In the Senate of the United States, 

May 20, 2010. 

Resolved, That the bill from the House of Representatives (H.R. 4173) entitled ‘‘An Act 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.’’, do pass with the following 

AMENDMENTS: 

Strike all after the enacting clause and insert the 

following: 

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the ‘‘Re3 storing American Financial Stability Act of 2010’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Severability. 

Sec. 4. Effective date. 

TITLE I—FINANCIAL STABILITY 

Sec. 101. Short title. 
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† HR 4173 EAS 

Sec. 102. Definitions. 

Subtitle A—Financial Stability Oversight Council 

Sec. 111. Financial Stability Oversight Council established. 

Sec. 112. Council authority. 

Sec. 113. Authority to require supervision and regulation of certain nonbank financial companies. 

Sec. 114. Registration of nonbank financial companies supervised by the Board 

of Governors. 

Sec. 115. Enhanced supervision and prudential standards for nonbank financial 

companies supervised by the Board of Governors and certain 

bank holding companies. 

Sec. 116. Reports. 

Sec. 117. Treatment of certain companies that cease to be bank holding companies. 

Sec. 118. Council funding. 

Sec. 119. Resolution of supervisory jurisdictional disputes among member agencies. 

Sec. 120. Additional standards applicable to activities or practices for financial 

stability purposes. 

Sec. 121. Mitigation of risks to financial stability. 

Subtitle B—Office of Financial Research 

Sec. 151. Definitions. 

Sec. 152. Office of Financial Research established. 

Sec. 153. Purpose and duties of the Office. 

Sec. 154. Organizational structure; responsibilities of primary programmatic 

units. 

Sec. 155. Funding. 

Sec. 156. Transition oversight. 

Subtitle C—Additional Board of Governors Authority for Certain Nonbank 

Financial Companies and Bank Holding Companies 

Sec. 161. Reports by and examinations of nonbank financial companies supervised by the Board of Governors. 

Sec. 162. Enforcement. 

Sec. 163. Acquisitions. 

Sec. 164. Prohibition against management interlocks between certain financial 

companies. 

Sec. 165. Enhanced supervision and prudential standards for nonbank financial 

companies supervised by the Board of Governors and certain 

bank holding companies. 

Sec. 166. Early remediation requirements. 

Sec. 167. Affiliations. 

Sec. 168. Regulations. 

Sec. 169. Avoiding duplication. 

Sec. 170. Safe harbor. 

Sec. 171. Leverage and risk-based capital requirements. 

TITLE II—ORDERLY LIQUIDATION AUTHORITY 

Sec. 201. Definitions. 

Sec. 202. Judicial review. 

Sec. 203. Systemic risk determination. 
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Sec. 204. Orderly liquidation. 

Sec. 205. Orderly liquidation of covered brokers and dealers. 

Sec. 206. Mandatory terms and conditions for all orderly liquidation actions. 

Sec. 207. Directors not liable for acquiescing in appointment of receiver. 

Sec. 208. Dismissal and exclusion of other actions. 

Sec. 209. Rulemaking; non-conflicting law. 

Sec. 210. Powers and duties of the corporation. 

Sec. 211. Miscellaneous provisions. 

Sec. 212. Prohibition of circumvention and prevention of conflicts of interest. 

Sec. 213. Ban on senior executives and directors. 

Sec. 214. Prohibition on taxpayer funding. 

TITLE III—TRANSFER OF POWERS TO THE COMPTROLLER OF THE 

CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS 

Sec. 300. Short title. 

Sec. 301. Purposes. 

Sec. 302. Definition. 

Subtitle A—Transfer of Powers and Duties 

Sec. 311. Transfer date. 

Sec. 312. Powers and duties transferred. 

Sec. 313. Abolishment. 

Sec. 314. Amendments to the revised statutes. 

Sec. 315. Federal information policy. 

Sec. 316. Savings provisions. 

Sec. 317. References in Federal law to Federal banking agencies. 

Sec. 318. Funding. 

Sec. 319. Contracting and leasing authority. 

Subtitle B—Transitional Provisions 

Sec. 321. Interim use of funds, personnel, and property of the Office of Thrift Supervision. 

Sec. 322. Transfer of employees. 

Sec. 323. Property transferred. 

Sec. 324. Funds transferred. 

Sec. 325. Disposition of affairs. 

Sec. 326. Continuation of services. 

Subtitle C—Federal Deposit Insurance Corporation 

Sec. 331. Deposit insurance reforms. 

Sec. 332. Management of the Federal Deposit Insurance Corporation. 

Subtitle D—Termination of Federal Thrift Charter 

Sec. 341. Termination of Federal savings associations. 

Sec. 342. Branching. 

TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND 

OTHERS 

Sec. 401. Short title. 

Sec. 402. Definitions. 

Sec. 403. Elimination of private adviser exemption; limited exemption for foreign 

private advisers; limited intrastate exemption. 
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Sec. 404. Collection of systemic risk data; reports; examinations; disclosures. 

Sec. 405. Disclosure provision eliminated. 

Sec. 406. Clarification of rulemaking authority. 

Sec. 407. Exemption of venture capital fund advisers. 

Sec. 408. Exemption of and record keeping by private equity fund advisers. 

Sec. 409. Family offices. 

Sec. 410. State and Federal responsibilities; asset threshold for Federal registration of investment advisers. 

Sec. 411. Custody of client assets. 

Sec. 412. Adjusting the accredited investor standard. 

Sec. 413. GAO study and report on accredited investors. 

Sec. 414. GAO study on self-regulatory organization for private funds. 

Sec. 415. Commission study and report on short selling. 

Sec. 416. Transition period. 

TITLE V—INSURANCE 

Subtitle A—Office of National Insurance 

Sec. 501. Short title. 

Sec. 502. Establishment of Office of National Insurance. 

Subtitle B—State-based Insurance Reform 

Sec. 511. Short title. 

Sec. 512. Effective date. 

PART I—NONADMITTED INSURANCE

Sec. 521. Reporting, payment, and allocation of premium taxes. 

Sec. 522. Regulation of nonadmitted insurance by insured’s home State. 

Sec. 523. Participation in national producer database. 

Sec. 524. Uniform standards for surplus lines eligibility. 

Sec. 525. Streamlined application for commercial purchasers. 

Sec. 526. GAO study of nonadmitted insurance market. 

Sec. 527. Definitions. 

PART II—REINSURANCE

Sec. 531. Regulation of credit for reinsurance and reinsurance agreements. 

Sec. 532. Regulation of reinsurer solvency. 

Sec. 533. Definitions. 

PART III—RULE OF CONSTRUCTION

Sec. 541. Rule of construction. 

Sec. 542. Severability. 

TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS 

ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS 

Sec. 601. Short title. 

Sec. 602. Definition. 

Sec. 603. Moratorium and study on treatment of credit card banks, industrial 

loan companies, and certain other companies under the Bank 

Holding Company Act of 1956. 
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Sec. 604. Reports and examinations of holding companies; regulation of functionally regulated subsidiaries. 

Sec. 605. Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies. 

Sec. 606. Requirements for financial holding companies to remain well capitalized and well managed. 

Sec. 607. Standards for interstate acquisitions. 

Sec. 608. Enhancing existing restrictions on bank transactions with affiliates. 

Sec. 609. Eliminating exceptions for transactions with financial subsidiaries. 

Sec. 610. Lending limits applicable to credit exposure on derivative transactions, 

repurchase agreements, reverse repurchase agreements, and securities lending and borrowing transactions. 

Sec. 611. Application of national bank lending limits to insured State banks. 

Sec. 612. Restriction on conversions of troubled banks. 

Sec. 613. De novo branching into States. 

Sec. 614. Lending limits to insiders. 

Sec. 615. Limitations on purchases of assets from insiders. 

Sec. 616. Regulations regarding capital levels of holding companies. 

Sec. 617. Elimination of elective investment bank holding company framework. 

Sec. 618. Securities holding companies. 

Sec. 619. Restrictions on capital market activity by banks and bank holding companies. 

Sec. 620. Concentration limits on large financial firms. 

TITLE VII—WALL STREET TRANSPARENCY AND ACCOUNTABILITY 

Sec. 701. Short title. 

Subtitle A—Regulation of Over-the-Counter Swaps Markets 

PART I—REGULATORY AUTHORITY

Sec. 711. Definitions. 

Sec. 712. Review of regulatory authority. 

Sec. 713. Recommendations for changes to portfolio margining laws. 

Sec. 714. Abusive swaps. 

Sec. 715. Authority to prohibit participation in swap activities. 

Sec. 716. Prohibition against Federal Government bailouts of swaps entities. 

Sec. 717. New product approval—CFTC-SEC process. 

Sec. 718. Determining status of novel derivative products. 

PART II—REGULATION OF SWAP MARKETS

Sec. 721. Definitions. 

Sec. 722. Jurisdiction. 

Sec. 723. Clearing. 

Sec. 724. Swaps; segregation and bankruptcy treatment. 

Sec. 725. Derivatives clearing organizations. 

Sec. 726. Rulemaking on conflict of interest. 

Sec. 727. Public reporting of swap transaction data. 

Sec. 728. Swap data repositories. 

Sec. 729. Reporting and recordkeeping. 

Sec. 730. Large swap trader reporting. 

Sec. 731. Registration and regulation of swap dealers and major swap participants. 

Sec. 732. Conflicts of interest. 

Sec. 733. Swap execution facilities. 
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Sec. 734. Derivatives transaction execution facilities and exempt boards of trade. 

Sec. 735. Designated contract markets. 

Sec. 736. Margin. 

Sec. 737. Position limits. 

Sec. 738. Foreign boards of trade. 

Sec. 739. Legal certainty for swaps. 

Sec. 740. Multilateral clearing organizations. 

Sec. 741. Enforcement. 

Sec. 742. Retail commodity transactions. 

Sec. 743. Other authority. 

Sec. 744. Restitution remedies. 

Sec. 745. Enhanced compliance by registered entities. 

Sec. 746. Insider trading. 

Sec. 747. Antidisruptive practices authority. 

Sec. 748. Commodity whistleblower incentives and protection. 

Sec. 749. Conforming amendments. 

Sec. 750. Study on oversight of carbon markets. 

Sec. 751. Energy and Environmental Markets Advisory Committee. 

Sec. 752. International harmonization. 

Sec. 753. Antimarket manipulation authority. 

Sec. 754. Effective date. 

Subtitle B—Regulation of Security-Based Swap Markets 

Sec. 761. Definitions under the Securities Exchange Act of 1934. 

Sec. 762. Repeal of prohibition on regulation of security-based swap agreements. 

Sec. 763. Amendments to the Securities Exchange Act of 1934. 

Sec. 764. Registration and regulation of security-based swap dealers and major 

security-based swap participants. 

Sec. 765. Rulemaking on conflict of interest. 

Sec. 766. Reporting and recordkeeping. 

Sec. 767. State gaming and bucket shop laws. 

Sec. 768. Amendments to the Securities Act of 1933; treatment of security-based 

swaps. 

Sec. 769. Definitions under the Investment Company Act of 1940. 

Sec. 770. Definitions under the Investment Advisors Act of 1940. 

Sec. 771. Other authority. 

Sec. 772. Jurisdiction. 

Sec. 773. Effective date. 

TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION 

Sec. 801. Short title. 

Sec. 802. Findings and purposes. 

Sec. 803. Definitions. 

Sec. 804. Designation of systemic importance. 

Sec. 805. Standards for systemically important financial market utilities and 

payment, clearing, or settlement activities. 

Sec. 806. Operations of designated financial market utilities. 

Sec. 807. Examination of and enforcement actions against designated financial 

market utilities. 

Sec. 808. Examination of and enforcement actions against financial institutions 

subject to standards for designated activities. 

Sec. 809. Requests for information, reports, or records. 

Sec. 810. Rulemaking. 

Sec. 811. Other authority. 
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Sec. 812. Effective date. 

TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE 

REGULATION OF SECURITIES 

Subtitle A—Increasing Investor Protection 

Sec. 911. Investor Advisory Committee established. 

Sec. 912. Clarification of authority of the Commission to engage in investor testing. 

Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and investment advisers. 

Sec. 914. Office of the Investor Advocate. 

Sec. 915. Streamlining of filing procedures for self-regulatory organizations. 

Sec. 916. Study regarding financial literacy among investors. 

Sec. 917. Study regarding mutual fund advertising. 

Sec. 918. Clarification of Commission authority to require investor disclosures before purchase of investment products and services. 

Sec. 919. Study on conflicts of interest. 

Sec. 919A. Study on improved investor access to information on investment advisers and broker-dealers. 

Sec. 919B. Study on financial planners and the use of financial designations. 

Subtitle B—Increasing Regulatory Enforcement and Remedies 

Sec. 921. Authority to issue rules related to mandatory predispute arbitration. 

Sec. 922. Whistleblower protection. 

Sec. 923. Conforming amendments for whistleblower protection. 

Sec. 924. Implementation and transition provisions for whistleblower protection. 

Sec. 925. Collateral bars. 

Sec. 926. Disqualifying felons and other ‘‘bad actors’’ from Regulation D Offerings. 

Sec. 927. Equal treatment of self-regulatory organization rules. 

Sec. 928. Clarification that Section 205 of the Investment Advisers Act of 1940 

does not apply to State-registered advisers. 

Sec. 929. Unlawful margin lending. 

Sec. 929A. Protection for employees of subsidiaries and affiliates of publicly traded companies. 

Sec. 929B. FAIR Fund amendments. 

Sec. 929C. Increasing the borrowing limit on Treasury loans. 

Subtitle C—Improvements to the Regulation of Credit Rating Agencies 

Sec. 931. Findings. 

Sec. 932. Enhanced regulation, accountability, and transparency of nationally 

recognized statistical rating organizations. 

Sec. 933. State of mind in private actions. 

Sec. 934. Referring tips to law enforcement or regulatory authorities. 

Sec. 935. Consideration of information from sources other than the issuer in rating decisions. 

Sec. 936. Qualification standards for credit rating analysts. 

Sec. 937. Timing of regulations. 

Sec. 938. Universal ratings symbols. 

Sec. 939. Removal of statutory references to credit ratings. 

Sec. 939A. Securities and Exchange Commission study on strengthening credit 

rating agency independence. 
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Sec. 939B. Government Accountability Office study on alternative business models. 

Sec. 939C. Government Accountability Office study on the creation of an independent professional analyst organization. 

Sec. 939D. Initial credit rating assignments. 

Subtitle D—Improvements to the Asset-Backed Securitization Process 

Sec. 941. Regulation of credit risk retention. 

Sec. 942. Disclosures and reporting for asset-backed securities. 

Sec. 943. Representations and warranties in asset-backed offerings. 

Sec. 944. Exempted transactions under the Securities Act of 1933. 

Sec. 945. Due diligence analysis and disclosure in asset-backed securities issues. 

Subtitle E—Accountability and Executive Compensation 

Sec. 951. Shareholder vote on executive compensation disclosures. 

Sec. 952. Compensation committee independence. 

Sec. 953. Executive compensation disclosures. 

Sec. 954. Recovery of erroneously awarded compensation. 

Sec. 955. Disclosure regarding employee and director hedging. 

Sec. 956. Excessive compensation by holding companies of depository institutions. 

Sec. 957. Voting by brokers. 

Subtitle F—Improvements to the Management of the Securities and Exchange 

Commission 

Sec. 961. Report and certification of internal supervisory controls. 

Sec. 962. Triennial report on personnel management. 

Sec. 963. Annual financial controls audit. 

Sec. 964. Report on oversight of national securities associations. 

Sec. 965. Compliance examiners. 

Sec. 966. Suggestion program for employees of the Commission. 

Subtitle G—Strengthening Corporate Governance 

Sec. 971. Election of directors by majority vote in uncontested elections. 

Sec. 972. Proxy access. 

Sec. 973. Disclosures regarding chairman and CEO structures. 

Subtitle H—Municipal Securities 

Sec. 975. Regulation of municipal securities and changes to the board of the 

MSRB. 

Sec. 976. Government Accountability Office study of increased disclosure to investors. 

Sec. 977. Government Accountability Office study on the municipal securities 

markets. 

Sec. 978. Study of funding for Government Accounting Standards Board. 

Sec. 979. Commission Office of Municipal Securities. 

Subtitle I—Public Company Accounting Oversight Board, Portfolio Margining, 

and Other Matters 

Sec. 981. Authority to share certain information with foreign authorities. 

Sec. 982. Oversight of brokers and dealers. 

Sec. 983. Portfolio margining. 

Sec. 984. Loan or borrowing of securities. 
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Sec. 985. Technical corrections to Federal securities laws. 

Sec. 986. Conforming amendments relating to repeal of the Public Utility Holding Company Act of 1935. 

Sec. 987. Amendment to definition of material loss and nonmaterial losses to the 

Deposit Insurance Fund for purposes of Inspector General reviews. 

Sec. 988. Amendment to definition of material loss and nonmaterial losses to the 

National Credit Union Share Insurance Fund for purposes of 

Inspector General reviews. 

Sec. 989. Government Accountability Office study on proprietary trading. 

Sec. 989A. Senior investor protections. 

Sec. 989B. Designated Federal Entity Inspectors General Independence. 

Sec. 989C. Strengthening Inspector General accountability. 

Sec. 989D. Removal of inspectors general of designated Federal entities. 

Sec. 989E. Additional oversight of financial regulatory system. 

Subtitle J—Self-funding of the Securities and Exchange Commission 

Sec. 991. Securities and Exchange Commission self-funding. 

TITLE X—BUREAU OF CONSUMER FINANCIAL PROTECTION 

Sec. 1001. Short title. 

Sec. 1002. Definitions. 

Subtitle A—Bureau of Consumer Financial Protection 

Sec. 1011. Establishment of the Bureau. 

Sec. 1012. Executive and administrative powers. 

Sec. 1013. Administration. 

Sec. 1014. Consumer Advisory Board. 

Sec. 1015. Coordination. 

Sec. 1016. Appearances before and reports to Congress. 

Sec. 1017. Funding; penalties and fines. 

Sec. 1018. Effective date. 

Subtitle B—General Powers of the Bureau 

Sec. 1021. Purpose, objectives, and functions. 

Sec. 1022. Rulemaking authority. 

Sec. 1023. Review of Bureau regulations. 

Sec. 1024. Supervision of nondepository covered persons. 

Sec. 1025. Supervision of very large banks, savings associations, and credit 

unions. 

Sec. 1026. Other banks, savings associations, and credit unions. 

Sec. 1027. Limitations on authorities of the Bureau; preservation of authorities. 

Sec. 1028. Authority to restrict mandatory pre-dispute arbitration. 

Sec. 1029. Effective date. 

Subtitle C—Specific Bureau Authorities 

Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices. 

Sec. 1032. Disclosures. 

Sec. 1033. Consumer rights to access information. 

Sec. 1034. Response to consumer complaints and inquiries. 

Sec. 1035. Private education loan ombudsman. 

Sec. 1036. Prohibited acts. 
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Sec. 1037. Effective date. 

Subtitle D—Preservation of State Law 

Sec. 1041. Relation to State law. 

Sec. 1042. Preservation of enforcement powers of States. 

Sec. 1043. Preservation of existing contracts. 

Sec. 1044. State law preemption standards for national banks and subsidiaries 

clarified. 

Sec. 1045. Clarification of law applicable to nondepository institution subsidiaries. 

Sec. 1046. State law preemption standards for Federal savings associations and 

subsidiaries clarified. 

Sec. 1047. Visitorial standards for national banks and savings associations. 

Sec. 1048. Effective date. 

Subtitle E—Enforcement Powers 

Sec. 1051. Definitions. 

Sec. 1052. Investigations and administrative discovery. 

Sec. 1053. Hearings and adjudication proceedings. 

Sec. 1054. Litigation authority. 

Sec. 1055. Relief available. 

Sec. 1056. Referrals for criminal proceedings. 

Sec. 1057. Employee protection. 

Sec. 1058. Effective date. 

Subtitle F—Transfer of Functions and Personnel; Transitional Provisions 

Sec. 1061. Transfer of consumer financial protection functions. 

Sec. 1062. Designated transfer date. 

Sec. 1063. Savings provisions. 

Sec. 1064. Transfer of certain personnel. 

Sec. 1065. Incidental transfers. 

Sec. 1066. Interim authority of the Secretary. 

Sec. 1067. Transition oversight. 

Subtitle G—Regulatory Improvements 

Sec. 1071. Small business data collection. 

Sec. 1072. GAO study on the effectiveness and impact of various appraisal methods. 

Sec. 1073. Prohibited payments to mortgage originators. 

Sec. 1074. Minimum standards for residential mortgage loans. 

Sec. 1075. Prohibition on certain prepayment penalties. 

Sec. 1076. Assistance for economically vulnerable individuals and families. 

Sec. 1077. Remittance transfers. 

Sec. 1078. Department of the Treasury study on ending the conservatorship of 

Fannie Mae, Freddie Mac, and reforming the housing finance 

system. 

Sec. 1079. Reasonable fees and rules for payment card transactions. 

Sec. 1079A. Use of Consumer Reports. 

Subtitle H—Conforming Amendments 

Sec. 1081. Amendments to the Inspector General Act. 

Sec. 1082. Amendments to the Privacy Act of 1974. 
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† HR 4173 EAS 

Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of 

1982. 

Sec. 1084. Amendments to the Electronic Fund Transfer Act. 

Sec. 1085. Amendments to the Equal Credit Opportunity Act. 

Sec. 1086. Amendments to the Expedited Funds Availability Act. 

Sec. 1087. Amendments to the Fair Credit Billing Act. 

Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act. 

Sec. 1089. Amendments to the Fair Debt Collection Practices Act. 

Sec. 1090. Amendments to the Federal Deposit Insurance Act. 

Sec. 1091. Amendments to the Gramm-Leach-Bliley Act. 

Sec. 1092. Amendments to the Home Mortgage Disclosure Act. 

Sec. 1093. Amendments to the Homeowners Protection Act of 1998. 

Sec. 1094. Amendments to the Home Ownership and Equity Protection Act of 

1994. 

Sec. 1095. Amendments to the Omnibus Appropriations Act, 2009. 

Sec. 1096. Amendments to the Real Estate Settlement Procedures Act. 

Sec. 1097. Amendments to the Right to Financial Privacy Act of 1978. 

Sec. 1098. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. 

Sec. 1099. Amendments to the Truth in Lending Act. 

Sec. 1100. Amendments to the Truth in Savings Act. 

Sec. 1101. Amendments to the Telemarketing and Consumer Fraud and Abuse 

Prevention Act. 

Sec. 1102. Amendments to the Paperwork Reduction Act. 

Sec. 1103. Adjustments for inflation in the Truth in Lending Act. 

Sec. 1104. Small business fairness and regulatory transparency. 

Sec. 1105. Effective date. 

TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS 

Sec. 1151. Federal Reserve Act amendments on emergency lending authority. 

Sec. 1152. Reviews of special Federal Reserve credit facilities. 

Sec. 1153. Public access to information. 

Sec. 1154. Liquidity event determination. 

Sec. 1155. Emergency financial stabilization. 

Sec. 1156. Additional related amendments. 

Sec. 1157. Federal Reserve Act amendments on Federal reserve bank governance. 

Sec. 1158. Amendments to the Federal Reserve Act relating to supervision and 

regulation policy. 

Sec. 1159. GAO audit of the Federal Reserve facilities; Publication of Board actions. 

TITLE XII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL 

INSTITUTIONS 

Sec. 1201. Short title. 

Sec. 1202. Purpose. 

Sec. 1203. Definitions. 

Sec. 1204. Expanded access to mainstream financial institutions. 

Sec. 1205. Low-cost alternatives to payday loans. 

Sec. 1206. Grants to establish loan-loss reserve funds. 

Sec. 1207. Procedural provisions. 

Sec. 1208. Authorization of appropriations. 

Sec. 1209. Regulations. 

Sec. 1210. Evaluation and reports to Congress. 
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TITLE XIII—PAY IT BACK ACT 

Sec. 1301. Short title. 

Sec. 1302. Amendment to reduce TARP authorization. 

Sec. 1303. Report. 

Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008. 

Sec. 1305. Federal Housing Finance Agency report. 

Sec. 1306. Repayment of unobligated ARRA funds. 

TITLE XIV—MISCELLANEOUS 

Sec. 1401. Restrictions on use of Federal funds to finance bailouts of foreign governments. 

TITLE XV—CONGO CONFLICT MINERALS 

Sec. 1501. Sense of Congress on exploitation and trade of columbite-tantalite, cassiterite, gold, and wolframite originating in Democratic Republic of Congo. 

Sec. 1502. Disclosure to Securities and Exchange Commission relating to columbite-tantalite, cassiterite, gold, and wolframite originating in 

Democratic Republic of Congo. 

Sec. 1503. Report. 

1 SEC. 2. DEFINITIONS. 

2 As used in this Act, the following definitions shall 

3 apply, except as the context otherwise requires or as other4 wise specifically provided in this Act: 

5 (1) AFFILIATE.—The term ‘‘affiliate’’ means any 

6 company that controls, is controlled by, or is under 

7 common control with another company. 

8 (2) APPROPRIATE FEDERAL BANKING AGENCY.— 

9 On and after the transfer date, the term ‘‘appropriate 

10 Federal banking agency’’ has the same meaning as in 

11 section 3(q) of the Federal Deposit Insurance Act (12 

12 U.S.C. 1813(q)), as amended by title III. 

13 (3) BOARD OF GOVERNORS.—The term ‘‘Board of 

14 Governors’’ means the Board of Governors of the Fed15 eral Reserve System. 
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† HR 4173 EAS 

1 (4) BUREAU.—The term ‘‘Bureau’’ means the 

2 Bureau of Consumer Financial Protection established 

3 under title X. 

4 (5) COMMISSION.—The term ‘‘Commission’’ 

5 means the Securities and Exchange Commission, ex6 cept in the context of the Commodity Futures Trading 

7 Commission. 

8 (6) CORPORATION.—The term ‘‘Corporation’’ 

9 means the Federal Deposit Insurance Corporation. 

10 (7) COUNCIL.—The term ‘‘Council’’ means the 

11 Financial Stability Oversight Council established 

12 under title I. 

13 (8) CREDIT UNION.—The term ‘‘credit union’’ 

14 means a Federal credit union, State credit union, or 

15 State-chartered credit union, as those terms are de16 fined in section 101 of the Federal Credit Union Act 

17 (12 U.S.C. 1752). 

18 (9) FEDERAL BANKING AGENCY.—The term— 

19 (A) ‘‘Federal banking agency’’ means, indi20 vidually, the Board of Governors, the Office of 

21 the Comptroller of the Currency, and the Cor22 poration; and 

23 (B) ‘‘Federal banking agencies’’ means all 

24 of the agencies referred to in subparagraph (A), 

25 collectively. 
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† HR 4173 EAS 

1 (10) FUNCTIONALLY REGULATED SUBSIDIARY.— 

2 The term ‘‘functionally regulated subsidiary’’ has the 

3 same meaning as in section 5(c)(5) of the Bank Hold4 ing Company Act of 1956 (12 U.S.C. 1844(c)(5)). 

5 (11) PRIMARY FINANCIAL REGULATORY AGEN6 CY.—The term ‘‘primary financial regulatory agen7 cy’’ means— 

8 (A) the appropriate Federal banking agen9 cy, with respect to institutions described in sec10 tion 3(q) of the Federal Deposit Insurance Act, 

11 except to the extent that an institution is or the 

12 activities of an institution are otherwise subject 

13 to the jurisdiction of an agency listed in sub14 paragraph (B), (C), (D), or (E); 

15 (B) the Securities and Exchange Commis16 sion, with respect to— 

17 (i) any broker or dealer that is reg18 istered with the Commission under the Se19 curities Exchange Act of 1934; 

20 (ii) any investment company that is 

21 registered with the Commission under the 

22 Investment Company Act of 1940; 

23 (iii) any investment adviser that is 

24 registered with the Commission under the 

25 Investment Advisers Act of 1940, with re-
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† HR 4173 EAS 

1 spect to the investment advisory activities of 

2 such company and activities that are inci3 dental to such advisory activities; and 

4 (iv) any clearing agency registered 

5 with the Commission under the Securities 

6 Exchange Act of 1934; 

7 (C) the Commodity Futures Trading Com8 mission, with respect to any futures commission 

9 merchant, any commodity trading adviser, and 

10 any commodity pool operator registered with the 

11 Commodity Futures Trading Commission under 

12 the Commodity Exchange Act, with respect to the 

13 commodities activities of such entity and activi14 ties that are incidental to such commodities ac15 tivities; 

16 (D) the State insurance authority of the 

17 State in which an insurance company is domi18 ciled, with respect to the insurance activities and 

19 activities that are incidental to such insurance 

20 activities of an insurance company that is sub21 ject to supervision by the State insurance au22 thority under State insurance law; and 

23 (E) the Federal Housing Finance Agency, 

24 with respect to Federal Home Loan Banks or the 

25 Federal Home Loan Bank System, and with re-
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† HR 4173 EAS 

1 spect to the Federal National Mortgage Associa2 tion or the Federal Home Loan Mortgage Cor3 poration. 

4 (12) PRUDENTIAL STANDARDS.—The term ‘‘pru5 dential standards’’ means enhanced supervision and 

6 regulatory standards developed by the Board of Gov7 ernors under section 115 or 165. 

8 (13) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of the Treasury. 

10 (14) SECURITIES TERMS.—The— 

11 (A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’, ‘‘na12 tionally recognized statistical ratings organiza13 tion’’, ‘‘security’’, and ‘‘securities laws’’ have the 

14 same meanings as in section 3 of the Securities 

15 Exchange Act of 1934 (15 U.S.C. 78c); 

16 (B) term ‘‘investment adviser’’ has the same 

17 meaning as in section 202 of the Investment Ad18 visers Act of 1940 (15 U.S.C. 80b–2); and 

19 (C) term ‘‘investment company’’ has the 

20 same meaning as in section 3 of the Investment 

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

22 (15) STATE.—The term ‘‘State’’ means any 

23 State, commonwealth, territory, or possession of the 

24 United States, the District of Columbia, the Common25 wealth of Puerto Rico, the Commonwealth of the 
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1 Northern Mariana Islands, American Samoa, Guam, 

2 or the United States Virgin Islands. 

3 (16) TRANSFER DATE.—The term ‘‘transfer 

4 date’’ means the date established under section 311. 

5 (17) OTHER INCORPORATED DEFINITIONS.— 

6 (A) FEDERAL DEPOSIT INSURANCE ACT.— 

7 The terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding 

8 company’’, ‘‘control’’ (when used with respect to 

9 a depository institution), ‘‘deposit’’, ‘‘depository 

10 institution’’, ‘‘Federal depository institution’’, 

11 ‘‘Federal savings association’’, ‘‘foreign bank’’, 

12 ‘‘including’’, ‘‘insured branch’’, ‘‘insured deposi13 tory institution’’, ‘‘national member bank’’, ‘‘na14 tional nonmember bank’’, ‘‘savings association’’, 

15 ‘‘State bank’’, ‘‘State depository institution’’, 

16 ‘‘State member bank’’, ‘‘State nonmember bank’’, 

17 ‘‘State savings association’’, and ‘‘subsidiary’’ 

18 have the same meanings as in section 3 of the 

19 Federal Deposit Insurance Act (12 U.S.C. 1813). 

20 (B) HOLDING COMPANIES.—The term— 

21 (i) ‘‘bank holding company’’ has the 

22 same meaning as in section 2 of the Bank 

23 Holding Company Act of 1956 (12 U.S.C. 

24 1841); 
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1 (ii) ‘‘financial holding company’’ has 

2 the same meaning as in section 2(p) of the 

3 Bank Holding Company Act of 1956 (12 

4 U.S.C. 1841(p)); and 

5 (iii) ‘‘savings and loan holding com6 pany’’ has the same meaning as in section 

7 10 of the Home Owners’ Loan Act (12 

8 U.S.C. 1467a(a)). 

9 SEC. 3. SEVERABILITY. 

10 If any provision of this Act, an amendment made by 

11 this Act, or the application of such provision or amendment 

12 to any person or circumstance is held to be unconstitu13 tional, the remainder of this Act, the amendments made by 

14 this Act, and the application of the provisions of such to 

15 any person or circumstance shall not be affected thereby. 

16 SEC. 4. EFFECTIVE DATE. 

17 Except as otherwise specifically provided in this Act 

18 or the amendments made by this Act, this Act and such 

19 amendments shall take effect 1 day after the date of enact20 ment of this Act. 

21 TITLE I—FINANCIAL STABILITY 

22 SEC. 101. SHORT TITLE. 

23 This title may be cited as the ‘‘Financial Stability Act 

24 of 2010’’. 
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1 SEC. 102. DEFINITIONS. 

2 (a) IN GENERAL.—For purposes of this title, unless the 

3 context otherwise requires, the following definitions shall 

4 apply: 

5 (1) BANK HOLDING COMPANY.—The term ‘‘bank 

6 holding company’’ has the same meaning as in sec7 tion 2 of the Bank Holding Company Act of 1956 (12 

8 U.S.C. 1841). A foreign bank or company that is 

9 treated as a bank holding company for purposes of 

10 the Bank Holding Company Act of 1956, pursuant to 

11 section 8(a) of the International Banking Act of 1978 

12 (12 U.S.C. 3106(a)), shall be treated as a bank hold13 ing company for purposes of this title. 

14 (2) CHAIRPERSON.—The term ‘‘Chairperson’’ 

15 means the Chairperson of the Council. 

16 (3) MEMBER AGENCY.—The term ‘‘member agen17 cy’’ means an agency represented by a voting member 

18 of the Council. 

19 (4) NONBANK FINANCIAL COMPANY DEFINI20 TIONS.— 

21 (A) FOREIGN NONBANK FINANCIAL COM22 PANY.—The term ‘‘foreign nonbank financial 

23 company’’ means a company (other than a com24 pany that is, or is treated in the United States 

25 as, a bank holding company or a subsidiary 

26 thereof) that is— 
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1 (i) incorporated or organized in a 

2 country other than the United States; and 

3 (ii) predominantly engaged in, includ4 ing through a branch in the United States, 

5 financial activities, as defined in paragraph 

6 (6). 

7 (B) U.S. NONBANK FINANCIAL COMPANY.— 

8 The term ‘‘U.S. nonbank financial company’’ 

9 means a company (other than a bank holding 

10 company or a subsidiary thereof, or a Farm 

11 Credit System institution chartered and subject 

12 to the provisions of the Farm Credit Act of 1971 

13 (12 U.S.C. 2001 et seq.)) that is— 

14 (i) incorporated or organized under the 

15 laws of the United States or any State; and 

16 (ii) predominantly engaged in finan17 cial activities as defined in paragraph (6). 

18 (C) NONBANK FINANCIAL COMPANY.—The 

19 term ‘‘nonbank financial company’’ means a 

20 U.S. nonbank financial company and a foreign 

21 nonbank financial company. 

22 (D) NONBANK FINANCIAL COMPANY SUPER23 VISED BY THE BOARD OF GOVERNORS.—The 

24 term ‘‘nonbank financial company supervised by 

25 the Board of Governors’’ means a nonbank fi-
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1 nancial company that the Council has deter2 mined under section 113 shall be supervised by 

3 the Board of Governors. 

4 (5) OFFICE OF FINANCIAL RESEARCH.—The term 

5 ‘‘Office of Financial Research’’ means the office estab6 lished under section 152. 

7 (6) PREDOMINANTLY ENGAGED.—A company is 

8 ‘‘predominantly engaged in financial activities’’ if— 

9 (A) the annual gross revenues derived by the 

10 company and all of its subsidiaries from activi11 ties that are financial in nature (as defined in 

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

13 of 1956) and, if applicable, from the ownership 

14 or control of one or more insured depository in15 stitutions, represents 85 percent or more of the 

16 consolidated annual gross revenues of the com17 pany; or 

18 (B) the consolidated assets of the company 

19 and all of its subsidiaries related to activities 

20 that are financial in nature (as defined in sec21 tion 4(k) of the Bank Holding Company Act of 

22 1956) and, if applicable, related to the ownership 

23 or control of one or more insured depository in24 stitutions, represents 85 percent or more of the 

25 consolidated assets of the company. 
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1 (7) SIGNIFICANT INSTITUTIONS.—The terms ‘‘sig2 nificant nonbank financial company’’ and ‘‘signifi3 cant bank holding company’’ have the meanings given 

4 those terms by rule of the Board of Governors. 

5 (b) DEFINITIONAL CRITERIA.—The Board of Gov6 ernors shall establish, by regulation, the requirements for 

7 determining if a company is predominantly engaged in fi8 nancial activities, as defined in subsection (a)(6). 

9 (c) FOREIGN NONBANK FINANCIAL COMPANIES.—For 

10 purposes of the authority of the Board of Governors under 

11 this title with respect to foreign nonbank financial compa12 nies, references in this title to ‘‘company’’ or ‘‘subsidiary’’ 

13 include only the United States activities and subsidiaries 

14 of such foreign company. 

15 Subtitle A—Financial Stability 

16 Oversight Council 

17 SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES18 TABLISHED. 

19 (a) ESTABLISHMENT.—Effective on the date of enact20 ment of this Act, there is established the Financial Stability 

21 Oversight Council. 

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

23 following members: 

24 (1) VOTING MEMBERS.—The voting members, 

25 who shall each have 1 vote on the Council shall be— 
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1 (A) the Secretary of the Treasury, who shall 

2 serve as Chairperson of the Council; 

3 (B) the Chairman of the Board of Gov4 ernors; 

5 (C) the Comptroller of the Currency; 

6 (D) the Director of the Bureau; 

7 (E) the Chairman of the Commission; 

8 (F) the Chairperson of the Corporation; 

9 (G) the Chairperson of the Commodity Fu10 tures Trading Commission; 

11 (H) the Director of the Federal Housing Fi12 nance Agency; and 

13 (I) an independent member appointed by 

14 the President, by and with the advice and con15 sent of the Senate, having insurance expertise. 

16 (2) NONVOTING MEMBERS.—The Director of the 

17 Office of Financial Research— 

18 (A) shall serve in an advisory capacity as 

19 a nonvoting member of the Council; and 

20 (B) may not be excluded from any of the 

21 proceedings, meetings, discussions, or delibera22 tions of the Council. 

23 (c) TERMS; VACANCY.— 

24 (1) TERMS.—The independent member of the 

25 Council shall serve for a term of 6 years. 
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1 (2) VACANCY.—Any vacancy on the Council shall 

2 be filled in the manner in which the original appoint3 ment was made. 

4 (3) ACTING OFFICIALS MAY SERVE.—In the event 

5 of a vacancy in the office of the head of a member 

6 agency or department, and pending the appointment 

7 of a successor, or during the absence or disability of 

8 the head of a member agency or department, the act9 ing head of the member agency or department shall 

10 serve as a member of the Council in the place of that 

11 agency or department head. 

12 (d) TECHNICAL AND PROFESSIONAL ADVISORY COM13 MITTEES.—The Council may appoint such special advisory, 

14 technical, or professional committees as may be useful in 

15 carrying out the functions of the Council, including an ad16 visory committee consisting of State regulators, and the 

17 members of such committees may be members of the Council, 

18 or other persons, or both. 

19 (e) MEETINGS.— 

20 (1) TIMING.—The Council shall meet at the call 

21 of the Chairperson or a majority of the members then 

22 serving, but not less frequently than quarterly. 

23 (2) RULES FOR CONDUCTING BUSINESS.—The 

24 Council shall adopt such rules as may be necessary 

25 for the conduct of the business of the Council. Such 
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1 rules shall be rules of agency organization, procedure, 

2 or practice for purposes of section 553 of title 5, 

3 United States Code. 

4 (f) VOTING.—Unless otherwise specified, the Council 

5 shall make all decisions that it is authorized or required 

6 to make by a majority vote of the members then serving. 

7 (g) NONAPPLICABILITY OF FACA.—The Federal Advi8 sory Committee Act (5 U.S.C. App.) shall not apply to the 

9 Council, or to any special advisory, technical, or profes10 sional committee appointed by the Council, except that, if 

11 an advisory, technical, or professional committee has one 

12 or more members who are not employees of or affiliated with 

13 the United States Government, the Council shall publish a 

14 list of the names of the members of such committee. 

15 (h) ASSISTANCE FROM FEDERAL AGENCIES.—Any de16 partment or agency of the United States may provide to 

17 the Council and any special advisory, technical, or profes18 sional committee appointed by the Council, such services, 

19 funds, facilities, staff, and other support services as the 

20 Council may determine advisable. 

21 (i) COMPENSATION OF MEMBERS.— 

22 (1) FEDERAL EMPLOYEE MEMBERS.—All mem23 bers of the Council who are officers or employees of 

24 the United States shall serve without compensation in 
26 

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1 addition to that received for their services as officers 

2 or employees of the United States. 

3 (2) COMPENSATION FOR NON-FEDERAL MEM4 BER.—Section 5314 of title 5, United States Code, is 

5 amended by adding at the end the following: 

6 ‘‘Independent Member of the Financial Stability 

7 Oversight Council (1).’’. 

8 (j) DETAIL OF GOVERNMENT EMPLOYEES.—Any em9 ployee of the Federal Government may be detailed to the 

10 Council without reimbursement, and such detail shall be 

11 without interruption or loss of civil service status or privi12 lege. An employee of the Federal Government detailed to the 

13 Council shall report to and be subject to oversight by the 

14 Council during the assignment to the Council, and shall 

15 be compensated by the department or agency from which 

16 the employee was detailed. 

17 SEC. 112. COUNCIL AUTHORITY. 

18 (a) PURPOSES AND DUTIES OF THE COUNCIL.— 

19 (1) IN GENERAL.—The purposes of the Council 

20 are— 

21 (A) to identify risks to the financial sta22 bility of the United States that could arise from 

23 the material financial distress or failure of large, 

24 interconnected bank holding companies or 

25 nonbank financial companies; 
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1 (B) to promote market discipline, by elimi2 nating expectations on the part of shareholders, 

3 creditors, and counterparties of such companies 

4 that the Government will shield them from losses 

5 in the event of failure; and 

6 (C) to respond to emerging threats to the 

7 stability of the United States financial markets. 

8 (2) DUTIES.—The Council shall, in accordance 

9 with this title— 

10 (A) collect information from member agen11 cies and other Federal and State financial regu12 latory agencies and, if necessary to assess risks 

13 to the United States financial system, direct the 

14 Office of Financial Research to collect informa15 tion from bank holding companies and nonbank 

16 financial companies; 

17 (B) provide direction to, and request data 

18 and analyses from, the Office of Financial Re19 search to support the work of the Council; 

20 (C) monitor the financial services market21 place in order to identify potential threats to the 

22 financial stability of the United States; 

23 (D) facilitate information sharing and co24 ordination among the member agencies and other 

25 Federal and State agencies regarding domestic 
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1 financial services policy development, rule2 making, examinations, reporting requirements, 

3 and enforcement actions; 

4 (E) recommend to the member agencies gen5 eral supervisory priorities and principles reflect6 ing the outcome of discussions among the mem7 ber agencies; 

8 (F) identify gaps in regulation that could 

9 pose risks to the financial stability of the United 

10 States; 

11 (G) require supervision by the Board of 

12 Governors for nonbank financial companies that 

13 may pose risks to the financial stability of the 

14 United States in the event of their material fi15 nancial distress or failure, pursuant to section 

16 113; 

17 (H) make recommendations to the Board of 

18 Governors concerning the establishment of height19 ened prudential standards for risk-based capital, 

20 leverage, liquidity, contingent capital, resolution 

21 plans and credit exposure reports, concentration 

22 limits, enhanced public disclosures, and overall 

23 risk management for nonbank financial compa24 nies and large, interconnected bank holding com25 panies supervised by the Board of Governors; 
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1 (I) identify systemically important finan2 cial market utilities and payment, clearing, and 

3 settlement activities (as that term is defined in 

4 title VIII), and require such utilities and activi5 ties to be subject to standards established by the 

6 Board of Governors; 

7 (J) make recommendations to primary fi8 nancial regulatory agencies to apply new or 

9 heightened standards and safeguards for finan10 cial activities or practices that could create or 

11 increase risks of significant liquidity, credit, or 

12 other problems spreading among bank holding 

13 companies, nonbank financial companies, and 

14 United States financial markets; 

15 (K) make determinations regarding exemp16 tions in title VII, where necessary; 

17 (L) provide a forum for— 

18 (i) discussion and analysis of emerging 

19 market developments and financial regu20 latory issues; and 

21 (ii) resolution of jurisdictional disputes 

22 among the members of the Council; and 

23 (M) annually report to and testify before 

24 Congress on— 

25 (i) the activities of the Council; 
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1 (ii) significant financial market devel2 opments and potential emerging threats to 

3 the financial stability of the United States; 

4 (iii) all determinations made under 

5 section 113 or title VIII, and the basis for 

6 such determinations; and 

7 (iv) recommendations— 

8 (I) to enhance the integrity, effi9 ciency, competitiveness, and stability 

10 of United States financial markets; 

11 (II) to promote market discipline; 

12 and 

13 (III) to maintain investor con14 fidence. 

15 (b) AUTHORITY TO OBTAIN INFORMATION.— 

16 (1) IN GENERAL.—The Council may receive, and 

17 may request the submission of, any data or informa18 tion from the Office of Financial Research and mem19 ber agencies, as necessary— 

20 (A) to monitor the financial services mar21 ketplace to identify potential risks to the finan22 cial stability of the United States; or 

23 (B) to otherwise carry out any of the provi24 sions of this title. 
31 

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1 (2) SUBMISSIONS BY THE OFFICE AND MEMBER

2 AGENCIES.—Notwithstanding any other provision of 

3 law, the Office of Financial Research and any mem4 ber agency are authorized to submit information to 

5 the Council. 

6 (3) FINANCIAL DATA COLLECTION.— 

7 (A) IN GENERAL.—The Council, acting 

8 through the Office of Financial Research, may 

9 require the submission of periodic and other re10 ports from any nonbank financial company or 

11 bank holding company for the purpose of assess12 ing the extent to which a financial activity or fi13 nancial market in which the nonbank financial 

14 company or bank holding company participates, 

15 or the nonbank financial company or bank hold16 ing company itself, poses a threat to the finan17 cial stability of the United States. 

18 (B) MITIGATION OF REPORT BURDEN.—Be19 fore requiring the submission of reports from any 

20 nonbank financial company or bank holding 

21 company that is regulated by a member agency 

22 or any primary financial regulatory agency, the 

23 Council, acting through the Office of Financial 

24 Research, shall coordinate with such agencies 

25 and shall, whenever possible, rely on information 
32 

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1 available from the Office of Financial Research 

2 or such agencies. 

3 (4) BACK-UP EXAMINATION BY THE BOARD OF

4 GOVERNORS.—If the Council is unable to determine 

5 whether the financial activities of a nonbank finan6 cial company pose a threat to the financial stability 

7 of the United States, based on information or reports 

8 obtained under paragraph (3), discussions with man9 agement, and publicly available information, the 

10 Council may request the Board of Governors, and the 

11 Board of Governors is authorized, to conduct an ex12 amination of the nonbank financial company for the 

13 sole purpose of determining whether the nonbank fi14 nancial company should be supervised by the Board 

15 of Governors for purposes of this title. 

16 (5) CONFIDENTIALITY.— 

17 (A) IN GENERAL.—The Council, the Office 

18 of Financial Research, and the other member 

19 agencies shall maintain the confidentiality of 

20 any data, information, and reports submitted 

21 under this subsection and subtitle B. 

22 (B) RETENTION OF PRIVILEGE.—The sub23 mission of any nonpublicly available data or in24 formation under this subsection and subtitle B 

25 shall not constitute a waiver of, or otherwise af-
33 

† HR 4173 EAS 

1 fect, any privilege arising under Federal or State 

2 law (including the rules of any Federal or State 

3 court) to which the data or information is other4 wise subject. 

5 (C) FREEDOM OF INFORMATION ACT.—Sec6 tion 552 of title 5, United States Code, including 

7 the exceptions thereunder, shall apply to any 

8 data or information submitted under this sub9 section and subtitle B. 

10 SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG11 ULATION OF CERTAIN NONBANK FINANCIAL 

12 COMPANIES. 

13 (a) U.S. NONBANK FINANCIAL COMPANIES SUPER14 VISED BY THE BOARD OF GOVERNORS.— 

15 (1) DETERMINATION.—The Council, on a nondelegable basis and by a vote of not fewer than 2 16 ⁄3 of 

17 the members then serving, including an affirmative 

18 vote by the Chairperson, may determine that a U.S. 

19 nonbank financial company shall be supervised by the 

20 Board of Governors and shall be subject to prudential 

21 standards, in accordance with this title, if the Council 

22 determines that material financial distress at the 

23 U.S. nonbank financial company would pose a threat 

24 to the financial stability of the United States. 
34 

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1 (2) CONSIDERATIONS.—Each determination 

2 under paragraph (1) shall be based on a consider3 ation by the Council of— 

4 (A) the degree of leverage of the company; 

5 (B) the amount and nature of the financial 

6 assets of the company; 

7 (C) the amount and types of the liabilities 

8 of the company, including the degree of reliance 

9 on short-term funding; 

10 (D) the extent and types of the off-balance11 sheet exposures of the company; 

12 (E) the extent and types of the transactions 

13 and relationships of the company with other sig14 nificant nonbank financial companies and sig15 nificant bank holding companies; 

16 (F) the importance of the company as a 

17 source of credit for households, businesses, and 

18 State and local governments and as a source of 

19 liquidity for the United States financial system; 

20 (G) the recommendation, if any, of a mem21 ber of the Council; 

22 (H) the operation of, or ownership interest 

23 in, any clearing, settlement, or payment business 

24 of the company; 

25 (I) the extent to which— 
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1 (i) assets are managed rather than 

2 owned by the company; and 

3 (ii) ownership of assets under manage4 ment is diffuse; and 

5 (J) any other factors that the Council deems 

6 appropriate. 

7 (b) FOREIGN NONBANK FINANCIAL COMPANIES SU8 PERVISED BY THE BOARD OF GOVERNORS.— 

9 (1) DETERMINATION.—The Council, on a nondelegable basis and by a vote of not fewer than 2 10 ⁄3 of 

11 the members then serving, including an affirmative 

12 vote by the Chairperson, may determine that a for13 eign nonbank financial company that has substantial 

14 assets or operations in the United States shall be su15 pervised by the Board of Governors and shall be sub16 ject to prudential standards in accordance with this 

17 title, if the Council determines that material financial 

18 distress at the foreign nonbank financial company 

19 would pose a threat to the financial stability of the 

20 United States. 

21 (2) CONSIDERATIONS.—Each determination 

22 under paragraph (1) shall be based on a consider23 ation by the Council of— 

24 (A) the degree of leverage of the company; 
36 

† HR 4173 EAS 

1 (B) the amount and nature of the United 

2 States financial assets of the company; 

3 (C) the amount and types of the liabilities 

4 of the company used to fund activities and oper5 ations in the United States, including the degree 

6 of reliance on short-term funding; 

7 (D) the extent of the United States-related 

8 off-balance-sheet exposure of the company; 

9 (E) the extent and type of the transactions 

10 and relationships of the company with other sig11 nificant nonbank financial companies and bank 

12 holding companies; 

13 (F) the importance of the company as a 

14 source of credit for United States households, 

15 businesses, and State and local governments, and 

16 as a source of liquidity for the United States fi17 nancial system; 

18 (G) the recommendation, if any, of a mem19 ber of the Council; 

20 (H) the extent to which— 

21 (i) assets are managed rather than 

22 owned by the company; and 

23 (ii) ownership of assets under manage24 ment is diffuse; and 
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1 (I) any other factors that the Council deems 

2 appropriate. 

3 (c) ANTI-EVASION.— 

4 (1) DETERMINATIONS.—In order to avoid eva5 sion of this Act, the Council, on its own initiative or 

6 at the request of the Board of Governors, may deter7 mine, on a nondelegable basis and by a vote of not 

fewer than 2 8 ⁄3 of the members then serving, including 

9 an affirmative vote by the Chairperson, that— 

10 (A) material financial distress related to fi11 nancial activities conducted directly or indi12 rectly by a company incorporated or organized 

13 under the laws of the United States or any State 

14 or the financial activities in the United States of 

15 a company incorporated or organized in a coun16 try other than the United States would pose a 

17 threat to the financial stability of the United 

18 States based on consideration of the factors in 

19 subsection (b)(2); 

20 (B) the company is organized or operates in 

21 such a manner as to evade the application of 

22 this title; 

23 (C) such financial activities of the company 

24 shall be supervised by the Board of Governors 

25 and subject to prudential standards in accord-
38 

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1 ance with this title consistent with paragraph 

2 (2); and 

3 (D) upon making a determination under 

4 subsection (c)(1), the Council shall submit a re5 port to the appropriate committees of Congress 

6 detailing the reasons for making such determina7 tion under this subsection. 

8 (2) Consolidated supervision of only financial 

9 activities; Establishment of an intermediate holding 

10 company. 

11 (A) ESTABLISHMENT OF AN INTERMEDIATE

12 HOLDING COMPANY.—Upon a determination 

13 under paragraph (1), the company may establish 

14 an intermediate holding company in which the 

15 financial activities of such company and its sub16 sidiaries will be conducted (other than the activi17 ties described in section 167(b)(2) in compliance 

18 with any regulations or guidance provided by 

19 the Board of Governors). Such intermediate hold20 ing company shall be subject to the supervision 

21 of the Board of Governors and to prudential 

22 standards under this title as if the intermediate 

23 holding company is a nonbank financial com24 pany supervised by the Board of Governors. 
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1 (B) ACTION OF THE BOARD OF GOV2 ERNORS.—To facilitate the supervision of the fi3 nancial activities subject to the determination in 

4 paragraph (1), the Board of Governors may re5 quire a company to establish an intermediate 

6 holding company, as provided for in section 167, 

7 which would be subject to the supervision of the 

8 Board of Governors and to prudential standards 

9 under this title as if the intermediate holding 

10 company is a nonbank financial company super11 vised by the Board of Governors. 

12 (3) NOTICE AND OPPORTUNITY FOR HEARING

13 AND FINAL DETERMINATION; JUDICIAL REVIEW.—Sub14 sections (d), (f), and (g) shall apply to determinations 

15 made by the Council pursuant to paragraph (1) in 

16 the same manner as such subsections apply to 

17 nonbank financial companies. 

18 (4) COVERED FINANCIAL ACTIVITIES.—For pur19 poses of this subsection, the term ‘‘financial activi20 ties’’ means activities that are financial in nature (as 

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

22 Act of 1956) and include the ownership or control of 

23 one or more insured depository institutions and shall 

24 not include internal financial activities conducted for 

25 the company or any affiliates thereof including inter-
40 

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1 nal treasury, investment, and employee benefit func2 tions. 

3 (5) ONLY FINANCIAL ACTIVITIES SUBJECT TO

4 PRUDENTIAL SUPERVISION.—Nonfinancial activities 

5 of the company shall not be subject to supervision by 

6 the Board of Governors and prudential standards of 

7 the Board. For purposes of this Act, the financial ac8 tivities that are the subject of the determination in 

9 paragraph (1) shall be subject to the same require10 ments as a nonbank financial company. Nothing in 

11 this paragraph shall prohibit or limit the authority 

12 of the Board of Governors to apply prudential stand13 ards under this title to the financial activities that 

14 are subject to the determination in paragraph (1). 

15 (d) REEVALUATION AND RESCISSION.—The Council 

16 shall— 

17 (1) not less frequently than annually, reevaluate 

18 each determination made under subsections (a) and 

19 (b) with respect to each nonbank financial company 

20 supervised by the Board of Governors; and 

21 (2) rescind any such determination, if the Council, by a vote of not fewer than 2 22 ⁄3 of the members then 

23 serving, including an affirmative vote by the Chair24 person, determines that the nonbank financial com-
41 

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1 pany no longer meets the standards under subsection 

2 (a) or (b), as applicable. 

3 (e) NOTICE AND OPPORTUNITY FOR HEARING AND

4 FINAL DETERMINATION.— 

5 (1) IN GENERAL.—The Council shall provide to 

6 a nonbank financial company written notice of a pro7 posed determination of the Council, including an ex8 planation of the basis of the proposed determination 

9 of the Council, that such nonbank financial company 

10 shall be supervised by the Board of Governors and 

11 shall be subject to prudential standards in accordance 

12 with this title. 

13 (2) HEARING.—Not later than 30 days after the 

14 date of receipt of any notice of a proposed determina15 tion under paragraph (1), the nonbank financial 

16 company may request, in writing, an opportunity for 

17 a written or oral hearing before the Council to contest 

18 the proposed determination. Upon receipt of a timely 

19 request, the Council shall fix a time (not later than 

20 30 days after the date of receipt of the request) and 

21 place at which such company may appear, personally 

22 or through counsel, to submit written materials (or, 

23 at the sole discretion of the Council, oral testimony 

24 and oral argument). 
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1 (3) FINAL DETERMINATION.—Not later than 60 

2 days after the date of a hearing under paragraph (2), 

3 the Council shall notify the nonbank financial com4 pany of the final determination of the Council, which 

5 shall contain a statement of the basis for the decision 

6 of the Council. 

7 (4) NO HEARING REQUESTED.—If a nonbank fi8 nancial company does not make a timely request for 

9 a hearing, the Council shall notify the nonbank finan10 cial company, in writing, of the final determination 

11 of the Council under subsection (a) or (b), as applica12 ble, not later than 10 days after the date by which the 

13 company may request a hearing under paragraph 

14 (2). 

15 (f) EMERGENCY EXCEPTION.— 

16 (1) IN GENERAL.—The Council may waive or 

17 modify the requirements of subsection (d) with respect 

18 to a nonbank financial company, if the Council determines, by a vote of not fewer than 2 19 ⁄3 of the members 

20 then serving, including an affirmative vote by the 

21 Chairperson, that such waiver or modification is nec22 essary or appropriate to prevent or mitigate threats 

23 posed by the nonbank financial company to the finan24 cial stability of the United States. 
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1 (2) NOTICE.—The Council shall provide notice of 

2 a waiver or modification under this paragraph to the 

3 nonbank financial company concerned as soon as 

4 practicable, but not later than 24 hours after the 

5 waiver or modification is granted. 

6 (3) OPPORTUNITY FOR HEARING.—The Council 

7 shall allow a nonbank financial company to request, 

8 in writing, an opportunity for a written or oral hear9 ing before the Council to contest a waiver or modi10 fication under this paragraph, not later than 10 days 

11 after the date of receipt of notice of the waiver or 

12 modification by the company. Upon receipt of a time13 ly request, the Council shall fix a time (not later than 

14 15 days after the date of receipt of the request) and 

15 place at which the nonbank financial company may 

16 appear, personally or through counsel, to submit writ17 ten materials (or, at the sole discretion of the Council, 

18 oral testimony and oral argument). 

19 (4) NOTICE OF FINAL DETERMINATION.—Not 

20 later than 30 days after the date of any hearing 

21 under paragraph (3), the Council shall notify the sub22 ject nonbank financial company of the final deter23 mination of the Council under this paragraph, which 

24 shall contain a statement of the basis for the decision 

25 of the Council. 
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1 (g) CONSULTATION.—The Council shall consult with 

2 the primary financial regulatory agency, if any, for each 

3 nonbank financial company or subsidiary of a nonbank fi4 nancial company that is being considered for supervision 

5 by the Board of Governors under this section before the 

6 Council makes any final determination with respect to such 

7 nonbank financial company under subsection (a), (b), or 

8 (c). 

9 (h) JUDICIAL REVIEW.—If the Council makes a final 

10 determination under this section with respect to a nonbank 

11 financial company, such nonbank financial company may, 

12 not later than 30 days after the date of receipt of the notice 

13 of final determination under subsection (d)(3) or (e)(4), 

14 bring an action in the United States district court for the 

15 judicial district in which the home office of such nonbank 

16 financial company is located, or in the United States Dis17 trict Court for the District of Columbia, for an order requir18 ing that the final determination be rescinded, and the court 

19 shall, upon review, dismiss such action or direct the final 

20 determination to be rescinded. Review of such an action 

21 shall be limited to whether the final determination made 

22 under this section was arbitrary and capricious. 
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1 SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA2 NIES SUPERVISED BY THE BOARD OF GOV3 ERNORS. 

4 Not later than 180 days after the date of a final Coun5 cil determination under section 113 that a nonbank finan6 cial company is to be supervised by the Board of Governors, 

7 such company shall register with the Board of Governors, 

8 on forms prescribed by the Board of Governors, which shall 

9 include such information as the Board of Governors, in con10 sultation with the Council, may deem necessary or appro11 priate to carry out this title. 

12 SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL 

13 STANDARDS FOR NONBANK FINANCIAL COM14 PANIES SUPERVISED BY THE BOARD OF GOV15 ERNORS AND CERTAIN BANK HOLDING COM16 PANIES. 

17 (a) IN GENERAL.— 

18 (1) PURPOSE.—In order to prevent or mitigate 

19 risks to the financial stability of the United States 

20 that could arise from the material financial distress 

21 or failure of large, interconnected financial institu22 tions, the Council may make recommendations to the 

23 Board of Governors concerning the establishment and 

24 refinement of prudential standards and reporting and 

25 disclosure requirements applicable to nonbank finan26 cial companies supervised by the Board of Governors 
46 

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1 and large, interconnected bank holding companies, 

2 that— 

3 (A) are more stringent than those applicable 

4 to other nonbank financial companies and bank 

5 holding companies that do not present similar 

6 risks to the financial stability of the United 

7 States; and 

8 (B) increase in stringency, based on the 

9 considerations identified in subsection (b)(3). 

10 (2) LIMITATION ON BANK HOLDING COMPA11 NIES.—Any standards recommended under sub12 sections (b) through (f) shall not apply to any bank 

13 holding company with total consolidated assets of less 

14 than $50,000,000,000. The Council may recommend 

15 an asset threshold greater than $50,000,000,000 for 

16 the applicability of any particular standard under 

17 those subsections. 

18 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

19 (1) IN GENERAL.—The recommendations of the 

20 Council under subsection (a) may include— 

21 (A) risk-based capital requirements; 

22 (B) leverage limits; 

23 (C) liquidity requirements; 

24 (D) resolution plan and credit exposure re25 port requirements; 
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1 (E) concentration limits; 

2 (F) a contingent capital requirement; 

3 (G) enhanced public disclosures; and 

4 (H) overall risk management requirements. 

5 (2) PRUDENTIAL STANDARDS FOR FOREIGN FI6 NANCIAL COMPANIES.—In making recommendations 

7 concerning the standards set forth in paragraph (1) 

8 that would apply to foreign nonbank financial com9 panies supervised by the Board of Governors or for10 eign-based bank holding companies, the Council shall 

11 give due regard to the principle of national treatment 

12 and competitive equity. 

13 (3) CONSIDERATIONS.—In making recommenda14 tions concerning prudential standards under para15 graph (1), the Council shall— 

16 (A) take into account differences among 

17 nonbank financial companies supervised by the 

18 Board of Governors and bank holding companies 

19 described in subsection (a), based on— 

20 (i) the factors described in subsections 

21 (a) and (b) of section 113; 

22 (ii) whether the company owns an in23 sured depository institution; 

24 (iii) nonfinancial activities and affili25 ations of the company; and 
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1 (iv) any other factors that the Council 

2 determines appropriate; and 

3 (B) to the extent possible, ensure that small 

4 changes in the factors listed in subsections (a) 

5 and (b) of section 113 would not result in sharp, 

6 discontinuous changes in the prudential stand7 ards established under paragraph (1). 

8 (c) CONTINGENT CAPITAL.— 

9 (1) STUDY REQUIRED.—The Council shall con10 duct a study of the feasibility, benefits, costs, and 

11 structure of a contingent capital requirement for 

12 nonbank financial companies supervised by the Board 

13 of Governors and bank holding companies described 

14 in subsection (a), which study shall include— 

15 (A) an evaluation of the degree to which 

16 such requirement would enhance the safety and 

17 soundness of companies subject to the require18 ment, promote the financial stability of the 

19 United States, and reduce risks to United States 

20 taxpayers; 

21 (B) an evaluation of the characteristics and 

22 amounts of convertible debt that should be re23 quired; 

24 (C) an analysis of potential prudential 

25 standards that should be used to determine 
49 

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1 whether the contingent capital of a company 

2 would be converted to equity in times of finan3 cial stress; 

4 (D) an evaluation of the costs to companies, 

5 the effects on the structure and operation of cred6 it and other financial markets, and other eco7 nomic effects of requiring contingent capital; 

8 (E) an evaluation of the effects of such re9 quirement on the international competitiveness 

10 of companies subject to the requirement and the 

11 prospects for international coordination in estab12 lishing such requirement; and 

13 (F) recommendations for implementing reg14 ulations. 

15 (2) REPORT.—The Council shall submit a report 

16 to Congress regarding the study required by para17 graph (1) not later than 2 years after the date of en18 actment of this Act. 

19 (3) RECOMMENDATIONS.— 

20 (A) IN GENERAL.—Subsequent to submit21 ting a report to Congress under paragraph (2), 

22 the Council may make recommendations to the 

23 Board of Governors to require any nonbank fi24 nancial company supervised by the Board of 

25 Governors and any bank holding company de-
50 

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1 scribed in subsection (a) to maintain a min2 imum amount of long-term hybrid debt that is 

3 convertible to equity in times of financial stress. 

4 (B) FACTORS TO CONSIDER.—In making 

5 recommendations under this subsection, the 

6 Council shall consider— 

7 (i) an appropriate transition period 

8 for implementation of a conversion under 

9 this subsection; 

10 (ii) the factors described in subsection 

11 (b)(3); 

12 (iii) capital requirements applicable to 

13 a nonbank financial company supervised by 

14 the Board of Governors or a bank holding 

15 company described in subsection (a), and 

16 subsidiaries thereof; 

17 (iv) results of the study required by 

18 paragraph (1); and 

19 (v) any other factor that the Council 

20 deems appropriate. 

21 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE22 PORTS.— 

23 (1) RESOLUTION PLAN.—The Council may make 

24 recommendations to the Board of Governors con25 cerning the requirement that each nonbank financial 
51 

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1 company supervised by the Board of Governors and 

2 each bank holding company described in subsection 

3 (a) report periodically to the Council, the Board of 

4 Governors, and the Corporation, the plan of such 

5 company for rapid and orderly resolution in the event 

6 of material financial distress or failure. 

7 (2) CREDIT EXPOSURE REPORT.—The Council 

8 may make recommendations to the Board of Gov9 ernors concerning the advisability of requiring each 

10 nonbank financial company supervised by the Board 

11 of Governors and bank holding company described in 

12 subsection (a) to report periodically to the Council, 

13 the Board of Governors, and the Corporation on— 

14 (A) the nature and extent to which the com15 pany has credit exposure to other significant 

16 nonbank financial companies and significant 

17 bank holding companies; and 

18 (B) the nature and extent to which other 

19 such significant nonbank financial companies 

20 and significant bank holding companies have 

21 credit exposure to that company. 

22 (e) CONCENTRATION LIMITS.—In order to limit the 

23 risks that the failure of any individual company could pose 

24 to nonbank financial companies supervised by the Board 

25 of Governors or bank holding companies described in sub-
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1 section (a), the Council may make recommendations to the 

2 Board of Governors to prescribe standards to limit such 

3 risks, as set forth in section 165. 

4 (f) ENHANCED PUBLIC DISCLOSURES.—The Council 

5 may make recommendations to the Board of Governors to 

6 require periodic public disclosures by bank holding compa7 nies described in subsection (a) and by nonbank financial 

8 companies supervised by the Board of Governors, in order 

9 to support market evaluation of the risk profile, capital ade10 quacy, and risk management capabilities thereof. 

11 SEC. 116. REPORTS. 

12 (a) IN GENERAL.—Subject to subsection (b), the Coun13 cil, acting through the Office of Financial Research, may 

14 require a bank holding company with total consolidated as15 sets of $50,000,000,000 or greater or a nonbank financial 

16 company supervised by the Board of Governors, and any 

17 subsidiary thereof, to submit certified reports to keep the 

18 Council informed as to— 

19 (1) the financial condition of the company; 

20 (2) systems for monitoring and controlling fi21 nancial, operating, and other risks; 

22 (3) transactions with any subsidiary that is a 

23 depository institution; and 

24 (4) the extent to which the activities and oper25 ations of the company and any subsidiary thereof, 
53 

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1 could, under adverse circumstances, have the potential 

2 to disrupt financial markets or affect the overall fi3 nancial stability of the United States. 

4 (b) USE OF EXISTING REPORTS.— 

5 (1) IN GENERAL.—For purposes of compliance 

6 with subsection (a), the Council, acting through the 

7 Office of Financial Research, shall, to the fullest ex8 tent possible, use— 

9 (A) reports that a bank holding company, 

10 nonbank financial company supervised by the 

11 Board of Governors, or any functionally regu12 lated subsidiary of such company has been re13 quired to provide to other Federal or State regu14 latory agencies; 

15 (B) information that is otherwise required 

16 to be reported publicly; and 

17 (C) externally audited financial statements. 

18 (2) AVAILABILITY.—Each bank holding company 

19 described in subsection (a) and nonbank financial 

20 company supervised by the Board of Governors, and 

21 any subsidiary thereof, shall provide to the Council, 

22 at the request of the Council, copies of all reports re23 ferred to in paragraph (1). 

24 (3) CONFIDENTIALITY.—The Council shall main25 tain the confidentiality of the reports obtained under 
54 

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1 subsection (a) and paragraph (1)(A) of this sub2 section. 

3 SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT 

4 CEASE TO BE BANK HOLDING COMPANIES. 

5 (a) APPLICABILITY.—This section shall apply to any 

6 entity or a successor entity that— 

7 (1) was a bank holding company having total 

8 consolidated assets equal to or greater than 

9 $50,000,000,000 as of January 1, 2010; and 

10 (2) received financial assistance under or par11 ticipated in the Capital Purchase Program estab12 lished under the Troubled Asset Relief Program au13 thorized by the Emergency Economic Stabilization 

14 Act of 2008. 

15 (b) TREATMENT.—If an entity described in subsection 

16 (a) ceases to be a bank holding company at any time after 

17 January 1, 2010, then such entity shall be treated as a 

18 nonbank financial company supervised by the Board of 

19 Governors, as if the Council had made a determination 

20 under section 113 with respect to that entity. 

21 (c) APPEAL.— 

22 (1) REQUEST FOR HEARING.—An entity may re23 quest, in writing, an opportunity for a written or 

24 oral hearing before the Council to appeal its treat25 ment as a nonbank financial company supervised by 
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1 the Board of Governors in accordance with this sec2 tion. Upon receipt of the request, the Council shall fix 

3 a time (not later than 30 days after the date of re4 ceipt of the request) and place at which such entity 

5 may appear, personally or through counsel, to submit 

6 written materials (or, at the sole discretion of the 

7 Council, oral testimony and oral argument). 

8 (2) DECISION.— 

9 (A) PROPOSED DECISION.—Not later than 

10 60 days after the date of a hearing under para11 graph (1), the Council shall submit a report to, 

12 and may testify before, the Committee on Bank13 ing, Housing, and Urban Affairs of the Senate 

14 and the Committee on Financial Services of the 

15 House of Representatives on the proposed deci16 sion of the Council regarding an appeal under 

17 paragraph (1), which report shall include a 

18 statement of the basis for the proposed decision 

19 of the Council. 

20 (B) NOTICE OF FINAL DECISION.—The 

21 Council shall notify the subject entity of the final 

22 decision of the Council regarding an appeal 

23 under paragraph (1), which notice shall contain 

24 a statement of the basis for the final decision of 
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1 the Council, not later than 60 days after the 

2 later of— 

3 (i) the date of the submission of the re4 port under subparagraph (A); or 

5 (ii) if the Committee on Banking, 

6 Housing, and Urban Affairs of the Senate 

7 or the Committee on Financial Services of 

8 the House of Representatives holds one or 

9 more hearings regarding such report, the 

10 date of the last such hearing. 

11 (C) CONSIDERATIONS.—In making a deci12 sion regarding an appeal under paragraph (1), 

13 the Council shall consider whether the company 

14 meets the standards under section 113(a) or 

15 113(b), as applicable, and the definition of the 

16 term ‘‘nonbank financial company’’ under sec17 tion 102. The decision of the Council shall be 

18 final, subject to the review under paragraph (3). 

19 (3) REVIEW.—If the Council denies an appeal 

20 under this subsection, the Council shall, not less fre21 quently than annually, review and reevaluate the de22 cision. 

23 SEC. 118. COUNCIL FUNDING. 

24 Any expenses of the Council shall be treated as expenses 

25 of, and paid by, the Office of Financial Research. 
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1 SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL 

2 DISPUTES AMONG MEMBER AGENCIES. 

3 (a) REQUEST FOR DISPUTE RESOLUTION.—The Coun4 cil shall resolve a dispute among 2 or more member agen5 cies, if— 

6 (1) a member agency has a dispute with another 

7 member agency about the respective jurisdiction over 

8 a particular bank holding company, nonbank finan9 cial company, or financial activity or product (ex10 cluding matters for which another dispute mechanism 

11 specifically has been provided under Federal law); 

12 (2) the Council determines that the disputing 

13 agencies cannot, after a demonstrated good faith ef14 fort, resolve the dispute without the intervention of the 

15 Council; and 

16 (3) any of the member agencies involved in the 

17 dispute— 

18 (A) provides all other disputants prior no19 tice of the intent to request dispute resolution by 

20 the Council; and 

21 (B) requests in writing, not earlier than 14 

22 days after providing the notice described in sub23 paragraph (A), that the Council resolve the dis24 pute. 

25 (b) COUNCIL DECISION.—The Council shall resolve 

26 each dispute described in subsection (a)— 
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1 (1) within a reasonable time after receiving the 

2 dispute resolution request; 

3 (2) after consideration of relevant information 

4 provided by each agency party to the dispute; and 

5 (3) by agreeing with 1 of the disputants regard6 ing the entirety of the matter, or by determining a 

7 compromise position. 

8 (c) FORM AND BINDING EFFECT.—A Council decision 

9 under this section shall— 

10 (1) be in writing; 

11 (2) include an explanation of the reasons there12 for; and 

13 (3) be binding on all Federal agencies that are 

14 parties to the dispute. 

15 SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVI16 TIES OR PRACTICES FOR FINANCIAL STA17 BILITY PURPOSES. 

18 (a) IN GENERAL.—The Council may issue rec19 ommendations to the primary financial regulatory agencies 

20 to apply new or heightened standards and safeguards, in21 cluding standards enumerated in section 115, for a finan22 cial activity or practice conducted by bank holding compa23 nies or nonbank financial companies under their respective 

24 jurisdictions, if the Council determines that the conduct of 

25 such activity or practice could create or increase the risk 
59 

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1 of significant liquidity, credit, or other problems spreading 

2 among bank holding companies and nonbank financial 

3 companies or the financial markets of the United States. 

4 (b) PROCEDURE FOR RECOMMENDATIONS TO REGU5 LATORS.— 

6 (1) NOTICE AND OPPORTUNITY FOR COMMENT.— 

7 The Council shall consult with the primary financial 

8 regulatory agencies and provide notice to the public 

9 and opportunity for comment for any proposed rec10 ommendation that the primary financial regulatory 

11 agencies apply new or heightened standards and safe12 guards for a financial activity or practice. 

13 (2) CRITERIA.—The new or heightened standards 

14 and safeguards for a financial activity or practice 

15 recommended under paragraph (1)— 

16 (A) shall take costs to long-term economic 

17 growth into account; and 

18 (B) may include prescribing the conduct of 

19 the activity or practice in specific ways (such as 

20 by limiting its scope, or applying particular 

21 capital or risk management requirements to the 

22 conduct of the activity) or prohibiting the activ23 ity or practice. 

24 (c) IMPLEMENTATION OF RECOMMENDED STAND25 ARDS.— 
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1 (1) ROLE OF PRIMARY FINANCIAL REGULATORY

2 AGENCY.— 

3 (A) IN GENERAL.—Each primary financial 

4 regulatory agency may impose, require reports 

5 regarding, examine for compliance with, and en6 force standards in accordance with this section 

7 with respect to those entities for which it is the 

8 primary financial regulatory agency. 

9 (B) RULE OF CONSTRUCTION.—The author10 ity under this paragraph is in addition to, and 

11 does not limit, any other authority of a primary 

12 financial regulatory agency. Compliance by an 

13 entity with actions taken by a primary financial 

14 regulatory agency under this section shall be en15 forceable in accordance with the statutes gov16 erning the respective jurisdiction of the primary 

17 financial regulatory agency over the entity, as if 

18 the agency action were taken under those stat19 utes. 

20 (2) IMPOSITION OF STANDARDS.—The primary 

21 financial regulatory agency shall impose the stand22 ards recommended by the Council in accordance with 

23 subsection (a), or similar standards that the Council 

24 deems acceptable, or shall explain in writing to the 

25 Council, not later than 90 days after the date on 
61 

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1 which the Council issues the recommendation, why the 

2 agency has determined not to follow the recommenda3 tion of the Council. 

4 (d) REPORT TO CONGRESS.—The Council shall report 

5 to Congress on— 

6 (1) any recommendations issued by the Council 

7 under this section; 

8 (2) the implementation of, or failure to imple9 ment such recommendation on the part of a primary 

10 financial regulatory agency; and 

11 (3) in any case in which no primary financial 

12 regulatory agency exists for the nonbank financial 

13 company conducting financial activities or practices 

14 referred to in subsection (a), recommendations for leg15 islation that would prevent such activities or prac16 tices from threatening the stability of the financial 

17 system of the United States. 

18 (e) EFFECT OF RESCISSION OF IDENTIFICATION.— 

19 (1) NOTICE.—The Council may recommend to 

20 the relevant primary financial regulatory agency that 

21 a financial activity or practice no longer requires any 

22 standards or safeguards implemented under this sec23 tion. 

24 (2) DETERMINATION OF PRIMARY FINANCIAL

25 REGULATORY AGENCY TO CONTINUE.— 
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1 (A) IN GENERAL.—Upon receipt of a rec2 ommendation under paragraph (1), a primary 

3 financial regulatory agency that has imposed 

4 standards under this section shall determine 

5 whether standards that it has imposed under this 

6 section should remain in effect. 

7 (B) APPEAL PROCESS.—Each primary fi8 nancial regulatory agency that has imposed 

9 standards under this section shall promulgate 

10 regulations to establish a procedure under which 

11 entities under its jurisdiction may appeal a de12 termination by such agency under this para13 graph that standards imposed under this section 

14 should remain in effect. 

15 SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY. 

16 (a) MITIGATORY ACTIONS.—If the Board of Governors 

17 determines that a bank holding company with total consoli18 dated assets of $50,000,000,000 or more, or a nonbank fi19 nancial company supervised by the Board of Governors, 

20 poses a grave threat to the financial stability of the United 

21 States, the Board of Governors, upon an affirmative vote 

of not fewer than 2 22 ⁄3 of the Council members then serving, 

23 shall require the subject company— 

24 (1) to terminate one or more activities; 
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1 (2) to impose conditions on the manner in which 

2 the company conducts one or more activities; or 

3 (3) if the Board of Governors determines that 

4 such action is inadequate to mitigate a threat to the 

5 financial stability of the United States in its rec6 ommendation, to sell or otherwise transfer assets or 

7 off-balance-sheet items to unaffiliated entities. 

8 (b) NOTICE AND HEARING.— 

9 (1) IN GENERAL.—The Board of Governors, in 

10 consultation with the Council, shall provide to a com11 pany described in subsection (a) written notice that 

12 such company is being considered for mitigatory ac13 tion pursuant to this section, including an expla14 nation of the basis for, and description of, the pro15 posed mitigatory action. 

16 (2) HEARING.—Not later than 30 days after the 

17 date of receipt of notice under paragraph (1), the 

18 company may request, in writing, an opportunity for 

19 a written or oral hearing before the Board of Gov20 ernors to contest the proposed mitigatory action. 

21 Upon receipt of a timely request, the Board of Gov22 ernors shall fix a time (not later than 30 days after 

23 the date of receipt of the request) and place at which 

24 such company may appear, personally or through 

25 counsel, to submit written materials (or, at the discre-
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1 tion of the Board of Governors, in consultation with 

2 the Council, oral testimony and oral argument). 

3 (3) DECISION.—Not later than 60 days after the 

4 date of a hearing under paragraph (2), or not later 

5 than 60 days after the provision of a notice under 

6 paragraph (1) if no hearing was held, the Board of 

7 Governors shall notify the company of the final deci8 sion of the Board of Governors, including the results 

9 of the vote of the Council, as described in subsection 

10 (a). 

11 (c) FACTORS FOR CONSIDERATION.—The Board of 

12 Governors and the Council shall take into consideration the 

13 factors set forth in subsection (a) or (b) of section 113, as 

14 applicable, in a determination described in subsection (a) 

15 and in a decision described in subsection (b). 

16 (d) APPLICATION TO FOREIGN FINANCIAL COMPA17 NIES.—The Board of Governors may prescribe regulations 

18 regarding the application of this section to foreign nonbank 

19 financial companies supervised by the Board of Governors 

20 and foreign-based bank holding companies, giving due re21 gard to the principle of national treatment and competitive 

22 equity. 
65 

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1 Subtitle B—Office of Financial 

2 Research 

3 SEC. 151. DEFINITIONS. 

4 For purposes of this subtitle— 

5 (1) the terms ‘‘Office’’ and ‘‘Director’’ mean the 

6 Office of Financial Research established under this 

7 subtitle and the Director thereof, respectively; 

8 (2) the term ‘‘financial company’’ has the same 

9 meaning as in title II, and includes an insured de10 pository institution and an insurance company; 

11 (3) the term ‘‘Data Center’’ means the data cen12 ter established under section 154; 

13 (4) the term ‘‘Research and Analysis Center’’ 

14 means the research and analysis center established 

15 under section 154; 

16 (5) the term ‘‘financial transaction data’’ means 

17 the structure and legal description of a financial con18 tract, with sufficient detail to describe the rights and 

19 obligations between counterparties and make possible 

20 an independent valuation; 

21 (6) the term ‘‘position data’’— 

22 (A) means data on financial assets or li23 abilities held on the balance sheet of a financial 

24 company, where positions are created or changed 

25 by the execution of a financial transaction; and 
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1 (B) includes information that identifies 

2 counterparties, the valuation by the financial 

3 company of the position, and information that 

4 makes possible an independent valuation of the 

5 position; 

6 (7) the term ‘‘financial contract’’ means a legally 

7 binding agreement between 2 or more counterparties, 

8 describing rights and obligations relating to the fu9 ture delivery of items of intrinsic or extrinsic value 

10 among the counterparties; and 

11 (8) the term ‘‘financial instrument’’ means a fi12 nancial contract in which the terms and conditions 

13 are publicly available, and the roles of one or more 

14 of the counterparties are assignable without the con15 sent of any of the other counterparties (including 

16 common stock of a publicly traded company, govern17 ment bonds, or exchange traded futures and options 

18 contracts). 

19 SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED. 

20 (a) ESTABLISHMENT.—There is established within the 

21 Department of the Treasury the Office of Financial Re22 search. 

23 (b) DIRECTOR.— 
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1 (1) IN GENERAL.—The Office shall be headed by 

2 a Director, who shall be appointed by the President, 

3 by and with the advice and consent of the Senate. 

4 (2) TERM OF SERVICE.—The Director shall serve 

5 for a term of 6 years, except that, in the event that 

6 a successor is not nominated and confirmed by the 

7 end of the term of service of a Director, the Director 

8 may continue to serve until such time as the next Di9 rector is appointed and confirmed. 

10 (3) EXECUTIVE LEVEL.—The Director shall be 

11 compensated at level III of the Executive Schedule. 

12 (4) PROHIBITION ON DUAL SERVICE.—The indi13 vidual serving in the position of Director may not, 

14 during such service, also serve as the head of any fi15 nancial regulatory agency. 

16 (5) RESPONSIBILITIES, DUTIES, AND AUTHOR17 ITY.—The Director shall have sole discretion in the 

18 manner in which the Director fulfills the responsibil19 ities and duties and exercises the authorities described 

20 in this subtitle. 

21 (c) BUDGET.—The Director, in consultation with the 

22 Chairperson, shall establish the annual budget of the Office. 

23 (d) OFFICE PERSONNEL.— 
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1 (1) IN GENERAL.—The Director, in consultation 

2 with the Chairperson, may fix the number of, and ap3 point and direct, all employees of the Office. 

4 (2) COMPENSATION.—The Director, in consulta5 tion with the Chairperson, shall fix, adjust, and ad6 minister the pay for all employees of the Office, with7 out regard to chapter 51 or subchapter III of chapter 

8 53 of title 5, United States Code, relating to classi9 fication of positions and General Schedule pay rates. 

10 (3) COMPARABILITY.—Section 1206(a) of the Fi11 nancial Institutions Reform, Recovery, and Enforce12 ment Act of 1989 (12 U.S.C. 1833b(a)) is amended— 

13 (A) by striking ‘‘Finance Board,’’ and in14 serting ‘‘Finance Board, the Office of Financial 

15 Research, and the Bureau of Consumer Finan16 cial Protection’’; and 

17 (B) by striking ‘‘and the Office of Thrift 

18 Supervision,’’. 

19 (e) ASSISTANCE FROM FEDERAL AGENCIES.—Any de20 partment or agency of the United States may provide to 

21 the Office and any special advisory, technical, or profes22 sional committees appointed by the Office, such services, 

23 funds, facilities, staff, and other support services as the Of24 fice may determine advisable. Any Federal Government em25 ployee may be detailed to the Office without reimbursement, 
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1 and such detail shall be without interruption or loss of civil 

2 service status or privilege. 

3 (f) PROCUREMENT OF TEMPORARY AND INTERMITTENT

4 SERVICES.—The Director may procure temporary and 

5 intermittent services under section 3109(b) of title 5, United 

6 States Code, at rates for individuals which do not exceed 

7 the daily equivalent of the annual rate of basic pay pre8 scribed for level V of the Executive Schedule under section 

9 5316 of such title. 

10 (g) CONTRACTING AND LEASING AUTHORITY.—Not11 withstanding the Federal Property and Administrative 

12 Services Act of 1949 (41 U.S.C. 251 et seq.) or any other 

13 provision of law, the Director may— 

14 (1) enter into and perform contracts, execute in15 struments, and acquire, in any lawful manner, such 

16 goods and services, or personal or real property (or 

17 property interest), as the Director deems necessary to 

18 carry out the duties and responsibilities of the Office; 

19 and 

20 (2) hold, maintain, sell, lease, or otherwise dis21 pose of the property (or property interest) acquired 

22 under paragraph (1). 

23 (h) NON-COMPETE.—The Director and any staff of the 

24 Office who has had access to the transaction or position 

25 data maintained by the Data Center or other business con-
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1 fidential information about financial entities required to 

2 report to the Office, may not, for a period of 1 year after 

3 last having access to such transaction or position data or 

4 business confidential information, be employed by or pro5 vide advice or consulting services to a financial company, 

6 regardless of whether that entity is required to report to 

7 the Office. For staff whose access to business confidential 

8 information was limited, the Director may provide, on a 

9 case-by-case basis, for a shorter period of post-employment 

10 prohibition, provided that the shorter period does not com11 promise business confidential information. 

12 (i) TECHNICAL AND PROFESSIONAL ADVISORY COM13 MITTEES.—The Office, in consultation with the Chair14 person, may appoint such special advisory, technical, or 

15 professional committees as may be useful in carrying out 

16 the functions of the Office, and the members of such commit17 tees may be staff of the Office, or other persons, or both. 

18 (j) FELLOWSHIP PROGRAM.—The Office, in consulta19 tion with the Chairperson, may establish and maintain an 

20 academic and professional fellowship program, under which 

21 qualified academics and professionals shall be invited to 

22 spend not longer than 2 years at the Office, to perform re23 search and to provide advanced training for Office per24 sonnel. 
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1 (k) EXECUTIVE SCHEDULE COMPENSATION.—Section 

2 5314 of title 5, United States Code, is amended by adding 

3 at the end the following new item: 

4 ‘‘Director of the Office of Financial Research.’’. 

5 SEC. 153. PURPOSE AND DUTIES OF THE OFFICE. 

6 (a) PURPOSE AND DUTIES.—The purpose of the Office 

7 is to support the Council in fulfilling the purposes and du8 ties of the Council, as set forth in subtitle A, and to support 

9 member agencies, by— 

10 (1) collecting data on behalf of the Council, and 

11 providing such data to the Council and member agen12 cies; 

13 (2) standardizing the types and formats of data 

14 reported and collected; 

15 (3) performing applied research and essential 

16 long-term research; 

17 (4) developing tools for risk measurement and 

18 monitoring; 

19 (5) performing other related services; 

20 (6) making the results of the activities of the Of21 fice available to financial regulatory agencies; and 

22 (7) assisting such member agencies in deter23 mining the types and formats of data authorized by 

24 this Act to be collected by such member agencies. 

25 (b) ADMINISTRATIVE AUTHORITY.—The Office may— 
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1 (1) share data and information, including soft2 ware developed by the Office, with the Council and 

3 member agencies, which shared data, information, 

4 and software— 

5 (A) shall be maintained with at least the 

6 same level of security as is used by the Office; 

7 and 

8 (B) may not be shared with any individual 

9 or entity without the permission of the Council; 

10 (2) sponsor and conduct research projects; and 

11 (3) assist, on a reimbursable basis, with finan12 cial analyses undertaken at the request of other Fed13 eral agencies that are not member agencies. 

14 (c) RULEMAKING AUTHORITY.— 

15 (1) SCOPE.—The Office, in consultation with the 

16 Chairperson, shall issue rules, regulations, and orders 

17 only to the extent necessary to carry out the purposes 

18 and duties described in paragraphs (1), (2), and (7) 

19 of subsection (a). 

20 (2) STANDARDIZATION.—Member agencies, in 

21 consultation with the Office, shall implement regula22 tions promulgated by the Office under paragraph (1) 

23 to standardize the types and formats of data reported 

24 and collected on behalf of the Council, as described in 

25 subsection (a)(2). If a member agency fails to imple-
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1 ment such regulations prior to the expiration of the 

2 3-year period following the date of publication of 

3 final regulations, the Office, in consultation with the 

4 Chairperson, may implement such regulations with 

5 respect to the financial entities under the jurisdiction 

6 of the member agency. 

7 (d) TESTIMONY.— 

8 (1) IN GENERAL.—The Director of the Office 

9 shall report to and testify before the Committee on 

10 Banking, Housing, and Urban Affairs of the Senate 

11 and the Committee on Financial Services of the 

12 House of Representatives annually on the activities of 

13 the Office, including the work of the Data Center and 

14 the Research and Analysis Center, and the assessment 

15 of the Office of significant financial market develop16 ments and potential emerging threats to the financial 

17 stability of the United States. 

18 (2) NO PRIOR REVIEW.—No officer or agency of 

19 the United States shall have any authority to require 

20 the Director to submit the testimony required under 

21 paragraph (1) or other Congressional testimony to 

22 any officer or agency of the United States for ap23 proval, comment, or review prior to the submission of 

24 such testimony. Any such testimony to Congress shall 

25 include a statement that the views expressed therein 
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1 are those of the Director and do not necessarily rep2 resent the views of the President. 

3 (e) ADDITIONAL REPORTS.—The Director may provide 

4 additional reports to Congress concerning the financial sta5 bility of the United States. The Director shall notify the 

6 Council of any such additional reports provided to Con7 gress. 

8 (f) SUBPOENA.— 

9 (1) IN GENERAL.—The Director may require, by 

10 subpoena, the production of the data requested under 

11 subsection (a)(1) and section 154(b)(1), but only upon 

12 a written finding by the Director that— 

13 (A) such data is required to carry out the 

14 functions described under this subtitle; and 

15 (B) the Office has coordinated with such 

16 agency, as required under section 

17 154(b)(1)(B)(ii). 

18 (2) FORMAT.—Subpoenas under paragraph (1) 

19 shall bear the signature of the Director, and shall be 

20 served by any person or class of persons designated by 

21 the Director for that purpose. 

22 (3) ENFORCEMENT.—In the case of contumacy or 

23 failure to obey a subpoena, the subpoena shall be en24 forceable by order of any appropriate district court of 

25 the United States. Any failure to obey the order of the 
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1 court may be punished by the court as a contempt of 

2 court. 

3 SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBIL4 ITIES OF PRIMARY PROGRAMMATIC UNITS. 

5 (a) IN GENERAL.—There are established within the Of6 fice, to carry out the programmatic responsibilities of the 

7 Office— 

8 (1) the Data Center; and 

9 (2) the Research and Analysis Center. 

10 (b) DATA CENTER.— 

11 (1) GENERAL DUTIES.— 

12 (A) DATA COLLECTION.—The Data Center, 

13 on behalf of the Council, shall collect, validate, 

14 and maintain all data necessary to carry out the 

15 duties of the Data Center, as described in this 

16 subtitle. The data assembled shall be obtained 

17 from member agencies, commercial data pro18 viders, publicly available data sources, and fi19 nancial entities under subparagraph (B). 

20 (B) AUTHORITY.— 

21 (i) IN GENERAL.—The Office may, as 

22 determined by the Council or by the Direc23 tor in consultation with the Council, require 

24 the submission of periodic and other reports 

25 from any financial company for the pur-
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1 pose of assessing the extent to which a fi2 nancial activity or financial market in 

3 which the financial company participates, 

4 or the financial company itself, poses a 

5 threat to the financial stability of the 

6 United States. 

7 (ii) MITIGATION OF REPORT BUR8 DEN.—Before requiring the submission of a 

9 report from any financial company that is 

10 regulated by a member agency or any pri11 mary financial regulatory agency, the Of12 fice shall coordinate with such agencies and 

13 shall, whenever possible, rely on information 

14 available from such agencies. 

15 (C) RULEMAKING.—The Office shall pro16 mulgate regulations pursuant to subsections 

17 (a)(1), (a)(2), (a)(7), and (c)(1) of section 153 

18 regarding the type and scope of the data to be 

19 collected by the Data Center under this para20 graph. 

21 (2) RESPONSIBILITIES.— 

22 (A) PUBLICATION.—The Data Center shall 

23 prepare and publish, in a manner that is easily 

24 accessible to the public— 
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1 (i) a financial company reference 

2 database; 

3 (ii) a financial instrument reference 

4 database; and 

5 (iii) formats and standards for Office 

6 data, including standards for reporting fi7 nancial transaction and position data to 

8 the Office. 

9 (B) CONFIDENTIALITY.—The Data Center 

10 shall not publish any confidential data under 

11 subparagraph (A). 

12 (3) INFORMATION SECURITY.—The Director shall 

13 ensure that data collected and maintained by the 

14 Data Center are kept secure and protected against 

15 unauthorized disclosure. 

16 (4) CATALOG OF FINANCIAL ENTITIES AND IN17 STRUMENTS.—The Data Center shall maintain a 

18 catalog of the financial entities and instruments re19 ported to the Office. 

20 (5) AVAILABILITY TO THE COUNCIL AND MEMBER

21 AGENCIES.—The Data Center shall make data col22 lected and maintained by the Data Center available 

23 to the Council and member agencies, as necessary to 

24 support their regulatory responsibilities. 
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1 (6) OTHER AUTHORITY.—The Office shall, after 

2 consultation with the member agencies, provide cer3 tain data to financial industry participants and to 

4 the general public to increase market transparency 

5 and facilitate research on the financial system, to the 

6 extent that intellectual property rights are not vio7 lated, business confidential information is properly 

8 protected, and the sharing of such information poses 

9 no significant threats to the financial system of the 

10 United States. 

11 (c) RESEARCH AND ANALYSIS CENTER.— 

12 (1) GENERAL DUTIES.—The Research and Anal13 ysis Center, on behalf of the Council, shall develop 

14 and maintain independent analytical capabilities 

15 and computing resources— 

16 (A) to develop and maintain metrics and 

17 reporting systems for risks to the financial sta18 bility of the United States; 

19 (B) to monitor, investigate, and report on 

20 changes in system-wide risk levels and patterns 

21 to the Council and Congress; 

22 (C) to conduct, coordinate, and sponsor re23 search to support and improve regulation of fi24 nancial entities and markets; 
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1 (D) to evaluate and report on stress tests or 

2 other stability-related evaluations of financial 

3 entities overseen by the member agencies; 

4 (E) to maintain expertise in such areas as 

5 may be necessary to support specific requests for 

6 advice and assistance from financial regulators; 

7 (F) to investigate disruptions and failures 

8 in the financial markets, report findings, and 

9 make recommendations to the Council based on 

10 those findings; 

11 (G) to conduct studies and provide advice 

12 on the impact of policies related to systemic risk; 

13 and 

14 (H) to promote best practices for financial 

15 risk management. 

16 (d) REPORTING RESPONSIBILITIES.— 

17 (1) REQUIRED REPORTS.—Not later than 2 

18 years after the date of enactment of this Act, and not 

19 later than 120 days after the end of each fiscal year 

20 thereafter, the Office shall prepare and submit a re21 port to Congress. 

22 (2) CONTENT.—Each report required by this sub23 section shall assess the state of the United States fi24 nancial system, including— 
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1 (A) an analysis of any threats to the finan2 cial stability of the United States; 

3 (B) the status of the efforts of the Office in 

4 meeting the mission of the Office; and 

5 (C) key findings from the research and 

6 analysis of the financial system by the Office. 

7 SEC. 155. FUNDING. 

8 (a) FINANCIAL RESEARCH FUND.— 

9 (1) FUND ESTABLISHED.—There is established in 

10 the Treasury of the United States a separate fund to 

11 be known as the ‘‘Financial Research Fund’’. 

12 (2) FUND RECEIPTS.—All amounts provided to 

13 the Office under subsection (c), and all assessments 

14 that the Office receives under subsection (d) shall be 

15 deposited into the Financial Research Fund. 

16 (3) INVESTMENTS AUTHORIZED.— 

17 (A) AMOUNTS IN FUND MAY BE IN18 VESTED.—The Director may request the Sec19 retary to invest the portion of the Financial Re20 search Fund that is not, in the judgment of the 

21 Director, required to meet the needs of the Office. 

22 (B) ELIGIBLE INVESTMENTS.—Investments 

23 shall be made by the Secretary in obligations of 

24 the United States or obligations that are guaran25 teed as to principal and interest by the United 
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1 States, with maturities suitable to the needs of 

2 the Financial Research Fund, as determined by 

3 the Director. 

4 (4) INTEREST AND PROCEEDS CREDITED.—The 

5 interest on, and the proceeds from the sale or redemp6 tion of, any obligations held in the Financial Re7 search Fund shall be credited to and form a part of 

8 the Financial Research Fund. 

9 (b) USE OF FUNDS.— 

10 (1) IN GENERAL.—Funds obtained by, trans11 ferred to, or credited to the Financial Research Fund 

12 shall be immediately available to the Office, and shall 

13 remain available until expended, to pay the expenses 

14 of the Office in carrying out the duties and respon15 sibilities of the Office. 

16 (2) FEES, ASSESSMENTS, AND OTHER FUNDS NOT

17 GOVERNMENT FUNDS.—Funds obtained by, trans18 ferred to, or credited to the Financial Research Fund 

19 shall not be construed to be Government funds or ap20 propriated monies. 

21 (3) AMOUNTS NOT SUBJECT TO APPORTION22 MENT.—Notwithstanding any other provision of law, 

23 amounts in the Financial Research Fund shall not be 

24 subject to apportionment for purposes of chapter 15 of 
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1 title 31, United States Code, or under any other au2 thority, or for any other purpose. 

3 (c) INTERIM FUNDING.—During the 2-year period fol4 lowing the date of enactment of this Act, the Board of Gov5 ernors shall provide to the Office an amount sufficient to 

6 cover the expenses of the Office. 

7 (d) PERMANENT SELF-FUNDING.— 

8 (1) IN GENERAL.—Beginning 2 years after the 

9 date of enactment of this Act, the Secretary shall es10 tablish, by regulation, and with the approval of the 

11 Council, an assessment schedule, including the assess12 ment base and rates, applicable to bank holding com13 panies with total consolidated assets of 

14 $50,000,000,000 or greater and nonbank financial 

15 companies supervised by the Board of Governors, that 

16 takes into account differences among such companies, 

17 based on the considerations for establishing the pru18 dential standards under section 115, to collect assess19 ments equal to the estimated total expenses of the Of20 fice. 

21 (2) SHORTFALL.—To the extent that the assess22 ments under paragraph (1) do not fully cover the 

23 total expenses of the Office, the Board of Governors 

24 shall provide to the Office an amount sufficient to 

25 cover the difference. 
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1 SEC. 156. TRANSITION OVERSIGHT. 

2 (a) PURPOSE.—The purpose of this section is to ensure 

3 that the Office— 

4 (1) has an orderly and organized startup; 

5 (2) attracts and retains a qualified workforce; 

6 and 

7 (3) establishes comprehensive employee training 

8 and benefits programs. 

9 (b) REPORTING REQUIREMENT.— 

10 (1) IN GENERAL.—The Office shall submit an 

11 annual report to the Committee on Banking, Hous12 ing, and Urban Affairs of the Senate and the Com13 mittee on Financial Services of the House of Rep14 resentatives that includes the plans described in para15 graph (2). 

16 (2) PLANS.—The plans described in this para17 graph are as follows: 

18 (A) TRAINING AND WORKFORCE DEVELOP19 MENT PLAN.—The Office shall submit a training 

20 and workforce development plan that includes, to 

21 the extent practicable— 

22 (i) identification of skill and technical 

23 expertise needs and actions taken to meet 

24 those requirements; 

25 (ii) steps taken to foster innovation 

26 and creativity; 
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1 (iii) leadership development and suc2 cession planning; and 

3 (iv) effective use of technology by em4 ployees. 

5 (B) WORKPLACE FLEXIBILITY PLAN.—The 

6 Office shall submit a workforce flexibility plan 

7 that includes, to the extent practicable— 

8 (i) telework; 

9 (ii) flexible work schedules; 

10 (iii) phased retirement; 

11 (iv) reemployed annuitants; 

12 (v) part-time work; 

13 (vi) job sharing; 

14 (vii) parental leave benefits and 

15 childcare assistance; 

16 (viii) domestic partner benefits; 

17 (ix) other workplace flexibilities; or 

18 (x) any combination of the items de19 scribed in clauses (i) through (ix). 

20 (C) RECRUITMENT AND RETENTION PLAN.— 

21 The Office shall submit a recruitment and reten22 tion plan that includes, to the extent practicable, 

23 provisions relating to— 
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1 (i) the steps necessary to target highly 

2 qualified applicant pools with diverse back3 grounds; 

4 (ii) streamlined employment applica5 tion processes; 

6 (iii) the provision of timely notifica7 tion of the status of employment applica8 tions to applicants; and 

9 (iv) the collection of information to 

10 measure indicators of hiring effectiveness. 

11 (c) EXPIRATION.—The reporting requirement under 

12 subsection (b) shall terminate 5 years after the date of en13 actment of this Act. 

14 (d) RULE OF CONSTRUCTION.—Nothing in this section 

15 may be construed to affect— 

16 (1) a collective bargaining agreement, as that 

17 term is defined in section 7103(a)(8) of title 5, United 

18 States Code, that is in effect on the date of enactment 

19 of this Act; or 

20 (2) the rights of employees under chapter 71 of 

21 title 5, United States Code. 
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1 Subtitle C—Additional Board of 

2 Governors Authority for Certain 

3 Nonbank Financial Companies 

4 and Bank Holding Companies 

5 SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK 

6 FINANCIAL COMPANIES BY THE BOARD OF 

7 GOVERNORS. 

8 (a) REPORTS.— 

9 (1) IN GENERAL.—The Board of Governors may 

10 require each nonbank financial company supervised 

11 by the Board of Governors, and any subsidiary there12 of, to submit reports under oath, to keep the Board 

13 of Governors informed as to— 

14 (A) the financial condition of the company 

15 or subsidiary, systems of the company or sub16 sidiary for monitoring and controlling financial, 

17 operating, and other risks, and the extent to 

18 which the activities and operations of the com19 pany or subsidiary pose a threat to the financial 

20 stability of the United States; and 

21 (B) compliance by the company or sub22 sidiary with the requirements of this subtitle. 

23 (2) USE OF EXISTING REPORTS AND INFORMA24 TION.—In carrying out subsection (a), the Board of 

25 Governors shall, to the fullest extent possible, use— 
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1 (A) reports and supervisory information 

2 that a nonbank financial company or subsidiary 

3 thereof has been required to provide to other Fed4 eral or State regulatory agencies; 

5 (B) information otherwise obtainable from 

6 Federal or State regulatory agencies; 

7 (C) information that is otherwise required 

8 to be reported publicly; and 

9 (D) externally audited financial statements 

10 of such company or subsidiary. 

11 (3) AVAILABILITY.—Upon the request of the 

12 Board of Governors, a nonbank financial company 

13 supervised by the Board of Governors, or a subsidiary 

14 thereof, shall promptly provide to the Board of Gov15 ernors any information described in paragraph (2). 

16 (b) EXAMINATIONS.— 

17 (1) IN GENERAL.—Subject to paragraph (2), the 

18 Board of Governors may examine any nonbank fi19 nancial company supervised by the Board of Gov20 ernors and any subsidiary of such company, to deter21 mine— 

22 (A) the nature of the operations and finan23 cial condition of the company and such sub24 sidiary; 
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1 (B) the financial, operational, and other 

2 risks within the company that may pose a threat 

3 to the safety and soundness of such company or 

4 to the financial stability of the United States; 

5 (C) the systems for monitoring and control6 ling such risks; and 

7 (D) compliance by the company with the re8 quirements of this subtitle. 

9 (2) USE OF EXAMINATION REPORTS AND INFOR10 MATION.—For purposes of this subsection, the Board 

11 of Governors shall, to the fullest extent possible, rely 

12 on reports of examination of any depository institu13 tion subsidiary or functionally regulated subsidiary 

14 made by the primary financial regulatory agency for 

15 that subsidiary, and on information described in sub16 section (a)(2). 

17 (c) COORDINATION WITH PRIMARY FINANCIAL REGU18 LATORY AGENCY.—The Board of Governors shall— 

19 (1) provide to the primary financial regulatory 

20 agency for any company or subsidiary, reasonable no21 tice before requiring a report, requesting information, 

22 or commencing an examination of such subsidiary 

23 under this section; and 
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1 (2) avoid duplication of examination activities, 

2 reporting requirements, and requests for information, 

3 to the extent possible. 

4 SEC. 162. ENFORCEMENT. 

5 (a) IN GENERAL.—Except as provided in subsection 

6 (b), a nonbank financial company supervised by the Board 

7 of Governors and any subsidiaries of such company (other 

8 than any depository institution subsidiary) shall be subject 

9 to the provisions of subsections (b) through (n) of section 

10 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), 

11 in the same manner and to the same extent as if the com12 pany were a bank holding company, as provided in section 

13 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 

14 1818(b)(3)). 

15 (b) ENFORCEMENT AUTHORITY FOR FUNCTIONALLY

16 REGULATED SUBSIDIARIES.— 

17 (1) REFERRAL.—If the Board of Governors de18 termines that a condition, practice, or activity of a 

19 depository institution subsidiary or functionally regu20 lated subsidiary of a nonbank financial company su21 pervised by the Board of Governors does not comply 

22 with the regulations or orders prescribed by the Board 

23 of Governors under this Act, or otherwise poses a 

24 threat to the financial stability of the United States, 

25 the Board of Governors may recommend, in writing, 
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1 to the primary financial regulatory agency for the 

2 subsidiary that such agency initiate a supervisory ac3 tion or enforcement proceeding. The recommendation 

4 shall be accompanied by a written explanation of the 

5 concerns giving rise to the recommendation. 

6 (2) BACK-UP AUTHORITY OF THE BOARD OF GOV7 ERNORS.—If, during the 60-day period beginning on 

8 the date on which the primary financial regulatory 

9 agency receives a recommendation under paragraph 

10 (1), the primary financial regulatory agency does not 

11 take supervisory or enforcement action against a sub12 sidiary that is acceptable to the Board of Governors, 

13 the Board of Governors (upon a vote of its members) 

14 may take the recommended supervisory or enforce15 ment action, as if the subsidiary were a bank holding 

16 company subject to supervision by the Board of Gov17 ernors. 

18 SEC. 163. ACQUISITIONS. 

19 (a) ACQUISITIONS OF BANKS; TREATMENT AS A BANK

20 HOLDING COMPANY.—For purposes of section 3 of the Bank 

21 Holding Company Act of 1956 (12 U.S.C. 1842), a nonbank 

22 financial company supervised by the Board of Governors 

23 shall be deemed to be, and shall be treated as, a bank hold24 ing company. 

25 (b) ACQUISITION OF NONBANK COMPANIES.— 
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1 (1) PRIOR NOTICE FOR LARGE ACQUISITIONS.— 

2 Notwithstanding section 4(k)(6)(B) of the Bank Hold3 ing Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)), 

4 a bank holding company with total consolidated as5 sets equal to or greater than $50,000,000,000 or a 

6 nonbank financial company supervised by the Board 

7 of Governors shall not acquire direct or indirect own8 ership or control of any voting shares of any com9 pany (other than an insured depository institution) 

10 that is engaged in activities described in section 4(k) 

11 of the Bank Holding Company Act of 1956 having 

12 total consolidated assets of $10,000,000,000 or more, 

13 without providing written notice to the Board of Gov14 ernors in advance of the transaction. 

15 (2) EXEMPTIONS.—The prior notice requirement 

16 in paragraph (1) shall not apply with regard to the 

17 acquisition of shares that would qualify for the ex18 emptions in section 4(c) or section 4(k)(4)(E) of the 

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

20 1843(c) and (k)(4)(E)). 

21 (3) NOTICE PROCEDURES.—The notice proce22 dures set forth in section 4(j)(1) of the Bank Holding 

23 Company Act of 1956 (12 U.S.C. 1843(j)(1)), without 

24 regard to section 4(j)(3) of that Act, shall apply to an 

25 acquisition of any company (other than an insured 
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1 depository institution) by a bank holding company 

2 with total consolidated assets equal to or greater than 

3 $50,000,000,000 or a nonbank financial company su4 pervised by the Board of Governors, as described in 

5 paragraph (1), including any such company engaged 

6 in activities described in section 4(k) of that Act. 

7 (4) STANDARDS FOR REVIEW.—In addition to 

8 the standards provided in section 4(j)(2) of the Bank 

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

10 1843(j)(2)), the Board of Governors shall consider the 

11 extent to which the proposed acquisition would result 

12 in greater or more concentrated risks to global or 

13 United States financial stability or the United States 

14 economy. 

15 SEC. 164. PROHIBITION AGAINST MANAGEMENT INTER16 LOCKS BETWEEN CERTAIN FINANCIAL COM17 PANIES. 

18 A nonbank financial company supervised by the Board 

19 of Governors shall be treated as a bank holding company 

20 for purposes of the Depository Institutions Management 

21 Interlocks Act (12 U.S.C. 3201 et seq.), except that the 

22 Board of Governors shall not exercise the authority provided 

23 in section 7 of that Act (12 U.S.C. 3207) to permit service 

24 by a management official of a nonbank financial company 

25 supervised by the Board of Governors as a management offi-
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1 cial of any bank holding company with total consolidated 

2 assets equal to or greater than $50,000,000,000, or other 

3 nonaffiliated nonbank financial company supervised by the 

4 Board of Governors (other than to provide a temporary ex5 emption for interlocks resulting from a merger, acquisition, 

6 or consolidation). 

7 SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL 

8 STANDARDS FOR NONBANK FINANCIAL COM9 PANIES SUPERVISED BY THE BOARD OF GOV10 ERNORS AND CERTAIN BANK HOLDING COM11 PANIES. 

12 (a) IN GENERAL.— 

13 (1) PURPOSE.—In order to prevent or mitigate 

14 risks to the financial stability of the United States 

15 that could arise from the material financial distress 

16 or failure of large, interconnected financial institu17 tions, the Board of Governors shall, on its own or 

18 pursuant to recommendations by the Council under 

19 section 115, establish prudential standards and re20 porting and disclosure requirements applicable to 

21 nonbank financial companies supervised by the Board 

22 of Governors and large, interconnected bank holding 

23 companies that— 

24 (A) are more stringent than the standards 

25 and requirements applicable to nonbank finan-
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1 cial companies and bank holding companies that 

2 do not present similar risks to the financial sta3 bility of the United States; and 

4 (B) increase in stringency, based on the 

5 considerations identified in subsection (b)(3). 

6 (2) LIMITATION ON BANK HOLDING COMPA7 NIES.—Any standards established under subsections 

8 (b) through (f) shall not apply to any bank holding 

9 company with total consolidated assets of less than 

10 $50,000,000,000, but the Board of Governors may es11 tablish an asset threshold greater than 

12 $50,000,000,000 for the applicability of any par13 ticular standard under subsections (b) through (f). 

14 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

15 (1) IN GENERAL.— 

16 (A) REQUIRED STANDARDS.—The Board of 

17 Governors shall, by regulation or order, establish 

18 prudential standards for nonbank financial com19 panies supervised by the Board of Governors and 

20 bank holding companies described in subsection 

21 (a), that shall include— 

22 (i) risk-based capital requirements; 

23 (ii) leverage limits; 

24 (iii) liquidity requirements; 
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1 (iv) resolution plan and credit expo2 sure report requirements; and 

3 (v) concentration limits. 

4 (B) ADDITIONAL STANDARDS AUTHOR5 IZED.—The Board of Governors may, by regula6 tion or order, establish prudential standards for 

7 nonbank financial companies supervised by the 

8 Board of Governors and bank holding companies 

9 described in subsection (a), that include— 

10 (i) a contingent capital requirement; 

11 (ii) enhanced public disclosures; and 

12 (iii) overall risk management require13 ments. 

14 (2) PRUDENTIAL STANDARDS FOR FOREIGN FI15 NANCIAL COMPANIES.—In applying the standards set 

16 forth in paragraph (1) to foreign nonbank financial 

17 companies supervised by the Board of Governors and 

18 to foreign-based bank holding companies, the Board of 

19 Governors shall give due regard to the principle of 

20 national treatment and competitive equity. 

21 (3) CONSIDERATIONS.—In prescribing pruden22 tial standards under paragraph (1), the Board of 

23 Governors shall— 

24 (A) take into account differences among 

25 nonbank financial companies supervised by the 
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1 Board of Governors and bank holding companies 

2 described in subsection (a), based on— 

3 (i) the factors described in subsections 

4 (a) and (b) of section 113; 

5 (ii) whether the company owns an in6 sured depository institution; 

7 (iii) nonfinancial activities and affili8 ations of the company; and 

9 (iv) any other factors that the Board of 

10 Governors determines appropriate; 

11 (B) to the extent possible, ensure that small 

12 changes in the factors listed in subsections (a) 

13 and (b) of section 113 would not result in sharp, 

14 discontinuous changes in the prudential stand15 ards established under paragraph (1) of this sub16 section; and 

17 (C) take into account any recommendations 

18 of the Council under section 115. 

19 (4) REPORT.—The Board of Governors shall sub20 mit an annual report to Congress regarding the im21 plementation of the prudential standards required 

22 pursuant to paragraph (1), including the use of such 

23 standards to mitigate risks to the financial stability 

24 of the United States. 

25 (c) CONTINGENT CAPITAL.— 
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1 (1) IN GENERAL.—Subsequent to submission by 

2 the Council of a report to Congress under section 

3 115(c), the Board of Governors may promulgate regu4 lations that require each nonbank financial company 

5 supervised by the Board of Governors and bank hold6 ing companies described in subsection (a) to main7 tain a minimum amount of long-term hybrid debt 

8 that is convertible to equity in times of financial 

9 stress. 

10 (2) FACTORS TO CONSIDER.—In establishing reg11 ulations under this subsection, the Board of Governors 

12 shall consider— 

13 (A) the results of the study undertaken by 

14 the Council, and any recommendations of the 

15 Council, under section 115(c); 

16 (B) an appropriate transition period for 

17 implementation of a conversion under this sub18 section; 

19 (C) the factors described in subsection 

20 (b)(3)(A); 

21 (D) capital requirements applicable to the 

22 nonbank financial company supervised by the 

23 Board of Governors or a bank holding company 

24 described in subsection (a), and subsidiaries 

25 thereof; and 
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1 (E) any other factor that the Board of Gov2 ernors deems appropriate. 

3 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE4 PORTS.— 

5 (1) RESOLUTION PLAN.—The Board of Governors 

6 shall require each nonbank financial company super7 vised by the Board of Governors and bank holding 

8 companies described in subsection (a) to report peri9 odically to the Board of Governors, the Council, and 

10 the Corporation the plan of such company for rapid 

11 and orderly resolution in the event of material finan12 cial distress or failure. 

13 (2) CREDIT EXPOSURE REPORT.—The Board of 

14 Governors shall require each nonbank financial com15 pany supervised by the Board of Governors and bank 

16 holding companies described in subsection (a) to re17 port periodically to the Board of Governors, the Coun18 cil, and the Corporation on— 

19 (A) the nature and extent to which the com20 pany has credit exposure to other significant 

21 nonbank financial companies and significant 

22 bank holding companies; and 

23 (B) the nature and extent to which other 

24 significant nonbank financial companies and 
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1 significant bank holding companies have credit 

2 exposure to that company. 

3 (3) REVIEW.—The Board of Governors and the 

4 Corporation shall review the information provided in 

5 accordance with this section by each nonbank finan6 cial company supervised by the Board of Governors 

7 and bank holding company described in subsection 

8 (a). 

9 (4) NOTICE OF DEFICIENCIES.—If the Board of 

10 Governors and the Corporation jointly determine, 

11 based on their review under paragraph (3), that the 

12 resolution plan of a nonbank financial company su13 pervised by the Board of Governors or a bank holding 

14 company described in subsection (a) is not credible or 

15 would not facilitate an orderly resolution of the com16 pany under title 11, United States Code— 

17 (A) the Board of Governors and the Cor18 poration shall notify the company, as applicable, 

19 of the deficiencies in the resolution plan; and 

20 (B) the company shall resubmit the resolu21 tion plan within a time frame determined by the 

22 Board of Governors and the Corporation, with 

23 revisions demonstrating that the plan is credible 

24 and would result in an orderly resolution under 

25 title 11, United States Code, including any pro-
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1 posed changes in business operations and cor2 porate structure to facilitate implementation of 

3 the plan. 

4 (5) FAILURE TO RESUBMIT CREDIBLE PLAN.— 

5 (A) IN GENERAL.—If a nonbank financial 

6 company supervised by the Board of Governors 

7 or a bank holding company described in sub8 section (a) fails to timely resubmit the resolution 

9 plan as required under paragraph (4), with such 

10 revisions as are required under subparagraph 

11 (B), the Board of Governors and the Corporation 

12 may jointly impose more stringent capital, lever13 age, or liquidity requirements, or restrictions on 

14 the growth, activities, or operations of the com15 pany, or any subsidiary thereof, until such time 

16 as the company resubmits a plan that remedies 

17 the deficiencies. 

18 (B) DIVESTITURE.—The Board of Gov19 ernors and the Corporation, in consultation with 

20 the Council, may direct a nonbank financial 

21 company supervised by the Board of Governors 

22 or a bank holding company described in sub23 section (a), by order, to divest certain assets or 

24 operations identified by the Board of Governors 

25 and the Corporation, to facilitate an orderly res-
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1 olution of such company under title 11, United 

2 States Code, in the event of the failure of such 

3 company, in any case in which— 

4 (i) the Board of Governors and the 

5 Corporation have jointly imposed more 

6 stringent requirements on the company pur7 suant to subparagraph (A); and 

8 (ii) the company has failed, within the 

9 2-year period beginning on the date of the 

10 imposition of such requirements under sub11 paragraph (A), to resubmit the resolution 

12 plan with such revisions as were required 

13 under paragraph (4)(B). 

14 (6) RULES.—Not later than 18 months after the 

15 date of enactment of this Act, the Board of Governors 

16 and the Corporation shall jointly issue final rules im17 plementing this subsection. 

18 (e) CONCENTRATION LIMITS.— 

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

20 the failure of any individual company could pose to 

21 a nonbank financial company supervised by the 

22 Board of Governors or a bank holding company de23 scribed in subsection (a), the Board of Governors, by 

24 regulation, shall prescribe standards that limit such 

25 risks. 
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1 (2) LIMITATION ON CREDIT EXPOSURE.—The 

2 regulations prescribed by the Board of Governors 

3 under paragraph (1) shall prohibit each nonbank fi4 nancial company supervised by the Board of Gov5 ernors and bank holding company described in sub6 section (a) from having credit exposure to any unaf7 filiated company that exceeds 25 percent of the cap8 ital stock and surplus (or such lower amount as the 

9 Board of Governors may determine by regulation to 

10 be necessary to mitigate risks to the financial sta11 bility of the United States) of the company. 

12 (3) CREDIT EXPOSURE.—For purposes of para13 graph (2), ‘‘credit exposure’’ to a company means— 

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

15 including loans, deposits, and lines of credit; 

16 (B) all repurchase agreements and reverse 

17 repurchase agreements with the company; 

18 (C) all securities borrowing and lending 

19 transactions with the company, to the extent that 

20 such transactions create credit exposure for the 

21 nonbank financial company supervised by the 

22 Board of Governors or a bank holding company 

23 described in subsection (a); 
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1 (D) all guarantees, acceptances, or letters of 

2 credit (including endorsement or standby letters 

3 of credit) issued on behalf of the company; 

4 (E) all purchases of or investment in securi5 ties issued by the company; 

6 (F) counterparty credit exposure to the com7 pany in connection with a derivative transaction 

8 between the nonbank financial company super9 vised by the Board of Governors or a bank hold10 ing company described in subsection (a) and the 

11 company; and 

12 (G) any other similar transactions that the 

13 Board of Governors, by regulation, determines to 

14 be a credit exposure for purposes of this section. 

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

16 subsection, any transaction by a nonbank financial 

17 company supervised by the Board of Governors or a 

18 bank holding company described in subsection (a) 

19 with any person is a transaction with a company, to 

20 the extent that the proceeds of the transaction are 

21 used for the benefit of, or transferred to, that com22 pany. 

23 (5) RULEMAKING.—The Board of Governors may 

24 issue such regulations and orders, including defini-
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1 tions consistent with this section, as may be necessary 

2 to administer and carry out this subsection. 

3 (6) EXEMPTIONS.—The Board of Governors may, 

4 by regulation or order, exempt transactions, in whole 

5 or in part, from the definition of ‘‘credit exposure’’ 

6 for purposes of this subsection, if the Board of Gov7 ernors finds that the exemption is in the public inter8 est and is consistent with the purpose of this sub9 section. 

10 (7) TRANSITION PERIOD.— 

11 (A) IN GENERAL.—This subsection and any 

12 regulations and orders of the Board of Governors 

13 under this subsection shall not be effective until 

14 3 years after the date of enactment of this Act. 

15 (B) EXTENSION AUTHORIZED.—The Board 

16 of Governors may extend the period specified in 

17 subparagraph (A) for not longer than an addi18 tional 2 years. 

19 (f) ENHANCED PUBLIC DISCLOSURES.—The Board of 

20 Governors may prescribe, by regulation, periodic public dis21 closures by nonbank financial companies supervised by the 

22 Board of Governors and bank holding companies described 

23 in subsection (a) in order to support market evaluation of 

24 the risk profile, capital adequacy, and risk management ca25 pabilities thereof. 
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1 (g) RISK COMMITTEE.— 

2 (1) NONBANK FINANCIAL COMPANIES SUPER3 VISED BY THE BOARD OF GOVERNORS.—The Board of 

4 Governors shall require each nonbank financial com5 pany supervised by the Board of Governors that is a 

6 publicly traded company to establish a risk com7 mittee, as set forth in paragraph (3), not later than 

8 1 year after the date of receipt of a notice of final de9 termination under section 113(d)(3) with respect to 

10 such nonbank financial company supervised by the 

11 Board of Governors. 

12 (2) CERTAIN BANK HOLDING COMPANIES.— 

13 (A) MANDATORY REGULATIONS.—The 

14 Board of Governors shall issue regulations re15 quiring each bank holding company that is a 

16 publicly traded company and that has total con17 solidated assets of not less than $10,000,000,000 

18 to establish a risk committee, as set forth in 

19 paragraph (3). 

20 (B) PERMISSIVE REGULATIONS.—The 

21 Board of Governors may require each bank hold22 ing company that is a publicly traded company 

23 and that has total consolidated assets of less than 

24 $10,000,000,000 to establish a risk committee, as 

25 set forth in paragraph (3), as determined nec-
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1 essary or appropriate by the Board of Governors 

2 to promote sound risk management practices. 

3 (3) RISK COMMITTEE.—A risk committee re4 quired by this subsection shall— 

5 (A) be responsible for the oversight of the 

6 enterprise-wide risk management practices of the 

7 nonbank financial company supervised by the 

8 Board of Governors or bank holding company 

9 described in subsection (a), as applicable; 

10 (B) include such number of independent di11 rectors as the Board of Governors may determine 

12 appropriate, based on the nature of operations, 

13 size of assets, and other appropriate criteria re14 lated to the nonbank financial company super15 vised by the Board of Governors or a bank hold16 ing company described in subsection (a), as ap17 plicable; and 

18 (C) include at least 1 risk management ex19 pert having experience in identifying, assessing, 

20 and managing risk exposures of large, complex 

21 firms. 

22 (4) RULEMAKING.—The Board of Governors shall 

23 issue final rules to carry out this subsection, not later 

24 than 1 year after the transfer date, to take effect not 

25 later than 15 months after the transfer date. 
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1 (h) STRESS TESTS.—The Board of Governors shall 

2 conduct analyses in which nonbank financial companies su3 pervised by the Board of Governors and bank holding com4 panies described in subsection (a) are subject to evaluation 

5 of whether the companies have the capital, on a total con6 solidated basis, necessary to absorb losses as a result of ad7 verse economic conditions. The Board of Governors may de8 velop and apply such other analytic techniques as are nec9 essary to identify, measure, and monitor risks to the finan10 cial stability of the United States. 

11 SEC. 166. EARLY REMEDIATION REQUIREMENTS. 

12 (a) IN GENERAL.—The Board of Governors, in con13 sultation with the Council and the Corporation, shall pre14 scribe regulations establishing requirements to provide for 

15 the early remediation of financial distress of a nonbank fi16 nancial company supervised by the Board of Governors or 

17 a bank holding company described in section 165(a), except 

18 that nothing in this subsection authorizes the provision of 

19 financial assistance from the Federal Government. 

20 (b) PURPOSE OF THE EARLY REMEDIATION REQUIRE21 MENTS.—The purpose of the early remediation require22 ments under subsection (a) shall be to establish a series of 

23 specific remedial actions to be taken by a nonbank financial 

24 company supervised by the Board of Governors or a bank 

25 holding company described in section 165(a) that is experi-
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1 encing increasing financial distress, in order to minimize 

2 the probability that the company will become insolvent and 

3 the potential harm of such insolvency to the financial sta4 bility of the United States. 

5 (c) REMEDIATION REQUIREMENTS.—The regulations 

6 prescribed by the Board of Governors under subsection (a) 

7 shall— 

8 (1) define measures of the financial condition of 

9 the company, including regulatory capital, liquidity 

10 measures, and other forward-looking indicators; and 

11 (2) establish requirements that increase in strin12 gency as the financial condition of the company de13 clines, including— 

14 (A) requirements in the initial stages of fi15 nancial decline, including limits on capital dis16 tributions, acquisitions, and asset growth; and 

17 (B) requirements at later stages of financial 

18 decline, including a capital restoration plan and 

19 capital-raising requirements, limits on trans20 actions with affiliates, management changes, and 

21 asset sales. 

22 SEC. 167. AFFILIATIONS. 

23 (a) AFFILIATIONS.—Nothing in this subtitle shall be 

24 construed to require a nonbank financial company super25 vised by the Board of Governors, or a company that controls 
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1 a nonbank financial company supervised by the Board of 

2 Governors, to conform the activities thereof to the require3 ments of section 4 of the Bank Holding Company Act of 

4 1956 (12 U.S.C. 1843). 

5 (b) REQUIREMENT.— 

6 (1) IN GENERAL.—If a nonbank financial com7 pany supervised by the Board of Governors conducts 

8 activities other than those that are determined to be 

9 financial in nature or incidental thereto under sec10 tion 4(k) of the Bank Holding Company Act of 1956, 

11 the Board of Governors may require such company to 

12 establish and conduct such activities that are deter13 mined to be financial in nature or incidental thereto 

14 in an intermediate holding company established pur15 suant to regulation of the Board of Governors, not 

16 later than 90 days after the date on which the 

17 nonbank financial company supervised by the Board 

18 of Governors was notified of the determination under 

19 section 113(a). 

20 (2) INTERNAL FINANCIAL ACTIVITIES.—For pur21 poses of this subsection, activities that are determined 

22 to be financial in nature or incidental thereto under 

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

24 1956, as described in paragraph (1), shall not include 

25 internal financial activities conducted for a nonbank 
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1 financial company supervised by the Board of Gov2 ernors or any affiliate, including internal treasury, 

3 investment, and employee benefit functions. With re4 spect to any internal financial activity of such com5 pany during the year prior to the date of enactment 

6 of this Act, such company may continue to engage in 

such activity as long as at least 2 7 ⁄3 of the assets or 

2 8 ⁄3 of the revenues generated from the activity are 

9 from or attributable to such company, subject to re10 view by the Board of Governors, to determine whether 

11 engaging in such activity presents undue risk to such 

12 company or to the financial stability of the United 

13 States. 

14 (c) REGULATIONS.—The Board of Governors— 

15 (1) shall promulgate regulations to establish the 

16 criteria for determining whether to require a nonbank 

17 financial company supervised by the Board of Gov18 ernors to establish an intermediate holding company 

19 under subsection (a); and 

20 (2) may promulgate regulations to establish any 

21 restrictions or limitations on transactions between an 

22 intermediate holding company or a nonbank finan23 cial company supervised by the Board of Governors 

24 and its affiliates, as necessary to prevent unsafe and 

25 unsound practices in connection with transactions be-
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1 tween such company, or any subsidiary thereof, and 

2 its parent company or affiliates that are not subsidi3 aries of such company, except that such regulations 

4 shall not restrict or limit any transaction in connec5 tion with the bona fide acquisition or lease by an un6 affiliated person of assets, goods, or services. 

7 SEC. 168. REGULATIONS. 

8 Except as otherwise specified in this subtitle, not later 

9 than 18 months after the transfer date, the Board of Gov10 ernors shall issue final regulations to implement this sub11 title and the amendments made by this subtitle. 

12 SEC. 169. AVOIDING DUPLICATION. 

13 The Board of Governors shall take any action that the 

14 Board of Governors deems appropriate to avoid imposing 

15 requirements under this subtitle that are duplicative of re16 quirements applicable to bank holding companies and 

17 nonbank financial companies under other provisions of law. 

18 SEC. 170. SAFE HARBOR. 

19 (a) REGULATIONS.—The Board of Governors shall pro20 mulgate regulations on behalf of, and in consultation with, 

21 the Council setting forth the criteria for exempting certain 

22 types or classes of U.S. nonbank financial companies or for23 eign nonbank financial companies from supervision by the 

24 Board of Governors. 
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1 (b) CONSIDERATIONS.—In developing the criteria 

2 under subsection (a), the Board of Governors shall take into 

3 account the factors for consideration described in sub4 sections (a) and (b) of section 113 in determining whether 

5 a U.S. nonbank financial company or foreign nonbank fi6 nancial company shall be supervised by the Board of Gov7 ernors. 

8 (c) RULE OF CONSTRUCTION.—Nothing in this section 

9 shall be construed to require supervision by the Board of 

10 Governors of a U.S. nonbank financial company or foreign 

11 nonbank financial company, if such company does not meet 

12 the criteria for exemption established under subsection (a). 

13 (d) UPDATE.—The Board of Governors shall, in con14 sultation with the Council, review the regulations promul15 gated under subsection (a), not less frequently than every 

16 5 years, and based upon the review, the Board of Governors 

17 may revise such regulations on behalf of, and in consulta18 tion with, the Council to update as necessary the criteria 

19 set forth in such regulations. 

20 (e) TRANSITION PERIOD.—No revisions under sub21 section (d) shall take effect before the end of the 2-year pe22 riod after the date of publication of such revisions in final 

23 form. 

24 (f) REPORT.—The Chairperson of the Board of Gov25 ernors and the Chairperson of the Council shall submit a 
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1 joint report to the Committee on Banking, Housing, and 

2 Urban Affairs of the Senate and the Committee on Finan3 cial Services of the House of Representatives not later than 

4 30 days after the date of the issuance in final form of the 

5 regulations under subsection (a), or any subsequent revision 

6 to such regulations under subsection (d), as applicable. 

7 Such report shall include, at a minimum, the rationale for 

8 exemption and empirical evidence to support the criteria 

9 for exemption. 

10 SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIRE11 MENTS. 

12 (a) DEFINITIONS.— 

13 (1) GENERALLY APPLICABLE LEVERAGE CAPITAL

14 REQUIREMENTS.—The term ‘‘generally applicable le15 verage capital requirements’’ means— 

16 (A) the minimum ratios of tier 1 capital to 

17 average total assets, as established by the appro18 priate Federal banking agencies to apply to in19 sured depository institutions under the prompt 

20 corrective action regulations implementing sec21 tion 38 of the Federal Deposit Insurance Act, re22 gardless of total consolidated asset size or foreign 

23 financial exposure; and 

24 (B) includes the regulatory capital compo25 nents in the numerator of that capital require-
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1 ment, average total assets in the denominator of 

2 that capital requirement, and the required ratio 

3 of the numerator to the denominator. 

4 (2) GENERALLY APPLICABLE RISK-BASED CAP5 ITAL REQUIREMENTS.—The term ‘‘generally applica6 ble risk-based capital requirements’’ means— 

7 (A) the risk-based capital requirements as 

8 established by the appropriate Federal banking 

9 agencies to apply to insured depository institu10 tions under the agency’s Prompt Corrective Ac11 tion regulations that implement section 38 of the 

12 Federal Deposit Insurance Act, regardless of 

13 total consolidated asset size or foreign financial 

14 exposure; and 

15 (B) includes the regulatory capital compo16 nents in the numerator of those capital require17 ments, the risk-weighted assets in the denomi18 nator of those capital requirements, and the re19 quired ratio of the numerator to the denomi20 nator. 

21 (b) MINIMUM CAPITAL REQUIREMENTS.— 

22 (1) MINIMUM LEVERAGE CAPITAL REQUIRE23 MENTS.—The appropriate Federal banking agencies 

24 shall establish minimum leverage capital require25 ments on a consolidated basis for insured depository 
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1 institutions, depository institution holding compa2 nies, and nonbank financial companies identified 

3 under section 113. The minimum leverage capital re4 quirements established under this paragraph shall not 

5 be less than the generally applicable leverage capital 

6 requirements, which shall serve as a floor for any cap7 ital requirements the agency may require, nor quan8 titatively lower than the generally applicable leverage 

9 capital requirements that were in effect for insured 

10 depository institutions as of the date of enactment of 

11 this Act. 

12 (2) MINIMUM RISK-BASED CAPITAL REQUIRE13 MENTS.—The appropriate Federal banking agencies 

14 shall establish minimum risk-based capital require15 ments on a consolidated basis for insured depository 

16 institutions, depository institution holding compa17 nies, and nonbank financial companies identified 

18 under section 113. The minimum risk-based capital 

19 requirements established under this paragraph shall 

20 not be less than the generally applicable risk-based 

21 capital requirements, which shall serve as a floor for 

22 any capital requirements the agency may require, nor 

23 quantitatively lower than the generally applicable 

24 risk-based capital requirements that were in effect for 
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1 insured depository institutions as of the date of enact2 ment of this Act. 

3 (3) CAPITAL REQUIREMENTS TO ADDRESS AC4 TIVITIES THAT POSE RISKS TO THE FINANCIAL SYS5 TEM.— 

6 (A) IN GENERAL.—Subject to the rec7 ommendations of the Council, in accordance with 

8 section 120, the Federal banking agencies shall 

9 develop capital requirements applicable to all in10 stitutions covered by this section that address the 

11 risks that the activities of such institutions pose, 

12 not only to the institution engaging in the activ13 ity, but to other public and private stakeholders 

14 in the event of adverse performance, disruption, 

15 or failure of the institution or the activity. 

16 (B) CONTENT.—Such rules shall address, at 

17 a minimum, the risks arising from— 

18 (i) significant volumes of activity in 

19 derivatives, securitized products purchased 

20 and sold, financial guarantees purchased 

21 and sold, securities borrowing and lending, 

22 and repurchase agreements and reverse re23 purchase agreements; 

24 (ii) concentrations in assets for which 

25 the values presented in financial reports are 
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1 based on models rather than historical cost 

2 or prices deriving from deep and liquid 2- 

3 way markets; and 

4 (iii) concentrations in market share for 

5 any activity that would substantially dis6 rupt financial markets if the institution is 

7 forced to unexpectedly cease the activity. 

8 TITLE II—ORDERLY 

9 LIQUIDATION AUTHORITY 

10 SEC. 201. DEFINITIONS. 

11 (a) IN GENERAL.—In this title, the following defini12 tions shall apply: 

13 (1) ADMINISTRATIVE EXPENSES OF THE RE14 CEIVER.—The term ‘‘administrative expenses of the 

15 receiver’’ includes— 

16 (A) the actual, necessary costs and expenses 

17 incurred by the Corporation as receiver for a 

18 covered financial company in liquidating a cov19 ered financial company; and 

20 (B) any obligations that the Corporation as 

21 receiver for a covered financial company deter22 mines are necessary and appropriate to facilitate 

23 the smooth and orderly liquidation of the covered 

24 financial company. 
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1 (2) BANKRUPTCY CODE.—The term ‘‘Bankruptcy 

2 Code’’ means title 11, United States Code. 

3 (3) BRIDGE FINANCIAL COMPANY.—The term 

4 ‘‘bridge financial company’’ means a new financial 

5 company organized by the Corporation in accordance 

6 with section 210(h) for the purpose of resolving a cov7 ered financial company. 

8 (4) CLAIM.—The term ‘‘claim’’ means any right 

9 of payment, whether or not such right is reduced to 

10 judgment, liquidated, unliquidated, fixed, contingent, 

11 matured, unmatured, disputed, undisputed, legal, eq12 uitable, secured, or unsecured. 

13 (5) COMPANY.—The term ‘‘company’’ has the 

14 same meaning as in section 2(b) of the Bank Holding 

15 Company Act of 1956 (12 U.S.C. 1841(b)), except 

16 that such term includes any company described in 

17 paragraph (11), the majority of the securities of 

18 which are owned by the United States or any State. 

19 (6) COVERED BROKER OR DEALER.—The term 

20 ‘‘covered broker or dealer’’ means a covered financial 

21 company that is a broker or dealer that— 

22 (A) is registered with the Commission under 

23 section 15(b) of the Securities Exchange Act of 

24 1934 (15 U.S.C. 78o(b)); and 

25 (B) is a member of SIPC. 
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1 (7) COVERED FINANCIAL COMPANY.—The term 

2 ‘‘covered financial company’’— 

3 (A) means a financial company for which 

4 a determination has been made under section 

5 203(b); and 

6 (B) does not include an insured depository 

7 institution. 

8 (8) COVERED SUBSIDIARY.—The term ‘‘covered 

9 subsidiary’’ means a subsidiary of a covered financial 

10 company, other than— 

11 (A) an insured depository institution; 

12 (B) an insurance company; or 

13 (C) a covered broker or dealer. 

14 (9) DEFINITIONS RELATING TO COVERED BRO15 KERS AND DEALERS.—The terms ‘‘customer’’, ‘‘cus16 tomer name securities’’, ‘‘customer property’’, and 

17 ‘‘net equity’’ in the context of a covered broker or 

18 dealer, have the same meanings as in section 16 of the 

19 Securities Investor Protection Act of 1970 (15 U.S.C. 

20 78lll). 

21 (10) FINANCIAL COMPANY.—The term ‘‘financial 

22 company’’ means any company that— 

23 (A) is incorporated or organized under any 

24 provision of Federal law or the laws of any 

25 State; 
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1 (B) is— 

2 (i) a bank holding company, as defined 

3 in section 2(a) of the Bank Holding Com4 pany Act of 1956 (12 U.S.C. 1841(a)), and 

5 including any company described in para6 graph (5); 

7 (ii) a nonbank financial company su8 pervised by the Board of Governors; 

9 (iii) any company that is predomi10 nantly engaged in activities that the Board 

11 of Governors has determined are financial 

12 in nature or incidental thereto for purposes 

13 of section 4(k) of the Bank Holding Com14 pany Act of 1956 (12 U.S.C. 1843(k)) other 

15 than a company described in clause (i) or 

16 (ii); or 

17 (iv) any subsidiary of any company 

18 described in any of clauses (i) through (iii) 

19 that is predominantly engaged in activities 

20 that the Board of Governors has determined 

21 are financial in nature or incidental thereto 

22 for purposes of section 4(k) of the Bank 

23 Holding Company Act of 1956 (12 U.S.C. 

24 1843(k)) (other than a subsidiary that is an 
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1 insured depository institution or an insur2 ance company); and 

3 (C) is not a Farm Credit System institu4 tion chartered under and subject to the provi5 sions of the Farm Credit Act of 1971, as amend6 ed (12 U.S.C. 2001 et seq.), a governmental enti7 ty, or a regulated entity, as defined under sec8 tion 1303 of the Federal Housing Enterprises Fi9 nancial Safety and Soundness Act of 1992 (12 

10 U.S.C. 4502(20)). 

11 (11) FUND.—The term ‘‘Fund’’ means the Or12 derly Liquidation Fund established under section 

13 210(n). 

14 (12) INSURANCE COMPANY.—The term ‘‘insur15 ance company’’ means any entity that is— 

16 (A) engaged in the business of insurance; 

17 (B) subject to regulation by a State insur18 ance regulator; and 

19 (C) covered by a State law that is designed 

20 to specifically deal with the rehabilitation, liq21 uidation, or insolvency of an insurance com22 pany. 

23 (13) NONBANK FINANCIAL COMPANY.—The term 

24 ‘‘nonbank financial company’’ has the same meaning 

25 as in section 102(a)(4)(C). 
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1 (14) NONBANK FINANCIAL COMPANY SUPERVISED

2 BY THE BOARD OF GOVERNORS.—The term ‘‘nonbank 

3 financial company supervised by the Board of Gov4 ernors’’ has the same meaning as in section 

5 102(a)(3)(D). 

6 (15) COURT.—The term ‘‘Court’’ means the 

7 United States District Court for the District of Co8 lumbia. 

9 (16) SIPC.—The term ‘‘SIPC’’ means the Secu10 rities Investor Protection Corporation. 

11 (b) DEFINITIONAL CRITERIA.—For purpose of the defi12 nition of the term ‘‘financial company’’ under subsection 

13 (a)(10), no company shall be deemed to be predominantly 

14 engaged in activities that the Board of Governors has deter15 mined are financial in nature or incidental thereto for pur16 poses of section 4(k) of the Bank Holding Company Act of 

17 1956 (12 U.S.C. 1843(k)), if the consolidated revenues of 

18 such company from such activities constitute less than 85 

19 percent of the total consolidated revenues of such company, 

20 as the Corporation, in consultation with the Secretary, shall 

21 establish by regulation. In determining whether a company 

22 is a financial company under this title, the consolidated 

23 revenues derived from the ownership or control of a deposi24 tory institution shall be included. 
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1 SEC. 202. JUDICIAL REVIEW. 

2 (a) COMMENCEMENT OF ORDERLY LIQUIDATION.— 

3 (1) PETITION TO DISTRICT COURT.— 

4 (A) DISTRICT COURT REVIEW.— 

5 (i) PETITION TO DISTRICT COURT.— 

6 Subsequent to a determination by the Sec7 retary under section 203 that a financial 

8 company satisfies the criteria in section 

9 203(b), the Secretary shall notify the Cor10 poration and the covered financial com11 pany. If the board of directors (or body per12 forming similar functions) of the covered fi13 nancial company acquiesces or consents to 

14 the appointment of the Corporation as a re15 ceiver, the Secretary shall appoint the Cor16 poration as a receiver. If the board of direc17 tors (or body performing similar functions) 

18 of the covered financial company does not 

19 acquiesce or consent to the appointment of 

20 the Corporation as receiver, the Secretary 

21 shall petition the United States District 

22 Court for the District of Columbia for an 

23 order authorizing the Secretary to appoint 

24 the Corporation as a receiver. 

25 (ii) FORM AND CONTENT OF ORDER.— 

26 The Secretary shall present all relevant 
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1 findings and the recommendation made 

2 pursuant to section 203(a) to the Court. The 

3 petition shall be filed under seal. 

4 (iii) DETERMINATION.—On a strictly 

5 confidential basis, and without any prior 

6 public disclosure, the Court, after notice to 

7 the covered financial company and a hear8 ing in which the covered financial company 

9 may oppose the petition, shall determine 

10 whether the determination of the Secretary 

11 that the covered financial company is in de12 fault or in danger of default and satisfies 

13 the definition of a financial company under 

14 section 201(10) is arbitrary and capricious. 

15 (iv) ISSUANCE OF ORDER.—If the 

16 Court determines that the determination of 

17 the Secretary that the covered financial 

18 company is in default or in danger of de19 fault and satisfies the definition of a finan20 cial company under section 201(10)— 

21 (I) is not arbitrary and capri22 cious, the Court shall issue an order 

23 immediately authorizing the Secretary 

24 to appoint the Corporation as receiver 

25 of the covered financial company; or 
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1 (II) is arbitrary and capricious, 

2 the Court shall immediately provide to 

3 the Secretary a written statement of 

4 each reason supporting its determina5 tion, and afford the Secretary an im6 mediate opportunity to amend and 

7 refile the petition under clause (i). 

8 (v) PETITION GRANTED BY OPERATION

9 OF LAW.—If the Court does not make a de10 termination within 24 hours of receipt of 

11 the petition— 

12 (I) the petition shall be granted 

13 by operation of law; 

14 (II) the Secretary shall appoint 

15 the Corporation as receiver; and 

16 (III) liquidation under this title 

17 shall automatically and without fur18 ther notice or action be commenced 

19 and the Corporation may immediately 

20 take all actions authorized under this 

21 title. 

22 (B) EFFECT OF DETERMINATION.—The de23 termination of the Court under subparagraph 

24 (A) shall be final, and shall be subject to appeal 

25 only in accordance with paragraph (2). The de-
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1 cision shall not be subject to any stay or injunc2 tion pending appeal. Upon conclusion of its pro3 ceedings under subparagraph (A), the Court 

4 shall provide immediately for the record a writ5 ten statement of each reason supporting the deci6 sion of the Court, and shall provide copies there7 of to the Secretary and the covered financial 

8 company. 

9 (C) CRIMINAL PENALTIES.—A person who 

10 recklessly discloses a determination of the Sec11 retary under section 203(b) or a petition of the 

12 Secretary under subparagraph (A), or the pend13 ency of court proceedings as provided for under 

14 subparagraph (A), shall be fined not more than 

15 $250,000, or imprisoned for not more than 5 

16 years, or both. 

17 (2) APPEAL OF DECISIONS OF THE DISTRICT

18 COURT.— 

19 (A) APPEAL TO COURT OF APPEALS.— 

20 (i) IN GENERAL.—Subject to clause 

21 (ii), the United States Court of Appeals for 

22 the District of Columbia Circuit shall have 

23 jurisdiction of an appeal of a final decision 

24 of the Court filed by the Secretary or a cov25 ered financial company, through its board 
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1 of directors, notwithstanding section 

2 210(a)(1)(A)(i), not later than 30 days after 

3 the date on which the decision of the Court 

4 is rendered or deemed rendered under this 

5 subsection. 

6 (ii) CONDITION OF JURISDICTION.— 

7 The Court of Appeals shall have jurisdiction 

8 of an appeal by a covered financial com9 pany only if the covered financial company 

10 did not acquiesce or consent to the appoint11 ment of a receiver by the Secretary under 

12 paragraph (1)(A). 

13 (iii) EXPEDITION.—The Court of Ap14 peals shall consider any appeal under this 

15 subparagraph on an expedited basis. 

16 (iv) SCOPE OF REVIEW.—For an ap17 peal taken under this subparagraph, review 

18 shall be limited to whether the determina19 tion of the Secretary that a covered finan20 cial company is in default or in danger of 

21 default and satisfies the definition of a fi22 nancial company under section 201(10) is 

23 arbitrary and capricious. 

24 (B) APPEAL TO THE SUPREME COURT.— 
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1 (i) IN GENERAL.—A petition for a writ 

2 of certiorari to review a decision of the 

3 Court of Appeals under subparagraph (A) 

4 may be filed by the Secretary or the covered 

5 financial company, through its board of di6 rectors, notwithstanding section 

7 210(a)(1)(A)(i), with the Supreme Court of 

8 the United States, not later than 30 days 

9 after the date of the final decision of the 

10 Court of Appeals, and the Supreme Court 

11 shall have discretionary jurisdiction to re12 view such decision. 

13 (ii) WRITTEN STATEMENT.—In the 

14 event of a petition under clause (i), the 

15 Court of Appeals shall immediately provide 

16 for the record a written statement of each 

17 reason for its decision. 

18 (iii) EXPEDITION.—The Supreme 

19 Court shall consider any petition under this 

20 subparagraph on an expedited basis. 

21 (iv) SCOPE OF REVIEW.—Review by 

22 the Supreme Court under this subparagraph 

23 shall be limited to whether the determina24 tion of the Secretary that the covered finan25 cial company is in default or in danger of 
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1 default and satisfies the definition of a fi2 nancial company under section 201(10) is 

3 arbitrary and capricious. 

4 (b) ESTABLISHMENT AND TRANSMITTAL OF RULES

5 AND PROCEDURES.— 

6 (1) IN GENERAL.—Not later than 6 months after 

7 the date of enactment of this Act, the Court shall es8 tablish such rules and procedures as may be necessary 

9 to ensure the orderly conduct of proceedings, includ10 ing rules and procedures to ensure that the 24-hour 

11 deadline is met and that the Secretary shall have an 

12 ongoing opportunity to amend and refile petitions 

13 under subsection (a)(1). 

14 (2) PUBLICATION OF RULES.—The rules and 

15 procedures established under paragraph (1), and any 

16 modifications of such rules and procedures, shall be 

17 recorded and shall be transmitted to— 

18 (A) the Committee on the Judiciary of the 

19 Senate; 

20 (B) the Committee on Banking, Housing, 

21 and Urban Affairs of the Senate; 

22 (C) the Committee on the Judiciary of the 

23 House of Representatives; and 

24 (D) the Committee on Financial Services of 

25 the House of Representatives. 
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1 (c) PROVISIONS APPLICABLE TO FINANCIAL COMPA2 NIES.— 

3 (1) BANKRUPTCY CODE.—Except as provided in 

4 this subsection, the provisions of the Bankruptcy Code 

5 and rules issued thereunder, and not the provisions of 

6 this title, shall apply to financial companies that are 

7 not covered financial companies for which the Cor8 poration has been appointed as receiver. 

9 (2) THIS TITLE.—The provisions of this title 

10 shall exclusively apply to and govern all matters re11 lating to covered financial companies for which the 

12 Corporation is appointed as receiver, and no provi13 sions of the Bankruptcy Code or the rules issued 

14 thereunder shall apply in such cases. 

15 (d) TIME LIMIT ON RECEIVERSHIP AUTHORITY.— 

16 (1) BASELINE PERIOD.—Any appointment of the 

17 Corporation as receiver under this section shall termi18 nate at the end of the 3-year period beginning on the 

19 date on which such appointment is made. 

20 (2) EXTENSION OF TIME LIMIT.—The time limit 

21 established in paragraph (1) may be extended by the 

22 Corporation for up to 1 additional year, if the Chair23 person of the Corporation determines and certifies in 

24 writing to the Committee on Banking, Housing, and 

25 Urban Affairs of the Senate and the Committee on 
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1 Financial Services of the House of Representatives 

2 that continuation of the receivership is necessary— 

3 (A) to— 

4 (i) maximize the net present value re5 turn from the sale or other disposition of 

6 the assets of the covered financial company; 

7 or 

8 (ii) minimize the amount of loss real9 ized upon the sale or other disposition of the 

10 assets of the covered financial company; and 

11 (B) to protect the stability of the financial 

12 system of the United States. 

13 (3) SECOND EXTENSION OF TIME LIMIT.— 

14 (A) IN GENERAL.—The time limit under 

15 this subsection, as extended under paragraph (2), 

16 may be extended for up to 1 additional year, if 

17 the Chairperson of the Corporation, with the con18 currence of the Secretary, submits the certifi19 cations described in paragraph (2). 

20 (B) ADDITIONAL REPORT REQUIRED.—Not 

21 later than 30 days after the date of commence22 ment of the extension under subparagraph (A), 

23 the Corporation shall submit a report to the 

24 Committee on Banking, Housing, and Urban Af25 fairs of the Senate and the Committee on Finan-
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1 cial Services of the House of Representatives de2 scribing the need for the extension and the spe3 cific plan of the Corporation to conclude the re4 ceivership before the end of the second extension. 

5 (4) ONGOING LITIGATION.—The time limit under 

6 this subsection, as extended under paragraph (3), 

7 may be further extended solely for the purpose of com8 pleting ongoing litigation in which the Corporation 

9 as receiver is a party, provided that the appointment 

10 of the Corporation as receiver shall terminate not 

11 later than 90 days after the date of completion of such 

12 litigation, if— 

13 (A) the Council determines that the Cor14 poration used its best efforts to conclude the re15 ceivership in accordance with its plan before the 

16 end of the time limit described in paragraph (3); 

17 (B) the Council determines that the comple18 tion of longer-term responsibilities in the form of 

19 ongoing litigation justifies the need for an exten20 sion; and 

21 (C) the Corporation submits a report ap22 proved by the Council not later than 30 days 

23 after the date of the determinations by the Coun24 cil under subparagraphs (A) and (B) to the 

25 Committee on Banking, Housing, and Urban Af-
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1 fairs of the Senate and the Committee on Finan2 cial Services of the House of Representatives, de3 scribing— 

4 (i) the ongoing litigation justifying the 

5 need for an extension; and 

6 (ii) the specific plan of the Corporation 

7 to complete the litigation and conclude the 

8 receivership. 

9 (5) REGULATIONS.—The Corporation may issue 

10 regulations governing the termination of receiverships 

11 under this title. 

12 (6) NO LIABILITY.—The Corporation and the De13 posit Insurance Fund shall not be liable for unre14 solved claims arising from the receivership after the 

15 termination of the receivership. 

16 (e) STUDY OF BANKRUPTCY AND ORDERLY LIQUIDA17 TION PROCESS FOR FINANCIAL COMPANIES.— 

18 (1) STUDY.— 

19 (A) IN GENERAL.—The Administrative Of20 fice of the United States Courts and the Comp21 troller General of the United States shall each 

22 monitor the activities of the Court, and each 

23 such Office shall conduct separate studies regard24 ing the bankruptcy and orderly liquidation proc-
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1 ess for financial companies under the Bank2 ruptcy Code. 

3 (B) ISSUES TO BE STUDIED.—In con4 ducting the study under subparagraph (A), the 

5 Administrative Office of the United States 

6 Courts and the Comptroller General of the 

7 United States each shall evaluate— 

8 (i) the effectiveness of chapter 7 or 

9 chapter 11 of the Bankruptcy Code in fa10 cilitating the orderly liquidation or reorga11 nization of financial companies; 

12 (ii) ways to maximize the efficiency 

13 and effectiveness of the Court; and 

14 (iii) ways to make the orderly liquida15 tion process under the Bankruptcy Code for 

16 financial companies more effective. 

17 (2) REPORTS.—Not later than 1 year after the 

18 date of enactment of this Act, in each successive year 

19 until the third year, and every fifth year after that 

20 date of enactment, the Administrative Office of the 

21 United States Courts and the Comptroller General of 

22 the United States shall submit to the Committee on 

23 Banking, Housing, and Urban Affairs and the Com24 mittee on the Judiciary of the Senate and the Com25 mittee on Financial Services and the Committee on 
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1 the Judiciary of the House of Representatives sepa2 rate reports summarizing the results of the studies 

3 conducted under paragraph (1). 

4 (f) STUDY OF INTERNATIONAL COORDINATION RELAT5 ING TO BANKRUPTCY PROCESS FOR FINANCIAL COMPA6 NIES.— 

7 (1) STUDY.— 

8 (A) IN GENERAL.—The Comptroller General 

9 of the United States shall conduct a study re10 garding international coordination relating to 

11 the orderly liquidation of financial companies 

12 under the Bankruptcy Code. 

13 (B) ISSUES TO BE STUDIED.—In con14 ducting the study under subparagraph (A), the 

15 Comptroller General of the United States shall 

16 evaluate, with respect to the bankruptcy process 

17 for financial companies— 

18 (i) the extent to which international 

19 coordination currently exists; 

20 (ii) current mechanisms and structures 

21 for facilitating international cooperation; 

22 (iii) barriers to effective international 

23 coordination; and 

24 (iv) ways to increase and make more 

25 effective international coordination. 
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1 (2) REPORT.—Not later than 1 year after the 

2 date of enactment of this Act, the Comptroller General 

3 of the United States shall submit to the Committee on 

4 Banking, Housing, and Urban Affairs and the Com5 mittee on the Judiciary of the Senate and the Com6 mittee on Financial Services and the Committee on 

7 the Judiciary of the House of Representatives and the 

8 Secretary a report summarizing the results of the 

9 study conducted under paragraph (1). 

10 (g) STUDY OF PROMPT CORRECTIVE ACTION IMPLE11 MENTATION BY THE APPROPRIATE FEDERAL AGENCIES.— 

12 (1) STUDY.—The Comptroller General of the 

13 United States shall conduct a study regarding the im14 plementation of prompt corrective action by the ap15 propriate Federal banking agencies. 

16 (2) ISSUES TO BE STUDIED.—In conducting the 

17 study under paragraph (1), the Comptroller General 

18 shall evaluate— 

19 (A) the effectiveness of implementation of 

20 prompt corrective action by the appropriate Fed21 eral banking agencies and the resolution of in22 sured depository institutions by the Corporation; 

23 and 

24 (B) ways to make prompt corrective action 

25 a more effective tool to resolve the insured deposi-
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1 tory institutions at the least possible long-term 

2 cost to the Deposit Insurance Fund. 

3 (3) REPORT TO COUNCIL.—Not later than 1 

4 years after the date of enactment of this Act, the 

5 Comptroller General shall submit a report to the 

6 Council on the results of the study conducted under 

7 this subsection. 

8 (4) COUNCIL REPORT OF ACTION.—Not later 

9 than 6 months after the date of receipt of the report 

10 from the Comptroller General under paragraph (3), 

11 the Council shall submit a report to the Committee on 

12 Banking, Housing, and Urban Affairs of the Senate 

13 and the Committee on Financial Services of the 

14 House of Representatives on actions taken in response 

15 to the report, including any recommendations made 

16 to the Federal primary financial regulatory agencies 

17 under section 120. 

18 SEC. 203. SYSTEMIC RISK DETERMINATION. 

19 (a) WRITTEN RECOMMENDATION AND DETERMINA20 TION.— 

21 (1) VOTE REQUIRED.— 

22 (A) IN GENERAL.—On their own initiative, 

23 or at the request of the Secretary, the Corpora24 tion and the Board of Governors shall consider 

25 whether to make a written recommendation de-
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† HR 4173 EAS 

1 scribed in paragraph (2) with respect to whether 

2 the Secretary should appoint the Corporation as 

3 receiver for a financial company. Such rec4 ommendation shall be made upon a vote of not 

fewer than 2 5 ⁄3 of the members of the Board of 

Governors then serving and 2 6 ⁄3 of the members of 

7 the board of directors of the Corporation then 

8 serving. 

9 (B) CASES INVOLVING COVERED BROKERS

10 OR DEALERS.—In the case of a covered broker or 

11 dealer, or in which the largest United States sub12 sidiary (as measured by total assets as of the end 

13 of the previous calendar quarter) of a financial 

14 company is a covered broker or dealer, the Com15 mission and the Board of Governors, at the re16 quest of the Secretary, or on their own initiative, 

17 shall consider whether to make the written rec18 ommendation described in paragraph (2) with 

19 respect to the financial company. Subject to the 

20 requirements in paragraph (2), such rec21 ommendation shall be made upon a vote of not 

fewer than 2 22 ⁄3 of the members of the Board of 

23 Governors then serving and the members of the 

24 Commission then serving, and in consultation 

25 with the Corporation. 
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1 (2) RECOMMENDATION REQUIRED.—Any written 

2 recommendation pursuant to paragraph (1) shall con3 tain— 

4 (A) an evaluation of whether the financial 

5 company is in default or in danger of default; 

6 (B) a description of the effect that the de7 fault of the financial company would have on fi8 nancial stability in the United States; 

9 (C) a recommendation regarding the nature 

10 and the extent of actions to be taken under this 

11 title regarding the financial company; 

12 (D) an evaluation of the likelihood of a pri13 vate sector alternative to prevent the default of 

14 the financial company; 

15 (E) an evaluation of why a case under the 

16 Bankruptcy Code is not appropriate for the fi17 nancial company; 

18 (F) an evaluation of the effects on creditors, 

19 counterparties, and shareholders of the financial 

20 company and other market participants; and 

21 (G) an evaluation of whether the company 

22 satisfies the definition of a financial company 

23 under section 201. 

24 (b) DETERMINATION BY THE SECRETARY.—Notwith25 standing any other provision of Federal or State law, the 
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1 Secretary shall take action in accordance with section 

2 202(a)(1)(A), if, upon the written recommendation under 

3 subsection (a), the Secretary (in consultation with the 

4 President) determines that— 

5 (1) the financial company is in default or in 

6 danger of default; 

7 (2) the failure of the financial company and its 

8 resolution under otherwise applicable Federal or State 

9 law would have serious adverse effects on financial 

10 stability in the United States; 

11 (3) no viable private sector alternative is avail12 able to prevent the default of the financial company; 

13 (4) any effect on the claims or interests of credi14 tors, counterparties, and shareholders of the financial 

15 company and other market participants as a result of 

16 actions to be taken under this title is appropriate, 

17 given the impact that any action taken under this 

18 title would have on financial stability in the United 

19 States; 

20 (5) any action under section 204 would avoid or 

21 mitigate such adverse effects, taking into consider22 ation the effectiveness of the action in mitigating po23 tential adverse effects on the financial system, the cost 

24 to the general fund of the Treasury, and the potential 

25 to increase excessive risk taking on the part of credi-
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1 tors, counterparties, and shareholders in the financial 

2 company; 

3 (6) a Federal regulatory agency has ordered the 

4 financial company to convert all of its convertible 

5 debt instruments that are subject to the regulatory 

6 order; and 

7 (7) the company satisfies the definition of a fi8 nancial company under section 201. 

9 (c) DOCUMENTATION AND REVIEW.— 

10 (1) IN GENERAL.—The Secretary shall— 

11 (A) document any determination under sub12 section (b); 

13 (B) retain the documentation for review 

14 under paragraph (2); and 

15 (C) notify the covered financial company 

16 and the Corporation of such determination. 

17 (2) REPORT TO CONGRESS.—Not later than 24 

18 hours after the date of appointment of the Corpora19 tion as receiver for a covered financial company, the 

20 Secretary shall provide written notice of the rec21 ommendations and determinations reached in accord22 ance with subsections (a) and (b) to the Majority 

23 Leader and the Minority Leader of the Senate and the 

24 Speaker and the Minority Leader of the House of 

25 Representatives, the Committee on Banking, Housing, 
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† HR 4173 EAS 

1 and Urban Affairs of the Senate, and the Committee 

2 on Financial Services of the House of Representatives, 

3 which shall consist of a summary of the basis for the 

4 determination, including, to the extent available at 

5 the time of the determination— 

6 (A) the size and financial condition of the 

7 covered financial company; 

8 (B) the sources of capital and credit sup9 port that were available to the covered financial 

10 company; 

11 (C) the operations of the covered financial 

12 company that could have had a significant im13 pact on financial stability, markets, or both; 

14 (D) identification of the banks and finan15 cial companies which may be able to provide the 

16 services offered by the covered financial com17 pany; 

18 (E) any potential international ramifica19 tions of resolution of the covered financial com20 pany under other applicable insolvency law; 

21 (F) an estimate of the potential effect of the 

22 resolution of the covered financial company 

23 under other applicable insolvency law on the fi24 nancial stability of the United States; 
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† HR 4173 EAS 

1 (G) the potential effect of the appointment 

2 of a receiver by the Secretary on consumers; 

3 (H) the potential effect of the appointment 

4 of a receiver by the Secretary on the financial 

5 system, financial markets, and banks and other 

6 financial companies; and 

7 (I) whether resolution of the covered finan8 cial company under other applicable insolvency 

9 law would cause banks or other financial compa10 nies to experience severe liquidity distress. 

11 (3) REPORTS TO CONGRESS AND THE PUBLIC.— 

12 (A) IN GENERAL.—Not later than 60 days 

13 after the date of appointment of the Corporation 

14 as receiver for a covered financial company, the 

15 Corporation shall file a report with the Com16 mittee on Banking, Housing, and Urban Affairs 

17 of the Senate and the Committee on Financial 

18 Services of the House of Representatives— 

19 (i) setting forth information on the fi20 nancial condition of the covered financial 

21 company as of the date of the appointment, 

22 including a description of its assets and li23 abilities; 
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1 (ii) describing the plan of, and actions 

2 taken by, the Corporation to wind down the 

3 covered financial company; 

4 (iii) explaining each instance in which 

5 the Corporation waived any applicable re6 quirements of part 366 of title 12, Code of 

7 Federal Regulations (or any successor there8 to) with respect to conflicts of interest by 

9 any person in the private sector who was 

10 retained to provide services to the Corpora11 tion in connection with such receivership; 

12 (iv) describing the reasons for the pro13 vision of any funding to the receivership out 

14 of the Fund; 

15 (v) setting forth the expected costs of 

16 the orderly liquidation of the covered finan17 cial company; 

18 (vi) setting forth the identity of any 

19 claimant that is treated in a manner dif20 ferent from other similarly situated claim21 ants under subsection (b)(4), (d)(4), or 

22 (h)(5)(E), the amount of any additional 

23 payment to such claimant under subsection 

24 (d)(4), and the reason for any such action; 

25 and 
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† HR 4173 EAS 

1 (vii) which report the Corporation 

2 shall publish on an online website main3 tained by the Corporation, subject to main4 taining appropriate confidentiality. 

5 (B) AMENDMENTS.—The Corporation shall, 

6 on a timely basis, not less frequently than quar7 terly, amend or revise and resubmit the reports 

8 prepared under this paragraph, as necessary. 

9 (C) CONGRESSIONAL TESTIMONY.—The Cor10 poration and the primary financial regulatory 

11 agency, if any, of the financial company for 

12 which the Corporation was appointed receiver 

13 under this title shall appear before Congress, if 

14 requested, not later than 30 days after the date 

15 on which the Corporation first files the reports 

16 required under subparagraph (A). 

17 (4) DEFAULT OR IN DANGER OF DEFAULT.—For 

18 purposes of this title, a financial company shall be 

19 considered to be in default or in danger of default if, 

20 as determined in accordance with subsection (b)— 

21 (A) a case has been, or likely will promptly 

22 be, commenced with respect to the financial com23 pany under the Bankruptcy Code; 

24 (B) the financial company has incurred, or 

25 is likely to incur, losses that will deplete all or 
146 

† HR 4173 EAS 

1 substantially all of its capital, and there is no 

2 reasonable prospect for the company to avoid 

3 such depletion; 

4 (C) the assets of the financial company are, 

5 or are likely to be, less than its obligations to 

6 creditors and others; or 

7 (D) the financial company is, or is likely to 

8 be, unable to pay its obligations (other than 

9 those subject to a bona fide dispute) in the nor10 mal course of business. 

11 (5) GAO REVIEW.—The Comptroller General of 

12 the United States shall review and report to Congress 

13 on any determination under subsection (b), that re14 sults in the appointment of the Corporation as re15 ceiver, including— 

16 (A) the basis for the determination; 

17 (B) the purpose for which any action was 

18 taken pursuant thereto; 

19 (C) the likely effect of the determination 

20 and such action on the incentives and conduct of 

21 financial companies and their creditors, counter22 parties, and shareholders; and 

23 (D) the likely disruptive effect of the deter24 mination and such action on the reasonable ex25 pectations of creditors, counterparties, and share-
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1 holders, taking into account the impact any ac2 tion under this title would have on financial sta3 bility in the United States, including whether 

4 the rights of such parties will be disrupted. 

5 (d) CORPORATION POLICIES AND PROCEDURES.—As 

6 soon as is practicable after the date of enactment of this 

7 Act, the Corporation shall establish policies and procedures 

8 that are acceptable to the Secretary governing the use of 

9 funds available to the Corporation to carry out this title, 

10 including the terms and conditions for the provision and 

11 use of funds under sections 204(d), 210(h)(2)(G)(iv), and 

12 210(h)(9). 

13 (e) TREATMENT OF INSURANCE COMPANIES AND IN14 SURANCE COMPANY SUBSIDIARIES.— 

15 (1) IN GENERAL.—Notwithstanding subsection 

16 (b), if an insurance company is a covered financial 

17 company or a subsidiary or affiliate of a covered fi18 nancial company, the liquidation or rehabilitation of 

19 such insurance company, and any subsidiary or affil20 iate of such company that is not excepted under para21 graph (2), shall be conducted as provided under such 

22 State law. 

23 (2) EXCEPTION FOR SUBSIDIARIES AND AFFILI24 ATES.—The requirement of paragraph (1) shall not 

25 apply with respect to any subsidiary or affiliate of an 
148 

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1 insurance company that is not itself an insurance 

2 company. 

3 (3) BACKUP AUTHORITY.—Notwithstanding 

4 paragraph (1), with respect to a covered financial 

5 company described in paragraph (1), if, after the end 

6 of the 60-day period beginning on the date on which 

7 a determination is made under section 202(a) with 

8 respect to such company, the appropriate regulatory 

9 agency has not filed the appropriate judicial action 

10 in the appropriate State court to place such company 

11 into orderly liquidation under the laws and require12 ments of the State, the Corporation shall have the au13 thority to stand in the place of the appropriate regu14 latory agency and file the appropriate judicial action 

15 in the appropriate State court to place such company 

16 into orderly liquidation under the laws and require17 ments of the State. 

18 SEC. 204. ORDERLY LIQUIDATION. 

19 (a) PURPOSE OF ORDERLY LIQUIDATION AUTHOR20 ITY.—It is the purpose of this title to provide the necessary 

21 authority to liquidate failing financial companies that pose 

22 a significant risk to the financial stability of the United 

23 States in a manner that mitigates such risk and minimizes 

24 moral hazard. The authority provided in this title shall be 
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1 exercised in the manner that best fulfills such purpose, so 

2 that— 

3 (1) creditors and shareholders will bear the losses 

4 of the financial company; 

5 (2) management responsible for the condition of 

6 the financial company will not be retained; and 

7 (3) the Corporation and other appropriate agen8 cies will take all steps necessary and appropriate to 

9 assure that all parties, including management and 

10 third parties, having responsibility for the condition 

11 of the financial company bear losses consistent with 

12 their responsibility, including actions for damages, 

13 restitution, and recoupment of compensation and 

14 other gains not compatible with such responsibility. 

15 (b) CORPORATION AS RECEIVER.—Upon the appoint16 ment of the Corporation under section 202, the Corporation 

17 shall act as the receiver for the covered financial company, 

18 with all of the rights and obligations set forth in this title. 

19 (c) CONSULTATION.—The Corporation, as receiver— 

20 (1) shall consult with the primary financial reg21 ulatory agency or agencies of the covered financial 

22 company and its covered subsidiaries for purposes of 

23 ensuring an orderly liquidation of the covered finan24 cial company; 
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1 (2) may consult with, or under subsection 

2 (a)(1)(B)(v) or (a)(1)(L) of section 210, acquire the 

3 services of, any outside experts, as appropriate to in4 form and aid the Corporation in the orderly liquida5 tion process; 

6 (3) shall consult with the primary financial reg7 ulatory agency or agencies of any subsidiaries of the 

8 covered financial company that are not covered sub9 sidiaries, and coordinate with such regulators regard10 ing the treatment of such solvent subsidiaries and the 

11 separate resolution of any such insolvent subsidiaries 

12 under other governmental authority, as appropriate; 

13 and 

14 (4) shall consult with the Commission and the 

15 Securities Investor Protection Corporation in the case 

16 of any covered financial company for which the Cor17 poration has been appointed as receiver that is a 

18 broker or dealer registered with the Commission under 

19 section 15(b) of the Securities Exchange Act of 1934 

20 (15 U.S.C. 78o(b)) and is a member of the Securities 

21 Investor Protection Corporation, for the purpose of 

22 determining whether to transfer to a bridge financial 

23 company organized by the Corporation as receiver, 

24 without consent of any customer, customer accounts of 

25 the covered financial company. 
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1 (d) FUNDING FOR ORDERLY LIQUIDATION.—Upon its 

2 appointment as receiver for a covered financial company, 

3 and thereafter as the Corporation may, in its discretion, 

4 determine to be necessary or appropriate, the Corporation 

5 may make available to the receivership, subject to the condi6 tions set forth in section 206 and subject to the plan de7 scribed in section 210(n)(11), funds for the orderly liquida8 tion of the covered financial company. All funds provided 

9 by the Corporation under this subsection shall have a pri10 ority of claims under subparagraph (A) or (B) of section 

11 210(b)(1), as applicable, including funds used for— 

12 (1) making loans to, or purchasing any debt ob13 ligation of, the covered financial company or any cov14 ered subsidiary; 

15 (2) purchasing or guaranteeing against loss the 

16 assets of the covered financial company or any cov17 ered subsidiary, directly or through an entity estab18 lished by the Corporation for such purpose; 

19 (3) assuming or guaranteeing the obligations of 

20 the covered financial company or any covered sub21 sidiary to 1 or more third parties; 

22 (4) taking a lien on any or all assets of the cov23 ered financial company or any covered subsidiary, 

24 including a first priority lien on all unencumbered 

25 assets of the covered financial company or any cov-
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1 ered subsidiary to secure repayment of any trans2 actions conducted under this subsection; 

3 (5) selling or transferring all, or any part, of 

4 such acquired assets, liabilities, or obligations of the 

5 covered financial company or any covered subsidiary; 

6 and 

7 (6) making payments pursuant to subsections 

8 (b)(4), (d)(4), and (h)(5)(E) of section 210. 

9 SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS 

10 AND DEALERS. 

11 (a) APPOINTMENT OF SIPC AS TRUSTEE FOR PROTEC12 TION OF CUSTOMER SECURITIES AND PROPERTY.—Upon 

13 the appointment of the Corporation as receiver for any cov14 ered broker or dealer, the Corporation shall appoint, with15 out any need for court approval, the Securities Investor 

16 Protection Corporation to act as trustee for liquidation 

17 under the Securities Investor Protection Act of 1970 (15 

18 U.S.C. 78aaa et seq.) of the covered broker or dealer. 

19 (b) POWERS AND DUTIES OF SIPC.— 

20 (1) IN GENERAL.—Except as provided in this 

21 section, upon its appointment as trustee for the liq22 uidation of a covered broker or dealer, SIPC shall 

23 have all of the powers and duties provided by the Se24 curities Investor Protection Act of 1970 (15 U.S.C. 

25 78aaa et seq.), including, without limitation, all 
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1 rights of action against third parties, but shall have 

2 no powers or duties with respect to assets and liabil3 ities transferred by the Corporation from the covered 

4 broker or dealer to any bridge financial company es5 tablished in accordance with this title. 

6 (2) LIMITATION OF POWERS.—The exercise by 

7 SIPC of powers and functions as trustee under sub8 section (a) shall not impair or impede the exercise of 

9 the powers and duties of the Corporation with regard 

10 to— 

11 (A) any action, except as otherwise provided 

12 in this title— 

13 (i) to make funds available under sec14 tion 204(d); 

15 (ii) to organize, establish, operate, or 

16 terminate any bridge financial company; 

17 (iii) to transfer assets and liabilities; 

18 (iv) to enforce or repudiate contracts; 

19 or 

20 (v) to take any other action relating to 

21 such bridge financial company under sec22 tion 210; or 

23 (B) determining claims under subsection 

24 (d). 
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1 (3) QUALIFIED FINANCIAL CONTRACTS.—Not2 withstanding any provision of the Securities Investor 

3 Protection Act of 1970 to the contrary (including sec4 tion 5(b)(2)(C) of that Act (15 U.S.C. 

5 78eee(b)(2)(C))), the rights and obligations of any 

6 party to a qualified financial contract (as that term 

7 is defined in section 210(c)(8)) to which a covered 

8 broker or dealer described in subsection (a) is a party 

9 shall be governed exclusively by section 210, including 

10 the limitations and restrictions contained in section 

11 210(c)(10)(B). 

12 (c) LIMITATION ON COURT ACTION.—Except as other13 wise provided in this title, no court may take any action, 

14 including any action pursuant to the Securities Investor 

15 Protection Act of 1970 or the Bankruptcy Code, to restrain 

16 or affect the exercise of powers or functions of the Corpora17 tion as receiver for a covered broker or dealer and any 

18 claims against the Corporation as such receiver shall be de19 termined in accordance with subsection (e) and such claims 

20 shall be limited to money damages. 

21 (d) ACTIONS BY CORPORATION AS RECEIVER.— 

22 (1) IN GENERAL.—Notwithstanding any other 

23 provision of this title, no action taken by the Cor24 poration, as receiver with respect to a covered broker 

25 or dealer, shall— 
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1 (A) adversely affect the rights of a customer 

2 to customer property or customer name securi3 ties; 

4 (B) diminish the amount or timely pay5 ment of net equity claims of customers; or 

6 (C) otherwise impair the recoveries provided 

7 to a customer under the Securities Investor Pro8 tection Act of 1970 (15 U.S.C. 78aaa et seq.). 

9 (2) NET PROCEEDS.—The net proceeds from any 

10 transfer, sale, or disposition of assets by the Corpora11 tion as receiver for the covered broker or dealer shall 

12 be for the benefit of the estate of the covered broker or 

13 dealer, as provided in this title. 

14 (e) CLAIMS AGAINST THE CORPORATION AS RE15 CEIVER.—Any claim against the Corporation as receiver for 

16 a covered broker or dealer for assets transferred to a bridge 

17 financial company established with respect to such covered 

18 broker or dealer— 

19 (1) shall be determined in accordance with sec20 tion 210(a)(2); and 

21 (2) may be reviewed by the appropriate district 

22 or territorial court of the United States in accordance 

23 with section 210(a)(5). 

24 (f) SATISFACTION OF CUSTOMER CLAIMS.— 
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1 (1) OBLIGATIONS TO CUSTOMERS.—Notwith2 standing any other provision of this title, all obliga3 tions of a covered broker or dealer or of any bridge 

4 financial company established with respect to such 

5 covered broker or dealer to a customer relating to, or 

6 net equity claims based upon, customer property shall 

7 be promptly discharged by the delivery of securities or 

8 the making of payments to or for the account of such 

9 customer, in a manner and in an amount at least as 

10 beneficial to the customer as would have been the case 

11 had the covered broker or dealer been subject to a pro12 ceeding under the Securities Investor Protection Act 

13 of 1970 (15 U.S.C. 78aaa et seq.) without the ap14 pointment of the Corporation as receiver, and with a 

15 filing date as of the date on which the Corporation 

16 is appointed as receiver. 

17 (2) SATISFACTION OF CLAIMS BY SIPC.—SIPC, 

18 as trustee for a covered broker or dealer, shall satisfy 

19 customer claims in the manner and amount provided 

20 under the Securities Investor Protection Act of 1970 

21 (15 U.S.C. 78aaa et seq.), as if the appointment of the 

22 Corporation as receiver had not occurred, and with a 

23 filing date as of the date on which the Corporation 

24 is appointed as receiver. The Corporation shall satisfy 

25 customer claims, to the extent that a customer would 
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1 have received more securities or cash with respect to 

2 the allocation of customer property had the covered fi3 nancial company been subject to a proceeding under 

4 the Securities Investor Protection Act (15 U.S.C. 

5 78aaa et seq.) without the appointment of the Cor6 poration as receiver, and with a filing date as of the 

7 date on which the Corporation is appointed as re8 ceiver. 

9 (g) PRIORITIES.— 

10 (1) CUSTOMER PROPERTY.—As trustee for a cov11 ered broker or dealer, SIPC shall allocate customer 

12 property and deliver customer name securities in ac13 cordance with section 8(c) of the Securities Investor 

14 Protection Act of 1970 (15 U.S.C. 78fff–2(c)). 

15 (2) OTHER CLAIMS.—All claims other than those 

16 described in paragraph (1) (including any unpaid 

17 claim by a customer for the allowed net equity claim 

18 of such customer from customer property) shall be 

19 paid in accordance with the priorities in section 

20 210(b). 

21 (h) RULEMAKING.—The Commission and the Corpora22 tion, after consultation with SIPC, shall jointly issue rules 

23 to implement this section. 
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1 SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL 

2 ORDERLY LIQUIDATION ACTIONS. 

3 In taking action under this title, the Corporation 

4 shall— 

5 (1) determine that such action is necessary for 

6 purposes of the financial stability of the United 

7 States, and not for the purpose of preserving the cov8 ered financial company; 

9 (2) ensure that the shareholders of a covered fi10 nancial company do not receive payment until after 

11 all other claims and the Fund are fully paid; 

12 (3) ensure that unsecured creditors bear losses in 

13 accordance with the priority of claim provisions in 

14 section 210; 

15 (4) ensure that management responsible for the 

16 failed condition of the covered financial company is 

17 removed (if such management has not already been 

18 removed at the time at which the Corporation is ap19 pointed receiver); and 

20 (5) not take an equity interest in or become a 

21 shareholder of any covered financial company or any 

22 covered subsidiary. 

23 SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN AP24 POINTMENT OF RECEIVER. 

25 The members of the board of directors (or body per26 forming similar functions) of a covered financial company 
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1 shall not be liable to the shareholders or creditors thereof 

2 for acquiescing in or consenting in good faith to the ap3 pointment of the Corporation as receiver for the covered fi4 nancial company under section 203. 

5 SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS. 

6 (a) IN GENERAL.—Effective as of the date of the ap7 pointment of the Corporation as receiver for the covered fi8 nancial company under section 202 or the appointment of 

9 SIPC as trustee for a covered broker or dealer under section 

10 205, as applicable, any case or proceeding commenced with 

11 respect to the covered financial company under the Bank12 ruptcy Code or the Securities Investor Protection Act of 

13 1970 shall be dismissed, upon notice to the Bankruptcy 

14 Court (with respect to a case commenced under the Bank15 ruptcy Code), and upon notice to SIPC (with respect to 

16 a covered broker or dealer) and no such case or proceeding 

17 may be commenced with respect to a covered financial com18 pany at any time while the orderly liquidation is pending. 

19 (b) REVESTING OF ASSETS.—Effective as of the date 

20 of appointment of the Corporation as receiver, the assets 

21 of a covered financial company shall, to the extent they have 

22 vested in any entity other than the covered financial com23 pany as a result of any case or proceeding commenced with 

24 respect to the covered financial company under the Bank25 ruptcy Code, the Securities Investor Protection Act of 1970, 
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1 or any similar provision of State liquidation or insolvency 

2 law applicable to the covered financial company, revest in 

3 the covered financial company. 

4 (c) LIMITATION.—Notwithstanding subsections (a) and 

5 (b), any order entered or other relief granted by a bank6 ruptcy court prior to the date of appointment of the Cor7 poration as receiver shall continue with the same validity 

8 as if an orderly liquidation had not been commenced. 

9 SEC. 209. RULEMAKING; NON-CONFLICTING LAW. 

10 The Corporation shall, in consultation with the Coun11 cil, prescribe such rules or regulations as the Corporation 

12 considers necessary or appropriate to implement this title, 

13 including rules and regulations with respect to the rights, 

14 interests, and priorities of creditors, counterparties, secu15 rity entitlement holders, or other persons with respect to 

16 any covered financial company or any assets or other prop17 erty of or held by such covered financial company, and ad18 dress the potential for conflicts of interest between or among 

19 individual receiverships established under this title or 

20 under the Federal Deposit Insurance Act. To the extent pos21 sible, the Corporation shall seek to harmonize applicable 

22 rules and regulations promulgated under this section with 

23 the insolvency laws that would otherwise apply to a covered 

24 financial company. 
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1 SEC. 210. POWERS AND DUTIES OF THE CORPORATION. 

2 (a) POWERS AND AUTHORITIES.— 

3 (1) GENERAL POWERS.— 

4 (A) SUCCESSOR TO COVERED FINANCIAL

5 COMPANY.—The Corporation shall, upon ap6 pointment as receiver for a covered financial 

7 company under this title, succeed to— 

8 (i) all rights, titles, powers, and privi9 leges of the covered financial company and 

10 its assets, and of any stockholder, member, 

11 officer, or director of such company; and 

12 (ii) title to the books, records, and as13 sets of any previous receiver or other legal 

14 custodian of such covered financial com15 pany. 

16 (B) OPERATION OF THE COVERED FINAN17 CIAL COMPANY DURING THE PERIOD OF ORDERLY

18 LIQUIDATION.—The Corporation, as receiver for 

19 a covered financial company, may— 

20 (i) take over the assets of and operate 

21 the covered financial company with all of 

22 the powers of the members or shareholders, 

23 the directors, and the officers of the covered 

24 financial company, and conduct all busi25 ness of the covered financial company; 
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1 (ii) collect all obligations and money 

2 owed to the covered financial company; 

3 (iii) perform all functions of the cov4 ered financial company, in the name of the 

5 covered financial company; 

6 (iv) manage the assets and property of 

7 the covered financial company, consistent 

8 with maximization of the value of the assets 

9 in the context of the orderly liquidation; 

10 and 

11 (v) provide by contract for assistance 

12 in fulfilling any function, activity, action, 

13 or duty of the Corporation as receiver. 

14 (C) FUNCTIONS OF COVERED FINANCIAL

15 COMPANY OFFICERS, DIRECTORS, AND SHARE16 HOLDERS.— 

17 (i) IN GENERAL.—The Corporation 

18 may provide for the exercise of any function 

19 by any member or stockholder, director, or 

20 officer of any covered financial company for 

21 which the Corporation has been appointed 

22 as receiver under this title. 

23 (ii) PRESUMPTION.—There shall be a 

24 strong presumption that the Corporation, as 

25 receiver for a covered financial company, 
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1 will remove management responsible for the 

2 failed condition of the covered financial 

3 company. 

4 (D) ADDITIONAL POWERS AS RECEIVER.— 

5 The Corporation shall, as receiver for a covered 

6 financial company, and subject to all legally en7 forceable and perfected security interests and all 

8 legally enforceable security entitlements in re9 spect of assets held by the covered financial com10 pany, liquidate, and wind-up the affairs of a 

11 covered financial company, including taking 

12 steps to realize upon the assets of the covered fi13 nancial company, in such manner as the Cor14 poration deems appropriate, including through 

15 the sale of assets, the transfer of assets to a 

16 bridge financial company established under sub17 section (h), or the exercise of any other rights or 

18 privileges granted to the receiver under this sec19 tion. 

20 (E) ADDITIONAL POWERS WITH RESPECT TO

21 FAILING SUBSIDIARIES OF A COVERED FINANCIAL

22 COMPANY.— 

23 (i) IN GENERAL.—In any case in 

24 which a receiver is appointed for a covered 

25 financial company under section 202, the 
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1 Corporation may appoint itself as receiver 

2 of any subsidiary (other than an insured 

3 depository institution, any covered broker 

4 or dealer, or an insurance company) of the 

5 covered financial company that is organized 

6 under Federal law or the laws of any State, 

7 if the Corporation and the Secretary jointly 

8 determine that— 

9 (I) the subsidiary is in default or 

10 in danger of default; 

11 (II) such action would avoid or 

12 mitigate serious adverse effects on the 

13 financial stability or economic condi14 tions of the United States; and 

15 (III) such action would facilitate 

16 the orderly liquidation of the covered 

17 financial company. 

18 (ii) TREATMENT AS COVERED FINAN19 CIAL COMPANY.—If the Corporation is ap20 pointed as receiver of a subsidiary of a cov21 ered financial company under clause (i), 

22 the subsidiary shall thereafter be considered 

23 a covered financial company under this 

24 title, and the Corporation shall thereafter 

25 have all the powers and rights with respect 
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1 to that subsidiary as it has with respect to 

2 a covered financial company under this 

3 title. 

4 (F) ORGANIZATION OF BRIDGE COMPA5 NIES.—The Corporation, as receiver for a cov6 ered financial company, may organize a bridge 

7 financial company under subsection (h). 

8 (G) MERGER; TRANSFER OF ASSETS AND LI9 ABILITIES.— 

10 (i) IN GENERAL.—Subject to clauses 

11 (ii) and (iii), the Corporation, as receiver 

12 for a covered financial company, may— 

13 (I) merge the covered financial 

14 company with another company; or 

15 (II) transfer any asset or liability 

16 of the covered financial company (in17 cluding any assets and liabilities held 

18 by the covered financial company for 

19 security entitlement holders, any cus20 tomer property, or any assets and li21 abilities associated with any trust or 

22 custody business) without obtaining 

23 any approval, assignment, or consent 

24 with respect to such transfer. 
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1 (ii) FEDERAL AGENCY APPROVAL; 

2 ANTITRUST REVIEW.—With respect to a 

3 transaction described in clause (i)(I) that 

4 requires approval by a Federal agency— 

5 (I) the transaction may not be 

6 consummated before the 5th calendar 

7 day after the date of approval by the 

8 Federal agency responsible for such ap9 proval; 

10 (II) if, in connection with any 

11 such approval, a report on competitive 

12 factors is required, the Federal agency 

13 responsible for such approval shall 

14 promptly notify the Attorney General 

15 of the United States of the proposed 

16 transaction, and the Attorney General 

17 shall provide the required report not 

18 later than 10 days after the date of the 

19 request; and 

20 (III) if notification under section 

21 7A of the Clayton Act is required with 

22 respect to such transaction, then the re23 quired waiting period shall end on the 

24 15th day after the date on which the 

25 Attorney General and the Federal 
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1 Trade Commission receive such notifi2 cation, unless the waiting period is ter3 minated earlier under subsection (b)(2) 

4 of such section 7A, or is extended pur5 suant to subsection (e)(2) of such sec6 tion 7A. 

7 (iii) SETOFF.—Subject to the other 

8 provisions of this title, any transferee of as9 sets from a receiver, including a bridge fi10 nancial company, shall be subject to such 

11 claims or rights as would prevail over the 

12 rights of such transferee in such assets 

13 under applicable noninsolvency law. 

14 (H) PAYMENT OF VALID OBLIGATIONS.—The 

15 Corporation, as receiver for a covered financial 

16 company, shall, to the extent that funds are 

17 available, pay all valid obligations of the covered 

18 financial company that are due and payable at 

19 the time of the appointment of the Corporation 

20 as receiver, in accordance with the prescriptions 

21 and limitations of this title. 

22 (I) APPLICABLE NONINSOLVENCY LAW.—Ex23 cept as may otherwise be provided in this title, 

24 the applicable noninsolvency law shall be deter25 mined by the noninsolvency choice of law rules 
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1 otherwise applicable to the claims, rights, titles, 

2 persons, or entities at issue. 

3 (J) SUBPOENA AUTHORITY.— 

4 (i) IN GENERAL.—The Corporation, as 

5 receiver for a covered financial company, 

6 may, for purposes of carrying out any 

7 power, authority, or duty with respect to 

8 the covered financial company (including 

9 determining any claim against the covered 

10 financial company and determining and re11 alizing upon any asset of any person in the 

12 course of collecting money due the covered 

13 financial company), exercise any power es14 tablished under section 8(n) of the Federal 

15 Deposit Insurance Act, as if the Corpora16 tion were the appropriate Federal banking 

17 agency for the covered financial company, 

18 and the covered financial company were an 

19 insured depository institution. 

20 (ii) RULE OF CONSTRUCTION.—This 

21 subparagraph may not be construed as lim22 iting any rights that the Corporation, in 

23 any capacity, might otherwise have to exer24 cise any powers described in clause (i) or 

25 under any other provision of law. 
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1 (K) INCIDENTAL POWERS.—The Corpora2 tion, as receiver for a covered financial com3 pany, may exercise all powers and authorities 

4 specifically granted to receivers under this title, 

5 and such incidental powers as shall be necessary 

6 to carry out such powers under this title. 

7 (L) UTILIZATION OF PRIVATE SECTOR.—In 

8 carrying out its responsibilities in the manage9 ment and disposition of assets from the covered 

10 financial company, the Corporation, as receiver 

11 for a covered financial company, may utilize the 

12 services of private persons, including real estate 

13 and loan portfolio asset management, property 

14 management, auction marketing, legal, and bro15 kerage services, if such services are available in 

16 the private sector, and the Corporation deter17 mines that utilization of such services is prac18 ticable, efficient, and cost effective. 

19 (M) SHAREHOLDERS AND CREDITORS OF

20 COVERED FINANCIAL COMPANY.—Notwith21 standing any other provision of law, the Cor22 poration, as receiver for a covered financial com23 pany, shall succeed by operation of law to the 

24 rights, titles, powers, and privileges described in 

25 subparagraph (A), and shall terminate all rights 
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1 and claims that the stockholders and creditors of 

2 the covered financial company may have against 

3 the assets of the covered financial company or 

4 the Corporation arising out of their status as 

5 stockholders or creditors, except for their right to 

6 payment, resolution, or other satisfaction of their 

7 claims, as permitted under this section. The Cor8 poration shall ensure that shareholders and unse9 cured creditors bear losses, consistent with the 

10 priority of claims provisions under this section. 

11 (N) COORDINATION WITH FOREIGN FINAN12 CIAL AUTHORITIES.—The Corporation, as re13 ceiver for a covered financial company, shall co14 ordinate, to the maximum extent possible, with 

15 the appropriate foreign financial authorities re16 garding the orderly liquidation of any covered fi17 nancial company that has assets or operations in 

18 a country other than the United States. 

19 (O) RESTRICTION ON TRANSFERS TO

20 BRIDGE FINANCIAL COMPANY.— 

21 (i) SECTION OF ACCOUNTS FOR TRANS22 FER.—If the Corporation establishes one or 

23 more bridge financial companies with re24 spect to a covered broker or dealer, the Cor25 poration shall transfer to a bridge financial 
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1 company, all customer accounts of the cov2 ered financial company, unless the Corpora3 tion, after consulting with the Commission 

4 and SIPC, determines that— 

5 (I) the customer accounts are like6 ly to be promptly transferred to an7 other covered broker or dealer; or 

8 (II) the transfer of the accounts to 

9 a bridge financial company would ma10 terially interfere with the ability of the 

11 Corporation to avoid or mitigate seri12 ous adverse effects on financial sta13 bility or economic conditions in the 

14 United States. 

15 (ii) TRANSFER OF PROPERTY.—SIPC, 

16 as trustee for the liquidation of the covered 

17 broker or dealer, and the Commission, shall 

18 provide any and all reasonable assistance 

19 necessary to complete such transfers by the 

20 Corporation. 

21 (iii) CUSTOMER CONSENT AND COURT

22 APPROVAL NOT REQUIRED.—Neither cus23 tomer consent nor court approval shall be 

24 required to transfer any customer accounts 

25 and associated customer property to a 
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1 bridge financial company in accordance 

2 with this section. 

3 (iv) NOTIFICATION OF SIPC AND SHAR4 ING OF INFORMATION.—The Corporation 

5 shall identify to SIPC the customer ac6 counts and associated customer property 

7 transferred to the bridge financial company. 

8 The Corporation and SIPC shall cooperate 

9 in the sharing of any information necessary 

10 for each entity to discharge its obligations 

11 under this title and under the Securities In12 vestor Protection Act of 1970 (15 U.S.C. 

13 78aaa et seq.) including by providing access 

14 to the books and records of the covered fi15 nancial company and any bridge financial 

16 company established in accordance with 

17 this title. 

18 (2) DETERMINATION OF CLAIMS.— 

19 (A) IN GENERAL.—The Corporation, as re20 ceiver for a covered financial company, shall re21 port on claims, as set forth in section 203(c)(3). 

22 Subject to paragraph (4) of this subsection, the 

23 Corporation, as receiver for a covered financial 

24 company, shall determine claims in accordance 
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1 with the requirements of this subsection and reg2 ulations prescribed under section 209. 

3 (B) NOTICE REQUIREMENTS.—The Corpora4 tion, as receiver for a covered financial com5 pany, in any case involving the liquidation or 

6 winding up of the affairs of a covered financial 

7 company, shall— 

8 (i) promptly publish a notice to the 

9 creditors of the covered financial company 

10 to present their claims, together with proof, 

11 to the receiver by a date specified in the no12 tice, which shall be not earlier than 90 days 

13 after the date of publication of such notice; 

14 and 

15 (ii) republish such notice 1 month and 

16 2 months, respectively, after the date of pub17 lication under clause (i). 

18 (C) MAILING REQUIRED.—The Corporation 

19 as receiver shall mail a notice similar to the no20 tice published under clause (i) or (ii) of subpara21 graph (B), at the time of such publication, to 

22 any creditor shown on the books and records of 

23 the covered financial company— 

24 (i) at the last address of the creditor 

25 appearing in such books; 
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1 (ii) in any claim filed by the claimant; 

2 or 

3 (iii) upon discovery of the name and 

4 address of a claimant not appearing on the 

5 books and records of the covered financial 

6 company, not later than 30 days after the 

7 date of the discovery of such name and ad8 dress. 

9 (3) PROCEDURES FOR RESOLUTION OF

10 CLAIMS.— 

11 (A) DECISION PERIOD.— 

12 (i) IN GENERAL.—Prior to the 180th 

13 day after the date on which a claim against 

14 a covered financial company is filed with 

15 the Corporation as receiver, or such later 

16 date as may be agreed as provided in clause 

17 (ii), the Corporation shall notify the claim18 ant whether it accepts or objects to the 

19 claim, in accordance with subparagraphs 

20 (B), (C), and (D). 

21 (ii) EXTENSION OF TIME.—By written 

22 agreement executed not later than 180 days 

23 after the date on which a claim against a 

24 covered financial company is filed with the 

25 Corporation, the period described in clause 
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1 (i) may be extended by written agreement 

2 between the claimant and the Corporation. 

3 Failure to notify the claimant of any dis4 allowance within the time period set forth 

5 in clause (i), as it may be extended by 

6 agreement under this clause, shall be 

7 deemed to be a disallowance of such claim, 

8 and the claimant may file or continue an 

9 action in court, as provided in paragraph 

10 (4). 

11 (iii) MAILING OF NOTICE SUFFI12 CIENT.—The requirements of clause (i) shall 

13 be deemed to be satisfied if the notice of any 

14 decision with respect to any claim is mailed 

15 to the last address of the claimant which 

16 appears— 

17 (I) on the books, records, or both 

18 of the covered financial company; 

19 (II) in the claim filed by the 

20 claimant; or 

21 (III) in documents submitted in 

22 proof of the claim. 

23 (iv) CONTENTS OF NOTICE OF DIS24 ALLOWANCE.—If the Corporation as receiver 
176 

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1 objects to any claim filed under clause (i), 

2 the notice to the claimant shall contain— 

3 (I) a statement of each reason for 

4 the disallowance; and 

5 (II) the procedures required to file 

6 or continue an action in court, as pro7 vided in paragraph (4). 

8 (B) ALLOWANCE OF PROVEN CLAIM.—The 

9 receiver shall allow any claim received by the re10 ceiver on or before the date specified in the notice 

11 under paragraph (2)(B)(i), which is proved to 

12 the satisfaction of the receiver. 

13 (C) DISALLOWANCE OF CLAIMS FILED

14 AFTER END OF FILING PERIOD.— 

15 (i) IN GENERAL.—Except as provided 

16 in clause (ii), claims filed after the date 

17 specified in the notice published under 

18 paragraph (2)(B)(i) shall be disallowed, 

19 and such disallowance shall be final. 

20 (ii) CERTAIN EXCEPTIONS.—Clause (i) 

21 shall not apply with respect to any claim 

22 filed by a claimant after the date specified 

23 in the notice published under paragraph 

24 (2)(B)(i), and such claim may be considered 
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† HR 4173 EAS 

1 by the receiver under subparagraph (B), 

2 if— 

3 (I) the claimant did not receive 

4 notice of the appointment of the re5 ceiver in time to file such claim before 

6 such date; and 

7 (II) such claim is filed in time to 

8 permit payment of such claim. 

9 (D) AUTHORITY TO DISALLOW CLAIMS.— 

10 (i) IN GENERAL.—The Corporation 

11 may object to any portion of any claim by 

12 a creditor or claim of a security, preference, 

13 setoff, or priority which is not proved to the 

14 satisfaction of the Corporation. 

15 (ii) PAYMENTS TO UNDERSECURED

16 CREDITORS.—In the case of a claim against 

17 a covered financial company that is secured 

18 by any property or other asset of such cov19 ered financial company, the receiver— 

20 (I) may treat the portion of such 

21 claim which exceeds an amount equal 

22 to the fair market value of such prop23 erty or other asset as an unsecured 

24 claim; and 
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† HR 4173 EAS 

1 (II) may not make any payment 

2 with respect to such unsecured portion 

3 of the claim, other than in connection 

4 with the disposition of all claims of 

5 unsecured creditors of the covered fi6 nancial company. 

7 (iii) EXCEPTIONS.—No provision of 

8 this paragraph shall apply with respect 

9 to— 

10 (I) any extension of credit from 

11 any Federal reserve bank, or the Cor12 poration, to any covered financial 

13 company; or 

14 (II) subject to clause (ii), any le15 gally enforceable and perfected security 

16 interest in the assets of the covered fi17 nancial company securing any such 

18 extension of credit. 

19 (E) LEGAL EFFECT OF FILING.— 

20 (i) STATUTE OF LIMITATIONS

21 TOLLED.—For purposes of any applicable 

22 statute of limitations, the filing of a claim 

23 with the receiver shall constitute a com24 mencement of an action. 
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1 (ii) NO PREJUDICE TO OTHER AC2 TIONS.—Subject to paragraph (8), the filing 

3 of a claim with the receiver shall not preju4 dice any right of the claimant to continue 

5 any action which was filed before the date 

6 of appointment of the receiver for the cov7 ered financial company. 

8 (4) JUDICIAL DETERMINATION OF CLAIMS.— 

9 (A) IN GENERAL.—Subject to subparagraph 

10 (B), a claimant may file suit on a claim (or 

11 continue an action commenced before the date of 

12 appointment of the Corporation as receiver) in 

13 the district or territorial court of the United 

14 States for the district within which the principal 

15 place of business of the covered financial com16 pany is located (and such court shall have juris17 diction to hear such claim). 

18 (B) TIMING.—A claim under subparagraph 

19 (A) may be filed before the end of the 60-day pe20 riod beginning on the earlier of— 

21 (i) the end of the period described in 

22 paragraph (3)(A)(i) (or, if extended by 

23 agreement of the Corporation and the 

24 claimant, the period described in paragraph 

25 (3)(A)(ii)) with respect to any claim 
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† HR 4173 EAS 

1 against a covered financial company for 

2 which the Corporation is receiver; or 

3 (ii) the date of any notice of disallow4 ance of such claim pursuant to paragraph 

5 (3)(A)(i). 

6 (C) STATUTE OF LIMITATIONS.—If any 

7 claimant fails to file suit on such claim (or to 

8 continue an action on such claim commenced be9 fore the date of appointment of the Corporation 

10 as receiver) prior to the end of the 60-day period 

11 described in subparagraph (B), the claim shall 

12 be deemed to be disallowed (other than any por13 tion of such claim which was allowed by the re14 ceiver) as of the end of such period, such dis15 allowance shall be final, and the claimant shall 

16 have no further rights or remedies with respect 

17 to such claim. 

18 (5) EXPEDITED DETERMINATION OF CLAIMS.— 

19 (A) PROCEDURE REQUIRED.—The Corpora20 tion shall establish a procedure for expedited re21 lief outside of the claims process established 

22 under paragraph (3), for any claimant that al23 leges— 

24 (i) the existence of a legally valid and 

25 enforceable or perfected security interest in 
181 

† HR 4173 EAS 

1 property of a covered financial company, or 

2 is an entitlement holder that has obtained 

3 control of any legally valid and enforceable 

4 security entitlement in respect of any asset 

5 held by the covered financial company for 

6 which the Corporation has been appointed 

7 receiver; and 

8 (ii) that irreparable injury will occur 

9 if the claims procedure established under 

10 paragraph (3) is followed. 

11 (B) DETERMINATION PERIOD.—Prior to the 

12 end of the 90-day period beginning on the date 

13 on which a claim is filed in accordance with the 

14 procedures established pursuant to subparagraph 

15 (A), the Corporation shall— 

16 (i) determine— 

17 (I) whether to allow or disallow 

18 such claim, or any portion thereof; or 

19 (II) whether such claim should be 

20 determined pursuant to the procedures 

21 established pursuant to paragraph (3); 

22 (ii) notify the claimant of the deter23 mination; and 

24 (iii) if the claim is disallowed, provide 

25 a statement of each reason for the disallow-
182 

† HR 4173 EAS 

1 ance and the procedure for obtaining a ju2 dicial determination. 

3 (C) PERIOD FOR FILING OR RENEWING

4 SUIT.—Any claimant who files a request for ex5 pedited relief shall be permitted to file suit (or 

6 continue a suit filed before the date of appoint7 ment of the Corporation as receiver seeking a de8 termination of the rights of the claimant with re9 spect to such security interest (or such security 

10 entitlement) after the earlier of— 

11 (i) the end of the 90-day period begin12 ning on the date of the filing of a request 

13 for expedited relief; or 

14 (ii) the date on which the Corporation 

15 denies the claim or a portion thereof. 

16 (D) STATUTE OF LIMITATIONS.—If an ac17 tion described in subparagraph (C) is not filed, 

18 or the motion to renew a previously filed suit is 

19 not made, before the end of the 30-day period be20 ginning on the date on which such action or mo21 tion may be filed in accordance with subpara22 graph (C), the claim shall be deemed to be dis23 allowed as of the end of such period (other than 

24 any portion of such claim which was allowed by 

25 the receiver), such disallowance shall be final, 
183 

† HR 4173 EAS 

1 and the claimant shall have no further rights or 

2 remedies with respect to such claim. 

3 (E) LEGAL EFFECT OF FILING.— 

4 (i) STATUTE OF LIMITATIONS

5 TOLLED.—For purposes of any applicable 

6 statute of limitations, the filing of a claim 

7 with the receiver shall constitute a com8 mencement of an action. 

9 (ii) NO PREJUDICE TO OTHER AC10 TIONS.—Subject to paragraph (8), the filing 

11 of a claim with the receiver shall not preju12 dice any right of the claimant to continue 

13 any action which was filed before the ap14 pointment of the Corporation as receiver for 

15 the covered financial company. 

16 (6) AGREEMENTS AGAINST INTEREST OF THE

17 RECEIVER.—No agreement that tends to diminish or 

18 defeat the interest of the Corporation as receiver in 

19 any asset acquired by the receiver under this section 

20 shall be valid against the receiver, unless such agree21 ment— 

22 (A) is in writing; 

23 (B) was executed by an authorized officer or 

24 representative of the covered financial company, 
184 

† HR 4173 EAS 

1 or confirmed in the ordinary course of business 

2 by the covered financial company; and 

3 (C) has been, since the time of its execution, 

4 an official record of the company or the party 

5 claiming under the agreement provides docu6 mentation, acceptable to the receiver, of such 

7 agreement and its authorized execution or con8 firmation by the covered financial company. 

9 (7) PAYMENT OF CLAIMS.— 

10 (A) IN GENERAL.—Subject to subparagraph 

11 (B), the Corporation as receiver may, in its dis12 cretion and to the extent that funds are avail13 able, pay creditor claims, in such manner and 

14 amounts as are authorized under this section, 

15 which are— 

16 (i) allowed by the receiver; 

17 (ii) approved by the receiver pursuant 

18 to a final determination pursuant to para19 graph (3) or (5), as applicable; or 

20 (iii) determined by the final judgment 

21 of a court of competent jurisdiction. 

22 (B) LIMITATION.—A creditor shall, in no 

23 event, receive less than the amount that the cred24 itor is entitled to receive under paragraphs (2) 

25 and (3) of subsection (d), as applicable. 
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† HR 4173 EAS 

1 (C) PAYMENT OF DIVIDENDS ON CLAIMS.— 

2 The Corporation as receiver may, in its sole dis3 cretion, and to the extent otherwise permitted by 

4 this section, pay dividends on proven claims at 

5 any time, and no liability shall attach to the 

6 Corporation as receiver, by reason of any such 

7 payment or for failure to pay dividends to a 

8 claimant whose claim is not proved at the time 

9 of any such payment. 

10 (D) RULEMAKING BY THE CORPORATION.— 

11 The Corporation may prescribe such rules, in12 cluding definitions of terms, as the Corporation 

13 deems appropriate to establish an interest rate 

14 for or to make payments of post-insolvency inter15 est to creditors holding proven claims against the 

16 receivership estate of a covered financial com17 pany, except that no such interest shall be paid 

18 until the Corporation as receiver has satisfied 

19 the principal amount of all creditor claims. 

20 (8) SUSPENSION OF LEGAL ACTIONS.— 

21 (A) IN GENERAL.—After the appointment of 

22 the Corporation as receiver for a covered finan23 cial company, the Corporation may request a 

24 stay in any judicial action or proceeding in 

25 which such covered financial company is or be-
186 

† HR 4173 EAS 

1 comes a party, for a period of not to exceed 90 

2 days. 

3 (B) GRANT OF STAY BY ALL COURTS RE4 QUIRED.—Upon receipt of a request by the Cor5 poration pursuant to subparagraph (A), the 

6 court shall grant such stay as to all parties. 

7 (9) ADDITIONAL RIGHTS AND DUTIES.— 

8 (A) PRIOR FINAL ADJUDICATION.—The Cor9 poration shall abide by any final, non-appeal10 able judgment of any court of competent jurisdic11 tion that was rendered before the appointment of 

12 the Corporation as receiver. 

13 (B) RIGHTS AND REMEDIES OF RE14 CEIVER.—In the event of any appealable judg15 ment, the Corporation as receiver shall— 

16 (i) have all the rights and remedies 

17 available to the covered financial company 

18 (before the date of appointment of the Cor19 poration as receiver under section 202) and 

20 the Corporation, including removal to Fed21 eral court and all appellate rights; and 

22 (ii) not be required to post any bond 

23 in order to pursue such remedies. 

24 (C) NO ATTACHMENT OR EXECUTION.—No 

25 attachment or execution may be issued by any 
187 

† HR 4173 EAS 

1 court upon assets in the possession of the Cor2 poration as receiver for a covered financial com3 pany. 

4 (D) LIMITATION ON JUDICIAL REVIEW.— 

5 Except as otherwise provided in this title, no 

6 court shall have jurisdiction over— 

7 (i) any claim or action for payment 

8 from, or any action seeking a determination 

9 of rights with respect to, the assets of any 

10 covered financial company for which the 

11 Corporation has been appointed receiver, 

12 including any assets which the Corporation 

13 may acquire from itself as such receiver; or 

14 (ii) any claim relating to any act or 

15 omission of such covered financial company 

16 or the Corporation as receiver. 

17 (E) DISPOSITION OF ASSETS.—In exercising 

18 any right, power, privilege, or authority as re19 ceiver in connection with any covered financial 

20 company for which the Corporation is acting as 

21 receiver under this section, the Corporation shall, 

22 to the greatest extent practicable, conduct its op23 erations in a manner that— 
188 

† HR 4173 EAS 

1 (i) maximizes the net present value re2 turn from the sale or disposition of such as3 sets; 

4 (ii) minimizes the amount of any loss 

5 realized in the resolution of cases; 

6 (iii) mitigates the potential for serious 

7 adverse effects to the financial system; 

8 (iv) ensures timely and adequate com9 petition and fair and consistent treatment 

10 of offerors; and 

11 (v) prohibits discrimination on the 

12 basis of race, sex, or ethnic group in the so13 licitation and consideration of offers. 

14 (10) STATUTE OF LIMITATIONS FOR ACTIONS

15 BROUGHT BY RECEIVER.— 

16 (A) IN GENERAL.—Notwithstanding any 

17 provision of any contract, the applicable statute 

18 of limitations with regard to any action brought 

19 by the Corporation as receiver for a covered fi20 nancial company shall be— 

21 (i) in the case of any contract claim, 

22 the longer of— 

23 (I) the 6-year period beginning on 

24 the date on which the claim accrues; or 
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† HR 4173 EAS 

1 (II) the period applicable under 

2 State law; and 

3 (ii) in the case of any tort claim, the 

4 longer of— 

5 (I) the 3-year period beginning on 

6 the date on which the claim accrues; or 

7 (II) the period applicable under 

8 State law. 

9 (B) DATE ON WHICH A CLAIM ACCRUES.— 

10 For purposes of subparagraph (A), the date on 

11 which the statute of limitations begins to run on 

12 any claim described in subparagraph (A) shall 

13 be the later of— 

14 (i) the date of the appointment of the 

15 Corporation as receiver under this title; or 

16 (ii) the date on which the cause of ac17 tion accrues. 

18 (C) REVIVAL OF EXPIRED STATE CAUSES OF

19 ACTION.— 

20 (i) IN GENERAL.—In the case of any 

21 tort claim described in clause (ii) for which 

22 the applicable statute of limitations under 

23 State law has expired not more than 5 

24 years before the date of appointment of the 

25 Corporation as receiver for a covered finan-
190 

† HR 4173 EAS 

1 cial company, the Corporation may bring 

2 an action as receiver on such claim without 

3 regard to the expiration of the statute of 

4 limitations. 

5 (ii) CLAIMS DESCRIBED.—A tort claim 

6 referred to in clause (i) is a claim arising 

7 from fraud, intentional misconduct result8 ing in unjust enrichment, or intentional 

9 misconduct resulting in substantial loss to 

10 the covered financial company. 

11 (11) AVOIDABLE TRANSFERS.— 

12 (A) FRAUDULENT TRANSFERS.—The Cor13 poration, as receiver for any covered financial 

14 company, may avoid a transfer of any interest 

15 of the covered financial company in property, or 

16 any obligation incurred by the covered financial 

17 company, that was made or incurred at or with18 in 2 years before the time of commencement, if— 

19 (i) the covered financial company vol20 untarily or involuntarily— 

21 (I) made such transfer or incurred 

22 such obligation with actual intent to 

23 hinder, delay, or defraud any entity to 

24 which the covered financial company 

25 was or became, on or after the date on 
191 

† HR 4173 EAS 

1 which such transfer was made or such 

2 obligation was incurred, indebted; or 

3 (II) received less than a reason4 ably equivalent value in exchange for 

5 such transferor obligation; and 

6 (ii) the covered financial company vol7 untarily or involuntarily— 

8 (I) was insolvent on the date that 

9 such transfer was made or such obliga10 tion was incurred, or became insolvent 

11 as a result of such transfer or obliga12 tion; 

13 (II) was engaged in business or a 

14 transaction, or was about to engage in 

15 business or a transaction, for which 

16 any property remaining with the cov17 ered financial company was an unrea18 sonably small capital; 

19 (III) intended to incur, or be20 lieved that the covered financial com21 pany would incur, debts that would be 

22 beyond the ability of the covered finan23 cial company to pay as such debts ma24 tured; or 
192 

† HR 4173 EAS 

1 (IV) made such transfer to or for 

2 the benefit of an insider, or incurred 

3 such obligation to or for the benefit of 

4 an insider, under an employment con5 tract and not in the ordinary course of 

6 business. 

7 (B) PREFERENTIAL TRANSFERS.—The Cor8 poration as receiver for any covered financial 

9 company may avoid a transfer of an interest of 

10 the covered financial company in property— 

11 (i) to or for the benefit of a creditor; 

12 (ii) for or on account of an antecedent 

13 debt that was owed by the covered financial 

14 company before the transfer was made; 

15 (iii) that was made while the covered 

16 financial company was insolvent; 

17 (iv) that was made— 

18 (I) 90 days or less before the date 

19 on which the Corporation was ap20 pointed receiver; or 

21 (II) more than 90 days, but less 

22 than 1 year before the date on which 

23 the Corporation was appointed re24 ceiver, if such creditor at the time of 

25 the transfer was an insider; and 
193 

† HR 4173 EAS 

1 (v) that enables the creditor to receive 

2 more than the creditor would receive if— 

3 (I) the covered financial company 

4 had been liquidated under chapter 7 of 

5 the Bankruptcy Code; 

6 (II) the transfer had not been 

7 made; and 

8 (III) the creditor received pay9 ment of such debt to the extent pro10 vided by the provisions of chapter 7 of 

11 the Bankruptcy Code. 

12 (C) POST-RECEIVERSHIP TRANSACTIONS.— 

13 The Corporation as receiver for any covered fi14 nancial company may avoid a transfer of prop15 erty of the receivership that occurred after the 

16 Corporation was appointed receiver that was not 

17 authorized under this title by the Corporation as 

18 receiver. 

19 (D) RIGHT OF RECOVERY.—To the extent 

20 that a transfer is avoided under subparagraph 

21 (A), (B), or (C), the Corporation may recover, 

22 for the benefit of the covered financial company, 

23 the property transferred or, if a court so orders, 

24 the value of such property (at the time of such 

25 transfer) from— 
194 

† HR 4173 EAS 

1 (i) the initial transferee of such trans2 fer or the person for whose benefit such 

3 transfer was made; or 

4 (ii) any immediate or mediate trans5 feree of any such initial transferee. 

6 (E) RIGHTS OF TRANSFEREE OR OBLI7 GEE.—The Corporation may not recover under 

8 subparagraph (D)(ii) from— 

9 (i) any transferee that takes for value, 

10 including in satisfaction of or to secure a 

11 present or antecedent debt, in good faith, 

12 and without knowledge of the voidability of 

13 the transfer avoided; or 

14 (ii) any immediate or mediate good 

15 faith transferee of such transferee. 

16 (F) DEFENSES.—Subject to the other provi17 sions of this title— 

18 (i) a transferee or obligee from which 

19 the Corporation seeks to recover a transfer 

20 or to avoid an obligation under subpara21 graph (A), (B), (C), or (D) shall have the 

22 same defenses available to a transferee or 

23 obligee from which a trustee seeks to recover 

24 a transfer or avoid an obligation under; 

25 and 
195 

† HR 4173 EAS 

1 (ii) the authority of the Corporation to 

2 recover a transfer or avoid an obligation 

3 shall be subject to subsections (b) and (c) of 

4 section 546, section 547(c), and section 

5 548(c) of the Bankruptcy Code. 

6 (G) RIGHTS UNDER THIS SECTION.—The 

7 rights of the Corporation as receiver under this 

8 section shall be superior to any rights of a trust9 ee or any other party (other than a Federal 

10 agency) under the Bankruptcy Code. 

11 (H) RULES OF CONSTRUCTION; DEFINI12 TIONS.—For purposes of— 

13 (i) subparagraphs (A) and (B)— 

14 (I) the term ‘‘insider’’ has the 

15 same meaning as in section 101(31) of 

16 the Bankruptcy Code; 

17 (II) a transfer is made when such 

18 transfer is so perfected that a bona fide 

19 purchaser from the covered financial 

20 company against whom applicable law 

21 permits such transfer to be perfected 

22 cannot acquire an interest in the prop23 erty transferred that is superior to the 

24 interest in such property of the trans25 feree, but if such transfer is not so per-
196 

† HR 4173 EAS 

1 fected before the date on which the Cor2 poration is appointed as receiver for 

3 the covered financial company, such 

4 transfer is made immediately before 

5 the date of such appointment; and 

6 (III) the term ‘‘value’’ means 

7 property, or satisfaction or securing of 

8 a present or antecedent debt of the cov9 ered financial company, but does not 

10 include an unperformed promise to 

11 furnish support to the covered finan12 cial company; and 

13 (ii) subparagraph (B)— 

14 (I) the covered financial company 

15 is presumed to have been insolvent on 

16 and during the 90-day period imme17 diately preceding the date of appoint18 ment of the Corporation as receiver; 

19 and 

20 (II) the term ‘‘insolvent’’ has the 

21 same meaning as in section 101(32) of 

22 the Bankruptcy Code. 

23 (12) SETOFF.— 

24 (A) GENERALLY.—Except as otherwise pro25 vided in this title, any right of a creditor to off-
197 

† HR 4173 EAS 

1 set a mutual debt owed by the creditor to any 

2 covered financial company that arose before the 

3 Corporation was appointed as receiver for the 

4 covered financial company against a claim of 

5 such creditor may be asserted if enforceable 

6 under applicable noninsolvency law, except to 

7 the extent that— 

8 (i) the claim of the creditor against the 

9 covered financial company is disallowed; 

10 (ii) the claim was transferred, by an 

11 entity other than the covered financial com12 pany, to the creditor— 

13 (I) after the Corporation was ap14 pointed as receiver of the covered fi15 nancial company; or 

16 (II)(aa) after the 90-day period 

17 preceding the date on which the Cor18 poration was appointed as receiver for 

19 the covered financial company; and 

20 (bb) while the covered financial 

21 company was insolvent (except for a 

22 setoff in connection with a qualified fi23 nancial contract); or 
198 

† HR 4173 EAS 

1 (iii) the debt owed to the covered finan2 cial company was incurred by the covered 

3 financial company— 

4 (I) after the 90-day period pre5 ceding the date on which the Corpora6 tion was appointed as receiver for the 

7 covered financial company; 

8 (II) while the covered financial 

9 company was insolvent; and 

10 (III) for the purpose of obtaining 

11 a right of setoff against the covered fi12 nancial company (except for a setoff in 

13 connection with a qualified financial 

14 contract). 

15 (B) INSUFFICIENCY.— 

16 (i) IN GENERAL.—Except with respect 

17 to a setoff in connection with a qualified fi18 nancial contract, if a creditor offsets a mu19 tual debt owed to the covered financial com20 pany against a claim of the covered finan21 cial company on or within the 90-day pe22 riod preceding the date on which the Cor23 poration is appointed as receiver for the 

24 covered financial company, the Corporation 

25 may recover from the creditor the amount so 
199 

† HR 4173 EAS 

1 offset, to the extent that any insufficiency 

2 on the date of such setoff is less than the in3 sufficiency on the later of— 

4 (I) the date that is 90 days before 

5 the date on which the Corporation is 

6 appointed as receiver for the covered fi7 nancial company; or 

8 (II) the first day on which there 

9 is an insufficiency during the 90-day 

10 period preceding the date on which the 

11 Corporation is appointed as receiver 

12 for the covered financial company. 

13 (ii) DEFINITION OF INSUFFICIENCY.— 

14 In this subparagraph, the term ‘‘insuffi15 ciency’’ means the amount, if any, by which 

16 a claim against the covered financial com17 pany exceeds a mutual debt owed to the cov18 ered financial company by the holder of 

19 such claim. 

20 (C) INSOLVENCY.—The term ‘‘insolvent’’ has 

21 the same meaning as in section 101(32) of the 

22 Bankruptcy Code. 

23 (D) PRESUMPTION OF INSOLVENCY.—For 

24 purposes of this paragraph, the covered financial 

25 company is presumed to have been insolvent on 
200 

† HR 4173 EAS 

1 and during the 90-day period preceding the date 

2 of appointment of the Corporation as receiver. 

3 (E) LIMITATION.—Nothing in this para4 graph (12) shall be the basis for any right of 

5 setoff where no such right exists under applicable 

6 noninsolvency law. 

7 (F) PRIORITY CLAIM.—Except as otherwise 

8 provided in this title, the Corporation as receiver 

9 for the covered financial company may sell or 

10 transfer any assets free and clear of the setoff 

11 rights of any party, except that such party shall 

12 be entitled to a claim, subordinate to the claims 

13 payable under subparagraphs (A), (B), (C), and 

14 (D) of subsection (b)(1), but senior to all other 

15 unsecured liabilities defined in subsection 

16 (b)(1)(E), in an amount equal to the value of 

17 such setoff rights. 

18 (13) ATTACHMENT OF ASSETS AND OTHER IN19 JUNCTIVE RELIEF.—Subject to paragraph (14), any 

20 court of competent jurisdiction may, at the request of 

21 the Corporation as receiver for a covered financial 

22 company, issue an order in accordance with Rule 65 

23 of the Federal Rules of Civil Procedure, including an 

24 order placing the assets of any person designated by 
201 

† HR 4173 EAS 

1 the Corporation under the control of the court and 

2 appointing a trustee to hold such assets. 

3 (14) STANDARDS.— 

4 (A) SHOWING.—Rule 65 of the Federal 

5 Rules of Civil Procedure shall apply with respect 

6 to any proceeding under paragraph (13), with7 out regard to the requirement that the applicant 

8 show that the injury, loss, or damage is irrep9 arable and immediate. 

10 (B) STATE PROCEEDING.—If, in the case of 

11 any proceeding in a State court, the court deter12 mines that rules of civil procedure available 

13 under the laws of the State provide substantially 

14 similar protections of the right of the parties to 

15 due process as provided under Rule 65 (as modi16 fied 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 CORPORA22 TION AS RECEIVER.—Notwithstanding any other pro23 vision of this title, any final and non-appealable 

24 judgment for monetary damages entered against the 

25 Corporation as receiver for a covered financial com-
202 

† HR 4173 EAS 

1 pany for the breach of an agreement executed or ap2 proved by the Corporation after the date of its ap3 pointment shall be paid as an administrative expense 

4 of the receiver. Nothing in this paragraph shall be 

5 construed to limit the power of a receiver to exercise 

6 any rights under contract or law, including to termi7 nate, breach, cancel, or otherwise discontinue such 

8 agreement. 

9 (16) ACCOUNTING AND RECORDKEEPING RE10 QUIREMENTS.— 

11 (A) IN GENERAL.—The Corporation as re12 ceiver for a covered financial company shall, 

13 consistent with the accounting and reporting 

14 practices and procedures established by the Cor15 poration, maintain a full accounting of each re16 ceivership or other disposition of any covered fi17 nancial company. 

18 (B) ANNUAL ACCOUNTING OR REPORT.— 

19 With respect to each receivership to which the 

20 Corporation is appointed, the Corporation shall 

21 make an annual accounting or report, as appro22 priate, available to the Secretary and the Comp23 troller General of the United States. 

24 (C) AVAILABILITY OF REPORTS.—Any re25 port prepared pursuant to subparagraph (B) 
203 

† HR 4173 EAS 

1 and section 203(c)(3) shall be made available to 

2 the public by the Corporation. 

3 (D) RECORDKEEPING REQUIREMENT.— 

4 (i) IN GENERAL.—The Corporation 

5 shall prescribe such regulations and estab6 lish such retention schedules as are nec7 essary to maintain the documents and 

8 records of the Corporation generated in ex9 ercising the authorities of this title and the 

10 records of a covered financial company for 

11 which the Corporation is appointed receiver, 

12 with due regard for— 

13 (I) the avoidance of duplicative 

14 record retention; and 

15 (II) the expected evidentiary needs 

16 of the Corporation as receiver for a 

17 covered financial company and the 

18 public regarding the records of covered 

19 financial companies. 

20 (ii) RETENTION OF RECORDS.—Unless 

21 otherwise required by applicable Federal 

22 law or court order, the Corporation may 

23 not, at any time, destroy any records that 

24 are subject to clause (i). 
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† HR 4173 EAS 

1 (iii) RECORDS DEFINED.—As used in 

2 this subparagraph, the terms ‘‘records’’ and 

3 ‘‘records of a covered financial company’’ 

4 mean any document, book, paper, map, 

5 photograph, microfiche, microfilm, computer 

6 or electronically-created record generated or 

7 maintained by the covered financial com8 pany in the course of and necessary to its 

9 transaction of business. 

10 (b) PRIORITY OF EXPENSES AND UNSECURED

11 CLAIMS.— 

12 (1) IN GENERAL.—Unsecured claims against a 

13 covered financial company, or the Corporation as re14 ceiver for such covered financial company under this 

15 section, that are proven to the satisfaction of the re16 ceiver shall have priority in the following order: 

17 (A) Administrative expenses of the receiver. 

18 (B) Any amounts owed to the United 

19 States, unless the United States agrees or con20 sents otherwise. 

21 (C) Wages, salaries, or commissions, includ22 ing vacation, severance, and sick leave pay 

23 earned by an individual (other than an indi24 vidual described in subparagraph (G)), but only 

25 to the extent of $11,725 for each individual (as 
205 

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1 indexed for inflation, by regulation of the Cor2 poration) earned not later than 180 days before 

3 the date of appointment of the Corporation as re4 ceiver. 

5 (D) Contributions owed to employee benefit 

6 plans arising from services rendered not later 

7 than 180 days before the date of appointment of 

8 the Corporation as receiver, to the extent of the 

9 number of employees covered by each such plan, 

10 multiplied by $11,725 (as indexed for inflation, 

11 by regulation of the Corporation), less the aggre12 gate amount paid to such employees under sub13 paragraph (C), plus the aggregate amount paid 

14 by the receivership on behalf of such employees to 

15 any other employee benefit plan. 

16 (E) Any other general or senior liability of 

17 the covered financial company (which is not a li18 ability described under subparagraph (F), (G), 

19 or (H)). 

20 (F) Any obligation subordinated to general 

21 creditors (which is not an obligation described 

22 under subparagraph (G) or (H)). 

23 (G) Any wages, salaries, or commissions in24 cluding vacation, severance, and sick leave pay 
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1 earned, owed to senior executives and directors of 

2 the covered financial company. 

3 (H) Any obligation to shareholders, mem4 bers, general partners, limited partners, or other 

5 persons, with interests in the equity of the cov6 ered financial company arising as a result of 

7 their status as shareholders, members, general 

8 partners, limited partners, or other persons with 

9 interests in the equity of the covered financial 

10 company. 

11 (2) POST-RECEIVERSHIP FINANCING PRIORITY.— 

12 In the event that the Corporation, as receiver for a 

13 covered financial company, is unable to obtain unse14 cured credit for the covered financial company from 

15 commercial sources, the Corporation as receiver may 

16 obtain credit or incur debt on the part of the covered 

17 financial company, which shall have priority over 

18 any or all administrative expenses of the receiver 

19 under paragraph (1)(A). 

20 (3) CLAIMS OF THE UNITED STATES.—Unsecured 

21 claims of the United States shall, at a minimum, 

22 have a higher priority than liabilities of the covered 

23 financial company that count as regulatory capital. 

24 (4) CREDITORS SIMILARLY SITUATED.—All 

25 claimants of a covered financial company that are 
207 

† HR 4173 EAS 

1 similarly situated under paragraph (1) shall be treat2 ed in a similar manner, except that the Corporation 

3 as receiver may take any action (including making 

4 payments, subject to subsection (o)(1)(E)(ii)) that 

5 does not comply with this subsection, if— 

6 (A) the Corporation determines that such 

7 action is necessary— 

8 (i) to maximize the value of the assets 

9 of the covered financial company; 

10 (ii) to initiate and continue operations 

11 essential to implementation of the receiver12 ship or any bridge financial company; 

13 (iii) to maximize the present value re14 turn from the sale or other disposition of 

15 the assets of the covered financial company; 

16 or 

17 (iv) to minimize the amount of any 

18 loss realized upon the sale or other disposi19 tion of the assets of the covered financial 

20 company; and 

21 (B) all claimants that are similarly situ22 ated under paragraph (1) receive not less than 

23 the amount provided in paragraphs (2) and (3) 

24 of subsection (d). 
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1 (5) SECURED CLAIMS UNAFFECTED.—This sec2 tion shall not affect secured claims or security entitle3 ments in respect of assets or property held by the cov4 ered financial company, except to the extent that the 

5 security is insufficient to satisfy the claim, and then 

6 only with regard to the difference between the claim 

7 and the amount realized from the security. 

8 (6) PRIORITY OF EXPENSES AND UNSECURED

9 CLAIMS IN THE ORDERLY LIQUIDATION OF SIPC MEM10 BER.—Where the Corporation is appointed as receiver 

11 for a covered broker or dealer, unsecured claims 

12 against such covered broker or dealer, or the Corpora13 tion as receiver for such covered broker or dealer 

14 under this section, that are proven to the satisfaction 

15 of the receiver under section 205(e), shall have the 

16 priority prescribed in paragraph (1), except that— 

17 (A) SIPC shall be entitled to recover admin18 istrative expenses incurred in performing its re19 sponsibilities under section 205 on an equal 

20 basis with the Corporation, in accordance with 

21 paragraph (1)(A); 

22 (B) the Corporation shall be entitled to re23 cover any amounts paid to customers or to SIPC 

24 pursuant to section 205(f), in accordance with 

25 paragraph (1)(B); 
209 

† HR 4173 EAS 

1 (C) SIPC shall be entitled to recover any 

2 amounts paid out of the SIPC Fund to meet its 

3 obligations under section 205 and under the Se4 curities Investor Protection Act of 1970 (15 

5 U.S.C. 78aaa et seq.), which claim shall be sub6 ordinate to the claims payable under subpara7 graphs (A) and (B) of paragraph (1), but senior 

8 to all other claims; and 

9 (D) the Corporation may, after paying any 

10 proven claims to customers under section 205 

11 and the Securities Investor Protection Act of 

12 1970 (15 U.S.C. 78aaa et seq.), and as provided 

13 above, pay dividends on other proven claims, in 

14 its discretion, and to the extent that funds are 

15 available, in accordance with the priorities set 

16 forth in paragraph (1). 

17 (c) PROVISIONS RELATING TO CONTRACTS ENTERED

18 INTO BEFORE APPOINTMENT OF RECEIVER.— 

19 (1) AUTHORITY TO REPUDIATE CONTRACTS.—In 

20 addition to any other rights that a receiver may have, 

21 the Corporation as receiver for any covered financial 

22 company may disaffirm or repudiate any contract or 

23 lease— 

24 (A) to which the covered financial company 

25 is a party; 
210 

† HR 4173 EAS 

1 (B) the performance of which the Corpora2 tion as receiver, in the discretion of the Corpora3 tion, determines to be burdensome; and 

4 (C) the disaffirmance or repudiation of 

5 which the Corporation as receiver determines, in 

6 the discretion of the Corporation, will promote 

7 the orderly administration of the affairs of the 

8 covered financial company. 

9 (2) TIMING OF REPUDIATION.—The Corporation, 

10 as receiver for any covered financial company, shall 

11 determine whether or not to exercise the rights of re12 pudiation under this section within a reasonable pe13 riod of time. 

14 (3) CLAIMS FOR DAMAGES FOR REPUDIATION.— 

15 (A) IN GENERAL.—Except as provided in 

16 paragraphs (4), (5), and (6) and in subpara17 graphs (C), (D), and (E) of this paragraph, the 

18 liability of the Corporation as receiver for a cov19 ered financial company for the disaffirmance or 

20 repudiation of any contract pursuant to para21 graph (1) shall be— 

22 (i) limited to actual direct compen23 satory damages; and 

24 (ii) determined as of— 
211 

† HR 4173 EAS 

1 (I) the date of the appointment of 

2 the Corporation as receiver; or 

3 (II) in the case of any contract or 

4 agreement referred to in paragraph 

5 (8), the date of the disaffirmance or re6 pudiation of such contract or agree7 ment. 

8 (B) NO LIABILITY FOR OTHER DAMAGES.— 

9 For purposes of subparagraph (A), the term ‘‘ac10 tual direct compensatory damages’’ does not in11 clude— 

12 (i) punitive or exemplary damages; 

13 (ii) damages for lost profits or oppor14 tunity; or 

15 (iii) damages for pain and suffering. 

16 (C) MEASURE OF DAMAGES FOR REPUDI17 ATION OF QUALIFIED FINANCIAL CONTRACTS.—In 

18 the case of any qualified financial contract or 

19 agreement to which paragraph (8) applies, com20 pensatory damages shall be— 

21 (i) deemed to include normal and rea22 sonable costs of cover or other reasonable 

23 measures of damages utilized in the indus24 tries for such contract and agreement 

25 claims; and 
212 

† HR 4173 EAS 

1 (ii) paid in accordance with this para2 graph and subsection (d), except as other3 wise specifically provided in this subsection. 

4 (D) MEASURE OF DAMAGES FOR REPUDI5 ATION OR DISAFFIRMANCE OF DEBT OBLIGA6 TION.—In the case of any debt for borrowed 

7 money or evidenced by a security, actual direct 

8 compensatory damages shall be no less than the 

9 amount lent plus accrued interest plus any 

10 accreted original issue discount as of the date the 

11 Corporation was appointed receiver of the cov12 ered financial company and, to the extent that 

13 an allowed secured claim is secured by property 

14 the value of which is greater than the amount of 

15 such claim and any accrued interest through the 

16 date of repudiation or disaffirmance, such ac17 crued interest pursuant to paragraph (1). 

18 (E) MEASURE OF DAMAGES FOR REPUDI19 ATION OR DISAFFIRMANCE OF CONTINGENT OBLI20 GATION.—In the case of any contingent obliga21 tion of a covered financial company consisting of 

22 any obligation under a guarantee, letter of cred23 it, loan commitment, or similar credit obliga24 tion, the Corporation may, by rule or regulation, 

25 prescribe that actual direct compensatory dam-
213 

† HR 4173 EAS 

1 ages shall be no less than the estimated value of 

2 the claim as of the date the Corporation was ap3 pointed receiver of the covered financial com4 pany, as such value is measured based on the 

5 likelihood that such contingent claim would be6 come fixed and the probable magnitude thereof. 

7 (4) LEASES UNDER WHICH THE COVERED FINAN8 CIAL COMPANY IS THE LESSEE.— 

9 (A) IN GENERAL.—If the Corporation as re10 ceiver disaffirms or repudiates a lease under 

11 which the covered financial company is the les12 see, the receiver shall not be liable for any dam13 ages (other than damages determined pursuant 

14 to subparagraph (B)) for the disaffirmance or re15 pudiation of such lease. 

16 (B) PAYMENTS OF RENT.—Notwithstanding 

17 subparagraph (A), the lessor under a lease to 

18 which subparagraph (A) would otherwise apply 

19 shall— 

20 (i) be entitled to the contractual rent 

21 accruing before the later of the date on 

22 which— 

23 (I) the notice of disaffirmance or 

24 repudiation is mailed; or 
214 

† HR 4173 EAS 

1 (II) the disaffirmance or repudi2 ation becomes effective, unless the lessor 

3 is in default or breach of the terms of 

4 the lease; 

5 (ii) have no claim for damages under 

6 any acceleration clause or other penalty 

7 provision in the lease; and 

8 (iii) have a claim for any unpaid rent, 

9 subject to all appropriate offsets and de10 fenses, due as of the date of the appointment 

11 which shall be paid in accordance with this 

12 paragraph and subsection (d). 

13 (5) LEASES UNDER WHICH THE COVERED FINAN14 CIAL COMPANY IS THE LESSOR.— 

15 (A) IN GENERAL.—If the Corporation as re16 ceiver for a covered financial company repudi17 ates an unexpired written lease of real property 

18 of the covered financial company under which 

19 the covered financial company is the lessor and 

20 the lessee is not, as of the date of such repudi21 ation, in default, the lessee under such lease may 

22 either— 

23 (i) treat the lease as terminated by 

24 such repudiation; or 
215 

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1 (ii) remain in possession of the lease2 hold interest for the balance of the term of 

3 the lease, unless the lessee defaults under the 

4 terms of the lease after the date of such re5 pudiation. 

6 (B) PROVISIONS APPLICABLE TO LESSEE

7 REMAINING IN POSSESSION.—If any lessee under 

8 a lease described in subparagraph (A) remains 

9 in possession of a leasehold interest pursuant to 

10 clause (ii) of subparagraph (A)— 

11 (i) the lessee— 

12 (I) shall continue to pay the con13 tractual rent pursuant to the terms of 

14 the lease after the date of the repudi15 ation of such lease; and 

16 (II) may offset against any rent 

17 payment which accrues after the date 

18 of the repudiation of the lease, any 

19 damages which accrue after such date 

20 due to the nonperformance of any obli21 gation of the covered financial com22 pany under the lease after such date; 

23 and 

24 (ii) the Corporation as receiver shall 

25 not be liable to the lessee for any damages 
216 

† HR 4173 EAS 

1 arising after such date as a result of the re2 pudiation, other than the amount of any 

3 offset allowed under clause (i)(II). 

4 (6) CONTRACTS FOR THE SALE OF REAL PROP5 ERTY.— 

6 (A) IN GENERAL.—If the receiver repudiates 

7 any contract (which meets the requirements of 

8 subsection (a)(6)) for the sale of real property, 

9 and the purchaser of such real property under 

10 such contract is in possession and is not, as of 

11 the date of such repudiation, in default, such 

12 purchaser may either— 

13 (i) treat the contract as terminated by 

14 such repudiation; or 

15 (ii) remain in possession of such real 

16 property. 

17 (B) PROVISIONS APPLICABLE TO PUR18 CHASER REMAINING IN POSSESSION.—If any 

19 purchaser of real property under any contract 

20 described in subparagraph (A) remains in pos21 session of such property pursuant to clause (ii) 

22 of subparagraph (A)— 

23 (i) the purchaser— 

24 (I) shall continue to make all 

25 payments due under the contract after 
217 

† HR 4173 EAS 

1 the date of the repudiation of the con2 tract; and 

3 (II) may offset against any such 

4 payments any damages which accrue 

5 after such date due to the nonperform6 ance (after such date) of any obligation 

7 of the covered financial company under 

8 the contract; and 

9 (ii) the Corporation as receiver shall— 

10 (I) not be liable to the purchaser 

11 for any damages arising after such 

12 date as a result of the repudiation, 

13 other than the amount of any offset al14 lowed under clause (i)(II); 

15 (II) deliver title to the purchaser 

16 in accordance with the provisions of 

17 the contract; and 

18 (III) have no obligation under the 

19 contract other than the performance re20 quired under subclause (II). 

21 (C) ASSIGNMENT AND SALE ALLOWED.— 

22 (i) IN GENERAL.—No provision of this 

23 paragraph shall be construed as limiting 

24 the right of the Corporation as receiver to 

25 assign the contract described in subpara-
218 

† HR 4173 EAS 

1 graph (A) and sell the property, subject to 

2 the contract and the provisions of this para3 graph. 

4 (ii) NO LIABILITY AFTER ASSIGNMENT

5 AND SALE.—If an assignment and sale de6 scribed in clause (i) is consummated, the 

7 Corporation as receiver shall have no fur8 ther liability under the contract described 

9 in subparagraph (A) or with respect to the 

10 real property which was the subject of such 

11 contract. 

12 (7) PROVISIONS APPLICABLE TO SERVICE CON13 TRACTS.— 

14 (A) SERVICES PERFORMED BEFORE AP15 POINTMENT.—In the case of any contract for 

16 services between any person and any covered fi17 nancial company for which the Corporation has 

18 been appointed receiver, any claim of such per19 son for services performed before the date of ap20 pointment shall be— 

21 (i) a claim to be paid in accordance 

22 with subsections (a), (b), and (d); and 

23 (ii) deemed to have arisen as of the 

24 date on which the receiver was appointed. 
219 

† HR 4173 EAS 

1 (B) SERVICES PERFORMED AFTER APPOINT2 MENT AND PRIOR TO REPUDIATION.—If, in the 

3 case of any contract for services described in sub4 paragraph (A), the Corporation as receiver ac5 cepts performance by the other person before 

6 making any determination to exercise the right 

7 of repudiation of such contract under this sec8 tion— 

9 (i) the other party shall be paid under 

10 the terms of the contract for the services per11 formed; and 

12 (ii) the amount of such payment shall 

13 be treated as an administrative expense of 

14 the receivership. 

15 (C) ACCEPTANCE OF PERFORMANCE NO BAR

16 TO SUBSEQUENT REPUDIATION.—The acceptance 

17 by the Corporation as receiver for services re18 ferred to in subparagraph (B) in connection 

19 with a contract described in subparagraph (B) 

20 shall not affect the right of the Corporation as 

21 receiver to repudiate such contract under this 

22 section at any time after such performance. 

23 (8) CERTAIN QUALIFIED FINANCIAL CON24 TRACTS.— 
220 

† HR 4173 EAS 

1 (A) RIGHTS OF PARTIES TO CONTRACTS.— 

2 Subject to subsection (a)(8) and paragraphs (9) 

3 and (10) of this subsection, and notwithstanding 

4 any other provision of this section, any other 

5 provision of Federal law, or the law of any 

6 State, no person shall be stayed or prohibited 

7 from exercising— 

8 (i) any right that such person has to 

9 cause the termination, liquidation, or accel10 eration of any qualified financial contract 

11 with a covered financial company which 

12 arises upon the date of appointment of the 

13 Corporation as receiver for such covered fi14 nancial company at any time after such 

15 appointment; 

16 (ii) any right under any security 

17 agreement or arrangement or other credit 

18 enhancement related to one or more quali19 fied financial contracts described in clause 

20 (i); or 

21 (iii) any right to offset or net out any 

22 termination value, payment amount, or 

23 other transfer obligation arising under or in 

24 connection with 1 or more contracts or 

25 agreements described in clause (i), includ-
221 

† HR 4173 EAS 

1 ing any master agreement for such con2 tracts or agreements. 

3 (B) APPLICABILITY OF OTHER PROVI4 SIONS.—Subsection (a)(8) shall apply in the case 

5 of any judicial action or proceeding brought 

6 against the Corporation as receiver referred to in 

7 subparagraph (A), or the subject covered finan8 cial company, by any party to a contract or 

9 agreement described in subparagraph (A)(i) with 

10 such covered financial company. 

11 (C) CERTAIN TRANSFERS NOT AVOID12 ABLE.— 

13 (i) IN GENERAL.—Notwithstanding 

14 subsection (a)(11), (a)(12), or (c)(12), sec15 tion 5242 of the Revised Statutes of the 

16 United States, or any other provision of 

17 Federal or State law relating to the avoid18 ance of preferential or fraudulent transfers, 

19 the Corporation, whether acting as the Cor20 poration or as receiver for a covered finan21 cial company, may not avoid any transfer 

22 of money or other property in connection 

23 with any qualified financial contract with 

24 a covered financial company. 
222 

† HR 4173 EAS 

1 (ii) EXCEPTION FOR CERTAIN TRANS2 FERS.—Clause (i) shall not apply to any 

3 transfer of money or other property in con4 nection with any qualified financial con5 tract with a covered financial company if 

6 the transferee had actual intent to hinder, 

7 delay, or defraud such company, the credi8 tors of such company, or the Corporation as 

9 receiver appointed for such company. 

10 (D) CERTAIN CONTRACTS AND AGREEMENTS

11 DEFINED.—For purposes of this subsection, the 

12 following definitions shall apply: 

13 (i) QUALIFIED FINANCIAL CON14 TRACT.—The term ‘‘qualified financial con15 tract’’ means any securities contract, com16 modity contract, forward contract, repur17 chase agreement, swap agreement, and any 

18 similar agreement that the Corporation de19 termines by regulation, resolution, or order 

20 to be a qualified financial contract for pur21 poses of this paragraph. 

22 (ii) SECURITIES CONTRACT.—The term 

23 ‘‘securities contract’’— 

24 (I) means a contract for the pur25 chase, sale, or loan of a security, a cer-
223 

† HR 4173 EAS 

1 tificate of deposit, a mortgage loan, 

2 any interest in a mortgage loan, a 

3 group or index of securities, certificates 

4 of deposit, or mortgage loans or inter5 ests therein (including any interest 

6 therein or based on the value thereof), 

7 or any option on any of the foregoing, 

8 including any option to purchase or 

9 sell any such security, certificate of de10 posit, mortgage loan, interest, group or 

11 index, or option, and including any re12 purchase or reverse repurchase trans13 action on any such security, certificate 

14 of deposit, mortgage loan, interest, 

15 group or index, or option (whether or 

16 not such repurchase or reverse repur17 chase transaction is a ‘‘repurchase 

18 agreement’’, as defined in clause (v)); 

19 (II) does not include any pur20 chase, sale, or repurchase obligation 

21 under a participation in a commercial 

22 mortgage loan unless the Corporation 

23 determines by regulation, resolution, or 

24 order to include any such agreement 

25 within the meaning of such term; 
224 

† HR 4173 EAS 

1 (III) means any option entered 

2 into on a national securities exchange 

3 relating to foreign currencies; 

4 (IV) means the guarantee (includ5 ing by novation) by or to any securi6 ties clearing agency of any settlement 

7 of cash, securities, certificates of de8 posit, mortgage loans or interests there9 in, group or index of securities, certifi10 cates of deposit or mortgage loans or 

11 interests therein (including any inter12 est therein or based on the value there13 of) or an option on any of the fore14 going, including any option to pur15 chase or sell any such security, certifi16 cate of deposit, mortgage loan, interest, 

17 group or index, or option (whether or 

18 not such settlement is in connection 

19 with any agreement or transaction re20 ferred to in subclauses (I) through 

21 (XII) (other than subclause (II))); 

22 (V) means any margin loan; 

23 (VI) means any extension of cred24 it for the clearance or settlement of se25 curities transactions; 
225 

† HR 4173 EAS 

1 (VII) means any loan transaction 

2 coupled with a securities collar trans3 action, any prepaid securities forward 

4 transaction, or any total return swap 

5 transaction coupled with a securities 

6 sale transaction; 

7 (VIII) means any other agreement 

8 or transaction that is similar to any 

9 agreement or transaction referred to in 

10 this clause; 

11 (IX) means any combination of 

12 the agreements or transactions referred 

13 to in this clause; 

14 (X) means any option to enter 

15 into any agreement or transaction re16 ferred to in this clause; 

17 (XI) means a master agreement 

18 that provides for an agreement or 

19 transaction referred to in any of sub20 clauses (I) through (X), other than sub21 clause (II), together with all supple22 ments to any such master agreement, 

23 without regard to whether the master 

24 agreement provides for an agreement 

25 or transaction that is not a securities 
226 

† HR 4173 EAS 

1 contract under this clause, except that 

2 the master agreement shall be consid3 ered to be a securities contract under 

4 this clause only with respect to each 

5 agreement or transaction under the 

6 master agreement that is referred to in 

7 any of subclauses (I) through (X), other 

8 than subclause (II); and 

9 (XII) means any security agree10 ment or arrangement or other credit 

11 enhancement related to any agreement 

12 or transaction referred to in this 

13 clause, including any guarantee or re14 imbursement obligation in connection 

15 with any agreement or transaction re16 ferred to in this clause. 

17 (iii) COMMODITY CONTRACT.—The 

18 term ‘‘commodity contract’’ means— 

19 (I) with respect to a futures com20 mission merchant, a contract for the 

21 purchase or sale of a commodity for fu22 ture delivery on, or subject to the rules 

23 of, a contract market or board of trade; 
227 

† HR 4173 EAS 

1 (II) with respect to a foreign fu2 tures commission merchant, a foreign 

3 future; 

4 (III) with respect to a leverage 

5 transaction merchant, a leverage trans6 action; 

7 (IV) with respect to a clearing or8 ganization, a contract for the purchase 

9 or sale of a commodity for future deliv10 ery on, or subject to the rules of, a con11 tract market or board of trade that is 

12 cleared by such clearing organization, 

13 or commodity option traded on, or sub14 ject to the rules of, a contract market 

15 or board of trade that is cleared by 

16 such clearing organization; 

17 (V) with respect to a commodity 

18 options dealer, a commodity option; 

19 (VI) any other agreement or 

20 transaction that is similar to any 

21 agreement or transaction referred to in 

22 this clause; 

23 (VII) any combination of the 

24 agreements or transactions referred to 

25 in this clause; 
228 

† HR 4173 EAS 

1 (VIII) any option to enter into 

2 any agreement or transaction referred 

3 to in this clause; 

4 (IX) a master agreement that pro5 vides for an agreement or transaction 

6 referred to in any of subclauses (I) 

7 through (VIII), together with all sup8 plements to any such master agree9 ment, without regard to whether the 

10 master agreement provides for an 

11 agreement or transaction that is not a 

12 commodity contract under this clause, 

13 except that the master agreement shall 

14 be considered to be a commodity con15 tract under this clause only with re16 spect to each agreement or transaction 

17 under the master agreement that is re18 ferred to in any of subclauses (I) 

19 through (VIII); or 

20 (X) any security agreement or ar21 rangement or other credit enhancement 

22 related to any agreement or trans23 action referred to in this clause, in24 cluding any guarantee or reimburse25 ment obligation in connection with 
229 

† HR 4173 EAS 

1 any agreement or transaction referred 

2 to in this clause. 

3 (iv) FORWARD CONTRACT.—The term 

4 ‘‘forward contract’’ means— 

5 (I) a contract (other than a com6 modity contract) for the purchase, sale, 

7 or transfer of a commodity or any 

8 similar good, article, service, right, or 

9 interest which is presently or in the fu10 ture becomes the subject of dealing in 

11 the forward contract trade, or product 

12 or byproduct thereof, with a maturity 

13 date that is more than 10 days after 

14 the date on which the contract is en15 tered into, including a repurchase or 

16 reverse repurchase transaction (whether 

17 or not such repurchase or reverse re18 purchase transaction is a ‘‘repurchase 

19 agreement’’, as defined in clause (v)), 

20 consignment, lease, swap, hedge trans21 action, deposit, loan, option, allocated 

22 transaction, unallocated transaction, 

23 or any other similar agreement; 
230 

† HR 4173 EAS 

1 (II) any combination of agree2 ments or transactions referred to in 

3 subclauses (I) and (III); 

4 (III) any option to enter into any 

5 agreement or transaction referred to in 

6 subclause (I) or (II); 

7 (IV) a master agreement that pro8 vides for an agreement or transaction 

9 referred to in subclause (I), (II), or 

10 (III), together with all supplements to 

11 any such master agreement, without 

12 regard to whether the master agreement 

13 provides for an agreement or trans14 action that is not a forward contract 

15 under this clause, except that the mas16 ter agreement shall be considered to be 

17 a forward contract under this clause 

18 only with respect to each agreement or 

19 transaction under the master agree20 ment that is referred to in subclause 

21 (I), (II), or (III); or 

22 (V) any security agreement or ar23 rangement or other credit enhancement 

24 related to any agreement or trans25 action referred to in subclause (I), (II), 
231 

† HR 4173 EAS 

1 (III), or (IV), including any guarantee 

2 or reimbursement obligation in connec3 tion with any agreement or trans4 action referred to in any such sub5 clause. 

6 (v) REPURCHASE AGREEMENT.—The 

7 term ‘‘repurchase agreement’’ (which defini8 tion also applies to a reverse repurchase 

9 agreement)— 

10 (I) means an agreement, includ11 ing related terms, which provides for 

12 the transfer of one or more certificates 

13 of deposit, mortgage related securities 

14 (as such term is defined in section 3 of 

15 the Securities Exchange Act of 1934), 

16 mortgage loans, interests in mortgage17 related securities or mortgage loans, el18 igible bankers’ acceptances, qualified 

19 foreign government securities (which, 

20 for purposes of this clause, means a se21 curity that is a direct obligation of, or 

22 that is fully guaranteed by, the central 

23 government of a member of the Organi24 zation for Economic Cooperation and 

25 Development, as determined by regula-
232 

† HR 4173 EAS 

1 tion or order adopted by the Board of 

2 Governors), or securities that are direct 

3 obligations of, or that are fully guaran4 teed by, the United States or any agen5 cy of the United States against the 

6 transfer of funds by the transferee of 

7 such certificates of deposit, eligible 

8 bankers’ acceptances, securities, mort9 gage loans, or interests with a simulta10 neous agreement by such transferee to 

11 transfer to the transferor thereof certifi12 cates of deposit, eligible bankers’ ac13 ceptances, securities, mortgage loans, 

14 or interests as described above, at a 

15 date certain not later than 1 year after 

16 such transfers or on demand, against 

17 the transfer of funds, or any other 

18 similar agreement; 

19 (II) does not include any repur20 chase obligation under a participation 

21 in a commercial mortgage loan, unless 

22 the Corporation determines, by regula23 tion, resolution, or order to include 

24 any such participation within the 

25 meaning of such term; 
233 

† HR 4173 EAS 

1 (III) means any combination of 

2 agreements or transactions referred to 

3 in subclauses (I) and (IV); 

4 (IV) means any option to enter 

5 into any agreement or transaction re6 ferred to in subclause (I) or (III); 

7 (V) means a master agreement 

8 that provides for an agreement or 

9 transaction referred to in subclause (I), 

10 (III), or (IV), together with all supple11 ments to any such master agreement, 

12 without regard to whether the master 

13 agreement provides for an agreement 

14 or transaction that is not a repurchase 

15 agreement under this clause, except 

16 that the master agreement shall be con17 sidered to be a repurchase agreement 

18 under this subclause only with respect 

19 to each agreement or transaction under 

20 the master agreement that is referred to 

21 in subclause (I), (III), or (IV); and 

22 (VI) means any security agree23 ment or arrangement or other credit 

24 enhancement related to any agreement 

25 or transaction referred to in subclause 
234 

† HR 4173 EAS 

1 (I), (III), (IV), or (V), including any 

2 guarantee or reimbursement obligation 

3 in connection with any agreement or 

4 transaction referred to in any such 

5 subclause. 

6 (vi) SWAP AGREEMENT.—The term 

7 ‘‘swap agreement’’ means— 

8 (I) any agreement, including the 

9 terms and conditions incorporated by 

10 reference in any such agreement, which 

11 is an interest rate swap, option, future, 

12 or forward agreement, including a rate 

13 floor, rate cap, rate collar, cross-cur14 rency rate swap, and basis swap; a 

15 spot, same day-tomorrow, tomorrow16 next, forward, or other foreign ex17 change, precious metals, or other com18 modity agreement; a currency swap, 

19 option, future, or forward agreement; 

20 an equity index or equity swap, op21 tion, future, or forward agreement; a 

22 debt index or debt swap, option, future, 

23 or forward agreement; a total return, 

24 credit spread or credit swap, option, 

25 future, or forward agreement; a com-
235 

† HR 4173 EAS 

1 modity index or commodity swap, op2 tion, future, or forward agreement; 

3 weather swap, option, future, or for4 ward agreement; an emissions swap, 

5 option, future, or forward agreement; 

6 or an inflation swap, option, future, or 

7 forward agreement; 

8 (II) any agreement or transaction 

9 that is similar to any other agreement 

10 or transaction referred to in this clause 

11 and that is of a type that has been, is 

12 presently, or in the future becomes, the 

13 subject of recurrent dealings in the 

14 swap or other derivatives markets (in15 cluding terms and conditions incor16 porated by reference in such agree17 ment) and that is a forward, swap, fu18 ture, option, or spot transaction on one 

19 or more rates, currencies, commodities, 

20 equity securities or other equity instru21 ments, debt securities or other debt in22 struments, quantitative measures asso23 ciated with an occurrence, extent of an 

24 occurrence, or contingency associated 

25 with a financial, commercial, or eco-
236 

† HR 4173 EAS 

1 nomic consequence, or economic or fi2 nancial indices or measures of eco3 nomic or financial risk or value; 

4 (III) any combination of agree5 ments or transactions referred to in 

6 this clause; 

7 (IV) any option to enter into any 

8 agreement or transaction referred to in 

9 this clause; 

10 (V) a master agreement that pro11 vides for an agreement or transaction 

12 referred to in subclause (I), (II), (III), 

13 or (IV), together with all supplements 

14 to any such master agreement, without 

15 regard to whether the master agreement 

16 contains an agreement or transaction 

17 that is not a swap agreement under 

18 this clause, except that the master 

19 agreement shall be considered to be a 

20 swap agreement under this clause only 

21 with respect to each agreement or 

22 transaction under the master agree23 ment that is referred to in subclause 

24 (I), (II), (III), or (IV); and 
237 

† HR 4173 EAS 

1 (VI) any security agreement or 

2 arrangement or other credit enhance3 ment related to any agreement or 

4 transaction referred to in any of 

5 clauses (I) through (V), including any 

6 guarantee or reimbursement obligation 

7 in connection with any agreement or 

8 transaction referred to in any such 

9 clause. 

10 (vii) DEFINITIONS RELATING TO DE11 FAULT.—When used in this paragraph and 

12 paragraph (10)— 

13 (I) the term ‘‘default’’ means, 

14 with respect to a covered financial 

15 company, any adjudication or other of16 ficial decision by any court of com17 petent jurisdiction, or other public au18 thority pursuant to which the Corpora19 tion has been appointed receiver; and 

20 (II) the term ‘‘in danger of de21 fault’’ means a covered financial com22 pany with respect to which the Cor23 poration or appropriate State author24 ity has determined that— 
238 

† HR 4173 EAS 

1 (aa) in the opinion of the 

2 Corporation or such authority— 

3 (AA) the covered finan4 cial company is not likely to 

5 be able to pay its obligations 

6 in the normal course of busi7 ness; and 

8 (BB) there is no reason9 able prospect that the covered 

10 financial company will be 

11 able to pay such obligations 

12 without Federal assistance; 

13 or 

14 (bb) in the opinion of the 

15 Corporation or such authority— 

16 (AA) the covered finan17 cial company has incurred or 

18 is likely to incur losses that 

19 will deplete all or substan20 tially all of its capital; and 

21 (BB) there is no reason22 able prospect that the capital 

23 will be replenished without 

24 Federal assistance. 
239 

† HR 4173 EAS 

1 (viii) TREATMENT OF MASTER AGREE2 MENT AS ONE AGREEMENT.—Any master 

3 agreement for any contract or agreement de4 scribed in any of clauses (i) through (vi) (or 

5 any master agreement for such master 

6 agreement or agreements), together with all 

7 supplements to such master agreement, shall 

8 be treated as a single agreement and a sin9 gle qualified financial contact. If a master 

10 agreement contains provisions relating to 

11 agreements or transactions that are not 

12 themselves qualified financial contracts, the 

13 master agreement shall be deemed to be a 

14 qualified financial contract only with re15 spect to those transactions that are them16 selves qualified financial contracts. 

17 (ix) TRANSFER.—The term ‘‘transfer’’ 

18 means every mode, direct or indirect, abso19 lute or conditional, voluntary or involun20 tary, of disposing of or parting with prop21 erty or with an interest in property, includ22 ing retention of title as a security interest 

23 and foreclosure of the equity of redemption 

24 of the covered financial company. 
240 

† HR 4173 EAS 

1 (x) PERSON.—The term ‘‘person’’ in2 cludes any governmental entity in addition 

3 to any entity included in the definition of 

4 such term in section 1, title 1, United 

5 States Code. 

6 (E) CLARIFICATION.—No provision of law 

7 shall be construed as limiting the right or power 

8 of the Corporation, or authorizing any court or 

9 agency to limit or delay, in any manner, the 

10 right or power of the Corporation to transfer any 

11 qualified financial contract in accordance with 

12 paragraphs (9) and (10) of this subsection or to 

13 disaffirm or repudiate any such contract in ac14 cordance with subsection (c)(1). 

15 (F) WALKAWAY CLAUSES NOT EFFECTIVE.— 

16 (i) IN GENERAL.—Notwithstanding the 

17 provisions of subparagraph (A) of this 

18 paragraph and sections 403 and 404 of the 

19 Federal Deposit Insurance Corporation Im20 provement Act of 1991, no walkaway clause 

21 shall be enforceable in a qualified financial 

22 contract of a covered financial company in 

23 default. 

24 (ii) LIMITED SUSPENSION OF CERTAIN

25 OBLIGATIONS.—In the case of a qualified fi-
241 

† HR 4173 EAS 

1 nancial contract referred to in clause (i), 

2 any payment or delivery obligations other3 wise due from a party pursuant to the 

4 qualified financial contract shall be sus5 pended from the time at which the Corpora6 tion is appointed as receiver until the ear7 lier of— 

8 (I) the time at which such party 

9 receives notice that such contract has 

10 been transferred pursuant to para11 graph (10)(A); or 

12 (II) 5:00 p.m. (eastern time) on 

13 the 3rd business day following the date 

14 of the appointment of the Corporation 

15 as receiver. 

16 (iii) WALKAWAY CLAUSE DEFINED.— 

17 For purposes of this subparagraph, the term 

18 ‘‘walkaway clause’’ means any provision in 

19 a qualified financial contract that suspends, 

20 conditions, or extinguishes a payment obli21 gation of a party, in whole or in part, or 

22 does not create a payment obligation of a 

23 party that would otherwise exist, solely be24 cause of the status of such party as a non25 defaulting party in connection with the in-
242 

† HR 4173 EAS 

1 solvency of a covered financial company 

2 that is a party to the contract or the ap3 pointment of or the exercise of rights or 

4 powers by the Corporation as receiver for 

5 such covered financial company, and not as 

6 a result of the exercise by a party of any 

7 right to offset, setoff, or net obligations that 

8 exist under the contract, any other contract 

9 between those parties, or applicable law. 

10 (iv) CERTAIN OBLIGATIONS TO CLEAR11 ING ORGANIZATIONS.—In the event that the 

12 Corporation has been appointed as receiver 

13 for a covered financial company which is a 

14 party to any qualified financial contract 

15 cleared by or subject to the rules of a clear16 ing organization (as defined in subsection 

17 (c)(9)(D)), the receiver shall use its best ef18 forts to meet all margin, collateral, and set19 tlement obligations of the covered financial 

20 company that arise under qualified finan21 cial contracts (other than any margin, col22 lateral, or settlement obligation that is not 

23 enforceable against the receiver under para24 graph (8)(F)(i) or paragraph (10)(B)), as 

25 required by the rules of the clearing organi-
243 

† HR 4173 EAS 

1 zation when due, and such obligations shall 

2 not be suspended pursuant to paragraph 

3 (8)(F)(ii). Notwithstanding paragraph 

4 (8)(F)(ii) or (10)(B), if the receiver fails to 

5 satisfy any such margin, collateral, or set6 tlement obligations under the rules of the 

7 clearing organization, the clearing organi8 zation shall have the immediate right to ex9 ercise, and shall not be stayed from exer10 cising, all of its rights and remedies under 

11 its rules and applicable law with respect to 

12 any qualified financial contract of the cov13 ered financial company, including, without 

14 limitation, the right to liquidate all posi15 tions and collateral of such covered finan16 cial company under the company’s qualified 

17 financial contracts, and suspend or cease to 

18 act for such covered financial company, all 

19 in accordance with the rules of the clearing 

20 organization. 

21 (G) RECORDKEEPING.— 

22 (i) JOINT RULEMAKING.—The Federal 

23 primary financial regulatory agencies shall 

24 jointly prescribe regulations requiring that 

25 financial companies maintain such records 
244 

† HR 4173 EAS 

1 with respect to qualified financial contracts 

2 (including market valuations) that the Fed3 eral primary financial regulatory agencies 

4 determine to be necessary or appropriate in 

5 order to assist the Corporation as receiver 

6 for a covered financial company in being 

7 able to exercise its rights and fulfill its obli8 gations under this paragraph or paragraph 

9 (9) or (10). 

10 (ii) TIMEFRAME.—The Federal pri11 mary financial regulatory agencies shall 

12 prescribe joint final or interim final regula13 tions not later than 24 months after the 

14 date of enactment of this Act. 

15 (iii) BACK-UP RULEMAKING AUTHOR16 ITY.—If the Federal primary financial reg17 ulatory agencies do not prescribe joint final 

18 or interim final regulations within the time 

19 frame in clause (ii), the Chairperson of the 

20 Council shall prescribe, in consultation with 

21 the Corporation, the regulations required by 

22 clause (i). 

23 (iv) CATEGORIZATION AND TIERING.— 

24 The joint regulations prescribed under 

25 clause (i) shall, as appropriate, differentiate 
245 

† HR 4173 EAS 

1 among financial companies by taking into 

2 consideration their size, risk, complexity, le3 verage, frequency and dollar amount of 

4 qualified financial contracts, interconnect5 edness to the financial system, and any 

6 other factors deemed appropriate. 

7 (9) TRANSFER OF QUALIFIED FINANCIAL CON8 TRACTS.— 

9 (A) IN GENERAL.—In making any transfer 

10 of assets or liabilities of a covered financial com11 pany in default, which includes any qualified fi12 nancial contract, the Corporation as receiver for 

13 such covered financial company shall either— 

14 (i) transfer to one financial institu15 tion, other than a financial institution for 

16 which a conservator, receiver, trustee in 

17 bankruptcy, or other legal custodian has 

18 been appointed or which is otherwise the 

19 subject of a bankruptcy or insolvency pro20 ceeding— 

21 (I) all qualified financial con22 tracts between any person or any affil23 iate of such person and the covered fi24 nancial company in default; 
246 

† HR 4173 EAS 

1 (II) all claims of such person or 

2 any affiliate of such person against 

3 such covered financial company under 

4 any such contract (other than any 

5 claim which, under the terms of any 

6 such contract, is subordinated to the 

7 claims of general unsecured creditors of 

8 such company); 

9 (III) all claims of such covered fi10 nancial company against such person 

11 or any affiliate of such person under 

12 any such contract; and 

13 (IV) all property securing or any 

14 other credit enhancement for any con15 tract described in subclause (I) or any 

16 claim described in subclause (II) or 

17 (III) under any such contract; or 

18 (ii) transfer none of the qualified fi19 nancial contracts, claims, property or other 

20 credit enhancement referred to in clause (i) 

21 (with respect to such person and any affil22 iate of such person). 

23 (B) TRANSFER TO FOREIGN BANK, FINAN24 CIAL INSTITUTION, OR BRANCH OR AGENCY

25 THEREOF.—In transferring any qualified finan-
247 

† HR 4173 EAS 

1 cial contracts and related claims and property 

2 under subparagraph (A)(i), the Corporation as 

3 receiver for the covered financial company shall 

4 not make such transfer to a foreign bank, finan5 cial institution organized under the laws of a 

6 foreign country, or a branch or agency of a for7 eign bank or financial institution unless, under 

8 the law applicable to such bank, financial insti9 tution, branch or agency, to the qualified finan10 cial contracts, and to any netting contract, any 

11 security agreement or arrangement or other cred12 it enhancement related to one or more qualified 

13 financial contracts, the contractual rights of the 

14 parties to such qualified financial contracts, net15 ting contracts, security agreements or arrange16 ments, or other credit enhancements are enforce17 able substantially to the same extent as per18 mitted under this section. 

19 (C) TRANSFER OF CONTRACTS SUBJECT TO

20 THE RULES OF A CLEARING ORGANIZATION.—In 

21 the event that the Corporation as receiver for a 

22 financial institution transfers any qualified fi23 nancial contract and related claims, property, or 

24 credit enhancement pursuant to subparagraph 

25 (A)(i) and such contract is cleared by or subject 
248 

† HR 4173 EAS 

1 to the rules of a clearing organization, the clear2 ing organization shall not be required to accept 

3 the transferee as a member by virtue of the 

4 transfer. 

5 (D) DEFINITIONS.—For purposes of this 

6 paragraph— 

7 (i) the term ‘‘financial institution’’ 

8 means a broker or dealer, a depository in9 stitution, a futures commission merchant, a 

10 bridge financial company, or any other in11 stitution determined by the Corporation, by 

12 regulation, to be a financial institution; 

13 and 

14 (ii) the term ‘‘clearing organization’’ 

15 has the same meaning as in section 402 of 

16 the Federal Deposit Insurance Corporation 

17 Improvement Act of 1991. 

18 (10) NOTIFICATION OF TRANSFER.— 

19 (A) IN GENERAL.— 

20 (i) NOTICE.—The Corporation shall 

21 provide notice in accordance with clause 

22 (ii), if— 

23 (I) the Corporation as receiver for 

24 a covered financial company in default 

25 or in danger of default transfers any 
249 

† HR 4173 EAS 

1 assets or liabilities of the covered fi2 nancial company; and 

3 (II) the transfer includes any 

4 qualified financial contract. 

5 (ii) TIMING.—The Corporation as re6 ceiver for a covered financial company shall 

7 notify any person who is a party to any 

8 contract described in clause (i) of such 

9 transfer not later than 5:00 p.m. (eastern 

10 time) on the 3rd business day following the 

11 date of the appointment of the Corporation 

12 as receiver. 

13 (B) CERTAIN RIGHTS NOT ENFORCEABLE.— 

14 (i) RECEIVERSHIP.—A person who is a 

15 party to a qualified financial contract with 

16 a covered financial company may not exer17 cise any right that such person has to ter18 minate, liquidate, or net such contract 

19 under paragraph (8)(A) solely by reason of 

20 or incidental to the appointment under this 

21 section of the Corporation as receiver for the 

22 covered financial company (or the insol23 vency or financial condition of the covered 

24 financial company for which the Corpora25 tion has been appointed as receiver)— 
250 

† HR 4173 EAS 

1 (I) until 5:00 p.m. (eastern time) 

2 on the 3rd business day following the 

3 date of the appointment; or 

4 (II) after the person has received 

5 notice that the contract has been trans6 ferred pursuant to paragraph (9)(A). 

7 (ii) NOTICE.—For purposes of this 

8 paragraph, the Corporation as receiver for a 

9 covered financial company shall be deemed 

10 to have notified a person who is a party to 

11 a qualified financial contract with such cov12 ered financial company, if the Corporation 

13 has taken steps reasonably calculated to 

14 provide notice to such person by the time 

15 specified in subparagraph (A). 

16 (C) TREATMENT OF BRIDGE FINANCIAL

17 COMPANY.—For purposes of paragraph (9), a 

18 bridge financial company shall not be considered 

19 to be a covered financial company for which a 

20 conservator, receiver, trustee in bankruptcy, or 

21 other legal custodian has been appointed, or 

22 which is otherwise the subject of a bankruptcy or 

23 insolvency proceeding. 

24 (D) BUSINESS DAY DEFINED.—For pur25 poses of this paragraph, the term ‘‘business day’’ 
251 

† HR 4173 EAS 

1 means any day other than any Saturday, Sun2 day, or any day on which either the New York 

3 Stock Exchange or the Federal Reserve Bank of 

4 New York is closed. 

5 (11) DISAFFIRMANCE OR REPUDIATION OF

6 QUALIFIED FINANCIAL CONTRACTS.—In exercising the 

7 rights of disaffirmance or repudiation of the Corpora8 tion as receiver with respect to any qualified finan9 cial contract to which a covered financial company is 

10 a party, the Corporation shall either— 

11 (A) disaffirm or repudiate all qualified fi12 nancial contracts between— 

13 (i) any person or any affiliate of such 

14 person; and 

15 (ii) the covered financial company in 

16 default; or 

17 (B) disaffirm or repudiate none of the 

18 qualified financial contracts referred to in sub19 paragraph (A) (with respect to such person or 

20 any affiliate of such person). 

21 (12) CERTAIN SECURITY AND CUSTOMER INTER22 ESTS NOT AVOIDABLE.—No provision of this sub23 section shall be construed as permitting the avoidance 

24 of any— 
252 

† HR 4173 EAS 

1 (A) legally enforceable or perfected security 

2 interest in any of the assets of any covered fi3 nancial company, except in accordance with sub4 section (a)(11); or 

5 (B) legally enforceable interest in customer 

6 property, security entitlements in respect of as7 sets or property held by the covered financial 

8 company for any security entitlement holder. 

9 (13) AUTHORITY TO ENFORCE CONTRACTS.— 

10 (A) IN GENERAL.—The Corporation, as re11 ceiver for a covered financial company, may en12 force any contract, other than a liability insur13 ance contract of a director or officer, a financial 

14 institution bond entered into by the covered fi15 nancial company, notwithstanding any provi16 sion of the contract providing for termination, 

17 default, acceleration, or exercise of rights upon, 

18 or solely by reason of, insolvency, the appoint19 ment of or the exercise of rights or powers by the 

20 Corporation as receiver, the filing of the petition 

21 pursuant to section 202(a)(1), or the issuance of 

22 the recommendations or determination, or any 

23 actions or events occurring in connection there24 with or as a result thereof, pursuant to section 

25 203. 
253 

† HR 4173 EAS 

1 (B) CERTAIN RIGHTS NOT AFFECTED.—No 

2 provision of this paragraph may be construed as 

3 impairing or affecting any right of the Corpora4 tion as receiver to enforce or recover under a li5 ability insurance contract of a director or officer 

6 or financial institution bond under other appli7 cable law. 

8 (C) CONSENT REQUIREMENT AND IPSO

9 FACTO CLAUSES.— 

10 (i) IN GENERAL.—Except as otherwise 

11 provided by this section, no person may ex12 ercise any right or power to terminate, ac13 celerate, or declare a default under any con14 tract to which the covered financial com15 pany is a party (and no provision in any 

16 such contract providing for such default, 

17 termination, or acceleration shall be en18 forceable), or to obtain possession of or exer19 cise control over any property of the covered 

20 financial company or affect any contractual 

21 rights of the covered financial company, 

22 without the consent of the Corporation as 

23 receiver for the covered financial company 

24 during the 90 day period beginning from 
254 

† HR 4173 EAS 

1 the appointment of the Corporation as re2 ceiver. 

3 (ii) EXCEPTIONS.—No provision of this 

4 subparagraph shall apply to a director or 

5 officer liability insurance contract or a fi6 nancial institution bond, to the rights of 

7 parties to certain qualified financial con8 tracts pursuant to paragraph (8), or to the 

9 rights of parties to netting contracts pursu10 ant to subtitle A of title IV of the Federal 

11 Deposit Insurance Corporation Improve12 ment Act of 1991 (12 U.S.C. 4401 et seq.), 

13 or shall be construed as permitting the Cor14 poration as receiver to fail to comply with 

15 otherwise enforceable provisions of such con16 tract. 

17 (D) CONTRACTS TO EXTEND CREDIT.—Not18 withstanding any other provision in this title, if 

19 the Corporation as receiver enforces any contract 

20 to extend credit to the covered financial company 

21 or bridge financial company, any valid and en22 forceable obligation to repay such debt shall be 

23 paid by the Corporation as receiver, as an ad24 ministrative expense of the receivership. 
255 

† HR 4173 EAS 

1 (14) EXCEPTION FOR FEDERAL RESERVE BANKS

2 AND CORPORATION SECURITY INTEREST.—No provi3 sion of this subsection shall apply with respect to— 

4 (A) any extension of credit from any Fed5 eral reserve bank or the Corporation to any cov6 ered financial company; or 

7 (B) any security interest in the assets of the 

8 covered financial company securing any such ex9 tension of credit. 

10 (15) SAVINGS CLAUSE.—The meanings of terms 

11 used in this subsection are applicable for purposes of 

12 this subsection only, and shall not be construed or ap13 plied so as to challenge or affect the characterization, 

14 definition, or treatment of any similar terms under 

15 any other statute, regulation, or rule, including the 

16 Gramm-Leach-Bliley Act, the Legal Certainty for 

17 Bank Products Act of 2000, the securities laws (as 

18 that term is defined in section 3(a)(47) of the Securi19 ties Exchange Act of 1934), and the Commodity Ex20 change Act. 

21 (16) ENFORCEMENT OF CONTRACTS GUARANTEED

22 BY THE COVERED FINANCIAL COMPANY.— 

23 (A) IN GENERAL.—The Corporation, as re24 ceiver for a covered financial company or as re25 ceiver for a subsidiary of a covered financial 
256 

† HR 4173 EAS 

1 company (including an insured depository insti2 tution) shall have the power to enforce contracts 

3 of subsidiaries or affiliates of the covered finan4 cial company, the obligations under which are 

5 guaranteed or otherwise supported by or linked 

6 to the covered financial company, notwith7 standing any contractual right to cause the ter8 mination, liquidation, or acceleration of such 

9 contracts based solely on the insolvency, finan10 cial condition, or receivership of the covered fi11 nancial company, if— 

12 (i) such guaranty or other support and 

13 all related assets and liabilities are trans14 ferred to and assumed by a bridge financial 

15 company or a third party (other than a 

16 third party for which a conservator, re17 ceiver, trustee in bankruptcy, or other legal 

18 custodian has been appointed, or which is 

19 otherwise the subject of a bankruptcy or in20 solvency proceeding) within the same period 

21 of time as the Corporation is entitled to 

22 transfer the qualified financial contracts of 

23 such covered financial company; or 
257 

† HR 4173 EAS 

1 (ii) the Corporation, as receiver, other2 wise provides adequate protection with re3 spect to such obligations. 

4 (B) RULE OF CONSTRUCTION.—For pur5 poses of this paragraph, a bridge financial com6 pany shall not be considered to be a third party 

7 for which a conservator, receiver, trustee in 

8 bankruptcy, or other legal custodian has been ap9 pointed, or which is otherwise the subject of a 

10 bankruptcy or insolvency proceeding. 

11 (d) VALUATION OF CLAIMS IN DEFAULT.— 

12 (1) IN GENERAL.—Notwithstanding any other 

13 provision of Federal law or the law of any State, and 

14 regardless of the method utilized by the Corporation 

15 for a covered financial company, including trans16 actions authorized under subsection (h), this sub17 section shall govern the rights of the creditors of any 

18 such covered financial company. 

19 (2) MAXIMUM LIABILITY.—The maximum liabil20 ity of the Corporation, acting as receiver for a covered 

21 financial company or in any other capacity, to any 

22 person having a claim against the Corporation as re23 ceiver or the covered financial company for which the 

24 Corporation is appointed shall equal the amount that 

25 such claimant would have received if— 
258 

† HR 4173 EAS 

1 (A) the Corporation had not been appointed 

2 receiver with respect to the covered financial 

3 company; and 

4 (B) the covered financial company had been 

5 liquidated under chapter 7 of the Bankruptcy 

6 Code, or any similar provision of State insol7 vency law applicable to the covered financial 

8 company. 

9 (3) SPECIAL PROVISION FOR ORDERLY LIQUIDA10 TION BY SIPC.—The maximum liability of the Cor11 poration, acting as receiver or in its corporate capac12 ity for any covered broker or dealer to any customer 

13 of such covered broker or dealer, with respect to cus14 tomer property of such customer, shall be— 

15 (A) equal to the amount that such customer 

16 would have received with respect to such cus17 tomer property in a case initiated by SIPC 

18 under the Securities Investor Protection Act of 

19 1970 (15 U.S.C. 78aaa et seq.); and 

20 (B) determined as of the close of business on 

21 the date on which the Corporation is appointed 

22 as receiver. 

23 (4) ADDITIONAL PAYMENTS AUTHORIZED.— 

24 (A) IN GENERAL.—Subject to subsection 

25 (o)(1)(E)(ii), the Corporation, with the approval 
259 

† HR 4173 EAS 

1 of the Secretary, may make additional payments 

2 or credit additional amounts to or with respect 

3 to or for the account of any claimant or category 

4 of claimants of the covered financial company, if 

5 the Corporation determines that such payments 

6 or credits are necessary or appropriate to mini7 mize losses to the Corporation as receiver from 

8 the orderly liquidation of the covered financial 

9 company under this section. 

10 (B) LIMITATIONS.— 

11 (i) PROHIBITION.—The Corporation 

12 shall not make any payments or credit 

13 amounts to any claimant or category of 

14 claimants that would result in any claim15 ant receiving more than the face value 

16 amount of any claim that is proven to the 

17 satisfaction of the Corporation. 

18 (ii) NO OBLIGATION.—Notwithstanding 

19 any other provision of Federal or State law, 

20 or the Constitution of any State, the Cor21 poration shall not be obligated, as a result 

22 of having made any payment under sub23 paragraph (A) or credited any amount de24 scribed in subparagraph (A) to or with re25 spect to, or for the account, of any claimant 
260 

† HR 4173 EAS 

1 or category of claimants, to make payments 

2 to any other claimant or category of claim3 ants. 

4 (C) MANNER OF PAYMENT.—The Corpora5 tion may make payments or credit amounts 

6 under subparagraph (A) directly to the claim7 ants or may make such payments or credit such 

8 amounts to a company other than a covered fi9 nancial company or a bridge financial company 

10 established with respect thereto in order to in11 duce such other company to accept liability for 

12 such claims. 

13 (e) LIMITATION ON COURT ACTION.—Except as pro14 vided in this title, no court may take any action to restrain 

15 or affect the exercise of powers or functions of the receiver 

16 hereunder, and any remedy against the Corporation or re17 ceiver shall be limited to money damages determined in ac18 cordance with this title. 

19 (f) LIABILITY OF DIRECTORS AND OFFICERS.— 

20 (1) IN GENERAL.—A director or officer of a cov21 ered financial company may be held personally liable 

22 for monetary damages in any civil action described 

23 in paragraph (2) by, on behalf of, or at the request 

24 or direction of the Corporation, which action is pros-
261 

† HR 4173 EAS 

1 ecuted wholly or partially for the benefit of the Cor2 poration— 

3 (A) acting as receiver for such covered fi4 nancial company; 

5 (B) acting based upon a suit, claim, or 

6 cause of action purchased from, assigned by, or 

7 otherwise conveyed by the Corporation as re8 ceiver; or 

9 (C) acting based upon a suit, claim, or 

10 cause of action purchased from, assigned by, or 

11 otherwise conveyed in whole or in part by a cov12 ered financial company or its affiliate in connec13 tion with assistance provided under this title. 

14 (2) ACTIONS COVERED.—Paragraph (1) shall 

15 apply with respect to actions for gross negligence, in16 cluding any similar conduct or conduct that dem17 onstrates a greater disregard of a duty of care (than 

18 gross negligence) including intentional tortious con19 duct, as such terms are defined and determined under 

20 applicable State law. 

21 (3) SAVINGS CLAUSE.—Nothing in this sub22 section shall impair or affect any right of the Cor23 poration under other applicable law. 

24 (g) DAMAGES.—In any proceeding related to any 

25 claim against a director, officer, employee, agent, attorney, 
262 

† HR 4173 EAS 

1 accountant, or appraiser of a covered financial company, 

2 or any other party employed by or providing services to 

3 a covered financial company, recoverable damages deter4 mined to result from the improvident or otherwise improper 

5 use or investment of any assets of the covered financial com6 pany shall include principal losses and appropriate inter7 est. 

8 (h) BRIDGE FINANCIAL COMPANIES.— 

9 (1) ORGANIZATION.— 

10 (A) PURPOSE.—The Corporation, as re11 ceiver for one or more covered financial compa12 nies or in anticipation of being appointed re13 ceiver for one or more covered financial compa14 nies, may organize one or more bridge financial 

15 companies in accordance with this subsection. 

16 (B) AUTHORITIES.—Upon the creation of a 

17 bridge financial company under subparagraph 

18 (A) with respect to a covered financial company, 

19 such bridge financial company may— 

20 (i) assume such liabilities (including 

21 liabilities associated with any trust or cus22 tody business, but excluding any liabilities 

23 that count as regulatory capital) of such 

24 covered financial company as the Corpora-
263 

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1 tion may, in its discretion, determine to be 

2 appropriate; 

3 (ii) purchase such assets (including as4 sets associated with any trust or custody 

5 business) of such covered financial company 

6 as the Corporation may, in its discretion, 

7 determine to be appropriate; and 

8 (iii) perform any other temporary 

9 function which the Corporation may, in its 

10 discretion, prescribe in accordance with this 

11 section. 

12 (2) CHARTER AND ESTABLISHMENT.— 

13 (A) ESTABLISHMENT.—Except as provided 

14 in subparagraph (H), where the covered finan15 cial company is a covered broker or dealer, the 

16 Corporation, as receiver for a covered financial 

17 company, may grant a Federal charter to and 

18 approve articles of association for one or more 

19 bridge financial company or companies, with re20 spect to such covered financial company which 

21 shall, by operation of law and immediately upon 

22 issuance of its charter and approval of its arti23 cles of association, be established and operate in 

24 accordance with, and subject to, such charter, ar25 ticles, and this section. 
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1 (B) MANAGEMENT.—Upon its establish2 ment, a bridge financial company shall be under 

3 the management of a board of directors ap4 pointed by the Corporation. 

5 (C) ARTICLES OF ASSOCIATION.—The arti6 cles of association and organization certificate of 

7 a bridge financial company shall have such 

8 terms as the Corporation may provide, and shall 

9 be executed by such representatives as the Cor10 poration may designate. 

11 (D) TERMS OF CHARTER; RIGHTS AND

12 PRIVILEGES.—Subject to and in accordance with 

13 the provisions of this subsection, the Corporation 

14 shall— 

15 (i) establish the terms of the charter of 

16 a bridge financial company and the rights, 

17 powers, authorities, and privileges of a 

18 bridge financial company granted by the 

19 charter or as an incident thereto; and 

20 (ii) provide for, and establish the terms 

21 and conditions governing, the management 

22 (including the bylaws and the number of di23 rectors of the board of directors) and oper24 ations of the bridge financial company. 
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1 (E) TRANSFER OF RIGHTS AND PRIVILEGES

2 OF COVERED FINANCIAL COMPANY.— 

3 (i) IN GENERAL.—Notwithstanding 

4 any other provision of Federal or State law, 

5 the Corporation may provide for a bridge 

6 financial company to succeed to and assume 

7 any rights, powers, authorities, or privileges 

8 of the covered financial company with re9 spect to which the bridge financial company 

10 was established and, upon such determina11 tion by the Corporation, the bridge finan12 cial company shall immediately and by op13 eration of law succeed to and assume such 

14 rights, powers, authorities, and privileges. 

15 (ii) EFFECTIVE WITHOUT APPROVAL.— 

16 Any succession to or assumption by a 

17 bridge financial company of rights, powers, 

18 authorities, or privileges of a covered finan19 cial company under clause (i) or otherwise 

20 shall be effective without any further ap21 proval under Federal or State law, assign22 ment, or consent with respect thereto. 

23 (F) CORPORATE GOVERNANCE AND ELEC24 TION AND DESIGNATION OF BODY OF LAW.—To 

25 the extent permitted by the Corporation and con-
266 

† HR 4173 EAS 

1 sistent with this section and any rules, regula2 tions, or directives issued by the Corporation 

3 under this section, a bridge financial company 

4 may elect to follow the corporate governance 

5 practices and procedures that are applicable to a 

6 corporation incorporated under the general cor7 poration law of the State of Delaware, or the 

8 State of incorporation or organization of the cov9 ered financial company with respect to which the 

10 bridge financial company was established, as 

11 such law may be amended from time to time. 

12 (G) CAPITAL.— 

13 (i) CAPITAL NOT REQUIRED.—Notwith14 standing any other provision of Federal or 

15 State law, a bridge financial company may, 

16 if permitted by the Corporation, operate 

17 without any capital or surplus, or with 

18 such capital or surplus as the Corporation 

19 may in its discretion determine to be ap20 propriate. 

21 (ii) NO CONTRIBUTION BY THE COR22 PORATION REQUIRED.—The Corporation is 

23 not required to pay capital into a bridge fi24 nancial company or to issue any capital 
267 

† HR 4173 EAS 

1 stock on behalf of a bridge financial com2 pany established under this subsection. 

3 (iii) AUTHORITY.—If the Corporation 

4 determines that such action is advisable, the 

5 Corporation may cause capital stock or 

6 other securities of a bridge financial com7 pany established with respect to a covered 

8 financial company to be issued and offered 

9 for sale in such amounts and on such terms 

10 and conditions as the Corporation may, in 

11 its discretion, determine. 

12 (iv) OPERATING FUNDS IN LIEU OF

13 CAPITAL AND IMPLEMENTATION PLAN.— 

14 Upon the organization of a bridge financial 

15 company, and thereafter as the Corporation 

16 may, in its discretion, determine to be nec17 essary or advisable, the Corporation may 

18 make available to the bridge financial com19 pany, subject to the plan described in sub20 section (n)(11), funds for the operation of 

21 the bridge financial company in lieu of cap22 ital. 

23 (H) BRIDGE BROKERS OR DEALERS.— 

24 (i) IN GENERAL.—The Corporation, as 

25 receiver for a covered broker or dealer, may 
268 

† HR 4173 EAS 

1 approve articles of association for one or 

2 more bridge financial companies with re3 spect to such covered broker or dealer, which 

4 bridge financial company or companies 

5 shall, by operation of law and immediately 

6 upon approval of its articles of associa7 tion— 

8 (I) be established and deemed reg9 istered with the Commission under the 

10 Securities Exchange Act of 1934 and a 

11 member of SIPC; 

12 (II) operate in accordance with 

13 such articles and this section; and 

14 (III) succeed to any and all reg15 istrations and memberships of the cov16 ered financial company with or in any 

17 self-regulatory organizations. 

18 (ii) OTHER REQUIREMENTS.—Except 

19 as provided in clause (i), and notwith20 standing any other provision of this section, 

21 the bridge financial company shall be sub22 ject to the Federal securities laws and all 

23 requirements with respect to being a mem24 ber of a self-regulatory organization, unless 

25 exempted from any such requirements by 
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† HR 4173 EAS 

1 the Commission, as is necessary or appro2 priate in the public interest or for the pro3 tection of investors. 

4 (iii) TREATMENT OF CUSTOMERS.— 

5 Except as otherwise provided by this title, 

6 any customer of the covered broker or dealer 

7 whose account is transferred to a bridge fi8 nancial company shall have all the rights, 

9 privileges, and protections under section 

10 205(f) and under the Securities Investor 

11 Protection Act of 1970 (15 U.S.C. 78aaa et 

12 seq.), that such customer would have had if 

13 the account were not transferred from the 

14 covered financial company under this sub15 paragraph. 

16 (iv) OPERATION OF BRIDGE BROKERS

17 OR DEALERS.—Notwithstanding any other 

18 provision of this title, the Corporation shall 

19 not operate any bridge financial company 

20 created by the Corporation under this title 

21 with respect to a covered broker or dealer in 

22 such a manner as to adversely affect the 

23 ability of customers to promptly access their 

24 customer property in accordance with ap25 plicable law. 
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1 (3) INTERESTS IN AND ASSETS AND OBLIGATIONS

2 OF COVERED FINANCIAL COMPANY.—Notwithstanding 

3 paragraph (1) or (2) or any other provision of law— 

4 (A) a bridge financial company shall as5 sume, acquire, or succeed to the assets or liabil6 ities of a covered financial company (including 

7 the assets or liabilities associated with any trust 

8 or custody business) only to the extent that such 

9 assets or liabilities are transferred by the Cor10 poration to the bridge financial company in ac11 cordance with, and subject to the restrictions set 

12 forth in, paragraph (1)(B); and 

13 (B) a bridge financial company shall not 

14 assume, acquire, or succeed to any obligation 

15 that a covered financial company for which the 

16 Corporation has been appointed receiver may 

17 have to any shareholder, member, general part18 ner, limited partner, or other person with an in19 terest in the equity of the covered financial com20 pany that arises as a result of the status of that 

21 person having an equity claim in the covered fi22 nancial company. 

23 (4) BRIDGE FINANCIAL COMPANY TREATED AS

24 BEING IN DEFAULT FOR CERTAIN PURPOSES.—A 

25 bridge financial company shall be treated as a cov-
271 

† HR 4173 EAS 

1 ered financial company in default at such times and 

2 for such purposes as the Corporation may, in its dis3 cretion, determine. 

4 (5) TRANSFER OF ASSETS AND LIABILITIES.— 

5 (A) AUTHORITY OF CORPORATION.—The 

6 Corporation, as receiver for a covered financial 

7 company, may transfer any assets and liabilities 

8 of a covered financial company (including any 

9 assets or liabilities associated with any trust or 

10 custody business) to one or more bridge financial 

11 companies, in accordance with and subject to the 

12 restrictions of paragraph (1). 

13 (B) SUBSEQUENT TRANSFERS.—At any 

14 time after the establishment of a bridge financial 

15 company with respect to a covered financial 

16 company, the Corporation, as receiver, may 

17 transfer any assets and liabilities of such covered 

18 financial company as the Corporation may, in 

19 its discretion, determine to be appropriate in ac20 cordance with and subject to the restrictions of 

21 paragraph (1). 

22 (C) TREATMENT OF TRUST OR CUSTODY

23 BUSINESS.—For purposes of this paragraph, the 

24 trust or custody business, including fiduciary 

25 appointments, held by any covered financial 
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† HR 4173 EAS 

1 company is included among its assets and liabil2 ities. 

3 (D) EFFECTIVE WITHOUT APPROVAL.—The 

4 transfer of any assets or liabilities, including 

5 those associated with any trust or custody busi6 ness of a covered financial company, to a bridge 

7 financial company shall be effective without any 

8 further approval under Federal or State law, as9 signment, or consent with respect thereto. 

10 (E) EQUITABLE TREATMENT OF SIMILARLY

11 SITUATED CREDITORS.—The Corporation shall 

12 treat all creditors of a covered financial com13 pany that are similarly situated under sub14 section (b)(1), in a similar manner in exercising 

15 the authority of the Corporation under this sub16 section to transfer any assets or liabilities of the 

17 covered financial company to one or more bridge 

18 financial companies established with respect to 

19 such covered financial company, except that the 

20 Corporation may take any action (including 

21 making payments, subject to subsection 

22 (o)(1)(D)(ii)) that does not comply with this sub23 paragraph, if— 

24 (i) the Corporation determines that 

25 such action is necessary— 
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† HR 4173 EAS 

1 (I) to maximize the value of the 

2 assets of the covered financial com3 pany; 

4 (II) to maximize the present value 

5 return from the sale or other disposi6 tion of the assets of the covered finan7 cial company; or 

8 (III) to minimize the amount of 

9 any loss realized upon the sale or other 

10 disposition of the assets of the covered 

11 financial company; and 

12 (ii) all creditors that are similarly sit13 uated under subsection (b)(1) receive not 

14 less than the amount provided under para15 graphs (2) and (3) of subsection (d). 

16 (F) LIMITATION ON TRANSFER OF LIABIL17 ITIES.—Notwithstanding any other provision of 

18 law, the aggregate amount of liabilities of a cov19 ered financial company that are transferred to, 

20 or assumed by, a bridge financial company from 

21 a covered financial company may not exceed the 

22 aggregate amount of the assets of the covered fi23 nancial company that are transferred to, or pur24 chased by, the bridge financial company from the 

25 covered financial company. 
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† HR 4173 EAS 

1 (6) STAY OF JUDICIAL ACTION.—Any judicial ac2 tion to which a bridge financial company becomes a 

3 party by virtue of its acquisition of any assets or as4 sumption of any liabilities of a covered financial 

5 company shall be stayed from further proceedings for 

6 a period of not longer than 45 days (or such longer 

7 period as may be agreed to upon the consent of all 

8 parties) at the request of the bridge financial com9 pany. 

10 (7) AGREEMENTS AGAINST INTEREST OF THE

11 BRIDGE FINANCIAL COMPANY.—No agreement that 

12 tends to diminish or defeat the interest of the bridge 

13 financial company in any asset of a covered financial 

14 company acquired by the bridge financial company 

15 shall be valid against the bridge financial company, 

16 unless such agreement— 

17 (A) is in writing; 

18 (B) was executed by an authorized officer or 

19 representative of the covered financial company 

20 or confirmed in the ordinary course of business 

21 by the covered financial company; and 

22 (C) has been on the official record of the 

23 company, since the time of its execution, or with 

24 which, the party claiming under the agreement 

25 provides documentation of such agreement and 
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† HR 4173 EAS 

1 its authorized execution or confirmation by the 

2 covered financial company that is acceptable to 

3 the receiver. 

4 (8) NO FEDERAL STATUS.— 

5 (A) AGENCY STATUS.—A bridge financial 

6 company is not an agency, establishment, or in7 strumentality of the United States. 

8 (B) EMPLOYEE STATUS.—Representatives 

9 for purposes of paragraph (1)(B), directors, offi10 cers, employees, or agents of a bridge financial 

11 company are not, solely by virtue of service in 

12 any such capacity, officers or employees of the 

13 United States. Any employee of the Corporation 

14 or of any Federal instrumentality who serves at 

15 the request of the Corporation as a representative 

16 for purposes of paragraph (1)(B), director, offi17 cer, employee, or agent of a bridge financial 

18 company shall not— 

19 (i) solely by virtue of service in any 

20 such capacity lose any existing status as an 

21 officer or employee of the United States for 

22 purposes of title 5, United States Code, or 

23 any other provision of law; or 

24 (ii) receive any salary or benefits for 

25 service in any such capacity with respect to 
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† HR 4173 EAS 

1 a bridge financial company in addition to 

2 such salary or benefits as are obtained 

3 through employment with the Corporation 

4 or such Federal instrumentality. 

5 (9) FUNDING AUTHORIZED.—The Corporation 

6 may, subject to the plan described in subsection 

7 (n)(11), provide funding to facilitate any transaction 

8 described in subparagraph (A), (B), (C), or (D) of 

9 paragraph (13) with respect to any bridge financial 

10 company, or facilitate the acquisition by a bridge fi11 nancial company of any assets, or the assumption of 

12 any liabilities, of a covered financial company for 

13 which the Corporation has been appointed receiver. 

14 (10) EXEMPT TAX STATUS.—Notwithstanding 

15 any other provision of Federal or State law, a bridge 

16 financial company, its franchise, property, and in17 come shall be exempt from all taxation now or here18 after imposed by the United States, by any territory, 

19 dependency, or possession thereof, or by any State, 

20 county, municipality, or local taxing authority. 

21 (11) FEDERAL AGENCY APPROVAL; ANTITRUST

22 REVIEW.—If a transaction involving the merger or 

23 sale of a bridge financial company requires approval 

24 by a Federal agency, the transaction may not be con25 summated before the 5th calendar day after the date 
277 

† HR 4173 EAS 

1 of approval by the Federal agency responsible for such 

2 approval with respect thereto. If, in connection with 

3 any such approval a report on competitive factors 

4 from the Attorney General is required, the Federal 

5 agency responsible for such approval shall promptly 

6 notify the Attorney General of the proposed trans7 action and the Attorney General shall provide the re8 quired report within 10 days of the request. If a noti9 fication is required under section 7A of the Clayton 

10 Act with respect to such transaction, the required 

11 waiting period shall end on the 15th day after the 

12 date on which the Attorney General and the Federal 

13 Trade Commission receive such notification, unless 

14 the waiting period is terminated earlier under section 

15 7A(b)(2) of the Clayton Act, or extended under section 

16 7A(e)(2) of that Act. 

17 (12) DURATION OF BRIDGE FINANCIAL COM18 PANY.—Subject to paragraphs (13) and (14), the sta19 tus of a bridge financial company as such shall ter20 minate at the end of the 2-year period following the 

21 date on which it was granted a charter. The Corpora22 tion may, in its discretion, extend the status of the 

23 bridge financial company as such for no more than 

24 3 additional 1-year periods. 
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† HR 4173 EAS 

1 (13) TERMINATION OF BRIDGE FINANCIAL COM2 PANY STATUS.—The status of any bridge financial 

3 company as such shall terminate upon the earliest 

4 of— 

5 (A) the date of the merger or consolidation 

6 of the bridge financial company with a company 

7 that is not a bridge financial company; 

8 (B) at the election of the Corporation, the 

9 sale of a majority of the capital stock of the 

10 bridge financial company to a company other 

11 than the Corporation and other than another 

12 bridge financial company; 

13 (C) the sale of 80 percent, or more, of the 

14 capital stock of the bridge financial company to 

15 a person other than the Corporation and other 

16 than another bridge financial company; 

17 (D) at the election of the Corporation, either 

18 the assumption of all or substantially all of the 

19 liabilities of the bridge financial company by a 

20 company that is not a bridge financial company, 

21 or the acquisition of all or substantially all of 

22 the assets of the bridge financial company by a 

23 company that is not a bridge financial company, 

24 or other entity as permitted under applicable 

25 law; and 
279 

† HR 4173 EAS 

1 (E) the expiration of the period provided in 

2 paragraph (12), or the earlier dissolution of the 

3 bridge financial company, as provided in para4 graph (15). 

5 (14) EFFECT OF TERMINATION EVENTS.— 

6 (A) MERGER OR CONSOLIDATION.—A merg7 er or consolidation, described in paragraph 

8 (12)(A) shall be conducted in accordance with, 

9 and shall have the effect provided in, the provi10 sions of applicable law. For the purpose of effect11 ing such a merger or consolidation, the bridge fi12 nancial company shall be treated as a corpora13 tion organized under the laws of the State of 

14 Delaware (unless the law of another State has 

15 been selected by the bridge financial company in 

16 accordance with paragraph (2)(F)), and the Cor17 poration shall be treated as the sole shareholder 

18 thereof, notwithstanding any other provision of 

19 State or Federal law. 

20 (B) CHARTER CONVERSION.—Following the 

21 sale of a majority of the capital stock of the 

22 bridge financial company, as provided in para23 graph (13)(B), the Corporation may amend the 

24 charter of the bridge financial company to reflect 

25 the termination of the status of the bridge finan-
280 

† HR 4173 EAS 

1 cial company as such, whereupon the company 

2 shall have all of the rights, powers, and privi3 leges under its constituent documents and appli4 cable Federal or State law. In connection there5 with, the Corporation may take such steps as 

6 may be necessary or convenient to reincorporate 

7 the bridge financial company under the laws of 

8 a State and, notwithstanding any provisions of 

9 Federal or State law, such State-chartered cor10 poration shall be deemed to succeed by operation 

11 of law to such rights, titles, powers, and interests 

12 of the bridge financial company as the Corpora13 tion may provide, with the same effect as if the 

14 bridge financial company had merged with the 

15 State-chartered corporation under provisions of 

16 the corporate laws of such State. 

17 (C) SALE OF STOCK.—Following the sale of 

18 80 percent or more of the capital stock of a 

19 bridge financial company, as provided in para20 graph (13)(C), the company shall have all of the 

21 rights, powers, and privileges under its con22 stituent documents and applicable Federal or 

23 State law. In connection therewith, the Corpora24 tion may take such steps as may be necessary or 

25 convenient to reincorporate the bridge financial 
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† HR 4173 EAS 

1 company under the laws of a State and, notwith2 standing any provisions of Federal or State law, 

3 the State-chartered corporation shall be deemed 

4 to succeed by operation of law to such rights, ti5 tles, powers and interests of the bridge financial 

6 company as the Corporation may provide, with 

7 the same effect as if the bridge financial com8 pany had merged with the State-chartered cor9 poration under provisions of the corporate laws 

10 of such State. 

11 (D) ASSUMPTION OF LIABILITIES AND SALE

12 OF ASSETS.—Following the assumption of all or 

13 substantially all of the liabilities of the bridge fi14 nancial company, or the sale of all or substan15 tially all of the assets of the bridge financial 

16 company, as provided in paragraph (13)(D), at 

17 the election of the Corporation, the bridge finan18 cial company may retain its status as such for 

19 the period provided in paragraph (12) or may be 

20 dissolved at the election of the Corporation. 

21 (E) AMENDMENTS TO CHARTER.—Following 

22 the consummation of a transaction described in 

23 subparagraph (A), (B), (C), or (D) of paragraph 

24 (13), the charter of the resulting company shall 
282 

† HR 4173 EAS 

1 be amended to reflect the termination of bridge 

2 financial company status, if appropriate. 

3 (15) DISSOLUTION OF BRIDGE FINANCIAL COM4 PANY.— 

5 (A) IN GENERAL.—Notwithstanding any 

6 other provision of Federal or State law, if the 

7 status of a bridge financial company as such has 

8 not previously been terminated by the occurrence 

9 of an event specified in subparagraph (A), (B), 

10 (C), or (D) of paragraph (13)— 

11 (i) the Corporation may, in its discre12 tion, dissolve the bridge financial company 

13 in accordance with this paragraph at any 

14 time; and 

15 (ii) the Corporation shall promptly 

16 commence dissolution proceedings in ac17 cordance with this paragraph upon the ex18 piration of the 2-year period following the 

19 date on which the bridge financial company 

20 was chartered, or any extension thereof, as 

21 provided in paragraph (12). 

22 (B) PROCEDURES.—The Corporation shall 

23 remain the receiver for a bridge financial com24 pany for the purpose of dissolving the bridge fi25 nancial company. The Corporation as receiver 
283 

† HR 4173 EAS 

1 for a bridge financial company shall wind up 

2 the affairs of the bridge financial company in 

3 conformity with the provisions of law relating to 

4 the liquidation of covered financial companies 

5 under this title. With respect to any such bridge 

6 financial company, the Corporation as receiver 

7 shall have all the rights, powers, and privileges 

8 and shall perform the duties related to the exer9 cise of such rights, powers, or privileges granted 

10 by law to the Corporation as receiver for a cov11 ered financial company under this title and, not12 withstanding any other provision of law, in the 

13 exercise of such rights, powers, and privileges, 

14 the Corporation shall not be subject to the direc15 tion or supervision of any State agency or other 

16 Federal agency. 

17 (16) AUTHORITY TO OBTAIN CREDIT.— 

18 (A) IN GENERAL.—A bridge financial com19 pany may obtain unsecured credit and issue un20 secured debt. 

21 (B) INABILITY TO OBTAIN CREDIT.—If a 

22 bridge financial company is unable to obtain 

23 unsecured credit or issue unsecured debt, the Cor24 poration may authorize the obtaining of credit 
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† HR 4173 EAS 

1 or the issuance of debt by the bridge financial 

2 company— 

3 (i) with priority over any or all of the 

4 obligations of the bridge financial company; 

5 (ii) secured by a lien on property of 

6 the bridge financial company that is not 

7 otherwise subject to a lien; or 

8 (iii) secured by a junior lien on prop9 erty of the bridge financial company that is 

10 subject to a lien. 

11 (C) LIMITATIONS.— 

12 (i) IN GENERAL.—The Corporation, 

13 after notice and a hearing, may authorize 

14 the obtaining of credit or the issuance of 

15 debt by a bridge financial company that is 

16 secured by a senior or equal lien on prop17 erty of the bridge financial company that is 

18 subject to a lien, only if— 

19 (I) the bridge financial company 

20 is unable to otherwise obtain such cred21 it or issue such debt; and 

22 (II) there is adequate protection of 

23 the interest of the holder of the lien on 

24 the property with respect to which such 
285 

† HR 4173 EAS 

1 senior or equal lien is proposed to be 

2 granted. 

3 (ii) HEARING.—The hearing required 

4 pursuant to this subparagraph shall be be5 fore a court of the United States, which 

6 shall have jurisdiction to conduct such hear7 ing. 

8 (D) BURDEN OF PROOF.—In any hearing 

9 under this paragraph, the Corporation has the 

10 burden of proof on the issue of adequate protec11 tion. 

12 (E) QUALIFIED FINANCIAL CONTRACTS.—No 

13 credit or debt obtained or issued by a bridge fi14 nancial company may contain terms that im15 pair the rights of a counterparty to a qualified 

16 financial contract upon a default by the bridge 

17 financial company, other than the priority of 

18 such counterparty’s unsecured claim (after the 

19 exercise of rights) relative to the priority of the 

20 bridge financial company’s obligations in respect 

21 of such credit or debt, unless such counterparty 

22 consents in writing to any such impairment. 

23 (17) EFFECT ON DEBTS AND LIENS.—The rever24 sal or modification on appeal of an authorization 

25 under this subsection to obtain credit or issue debt, or 
286 

† HR 4173 EAS 

1 of a grant under this section of a priority or a lien, 

2 does not affect the validity of any debt so issued, or 

3 any priority or lien so granted, to an entity that ex4 tended such credit in good faith, whether or not such 

5 entity knew of the pendency of the appeal, unless such 

6 authorization and the issuance of such debt, or the 

7 granting of such priority or lien, were stayed pending 

8 appeal. 

9 (i) SHARING RECORDS.—If the Corporation has been 

10 appointed as receiver for a covered financial company, 

11 other Federal regulators shall make all records relating to 

12 the covered financial company available to the Corporation, 

13 which may be used by the Corporation in any manner that 

14 the Corporation determines to be appropriate. 

15 (j) EXPEDITED PROCEDURES FOR CERTAIN CLAIMS.— 

16 (1) TIME FOR FILING NOTICE OF APPEAL.—The 

17 notice of appeal of any order, whether interlocutory 

18 or final, entered in any case brought by the Corpora19 tion against a director, officer, employee, agent, attor20 ney, accountant, or appraiser of the covered financial 

21 company, or any other person employed by or pro22 viding services to a covered financial company, shall 

23 be filed not later than 30 days after the date of entry 

24 of the order. The hearing of the appeal shall be held 

25 not later than 120 days after the date of the notice 
287 

† HR 4173 EAS 

1 of appeal. The appeal shall be decided not later than 

2 180 days after the date of the notice of appeal. 

3 (2) SCHEDULING.—The court shall expedite the 

4 consideration of any case brought by the Corporation 

5 against a director, officer, employee, agent, attorney, 

6 accountant, or appraiser of a covered financial com7 pany or any other person employed by or providing 

8 services to a covered financial company. As far as 

9 practicable, the court shall give such case priority on 

10 its docket. 

11 (3) JUDICIAL DISCRETION.—The court may mod12 ify the schedule and limitations stated in paragraphs 

13 (1) and (2) in a particular case, based on a specific 

14 finding that the ends of justice that would be served 

15 by making such a modification would outweigh the 

16 best interest of the public in having the case resolved 

17 expeditiously. 

18 (k) FOREIGN INVESTIGATIONS.—The Corporation, as 

19 receiver for any covered financial company, and for pur20 poses of carrying out any power, authority, or duty with 

21 respect to a covered financial company— 

22 (1) may request the assistance of any foreign fi23 nancial authority and provide assistance to any for24 eign financial authority in accordance with section 

25 8(v) of the Federal Deposit Insurance Act, as if the 
288 

† HR 4173 EAS 

1 covered financial company were an insured deposi2 tory institution, the Corporation were the appropriate 

3 Federal banking agency for the company, and any 

4 foreign financial authority were the foreign banking 

5 authority; and 

6 (2) may maintain an office to coordinate foreign 

7 investigations or investigations on behalf of foreign fi8 nancial authorities. 

9 (l) PROHIBITION ON ENTERING SECRECY AGREE10 MENTS AND PROTECTIVE ORDERS.—The Corporation may 

11 not enter into any agreement or approve any protective 

12 order which prohibits the Corporation from disclosing the 

13 terms of any settlement of an administrative or other action 

14 for damages or restitution brought by the Corporation in 

15 its capacity as receiver for a covered financial company. 

16 (m) LIQUIDATION OF CERTAIN COVERED FINANCIAL

17 COMPANIES OR BRIDGE FINANCIAL COMPANIES.— 

18 (1) IN GENERAL.—Except as specifically pro19 vided in this section, and notwithstanding any other 

20 provision of law, the Corporation, in connection with 

21 the liquidation of any covered financial company or 

22 bridge financial company with respect to which the 

23 Corporation has been appointed as receiver, shall— 

24 (A) in the case of any covered financial 

25 company or bridge financial company that is or 
289 

† HR 4173 EAS 

1 has a subsidiary that is a stockbroker, but is not 

2 a member of the Securities Investor Protection 

3 Corporation, apply the provisions of subchapter 

4 III of chapter 7 of the Bankruptcy Code, in re5 spect of the distribution to any customer of all 

6 customer name securities and customer property, 

7 as if such covered financial company or bridge 

8 financial company were a debtor for purposes of 

9 such subchapter; or 

10 (B) in the case of any covered financial 

11 company or bridge financial company that is a 

12 commodity broker, apply the provisions of sub13 chapter IV of chapter 7 the Bankruptcy Code, in 

14 respect of the distribution to any customer of all 

15 customer property, as if such covered financial 

16 company or bridge financial company were a 

17 debtor for purposes of such subchapter. 

18 (2) DEFINITIONS.—For purposes of this sub19 section— 

20 (A) the terms ‘‘customer’’, ‘‘customer name 

21 securities’’, and ‘‘customer property’’ have the 

22 same meanings as in section 741 of title 11, 

23 United States Code; and 
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† HR 4173 EAS 

1 (B) the terms ‘‘commodity broker’’ and 

2 ‘‘stockbroker’’ have the same meanings as in sec3 tion 101 of the Bankruptcy Code. 

4 (n) ORDERLY LIQUIDATION FUND.— 

5 (1) ESTABLISHMENT.—There is established in 

6 the Treasury of the United States a separate fund to 

7 be known as the ‘‘Orderly Liquidation Fund’’, which 

8 shall be available to the Corporation to carry out the 

9 authorities contained in this title, for the cost of ac10 tions authorized by this title, including the orderly 

11 liquidation of covered financial companies, payment 

12 of administrative expenses, the payment of principal 

13 and interest by the Corporation on obligations issued 

14 under paragraph (6), and the exercise of the authori15 ties of the Corporation under this title. 

16 (2) PROCEEDS.—Amounts received by the Cor17 poration, including assessments received under sub18 section (o), proceeds of obligations issued under para19 graph (6), interest and other earnings from invest20 ments, and repayments to the Corporation by covered 

21 financial companies, shall be deposited into the Fund. 

22 (3) MANAGEMENT.—The Corporation shall man23 age the Fund in accordance with this subsection and 

24 the policies and procedures established under section 

25 203(d). 
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1 (4) INVESTMENTS.—At the request of the Cor2 poration, the Secretary may invest such portion of 

3 amounts held in the Fund that are not, in the judg4 ment of the Corporation, required to meet the current 

5 needs of the Corporation, in obligations of the United 

6 States having suitable maturities, as determined by 

7 the Corporation. The interest on and the proceeds 

8 from the sale or redemption of such obligations shall 

9 be credited to the Fund. 

10 (5) AUTHORITY TO ISSUE OBLIGATIONS.— 

11 (A) CORPORATION AUTHORIZED TO ISSUE

12 OBLIGATIONS.—Upon appointment by the Sec13 retary of the Corporation as receiver for a cov14 ered financial company, the Corporation is au15 thorized to issue obligations to the Secretary. 

16 (B) SECRETARY AUTHORIZED TO PURCHASE

17 OBLIGATIONS.—The Secretary may, under such 

18 terms and conditions as the Secretary may re19 quire, purchase or agree to purchase any obliga20 tions issued under subparagraph (A), and for 

21 such purpose, the Secretary is authorized to use 

22 as a public debt transaction the proceeds of the 

23 sale of any securities issued under chapter 31 of 

24 title 31, United States Code, and the purposes 

25 for which securities may be issued under chapter 
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1 31 of title 31, United States Code, are extended 

2 to include such purchases. 

3 (C) INTEREST RATE.—Each purchase of ob4 ligations by the Secretary under this paragraph 

5 shall be upon such terms and conditions as to 

6 yield a return at a rate determined by the Sec7 retary, taking into consideration the current av8 erage yield on outstanding marketable obliga9 tions of the United States of comparable matu10 rity, plus an interest rate surcharge to be deter11 mined by the Secretary, which shall be greater 

12 than the difference between— 

13 (i) the current average rate on an 

14 index of corporate obligations of comparable 

15 maturity; and 

16 (ii) the current average rate on out17 standing marketable obligations of the 

18 United States of comparable maturity. 

19 (D) SECRETARY AUTHORIZED TO SELL OB20 LIGATIONS.—The Secretary may sell, upon such 

21 terms and conditions as the Secretary shall de22 termine, any of the obligations acquired under 

23 this paragraph. 

24 (E) PUBLIC DEBT TRANSACTIONS.—All pur25 chases and sales by the Secretary of such obliga-
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1 tions under this paragraph shall be treated as 

2 public debt transactions of the United States, 

3 and the proceeds from the sale of any obligations 

4 acquired by the Secretary under this paragraph 

5 shall be deposited into the Treasury of the 

6 United States as miscellaneous receipts. 

7 (6) MAXIMUM OBLIGATION LIMITATION.—The 

8 Corporation may not, in connection with the orderly 

9 liquidation of a covered financial company, issue or 

10 incur any obligation, if, after issuing or incurring the 

11 obligation, the aggregate amount of such obligations 

12 outstanding under this subsection for each covered fi13 nancial company would exceed— 

14 (A) an amount that is equal to 10 percent 

15 of the total consolidated assets of the covered fi16 nancial company, based on the most recent fi17 nancial statement available, during the 30-day 

18 period immediately following the date of ap19 pointment of the Corporation as receiver (or a 

20 shorter time period if the Corporation has cal21 culated the amount described under subpara22 graph (B)); and 

23 (B) the amount that is equal to 90 percent 

24 of the fair value of the total consolidated assets 

25 of each covered financial company that are 
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1 available for repayment, after the time period 

2 described in subparagraph (A). 

3 (7) RULEMAKING.—The Corporation and the 

4 Secretary shall jointly, in consultation with the 

5 Council, prescribe regulations governing the calcula6 tion of the maximum obligation limitation defined in 

7 this paragraph. 

8 (8) RULE OF CONSTRUCTION.— 

9 (A) IN GENERAL.—Nothing in this section 

10 shall be construed to affect the authority of the 

11 Corporation under subsection (a) or (b) of sec12 tion 14 or section 15(c)(5) of the Federal Deposit 

13 Insurance Act (12 U.S.C. 1824, 1825(c)(5)), the 

14 management of the Deposit Insurance Fund by 

15 the Corporation, or the resolution of insured de16 pository institutions, provided that— 

17 (i) the authorities of the Corporation 

18 contained in this title shall not be used to 

19 assist the Deposit Insurance Fund or to as20 sist any financial company under applica21 ble law other than this Act; 

22 (ii) the authorities of the Corporation 

23 relating to the Deposit Insurance Fund, or 

24 any other responsibilities of the Corporation 

25 under applicable law other than this title, 
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1 shall not be used to assist a covered finan2 cial company pursuant to this title; and 

3 (iii) the Deposit Insurance Fund may 

4 not be used in any manner to otherwise cir5 cumvent the purposes of this title. 

6 (B) VALUATION.—For purposes of deter7 mining the amount of obligations under this sub8 section— 

9 (i) the Corporation shall include as an 

10 obligation any contingent liability of the 

11 Corporation pursuant to this title; and 

12 (ii) the Corporation shall value any 

13 contingent liability at its expected cost to 

14 the Corporation. 

15 (9) ORDERLY LIQUIDATION PLAN.—Amounts in 

16 the Fund shall be available to the Corporation with 

17 regard to a covered financial company for which the 

18 Corporation is appointed receiver after the Corpora19 tion has developed an orderly liquidation plan that is 

20 acceptable to the Secretary with regard to such cov21 ered financial company, including the provision and 

22 use of funds, including taking any actions specified 

23 under section 204(d) and subsection (h)(2)(G)(iv) and 

24 (h)(9) of this section, and payments to third parties. 

25 The Corporation may, at any time, amend any or-
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1 derly liquidation plan approved by the Secretary 

2 with the concurrence of the Secretary. 

3 (10) IMPLEMENTATION EXPENSES.— 

4 (A) IN GENERAL.—Reasonable implementa5 tion expenses of the Corporation incurred after 

6 the date of enactment of this Act shall be treated 

7 as expenses of the Council. 

8 (B) REQUESTS FOR REIMBURSEMENT.—The 

9 Corporation shall periodically submit a request 

10 for reimbursement for implementation expenses 

11 to the Chairperson of the Council, who shall ar12 range for prompt reimbursement to the Corpora13 tion of reasonable implementation expenses. 

14 (C) DEFINITION.—As used in this para15 graph, the term ‘‘implementation expenses’’— 

16 (i) means costs incurred by the Cor17 poration beginning on the date of enactment 

18 of this Act, as part of its efforts to imple19 ment this title that do not relate to a par20 ticular covered financial company; and 

21 (ii) includes the costs incurred in con22 nection with the development of policies, 

23 procedures, rules, and regulations and other 

24 planning activities of the Corporation con25 sistent with carrying out this title. 
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1 (o) ASSESSMENTS.— 

2 (1) RISK-BASED ASSESSMENTS.— 

3 (A) ELIGIBLE FINANCIAL COMPANIES DE4 FINED.—For purposes of this subsection, the 

5 term ‘‘eligible financial company’’ means any 

6 bank holding company with total consolidated 

7 assets equal to or greater than $50,000,000,000 

8 and any nonbank financial company supervised 

9 by the Board of Governors. 

10 (B) ASSESSMENTS.—The Corporation shall 

11 charge one or more risk-based assessments in ac12 cordance with the provisions of subparagraph 

13 (D), if such assessments are necessary to pay in 

14 full the obligations issued by the Corporation to 

15 the Secretary within 60 months of the date of 

16 issuance of such obligations. 

17 (C) EXTENSIONS AUTHORIZED.—The Cor18 poration may, with the approval of the Sec19 retary, extend the time period under subpara20 graph (C)(iii), if the Corporation determines 

21 that an extension is necessary to avoid a serious 

22 adverse effect on the financial system of the 

23 United States. 
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1 (D) APPLICATION OF ASSESSMENTS.—To 

2 meet the requirements of subparagraph (C), the 

3 Corporation shall— 

4 (i) impose assessments, as soon as 

5 practicable, on any claimant that received 

6 additional payments or amounts from the 

7 Corporation pursuant to subsection (b)(4), 

8 (d)(4), or (h)(5)(E), except for payments or 

9 amounts necessary to initiate and continue 

10 operations essential to implementation of 

11 the receivership or any bridge financial 

12 company, to recover on a cumulative basis, 

13 the entire difference between— 

14 (I) the aggregate value the claim15 ant received from the Corporation on a 

16 claim pursuant to this title (including 

17 pursuant to subsection (b)(4), (d)(4), 

18 and (h)(5)(E)), as of the date on which 

19 such value was received; and 

20 (II) the value the claimant was 

21 entitled to receive from the Corporation 

22 on such claim solely from the proceeds 

23 of the liquidation of the covered finan24 cial company under this title; and 
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1 (ii) if the amounts to be recovered on 

2 a cumulative basis under clause (i) are in3 sufficient to meet the requirements of sub4 paragraph (C), after taking into account 

5 the considerations set forth in paragraph 

6 (4), impose assessments on— 

7 (I) eligible financial companies; 

8 and 

9 (II) financial companies with 

10 total consolidated assets equal to or 

11 greater than $50,000,000,000 that are 

12 not eligible financial companies. 

13 (E) PROVISION OF FINANCING.—Payments 

14 or amounts necessary to initiate and continue 

15 operations essential to implementation of the re16 ceivership or any bridge financial company de17 scribed in subparagraph (E)(i) shall not include 

18 the provision of financing, as defined by rule of 

19 the Corporation, to third parties. 

20 (2) GRADUATED ASSESSMENT RATE.—The Cor21 poration shall impose assessments on a graduated 

22 basis, with financial companies having greater assets 

23 being assessed at a higher rate. 

24 (3) NOTIFICATION AND PAYMENT.—The Corpora25 tion shall notify each financial company of that com-
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1 pany’s assessment under this subsection. Any finan2 cial company subject to assessment under this sub3 section shall pay such assessment in accordance with 

4 the regulations prescribed pursuant to paragraph (6). 

5 (4) RISK-BASED ASSESSMENT CONSIDER6 ATIONS.—In imposing assessments under this sub7 section, the Corporation shall— 

8 (A) take into account economic conditions 

9 generally affecting financial companies, so as to 

10 allow assessments to be lower during less favor11 able economic conditions; 

12 (B) take into account any assessments im13 posed on— 

14 (i) an insured depository institution 

15 subsidiary of a financial company pursuant 

16 to section 7 or section 13(c)(4)(G) of the 

17 Federal Deposit Insurance Act (12 U.S.C. 

18 1817, 1823(c)(4)(G)); 

19 (ii) a financial company or subsidiary 

20 of such company that is a member of SIPC 

21 pursuant to section 4 of the Securities In22 vestor Protection Act of 1970 (15 U.S.C. 

23 78ddd); and 

24 (iii) a financial company or sub25 sidiary of such company that is an insur-
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1 ance company pursuant to applicable State 

2 law to cover (or reimburse payments made 

3 to cover) the costs of rehabilitation, liquida4 tion, or other State insolvency proceeding 

5 with respect to one or more insurance com6 panies; 

7 (C) take into account the financial condi8 tion of the financial company, including the ex9 tent and type of off-balance-sheet exposures of the 

10 financial company; 

11 (D) take into account the risks presented by 

12 the financial company to the financial stability 

13 of the United States economy; 

14 (E) take into account the extent to which 

15 the financial company or group of financial 

16 companies has benefitted, or likely would benefit, 

17 from the orderly liquidation of a covered finan18 cial company and the use of the Fund under this 

19 title; 

20 (F) distinguish among different classes of 

21 assets or different types of financial companies 

22 (including distinguishing among different types 

23 of financial companies, based on their levels of 

24 capital and leverage) in order to establish com-
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1 parable assessment bases among financial com2 panies subject to this subsection; 

3 (G) establish the parameters for the grad4 uated assessment requirement in paragraph (2); 

5 and 

6 (H) take into account such other factors as 

7 the Corporation, in consultation with the Sec8 retary, deems appropriate. 

9 (5) COLLECTION OF INFORMATION.—The Cor10 poration may impose on covered financial companies 

11 such collection of information requirements as the 

12 Corporation deems necessary to carry out this sub13 section after the appointment of the Corporation as 

14 receiver under this title. 

15 (6) RULEMAKING.— 

16 (A) IN GENERAL.—The Corporation shall 

17 prescribe regulations to carry out this subsection. 

18 The Corporation shall consult with the Secretary 

19 in the development and finalization of such regu20 lations. 

21 (B) EQUITABLE TREATMENT.—The regula22 tions prescribed under subparagraph (A) shall 

23 take into account the differences in risks posed to 

24 the financial stability of the United States by fi25 nancial companies, the differences in the liabil-
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1 ity structures of financial companies, and the 

2 different bases for other assessments that such fi3 nancial companies may be required to pay, to 

4 ensure that assessed financial companies are 

5 treated equitably and that assessments under this 

6 subsection reflect such differences. 

7 (p) UNENFORCEABILITY OF CERTAIN AGREEMENTS.— 

8 (1) IN GENERAL.—No provision described in 

9 paragraph (2) shall be enforceable against or impose 

10 any liability on any person, as such enforcement or 

11 liability shall be contrary to public policy. 

12 (2) PROHIBITED PROVISIONS.—A provision de13 scribed in this paragraph is any term contained in 

14 any existing or future standstill, confidentiality, or 

15 other agreement that, directly or indirectly— 

16 (A) affects, restricts, or limits the ability of 

17 any person to offer to acquire or acquire; 

18 (B) prohibits any person from offering to 

19 acquire or acquiring; or 

20 (C) prohibits any person from using any 

21 previously disclosed information in connection 

22 with any such offer to acquire or acquisition of, 

23 all or part of any covered financial company, includ24 ing any liabilities, assets, or interest therein, in con-
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1 nection with any transaction in which the Corpora2 tion exercises its authority under this title. 

3 (q) OTHER EXEMPTIONS.— 

4 (1) IN GENERAL.—When acting as a receiver 

5 under this title— 

6 (A) the Corporation, including its franchise, 

7 its capital, reserves and surplus, and its income, 

8 shall be exempt from all taxation imposed by 

9 any State, county, municipality, or local taxing 

10 authority, except that any real property of the 

11 Corporation shall be subject to State, territorial, 

12 county, municipal, or local taxation to the same 

13 extent according to its value as other real prop14 erty is taxed, except that, notwithstanding the 

15 failure of any person to challenge an assessment 

16 under State law of the value of such property, 

17 such value, and the tax thereon, shall be deter18 mined as of the period for which such tax is im19 posed; 

20 (B) no property of the Corporation shall be 

21 subject to levy, attachment, garnishment, fore22 closure, or sale without the consent of the Cor23 poration, nor shall any involuntary lien attach 

24 to the property of the Corporation; and 
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1 (C) the Corporation shall not be liable for 

2 any amounts in the nature of penalties or fines, 

3 including those arising from the failure of any 

4 person to pay any real property, personal prop5 erty, probate, or recording tax or any recording 

6 or filing fees when due; and 

7 (D) the Corporation shall be exempt from 

8 all prosecution by the United States or any 

9 State, county, municipality, or local authority 

10 for any criminal offense arising under Federal, 

11 State, county, municipal, or local law, which 

12 was allegedly committed by the covered financial 

13 company, or persons acting on behalf of the cov14 ered financial company, prior to the appoint15 ment of the Corporation as receiver. 

16 (2) LIMITATION.—Paragraph (1) shall not apply 

17 with respect to any tax imposed (or other amount 

18 arising) under the Internal Revenue Code of 1986. 

19 (r) CERTAIN SALES OF ASSETS PROHIBITED.— 

20 (1) PERSONS WHO ENGAGED IN IMPROPER CON21 DUCT WITH, OR CAUSED LOSSES TO, COVERED FINAN22 CIAL COMPANIES.—The Corporation shall prescribe 

23 regulations which, at a minimum, shall prohibit the 

24 sale of assets of a covered financial company by the 

25 Corporation to— 
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1 (A) any person who— 

2 (i) has defaulted, or was a member of 

3 a partnership or an officer or director of a 

4 corporation that has defaulted, on 1 or more 

5 obligations, the aggregate amount of which 

6 exceeds $1,000,000, to such covered finan7 cial company; 

8 (ii) has been found to have engaged in 

9 fraudulent activity in connection with any 

10 obligation referred to in clause (i); and 

11 (iii) proposes to purchase any such 

12 asset in whole or in part through the use of 

13 the proceeds of a loan or advance of credit 

14 from the Corporation or from any covered 

15 financial company; 

16 (B) any person who participated, as an of17 ficer or director of such covered financial com18 pany or of any affiliate of such company, in a 

19 material way in any transaction that resulted in 

20 a substantial loss to such covered financial com21 pany; or 

22 (C) any person who has demonstrated a 

23 pattern or practice of defalcation regarding obli24 gations to such covered financial company. 
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1 (2) CONVICTED DEBTORS.—Except as provided 

2 in paragraph (3), a person may not purchase any 

3 asset of such institution from the receiver, if that per4 son— 

5 (A) has been convicted of an offense under 

6 section 215, 656, 657, 1005, 1006, 1007, 1008, 

7 1014, 1032, 1341, 1343, or 1344 of title 18, 

8 United States Code, or of conspiring to commit 

9 such an offense, affecting any covered financial 

10 company; and 

11 (B) is in default on any loan or other exten12 sion of credit from such covered financial com13 pany which, if not paid, will cause substantial 

14 loss to the Fund or the Corporation. 

15 (3) SETTLEMENT OF CLAIMS.—Paragraphs (1) 

16 and (2) shall not apply to the sale or transfer by the 

17 Corporation of any asset of any covered financial 

18 company to any person, if the sale or transfer of the 

19 asset resolves or settles, or is part of the resolution or 

20 settlement, of 1 or more claims that have been, or 

21 could have been, asserted by the Corporation against 

22 the person. 

23 (4) DEFINITION OF DEFAULT.—For purposes of 

24 this subsection, the term ‘‘default’’ means a failure to 

25 comply with the terms of a loan or other obligation 
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1 to such an extent that the property securing the obli2 gation is foreclosed upon. 

3 (s) RECOUPMENT OF COMPENSATION FROM SENIOR

4 EXECUTIVES AND DIRECTORS.— 

5 (1) IN GENERAL.—The Corporation, as receiver 

6 of a covered financial company, may recover from 

7 any current or former senior executive or director 

8 substantially responsible for the failed condition of the 

9 covered financial company any compensation received 

10 during the 2-year period preceding the date on which 

11 the Corporation was appointed as the receiver of the 

12 covered financial company, except that, in the case of 

13 fraud, no time limit shall apply. 

14 (2) COST CONSIDERATIONS.—In seeking to re15 cover any such compensation, the Corporation shall 

16 weigh the financial and deterrent benefits of such re17 covery against the cost of executing the recovery. 

18 (3) RULEMAKING.—The Corporation shall pro19 mulgate regulations to implement the requirements of 

20 this subsection, including defining the term ‘‘com21 pensation’’ to mean any financial remuneration, in22 cluding salary, bonuses, incentives, benefits, severance, 

23 deferred compensation, or golden parachute benefits, 

24 and any profits realized from the sale of the securities 

25 of the covered financial company. 
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1 SEC. 211. MISCELLANEOUS PROVISIONS. 

2 (a) CLARIFICATION OF PROHIBITION REGARDING CON3 CEALMENT OF ASSETS FROM RECEIVER OR LIQUIDATING

4 AGENT.—Section 1032(1) of title 18, United States Code, 

5 is amended by inserting ‘‘the Federal Deposit Insurance 

6 Corporation acting as receiver for a covered financial com7 pany, in accordance with title II of the Restoring American 

8 Financial Stability Act of 2010,’’ before ‘‘or the National 

9 Credit’’. 

10 (b) CONFORMING AMENDMENT.—Section 1032 of title 

11 18, United States Code, is amended in the section heading, 

12 by striking ‘‘of financial institution’’. 

13 (c) FEDERAL DEPOSIT INSURANCE CORPORATION IM14 PROVEMENT ACT OF 1991.—Section 403(a) of the Federal 

15 Deposit Insurance Corporation Improvement Act of 1991 

16 (12 U.S.C. 4403(a)) is amended by inserting ‘‘section 

17 210(c) of the Restoring American Financial Stability Act 

18 of 2010, section 1367 of the Federal Housing Enterprises 

19 Financial Safety and Soundness Act of 1992 (12 U.S.C. 

20 4617(d)),’’ after ‘‘section 11(e) of the Federal Deposit Insur21 ance Act,’’. 

22 (d) FDIC INSPECTOR GENERAL REVIEWS.— 

23 (1) SCOPE.—The Inspector General of the Cor24 poration shall conduct, supervise, and coordinate au25 dits and investigations of the liquidation of any cov26 ered financial company by the Corporation as re-
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1 ceiver under this title, including collecting and sum2 marizing— 

3 (A) a description of actions taken by the 

4 Corporation as receiver; 

5 (B) a description of any material sales, 

6 transfers, mergers, obligations, purchases, and 

7 other material transactions entered into by the 

8 Corporation; 

9 (C) an evaluation of the adequacy of the 

10 policies and procedures of the Corporation under 

11 section 203(d) and orderly liquidation plan 

12 under section 210(n)(14); 

13 (D) an evaluation of the utilization by the 

14 Corporation of the private sector in carrying out 

15 its functions, including the adequacy of any con16 flict-of-interest reviews; and 

17 (E) an evaluation of the overall perform18 ance of the Corporation in liquidating the cov19 ered financial company, including administra20 tive costs, timeliness of liquidation process, and 

21 impact on the financial system. 

22 (2) FREQUENCY.—Not later than 6 months after 

23 the date of appointment of the Corporation as receiver 

24 under this title and every 6 months thereafter, the In-
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1 spector General of the Corporation shall conduct the 

2 audit and investigation described in paragraph (1). 

3 (3) REPORTS AND TESTIMONY.—The Inspector 

4 General of the Corporation shall include in the semi5 annual reports required by section 5(a) of the Inspec6 tor General Act of 1978 (5 U.S.C. App.), a summary 

7 of the findings and evaluations under paragraph (1), 

8 and shall appear before the appropriate committees of 

9 Congress, if requested, to present each such report. 

10 (4) FUNDING.— 

11 (A) INITIAL FUNDING.—The expenses of the 

12 Inspector General of the Corporation in carrying 

13 out this subsection shall be considered adminis14 trative expenses of the receivership. 

15 (B) ADDITIONAL FUNDING.—If the max16 imum amount available to the Corporation as 

17 receiver under this title is insufficient to enable 

18 the Inspector General of the Corporation to carry 

19 out the duties under this subsection, the Corpora20 tion shall pay such additional amounts from as21 sessments imposed under section 210. 

22 (5) TERMINATION OF RESPONSIBILITIES.—The 

23 duties and responsibilities of the Inspector General of 

24 the Corporation under this subsection shall terminate 
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1 1 year after the date of termination of the receiver2 ship under this title. 

3 (e) TREASURY INSPECTOR GENERAL REVIEWS.— 

4 (1) SCOPE.—The Inspector General of the De5 partment of the Treasury shall conduct, supervise, 

6 and coordinate audits and investigations of actions 

7 taken by the Secretary related to the liquidation of 

8 any covered financial company under this title, in9 cluding collecting and summarizing— 

10 (A) a description of actions taken by the 

11 Secretary under this title; 

12 (B) an analysis of the approval by the Sec13 retary of the policies and procedures of the Cor14 poration under section 203 and acceptance of the 

15 orderly liquidation plan of the Corporation 

16 under section 210; and 

17 (C) an assessment of the terms and condi18 tions underlying the purchase by the Secretary of 

19 obligations of the Corporation under section 210. 

20 (2) FREQUENCY.—Not later than 6 months after 

21 the date of appointment of the Corporation as receiver 

22 under this title and every 6 months thereafter, the In23 spector General of the Department of the Treasury 

24 shall conduct the audit and investigation described in 

25 paragraph (1). 
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1 (3) REPORTS AND TESTIMONY.—The Inspector 

2 General of the Department of the Treasury shall in3 clude in the semiannual reports required by section 

4 5(a) of the Inspector General Act of 1978 (5 U.S.C. 

5 App.), a summary of the findings and assessments 

6 under paragraph (1), and shall appear before the ap7 propriate committees of Congress, if requested, to 

8 present each such report. 

9 (4) TERMINATION OF RESPONSIBILITIES.—The 

10 duties and responsibilities of the Inspector General of 

11 the Department of the Treasury under this subsection 

12 shall terminate 1 year after the date on which the ob13 ligations purchased by the Secretary from the Cor14 poration under section 210 are fully redeemed. 

15 (f) PRIMARY FINANCIAL REGULATORY AGENCY IN16 SPECTOR GENERAL REVIEWS.— 

17 (1) SCOPE.—Upon the appointment of the Cor18 poration as receiver for a covered financial company 

19 supervised by a Federal primary financial regulatory 

20 agency or the Board of Governors under section 165, 

21 the Inspector General of the agency or the Board of 

22 Governors shall make a written report reviewing the 

23 supervision by the agency or the Board of Governors 

24 of the covered financial company, which shall— 
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1 (A) evaluate the effectiveness of the agency 

2 or the Board of Governors in carrying out its su3 pervisory responsibilities with respect to the cov4 ered financial company; 

5 (B) identify any acts or omissions on the 

6 part of agency or Board of Governors officials 

7 that contributed to the covered financial com8 pany being in default or in danger of default; 

9 (C) identify any actions that could have 

10 been taken by the agency or the Board of Gov11 ernors that would have prevented the company 

12 from being in default or in danger of default; 

13 and 

14 (D) recommend appropriate administrative 

15 or legislative action. 

16 (2) REPORTS AND TESTIMONY.—Not later than 1 

17 year after the date of appointment of the Corporation 

18 as receiver under this title, the Inspector General of 

19 the Federal primary financial regulatory agency or 

20 the Board of Governors shall provide the report re21 quired by paragraph (1) to such agency or the Board 

22 of Governors, and along with such agency or the 

23 Board of Governors, as applicable, shall appear before 

24 the appropriate committees of Congress, if requested, 

25 to present the report required by paragraph (1). Not 
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1 later than 90 days after the date of receipt of the re2 port required by paragraph (1), such agency or the 

3 Board of Governors, as applicable, shall provide a 

4 written report to Congress describing any actions 

5 taken in response to the recommendations in the re6 port, and if no such actions were taken, describing the 

7 reasons why no actions were taken. 

8 SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVEN9 TION OF CONFLICTS OF INTEREST. 

10 (a) NO OTHER FUNDING.—Funds for the orderly liq11 uidation of any covered financial company under this title 

12 shall only be provided as specified under this title. 

13 (b) LIMIT ON GOVERNMENTAL ACTIONS.—No govern14 mental entity may take any action to circumvent the pur15 poses of this title. 

16 (c) CONFLICT OF INTEREST.—In the event that the 

17 Corporation is appointed receiver for more than 1 covered 

18 financial company or is appointed receiver for a covered 

19 financial company and receiver for any insured depository 

20 institution that is an affiliate of such covered financial 

21 company, the Corporation shall take appropriate action, as 

22 necessary to avoid any conflicts of interest that may arise 

23 in connection with multiple receiverships. 
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1 SEC. 213. BAN ON SENIOR EXECUTIVES AND DIRECTORS. 

2 (a) PROHIBITION AUTHORITY.—The Board of Gov3 ernors or, if the covered financial company was not super4 vised by the Board of Governors, the Corporation, may exer5 cise the authority provided by this section. 

6 (b) AUTHORITY TO ISSUE ORDER.—The appropriate 

7 agency described in subsection (a) may take any action au8 thorized by subsection (c), if the agency determines that— 

9 (1) a senior executive or a director of the covered 

10 financial company, prior to the appointment of the 

11 Corporation as receiver, has, directly or indirectly— 

12 (A) violated— 

13 (i) any law or regulation; 

14 (ii) any cease-and-desist order which 

15 has become final; 

16 (iii) any condition imposed in writing 

17 by a Federal agency in connection with any 

18 action on any application, notice, or re19 quest by such company or senior executive; 

20 or 

21 (iv) any written agreement between 

22 such company and such agency; 

23 (B) engaged or participated in any unsafe 

24 or unsound practice in connection with any fi25 nancial company; or 
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1 (C) committed or engaged in any act, omis2 sion, or practice which constitutes a breach of the 

3 fiduciary duty of such senior executive or direc4 tor; 

5 (2) by reason of the violation, practice, or breach 

6 described in any clause of paragraph (1), such senior 

7 executive or director has received financial gain or 

8 other benefit by reason of such violation, practice, or 

9 breach and such violation, practice, or breach contrib10 uted to the failure of the company; and 

11 (3) such violation, practice, or breach— 

12 (A) involves personal dishonesty on the part 

13 of such senior executive or director; or 

14 (B) demonstrates willful or continuing dis15 regard by such senior executive or director for 

16 the safety or soundness of such company. 

17 (c) AUTHORIZED ACTIONS.— 

18 (1) IN GENERAL.—The appropriate agency for a 

19 financial company, as described in subsection (a), 

20 may serve upon a senior executive or director de21 scribed in subsection (b) a written notice of the inten22 tion of the agency to prohibit any further participa23 tion by such person, in any manner, in the conduct 

24 of the affairs of any financial company for a period 

25 of time determined by the appropriate agency to be 
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1 commensurate with such violation, practice, or 

2 breach, provided such period shall be not less than 2 

3 years. 

4 (2) PROCEDURES.—The due process require5 ments and other procedures under section 8(e) of the 

6 Federal Deposit Insurance Act shall apply to actions 

7 under this section as if the covered financial company 

8 were an insured depository institution and the senior 

9 executive or director were an institution-affiliated 

10 party, as those terms are defined in that Act. 

11 (d) REGULATIONS.—The Corporation and the Board 

12 of Governors, in consultation with the Council, shall jointly 

13 prescribe rules or regulations to administer and carry out 

14 this section, including rules, regulations, or guidelines to 

15 further define the term senior executive for the purposes of 

16 this section. 

17 SEC. 214. PROHIBITION ON TAXPAYER FUNDING. 

18 (a) LIQUIDATION REQUIRED.—All financial compa19 nies put into receivership under this title shall be liq20 uidated. No taxpayer funds shall be used to prevent the liq21 uidation of any financial company under this title. 

22 (b) RECOVERY OF FUNDS.—All funds expended in the 

23 liquidation of a financial company under this title shall 

24 be recovered from the disposition of assets of such financial 
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1 company, or shall be the responsibility of the financial sec2 tor, through assessments. 

3 (c) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear 

4 no losses from the exercise of any authority under this title. 

5 TITLE III—TRANSFER OF POW6 ERS TO THE COMPTROLLER 

7 OF THE CURRENCY, THE COR8 PORATION, AND THE BOARD 

9 OF GOVERNORS 

10 SEC. 300. SHORT TITLE. 

11 This title may be cited as the ‘‘Enhancing Financial 

12 Institution Safety and Soundness Act of 2010’’. 

13 SEC. 301. PURPOSES. 

14 The purposes of this title are— 

15 (1) to provide for the safe and sound operation 

16 of the banking system of the United States; 

17 (2) to preserve and protect the dual system of 

18 Federal and State-chartered depository institutions; 

19 (3) to ensure the fair and appropriate super20 vision of each depository institution, regardless of the 

21 size or type of charter of the depository institution; 

22 and 

23 (4) to streamline and rationalize the supervision 

24 of depository institutions and the holding companies 

25 of depository institutions. 
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1 SEC. 302. DEFINITION. 

2 In this title, the term ‘‘transferred employee’’ means, 

3 as the context requires, an employee transferred to the Office 

4 of the Comptroller of the Currency or the Corporation under 

5 section 322. 

6 Subtitle A—Transfer of Powers and 

7 Duties 

8 SEC. 311. TRANSFER DATE. 

9 (a) TRANSFER DATE.—Except as provided in sub10 section (b), the term ‘‘transfer date’’ means the date that 

11 is 1 year after the date of enactment of this Act. 

12 (b) EXTENSION PERMITTED.— 

13 (1) NOTICE REQUIRED.—The Secretary, in con14 sultation with the Comptroller of the Currency, the 

15 Director of the Office of Thrift Supervision, the 

16 Chairman of the Board of Governors, and the Chair17 person of the Corporation, may extend the period 

18 under subsection (a) and designate a transfer date 

19 that is not later than 18 months after the date of en20 actment of this Act, if the Secretary transmits to the 

21 Committee on Banking, Housing, and Urban Affairs 

22 of the Senate and the Committee on Financial Serv23 ices of the House of Representatives— 

24 (A) a written determination that commence25 ment of the orderly process to implement this 
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1 title is not feasible by the date that is 1 year 

2 after the date of enactment of this Act; 

3 (B) an explanation of why an extension is 

4 necessary to commence the process of orderly im5 plementation of this title; 

6 (C) the transfer date designated under this 

7 subsection; and 

8 (D) a description of the steps that will be 

9 taken to initiate the process of an orderly and 

10 timely implementation of this title within the ex11 tended time period. 

12 (2) PUBLICATION OF NOTICE.—Not later than 

13 270 days after the date of enactment of this Act, the 

14 Secretary shall publish in the Federal Register notice 

15 of any transfer date designated under paragraph (1). 

16 SEC. 312. POWERS AND DUTIES TRANSFERRED. 

17 (a) EFFECTIVE DATE.—This section, and the amend18 ments made by this section, shall take effect on the transfer 

19 date. 

20 (b) FUNCTIONS OF THE OFFICE OF THRIFT SUPER21 VISION.— 

22 (1) SAVINGS AND LOAN HOLDING COMPANY FUNC23 TIONS TRANSFERRED.—There are transferred to the 

24 Board of Governors all functions of the Office of 

25 Thrift Supervision and the Director of the Office of 
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1 Thrift Supervision (including the authority to issue 

2 orders) relating to— 

3 (A) the supervision of— 

4 (i) any savings and loan holding com5 pany; and 

6 (ii) any subsidiary (other than a de7 pository institution) of a savings and loan 

8 holding company; and 

9 (B) all rulemaking authority of the Office of 

10 Thrift Supervision and the Director of the Office 

11 of Thrift Supervision relating to savings and 

12 loan holding companies. 

13 (2) ALL OTHER FUNCTIONS TRANSFERRED.— 

14 (A) BOARD OF GOVERNORS.—All rule15 making authority of the Office of Thrift Super16 vision and the Director of the Office of Thrift 

17 Supervision under section 11 of the Home Own18 ers’ Loan Act (12 U.S.C. 1468) relating to trans19 actions with affiliates and extensions of credit to 

20 executive officers, directors, and principal share21 holders and under section 5(q) of such Act relat22 ing to tying arrangements is transferred to the 

23 Board of Governors. 

24 (B) COMPTROLLER OF THE CURRENCY.— 

25 Except as provided in paragraph (1) and sub-
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1 paragraph (A), there are transferred to the 

2 Comptroller of the Currency all functions of the 

3 Office of Thrift Supervision and the Director of 

4 the Office of Thrift Supervision relating to Fed5 eral savings associations. 

6 (C) CORPORATION.—Except as provided in 

7 paragraph (1) and subparagraph (A), all func8 tions of the Office of Thrift Supervision and the 

9 Director of the Office of Thrift Supervision relat10 ing to State savings associations are transferred 

11 to the Corporation. 

12 (D) COMPTROLLER OF THE CURRENCY AND

13 THE CORPORATION.—Except as provided in 

14 paragraph (1) and subparagraph (A), all rule15 making authority of the Office of Thrift Super16 vision and the Director of the Office of Thrift 

17 Supervision relating to savings associations is 

18 transferred to the Office of the Comptroller of the 

19 Currency. 

20 (c) CONFORMING AMENDMENTS.— 

21 (1) FEDERAL DEPOSIT INSURANCE ACT.—Section 

22 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 

23 1813(q)) is amended by striking paragraphs (1) 

24 through (4) and inserting the following: 
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1 ‘‘(1) the Office of the Comptroller of the Cur2 rency, in the case of— 

3 ‘‘(A) any national banking association; 

4 ‘‘(B) any Federal branch or agency of a for5 eign bank; and 

6 ‘‘(C) any Federal savings association; 

7 ‘‘(2) the Federal Deposit Insurance Corporation, 

8 in the case of— 

9 ‘‘(A) any insured State nonmember bank; 

10 ‘‘(B) any foreign bank having an insured 

11 branch; and 

12 ‘‘(C) any State savings association; 

13 ‘‘(3) the Board of Governors of the Federal Re14 serve System, in the case of— 

15 ‘‘(A) any State member bank; 

16 ‘‘(B) any branch or agency of a foreign 

17 bank with respect to any provision of the Federal 

18 Reserve Act which is made applicable under the 

19 International Banking Act of 1978; 

20 ‘‘(C) any foreign bank which does not oper21 ate an insured branch; 

22 ‘‘(D) any agency or commercial lending 

23 company other than a Federal agency; 

24 ‘‘(E) supervisory or regulatory proceedings 

25 arising from the authority given to the Board of 
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1 Governors under section 7(c)(1) of the Inter2 national Banking Act of 1978, including such 

3 proceedings under the Financial Institutions Su4 pervisory Act of 1966; 

5 ‘‘(F) any bank holding company and any 

6 subsidiary (other than a depository institution) 

7 of a bank holding company; and 

8 ‘‘(G) any savings and loan holding com9 pany and any subsidiary (other than a deposi10 tory institution) of a savings and loan holding 

11 company.’’. 

12 (2) FEDERAL DEPOSIT INSURANCE ACT.— 

13 (A) APPLICATION.—Section 8(b)(3) of the 

14 Federal Deposit Insurance Act (12 U.S.C. 

15 1818(b)(3)) is amended to read as follows: 

16 ‘‘(3) APPLICATION TO BANK HOLDING COMPANIES, 

17 SAVINGS AND LOAN HOLDING COMPANIES, AND EDGE AND

18 AGREEMENT CORPORATIONS.— 

19 ‘‘(A) APPLICATION.—This subsection, subsections 

20 (c) through (s) and subsection (u) of this section, and 

21 section 50 shall apply to— 

22 ‘‘(i) any bank holding company, and any 

23 subsidiary (other than a bank) of a bank holding 

24 company, as those terms are defined in section 

25 2 of the Bank Holding Company Act of 1956 (12 
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1 U.S.C. 1841), as if such company or subsidiary 

2 was an insured depository institution for which 

3 the appropriate Federal banking agency for the 

4 bank holding company was the appropriate Fed5 eral banking agency; 

6 ‘‘(ii) any savings and loan holding com7 pany, and any subsidiary (other than a deposi8 tory institution) of a savings and loan holding 

9 company, as those terms are defined in section 

10 10 of the Home Owners’ Loan Act (12 U.S.C. 

11 1467a), as if such company or subsidiary was 

12 an insured depository institution for which the 

13 appropriate Federal banking agency for the sav14 ings and loan holding company was the appro15 priate Federal banking agency; and 

16 ‘‘(iii) any organization organized and oper17 ated under section 25A of the Federal Reserve 

18 Act (12 U.S.C. 611 et seq.) or operating under 

19 section 25 of the Federal Reserve Act (12 U.S.C. 

20 601 et seq.) and any noninsured State member 

21 bank, as if such organization or bank was a 

22 bank holding company. 

23 ‘‘(B) RULES OF CONSTRUCTION.— 

24 ‘‘(i) EFFECT ON OTHER AUTHORITY.—Noth25 ing in this paragraph may be construed to alter 
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1 or affect the authority of an appropriate Federal 

2 banking agency to initiate enforcement pro3 ceedings, issue directives, or take other remedial 

4 action under any other provision of law. 

5 ‘‘(ii) HOLDING COMPANIES.—Nothing in 

6 this paragraph or subsection (c) may be con7 strued as authorizing any Federal banking agen8 cy other than the appropriate Federal banking 

9 agency for a bank holding company or a savings 

10 and loan holding company to initiate enforce11 ment proceedings, issue directives, or take other 

12 remedial action against a bank holding com13 pany, a savings and loan holding company, or 

14 any subsidiary thereof (other than a depository 

15 institution).’’. 

16 (B) CONFORMING AMENDMENT.—Section 

17 8(b)(9) of the Federal Deposit Insurance Act (12 

18 U.S.C. 1818(b)(9)) is amended to read as follows: 

19 ‘‘(9) [Reserved].’’. 

20 (d) CONSUMER PROTECTION.—Nothing in this section 

21 may be construed to limit or otherwise affect the transfer 

22 of powers under title X. 
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1 SEC. 313. ABOLISHMENT. 

2 Effective 90 days after the transfer date, the Office of 

3 Thrift Supervision and the position of Director of the Office 

4 of Thrift Supervision are abolished. 

5 SEC. 314. AMENDMENTS TO THE REVISED STATUTES. 

6 (a) AMENDMENT TO SECTION 324.—Section 324 of the 

7 Revised Statutes of the United States (12 U.S.C. 1) is 

8 amended to read as follows: 

9 ‘‘SEC. 324. COMPTROLLER OF THE CURRENCY. 

10 ‘‘(a) OFFICE OF THE COMPTROLLER OF THE CUR11 RENCY ESTABLISHED.—There is established in the Depart12 ment of the Treasury a bureau to be known as the ‘Office 

13 of the Comptroller of the Currency’ which is charged with 

14 assuring the safety and soundness of, and compliance with 

15 laws and regulations, fair access to financial services, and 

16 fair treatment of customers by, the institutions and other 

17 persons subject to its jurisdiction. 

18 ‘‘(b) COMPTROLLER OF THE CURRENCY.— 

19 ‘‘(1) IN GENERAL.—The chief officer of the Office 

20 of the Comptroller of the Currency shall be known as 

21 the Comptroller of the Currency. The Comptroller of 

22 the Currency shall perform the duties of the Comp23 troller of the Currency under the general direction of 

24 the Secretary of the Treasury. The Secretary of the 

25 Treasury may not delay or prevent the issuance of 

26 any rule or the promulgation of any regulation by the 
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1 Comptroller of the Currency, and may not intervene 

2 in any matter or proceeding before the Comptroller of 

3 the Currency (including agency enforcement actions), 

4 unless otherwise specifically provided by law. 

5 ‘‘(2) ADDITIONAL AUTHORITY.—The Comptroller 

6 of the Currency shall have the same authority with 

7 respect to functions transferred to the Comptroller of 

8 the Currency under the Enhancing Financial Institu9 tion Safety and Soundness Act of 2010 (including 

10 matters that were within the jurisdiction of the Direc11 tor of the Office of Thrift Supervision or the Office of 

12 Thrift Supervision on the day before the transfer date 

13 under that Act) as was vested in the Director of the 

14 Office of Thrift Supervision on the transfer date 

15 under that Act.’’. 

16 (b) AMENDMENT TO SECTION 329.—Section 329 of the 

17 Revised Statutes of the United States (12 U.S.C. 11) is 

18 amended by inserting before the period at the end the fol19 lowing: ‘‘or any Federal savings association’’. 

20 (c) EFFECTIVE DATE.—This section, and the amend21 ments made by this section, shall take effect on the transfer 

22 date. 
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1 SEC. 315. FEDERAL INFORMATION POLICY. 

2 Section 3502(5) of title 44, United States Code, is 

3 amended by inserting ‘‘Office of the Comptroller of the Cur4 rency,’’ after ‘‘the Securities and Exchange Commission,’’. 

5 SEC. 316. SAVINGS PROVISIONS. 

6 (a) OFFICE OF THRIFT SUPERVISION.— 

7 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA8 TIONS NOT AFFECTED.—Sections 312(b) and 313 shall 

9 not affect the validity of any right, duty, or obliga10 tion of the United States, the Director of the Office 

11 of Thrift Supervision, the Office of Thrift Super12 vision, or any other person, that existed on the day 

13 before the transfer date. 

14 (2) CONTINUATION OF SUITS.—This title shall 

15 not abate any action or proceeding commenced by or 

16 against the Director of the Office of Thrift Super17 vision or the Office of Thrift Supervision before the 

18 transfer date, except that, for any action or pro19 ceeding arising out of a function of the Director of the 

20 Office of Thrift Supervision or the Office of Thrift Su21 pervision that is transferred to the Comptroller of the 

22 Currency, the Office of the Comptroller of the Cur23 rency, the Chairperson of the Corporation, the Cor24 poration, the Chairman of the Board of Governors, or 

25 the Board of Governors by this subtitle, the Comp26 troller of the Currency, the Office of the Comptroller 
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1 of the Currency, the Chairperson of the Corporation, 

2 the Corporation, the Chairman of the Board of Gov3 ernors, or the Board of Governors shall be substituted 

4 for the Director of the Office of Thrift Supervision or 

5 the Office of Thrift Supervision, as appropriate, as a 

6 party to the action or proceeding as of the transfer 

7 date. 

8 (b) CONTINUATION OF EXISTING ORDERS, RESOLU9 TIONS, DETERMINATIONS, AGREEMENTS, REGULATIONS, 

10 AND OTHER MATERIALS.—All orders, resolutions, deter11 minations, agreements, regulations, interpretative rules, 

12 other interpretations, guidelines, procedures, and other ad13 visory materials that have been issued, made, prescribed, 

14 or allowed to become effective by the Office of Thrift Super15 vision, or by a court of competent jurisdiction, in the per16 formance of functions of the Office of Thrift Supervision 

17 that are transferred by this subtitle and that are in effect 

18 on the day before the transfer date, shall continue in effect 

19 according to the terms of those materials, and shall be en20 forceable by or against the Office of the Comptroller of the 

21 Currency, the Corporation, or the Board of Governors, as 

22 appropriate, until modified, terminated, set aside, or super23 seded in accordance with applicable law by the Office of 

24 the Comptroller of the Currency, the Corporation, or the 
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1 Board of Governors, as appropriate, by any court of com2 petent jurisdiction, or by operation of law. 

3 (c) IDENTIFICATION OF REGULATIONS CONTINUED.— 

4 (1) BY THE OFFICE OF THE COMPTROLLER OF

5 THE CURRENCY.—Not later than the transfer date, the 

6 Office of the Comptroller of the Currency shall— 

7 (A) in consultation with the Corporation, 

8 identify the regulations continued under sub9 section (b) that will be enforced by the Office of 

10 the Comptroller of the Currency; and 

11 (B) publish a list of such regulations in the 

12 Federal Register. 

13 (2) BY THE CORPORATION.—Not later than the 

14 transfer date, the Corporation shall— 

15 (A) in consultation with the Office of the 

16 Comptroller of the Currency, identify the regula17 tions continued under subsection (b) that will be 

18 enforced by the Corporation; and 

19 (B) publish a list of such regulations in the 

20 Federal Register. 

21 (3) BY THE BOARD OF GOVERNORS.—Not later 

22 than the transfer date, the Board of Governors shall— 

23 (A) in consultation with the Office of the 

24 Comptroller of the Currency and the Corpora25 tion, identify the regulations continued under 
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1 subsection (b) that will be enforced by the Board 

2 of Governors; and 

3 (B) publish a list of such regulations in the 

4 Federal Register. 

5 (d) STATUS OF REGULATIONS PROPOSED OR NOT YET

6 EFFECTIVE.— 

7 (1) PROPOSED REGULATIONS.—Any proposed 

8 regulation of the Office of Thrift Supervision that the 

9 Office of Thrift Supervision, in performing functions 

10 transferred by this subtitle, has proposed before the 

11 transfer date, but has not published as a final regula12 tion before that date, shall be deemed to be a proposed 

13 regulation of the Office of the Comptroller of the Cur14 rency or the Board of Governors, as appropriate, ac15 cording to its terms. 

16 (2) REGULATIONS NOT YET EFFECTIVE.—Any 

17 interim or final regulation of the Office of Thrift Su18 pervision that the Office of Thrift Supervision, in 

19 performing functions transferred by this subtitle, has 

20 published before the transfer date, but which has not 

21 become effective before that date, shall become effective 

22 as a regulation of the Office of the Comptroller of the 

23 Currency or the Board of Governors, as appropriate, 

24 according to its terms. 
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1 SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL 

2 BANKING AGENCIES. 

3 Except as provided in section 312(d)(2), on and after 

4 the transfer date, any reference in Federal law to the Direc5 tor of the Office of Thrift Supervision or the Office of Thrift 

6 Supervision, in connection with any function of the Direc7 tor of the Office of Thrift Supervision or the Office of Thrift 

8 Supervision transferred under section 312(b) or any other 

9 provision of this subtitle, shall be deemed to be a reference 

10 to the Comptroller of the Currency, the Office of the Comp11 troller of the Currency, the Chairperson of the Corporation, 

12 the Corporation, the Chairman of the Board of Governors, 

13 or the Board of Governors, as appropriate. 

14 SEC. 318. FUNDING. 

15 (a) FUNDING OF OFFICE OF THE COMPTROLLER OF

16 THE CURRENCY.—Chapter 4 of title LXII of the Revised 

17 Statutes is amended by inserting after section 5240 (12 

18 U.S.C. 481, 482) the following: 

19 ‘‘SEC. 5240A. The Comptroller of the Currency may 

20 collect an assessment, fee, or other charge from any entity 

21 described in section 3(q)(1) of the Federal Deposit Insur22 ance Act (12 U.S.C. 1813(q)(1)), as the Comptroller deter23 mines is necessary or appropriate to carry out the respon24 sibilities of the Office of the Comptroller of the Currency. 

25 In establishing the amount of an assessment, fee, or charge 

26 collected from an entity under this section, the Comptroller 
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1 of the Currency may take into account the funds transferred 

2 to the Office of the Comptroller of the Currency under this 

3 section, the nature and scope of the activities of the entity, 

4 the amount and type of assets that the entity holds, the fi5 nancial and managerial condition of the entity, and any 

6 other factor, as the Comptroller of the Currency determines 

7 is appropriate. Funds derived from any assessment, fee, or 

8 charge collected or payment made pursuant to this section 

9 may be deposited by the Comptroller of the Currency in 

10 accordance with the provisions of section 5234. Such funds 

11 shall not be construed to be Government funds or appro12 priated monies, and shall not be subject to apportionment 

13 for purposes of chapter 15 of title 31, United States Code, 

14 or any other provision of law. The authority of the Comp15 troller of the Currency under this section shall be in addi16 tion to the authority under section 5240. 

17 ‘‘The Comptroller of the Currency shall have sole au18 thority to determine the manner in which the obligations 

19 of the Office of the Comptroller of the Currency shall be in20 curred and its disbursements and expenses allowed and 

21 paid, in accordance with this section.’’. 

22 (b) FUNDING OF BOARD OF GOVERNORS.—Section 11 

23 of the Federal Reserve Act (12 U.S.C. 248) is amended by 

24 adding at the end the following: 
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1 ‘‘(s) ASSESSMENTS, FEES, AND OTHER CHARGES FOR

2 CERTAIN COMPANIES.— 

3 ‘‘(1) IN GENERAL.—The Board shall collect a 

4 total amount of assessments, fees, or other charges 

5 from the companies described in paragraph (2) that 

6 is equal to the total expenses the Board estimates are 

7 necessary or appropriate to carry out the responsibil8 ities of the Board with respect to such companies. 

9 ‘‘(2) COMPANIES.—The companies described in 

10 this paragraph are— 

11 ‘‘(A) all bank holding companies having 

12 total consolidated assets of $50,000,000,000 or 

13 more; 

14 ‘‘(B) all savings and loan holding compa15 nies having total consolidated assets of 

16 $50,000,000,000 or more; and 

17 ‘‘(C) all nonbank financial companies su18 pervised by the Board under section 113 of the 

19 Restoring American Financial Stability Act of 

20 2010.’’. 

21 (c) CORPORATION EXAMINATION FEES.—Section 10(e) 

22 of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)) 

23 is amended by striking paragraph (1) and inserting the fol24 lowing: 
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1 ‘‘(1) REGULAR AND SPECIAL EXAMINATIONS OF

2 DEPOSITORY INSTITUTIONS.—The cost of conducting 

3 any regular examination or special examination of 

4 any depository institution under subsection (b)(2), 

5 (b)(3), or (d) or of any entity described in section 

6 3(q)(2) may be assessed by the Corporation against 

7 the institution or entity to meet the expenses of the 

8 Corporation in carrying out such examinations, or as 

9 the Corporation determines is necessary or appro10 priate to carry out the responsibilities of the Corpora11 tion.’’. 

12 (d) EFFECTIVE DATE.—This section, and the amend13 ments made by this section, shall take effect on the transfer 

14 date. 

15 SEC. 319. CONTRACTING AND LEASING AUTHORITY. 

16 Notwithstanding the Federal Property and Adminis17 trative Services Act of 1949 (41 U.S.C. 251 et seq.) or any 

18 other provision of law, the Office of the Comptroller of the 

19 Currency may— 

20 (1) enter into and perform contracts, execute in21 struments, and acquire, in any lawful manner, such 

22 goods and services, or personal or real property (or 

23 property interest) as the Comptroller deems necessary 

24 to carry out the duties and responsibilities of the Of25 fice of the Comptroller of the Currency; and 
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1 (2) hold, maintain, sell, lease, or otherwise dis2 pose of the property (or property interest) acquired 

3 under paragraph (1). 

4 Subtitle B—Transitional Provisions 

5 SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROP6 ERTY OF THE OFFICE OF THRIFT SUPER7 VISION. 

8 (a) IN GENERAL.—Before the transfer date, the Office 

9 of the Comptroller of the Currency, the Corporation, and 

10 the Board of Governors shall— 

11 (1) consult and cooperate with the Office of 

12 Thrift Supervision to facilitate the orderly transfer of 

13 functions to the Office of the Comptroller of the Cur14 rency, the Corporation, and the Board of Governors 

15 in accordance with this title; 

16 (2) determine jointly, from time to time— 

17 (A) the amount of funds necessary to pay 

18 any expenses associated with the transfer of func19 tions (including expenses for personnel, property, 

20 and administrative services) during the period 

21 beginning on the date of enactment of this Act 

22 and ending on the transfer date; 

23 (B) which personnel are appropriate to fa24 cilitate the orderly transfer of functions by this 

25 title; and 
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1 (C) what property and administrative serv2 ices are necessary to support the Office of the 

3 Comptroller of the Currency, the Corporation, 

4 and the Board of Governors during the period 

5 beginning on the date of enactment of this Act 

6 and ending on the transfer date; and 

7 (3) take such actions as may be necessary to pro8 vide for the orderly implementation of this title. 

9 (b) AGENCY CONSULTATION.—When requested jointly 

10 by the Office of the Comptroller of the Currency, the Cor11 poration, and the Board of Governors to do so before the 

12 transfer date, the Office of Thrift Supervision shall— 

13 (1) pay to the Office of the Comptroller of the 

14 Currency, the Corporation, or the Board of Governors, 

15 as applicable, from funds obtained by the Office of 

16 Thrift Supervision through assessments, fees, or other 

17 charges that the Office of Thrift Supervision is au18 thorized by law to impose, such amounts as the Office 

19 of the Comptroller of the Currency, the Corporation, 

20 and the Board of Governors jointly determine to be 

21 necessary under subsection (a); 

22 (2) detail to the Office of the Comptroller of the 

23 Currency, the Corporation, or the Board of Governors, 

24 as applicable, such personnel as the Office of the 

25 Comptroller of the Currency, the Corporation, and the 
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1 Board of Governors jointly determine to be appro2 priate under subsection (a); and 

3 (3) make available to the Office of the Comp4 troller of the Currency, the Corporation, or the Board 

5 of Governors, as applicable, such property and pro6 vide to the Office of the Comptroller of the Currency, 

7 the Corporation, or the Board of Governors, as appli8 cable, such administrative services as the Office of the 

9 Comptroller of the Currency, the Corporation, and the 

10 Board of Governors jointly determine to be necessary 

11 under subsection (a). 

12 (c) NOTICE REQUIRED.—The Office of the Comptroller 

13 of the Currency, the Corporation, and the Board of Gov14 ernors shall jointly give the Office of Thrift Supervision rea15 sonable prior notice of any request that the Office of the 

16 Comptroller of the Currency, the Corporation, and the 

17 Board of Governors jointly intend to make under subsection 

18 (b). 

19 SEC. 322. TRANSFER OF EMPLOYEES. 

20 (a) IN GENERAL.— 

21 (1) OFFICE OF THRIFT SUPERVISION EMPLOY22 EES.— 

23 (A) IN GENERAL.—All employees of the Of24 fice of Thrift Supervision shall be transferred to 

25 the Office of the Comptroller of the Currency or 
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1 the Corporation for employment in accordance 

2 with this section. 

3 (B) ALLOCATING EMPLOYEES FOR TRANS4 FER TO RECEIVING AGENCIES.—The Director of 

5 the Office of Thrift Supervision, the Comptroller 

6 of the Currency, and the Chairperson of the Cor7 poration shall— 

8 (i) jointly determine the number of em9 ployees of the Office of Thrift Supervision 

10 necessary to perform or support the func11 tions that are transferred to the Office of the 

12 Comptroller of the Currency or the Corpora13 tion by this title; and 

14 (ii) consistent with the determination 

15 under clause (i), jointly identify employees 

16 of the Office of Thrift Supervision for trans17 fer to the Office of the Comptroller of the 

18 Currency or the Corporation. 

19 (2) EMPLOYEES TRANSFERRED; SERVICE PERI20 ODS CREDITED.—For purposes of this section, periods 

21 of service with a Federal home loan bank, a joint of22 fice of Federal home loan banks, or a Federal reserve 

23 bank shall be credited as periods of service with a 

24 Federal agency. 
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1 (3) APPOINTMENT AUTHORITY FOR EXCEPTED

2 SERVICE TRANSFERRED.— 

3 (A) IN GENERAL.—Except as provided in 

4 subparagraph (B), any appointment authority of 

5 the Office of Thrift Supervision under Federal 

6 law that relates to the functions transferred 

7 under section 312, including the regulations of 

8 the Office of Personnel Management, for filling 

9 the positions of employees in the excepted service 

10 shall be transferred to the Comptroller of the 

11 Currency or the Chairperson of the Corporation, 

12 as appropriate. 

13 (B) DECLINING TRANSFERS ALLOWED.—The 

14 Office of the Comptroller of the Currency or the 

15 Chairperson of the Corporation may decline to 

16 accept a transfer of authority under subpara17 graph (A) (and the employees appointed under 

18 that authority) to the extent that such authority 

19 relates to positions excepted from the competitive 

20 service because of their confidential, policy-mak21 ing, policy-determining, or policy-advocating 

22 character. 

23 (4) ADDITIONAL APPOINTMENT AUTHORITY.— 

24 Notwithstanding any other provision of law, the Of25 fice of the Comptroller of the Currency and the Cor-
343 

† HR 4173 EAS 

1 poration may appoint transferred employees to posi2 tions in the Office of the Comptroller of the Currency 

3 or the Corporation, respectively. 

4 (b) TIMING OF TRANSFERS AND POSITION ASSIGN5 MENTS.—Each employee to be transferred under subsection 

6 (a)(1) shall— 

7 (1) be transferred not later than 90 days after 

8 the transfer date; and 

9 (2) receive notice of the position assignment of 

10 the employee not later than 120 days after the effec11 tive date of the transfer of the employee. 

12 (c) TRANSFER OF FUNCTIONS.— 

13 (1) IN GENERAL.—Notwithstanding any other 

14 provision of law, the transfer of employees under this 

15 subtitle shall be deemed a transfer of functions for the 

16 purpose of section 3503 of title 5, United States Code. 

17 (2) PRIORITY.—If any provision of this subtitle 

18 conflicts with any protection provided to a trans19 ferred employee under section 3503 of title 5, United 

20 States Code, the provisions of this subtitle shall con21 trol. 

22 (d) EMPLOYEE STATUS AND ELIGIBILITY.—The trans23 fer of functions and employees under this subtitle, and the 

24 abolishment of the Office of Thrift Supervision under sec25 tion 313, shall not affect the status of the transferred em-
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1 ployees as employees of an agency of the United States 

2 under any provision of law. 

3 (e) EQUAL STATUS AND TENURE POSITIONS.— 

4 (1) STATUS AND TENURE.—Each transferred em5 ployee from the Office of Thrift Supervision shall be 

6 placed in a position at the Office of the Comptroller 

7 of the Currency or the Corporation with the same sta8 tus and tenure as the transferred employee held on the 

9 day before the date on which the employee was trans10 ferred. 

11 (2) FUNCTIONS.—To the extent practicable, each 

12 transferred employee shall be placed in a position at 

13 the Office of the Comptroller of the Currency or the 

14 Corporation, as applicable, responsible for the same 

15 functions and duties as the transferred employee had 

16 on the day before the date on which the employee was 

17 transferred, in accordance with the expertise and pref18 erences of the transferred employee. 

19 (f) NO ADDITIONAL CERTIFICATION REQUIRE20 MENTS.—An examiner who is a transferred employee shall 

21 not be subject to any additional certification requirements 

22 before being placed in a comparable position at the Office 

23 of the Comptroller of the Currency or the Corporation, if 

24 the examiner carries out examinations of the same type of 

25 institutions as an employee of the Office of the Comptroller 
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† HR 4173 EAS 

1 of the Currency or the Corporation as the employee was 

2 responsible for carrying out before the date on which the 

3 employee was transferred. 

4 (g) PERSONNEL ACTIONS LIMITED.— 

5 (1) 2-YEAR PROTECTION.—Except as provided in 

6 paragraph (2), during the 2-year period beginning on 

7 the transfer date, an employee holding a permanent 

8 position on the day before the date on which the em9 ployee was transferred shall not be involuntarily sep10 arated or involuntarily reassigned outside the locality 

11 pay area (as defined by the Office of Personnel Man12 agement) of the employee. 

13 (2) EXCEPTIONS.—The Comptroller of the Cur14 rency and the Chairperson of the Corporation, as ap15 plicable, may— 

16 (A) separate a transferred employee for 

17 cause, including for unacceptable performance; 

18 or 

19 (B) terminate an appointment to a position 

20 excepted from the competitive service because of 

21 its confidential policy-making, policy-deter22 mining, or policy-advocating character. 

23 (h) PAY.— 

24 (1) 2-YEAR PROTECTION.—Except as provided in 

25 paragraph (2), during the 2-year period beginning on 
346 

† HR 4173 EAS 

1 the date on which the employee was transferred under 

2 this subtitle, a transferred employee shall be paid at 

3 a rate that is not less than the basic rate of pay, in4 cluding any geographic differential, that the trans5 ferred employee received during the pay period imme6 diately preceding the date on which the employee was 

7 transferred. 

8 (2) EXCEPTIONS.—The Comptroller of the Cur9 rency or the Chairman of the Board of Governors 

10 may reduce the rate of basic pay of a transferred em11 ployee— 

12 (A) for cause, including for unacceptable 

13 performance; or 

14 (B) with the consent of the transferred em15 ployee. 

16 (3) PROTECTION ONLY WHILE EMPLOYED.—This 

17 subsection shall apply to a transferred employee only 

18 during the period that the transferred employee re19 mains employed by Office of the Comptroller of the 

20 Currency or the Corporation. 

21 (4) PAY INCREASES PERMITTED.—Nothing in 

22 this subsection shall limit the authority of the Comp23 troller of the Currency or the Chairperson of the Cor24 poration to increase the pay of a transferred em25 ployee. 
347 

† HR 4173 EAS 

1 (i) BENEFITS.— 

2 (1) RETIREMENT BENEFITS FOR TRANSFERRED

3 EMPLOYEES.— 

4 (A) IN GENERAL.— 

5 (i) CONTINUATION OF EXISTING RE6 TIREMENT PLAN.—Each transferred em7 ployee shall remain enrolled in the retire8 ment plan of the transferred employee, for 

9 as long as the transferred employee is em10 ployed by the Office of the Comptroller of 

11 the Currency or the Corporation. 

12 (ii) EMPLOYER’S CONTRIBUTION.—The 

13 Comptroller of the Currency or the Chair14 person of the Corporation, as appropriate, 

15 shall pay any employer contributions to the 

16 existing retirement plan of each transferred 

17 employee, as required under each such exist18 ing retirement plan. 

19 (B) DEFINITION.—In this paragraph, the 

20 term ‘‘existing retirement plan’’ means, with re21 spect to a transferred employee, the retirement 

22 plan (including the Financial Institutions Re23 tirement Fund), and any associated thrift sav24 ings plan, of the agency from which the employee 

25 was transferred in which the employee was en-
348 

† HR 4173 EAS 

1 rolled on the day before the date on which the 

2 employee was transferred. 

3 (2) BENEFITS OTHER THAN RETIREMENT BENE4 FITS.— 

5 (A) DURING FIRST YEAR.— 

6 (i) EXISTING PLANS CONTINUE.—Dur7 ing the 1-year period following the transfer 

8 date, each transferred employee may retain 

9 membership in any employee benefit pro10 gram (other than a retirement benefit pro11 gram) of the agency from which the em12 ployee was transferred under this title, in13 cluding any dental, vision, long term care, 

14 or life insurance program to which the em15 ployee belonged on the day before the trans16 fer date. 

17 (ii) EMPLOYER’S CONTRIBUTION.—The 

18 Office of the Comptroller of the Currency or 

19 the Corporation, as appropriate, shall pay 

20 any employer cost required to extend cov21 erage in the benefit program to the trans22 ferred employee as required under that pro23 gram or negotiated agreements. 

24 (B) DENTAL, VISION, OR LIFE INSURANCE

25 AFTER FIRST YEAR.—If, after the 1-year period 
349 

† HR 4173 EAS 

1 beginning on the transfer date, the Office of the 

2 Comptroller of the Currency or the Corporation 

3 determines that the Office of the Comptroller of 

4 the Currency or the Corporation, as the case may 

5 be, will not continue to participate in any den6 tal, vision, or life insurance program of an agen7 cy from which an employee was transferred, a 

8 transferred employee who is a member of the 

9 program may, before the decision takes effect and 

10 without regard to any regularly scheduled open 

11 season, elect to enroll in— 

12 (i) the enhanced dental benefits pro13 gram established under chapter 89A of title 

14 5, United States Code; 

15 (ii) the enhanced vision benefits estab16 lished under chapter 89B of title 5, United 

17 States Code; and 

18 (iii) the Federal Employees’ Group 

19 Life Insurance Program established under 

20 chapter 87 of title 5, United States Code, 

21 without regard to any requirement of insur22 ability. 

23 (C) LONG TERM CARE INSURANCE AFTER

24 1ST YEAR.—If, after the 1-year period beginning 

25 on the transfer date, the Office of the Comptroller 
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† HR 4173 EAS 

1 of the Currency or the Corporation determines 

2 that the Office of the Comptroller of the Currency 

3 or the Corporation, as appropriate, will not con4 tinue to participate in any long term care insur5 ance program of an agency from which an em6 ployee transferred, a transferred employee who is 

7 a member of such a program may, before the de8 cision takes effect, elect to apply for coverage 

9 under the Federal Long Term Care Insurance 

10 Program established under chapter 90 of title 5, 

11 United States Code, under the underwriting re12 quirements applicable to a new active workforce 

13 member, as described in part 875 of title 5, Code 

14 of Federal Regulations (or any successor thereto). 

15 (D) CONTRIBUTION OF TRANSFERRED EM16 PLOYEE.— 

17 (i) IN GENERAL.—Subject to clause 

18 (ii), a transferred employee who is enrolled 

19 in a plan under the Federal Employees 

20 Health Benefits Program shall pay any em21 ployee contribution required under the plan. 

22 (ii) COST DIFFERENTIAL.—The Office 

23 of the Comptroller of the Currency or the 

24 Corporation, as applicable, shall pay any 

25 difference in cost between the employee con-
351 

† HR 4173 EAS 

1 tribution required under the plan provided 

2 to transferred employees by the agency from 

3 which the employee transferred on the date 

4 of enactment of this Act and the plan pro5 vided by the Office of the Comptroller of the 

6 Currency or the Corporation, as the case 

7 may be, under this section. 

8 (iii) FUNDS TRANSFER.—The Office of 

9 the Comptroller of the Currency or the Cor10 poration, as the case may be, shall transfer 

11 to the Employees Health Benefits Fund es12 tablished under section 8909 of title 5, 

13 United States Code, an amount determined 

14 by the Director of the Office of Personnel 

15 Management, after consultation with the 

16 Comptroller of the Currency or the Chair17 person of the Corporation, as the case may 

18 be, and the Office of Management and 

19 Budget, to be necessary to reimburse the 

20 Fund for the cost to the Fund of providing 

21 any benefits under this subparagraph that 

22 are not otherwise paid for by a transferred 

23 employee under clause (i). 

24 (E) SPECIAL PROVISIONS TO ENSURE CON25 TINUATION OF LIFE INSURANCE BENEFITS.— 
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† HR 4173 EAS 

1 (i) IN GENERAL.—An annuitant, as 

2 defined in section 8901 of title 5, United 

3 States Code, who is enrolled in a life insur4 ance plan administered by an agency from 

5 which employees are transferred under this 

6 title on the day before the transfer date shall 

7 be eligible for coverage by a life insurance 

8 plan under sections 8706(b), 8714a, 8714b, 

9 or 8714c of title 5, United States Code, or 

10 by a life insurance plan established by the 

11 Office of the Comptroller of the Currency or 

12 the Corporation, as applicable, without re13 gard to any regularly scheduled open season 

14 or any requirement of insurability. 

15 (ii) CONTRIBUTION OF TRANSFERRED

16 EMPLOYEE.— 

17 (I) IN GENERAL.—Subject to sub18 clause (II), a transferred employee en19 rolled in a life insurance plan under 

20 this subparagraph shall pay any em21 ployee contribution required by the 

22 plan. 

23 (II) COST DIFFERENTIAL.—The 

24 Office of the Comptroller of the Cur25 rency or the Corporation, as the case 
353 

† HR 4173 EAS 

1 may be, shall pay any difference in 

2 cost between the benefits provided by 

3 the agency from which the employee 

4 transferred on the date of enactment of 

5 this Act and the benefits provided 

6 under this section. 

7 (III) FUNDS TRANSFER.—The Of8 fice of the Comptroller of the Currency 

9 or the Corporation, as the case may be, 

10 shall transfer to the Federal Employ11 ees’ Group Life Insurance Fund estab12 lished under section 8714 of title 5, 

13 United States Code, an amount deter14 mined by the Director of the Office of 

15 Personnel Management, after consulta16 tion with the Comptroller of the Cur17 rency or the Chairperson of the Cor18 poration, as the case may be, and the 

19 Office of Management and Budget, to 

20 be necessary to reimburse the Federal 

21 Employees’ Group Life Insurance 

22 Fund for the cost to the Federal Em23 ployees’ Group Life Insurance Fund of 

24 providing benefits under this subpara25 graph not otherwise paid for by a 
354 

† HR 4173 EAS 

1 transferred employee under subclause 

2 (I). 

3 (IV) CREDIT FOR TIME ENROLLED

4 IN OTHER PLANS.—For any trans5 ferred employee, enrollment in a life 

6 insurance plan administered by the 

7 agency from which the employee trans8 ferred, immediately before enrollment 

9 in a life insurance plan under chapter 

10 87 of title 5, United States Code, shall 

11 be considered as enrollment in a life 

12 insurance plan under that chapter for 

13 purposes of section 8706(b)(1)(A) of 

14 title 5, United States Code. 

15 (j) INCORPORATION INTO AGENCY PAY SYSTEM.—Not 

16 later than 2 years after the transfer date, the Comptroller 

17 of the Currency and the Chairperson of the Corporation 

18 shall place each transferred employee into the established 

19 pay system and structure of the appropriate employing 

20 agency. 

21 (k) EQUITABLE TREATMENT.—In administering the 

22 provisions of this section, the Comptroller of the Currency 

23 and the Chairperson of the Corporation— 

24 (1) may not take any action that would unfairly 

25 disadvantage a transferred employee relative to any 
355 

† HR 4173 EAS 

1 other employee of the Office of the Comptroller of the 

2 Currency or the Corporation on the basis of prior em3 ployment by the Office of Thrift Supervision; and 

4 (2) may take such action as is appropriate in an 

5 individual case to ensure that a transferred employee 

6 receives equitable treatment, with respect to the sta7 tus, tenure, pay, benefits (other than benefits under 

8 programs administered by the Office of Personnel 

9 Management), and accrued leave or vacation time for 

10 prior periods of service with any Federal agency of 

11 the transferred employee. 

12 (l) REORGANIZATION.— 

13 (1) IN GENERAL.—If the Comptroller of the Cur14 rency or the Chairperson of the Corporation deter15 mines, during the 2-year period beginning 1 year 

16 after the transfer date, that a reorganization of the 

17 staff of the Office of the Comptroller of the Currency 

18 or the Corporation, respectively, is required, the reor19 ganization shall be deemed a ‘‘major reorganization’’ 

20 for purposes of affording affected employees retirement 

21 under section 8336(d)(2) or 8414(b)(1)(B) of title 5, 

22 United States Code. 

23 (2) SERVICE CREDIT.—For purposes of this sub24 section, periods of service with a Federal home loan 

25 bank or a joint office of Federal home loan banks 
356 

† HR 4173 EAS 

1 shall be credited as periods of service with a Federal 

2 agency. 

3 SEC. 323. PROPERTY TRANSFERRED. 

4 (a) PROPERTY DEFINED.—For purposes of this sec5 tion, the term ‘‘property’’ includes all real property (includ6 ing leaseholds) and all personal property, including com7 puters, furniture, fixtures, equipment, books, accounts, 

8 records, reports, files, memoranda, paper, reports of exam9 ination, work papers, and correspondence related to such 

10 reports, and any other information or materials. 

11 (b) PROPERTY OF THE OFFICE OF THRIFT SUPER12 VISION.—Not later than 90 days after the transfer date, all 

13 property of the Office of Thrift Supervision that the Comp14 troller of the Currency and the Chairperson of the Corpora15 tion jointly determine is used, on the day before the transfer 

16 date, to perform or support the functions of the Office of 

17 Thrift Supervision transferred to the Office of the Comp18 troller of the Currency or the Corporation under this title, 

19 shall be transferred to the Office of the Comptroller of the 

20 Currency or the Corporation in a manner consistent with 

21 the transfer of employees under this subtitle. 

22 (c) CONTRACTS RELATED TO PROPERTY TRANS23 FERRED.—Each contract, agreement, lease, license, permit, 

24 and similar arrangement relating to property transferred 

25 to the Office of the Comptroller of the Currency or the Cor-
357 

† HR 4173 EAS 

1 poration by this section shall be transferred to the Office 

2 of the Comptroller of the Currency or the Corporation, as 

3 appropriate, together with the property to which it relates. 

4 (d) PRESERVATION OF PROPERTY.—Property identi5 fied for transfer under this section shall not be altered, de6 stroyed, or deleted before transfer under this section. 

7 SEC. 324. FUNDS TRANSFERRED. 

8 The funds that, on the day before the transfer date, 

9 the Director of the Office of Thrift Supervision (in consulta10 tion with the Comptroller of the Currency, the Chairperson 

11 of the Corporation, and the Chairman of the Board of Gov12 ernors) determines are not necessary to dispose of the affairs 

13 of the Office of Thrift Supervision under section 325 and 

14 are available to the Office of Thrift Supervision to pay the 

15 expenses of the Office of Thrift Supervision— 

16 (1) relating to the functions of the Office of 

17 Thrift Supervision transferred under section 

18 312(b)(1)(B), shall be transferred to the Office of the 

19 Comptroller of the Currency on the transfer date; 

20 (2) relating to the functions of the Office of 

21 Thrift Supervision transferred under section 

22 312(b)(1)(C), shall be transferred to the Corporation 

23 on the transfer date; and 

24 (3) relating to the functions of the Office of 

25 Thrift Supervision transferred under section 
358 

† HR 4173 EAS 

1 312(b)(1)(A), shall be transferred to the Board of Gov2 ernors on the transfer date. 

3 SEC. 325. DISPOSITION OF AFFAIRS. 

4 (a) AUTHORITY OF DIRECTOR.—During the 90-day 

5 period beginning on the transfer date, the Director of the 

6 Office of Thrift Supervision— 

7 (1) shall, solely for the purpose of winding up 

8 the affairs of the Office of Thrift Supervision relating 

9 to any function transferred to the Office of the Comp10 troller of the Currency, the Corporation, or the Board 

11 of Governors under this title— 

12 (A) manage the employees of the Office of 

13 Thrift Supervision who have not yet been trans14 ferred and provide for the payment of the com15 pensation and benefits of the employees that ac16 crue before the date on which the employees are 

17 transferred under this title; and 

18 (B) manage any property of the Office of 

19 Thrift Supervision, until the date on which the 

20 property is transferred under section 323; and 

21 (2) may take any other action necessary to wind 

22 up the affairs of the Office of Thrift Supervision. 

23 (b) STATUS OF DIRECTOR.— 

24 (1) IN GENERAL.—Notwithstanding the transfer 

25 of functions under this subtitle, during the 90-day pe-
359 

† HR 4173 EAS 

1 riod beginning on the transfer date, the Director of 

2 the Office of Thrift Supervision shall retain and may 

3 exercise any authority vested in the Director of the 

4 Office of Thrift Supervision on the day before the 

5 transfer date, only to the extent necessary— 

6 (A) to wind up the Office of Thrift Super7 vision; and 

8 (B) to carry out the transfer under this sub9 title during such 90-day period. 

10 (2) OTHER PROVISIONS.—For purposes of para11 graph (1), the Director of the Office of Thrift Super12 vision shall, during the 90-day period beginning on 

13 the transfer date, continue to be— 

14 (A) treated as an officer of the United 

15 States; and 

16 (B) entitled to receive compensation at the 

17 same annual rate of basic pay that the Director 

18 of the Office of Thrift Supervision received on the 

19 day before the transfer date. 

20 SEC. 326. CONTINUATION OF SERVICES. 

21 Any agency, department, or other instrumentality of 

22 the United States, and any successor to any such agency, 

23 department, or instrumentality, that was, before the trans24 fer date, providing support services to the Office of Thrift 

25 Supervision in connection with functions transferred to the 
360 

† HR 4173 EAS 

1 Office of the Comptroller of the Currency, the Corporation 

2 or the Board of Governors under this title, shall— 

3 (1) continue to provide such services, subject to 

4 reimbursement by the Office of the Comptroller of the 

5 Currency, the Corporation, or the Board of Governors, 

6 until the transfer of functions under this title is com7 plete; and 

8 (2) consult with the Comptroller of the Currency, 

9 the Chairperson of the Corporation, or the Chairman 

10 of the Board of Governors, as appropriate, to coordi11 nate and facilitate a prompt and orderly transition. 

12 Subtitle C—Federal Deposit 

13 Insurance Corporation 

14 SEC. 331. DEPOSIT INSURANCE REFORMS. 

15 (a) SIZE DISTINCTIONS.—Section 7(b)(2) of the Fed16 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is 

17 amended— 

18 (1) by striking subparagraph (D); and 

19 (2) by redesignating subparagraph (C) as sub20 paragraph (D). 

21 (b) ASSESSMENT BASE.—The Corporation shall 

22 amend the regulations issued by the Corporation under sec23 tion 7(b)(2) of the Federal Deposit Insurance Act (12 

24 U.S.C. 1817(b)(2)) to define the term ‘‘assessment base’’ 
361 

† HR 4173 EAS 

1 with respect to an insured depository institution for pur2 poses of that section 7(b)(2), as an amount equal to— 

3 (1) the average consolidated total assets of the in4 sured depository institution during the assessment pe5 riod; minus 

6 (2) the sum of— 

7 (A) the average tangible equity of the in8 sured depository institution during the assess9 ment period; and 

10 (B) in the case of an insured depository in11 stitution that is a custodial bank (as defined by 

12 the Corporation, based on factors including the 

13 percentage of total revenues generated by custo14 dial businesses and the level of assets under cus15 tody) or a banker’s bank (as that term is used 

16 in section 5136 of the Revised Statutes (12 

17 U.S.C. 24)), an amount that the Corporation de18 termines is necessary to establish assessments 

19 consistent with the definition under section 

20 7(b)(1) of the Federal Deposit Insurance Act (12 

21 U.S.C. 1817(b)(1)) for a custodial bank or a 

22 banker’s bank. 
362 

† HR 4173 EAS 

1 SEC. 332. MANAGEMENT OF THE FEDERAL DEPOSIT INSUR2 ANCE CORPORATION. 

3 (a) IN GENERAL.—Section 2 of the Federal Deposit In4 surance Act (12 U.S.C. 1812) is amended— 

5 (1) in subsection (a)(1)(B), by striking ‘‘Director 

6 of the Office of Thrift Supervision’’ and inserting 

7 ‘‘Director of the Consumer Financial Protection Bu8 reau’’; 

9 (2) by amending subsection (d)(2) to read as fol10 lows: 

11 ‘‘(2) ACTING OFFICIALS MAY SERVE.—In the 

12 event of a vacancy in the Office of the Comptroller of 

13 the Currency and pending the appointment of a suc14 cessor, or during the absence or disability of the 

15 Comptroller of the Currency, the acting Comptroller 

16 of the Currency shall be a member of the Board of Di17 rectors in the place of the Comptroller of the Cur18 rency.’’; and 

19 (3) in subsection (f)(2), by striking ‘‘or of the Of20 fice of Thrift Supervision’’. 

21 (b) EFFECTIVE DATE.—This section, and the amend22 ments made by this section, shall take effect on the transfer 

23 date. 
363 

† HR 4173 EAS 

1 Subtitle D—Termination of Federal 

2 Thrift Charter 

3 SEC. 341. TERMINATION OF FEDERAL SAVINGS ASSOCIA4 TIONS. 

5 (a) IN GENERAL.—Beginning on the date of enactment 

6 of this Act, the Director of the Office of Thrift Supervision, 

7 or the Comptroller of the Currency, may not issue a charter 

8 for a Federal savings association under section 5 of the 

9 Home Owners’ Loan Act (12 U.S.C. 1464). 

10 (b) CONFORMING AMENDMENT.—Section 5(a) of the 

11 Home Owner’s Loan Act (12 U.S.C. 1464(a)) is amended 

12 to read as follows: 

13 ‘‘(a) IN GENERAL.—In order to provide thrift institu14 tions for the deposit of funds and for the extension of credit 

15 for homes and other goods and services, the Comptroller of 

16 the Currency is authorized, under such regulations as the 

17 Comptroller of the Currency may prescribe, to provide for 

18 the examination, operation, and regulation of associations 

19 to be known as ‘Federal savings associations’ (including 

20 Federal savings banks), giving primary consideration to the 

21 best practices of thrift institutions in the United States. The 

22 lending and investment powers conferred by this section are 

23 intended to encourage such institutions to provide credit for 

24 housing safely and soundly.’’. 
364 

† HR 4173 EAS 

1 (c) PROSPECTIVE REPEAL.—Effective on the date on 

2 which the Comptroller of the Currency determines that no 

3 Federal savings associations exist, section 5 of the Home 

4 Owner’s Loan Act (12 U.S.C. 1464) is repealed. 

5 SEC. 342. BRANCHING. 

6 Notwithstanding the Federal Deposit Insurance Act 

7 (12 U.S.C. 1811 et seq.), the Bank Holding Company Act 

8 of 1956 (12 U.S.C. 1841 et seq.), or any other provision 

9 of Federal or State law, a savings association that becomes 

10 a bank may continue to operate any branch or agency that 

11 the savings association operated immediately before the sav12 ings association became a bank. 

13 TITLE IV—REGULATION OF AD14 VISERS TO HEDGE FUNDS 

15 AND OTHERS 

16 SEC. 401. SHORT TITLE. 

17 This title may be cited as the ‘‘Private Fund Invest18 ment Advisers Registration Act of 2010’’. 

19 SEC. 402. DEFINITIONS. 

20 (a) INVESTMENT ADVISERS ACT OF 1940 DEFINI21 TIONS.—Section 202(a) of the Investment Advisers Act of 

22 1940 (15 U.S.C. 80b–2(a)) is amended by adding at the 

23 end the following: 

24 ‘‘(29) The term ‘private fund’ means an issuer 

25 that would be an investment company, as defined in 
365 

† HR 4173 EAS 

1 section 3 of the Investment Company Act of 1940 (15 

2 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) of 

3 that Act. 

4 ‘‘(30) The term ‘foreign private adviser’ means 

5 any investment adviser who— 

6 ‘‘(A) has no place of business in the United 

7 States; 

8 ‘‘(B) has, in total, fewer than 15 clients who 

9 are domiciled in or residents of the United 

10 States; 

11 ‘‘(C) has aggregate assets under manage12 ment attributable to clients in the United States 

13 and investors in the United States in private 

14 funds advised by the investment adviser of less 

15 than $25,000,000, or such higher amount as the 

16 Commission may, by rule, deem appropriate in 

17 accordance with the purposes of this title; and 

18 ‘‘(D) neither— 

19 ‘‘(i) holds itself out generally to the 

20 public in the United States as an invest21 ment adviser; nor 

22 ‘‘(ii) acts as— 

23 ‘‘(I) an investment adviser to any 

24 investment company registered under 
366 

† HR 4173 EAS 

1 the Investment Company Act of 1940; 

2 or 

3 ‘‘(II) a company that has elected 

4 to be a business development company 

5 pursuant to section 54 of the Invest6 ment Company Act of 1940 (15 U.S.C. 

7 80a–53), and has not withdrawn its 

8 election.’’. 

9 (b) OTHER DEFINITIONS.—As used in this title, the 

10 terms ‘‘investment adviser’’ and ‘‘private fund’’ have the 

11 same meanings as in section 202 of the Investment Advisers 

12 Act of 1940, as amended by this title. 

13 SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; 

14 LIMITED EXEMPTION FOR FOREIGN PRIVATE 

15 ADVISERS; LIMITED INTRASTATE EXEMPTION. 

16 Section 203(b) of the Investment Advisers Act of 1940 

17 (15 U.S.C. 80b–3(b)) is amended— 

18 (1) in paragraph (1), by inserting ‘‘, other than 

19 an investment adviser who acts as an investment ad20 viser to any private fund,’’ before ‘‘all of whose’’; 

21 (2) by striking paragraph (3) and inserting the 

22 following: 

23 ‘‘(3) any investment adviser that is a foreign 

24 private adviser;’’; and 
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1 (3) in paragraph (5), by striking ‘‘or’’ at the 

2 end; 

3 (4) in paragraph (6), by striking the period at 

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

5 (5) by adding at the end the following: 

6 ‘‘(7) any investment adviser, other than any en7 tity that has elected to be regulated or is regulated as 

8 a business development company pursuant to section 

9 54 of the Investment Company Act of 1940 (15 U.S.C. 

10 80a–54), who solely advises— 

11 ‘‘(A) small business investment companies 

12 that are licensees under the Small Business In13 vestment Act of 1958; 

14 ‘‘(B) entities that have received from the 

15 Small Business Administration notice to proceed 

16 to qualify for a license as a small business in17 vestment company under the Small Business In18 vestment Act of 1958, which notice or license has 

19 not been revoked; or 

20 ‘‘(C) applicants that are affiliated with 1 or 

21 more licensed small business investment compa22 nies described in subparagraph (A) and that 

23 have applied for another license under the Small 

24 Business Investment Act of 1958, which applica25 tion remains pending.’’. 
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1 SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; 

2 EXAMINATIONS; DISCLOSURES. 

3 Section 204 of the Investment Advisers Act of 1940 (15 

4 U.S.C. 80b–4) is amended— 

5 (1) by redesignating subsections (b) and (c) as 

6 subsections (c) and (d), respectively; and 

7 (2) by inserting after subsection (a) the fol8 lowing: 

9 ‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 

10 ‘‘(1) IN GENERAL.—The Commission may re11 quire any investment adviser registered under this 

12 title— 

13 ‘‘(A) to maintain such records of, and file 

14 with the Commission such reports regarding, 

15 private funds advised by the investment adviser, 

16 as necessary and appropriate in the public inter17 est and for the protection of investors, or for the 

18 assessment of systemic risk by the Financial Sta19 bility Oversight Council (in this subsection re20 ferred to as the ‘Council’); and 

21 ‘‘(B) to provide or make available to the 

22 Council those reports or records or the informa23 tion contained therein. 

24 ‘‘(2) TREATMENT OF RECORDS.—The records and 

25 reports of any private fund to which an investment 

26 adviser registered under this title provides investment 
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1 advice shall be deemed to be the records and reports 

2 of the investment adviser. 

3 ‘‘(3) REQUIRED INFORMATION.—The records and 

4 reports required to be maintained by a private fund 

5 and subject to inspection by the Commission under 

6 this subsection shall include, for each private fund ad7 vised by the investment adviser, a description of— 

8 ‘‘(A) the amount of assets under manage9 ment and use of leverage; 

10 ‘‘(B) counterparty credit risk exposure; 

11 ‘‘(C) trading and investment positions; 

12 ‘‘(D) valuation policies and practices of the 

13 fund; 

14 ‘‘(E) types of assets held; 

15 ‘‘(F) side arrangements or side letters, 

16 whereby certain investors in a fund obtain more 

17 favorable rights or entitlements than other inves18 tors; 

19 ‘‘(G) trading practices; and 

20 ‘‘(H) such other information as the Com21 mission, in consultation with the Council, deter22 mines is necessary and appropriate in the public 

23 interest and for the protection of investors or for 

24 the assessment of systemic risk, which may in25 clude the establishment of different reporting re-
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1 quirements for different classes of fund advisers, 

2 based on the type or size of private fund being 

3 advised. 

4 ‘‘(4) MAINTENANCE OF RECORDS.—An invest5 ment adviser registered under this title shall main6 tain such records of private funds advised by the in7 vestment adviser for such period or periods as the 

8 Commission, by rule, may prescribe as necessary and 

9 appropriate in the public interest and for the protec10 tion of investors, or for the assessment of systemic 

11 risk. 

12 ‘‘(5) FILING OF RECORDS.—The Commission 

13 shall issue rules requiring each investment adviser to 

14 a private fund to file reports containing such infor15 mation as the Commission deems necessary and ap16 propriate in the public interest and for the protection 

17 of investors or for the assessment of systemic risk. 

18 ‘‘(6) EXAMINATION OF RECORDS.— 

19 ‘‘(A) PERIODIC AND SPECIAL EXAMINA20 TIONS.—The Commission— 

21 ‘‘(i) shall conduct periodic inspections 

22 of all records of private funds maintained 

23 by an investment adviser registered under 

24 this title in accordance with a schedule es25 tablished by the Commission; and 
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1 ‘‘(ii) may conduct at any time and 

2 from time to time such additional, special, 

3 and other examinations as the Commission 

4 may prescribe as necessary and appropriate 

5 in the public interest and for the protection 

6 of investors, or for the assessment of sys7 temic risk. 

8 ‘‘(B) AVAILABILITY OF RECORDS.—An in9 vestment adviser registered under this title shall 

10 make available to the Commission any copies or 

11 extracts from such records as may be prepared 

12 without undue effort, expense, or delay, as the 

13 Commission or its representatives may reason14 ably request. 

15 ‘‘(7) INFORMATION SHARING.— 

16 ‘‘(A) IN GENERAL.—The Commission shall 

17 make available to the Council copies of all re18 ports, documents, records, and information filed 

19 with or provided to the Commission by an in20 vestment adviser under this subsection as the 

21 Council may consider necessary for the purpose 

22 of assessing the systemic risk posed by a private 

23 fund. 

24 ‘‘(B) CONFIDENTIALITY.—The Council shall 

25 maintain the confidentiality of information re-
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1 ceived under this paragraph in all such reports, 

2 documents, records, and information, in a man3 ner consistent with the level of confidentiality es4 tablished by the Commission pursuant to para5 graph (8). The Council shall be exempt from sec6 tion 552 of title 5, United States Code, with re7 spect to any information in any report, docu8 ment, record, or information made available, to 

9 the Council under this subsection.’’. 

10 ‘‘(8) COMMISSION CONFIDENTIALITY OF RE11 PORTS.—Notwithstanding any other provision of law, 

12 the Commission may not be compelled to disclose any 

13 report or information contained therein required to be 

14 filed with the Commission under this subsection, ex15 cept that nothing in this subsection authorizes the 

16 Commission— 

17 ‘‘(A) to withhold information from Con18 gress, upon an agreement of confidentiality; or 

19 ‘‘(B) prevent the Commission from com20 plying with— 

21 ‘‘(i) a request for information from 

22 any other Federal department or agency or 

23 any self-regulatory organization requesting 

24 the report or information for purposes with25 in the scope of its jurisdiction; or 
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1 ‘‘(ii) an order of a court of the United 

2 States in an action brought by the United 

3 States or the Commission. 

4 ‘‘(9) OTHER RECIPIENTS CONFIDENTIALITY.— 

5 Any department, agency, or self-regulatory organiza6 tion that receives reports or information from the 

7 Commission under this subsection shall maintain the 

8 confidentiality of such reports, documents, records, 

9 and information in a manner consistent with the 

10 level of confidentiality established for the Commission 

11 under paragraph (8). 

12 ‘‘(10) PUBLIC INFORMATION EXCEPTION.— 

13 ‘‘(A) IN GENERAL.—The Commission, the 

14 Council, and any other department, agency, or 

15 self-regulatory organization that receives infor16 mation, reports, documents, records, or informa17 tion from the Commission under this subsection, 

18 shall be exempt from the provisions of section 

19 552 of title 5, United States Code, with respect 

20 to any such report, document, record, or infor21 mation. Any proprietary information of an in22 vestment adviser ascertained by the Commission 

23 from any report required to be filed with the 

24 Commission pursuant to this subsection shall be 

25 subject to the same limitations on public disclo-
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1 sure as any facts ascertained during an exam2 ination, as provided by section 210(b) of this 

3 title. 

4 ‘‘(B) PROPRIETARY INFORMATION.—For 

5 purposes of this paragraph, proprietary informa6 tion includes— 

7 ‘‘(i) sensitive, non-public information 

8 regarding the investment or trading strate9 gies of the investment adviser; 

10 ‘‘(ii) analytical or research methodolo11 gies; 

12 ‘‘(iii) trading data; 

13 ‘‘(iv) computer hardware or software 

14 containing intellectual property; and 

15 ‘‘(v) any additional information that 

16 the Commission determines to be propri17 etary. 

18 ‘‘(11) ANNUAL REPORT TO CONGRESS.—The 

19 Commission shall report annually to Congress on how 

20 the Commission has used the data collected pursuant 

21 to this subsection to monitor the markets for the pro22 tection of investors and the integrity of the markets.’’. 

23 SEC. 405. DISCLOSURE PROVISION ELIMINATED. 

24 Section 210(c) of the Investment Advisers Act of 1940 

25 (15 U.S.C. 80b–10(c)) is amended by inserting before the 
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1 period at the end the following: ‘‘or for purposes of assess2 ment of potential systemic risk’’. 

3 SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY. 

4 Section 211 of the Investment Advisers Act of 1940 (15 

5 U.S.C. 80b–11) is amended— 

6 (1) in subsection (a), by inserting before the pe7 riod at the end of the first sentence the following: ‘‘, 

8 including rules and regulations defining technical, 

9 trade, and other terms used in this title, except that 

10 the Commission may not define the term ‘client’ for 

11 purposes of paragraphs (1) and (2) of section 206 to 

12 include an investor in a private fund managed by an 

13 investment adviser, if such private fund has entered 

14 into an advisory contract with such adviser’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The 

17 Commission and the Commodity Futures Trading Commis18 sion shall, after consultation with the Council but not later 

19 than 12 months after the date of enactment of the Private 

20 Fund Investment Advisers Registration Act of 2010, jointly 

21 promulgate rules to establish the form and content of the 

22 reports required to be filed with the Commission under sub23 section 204(b) and with the Commodity Futures Trading 

24 Commission by investment advisers that are registered both 
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1 under this title and the Commodity Exchange Act (7 U.S.C. 

2 1a et seq.).’’. 

3 SEC. 407. EXEMPTION OF VENTURE CAPITAL FUND ADVIS4 ERS. 

5 Section 203 of the Investment Advisers Act of 1940 (15 

6 U.S.C. 80b–3) is amended by adding at the end the fol7 lowing: 

8 ‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND ADVIS9 ERS.—No investment adviser shall be subject to the registra10 tion requirements of this title with respect to the provision 

11 of investment advice relating to a venture capital fund. Not 

12 later than 6 months after the date of enactment of this sub13 section, the Commission shall issue final rules to define the 

14 term ‘venture capital fund’ for purposes of this subsection.’’. 

15 SEC. 408. EXEMPTION OF AND RECORD KEEPING BY PRI16 VATE EQUITY FUND ADVISERS. 

17 Section 203 of the Investment Advisers Act of 1940 (15 

18 U.S.C. 80b–3) is amended by adding at the end the fol19 lowing: 

20 ‘‘(m) EXEMPTION OF AND REPORTING BY PRIVATE EQ21 UITY FUND ADVISERS.— 

22 ‘‘(1) IN GENERAL.—Except as provided in this 

23 subsection, no investment adviser shall be subject to 

24 the registration or reporting requirements of this title 
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1 with respect to the provision of investment advice re2 lating to a private equity fund or funds. 

3 ‘‘(2) MAINTENANCE OF RECORDS AND ACCESS BY

4 COMMISSION.—Not later than 6 months after the date 

5 of enactment of this subsection, the Commission shall 

6 issue final rules— 

7 ‘‘(A) to require investment advisers de8 scribed in paragraph (1) to maintain such 

9 records and provide to the Commission such an10 nual or other reports as the Commission taking 

11 into account fund size, governance, investment 

12 strategy, risk, and other factors, as the Commis13 sion determines necessary and appropriate in the 

14 public interest and for the protection of inves15 tors; and 

16 ‘‘(B) to define the term ‘private equity fund’ 

17 for purposes of this subsection.’’. 

18 SEC. 409. FAMILY OFFICES. 

19 (a) IN GENERAL.—Section 202(a)(11) of the Invest20 ment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)) is 

21 amended by striking ‘‘or (G)’’ and inserting the following: 

22 ‘‘; (G) any family office, as defined by rule, regulation, or 

23 order of the Commission, in accordance with the purposes 

24 of this title; or (H)’’. 
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1 (b) RULEMAKING.—The rules, regulations, or orders 

2 issued by the Commission pursuant to section 

3 202(a)(11)(G) of the Investment Advisers Act of 1940, as 

4 added by this section, regarding the definition of the term 

5 ‘‘family office’’ shall provide for an exemption that— 

6 (1) is consistent with the previous exemptive pol7 icy of the Commission, as reflected in exemptive or8 ders for family offices in effect on the date of enact9 ment of this Act; and 

10 (2) recognizes the range of organizational, man11 agement, and employment structures and arrange12 ments employed by family offices. 

13 SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET 

14 THRESHOLD FOR FEDERAL REGISTRATION 

15 OF INVESTMENT ADVISERS. 

16 Section 203A(a)(1) of the Investment Advisers Act of 

17 1940 (15 U.S.C. 80b–3a(a)(1)) is amended— 

18 (1) in subparagraph (A)— 

19 (A) by striking ‘‘$25,000,000’’ and inserting 

20 ‘‘$100,000,000’’; and 

21 (B) by striking ‘‘or’’ at the end; 

22 (2) in subparagraph (B), by striking the period 

23 at the end and inserting ‘‘; or’’; and 

24 (3) by adding at the end the following: 
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1 ‘‘(C) is an adviser to a company that has 

2 elected to be a business development company 

3 pursuant to section 54 of the Investment Com4 pany Act of 1940, and has not withdrawn its 

5 election.’’. 

6 SEC. 411. CUSTODY OF CLIENT ASSETS. 

7 The Investment Advisers Act of 1940 (15 U.S.C. 80b– 

8 1 et seq.) is amended by adding at the end the following 

9 new section: 

10 ‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS. 

11 ‘‘An investment adviser registered under this title shall 

12 take such steps to safeguard client assets over which such 

13 adviser has custody, including, without limitation, 

14 verification of such assets by an independent public ac15 countant, as the Commission may, by rule, prescribe.’’. 

16 SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STAND17 ARD. 

18 (a) IN GENERAL.—The Commission shall adjust any 

19 net worth standard for an accredited investor, as set forth 

20 in the rules of the Commission under the Securities Act of 

21 1933, so that the individual net worth of any natural per22 son, or joint net worth with the spouse of that person, at 

23 the time of purchase, is more than $1,000,000 (as such 

24 amount is adjusted periodically by rule of the Commission), 

25 excluding the value of the primary residence of such natural 
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1 person, except that during the 4-year period that begins on 

2 the date of enactment of this Act, any net worth standard 

3 shall be $1,000,000, excluding the value of the primary resi4 dence of such natural person. 

5 (b) REVIEW AND ADJUSTMENT.— 

6 (1) INITIAL REVIEW AND ADJUSTMENT.— 

7 (A) INITIAL REVIEW.—The Commission 

8 may undertake a review of the definition of the 

9 term ‘‘accredited investor’’, as such term applies 

10 to natural persons, to determine whether the re11 quirements of the definition, excluding the re12 quirement relating to the net worth standard de13 scribed in subsection (a), should be adjusted or 

14 modified for the protection of investors, in the 

15 public interest, and in light of the economy. 

16 (B) ADJUSTMENT OR MODIFICATION.—Upon 

17 completion of a review under subparagraph (A), 

18 the Commission may, by notice and comment 

19 rulemaking, make such adjustments to the defini20 tion of the term ‘‘accredited investor’’, excluding 

21 adjusting or modifying the requirement relating 

22 to the net worth standard described in subsection 

23 (a), as such term applies to natural persons, as 

24 the Commission may deem appropriate for the 
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1 protection of investors, in the public interest, 

2 and in light of the economy. 

3 (2) SUBSEQUENT REVIEWS AND ADJUSTMENT.— 

4 (A) SUBSEQUENT REVIEWS.—Not earlier 

5 than 4 years after the date of enactment of this 

6 Act, and not less frequently than once every 4 

7 years thereafter, the Commission shall undertake 

8 a review of the definition, in its entirety, of the 

9 term ‘‘accredited investor’’, as defined in section 

10 230.215 of title 17, Code of Federal Regulations, 

11 or any successor thereto, as such term applies to 

12 natural persons, to determine whether the re13 quirements of the definition should be adjusted or 

14 modified for the protection of investors, in the 

15 public interest, and in light of the economy. 

16 (B) ADJUSTMENT OR MODIFICATION.—Upon 

17 completion of a review under subparagraph (A), 

18 the Commission may, by notice and comment 

19 rulemaking, make such adjustments to the defini20 tion of the term ‘‘accredited investor’’, as defined 

21 in section 230.215 of title 17, Code of Federal 

22 Regulations, or any successor thereto, as such 

23 term applies to natural persons, as the Commis24 sion may deem appropriate for the protection of 
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1 investors, in the public interest, and in light of 

2 the economy. 

3 SEC. 413. GAO STUDY AND REPORT ON ACCREDITED INVES4 TORS. 

5 The Comptroller General of the United States shall 

6 conduct a study on the appropriate criteria for determining 

7 the financial thresholds or other criteria needed to qualify 

8 for accredited investor status and eligibility to invest in 

9 private funds, and shall submit a report to the Committee 

10 on Banking, Housing, and Urban Affairs of the Senate and 

11 the Committee on Financial Services of the House of Rep12 resentatives on the results of such study not later than 3 

13 years after the date of enactment of this Act. 

14 SEC. 414. GAO STUDY ON SELF-REGULATORY ORGANIZA15 TION FOR PRIVATE FUNDS. 

16 The Comptroller General of the United States shall— 

17 (1) conduct a study of the feasibility of forming 

18 a self-regulatory organization to oversee private 

19 funds; and 

20 (2) submit a report to the Committee on Bank21 ing, Housing, and Urban Affairs of the Senate and 

22 the Committee on Financial Services of the House of 

23 Representatives on the results of such study, not later 

24 than 1 year after the date of enactment of this Act. 
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1 SEC. 415. COMMISSION STUDY AND REPORT ON SHORT 

2 SELLING. 

3 (a) STUDY.—The Division of Risk, Strategy, and Fi4 nancial Innovation of the Commission shall conduct a 

5 study, taking into account current scholarship, on the state 

6 of short selling on national securities exchanges and in the 

7 over-the-counter markets, with particular attention to the 

8 impact of recent rule changes and the incidence of— 

9 (1) the failure to deliver shares sold short; or 

10 (2) delivery of shares on the fourth day following 

11 the short sale transaction. 

12 (b) REPORT.—The Division of Risk, Strategy, and Fi13 nancial Innovation shall submit a report, together with any 

14 recommendations for market improvements, including con15 sideration of real time reporting of short sale positions, to 

16 the Committee on Banking, Housing, and Urban Affairs 

17 of the Senate and the Committee on Financial Services of 

18 the House of Representatives on the results of the study con19 ducted under subsection (a), not later than 2 years after 

20 the date of enactment of this Act. 

21 SEC. 416. TRANSITION PERIOD. 

22 Except as otherwise provided in this title, this title and 

23 the amendments made by this title shall become effective 

24 1 year after the date of enactment of this Act, except that 

25 any investment adviser may, at the discretion of the invest26 ment adviser, register with the Commission under the In-
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1 vestment Advisers Act of 1940 during that 1-year period, 

2 subject to the rules of the Commission. 

3 TITLE V—INSURANCE 

4 Subtitle A—Office of National 

5 Insurance 

6 SEC. 501. SHORT TITLE. 

7 This subtitle may be cited as the ‘‘Office of National 

8 Insurance Act of 2010’’. 

9 SEC. 502. ESTABLISHMENT OF OFFICE OF NATIONAL INSUR10 ANCE. 

11 (a) ESTABLISHMENT OF OFFICE.—Subchapter I of 

12 chapter 3 of subtitle I of title 31, United States Code, is 

13 amended— 

14 (1) by redesignating section 312 as section 315; 

15 (2) by redesignating section 313 as section 312; 

16 and 

17 (3) by inserting after section 312 (as so redesig18 nated) the following new sections: 

19 ‘‘SEC. 313. OFFICE OF NATIONAL INSURANCE. 

20 ‘‘(a) ESTABLISHMENT.—There is established within 

21 the Department of the Treasury the Office of National In22 surance. 

23 ‘‘(b) LEADERSHIP.—The Office shall be headed by a 

24 Director, who shall be appointed by the Secretary of the 

25 Treasury. The position of Director shall be a career reserved 
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1 position in the Senior Executive Service, as that position 

2 is defined under section 3132 of title 5, United States Code. 

3 ‘‘(c) FUNCTIONS.— 

4 ‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF

5 SECRETARY.—The Office, pursuant to the direction of 

6 the Secretary, shall have the authority— 

7 ‘‘(A) to monitor all aspects of the insurance 

8 industry, including identifying issues or gaps in 

9 the regulation of insurers that could contribute 

10 to a systemic crisis in the insurance industry or 

11 the United States financial system; 

12 ‘‘(B) to recommend to the Financial Sta13 bility Oversight Council that it designate an in14 surer, including the affiliates of such insurer, as 

15 an entity subject to regulation as a nonbank fi16 nancial company supervised by the Board of 

17 Governors pursuant to title I of the Restoring 

18 American Financial Stability Act of 2010; 

19 ‘‘(C) to assist the Secretary in admin20 istering the Terrorism Insurance Program estab21 lished in the Department of the Treasury under 

22 the Terrorism Risk Insurance Act of 2002 (15 

23 U.S.C. 6701 note); 

24 ‘‘(D) to coordinate Federal efforts and de25 velop Federal policy on prudential aspects of 
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1 international insurance matters, including rep2 resenting the United States, as appropriate, in 

3 the International Association of Insurance Su4 pervisors (or a successor entity) and assisting the 

5 Secretary in negotiating International Insurance 

6 Agreements on Prudential Measures; 

7 ‘‘(E) to determine, in accordance with sub8 section (f), whether State insurance measures are 

9 preempted by International Insurance Agree10 ments on Prudential Measures; 

11 ‘‘(F) to consult with the States (including 

12 State insurance regulators) regarding insurance 

13 matters of national importance and prudential 

14 insurance matters of international importance; 

15 and 

16 ‘‘(G) to perform such other related duties 

17 and authorities as may be assigned to the Office 

18 by the Secretary. 

19 ‘‘(2) ADVISORY FUNCTIONS.—The Office shall ad20 vise the Secretary on major domestic and prudential 

21 international insurance policy issues. 

22 ‘‘(d) SCOPE.—The authority of the Office shall extend 

23 to all lines of insurance except health insurance, as such 

24 insurance is determined by the Secretary based on section 

25 2791 of the Public Health Service Act (42 U.S.C. 300gg– 
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1 91), and crop insurance, as established by the Federal Crop 

2 Insurance Act (7 U.S.C. 1501 et seq.). 

3 ‘‘(e) GATHERING OF INFORMATION.— 

4 ‘‘(1) IN GENERAL.—In carrying out the func5 tions required under subsection (c), the Office may— 

6 ‘‘(A) receive and collect data and informa7 tion on and from the insurance industry and in8 surers; 

9 ‘‘(B) enter into information-sharing agree10 ments; 

11 ‘‘(C) analyze and disseminate data and in12 formation; and 

13 ‘‘(D) issue reports regarding all lines of in14 surance except health insurance. 

15 ‘‘(2) COLLECTION OF INFORMATION FROM INSUR16 ERS AND AFFILIATES.— 

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 paragraph (3), the Office may require an in19 surer, or any affiliate of an insurer, to submit 

20 such data or information as the Office may rea21 sonably require in carrying out the functions de22 scribed under subsection (c). 

23 ‘‘(B) RULE OF CONSTRUCTION.—Notwith24 standing any other provision of this section, for 

25 purposes of subparagraph (A), the term ‘insurer’ 
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1 means any person that is authorized to write in2 surance or reinsure risks and issue contracts or 

3 policies in 1 or more States. 

4 ‘‘(3) EXCEPTION FOR SMALL INSURERS.—Para5 graph (2) shall not apply with respect to any insurer 

6 or affiliate thereof that meets a minimum size thresh7 old that the Office may establish, whether by order or 

8 rule. 

9 ‘‘(4) ADVANCE COORDINATION.—Before collecting 

10 any data or information under paragraph (2) from 

11 an insurer, or any affiliate of an insurer, the Office 

12 shall coordinate with each relevant State insurance 

13 regulator (or other relevant Federal or State regu14 latory agency, if any, in the case of an affiliate of an 

15 insurer) to determine if the information to be collected 

16 is available from, or may be obtained in a timely 

17 manner by, such State insurance regulator, individ18 ually or collectively, another regulatory agency, or 

19 publicly available sources. Notwithstanding any other 

20 provision of law, each such relevant State insurance 

21 regulator or other Federal or State regulatory agency 

22 is authorized to provide to the Office such data or in23 formation. 

24 ‘‘(5) CONFIDENTIALITY.— 
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1 ‘‘(A) RETENTION OF PRIVILEGE.—The sub2 mission of any nonpublicly available data and 

3 information to the Office under this subsection 

4 shall not constitute a waiver of, or otherwise af5 fect, any privilege arising under Federal or State 

6 law (including the rules of any Federal or State 

7 court) to which the data or information is other8 wise subject. 

9 ‘‘(B) CONTINUED APPLICATION OF PRIOR

10 CONFIDENTIALITY AGREEMENTS.—Any require11 ment under Federal or State law to the extent 

12 otherwise applicable, or any requirement pursu13 ant to a written agreement in effect between the 

14 original source of any nonpublicly available 

15 data or information and the source of such data 

16 or information to the Office, regarding the pri17 vacy or confidentiality of any data or informa18 tion in the possession of the source to the Office, 

19 shall continue to apply to such data or informa20 tion after the data or information has been pro21 vided pursuant to this subsection to the Office. 

22 ‘‘(C) INFORMATION SHARING AGREEMENT.— 

23 Any data or information obtained by the Office 

24 may be made available to State insurance regu-
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1 lators, individually or collectively, through an 

2 information sharing agreement that— 

3 ‘‘(i) shall comply with applicable Fed4 eral law; and 

5 ‘‘(ii) shall not constitute a waiver of, 

6 or otherwise affect, any privilege under Fed7 eral or State law (including the rules of any 

8 Federal or State Court) to which the data 

9 or information is otherwise subject. 

10 ‘‘(D) AGENCY DISCLOSURE REQUIRE11 MENTS.—Section 552 of title 5, United States 

12 Code, shall apply to any data or information 

13 submitted to the Office by an insurer or an affil14 iate of an insurer. 

15 ‘‘(6) SUBPOENAS AND ENFORCEMENT.—The Di16 rector shall have the power to require by subpoena the 

17 production of the data or information requested under 

18 paragraph (2), but only upon a written finding by 

19 the Director that such data or information is required 

20 to carry out the functions described under subsection 

21 (c) and that the Office has coordinated with such reg22 ulator or agency as required under paragraph (4). 

23 Subpoenas shall bear the signature of the Director 

24 and shall be served by any person or class of persons 

25 designated by the Director for that purpose. In the 
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1 case of contumacy or failure to obey a subpoena, the 

2 subpoena shall be enforceable by order of any appro3 priate district court of the United States. Any failure 

4 to obey the order of the court may be punished by the 

5 court as a contempt of court. 

6 ‘‘(f) PREEMPTION OF STATE INSURANCE MEAS7 URES.— 

8 ‘‘(1) STANDARD.—A State insurance measure 

9 shall be preempted if, and only to the extent that the 

10 Director determines, in accordance with this sub11 section, that the measure— 

12 ‘‘(A) results in less favorable treatment of a 

13 non-United States insurer domiciled in a foreign 

14 jurisdiction that is subject to an international 

15 insurance agreement on prudential measures 

16 than a United States insurer domiciled, licensed, 

17 or otherwise admitted in that State; and 

18 ‘‘(B) is inconsistent with an International 

19 Insurance Agreement on Prudential Measures. 

20 ‘‘(2) DETERMINATION.— 

21 ‘‘(A) NOTICE OF POTENTIAL INCONSIST22 ENCY.—Before making any determination under 

23 paragraph (1), the Director shall— 
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1 ‘‘(i) notify and consult with the appro2 priate State regarding any potential incon3 sistency or preemption; 

4 ‘‘(ii) cause to be published in the Fed5 eral Register notice of the issue regarding 

6 the potential inconsistency or preemption, 

7 including a description of each State insur8 ance measure at issue and any applicable 

9 International Insurance Agreement on Pru10 dential Measures; 

11 ‘‘(iii) provide interested parties a rea12 sonable opportunity to submit written com13 ments to the Office; and 

14 ‘‘(iv) consider any comments received. 

15 ‘‘(B) SCOPE OF REVIEW.—For purposes of 

16 this subsection, the determination of the Director 

17 regarding State insurance measures shall be lim18 ited to the subject matter contained within the 

19 international insurance agreement on prudential 

20 measure involved. 

21 ‘‘(C) NOTICE OF DETERMINATION OF INCON22 SISTENCY.—Upon making any determination 

23 under paragraph (1), the Director shall— 
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1 ‘‘(i) notify the appropriate State of the 

2 determination and the extent of the incon3 sistency; 

4 ‘‘(ii) establish a reasonable period of 

5 time, which shall not be less than 30 days, 

6 before the determination shall become effec7 tive; and 

8 ‘‘(iii) notify the Committee on Bank9 ing, Housing, and Urban Affairs of the 

10 Senate and the Committee on Financial 

11 Services of the House of Representatives of 

12 the inconsistency. 

13 ‘‘(3) NOTICE OF EFFECTIVENESS.—Upon the 

14 conclusion of the period referred to in paragraph 

15 (2)(C)(ii), if the basis for such determination still ex16 ists, the determination shall become effective and the 

17 Director shall— 

18 ‘‘(A) cause to be published a notice in the 

19 Federal Register that the preemption has become 

20 effective, as well as the effective date; and 

21 ‘‘(B) notify the appropriate State. 

22 ‘‘(4) LIMITATION.—No State may enforce a State 

23 insurance measure to the extent that such measure 

24 has been preempted under this subsection. 
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1 ‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCE2 DURES ACT.—Determinations of inconsistency made pursu3 ant to subsection (f)(2) shall be subject to the applicable 

4 provisions of subchapter II of chapter 5 of title 5, United 

5 States Code (relating to administrative procedure), and 

6 chapter 7 of such title (relating to judicial review). 

7 ‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.— 

8 The Secretary may issue orders, regulations, policies, and 

9 procedures to implement this section. 

10 ‘‘(i) CONSULTATION.—The Director shall consult with 

11 State insurance regulators, individually or collectively, to 

12 the extent the Director determines appropriate, in carrying 

13 out the functions of the Office. 

14 ‘‘(j) SAVINGS PROVISIONS.—Nothing in this section 

15 shall— 

16 ‘‘(1) preempt— 

17 ‘‘(A) any State insurance measure that gov18 erns any insurer’s rates, premiums, under19 writing, or sales practices; 

20 ‘‘(B) any State coverage requirements for 

21 insurance; 

22 ‘‘(C) the application of the antitrust laws of 

23 any State to the business of insurance; or 

24 ‘‘(D) any State insurance measure gov25 erning the capital or solvency of an insurer, ex-
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1 cept to the extent that such State insurance 

2 measure results in less favorable treatment of a 

3 non-United State insurer than a United States 

4 insurer; 

5 ‘‘(2) be construed to alter, amend, or limit any 

6 provision of the Consumer Financial Protection Agen7 cy Act of 2010; or 

8 ‘‘(3) affect the preemption of any State insur9 ance measure otherwise inconsistent with and pre10 empted by Federal law. 

11 ‘‘(k) RETENTION OF EXISTING STATE REGULATORY

12 AUTHORITY.—Nothing in this section or section 314 shall 

13 be construed to establish or provide the Office or the Depart14 ment of the Treasury with general supervisory or regulatory 

15 authority over the business of insurance. 

16 ‘‘(l) ANNUAL REPORT TO CONGRESS.—Beginning Sep17 tember 30, 2011, the Director shall submit a report on or 

18 before September 30 of each calendar year to the President 

19 and to the Committee on Banking, Housing, and Urban 

20 Affairs of the Senate and the Committee on Financial Serv21 ices of the House of Representatives on the insurance indus22 try, any actions taken by the Office pursuant to subsection 

23 (f) (regarding preemption of inconsistent State insurance 

24 measures), and any other information as deemed relevant 

25 by the Director or as requested by such Committees. 
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1 ‘‘(m) STUDY AND REPORT ON REGULATION OF INSUR2 ANCE.— 

3 ‘‘(1) IN GENERAL.—Not later than 18 months 

4 after the date of enactment of this section, the Direc5 tor shall conduct a study and submit a report to Con6 gress on how to modernize and improve the system of 

7 insurance regulation in the United States. 

8 ‘‘(2) CONSIDERATIONS.—The study and report 

9 required under paragraph (1) shall be based on and 

10 guided by the following considerations: 

11 ‘‘(A) Systemic risk regulation with respect 

12 to insurance. 

13 ‘‘(B) Capital standards and the relationship 

14 between capital allocation and liabilities, includ15 ing standards relating to liquidity and duration 

16 risk. 

17 ‘‘(C) Consumer protection for insurance 

18 products and practices, including gaps in state 

19 regulation. 

20 ‘‘(D) The degree of national uniformity of 

21 state insurance regulation. 

22 ‘‘(E) The regulation of insurance companies 

23 and affiliates on a consolidated basis. 

24 ‘‘(F) International coordination of insur25 ance regulation. 
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1 ‘‘(3) ADDITIONAL FACTORS.—The study and re2 port required under paragraph (1) shall also examine 

3 the following factors: 

4 ‘‘(A) The costs and benefits of potential Fed5 eral regulation of insurance across various lines 

6 of insurance (except health insurance). 

7 ‘‘(B) The feasibility of regulating only cer8 tain lines of insurance at the Federal level, while 

9 leaving other lines of insurance to be regulated 

10 at the State level. 

11 ‘‘(C) The ability of any potential Federal 

12 regulation or Federal regulators to eliminate or 

13 minimize regulatory arbitrage. 

14 ‘‘(D) The impact that developments in the 

15 regulation of insurance in foreign jurisdictions 

16 might have on the potential Federal regulation of 

17 insurance. 

18 ‘‘(E) The ability of any potential Federal 

19 regulation or Federal regulator to provide robust 

20 consumer protection for policyholders. 

21 ‘‘(F) The potential consequences of sub22 jecting insurance companies to a Federal resolu23 tion authority, including the effects of any Fed24 eral resolution authority— 
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1 ‘‘(i) on the operation of State insur2 ance guaranty fund systems, including the 

3 loss of guaranty fund coverage if an insur4 ance company is subject to a Federal resolu5 tion authority; 

6 ‘‘(ii) on policyholder protection, in7 cluding the loss of the priority status of pol8 icyholder claims over other unsecured gen9 eral creditor claims; 

10 ‘‘(iii) in the case of life insurance com11 panies, the loss of the special status of sepa12 rate account assets and separate account li13 abilities; and 

14 ‘‘(iv) on the international competitive15 ness of insurance companies. 

16 ‘‘(G) Such other factors as the Director de17 termines necessary or appropriate, consistent 

18 with the principles set forth in paragraph (2). 

19 ‘‘(4) REQUIRED RECOMMENDATIONS.—The study 

20 and report required under paragraph (1) shall also 

21 contain any legislative, administrative, or regulatory 

22 recommendations, as the Director determines appro23 priate, to carry out or effectuate the findings set forth 

24 in such report. 
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1 ‘‘(5) CONSULTATION.—With respect to the study 

2 and report required under paragraph (1), the Direc3 tor shall consult with the National Association of In4 surance Commissioners, consumer organizations, rep5 resentatives of the insurance industry and policy6 holders, and other organizations and experts, as ap7 propriate. 

8 ‘‘(n) USE OF EXISTING RESOURCES.—To carry out 

9 this section, the Office may employ personnel, facilities, and 

10 any other resource of the Department of the Treasury avail11 able to the Secretary. 

12 ‘‘(o) DEFINITIONS.—In this section and section 314, 

13 the following definitions shall apply: 

14 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means, 

15 with respect to an insurer, any person who controls, 

16 is controlled by, or is under common control with the 

17 insurer. 

18 ‘‘(2) INSURER.—The term ‘insurer’ means any 

19 person engaged in the business of insurance, includ20 ing reinsurance. 

21 ‘‘(3) INTERNATIONAL INSURANCE AGREEMENT ON

22 PRUDENTIAL MEASURES.—The term ‘International 

23 Insurance Agreement on Prudential Measures’ means 

24 a written bilateral or multilateral agreement entered 

25 into between the United States and a foreign govern-
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1 ment, authority, or regulatory entity regarding pru2 dential measures applicable to the business of insur3 ance or reinsurance. 

4 ‘‘(4) NON-UNITED STATES INSURER.—The term 

5 ‘non-United States insurer’ means an insurer that is 

6 organized under the laws of a jurisdiction other than 

7 a State, but does not include any United States 

8 branch of such an insurer. 

9 ‘‘(5) OFFICE.—The term ‘Office’ means the Office 

10 of National Insurance established by this section. 

11 ‘‘(6) STATE INSURANCE MEASURE.—The term 

12 ‘State insurance measure’ means any State law, regu13 lation, administrative ruling, bulletin, guideline, or 

14 practice relating to or affecting prudential measures 

15 applicable to insurance or reinsurance. 

16 ‘‘(7) STATE INSURANCE REGULATOR.—The term 

17 ‘State insurance regulator’ means any State regu18 latory authority responsible for the supervision of in19 surers. 

20 ‘‘(8) UNITED STATES INSURER.—The term 

21 ‘United States insurer’ means— 

22 ‘‘(A) an insurer that is organized under the 

23 laws of a State; or 

24 ‘‘(B) a United States branch of a non25 United States insurer. 
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1 ‘‘(p) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated for the Office for each 

3 fiscal year such sums as may be necessary. 

4 ‘‘SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON 

5 PRUDENTIAL MEASURES. 

6 ‘‘(a) IN GENERAL.—The Secretary of the Treasury is 

7 authorized to negotiate and enter into International Insur8 ance Agreements on Prudential Measures on behalf of the 

9 United States. 

10 ‘‘(b) SAVINGS PROVISION.—Nothing in this section or 

11 section 313 shall be construed to affect the development and 

12 coordination of United States international trade policy or 

13 the administration of the United States trade agreements 

14 program. It is to be understood that the negotiation of 

15 International Insurance Agreements on Prudential Meas16 ures under such sections is consistent with the requirement 

17 of this subsection. 

18 ‘‘(c) CONSULTATION.—The Secretary shall consult 

19 with the United States Trade Representative on the negotia20 tion of International Insurance Agreements on Prudential 

21 Measures, including prior to initiating and concluding any 

22 such agreements.’’. 

23 (b) DUTIES OF SECRETARY.—Section 321(a) of title 

24 31, United States Code, is amended— 
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1 (1) in paragraph (7), by striking ‘‘; and’’ and 

2 inserting a semicolon; 

3 (2) in paragraph (8)(C), by striking the period 

4 at the end and inserting ‘‘; and’’; and 

5 (3) by adding at the end the following new para6 graph: 

7 ‘‘(9) advise the President on major domestic and 

8 international prudential policy issues in connection 

9 with all lines of insurance except health insurance.’’. 

10 (c) CLERICAL AMENDMENT.—The table of sections for 

11 subchapter I of chapter 3 of title 31, United States Code, 

12 is amended by striking the item relating to section 312 and 

13 inserting the following new items: 

‘‘Sec. 312. Terrorism and financial intelligence. 

‘‘Sec. 313. Office of National Insurance. 

‘‘Sec. 314. International insurance agreements on prudential measures. 

‘‘Sec. 315. Continuing in office.’’. 

14 Subtitle B—State-based Insurance 

15 Reform 

16 SEC. 511. SHORT TITLE. 

17 This subtitle may be cited as the ‘‘Nonadmitted and 

18 Reinsurance Reform Act of 2010’’. 

19 SEC. 512. EFFECTIVE DATE. 

20 Except as otherwise specifically provided in this sub21 title, this subtitle shall take effect upon the expiration of 

22 the 12-month period beginning on the date of the enactment 

23 of this subtitle. 
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1 PART I—NONADMITTED INSURANCE 

2 SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PRE3 MIUM TAXES. 

4 (a) HOME STATE’S EXCLUSIVE AUTHORITY.—No 

5 State other than the home State of an insured may require 

6 any premium tax payment for nonadmitted insurance. 

7 (b) ALLOCATION OF NONADMITTED PREMIUM

8 TAXES.— 

9 (1) IN GENERAL.—The States may enter into a 

10 compact or otherwise establish procedures to allocate 

11 among the States the premium taxes paid to an in12 sured’s home State described in subsection (a). 

13 (2) EFFECTIVE DATE.—Except as expressly oth14 erwise provided in such compact or other procedures, 

15 any such compact or other procedures— 

16 (A) if adopted on or before the expiration of 

17 the 330-day period that begins on the date of the 

18 enactment of this subtitle, shall apply to any 

19 premium taxes that, on or after such date of en20 actment, are required to be paid to any State 

21 that is subject to such compact or procedures; 

22 and 

23 (B) if adopted after the expiration of such 

24 330-day period, shall apply to any premium 

25 taxes that, on or after January 1 of the first cal26 endar year that begins after the expiration of 
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1 such 330-day period, are required to be paid to 

2 any State that is subject to such compact or pro3 cedures. 

4 (3) REPORT.—Upon the expiration of the 330- 

5 day period referred to in paragraph (2), the NAIC 

6 may submit a report to the Committee on Financial 

7 Services and Committee on the Judiciary of the 

8 House of Representatives and the Committee on 

9 Banking, Housing, and Urban Affairs of the Senate 

10 identifying and describing any compact or other pro11 cedures for allocation among the States of premium 

12 taxes that have been adopted during such period by 

13 any States. 

14 (4) NATIONWIDE SYSTEM.—The Congress intends 

15 that each State adopt nationwide uniform require16 ments, forms, and procedures, such as an interstate 

17 compact, that provides for the reporting, payment, 

18 collection, and allocation of premium taxes for non19 admitted insurance consistent with this section. 

20 (c) ALLOCATION BASED ON TAX ALLOCATION RE21 PORT.—To facilitate the payment of premium taxes among 

22 the States, an insured’s home State may require surplus 

23 lines brokers and insureds who have independently procured 

24 insurance to annually file tax allocation reports with the 

25 insured’s home State detailing the portion of the non-
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1 admitted insurance policy premium or premiums attrib2 utable to properties, risks, or exposures located in each 

3 State. The filing of a nonadmitted insurance tax allocation 

4 report and the payment of tax may be made by a person 

5 authorized by the insured to act as its agent. 

6 SEC. 522. REGULATION OF NONADMITTED INSURANCE BY 

7 INSURED’S HOME STATE. 

8 (a) HOME STATE AUTHORITY.—Except as otherwise 

9 provided in this section, the placement of nonadmitted in10 surance shall be subject to the statutory and regulatory re11 quirements solely of the insured’s home State. 

12 (b) BROKER LICENSING.—No State other than an in13 sured’s home State may require a surplus lines broker to 

14 be licensed in order to sell, solicit, or negotiate nonadmitted 

15 insurance with respect to such insured. 

16 (c) ENFORCEMENT PROVISION.—With respect to sec17 tion 521 and subsections (a) and (b) of this section, any 

18 law, regulation, provision, or action of any State that ap19 plies or purports to apply to nonadmitted insurance sold 

20 to, solicited by, or negotiated with an insured whose home 

21 State is another State shall be preempted with respect to 

22 such application. 

23 (d) WORKERS’ COMPENSATION EXCEPTION.—This sec24 tion may not be construed to preempt any State law, rule, 

25 or regulation that restricts the placement of workers’ com-
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1 pensation insurance or excess insurance for self-funded 

2 workers’ compensation plans with a nonadmitted insurer. 

3 SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATA4 BASE. 

5 After the expiration of the 2-year period beginning on 

6 the date of the enactment of this subtitle, a State may not 

7 collect any fees relating to licensing of an individual or en8 tity as a surplus lines broker in the State unless the State 

9 has in effect at such time laws or regulations that provide 

10 for participation by the State in the national insurance 

11 producer database of the NAIC, or any other equivalent uni12 form national database, for the licensure of surplus lines 

13 brokers and the renewal of such licenses. 

14 SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGI15 BILITY. 

16 A State may not— 

17 (1) impose eligibility requirements on, or other18 wise establish eligibility criteria for, nonadmitted in19 surers domiciled in a United States jurisdiction, ex20 cept in conformance with such requirements and cri21 teria in sections 5A(2) and 5C(2)(a) of the Non-Ad22 mitted Insurance Model Act, unless the State has 

23 adopted nationwide uniform requirements, forms, and 

24 procedures developed in accordance with section 
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1 521(b) of this subtitle that include alternative nation2 wide uniform eligibility requirements; or 

3 (2) prohibit a surplus lines broker from placing 

4 nonadmitted insurance with, or procuring non5 admitted insurance from, a nonadmitted insurer 

6 domiciled outside the United States that is listed on 

7 the Quarterly Listing of Alien Insurers maintained 

8 by the International Insurers Department of the 

9 NAIC. 

10 SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL 

11 PURCHASERS. 

12 A surplus lines broker seeking to procure or place non13 admitted insurance in a State for an exempt commercial 

14 purchaser shall not be required to satisfy any State require15 ment to make a due diligence search to determine whether 

16 the full amount or type of insurance sought by such exempt 

17 commercial purchaser can be obtained from admitted insur18 ers if— 

19 (1) the broker procuring or placing the surplus 

20 lines insurance has disclosed to the exempt commer21 cial purchaser that such insurance may or may not 

22 be available from the admitted market that may pro23 vide greater protection with more regulatory over24 sight; and 
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1 (2) the exempt commercial purchaser has subse2 quently requested in writing the broker to procure or 

3 place such insurance from a nonadmitted insurer. 

4 SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MAR5 KET. 

6 (a) IN GENERAL.—The Comptroller General of the 

7 United States shall conduct a study of the nonadmitted in8 surance market to determine the effect of the enactment of 

9 this part on the size and market share of the nonadmitted 

10 insurance market for providing coverage typically provided 

11 by the admitted insurance market. 

12 (b) CONTENTS.—The study shall determine and ana13 lyze— 

14 (1) the change in the size and market share of 

15 the nonadmitted insurance market and in the number 

16 of insurance companies and insurance holding com17 panies providing such business in the 18-month pe18 riod that begins upon the effective date of this subtitle; 

19 (2) the extent to which insurance coverage typi20 cally provided by the admitted insurance market has 

21 shifted to the nonadmitted insurance market; 

22 (3) the consequences of any change in the size 

23 and market share of the nonadmitted insurance mar24 ket, including differences in the price and availability 
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1 of coverage available in both the admitted and non2 admitted insurance markets; 

3 (4) the extent to which insurance companies and 

4 insurance holding companies that provide both ad5 mitted and nonadmitted insurance have experienced 

6 shifts in the volume of business between admitted and 

7 nonadmitted insurance; and 

8 (5) the extent to which there has been a change 

9 in the number of individuals who have nonadmitted 

10 insurance policies, the type of coverage provided 

11 under such policies, and whether such coverage is 

12 available in the admitted insurance market. 

13 (c) CONSULTATION WITH NAIC.—In conducting the 

14 study under this section, the Comptroller General shall con15 sult with the NAIC. 

16 (d) REPORT.—The Comptroller General shall complete 

17 the study under this section and submit a report to the 

18 Committee on Banking, Housing, and Urban Affairs of the 

19 Senate and the Committee on Financial Services of the 

20 House of Representatives regarding the findings of the study 

21 not later than 30 months after the effective date of this sub22 title. 

23 SEC. 527. DEFINITIONS. 

24 For purposes of this part, the following definitions 

25 shall apply: 
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1 (1) ADMITTED INSURER.—The term ‘‘admitted 

2 insurer’’ means, with respect to a State, an insurer 

3 licensed to engage in the business of insurance in such 

4 State. 

5 (2) AFFILIATE.—The term ‘‘affiliate’’ means, 

6 with respect to an insured, any entity that controls, 

7 is controlled by, or is under common control with the 

8 insured. 

9 (3) AFFILIATED GROUP.—The term ‘‘affiliated 

10 group’’ means any group of entities that are all affili11 ated. 

12 (4) CONTROL.—An entity has ‘‘control’’ over an13 other entity if— 

14 (A) the entity directly or indirectly or act15 ing through 1 or more other persons owns, con16 trols, or has the power to vote 25 percent or more 

17 of any class of voting securities of the other enti18 ty; or 

19 (B) the entity controls in any manner the 

20 election of a majority of the directors or trustees 

21 of the other entity. 

22 (5) EXEMPT COMMERCIAL PURCHASER.—The 

23 term ‘‘exempt commercial purchaser’’ means any per24 son purchasing commercial insurance that, at the 

25 time of placement, meets the following requirements: 
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1 (A) The person employs or retains a quali2 fied risk manager to negotiate insurance cov3 erage. 

4 (B) The person has paid aggregate nation5 wide commercial property and casualty insur6 ance premiums in excess of $100,000 in the im7 mediately preceding 12 months. 

8 (C)(i) The person meets at least 1 of the fol9 lowing criteria: 

10 (I) The person possesses a net worth in 

11 excess of $20,000,000, as such amount is ad12 justed pursuant to clause (ii). 

13 (II) The person generates annual reve14 nues in excess of $50,000,000, as such 

15 amount is adjusted pursuant to clause (ii). 

16 (III) The person employs more than 

17 500 full-time or full-time equivalent em18 ployees per individual insured or is a mem19 ber of an affiliated group employing more 

20 than 1,000 employees in the aggregate. 

21 (IV) The person is a not-for-profit or22 ganization or public entity generating an23 nual budgeted expenditures of at least 

24 $30,000,000, as such amount is adjusted 

25 pursuant to clause (ii). 
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1 (V) The person is a municipality with 

2 a population in excess of 50,000 persons. 

3 (ii) Effective on the fifth January 1 occur4 ring after the date of the enactment of this sub5 title and each fifth January 1 occurring there6 after, the amounts in subclauses (I), (II), and 

7 (IV) of clause (i) shall be adjusted to reflect the 

8 percentage change for such 5-year period in the 

9 Consumer Price Index for All Urban Consumers 

10 published by the Bureau of Labor Statistics of 

11 the Department of Labor. 

12 (6) HOME STATE.— 

13 (A) IN GENERAL.—Except as provided in 

14 subparagraph (B), the term ‘‘home State’’ 

15 means, with respect to an insured— 

16 (i) the State in which an insured 

17 maintains its principal place of business or, 

18 in the case of an individual, the individ19 ual’s principal residence; or 

20 (ii) if 100 percent of the insured risk 

21 is located out of the State referred to in sub22 paragraph (A), the State to which the great23 est percentage of the insured’s taxable pre24 mium for that insurance contract is allo25 cated. 
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1 (B) AFFILIATED GROUPS.—If more than 1 

2 insured from an affiliated group are named in3 sureds on a single nonadmitted insurance con4 tract, the term ‘‘home State’’ means the home 

5 State, as determined pursuant to subparagraph 

6 (A), of the member of the affiliated group that 

7 has the largest percentage of premium attributed 

8 to it under such insurance contract. 

9 (7) INDEPENDENTLY PROCURED INSURANCE.— 

10 The term ‘‘independently procured insurance’’ means 

11 insurance procured directly by an insured from a 

12 nonadmitted insurer. 

13 (8) NAIC.—The term ‘‘NAIC’’ means the Na14 tional Association of Insurance Commissioners or any 

15 successor entity. 

16 (9) NONADMITTED INSURANCE.—The term ‘‘non17 admitted insurance’’ means any property and cas18 ualty insurance permitted to be placed directly or 

19 through a surplus lines broker with a nonadmitted in20 surer eligible to accept such insurance. 

21 (10) NON-ADMITTED INSURANCE MODEL ACT.— 

22 The term ‘‘Non-Admitted Insurance Model Act’’ 

23 means the provisions of the Non-Admitted Insurance 

24 Model Act, as adopted by the NAIC on August 3, 
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1 1994, and amended on September 30, 1996, December 

2 6, 1997, October 2, 1999, and June 8, 2002. 

3 (11) NONADMITTED INSURER.—The term ‘‘non4 admitted insurer’’— 

5 (A) means, with respect to a State, an in6 surer not licensed to engage in the business of in7 surance in such State; but 

8 (B) does not include a risk retention group, 

9 as that term is defined in section 2(a)(4) of the 

10 Liability Risk Retention Act of 1986 (15 U.S.C. 

11 3901(a)(4)). 

12 (12) QUALIFIED RISK MANAGER.—The term 

13 ‘‘qualified risk manager’’ means, with respect to a 

14 policyholder of commercial insurance, a person who 

15 meets all of the following requirements: 

16 (A) The person is an employee of, or third 

17 party consultant retained by, the commercial 

18 policyholder. 

19 (B) The person provides skilled services in 

20 loss prevention, loss reduction, or risk and insur21 ance coverage analysis, and purchase of insur22 ance. 

23 (C) The person— 

24 (i)(I) has a bachelor’s degree or higher 

25 from an accredited college or university in 
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1 risk management, business administration, 

2 finance, economics, or any other field deter3 mined by a State insurance commissioner 

4 or other State regulatory official or entity 

5 to demonstrate minimum competence in 

6 risk management; and 

7 (II)(aa) has 3 years of experience in 

8 risk financing, claims administration, loss 

9 prevention, risk and insurance analysis, or 

10 purchasing commercial lines of insurance; 

11 or 

12 (bb) has 1 of the following designa13 tions: 

14 (AA) a designation as a Chartered 

15 Property and Casualty Underwriter 

16 (in this subparagraph referred to as 

17 ‘‘CPCU’’) issued by the American In18 stitute for CPCU/Insurance Institute of 

19 America; 

20 (BB) a designation as an Asso21 ciate in Risk Management (ARM) 

22 issued by the American Institute for 

23 CPCU/Insurance Institute of America; 

24 (CC) a designation as Certified 

25 Risk Manager (CRM) issued by the 
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1 National Alliance for Insurance Edu2 cation & Research; 

3 (DD) a designation as a RIMS 

4 Fellow (RF) issued by the Global Risk 

5 Management Institute; or 

6 (EE) any other designation, cer7 tification, or license determined by a 

8 State insurance commissioner or other 

9 State insurance regulatory official or 

10 entity to demonstrate minimum com11 petency in risk management; 

12 (ii)(I) has at least 7 years of experi13 ence in risk financing, claims administra14 tion, loss prevention, risk and insurance 

15 coverage analysis, or purchasing commer16 cial lines of insurance; and 

17 (II) has any 1 of the designations spec18 ified in subitems (AA) through (EE) of 

19 clause (i)(II)(bb); 

20 (iii) has at least 10 years of experience 

21 in risk financing, claims administration, 

22 loss prevention, risk and insurance coverage 

23 analysis, or purchasing commercial lines of 

24 insurance; or 
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1 (iv) has a graduate degree from an ac2 credited college or university in risk man3 agement, business administration, finance, 

4 economics, or any other field determined by 

5 a State insurance commissioner or other 

6 State regulatory official or entity to dem7 onstrate minimum competence in risk man8 agement. 

9 (13) PREMIUM TAX.—The term ‘‘premium tax’’ 

10 means, with respect to surplus lines or independently 

11 procured insurance coverage, any tax, fee, assessment, 

12 or other charge imposed by a government entity di13 rectly or indirectly based on any payment made as 

14 consideration for an insurance contract for such in15 surance, including premium deposits, assessments, 

16 registration fees, and any other compensation given 

17 in consideration for a contract of insurance. 

18 (14) SURPLUS LINES BROKER.—The term ‘‘sur19 plus lines broker’’ means an individual, firm, or cor20 poration which is licensed in a State to sell, solicit, 

21 or negotiate insurance on properties, risks, or expo22 sures located or to be performed in a State with non23 admitted insurers. 
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1 PART II—REINSURANCE 

2 SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND 

3 REINSURANCE AGREEMENTS. 

4 (a) CREDIT FOR REINSURANCE.—If the State of domi5 cile of a ceding insurer is an NAIC-accredited State, or has 

6 financial solvency requirements substantially similar to the 

7 requirements necessary for NAIC accreditation, and recog8 nizes credit for reinsurance for the insurer’s ceded risk, then 

9 no other State may deny such credit for reinsurance. 

10 (b) ADDITIONAL PREEMPTION OF EXTRATERRITORIAL

11 APPLICATION OF STATE LAW.—In addition to the applica12 tion of subsection (a), all laws, regulations, provisions, or 

13 other actions of a State that is not the domiciliary State 

14 of the ceding insurer, except those with respect to taxes and 

15 assessments on insurance companies or insurance income, 

16 are preempted to the extent that they— 

17 (1) restrict or eliminate the rights of the ceding 

18 insurer or the assuming insurer to resolve disputes 

19 pursuant to contractual arbitration to the extent such 

20 contractual provision is not inconsistent with the pro21 visions of title 9, United States Code; 

22 (2) require that a certain State’s law shall gov23 ern the reinsurance contract, disputes arising from 

24 the reinsurance contract, or requirements of the rein25 surance contract; 
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1 (3) attempt to enforce a reinsurance contract on 

2 terms different than those set forth in the reinsurance 

3 contract, to the extent that the terms are not incon4 sistent with this part; or 

5 (4) otherwise apply the laws of the State to rein6 surance agreements of ceding insurers not domiciled 

7 in that State. 

8 SEC. 532. REGULATION OF REINSURER SOLVENCY. 

9 (a) DOMICILIARY STATE REGULATION.—If the State 

10 of domicile of a reinsurer is an NAIC-accredited State or 

11 has financial solvency requirements substantially similar 

12 to the requirements necessary for NAIC accreditation, such 

13 State shall be solely responsible for regulating the financial 

14 solvency of the reinsurer. 

15 (b) NONDOMICILIARY STATES.— 

16 (1) LIMITATION ON FINANCIAL INFORMATION RE17 QUIREMENTS.—If the State of domicile of a reinsurer 

18 is an NAIC-accredited State or has financial solvency 

19 requirements substantially similar to the require20 ments necessary for NAIC accreditation, no other 

21 State may require the reinsurer to provide any addi22 tional financial information other than the informa23 tion the reinsurer is required to file with its domi24 ciliary State. 
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1 (2) RECEIPT OF INFORMATION.—No provision of 

2 this section shall be construed as preventing or pro3 hibiting a State that is not the State of domicile of 

4 a reinsurer from receiving a copy of any financial 

5 statement filed with its domiciliary State. 

6 SEC. 533. DEFINITIONS. 

7 For purposes of this part, the following definitions 

8 shall apply: 

9 (1) CEDING INSURER.—The term ‘‘ceding in10 surer’’ means an insurer that purchases reinsurance. 

11 (2) DOMICILIARY STATE.—The terms ‘‘State of 

12 domicile’’ and ‘‘domiciliary State’’ mean, with re13 spect to an insurer or reinsurer, the State in which 

14 the insurer or reinsurer is incorporated or entered 

15 through, and licensed. 

16 (3) REINSURANCE.—The term ‘‘reinsurance’’ 

17 means the assumption by an insurer of all or part of 

18 a risk undertaken originally by another insurer. 

19 (4) REINSURER.— 

20 (A) IN GENERAL.—The term ‘‘reinsurer’’ 

21 means an insurer to the extent that the in22 surer— 

23 (i) is principally engaged in the busi24 ness of reinsurance; 
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1 (ii) does not conduct significant 

2 amounts of direct insurance as a percentage 

3 of its net premiums; and 

4 (iii) is not engaged in an ongoing 

5 basis in the business of soliciting direct in6 surance. 

7 (B) DETERMINATION.—A determination of 

8 whether an insurer is a reinsurer shall be made 

9 under the laws of the State of domicile in accord10 ance with this paragraph. 

11 PART III—RULE OF CONSTRUCTION 

12 SEC. 541. RULE OF CONSTRUCTION. 

13 Nothing in this subtitle or the amendments made by 

14 this subtitle shall be construed to modify, impair, or super15 sede the application of the antitrust laws. Any implied or 

16 actual conflict between this subtitle and any amendments 

17 to this subtitle and the antitrust laws shall be resolved in 

18 favor of the operation of the antitrust laws. 

19 SEC. 542. SEVERABILITY. 

20 If any section or subsection of this subtitle, or any ap21 plication of such provision to any person or circumstance, 

22 is held to be unconstitutional, the remainder of this subtitle, 

23 and the application of the provision to any other person 

24 or circumstance, shall not be affected. 
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1 TITLE VI—IMPROVEMENTS TO 

2 REGULATION OF BANK AND 

3 SAVINGS ASSOCIATION HOLD4 ING COMPANIES AND DEPOSI5 TORY INSTITUTIONS 

6 SEC. 601. SHORT TITLE. 

7 This title may be cited as the ‘‘Bank and Savings Asso8 ciation Holding Company and Depository Institution Reg9 ulatory Improvements Act of 2010’’. 

10 SEC. 602. DEFINITION. 

11 In this title, the term ‘‘commercial firm’’ means any 

12 entity that derives not less than 15 percent of the consoli13 dated annual gross revenues of the entity, including all af14 filiates of the entity, from engaging in activities that are 

15 not financial in nature or incidental to activities that are 

16 financial in nature, as provided in section 4(k) of the Bank 

17 Holding Company Act of 1956 (12 U.S.C. 1843(k)). 

18 SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF 

19 CREDIT CARD BANKS, INDUSTRIAL LOAN 

20 COMPANIES, AND CERTAIN OTHER COMPA21 NIES UNDER THE BANK HOLDING COMPANY 

22 ACT OF 1956. 

23 (a) MORATORIUM.— 

24 (1) DEFINITIONS.—In this subsection— 
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1 (A) the term ‘‘credit card bank’’ means an 

2 institution described in section 2(c)(2)(F) of the 

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

4 1841(c)(2)(F)); 

5 (B) the term ‘‘industrial bank’’ means an 

6 institution described in section 2(c)(2)(H) of the 

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

8 1841(c)(2)(H)); and 

9 (C) the term ‘‘trust bank’’ means an institu10 tion described in section 2(c)(2)(D) of the Bank 

11 Holding Company Act of 1956 (12 U.S.C. 

12 1841(c)(2)(D)). 

13 (2) MORATORIUM ON PROVISION OF DEPOSIT IN14 SURANCE.—The Corporation may not approve an ap15 plication for deposit insurance under section 5 of the 

16 Federal Deposit Insurance Act (12 U.S.C. 1815) that 

17 is received after November 10, 2009, for an industrial 

18 bank, a credit card bank, or a trust bank that is di19 rectly or indirectly owned or controlled by a commer20 cial firm. 

21 (3) CHANGE IN CONTROL.— 

22 (A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the appropriate Federal 

24 banking agency shall disapprove a change in 

25 control, as provided in section 7(j) of the Federal 
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1 Deposit Insurance Act (12 U.S.C. 1817(j)), of an 

2 industrial bank, a credit card bank, or a trust 

3 bank if the change in control would result in di4 rect or indirect control of the industrial bank, 

5 credit card bank, or trust bank by a commercial 

6 firm. 

7 (B) EXCEPTIONS.—Subparagraph (A) shall 

8 not apply to a change in control of an industrial 

9 bank, credit card bank, or trust bank that— 

10 (i) is in danger of default, as deter11 mined by the appropriate Federal banking 

12 agency; or 

13 (ii) results from the merger or whole 

14 acquisition of a commercial firm that di15 rectly or indirectly controls the industrial 

16 bank, credit card bank, or trust bank in a 

17 bona fide merger with or acquisition by an18 other commercial firm, as determined by the 

19 appropriate Federal banking agency. 

20 (4) SUNSET.—This subsection shall cease to have 

21 effect 3 years after the date of enactment of this Act. 

22 (b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF

23 EXCEPTIONS UNDER THE BANK HOLDING COMPANY ACT

24 OF 1956.— 
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1 (1) STUDY REQUIRED.—The Comptroller General 

2 of the United States shall carry out a study to deter3 mine whether it is necessary, in order to strengthen 

4 the safety and soundness of institutions or the sta5 bility of the financial system, to eliminate the excep6 tions under section 2 of the Bank Holding Company 

7 Act of 1956 (12 U.S.C. 1841) for institutions de8 scribed in— 

9 (A) section 2(a)(5)(E) of the Bank Holding 

10 Company Act of 1956 (12 U.S.C. 1841(a)(5)(E)); 

11 (B) section 2(a)(5)(F) of the Bank Holding 

12 Company Act of 1956 (12 U.S.C. 1841(a)(5)(F)); 

13 (C) section 2(c)(2)(D) of the Bank Holding 

14 Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)); 

15 (D) section 2(c)(2)(F) of the Bank Holding 

16 Company Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 

17 (E) section 2(c)(2)(H) of the Bank Holding 

18 Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); 

19 and 

20 (F) section 2(c)(2)(B) of the Bank Holding 

21 Company Act of 1956 (12 U.S.C. 1841(c)(2)(B)). 

22 (2) CONTENT OF STUDY.— 

23 (A) IN GENERAL.—The study required 

24 under paragraph (1), with respect to the institu25 tions referenced in each of subparagraphs (A) 
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1 through (E) of paragraph (1), shall, to the extent 

2 feasible be based on information provided to the 

3 Comptroller General by the appropriate Federal 

4 or State regulator, and shall— 

5 (i) identify the types and number of 

6 institutions excepted from section 2 of the 

7 Bank Holding Company Act of 1956 (12 

8 U.S.C. 1841) under each of the subpara9 graphs described in subparagraphs (A) 

10 through (E) of paragraph (1); 

11 (ii) generally describe the size and geo12 graphic locations of the institutions de13 scribed in clause (i); 

14 (iii) determine the extent to which the 

15 institutions described in clause (i) are held 

16 by holding companies that are commercial 

17 firms; 

18 (iv) determine whether the institutions 

19 described in clause (i) have any affiliates 

20 that are commercial firms; 

21 (v) identify the Federal banking agen22 cy responsible for the supervision of the in23 stitutions described in clause (i) on and 

24 after the transfer date; 
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1 (vi) determine the adequacy of the Fed2 eral bank regulatory framework applicable 

3 to each category of institution described in 

4 clause (i), including any restrictions (in5 cluding limitations on affiliate transactions 

6 or cross-marketing) that apply to trans7 actions between an institution, the holding 

8 company of the institution, and any other 

9 affiliate of the institution; and 

10 (vii) evaluate the potential con11 sequences of subjecting the institutions de12 scribed in clause (i) to the requirements of 

13 the Bank Holding Company Act of 1956, 

14 including with respect to the availability 

15 and allocation of credit, the stability of the 

16 financial system and the economy, the safe 

17 and sound operation of each category of in18 stitution, and the impact on the types of ac19 tivities in which such institutions, and the 

20 holding companies of such institutions, may 

21 engage. 

22 (B) SAVINGS ASSOCIATIONS.—With respect 

23 to institutions described in paragraph (1)(F), the 

24 study required under paragraph (1) shall— 
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1 (i) determine the adequacy of the Fed2 eral bank regulatory framework applicable 

3 to such institutions, including any restric4 tions (including limitations on affiliate 

5 transactions or cross-marketing) that apply 

6 to transactions between an institution, the 

7 holding company of the institution, and 

8 any other affiliate of the institution; and 

9 (ii) evaluate the potential consequences 

10 of subjecting the institutions described in 

11 paragraph (1)(F) to the requirements of the 

12 Bank Holding Company Act of 1956, in13 cluding with respect to the availability and 

14 allocation of credit, the stability of the fi15 nancial system and the economy, the safe 

16 and sound operation of such institutions, 

17 and the impact on the types of activities in 

18 which such institutions, and the holding 

19 companies of such institutions, may engage. 

20 (3) REPORT.—Not later than 18 months after the 

21 date of enactment of this Act, the Comptroller General 

22 shall submit to the Committee on Banking, Housing, 

23 and Urban Affairs of the Senate and the Committee 

24 on Financial Services of the House of Representatives 

25 a report on the study required under paragraph (1). 
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1 SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COM2 PANIES; REGULATION OF FUNCTIONALLY 

3 REGULATED SUBSIDIARIES. 

4 (a) REPORTS BY BANK HOLDING COMPANIES.—Sec5 tions 5(c)(1) of the Bank Holding Company Act of 1956 

6 (12 U.S.C. 1844(c)(1)) is amended— 

7 (1) by striking subparagraph (B) and inserting 

8 the following: 

9 ‘‘(B) USE OF EXISTING REPORTS AND

10 OTHER SUPERVISORY INFORMATION.—The ap11 propriate Federal banking agency for a bank 

12 holding company shall, to the fullest extent pos13 sible, use— 

14 ‘‘(i) reports and other supervisory in15 formation that the bank holding company 

16 or any subsidiary thereof has been required 

17 to provide to other Federal or State regu18 latory agencies; 

19 ‘‘(ii) externally audited financial state20 ments of the bank holding company or sub21 sidiary; 

22 ‘‘(iii) information otherwise available 

23 from Federal or State regulatory agencies; 

24 and 

25 ‘‘(iv) information that is otherwise re26 quired to be reported publicly.’’; and 
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1 (2) by adding at the end the following: 

2 ‘‘(C) AVAILABILITY.—Upon the request of 

3 the appropriate Federal banking agency for a 

4 bank holding company, the bank holding com5 pany or a subsidiary of the bank holding com6 pany shall promptly provide to the appropriate 

7 Federal banking agency any information de8 scribed in clauses (i) through (iii) of subpara9 graph (B).’’. 

10 (b) EXAMINATIONS OF BANK HOLDING COMPANIES.— 

11 Section 5(c)(2) of the Bank Holding Company Act of 1956 

12 (12 U.S.C. 1844(c)(2)) is amended to read as follows: 

13 ‘‘(2) EXAMINATIONS.— 

14 ‘‘(A) IN GENERAL.—The appropriate Fed15 eral banking agency for a bank holding company 

16 may make examinations of the bank holding 

17 company and each subsidiary of the bank hold18 ing company in order to— 

19 ‘‘(i) inform such appropriate Federal 

20 banking agency of— 

21 ‘‘(I) the nature of the operations 

22 and financial condition of the bank 

23 holding company and the subsidiary; 

24 ‘‘(II) the financial, operational, 

25 and other risks within the bank hold-
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1 ing company system that may pose a 

2 threat to— 

3 ‘‘(aa) the safety and sound4 ness of the bank holding company 

5 or of any depository institution 

6 subsidiary of the bank holding 

7 company; or 

8 ‘‘(bb) the stability of the fi9 nancial system of the United 

10 States; and 

11 ‘‘(III) the systems of the bank 

12 holding company for monitoring and 

13 controlling the risks described in sub14 clause (II); and 

15 ‘‘(ii) enforce the compliance of the bank 

16 holding company and the subsidiary with 

17 this Act and any other Federal law that 

18 such appropriate Federal banking agency 

19 has specific jurisdiction to enforce against 

20 the bank holding company or subsidiary. 

21 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI22 NATIONS.—For purposes of this paragraph, the 

23 appropriate Federal banking agency for a bank 

24 holding company shall, to the fullest extent pos25 sible, rely on— 
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1 ‘‘(i) examination reports made by 

2 other Federal or State regulatory agencies 

3 relating to the bank holding company and 

4 any subsidiary of the bank holding com5 pany; and 

6 ‘‘(ii) the reports and other information 

7 required under paragraph (1). 

8 ‘‘(C) COORDINATION WITH OTHER REGU9 LATORS.—The appropriate Federal banking 

10 agency for a bank holding company shall— 

11 ‘‘(i) provide reasonable notice to, and 

12 consult with, the appropriate Federal bank13 ing agency or State regulatory agency of a 

14 subsidiary that is a depository institution 

15 or a functionally regulated subsidiary before 

16 commencing an examination of the sub17 sidiary under this section; and 

18 ‘‘(ii) to the fullest extent possible, avoid 

19 duplication of examination activities, re20 porting requirements, and requests for in21 formation.’’. 

22 (c) AUTHORITY TO REGULATE FUNCTIONALLY REGU23 LATED SUBSIDIARIES OF BANK HOLDING COMPANIES.— 

24 The Bank Holding Company Act of 1956 (12 U.S.C. 1841 

25 et seq.) is amended— 
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1 (1) in section 5(c) (12 U.S.C. 1844(c)), by strik2 ing paragraphs (3) and (4) and inserting the fol3 lowing: 

4 ‘‘(3) [Reserved] 

5 ‘‘(4) [Reserved]’’; and 

6 (2) by striking section 10A (12 U.S.C. 1848a). 

7 (d) ACQUISITIONS OF BANKS.—Section 3(c) of the 

8 Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) 

9 is amended by adding at the end the following: 

10 ‘‘(7) FINANCIAL STABILITY.—In every case, the 

11 appropriate Federal banking agency of a bank hold12 ing company shall take into consideration the extent 

13 to which a proposed acquisition, merger, or consolida14 tion would result in greater or more concentrated 

15 risks to the stability of the United States banking or 

16 financial system.’’. 

17 (e) ACQUISITIONS OF NONBANKS.— 

18 (1) NOTICE PROCEDURES.—Section 4(j)(2)(A) of 

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

20 1843(j)(2)(A)) is amended by striking ‘‘or unsound 

21 banking practices’’ and inserting ‘‘unsound banking 

22 practices, or risk to the stability of the United States 

23 banking or financial system’’. 

24 (2) ACTIVITIES THAT ARE FINANCIAL IN NA25 TURE.—Section 4(k)(6)(B) of the Bank Holding Com-
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1 pany Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is 

2 amended to read as follows: 

3 ‘‘(B) APPROVAL NOT REQUIRED FOR CER4 TAIN FINANCIAL ACTIVITIES.— 

5 ‘‘(i) IN GENERAL.—Except as provided 

6 in clause (ii), a financial holding company 

7 may commence any activity or acquire any 

8 company, pursuant to paragraph (4) or 

9 any regulation prescribed or order issued 

10 under paragraph (5), without prior ap11 proval of the appropriate Federal banking 

12 agency for the financial holding company. 

13 ‘‘(ii) EXCEPTION.—A financial holding 

14 company may not acquire a company, 

15 without the prior approval of the appro16 priate Federal banking agency for the fi17 nancial holding company, in a transaction 

18 in which the total consolidated assets to be 

19 acquired by the financial holding company 

20 exceed $25,000,000,000.’’. 

21 (f) BANK MERGER ACT TRANSACTIONS.—Section 

22 18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 

23 1828(c)(5)) is amended, in the matter immediately fol24 lowing subparagraph (B), by striking ‘‘and the convenience 

25 and needs of the community to be served’’ and inserting 
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1 ‘‘the convenience and needs of the community to be served, 

2 and the risk to the stability of the United States banking 

3 or financial system’’. 

4 (g) REPORTS BY SAVINGS AND LOAN HOLDING COMPA5 NIES.—Section 10(b)(2) of the Home Owners’ Loan Act (12 

6 U.S.C. 1467a(b)(2) is amended— 

7 (1) by striking ‘‘Each savings’’ and inserting the 

8 following: 

9 ‘‘(A) IN GENERAL.—Each savings’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(B) USE OF EXISTING REPORTS AND

12 OTHER SUPERVISORY INFORMATION.—The ap13 propriate Federal banking agency for a savings 

14 and loan holding company shall, to the fullest 

15 extent possible, use— 

16 ‘‘(i) reports and other supervisory in17 formation that the savings and loan holding 

18 company or any subsidiary thereof has been 

19 required to provide to other Federal or 

20 State regulatory agencies; 

21 ‘‘(ii) externally audited financial state22 ments of the savings and loan holding com23 pany or subsidiary; 
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1 ‘‘(iii) information that is otherwise 

2 available from Federal or State regulatory 

3 agencies; and 

4 ‘‘(iv) information that is otherwise re5 quired to be reported publicly. 

6 ‘‘(C) AVAILABILITY.—Upon the request of 

7 the appropriate Federal banking agency for a 

8 savings and loan holding company, the savings 

9 and loan holding company or a subsidiary of the 

10 savings and loan holding company shall prompt11 ly provide to the appropriate Federal banking 

12 agency any information described in clauses (i) 

13 through (iii) of subparagraph (B).’’. 

14 (h) EXAMINATION OF SAVINGS AND LOAN HOLDING

15 COMPANIES.— 

16 (1) DEFINITIONS.—Section 2 of the Home Own17 ers’ Loan Act (12 U.S.C. 1462) is amended by adding 

18 at the end the following: 

19 ‘‘(10) APPROPRIATE FEDERAL BANKING AGEN20 CY.—The term ‘appropriate Federal banking agency’ 

21 has the same meaning as in section 3(q) of the Fed22 eral Deposit Insurance Act (12 U.S.C. 1813(q)). 

23 ‘‘(11) FUNCTIONALLY REGULATED SUB24 SIDIARY.—The term ‘functionally regulated sub25 sidiary’ has the same meaning as in section 5(c)(5) 
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1 of the Bank Holding Company Act of 1956 (12 

2 U.S.C. 1844(c)(5)).’’. 

3 (2) EXAMINATION.—Section 10(b) of the Home 

4 Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended 

5 by striking paragraph (4) and inserting the following: 

6 ‘‘(4) EXAMINATIONS.— 

7 ‘‘(A) IN GENERAL.—The appropriate Fed8 eral banking agency for a savings and loan hold9 ing company may make examinations of the sav10 ings and loan holding company and each sub11 sidiary of the savings and loan holding company 

12 system, in order to— 

13 ‘‘(i) inform such appropriate Federal 

14 banking agency of— 

15 ‘‘(I) the nature of the operations 

16 and financial condition of the savings 

17 and loan holding company and the 

18 subsidiary; 

19 ‘‘(II) the financial, operational, 

20 and other risks within the savings and 

21 loan holding company that may pose a 

22 threat to— 

23 ‘‘(aa) the safety and sound24 ness of the savings and loan hold25 ing company or of any depository 
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1 institution subsidiary of the sav2 ings and loan holding company; 

3 or 

4 ‘‘(bb) the stability of the fi5 nancial system of the United 

6 States; and 

7 ‘‘(III) the systems of the savings 

8 and loan holding company for moni9 toring and controlling the risks de10 scribed in subclause (II); and 

11 ‘‘(ii) enforce the compliance of the sav12 ings and loan holding company and the 

13 subsidiary with this Act and any other Fed14 eral law that such appropriate Federal 

15 banking agency has specific jurisdiction to 

16 enforce against the savings and loan hold17 ing company or subsidiary. 

18 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI19 NATIONS.—For purposes of this subsection, the 

20 appropriate Federal banking agency for a sav21 ings and loan holding company shall, to the full22 est extent possible, rely on— 

23 ‘‘(i) the examination reports made by 

24 other Federal or State regulatory agencies 
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1 relating to the savings and loan holding 

2 company and any subsidiary; and 

3 ‘‘(ii) the reports and other information 

4 required under paragraph (2). 

5 ‘‘(C) COORDINATION WITH OTHER REGU6 LATORS.—The appropriate Federal banking 

7 agency for a savings and loan holding company 

8 shall— 

9 ‘‘(i) provide reasonable notice to, and 

10 consult with, the appropriate Federal bank11 ing agency or State regulatory agency of a 

12 subsidiary that is a depository institution 

13 or a functionally regulated subsidiary before 

14 commencing an examination of the sub15 sidiary under this section; and 

16 ‘‘(ii) to the fullest extent possible, avoid 

17 duplication of examination activities, re18 porting requirements, and requests for in19 formation.’’. 

20 (i) EFFECTIVE DATE.—The amendments made by this 

21 section shall take effect on the transfer date. 
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1 SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMIS2 SIBLE ACTIVITIES OF DEPOSITORY INSTITU3 TION SUBSIDIARIES OF HOLDING COMPA4 NIES. 

5 Section 6 of the Bank Holding Company Act of 1956 

6 (12 U.S.C. 1845) is amended to read as follows: 

7 ‘‘SEC. 6. ASSURING CONSISTENT OVERSIGHT OF PERMIS8 SIBLE ACTIVITIES OF DEPOSITORY INSTITU9 TION SUBSIDIARIES OF HOLDING COMPA10 NIES. 

11 ‘‘(a) DEFINITIONS.— 

12 ‘‘(1) DEFINITIONS.—In this section— 

13 ‘‘(A) the term ‘depository institution hold14 ing company’ has the same meaning as in sec15 tion 3(w) of the Federal Deposit Insurance Act 

16 (12 U.S.C. 1813(w)); 

17 ‘‘(B) the term ‘functionally regulated sub18 sidiary’ has the same meaning as in section 

19 5(c)(5); and 

20 ‘‘(C) the term ‘lead Federal banking agency’ 

21 means— 

22 ‘‘(i) the Office of the Comptroller of the 

23 Currency, in the case of any depository in24 stitution holding company having— 

25 ‘‘(I) a subsidiary that is an in26 sured depository institution, if all such 
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1 insured depository institutions are 

2 Federal depository institutions; or 

3 ‘‘(II) a subsidiary that is a Fed4 eral depository institution and a sub5 sidiary that is a State depository in6 stitution, if the total consolidated as7 sets of all subsidiaries that are Federal 

8 depository institutions exceed the total 

9 consolidated assets of all subsidiaries 

10 that are State depository institutions; 

11 and 

12 ‘‘(ii) the Federal Deposit Insurance 

13 Corporation, in the case of any depository 

14 institution holding company having— 

15 ‘‘(I) a subsidiary that is an in16 sured depository institution, if all such 

17 insured depository institutions are 

18 State depository institutions; or 

19 ‘‘(II) a subsidiary that is a Fed20 eral depository institution and a sub21 sidiary that is a State depository in22 stitution, if the total consolidated as23 sets of all subsidiaries that are State 

24 depository institutions exceed the total 

25 consolidated assets of all subsidiaries 
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1 that are Federal depository institu2 tions. 

3 ‘‘(2) DETERMINATION OF TOTAL CONSOLIDATED

4 ASSETS.—For purposes of paragraph (1)(A), the total 

5 consolidated assets of a depository institution shall be 

6 determined in the same manner that total consoli7 dated assets of depository institutions are determined 

8 for purposes of section 3(q) of the Federal Deposit In9 surance Act (12 U.S.C. 1813(q)). 

10 ‘‘(b) LEAD AGENCY SUPERVISION.— 

11 ‘‘(1) IN GENERAL.—The lead Federal banking 

12 agency for each depository institution holding com13 pany shall make examinations of the activities of each 

14 nondepository institution subsidiary (other than a 

15 functionally regulated subsidiary) of the depository 

16 institution holding company that are permissible for 

17 depository institution subsidiaries of the depository 

18 institution holding company, to determine whether 

19 the activities— 

20 ‘‘(A) present safety and soundness risks to 

21 any depository institution subsidiary of the de22 pository institution holding company; 

23 ‘‘(B) are conducted in accordance with ap24 plicable law; and 
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1 ‘‘(C) are subject to appropriate systems for 

2 monitoring and controlling the financial, oper3 ating, and other risks of the activity and pro4 tecting the depository institution subsidiaries of 

5 the holding company. 

6 ‘‘(2) PROCESS FOR EXAMINATION.—An examina7 tion under paragraph (1) shall be carried out under 

8 the authority of the lead Federal banking agency, as 

9 if the nondepository institution subsidiary were an 

10 insured depository institution for which the lead Fed11 eral banking agency is the appropriate Federal bank12 ing agency. 

13 ‘‘(c) COORDINATION.—For each depository institution 

14 holding company for which the Board of Governors is the 

15 appropriate Federal banking agency, the lead Federal bank16 ing agency of the depository institution holding company 

17 shall coordinate the supervision of the activities of subsidi18 aries described in subsection (b) with the Board of Gov19 ernors, in a manner that— 

20 ‘‘(1) avoids duplication; 

21 ‘‘(2) shares information relevant to the super22 vision of the depository institution holding company 

23 by each agency; 

24 ‘‘(3) achieves the objectives of subsection (b); and 
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1 ‘‘(4) ensures that the depository institution hold2 ing company and the subsidiaries of the depository 

3 institution holding company are not subject to con4 flicting supervisory demands by the 2 agencies. 

5 ‘‘(d) REFERRALS FOR ENFORCEMENT.— 

6 ‘‘(1) RECOMMENDATION OF ACTION BY BOARD OF

7 GOVERNORS.—The lead Federal banking agency for a 

8 depository institution holding company, based on in9 formation obtained pursuant to the responsibilities of 

10 the agency under subsection (b), may submit to the 

11 Board of Governors, in writing, a recommendation 

12 that the Board of Governors take enforcement action 

13 against a nondepository institution subsidiary (other 

14 than a functionally regulated subsidiary) of the de15 pository institution holding company, together with 

16 an explanation of the concerns giving rise to the rec17 ommendation. 

18 ‘‘(2) BACK-UP AUTHORITY OF THE LEAD FED19 ERAL BANKING AGENCY.—If, within the 60-day period 

20 beginning on the date on which the Board of Gov21 ernors receives a recommendation under paragraph 

22 (1), the Board of Governors does not take enforcement 

23 action against a nondepository institution subsidiary 

24 or provide a plan for enforcement action that is ac25 ceptable to the lead Federal banking agency, the lead 
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1 Federal banking agency (upon the authorization of 

2 the Comptroller, or the Federal Deposit Insurance 

3 Corporation, upon a vote of its members, as applica4 ble) may take the recommended enforcement action, in 

5 the same manner as if the subsidiary were an insured 

6 depository institution for which the lead Federal 

7 banking agency is the appropriate Federal banking 

8 agency.’’. 

9 SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COM10 PANIES TO REMAIN WELL CAPITALIZED AND 

11 WELL MANAGED. 

12 (a) AMENDMENT.—Section 4(l)(1) of the Bank Hold13 ing Company Act of 1956 (12 U.S.C. 1843(l)(1)) is amend14 ed— 

15 (1) in subparagraph (B), by striking ‘‘and’’ at 

16 the end; 

17 (2) by redesignating subparagraph (C) as sub18 paragraph (D); 

19 (3) by inserting after subparagraph (B) the fol20 lowing: 

21 ‘‘(C) the bank holding company is well cap22 italized and well managed; and’’; and 

23 (4) in subparagraph (D)(ii), as so redesignated, 

24 by striking ‘‘subparagraphs (A) and (B)’’ and insert25 ing ‘‘subparagraphs (A), (B), and (C)’’. 
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1 (b) EFFECTIVE DATE.—The amendments made by this 

2 section shall take effect on the transfer date. 

3 SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS. 

4 (a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of 

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

6 1842(d)(1)(A)) is amended by striking ‘‘adequately capital7 ized and adequately managed’’ and inserting ‘‘well capital8 ized and well managed’’. 

9 (b) INTERSTATE BANK MERGERS.—Section 

10 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 

11 1831u(b)(4)(B)) is amended by striking ‘‘will continue to 

12 be adequately capitalized and adequately managed’’ and in13 serting ‘‘will be well capitalized and well managed’’. 

14 (c) EFFECTIVE DATE.—The amendments made by this 

15 section shall take effect on the transfer date. 

16 SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK 

17 TRANSACTIONS WITH AFFILIATES. 

18 (a) AFFILIATE TRANSACTIONS.—Section 23A of the 

19 Federal Reserve Act (12 U.S.C. 371c) is amended— 

20 (1) in subsection (b)— 

21 (A) in paragraph (1), by striking subpara22 graph (D) and inserting the following: 

23 ‘‘(D) any investment fund with respect to 

24 which a member bank or affiliate thereof is an 

25 investment adviser; and’’; and 
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1 (B) in paragraph (7)— 

2 (i) in subparagraph (A), by inserting 

3 before the semicolon at the end the fol4 lowing: ‘‘, including a purchase of assets 

5 subject to an agreement to repurchase’’; 

6 (ii) in subparagraph (C), by striking 

7 ‘‘, including assets subject to an agreement 

8 to repurchase,’’; 

9 (iii) in subparagraph (D)— 

10 (I) by inserting ‘‘or other debt ob11 ligations’’ after ‘‘acceptance of securi12 ties’’; and 

13 (II) by striking ‘‘or’’ at the end; 

14 and 

15 (iv) by adding at the end the following: 

16 ‘‘(F) a transaction with an affiliate that in17 volves the borrowing or lending of securities, to 

18 the extent that the transaction causes a member 

19 bank or a subsidiary to have credit exposure to 

20 the affiliate; or 

21 ‘‘(G) a derivative transaction, as defined in 

22 paragraph (3) of section 5200(b) of the Revised 

23 Statutes of the United States (12 U.S.C. 84(b)), 

24 with an affiliate, to the extent that the trans-
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1 action causes a member bank or a subsidiary to 

2 have credit exposure to the affiliate;’’; 

3 (2) in subsection (c)— 

4 (A) in paragraph (1)— 

5 (i) in the matter preceding subpara6 graph (A), by striking ‘‘subsidiary’’ and all 

7 that follows through ‘‘time of the trans8 action’’ and inserting ‘‘subsidiary, and any 

9 credit exposure of a member bank or a sub10 sidiary to an affiliate resulting from a secu11 rities borrowing or lending transaction, or 

12 a derivative transaction, shall be secured at 

13 all times’’; and 

14 (ii) in each of subparagraphs (A) 

15 through (D), by striking ‘‘or letter of credit’’ 

16 and inserting ‘‘letter of credit, or credit ex17 posure’’; 

18 (B) by striking paragraph (2); 

19 (C) by redesignating paragraphs (3) 

20 through (5) as paragraphs (2) through (4), re21 spectively; 

22 (D) in paragraph (2), as so redesignated, by 

23 inserting before the period at the end ‘‘, or credit 

24 exposure to an affiliate resulting from a securi-
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1 ties borrowing or lending transaction, or deriva2 tive transaction’’; and 

3 (E) in paragraph (3), as so redesignated— 

4 (i) by inserting ‘‘or other debt obliga5 tions’’ after ‘‘securities’’; and 

6 (ii) by striking ‘‘or guarantee’’ and all 

7 that follows through ‘‘behalf of,’’ and insert8 ing ‘‘guarantee, acceptance, or letter of cred9 it issued on behalf of, or credit exposure 

10 from a securities borrowing or lending 

11 transaction, or derivative transaction to,’’; 

12 (3) in subsection (d)(4), in the matter preceding 

13 subparagraph (A), by striking ‘‘or issuing’’ and all 

14 that follows through ‘‘behalf of,’’ and inserting 

15 ‘‘issuing a guarantee, acceptance, or letter of credit on 

16 behalf of, or having credit exposure resulting from a 

17 securities borrowing or lending transaction, or deriva18 tive transaction to,’’; and 

19 (4) in subsection (f)— 

20 (A) in paragraph (2)— 

21 (i) by striking ‘‘or order’’; 

22 (ii) by striking ‘‘if it finds’’ and all 

23 that follows through the end of the para24 graph and inserting the following: ‘‘if— 
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1 ‘‘(i) the Board finds the exemption to 

2 be in the public interest and consistent with 

3 the purposes of this section, and notifies the 

4 Federal Deposit Insurance Corporation of 

5 such finding; and 

6 ‘‘(ii) before the end of the 60-day pe7 riod beginning on the date on which the 

8 Federal Deposit Insurance Corporation re9 ceives notice of the finding under clause (i), 

10 the Federal Deposit Insurance Corporation 

11 does not object, in writing, to the finding, 

12 based on a determination that the exemp13 tion presents an unacceptable risk to the 

14 Deposit Insurance Fund.’’; 

15 (iii) by striking the Board and insert16 ing the following: 

17 ‘‘(A) IN GENERAL.—The Board’’; and 

18 (iv) by adding at the end the following: 

19 ‘‘(B) ADDITIONAL EXEMPTIONS.— 

20 ‘‘(i) NATIONAL BANKS.—The Comp21 troller of the Currency may, by order, ex22 empt a transaction of a national bank from 

23 the requirements of this section if— 

24 ‘‘(I) the Board and the Office of 

25 the Comptroller of the Currency jointly 
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1 find the exemption to be in the public 

2 interest and consistent with the pur3 poses of this section and notify the 

4 Federal Deposit Insurance Corporation 

5 of such finding; and 

6 ‘‘(II) before the end of the 60-day 

7 period beginning on the date on which 

8 the Federal Deposit Insurance Cor9 poration receives notice of the finding 

10 under subclause (I), the Federal De11 posit Insurance Corporation does not 

12 object, in writing, to the finding, based 

13 on a determination that the exemption 

14 presents an unacceptable risk to the 

15 Deposit Insurance Fund. 

16 ‘‘(ii) STATE BANKS.—The Federal De17 posit Insurance Corporation may, by order, 

18 exempt a transaction of a State nonmember 

19 bank, and the Board may, by order, exempt 

20 a transaction of a State member bank, from 

21 the requirements of this section if— 

22 ‘‘(I) the Board and the Federal 

23 Deposit Insurance Corporation jointly 

24 find that the exemption is in the public 
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1 interest and consistent with the pur2 poses of this section; and 

3 ‘‘(II) the Federal Deposit Insur4 ance Corporation finds that the exemp5 tion does not present an unacceptable 

6 risk to the Deposit Insurance Fund.’’; 

7 and 

8 (B) by adding at the end the following: 

9 ‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.— 

10 The Board may issue such regulations or interpreta11 tions as the Board determines are necessary or appro12 priate with respect to the manner in which a netting 

13 agreement may be taken into account in determining 

14 the amount of a covered transaction between a mem15 ber bank or a subsidiary and an affiliate, including 

16 the extent to which netting agreements between a 

17 member bank or a subsidiary and an affiliate may be 

18 taken into account in determining whether a covered 

19 transaction is fully secured for purposes of subsection 

20 (d)(4). An interpretation under this paragraph with 

21 respect to a specific member bank, subsidiary, or affil22 iate shall be issued jointly with the appropriate Fed23 eral banking agency for such member bank, sub24 sidiary, or affiliate.’’. 
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1 (b) TRANSACTIONS WITH AFFILIATES.—Section 

2 23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e)) is 

3 amended— 

4 (1) by striking the undesignated matter following 

5 subparagraph (B); 

6 (2) by redesignating subparagraphs (A) and (B) 

7 as clauses (i) and (ii), respectively, and adjusting the 

8 clause margins accordingly; 

9 (3) by redesignating paragraphs (1) and (2) as 

10 subparagraphs (A) and (B), respectively, and adjust11 ing the subparagraph margins accordingly; 

12 (4) by striking ‘‘The Board’’ and inserting the 

13 following: 

14 ‘‘(1) IN GENERAL.—The Board’’; 

15 (5) in paragraph (1)(B), as so redesignated— 

16 (A) in the matter preceding clause (i), by 

17 inserting before ‘‘regulations’’ the following: 

18 ‘‘subject to paragraph (2), if the Board finds 

19 that an exemption or exclusion is in the public 

20 interest and is consistent with the purposes of 

21 this section, and notifies the Federal Deposit In22 surance Corporation of such finding,’’; and 

23 (B) in clause (ii), by striking the comma at 

24 the end and inserting a period; and 

25 (6) by adding at the end the following: 
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1 ‘‘(2) EXCEPTION.—The Board may grant an ex2 emption or exclusion under this subsection only if, 

3 during the 60-day period beginning on the date of re4 ceipt of notice of the finding from the Board under 

5 paragraph (1)(B), the Federal Deposit Insurance Cor6 poration does not object, in writing, to such exemp7 tion or exclusion, based on a determination that the 

8 exemption presents an unacceptable risk to the De9 posit Insurance Fund.’’. 

10 (c) HOME OWNERS’ LOAN ACT.—Section 11 of the 

11 Home Owners’ Loan Act (12 U.S.C. 1468) is amended by 

12 adding at the end the following: 

13 ‘‘(d) EXEMPTIONS.— 

14 ‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The 

15 Comptroller of the Currency may, by order, exempt a 

16 transaction of a Federal savings association from the 

17 requirements of this section if— 

18 ‘‘(A) the Board and the Office of the Comp19 troller of the Currency jointly find the exemption 

20 to be in the public interest and consistent with 

21 the purposes of this section and notify the Fed22 eral Deposit Insurance Corporation of such find23 ing; and 

24 ‘‘(B) before the end of the 60-day period be25 ginning on the date on which the Federal De-
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1 posit Insurance Corporation receives notice of the 

2 finding under subparagraph (A), the Federal De3 posit Insurance Corporation does not object, in 

4 writing, to the finding, based on a determination 

5 that the exemption presents an unacceptable risk 

6 to the Deposit Insurance Fund. 

7 ‘‘(2) STATE SAVINGS ASSOCIATION.—The Federal 

8 Deposit Insurance Corporation may, by order, exempt 

9 a transaction of a State savings association from the 

10 requirements of this section if the Board and the Fed11 eral Deposit Insurance Corporation jointly find 

12 that— 

13 ‘‘(A) the exemption is in the public interest 

14 and consistent with the purposes of this section; 

15 and 

16 ‘‘(B) the exemption does not present an un17 acceptable risk to the Deposit Insurance Fund.’’. 

18 (d) EFFECTIVE DATE.—The amendments made by this 

19 section shall take effect 1 year after the transfer date. 

20 SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS 

21 WITH FINANCIAL SUBSIDIARIES. 

22 (a) AMENDMENT.—Section 23A(e) of the Federal Re23 serve Act (12 U.S.C. 371c(e)) is amended— 

24 (1) by striking paragraph (3); and 
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1 (2) by redesignating paragraph (4) as para2 graph (3). 

3 (b) PROSPECTIVE APPLICATION OF AMENDMENT.—The 

4 amendments made by this section shall apply with respect 

5 to any covered transaction between a bank and a subsidiary 

6 of the bank, as those terms are defined in section 23A of 

7 the Federal Reserve Act (12 U.S.C. 371c), that is entered 

8 into on or after the date of enactment of this Act. 

9 (c) EFFECTIVE DATE.—The amendments made by this 

10 section shall take effect 1 year after the transfer date. 

11 SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPO12 SURE ON DERIVATIVE TRANSACTIONS, RE13 PURCHASE AGREEMENTS, REVERSE REPUR14 CHASE AGREEMENTS, AND SECURITIES LEND15 ING AND BORROWING TRANSACTIONS. 

16 (a) NATIONAL BANKS.—Section 5200(b) of the Revised 

17 Statutes of the United States (12 U.S.C. 84(b)) is amend18 ed— 

19 (1) in paragraph (1), by striking ‘‘shall include’’ 

20 and all that follows through the end of the paragraph 

21 and inserting the following: ‘‘shall include— 

22 ‘‘(A) all direct or indirect advances of funds 

23 to a person made on the basis of any obligation 

24 of that person to repay the funds or repayable 
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1 from specific property pledged by or on behalf of 

2 the person; 

3 ‘‘(B) to the extent specified by the Comp4 troller of the Currency, any liability of a na5 tional banking association to advance funds to 

6 or on behalf of a person pursuant to a contrac7 tual commitment; and 

8 ‘‘(C) any credit exposure to a person aris9 ing from a derivative transaction, repurchase 

10 agreement, reverse repurchase agreement, securi11 ties lending transaction, or securities borrowing 

12 transaction between the national banking asso13 ciation and the person;’’; 

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

15 the end and inserting ‘‘; and’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(3) the term ‘derivative transaction’ includes 

18 any transaction that is a contract, agreement, swap, 

19 warrant, note, or option that is based, in whole or in 

20 part, on the value of, any interest in, or any quan21 titative measure or the occurrence of any event relat22 ing to, one or more commodities, securities, cur23 rencies, interest or other rates, indices, or other as24 sets.’’. 
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1 (b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the 

2 Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended 

3 by striking ‘‘Director’’ each place that term appears and 

4 inserting ‘‘Comptroller of the Currency’’. 

5 (c) EFFECTIVE DATE.—The amendments made by this 

6 section shall take effect 1 year after the transfer date. 

7 SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIM8 ITS TO INSURED STATE BANKS. 

9 (a) AMENDMENT.—Section 18 of the Federal Deposit 

10 Insurance Act (12 U.S.C. 1828) is amended by adding at 

11 the end the following: 

12 ‘‘(y) APPLICATION OF LENDING LIMITS TO INSURED

13 STATE BANKS.—Section 5200 of the Revised Statutes of the 

14 United States (12 U.S.C. 84) shall apply to each insured 

15 State bank, in the same manner and to the same extent 

16 as if the insured State bank were a national banking asso17 ciation.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by this 

19 section shall take effect 1 year after the transfer date. 

20 SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED 

21 BANKS. 

22 (a) CONVERSION OF A NATIONAL BANKING ASSOCIA23 TION TO A STATE BANK.—The Act entitled ‘‘An Act to pro24 vide for the conversion of national banking associations into 

25 and their merger or consolidation with State banks, and 
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† HR 4173 EAS 

1 for other purposes.’’ (12 U.S.C. 214 et seq.) is amended by 

2 adding at the end the following: 

3 ‘‘SEC. 10. PROHIBITION ON CONVERSION. 

4 ‘‘A national banking association may not convert to 

5 a State bank or State savings association during any pe6 riod in which the national banking association is subject 

7 to a cease and desist order (or other formal enforcement 

8 order) issued by, or a memorandum of understanding en9 tered into with, the Comptroller of the Currency with re10 spect to a significant supervisory matter.’’. 

11 (b) CONVERSION OF A STATE BANK TO A NATIONAL

12 BANK.—Section 5154 of the Revised Statutes of the United 

13 States (12 U.S.C. 35) is amended by adding at the end the 

14 following: ‘‘The Comptroller of the Currency may not ap15 prove the conversion of a State bank or State savings asso16 ciation to a national banking association during any pe17 riod in which the State bank or State savings association 

18 is subject to a cease and desist order (or other formal en19 forcement order) issued by, or a memorandum of under20 standing entered into with, a State bank supervisor or the 

21 appropriate Federal banking agency with respect to a sig22 nificant supervisory matter.’’. 

23 (c) CONVERSION OF A FEDERAL SAVINGS ASSOCIATION

24 TO A NATIONAL OR STATE BANK OR STATE SAVINGS ASSO25 CIATION.—Section 5(i) of the Home Owners’ Loan Act (12 
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† HR 4173 EAS 

1 U.S.C. 1464(i)) is amended by adding at the end the fol2 lowing: 

3 ‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY

4 FEDERAL SAVINGS ASSOCIATIONS.—A Federal savings 

5 association may not convert to a national bank or 

6 State bank or State savings association during any 

7 period in which the Federal savings association is 

8 subject to a cease and desist order (or other formal en9 forcement order) issued by, or a memorandum of un10 derstanding entered into with, the Office of Thrift Su11 pervision or the Comptroller of the Currency with re12 spect to a significant supervisory matter.’’. 

13 SEC. 613. DE NOVO BRANCHING INTO STATES. 

14 (a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the 

15 Revised Statutes of the United States (12 U.S.C. 

16 36(g)(1)(A)) is amended to read as follows: 

17 ‘‘(A) the law of the State in which the 

18 branch is located, or is to be located, would per19 mit establishment of the branch, if the national 

20 bank were a State bank chartered by such State; 

21 and’’. 

22 (b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) 

23 of the Federal Deposit Insurance Act (12 U.S.C. 

24 1828(d)(4)(A)(i)) is amended to read as follows: 
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1 ‘‘(i) the law of the State in which the 

2 branch is located, or is to be located, would 

3 permit establishment of the branch, if the 

4 bank were a State bank chartered by such 

5 State; and’’. 

6 SEC. 614. LENDING LIMITS TO INSIDERS. 

7 (a) EXTENSIONS OF CREDIT.—Section 22(h)(9)(D)(i) 

8 of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is 

9 amended— 

10 (1) by striking the period at the end and insert11 ing ‘‘; or’’; 

12 (2) by striking ‘‘a person’’ and inserting ‘‘the 

13 person’’; 

14 (3) by striking ‘‘extends credit by making’’ and 

15 inserting the following: ‘‘extends credit to a person 

16 by— 

17 ‘‘(I) making’’; and 

18 (4) by adding at the end the following: 

19 ‘‘(II) having credit exposure to the 

20 person arising from a derivative trans21 action (as defined in section 5200(b) of 

22 the Revised Statutes of the United 

23 States (12 U.S.C. 84(b))), repurchase 

24 agreement, reverse repurchase agree25 ment, securities lending transaction, or 
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1 securities borrowing transaction be2 tween the member bank and the per3 son.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by this 

5 section shall take effect 1 year after the transfer date. 

6 SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM 

7 INSIDERS. 

8 (a) AMENDMENT TO THE FEDERAL DEPOSIT INSUR9 ANCE ACT.—Section 18 of the Federal Deposit Insurance 

10 Act (12 U.S.C. 1828) is amended by adding at the end the 

11 following: 

12 ‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.— 

13 ‘‘(1) IN GENERAL.—An insured depository insti14 tution may not purchase an asset from, or sell an 

15 asset to, an executive officer, director, or principal 

16 shareholder of the insured depository institution, or 

17 any related interest of such person (as such terms are 

18 defined in section 22(h) of Federal Reserve Act), un19 less— 

20 ‘‘(A) the transaction is on market terms; 

21 and 

22 ‘‘(B) if the transaction represents more than 

23 10 percent of the capital stock and surplus of the 

24 insured depository institution, the transaction 

25 has been approved in advance by a majority of 
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1 the members of the board of directors of the in2 sured depository institution who do not have an 

3 interest in the transaction. 

4 ‘‘(2) RULEMAKING.—The Board of Governors of 

5 the Federal Reserve System may issue such rules as 

6 may be necessary to define terms and to carry out the 

7 purposes this subsection. Before proposing or adopting 

8 a rule under this paragraph, the Board of Governors 

9 of the Federal Reserve System shall consult with the 

10 Comptroller of the Currency and the Corporation as 

11 to the terms of the rule.’’. 

12 (b) AMENDMENTS TO THE FEDERAL RESERVE ACT.— 

13 Section 22(d) of the Federal Reserve Act (12 U.S.C. 375) 

14 is amended to read as follows: 

15 ‘‘(d) [Reserved]’’. 

16 (c) EFFECTIVE DATE.—The amendments made by this 

17 section shall take effect on the transfer date. 

18 SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF 

19 HOLDING COMPANIES. 

20 (a) CAPITAL LEVELS OF BANK HOLDING COMPA21 NIES.—Section 5(b) of the Bank Holding Company Act of 

22 1956 (12 U.S.C. 1844(b)) is amended by inserting after 

23 ‘‘regulations’’ the following: ‘‘(including regulations relat24 ing to the capital requirements of bank holding compa25 nies)’’. 
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1 (b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLDING

2 COMPANIES.—Section 10(g)(1) of the Home Owners’ Loan 

3 Act (12 U.S.C. 1467a(g)(1)) is amended by inserting after 

4 ‘‘orders’’ the following: ‘‘(including regulations relating to 

5 capital requirements for savings and loan holding compa6 nies)’’. 

7 (c) SOURCE OF STRENGTH.—The Federal Deposit In8 surance Act (12 U.S.C. 1811 et seq.) is amended by insert9 ing after section 38 (12 U.S.C. 1831o) the following: 

10 ‘‘SEC. 38A. SOURCE OF STRENGTH. 

11 ‘‘(a) HOLDING COMPANIES.—The appropriate Federal 

12 banking agency for a bank holding company or savings and 

13 loan holding company shall require the bank holding com14 pany or savings and loan holding company to serve as a 

15 source of financial strength for any subsidiary of the bank 

16 holding company or savings and loan holding company 

17 that is a depository institution. 

18 ‘‘(b) OTHER COMPANIES.—If an insured depository 

19 institution is not the subsidiary of a bank holding company 

20 or savings and loan holding company, the appropriate Fed21 eral banking agency for the insured depository institution 

22 shall require any company that directly or indirectly con23 trols the insured depository institution to serve as a source 

24 of financial strength for such institution. 
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† HR 4173 EAS 

1 ‘‘(c) REPORTS.—The appropriate Federal banking 

2 agency for an insured depository institution described in 

3 subsection (b) may, from time to time, require the company, 

4 or a company that directly or indirectly controls the in5 sured depository institution to submit a report, under oath, 

6 for the purposes of— 

7 ‘‘(1) assessing the ability of such company to 

8 comply with the requirement under subsection (b); 

9 and 

10 ‘‘(2) enforcing the compliance of such company 

11 with the requirement under subsection (b). 

12 ‘‘(d) RULES.—Not later than 1 year after the transfer 

13 date, as defined in section 311 of the Enhancing Financial 

14 Institution Safety and Soundness Act of 2010, the appro15 priate Federal banking agencies shall jointly issue final 

16 rules to carry out this section. 

17 ‘‘(e) DEFINITION.—In this section, the term ‘source of 

18 financial strength’ means the ability of a company that di19 rectly or indirectly owns or controls an insured depository 

20 institution to provide financial assistance to such insured 

21 depository institution in the event of the financial distress 

22 of the insured depository institution.’’. 

23 (d) EFFECTIVE DATE.—The amendments made by this 

24 section shall take effect on the transfer date. 
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† HR 4173 EAS 

1 SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK 

2 HOLDING COMPANY FRAMEWORK. 

3 (a) AMENDMENT.—Section 17 of the Securities Ex4 change Act of 1934 (15 U.S.C. 78q) is amended— 

5 (1) by striking subsection (i); and 

6 (2) by redesignating subsections (j) and (k) as 

7 subsections (i) and (j), respectively. 

8 (b) EFFECTIVE DATE.—The amendments made by this 

9 section shall take effect on the transfer date. 

10 SEC. 618. SECURITIES HOLDING COMPANIES. 

11 (a) DEFINITIONS.—In this section— 

12 (1) the term ‘‘associated person of a securities 

13 holding company’’ means a person directly or indi14 rectly controlling, controlled by, or under common 

15 control with, a securities holding company; 

16 (2) the term ‘‘foreign bank’’ has the same mean17 ing as in section 1(b)(7) of the International Banking 

18 Act of 1978 (12 U.S.C. 3101(b)(7)); 

19 (3) the term ‘‘insured bank’’ has the same mean20 ing as in section 3 of the Federal Deposit Insurance 

21 Act (12 U.S.C. 1813); 

22 (4) the term ‘‘securities holding company’’— 

23 (A) means— 

24 (i) a person (other than a natural per25 son) that owns or controls 1 or more brokers 
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† HR 4173 EAS 

1 or dealers registered with the Commission; 

2 and 

3 (ii) the associated persons of a person 

4 described in clause (i); and 

5 (B) does not include a person that is— 

6 (i) a nonbank financial company su7 pervised by the Board under title I; 

8 (ii) an affiliate of an insured bank 

9 (other than an institution described in sub10 paragraphs (D), (F), or (H) of section 

11 2(c)(2) of the Bank Holding Company Act 

12 of 1956 (12 U.S.C. 1841(c)(2)) or an affil13 iate of a savings association; 

14 (iii) a foreign bank, foreign company, 

15 or company that is described in section 8(a) 

16 of the International Banking Act of 1978 

17 (12 U.S.C. 3106(a)); 

18 (iv) a foreign bank that controls, di19 rectly or indirectly, a corporation chartered 

20 under section 25A of the Federal Reserve 

21 Act (12 U.S.C. 611 et seq.); or 

22 (v) subject to comprehensive consoli23 dated supervision by a foreign regulator; 

24 (5) the term ‘‘supervised securities holding com25 pany’’ means a securities holding company that is su-
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1 pervised by the Board of Governors under this section; 

2 and 

3 (6) the terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding 

4 company’’, ‘‘company’’, ‘‘control’’, ‘‘savings associa5 tion’’, and ‘‘subsidiary’’ have the same meanings as 

6 in section 2 of the Bank Holding Company Act of 

7 1956. 

8 (b) SUPERVISION OF A SECURITIES HOLDING COM9 PANY NOT HAVING A BANK OR SAVINGS ASSOCIATION AF10 FILIATE.— 

11 (1) IN GENERAL.—A securities holding company 

12 that is required by a foreign regulator or provision of 

13 foreign law to be subject to comprehensive consoli14 dated supervision may register with the Board of 

15 Governors under paragraph (2) to become a super16 vised securities holding company. Any securities hold17 ing company filing such a registration shall be super18 vised in accordance with this section, and shall com19 ply with the rules and orders prescribed by the Board 

20 of Governors applicable to supervised securities hold21 ing companies. 

22 (2) REGISTRATION AS A SUPERVISED SECURI23 TIES HOLDING COMPANY.— 

24 (A) REGISTRATION.—A securities holding 

25 company that elects to be subject to comprehen-
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1 sive consolidated supervision shall register by fil2 ing with the Board of Governors such informa3 tion and documents as the Board of Governors, 

4 by regulation, may prescribe as necessary or ap5 propriate in furtherance of the purposes of this 

6 section. 

7 (B) EFFECTIVE DATE.—A securities holding 

8 company that registers under subparagraph (A) 

9 shall be deemed to be a supervised securities 

10 holding company, effective on the date that is 45 

11 days after the date of receipt of the registration 

12 information and documents under subparagraph 

13 (A) by the Board of Governors, or within such 

14 shorter period as the Board of Governors, by rule 

15 or order, may determine. 

16 (c) SUPERVISION OF SECURITIES HOLDING COMPA17 NIES.— 

18 (1) RECORDKEEPING AND REPORTING.— 

19 (A) RECORDKEEPING AND REPORTING RE20 QUIRED.—Each supervised securities holding 

21 company and each affiliate of a supervised secu22 rities holding company shall make and keep for 

23 periods determined by the Board of Governors 

24 such records, furnish copies of such records, and 

25 make such reports, as the Board of Governors de-
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1 termines to be necessary or appropriate to carry 

2 out this section, to prevent evasions thereof, and 

3 to monitor compliance by the supervised securi4 ties holding company or affiliate with applicable 

5 provisions of law. 

6 (B) FORM AND CONTENTS.— 

7 (i) IN GENERAL.—Any record or report 

8 required to be made, furnished, or kept 

9 under this paragraph shall— 

10 (I) be prepared in such form and 

11 according to such specifications (in12 cluding certification by a registered 

13 public accounting firm), as the Board 

14 of Governors may require; and 

15 (II) be provided promptly to the 

16 Board of Governors at any time, upon 

17 request by the Board of Governors. 

18 (ii) CONTENTS.—Records and reports 

19 required to be made, furnished, or kept 

20 under this paragraph may include— 

21 (I) a balance sheet or income 

22 statement of the supervised securities 

23 holding company or an affiliate of a 

24 supervised securities holding company; 
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1 (II) an assessment of the consoli2 dated capital and liquidity of the su3 pervised securities holding company; 

4 (III) a report by an independent 

5 auditor attesting to the compliance of 

6 the supervised securities holding com7 pany with the internal risk manage8 ment and internal control objectives of 

9 the supervised securities holding com10 pany; and 

11 (IV) a report concerning the ex12 tent to which the supervised securities 

13 holding company or affiliate has com14 plied with the provisions of this section 

15 and any regulations prescribed and or16 ders issued under this section. 

17 (2) USE OF EXISTING REPORTS.— 

18 (A) IN GENERAL.—The Board of Governors 

19 shall, to the fullest extent possible, accept reports 

20 in fulfillment of the requirements of this para21 graph that a supervised securities holding com22 pany or an affiliate of a supervised securities 

23 holding company has been required to provide to 

24 another regulatory agency or a self-regulatory 

25 organization. 
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1 (B) AVAILABILITY.—A supervised securities 

2 holding company or an affiliate of a supervised 

3 securities holding company shall promptly pro4 vide to the Board of Governors, at the request of 

5 the Board of Governors, any report described in 

6 subparagraph (A), as permitted by law. 

7 (3) EXAMINATION AUTHORITY.— 

8 (A) FOCUS OF EXAMINATION AUTHORITY.— 

9 The Board of Governors may make examinations 

10 of any supervised securities holding company 

11 and any affiliate of a supervised securities hold12 ing company to carry out this subsection, to pre13 vent evasions thereof, and to monitor compliance 

14 by the supervised securities holding company or 

15 affiliate with applicable provisions of law. 

16 (B) DEFERENCE TO OTHER EXAMINA17 TIONS.—For purposes of this subparagraph, the 

18 Board of Governors shall, to the fullest extent 

19 possible, use the reports of examination made by 

20 other appropriate Federal or State regulatory 

21 authorities with respect to any functionally regu22 lated subsidiary or any institution described in 

23 subparagraph (D), (F), or (H) of section 2(c)(2) 

24 of the Bank Holding Company Act of 1956 (12 

25 U.S.C. 1841(c)(2)). 
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1 (d) CAPITAL AND RISK MANAGEMENT.— 

2 (1) IN GENERAL.—The Board of Governors shall, 

3 by regulation or order, prescribe capital adequacy 

4 and other risk management standards for supervised 

5 securities holding companies that are appropriate to 

6 protect the safety and soundness of the supervised se7 curities holding companies and address the risks 

8 posed to financial stability by supervised securities 

9 holding companies. 

10 (2) DIFFERENTIATION.—In imposing standards 

11 under this subsection, the Board of Governors may 

12 differentiate among supervised securities holding com13 panies on an individual basis, or by category, taking 

14 into consideration the requirements under paragraph 

15 (3). 

16 (3) CONTENT.—Any standards imposed on a su17 pervised securities holding company under this sub18 section shall take into account— 

19 (A) the differences among types of business 

20 activities carried out by the supervised securities 

21 holding company; 

22 (B) the amount and nature of the financial 

23 assets of the supervised securities holding com24 pany; 
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1 (C) the amount and nature of the liabilities 

2 of the supervised securities holding company, in3 cluding the degree of reliance on short-term fund4 ing; 

5 (D) the extent and nature of the off-balance 

6 sheet exposures of the supervised securities hold7 ing company; 

8 (E) the extent and nature of the trans9 actions and relationships of the supervised secu10 rities holding company with other financial com11 panies; 

12 (F) the importance of the supervised securi13 ties holding company as a source of credit for 

14 households, businesses, and State and local gov15 ernments, and as a source of liquidity for the fi16 nancial system; and 

17 (G) the nature, scope, and mix of the activi18 ties of the supervised securities holding company. 

19 (4) NOTICE.—A capital requirement imposed 

20 under this subsection may not take effect earlier than 

21 180 days after the date on which a supervised securi22 ties holding company is provided notice of the capital 

23 requirement. 
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1 (e) EXCEPTION FOR BANKS.—No bank shall be subject 

2 to any of the requirements set forth in subsections (c) and 

3 (d). 

4 (f) OTHER PROVISIONS OF LAW APPLICABLE TO SU5 PERVISED SECURITIES HOLDING COMPANIES.— 

6 (1) FEDERAL DEPOSIT INSURANCE ACT.—Sub7 sections (b), (c) through (s), and (u) of section 8 of 

8 the Federal Deposit Insurance Act (12 U.S.C. 1818) 

9 shall apply to any supervised securities holding com10 pany, and to any subsidiary (other than a bank or 

11 an institution described in subparagraph (D), (F), or 

12 (H) of section 2(c)(2) of the Bank Holding Company 

13 Act of 1956 (12 U.S.C. 1841(c)(2))) of a supervised 

14 securities holding company, in the same manner as 

15 such subsections apply to a bank holding company for 

16 which the Board of Governors is the appropriate Fed17 eral banking agency. For purposes of applying such 

18 subsections to a supervised securities holding com19 pany or a subsidiary (other than a bank or an insti20 tution described in subparagraph (D), (F), or (H) of 

21 section 2(c)(2) of the Bank Holding Company Act of 

22 1956 (12 U.S.C. 1841(c)(2))) of a supervised securi23 ties holding company, the Board of Governors shall be 

24 deemed the appropriate Federal banking agency for 
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1 the supervised securities holding company or sub2 sidiary. 

3 (2) BANK HOLDING COMPANY ACT OF 1956.—Ex4 cept as the Board of Governors may otherwise provide 

5 by regulation or order, a supervised securities holding 

6 company shall be subject to the provisions of the Bank 

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

8 seq.) in the same manner and to the same extent a 

9 bank holding company is subject to such provisions, 

10 except that a supervised securities holding company 

11 may not, by reason of this paragraph, be deemed to 

12 be a bank holding company for purposes of section 4 

13 of the Bank Holding Company Act of 1956 (12 

14 U.S.C. 1843). 

15 SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY 

16 BANKS AND BANK HOLDING COMPANIES. 

17 (a) DEFINITIONS.—In this section— 

18 (1) the terms ‘‘hedge fund’’ and ‘‘private equity 

19 fund’’ mean a company or other entity that is exempt 

20 from registration as an investment company pursu21 ant to section 3(c)(1) or 3(c)(7) of the Investment 

22 Company Act of 1940 (15 U.S.C. 80a–3(c)(1) or 80a– 

23 3(c)(7)), or a similar fund, as jointly determined by 

24 the appropriate Federal banking agencies; 

25 (2) the term ‘‘proprietary trading’’— 
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1 (A) means purchasing or selling, or other2 wise acquiring or disposing of, stocks, bonds, op3 tions, commodities, derivatives, or other finan4 cial instruments by an insured depository insti5 tution, a company that controls, directly or indi6 rectly, an insured depository institution or is 

7 treated as a bank holding company for purposes 

8 of the Bank Holding Company Act of 1956 (12 

9 U.S.C. 1841 et seq.), and any subsidiary of such 

10 institution or company, for the trading book (or 

11 such other portfolio as the Federal banking agen12 cies may determine) of such institution, com13 pany, or subsidiary; and 

14 (B) subject to such restrictions as the Fed15 eral banking agencies may determine, does not 

16 include purchasing or selling, or otherwise ac17 quiring or disposing of, stocks, bonds, options, 

18 commodities, derivatives, or other financial in19 struments on behalf of a customer, as part of 

20 market making activities, or otherwise in connec21 tion with or in facilitation of customer relation22 ships, including risk-mitigating hedging activi23 ties related to such a purchase, sale, acquisition, 

24 or disposal; and 
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1 (3) the term ‘‘sponsoring’’, when used with re2 spect to a hedge fund or private equity fund, means— 

3 (A) serving as a general partner, managing 

4 member, or trustee of the fund; 

5 (B) in any manner selecting or controlling 

6 (or having employees, officers, directors, or 

7 agents who constitute) a majority of the direc8 tors, trustees, or management of the fund; or 

9 (C) sharing with the fund, for corporate, 

10 marketing, promotional, or other purposes, the 

11 same name or a variation of the same name. 

12 (b) PROHIBITION ON PROPRIETARY TRADING.— 

13 (1) IN GENERAL.—Subject to the recommenda14 tions and modifications of the Council under sub15 section (g), and except as provided in paragraph (2) 

16 or (3), the appropriate Federal banking agencies 

17 shall, through a rulemaking under subsection (g), 

18 jointly prohibit proprietary trading by an insured de19 pository institution, a company that controls, directly 

20 or indirectly, an insured depository institution or is 

21 treated as a bank holding company for purposes of 

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

23 1841 et seq.), and any subsidiary of such institution 

24 or company. 

25 (2) EXCEPTED OBLIGATIONS.— 
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1 (A) IN GENERAL.—The prohibition under 

2 this subsection shall not apply with respect to an 

3 investment that is otherwise authorized by Fed4 eral law in— 

5 (i) obligations of the United States or 

6 any agency of the United States, including 

7 obligations fully guaranteed as to principal 

8 and interest by the United States or an 

9 agency of the United States; 

10 (ii) obligations, participations, or 

11 other instruments of, or issued by, the Gov12 ernment National Mortgage Association, the 

13 Federal National Mortgage Association, or 

14 the Federal Home Loan Mortgage Corpora15 tion, including obligations fully guaranteed 

16 as to principal and interest by such enti17 ties; and 

18 (iii) obligations of any State or any 

19 political subdivision of a State. 

20 (B) CONDITIONS.—The appropriate Federal 

21 banking agencies may impose conditions on the 

22 conduct of investments described in subpara23 graph (A). 

24 (C) RULE OF CONSTRUCTION.—Nothing in 

25 subparagraph (A) may be construed to grant 
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1 any authority to any person that is not other2 wise provided in Federal law. 

3 (3) FOREIGN ACTIVITIES.—An investment or ac4 tivity conducted by a company pursuant to para5 graph (9) or (13) of section 4(c) of the Bank Holding 

6 Company Act of 1956 (12 U.S.C. 1843(c)) solely out7 side of the United States shall not be subject to the 

8 prohibition under paragraph (1), provided that the 

9 company is not directly or indirectly controlled by a 

10 company that is organized under the laws of the 

11 United States or of a State. 

12 (c) PROHIBITION ON SPONSORING AND INVESTING IN

13 HEDGE FUNDS AND PRIVATE EQUITY FUNDS.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), and subject to the recommendations and 

16 modifications of the Council under subsection (g), the 

17 appropriate Federal banking agencies shall, through a 

18 rulemaking under subsection (g), jointly prohibit an 

19 insured depository institution, a company that con20 trols, directly or indirectly, an insured depository in21 stitution or is treated as a bank holding company for 

22 purposes of the Bank Holding Company Act of 1956 

23 (12 U.S.C. 1841 et seq.), or any subsidiary of such 

24 institution or company, from sponsoring or investing 

25 in a hedge fund or a private equity fund. 
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1 (2) APPLICATION TO FOREIGN ACTIVITIES OF

2 FOREIGN FIRMS.—An investment or activity con3 ducted by a company pursuant to paragraph (9) or 

4 (13) of section 4(c) of the Bank Holding Company 

5 Act of 1956 (12 U.S.C. 1843(c)) solely outside of the 

6 United States shall not be subject to the prohibitions 

7 and restrictions under paragraph (1), provided that 

8 the company is not directly or indirectly controlled 

9 by a company that is organized under the laws of the 

10 United States or of a State. 

11 (d) INVESTMENTS IN SMALL BUSINESS INVESTMENT

12 COMPANIES AND INVESTMENTS DESIGNED TO PROMOTE

13 THE PUBLIC WELFARE.— 

14 (1) IN GENERAL.—A prohibition imposed by the 

15 appropriate Federal banking agencies under sub16 section (c) shall not apply with respect an investment 

17 otherwise authorized under Federal law that is— 

18 (A) an investment in a small business in19 vestment company, as that term is defined in 

20 section 103 of the Small Business Investment Act 

21 of 1958 (15 U.S.C. 662); or 

22 (B) designed primarily to promote the pub23 lic welfare, as provided in the 11th paragraph of 

24 section 5136 of the Revised Statutes (12 U.S.C. 

25 24). 
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1 (2) RULE OF CONSTRUCTION.—Nothing in para2 graph (1) may be construed to grant any authority 

3 to any person that is not otherwise provided in Fed4 eral law. 

5 (e) LIMITATIONS ON RELATIONSHIPS WITH HEDGE

6 FUNDS AND PRIVATE EQUITY FUNDS.— 

7 (1) COVERED TRANSACTIONS.—An insured de8 pository institution, a company that controls, directly 

9 or indirectly, an insured depository institution or is 

10 treated as a bank holding company for purposes of 

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

12 1841 et seq.), and any subsidiary of such institution 

13 or company that serves, directly or indirectly, as the 

14 investment manager or investment adviser to a hedge 

15 fund or private equity fund may not enter into a cov16 ered transaction, as defined in section 23A of the Fed17 eral Reserve Act (12 U.S.C. 371c) with such hedge 

18 fund or private equity fund. 

19 (2) AFFILIATION.—An insured depository insti20 tution, a company that controls, directly or indi21 rectly, an insured depository institution or is treated 

22 as a bank holding company for purposes of the Bank 

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

24 seq.), and any subsidiary of such institution or com25 pany that serves, directly or indirectly, as the invest-
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1 ment manager or investment adviser to a hedge fund 

2 or private equity fund shall be subject to section 23B 

3 of the Federal Reserve Act (12 U.S.C. 371c–1) as if 

4 such institution, company, or subsidiary were a mem5 ber bank and such hedge fund or private equity fund 

6 were an affiliate. 

7 (f) CAPITAL AND QUANTITATIVE LIMITATIONS FOR

8 CERTAIN NONBANK FINANCIAL COMPANIES.— 

9 (1) IN GENERAL.—Except as provided in para10 graph (2), and subject to the recommendations and 

11 modifications of the Council under subsection (g), the 

12 Board of Governors shall adopt rules imposing addi13 tional capital requirements and specifying additional 

14 quantitative limits for nonbank financial companies 

15 supervised by the Board of Governors under section 

16 113 that engage in proprietary trading or sponsoring 

17 and investing in hedge funds and private equity 

18 funds. 

19 (2) EXCEPTIONS.—The rules under this sub20 section shall not apply with respect to the trading of 

21 an investment that is otherwise authorized by Federal 

22 law— 

23 (A) in obligations of the United States or 

24 any agency of the United States, including obli25 gations fully guaranteed as to principal and in-
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1 terest by the United States or an agency of the 

2 United States; 

3 (B) in obligations, participations, or other 

4 instruments of, or issued by, the Government Na5 tional Mortgage Association, the Federal Na6 tional Mortgage Association, or the Federal 

7 Home Loan Mortgage Corporation, including ob8 ligations fully guaranteed as to principal and 

9 interest by such entities; 

10 (C) in obligations of any State or any polit11 ical subdivision of a State; 

12 (D) in a small business investment com13 pany, as that term is defined in section 103 of 

14 the Small Business Investment Act of 1958 (15 

15 U.S.C. 662); or 

16 (E) that is designed primarily to promote 

17 the public welfare, as provided in the 11th para18 graph of section 5136 of the Revised Statutes (12 

19 U.S.C. 24). 

20 (g) COUNCIL STUDY AND RULEMAKING.— 

21 (1) STUDY AND RECOMMENDATIONS.—Not later 

22 than 6 months after the date of enactment of this Act, 

23 the Council— 

24 (A) shall complete a study of the definitions 

25 under subsection (a) and the other provisions 
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1 under subsections (b) through (f), to assess the 

2 extent to which the definitions under subsection 

3 (a) and the implementation of subsections (a) 

4 through (f) would— 

5 (i) promote and enhance the safety and 

6 soundness of depository institutions and the 

7 affiliates of depository institutions; 

8 (ii) protect taxpayers and enhance fi9 nancial stability by minimizing the risk 

10 that depository institutions and the affili11 ates of depository institutions will engage 

12 in unsafe and unsound activities; 

13 (iii) limit the inappropriate transfer of 

14 Federal subsidies from institutions that ben15 efit from deposit insurance and liquidity fa16 cilities of the Federal Government to un17 regulated entities; 

18 (iv) reduce inappropriate conflicts of 

19 interest between the self-interest of deposi20 tory institutions, affiliates of depository in21 stitutions, and financial companies super22 vised by the Board, and the interests of the 

23 customers of such institutions and compa24 nies; 
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1 (v) raise the cost of credit or other fi2 nancial services, reduce the availability of 

3 credit or other financial services, or impose 

4 other costs on households and businesses in 

5 the United States; 

6 (vi) limit activities that have caused 

7 undue risk or loss in depository institu8 tions, affiliates of depository institutions, 

9 and financial companies supervised by the 

10 Board of Governors, or that might reason11 ably be expected to create undue risk or loss 

12 in such institutions, affiliates, and compa13 nies; and 

14 (vii) appropriately accommodates the 

15 business of insurance within an insurance 

16 company subject to regulation in accordance 

17 with State insurance company investment 

18 laws; 

19 (B) shall make recommendations regarding 

20 the definitions under subsection (a) and the im21 plementation of other provisions under sub22 sections (b) through (f), including any modifica23 tions to the definitions, prohibitions, require24 ments, and limitations contained therein that the 
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1 Council determines would more effectively imple2 ment the purposes of this section; and 

3 (C) may make recommendations for prohib4 iting the conduct of the activities described in 

5 subsections (b) and (c) above a specific threshold 

6 amount and imposing additional capital re7 quirements on activities conducted below such 

8 threshold amount. 

9 (2) RULEMAKING.—Not earlier than the date of 

10 completion of the study required under paragraph 

11 (1), and not later than 9 months after the date of 

12 completion of such study— 

13 (A) the appropriate Federal banking agen14 cies shall jointly issue final regulations imple15 menting subsections (b) through (e), which shall 

16 reflect any recommendations or modifications 

17 made by the Council pursuant to paragraph 

18 (1)(B); and 

19 (B) the Board of Governors shall issue final 

20 regulations implementing subsection (f), which 

21 shall reflect any recommendations or modifica22 tions made by the Council pursuant to para23 graph (1)(B). 

24 (h) TRANSITION.— 
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1 (1) IN GENERAL.—The final regulations issued 

2 by the appropriate Federal banking agencies and the 

3 Board of Governors under subsection (g)(2) shall pro4 vide that, effective 2 years after the date on which 

5 such final regulations are issued, no insured deposi6 tory institution, company that controls, directly or 

7 indirectly, an insured depository institution, com8 pany that is treated as a bank holding company for 

9 purposes of the Bank Holding Company Act of 1956 

10 (12 U.S.C. 1841 et seq.), or subsidiary of such institu11 tion or company, may retain any investment or rela12 tionship prohibited under such regulations. 

13 (2) EXTENSION.— 

14 (A) IN GENERAL.—The appropriate Federal 

15 banking agency for an insured depository insti16 tution or a company described in paragraph (1) 

17 may, upon the application of any such company, 

18 extend the 2-year period under paragraph (1) 

19 with respect to such company, if the appropriate 

20 Federal banking agency determines that an ex21 tension would not be detrimental to the public 

22 interest. 

23 (B) TIME PERIOD FOR EXTENSION.—An ex24 tension granted under subparagraph (A) may 

25 not exceed— 
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1 (i) 1 year for each determination made 

2 by the appropriate Federal banking agency 

3 under subparagraph (A); and 

4 (ii) a total of 3 years with respect to 

5 any 1 company. 

6 SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL 

7 FIRMS. 

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

9 1841 et seq.) is amended by adding at the end the following: 

10 ‘‘SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL 

11 FIRMS. 

12 ‘‘(a) DEFINITIONS.—In this section— 

13 ‘‘(1) the term ‘Council’ means the Financial Sta14 bility Oversight Council; 

15 ‘‘(2) the term ‘financial company’ means— 

16 ‘‘(A) an insured depository institution; 

17 ‘‘(B) a bank holding company; 

18 ‘‘(C) a savings and loan holding company; 

19 ‘‘(D) a company that controls an insured 

20 depository institution; 

21 ‘‘(E) a nonbank financial company super22 vised by the Board under title I of the Restoring 

23 American Financial Stability Act of 2010; and 
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1 ‘‘(F) a foreign bank or company that is 

2 treated as a bank holding company for purposes 

3 of this Act; and 

4 ‘‘(3) the term ‘liabilities’ means— 

5 ‘‘(A) with respect to a United States finan6 cial company— 

7 ‘‘(i) the total risk-weighted assets of the 

8 financial company, as determined under the 

9 risk-based capital rules applicable to bank 

10 holding companies, as adjusted to reflect ex11 posures that are deducted from regulatory 

12 capital; less 

13 ‘‘(ii) the total regulatory capital of the 

14 financial company under the risk-based 

15 capital rules applicable to bank holding 

16 companies; 

17 ‘‘(B) with respect to a foreign-based finan18 cial company— 

19 ‘‘(i) the total risk-weighted assets of the 

20 United States operations of the financial 

21 company, as determined under the applica22 ble risk-based capital rules, as adjusted to 

23 reflect exposures that are deducted from reg24 ulatory capital; less 
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1 ‘‘(ii) the total regulatory capital of the 

2 United States operations of the financial 

3 company, as determined under the applica4 ble risk-based capital rules; and 

5 ‘‘(C) with respect to an insurance company 

6 or other nonbank financial company supervised 

7 by the Board, such assets of the company as the 

8 Board shall specify by rule, in order to provide 

9 for consistent and equitable treatment of such 

10 companies. 

11 ‘‘(b) CONCENTRATION LIMIT.—Subject to the rec12 ommendations by the Council under subsection (e), a finan13 cial company may not merge or consolidate with, acquire 

14 all or substantially all of the assets of, or otherwise acquire 

15 control of, another company, if the total consolidated liabil16 ities of the acquiring financial company upon consumma17 tion of the transaction would exceed 10 percent of the aggre18 gate consolidated liabilities of all financial companies at 

19 the end of the calendar year preceding the transaction. 

20 ‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With the 

21 prior written consent of the Board, the concentration limit 

22 under subsection (b) shall not apply to an acquisition— 

23 ‘‘(1) of a bank in default or in danger of default; 

24 ‘‘(2) with respect to which assistance is provided 

25 by the Federal Deposit Insurance Corporation under 
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1 section 13(c) of the Federal Deposit Insurance Act (12 

2 U.S.C. 1823(c)); or 

3 ‘‘(3) that would result only in a de minimis in4 crease in the liabilities of the financial company. 

5 ‘‘(d) RULEMAKING AND GUIDANCE.—The Board shall 

6 issue regulations implementing this section in accordance 

7 with the recommendations of the Council under subsection 

8 (e), including the definition of terms, as necessary. The 

9 Board may issue interpretations or guidance regarding the 

10 application of this section to an individual financial com11 pany or to financial companies in general. 

12 ‘‘(e) COUNCIL STUDY AND RULEMAKING.— 

13 ‘‘(1) STUDY AND RECOMMENDATIONS.—Not later 

14 than 6 months after the date of enactment of this sec15 tion, the Council shall— 

16 ‘‘(A) complete a study of the extent to which 

17 the concentration limit under this section would 

18 affect financial stability, moral hazard in the fi19 nancial system, the efficiency and competitive20 ness of United States financial firms and finan21 cial markets, and the cost and availability of 

22 credit and other financial services to households 

23 and businesses in the United States; and 

24 ‘‘(B) make recommendations regarding any 

25 modifications to the concentration limit that the 
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1 Council determines would more effectively imple2 ment this section. 

3 ‘‘(2) RULEMAKING.—Not later than 9 months 

4 after the date of completion of the study under para5 graph (1), and notwithstanding subsections (b) and 

6 (d), the Board shall issue final regulations imple7 menting this section, which shall reflect any rec8 ommendations by the Council under paragraph 

9 (1)(B).’’. 

10 TITLE VII—WALL STREET TRANS11 PARENCY AND ACCOUNT12 ABILITY 

13 SEC. 701. SHORT TITLE. 

14 This title may be cited as the ‘‘Wall Street Trans15 parency and Accountability Act of 2010’’. 

16 Subtitle A—Regulation of Over-the17 Counter Swaps Markets 

18 PART I—REGULATORY AUTHORITY 

19 SEC. 711. DEFINITIONS. 

20 In this subtitle, the terms ‘‘prudential regulator’’, 

21 ‘‘swap’’, ‘‘swap dealer’’, ‘‘major swap participant’’, ‘‘swap 

22 data repository’’, ‘‘associated person of a swap dealer or 

23 major swap participant’’, ‘‘eligible contract participant’’, 

24 ‘‘swap execution facility’’, ‘‘security-based swap’’, ‘‘secu25 rity-based swap dealer’’, ‘‘major security-based swap par-
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1 ticipant’’, ‘‘swap data repository’’, and ‘‘associated person 

2 of a security-based swap dealer or major security-based 

3 swap participant’’ have the meanings given the terms in 

4 section 1a of the Commodity Exchange Act (7 U.S.C. 1a). 

5 SEC. 712. REVIEW OF REGULATORY AUTHORITY. 

6 (a) REGULATORY AUTHORITY.— 

7 (1) IN GENERAL.—Except as provided in para8 graphs (4) and (8), the Commodity Futures Trading 

9 Commission and the Securities and Exchange Com10 mission shall each prescribe such regulations as may 

11 be necessary to carry out the purposes of this title. 

12 (2) COORDINATION, CONSISTENCY, AND COM13 PARABILITY.—Both Commissions required under 

14 paragraph (1) to prescribe regulations shall consult 

15 and coordinate with each other for the purposes of as16 suring, to the extent possible, that the regulations pre17 scribed by each such Commission are consistent and 

18 comparable with the regulations prescribed by the 

19 other. 

20 (3) PROCEDURES AND DEADLINE.—Such regula21 tions shall be prescribed in accordance with applica22 ble requirements of title 5, United States Code, and, 

23 shall be issued in final form not later than 180 days 

24 after the date of enactment of this Act. 
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1 (4) APPLICABILITY.—The requirements of para2 graph (1) shall not apply to an order issued— 

3 (A) in connection with or arising from a 

4 violation or potential violation of any provision 

5 of the Commodity Exchange Act (7 U.S.C. 1 et 

6 seq.); 

7 (B) in connection with or arising from a 

8 violation or potential violation of any provision 

9 of the securities laws; or 

10 (C) in any proceeding that is conducted on 

11 the record in accordance with sections 556 and 

12 557 of title 5, United States Code. 

13 (5) EFFECT.—Nothing in this subsection author14 izes any consultation or procedure for consultation 

15 that is not consistent with the requirements of sub16 chapter II of chapter 5, and chapter 7, of title 5, 

17 United States Code (commonly known as the ‘‘Admin18 istrative Procedure Act’’). 

19 (6) RULES; ORDERS.—In developing and pro20 mulgating rules or orders pursuant to this subsection, 

21 each Commission shall consider the views of the pru22 dential regulators. 

23 (7) TREATMENT OF SIMILAR PRODUCTS AND EN24 TITIES.— 
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1 (A) IN GENERAL.—In adopting rules and 

2 orders under this subsection, the Commodity Fu3 tures Trading Commission and the Securities 

4 and Exchange Commission shall treat function5 ally or economically similar products or entities 

6 described in paragraphs (1) and (2) in a similar 

7 manner. 

8 (B) EFFECT.—Nothing in this subtitle re9 quires the Commodity Futures Trading Commis10 sion or the Securities and Exchange Commission 

11 to adopt joint rules or orders that treat function12 ally or economically similar products or entities 

13 described in paragraphs (1) and (2) in an iden14 tical manner. 

15 (8) MIXED SWAPS.—The Commodity Futures 

16 Trading Commission and the Securities and Ex17 change Commission shall jointly prescribe such regu18 lations regarding mixed swaps, as described in section 

19 1a(47)(D) of the Commodity Exchange Act (7 U.S.C. 

20 1a(47)(D)) and in section (68)(D) of the Securities 

21 Exchange Act of 1934 (15 U.S.C. (68)(D)), as may be 

22 necessary to carry out the purposes of this title. 

23 (b) LIMITATION.— 

24 (1) COMMODITY FUTURES TRADING COMMIS25 SION.—Nothing in this title, unless specifically pro-
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1 vided, confers jurisdiction on the Commodity Futures 

2 Trading Commission to issue a rule, regulation, or 

3 order providing for oversight or regulation of— 

4 (A) security-based swaps; or 

5 (B) with regard to its activities or functions 

6 concerning security-based swaps— 

7 (i) security-based swap dealers; 

8 (ii) major security-based swap partici9 pants; 

10 (iii) security-based swap data reposi11 tories; 

12 (iv) persons associated with a security13 based swap dealer or major security-based 

14 swap participant; 

15 (v) eligible contract participants with 

16 respect to security-based swaps; or 

17 (vi) swap execution facilities with re18 spect to security-based swaps. 

19 (2) SECURITIES AND EXCHANGE COMMISSION.— 

20 Nothing in this title, unless specifically provided, con21 fers jurisdiction on the Securities and Exchange Com22 mission or State securities regulators to issue a rule, 

23 regulation, or order providing for oversight or regula24 tion of— 

25 (A) swaps; or 
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1 (B) with regard to its activities or functions 

2 concerning swaps— 

3 (i) swap dealers; 

4 (ii) major swap participants; 

5 (iii) swap data repositories; 

6 (iv) persons associated with a swap 

7 dealer or major swap participant; 

8 (v) eligible contract participants with 

9 respect to swaps; or 

10 (vi) swap execution facilities with re11 spect to swaps. 

12 (3) PROHIBITION ON CERTAIN FUTURES ASSO13 CIATIONS AND NATIONAL SECURITIES ASSOCIA14 TIONS.— 

15 (A) FUTURES ASSOCIATIONS.—Notwith16 standing any other provision of law (including 

17 regulations), unless otherwise authorized by this 

18 title, no futures association registered under sec19 tion 17 of the Commodity Exchange Act (7 

20 U.S.C. 21) may issue a rule, regulation, or order 

21 for the oversight or regulation of, or otherwise as22 sert jurisdiction over, for any purpose, any secu23 rity-based swap, except that this shall not limit 

24 the authority of a national futures association to 
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1 examine for compliance with and enforce its 

2 rules on advertising and capital adequacy. 

3 (B) NATIONAL SECURITIES ASSOCIA4 TIONS.—Notwithstanding any other provision of 

5 law (including regulations), unless otherwise au6 thorized by this title, no national securities asso7 ciation registered under section 15A of the Secu8 rities Exchange Act of 1934 (15 U.S.C. 78o–3) 

9 may issue a rule, regulation, or order for the 

10 oversight or regulation of, or otherwise assert ju11 risdiction over, for any purpose, any swap, ex12 cept that this shall not limit the authority of a 

13 national securities association to examine for 

14 compliance with and enforce its rules on adver15 tising and capital adequacy. 

16 (c) OBJECTION TO COMMISSION REGULATION.— 

17 (1) FILING OF PETITION FOR REVIEW.— 

18 (A) IN GENERAL.—If either Commission re19 ferred to in this section determines that a final 

20 rule, regulation, or order of the other Commis21 sion conflicts with subsection (a)(4) or (b), then 

22 the complaining Commission may obtain review 

23 of the final rule, regulation, or order in the 

24 United States Court of Appeals for the District 

25 of Columbia Circuit by filing in the court, not 
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1 later than 60 days after the date of publication 

2 of the final rule, regulation, or order, a written 

3 petition requesting that the rule, regulation, or 

4 order be set aside. 

5 (B) EXPEDITED PROCEEDING.—A pro6 ceeding described in subparagraph (A) shall be 

7 expedited by the United States Court of Appeals 

8 for the District of Columbia Circuit. 

9 (2) TRANSMITTAL OF PETITION AND RECORD.— 

10 (A) IN GENERAL.—A copy of a petition de11 scribed in paragraph (1) shall be transmitted not 

12 later than 1 business day after the date of filing 

13 by the complaining Commission to the Secretary 

14 of the responding Commission. 

15 (B) DUTY OF RESPONDING COMMISSION.— 

16 On receipt of the copy of a petition described in 

17 paragraph (1), the responding Commission shall 

18 file with the United States Court of Appeals for 

19 the District of Columbia Circuit— 

20 (i) a copy of the rule, regulation, or 

21 order under review (including any docu22 ments referred to therein); and 

23 (ii) any other materials prescribed by 

24 the United States Court of Appeals for the 

25 District of Columbia Circuit. 
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1 (3) STANDARD OF REVIEW.—The United States 

2 Court of Appeals for the District of Columbia Circuit 

3 shall— 

4 (A) give deference to the views of neither 

5 Commission; and 

6 (B) determine to affirm or set aside a rule, 

7 regulation, or order of the responding Commis8 sion under this subsection, based on the deter9 mination of the court as to whether the rule, reg10 ulation, or order is in conflict with subsection 

11 (a)(4) or (b), as applicable. 

12 (4) JUDICIAL STAY.—The filing of a petition by 

13 the complaining Commission pursuant to paragraph 

14 (1) shall operate as a stay of the rule, regulation, or 

15 order until the date on which the determination of the 

16 United States Court of Appeals for the District of Co17 lumbia Circuit is final (including any appeal of the 

18 determination). 

19 (d) ADOPTION OF RULES ON UNCLEARED SWAPS.— 

20 Notwithstanding subsections (b) and (c), the Commodity 

21 Futures Trading Commission and the Securities and Ex22 change Commission shall, after consulting with each other 

23 Commission, adopt rules— 

24 (1) to require the maintenance of records of all 

25 activities relating to transactions in swaps and secu-
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1 rity-based swaps under the respective jurisdictions of 

2 the Commodity Futures Trading Commission and the 

3 Securities and Exchange Commission that are 

4 uncleared; 

5 (2) to make available, consistent with section 8 

6 of the Commodity Exchange Act (7 U.S.C. 12), to the 

7 Securities and Exchange Commission information re8 lating to swaps transactions that are uncleared; and 

9 (3) to make available to the Commodity Futures 

10 Trading Commission information relating to secu11 rity-based swaps transactions that are uncleared. 

12 (e) DEFINITIONS.—Notwithstanding subsections (b) 

13 and (c), the Commodity Futures Trading Commission and 

14 the Securities and Exchange Commission shall jointly 

15 adopt rules to define the term ‘‘security-based swap agree16 ment’’ in section 1a(47)(A)(v) of the Commodity Exchange 

17 Act (7 U.S.C. 1a(47)(A)(v)) and in section 3(a)(78) of the 

18 Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(78)). 

19 (f) GLOBAL RULEMAKING TIMEFRAME.—Unless other20 wise provided in a particular provision of this title, or an 

21 amendment made by this title, the Commodity Futures 

22 Trading Commission or the Securities and Exchange Com23 mission, or both, shall individually, and not jointly, pro24 mulgate rules and regulations required of each Commission 
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1 under this title or an amendment made by this title not 

2 later than 180 days after the date of enactment of this Act. 

3 (g) EXPEDITED RULEMAKING PROCESS.—The Com4 modity Futures Trading Commission or the Securities and 

5 Exchange Commission, or both, may use emergency and ex6 pedited procedures (including any administrative or other 

7 procedure as appropriate) to carry out this title and the 

8 amendments made by this title if, in either of the Commis9 sions’ discretion, it considers it necessary to do so. 

10 SEC. 713. RECOMMENDATIONS FOR CHANGES TO PORT11 FOLIO MARGINING LAWS. 

12 Not later than 180 days after the date of enactment 

13 of this Act, the Securities and Exchange Commission, the 

14 Commodity Futures Trading Commission, and the pruden15 tial regulators shall submit to the appropriate committees 

16 of Congress recommendations for legislative changes to the 

17 Federal laws to facilitate the portfolio margining of securi18 ties and commodity futures and options, commodity op19 tions, swaps, and other financial instrument positions. 

20 SEC. 714. ABUSIVE SWAPS. 

21 The Commodity Futures Trading Commission or the 

22 Securities and Exchange Commission, or both, individually 

23 may, by rule or order— 

24 (1) collect information as may be necessary con25 cerning the markets for any types of— 
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1 (A) swap (as defined in section 1a of the 

2 Commodity Exchange Act (7 U.S.C. 1a)); or 

3 (B) security-based swap (as defined in sec4 tion 1a of the Commodity Exchange Act (7 

5 U.S.C. 1a)); and 

6 (2) issue a report with respect to any types of 

7 swaps or security-based swaps that the Commodity 

8 Futures Trading Commission or the Securities and 

9 Exchange Commission determines to be detrimental 

10 to— 

11 (A) the stability of a financial market; or 

12 (B) participants in a financial market. 

13 SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN 

14 SWAP ACTIVITIES. 

15 Except as provided in section 4 of the Commodity Ex16 change Act (7 U.S.C. 6) (as amended by section 738), if 

17 the Commodity Futures Trading Commission or the Securi18 ties and Exchange Commission determines that the regula19 tion of swaps or security-based swaps markets in a foreign 

20 country undermines the stability of the United States fi21 nancial system, either Commission, in consultation with the 

22 Secretary of the Treasury, may prohibit an entity domi23 ciled in the foreign country from participating in the 

24 United States in any swap or security-based swap activi25 ties. 
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1 SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT 

2 BAILOUTS OF SWAPS ENTITIES. 

3 (a) PROHIBITION ON FEDERAL ASSISTANCE.—Not4 withstanding any other provision of law (including regula5 tions), no Federal assistance may be provided to any swaps 

6 entity with respect to any swap, security-based swap, or 

7 other activity of the swaps entity. 

8 (b) DEFINITIONS.—In this section: 

9 (1) FEDERAL ASSISTANCE.—The term ‘‘Federal 

10 assistance’’ means the use of any funds, including ad11 vances from any Federal Reserve credit facility, dis12 count window, or pursuant to the third undesignated 

13 paragraph of section 13 of the Federal Reserve Act 

14 (12 U.S.C. 343) (relating to emergency lending au15 thority), Federal Deposit Insurance Corporation in16 surance, or guarantees for the purpose of— 

17 (A) making any loan to, or purchasing any 

18 stock, equity interest, or debt obligation of, any 

19 swaps entity; 

20 (B) purchasing the assets of any swaps enti21 ty; 

22 (C) guaranteeing any loan or debt issuance 

23 of any swaps entity; or 

24 (D) entering into any assistance arrange25 ment (including tax breaks), loss sharing, or 

26 profit sharing with any swaps entity. 
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1 (2) SWAPS ENTITY.—The term ‘‘swaps entity’’ 

2 means any swap dealer, security-based swap dealer, 

3 major swap participant, major security-based swap 

4 participant, swap execution facility, designated con5 tract market, national securities exchange, central 

6 counterparty, clearing house, clearing agency, or de7 rivatives clearing organization that is registered 

8 under— 

9 (A) the Commodity Exchange Act (7 U.S.C. 

10 1 et seq.); 

11 (B) the Securities Exchange Act of 1934 (15 

12 U.S.C. 78a et seq.); or 

13 (C) any other Federal or State law (includ14 ing regulations). 

15 SEC. 717. NEW PRODUCT APPROVAL—CFTC—SEC PROCESS. 

16 (a) AMENDMENTS TO THE COMMODITY EXCHANGE

17 ACT.—Section 2(a)(1)(C) of the Commodity Exchange Act 

18 (7 U.S.C. 2(a)(1)(C)) is amended— 

19 (1) in clause (i) by striking ‘‘This’’ and insert20 ing ‘‘(I) Except as provided in subclause (II), this’’; 

21 and 

22 (2) by adding at the end of clause (i) the fol23 lowing: 

24 ‘‘(II) This Act shall apply to and 

25 the Commission shall have jurisdiction 
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1 with respect to accounts, agreements, 

2 and transactions involving, and may 

3 permit the listing for trading pursuant 

4 to section 5c(c) of, a put, call, or other 

5 option on 1 or more securities (as de6 fined in section 2(a)(1) of the Securi7 ties Act of 1933 or section 3(a)(10) of 

8 the Securities Exchange Act of 1934 on 

9 the date of enactment of the Futures 

10 Trading Act of 1982), including any 

11 group or index of such securities, or 

12 any interest therein or based on the 

13 value thereof, that is exempted by the 

14 Securities and Exchange Commission 

15 pursuant to section 36(a)(1) of the Se16 curities Exchange Act of 1934 with the 

17 condition that the Commission exercise 

18 concurrent jurisdiction over such put, 

19 call, or other option; provided, how20 ever, that nothing in this paragraph 

21 shall be construed to affect the jurisdic22 tion and authority of the Securities 

23 and Exchange Commission over such 

24 put, call, or other option.’’. 
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1 (b) AMENDMENT TO THE SECURITIES EXCHANGE ACT

2 OF 1934.—The Securities Exchange Act of 1934 is amended 

3 by adding the following section after section 3A (15 U.S.C. 

4 78c–1): 

5 ‘‘SEC. 3B. SECURITIES-RELATED DERIVATIVES. 

6 ‘‘(a) Any agreement, contract, or transaction (or class 

7 thereof) that is exempted by the Commodity Futures Trad8 ing Commission pursuant to section 4(c)(1) of the Com9 modity Exchange Act (7 U.S.C. 6(c)(1)) with the condition 

10 that the Commission exercise concurrent jurisdiction over 

11 such agreement, contract, or transaction (or class thereof) 

12 shall be deemed a security for purposes of the securities 

13 laws. 

14 ‘‘(b) With respect to any agreement, contract, or trans15 action (or class thereof) that is exempted by the Commodity 

16 Futures Trading Commission pursuant to section 4(c)(1) 

17 of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the 

18 condition that the Commission exercise concurrent jurisdic19 tion over such agreement, contract, or transaction (or class 

20 thereof), references in the securities laws to the ‘purchase’ 

21 or ‘sale’ of a security shall be deemed to include the execu22 tion, termination (prior to its scheduled maturity date), as23 signment, exchange, or similar transfer or conveyance of, 

24 or extinguishing of rights or obligations under such agree25 ment, contract, or transaction, as the context may require.’’. 
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1 (c) AMENDMENT TO SECURITIES EXCHANGE ACT OF

2 1934.—Section 19(b) of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78s(b)) is amended by adding at the end the 

4 following: 

5 ‘‘(10) Notwithstanding the provisions of para6 graph (2), the time period within which the Commis7 sion is required by order to approve a proposed rule 

8 change or institute proceedings to determine whether 

9 the proposed rule change should be disapproved is 

10 stayed pending a determination by the Commission 

11 upon the request of the Commodity Futures Trading 

12 Commission or its Chairman that the Commission 

13 issue a determination as to whether a product that is 

14 the subject of such proposed rule change is a security 

15 pursuant to section 718 of the Wall Street Trans16 parency and Accountability Act of 2010.’’. 

17 (d) AMENDMENT TO COMMODITY EXCHANGE ACT.— 

18 Section 5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 

19 7a–2(c)(1)) is amended— 

20 (1) by striking ‘‘Subject to paragraph (2)’’ and 

21 inserting the following: 

22 ‘‘(A) ELECTION.—Subject to paragraph 

23 (2)’’; and 

24 (2) by adding at the end the following: 
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1 ‘‘(B) CERTIFICATION.—The certification of 

2 a product pursuant to this paragraph shall be 

3 stayed pending a determination by the Commis4 sion upon the request of the Securities and Ex5 change Commission or its Chairman that the 

6 Commission issue a determination as to whether 

7 the product that is the subject of such certifi8 cation is a contract of sale of a commodity for 

9 future delivery, an option on such a contract, or 

10 an option on a commodity pursuant to section 

11 718 of the Wall Street Transparency and Ac12 countability Act of 2010.’’. 

13 SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE 

14 PRODUCTS. 

15 (a) PROCESS FOR DETERMINING THE STATUS OF A

16 NOVEL DERIVATIVE PRODUCT.— 

17 (1) NOTICE.— 

18 (A) IN GENERAL.—Any person filing a pro19 posal to list or trade a novel derivative product 

20 that may have elements of both securities and 

21 contracts of sale of a commodity for future deliv22 ery (or options on such contracts or options on 

23 commodities) may concurrently provide notice 

24 and furnish a copy of such filing with both the 

25 Securities and Exchange Commission and the 
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1 Commodity Futures Trading Commission. Any 

2 such notice shall state that notice has been made 

3 with both Commissions. 

4 (B) NOTIFICATION.—If no concurrent notice 

5 is made pursuant to subparagraph (A), within 5 

6 business days after determining that a proposal 

7 that seeks to list or trade a novel derivative 

8 product may have elements of both securities and 

9 contracts of sale of a commodity for future deliv10 ery (or options on such contracts or options on 

11 commodities), the Securities and Exchange Com12 mission or the Commodity Futures Trading 

13 Commission, as applicable, shall notify the other 

14 Commission and provide a copy of such filing to 

15 the other Commission. 

16 (2) REQUEST FOR DETERMINATION.— 

17 (A) IN GENERAL.—No later than 21 days 

18 after receipt of a notice under paragraph (1), or 

19 upon its own initiative if no such notice is re20 ceived, the Commodity Futures Trading Com21 mission may request that the Securities and Ex22 change Commission issue a determination as to 

23 whether a product is a security, as defined in 

24 section 3(a)(10) of the Securities Exchange Act 

25 of 1934 (15 U.S.C. 78c(a)(10)). 
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1 (B) REQUEST.—No later than 21 days after 

2 receipt of a notice under paragraph (1), or upon 

3 its own initiative if no such notice is received, 

4 the Securities and Exchange Commission may 

5 request that the Commodity Futures Trading 

6 Commission issue a determination as to whether 

7 a product is a contract of sale of a commodity 

8 for future delivery, an option on such a contract, 

9 or an option on a commodity subject to the Com10 modity Futures Trading Commission’s exclusive 

11 jurisdiction under section 2(a)(1)(A) of the Com12 modity Exchange Act (7 U.S.C. 2(a)(1)(A)). 

13 (C) REQUIREMENT RELATING TO RE14 QUEST.—A request under subparagraph (A) or 

15 (B) shall be made by submitting such request, in 

16 writing, to the Securities and Exchange Com17 mission or the Commodity Futures Trading 

18 Commission, as applicable. 

19 (D) EFFECT.—Nothing in this paragraph 

20 shall be construed to prevent— 

21 (i) the Commodity Futures Trading 

22 Commission from requesting that the Secu23 rities and Exchange Commission grant an 

24 exemption pursuant to section 36(a)(1) of 

25 the Securities Exchange Act of 1934 (15 
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1 U.S.C. 78mm(a)(1)) with respect to a prod2 uct that is the subject of a filing under 

3 paragraph (1); or 

4 (ii) the Securities and Exchange Com5 mission from requesting that the Com6 modity Futures Trading Commission grant 

7 an exemption pursuant to section 4(c)(1) of 

8 the Commodity Exchange Act (7 U.S.C. 

9 6(c)(1)) with respect to a product that is the 

10 subject of a filing under paragraph (1). 

11 Provided, however, that nothing in this subpara12 graph shall be construed to require the Com13 modity Futures Trading Commission or the Se14 curities and Exchange Commission to issue an 

15 exemption requested pursuant to this subpara16 graph; provided further, That an order granting 

17 or denying an exemption described in this sub18 paragraph and issued under paragraph (3)(B) 

19 shall not be subject to judicial review pursuant 

20 to subsection (b). 

21 (E) WITHDRAWAL OF REQUEST.—A request 

22 under subparagraph (A) or (B) may be with23 drawn by the Commission making the request at 

24 any time prior to a determination being made 

25 pursuant to paragraph (3) for any reason by 
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1 providing written notice to the head of the other 

2 Commission. 

3 (3) DETERMINATION.—Notwithstanding any 

4 other provision of law, no later than 120 days after 

5 the date of receipt of a request— 

6 (A) under subparagraph (A) or (B) of para7 graph (2), unless such request has been with8 drawn pursuant to paragraph (2)(E), the Secu9 rities and Exchange Commission or the Com10 modity Futures Trading Commission, as appli11 cable, shall, by order, issue the determination re12 quested in subparagraph (A) or (B) of para13 graph (2), as applicable, and the reasons there14 fore; or 

15 (B) under paragraph (2)(D), unless such re16 quest has been withdrawn, the Securities and 

17 Exchange Commission or the Commodity Fu18 tures Trading Commission, as applicable, shall 

19 grant an exemption or provide reasons for not 

20 granting such exemption, provided that any de21 cision by the Securities and Exchange Commis22 sion not to grant such exemption shall not be re23 viewable under section 25 of the Securities Ex24 change Act of 1934 (15 U.S.C. 78y). 

25 (b) JUDICIAL RESOLUTION.— 
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1 (1) IN GENERAL.—The Commodity Futures 

2 Trading Commission or the Securities and Exchange 

3 Commission may petition the United States Court of 

4 Appeals for the District of Columbia Circuit for re5 view of a final order of the other Commission, with 

6 respect to a novel derivative product that may have 

7 elements of both securities and contracts of sale of a 

8 commodity for future delivery (or options on such 

9 contracts or options on commodities) that it believes 

10 affects its statutory jurisdiction, including an order 

11 or orders issued under subsection (a)(3)(A), by filing 

12 in such court, within 60 days after the date of entry 

13 of such order, a written petition requesting a review 

14 of the order. Any such proceeding shall be expedited 

15 by the Court of Appeals. 

16 (2) TRANSMITTAL OF PETITION AND RECORD.— 

17 A copy of a petition described in paragraph (1) shall 

18 be transmitted not later than 1 business day after fil19 ing by the complaining Commission to the responding 

20 Commission. On receipt of the petition, the respond21 ing Commission shall file with the court a copy of the 

22 order under review and any documents referred to 

23 therein, and any other materials prescribed by the 

24 court. 
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1 (3) STANDARD OF REVIEW.—The court, in con2 sidering a petition filed pursuant to paragraph (1), 

3 shall give no deference to, or presumption in favor of, 

4 the views of either Commission. 

5 (4) JUDICIAL STAY.—The filing of a petition by 

6 the complaining Commission pursuant to paragraph 

7 (1) shall operate as a stay of the order, until the date 

8 on which the determination of the court is final (in9 cluding any appeal of the determination). 

10 PART II—REGULATION OF SWAP MARKETS 

11 SEC. 721. DEFINITIONS. 

12 (a) IN GENERAL.—Section 1a of the Commodity Ex13 change Act (7 U.S.C. 1a) is amended— 

14 (1) by redesignating paragraphs (2), (3) and (4), 

15 (5) through (17), (18) through (23), (24) through 

16 (28), (29), (30), (31) through (33), and (34) as para17 graphs (6), (8) and (9), (11) through (23), (26) 

18 through (31), (34) through (38), (40), (41), (44) 

19 through (46), and (51), respectively; 

20 (2) by inserting after paragraph (1) the fol21 lowing: 

22 ‘‘(2) APPROPRIATE FEDERAL BANKING AGEN23 CY.—The term ‘appropriate Federal banking agency’ 

24 has the meaning given the term in section 3 of the 

25 Federal Deposit Insurance Act (12 U.S.C. 1813). 
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1 ‘‘(3) ASSOCIATED PERSON OF A SECURITY-BASED

2 SWAP DEALER OR MAJOR SECURITY-BASED SWAP PAR3 TICIPANT.—The term ‘associated person of a security4 based swap dealer or major security-based swap par5 ticipant’ has the meaning given the term in section 

6 3(a) of the Securities Exchange Act of 1934 (15 

7 U.S.C. 78c(a)). 

8 ‘‘(4) ASSOCIATED PERSON OF A SWAP DEALER

9 OR MAJOR SWAP PARTICIPANT.— 

10 ‘‘(A) IN GENERAL.—The term ‘associated 

11 person of a swap dealer or major swap partici12 pant’ means— 

13 ‘‘(i) any partner, officer, director, or 

14 branch manager of a swap dealer or major 

15 swap participant (including any individual 

16 who holds a similar status or performs a 

17 similar function with respect to any part18 ner, officer, director, or branch manager of 

19 a swap dealer or major swap participant); 

20 ‘‘(ii) any person that directly or indi21 rectly controls, is controlled by, or is under 

22 common control with, a swap dealer or 

23 major swap participant; and 

24 ‘‘(iii) any employee of a swap dealer 

25 or major swap participant. 
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1 ‘‘(B) EXCLUSION.—Other than for purposes 

2 of section 4s(b)(6), the term ‘associated person of 

3 a swap dealer or major swap participant’ does 

4 not include any person associated with a swap 

5 dealer or major swap participant the functions 

6 of which are solely clerical or ministerial. 

7 ‘‘(5) BOARD.—The term ‘Board’ means the 

8 Board of Governors of the Federal Reserve System.’’; 

9 (3) by inserting after paragraph (6) (as redesig10 nated by paragraph (1)) the following: 

11 ‘‘(7) CLEARED SWAP.—The term ‘cleared swap’ 

12 means any swap that is, directly or indirectly, sub13 mitted to and cleared by a derivatives clearing orga14 nization registered with the Commission.’’; 

15 (4) in paragraph (9) (as redesignated by para16 graph (1)), by striking ‘‘except onions’’ and all that 

17 follows through the period at the end and inserting 

18 the following: ‘‘except onions (as provided in section 

19 13–1) and motion picture box office receipts (or any 

20 index, measure, value, or data related to such re21 ceipts), and all services, rights, and interests (except 

22 motion picture box office receipts, or any index, meas23 ure, value or data related to such receipts) in which 

24 contracts for future delivery are presently or in the 

25 future dealt in.’’; 
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1 (5) by inserting after paragraph (9) (as redesig2 nated by paragraph (1)) the following: 

3 ‘‘(10) COMMODITY POOL.— 

4 ‘‘(A) IN GENERAL.—The term ‘commodity 

5 pool’ means any investment trust, syndicate, or 

6 similar form of enterprise operated for the pur7 pose of trading in commodity interests, includ8 ing any— 

9 ‘‘(i) commodity for future delivery, se10 curity futures product, or swap; 

11 ‘‘(ii) agreement, contract, or trans12 action described in section 2(c)(2)(C)(i) or 

13 section 2(c)(2)(D)(i); 

14 ‘‘(iii) commodity option authorized 

15 under section 4c; or 

16 ‘‘(iv) leverage transaction authorized 

17 under section 19. 

18 ‘‘(B) FURTHER DEFINITION.—The Commis19 sion, by rule or regulation, may include within, 

20 or exclude from, the term ‘commodity pool’ any 

21 investment trust, syndicate, or similar form of 

22 enterprise if the Commission determines that the 

23 rule or regulation will effectuate the purposes of 

24 this Act.’’; 
520 

† HR 4173 EAS 

1 (6) by striking paragraph (11) (as redesignated 

2 by paragraph (1)) and inserting the following: 

3 ‘‘(11) COMMODITY POOL OPERATOR.— 

4 ‘‘(A) IN GENERAL.—The term ‘commodity 

5 pool operator’ means any person— 

6 ‘‘(i) engaged in a business that is of 

7 the nature of a commodity pool, investment 

8 trust, syndicate, or similar form of enter9 prise, and who, in connection therewith, so10 licits, accepts, or receives from others, funds, 

11 securities, or property, either directly or 

12 through capital contributions, the sale of 

13 stock or other forms of securities, or other14 wise, for the purpose of trading in com15 modity interest, including any— 

16 ‘‘(I) commodity for future deliv17 ery, security futures product, or swap; 

18 ‘‘(II) agreement, contract, or 

19 transaction described in section 

20 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

21 ‘‘(III) commodity option author22 ized under section 4c; or 

23 ‘‘(IV) leverage transaction author24 ized under section 19; or 
521 

† HR 4173 EAS 

1 ‘‘(ii) who is registered with the Com2 mission as a commodity pool operator. 

3 ‘‘(B) FURTHER DEFINITION.—The Commis4 sion, by rule or regulation, may include within, 

5 or exclude from, the term ‘commodity pool oper6 ator’ any person engaged in a business that is of 

7 the nature of a commodity pool, investment 

8 trust, syndicate, or similar form of enterprise if 

9 the Commission determines that the rule or regu10 lation will effectuate the purposes of this Act.’’; 

11 (7) in paragraph (12) (as redesignated by para12 graph (1)), in subparagraph (A)— 

13 (A) in clause (i)— 

14 (i) in subclause (I), by striking ‘‘made 

15 or to be made on or subject to the rules of 

16 a contract market or derivatives transaction 

17 execution facility’’ and inserting ‘‘, security 

18 futures product, or swap’’; 

19 (ii) by redesignating subclauses (II) 

20 and (III) as subclauses (III) and (IV); 

21 (iii) by inserting after subclause (I) the 

22 following: 

23 ‘‘(II) any agreement, contract, or 

24 transaction described in section 
522 

† HR 4173 EAS 

1 2(c)(2)(C)(i) or section 2(c)(2)(D)(i)’’; 

2 and 

3 (iv) in subclause (IV) (as so redesig4 nated), by striking ‘‘or’’; 

5 (B) in clause (ii), by striking the period at 

6 the end and inserting a semicolon; and 

7 (C) by adding at the end the following: 

8 ‘‘(iii) is registered with the Commis9 sion as a commodity trading advisor; or 

10 ‘‘(iv) the Commission, by rule or regu11 lation, may include if the Commission de12 termines that the rule or regulation will ef13 fectuate the purposes of this Act.’’; 

14 (8) in paragraph (17) (as redesignated by para15 graph (1)), in subparagraph (A), in the matter pre16 ceding clause (i), by striking ‘‘paragraph (12)(A)’’ 

17 and inserting ‘‘paragraph (18)(A)’’; 

18 (9) in paragraph (18) (as redesignated by para19 graph (1))— 

20 (A) in subparagraph (A)— 

21 (i) in the matter following clause 

22 (vii)(III)— 

23 (I) by striking ‘‘section 1a 

24 (11)(A)’’ and inserting ‘‘paragraph 

25 (17)(A)’’; and 
523 

† HR 4173 EAS 

1 (II) by striking ‘‘$25,000,000’’ 

2 and inserting ‘‘$50,000,000’’; and 

3 (ii) in clause (xi), in the matter pre4 ceding subclause (I), by striking ‘‘total as5 sets in an amount’’ and inserting ‘‘amounts 

6 invested on a discretionary basis, the aggre7 gate of which is’’; 

8 (10) by striking paragraph (22) (as redesignated 

9 by paragraph (1)) and inserting the following: 

10 ‘‘(22) FLOOR BROKER.— 

11 ‘‘(A) IN GENERAL.—The term ‘floor broker’ 

12 means any person— 

13 ‘‘(i) who, in or surrounding any pit, 

14 ring, post, or other place provided by a con15 tract market for the meeting of persons 

16 similarly engaged, shall purchase or sell for 

17 any other person— 

18 ‘‘(I) any commodity for future de19 livery, security futures product, or 

20 swap; or 

21 ‘‘(II) any commodity option au22 thorized under section 4c; or 

23 ‘‘(ii) who is registered with the Com24 mission as a floor broker. 
524 

† HR 4173 EAS 

1 ‘‘(B) FURTHER DEFINITION.—The Commis2 sion, by rule or regulation, may include within, 

3 or exclude from, the term ‘floor broker’ any per4 son in or surrounding any pit, ring, post, or 

5 other place provided by a contract market for the 

6 meeting of persons similarly engaged who trades 

7 for any other person if the Commission deter8 mines that the rule or regulation will effectuate 

9 the purposes of this Act.’’; 

10 (11) by striking paragraph (23) (as redesignated 

11 by paragraph (1)) and inserting the following: 

12 ‘‘(23) FLOOR TRADER.— 

13 ‘‘(A) IN GENERAL.—The term ‘floor trader’ 

14 means any person— 

15 ‘‘(i) who, in or surrounding any pit, 

16 ring, post, or other place provided by a con17 tract market for the meeting of persons 

18 similarly engaged, purchases, or sells solely 

19 for such person’s own account— 

20 ‘‘(I) any commodity for future de21 livery, security futures product, or 

22 swap; or 

23 ‘‘(II) any commodity option au24 thorized under section 4c; or 
525 

† HR 4173 EAS 

1 ‘‘(ii) who is registered with the Com2 mission as a floor trader. 

3 ‘‘(B) FURTHER DEFINITION.—The Commis4 sion, by rule or regulation, may include within, 

5 or exclude from, the term ‘floor trader’ any per6 son in or surrounding any pit, ring, post, or 

7 other place provided by a contract market for the 

8 meeting of persons similarly engaged who trades 

9 solely for such person’s own account if the Com10 mission determines that the rule or regulation 

11 will effectuate the purposes of this Act.’’; 

12 (12) by inserting after paragraph (23) (as redes13 ignated by paragraph (1)) the following: 

14 ‘‘(24) FOREIGN EXCHANGE FORWARD.—The term 

15 ‘foreign exchange forward’ means a transaction that 

16 solely involves the exchange of 2 different currencies 

17 on a specific future date at a fixed rate agreed upon 

18 on the inception of the contract covering the exchange. 

19 ‘‘(25) FOREIGN EXCHANGE SWAP.—The term 

20 ‘foreign exchange swap’ means a transaction that 

21 solely involves— 

22 ‘‘(A) an exchange of 2 different currencies 

23 on a specific date at a fixed rate that is agreed 

24 upon on the inception of the contract covering 

25 the exchange; and 
526 

† HR 4173 EAS 

1 ‘‘(B) a reverse exchange of the 2 currencies 

2 described in subparagraph (A) at a later date 

3 and at a fixed rate that is agreed upon on the 

4 inception of the contract covering the exchange.’’; 

5 (13) by striking paragraph (28) (as redesignated 

6 by paragraph (1)) and inserting the following: 

7 ‘‘(28) FUTURES COMMISSION MERCHANT.— 

8 ‘‘(A) IN GENERAL.—The term ‘futures com9 mission merchant’ means an individual, associa10 tion, partnership, corporation, or trust— 

11 ‘‘(i) that— 

12 ‘‘(I) is engaged in soliciting or in 

13 accepting orders for— 

14 ‘‘(aa) the purchase or sale of 

15 a commodity for future delivery; 

16 ‘‘(bb) a security futures prod17 uct; 

18 ‘‘(cc) a swap; 

19 ‘‘(dd) any agreement, con20 tract, or transaction described in 

21 section 2(c)(2)(C)(i) or section 

22 2(c)(2)(D)(i); 

23 ‘‘(ee) any commodity option 

24 authorized under section 4c; or 
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† HR 4173 EAS 

1 ‘‘(ff) any leverage transaction 

2 authorized under section 19; or 

3 ‘‘(II) is acting as a counterparty 

4 in any agreement, contract, or trans5 action described in section 

6 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

7 and 

8 ‘‘(III) in or in connection with 

9 the activities described in subclause (I) 

10 or (II), accepts any money, securities, 

11 or property (or extends credit in lieu 

12 thereof) to margin, guarantee, or secure 

13 any trades or contracts that result or 

14 may result therefrom; or 

15 ‘‘(ii) that is registered with the Com16 mission as a futures commission merchant. 

17 ‘‘(B) FURTHER DEFINITION.—The Commis18 sion, by rule or regulation, may include within, 

19 or exclude from, the term ‘futures commission 

20 merchant’ any person who engages in soliciting 

21 or accepting orders for, or acting as a 

22 counterparty in, any agreement, contract, or 

23 transaction subject to this Act, and who accepts 

24 any money, securities, or property (or extends 

25 credit in lieu thereof) to margin, guarantee, or 
528 

† HR 4173 EAS 

1 secure any trades or contracts that result or may 

2 result therefrom, if the Commission determines 

3 that the rule or regulation will effectuate the 

4 purposes of this Act.’’; 

5 (14) in paragraph (30) (as redesignated by 

6 paragraph (1)), in subparagraph (B), by striking 

7 ‘‘state’’ and inserting ‘‘State’’; 

8 (15) by striking paragraph (31) (as redesignated 

9 by paragraph (1)) and inserting the following: 

10 ‘‘(31) INTRODUCING BROKER.— 

11 ‘‘(A) IN GENERAL.—The term ‘introducing 

12 broker’ means any person (except an individual 

13 who elects to be and is registered as an associ14 ated person of a futures commission merchant)— 

15 ‘‘(i) who— 

16 ‘‘(I) is engaged in soliciting or in 

17 accepting orders for— 

18 ‘‘(aa) the purchase or sale of 

19 any commodity for future deliv20 ery, security futures product, or 

21 swap; 

22 ‘‘(bb) any agreement, con23 tract, or transaction described in 

24 section 2(c)(2)(C)(i) or section 

25 2(c)(2)(D)(i); 
529 

† HR 4173 EAS 

1 ‘‘(cc) any commodity option 

2 authorized under section 4c; or 

3 ‘‘(dd) any leverage trans4 action authorized under section 

5 19; and 

6 ‘‘(II) does not accept any money, 

7 securities, or property (or extend credit 

8 in lieu thereof) to margin, guarantee, 

9 or secure any trades or contracts that 

10 result or may result therefrom; or 

11 ‘‘(ii) who is registered with the Com12 mission as an introducing broker. 

13 ‘‘(B) FURTHER DEFINITION.—The Commis14 sion, by rule or regulation, may include within, 

15 or exclude from, the term ‘introducing broker’ 

16 any person who engages in soliciting or accept17 ing orders for any agreement, contract, or trans18 action subject to this Act, and who does not ac19 cept any money, securities, or property (or ex20 tend credit in lieu thereof) to margin, guarantee, 

21 or secure any trades or contracts that result or 

22 may result therefrom, if the Commission deter23 mines that the rule or regulation will effectuate 

24 the purposes of this Act.’’; 
530 

† HR 4173 EAS 

1 (16) by inserting after paragraph (31) (as redes2 ignated by paragraph (1)) the following: 

3 ‘‘(32) MAJOR SECURITY-BASED SWAP PARTICI4 PANT.—The term ‘major security-based swap partici5 pant’ has the meaning given the term in section 3(a) 

6 of the Securities Exchange Act of 1934 (15 U.S.C. 

7 78c(a)). 

8 ‘‘(33) MAJOR SWAP PARTICIPANT.— 

9 ‘‘(A) IN GENERAL.—The term ‘major swap 

10 participant’ means any person who is not a 

11 swap dealer, and— 

12 ‘‘(i) maintains a substantial position 

13 in swaps for any of the major swap cat14 egories as determined by the Commission, 

15 excluding— 

16 ‘‘(I) positions held for hedging or 

17 mitigating commercial risk; and 

18 ‘‘(II) positions maintained by any 

19 employee benefit plan (or any contract 

20 held by such a plan) as defined in 

21 paragraphs (3) and (32) of section 3 of 

22 the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1002) for 

24 the primary purpose of hedging or 
531 

† HR 4173 EAS 

1 mitigating any risk directly associated 

2 with the operation of the plan; or 

3 ‘‘(ii) whose outstanding swaps create 

4 substantial counterparty exposure that 

5 could have serious adverse effects on the fi6 nancial stability of the United States bank7 ing system or financial markets; or 

8 ‘‘(iii)(I) is a financial entity, other 

9 than an entity predominantly engaged in 

10 providing financing for the purchase of an 

11 affiliate’s merchandise or manufactured 

12 goods, that is highly leveraged relative to 

13 the amount of capital it holds; and 

14 ‘‘(II) maintains a substantial position 

15 in outstanding swaps in any major swap 

16 category as determined by the Commission. 

17 ‘‘(B) DEFINITION OF SUBSTANTIAL POSI18 TION.—For purposes of subparagraph (A), the 

19 Commission shall define by rule or regulation 

20 the term ‘substantial position’ at the threshold 

21 that the Commission determines to be prudent 

22 for the effective monitoring, management, and 

23 oversight of entities that are systemically impor24 tant or can significantly impact the financial 

25 system of the United States. 
532 

† HR 4173 EAS 

1 ‘‘(C) SCOPE OF DESIGNATION.—For pur2 poses of subparagraph (A), a person may be des3 ignated as a major swap participant for 1 or 

4 more categories of swaps without being classified 

5 as a major swap participant for all classes of 

6 swaps. 

7 ‘‘(D) CAPITAL.—In setting capital require8 ments for a person that is designated as a major 

9 swap participant for a single type or single class 

10 or category of swaps or activities, the prudential 

11 regulator and the Commission shall take into ac12 count the risks associated with other types of 

13 swaps or classes of swaps or categories of swaps 

14 engaged in and the other activities conducted by 

15 that person that are not otherwise subject to reg16 ulation applicable to that person by virtue of the 

17 status of the person as a major swap partici18 pant.’’; 

19 (17) by inserting after paragraph (38) (as redes20 ignated by paragraph (1)) the following: 

21 ‘‘(39) PRUDENTIAL REGULATOR.—The term 

22 ‘prudential regulator’ means— 

23 ‘‘(A) the Office of the Comptroller of the 

24 Currency, in the case of— 

25 ‘‘(i) any national banking association; 
533 

† HR 4173 EAS 

1 ‘‘(ii) any Federal branch or agency of 

2 a foreign bank; or 

3 ‘‘(iii) any Federal savings association; 

4 ‘‘(B) the Federal Deposit Insurance Cor5 poration, in the case of— 

6 ‘‘(i) any insured State bank; 

7 ‘‘(ii) any foreign bank having an in8 sured branch; or 

9 ‘‘(iii) any State savings association; 

10 ‘‘(C) the Board of Governors of the Federal 

11 Reserve System, in the case of— 

12 ‘‘(i) any noninsured State member 

13 bank; 

14 ‘‘(ii) any branch or agency of a foreign 

15 bank with respect to any provision of the 

16 Federal Reserve Act (12 U.S.C. 221 et seq.) 

17 which is made applicable under the Inter18 national Banking Act of 1978 (12 U.S.C. 

19 3101 et seq.); 

20 ‘‘(iii) any foreign bank which does not 

21 operate an insured branch; 

22 ‘‘(iv) any agency or commercial lend23 ing company other than a Federal agency; 

24 or 
534 

† HR 4173 EAS 

1 ‘‘(v) supervisory or regulatory pro2 ceedings arising from the authority given to 

3 the Board of Governors under section 

4 7(c)(1) of the International Banking Act of 

5 1978 (12 U.S.C. 3105(c)(1)), including such 

6 proceedings under the Financial Institu7 tions Supervisory Act of 1966 (12 U.S.C. 

8 1464 et seq.); and 

9 ‘‘(D) the Farm Credit Administration, in 

10 the case of a swap dealer, major swap partici11 pant, security-based swap dealer, or major secu12 rity-based swap participant that is an institu13 tion chartered under the Farm Credit Act of 

14 1971 (12 U.S.C. 2001 et seq.).’’; 

15 (18) in paragraph (40) (as redesignated by 

16 paragraph (1))— 

17 (A) by striking subparagraph (B); 

18 (B) by redesignating subparagraphs (C), 

19 (D), and (E) as subparagraphs (B), (C), and 

20 (F), respectively; 

21 (C) in subparagraph (C) (as so redesig22 nated), by striking ‘‘and’’; 

23 (D) by inserting after subparagraph (C) (as 

24 so redesignated) the following: 
535 

† HR 4173 EAS 

1 ‘‘(D) a swap execution facility registered 

2 under section 5h; 

3 ‘‘(E) a swap data repository; and’’; 

4 (19) by inserting after paragraph (41) (as redes5 ignated by paragraph (1)) the following: 

6 ‘‘(42) SECURITY-BASED SWAP.—The term ‘secu7 rity-based swap’ has the meaning given the term in 

8 section 3(a) of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78c(a)). 

10 ‘‘(43) SECURITY-BASED SWAP DEALER.—The 

11 term ‘security-based swap dealer’ has the meaning 

12 given the term in section 3(a) of the Securities Ex13 change Act of 1934 (15 U.S.C. 78c(a)).’’; 

14 (20) in paragraph (46) (as redesignated by 

15 paragraph (1)), by striking ‘‘subject to section 

16 2(h)(7)’’ and inserting ‘‘subject to section 2(h)(5)’’; 

17 (21) by inserting after paragraph (46) (as redes18 ignated by paragraph (1)) the following: 

19 ‘‘(47) SWAP.— 

20 ‘‘(A) IN GENERAL.—Except as provided in 

21 subparagraph (B), the term ‘swap’ means any 

22 agreement, contract, or transaction— 

23 ‘‘(i) that is a put, call, cap, floor, col24 lar, or similar option of any kind that is 

25 for the purchase or sale, or based on the 
536 

† HR 4173 EAS 

1 value, of 1 or more interest or other rates, 

2 currencies, commodities, securities, instru3 ments of indebtedness, indices, quantitative 

4 measures, or other financial or economic in5 terests or property of any kind; 

6 ‘‘(ii) that provides for any purchase, 

7 sale, payment, or delivery (other than a 

8 dividend on an equity security) that is de9 pendent on the occurrence, nonoccurrence, 

10 or the extent of the occurrence of an event 

11 or contingency associated with a potential 

12 financial, economic, or commercial con13 sequence; 

14 ‘‘(iii) that provides on an executory 

15 basis for the exchange, on a fixed or contin16 gent basis, of 1 or more payments based on 

17 the value or level of 1 or more interest or 

18 other rates, currencies, commodities, securi19 ties, instruments of indebtedness, indices, 

20 quantitative measures, or other financial or 

21 economic interests or property of any kind, 

22 or any interest therein or based on the value 

23 thereof, and that transfers, as between the 

24 parties to the transaction, in whole or in 

25 part, the financial risk associated with a 
537 

† HR 4173 EAS 

1 future change in any such value or level 

2 without also conveying a current or future 

3 direct or indirect ownership interest in an 

4 asset (including any enterprise or invest5 ment pool) or liability that incorporates the 

6 financial risk so transferred, including any 

7 agreement, contract, or transaction com8 monly known as— 

9 ‘‘(I) an interest rate swap; 

10 ‘‘(II) a rate floor; 

11 ‘‘(III) a rate cap; 

12 ‘‘(IV) a rate collar; 

13 ‘‘(V) a cross-currency rate swap; 

14 ‘‘(VI) a basis swap; 

15 ‘‘(VII) a currency swap; 

16 ‘‘(VIII) a foreign exchange swap; 

17 ‘‘(IX) a total return swap; 

18 ‘‘(X) an equity index swap; 

19 ‘‘(XI) an equity swap; 

20 ‘‘(XII) a debt index swap; 

21 ‘‘(XIII) a debt swap; 

22 ‘‘(XIV) a credit spread; 

23 ‘‘(XV) a credit default swap; 

24 ‘‘(XVI) a credit swap; 

25 ‘‘(XVII) a weather swap; 
538 

† HR 4173 EAS 

1 ‘‘(XVIII) an energy swap; 

2 ‘‘(XIX) a metal swap; 

3 ‘‘(XX) an agricultural swap; 

4 ‘‘(XXI) an emissions swap; and 

5 ‘‘(XXII) a commodity swap; 

6 ‘‘(iv) that is an agreement, contract, or 

7 transaction that is, or in the future becomes 

8 commonly known to the trade as a swap; 

9 ‘‘(v) including any security-based swap 

10 agreement which meets the definition of 

11 ‘swap agreement’ as defined in section 206A 

12 of the Gramm-Leach-Bliley Act (15 U.S.C. 

13 78c note) of which a material term is based 

14 on the price, yield, value, or volatility of 

15 any security or any group or index of secu16 rities, or any interest therein; or 

17 ‘‘(vi) that is any combination or per18 mutation of, or option on, any agreement, 

19 contract, or transaction described in any of 

20 clauses (i) through (v). 

21 ‘‘(B) EXCLUSIONS.—The term ‘swap’ does 

22 not include— 

23 ‘‘(i) any contract of sale of a com24 modity for future delivery (or option on 

25 such a contract), leverage contract author-
539 

† HR 4173 EAS 

1 ized under section 19, security futures prod2 uct, or agreement, contract, or transaction 

3 described in section 2(c)(2)(C)(i) or section 

4 2(c)(2)(D)(i); 

5 ‘‘(ii) any sale of a nonfinancial com6 modity or security for deferred shipment or 

7 delivery, so long as the transaction is in8 tended to be physically settled; 

9 ‘‘(iii) any put, call, straddle, option, or 

10 privilege on any security, certificate of de11 posit, or group or index of securities, in12 cluding any interest therein or based on the 

13 value thereof, that is subject to— 

14 ‘‘(I) the Securities Act of 1933 (15 

15 U.S.C. 77a et seq.); and 

16 ‘‘(II) the Securities Exchange Act 

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

18 ‘‘(iv) any put, call, straddle, option, or 

19 privilege relating to a foreign currency en20 tered into on a national securities exchange 

21 registered pursuant to section 6(a) of the 

22 Securities Exchange Act of 1934 (15 U.S.C. 

23 78f(a)); 

24 ‘‘(v) any agreement, contract, or trans25 action providing for the purchase or sale of 
540 

† HR 4173 EAS 

1 1 or more securities on a fixed basis that is 

2 subject to— 

3 ‘‘(I) the Securities Act of 1933 (15 

4 U.S.C. 77a et seq.); and 

5 ‘‘(II) the Securities Exchange Act 

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

7 ‘‘(vi) any agreement, contract, or 

8 transaction providing for the purchase or 

9 sale of 1 or more securities on a contingent 

10 basis that is subject to the Securities Act of 

11 1933 (15 U.S.C. 77a et seq.) and the Securi12 ties Exchange Act of 1934 (15 U.S.C. 78a 

13 et seq.), unless the agreement, contract, or 

14 transaction predicates the purchase or sale 

15 on the occurrence of a bona fide contingency 

16 that might reasonably be expected to affect 

17 or be affected by the creditworthiness of a 

18 party other than a party to the agreement, 

19 contract, or transaction; 

20 ‘‘(vii) any note, bond, or evidence of 

21 indebtedness that is a security, as defined 

22 in section 2(a) of the Securities Act of 1933 

23 (15 U.S.C. 77b(a)); 

24 ‘‘(viii) any agreement, contract, or 

25 transaction that is— 
541 

† HR 4173 EAS 

1 ‘‘(I) based on a security; and 

2 ‘‘(II) entered into directly or 

3 through an underwriter (as defined in 

4 section 2(a) of the Securities Act of 

5 1933 (15 U.S.C. 77b(a))) by the issuer 

6 of such security for the purposes of 

7 raising capital, unless the agreement, 

8 contract, or transaction is entered into 

9 to manage a risk associated with cap10 ital raising; 

11 ‘‘(ix) any agreement, contract, or 

12 transaction a counterparty of which is a 

13 Federal Reserve bank, the Federal Govern14 ment, or a Federal agency that is expressly 

15 backed by the full faith and credit of the 

16 United States; and 

17 ‘‘(x) any security-based swap, other 

18 than a security-based swap as described in 

19 subparagraph (D). 

20 ‘‘(C) RULE OF CONSTRUCTION REGARDING

21 MASTER AGREEMENTS.— 

22 ‘‘(i) IN GENERAL.—Except as provided 

23 in clause (ii), the term ‘swap’ includes a 

24 master agreement that provides for an 

25 agreement, contract, or transaction that is a 
542 

† HR 4173 EAS 

1 swap under subparagraph (A), together 

2 with each supplement to any master agree3 ment, without regard to whether the master 

4 agreement contains an agreement, contract, 

5 or transaction that is not a swap pursuant 

6 to subparagraph (A). 

7 ‘‘(ii) EXCEPTION.—For purposes of 

8 clause (i), the master agreement shall be 

9 considered to be a swap only with respect to 

10 each agreement, contract, or transaction 

11 covered by the master agreement that is a 

12 swap pursuant to subparagraph (A). 

13 ‘‘(D) MIXED SWAP.—The term ‘security14 based swap’ includes any agreement, contract, or 

15 transaction that is as described in section 

16 3(a)(68)(A) of the Securities Exchange Act of 

17 1934 (15 U.S.C. 78c(a)(68)(A)) and also is based 

18 on the value of 1 or more interest or other rates, 

19 currencies, commodities, instruments of indebted20 ness, indices, quantitative measures, other finan21 cial or economic interest or property of any kind 

22 (other than a single security or a narrow-based 

23 security index), or the occurrence, non-occur24 rence, or the extent of the occurrence of an event 

25 or contingency associated with a potential finan-
543 

† HR 4173 EAS 

1 cial, economic, or commercial consequence (other 

2 than an event described in subparagraph 

3 (A)(iii)). 

4 ‘‘(E) TREATMENT OF FOREIGN EXCHANGE

5 SWAPS AND FORWARDS.— 

6 ‘‘(i) IN GENERAL.—Foreign exchange 

7 swaps and foreign exchange forwards shall 

8 be considered swaps under this paragraph 

9 unless the Secretary makes a written deter10 mination that either foreign exchange swaps 

11 or foreign exchange forwards or both— 

12 ‘‘(I) should be not be regulated as 

13 swaps under this Act; and 

14 ‘‘(II) are not structured to evade 

15 the Wall Street Transparency and Ac16 countability Act of 2010 in violation of 

17 any rule promulgated by the Commis18 sion pursuant to section 111(c) of that 

19 Act. 

20 ‘‘(ii) CONGRESSIONAL NOTICE; EFFEC21 TIVENESS.—The Secretary shall submit any 

22 written determination under clause (i) to 

23 the appropriate committees of Congress, in24 cluding the Committee on Agriculture, Nu25 trition, and Forestry of the Senate and the 
544 

† HR 4173 EAS 

1 Committee on Agriculture of the House of 

2 Representatives. Any such written deter3 mination by the Secretary shall not be effec4 tive until it is submitted to the appropriate 

5 committees of Congress. 

6 ‘‘(iii) REPORTING.—Notwithstanding a 

7 written determination by the Secretary 

8 under clause (i), all foreign exchange swaps 

9 and foreign exchange forwards shall be re10 ported to either a swap data repository, or, 

11 if there is no swap data repository that 

12 would accept such swaps or forwards, to the 

13 Commission pursuant to section 4r within 

14 such time period as the Commission may by 

15 rule or regulation prescribe. 

16 ‘‘(iv) BUSINESS STANDARDS.—Not17 withstanding clauses (ix) and (x) of sub18 paragraph (B) and clause (ii), any party to 

19 a foreign exchange swap or forward that is 

20 a swap dealer or major swap participant 

21 shall conform to the business conduct stand22 ards contained in section 4s(h). 

23 ‘‘(v) SECRETARY.—For purposes of this 

24 subparagraph only, the term ‘Secretary’ 

25 means the Secretary of the Treasury. 
545 

† HR 4173 EAS 

1 ‘‘(F) EXCEPTION FOR CERTAIN FOREIGN EX2 CHANGE SWAPS AND FORWARDS.— 

3 ‘‘(i) REGISTERED ENTITIES.—Any for4 eign exchange swap and any foreign ex5 change forward that is listed and traded on 

6 or subject to the rules of a designated con7 tract market or a swap execution facility, 

8 or that is cleared by a derivatives clearing 

9 organization shall not be exempt from any 

10 provision of this Act or amendments made 

11 by the Wall Street Transparency and Ac12 countability Act of 2010 prohibiting fraud 

13 or manipulation. 

14 ‘‘(ii) RETAIL TRANSACTIONS.—Nothing 

15 in subparagraph (E) shall affect, or be con16 strued to affect, the applicability of this Act 

17 or the jurisdiction of the Commission with 

18 respect to agreements, contracts, or trans19 actions in foreign currency pursuant to sec20 tion 2(c)(2). 

21 ‘‘(48) SWAP DATA REPOSITORY.—The term ‘swap 

22 data repository’ means any person that collects, cal23 culates, prepares, or maintains information or 

24 records with respect to transactions or positions in, or 
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† HR 4173 EAS 

1 the terms and conditions of, swaps entered into by 

2 third parties. 

3 ‘‘(49) SWAP DEALER.— 

4 ‘‘(A) IN GENERAL.—The term ‘swap dealer’ 

5 means any person who— 

6 ‘‘(i) holds itself out as a dealer in 

7 swaps; 

8 ‘‘(ii) makes a market in swaps; 

9 ‘‘(iii) regularly engages in the pur10 chase and sale of swaps in the ordinary 

11 course of business; or 

12 ‘‘(iv) engages in any activity causing 

13 the person to be commonly known in the 

14 trade as a dealer or market maker in 

15 swaps. 

16 ‘‘(B) INCLUSION.—A person may be des17 ignated as a swap dealer for a single type or sin18 gle class or category of swap or activities and 

19 considered not to be a swap dealer for other 

20 types, classes, or categories of swaps or activities. 

21 ‘‘(C) CAPITAL.—In setting capital require22 ments for a person that is designated as a swap 

23 dealer for a single type or single class or cat24 egory of swap or activities, the prudential regu25 lator and the Commission shall take into account 
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† HR 4173 EAS 

1 the risks associated with other types of swaps or 

2 classes of swaps or categories of swaps engaged 

3 in and the other activities conducted by that per4 son that are not otherwise subject to regulation 

5 applicable to that person by virtue of the status 

6 of the person as a swap dealer. 

7 ‘‘(D) EXCEPTION.—The term ‘swap dealer’ 

8 does not include a person that buys or sells 

9 swaps for such person’s own account, either indi10 vidually or in a fiduciary capacity, but not as 

11 a part of a regular business. 

12 ‘‘(50) SWAP EXECUTION FACILITY.—The term 

13 ‘swap execution facility’ means a facility in which 

14 multiple participants have the ability to execute or 

15 trade swaps by accepting bids and offers made by 

16 other participants that are open to multiple partici17 pants in the facility or system, through any means of 

18 interstate commerce, including any trading facility, 

19 that— 

20 ‘‘(A) facilitates the execution of swaps be21 tween persons; and 

22 ‘‘(B) is not a designated contract market.’’; 

23 and 
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1 (22) in paragraph (51) (as redesignated by 

2 paragraph (1)), in subparagraph (A)(i), by striking 

3 ‘‘partipants’’ and inserting ‘‘participants’’. 

4 (b) AUTHORITY TO DEFINE TERMS.—The Commodity 

5 Futures Trading Commission may adopt a rule to define— 

6 (1) the term ‘‘commercial risk’’; and 

7 (2) any other term included in an amendment to 

8 the Commodity Exchange Act (7 U.S.C. 1 et seq.) 

9 made by this subtitle. 

10 (c) MODIFICATION OF DEFINITIONS.—To include 

11 transactions and entities that have been structured to evade 

12 this subtitle (or an amendment made by this subtitle), the 

13 Commodity Futures Trading Commission shall adopt a 

14 rule to further define the terms ‘‘swap’’, ‘‘swap dealer’’, 

15 ‘‘major swap participant’’, and ‘‘eligible contract partici16 pant’’. 

17 (d) EXEMPTIONS.—Section 4(c)(1) of the Commodity 

18 Exchange Act (7 U.S.C. 6(c)(1)) is amended by striking 

19 ‘‘except that’’ and all that follows through the period at the 

20 end and inserting the following: ‘‘except that— 

21 ‘‘(A) unless the Commission is expressly au22 thorized by any provision described in this sub23 paragraph to grant exemptions, with respect to 

24 amendments made by subtitle A of the Wall 
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† HR 4173 EAS 

1 Street Transparency and Accountability Act of 

2 2010— 

3 ‘‘(i) with respect to— 

4 ‘‘(I) paragraphs (2), (3), (4), (5), 

5 and (7), clause (vii)(III) of paragraph 

6 (17), paragraphs (23), (24), (31), (32), 

7 (38), (39), (41), (42), (46), (47), (48), 

8 and (49) of section 1a, and sections 

9 2(a)(13), 2(c)(D), 4a(a), 4a(b), 4d(c), 

10 4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 

11 5(h), 5b(c), 5b(i), 8e, and 21; and 

12 ‘‘(II) section 206(e) of the 

13 Gramm-Leach-Bliley Act (Public Law 

14 106–102; 15 U.S.C. 78c note); and 

15 ‘‘(ii) in subsection (c) of section 111 

16 and section 132; and 

17 ‘‘(B) the Commission and the Securities 

18 and Exchange Commission may by rule, regula19 tion, or order jointly exclude any agreement, 

20 contract, or transaction from section 2(a)(1)(D)) 

21 if the Commission determines that the exemption 

22 would be consistent with the public interest.’’. 

23 (e) CONFORMING AMENDMENTS.— 
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1 (1) Section 2(c)(2)(B)(i)(II) of the Commodity 

2 Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amend3 ed— 

4 (A) in item (cc)— 

5 (i) in subitem (AA), by striking ‘‘sec6 tion 1a(20)’’ and inserting ‘‘section 1a’’; 

7 and 

8 (ii) in subitem (BB), by striking ‘‘sec9 tion 1a(20)’’ and inserting ‘‘section 1a’’; 

10 and 

11 (B) in item (dd), by striking ‘‘section 

12 1a(12)(A)(ii)’’ and inserting ‘‘section 

13 1a(18)(A)(ii)’’. 

14 (2) Section 4m(3) of the Commodity Exchange 

15 Act (7 U.S.C. 6m(3)) is amended by striking ‘‘section 

16 1a(6)’’ and inserting ‘‘section 1a’’. 

17 (3) Section 4q(a)(1) of the Commodity Exchange 

18 Act (7 U.S.C. 6o–1(a)(1)) is amended by striking 

19 ‘‘section 1a(4)’’ and inserting ‘‘section 1a(9)’’. 

20 (4) Section 5(e)(1) of the Commodity Exchange 

21 Act (7 U.S.C. 7(e)(1)) is amended by striking ‘‘section 

22 1a(4)’’ and inserting ‘‘section 1a(9)’’. 

23 (5) Section 5a(b)(2)(F) of the Commodity Ex24 change Act (7 U.S.C. 7a(b)(2)(F)) is amended by 
551 

† HR 4173 EAS 

1 striking ‘‘section 1a(4)’’ and inserting ‘‘section 

2 1a(9)’’. 

3 (6) Section 5b(a) of the Commodity Exchange 

4 Act (7 U.S.C. 7a–1(a)) is amended, in the matter pre5 ceding paragraph (1), by striking ‘‘section 1a(9)’’ and 

6 inserting ‘‘section 1a’’. 

7 (7) Section 5c(c)(2)(B) of the Commodity Ex8 change Act (7 U.S.C. 7a–2(c)(2)(B)) is amended by 

9 striking ‘‘section 1a(4)’’ and inserting ‘‘section 

10 1a(9)’’. 

11 (8) Section 6(g)(5)(B)(i) of the Securities Ex12 change Act of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is 

13 amended— 

14 (A) in subclause (I), by striking ‘‘section 

15 1a(12)(B)(ii)’’ and inserting ‘‘section 

16 1a(18)(B)(ii)’’; and 

17 (B) in subclause (II), by striking ‘‘section 

18 1a(12)’’ and inserting ‘‘section 1a(18)’’. 

19 (9) The Legal Certainty for Bank Products Act 

20 of 2000 (7 U.S.C. 27 et seq.) is amended— 

21 (A) in section 402— 

22 (i) in subsection (a)(7), by striking 

23 ‘‘section 1a(20)’’ and inserting ‘‘section 1a’’; 

24 (ii) in subsection (b)(2), by striking 

25 ‘‘section 1a(12)’’ and inserting ‘‘section 1a’’; 
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1 (iii) in subsection (c), by striking ‘‘sec2 tion 1a(4)’’ and inserting ‘‘section 1a’’; and 

3 (iv) in subsection (d)— 

4 (I) in the matter preceding para5 graph (1), by striking ‘‘section 1a(4)’’ 

6 and inserting ‘‘section 1a(9)’’; 

7 (II) in paragraph (1)— 

8 (aa) in subparagraph (A), by 

9 striking ‘‘section 1a(12)’’ and in10 serting ‘‘section 1a’’; and 

11 (bb) in subparagraph (B), by 

12 striking ‘‘section 1a(33)’’ and in13 serting ‘‘section 1a’’; 

14 (III) in paragraph (2)— 

15 (aa) in subparagraph (A), by 

16 striking ‘‘section 1a(10)’’ and in17 serting ‘‘section 1a’’; 

18 (bb) in subparagraph (B), by 

19 striking ‘‘section 1a(12)(B)(ii)’’ 

20 and inserting ‘‘section 

21 1a(18)(B)(ii)’’; 

22 (cc) in subparagraph (C), by 

23 striking ‘‘section 1a(12)’’ and in24 serting ‘‘section 1a(18)’’; and 
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1 (dd) in subparagraph (D), 

2 by striking ‘‘section 1a(13)’’ and 

3 inserting ‘‘section 1a’’; and 

4 (B) in section 404(1), by striking ‘‘section 

5 1a(4)’’ and inserting ‘‘section 1a’’. 

6 SEC. 722. JURISDICTION. 

7 (a) EXCLUSIVE JURISDICTION.—Section 2(a)(1)(A) of 

8 the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is 

9 amended in the first sentence— 

10 (1) by inserting ‘‘the Wall Street Transparency 

11 and Accountability Act of 2010 (including an amend12 ment made by that Act) and’’ after ‘‘otherwise pro13 vided in’’; 

14 (2) by striking ‘‘(c) through (i) of this section’’ 

15 and inserting ‘‘(c) and (f)’’; 

16 (3) by striking ‘‘contracts of sale’’ and inserting 

17 ‘‘swaps or contracts of sale’’; and 

18 (4) by striking ‘‘or derivatives transaction execu19 tion facility registered pursuant to section 5 or 5a’’ 

20 and inserting ‘‘pursuant to section 5’’. 

21 (b) REGULATION OF SWAPS UNDER FEDERAL AND

22 STATE LAW.—Section 12 of the Commodity Exchange Act 

23 (7 U.S.C. 16) is amended by adding at the end the fol24 lowing: 
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1 ‘‘(h) REGULATION OF SWAPS AS INSURANCE UNDER

2 STATE LAW.—A swap— 

3 ‘‘(1) shall not be considered to be insurance; and 

4 ‘‘(2) may not be regulated as an insurance con5 tract under the law of any State.’’. 

6 (c) AGREEMENTS, CONTRACTS, AND TRANSACTIONS

7 TRADED ON AN ORGANIZED EXCHANGE.—Section 

8 2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 

9 2(c)(2)(A)) is amended— 

10 (1) in clause (i), by striking ‘‘or’’ at the end; 

11 (2) by redesignating clause (ii) as clause (iii); 

12 and 

13 (3) by inserting after clause (i) the following: 

14 ‘‘(ii) a swap; or’’. 

15 (d) APPLICABILITY.—Section 2 of the Commodity Ex16 change Act (7 U.S.C. 2) (as amended by section 723(a)(3)) 

17 is amended by adding at the end the following: 

18 ‘‘(i) APPLICABILITY.—The provisions of this Act relat19 ing to swaps that were enacted by the Wall Street Trans20 parency and Accountability Act of 2010 (including any 

21 rule prescribed or regulation promulgated under that Act), 

22 shall not apply to activities outside the United States unless 

23 those activities— 
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† HR 4173 EAS 

1 ‘‘(1) have a direct and significant connection 

2 with activities in, or effect on, commerce of the 

3 United States; or 

4 ‘‘(2) contravene such rules or regulations as the 

5 Commission may prescribe or promulgate as are nec6 essary or appropriate to prevent the evasion of any 

7 provision of this Act that was enacted by the Wall 

8 Street Transparency and Accountability Act of 

9 2010.’’. 

10 (e) JUST AND REASONABLE RATES.—Section 

11 2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 

12 2(a)(1)(C)) (as amended by section 717(a)) is amended by 

13 adding at the end the following: 

14 ‘‘(vi) Notwithstanding the exclusive ju15 risdiction of the Commission with respect to 

16 accounts, agreements, and transactions in17 volving swaps or contracts of sale of a com18 modity for future delivery under this Act, 

19 no provision of this Act shall be construed— 

20 ‘‘(I) to supersede or limit the au21 thority of the Federal Energy Regu22 latory Commission under the Federal 

23 Power Act (16 U.S.C. 791a et seq.) or 

24 the Natural Gas Act (15 U.S.C. 717 et 

25 seq.); 
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† HR 4173 EAS 

1 ‘‘(II) to restrict the Federal En2 ergy Regulatory Commission from car3 rying out the duties and responsibil4 ities of the Federal Energy Regulatory 

5 Commission to ensure just and reason6 able rates and protect the public inter7 est under the Acts described in sub8 clause (I); or 

9 ‘‘(III) to supersede or limit the 

10 authority of a State regulatory author11 ity (as defined in section 3(21) of the 

12 Federal Power Act (16 U.S.C. 796(21)) 

13 that has jurisdiction to regulate rates 

14 and charges for the sale of electric en15 ergy within the State, or restrict that 

16 State regulatory authority from car17 rying out the duties and responsibil18 ities of the State regulatory authority 

19 pursuant to the jurisdiction of the 

20 State regulatory authority to regulate 

21 rates and charges for the transmission 

22 or sale of electric energy. 

23 ‘‘(vii) Nothing in clause (vi) shall af24 fect the Commission’s authority with respect 

25 to the trading, execution, or clearing of any 
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† HR 4173 EAS 

1 agreement, contract, or transaction on or 

2 subject to the rules of a registered entity, in3 cluding a designated contract market, de4 rivatives clearing organization, or swaps 

5 execution facility.’’. 

6 (f) PUBLIC INTEREST WAIVER.—Section 4(c) of the 

7 Commodity Exchange Act (7 U.S.C. 6(c)) (as amended by 

8 section 721(d)) is amended by adding at the end the fol9 lowing: 

10 ‘‘(6) If the Commission determines that the ex11 emption would be consistent with the public interest 

12 and the purposes of this Act, the Commission shall, 

13 in accordance with paragraphs (1) and (2), exempt 

14 from the requirements of this Act an agreement, con15 tract, or transaction that is entered into— 

16 ‘‘(A) pursuant to a tariff or rate schedule 

17 approved or permitted to take effect by the Fed18 eral Energy Regulatory Commission; 

19 ‘‘(B) pursuant to a tariff or rate schedule 

20 establishing rates or charges for, or protocols gov21 erning, the sale of electric energy approved or 

22 permitted to take effect by the regulatory author23 ity of the State or municipality having jurisdic24 tion to regulate rates and charges for the sale of 
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† HR 4173 EAS 

1 electric energy within the State or municipality; 

2 or 

3 ‘‘(C) between entities described in section 

4 201(f) of the Federal Power Act (16 U.S.C. 

5 824(f)).’’. 

6 SEC. 723. CLEARING. 

7 (a) CLEARING REQUIREMENT.— 

8 (1) IN GENERAL.—Section 2 of the Commodity 

9 Exchange Act (7 U.S.C. 2) is amended— 

10 (A) by striking subsections (d), (e), (g), and 

11 (h); and 

12 (B) by redesignating subsection (i) as sub13 section (g). 

14 (2) SWAPS; LIMITATION ON PARTICIPATION.— 

15 Section 2 of the Commodity Exchange Act (7 U.S.C. 

16 2) (as amended by paragraph (1)) is amended by in17 serting after subsection (c) the following: 

18 ‘‘(d) SWAPS.—Nothing in this Act (other than sub19 paragraphs (A), (B), (C), and (D) of subsection (a)(1), sub20 sections (f) and (g), sections 1a, 2(c)(2)(A)(ii), 2(e), 2(h), 

21 4(c), 4a, 4b, and 4b–1, subsections (a), (b), and (g) of sec22 tion 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 

23 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections (c) and 

24 (d) of section 6, sections 6c, 6d, 8, 8a, and 9, subsections 

25 (e)(2) and (f) of section 12, subsections (a) and (b) of section 
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1 13, sections 17, 20, 21, and 22(a)(4), and any other provi2 sion of this Act that is applicable to registered entities and 

3 Commission registrants) governs or applies to a swap. 

4 ‘‘(e) LIMITATION ON PARTICIPATION.—It shall be un5 lawful for any person, other than an eligible contract par6 ticipant, to enter into a swap unless the swap is entered 

7 into on, or subject to the rules of, a board of trade des8 ignated as a contract market under section 5.’’. 

9 (3) MANDATORY CLEARING OF SWAPS.—Section 

10 2 of the Commodity Exchange Act (7 U.S.C. 2) is 

11 amended by inserting after subsection (g) (as redesig12 nated by paragraph (1)(B)) the following: 

13 ‘‘(h) CLEARING REQUIREMENT.— 

14 ‘‘(1) SUBMISSION.— 

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 paragraphs (9) and (10), any person who is a 

17 party to a swap shall submit such swap for 

18 clearing to a derivatives clearing organization 

19 that is registered under this Act or a derivatives 

20 clearing organization that is exempt from reg21 istration under section 5b(j) of this Act. 

22 ‘‘(B) OPEN ACCESS.—The rules of a reg23 istered derivatives clearing organization shall— 

24 ‘‘(i) prescribe that all swaps with the 

25 same terms and conditions are economically 
560 

† HR 4173 EAS 

1 equivalent and may be offset with each 

2 other within the derivatives clearing organi3 zation; and 

4 ‘‘(ii) provide for nondiscriminatory 

5 clearing of a swap executed bilaterally or on 

6 or through the rules of an unaffiliated des7 ignated contract market or swap execution 

8 facility, subject to the requirements of sec9 tion 5(b). 

10 ‘‘(2) COMMISSION APPROVAL.— 

11 ‘‘(A) IN GENERAL.—A derivatives clearing 

12 organization shall submit to the Commission for 

13 prior approval any group, category, type, or 

14 class of swaps that the derivatives clearing orga15 nization seeks to accept for clearing, which sub16 mission the Commission shall make available to 

17 the public. 

18 ‘‘(B) DEADLINE.—The Commission shall 

19 take final action on a request submitted pursu20 ant to subparagraph (A) not later than 90 days 

21 after submission of the request, unless the deriva22 tives clearing organization submitting the re23 quest agrees to an extension of the time limita24 tion established under this subparagraph. 
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1 ‘‘(C) APPROVAL.—The Commission shall 

2 approve, unconditionally or subject to such terms 

3 and conditions as the Commission determines to 

4 be appropriate, any request submitted pursuant 

5 to subparagraph (A) if the Commission finds 

6 that the request is consistent with section 

7 5b(c)(2). The Commission shall not approve any 

8 such request if the Commission does not make 

9 such finding. 

10 ‘‘(D) RULES.—The Commission shall adopt 

11 rules for a derivatives clearing organization’s 

12 submission for approval, pursuant to this para13 graph, of any group, category, type, or class of 

14 swaps that the derivative clearing organization 

15 seeks to accept for clearing. 

16 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At any 

17 time after issuance of an approval pursuant to para18 graph (2): 

19 ‘‘(A) REVIEW PROCESS.—The Commission, 

20 on application of a counterparty to a swap or 

21 on its own initiative, may stay the clearing re22 quirement of paragraph (1) until the Commis23 sion completes a review of the terms of the swap, 

24 or the group, category, type, or class of swaps, 

25 and the clearing arrangement. 
562 

† HR 4173 EAS 

1 ‘‘(B) DEADLINE.—The Commission shall 

2 complete a review undertaken pursuant to sub3 paragraph (A) not later than 90 days after 

4 issuance of the stay, unless the derivatives clear5 ing organization that clears the swap, or the 

6 group, category, type, or class of swaps, agrees to 

7 an extension of the time limitation established 

8 under this subparagraph. 

9 ‘‘(C) DETERMINATION.—Upon completion of 

10 the review undertaken pursuant to subparagraph 

11 (A)— 

12 ‘‘(i) the Commission may determine, 

13 unconditionally or subject to such terms 

14 and conditions as the Commission deter15 mines to be appropriate, that the swap, or 

16 the group, category, type, or class of swaps, 

17 must be cleared pursuant to this subsection 

18 if the Commission finds that such clear19 ing— 

20 ‘‘(I) is consistent with section 

21 5b(c)(2); and 

22 ‘‘(II) is otherwise in the public in23 terest, for the protection of investors, 

24 and consistent with the purposes of 

25 this Act; 
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† HR 4173 EAS 

1 ‘‘(ii) the Commission may determine 

2 that the clearing requirement of paragraph 

3 (1) shall not apply to the swap, or the 

4 group, category, type, or class of swaps; or 

5 ‘‘(iii) if a determination is made that 

6 the clearing requirement of paragraph (1) 

7 shall no longer apply, then it shall still be 

8 permissible to clear such swap, or the 

9 group, category, type, or class of swaps. 

10 ‘‘(D) RULES.—The Commission shall adopt 

11 rules for reviewing, pursuant to this paragraph, 

12 a derivatives clearing organization’s clearing of 

13 a swap, or a group, category, type, or class of 

14 swaps that the Commission has accepted for 

15 clearing. 

16 ‘‘(4) SWAPS REQUIRED TO BE ACCEPTED FOR

17 CLEARING.— 

18 ‘‘(A) RULEMAKING.—The Commission shall 

19 adopt rules to further identify any group, cat20 egory, type, or class of swaps not submitted for 

21 approval under paragraph (2) that the Commis22 sion deems should be accepted for clearing. In 

23 adopting such rules, the Commission shall take 

24 into account the following factors: 
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† HR 4173 EAS 

1 ‘‘(i) The extent to which any of the 

2 terms of the group, category, type, or class 

3 of swaps, including price, are disseminated 

4 to third parties or are referenced in other 

5 agreements, contracts, or transactions. 

6 ‘‘(ii) The volume of transactions in the 

7 group, category, type, or class of swaps. 

8 ‘‘(iii) The extent to which the terms of 

9 the group, category, type, or class of swaps 

10 are similar to the terms of other agreements, 

11 contracts, or transactions that are cleared. 

12 ‘‘(iv) Whether any differences in the 

13 terms of the group, category, type, or class 

14 of swaps, compared to other agreements, 

15 contracts, or transactions that are cleared, 

16 are of economic significance. 

17 ‘‘(v) Whether a derivatives clearing or18 ganization is prepared to clear the group, 

19 category, type, or class of swaps and such 

20 derivatives clearing organization has in 

21 place effective risk management systems. 

22 ‘‘(vi) Any other factors the Commission 

23 determine to be appropriate. 

24 ‘‘(B) OTHER DESIGNATIONS.—At any time 

25 after the adoption of the rules required under 
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† HR 4173 EAS 

1 subparagraph (A), the Commission may sepa2 rately designate a particular swap or class of 

3 swaps as subject to the clearing requirement in 

4 paragraph (1), taking into account the factors 

5 described in clauses (i) through (vi) of subpara6 graph (A) and the rules adopted under such sub7 paragraph. 

8 ‘‘(C) IN GENERAL.—In accordance with 

9 subparagraph (A), the Commission shall, con10 sistent with the public interest, adopt rules 

11 under the expedited process described in subpara12 graph (D) to establish criteria for determining 

13 that a swap, or any group, category, type, or 

14 class of swap is required to be cleared. 

15 ‘‘(D) EXPEDITED RULEMAKING AUTHOR16 ITY.— 

17 ‘‘(i) PROCEDURE.—The promulgation 

18 of regulations under subparagraph (A) may 

19 be made without regard to— 

20 ‘‘(I) the notice and comment pro21 visions of section 553 of title 5, United 

22 States Code; and 

23 ‘‘(II) chapter 35 of title 44, 

24 United States Code (commonly known 

25 as the ‘Paperwork Reduction Act’). 
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† HR 4173 EAS 

1 ‘‘(ii) AGENCY RULEMAKING.—In car2 rying out subparagraph (A), the Commis3 sion shall use the authority provided under 

4 section 808 of title 5, United States Code. 

5 ‘‘(5) PREVENTION OF EVASION.— 

6 ‘‘(A) IN GENERAL.—The Commission may 

7 prescribe rules under this subsection (and issue 

8 interpretations of rules prescribed under this 

9 subsection) as determined by the Commission to 

10 be necessary to prevent evasions of the manda11 tory clearing requirements under this Act. 

12 ‘‘(B) DUTY OF COMMISSION TO INVESTIGATE

13 AND TAKE CERTAIN ACTIONS.—To the extent the 

14 Commission finds that a particular swap, group, 

15 category, type, or class of swaps would otherwise 

16 be subject to mandatory clearing but no deriva17 tives clearing organization has listed the swap, 

18 group, category, type, or class of swaps for clear19 ing, the Commission shall— 

20 ‘‘(i) investigate the relevant facts and 

21 circumstances; 

22 ‘‘(ii) within 30 days issue a public re23 port containing the results of the investiga24 tion; and 
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† HR 4173 EAS 

1 ‘‘(iii) take such actions as the Commis2 sion determines to be necessary and in the 

3 public interest, which may include requir4 ing the retaining of adequate margin or 

5 capital by parties to the swap, group, cat6 egory, type, or class of swaps. 

7 ‘‘(C) EFFECT ON AUTHORITY.—Nothing in 

8 this paragraph shall— 

9 ‘‘(i) authorize the Commission to re10 quire a derivatives clearing organization to 

11 list for clearing a swap, group, category, 

12 type, or class of swaps if the clearing of the 

13 swap, group, category, type, or class of 

14 swaps would adversely affect the business 

15 operations of the derivatives clearing orga16 nization, threaten the financial integrity of 

17 the derivatives clearing organization, or 

18 pose a systemic risk to the derivatives clear19 ing organization; and 

20 ‘‘(ii) affect the authority of the Com21 mission to enforce the open access provisions 

22 of paragraph (1) with respect to a swap, 

23 group, category, type, or class of swaps that 

24 is listed for clearing by a derivatives clear25 ing organization. 
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† HR 4173 EAS 

1 ‘‘(6) REQUIRED REPORTING.— 

2 ‘‘(A) BOTH COUNTERPARTIES.—Both 

3 counterparties to a swap that is not cleared by 

4 any derivatives clearing organization shall re5 port such a swap either to a registered swap re6 pository described in section 21 or, if there is no 

7 repository that would accept the swap, to the 

8 Commission pursuant to section 4r. 

9 ‘‘(B) TIMING.—Counterparties to a swap 

10 shall submit the reports required under subpara11 graph (A) not later than such time period as the 

12 Commission may by rule or regulation prescribe. 

13 ‘‘(7) TRANSITION RULES.— 

14 ‘‘(A) REPORTING TRANSITION RULES.— 

15 Rules adopted by the Commission under this sec16 tion shall provide for the reporting of data, as 

17 follows: 

18 ‘‘(i) SWAPS ENTERED INTO BEFORE

19 DATE OF ENACTMENT OF THIS SUB20 SECTION.—Swaps entered into before the 

21 date of the enactment of this subsection shall 

22 be reported to a registered swap repository 

23 or the Commission not later than 180 days 

24 after the effective date of this subsection. 
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† HR 4173 EAS 

1 ‘‘(ii) SWAPS ENTERED INTO ON OR

2 AFTER DATE OF ENACTMENT OF THIS SUB3 SECTION.—Swaps entered into on or after 

4 such date of enactment shall be reported to 

5 a registered swap repository or the Commis6 sion not later than the later of— 

7 ‘‘(I) 90 days after such effective 

8 date; or 

9 ‘‘(II) such other time after enter10 ing into the swap as the Commission 

11 may prescribe by rule or regulation. 

12 ‘‘(B) CLEARING TRANSITION RULES.— 

13 ‘‘(i) SWAPS ENTERED INTO BEFORE

14 THE DATE OF THE ENACTMENT OF THIS

15 SUBSECTION.—Swaps entered into before 

16 the date of the enactment of this subsection 

17 are exempt from the clearing requirements 

18 of this subsection if reported pursuant to 

19 subparagraph (A)(i). 

20 ‘‘(ii) SWAPS ENTERED INTO BEFORE

21 APPLICATION OF CLEARING REQUIRE22 MENT.—Swaps entered into before applica23 tion of the clearing requirement pursuant to 

24 this subsection are exempt from the clearing 
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1 requirements of this subsection if reported 

2 pursuant to subparagraph (A)(ii). 

3 ‘‘(8) TRADE EXECUTION.— 

4 ‘‘(A) IN GENERAL.—With respect to trans5 actions involving swaps subject to the clearing 

6 requirement of paragraph (1), counterparties 

7 shall— 

8 ‘‘(i) execute the transaction on a board 

9 of trade designated as a contract market 

10 under section 5; or 

11 ‘‘(ii) execute the transaction on a swap 

12 execution facility registered under section 

13 5h or a swap execution facility that is ex14 empt from registration under section 5h(f) 

15 of this Act. 

16 ‘‘(B) EXCEPTION.—The requirements of 

17 clauses (i) and (ii) of subparagraph (A) shall not 

18 apply if no board of trade or swap execution fa19 cility makes the swap available to trade or a 

20 swap transactions where a commercial end user 

21 opts to use the clearing exemption under para22 graph (9). 

23 ‘‘(9) REQUIRED EXEMPTION.—Subject to para24 graph (4), the Commission shall exempt a swap from 

25 the requirements of paragraphs (1) and (8) and any 
571 

† HR 4173 EAS 

1 rules issued under this subsection, if no derivatives 

2 clearing organization registered under this Act or no 

3 derivatives clearing organization that is exempt from 

4 registration under section 5b(j) of this Act will accept 

5 the swap from clearing. 

6 ‘‘(10) END USER CLEARING EXEMPTION.— 

7 ‘‘(A) DEFINITION OF COMMERCIAL END

8 USER.— 

9 ‘‘(i) IN GENERAL.—In this paragraph, 

10 the term ‘commercial end user’ means any 

11 person other than a financial entity de12 scribed in clause (ii) who, as its primary 

13 business activity, owns, uses, produces, 

14 processes, manufactures, distributes, mer15 chandises, or markets goods, services, or 

16 commodities (which shall include but not be 

17 limited to coal, natural gas, electricity, eth18 anol, crude oil, gasoline, propane, dis19 tillates, and other hydrocarbons) either in20 dividually or in a fiduciary capacity. 

21 ‘‘(ii) FINANCIAL ENTITY.—The term 

22 ‘financial entity’ means— 

23 ‘‘(I) a swap dealer, major swap 

24 participant, security-based swap deal-
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1 er, or major security-based swap par2 ticipant; 

3 ‘‘(II) a person predominantly en4 gaged in activities that are in the busi5 ness of banking or financial in nature, 

6 as defined in Section 4(k) of the Bank 

7 Holding Company Act of 1956; 

8 ‘‘(III) a person predominantly en9 gaged in activities that are financial 

10 in nature; 

11 ‘‘(IV) a commodity pool or a pri12 vate fund as defined in section 202(a) 

13 of the Investment Advisers Act of 1940 

14 (15 U.S.C. 80b–2(a)); or 

15 ‘‘(V) a person that is registered or 

16 required to be registered with the Com17 mission. 

18 ‘‘(B) END USER CLEARING EXEMPTION.— 

19 ‘‘(i) IN GENERAL.—Subject to clause 

20 (ii), in the event that a swap is subject to 

21 the mandatory clearing requirement under 

22 paragraph (1), and 1 of the counterparties 

23 to the swap is a commercial end user, that 

24 counterparty— 
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† HR 4173 EAS 

1 ‘‘(I)(aa) may elect not to clear the 

2 swap, as required under paragraph 

3 (1); or 

4 ‘‘(bb) may elect to require clearing 

5 of the swap; and 

6 ‘‘(II) if the end user makes an 

7 election under subclause (I)(bb), shall 

8 have the sole right to select the deriva9 tives clearing organization at which 

10 the swap will be cleared. 

11 ‘‘(ii) LIMITATION.—A commercial end 

12 user may only make an election under 

13 clause (i) if the end user is using the swap 

14 to hedge its own commercial risk. 

15 ‘‘(C) TREATMENT OF AFFILIATES.— 

16 ‘‘(i) IN GENERAL.—An affiliate of a 

17 commercial end user (including affiliate en18 tities predominantly engaged in providing 

19 financing for the purchase of the merchan20 dise or manufactured goods of the commer21 cial end user) may make an election under 

22 subparagraph (B)(i) only if the affiliate, 

23 acting on behalf of the commercial end user 

24 and as an agent, uses the swap to hedge or 

25 mitigate the commercial risk of the commer-
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† HR 4173 EAS 

1 cial end user parent or other affiliate of the 

2 commercial end user that is not a financial 

3 entity. 

4 ‘‘(ii) PROHIBITION RELATING TO CER5 TAIN AFFILIATES.—An affiliate of a com6 mercial end user shall not use the exemption 

7 under subparagraph (B) if the affiliate is— 

8 ‘‘(I) a swap dealer; 

9 ‘‘(II) a security-based swap deal10 er; 

11 ‘‘(III) a major swap participant; 

12 ‘‘(IV) a major security-based swap 

13 participant; 

14 ‘‘(V) an issuer that would be an 

15 investment company, as defined in sec16 tion 3 of the Investment Company Act 

17 of 1940 (15 U.S.C. 80a–3), but for 

18 paragraph (1) or (7) of subsection (c) 

19 of that Act (15 U.S.C. 80a–3(c)); 

20 ‘‘(VI) a commodity pool; 

21 ‘‘(VII) a bank holding company 

22 with over $50,000,000,000 in consoli23 dated assets; or 
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† HR 4173 EAS 

1 ‘‘(VIII) an affiliate of any entity 

2 described in subclauses (I) through 

3 (VII). 

4 ‘‘(D) ABUSE OF EXEMPTION.—The Commis5 sion may prescribe such rules or issue interpre6 tations of the rules as the Commission deter7 mines to be necessary to prevent abuse of the ex8 emption described in subparagraph (B). The 

9 Commission may also request information from 

10 those entities claiming the clearing exemption as 

11 necessary to prevent abuse of the exemption de12 scribed in subparagraph (B). 

13 ‘‘(E) OPTION TO CLEAR.— 

14 ‘‘(i) SWAPS REQUIRED TO BE CLEARED

15 ENTERED INTO WITH A FINANCIAL ENTI16 TY.—With respect to any swap that is re17 quired to be cleared by a derivatives clear18 ing organization and entered into by a 

19 swap dealer or a major swap participant 

20 with a financial entity, the financial entity 

21 shall have the sole right to select the deriva22 tives clearing organization at which the 

23 swap will be cleared. 

24 ‘‘(ii) SWAPS NOT REQUIRED TO BE

25 CLEARED ENTERED INTO WITH A FINANCIAL
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† HR 4173 EAS 

1 ENTITY OR COMMERCIAL END USER.—With 

2 respect to any swap that is not required to 

3 be cleared by a derivatives clearing organi4 zation and entered into by a swap dealer or 

5 a major swap participant with a financial 

6 entity or commercial end user, the financial 

7 entity or commercial end user— 

8 ‘‘(I) may elect to require clearing 

9 of the swap; and 

10 ‘‘(II) shall have the sole right to 

11 select the derivatives clearing organiza12 tion at which the swap will be 

13 cleared.’’. 

14 (b) COMMODITY EXCHANGE ACT.—Section 2 of the 

15 Commodity Exchange Act (7 U.S.C. 2) is amended by add16 ing at the end the following: 

17 ‘‘(j) AUDIT COMMITTEE APPROVAL.—Exemptions from 

18 the requirements of subsection (h)(2)(F) to clear a swap and 

19 subsection (b) to trade a swap through a board of trade 

20 or swap execution facility shall be available to a 

21 counterparty that is an issuer of securities that are reg22 istered under section 12 of the Securities Exchange Act of 

23 1934 (15 U.S.C. 78l) or that is required to file reports pur24 suant to section 15(d) of the Securities Exchange Act of 

25 1934 (15 U.S.C. 78o) only if the issuer’s audit committee 
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† HR 4173 EAS 

1 has reviewed and approved its decision to enter into swaps 

2 that are subject to such exemptions.’’. 

3 (c) GRANDFATHER PROVISIONS.— 

4 (1) LEGAL CERTAINTY FOR CERTAIN TRANS5 ACTIONS IN EXEMPT COMMODITIES.—Not later than 

6 60 days after the date of enactment of this Act, a per7 son may submit to the Commodity Futures Trading 

8 Commission a petition to remain subject to section 

9 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) 

10 (as in effect on the day before the date of enactment 

11 of this Act). 

12 (2) CONSIDERATION; AUTHORITY OF COMMODITY

13 FUTURES TRADING COMMISSION.—The Commodity 

14 Futures Trading Commission— 

15 (A) shall consider any petition submitted 

16 under subparagraph (A) in a prompt manner; 

17 and 

18 (B) may allow a person to continue oper19 ating subject to section 2(h) of the Commodity 

20 Exchange Act (7 U.S.C. 2(h)) (as in effect on the 

21 day before the date of enactment of this Act) for 

22 not longer than a 1-year period. 

23 (3) AGRICULTURAL SWAPS.— 

24 (A) IN GENERAL.—Except as provided in 

25 paragraph (2), no person shall offer to enter 
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† HR 4173 EAS 

1 into, enter into, or confirm the execution of, any 

2 swap in an agricultural commodity (as defined 

3 by the Commodity Futures Trading Commis4 sion). 

5 (B) EXCEPTION.—Notwithstanding para6 graph (1), a person may offer to enter into, enter 

7 into, or confirm the execution of, any swap in 

8 an agricultural commodity pursuant to section 

9 4(c) of the Commodity Exchange Act (7 U.S.C. 

10 6(c)) or any rule, regulation, or order issued 

11 thereunder (including any rule, regulation, or 

12 order in effect as of the date of enactment of this 

13 Act) by the Commodity Futures Trading Com14 mission to allow swaps under such terms and 

15 conditions as the Commission shall prescribe. 

16 (4) REQUIRED REPORTING.—If the exception de17 scribed in paragraph (2) applies, and there is no fa18 cility that makes the swap available to trade, the 

19 counterparties shall comply with any recordkeeping 

20 and transaction reporting requirements that may be 

21 prescribed by the Commission with respect to swaps 

22 subject to the requirements of paragraph (1). 
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† HR 4173 EAS 

1 SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREAT2 MENT. 

3 (a) SEGREGATION REQUIREMENTS FOR CLEARED

4 SWAPS.—Section 4d of the Commodity Exchange Act (7 

5 U.S.C. 6d) (as amended by section 732) is amended by add6 ing at the end the following: 

7 ‘‘(f) SWAPS.— 

8 ‘‘(1) REGISTRATION REQUIREMENT.—It shall be 

9 unlawful for any person to accept any money, securi10 ties, or property (or to extend any credit in lieu of 

11 money, securities, or property) from, for, or on behalf 

12 of a swaps customer to margin, guarantee, or secure 

13 a swap cleared by or through a derivatives clearing 

14 organization (including money, securities, or property 

15 accruing to the customer as the result of such a 

16 swap), unless the person shall have registered under 

17 this Act with the Commission as a futures commis18 sion merchant, and the registration shall not have ex19 pired nor been suspended nor revoked. 

20 ‘‘(2) CLEARED SWAPS.— 

21 ‘‘(A) SEGREGATION REQUIRED.—A futures 

22 commission merchant shall treat and deal with 

23 all money, securities, and property of any swaps 

24 customer received to margin, guarantee, or secure 

25 a swap cleared by or though a derivatives clear26 ing organization (including money, securities, or 
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† HR 4173 EAS 

1 property accruing to the swaps customer as the 

2 result of such a swap) as belonging to the swaps 

3 customer. 

4 ‘‘(B) COMMINGLING PROHIBITED.—Money, 

5 securities, and property of a swaps customer de6 scribed in subparagraph (A) shall be separately 

7 accounted for and shall not be commingled with 

8 the funds of the futures commission merchant or 

9 be used to margin, secure, or guarantee any 

10 trades or contracts of any swaps customer or 

11 person other than the person for whom the same 

12 are held. 

13 ‘‘(3) EXCEPTIONS.— 

14 ‘‘(A) USE OF FUNDS.— 

15 ‘‘(i) IN GENERAL.—Notwithstanding 

16 paragraph (2), money, securities, and prop17 erty of a swaps customer of a futures com18 mission merchant described in paragraph 

19 (2) may, for convenience, be commingled 

20 and deposited in the same 1 or more ac21 counts with any bank or trust company or 

22 with a derivatives clearing organization. 

23 ‘‘(ii) WITHDRAWAL.—Notwithstanding 

24 paragraph (2), such share of the money, se25 curities, and property described in clause 
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† HR 4173 EAS 

1 (i) as in the normal course of business shall 

2 be necessary to margin, guarantee, secure, 

3 transfer, adjust, or settle a cleared swap 

4 with a derivatives clearing organization, or 

5 with any member of the derivatives clearing 

6 organization, may be withdrawn and ap7 plied to such purposes, including the pay8 ment of commissions, brokerage, interest, 

9 taxes, storage, and other charges, lawfully 

10 accruing in connection with the cleared 

11 swap. 

12 ‘‘(B) COMMISSION ACTION.—Notwith13 standing paragraph (2), in accordance with such 

14 terms and conditions as the Commission may 

15 prescribe by rule, regulation, or order, any 

16 money, securities, or property of the swaps cus17 tomer of a futures commission merchant de18 scribed in paragraph (2) may be commingled 

19 and deposited as provided in this section with 

20 any other money, securities, or property received 

21 by the futures commission merchant and re22 quired by the Commission to be separately ac23 counted for and treated and dealt with as belong24 ing to the swaps customer of the futures commis25 sion merchant. 
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† HR 4173 EAS 

1 ‘‘(4) PERMITTED INVESTMENTS.—Money de2 scribed in paragraph (2) may be invested in obliga3 tions of the United States, in general obligations of 

4 any State or of any political subdivision of a State, 

5 and in obligations fully guaranteed as to principal 

6 and interest by the United States, or in any other in7 vestment that the Commission may by rule or regula8 tion prescribe, and such investments shall be made in 

9 accordance with such rules and regulations and sub10 ject to such conditions as the Commission may pre11 scribe. 

12 ‘‘(5) COMMODITY CONTRACT.—A swap cleared by 

13 or through a derivatives clearing organization shall be 

14 considered to be a commodity contract as such term 

15 is defined in section 761 of title 11, United States 

16 Code, with regard to all money, securities, and prop17 erty of any swaps customer received by a futures com18 mission merchant or a derivatives clearing organiza19 tion to margin, guarantee, or secure the swap (includ20 ing money, securities, or property accruing to the cus21 tomer as the result of the swap). 

22 ‘‘(6) PROHIBITION.—It shall be unlawful for any 

23 person, including any derivatives clearing organiza24 tion and any depository institution, that has received 

25 any money, securities, or property for deposit in a 
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† HR 4173 EAS 

1 separate account or accounts as provided in para2 graph (2) to hold, dispose of, or use any such money, 

3 securities, or property as belonging to the depositing 

4 futures commission merchant or any person other 

5 than the swaps customer of the futures commission 

6 merchant.’’. 

7 (b) BANKRUPTCY TREATMENT OF CLEARED SWAPS.— 

8 Section 761 of title 11, United States Code, is amended— 

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

10 (F) and inserting the following: 

11 ‘‘(F)(i) any other contract, option, agree12 ment, or transaction that is similar to a con13 tract, option, agreement, or transaction referred 

14 to in this paragraph; and 

15 ‘‘(ii) with respect to a futures commission 

16 merchant or a clearing organization, any other 

17 contract, option, agreement, or transaction, in 

18 each case, that is cleared by a clearing organiza19 tion;’’; and 

20 (2) in paragraph (9)(A)(i), by striking ‘‘the com21 modity futures account’’ and inserting ‘‘a commodity 

22 contract account’’. 

23 (c) SEGREGATION REQUIREMENTS FOR UNCLEARED

24 SWAPS.—Section 4s of the Commodity Exchange Act (as 
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† HR 4173 EAS 

1 added by section 731) is amended by adding at the end 

2 the following: 

3 ‘‘(l) SEGREGATION REQUIREMENTS.— 

4 ‘‘(1) SEGREGATION OF ASSETS HELD AS COLLAT5 ERAL IN UNCLEARED SWAP TRANSACTIONS.— 

6 ‘‘(A) NOTIFICATION.—A swap dealer or 

7 major swap participant shall be required to no8 tify the counterparty of the swap dealer or major 

9 swap participant at the beginning of a swap 

10 transaction that the counterparty has the right 

11 to require segregation of the funds or other prop12 erty supplied to margin, guarantee, or secure the 

13 obligations of the counterparty. 

14 ‘‘(B) SEGREGATION AND MAINTENANCE OF

15 FUNDS.—At the request of a counterparty to a 

16 swap that provides funds or other property to a 

17 swap dealer or major swap participant to mar18 gin, guarantee, or secure the obligations of the 

19 counterparty, the swap dealer or major swap 

20 participant shall— 

21 ‘‘(i) segregate the funds or other prop22 erty for the benefit of the counterparty; and 

23 ‘‘(ii) in accordance with such rules and 

24 regulations as the Commission may promul25 gate, maintain the funds or other property 
585 

† HR 4173 EAS 

1 in a segregated account separate from the 

2 assets and other interests of the swap dealer 

3 or major swap participant. 

4 ‘‘(2) APPLICABILITY.—The requirements de5 scribed in paragraph (1) shall— 

6 ‘‘(A) apply only to a swap between a 

7 counterparty and a swap dealer or major swap 

8 participant that is not submitted for clearing to 

9 a derivatives clearing organization; and 

10 ‘‘(B)(i) not apply to variation margin pay11 ments; or 

12 ‘‘(ii) not preclude any commercial arrange13 ment regarding— 

14 ‘‘(I) the investment of segregated funds 

15 or other property that may only be invested 

16 in such investments as the Commission may 

17 permit by rule or regulation; and 

18 ‘‘(II) the related allocation of gains 

19 and losses resulting from any investment of 

20 the segregated funds or other property. 

21 ‘‘(3) USE OF INDEPENDENT THIRD-PARTY

22 CUSTODIANS.—The segregated account described in 

23 paragraph (1) shall be— 

24 ‘‘(A) carried by an independent third-party 

25 custodian; and 
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† HR 4173 EAS 

1 ‘‘(B) designated as a segregated account for 

2 and on behalf of the counterparty. 

3 ‘‘(4) REPORTING REQUIREMENT.—If the 

4 counterparty does not choose to require segregation of 

5 the funds or other property supplied to margin, guar6 antee, or secure the obligations of the counterparty, 

7 the swap dealer or major swap participant shall re8 port to the counterparty of the swap dealer or major 

9 swap participant on a quarterly basis that the back 

10 office procedures of the swap dealer or major swap 

11 participant relating to margin and collateral require12 ments are in compliance with the agreement of the 

13 counterparties.’’. 

14 SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS. 

15 (a) REGISTRATION REQUIREMENT.—Section 5b of the 

16 Commodity Exchange Act (7 U.S.C. 7a–1) is amended by 

17 striking subsections (a) and (b) and inserting the following: 

18 ‘‘(a) REGISTRATION REQUIREMENT.— 

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), it shall be unlawful for a derivatives clear21 ing organization, directly or indirectly, to make use 

22 of the mails or any means or instrumentality of 

23 interstate commerce to perform the functions of a de24 rivatives clearing organization with respect to— 
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† HR 4173 EAS 

1 ‘‘(A) a contract of sale of a commodity for 

2 future delivery (or an option on the contract of 

3 sale) or option on a commodity, in each case, 

4 unless the contract or option is— 

5 ‘‘(i) excluded from this Act by sub6 section (a)(1)(C)(i), (c), or (f) of section 2; 

7 or 

8 ‘‘(ii) a security futures product cleared 

9 by a clearing agency registered with the Se10 curities and Exchange Commission under 

11 the Securities Exchange Act of 1934 (15 

12 U.S.C. 78a et seq.); or 

13 ‘‘(B) a swap. 

14 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

15 apply to a derivatives clearing organization that is 

16 registered with the Commission. 

17 ‘‘(b) VOLUNTARY REGISTRATION.—A person that 

18 clears 1 or more agreements, contracts, or transactions that 

19 are not required to be cleared under this Act may register 

20 with the Commission as a derivatives clearing organiza21 tion.’’. 

22 (b) REGISTRATION FOR DEPOSITORY INSTITUTIONS

23 AND CLEARING AGENCIES; EXEMPTIONS; COMPLIANCE OF24 FICER; ANNUAL REPORTS.—Section 5b of the Commodity 
588 

† HR 4173 EAS 

1 Exchange Act (7 U.S.C. 7a–1) is amended by adding at 

2 the end the following: 

3 ‘‘(g) REQUIRED REGISTRATION FOR DEPOSITORY IN4 STITUTIONS AND CLEARING AGENCIES.—A person that is 

5 required to be registered as a derivatives clearing organiza6 tion under this section shall register with the Commission 

7 regardless of whether the person is also licensed as a deposi8 tory institution (as that term is defined in section 3 of the 

9 Federal Deposit Insurance Act (12 U.S.C. 1813) or a clear10 ing agency registered with the Securities and Exchange 

11 Commission under the Securities Exchange Act of 1934 (15 

12 U.S.C. 78a et seq.). 

13 ‘‘(h) EXISTING DEPOSITORY INSTITUTIONS AND

14 CLEARING AGENCIES.— 

15 ‘‘(1) IN GENERAL.—A depository institution or 

16 clearing agency registered with the Securities and Ex17 change Commission under the Securities Exchange 

18 Act of 1934 (15 U.S.C. 78a et seq.) that is required 

19 to be registered as a derivatives clearing organization 

20 under this section is deemed to be registered under 

21 this section to the extent that, before the date of enact22 ment of this subsection— 

23 ‘‘(A) the depository institution cleared 

24 swaps as a multilateral clearing organization; or 

25 ‘‘(B) the clearing agency cleared swaps. 
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† HR 4173 EAS 

1 ‘‘(2) CONVERSION OF DEPOSITORY INSTITU2 TIONS.—A depository institution to which this para3 graph applies may, by the vote of the shareholders 

4 owning not less than 51 percent of the voting interests 

5 of the depository institution, be converted into a State 

6 corporation, partnership, limited liability company, 

7 or similar legal form pursuant to a plan of conver8 sion, if the conversion is not in contravention of ap9 plicable State law. 

10 ‘‘(i) EXEMPTIONS.—The Commission may exempt, 

11 conditionally or unconditionally, a derivatives clearing or12 ganization from registration under this section for the 

13 clearing of swaps if the Commission determines that the de14 rivatives clearing organization is subject to comparable, 

15 comprehensive supervision and regulation by the Securities 

16 and Exchange Commission or the appropriate government 

17 authorities in the home country of the organization. Such 

18 conditions may include, but are not limited to, requiring 

19 that the derivatives clearing organization be available for 

20 inspection by the Commission and make available all infor21 mation requested by the Commission. 

22 ‘‘(j) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

23 ‘‘(1) IN GENERAL.—Each derivatives clearing or24 ganization shall designate an individual to serve as 

25 a chief compliance officer. 
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† HR 4173 EAS 

1 ‘‘(2) DUTIES.—The chief compliance officer 

2 shall— 

3 ‘‘(A) report directly to the board or to the 

4 senior officer of the derivatives clearing organi5 zation; 

6 ‘‘(B) review the compliance of the deriva7 tives clearing organization with respect to the 

8 core principles described in subsection (c)(2); 

9 ‘‘(C) in consultation with the board of the 

10 derivatives clearing organization, a body per11 forming a function similar to the board of the 

12 derivatives clearing organization, or the senior 

13 officer of the derivatives clearing organization, 

14 resolve any conflicts of interest that may arise; 

15 ‘‘(D) be responsible for administering each 

16 policy and procedure that is required to be estab17 lished pursuant to this section; 

18 ‘‘(E) ensure compliance with this Act (in19 cluding regulations) relating to agreements, con20 tracts, or transactions, including each rule pre21 scribed by the Commission under this section; 

22 ‘‘(F) establish procedures for the remedi23 ation of noncompliance issues identified by the 

24 compliance officer through any— 

25 ‘‘(i) compliance office review; 
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† HR 4173 EAS 

1 ‘‘(ii) look-back; 

2 ‘‘(iii) internal or external audit find3 ing; 

4 ‘‘(iv) self-reported error; or 

5 ‘‘(v) validated complaint; and 

6 ‘‘(G) establish and follow appropriate proce7 dures for the handling, management response, re8 mediation, retesting, and closing of noncompli9 ance issues. 

10 ‘‘(3) ANNUAL REPORTS.— 

11 ‘‘(A) IN GENERAL.—In accordance with 

12 rules prescribed by the Commission, the chief 

13 compliance officer shall annually prepare and 

14 sign a report that contains a description of— 

15 ‘‘(i) the compliance of the derivatives 

16 clearing organization of the compliance offi17 cer with respect to this Act (including regu18 lations); and 

19 ‘‘(ii) each policy and procedure of the 

20 derivatives clearing organization of the 

21 compliance officer (including the code of 

22 ethics and conflict of interest policies of the 

23 derivatives clearing organization). 

24 ‘‘(B) REQUIREMENTS.—A compliance re25 port under subparagraph (A) shall— 
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† HR 4173 EAS 

1 ‘‘(i) accompany each appropriate fi2 nancial report of the derivatives clearing or3 ganization that is required to be furnished 

4 to the Commission pursuant to this section; 

5 and 

6 ‘‘(ii) include a certification that, under 

7 penalty of law, the compliance report is ac8 curate and complete.’’. 

9 (c) CORE PRINCIPLES FOR DERIVATIVES CLEARING

10 ORGANIZATIONS.—Section 5b(c) of the Commodity Ex11 change Act (7 U.S.C. 7a–1(c)) is amended by striking para12 graph (2) and inserting the following: 

13 ‘‘(2) CORE PRINCIPLES FOR DERIVATIVES CLEAR14 ING ORGANIZATIONS.— 

15 ‘‘(A) COMPLIANCE.— 

16 ‘‘(i) IN GENERAL.—To be registered 

17 and to maintain registration as a deriva18 tives clearing organization, a derivatives 

19 clearing organization shall comply with 

20 each core principle described in this para21 graph and any requirement that the Com22 mission may impose by rule or regulation 

23 pursuant to section 8a(5). 

24 ‘‘(ii) DISCRETION OF DERIVATIVES

25 CLEARING ORGANIZATION.—Subject to any 
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† HR 4173 EAS 

1 rule or regulation prescribed by the Com2 mission, a derivatives clearing organization 

3 shall have reasonable discretion in estab4 lishing the manner by which the derivatives 

5 clearing organization complies with each 

6 core principle described in this paragraph. 

7 ‘‘(B) FINANCIAL RESOURCES.— 

8 ‘‘(i) IN GENERAL.—Each derivatives 

9 clearing organization shall have adequate 

10 financial, operational, and managerial re11 sources, as determined by the Commission, 

12 to discharge each responsibility of the de13 rivatives clearing organization. 

14 ‘‘(ii) MINIMUM AMOUNT OF FINANCIAL

15 RESOURCES.—Each derivatives clearing or16 ganization shall possess financial resources 

17 that, at a minimum, exceed the total 

18 amount that would— 

19 ‘‘(I) enable the organization to 

20 meet its financial obligations to its 

21 members and participants notwith22 standing a default by the member or 

23 participant creating the largest finan24 cial exposure for that organization in 
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† HR 4173 EAS 

1 extreme but plausible market condi2 tions; and 

3 ‘‘(II) enable the derivatives clear4 ing organization to cover the operating 

5 costs of the derivatives clearing organi6 zation for a period of 1 year (as cal7 culated on a rolling basis). 

8 ‘‘(C) PARTICIPANT AND PRODUCT ELIGI9 BILITY.— 

10 ‘‘(i) IN GENERAL.—Each derivatives 

11 clearing organization shall establish— 

12 ‘‘(I) appropriate admission and 

13 continuing eligibility standards (in14 cluding sufficient financial resources 

15 and operational capacity to meet obli16 gations arising from participation in 

17 the derivatives clearing organization) 

18 for members of, and participants in, 

19 the derivatives clearing organization; 

20 and 

21 ‘‘(II) appropriate standards for 

22 determining the eligibility of agree23 ments, contracts, and transactions sub24 mitted to the derivatives clearing orga25 nization for clearing. 
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† HR 4173 EAS 

1 ‘‘(ii) REQUIRED PROCEDURES.—Each 

2 derivatives clearing organization shall es3 tablish and implement procedures to verify, 

4 on an ongoing basis, the compliance of each 

5 participation and membership requirement 

6 of the derivatives clearing organization. 

7 ‘‘(iii) REQUIREMENTS.—The partici8 pation and membership requirements of 

9 each derivatives clearing organization 

10 shall— 

11 ‘‘(I) be objective; 

12 ‘‘(II) be publicly disclosed; and 

13 ‘‘(III) permit fair and open ac14 cess. 

15 ‘‘(D) RISK MANAGEMENT.— 

16 ‘‘(i) IN GENERAL.—Each derivatives 

17 clearing organization shall ensure that the 

18 derivatives clearing organization possesses 

19 the ability to manage the risks associated 

20 with discharging the responsibilities of the 

21 derivatives clearing organization through 

22 the use of appropriate tools and procedures. 

23 ‘‘(ii) MEASUREMENT OF CREDIT EXPO24 SURE.—Each derivatives clearing organiza25 tion shall— 
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1 ‘‘(I) not less than once during 

2 each business day of the derivatives 

3 clearing organization, measure the 

4 credit exposures of the derivatives 

5 clearing organization to each member 

6 and participant of the derivatives 

7 clearing organization; and 

8 ‘‘(II) monitor each exposure de9 scribed in subclause (I) periodically 

10 during the business day of the deriva11 tives clearing organization. 

12 ‘‘(iii) LIMITATION OF EXPOSURE TO

13 POTENTIAL LOSSES FROM DEFAULTS.— 

14 Each derivatives clearing organization, 

15 through margin requirements and other risk 

16 control mechanisms, shall limit the exposure 

17 of the derivatives clearing organization to 

18 potential losses from defaults by members 

19 and participants of the derivatives clearing 

20 organization to ensure that— 

21 ‘‘(I) the operations of the deriva22 tives clearing organization would not 

23 be disrupted; and 

24 ‘‘(II) nondefaulting members or 

25 participants would not be exposed to 
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1 losses that nondefaulting members or 

2 participants cannot anticipate or con3 trol. 

4 ‘‘(iv) MARGIN REQUIREMENTS.—The 

5 margin required from each member and 

6 participant of a derivatives clearing organi7 zation shall be sufficient to cover potential 

8 exposures in normal market conditions. 

9 ‘‘(v) REQUIREMENTS REGARDING MOD10 ELS AND PARAMETERS.—Each model and 

11 parameter used in setting margin require12 ments under clause (iv) shall be— 

13 ‘‘(I) risk-based; and 

14 ‘‘(II) reviewed on a regular basis. 

15 ‘‘(E) SETTLEMENT PROCEDURES.—Each de16 rivatives clearing organization shall— 

17 ‘‘(i) complete money settlements on a 

18 timely basis (but not less frequently than 

19 once each business day); 

20 ‘‘(ii) employ money settlement ar21 rangements to eliminate or strictly limit the 

22 exposure of the derivatives clearing organi23 zation to settlement bank risks (including 

24 credit and liquidity risks from the use of 

25 banks to effect money settlements); 
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† HR 4173 EAS 

1 ‘‘(iii) ensure that money settlements 

2 are final when effected; 

3 ‘‘(iv) maintain an accurate record of 

4 the flow of funds associated with each 

5 money settlement; 

6 ‘‘(v) possess the ability to comply with 

7 each term and condition of any permitted 

8 netting or offset arrangement with any 

9 other clearing organization; 

10 ‘‘(vi) regarding physical settlements, 

11 establish rules that clearly state each obliga12 tion of the derivatives clearing organization 

13 with respect to physical deliveries; and 

14 ‘‘(vii) ensure that each risk arising 

15 from an obligation described in clause (vi) 

16 is identified and managed. 

17 ‘‘(F) TREATMENT OF FUNDS.— 

18 ‘‘(i) REQUIRED STANDARDS AND PRO19 CEDURES.—Each derivatives clearing orga20 nization shall establish standards and pro21 cedures that are designed to protect and en22 sure the safety of member and participant 

23 funds and assets. 

24 ‘‘(ii) HOLDING OF FUNDS AND AS25 SETS.—Each derivatives clearing organiza-
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† HR 4173 EAS 

1 tion shall hold member and participant 

2 funds and assets in a manner by which to 

3 minimize the risk of loss or of delay in the 

4 access by the derivatives clearing organiza5 tion to the assets and funds. 

6 ‘‘(iii) PERMISSIBLE INVESTMENTS.— 

7 Funds and assets invested by a derivatives 

8 clearing organization shall be held in in9 struments with minimal credit, market, and 

10 liquidity risks. 

11 ‘‘(G) DEFAULT RULES AND PROCEDURES.— 

12 ‘‘(i) IN GENERAL.—Each derivatives 

13 clearing organization shall have rules and 

14 procedures designed to allow for the effi15 cient, fair, and safe management of events 

16 during which members or participants— 

17 ‘‘(I) become insolvent; or 

18 ‘‘(II) otherwise default on the obli19 gations of the members or participants 

20 to the derivatives clearing organiza21 tion. 

22 ‘‘(ii) DEFAULT PROCEDURES.—Each 

23 derivatives clearing organization shall— 
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† HR 4173 EAS 

1 ‘‘(I) clearly state the default pro2 cedures of the derivatives clearing or3 ganization; 

4 ‘‘(II) make publicly available the 

5 default rules of the derivatives clearing 

6 organization; and 

7 ‘‘(III) ensure that the derivatives 

8 clearing organization may take timely 

9 action— 

10 ‘‘(aa) to contain losses and 

11 liquidity pressures; and 

12 ‘‘(bb) to continue meeting 

13 each obligation of the derivatives 

14 clearing organization. 

15 ‘‘(H) RULE ENFORCEMENT.—Each deriva16 tives clearing organization shall— 

17 ‘‘(i) maintain adequate arrangements 

18 and resources for— 

19 ‘‘(I) the effective monitoring and 

20 enforcement of compliance with the 

21 rules of the derivatives clearing organi22 zation; and 

23 ‘‘(II) the resolution of disputes; 

24 ‘‘(ii) have the authority and ability to 

25 discipline, limit, suspend, or terminate the 
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† HR 4173 EAS 

1 activities of a member or participant due to 

2 a violation by the member or participant of 

3 any rule of the derivatives clearing organi4 zation; and 

5 ‘‘(iii) report to the Commission regard6 ing rule enforcement activities and sanc7 tions imposed against members and partici8 pants as provided in clause (ii). 

9 ‘‘(I) SYSTEM SAFEGUARDS.—Each deriva10 tives clearing organization shall— 

11 ‘‘(i) establish and maintain a program 

12 of risk analysis and oversight to identify 

13 and minimize sources of operational risk 

14 through the development of appropriate con15 trols and procedures, and automated sys16 tems, that are reliable, secure, and have 

17 adequate scalable capacity; 

18 ‘‘(ii) establish and maintain emergency 

19 procedures, backup facilities, and a plan for 

20 disaster recovery that allows for— 

21 ‘‘(I) the timely recovery and re22 sumption of operations of the deriva23 tives clearing organization; and 
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† HR 4173 EAS 

1 ‘‘(II) the fulfillment of each obli2 gation and responsibility of the deriva3 tives clearing organization; and 

4 ‘‘(iii) periodically conduct tests to 

5 verify that the backup resources of the de6 rivatives clearing organization are suffi7 cient to ensure daily processing, clearing, 

8 and settlement. 

9 ‘‘(J) REPORTING.—Each derivatives clear10 ing organization shall provide to the Commis11 sion all information that the Commission deter12 mines to be necessary to conduct oversight of the 

13 derivatives clearing organization. 

14 ‘‘(K) RECORDKEEPING.—Each derivatives 

15 clearing organization shall maintain records of 

16 all activities related to the business of the deriva17 tives clearing organization as a derivatives clear18 ing organization— 

19 ‘‘(i) in a form and manner that is ac20 ceptable to the Commission; and 

21 ‘‘(ii) for a period of not less than 5 

22 years. 

23 ‘‘(L) PUBLIC INFORMATION.— 

24 ‘‘(i) IN GENERAL.—Each derivatives 

25 clearing organization shall provide to mar-
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† HR 4173 EAS 

1 ket participants sufficient information to 

2 enable the market participants to identify 

3 and evaluate accurately the risks and costs 

4 associated with using the services of the de5 rivatives clearing organization. 

6 ‘‘(ii) AVAILABILITY OF INFORMA7 TION.—Each derivatives clearing organiza8 tion shall make information concerning the 

9 rules and operating procedures governing 

10 the clearing and settlement systems of the 

11 derivatives clearing organization available 

12 to market participants. 

13 ‘‘(iii) PUBLIC DISCLOSURE.—Each de14 rivatives clearing organization shall disclose 

15 publicly and to the Commission informa16 tion concerning— 

17 ‘‘(I) the terms and conditions of 

18 each contract, agreement, and other 

19 transaction cleared and settled by the 

20 derivatives clearing organization; 

21 ‘‘(II) each clearing and other fee 

22 that the derivatives clearing organiza23 tion charges the members and partici24 pants of the derivatives clearing orga25 nization; 
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† HR 4173 EAS 

1 ‘‘(III) the margin-setting method2 ology, and the size and composition, of 

3 the financial resource package of the 

4 derivatives clearing organization; 

5 ‘‘(IV) daily settlement prices, vol6 ume, and open interest for each con7 tract settled or cleared by the deriva8 tives clearing organization; and 

9 ‘‘(V) any other matter relevant to 

10 participation in the settlement and 

11 clearing activities of the derivatives 

12 clearing organization. 

13 ‘‘(M) INFORMATION-SHARING.—Each de14 rivatives clearing organization shall— 

15 ‘‘(i) enter into, and abide by the terms 

16 of, each appropriate and applicable domes17 tic and international information-sharing 

18 agreement; and 

19 ‘‘(ii) use relevant information obtained 

20 from each agreement described in clause (i) 

21 in carrying out the risk management pro22 gram of the derivatives clearing organiza23 tion. 

24 ‘‘(N) ANTITRUST CONSIDERATIONS.—Unless 

25 necessary or appropriate to achieve the purposes 
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† HR 4173 EAS 

1 of this Act, a derivatives clearing organization 

2 shall not— 

3 ‘‘(i) adopt any rule or take any action 

4 that results in any unreasonable restraint of 

5 trade; or 

6 ‘‘(ii) impose any material anticompeti7 tive burden. 

8 ‘‘(O) GOVERNANCE FITNESS STANDARDS.— 

9 ‘‘(i) GOVERNANCE ARRANGEMENTS.— 

10 Each derivatives clearing organization shall 

11 establish governance arrangements that are 

12 transparent— 

13 ‘‘(I) to fulfill public interest re14 quirements; and 

15 ‘‘(II) to support the objectives of 

16 owners and participants. 

17 ‘‘(ii) FITNESS STANDARDS.—Each de18 rivatives clearing organization shall estab19 lish and enforce appropriate fitness stand20 ards for— 

21 ‘‘(I) directors; 

22 ‘‘(II) members of any disciplinary 

23 committee; 

24 ‘‘(III) members of the derivatives 

25 clearing organization; 
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† HR 4173 EAS 

1 ‘‘(IV) any other individual or en2 tity with direct access to the settlement 

3 or clearing activities of the derivatives 

4 clearing organization; and 

5 ‘‘(V) any party affiliated with 

6 any individual or entity described in 

7 this clause. 

8 ‘‘(P) CONFLICTS OF INTEREST.—Each de9 rivatives clearing organization shall— 

10 ‘‘(i) establish and enforce rules to min11 imize conflicts of interest in the decision12 making process of the derivatives clearing 

13 organization; and 

14 ‘‘(ii) establish a process for resolving 

15 conflicts of interest described in clause (i). 

16 ‘‘(Q) COMPOSITION OF GOVERNING

17 BOARDS.—Each derivatives clearing organiza18 tion shall ensure that the composition of the gov19 erning board or committee of the derivatives 

20 clearing organization includes market partici21 pants. 

22 ‘‘(R) LEGAL RISK.—Each derivatives clear23 ing organization shall have a well-founded, 

24 transparent, and enforceable legal framework for 
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† HR 4173 EAS 

1 each aspect of the activities of the derivatives 

2 clearing organization. 

3 ‘‘(S) MODIFICATION OF CORE PRIN4 CIPLES.—The Commission may conform the core 

5 principles established in this paragraph to reflect 

6 evolving United States and international stand7 ards.’’. 

8 (d) CONFLICTS OF INTEREST.—The Commodity Fu9 tures Trading Commission shall adopt rules mitigating 

10 conflicts of interest in connection with the conduct of busi11 ness by a swap dealer or a major swap participant with 

12 a derivatives clearing organization, board of trade, or a 

13 swap execution facility that clears or trades swaps in which 

14 the swap dealer or major swap participant has a material 

15 debt or material equity investment. 

16 (e) REPORTING REQUIREMENTS.—Section 5b of the 

17 Commodity Exchange Act (7 U.S.C. 7a–1) (as amended by 

18 subsection (b)) is amended by adding at the end the fol19 lowing: 

20 ‘‘(k) REPORTING REQUIREMENTS.— 

21 ‘‘(1) DUTY OF DERIVATIVES CLEARING ORGANI22 ZATIONS.—Each derivatives clearing organization 

23 that clears swaps shall provide to the Commission all 

24 information that is determined by the Commission to 
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† HR 4173 EAS 

1 be necessary to perform each responsibility of the 

2 Commission under this Act. 

3 ‘‘(2) DATA COLLECTION AND MAINTENANCE RE4 QUIREMENTS.—The Commission shall adopt data col5 lection and maintenance requirements for swaps 

6 cleared by derivatives clearing organizations that are 

7 comparable to the corresponding requirements for— 

8 ‘‘(A) swaps data reported to swap data re9 positories; and 

10 ‘‘(B) swaps traded on swap execution facili11 ties. 

12 ‘‘(3) REPORTS ON SECURITY-BASED SWAP

13 AGREEMENTS TO BE SHARED WITH THE SECURITIES

14 AND EXCHANGE COMMISSION.— 

15 ‘‘(A) IN GENERAL.—A derivatives clearing 

16 organization that clears security-based swap 

17 agreements (as defined in section 3(a)(79) of the 

18 Securities Exchange Act) shall, upon request, 

19 make available to the Securities and Exchange 

20 Commission all books and records relating to 

21 such security-based swap agreements, consistent 

22 with the confidentiality and disclosure require23 ments of section 8. 

24 ‘‘(B) JURISDICTION.—Nothing in this para25 graph shall affect the exclusive jurisdiction of the 
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† HR 4173 EAS 

1 Commission to prescribe recordkeeping and re2 porting requirements for a derivatives clearing 

3 organization that is registered with the Commis4 sion.’’ 

5 ‘‘(4) INFORMATION SHARING.—Subject to section 

6 8, and upon request, the Commission shall share in7 formation collected under paragraph (2) with— 

8 ‘‘(A) the Board; 

9 ‘‘(B) the Securities and Exchange Commis10 sion; 

11 ‘‘(C) each appropriate prudential regulator; 

12 ‘‘(D) the Financial Stability Oversight 

13 Council; 

14 ‘‘(E) the Department of Justice; and 

15 ‘‘(F) any other person that the Commission 

16 determines to be appropriate, including— 

17 ‘‘(i) foreign financial supervisors (in18 cluding foreign futures authorities); 

19 ‘‘(ii) foreign central banks; and 

20 ‘‘(iii) foreign ministries. 

21 ‘‘(5) CONFIDENTIALITY AND INDEMNIFICATION

22 AGREEMENT.—Before the Commission may share in23 formation with any entity described in paragraph 

24 (4)— 
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† HR 4173 EAS 

1 ‘‘(A) the Commission shall receive a written 

2 agreement from each entity stating that the enti3 ty shall abide by the confidentiality requirements 

4 described in section 8 relating to the information 

5 on swap transactions that is provided; and 

6 ‘‘(B) each entity shall agree to indemnify 

7 the Commission for any expenses arising from 

8 litigation relating to the information provided 

9 under section 8. 

10 ‘‘(6) PUBLIC INFORMATION.—Each derivatives 

11 clearing organization that clears swaps shall provide 

12 to the Commission (including any designee of the 

13 Commission) information under paragraph (2) in 

14 such form and at such frequency as is required by the 

15 Commission to comply with the public reporting re16 quirements contained in section 2(a)(13).’’. 

17 (f) PUBLIC DISCLOSURE.—Section 8(e) of the Com18 modity Exchange Act (7 U.S.C. 12(e)) is amended in the 

19 last sentence— 

20 (1) by inserting ‘‘, central bank and ministries,’’ 

21 after ‘‘department’’ each place it appears; and 

22 (2) by striking ‘‘. is a party.’’ and inserting ‘‘, 

23 is a party.’’. 

24 (g) LEGAL CERTAINTY FOR IDENTIFIED BANKING

25 PRODUCTS.— 
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† HR 4173 EAS 

1 (1) REPEALS.—The Legal Certainty for Bank 

2 Products Act of 2000 (7 U.S.C. 27 et seq.) is amend3 ed— 

4 (A) by striking sections 404 and 407 (7 

5 U.S.C. 27b, 27e); 

6 (B) in section 402 (7 U.S.C. 27), by strik7 ing subsection (d); and 

8 (C) in section 408 (7 U.S.C. 27f)— 

9 (i) in subsection (c)— 

10 (I) by striking ‘‘in the case’’ and 

11 all that follows through ‘‘a hybrid’’ and 

12 inserting ‘‘in the case of a hybrid’’; 

13 (II) by striking ‘‘; or’’ and insert14 ing a period; and 

15 (III) by striking paragraph (2); 

16 (ii) by striking subsection (b); and 

17 (iii) by redesignating subsection (c) as 

18 subsection (b). 

19 (2) LEGAL CERTAINTY FOR BANK PRODUCTS ACT

20 OF 2000.—Section 403 of the Legal Certainty for 

21 Bank Products Act of 2000 (7 U.S.C. 27a) is amend22 ed to read as follows: 

23 ‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. 

24 ‘‘(a) EXCLUSION.—Except as provided in subsection 

25 (b) or (c)— 
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† HR 4173 EAS 

1 ‘‘(1) the Commodity Exchange Act (7 U.S.C. 1 

2 et seq.) shall not apply to, and the Commodity Fu3 tures Trading Commission shall not exercise regu4 latory authority under the Commodity Exchange Act 

5 (7 U.S.C. 1 et seq.) with respect to, an identified 

6 banking product; and 

7 ‘‘(2) the definitions of ‘security-based swap’ in 

8 section 3(a)(68) of the Securities Exchange Act of 

9 1934 and ‘security-based swap agreement’ in section 

10 3(a)(79) of the Securities Exchange Act of 1934 do 

11 not include any identified bank product. 

12 ‘‘(b) EXCEPTION.—An appropriate Federal banking 

13 agency may except an identified banking product of a bank 

14 under its regulatory jurisdiction from the exclusion in sub15 section (a) if the agency determines, in consultation with 

16 the Commodity Futures Trading Commission and the Secu17 rities and Exchange Commission, that the product— 

18 ‘‘(1) would meet the definition of a ‘swap’ under 

19 section 1a(46) of the Commodity Exchange Act (7 

20 U.S.C. 1a) or a ‘security-based swap’ under that sec21 tion 3(a)(68) of the Securities Exchange Act of 1934; 

22 and 

23 ‘‘(2) has become known to the trade as a swap 

24 or security-based swap, or otherwise has been struc25 tured as an identified banking product for the pur-
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† HR 4173 EAS 

1 pose of evading the provisions of the Commodity Ex2 change Act (7 U.S.C. 1 et seq.), the Securities Act of 

3 1933 (15 U.S.C. 77a et seq.), or the Securities Ex4 change Act of 1934 (15 U.S.C. 78a et seq.). 

5 ‘‘(c) EXCEPTION.—The exclusions in subsection (a) 

6 shall not apply to an identified bank product that— 

7 ‘‘(1) is a product of a bank that is not under the 

8 regulatory jurisdiction of an appropriate Federal 

9 banking agency; 

10 ‘‘(2) meets the definition of swap in section 

11 1a(46) of the Commodity Exchange Act or security12 based swap in section 3(a)(68) of the Securities Ex13 change Act of 1934; and 

14 ‘‘(3) has become known to the trade as a swap 

15 or security-based swap, or otherwise has been struc16 tured as an identified banking product for the pur17 pose of evading the provisions of the Commodity Ex18 change Act (7 U.S.C. 1 et seq.), the Securities Act of 

19 1933 (15 U.S.C. 77a et seq.), or the Securities Ex20 change Act of 1934 (15 U.S.C. 78a et seq.).’’. 

21 SEC. 726. RULEMAKING ON CONFLICT OF INTEREST. 

22 (a) IN GENERAL.—Not later than 180 days after the 

23 date of enactment of the Wall Street Transparency and Ac24 countability Act of 2010, the Commodity Futures Trading 

25 Commission shall determine whether to adopt rules to estab-
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† HR 4173 EAS 

1 lish limits on the control of any derivatives clearing organi2 zation that clears swaps, or swap execution facility or board 

3 of trade designated as a contract market that posts swaps 

4 or makes swaps available for trading, by a bank holding 

5 company (as defined in section 2 of the Bank Holding Com6 pany Act of 1956 (12 U.S.C. 1841)) with total consolidated 

7 assets of $50,000,000,000 or more, a nonbank financial 

8 company (as defined in section 102) supervised by the 

9 Board of Governors of the Federal Reserve System, an affil10 iate of such a bank holding company or nonbank financial 

11 company, a swap dealer, major swap participant, or associ12 ated person of a swap dealer or major swap participant. 

13 (b) PURPOSES.—The Commission shall adopt rules if 

14 it determines, after the review described in subsection (a), 

15 that such rules are necessary or appropriate to improve the 

16 governance of, or to mitigate systemic risk, promote com17 petition, or mitigate conflicts of interest in connection with 

18 a swap dealer or major swap participant’s conduct of busi19 ness with, a derivatives clearing organization, contract 

20 market, or swap execution facility that clears or posts swaps 

21 or makes swaps available for trading and in which such 

22 swap dealer or major swap participant has a material debt 

23 or equity investment. 
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† HR 4173 EAS 

1 SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION 

2 DATA. 

3 Section 2(a) of the Commodity Exchange Act (7 U.S.C. 

4 2(a)) is amended by adding at the end the following: 

5 ‘‘(13) PUBLIC AVAILABILITY OF SWAP TRANS6 ACTION DATA.— 

7 ‘‘(A) DEFINITION OF REAL-TIME PUBLIC RE8 PORTING.—In this paragraph, the term ‘real9 time public reporting’ means to report data re10 lating to a swap transaction as soon as techno11 logically practicable after the time at which the 

12 swap transaction has been executed. 

13 ‘‘(B) PURPOSE.—The purpose of this section 

14 is to authorize the Commission to make swap 

15 transaction and pricing data available to the 

16 public in such form and at such times as the 

17 Commission determines appropriate to enhance 

18 price discovery. 

19 ‘‘(C) GENERAL RULE.—The Commission is 

20 authorized and required to provide by rule for 

21 the public availability of swap transaction and 

22 pricing data as follows: 

23 ‘‘(i) With respect to those swaps that 

24 are subject to the mandatory clearing re25 quirement described in subsection (h)(2) 

26 (including those swaps that are exempted 
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† HR 4173 EAS 

1 from the requirement pursuant to subsection 

2 (h)(10)), the Commission shall require real3 time public reporting for such transactions. 

4 ‘‘(ii) With respect to those swaps that 

5 are not subject to the mandatory clearing 

6 requirement described in subsection (h)(2), 

7 but are cleared at a registered derivatives 

8 clearing organization, the Commission shall 

9 require real-time public reporting for such 

10 transactions. 

11 ‘‘(iii) With respect to swaps that are 

12 not cleared at a registered derivatives clear13 ing organization and which are reported to 

14 a swap data repository or the Commission 

15 under subsection (h), the Commission shall 

16 make available to the public, in a manner 

17 that does not disclose the business trans18 actions and market positions of any person, 

19 aggregate data on such swap trading vol20 umes and positions. 

21 ‘‘(iv) With respect to swaps that are 

22 exempt from the requirements of subsection 

23 (h)(1), pursuant to subsection (h)(10), the 

24 Commission shall require real-time public 

25 reporting for such transactions. 
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† HR 4173 EAS 

1 ‘‘(D) REGISTERED ENTITIES AND PUBLIC

2 REPORTING.—The Commission may require reg3 istered entities to publicly disseminate the swap 

4 transaction and pricing data required to be re5 ported under this paragraph. 

6 ‘‘(E) RULEMAKING REQUIRED.—With re7 spect to the rule providing for the public avail8 ability of transaction and pricing data for swaps 

9 described in clauses (i) and (ii) of subparagraph 

10 (C), the rule promulgated by the Commission 

11 shall contain provisions— 

12 ‘‘(i) to ensure such information does 

13 not identify the participants; 

14 ‘‘(ii) to specify the criteria for deter15 mining what constitutes a large notional 

16 swap transaction (block trade) for par17 ticular markets and contracts; 

18 ‘‘(iii) to specify the appropriate time 

19 delay for reporting large notional swap 

20 transactions (block trades) to the public; 

21 and 

22 ‘‘(iv) that take into account whether 

23 the public disclosure will materially reduce 

24 market liquidity. 
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† HR 4173 EAS 

1 ‘‘(F) TIMELINESS OF REPORTING.—Parties 

2 to a swap (including agents of the parties to a 

3 swap) shall be responsible for reporting swap 

4 transaction information to the appropriate reg5 istered entity in a timely manner as may be pre6 scribed by the Commission. 

7 ‘‘(14) SEMIANNUAL AND ANNUAL PUBLIC RE8 PORTING OF AGGREGATE SWAP DATA.— 

9 ‘‘(A) IN GENERAL.—In accordance with 

10 subparagraph (B), the Commission shall issue a 

11 written report on a semiannual and annual 

12 basis to make available to the public information 

13 relating to— 

14 ‘‘(i) the trading and clearing in the 

15 major swap categories; and 

16 ‘‘(ii) the market participants and de17 velopments in new products. 

18 ‘‘(B) USE; CONSULTATION.—In preparing a 

19 report under subparagraph (A), the Commission 

20 shall— 

21 ‘‘(i) use information from swap data 

22 repositories and derivatives clearing organi23 zations; and 

24 ‘‘(ii) consult with the Office of the 

25 Comptroller of the Currency, the Bank for 
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† HR 4173 EAS 

1 International Settlements, and such other 

2 regulatory bodies as may be necessary.’’. 

3 SEC. 728. SWAP DATA REPOSITORIES. 

4 The Commodity Exchange Act is amended by inserting 

5 after section 20 (7 U.S.C. 24) the following: 

6 ‘‘SEC. 21. SWAP DATA REPOSITORIES. 

7 ‘‘(a) REGISTRATION REQUIREMENT.— 

8 ‘‘(1) IN GENERAL.—It shall be unlawful for any 

9 person, unless registered with the Commission, di10 rectly or indirectly to make use of the mails or any 

11 means or instrumentality of interstate commerce to 

12 perform the functions of a swap data repository. 

13 ‘‘(2) INSPECTION AND EXAMINATION.—Each reg14 istered swap data repository shall be subject to inspec15 tion and examination by any representative of the 

16 Commission. 

17 ‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.— 

18 ‘‘(A) IN GENERAL.—To be registered, and 

19 maintain registration, as a swap data reposi20 tory, the swap data repository shall comply 

21 with— 

22 ‘‘(i) the core principles described in 

23 this subsection; and 
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† HR 4173 EAS 

1 ‘‘(ii) any requirement that the Com2 mission may impose by rule or regulation 

3 pursuant to section 8a(5). 

4 ‘‘(B) REASONABLE DISCRETION OF SWAP

5 DATA REPOSITORY.—Unless otherwise determined 

6 by the Commission by rule or regulation, a swap 

7 data repository described in subparagraph (A) 

8 shall have reasonable discretion in establishing 

9 the manner in which the swap data repository 

10 complies with the core principles described in 

11 this subsection. 

12 ‘‘(b) STANDARD SETTING.— 

13 ‘‘(1) DATA IDENTIFICATION.—The Commission 

14 shall prescribe standards that specify the data ele15 ments for each swap that shall be collected and main16 tained by each registered swap data repository. 

17 ‘‘(2) DATA COLLECTION AND MAINTENANCE.— 

18 The Commission shall prescribe data collection and 

19 data maintenance standards for swap data reposi20 tories. 

21 ‘‘(3) COMPARABILITY.—The standards prescribed 

22 by the Commission under this subsection shall be com23 parable to the data standards imposed by the Com24 mission on derivatives clearing organizations in con25 nection with their clearing of swaps. 
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† HR 4173 EAS 

1 ‘‘(4) SHARING OF INFORMATION WITH SECURI2 TIES AND EXCHANGE COMMISSION.—Registered swap 

3 data repositories shall make available to the Securi4 ties and Exchange Commission, upon request, all 

5 books and records relating to security-based swap 

6 agreements that are maintained by such swap data 

7 repository, consistent with the confidentiality and 

8 disclosure requirements of section 8. Nothing in this 

9 paragraph shall affect the exclusive jurisdiction of the 

10 Commission to prescribe recordkeeping and reporting 

11 requirements for a swap data repository that is reg12 istered with the Commission. 

13 ‘‘(c) DUTIES.—A swap data repository shall— 

14 ‘‘(1) accept data prescribed by the Commission 

15 for each swap under subsection (b); 

16 ‘‘(2) confirm with both counterparties to the 

17 swap the accuracy of the data that was submitted; 

18 ‘‘(3) maintain the data described in paragraph 

19 (1) in such form, in such manner, and for such pe20 riod as may be required by the Commission; 

21 ‘‘(4)(A) provide direct electronic access to the 

22 Commission (or any designee of the Commission, in23 cluding another registered entity); and 

24 ‘‘(B) provide the information described in para25 graph (1) in such form and at such frequency as the 
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† HR 4173 EAS 

1 Commission may require to comply with the public 

2 reporting requirements contained in section 2(a)(13); 

3 ‘‘(5) at the direction of the Commission, establish 

4 automated systems for monitoring, screening, and 

5 analyzing swap data, including compliance and fre6 quency of end user clearing exemption claims by indi7 vidual and affiliated entities; 

8 ‘‘(6) maintain the privacy of any and all swap 

9 transaction information that the swap data reposi10 tory receives from a swap dealer, counterparty, or 

11 any other registered entity; and 

12 ‘‘(7) on a confidential basis pursuant to section 

13 8, upon request, and after notifying the Commission 

14 of the request, make available all data obtained by the 

15 swap data repository, including individual 

16 counterparty trade and position data, to— 

17 ‘‘(A) each appropriate prudential regulator; 

18 ‘‘(B) the Financial Stability Oversight 

19 Council; 

20 ‘‘(C) the Securities and Exchange Commis21 sion; 

22 ‘‘(D) the Department of Justice; and 

23 ‘‘(E) any other person that the Commission 

24 determines to be appropriate, including— 
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† HR 4173 EAS 

1 ‘‘(i) foreign financial supervisors (in2 cluding foreign futures authorities); 

3 ‘‘(ii) foreign central banks; 

4 ‘‘(iii) foreign ministries; and 

5 ‘‘(8) establish and maintain emergency proce6 dures, backup facilities, and a plan for disaster recov7 ery that allows for the timely recovery and resump8 tion of operations and the fulfillment of the respon9 sibilities and obligations of the organization. 

10 ‘‘(d) CONFIDENTIALITY AND INDEMNIFICATION AGREE11 MENT.—Before the swap data repository may share infor12 mation with any entity described above— 

13 ‘‘(1) the swap data repository shall receive a 

14 written agreement from each entity stating that the 

15 entity shall abide by the confidentiality requirements 

16 described in section 8 relating to the information on 

17 swap transactions that is provided; and 

18 ‘‘(2) each entity shall agree to indemnify the 

19 swap data repository and the Commission for any ex20 penses arising from litigation relating to the informa21 tion provided under section 8. 

22 ‘‘(e) DESIGNATION OF CHIEF COMPLIANCE OFFI23 CER.— 
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1 ‘‘(1) IN GENERAL.—Each swap data repository 

2 shall designate an individual to serve as a chief com3 pliance officer. 

4 ‘‘(2) DUTIES.—The chief compliance officer 

5 shall— 

6 ‘‘(A) report directly to the board or to the 

7 senior officer of the swap data repository; 

8 ‘‘(B) review the compliance of the swap 

9 data repository with respect to the core prin10 ciples described in subsection (f); 

11 ‘‘(C) in consultation with the board of the 

12 swap data repository, a body performing a func13 tion similar to the board of the swap data repos14 itory, or the senior officer of the swap data re15 pository, resolve any conflicts of interest that 

16 may arise; 

17 ‘‘(D) be responsible for administering each 

18 policy and procedure that is required to be estab19 lished pursuant to this section; 

20 ‘‘(E) ensure compliance with this Act (in21 cluding regulations) relating to agreements, con22 tracts, or transactions, including each rule pre23 scribed by the Commission under this section; 
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1 ‘‘(F) establish procedures for the remedi2 ation of noncompliance issues identified by the 

3 chief compliance officer through any— 

4 ‘‘(i) compliance office review; 

5 ‘‘(ii) look-back; 

6 ‘‘(iii) internal or external audit find7 ing; 

8 ‘‘(iv) self-reported error; or 

9 ‘‘(v) validated complaint; and 

10 ‘‘(G) establish and follow appropriate proce11 dures for the handling, management response, re12 mediation, retesting, and closing of noncompli13 ance issues. 

14 ‘‘(3) ANNUAL REPORTS.— 

15 ‘‘(A) IN GENERAL.—In accordance with 

16 rules prescribed by the Commission, the chief 

17 compliance officer shall annually prepare and 

18 sign a report that contains a description of— 

19 ‘‘(i) the compliance of the swap data 

20 repository of the chief compliance officer 

21 with respect to this Act (including regula22 tions); and 

23 ‘‘(ii) each policy and procedure of the 

24 swap data repository of the chief compli25 ance officer (including the code of ethics and 
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† HR 4173 EAS 

1 conflict of interest policies of the swap data 

2 repository). 

3 ‘‘(B) REQUIREMENTS.—A compliance re4 port under subparagraph (A) shall— 

5 ‘‘(i) accompany each appropriate fi6 nancial report of the swap data repository 

7 that is required to be furnished to the Com8 mission pursuant to this section; and 

9 ‘‘(ii) include a certification that, under 

10 penalty of law, the compliance report is ac11 curate and complete. 

12 ‘‘(f) CORE PRINCIPLES APPLICABLE TO SWAP DATA

13 REPOSITORIES.— 

14 ‘‘(1) ANTITRUST CONSIDERATIONS.—Unless nec15 essary or appropriate to achieve the purposes of this 

16 Act, a swap data repository shall not 

17 ‘‘(A) adopt any rule or take any action that 

18 results in any unreasonable restraint of trade; or 

19 ‘‘(B) impose any material anticompetitive 

20 burden on the trading, clearing, or reporting of 

21 transactions. 

22 ‘‘(2) GOVERNANCE ARRANGEMENTS.—Each swap 

23 data repository shall establish governance arrange24 ments that are transparent— 
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† HR 4173 EAS 

1 ‘‘(A) to fulfill public interest requirements; 

2 and 

3 ‘‘(B) to support the objectives of the Federal 

4 Government, owners, and participants. 

5 ‘‘(3) CONFLICTS OF INTEREST.—Each swap data 

6 repository shall— 

7 ‘‘(A) establish and enforce rules to minimize 

8 conflicts of interest in the decision-making proc9 ess of the swap data repository; and 

10 ‘‘(B) establish a process for resolving con11 flicts of interest described in subparagraph (A). 

12 ‘‘(g) REQUIRED REGISTRATION FOR SWAP DATA RE13 POSITORIES.—Any person that is required to be registered 

14 as a swap data repository under this section shall register 

15 with the Commission regardless of whether that person is 

16 also licensed as a bank or registered with the Securities and 

17 Exchange Commission as a swap data repository. 

18 ‘‘(h) RULES.—The Commission shall adopt rules gov19 erning persons that are registered under this section.’’. 

20 SEC. 729. REPORTING AND RECORDKEEPING. 

21 The Commodity Exchange Act is amended by inserting 

22 after section 4q (7 U.S.C. 6o–1) the following: 
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† HR 4173 EAS 

1 ‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR 

2 UNCLEARED SWAPS. 

3 ‘‘(a) REQUIRED REPORTING OF SWAPS NOT ACCEPT4 ED BY ANY DERIVATIVES CLEARING ORGANIZATION.— 

5 ‘‘(1) IN GENERAL.—Each swap that is not ac6 cepted for clearing by any derivatives clearing orga7 nization shall be reported to— 

8 ‘‘(A) a swap data repository described in 

9 section 21; or 

10 ‘‘(B) in the case in which there is no swap 

11 data repository that would accept the swap, to 

12 the Commission pursuant to this section within 

13 such time period as the Commission may by rule 

14 or regulation prescribe. 

15 ‘‘(2) TRANSITION RULE FOR PREENACTMENT

16 SWAPS.— 

17 ‘‘(A) SWAPS ENTERED INTO BEFORE THE

18 DATE OF ENACTMENT OF THE WALL STREET

19 TRANSPARENCY AND ACCOUNTABILITY ACT OF

20 2010.—Each swap entered into before the date of 

21 enactment of the Wall Street Transparency and 

22 Accountability Act of 2010, the terms of which 

23 have not expired as of the date of enactment of 

24 that Act, shall be reported to a registered swap 

25 data repository or the Commission by a date 

26 that is not later than— 
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† HR 4173 EAS 

1 ‘‘(i) 30 days after issuance of the in2 terim final rule; or 

3 ‘‘(ii) such other period as the Commis4 sion determines to be appropriate. 

5 ‘‘(B) COMMISSION RULEMAKING.—The Com6 mission shall promulgate an interim final rule 

7 within 90 days of the date of enactment of this 

8 section providing for the reporting of each swap 

9 entered into before the date of enactment as ref10 erenced in subparagraph (A). 

11 ‘‘(C) EFFECTIVE DATE.—The reporting pro12 visions described in this section shall be effective 

13 upon the enactment of this section. 

14 ‘‘(3) REPORTING OBLIGATIONS.— 

15 ‘‘(A) SWAPS IN WHICH ONLY 1

16 COUNTERPARTY IS A SWAP DEALER OR MAJOR

17 SWAP PARTICIPANT.—With respect to a swap in 

18 which only 1 counterparty is a swap dealer or 

19 major swap participant, the swap dealer or 

20 major swap participant shall report the swap as 

21 required under paragraphs (1) and (2). 

22 ‘‘(B) SWAPS IN WHICH 1 COUNTERPARTY IS

23 A SWAP DEALER AND THE OTHER A MAJOR SWAP

24 PARTICIPANT.—With respect to a swap in which 

25 1 counterparty is a swap dealer and the other a 
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† HR 4173 EAS 

1 major swap participant, the swap dealer shall 

2 report the swap as required under paragraphs 

3 (1) and (2). 

4 ‘‘(C) OTHER SWAPS.—With respect to any 

5 other swap not described in subparagraph (A) or 

6 (B), the counterparties to the swap shall select a 

7 counterparty to report the swap as required 

8 under paragraphs (1) and (2). 

9 ‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any indi10 vidual or entity that enters into a swap shall meet each 

11 requirement described in subsection (c) if the individual or 

12 entity did not— 

13 ‘‘(1) clear the swap in accordance with section 

14 2(h)(1); or 

15 ‘‘(2) have the data regarding the swap accepted 

16 by a swap data repository in accordance with rules 

17 (including timeframes) adopted by the Commission 

18 under section 21. 

19 ‘‘(c) REQUIREMENTS.—An individual or entity de20 scribed in subsection (b) shall— 

21 ‘‘(1) upon written request from the Commission, 

22 provide reports regarding the swaps held by the indi23 vidual or entity to the Commission in such form and 

24 in such manner as the Commission may request; and 
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† HR 4173 EAS 

1 ‘‘(2) maintain books and records pertaining to 

2 the swaps held by the individual or entity in such 

3 form, in such manner, and for such period as the 

4 Commission may require, which shall be open to in5 spection by— 

6 ‘‘(A) any representative of the Commission; 

7 ‘‘(B) an appropriate prudential regulator; 

8 ‘‘(C) the Securities and Exchange Commis9 sion; 

10 ‘‘(D) the Financial Stability Oversight 

11 Council; and 

12 ‘‘(E) the Department of Justice. 

13 ‘‘(d) IDENTICAL DATA.—In prescribing rules under 

14 this section, the Commission shall require individuals and 

15 entities described in subsection (b) to submit to the Commis16 sion a report that contains data that is not less comprehen17 sive than the data required to be collected by swap data 

18 repositories under section 21.’’. 

19 SEC. 730. LARGE SWAP TRADER REPORTING. 

20 The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 

21 amended by adding after section 4s (as added by section 

22 731) the following: 

23 ‘‘SEC. 4t. LARGE SWAP TRADER REPORTING. 

24 ‘‘(a) PROHIBITION.— 
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), it shall be unlawful for any person to enter 

3 into any swap that the Commission determines to 

4 perform a significant price discovery function with 

5 respect to registered entities if— 

6 ‘‘(A) the person directly or indirectly enters 

7 into the swap during any 1 day in an amount 

8 equal to or in excess of such amount as shall be 

9 established periodically by the Commission; and 

10 ‘‘(B) the person directly or indirectly has or 

11 obtains a position in the swap equal to or in ex12 cess of such amount as shall be established peri13 odically by the Commission. 

14 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

15 apply if— 

16 ‘‘(A) the person files or causes to be filed 

17 with the properly designated officer of the Com18 mission such reports regarding any transactions 

19 or positions described in subparagraphs (A) and 

20 (B) of paragraph (1) as the Commission may re21 quire by rule or regulation; and 

22 ‘‘(B) in accordance with the rules and regu23 lations of the Commission, the person keeps books 

24 and records of all such swaps and any trans25 actions and positions in any related commodity 
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† HR 4173 EAS 

1 traded on or subject to the rules of any board of 

2 trade, and of cash or spot transactions in, inven3 tories of, and purchase and sale commitments of, 

4 such a commodity. 

5 ‘‘(b) REQUIREMENTS.— 

6 ‘‘(1) IN GENERAL.—Books and records described 

7 in subsection (a)(2)(B) shall— 

8 ‘‘(A) show such complete details concerning 

9 all transactions and positions as the Commission 

10 may prescribe by rule or regulation; 

11 ‘‘(B) be open at all times to inspection and 

12 examination by any representative of the Com13 mission; and 

14 ‘‘(C) be open at all times to inspection and 

15 examination by the Securities and Exchange 

16 Commission, to the extent such books and records 

17 relate to transactions in security-based swap 

18 agreements (as that term is defined in section 

19 3(a)(79) of the Securities Exchange Act of 1934), 

20 and consistent with the confidentiality and dis21 closure requirements of section 8. 

22 ‘‘(2) JURISDICTION.—Nothing in paragraph (1) 

23 shall affect the exclusive jurisdiction of the Commis24 sion to prescribe recordkeeping and reporting require25 ments for large swap traders under this section. 
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1 ‘‘(c) APPLICABILITY.—For purposes of this section, the 

2 swaps, futures, and cash or spot transactions and positions 

3 of any person shall include the swaps, futures, and cash 

4 or spot transactions and positions of any persons directly 

5 or indirectly controlled by the person. 

6 ‘‘(d) SIGNIFICANT PRICE DISCOVERY FUNCTION.—In 

7 making a determination as to whether a swap performs or 

8 affects a significant price discovery function with respect 

9 to registered entities, the Commission shall consider the fac10 tors described in section 4a(a)(3).’’. 

11 SEC. 731. REGISTRATION AND REGULATION OF SWAP DEAL12 ERS AND MAJOR SWAP PARTICIPANTS. 

13 The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 

14 amended by inserting after section 4r (as added by section 

15 729) the following: 

16 ‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEAL17 ERS AND MAJOR SWAP PARTICIPANTS. 

18 ‘‘(a) REGISTRATION.— 

19 ‘‘(1) SWAP DEALERS.—It shall be unlawful for 

20 any person to act as a swap dealer unless the person 

21 is registered as a swap dealer with the Commission. 

22 ‘‘(2) MAJOR SWAP PARTICIPANTS.—It shall be 

23 unlawful for any person to act as a major swap par24 ticipant unless the person is registered as a major 

25 swap participant with the Commission. 
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† HR 4173 EAS 

1 ‘‘(b) REQUIREMENTS.— 

2 ‘‘(1) IN GENERAL.—A person shall register as a 

3 swap dealer or major swap participant by filing a 

4 registration application with the Commission. 

5 ‘‘(2) CONTENTS.— 

6 ‘‘(A) IN GENERAL.—The application shall 

7 be made in such form and manner as prescribed 

8 by the Commission, and shall contain such infor9 mation, as the Commission considers necessary 

10 concerning the business in which the applicant is 

11 or will be engaged. 

12 ‘‘(B) CONTINUAL REPORTING.—A person 

13 that is registered as a swap dealer or major 

14 swap participant shall continue to submit to the 

15 Commission reports that contain such informa16 tion pertaining to the business of the person as 

17 the Commission may require. 

18 ‘‘(3) EXPIRATION.—Each registration under this 

19 section shall expire at such time as the Commission 

20 may prescribe by rule or regulation. 

21 ‘‘(4) RULES.—Except as provided in subsections 

22 (c), (e), and (f), the Commission may prescribe rules 

23 applicable to non-bank swap dealers and non-bank 

24 major swap participants, including rules that limit 
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† HR 4173 EAS 

1 the activities of swap dealers and major swap partici2 pants. 

3 ‘‘(5) TRANSITION.—Rules under this section shall 

4 provide for the registration of swap dealers and major 

5 swap participants not later than 1 year after the date 

6 of enactment of the Wall Street Transparency and Ac7 countability Act of 2010. 

8 ‘‘(6) STATUTORY DISQUALIFICATION.—Except to 

9 the extent otherwise specifically provided by rule, reg10 ulation, or order, it shall be unlawful for a swap 

11 dealer or a major swap participant to permit any 

12 person associated with a swap dealer or a major swap 

13 participant who is subject to a statutory disqualifica14 tion to effect or be involved in effecting swaps on be15 half of the swap dealer or major swap participant, if 

16 the swap dealer or major swap participant knew, or 

17 in the exercise of reasonable care should have known, 

18 of the statutory disqualification. 

19 ‘‘(c) DUAL REGISTRATION.— 

20 ‘‘(1) SWAP DEALER.—Any person that is re21 quired to be registered as a swap dealer under this 

22 section shall register with the Commission regardless 

23 of whether the person also is a depository institution 

24 or is registered with the Securities and Exchange 

25 Commission as a security-based swap dealer. 
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† HR 4173 EAS 

1 ‘‘(2) MAJOR SWAP PARTICIPANT.—Any person 

2 that is required to be registered as a major swap par3 ticipant under this section shall register with the 

4 Commission regardless of whether the person also is 

5 a depository institution or is registered with the Se6 curities and Exchange Commission as a major secu7 rity-based swap participant. 

8 ‘‘(d) RULEMAKINGS.— 

9 ‘‘(1) IN GENERAL.—The Commission shall adopt 

10 rules for persons that are registered as swap dealers 

11 or major swap participants under this section. 

12 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE13 MENTS.— 

14 ‘‘(A) IN GENERAL.—The Commission may 

15 not prescribe rules imposing prudential require16 ments on swap dealers or major swap partici17 pants for which there is a prudential regulator. 

18 ‘‘(B) APPLICABILITY.—Subparagraph (A) 

19 does not limit the authority of the Commission 

20 to prescribe appropriate business conduct, re21 porting, and recordkeeping requirements to pro22 tect investors. 

23 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

24 ‘‘(1) IN GENERAL.— 
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† HR 4173 EAS 

1 ‘‘(A) SWAP DEALERS AND MAJOR SWAP PAR2 TICIPANTS THAT ARE DEPOSITORY INSTITU3 TIONS.—Each registered swap dealer and major 

4 swap participant that is a depository institu5 tion, as that term is defined in section 3 of the 

6 Federal Deposit Insurance Act (12 U.S.C. 1813), 

7 shall meet such minimum capital requirements 

8 and minimum initial and variation margin re9 quirements as the appropriate Federal banking 

10 agency shall by rule or regulation prescribe 

11 under paragraph (2)(A) to help ensure the safety 

12 and soundness of the swap dealer or major swap 

13 participant. 

14 ‘‘(B) SWAP DEALERS AND MAJOR SWAP PAR15 TICIPANTS THAT ARE NOT DEPOSITORY INSTITU16 TIONS.—Each registered swap dealer and major 

17 swap participant that is not a depository insti18 tution, as that term is defined in section 3 of the 

19 Federal Deposit Insurance Act (12 U.S.C. 1813), 

20 shall meet such minimum capital requirements 

21 and minimum initial and variation margin re22 quirements as the Commission and the Securities 

23 and Exchange Commission shall by rule or regu24 lation prescribe under paragraph (2)(B) to help 
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† HR 4173 EAS 

1 ensure the safety and soundness of the swap deal2 er or major swap participant. 

3 ‘‘(2) RULES.— 

4 ‘‘(A) SWAP DEALERS AND MAJOR SWAP PAR5 TICIPANTS THAT ARE DEPOSITORY INSTITU6 TIONS.—The appropriate Federal banking agen7 cies, in consultation with the Commission and 

8 the Securities and Exchange Commission, shall 

9 adopt rules imposing capital and margin re10 quirements under this subsection for swap deal11 ers and major swap participants that are deposi12 tory institutions, as that term is defined in sec13 tion 3 of the Federal Deposit Insurance Act (12 

14 U.S.C. 1813). 

15 ‘‘(B) SWAP DEALERS AND MAJOR SWAP PAR16 TICIPANTS THAT ARE NOT DEPOSITORY INSTITU17 TIONS.—The Commission shall adopt rules im18 posing capital and margin requirements under 

19 this subsection for swap dealers and major swap 

20 participants that are not depository institutions, 

21 as that term is defined in section 3 of the Fed22 eral Deposit Insurance Act (12 U.S.C. 1813). 

23 ‘‘(3) CAPITAL.— 

24 ‘‘(A) SWAP DEALERS AND MAJOR SWAP PAR25 TICIPANTS THAT ARE DEPOSITORY INSTITU-
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† HR 4173 EAS 

1 TIONS.—The capital requirements prescribed 

2 under paragraph (2)(A) for swap dealers and 

3 major swap participants that are depository in4 stitutions shall contain— 

5 ‘‘(i) a capital requirement that is 

6 greater than zero for swaps that are cleared 

7 by a registered derivatives clearing organi8 zation or a derivatives clearing organiza9 tion that is exempt from registration under 

10 section 5b(j); and 

11 ‘‘(ii) to offset the greater risk to the 

12 swap dealer or major swap participant and 

13 to the financial system arising from the use 

14 of swaps that are not cleared, substantially 

15 higher capital requirements for swaps that 

16 are not cleared by a registered derivatives 

17 clearing organization or a derivatives clear18 ing organization that is exempt from reg19 istration under section 5b(j) than for swaps 

20 that are cleared. 

21 ‘‘(B) SWAP DEALERS AND MAJOR SWAP PAR22 TICIPANTS THAT ARE NOT DEPOSITORY INSTITU23 TIONS.—The capital requirements prescribed 

24 under paragraph (2)(B) for swap dealers and 

25 major swap participants that are not depository 
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† HR 4173 EAS 

1 institutions shall be as strict as or stricter than 

2 the capital requirements prescribed for swap 

3 dealers and major swap participants that are 

4 depository institutions under paragraph (2)(A). 

5 ‘‘(C) RULE OF CONSTRUCTION.— 

6 ‘‘(i) IN GENERAL.—Nothing in this sec7 tion shall limit, or be construed to limit, the 

8 authority— 

9 ‘‘(I) of the Commission to set fi10 nancial responsibility rules for a fu11 tures commission merchant or intro12 ducing broker registered pursuant to 

13 section 4f(a) (except for section 

14 4f(a)(3)) in accordance with section 

15 4f(b); or 

16 ‘‘(II) of the Securities and Ex17 change Commission to set financial re18 sponsibility rules for a broker or dealer 

19 registered pursuant to section 15(b) of 

20 the Securities Exchange Act of 1934 

21 (15 U.S.C. 78o(b)) (except for section 

22 15(b)(11) of that Act (15 U.S.C. 

23 78o(b)(11)) in accordance with section 

24 15(c)(3) of the Securities Exchange Act 

25 of 1934 (15 U.S.C. 78o(c)(3)). 
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† HR 4173 EAS 

1 ‘‘(ii) FUTURES COMMISSION MER2 CHANTS AND OTHER DEALERS.—A futures 

3 commission merchant, introducing broker, 

4 broker, or dealer shall maintain sufficient 

5 capital to comply with the stricter of any 

6 applicable capital requirements to which 

7 such futures commission merchant, intro8 ducing broker, broker, or dealer is subject to 

9 under this Act or the Securities Exchange 

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

11 ‘‘(4) MARGIN.— 

12 ‘‘(A) SWAP DEALERS AND MAJOR SWAP PAR13 TICIPANTS THAT ARE DEPOSITORY INSTITU14 TIONS.—The appropriate Federal banking agen15 cy for swap dealers and major swap participants 

16 that are depository institutions shall impose both 

17 initial and variation margin requirements in 

18 accordance with paragraph (2)(A) on all swaps 

19 that are not cleared by a registered derivatives 

20 clearing organization or a derivatives clearing 

21 organization that is exempt from registration 

22 under section 5b(j). 

23 ‘‘(B) SWAP DEALERS AND MAJOR SWAP PAR24 TICIPANTS THAT ARE NOT DEPOSITORY INSTITU25 TIONS.—The Commission and the Securities and 
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† HR 4173 EAS 

1 Exchange Commission shall impose both initial 

2 and variation margin requirements in accord3 ance with paragraph (2)(B) for swap dealers 

4 and major swap participants that are not depos5 itory institutions on all swaps that are not 

6 cleared by a registered derivatives clearing orga7 nization or a derivatives clearing organization 

8 that is exempt from registration under section 

9 5b(j). Any such initial and variation margin re10 quirements shall be as strict as or stricter than 

11 the margin requirements prescribed under para12 graph (4)(A). 

13 ‘‘(5) MARGIN REQUIREMENTS.—In prescribing 

14 margin requirements under this subsection, the ap15 propriate Federal banking agency with respect to 

16 swap dealers and major swap participants that are 

17 depository institutions and the Commission with re18 spect to swap dealers and major swap participants 

19 that are not depository institutions may permit the 

20 use of noncash collateral, as the agency or the Com21 mission determines to be consistent with— 

22 ‘‘(A) preserving the financial integrity of 

23 markets trading swaps; and 

24 ‘‘(B) preserving the stability of the United 

25 States financial system. 
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† HR 4173 EAS 

1 ‘‘(6) COMPARABILITY OF CAPITAL AND MARGIN

2 REQUIREMENTS.— 

3 ‘‘(A) IN GENERAL.—The appropriate Fed4 eral banking agencies, the Commission, and the 

5 Securities and Exchange Commission shall peri6 odically (but not less frequently than annually) 

7 consult on minimum capital requirements and 

8 minimum initial and variation margin require9 ments. 

10 ‘‘(B) COMPARABILITY.—The entities de11 scribed in subparagraph (A) shall, to the max12 imum extent practicable, establish and maintain 

13 comparable minimum capital requirements and 

14 minimum initial and variation margin require15 ments, including the use of non cash collateral, 

16 for— 

17 ‘‘(i) swap dealers; and 

18 ‘‘(ii) major swap participants. 

19 ‘‘(7) REQUESTED MARGIN.—If any party to a 

20 swap that is exempt from the margin requirements of 

21 paragraph (4)(A)(i) pursuant to the provisions of 

22 paragraph (4)(A)(ii), or from the margin require23 ments of paragraph (4)(B)(i) pursuant to the provi24 sions of paragraph (4)(B)(ii), requests that such swap 

25 be margined, then— 
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† HR 4173 EAS 

1 ‘‘(A) the exemption shall not apply; and 

2 ‘‘(B) the counterparty to such swap shall 

3 provide the requested margin. 

4 ‘‘(8) APPLICABILITY WITH RESPECT TO

5 COUNTERPARTIES.—Paragraph (4) shall not apply to 

6 initial and variation margin for swaps in which 1 of 

7 the counterparties is not— 

8 ‘‘(A) a swap dealer; 

9 ‘‘(B) a major swap participant; or 

10 ‘‘(C) a financial entity as described in sec11 tion 2(h)(9)(A)(ii), and such counterparty is eli12 gible for and utilizing the commercial end user 

13 clearing exemption under section 2(h)(9). 

14 ‘‘(f) REPORTING AND RECORDKEEPING.— 

15 ‘‘(1) IN GENERAL.—Each registered swap dealer 

16 and major swap participant— 

17 ‘‘(A) shall make such reports as are re18 quired by the Commission by rule or regulation 

19 regarding the transactions and positions and fi20 nancial condition of the registered swap dealer 

21 or major swap participant; 

22 ‘‘(B)(i) for which there is a prudential regu23 lator, shall keep books and records of all activi24 ties related to the business as a swap dealer or 

25 major swap participant in such form and man-
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† HR 4173 EAS 

1 ner and for such period as may be prescribed by 

2 the Commission by rule or regulation; and 

3 ‘‘(ii) for which there is no prudential regu4 lator, shall keep books and records in such form 

5 and manner and for such period as may be pre6 scribed by the Commission by rule or regulation; 

7 and 

8 ‘‘(C) shall keep books and records described 

9 in subparagraph (B) open to inspection and ex10 amination by any representative of the Commis11 sion. 

12 ‘‘(2) RULES.—The Commission shall adopt rules 

13 governing reporting and recordkeeping for swap deal14 ers and major swap participants. 

15 ‘‘(g) DAILY TRADING RECORDS.— 

16 ‘‘(1) IN GENERAL.—Each registered swap dealer 

17 and major swap participant shall maintain daily 

18 trading records of the swaps of the registered swap 

19 dealer and major swap participant and all related 

20 records (including related cash or forward trans21 actions) and recorded communications, including 

22 electronic mail, instant messages, and recordings of 

23 telephone calls, for such period as may be required by 

24 the Commission by rule or regulation. 
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† HR 4173 EAS 

1 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

2 trading records shall include such information as the 

3 Commission shall require by rule or regulation. 

4 ‘‘(3) COUNTERPARTY RECORDS.—Each registered 

5 swap dealer and major swap participant shall main6 tain daily trading records for each counterparty in a 

7 manner and form that is identifiable with each swap 

8 transaction. 

9 ‘‘(4) AUDIT TRAIL.—Each registered swap dealer 

10 and major swap participant shall maintain a com11 plete audit trail for conducting comprehensive and 

12 accurate trade reconstructions. 

13 ‘‘(5) RULES.—The Commission shall adopt rules 

14 governing daily trading records for swap dealers and 

15 major swap participants. 

16 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 

17 ‘‘(1) IN GENERAL.—Each registered swap dealer 

18 and major swap participant shall conform with such 

19 business conduct standards as may be prescribed by 

20 the Commission by rule or regulation that relate to— 

21 ‘‘(A) fraud, manipulation, and other abu22 sive practices involving swaps (including swaps 

23 that are offered but not entered into); 
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† HR 4173 EAS 

1 ‘‘(B) diligent supervision of the business of 

2 the registered swap dealer and major swap par3 ticipant; 

4 ‘‘(C) adherence to all applicable position 

5 limits; and 

6 ‘‘(D) such other matters as the Commission 

7 determines to be appropriate. 

8 ‘‘(2) SPECIAL RULE; FIDUCIARY DUTIES TO CER9 TAIN ENTITIES.— 

10 ‘‘(A) GOVERNMENTAL ENTITIES.—A swap 

11 dealer that provides advice regarding, or offers to 

12 enter into, or enters into a swap with a State, 

13 State agency, city, county, municipality, or 

14 other political subdivision of a State or a Fed15 eral agency shall have a fiduciary duty to the 

16 State, State agency, city, county, municipality, 

17 or other political subdivision of a State, or the 

18 Federal agency, as appropriate. 

19 ‘‘(B) PENSION PLANS; ENDOWMENTS; RE20 TIREMENT PLANS.—A swap dealer that provides 

21 advice regarding, or offers to enter into, or enters 

22 into a swap with a pension plan, endowment, or 

23 retirement plan shall have a fiduciary duty to 

24 the pension plan, endowment, or retirement 

25 plan, as appropriate. 
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† HR 4173 EAS 

1 ‘‘(3) BUSINESS CONDUCT REQUIREMENTS.— 

2 Business conduct requirements adopted by the Com3 mission shall— 

4 ‘‘(A) establish the standard of care for a 

5 swap dealer or major swap participant to verify 

6 that any counterparty meets the eligibility 

7 standards for an eligible contract participant; 

8 ‘‘(B) require disclosure by the swap dealer 

9 or major swap participant to any counterparty 

10 to the transaction (other than a swap dealer, 

11 major swap participant, security-based swap 

12 dealer, or major security-based swap partici13 pant) of— 

14 ‘‘(i) information about the material 

15 risks and characteristics of the swap; 

16 ‘‘(ii) the source and amount of any fees 

17 or other material remuneration that the 

18 swap dealer or major swap participant 

19 would directly or indirectly expect to receive 

20 in connection with the swap; 

21 ‘‘(iii) any other material incentives or 

22 conflicts of interest that the swap dealer or 

23 major swap participant may have in con24 nection with the swap; and 
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† HR 4173 EAS 

1 ‘‘(iv)(I) for cleared swaps, upon the re2 quest of the counterparty, the daily mark 

3 from the appropriate derivatives clearing 

4 organization; and 

5 ‘‘(II) for uncleared swaps, the daily 

6 mark of the swap dealer or the major swap 

7 participant; 

8 ‘‘(C) establish a standard of conduct for a 

9 swap dealer or major swap participant to com10 municate in a fair and balanced manner based 

11 on principles of fair dealing and good faith; 

12 ‘‘(D) establish a standard of conduct for a 

13 swap dealer or major swap participant, with re14 spect to a counterparty that is an eligible con15 tract participant within the meaning of sub16 clause (I) or (II) of clause (vii) of section 1a(18) 

17 of this Act, to have a reasonable basis to believe 

18 that the counterparty has an independent rep19 resentative that— 

20 ‘‘(i) has sufficient knowledge to evalu21 ate the transaction and risks; 

22 ‘‘(ii) is not subject to a statutory dis23 qualification; 

24 ‘‘(iii) is independent of the swap dealer 

25 or major swap participant; 
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† HR 4173 EAS 

1 ‘‘(iv) undertakes a duty to act in the 

2 best interests of the counterparty it rep3 resents; 

4 ‘‘(v) makes appropriate disclosures; 

5 and 

6 ‘‘(vi) will provide written representa7 tions to the eligible contract participant re8 garding fair pricing and the appropriate9 ness of the transaction; and 

10 ‘‘(E) establish such other standards and re11 quirements as the Commission may determine 

12 are appropriate in the public interest, for the 

13 protection of investors, or otherwise in further14 ance of the purposes of this Act. 

15 ‘‘(4) RULES.—The Commission shall prescribe 

16 rules under this subsection governing business conduct 

17 standards for swap dealers and major swap partici18 pants. 

19 ‘‘(i) DOCUMENTATION AND BACK OFFICE STAND20 ARDS.— 

21 ‘‘(1) IN GENERAL.—Each registered swap dealer 

22 and major swap participant shall conform with such 

23 standards as may be prescribed by the Commission by 

24 rule or regulation that relate to timely and accurate 
652 

† HR 4173 EAS 

1 confirmation, processing, netting, documentation, and 

2 valuation of all swaps. 

3 ‘‘(2) RULES.—The Commission shall adopt rules 

4 governing documentation and back office standards 

5 for swap dealers and major swap participants. 

6 ‘‘(j) DUTIES.—Each registered swap dealer and major 

7 swap participant at all times shall comply with the fol8 lowing requirements: 

9 ‘‘(1) MONITORING OF TRADING.—The swap deal10 er or major swap participant shall monitor its trad11 ing in swaps to prevent violations of applicable posi12 tion limits. 

13 ‘‘(2) RISK MANAGEMENT PROCEDURES.—The 

14 swap dealer or major swap participant shall establish 

15 robust and professional risk management systems ade16 quate for managing the day-to-day business of the 

17 swap dealer or major swap participant. 

18 ‘‘(3) DISCLOSURE OF GENERAL INFORMATION.— 

19 The swap dealer or major swap participant shall dis20 close to the Commission and to the prudential regu21 lator for the swap dealer or major swap participant, 

22 as applicable, information concerning— 

23 ‘‘(A) terms and conditions of its swaps; 

24 ‘‘(B) swap trading operations, mechanisms, 

25 and practices; 
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† HR 4173 EAS 

1 ‘‘(C) financial integrity protections relating 

2 to swaps; and 

3 ‘‘(D) other information relevant to its trad4 ing in swaps. 

5 ‘‘(4) ABILITY TO OBTAIN INFORMATION.—The 

6 swap dealer or major swap participant shall— 

7 ‘‘(A) establish and enforce internal systems 

8 and procedures to obtain any necessary informa9 tion to perform any of the functions described in 

10 this section; and 

11 ‘‘(B) provide the information to the Com12 mission and to the prudential regulator for the 

13 swap dealer or major swap participant, as ap14 plicable, on request. 

15 ‘‘(5) CONFLICTS OF INTEREST.—The swap dealer 

16 and major swap participant shall implement conflict17 of-interest systems and procedures that— 

18 ‘‘(A) establish structural and institutional 

19 safeguards to ensure that the activities of any 

20 person within the firm relating to research or 

21 analysis of the price or market for any com22 modity or swap or acting in a role of providing 

23 clearing activities or making determinations as 

24 to accepting clearing customers are separated by 

25 appropriate informational partitions within the 
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† HR 4173 EAS 

1 firm from the review, pressure, or oversight of 

2 persons whose involvement in pricing, trading, 

3 or clearing activities might potentially bias their 

4 judgment or supervision and contravene the core 

5 principles of open access and the business con6 duct standards described in this Act; and 

7 ‘‘(B) address such other issues as the Com8 mission determines to be appropriate. 

9 ‘‘(6) ANTITRUST CONSIDERATIONS.—Unless nec10 essary or appropriate to achieve the purposes of this 

11 Act, a swap dealer or major swap participant shall 

12 not— 

13 ‘‘(A) adopt any process or take any action 

14 that results in any unreasonable restraint of 

15 trade; or 

16 ‘‘(B) impose any material anticompetitive 

17 burden on trading or clearing. 

18 ‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFI19 CER.— 

20 ‘‘(1) IN GENERAL.—Each swap dealer and major 

21 swap participant shall designate an individual to 

22 serve as a chief compliance officer. 

23 ‘‘(2) DUTIES.—The chief compliance officer 

24 shall— 
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† HR 4173 EAS 

1 ‘‘(A) report directly to the board or to the 

2 senior officer of the swap dealer or major swap 

3 participant; 

4 ‘‘(B) review the compliance of the swap 

5 dealer or major swap participant with respect to 

6 the swap dealer and major swap participant re7 quirements described in this section; 

8 ‘‘(C) in consultation with the board of di9 rectors, a body performing a function similar to 

10 the board, or the senior officer of the organiza11 tion, resolve any conflicts of interest that may 

12 arise; 

13 ‘‘(D) be responsible for administering each 

14 policy and procedure that is required to be estab15 lished pursuant to this section; 

16 ‘‘(E) ensure compliance with this Act (in17 cluding regulations) relating to swaps, including 

18 each rule prescribed by the Commission under 

19 this section; 

20 ‘‘(F) establish procedures for the remedi21 ation of noncompliance issues identified by the 

22 chief compliance officer through any— 

23 ‘‘(i) compliance office review; 

24 ‘‘(ii) look-back; 
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1 ‘‘(iii) internal or external audit find2 ing; 

3 ‘‘(iv) self-reported error; or 

4 ‘‘(v) validated complaint; and 

5 ‘‘(G) establish and follow appropriate proce6 dures for the handling, management response, re7 mediation, retesting, and closing of noncompli8 ance issues. 

9 ‘‘(3) ANNUAL REPORTS.— 

10 ‘‘(A) IN GENERAL.—In accordance with 

11 rules prescribed by the Commission, the chief 

12 compliance officer shall annually prepare and 

13 sign a report that contains a description of— 

14 ‘‘(i) the compliance of the swap dealer 

15 or major swap participant with respect to 

16 this Act (including regulations); and 

17 ‘‘(ii) each policy and procedure of the 

18 swap dealer or major swap participant of 

19 the chief compliance officer (including the 

20 code of ethics and conflict of interest poli21 cies). 

22 ‘‘(B) REQUIREMENTS.—A compliance re23 port under subparagraph (A) shall— 

24 ‘‘(i) accompany each appropriate fi25 nancial report of the swap dealer or major 
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† HR 4173 EAS 

1 swap participant that is required to be fur2 nished to the Commission pursuant to this 

3 section; and 

4 ‘‘(ii) include a certification that, under 

5 penalty of law, the compliance report is ac6 curate and complete.’’. 

7 SEC. 732. CONFLICTS OF INTEREST. 

8 Section 4d of the Commodity Exchange Act (7 U.S.C. 

9 6d) is amended— 

10 (1) by redesignating subsection (c) as subsection 

11 (e); and 

12 (2) by inserting after subsection (b) the fol13 lowing: 

14 ‘‘(c) CONFLICTS OF INTEREST.—The Commission shall 

15 require that futures commission merchants and introducing 

16 brokers implement conflict-of-interest systems and proce17 dures that— 

18 ‘‘(1) establish structural and institutional safe19 guards to ensure that the activities of any person 

20 within the firm relating to research or analysis of the 

21 price or market for any commodity are separated by 

22 appropriate informational partitions within the firm 

23 from the review, pressure, or oversight of persons 

24 whose involvement in trading or clearing activities 
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† HR 4173 EAS 

1 might potentially bias the judgment or supervision of 

2 the persons; and 

3 ‘‘(2) address such other issues as the Commission 

4 determines to be appropriate. 

5 ‘‘(d) DESIGNATION OF CHIEF COMPLIANCE OFFI6 CER.— 

7 ‘‘(1) IN GENERAL.—Each futures commission 

8 merchant shall designate an individual to serve as a 

9 chief compliance officer. 

10 ‘‘(2) DUTIES.—The chief compliance officer 

11 shall— 

12 ‘‘(A) report directly to the board or to the 

13 senior officer of the futures commission mer14 chant; 

15 ‘‘(B) review the compliance of the futures 

16 commission merchant with respect to require17 ments described in this section; 

18 ‘‘(C) in consultation with the board of di19 rectors, a body performing a function similar to 

20 the board, or the senior officer of the organiza21 tion, resolve any conflicts of interest that may 

22 arise; 

23 ‘‘(D) be responsible for administering each 

24 policy and procedure that is required to be estab25 lished pursuant to this section; 
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† HR 4173 EAS 

1 ‘‘(E) ensure compliance with this Act (in2 cluding regulations and each rule prescribed by 

3 the Commission under this section) relating, but 

4 not limited, to— 

5 ‘‘(i) contracts of sale of a commodity 

6 for future delivery; 

7 ‘‘(ii) options on the contracts described 

8 in clause (i); 

9 ‘‘(iii) commodity options; 

10 ‘‘(iv) retail commodity transactions; 

11 ‘‘(v) security futures products; 

12 ‘‘(vi) leverage contracts; and 

13 ‘‘(vii) swaps; 

14 ‘‘(F) establish procedures for the remedi15 ation of noncompliance issues identified by the 

16 chief compliance officer through any— 

17 ‘‘(i) compliance office review; 

18 ‘‘(ii) look-back; 

19 ‘‘(iii) internal or external audit find20 ing; 

21 ‘‘(iv) self-reported error; or 

22 ‘‘(v) validated complaint; and 

23 ‘‘(G) establish and follow appropriate proce24 dures for the handling, management response, re-
660 

† HR 4173 EAS 

1 mediation, retesting, and closing of noncompli2 ance issues. 

3 ‘‘(3) ANNUAL REPORTS.— 

4 ‘‘(A) IN GENERAL.—In accordance with 

5 rules prescribed by the Commission, the chief 

6 compliance officer shall annually prepare and 

7 sign a report that contains a description of— 

8 ‘‘(i) the compliance of the futures com9 mission merchant with respect to this Act 

10 (including regulations); and 

11 ‘‘(ii) each policy and procedure of the 

12 futures commission merchant of the chief 

13 compliance officer (including the code of 

14 ethics and conflict of interest policies). 

15 ‘‘(B) REQUIREMENTS.—A compliance re16 port under subparagraph (A) shall— 

17 ‘‘(i) accompany each appropriate fi18 nancial report of the futures commission 

19 merchant that is required to be furnished to 

20 the Commission pursuant to this section; 

21 and 

22 ‘‘(ii) include a certification that, under 

23 penalty of law, the compliance report is ac24 curate and complete.’’. 
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† HR 4173 EAS 

1 SEC. 733. SWAP EXECUTION FACILITIES. 

2 The Commodity Exchange Act is amended by inserting 

3 after section 5g (7 U.S.C. 7b–2) the following: 

4 ‘‘SEC. 5h. SWAP EXECUTION FACILITIES. 

5 ‘‘(a) REGISTRATION.— 

6 ‘‘(1) IN GENERAL.—No person may operate a fa7 cility for the trading or processing of swaps unless the 

8 facility is registered as a swap execution facility or 

9 as a designated contract market under this section. 

10 ‘‘(2) DUAL REGISTRATION.—Any person that is 

11 registered as a swap execution facility under this sec12 tion shall register with the Commission regardless of 

13 whether the person also is registered with the Securi14 ties and Exchange Commission as a swap execution 

15 facility. 

16 ‘‘(b) TRADING AND TRADE PROCESSING.—A swap exe17 cution facility that is registered under subsection (a) may— 

18 ‘‘(1) make available for trading any swap; and 

19 ‘‘(2) facilitate trade processing of any swap. 

20 ‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE

21 SWAPS BY CONTRACT MARKETS.—A board of trade that op22 erates a contract market shall, to the extent that the board 

23 of trade also operates a swap execution facility and uses 

24 the same electronic trade execution system for listing and 

25 executing trades of swaps on or through the contract market 

26 and the swap execution facility, identify whether the elec-
662 

† HR 4173 EAS 

1 tronic trading of such swaps is taking place on or through 

2 the contract market or the swap execution facility. 

3 ‘‘(d) CORE PRINCIPLES FOR SWAP EXECUTION FACILI4 TIES.— 

5 ‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 

6 ‘‘(A) IN GENERAL.—To be registered, and 

7 maintain registration, as a swap execution facil8 ity, the swap execution facility shall comply 

9 with— 

10 ‘‘(i) the core principles described in 

11 this subsection; and 

12 ‘‘(ii) any requirement that the Com13 mission may impose by rule or regulation 

14 pursuant to section 8a(5). 

15 ‘‘(B) REASONABLE DISCRETION OF SWAP

16 EXECUTION FACILITY.—Unless otherwise deter17 mined by the Commission by rule or regulation, 

18 a swap execution facility described in subpara19 graph (A) shall have reasonable discretion in es20 tablishing the manner in which the swap execu21 tion facility complies with the core principles de22 scribed in this subsection. 

23 ‘‘(2) COMPLIANCE WITH RULES.—A swap execu24 tion facility shall— 
663 

† HR 4173 EAS 

1 ‘‘(A) monitor and enforce compliance with 

2 any rule of the swap execution facility, includ3 ing— 

4 ‘‘(i) the terms and conditions of the 

5 swaps traded or processed on or through the 

6 swap execution facility; and 

7 ‘‘(ii) any limitation on access to the 

8 swap execution facility; 

9 ‘‘(B) establish and enforce trading, trade 

10 processing, and participation rules that will 

11 deter abuses and have the capacity to detect, in12 vestigate, and enforce those rules, including 

13 means— 

14 ‘‘(i) to provide market participants 

15 with impartial access to the market; and 

16 ‘‘(ii) to capture information that may 

17 be used in establishing whether rule viola18 tions have occurred; 

19 ‘‘(C) establish rules governing the operation 

20 of the facility, including rules specifying trading 

21 procedures to be used in entering and executing 

22 orders traded or posted on the facility, including 

23 block trades; and 

24 ‘‘(D) provide by its rules that when a swap 

25 dealer or major swap participant enters into or 
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† HR 4173 EAS 

1 facilitates a swap that is subject to the manda2 tory clearing requirement of section 2(h)(2)(F), 

3 the swap dealer or major swap participant shall 

4 be responsible for compliance with the manda5 tory trading requirement of section 113(d) of the 

6 Wall Street Transparency and Accountability 

7 Act of 2010. 

8 ‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MA9 NIPULATION.—The swap execution facility shall per10 mit trading only in swaps that are not readily sus11 ceptible to manipulation. 

12 ‘‘(4) MONITORING OF TRADING AND TRADE PROC13 ESSING.—The swap execution facility shall— 

14 ‘‘(A) establish and enforce rules or terms 

15 and conditions defining, or specifications detail16 ing— 

17 ‘‘(i) trading procedures to be used in 

18 entering and executing orders traded on or 

19 through the facilities of the swap execution 

20 facility; and 

21 ‘‘(ii) procedures for trade processing of 

22 swaps on or through the facilities of the 

23 swap execution facility; and 

24 ‘‘(B) monitor trading in swaps to prevent 

25 manipulation, price distortion, and disruptions 
665 

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1 of the delivery or cash settlement process through 

2 surveillance, compliance, and disciplinary prac3 tices and procedures, including methods for con4 ducting real-time monitoring of trading and 

5 comprehensive and accurate trade reconstruc6 tions. 

7 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—The 

8 swap execution facility shall— 

9 ‘‘(A) establish and enforce rules that will 

10 allow the facility to obtain any necessary infor11 mation to perform any of the functions described 

12 in this section; 

13 ‘‘(B) provide the information to the Com14 mission on request; and 

15 ‘‘(C) have the capacity to carry out such 

16 international information-sharing agreements as 

17 the Commission may require. 

18 ‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 

19 ‘‘(A) IN GENERAL.—To reduce the potential 

20 threat of market manipulation or congestion, es21 pecially during trading in the delivery month, a 

22 swap execution facility that is a trading facility 

23 shall adopt for each of the contracts of the facil24 ity, as is necessary and appropriate, position 
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† HR 4173 EAS 

1 limitations or position accountability for specu2 lators. 

3 ‘‘(B) POSITION LIMITS.—For any contract 

4 that is subject to a position limitation estab5 lished by the Commission pursuant to section 

6 4a(a), the swap execution facility shall set its po7 sition limitation at a level no higher than the 

8 Commission limitation. 

9 ‘‘(C) POSITION ENFORCEMENT.—For any 

10 contract that is subject to a position limitation 

11 established by the Commission pursuant to sec12 tion 4a(a), a swap execution facility shall reject 

13 any proposed swap transaction if, based on in14 formation readily available to a swap execution 

15 facility, any proposed swap transaction would 

16 cause a swap execution facility customer that 

17 would be a party to such swap transaction to ex18 ceed such position limitation. 

19 ‘‘(7) FINANCIAL INTEGRITY OF TRANSACTIONS.— 

20 The swap execution facility shall establish and enforce 

21 rules and procedures for ensuring the financial integ22 rity of swaps entered on or through the facilities of 

23 the swap execution facility, including the clearance 

24 and settlement of the swaps pursuant to section 

25 2(h)(1). 
667 

† HR 4173 EAS 

1 ‘‘(8) EMERGENCY AUTHORITY.—The swap execu2 tion facility shall adopt rules to provide for the exer3 cise of emergency authority, in consultation or co4 operation with the Commission, as is necessary and 

5 appropriate, including the authority to liquidate or 

6 transfer open positions in any swap or to suspend or 

7 curtail trading in a swap. 

8 ‘‘(9) TIMELY PUBLICATION OF TRADING INFOR9 MATION.— 

10 ‘‘(A) IN GENERAL.—The swap execution fa11 cility shall make public timely information on 

12 price, trading volume, and other trading data on 

13 swaps to the extent prescribed by the Commis14 sion. 

15 ‘‘(B) CAPACITY OF SWAP EXECUTION FACIL16 ITY.—The swap execution facility shall be re17 quired to have the capacity to electronically cap18 ture trade information with respect to trans19 actions executed on the facility. 

20 ‘‘(10) RECORDKEEPING AND REPORTING.— 

21 ‘‘(A) IN GENERAL.—A swap execution facil22 ity shall— 

23 ‘‘(i) maintain records of all activities 

24 relating to the business of the facility, in25 cluding a complete audit trail, in a form 
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† HR 4173 EAS 

1 and manner acceptable to the Commission 

2 for a period of 5 years; and 

3 ‘‘(ii) report to the Commission, in a 

4 form and manner acceptable to the Commis5 sion, such information as the Commission 

6 determines to be necessary or appropriate 

7 for the Commission to perform the duties of 

8 the Commission under this Act. 

9 ‘‘(B) REQUIREMENTS.—The Commission 

10 shall adopt data collection and reporting re11 quirements for swap execution facilities that are 

12 comparable to corresponding requirements for de13 rivatives clearing organizations and swap data 

14 repositories. 

15 ‘‘(11) ANTITRUST CONSIDERATIONS.—Unless nec16 essary or appropriate to achieve the purposes of this 

17 Act, the swap execution facility shall not— 

18 ‘‘(A) adopt any rules or taking any actions 

19 that result in any unreasonable restraint of 

20 trade; or 

21 ‘‘(B) impose any material anticompetitive 

22 burden on trading or clearing. 

23 ‘‘(12) CONFLICTS OF INTEREST.—The swap exe24 cution facility shall— 
669 

† HR 4173 EAS 

1 ‘‘(A) establish and enforce rules to minimize 

2 conflicts of interest in its decision-making proc3 ess; and 

4 ‘‘(B) establish a process for resolving the 

5 conflicts of interest. 

6 ‘‘(13) FINANCIAL RESOURCES.— 

7 ‘‘(A) IN GENERAL.—The swap execution fa8 cility shall have adequate financial, operational, 

9 and managerial resources to discharge each re10 sponsibility of the swap execution facility. 

11 ‘‘(B) DETERMINATION OF RESOURCE ADE12 QUACY.—The financial resources of a swap exe13 cution facility shall be considered to be adequate 

14 if the value of the financial resources exceeds the 

15 total amount that would enable the swap execu16 tion facility to cover the operating costs of the 

17 swap execution facility for a 1-year period, as 

18 calculated on a rolling basis. 

19 ‘‘(14) SYSTEM SAFEGUARDS.—The swap execu20 tion facility shall— 

21 ‘‘(A) establish and maintain a program of 

22 risk analysis and oversight to identify and mini23 mize sources of operational risk, through the de24 velopment of appropriate controls and proce25 dures, and automated systems, that— 
670 

† HR 4173 EAS 

1 ‘‘(i) are reliable and secure; and 

2 ‘‘(ii) have adequate scalable capacity; 

3 ‘‘(B) establish and maintain emergency pro4 cedures, backup facilities, and a plan for disaster 

5 recovery that are designed to allow for— 

6 ‘‘(i) the timely recovery and resump7 tion of operations; and 

8 ‘‘(ii) the fulfillment of the responsibil9 ities and obligation of the swap execution 

10 facility; and 

11 ‘‘(C) periodically conduct tests to verify that 

12 the backup resources of the swap execution facil13 ity are sufficient to ensure continued— 

14 ‘‘(i) order processing and trade match15 ing; 

16 ‘‘(ii) price reporting; 

17 ‘‘(iii) market surveillance and 

18 ‘‘(iv) maintenance of a comprehensive 

19 and accurate audit trail. 

20 ‘‘(15) DESIGNATION OF CHIEF COMPLIANCE OFFI21 CER.— 

22 ‘‘(A) IN GENERAL.—Each swap execution 

23 facility shall designate an individual to serve as 

24 a chief compliance officer. 
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† HR 4173 EAS 

1 ‘‘(B) DUTIES.—The chief compliance officer 

2 shall— 

3 ‘‘(i) report directly to the board or to 

4 the senior officer of the facility; 

5 ‘‘(ii) review compliance with the core 

6 principles in this subsection; 

7 ‘‘(iii) in consultation with the board of 

8 the facility, a body performing a function 

9 similar to that of a board, or the senior offi10 cer of the facility, resolve any conflicts of 

11 interest that may arise; 

12 ‘‘(iv) be responsible for establishing 

13 and administering the policies and proce14 dures required to be established pursuant to 

15 this section; 

16 ‘‘(v) ensure compliance with this Act 

17 and the rules and regulations issued under 

18 this Act, including rules prescribed by the 

19 Commission pursuant to this section; and 

20 ‘‘(vi) establish procedures for the reme21 diation of noncompliance issues found dur22 ing compliance office reviews, look backs, 

23 internal or external audit findings, self-re24 ported errors, or through validated com25 plaints. 
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† HR 4173 EAS 

1 ‘‘(C) REQUIREMENTS FOR PROCEDURES.— 

2 In establishing procedures under subparagraph 

3 (B)(vi), the chief compliance officer shall design 

4 the procedures to establish the handling, manage5 ment response, remediation, retesting, and clos6 ing of noncompliance issues. 

7 ‘‘(D) ANNUAL REPORTS.— 

8 ‘‘(i) IN GENERAL.—In accordance with 

9 rules prescribed by the Commission, the 

10 chief compliance officer shall annually pre11 pare and sign a report that contains a de12 scription of— 

13 ‘‘(I) the compliance of the swap 

14 execution facility with this Act; and 

15 ‘‘(II) the policies and procedures, 

16 including the code of ethics and con17 flict of interest policies, of the swap 

18 execution facility. 

19 ‘‘(ii) REQUIREMENTS.—The chief com20 pliance officer shall— 

21 ‘‘(I) submit each report described 

22 in clause (i) with the appropriate fi23 nancial report of the swap execution 

24 facility that is required to be submitted 
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† HR 4173 EAS 

1 to the Commission pursuant to this 

2 section; and 

3 ‘‘(II) include in the report a cer4 tification that, under penalty of law, 

5 the report is accurate and complete. 

6 ‘‘(e) EXEMPTIONS.—The Commission may exempt, 

7 conditionally or unconditionally, a swap execution facility 

8 from registration under this section if the Commission finds 

9 that the facility is subject to comparable, comprehensive su10 pervision and regulation on a consolidated basis by the Se11 curities and Exchange Commission, a prudential regulator, 

12 or the appropriate governmental authorities in the home 

13 country of the facility. 

14 ‘‘(f) RULES.—The Commission shall prescribe rules 

15 governing the regulation of alternative swap execution fa16 cilities under this section.’’. 

17 SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILI18 TIES AND EXEMPT BOARDS OF TRADE. 

19 (a) IN GENERAL.—Sections 5a and 5d of the Com20 modity Exchange Act (7 U.S.C. 7a, 7a–3) are repealed. 

21 (b) CONFORMING AMENDMENTS.— 

22 (1) Section 2 of the Commodity Exchange Act (7 

23 U.S.C. 2) is amended— 

24 (A) in subsection (a)(1)(A), in the first sen25 tence, by striking ‘‘or 5a’’; and 
674 

† HR 4173 EAS 

1 (B) in paragraph (2) of subsection (g) (as 

2 redesignated by section 723(a)(1)(B)), by strik3 ing ‘‘section 5a of this Act’’ and all that follows 

4 through ‘‘5d of this Act’’ and inserting ‘‘section 

5 5b of this Act’’. 

6 (2) Section 6(g)(1)(A) of the Securities Exchange 

7 Act of 1934 (15 U.S.C. 78f(g)(1)(A)) is amended— 

8 (A) by striking ‘‘that—’’ and all that fol9 lows through ‘‘(i) has been designated’’ and in10 serting ‘‘that has been designated’’; 

11 (B) by striking ‘‘; or’’ and inserting ‘‘; and’’ 

12 and 

13 (C) by striking clause (ii). 

14 SEC. 735. DESIGNATED CONTRACT MARKETS. 

15 (a) CRITERIA FOR DESIGNATION.—Section 5 of the 

16 Commodity Exchange Act (7 U.S.C. 7) is amended by strik17 ing subsection (b). 

18 (b) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

19 Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is 

20 amended by striking subsection (d) and inserting the fol21 lowing: 

22 ‘‘(d) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

23 ‘‘(1) DESIGNATION AS CONTRACT MARKET.— 
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† HR 4173 EAS 

1 ‘‘(A) IN GENERAL.—To be designated, and 

2 maintain a designation, as a contract market, a 

3 board of trade shall comply with— 

4 ‘‘(i) any core principle described in 

5 this subsection; and 

6 ‘‘(ii) any requirement that the Com7 mission may impose by rule or regulation 

8 pursuant to section 8a(5). 

9 ‘‘(B) REASONABLE DISCRETION OF CON10 TRACT MARKET.—Unless otherwise determined 

11 by the Commission by rule or regulation, a 

12 board of trade described in subparagraph (A) 

13 shall have reasonable discretion in establishing 

14 the manner in which the board of trade complies 

15 with the core principles described in this sub16 section. 

17 ‘‘(2) COMPLIANCE WITH RULES.— 

18 ‘‘(A) IN GENERAL.—The board of trade 

19 shall establish, monitor, and enforce compliance 

20 with the rules of the contract market, includ21 ing— 

22 ‘‘(i) access requirements; 

23 ‘‘(ii) the terms and conditions of any 

24 contracts to be traded on the contract mar25 ket; and 
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† HR 4173 EAS 

1 ‘‘(iii) rules prohibiting abusive trade 

2 practices on the contract market. 

3 ‘‘(B) CAPACITY OF CONTRACT MARKET.— 

4 The board of trade shall have the capacity to de5 tect, investigate, and apply appropriate sanc6 tions to any person that violates any rule of the 

7 contract market. 

8 ‘‘(C) REQUIREMENT OF RULES.—The rules 

9 of the contract market shall provide the board of 

10 trade with the ability and authority to obtain 

11 any necessary information to perform any func12 tion described in this subsection, including the 

13 capacity to carry out such international infor14 mation-sharing agreements as the Commission 

15 may require. 

16 ‘‘(3) CONTRACTS NOT READILY SUBJECT TO MA17 NIPULATION.—The board of trade shall list on the 

18 contract market only contracts that are not readily 

19 susceptible to manipulation. 

20 ‘‘(4) PREVENTION OF MARKET DISRUPTION.—The 

21 board of trade shall have the capacity and responsi22 bility to prevent manipulation, price distortion, and 

23 disruptions of the delivery or cash-settlement process 

24 through market surveillance, compliance, and enforce25 ment practices and procedures, including— 
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† HR 4173 EAS 

1 ‘‘(A) methods for conducting real-time mon2 itoring of trading; and 

3 ‘‘(B) comprehensive and accurate trade re4 constructions. 

5 ‘‘(5) POSITION LIMITATIONS OR ACCOUNT6 ABILITY.— 

7 ‘‘(A) IN GENERAL.—To reduce the potential 

8 threat of market manipulation or congestion (es9 pecially during trading in the delivery month), 

10 the board of trade shall adopt for each contract 

11 of the board of trade, as is necessary and appro12 priate, position limitations or position account13 ability for speculators. 

14 ‘‘(B) MAXIMUM ALLOWABLE POSITION LIMI15 TATION.—For any contract that is subject to a 

16 position limitation established by the Commis17 sion pursuant to section 4a(a), the board of trade 

18 shall set the position limitation of the board of 

19 trade at a level not higher than the position lim20 itation established by the Commission. 

21 ‘‘(6) EMERGENCY AUTHORITY.—The board of 

22 trade, in consultation or cooperation with the Com23 mission, shall adopt rules to provide for the exercise 

24 of emergency authority, as is necessary and appro25 priate, including the authority— 
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1 ‘‘(A) to liquidate or transfer open positions 

2 in any contract; 

3 ‘‘(B) to suspend or curtail trading in any 

4 contract; and 

5 ‘‘(C) to require market participants in any 

6 contract to meet special margin requirements. 

7 ‘‘(7) AVAILABILITY OF GENERAL INFORMATION.— 

8 The board of trade shall make available to market au9 thorities, market participants, and the public accu10 rate information concerning— 

11 ‘‘(A) the terms and conditions of the con12 tracts of the contract market; and 

13 ‘‘(B)(i) the rules, regulations, and mecha14 nisms for executing transactions on or through 

15 the facilities of the contract market; and 

16 ‘‘(ii) the rules and specifications describing 

17 the operation of the contract market’s— 

18 ‘‘(I) electronic matching platform; or 

19 ‘‘(II) trade execution facility. 

20 ‘‘(8) DAILY PUBLICATION OF TRADING INFORMA21 TION.—The board of trade shall make public daily in22 formation on settlement prices, volume, open interest, 

23 and opening and closing ranges for actively traded 

24 contracts on the contract market. 

25 ‘‘(9) EXECUTION OF TRANSACTIONS.— 
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1 ‘‘(A) IN GENERAL.—The board of trade 

2 shall provide a competitive, open, and efficient 

3 market and mechanism for executing trans4 actions that protects the price discovery process 

5 of trading in the centralized market of the board 

6 of trade. 

7 ‘‘(B) RULES.—The rules of the board of 

8 trade may authorize, for bona fide business pur9 poses— 

10 ‘‘(i) transfer trades or office trades; 

11 ‘‘(ii) an exchange of— 

12 ‘‘(I) futures in connection with a 

13 cash commodity transaction; 

14 ‘‘(II) futures for cash commod15 ities; or 

16 ‘‘(III) futures for swaps; or 

17 ‘‘(iii) a futures commission merchant, 

18 acting as principal or agent, to enter into 

19 or confirm the execution of a contract for 

20 the purchase or sale of a commodity for fu21 ture delivery if the contract is reported, re22 corded, or cleared in accordance with the 

23 rules of the contract market or a derivatives 

24 clearing organization. 
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1 ‘‘(10) TRADE INFORMATION.—The board of trade 

2 shall maintain rules and procedures to provide for the 

3 recording and safe storage of all identifying trade in4 formation in a manner that enables the contract mar5 ket to use the information— 

6 ‘‘(A) to assist in the prevention of customer 

7 and market abuses; and 

8 ‘‘(B) to provide evidence of any violations of 

9 the rules of the contract market. 

10 ‘‘(11) FINANCIAL INTEGRITY OF TRANS11 ACTIONS.—The board of trade shall establish and en12 force— 

13 ‘‘(A) rules and procedures for ensuring the 

14 financial integrity of transactions entered into 

15 on or through the facilities of the contract market 

16 (including the clearance and settlement of the 

17 transactions with a derivatives clearing organi18 zation); and 

19 ‘‘(B) rules to ensure— 

20 ‘‘(i) the financial integrity of any— 

21 ‘‘(I) futures commission merchant; 

22 and 

23 ‘‘(II) introducing broker; and 

24 ‘‘(ii) the protection of customer funds. 
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1 ‘‘(12) PROTECTION OF MARKETS AND MARKET

2 PARTICIPANTS.—The board of trade shall establish 

3 and enforce rules— 

4 ‘‘(A) to protect markets and market partici5 pants from abusive practices committed by any 

6 party, including abusive practices committed by 

7 a party acting as an agent for a participant; 

8 and 

9 ‘‘(B) to promote fair and equitable trading 

10 on the contract market. 

11 ‘‘(13) DISCIPLINARY PROCEDURES.—The board 

12 of trade shall establish and enforce disciplinary proce13 dures that authorize the board of trade to discipline, 

14 suspend, or expel members or market participants 

15 that violate the rules of the board of trade, or similar 

16 methods for performing the same functions, including 

17 delegation of the functions to third parties. 

18 ‘‘(14) DISPUTE RESOLUTION.—The board of 

19 trade shall establish and enforce rules regarding, and 

20 provide facilities for alternative dispute resolution as 

21 appropriate for, market participants and any market 

22 intermediaries. 

23 ‘‘(15) GOVERNANCE FITNESS STANDARDS.—The 

24 board of trade shall establish and enforce appropriate 

25 fitness standards for directors, members of any dis-
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1 ciplinary committee, members of the contract market, 

2 and any other person with direct access to the facility 

3 (including any party affiliated with any person de4 scribed in this paragraph). 

5 ‘‘(16) CONFLICTS OF INTEREST.—The board of 

6 trade shall establish and enforce rules— 

7 ‘‘(A) to minimize conflicts of interest in the 

8 decision-making process of the contract market; 

9 and 

10 ‘‘(B) to establish a process for resolving con11 flicts of interest described in subparagraph (A). 

12 ‘‘(17) COMPOSITION OF GOVERNING BOARDS OF

13 CONTRACT MARKETS.—The governance arrangements 

14 of the board of trade shall be designed to promote the 

15 objectives of market participants. 

16 ‘‘(18) RECORDKEEPING.—The board of trade 

17 shall maintain records of all activities relating to the 

18 business of the contract market— 

19 ‘‘(A) in a form and manner that is accept20 able to the Commission; and 

21 ‘‘(B) for a period of at least 5 years. 

22 ‘‘(19) ANTITRUST CONSIDERATIONS.—Unless nec23 essary or appropriate to achieve the purposes of this 

24 Act, the board of trade shall not— 
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1 ‘‘(A) adopt any rule or taking any action 

2 that results in any unreasonable restraint of 

3 trade; or 

4 ‘‘(B) impose any material anticompetitive 

5 burden on trading on the contract market. 

6 ‘‘(20) SYSTEM SAFEGUARDS.—The board of trade 

7 shall— 

8 ‘‘(A) establish and maintain a program of 

9 risk analysis and oversight to identify and mini10 mize sources of operational risk, through the de11 velopment of appropriate controls and proce12 dures, and the development of automated sys13 tems, that are reliable, secure, and have adequate 

14 scalable capacity; 

15 ‘‘(B) establish and maintain emergency pro16 cedures, backup facilities, and a plan for disaster 

17 recovery that allow for the timely recovery and 

18 resumption of operations and the fulfillment of 

19 the responsibilities and obligations of the board 

20 of trade; and 

21 ‘‘(C) periodically conduct tests to verify that 

22 backup resources are sufficient to ensure contin23 ued order processing and trade matching, price 

24 reporting, market surveillance, and maintenance 

25 of a comprehensive and accurate audit trail. 
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1 ‘‘(21) FINANCIAL RESOURCES.— 

2 ‘‘(A) IN GENERAL.—The board of trade 

3 shall have adequate financial, operational, and 

4 managerial resources to discharge each responsi5 bility of the board of trade. 

6 ‘‘(B) DETERMINATION OF ADEQUACY.—The 

7 financial resources of the board of trade shall be 

8 considered to be adequate if the value of the fi9 nancial resources exceeds the total amount that 

10 would enable the contract market to cover the op11 erating costs of the contract market for a 1-year 

12 period, as calculated on a rolling basis.’’. 

13 SEC. 736. MARGIN. 

14 Section 8a(7) of the Commodity Exchange Act (7 

15 U.S.C. 12a(7)) is amended— 

16 (1) in subparagraph (C), by striking ‘‘, excepting 

17 the setting of levels of margin’’; 

18 (2) by redesignating subparagraphs (D) through 

19 (F) as subparagraphs (E) through (G), respectively; 

20 and 

21 (3) by inserting after subparagraph (C) the fol22 lowing: 

23 ‘‘(D) margin requirements, provided that 

24 the rules, regulations, or orders shall— 
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1 ‘‘(i) be limited to protecting the finan2 cial integrity of the derivatives clearing or3 ganization; 

4 ‘‘(ii) be designed for risk management 

5 purposes to protect the financial integrity of 

6 transactions; and 

7 ‘‘(iii) not set specific margin 

8 amounts;’’. 

9 SEC. 737. POSITION LIMITS. 

10 (a) AGGREGATE POSITION LIMITS.—Section 4a(a) of 

11 the Commodity Exchange Act (7 U.S.C. 6a(a)) is amend12 ed— 

13 (1) by inserting after ‘‘(a)’’ the following: 

14 ‘‘(1) IN GENERAL.—’’; 

15 (2) in the first sentence, by striking ‘‘on elec16 tronic trading facilities with respect to a significant 

17 price discovery contract’’ and inserting ‘‘swaps that 

18 perform or affect a significant price discovery func19 tion with respect to registered entities’’; 

20 (3) in the second sentence— 

21 (A) by inserting ‘‘, including any group or 

22 class of traders,’’ after ‘‘held by any person’’; and 

23 (B) by striking ‘‘on an electronic trading 

24 facility with respect to a significant price dis25 covery contract,’’ and inserting ‘‘swaps traded on 
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1 or subject to the rules of an swaps execution fa2 cility, or swaps not traded on or subject to the 

3 rules of an swaps execution facility that perform 

4 a significant price discovery function with re5 spect to a registered entity,’’; and 

6 (4) by adding at the end the following: 

7 ‘‘(2) AGGREGATE POSITION LIMITS.—The Com8 mission shall, by rule or regulation, establish limits 

9 (including related hedge exemption provisions) on the 

10 aggregate number or amount of positions in contracts 

11 based on the same underlying commodity (as defined 

12 by the Commission) that may be held by any person, 

13 including any group or class of traders, for each 

14 month across— 

15 ‘‘(A) contracts listed by designated contract 

16 markets; 

17 ‘‘(B) with respect to an agreement, contract, 

18 or transaction that settles against, or in relation 

19 to, any price (including the daily or final settle20 ment price) of 1 or more contracts listed for 

21 trading on a registered entity, contracts traded 

22 on a foreign board of trade that provides mem23 bers or other participants located in the United 

24 States with direct access to the electronic trading 
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1 and order matching system of the foreign board 

2 of trade; 

3 ‘‘(C) swaps traded on or subject to the rules 

4 of a swap execution facility; and 

5 ‘‘(D) swaps not traded on or subject to the 

6 rules of a swap execution facility that perform or 

7 affect a significant price discovery function with 

8 respect to a registered entity. 

9 ‘‘(3) SIGNIFICANT PRICE DISCOVERY FUNC10 TION.—In making a determination as to whether a 

11 swap performs or affects a significant price discovery 

12 function with respect to registered entities, the Com13 mission shall consider, as appropriate, the following 

14 factors: 

15 ‘‘(A) PRICE LINKAGE.—The extent to which 

16 the swap uses or otherwise relies on a daily or 

17 final settlement price, or other major price pa18 rameter, of another contract traded on a reg19 istered entity based on the same underlying com20 modity, to value a position, transfer or convert 

21 a position, financially settle a position, or close 

22 out a position. 

23 ‘‘(B) ARBITRAGE.—The extent to which the 

24 price for the swap is sufficiently related to the 

25 price of another contract traded on a registered 
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1 entity based on the same underlying commodity 

2 so as to permit market participants to effectively 

3 arbitrage between the markets by simultaneously 

4 maintaining positions or executing trades in the 

5 swaps on a frequent and recurring basis. 

6 ‘‘(C) MATERIAL PRICE REFERENCE.—The 

7 extent to which, on a frequent and recurring 

8 basis, bids, offers, or transactions in a contract 

9 traded on a registered entity are directly based 

10 on, or are determined by referencing, the price 

11 generated by the swap. 

12 ‘‘(D) MATERIAL LIQUIDITY.—The extent to 

13 which the volume of swaps being traded in the 

14 commodity is sufficient to have a material effect 

15 on another contract traded on a registered entity. 

16 ‘‘(E) OTHER MATERIAL FACTORS.—Such 

17 other material factors as the Commission speci18 fies by rule or regulation as relevant to deter19 mine whether a swap serves a significant price 

20 discovery function with respect to a regulated 

21 market. 

22 ‘‘(4) EXEMPTIONS.—The Commission, by rule, 

23 regulation, or order, may exempt, conditionally or 

24 unconditionally, any person or class of persons, any 

25 swap or class of swaps, or any transaction or class 
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1 of transactions from any requirement that the Com2 mission establishes under this section with respect to 

3 position limits.’’. 

4 (b) CONFORMING AMENDMENTS.—Section 4a(b) of the 

5 Commodity Exchange Act (7 U.S.C. 6a(b)) is amended— 

6 (1) in paragraph (1), by striking ‘‘or derivatives 

7 transaction execution facility or facilities or electronic 

8 trading facility’’ and inserting ‘‘or swap execution fa9 cility or facilities’’; and 

10 (2) in paragraph (2), by striking ‘‘or derivatives 

11 transaction execution facility or facilities or electronic 

12 trading facility’’ and inserting ‘‘or swap execution fa13 cility’’. 

14 SEC. 738. FOREIGN BOARDS OF TRADE. 

15 (a) IN GENERAL.—Section 4(b) of the Commodity Ex16 change Act (7 U.S.C. 6(b)) is amended— 

17 (1) in the first sentence, by striking ‘‘The Com18 mission’’ and inserting the following: 

19 ‘‘(2) PERSONS LOCATED IN THE UNITED

20 STATES.— 

21 ‘‘(A) IN GENERAL.—The Commission’’; 

22 (2) in the second sentence, by striking ‘‘Such 

23 rules and regulations’’ and inserting the following: 

24 ‘‘(B) DIFFERENT REQUIREMENTS.—Rules 

25 and regulations described in subparagraph (A)’’; 
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1 (3) in the third sentence— 

2 (A) by striking ‘‘No rule or regulation’’ and 

3 inserting the following: 

4 ‘‘(C) PROHIBITION.—Except as provided in 

5 paragraphs (1) and (2), no rule or regulation’’; 

6 (B) by striking ‘‘that (1) requires’’ and in7 serting the following: ‘‘that— 

8 ‘‘(i) requires’’; and 

9 (C) by striking ‘‘market, or (2) governs’’ 

10 and inserting the following: ‘‘market; or 

11 ‘‘(ii) governs’’; and 

12 (4) by inserting before paragraph (2) (as des13 ignated by paragraph (1)) the following: 

14 ‘‘(1) FOREIGN BOARDS OF TRADE.— 

15 ‘‘(A) IN GENERAL.—It shall be unlawful for 

16 a foreign board of trade to provide to the mem17 bers of the foreign board of trade or other par18 ticipants located in the United States direct ac19 cess to the electronic trading and order-matching 

20 system of the foreign board of trade with respect 

21 to an agreement, contract, or transaction that 

22 settles against any price (including the daily or 

23 final settlement price) of 1 or more contracts 

24 listed for trading on a registered entity, unless 

25 the Commission determines that— 
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1 ‘‘(i) the foreign board of trade makes 

2 public daily trading information regarding 

3 the agreement, contract, or transaction that 

4 is comparable to the daily trading informa5 tion published by the registered entity for 

6 the 1 or more contracts against which the 

7 agreement, contract, or transaction traded 

8 on the foreign board of trade settles; and 

9 ‘‘(ii) the foreign board of trade (or the 

10 foreign futures authority that oversees the 

11 foreign board of trade)— 

12 ‘‘(I) adopts position limits (in13 cluding related hedge exemption provi14 sions) for the agreement, contract, or 

15 transaction that are comparable to the 

16 position limits (including related hedge 

17 exemption provisions) adopted by the 

18 registered entity for the 1 or more con19 tracts against which the agreement, 

20 contract, or transaction traded on the 

21 foreign board of trade settles; 

22 ‘‘(II) has the authority to require 

23 or direct market participants to limit, 

24 reduce, or liquidate any position the 

25 foreign board of trade (or the foreign 
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1 futures authority that oversees the for2 eign board of trade) determines to be 

3 necessary to prevent or reduce the 

4 threat of price manipulation, excessive 

5 speculation as described in section 4a, 

6 price distortion, or disruption of deliv7 ery or the cash settlement process; 

8 ‘‘(III) agrees to promptly notify 

9 the Commission, with regard to the 

10 agreement, contract, or transaction 

11 that settles against any price (includ12 ing the daily or final settlement price) 

13 of 1 or more contracts listed for trad14 ing on a registered entity, of any 

15 change regarding— 

16 ‘‘(aa) the information that 

17 the foreign board of trade will 

18 make publicly available; 

19 ‘‘(bb) the position limits that 

20 the foreign board of trade or for21 eign futures authority will adopt 

22 and enforce; 

23 ‘‘(cc) the position reductions 

24 required to prevent manipulation, 

25 excessive speculation as described 
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1 in section 4a, price distortion, or 

2 disruption of delivery or the cash 

3 settlement process; and 

4 ‘‘(dd) any other area of in5 terest expressed by the Commis6 sion to the foreign board of trade 

7 or foreign futures authority; 

8 ‘‘(IV) provides information to the 

9 Commission regarding large trader po10 sitions in the agreement, contract, or 

11 transaction that is comparable to the 

12 large trader position information col13 lected by the Commission for the 1 or 

14 more contracts against which the 

15 agreement, contract, or transaction 

16 traded on the foreign board of trade 

17 settles; and 

18 ‘‘(V) provides the Commission 

19 such information as is necessary to 

20 publish reports on aggregate trader po21 sitions for the agreement, contract, or 

22 transaction traded on the foreign board 

23 of trade that are comparable to such 

24 reports on aggregate trader positions 

25 for the 1 or more contracts against 
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1 which the agreement, contract, or 

2 transaction traded on the foreign board 

3 of trade settles. 

4 ‘‘(B) EXISTING FOREIGN BOARDS OF

5 TRADE.—Subparagraph (A) shall not be effective 

6 with respect to any foreign board of trade to 

7 which, prior to the date of enactment of this 

8 paragraph, the Commission granted direct access 

9 permission until the date that is 180 days after 

10 that date of enactment.’’. 

11 (b) LIABILITY OF REGISTERED PERSONS TRADING ON

12 A FOREIGN BOARD OF TRADE.—Section 4 of the Com13 modity Exchange Act (7 U.S.C. 6) is amended— 

14 (1) in subsection (a), in the matter preceding 

15 paragraph (1), by inserting ‘‘or by subsection (e)’’ 

16 after ‘‘Unless exempted by the Commission pursuant 

17 to subsection (c)’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(e) LIABILITY OF REGISTERED PERSONS TRADING ON

20 A FOREIGN BOARD OF TRADE.—A person registered with 

21 the Commission, or exempt from registration by the Com22 mission, under this Act may not be found to have violated 

23 subsection (a) with respect to a transaction in, or in connec24 tion with, a contract of sale of a commodity for future deliv25 ery if the person has reason to believe that the transaction 
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1 and the contract is made on or subject to the rules of a 

2 foreign board of trade that has complied with paragraphs 

3 (1) and (2) of subsection (b).’’. 

4 (c) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES

5 CONTRACTS.—Section 22(a) of the Commodity Exchange 

6 Act (7 U.S.C. 25(a)) (as amended by section 739) is amend7 ed by adding at the end the following: 

8 ‘‘(6) CONTRACT ENFORCEMENT FOR FOREIGN FU9 TURES CONTRACTS.—A contract of sale of a com10 modity for future delivery traded or executed on or 

11 through the facilities of a board of trade, exchange, or 

12 market located outside the United States for purposes 

13 of section 4(a) shall not be void, voidable, or unen14 forceable, and a party to such a contract shall not be 

15 entitled to rescind or recover any payment made with 

16 respect to the contract, based on the failure of the for17 eign board of trade to comply with any provision of 

18 this Act.’’. 

19 SEC. 739. LEGAL CERTAINTY FOR SWAPS. 

20 Section 22(a) of the Commodity Exchange Act (7 

21 U.S.C. 25(a)) is amended by striking paragraph (4) and 

22 inserting the following: 

23 ‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELIGI24 BLE COUNTERPARTIES.— 
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1 ‘‘(A) IN GENERAL.—No hybrid instrument 

2 sold to any investor shall be void, voidable, or 

3 unenforceable, and no party to a hybrid instru4 ment shall be entitled to rescind, or recover any 

5 payment made with respect to, the hybrid instru6 ment under this section or any other provision 

7 of Federal or State law, based solely on the fail8 ure of the hybrid instrument to comply with the 

9 terms or conditions of section 2(f) or regulations 

10 of the Commission. 

11 ‘‘(B) SWAPS.—No agreement, contract, or 

12 transaction between eligible contract partici13 pants or persons reasonably believed to be eligi14 ble contract participants shall be void, voidable, 

15 or unenforceable, and no party to an agreement, 

16 contract, or transaction shall be entitled to re17 scind, or recover any payment made with respect 

18 to, the agreement, contract, or transaction under 

19 this section or any other provision of Federal or 

20 State law, based solely on the failure of the 

21 agreement, contract, or transaction— 

22 ‘‘(i) to meet the definition of a swap 

23 under section 1a; or 

24 ‘‘(ii) to be cleared in accordance with 

25 section 2(h)(1). 
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† HR 4173 EAS 

1 ‘‘(5) LEGAL CERTAINTY FOR LONG-TERM SWAPS

2 ENTERED INTO BEFORE THE DATE OF ENACTMENT OF

3 THE WALL STREET TRANSPARENCY AND ACCOUNT4 ABILITY ACT OF 2010.— 

5 ‘‘(A) IN GENERAL.—Any swap entered into 

6 before the date of enactment of the Wall Street 

7 Transparency and Accountability Act of 2010, 

8 the terms of which have not expired as of the 

9 date of enactment, shall not be subject to the 

10 mandatory clearing requirements under this Act. 

11 ‘‘(B) EFFECT ON SWAPS.—Unless specifi12 cally reserved in the applicable bilateral trading 

13 agreement, neither the enactment of the Wall 

14 Street Transparency and Accountability Act of 

15 2010, nor any requirement under that Act or an 

16 amendment made by that Act, shall constitute a 

17 termination event, force majeure, illegality, in18 creased costs, regulatory change, or similar event 

19 under a bilateral trading agreement (including 

20 any related credit support arrangement) that 

21 would permit a party to terminate, renegotiate, 

22 modify, amend, or supplement 1 or more trans23 actions under the bilateral trading agreement. 

24 ‘‘(C) POSITION LIMITS.—Any position limit 

25 established under the Wall Street Transparency 
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1 and Accountability Act of 2010 shall not apply 

2 to a position acquired in good faith prior to the 

3 effective date of any rule, regulation, or order 

4 under the Act that establishes the position limit; 

5 provided, however, that such positions shall be 

6 attributed to the trader if the trader’s position is 

7 increased after the effective date such position 

8 limit rule, regulation, or order.’’. 

9 SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS. 

10 Sections 408 and 409 of the Federal Deposit Insurance 

11 Corporation Improvement Act of 1991 (12 U.S.C. 4421, 

12 4422) are repealed. 

13 SEC. 741. ENFORCEMENT. 

14 (a) ENFORCEMENT AUTHORITY.—The Commodity Ex15 change Act is amended by inserting after section 4b (7 

16 U.S.C. 6b) the following: 

17 ‘‘SEC. 4b–1. ENFORCEMENT AUTHORITY. 

18 ‘‘(a) COMMISSION.—Except as provided in subsections 

19 (b), (c), and (d), the Commission shall have primary au20 thority to enforce the amendments made by the Wall Street 

21 Transparency and Accountability Act of 2010 with respect 

22 to any person. 

23 ‘‘(b) APPROPRIATE FEDERAL BANKING AGENCIES.— 

24 The appropriate Federal banking agency for swap dealers 

25 or major swap participants that are depository institu-
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1 tions, as that term is defined under section 3 of the Federal 

2 Deposit Insurance Act (12 U.S.C. 1813), shall have exclu3 sive authority to enforce the provisions of section 4s(e) and 

4 other prudential requirements of this Act, with respect to 

5 depository institutions that are swap dealers or major swap 

6 participants. 

7 ‘‘(c) REFERRALS.— 

8 ‘‘(1) PRUDENTIAL REGULATORS.—If the pruden9 tial regulator for a swap dealer or major swap partic10 ipant has cause to believe that the swap dealer or 

11 major swap participant, or any affiliate or division 

12 of the swap dealer or major swap participant, may 

13 have engaged in conduct that constitutes a violation 

14 of the nonprudential requirements of this Act (includ15 ing section 4s or rules adopted by the Commission 

16 under that section), the prudential regulator shall 

17 promptly notify the Commission in a written report 

18 that includes— 

19 ‘‘(A) a request that the Commission initiate 

20 an enforcement proceeding under this Act; and 

21 ‘‘(B) an explanation of the facts and cir22 cumstances that led to the preparation of the 

23 written report. 

24 ‘‘(2) COMMISSION.—If the Commission has cause 

25 to believe that a swap dealer or major swap partici-
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1 pant that has a prudential regulator may have en2 gaged in conduct that constitutes a violation of any 

3 prudential requirement of section 4s or rules adopted 

4 by the Commission under that section, the Commis5 sion may notify the prudential regulator of the con6 duct in a written report that includes— 

7 ‘‘(A) a request that the prudential regulator 

8 initiate an enforcement proceeding under this 

9 Act or any other Federal law (including regula10 tions); and 

11 ‘‘(B) an explanation of the concerns of the 

12 Commission, and a description of the facts and 

13 circumstances, that led to the preparation of the 

14 written report. 

15 ‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.— 

16 ‘‘(1) INITIATION OF ENFORCEMENT PROCEEDING

17 BY PRUDENTIAL REGULATOR.—If the Commission 

18 does not initiate an enforcement proceeding before the 

19 end of the 90-day period beginning on the date on 

20 which the Commission receives a written report under 

21 subsection (c)(1), the prudential regulator may ini22 tiate an enforcement proceeding. 

23 ‘‘(2) INITIATION OF ENFORCEMENT PROCEEDING

24 BY COMMISSION.—If the prudential regulator does not 

25 initiate an enforcement proceeding before the end of 
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1 the 90-day period beginning on the date on which the 

2 prudential regulator receives a written report under 

3 subsection (c)(2), the Commission may initiate an en4 forcement proceeding.’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) Section 4b of the Commodity Exchange Act 

7 (7 U.S.C. 6b) is amended— 

8 (A) in subsection (a)(2), by striking ‘‘or 

9 other agreement, contract, or transaction subject 

10 to paragraphs (1) and (2) of section 5a(g),’’ and 

11 inserting ‘‘or swap,’’; 

12 (B) in subsection (b), by striking ‘‘or other 

13 agreement, contract or transaction subject to 

14 paragraphs (1) and (2) of section 5a(g),’’ and 

15 inserting ‘‘or swap,’’; and 

16 (C) by adding at the end the following: 

17 ‘‘(e) It shall be unlawful for any person, directly or 

18 indirectly, by the use of any means or instrumentality of 

19 interstate commerce, or of the mails, or of any facility of 

20 any registered entity, in or in connection with any order 

21 to make, or the making of, any contract of sale of any com22 modity for future delivery (or option on such a contract), 

23 or any swap, on a group or index of securities (or any in24 terest therein or based on the value thereof)— 
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1 ‘‘(1) to employ any device, scheme, or artifice to 

2 defraud; 

3 ‘‘(2) to make any untrue statement of a material 

4 fact or to omit to state a material fact necessary in 

5 order to make the statements made, in the light of the 

6 circumstances under which they were made, not mis7 leading; or 

8 ‘‘(3) to engage in any act, practice, or course of 

9 business which operates or would operate as a fraud 

10 or deceit upon any person.’’. 

11 (2) Section 4c(a)(1) of the Commodity Exchange 

12 Act (7 U.S.C. 6c(a)(1)) is amended by inserting ‘‘or 

13 swap’’ before ‘‘if the transaction is used or may be 

14 used’’. 

15 (3) Section 6(c) of the Commodity Exchange Act 

16 (7 U.S.C. 9) is amended in the first sentence by in17 serting ‘‘or of any swap,’’ before ‘‘or has willfully 

18 made’’. 

19 (4) Section 6(d) of the Commodity Exchange Act 

20 (7 U.S.C. 13b) is amended in the first sentence, in the 

21 matter preceding the proviso, by inserting ‘‘or of any 

22 swap,’’ before ‘‘or otherwise is violating’’. 

23 (5) Section 6c(a) of the Commodity Exchange 

24 Act (7 U.S.C. 13a–1(a)) is amended in the matter 
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† HR 4173 EAS 

1 preceding the proviso by inserting ‘‘or any swap’’ 

2 after ‘‘commodity for future delivery’’. 

3 (6) Section 9 of the Commodity Exchange Act (7 

4 U.S.C. 13) is amended— 

5 (A) in subsection (a)— 

6 (i) in paragraph (2), by inserting ‘‘or 

7 of any swap,’’ before ‘‘or to corner’’; and 

8 (ii) in paragraph (4), by inserting 

9 ‘‘swap data repository,’’ before ‘‘or futures 

10 association’’ and 

11 (B) in subsection (e)(1)— 

12 (i) by inserting ‘‘swap data reposi13 tory,’’ before ‘‘or registered futures associa14 tion’’; and 

15 (ii) by inserting ‘‘, or swaps,’’ before 

16 ‘‘on the basis’’. 

17 (7) Section 9(a) of the Commodity Exchange Act 

18 (7 U.S.C. 13(a)) is amended by adding at the end the 

19 following: 

20 ‘‘(6) Any person to abuse the end user clearing 

21 exemption under section 2(h)(4), as determined by the 

22 Commission.’’. 

23 (8) Section 8(b) of the Federal Deposit Insurance 

24 Act (12 U.S.C. 1818(b)) is amended by adding at the 

25 end the following: 
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1 ‘‘(11) SWAPS.— 

2 ‘‘(A) IN GENERAL.—Subject to subpara3 graph (B), this section shall apply to any swap 

4 dealer, major swap participant, security-based 

5 swap dealer, major security-based swap partici6 pant, derivatives clearing organization, swap 

7 data repository, or swap execution facility, re8 gardless of whether the dealer, participant, orga9 nization, repository, or facility is an insured de10 pository institution, for which the Board, the 

11 Corporation, or the Office of the Comptroller of 

12 the Currency is the appropriate Federal banking 

13 agency or prudential regulator for purposes of 

14 the amendments made by the Wall Street Trans15 parency and Accountability Act of 2010. 

16 ‘‘(B) LIMITATION.—The authority described 

17 in subparagraph (A) shall be limited by, and ex18 ercised in accordance with, section 4b–1 of the 

19 Commodity Exchange Act.’’. 

20 (9) Section 2(c)(2)(B) of the Commodity Ex21 change Act (7 U.S.C. 2(c)(2)(B)) is amended— 

22 (A) by striking ‘‘(dd),’’ each place it ap23 pears; 
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† HR 4173 EAS 

1 (B) in clause (iii), by inserting ‘‘, and ac2 counts or pooled investment vehicles described in 

3 clause (vi),’’ before ‘‘shall be subject to’’; and 

4 (C) by adding at the end the following: 

5 ‘‘(vi) This Act applies to, and the 

6 Commission shall have jurisdiction over, an 

7 account or pooled investment vehicle that is 

8 offered for the purpose of trading, or that 

9 trades, any agreement, contract, or trans10 action in foreign currency described in 

11 clause (i).’’. 

12 (10) Section 2(c)(2)(C) of the Commodity Ex13 change Act (7 U.S.C. 2(c)(2)(C)) is amended— 

14 (A) by striking ‘‘(dd),’’ each place it ap15 pears; 

16 (B) in clause (ii)(I), by inserting ‘‘, and ac17 counts or pooled investment vehicles described in 

18 clause (vii),’’ before ‘‘shall be subject to’’; and 

19 (C) by adding at the end the following: 

20 ‘‘(vii) This Act applies to, and the 

21 Commission shall have jurisdiction over, an 

22 account or pooled investment vehicle that is 

23 offered for the purpose of trading, or that 

24 trades, any agreement, contract, or trans-
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1 action in foreign currency described in 

2 clause (i).’’. 

3 (11) Section 1a(19)(A)(iv)(II) of the Commodity 

4 Exchange Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redes5 ignated by section 721(a)(1)) is amended by inserting 

6 before the semicolon at the end the following: ‘‘pro7 vided, however, that for purposes of section 

8 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the term 

9 ‘eligible contract participant’ shall not include a com10 modity pool in which any participant is not other11 wise an eligible contract participant’’. 

12 SEC. 742. RETAIL COMMODITY TRANSACTIONS. 

13 (a) IN GENERAL.—Section 2(c) of the Commodity Ex14 change Act (7 U.S.C. 2(c)) is amended— 

15 (1) in paragraph (1), by striking ‘‘(to the extent 

16 provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ 

17 and inserting ‘‘, 5b, or 12(e)(2)(B))’’; and 

18 (2) in paragraph (2), by adding at the end the 

19 following: 

20 ‘‘(D) RETAIL COMMODITY TRANSACTIONS.— 

21 ‘‘(i) APPLICABILITY.—Except as pro22 vided in clause (ii), this subparagraph shall 

23 apply to any agreement, contract, or trans24 action in any commodity that is— 
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1 ‘‘(I) entered into with, or offered 

2 to (even if not entered into with), a 

3 person that is not an eligible contract 

4 participant or eligible commercial en5 tity; and 

6 ‘‘(II) entered into, or offered (even 

7 if not entered into), on a leveraged or 

8 margined basis, or financed by the of9 feror, the counterparty, or a person 

10 acting in concert with the offeror or 

11 counterparty on a similar basis. 

12 ‘‘(ii) EXCEPTIONS.—This subpara13 graph shall not apply to— 

14 ‘‘(I) an agreement, contract, or 

15 transaction described in paragraph (1) 

16 or subparagraphs (A), (B), or (C), in17 cluding any agreement, contract, or 

18 transaction specifically excluded from 

19 subparagraph (A), (B), or (C); 

20 ‘‘(II) any security; 

21 ‘‘(III) a contract of sale that— 

22 ‘‘(aa) results in actual deliv23 ery within 28 days or such other 

24 period as the Commission may 

25 determine by rule or regulation 
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1 based upon the typical commer2 cial practice in cash or spot mar3 kets for the commodity involved; 

4 or 

5 ‘‘(bb) creates an enforceable 

6 obligation to deliver between a 

7 seller and a buyer that have the 

8 ability to deliver and accept deliv9 ery, respectively, in connection 

10 with the line of business of the 

11 seller and buyer; or 

12 ‘‘(IV) an agreement, contract, or 

13 transaction that is listed on a national 

14 securities exchange registered under 

15 section 6(a) of the Securities Exchange 

16 Act of 1934 (15 U.S.C. 78f(a)); or 

17 ‘‘(V) an identified banking prod18 uct, as defined in section 402(b) of the 

19 Legal Certainty for Bank Products Act 

20 of 2000 (7 U.S.C.27(b)). 

21 ‘‘(iii) ENFORCEMENT.—Sections 4(a), 

22 4(b), and 4b apply to any agreement, con23 tract, or transaction described in clause (i), 

24 as if the agreement, contract, or transaction 
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1 was a contract of sale of a commodity for 

2 future delivery. 

3 ‘‘(iv) ELIGIBLE COMMERCIAL ENTI4 TY.—For purposes of this subparagraph, an 

5 agricultural producer, packer, or handler 

6 shall be considered to be an eligible commer7 cial entity for any agreement, contract, or 

8 transaction for a commodity in connection 

9 with the line of business of the agricultural 

10 producer, packer, or handler. 

11 ‘‘(v) ACTUAL DELIVERY.—For purposes 

12 of clause (ii)(III), the term ‘actual delivery’ 

13 does not include delivery to a third party in 

14 a financed transaction in which the com15 modity is held as collateral.’’. 

16 (b) GRAMM-LEACH-BLILEY ACT.—Section 206(a) of 

17 the Gramm-Leach-Bliley Act (Public Law 106–102; 15 

18 U.S.C. 78c note) is amended, in the matter preceding para19 graph (1), by striking ‘‘For purposes of’’ and inserting ‘‘Ex20 cept as provided in subsection (e), for purposes of’’. 

21 (c) CONFORMING AMENDMENTS RELATING TO RETAIL

22 FOREIGN EXCHANGE TRANSACTIONS.— 

23 (1) Section 2(c)(2)(B)(i)(II) of the Commodity 

24 Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amend25 ed— 
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† HR 4173 EAS 

1 (A) in item (aa), by inserting ‘‘United 

2 States’’ before ‘‘financial institution’’; 

3 (B) by striking items (dd) and (ff); 

4 (C) by redesignating items (ee) and (gg) as 

5 items (dd) and (ff), respectively; and 

6 (D) in item (dd) (as so redesignated), by 

7 striking the semicolon and inserting ‘‘; or’’. 

8 (2) Section 2(c)(2) of the Commodity Exchange 

9 Act (7 U.S.C. 2(c)(2)) (as amended by subsection 

10 (a)(2)) is amended by adding at the end the fol11 lowing: 

12 ‘‘(E) PROHIBITION.— 

13 ‘‘(i) DEFINITION OF FEDERAL REGU14 LATORY AGENCY.—In this subparagraph, 

15 the term ‘Federal regulatory agency’ 

16 means— 

17 ‘‘(I) the Commission; 

18 ‘‘(II) the Securities and Exchange 

19 Commission; 

20 ‘‘(III) an appropriate Federal 

21 banking agency; 

22 ‘‘(IV) the National Credit Union 

23 Association; and 

24 ‘‘(V) the Farm Credit Administra25 tion. 
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1 ‘‘(ii) PROHIBITION.—A person de2 scribed in subparagraph (B)(i)(II) for 

3 which there is a Federal regulatory agency 

4 shall not offer to, or enter into with, a per5 son that is not an eligible contract partici6 pant, any agreement, contract, or trans7 action in foreign currency described in sub8 paragraph (B)(i)(I) except pursuant to a 

9 rule or regulation of a Federal regulatory 

10 agency allowing the agreement, contract, or 

11 transaction under such terms and condi12 tions as the Federal regulatory agency shall 

13 prescribe. 

14 ‘‘(iii) REQUIREMENTS OF RULES AND

15 REGULATIONS.— 

16 ‘‘(I) IN GENERAL.—The rules and 

17 regulations described in clause (ii) 

18 shall prescribe appropriate require19 ments with respect to— 

20 ‘‘(aa) disclosure; 

21 ‘‘(bb) recordkeeping; 

22 ‘‘(cc) capital and margin; 

23 ‘‘(dd) reporting; 

24 ‘‘(ee) business conduct; 

25 ‘‘(ff) documentation; and 
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1 ‘‘(gg) such other standards or 

2 requirements as the Federal regu3 latory agency shall determine to 

4 be necessary. 

5 ‘‘(II) TREATMENT.—The rules or 

6 regulations described in clause (ii) 

7 shall treat all agreements, contracts, 

8 and transactions in foreign currency 

9 described in subparagraph (B)(i)(I), 

10 and all agreements, contracts, and 

11 transactions in foreign currency that 

12 are functionally or economically simi13 lar to agreements, contracts, or trans14 actions described in subparagraph 

15 (B)(i)(I), similarly.’’. 

16 SEC. 743. OTHER AUTHORITY. 

17 Unless otherwise provided by the amendments made by 

18 this subtitle, the amendments made by this subtitle do not 

19 divest any appropriate Federal banking agency, the Com20 modity Futures Trading Commission, the Securities and 

21 Exchange Commission, or other Federal or State agency of 

22 any authority derived from any other applicable law. 
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1 SEC. 744. RESTITUTION REMEDIES. 

2 Section 6c(d) of the Commodity Exchange Act (7 

3 U.S.C. 13a–1(d)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(3) EQUITABLE REMEDIES.—In any action 

6 brought under this section, the Commission may seek, 

7 and the court shall have jurisdiction to impose, on a 

8 proper showing, on any person found in the action to 

9 have committed any violation, equitable remedies in10 cluding— 

11 ‘‘(A) restitution to persons who have sus12 tained losses proximately caused by such viola13 tion (in the amount of such losses); and 

14 ‘‘(B) disgorgement of gains received in con15 nection with such violation.’’. 

16 SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTI17 TIES. 

18 (a) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

19 Section 5(d) of the Commodity Exchange Act (7 U.S.C. 

20 7(d)) (as amended by section 735(b)) is amended by strik21 ing paragraph (1) and inserting the following: 

22 ‘‘(1) DESIGNATION.— 

23 ‘‘(A) IN GENERAL.—To be designated as, 

24 and to maintain the designation of, a board of 

25 trade as a contract market, the board of trade 

26 shall comply with— 
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1 ‘‘(i) the core principles described in 

2 this subsection; and 

3 ‘‘(ii) any requirement that the Com4 mission may impose by rule or regulation 

5 pursuant to section 8a(5). 

6 ‘‘(B) DISCRETION OF BOARD OF TRADE.— 

7 Unless the Commission determines otherwise by 

8 rule or regulation, the board of trade shall have 

9 reasonable discretion in establishing the manner 

10 by which the board of trade complies with each 

11 core principle.’’. 

12 (b) CORE PRINCIPLES.—Section 5b(c)(2) of the Com13 modity Exchange Act (7 U.S.C. 7a–1(c)(2)) (as amended 

14 by section 725(c)) is amended by striking subparagraph (A) 

15 and inserting the following: 

16 ‘‘(A) REGISTRATION.— 

17 ‘‘(i) IN GENERAL.—To be registered 

18 and to maintain registration as a deriva19 tives clearing organization, a derivatives 

20 clearing organization shall comply with— 

21 ‘‘(I) the core principles described 

22 in this paragraph; and 

23 ‘‘(II) any requirement that the 

24 Commission may impose by rule or 

25 regulation pursuant to section 8a(5). 
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1 ‘‘(ii) DISCRETION OF COMMISSION.— 

2 Unless the Commission determines otherwise 

3 by rule or regulation, a derivatives clearing 

4 organization shall have reasonable discre5 tion in establishing the manner by which 

6 the derivatives clearing organization com7 plies with each core principle.’’. 

8 (c) EFFECT OF INTERPRETATION.—Section 5c(a) of 

9 the Commodity Exchange Act (7 U.S.C. 7a–2(a)) is amend10 ed by striking paragraph (2) and inserting the following: 

11 ‘‘(2) EFFECT OF INTERPRETATION.—An inter12 pretation issued under paragraph (1) may provide 

13 the exclusive means for complying with each section 

14 described in paragraph (1).’’. 

15 (d) NEW CONTRACTS, NEW RULES, AND RULE AMEND16 MENTS.— 

17 (1) IN GENERAL.—A registered entity may elect 

18 to list for trading or accept for clearing any new con19 tract, or other instrument, or may elect to approve 

20 and implement any new rule or rule amendment, by 

21 providing to the Commission (and the Secretary of 

22 the Treasury, in the case of a contract of sale of a 

23 government security for future delivery (or option on 

24 such a contract) or a rule or rule amendment specifi25 cally related to such a contract) a written certifi-
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1 cation that the new contract or instrument or clear2 ing of the new contract or instrument, new rule, or 

3 rule amendment complies with this Act (including 

4 regulations under this Act). 

5 (2) RULE REVIEW.—The new rule or rule 

6 amendment described in paragraph (1) shall become 

7 effective, pursuant to the certification of the registered 

8 entity, on the date that is 10 business days after the 

9 date on which the Commission receives the certifi10 cation (or such shorter period as determined by the 

11 Commission by rule or regulation) unless the Com12 mission notifies the registered entity within such time 

13 that it is staying the certification because there exist 

14 novel or complex issues that require additional time 

15 to analyze, an inadequate explanation by the submit16 ting registered entity, or a potential inconsistency 

17 with this Act (including regulations under this Act). 

18 (3) STAY OF CERTIFICATION FOR RULES.— 

19 (A) A notification by the Commission pur20 suant to paragraph (2) shall stay the certifi21 cation of the new rule or rule amendment for up 

22 to an additional 90 days from the date of the no23 tification. 

24 (B) A rule or rule amendment subject to a 

25 stay pursuant to subparagraph (A) shall become 
717 

† HR 4173 EAS 

1 effective, pursuant to the certification of the reg2 istered entity, at the expiration of the period de3 scribed in subparagraph (A) unless the Commis4 sion— 

5 (i) withdraws the stay prior to that 

6 time; or 

7 (ii) notifies the registered entity during 

8 such period that it objects to the proposed 

9 certification on the grounds that it is incon10 sistent with this Act (including regulations 

11 under this Act). 

12 (4) PRIOR APPROVAL.— 

13 (A) IN GENERAL.—A registered entity may 

14 request that the Commission grant prior ap15 proval to any new contract or other instrument, 

16 new rule, or rule amendment. 

17 (B) PRIOR APPROVAL REQUIRED.—Notwith18 standing any other provision of this section, a 

19 designated contract market shall submit to the 

20 Commission for prior approval each rule amend21 ment that materially changes the terms and con22 ditions, as determined by the Commission, in 

23 any contract of sale for future delivery of a com24 modity specifically enumerated in section 1a(10) 

25 (or any option thereon) traded through its facili-
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† HR 4173 EAS 

1 ties if the rule amendment applies to contracts 

2 and delivery months which have already been 

3 listed for trading and have 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 (5) APPROVAL.— 

12 (A) RULES.—The Commission shall ap13 prove a new rule, or rule amendment, of a reg14 istered entity unless the Commission finds that 

15 the new rule, or rule amendment, is inconsistent 

16 with this subtitle (including regulations). 

17 (B) CONTRACTS AND INSTRUMENTS.—The 

18 Commission shall approve a new contract or 

19 other instrument unless the Commission finds 

20 that the new contract or other instrument would 

21 violate this subtitle (including regulations). 

22 (C) SPECIAL RULE FOR REVIEW AND AP23 PROVAL OF EVENT CONTRACTS AND SWAPS CON24 TRACTS.— 
719 

† HR 4173 EAS 

1 (i) EVENT CONTRACTS.—In connection 

2 with the listing of agreements, contracts, 

3 transactions, or swaps in excluded commod4 ities that are based upon the occurrence, ex5 tent of an occurrence, or contingency (other 

6 than a change in the price, rate, value, or 

7 levels of a commodity described in section 

8 1a(2)(i)), by a designated contract market 

9 or swap execution facility, the Commission 

10 may determine that such agreements, con11 tracts, or transactions are contrary to the 

12 public interest if the agreements, contracts, 

13 or transactions involve— 

14 (I) activity that is unlawful 

15 under any Federal or State law; 

16 (II) terrorism; 

17 (III) assassination; 

18 (IV) war; 

19 (V) gaming; or 

20 (VI) other similar activity deter21 mined by the Commission, by rule or 

22 regulation, to be contrary to the public 

23 interest. 

24 (ii) PROHIBITION.—No agreement, 

25 contract, or transaction determined by the 
720 

† HR 4173 EAS 

1 Commission to be contrary to the public in2 terest under clause (i) may be listed or 

3 made available for clearing or trading on or 

4 through a registered entity. 

5 (iii) SWAPS CONTRACTS.— 

6 (I) IN GENERAL.—In connection 

7 with the listing of a swap for clearing 

8 by a derivatives clearing organization, 

9 the Commission shall determine, upon 

10 request or on its own motion, the ini11 tial eligibility, or the continuing quali12 fication, of a derivatives clearing orga13 nization to clear such a swap under 

14 those criteria, conditions, or rules that 

15 the Commission, in its discretion, de16 termines. 

17 (II) REQUIREMENTS.—Any such 

18 criteria, conditions, or rules shall con19 sider— 

20 (aa) the financial integrity 

21 of the derivatives clearing organi22 zation; and 

23 (bb) any other factors which 

24 the Commission determines may 

25 be appropriate. 
721 

† HR 4173 EAS 

1 (iv) DEADLINE.—The Commission 

2 shall take final action under clauses (i) and 

3 (ii) in not later than 90 days from the com4 mencement of its review unless the party 

5 seeking to offer the contract or swap agrees 

6 to an extension of this time limitation. 

7 (e) VIOLATION OF CORE PRINCIPLES.—Section 5c of 

8 the Commodity Exchange Act (7 U.S.C. 7a–2) is amended 

9 by striking subsection (d). 

10 SEC. 746. INSIDER TRADING. 

11 Section 4c(a) of the Commodity Exchange Act (7 

12 U.S.C. 6c(a)) is amended by adding at the end the fol13 lowing: 

14 ‘‘(3) CONTRACT OF SALE.—It shall be unlawful 

15 for any employee or agent of any department or agen16 cy of the Federal Government who, by virtue of the 

17 employment or position of the employee or agent, ac18 quires information that may affect or tend to affect 

19 the price of any commodity in interstate commerce, 

20 or for future delivery, or any swap, and which infor21 mation has not been disseminated by the department 

22 or agency of the Federal Government holding or cre23 ating the information in a manner which makes it 

24 generally available to the trading public, or disclosed 

25 in a criminal, civil, or administrative hearing, or in 
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† HR 4173 EAS 

1 a congressional, administrative, or Government Ac2 countability Office report, hearing, audit, or inves3 tigation, to use the information in his personal ca4 pacity and for personal gain to enter into, or offer to 

5 enter into— 

6 ‘‘(A) a contract of sale of a commodity for 

7 future delivery (or option on such a contract); 

8 ‘‘(B) an option (other than an option exe9 cuted or traded on a national securities exchange 

10 registered pursuant to section 6(a) of the Securi11 ties Exchange Act of 1934 (15 U.S.C. 78f(a)); or 

12 ‘‘(C) a swap. 

13 ‘‘(4) NONPUBLIC INFORMATION.— 

14 ‘‘(A) IMPARTING OF NONPUBLIC INFORMA15 TION.—It shall be unlawful for any employee or 

16 agent of any department or agency of the Fed17 eral Government who, by virtue of the employ18 ment or position of the employee or agent, ac19 quires information that may affect or tend to af20 fect the price of any commodity in interstate 

21 commerce, or for future delivery, or any swap, 

22 and which information has not been dissemi23 nated by the department or agency of the Federal 

24 Government holding or creating the information 

25 in a manner which makes it generally available 
723 

† HR 4173 EAS 

1 to the trading public, or disclosed in a criminal, 

2 civil, or administrative hearing, or in a congres3 sional, administrative, or Government Account4 ability Office report, hearing, audit, or inves5 tigation, to impart the information in his per6 sonal capacity and for personal gain with intent 

7 to assist another person, directly or indirectly, to 

8 use the information to enter into, or offer to 

9 enter into— 

10 ‘‘(i) a contract of sale of a commodity 

11 for future delivery (or option on such a con12 tract); 

13 ‘‘(ii) an option (other than an option 

14 executed or traded on a national securities 

15 exchange registered pursuant to section 6(a) 

16 of the Securities Exchange Act of 1934 (15 

17 U.S.C. 78f(a)); or 

18 ‘‘(iii) a swap. 

19 ‘‘(B) KNOWING USE.—It shall be unlawful 

20 for any person who receives information im21 parted by any employee or agent of any depart22 ment or agency of the Federal Government as de23 scribed in subparagraph (A) to knowingly use 

24 such information to enter into, or offer to enter 

25 into— 
724 

† HR 4173 EAS 

1 ‘‘(i) a contract of sale of a commodity 

2 for future delivery (or option on such a con3 tract); 

4 ‘‘(ii) an option (other than an option 

5 executed or traded on a national securities 

6 exchange registered pursuant to section 6(a) 

7 of the Securities Exchange Act of 1934 (15 

8 U.S.C. 78f(a)); or 

9 ‘‘(iii) a swap. 

10 ‘‘(C) THEFT OF NONPUBLIC INFORMA11 TION.—It shall be unlawful for any person to 

12 steal, convert, or misappropriate, by any means 

13 whatsoever, information held or created by any 

14 department or agency of the Federal Government 

15 that may affect or tend to affect the price of any 

16 commodity in interstate commerce, or for future 

17 delivery, or any swap, where such person knows, 

18 or acts in reckless disregard of the fact, that such 

19 information has not been disseminated by the de20 partment or agency of the Federal Government 

21 holding or creating the information in a manner 

22 which makes it generally available to the trading 

23 public, or disclosed in a criminal, civil, or ad24 ministrative hearing, or in a congressional, ad25 ministrative, or Government Accountability Of-
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† HR 4173 EAS 

1 fice report, hearing, audit, or investigation, and 

2 to use such information, or to impart such infor3 mation with the intent to assist another person, 

4 directly or indirectly, to use such information to 

5 enter into, or offer to enter into— 

6 ‘‘(i) a contract of sale of a commodity 

7 for future delivery (or option on such a con8 tract); 

9 ‘‘(ii) an option (other than an option 

10 executed or traded on a national securities 

11 exchange registered pursuant to section 6(a) 

12 of the Securities Exchange Act of 1934 (15 

13 U.S.C. 78f(a)); or 

14 ‘‘(iii) a swap. 

15 Provided, however, that nothing in this sub16 paragraph shall preclude a person that has 

17 provided information concerning, or gen18 erated by, the person, its operations or ac19 tivities, to any employee or agent of any de20 partment or agency of the Federal Govern21 ment, voluntarily or as required by law, 

22 from using such information to enter into, 

23 or offer to enter into, a contract of sale, op24 tion, or swap described in clauses (i), (ii), 

25 or (iii).’’. 
726 

† HR 4173 EAS 

1 SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY. 

2 Section 4c(a) of the Commodity Exchange Act (7 

3 U.S.C. 6c(a)) (as amended by section 746) is amended by 

4 adding at the end the following: 

5 ‘‘(5) DISRUPTIVE PRACTICES.—It shall be un6 lawful for any person to engage in any trading, prac7 tice, or conduct on or subject to the rules of a reg8 istered entity that— 

9 ‘‘(A) violates bids or offers; 

10 ‘‘(B) demonstrates intentional or reckless 

11 disregard for the orderly execution of trans12 actions during the closing period; or 

13 ‘‘(C) is, is of the character of, or is com14 monly known to the trade as, ‘spoofing’ (bidding 

15 or offering with the intent to cancel the bid or 

16 offer before execution). 

17 ‘‘(6) RULEMAKING AUTHORITY.—The Commis18 sion may make and promulgate such rules and regu19 lations as, in the judgment of the Commission, are 

20 reasonably necessary to prohibit the trading practices 

21 described in paragraph (5) and any other trading 

22 practice that is disruptive of fair and equitable trad23 ing. 

24 ‘‘(7) USE OF SWAPS TO DEFRAUD.—It shall be 

25 unlawful for any person to enter into a swap know26 ing, or acting in reckless disregard of the fact, that 
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† HR 4173 EAS 

1 its counterparty will use the swap as part of a device, 

2 scheme, or artifice to defraud any third party.’’. 

3 SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND 

4 PROTECTION. 

5 The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 

6 amended by adding at the end the following: 

7 ‘‘SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND 

8 PROTECTION. 

9 ‘‘(a) DEFINITIONS.—In this section: 

10 ‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE AC11 TION.—The term ‘covered judicial or administrative 

12 action’ means any judicial or administrative action 

13 brought by the Commission under this Act that results 

14 in monetary sanctions exceeding $1,000,000. 

15 ‘‘(2) FUND.—The term ‘Fund’ means the Com16 modity Futures Trading Commission Customer Pro17 tection Fund established under subsection (g). 

18 ‘‘(3) MONETARY SANCTIONS.—The term ‘mone19 tary sanctions’, when used with respect to any judi20 cial or administrative action means— 

21 ‘‘(A) any monies, including penalties, 

22 disgorgement, restitution, and interest ordered to 

23 be paid; and 

24 ‘‘(B) any monies deposited into a 

25 disgorgement fund or other fund pursuant to sec-
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† HR 4173 EAS 

1 tion 308(b) of the Sarbanes-Oxley Act of 2002 

2 (15 U.S.C. 7246(b)), as a result of such action 

3 or any settlement of such action. 

4 ‘‘(4) ORIGINAL INFORMATION.—The term ‘origi5 nal information’ means information that— 

6 ‘‘(A) is derived from the independent knowl7 edge or analysis of a whistleblower; 

8 ‘‘(B) is not known to the Commission from 

9 any other source, unless the whistleblower is the 

10 original source of the information; and 

11 ‘‘(C) is not exclusively derived from an alle12 gation made in a judicial or administrative 

13 hearing, in a governmental report, hearing, 

14 audit, or investigation, or from the news media, 

15 unless the whistleblower is a source of the infor16 mation. 

17 ‘‘(5) RELATED ACTION.—The term ‘related ac18 tion’, when used with respect to any judicial or ad19 ministrative action brought by the Commission under 

20 this Act, means any judicial or administrative action 

21 brought by an entity described in subclauses (i) 

22 through (vi) of subsection (g)(2)(B) that is based upon 

23 the original information provided by a whistleblower 

24 pursuant to subsection (a) that led to the successful 

25 enforcement of the Commission action. 
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1 ‘‘(6) SUCCESSFUL RESOLUTION.—The term ‘suc2 cessful resolution’, when used with respect to any ju3 dicial or administrative action brought by the Com4 mission under this Act, includes any settlement of 

5 such action. 

6 ‘‘(7) WHISTLEBLOWER.—The term ‘whistle7 blower’ means any individual, or 2 or more individ8 uals acting jointly, who provides information relating 

9 to a violation of this Act to the Commission, in a 

10 manner established by rule or regulation, by the Com11 mission. 

12 ‘‘(b) AWARDS.— 

13 ‘‘(1) IN GENERAL.—In any covered judicial or 

14 administrative action, or related action, the Commis15 sion, under regulations prescribed by the Commission 

16 and subject to subsection (c), shall pay an award or 

17 awards to 1 or more whistleblowers who voluntarily 

18 provided original information to the Commission that 

19 led to the successful enforcement of the covered judi20 cial or administrative action, or related action, in an 

21 aggregate amount equal to— 

22 ‘‘(A) not less than 10 percent, in total, of 

23 what has been collected of the monetary sanctions 

24 imposed in the action or related actions; and 
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† HR 4173 EAS 

1 ‘‘(B) not more than 30 percent, in total, of 

2 what has been collected of the monetary sanctions 

3 imposed in the action or related actions. 

4 ‘‘(2) PAYMENT OF AWARDS.—Any amount paid 

5 under paragraph (1) shall be paid from the Fund. 

6 ‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL

7 OF AWARD.— 

8 ‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— 

9 ‘‘(A) DISCRETION.—The determination of 

10 the amount of an award made under subsection 

11 (b) shall be in the discretion of the Commission. 

12 ‘‘(B) CRITERIA.—In determining the 

13 amount of an award made under subsection (b), 

14 the Commission shall take into account— 

15 ‘‘(i) the significance of the information 

16 provided by the whistleblower to the success 

17 of the covered judicial or administrative ac18 tion; 

19 ‘‘(ii) the degree of assistance provided 

20 by the whistleblower and any legal rep21 resentative of the whistleblower in a covered 

22 judicial or administrative action; 

23 ‘‘(iii) the programmatic interest of the 

24 Commission in deterring violations of the 

25 Act (including regulations under the Act) 
731 

† HR 4173 EAS 

1 by making awards to whistleblowers who 

2 provide information that leads to the suc3 cessful enforcement of such laws; and 

4 ‘‘(iv) such additional relevant factors 

5 as the Commission may establish by rule or 

6 regulation. 

7 ‘‘(2) DENIAL OF AWARD.—No award under sub8 section (b) shall be made— 

9 ‘‘(A) to any whistleblower who is, or was at 

10 the time the whistleblower acquired the original 

11 information submitted to the Commission, a 

12 member, officer, or employee of— 

13 ‘‘(i) a appropriate regulatory agency; 

14 ‘‘(ii) the Department of Justice; 

15 ‘‘(iii) a registered entity; 

16 ‘‘(iv) a registered futures association; 

17 or 

18 ‘‘(v) a self-regulatory organization as 

19 defined in section 3(a) of the Securities Ex20 change Act of 1934 (15 U.S.C. 78c(a)); or 

21 ‘‘(vi) a law enforcement organization; 

22 ‘‘(B) to any whistleblower who is convicted 

23 of a criminal violation related to the judicial or 

24 administrative action for which the whistle-
732 

† HR 4173 EAS 

1 blower otherwise could receive an award under 

2 this section; 

3 ‘‘(C) to any whistleblower who submits in4 formation to the Commission that is based on the 

5 facts underlying the covered action submitted 

6 previously by another whistleblower; 

7 ‘‘(D) to any whistleblower who fails to sub8 mit information to the Commission in such form 

9 as the Commission may, by rule or regulation, 

10 require. 

11 ‘‘(d) REPRESENTATION.— 

12 ‘‘(1) PERMITTED REPRESENTATION.—Any whis13 tleblower who makes a claim for an award under sub14 section (b) may be represented by counsel. 

15 ‘‘(2) REQUIRED REPRESENTATION.— 

16 ‘‘(A) IN GENERAL.—Any whistleblower who 

17 anonymously makes a claim for an award under 

18 subsection (b) shall be represented by counsel if 

19 the whistleblower submits the information upon 

20 which the claim is based. 

21 ‘‘(B) DISCLOSURE OF IDENTITY.—Prior to 

22 the payment of an award, a whistleblower shall 

23 disclose the identity of the whistleblower and 

24 provide such other information as the Commis-
733 

† HR 4173 EAS 

1 sion may require, directly or through counsel for 

2 the whistleblower. 

3 ‘‘(e) NO CONTRACT NECESSARY.—No contract with the 

4 Commission is necessary for any whistleblower to receive 

5 an award under subsection (b), unless otherwise required 

6 by the Commission, by rule or regulation. 

7 ‘‘(f) APPEALS.— 

8 ‘‘(1) IN GENERAL.—Any determination made 

9 under this section, including whether, to whom, or in 

10 what amount to make awards, shall be in the discre11 tion of the Commission. 

12 ‘‘(2) APPEALS.—Any determination described in 

13 paragraph (1) may be appealed to the appropriate 

14 court of appeals of the United States not more than 

15 30 days after the determination is issued by the Com16 mission. 

17 ‘‘(3) REVIEW.—The court shall review the deter18 mination made by the Commission in accordance 

19 with section 7064 of title 5, United States Code. 

20 ‘‘(g) COMMODITY FUTURES TRADING COMMISSION

21 CUSTOMER PROTECTION FUND.— 

22 ‘‘(1) ESTABLISHMENT.—There is established in 

23 the Treasury of the United States a revolving fund to 

24 be known as the ‘Commodity Futures Trading Com25 mission Customer Protection Fund’. 
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† HR 4173 EAS 

1 ‘‘(2) USE OF FUND.—The Fund shall be avail2 able to the Commission, without further appropria3 tion or fiscal year limitation, for— 

4 ‘‘(A) the payment of awards to whistle5 blowers as provided in subsection (a); and 

6 ‘‘(B) the funding of customer education ini7 tiatives designed to help customers protect them8 selves against fraud or other violations of this 

9 Act, or the rules and regulations thereunder. 

10 ‘‘(3) DEPOSITS AND CREDITS.—There shall be 

11 deposited into or credited to the Fund— 

12 ‘‘(A) any monetary judgment collected by 

13 the Commission in any judicial or administra14 tive action brought by the Commission under 

15 this Act, that is not otherwise distributed to vic16 tims of a violation of this Act or the rules and 

17 regulations thereunder underlying such action, 

18 unless the balance of the Fund at the time the 

19 monetary judgment is collected exceeds 

20 $100,000,000; and 

21 ‘‘(B) all income from investments made 

22 under paragraph (4). 

23 ‘‘(4) INVESTMENTS.— 

24 ‘‘(A) AMOUNTS IN FUND MAY BE IN25 VESTED.—The Commission may request the Sec-
735 

† HR 4173 EAS 

1 retary of the Treasury to invest the portion of 

2 the Fund that is not, in the Commission’s judg3 ment, required to meet the current needs of the 

4 Fund. 

5 ‘‘(B) ELIGIBLE INVESTMENTS.—Investments 

6 shall be made by the Secretary of the Treasury 

7 in obligations of the United States or obligations 

8 that are guaranteed as to principal and interest 

9 by the United States, with maturities suitable to 

10 the needs of the Fund as determined by the Com11 mission. 

12 ‘‘(C) INTEREST AND PROCEEDS CRED13 ITED.—The interest on, and the proceeds from 

14 the sale or redemption of, any obligations held in 

15 the Fund shall be credited to, and form a part 

16 of, the Fund. 

17 ‘‘(5) REPORTS TO CONGRESS.—Not later than 

18 October 30 of each year, the Commission shall trans19 mit to the Committee on Agriculture, Nutrition, and 

20 Forestry of the Senate, and the Committee on Agri21 culture of the House of Representatives a report on— 

22 ‘‘(A) the Commission’s whistleblower award 

23 program under this section, including a descrip24 tion of the number of awards granted and the 
736 

† HR 4173 EAS 

1 types of cases in which awards were granted 

2 during the preceding fiscal year; 

3 ‘‘(B) customer education initiatives de4 scribed in paragraph (2)(B) that were funded by 

5 the Fund during the preceding fiscal year; 

6 ‘‘(C) the balance of the Fund at the begin7 ning of the preceding fiscal year; 

8 ‘‘(D) the amounts deposited into or credited 

9 to the Fund during the preceding fiscal year; 

10 ‘‘(E) the amount of earnings on investments 

11 of amounts in the Fund during the preceding fis12 cal year; 

13 ‘‘(F) the amount paid from the Fund dur14 ing the preceding fiscal year to whistleblowers 

15 pursuant to subsection (b); 

16 ‘‘(G) the amount paid from the Fund dur17 ing the preceding fiscal year for customer edu18 cation initiatives described in paragraph (2)(B); 

19 ‘‘(H) the balance of the Fund at the end of 

20 the preceding fiscal year; and 

21 ‘‘(I) a complete set of audited financial 

22 statements, including a balance sheet, income 

23 statement, and cash flow analysis. 

24 ‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 

25 ‘‘(1) PROHIBITION AGAINST RETALIATION.— 
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† HR 4173 EAS 

1 ‘‘(A) IN GENERAL.—No employer may dis2 charge, demote, suspend, threaten, harass, di3 rectly or indirectly, or in any other manner dis4 criminate against, a whistleblower in the terms 

5 and conditions of employment because of any 

6 lawful act done by the whistleblower— 

7 ‘‘(i) in providing information to the 

8 Commission in accordance with subsection 

9 (b); or 

10 ‘‘(ii) in assisting in any investigation 

11 or judicial or administrative action of the 

12 Commission based upon or related to such 

13 information. 

14 ‘‘(B) ENFORCEMENT.— 

15 ‘‘(i) CAUSE OF ACTION.—An indi16 vidual who alleges discharge or other dis17 crimination in violation of subparagraph 

18 (A) may bring an action under this sub19 section in the appropriate district court of 

20 the United States for the relief provided in 

21 subparagraph (C), unless the individual 

22 who is alleging discharge or other discrimi23 nation in violation of subparagraph (A) is 

24 an employee of the federal government, in 

25 which case the individual shall only bring 
738 

† HR 4173 EAS 

1 an action under section 1221 of title 5 

2 United States Code. 

3 ‘‘(ii) SUBPOENAS.—A subpoena requir4 ing the attendance of a witness at a trial or 

5 hearing conducted under this subsection 

6 may be served at any place in the United 

7 States. 

8 ‘‘(iii) STATUTE OF LIMITATIONS.—An 

9 action under this subsection may not be 

10 brought more than 2 years after the date on 

11 which the violation reported in subpara12 graph (A) is committed. 

13 ‘‘(C) RELIEF.—Relief for an individual 

14 prevailing in an action brought under subpara15 graph (B) shall include— 

16 ‘‘(i) reinstatement with the same se17 niority status that the individual would 

18 have had, but for the discrimination; 

19 ‘‘(ii) the amount of back pay otherwise 

20 owed to the individual, with interest; and 

21 ‘‘(iii) compensation for any special 

22 damages sustained as a result of the dis23 charge or discrimination, including litiga24 tion costs, expert witness fees, and reason25 able attorney’s fees. 
739 

† HR 4173 EAS 

1 ‘‘(2) CONFIDENTIALITY.— 

2 ‘‘(A) INFORMATION PROVIDED.— 

3 ‘‘(i) IN GENERAL.—Except as provided 

4 in subparagraph (B), all information pro5 vided to the Commission by a whistleblower 

6 shall be confidential and privileged as an 

7 evidentiary matter (and shall not be subject 

8 to civil discovery or other legal process) in 

9 any proceeding in any Federal or State 

10 court or administrative agency, and shall be 

11 exempt from disclosure, in the hands of a 

12 department or agency of the Federal Gov13 ernment, under section 552 of title 5, 

14 United States Code (commonly known as 

15 the ‘Freedom of Information Act’) or other16 wise, unless and until required to be dis17 closed to a defendant or respondent in con18 nection with a public proceeding instituted 

19 by the Commission or any entity described 

20 in subparagraph (B). 

21 ‘‘(ii) CONSTRUCTION.—For purposes of 

22 section 552 of title 5, United States Code, 

23 this paragraph shall be considered to be a 

24 statute described in subsection (b)(3)(B) of 

25 that section. 
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† HR 4173 EAS 

1 ‘‘(iii) EFFECT.—Nothing in this para2 graph is intended to limit the ability of the 

3 Attorney General to present such evidence to 

4 a grand jury or to share such evidence with 

5 potential witnesses or defendants in the 

6 course of an ongoing criminal investigation. 

7 ‘‘(B) AVAILABILITY TO GOVERNMENT AGEN8 CIES.— 

9 ‘‘(i) IN GENERAL.—Without the loss of 

10 its status as confidential and privileged in 

11 the hands of the Commission, all informa12 tion referred to in subparagraph (A) may, 

13 in the discretion of the Commission, when 

14 determined by the Commission to be nec15 essary or appropriate to accomplish the 

16 purposes of this Act and protect customers 

17 and in accordance with clause (ii), be made 

18 available to— 

19 ‘‘(I) the Department of Justice; 

20 ‘‘(II) an appropriate department 

21 or agency of the Federal Government, 

22 acting within the scope of its jurisdic23 tion; 

24 ‘‘(III) a registered entity, reg25 istered futures association, or self-regu-
741 

† HR 4173 EAS 

1 latory organization as defined in sec2 tion 3(a) of the Securities Exchange 

3 Act of 1934 (15 U.S.C. 78c(a)); 

4 ‘‘(IV) a State attorney general in 

5 connection with any criminal inves6 tigation; 

7 ‘‘(V) an appropriate department 

8 or agency of any State, acting within 

9 the scope of its jurisdiction; and 

10 ‘‘(VI) a foreign futures authority. 

11 ‘‘(ii) MAINTENANCE OF INFORMA12 TION.—Each of the entities, agencies, or 

13 persons described in clause (i) shall main14 tain information described in that clause as 

15 confidential and privileged, in accordance 

16 with the requirements in subparagraph (A). 

17 ‘‘(3) RIGHTS RETAINED.—Nothing in this section 

18 shall be deemed to diminish the rights, privileges, or 

19 remedies of any whistleblower under any Federal or 

20 State law, or under any collective bargaining agree21 ment. 

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 provi-
742 

† HR 4173 EAS 

1 sions of this section consistent with the purposes of this sec2 tion. 

3 ‘‘(j) IMPLEMENTING RULES.—The Commission shall 

4 issue final rules or regulations implementing the provisions 

5 of this section not later than 270 days after the date of en6 actment of the Wall Street Transparency and Account7 ability Act of 2010. 

8 ‘‘(k) ORIGINAL INFORMATION.—Information submitted 

9 to the Commission by a whistleblower in accordance with 

10 rules or regulations implementing this section shall not lose 

11 its status as original information solely because the whistle12 blower submitted such information prior to the effective 

13 date of such rules or regulations, provided such information 

14 was submitted after the date of enactment of the Wall Street 

15 Transparency and Accountability Act of 2010. 

16 ‘‘(l) AWARDS.—A whistleblower may receive an award 

17 pursuant to this section regardless of whether any violation 

18 of a provision of this Act, or a rule or regulation thereunder, 

19 underlying the judicial or administrative action upon 

20 which the award is based occurred prior to the date of en21 actment of the Wall Street Transparency and Account22 ability Act of 2010. 

23 ‘‘(m) PROVISION OF FALSE INFORMATION.—A whistle24 blower who knowingly and willfully makes any false, ficti25 tious, or fraudulent statement or representation, or who 
743 

† HR 4173 EAS 

1 makes or uses any false writing or document knowing the 

2 same to contain any false, fictitious, or fraudulent state3 ment or entry, shall not be entitled to an award under this 

4 section and shall be subject to prosecution under section 

5 1001 of title 18, United States Code.’’. 

6 SEC. 749. CONFORMING AMENDMENTS. 

7 (a) Section 2(c)(1) of the Commodity Exchange Act (7 

8 U.S.C. 2(c)(1)) is amended, in the matter preceding sub9 paragraph (A), by striking ‘‘5a (to the extent provided in 

10 section 5a(g)),’’. 

11 (b) Section 4d of the Commodity Exchange Act (7 

12 U.S.C. 6d) (as amended by section 724) is amended— 

13 (1) in subsection (a)— 

14 (A) in the matter preceding paragraph 

15 (1)— 

16 (i) by striking ‘‘engage as’’ and insert17 ing ‘‘be a’’; and 

18 (ii) by striking ‘‘or introducing 

19 broker’’ and all that follows through ‘‘or de20 rivatives transaction execution facility’’; 

21 (B) in paragraph (1), by striking ‘‘or intro22 ducing broker’’; and 

23 (C) in paragraph (2), by striking ‘‘if a fu24 tures commission merchant,’’; and 

25 (2) by adding at the end the following: 
744 

† HR 4173 EAS 

1 ‘‘(g) It shall be unlawful for any person to be an intro2 ducing broker unless such person shall have registered under 

3 this Act with the Commission as an introducing broker and 

4 such registration shall not have expired nor been suspended 

5 nor revoked.’’. 

6 (c) Section 4m(3) of the Commodity Exchange Act (7 

7 U.S.C. 6m(3)) is amended— 

8 (1) by striking ‘‘(3) Subsection (1) of this sec9 tion’’ and inserting the following: 

10 ‘‘(3) EXCEPTION.— 

11 ‘‘(A) IN GENERAL.—Paragraph (1)’’; and 

12 (2) by striking ‘‘to any investment trust’’ and all 

13 that follows through the period at the end and insert14 ing the following: ‘‘to any commodity pool that is en15 gaged primarily in trading commodity interests. 

16 ‘‘(B) ENGAGED PRIMARILY.—For purposes 

17 of subparagraph (A), a commodity trading advi18 sor or a commodity pool shall be considered to 

19 be ‘engaged primarily’ in the business of being a 

20 commodity trading advisor or commodity pool if 

21 it is or holds itself out to the public as being en22 gaged primarily, or proposes to engage pri23 marily, in the business of advising on com24 modity interests or investing, reinvesting, own-
745 

† HR 4173 EAS 

1 ing, holding, or trading in commodity interests, 

2 respectively. 

3 ‘‘(C) COMMODITY INTERESTS.—For pur4 poses of this paragraph, commodity interests 

5 shall include contracts of sale of a commodity for 

6 future delivery, options on such contracts, secu7 rity futures, swaps, leverage contracts, foreign 

8 exchange, spot and forward contracts on physical 

9 commodities, and any monies held in an account 

10 used for trading commodity interests.’’. 

11 (d) Section 5c of the Commodity Exchange Act (7 

12 U.S.C. 7a–2) is amended— 

13 (1) in subsection (a)(1)— 

14 (A) by striking ‘‘, 5a(d),’’; and 

15 (B) by striking ‘‘and section (2)(h)(7) with 

16 respect to significant price discovery contracts,’’; 

17 and 

18 (2) in subsection (f)(1), by striking ‘‘section 

19 4d(c) of this Act’’ and inserting ‘‘section 4d(e)’’. 

20 (e) Section 5e of the Commodity Exchange Act (7 

21 U.S.C. 7b) is amended by striking ‘‘or revocation of the 

22 right of an electronic trading facility to rely on the exemp23 tion set forth in section 2(h)(3) with respect to a significant 

24 price discovery contract,’’. 
746 

† HR 4173 EAS 

1 (f) Section 6(b) of the Commodity Exchange Act (7 

2 U.S.C. 8(b)) is amended in the first sentence by striking 

3 ‘‘, or to revoke the right of an electronic trading facility 

4 to rely on the exemption set forth in section 2(h)(3) with 

5 respect to a significant price discovery contract,’’. 

6 (g) Section 12(e)(2)(B) of the Commodity Exchange 

7 Act (7 U.S.C. 16(e)(2)(B)) is amended— 

8 (1) by striking ‘‘section 2(c), 2(d), 2(f), or 2(g) 

9 of this Act’’ and inserting ‘‘section 2(c), 2(f), or 2(i) 

10 of this Act’’; and 

11 (2) by striking ‘‘2(h) or’’. 

12 (h) Section 17(r)(1) of the Commodity Exchange Act 

13 (7 U.S.C. 21(r)(1)) is amended by striking ‘‘section 4d(c) 

14 of this Act’’ and inserting ‘‘section 4d(e)’’. 

15 (i) Section 22(b)(1)(A) of the Commodity Exchange 

16 Act (7 U.S.C. 25(b)(1)(A)) is amended by striking ‘‘section 

17 2(h)(7) or’’. 

18 (j) Section 408(2)(C) of the Federal Deposit Insurance 

19 Corporation Improvement Act of 1991 (12 U.S.C. 

20 4421(2)(C)) is amended— 

21 (1) by striking ‘‘section 2(c), 2(d), 2(f), or (2)(g) 

22 of such Act’’ and inserting ‘‘section 2(c), 2(f), or 2(i) 

23 of that Act’’; and 

24 (2) by striking ‘‘2(h) or’’. 
747 

† HR 4173 EAS 

1 SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS. 

2 (a) INTERAGENCY WORKING GROUP.—There is estab3 lished to carry out this section an interagency working 

4 group (referred to in this section as the ‘‘interagency 

5 group’’) composed of the following members or designees: 

6 (1) The Chairman of the Commodity Futures 

7 Trading Commission (referred to in this section as 

8 the ‘‘Commission’’), who shall serve as Chairman of 

9 the interagency group. 

10 (2) The Secretary of Agriculture. 

11 (3) The Secretary of the Treasury. 

12 (4) The Chairman of the Securities and Ex13 change Commission. 

14 (5) The Administrator of the Environmental 

15 Protection Agency. 

16 (6) The Chairman of the Federal Energy Regu17 latory Commission. 

18 (7) The Commissioner of the Federal Trade Com19 mission. 

20 (8) The Administrator of the Energy Informa21 tion Administration. 

22 (b) ADMINISTRATIVE SUPPORT.—The Commission 

23 shall provide the interagency group such administrative 

24 support services as are necessary to enable the interagency 

25 group to carry out the functions of the interagency group 

26 under this section. 
748 

† HR 4173 EAS 

1 (c) CONSULTATION.—In carrying out this section, the 

2 interagency group shall consult with representatives of ex3 changes, clearinghouses, self-regulatory bodies, major carbon 

4 market participants, consumers, and the general public, as 

5 the interagency group determines to be appropriate. 

6 (d) STUDY.—The interagency group shall conduct a 

7 study on the oversight of existing and prospective carbon 

8 markets to ensure an efficient, secure, and transparent car9 bon market, including oversight of spot markets and deriva10 tive markets. 

11 (e) REPORT.—Not later than 180 days after the date 

12 of enactment of this Act, the interagency group shall submit 

13 to Congress a report on the results of the study conducted 

14 under subsection (b), including recommendations for the 

15 oversight of existing and prospective carbon markets to en16 sure an efficient, secure, and transparent carbon market, 

17 including oversight of spot markets and derivative markets. 

18 SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVI19 SORY COMMITTEE. 

20 Section 2(a) of the Commodity Exchange Act (7 U.S.C. 

21 2(a)) (as amended by section 727) is amended by adding 

22 at the end the following: 

23 ‘‘(15) ENERGY AND ENVIRONMENTAL MARKETS

24 ADVISORY COMMITTEE.— 

25 ‘‘(A) ESTABLISHMENT.— 
749 

† HR 4173 EAS 

1 ‘‘(i) IN GENERAL.—An Energy and 

2 Environmental Markets Advisory Com3 mittee is hereby established. 

4 ‘‘(ii) MEMBERSHIP.—The Committee 

5 shall have 9 members. 

6 ‘‘(iii) ACTIVITIES.—The Committee’s 

7 objectives and scope of activities shall be— 

8 ‘‘(I) to conduct public meetings; 

9 ‘‘(II) to submit reports and rec10 ommendations to the Commission (in11 cluding dissenting or minority views, 

12 if any); and 

13 ‘‘(III) otherwise to serve as a vehi14 cle for discussion and communication 

15 on matters of concern to exchanges, 

16 firms, end users, and regulators re17 garding energy and environmental 

18 markets and their regulation by the 

19 Commission. 

20 ‘‘(B) REQUIREMENTS.— 

21 ‘‘(i) IN GENERAL.—The Committee 

22 shall hold public meetings at such intervals 

23 as are necessary to carry out the functions 

24 of the Committee, but not less frequently 

25 than 2 times per year. 
750 

† HR 4173 EAS 

1 ‘‘(ii) MEMBERS.—Members shall be ap2 pointed to 3-year terms, but may be re3 moved for cause by vote of the Commission. 

4 ‘‘(C) APPOINTMENT.—The Commission shall 

5 appoint members with a wide diversity of opin6 ion and who represent a broad spectrum of inter7 ests, including hedgers and consumers. 

8 ‘‘(D) REIMBURSEMENT.—Members shall be 

9 entitled to per diem and travel expense reim10 bursement by the Commission. 

11 ‘‘(E) FACA.—The Committee shall not be 

12 subject to the Federal Advisory Committee Act (5 

13 U.S.C. App.).’’. 

14 SEC. 752. INTERNATIONAL HARMONIZATION. 

15 In order to promote effective and consistent global reg16 ulation of swaps and security-based swaps, the Securities 

17 and Exchange Commission, the Commodity Futures Trad18 ing Commission, the Financial Stability Oversight Council, 

19 and the Treasury Department— 

20 (1) shall, both individually and collectively, con21 sult and coordinate with foreign regulatory authori22 ties on the establishment of consistent international 

23 standards with respect to the regulation of such 

24 swaps; and 
751 

† HR 4173 EAS 

1 (2) may, both individually and collectively, agree 

2 to such information-sharing arrangements as may be 

3 deemed to be necessary or appropriate in the public 

4 interest or for the protection of investors and swap 

5 counterparties. 

6 SEC. 753. ANTIMARKET MANIPULATION AUTHORITY. 

7 (a) PROHIBITION REGARDING MANIPULATION AND

8 FALSE INFORMATION.—Subsection (c) of section 6 of the 

9 Commodity Exchange Act (7 U.S.C. 9, 15) is amended to 

10 read as follows: 

11 ‘‘(c) PROHIBITION REGARDING MANIPULATION AND

12 FALSE INFORMATION.— 

13 ‘‘(1) PROHIBITION AGAINST MANIPULATION.—It 

14 shall be unlawful for any person, directly or indi15 rectly, to use or employ, or attempt to use or employ, 

16 in connection with any swap, or a contract of sale of 

17 any commodity in interstate commerce, or for future 

18 delivery on or subject to the rules of any registered en19 tity, any manipulative or deceptive device or contriv20 ance, in contravention of such rules and regulations 

21 as the Commission shall promulgate by not later than 

22 1 year after the date of enactment of the Restoring 

23 American Financial Stability Act of 2010. 

24 ‘‘(A) SPECIAL PROVISION FOR MANIPULA25 TION BY FALSE REPORTING.—Unlawful manipu-
752 

† HR 4173 EAS 

1 lation for purposes of this paragraph shall in2 clude, but not be limited to, delivering, or caus3 ing to be delivered for transmission through the 

4 mails or interstate commerce, by any means of 

5 communication whatsoever, a false or misleading 

6 or inaccurate report concerning crop or market 

7 information or conditions that affect or tend to 

8 affect the price of any commodity in interstate 

9 commerce, knowing, or acting in reckless dis10 regard of the fact, that such report is false, mis11 leading or inaccurate. 

12 ‘‘(B) EFFECT ON OTHER LAW.—Nothing in 

13 this paragraph shall affect, or be construed to af14 fect, the applicability of section 9(a)(2). 

15 ‘‘(2) PROHIBITION REGARDING FALSE INFORMA16 TION.—It shall be unlawful for any person to make 

17 any false or misleading statement of a material fact 

18 to the Commission, including in any registration ap19 plication or any report filed with the Commission 

20 under this Act, or any other information relating to 

21 a swap, or a contract of sale of a commodity, in 

22 interstate commerce, or for future delivery on or sub23 ject to the rules of any registered entity, or to omit 

24 to state in any such statement any material fact that 

25 is necessary to make any statement of a material fact 
753 

† HR 4173 EAS 

1 made not misleading in any material respect, if the 

2 person knew, or reasonably should have known, the 

3 statement to be false or misleading. 

4 ‘‘(3) OTHER MANIPULATION.—In addition to the 

5 prohibition in paragraph (1), it shall be unlawful for 

6 any person, directly or indirectly, to manipulate or 

7 attempt to manipulate the price of any swap, or of 

8 any commodity in interstate commerce, or for future 

9 delivery on or subject to the rules of any registered en10 tity. 

11 ‘‘(4) ENFORCEMENT.— 

12 ‘‘(A) AUTHORITY OF COMMISSION.—If the 

13 Commission has reason to believe that any per14 son (other than a registered entity) is violating 

15 or has violated this subsection, or any other pro16 vision of this Act (including any rule, regula17 tion, or order of the Commission promulgated in 

18 accordance with this subsection or any other pro19 vision of this Act), the Commission may serve 

20 upon the person a complaint. 

21 ‘‘(B) CONTENTS OF COMPLAINT.—A com22 plaint under subparagraph (A) shall— 

23 ‘‘(i) contain a description of the 

24 charges against the person that is the sub25 ject of the complaint; and 
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1 ‘‘(ii) have attached or contain a notice 

2 of hearing that specifies the date and loca3 tion of the hearing regarding the complaint. 

4 ‘‘(C) HEARING.—A hearing described in 

5 subparagraph (B)(ii)— 

6 ‘‘(i) shall be held not later than 3 days 

7 after service of the complaint described in 

8 subparagraph (A); 

9 ‘‘(ii) shall require the person to show 

10 cause regarding why— 

11 ‘‘(I) an order should not be 

12 made— 

13 ‘‘(aa) to prohibit the person 

14 from trading on, or subject to the 

15 rules of, any registered entity; and 

16 ‘‘(bb) to direct all registered 

17 entities to refuse all privileges to 

18 the person until further notice of 

19 the Commission; and 

20 ‘‘(II) the registration of the per21 son, if registered with the Commission 

22 in any capacity, should not be sus23 pended or revoked; and 

24 ‘‘(iii) may be held before— 

25 ‘‘(I) the Commission; or 
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1 ‘‘(II) an administrative law judge 

2 designated by the Commission, under 

3 which the administrative law judge 

4 shall ensure that all evidence is re5 corded in written form and submitted 

6 to the Commission. 

7 ‘‘(5) SUBPOENA.—For the purpose of securing ef8 fective enforcement of the provisions of this Act, for 

9 the purpose of any investigation or proceeding under 

10 this Act, and for the purpose of any action taken 

11 under section 12(f) of this Act, any member of the 

12 Commission or any Administrative Law Judge or 

13 other officer designated by the Commission (except as 

14 provided in paragraph (7)) may administer oaths 

15 and affirmations, subpoena witnesses, compel their 

16 attendance, take evidence, and require the production 

17 of any books, papers, correspondence, memoranda, or 

18 other records that the Commission deems relevant or 

19 material to the inquiry. 

20 ‘‘(6) WITNESSES.—The attendance of witnesses 

21 and the production of any such records may be re22 quired from any place in the United States, any 

23 State, or any foreign country or jurisdiction at any 

24 designated place of hearing. 
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1 ‘‘(7) SERVICE.—A subpoena issued under this 

2 section may be served upon any person who is not to 

3 be found within the territorial jurisdiction of any 

4 court of the United States in such manner as the Fed5 eral Rules of Civil Procedure prescribe for service of 

6 process in a foreign country, except that a subpoena 

7 to be served on a person who is not to be found within 

8 the territorial jurisdiction of any court of the United 

9 States may be issued only on the prior approval of 

10 the Commission. 

11 ‘‘(8) REFUSAL TO OBEY.—In case of contumacy 

12 by, or refusal to obey a subpoena issued to, any per13 son, the Commission may invoke the aid of any court 

14 of the United States within the jurisdiction in which 

15 the investigation or proceeding is conducted, or where 

16 such person resides or transacts business, in requiring 

17 the attendance and testimony of witnesses and the 

18 production of books, papers, correspondence, memo19 randa, and other records. Such court may issue an 

20 order requiring such person to appear before the Com21 mission or member or Administrative Law Judge or 

22 other officer designated by the Commission, there to 

23 produce records, if so ordered, or to give testimony 

24 touching the matter under investigation or in ques25 tion. 
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1 ‘‘(9) FAILURE TO OBEY.—Any failure to obey 

2 such order of the court may be punished by the court 

3 as a contempt thereof. All process in any such case 

4 may be served in the judicial district wherein such 

5 person is an inhabitant or transacts business or wher6 ever such person may be found. 

7 ‘‘(10) EVIDENCE.—On the receipt of evidence 

8 under paragraph (4)(C)(iii), the Commission may— 

9 ‘‘(A) prohibit the person that is the subject 

10 of the hearing from trading on, or subject to the 

11 rules of, any registered entity and require all 

12 registered entities to refuse the person all privi13 leges on the registered entities for such period as 

14 the Commission may require in the order; 

15 ‘‘(B) if the person is registered with the 

16 Commission in any capacity, suspend, for a pe17 riod not to exceed 180 days, or revoke, the reg18 istration of the person; 

19 ‘‘(C) assess such person— 

20 ‘‘(i) a civil penalty of not more than 

21 an amount equal to the greater of— 

22 ‘‘(I) $140,000; or 

23 ‘‘(II) triple the monetary gain to 

24 such person for each such violation; or 
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1 ‘‘(ii) in any case of manipulation or 

2 attempted manipulation in violation of this 

3 subsection or section 9(a)(2), a civil penalty 

4 of not more than an amount equal to the 

5 greater of— 

6 ‘‘(I) $1,000,000; or 

7 ‘‘(II) triple the monetary gain to 

8 the person for each such violation; and 

9 ‘‘(D) require restitution to customers of 

10 damages proximately caused by violations of the 

11 person. 

12 ‘‘(11) ORDERS.— 

13 ‘‘(A) NOTICE.—The Commission shall pro14 vide to a person described in paragraph (10) 

15 and the appropriate governing board of the reg16 istered entity notice of the order described in 

17 paragraph (10) by— 

18 ‘‘(i) registered mail; 

19 ‘‘(ii) certified mail; or 

20 ‘‘(iii) personal delivery. 

21 ‘‘(B) REVIEW.— 

22 ‘‘(i) IN GENERAL.—A person described 

23 in paragraph (10) may obtain a review of 

24 the order or such other equitable relief as 
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1 determined to be appropriate by a court de2 scribed in clause (ii). 

3 ‘‘(ii) PETITION.—To obtain a review 

4 or other relief under clause (i), a person 

5 may, not later than 15 days after notice is 

6 given to the person under clause (i), file a 

7 written petition to set aside the order with 

8 the United States Court of Appeals— 

9 ‘‘(I) for the circuit in which the 

10 petitioner carries out the business of 

11 the petitioner; or 

12 ‘‘(II) in the case of an order deny13 ing registration, the circuit in which 

14 the principal place of business of the 

15 petitioner is located, as listed on the 

16 application for registration of the peti17 tioner. 

18 ‘‘(C) PROCEDURE.— 

19 ‘‘(i) DUTY OF CLERK OF APPROPRIATE

20 COURT.—The clerk of the appropriate court 

21 under subparagraph (B)(ii) shall transmit 

22 to the Commission a copy of a petition filed 

23 under subparagraph (B)(ii). 

24 ‘‘(ii) DUTY OF COMMISSION.—In ac25 cordance with section 2112 of title 28, 
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1 United States Code, the Commission shall 

2 file in the appropriate court described in 

3 subparagraph (B)(ii) the record theretofore 

4 made. 

5 ‘‘(iii) JURISDICTION OF APPROPRIATE

6 COURT.—Upon the filing of a petition 

7 under subparagraph (B)(ii), the appro8 priate court described in subparagraph 

9 (B)(ii) shall have jurisdiction to affirm, set 

10 aside, or modify the order of the Commis11 sion, and the findings of the Commission as 

12 to the facts, if supported by the weight of 

13 evidence, shall in like manner be conclu14 sive.’’. 

15 (b) CEASE AND DESIST ORDERS, FINES.—Section 6(d) 

16 of the Commodity Exchange Act (7 U.S.C. 13b) is amended 

17 to read as follows: 

18 ‘‘(d) If any person (other than a registered entity), is 

19 violating or has violated subsection (c) or any other provi20 sions of this Act or of the rules, regulations, or orders of 

21 the Commission thereunder, the Commission may, upon no22 tice and hearing, and subject to appeal as in other cases 

23 provided for in subsection (c), make and enter an order di24 recting that such person shall cease and desist therefrom 

25 and, if such person thereafter and after the lapse of the pe-
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1 riod allowed for appeal of such order or after the affirmance 

2 of such order, shall fail or refuse to obey or comply with 

3 such order, such person shall be guilty of a misdemeanor 

4 and, upon conviction thereof, shall be fined not more than 

5 the higher of $140,000 or triple the monetary gain to such 

6 person, or imprisoned for not less than six months nor more 

7 than one year, or both, except that if such failure or refusal 

8 to obey or comply with such order involves any offense with9 in subsection (a) or (b) of section 9 of this Act, such person 

10 shall be guilty of a felony and, upon conviction thereof, shall 

11 be subject to the penalties of said subsection (a) or (b): Pro12 vided, That any such cease and desist order under this sub13 section against any respondent in any case of manipulation 

14 shall be issued only in conjunction with an order issued 

15 against such respondent under subsection (c). Each day 

16 during which such failure or refusal to obey or comply with 

17 such order continues shall be deemed a separate offense.’’. 

18 (c) MANIPULATIONS; PRIVATE RIGHTS OF ACTION.— 

19 Section 22(a)(1) of the Commodity Exchange Act (7 U.S.C. 

20 25(a)(1)) is amended by striking subparagraph (D) and in21 serting the following: 

22 ‘‘(D) who purchased or sold a contract re23 ferred to in subparagraph (B) hereof or swap if 

24 the violation constitutes— 
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1 ‘‘(i) the use or employment of, or an 

2 attempt to use or employ, in connection 

3 with a swap, or a contract of sale of a com4 modity, in interstate commerce, or for fu5 ture delivery on or subject to the rules of 

6 any registered entity, any manipulative de7 vice or contrivance in contravention of such 

8 rules and regulations as the Commission 

9 shall promulgate by not later than 1 year 

10 after the date of enactment of the Restoring 

11 American Financial Stability Act of 2010; 

12 or 

13 ‘‘(ii) a manipulation of the price of 

14 any such contract or swap or the price of 

15 the commodity underlying such contract or 

16 swap.’’. 

17 (d) EFFECTIVE DATE.— 

18 (1) The amendments made by this section shall 

19 take effect on the date on which the final rule promul20 gated by the Commodity Futures Trading Commis21 sion pursuant to this Act takes effect. 

22 (2) Paragraph (1) shall not preclude the Com23 mission from undertaking prior to the effective date 

24 any rulemaking necessary to implement the amend25 ments contained in this section. 
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1 SEC. 754. EFFECTIVE DATE. 

2 Unless otherwise provided in this title, this subtitle 

3 shall take effect on the date that is 180 days after the date 

4 of enactment of this Act. 

5 Subtitle B—Regulation of Security6 Based Swap Markets 

7 SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE 

8 ACT OF 1934. 

9 (a) DEFINITIONS.—Section 3(a) of the Securities Ex10 change Act of 1934 (15 U.S.C. 78c(a)) is amended— 

11 (1) in subparagraphs (A) and (B) of paragraph 

12 (5), by inserting ‘‘(not including security-based 

13 swaps, other than security-based swaps with or for 

14 persons that are not eligible contract participants)’’ 

15 after ‘‘securities’’ each place that term appears; 

16 (2) in paragraph (10), by inserting ‘‘security17 based swap,’’ after ‘‘security future,’’; 

18 (3) in paragraph (13), by adding at the end the 

19 following: ‘‘For security-based swaps, such terms in20 clude the execution, termination (prior to its sched21 uled maturity date), assignment, exchange, or similar 

22 transfer or conveyance of, or extinguishing of rights 

23 or obligations under, a security-based swap, as the 

24 context may require.’’; 

25 (4) in paragraph (14), by adding at the end the 

26 following: ‘‘For security-based swaps, such terms in-
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1 clude the execution, termination (prior to its sched2 uled maturity date), assignment, exchange, or similar 

3 transfer or conveyance of, or extinguishing of rights 

4 or obligations under, a security-based swap, as the 

5 context may require.’’; 

6 (5) in paragraph (39)— 

7 (A) in subparagraph (B)(i)— 

8 (i) in subclause (I), by striking ‘‘or 

9 government securities dealer’’ and inserting 

10 ‘‘government securities dealer, security11 based swap dealer, or major security-based 

12 swap participant’’; and 

13 (ii) in subclause (II), by inserting ‘‘se14 curity-based swap dealer, major security15 based swap participant,’’ after ‘‘government 

16 securities dealer,’’; 

17 (B) in subparagraph (C), by striking ‘‘or 

18 government securities dealer’’ and inserting 

19 ‘‘government securities dealer, security-based 

20 swap dealer, or major security-based swap par21 ticipant’’; and 

22 (C) in subparagraph (D), by inserting ‘‘se23 curity-based swap dealer, major security-based 

24 swap participant,’’ after ‘‘government securities 

25 dealer,’’; and 
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1 (6) by adding at the end the following: 

2 ‘‘(65) ELIGIBLE CONTRACT PARTICIPANT.—The 

3 term ‘eligible contract participant’ has the same 

4 meaning as in section 1a of the Commodity Exchange 

5 Act (7 U.S.C. 1a). 

6 ‘‘(66) MAJOR SWAP PARTICIPANT.—The term 

7 ‘major swap participant’ has the same meaning as in 

8 section 1a of the Commodity Exchange Act (7 U.S.C. 

9 1a). 

10 ‘‘(67) MAJOR SECURITY-BASED SWAP PARTICI11 PANT.— 

12 ‘‘(A) IN GENERAL.—The term ‘major secu13 rity-based swap participant’ means any per14 son— 

15 ‘‘(i) who is not a security-based swap 

16 dealer; and 

17 ‘‘(ii)(I) who maintains a substantial 

18 position in security-based swaps for any of 

19 the major security-based swap categories, as 

20 such categories are determined by the Com21 mission, excluding— 

22 ‘‘(aa) positions held for hedging 

23 or mitigating commercial risk; and 

24 ‘‘(bb) positions maintained by 

25 any employee benefit plan (or any con-
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† HR 4173 EAS 

1 tract held by such a plan), as that 

2 term is defined in paragraphs (3) and 

3 (32) of section 3 of the Employee Re4 tirement Income Security Act of 1974 

5 (29 U.S.C. 1002), for the primary pur6 pose of hedging or mitigating any risk 

7 directly associated with the operation 

8 of the plan; 

9 ‘‘(II) whose outstanding security-based 

10 swaps create substantial counterparty expo11 sure that could have serious adverse effects 

12 on the financial stability of the United 

13 States banking system or financial markets; 

14 or 

15 ‘‘(III) that is a financial entity that— 

16 ‘‘(aa) is highly leveraged relative 

17 to the amount of capital such entity 

18 holds; and 

19 ‘‘(bb) maintains a substantial po20 sition in outstanding security-based 

21 swaps in any major security-based 

22 swap category, as such categories are 

23 determined by the Commission. 

24 ‘‘(B) DEFINITION OF SUBSTANTIAL POSI25 TION.—For purposes of subparagraph (A), the 
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1 Commission shall define, by rule or regulation, 

2 the term ‘substantial position’ at the threshold 

3 that the Commission determines to be prudent 

4 for the effective monitoring, management, and 

5 oversight of entities that are systemically impor6 tant or can significantly impact the financial 

7 system of the United States. 

8 ‘‘(C) SCOPE OF DESIGNATION.—For pur9 poses of subparagraph (A), a person may be des10 ignated as a major security-based swap partici11 pant for 1 or more categories of security-based 

12 swaps without being classified as a major secu13 rity-based swap participant for all classes of se14 curity-based swaps. 

15 ‘‘(D) CAPITAL.—In setting capital require16 ments for a person that is designated as a major 

17 security-based swap participant for a single type 

18 or single class or category of security-based swap 

19 or activities, the prudential regulator and the 

20 Commission shall take into account the risks as21 sociated with other types of security-based swaps 

22 or classes of security-based swaps or categories of 

23 security-based swaps engaged in and the other 

24 activities conducted by that person that are not 

25 otherwise subject to regulation applicable to that 
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1 person by virtue of the status of the person as a 

2 major security-based swap participant. 

3 ‘‘(68) SECURITY-BASED SWAP.— 

4 ‘‘(A) IN GENERAL.—Except as provided in 

5 subparagraph (B), the term ‘security-based swap’ 

6 means any agreement, contract, or transaction 

7 that— 

8 ‘‘(i) is a swap, as that term is defined 

9 under section 1a of the Commodity Ex10 change Act; and 

11 ‘‘(ii) is based on— 

12 ‘‘(I) an index that is a narrow13 based security index, including any in14 terest therein or on the value thereof; 

15 ‘‘(II) a single security or loan, in16 cluding any interest therein or on the 

17 value thereof; or 

18 ‘‘(III) the occurrence, nonoccur19 rence, or extent of the occurrence of an 

20 event relating to a single issuer of a se21 curity or the issuers of securities in a 

22 narrow-based security index, provided 

23 that such event directly affects the fi24 nancial statements, financial condi-
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† HR 4173 EAS 

1 tion, or financial obligations of the 

2 issuer. 

3 ‘‘(B) RULE OF CONSTRUCTION REGARDING

4 MASTER AGREEMENTS.—The term ‘security-based 

5 swap’ shall be construed to include a master 

6 agreement that provides for an agreement, con7 tract, or transaction that is a security-based 

8 swap pursuant to subparagraph (A), together 

9 with all supplements to any such master agree10 ment, without regard to whether the master 

11 agreement contains an agreement, contract, or 

12 transaction that is not a security-based swap 

13 pursuant to subparagraph (A), except that the 

14 master agreement shall be considered to be a se15 curity-based swap only with respect to each 

16 agreement, contract, or transaction under the 

17 master agreement that is a security-based swap 

18 pursuant to subparagraph (A). 

19 ‘‘(C) EXCLUSIONS.—The term ‘security20 based swap’ does not include any agreement, 

21 contract, or transaction that meets the definition 

22 of a security-based swap only because such agree23 ment, contract, or transaction references, is based 

24 upon, or settles through the transfer, delivery, or 

25 receipt of an exempted security under paragraph 
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1 (12), as in effect on the date of enactment of the 

2 Futures Trading Act of 1982 (other than any 

3 municipal security as defined in paragraph (29) 

4 as in effect on the date of enactment of the Fu5 tures Trading Act of 1982), unless such agree6 ment, contract, or transaction is of the character 

7 of, or is commonly known in the trade as, a put, 

8 call, or other option. 

9 ‘‘(D) MIXED SWAP.—The term ‘security10 based swap’ includes any agreement, contract, or 

11 transaction that is as described in subparagraph 

12 (A) and also is based on the value of 1 or more 

13 interest or other rates, currencies, commodities, 

14 instruments of indebtedness, indices, quantitative 

15 measures, other financial or economic interest or 

16 property of any kind (other than a single secu17 rity or a narrow-based security index), or the oc18 currence, non-occurrence, or the extent of the oc19 currence of an event or contingency associated 

20 with a potential financial, economic, or commer21 cial consequence (other than an event described 

22 in subparagraph (A)(ii)(III)). 

23 ‘‘(69) SWAP.—The term ‘swap’ has the same 

24 meaning as in section 1a of the Commodity Exchange 

25 Act (7 U.S.C. 1a). 
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1 ‘‘(70) PERSON ASSOCIATED WITH A SECURITY2 BASED SWAP DEALER OR MAJOR SECURITY-BASED

3 SWAP PARTICIPANT.— 

4 ‘‘(A) IN GENERAL.—The term ‘person asso5 ciated with a security-based swap dealer or 

6 major security-based swap participant’ or ‘asso7 ciated person of a security-based swap dealer or 

8 major security-based swap participant’ means— 

9 ‘‘(i) any partner, officer, director, or 

10 branch manager of such security-based swap 

11 dealer or major security-based swap partici12 pant (or any person occupying a similar 

13 status or performing similar functions); 

14 ‘‘(ii) any person directly or indirectly 

15 controlling, controlled by, or under common 

16 control with such security-based swap dealer 

17 or major security-based swap participant; 

18 or 

19 ‘‘(iii) any employee of such security20 based swap dealer or major security-based 

21 swap participant. 

22 ‘‘(B) EXCLUSION.—Other than for purposes 

23 of section 15F(l)(2), the term ‘person associated 

24 with a security-based swap dealer or major secu25 rity-based swap participant’ or ‘associated per-
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† HR 4173 EAS 

1 son of a security-based swap dealer or major se2 curity-based swap participant’ does not include 

3 any person associated with a security-based 

4 swap dealer or major security-based swap partic5 ipant whose functions are solely clerical or min6 isterial. 

7 ‘‘(71) SECURITY-BASED SWAP DEALER.— 

8 ‘‘(A) IN GENERAL.—The term ‘security9 based swap dealer’ means any person who— 

10 ‘‘(i) holds themself out as a dealer in 

11 security-based swaps; 

12 ‘‘(ii) makes a market in security-based 

13 swaps; 

14 ‘‘(iii) regularly engages in the pur15 chase and sale of security-based swaps in 

16 the ordinary course of a business; or 

17 ‘‘(iv) engages in any activity causing 

18 it to be commonly known in the trade as a 

19 dealer or market maker in security-based 

20 swaps. 

21 ‘‘(B) DESIGNATION BY TYPE OR CLASS.—A 

22 person may be designated as a security-based 

23 swap dealer for a single type or single class or 

24 category of security-based swap or activities and 

25 considered not to be a security-based swap dealer 
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† HR 4173 EAS 

1 for other types, classes, or categories of security2 based swaps or activities. 

3 ‘‘(C) CAPITAL.—In setting capital require4 ments for a person that is designated as a secu5 rity-based swap dealer for a single type or single 

6 class or category of security-based swap or ac7 tivities, the prudential regulator and the Com8 mission shall take into account the risks associ9 ated with other types of security-based swaps or 

10 classes of security-based swaps or categories of se11 curity-based swaps engaged in and the other ac12 tivities conducted by that person that are not 

13 otherwise subject to regulation applicable to that 

14 person by virtue of the status of the person as a 

15 security-based swap dealer. 

16 ‘‘(72) 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 ‘‘(73) BOARD.—The term ‘Board’ means the 

21 Board of Governors of the Federal Reserve System. 

22 ‘‘(74) PRUDENTIAL REGULATOR.—The term 

23 ‘prudential regulator’ has the same meaning as in 

24 section 1a of the Commodity Exchange Act (7 U.S.C. 

25 1a). 
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1 ‘‘(75) SECURITY-BASED SWAP DATA REPOSI2 TORY.—The term ‘security-based swap data reposi3 tory’ means any person that collects, calculates, pre4 pares, or maintains information or records with re5 spect to transactions or positions in, or the terms and 

6 conditions of, security-based swaps entered into by 

7 third parties. 

8 ‘‘(76) SWAP DEALER.—The term ‘swap dealer’ 

9 has the same meaning as in section 1a of the Com10 modity Exchange Act (7 U.S.C. 1a). 

11 ‘‘(77) SWAP EXECUTION FACILITY.—The term 

12 ‘swap execution facility’ means a facility in which 

13 multiple participants have the ability to execute or 

14 trade security-based swaps by accepting bids and of15 fers made by other participants that are open to mul16 tiple participants in the facility or system, or con17 firmation facility, that— 

18 ‘‘(A) facilitates the execution of security19 based swaps between persons; and 

20 ‘‘(B) is not a designated contract market. 

21 ‘‘(78) SECURITY-BASED SWAP AGREEMENT.— 

22 ‘‘(A) IN GENERAL.—For purposes of sections 

23 9, 10, 16, 20, and 21A of this Act, and section 

24 17 of the Securities Act of 1933 (15 U.S.C. 77q), 

25 the term ‘security-based swap agreement’ means 
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† HR 4173 EAS 

1 a swap agreement as defined in section 206A of 

2 the Gramm-Leach-Bliley Act (15 U.S.C. 78c 

3 note) of which a material term is based on the 

4 price, yield, value, or volatility of any security 

5 or any group or index of securities, or any inter6 est therein. 

7 ‘‘(B) EXCLUSIONS.—The term ‘security8 based swap agreement’ does not include any se9 curity-based swap.’’. 

10 (b) AUTHORITY TO FURTHER DEFINE TERMS.—The 

11 Securities and Exchange Commission may, by rule, further 

12 define the terms ‘‘security-based swap’’, ‘‘security-based 

13 swap dealer’’, ‘‘major security-based swap participant’’, 

14 and ‘‘eligible contract participant’’ with regard to security15 based swaps (as such terms are defined in the amendments 

16 made by subsection (a)) for the purpose of including trans17 actions and entities that have been structured to evade this 

18 subtitle or the amendments made by this subtitle. 

19 (c) OTHER INCORPORATED DEFINITIONS.—Except as 

20 the context otherwise requires, in this subtitle, the terms 

21 ‘‘prudential regulator’’, ‘‘swap’’, ‘‘swap dealer’’, ‘‘major 

22 swap participant’’, ‘‘swap data repository’’, ‘‘associated 

23 person of a swap dealer or major swap participant’’, ‘‘eligi24 ble contract participant’’, ‘‘swap execution facility’’, ‘‘secu25 rity-based swap’’, ‘‘security-based swap dealer’’, ‘‘major se-
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1 curity-based swap participant’’, ‘‘security-based swap data 

2 repository’’, and ‘‘associated person of a security-based 

3 swap dealer or major security-based swap participant’’ 

4 have the same meanings as in section 1a of the Commodity 

5 Exchange Act (7 U.S.C. 1a), as amended by this Act. 

6 SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SE7 CURITY-BASED SWAP AGREEMENTS. 

8 (a) REPEAL.—Sections 206B and 206C of the Gramm9 Leach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) 

10 are repealed. 

11 (b) CONFORMING AMENDMENTS TO THE SECURITIES

12 ACT OF 1933.— 

13 (1) Section 2A of the Securities Act of 1933 (15 

14 U.S.C. 77b–1) is amended— 

15 (A) by striking subsection (a) and reserving 

16 that subsection; and 

17 (B) by striking ‘‘(as defined in section 206B 

18 of the Gramm-Leach-Bliley Act)’’ each place that 

19 such term appears and inserting ‘‘(as defined in 

20 section 3(a)(78) of the Securities Exchange Act 

21 of 1934)’’. 

22 (2) Section 17 of the Securities Act of 1933 (15 

23 U.S.C. 77q) is amended— 

24 (A) in subsection (a)— 
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1 (i) by inserting ‘‘(including security2 based swaps)’’ after ‘‘securities’’; and 

3 (ii) by striking ‘‘(as defined in section 

4 206B of the Gramm-Leach-Bliley Act)’’ and 

5 inserting ‘‘(as defined in section 3(a)(78) of 

6 the Securities Exchange Act)’’; and 

7 (B) in subsection (d), by striking ‘‘206B of 

8 the Gramm-Leach-Bliley Act’’ and inserting 

9 ‘‘3(a)(78) of the Securities Exchange Act of 

10 1934’’. 

11 (c) CONFORMING AMENDMENTS TO THE SECURITIES

12 EXCHANGE ACT OF 1934.—The Securities Exchange Act of 

13 1934 (15 U.S.C. 78a et seq.) is amended— 

14 (1) in section 3A (15 U.S.C. 78c–1)— 

15 (A) by striking subsection (a) and reserving 

16 that subsection; and 

17 (B) by striking ‘‘(as defined in section 206B 

18 of the Gramm-Leach-Bliley Act)’’ each place that 

19 the term appears; 

20 (2) in section 9 (15 U.S.C. 78i)— 

21 (A) in subsection (a), by striking para22 graphs (2) through (5) and inserting the fol23 lowing: 

24 ‘‘(2) To effect, alone or with 1 or more other persons, 

25 a series of transactions in any security registered on a na-
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† HR 4173 EAS 

1 tional securities exchange, any security not so registered, 

2 or in connection with any security-based swap or security3 based swap agreement with respect to such security creating 

4 actual or apparent active trading in such security, or rais5 ing or depressing the price of such security, for the purpose 

6 of inducing the purchase or sale of such security by others. 

7 ‘‘(3) If a dealer, broker, security-based swap dealer, 

8 major security-based swap participant, or other person sell9 ing or offering for sale or purchasing or offering to purchase 

10 the security, a security-based swap, or a security-based 

11 swap agreement with respect to such security, to induce the 

12 purchase or sale of any security registered on a national 

13 securities exchange, any security not so registered, any secu14 rity-based swap, or any security-based swap agreement 

15 with respect to such security by the circulation or dissemi16 nation in the ordinary course of business of information 

17 to the effect that the price of any such security will or is 

18 likely to rise or fall because of market operations of any 

19 1 or more persons conducted for the purpose of raising or 

20 depressing the price of such security. 

21 ‘‘(4) If a dealer, broker, security-based swap dealer, 

22 major security-based swap participant, or other person sell23 ing or offering for sale or purchasing or offering to purchase 

24 the security, a security-based swap, or security-based swap 

25 agreement with respect to such security, to make, regarding 
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1 any security registered on a national securities exchange, 

2 any security not so registered, any security-based swap, or 

3 any security-based swap agreement with respect to such se4 curity, for the purpose of inducing the purchase or sale of 

5 such security, such security-based swap, or such security6 based swap agreement any statement which was at the time 

7 and in the light of the circumstances under which it was 

8 made, false or misleading with respect to any material fact, 

9 and which that person knew or had reasonable ground to 

10 believe was so false or misleading. 

11 ‘‘(5) For a consideration, received directly or indi12 rectly from a broker, dealer, security-based swap dealer, 

13 major security-based swap participant, or other person sell14 ing or offering for sale or purchasing or offering to purchase 

15 the security, a security-based swap, or security-based swap 

16 agreement with respect to such security, to induce the pur17 chase of any security registered on a national securities ex18 change, any security not so registered, any security-based 

19 swap, or any security-based swap agreement with respect 

20 to such security by the circulation or dissemination of in21 formation to the effect that the price of any such security 

22 will or is likely to rise or fall because of the market oper23 ations of any 1 or more persons conducted for the purpose 

24 of raising or depressing the price of such security.’’; and 
780 

† HR 4173 EAS 

1 (B) in subsection (i), by striking ‘‘(as de2 fined in section 206B of the Gramm-Leach-Bliley 

3 Act)’’; 

4 (3) in section 10 (15 U.S.C. 78j)— 

5 (A) in subsection (b), by striking ‘‘(as de6 fined in section 206B of the Gramm-Leach-Bliley 

7 Act),’’ each place that term appears; and 

8 (B) in the matter following subsection (b), 

9 by striking ‘‘(as defined in section 206B of the 

10 Gramm-Leach-Bliley Act)’’; 

11 (4) in section 15 (15 U.S.C. 78o)— 

12 (A) in subsection (c)(1)(A), by striking ‘‘(as 

13 defined in section 206B of the Gramm-Leach14 Bliley Act),’’; 

15 (B) in subparagraphs (B) and (C) of sub16 section (c)(1), by striking ‘‘(as defined in section 

17 206B of the Gramm-Leach-Bliley Act)’’ each 

18 place that term appears; 

19 (C) by redesignating subsection (i), as 

20 added by section 303(f) of the Commodity Fu21 tures Modernization Act of 2000 (Public Law 

22 106–554; 114 Stat. 2763A–455)), as subsection 

23 (j); and 
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† HR 4173 EAS 

1 (D) in subsection (j), as redesignated by 

2 subparagraph (C), by striking ‘‘(as defined in 

3 section 206B of the Gramm-Leach-Bliley Act)’’; 

4 (5) in section 16 (15 U.S.C. 78p)— 

5 (A) in subsection (a)(2)(C), by striking ‘‘(as 

6 defined in section 206(b) of the Gramm-Leach7 Bliley Act (15 U.S.C. 78c note))’’; 

8 (B) in subsection (a)(3)(B), by inserting 

9 ‘‘or security-based swaps’’ after ‘‘security-based 

10 swap agreement’’; 

11 (C) in the first sentence of subsection (b), by 

12 striking ‘‘(as defined in section 206B of the 

13 Gramm-Leach-Bliley Act)’’; 

14 (D) in the third sentence of subsection (b), 

15 by striking ‘‘(as defined in section 206B of the 

16 Gramm-Leach Bliley Act)’’ and inserting ‘‘or a 

17 security-based swap’’; and 

18 (E) in subsection (g), by striking ‘‘(as de19 fined in section 206B of the Gramm-Leach-Bliley 

20 Act)’’; 

21 (6) in section 20 (15 U.S.C. 78t), 

22 (A) in subsection (d), by striking ‘‘(as de23 fined in section 206B of the Gramm-Leach-Bliley 

24 Act)’’; and 
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† HR 4173 EAS 

1 (B) in subsection (f), by striking ‘‘(as de2 fined in section 206B of the Gramm-Leach-Bliley 

3 Act)’’; 

4 (7) in section 21A (15 U.S.C. 78u–1)— 

5 (A) in subsection (a)(1), by striking ‘‘(as 

6 defined in section 206B of the Gramm-Leach7 Bliley Act)’’; and 

8 (B) in subsection (g), by striking ‘‘(as de9 fined in section 206B of the Gramm-Leach-Bliley 

10 Act)’’. 

11 SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE 

12 ACT OF 1934. 

13 (a) CLEARING FOR SECURITY-BASED SWAPS.—The Se14 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 

15 amended by inserting after section 3B (as added by section 

16 717 of this Act): 

17 ‘‘SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS. 

18 ‘‘(a) CLEARING REQUIREMENT.— 

19 ‘‘(1) SUBMISSION.— 

20 ‘‘(A) IN GENERAL.—Except as provided in 

21 paragraphs (9) and (10), any person who is a 

22 party to a security-based swap shall submit such 

23 security-based swap for clearing to a clearing 

24 agency registered under section 17A of this title. 
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† HR 4173 EAS 

1 ‘‘(B) OPEN ACCESS.—The rules of a reg2 istered clearing agency shall— 

3 ‘‘(i) prescribe that all security-based 

4 swaps with the same terms and conditions 

5 are economically equivalent and may be off6 set with each other within the clearing 

7 agency; and 

8 ‘‘(ii) provide for nondiscriminatory 

9 clearing of a security-based swap executed 

10 bilaterally or on or through the rules of an 

11 unaffiliated national securities exchange or 

12 swap execution facility, subject to the re13 quirements of section 5(b). 

14 ‘‘(2) COMMISSION APPROVAL.— 

15 ‘‘(A) IN GENERAL.—A clearing agency shall 

16 submit to the Commission for prior approval 

17 any group, category, type, or class of security18 based swaps that the clearing agency seeks to ac19 cept for clearing, which submission the Commis20 sion shall make available to the public. 

21 ‘‘(B) DEADLINE.—The Commission shall 

22 take final action on a request submitted pursu23 ant to subparagraph (A) not later than 90 days 

24 after submission of the request, unless the clear25 ing agency submitting the request agrees to an 
784 

† HR 4173 EAS 

1 extension of the time limitation established under 

2 this subparagraph. 

3 ‘‘(C) APPROVAL.—The Commission shall 

4 approve, unconditionally or subject to such terms 

5 and conditions as the Commission determines to 

6 be appropriate, any request submitted pursuant 

7 to subparagraph (A) if the Commission finds 

8 that the request is consistent with the require9 ments of section 17A. The Commission shall not 

10 approve any such request if the Commission does 

11 not make such finding. 

12 ‘‘(D) RULES.—The Commission shall adopt 

13 rules for a clearing agency’s submission for ap14 proval, pursuant to this paragraph, of any 

15 group, category, type, or class of security-based 

16 swaps that the clearing agency seeks to accept for 

17 clearing. 

18 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At any 

19 time after issuance of an approval pursuant to para20 graph (2): 

21 ‘‘(A) REVIEW PROCESS.—The Commission, 

22 on application of a counterparty to a security23 based swap or on its own initiative, may stay 

24 the clearing requirement of paragraph (1) until 

25 the Commission completes a review of the terms 
785 

† HR 4173 EAS 

1 of the security-based swap, or the group, cat2 egory, type, or class of security-based swaps, and 

3 the clearing arrangement. 

4 ‘‘(B) DEADLINE.—The Commission shall 

5 complete a review undertaken pursuant to sub6 paragraph (A) not later than 90 days after 

7 issuance of the stay, unless the clearing agency 

8 that clears the security-based swap, or the group, 

9 category, type, or class of security-based swaps, 

10 agrees to an extension of the time limitation es11 tablished under this subparagraph. 

12 ‘‘(C) DETERMINATION.—Upon completion of 

13 the review undertaken pursuant to subparagraph 

14 (A)— 

15 ‘‘(i) the Commission may determine, 

16 unconditionally or subject to such terms 

17 and conditions as the Commission deter18 mines to be appropriate, that the security19 based swap, or the group, category, type, or 

20 class of security-based swaps, must be 

21 cleared pursuant to this subsection if the 

22 Commission finds that such clearing— 

23 ‘‘(I) is consistent with the require24 ments of section 17A; and 
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† HR 4173 EAS 

1 ‘‘(II) is otherwise in the public in2 terest, for the protection of investors, 

3 and consistent with the purposes of 

4 this title; 

5 ‘‘(ii) the Commission may determine 

6 that the clearing requirement of paragraph 

7 (1) shall not apply to the security-based 

8 swap, or the group, category, type, or class 

9 of security-based swaps; or 

10 ‘‘(iii) if a determination is made that 

11 the clearing requirement of paragraph (1) 

12 shall no longer apply, then the Commission 

13 may still permit such security-based swap, 

14 or the group, category, type, or class of secu15 rity-based swaps to be cleared. 

16 ‘‘(D) RULES.—The Commission shall adopt 

17 rules for reviewing, pursuant to this paragraph, 

18 a clearing agency’s clearing of a security-based 

19 swap, or a group, category, type, or class of secu20 rity-based swaps that the Commission has ac21 cepted for clearing. 

22 ‘‘(4) SECURITY-BASED SWAPS REQUIRED TO BE

23 ACCEPTED FOR CLEARING.— 

24 ‘‘(A) RULEMAKING.—The Commission shall 

25 adopt rules to further identify any group, cat-
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† HR 4173 EAS 

1 egory, type, or class of security-based swaps not 

2 submitted for approval under paragraph (2) that 

3 the Commission deems should be accepted for 

4 clearing. In adopting such rules, the Commission 

5 shall take into account the following factors: 

6 ‘‘(i) The extent to which any of the 

7 terms of the group, category, type, or class 

8 of security-based swaps, including price, are 

9 disseminated to third parties or are ref10 erenced in other agreements, contracts, or 

11 transactions. 

12 ‘‘(ii) The volume of transactions in the 

13 group, category, type, or class of security14 based swaps. 

15 ‘‘(iii) The extent to which the terms of 

16 the group, category, type, or class of secu17 rity-based swaps are similar to the terms of 

18 other agreements, contracts, or transactions 

19 that are cleared. 

20 ‘‘(iv) Whether any differences in the 

21 terms of the group, category, type, or class 

22 of security-based swaps, compared to other 

23 agreements, contracts, or transactions that 

24 are cleared, are of economic significance. 
788 

† HR 4173 EAS 

1 ‘‘(v) Whether a clearing agency is pre2 pared to clear the group, category, type, or 

3 class of security-based swaps and such 

4 clearing agency has in place effective risk 

5 management systems. 

6 ‘‘(vi) Any other factor the Commission 

7 determines to be appropriate. 

8 ‘‘(B) OTHER DESIGNATIONS.—At any time 

9 after the adoption of the rules required under 

10 subparagraph (A), the Commission may sepa11 rately designate a particular security-based swap 

12 or class of security-based swaps as subject to the 

13 clearing requirement of paragraph (1), taking 

14 into account the factors established in clauses (i) 

15 through (vi) of subparagraph (A) and the rules 

16 adopted in such subparagraph. 

17 ‘‘(C) IN GENERAL.—In accordance with 

18 subparagraph (A), the Commission shall, con19 sistent with the public interest, adopt rules 

20 under the expedited process described in subpara21 graph (D) to establish criteria for determining 

22 that a swap, or any group, category, type, or 

23 class of swap is required to be cleared. 

24 ‘‘(D) EXPEDITED RULEMAKING AUTHOR25 ITY.— 
789 

† HR 4173 EAS 

1 ‘‘(i) PROCEDURE.—The promulgation 

2 of regulations under subparagraph (A) may 

3 be made without regard to— 

4 ‘‘(I) the notice and comment pro5 visions of section 553 of title 5, United 

6 States Code; and 

7 ‘‘(II) chapter 35 of title 44, 

8 United States Code (commonly known 

9 as the ‘Paperwork Reduction Act’). 

10 ‘‘(ii) AGENCY RULEMAKING.—In car11 rying out subparagraph (A), the Commis12 sion shall use the authority provided under 

13 section 808 of title 5, United States Code. 

14 ‘‘(5) PREVENTION OF EVASION.— 

15 ‘‘(A) IN GENERAL.—The Commission shall 

16 have authority to prescribe rules under this sec17 tion, or issue interpretations of such rules, as 

18 necessary to prevent evasions of this section. 

19 ‘‘(B) DUTY OF COMMISSION TO INVESTIGATE

20 AND TAKE CERTAIN ACTIONS.—To the extent the 

21 Commission finds that a particular security22 based swap or any group, category, type, or class 

23 of security-based swaps that would otherwise be 

24 subject to mandatory clearing but no clearing 

25 agency has listed the security-based swap or the 
790 

† HR 4173 EAS 

1 group, category, type, or class of security-based 

2 swaps for clearing, the Commission shall— 

3 ‘‘(i) investigate the relevant facts and 

4 circumstances; 

5 ‘‘(ii) within 30 days issue a public re6 port containing the results of the investiga7 tion; and 

8 ‘‘(iii) take such actions as the Commis9 sion determines to be necessary and in the 

10 public interest, which may include requir11 ing the retaining of adequate margin or 

12 capital by parties to the security-based 

13 swap or the group, category, type, or class 

14 of security-based swaps. 

15 ‘‘(C) EFFECT ON AUTHORITY.—Nothing in 

16 this paragraph— 

17 ‘‘(i) authorize the Commission to re18 quire a clearing agency to list for clearing 

19 a security-based swap or any group, cat20 egory, type, or class of security-based swaps 

21 if the clearing of the security-based swap or 

22 the group, category, type, or class of secu23 rity-based swaps would adversely affect the 

24 business operations of the clearing agency, 

25 threaten the financial integrity of the clear-
791 

† HR 4173 EAS 

1 ing agency, or pose a systemic risk to the 

2 clearing agency; and 

3 ‘‘(ii) affect the authority of the Com4 mission to enforce the open access provisions 

5 of paragraph (1) with respect to a security6 based swap or the group, category, type, or 

7 class of security-based swaps that is listed 

8 for clearing by a clearing agency. 

9 ‘‘(6) REQUIRED REPORTING.— 

10 ‘‘(A) BOTH COUNTERPARTIES.—Both 

11 counterparties to a security-based swap that is 

12 not cleared by any clearing agency shall report 

13 such a security-based swap either to a registered 

14 security-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. 

18 ‘‘(B) TIMING.—Counterparties to a secu19 rity-based swap shall submit the reports required 

20 under subparagraph (A) not later than such time 

21 period as the Commission may by rule or regula22 tion prescribe. 

23 ‘‘(7) TRANSITION RULES.— 

24 ‘‘(A) REPORTING TRANSITION RULES.— 

25 Rules adopted by the Commission under this sec-
792 

† HR 4173 EAS 

1 tion shall provide for the reporting of data, as 

2 follows: 

3 ‘‘(i) Security-based swaps entered into 

4 before the date of the enactment of this sec5 tion shall be reported to a registered secu6 rity-based swap repository or the Commis7 sion not later than 180 days after the effec8 tive date of this section. 

9 ‘‘(ii) Security-based swaps entered into 

10 on or after such date of enactment shall be 

11 reported to a registered security-based swap 

12 repository or the Commission not later than 

13 the later of— 

14 ‘‘(I) 90 days after such effective 

15 date; or 

16 ‘‘(II) such other time after enter17 ing into the security-based swap as the 

18 Commission may prescribe by rule or 

19 regulation. 

20 ‘‘(B) CLEARING TRANSITION RULES.— 

21 ‘‘(i) Security-based swaps entered into 

22 before the date of the enactment of this sec23 tion are exempt from the clearing require24 ments of this subsection if reported pursu25 ant to subparagraph (A)(i). 
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† HR 4173 EAS 

1 ‘‘(ii) Security-based swaps entered into 

2 before application of the clearing require3 ment pursuant to this section are exempt 

4 from the clearing requirements of this sec5 tion if reported pursuant to subparagraph 

6 (A)(ii). 

7 ‘‘(8) TRADE EXECUTION.— 

8 ‘‘(A) IN GENERAL.—With respect to trans9 actions involving security-based swaps subject to 

10 the clearing requirement of paragraph (1), 

11 counterparties shall— 

12 ‘‘(i) execute the transaction on an ex13 change; or 

14 ‘‘(ii) execute the transaction on a swap 

15 execution facility registered under section 

16 3D or a swap execution facility that is ex17 empt from registration under section 3D(e). 

18 ‘‘(B) EXCEPTION.—The requirements of 

19 clauses (i) and (ii) of subparagraph (A) shall not 

20 apply— 

21 ‘‘(i) if no national securities exchange 

22 or security-based swap execution facility 

23 makes the security-based swap available to 

24 trade; or 
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† HR 4173 EAS 

1 ‘‘(ii) to swap transactions where a 

2 commercial end user opts to use the clearing 

3 exemption under paragraph (10). 

4 ‘‘(9) REQUIRED EXEMPTION.—Subject to para5 graph (4), the Commission shall exempt a security6 based swap from the requirements of paragraphs (1) 

7 and (8) and any rules issued under this subsection, 

8 if no clearing agency registered under this Act will 

9 accept the security-based swap from clearing. 

10 ‘‘(10) END USER CLEARING EXEMPTION.— 

11 ‘‘(A) DEFINITION OF COMMERCIAL END

12 USER.— 

13 ‘‘(i) IN GENERAL.—In this paragraph, 

14 the term ‘commercial end user’ means any 

15 person other than a financial entity de16 scribed in clause (ii) who, as its primary 

17 business activity, owns, uses, produces, 

18 processes, manufactures, distributes, mer19 chandises, or markets services or commod20 ities (which shall include coal, natural gas, 

21 electricity, ethanol, crude oil, distillates, 

22 and other hydrocarbons) either individually 

23 or in a fiduciary capacity. 

24 ‘‘(ii) FINANCIAL ENTITY.—The term 

25 ‘financial entity’ means— 
795 

† HR 4173 EAS 

1 ‘‘(I) a swap dealer, major swap 

2 participant, security-based swap deal3 er, or major security-based swap par4 ticipant; 

5 ‘‘(II) a person predominantly en6 gaged in activities that are in the busi7 ness of banking or financial in nature, 

8 as defined in Section 4(k) of the Bank 

9 Holding Company Act of 1956; 

10 ‘‘(III) a person predominantly en11 gaged in activities that are financial 

12 in nature; 

13 ‘‘(IV) a private fund as defined in 

14 section 202(a) of the Investment Advis15 ers Act of 1940 (15 U.S.C. 80b–2(a)) 

16 or a commodity pool as defined in sec17 tion 1a of the Commodity Exchange 

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

19 ‘‘(V) a person that is registered or 

20 required to be registered with the Com21 mission, but does not include a public 

22 company which registers its securities 

23 with the Commission. 

24 ‘‘(B) END USER CLEARING EXEMPTION.— 
796 

† HR 4173 EAS 

1 ‘‘(i) IN GENERAL.—Subject to clause 

2 (ii), in the event that a security-based swap 

3 is subject to the mandatory clearing require4 ment under paragraph (1), and 1 of the 

5 counterparties to the security-based swap is 

6 a commercial end user that counterparty— 

7 ‘‘(I)(aa) may elect not to clear the 

8 security-based swap, as required under 

9 paragraph (1); or 

10 ‘‘(bb) may elect to require clearing 

11 of the security-based swap; and 

12 ‘‘(II) if the end user makes an 

13 election under subclause (I)(bb), shall 

14 have the sole right to select the clearing 

15 agency at which the security-based 

16 swap will be cleared. 

17 ‘‘(ii) LIMITATION.—A commercial end 

18 user may only make an election under 

19 clause (i) if the end user is using the secu20 rity-based swap to hedge its own commer21 cial risk. 

22 ‘‘(C) TREATMENT OF AFFILIATES.— 

23 ‘‘(i) IN GENERAL.—An affiliate of a 

24 commercial end user (including affiliate en25 tities predominantly engaged in providing 
797 

† HR 4173 EAS 

1 financing for the purchase of the merchan2 dise or manufactured goods of the commer3 cial end user) may make an election under 

4 subparagraph (B)(i) only if the affiliate, 

5 acting on behalf of the commercial end user 

6 and as an agent, uses the security-based 

7 swap to hedge or mitigate the commercial 

8 risk of the commercial end user parent or 

9 other affiliates of the commercial end user 

10 that is not a financial entity. 

11 ‘‘(ii) PROHIBITION RELATING TO CER12 TAIN AFFILIATES.—An affiliate of a com13 mercial end user shall not use the exemption 

14 under subparagraph (B) if the affiliate is— 

15 ‘‘(I) a security-based swap dealer; 

16 ‘‘(II) a security-based security17 based swap dealer; 

18 ‘‘(III) a major security-based 

19 swap participant; 

20 ‘‘(IV) a major security-based secu21 rity-based swap participant; 

22 ‘‘(V) an issuer that would be an 

23 investment company, as defined in sec24 tion 3 of the Investment Company Act 

25 of 1940 (15 U.S.C. 80a–3), but for 
798 

† HR 4173 EAS 

1 paragraph (1) or (7) of subsection (c) 

2 of that section 3 (15 U.S.C. 80a–3(c)); 

3 ‘‘(VI) a commodity pool; 

4 ‘‘(VII) a bank holding company 

5 with over $50,000,000,000 in consoli6 dated assets; or 

7 ‘‘(VIII) an affiliate of any entity 

8 described in subclauses (I) through 

9 (VII). 

10 ‘‘(iii) ABUSE OF EXEMPTION.—The 

11 Commission may prescribe such rules, or 

12 issue interpretations of the rules, as the 

13 Commission determines to be necessary to 

14 prevent abuse of the exemption described in 

15 subparagraph (B). 

16 ‘‘(D) OPTION TO CLEAR.— 

17 ‘‘(i) SECURITY-BASED SWAPS RE18 QUIRED TO BE CLEARED ENTERED INTO

19 WITH A FINANCIAL ENTITY.—With respect to 

20 any securities-based swap that is required 

21 to be cleared by a clearing agency and en22 tered into by a securities-based swap dealer 

23 or a major securities-based swap partici24 pant with a financial entity, the financial 

25 entity shall have the sole right to select the 
799 

† HR 4173 EAS 

1 clearing agency at which the securities2 based swap will be cleared. 

3 ‘‘(ii) SECURITY-BASED SWAPS NOT RE4 QUIRED TO BE CLEARED ENTERED INTO

5 WITH A FINANCIAL ENTITY OR COMMERCIAL

6 END USER.—With respect to any securities7 based swap that is not required to be 

8 cleared by a clearing agency and entered 

9 into by a securities-based swap dealer or a 

10 major securities-based swap participant 

11 with a financial entity or commercial end 

12 user, the financial entity or commercial end 

13 user— 

14 ‘‘(I) may elect to require clearing 

15 of the securities-based swap; and 

16 ‘‘(II) shall have the sole right to 

17 select the clearing agency at which the 

18 securities-based swap will be cleared. 

19 ‘‘(b) AUDIT COMMITTEE APPROVAL.—Exemptions 

20 from the requirements of this section to clear or trade a 

21 security-based swap through a national securities exchange 

22 or security-based swap execution facility shall be available 

23 to a counterparty that is an issuer of securities that are 

24 registered under section 12 or that is required to file reports 

25 pursuant to section 15(d), only if the issuer’s audit com-
800 

† HR 4173 EAS 

1 mittee has reviewed and approved the issuer’s decision to 

2 enter into security-based swaps that are subject to such ex3 emptions. 

4 ‘‘(c) PUBLIC AVAILABILITY OF SECURITY-BASED SWAP

5 TRANSACTION DATA.— 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) DEFINITION OF REAL-TIME PUBLIC RE8 PORTING.—In this paragraph, the term ‘real9 time public reporting’ means to report data re10 lating to a security-based swap transaction as 

11 soon as technologically practicable after the time 

12 at which the security-based swap transaction has 

13 been executed. 

14 ‘‘(B) PURPOSE.—The purpose of this section 

15 is to authorize the Commission to make security16 based swap transaction and pricing data avail17 able to the public in such form and at such times 

18 as the Commission determines appropriate to en19 hance price discovery. 

20 ‘‘(C) GENERAL RULE.—The Commission is 

21 authorized to provide by rule for the public 

22 availability of security-based swap transaction 

23 and pricing data as follows: 

24 ‘‘(i) With respect to those security25 based swaps that are subject to the manda-
801 

† HR 4173 EAS 

1 tory clearing requirement described in sub2 section (a)(1) (including those security3 based swaps that are exempted from those 

4 requirements), the Commission shall require 

5 real-time public reporting for such trans6 actions. 

7 ‘‘(ii) With respect to those security8 based swaps that are not subject to the man9 datory clearing requirement described in 

10 subsection (a)(1), but are cleared at a reg11 istered clearing agency, the Commission 

12 shall require real-time public reporting for 

13 such transactions. 

14 ‘‘(iii) With respect to security-based 

15 swaps that are not cleared at a registered 

16 clearing agency and which are reported to 

17 a security-based swap data repository or the 

18 Commission under subsection (a), the Com19 mission shall make available to the public, 

20 in a manner that does not disclose the busi21 ness transactions and market positions of 

22 any person, aggregate data on such secu23 rity-based swap trading volumes and posi24 tions. 
802 

† HR 4173 EAS 

1 ‘‘(iv) With respect to security-based 

2 swaps that are exempt from the require3 ments of subsection (a)(1), but are subject to 

4 the requirements of subsection (a)(8), the 

5 Commission shall require real-time public 

6 reporting for such transactions. 

7 ‘‘(D) REGISTERED ENTITIES AND PUBLIC

8 REPORTING.—The Commission may require reg9 istered entities to publicly disseminate the secu10 rity-based swap transaction and pricing data re11 quired to be reported under this paragraph. 

12 ‘‘(E) RULEMAKING REQUIRED.—With re13 spect to the rule providing for the public avail14 ability of transaction and pricing data for secu15 rity-based swaps described in clauses (i) and (ii) 

16 of subparagraph (C), the rule promulgated by the 

17 Commission shall contain provisions— 

18 ‘‘(i) to ensure such information does 

19 not identify the participants; 

20 ‘‘(ii) to specify the criteria for deter21 mining what constitutes a large notional se22 curity-based swap transaction (block trade) 

23 for particular markets and contracts; 

24 ‘‘(iii) to specify the appropriate time 

25 delay for reporting large notional security- 
803 

† HR 4173 EAS 

1 based swap transactions (block trades) to 

2 the public; and 

3 ‘‘(iv) that take into account whether 

4 the public disclosure will materially reduce 

5 market liquidity. 

6 ‘‘(F) TIMELINESS OF REPORTING.—Parties 

7 to a security-based swap (including agents of the 

8 parties to a security-based swap) shall be respon9 sible for reporting security-based swap trans10 action information to the appropriate registered 

11 entity in a timely manner as may be prescribed 

12 by the Commission. 

13 ‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORT14 ING OF AGGREGATE SECURITY-BASED SWAP DATA.— 

15 ‘‘(A) IN GENERAL.—In accordance with 

16 subparagraph (B), the Commission shall issue a 

17 written report on a semiannual and annual 

18 basis to make available to the public information 

19 relating to— 

20 ‘‘(i) the trading and clearing in the 

21 major security-based swap categories; and 

22 ‘‘(ii) the market participants and de23 velopments in new products. 
804 

† HR 4173 EAS 

1 ‘‘(B) USE; CONSULTATION.—In preparing a 

2 report under subparagraph (A), the Commission 

3 shall— 

4 ‘‘(i) use information from security5 based swap data repositories and clearing 

6 agencies; and 

7 ‘‘(ii) consult with the Office of the 

8 Comptroller of the Currency, the Bank for 

9 International Settlements, and such other 

10 regulatory bodies as may be necessary. 

11 ‘‘(C) TRANSITION RULE FOR

12 PREENACTMENT SECURITY-BASED SWAPS.— 

13 ‘‘(i) SECURITY-BASED SWAPS ENTERED

14 INTO BEFORE THE DATE OF ENACTMENT OF

15 THE WALL STREET TRANSPARENCY AND AC16 COUNTABILITY ACT OF 2010.—Each security17 based swap entered into before the date of 

18 enactment of the Wall Street Transparency 

19 and Accountability Act of 2010, the terms of 

20 which have not expired as of the date of en21 actment of that Act, shall be reported to a 

22 registered security-based swap data reposi23 tory or the Commission by a date that is 

24 not later than— 
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1 ‘‘(I) 30 days after the date of 

2 issuance of the interim final rule; or 

3 ‘‘(II) such other period as the 

4 Commission determines to be appro5 priate. 

6 ‘‘(ii) COMMISSION RULEMAKING.—The 

7 Commission shall promulgate an interim 

8 final rule within 90 days of the date of en9 actment of this section providing for the re10 porting of each security-based swap entered 

11 into before the date of enactment as ref12 erenced in clause (i). 

13 ‘‘(D) EFFECTIVE DATE.—The reporting pro14 visions described in this paragraph shall be effec15 tive upon the date of enactment of this section. 

16 ‘‘(d) DESIGNATION OF CHIEF COMPLIANCE OFFI17 CER.— 

18 ‘‘(1) IN GENERAL.—Each registered clearing 

19 agency shall designate an individual to serve as a 

20 chief compliance officer. 

21 ‘‘(2) DUTIES.—The chief compliance officer 

22 shall— 

23 ‘‘(A) report directly to the board or to the 

24 senior officer of the clearing agency; 
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1 ‘‘(B) in consultation with its board, a body 

2 performing a function similar thereto, or the sen3 ior officer of the registered clearing agency, re4 solve any conflicts of interest that may arise; 

5 ‘‘(C) be responsible for administering each 

6 policy and procedure that is required to be estab7 lished pursuant to this section; 

8 ‘‘(D) ensure compliance with this title (in9 cluding regulations issued under this title) relat10 ing to agreements, contracts, or transactions, in11 cluding each rule prescribed by the Commission 

12 under this section; 

13 ‘‘(E) establish procedures for the remedi14 ation of noncompliance issues identified by the 

15 compliance officer through any— 

16 ‘‘(i) compliance office review; 

17 ‘‘(ii) look-back; 

18 ‘‘(iii) internal or external audit find19 ing; 

20 ‘‘(iv) self-reported error; or 

21 ‘‘(v) validated complaint; and 

22 ‘‘(F) establish and follow appropriate proce23 dures for the handling, management response, re24 mediation, retesting, and closing of noncompli25 ance issues. 
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1 ‘‘(3) ANNUAL REPORTS.— 

2 ‘‘(A) IN GENERAL.—In accordance with 

3 rules prescribed by the Commission, the chief 

4 compliance officer shall annually prepare and 

5 sign a report that contains a description of— 

6 ‘‘(i) the compliance of the registered 

7 clearing agency or security-based swap exe8 cution facility of the compliance officer with 

9 respect to this title (including regulations 

10 under this title); and 

11 ‘‘(ii) each policy and procedure of the 

12 registered clearing agency of the compliance 

13 officer (including the code of ethics and con14 flict of interest policies of the registered 

15 clearing agency). 

16 ‘‘(B) REQUIREMENTS.—A compliance re17 port under subparagraph (A) shall— 

18 ‘‘(i) accompany each appropriate fi19 nancial report of the registered clearing 

20 agency that is required to be furnished to 

21 the Commission pursuant to this section; 

22 and 

23 ‘‘(ii) include a certification that, under 

24 penalty of law, the compliance report is ac25 curate and complete.’’. 
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† HR 4173 EAS 

1 (b) CLEARING AGENCY REQUIREMENTS.—Section 17A 

2 of the Securities Exchange Act of 1934 (15 U.S.C. 78q–1) 

3 is amended by adding at the end the following: 

4 ‘‘(g) REGISTRATION REQUIREMENT.—It shall be un5 lawful for a clearing agency, unless registered with the 

6 Commission, directly or indirectly to make use of the mails 

7 or any means or instrumentality of interstate commerce to 

8 perform the functions of a clearing agency with respect to 

9 a security-based swap. 

10 ‘‘(h) VOLUNTARY REGISTRATION.—A person that 

11 clears agreements, contracts, or transactions that are not 

12 required to be cleared under this title may register with 

13 the Commission as a clearing agency. 

14 ‘‘(i) STANDARDS FOR CLEARING AGENCIES CLEARING

15 SECURITY-BASED SWAP TRANSACTIONS.—To be registered 

16 and to maintain registration as a clearing agency that 

17 clears security-based swap transactions, a clearing agency 

18 shall comply with such standards as the Commission may 

19 establish by rule. In establishing any such standards, and 

20 in the exercise of its oversight of such a clearing agency 

21 pursuant to this title, the Commission may conform such 

22 standards or oversight to reflect evolving United States and 

23 international standards. Except where the Commission de24 termines otherwise by rule or regulation, a clearing agency 
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† HR 4173 EAS 

1 shall have reasonable discretion in establishing the manner 

2 in which it complies with any such standards. 

3 ‘‘(j) RULES.—The Commission shall adopt rules gov4 erning persons that are registered as clearing agencies for 

5 security-based swaps under this title. 

6 ‘‘(k) EXEMPTIONS.— 

7 ‘‘(1) IN GENERAL.—The Commission may ex8 empt, conditionally or unconditionally, a clearing 

9 agency from registration under this section for the 

10 clearing of security-based swaps if the Commission 

11 determines that the clearing agency is subject to com12 parable, comprehensive supervision and regulation by 

13 the Commodity Futures Trading Commission or the 

14 appropriate government authorities in the home coun15 try of the agency. Such conditions may include, but 

16 are not limited to, requiring that the clearing agency 

17 be available for inspection by the Commission and 

18 make available all information requested by the Com19 mission. 

20 ‘‘(2) DERIVATIVES CLEARING ORGANIZATIONS.— 

21 A person that is required to be registered as a deriva22 tives clearing organization under the Commodity Ex23 change Act, whose principal business is clearing com24 modity futures and options on commodity futures 

25 transactions and swaps and which is a derivatives 
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† HR 4173 EAS 

1 clearing organization registered with the Commodity 

2 Futures Trading Commission under the Commodity 

3 Exchange Act (7 U.S.C. 1 et seq.), shall be uncondi4 tionally exempt from registration under this section 

5 solely for the purpose of clearing security-based 

6 swaps, unless the Commission finds that such deriva7 tives clearing organization is not subject to com8 parable, comprehensive supervision and regulation by 

9 the Commodity Futures Trading Commission. 

10 ‘‘(l) MODIFICATION OF CORE PRINCIPLES.—The Com11 mission may conform the core principles established in this 

12 section to reflect evolving United States and international 

13 standards.’’. 

14 (c) SECURITY-BASED SWAP EXECUTION FACILITIES.— 

15 The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

16 is amended by inserting after section 3C (as added by sub17 section (a) of this section) the following: 

18 ‘‘SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES. 

19 ‘‘(a) REGISTRATION.— 

20 ‘‘(1) IN GENERAL.—No person may operate a fa21 cility for the trading or processing of security-based 

22 swaps, unless the facility is registered as a security23 based swap execution facility or as a national securi24 ties exchange under this section. 
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1 ‘‘(2) DUAL REGISTRATION.—Any person that is 

2 registered as a security-based swap execution facility 

3 under this section shall register with the Commission 

4 regardless of whether the person also is registered with 

5 the Commodity Futures Trading Commission as a 

6 swap execution facility. 

7 ‘‘(b) TRADING AND TRADE PROCESSING.—A security8 based swap execution facility that is registered under sub9 section (a) may— 

10 ‘‘(1) make available for trading any security11 based swap; and 

12 ‘‘(2) facilitate trade processing of any security13 based swap. 

14 ‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE

15 SECURITY-BASED SWAPS BY NATIONAL SECURITIES EX16 CHANGES.—A national securities exchange shall, to the ex17 tent that the exchange also operates a security-based swap 

18 execution facility and uses the same electronic trade execu19 tion system for listing and executing trades of security20 based swaps on or through the exchange and the facility, 

21 identify whether electronic trading of such security-based 

22 swaps is taking place on or through the national securities 

23 exchange or the security-based swap execution facility. 

24 ‘‘(d) CORE PRINCIPLES FOR SECURITY-BASED SWAP

25 EXECUTION FACILITIES.— 
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1 ‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 

2 ‘‘(A) IN GENERAL.—To be registered, and 

3 maintain registration, as a security-based swap 

4 execution facility, the security-based swap execu5 tion facility shall comply with— 

6 ‘‘(i) the core principles described in 

7 this subsection; and 

8 ‘‘(ii) any requirement that the Com9 mission may impose by rule or regulation. 

10 ‘‘(B) REASONABLE DISCRETION OF SECU11 RITY-BASED SWAP EXECUTION FACILITY.—Unless 

12 otherwise determined by the Commission, by rule 

13 or regulation, a security-based swap execution 

14 facility described in subparagraph (A) shall have 

15 reasonable discretion in establishing the manner 

16 in which it complies with the core principles de17 scribed in this subsection. 

18 ‘‘(2) COMPLIANCE WITH RULES.—A security19 based swap execution facility shall— 

20 ‘‘(A) monitor and enforce compliance with 

21 any rule established by such security-based swap 

22 execution facility, including— 

23 ‘‘(i) the terms and conditions of the se24 curity-based swaps traded or processed on 

25 or through the facility; and 
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† HR 4173 EAS 

1 ‘‘(ii) any limitation on access to the 

2 facility; 

3 ‘‘(B) establish and enforce trading, trade 

4 processing, and participation rules that will 

5 deter abuses and have the capacity to detect, in6 vestigate, and enforce those rules, including 

7 means— 

8 ‘‘(i) to provide market participants 

9 with impartial access to the market; and 

10 ‘‘(ii) to capture information that may 

11 be used in establishing whether rule viola12 tions have occurred; and 

13 ‘‘(C) establish rules governing the operation 

14 of the facility, including rules specifying trading 

15 procedures to be used in entering and executing 

16 orders traded or posted on the facility, including 

17 block trades. 

18 ‘‘(3) SECURITY-BASED SWAPS NOT READILY SUS19 CEPTIBLE TO MANIPULATION.—The security-based 

20 swap execution facility shall permit trading only in 

21 security-based swaps that are not readily susceptible 

22 to manipulation. 

23 ‘‘(4) MONITORING OF TRADING AND TRADE PROC24 ESSING.—The security-based swap execution facility 

25 shall— 
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1 ‘‘(A) establish and enforce rules or terms 

2 and conditions defining, or specifications detail3 ing— 

4 ‘‘(i) trading procedures to be used in 

5 entering and executing orders traded on or 

6 through the facilities of the security-based 

7 swap execution facility; and 

8 ‘‘(ii) procedures for trade processing of 

9 security-based swaps on or through the fa10 cilities of the security-based swap execution 

11 facility; and 

12 ‘‘(B) monitor trading in security-based 

13 swaps to prevent manipulation, price distortion, 

14 and disruptions of the delivery or cash settlement 

15 process through surveillance, compliance, and 

16 disciplinary practices and procedures, including 

17 methods for conducting real-time monitoring of 

18 trading and comprehensive and accurate trade 

19 reconstructions. 

20 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—The se21 curity-based swap execution facility shall— 

22 ‘‘(A) establish and enforce rules that will 

23 allow the facility to obtain any necessary infor24 mation to perform any of the functions described 

25 in this subsection; 
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† HR 4173 EAS 

1 ‘‘(B) provide the information to the Com2 mission on request; and 

3 ‘‘(C) have the capacity to carry out such 

4 international information-sharing agreements as 

5 the Commission may require. 

6 ‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 

7 ‘‘(A) IN GENERAL.—To reduce the potential 

8 threat of market manipulation or congestion, es9 pecially during trading in the delivery month, a 

10 security-based swap execution facility that is a 

11 trading facility shall adopt for each of the con12 tracts of the facility, as is necessary and appro13 priate, position limitations or position account14 ability for speculators. 

15 ‘‘(B) POSITION LIMITS.—For any contract 

16 or agreement that is subject to a position limita17 tion established by the Commission pursuant to 

18 section 10B, the security-based swap execution 

19 facility shall set its position limitation at a level 

20 no higher than the limitation established by the 

21 Commission. 

22 ‘‘(C) POSITION ENFORCEMENT.—For any 

23 contract or agreement that is subject to a posi24 tion limitation established by the Commission 

25 pursuant to section 10B, a security-based swap 
816 

† HR 4173 EAS 

1 execution facility shall reject any proposed secu2 rity-based swap transaction if, based on infor3 mation readily available to a security-based 

4 swap execution facility, any proposed security5 based swap transaction would cause a security6 based swap execution facility customer that 

7 would be a party to such swap transaction to ex8 ceed such position limitation. 

9 ‘‘(7) FINANCIAL INTEGRITY OF TRANSACTIONS.— 

10 The security-based swap execution facility shall estab11 lish and enforce rules and procedures for ensuring the 

12 financial integrity of security-based swaps entered on 

13 or through the facilities of the security-based swap 

14 execution facility, including the clearance and settle15 ment of security-based swaps pursuant to section 

16 3C(a)(1). 

17 ‘‘(8) EMERGENCY AUTHORITY.—The security18 based swap execution facility shall adopt rules to pro19 vide for the exercise of emergency authority, in con20 sultation or cooperation with the Commission, as is 

21 necessary and appropriate, including the authority to 

22 liquidate or transfer open positions in any security23 based swap or to suspend or curtail trading in a se24 curity-based swap. 
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† HR 4173 EAS 

1 ‘‘(9) TIMELY PUBLICATION OF TRADING INFOR2 MATION.— 

3 ‘‘(A) IN GENERAL.—The security-based 

4 swap execution facility shall make public timely 

5 information on price, trading volume, and other 

6 trading data on security-based swaps to the ex7 tent prescribed by the Commission. 

8 ‘‘(B) CAPACITY OF SECURITY-BASED SWAP

9 EXECUTION FACILITY.—The security-based swap 

10 execution facility shall be required to have the 

11 capacity to electronically capture trade informa12 tion with respect to transactions executed on the 

13 facility. 

14 ‘‘(10) RECORDKEEPING AND REPORTING.— 

15 ‘‘(A) IN GENERAL.—A security-based swap 

16 execution facility shall— 

17 ‘‘(i) maintain records of all activities 

18 relating to the business of the facility, in19 cluding a complete audit trail, in a form 

20 and manner acceptable to the Commission 

21 for a period of 5 years; and 

22 ‘‘(ii) report to the Commission, in a 

23 form and manner acceptable to the Commis24 sion, such information as the Commission 

25 determines to be necessary or appropriate 
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† HR 4173 EAS 

1 for the Commission to perform the duties of 

2 the Commission under this title. 

3 ‘‘(B) REQUIREMENTS.—The Commission 

4 shall adopt data collection and reporting re5 quirements for security-based swap execution fa6 cilities that are comparable to corresponding re7 quirements for clearing agencies and security8 based swap data repositories. 

9 ‘‘(11) ANTITRUST CONSIDERATIONS.—Unless nec10 essary or appropriate to achieve the purposes of this 

11 title, the security-based swap execution facility shall 

12 not— 

13 ‘‘(A) adopt any rules or taking any actions 

14 that result in any unreasonable restraint of 

15 trade; or 

16 ‘‘(B) impose any material anticompetitive 

17 burden on trading or clearing. 

18 ‘‘(12) CONFLICTS OF INTEREST.—The security19 based swap execution facility shall— 

20 ‘‘(A) establish and enforce rules to minimize 

21 conflicts of interest in its decision-making proc22 ess; and 

23 ‘‘(B) establish a process for resolving the 

24 conflicts of interest. 

25 ‘‘(13) FINANCIAL RESOURCES.— 
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† HR 4173 EAS 

1 ‘‘(A) IN GENERAL.—The security-based 

2 swap execution facility shall have adequate fi3 nancial, operational, and managerial resources 

4 to discharge each responsibility of the security5 based swap execution facility, as determined by 

6 the Commission. 

7 ‘‘(B) DETERMINATION OF RESOURCE ADE8 QUACY.—The financial resources of a security9 based swap execution facility shall be considered 

10 to be adequate if the value of the financial re11 sources— 

12 ‘‘(i) enables the organization to meet 

13 its financial obligations to its members and 

14 participants notwithstanding a default by 

15 the member or participant creating the 

16 largest financial exposure for that organiza17 tion in extreme but plausible market condi18 tions; and 

19 ‘‘(ii) exceeds the total amount that 

20 would enable the security-based swap execu21 tion facility to cover the operating costs of 

22 the security-based swap execution facility 

23 for a 1-year period, as calculated on a roll24 ing basis. 
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† HR 4173 EAS 

1 ‘‘(14) SYSTEM SAFEGUARDS.—The security-based 

2 swap execution facility shall— 

3 ‘‘(A) establish and maintain a program of 

4 risk analysis and oversight to identify and mini5 mize sources of operational risk, through the de6 velopment of appropriate controls and proce7 dures, and automated systems, that— 

8 ‘‘(i) are reliable and secure; and 

9 ‘‘(ii) have adequate scalable capacity; 

10 ‘‘(B) establish and maintain emergency pro11 cedures, backup facilities, and a plan for disaster 

12 recovery that are designed to allow for— 

13 ‘‘(i) the timely recovery and resump14 tion of operations; and 

15 ‘‘(ii) the fulfillment of the responsibil16 ities and obligation of the security-based 

17 swap execution facility; and 

18 ‘‘(C) periodically conduct tests to verify that 

19 the backup resources of the security-based swap 

20 execution facility are sufficient to ensure contin21 ued— 

22 ‘‘(i) order processing and trade match23 ing; 

24 ‘‘(ii) price reporting; 

25 ‘‘(iii) market surveillance; and 
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† HR 4173 EAS 

1 ‘‘(iv) maintenance of a comprehensive 

2 and accurate audit trail. 

3 ‘‘(15) DESIGNATION OF CHIEF COMPLIANCE OFFI4 CER.— 

5 ‘‘(A) IN GENERAL.—Each security-based 

6 swap execution facility shall designate an indi7 vidual to serve as a chief compliance officer. 

8 ‘‘(B) DUTIES.—The chief compliance officer 

9 shall— 

10 ‘‘(i) report directly to the board or to 

11 the senior officer of the facility; 

12 ‘‘(ii) review compliance with the core 

13 principles in this subsection; 

14 ‘‘(iii) in consultation with the board of 

15 the facility, a body performing a function 

16 similar to that of a board, or the senior offi17 cer of the facility, resolve any conflicts of 

18 interest that may arise; 

19 ‘‘(iv) be responsible for establishing 

20 and administering the policies and proce21 dures required to be established pursuant to 

22 this section; 

23 ‘‘(v) ensure compliance with this title 

24 and the rules and regulations issued under 
822 

† HR 4173 EAS 

1 this title, including rules prescribed by the 

2 Commission pursuant to this section; 

3 ‘‘(vi) establish procedures for the reme4 diation of noncompliance issues found dur5 ing— 

6 ‘‘(I) compliance office reviews; 

7 ‘‘(II) look backs; 

8 ‘‘(III) internal or external audit 

9 findings; 

10 ‘‘(IV) self-reported errors; or 

11 ‘‘(V) through validated com12 plaints; and 

13 ‘‘(vii) establish and follow appropriate 

14 procedures for the handling, management 

15 response, remediation, retesting, and closing 

16 of noncompliance issues. 

17 ‘‘(C) ANNUAL REPORTS.— 

18 ‘‘(i) IN GENERAL.—In accordance with 

19 rules prescribed by the Commission, the 

20 chief compliance officer shall annually pre21 pare and sign a report that contains a de22 scription of— 

23 ‘‘(I) the compliance of the secu24 rity-based swap execution facility with 

25 this title; and 
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† HR 4173 EAS 

1 ‘‘(II) the policies and procedures, 

2 including the code of ethics and con3 flict of interest policies, of the security4 based security-based swap execution fa5 cility. 

6 ‘‘(ii) REQUIREMENTS.—The chief com7 pliance officer shall— 

8 ‘‘(I) submit each report described 

9 in clause (i) with the appropriate fi10 nancial report of the security-based 

11 swap execution facility that is required 

12 to be submitted to the Commission pur13 suant to this section; and 

14 ‘‘(II) include in the report a cer15 tification that, under penalty of law, 

16 the report is accurate and complete. 

17 ‘‘(e) EXEMPTIONS.—The Commission may exempt, 

18 conditionally or unconditionally, a security-based swap 

19 execution facility from registration under this section if the 

20 Commission finds that the facility is subject to comparable, 

21 comprehensive supervision and regulation on a consolidated 

22 basis by the Commodity Futures Trading Commission. 

23 ‘‘(f) RULES.—The Commission shall prescribe rules 

24 governing the regulation of security-based swap execution 

25 facilities under this section.’’. 
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† HR 4173 EAS 

1 (d) SEGREGATION OF ASSETS HELD AS COLLATERAL

2 IN SECURITY-BASED SWAP TRANSACTIONS.—The Securities 

3 Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended 

4 by inserting after section 3D (as added by subsection (b)) 

5 the following: 

6 ‘‘SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL 

7 IN SECURITY-BASED SWAP TRANSACTIONS. 

8 ‘‘(a) REGISTRATION REQUIREMENT.—It shall be un9 lawful for any person to accept any money, securities, or 

10 property (or to extend any credit in lieu of money, securi11 ties, or property) from, for, or on behalf of a security-based 

12 swaps customer or to margin, guarantee, or secure a secu13 rity-based swap cleared by or through a clearing agency 

14 (including money, securities, or property accruing to the 

15 customer as the result of such a security-based swap), unless 

16 the person shall have registered under this title with the 

17 Commission as a broker, dealer, or security-based swap 

18 dealer, and the registration shall not have expired nor been 

19 suspended nor revoked. 

20 ‘‘(b) CLEARED SECURITY-BASED SWAPS.— 

21 ‘‘(1) SEGREGATION REQUIRED.—A broker, deal22 er, or security-based swap dealer shall treat and deal 

23 with all money, securities, and property of any secu24 rity-based swaps customer received to margin, guar25 antee, or secure a security-based swap cleared by or 
825 

† HR 4173 EAS 

1 though a clearing agency (including money, securi2 ties, or property accruing to the security-based swaps 

3 customer as the result of such a security-based swap) 

4 as belonging to the security-based swaps customer. 

5 ‘‘(2) COMMINGLING PROHIBITED.—Money, secu6 rities, and property of a security-based swaps cus7 tomer described in paragraph (1) shall be separately 

8 accounted for and shall not be commingled with the 

9 funds of the broker, dealer, or security-based swap 

10 dealer or be used to margin, secure, or guarantee any 

11 trades or contracts of any security-based swaps cus12 tomer or person other than the person for whom the 

13 same are held. 

14 ‘‘(c) EXCEPTIONS.— 

15 ‘‘(1) USE OF FUNDS.— 

16 ‘‘(A) IN GENERAL.—Notwithstanding sub17 section (b), money, securities, and property of a 

18 security-based swaps customer of a broker, deal19 er, or security-based swap dealer described in 

20 subsection (b) may, for convenience, be commin21 gled and deposited in the same 1 or more ac22 counts with any bank or trust company or with 

23 a clearing agency. 

24 ‘‘(B) WITHDRAWAL.—Notwithstanding sub25 section (b), such share of the money, securities, 
826 

† HR 4173 EAS 

1 and property described in subparagraph (A) as 

2 in the normal course of business shall be nec3 essary to margin, guarantee, secure, transfer, ad4 just, or settle a cleared security-based swap with 

5 a clearing agency, or with any member of the 

6 clearing agency, may be withdrawn and applied 

7 to such purposes, including the payment of com8 missions, brokerage, interest, taxes, storage, and 

9 other charges, lawfully accruing in connection 

10 with the cleared security-based swap. 

11 ‘‘(2) COMMISSION ACTION.—Notwithstanding 

12 subsection (b), in accordance with such terms and 

13 conditions as the Commission may prescribe by rule, 

14 regulation, or order, any money, securities, or prop15 erty of the security-based swaps customer of a broker, 

16 dealer, or security-based swap dealer described in sub17 section (b) may be commingled and deposited as pro18 vided in this section with any other money, securities, 

19 or property received by the broker, dealer, or security20 based swap dealer and required by the Commission to 

21 be separately accounted for and treated and dealt 

22 with as belonging to the security-based swaps cus23 tomer of the broker, dealer, or security-based swap 

24 dealer. 
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† HR 4173 EAS 

1 ‘‘(d) PERMITTED INVESTMENTS.—Money described in 

2 subsection (b) may be invested in obligations of the United 

3 States, in general obligations of any State or of any polit4 ical subdivision of a State, and in obligations fully guaran5 teed as to principal and interest by the United States, or 

6 in any other investment that the Commission may by rule 

7 or regulation prescribe, and such investments shall be made 

8 in accordance with such rules and regulations and subject 

9 to such conditions as the Commission may prescribe. 

10 ‘‘(e) PROHIBITION.—It shall be unlawful for any per11 son, including any clearing agency and any depository in12 stitution, that has received any money, securities, or prop13 erty for deposit in a separate account or accounts as pro14 vided in subsection (b) to hold, dispose of, or use any such 

15 money, securities, or property as belonging to the depositing 

16 broker, dealer, or security-based swap dealer or any person 

17 other than the swaps customer of the broker, dealer, or secu18 rity-based swap dealer.’’. 

19 (e) TRADING IN SECURITY-BASED SWAPS.—Section 6 

20 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 

21 amended by adding at the end the following: 

22 ‘‘(l) SECURITY-BASED SWAPS.—It shall be unlawful 

23 for any person to effect a transaction in a security-based 

24 swap with or for a person that is not an eligible contract 

25 participant, unless such transaction is effected on a na-
828 

† HR 4173 EAS 

1 tional securities exchange registered pursuant to subsection 

2 (b).’’. 

3 (f) ADDITIONS OF SECURITY-BASED SWAPS TO CER4 TAIN ENFORCEMENT PROVISIONS.—Section 9(b) of the Se5 curities Exchange Act of 1934 (15 U.S.C. 78i(b)) is amend6 ed by striking paragraphs (1) through (3) and inserting 

7 the following: 

8 ‘‘(1) any transaction in connection with any se9 curity whereby any party to such transaction ac10 quires— 

11 ‘‘(A) any put, call, straddle, or other option 

12 or privilege of buying the security from or selling 

13 the security to another without being bound to do 

14 so; 

15 ‘‘(B) any security futures product on the se16 curity; or 

17 ‘‘(C) any security-based swap involving the 

18 security or the issuer of the security; 

19 ‘‘(2) any transaction in connection with any se20 curity with relation to which such person has, di21 rectly or indirectly, any interest in any— 

22 ‘‘(A) such put, call, straddle, option, or 

23 privilege; 

24 ‘‘(B) such security futures product; or 

25 ‘‘(C) such security-based swap; or 
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† HR 4173 EAS 

1 ‘‘(3) any transaction in any security for the ac2 count of any person who such person has reason to 

3 believe has, and who actually has, directly or indi4 rectly, any interest in any— 

5 ‘‘(A) such put, call, straddle, option, or 

6 privilege; 

7 ‘‘(B) such security futures product with re8 lation to such security; or 

9 ‘‘(C) any security-based swap involving 

10 such security or the issuer of such security.’’. 

11 (g) RULEMAKING AUTHORITY TO PREVENT FRAUD, 

12 MANIPULATION AND DECEPTIVE CONDUCT IN SECURITY13 BASED SWAPS.—Section 9 of the Securities Exchange Act 

14 of 1934 (15 U.S.C. 78i) is amended by adding at the end 

15 the following: 

16 ‘‘(j) It shall be unlawful for any person, directly or 

17 indirectly, by the use of any means or instrumentality of 

18 interstate commerce or of the mails, or of any facility of 

19 any national securities exchange, to effect any transaction 

20 in, or to induce or attempt to induce the purchase or sale 

21 of, any security-based swap, in connection with which such 

22 person engages in any fraudulent, deceptive, or manipula23 tive act or practice, makes any fictitious quotation, or en24 gages in any transaction, practice, or course of business 

25 which operates as a fraud or deceit upon any person. The 
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† HR 4173 EAS 

1 Commission shall, for the purposes of this subsection, by 

2 rules and regulations define, and prescribe means reason3 ably designed to prevent, such transactions, acts, practices, 

4 and courses of business as are fraudulent, deceptive, or ma5 nipulative, and such quotations as are fictitious.’’. 

6 (h) POSITION LIMITS AND POSITION ACCOUNTABILITY

7 FOR SECURITY-BASED SWAPS.—The Securities Exchange 

8 Act of 1934 is amended by inserting after section 10A (15 

9 U.S.C. 78j–1) the following: 

10 ‘‘SEC. 10B. POSITION LIMITS AND POSITION ACCOUNT11 ABILITY FOR SECURITY-BASED SWAPS AND 

12 LARGE TRADER REPORTING. 

13 ‘‘(a) POSITION LIMITS.—As a means reasonably de14 signed to prevent fraud and manipulation, the Commission 

15 shall, by rule or regulation, as necessary or appropriate in 

16 the public interest or for the protection of investors, estab17 lish limits (including related hedge exemption provisions) 

18 on the size of positions in any security-based swap that may 

19 be held by any person. In establishing such limits, the Com20 mission may require any person to aggregate positions in— 

21 ‘‘(1) any security-based swap and any security 

22 or loan or group of securities or loans on which such 

23 security-based swap is based, which such security24 based swap references, or to which such security-based 

25 swap is related as described in paragraph (68) of sec-
831 

† HR 4173 EAS 

1 tion 3(a), and any other instrument relating to such 

2 security or loan or group or index of securities or 

3 loans; or 

4 ‘‘(2) any security-based swap and— 

5 ‘‘(A) any security or group or index of secu6 rities, the price, yield, value, or volatility of 

7 which, or of which any interest therein, is the 

8 basis for a material term of such security-based 

9 swap as described in paragraph (68) of section 

10 3(a); and 

11 ‘‘(B) any other instrument relating to the 

12 same security or group or index of securities de13 scribed under subparagraph (A). 

14 ‘‘(b) EXEMPTIONS.—The Commission, by rule, regula15 tion, or order, may conditionally or unconditionally exempt 

16 any person or class of persons, any security-based swap or 

17 class of security-based swaps, or any transaction or class 

18 of transactions from any requirement the Commission may 

19 establish under this section with respect to position limits. 

20 ‘‘(c) SRO RULES.— 

21 ‘‘(1) IN GENERAL.—As a means reasonably de22 signed to prevent fraud or manipulation, the Com23 mission, by rule, regulation, or order, as necessary or 

24 appropriate in the public interest, for the protection 

25 of investors, or otherwise in furtherance of the pur-
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† HR 4173 EAS 

1 poses of this title, may direct a self-regulatory organi2 zation— 

3 ‘‘(A) to adopt rules regarding the size of po4 sitions in any security-based swap that may be 

5 held by— 

6 ‘‘(i) any member of such self-regulatory 

7 organization; or 

8 ‘‘(ii) any person for whom a member 

9 of such self-regulatory organization effects 

10 transactions in such security-based swap; 

11 and 

12 ‘‘(B) to adopt rules reasonably designed to 

13 ensure compliance with requirements prescribed 

14 by the Commission under this subsection. 

15 ‘‘(2) REQUIREMENT TO AGGREGATE POSI16 TIONS.—In establishing the limits under paragraph 

17 (1), the self-regulatory organization may require such 

18 member or person to aggregate positions in— 

19 ‘‘(A) any security-based swap and any secu20 rity or loan or group or narrow-based security 

21 narrow-based security index of securities or loans 

22 on which such security-based swap is based, 

23 which such security-based swap references, or to 

24 which such security-based swap is related as de25 scribed in section 3(a)(68), and any other in-
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† HR 4173 EAS 

1 strument relating to such security or loan or 

2 group or narrow-based security index of securi3 ties or loans; or 

4 ‘‘(B)(i) any security-based swap; and 

5 ‘‘(ii) any security-based swap and any 

6 other instrument relating to the same security or 

7 group or narrow-based security index of securi8 ties. 

9 ‘‘(d) LARGE TRADER REPORTING.—The Commission, 

10 by rule or regulation, may require any person that effects 

11 transactions for such person’s own account or the account 

12 of others in any securities-based swap or uncleared security13 based swap and any security or loan or group or narrow14 based security index of securities or loans as set forth in 

15 paragraphs (1) and (2) of subsection (a) under this section 

16 to report such information as the Commission may pre17 scribe regarding any position or positions in any security18 based swap or uncleared security-based swap and any secu19 rity or loan or group or narrow-based security index of se20 curities or loans and any other instrument relating to such 

21 security or loan or group or narrow-based security index 

22 of securities or loans as set forth in paragraphs (1) and 

23 (2) of subsection (a) under this section.’’. 

24 (i) PUBLIC REPORTING AND REPOSITORIES FOR SE25 CURITY-BASED SWAPS.—Section 13 of the Securities Ex-
834 

† HR 4173 EAS 

1 change Act of 1934 (15 U.S.C. 78m) is amended by adding 

2 at the end the following: 

3 ‘‘(m) PUBLIC AVAILABILITY OF SECURITY-BASED

4 SWAP TRANSACTION DATA.— 

5 ‘‘(1) IN GENERAL.— 

6 ‘‘(A) DEFINITION OF REAL-TIME PUBLIC RE7 PORTING.—In this paragraph, the term ‘real8 time public reporting’ means to report data re9 lating to a security-based swap transaction as 

10 soon as technologically practicable after the time 

11 at which the security-based swap transaction has 

12 been executed. 

13 ‘‘(B) PURPOSE.—The purpose of this section 

14 is to authorize the Commission to make security15 based swap transaction and pricing data avail16 able to the public in such form and at such times 

17 as the Commission determines appropriate to en18 hance price discovery. 

19 ‘‘(C) GENERAL RULE.—The Commission is 

20 authorized to provide by rule for the public 

21 availability of security-based swap transaction 

22 and pricing data as follows: 

23 ‘‘(i) With respect to those security24 based swaps that are subject to the manda25 tory clearing requirement described in sec-
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† HR 4173 EAS 

1 tion 3C(a)(1) (including those security2 based swaps that are exempted from the re3 quirement pursuant to section 3C(a)(10)), 

4 the Commission shall require real-time pub5 lic reporting for such transactions. 

6 ‘‘(ii) With respect to those security7 based swaps that are not subject to the man8 datory clearing requirement described in 

9 subsection section 3C(a)(1), but are cleared 

10 at a registered clearing agency, the Com11 mission shall require real-time public re12 porting for such transactions. 

13 ‘‘(iii) With respect to security-based 

14 swaps that are not cleared at a registered 

15 clearing agency and which are reported to 

16 a security-based swap data repository or the 

17 Commission under section 3C(a), the Com18 mission shall make available to the public, 

19 in a manner that does not disclose the busi20 ness transactions and market positions of 

21 any person, aggregate data on such secu22 rity-based swap trading volumes and posi23 tions. 

24 ‘‘(iv) With respect to security-based 

25 swaps that are exempt from the require-
836 

† HR 4173 EAS 

1 ments of section 3C(a)(1), but are subject to 

2 the requirements of section 3C(a)(8), the 

3 Commission shall require real-time public 

4 reporting for such transactions. 

5 ‘‘(D) REGISTERED ENTITIES AND PUBLIC

6 REPORTING.—The Commission may require reg7 istered entities to publicly disseminate the secu8 rity-based swap transaction and pricing data re9 quired to be reported under this paragraph. 

10 ‘‘(E) RULEMAKING REQUIRED.—With re11 spect to the rule providing for the public avail12 ability of transaction and pricing data for secu13 rity-based swaps described in clauses (i) and (ii) 

14 of subparagraph (C), the rule promulgated by the 

15 Commission shall contain provisions— 

16 ‘‘(i) to ensure such information does 

17 not identify the participants; 

18 ‘‘(ii) to specify the criteria for deter19 mining what constitutes a large notional se20 curity-based swap transaction (block trade) 

21 for particular markets and contracts; 

22 ‘‘(iii) to specify the appropriate time 

23 delay for reporting large notional security24 based swap transactions (block trades) to 

25 the public; and 
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† HR 4173 EAS 

1 ‘‘(iv) that take into account whether 

2 the public disclosure will materially reduce 

3 market liquidity. 

4 ‘‘(F) TIMELINESS OF REPORTING.—Parties 

5 to a security-based swap (including agents of the 

6 parties to a security-based swap) shall be respon7 sible for reporting security-based swap trans8 action information to the appropriate registered 

9 entity in a timely manner as may be prescribed 

10 by the Commission. 

11 ‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORT12 ING OF AGGREGATE SECURITY-BASED SWAP DATA.— 

13 ‘‘(A) IN GENERAL.—In accordance with 

14 subparagraph (B), the Commission shall issue a 

15 written report on a semiannual and annual 

16 basis to make available to the public information 

17 relating to— 

18 ‘‘(i) the trading and clearing in the 

19 major security-based swap categories; and 

20 ‘‘(ii) the market participants and de21 velopments in new products. 

22 ‘‘(B) USE; CONSULTATION.—In preparing a 

23 report under subparagraph (A), the Commission 

24 shall— 
838 

† HR 4173 EAS 

1 ‘‘(i) use information from security2 based swap data repositories and deriva3 tives clearing organizations; and 

4 ‘‘(ii) consult with the Office of the 

5 Comptroller of the Currency, the Bank for 

6 International Settlements, and such other 

7 regulatory bodies as may be necessary. 

8 ‘‘(n) SECURITY-BASED SWAP DATA REPOSITORIES.— 

9 ‘‘(1) REGISTRATION REQUIREMENT.—It shall be 

10 unlawful for any person, unless registered with the 

11 Commission, directly or indirectly, to make use of the 

12 mails or any means or instrumentality of interstate 

13 commerce to perform the functions of a security-based 

14 swap data repository. 

15 ‘‘(2) INSPECTION AND EXAMINATION.—Each reg16 istered security-based swap data repository shall be 

17 subject to inspection and examination by any rep18 resentative of the Commission. 

19 ‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.— 

20 ‘‘(A) IN GENERAL.—To be registered, and 

21 maintain registration, as a security-based swap 

22 data repository, the security-based swap data re23 pository shall comply with— 

24 ‘‘(i) the core principles described in 

25 this subsection; and 
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† HR 4173 EAS 

1 ‘‘(ii) any requirement that the Com2 mission may impose by rule or regulation. 

3 ‘‘(B) REASONABLE DISCRETION OF SECU4 RITY-BASED SWAP DATA REPOSITORY.—Unless 

5 otherwise determined by the Commission, by rule 

6 or regulation, a security-based swap data reposi7 tory described in subparagraph (A) shall have 

8 reasonable discretion in establishing the manner 

9 in which the security-based swap data repository 

10 complies with the core principles described in 

11 this subsection. 

12 ‘‘(4) STANDARD SETTING.— 

13 ‘‘(A) DATA IDENTIFICATION.—The Commis14 sion shall prescribe standards that specify the 

15 data elements for each security-based swap that 

16 shall be collected and maintained by each reg17 istered security-based swap data repository. 

18 ‘‘(B) DATA COLLECTION AND MAINTE19 NANCE.—The Commission shall prescribe data 

20 collection and data maintenance standards for 

21 security-based swap data repositories. 

22 ‘‘(C) COMPARABILITY.—The standards pre23 scribed by the Commission under this subsection 

24 shall be comparable to the data standards im25 posed by the Commission on clearing agencies in 
840 

† HR 4173 EAS 

1 connection with their clearing of security-based 

2 swaps. 

3 ‘‘(5) DUTIES.—A security-based swap data re4 pository shall— 

5 ‘‘(A) accept data prescribed by the Commis6 sion for each security-based swap under sub7 section (b); 

8 ‘‘(B) confirm with both counterparties to 

9 the security-based swap the accuracy of the data 

10 that was submitted; 

11 ‘‘(C) maintain the data described in sub12 paragraph (A) in such form, in such manner, 

13 and for such period as may be required by the 

14 Commission; 

15 ‘‘(D)(i) provide direct electronic access to 

16 the Commission (or any designee of the Commis17 sion, including another registered entity); and 

18 ‘‘(ii) provide the information described in 

19 subparagraph (A) in such form and at such fre20 quency as the Commission may require to com21 ply with the public reporting requirements set 

22 forth in subsection (m); 

23 ‘‘(E) at the direction of the Commission, es24 tablish automated systems for monitoring, 
841 

† HR 4173 EAS 

1 screening, and analyzing security-based swap 

2 data; 

3 ‘‘(F) maintain the privacy of any and all 

4 security-based swap transaction information that 

5 the security-based swap data repository receives 

6 from a security-based swap dealer, counterparty, 

7 or any other registered entity; and 

8 ‘‘(G) on a confidential basis pursuant to 

9 section 24, upon request, and after notifying the 

10 Commission of the request, make available all 

11 data obtained by the security-based swap data 

12 repository, including individual counterparty 

13 trade and position data, to— 

14 ‘‘(i) each appropriate prudential regu15 lator; 

16 ‘‘(ii) the Financial Stability Oversight 

17 Council; 

18 ‘‘(iii) the Commodity Futures Trading 

19 Commission; 

20 ‘‘(iv) the Department of Justice; and 

21 ‘‘(v) any other person that the Com22 mission determines to be appropriate, in23 cluding— 

24 ‘‘(I) foreign financial supervisors 

25 (including foreign futures authorities); 
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† HR 4173 EAS 

1 ‘‘(II) foreign central banks; and 

2 ‘‘(III) foreign ministries. 

3 ‘‘(H) CONFIDENTIALITY AND INDEMNIFICA4 TION AGREEMENT.—Before the security-based 

5 swap data repository may share information 

6 with any entity described in subparagraph 

7 (G)— 

8 ‘‘(i) the security-based swap data re9 pository shall receive a written agreement 

10 from each entity stating that the entity 

11 shall abide by the confidentiality require12 ments described in section 24 relating to the 

13 information on security-based swap trans14 actions that is provided; and 

15 ‘‘(ii) each entity shall agree to indem16 nify the security-based swap data repository 

17 and the Commission for any expenses aris18 ing from litigation relating to the informa19 tion provided under section 24. 

20 ‘‘(6) DESIGNATION OF CHIEF COMPLIANCE OFFI21 CER.— 

22 ‘‘(A) IN GENERAL.—Each security-based 

23 swap data repository shall designate an indi24 vidual to serve as a chief compliance officer. 
843 

† HR 4173 EAS 

1 ‘‘(B) DUTIES.—The chief compliance officer 

2 shall— 

3 ‘‘(i) report directly to the board or to 

4 the senior officer of the security-based swap 

5 data repository; 

6 ‘‘(ii) review the compliance of the secu7 rity-based swap data repository with re8 spect to the core principles described in 

9 paragraph (7); 

10 ‘‘(iii) in consultation with the board of 

11 the security-based swap data repository, a 

12 body performing a function similar to the 

13 board of the security-based swap data repos14 itory, or the senior officer of the security15 based swap data repository, resolve any 

16 conflicts of interest that may arise; 

17 ‘‘(iv) be responsible for administering 

18 each policy and procedure that is required 

19 to be established pursuant to this section; 

20 ‘‘(v) ensure compliance with this title 

21 (including regulations) relating to agree22 ments, contracts, or transactions, including 

23 each rule prescribed by the Commission 

24 under this section; 
844 

† HR 4173 EAS 

1 ‘‘(vi) establish procedures for the reme2 diation of noncompliance issues identified 

3 by the chief compliance officer through 

4 any— 

5 ‘‘(I) compliance office review; 

6 ‘‘(II) look-back; 

7 ‘‘(III) internal or external audit 

8 finding; 

9 ‘‘(IV) self-reported error; or 

10 ‘‘(V) validated complaint; and 

11 ‘‘(vii) establish and follow appropriate 

12 procedures for the handling, management 

13 response, remediation, retesting, and closing 

14 of noncompliance issues. 

15 ‘‘(C) ANNUAL REPORTS.— 

16 ‘‘(i) IN GENERAL.—In accordance with 

17 rules prescribed by the Commission, the 

18 chief compliance officer shall annually pre19 pare and sign a report that contains a de20 scription of— 

21 ‘‘(I) the compliance of the secu22 rity-based swap data repository of the 

23 chief compliance officer with respect to 

24 this title (including regulations); and 
845 

† HR 4173 EAS 

1 ‘‘(II) each policy and procedure of 

2 the security-based swap data repository 

3 of the chief compliance officer (includ4 ing the code of ethics and conflict of 

5 interest policies of the security-based 

6 swap data repository). 

7 ‘‘(ii) REQUIREMENTS.—A compliance 

8 report under clause (i) shall— 

9 ‘‘(I) accompany each appropriate 

10 financial report of the security-based 

11 swap data repository that is required 

12 to be furnished to the Commission pur13 suant to this section; and 

14 ‘‘(II) include a certification that, 

15 under penalty of law, the compliance 

16 report is accurate and complete. 

17 ‘‘(7) CORE PRINCIPLES APPLICABLE TO SECU18 RITY-BASED SWAP DATA REPOSITORIES.— 

19 ‘‘(A) ANTITRUST CONSIDERATIONS.—Unless 

20 necessary or appropriate to achieve the purposes 

21 of this title, the swap data repository shall not— 

22 ‘‘(i) adopt any rule or take any action 

23 that results in any unreasonable restraint of 

24 trade; or 
846 

† HR 4173 EAS 

1 ‘‘(ii) impose any material anticompeti2 tive burden on the trading, clearing, or re3 porting of transactions. 

4 ‘‘(B) GOVERNANCE ARRANGEMENTS.—Each 

5 security-based swap data repository shall estab6 lish governance arrangements that are trans7 parent— 

8 ‘‘(i) to fulfill public interest require9 ments; and 

10 ‘‘(ii) to support the objectives of the 

11 Federal Government, owners, and partici12 pants. 

13 ‘‘(C) CONFLICTS OF INTEREST.—Each secu14 rity-based swap data repository shall— 

15 ‘‘(i) establish and enforce rules to min16 imize conflicts of interest in the decision17 making process of the security-based swap 

18 data repository; and 

19 ‘‘(ii) establish a process for resolving 

20 any conflicts of interest described in clause 

21 (i). 

22 ‘‘(8) REQUIRED REGISTRATION FOR SECURITY23 BASED SWAP DATA REPOSITORIES.—Any person that 

24 is required to be registered as a security-based swap 

25 data repository under this subsection shall register 
847 

† HR 4173 EAS 

1 with the Commission, regardless of whether that per2 son is also licensed under the Commodity Exchange 

3 Act as a swap data repository. 

4 ‘‘(9) RULES.—The Commission shall adopt rules 

5 governing persons that are registered under this sub6 section.’’. 

7 SEC. 764. REGISTRATION AND REGULATION OF SECURITY8 BASED SWAP DEALERS AND MAJOR SECU9 RITY-BASED SWAP PARTICIPANTS. 

10 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

11 et seq.) is amended by inserting after section 15E (15 

12 U.S.C. 78o–7) the following: 

13 ‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY14 BASED SWAP DEALERS AND MAJOR SECU15 RITY-BASED SWAP PARTICIPANTS. 

16 ‘‘(a) REGISTRATION.— 

17 ‘‘(1) SECURITY-BASED SWAP DEALERS.—It shall 

18 be unlawful for any person to act as a security-based 

19 swap dealer unless the person is registered as a secu20 rity-based swap dealer with the Commission. 

21 ‘‘(2) MAJOR SECURITY-BASED SWAP PARTICI22 PANTS.—It shall be unlawful for any person to act as 

23 a major security-based swap participant unless the 

24 person is registered as a major security-based swap 

25 participant with the Commission. 
848 

† HR 4173 EAS 

1 ‘‘(b) REQUIREMENTS.— 

2 ‘‘(1) IN GENERAL.—A person shall register as a 

3 security-based swap dealer or major security-based 

4 swap participant by filing a registration application 

5 with the Commission. 

6 ‘‘(2) CONTENTS.— 

7 ‘‘(A) IN GENERAL.—The application shall 

8 be made in such form and manner as prescribed 

9 by the Commission, and shall contain such infor10 mation, as the Commission considers necessary 

11 concerning the business in which the applicant is 

12 or will be engaged. 

13 ‘‘(B) CONTINUAL REPORTING.—A person 

14 that is registered as a security-based swap dealer 

15 or major security-based swap participant shall 

16 continue to submit to the Commission reports 

17 that contain such information pertaining to the 

18 business of the person as the Commission may 

19 require. 

20 ‘‘(3) EXPIRATION.—Each registration under this 

21 section shall expire at such time as the Commission 

22 may prescribe by rule or regulation. 

23 ‘‘(4) RULES.—Except as provided in subsections 

24 (c), (e), and (f), the Commission may prescribe rules 

25 applicable to security-based swap dealers and major 
849 

† HR 4173 EAS 

1 security-based swap participants, including rules that 

2 limit the activities of non-bank security-based swap 

3 dealers and non-bank major security-based swap par4 ticipants. 

5 ‘‘(5) TRANSITION.—Not later than 1 year after 

6 the date of enactment of the Wall Street Transparency 

7 and Accountability Act of 2010, the Commission shall 

8 issue rules under this section to provide for the reg9 istration of security-based swap dealers and major se10 curity-based swap participants. 

11 ‘‘(6) STATUTORY DISQUALIFICATION.—Except to 

12 the extent otherwise specifically provided by rule, reg13 ulation, or order of the Commission, it shall be un14 lawful for a security-based swap dealer or a major se15 curity-based swap participant to permit any person 

16 associated with a security-based swap dealer or a 

17 major security-based swap participant who is subject 

18 to a statutory disqualification to effect or be involved 

19 in effecting security-based swaps on behalf of the secu20 rity-based swap dealer or major security-based swap 

21 participant, if the security-based swap dealer or 

22 major security-based swap participant knew, or in 

23 the exercise of reasonable care should have known, of 

24 the statutory disqualification. 

25 ‘‘(c) DUAL REGISTRATION.— 
850 

† HR 4173 EAS 

1 ‘‘(1) SECURITY-BASED SWAP DEALER.—Any per2 son that is required to be registered as a security3 based swap dealer under this section shall register 

4 with the Commission, regardless of whether the person 

5 also is registered with the Commodity Futures Trad6 ing Commission as a swap dealer. 

7 ‘‘(2) MAJOR SECURITY-BASED SWAP PARTICI8 PANT.—Any person that is required to be registered 

9 as a major security-based swap participant under 

10 this section shall register with the Commission, re11 gardless of whether the person also is registered with 

12 the Commodity Futures Trading Commission as a 

13 major swap participant. 

14 ‘‘(d) RULEMAKING.— 

15 ‘‘(1) IN GENERAL.—The Commission shall adopt 

16 rules for persons that are registered as security-based 

17 swap dealers or major security-based swap partici18 pants under this section. 

19 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE20 MENTS.— 

21 ‘‘(A) IN GENERAL.—The Commission may 

22 not prescribe rules imposing prudential require23 ments on security-based swap dealers or major 

24 security-based swap participants that are deposi25 tory institutions, as that term is defined in sec-
851 

† HR 4173 EAS 

1 tion 3 of the Federal Deposit Insurance Act (12 

2 U.S.C. 1813). 

3 ‘‘(B) APPLICABILITY.—Subparagraph (A) 

4 does not limit the authority of the Commission 

5 to prescribe appropriate business conduct, re6 porting, and recordkeeping requirements on secu7 rity-based swap dealers or major security-based 

8 swap participants that are depository institu9 tions to protect investors. 

10 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

11 ‘‘(1) IN GENERAL.— 

12 ‘‘(A) SECURITY-BASED SWAP DEALERS AND

13 MAJOR SECURITY-BASED SWAP PARTICIPANTS

14 THAT ARE DEPOSITORY INSTITUTIONS.—Each 

15 registered security-based swap dealer and major 

16 security-based swap participant that is a deposi17 tory institution, as that term is defined in sec18 tion 3 of the Federal Deposit Insurance Act (12 

19 U.S.C. 1813), shall meet such minimum capital 

20 requirements and minimum initial and vari21 ation margin requirements as the appropriate 

22 Federal banking agency shall by rule or regula23 tion prescribe under paragraph (2)(A) to help 

24 ensure the safety and soundness of the security- 
852 

† HR 4173 EAS 

1 based swap dealer or major security-based swap 

2 participant. 

3 ‘‘(B) SECURITY-BASED SWAP DEALERS AND

4 MAJOR SECURITY-BASED SWAP PARTICIPANTS

5 THAT ARE NOT DEPOSITORY INSTITUTIONS.— 

6 Each registered security-based swap dealer and 

7 major security-based swap participant that is 

8 not a depository institution, as that term is de9 fined in section 3 of the Federal Deposit Insur10 ance Act (12 U.S.C. 1813), shall meet such min11 imum capital requirements and minimum ini12 tial and variation margin requirements as the 

13 Commission shall by rule or regulation prescribe 

14 under paragraph (2)(B) to help ensure the safety 

15 and soundness of the security-based swap dealer 

16 or major security-based swap participant. 

17 ‘‘(2) RULES.— 

18 ‘‘(A) SECURITY-BASED SWAP DEALERS AND

19 MAJOR SECURITY-BASED SWAP PARTICIPANTS

20 THAT ARE DEPOSITORY INSTITUTIONS.—The ap21 propriate Federal banking agencies, in consulta22 tion with the Commission and the Commodity 

23 Futures Trading Commission, shall adopt rules 

24 imposing capital and margin requirements 

25 under this subsection for security-based swap 
853 

† HR 4173 EAS 

1 dealers and major security-based swap partici2 pants that are depository institutions, as that 

3 term is defined in section 3 of the Federal De4 posit Insurance Act (12 U.S.C. 1813). 

5 ‘‘(B) SECURITY-BASED SWAP DEALERS AND

6 MAJOR SECURITY-BASED SWAP PARTICIPANTS

7 THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 

8 Commission shall adopt rules imposing capital 

9 and margin requirements under this subsection 

10 for security-based swap dealers and major secu11 rity-based swap participants that are not deposi12 tory institutions, as that term is defined in sec13 tion 3 of the Federal Deposit Insurance Act (12 

14 U.S.C. 1813). 

15 ‘‘(3) CAPITAL.— 

16 ‘‘(A) SECURITY-BASED SWAP DEALERS AND

17 MAJOR SECURITY-BASED SWAP PARTICIPANTS

18 THAT ARE DEPOSITORY INSTITUTIONS.—The cap19 ital requirements prescribed under paragraph 

20 (2)(A) for security-based swap dealers and major 

21 security-based swap participants that are deposi22 tory institutions shall contain— 

23 ‘‘(i) a capital requirement that is 

24 greater than zero for security-based swaps 

25 that are cleared by a clearing agency; and 
854 

† HR 4173 EAS 

1 ‘‘(ii) to offset the greater risk to the se2 curity-based swap dealer or major security3 based swap participant and to the financial 

4 system arising from the use of security5 based swaps that are not cleared, substan6 tially higher capital requirements for secu7 rity-based swaps that are not cleared by a 

8 clearing agency than for security-based 

9 swaps that are cleared. 

10 ‘‘(B) SECURITY-BASED SWAP DEALERS AND

11 MAJOR SECURITY-BASED SWAP PARTICIPANTS

12 THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 

13 capital requirements prescribed under paragraph 

14 (2)(B) for security-based swap dealers and major 

15 security-based swap participants that are not de16 pository institutions shall be as strict as or 

17 stricter than the capital requirements prescribed 

18 for security-based swap dealers and major secu19 rity-based swap participants that are depository 

20 institutions under paragraph (2)(A). 

21 ‘‘(C) RULE OF CONSTRUCTION.— 

22 ‘‘(i) IN GENERAL.—Nothing in this sec23 tion shall limit, or be construed to limit, the 

24 authority— 
855 

† HR 4173 EAS 

1 ‘‘(I) of the Commission to set fi2 nancial responsibility rules for a 

3 broker or dealer registered pursuant to 

4 section 15(b) (except for section 

5 15(b)(11) thereof) in accordance with 

6 section 15(c)(3); or 

7 ‘‘(II) of the Commodity Futures 

8 Trading Commission to set financial 

9 responsibility rules for a futures com10 mission merchant or introducing 

11 broker registered pursuant to section 

12 4f(a) of the Commodity Exchange Act 

13 (except for section 4f(a)(3) thereof) in 

14 accordance with section 4f(b) of the 

15 Commodity Exchange Act. 

16 ‘‘(ii) FUTURES COMMISSION MER17 CHANTS AND OTHER DEALERS.—A futures 

18 commission merchant, introducing broker, 

19 broker, or dealer shall maintain sufficient 

20 capital to comply with the stricter of any 

21 applicable capital requirements to which 

22 such futures commission merchant, intro23 ducing broker, broker, or dealer is subject to 

24 under this title or the Commodity Exchange 

25 Act. 
856 

† HR 4173 EAS 

1 ‘‘(4) MARGIN.— 

2 ‘‘(A) SECURITY-BASED SWAP DEALERS AND

3 MAJOR SECURITY-BASED SWAP PARTICIPANTS

4 THAT ARE DEPOSITORY INSTITUTIONS.—The ap5 propriate Federal banking agency for security6 based swap dealers and major security-based 

7 swap participants that are depository institu8 tions shall impose both initial and variation 

9 margin requirements in accordance with para10 graph (2)(A) on all security-based swaps that 

11 are not cleared by a clearing agency. 

12 ‘‘(B) SECURITY-BASED SWAP DEALERS AND

13 MAJOR SECURITY-BASED SWAP PARTICIPANTS

14 THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 

15 Commission shall impose both initial and vari16 ation margin requirements in accordance with 

17 paragraph (2)(B) for security-based swap dealers 

18 and major security-based swap participants that 

19 are not depository institutions on all security20 based swaps that are not cleared by a clearing 

21 agency. Any such initial and variation margin 

22 requirements shall be as strict as or stricter than 

23 the margin requirements prescribed under para24 graph (4)(A). 
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† HR 4173 EAS 

1 ‘‘(5) MARGIN REQUIREMENTS.—In prescribing 

2 margin requirements under this subsection, the ap3 propriate Federal banking agency with respect to se4 curity-based swap dealers and major security-based 

5 swap participants that are depository institutions, 

6 and the Commission with respect to security-based 

7 swap dealers and major security-based swap partici8 pants that are not depository institutions may permit 

9 the use of noncash collateral, as the agency or the 

10 Commission determines to be consistent with— 

11 ‘‘(A) preserving the financial integrity of 

12 markets trading security-based swaps; and 

13 ‘‘(B) preserving the stability of the United 

14 States financial system. 

15 ‘‘(6) COMPARABILITY OF CAPITAL AND MARGIN

16 REQUIREMENTS.— 

17 ‘‘(A) IN GENERAL.—The appropriate Fed18 eral banking agencies, the Commission, and the 

19 Securities and Exchange Commission shall peri20 odically (but not less frequently than annually) 

21 consult on minimum capital requirements and 

22 minimum initial and variation margin require23 ments. 

24 ‘‘(B) COMPARABILITY.—The entities de25 scribed in subparagraph (A) shall, to the max-
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† HR 4173 EAS 

1 imum extent practicable, establish and maintain 

2 comparable minimum capital requirements and 

3 minimum initial and variation margin require4 ments, including the use of noncash collateral, 

5 for— 

6 ‘‘(i) security-based swap dealers; and 

7 ‘‘(ii) major security-based swap par8 ticipants. 

9 ‘‘(7) REQUESTED MARGIN.—If any party to a se10 curity-based swap that is exempt from the margin re11 quirements of paragraph (4)(A) or paragraph (4)(B) 

12 requests that such security-based swap be margined, 

13 then— 

14 ‘‘(A) the exemption shall not apply; and 

15 ‘‘(B) the counterparty to such security-based 

16 swap shall provide the requested margin. 

17 ‘‘(8) APPLICABILITY WITH RESPECT TO

18 COUNTERPARTIES.—Paragraphs (4) and (5) shall not 

19 apply to initial and variation margin for security20 based swaps in which 1 of the counterparties is not— 

21 ‘‘(A) a security-based swap dealer; 

22 ‘‘(B) a major security-based swap partici23 pant; or 

24 ‘‘(C) a financial entity as described in sec25 tion 3C(a)(10)(A)(ii), and such counterparty is 
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1 eligible for and utilizing the commercial end user 

2 clearing exemption under section 3C(a)(10). 

3 ‘‘(f) REPORTING AND RECORDKEEPING.— 

4 ‘‘(1) IN GENERAL.—Each registered security5 based swap dealer and major security-based swap 

6 participant— 

7 ‘‘(A) shall make such reports as are re8 quired by the Commission, by rule or regulation, 

9 regarding the transactions and positions and fi10 nancial condition of the registered security-based 

11 swap dealer or major security-based swap partic12 ipant; 

13 ‘‘(B)(i) for which there is a prudential regu14 lator, shall keep books and records of all activi15 ties related to the business as a security-based 

16 swap dealer or major security-based swap partic17 ipant in such form and manner and for such pe18 riod as may be prescribed by the Commission by 

19 rule or regulation; and 

20 ‘‘(ii) for which there is no prudential regu21 lator, shall keep books and records in such form 

22 and manner and for such period as may be pre23 scribed by the Commission by rule or regulation; 

24 and 
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† HR 4173 EAS 

1 ‘‘(C) shall keep books and records described 

2 in subparagraph (B) open to inspection and ex3 amination by any representative of the Commis4 sion. 

5 ‘‘(2) RULES.—The Commission shall adopt rules 

6 governing reporting and recordkeeping for security7 based swap dealers and major security-based swap 

8 participants. 

9 ‘‘(g) DAILY TRADING RECORDS.— 

10 ‘‘(1) IN GENERAL.—Each registered security11 based swap dealer and major security-based swap 

12 participant shall maintain daily trading records of 

13 the security-based swaps of the registered security14 based swap dealer and major security-based swap 

15 participant and all related records (including related 

16 cash or forward transactions) and recorded commu17 nications, including electronic mail, instant messages, 

18 and recordings of telephone calls, for such period as 

19 may be required by the Commission by rule or regula20 tion. 

21 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

22 trading records shall include such information as the 

23 Commission shall require by rule or regulation. 

24 ‘‘(3) CUSTOMER RECORDS.—Each registered se25 curity-based swap dealer and major security-based 
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† HR 4173 EAS 

1 swap participant shall maintain daily trading 

2 records for each customer or counterparty in a man3 ner and form that is identifiable with each security4 based swap transaction. 

5 ‘‘(4) AUDIT TRAIL.—Each registered security6 based swap dealer and major security-based swap 

7 participant shall maintain a complete audit trail for 

8 conducting comprehensive and accurate trade recon9 structions. 

10 ‘‘(5) RULES.—The Commission shall adopt rules 

11 governing daily trading records for security-based 

12 swap dealers and major security-based swap partici13 pants. 

14 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 

15 ‘‘(1) IN GENERAL.—Each registered security16 based swap dealer and major security-based swap 

17 participant shall conform with such business conduct 

18 standards as may be prescribed by the Commission, 

19 by rule or regulation, that relate to— 

20 ‘‘(A) fraud, manipulation, and other abu21 sive practices involving security-based swaps (in22 cluding security-based swaps that are offered but 

23 not entered into); 
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† HR 4173 EAS 

1 ‘‘(B) diligent supervision of the business of 

2 the registered security-based swap dealer and 

3 major security-based swap participant; 

4 ‘‘(C) adherence to all applicable position 

5 limits; and 

6 ‘‘(D) such other matters as the Commission 

7 determines to be appropriate. 

8 ‘‘(2) SPECIAL RULE; FIDUCIARY DUTIES TO CER9 TAIN ENTITIES.— 

10 ‘‘(A) GOVERNMENTAL ENTITIES.—A secu11 rity-based swap dealer that provides advice re12 garding, or offers to enter into, or enters into a 

13 security-based swap with a State, State agency, 

14 city, county, municipality, or other political sub15 division of a State, or a Federal agency shall 

16 have a fiduciary duty to the State, State agency, 

17 city, county, municipality, or other political sub18 division of the State, or the Federal agency, as 

19 appropriate. 

20 ‘‘(B) PENSION PLANS; ENDOWMENTS; RE21 TIREMENT PLANS.—A security-based swap dealer 

22 that provides advice regarding, or offers to enter 

23 into, or enters into a security-based swap with 

24 a pension plan, endowment, or retirement plan 
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† HR 4173 EAS 

1 shall have a fiduciary duty to the pension plan, 

2 endowment, or retirement plan, as appropriate. 

3 ‘‘(3) BUSINESS CONDUCT REQUIREMENTS.— 

4 Business conduct requirements adopted by the Com5 mission under this subsection shall— 

6 ‘‘(A) establish the standard of care for a se7 curity-based swap dealer or major security-based 

8 swap participant to verify that any 

9 counterparty meets the eligibility standards for 

10 an eligible contract participant; 

11 ‘‘(B) require disclosure by the security-based 

12 swap dealer or major security-based swap partic13 ipant to any counterparty to the transaction 

14 (other than a security-based swap dealer or a 

15 major security-based swap participant) of— 

16 ‘‘(i) information about the material 

17 risks and characteristics of the security18 based swap; 

19 ‘‘(ii) the source and amount of any fees 

20 or other material remuneration that the se21 curity-based swap dealer or major security22 based swap participant would directly or 

23 indirectly expect to receive in connection 

24 with the security-based swap; 
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† HR 4173 EAS 

1 ‘‘(iii) any other material incentives or 

2 conflicts of interest that the security-based 

3 swap dealer or major security-based swap 

4 participant may have in connection with 

5 the security-based swap; and 

6 ‘‘(iv)(I) for cleared security-based 

7 swaps, upon the request of the counterparty, 

8 the daily mark from the appropriate clear9 ing agency; and 

10 ‘‘(II) for uncleared security-based 

11 swaps, the daily mark of the security-based 

12 swap dealer or the major security-based 

13 swap participant; 

14 ‘‘(C) establish a standard of conduct for a 

15 security-based swap dealer or major security16 based swap participant to communicate in a 

17 fair and balanced manner based on principles of 

18 fair dealing and good faith; 

19 ‘‘(D) establish a standard of conduct for a 

20 security-based swap dealer or major security21 based swap participant, with respect to a 

22 counterparty that is an eligible contract partici23 pant within the meaning of subclause (I) or (II) 

24 of clause (vii) of section 1a(18) of the Com25 modity Exchange Act, to have a reasonable basis 
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† HR 4173 EAS 

1 to believe that the counterparty has an inde2 pendent representative that— 

3 ‘‘(i) has sufficient knowledge to evalu4 ate the transaction and risks; 

5 ‘‘(ii) is not subject to a statutory dis6 qualification; 

7 ‘‘(iii) is independent of the security8 based swap dealer or major security-based 

9 swap participant; 

10 ‘‘(iv) undertakes a duty to act in the 

11 best interests of the counterparty it rep12 resents; 

13 ‘‘(v) makes appropriate disclosures; 

14 and 

15 ‘‘(vi) will provide written representa16 tions to the eligible contract participant re17 garding fair pricing and the appropriate18 ness of the transaction; and 

19 ‘‘(E) establish such other standards and re20 quirements as the Commission may determine 

21 are appropriate in the public interest, for the 

22 protection of investors, or otherwise in further23 ance of the purposes of this title. 

24 ‘‘(4) RULES.—The Commission shall prescribe 

25 rules under this subsection governing business conduct 
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† HR 4173 EAS 

1 standards for security-based swap dealers and major 

2 security-based swap 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 such standards as 

8 may be prescribed by the Commission, by rule or reg9 ulation, that relate to timely and accurate confirma10 tion, processing, netting, documentation, and valu11 ation of all security-based swaps. 

12 ‘‘(2) RULES.—The Commission shall adopt rules 

13 governing documentation and back office standards 

14 for security-based swap dealers and major security15 based swap participants. 

16 ‘‘(j) DUTIES.—Each registered security-based swap 

17 dealer and major security-based swap participant shall, at 

18 all times, comply with the following requirements: 

19 ‘‘(1) MONITORING OF TRADING.—The security20 based swap dealer or major security-based swap par21 ticipant shall monitor its trading in security-based 

22 swaps to prevent violations of applicable position 

23 limits. 

24 ‘‘(2) RISK MANAGEMENT PROCEDURES.—The se25 curity-based swap dealer or major security-based 
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† HR 4173 EAS 

1 swap participant shall establish robust and profes2 sional risk management systems adequate for man3 aging the day-to-day business of the security-based 

4 swap dealer or major security-based swap partici5 pant. 

6 ‘‘(3) DISCLOSURE OF GENERAL INFORMATION.— 

7 The security-based swap dealer or major security8 based swap participant shall disclose to the Commis9 sion and to the prudential regulator for the security10 based swap dealer or major security-based swap par11 ticipant, as applicable, information concerning— 

12 ‘‘(A) terms and conditions of its security13 based swaps; 

14 ‘‘(B) security-based swap trading oper15 ations, mechanisms, and practices; 

16 ‘‘(C) financial integrity protections relating 

17 to security-based swaps; and 

18 ‘‘(D) other information relevant to its trad19 ing in security-based swaps. 

20 ‘‘(4) ABILITY TO OBTAIN INFORMATION.—The se21 curity-based swap dealer or major security-based 

22 swap participant shall— 

23 ‘‘(A) establish and enforce internal systems 

24 and procedures to obtain any necessary informa-
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† HR 4173 EAS 

1 tion to perform any of the functions described in 

2 this section; and 

3 ‘‘(B) provide the information to the Com4 mission and to the prudential regulator for the 

5 security-based swap dealer or major security6 based swap participant, as applicable, on re7 quest. 

8 ‘‘(5) 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 ensure that the activities of any 

14 person within the firm relating to research or 

15 analysis of the price or market for any security16 based swap or acting in a role of providing 

17 clearing activities or making determinations as 

18 to accepting clearing customers are separated by 

19 appropriate informational partitions within the 

20 firm from the review, pressure, or oversight of 

21 persons whose involvement in pricing, trading, 

22 or clearing activities might potentially bias their 

23 judgment or supervision and contravene the core 

24 principles of open access and the business con25 duct standards described in this title; and 
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† HR 4173 EAS 

1 ‘‘(B) address such other issues as the Com2 mission determines to be appropriate. 

3 ‘‘(6) ANTITRUST CONSIDERATIONS.—Unless nec4 essary or appropriate to achieve the purposes of this 

5 title, the security-based swap dealer or major secu6 rity-based swap participant shall not— 

7 ‘‘(A) adopt any process or take any action 

8 that results in any unreasonable restraint of 

9 trade; or 

10 ‘‘(B) impose any material anticompetitive 

11 burden on trading or clearing. 

12 ‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFI13 CER.— 

14 ‘‘(1) IN GENERAL.—Each security-based swap 

15 dealer and major security-based swap participant 

16 shall designate an individual to serve as a chief com17 pliance officer. 

18 ‘‘(2) DUTIES.—The chief compliance officer 

19 shall— 

20 ‘‘(A) report directly to the board or to the 

21 senior officer of the security-based swap dealer or 

22 major security-based swap participant; 

23 ‘‘(B) review the compliance of the security24 based swap dealer or major security-based swap 

25 participant with respect to the security-based 
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† HR 4173 EAS 

1 swap dealer and major security-based swap par2 ticipant requirements described in this section; 

3 ‘‘(C) in consultation with the board of di4 rectors, a body performing a function similar to 

5 the board, or the senior officer of the organiza6 tion, resolve any conflicts of interest that may 

7 arise; 

8 ‘‘(D) be responsible for administering each 

9 policy and procedure that is required to be estab10 lished pursuant to this section; 

11 ‘‘(E) ensure compliance with this title (in12 cluding regulations) relating to security-based 

13 swaps, including each rule prescribed by the 

14 Commission under this section; 

15 ‘‘(F) establish procedures for the remedi16 ation of noncompliance issues identified by the 

17 chief compliance officer through any— 

18 ‘‘(i) compliance office review; 

19 ‘‘(ii) look-back; 

20 ‘‘(iii) internal or external audit find21 ing; 

22 ‘‘(iv) self-reported error; or 

23 ‘‘(v) validated complaint; and 

24 ‘‘(G) establish and follow appropriate proce25 dures for the handling, management response, re-
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† HR 4173 EAS 

1 mediation, retesting, and closing of noncompli2 ance issues. 

3 ‘‘(3) ANNUAL REPORTS.— 

4 ‘‘(A) IN GENERAL.—In accordance with 

5 rules prescribed by the Commission, the chief 

6 compliance officer shall annually prepare and 

7 sign a report that contains a description of— 

8 ‘‘(i) the compliance of the security9 based swap dealer or major swap partici10 pant with respect to this title (including 

11 regulations); and 

12 ‘‘(ii) each policy and procedure of the 

13 security-based swap dealer or major secu14 rity-based swap participant of the chief 

15 compliance officer (including the code of 

16 ethics and conflict of interest policies). 

17 ‘‘(B) REQUIREMENTS.—A compliance re18 port under subparagraph (A) shall— 

19 ‘‘(i) accompany each appropriate fi20 nancial report of the security-based swap 

21 dealer or major security-based swap partici22 pant that is required to be furnished to the 

23 Commission pursuant to this section; and 
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† HR 4173 EAS 

1 ‘‘(ii) include a certification that, under 

2 penalty of law, the compliance report is ac3 curate and complete. 

4 ‘‘(l) ENFORCEMENT AND ADMINISTRATIVE PRO5 CEEDING AUTHORITY.— 

6 ‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.— 

7 ‘‘(A) SECURITIES AND EXCHANGE COMMIS8 SION.—Except as provided in subparagraph (B), 

9 the Commission shall have primary authority to 

10 enforce subtitle B, and the amendments made by 

11 subtitle B of the Wall Street Transparency and 

12 Accountability Act of 2010, with respect to any 

13 person. 

14 ‘‘(B) APPROPRIATE FEDERAL BANKING

15 AGENCIES.—The appropriate Federal banking 

16 agency for security-based swap dealers or major 

17 security-based swap participants that are deposi18 tory institutions, as that term is defined under 

19 section 3 of the Federal Deposit Insurance Act 

20 (12 U.S.C. 1813), shall have exclusive authority 

21 to enforce the provisions of subsection (e) and 

22 other prudential requirements of this title, with 

23 respect to depository institutions that are secu24 rity-based swap dealers or major security-based 

25 swap participants. 
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† HR 4173 EAS 

1 ‘‘(C) REFERRAL.— 

2 ‘‘(i) VIOLATIONS OF NONPRUDENTIAL

3 REQUIREMENTS.—If the appropriate Fed4 eral banking agency for security-based swap 

5 dealers or major security-based swap par6 ticipants that are depository institutions 

7 has cause to believe that such security-based 

8 swap dealer or major security-based swap 

9 participant may have engaged in conduct 

10 that constitutes a violation of the non11 prudential requirements of this section or 

12 rules adopted by the Commission there13 under, the agency may recommend in writ14 ing to the Commission that the Commission 

15 initiate an enforcement proceeding as au16 thorized under this title. The recommenda17 tion shall be accompanied by a written ex18 planation of the concerns giving rise to the 

19 recommendation. 

20 ‘‘(ii) VIOLATIONS OF PRUDENTIAL RE21 QUIREMENTS.—If the Commission has cause 

22 to believe that a securities-based swap deal23 er or major securities-based swap partici24 pant that has a prudential regulator may 

25 have engaged in conduct that constitute a 
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† HR 4173 EAS 

1 violation of the prudential requirements of 

2 subsection (e) or rules adopted thereunder, 

3 the Commission may recommend in writing 

4 to the prudential regulator that the pruden5 tial regulator initiate an enforcement pro6 ceeding as authorized under this title. The 

7 recommendation shall be accompanied by a 

8 written explanation of the concerns giving 

9 rise to the recommendation. 

10 ‘‘(2) CENSURE, DENIAL, SUSPENSION; NOTICE

11 AND HEARING.—The Commission, by order, shall cen12 sure, place limitations on the activities, functions, or 

13 operations of, or revoke the registration of any secu14 rity-based swap dealer or major security-based swap 

15 participant that has registered with the Commission 

16 pursuant to subsection (b) if the Commission finds, 

17 on the record after notice and opportunity for hear18 ing, that such censure, placing of limitations, or rev19 ocation is in the public interest and that such secu20 rity-based swap dealer or major security-based swap 

21 participant, or any person associated with such secu22 rity-based swap dealer or major security-based swap 

23 participant effecting or involved in effecting trans24 actions in security-based swaps on behalf of such secu25 rity-based swap dealer or major security-based swap 
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† HR 4173 EAS 

1 participant, whether prior or subsequent to becoming 

2 so associated— 

3 ‘‘(A) has committed or omitted any act, or 

4 is subject to an order or finding, enumerated in 

5 subparagraph (A), (D), or (E) of paragraph (4) 

6 of section 15(b); 

7 ‘‘(B) has been convicted of any offense speci8 fied in subparagraph (B) of such paragraph (4) 

9 within 10 years of the commencement of the pro10 ceedings under this subsection; 

11 ‘‘(C) is enjoined from any action, conduct, 

12 or practice specified in subparagraph (C) of such 

13 paragraph (4); 

14 ‘‘(D) is subject to an order or a final order 

15 specified in subparagraph (F) or (H), respec16 tively, of such paragraph (4); or 

17 ‘‘(E) has been found by a foreign financial 

18 regulatory authority to have committed or omit19 ted any act, or violated any foreign statute or 

20 regulation, enumerated in subparagraph (G) of 

21 such paragraph (4). 

22 ‘‘(3) ASSOCIATED PERSONS.—With respect to 

23 any person who is associated, who is seeking to be24 come associated, or, at the time of the alleged mis25 conduct, who was associated or was seeking to become 
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1 associated with a security-based swap dealer or major 

2 security-based swap participant for the purpose of ef3 fecting or being involved in effecting security-based 

4 swaps on behalf of such security-based swap dealer or 

5 major security-based swap participant, the Commis6 sion, by order, shall censure, place limitations on the 

7 activities or functions of such person, or suspend for 

8 a period not exceeding 12 months, or bar such person 

9 from being associated with a security-based swap 

10 dealer or major security-based swap participant, if 

11 the Commission finds, on the record after notice and 

12 opportunity for a hearing, that such censure, placing 

13 of limitations, suspension, or bar is in the public in14 terest and that such person— 

15 ‘‘(A) has committed or omitted any act, or 

16 is subject to an order or finding, enumerated in 

17 subparagraph (A), (D), or (E) of paragraph (4) 

18 of section 15(b); 

19 ‘‘(B) has been convicted of any offense speci20 fied in subparagraph (B) of such paragraph (4) 

21 within 10 years of the commencement of the pro22 ceedings under this subsection; 

23 ‘‘(C) is enjoined from any action, conduct, 

24 or practice specified in subparagraph (C) of such 

25 paragraph (4); 
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† HR 4173 EAS 

1 ‘‘(D) is subject to an order or a final order 

2 specified in subparagraph (F) or (H), respec3 tively, of such paragraph (4); or 

4 ‘‘(E) has been found by a foreign financial 

5 regulatory authority to have committed or omit6 ted any act, or violated any foreign statute or 

7 regulation, enumerated in subparagraph (G) of 

8 such paragraph (4). 

9 ‘‘(4) UNLAWFUL CONDUCT.—It shall be unlaw10 ful— 

11 ‘‘(A) for any person as to whom an order 

12 under paragraph (3) is in effect, without the 

13 consent of the Commission, willfully to become, 

14 or to be, associated with a security-based swap 

15 dealer or major security-based swap participant 

16 in contravention of such order; or 

17 ‘‘(B) for any security-based swap dealer or 

18 major security-based swap participant to permit 

19 such a person, without the consent of the Com20 mission, to become or remain a person associated 

21 with the security-based swap dealer or major se22 curity-based swap participant in contravention 

23 of such order, if such security-based swap dealer 

24 or major security-based swap participant knew, 
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† HR 4173 EAS 

1 or in the exercise of reasonable care should have 

2 known, of such order.’’. 

3 SEC. 765. RULEMAKING ON CONFLICT OF INTEREST. 

4 (a) IN GENERAL.—Not later than 180 days after the 

5 date of enactment of the Wall Street Transparency and Ac6 countability Act of 2010, the Securities and Exchange Com7 mission shall determine whether to adopt rules to establish 

8 limits on the control of any clearing agency that clears secu9 rity-based swaps, or on the control of any security-based 

10 swap execution facility or national securities exchange that 

11 posts or makes available for trading security-based swaps, 

12 by a bank holding company (as defined in section 2 of the 

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

14 with total consolidated assets of $50,000,000,000 or more, 

15 a nonbank financial company (as defined in section 102) 

16 supervised by the Board of Governors of the Federal Reserve 

17 System, affiliate of such a bank holding company or 

18 nonbank financial company, a security-based swap dealer, 

19 major security-based swap participant, or person associated 

20 with a security-based swap dealer or major security-based 

21 swap participant. 

22 (b) PURPOSES.—The Commission shall adopt rules if 

23 the Commission determines, after the review described in 

24 subsection (a), that such rules are necessary or appropriate 

25 to improve the governance of, or to mitigate systemic risk, 
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1 promote competition, or mitigate conflicts of interest in 

2 connection with a security-based swap dealer or major secu3 rity-based swap participant’s conduct of business with, a 

4 clearing agency, national securities exchange, or security5 based swap execution facility that clears, posts, or makes 

6 available for trading security-based swaps and in which 

7 such security-based swap dealer or major security-based 

8 swap participant has a material debt or equity investment. 

9 SEC. 766. REPORTING AND RECORDKEEPING. 

10 (a) IN GENERAL.—The Securities Exchange Act of 

11 1934 (15 U.S.C. 78a et seq.) is amended by inserting after 

12 section 13 the following: 

13 ‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN 

14 SECURITY-BASED SWAPS. 

15 ‘‘(a) REQUIRED REPORTING OF SECURITY-BASED

16 SWAPS NOT ACCEPTED BY ANY CLEARING AGENCY OR DE17 RIVATIVES CLEARING ORGANIZATION.— 

18 ‘‘(1) IN GENERAL.—Each security-based swap 

19 that is not accepted for clearing by any clearing 

20 agency or derivatives clearing organization shall be 

21 reported to— 

22 ‘‘(A) a security-based swap data repository 

23 described in section 10B(n); or 

24 ‘‘(B) in the case in which there is no secu25 rity-based swap data repository that would ac-
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† HR 4173 EAS 

1 cept the security-based swap, to the Commission 

2 pursuant to this section within such time period 

3 as the Commission may by rule or regulation 

4 prescribe. 

5 ‘‘(2) TRANSITION RULE FOR PREENACTMENT SE6 CURITY-BASED SWAPS.— 

7 ‘‘(A) SECURITY-BASED SWAPS ENTERED

8 INTO BEFORE THE DATE OF ENACTMENT OF THE

9 WALL STREET TRANSPARENCY AND ACCOUNT10 ABILITY ACT OF 2010.—Each security-based swap 

11 entered into before the date of enactment of the 

12 Wall Street Transparency and Accountability 

13 Act of 2010, the terms of which have not expired 

14 as of the date of enactment of that Act, shall be 

15 reported to a registered security-based swap data 

16 repository or the Commission by a date that is 

17 not later than— 

18 ‘‘(i) 30 days after issuance of the in19 terim final rule; or 

20 ‘‘(ii) such other period as the Commis21 sion determines to be appropriate. 

22 ‘‘(B) COMMISSION RULEMAKING.—The Com23 mission shall promulgate an interim final rule 

24 within 90 days of the date of enactment of this 

25 section providing for the reporting of each secu-
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1 rity-based swap entered into before the date of 

2 enactment as referenced in subparagraph (A). 

3 ‘‘(C) EFFECTIVE DATE.—The reporting pro4 visions described in this section shall be effective 

5 upon the date of the enactment of this section. 

6 ‘‘(3) REPORTING OBLIGATIONS.— 

7 ‘‘(A) SECURITY-BASED SWAPS IN WHICH

8 ONLY 1 COUNTERPARTY IS A SECURITY-BASED

9 SWAP DEALER OR MAJOR SECURITY-BASED SWAP

10 PARTICIPANT.—With respect to a security-based 

11 swap in which only 1 counterparty is a security12 based swap dealer or major security-based swap 

13 participant, the security-based swap dealer or 

14 major security-based swap participant shall re15 port the security-based swap as required under 

16 paragraphs (1) and (2). 

17 ‘‘(B) SECURITY-BASED SWAPS IN WHICH 1

18 COUNTERPARTY IS A SECURITY-BASED SWAP

19 DEALER AND THE OTHER A MAJOR SECURITY20 BASED SWAP PARTICIPANT.—With respect to a 

21 security-based swap in which 1 counterparty is 

22 a security-based swap dealer and the other a 

23 major security-based swap participant, the secu24 rity-based swap dealer shall report the security- 
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† HR 4173 EAS 

1 based swap as required under paragraphs (1) 

2 and (2). 

3 ‘‘(C) OTHER SECURITY-BASED SWAPS.— 

4 With respect to any other security-based swap 

5 not described in subparagraph (A) or (B), the 

6 counterparties to the security-based swap shall 

7 select a counterparty to report the security-based 

8 swap as required under paragraphs (1) and (2). 

9 ‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any indi10 vidual or entity that enters into a security-based swap shall 

11 meet each requirement described in subsection (c) if the in12 dividual or entity did not— 

13 ‘‘(1) clear the security-based swap in accordance 

14 with section 3C(a)(1); or 

15 ‘‘(2) have the data regarding the security-based 

16 swap accepted by a security-based swap data reposi17 tory in accordance with rules (including timeframes) 

18 adopted by the Commission under this title. 

19 ‘‘(c) REQUIREMENTS.—An individual or entity de20 scribed in subsection (b) shall— 

21 ‘‘(1) upon written request from the Commission, 

22 provide reports regarding the security-based swaps 

23 held by the individual or entity to the Commission in 

24 such form and in such manner as the Commission 

25 may request; and 
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1 ‘‘(2) maintain books and records pertaining to 

2 the security-based swaps held by the individual or en3 tity in such form, in such manner, and for such pe4 riod as the Commission may require, which shall be 

5 open to inspection by— 

6 ‘‘(A) any representative of the Commission; 

7 ‘‘(B) an appropriate prudential regulator; 

8 ‘‘(C) the Commodity Futures Trading Com9 mission; 

10 ‘‘(D) the Financial Stability Oversight 

11 Council; and 

12 ‘‘(E) the Department of Justice. 

13 ‘‘(d) IDENTICAL DATA.—In prescribing rules under 

14 this section, the Commission shall require individuals and 

15 entities described in subsection (b) to submit to the Commis16 sion a report that contains data that is not less comprehen17 sive than the data required to be collected by security-based 

18 swap data repositories under this title.’’. 

19 (b) BENEFICIAL OWNERSHIP REPORTING.—Section 13 

20 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 

21 is amended— 

22 (1) in subsection (d)(1), by inserting ‘‘or other23 wise becomes or is deemed to become a beneficial 

24 owner of any of the foregoing upon the purchase or 

25 sale of a security-based swap that the Commission 
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1 may define by rule, and’’ after ‘‘Alaska Native Claims 

2 Settlement Act,’’; and 

3 (2) in subsection (g)(1), by inserting ‘‘or other4 wise becomes or is deemed to become a beneficial 

5 owner of any security of a class described in sub6 section (d)(1) upon the purchase or sale of a security7 based swap that the Commission may define by rule’’ 

8 after ‘‘subsection (d)(1) of this section’’. 

9 (c) REPORTS BY INSTITUTIONAL INVESTMENT MAN10 AGERS.—Section 13(f)(1) of the Securities Exchange Act of 

11 1934 (15 U.S.C. 78m(f)(1)) is amended by inserting ‘‘or 

12 otherwise becomes or is deemed to become a beneficial owner 

13 of any security of a class described in subsection (d)(1) 

14 upon the purchase or sale of a security-based swap that the 

15 Commission may define by rule,’’ after ‘‘subsection (d)(1) 

16 of this section’’. 

17 (d) ADMINISTRATIVE PROCEEDING AUTHORITY.—Sec18 tion 15(b)(4) of the Securities Exchange Act of 1934 (15 

19 U.S.C. 78o(b)(4)) is amended— 

20 (1) in subparagraph (C), by inserting ‘‘security21 based swap dealer, major security-based swap partici22 pant,’’ after ‘‘government securities dealer,’’; and 

23 (2) in subparagraph (F), by striking ‘‘broker or 

24 dealer’’ and inserting ‘‘broker, dealer, security-based 
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1 swap dealer, or a major security-based swap partici2 pant’’. 

3 (e) SECURITY-BASED SWAP BENEFICIAL OWNER4 SHIP.—Section 13 of the Securities Exchange Act of 1934 

5 (15 U.S.C. 78m) is amended by adding at the end the fol6 lowing: 

7 ‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this 

8 section and section 16, a person shall be deemed to acquire 

9 beneficial ownership of an equity security based on the pur10 chase or sale of a security-based swap, only to the extent 

11 that the Commission, by rule, determines after consultation 

12 with the prudential regulators and the Secretary of the 

13 Treasury, that the purchase or sale of the security-based 

14 swap, or class of security-based swap, provides incidents of 

15 ownership comparable to direct ownership of the equity se16 curity, and that it is necessary to achieve the purposes of 

17 this section that the purchase or sale of the security-based 

18 swaps, or class of security-based swap, be deemed the acqui19 sition of beneficial ownership of the equity security.’’. 

20 SEC. 767. STATE GAMING AND BUCKET SHOP LAWS. 

21 Section 28(a) of the Securities Exchange Act of 1934 

22 (15 U.S.C. 78bb(a)) is amended to read as follows: 

23 ‘‘(a) LIMITATION ON JUDGMENTS.— 

24 ‘‘(1) IN GENERAL.—No person permitted to 

25 maintain a suit for damages under the provisions of 
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1 this title shall recover, through satisfaction of judg2 ment in 1 or more actions, a total amount in excess 

3 of the actual damages to that person on account of the 

4 act complained of. Except as otherwise specifically 

5 provided in this title, nothing in this title shall affect 

6 the jurisdiction of the securities commission (or any 

7 agency or officer performing like functions) of any 

8 State over any security or any person insofar as it 

9 does not conflict with the provisions of this title or the 

10 rules and regulations under this title. 

11 ‘‘(2) RULE OF CONSTRUCTION.—Except as pro12 vided in subsection (f), the rights and remedies pro13 vided by this title shall be in addition to any and all 

14 other rights and remedies that may exist at law or in 

15 equity. 

16 ‘‘(3) STATE BUCKET SHOP LAWS.—No State law 

17 which prohibits or regulates the making or promoting 

18 of wagering or gaming contracts, or the operation of 

19 ‘bucket shops’ or other similar or related activities, 

20 shall invalidate— 

21 ‘‘(A) any put, call, straddle, option, privi22 lege, or other security subject to this title (except 

23 any security that has a pari-mutuel payout or 

24 otherwise is determined by the Commission, act25 ing by rule, regulation, or order, to be appro-
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1 priately subject to such laws), or apply to any 

2 activity which is incidental or related to the 

3 offer, purchase, sale, exercise, settlement, or close4 out of any such security; 

5 ‘‘(B) any security-based swap between eligi6 ble contract participants; or 

7 ‘‘(C) any security-based swap effected on a 

8 national securities exchange registered pursuant 

9 to section 6(b). 

10 ‘‘(4) OTHER STATE PROVISIONS.—No provision 

11 of State law regarding the offer, sale, or distribution 

12 of securities shall apply to any transaction in a secu13 rity-based swap or a security futures product, except 

14 that this paragraph may not be construed as limiting 

15 any State antifraud law of general applicability. A 

16 security-based swap may not be regulated as an in17 surance contract under any provision of State law.’’. 

18 SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; 

19 TREATMENT OF SECURITY-BASED SWAPS. 

20 (a) DEFINITIONS.—Section 2(a) of the Securities Act 

21 of 1933 (15 U.S.C. 77b(a)) is amended— 

22 (1) in paragraph (1), by inserting ‘‘security23 based swap,’’ after ‘‘security future,’’; 

24 (2) in paragraph (3), by adding at the end the 

25 following: ‘‘Any offer or sale of a security-based swap 
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1 by or on behalf of the issuer of the securities upon 

2 which such security-based swap is based or is ref3 erenced, an affiliate of the issuer, or an underwriter, 

4 shall constitute a contract for sale of, sale of, offer for 

5 sale, or offer to sell such securities.’’; and 

6 (3) by adding at the end the following: 

7 ‘‘(17) The terms ‘swap’ and ‘security-based swap’ 

8 have the same meanings as in section 1a of the Com9 modity Exchange Act (7 U.S.C. 1a). 

10 ‘‘(18) The terms ‘purchase’ or ‘sale’ of a security11 based swap shall be deemed to mean the execution, 

12 termination (prior to its scheduled maturity date), 

13 assignment, exchange, or similar transfer or convey14 ance of, or extinguishing of rights or obligations 

15 under, a security-based swap, as the context may re16 quire.’’. 

17 (b) REGISTRATION OF SECURITY-BASED SWAPS.—Sec18 tion 5 of the Securities Act of 1933 (15 U.S.C. 77e) is 

19 amended by adding at the end the following: 

20 ‘‘(d) Notwithstanding the provisions of section 3 or 4, 

21 unless a registration statement meeting the requirements of 

22 section 10(a) is in effect as to a security-based swap, it shall 

23 be unlawful for any person, directly or indirectly, to make 

24 use of any means or instruments of transportation or com25 munication in interstate commerce or of the mails to offer 
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1 to sell, offer to buy or purchase or sell a security-based swap 

2 to any person who is not an eligible contract participant 

3 as defined in section 1a(18) of the Commodity Exchange 

4 Act (7 U.S.C. 1a(18)).’’. 

5 SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY 

6 ACT OF 1940. 

7 Section 2(a) of the Investment Company Act of 1940 

8 (15 U.S.C. 80a–2) is amended by adding at the end the 

9 following: 

10 ‘‘(54) The terms ‘commodity pool’, ‘commodity 

11 pool operator’, ‘commodity trading advisor’, ‘major 

12 swap participant’, ‘swap’, ‘swap dealer’, and ‘swap 

13 execution facility’ have the same meanings as in sec14 tion 1a of the Commodity Exchange Act (7 U.S.C. 

15 1a).’’. 

16 SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVI17 SORS ACT OF 1940. 

18 Section 202(a) of the Investment Advisers Act of 1940 

19 (15 U.S.C. 80b–2) is amended by adding at the end the 

20 following: 

21 ‘‘(29) The terms ‘commodity pool’, ‘commodity 

22 pool operator’, ‘commodity trading advisor’, ‘major 

23 swap participant’, ‘swap’, ‘swap dealer’, and ‘swap 

24 execution facility’ have the same meanings as in sec-
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1 tion 1a of the Commodity Exchange Act (7 U.S.C. 

2 1a).’’. 

3 SEC. 771. OTHER AUTHORITY. 

4 Unless otherwise provided by its terms, this subtitle 

5 does not divest any appropriate Federal banking agency, 

6 the Securities and Exchange Commission, the Commodity 

7 Futures Trading Commission, or any other Federal or State 

8 agency, of any authority derived from any other provision 

9 of applicable law. 

10 SEC. 772. JURISDICTION. 

11 (a) IN GENERAL.—Section 36 of the Securities Ex12 change Act of 1934 (15 U.S.C. 78mm) is amended by add13 ing at the end the following: 

14 ‘‘(c) DERIVATIVES.—The Commission shall not grant 

15 exemptions from the security-based swap provisions of the 

16 Wall Street Transparency and Accountability Act of 2010 

17 or the amendments made by that Act, except as expressly 

18 authorized under the provisions of that Act.’’. 

19 (b) RULE OF CONSTRUCTION.—Section 30 of the Secu20 rities Exchange Act of 1934 (15 U.S.C. 78dd) is amended 

21 by adding at the end the following: 

22 ‘‘(c) RULE OF CONSTRUCTION.—No provision of this 

23 title that was added by the Wall Street Transparency and 

24 Accountability Act of 2010, or any rule or regulation there25 under, shall apply to any person insofar as such person 
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1 transacts a business in security-based swaps without the ju2 risdiction of the United States, unless such person transacts 

3 such business in contravention of such rules and regulations 

4 as the Commission may prescribe as necessary or appro5 priate to prevent the evasion of any provision of this title 

6 that was added by the Wall Street Transparency and Ac7 countability Act of 2010. This subsection shall not be con8 strued to limit the jurisdiction of the Commission under 

9 any provision of this title, as in effect prior to the date 

10 of enactment of the Wall Street Transparency and Account11 ability Act of 2010.’’. 

12 SEC. 773. EFFECTIVE DATE. 

13 Unless otherwise specifically provided in this subtitle, 

14 this subtitle, the provisions of this subtitle, and the amend15 ments made by this subtitle shall become effective 180 days 

16 after the date of enactment of this Act. 

17 TITLE VIII—PAYMENT, CLEAR18 ING, AND SETTLEMENT SU19 PERVISION 

20 SEC. 801. SHORT TITLE. 

21 This title may be cited as the ‘‘Payment, Clearing, and 

22 Settlement Supervision Act of 2010’’. 

23 SEC. 802. FINDINGS AND PURPOSES. 

24 (a) FINDINGS.—Congress finds the following: 
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1 (1) The proper functioning of the financial mar2 kets is dependent upon safe and efficient arrange3 ments for the clearing and settlement of payment, se4 curities, and other financial transactions. 

5 (2) Financial market utilities that conduct or 

6 support multilateral payment, clearing, or settlement 

7 activities may reduce risks for their participants and 

8 the broader financial system, but such utilities may 

9 also concentrate and create new risks and thus must 

10 be well designed and operated in a safe and sound 

11 manner. 

12 (3) Payment, clearing, and settlement activities 

13 conducted by financial institutions also present im14 portant risks to the participating financial institu15 tions and to the financial system. 

16 (4) Enhancements to the regulation and super17 vision of systemically important financial market 

18 utilities and the conduct of systemically important 

19 payment, clearing, and settlement activities by finan20 cial institutions are necessary— 

21 (A) to provide consistency; 

22 (B) to promote robust risk management and 

23 safety and soundness; 

24 (C) to reduce systemic risks; and 
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1 (D) to support the stability of the broader 

2 financial system. 

3 (b) PURPOSE.—The purpose of this title is to mitigate 

4 systemic risk in the financial system and promote financial 

5 stability by— 

6 (1) authorizing the Board of Governors to pre7 scribe uniform standards for the— 

8 (A) management of risks by systemically 

9 important financial market utilities; and 

10 (B) conduct of systemically important pay11 ment, clearing, and settlement activities by fi12 nancial institutions; 

13 (2) providing the Board of Governors an en14 hanced role in the supervision of risk management 

15 standards for systemically important financial mar16 ket utilities; 

17 (3) strengthening the liquidity of systemically 

18 important financial market utilities; and 

19 (4) providing the Board of Governors an en20 hanced role in the supervision of risk management 

21 standards for systemically important payment, clear22 ing, and settlement activities by financial institu23 tions. 

24 SEC. 803. DEFINITIONS. 

25 In this title, the following definitions shall apply: 
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1 (1) APPROPRIATE FINANCIAL REGULATOR.—The 

2 term ‘‘appropriate financial regulator’’ means— 

3 (A) the primary financial regulatory agen4 cy, as defined in section 2 of this Act; 

5 (B) the National Credit Union Administra6 tion, with respect to any insured credit union 

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

8 1751 et seq.); and 

9 (C) the Board of Governors, with respect to 

10 organizations operating under section 25A of the 

11 Federal Reserve Act (12 U.S.C. 611), and any 

12 other financial institution engaged in a des13 ignated activity. 

14 (2) DESIGNATED ACTIVITY.—The term ‘‘des15 ignated activity’’ means a payment, clearing, or set16 tlement activity that the Council has designated as 

17 systemically important under section 804. 

18 (3) DESIGNATED FINANCIAL MARKET UTILITY.— 

19 The term ‘‘designated financial market utility’’ means 

20 a financial market utility that the Council has des21 ignated as systemically important under section 804. 

22 (4) FINANCIAL INSTITUTION.—The term ‘‘finan23 cial institution’’ means— 
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1 (A) a depository institution, as defined in 

2 section 3 of the Federal Deposit Insurance Act 

3 (12 U.S.C. 1813); 

4 (B) a branch or agency of a foreign bank, 

5 as defined in section 1(b) of the International 

6 Banking Act of 1978 (12 U.S.C. 3101); 

7 (C) an organization operating under section 

8 25 or 25A of the Federal Reserve Act (12 U.S.C. 

9 601–604a and 611 through 631); 

10 (D) a credit union, as defined in section 

11 101 of the Federal Credit Union Act (12 U.S.C. 

12 1752); 

13 (E) a broker or dealer, as defined in section 

14 3 of the Securities Exchange Act of 1934 (15 

15 U.S.C. 78c); 

16 (F) an investment company, as defined in 

17 section 3 of the Investment Company Act of 1940 

18 (15 U.S.C. 80a–3); 

19 (G) an insurance company, as defined in 

20 section 2 of the Investment Company Act of 1940 

21 (15 U.S.C. 80a–2); 

22 (H) an investment adviser, as defined in 

23 section 202 of the Investment Advisers Act of 

24 1940 (15 U.S.C. 80b–2); 
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1 (I) a futures commission merchant, com2 modity trading advisor, or commodity pool oper3 ator, as defined in section 1a of the Commodity 

4 Exchange Act (7 U.S.C. 1a); and 

5 (J) any company engaged in activities that 

6 are financial in nature or incidental to a finan7 cial activity, as described in section 4 of the 

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

9 1843(k)). 

10 (5) FINANCIAL MARKET UTILITY.—The term ‘‘fi11 nancial market utility’’ means any person that man12 ages or operates a multilateral system for the purpose 

13 of transferring, clearing, or settling payments, securi14 ties, or other financial transactions among financial 

15 institutions or between financial institutions and the 

16 person. 

17 (6) PAYMENT, CLEARING, OR SETTLEMENT ACTIV18 ITY.— 

19 (A) IN GENERAL.—The term ‘‘payment, 

20 clearing, or settlement activity’’ means an activ21 ity carried out by 1 or more financial institu22 tions to facilitate the completion of financial 

23 transactions. 
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1 (B) FINANCIAL TRANSACTION.—For the 

2 purposes of subparagraph (A), the term ‘‘finan3 cial transaction’’ includes— 

4 (i) funds transfers; 

5 (ii) securities contracts; 

6 (iii) contracts of sale of a commodity 

7 for future delivery; 

8 (iv) forward contracts; 

9 (v) repurchase agreements; 

10 (vi) swaps; 

11 (vii) security-based swaps; 

12 (viii) swap agreements; 

13 (ix) security-based swap agreements; 

14 (x) foreign exchange contracts; 

15 (xi) financial derivatives contracts; 

16 and 

17 (xii) any similar transaction that the 

18 Council determines to be a financial trans19 action for purposes of this title. 

20 (C) INCLUDED ACTIVITIES.—When con21 ducted with respect to a financial transaction, 

22 payment, clearing, and settlement activities may 

23 include— 
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1 (i) the calculation and communication 

2 of unsettled financial transactions between 

3 counterparties; 

4 (ii) the netting of transactions; 

5 (iii) provision and maintenance of 

6 trade, contract, or instrument information; 

7 (iv) the management of risks and ac8 tivities associated with continuing financial 

9 transactions; 

10 (v) transmittal and storage of payment 

11 instructions; 

12 (vi) the movement of funds; 

13 (vii) the final settlement of financial 

14 transactions; and 

15 (viii) other similar functions that the 

16 Council may determine. 

17 (7) SUPERVISORY AGENCY.— 

18 (A) IN GENERAL.—The term ‘‘Supervisory 

19 Agency’’ means the Federal agency that has pri20 mary jurisdiction over a designated financial 

21 market utility under Federal banking, securities, 

22 or commodity futures laws, as follows: 

23 (i) The Securities and Exchange Com24 mission, with respect to a designated finan25 cial market utility that is a clearing agency 
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1 registered with the Securities and Exchange 

2 Commission. 

3 (ii) The Commodity Futures Trading 

4 Commission, with respect to a designated fi5 nancial market utility that is a derivatives 

6 clearing organization registered with the 

7 Commodity Futures Trading Commission. 

8 (iii) The appropriate Federal banking 

9 agency, with respect to a designated finan10 cial market utility that is an institution de11 scribed in section 3(q) of the Federal De12 posit Insurance Act. 

13 (iv) The Board of Governors, with re14 spect to a designated financial market util15 ity that is otherwise not subject to the juris16 diction of any agency listed in clauses (i), 

17 (ii), and (iii). 

18 (B) MULTIPLE AGENCY JURISDICTION.—If a 

19 designated financial market utility is subject to 

20 the jurisdictional supervision of more than 1 

21 agency listed in subparagraph (A), then such 

22 agencies should agree on 1 agency to act as the 

23 Supervisory Agency, and if such agencies cannot 

24 agree on which agency has primary jurisdiction, 
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1 the Council shall decide which agency is the Su2 pervisory Agency for purposes of this title. 

3 (8) SYSTEMICALLY IMPORTANT AND SYSTEMIC

4 IMPORTANCE.—The terms ‘‘systemically important’’ 

5 and ‘‘systemic importance’’ mean a situation where 

6 the failure of or a disruption to the functioning of a 

7 financial market utility or the conduct of a payment, 

8 clearing, or settlement activity could create, or in9 crease, the risk of significant liquidity or credit prob10 lems spreading among financial institutions or mar11 kets and thereby threaten the stability of the financial 

12 system. 

13 SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE. 

14 (a) DESIGNATION.— 

15 (1) FINANCIAL STABILITY OVERSIGHT COUN16 CIL.—The Council, on a nondelegable basis and by a 

vote of not fewer than 2 17 ⁄3 of members then serving, in18 cluding an affirmative vote by the Chairperson of the 

19 Council, shall designate those financial market utili20 ties or payment, clearing, or settlement activities that 

21 the Council determines are, or are likely to become, 

22 systemically important. 

23 (2) CONSIDERATIONS.—In determining whether 

24 a financial market utility or payment, clearing, or 

25 settlement activity is, or is likely to become, system-
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1 ically important, the Council shall take into consider2 ation the following: 

3 (A) The aggregate monetary value of trans4 actions processed by the financial market utility 

5 or carried out through the payment, clearing, or 

6 settlement activity. 

7 (B) The aggregate exposure of the financial 

8 market utility or a financial institution engaged 

9 in payment, clearing, or settlement activities to 

10 its counterparties. 

11 (C) The relationship, interdependencies, or 

12 other interactions of the financial market utility 

13 or payment, clearing, or settlement activity with 

14 other financial market utilities or payment, 

15 clearing, or settlement activities. 

16 (D) The effect that the failure of or a dis17 ruption to the financial market utility or pay18 ment, clearing, or settlement activity would have 

19 on critical markets, financial institutions, or the 

20 broader financial system. 

21 (E) Any other factors that the Council 

22 deems appropriate. 

23 (b) RESCISSION OF DESIGNATION.— 

24 (1) IN GENERAL.—The Council, on a nondelegable basis and by a vote of not fewer than 2 25 ⁄3 of 
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1 members then serving, including an affirmative vote 

2 by the Chairperson of the Council, shall rescind a des3 ignation of systemic importance for a designated fi4 nancial market utility or designated activity if the 

5 Council determines that the utility or activity no 

6 longer meets the standards for systemic importance. 

7 (2) EFFECT OF RESCISSION.—Upon rescission, 

8 the financial market utility or financial institutions 

9 conducting the activity will no longer be subject to the 

10 provisions of this title or any rules or orders pre11 scribed by the Council under this title. 

12 (c) CONSULTATION AND NOTICE AND OPPORTUNITY

13 FOR HEARING.— 

14 (1) CONSULTATION.—Before making any deter15 mination under subsection (a) or (b), the Council 

16 shall consult with the relevant Supervisory Agency 

17 and the Board of Governors. 

18 (2) ADVANCE NOTICE AND OPPORTUNITY FOR

19 HEARING.— 

20 (A) IN GENERAL.—Before making any de21 termination under subsection (a) or (b), the 

22 Council shall provide the financial market util23 ity or, in the case of a payment, clearing, or set24 tlement activity, financial institutions with ad-
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1 vance notice of the proposed determination of the 

2 Council. 

3 (B) NOTICE IN FEDERAL REGISTER.—The 

4 Council shall provide such advance notice to fi5 nancial institutions by publishing a notice in 

6 the Federal Register. 

7 (C) REQUESTS FOR HEARING.—Within 30 

8 days from the date of any notice of the proposed 

9 determination of the Council, the financial mar10 ket utility or, in the case of a payment, clearing, 

11 or settlement activity, a financial institution en12 gaged in the designated activity may request, in 

13 writing, an opportunity for a written or oral 

14 hearing before the Council to demonstrate that 

15 the proposed designation or rescission of designa16 tion is not supported by substantial evidence. 

17 (D) WRITTEN SUBMISSIONS.—Upon receipt 

18 of a timely request, the Council shall fix a time, 

19 not more than 30 days after receipt of the re20 quest, unless extended at the request of the finan21 cial market utility or financial institution, and 

22 place at which the financial market utility or fi23 nancial institution may appear, personally or 

24 through counsel, to submit written materials, or, 
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1 at the sole discretion of the Council, oral testi2 mony or oral argument. 

3 (3) EMERGENCY EXCEPTION.— 

4 (A) WAIVER OR MODIFICATION BY VOTE OF

5 THE COUNCIL.—The Council may waive or mod6 ify the requirements of paragraph (2) if the 

7 Council determines, by an affirmative vote of not 

less than 2 8 ⁄3 of all members then serving, includ9 ing an affirmative vote by the Chairperson of the 

10 Council, that the waiver or modification is nec11 essary to prevent or mitigate an immediate 

12 threat to the financial system posed by the finan13 cial market utility or the payment, clearing, or 

14 settlement activity. 

15 (B) NOTICE OF WAIVER OR MODIFICA16 TION.—The Council shall provide notice of the 

17 waiver or modification to the financial market 

18 utility concerned or, in the case of a payment, 

19 clearing, or settlement activity, to financial in20 stitutions, as soon as practicable, which shall be 

21 no later than 24 hours after the waiver or modi22 fication in the case of a financial market utility 

23 and 3 business days in the case of financial in24 stitutions. The Council shall provide the notice to 

25 financial institutions by posting a notice on the 
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1 website of the Council and by publishing a notice 

2 in the Federal Register. 

3 (d) NOTIFICATION OF FINAL DETERMINATION.— 

4 (1) AFTER HEARING.—Within 60 days of any 

5 hearing under subsection (c)(3), the Council shall no6 tify the financial market utility or financial institu7 tions of the final determination of the Council in 

8 writing, which shall include findings of fact upon 

9 which the determination of the Council is based. 

10 (2) WHEN NO HEARING REQUESTED.—If the 

11 Council does not receive a timely request for a hear12 ing under subsection (c)(3), the Council shall notify 

13 the financial market utility or financial institutions 

14 of the final determination of the Council in writing 

15 not later than 30 days after the expiration of the date 

16 by which a financial market utility or a financial in17 stitution could have requested a hearing. All notices 

18 to financial institutions under this subsection shall be 

19 published in the Federal Register. 

20 (e) EXTENSION OF TIME PERIODS.—The Council may 

21 extend the time periods established in subsections (c) and 

22 (d) as the Council determines to be necessary or appro23 priate. 
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1 SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FI2 NANCIAL MARKET UTILITIES AND PAYMENT, 

3 CLEARING, OR SETTLEMENT ACTIVITIES. 

4 (a) AUTHORITY TO PRESCRIBE STANDARDS.—The 

5 Board, by rule or order, and in consultation with the Coun6 cil and the Supervisory Agencies, shall prescribe risk man7 agement standards, taking into consideration relevant 

8 international standards and existing prudential require9 ments, governing— 

10 (1) the operations related to the payment, clear11 ing, and settlement activities of designated financial 

12 market utilities; and 

13 (2) the conduct of designated activities by finan14 cial institutions. 

15 (b) OBJECTIVES AND PRINCIPLES.—The objectives and 

16 principles for the risk management standards prescribed 

17 under subsection (a) shall be to— 

18 (1) promote robust risk management; 

19 (2) promote safety and soundness; 

20 (3) reduce systemic risks; and 

21 (4) support the stability of the broader financial 

22 system. 

23 (c) SCOPE.—The standards prescribed under sub24 section (a) may address areas such as— 

25 (1) risk management policies and procedures; 

26 (2) margin and collateral requirements; 
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1 (3) participant or counterparty default policies 

2 and procedures; 

3 (4) the ability to complete timely clearing and 

4 settlement of financial transactions; 

5 (5) capital and financial resource requirements 

6 for designated financial market utilities; and 

7 (6) other areas that the Board determines are 

8 necessary to achieve the objectives and principles in 

9 subsection (b). 

10 (d) THRESHOLD LEVEL.—The standards prescribed 

11 under subsection (a) governing the conduct of designated 

12 activities by financial institutions shall, where appropriate, 

13 establish a threshold as to the level or significance of engage14 ment in the activity at which a financial institution will 

15 become subject to the standards with respect to that activity. 

16 (e) COMPLIANCE REQUIRED.—Designated financial 

17 market utilities and financial institutions subject to the 

18 standards prescribed by the Board of Governors for a des19 ignated activity shall conduct their operations in compli20 ance with the applicable risk management standards pre21 scribed by the Board of Governors. 

22 SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MAR23 KET UTILITIES. 

24 (a) FEDERAL RESERVE ACCOUNT AND SERVICES.— 

25 The Board of Governors may authorize a Federal Reserve 
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1 Bank to establish and maintain an account for a designated 

2 financial market utility and provide services to the des3 ignated financial market utility that the Federal Reserve 

4 Bank is authorized under the Federal Reserve Act to pro5 vide to a depository institution, subject to any applicable 

6 rules, orders, standards, or guidelines prescribed by the 

7 Board of Governors. 

8 (b) ADVANCES.—The Board of Governors may author9 ize a Federal Reserve Bank to provide to a designated fi10 nancial market utility the same discount and borrowing 

11 privileges as the Federal Reserve Bank may provide to a 

12 depository institution under the Federal Reserve Act, sub13 ject to any applicable rules, orders, standards, or guidelines 

14 prescribed by the Board of Governors. 

15 (c) EARNINGS ON FEDERAL RESERVE BALANCES.—A 

16 Federal Reserve Bank may pay earnings on balances main17 tained by or on behalf of a designated financial market util18 ity in the same manner and to the same extent as the Fed19 eral Reserve Bank may pay earnings to a depository insti20 tution under the Federal Reserve Act, subject to any appli21 cable rules, orders, standards, or guidelines prescribed by 

22 the Board of Governors. 

23 (d) RESERVE REQUIREMENTS.—The Board of Gov24 ernors may exempt a designated financial market utility 

25 from, or modify any, reserve requirements under section 19 
909 

† HR 4173 EAS 

1 of the Federal Reserve Act (12 U.S.C. 461) applicable to 

2 a designated financial market utility. 

3 (e) CHANGES TO RULES, PROCEDURES, OR OPER4 ATIONS.— 

5 (1) ADVANCE NOTICE.— 

6 (A) ADVANCE NOTICE OF PROPOSED

7 CHANGES REQUIRED.—A designated financial 

8 market utility shall provide notice 60 days in 

9 advance advance notice to its Supervisory Agen10 cy and the Board of Governors of any proposed 

11 change to its rules, procedures, or operations that 

12 could, as defined in rules of the Board of Gov13 ernors, materially affect, the nature or level of 

14 risks presented by the designated financial mar15 ket utility. 

16 (B) TERMS AND STANDARDS PRESCRIBED

17 BY THE BOARD OF GOVERNORS.—The Board of 

18 Governors shall prescribe regulations that define 

19 and describe the standards for determining when 

20 notice is required to be provided under subpara21 graph (A). 

22 (C) CONTENTS OF NOTICE.—The notice of a 

23 proposed change shall describe— 

24 (i) the nature of the change and ex25 pected effects on risks to the designated fi-
910 

† HR 4173 EAS 

1 nancial market utility, its participants, or 

2 the market; and 

3 (ii) how the designated financial mar4 ket utility plans to manage any identified 

5 risks. 

6 (D) ADDITIONAL INFORMATION.—The Su7 pervisory Agency or the Board of Governors may 

8 require a designated financial market utility to 

9 provide any information necessary to assess the 

10 effect the proposed change would have on the na11 ture or level of risks associated with the des12 ignated financial market utility’s payment, 

13 clearing, or settlement activities and the suffi14 ciency of any proposed risk management tech15 niques. 

16 (E) NOTICE OF OBJECTION.—The Super17 visory Agency or the Board of Governors shall 

18 notify the designated financial market utility of 

19 any objection regarding the proposed change 

20 within 60 days from the later of— 

21 (i) the date that the notice of the pro22 posed change is received; or 

23 (ii) the date any further information 

24 requested for consideration of the notice is 

25 received. 
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† HR 4173 EAS 

1 (F) CHANGE NOT ALLOWED IF OBJEC2 TION.—A designated financial market utility 

3 shall not implement a change to which the Board 

4 of Governors or the Supervisory Agency has an 

5 objection. 

6 (G) CHANGE ALLOWED IF NO OBJECTION

7 WITHIN 60 DAYS.—A designated financial market 

8 utility may implement a change if it has not re9 ceived an objection to the proposed change within 

10 60 days of the later of— 

11 (i) the date that the Supervisory Agen12 cy or the Board of Governors receives the 

13 notice of proposed change; or 

14 (ii) the date the Supervisory Agency or 

15 the Board of Governors receives any further 

16 information it requests for consideration of 

17 the notice. 

18 (H) REVIEW EXTENSION FOR NOVEL OR

19 COMPLEX ISSUES.—The Supervisory Agency or 

20 the Board of Governors may, during the 60-day 

21 review period, extend the review period for an 

22 additional 60 days for proposed changes that 

23 raise novel or complex issues, subject to the Su24 pervisory Agency or the Board of Governors pro25 viding the designated financial market utility 
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† HR 4173 EAS 

1 with prompt written notice of the extension. Any 

2 extension under this subparagraph will extend 

3 the time periods under subparagraphs (D) and 

4 (F). 

5 (I) CHANGE ALLOWED EARLIER IF NOTI6 FIED OF NO OBJECTION.—A designated financial 

7 market utility may implement a change in less 

8 than 60 days from the date of receipt of the no9 tice of proposed change by the Supervisory Agen10 cy or the Board of Governors, or the date the Su11 pervisory Agency or the Board of Governors re12 ceives any further information it requested, if the 

13 Supervisory Agency or the Board of Governors 

14 notifies the designated financial market utility 

15 in writing that it does not object to the proposed 

16 change and authorizes the designated financial 

17 market utility to implement the change on an 

18 earlier date, subject to any conditions imposed 

19 by the Supervisory Agency or the Board of Gov20 ernors. 

21 (2) EMERGENCY CHANGES.— 

22 (A) IN GENERAL.—A designated financial 

23 market utility may implement a change that 

24 would otherwise require advance notice under 

25 this subsection if it determines that— 
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† HR 4173 EAS 

1 (i) an emergency exists; and 

2 (ii) immediate implementation of the 

3 change is necessary for the designated fi4 nancial market utility to continue to pro5 vide its services in a safe and sound man6 ner. 

7 (B) NOTICE REQUIRED WITHIN 24 HOURS.— 

8 The designated financial market utility shall 

9 provide notice of any such emergency change to 

10 its Supervisory Agency and the Board of Gov11 ernors, as soon as practicable, which shall be no 

12 later than 24 hours after implementation of the 

13 change. 

14 (C) CONTENTS OF EMERGENCY NOTICE.—In 

15 addition to the information required for changes 

16 requiring advance notice, the notice of an emer17 gency change shall describe— 

18 (i) the nature of the emergency; and 

19 (ii) the reason the change was nec20 essary for the designated financial market 

21 utility to continue to provide its services in 

22 a safe and sound manner. 

23 (D) MODIFICATION OR RESCISSION OF

24 CHANGE MAY BE REQUIRED.—The Supervisory 

25 Agency or the Board of Governors may require 
914 

† HR 4173 EAS 

1 modification or rescission of the change if it 

2 finds that the change is not consistent with the 

3 purposes of this Act or any rules, orders, or 

4 standards prescribed by the Board of Governors 

5 hereunder. 

6 (3) COPYING THE BOARD OF GOVERNORS.—The 

7 Supervisory Agency shall provide the Board of Gov8 ernors concurrently with a complete copy of any no9 tice, request, or other information it issues, submits, 

10 or receives under this subsection. 

11 (4) CONSULTATION WITH BOARD OF GOV12 ERNORS.—Before taking any action on, or completing 

13 its review of, a change proposed by a designated fi14 nancial market utility, the Supervisory Agency shall 

15 consult with the Board of Governors. 

16 SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS 

17 AGAINST DESIGNATED FINANCIAL MARKET 

18 UTILITIES. 

19 (a) EXAMINATION.—Notwithstanding any other provi20 sion of law and subject to subsection (d), the Supervisory 

21 Agency shall conduct examinations of a designated finan22 cial market utility at least once annually in order to deter23 mine the following: 

24 (1) The nature of the operations of, and the risks 

25 borne by, the designated financial market utility. 
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1 (2) The financial and operational risks presented 

2 by the designated financial market utility to finan3 cial institutions, critical markets, or the broader fi4 nancial system. 

5 (3) The resources and capabilities of the des6 ignated financial market utility to monitor and con7 trol such risks. 

8 (4) The safety and soundness of the designated 

9 financial market utility. 

10 (5) The designated financial market utility’s 

11 compliance with— 

12 (A) this title; and 

13 (B) the rules and orders prescribed by the 

14 Board of Governors under this title. 

15 (b) SERVICE PROVIDERS.—Whenever a service integral 

16 to the operation of a designated financial market utility 

17 is performed for the designated financial market utility by 

18 another entity, whether an affiliate or non-affiliate and 

19 whether on or off the premises of the designated financial 

20 market utility, the Supervisory Agency may examine 

21 whether the provision of that service is in compliance with 

22 applicable law, rules, orders, and standards to the same ex23 tent as if the designated financial market utility were per24 forming the service on its own premises. 
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† HR 4173 EAS 

1 (c) ENFORCEMENT.—For purposes of enforcing the 

2 provisions of this section, a designated financial market 

3 utility shall be subject to, and the appropriate Supervisory 

4 Agency shall have authority under the provisions of sub5 sections (b) through (n) of section 8 of the Federal Deposit 

6 Insurance Act (12 U.S.C. 1818) in the same manner and 

7 to the same extent as if the designated financial market util8 ity was an insured depository institution and the Super9 visory Agency was the appropriate Federal banking agency 

10 for such insured depository institution. 

11 (d) BOARD OF GOVERNORS INVOLVEMENT IN EXAMI12 NATIONS.— 

13 (1) BOARD OF GOVERNORS CONSULTATION ON

14 EXAMINATION PLANNING.—The Supervisory Agency 

15 shall consult with the Board of Governors regarding 

16 the scope and methodology of any examination con17 ducted under subsections (a) and (b). 

18 (2) BOARD OF GOVERNORS PARTICIPATION IN EX19 AMINATION.—The Board of Governors may, in its dis20 cretion, participate in any examination led by a Su21 pervisory Agency and conducted under subsections (a) 

22 and (b). 

23 (e) BOARD OF GOVERNORS ENFORCEMENT REC24 OMMENDATIONS.— 
917 

† HR 4173 EAS 

1 (1) RECOMMENDATION.—The Board of Governors 

2 may at any time recommend to the Supervisory 

3 Agency that such agency take enforcement action 

4 against a designated financial market utility. Any 

5 such recommendation for enforcement action shall 

6 provide a detailed analysis supporting the rec7 ommendation of the Board of Governors. 

8 (2) CONSIDERATION.—The Supervisory Agency 

9 shall consider the recommendation of the Board of 

10 Governors and submit a response to the Board of Gov11 ernors within 60 days. 

12 (3) MEDIATION.—If the Supervisory Agency re13 jects, in whole or in part, the recommendation of the 

14 Board of Governors, the Board of Governors may dis15 pute the matter by referring the recommendation to 

16 the Council, which shall attempt to resolve the dis17 pute. 

18 (4) ENFORCEMENT ACTION.—If the Council is 

19 unable to resolve the dispute under paragraph (3) 

20 within 30 days from the date of referral, the Board 

21 of Governors may, upon a vote of its members— 

22 (A) exercise the enforcement authority ref23 erenced in subsection (c) as if it were the Super24 visory Agency; and 
918 

† HR 4173 EAS 

1 (B) take enforcement action against the des2 ignated financial market utility. 

3 (f) EMERGENCY ENFORCEMENT ACTIONS BY THE

4 BOARD OF GOVERNORS.— 

5 (1) IMMINENT RISK OF SUBSTANTIAL HARM.— 

6 The Board of Governors may, after consulting with 

7 the Council and the Supervisory Agency, take enforce8 ment action against a designated financial market 

9 utility if the Board of Governors has reasonable cause 

10 to believe that— 

11 (A) either— 

12 (i) an action engaged in, or con13 templated by, a designated financial market 

14 utility (including any change proposed by 

15 the designated financial market utility to 

16 its rules, procedures, or operations that 

17 would otherwise be subject to section 806(e)) 

18 poses an imminent risk of substantial harm 

19 to financial institutions, critical markets, 

20 or the broader financial system; or 

21 (ii) the condition of a designated fi22 nancial market utility poses an imminent 

23 risk of substantial harm to financial insti24 tutions, critical markets, or the broader fi25 nancial system; and 
919 

† HR 4173 EAS 

1 (B) the imminent risk of substantial harm 

2 precludes the Board of Governors’ use of the pro3 cedures in subsection (e). 

4 (2) ENFORCEMENT AUTHORITY.—For purposes of 

5 taking enforcement action under paragraph (1), a 

6 designated financial market utility shall be subject to, 

7 and the Board of Governors shall have authority 

8 under the provisions of subsections (b) through (n) of 

9 section 8 of the Federal Deposit Insurance Act (12 

10 U.S.C. 1818) in the same manner and to the same ex11 tent as if the designated financial market utility was 

12 an insured depository institution and the Board of 

13 Governors was the appropriate Federal banking agen14 cy for such insured depository institution. 

15 (3) PROMPT NOTICE TO SUPERVISORY AGENCY OF

16 ENFORCEMENT ACTION.—Within 24 hours of taking 

17 an enforcement action under this subsection, the 

18 Board of Governors shall provide written notice to the 

19 designated financial market utility’s Supervisory 

20 Agency containing a detailed analysis of the action of 

21 the Board of Governors, with supporting documenta22 tion included. 
920 

† HR 4173 EAS 

1 SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS 

2 AGAINST FINANCIAL INSTITUTIONS SUBJECT 

3 TO STANDARDS FOR DESIGNATED ACTIVI4 TIES. 

5 (a) EXAMINATION.—The appropriate financial regu6 lator is authorized to examine a financial institution sub7 ject to the standards prescribed by the Board of Governors 

8 for a designated activity in order to determine the fol9 lowing: 

10 (1) The nature and scope of the designated ac11 tivities engaged in by the financial institution. 

12 (2) The financial and operational risks the des13 ignated activities engaged in by the financial institu14 tion may pose to the safety and soundness of the fi15 nancial institution. 

16 (3) The financial and operational risks the des17 ignated activities engaged in by the financial institu18 tion may pose to other financial institutions, critical 

19 markets, or the broader financial system. 

20 (4) The resources available to and the capabili21 ties of the financial institution to monitor and con22 trol the risks described in paragraphs (2) and (3). 

23 (5) The financial institution’s compliance with 

24 this title and the rules and orders prescribed by the 

25 Board of Governors under this title. 
921 

† HR 4173 EAS 

1 (b) ENFORCEMENT.—For purposes of enforcing the 

2 provisions of this section, and the rules and orders pre3 scribed by the Board of Governors under this section, a fi4 nancial institution subject to the standards prescribed by 

5 the Board of Governors for a designated activity shall be 

6 subject to, and the appropriate financial regulator shall 

7 have authority under the provisions of subsections (b) 

8 through (n) of section 8 of the Federal Deposit Insurance 

9 Act (12 U.S.C. 1818) in the same manner and to the same 

10 extent as if the financial institution was an insured deposi11 tory institution and the appropriate financial regulator 

12 was the appropriate Federal banking agency for such in13 sured depository institution. 

14 (c) TECHNICAL ASSISTANCE.—The Board of Governors 

15 shall consult with and provide such technical assistance as 

16 may be required by the appropriate financial regulators to 

17 ensure that the rules and orders prescribed by the Board 

18 of Governors under this title are interpreted and applied 

19 in as consistent and uniform a manner as practicable. 

20 (d) DELEGATION.— 

21 (1) EXAMINATION.— 

22 (A) REQUEST TO BOARD OF GOVERNORS.— 

23 The appropriate financial regulator may request 

24 the Board of Governors to conduct or participate 

25 in an examination of a financial institution 
922 

† HR 4173 EAS 

1 subject to the standards prescribed by the Board 

2 of Governors for a designated activity in order 

3 to assess the compliance of such financial insti4 tution with— 

5 (i) this title; or 

6 (ii) the rules or orders prescribed by 

7 the Board of Governors under this title. 

8 (B) EXAMINATION BY BOARD OF GOV9 ERNORS.—Upon receipt of an appropriate writ10 ten request, the Board of Governors will conduct 

11 the examination under such terms and condi12 tions to which the Board of Governors and the 

13 appropriate financial regulator mutually agree. 

14 (2) ENFORCEMENT.— 

15 (A) REQUEST TO BOARD OF GOVERNORS.— 

16 The appropriate financial regulator may request 

17 the Board of Governors to enforce this title or the 

18 rules or orders prescribed by the Board of Gov19 ernors under this title against a financial insti20 tution that is subject to the standards prescribed 

21 by the Board of Governors for a designated activ22 ity. 

23 (B) ENFORCEMENT BY BOARD OF GOV24 ERNORS.—Upon receipt of an appropriate writ25 ten request, the Board of Governors shall deter-
923 

† HR 4173 EAS 

1 mine whether an enforcement action is war2 ranted, and, if so, it shall enforce compliance 

3 with this title or the rules or orders prescribed 

4 by the Board of Governors under this title and, 

5 if so, the financial institution shall be subject to, 

6 and the Board of Governors shall have authority 

7 under the provisions of subsections (b) through 

8 (n) of section 8 of the Federal Deposit Insurance 

9 Act (12 U.S.C. 1818) in the same manner and 

10 to the same extent as if the financial institution 

11 was an insured depository institution and the 

12 Board of Governors was the appropriate Federal 

13 banking agency for such insured depository in14 stitution. 

15 (e) BACK-UP AUTHORITY OF THE BOARD OF GOV16 ERNORS.— 

17 (1) EXAMINATION AND ENFORCEMENT.—Notwith18 standing any other provision of law, the Board of 

19 Governors may— 

20 (A) conduct an examination of the type de21 scribed in subsection (a) of any financial insti22 tution that is subject to the standards prescribed 

23 by the Board of Governors for a designated activ24 ity; and 
924 

† HR 4173 EAS 

1 (B) enforce the provisions of this title or 

2 any rules or orders prescribed by the Board of 

3 Governors under this title against any financial 

4 institution that is subject to the standards pre5 scribed by the Board of Governors for a des6 ignated activity. 

7 (2) LIMITATIONS.— 

8 (A) EXAMINATION.—The Board of Gov9 ernors may exercise the authority described in 

10 paragraph (1)(A) only if the Board of Governors 

11 has— 

12 (i) reasonable cause to believe that a fi13 nancial institution is not in compliance 

14 with this title or the rules or orders pre15 scribed by the Board of Governors under 

16 this title with respect to a designated activ17 ity; 

18 (ii) notified, in writing, the appro19 priate financial regulator and the Council 

20 of its belief under clause (i) with supporting 

21 documentation included; 

22 (iii) requested the appropriate finan23 cial regulator to conduct a prompt exam24 ination of the financial institution; and 

25 (iv) either— 
925 

† HR 4173 EAS 

1 (I) not been afforded a reasonable 

2 opportunity to participate in an exam3 ination of the financial institution by 

4 the appropriate financial regulator 

5 within 30 days after the date of the 

6 Board’s notification under clause (ii); 

7 or 

8 (II) reasonable cause to believe 

9 that the financial institution’s non10 compliance with this title or the rules 

11 or orders prescribed by the Board of 

12 Governors under this title poses a sub13 stantial risk to other financial institu14 tions, critical markets, or the broader 

15 financial system, subject to the Board 

16 of Governors affording the appropriate 

17 financial regulator a reasonable oppor18 tunity to participate in the examina19 tion. 

20 (B) ENFORCEMENT.—The Board of Gov21 ernors may exercise the authority described in 

22 paragraph (1)(B) only if the Board of Governors 

23 has— 

24 (i) reasonable cause to believe that a fi25 nancial institution is not in compliance 
926 

† HR 4173 EAS 

1 with this title or the rules or orders pre2 scribed by the Board of Governors under 

3 this title with respect to a designated activ4 ity; 

5 (ii) notified, in writing, the appro6 priate financial regulator and the Council 

7 of its belief under clause (i) with supporting 

8 documentation included and with a rec9 ommendation that the appropriate financial 

10 regulator take 1 or more specific enforce11 ment actions against the financial institu12 tion; and 

13 (iii) either— 

14 (I) not been notified, in writing, 

15 by the appropriate financial regulator 

16 of the commencement of an enforcement 

17 action recommended by the Board of 

18 Governors against the financial insti19 tution within 60 days from the date of 

20 the notification under clause (ii); or 

21 (II) reasonable cause to believe 

22 that the financial institution’s non23 compliance with this title or the rules 

24 or orders prescribed by the Board of 

25 Governors under this title poses a sub-
927 

† HR 4173 EAS 

1 stantial risk to other financial institu2 tions, critical markets, or the broader 

3 financial system, subject to the Board 

4 of Governors notifying the appropriate 

5 financial regulator of the Board’s en6 forcement action. 

7 (3) ENFORCEMENT PROVISIONS.—For purposes 

8 of taking enforcement action under paragraph (1), the 

9 financial institution shall be subject to, and the 

10 Board of Governors shall have authority under the 

11 provisions of subsections (b) through (n) of section 8 

12 of the Federal Deposit Insurance Act (12 U.S.C. 

13 1818) in the same manner and to the same extent as 

14 if the financial institution was an insured depository 

15 institution and the Board of Governors was the ap16 propriate Federal banking agency for such insured 

17 depository institution. 

18 SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR 

19 RECORDS. 

20 (a) INFORMATION TO ASSESS SYSTEMIC IMPOR21 TANCE.— 

22 (1) FINANCIAL MARKET UTILITIES.—The Council 

23 is authorized to require any financial market utility 

24 to submit such information as the Council may re25 quire for the sole purpose of assessing whether that fi-
928 

† HR 4173 EAS 

1 nancial market utility is systemically important, but 

2 only if the Council has reasonable cause to believe 

3 that the financial market utility meets the standards 

4 for systemic importance set forth in section 804. 

5 (2) FINANCIAL INSTITUTIONS ENGAGED IN PAY6 MENT, CLEARING, OR SETTLEMENT ACTIVITIES.—The 

7 Council is authorized to require any financial insti8 tution to submit such information as the Council may 

9 require for the sole purpose of assessing whether any 

10 payment, clearing, or settlement activity engaged in 

11 or supported by a financial institution is system12 ically important, but only if the Council has reason13 able cause to believe that the activity meets the stand14 ards for systemic importance set forth in section 804. 

15 (b) REPORTING AFTER DESIGNATION.— 

16 (1) DESIGNATED FINANCIAL MARKET UTILI17 TIES.—The Board of Governors and the Council may 

18 require a designated financial market utility to sub19 mit reports or data to the Board of Governors and the 

20 Council in such frequency and form as deemed nec21 essary by the Board of Governors and the Council in 

22 order to assess the safety and soundness of the utility 

23 and the systemic risk that the utility’s operations pose 

24 to the financial system. 
929 

† HR 4173 EAS 

1 (2) FINANCIAL INSTITUTIONS SUBJECT TO

2 STANDARDS FOR DESIGNATED ACTIVITIES.—The 

3 Board of Governors and the Council may require 1 or 

4 more financial institutions subject to the standards 

5 prescribed by the Board of Governors for a designated 

6 activity to submit, in such frequency and form as 

7 deemed necessary by the Board of Governors and the 

8 Council, reports and data to the Board of Governors 

9 and the Council solely with respect to the conduct of 

10 the designated activity and solely to assess whether— 

11 (A) the rules, orders, or standards pre12 scribed by the Board of Governors with respect 

13 to the designated activity appropriately address 

14 the risks to the financial system presented by 

15 such activity; and 

16 (B) the financial institutions are in compli17 ance with this title and the rules and orders pre18 scribed by the Board of Governors under this 

19 title with respect to the designated activity. 

20 (c) COORDINATION WITH APPROPRIATE FEDERAL SU21 PERVISORY AGENCY.— 

22 (1) ADVANCE COORDINATION.—Before directly 

23 requesting any material information from, or impos24 ing reporting or recordkeeping requirements on, any 

25 financial market utility or any financial institution 
930 

† HR 4173 EAS 

1 engaged in a payment, clearing, or settlement activ2 ity, the Board of Governors and the Council shall co3 ordinate with the Supervisory Agency for a financial 

4 market utility or the appropriate financial regulator 

5 for a financial institution to determine if the infor6 mation is available from or may be obtained by the 

7 agency in the form, format, or detail required by the 

8 Board of Governors and the Council. 

9 (2) SUPERVISORY REPORTS.—Notwithstanding 

10 any other provision of law, the Supervisory Agency, 

11 the appropriate financial regulator, and the Board of 

12 Governors are authorized to disclose to each other and 

13 the Council copies of its examination reports or simi14 lar reports regarding any financial market utility or 

15 any financial institution engaged in payment, clear16 ing, or settlement activities. 

17 (d) TIMING OF RESPONSE FROM APPROPRIATE FED18 ERAL SUPERVISORY AGENCY.—If the information, report, 

19 records, or data requested by the Board of Governors or the 

20 Council under subsection (c)(1) are not provided in full by 

21 the Supervisory Agency or the appropriate financial regu22 lator in less than 15 days after the date on which the mate23 rial is requested, the Board of Governors or the Council may 

24 request the information or impose recordkeeping or report-
931 

† HR 4173 EAS 

1 ing requirements directly on such persons as provided in 

2 subsections (a) and (b) with notice to the agency. 

3 (e) SHARING OF INFORMATION.— 

4 (1) MATERIAL CONCERNS.—Notwithstanding any 

5 other provision of law, the Board of Governors, the 

6 Council, the appropriate financial regulator, and any 

7 Supervisory Agency are authorized to— 

8 (A) promptly notify each other of material 

9 concerns about a designated financial market 

10 utility or any financial institution engaged in 

11 designated activities; and 

12 (B) share appropriate reports, information, 

13 or data relating to such concerns. 

14 (2) OTHER INFORMATION.—Notwithstanding any 

15 other provision of law, the Board of Governors, the 

16 Council, the appropriate financial regulator, or any 

17 Supervisory Agency may, under such terms and con18 ditions as it deems appropriate, provide confidential 

19 supervisory information and other information ob20 tained under this title to other persons it deems ap21 propriate, including the Secretary, State financial in22 stitution supervisory agencies, foreign financial su23 pervisors, foreign central banks, and foreign finance 

24 ministries, subject to reasonable assurances of con25 fidentiality. 
932 

† HR 4173 EAS 

1 (f) PRIVILEGE MAINTAINED.—The Board of Governors, 

2 the Council, the appropriate financial regulator, and any 

3 Supervisory Agency providing reports or data under this 

4 section shall not be deemed to have waived any privilege 

5 applicable to those reports or data, or any portion thereof, 

6 by providing the reports or data to the other party or by 

7 permitting the reports or data, or any copies thereof, to be 

8 used by the other party. 

9 (g) DISCLOSURE EXEMPTION.—Information obtained 

10 by the Board of Governors or the Council under this section 

11 and any materials prepared by the Board of Governors or 

12 the Council regarding its assessment of the systemic impor13 tance of financial market utilities or any payment, clear14 ing, or settlement activities engaged in by financial institu15 tions, and in connection with its supervision of designated 

16 financial market utilities and designated activities, shall be 

17 confidential supervisory information exempt from disclo18 sure under section 552 of title 5, United States Code. For 

19 purposes of such section 552, this subsection shall be consid20 ered a statute described in subsection (b)(3) of such section 

21 552. 

22 SEC. 810. RULEMAKING. 

23 The Board of Governors and the Council are author24 ized to prescribe such rules and issue such orders as may 

25 be necessary to administer and carry out the authorities 
933 

† HR 4173 EAS 

1 and duties granted to the Board of Governors or the Coun2 cil, respectively, and prevent evasions thereof. 

3 SEC. 811. OTHER AUTHORITY. 

4 Unless otherwise provided by its terms, this title does 

5 not divest any appropriate financial regulator, any Super6 visory Agency, or any other Federal or State agency, of any 

7 authority derived from any other applicable law, except 

8 that any standards prescribed by the Board of Governors 

9 under section 805 shall supersede any less stringent require10 ments established under other authority to the extent of any 

11 conflict. 

12 SEC. 812. EFFECTIVE DATE. 

13 This title is effective as of the date of enactment of this 

14 Act. 

15 TITLE IX—INVESTOR PROTEC16 TIONS AND IMPROVEMENTS 

17 TO THE REGULATION OF SE18 CURITIES 

19 Subtitle A—Increasing Investor 

20 Protection 

21 SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED. 

22 Title I of the Securities Exchange Act of 1934 (15 

23 U.S.C. 78a et seq.) is amended by adding at the end the 

24 following: 
934 

† HR 4173 EAS 

1 ‘‘SEC. 39. INVESTOR ADVISORY COMMITTEE. 

2 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 

3 ‘‘(1) ESTABLISHMENT.—There is established 

4 within the Commission the Investor Advisory Com5 mittee (referred to in this section as the ‘Committee’). 

6 ‘‘(2) PURPOSE.—The Committee shall— 

7 ‘‘(A) advise and consult with the Commis8 sion on— 

9 ‘‘(i) regulatory priorities of the Com10 mission; 

11 ‘‘(ii) issues relating to the regulation of 

12 securities products, trading strategies, and 

13 fee structures, and the effectiveness of disclo14 sure; 

15 ‘‘(iii) initiatives to protect investor in16 terest; and 

17 ‘‘(iv) initiatives to promote investor 

18 confidence and the integrity of the securities 

19 marketplace; and 

20 ‘‘(B) submit to the Commission such find21 ings and recommendations as the Committee de22 termines are appropriate, including rec23 ommendations for proposed legislative changes. 

24 ‘‘(b) MEMBERSHIP.— 

25 ‘‘(1) IN GENERAL.—The members of the Com26 mittee shall be— 
935 

† HR 4173 EAS 

1 ‘‘(A) the Investor Advocate; 

2 ‘‘(B) a representative of State securities 

3 commissions; 

4 ‘‘(C) a representative of the interests of sen5 ior citizens; and 

6 ‘‘(D) not fewer than 10, and not more than 

7 20, members appointed by the Commission, from 

8 among individuals who— 

9 ‘‘(i) represent the interests of indi10 vidual equity and debt investors, including 

11 investors in mutual funds; 

12 ‘‘(ii) represent the interests of institu13 tional investors, including the interests of 

14 pension funds and registered investment 

15 companies; 

16 ‘‘(iii) are knowledgeable about invest17 ment issues and decisions; and 

18 ‘‘(iv) have reputations of integrity. 

19 ‘‘(2) TERM.—Each member of the Committee ap20 pointed under paragraph (1)(B) shall serve for a term 

21 of 4 years. 

22 ‘‘(3) MEMBERS NOT COMMISSION EMPLOYEES.— 

23 Members appointed under paragraph (1)(B) shall not 

24 be deemed to be employees or agents of the Commis25 sion solely because of membership on the Committee. 
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† HR 4173 EAS 

1 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS2 SISTANT SECRETARY.— 

3 ‘‘(1) IN GENERAL.—The members of the Com4 mittee shall elect, from among the members of the 

5 Committee— 

6 ‘‘(A) a chairman, who may not be employed 

7 by an issuer; 

8 ‘‘(B) a vice chairman, who may not be em9 ployed by an issuer; 

10 ‘‘(C) a secretary; and 

11 ‘‘(D) an assistant secretary. 

12 ‘‘(2) TERM.—Each member elected under para13 graph (1) shall serve for a term of 3 years in the ca14 pacity for which the member was elected under para15 graph (1). 

16 ‘‘(d) MEETINGS.— 

17 ‘‘(1) FREQUENCY OF MEETINGS.—The Committee 

18 shall meet— 

19 ‘‘(A) not less frequently than twice annu20 ally, at the call of the chairman of the Com21 mittee; and 

22 ‘‘(B) from time to time, at the call of the 

23 Commission. 

24 ‘‘(2) NOTICE.—The chairman of the Committee 

25 shall give the members of the Committee written no-
937 

† HR 4173 EAS 

1 tice of each meeting, not later than 2 weeks before the 

2 date of the meeting. 

3 ‘‘(e) COMPENSATION AND TRAVEL EXPENSES.—Each 

4 member of the Committee who is not a full-time employee 

5 of the United States shall— 

6 ‘‘(1) be compensated at a rate not to exceed the 

7 daily equivalent of the annual rate of basic pay in 

8 effect for a position at level V of the Executive Sched9 ule under section 5316 of title 5, United States Code, 

10 for each day during which the member is engaged in 

11 the actual performance of the duties of the Committee; 

12 and 

13 ‘‘(2) while away from the home or regular place 

14 of business of the member in the performance of serv15 ices for the Committee, be allowed travel expenses, in16 cluding per diem in lieu of subsistence, in the same 

17 manner as persons employed intermittently in the 

18 Government service are allowed expenses under sec19 tion 5703(b) of title 5, United States Code. 

20 ‘‘(f) STAFF.—The Commission shall make available to 

21 the Committee such staff as the chairman of the Committee 

22 determines are necessary to carry out this section. 

23 ‘‘(g) REVIEW BY COMMISSION.—The Commission 

24 shall— 
938 

† HR 4173 EAS 

1 ‘‘(1) review the findings and recommendations of 

2 the Committee; and 

3 ‘‘(2) each time the Committee submits a finding 

4 or recommendation to the Commission, issue a public 

5 statement— 

6 ‘‘(A) assessing the finding or recommenda7 tion of the Committee; and 

8 ‘‘(B) disclosing the action, if any, the Com9 mission intends to take with respect to the find10 ing or recommendation. 

11 ‘‘(h) COMMITTEE FINDINGS.—Nothing in this section 

12 shall require the Commission to agree to or act upon any 

13 finding or recommendation of the Committee. 

14 ‘‘(i) FEDERAL ADVISORY COMMITTEE ACT.—The Fed15 eral Advisory Committee Act (5 U.S.C. App.) shall not 

16 apply with respect to the Committee and its activities. 

17 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There is 

18 authorized to be appropriated to the Commission such sums 

19 as are necessary to carry out this section.’’. 

20 SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMIS21 SION TO ENGAGE IN INVESTOR TESTING. 

22 Section 19 of the Securities Act of 1933 (15 U.S.C. 

23 77s) is amended by adding at the end the following: 

24 ‘‘(e) EVALUATION OF RULES OR PROGRAMS.—For the 

25 purpose of evaluating any rule or program of the Commis-
939 

† HR 4173 EAS 

1 sion issued or carried out under any provision of the securi2 ties laws, as defined in section 3 of the Securities Exchange 

3 Act of 1934 (15 U.S.C. 78c), and the purposes of consid4 ering, proposing, adopting, or engaging in any such rule 

5 or program or developing new rules or programs, the Com6 mission may— 

7 ‘‘(1) gather information from and communicate 

8 with investors or other members of the public; 

9 ‘‘(2) engage in such temporary investor testing 

10 programs as the Commission determines are in the 

11 public interest or would protect investors; and 

12 ‘‘(3) consult with academics and consultants, as 

13 necessary to carry out this subsection. 

14 ‘‘(f) RULE OF CONSTRUCTION.—For purposes of the 

15 Paperwork Reduction Act (44 U.S.C. 3501 et seq.), any ac16 tion taken under subsection (e) shall not be construed to 

17 be a collection of information.’’. 

18 SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGA19 TIONS OF BROKERS, DEALERS, AND INVEST20 MENT ADVISERS. 

21 (a) DEFINITIONS.—In this section— 

22 (1) the term ‘‘FINRA’’ means the Financial In23 dustry Regulatory Authority; and 

24 (2) the term ‘‘retail customer’’ means an indi25 vidual customer of a broker, dealer, investment ad-
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† HR 4173 EAS 

1 viser, person associated with a broker or dealer, or a 

2 person associated with an investment adviser. 

3 (b) IN GENERAL.—The Commission shall conduct a 

4 study to evaluate— 

5 (1) the effectiveness of existing legal or regulatory 

6 standards of care for brokers, dealers, investment ad7 visers, persons associated with brokers or dealers, and 

8 persons associated with investment advisers for pro9 viding personalized investment advice and rec10 ommendations about securities to retail customers im11 posed by the Commission and FINRA, and other Fed12 eral and State legal or regulatory standards; and 

13 (2) whether there are legal or regulatory gaps or 

14 overlap in legal or regulatory standards in the protec15 tion of retail customers relating to the standards of 

16 care for brokers, dealers, investment advisers, persons 

17 associated with brokers or dealers, and persons associ18 ated with investment advisers for providing personal19 ized investment advice about securities to retail cus20 tomers that should be addressed by rule or statute. 

21 (c) CONSIDERATIONS.—In conducting the study re22 quired under subsection (b), the Commission shall con23 sider— 

24 (1) the regulatory, examination, and enforcement 

25 resources devoted to, and activities of, the Commission 
941 

† HR 4173 EAS 

1 and FINRA to enforce the standards of care for bro2 kers, dealers, investment advisers, persons associated 

3 with brokers or dealers, and persons associated with 

4 investment advisers when providing personalized in5 vestment advice and recommendations about securi6 ties to retail customers, including— 

7 (A) the frequency of examinations of bro8 kers, dealers, and investment advisers; and 

9 (B) the length of time of the examinations; 

10 (2) the substantive differences, compared and 

11 contrasted in detail, in the regulation of brokers, deal12 ers, and investment advisers, when providing person13 alized investment advice and recommendations about 

14 securities to retail customers, including the differences 

15 in the amount of resources devoted to the regulation 

16 and examination of brokers, dealers, and investment 

17 advisers, by the Commission and FINRA; 

18 (3) the specific instances in which— 

19 (A) the regulation and oversight of invest20 ment advisers provide greater protection to retail 

21 customers than the regulation and oversight of 

22 brokers and dealers; and 

23 (B) the regulation and oversight of brokers 

24 and dealers provide greater protection to retail 
942 

† HR 4173 EAS 

1 customers than the regulation and oversight of 

2 investment advisers; 

3 (4) the existing legal or regulatory standards of 

4 State securities regulators and other regulators in5 tended to protect retail customers; 

6 (5) the potential impact on retail customers, in7 cluding the potential impact on access of retail cus8 tomers to the range of products and services offered by 

9 brokers and dealers, of imposing upon brokers, deal10 ers, and persons associated with brokers or dealers— 

11 (A) the standard of care applied under the 

12 Investment Advisers Act of 1940 (15 U.S.C. 80b– 

13 1 et seq.) for providing personalized investment 

14 advice about securities to retail customers of in15 vestment advisers; and 

16 (B) other requirements of the Investment 

17 Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.); 

18 (6) the potential impact of— 

19 (A) imposing on investment advisers the 

20 standard of care applied by the Commission and 

21 FINRA under the Securities Exchange Act of 

22 1934 (15 U.S.C. 78a et seq.) for providing rec23 ommendations about securities to retail cus24 tomers of brokers and dealers and other Commis-
943 

† HR 4173 EAS 

1 sion and FINRA requirements applicable to bro2 kers and dealers; and 

3 (B) authorizing the Commission to des4 ignate 1 or more self-regulatory organizations to 

5 augment the efforts of the Commission to oversee 

6 investment advisers; 

7 (7) the potential impact of eliminating the 

8 broker and dealer exclusion from the definition of ‘‘in9 vestment adviser’’ under section 202(a)(11)(C) of the 

10 Investment Advisers Act of 1940 (15 U.S.C. 80b– 

11 2(a)(11)(C)), in terms of— 

12 (A) the potential benefits or harm to retail 

13 customers that could result from such a change, 

14 including any potential impact on access to per15 sonalized investment advice and recommenda16 tions about securities to retail customers or the 

17 availability of such advice and recommenda18 tions; 

19 (B) the number of additional entities and 

20 individuals that would be required to register 

21 under, or become subject to, the Investment Ad22 visers Act of 1940 (15 U.S.C. 80b–1 et seq.), and 

23 the additional requirements to which brokers, 

24 dealers, and persons associated with brokers and 

25 dealers would become subject, including— 
944 

† HR 4173 EAS 

1 (i) any potential additional associated 

2 person licensing, registration, and examina3 tion requirements; and 

4 (ii) the additional costs, if any, to the 

5 additional entities and individuals; and 

6 (C) the impact on Commission resources 

7 to— 

8 (i) conduct examinations of registered 

9 investment advisers and the representatives 

10 of registered investment advisers, including 

11 the impact on the examination cycle; and 

12 (ii) enforce the standard of care and 

13 other applicable requirements imposed 

14 under the Investment Advisers Act of 1940 

15 (15 U.S.C. 80b–1 et seq.); 

16 (8) the ability of investors to understand the dif17 ferences in terms of regulatory oversight and exami18 nations between brokers, dealers, and investment ad19 visers; 

20 (9) the varying level of services provided by bro21 kers, dealers, investment advisers, persons associated 

22 with brokers or dealers, and persons associated with 

23 investment advisers to retail customers and the vary24 ing scope and terms of retail customer relationships 

25 of brokers, dealers, investment advisers, persons asso-
945 

† HR 4173 EAS 

1 ciated with brokers or dealers, and persons associated 

2 with investment advisers with such retail customers; 

3 (10) any potential benefits or harm to retail cus4 tomers that could result from any potential changes 

5 in the regulatory requirements or legal standards af6 fecting brokers, dealers, investment advisers, persons 

7 associated with brokers or dealers, and persons associ8 ated with investment advisers relating to their obliga9 tions to retail customers, including any potential im10 pact on— 

11 (A) protection from fraud; 

12 (B) access to personalized investment ad13 vice, and recommendations about securities to re14 tail customers; or 

15 (C) the availability of such advice and rec16 ommendations; 

17 (11) the additional costs and expenses to retail 

18 customers and to brokers, dealers, and investment ad19 visers resulting from potential changes in the regu20 latory requirements or legal standards affecting bro21 kers, dealers, investment advisers, persons associated 

22 with brokers or dealers, and persons associated with 

23 investment advisers relating to their obligations to re24 tail customers; and 
946 

† HR 4173 EAS 

1 (12) any other consideration that the Commis2 sion deems necessary and appropriate to effectively 

3 execute the study required under subsection (b). 

4 (d) REPORT.— 

5 (1) IN GENERAL.—Not later than 1 year after 

6 the date of enactment of this Act, the Commission 

7 shall submit a report on the study required under 

8 subsection (b) to— 

9 (A) the Committee on Banking, Housing, 

10 and Urban Affairs of the Senate; and 

11 (B) the Committee on Financial Services of 

12 the House of Representatives. 

13 (2) CONTENT REQUIREMENTS.—The report re14 quired under paragraph (1) shall describe the find15 ings, conclusions, and recommendations of the Com16 mission from the study required under subsection (b), 

17 including— 

18 (A) a description of the considerations, 

19 analysis, and public and industry input that the 

20 Commission considered, as required under sub21 section (e), to make such findings, conclusions, 

22 and policy recommendations; and 

23 (B) an analysis of— 

24 (i) whether any identified legal or reg25 ulatory gaps or overlap in legal or regu-
947 

† HR 4173 EAS 

1 latory standards in the protection of retail 

2 customers relating to the standards of care 

3 for brokers, dealers, investment advisers, 

4 persons associated with brokers or dealers, 

5 and persons associated with investment ad6 visers for providing personalized investment 

7 advice about securities to retail customers 

8 can be addressed by rule; and 

9 (ii) whether, and the extent to which, 

10 the Commission would require additional 

11 statutory authority to address such gaps or 

12 overlap. 

13 (e) PUBLIC COMMENT.—The Commission shall seek 

14 and consider public input, comments, and data in order 

15 to prepare the report required under subsection (d). 

16 (f) RULEMAKING.— 

17 (1) IN GENERAL.—If the study required under 

18 subsection (b) identifies any gaps or overlap in the 

19 legal or regulatory standards in the protection of re20 tail customers relating to the standards of care for 

21 brokers, dealers, investment advisers, persons associ22 ated with brokers or dealers, and persons associated 

23 with investment advisers for providing personalized 

24 investment advice about securities to such retail cus-
948 

† HR 4173 EAS 

1 tomers, the Commission, not later than 2 years after 

2 the date of enactment of this Act, shall— 

3 (A) commence a rulemaking, as necessary 

4 or appropriate in the public interest and for the 

5 protection of retail customers, to address such 

6 regulatory gaps and overlap that can be ad7 dressed by rule, using its authority under the Se8 curities Exchange Act of 1934 (15 U.S.C. 78a et 

9 seq.) and the Investment Advisers Act of 1940 

10 (15 U.S.C. 80b–1 et seq.); and 

11 (B) consider and take into account the find12 ings, conclusions, and recommendations of the 

13 study required under this section. 

14 (2) RULE OF CONSTRUCTION.—Nothing in this 

15 section shall be construed to limit the rulemaking au16 thority of the Commission under any other provision 

17 of Federal law. 

18 SEC. 914. OFFICE OF THE INVESTOR ADVOCATE. 

19 Section 4 of the Securities Exchange Act of 1934 (15 

20 U.S.C. 78d) is amended by adding at the end the following: 

21 ‘‘(g) OFFICE OF THE INVESTOR ADVOCATE.— 

22 ‘‘(1) OFFICE ESTABLISHED.—There is established 

23 within the Commission the Office of the Investor Ad24 vocate (in this subsection referred to as the ‘Office’). 

25 ‘‘(2) INVESTOR ADVOCATE.— 
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† HR 4173 EAS 

1 ‘‘(A) IN GENERAL.—The head of the Office 

2 shall be the Investor Advocate, who shall— 

3 ‘‘(i) report directly to the Chairman; 

4 and 

5 ‘‘(ii) be appointed by the Chairman, in 

6 consultation with the Commission, from 

7 among individuals having experience in ad8 vocating for the interests of investors in se9 curities and investor protection issues, from 

10 the perspective of investors. 

11 ‘‘(B) COMPENSATION.—The annual rate of 

12 pay for the Investor Advocate shall be equal to 

13 the highest rate of annual pay for a Senior Exec14 utive Service position within the Commission. 

15 ‘‘(C) LIMITATION ON SERVICE.—An indi16 vidual who serves as the Investor Advocate may 

17 not be employed by the Commission— 

18 ‘‘(i) during the 2-year period ending 

19 on the date of appointment as Investor Ad20 vocate; or 

21 ‘‘(ii) during the 5-year period begin22 ning on the date on which the person ceases 

23 to serve as the Investor Advocate. 

24 ‘‘(3) STAFF OF OFFICE.—The Investor Advocate 

25 may retain or employ independent counsel, research 
950 

† HR 4173 EAS 

1 staff, and service staff, as the Investor Advocate deems 

2 necessary to carry out the functions, powers, and du3 ties of the Office. 

4 ‘‘(4) FUNCTIONS OF THE INVESTOR ADVOCATE.— 

5 The Investor Advocate shall— 

6 ‘‘(A) assist retail investors in resolving sig7 nificant problems such investors may have with 

8 the Commission or with self-regulatory organiza9 tions; 

10 ‘‘(B) identify areas in which investors 

11 would benefit from changes in the regulations of 

12 the Commission or the rules of self-regulatory or13 ganizations; 

14 ‘‘(C) identify problems that investors have 

15 with financial service providers and investment 

16 products; 

17 ‘‘(D) analyze the potential impact on inves18 tors of— 

19 ‘‘(i) proposed regulations of the Com20 mission; and 

21 ‘‘(ii) proposed rules of self-regulatory 

22 organizations registered under this title; 

23 and 

24 ‘‘(E) to the extent practicable, propose to the 

25 Commission changes in the regulations or orders 
951 

† HR 4173 EAS 

1 of the Commission and to Congress any legisla2 tive, administrative, or personnel changes that 

3 may be appropriate to mitigate problems identi4 fied under this paragraph and to promote the in5 terests of investors. 

6 ‘‘(5) ACCESS TO DOCUMENTS.—The Commission 

7 shall ensure that the Investor Advocate has full access 

8 to the documents of the Commission and any self-reg9 ulatory organization, as necessary to carry out the 

10 functions of the Office. 

11 ‘‘(6) ANNUAL REPORTS.— 

12 ‘‘(A) REPORT ON OBJECTIVES.— 

13 ‘‘(i) IN GENERAL.—Not later than 

14 June 30 of each year after 2010, the Inves15 tor Advocate shall submit to the Committee 

16 on Banking, Housing, and Urban Affairs of 

17 the Senate and the Committee on Financial 

18 Services of the House of Representatives a 

19 report on the objectives of the Investor Advo20 cate for the following fiscal year. 

21 ‘‘(ii) CONTENTS.—Each report re22 quired under clause (i) shall contain full 

23 and substantive analysis and explanation. 

24 ‘‘(B) REPORT ON ACTIVITIES.— 
952 

† HR 4173 EAS 

1 ‘‘(i) IN GENERAL.—Not later than De2 cember 31 of each year after 2010, the In3 vestor Advocate shall submit to the Com4 mittee on Banking, Housing, and Urban 

5 Affairs of the Senate and the Committee on 

6 Financial Services of the House of Rep7 resentatives a report on the activities of the 

8 Investor Advocate during the immediately 

9 preceding fiscal year. 

10 ‘‘(ii) CONTENTS.—Each report re11 quired under clause (i) shall include— 

12 ‘‘(I) appropriate statistical infor13 mation and full and substantive anal14 ysis; 

15 ‘‘(II) information on steps that 

16 the Investor Advocate has taken during 

17 the reporting period to improve inves18 tor services and the responsiveness of 

19 the Commission and self-regulatory or20 ganizations to investor concerns; 

21 ‘‘(III) a summary of the most se22 rious problems encountered by inves23 tors during the reporting period; 
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† HR 4173 EAS 

1 ‘‘(IV) an inventory of the items 

2 described in subclauses (III) that in3 cludes— 

4 ‘‘(aa) identification of any 

5 action taken by the Commission 

6 or the self-regulatory organization 

7 and the result of such action; 

8 ‘‘(bb) the length of time that 

9 each item has remained on such 

10 inventory; and 

11 ‘‘(cc) for items on which no 

12 action has been taken, the reasons 

13 for inaction, and an identifica14 tion of any official who is respon15 sible for such action; 

16 ‘‘(V) recommendations for such 

17 administrative and legislative actions 

18 as may be appropriate to resolve prob19 lems encountered by investors; and 

20 ‘‘(VI) any other information, as 

21 determined appropriate by the Investor 

22 Advocate. 

23 ‘‘(iii) INDEPENDENCE.—Each report 

24 required under this paragraph shall be pro25 vided directly to the Committees listed in 
954 

† HR 4173 EAS 

1 clause (i) without any prior review or com2 ment from the Commission, any commis3 sioner, any other officer or employee of the 

4 Commission, or the Office of Management 

5 and Budget. 

6 ‘‘(iv) CONFIDENTIALITY.—No report re7 quired under clause (i) may contain con8 fidential information. 

9 ‘‘(7) REGULATIONS.—The Commission shall, by 

10 regulation, establish procedures requiring a formal re11 sponse to all recommendations submitted to the Com12 mission by the Investor Advocate, not later than 3 

13 months after the date of such submission.’’. 

14 SEC. 915. STREAMLINING OF FILING PROCEDURES FOR 

15 SELF-REGULATORY ORGANIZATIONS. 

16 (a) FILING PROCEDURES.—Section 19(b) of the Secu17 rities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended 

18 by striking paragraph (2) (including the undesignated mat19 ter immediately following subparagraph (B)) and inserting 

20 the following: 

21 ‘‘(2) APPROVAL PROCESS.— 

22 ‘‘(A) APPROVAL PROCESS ESTABLISHED.— 

23 ‘‘(i) IN GENERAL.—Except as provided 

24 in clause (ii), not later than 45 days after 

25 the date of publication of a proposed rule 
955 

† HR 4173 EAS 

1 change under paragraph (1), the Commis2 sion shall— 

3 ‘‘(I) by order, approve the pro4 posed rule change; or 

5 ‘‘(II) institute proceedings under 

6 subparagraph (B) to determine wheth7 er the proposed rule change should be 

8 disapproved. 

9 ‘‘(ii) EXTENSION OF TIME PERIOD.— 

10 The Commission may extend the period es11 tablished under clause (i) by not more than 

12 an additional 45 days, if— 

13 ‘‘(I) the Commission determines 

14 that a longer period is appropriate 

15 and publishes the reasons for such de16 termination; or 

17 ‘‘(II) the self-regulatory organiza18 tion that filed the proposed rule change 

19 consents to the longer period. 

20 ‘‘(B) PROCEEDINGS.— 

21 ‘‘(i) NOTICE AND HEARING.—If the 

22 Commission does not approve a proposed 

23 rule change under subparagraph (A), the 

24 Commission shall provide to the self-regu-
956 

† HR 4173 EAS 

1 latory organization that filed the proposed 

2 rule change— 

3 ‘‘(I) notice of the grounds for dis4 approval under consideration; and 

5 ‘‘(II) opportunity for hearing, to 

6 be concluded not later than 180 days 

7 after the date of publication of notice 

8 of the filing of the proposed rule 

9 change. 

10 ‘‘(ii) ORDER OF APPROVAL OR DIS11 APPROVAL.— 

12 ‘‘(I) IN GENERAL.—Except as pro13 vided in subclause (II), not later than 

14 180 days after the date of publication 

15 under paragraph (1), the Commission 

16 shall issue an order approving or dis17 approving the proposed rule change. 

18 ‘‘(II) EXTENSION OF TIME PE19 RIOD.—The Commission may extend 

20 the period for issuance under clause (I) 

21 by not more than 60 days, if— 

22 ‘‘(aa) the Commission deter23 mines that a longer period is ap24 propriate and publishes the rea25 sons for such determination; or 
957 

† HR 4173 EAS 

1 ‘‘(bb) the self-regulatory orga2 nization that filed the proposed 

3 rule change consents to the longer 

4 period. 

5 ‘‘(C) STANDARDS FOR APPROVAL AND DIS6 APPROVAL.— 

7 ‘‘(i) APPROVAL.—The Commission 

8 shall approve a proposed rule change of a 

9 self-regulatory organization if it finds that 

10 such proposed rule change is consistent with 

11 the requirements of this title and the rules 

12 and regulations issued under this title that 

13 are applicable to such organization. 

14 ‘‘(ii) DISAPPROVAL.—The Commission 

15 shall disapprove a proposed rule change of 

16 a self-regulatory organization if it does not 

17 make a finding described in clause (i). 

18 ‘‘(iii) TIME FOR APPROVAL.—The 

19 Commission may not approve a proposed 

20 rule change earlier than 30 days after the 

21 date of publication under paragraph (1), 

22 unless the Commission finds good cause for 

23 so doing and publishes the reason for the 

24 finding. 
958 

† HR 4173 EAS 

1 ‘‘(D) RESULT OF FAILURE TO INSTITUTE OR

2 CONCLUDE PROCEEDINGS.—A proposed rule 

3 change shall be deemed to have been approved by 

4 the Commission, if— 

5 ‘‘(i) the Commission does not approve 

6 the proposed rule change or begin pro7 ceedings under subparagraph (B) within the 

8 period described in subparagraph (A); or 

9 ‘‘(ii) the Commission does not issue an 

10 order approving or disapproving the pro11 posed rule change under subparagraph (B) 

12 within the period described in subpara13 graph (B)(ii). 

14 ‘‘(E) PUBLICATION DATE BASED ON FED15 ERAL REGISTER PUBLISHING.—For purposes of 

16 this paragraph, if, after filing a proposed rule 

17 change with the Commission pursuant to para18 graph (1), a self-regulatory organization pub19 lishes a notice of the filing of such proposed rule 

20 change, together with the substantive terms of 

21 such proposed rule change, on a publicly acces22 sible website, the Commission shall thereafter 

23 send the notice to the Federal Register for publi24 cation thereof under paragraph (1) within 15 

25 days of the date on which such website publica-
959 

† HR 4173 EAS 

1 tion is made. If the Commission fails to send the 

2 notice for publication thereof within such 15 day 

3 period, then the date of publication shall be 

4 deemed to be the date on which such website pub5 lication was made.’’. 

6 (b) CLARIFICATION OF FILING DATE.— 

7 (1) RULE OF CONSTRUCTION.—Section 19(b) of 

8 the Securities Exchange Act of 1934 (15 U.S.C. 

9 78s(b)) is amended by adding at the end the fol10 lowing: 

11 ‘‘(10) RULE OF CONSTRUCTION RELATING TO

12 FILING DATE OF PROPOSED RULE CHANGES.— 

13 ‘‘(A) IN GENERAL.—For purposes of this 

14 subsection, the date of filing of a proposed rule 

15 change shall be deemed to be the date on which 

16 the Commission receives the proposed rule 

17 change. 

18 ‘‘(B) EXCEPTION.—A proposed rule change 

19 has not been received by the Commission for pur20 poses of subparagraph (A) if, not later than 7 

21 days after the date of receipt by the Commission, 

22 the Commission notifies the self-regulatory orga23 nization that such proposed rule change does not 

24 comply with the rules of the Commission relating 

25 to the required form of a proposed rule change.’’. 
960 

† HR 4173 EAS 

1 (2) PUBLICATION.—Section 19(b)(1) of the Secu2 rities Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is 

3 amended by striking ‘‘upon’’ and inserting ‘‘as soon 

4 as practicable after the date of’’. 

5 (c) EFFECTIVE DATE OF PROPOSED RULES.—Section 

6 19(b)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 

7 78s(b)(3)) is amended— 

8 (1) in subparagraph (A)— 

9 (A) by striking ‘‘may take effect’’ and in10 serting ‘‘shall take effect’’; and 

11 (B) by inserting ‘‘on any person, whether or 

12 not the person is a member of the self-regulatory 

13 organization’’ after ‘‘charge imposed by the self14 regulatory organization’’; and 

15 (2) in subparagraph (C)— 

16 (A) by amending the second sentence to read 

17 as follows: ‘‘At any time within the 60-day pe18 riod beginning on the date of filing of such a 

19 proposed rule change in accordance with the pro20 visions of paragraph (1), the Commission sum21 marily may temporarily suspend the change in 

22 the rules of the self-regulatory organization made 

23 thereby, if it appears to the Commission that 

24 such action is necessary or appropriate in the 

25 public interest, for the protection of investors, or 
961 

† HR 4173 EAS 

1 otherwise in furtherance of the purposes of this 

2 title.’’; 

3 (B) by inserting after the second sentence 

4 the following: ‘‘If the Commission takes such ac5 tion, the Commission shall institute proceedings 

6 under paragraph (2)(B) to determine whether 

7 the proposed rule should be approved or dis8 approved.’’; and 

9 (C) in the third sentence, by striking ‘‘the 

10 preceding sentence’’ and inserting ‘‘this subpara11 graph’’. 

12 (d) CONFORMING CHANGE.—Section 19(b)(4)(D) of the 

13 Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) 

14 is amended to read as follows: 

15 ‘‘(D)(i) The Commission shall order the 

16 temporary suspension of any change in the rules 

17 of a clearing agency made by a proposed rule 

18 change that has taken effect under paragraph 

19 (3), if the appropriate regulatory agency for the 

20 clearing agency notifies the Commission not 

21 later than 30 days after the date on which the 

22 proposed rule change was filed of— 

23 ‘‘(I) the determination by the appro24 priate regulatory agency that the rules of 

25 such clearing agency, as so changed, may be 
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† HR 4173 EAS 

1 inconsistent with the safeguarding of securi2 ties or funds in the custody or control of 

3 such clearing agency or for which it is re4 sponsible; and 

5 ‘‘(II) the reasons for the determination 

6 described in subclause (I). 

7 ‘‘(ii) If the Commission takes action under 

8 clause (i), the Commission shall institute pro9 ceedings under paragraph (2)(B) to determine if 

10 the proposed rule change should be approved or 

11 disapproved.’’. 

12 SEC. 916. STUDY REGARDING FINANCIAL LITERACY AMONG 

13 INVESTORS. 

14 (a) IN GENERAL.—The Commission shall conduct a 

15 study to identify— 

16 (1) the existing level of financial literacy among 

17 retail investors, including subgroups of investors iden18 tified by the Commission; 

19 (2) methods to improve the timing, content, and 

20 format of disclosures to investors with respect to fi21 nancial intermediaries, investment products, and in22 vestment services; 

23 (3) the most useful and understandable relevant 

24 information that retail investors need to make in25 formed financial decisions before engaging a financial 
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1 intermediary or purchasing an investment product or 

2 service that is typically sold to retail investors, in3 cluding shares of open-end companies, as that term is 

4 defined in section 5 of the Investment Company Act 

5 of 1940 (15 U.S.C. 80a–5) that are registered under 

6 section 8 of that Act; 

7 (4) methods to increase the transparency of ex8 penses and conflicts of interests in transactions in9 volving investment services and products, including 

10 shares of open-end companies described in paragraph 

11 (3); 

12 (5) the most effective existing private and public 

13 efforts to educate investors; and 

14 (6) in consultation with the Financial Literacy 

15 and Education Commission, a strategy (including, to 

16 the extent practicable, measurable goals and objec17 tives) to increase the financial literacy of investors in 

18 order to bring about a positive change in investor be19 havior. 

20 (b) REPORT.—Not later than 2 years after the date 

21 of enactment of this Act, the Commission shall submit a 

22 report on the study required under subsection (a) to— 

23 (1) the Committee on Banking, Housing, and 

24 Urban Affairs of the Senate; and 
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1 (2) the Committee on Financial Services of the 

2 House of Representatives. 

3 SEC. 917. STUDY REGARDING MUTUAL FUND ADVERTISING. 

4 (a) IN GENERAL.—The Comptroller General of the 

5 United States shall conduct a study on mutual fund adver6 tising to identify— 

7 (1) existing and proposed regulatory require8 ments for open-end investment company advertise9 ments; 

10 (2) current marketing practices for the sale of 

11 open-end investment company shares, including the 

12 use of past performance data, funds that have merged, 

13 and incubator funds; 

14 (3) the impact of such advertising on consumers; 

15 and 

16 (4) recommendations to improve investor protec17 tions in mutual fund advertising and additional in18 formation necessary to ensure that investors can make 

19 informed financial decisions when purchasing shares. 

20 (b) REPORT.—Not later than 1 year after the date of 

21 enactment of this Act, the Comptroller General of the United 

22 States shall submit a report on the results of the study con23 ducted under subsection (a) to— 

24 (1) the Committee on Banking, Housing, and 

25 Urban Affairs of the United States Senate; and 
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1 (2) the Committee on Financial Services of the 

2 House of Representatives. 

3 SEC. 918. CLARIFICATION OF COMMISSION AUTHORITY TO 

4 REQUIRE INVESTOR DISCLOSURES BEFORE 

5 PURCHASE OF INVESTMENT PRODUCTS AND 

6 SERVICES. 

7 Section 15 of the Securities Exchange Act of 1934 (15 

8 U.S.C. 78o) is amended by adding at the end the following: 

9 ‘‘(k) DISCLOSURES TO RETAIL INVESTORS.— 

10 ‘‘(1) IN GENERAL.—Notwithstanding any other 

11 provision of the securities laws, the Commission may 

12 issue rules designating documents or information that 

13 shall be provided by a broker or dealer to a retail in14 vestor before the purchase of an investment product or 

15 service by the retail investor. 

16 ‘‘(2) CONSIDERATIONS.—In developing any rules 

17 under paragraph (1), the Commission shall consider 

18 whether the rules will promote investor protection, ef19 ficiency, competition, and capital formation. 

20 ‘‘(3) FORM AND CONTENTS OF DOCUMENTS AND

21 INFORMATION.—Any documents or information des22 ignated under a rule promulgated under paragraph 

23 (1) shall— 

24 ‘‘(A) be in a summary format; and 
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1 ‘‘(B) contain clear and concise information 

2 about— 

3 ‘‘(i) investment objectives, strategies, 

4 costs, and risks; and 

5 ‘‘(ii) any compensation or other finan6 cial incentive received by a broker, dealer, 

7 or other intermediary in connection with 

8 the purchase of retail investment products.’’. 

9 SEC. 919. STUDY ON CONFLICTS OF INTEREST. 

10 (a) IN GENERAL.—The Comptroller General of the 

11 United States shall conduct a study— 

12 (1) to identify and examine potential conflicts of 

13 interest that exist between the staffs of the investment 

14 banking and equity and fixed income securities ana15 lyst functions within the same firm; and 

16 (2) to make recommendations to Congress de17 signed to protect investors in light of such conflicts. 

18 (b) CONSIDERATIONS.—In conducting the study under 

19 subsection (a), the Comptroller General shall— 

20 (1) consider— 

21 (A) the potential for investor harm resulting 

22 from conflicts, including consideration of the 

23 forms of misconduct engaged in by the several se24 curities firms and individuals that entered into 
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1 the Global Analyst Research Settlements in 2003 

2 (also known as the ‘‘Global Settlement’’); 

3 (B) the nature and benefits of the under4 takings to which those firms agreed in enforce5 ment proceedings, including firewalls between re6 search and investment banking, separate report7 ing lines, dedicated legal and compliance staffs, 

8 allocation of budget, physical separation, com9 pensation, employee performance evaluations, 

10 coverage decisions, limitations on soliciting in11 vestment banking business, disclosures, trans12 parency, and other measures; 

13 (C) whether any such undertakings should 

14 be codified and applied permanently to securities 

15 firms, or whether the Commission should adopt 

16 rules applying any such undertakings to securi17 ties firms; and 

18 (D) whether to recommend regulatory or 

19 legislative measures designed to mitigate possible 

20 adverse consequences to investors arising from 

21 the conflicts of interest or to enhance investor 

22 protection or confidence in the integrity of the 

23 securities markets; and 

24 (2) consult with State attorneys general, State 

25 securities officials, the Commission, the Financial In-
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1 dustry Regulatory Authority (‘‘FINRA’’), NYSE Reg2 ulation, investor advocates, brokers, dealers, retail in3 vestors, institutional investors, and academics. 

4 (c) REPORT.—The Comptroller General shall submit 

5 a report on the results of the study required by this section 

6 to the Committee on Banking, Housing, and Urban Affairs 

7 of the Senate and the Committee on Financial Services of 

8 the House of Representatives, not later than 18 months after 

9 the date of enactment of this Act. 

10 SEC. 919A. STUDY ON IMPROVED INVESTOR ACCESS TO IN11 FORMATION ON INVESTMENT ADVISERS AND 

12 BROKER-DEALERS. 

13 (a) STUDY.— 

14 (1) IN GENERAL.—Not later than 6 months after 

15 the date of enactment of this Act, the Commission 

16 shall complete a study, including recommendations, of 

17 ways to improve the access of investors to registration 

18 information (including disciplinary actions, regu19 latory, judicial, and arbitration proceedings, and 

20 other information) about registered and previously 

21 registered investment advisers, associated persons of 

22 investment advisers, brokers and dealers and their as23 sociated persons on the existing Central Registration 

24 Depository and Investment Adviser Registration De-
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1 pository systems, as well as identify additional infor2 mation that should be made publicly available. 

3 (2) CONTENTS.—The study required by sub4 section (a) shall include an analysis of the advantages 

5 and disadvantages of further centralizing access to the 

6 information contained in the 2 systems, including— 

7 (A) identification of those data pertinent to 

8 investors; and 

9 (B) the identification of the method and for10 mat for displaying and publishing such data to 

11 enhance accessibility by and utility to investors. 

12 (b) IMPLEMENTATION.—Not later than 18 months after 

13 the date of completion of the study required by subsection 

14 (a), the Commission shall implement any recommendations 

15 of the study. 

16 SEC. 919B. STUDY ON FINANCIAL PLANNERS AND THE USE 

17 OF FINANCIAL DESIGNATIONS. 

18 (a) IN GENERAL.—The Comptroller General of the 

19 United States shall conduct a study to evaluate— 

20 (1) the effectiveness of State and Federal regula21 tions to protect consumers from individuals who hold 

22 themselves out as financial planners through the use 

23 of misleading designations; 

24 (2) current State and Federal oversight structure 

25 and regulations for financial planners; and 
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1 (3) legal or regulatory gaps in the regulation of 

2 financial planners and other individuals who provide 

3 or offer to provide financial planning services to con4 sumers. 

5 (b) CONSIDERATIONS.—In conducting the study re6 quired under subsection (a), the Comptroller General shall 

7 consider— 

8 (1) the role of financial planners in providing 

9 advice regarding the management of financial re10 sources, including investment planning, income tax 

11 planning, education planning, retirement planning, 

12 estate planning, and risk management; 

13 (2) whether current regulations at the State and 

14 Federal level provide adequate ethical and profes15 sional standards for financial planners; 

16 (3) the use of the title ‘‘financial planner’’ and 

17 misleading designations in connection with sale of fi18 nancial products, including insurance and securities; 

19 (4) the possible risk posed to consumers by indi20 viduals who hold themselves out as financial planners 

21 through the use of misleading designations, including 

22 ‘‘financial advisor’’ and ‘‘financial consultant’’; 

23 (5) the ability of consumers to understand licens24 ing requirements and standards of care that apply to 

25 individuals who provide financial advice; 
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1 (6) the possible benefits to consumers of regula2 tion and professional oversight of financial planners; 

3 and 

4 (7) any other consideration that the Comptroller 

5 General deems necessary or appropriate to effectively 

6 execute the study required under subsection (a). 

7 (c) RECOMMENDATIONS.—In providing recommenda8 tions for the appropriate regulation of financial planners 

9 and other individuals who provide or offer to provide finan10 cial planning services, in order to protect consumers of fi11 nancial planning services, the Comptroller General shall 

12 consider— 

13 (1) the appropriate structure for regulation of fi14 nancial planners and individuals providing financial 

15 planning services; and 

16 (2) the appropriate scope of the regulations need17 ed to protect consumers, including but not limited to 

18 the need to establish competency standards, practice 

19 standards, ethical guidelines, disciplinary authority, 

20 and transparency to consumers. 

21 (d) REPORT.— 

22 (1) IN GENERAL.—Not later than 180 days after 

23 the date of enactment of this Act, the Comptroller 

24 General shall submit a report on the study required 

25 under subsection (a) to— 
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1 (A) the Committee on Banking, Housing, 

2 and Urban Affairs of the Senate; 

3 (B) the Special Committee on Aging of the 

4 Senate; and 

5 (C) the Committee on Financial Services of 

6 the House of Representatives. 

7 (2) CONTENT REQUIREMENTS.—The report re8 quired under paragraph (1) shall describe the find9 ings and determinations made by the Comptroller 

10 General in carrying out the study required under sub11 section (a), including a description of the consider12 ations, analysis, and government, public, industry, 

13 nonprofit and consumer input that the Comptroller 

14 General considered to make such findings, conclu15 sions, and legislative, regulatory, or other rec16 ommendations. 

17 Subtitle B—Increasing Regulatory 

18 Enforcement and Remedies 

19 SEC. 921. AUTHORITY TO ISSUE RULES RELATED TO MAN20 DATORY PREDISPUTE ARBITRATION. 

21 (a) AMENDMENT TO SECURITIES EXCHANGE ACT OF

22 1934.—Section 15 of the Securities Exchange Act of 1934 

23 (15 U.S.C. 78o), as amended by section 918, is amended 

24 by adding at the end the following: 
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1 ‘‘(l) AUTHORITY TO RESTRICT MANDATORY

2 PREDISPUTE ARBITRATION.—The Commission may con3 duct a rulemaking to reaffirm or prohibit, or impose or not 

4 impose conditions or limitations on the use of, agreements 

5 that require customers or clients of any broker, dealer, or 

6 municipal securities dealer to arbitrate any dispute between 

7 them and such broker, dealer, or municipal securities dealer 

8 that arises under the securities laws or the rules of a self9 regulatory organization, if the Commission finds that such 

10 reaffirmation, prohibition, imposition of conditions or limi11 tations, or other action is in the public interest and for 

12 the protection of investors.’’. 

13 (b) AMENDMENT TO INVESTMENT ADVISERS ACT OF

14 1940.—Section 205 of the Investment Advisers Act of 1940 

15 (15 U.S.C. 80b–5) is amended by adding at the end the 

16 following: 

17 ‘‘(f) AUTHORITY TO ISSUE RULES RELATED TO MAN18 DATORY PREDISPUTE ARBITRATION.—The Commission 

19 may conduct rulemaking to reaffirm or prohibit, or impose 

20 or not impose conditions or limitations on the use of, agree21 ments that require customers or clients of any investment 

22 adviser to arbitrate any dispute between them and such in23 vestment adviser that arises under the securities laws, as 

24 defined in section 3 of the Securities Exchange Act of 1934 

25 (15 U.S.C. 78c), or the rules of a self-regulatory organiza-
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1 tion, if the Commission finds that such reaffirmation, pro2 hibition, imposition of conditions or limitations, or other 

3 action is in the public interest and for the protection of 

4 investors.’’. 

5 SEC. 922. WHISTLEBLOWER PROTECTION. 

6 (a) IN GENERAL.—The Securities Exchange Act of 

7 1934 (15 U.S.C. 78a et seq.) is amended by inserting after 

8 section 21E the following: 

9 ‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 

10 PROTECTION. 

11 ‘‘(a) DEFINITIONS.—In this section the following defi12 nitions shall apply: 

13 ‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE AC14 TION.—The term ‘covered judicial or administrative 

15 action’ means any judicial or administrative action 

16 brought by the Commission under the securities laws 

17 that results in monetary sanctions exceeding 

18 $1,000,000. 

19 ‘‘(2) FUND.—The term ‘Fund’ means the Securi20 ties and Exchange Commission Investor Protection 

21 Fund. 

22 ‘‘(3) ORIGINAL INFORMATION.—The term ‘origi23 nal information’ means information that— 

24 ‘‘(A) is derived from the independent knowl25 edge or analysis of a whistleblower; 
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1 ‘‘(B) is not known to the Commission from 

2 any other source, unless the whistleblower is the 

3 original source of the information; and 

4 ‘‘(C) is not exclusively derived from an alle5 gation made in a judicial or administrative 

6 hearing, in a governmental report, hearing, 

7 audit, or investigation, or from the news media, 

8 unless the whistleblower is a source of the infor9 mation. 

10 ‘‘(4) MONETARY SANCTIONS.—The term ‘mone11 tary sanctions’, when used with respect to any judi12 cial or administrative action, means— 

13 ‘‘(A) any monies, including penalties, 

14 disgorgement, and interest, ordered to be paid; 

15 and 

16 ‘‘(B) any monies deposited into a 

17 disgorgement fund or other fund pursuant to sec18 tion 308(b) of the Sarbanes-Oxley Act of 2002 

19 (15 U.S.C. 7246(b)), as a result of such action 

20 or any settlement of such action. 

21 ‘‘(5) RELATED ACTION.—The term ‘related ac22 tion’, when used with respect to any judicial or ad23 ministrative action brought by the Commission under 

24 the securities laws, means any judicial or administra25 tive action brought by an entity described in sub-
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1 clauses (I) through (IV) of subsection (h)(2)(D)(i) that 

2 is based upon the original information provided by a 

3 whistleblower pursuant to subsection (a) that led to 

4 the successful enforcement of the Commission action. 

5 ‘‘(6) WHISTLEBLOWER.—The term ‘whistle6 blower’ means any individual, or 2 or more individ7 uals acting jointly, who provides information relating 

8 to a violation of the securities laws to the Commis9 sion, in a manner established, by rule or regulation, 

10 by the Commission. 

11 ‘‘(b) AWARDS.— 

12 ‘‘(1) IN GENERAL.—In any covered judicial or 

13 administrative action, or related action, the Commis14 sion, under regulations prescribed by the Commission 

15 and subject to subsection (c), shall pay an award or 

16 awards to 1 or more whistleblowers who voluntarily 

17 provided original information to the Commission that 

18 led to the successful enforcement of the covered judi19 cial or administrative action, or related action, in an 

20 aggregate amount equal to— 

21 ‘‘(A) not less than 10 percent, in total, of 

22 what has been collected of the monetary sanctions 

23 imposed in the action or related actions; and 
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1 ‘‘(B) not more than 30 percent, in total, of 

2 what has been collected of the monetary sanctions 

3 imposed in the action or related actions. 

4 ‘‘(2) PAYMENT OF AWARDS.—Any amount paid 

5 under paragraph (1) shall be paid from the Fund. 

6 ‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL

7 OF AWARD.— 

8 ‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— 

9 ‘‘(A) DISCRETION.—The determination of 

10 the amount of an award made under subsection 

11 (b) shall be in the discretion of the Commission. 

12 ‘‘(B) CRITERIA.—In determining the 

13 amount of an award made under subsection (b), 

14 the Commission shall take into account— 

15 ‘‘(i) the significance of the information 

16 provided by the whistleblower to the success 

17 of the covered judicial or administrative ac18 tion; 

19 ‘‘(ii) the degree of assistance provided 

20 by the whistleblower and any legal rep21 resentative of the whistleblower in a covered 

22 judicial or administrative action; 

23 ‘‘(iii) the programmatic interest of the 

24 Commission in deterring violations of the 

25 securities laws by making awards to whis-
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1 tleblowers who provide information that 

2 lead to the successful enforcement of such 

3 laws; and 

4 ‘‘(iv) such additional relevant factors 

5 as the Commission may establish by rule or 

6 regulation. 

7 ‘‘(2) DENIAL OF AWARD.—No award under sub8 section (b) shall be made— 

9 ‘‘(A) to any whistleblower who is, or was at 

10 the time the whistleblower acquired the original 

11 information submitted to the Commission, a 

12 member, officer, or employee of— 

13 ‘‘(i) an appropriate regulatory agency; 

14 ‘‘(ii) the Department of Justice; 

15 ‘‘(iii) a self-regulatory organization; 

16 ‘‘(iv) the Public Company Accounting 

17 Oversight Board; or 

18 ‘‘(v) a law enforcement organization; 

19 ‘‘(B) to any whistleblower who is convicted 

20 of a criminal violation related to the judicial or 

21 administrative action for which the whistle22 blower otherwise could receive an award under 

23 this section; 

24 ‘‘(C) to any whistleblower who gains the in25 formation through the performance of an audit 
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1 of financial statements required under the securi2 ties laws and for whom such submission would 

3 be contrary to the requirements of section 101A 

4 of the Securities Exchange Act of 1934 (15 

5 U.S.C. 78j–1); or 

6 ‘‘(D) to any whistleblower who fails to sub7 mit information to the Commission in such form 

8 as the Commission may, by rule, require. 

9 ‘‘(d) REPRESENTATION.— 

10 ‘‘(1) PERMITTED REPRESENTATION.—Any whis11 tleblower who makes a claim for an award under sub12 section (b) may be represented by counsel. 

13 ‘‘(2) REQUIRED REPRESENTATION.— 

14 ‘‘(A) IN GENERAL.—Any whistleblower who 

15 anonymously makes a claim for an award under 

16 subsection (b) shall be represented by counsel if 

17 the whistleblower anonymously submits the in18 formation upon which the claim is based. 

19 ‘‘(B) DISCLOSURE OF IDENTITY.—Prior to 

20 the payment of an award, a whistleblower shall 

21 disclose the identity of the whistleblower and 

22 provide such other information as the Commis23 sion may require, directly or through counsel for 

24 the whistleblower. 
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1 ‘‘(e) NO CONTRACT NECESSARY.—No contract with the 

2 Commission is necessary for any whistleblower to receive 

3 an award under subsection (b), unless otherwise required 

4 by the Commission by rule or regulation. 

5 ‘‘(f) APPEALS.—Any determination made under this 

6 section, including whether, to whom, or in what amount 

7 to make awards, shall be in the discretion of the Commis8 sion. Any such determination may be appealed to the ap9 propriate court of appeals of the United States not more 

10 than 30 days after the determination is issued by the Com11 mission. The court shall review the determination made by 

12 the Commission in accordance with section 706 of title 5, 

13 United States Code. 

14 ‘‘(g) INVESTOR PROTECTION FUND.— 

15 ‘‘(1) FUND ESTABLISHED.—There is established 

16 in the Treasury of the United States a fund to be 

17 known as the ‘Securities and Exchange Commission 

18 Investor Protection Fund’. 

19 ‘‘(2) USE OF FUND.—The Fund shall be avail20 able to the Commission, without further appropria21 tion or fiscal year limitation, for— 

22 ‘‘(A) paying awards to whistleblowers as 

23 provided in subsection (b); and 

24 ‘‘(B) funding the activities of the Inspector 

25 General of the Commission under section 4(i). 
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1 ‘‘(3) DEPOSITS AND CREDITS.—There shall be 

2 deposited into or credited to the Fund an amount 

3 equal to— 

4 ‘‘(A) the amount awarded under subsection 

5 (b) from any monetary sanction collected by the 

6 Commission in any judicial or administrative 

7 action brought by the Commission that is based 

8 on information provided by a whistleblower 

9 under the securities laws, unless, the balance of 

10 the Fund at the time the monetary sanction is 

11 collected exceeds $200,000,000; 

12 ‘‘(B) any monetary sanction added to a 

13 disgorgement fund or other fund pursuant to sec14 tion 308 of the Sarbanes-Oxley Act of 2002 (15 

15 U.S.C. 7246) that is not distributed to the vic16 tims for whom the disgorgement fund was estab17 lished, unless the balance of the disgorgement 

18 fund at the time the determination is made not 

19 to distribute the monetary sanction to such vic20 tims exceeds $100,000,000; and 

21 ‘‘(C) all income from investments made 

22 under paragraph (4). 

23 ‘‘(4) INVESTMENTS.— 

24 ‘‘(A) AMOUNTS IN FUND MAY BE IN25 VESTED.—The Commission may request the Sec-
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1 retary of the Treasury to invest the portion of 

2 the Fund that is not, in the discretion of the 

3 Commission, required to meet the current needs 

4 of the Fund. 

5 ‘‘(B) ELIGIBLE INVESTMENTS.—Investments 

6 shall be made by the Secretary of the Treasury 

7 in obligations of the United States or obligations 

8 that are guaranteed as to principal and interest 

9 by the United States, with maturities suitable to 

10 the needs of the Fund as determined by the Com11 mission on the record. 

12 ‘‘(C) INTEREST AND PROCEEDS CRED13 ITED.—The interest on, and the proceeds from 

14 the sale or redemption of, any obligations held in 

15 the Fund shall be credited to the Fund. 

16 ‘‘(5) REPORTS TO CONGRESS.—Not later than 

17 October 30 of each fiscal year beginning after the date 

18 of enactment of this subsection, the Commission shall 

19 submit to the Committee on Banking, Housing, and 

20 Urban Affairs of the Senate, and the Committee on 

21 Financial Services of the House of Representatives a 

22 report on— 

23 ‘‘(A) the whistleblower award program, es24 tablished under this section, including— 
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1 ‘‘(i) a description of the number of 

2 awards granted; and 

3 ‘‘(ii) the types of cases in which 

4 awards were granted during the preceding 

5 fiscal year; 

6 ‘‘(B) the balance of the Fund at the begin7 ning of the preceding fiscal year; 

8 ‘‘(C) the amounts deposited into or credited 

9 to the Fund during the preceding fiscal year; 

10 ‘‘(D) the amount of earnings on investments 

11 made under paragraph (4) during the preceding 

12 fiscal year; 

13 ‘‘(E) the amount paid from the Fund dur14 ing the preceding fiscal year to whistleblowers 

15 pursuant to subsection (b); 

16 ‘‘(F) the balance of the Fund at the end of 

17 the preceding fiscal year; and 

18 ‘‘(G) a complete set of audited financial 

19 statements, including— 

20 ‘‘(i) a balance sheet; 

21 ‘‘(ii) income statement; and 

22 ‘‘(iii) cash flow analysis. 

23 ‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 

24 ‘‘(1) PROHIBITION AGAINST RETALIATION.— 
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1 ‘‘(A) IN GENERAL.—No employer may dis2 charge, demote, suspend, threaten, harass, di3 rectly or indirectly, or in any other manner dis4 criminate against, a whistleblower in the terms 

5 and conditions of employment because of any 

6 lawful act done by the whistleblower— 

7 ‘‘(i) in providing information to the 

8 Commission in accordance with subsection 

9 (a); or 

10 ‘‘(ii) in assisting in any investigation 

11 or judicial or administrative action of the 

12 Commission based upon or related to such 

13 information. 

14 ‘‘(B) ENFORCEMENT.— 

15 ‘‘(i) CAUSE OF ACTION.—An indi16 vidual who alleges discharge or other dis17 crimination in violation of subparagraph 

18 (A) may bring an action under this sub19 section in the appropriate district court of 

20 the United States for the relief provided in 

21 subparagraph (C). 

22 ‘‘(ii) SUBPOENAS.—A subpoena requir23 ing the attendance of a witness at a trial or 

24 hearing conducted under this section may 

25 be served at any place in the United States. 
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1 ‘‘(iii) STATUTE OF LIMITATIONS.— 

2 ‘‘(I) IN GENERAL.—An action 

3 under this subsection may not be 

4 brought— 

5 ‘‘(aa) more than 6 years 

6 after the date on which the viola7 tion of subparagraph (A) oc8 curred; or 

9 ‘‘(bb) more than 3 years after 

10 the date when facts material to 

11 the right of action are known or 

12 reasonably should have been 

13 known by the employee alleging a 

14 violation of subparagraph (A). 

15 ‘‘(II) REQUIRED ACTION WITHIN

16 10 YEARS.—Notwithstanding subclause 

17 (I), an action under this subsection 

18 may not in any circumstance be 

19 brought more than 10 years after the 

20 date on which the violation occurs. 

21 ‘‘(C) RELIEF.—Relief for an individual 

22 prevailing in an action brought under subpara23 graph (B) shall include— 
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1 ‘‘(i) reinstatement with the same se2 niority status that the individual would 

3 have had, but for the discrimination; 

4 ‘‘(ii) 2 times the amount of back pay 

5 otherwise owed to the individual, with in6 terest; and 

7 ‘‘(iii) compensation for litigation costs, 

8 expert witness fees, and reasonable attor9 neys’ fees. 

10 ‘‘(2) CONFIDENTIALITY.— 

11 ‘‘(A) IN GENERAL.—Unless and until re12 quired to be disclosed to a defendant or respond13 ent in connection with a proceeding instituted by 

14 the Commission or any entity described in sub15 paragraph (D), all information provided to the 

16 Commission by a whistleblower— 

17 ‘‘(i) in any proceeding in any Federal 

18 or State court or administrative agency— 

19 ‘‘(I) shall be confidential and 

20 privileged as an evidentiary matter; 

21 and 

22 ‘‘(II) shall not be subject to civil 

23 discovery or other legal process; and 

24 ‘‘(ii) shall not be subject to disclosure 

25 under section 552 of title 5, United States 
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1 Code (commonly referred to as the Freedom 

2 of Information Act) or under any pro3 ceeding under that section. 

4 ‘‘(B) EXEMPTED STATUTE.—For purposes 

5 of section 552 of title 5, United States Code, this 

6 paragraph shall be considered a statute described 

7 in subsection (b)(3)(B) of such section 552. 

8 ‘‘(C) RULE OF CONSTRUCTION.—Nothing in 

9 this section is intended to limit, or shall be con10 strued to limit, the ability of the Attorney Gen11 eral to present such evidence to a grand jury or 

12 to share such evidence with potential witnesses or 

13 defendants in the course of an ongoing criminal 

14 investigation. 

15 ‘‘(D) AVAILABILITY TO GOVERNMENT AGEN16 CIES.— 

17 ‘‘(i) IN GENERAL.—Without the loss of 

18 its status as confidential and privileged in 

19 the hands of the Commission, all informa20 tion referred to in subparagraph (A) may, 

21 in the discretion of the Commission, when 

22 determined by the Commission to be nec23 essary to accomplish the purposes of this 

24 Act and to protect investors, be made avail25 able to— 
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1 ‘‘(I) the Attorney General of the 

2 United States; 

3 ‘‘(II) an appropriate regulatory 

4 authority; 

5 ‘‘(III) a self-regulatory organiza6 tion; 

7 ‘‘(IV) a State attorney general in 

8 connection with any criminal inves9 tigation; 

10 ‘‘(V) any appropriate State regu11 latory authority; 

12 ‘‘(VI) the Public Company Ac13 counting Oversight Board; 

14 ‘‘(VII) a foreign securities author15 ity; and 

16 ‘‘(VIII) a foreign law enforcement 

17 authority. 

18 ‘‘(ii) CONFIDENTIALITY.— 

19 ‘‘(I) IN GENERAL.—Each of the 

20 entities described in subclauses (I) 

21 through (VI) of clause (i) shall main22 tain such information as confidential 

23 and privileged, in accordance with the 

24 requirements established under sub25 paragraph (A). 
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1 ‘‘(II) FOREIGN AUTHORITIES.— 

2 Each of the entities described in sub3 clauses (VII) and (VIII) of clause (i) 

4 shall maintain such information in ac5 cordance with such assurances of con6 fidentiality as the Commission deter7 mines appropriate. 

8 ‘‘(3) RIGHTS RETAINED.—Nothing in this section 

9 shall be deemed to diminish the rights, privileges, or 

10 remedies of any whistleblower under any Federal or 

11 State law, or under any collective bargaining agree12 ment. 

13 ‘‘(i) PROVISION OF FALSE INFORMATION.—A whistle14 blower shall not be entitled to an award under this section 

15 if the whistleblower— 

16 ‘‘(1) knowingly and willfully makes any false, 

17 fictitious, or fraudulent statement or representation; 

18 or 

19 ‘‘(2) uses any false writing or document knowing 

20 the writing or document contains any false, fictitious, 

21 or fraudulent statement or entry. 

22 ‘‘(j) 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 provi-
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1 sions of this section consistent with the purposes of this sec2 tion.’’. 

3 (b) PROTECTION FOR EMPLOYEES OF NATIONALLY

4 RECOGNIZED STATISTICAL RATING ORGANIZATIONS.—Sec5 tion 1514A(a) of title 18, United States Code, is amended— 

6 (1) by inserting ‘‘or nationally recognized statis7 tical rating organization (as defined in section 3(a) 

8 of the Securities Exchange Act of 1934 (15 U.S.C. 

9 78c),’’ after ‘‘78o(d)),’’; and 

10 (2) by inserting ‘‘or nationally recognized statis11 tical rating organization’’ after ‘‘such company’’. 

12 SEC. 923. CONFORMING AMENDMENTS FOR WHISTLE13 BLOWER PROTECTION. 

14 (a) IN GENERAL.— 

15 (1) SECURITIES ACT OF 1933.—Section 

16 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C. 

17 77t(d)(3)(A)) is amended by inserting ‘‘and section 

18 21F of the Securities Exchange Act of 1934’’ after 

19 ‘‘the Sarbanes-Oxley Act of 2002’’. 

20 (2) INVESTMENT COMPANY ACT OF 1940.—Section 

21 42(e)(3)(A) of the Investment Company Act of 1940 

22 (15 U.S.C. 80a–41(e)(3)(A)) is amended by inserting 

23 ‘‘and section 21F of the Securities Exchange Act of 

24 1934’’ after ‘‘the Sarbanes-Oxley Act of 2002’’. 
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1 (3) INVESTMENT ADVISERS ACT OF 1940.—Sec2 tion 209(e)(3)(A) of the Investment Advisers Act of 

3 1940 (15 U.S.C. 80b–9(e)(3)(A)) is amended by in4 serting ‘‘and section 21F of the Securities Exchange 

5 Act of 1934’’ after ‘‘the Sarbanes-Oxley Act of 2002’’. 

6 (b) SECURITIES EXCHANGE ACT.— 

7 (1) SECTION 21.—Section 21(d)(3)(C)(i) of the 

8 Securities Exchange Act of 1934 (15 U.S.C. 

9 78u(d)(3)(C)(i)) is amended by inserting ‘‘and section 

10 21F of this title’’ after ‘‘the Sarbanes-Oxley Act of 

11 2002’’. 

12 (2) SECTION 21A.—Section 21A of the Securities 

13 Exchange Act of 1934 (15 U.S.C. 78u–1) is amend14 ed— 

15 (A) in subsection (d)(1) by— 

16 (i) striking ‘‘(subject to subsection 

17 (e))’’; and 

18 (ii) inserting ‘‘and section 21F of this 

19 title’’ after ‘‘the Sarbanes-Oxley Act of 

20 2002’’; 

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

22 (C) by redesignating subsections (f) and (g) 

23 as subsections (e) and (f), respectively. 
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1 SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS 

2 FOR WHISTLEBLOWER PROTECTION. 

3 (a) IMPLEMENTING RULES.—The Commission shall 

4 issue final regulations implementing the provisions of sec5 tion 21F of the Securities Exchange Act of 1934, as added 

6 by this subtitle, not later than 270 days after the date of 

7 enactment of this Act. 

8 (b) ORIGINAL INFORMATION.—Information provided 

9 to the Commission by a whistleblower in accordance with 

10 the regulations referenced in subsection (a) shall not lose 

11 the status of original information (as defined in section 

12 21F(i)(1) of the Securities Exchange Act of 1934, as added 

13 by this subtitle) solely because the whistleblower provided 

14 the information prior to the effective date of the regulations, 

15 provided that the information is— 

16 (1) provided by the whistleblower after the date 

17 of enactment of this subtitle, or monetary sanctions 

18 are collected after the date of enactment of this sub19 title; or 

20 (2) related to a violation for which an award 

21 under section 21F of the Securities Exchange Act of 

22 1934, as added by this subtitle, could have been paid 

23 at the time the information was provided by the whis24 tleblower. 

25 (c) AWARDS.—A whistleblower may receive an award 

26 pursuant to section 21F of the Securities Exchange Act of 
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1 1934, as added by this subtitle, regardless of whether any 

2 violation of a provision of the securities laws, or a rule or 

3 regulation thereunder, underlying the judicial or adminis4 trative action upon which the award is based, occurred 

5 prior to the date of enactment of this subtitle. 

6 SEC. 925. COLLATERAL BARS. 

7 (a) SECURITIES EXCHANGE ACT OF 1934.— 

8 (1) SECTION 15.—Section 15(b)(6)(A) of the Se9 curities Exchange Act of 1934 (15 U.S.C. 

10 78o(b)(6)(A)) is amended by striking ‘‘12 months, or 

11 bar such person from being associated with a broker 

12 or dealer,’’ and inserting ‘‘12 months, or bar any 

13 such person from being associated with a broker, deal14 er, investment adviser, municipal securities dealer, 

15 municipal advisor, transfer agent, or nationally rec16 ognized statistical rating organization,’’. 

17 (2) SECTION 15B.—Section 15B(c)(4) of the Se18 curities Exchange Act of 1934 (15 U.S.C. 78o– 

19 4(c)(4)) is amended by striking ‘‘twelve months or bar 

20 any such person from being associated with a munic21 ipal securities dealer,’’ and inserting ‘‘12 months or 

22 bar any such person from being associated with a 

23 broker, dealer, investment adviser, municipal securi24 ties dealer, municipal advisor, transfer agent, or na25 tionally recognized statistical rating organization,’’. 
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1 (3) SECTION 17A.—Section 17A(c)(4)(C) of the 

2 Securities Exchange Act of 1934 (15 U.S.C. 78q– 

3 1(c)(4)(C)) is amended by striking ‘‘twelve months or 

4 bar any such person from being associated with the 

5 transfer agent,’’ and inserting ‘‘12 months or bar any 

6 such person from being associated with any transfer 

7 agent, broker, dealer, investment adviser, municipal 

8 securities dealer, municipal advisor, or nationally 

9 recognized statistical rating organization,’’. 

10 (b) INVESTMENT ADVISERS ACT OF 1940.—Section 

11 203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 

12 80b–3(f)) is amended by striking ‘‘twelve months or bar any 

13 such person from being associated with an investment ad14 viser,’’ and inserting ‘‘12 months or bar any such person 

15 from being associated with an investment adviser, broker, 

16 dealer, municipal securities dealer, municipal advisor, 

17 transfer agent, or nationally recognized statistical rating 

18 organization,’’. 

19 SEC. 926. DISQUALIFYING FELONS AND OTHER ‘‘BAD AC20 TORS’’ FROM REGULATION D OFFERINGS. 

21 Not later than 1 year after the date of enactment of 

22 this Act, the Commission shall issue rules for the disquali23 fication of offerings and sales of securities made under sec24 tion 230.506 of title 17, Code of Federal Regulations, that— 
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1 (1) are substantially similar to the provisions of 

2 section 230.262 of title 17, Code of Federal Regula3 tions, or any successor thereto; and 

4 (2) disqualify any offering or sale of securities 

5 by a person that— 

6 (A) is subject to a final order of a State se7 curities commission (or an agency or officer of a 

8 State performing like functions), a State author9 ity that supervises or examines banks, savings 

10 associations, or credit unions, a State insurance 

11 commission (or an agency or officer of a State 

12 performing like functions), an appropriate Fed13 eral banking agency, or the National Credit 

14 Union Administration, that— 

15 (i) bars the person from— 

16 (I) association with an entity reg17 ulated by such commission, authority, 

18 agency, or officer; 

19 (II) engaging in the business of 

20 securities, insurance, or banking; or 

21 (III) engaging in savings associa22 tion or credit union activities; or 

23 (ii) constitutes a final order based on 

24 a violation of any law or regulation that 

25 prohibits fraudulent, manipulative, or de-
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1 ceptive conduct within the 10-year period 

2 ending on the date of the filing of the offer 

3 or sale; or 

4 (B) has been convicted of any felony or mis5 demeanor in connection with the purchase or 

6 sale of any security or involving the making of 

7 any false filing with the Commission. 

8 SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGA9 NIZATION RULES. 

10 Section 29(a) of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78cc(a)) is amended by striking ‘‘an exchange 

12 required thereby’’ and inserting ‘‘a self-regulatory organiza13 tion,’’. 

14 SEC. 928. CLARIFICATION THAT SECTION 205 OF THE IN15 VESTMENT ADVISERS ACT OF 1940 DOES NOT 

16 APPLY TO STATE-REGISTERED ADVISERS. 

17 Section 205(a) of the Investment Advisers Act of 1940 

18 (15 U.S.C. 80b–5(a)) is amended, in the matter preceding 

19 paragraph (1)— 

20 (1) by striking ‘‘, unless exempt from registra21 tion pursuant to section 203(b),’’ and inserting ‘‘reg22 istered or required to be registered with the Commis23 sion’’; 
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1 (2) by striking ‘‘make use of the mails or any 

2 means or instrumentality of interstate commerce, di3 rectly or indirectly, to’’; and 

4 (3) by striking ‘‘to’’ after ‘‘in any way’’. 

5 SEC. 929. UNLAWFUL MARGIN LENDING. 

6 Section 7(c)(1)(A) of the Securities Exchange Act of 

7 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; 

8 and’’ and inserting ‘‘; or’’. 

9 SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES 

10 AND AFFILIATES OF PUBLICLY TRADED COM11 PANIES. 

12 Section 1514A of title 18, United States Code, is 

13 amended by inserting ‘‘including any subsidiary or affiliate 

14 whose financial information is included in the consolidated 

15 financial statements of such company’’ after ‘‘the Securities 

16 Exchange Act of 1934 (15 U.S.C. 78o(d))’’. 

17 SEC. 929B. FAIR FUND AMENDMENTS. 

18 Section 308 of the Sarbanes-Oxley Act of 2002 (15 

19 U.S.C. 7246(a)) is amended— 

20 (1) by striking subsection (a) and inserting the 

21 following: 

22 ‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RELIEF

23 OF VICTIMS.—If, in any judicial or administrative action 

24 brought by the Commission under the securities laws, the 

25 Commission obtains a civil penalty against any person for 
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1 a violation of such laws, or such person agrees, in settlement 

2 of any such action, to such civil penalty, the amount of 

3 such civil penalty shall, on the motion or at the direction 

4 of the Commission, be added to and become part of a 

5 disgorgement fund or other fund established for the benefit 

6 of the victims of such violation.’’; 

7 (2) in subsection (b)— 

8 (A) by striking ‘‘for a disgorgement fund 

9 described in subsection (a)’’ and inserting ‘‘for a 

10 disgorgement fund or other fund described in 

11 subsection (a)’’; and 

12 (B) by striking ‘‘in the disgorgement fund’’ 

13 and inserting ‘‘in such fund’’; and 

14 (3) by striking subsection (e). 

15 SEC. 929C. INCREASING THE BORROWING LIMIT ON TREAS16 URY LOANS. 

17 Section 4(h) of the Securities Investor Protection Act 

18 of 1970 (15 U.S.C. 78ddd(h)) is amended in the first sen19 tence, by striking ‘‘$1,000,000,000’’ and inserting 

20 ‘‘$2,500,000,000’’. 

21 Subtitle C—Improvements to the 

22 Regulation of Credit Rating 

23 Agencies 

24 SEC. 931. FINDINGS. 

25 Congress finds the following: 
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1 (1) Because of the systemic importance of credit 

2 ratings and the reliance placed on credit ratings by 

3 individual and institutional investors and financial 

4 regulators, the activities and performances of credit 

5 rating agencies, including nationally recognized sta6 tistical rating organizations, are matters of national 

7 public interest, as credit rating agencies are central 

8 to capital formation, investor confidence, and the effi9 cient performance of the United States economy. 

10 (2) Credit rating agencies, including nationally 

11 recognized statistical rating organizations, play a 

12 critical ‘‘gatekeeper’’ role in the debt market that is 

13 functionally similar to that of securities analysts, who 

14 evaluate the quality of securities in the equity market, 

15 and auditors, who review the financial statements of 

16 firms. Such role justifies a similar level of public 

17 oversight and accountability. 

18 (3) Because credit rating agencies perform eval19 uative and analytical services on behalf of clients, 

20 much as other financial ‘‘gatekeepers’’ do, the activi21 ties of credit rating agencies are fundamentally com22 mercial in character and should be subject to the same 

23 standards of liability and oversight as apply to audi24 tors, securities analysts, and investment bankers. 
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1 (4) In certain activities, particularly in advising 

2 arrangers of structured financial products on poten3 tial ratings of such products, credit rating agencies 

4 face conflicts of interest that need to be carefully mon5 itored and that therefore should be addressed explic6 itly in legislation in order to give clearer authority 

7 to the Securities and Exchange Commission. 

8 (5) In the recent financial crisis, the ratings on 

9 structured financial products have proven to be inac10 curate. This inaccuracy contributed significantly to 

11 the mismanagement of risks by financial institutions 

12 and investors, which in turn adversely impacted the 

13 health of the economy in the United States and 

14 around the world. Such inaccuracy necessitates in15 creased accountability on the part of credit rating 

16 agencies. 

17 SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND 

18 TRANSPARENCY OF NATIONALLY RECOG19 NIZED STATISTICAL RATING ORGANIZA20 TIONS. 

21 Section 15E of the Securities Exchange Act of 1934 

22 (15 U.S.C. 78o–7) is amended— 

23 (1) in subsection (c)— 

24 (A) in paragraph (2)— 
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1 (i) in the second sentence, by inserting 

2 ‘‘any other provision of this section, or’’ 

3 after ‘‘Notwithstanding’’; and 

4 (ii) by inserting after the period at the 

5 end the following: ‘‘Nothing in this para6 graph may be construed to afford a defense 

7 against any action or proceeding brought by 

8 the Commission to enforce the antifraud 

9 provisions of the securities laws.’’; and 

10 (B) by adding at the end the following: 

11 ‘‘(3) INTERNAL CONTROLS OVER PROCESSES FOR

12 DETERMINING CREDIT RATINGS.— 

13 ‘‘(A) IN GENERAL.—Each nationally recog14 nized statistical rating organization shall estab15 lish, maintain, enforce, and document an effec16 tive internal control structure governing the im17 plementation of and adherence to policies, proce18 dures, and methodologies for determining credit 

19 ratings, taking into consideration such factors as 

20 the Commission may prescribe, by rule. 

21 ‘‘(B) ATTESTATION REQUIREMENT.—The 

22 Commission shall prescribe rules requiring each 

23 nationally recognized statistical rating organiza24 tion to submit to the Commission an annual in25 ternal controls report, which shall contain— 
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1 ‘‘(i) a description of the responsibility 

2 of the management of the nationally recog3 nized statistical rating organization in es4 tablishing and maintaining an effective in5 ternal control structure under subparagraph 

6 (A); 

7 ‘‘(ii) an assessment of the effectiveness 

8 of the internal control structure of the na9 tionally recognized statistical rating organi10 zation; and 

11 ‘‘(iii) the attestation of the chief execu12 tive officer, or equivalent individual, of the 

13 nationally recognized statistical rating or14 ganization.’’; 

15 (2) in subsection (d)— 

16 (A) in the subsection heading, by inserting 

17 ‘‘FINE,’’ after ‘‘CENSURE,’’; 

18 (B) by inserting ‘‘fine,’’ after ‘‘censure,’’ 

19 each place that term appears; 

20 (C) in paragraph (2), by redesignating sub21 paragraphs (A) and (B) as clauses (i) and (ii), 

22 respectively, and adjusting the clause margins 

23 accordingly; 

24 (D) by redesignating paragraphs (1) 

25 through (5) as subparagraphs (A) through (E), 
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1 respectively, and adjusting the subparagraph 

2 margins accordingly; 

3 (E) in the matter preceding subparagraph 

4 (A), as so redesignated, by striking ‘‘The Com5 mission’’ and inserting the following: 

6 ‘‘(1) IN GENERAL.—The Commission’’; 

7 (F) in subparagraph (D), as so redesig8 nated, by striking ‘‘or’’ at the end; 

9 (G) in subparagraph (E), as so redesig10 nated, by striking the period at the end and in11 serting a semicolon; and 

12 (H) by adding at the end the following: 

13 ‘‘(F) has failed reasonably to supervise, 

14 with a view to preventing a violation of the secu15 rities laws, an individual who commits such a 

16 violation, if the individual is subject to the su17 pervision of that person. 

18 ‘‘(2) SUSPENSION OR REVOCATION FOR PAR19 TICULAR CLASS OF SECURITIES.— 

20 ‘‘(A) IN GENERAL.—The Commission may 

21 temporarily suspend or permanently revoke the 

22 registration of a nationally recognized statistical 

23 rating organization with respect to a particular 

24 class or subclass of securities, if the Commission 

25 finds, on the record after notice and opportunity 
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1 for hearing, that the nationally recognized statis2 tical rating organization does not have adequate 

3 financial and managerial resources to consist4 ently produce credit ratings with integrity. 

5 ‘‘(B) CONSIDERATIONS.—In making any 

6 determination under subparagraph (A), the 

7 Commission shall consider— 

8 ‘‘(i) whether the nationally recognized 

9 statistical rating organization has failed 

10 over a sustained period of time, as deter11 mined by the Commission, to produce rat12 ings that are accurate for that class or sub13 class of securities; and 

14 ‘‘(ii) such other factors as the Commis15 sion may determine.’’; 

16 (3) in subsection (h), by adding at the end the 

17 following: 

18 ‘‘(3) SEPARATION OF RATINGS FROM SALES AND

19 MARKETING.— 

20 ‘‘(A) RULES REQUIRED.—The Commission 

21 shall issue rules to prevent the sales and mar22 keting considerations of a nationally recognized 

23 statistical rating organization from influencing 

24 the production of ratings by the nationally recog25 nized statistical rating organization. 
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1 ‘‘(B) CONTENTS OF RULES.—The rules 

2 issued under subparagraph (A) shall provide 

3 for— 

4 ‘‘(i) exceptions for small nationally 

5 recognized statistical rating organizations 

6 with respect to which the Commission deter7 mines that the separation of the production 

8 of ratings and sales and marketing activi9 ties is not appropriate; and 

10 ‘‘(ii) suspension or revocation of the 

11 registration of a nationally recognized sta12 tistical rating organization, if the Commis13 sion finds, on the record, after notice and 

14 opportunity for a hearing, that— 

15 ‘‘(I) the nationally recognized sta16 tistical rating organization has com17 mitted a violation of a rule issued 

18 under this subsection; and 

19 ‘‘(II) the violation of a rule issued 

20 under this subsection affected a rat21 ing.’’; 

22 (4) in subsection (j)— 

23 (A) by striking ‘‘Each’’ and inserting the 

24 following: 

25 ‘‘(1) IN GENERAL.—Each’’; and 
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1 (B) by adding at the end the following: 

2 ‘‘(2) LIMITATIONS.— 

3 ‘‘(A) IN GENERAL.—Except as provided in 

4 subparagraph (B), an individual designated 

5 under paragraph (1) may not, while serving in 

6 the designated capacity— 

7 ‘‘(i) perform credit ratings; 

8 ‘‘(ii) participate in the development of 

9 ratings methodologies or models; 

10 ‘‘(iii) perform marketing or sales func11 tions; or 

12 ‘‘(iv) participate in establishing com13 pensation levels, other than for employees 

14 working for that individual. 

15 ‘‘(B) EXCEPTION.—The Commission may 

16 exempt a small nationally recognized statistical 

17 rating organization from the limitations under 

18 this paragraph, if the Commission finds that 

19 compliance with such limitations would impose 

20 an unreasonable burden on the nationally recog21 nized statistical rating organization. 

22 ‘‘(3) OTHER DUTIES.—Each individual des23 ignated under paragraph (1) shall establish proce24 dures for the receipt, retention, and treatment of— 
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1 ‘‘(A) complaints regarding credit ratings, 

2 models, methodologies, and compliance with the 

3 securities laws and the policies and procedures 

4 developed under this section; and 

5 ‘‘(B) confidential, anonymous complaints 

6 by employees or users of credit ratings. 

7 ‘‘(4) ANNUAL REPORTS REQUIRED.— 

8 ‘‘(A) ANNUAL REPORTS REQUIRED.—Each 

9 individual designated under paragraph (1) shall 

10 submit to the nationally recognized statistical 

11 rating organization an annual report on the 

12 compliance of the nationally recognized statis13 tical rating organization with the securities laws 

14 and the policies and procedures of the nationally 

15 recognized statistical rating organization that 

16 includes— 

17 ‘‘(i) a description of any material 

18 changes to the code of ethics and conflict of 

19 interest policies of the nationally recognized 

20 statistical rating organization; and 

21 ‘‘(ii) a certification that the report is 

22 accurate and complete. 

23 ‘‘(B) SUBMISSION OF REPORTS TO THE

24 COMMISSION.—Each nationally recognized statis25 tical rating organization shall file the reports re-
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1 quired under subparagraph (A) together with the 

2 financial report that is required to be submitted 

3 to the Commission under this section.’’; and 

4 (5) by striking subsection (p) and inserting the 

5 following: 

6 ‘‘(p) REGULATION OF NATIONALLY RECOGNIZED STA7 TISTICAL RATING ORGANIZATIONS.— 

8 ‘‘(1) ESTABLISHMENT OF OFFICE OF CREDIT

9 RATINGS.— 

10 ‘‘(A) OFFICE ESTABLISHED.—The Commis11 sion shall establish within the Commission an 

12 Office of Credit Ratings (referred to in this sub13 section as the ‘Office’) to administer the rules of 

14 the Commission— 

15 ‘‘(i) with respect to the practices of na16 tionally recognized statistical rating organi17 zations in determining ratings, for the pro18 tection of users of credit ratings and in the 

19 public interest; 

20 ‘‘(ii) to promote accuracy in credit rat21 ings issued by nationally recognized statis22 tical rating organizations; and 

23 ‘‘(iii) to ensure that such ratings are 

24 not unduly influenced by conflicts of inter25 est. 
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1 ‘‘(B) DIRECTOR OF THE OFFICE.—The head 

2 of the Office shall be the Director, who shall re3 port to the Chairman. 

4 ‘‘(2) STAFFING.—The Office established under 

5 this subsection shall be staffed sufficiently to carry 

6 out fully the requirements of this section. The staff 

7 shall include persons with knowledge of and expertise 

8 in corporate, municipal, and structured debt finance. 

9 ‘‘(3) COMMISSION EXAMINATIONS.— 

10 ‘‘(A) ANNUAL EXAMINATIONS REQUIRED.— 

11 The Office shall conduct an examination of each 

12 nationally recognized statistical rating organiza13 tion at least annually. 

14 ‘‘(B) CONDUCT OF EXAMINATIONS.—Each 

15 examination under subparagraph (A) shall in16 clude a review of— 

17 ‘‘(i) whether the nationally recognized 

18 statistical rating organization conducts 

19 business in accordance with the policies, 

20 procedures, and rating methodologies of the 

21 nationally recognized statistical rating or22 ganization; 

23 ‘‘(ii) the management of conflicts of in24 terest by the nationally recognized statis25 tical rating organization; 
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1 ‘‘(iii) implementation of ethics policies 

2 by the nationally recognized statistical rat3 ing organization; 

4 ‘‘(iv) the internal supervisory controls 

5 of the nationally recognized statistical rat6 ing organization; 

7 ‘‘(v) the governance of the nationally 

8 recognized statistical rating organization; 

9 ‘‘(vi) the activities of the individual 

10 designated by the nationally recognized sta11 tistical rating organization under sub12 section (j)(1); 

13 ‘‘(vii) the processing of complaints by 

14 the nationally recognized statistical rating 

15 organization; and 

16 ‘‘(viii) the policies of the nationally 

17 recognized statistical rating organization 

18 governing the post-employment activities of 

19 former staff of the nationally recognized sta20 tistical rating organization. 

21 ‘‘(C) INSPECTION REPORTS.—The Commis22 sion shall make available to the public, in an 

23 easily understandable format, an annual report 

24 summarizing— 
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1 ‘‘(i) the essential findings of all exami2 nations conducted under subparagraph (A), 

3 as deemed appropriate by the Commission; 

4 ‘‘(ii) the responses by the nationally 

5 recognized statistical rating organizations 

6 to any material regulatory deficiencies 

7 identified by the Commission under clause 

8 (i); and 

9 ‘‘(iii) whether the nationally recognized 

10 statistical rating organizations have appro11 priately addressed the recommendations of 

12 the Commission contained in previous re13 ports under this subparagraph. 

14 ‘‘(4) RULEMAKING AUTHORITY.—The Commis15 sion shall— 

16 ‘‘(A) establish, by rule, fines, and other pen17 alties applicable to any nationally recognized 

18 statistical rating organization that violates the 

19 requirements of this subsection and the rules 

20 thereunder; and 

21 ‘‘(B) issue such rules as may be necessary 

22 to carry out this subsection. 

23 ‘‘(q) TRANSPARENCY OF RATINGS PERFORMANCE.— 

24 ‘‘(1) RULEMAKING REQUIRED.—The Commission 

25 shall, by rule, require that each nationally recognized 
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1 statistical rating organization publicly disclose infor2 mation on the initial credit ratings determined by the 

3 nationally recognized statistical rating organization 

4 for each type of obligor, security, and money market 

5 instrument, and any subsequent changes to such cred6 it ratings, for the purpose of allowing users of credit 

7 ratings to evaluate the accuracy of ratings and com8 pare the performance of ratings by different nation9 ally recognized statistical rating organizations. 

10 ‘‘(2) CONTENT.—The rules of the Commission 

11 under this subsection shall require, at a minimum, 

12 disclosures that— 

13 ‘‘(A) are comparable among nationally rec14 ognized statistical rating organizations, to allow 

15 users of credit ratings to compare the perform16 ance of credit ratings across nationally recog17 nized statistical rating organizations; 

18 ‘‘(B) are clear and informative for investors 

19 who use or might use credit ratings; 

20 ‘‘(C) include performance information over 

21 a range of years and for a variety of types of 

22 credit ratings, including for credit ratings with23 drawn by the nationally recognized statistical 

24 rating organization; 
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1 ‘‘(D) are published and made freely avail2 able by the nationally recognized statistical rat3 ing organization, on an easily accessible portion 

4 of its website, and in writing, when requested; 

5 and 

6 ‘‘(E) are appropriate to the business model 

7 of a nationally recognized statistical rating orga8 nization. 

9 ‘‘(r) CREDIT RATINGS METHODOLOGIES.—The Com10 mission shall prescribe rules, for the protection of investors 

11 and in the public interest, with respect to the procedures 

12 and methodologies, including qualitative and quantitative 

13 data and models, used by nationally recognized statistical 

14 rating organizations that require each nationally recog15 nized statistical rating organization— 

16 ‘‘(1) to ensure that credit ratings are determined 

17 using procedures and methodologies, including quali18 tative and quantitative data and models, that are— 

19 ‘‘(A) approved by the board of the nation20 ally recognized statistical rating organization, a 

21 body performing a function similar to that of a 

22 board, or the senior credit officer of the nation23 ally recognized statistical rating organization; 

24 and 
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1 ‘‘(B) in accordance with the policies and 

2 procedures of the nationally recognized statistical 

3 rating organization for the development and 

4 modification of credit rating procedures and 

5 methodologies; 

6 ‘‘(2) to ensure that when material changes to 

7 credit rating procedures and methodologies (including 

8 changes to qualitative and quantitative data and 

9 models) are made, that— 

10 ‘‘(A) the changes are applied consistently to 

11 all credit ratings to which the changed proce12 dures and methodologies apply; 

13 ‘‘(B) to the extent that changes are made to 

14 credit rating surveillance procedures and meth15 odologies, the changes are applied to then-current 

16 credit ratings by the nationally recognized statis17 tical rating organization within a reasonable 

18 time period determined by the Commission, by 

19 rule; and 

20 ‘‘(C) the nationally recognized statistical 

21 rating organization publicly discloses the reason 

22 for the change; and 

23 ‘‘(3) to notify users of credit ratings— 

24 ‘‘(A) of the version of a procedure or meth25 odology, including the qualitative methodology or 
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1 quantitative inputs, used with respect to a par2 ticular credit rating; 

3 ‘‘(B) when a material change is made to a 

4 procedure or methodology, including to a quali5 tative model or quantitative inputs; 

6 ‘‘(C) when a significant error is identified 

7 in a procedure or methodology, including a qual8 itative or quantitative model, that may result in 

9 credit rating actions; and 

10 ‘‘(D) of the likelihood of a material change 

11 described in subparagraph (B) resulting in a 

12 change in current credit ratings. 

13 ‘‘(s) TRANSPARENCY OF CREDIT RATING METHODOLO14 GIES AND INFORMATION REVIEWED.— 

15 ‘‘(1) FORM FOR DISCLOSURES.—The Commission 

16 shall require, by rule, each nationally recognized sta17 tistical rating organization to prescribe a form to ac18 company the publication of each credit rating that 

19 discloses— 

20 ‘‘(A) information relating to— 

21 ‘‘(i) the assumptions underlying the 

22 credit rating procedures and methodologies; 

23 ‘‘(ii) the data that was relied on to de24 termine the credit rating; and 
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1 ‘‘(iii) if applicable, how the nationally 

2 recognized statistical rating organization 

3 used servicer or remittance reports, and 

4 with what frequency, to conduct surveillance 

5 of the credit rating; and 

6 ‘‘(B) information that can be used by inves7 tors and other users of credit ratings to better 

8 understand credit ratings in each class of credit 

9 rating issued by the nationally recognized statis10 tical rating organization. 

11 ‘‘(2) FORMAT.—The form developed under para12 graph (1) shall— 

13 ‘‘(A) be easy to use and helpful for users of 

14 credit ratings to understand the information 

15 contained in the report; 

16 ‘‘(B) require the nationally recognized sta17 tistical rating organization to provide the con18 tent described in paragraph (3)(B) in a manner 

19 that is directly comparable across types of secu20 rities; and 

21 ‘‘(C) be made readily available to users of 

22 credit ratings, in electronic or paper form, as the 

23 Commission may, by rule, determine. 

24 ‘‘(3) CONTENT OF FORM.— 
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1 ‘‘(A) QUALITATIVE CONTENT.—Each na2 tionally recognized statistical rating organiza3 tion shall disclose on the form developed under 

4 paragraph (1)— 

5 ‘‘(i) the credit ratings produced by the 

6 nationally recognized statistical rating or7 ganization; 

8 ‘‘(ii) the main assumptions and prin9 ciples used in constructing procedures and 

10 methodologies, including qualitative meth11 odologies and quantitative inputs and as12 sumptions about the correlation of defaults 

13 across obligors used in rating structured 

14 products; 

15 ‘‘(iii) the potential limitations of the 

16 credit ratings, and the types of risks ex17 cluded from the credit ratings that the na18 tionally recognized statistical rating organi19 zation does not comment on, including li20 quidity, market, and other risks; 

21 ‘‘(iv) information on the uncertainty of 

22 the credit rating, including— 

23 ‘‘(I) information on the reli24 ability, accuracy, and quality of the 
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1 data relied on in determining the cred2 it rating; and 

3 ‘‘(II) a statement relating to the 

4 extent to which data essential to the 

5 determination of the credit rating were 

6 reliable or limited, including— 

7 ‘‘(aa) any limits on the scope 

8 of historical data; and 

9 ‘‘(bb) any limits in accessi10 bility to certain documents or 

11 other types of information that 

12 would have better informed the 

13 credit rating; 

14 ‘‘(v) whether and to what extent third 

15 party due diligence services have been used 

16 by the nationally recognized statistical rat17 ing organization, a description of the infor18 mation that such third party reviewed in 

19 conducting due diligence services, and a de20 scription of the findings or conclusions of 

21 such third party; 

22 ‘‘(vi) a description of the data about 

23 any obligor, issuer, security, or money mar24 ket instrument that were relied upon for the 

25 purpose of determining the credit rating; 
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1 ‘‘(vii) a statement containing an over2 all assessment of the quality of information 

3 available and considered in producing a 

4 rating for an obligor, security, or money 

5 market instrument, in relation to the qual6 ity of information available to the nation7 ally recognized statistical rating organiza8 tion in rating similar issuances; 

9 ‘‘(viii) information relating to conflicts 

10 of interest of the nationally recognized sta11 tistical rating organization; and 

12 ‘‘(ix) such additional information as 

13 the Commission may require. 

14 ‘‘(B) QUANTITATIVE CONTENT.—Each na15 tionally recognized statistical rating organiza16 tion shall disclose on the form developed under 

17 this subsection— 

18 ‘‘(i) an explanation or measure of the 

19 potential volatility of the credit rating, in20 cluding— 

21 ‘‘(I) any factors that might lead 

22 to a change in the credit ratings; and 

23 ‘‘(II) the magnitude of the change 

24 that a user can expect under different 

25 market conditions; 
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1 ‘‘(ii) information on the content of the 

2 rating, including— 

3 ‘‘(I) the historical performance of 

4 the rating; and 

5 ‘‘(II) the expected probability of 

6 default and the expected loss in the 

7 event of default; 

8 ‘‘(iii) information on the sensitivity of 

9 the rating to assumptions made by the na10 tionally recognized statistical rating organi11 zation; and 

12 ‘‘(iv) such additional information as 

13 may be required by the Commission. 

14 ‘‘(4) DUE DILIGENCE SERVICES FOR ASSET15 BACKED SECURITIES.— 

16 ‘‘(A) FINDINGS.—The issuer or underwriter 

17 of any asset-backed security shall make publicly 

18 available the findings and conclusions of any 

19 third-party due diligence report obtained by the 

20 issuer or underwriter. 

21 ‘‘(B) CERTIFICATION REQUIRED.—In any 

22 case in which third-party due diligence services 

23 are employed by a nationally recognized statis24 tical rating organization, an issuer, or an un25 derwriter, the person providing the due diligence 
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1 services shall provide to any nationally recog2 nized statistical rating organization that pro3 duces a rating to which such services relate, 

4 written certification, as provided in subpara5 graph (C). 

6 ‘‘(C) FORMAT AND CONTENT.—The Commis7 sion shall establish the appropriate format and 

8 content for the written certifications required 

9 under subparagraph (B), to ensure that pro10 viders of due diligence services have conducted a 

11 thorough review of data, documentation, and 

12 other relevant information necessary for a na13 tionally recognized statistical rating organiza14 tion to provide an accurate rating. 

15 ‘‘(D) DISCLOSURE OF CERTIFICATION.—The 

16 Commission shall adopt rules requiring a na17 tionally recognized statistical rating organiza18 tion, at the time at which the nationally recog19 nized statistical rating organization produces a 

20 rating, to disclose the certification described in 

21 subparagraph (B) to the public in a manner 

22 that allows the public to determine the adequacy 

23 and level of due diligence services provided by a 

24 third party. 
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1 ‘‘(t) CORPORATE GOVERNANCE, ORGANIZATION, AND

2 MANAGEMENT OF CONFLICTS OF INTEREST.— 

3 ‘‘(1) BOARD OF DIRECTORS.—Each nationally 

4 recognized statistical rating organization shall have a 

5 board of directors. 

6 ‘‘(2) INDEPENDENT DIRECTORS.— 

‘‘(A) IN GENERAL.—At least 1 7 ⁄2 of the board 

8 of directors, but not fewer than 2 of the members 

9 thereof, shall be independent of the nationally 

10 recognized statistical rating agency. A portion of 

11 the independent directors shall include users of 

12 ratings from a nationally recognized statistical 

13 rating organization. 

14 ‘‘(B) INDEPENDENCE DETERMINATION.—In 

15 order to be considered independent for purposes 

16 of this subsection, a member of the board of di17 rectors of a nationally recognized statistical rat18 ing organization— 

19 ‘‘(i) may not, other than in his or her 

20 capacity as a member of the board of direc21 tors or any committee thereof— 

22 ‘‘(I) accept any consulting, advi23 sory, or other compensatory fee from 

24 the nationally recognized statistical 

25 rating organization; or 
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1 ‘‘(II) be a person associated with 

2 the nationally recognized statistical 

3 rating organization or with any affili4 ated company thereof; and 

5 ‘‘(ii) shall be disqualified from any de6 liberation involving a specific rating in 

7 which the independent board member has a 

8 financial interest in the outcome of the rat9 ing. 

10 ‘‘(C) COMPENSATION AND TERM.—The com11 pensation of the independent members of the 

12 board of directors of a nationally recognized sta13 tistical rating organization shall not be linked to 

14 the business performance of the nationally recog15 nized statistical rating organization, and shall 

16 be arranged so as to ensure the independence of 

17 their judgment. The term of office of the inde18 pendent directors shall be for a pre-agreed fixed 

19 period, not to exceed 5 years, and shall not be re20 newable. 

21 ‘‘(3) DUTIES OF BOARD OF DIRECTORS.—In ad22 dition to the overall responsibilities of the board of di23 rectors, the board shall oversee— 
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1 ‘‘(A) the establishment, maintenance, and 

2 enforcement of policies and procedures for deter3 mining credit ratings; 

4 ‘‘(B) the establishment, maintenance, and 

5 enforcement of policies and procedures to ad6 dress, manage, and disclose any conflicts of in7 terest; 

8 ‘‘(C) the effectiveness of the internal control 

9 system with respect to policies and procedures 

10 for determining credit ratings; and 

11 ‘‘(D) the compensation and promotion poli12 cies and practices of the nationally recognized 

13 statistical rating organization. 

14 ‘‘(4) TREATMENT OF NRSRO SUBSIDIARIES.—If a 

15 nationally recognized statistical rating organization 

16 is a subsidiary of a parent entity, the board of the 

17 directors of the parent entity may satisfy the require18 ments of this subsection by assigning to a committee 

19 of such board of directors the duties under paragraph 

20 (3), if— 

‘‘(A) at least 1 21 ⁄2 of the members of the com22 mittee (including the chairperson of the com23 mittee) are independent, as defined in this sec24 tion; and 
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† HR 4173 EAS 

1 ‘‘(B) at least 1 member of the committee is 

2 a user of ratings from a nationally recognized 

3 statistical rating organization. 

4 ‘‘(5) EXCEPTION AUTHORITY.—If the Commis5 sion finds that compliance with the provisions of this 

6 subsection present an unreasonable burden on a small 

7 nationally recognized statistical rating organization, 

8 the Commission may permit the nationally recognized 

9 statistical rating organization to delegate such re10 sponsibilities to a committee that includes at least one 

11 individual who is a user of ratings of a nationally 

12 recognized statistical rating organization.’’. 

13 SEC. 933. STATE OF MIND IN PRIVATE ACTIONS. 

14 (a) ACCOUNTABILITY.—Section 15E(m) of the Securi15 ties Exchange Act of 1934 (15 U.S.C. 78o–7(m)) is amended 

16 to read as follows: 

17 ‘‘(m) ACCOUNTABILITY.— 

18 ‘‘(1) IN GENERAL.—The enforcement and penalty 

19 provisions of this title shall apply to statements made 

20 by a credit rating agency in the same manner and 

21 to the same extent as such provisions apply to state22 ments made by a registered public accounting firm or 

23 a securities analyst under the securities laws, and 

24 such statements shall not be deemed forward-looking 

25 statements for the purposes of section 21E. 
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† HR 4173 EAS 

1 ‘‘(2) RULEMAKING.—The Commission shall issue 

2 such rules as may be necessary to carry out this sub3 section.’’. 

4 (b) STATE OF MIND.—Section 21D(b)(2) of the Securi5 ties Exchange Act of 1934 (15 U.S.C. 78u–4(b)(2)) is 

6 amended— 

7 (1) by striking ‘‘In any’’ and inserting the fol8 lowing: 

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 subparagraph (B), in any’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(B) EXCEPTION.—In the case of an action 

13 for money damages brought against a credit rat14 ing agency or a controlling person under this 

15 title, it shall be sufficient, for purposes of plead16 ing any required state of mind in relation to 

17 such action, that the complaint state with par18 ticularity facts giving rise to a strong inference 

19 that the credit rating agency knowingly or reck20 lessly failed— 

21 ‘‘(i) to conduct a reasonable investiga22 tion of the rated security with respect to the 

23 factual elements relied upon by its own 

24 methodology for evaluating credit risk; or 
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† HR 4173 EAS 

1 ‘‘(ii) to obtain reasonable verification 

2 of such factual elements (which verification 

3 may be based on a sampling technique that 

4 does not amount to an audit) from other 

5 sources that the credit rating agency consid6 ered to be competent and that were inde7 pendent of the issuer and underwriter.’’. 

8 SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REG9 ULATORY AUTHORITIES. 

10 Section 15E of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78o–7), as amended by this subtitle, is amended 

12 by adding at the end the following: 

13 ‘‘(u) DUTY TO REPORT TIPS ALLEGING MATERIAL

14 VIOLATIONS OF LAW.— 

15 ‘‘(1) DUTY TO REPORT.—Each nationally recog16 nized statistical rating organization shall refer to the 

17 appropriate law enforcement or regulatory authorities 

18 any information that the nationally recognized statis19 tical rating organization receives from a third party 

20 and finds credible that alleges that an issuer of secu21 rities rated by the nationally recognized statistical 

22 rating organization has committed or is committing 

23 a material violation of law that has not been adju24 dicated by a Federal or State court. 
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† HR 4173 EAS 

1 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

2 paragraph (1) may be construed to require a nation3 ally recognized statistical rating organization to 

4 verify the accuracy of the information described in 

5 paragraph (1).’’. 

6 SEC. 935. CONSIDERATION OF INFORMATION FROM 

7 SOURCES OTHER THAN THE ISSUER IN RAT8 ING DECISIONS. 

9 Section 15E of the Securities Exchange Act of 1934 

10 (15 U.S.C. 78o–7), as amended by this subtitle, is amended 

11 by adding at the end the following: 

12 ‘‘(v) INFORMATION FROM SOURCES OTHER THAN THE

13 ISSUER.—In producing a credit rating, a nationally recog14 nized statistical rating organization shall consider informa15 tion about an issuer that the nationally recognized statis16 tical rating organization has, or receives from a source 

17 other than the issuer, that the nationally recognized statis18 tical rating organization finds credible and potentially sig19 nificant to a rating decision.’’. 

20 SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING 

21 ANALYSTS. 

22 Not later than 1 year after the date of enactment of 

23 this Act, the Commission shall issue rules that are reason24 ably designed to ensure that any person employed by a na-
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† HR 4173 EAS 

1 tionally recognized statistical rating organization to per2 form credit ratings— 

3 (1) meets standards of training, experience, and 

4 competence necessary to produce accurate ratings for 

5 the categories of issuers whose securities the person 

6 rates; and 

7 (2) is tested for knowledge of the credit rating 

8 process. 

9 SEC. 937. TIMING OF REGULATIONS. 

10 Unless otherwise specifically provided in this subtitle, 

11 the Commission shall issue final regulations, as required 

12 by this subtitle and the amendments made by this subtitle, 

13 not later than 1 year after the date of enactment of this 

14 Act. 

15 SEC. 938. UNIVERSAL RATINGS SYMBOLS. 

16 (a) RULEMAKING.—The Commission shall require, by 

17 rule, each nationally recognized statistical rating organiza18 tion to establish, maintain, and enforce written policies and 

19 procedures that— 

20 (1) assess the probability that an issuer of a se21 curity or money market instrument will default, fail 

22 to make timely payments, or otherwise not make pay23 ments to investors in accordance with the terms of the 

24 security or money market instrument; 
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† HR 4173 EAS 

1 (2) clearly define and disclose the meaning of 

2 any symbol used by the nationally recognized statis3 tical rating organization to denote a credit rating; 

4 and 

5 (3) apply any symbol described in paragraph (2) 

6 in a manner that is consistent for all types of securi7 ties and money market instruments for which the 

8 symbol is used. 

9 (b) RULE OF CONSTRUCTION.—Nothing in this section 

10 shall prohibit a nationally recognized statistical rating or11 ganization from using distinct sets of symbols to denote 

12 credit ratings for different types of securities or money mar13 ket instruments. 

14 SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CRED15 IT RATINGS. 

16 (a) FEDERAL DEPOSIT INSURANCE ACT.—The Federal 

17 Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amend18 ed— 

19 (1) in section 7(b)(1)(E)(i), by striking ‘‘credit 

20 rating entities, and other private economic’’ and in21 sert ‘‘private economic, credit,’’; 

22 (2) in section 28(d)— 

23 (A) in the subsection heading, by striking 

24 ‘‘NOT OF INVESTMENT GRADE’’; 
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1 (B) in paragraph (1), by striking ‘‘not of 

2 investment grade’’ and inserting ‘‘that does not 

3 meet standards of credit-worthiness as estab4 lished by the Corporation’’; 

5 (C) in paragraph (2), by striking ‘‘not of 

6 investment grade’’; 

7 (D) by striking paragraph (3); 

8 (E) by redesignating paragraph (4) as 

9 paragraph (3); and 

10 (F) in paragraph (3), as so redesignated— 

11 (i) by striking subparagraph (A); 

12 (ii) by redesignating subparagraphs 

13 (B) and (C) as subparagraphs (A) and (B), 

14 respectively; and 

15 (iii) in subparagraph (B), as so redes16 ignated, by striking ‘‘not of investment 

17 grade’’ and inserting ‘‘that does not meet 

18 standards of credit-worthiness as established 

19 by the Corporation’’; and 

20 (3) in section 28(e)— 

21 (A) in the subsection heading, by striking 

22 ‘‘NOT OF INVESTMENT GRADE’’; 

23 (B) in paragraph (1), by striking ‘‘not of 

24 investment grade’’ and inserting ‘‘that does not 
1032 

† HR 4173 EAS 

1 meet standards of credit-worthiness as estab2 lished by the Corporation’’; and 

3 (C) in paragraphs (2) and (3), by striking 

4 ‘‘not of investment grade’’ each place that it ap5 pears and inserting ‘‘that does not meet stand6 ards of credit-worthiness established by the Cor7 poration’’. 

8 (b) FEDERAL HOUSING ENTERPRISES FINANCIAL

9 SAFETY AND SOUNDNESS ACT OF 1992.—Section 1319 of 

10 the Federal Housing Enterprises Financial Safety and 

11 Soundness Act of 1992 (12 U.S.C. 4519) is amended by 

12 striking ‘‘that is a nationally registered statistical rating 

13 organization, as such term is defined in section 3(a) of the 

14 Securities Exchange Act of 1934,’’. 

15 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

16 6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 

17 U.S.C. 80a–6(a)(5)(A)(iv)(I)) is amended by striking ‘‘is 

18 rated investment grade by not less than 1 nationally reg19 istered statistical rating organization’’ and inserting 

20 ‘‘meets such standards of credit-worthiness as the Commis21 sion shall adopt’’. 

22 (d) REVISED STATUTES.—Section 5136A of title LXII 

23 of the Revised Statutes of the United States (12 U.S.C. 24a) 

24 is amended— 
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† HR 4173 EAS 

1 (1) in subsection (a)(2)(E), by striking ‘‘any ap2 plicable rating’’ and inserting ‘‘standards of credit3 worthiness established by the Comptroller of the Cur4 rency’’; 

5 (2) in the heading for subsection (a)(3) by strik6 ing ‘‘RATING OR COMPARABLE REQUIREMENT’’ and 

7 inserting ‘‘REQUIREMENT’’; 

8 (3) subsection (a)(3), by amending subparagraph 

9 (A) to read as follows: 

10 ‘‘(A) IN GENERAL.—A national bank meets 

11 the requirements of this paragraph if the bank is 

12 one of the 100 largest insured banks and has not 

13 fewer than 1 issue of outstanding debt that meets 

14 standards of credit-worthiness or other criteria 

15 as the Secretary of the Treasury and the Board 

16 of Governors of the Federal Reserve System may 

17 jointly establish.’’. 

18 (4) in the heading for subsection (f), by striking 

19 ‘‘MAINTAIN PUBLIC RATING OR’’ and inserting 

20 ‘‘MEET STANDARDS OF CREDIT-WORTHINESS’’; and 

21 (5) in subsection (f)(1), by striking ‘‘any appli22 cable rating’’ and inserting ‘‘standards of credit-wor23 thiness established by the Comptroller of the Cur24 rency’’. 
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† HR 4173 EAS 

1 (e) SECURITIES EXCHANGE ACT OF 1934.—Section 

2 3(a) Securities Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) 

3 is amended— 

4 (1) in paragraph (41), by striking ‘‘is rated in 

5 one of the two highest rating categories by at least one 

6 nationally registered statistical rating organization’’ 

7 and inserting ‘‘meets standards of credit-worthiness 

8 as established by the Commission’’; and 

9 (2) in paragraph (53)(A), by striking ‘‘is rated 

10 in 1 of the 4 highest rating categories by at least 1 

11 nationally registered statistical rating organization’’ 

12 and inserting ‘‘meets standards of credit-worthiness 

13 as established by the Commission’’. 

14 (f) WORLD BANK DISCUSSIONS.—Section 3(a)(6) of 

15 the amendment in the nature of a substitute to the text of 

16 H.R. 4645, as ordered reported from the Committee on 

17 Banking, Finance and Urban Affairs on September 22, 

18 1988, as enacted into law by section 555 of Public Law 

19 100–461, (22 U.S.C. 286hh(a)(6)), is amended by striking 

20 ‘‘credit rating’’ and inserting ‘‘credit-worthiness’’. 

21 (g) EFFECTIVE DATE.—The amendments made by this 

22 section shall take effect 2 years after the date of enactment 

23 of this Act. 

24 (1) IN GENERAL.—Commission shall undertake a 

25 study on the feasability and desirability of— 
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1 (A) standardizing credit ratings termi2 nology, so that all credit rating agencies issue 

3 credit ratings using identical terms; 

4 (B) standardizing the market stress condi5 tions under which ratings are evaluated; 

6 (C) requiring a quantitative correspondence 

7 between credit ratings and a range of default 

8 probabilities and loss expectations under stand9 ardized conditions of economic stress; and 

10 (D) standardizing credit rating terminology 

11 across asset classes, so that named ratings cor12 respond to a standard range of default prob13 abilities and expected losses independent of asset 

14 class and issuing entity. 

15 (2) REPORT.—Not later than 1 year after the 

16 date of enactment of this Act, the Commission shall 

17 submit to Congress a report containing the findings 

18 of the study under paragraph (1) and the rec19 ommendations, if any, of the Commission with respect 

20 to the study. 

21 SEC. 939A. SECURITIES AND EXCHANGE COMMISSION 

22 STUDY ON STRENGTHENING CREDIT RATING 

23 AGENCY INDEPENDENCE. 

24 (a) STUDY.—The Commission shall conduct a study 

25 of— 
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† HR 4173 EAS 

1 (1) the independence of nationally recognized 

2 statistical rating organizations; and 

3 (2) how the independence of nationally recog4 nized statistical rating organizations affects the rat5 ings issued by the nationally recognized statistical 

6 rating organizations. 

7 (b) SUBJECTS FOR EVALUATION.—In conducting the 

8 study under subsection (a), the Commission shall evalu9 ate— 

10 (1) the management of conflicts of interest raised 

11 by a nationally recognized statistical rating organiza12 tion providing other services, including risk manage13 ment advisory services, ancillary assistance, or con14 sulting services; 

15 (2) the potential impact of rules prohibiting a 

16 nationally recognized statistical rating organization 

17 that provides a rating to an issuer from providing 

18 other services to the issuer; and 

19 (3) any other issue relating to nationally recog20 nized statistical rating organizations, as the Chair21 man of the Commission determines is appropriate. 

22 (c) REPORT.—Not later than 3 years after the date of 

23 enactment of this Act, the Chairman of the Commission 

24 shall submit to the Committee on Banking, Housing, and 

25 Urban Affairs of the Senate and the Committee on Finan-
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† HR 4173 EAS 

1 cial Services of the House of Representatives a report on 

2 the results of the study conducted under subsection (a), in3 cluding recommendations, if any, for improving the integ4 rity of ratings issued by nationally recognized statistical 

5 rating organizations. 

6 SEC. 939B. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

7 ON ALTERNATIVE BUSINESS MODELS. 

8 (a) STUDY.—The Comptroller General of the United 

9 States shall conduct a study on alternative means for com10 pensating nationally recognized statistical rating organiza11 tions in order to create incentives for nationally recognized 

12 statistical rating organizations to provide more accurate 

13 credit ratings, including any statutory changes that would 

14 be required to facilitate the use of an alternative means of 

15 compensation. 

16 (b) REPORT.—Not later than 1 year after the date of 

17 enactment of this Act, the Comptroller General shall submit 

18 to the Committee on Banking, Housing, and Urban Affairs 

19 of the Senate and the Committee on Financial Services of 

20 the House of Representatives a report on the results of the 

21 study conducted under subsection (a), including rec22 ommendations, if any, for providing incentives to credit 

23 rating agencies to improve the credit rating process. 
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† HR 4173 EAS 

1 SEC. 939C. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

2 ON THE CREATION OF AN INDEPENDENT 

3 PROFESSIONAL ANALYST ORGANIZATION. 

4 (a) STUDY.—The Comptroller General of the United 

5 States shall conduct a study on the feasibility and merits 

6 of creating an independent professional organization for 

7 rating analysts employed by nationally recognized statis8 tical rating organizations that would be responsible for— 

9 (1) establishing independent standards for gov10 erning the profession of rating analysts; 

11 (2) establishing a code of ethical conduct; and 

12 (3) overseeing the profession of rating analysts. 

13 (b) REPORT.—Not later than 1 year after the date of 

14 enactment of this Act, the Comptroller General shall submit 

15 to the Committee on Banking, Housing, and Urban Affairs 

16 of the Senate and the Committee on Financial Services of 

17 the House of Representatives a report on the results of the 

18 study conducted under subsection (a). 

19 SEC. 939D. INITIAL CREDIT RATING ASSIGNMENTS. 

20 Section 15E of the Securities Exchange Act of 1934 

21 (15 U.S.C. 78o–7), as amended by this Act, is amended by 

22 adding at the end the following: 

23 ‘‘(w) INITIAL CREDIT RATING ASSIGNMENTS.— 

24 ‘‘(1) DEFINITIONS.—In this subsection the fol25 lowing definitions shall apply: 
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† HR 4173 EAS 

1 ‘‘(A) BOARD.—The term ‘Board’ means the 

2 Credit Rating Agency Board established under 

3 paragraph (2). 

4 ‘‘(B) QUALIFIED NATIONALLY RECOGNIZED

5 STATISTICAL RATING ORGANIZATION.—The term 

6 ‘qualified nationally recognized statistical rating 

7 organization’, with respect to a category of struc8 tured finance products, means a nationally rec9 ognized statistical rating organization that the 

10 Board determines, under paragraph (3)(B), to be 

11 qualified to issue initial credit ratings with re12 spect to such category. 

13 ‘‘(C) REGULATIONS.— 

14 ‘‘(i) CATEGORY OF STRUCTURED FI15 NANCE PRODUCTS.— 

16 ‘‘(I) IN GENERAL.—The term ‘cat17 egory of structured finance products’— 

18 ‘‘(aa) shall include any asset 

19 backed security and any struc20 tured product based on an asset21 backed security; and 

22 ‘‘(bb) shall be further defined 

23 and expanded by the Commission, 

24 by rule, as necessary. 
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1 ‘‘(II) CONSIDERATIONS.—In 

2 issuing the regulations required under 

3 subclause (I), the Commission shall 

4 consider— 

5 ‘‘(aa) the types of issuers 

6 that issue structured finance prod7 ucts; 

8 ‘‘(bb) the types of investors 

9 who purchase structured finance 

10 products; 

11 ‘‘(cc) the different categories 

12 of structured finance products ac13 cording to— 

14 ‘‘(AA) the types of cap15 ital flow and legal structure 

16 used; 

17 ‘‘(BB) the types of un18 derlying products used; and 

19 ‘‘(CC) the types of terms 

20 used in debt securities; 

21 ‘‘(dd) the different values of 

22 debt securities; and 

23 ‘‘(ee) the different numbers of 

24 units of debt securities that are 

25 issued together. 
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† HR 4173 EAS 

1 ‘‘(ii) REASONABLE FEE.—The Board 

2 shall issue regulations to define the term 

3 ‘reasonable fee’. 

4 ‘‘(2) CREDIT RATING AGENCY BOARD.— 

5 ‘‘(A) IN GENERAL.—Not later than 180 

6 days after the date of enactment of the Restoring 

7 American Financial Stability Act of 2010, the 

8 Commission shall— 

9 ‘‘(i) establish the Credit Rating Agency 

10 Board, which shall be a self-regulatory orga11 nization; 

12 ‘‘(ii) subject to subparagraph (C), se13 lect the initial members of the Board; and 

14 ‘‘(iii) establish a schedule to ensure 

15 that the Board begins assigning qualified 

16 nationally recognized statistical rating or17 ganizations to provide initial ratings not 

18 later than 1 year after the selection of the 

19 members of the Board. 

20 ‘‘(B) SCHEDULE.—The schedule established 

21 under subparagraph (A)(iii) shall prescribe 

22 when— 

23 ‘‘(i) the Board will conduct a study of 

24 the securitization and ratings process and 
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1 provide recommendations to the Commis2 sion; 

3 ‘‘(ii) the Commission will issue rules 

4 and regulations under this section; 

5 ‘‘(iii) the Board may issue rules under 

6 this subsection; and 

7 ‘‘(iv) the Board will— 

8 ‘‘(I) begin accepting applications 

9 to select qualified national recognized 

10 statistical rating organizations; and 

11 ‘‘(II) begin assigning qualified 

12 national recognized statistical rating 

13 organizations to provide initial rat14 ings. 

15 ‘‘(C) MEMBERSHIP.— 

16 ‘‘(i) IN GENERAL.—The Board shall 

17 initially be composed of an odd number of 

18 members selected from the industry, with 

19 the total numerical membership of the 

20 Board to be determined by the Commission. 

21 ‘‘(ii) SPECIFICATIONS.—Of the mem22 bers initially selected to serve on the 

23 Board— 

24 ‘‘(I) not less than a majority of 

25 the members shall be representatives of 
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1 the investor industry who do not rep2 resent issuers; 

3 ‘‘(II) not less than 1 member 

4 should be a representative of the issuer 

5 industry; 

6 ‘‘(III) not less than 1 member 

7 should be a representative of the credit 

8 rating agency industry; and 

9 ‘‘(IV) not less than 1 member 

10 should be an independent member. 

11 ‘‘(iii) TERMS.—Initial members shall 

12 be appointed by the Commission for a term 

13 of 4 years. 

14 ‘‘(iv) NOMINATION AND ELECTION OF

15 MEMBERS.— 

16 ‘‘(I) IN GENERAL.—Prior to the 

17 expiration of the terms of office of the 

18 initial members, the Commission shall 

19 establish fair procedures for the nomi20 nation and election of future members 

21 of the Board. 

22 ‘‘(II) MODIFICATIONS OF THE

23 BOARD.—Prior to the expiration of the 

24 terms of office of the initial members, 

25 the Commission— 
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1 ‘‘(aa) may increase the size 

2 of the board to a larger odd num3 ber and adjust the length of future 

4 terms; and 

5 ‘‘(bb) shall retain the com6 position of members described in 

7 clause (ii). 

8 ‘‘(v) RESPONSIBILITIES OF MEM9 BERS.—Members shall perform, at a min10 imum, the duties described in this sub11 section. 

12 ‘‘(vi) RULEMAKING AUTHORITY.—The 

13 Commission shall, if it determines necessary 

14 and appropriate, issue further rules and 

15 regulations on the composition of the mem16 bership of the Board and the responsibilities 

17 of the members. 

18 ‘‘(D) OTHER AUTHORITIES OF THE

19 BOARD.—The Board shall have the authority to 

20 levy fees from qualified nationally recognized 

21 statistical rating organization applicants, and 

22 periodically from qualified nationally recognized 

23 statistical rating organizations as necessary to 

24 fund expenses of the Board. 
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1 ‘‘(E) REGULATION.—The Commission has 

2 the authority to regulate the activities of the 

3 Board, and issue any further regulations of the 

4 Board it deems necessary, not in contravention 

5 with the intent of this section. 

6 ‘‘(3) BOARD SELECTION OF QUALIFIED NATION7 ALLY RECOGNIZED STATISTICAL RATING ORGANIZA8 TION.— 

9 ‘‘(A) APPLICATION.— 

10 ‘‘(i) IN GENERAL.—A nationally recog11 nized statistical rating organization may 

12 submit an application to the Board, in such 

13 form and manner as the Board may re14 quire, to become a qualified nationally rec15 ognized statistical rating organization with 

16 respect to a category of structured finance 

17 products. 

18 ‘‘(ii) CONTENTS.—An application sub19 mitted under clause (i) shall contain— 

20 ‘‘(I) information regarding the in21 stitutional and technical capacity of 

22 the nationally recognized statistical 

23 rating organization to issue credit rat24 ings; 
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1 ‘‘(II) information on whether the 

2 nationally recognized statistical rating 

3 organization has been exempted by the 

4 Commission from any requirements 

5 under any other provision of this sec6 tion; and 

7 ‘‘(III) any additional information 

8 the Board may require. 

9 ‘‘(iii) REJECTION OF APPLICATIONS.— 

10 The Board may reject an application sub11 mitted under this paragraph if the nation12 ally recognized statistical rating organiza13 tion has been exempted by the Commission 

14 from any requirements under any other 

15 provision of this section. 

16 ‘‘(B) SELECTION.—The Board shall select 

17 qualified national recognized statistical rating 

18 organizations with respect to each category of 

19 structured finance products from among nation20 ally recognized statistical rating organizations 

21 that submit applications under subparagraph 

22 (A). 

23 ‘‘(C) RETENTION OF STATUS AND OBLIGA24 TIONS AFTER SELECTION.—An entity selected as 

25 a qualified nationally recognized statistical rat-
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1 ing organization shall retain its status and obli2 gations under the law as a nationally recognized 

3 statistical rating organization, and nothing in 

4 this subsection grants authority to the Commis5 sion or the Board to exempt qualified nationally 

6 recognized statistical rating organizations from 

7 obligations or requirements otherwise imposed by 

8 Federal law on nationally recognized statistical 

9 rating organizations. 

10 ‘‘(4) REQUESTING AN INITIAL CREDIT RATING.— 

11 An issuer that seeks an initial credit rating for a 

12 structured finance product— 

13 ‘‘(A) may not request an initial credit rat14 ing from a nationally recognized statistical rat15 ing organization; and 

16 ‘‘(B) shall submit a request for an initial 

17 credit rating to the Board, in such form and 

18 manner as the Board may prescribe. 

19 ‘‘(5) ASSIGNMENT OF RATING DUTIES.— 

20 ‘‘(A) IN GENERAL.—For each request re21 ceived by the Board under paragraph (4)(B), the 

22 Board shall select a qualified nationally recog23 nized statistical rating organization to provide 

24 the initial credit rating to the issuer. 

25 ‘‘(B) METHOD OF SELECTION.— 
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1 ‘‘(i) IN GENERAL.—The Board shall— 

2 ‘‘(I) evaluate a number of selec3 tion methods, including a lottery or ro4 tating assignment system, incor5 porating the factors described in clause 

6 (ii), to reduce the conflicts of interest 

7 that exist under the issuer-pays model; 

8 and 

9 ‘‘(II) prescribe and publish the se10 lection method to be used under sub11 paragraph (A). 

12 ‘‘(ii) CONSIDERATION.—In evaluating 

13 a selection method described in clause (i)(I), 

14 the Board shall consider— 

15 ‘‘(I) the information submitted by 

16 the qualified nationally recognized sta17 tistical rating organization under 

18 paragraph (3)(A)(ii) regarding the in19 stitutional and technical capacity of 

20 the qualified nationally recognized sta21 tistical rating organization to issue 

22 credit ratings; 

23 ‘‘(II) evaluations conducted under 

24 paragraph (7); 
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1 ‘‘(III) formal feedback from insti2 tutional investors; and 

3 ‘‘(IV) information from subclauses 

4 (I) and (II) to implement a mecha5 nism which increases or decreases as6 signments based on past performance. 

7 ‘‘(iii) PROHIBITION.—The Board, in 

8 choosing a selection method, may not use a 

9 method that would allow for the solicitation 

10 or consideration of the preferred national 

11 recognized statistical rating organizations 

12 of the issuer. 

13 ‘‘(iv) ADJUSTMENT OF PROCESS.—The 

14 Board shall issue rules describing the proc15 ess by which it can modify the assignment 

16 process described in clause (i). 

17 ‘‘(C) RIGHT OF REFUSAL.— 

18 ‘‘(i) REFUSAL.—A qualified nationally 

19 recognized statistical rating organization 

20 selected under subparagraph (A) may refuse 

21 to accept a selection for a particular request 

22 by— 

23 ‘‘(I) notifying the Board of such 

24 refusal; and 
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1 ‘‘(II) submitting to the Board a 

2 written explanation of the refusal. 

3 ‘‘(ii) SELECTION.—Upon receipt of a 

4 notification under clause (i), the Board 

5 shall make an additional selection under 

6 subparagraph (A). 

7 ‘‘(iii) INSPECTION REPORTS.—The 

8 Board shall annually submit any expla9 nations of refusals received under clause 

10 (i)(II) to the Commission, and such explan11 atory submissions shall be published in the 

12 annual inspection reports required under 

13 subsection (p)(3)(C). 

14 ‘‘(6) DISCLAIMER REQUIRED.—Each initial 

15 credit rating issued under this subsection shall in16 clude, in writing, the following disclaimer: ‘This ini17 tial rating has not been evaluated, approved, or cer18 tified by the Government of the United States or by 

19 a Federal agency.’. 

20 ‘‘(7) EVALUATION OF PERFORMANCE.— 

21 ‘‘(A) IN GENERAL.—The Board shall pre22 scribe rules by which the Board will evaluate the 

23 performance of each qualified nationally recog24 nized statistical rating organization, including 

25 rules that require, at a minimum, an annual 
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1 evaluation of each qualified nationally recog2 nized statistical rating organization. 

3 ‘‘(B) CONSIDERATIONS.—The Board, in 

4 conducting an evaluation under subparagraph 

5 (A), shall consider— 

6 ‘‘(i) the results of the annual examina7 tion conducted under subsection (p)(3); 

8 ‘‘(ii) surveillance of credit ratings con9 ducted by the qualified nationally recog10 nized statistical rating organization after 

11 the credit ratings are issued, including— 

12 ‘‘(I) how the rated instruments 

13 perform; 

14 ‘‘(II) the accuracy of the ratings 

15 provided by the qualified nationally 

16 recognized statistical rating organiza17 tion as compared to the other nation18 ally recognized statistical rating orga19 nizations; and 

20 ‘‘(III) the effectiveness of the 

21 methodologies used by the qualified na22 tionally recognized statistical rating 

23 organization; and 

24 ‘‘(iii) any additional factors the Board 

25 determines to be relevant. 
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1 ‘‘(C) REQUEST FOR REEVALUATION.—Sub2 ject to rules prescribed by the Board, and not less 

3 frequently than once a year, a qualified nation4 ally recognized statistical rating organization 

5 may request that the Board conduct an evalua6 tion under this paragraph. 

7 ‘‘(D) DISCLOSURE.—The Board shall make 

8 the evaluations conducted under this paragraph 

9 available to Congress. 

10 ‘‘(8) RATING FEES CHARGED TO ISSUERS.— 

11 ‘‘(A) LIMITED TO REASONABLE FEES.—A 

12 qualified nationally recognized statistical rating 

13 organization shall charge an issuer a reasonable 

14 fee, as determined by the Commission, for an 

15 initial credit rating provided under this section. 

16 ‘‘(B) FEES.—Fees may be determined by 

17 the qualified national recognized statistical rat18 ing organizations unless the Board determines it 

19 is necessary to issue rules on fees. 

20 ‘‘(9) NO PROHIBITION ON ADDITIONAL RAT21 INGS.—Nothing in this section shall prohibit an 

22 issuer from requesting or receiving additional credit 

23 ratings with respect to a debt security, if the initial 

24 credit rating is provided in accordance with this sec25 tion. 
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1 ‘‘(10) NO PROHIBITION ON INDEPENDENT RAT2 INGS OFFERED BY NATIONALLY RECOGNIZED STATIS3 TICAL RATING ORGANIZATIONS.— 

4 ‘‘(A) IN GENERAL.—Nothing in this section 

5 shall prohibit a nationally recognized statistical 

6 rating organization from independently pro7 viding a credit rating with respect to a debt se8 curity, if— 

9 ‘‘(i) the nationally recognized statis10 tical rating organization does not enter into 

11 a contract with the issuer of the debt secu12 rity to provide the initial credit rating; and 

13 ‘‘(ii) the nationally recognized statis14 tical rating organization is not paid by the 

15 issuer of the debt security to provide the ini16 tial credit rating. 

17 ‘‘(B) RULE OF CONSTRUCTION.—For pur18 poses of this section, a credit rating described in 

19 subparagraph (A) may not be construed to be an 

20 initial credit rating. 

21 ‘‘(11) PUBLIC COMMUNICATIONS.—Any commu22 nications made with the public by an issuer with re23 spect to the credit rating of a debt security shall 

24 clearly specify whether the credit rating was made 

25 by— 
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1 ‘‘(A) a qualified nationally recognized sta2 tistical rating organization selected under para3 graph (5)(A) to provide the initial credit rating 

4 for such debt security; or 

5 ‘‘(B) a nationally recognized statistical rat6 ing organization not selected under paragraph 

7 (5)(A). 

8 ‘‘(12) PROHIBITION ON MISREPRESENTATION.— 

9 With respect to a debt security, it shall be unlawful 

10 for any person to misrepresent any subsequent credit 

11 rating provided for such debt security as an initial 

12 credit rating provided for such debt security by a 

13 qualified nationally recognized statistical rating orga14 nization selected under paragraph (5)(A). 

15 ‘‘(13) INITIAL CREDIT RATING REVISION AFTER

16 MATERIAL CHANGE IN CIRCUMSTANCE.—If the Board 

17 determines that it is necessary or appropriate in the 

18 public interest or for the protection of investors, the 

19 Board may issue regulations requiring that an issuer 

20 that has received an initial credit rating under this 

21 subsection request a revised initial credit rating, 

22 using the same method as provided under paragraph 

23 (4), each time the issuer experiences a material 

24 change in circumstances, as defined by the Board. 

25 ‘‘(14) CONFLICTS.— 
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1 ‘‘(A) MEMBERS OR EMPLOYEES OF THE

2 BOARD.— 

3 ‘‘(i) LOAN OF MONEY OR SECURITIES

4 PROHIBITED.— 

5 ‘‘(I) IN GENERAL.—A member or 

6 employee of the Board shall not accept 

7 any loan of money or securities, or 

8 anything above nominal value, from 

9 any nationally recognized statistical 

10 rating organization, issuer, or investor. 

11 ‘‘(II) EXCEPTION.—The prohibi12 tion in subclause (I) does not apply to 

13 a loan made in the context of disclosed, 

14 routine banking and brokerage agree15 ments, or a loan that is clearly moti16 vated by a personal or family relation17 ship. 

18 ‘‘(ii) EMPLOYMENT NEGOTIATIONS

19 PROHIBITION.—A member or employee of 

20 the Board shall not engage in employment 

21 negotiations with any nationally recognized 

22 statistical rating organization, issuer, or in23 vestor, unless the member or employee— 
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1 ‘‘(I) discloses the negotiations im2 mediately upon initiation of the nego3 tiations; and 

4 ‘‘(II) recuses himself from all pro5 ceedings concerning the entity involved 

6 in the negotiations until termination 

7 of negotiations or until termination of 

8 his employment by the Board, if an 

9 offer of employment is accepted. 

10 ‘‘(B) CREDIT ANALYSTS.— 

11 ‘‘(i) IN GENERAL.—A credit analyst of 

12 a qualified nationally recognized statistical 

13 rating organization shall not accept any 

14 loan of money or securities, or anything 

15 above nominal value, from any issuer or in16 vestor. 

17 ‘‘(ii) EXCEPTION.—The prohibition de18 scribed in clause (i) does not apply to a 

19 loan made in the context of disclosed, rou20 tine banking and brokerage agreements, or 

21 a loan that is clearly motivated by a per22 sonal or family relationship. 

23 ‘‘(15) EVALUATION OF CREDIT RATING AGENCY

24 BOARD.—Not later than 5 years after the date that 

25 the Board begins assigning qualified nationally recog-
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1 nized statistical rating organizations to provide ini2 tial ratings, the Commission shall submit to Congress 

3 a report that provides recommendations of— 

4 ‘‘(A) the continuation of the Board; 

5 ‘‘(B) any modification to the procedures of 

6 the Board; and 

7 ‘‘(C) modifications to the provisions in this 

8 subsection.’’. 

9 Subtitle D—Improvements to the 

10 Asset-Backed Securitization Process 

11 SEC. 941. REGULATION OF CREDIT RISK RETENTION. 

12 (a) DEFINITION OF ASSET-BACKED SECURITY.—Sec13 tion 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

14 78c(a)) is amended by adding at the end the following: 

15 ‘‘(77) ASSET-BACKED SECURITY.—The term 

16 ‘asset-backed security’— 

17 ‘‘(A) means a fixed-income or other security 

18 collateralized by any type of self-liquidating fi19 nancial asset (including a loan, a lease, a mort20 gage, or a secured or unsecured receivable) that 

21 allows the holder of the security to receive pay22 ments that depend primarily on cash flow from 

23 the asset, including— 

24 ‘‘(i) a collateralized mortgage obliga25 tion; 
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1 ‘‘(ii) a collateralized debt obligation; 

2 ‘‘(iii) a collateralized bond obligation; 

3 ‘‘(iv) a collateralized debt obligation of 

4 asset-backed securities; 

5 ‘‘(v) a collateralized debt obligation of 

6 collateralized debt obligations; and 

7 ‘‘(vi) a security that the Commission, 

8 by rule, determines to be an asset-backed se9 curity for purposes of this section; and 

10 ‘‘(B) does not include a security issued by 

11 a finance subsidiary held by the parent company 

12 or a company controlled by the parent company, 

13 if none of the securities issued by the finance 

14 subsidiary are held by an entity that is not con15 trolled by the parent company.’’. 

16 (b) CREDIT RISK RETENTION.—The Securities Ex17 change Act of 1934 (15 U.S.C. 78a et seq.) is amended by 

18 inserting after section 15F, as added by this Act, the fol19 lowing: 

20 ‘‘SEC. 15G. CREDIT RISK RETENTION. 

21 ‘‘(a) DEFINITIONS.—In this section— 

22 ‘‘(1) the term ‘Federal banking agencies’ means 

23 the Office of the Comptroller of the Currency, the 

24 Board of Governors of the Federal Reserve System, 

25 and the Federal Deposit Insurance Corporation; 
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† HR 4173 EAS 

1 ‘‘(2) the term ‘insured depository institution’ has 

2 the same meaning as in section 3(c) of the Federal 

3 Deposit Insurance Act (12 U.S.C. 1813(c)); 

4 ‘‘(3) the term ‘securitizer’ means— 

5 ‘‘(A) an issuer of an asset-backed security; 

6 or 

7 ‘‘(B) a person who organizes and initiates 

8 an asset-backed securities transaction by selling 

9 or transferring assets, either directly or indi10 rectly, including through an affiliate, to the 

11 issuer; and 

12 ‘‘(4) the term ‘originator’ means a person who— 

13 ‘‘(A) through the extension of credit or oth14 erwise, creates a financial asset that 

15 collateralizes an asset-backed security; and 

16 ‘‘(B) sells an asset to a securitizer. 

17 ‘‘(b) IN GENERAL.—Not later than 270 days after the 

18 date of enactment of this section, the Federal banking agen19 cies and the Commission shall jointly prescribe regulations 

20 to require any securitizer to retain an economic interest in 

21 a portion of the credit risk for any asset that the securitizer, 

22 through the issuance of an asset-backed security, transfers, 

23 sells, or conveys to a third party. 

24 ‘‘(c) STANDARDS FOR REGULATIONS.— 
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1 ‘‘(1) STANDARDS.—The regulations prescribed 

2 under subsection (b) shall— 

3 ‘‘(A) prohibit a securitizer from directly or 

4 indirectly hedging or otherwise transferring the 

5 credit risk that the securitizer is required to re6 tain with respect to an asset; 

7 ‘‘(B) require a securitizer to retain— 

8 ‘‘(i) not less than 5 percent of the cred9 it risk for any asset— 

10 ‘‘(I) that is not a qualified resi11 dential mortgage that is transferred, 

12 sold, or conveyed through the issuance 

13 of an asset-backed security by the 

14 securitizer; or 

15 ‘‘(II) that is a qualified residen16 tial mortgage that is transferred, sold, 

17 or conveyed through the issuance of an 

18 asset-backed security by the securitizer, 

19 if 1 or more of the assets that 

20 collateralize the asset-backed security 

21 are not qualified residential mortgages; 

22 or 

23 ‘‘(ii) less than 5 percent of the credit 

24 risk for an asset that is not a qualified resi25 dential mortgage that is transferred, sold, or 
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1 conveyed through the issuance of an asset2 backed security by the securitizer, if the 

3 originator of the asset meets the under4 writing standards prescribed under para5 graph (2)(B); 

6 ‘‘(C) specify— 

7 ‘‘(i) the permissible forms of risk reten8 tion for purposes of this section; 

9 ‘‘(ii) the minimum duration of the risk 

10 retention required under this section; and 

11 ‘‘(iii) that a securitizer is not required 

12 to retain any part of the credit risk for an 

13 asset that is transferred, sold or conveyed 

14 through the issuance of an asset-backed se15 curity by the securitizer, if all of the assets 

16 that collateralize the asset-backed security 

17 are qualified residential mortgages; 

18 ‘‘(D) apply, regardless of whether the 

19 securitizer is an insured depository institution; 

20 and 

21 ‘‘(E) with respect to a commercial mort22 gage, specify the permissible types, forms, and 

23 amounts of risk retention that would meet the re24 quirements of subparagraph (B), such as— 
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1 ‘‘(i) retention of a specified amount or 

2 percentage of the total credit risk of the 

3 asset; 

4 ‘‘(ii) retention of the first-loss position 

5 by a third-party purchaser that specifically 

6 negotiates for the purchase of such first-loss 

7 position and provides due diligence on all 

8 individual assets in the pool before the 

9 issuance of the asset-backed securities; 

10 ‘‘(iii) a determination by a Federal 

11 banking agency or the Commission that the 

12 underwriting standards and controls for the 

13 asset are adequate; and 

14 ‘‘(iv) provision of adequate representa15 tions and warranties and related enforce16 ment mechanisms; and 

17 ‘‘(F) provide for— 

18 ‘‘(i) a total or partial exemption of 

19 any securitization, as may be appropriate 

20 in the public interest and for the protection 

21 of investors; and 

22 ‘‘(ii) the allocation of risk retention ob23 ligations between a securitizer and an origi24 nator in the case of a securitizer that pur25 chases assets from an originator, as the Fed-
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1 eral banking agencies and the Commission 

2 jointly determine appropriate. 

3 ‘‘(2) ASSET CLASSES.— 

4 ‘‘(A) ASSET CLASSES.—The regulations pre5 scribed under subsection (b) shall establish asset 

6 classes with separate rules for securitizers of dif7 ferent classes of assets, including residential 

8 mortgages, commercial mortgages, commercial 

9 loans, auto loans, and any other class of assets 

10 that the Federal banking agencies and the Com11 mission deem appropriate. 

12 ‘‘(B) CONTENTS.—For each asset class es13 tablished under subparagraph (A), the regula14 tions prescribed under subsection (b) shall estab15 lish underwriting standards that specify the 

16 terms, conditions, and characteristics of a loan 

17 within the asset class that indicate a reduced 

18 credit risk with respect to the loan. 

19 ‘‘(d) ORIGINATORS.—In determining how to allocate 

20 risk retention obligations between a securitizer and an 

21 originator under subsection (c)(1)(E)(ii), the Federal bank22 ing agencies and the Commission shall— 

23 ‘‘(1) reduce the percentage of risk retention obli24 gations required of the securitizer by the percentage of 
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1 risk retention obligations required of the originator; 

2 and 

3 ‘‘(2) consider— 

4 ‘‘(A) whether the assets sold to the 

5 securitizer have terms, conditions, and character6 istics that reflect reduced credit risk; 

7 ‘‘(B) whether the form or volume of trans8 actions in securitization markets creates incen9 tives for imprudent origination of the type of 

10 loan or asset to be sold to the securitizer; and 

11 ‘‘(C) the potential impact of the risk reten12 tion obligations on the access of consumers and 

13 businesses to credit on reasonable terms, which 

14 may not include the transfer of credit risk to a 

15 third party. 

16 ‘‘(e) EXEMPTIONS, EXCEPTIONS, AND ADJUST17 MENTS.— 

18 ‘‘(1) IN GENERAL.—The Federal banking agen19 cies and the Commission may jointly adopt or issue 

20 exemptions, exceptions, or adjustments to the rules 

21 issued under this section, including exemptions, ex22 ceptions, or adjustments for classes of institutions or 

23 assets relating to the risk retention requirement and 

24 the prohibition on hedging under subsection (c)(1). 
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1 ‘‘(2) APPLICABLE STANDARDS.—Any exemption, 

2 exception, or adjustment adopted or issued by the 

3 Federal banking agencies and the Commission under 

4 this paragraph shall— 

5 ‘‘(A) help ensure high quality underwriting 

6 standards for the securitizers and originators of 

7 assets that are securitized or available for 

8 securitization; and 

9 ‘‘(B) encourage appropriate risk manage10 ment practices by the securitizers and origina11 tors of assets, improve the access of consumers 

12 and businesses to credit on reasonable terms, or 

13 otherwise be in the public interest and for the 

14 protection of investors. 

15 ‘‘(3) FARM CREDIT SYSTEM INSTITUTIONS.—A 

16 Farm Credit System institution, including the Fed17 eral Agricultural Mortgage Corporation, that is char18 tered and subject to the provisions of the Farm Credit 

19 Act of 1971, as amended (12 U.S.C. 2001 et seq.), 

20 shall be exempt from the risk retention provisions of 

21 this subsection. 

22 ‘‘(4) EXEMPTION FOR QUALIFIED RESIDENTIAL

23 MORTGAGES.— 

24 ‘‘(A) IN GENERAL.—The Federal banking 

25 agencies, the Commission, the Secretary of Hous-
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1 ing and Urban Development, and the Director of 

2 the Federal Housing Finance Agency shall joint3 ly issue regulations to exempt qualified residen4 tial mortgages from the risk retention require5 ments of this subsection. 

6 ‘‘(B) QUALIFIED RESIDENTIAL MORT7 GAGE.—The Federal banking agencies, the Com8 mission, the Secretary of Housing and Urban 

9 Development, and the Director of the Federal 

10 Housing Finance Agency shall jointly define the 

11 term ‘qualified residential mortgage’ for purposes 

12 of this subsection, taking into consideration un13 derwriting and product features that historical 

14 loan performance data indicate result in a lower 

15 risk of default, such as— 

16 ‘‘(i) documentation and verification of 

17 the financial resources relied upon to qual18 ify the mortgagor; 

19 ‘‘(ii) standards with respect to— 

20 ‘‘(I) the residual income of the 

21 mortgagor after all monthly obliga22 tions; 

23 ‘‘(II) the ratio of the housing pay24 ments of the mortgagor to the monthly 

25 income of the mortgagor; 
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1 ‘‘(III) the ratio of total monthly 

2 installment payments of the mortgagor 

3 to the income of the mortgagor; 

4 ‘‘(iii) mitigating the potential for pay5 ment shock on adjustable rate mortgages 

6 through product features and underwriting 

7 standards; 

8 ‘‘(iv) mortgage guarantee insurance ob9 tained at the time of origination for loans 

10 with combined loan-to-value ratios of great11 er than 80 percent; and 

12 ‘‘(v) prohibiting or restricting the use 

13 of balloon payments, negative amortization, 

14 prepayment penalties, interest-only pay15 ments, and other features that have been 

16 demonstrated to exhibit a higher risk of bor17 rower default. 

18 ‘‘(5) CONDITION FOR QUALIFIED RESIDENTIAL

19 MORTGAGE EXEMPTION.—The regulations issued 

20 under paragraph (4) shall provide that an asset21 backed security that is collateralized by tranches of 

22 other asset-backed securities shall not be exempt from 

23 the risk retention requirements of this subsection. 

24 ‘‘(6) CERTIFICATION.—The Commission shall re25 quire an issuer to certify, for each issuance of an 
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1 asset-backed security collateralized exclusively by 

2 qualified residential mortgages, that the issuer has 

3 evaluated the effectiveness of the internal supervisory 

4 controls of the issuer with respect to the process for 

5 ensuring that all assets that collateralize the asset6 backed security are qualified residential mortgages. 

7 ‘‘(f) ENFORCEMENT.—The regulations issued under 

8 this section shall be enforced by— 

9 ‘‘(1) the appropriate Federal banking agency, 

10 with respect to any securitizer that is an insured de11 pository institution; and 

12 ‘‘(2) the Commission, with respect to any 

13 securitizer that is not an insured depository institu14 tion. 

15 ‘‘(g) AUTHORITY OF COMMISSION.—The authority of 

16 the Commission under this section shall be in addition to 

17 the authority of the Commission to otherwise enforce the 

18 securities laws. 

19 ‘‘(h) EFFECTIVE DATE OF REGULATIONS.—The regu20 lations issued under this section shall become effective— 

21 ‘‘(1) with respect to securitizers and originators 

22 of asset-backed securities backed by residential mort23 gages, 1 year after the date on which final rules under 

24 this section are published in the Federal Register; and 
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1 ‘‘(2) with respect to securitizers and originators 

2 of all other classes of asset-backed securities, 2 years 

3 after the date on which final rules under this section 

4 are published in the Federal Register.’’. 

5 SEC. 942. DISCLOSURES AND REPORTING FOR ASSET6 BACKED SECURITIES. 

7 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

8 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 

9 78o(d)) is amended— 

10 (1) by striking ‘‘(d) Each’’ and inserting the fol11 lowing: 

12 ‘‘(d) SUPPLEMENTARY AND PERIODIC INFORMA13 TION.— 

14 ‘‘(1) IN GENERAL.—Each’’; 

15 (2) in the third sentence, by inserting after ‘‘se16 curities of each class’’ the following: ‘‘, other than any 

17 class of asset-backed securities,’’; and 

18 (3) by adding at the end the following: 

19 ‘‘(2) ASSET-BACKED SECURITIES.— 

20 ‘‘(A) SUSPENSION OF DUTY TO FILE.—The 

21 Commission may, by rule or regulation, provide 

22 for the suspension or termination of the duty to 

23 file under this subsection for any class of asset24 backed security, on such terms and conditions 

25 and for such period or periods as the Commis-
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1 sion deems necessary or appropriate in the pub2 lic interest or for the protection of investors. 

3 ‘‘(B) CLASSIFICATION OF ISSUERS.—The 

4 Commission may, for purposes of this subsection, 

5 classify issuers and prescribe requirements ap6 propriate for each class of issuers of asset-backed 

7 securities.’’. 

8 (b) SECURITIES ACT OF 1933.—Section 7 of the Secu9 rities Act of 1933 (15 U.S.C. 77g) is amended by adding 

10 at the end the following: 

11 ‘‘(c) DISCLOSURE REQUIREMENTS.— 

12 ‘‘(1) IN GENERAL.—The Commission shall adopt 

13 regulations under this subsection requiring each 

14 issuer of an asset-backed security to disclose, for each 

15 tranche or class of security, information regarding the 

16 assets backing that security. 

17 ‘‘(2) CONTENT OF REGULATIONS.—In adopting 

18 regulations under this subsection, the Commission 

19 shall— 

20 ‘‘(A) set standards for the format of the 

21 data provided by issuers of an asset-backed secu22 rity, which shall, to the extent feasible, facilitate 

23 comparison of such data across securities in 

24 similar types of asset classes; and 
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1 ‘‘(B) require issuers of asset-backed securi2 ties, at a minimum, to disclose asset-level or 

3 loan-level data necessary for investors to inde4 pendently perform due diligence, including— 

5 ‘‘(i) data having unique identifiers re6 lating to loan brokers or originators; 

7 ‘‘(ii) the nature and extent of the com8 pensation of the broker or originator of the 

9 assets backing the security; and 

10 ‘‘(iii) the amount of risk retention by 

11 the originator and the securitizer of such as12 sets.’’. 

13 SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET14 BACKED OFFERINGS. 

15 Not later than 180 days after the date of enactment 

16 of this Act, the Securities and Exchange Commission shall 

17 prescribe regulations on the use of representations and war18 ranties in the market for asset-backed securities (as that 

19 term is defined in section 3(a)(77) of the Securities Ex20 change Act of 1934, as added by this subtitle) that— 

21 (1) require each national recognized statistical 

22 rating organization to include in any report accom23 panying a credit rating a description of— 

24 (A) the representations, warranties, and en25 forcement mechanisms available to investors; and 
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1 (B) how they differ from the representa2 tions, warranties, and enforcement mechanisms 

3 in issuances of similar securities; and 

4 (2) require any securitizer (as that term is de5 fined in section 15G(a) of the Securities Exchange 

6 Act of 1934, as added by this subtitle) to disclose ful7 filled and unfulfilled repurchase requests across all 

8 trusts aggregated by the securitizer, so that investors 

9 may identify asset originators with clear under10 writing deficiencies. 

11 SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURI12 TIES ACT OF 1933. 

13 (a) EXEMPTION ELIMINATED.—Section 4 of the Secu14 rities Act of 1933 (15 U.S.C. 77d) is amended— 

15 (1) by striking paragraph (5); and 

16 (2) by striking ‘‘(6) transactions’’ and inserting 

17 the following: 

18 ‘‘(5) transactions’’. 

19 (b) CONFORMING AMENDMENT.—Section 

20 3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 

21 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 

22 ‘‘4(6)’’ and inserting ‘‘4(5)’’. 
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1 SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN 

2 ASSET-BACKED SECURITIES ISSUES. 

3 Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), 

4 as amended by this subtitle, is amended by adding at the 

5 end the following: 

6 ‘‘(d) REGISTRATION STATEMENT FOR ASSET-BACKED

7 SECURITIES.—Not later than 180 days after the date of en8 actment of this subsection, the Commission shall issue rules 

9 relating to the registration statement required to be filed 

10 by any issuer of an asset-backed security (as that term is 

11 defined in section 3(a)(77) of the Securities Exchange Act 

12 of 1934) that require any issuer of an asset-backed secu13 rity— 

14 ‘‘(1) to perform a due diligence analysis of the 

15 assets underlying the asset-backed security; and 

16 ‘‘(2) to disclose the nature of the analysis under 

17 paragraph (1).’’. 

18 Subtitle E—Accountability and 

19 Executive Compensation 

20 SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA21 TION DISCLOSURES. 

22 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

23 et seq.) is amended by inserting after section 14 (15 U.S.C. 

24 78n) the following: 
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1 ‘‘SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECU2 TIVE COMPENSATION. 

3 ‘‘(a) SEPARATE RESOLUTION REQUIRED.—Any proxy 

4 or consent or authorization for an annual or other meeting 

5 of the shareholders occurring after the end of the 6-month 

6 period beginning on the date of enactment of this section, 

7 for which the proxy solicitation rules of the Commission 

8 require compensation disclosure, shall include a separate 

9 resolution subject to shareholder vote to approve the com10 pensation of executives, as disclosed pursuant to section 

11 229.402 of title 17, Code of Federal Regulations, or any 

12 successor thereto. 

13 ‘‘(b) RULE OF CONSTRUCTION.—The shareholder vote 

14 referred to in subsection (a) shall not be binding on the 

15 issuer or the board of directors of an issuer, and may not 

16 be construed— 

17 ‘‘(1) as overruling a decision by such issuer or 

18 board of directors; 

19 ‘‘(2) to create or imply any change to the fidu20 ciary duties of such issuer or board of directors; 

21 ‘‘(3) to create or imply any additional fiduciary 

22 duties for such issuer or board of directors; or 

23 ‘‘(4) to restrict or limit the ability of share24 holders to make proposals for inclusion in proxy ma25 terials related to executive compensation.’’. 
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1 SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE. 

2 The Securities Exchange Act of 1934 (15 U.S.C. 78 

3 et seq.) is amended by inserting after section 10B, as added 

4 by section 753, the following: 

5 ‘‘SEC. 10C. COMPENSATION COMMITTEES. 

6 ‘‘(a) INDEPENDENCE OF COMPENSATION COMMIT7 TEES.— 

8 ‘‘(1) LISTING STANDARDS.—The Commission 

9 shall, by rule, direct the national securities exchanges 

10 and national securities associations to prohibit the 

11 listing of any security of an issuer that does not com12 ply with the requirements of this subsection. 

13 ‘‘(2) INDEPENDENCE OF COMPENSATION COMMIT14 TEES.—The rules of the Commission under paragraph 

15 (1) shall require that each member of the compensa16 tion committee of the board of directors of an issuer 

17 be— 

18 ‘‘(A) a member of the board of directors of 

19 the issuer; and 

20 ‘‘(B) independent. 

21 ‘‘(3) INDEPENDENCE.—The rules of the Commis22 sion under paragraph (1) shall require that, in deter23 mining the definition of the term ‘independence’ for 

24 purposes of paragraph (2), the national securities ex25 changes and the national securities associations shall 

26 consider relevant factors, including— 
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1 ‘‘(A) the source of compensation of a mem2 ber of the board of directors of an issuer, includ3 ing any consulting, advisory, or other compen4 satory fee paid by the issuer to such member of 

5 the board of directors; and 

6 ‘‘(B) whether a member of the board of di7 rectors of an issuer is affiliated with the issuer, 

8 a subsidiary of the issuer, or an affiliate of a 

9 subsidiary of the issuer. 

10 ‘‘(4) EXEMPTION AUTHORITY.—The rules of the 

11 Commission under paragraph (1) shall permit a na12 tional securities exchange or a national securities as13 sociation to exempt a particular relationship from the 

14 requirements of paragraph (2), with respect to the 

15 members of a compensation committee, as the na16 tional securities exchange or national securities asso17 ciation determines is appropriate, taking into consid18 eration the size of an issuer and any other relevant 

19 factors. 

20 ‘‘(b) INDEPENDENCE OF COMPENSATION CONSULTANTS

21 AND OTHER COMPENSATION COMMITTEE ADVISERS.— 

22 ‘‘(1) IN GENERAL.—The compensation committee 

23 of an issuer may only select a compensation consult24 ant, legal counsel, or other adviser to the compensa25 tion committee after taking into consideration the fac-
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1 tors identified by the Commission under paragraph 

2 (2). 

3 ‘‘(2) RULES.—The Commission shall identify 

4 factors that affect the independence of a compensation 

5 consultant, legal counsel, or other adviser to a com6 pensation committee of an issuer, including— 

7 ‘‘(A) the provision of other services to the 

8 issuer by the person that employs the compensa9 tion consultant, legal counsel, or other adviser; 

10 ‘‘(B) the amount of fees received from the 

11 issuer by the person that employs the compensa12 tion consultant, legal counsel, or other adviser, 

13 as a percentage of the total revenue of the person 

14 that employs the compensation consultant, legal 

15 counsel, or other adviser; 

16 ‘‘(C) the policies and procedures of the per17 son that employs the compensation consultant, 

18 legal counsel, or other adviser that are designed 

19 to prevent conflicts of interest; 

20 ‘‘(D) any business or personal relationship 

21 of the compensation consultant, legal counsel, or 

22 other adviser with a member of the compensation 

23 committee; and 
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1 ‘‘(E) any stock of the issuer owned by the 

2 compensation consultant, legal counsel, or other 

3 adviser. 

4 ‘‘(c) COMPENSATION COMMITTEE AUTHORITY RELAT5 ING TO COMPENSATION CONSULTANTS.— 

6 ‘‘(1) AUTHORITY TO RETAIN COMPENSATION CON7 SULTANT.— 

8 ‘‘(A) IN GENERAL.—The compensation com9 mittee of an issuer, in its capacity as a com10 mittee of the board of directors, may, in its sole 

11 discretion, retain or obtain the advice of a com12 pensation consultant. 

13 ‘‘(B) DIRECT RESPONSIBILITY OF COM14 PENSATION COMMITTEE.—The compensation 

15 committee of an issuer shall be directly respon16 sible for the appointment, compensation, and 

17 oversight of the work of a compensation consult18 ant. 

19 ‘‘(C) RULE OF CONSTRUCTION.—This para20 graph may not be construed— 

21 ‘‘(i) to require the compensation com22 mittee to implement or act consistently with 

23 the advice or recommendations of the com24 pensation consultant; or 
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1 ‘‘(ii) to affect the ability or obligation 

2 of a compensation committee to exercise its 

3 own judgment in fulfillment of the duties of 

4 the compensation committee. 

5 ‘‘(2) DISCLOSURE.—In any proxy or consent so6 licitation material for an annual meeting of the 

7 shareholders (or a special meeting in lieu of the an8 nual meeting) occurring on or after the date that is 

9 1 year after the date of enactment of this section, each 

10 issuer shall disclose in the proxy or consent material, 

11 in accordance with regulations of the Commission, 

12 whether— 

13 ‘‘(A) the compensation committee of the 

14 issuer retained or obtained the advice of a com15 pensation consultant; and 

16 ‘‘(B) the work of the compensation consult17 ant has raised any conflict of interest and, if so, 

18 the nature of the conflict and how the conflict is 

19 being addressed. 

20 ‘‘(d) AUTHORITY TO ENGAGE INDEPENDENT LEGAL

21 COUNSEL AND OTHER ADVISERS.— 

22 ‘‘(1) IN GENERAL.—The compensation committee 

23 of an issuer, in its capacity as a committee of the 

24 board of directors, may, in its sole discretion, retain 
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1 and obtain the advice of independent legal counsel 

2 and other advisers. 

3 ‘‘(2) DIRECT RESPONSIBILITY OF COMPENSATION

4 COMMITTEE.—The compensation committee of an 

5 issuer shall be directly responsible for the appoint6 ment, compensation, and oversight of the work of 

7 independent legal counsel and other advisers. 

8 ‘‘(3) RULE OF CONSTRUCTION.—This subsection 

9 may not be construed— 

10 ‘‘(A) to require a compensation committee 

11 to implement or act consistently with the advice 

12 or recommendations of independent legal counsel 

13 or other advisers under this subsection; or 

14 ‘‘(B) to affect the ability or obligation of a 

15 compensation committee to exercise its own judg16 ment in fulfillment of the duties of the compensa17 tion committee. 

18 ‘‘(e) COMPENSATION OF COMPENSATION CONSULT19 ANTS, INDEPENDENT LEGAL COUNSEL, AND OTHER ADVIS20 ERS.—Each issuer shall provide for appropriate funding, 

21 as determined by the compensation committee in its capac22 ity as a committee of the board of directors, for payment 

23 of reasonable compensation— 

24 ‘‘(1) to a compensation consultant; and 
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1 ‘‘(2) to independent legal counsel or any other 

2 adviser to the compensation committee. 

3 ‘‘(f) COMMISSION RULES.— 

4 ‘‘(1) IN GENERAL.—Not later than 360 days 

5 after the date of enactment of this section, the Com6 mission shall, by rule, direct the national securities 

7 exchanges and national securities associations to pro8 hibit the listing of any security of an issuer that is 

9 not in compliance with the requirements of this sec10 tion. 

11 ‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The 

12 rules of the Commission under paragraph (1) shall 

13 provide for appropriate procedures for an issuer to 

14 have a reasonable opportunity to cure any defects that 

15 would be the basis for the prohibition under para16 graph (1), before the imposition of such prohibition. 

17 ‘‘(3) EXEMPTION AUTHORITY.— 

18 ‘‘(A) IN GENERAL.—The rules of the Com19 mission under paragraph (1) shall permit a na20 tional securities exchange or a national securi21 ties association to exempt a category of issuers 

22 from the requirements under this section, as the 

23 national securities exchange or the national secu24 rities association determines is appropriate. 
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1 ‘‘(B) CONSIDERATIONS.—In determining 

2 appropriate exemptions under subparagraph (A), 

3 the national securities exchange or the national 

4 securities association shall take into account the 

5 potential impact of the requirements of this sec6 tion on smaller reporting issuers.’’. 

7 SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES. 

8 (a) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 

9 Section 14 of the Securities Exchange Act of 1934 (15 

10 U.S.C. 78n), as amended by this title, is amended by add11 ing at the end the following: 

12 ‘‘(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 

13 The Commission shall, by rule, require each issuer to dis14 close in any proxy or consent solicitation material for an 

15 annual meeting of the shareholders of the issuer a clear de16 scription of any compensation required to be disclosed by 

17 the issuer under section 229.402 of title 17, Code of Federal 

18 Regulations (or any successor thereto), including informa19 tion that shows the relationship between executive com20 pensation actually paid and the financial performance of 

21 the issuer, taking into account any change in the value of 

22 the shares of stock and dividends of the issuer and any dis23 tributions. The disclosure under this subsection may include 

24 a graphic representation of the information required to be 

25 disclosed.’’. 
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1 (b) ADDITIONAL DISCLOSURE REQUIREMENTS.— 

2 (1) IN GENERAL.—The Commission shall amend 

3 section 229.402 of title 17, Code of Federal Regula4 tions, to require each issuer to disclose in any filing 

5 of the issuer described in section 229.10(a) of title 17, 

6 Code of Federal Regulations (or any successor there7 to)— 

8 (A) the median of the annual total com9 pensation of all employees of the issuer, except 

10 the chief executive officer (or any equivalent po11 sition) of the issuer; 

12 (B) the annual total compensation of the 

13 chief executive officer (or any equivalent posi14 tion) of the issuer; and 

15 (C) the ratio of the amount described in 

16 subparagraph (A) to the amount described in 

17 subparagraph (B). 

18 (2) TOTAL COMPENSATION.—For purposes of this 

19 subsection, the total compensation of an employee of 

20 an issuer shall be determined in accordance with sec21 tion 229.402(c)(2)(x) of title 17, Code of Federal Reg22 ulations, as in effect on the day before the date of en23 actment of this Act. 
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1 SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COM2 PENSATION. 

3 The Securities Exchange Act of 1934 is amended by 

4 inserting after section 10C, as added by section 952, the 

5 following: 

6 ‘‘SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COM7 PENSATION POLICY. 

8 ‘‘(a) LISTING STANDARDS.—The Commission shall, by 

9 rule, direct the national securities exchanges and national 

10 securities associations to prohibit the listing of any security 

11 of an issuer that does not comply with the requirements 

12 of this section. 

13 ‘‘(b) RECOVERY OF FUNDS.—The rules of the Commis14 sion under subsection (a) shall require each issuer to develop 

15 and implement a policy providing— 

16 ‘‘(1) for disclosure of the policy of the issuer on 

17 incentive-based compensation that is based on finan18 cial information required to be reported under the se19 curities laws; and 

20 ‘‘(2) that, in the event that the issuer is required 

21 to prepare an accounting restatement due to the ma22 terial noncompliance of the issuer with any financial 

23 reporting requirement under the securities laws, the 

24 issuer will recover from any current or former execu25 tive officer of the issuer who received incentive-based 

26 compensation (including stock options awarded as 
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1 compensation) during the 3-year period preceding the 

2 date on which the issuer is required to prepare an ac3 counting restatement, based on the erroneous data, in 

4 excess of what would have been paid to the executive 

5 officer under the accounting restatement.’’. 

6 SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIREC7 TOR HEDGING. 

8 Section 14 of the Securities Exchange Act of 1934 (15 

9 U.S.C. 78n), as amended by this title, is amended by add10 ing at the end the following: 

11 ‘‘(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND

12 DIRECTORS.—The Commission shall, by rule, require each 

13 issuer to disclose in any proxy or consent solicitation mate14 rial for an annual meeting of the shareholders of the issuer 

15 whether any employee or member of the board of directors 

16 of the issuer, or any designee of such employee or member, 

17 is permitted to purchase financial instruments (including 

18 prepaid variable forward contracts, equity swaps, collars, 

19 and exchange funds) that are designed to hedge or offset 

20 any decrease in the market value of equity securities— 

21 ‘‘(1) granted to the employee or member of the 

22 board of directors by the issuer as part of the com23 pensation of the employee or member of the board of 

24 directors; or 
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1 ‘‘(2) held, directly or indirectly, by the employee 

2 or member of the board of directors.’’. 

3 SEC. 956. EXCESSIVE COMPENSATION BY HOLDING COMPA4 NIES OF DEPOSITORY INSTITUTIONS. 

5 Section 5 of the Bank Holding Company Act of 1956 

6 (12 U.S.C. 1844) is amended by adding at the end the fol7 lowing: 

8 ‘‘(i) EXCESSIVE COMPENSATION.— 

9 ‘‘(1) IN GENERAL.—Not later than 180 days 

10 after the transfer date established under section 311 

11 of the Restoring American Financial Stability Act of 

12 2010, the Board of Governors, in consultation with 

13 the Comptroller of the Currency and the Federal De14 posit Insurance Corporation, shall, by rule, establish 

15 standards prohibiting as an unsafe and unsound 

16 practice any compensation plan of a bank holding 

17 company that— 

18 ‘‘(A) provides an executive officer, employee, 

19 director, or principal shareholder of the bank 

20 holding company with excessive compensation, 

21 fees, or benefits; or 

22 ‘‘(B) could lead to material financial loss to 

23 the bank holding company. 

24 ‘‘(2) CONSIDERATIONS.—In establishing the 

25 standards under paragraph (1), the Board of Gov-
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1 ernors shall take into consideration the compensation 

2 standards described in section 39(c) of the Federal 

3 Deposit Insurance Act (12 U.S.C. 1831p–1(c)) and 

4 the views and recommendations of the Comptroller of 

5 the Currency and the Federal Deposit Insurance Cor6 poration.’’. 

7 SEC. 957. VOTING BY BROKERS. 

8 Section 6(b) of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78f(b)) is amended— 

10 (1) in paragraph (9)— 

11 (A) in subparagraph (A), by redesignating 

12 clauses (i) through (v) as subclauses (I) through 

13 (V), respectively, and adjusting the margins ac14 cordingly; 

15 (B) by redesignating subparagraphs (A) 

16 through (D) as clauses (i) through (iv), respec17 tively, and adjusting the margins accordingly; 

18 (C) by inserting ‘‘(A)’’ after ‘‘(9)’’; and 

19 (D) in the matter immediately following 

20 clause (iv), as so redesignated, by striking ‘‘As 

21 used’’ and inserting the following: 

22 ‘‘(B) As used’’. 

23 (2) by adding at the end the following: 

24 ‘‘(10)(A) The rules of the exchange prohibit any 

25 member that is not the beneficial owner of a security 
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1 registered under section 12 from granting a proxy to 

2 vote the security in connection with a shareholder vote 

3 described in subparagraph (B), unless the beneficial 

4 owner of the security has instructed the member to 

5 vote the proxy in accordance with the voting instruc6 tions of the beneficial owner. 

7 ‘‘(B) A shareholder vote described in this sub8 paragraph is a shareholder vote with respect to the 

9 election of a member of the board of directors of an 

10 issuer, executive compensation, or any other signifi11 cant matter, as determined by the Commission, by 

12 rule. 

13 ‘‘(C) Nothing in this paragraph shall be con14 strued to prohibit a national securities exchange from 

15 prohibiting a member that is not the beneficial owner 

16 of a security registered under section 12 from grant17 ing a proxy to vote the security in connection with 

18 a shareholder vote not described in subparagraph 

19 (A).’’. 
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1 Subtitle F—Improvements to the 

2 Management of the Securities 

3 and Exchange Commission 

4 SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SU5 PERVISORY CONTROLS. 

6 (a) ANNUAL REPORTS AND CERTIFICATION.—Not later 

7 than 90 days after the end of each fiscal year, the Commis8 sion shall submit a report to the Committee on Banking, 

9 Housing, and Urban Affairs of the Senate and the Com10 mittee on Financial Services of the House of Representa11 tives on the conduct by the Commission of examinations 

12 of registered entities, enforcement investigations, and review 

13 of corporate financial securities filings. 

14 (b) CONTENTS OF REPORTS.—Each report under sub15 section (a) shall contain— 

16 (1) an assessment, as of the end of the most re17 cent fiscal year, of the effectiveness of— 

18 (A) the internal supervisory controls of the 

19 Commission; and 

20 (B) the procedures of the Commission appli21 cable to the staff of the Commission who perform 

22 examinations of registered entities, enforcement 

23 investigations, and reviews of corporate financial 

24 securities filings; 
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1 (2) a certification that the Commission has ade2 quate internal supervisory controls to carry out the 

3 duties of the Commission described in paragraph 

4 (1)(B); and 

5 (3) a summary by the Comptroller General of the 

6 United States of the review carried out under sub7 section (d). 

8 (c) CERTIFICATION.— 

9 (1) SIGNATURE.—The certification under sub10 section (b)(2) shall be signed by the Director of the 

11 Division of Enforcement, the Director of the Division 

12 of Corporation Finance, and the Director of the Office 

13 of Compliance Inspections and Examinations (or the 

14 head of any successor division or office). 

15 (2) CONTENT OF CERTIFICATION.—Each indi16 vidual described in paragraph (1) shall certify that 

17 the individual— 

18 (A) is directly responsible for establishing 

19 and maintaining the internal supervisory con20 trols of the Division or Office of which the indi21 vidual is the head; 

22 (B) is knowledgeable about the internal su23 pervisory controls of the Division or Office of 

24 which the individual is the head; 
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1 (C) has evaluated the effectiveness of the in2 ternal supervisory controls during the 90-day pe3 riod ending on the final day of the fiscal year 

4 to which the report relates; and 

5 (D) has disclosed to the Commission any 

6 significant deficiencies in the design or operation 

7 of internal supervisory controls that could ad8 versely affect the ability of the Division or Office 

9 to consistently conduct inspections, or investiga10 tions, or reviews of filings with professional com11 petence and integrity. 

12 (d) REVIEW BY THE COMPTROLLER GENERAL.—Not 

13 later than the date on which the first report is submitted 

14 under subsection (a), the Comptroller General of the United 

15 States shall submit to the Committee on Banking, Housing, 

16 and Urban Affairs of the Senate and the Committee on Fi17 nancial Services of the House of Representatives an initial 

18 report that contains a review of the adequacy and effective19 ness of the internal supervisory control structure and proce20 dures described in subsection (b)(1). 

21 SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGE22 MENT. 

23 (a) TRIENNIAL REPORT REQUIRED.—Once every 3 

24 years, the Comptroller General of the United States shall 

25 submit a report to the Committee on Banking, Housing, 
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1 and Urban Affairs of the Senate and the Committee on Fi2 nancial Services of the House of Representatives on the 

3 quality of personnel management by the Commission. 

4 (b) CONTENTS OF REPORT.—Each report under sub5 section (a) shall include— 

6 (1) an evaluation of— 

7 (A) the effectiveness of supervisors in using 

8 the skills, talents, and motivation of the employ9 ees of the Commission to achieve the goals of the 

10 Commission; 

11 (B) the criteria for promoting employees of 

12 the Commission to supervisory positions; 

13 (C) the fairness of the application of the 

14 promotion criteria to the decisions of the Com15 mission; 

16 (D) the competence of the professional staff 

17 of the Commission; 

18 (E) the efficiency of communication between 

19 the units of the Commission regarding the work 

20 of the Commission (including communication be21 tween divisions and between subunits of a divi22 sion) and the efforts by the Commission to pro23 mote such communication; 

24 (F) the turnover within subunits of the 

25 Commission, including the identification of su-
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1 pervisors whose subordinates have an unusually 

2 high rate of turnover; 

3 (G) whether there are excessive numbers of 

4 low-level, mid-level, or senior-level managers; 

5 (H) any initiatives of the Commission that 

6 increase the competence of the staff of the Com7 mission; 

8 (I) the actions taken by the Commission re9 garding employees of the Commission who have 

10 failed to perform their duties; and 

11 (J) such other factors relating to the man12 agement of the Commission as the Comptroller 

13 General determines are appropriate; 

14 (2) an evaluation of any improvements made 

15 with respect to the areas described in paragraph (1) 

16 since the date of submission of the previous report; 

17 and 

18 (3) recommendations for how the Commission 

19 can use the human resources of the Commission more 

20 effectively and efficiently to carry out the mission of 

21 the Commission. 

22 (c) CONSULTATION.—In preparing the report under 

23 subsection (a), the Comptroller General shall consult with 

24 current employees of the Commission, retired employees and 

25 other former employees of the Commission, the Inspector 
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1 General of the Commission, persons that have business be2 fore the Commission, any union representing the employees 

3 of the Commission, private management consultants, aca4 demics, and any other source that the Comptroller General 

5 deems appropriate. 

6 (d) REPORT BY COMMISSION.—Not later than 90 days 

7 after the date on which the Comptroller General submits 

8 each report under subsection (a), the Commission shall sub9 mit to the Committee on Banking, Housing, and Urban Af10 fairs of the Senate and the Committee on Financial Services 

11 of the House of Representatives a report describing the ac12 tions taken by the Commission in response to the rec13 ommendations contained in the report under subsection (a). 

14 (e) REIMBURSEMENTS FOR COST OF REPORTS.— 

15 (1) REIMBURSEMENTS REQUIRED.—The Com16 mission shall reimburse the Government Account17 ability Office for the full cost of making the reports 

18 under this section, as billed therefor by the Comp19 troller General. 

20 (2) CREDITING AND USE OF REIMBURSE21 MENTS.—Such reimbursements shall— 

22 (A) be credited to the appropriation account 

23 ‘‘Salaries and Expenses, Government Account24 ability Office’’ current when the payment is re25 ceived; and 
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1 (B) remain available until expended. 

2 SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT. 

3 (a) REPORTS OF COMMISSION.— 

4 (1) ANNUAL REPORTS REQUIRED.—Not later 

5 than 6 months after the end of each fiscal year, the 

6 Commission shall publish and submit to Congress a 

7 report that— 

8 (A) describes the responsibility of the man9 agement of the Commission for establishing and 

10 maintaining an adequate internal control struc11 ture and procedures for financial reporting; and 

12 (B) contains an assessment of the effective13 ness of the internal control structure and proce14 dures for financial reporting of the Commission 

15 during that fiscal year. 

16 (2) ATTESTATION.—The reports required under 

17 paragraph (1) shall be attested to by the Chairman 

18 and chief financial officer of the Commission. 

19 (b) REPORT BY COMPTROLLER GENERAL.— 

20 (1) REPORT REQUIRED.—Not later than 6 

21 months after the end of the first fiscal year after the 

22 date of enactment of this Act, the Comptroller General 

23 of the United States shall submit a report to Congress 

24 that assesses— 
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1 (A) the effectiveness of the internal control 

2 structure and procedures of the Commission for 

3 financial reporting; and 

4 (B) the assessment of the Commission under 

5 subsection (a)(1)(B). 

6 (2) ATTESTATION.—The Comptroller General 

7 shall attest to, and report on, the assessment made by 

8 the Commission under subsection (a). 

9 (c) REIMBURSEMENTS FOR COST OF REPORTS.— 

10 (1) REIMBURSEMENTS REQUIRED.—The Com11 mission shall reimburse the Government Account12 ability Office for the full cost of making the reports 

13 under subsection (b), as billed therefor by the Comp14 troller General. 

15 (2) CREDITING AND USE OF REIMBURSE16 MENTS.—Such reimbursements shall— 

17 (A) be credited to the appropriation account 

18 ‘‘Salaries and Expenses, Government Account19 ability Office’’ current when the payment is re20 ceived; and 

21 (B) remain available until expended. 

22 SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURI23 TIES ASSOCIATIONS. 

24 (a) REPORT REQUIRED.—Not later than 2 years after 

25 the date of enactment of this Act, and every 3 years there-
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1 after, the Comptroller General of the United States shall 

2 submit to the Committee on Banking, Housing, and Urban 

3 Affairs of the Senate and the Committee on Financial Serv4 ices of the House of Representatives a report that includes 

5 an evaluation of the oversight by the Commission of na6 tional securities associations registered under section 15A 

7 of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) 

8 with respect to— 

9 (1) the governance of such national securities as10 sociations, including the identification and manage11 ment of conflicts of interest by such national securi12 ties associations, together with an analysis of the im13 pact of any conflicts of interest on the regulatory en14 forcement or rulemaking by such national securities 

15 associations; 

16 (2) the examinations carried out by the national 

17 securities associations, including the expertise of the 

18 examiners; 

19 (3) the executive compensation practices of such 

20 national securities associations; 

21 (4) the arbitration services provided by the na22 tional securities associations; 

23 (5) the review performed by national securities 

24 associations of advertising by the members of the na25 tional securities associations; 
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1 (6) the cooperation with and assistance to State 

2 securities administrators by the national securities 

3 associations to promote investor protection; 

4 (7) how the funding of national securities asso5 ciations is used to support the mission of the national 

6 securities associations, including— 

7 (A) the methods of funding; 

8 (B) the sufficiency of funds; 

9 (C) how funds are invested by the national 

10 securities association pending use; and 

11 (D) the impact of the methods, sufficiency, 

12 and investment of funds on regulatory enforce13 ment by the national securities associations; 

14 (8) the policies regarding the employment of 

15 former employees of national securities associations 

16 by regulated entities; 

17 (9) the ongoing effectiveness of the rules of the 

18 national securities associations in achieving the goals 

19 of the rules; 

20 (10) the transparency of governance and activi21 ties of the national securities associations; and 

22 (11) any other issue that has an impact, as de23 termined by the Comptroller General, on the effective24 ness of such national securities associations in per-
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1 forming their mission and in dealing fairly with in2 vestors and members; 

3 (b) REIMBURSEMENTS FOR COST OF REPORTS.— 

4 (1) REIMBURSEMENTS REQUIRED.—The Com5 mission shall reimburse the Government Account6 ability Office for the full cost of making the reports 

7 under subsection (a), as billed therefor by the Comp8 troller General. 

9 (2) CREDITING AND USE OF REIMBURSE10 MENTS.—Such reimbursements shall— 

11 (A) be credited to the appropriation account 

12 ‘‘Salaries and Expenses, Government Account13 ability Office’’ current when the payment is re14 ceived; and 

15 (B) remain available until expended. 

16 SEC. 965. COMPLIANCE EXAMINERS. 

17 Section 4 of the Securities Exchange Act of 1934 (15 

18 U.S.C. 78d) is amended by adding at the end the following: 

19 ‘‘(h) EXAMINERS.— 

20 ‘‘(1) DIVISION OF TRADING AND MARKETS.—The 

21 Division of Trading and Markets of the Commission, 

22 or any successor organizational unit, shall have a 

23 staff of examiners who shall— 
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1 ‘‘(A) perform compliance inspections and 

2 examinations of entities under the jurisdiction of 

3 that Division; and 

4 ‘‘(B) report to the Director of that Division. 

5 ‘‘(2) DIVISION OF INVESTMENT MANAGEMENT.— 

6 The Division of Investment Management of the Com7 mission, or any successor organizational unit, shall 

8 have a staff of examiners who shall— 

9 ‘‘(A) perform compliance inspections and 

10 examinations of entities under the jurisdiction of 

11 that Division; and 

12 ‘‘(B) report to the Director of that Divi13 sion.’’. 

14 SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE 

15 COMMISSION. 

16 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

17 et seq.) is amended by inserting after section 4C (15 U.S.C. 

18 78d–3) the following: 

19 ‘‘SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL. 

20 ‘‘(a) SUGGESTION SUBMISSIONS BY COMMISSION EM21 PLOYEES.— 

22 ‘‘(1) HOTLINE ESTABLISHED.—The Inspector 

23 General of the Commission shall establish and main24 tain a telephone hotline or other electronic means for 

25 the receipt of— 
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1 ‘‘(A) suggestions by employees of the Com2 mission for improvements in the work efficiency, 

3 effectiveness, and productivity, and the use of the 

4 resources, of the Commission; and 

5 ‘‘(B) allegations by employees of the Com6 mission of waste, abuse, misconduct, or mis7 management within the Commission. 

8 ‘‘(2) CONFIDENTIALITY.—The Inspector General 

9 shall maintain as confidential— 

10 ‘‘(A) the identity of any individual who 

11 provides information by the means established 

12 under paragraph (1), unless the individual re13 quests otherwise, in writing; and 

14 ‘‘(B) at the request of any such individual, 

15 any specific information provided by the indi16 vidual. 

17 ‘‘(b) CONSIDERATION OF REPORTS.—The Inspector 

18 General shall consider any suggestions or allegations re19 ceived by the means established under subsection (a)(1), and 

20 shall recommend appropriate action in relation to such sug21 gestions or allegations. 

22 ‘‘(c) RECOGNITION.—The Inspector General may rec23 ognize any employee who makes a suggestion under sub24 section (a)(1) (or by other means) that would or does— 
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1 ‘‘(1) increase the work efficiency, effectiveness, or 

2 productivity of the Commission; or 

3 ‘‘(2) reduce waste, abuse, misconduct, or mis4 management within the Commission. 

5 ‘‘(d) REPORT.—The Inspector General of the Commis6 sion shall submit to Congress an annual report containing 

7 a description of— 

8 ‘‘(1) the nature, number, and potential benefits 

9 of any suggestions received under subsection (a); 

10 ‘‘(2) the nature, number, and seriousness of any 

11 allegations received under subsection (a); 

12 ‘‘(3) any recommendations made or actions 

13 taken by the Inspector General in response to substan14 tiated allegations received under subsection (a); and 

15 ‘‘(4) any action the Commission has taken in re16 sponse to suggestions or allegations received under 

17 subsection (a). 

18 ‘‘(e) FUNDING.—The activities of the Inspector General 

19 under this subsection shall be funded by the Securities and 

20 Exchange Commission Investor Protection Fund established 

21 under section 21F.’’. 
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1 Subtitle G—Strengthening 

2 Corporate Governance 

3 SEC. 971. ELECTION OF DIRECTORS BY MAJORITY VOTE IN 

4 UNCONTESTED ELECTIONS. 

5 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

6 et seq.) is amended by inserting after section 14A, as added 

7 by this title, the following: 

8 ‘‘SEC. 14B. CORPORATE GOVERNANCE. 

9 ‘‘(a) CORPORATE GOVERNANCE STANDARDS.— 

10 ‘‘(1) LISTING STANDARDS.— 

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

12 after the date of enactment of this subsection, the 

13 Commission shall, by rule, direct the national se14 curities exchanges and national securities asso15 ciations to prohibit the listing of any security of 

16 an issuer that is not in compliance with any of 

17 the requirements of this subsection. 

18 ‘‘(B) OPPORTUNITY TO COMPLY AND

19 CURE.—The rules established under this para20 graph shall allow an issuer to have an oppor21 tunity to come into compliance with the require22 ments of this subsection, and to cure any defect 

23 that would be the basis for a prohibition under 

24 subparagraph (A), before the imposition of such 

25 prohibition. 
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1 ‘‘(C) AUTHORITY TO EXEMPT.—The Com2 mission may, by rule or order, exempt an issuer 

3 from any or all of the requirements of this sub4 section and the rules issued under this sub5 section, based on the size of the issuer, the market 

6 capitalization of the issuer, the number of share7 holders of record of the issuer, or any other cri8 teria, as the Commission deems necessary and 

9 appropriate in the public interest or for the pro10 tection of investors. 

11 ‘‘(2) COMMISSION RULES ON ELECTIONS.—In an 

12 election for membership on the board of directors of 

13 an issuer— 

14 ‘‘(A) that is uncontested, each director who 

15 receives a majority of the votes cast shall be 

16 deemed to be elected; 

17 ‘‘(B) that is contested, if the number of 

18 nominees exceeds the number of directors to be 

19 elected, each director shall be elected by the vote 

20 of a plurality of the shares represented at a 

21 meeting and entitled to vote; and 

22 ‘‘(C) if a director of an issuer receives less 

23 than a majority of the votes cast in an 

24 uncontested election— 
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1 ‘‘(i) the director shall tender the res2 ignation of the director to the board of di3 rectors; and 

4 ‘‘(ii) the board of directors— 

5 ‘‘(I) shall— 

6 ‘‘(aa) accept the resignation 

7 of the director; 

8 ‘‘(bb) determine a date on 

9 which the resignation will take ef10 fect, within a reasonable period of 

11 time, as established by the Com12 mission; and 

13 ‘‘(cc) make the date under 

14 item (bb) public within a reason15 able period of time, as established 

16 by the Commission; or 

17 ‘‘(II) shall, upon a unanimous 

18 vote of the board, decline to accept the 

19 resignation and, not later than 30 

20 days after the date of the vote (or with21 in such shorter period as the Commis22 sion may establish), make public, to23 gether with a discussion of the analysis 

24 used in reaching the conclusion, the 

25 specific reasons that— 
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1 ‘‘(aa) the board chose not to 

2 accept the resignation; and 

3 ‘‘(bb) the decision was in the 

4 best interests of the issuer and the 

5 shareholders of the issuer.’’. 

6 SEC. 972. PROXY ACCESS. 

7 (a) PROXY ACCESS.—Section 14(a) of the Securities 

8 Exchange Act of 1934 (15 U.S.C. 78n(a)) is amended— 

9 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(2) The rules and regulations prescribed by the Com12 mission under paragraph (1) may include— 

13 ‘‘(A) a requirement that a solicitation of proxy, 

14 consent, or authorization by (or on behalf of) an 

15 issuer include a nominee submitted by a shareholder 

16 to serve on the board of directors of the issuer; and 

17 ‘‘(B) a requirement that an issuer follow a cer18 tain procedure in relation to a solicitation described 

19 in subparagraph (A).’’. 

20 (b) REGULATIONS.—The Commission may issue rules 

21 permitting the use by shareholders of proxy solicitation ma22 terials supplied by an issuer of securities for the purpose 

23 of nominating individuals to membership on the board of 

24 directors of the issuer, under such terms and conditions as 
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1 the Commission determines are in the interests of share2 holders and for the protection of investors. 

3 SEC. 973. DISCLOSURES REGARDING CHAIRMAN AND CEO 

4 STRUCTURES. 

5 Section 14B of the Securities Exchange Act of 1934, 

6 as added by section 971, is amended by adding at the end 

7 the following: 

8 ‘‘(b) DISCLOSURES REGARDING CHAIRMAN AND CEO 

9 STRUCTURES.—Not later than 180 days after the date of 

10 enactment of this subsection, the Commission shall issue 

11 rules that require an issuer to disclose in the annual proxy 

12 sent to investors the reasons why the issuer has chosen— 

13 ‘‘(1) the same person to serve as chairman of the 

14 board of directors and chief executive officer (or in 

15 equivalent positions); or 

16 ‘‘(2) different individuals to serve as chairman of 

17 the board of directors and chief executive officer (or 

18 in equivalent positions of the issuer).’’. 

19 Subtitle H—Municipal Securities 

20 SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND 

21 CHANGES TO THE BOARD OF THE MSRB. 

22 (a) REGISTRATION OF MUNICIPAL SECURITIES DEAL23 ERS AND MUNICIPAL ADVISORS.—Section 15B(a) of the Se24 curities Exchange Act of 1934 (15 U.S.C. 78o–4(a)) is 

25 amended— 
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1 (1) in paragraph (1)— 

2 (A) by inserting ‘‘(A)’’ after ‘‘(1)’’; and 

3 (B) by adding at the end the following: 

4 ‘‘(B) It shall be unlawful for a municipal 

5 advisor to provide advice to or on behalf of a 

6 municipal entity or obligated person with respect 

7 to municipal financial products or the issuance 

8 of municipal securities, or to undertake a solici9 tation of a municipal entity or obligated person, 

10 unless the municipal advisor is registered in ac11 cordance with this subsection.’’; 

12 (2) in paragraph (2), by inserting ‘‘or municipal 

13 advisor’’ after ‘‘municipal securities dealer’’ each 

14 place that term appears; 

15 (3) in paragraph (3), by inserting ‘‘or municipal 

16 advisor’’ after ‘‘municipal securities dealer’’ each 

17 place that term appears; 

18 (4) in paragraph (4), by striking ‘‘dealer, or mu19 nicipal securities dealer or class of brokers, dealers, or 

20 municipal securities dealers’’ and inserting ‘‘dealer, 

21 municipal securities dealer, or municipal advisor, or 

22 class of brokers, dealers, municipal securities dealers, 

23 or municipal advisors’’; and 

24 (5) by adding at the end the following: 
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1 ‘‘(5) No municipal advisor shall make use of the 

2 mails or any means or instrumentality of interstate 

3 commerce to provide advice to or on behalf of a mu4 nicipal entity or obligated person with respect to mu5 nicipal financial products, the issuance of municipal 

6 securities, or participation in the issuance of munic7 ipal securities, or to undertake a solicitation of a mu8 nicipal entity or obligated person, in connection with 

9 which such municipal advisor engages in any fraudu10 lent, deceptive, or manipulative act or practice.’’. 

11 (b) MUNICIPAL SECURITIES RULEMAKING BOARD.— 

12 Section 15B(b) of the Securities Exchange Act of 1934 (15 

13 U.S.C. 78o–4(b)) is amended— 

14 (1) in paragraph (1)— 

15 (A) in the first sentence, by striking ‘‘Not 

16 later than’’ and all that follows through ‘‘ap17 pointed by the Commission’’ and inserting ‘‘The 

18 Municipal Securities Rulemaking Board shall be 

19 composed of 15 members, or such other number 

20 of members as specified by rules of the Board 

21 pursuant to paragraph (2)(B),’’; 

22 (B) by striking the second sentence and in23 serting the following: ‘‘The members of the Board 

24 shall serve as members for a term of 3 years or 

25 for such other terms as specified by rules of the 
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1 Board pursuant to paragraph (2)(B), and shall 

2 consist of (A) 8 individuals who are not associ3 ated with any broker, dealer, municipal securi4 ties dealer, or municipal advisor (other than by 

5 reason of being under common control with, or 

6 indirectly controlling, any broker or dealer 

7 which is not a municipal securities broker or 

8 municipal securities dealer), at least 1 of whom 

9 shall be representative of institutional or retail 

10 investors in municipal securities, at least 1 of 

11 whom shall be representative of municipal enti12 ties, and at least 1 of whom shall be a member 

13 of the public with knowledge of or experience in 

14 the municipal industry (which members are 

15 hereinafter referred to as ‘public representa16 tives’); and (B) 7 individuals who are associated 

17 with a broker, dealer, municipal securities deal18 er, or municipal advisor, including at least 1 in19 dividual who is associated with and representa20 tive of brokers, dealers, or municipal securities 

21 dealers that are not banks or subsidiaries or de22 partments or divisions of banks (which members 

23 are hereinafter referred to as ‘broker-dealer rep24 resentatives’), at least 1 individual who is associ25 ated with and representative of municipal secu-
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1 rities dealers which are banks or subsidiaries or 

2 departments or divisions of banks (which mem3 bers are hereinafter referred to as ‘bank rep4 resentatives’), and at least 1 individual who is 

5 associated with a municipal advisor (which 

6 member is hereinafter referred to as the ‘advisor 

7 representative’).’’; and 

8 (C) in the third sentence, by striking ‘‘ini9 tial’’; 

10 (2) in paragraph (2)— 

11 (A) in the matter preceding subparagraph 

12 (A)— 

13 (i) by inserting before the period at the 

14 end of the first sentence the following: ‘‘and 

15 advice provided to or on behalf of municipal 

16 entities or obligated persons by brokers, 

17 dealers, municipal securities dealers, and 

18 municipal advisors with respect to munic19 ipal financial products, the issuance of mu20 nicipal securities, or participation in the 

21 issuance of municipal securities, and solici22 tations of municipal entities or obligated 

23 persons undertaken by brokers, dealers, mu24 nicipal securities dealers, and municipal 

25 advisors’’; and 
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1 (ii) by striking the second sentence; 

2 (B) in subparagraph (A)— 

3 (i) in the matter preceding clause (i)— 

4 (I) by inserting ‘‘, and no broker, 

5 dealer, municipal securities dealer, or 

6 municipal advisor shall provide advice 

7 to or on behalf of a municipal entity 

8 or obligated person with respect to mu9 nicipal financial products, the issuance 

10 of municipal securities, or participa11 tion in the issuance of municipal secu12 rities’’ after ‘‘sale of, any municipal 

13 security’’; and 

14 (II) by inserting ‘‘and municipal 

15 entities or obligated persons’’ after 

16 ‘‘protection of investors’’; 

17 (ii) in clause (i), by striking ‘‘munic18 ipal securities brokers and municipal secu19 rities dealers’’ each place that term appears 

20 and inserting ‘‘municipal securities brokers, 

21 municipal securities dealers, and municipal 

22 advisors’’; 

23 (iii) in clause (ii), by adding ‘‘and’’ at 

24 the end; 
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1 (iv) in clause (iii), by striking ‘‘; and’’ 

2 and inserting a period; and 

3 (v) by striking clause (iv); 

4 (C) in subparagraph (B), by striking 

5 ‘‘nominations and elections’’ and all that follows 

6 through ‘‘specify’’ and inserting ‘‘nominations 

7 and elections of public representatives, broker8 dealer representatives, bank representatives, and 

9 advisor representatives. Such rules shall provide 

10 that the membership of the Board shall at all 

11 times be as evenly divided in number as possible 

12 between entities or individuals who are subject to 

13 regulation by the Board and entities or individ14 uals not subject to regulation by the Board, pro15 vided, however, that a majority of the members 

16 of the Board shall at all times be public rep17 resentatives. Such rules shall also specify’’; 

18 (D) in subparagraph (C)— 

19 (i) by inserting ‘‘and municipal finan20 cial products’’ after ‘‘municipal securities’’ 

21 the first two times that term appears; 

22 (ii) by inserting ‘‘, municipal entities, 

23 obligated persons,’’ before ‘‘and the public 

24 interest’’; 
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1 (iii) by striking ‘‘between’’ and insert2 ing ‘‘among’’; 

3 (iv) by striking ‘‘issuers, municipal se4 curities brokers, or municipal securities 

5 dealers, to fix’’ and inserting ‘‘municipal 

6 entities, obligated persons, municipal secu7 rities brokers, municipal securities dealers, 

8 or municipal advisors, to fix’’; and 

9 (v) by striking ‘‘brokers or municipal 

10 securities dealers, to regulate’’ and inserting 

11 ‘‘brokers, municipal securities dealers, or 

12 municipal advisors, to regulate’’; 

13 (E) in subparagraph (D)— 

14 (i) by inserting ‘‘and advice con15 cerning municipal financial products’’ after 

16 ‘‘transactions in municipal securities’’; 

17 (ii) by striking ‘‘That no’’ and insert18 ing ‘‘that no’’; 

19 (iii) by inserting ‘‘municipal advisor,’’ 

20 before ‘‘or person associated’’; and 

21 (iv) by striking ‘‘a municipal securi22 ties broker or municipal securities dealer 

23 may be compelled’’ and inserting ‘‘a munic24 ipal securities broker, municipal securities 
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1 dealer, or municipal advisor may be com2 pelled’’; 

3 (F) in subparagraph (E)— 

4 (i) by striking ‘‘municipal securities 

5 brokers and municipal securities dealers’’ 

6 and inserting ‘‘municipal securities brokers, 

7 municipal securities dealers, and municipal 

8 advisors’’; and 

9 (ii) by striking ‘‘municipal securities 

10 broker or municipal securities dealer’’ and 

11 inserting ‘‘municipal securities broker, mu12 nicipal securities dealer, or municipal advi13 sor’’; 

14 (G) in subparagraph (G), by striking ‘‘mu15 nicipal securities brokers and municipal securi16 ties dealers’’ and inserting ‘‘municipal securities 

17 brokers, municipal securities dealers, and munic18 ipal advisors’’; 

19 (H) in subparagraph (J)— 

20 (i) by striking ‘‘municipal securities 

21 broker and each municipal securities deal22 er’’ and inserting ‘‘municipal securities 

23 broker, municipal securities dealer, and mu24 nicipal advisor’’; and 
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1 (ii) by striking the period at the end of 

2 the second sentence and inserting ‘‘, which 

3 may include charges for failure to submit to 

4 the Board required information or docu5 ments to any information system operated 

6 by the Board in a full, accurate, or timely 

7 manner, or any other failure to comply 

8 with the rules of the Board.’’; 

9 (I) in subparagraph (K)— 

10 (i) by inserting ‘‘broker, dealer, or’’ be11 fore ‘‘municipal securities dealer’’ each 

12 place that term appears; and 

13 (ii) by striking ‘‘municipal securities 

14 investment portfolio’’ and inserting ‘‘related 

15 account of a broker, dealer, or municipal se16 curities dealer’’; and 

17 (J) by adding at the end the following: 

18 ‘‘(L) provide continuing education require19 ments for municipal advisors. 

20 ‘‘(M) provide professional standards. 

21 ‘‘(N) not impose a regulatory burden on 

22 small municipal advisors that is not necessary 

23 or appropriate in the public interest and for the 

24 protection of investors, municipal entities, and 

25 obligated persons.’’; 
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1 (3) by redesignating paragraph (3) as para2 graph (7); and 

3 (4) by inserting after paragraph (2) the fol4 lowing: 

5 ‘‘(3) The Board, in conjunction with or on behalf 

6 of any Federal financial regulator or self-regulatory 

7 organization, may— 

8 ‘‘(A) establish information systems; and 

9 ‘‘(B) assess such reasonable fees and charges 

10 for the submission of information to, or the re11 ceipt of information from, such systems from any 

12 persons which systems may be developed for the 

13 purposes of serving as a repository of informa14 tion from municipal market participants or oth15 erwise in furtherance of the purposes of the 

16 Board, a Federal financial regulator, or a self17 regulatory organization. 

18 ‘‘(4) The Board shall provide guidance and as19 sistance in the enforcement of, and examination for, 

20 compliance with the rules of the Board to the Com21 mission, a registered securities association under sec22 tion 15A, or any other appropriate regulatory agency, 

23 as applicable.’’. 

24 (c) DISCIPLINE OF DEALERS AND MUNICIPAL ADVI25 SORS AND OTHER MATTERS.—Section 15B(c) of the Securi-
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1 ties Exchange Act of 1934 (15 U.S.C. 78o–4(c)) is amend2 ed— 

3 (1) in paragraph (1), by inserting ‘‘, and no 

4 broker, dealer, municipal securities dealer, or munic5 ipal advisor shall make use of the mails or any means 

6 or instrumentality of interstate commerce to provide 

7 advice to or on behalf of a municipal entity or obli8 gated person with respect to municipal financial 

9 products, the issuance of municipal securities, or par10 ticipation in the issuance of municipal securities, or 

11 to undertake a solicitation of a municipal entity or 

12 obligated person,’’ after ‘‘any municipal security’’; 

13 (2) in paragraph (2), by inserting ‘‘or municipal 

14 advisor’’ after ‘‘municipal securities dealer’’ each 

15 place that term appears; 

16 (3) in paragraph (3)— 

17 (A) by inserting ‘‘or municipal entities or 

18 obligated person’’ after ‘‘protection of investors’’ 

19 each place that term appears; and 

20 (B) by inserting ‘‘or municipal advisor’’ 

21 after ‘‘municipal securities dealer’’ each place 

22 that term appears; 

23 (4) in paragraph (4), by inserting ‘‘or municipal 

24 advisor’’ after ‘‘municipal securities dealer or obli25 gated person’’ each place that term appears; 
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1 (5) in paragraph (6)(B), by inserting ‘‘or mu2 nicipal entities’’ after ‘‘protection of investors’’; 

3 (6) in paragraph (7)— 

4 (A) in subparagraph (A)— 

5 (i) in clause (i), by striking ‘‘; and’’ 

6 and inserting a semicolon; 

7 (ii) in clause (ii), by striking the pe8 riod and inserting ‘‘; and’’; and 

9 (iii) by adding at the end the fol10 lowing: 

11 ‘‘(iii) the Commission, or its designee, 

12 in the case of municipal advisors.’’. 

13 (B) in subparagraph (B), by inserting ‘‘or 

14 municipal entities or obligated person’’ after 

15 ‘‘protection of investors’’; and 

16 (7) by adding at the end the following: 

17 ‘‘(9)(A) Fines collected by the Commission for 

18 violations of the rules of the Board shall be equally 

19 divided between the Commission and the Board. 

20 ‘‘(B) Fines collected by a registered securities as21 sociation under section 15A(7) with respect to viola22 tions of the rules of the Board shall be accounted for 

23 by such registered securities association separately 

24 from other fines collected under section 15A(7) and 

25 shall be allocated between such registered securities as-
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1 sociation and the Board at the direction of the Com2 mission.’’. 

3 (d) ISSUANCE OF MUNICIPAL SECURITIES.—Section 

4 15B(d)(2) of the Securities Exchange Act of 1934 (15 

5 U.S.C. 78o–4(d)) is amended— 

6 (1) by striking ‘‘through a municipal securities 

7 broker or municipal securities dealer or otherwise’’ 

8 and inserting ‘‘through a municipal securities broker, 

9 municipal securities dealer, municipal advisor, or 

10 otherwise’’; and 

11 (2) by inserting ‘‘or municipal advisors’’ before 

12 ‘‘to furnish’’. 

13 (e) DEFINITIONS.—Section 15B of the Securities Ex14 change Act of 1934 (15 U.S.C. 78o–4) is amended by adding 

15 at the end the following: 

16 ‘‘(e) DEFINITIONS.—For purposes of this section— 

17 ‘‘(1) the term ‘Board’ means the Municipal Secu18 rities Rulemaking Board established under subsection 

19 (b)(1); 

20 ‘‘(2) the term ‘guaranteed investment contract’ 

21 includes any investment that has specified with22 drawal or reinvestment provisions and a specifically 

23 negotiated or bid interest rate, and also includes any 

24 agreement to supply investments on 2 or more future 

25 dates, such as a forward supply contract; 
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1 ‘‘(3) the term ‘investment strategies’ includes 

2 plans or programs for the investment of the proceeds 

3 of municipal securities that are not municipal de4 rivatives, guaranteed investment contracts, and the 

5 recommendation of and brokerage of municipal es6 crow investments; 

7 ‘‘(4) the term ‘municipal advisor’— 

8 ‘‘(A) means a person (who is not a munic9 ipal entity or an employee of a municipal enti10 ty) that— 

11 ‘‘(i) provides advice to or on behalf of 

12 a municipal entity or obligated person with 

13 respect to municipal financial products or 

14 the issuance of municipal securities, includ15 ing advice with respect to the structure, 

16 timing, terms, and other similar matters 

17 concerning such financial products or 

18 issues; 

19 ‘‘(ii) participates in the issuance of 

20 municipal securities; or 

21 ‘‘(iii) undertakes a solicitation of a 

22 municipal entity; 

23 ‘‘(B) includes financial advisors, guaran24 teed investment contract brokers, third-party 

25 marketers, placement agents, solicitors, finders, 
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1 and swap advisors, if such persons are described 

2 in any of clauses (i) through (iii) of subpara3 graph (A); and 

4 ‘‘(C) does not include a broker, dealer, or 

5 municipal securities dealer serving as an under6 writer (as defined in section 2(a)(11) of the Se7 curities Act of 1933) (15 U.S.C. 77b(a)(11)), any 

8 investment adviser registered under the Invest9 ment Advisers Act of 1940, or persons associated 

10 with such investment advisers who are providing 

11 investment advice, attorneys offering legal advice 

12 or providing services that are of a traditional 

13 legal nature, or engineers providing engineering 

14 advice; 

15 ‘‘(5) the term ‘municipal derivative’ means any 

16 financial instrument or contract designed to hedge a 

17 risk (including interest rate swaps, basis swaps, cred18 it default swaps, caps, floors, and collars); 

19 ‘‘(6) the term ‘municipal financial product’ 

20 means municipal derivatives, guaranteed investment 

21 contracts, and investment strategies; 

22 ‘‘(7) the term ‘rules of the Board’ means the rules 

23 proposed and adopted by the Board under subsection 

24 (b)(2); 
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1 ‘‘(8) the term ‘person associated with a munic2 ipal advisor’ or ‘associated person of an advisor’ 

3 means— 

4 ‘‘(A) any partner, officer, director, or 

5 branch manager of such municipal advisor (or 

6 any person occupying a similar status or per7 forming similar functions); 

8 ‘‘(B) any other employee of such municipal 

9 advisor who is engaged in the management, di10 rection, supervision, or performance of any ac11 tivities relating to the provision of advice to or 

12 on behalf of a municipal entity or obligated per13 son with respect to municipal financial products, 

14 the issuance of municipal securities, or partici15 pation in the issuance of municipal securities; 

16 and 

17 ‘‘(C) any person directly or indirectly con18 trolling, controlled by, or under common control 

19 with such municipal advisor; 

20 ‘‘(9) the term ‘municipal entity’ means any 

21 State, political subdivision of a State, or municipal 

22 corporate instrumentality of a State, including— 

23 ‘‘(A) any agency, authority, or instrumen24 tality of the State, political subdivision, or mu25 nicipal corporate instrumentality; 
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1 ‘‘(B) any plan, program, or pool of assets 

2 sponsored or established by the State, political 

3 subdivision, or municipal corporate instrumen4 tality or any agency, authority, or instrumen5 tality thereof; and 

6 ‘‘(C) any other issuer of municipal securi7 ties; 

8 ‘‘(10) the term ‘solicitation of a municipal entity 

9 or obligated person’ means a direct or indirect com10 munication with a municipal entity or obligated per11 son made by a person, for direct or indirect com12 pensation, on behalf of a broker, dealer, municipal se13 curities dealer, municipal advisor, or investment ad14 viser (as defined in section 202 of the Investment Ad15 visers Act of 1940) that does not control, is not con16 trolled by, or is not under common control with the 

17 person undertaking such solicitation for the purpose 

18 of obtaining or retaining an engagement by a munic19 ipal entity or obligated person of a broker, dealer, 

20 municipal securities dealer, or municipal advisor for 

21 or in connection with municipal financial products, 

22 the issuance of municipal securities, or participation 

23 in the issuance of municipal securities, or of an in24 vestment adviser to provide investment advisory serv25 ices to or on behalf of a municipal entity; and 
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1 ‘‘(11) the term ‘obligated person’ means any per2 son, including an issuer of municipal securities, who 

3 is either generally or through an enterprise, fund, or 

4 account of such person, committed by contract or 

5 other arrangement to support the payment of all or 

6 part of the obligations on the municipal securities to 

7 be sold in an offering of municipal securities.’’. 

8 (f) REGISTERED SECURITIES ASSOCIATION.—Section 

9 15A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 

10 78o–3(b)) is amended by adding at the end the following: 

11 ‘‘(15) The rules of the association provide that 

12 the association shall— 

13 ‘‘(A) request guidance from the Municipal 

14 Securities Rulemaking Board in interpretation 

15 of the rules of the Municipal Securities Rule16 making Board; and 

17 ‘‘(B) provide information to the Municipal 

18 Securities Rulemaking Board about the enforce19 ment actions and examinations of the associa20 tion under section 15B(b)(2)(E), so that the Mu21 nicipal Securities Rulemaking Board may— 

22 ‘‘(i) assist in such enforcement actions 

23 and examinations; and 

24 ‘‘(ii) evaluate the ongoing effectiveness 

25 of the rules of the Board.’’. 
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1 (g) REGISTRATION AND REGULATION OF BROKERS

2 AND DEALERS.—Section 15 of the Securities Exchange Act 

3 of 1934 is amended— 

4 (1) in subsection (b)(4), by inserting ‘‘municipal 

5 advisor,’’ after ‘‘municipal securities dealer’’ each 

6 place that term appears; and 

7 (2) in subsection (c), by inserting ‘‘broker, deal8 er, or’’ before ‘‘municipal securities dealer’’ each place 

9 that term appears. 

10 (h) ACCOUNTS AND RECORDS, REPORTS, EXAMINA11 TIONS OF EXCHANGES, MEMBERS, AND OTHERS.—Section 

12 17(a)(1) of the Securities Exchange Act of 1934 is amended 

13 by inserting ‘‘municipal advisor,’’ after ‘‘municipal securi14 ties dealer’’. 

15 (i) SAVINGS CLAUSE.—Notwithstanding any provision 

16 of the Over-the-Counter Derivatives Markets Act of 2010, 

17 or any amendment made pursuant to such Act, the provi18 sions of this section, and the amendments made pursuant 

19 to this section, shall apply to any municipal derivative. 

20 (j) EFFECTIVE DATE.—This section, and the amend21 ments made by this section, shall take effect on October 1, 

22 2010. 
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1 SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

2 OF INCREASED DISCLOSURE TO INVESTORS. 

3 (a) STUDY.—The Comptroller General of the United 

4 States shall conduct a study and review of the disclosure 

5 required to be made by issuers of municipal securities. 

6 (b) SUBJECTS FOR EVALUATION.—In conducting the 

7 study under subsection (a), the Comptroller General of the 

8 United States shall— 

9 (1) broadly describe— 

10 (A) the size of the municipal securities mar11 kets and the issuers and investors; and 

12 (B) the disclosures provided by issuers to 

13 investors; 

14 (2) compare the amount, frequency, and quality 

15 of disclosures that issuers of municipal securities are 

16 required by law to provide for the benefit of munic17 ipal securities holders, including the amount of and 

18 frequency of disclosures actually provided by issuers 

19 of municipal securities, with the amount of and fre20 quency of disclosures that issuers of corporate securi21 ties provide for the benefit of corporate securities hold22 ers, taking into account the differences between issuers 

23 of municipal securities and issuers of corporate secu24 rities; 

25 (3) evaluate the costs and benefits to various 

26 types of issuers of municipal securities of requiring 
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1 issuers of municipal bonds to provide additional fi2 nancial disclosures for the benefit of investors; 

3 (4) evaluate the potential benefit to investors 

4 from additional financial disclosures by issuers of 

5 municipal bonds; and 

6 (5) make recommendations relating to disclosure 

7 requirements for municipal issuers, including the ad8 visability of the repeal or retention of section 15B(d) 

9 of the Securities Exchange Act of 1934 (15 U.S.C. 

10 78o–4(d)) (commonly known as the ‘‘Tower Amend11 ment’’). 

12 (c) REPORT.—Not later than 1 year after the date of 

13 enactment of this Act, the Comptroller General of the United 

14 States shall submit a report to Congress on the results of 

15 the study conducted under subsection (a), including rec16 ommendations for how to improve disclosure by issuers of 

17 municipal securities. 

18 SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

19 ON THE MUNICIPAL SECURITIES MARKETS. 

20 (a) STUDY.—The Comptroller General of the United 

21 States shall conduct a study of the municipal securities 

22 markets. 

23 (b) REPORT.—Not later than 180 days after the date 

24 of enactment of this Act, the Comptroller General of the 

25 United States shall submit a report to the Committee on 
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1 Banking, Housing, and Urban Affairs of the Senate, and 

2 the Committee on Financial Services of the House of Rep3 resentatives, with copies to the Special Committee on Aging 

4 of the Senate and the Commission, on the results of the 

5 study conducted under subsection (a), including— 

6 (1) an analysis of the mechanisms for trading, 

7 quality of trade executions, market transparency, 

8 trade reporting, price discovery, settlement clearing, 

9 and credit enhancements; 

10 (2) the needs of the markets and investors and 

11 the impact of recent innovations; 

12 (3) recommendations for how to improve the 

13 transparency, efficiency, fairness, and liquidity of 

14 trading in the municipal securities markets, includ15 ing with reference to items listed in paragraph (1); 

16 and 

17 (4) potential uses of derivatives in the municipal 

18 securities markets. 

19 (c) RESPONSES.—Not later than 180 days after receipt 

20 of the report required under subsection (b), the Commission 

21 shall submit a response to the Committee on Banking, 

22 Housing, and Urban Affairs of the Senate, and the Com23 mittee on Financial Services of the House of Representa24 tives, with a copy to the Special Committee on Aging of 

25 the Senate, stating the actions the Commission has taken 
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1 in response to the recommendations contained in such re2 port. 

3 SEC. 978. STUDY OF FUNDING FOR GOVERNMENT AC4 COUNTING STANDARDS BOARD. 

5 (a) STUDY.—The Commission shall conduct a study 

6 that evaluates— 

7 (1) the role and importance of the Government 

8 Accounting Standards Board in the municipal securi9 ties markets; 

10 (2) the manner in which the Government Ac11 counting Standards Board is funded, and how such 

12 manner of funding affects the financial information 

13 available to securities investors; 

14 (3) the advisability of changes to the manner in 

15 which the Government Accounting Standards Board 

16 is funded; and 

17 (4) whether legislative changes to the manner in 

18 which the Government Accounting Standards Board 

19 is funded are necessary for the benefit of investors and 

20 in the public interest. 

21 (b) CONSULTATION.—In conducting the study required 

22 under subsection (a), the Commission shall consult with 

23 State and local government financial officers. 

24 (c) REPORT.—Not later than 270 days after the date 

25 of enactment of this Act, the Commission shall submit to 
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1 the Committee on Banking, Housing, and Urban Affairs 

2 of the Senate and the Committee on Financial Services of 

3 the House of Representatives a report on the study required 

4 under subsection (a). 

5 SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES. 

6 (a) IN GENERAL.—There shall be in the Commission 

7 an Office of Municipal Securities, which shall— 

8 (1) administer the rules of the Commission with 

9 respect to the practices of municipal securities brokers 

10 and dealers, municipal securities advisors, municipal 

11 securities investors, and municipal securities issuers; 

12 and 

13 (2) coordinate with the Municipal Securities 

14 Rulemaking Board for rulemaking and enforcement 

15 actions as required by law. 

16 (b) DIRECTOR OF THE OFFICE.—The head of the Office 

17 of Municipal Securities shall be the Director, who shall re18 port to the Chairman. 

19 (c) STAFFING.— 

20 (1) IN GENERAL.—The Office of Municipal Secu21 rities shall be staffed sufficiently to carry out the re22 quirements of this section. 

23 (2) REQUIREMENT.—The staff of the Office of 

24 Municipal Securities shall include individuals with 

25 knowledge of and expertise in municipal finance. 
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1 Subtitle I—Public Company Ac2 counting Oversight Board, Port3 folio Margining, and Other Mat4 ters 

5 SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION 

6 WITH FOREIGN AUTHORITIES. 

7 (a) DEFINITION.—Section 2(a) of the Sarbanes-Oxley 

8 Act of 2002 (15 U.S.C. 7201(a)) is amended by adding at 

9 the end the following: 

10 ‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHOR11 ITY.—The term ‘foreign auditor oversight authority’ 

12 means any governmental body or other entity empow13 ered by a foreign government to conduct inspections 

14 of public accounting firms or otherwise to administer 

15 or enforce laws related to the regulation of public ac16 counting firms.’’. 

17 (b) AVAILABILITY TO SHARE INFORMATION.—Section 

18 105(b)(5) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

19 7215(b)(5)) is amended by adding at the end the following: 

20 ‘‘(C) AVAILABILITY TO FOREIGN OVERSIGHT

21 AUTHORITIES.—Without the loss of its status as 

22 confidential and privileged in the hands of the 

23 Board, all information referred to in subpara24 graph (A) that relates to a public accounting 

25 firm that a foreign government has empowered a 
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† HR 4173 EAS 

1 foreign auditor oversight authority to inspect or 

2 otherwise enforce laws with respect to, may, at 

3 the discretion of the Board, be made available to 

4 the foreign auditor oversight authority, if— 

5 ‘‘(i) the Board finds that it is nec6 essary to accomplish the purposes of this 

7 Act or to protect investors; 

8 ‘‘(ii) the foreign auditor oversight au9 thority provides— 

10 ‘‘(I) such assurances of confiden11 tiality as the Board may request; 

12 ‘‘(II) a description of the applica13 ble information systems and controls of 

14 the foreign auditor oversight authority; 

15 and 

16 ‘‘(III) a description of the laws 

17 and regulations of the foreign govern18 ment of the foreign auditor oversight 

19 authority that are relevant to informa20 tion access; and 

21 ‘‘(iii) the Board determines that it is 

22 appropriate to share such information.’’. 

23 (c) CONFORMING AMENDMENT.—Section 105(b)(5)(A) 

24 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
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1 7215(b)(5)(A)) is amended by striking ‘‘subparagraph (B)’’ 

2 and inserting ‘‘subparagraphs (B) and (C)’’. 

3 SEC. 982. OVERSIGHT OF BROKERS AND DEALERS. 

4 (a) DEFINITIONS.— 

5 (1) DEFINITIONS AMENDED.—Title I of the Sar6 banes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.) is 

7 amended by adding at the end the following new sec8 tion: 

9 ‘‘SEC. 110. DEFINITIONS. 

10 ‘‘For the purposes of this title, the following definitions 

11 shall apply: 

12 ‘‘(1) AUDIT.—The term ‘audit’ means an exam13 ination of the financial statements, reports, docu14 ments, procedures, controls, or notices of any issuer, 

15 broker, or dealer by an independent public accounting 

16 firm in accordance with the rules of the Board or the 

17 Commission, for the purpose of expressing an opinion 

18 on the financial statements or providing an audit re19 port. 

20 ‘‘(2) AUDIT REPORT.—The term ‘audit report’ 

21 means a document, report, notice, or other record— 

22 ‘‘(A) prepared following an audit performed 

23 for purposes of compliance by an issuer, broker, 

24 or dealer with the requirements of the securities 

25 laws; and 
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1 ‘‘(B) in which a public accounting firm ei2 ther— 

3 ‘‘(i) sets forth the opinion of that firm 

4 regarding a financial statement, report, no5 tice, or other document, procedures, or con6 trols; or 

7 ‘‘(ii) asserts that no such opinion can 

8 be expressed. 

9 ‘‘(3) BROKER.—The term ‘broker’ means a 

10 broker (as such term is defined in section 3(a)(4) of 

11 the Securities Exchange Act of 1934 (15 U.S.C. 

12 78c(a)(4))) that is required to file a balance sheet, in13 come statement, or other financial statement under 

14 section 17(e)(1)(A) of such Act (15 U.S.C. 

15 78q(e)(1)(A)), where such balance sheet, income state16 ment, or financial statement is required to be certified 

17 by a registered public accounting firm. 

18 ‘‘(4) DEALER.—The term ‘dealer’ means a dealer 

19 (as such term is defined in section 3(a)(5) of the Se20 curities Exchange Act of 1934 (15 U.S.C. 78c(a)(5))) 

21 that is required to file a balance sheet, income state22 ment, or other financial statement under section 

23 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 

24 where such balance sheet, income statement, or finan-
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1 cial statement is required to be certified by a reg2 istered public accounting firm. 

3 ‘‘(5) PROFESSIONAL STANDARDS.—The term 

4 ‘professional standards’ means— 

5 ‘‘(A) accounting principles that are— 

6 ‘‘(i) established by the standard setting 

7 body described in section 19(b) of the Secu8 rities Act of 1933, as amended by this Act, 

9 or prescribed by the Commission under sec10 tion 19(a) of that Act (15 U.S.C. 17a(s)) or 

11 section 13(b) of the Securities Exchange Act 

12 of 1934 (15 U.S.C. 78a(m)); and 

13 ‘‘(ii) relevant to audit reports for par14 ticular issuers, brokers, or dealers, or dealt 

15 with in the quality control system of a par16 ticular registered public accounting firm; 

17 and 

18 ‘‘(B) auditing standards, standards for at19 testation engagements, quality control policies 

20 and procedures, ethical and competency stand21 ards, and independence standards (including 

22 rules implementing title II) that the Board or 

23 the Commission determines— 
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1 ‘‘(i) relate to the preparation or 

2 issuance of audit reports for issuers, bro3 kers, or dealers; and 

4 ‘‘(ii) are established or adopted by the 

5 Board under section 103(a), or are promul6 gated as rules of the Commission. 

7 ‘‘(6) SELF-REGULATORY ORGANIZATION.—The 

8 term ‘self-regulatory organization’ has the same 

9 meaning as in section 3(a) of the Securities Exchange 

10 Act of 1934 (15 U.S.C. 78c(a)).’’. 

11 (2) CONFORMING AMENDMENT.—Section 2(a) of 

12 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) 

13 is amended in the matter preceding paragraph (1), by 

14 striking ‘‘In this’’ and inserting ‘‘Except as otherwise 

15 specifically provided in this Act, in this’’. 

16 (b) ESTABLISHMENT AND ADMINISTRATION OF THE

17 PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.—Sec18 tion 101 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

19 7211) is amended— 

20 (1) by striking ‘‘issuers’’ each place that term 

21 appears and inserting ‘‘issuers, brokers, and dealers’’; 

22 and 

23 (2) in subsection (a)— 

24 (A) by striking ‘‘public companies’’ and in25 serting ‘‘companies’’; and 
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1 (B) by striking ‘‘for companies the securi2 ties of which are sold to, and held by and for, 

3 public investors’’. 

4 (c) REGISTRATION WITH THE BOARD.—Section 102 of 

5 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amend6 ed— 

7 (1) in subsection (a)— 

8 (A) by striking ‘‘Beginning 180’’ and all 

9 that follows through ‘‘101(d), it’’ and inserting 

10 ‘‘It’’; and 

11 (B) by striking ‘‘issuer’’ and inserting 

12 ‘‘issuer, broker, or dealer’’; 

13 (2) in subsection (b)— 

14 (A) in paragraph (2)(A), by striking 

15 ‘‘issuers’’ and inserting ‘‘issuers, brokers, and 

16 dealers’’; and 

17 (B) by striking ‘‘issuer’’ each place that 

18 term appears and inserting ‘‘issuer, broker, or 

19 dealer’’. 

20 (d) AUDITING AND INDEPENDENCE.—Section 103(a) of 

21 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is 

22 amended— 

23 (1) in paragraph (1), by striking ‘‘and such eth24 ics standards’’ and inserting ‘‘such ethics standards, 

25 and such independence standards’’; 
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1 (2) in paragraph (2)(A)(iii), by striking ‘‘de2 scribe in each audit report’’ and inserting ‘‘in each 

3 audit report for an issuer, describe’’; and 

4 (3) in paragraph (2)(B)(i), by striking ‘‘issuers’’ 

5 and inserting ‘‘issuers, brokers, and dealers’’. 

6 (e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNT7 ING FIRMS.—Section 104 of the Sarbanes-Oxley Act of 2002 

8 (15 U.S.C. 7214) is amended— 

9 (1) in subsection (a), by striking ‘‘issuers’’ and 

10 inserting ‘‘issuers, brokers, and dealers’’; and 

11 (2) in subsection (b)(1)— 

12 (A) by striking ‘‘audit reports for’’ each 

13 place that term appears and inserting ‘‘audit re14 ports on annual financial statements for’’; 

15 (B) in subparagraph (A), by striking ‘‘and’’ 

16 at the end; 

17 (C) in subparagraph (B), by striking the 

18 period at the end and inserting ‘‘; and’’; and 

19 (D) by adding at the end the following: 

20 ‘‘(C) with respect to each registered public 

21 accounting firm that regularly provides audit re22 ports and that is not described in subparagraph 

23 (A) or (B), on a basis determined by the Board, 

24 by rule, that is consistent with the public interest 

25 and protection of investors.’’. 
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1 (f) INVESTIGATIONS AND DISCIPLINARY PRO2 CEEDINGS.—Section 105(c)(7)(B) of the Sarbanes-Oxley 

3 Act of 2002 (15 U.S.C. 7215(c)(7)(B)) is amended— 

4 (1) in the subparagraph heading, by inserting ‘‘, 

5 BROKER, OR DEALER’’ after ‘‘ISSUER’’; 

6 (2) by striking ‘‘any issuer’’ each place that term 

7 appears and inserting ‘‘any issuer, broker, or dealer’’; 

8 and 

9 (3) by striking ‘‘an issuer under this subsection’’ 

10 and inserting ‘‘a registered public accounting firm 

11 under this subsection’’. 

12 (g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 

13 106(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

14 7216(a)) is amended— 

15 (1) in paragraph (1), by striking ‘‘issuer’’ and 

16 inserting ‘‘issuer, broker, or dealer’’; and 

17 (2) in paragraph (2), by striking ‘‘issuers’’ and 

18 inserting ‘‘issuers, brokers, or dealers’’. 

19 (h) FUNDING.—Section 109 of the Sarbanes-Oxley Act 

20 of 2002 (15 U.S.C. 7219) is amended— 

21 (1) in subsection (c)(2), by striking ‘‘subsection 

22 (i)’’ and inserting ‘‘subsection (j)’’; 

23 (2) in subsection (d)— 

24 (A) in paragraph (2), by striking ‘‘allowing 

25 for differentiation among classes of issuers, as 
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1 appropriate’’ and inserting ‘‘and among brokers 

2 and dealers, in accordance with subsection (h), 

3 and allowing for differentiation among classes of 

4 issuers, brokers and dealers, as appropriate’’; 

5 and 

6 (B) by adding at the end the following: 

7 ‘‘(3) BROKERS AND DEALERS.—The Board shall 

8 begin the allocation, assessment, and collection of fees 

9 under paragraph (2) with respect to brokers and deal10 ers with the payment of support fees to fund the first 

11 full fiscal year beginning after the effective date of 

12 this paragraph.’’; 

13 (3) by redesignating subsections (h), (i), and (j) 

14 as subsections (i), (j), and (k), respectively; and 

15 (4) by inserting after subsection (g) the fol16 lowing: 

17 ‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES

18 AMONG BROKERS AND DEALERS.— 

19 ‘‘(1) OBLIGATION TO PAY.—Each broker or deal20 er shall pay to the Board the annual accounting sup21 port fee allocated to such broker or dealer under this 

22 section. 

23 ‘‘(2) ALLOCATION.—Any amount due from a 

24 broker or dealer (or from a particular class of brokers 

25 and dealers) under this section shall be allocated 
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1 among brokers and dealers and payable by the broker 

2 or dealer (or the brokers and dealers in the particular 

3 class, as applicable). 

4 ‘‘(3) PROPORTIONALITY.—The amount due from 

5 a broker or dealer shall be in proportion to the net 

6 capital of the broker or dealer, compared to the total 

7 net capital of all brokers and dealers, in accordance 

8 with rules issued by the Board.’’. 

9 (i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU10 LATORY ORGANIZATION.—Section 105(b)(4)(B) of the Sar11 banes-Oxley Act of 2002 (15 U.S.C. 7215(b)(4)(B)) is 

12 amended— 

13 (1) by redesignating clauses (ii) and (iii) as 

14 clauses (iii) and (iv), respectively; and 

15 (2) by inserting after clause (i) the following: 

16 ‘‘(ii) to a self-regulatory organization, 

17 in the case of an investigation that concerns 

18 an audit report for a broker or dealer that 

19 is under the jurisdiction of such self-regu20 latory organization;’’. 

21 (j) USE OF DOCUMENTS RELATED TO AN INSPECTION

22 OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of the Sar23 banes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is 

24 amended— 
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1 (1) in subclause (III), by striking ‘‘and’’ at the 

2 end; 

3 (2) in subclause (IV), by striking the comma and 

4 inserting ‘‘; and’’; and 

5 (3) by inserting after subclause (IV) the fol6 lowing: 

7 ‘‘(V) a self-regulatory organiza8 tion, with respect to an audit report 

9 for a broker or dealer that is under the 

10 jurisdiction of such self-regulatory or11 ganization,’’. 

12 (k) EFFECTIVE DATE.—The amendments made by this 

13 section shall take effect 180 days after the date of enactment 

14 of this Act. 

15 SEC. 983. PORTFOLIO MARGINING. 

16 (a) ADVANCES.—Section 9(a)(1) of the Securities In17 vestor Protection Act of 1970 (15 U.S.C. 78fff–3(a)(1)) is 

18 amended by inserting ‘‘or options on commodity futures 

19 contracts’’ after ‘‘claim for securities’’. 

20 (b) DEFINITIONS.—Section 16 of the Securities Inves21 tor Protection Act of 1970 (15 U.S.C. 78lll) is amended— 

22 (1) by striking paragraph (2) and inserting the 

23 following: 

24 ‘‘(2) CUSTOMER.— 
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1 ‘‘(A) IN GENERAL.—The term ‘customer’ of 

2 a debtor means any person (including any per3 son with whom the debtor deals as principal or 

4 agent) who has a claim on account of securities 

5 received, acquired, or held by the debtor in the 

6 ordinary course of its business as a broker or 

7 dealer from or for the securities accounts of such 

8 person for safekeeping, with a view to sale, to 

9 cover consummated sales, pursuant to purchases, 

10 as collateral, security, or for purposes of effecting 

11 transfer. 

12 ‘‘(B) INCLUDED PERSONS.—The term ‘cus13 tomer’ includes— 

14 ‘‘(i) any person who has deposited cash 

15 with the debtor for the purpose of pur16 chasing securities; 

17 ‘‘(ii) any person who has a claim 

18 against the debtor for cash, securities, fu19 tures contracts, or options on futures con20 tracts received, acquired, or held in a port21 folio margining account carried as a securi22 ties account pursuant to a portfolio mar23 gining program approved by the Commis24 sion; and 
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1 ‘‘(iii) any person who has a claim 

2 against the debtor arising out of sales or 

3 conversions of such securities. 

4 ‘‘(C) EXCLUDED PERSONS.—The term ‘cus5 tomer’ does not include any person, to the extent 

6 that— 

7 ‘‘(i) the claim of such person arises out 

8 of transactions with a foreign subsidiary of 

9 a member of SIPC; or 

10 ‘‘(ii) such person has a claim for cash 

11 or securities which by contract, agreement, 

12 or understanding, or by operation of law, is 

13 part of the capital of the debtor, or is subor14 dinated to the claims of any or all creditors 

15 of the debtor, notwithstanding that some 

16 ground exists for declaring such contract, 

17 agreement, or understanding void or void18 able in a suit between the claimant and the 

19 debtor.’’; 

20 (2) in paragraph (4)— 

21 (A) in subparagraph (C), by striking ‘‘and’’ 

22 at the end; 

23 (B) by redesignating subparagraph (D) as 

24 subparagraph (E); and 
1146 

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1 (C) by inserting after subparagraph (C) the 

2 following: 

3 ‘‘(D) in the case of a portfolio margining 

4 account of a customer that is carried as a securi5 ties account pursuant to a portfolio margining 

6 program approved by the Commission, a futures 

7 contract or an option on a futures contract re8 ceived, acquired, or held by or for the account of 

9 a debtor from or for such portfolio margining ac10 count, and the proceeds thereof; and’’; 

11 (3) in paragraph (9), in the matter following 

12 subparagraph (L), by inserting after ‘‘Such term’’ the 

13 following: ‘‘includes revenues earned by a broker or 

14 dealer in connection with a transaction in the port15 folio margining account of a customer carried as se16 curities accounts pursuant to a portfolio margining 

17 program approved by the Commission. Such term’’; 

18 and 

19 (4) in paragraph (11)— 

20 (A) in subparagraph (A)— 

21 (i) by striking ‘‘filing date, all’’ and 

22 all that follows through the end of the sub23 paragraph and inserting the following: ‘‘fil24 ing date— 
1147 

† HR 4173 EAS 

1 ‘‘(i) all securities positions of such cus2 tomer (other than customer name securities 

3 reclaimed by such customer); and 

4 ‘‘(ii) all positions in futures contracts 

5 and options on futures contracts held in a 

6 portfolio margining account carried as a se7 curities account pursuant to a portfolio 

8 margining program approved by the Com9 mission, including all property 

10 collateralizing such positions, to the extent 

11 that such property is not otherwise included 

12 herein; minus’’; and 

13 (B) in the matter following subparagraph 

14 (C), by striking ‘‘In determining’’ and inserting 

15 the following: ‘‘A claim for a commodity futures 

16 contract received, acquired, or held in a portfolio 

17 margining account pursuant to a portfolio mar18 gining program approved by the Commission or 

19 a claim for a security futures contract, shall be 

20 deemed to be a claim with respect to such con21 tract as of the filing date, and such claim shall 

22 be treated as a claim for cash. In determining’’. 
1148 

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1 SEC. 984. LOAN OR BORROWING OF SECURITIES. 

2 (a) RULEMAKING AUTHORITY.—Section 10 of the Se3 curities Exchange Act of 1934 (15 U.S.C. 78j) is amended 

4 by adding at the end the following: 

5 ‘‘(c)(1) To effect, accept, or facilitate a trans6 action involving the loan or borrowing of securities in 

7 contravention of such rules and regulations as the 

8 Commission may prescribe as necessary or appro9 priate in the public interest or for the protection of 

10 investors. 

11 ‘‘(2) Nothing in paragraph (1) may be construed 

12 to limit the authority of the appropriate Federal 

13 banking agency (as defined in section 3(q) of the Fed14 eral Deposit Insurance Act (12 U.S.C. 1813(q))), the 

15 National Credit Union Administration, or any other 

16 Federal department or agency having a responsibility 

17 under Federal law to prescribe rules or regulations re18 stricting transactions involving the loan or borrowing 

19 of securities in order to protect the safety and sound20 ness of a financial institution or to protect the finan21 cial system from systemic risk.’’. 

22 (b) RULEMAKING REQUIRED.—Not later than 2 years 

23 after the date of enactment of this Act, the Commission shall 

24 promulgate rules that are designed to increase the trans25 parency of information available to brokers, dealers, and 

26 investors, with respect to the loan or borrowing of securities. 
1149 

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1 SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURI2 TIES LAWS. 

3 (a) SECURITIES ACT OF 1933.—The Securities Act of 

4 1933 (15 U.S.C. 77a et seq.) is amended— 

5 (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by 

6 striking ‘‘individual;’’ and inserting ‘‘individual,’’; 

7 (2) in section 18 (15 U.S.C. 77r)— 

8 (A) in subsection (b)(1)(C), by striking ‘‘is 

9 a security’’ and inserting ‘‘a security’’; and 

10 (B) in subsection (c)(2)(B)(i), by striking 

11 ‘‘State, or’’ and inserting ‘‘State or’’; 

12 (3) in section 19(d)(6)(A) (15 U.S.C. 

13 77s(d)(6)(A)), by striking ‘‘in paragraph (1) of (3)’’ 

14 and inserting ‘‘in paragraph (1) or (3)’’; and 

15 (4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z– 

16 2(c)(1)(B)(ii)), by striking ‘‘business entity;’’ and in17 serting ‘‘business entity,’’. 

18 (b) SECURITIES EXCHANGE ACT OF 1934.—The Secu19 rities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 

20 amended— 

21 (1) in section 2 (15 U.S.C. 78b), by striking ‘‘af22 fected’’ and inserting ‘‘effected’’; 

23 (2) in section 3 (15 U.S.C. 78c)— 

24 (A) in subsection (a)(55)(A), by striking 

25 ‘‘section 3(a)(12) of the Securities Exchange Act 
1150 

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1 of 1934’’ and inserting ‘‘section 3(a)(12) of this 

2 title’’; and 

3 (B) in subsection (g), by striking ‘‘com4 pany, account person, or entity’’ and inserting 

5 ‘‘company, account, person, or entity’’; 

6 (3) in section 10A(i)(1)(B) (15 U.S.C. 78j– 

7 1(i)(1)(B))— 

8 (A) in the subparagraph heading, by strik9 ing ‘‘MINIMUS’’ and inserting ‘‘MINIMIS’’; and 

10 (B) in clause (i), by striking ‘‘nonaudit’’ 

11 and inserting ‘‘non-audit’’; 

12 (4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by 

13 striking ‘‘earning statement’’ and inserting ‘‘earnings 

14 statement’’; 

15 (5) in section 15 (15 U.S.C. 78o)— 

16 (A) in subsection (b)(1)— 

17 (i) in subparagraph (B), by striking 

18 ‘‘The order granting’’ and all that follows 

19 through ‘‘from such membership.’’; and 

20 (ii) in the undesignated matter imme21 diately following subparagraph (B), by in22 serting after the first sentence the following: 

23 ‘‘The order granting registration shall not 

24 be effective until such broker or dealer has 

25 become a member of a registered securities 
1151 

† HR 4173 EAS 

1 association, or until such broker or dealer 

2 has become a member of a national securi3 ties exchange, if such broker or dealer effects 

4 transactions solely on that exchange, unless 

5 the Commission has exempted such broker 

6 or dealer, by rule or order, from such mem7 bership.’’; 

8 (6) in section 15C(a)(2) (15 U.S.C. 78o– 

9 5(a)(2))— 

10 (A) by redesignating clauses (i) and (ii) as 

11 subparagraphs (A) and (B), respectively, and 

12 adjusting the subparagraph margins accordingly; 

13 (B) in subparagraph (B), as so redesig14 nated, by striking ‘‘The order granting’’ and all 

15 that follows through ‘‘from such membership.’’; 

16 and 

17 (C) in the matter following subparagraph 

18 (B), as so redesignated, by inserting after the 

19 first sentence the following: ‘‘The order granting 

20 registration shall not be effective until such gov21 ernment securities broker or government securi22 ties dealer has become a member of a national 

23 securities exchange registered under section 6 of 

24 this title, or a securities association registered 

25 under section 15A of this title, unless the Com-
1152 

† HR 4173 EAS 

1 mission has exempted such government securities 

2 broker or government securities dealer, by rule or 

3 order, from such membership.’’; 

4 (7) in section 17(b)(1)(B) (15 U.S.C. 

5 78q(b)(1)(B)), by striking ‘‘15A(k) gives’’ and insert6 ing ‘‘15A(k), give’’; and 

7 (8) in section 21C(c)(2) (15 U.S.C. 78u–3(c)(2)), 

8 by striking ‘‘paragraph (1) subsection’’ and inserting 

9 ‘‘Paragraph (1)’’. 

10 (c) TRUST INDENTURE ACT OF 1939.—The Trust In11 denture Act of 1939 (15 U.S.C. 77aaa et seq.) is amended— 

12 (1) in section 304(b) (15 U.S.C. 77ddd(b)), by 

13 striking ‘‘section 2 of such Act’’ and inserting ‘‘section 

14 2(a) of such Act’’; and 

15 (2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), 

16 by striking ‘‘, in the’’ and inserting ‘‘in the’’. 

17 (d) INVESTMENT COMPANY ACT OF 1940.—The Invest18 ment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is 

19 amended— 

20 (1) in section 2(a)(19) (15 U.S.C. 80a–2(a)(19)), 

21 in the matter following subparagraph (B)(vii)— 

22 (A) by striking ‘‘clause (vi)’’ each place that 

23 term appears and inserting ‘‘clause (vii)’’; and 
1153 

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1 (B) in each of subparagraphs (A)(vi) and 

2 (B)(vi), by adding ‘‘and’’ at the end of subclause 

3 (III); 

4 (2) in section 9(b)(4)(B) (15 U.S.C. 80a– 

5 9(b)(4)(B)), by adding ‘‘or’’ after the semicolon at the 

6 end; 

7 (3) in section 12(d)(1)(J) (15 U.S.C. 80a– 

8 12(d)(1)(J)), by striking ‘‘any provision of this sub9 section’’ and inserting ‘‘any provision of this para10 graph’’; 

11 (4) in section 17(f) (15 U.S.C. 80a–17(f))— 

12 (A) in paragraph (4), by striking ‘‘No such 

13 member’’ and inserting ‘‘No member of a na14 tional securities exchange’’; and 

15 (B) in paragraph (6), by striking ‘‘com16 pany may serve’’ and inserting ‘‘company, may 

17 serve’’; and 

18 (5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 

19 60(a)(3)(B)(iii))— 

20 (A) by striking ‘‘paragraph (1) of section 

21 205’’ and inserting ‘‘section 205(a)(1)’’; and 

22 (B) by striking ‘‘clause (A) or (B) of that 

23 section’’ and inserting ‘‘paragraph (1) or (2) of 

24 section 205(b)’’. 
1154 

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1 (e) INVESTMENT ADVISERS ACT OF 1940.—The Invest2 ment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is 

3 amended— 

4 (1) in section 203 (15 U.S.C. 80b–3)— 

5 (A) in subsection (c)(1)(A), by striking 

6 ‘‘principal business office and’’ and inserting 

7 ‘‘principal office, principal place of business, 

8 and’’; and 

9 (B) in subsection (k)(4)(B), in the matter 

10 following clause (ii), by striking ‘‘principal place 

11 of business’’ and inserting ‘‘principal office or 

12 place of business’’; 

13 (2) in section 206(3) (15 U.S.C. 80b–6(3)), by 

14 adding ‘‘or’’ after the semicolon at the end; 

15 (3) in section 213(a) (15 U.S.C. 80b–13(a)), by 

16 striking ‘‘principal place of business’’ and inserting 

17 ‘‘principal office or place of business’’; and 

18 (4) in section 222 (15 U.S.C. 80b–18a), by strik19 ing ‘‘principal place of business’’ each place that term 

20 appears and inserting ‘‘principal office and place of 

21 business’’. 
1155 

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1 SEC. 986. CONFORMING AMENDMENTS RELATING TO RE2 PEAL OF THE PUBLIC UTILITY HOLDING COM3 PANY ACT OF 1935. 

4 (a) SECURITIES EXCHANGE ACT OF 1934.—The Secu5 rities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amend6 ed— 

7 (1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), 

8 by striking ‘‘the Public Utility Holding Company Act 

9 of 1935 (15 U.S.C. 79a et seq.),’’; 

10 (2) in section 12(k) (15 U.S.C. 78l(k)), by 

11 amending paragraph (7) to read as follows:

12 ‘‘(7) DEFINITION.—For purposes of this sub13 section, the term ‘emergency’ means— 

14 ‘‘(A) a major market disturbance character15 ized by or constituting— 

16 ‘‘(i) sudden and excessive fluctuations 

17 of securities prices generally, or a substan18 tial threat thereof, that threaten fair and 

19 orderly markets; or 

20 ‘‘(ii) a substantial disruption of the 

21 safe or efficient operation of the national 

22 system for clearance and settlement of 

23 transactions in securities, or a substantial 

24 threat thereof; or 

25 ‘‘(B) a major disturbance that substantially 

26 disrupts, or threatens to substantially disrupt— 
1156 

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1 ‘‘(i) the functioning of securities mar2 kets, investment companies, or any other 

3 significant portion or segment of the securi4 ties markets; or 

5 ‘‘(ii) the transmission or processing of 

6 securities transactions.’’; and 

7 (3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by 

8 striking ‘‘section 18(c) of the Public Utility Holding 

9 Company Act of 1935,’’. 

10 (b) TRUST INDENTURE ACT OF 1939.—The Trust In11 denture Act of 1939 (15 U.S.C. 77aaa et seq.) is amended— 

12 (1) in section 303 (15 U.S.C. 77ccc), by striking 

13 paragraph (17) and inserting the following: 

14 ‘‘(17) The terms ‘Securities Act of 1933’ and ‘Se15 curities Exchange Act of 1934’ shall be deemed to 

16 refer, respectively, to such Acts, as amended, whether 

17 amended prior to or after the enactment of this title.’’; 

18 (2) in section 308 (15 U.S.C. 77hhh), by striking 

19 ‘‘Securities Act of 1933, the Securities Exchange Act 

20 of 1934, or the Public Utility Holding Company Act 

21 of 1935’’ each place that term appears and inserting 

22 ‘‘Securities Act of 1933 or the Securities Exchange 

23 Act of 1934’’; 

24 (3) in section 310 (15 U.S.C. 77jjj), by striking 

25 subsection (c); 
1157 

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1 (4) in section 311 (15 U.S.C. 77kkk), by striking 

2 subsection (c); 

3 (5) in section 323(b) (15 U.S.C. 77www(b)), by 

4 striking ‘‘Securities Act of 1933, or the Securities Ex5 change Act of 1934, or the Public Utility Holding 

6 Company Act of 1935’’ and inserting ‘‘Securities Act 

7 of 1933 or the Securities Exchange Act of 1934’’; and 

8 (6) in section 326 (15 U.S.C. 77zzz), by striking 

9 ‘‘Securities Act of 1933, or the Securities Exchange 

10 Act of 1934, or the Public Utility Holding Company 

11 Act of 1935,’’ and inserting ‘‘Securities Act of 1933 

12 or the Securities Exchange Act of 1934’’. 

13 (c) INVESTMENT COMPANY ACT OF 1940.—The Invest14 ment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is 

15 amended— 

16 (1) in section 2(a)(44) (15 U.S.C. 80a–2(a)(44)), 

17 by striking ‘‘ ‘Public Utility Holding Company Act of 

18 1935’,’’; 

19 (2) in section 3(c) (15 U.S.C. 80a–3(c)), by 

20 striking paragraph (8) and inserting the following: 

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 
1158 

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1 (4) in section 50 (15 U.S.C. 80a–49), by striking 

2 ‘‘the Public Utility Holding Company Act of 1935,’’. 

3 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

4 202(a)(21) of the Investment Advisers Act of 1940 (15 

5 U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public Util6 ity Holding Company Act of 1935’,’’. 

7 SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS 

8 AND NONMATERIAL LOSSES TO THE DEPOSIT 

9 INSURANCE FUND FOR PURPOSES OF IN10 SPECTOR GENERAL REVIEWS. 

11 (a) IN GENERAL.—Section 38(k) of the Federal De12 posit Insurance Act (U.S.C. 1831o(k)) is amended— 

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

14 (B) and inserting the following: 

15 ‘‘(B) MATERIAL LOSS DEFINED.—The term 

16 ‘material loss’ means any estimated loss in ex17 cess of— 

18 ‘‘(i) $100,000,000, if the loss occurs 

19 during the period beginning on September 

20 30, 2009, and ending on December 31, 

21 2010; 

22 ‘‘(ii) $75,000,000, if the loss occurs 

23 during the period beginning on January 1, 

24 2011, and ending on December 31, 2011; 

25 and 
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† HR 4173 EAS 

1 ‘‘(iii) $50,000,000, if the loss occurs on 

2 or after January 1, 2012.’’; 

3 (2) in paragraph (4)(A) by striking ‘‘the report’’ 

4 and inserting ‘‘any report on losses required under 

5 this subsection,’’; 

6 (3) by striking paragraph (6); 

7 (4) by redesignating paragraph (5) as para8 graph (6); and 

9 (5) by inserting after paragraph (4) the fol10 lowing: 

11 ‘‘(5) LOSSES THAT ARE NOT MATERIAL.— 

12 ‘‘(A) SEMIANNUAL REPORT.—For the 6- 

13 month period ending on March 31, 2010, and 

14 each 6-month period thereafter, the Inspector 

15 General of each Federal banking agency shall— 

16 ‘‘(i) identify losses that the Inspector 

17 General estimates have been incurred by the 

18 Deposit Insurance Fund during that 6- 

19 month period, with respect to the insured 

20 depository institutions supervised by the 

21 Federal banking agency; 

22 ‘‘(ii) for each loss incurred by the De23 posit Insurance Fund that is not a material 

24 loss, determine— 
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† HR 4173 EAS 

1 ‘‘(I) the grounds identified by the 

2 Federal banking agency or State bank 

3 supervisor for appointing the Corpora4 tion as receiver under section 11(c)(5); 

5 and 

6 ‘‘(II) whether any unusual cir7 cumstances exist that might warrant 

8 an in-depth review of the loss; and 

9 ‘‘(iii) prepare and submit a written re10 port to the appropriate Federal banking 

11 agency and to Congress on the results of 

12 any determination by the Inspector Gen13 eral, including— 

14 ‘‘(I) an identification of any loss 

15 that warrants an in-depth review, to16 gether with the reasons why such re17 view is warranted, or, if the Inspector 

18 General determines that no review is 

19 warranted, an explanation of such de20 termination; and 

21 ‘‘(II) for each loss identified under 

22 subclause (I) that warrants an in23 depth review, the date by which such 

24 review, and a report on such review 

25 prepared in a manner consistent with 
1161 

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1 reports under paragraph (1)(A), will 

2 be completed and submitted to the Fed3 eral banking agency and Congress. 

4 ‘‘(B) DEADLINE FOR SEMIANNUAL RE5 PORT.—The Inspector General of each Federal 

6 banking agency shall— 

7 ‘‘(i) submit each report required under 

8 paragraph (A) expeditiously, and not later 

9 than 90 days after the end of the 6-month 

10 period covered by the report; and 

11 ‘‘(ii) provide a copy of the report re12 quired under paragraph (A) to any Member 

13 of Congress, upon request.’’. 

14 (b) TECHNICAL AND CONFORMING AMENDMENT.—The 

15 heading for subsection (k) of section 38 of the Federal De16 posit Insurance Act (U.S.C. 1831o(k)) is amended to read 

17 as follows: 

18 ‘‘(k) REVIEWS REQUIRED WHEN DEPOSIT INSURANCE

19 FUND INCURS LOSSES.—’’. 
1162 

† HR 4173 EAS 

1 SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS 

2 AND NONMATERIAL LOSSES TO THE NA3 TIONAL CREDIT UNION SHARE INSURANCE 

4 FUND FOR PURPOSES OF INSPECTOR GEN5 ERAL REVIEWS. 

6 (a) IN GENERAL.—Section 216(j) of the Federal Credit 

7 Union Act (12 U.S.C. 1790d(j)) is amended to read as fol8 lows: 

9 ‘‘(j) REVIEWS REQUIRED WHEN SHARE INSURANCE

10 FUND EXPERIENCES LOSSES.— 

11 ‘‘(1) IN GENERAL.—If the Fund incurs a mate12 rial loss with respect to an insured credit union, the 

13 Inspector General of the Board shall— 

14 ‘‘(A) submit to the Board a written report 

15 reviewing the supervision of the credit union by 

16 the Administration (including the implementa17 tion of this section by the Administration), 

18 which shall include— 

19 ‘‘(i) a description of the reasons why 

20 the problems of the credit union resulted in 

21 a material loss to the Fund; and 

22 ‘‘(ii) recommendations for preventing 

23 any such loss in the future; and 

24 ‘‘(B) submit a copy of the report under sub25 paragraph (A) to— 
1163 

† HR 4173 EAS 

1 ‘‘(i) the Comptroller General of the 

2 United States; 

3 ‘‘(ii) the Corporation; 

4 ‘‘(iii) in the case of a report relating 

5 to a State credit union, the appropriate 

6 State supervisor; and 

7 ‘‘(iv) to any Member of Congress, upon 

8 request. 

9 ‘‘(2) MATERIAL LOSS DEFINED.—For purposes of 

10 determining whether the Fund has incurred a mate11 rial loss with respect to an insured credit union, a 

12 loss is material if it exceeds the sum of— 

13 ‘‘(A) $25,000,000; and 

14 ‘‘(B) an amount equal to 10 percent of the 

15 total assets of the credit union on the date on 

16 which the Board initiated assistance under sec17 tion 208 or was appointed liquidating agent. 

18 ‘‘(3) PUBLIC DISCLOSURE REQUIRED.— 

19 ‘‘(A) IN GENERAL.—The Board shall dis20 close a report under this subsection, upon request 

21 under section 552 of title 5, United States Code, 

22 without excising— 

23 ‘‘(i) any portion under section 

24 552(b)(5) of title 5, United States Code; or 
1164 

† HR 4173 EAS 

1 ‘‘(ii) any information about the in2 sured credit union (other than trade secrets) 

3 under section 552(b)(8) of title 5, United 

4 States Code. 

5 ‘‘(B) RULE OF CONSTRUCTION.—Subpara6 graph (A) may not be construed as requiring the 

7 agency to disclose the name of any customer of 

8 the insured credit union (other than an institu9 tion-affiliated party), or information from which 

10 the identity of such customer could reasonably be 

11 ascertained. 

12 ‘‘(4) LOSSES THAT ARE NOT MATERIAL.— 

13 ‘‘(A) SEMIANNUAL REPORT.—For the 6- 

14 month period ending on March 31, 2010, and 

15 each 6-month period thereafter, the Inspector 

16 General of the Board shall— 

17 ‘‘(i) identify any losses that the Inspec18 tor General estimates were incurred by the 

19 Fund during such 6-month period, with re20 spect to insured credit unions; 

21 ‘‘(ii) for each loss to the Fund that is 

22 not a material loss, determine— 

23 ‘‘(I) the grounds identified by the 

24 Board or the State official having ju25 risdiction over a State credit union for 
1165 

† HR 4173 EAS 

1 appointing the Board as the liqui2 dating agent for any Federal or State 

3 credit union; and 

4 ‘‘(II) whether any unusual cir5 cumstances exist that might warrant 

6 an in-depth review of the loss; and 

7 ‘‘(iii) prepare and submit a written re8 port to the Board and to Congress on the re9 sults of the determinations of the Inspector 

10 General that includes— 

11 ‘‘(I) an identification of any loss 

12 that warrants an in-depth review, and 

13 the reasons such review is warranted, 

14 or if the Inspector General determines 

15 that no review is warranted, an expla16 nation of such determination; and 

17 ‘‘(II) for each loss identified in 

18 subclause (I) that warrants an in19 depth review, the date by which such 

20 review, and a report on the review pre21 pared in a manner consistent with re22 ports under paragraph (1)(A), will be 

23 completed. 
1166 

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1 ‘‘(B) DEADLINE FOR SEMIANNUAL RE2 PORT.—The Inspector General of the Board 

3 shall— 

4 ‘‘(i) submit each report required under 

5 subparagraph (A) expeditiously, and not 

6 later than 90 days after the end of the 6- 

7 month period covered by the report; and 

8 ‘‘(ii) provide a copy of the report re9 quired under subparagraph (A) to any 

10 Member of Congress, upon request. 

11 ‘‘(5) GAO REVIEW.—The Comptroller General of 

12 the United States shall, under such conditions as the 

13 Comptroller General determines to be appropriate— 

14 ‘‘(A) review each report made under para15 graph (1), including the extent to which the In16 spector General of the Board complied with the 

17 requirements under section 8L of the Inspector 

18 General Act of 1978 (5 U.S.C. App.) with respect 

19 to each such report; and 

20 ‘‘(B) recommend improvements to the super21 vision of insured credit unions (including im22 provements relating to the implementation of 

23 this section).’’. 
1167 

† HR 4173 EAS 

1 SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

2 ON PROPRIETARY TRADING. 

3 (a) DEFINITIONS.—In this section— 

4 (1) the term ‘‘covered entity’’ means— 

5 (A) an insured depository institution, an 

6 affiliate of an insured depository institution, a 

7 bank holding company, a financial holding com8 pany, or a subsidiary of a bank holding com9 pany or a financial holding company, as those 

10 terms are defined in the Bank Holding Company 

11 Act of 1956 (12 U.S.C. 1841 et seq.); and 

12 (B) any other entity, as the Comptroller 

13 General of the United States may determine; and 

14 (2) the term ‘‘proprietary trading’’ means the 

15 act of a covered entity investing as a principal in se16 curities, commodities, derivatives, hedge funds, pri17 vate equity firms, or such other financial products or 

18 entities as the Comptroller General may determine. 

19 (b) STUDY.— 

20 (1) IN GENERAL.—The Comptroller General of 

21 the United States shall conduct a study regarding the 

22 risks and conflicts associated with proprietary trad23 ing by and within covered entities, including an eval24 uation of— 

25 (A) whether proprietary trading presents a 

26 material systemic risk to the stability of the 
1168 

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1 United States financial system, and if so, the 

2 costs and benefits of options for mitigating such 

3 systemic risk; 

4 (B) whether proprietary trading presents 

5 material risks to the safety and soundness of the 

6 covered entities that engage in such activities, 

7 and if so, the costs and benefits of options for 

8 mitigating such risks; 

9 (C) whether proprietary trading presents 

10 material conflicts of interest between covered en11 tities that engage in proprietary trading and the 

12 clients of the institutions who use the firm to 

13 execute trades or who rely on the firm to manage 

14 assets, and if so, the costs and benefits of options 

15 for mitigating such conflicts of interest; 

16 (D) whether adequate disclosure regarding 

17 the risks and conflicts of proprietary trading is 

18 provided to the depositors, trading and asset 

19 management clients, and investors of covered en20 tities that engage in proprietary trading, and if 

21 not, the costs and benefits of options for the im22 provement of such disclosure; and 

23 (E) whether the banking, securities, and 

24 commodities regulators of institutions that en25 gage in proprietary trading have in place ade-
1169 

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1 quate systems and controls to monitor and con2 tain any risks and conflicts of interest related to 

3 proprietary trading, and if not, the costs and 

4 benefits of options for the improvement of such 

5 systems and controls. 

6 (2) CONSIDERATIONS.—In carrying out the 

7 study required under paragraph (1), the Comptroller 

8 General shall consider— 

9 (A) current practice relating to proprietary 

10 trading; 

11 (B) the advisability of a complete ban on 

12 proprietary trading; 

13 (C) limitations on the scope of activities 

14 that covered entities may engage in with respect 

15 to proprietary trading; 

16 (D) the advisability of additional capital 

17 requirements for covered entities that engage in 

18 proprietary trading; 

19 (E) enhanced restrictions on transactions 

20 between affiliates related to proprietary trading; 

21 (F) enhanced accounting disclosures relat22 ing to proprietary trading; 

23 (G) enhanced public disclosure relating to 

24 proprietary trading; and 
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1 (H) any other options the Comptroller Gen2 eral deems appropriate. 

3 (c) REPORT TO CONGRESS.—Not later than 15 months 

4 after the date of enactment of this Act, the Comptroller Gen5 eral shall submit a report to Congress on the results of the 

6 study conducted under subsection (b). 

7 (d) ACCESS BY COMPTROLLER GENERAL.—For pur8 poses of conducting the study required under subsection (b), 

9 the Comptroller General shall have access, upon request, to 

10 any information, data, schedules, books, accounts, financial 

11 records, reports, files, electronic communications, or other 

12 papers, things, or property belonging to or in use by a cov13 ered entity that engages in proprietary trading, and to the 

14 officers, directors, employees, independent public account15 ants, financial advisors, staff, and agents and representa16 tives of a covered entity (as related to the activities of the 

17 agent or representative on behalf of the covered entity), at 

18 such reasonable times as the Comptroller General may re19 quest. The Comptroller General may make and retain copies 

20 of books, records, accounts, and other records, as the Comp21 troller General deems appropriate. 

22 (e) CONFIDENTIALITY OF REPORTS.— 

23 (1) IN GENERAL.—Except as provided in para24 graph (2), the Comptroller General may not disclose 

25 information regarding— 
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1 (A) any proprietary trading activity of a 

2 covered entity, unless such information is dis3 closed at a level of generality that does not reveal 

4 the investment or trading position or strategy of 

5 the covered entity for any specific security, com6 modity, derivative, or other investment or finan7 cial product; or 

8 (B) any individual interviewed by the 

9 Comptroller General for purposes of the study 

10 under subsection (b), unless such information is 

11 disclosed at a level of generality that does not re12 veal— 

13 (i) the name of or identifying details 

14 relating to such individual; or 

15 (ii) in the case of an individual who is 

16 an employee of a third party that provides 

17 professional services to a covered entity be18 lieved to be engaged in proprietary trading, 

19 the name of or any identifying details relat20 ing to such third party. 

21 (2) EXCEPTIONS.—The Comptroller General may 

22 disclose the information described in paragraph (1)— 

23 (A) to a department, agency, or official of 

24 the Federal Government, for official use, upon 

25 request; 
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1 (B) to a committee of Congress, upon re2 quest; and 

3 (C) to a court, upon an order of such court. 

4 SEC. 989A. SENIOR INVESTOR PROTECTIONS. 

5 (a) DEFINITIONS.—As used in this section— 

6 (1) the term ‘‘eligible entity’’ means— 

7 (A) a securities commission (or any agency 

8 or office performing like functions) of a State 

9 that the Office determines has adopted rules on 

10 the appropriate use of designations in the offer 

11 or sale of securities or investment advice that 

12 meet or exceed the minimum requirements of the 

13 NASAA Model Rule on the Use of Senior-Spe14 cific Certifications and Professional Designations 

15 (or any successor thereto); 

16 (B) the insurance commission (or any agen17 cy or office performing like functions) of any 

18 State that the Office determines has— 

19 (i) adopted rules on the appropriate 

20 use of designations in the sale of insurance 

21 products that, to the extent practicable, con22 form to the minimum requirements of the 

23 National Association of Insurance Commis24 sioners Model Regulation on the Use of Sen25 ior-Specific Certifications and Professional 
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1 Designations in the Sale of Life Insurance 

2 and Annuities (or any successor thereto); 

3 and 

4 (ii) adopted rules with respect to fidu5 ciary or suitability requirements in the sale 

6 of annuities that meet or exceed the min7 imum requirements established by the Suit8 ability in Annuity Transactions Model Reg9 ulation of the National Association of In10 surance Commissioners (or any successor 

11 thereto); or 

12 (C) a consumer protection agency of any 

13 State, if— 

14 (i) the securities commission (or any 

15 agency or office performing like functions) 

16 of the State is eligible under subparagraph 

17 (A); or 

18 (ii) the insurance commission (or any 

19 agency or office performing like functions) 

20 of the State is eligible under subparagraph 

21 (B); 

22 (2) the term ‘‘financial product’’ means a secu23 rity, an insurance product (including an insurance 

24 product that pays a return, whether fixed or vari25 able), a bank product, and a loan product; 
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1 (3) the term ‘‘misleading designation’’— 

2 (A) means a certification, professional des3 ignation, or other purported credential that indi4 cates or implies that a salesperson or adviser has 

5 special certification or training in advising or 

6 servicing seniors; and 

7 (B) does not include a certification, profes8 sional designation, license, or other credential 

9 that— 

10 (i) was issued by or obtained from an 

11 academic institution having regional ac12 creditation; 

13 (ii) meets the standards for certifi14 cations, licenses, and professional designa15 tions outlined by the NASAA Model Rule on 

16 the Use of Senior-Specific Certifications 

17 and Professional Designations in the Sale of 

18 Life Insurance and Annuities, adopted by 

19 the National Association of Insurance Com20 missioners (or any successor thereto); or 

21 (iii) was issued by or obtained from a 

22 State; 

23 (4) the term ‘‘misleading or fraudulent mar24 keting’’ means the use of a misleading designation by 
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1 a person that sells to or advises a senior in connection 

2 with the sale of a financial product; 

3 (5) the term ‘‘NASAA’’ means the North Amer4 ican Securities Administrators Association; 

5 (6) the term ‘‘Office’’ means the Office of Finan6 cial Literacy of the Bureau; and 

7 (7) the term ‘‘senior’’ means any individual who 

8 has attained the age of 62 years or older. 

9 (b) GRANTS TO STATES FOR ENHANCED PROTECTION

10 OF SENIORS FROM BEING MISLED BY FALSE DESIGNA11 TIONS.—The Office shall establish a program under which 

12 the Office may make grants to States or eligible entities— 

13 (1) to hire staff to identify, investigate, and 

14 prosecute (through civil, administrative, or criminal 

15 enforcement actions) cases involving misleading or 

16 fraudulent marketing; 

17 (2) to fund technology, equipment, and training 

18 for regulators, prosecutors, and law enforcement offi19 cers, in order to identify salespersons and advisers 

20 who target seniors through the use of misleading des21 ignations; 

22 (3) to fund technology, equipment, and training 

23 for prosecutors to increase the successful prosecution 

24 of salespersons and advisers who target seniors with 

25 the use of misleading designations; 
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1 (4) to provide educational materials and train2 ing to regulators on the appropriateness of the use of 

3 designations by salespersons and advisers in connec4 tion with the sale and marketing of financial prod5 ucts; 

6 (5) to provide educational materials and train7 ing to seniors to increase awareness and under8 standing of misleading or fraudulent marketing; 

9 (6) to develop comprehensive plans to combat 

10 misleading or fraudulent marketing of financial prod11 ucts to seniors; and 

12 (7) to enhance provisions of State law to provide 

13 protection for seniors against misleading or fraudu14 lent marketing. 

15 (c) APPLICATIONS.—A State or eligible entity desiring 

16 a grant under this section shall submit an application to 

17 the Office, in such form and in such a manner as the Office 

18 may determine, that includes— 

19 (1) a proposal for activities to protect seniors 

20 from misleading or fraudulent marketing that are 

21 proposed to be funded using a grant under this sec22 tion, including— 

23 (A) an identification of the scope of the 

24 problem of misleading or fraudulent marketing 

25 in the State; 
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1 (B) a description of how the proposed ac2 tivities would— 

3 (i) protect seniors from misleading or 

4 fraudulent marketing in the sale of finan5 cial products, including by proactively 

6 identifying victims of misleading and 

7 fraudulent marketing who are seniors; 

8 (ii) assist in the investigation and 

9 prosecution of those using misleading or 

10 fraudulent marketing; and 

11 (iii) discourage and reduce cases of 

12 misleading or fraudulent marketing; and 

13 (C) a description of how the proposed ac14 tivities would be coordinated with other State ef15 forts; and 

16 (2) any other information, as the Office deter17 mines is appropriate. 

18 (d) PERFORMANCE OBJECTIVES AND REPORTING RE19 QUIREMENTS.—The Office may establish such performance 

20 objectives and reporting requirements for States and eligible 

21 entities receiving a grant under this section as the Office 

22 determines are necessary to carry out and assess the effec23 tiveness of the program under this section. 

24 (e) MAXIMUM AMOUNT.—The amount of a grant under 

25 this section may not exceed— 
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1 (1) $500,000 for each of 3 consecutive fiscal 

2 years, if the recipient is a State, or an eligible entity 

3 of a State, that has adopted rules— 

4 (A) on the appropriate use of designations 

5 in the offer or sale of securities or investment ad6 vice that meet or exceed the minimum require7 ments of the NASAA Model Rule on the Use of 

8 Senior-Specific Certifications and Professional 

9 Designations (or any successor thereto); 

10 (B) on the appropriate use of designations 

11 in the sale of insurance products that, to the ex12 tent practicable, conform to the minimum re13 quirements of the National Association of Insur14 ance Commissioners Model Regulation on the 

15 Use of Senior-Specific Certifications and Profes16 sional Designations in the Sale of Life Insurance 

17 and Annuities (or any successor thereto); and 

18 (C) with respect to fiduciary or suitability 

19 requirements in the sale of annuities that meet 

20 or exceed the minimum requirements established 

21 by the Suitability in Annuity Transactions 

22 Model Regulation of the National Association of 

23 Insurance Commissioners (or any successor 

24 thereto); and 
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1 (2) $100,000 for each of 3 consecutive fiscal 

2 years, if the recipient is a State, or an eligible entity 

3 of a State, that has adopted— 

4 (A) rules on the appropriate use of designa5 tions in the offer or sale of securities or invest6 ment advice that meet or exceed the minimum 

7 requirements of the NASAA Model Rule on the 

8 Use of Senior-Specific Certifications and Profes9 sional Designations (or any successor thereto); or 

10 (B) rules— 

11 (i) on the appropriate use of designa12 tions in the sale of insurance products that, 

13 to the extent practicable, conform to the 

14 minimum requirements of the National As15 sociation of Insurance Commissioners Model 

16 Regulation on the Use of Senior-Specific 

17 Certifications and Professional Designations 

18 in the Sale of Life Insurance and Annuities 

19 (or any successor thereto); and 

20 (ii) with respect to fiduciary or suit21 ability requirements in the sale of annuities 

22 that meet or exceed the minimum require23 ments established by the Suitability in An24 nuity Transactions Model Regulation of the 
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1 National Association of Insurance Commis2 sioners (or any successor thereto). 

3 (f) SUBGRANTS.—A State or eligible entity that re4 ceives a grant under this section may make a subgrant, as 

5 the State or eligible entity determines is necessary to carry 

6 out the activities funded using a grant under this section. 

7 (g) REAPPLICATION.—A State or eligible entity that 

8 receives a grant under this section may reapply for a grant 

9 under this section, notwithstanding the limitations on grant 

10 amounts under subsection (e). 

11 (h) AUTHORIZATION OF APPROPRIATIONS.—There are 

12 authorized to be appropriated to carry out this section, 

13 $8,000,000 for each of fiscal years 2011 through 2015. 

14 SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS 

15 GENERAL INDEPENDENCE. 

16 Section 8G of the Inspector General Act of 1978 (5 

17 U.S.C. App.) is amended— 

18 (1) in subsection (a)(4)— 

19 (A) in the matter preceding subparagraph 

20 (A), by inserting ‘‘the board or commission of the 

21 designated Federal entity, or in the event the 

22 designated Federal entity does not have a board 

23 or commission,’’ after ‘‘means’’; 

24 (B) in subparagraph (A), by striking ‘‘and’’ 

25 after the semicolon; and 
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1 (C) by adding after subparagraph (B) the 

2 following: 

3 ‘‘(C) with respect to the Federal Labor Re4 lations Authority, such term means the members 

5 of the Authority (described under section 7104 of 

6 title 5, United States Code); 

7 ‘‘(D) with respect to the National Archives 

8 and Records Administration, such term means 

9 the Archivist of the United States; 

10 ‘‘(E) with respect to the National Credit 

11 Union Administration, such term means the Na12 tional Credit Union Administration Board (de13 scribed under section 102 of the Federal Credit 

14 Union Act (12 U.S.C. 1752a); 

15 ‘‘(F) with respect to the National Endow16 ment of the Arts, such term means the National 

17 Council on the Arts; 

18 ‘‘(G) with respect to the National Endow19 ment for the Humanities, such term means the 

20 National Council on the Humanities; and 

21 ‘‘(H) with respect to the Peace Corps, such 

22 term means the Director of the Peace Corps;’’; 

23 and 
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1 (2) in subsection (h), by inserting ‘‘if the des2 ignated Federal entity is not a board or commission, 

3 include’’ after ‘‘designated Federal entities and’’. 

4 SEC. 989C. STRENGTHENING INSPECTOR GENERAL AC5 COUNTABILITY. 

6 Section 5(a) of the Inspector General Act of 1978 (5 

7 U.S.C. App.) is amended— 

8 (1) in paragraph (12), by striking ‘‘and’’ after 

9 the semicolon; 

10 (2) in paragraph (13), by striking the period 

11 and inserting a semicolon; and 

12 (3) by adding at the end the following: 

13 ‘‘(14)(A) an appendix containing the results of 

14 any peer review conducted by another Office of In15 spector General during the reporting period; or 

16 ‘‘(B) if no peer review was conducted within that 

17 reporting period, a statement identifying the date of 

18 the last peer review conducted by another Office of In19 spector General; 

20 ‘‘(15) a list of any outstanding recommendations 

21 from any peer review conducted by another Office of 

22 Inspector General that have not been fully imple23 mented, including a statement describing the status of 

24 the implementation and why implementation is not 

25 complete; and 
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1 ‘‘(16) a list of any peer reviews conducted by the 

2 Inspector General of another Office of the Inspector 

3 General during the reporting period, including a list 

4 of any outstanding recommendations made from any 

5 previous peer review (including any peer review con6 ducted before the reporting period) that remain out7 standing or have not been fully implemented.’’. 

8 SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DES9 IGNATED FEDERAL ENTITIES. 

10 Section 8G(e) of the Inspector General Act of 1978 (5 

11 U.S.C. App.) is amended— 

12 (1) by redesignating the sentences following ‘‘(e)’’ 

13 as paragraph (2); and 

14 (2) by striking ‘‘(e)’’ and inserting the following: 

15 ‘‘(e)(1) In the case of a designated Federal entity for 

16 which a board or commission is the head of the designated 

17 Federal entity, a removal under this subsection may only 

be made upon the written concurrence of a 2 18 ⁄3 majority of 

19 the board or commission.’’. 

20 SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGU21 LATORY SYSTEM. 

22 (a) COUNCIL OF INSPECTORS GENERAL ON FINANCIAL

23 OVERSIGHT.— 

24 (1) ESTABLISHMENT AND MEMBERSHIP.—There 

25 is established a Council of Inspectors General on Fi-
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1 nancial Oversight (in this section referred to as the 

2 ‘‘Council of Inspectors General’’) chaired by the In3 spector General of the Department of the Treasury 

4 and composed of the inspectors general of the fol5 lowing: 

6 (A) The Board of Governors of the Federal 

7 Reserve System. 

8 (B) The Commodity Futures Trading Com9 mission. 

10 (C) The Department of Housing and Urban 

11 Development. 

12 (D) The Department of the Treasury. 

13 (E) The Federal Deposit Insurance Cor14 poration. 

15 (F) The Federal Housing Finance Agency. 

16 (G) The National Credit Union Adminis17 tration. 

18 (H) The Securities and Exchange Commis19 sion. 

20 (I) The Troubled Asset Relief Program 

21 (until the termination of the authority of the 

22 Special Inspector General for such program 

23 under section 121(k) of the Emergency Economic 

24 Stabilization Act of 2008 (12 U.S.C. 5231(k))). 

25 (2) DUTIES.— 
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1 (A) MEETINGS.—The Council of Inspectors 

2 General shall meet not less than once each quar3 ter, or more frequently if the chair considers it 

4 appropriate, to facilitate the sharing of informa5 tion among inspectors general and to discuss the 

6 ongoing work of each inspector general who is a 

7 member of the Council of Inspectors General, 

8 with a focus on concerns that may apply to the 

9 broader financial sector and ways to improve fi10 nancial oversight. 

11 (B) ANNUAL REPORT.—Each year the 

12 Council of Inspectors General shall submit to the 

13 Council and to Congress a report including— 

14 (i) for each inspector general who is a 

15 member of the Council of Inspectors Gen16 eral, a section within the exclusive editorial 

17 control of such inspector general that high18 lights the concerns and recommendations of 

19 such inspector general in such inspector 

20 general’s ongoing and completed work, with 

21 a focus on issues that may apply to the 

22 broader financial sector; and 

23 (ii) a summary of the general observa24 tions of the Council of Inspectors General 

25 based on the views expressed by each inspec-
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1 tor general as required by clause (i), with 

2 a focus on measures that should be taken to 

3 improve financial oversight. 

4 (3) WORKING GROUPS TO EVALUATE COUNCIL.— 

5 (A) CONVENING A WORKING GROUP.—The 

6 Council of Inspectors General may, by majority 

7 vote, convene a Council of Inspectors General 

8 Working Group to evaluate the effectiveness and 

9 internal operations of the Council. 

10 (B) PERSONNEL AND RESOURCES.—The in11 spectors general who are members of the Council 

12 of Inspectors General may detail staff and re13 sources to a Council of Inspectors General Work14 ing Group established under this paragraph to 

15 enable it to carry out its duties. 

16 (C) REPORTS.—A Council of Inspectors 

17 General Working Group established under this 

18 paragraph shall submit regular reports to the 

19 Council and to Congress on its evaluations pur20 suant to this paragraph. 

21 (b) RESPONSE TO REPORT BY COUNCIL.—The Council 

22 shall respond to the concerns raised in the report of the 

23 Council of Inspectors General under subsection (a)(2)(B) 

24 for such year. 
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1 Subtitle J—Self-funding of the Se2 curities and Exchange Commis3 sion 

4 SEC. 991. SECURITIES AND EXCHANGE COMMISSION SELF5 FUNDING. 

6 (a) SELF-FUNDING AUTHORITY.—Section 4 of the Se7 curities Exchange Act of 1934 (15 U.S.C. 78d) is amend8 ed— 

9 (1) in subsection (c), in the second sentence, by 

10 striking ‘‘credited to the appropriated funds of the 

11 Commission’’ and inserting ‘‘deposited in the account 

12 described in subsection (i)(4)’’; 

13 (2) in subsection (f), in the second sentence, by 

14 striking ‘‘considered a reimbursement to the appro15 priated funds of the Commission’’ and inserting ‘‘de16 posited in the account described in subsection (i)(4)’’; 

17 and 

18 (3) by adding at the end the following: 

19 ‘‘(i) FUNDING OF THE COMMISSION.— 

20 ‘‘(1) BUDGET.—For each fiscal year, the Chair21 man of the Commission shall prepare and submit to 

22 Congress a budget to Congress. Such budget shall be 

23 submitted at the same time the President submits a 

24 budget of the United States to Congress for such fiscal 

25 year. The budget submitted by the Chairman of the 
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1 Commission pursuant to this paragraph shall not be 

2 considered a request for appropriations. 

3 ‘‘(2) TREASURY PAYMENT.— 

4 ‘‘(A) On the first day of each fiscal year, the 

5 Treasury shall pay into the account described in 

6 paragraph (4) an amount equal to the budget 

7 submitted by the Chairman of the Commission 

8 pursuant to paragraph (1) for such fiscal year. 

9 ‘‘(B) At or prior to the end of each fiscal 

10 year, the Commission shall pay to the Treasury 

11 from fees and assessments deposited in the ac12 count described in paragraph (4) an amount 

13 equal to the amount paid by the Treasury pursu14 ant to subparagraph (A) for such fiscal year, un15 less there are not sufficient fees and assessments 

16 deposited in such account at or prior to the end 

17 of the fiscal year to make such payment, in 

18 which case the Commission shall make such pay19 ment in a subsequent fiscal year. 

20 ‘‘(3) OBLIGATIONS AND EXPENSES.— 

21 ‘‘(A) IN GENERAL.—The Commission shall 

22 determine and prescribe the manner in which— 

23 ‘‘(i) the obligations of the Commission 

24 shall be incurred; and 
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1 ‘‘(ii) the disbursements and expenses of 

2 the Commission allowed and paid. 

3 ‘‘(B) INSUFFICIENT FUNDS.—If, in the 

4 course of any fiscal year, the Chairman of the 

5 Commission determines that, due to unforeseen 

6 circumstances, the obligations of the Commission 

7 will exceed those provided for in the budget sub8 mitted under paragraph (1), the Chairman of 

9 the Commission may notify Congress of the 

10 amount and expected uses of the additional obli11 gations. 

12 ‘‘(C) AUTHORITY TO INCUR EXCESS OBLIGA13 TIONS.—The Commission may incur obligations 

14 in excess of the budget submitted under para15 graph (1) from amounts available in the account 

16 described in paragraph (4). 

17 ‘‘(D) RULE OF CONSTRUCTION.—Any notifi18 cation to Congress under this paragraph shall 

19 not be considered a request for appropriations. 

20 ‘‘(4) ACCOUNT.— 

21 ‘‘(A) ESTABLISHMENT.—Fees and assess22 ments collected under this title, section 6(b) of 

23 the Securities Act of 1933 (15 U.S.C. 77f(b)), 

24 and section 24(f) of the Investment Company Act 

25 of 1940 (15 U.S.C. 80a–24(f)) and payments 
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1 made by the Treasury pursuant to paragraph 

2 (2)(A) for any fiscal year shall be deposited into 

3 an account established at any regular Govern4 ment depositary or any State or national bank. 

5 ‘‘(B) RULE OF CONSTRUCTION.—Any 

6 amounts deposited into the account established 

7 under subparagraph (A) shall not be construed 

8 to be Government funds or appropriated monies. 

9 ‘‘(C) NO APPORTIONMENT.—Any amounts 

10 deposited into the account established under sub11 paragraph (A) shall not be subject to apportion12 ment for the purpose of chapter 15 of title 31, 

13 United States Code, or under any other author14 ity. 

15 ‘‘(5) USE OF ACCOUNT FUNDS.— 

16 ‘‘(A) PERMISSIBLE USES.—Amounts avail17 able in the account described in paragraph (4) 

18 may be withdrawn by the Commission and used 

19 for the purposes described in paragraphs (2) and 

20 (3). 

21 ‘‘(B) IMPERMISSIBLE USE.—Except as pro22 vided in paragraph (6), no amounts available in 

23 the account described in paragraph (4) shall be 

24 deposited and credited as general revenue of the 

25 Treasury. 
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1 ‘‘(6) EXCESS FUNDS.—If, at the end of any fiscal 

2 year and after all payments have been made to the 

3 Treasury pursuant to paragraph (2)(B) for such fis4 cal year and all prior fiscal years, the balance of the 

5 account described in paragraph (4) exceeds 25 percent 

6 of the budget of the Commission for the following fis7 cal year, the amount by which the balance exceeds 25 

8 percent of such budget shall be credited as general rev9 enue of the Treasury.’’. 

10 (b) CONFORMING AMENDMENTS TO TRANSACTION FEE

11 PROVISIONS.—Section 31 of the Securities Exchange Act of 

12 1934 (15 U.S.C. 78ee) is amended— 

13 (1) by amending subsection (a) to read as fol14 lows: 

15 ‘‘(a) RECOVERY OF COSTS AND EXPENSES.— 

16 ‘‘(1) IN GENERAL.—The Commission shall, in 

17 accordance with this section, collect transaction fees 

18 and assessments that are designed— 

19 ‘‘(A) to recover the reasonable costs and ex20 penses of the Commission, as set forth in the an21 nual budget of the Commission; and 

22 ‘‘(B) to provide funds necessary to main23 tain a reserve. 

24 ‘‘(2) OVERPAYMENTS.—The authority to collect 

25 transaction fees and assessments in accordance with 
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1 this section shall include the authority to offset from 

2 such collection any overpayment of transaction fees or 

3 assessments, regardless of the fiscal year in which 

4 such overpayment is made.’’; 

5 (2) in subsection (e)(2), by striking ‘‘September 

6 30’’ and inserting ‘‘September 25’’; 

7 (3) in subsection (g), by striking ‘‘April 30’’ and 

8 inserting ‘‘August 31’’; 

9 (4) by amending subsection (i) to read as fol10 lows: 

11 ‘‘(i) FEE COLLECTIONS.—Fees and assessments col12 lected pursuant to this section shall be deposited and cred13 ited in accordance with section 4(g) of this title.’’; 

14 (5) by amending subsection (j) to read as follows: 

15 ‘‘(j) ADJUSTMENTS TO TRANSACTION FEE RATES.— 

16 ‘‘(1) ANNUAL ADJUSTMENT.—For each fiscal 

17 year, the Commission shall by order adjust each of the 

18 rates applicable under subsections (b) and (c) for such 

19 fiscal year to a uniform adjusted rate that, when ap20 plied to the baseline estimate of the aggregate dollar 

21 amount of sales for such fiscal year, is reasonably 

22 likely to produce aggregate fee collections under this 

23 section (including assessments collected under sub24 section (d)) that are equal to the budget of the Com-
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1 mission for such fiscal year, plus amounts necessary 

2 to maintain a reserve. 

3 ‘‘(2) MID-YEAR ADJUSTMENT.—For each fiscal 

4 year, the Commission shall determine, by March 1 of 

5 such fiscal year, whether, based on the actual aggre6 gate dollar volume of sales during the first 4 months 

7 of such fiscal year, the baseline estimate of the aggre8 gate dollar volume of sales used under paragraph (1) 

9 for such fiscal year is reasonably likely to be 10 per10 cent (or more) greater or less than the actual aggre11 gate dollar volume of sales for such fiscal year. If the 

12 Commission so determines, the Commission shall by 

13 order, not later than March 1, adjust each of the rates 

14 applicable under subsections (b) and (c) for such fis15 cal year to a uniform adjusted rate that, when ap16 plied to the revised estimate of the aggregate dollar 

17 amount of sales for the remainder of such fiscal year, 

18 is reasonably likely to produce aggregate fee collec19 tions under this section (including fees estimated to 

20 be collected under subsections (b) and (c) during such 

21 fiscal year prior to the effective date of the new uni22 form adjusted rate and assessments collected under 

23 subsection (d)) that are equal to the budget of the 

24 Commission for such fiscal year, plus amounts nec25 essary to maintain a reserve. In making such revised 
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1 estimate, the Commission shall, after consultation 

2 with the Congressional Budget Office and the Office 

3 of Management and Budget, use the same method4 ology required by paragraph (4). 

5 ‘‘(3) REVIEW AND EFFECTIVE DATE.—In exer6 cising its authority under this subsection, the Com7 mission shall not be required to comply with the pro8 visions of section 553 of title 5 United States Code. 

9 An adjusted rate prescribed under paragraph (1) or 

10 (2) and published under subsection (g) shall not be 

11 subject to judicial review. An adjusted rate prescribed 

12 under paragraph (1) shall take effect on the first day 

13 of the fiscal year to which such rate applies. An ad14 justed rate prescribed under paragraph (2) shall take 

15 effect on April 1 of the fiscal year to which such rate 

16 applies. 

17 ‘‘(4) BASELINE ESTIMATE OF THE AGGREGATE

18 DOLLAR AMOUNT OF SALES.—For purposes of this 

19 subsection, the baseline estimate of the aggregate dol20 lar amount of sales for any fiscal year is the baseline 

21 estimate of the aggregate dollar amount of sales of se22 curities (other than bonds, debentures, other evidences 

23 of indebtedness, security futures products, and options 

24 on securities indexes excluding a narrow-based secu25 rity index) to be transacted on each national securi-
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1 ties exchange and by or through any member of each 

2 national securities association (otherwise than on a 

3 national securities exchange) during such fiscal year 

4 as determined by the Commission, after consultation 

5 with the Congressional Budget Office and the Office 

6 of Management and Budget, using the methodology 

7 required for making projections pursuant to section 

8 907 of title 2.’’; and 

9 (6) by striking subsections (k) and (l). 

10 (c) CONFORMING AMENDMENTS TO REGISTRATION

11 FEE PROVISIONS.— 

12 (1) SECTION 6(B) OF THE SECURITIES ACT OF

13 1933.—Section 6(b) of the Securities Act of 1933 (15 

14 U.S.C. 77f(b)) is amended— 

15 (A) by striking ‘‘offsetting’’ each place that 

16 term appears and inserting ‘‘fee’’; 

17 (B) in paragraph (3), in the paragraph 

18 heading, by striking ‘‘OFFSETTING’’ and insert19 ing ‘‘FEE’’; 

20 (C) in paragraph (11)(A), in the subpara21 graph heading, by striking ‘‘OFFSETTING’’ and 

22 inserting ‘‘FEE’’; 

23 (D) by striking paragraphs (1), (3), (4), 

24 (6), (8), and (9); 
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1 (E) by redesignating paragraph (2) as 

2 paragraph (1); 

3 (F) in paragraph (1), as so redesignated, by 

4 striking ‘‘(5) or (6)’’ and inserting ‘‘(3)’’; 

5 (G) by inserting after paragraph (1), as so 

6 redesignated, the following: 

7 ‘‘(2) FEE COLLECTIONS.—Fees collected pursuant 

8 to this subsection shall be deposited and credited in 

9 accordance with section 4(i) of the Securities Ex10 change Act of 1934.’’; 

11 (H) by redesignating paragraph (5) as 

12 paragraph (3); 

13 (I) in paragraph (3), as redesignated— 

14 (i) by striking ‘‘of the fiscal years 2003 

15 through 2011’’ and inserting ‘‘fiscal year’’; 

16 and 

17 (ii) by striking ‘‘paragraph (2)’’ and 

18 inserting ‘‘paragraph (1)’’; 

19 (J) by redesignating paragraph (7) as 

20 paragraph (4); 

21 (K) by inserting after paragraph (4), as so 

22 redesignated, the following: 

23 ‘‘(5) REVIEW AND EFFECTIVE DATE.—In exer24 cising its authority under this subsection, the Com25 mission shall not be required to comply with the pro-
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† HR 4173 EAS 

1 visions of section 553 of title 5, United States Code. 

2 An adjusted rate prescribed under paragraph (3) and 

3 published under paragraph (6) shall not be subject to 

4 judicial review. An adjusted rate prescribed under 

5 paragraph (3) shall take effect on the first day of the 

6 fiscal year to which such rate applies.’’; 

7 (L) by redesignating paragraphs (10) and 

8 (11), as paragraphs (6) and (7); 

9 (M) in paragraph (6), as redesignated, by 

10 striking ‘‘April 30’’ and inserting ‘‘August 31’’; 

11 and 

12 (N) in paragraph (7), as redesignated— 

13 (i) by striking ‘‘of the fiscal years 2002 

14 through 2011’’ and inserting ‘‘fiscal year’’; 

15 and 

16 (ii) by inserting at the end of the table 

17 in subparagraph (A) the following: 

2012 and each succeeding fiscal year An amount that is 

equal to the target fee collection amount for 

the prior fiscal 

year adjusted by 

the rate of inflation. 

18 (2) SECTION 13(E) OF THE SECURITIES EX19 CHANGE ACT OF 1934.—Section 13(e) of the Securities 
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† HR 4173 EAS 

1 Exchange Act of 1934 (15 U.S.C. 78m(e)) is amend2 ed— 

3 (A) by striking ‘‘offsetting’’ each place that 

4 term appears and inserting ‘‘fee’’; 

5 (B) in paragraph (3) by striking ‘‘para6 graphs (5) and (6)’’ and inserting ‘‘paragraph 

7 (5)’’; 

8 (C) by amending paragraph (4) to read as 

9 follows: 

10 ‘‘(4) FEE COLLECTIONS.—Fees collected pursuant 

11 to this subsection shall be deposited and credited in 

12 accordance with section 4(g) of this title.’’; 

13 (D) in paragraph (5), by striking ‘‘of the 

14 fiscal years 2003 through 2011’’ and inserting 

15 ‘‘fiscal year’’; 

16 (E) by striking paragraphs (6), (7), and 

17 (8); 

18 (F) by redesignating paragraph (7) as 

19 paragraph (6); 

20 (G) by inserting after paragraph (6), as so 

21 redesignated, the following: 

22 ‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer23 cising its authority under this subsection, the Com24 mission shall not be required to comply with the pro25 visions of section 553 of title 5. An adjusted rate pre-
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† HR 4173 EAS 

1 scribed under paragraph (5) and published under 

2 paragraph (8) shall not be subject to judicial review. 

3 An adjusted rate prescribed under paragraph (5) 

4 shall take effect on the first day of the fiscal year to 

5 which such rate applies.’’; 

6 (H) by striking paragraph (9); 

7 (I) by redesignating paragraph (10) as 

8 paragraph (8); and 

9 (J) in paragraph (8), as so redesignated, by 

10 striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(6)’’. 

11 (3) SECTION 14 OF THE SECURITIES EXCHANGE

12 ACT OF 1934.—Section 14(g) of the Securities Ex13 change Act of 1934 (15 U.S.C. 78n(g)) is amended— 

14 (A) by striking the word ‘‘offsetting’’ each 

15 time that it appears and inserting in its place 

16 the word ‘‘fee’’; 

17 (B) in paragraph (1)(A), by striking ‘‘para18 graphs (5) and (6)’’ each time it appears and 

19 inserting ‘‘paragraph (5)’’; 

20 (C) in paragraph (3), by striking ‘‘para21 graphs (5) and (6)’’ and inserting ‘‘paragraph 

22 (5)’’; 

23 (D) by amending paragraph (4) to read as 

24 follows: 
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† HR 4173 EAS 

1 ‘‘(4) FEE COLLECTIONS.—Fees collected pursuant 

2 to this subsection shall be deposited and credited in 

3 accordance with section 4(g) of this title.’’; 

4 (E) in paragraph (5), by striking ‘‘of the 

5 fiscal years 2003 through 2011’’ and inserting 

6 ‘‘fiscal year’’; 

7 (F) by striking paragraphs (6), (8), and 

8 (9); 

9 (G) by redesignating paragraph (7) as 

10 paragraph (6); 

11 (H) by inserting after paragraph (6), as so 

12 redesignated, the following: 

13 ‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer14 cising its authority under this subsection, the Com15 mission shall not be required to comply with the pro16 visions of section 553 of title 5. An adjusted rate pre17 scribed under paragraph (5) and published under 

18 paragraph (8) shall not be subject to judicial review. 

19 An adjusted rate prescribed under paragraph (5) 

20 shall take effect on the first day of the fiscal year to 

21 which such rate applies.’’; 

22 (I) by redesignating paragraphs (10) and 

23 (11) as paragraphs (8) and (9), respectively; and 

24 (J) in paragraph (9), as so redesignated, by 

25 striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(7)’’. 
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1 (d) REPEAL OF AUTHORIZATION OF APPROPRIA2 TIONS.—Section 35 of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78kk) is repealed. 

4 (e) EFFECTIVE DATE AND TRANSITION PROVISIONS.— 

5 (1) IN GENERAL.—Except as provided in para6 graphs (2) and (3), the amendments made by this sec7 tion shall be effective on the first day of the fiscal 

8 year following the fiscal year in which this Act is en9 acted. 

10 (2) TRANSITION PERIOD.—For the fiscal year 

11 following the fiscal year in which this Act is enacted, 

12 the budget of the Commission shall be deemed to be 

13 the budget submitted by the Chairman of the Commis14 sion to the President for such fiscal year in accord15 ance with the provisions of section 1108 of title 31, 

16 United States Code. 

17 (3) OTHER PROVISIONS.—The amendments made 

18 by this section to subsections (g) and (j)(1) of section 

19 31 of the Securities Exchange Act of 1934 (15 U.S.C. 

20 78ee) shall be effective on the date of enactment of this 

21 Act, and shall require the Commission to make and 

22 publish an annual adjustment to the fee rates appli23 cable under subsections (b) and (c) of section 31 of the 

24 Securities Exchange Act of 1934 (15 U.S.C. 78ee) for 

25 the fiscal year following the fiscal year in which this 
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1 Act is enacted. The adjusted rate described in the pre2 ceding sentence shall supersede any previously pub3 lished adjusted rate applicable under subsections (b) 

4 and (c) of section 31 of the Securities Exchange Act 

5 of 1934 for the fiscal year following the fiscal year in 

6 which this Act is enacted and shall take effect on the 

7 first day of the fiscal year following the fiscal year in 

8 which this Act is enacted, except that, if this Act is 

9 enacted on or after August 31 and on or prior to Sep10 tember 30, the adjusted rate described in the first sen11 tence shall be published not later than 15 days after 

12 the date of enactment of this Act and take effect 30 

13 days thereafter, and the Commission shall continue to 

14 collect fees under subsections (b) and (c) of section 31 

15 of the Securities Exchange Act of 1934 at the rate in 

16 effect during the preceding fiscal year until the ad17 justed rate is effective. 

18 TITLE X—BUREAU OF CON19 SUMER FINANCIAL PROTEC20 TION 

21 SEC. 1001. SHORT TITLE. 

22 This title may be cited as the ‘‘Consumer Financial 

23 Protection Act of 2010’’. 
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† HR 4173 EAS 

1 SEC. 1002. DEFINITIONS. 

2 Except as otherwise provided in this title, for purposes 

3 of this title, the following definitions shall apply: 

4 (1) AFFILIATE.—The term ‘‘affiliate’’ means any 

5 person that controls, is controlled by, or is under com6 mon control with another person. 

7 (2) BUREAU.—The term ‘‘Bureau’’ means the 

8 Bureau of Consumer Financial Protection. 

9 (3) BUSINESS OF INSURANCE.—The term ‘‘busi10 ness of insurance’’ means the writing of insurance or 

11 the reinsuring of risks by an insurer, including all 

12 acts necessary to such writing or reinsuring and the 

13 activities relating to the writing of insurance or the 

14 reinsuring of risks conducted by persons who act as, 

15 or are, officers, directors, agents, or employees of in16 surers or who are other persons authorized to act on 

17 behalf of such persons. 

18 (4) CONSUMER.—The term ‘‘consumer’’ means 

19 an individual or an agent, trustee, or representative 

20 acting on behalf of an individual. 

21 (5) CONSUMER FINANCIAL PRODUCT OR SERV22 ICE.—The term ‘‘consumer financial product or serv23 ice’’ means any financial product or service that is 

24 described in one or more categories under— 
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1 (A) paragraph (13) and is offered or pro2 vided for use by consumers primarily for per3 sonal, family, or household purposes; or 

4 (B) clause (i), (iii), (ix), or (x) of para5 graph (13)(A), and is delivered, offered, or pro6 vided in connection with a consumer financial 

7 product or service referred to in subparagraph 

8 (A). 

9 (6) COVERED PERSON.—The term ‘‘covered per10 son’’ means— 

11 (A) any person that engages in offering or 

12 providing a consumer financial product or serv13 ice; and 

14 (B) any affiliate of a person described in 

15 subparagraph (A) if such affiliate acts as a serv16 ice provider to such person. 

17 (7) CREDIT.—The term ‘‘credit’’ means the right 

18 granted by a person to a consumer to defer payment 

19 of a debt, incur debt and defer its payment, or pur20 chase property or services and defer payment for such 

21 purchase. 

22 (8) DEPOSIT-TAKING ACTIVITY.—The term ‘‘de23 posit-taking activity’’ means— 

24 (A) the acceptance of deposits, maintenance 

25 of deposit accounts, or the provision of services 
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1 related to the acceptance of deposits or the main2 tenance of deposit accounts; 

3 (B) the acceptance of funds, the provision of 

4 other services related to the acceptance of funds, 

5 or the maintenance of member share accounts by 

6 a credit union; or 

7 (C) the receipt of funds or the equivalent 

8 thereof, as the Bureau may determine by rule or 

9 order, received or held by a covered person (or an 

10 agent for a covered person) for the purpose of fa11 cilitating a payment or transferring funds or 

12 value of funds between a consumer and a third 

13 party. 

14 (9) DESIGNATED TRANSFER DATE.—The term 

15 ‘‘designated transfer date’’ means the date established 

16 under section 1062. 

17 (10) DIRECTOR.—The term ‘‘Director’’ means 

18 the Director of the Bureau. 

19 (11) ENUMERATED CONSUMER LAWS.—The term 

20 ‘‘enumerated consumer laws’’ means— 

21 (A) the Alternative Mortgage Transaction 

22 Parity Act of 1982 (12 U.S.C. 3801 et seq.); 

23 (B) the Consumer Leasing Act of 1976 (15 

24 U.S.C. 1667 et seq.); 
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1 (C) the Electronic Fund Transfer Act (15 

2 U.S.C. 1693 et seq.); 

3 (D) the Equal Credit Opportunity Act (15 

4 U.S.C. 1691 et seq.); 

5 (E) the Fair Credit Billing Act (15 U.S.C. 

6 1666 et seq.); 

7 (F) the Fair Credit Reporting Act (15 

8 U.S.C. 1681 et seq.), except with respect to sec9 tions 615(e) and 628 of that Act (15 U.S.C. 

10 1681m(e), 1681w); 

11 (G) the Home Owners Protection Act of 

12 1998 (12 U.S.C. 4901 et seq.); 

13 (H) the Fair Debt Collection Practices Act 

14 (15 U.S.C. 1692 et seq.); 

15 (I) subsections (b) through (f) of section 43 

16 of the Federal Deposit Insurance Act (12 U.S.C. 

17 1831t(c)–(f)); 

18 (J) sections 502 through 509 of the Gramm19 Leach-Bliley Act (15 U.S.C. 6802–6809) except 

20 for section 505 as it applies to section 501(b); 

21 (K) the Home Mortgage Disclosure Act of 

22 1975 (12 U.S.C. 2801 et seq.); 

23 (L) the Home Ownership and Equity Pro24 tection Act of 1994 (15 U.S.C. 1601 note); 
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1 (M) the Real Estate Settlement Procedures 

2 Act of 1974 (12 U.S.C. 2601 et seq.); 

3 (N) the S.A.F.E. Mortgage Licensing Act of 

4 2008 (12 U.S.C. 5101 et seq.); 

5 (O) the Truth in Lending Act (15 U.S.C. 

6 1601 et seq.); 

7 (P) the Truth in Savings Act (12 U.S.C. 

8 4301 et seq.); and 

9 (Q) section 626 of the Omnibus Appropria10 tions Act, 2009 (Public Law 111–8). 

11 (12) FEDERAL CONSUMER FINANCIAL LAW.—The 

12 term ‘‘Federal consumer financial law’’ means the 

13 provisions of this title, the enumerated consumer 

14 laws, the laws for which authorities are transferred 

15 under subtitles F and H, and any rule or order pre16 scribed by the Bureau under this title, an enumerated 

17 consumer law, or pursuant to the authorities trans18 ferred under subtitles F and H. The term does not in19 clude the Federal Trade Commission Act. 

20 (13) FINANCIAL PRODUCT OR SERVICE.—The 

21 term ‘‘financial product or service’’— 

22 (A) means— 

23 (i) extending credit and servicing 

24 loans, including acquiring, purchasing, sell25 ing, brokering, or other extensions of credit 
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1 (other than solely extending commercial 

2 credit to a person who originates consumer 

3 credit transactions); 

4 (ii) extending or brokering leases of 

5 personal or real property that are the func6 tional equivalent of purchase finance ar7 rangements, if— 

8 (I) the lease is on a non-operating 

9 basis; 

10 (II) the initial term of the lease is 

11 at least 90 days; and 

12 (III) in the case of a lease involv13 ing real property, at the inception of 

14 the initial lease, the transaction is in15 tended to result in ownership of the 

16 leased property to be transferred to the 

17 lessee, subject to standards prescribed 

18 by the Bureau; 

19 (iii) providing real estate settlement 

20 services or performing appraisals of real es21 tate or personal property; 

22 (iv) engaging in deposit-taking activi23 ties, transmitting or exchanging funds, or 

24 otherwise acting as a custodian of funds or 
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† HR 4173 EAS 

1 any financial instrument for use by or on 

2 behalf of a consumer; 

3 (v) selling, providing, or issuing stored 

4 value or payment instruments, except that, 

5 in the case of a sale of, or transaction to re6 load, stored value, only if the seller exercises 

7 substantial control over the terms or condi8 tions of the stored value provided to the con9 sumer where, for purposes of this clause— 

10 (I) a seller shall not be found to 

11 exercise substantial control over the 

12 terms or conditions of the stored value 

13 if the seller is not a party to the con14 tract with the consumer for the stored 

15 value product, and another person is 

16 principally responsible for establishing 

17 the terms or conditions of the stored 

18 value; and 

19 (II) advertising the nonfinancial 

20 goods or services of the seller on the 

21 stored value card or device is not in 

22 itself an exercise of substantial control 

23 over the terms or conditions; 

24 (vi) providing check cashing, check col25 lection, or check guaranty services; 
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† HR 4173 EAS 

1 (vii) providing payments or other fi2 nancial data processing products or services 

3 to a consumer by any technological means, 

4 including processing or storing financial or 

5 banking data for any payment instrument, 

6 or through any payments systems or net7 work used for processing payments data, in8 cluding payments made through an online 

9 banking system or mobile telecommuni10 cations network, except that a person shall 

11 not be deemed to be a covered person with 

12 respect to financial data processing solely 

13 because the person— 

14 (I) unknowingly or incidentally 

15 processes, stores, or transmits over the 

16 Internet, telephone line, mobile net17 work, or any other mode of trans18 mission, as part of a stream of other 

19 types of data, financial data in a 

20 manner that such data is undifferen21 tiated from other types of data of the 

22 same form that the person processes, 

23 stores, or transmits; 

24 (II) is a merchant, retailer, or 

25 seller of any nonfinancial good or serv-
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† HR 4173 EAS 

1 ice who engages in financial data proc2 essing by transmitting or storing pay3 ments data about a consumer exclu4 sively for purpose of initiating pay5 ments instructions by the consumer to 

6 pay such person for the purchase of, or 

7 to complete a commercial transaction 

8 for, such nonfinancial good or service 

9 sold directly by such person to the con10 sumer; or 

11 (III) provides access to a host 

12 server to a person for purposes of ena13 bling that person to establish and 

14 maintain a website; 

15 (viii) providing financial advisory 

16 services to consumers on individual finan17 cial matters or relating to proprietary fi18 nancial products or services (other than by 

19 publishing any bona fide newspaper, news 

20 magazine, or business or financial publica21 tion of general and regular circulation, in22 cluding publishing market data, news, or 

23 data analytics or investment information or 

24 recommendations that are not tailored to 
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† HR 4173 EAS 

1 the individual needs of a particular con2 sumer), including— 

3 (I) providing credit counseling to 

4 any consumer; and 

5 (II) providing services to assist a 

6 consumer with debt management or 

7 debt settlement, modifying the terms of 

8 any extension of credit, or avoiding 

9 foreclosure; 

10 (ix) collecting, analyzing, maintaining, 

11 or providing consumer report information 

12 or other account information, including in13 formation relating to the credit history of 

14 consumers, used or expected to be used in 

15 connection with any decision regarding the 

16 offering or provision of a consumer finan17 cial product or service, except to the extent 

18 that— 

19 (I) a person— 

20 (aa) collects, analyzes, or 

21 maintains information that re22 lates solely to the transactions be23 tween a consumer and such per24 son; or 
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† HR 4173 EAS 

1 (bb) provides the information 

2 described in item (aa) to an affil3 iate of such person; and 

4 (II) the information described in 

5 subclause (I)(aa) is not used by such 

6 person or affiliate in connection with 

7 any decision regarding the offering or 

8 provision of a consumer financial 

9 product or service to the consumer, 

10 other than credit described in section 

11 1027(a)(2)(A); 

12 (x) collecting debt related to any con13 sumer financial product or service; and 

14 (xi) such other financial product or 

15 service as may be defined by the Bureau, by 

16 regulation, for purposes of this title, if the 

17 Bureau finds that such financial product or 

18 service is— 

19 (I) entered into or conducted as a 

20 subterfuge or with a purpose to evade 

21 any Federal consumer financial law; 

22 or 

23 (II) permissible for a bank or for 

24 a financial holding company to offer 

25 or to provide under any provision of a 
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† HR 4173 EAS 

1 Federal law or regulation applicable to 

2 a bank or a financial holding com3 pany, and has, or likely will have, a 

4 material impact on consumers; and 

5 (B) does not include the business of insur6 ance. 

7 (14) FOREIGN EXCHANGE.—The term ‘‘foreign 

8 exchange’’ means the exchange, for compensation, of 

9 currency of the United States or of a foreign govern10 ment for currency of another government. 

11 (15) INSURED CREDIT UNION.—The term ‘‘in12 sured credit union’’ has the same meaning as in sec13 tion 101 of the Federal Credit Union Act (12 U.S.C. 

14 1752). 

15 (16) PAYMENT INSTRUMENT.—The term ‘‘pay16 ment instrument’’ means a check, draft, warrant, 

17 money order, traveler’s check, electronic instrument, 

18 or other instrument, payment of funds, or monetary 

19 value (other than currency). 

20 (17) PERSON.—The term ‘‘person’’ means an in21 dividual, partnership, company, corporation, associa22 tion (incorporated or unincorporated), trust, estate, 

23 cooperative organization, or other entity. 

24 (18) PERSON REGULATED BY THE COMMODITY

25 FUTURES TRADING COMMISSION.—The term ‘‘person 
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† HR 4173 EAS 

1 regulated by the Commodity Futures Trading Com2 mission’’ means any person that is registered, or re3 quired by statute or regulation to be registered, with 

4 the Commodity Futures Trading Commission, but 

5 only to the extent that the activities of such person 

6 are subject to the jurisdiction of the Commodity Fu7 tures Trading Commission under the Commodity Ex8 change Act. 

9 (19) PERSON REGULATED BY THE COMMIS10 SION.—The term ‘‘person regulated by the Commis11 sion’’ means a person who is— 

12 (A) a broker or dealer that is required to be 

13 registered under the Securities Exchange Act of 

14 1934; 

15 (B) an investment adviser that is registered 

16 under the Investment Advisers Act of 1940; 

17 (C) an investment company that is required 

18 to be registered under the Investment Company 

19 Act of 1940, and any company that has elected 

20 to be regulated as a business development com21 pany under that Act; 

22 (D) a national securities exchange that is 

23 required to be registered under the Securities Ex24 change Act of 1934; 
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† HR 4173 EAS 

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 self-regulatory organization that is 

8 required to be registered with the Commission; 

9 (H) any nationally recognized statistical 

10 rating organization that is required to be reg11 istered with the Commission; 

12 (I) any securities information processor 

13 that is required to be registered with the Com14 mission; 

15 (J) any municipal securities dealer that is 

16 required to be registered with the Commission; 

17 (K) any other person that is required to be 

18 registered with the Commission under the Secu19 rities Exchange Act of 1934; and 

20 (L) any employee, agent, or contractor act21 ing on behalf of, registered with, or providing 

22 services to, any person described in any of sub23 paragraphs (A) through (K), but only to the ex24 tent that any person described in any of sub25 paragraphs (A) through (K), or the employee, 
1217 

† HR 4173 EAS 

1 agent, or contractor of such person, acts in a reg2 ulated capacity. 

3 (20) PERSON REGULATED BY A STATE INSUR4 ANCE REGULATOR.—The term ‘‘person regulated by a 

5 State insurance regulator’’ means any person that is 

6 engaged in the business of insurance and subject to 

7 regulation by any State insurance regulator, but only 

8 to the extent that such person acts in such capacity. 

9 (21) PERSON THAT PERFORMS INCOME TAX

10 PREPARATION ACTIVITIES FOR CONSUMERS.—The 

11 term ‘‘person that performs income tax preparation 

12 activities for consumers’’ means— 

13 (A) any tax return preparer (as defined in 

14 section 7701(a)(36) of the Internal Revenue Code 

15 of 1986), regardless of whether compensated, but 

16 only to the extent that the person acts in such 

17 capacity; 

18 (B) any person regulated by the Secretary 

19 under section 330 of title 31, United States Code, 

20 but only to the extent that the person acts in 

21 such capacity; and 

22 (C) any authorized IRS e-file Providers (as 

23 defined for purposes of section 7216 of the Inter24 nal Revenue Code of 1986), but only to the extent 

25 that the person acts in such capacity. 
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† HR 4173 EAS 

1 (22) PRUDENTIAL REGULATOR.—The term ‘‘pru2 dential regulator’’ means— 

3 (A) in the case of an insured depository in4 stitution, the appropriate Federal banking agen5 cy, as that term is defined in section 3 of the 

6 Federal Deposit Insurance Act; and 

7 (B) in the case of an insured credit union, 

8 the National Credit Union Administration. 

9 (23) RELATED PERSON.—The term ‘‘related per10 son’’— 

11 (A) shall apply only with respect to a cov12 ered person that is not a bank holding company 

13 (as that term is defined in section 2 of the Bank 

14 Holding Company Act of 1956), credit union, or 

15 depository institution; 

16 (B) shall be deemed to mean a covered per17 son for all purposes of any provision of Federal 

18 consumer financial law; and 

19 (C) means— 

20 (i) any director, officer, or employee 

21 charged with managerial responsibility for, 

22 or controlling shareholder of, or agent for, 

23 such covered person; 

24 (ii) any shareholder, consultant, joint 

25 venture partner, or other person, as deter-
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† HR 4173 EAS 

1 mined by the Bureau (by rule or on a case2 by-case basis) who materially participates 

3 in the conduct of the affairs of such covered 

4 person; and 

5 (iii) any independent contractor (in6 cluding any attorney, appraiser, or ac7 countant) who knowingly or recklessly par8 ticipates in any— 

9 (I) violation of any provision of 

10 law or regulation; or 

11 (II) breach of a fiduciary duty. 

12 (24) SERVICE PROVIDER.— 

13 (A) IN GENERAL.—The term ‘‘service pro14 vider’’ means any person that provides a mate15 rial service to a covered person in connection 

16 with the offering or provision by such covered 

17 person of a consumer financial product or serv18 ice, including a person that— 

19 (i) participates in designing, oper20 ating, or maintaining the consumer finan21 cial product or service; or 

22 (ii) processes transactions relating to 

23 the consumer financial product or service 

24 (other than unknowingly or incidentally 

25 transmitting or processing financial data in 
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† HR 4173 EAS 

1 a manner that such data is undifferentiated 

2 from other types of data of the same form 

3 as the person transmits or processes). 

4 (B) EXCEPTIONS.—The term ‘‘service pro5 vider’’ does not include a person solely by virtue 

6 of such person offering or providing to a covered 

7 person— 

8 (i) a support service of a type provided 

9 to businesses generally or a similar ministe10 rial service; or 

11 (ii) time or space for an advertisement 

12 for a consumer financial product or service 

13 through print, newspaper, or electronic 

14 media. 

15 (C) RULE OF CONSTRUCTION.—A person 

16 that is a service provider shall be deemed to be 

17 a covered person to the extent that such person 

18 engages in the offering or provision of its own 

19 consumer financial product or service. 

20 (25) STATE.—The term ‘‘State’’ means any 

21 State, territory, or possession of the United States, the 

22 District of Columbia, the Commonwealth of Puerto 

23 Rico, the Commonwealth of the Northern Mariana Is24 lands, Guam, American Samoa, or the United States 

25 Virgin Islands or any federally recognized Indian 
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† HR 4173 EAS 

1 tribe, as defined by the Secretary of the Interior 

2 under section 104(a) of the Federally Recognized In3 dian Tribe List Act of 1994 (25 U.S.C. 479a–1(a)). 

4 (26) STORED VALUE.—The term ‘‘stored value’’ 

5 means funds or monetary value represented in any 

6 electronic format, whether or not specially encrypted, 

7 and stored or capable of storage on electronic media 

8 in such a way as to be retrievable and transferred 

9 electronically, and includes a prepaid debit card or 

10 product, or any other similar product, regardless of 

11 whether the amount of the funds or monetary value 

12 may be increased or reloaded. 

13 (27) TRANSMITTING OR EXCHANGING FUNDS.— 

14 The term ‘‘transmitting or exchanging funds’’ means 

15 receiving currency, monetary value, or payment in16 struments from a consumer for the purpose of ex17 changing or transmitting the same by any means, in18 cluding transmission by wire, facsimile, electronic 

19 transfer, courier, the Internet, or through bill pay20 ment services or through other businesses that facili21 tate third-party transfers within the United States or 

22 to or from the United States. 
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1 Subtitle A—Bureau of Consumer 

2 Financial Protection 

3 SEC. 1011. ESTABLISHMENT OF THE BUREAU. 

4 (a) BUREAU ESTABLISHED.—There is established in 

5 the Federal Reserve System the Bureau of Consumer Finan6 cial Protection, which shall regulate the offering and provi7 sion of consumer financial products or services under the 

8 Federal consumer financial laws. 

9 (b) DIRECTOR AND DEPUTY DIRECTOR.— 

10 (1) IN GENERAL.—There is established the posi11 tion of the Director, who shall serve as the head of the 

12 Bureau. 

13 (2) APPOINTMENT.—Subject to paragraph (3), 

14 the Director shall be appointed by the President, by 

15 and with the advice and consent of the Senate. 

16 (3) QUALIFICATION.—The President shall nomi17 nate the Director from among individuals who are 

18 citizens of the United States. 

19 (4) COMPENSATION.—The Director shall be com20 pensated at the rate prescribed for level II of the Ex21 ecutive Schedule under section 5313 of title 5, United 

22 States Code. 

23 (5) DEPUTY DIRECTOR.—There is established the 

24 position of Deputy Director, who shall— 

25 (A) be appointed by the Director; and 
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1 (B) serve as acting Director in the absence 

2 or unavailability of the Director. 

3 (c) TERM.— 

4 (1) IN GENERAL.—The Director shall serve for a 

5 term of 5 years. 

6 (2) EXPIRATION OF TERM.—An individual may 

7 serve as Director after the expiration of the term for 

8 which appointed, until a successor has been appointed 

9 and qualified. 

10 (3) REMOVAL FOR CAUSE.—The President may 

11 remove the Director for inefficiency, neglect of duty, 

12 or malfeasance in office. 

13 (d) SERVICE RESTRICTION.—No Director or Deputy 

14 Director may hold any office, position, or employment in 

15 any Federal reserve bank, Federal home loan bank, covered 

16 person, or service provider during the period of service of 

17 such person as Director or Deputy Director. 

18 (e) OFFICES.—The principal office of the Bureau shall 

19 be in the District of Columbia. The Director may establish 

20 regional offices of the Bureau, including in cities in which 

21 the Federal reserve banks, or branches of such banks, are 

22 located, in order to carry out the responsibilities assigned 

23 to the Bureau under the Federal consumer financial laws. 
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† HR 4173 EAS 

1 SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS. 

2 (a) POWERS OF THE BUREAU.—The Bureau is author3 ized to establish the general policies of the Bureau with re4 spect to all executive and administrative functions, includ5 ing— 

6 (1) the establishment of rules for conducting the 

7 general business of the Bureau, in a manner not in8 consistent with this title; 

9 (2) to bind the Bureau and enter into contracts; 

10 (3) directing the establishment and maintenance 

11 of divisions or other offices within the Bureau, in 

12 order to carry out the responsibilities under the Fed13 eral consumer financial laws, and to satisfy the re14 quirements of other applicable law; 

15 (4) to coordinate and oversee the operation of all 

16 administrative, enforcement, and research activities of 

17 the Bureau; 

18 (5) to adopt and use a seal; 

19 (6) to determine the character of and the neces20 sity for the obligations and expenditures of the Bu21 reau; 

22 (7) the appointment and supervision of per23 sonnel employed by the Bureau; 

24 (8) the distribution of business among personnel 

25 appointed and supervised by the Director and among 

26 administrative units of the Bureau; 
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1 (9) the use and expenditure of funds; 

2 (10) implementing the Federal consumer finan3 cial laws through rules, orders, guidance, interpreta4 tions, statements of policy, examinations, and enforce5 ment actions; and 

6 (11) performing such other functions as may be 

7 authorized or required by law. 

8 (b) DELEGATION OF AUTHORITY.—The Director of the 

9 Bureau may delegate to any duly authorized employee, rep10 resentative, or agent any power vested in the Bureau by 

11 law. 

12 (c) AUTONOMY OF THE BUREAU.— 

13 (1) COORDINATION WITH THE BOARD OF GOV14 ERNORS.—Notwithstanding section 18 of the Federal 

15 Trade Commission Act (15 U.S.C. 57a) and any 

16 other provision of law applicable to the supervision or 

17 examination of persons with respect to Federal con18 sumer financial laws, the Board of Governors may 

19 delegate to the Bureau the authorities to examine per20 sons subject to the jurisdiction of the Board of Gov21 ernors for compliance with the Federal consumer fi22 nancial laws. 

23 (2) AUTONOMY.—Notwithstanding the authori24 ties granted to the Board of Governors under the Fed25 eral Reserve Act, the Board of Governors may not— 
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1 (A) intervene in any matter or proceeding 

2 before the Director, including examinations or 

3 enforcement actions, unless otherwise specifically 

4 provided by law; 

5 (B) appoint, direct, or remove any officer or 

6 employee of the Bureau; or 

7 (C) merge or consolidate the Bureau, or any 

8 of the functions or responsibilities of the Bureau, 

9 with any division or office of the Board of Gov10 ernors or the Federal reserve banks. 

11 (3) RULES AND ORDERS.—No rule or order of 

12 the Bureau shall be subject to approval or review by 

13 the Board of Governors. The Board of Governors may 

14 not delay or prevent the issuance of any rule or order 

15 of the Bureau. 

16 (4) RECOMMENDATIONS AND TESTIMONY.—No of17 ficer or agency of the United States shall have any 

18 authority to require the Director or any other officer 

19 of the Bureau to submit legislative recommendations, 

20 or testimony or comments on legislation, to any offi21 cer or agency of the United States for approval, com22 ments, or review prior to the submission of such rec23 ommendations, testimony, or comments to the Con24 gress, if such recommendations, testimony, or com25 ments to the Congress include a statement indicating 
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1 that the views expressed therein are those of the Direc2 tor or such officer, and do not necessarily reflect the 

3 views of the Board of Governors or the President. 

4 SEC. 1013. ADMINISTRATION. 

5 (a) PERSONNEL.— 

6 (1) APPOINTMENT.— 

7 (A) IN GENERAL.—The Director may fix the 

8 number of, and appoint and direct, all employees 

9 of the Bureau. 

10 (B) EMPLOYEES OF THE BUREAU.—The Di11 rector is authorized to employ attorneys, compli12 ance examiners, compliance supervision ana13 lysts, economists, statisticians, and other employ14 ees as may be deemed necessary to conduct the 

15 business of the Bureau. Notwithstanding any 

16 other provision of law, all such employees shall 

17 be appointed and compensated on terms and 

18 conditions that are consistent with the terms and 

19 conditions set forth in section 11(l) of the Fed20 eral Reserve Act (12 U.S.C. 248(l)). 

21 (2) COMPENSATION.—The Director shall at all 

22 times provide compensation and benefits to each class 

23 of employees that, at a minimum, are equivalent to 

24 the compensation and benefits then being provided by 
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1 the Board of Governors for the corresponding class of 

2 employees. 

3 (b) SPECIFIC FUNCTIONAL UNITS.— 

4 (1) RESEARCH.—The Director shall establish a 

5 unit whose functions shall include researching, ana6 lyzing, and reporting on— 

7 (A) developments in markets for consumer 

8 financial products or services, including market 

9 areas of alternative consumer financial products 

10 or services with high growth rates and areas of 

11 risk to consumers; 

12 (B) access to fair and affordable credit for 

13 traditionally underserved communities; 

14 (C) consumer awareness, understanding, 

15 and use of disclosures and communications re16 garding consumer financial products or services; 

17 (D) consumer awareness and understanding 

18 of costs, risks, and benefits of consumer financial 

19 products or services; and 

20 (E) consumer behavior with respect to con21 sumer financial products or services. 

22 (2) COMMUNITY AFFAIRS.—The Director shall es23 tablish a unit whose functions shall include providing 

24 information, guidance, and technical assistance re25 garding the offering and provision of consumer finan-
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† HR 4173 EAS 

1 cial products or services to traditionally underserved 

2 consumers and communities. 

3 (3) COLLECTING AND TRACKING COMPLAINTS.— 

4 (A) IN GENERAL.—The Director shall estab5 lish a unit whose functions shall include estab6 lishing a single, toll-free telephone number, a 

7 website, and a database or utilizing an existing 

8 database to facilitate the centralized collection of, 

9 monitoring of, and response to consumer com10 plaints regarding consumer financial products or 

11 services. The Director shall coordinate with the 

12 Federal Trade Commission or other Federal 

13 agencies to route complaints to such agencies, 

14 where appropriate. 

15 (B) ROUTING CALLS TO STATES.—To the 

16 extent practicable, State agencies may receive 

17 appropriate complaints from the systems estab18 lished under subparagraph (A), if— 

19 (i) the State agency system has the 

20 functional capacity to receive calls or elec21 tronic reports routed by the Bureau systems; 

22 and 

23 (ii) the State agency has satisfied any 

24 conditions of participation in the system 

25 that the Bureau may establish, including 
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1 treatment of personally identifiable infor2 mation and sharing of information on com3 plaint resolution or related compliance pro4 cedures and resources. 

5 (C) REPORTS TO THE CONGRESS.—The Di6 rector shall present an annual report to Congress 

7 not later than March 31 of each year on the com8 plaints received by the Bureau in the prior year 

9 regarding consumer financial products and serv10 ices. Such report shall include information and 

11 analysis about complaint numbers, complaint 

12 types, and, where applicable, information about 

13 resolution of complaints. 

14 (D) DATA SHARING REQUIRED.—To facili15 tate preparation of the reports required under 

16 subparagraph (C), supervision and enforcement 

17 activities, and monitoring of the market for con18 sumer financial products and services, the Bu19 reau shall share consumer complaint informa20 tion with prudential regulators, the Federal 

21 Trade Commission, other Federal agencies, and 

22 State agencies, consistent with Federal law ap23 plicable to personally identifiable information. 

24 The prudential regulators, the Federal Trade 

25 Commission, and other Federal agencies shall 
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1 share data relating to consumer complaints re2 garding consumer financial products and serv3 ices with the Bureau, consistent with Federal 

4 law applicable to personally identifiable infor5 mation. 

6 (c) OFFICE OF FAIR LENDING AND EQUAL OPPOR7 TUNITY.— 

8 (1) ESTABLISHMENT.—The Director shall estab9 lish within the Bureau the Office of Fair Lending 

10 and Equal Opportunity. 

11 (2) FUNCTIONS.—The Office of Fair Lending 

12 and Equal Opportunity shall have such powers and 

13 duties as the Director may delegate to the Office, in14 cluding— 

15 (A) providing oversight and enforcement of 

16 Federal laws intended to ensure the fair, equi17 table, and nondiscriminatory access to credit for 

18 both individuals and communities that are en19 forced by the Bureau, including the Equal Credit 

20 Opportunity Act and the Home Mortgage Disclo21 sure Act; 

22 (B) coordinating fair lending and fair 

23 housing efforts of the Bureau with other Federal 

24 agencies and State regulators, as appropriate, to 
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† HR 4173 EAS 

1 promote consistent, efficient, and effective en2 forcement of Federal fair lending laws; 

3 (C) working with private industry, fair 

4 lending, civil rights, consumer and community 

5 advocates on the promotion of fair lending com6 pliance and education; and 

7 (D) providing annual reports to Congress 

8 on the efforts of the Bureau to fulfill its fair 

9 lending mandate. 

10 (3) ADMINISTRATION OF OFFICE.—There is es11 tablished the position of Assistant Director of the Bu12 reau for Fair Lending and Equal Opportunity, 

13 who— 

14 (A) shall be appointed by the Director; and 

15 (B) shall carry out such duties as the Direc16 tor may delegate to such Assistant Director. 

17 (d) OFFICE OF FINANCIAL LITERACY.— 

18 (1) ESTABLISHMENT.—The Director shall estab19 lish an Office of Financial Literacy, which shall be 

20 responsible for developing and implementing initia21 tives intended to educate and empower consumers to 

22 make better informed financial decisions. 

23 (2) OTHER DUTIES.—The Office of Financial 

24 Literacy shall develop and implement a strategy to 

25 improve the financial literacy of consumers that in-
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† HR 4173 EAS 

1 cludes measurable goals and objectives, in consulta2 tion with the Financial Literacy and Education 

3 Commission, consistent with the National Strategy 

4 for Financial Education, through activities including 

5 providing opportunities for consumers to access— 

6 (A) financial counseling; 

7 (B) information to assist with the evalua8 tion of credit products and the understanding of 

9 credit histories and scores; 

10 (C) savings, borrowing, and other services 

11 found at mainstream financial institutions; 

12 (D) activities intended to— 

13 (i) prepare the consumer for edu14 cational expenses and the submission of fi15 nancial aid applications, and other major 

16 purchases; 

17 (ii) reduce debt; and 

18 (iii) improve the financial situation of 

19 the consumer; 

20 (E) assistance in developing long-term sav21 ings strategies; and 

22 (F) wealth building and financial services 

23 during the preparation process to claim earned 

24 income tax credits and Federal benefits. 
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1 (3) COORDINATION.—The Office of Financial 

2 Literacy shall coordinate with other units within the 

3 Bureau in carrying out its functions, including— 

4 (A) working with the Community Affairs 

5 Office to implement the strategy to improve fi6 nancial literacy of consumers; and 

7 (B) working with the research unit estab8 lished by the Director to conduct research related 

9 to consumer financial education and counseling. 

10 (4) REPORT.—Not later than 24 months after the 

11 designated transfer date, and annually thereafter, the 

12 Director shall submit a report on its financial lit13 eracy activities and strategy to improve financial lit14 eracy of consumers to— 

15 (A) the Committee on Banking, Housing, 

16 and Urban Affairs of the Senate; and 

17 (B) the Committee on Financial Services of 

18 the House of Representatives. 

19 (5) MEMBERSHIP IN FINANCIAL LITERACY AND

20 EDUCATION COMMISSION.—Section 513(c)(1) of the 

21 Financial Literacy and Education Improvement Act 

22 (20 U.S.C. 9702(c)(1)) is amended— 

23 (A) in subparagraph (B), by striking ‘‘and’’ 

24 at the end; 
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† HR 4173 EAS 

1 (B) by redesignating subparagraph (C) as 

2 subparagraph (D); and 

3 (C) by inserting after subparagraph (B) the 

4 following new subparagraph: 

5 ‘‘(C) the Director of the Bureau of Con6 sumer Financial Protection; and’’. 

7 (6) CONFORMING AMENDMENT.—Section 513(d) 

8 of the Financial Literacy and Education Improve9 ment Act (20 U.S.C. 9702(d)) is amended by adding 

10 at the end the following: ‘‘The Director of the Bureau 

11 of Consumer Financial Protection shall serve as the 

12 Vice Chairman.’’. 

13 (e) OFFICE OF SERVICE MEMBER AFFAIRS.— 

14 (1) IN GENERAL.—The Director shall establish 

15 an Office of Service Member Affairs, which shall be 

16 responsible for developing and implementing initia17 tives for service members and their families intended 

18 to— 

19 (A) educate and empower service members 

20 and their families to make better informed deci21 sions regarding consumer financial products and 

22 services; 

23 (B) coordinate with the unit of the Bureau 

24 established under subsection (b)(3), in order to 

25 monitor complaints by service members and 
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† HR 4173 EAS 

1 their families and responses to those complaints 

2 by the Bureau or other appropriate Federal or 

3 State agency; and 

4 (C) coordinate efforts among Federal and 

5 State agencies, as appropriate, regarding con6 sumer protection measures relating to consumer 

7 financial products and services offered to, or 

8 used by, service members and their families. 

9 (2) COORDINATION.— 

10 (A) REGIONAL SERVICES.—The Director is 

11 authorized to assign employees of the Bureau as 

12 may be deemed necessary to conduct the business 

13 of the Office of Service Member Affairs, including 

14 by establishing and maintaining the functions of 

15 the Office in regional offices of the Bureau lo16 cated near military bases, military treatment fa17 cilities, or other similar military facilities. 

18 (B) AGREEMENTS.—The Director is author19 ized to enter into memoranda of understanding 

20 and similar agreements with the Department of 

21 Defense, including any branch or agency as au22 thorized by the department, in order to carry out 

23 the business of the Office of Service Member Af24 fairs. 
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1 (3) DEFINITION.—As used in this subsection, the 

2 term ‘‘service member’’ means any member of the 

3 United States Armed Forces and any member of the 

4 National Guard or Reserves. 

5 SEC. 1014. CONSUMER ADVISORY BOARD. 

6 (a) ESTABLISHMENT REQUIRED.—The Director shall 

7 establish a Consumer Advisory Board to advise and consult 

8 with the Bureau in the exercise of its functions under the 

9 Federal consumer financial laws, and to provide informa10 tion on emerging practices in the consumer financial prod11 ucts or services industry, including regional trends, con12 cerns, and other relevant information. 

13 (b) MEMBERSHIP.—In appointing the members of the 

14 Consumer Advisory Board, the Director shall seek to assem15 ble experts in consumer protection, financial services, com16 munity development, fair lending, and consumer financial 

17 products or services and seek representation of the interests 

18 of covered persons and consumers, without regard to party 

19 affiliation. Not fewer than 6 members shall be appointed 

20 upon the recommendation of the regional Federal Reserve 

21 Bank Presidents, on a rotating basis. 

22 (c) MEETINGS.—The Consumer Advisory Board shall 

23 meet from time to time at the call of the Director, but, at 

24 a minimum, shall meet at least twice in each year. 
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† HR 4173 EAS 

1 (d) COMPENSATION AND TRAVEL EXPENSES.—Mem2 bers of the Consumer Advisory Board who are not full-time 

3 employees of the United States shall— 

4 (1) be entitled to receive compensation at a rate 

5 fixed by the Director while attending meetings of the 

6 Consumer Advisory Board, including travel time; and 

7 (2) be allowed travel expenses, including trans8 portation and subsistence, while away from their 

9 homes or regular places of business. 

10 SEC. 1015. COORDINATION. 

11 The Bureau shall coordinate with the Commission, the 

12 Commodity Futures Trading Commission, the Federal 

13 Trade Commission, and other Federal agencies and State 

14 regulators, as appropriate, to promote consistent regulatory 

15 treatment of consumer financial and investment products 

16 and services. 

17 SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CON18 GRESS. 

19 (a) APPEARANCES BEFORE CONGRESS.—The Director 

20 of the Bureau shall appear before the Committee on Bank21 ing, Housing, and Urban Affairs of the Senate and the 

22 Committee on Financial Services of the House of Represent23 atives at semi-annual hearings regarding the reports re24 quired under subsection (b). 
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1 (b) REPORTS REQUIRED.—The Bureau shall, concur2 rent with each semi-annual hearing referred to in sub3 section (a), prepare and submit to the President and to the 

4 Committee on Banking, Housing, and Urban Affairs of the 

5 Senate and the Committee on Financial Services of the 

6 House of Representatives, a report, beginning with the ses7 sion following the designated transfer date. 

8 (c) CONTENTS.—The reports required by subsection (b) 

9 shall include— 

10 (1) a discussion of the significant problems faced 

11 by consumers in shopping for or obtaining consumer 

12 financial products or services; 

13 (2) a justification of the budget request of the 

14 previous year; 

15 (3) a list of the significant rules and orders 

16 adopted by the Bureau, as well as other significant 

17 initiatives conducted by the Bureau, during the pre18 ceding year and the plan of the Bureau for rules, or19 ders, or other initiatives to be undertaken during the 

20 upcoming period; 

21 (4) an analysis of complaints about consumer fi22 nancial products or services that the Bureau has re23 ceived and collected in its central database on com24 plaints during the preceding year; 
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† HR 4173 EAS 

1 (5) a list, with a brief statement of the issues, of 

2 the public supervisory and enforcement actions to 

3 which the Bureau was a party during the preceding 

4 year; 

5 (6) the actions taken regarding rules, orders, and 

6 supervisory actions with respect to covered persons 

7 which are not credit unions or depository institu8 tions; 

9 (7) an assessment of significant actions by State 

10 attorneys general or State regulators relating to Fed11 eral consumer financial law; and 

12 (8) an analysis of the efforts of the Bureau to 

13 fulfill the fair lending mission of the Bureau. 

14 SEC. 1017. FUNDING; PENALTIES AND FINES. 

15 (a) TRANSFER OF FUNDS FROM BOARD OF GOV16 ERNORS.— 

17 (1) IN GENERAL.—Each year (or quarter of such 

18 year), beginning on the designated transfer date, and 

19 each quarter thereafter, the Board of Governors shall 

20 transfer to the Bureau from the combined earnings of 

21 the Federal Reserve System, the amount determined 

22 by the Director to be reasonably necessary to carry 

23 out the authorities of the Bureau under Federal con24 sumer financial law, taking into account such other 
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† HR 4173 EAS 

1 sums made available to the Bureau from the pre2 ceding year (or quarter of such year). 

3 (2) FUNDING CAP.— 

4 (A) IN GENERAL.—Notwithstanding para5 graph (1), and in accordance with this para6 graph, the amount that shall be transferred to 

7 the Bureau in each fiscal year shall not exceed 

8 a fixed percentage of the total operating expenses 

9 of the Federal Reserve System, as reported in the 

10 Annual Report, 2009, of the Board of Governors, 

11 equal to— 

12 (i) 10 percent of such expenses in fiscal 

13 year 2011; 

14 (ii) 11 percent of such expenses in fis15 cal year 2012; and 

16 (iii) 12 percent of such expenses in fis17 cal year 2013, and in each year thereafter. 

18 (B) AMOUNT ADJUSTED FOR INFLATION.— 

19 The dollar amount referred to in subparagraph 

20 (A)(iii) shall be adjusted annually, using the 

21 percent by which the average urban consumer 

22 price index for the quarter preceding the date of 

23 the payment differs from the average of that 

24 index for the same quarter in the prior year. 
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1 (3) TRANSITION PERIOD.—Beginning on the date 

2 of enactment of this Act and until the designated 

3 transfer date, the Board of Governors shall transfer to 

4 the Bureau the amount estimated by the Secretary 

5 needed to carry out the authorities granted to the Bu6 reau under Federal consumer financial law, from the 

7 date of enactment of this Act until the designated 

8 transfer date. 

9 (4) BUDGET AND FINANCIAL MANAGEMENT.— 

10 (A) FINANCIAL OPERATING PLANS AND

11 FORECASTS.—The Director shall provide to the 

12 Director of the Office of Management and Budget 

13 copies of the financial operating plans and fore14 casts of the Director, as prepared by the Director 

15 in the ordinary course of the operations of the 

16 Bureau, and copies of the quarterly reports of the 

17 financial condition and results of operations of 

18 the Bureau, as prepared by the Director in the 

19 ordinary course of the operations of the Bureau. 

20 (B) FINANCIAL STATEMENTS.—The Bureau 

21 shall prepare annually a statement of— 

22 (i) assets and liabilities and surplus or 

23 deficit; 

24 (ii) income and expenses; and 

25 (iii) sources and application of funds. 
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† HR 4173 EAS 

1 (C) FINANCIAL MANAGEMENT SYSTEMS.— 

2 The Bureau shall implement and maintain fi3 nancial management systems that comply sub4 stantially with Federal financial management 

5 systems requirements and applicable Federal ac6 counting standards. 

7 (D) ASSERTION OF INTERNAL CONTROLS.— 

8 The Director shall provide to the Comptroller 

9 General of the United States an assertion as to 

10 the effectiveness of the internal controls that 

11 apply to financial reporting by the Bureau, 

12 using the standards established in section 

13 3512(c) of title 31, United States Code. 

14 (E) RULE OF CONSTRUCTION.—This sub15 section may not be construed as implying any 

16 obligation on the part of the Director to consult 

17 with or obtain the consent or approval of the Di18 rector of the Office of Management and Budget 

19 with respect to any report, plan, forecast, or 

20 other information referred to in subparagraph 

21 (A) or any jurisdiction or oversight over the af22 fairs or operations of the Bureau. 

23 (5) AUDIT OF THE BUREAU.— 

24 (A) IN GENERAL.—The Comptroller General 

25 shall annually audit the financial transactions 
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† HR 4173 EAS 

1 of the Bureau in accordance with the United 

2 States generally accepted government auditing 

3 standards, as may be prescribed by the Comp4 troller General of the United States. The audit 

5 shall be conducted at the place or places where 

6 accounts of the Bureau are normally kept. The 

7 representatives of the Government Accountability 

8 Office shall have access to the personnel and to 

9 all books, accounts, documents, papers, records 

10 (including electronic records), reports, files, and 

11 all other papers, automated data, things, or 

12 property belonging to or under the control of or 

13 used or employed by the Bureau pertaining to its 

14 financial transactions and necessary to facilitate 

15 the audit, and such representatives shall be af16 forded full facilities for verifying transactions 

17 with the balances or securities held by deposi18 tories, fiscal agents, and custodians. All such 

19 books, accounts, documents, records, reports, files, 

20 papers, and property of the Bureau shall remain 

21 in possession and custody of the Bureau. The 

22 Comptroller General may obtain and duplicate 

23 any such books, accounts, documents, records, 

24 working papers, automated data and files, or 

25 other information relevant to such audit without 
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1 cost to the Comptroller General, and the right of 

2 access of the Comptroller General to such infor3 mation shall be enforceable pursuant to section 

4 716(c) of title 31, United States Code. 

5 (B) REPORT.—The Comptroller General 

6 shall submit to the Congress a report of each an7 nual audit conducted under this subsection. The 

8 report to the Congress shall set forth the scope of 

9 the audit and shall include the statement of as10 sets and liabilities and surplus or deficit, the 

11 statement of income and expenses, the statement 

12 of sources and application of funds, and such 

13 comments and information as may be deemed 

14 necessary to inform Congress of the financial op15 erations and condition of the Bureau, together 

16 with such recommendations with respect thereto 

17 as the Comptroller General may deem advisable. 

18 A copy of each report shall be furnished to the 

19 President and to the Bureau at the time sub20 mitted to the Congress. 

21 (C) ASSISTANCE AND COSTS.—For the pur22 pose of conducting an audit under this sub23 section, the Comptroller General may, in the dis24 cretion of the Comptroller General, employ by 

25 contract, without regard to section 3709 of the 
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1 Revised Statutes of the United States (41 U.S.C. 

2 5), professional services of firms and organiza3 tions of certified public accountants for tem4 porary periods or for special purposes. Upon the 

5 request of the Comptroller General, the Director 

6 of the Bureau shall transfer to the Government 

7 Accountability Office from funds available, the 

8 amount requested by the Comptroller General to 

9 cover the full costs of any audit and report con10 ducted by the Comptroller General. The Comp11 troller General shall credit funds transferred to 

12 the account established for salaries and expenses 

13 of the Government Accountability Office, and 

14 such amount shall be available upon receipt and 

15 without fiscal year limitation to cover the full 

16 costs of the audit and report. 

17 (b) CONSUMER FINANCIAL PROTECTION FUND.— 

18 (1) SEPARATE FUND IN FEDERAL RESERVE

19 BOARD ESTABLISHED.—There is established in the 

20 Federal Reserve Board a separate fund, to be known 

21 as the ‘‘Consumer Financial Protection Fund’’ (re22 ferred to in this section as the ‘‘Bureau Fund’’). 

23 (2) FUND RECEIPTS.—All amounts transferred to 

24 the Bureau under subsection (a) shall be deposited 

25 into the Bureau Fund. 
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1 (3) INVESTMENT AUTHORITY.— 

2 (A) AMOUNTS IN BUREAU FUND MAY BE IN3 VESTED.—The Bureau may request the Board of 

4 Governors to invest the portion of the Bureau 

5 Fund that is not, in the judgment of the Bureau, 

6 required to meet the current needs of the Bureau. 

7 (B) ELIGIBLE INVESTMENTS.—Investments 

8 authorized by this paragraph shall be made by 

9 the Board of Governors in obligations of the 

10 United States or obligations that are guaranteed 

11 as to principal and interest by the United 

12 States, with maturities suitable to the needs of 

13 the Bureau Fund, as determined by the Bureau. 

14 (C) INTEREST AND PROCEEDS CREDITED.— 

15 The interest on, and the proceeds from the sale 

16 or redemption of, any obligations held in the Bu17 reau Fund shall be credited to the Bureau Fund. 

18 (c) USE OF FUNDS.— 

19 (1) IN GENERAL.—Funds obtained by, trans20 ferred to, or credited to the Bureau Fund shall be im21 mediately available to the Bureau and under the con22 trol of the Director, and shall remain available until 

23 expended, to pay the expenses of the Bureau in car24 rying out its duties and responsibilities. The com25 pensation of the Director and other employees of the 
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1 Bureau and all other expenses thereof may be paid 

2 from, obtained by, transferred to, or credited to the 

3 Bureau Fund under this section. 

4 (2) FUNDS THAT ARE NOT GOVERNMENT

5 FUNDS.—Funds obtained by or transferred to the Bu6 reau Fund shall not be construed to be Government 

7 funds or appropriated monies. 

8 (3) AMOUNTS NOT SUBJECT TO APPORTION9 MENT.—Notwithstanding any other provision of law, 

10 amounts in the Bureau Fund and in the Civil Pen11 alty Fund established under subsection (d) shall not 

12 be subject to apportionment for purposes of chapter 15 

13 of title 31, United States Code, or under any other 

14 authority. 

15 (d) PENALTIES AND FINES.— 

16 (1) ESTABLISHMENT OF VICTIMS RELIEF

17 FUND.—There is established in the Federal Reserve 

18 Board a fund to be known as the ‘‘Consumer Finan19 cial Protection Civil Penalty Fund’’ (referred to in 

20 this subsection as the ‘‘Civil Penalty Fund’’). If the 

21 Bureau obtains a civil penalty against any person in 

22 any judicial or administrative action under Federal 

23 consumer financial laws, the Bureau shall deposit 

24 into the Civil Penalty Fund, the amount of the pen25 alty collected. 
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1 (2) PAYMENT TO VICTIMS.—Amounts in the Civil 

2 Penalty Fund shall be available to the Bureau, with3 out fiscal year limitation, for payments to the victims 

4 of activities for which civil penalties have been im5 posed under the Federal consumer financial laws. To 

6 the extent such victims cannot be located or such pay7 ments are otherwise not practicable, the Bureau may 

8 use such funds for the purpose of consumer education 

9 and financial literacy programs. 

10 SEC. 1018. EFFECTIVE DATE. 

11 This subtitle shall become effective on the date of enact12 ment of this Act. 

13 Subtitle B—General Powers of the 

14 Bureau 

15 SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS. 

16 (a) PURPOSE.—The Bureau shall seek to implement 

17 and, where applicable, enforce Federal consumer financial 

18 law consistently for the purpose of ensuring that markets 

19 for consumer financial products and services are fair, 

20 transparent, and competitive. 

21 (b) OBJECTIVES.—The Bureau is authorized to exer22 cise its authorities under Federal consumer financial law 

23 for the purposes of ensuring that, with respect to consumer 

24 financial products and services— 
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1 (1) consumers are provided with timely and un2 derstandable information to make responsible deci3 sions about financial transactions; 

4 (2) consumers are protected from unfair, decep5 tive, or abusive acts and practices and from discrimi6 nation; 

7 (3) outdated, unnecessary, or unduly burdensome 

8 regulations are regularly identified and addressed in 

9 order to reduce unwarranted regulatory burdens; 

10 (4) Federal consumer financial law is enforced 

11 consistently, without regard to the status of a person 

12 as a depository institution, in order to promote fair 

13 competition; and 

14 (5) markets for consumer financial products and 

15 services operate transparently and efficiently to facili16 tate access and innovation. 

17 (c) FUNCTIONS.—The primary functions of the Bureau 

18 are— 

19 (1) conducting financial education programs; 

20 (2) collecting, investigating, and responding to 

21 consumer complaints; 

22 (3) collecting, researching, monitoring, and pub23 lishing information relevant to the functioning of 

24 markets for consumer financial products and services 
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1 to identify risks to consumers and the proper func2 tioning of such markets; 

3 (4) subject to sections 1024 through 1026, super4 vising covered persons for compliance with Federal 

5 consumer financial law, and taking appropriate en6 forcement action to address violations of Federal con7 sumer financial law; 

8 (5) issuing rules, orders, and guidance imple9 menting Federal consumer financial law; and 

10 (6) performing such support activities as may be 

11 necessary or useful to facilitate the other functions of 

12 the Bureau. 

13 SEC. 1022. RULEMAKING AUTHORITY. 

14 (a) IN GENERAL.—The Bureau is authorized to exer15 cise its authorities under Federal consumer financial law 

16 to administer, enforce, and otherwise implement the provi17 sions of Federal consumer financial law. 

18 (b) RULEMAKING, ORDERS, AND GUIDANCE.— 

19 (1) GENERAL AUTHORITY.—The Director may 

20 prescribe rules and issue orders and guidance, as may 

21 be necessary or appropriate to enable the Bureau to 

22 administer and carry out the purposes and objectives 

23 of the Federal consumer financial laws, and to pre24 vent evasions thereof. 
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1 (2) STANDARDS FOR RULEMAKING.—In pre2 scribing a rule under the Federal consumer financial 

3 laws— 

4 (A) the Bureau shall consider the potential 

5 benefits and costs to consumers and covered per6 sons, including the potential reduction of access 

7 by consumers to consumer financial products or 

8 services resulting from such rule; 

9 (B) the Bureau shall consult with the ap10 propriate prudential regulators or other Federal 

11 agencies prior to proposing a rule and during 

12 the comment process regarding consistency with 

13 prudential, market, or systemic objectives admin14 istered by such agencies; and 

15 (C) if, during the consultation process de16 scribed in subparagraph (B), a prudential regu17 lator provides the Bureau with a written objec18 tion to the proposed rule of the Bureau or a por19 tion thereof, the Bureau shall include in the 

20 adopting release a description of the objection 

21 and the basis for the Bureau decision, if any, re22 garding such objection, except that nothing in 

23 this clause shall be construed as altering or lim24 iting the procedures under section 1023 that may 

25 apply to any rule prescribed by the Bureau. 
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1 (3) EXEMPTIONS.— 

2 (A) IN GENERAL.—The Bureau, by rule, 

3 may conditionally or unconditionally exempt 

4 any class of covered persons, service providers, or 

5 consumer financial products or services, from 

6 any provision of this title, or from any rule 

7 issued under this title, as the Bureau determines 

8 necessary or appropriate to carry out the pur9 poses and objectives of this title, taking into con10 sideration the factors in subparagraph (B). 

11 (B) FACTORS.—In issuing an exemption, as 

12 permitted under subparagraph (A), the Bureau 

13 shall, as appropriate, take into consideration— 

14 (i) the total assets of the class of cov15 ered persons; 

16 (ii) the volume of transactions involv17 ing consumer financial products or services 

18 in which the class of covered persons en19 gages; and 

20 (iii) existing provisions of law which 

21 are applicable to the consumer financial 

22 product or service and the extent to which 

23 such provisions provide consumers with 

24 adequate protections. 
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1 (4) EXCLUSIVE RULEMAKING AUTHORITY.—Not2 withstanding any other provisions of Federal law and 

3 except as provided in section 1061(b)(5), to the extent 

4 that a provision of Federal consumer financial law 

5 authorizes the Bureau and another Federal agency to 

6 issue regulations under that provision of law for pur7 poses of assuring compliance with Federal consumer 

8 financial law and any regulations thereunder, the 

9 Bureau shall have the exclusive authority to prescribe 

10 rules subject to those provisions of law. 

11 (c) MONITORING.— 

12 (1) IN GENERAL.—In order to support its rule13 making and other functions, the Bureau shall monitor 

14 for risks to consumers in the offering or provision of 

15 consumer financial products or services, including de16 velopments in markets for such products or services. 

17 (2) CONSIDERATIONS.—In allocating its re18 sources to perform the monitoring required by this 

19 section, the Bureau may consider, among other fac20 tors— 

21 (A) likely risks and costs to consumers asso22 ciated with buying or using a type of consumer 

23 financial product or service; 
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1 (B) understanding by consumers of the risks 

2 of a type of consumer financial product or serv3 ice; 

4 (C) the legal protections applicable to the 

5 offering or provision of a consumer financial 

6 product or service, including the extent to which 

7 the law is likely to adequately protect consumers; 

8 (D) rates of growth in the offering or provi9 sion of a consumer financial product or service; 

10 (E) the extent, if any, to which the risks of 

11 a consumer financial product or service may dis12 proportionately affect traditionally underserved 

13 consumers; or 

14 (F) the types, number, and other pertinent 

15 characteristics of covered persons that offer or 

16 provide the consumer financial product or serv17 ice. 

18 (3) REPORTS.—The Bureau shall publish not 

19 fewer than 1 report of significant findings of its mon20 itoring required by this subsection in each calendar 

21 year, beginning with the first calendar year that be22 gins at least 1 year after the designated transfer date. 

23 (4) COLLECTION OF INFORMATION.—In con24 ducting research on the offering and provision of con25 sumer financial products or services, the Bureau shall 
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1 have the authority to gather information from time to 

2 time regarding the organization, business conduct, 

3 markets, and activities of persons operating in con4 sumer financial services markets. In order to gather 

5 such information, the Bureau may— 

6 (A) gather and compile information from 

7 examination reports concerning covered persons 

8 or service providers, assessment of consumer com9 plaints, surveys, and interviews of covered per10 sons and consumers, and review of available 

11 databases; 

12 (B) require persons to file with the Bureau, 

13 under oath or otherwise, in such form and with14 in such reasonable period of time as the Bureau 

15 may prescribe, by rule or order, annual or spe16 cial reports, or answers in writing to specific 

17 questions, furnishing such information as the 

18 Bureau may require; and 

19 (C) make public such information obtained 

20 by the Bureau under this section, as is in the 

21 public interest in reports or otherwise in the 

22 manner best suited for public information and 

23 use. 

24 (5) CONFIDENTIALITY RULES.—The Bureau shall 

25 prescribe rules regarding the confidential treatment of 
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1 information obtained from persons in connection with 

2 the exercise of its authorities under Federal consumer 

3 financial law. 

4 (A) ACCESS BY THE BUREAU TO REPORTS

5 OF OTHER REGULATORS.— 

6 (i) EXAMINATION AND FINANCIAL CON7 DITION REPORTS.—Upon providing reason8 able assurances of confidentiality, the Bu9 reau shall have access to any report of ex10 amination or financial condition made by a 

11 prudential regulator or other Federal agen12 cy having jurisdiction over a covered person 

13 or service provider, and to all revisions 

14 made to any such report. 

15 (ii) PROVISION OF OTHER REPORTS TO

16 THE BUREAU.—In addition to the reports 

17 described in clause (i), a prudential regu18 lator or other Federal agency having juris19 diction over a covered person or service pro20 vider may, in its discretion, furnish to the 

21 Bureau any other report or other confiden22 tial supervisory information concerning 

23 any insured depository institution, credit 

24 union, or other entity examined by such 
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1 agency under authority of any provision of 

2 Federal law. 

3 (B) ACCESS BY OTHER REGULATORS TO RE4 PORTS OF THE BUREAU.— 

5 (i) EXAMINATION REPORTS.—Upon 

6 providing reasonable assurances of confiden7 tiality, a prudential regulator, a State reg8 ulator, or any other Federal agency having 

9 jurisdiction over a covered person or service 

10 provider shall have access to any report of 

11 examination made by the Bureau with re12 spect to such person, and to all revisions 

13 made to any such report. 

14 (ii) PROVISION OF OTHER REPORTS TO

15 OTHER REGULATORS.—In addition to the 

16 reports described in clause (i), the Bureau 

17 may, in its discretion, furnish to a pruden18 tial regulator or other agency having juris19 diction over a covered person or service pro20 vider any other report or other confidential 

21 supervisory information concerning such 

22 person examined by the Bureau under the 

23 authority of any other provision of Federal 

24 law. 
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1 (6) PRIVACY CONSIDERATIONS.—In collecting in2 formation from any person, publicly releasing infor3 mation held by the Bureau, or requiring covered per4 sons to publicly report information, the Bureau shall 

5 take steps to ensure that proprietary, personal, or 

6 confidential consumer information that is protected 

7 from public disclosure under section 552(b) or 552a 

8 of title 5, United States Code, or any other provision 

9 of law, is not made public under this title. 

10 (d) ASSESSMENT OF SIGNIFICANT RULES.— 

11 (1) IN GENERAL.—The Bureau shall conduct an 

12 assessment of each significant rule or order adopted 

13 by the Bureau under Federal consumer financial law. 

14 The assessment shall address, among other relevant 

15 factors, the effectiveness of the rule or order in meet16 ing the purposes and objectives of this title and the 

17 specific goals stated by the Bureau. The assessment 

18 shall reflect available evidence and any data that the 

19 Bureau reasonably may collect. 

20 (2) REPORTS.—The Bureau shall publish a re21 port of its assessment under this subsection not later 

22 than 5 years after the effective date of the subject rule 

23 or order. 

24 (3) PUBLIC COMMENT REQUIRED.—Before pub25 lishing a report of its assessment, the Bureau shall in-
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1 vite public comment on recommendations for modi2 fying, expanding, or eliminating the newly adopted 

3 significant rule or order. 

4 (e) INFORMATION GATHERING.—In conducting any 

5 monitoring or assessment required by this section, the Bu6 reau may gather information through a variety of methods, 

7 including by conducting surveys or interviews of consumers. 

8 SEC. 1023. REVIEW OF BUREAU REGULATIONS. 

9 (a) REVIEW OF BUREAU REGULATIONS.—On the peti10 tion of a member agency of the Council, the Council may 

11 set aside a final regulation prescribed by the Bureau, or 

12 any provision thereof, if the Council decides, in accordance 

13 with subsection (c), that the regulation or provision would 

14 put the safety and soundness of the United States banking 

15 system or the stability of the financial system of the United 

16 States at risk. 

17 (b) PETITION.— 

18 (1) PROCEDURE.—An agency represented by a 

19 member of the Council may petition the Council, in 

20 writing, and in accordance with rules prescribed pur21 suant to subsection (f), to stay the effectiveness of, or 

22 set aside, a regulation if the member agency filing the 

23 petition— 

24 (A) has in good faith attempted to work 

25 with the Bureau to resolve concerns regarding 
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1 the effect of the rule on the safety and soundness 

2 of the United States banking system or the sta3 bility of the financial system of the United 

4 States; and 

5 (B) files the petition with the Council not 

6 later than 10 days after the date on which the 

7 regulation has been published in the Federal 

8 Register. 

9 (2) PUBLICATION.—Any petition filed with the 

10 Council under this section shall be published in the 

11 Federal Register and transmitted contemporaneously 

12 with filing to the Committee on Banking, Housing, 

13 and Urban Affairs of the Senate and the Committee 

14 on Financial Services of the House of Representatives. 

15 (c) STAYS AND SET ASIDES.— 

16 (1) STAY.— 

17 (A) IN GENERAL.—Upon the request of any 

18 member agency, the Chairperson of the Council 

19 may stay the effectiveness of a regulation for the 

20 purpose of allowing appropriate consideration of 

21 the petition by the Council. 

22 (B) EXPIRATION.—A stay issued under this 

23 paragraph shall expire on the earlier of— 

24 (i) 90 days after the date of filing of 

25 the petition under subsection (b); or 
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1 (ii) the date on which the Council 

2 makes a decision under paragraph (3). 

3 (2) NO ADVERSE INFERENCE.—After the expira4 tion of any stay imposed under this section, no infer5 ence shall be drawn regarding the validity or enforce6 ability of a regulation which was the subject of the pe7 tition. 

8 (3) VOTE.— 

9 (A) IN GENERAL.—The decision to issue a 

10 stay of, or set aside, any regulation under this 

11 section shall be made only with the affirmative 

vote in accordance with subparagraph (B) of 2 12 ⁄3

13 of the members of the Council then serving. 

14 (B) AUTHORIZATION TO VOTE.—A member 

15 of the Council may vote to stay the effectiveness 

16 of, or set aside, a final regulation prescribed by 

17 the Bureau only if the agency or department 

18 represented by that member has— 

19 (i) considered any relevant informa20 tion provided by the agency submitting the 

21 petition and by the Bureau; and 

22 (ii) made an official determination, at 

23 a public meeting where applicable, that the 

24 regulation which is the subject of the peti25 tion would put the safety and soundness of 
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1 the United States banking system or the 

2 stability of the financial system of the 

3 United States at risk. 

4 (4) DECISIONS TO SET ASIDE.— 

5 (A) EFFECT OF DECISION.—A decision by 

6 the Council to set aside a regulation prescribed 

7 by the Bureau, or provision thereof, shall render 

8 such regulation, or provision thereof, unenforce9 able. 

10 (B) TIMELY ACTION REQUIRED.—The Coun11 cil may not issue a decision to set aside a regu12 lation, or provision thereof, which is the subject 

13 of a petition under this section after the expira14 tion of the later of— 

15 (i) 45 days following the date of filing 

16 of the petition, unless a stay is issued under 

17 paragraph (1); or 

18 (ii) the expiration of a stay issued by 

19 the Council under this section. 

20 (C) SEPARATE AUTHORITY.—The issuance 

21 of a stay under this section does not affect the 

22 authority of the Council to set aside a regula23 tion. 

24 (5) DISMISSAL DUE TO INACTION.—A petition 

25 under this section shall be deemed dismissed if the 
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1 Council has not issued a decision to set aside a regu2 lation, or provision thereof, within the period for 

3 timely action under paragraph (4)(B). 

4 (6) PUBLICATION OF DECISION.—Any decision 

5 under this subsection to issue a stay of, or set aside, 

6 a regulation or provision thereof shall be published by 

7 the Council in the Federal Register as soon as prac8 ticable after the decision is made, with an expla9 nation of the reasons for the decision. 

10 (7) RULEMAKING PROCEDURES INAPPLICABLE.— 

11 The notice and comment procedures under section 553 

12 of title 5, United States Code, shall not apply to any 

13 decision under this section of the Council to issue a 

14 stay of, or set aside, a regulation. 

15 (8) JUDICIAL REVIEW OF DECISIONS BY THE

16 COUNCIL.—A decision by the Council to set aside a 

17 regulation prescribed by the Bureau, or provision 

18 thereof, shall be subject to review under chapter 7 of 

19 title 5, United States Code. 

20 (d) APPLICATION OF OTHER LAW.—Nothing in this 

21 section shall be construed as altering, limiting, or restrict22 ing the application of any other provision of law, except 

23 as otherwise specifically provided in this section, including 

24 chapter 5 and chapter 7 of title 5, United States Code, to 
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1 a regulation which is the subject of a petition filed under 

2 this section. 

3 (e) SAVINGS CLAUSE.—Nothing in this section shall be 

4 construed as limiting or restricting the Bureau from engag5 ing in a rulemaking in accordance with applicable law. 

6 (f) IMPLEMENTING RULES.—The Council shall pre7 scribe procedural rules to implement this section. 

8 SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED 

9 PERSONS. 

10 (a) SCOPE OF COVERAGE.— 

11 (1) APPLICABILITY.—Notwithstanding any other 

12 provision of this title, and except as provided in 

13 paragraph (3), this section shall apply to any covered 

14 person who— 

15 (A) offers or provides origination, broker16 age, or servicing of loans secured by real estate 

17 for use by consumers primarily for personal, 

18 family, or household purposes, or loan modifica19 tion or foreclosure relief services in connection 

20 with such loans; or 

21 (B) is a larger participant of a market for 

22 other consumer financial products or services, as 

23 defined by rule in accordance with paragraph 

24 (2). 
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1 (2) RULEMAKING TO DEFINE COVERED PERSONS

2 SUBJECT TO THIS SECTION.—The Bureau shall con3 sult with the Federal Trade Commission prior to 

4 issuing a rule to define covered persons subject to this 

5 section, in accordance with paragraph (1)(B). The 

6 Bureau shall issue its initial rule within 1 year of the 

7 designated transfer date. 

8 (3) RULES OF CONSTRUCTION.— 

9 (A) CERTAIN PERSONS EXCLUDED.—This 

10 section shall not apply to persons described in 

11 section 1025(a) or 1026(a). 

12 (B) ACTIVITY LEVELS.—For purposes of 

13 computing activity levels under paragraph (1) or 

14 rules issued thereunder, activities of affiliated 

15 companies (other than insured depository insti16 tutions or insured credit unions) shall be aggre17 gated. 

18 (b) SUPERVISION.— 

19 (1) IN GENERAL.—The Bureau shall require re20 ports and conduct examinations on a periodic basis 

21 of persons described in subsection (a)(1) for purposes 

22 of— 

23 (A) assessing compliance with the require24 ments of Federal consumer financial law; 
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1 (B) obtaining information about the activi2 ties and compliance systems or procedures of 

3 such person; and 

4 (C) detecting and assessing risks to con5 sumers and to markets for consumer financial 

6 products and services. 

7 (2) RISK-BASED SUPERVISION PROGRAM.—The 

8 Bureau shall exercise its authority under paragraph 

9 (1) in a manner designed to ensure that such exercise, 

10 with respect to persons described in subsection (a)(1), 

11 is based on the assessment by the Bureau of the risks 

12 posed to consumers in the relevant product markets 

13 and geographic markets, and taking into consider14 ation, as applicable— 

15 (A) the asset size of the covered person; 

16 (B) the volume of transactions involving 

17 consumer financial products or services in which 

18 the covered person engages; 

19 (C) the risks to consumers created by the 

20 provision of such consumer financial products or 

21 services; 

22 (D) the extent to which such institutions are 

23 subject to oversight by State authorities for con24 sumer protection; and 
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1 (E) any other factors that the Bureau deter2 mines to be relevant to a class of covered persons. 

3 (3) COORDINATION.—To minimize regulatory 

4 burden, the Bureau shall coordinate its supervisory 

5 activities with the supervisory activities conducted by 

6 prudential regulators and the State bank regulatory 

7 authorities, including establishing their respective 

8 schedules for examining persons described in sub9 section (a)(1) and requirements regarding reports to 

10 be submitted by such persons. 

11 (4) USE OF EXISTING REPORTS.—The Bureau 

12 shall, to the fullest extent possible, use— 

13 (A) reports pertaining to persons described 

14 in subsection (a)(1) that have been provided or 

15 required to have been provided to a Federal or 

16 State agency; and 

17 (B) information that has been reported pub18 licly. 

19 (5) PRESERVATION OF AUTHORITY.—Nothing in 

20 this title may be construed as limiting the authority 

21 of the Director to require reports from persons de22 scribed in subsection (a)(1), as permitted under para23 graph (1), regarding information owned or under the 

24 control of such person, regardless of whether such in-
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1 formation is maintained, stored, or processed by an2 other person. 

3 (6) REPORTS OF TAX LAW NONCOMPLIANCE.— 

4 The Bureau shall provide the Commissioner of Inter5 nal Revenue with any report of examination or re6 lated information identifying possible tax law non7 compliance. 

8 (7) REGISTRATION, RECORDKEEPING, AND

9 OTHER REQUIREMENTS FOR CERTAIN PERSONS.— 

10 (A) IN GENERAL.—The Bureau shall pre11 scribe rules to facilitate supervision of persons 

12 described in subsection (a)(1) and assessment 

13 and detection of risks to consumers. 

14 (B) REGISTRATION.— 

15 (i) IN GENERAL.—The Bureau shall 

16 prescribe rules regarding registration re17 quirements for persons described in sub18 section (a)(1). 

19 (ii) EXCEPTION FOR RELATED PER20 SONS.—The Bureau may not impose re21 quirements under this section regarding the 

22 registration of a related person. 

23 (iii) REGISTRATION INFORMATION.— 

24 Subject to rules prescribed by the Bureau, 

25 the Bureau shall publicly disclose the reg-
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1 istration information about persons de2 scribed in subsection (a)(1) to facilitate the 

3 ability of consumers to identify persons de4 scribed in subsection (a)(1) registered with 

5 the Bureau. 

6 (C) RECORDKEEPING.—The Bureau may 

7 require a person described in subsection (a)(1), 

8 to generate, provide, or retain records for the 

9 purposes of facilitating supervision of such per10 sons and assessing and detecting risks to con11 sumers. 

12 (D) REQUIREMENTS CONCERNING OBLIGA13 TIONS.—The Bureau may prescribe rules regard14 ing a person described in subsection (a)(1), to 

15 ensure that such persons are legitimate entities 

16 and are able to perform their obligations to con17 sumers. Such requirements may include back18 ground checks for principals, officers, directors, 

19 or key personnel and bonding or other appro20 priate financial requirements. 

21 (E) CONSULTATION WITH STATE AGEN22 CIES.—In developing and implementing require23 ments under this paragraph, the Bureau shall 

24 consult with State agencies regarding require25 ments or systems (including coordinated or com-
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1 bined systems for registration), where appro2 priate. 

3 (c) ENFORCEMENT AUTHORITY.— 

4 (1) THE BUREAU TO HAVE ENFORCEMENT AU5 THORITY.—Except as provided in paragraph (3) and 

6 section 1061(b)(5), with respect to any person de7 scribed in subsection (a)(1), to the extent that Federal 

8 law authorizes the Bureau and another Federal agen9 cy to enforce Federal consumer financial law, the Bu10 reau shall have exclusive authority to enforce that 

11 Federal consumer financial law. 

12 (2) REFERRAL.—Any Federal agency authorized 

13 to enforce a Federal consumer financial law described 

14 in paragraph (1) may recommend in writing to the 

15 Bureau that the Bureau initiate an enforcement pro16 ceeding, as the Bureau is authorized by that Federal 

17 law or by this title. 

18 (3) COORDINATION WITH THE FEDERAL TRADE

19 COMMISSION.— 

20 (A) IN GENERAL.—The Bureau and the 

21 Federal Trade Commission shall negotiate an 

22 agreement for coordinating with respect to en23 forcement actions by each agency regarding the 

24 offering or provision of consumer financial prod25 ucts or services by any covered person that is de-
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1 scribed in subsection (a)(1), or service providers 

2 thereto. The agreement shall include procedures 

3 for notice to the other agency, where feasible, 

4 prior to initiating a civil action to enforce any 

5 Federal law regarding the offering or provision 

6 of consumer financial products or services. 

7 (B) CIVIL ACTIONS.—Whenever a civil ac8 tion has been filed by, or on behalf of, the Bu9 reau or the Federal Trade Commission for any 

10 violation of any provision of Federal law de11 scribed in subparagraph (A), or any regulation 

12 prescribed under such provision of law— 

13 (i) the other agency may not, during 

14 the pendency of that action, institute a civil 

15 action under such provision of law against 

16 any defendant named in the complaint in 

17 such pending action for any violation al18 leged in the complaint; and 

19 (ii) the Bureau or the Federal Trade 

20 Commission may intervene as a party in 

21 any such action brought by the other agen22 cy, and, upon intervening— 

23 (I) be heard on all matters arising 

24 in such enforcement action; and 
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1 (II) file petitions for appeal in 

2 such actions. 

3 (C) AGREEMENT TERMS.—The terms of any 

4 agreement negotiated under subparagraph (A) 

5 may modify or supersede the provisions of sub6 paragraph (B). 

7 (D) DEADLINE.—The agencies shall reach 

8 the agreement required under subparagraph (A) 

9 not later than 6 months after the designated 

10 transfer date. 

11 (d) EXCLUSIVE RULEMAKING AND EXAMINATION AU12 THORITY.—Notwithstanding any other provision of Federal 

13 law and except as provided in section 1061(b)(5), to the 

14 extent that Federal law authorizes the Bureau and another 

15 Federal agency to issue regulations or guidance, conduct ex16 aminations, or require reports from a person described in 

17 subsection (a)(1) under such law for purposes of assuring 

18 compliance with Federal consumer financial law and any 

19 regulations thereunder, the Bureau shall have the exclusive 

20 authority to prescribe rules, issue guidance, conduct exami21 nations, require reports, or issue exemptions with regard 

22 to a person described in subsection (a)(1), subject to those 

23 provisions of law. 

24 (e) SERVICE PROVIDERS.—A service provider to a per25 son described in subsection (a)(1) shall be subject to the au-
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1 thority of the Bureau under this section, to the same extent 

2 as if such service provider were engaged in a service rela3 tionship with a bank, and the Bureau were an appropriate 

4 Federal banking agency under section 7(c) of the Bank 

5 Service Company Act (12 U.S.C. 1867(c)). In conducting 

6 any examination or requiring any report from a service 

7 provider subject to this subsection, the Bureau shall coordi8 nate with the appropriate prudential regulator, as applica9 ble. 

10 (f) PRESERVATION OF FARM CREDIT ADMINISTRATION

11 AUTHORITY.—No provision of this title may be construed 

12 as modifying, limiting, or otherwise affecting the authority 

13 of the Farm Credit Administration. 

14 SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS 

15 ASSOCIATIONS, AND CREDIT UNIONS. 

16 (a) SCOPE OF COVERAGE.— 

17 (1) APPLICABILITY.—This section shall apply to 

18 any covered person that is— 

19 (A) an insured depository institution with 

20 total assets of more than $10,000,000,000 and 

21 any affiliate thereof; or 

22 (B) an insured credit union with total as23 sets of more than $10,000,000,000 and any affil24 iate thereof. 
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1 (2) RULE OF CONSTRUCTION.—For purposes of 

2 determining total assets under this section and section 

3 1026, the Bureau shall rely on the same regulations 

4 and interim methodologies specified in section 312(e). 

5 (b) SUPERVISION.— 

6 (1) IN GENERAL.—The Bureau shall require re7 ports and conduct examinations on a periodic basis 

8 of persons described in subsection (a) for purposes 

9 of— 

10 (A) assessing compliance with the require11 ments of Federal consumer financial laws; 

12 (B) obtaining information about the activi13 ties and compliance systems or procedures of 

14 such persons; and 

15 (C) detecting and assessing risks to con16 sumers and to markets for consumer financial 

17 products and services. 

18 (2) COORDINATION.—To minimize regulatory 

19 burden, the Bureau shall coordinate its supervisory 

20 activities with the supervisory activities conducted by 

21 prudential regulators and the State bank regulatory 

22 authorities, including establishing their respective 

23 schedules for examining such persons described in 

24 subsection (a) and requirements regarding reports to 

25 be submitted by such persons. 
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1 (3) USE OF EXISTING REPORTS.—The Bureau 

2 shall, to the fullest extent possible, use— 

3 (A) reports pertaining to a person described 

4 in subsection (a) that have been provided or re5 quired to have been provided to a Federal or 

6 State agency; and 

7 (B) information that has been reported pub8 licly. 

9 (4) PRESERVATION OF AUTHORITY.—Nothing in 

10 this title may be construed as limiting the authority 

11 of the Director to require reports from a person de12 scribed in subsection (a), as permitted under para13 graph (1), regarding information owned or under the 

14 control of such person, regardless of whether such in15 formation is maintained, stored, or processed by an16 other person. 

17 (5) REPORTS OF TAX LAW NONCOMPLIANCE.— 

18 The Bureau shall provide the Commissioner of Inter19 nal Revenue with any report of examination or re20 lated information identifying possible tax law non21 compliance. 

22 (c) PRIMARY ENFORCEMENT AUTHORITY.— 

23 (1) THE BUREAU TO HAVE PRIMARY ENFORCE24 MENT AUTHORITY.—To the extent that the Bureau 

25 and another Federal agency are authorized to enforce 
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1 a Federal consumer financial law, the Bureau shall 

2 have primary authority to enforce that Federal con3 sumer financial law with respect to any person de4 scribed in subsection (a). 

5 (2) REFERRAL.—Any Federal agency, other than 

6 the Federal Trade Commission, that is authorized to 

7 enforce a Federal consumer financial law may rec8 ommend, in writing, to the Bureau that the Bureau 

9 initiate an enforcement proceeding with respect to a 

10 person described in subsection (a), as the Bureau is 

11 authorized to do by that Federal consumer financial 

12 law. 

13 (3) BACKUP ENFORCEMENT AUTHORITY OF

14 OTHER FEDERAL AGENCY.—If the Bureau does not, 

15 before the end of the 120-day period beginning on the 

16 date on which the Bureau receives a recommendation 

17 under paragraph (2), initiate an enforcement pro18 ceeding, the other agency referred to in paragraph (2) 

19 may initiate an enforcement proceeding, as permitted 

20 by the subject provision of Federal law. 

21 (d) SERVICE PROVIDERS.—A service provider to a per22 son described in subsection (a) shall be subject to the author23 ity of the Bureau under this section, to the same extent as 

24 if the Bureau were an appropriate Federal banking agency 

25 under section 7(c) of the Bank Service Company Act 12 
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† HR 4173 EAS 

1 U.S.C. 1867(c). In conducting any examination or requir2 ing any report from a service provider subject to this sub3 section, the Bureau shall coordinate with the appropriate 

4 prudential regulator. 

5 (e) SIMULTANEOUS AND COORDINATED SUPERVISORY

6 ACTION.— 

7 (1) EXAMINATIONS.—A prudential regulator and 

8 the Bureau shall, with respect to each insured deposi9 tory institution, insured credit union, or other cov10 ered person described in subsection (a) that is super11 vised by the prudential regulator and the Bureau, re12 spectively— 

13 (A) coordinate the scheduling of examina14 tions of the insured depository institution, in15 sured credit union, or other covered person de16 scribed in subsection (a); 

17 (B) conduct simultaneous examinations of 

18 each insured depository institution, insured cred19 it union, or other covered person described in 

20 subsection (a), unless such institution requests 

21 examinations to be conducted separately; 

22 (C) share each draft report of examination 

23 with the other agency and permit the receiving 

24 agency a reasonable opportunity (which shall not 

25 be less than a period of 30 days after the date 
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† HR 4173 EAS 

1 of receipt) to comment on the draft report before 

2 such report is made final; and 

3 (D) prior to issuing a final report of exam4 ination or taking supervisory action, take into 

5 consideration concerns, if any, raised in the 

6 comments made by the other agency. 

7 (2) COORDINATION WITH STATE BANK SUPER8 VISORS.—The Bureau shall pursue arrangements and 

9 agreements with State bank supervisors to coordinate 

10 examinations, consistent with paragraph (1). 

11 (3) AVOIDANCE OF CONFLICT IN SUPERVISION.— 

12 (A) REQUEST.—If the proposed supervisory 

13 determinations of the Bureau and a prudential 

14 regulator (in this section referred to collectively 

15 as the ‘‘agencies’’) are conflicting, an insured de16 pository institution, insured credit union, or 

17 other covered person described in subsection (a) 

18 may request the agencies to coordinate and 

19 present a joint statement of coordinated super20 visory action. 

21 (B) JOINT STATEMENT.—The agencies shall 

22 provide a joint statement under subparagraph 

23 (A), not later than 30 days after the date of re24 ceipt of the request of the insured depository in-
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1 stitution, credit union, or covered person de2 scribed in subsection (a). 

3 (4) APPEALS TO GOVERNING PANEL.— 

4 (A) IN GENERAL.—If the agencies do not re5 solve the conflict or issue a joint statement re6 quired by subparagraph (B), or if either of the 

7 agencies takes or attempts to take any super8 visory action relating to the request for the joint 

9 statement without the consent of the other agen10 cy, an insured depository institution, insured 

11 credit union, or other covered person described in 

12 subsection (a) may institute an appeal to a gov13 erning panel, as provided in this subsection, not 

14 later than 30 days after the expiration of the pe15 riod during which a joint statement is required 

16 to be filed under paragraph (3)(B). 

17 (B) COMPOSITION OF GOVERNING PANEL.— 

18 The governing panel for an appeal under this 

19 paragraph shall be composed of— 

20 (i) a representative from the Bureau 

21 and a representative of the prudential regu22 lator, both of whom— 

23 (I) have not participated in the 

24 material supervisory determinations 

25 under appeal; and 
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1 (II) do not directly or indirectly 

2 report to the person who participated 

3 materially in the supervisory deter4 minations under appeal; and 

5 (ii) one individual representative, to be 

6 determined on a rotating basis, from among 

7 the Board of Governors, the Corporation, 

8 the National Credit Union Administration, 

9 and the Office of the Comptroller of the Cur10 rency, other than any agency involved in 

11 the subject dispute. 

12 (C) CONDUCT OF APPEAL.—In an appeal 

13 under this paragraph— 

14 (i) the insured depository institution, 

15 insured credit union, or other covered per16 son described in subsection (a)— 

17 (I) shall include in its appeal all 

18 the facts and legal arguments per19 taining to the matter; and 

20 (II) may, through counsel, em21 ployees, or representatives, appear be22 fore the governing panel in person or 

23 by telephone; and 

24 (ii) the governing panel— 
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1 (I) may request the insured depos2 itory institution, insured credit union, 

3 or other covered person described in 

4 subsection (a), the Bureau, or the pru5 dential regulator to produce additional 

6 information relevant to the appeal; 

7 and 

8 (II) by a majority vote of its 

9 members, shall provide a final deter10 mination, in writing, not later than 30 

11 days after the date of filing of an 

12 informationally complete appeal, or 

13 such longer period as the panel and the 

14 insured depository institution, insured 

15 credit union, or other covered person 

16 described in subsection (a) may jointly 

17 agree. 

18 (D) PUBLIC AVAILABILITY OF DETERMINA19 TIONS.—A governing panel shall publish all in20 formation contained in a determination by the 

21 governing panel, with appropriate redactions of 

22 information that would be subject to an exemp23 tion from disclosure under section 552 of title 5, 

24 United States Code. 
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1 (E) PROHIBITION AGAINST RETALIATION.— 

2 The Bureau and the prudential regulators shall 

3 prescribe rules to provide safeguards from retal4 iation against the insured depository institution, 

5 insured credit union, or other covered person de6 scribed in subsection (a) instituting an appeal 

7 under this paragraph, as well as their officers 

8 and employees. 

9 (F) LIMITATION.—The process provided in 

10 this paragraph shall not apply to a determina11 tion by a prudential regulator to appoint a con12 servator or receiver for an insured depository in13 stitution or a liquidating agent for an insured 

14 credit union, as the case may be, or a decision 

15 to take action pursuant to section 38 of the Fed16 eral Deposit Insurance Act (12 U.S.C. 1831o) or 

17 section 212 of the Federal Credit Union Act (112 

18 U.S.C. 1790a), as applicable. 

19 (G) EFFECT ON OTHER AUTHORITY.—Noth20 ing in this section shall modify or limit the au21 thority of the Bureau to interpret, or take en22 forcement action under, any Federal consumer 

23 financial law. 
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1 SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND 

2 CREDIT UNIONS. 

3 (a) SCOPE OF COVERAGE.—This section shall apply 

4 to any covered person that is— 

5 (1) an insured depository institution with total 

6 assets of $10,000,000,000 or less; or 

7 (2) an insured credit union with total assets of 

8 $10,000,000,000 or less. 

9 (b) REPORTS.—The Director may require reports from 

10 a person described in subsection (a), as necessary to support 

11 the role of the Bureau in implementing Federal consumer 

12 financial law, to support its examination activities under 

13 subsection (c), and to assess and detect risks to consumers 

14 and consumer financial markets. 

15 (1) USE OF EXISTING REPORTS.—The Bureau 

16 shall, to the fullest extent possible, use— 

17 (A) reports pertaining to a person described 

18 in subsection (a) that have been provided or re19 quired to have been provided to a Federal or 

20 State agency; and 

21 (B) information that has been reported pub22 licly. 

23 (2) PRESERVATION OF AUTHORITY.—Nothing in 

24 this subsection may be construed as limiting the au25 thority of the Director from requiring from a person 

26 described in subsection (a), as permitted under para-
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1 graph (1), information owned or under the control of 

2 such person, regardless of whether such information is 

3 maintained, stored, or processed by another person. 

4 (3) REPORTS OF TAX LAW NONCOMPLIANCE.— 

5 The Bureau shall provide the Commissioner of Inter6 nal Revenue with any report of examination or re7 lated information identifying possible tax law non8 compliance. 

9 (c) EXAMINATIONS.— 

10 (1) IN GENERAL.—The Bureau may, at its dis11 cretion, include examiners on a sampling basis of the 

12 examinations performed by the prudential regulator 

13 of persons described in subsection (a). 

14 (2) AGENCY COORDINATION.—The prudential 

15 regulator shall— 

16 (A) provide all reports, records, and docu17 mentation related to the examination process for 

18 any institution included in the sample referred 

19 to in paragraph (1) to the Bureau on a timely 

20 and continual basis; 

21 (B) involve such Bureau examiner in the 

22 entire examination process for such person; and 

23 (C) consider input of the Bureau concerning 

24 the scope of an examination, conduct of the ex25 amination, the contents of the examination re-
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† HR 4173 EAS 

1 port, the designation of matters requiring atten2 tion, and examination ratings. 

3 (d) ENFORCEMENT.— 

4 (1) IN GENERAL.—Except for requiring reports 

5 under subsection (b), the prudential regulator shall 

6 have exclusive authority to enforce compliance with 

7 respect to a person described in subsection (a). 

8 (2) COORDINATION WITH PRUDENTIAL REGU9 LATOR.— 

10 (A) REFERRAL.—When the Bureau has rea11 son to believe that a person described in sub12 section (a) has engaged in a material violation 

13 of a Federal consumer financial law, the Bureau 

14 shall notify the prudential regulator in writing 

15 and recommend appropriate action to respond. 

16 (B) RESPONSE.—Upon receiving a rec17 ommendation under subparagraph (A), the pru18 dential regulator shall provide a written re19 sponse to the Bureau not later than 60 days 

20 thereafter. 

21 (e) SERVICE PROVIDERS.—A service provider to a sub22 stantial number of persons described in subsection (a) shall 

23 be subject to the authority of the Bureau under section 1025 

24 to the same extent as if the Bureau were an appropriate 

25 Federal bank agency under section 7(c) of the Bank Service 
1287 

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1 Company Act (12 U.S.C. 1867(c)). When conducting any 

2 examination or requiring any report from a service pro3 vider subject to this subsection, the Bureau shall coordinate 

4 with the appropriate prudential regulator. 

5 SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; 

6 PRESERVATION OF AUTHORITIES. 

7 (a) EXCLUSION FOR MERCHANTS, RETAILERS, AND

8 OTHER SELLERS OF NONFINANCIAL GOODS OR SERV9 ICES.— 

10 (1) SALE OR BROKERAGE OF NONFINANCIAL

11 GOOD OR SERVICE.—The Bureau may not exercise 

12 any rulemaking, supervisory, enforcement or other 

13 authority under this title with respect to a person 

14 who is a merchant, retailer, or seller of any non15 financial good or service and is engaged in the sale 

16 or brokerage of such nonfinancial good or service, ex17 cept to the extent that such person is engaged in offer18 ing or providing any consumer financial product or 

19 service, or is otherwise subject to any enumerated con20 sumer law or any law for which authorities are 

21 transferred under subtitle F or H. 

22 (2) OFFERING OR PROVISION OF CERTAIN CON23 SUMER FINANCIAL PRODUCTS OR SERVICES IN CON24 NECTION WITH THE SALE OR BROKERAGE OF NON25 FINANCIAL GOOD OR SERVICE.— 
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1 (A) IN GENERAL.—Except as provided in 

2 subparagraph (B), and subject to subparagraph 

3 (C), the Bureau may not exercise any rule4 making, supervisory, enforcement, or other au5 thority under this title with respect to a mer6 chant, retailer, or seller of nonfinancial goods or 

7 services, but only to the extent that such per8 son— 

9 (i) extends credit directly to a con10 sumer, in a case in which the good or serv11 ice being provided is not itself a consumer 

12 financial product or service (other than 

13 credit described in this subparagraph), ex14 clusively for the purpose of enabling that 

15 consumer to purchase such nonfinancial 

16 good or service directly from the merchant, 

17 retailer, or seller; 

18 (ii) directly, or through an agreement 

19 with another person, collects debt arising 

20 from credit extended as described in clause 

21 (i); or 

22 (iii) sells or conveys debt described in 

23 clause (i) that is delinquent or otherwise in 

24 default. 
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1 (B) APPLICABILITY.—Subparagraph (A) 

2 does not apply to any credit transaction or col3 lection of debt, other than as described in sub4 paragraph (C)(i), arising from a transaction de5 scribed in subparagraph (A)— 

6 (i) in which the merchant, retailer, or 

7 seller of nonfinancial goods or services as8 signs, sells or otherwise conveys to another 

9 person such debt owed by the consumer (ex10 cept for a sale of debt that is delinquent or 

11 otherwise in default, as described in sub12 paragraph (A)(iii)); 

13 (ii) in which the credit extended ex14 ceeds the market value of the nonfinancial 

15 good or service provided, or the Bureau oth16 erwise finds that the sale of the non17 financial good or service is done as a sub18 terfuge, so as to evade or circumvent the 

19 provisions of this title; or 

20 (iii) in which the merchant, retailer, or 

21 seller of nonfinancial goods or services regu22 larly extends credit and the credit is subject 

23 to a finance charge. 

24 (C) LIMITATIONS.— 
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1 (i) IN GENERAL.—Notwithstanding 

2 subparagraph (B), and except as provided 

3 in clause (ii), the Bureau may not exercise 

4 any rulemaking, supervisory, enforcement, 

5 or other authority under this title with re6 spect to a merchant, retailer, or seller of 

7 nonfinancial goods or services that is not 

8 engaged significantly in offering or pro9 viding consumer financial products or serv10 ices. 

11 (ii) EXCEPTION.—Subparagraph (A) 

12 and clause (i) of this subparagraph do not 

13 apply to any merchant, retailer, or seller of 

14 nonfinancial goods or services, to the extent 

15 that such person is subject to any enumer16 ated consumer law or any law for which 

17 authorities are transferred under subtitle F 

18 or H. 

19 (D) RULES.— 

20 (i) AUTHORITY OF OTHER AGEN21 CIES.—No provision of this title shall be 

22 construed as modifying, limiting, or super23 seding the supervisory or enforcement au24 thority of the Federal Trade Commission or 

25 any other agency (other than the Bureau) 
1291 

† HR 4173 EAS 

1 with respect to credit extended, or the collec2 tion of debt arising from such extension, di3 rectly by a merchant or retailer to a con4 sumer exclusively for the purpose of ena5 bling that consumer to purchase non6 financial goods or services directly from the 

7 merchant or retailer. 

8 (ii) SMALL BUSINESSES.—A merchant, 

9 retailer, or seller of nonfinancial goods or 

10 services that would otherwise be subject to 

11 the authority of the Bureau solely by virtue 

12 of the application of subparagraph (B)(iii) 

13 shall be deemed not to be engaged signifi14 cantly in offering or providing consumer fi15 nancial products or services under subpara16 graph (C)(i), if such person— 

17 (I) only extends credit for the sale 

18 of nonfinancial goods or services, as 

19 described in subparagraph (A)(i); 

20 (II) retains such credit on its own 

21 accounts (except to sell or convey such 

22 debt that is delinquent or otherwise in 

23 default); and 

24 (III) meets the relevant industry 

25 size threshold to be a small business 
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1 concern, based on annual receipts, pur2 suant to section 3 of the Small Busi3 ness Act (15 U.S.C. 632) and the im4 plementing rules thereunder. 

5 (iii) INITIAL YEAR.—A merchant, re6 tailer, or seller of nonfinancial goods or 

7 services shall be deemed to meet the relevant 

8 industry size threshold described in clause 

9 (ii)(III) during the first year of operations 

10 of that business concern if, during that 

11 year, the receipts of that business concern 

12 reasonably are expected to meet that size 

13 threshold. 

14 (E) EXCEPTION FROM STATE ENFORCE15 MENT.—To the extent that the Bureau may not 

16 exercise authority under this subsection with re17 spect to a merchant, retailer, or seller of non18 financial goods or services, no action by a State 

19 attorney general or State regulator with respect 

20 to a claim made under this title may be brought 

21 under subsection 1042(a), with respect to an ac22 tivity described in any of clauses (i) through 

23 (iii) of subparagraph (A) by such merchant, re24 tailer, or seller of nonfinancial goods or services. 
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1 (b) EXCLUSION FOR REAL ESTATE BROKERAGE AC2 TIVITIES.— 

3 (1) REAL ESTATE BROKERAGE ACTIVITIES EX4 CLUDED.—Without limiting subsection (a), and ex5 cept as permitted in paragraph (2), the Bureau may 

6 not exercise any rulemaking, supervisory, enforce7 ment, or other authority under this title with respect 

8 to a person that is licensed or registered as a real es9 tate broker or real estate agent, in accordance with 

10 State law, to the extent that such person— 

11 (A) acts as a real estate agent or broker for 

12 a buyer, seller, lessor, or lessee of real property; 

13 (B) brings together parties interested in the 

14 sale, purchase, lease, rental, or exchange of real 

15 property; 

16 (C) negotiates, on behalf of any party, any 

17 portion of a contract relating to the sale, pur18 chase, lease, rental, or exchange of real property 

19 (other than in connection with the provision of 

20 financing with respect to any such transaction); 

21 or 

22 (D) offers to engage in any activity, or act 

23 in any capacity, described in subparagraph (A), 

24 (B), or (C). 
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† HR 4173 EAS 

1 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

2 (1) shall not apply to any person to the extent that 

3 such person is engaged in the offering or provision of 

4 any consumer financial product or service or is other5 wise subject to any enumerated consumer law or any 

6 law for which authorities are transferred under sub7 title F or H. 

8 (c) EXCLUSION FOR MANUFACTURED HOME RETAIL9 ERS AND MODULAR HOME RETAILERS.— 

10 (1) IN GENERAL.—The Director may not exercise 

11 any rulemaking, supervisory, enforcement, or other 

12 authority over a person to the extent that— 

13 (A) such person is not described in para14 graph (2); and 

15 (B) such person— 

16 (i) acts as an agent or broker for a 

17 buyer or seller of a manufactured home or 

18 a modular home; 

19 (ii) facilitates the purchase by a con20 sumer of a manufactured home or modular 

21 home, by negotiating the purchase price or 

22 terms of the sales contract (other than pro23 viding financing with respect to such trans24 action); or 
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† HR 4173 EAS 

1 (iii) offers to engage in any activity 

2 described in clause (i) or (ii). 

3 (2) DESCRIPTION OF ACTIVITIES.—A person is 

4 described in this paragraph to the extent that such 

5 person is engaged in the offering or provision of any 

6 consumer financial product or service or is otherwise 

7 subject to any enumerated consumer law or any law 

8 for which authorities are transferred under subtitle F 

9 or H. 

10 (3) DEFINITIONS.—For purposes of this sub11 section, the following definitions shall apply: 

12 (A) MANUFACTURED HOME.—The term 

13 ‘‘manufactured home’’ has the same meaning as 

14 in section 603 of the National Manufactured 

15 Housing Construction and Safety Standards Act 

16 of 1974 (42 U.S.C. 5402). 

17 (B) MODULAR HOME.—The term ‘‘modular 

18 home’’ means a house built in a factory in 2 or 

19 more modules that meet the State or local build20 ing codes where the house will be located, and 

21 where such modules are transported to the build22 ing site, installed on foundations, and completed. 

23 (d) EXCLUSION FOR ACCOUNTANTS AND TAX PRE24 PARERS.— 
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† HR 4173 EAS 

1 (1) IN GENERAL.—Except as permitted in para2 graph (2), the Bureau may not exercise any rule3 making, supervisory, enforcement, or other authority 

4 over— 

5 (A) any person that is a certified public ac6 countant, permitted to practice as a certified 

7 public accounting firm, or certified or licensed 

8 for such purpose by a State, or any individual 

9 who is employed by or holds an ownership inter10 est with respect to a person described in this sub11 paragraph, when such person is performing or 

12 offering to perform— 

13 (i) customary and usual accounting 

14 activities, including the provision of ac15 counting, tax, advisory, or other services 

16 that are subject to the regulatory authority 

17 of a State board of accountancy or a Fed18 eral authority; or 

19 (ii) other services that are incidental to 

20 such customary and usual accounting ac21 tivities, to the extent that such incidental 

22 services are not offered or provided— 

23 (I) by the person separate and 

24 apart from such customary and usual 

25 accounting activities; or 
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1 (II) to consumers who are not re2 ceiving such customary and usual ac3 counting activities; or 

4 (B) any person, other than a person de5 scribed in subparagraph (A) that performs in6 come tax preparation activities for consumers. 

7 (2) DESCRIPTION OF ACTIVITIES.— 

8 (A) IN GENERAL.—Paragraph (1) shall not 

9 apply to any person described in paragraph 

10 (1)(A) or (1)(B) to the extent that such person 

11 is engaged in any activity which is not a cus12 tomary and usual accounting activity described 

13 in paragraph (1)(A) or incidental thereto but 

14 which is the offering or provision of any con15 sumer financial product or service, except to the 

16 extent that a person described in paragraph 

17 (1)(A) is engaged in an activity which is a cus18 tomary and usual accounting activity described 

19 in paragraph (1)(A), or incidental thereto. 

20 (B) NOT A CUSTOMARY AND USUAL AC21 COUNTING ACTIVITY.—For purposes of this sub22 section, extending or brokering credit is not a 

23 customary and usual accounting activity, or in24 cidental thereto. 
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† HR 4173 EAS 

1 (C) RULE OF CONSTRUCTION.—For pur2 poses of subparagraphs (A) and (B), a person de3 scribed in paragraph (1)(A) shall not be deemed 

4 to be extending credit, if such person is only ex5 tending credit directly to a consumer, exclusively 

6 for the purpose of enabling such consumer to 

7 purchase services described in clause (i) or (ii) 

8 of paragraph (1)(A) directly from such person, 

9 and such credit is— 

10 (i) not subject to a finance charge; and 

11 (ii) not payable by written agreement 

12 in more than 4 installments. 

13 (D) OTHER LIMITATIONS.—Paragraph (1) 

14 does not apply to any person described in para15 graph (1)(A) or (1)(B) that is otherwise subject 

16 to any enumerated consumer law or any law for 

17 which authorities are transferred under subtitle 

18 F or H. 

19 (e) EXCLUSION FOR ATTORNEYS.— 

20 (1) IN GENERAL.—The Bureau may not exercise 

21 any authority to conduct examinations of an attorney 

22 licensed by a State, to the extent that the attorney is 

23 engaged in the practice of law under the laws of such 

24 State. 
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† HR 4173 EAS 

1 (2) EXCEPTION FOR ENUMERATED CONSUMER

2 LAWS AND TRANSFERRED AUTHORITIES.—Paragraph 

3 (1) shall not apply to an attorney who is engaged in 

4 the offering or provision of any consumer financial 

5 product or service, or is otherwise subject to any enu6 merated consumer law or any law for which authori7 ties are transferred under subtitle F or H. 

8 (f) EXCLUSION FOR PERSONS REGULATED BY A STATE

9 INSURANCE REGULATOR.— 

10 (1) IN GENERAL.—No provision of this title shall 

11 be construed as altering, amending, or affecting the 

12 authority of any State insurance regulator to adopt 

13 rules, initiate enforcement proceedings, or take any 

14 other action with respect to a person regulated by a 

15 State insurance regulator. Except as provided in 

16 paragraph (2), the Bureau shall have no authority to 

17 exercise any power to enforce this title with respect to 

18 a person regulated by a State insurance regulator. 

19 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

20 (1) does not apply to any person described in such 

21 paragraph to the extent that such person is engaged 

22 in the offering or provision of any consumer financial 

23 product or service or is otherwise subject to any enu24 merated consumer law or any law for which authori25 ties are transferred under subtitle F or H. 
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† HR 4173 EAS 

1 (g) EXCLUSION FOR EMPLOYEE BENEFIT AND COM2 PENSATION PLANS AND CERTAIN OTHER ARRANGEMENTS

3 UNDER THE INTERNAL REVENUE CODE OF 1986.— 

4 (1) PRESERVATION OF AUTHORITY OF OTHER

5 AGENCIES.—No provision of this title shall be con6 strued as altering, amending, or affecting the author7 ity of the Secretary of the Treasury, the Secretary of 

8 Labor, or the Commissioner of Internal Revenue to 

9 adopt regulations, initiate enforcement proceedings, 

10 or take any actions with respect to any specified plan 

11 or arrangement. 

12 (2) ACTIVITIES NOT CONSTITUTING THE OFFER13 ING OR PROVISION OF ANY CONSUMER FINANCIAL

14 PRODUCT OR SERVICE.—For purposes of this title, a 

15 person shall not be treated as having engaged in the 

16 offering or provision of any consumer financial prod17 uct or service solely because such person is a specified 

18 plan or arrangement, or is engaged in the activity of 

19 establishing or maintaining, for the benefit of employ20 ees of such person (or for members of an employee or21 ganization), any specified plan or arrangement. 

22 (3) LIMITATION ON BUREAU AUTHORITY.— 

23 (A) IN GENERAL.—Except as provided 

24 under subparagraphs (B) and (C), the Bureau 

25 may not exercise any rulemaking or enforcement 
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† HR 4173 EAS 

1 authority with respect to products or services 

2 that relate to any specified plan or arrangement. 

3 (B) BUREAU ACTION ONLY PURSUANT TO

4 AGENCY REQUEST.—The Secretary and the Sec5 retary of Labor may jointly issue a written re6 quest to the Bureau regarding implementation of 

7 appropriate consumer protection standards 

8 under this title with respect to the provision of 

9 services relating to any specified plan or ar10 rangement. Subject to a request made under this 

11 subparagraph, the Bureau may exercise rule12 making authority, and may act to enforce a rule 

13 prescribed pursuant to such request, in accord14 ance with the provisions of this title. A request 

15 made by the Secretary and the Secretary of 

16 Labor under this subparagraph shall describe the 

17 basis for, and scope of, appropriate consumer 

18 protection standards to be implemented under 

19 this title with respect to the provision of services 

20 relating to any specified plan or arrangement. 

21 (C) DESCRIPTION OF PRODUCTS OR SERV22 ICES.—To the extent that a person engaged in 

23 providing products or services relating to any 

24 specified plan or arrangement is subject to any 

25 enumerated consumer law or any law for which 
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† HR 4173 EAS 

1 authorities are transferred under subtitle F or 

2 H, subparagraph (A) shall not apply with re3 spect to that law. 

4 (4) SPECIFIED PLAN OR ARRANGEMENT.—For 

5 purposes of this subsection, the term ‘‘specified plan 

6 or arrangement’’ means any plan, account, or ar7 rangement described in section 220, 223, 401(a), 

8 403(a), 403(b), 408, 408A, 529, or 530 of the Internal 

9 Revenue Code of 1986, or any employee benefit or 

10 compensation plan or arrangement, including a plan 

11 that is subject to title I of the Employee Retirement 

12 Income Security Act of 1974. 

13 (h) PERSONS REGULATED BY A STATE SECURITIES

14 COMMISSION.— 

15 (1) IN GENERAL.—No provision of this title shall 

16 be construed as altering, amending, or affecting the 

17 authority of any securities commission (or any agen18 cy or office performing like functions) of any State to 

19 adopt rules, initiate enforcement proceedings, or take 

20 any other action with respect to a person regulated by 

21 any securities commission (or any agency or office 

22 performing like functions) of any State. Except as 

23 permitted in paragraph (2) and subsection (f), the 

24 Bureau shall have no authority to exercise any power 

25 to enforce this title with respect to a person regulated 
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1 by any securities commission (or any agency or office 

2 performing like functions) of any State, but only to 

3 the extent that the person acts in such regulated ca4 pacity. 

5 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

6 (1) shall not apply to any person to the extent such 

7 person is engaged in the offering or provision of any 

8 consumer financial product or service, or is otherwise 

9 subject to any enumerated consumer law or any law 

10 for which authorities are transferred under subtitle F 

11 or H. 

12 (i) EXCLUSION FOR PERSONS REGULATED BY THE

13 COMMISSION.— 

14 (1) IN GENERAL.—No provision of this title may 

15 be construed as altering, amending, or affecting the 

16 authority of the Commission to adopt rules, initiate 

17 enforcement proceedings, or take any other action 

18 with respect to a person regulated by the Commission. 

19 The Bureau shall have no authority to exercise any 

20 power to enforce this title with respect to a person 

21 regulated by the Commission. 

22 (2) CONSULTATION AND COORDINATION.—Not23 withstanding paragraph (1), the Commission shall 

24 consult and coordinate, where feasible, with the Bu25 reau with respect to any rule (including any advance 
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1 notice of proposed rulemaking) regarding an invest2 ment product or service that is the same type of prod3 uct as, or that competes directly with, a consumer fi4 nancial product or service that is subject to the juris5 diction of the Bureau under this title or under any 

6 other law. In carrying out this paragraph, the agen7 cies shall negotiate an agreement to establish proce8 dures for such coordination, including procedures for 

9 providing advance notice to the Bureau when the 

10 Commission is initiating a rulemaking. 

11 (j) EXCLUSION FOR PERSONS REGULATED BY THE

12 COMMODITY FUTURES TRADING COMMISSION.— 

13 (1) IN GENERAL.—No provision of this title shall 

14 be construed as altering, amending, or affecting the 

15 authority of the Commodity Futures Trading Com16 mission to adopt rules, initiate enforcement pro17 ceedings, or take any other action with respect to a 

18 person regulated by the Commodity Futures Trading 

19 Commission. The Bureau shall have no authority to 

20 exercise any power to enforce this title with respect to 

21 a person regulated by the Commodity Futures Trad22 ing Commission. 

23 (2) CONSULTATION AND COORDINATION.—Not24 withstanding paragraph (1), the Commodity Futures 

25 Trading Commission shall consult and coordinate 
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1 with the Bureau with respect to any rule (including 

2 any advance notice of proposed rulemaking) regard3 ing a product or service that is the same type of prod4 uct as, or that competes directly with, a consumer fi5 nancial product or service that is subject to the juris6 diction of the Bureau under this title or under any 

7 other law. 

8 (k) EXCLUSION FOR PERSONS REGULATED BY THE

9 FARM CREDIT ADMINISTRATION.— 

10 (1) IN GENERAL.—No provision of this title shall 

11 be construed as altering, amending, or affecting the 

12 authority of the Farm Credit Administration to adopt 

13 rules, initiate enforcement proceedings, or take any 

14 other action with respect to a person regulated by the 

15 Farm Credit Administration. The Bureau shall have 

16 no authority to exercise any power to enforce this title 

17 with respect to a person regulated by the Farm Credit 

18 Administration. 

19 (2) DEFINITION.—For purposes of this sub20 section, the term ‘‘person regulated by the Farm Cred21 it Administration’’ means any Farm Credit System 

22 institution that is chartered and subject to the provi23 sions of the Farm Credit Act of 1971 (12 U.S.C. 2001 

24 et seq.). 
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1 (l) EXCLUSION FOR ACTIVITIES RELATING TO CHARI2 TABLE CONTRIBUTIONS.— 

3 (1) IN GENERAL.—The Director and the Bureau 

4 may not exercise any rulemaking, supervisory, en5 forcement, or other authority, including authority to 

6 order penalties, over any activities related to the so7 licitation or making of voluntary contributions to a 

8 tax-exempt organization as recognized by the Internal 

9 Revenue Service, by any agent, volunteer, or rep10 resentative of such organizations to the extent the or11 ganization, agent, volunteer, or representative thereof 

12 is soliciting or providing advice, information, edu13 cation, or instruction to any donor or potential donor 

14 relating to a contribution to the organization. 

15 (2) LIMITATION.—The exclusion in paragraph 

16 (1) does not apply to other activities not described in 

17 paragraph (1) that are the offering or provision of 

18 any consumer financial product or service, or are oth19 erwise subject to any enumerated consumer law or 

20 any law for which authorities are transferred under 

21 subtitle F or H. 

22 (m) INSURANCE.—The Bureau may not define as a fi23 nancial product or service, by regulation or otherwise, en24 gaging in the business of insurance. 
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1 (n) LIMITED AUTHORITY OF THE BUREAU.—Notwith2 standing subsections (a) through (h) and (l), a person sub3 ject to or described in one or more of such subsections— 

4 (1) may be a service provider; and 

5 (2) may be subject to requests from, or require6 ments imposed by, the Bureau regarding information 

7 in order to carry out the responsibilities and func8 tions of the Bureau and in accordance with section 

9 1022, 1052, or 1053. 

10 (o) NO AUTHORITY TO IMPOSE USURY LIMIT.—No 

11 provision of this title shall be construed as conferring au12 thority on the Bureau to establish a usury limit applicable 

13 to an extension of credit offered or made by a covered person 

14 to a consumer, unless explicitly authorized by law. 

15 (p) ATTORNEY GENERAL.—No provision of this title, 

16 including section 1024(c)(1), shall affect the authorities of 

17 the Attorney General under otherwise applicable provisions 

18 of law. 

19 (q) SECRETARY OF THE TREASURY.—No provision of 

20 this title shall affect the authorities of the Secretary, includ21 ing with respect to prescribing rules, initiating enforcement 

22 proceedings, or taking other actions with respect to a person 

23 that performs income tax preparation activities for con24 sumers. 
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1 (r) DEPOSIT INSURANCE AND SHARE INSURANCE.— 

2 Nothing in this title shall affect the authority of the Cor3 poration under the Federal Deposit Insurance Act or the 

4 National Credit Union Administration Board under the 

5 Federal Credit Union Act as to matters related to deposit 

6 insurance and share insurance, respectively. 

7 SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DIS8 PUTE ARBITRATION. 

9 (a) STUDY AND REPORT.—The Bureau shall conduct 

10 a study of, and shall provide a report to Congress con11 cerning, the use of agreements providing for arbitration of 

12 any future dispute between covered persons and consumers 

13 in connection with the offering or providing of consumer 

14 financial products or services. 

15 (b) FURTHER AUTHORITY.—The Bureau, by regula16 tion, may prohibit or impose conditions or limitations on 

17 the use of an agreement between a covered person and a 

18 consumer for a consumer financial product or service pro19 viding for arbitration of any future dispute between the 

20 parties, if the Bureau finds that such a prohibition or im21 position of conditions or limitations is in the public interest 

22 and for the protection of consumers. The findings in such 

23 rule shall be consistent with the study conducted under sub24 section (a). 
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1 (c) LIMITATION.—The authority described in sub2 section (b) may not be construed to prohibit or restrict a 

3 consumer from entering into a voluntary arbitration agree4 ment with a covered person after a dispute has arisen. 

5 (d) EFFECTIVE DATE.—Notwithstanding any other 

6 provision of law, any regulation prescribed by the Bureau 

7 under subsection (a) shall apply, consistent with the terms 

8 of the regulation, to any agreement between a consumer and 

9 a covered person entered into after the end of the 180-day 

10 period beginning on the effective date of the regulation, as 

11 established by the Bureau. 

12 SEC. 1029. EFFECTIVE DATE. 

13 This subtitle shall become effective on the designated 

14 transfer date. 

15 Subtitle C—Specific Bureau 

16 Authorities 

17 SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE 

18 ACTS OR PRACTICES. 

19 (a) IN GENERAL.—The Bureau may take any action 

20 authorized under subtitle E to prevent a covered person or 

21 service provider from committing or engaging in an unfair, 

22 deceptive, or abusive act or practice under Federal law in 

23 connection with any transaction with a consumer for a con24 sumer financial product or service, or the offering of a con25 sumer financial product or service. 
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1 (b) RULEMAKING.—The Bureau may prescribe rules 

2 applicable to a covered person or service provider identi3 fying as unlawful unfair, deceptive, or abusive acts or prac4 tices in connection with any transaction with a consumer 

5 for a consumer financial product or service, or the offering 

6 of a consumer financial product or service. Rules under this 

7 section may include requirements for the purpose of pre8 venting such acts or practices. 

9 (c) UNFAIRNESS.— 

10 (1) IN GENERAL.—The Bureau shall have no au11 thority under this section to declare an act or practice 

12 in connection with a transaction with a consumer for 

13 a consumer financial product or service, or the offer14 ing of a consumer financial product or service, to be 

15 unlawful on the grounds that such act or practice is 

16 unfair, unless the Bureau has a reasonable basis to 

17 conclude that— 

18 (A) the act or practice causes or is likely to 

19 cause substantial injury to consumers which is 

20 not reasonably avoidable by consumers; and 

21 (B) such substantial injury is not out22 weighed by countervailing benefits to consumers 

23 or to competition. 

24 (2) CONSIDERATION OF PUBLIC POLICIES.—In 

25 determining whether an act or practice is unfair, the 
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1 Bureau may consider established public policies as 

2 evidence to be considered with all other evidence. Such 

3 public policy considerations may not serve as a pri4 mary basis for such determination. 

5 (d) ABUSIVE.—The Bureau shall have no authority 

6 under this section to declare an act or practice abusive in 

7 connection with the provision of a consumer financial prod8 uct or service, unless the act or practice— 

9 (1) materially interferes with the ability of a 

10 consumer to understand a term or condition of a con11 sumer financial product or service; or 

12 (2) takes unreasonable advantage of— 

13 (A) a lack of understanding on the part of 

14 the consumer of the material risks, costs, or con15 ditions of the product or service; 

16 (B) the inability of the consumer to protect 

17 the interests of the consumer in selecting or using 

18 a consumer financial product or service; or 

19 (C) the reasonable reliance by the consumer 

20 on a covered person to act in the interests of the 

21 consumer. 

22 (e) CONSULTATION.—In prescribing rules under this 

23 section, the Bureau shall consult with the Federal banking 

24 agencies, or other Federal agencies, as appropriate, con25 cerning the consistency of the proposed rule with pruden-
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1 tial, market, or systemic objectives administered by such 

2 agencies. 

3 (f) CONSIDERATION OF SEASONAL INCOME.—The rules 

4 of the Bureau under this section shall provide, with respect 

5 to an extension of credit secured by residential real estate 

6 or a dwelling, if documented income of the borrower, includ7 ing income from a small business, is a repayment source 

8 for an extension of credit secured by residential real estate 

9 or a dwelling, the creditor may consider the seasonality and 

10 irregularity of such income in the underwriting of and 

11 scheduling of payments for such credit. 

12 SEC. 1032. DISCLOSURES. 

13 (a) IN GENERAL.—The Bureau may prescribe rules to 

14 ensure that the features of any consumer financial product 

15 or service, both initially and over the term of the product 

16 or service, are fully, accurately, and effectively disclosed to 

17 consumers in a manner that permits consumers to under18 stand the costs, benefits, and risks associated with the prod19 uct or service, in light of the facts and circumstances. 

20 (b) MODEL DISCLOSURES.— 

21 (1) IN GENERAL.—Any final rule prescribed by 

22 the Bureau under this section requiring disclosures 

23 may include a model form that may be used at the 

24 option of the covered person for provision of the re25 quired disclosures. 
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1 (2) FORMAT.—A model form issued pursuant to 

2 paragraph (1) shall contain a clear and conspicuous 

3 disclosure that, at a minimum— 

4 (A) uses plain language comprehensible to 

5 consumers; 

6 (B) contains a clear format and design, 

7 such as an easily readable type font; and 

8 (C) succinctly explains the information that 

9 must be communicated to the consumer. 

10 (3) CONSUMER TESTING.—Any model form 

11 issued pursuant to this subsection shall be validated 

12 through consumer testing. 

13 (c) BASIS FOR RULEMAKING.—In prescribing rules 

14 under this section, the Bureau shall consider available evi15 dence about consumer awareness, understanding of, and re16 sponses to disclosures or communications about the risks, 

17 costs, and benefits of consumer financial products or serv18 ices. 

19 (d) SAFE HARBOR.—Any covered person that uses a 

20 model form included with a rule issued under this section 

21 shall be deemed to be in compliance with the disclosure re22 quirements of this section with respect to such model form. 

23 (e) TRIAL DISCLOSURE PROGRAMS.— 

24 (1) IN GENERAL.—The Bureau may permit a 

25 covered person to conduct a trial program that is lim-
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1 ited in time and scope, subject to specified standards 

2 and procedures, for the purpose of providing trial dis3 closures to consumers that are designed to improve 

4 upon any model form issued pursuant to subsection 

5 (b)(1), or any other model form issued to implement 

6 an enumerated statute, as applicable. 

7 (2) SAFE HARBOR.—The standards and proce8 dures issued by the Bureau shall be designed to en9 courage covered persons to conduct trial disclosure 

10 programs. For the purposes of administering this sub11 section, the Bureau may establish a limited period 

12 during which a covered person conducting a trial dis13 closure program shall be deemed to be in compliance 

14 with, or may be exempted from, a requirement of a 

15 rule or an enumerated consumer law. 

16 (3) PUBLIC DISCLOSURE.—The rules of the Bu17 reau shall provide for public disclosure of trial disclo18 sure programs, which public disclosure may be lim19 ited, to the extent necessary to encourage covered per20 sons to conduct effective trials. 

21 (f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not 

22 later than 1 year after the designated transfer date, the Bu23 reau shall propose for public comment rules and model dis24 closures that combine the disclosures required under the 

25 Truth in Lending Act and the Real Estate Settlement Pro-
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1 cedures Act of 1974, into a single, integrated disclosure for 

2 mortgage loan transactions covered by those laws, unless the 

3 Bureau determines that any proposal issued by the Board 

4 of Governors and the Secretary of Housing and Urban De5 velopment carries out the same purpose. 

6 SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION. 

7 (a) IN GENERAL.—Subject to rules prescribed by the 

8 Bureau, a covered person shall make available to a con9 sumer, upon request, information in the control or posses10 sion of the covered person concerning the consumer finan11 cial product or service that the consumer obtained from such 

12 covered person, including information relating to any 

13 transaction, series of transactions, or to the account includ14 ing costs, charges and usage data. The information shall 

15 be made available in an electronic form usable by con16 sumers. 

17 (b) EXCEPTIONS.—A covered person may not be re18 quired by this section to make available to the consumer— 

19 (1) any confidential commercial information, in20 cluding an algorithm used to derive credit scores or 

21 other risk scores or predictors; 

22 (2) any information collected by the covered per23 son for the purpose of preventing fraud or money 

24 laundering, or detecting, or making any report re-
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1 garding other unlawful or potentially unlawful con2 duct; 

3 (3) any information required to be kept con4 fidential by any other provision of law; or 

5 (4) any information that the covered person can6 not retrieve in the ordinary course of its business with 

7 respect to that information. 

8 (c) NO DUTY TO MAINTAIN RECORDS.—Nothing in 

9 this section shall be construed to impose any duty on a cov10 ered person to maintain or keep any information about a 

11 consumer. 

12 (d) STANDARDIZED FORMATS FOR DATA.—The Bu13 reau, by rule, shall prescribe standards applicable to cov14 ered persons to promote the development and use of stand15 ardized formats for information, including through the use 

16 of machine readable files, to be made available to consumers 

17 under this section. 

18 (e) CONSULTATION.—The Bureau shall, when pre19 scribing any rule under this section, consult with the Fed20 eral banking agencies and the Federal Trade Commission 

21 to ensure, to the extent appropriate, that the rules— 

22 (1) impose substantively similar requirements on 

23 covered persons; 
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1 (2) take into account conditions under which 

2 covered persons do business both in the United States 

3 and in other countries; and 

4 (3) do not require or promote the use of any par5 ticular technology in order to develop systems for 

6 compliance. 

7 SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND IN8 QUIRIES. 

9 (a) TIMELY REGULATOR RESPONSE TO CON10 SUMERS.—The Bureau shall establish, in consultation with 

11 the appropriate Federal regulatory agencies, reasonable 

12 procedures to provide a timely response to consumers, in 

13 writing where appropriate, to complaints against, or in14 quiries concerning, a covered person, including— 

15 (1) steps that have been taken by the regulator 

16 in response to the complaint or inquiry of the con17 sumer; 

18 (2) any responses received by the regulator from 

19 the covered person; and 

20 (3) any follow-up actions or planned follow-up 

21 actions by the regulator in response to the complaint 

22 or inquiry of the consumer. 

23 (b) TIMELY RESPONSE TO REGULATOR BY COVERED

24 PERSON.—A covered person subject to supervision and pri25 mary enforcement by the Bureau pursuant to section 1025 
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1 shall provide a timely response, in writing where appro2 priate, to the Bureau, the prudential regulators, and any 

3 other agency having jurisdiction over such covered person 

4 concerning a consumer complaint or inquiry, including— 

5 (1) steps that have been taken by the covered per6 son to respond to the complaint or inquiry of the con7 sumer; 

8 (2) responses received by the covered person from 

9 the consumer; and 

10 (3) follow-up actions or planned follow-up ac11 tions by the covered person to respond to the com12 plaint or inquiry of the consumer. 

13 (c) PROVISION OF INFORMATION TO CONSUMERS.— 

14 (1) IN GENERAL.—A covered person subject to 

15 supervision and primary enforcement by the Bureau 

16 pursuant to section 1025 shall, in a timely manner, 

17 comply with a consumer request for information in 

18 the control or possession of such covered person con19 cerning the consumer financial product or service that 

20 the consumer obtained from such covered person, in21 cluding supporting written documentation, con22 cerning the account of the consumer. 

23 (2) EXCEPTIONS.—A covered person subject to 

24 supervision and primary enforcement by the Bureau 

25 pursuant to section 1025, a prudential regulator, and 
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1 any other agency having jurisdiction over a covered 

2 person subject to supervision and primary enforce3 ment by the Bureau pursuant to section 1025 may 

4 not be required by this section to make available to 

5 the consumer— 

6 (A) any confidential commercial informa7 tion, including an algorithm used to derive cred8 it scores or other risk scores or predictors; 

9 (B) any information collected by the covered 

10 person for the purpose of preventing fraud or 

11 money laundering, or detecting or making any 

12 report regarding other unlawful or potentially 

13 unlawful conduct; 

14 (C) any information required to be kept 

15 confidential by any other provision of law; or 

16 (D) any nonpublic or confidential informa17 tion, including confidential supervisory informa18 tion. 

19 (d) AGREEMENTS WITH OTHER AGENCIES.—The Bu20 reau shall enter into a memorandum of understanding with 

21 any affected Federal regulatory agency regarding proce22 dures by which any covered person, and the prudential reg23 ulators, and any other agency having jurisdiction over a 

24 covered person, including the Secretary of the Department 
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1 of Housing and Urban Development and the Secretary of 

2 Education, shall comply with this section. 

3 SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN. 

4 (a) ESTABLISHMENT.—The Secretary, in consultation 

5 with the Director, shall designate a Private Education Loan 

6 Ombudsman (in this section referred to as the ‘‘Ombuds7 man’’) within the Bureau, to provide timely assistance to 

8 borrowers of private education loans. 

9 (b) PUBLIC INFORMATION.—The Secretary and the Di10 rector shall disseminate information about the availability 

11 and functions of the Ombudsman to borrowers and poten12 tial borrowers, as well as institutions of higher education, 

13 lenders, guaranty agencies, loan servicers, and other par14 ticipants in private education student loan programs. 

15 (c) FUNCTIONS OF OMBUDSMAN.—The Ombudsman 

16 designated under this subsection shall— 

17 (1) in accordance with regulations of the Direc18 tor, receive, review, and attempt to resolve informally 

19 complaints from borrowers of loans described in sub20 section (a), including, as appropriate, attempts to re21 solve such complaints in collaboration with the De22 partment of Education and with institutions of high23 er education, lenders, guaranty agencies, loan 

24 servicers, and other participants in private education 

25 loan programs; 
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1 (2) not later than 90 days after the designated 

2 transfer date, establish a memorandum of under3 standing with the student loan ombudsman estab4 lished under section 141(f) of the Higher Education 

5 Act of 1965 (20 U.S.C. 1018(f)), to ensure coordina6 tion in providing assistance to and serving borrowers 

7 seeking to resolve complaints related to their private 

8 education or Federal student loans; 

9 (3) compile and analyze data on borrower com10 plaints regarding private education loans; and 

11 (4) make appropriate recommendations to the 

12 Director, the Secretary, the Secretary of Education, 

13 the Committee on Banking, Housing, and Urban Af14 fairs and the Committee on Health, Education, 

15 Labor, and Pensions of the Senate and the Committee 

16 on Financial Services and the Committee on Edu17 cation and Labor of the House of Representatives. 

18 (d) ANNUAL REPORTS.— 

19 (1) IN GENERAL.—The Ombudsman shall pre20 pare an annual report that describes the activities, 

21 and evaluates the effectiveness of the Ombudsman 

22 during the preceding year. 

23 (2) SUBMISSION.—The report required by para24 graph (1) shall be submitted on the same date annu25 ally to the Secretary, the Secretary of Education, the 
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1 Committee on Banking, Housing, and Urban Affairs 

2 and the Committee on Health, Education, Labor, and 

3 Pensions of the Senate and the Committee on Finan4 cial Services and the Committee on Education and 

5 Labor of the House of Representatives. 

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

7 terms ‘‘private education loan’’ and ‘‘institution of higher 

8 education’’ have the same meanings as in section 140 of 

9 the Truth in Lending Act (15 U.S.C. 1650). 

10 SEC. 1036. PROHIBITED ACTS. 

11 It shall be unlawful for any person— 

12 (1) to— 

13 (A) advertise, market, offer, or sell a con14 sumer financial product or service not in con15 formity with this title or applicable rules or or16 ders issued by the Bureau; 

17 (B) enforce, or attempt to enforce, any 

18 agreement with a consumer (including any term 

19 or change in terms in respect of such agreement), 

20 or impose, or attempt to impose, any fee or 

21 charge on a consumer in connection with a con22 sumer financial product or service that is not in 

23 conformity with this title or applicable rules or 

24 orders issued by the Bureau; or 
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1 (C) engage in any unfair, deceptive, or abu2 sive act or practice, 

3 except that no person shall be held to have vio4 lated this paragraph solely by virtue of pro5 viding or selling time or space to a person plac6 ing an advertisement; 

7 (2) to fail or refuse, as required by Federal con8 sumer financial law, or any rule or order issued by 

9 the Bureau thereunder— 

10 (A) to permit access to or copying of 

11 records; 

12 (B) to establish or maintain records; or 

13 (C) to make reports or provide information 

14 to the Bureau; or 

15 (3) knowingly or recklessly to provide substantial 

16 assistance to another person in violation of the provi17 sions of section 1031, or any rule or order issued 

18 thereunder, and notwithstanding any provision of 

19 this title, the provider of such substantial assistance 

20 shall be deemed to be in violation of that section to 

21 the same extent as the person to whom such assistance 

22 is provided. 

23 SEC. 1037. EFFECTIVE DATE. 

24 This subtitle shall take effect on the designated transfer 

25 date. 
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1 Subtitle D—Preservation of State 

2 Law 

3 SEC. 1041. RELATION TO STATE LAW. 

4 (a) IN GENERAL.— 

5 (1) RULE OF CONSTRUCTION.—This title, other 

6 than sections 1044 through 1048, may not be con7 strued as annulling, altering, or affecting, or exempt8 ing any person subject to the provisions of this title 

9 from complying with, the statutes, regulations, orders, 

10 or interpretations in effect in any State, except to the 

11 extent that any such provision of law is inconsistent 

12 with the provisions of this title, and then only to the 

13 extent of the inconsistency. 

14 (2) GREATER PROTECTION UNDER STATE LAW.— 

15 For purposes of this subsection, a statute, regulation, 

16 order, or interpretation in effect in any State is not 

17 inconsistent with the provisions of this title if the pro18 tection that such statute, regulation, order, or inter19 pretation affords to consumers is greater than the 

20 protection provided under this title. A determination 

21 regarding whether a statute, regulation, order, or in22 terpretation in effect in any State is inconsistent with 

23 the provisions of this title may be made by the Bu24 reau on its own motion or in response to a nonfrivo25 lous petition initiated by any interested person. 
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1 (b) RELATION TO OTHER PROVISIONS OF ENUMER2 ATED CONSUMER LAWS THAT RELATE TO STATE LAW.— 

3 No provision of this title, except as provided in section 

4 1083, shall be construed as modifying, limiting, or super5 seding the operation of any provision of an enumerated con6 sumer law that relates to the application of a law in effect 

7 in any State with respect to such Federal law. 

8 (c) ADDITIONAL CONSUMER PROTECTION REGULA9 TIONS IN RESPONSE TO STATE ACTION.— 

10 (1) NOTICE OF PROPOSED RULE REQUIRED.— 

11 The Bureau shall issue a notice of proposed rule12 making whenever a majority of the States has enacted 

13 a resolution in support of the establishment or modi14 fication of a consumer protection regulation by the 

15 Bureau. 

16 (2) BUREAU CONSIDERATIONS REQUIRED FOR

17 ISSUANCE OF FINAL REGULATION.—Before prescribing 

18 a final regulation based upon a notice issued pursu19 ant to paragraph (1), the Bureau shall take into ac20 count whether— 

21 (A) the proposed regulation would afford 

22 greater protection to consumers than any exist23 ing regulation; 

24 (B) the intended benefits of the proposed 

25 regulation for consumers would outweigh any in-
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1 creased costs or inconveniences for consumers, 

2 and would not discriminate unfairly against 

3 any category or class of consumers; and 

4 (C) a Federal banking agency has advised 

5 that the proposed regulation is likely to present 

6 an unacceptable safety and soundness risk to in7 sured depository institutions. 

8 (3) EXPLANATION OF CONSIDERATIONS.—The 

9 Bureau— 

10 (A) shall include a discussion of the consid11 erations required in paragraph (2) in the Fed12 eral Register notice of a final regulation pre13 scribed pursuant to this subsection; and 

14 (B) whenever the Bureau determines not to 

15 prescribe a final regulation, shall publish an ex16 planation of such determination in the Federal 

17 Register, and provide a copy of such explanation 

18 to each State that enacted a resolution in sup19 port of the proposed regulation, the Committee 

20 on Financial Services of the House of Represent21 atives, and the Committee on Banking, Housing, 

22 and Urban Affairs of the Senate. 

23 (4) RESERVATION OF AUTHORITY.—No provision 

24 of this subsection shall be construed as limiting or re25 stricting the authority of the Bureau to enhance con-
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1 sumer protection standards established pursuant to 

2 this title in response to its own motion or in response 

3 to a request by any other interested person. 

4 (5) RULE OF CONSTRUCTION.—No provision of 

5 this subsection shall be construed as exempting the 

6 Bureau from complying with subchapter II of chapter 

7 5 of title 5, United States Code. 

8 (6) DEFINITION.—For purposes of this sub9 section, the term ‘‘consumer protection regulation’’ 

10 means a regulation that the Bureau is authorized to 

11 prescribe under the Federal consumer financial laws. 

12 SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF 

13 STATES. 

14 (a) IN GENERAL.— 

15 (1) ACTION BY STATE.—Except as provided in 

16 paragraph (2), the attorney general (or the equivalent 

17 thereof) of any State may bring a civil action in the 

18 name of such State in any district court of the United 

19 States in that State or in State court that is located 

20 in that State and that has jurisdiction over the de21 fendant, to enforce provisions of this title or regula22 tions issued under this title, and to secure remedies 

23 under provisions of this title or remedies otherwise 

24 provided under other law. A State regulator may 

25 bring a civil action or other appropriate proceeding 
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1 to enforce the provisions of this title or regulations 

2 issued under this title with respect to any entity that 

3 is State-chartered, incorporated, licensed, or otherwise 

4 authorized to do business under State law (except as 

5 provided in paragraph (2)), and to secure remedies 

6 under provisions of this title or remedies otherwise 

7 provided under other provisions of law with respect to 

8 such an entity. 

9 (2) ACTION BY STATE AGAINST NATIONAL BANK

10 OR FEDERAL SAVINGS ASSOCIATION TO ENFORCE

11 RULES.— 

12 (A) IN GENERAL.—Except as permitted 

13 under subparagraph (B), the attorney general 

14 (or equivalent thereof) of any State may not 

15 bring a civil action in the name of such State 

16 against a national bank or Federal savings asso17 ciation with respect to an act or omission that 

18 would be a violation of a provision of this title. 

19 (B) ENFORCEMENT OF RULES PER20 MITTED.—The attorney general (or the equiva21 lent thereof) of any State may bring a civil ac22 tion in the name of such State against a na23 tional bank or Federal savings association in 

24 any district court of the United States in the 

25 State or in State court that is located in that 
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1 State and that has jurisdiction over the defend2 ant to enforce a regulation prescribed by the Bu3 reau under a provision of this title and to secure 

4 remedies under provisions of this title or rem5 edies otherwise provided under other law. 

6 (3) RULE OF CONSTRUCTION.—No provision of 

7 this title shall be construed as modifying, limiting, or 

8 superseding the operation of any provision of an enu9 merated consumer law that relates to the authority of 

10 a State attorney general or State regulator to enforce 

11 such Federal law. 

12 (b) CONSULTATION REQUIRED.— 

13 (1) NOTICE.— 

14 (A) IN GENERAL.—Before initiating any 

15 action in a court or other administrative or reg16 ulatory proceeding against any covered person as 

17 authorized by subsection (a) to enforce any pro18 vision of this title, including any regulation pre19 scribed by the Bureau under this title, a State 

20 attorney general or State regulator shall timely 

21 provide a copy of the complete complaint to be 

22 filed and written notice describing such action or 

23 proceeding to the Bureau and the prudential reg24 ulator, if any, or the designee thereof. 
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1 (B) EMERGENCY ACTION.—If prior notice is 

2 not practicable, the State attorney general or 

3 State regulator shall provide a copy of the com4 plete complaint and the notice to the Bureau and 

5 the prudential regulator, if any, immediately 

6 upon instituting the action or proceeding. 

7 (C) CONTENTS OF NOTICE.—The notifica8 tion required under this paragraph shall, at a 

9 minimum, 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 proceeding 

15 so as not to interfere with any action, in16 cluding any rulemaking, undertaken by the 

17 Bureau, a prudential regulator, or another 

18 Federal agency. 

19 (2) BUREAU RESPONSE.—In any action de20 scribed in paragraph (1), the Bureau 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 

25 action was not originally brought there; and 
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1 (ii) be heard on all matters arising in 

2 the action; and 

3 (C) appeal any order or judgment, to the 

4 same extent as any other party in the proceeding 

5 may. 

6 (c) REGULATIONS.—The Bureau shall prescribe regu7 lations to implement the requirements of this section and, 

8 from time to time, provide guidance in order to further co9 ordinate actions with the State attorneys general and other 

10 regulators. 

11 (d) PRESERVATION OF STATE AUTHORITY.— 

12 (1) STATE CLAIMS.—No provision of this section 

13 shall be construed as altering, limiting, or affecting 

14 the authority of a State attorney general or any other 

15 regulatory or enforcement agency or authority to 

16 bring an action or other regulatory proceeding aris17 ing solely under the law in effect in that State. 

18 (2) STATE SECURITIES REGULATORS.—No provi19 sion of this title shall be construed as altering, lim20 iting, or affecting the authority of a State securities 

21 commission (or any agency or office performing like 

22 functions) under State law to adopt rules, initiate en23 forcement proceedings, or take any other action with 

24 respect to a person regulated by such commission or 

25 authority. 
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1 (3) STATE INSURANCE REGULATORS.—No provi2 sion of this title shall be construed as altering, lim3 iting, or affecting the authority of a State insurance 

4 commission or State insurance regulator under State 

5 law to adopt rules, initiate enforcement proceedings, 

6 or take any other action with respect to a person reg7 ulated by such commission or regulator. 

8 SEC. 1043. PRESERVATION OF EXISTING CONTRACTS. 

9 This title, and regulations, orders, guidance, and in10 terpretations prescribed, issued, or established by the Bu11 reau, shall not be construed to alter or affect the applica12 bility of any regulation, order, guidance, or interpretation 

13 prescribed, issued, and established by the Comptroller of the 

14 Currency or the Director of the Office of Thrift Supervision 

15 regarding the applicability of State law under Federal 

16 banking law to any contract entered into on or before the 

17 date of enactment of this Act, by national banks, Federal 

18 savings associations, or subsidiaries thereof that are regu19 lated and supervised by the Comptroller of the Currency 

20 or the Director of the Office of Thrift Supervision, respec21 tively. 
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1 SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NA2 TIONAL BANKS AND SUBSIDIARIES CLARI3 FIED. 

4 (a) IN GENERAL.—Chapter one of title LXII of the Re5 vised Statutes of the United States (12 U.S.C. 21 et seq.) 

6 is amended by inserting after section 5136B the following 

7 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 bank’ 

14 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 directly and specifi24 cally regulates the manner, content, or terms and con25 ditions of any financial transaction (as may be au-
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1 thorized for national banks to engage in), or any ac2 count related thereto, with respect to a consumer. 

3 ‘‘(3) OTHER DEFINITIONS.—The terms ‘affiliate’, 

4 ‘subsidiary’, ‘includes’, and ‘including’ have the same 

5 meanings as in section 3 of the Federal Deposit In6 surance Act. 

7 ‘‘(b) PREEMPTION STANDARD.— 

8 ‘‘(1) IN GENERAL.—State consumer financial 

9 laws are preempted, only if— 

10 ‘‘(A) application of a State consumer finan11 cial law would have a discriminatory effect on 

12 national banks, in comparison with the effect of 

13 the law on a bank chartered by that State; 

14 ‘‘(B) the State consumer financial law is 

15 preempted in accordance with the legal standard 

16 of the decision of the Supreme Court of the 

17 United States in Barnett Bank of Marion Coun18 ty, N.A. v. Nelson, Florida Insurance Commis19 sioner, et al., 517 U.S. 25 (1996), and any pre20 emption determination under this subparagraph 

21 may be made by a court, or by regulation or 

22 order of the Comptroller of the Currency on a 

23 case-by-case basis, in accordance with applicable 

24 law; or 
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1 ‘‘(C) the State consumer financial law is 

2 preempted by a provision of Federal law other 

3 than this title. 

4 ‘‘(2) SAVINGS CLAUSE.—This title and section 24 

5 of the Federal Reserve Act (12 U.S.C. 371) do not 

6 preempt, annul, or affect the applicability of any 

7 State law to any subsidiary or affiliate of a national 

8 bank (other than a subsidiary or affiliate that is 

9 chartered as a national bank). 

10 ‘‘(3) CASE-BY-CASE BASIS.— 

11 ‘‘(A) DEFINITION.—As used in this section 

12 the term ‘case-by-case basis’ refers to a deter13 mination pursuant to this section made by the 

14 Comptroller concerning the impact of a par15 ticular State consumer financial law on any na16 tional bank that is subject to that law, or the law 

17 of any other State with substantively equivalent 

18 terms. 

19 ‘‘(B) CONSULTATION.—When making a de20 termination on a case-by-case basis that a State 

21 consumer financial law of another State has sub22 stantively equivalent terms as one that the 

23 Comptroller is preempting, the Comptroller shall 

24 first consult with the Bureau of Consumer Fi25 nancial Protection and shall take the views of the 
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1 Bureau into account when making the deter2 mination. 

3 ‘‘(4) RULE OF CONSTRUCTION.—This title does 

4 not occupy the field in any area of State law. 

5 ‘‘(5) STANDARDS OF REVIEW.— 

6 ‘‘(A) PREEMPTION.—A court reviewing any 

7 determinations made by the Comptroller regard8 ing preemption of a State law by this title or 

9 section 24 of the Federal Reserve Act (12 U.S.C. 

10 371) shall assess the validity of such determina11 tions, depending upon the thoroughness evident 

12 in the consideration of the agency, the validity 

13 of the reasoning of the agency, the consistency 

14 with other valid determinations made by the 

15 agency, and other factors which the court finds 

16 persuasive and relevant to its decision. 

17 ‘‘(B) SAVINGS CLAUSE.—Except as provided 

18 in subparagraph (A), nothing in this section 

19 shall affect the deference that a court may afford 

20 to the Comptroller in making determinations re21 garding the meaning or interpretation of title 

22 LXII of the Revised Statutes of the United States 

23 or other Federal laws. 

24 ‘‘(6) COMPTROLLER DETERMINATION NOT DELE25 GABLE.—Any regulation, order, or determination 
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1 made by the Comptroller of the Currency under para2 graph (1)(B) shall be made by the Comptroller, and 

3 shall not be delegable to another officer or employee 

4 of the Comptroller of the Currency. 

5 ‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation or order 

6 of the Comptroller of the Currency prescribed under sub7 section (b)(1)(B), shall be interpreted or applied so as to 

8 invalidate, or otherwise declare inapplicable to a national 

9 bank, the provision of the State consumer financial law, 

10 unless substantial evidence, made on the record of the pro11 ceeding, supports the specific finding regarding the preemp12 tion of such provision in accordance with the legal standard 

13 of the decision of the Supreme Court of the United States 

14 in Barnett Bank of Marion County, N.A. v. Nelson, Florida 

15 Insurance Commissioner, et al., 517 U.S. 25 (1996). 

16 ‘‘(d) PERIODIC REVIEW OF PREEMPTION DETERMINA17 TIONS.— 

18 ‘‘(1) IN GENERAL.—The Comptroller of the Cur19 rency shall periodically conduct a review, through no20 tice and public comment, of each determination that 

21 a provision of Federal law preempts a State consumer 

22 financial law. The agency shall conduct such review 

23 within the 5-year period after prescribing or other24 wise issuing such determination, and at least once 

25 during each 5-year period thereafter. After conducting 
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1 the review of, and inspecting the comments made on, 

2 the determination, the agency shall publish a notice 

3 in the Federal Register announcing the decision to 

4 continue or rescind the determination or a proposal 

5 to amend the determination. Any such notice of a 

6 proposal to amend a determination and the subse7 quent resolution of such proposal shall comply with 

8 the procedures set forth in subsections (a) and (b) of 

9 section 5244 of the Revised Statutes of the United 

10 States (12 U.S.C. 43 (a), (b)). 

11 ‘‘(2) REPORTS TO CONGRESS.—At the time of 

12 issuing a review conducted under paragraph (1), the 

13 Comptroller of the Currency shall submit a report re14 garding such review to the Committee on Financial 

15 Services of the House of Representatives and the Com16 mittee on Banking, Housing, and Urban Affairs of 

17 the Senate. The report submitted to the respective 

18 committees shall address whether the agency intends 

19 to continue, rescind, or propose to amend any deter20 mination that a provision of Federal law preempts a 

21 State consumer financial law, and the reasons there22 for. 

23 ‘‘(e) APPLICATION OF STATE CONSUMER FINANCIAL

24 LAW TO SUBSIDIARIES AND AFFILIATES.—Notwithstanding 

25 any provision of this title or section 24 of Federal Reserve 
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1 Act (12 U.S.C. 371), a State consumer financial law shall 

2 apply to a subsidiary or affiliate of a national bank (other 

3 than a subsidiary or affiliate that is chartered as a national 

4 bank) to the same extent that the State consumer financial 

5 law applies to any person, corporation, or other entity sub6 ject to such State law. 

7 ‘‘(f) PRESERVATION OF POWERS RELATED TO CHARG8 ING INTEREST.—No provision of this title shall be construed 

9 as altering or otherwise affecting the authority conferred by 

10 section 5197 of the Revised Statutes of the United States 

11 (12 U.S.C. 85) for the charging of interest by a national 

12 bank at the rate allowed by the laws of the State, territory, 

13 or district where the bank is located, including with respect 

14 to the meaning of ‘interest’ under such provision. 

15 ‘‘(g) TRANSPARENCY OF OCC PREEMPTION DETER16 MINATIONS.—The Comptroller of the Currency shall publish 

17 and update no less frequently than quarterly, a list of pre18 emption determinations by the Comptroller of the Currency 

19 then in effect that identifies the activities and practices cov20 ered by each determination and the requirements and con21 straints determined to be preempted.’’. 

22 (b) CLERICAL AMENDMENT.—The table of sections for 

23 chapter one of title LXII of the Revised Statutes of the 

24 United States is amended by inserting after the item relat25 ing to section 5136B the following new item: 
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‘‘Sec. 5136C. State law preemption standards for national banks and subsidiaries 

clarified.’’. 

1 SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NON2 DEPOSITORY INSTITUTION SUBSIDIARIES. 

3 Section 5136C of the Revised Statutes of the United 

4 States (as added by this subtitle) is amended by adding 

5 at the end the following: 

6 ‘‘(h) CLARIFICATION OF LAW APPLICABLE TO NON7 DEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILIATES

8 OF NATIONAL BANKS.— 

9 ‘‘(1) DEFINITIONS.—For purposes of this sub10 section, the terms ‘depository institution’, ‘sub11 sidiary’, and ‘affiliate’ have the same meanings as in 

12 section 3 of the Federal Deposit Insurance Act. 

13 ‘‘(2) RULE OF CONSTRUCTION.—No provision of 

14 this title or section 24 of the Federal Reserve Act (12 

15 U.S.C. 371) shall be construed as preempting, annul16 ling, or affecting the applicability of State law to any 

17 subsidiary, affiliate, or agent of a national bank 

18 (other than a subsidiary, affiliate, or agent that is 

19 chartered as a national bank).’’. 
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1 SEC. 1046. 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) IN GENERAL.—Any determination by a court or 

10 by the Director or any successor officer or agency regarding 

11 the relation of State law to a provision of this Act or any 

12 regulation or order prescribed under this Act shall be made 

13 in accordance with the laws and legal standards applicable 

14 to national banks regarding the preemption of State law. 

15 ‘‘(b) PRINCIPLES OF CONFLICT PREEMPTION APPLICA16 BLE.—Notwithstanding the authorities granted under sec17 tions 4 and 5, this Act does not occupy the field in any 

18 area of State law.’’. 

19 (b) CLERICAL AMENDMENT.—The table of sections for 

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

21 amended by striking the item relating to section 6 and in22 serting the following new item: 

‘‘Sec. 6. State law preemption standards for Federal savings associations and 

subsidiaries clarified.’’. 
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1 SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS 

2 AND SAVINGS ASSOCIATIONS. 

3 (a) NATIONAL BANKS.—Section 5136C of the Revised 

4 Statutes of the United States (as added by this subtitle) 

5 is amended by adding at the end the following: 

6 ‘‘(i) VISITORIAL POWERS.— 

7 ‘‘(1) IN GENERAL.—In accordance with the deci8 sion of the Supreme Court of the United States in 

9 Cuomo v. Clearing House Assn., L. L. C. (129 S. Ct. 

10 2710 (2009)), no provision of this title which relates 

11 to visitorial powers or otherwise limits or restricts the 

12 visitorial authority to which any national bank is 

13 subject shall be construed as limiting or restricting 

14 the authority of any attorney general (or other chief 

15 law enforcement officer) of any State to bring an ac16 tion against a national bank in a court of appro17 priate jurisdiction to enforce an applicable law and 

18 to seek relief as authorized by such law. 

19 ‘‘(j) ENFORCEMENT ACTIONS.—The ability of the 

20 Comptroller of the Currency to bring an enforcement action 

21 under this title or section 5 of the Federal Trade Commis22 sion Act does not preclude any private party from enforcing 

23 rights granted under Federal or State law in the courts.’’. 

24 (b) SAVINGS ASSOCIATIONS.—Section 6 of the Home 

25 Owners’ Loan Act (as added by this title) is amended by 

26 adding at the end the following: 
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1 ‘‘(c) VISITORIAL POWERS.—The provisions of sections 

2 5136C(i) of the Revised Statutes of the United States shall 

3 apply to Federal savings associations, and any subsidiary 

4 thereof, to the same extent and in the same manner as if 

5 such savings associations, or subsidiaries thereof, were na6 tional banks or subsidiaries of national banks, respec7 tively.’’ 

8 ‘‘(d) ENFORCEMENT ACTIONS.—The ability of the 

9 Comptroller of the Currency to bring an enforcement action 

10 under this Act or section 5 of the Federal Trade Commis11 sion Act does not preclude any private party from enforcing 

12 rights granted under Federal or State law in the courts.’’. 

13 SEC. 1048. EFFECTIVE DATE. 

14 This subtitle shall become effective on the designated 

15 transfer date. 

16 Subtitle E—Enforcement Powers 

17 SEC. 1051. DEFINITIONS. 

18 For purposes of this subtitle, the following definitions 

19 shall apply: 

20 (1) BUREAU INVESTIGATION.—The term ‘‘Bureau 

21 investigation’’ means any inquiry conducted by a Bu22 reau investigator for the purpose of ascertaining 

23 whether any person is or has been engaged in any 

24 conduct that is a violation, as defined in this section. 
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1 (2) BUREAU INVESTIGATOR.—The term ‘‘Bureau 

2 investigator’’ means any attorney or investigator em3 ployed by the Bureau who is charged with the duty 

4 of enforcing or carrying into effect any Federal con5 sumer financial law. 

6 (3) CIVIL INVESTIGATIVE DEMAND AND DE7 MAND.—The terms ‘‘civil investigative demand’’ and 

8 ‘‘demand’’ mean any demand issued by the Bureau. 

9 (4) CUSTODIAN.—The term ‘‘custodian’’ means 

10 the custodian or any deputy custodian designated by 

11 the Bureau. 

12 (5) DOCUMENTARY MATERIAL.—The term ‘‘docu13 mentary material’’ includes the original or any copy 

14 of any book, document, record, report, memorandum, 

15 paper, communication, tabulation, chart, logs, elec16 tronic files, or other data or data compilations stored 

17 in any medium. 

18 (6) VIOLATION.—The term ‘‘violation’’ means 

19 any act or omission that, if proved, would constitute 

20 a violation of any provision of Federal consumer fi21 nancial law. 

22 SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DIS23 COVERY. 

24 (a) JOINT INVESTIGATIONS.— 
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1 (1) IN GENERAL.—The Bureau or, where appro2 priate, a Bureau investigator, may engage in joint 

3 investigations and requests for information, as au4 thorized under this title. 

5 (2) FAIR LENDING.—The authority under para6 graph (1) includes matters relating to fair lending, 

7 and where appropriate, joint investigations with, and 

8 requests for information from, the Secretary of Hous9 ing and Urban Development, the Attorney General of 

10 the United States, or both. 

11 (b) SUBPOENAS.— 

12 (1) IN GENERAL.—The Bureau or a Bureau in13 vestigator may issue subpoenas for the attendance and 

14 testimony of witnesses and the production of relevant 

15 papers, books, documents, or other material in connec16 tion with hearings under this title. 

17 (2) FAILURE TO OBEY.—In the case of contu18 macy or refusal to obey a subpoena issued pursuant 

19 to this paragraph and served upon any person, the 

20 district court of the United States for any district in 

21 which such person is found, resides, or transacts busi22 ness, upon application by the Bureau or a Bureau in23 vestigator and after notice to such person, may issue 

24 an order requiring such person to appear and give 
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1 testimony or to appear and produce documents or 

2 other material. 

3 (3) CONTEMPT.—Any failure to obey an order of 

4 the court under this subsection may be punished by 

5 the court as a contempt thereof. 

6 (c) DEMANDS.— 

7 (1) IN GENERAL.—Whenever the Bureau has rea8 son to believe that any person may be in possession, 

9 custody, or control of any documentary material or 

10 tangible things, or may have any information, rel11 evant to a violation, the Bureau may, before the insti12 tution of any proceedings under the Federal consumer 

13 financial law, issue in writing, and cause to be served 

14 upon such person, a civil investigative demand re15 quiring such person to— 

16 (A) produce such documentary material for 

17 inspection and copying or reproduction in the 

18 form or medium requested by the Bureau; 

19 (B) submit such tangible things; 

20 (C) file written reports or answers to ques21 tions; 

22 (D) give oral testimony concerning docu23 mentary material, tangible things, or other in24 formation; or 
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1 (E) furnish any combination of such mate2 rial, answers, or testimony. 

3 (2) REQUIREMENTS.—Each civil investigative 

4 demand shall state the nature of the conduct consti5 tuting the alleged violation which is under investiga6 tion and the provision of law applicable to such viola7 tion. 

8 (3) PRODUCTION OF DOCUMENTS.—Each civil 

9 investigative demand for the production of documen10 tary material shall— 

11 (A) describe each class of documentary ma12 terial to be produced under the demand with 

13 such definiteness and certainty as to permit such 

14 material to be fairly identified; 

15 (B) prescribe a return date or dates which 

16 will provide a reasonable period of time within 

17 which the material so demanded may be assem18 bled and made available for inspection and copy19 ing or reproduction; and 

20 (C) identify the custodian to whom such 

21 material shall be made available. 

22 (4) PRODUCTION OF THINGS.—Each civil inves23 tigative demand for the submission of tangible things 

24 shall— 
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1 (A) describe each class of tangible things to 

2 be submitted under the demand with such defi3 niteness and certainty as to permit such things 

4 to be fairly identified; 

5 (B) prescribe a return date or dates which 

6 will provide a reasonable period of time within 

7 which the things so demanded may be assembled 

8 and submitted; and 

9 (C) identify the custodian to whom such 

10 things shall be submitted. 

11 (5) DEMAND FOR WRITTEN REPORTS OR AN12 SWERS.—Each civil investigative demand for written 

13 reports or answers to questions shall— 

14 (A) propound with definiteness and cer15 tainty the reports to be produced or the questions 

16 to be answered; 

17 (B) prescribe a date or dates at which time 

18 written reports or answers to questions shall be 

19 submitted; and 

20 (C) identify the custodian to whom such re21 ports or answers shall be submitted. 

22 (6) ORAL TESTIMONY.—Each civil investigative 

23 demand for the giving of oral testimony shall— 

24 (A) prescribe a date, time, and place at 

25 which oral testimony shall be commenced; and 
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1 (B) identify a Bureau investigator who 

2 shall conduct the investigation and the custodian 

3 to whom the transcript of such investigation 

4 shall be submitted. 

5 (7) SERVICE.—Any civil investigative demand 

6 and any enforcement petition filed under this section 

7 may be served— 

8 (A) by any Bureau investigator at any 

9 place within the territorial jurisdiction of any 

10 court of the United States; and 

11 (B) upon any person who is not found 

12 within the territorial jurisdiction of any court of 

13 the United States— 

14 (i) in such manner as the Federal 

15 Rules of Civil Procedure prescribe for serv16 ice in a foreign nation; and 

17 (ii) to the extent that the courts of the 

18 United States have authority to assert juris19 diction over such person, consistent with 

20 due process, the United States District 

21 Court for the District of Columbia shall 

22 have the same jurisdiction to take any ac23 tion respecting compliance with this section 

24 by such person that such district court 

25 would have if such person were personally 
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1 within the jurisdiction of such district 

2 court. 

3 (8) METHOD OF SERVICE.—Service of any civil 

4 investigative demand or any enforcement petition 

5 filed under this section may be made upon a person, 

6 including any legal entity, by— 

7 (A) delivering a duly executed copy of such 

8 demand or petition to the individual or to any 

9 partner, executive officer, managing agent, or 

10 general agent of such person, or to any agent of 

11 such person authorized by appointment or by 

12 law to receive service of process on behalf of such 

13 person; 

14 (B) delivering a duly executed copy of such 

15 demand or petition to the principal office or 

16 place of business of the person to be served; or 

17 (C) depositing a duly executed copy in the 

18 United States mails, by registered or certified 

19 mail, return receipt requested, duly addressed to 

20 such person at the principal office or place of 

21 business of such person. 

22 (9) PROOF OF SERVICE.— 

23 (A) IN GENERAL.—A verified return by the 

24 individual serving any civil investigative de25 mand or any enforcement petition filed under 
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1 this section setting forth the manner of such serv2 ice shall be proof of such service. 

3 (B) RETURN RECEIPTS.—In the case of 

4 service by registered or certified mail, such re5 turn shall be accompanied by the return post of6 fice receipt of delivery of such demand or en7 forcement petition. 

8 (10) PRODUCTION OF DOCUMENTARY MATE9 RIAL.—The production of documentary material in 

10 response to a civil investigative demand shall be made 

11 under a sworn certificate, in such form as the demand 

12 designates, by the person, if a natural person, to 

13 whom the demand is directed or, if not a natural per14 son, by any person having knowledge of the facts and 

15 circumstances relating to such production, to the ef16 fect that all of the documentary material required by 

17 the demand and in the possession, custody, or control 

18 of the person to whom the demand is directed has 

19 been produced and made available to the custodian. 

20 (11) SUBMISSION OF TANGIBLE THINGS.—The 

21 submission of tangible things in response to a civil 

22 investigative demand shall be made under a sworn 

23 certificate, in such form as the demand designates, by 

24 the person to whom the demand is directed or, if not 

25 a natural person, by any person having knowledge of 
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1 the facts and circumstances relating to such produc2 tion, to the effect that all of the tangible things re3 quired by the demand and in the possession, custody, 

4 or control of the person to whom the demand is di5 rected have been submitted to the custodian. 

6 (12) SEPARATE ANSWERS.—Each reporting re7 quirement or question in a civil investigative demand 

8 shall be answered separately and fully in writing 

9 under oath, unless it is objected to, in which event the 

10 reasons for the objection shall be stated in lieu of an 

11 answer, and it shall be submitted under a sworn cer12 tificate, in such form as the demand designates, by 

13 the person, if a natural person, to whom the demand 

14 is directed or, if not a natural person, by any person 

15 responsible for answering each reporting requirement 

16 or question, to the effect that all information required 

17 by the demand and in the possession, custody, control, 

18 or knowledge of the person to whom the demand is di19 rected has been submitted. 

20 (13) TESTIMONY.— 

21 (A) IN GENERAL.— 

22 (i) OATH OR AFFIRMATION.—Any Bu23 reau investigator before whom oral testi24 mony is to be taken shall put the witness 

25 under oath or affirmation, and shall per-
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1 sonally, or by any individual acting under 

2 the direction of and in the presence of the 

3 Bureau investigator, record the testimony of 

4 the witness. 

5 (ii) TRANSCRIPTION.—The testimony 

6 shall be taken stenographically and tran7 scribed. 

8 (iii) TRANSMISSION TO CUSTODIAN.— 

9 After the testimony is fully transcribed, the 

10 Bureau investigator before whom the testi11 mony is taken shall promptly transmit a 

12 copy of the transcript of the testimony to 

13 the custodian. 

14 (B) PARTIES PRESENT.—Any Bureau in15 vestigator before whom oral testimony is to be 

16 taken shall exclude from the place where the tes17 timony is to be taken all other persons, except 

18 the person giving the testimony, the attorney of 

19 that person, the officer before whom the testi20 mony is to be taken, and any stenographer tak21 ing such testimony. 

22 (C) LOCATION.—The oral testimony of any 

23 person taken pursuant to a civil investigative de24 mand shall be taken in the judicial district of the 

25 United States in which such person resides, is 
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1 found, or transacts business, or in such other 

2 place as may be agreed upon by the Bureau in3 vestigator before whom the oral testimony of such 

4 person is to be taken and such person. 

5 (D) ATTORNEY REPRESENTATION.— 

6 (i) IN GENERAL.—Any person com7 pelled to appear under a civil investigative 

8 demand for oral testimony pursuant to this 

9 section may be accompanied, represented, 

10 and advised by an attorney. 

11 (ii) AUTHORITY.—The attorney may 

12 advise a person described in clause (i), in 

13 confidence, either upon the request of such 

14 person or upon the initiative of the attor15 ney, with respect to any question asked of 

16 such person. 

17 (iii) OBJECTIONS.—A person described 

18 in clause (i), or the attorney for that per19 son, may object on the record to any ques20 tion, in whole or in part, and such person 

21 shall briefly state for the record the reason 

22 for the objection. An objection may properly 

23 be made, received, and entered upon the 

24 record when it is claimed that such person 

25 is entitled to refuse to answer the question 
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1 on grounds of any constitutional or other 

2 legal right or privilege, including the privi3 lege against self-incrimination, but such 

4 person shall not otherwise object to or refuse 

5 to answer any question, and such person or 

6 attorney shall not otherwise interrupt the 

7 oral examination. 

8 (iv) REFUSAL TO ANSWER.—If a per9 son described in clause (i) refuses to answer 

10 any question— 

11 (I) the Bureau may petition the 

12 district court of the United States pur13 suant to this section for an order com14 pelling such person to answer such 

15 question; and 

16 (II) on grounds of the privilege 

17 against self-incrimination, the testi18 mony of such person may be compelled 

19 in accordance with the provisions of 

20 section 6004 of title 18, United States 

21 Code. 

22 (E) TRANSCRIPTS.—For purposes of this 

23 subsection— 

24 (i) after the testimony of any witness 

25 is fully transcribed, the Bureau investigator 
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1 shall afford the witness (who may be accom2 panied by an attorney) a reasonable oppor3 tunity to examine the transcript; 

4 (ii) the transcript shall be read to or 

5 by the witness, unless such examination and 

6 reading are waived by the witness; 

7 (iii) any changes in form or substance 

8 which the witness desires to make shall be 

9 entered and identified upon the transcript 

10 by the Bureau investigator, with a state11 ment of the reasons given by the witness for 

12 making such changes; 

13 (iv) the transcript shall be signed by 

14 the witness, unless the witness in writing 

15 waives the signing, is ill, cannot be found, 

16 or refuses to sign; and 

17 (v) if the transcript is not signed by 

18 the witness during the 30-day period fol19 lowing the date on which the witness is first 

20 afforded a reasonable opportunity to exam21 ine the transcript, the Bureau investigator 

22 shall sign the transcript and state on the 

23 record the fact of the waiver, illness, absence 

24 of the witness, or the refusal to sign, to-
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1 gether with any reasons given for the failure 

2 to sign. 

3 (F) CERTIFICATION BY INVESTIGATOR.—The 

4 Bureau investigator shall certify on the tran5 script that the witness was duly sworn by him 

6 or her and that the transcript is a true record 

7 of the testimony given by the witness, and the 

8 Bureau investigator shall promptly deliver the 

9 transcript or send it by registered or certified 

10 mail to the custodian. 

11 (G) COPY OF TRANSCRIPT.—The Bureau in12 vestigator shall furnish a copy of the transcript 

13 (upon payment of reasonable charges for the 

14 transcript) to the witness only, except that the 

15 Bureau may for good cause limit such witness to 

16 inspection of the official transcript of his testi17 mony. 

18 (H) WITNESS FEES.—Any witness appear19 ing for the taking of oral testimony pursuant to 

20 a civil investigative demand shall be entitled to 

21 the same fees and mileage which are paid to wit22 nesses in the district courts of the United States. 

23 (d) CONFIDENTIAL TREATMENT OF DEMAND MATE24 RIAL.— 
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1 (1) IN GENERAL.—Documentary materials and 

2 tangible things received as a result of a civil inves3 tigative demand shall be subject to requirements and 

4 procedures regarding confidentiality, in accordance 

5 with rules established by the Bureau. 

6 (2) DISCLOSURE TO CONGRESS.—No rule estab7 lished by the Bureau regarding the confidentiality of 

8 materials submitted to, or otherwise obtained by, the 

9 Bureau shall be intended to prevent disclosure to ei10 ther House of Congress or to an appropriate com11 mittee of the Congress, except that the Bureau is per12 mitted to adopt rules allowing prior notice to any 

13 party that owns or otherwise provided the material to 

14 the Bureau and had designated such material as con15 fidential. 

16 (e) PETITION FOR ENFORCEMENT.— 

17 (1) IN GENERAL.—Whenever any person fails to 

18 comply with any civil investigative demand duly 

19 served upon him under this section, or whenever satis20 factory copying or reproduction of material requested 

21 pursuant to the demand cannot be accomplished and 

22 such person refuses to surrender such material, the 

23 Bureau, through such officers or attorneys as it may 

24 designate, may file, in the district court of the United 

25 States for any judicial district in which such person 
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1 resides, is found, or transacts business, and serve 

2 upon such person, a petition for an order of such 

3 court for the enforcement of this section. 

4 (2) SERVICE OF PROCESS.—All process of any 

5 court to which application may be made as provided 

6 in this subsection may be served in any judicial dis7 trict. 

8 (f) PETITION FOR ORDER MODIFYING OR SETTING

9 ASIDE DEMAND.— 

10 (1) IN GENERAL.—Not later than 20 days after 

11 the service of any civil investigative demand upon 

12 any person under subsection (b), or at any time be13 fore the return date specified in the demand, which14 ever period is shorter, or within such period exceeding 

15 20 days after service or in excess of such return date 

16 as may be prescribed in writing, subsequent to serv17 ice, by any Bureau investigator named in the de18 mand, such person may file with the Bureau a peti19 tion for an order by the Bureau modifying or setting 

20 aside the demand. 

21 (2) COMPLIANCE DURING PENDENCY.—The time 

22 permitted for compliance with the demand in whole 

23 or in part, as determined proper and ordered by the 

24 Bureau, shall not run during the pendency of a peti25 tion under paragraph (1) at the Bureau, except that 
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1 such person shall comply with any portions of the de2 mand not sought to be modified or set aside. 

3 (3) SPECIFIC GROUNDS.—A petition under para4 graph (1) shall specify each ground upon which the 

5 petitioner relies in seeking relief, and may be based 

6 upon any failure of the demand to comply with the 

7 provisions of this section, or upon any constitutional 

8 or other legal right or privilege of such person. 

9 (g) CUSTODIAL CONTROL.—At any time during which 

10 any custodian is in custody or control of any documentary 

11 material, tangible things, reports, answers to questions, or 

12 transcripts of oral testimony given by any person in com13 pliance with any civil investigative demand, such person 

14 may file, in the district court of the United States for the 

15 judicial district within which the office of such custodian 

16 is situated, and serve upon such custodian, a petition for 

17 an order of such court requiring the performance by such 

18 custodian of any duty imposed upon him by this section 

19 or rule promulgated by the Bureau. 

20 (h) JURISDICTION OF COURT.— 

21 (1) IN GENERAL.—Whenever any petition is filed 

22 in any district court of the United States under this 

23 section, such court shall have jurisdiction to hear and 

24 determine the matter so presented, and to enter such 
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1 order or orders as may be required to carry out the 

2 provisions of this section. 

3 (2) APPEAL.—Any final order entered as de4 scribed in paragraph (1) shall be subject to appeal 

5 pursuant to section 1291 of title 28, United States 

6 Code. 

7 SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS. 

8 (a) IN GENERAL.—The Bureau is authorized to con9 duct hearings and adjudication proceedings with respect to 

10 any person in the manner prescribed by chapter 5 of title 

11 5, United States Code in order to ensure or enforce compli12 ance with— 

13 (1) the provisions of this title, including any 

14 rules prescribed by the Bureau under this title; and 

15 (2) any other Federal law that the Bureau is au16 thorized to enforce, including an enumerated con17 sumer law, and any regulations or order prescribed 

18 thereunder, unless such Federal law specifically limits 

19 the Bureau from conducting a hearing or adjudica20 tion proceeding and only to the extent of such limita21 tion. 

22 (b) SPECIAL RULES FOR CEASE-AND-DESIST PRO23 CEEDINGS.— 

24 (1) ORDERS AUTHORIZED.— 
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1 (A) IN GENERAL.—If, in the opinion of the 

2 Bureau, any covered person or service provider 

3 is engaging or has engaged in an activity that 

4 violates a law, rule, or any condition imposed in 

5 writing on the person by the Bureau, the Bureau 

6 may, subject to sections 1024, 1025, and 1026, 

7 issue and serve upon the covered person or serv8 ice provider a notice of charges in respect thereof. 

9 (B) CONTENT OF NOTICE.—The notice 

10 under subparagraph (A) shall contain a state11 ment of the facts constituting the alleged viola12 tion or violations, and shall fix a time and place 

13 at which a hearing will be held to determine 

14 whether an order to cease and desist should issue 

15 against the covered person or service provider, 

16 such hearing to be held not earlier than 30 days 

17 nor later than 60 days after the date of service 

18 of such notice, unless an earlier or a later date 

19 is set by the Bureau, at the request of any party 

20 so served. 

21 (C) CONSENT.—Unless the party or parties 

22 served under subparagraph (B) appear at the 

23 hearing personally or by a duly authorized rep24 resentative, such person shall be deemed to have 
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1 consented to the issuance of the cease-and-desist 

2 order. 

3 (D) PROCEDURE.—In the event of consent 

4 under subparagraph (C), or if, upon the record, 

5 made at any such hearing, the Bureau finds that 

6 any violation specified in the notice of charges 

7 has been established, the Bureau may issue and 

8 serve upon the covered person or service provider 

9 an order to cease and desist from the violation 

10 or practice. Such order may, by provisions which 

11 may be mandatory or otherwise, require the cov12 ered person or service provider to cease and de13 sist from the subject activity, and to take affirm14 ative action to correct the conditions resulting 

15 from any such violation. 

16 (2) EFFECTIVENESS OF ORDER.—A cease-and-de17 sist order shall become effective at the expiration of 30 

18 days after the date of service of an order under para19 graph (1) upon the covered person or service provider 

20 concerned (except in the case of a cease-and-desist 

21 order issued upon consent, which shall become effec22 tive at the time specified therein), and shall remain 

23 effective and enforceable as provided therein, except to 

24 such extent as the order is stayed, modified, termi-
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1 nated, or set aside by action of the Bureau or a re2 viewing court. 

3 (3) DECISION AND APPEAL.—Any hearing pro4 vided for in this subsection shall be held in the Fed5 eral judicial district or in the territory in which the 

6 residence or principal office or place of business of the 

7 person is located unless the person consents to another 

8 place, and shall be conducted in accordance with the 

9 provisions of chapter 5 of title 5 of the United States 

10 Code. After such hearing, and within 90 days after 

11 the Bureau has notified the parties that the case has 

12 been submitted to the Bureau for final decision, the 

13 Bureau shall render its decision (which shall include 

14 findings of fact upon which its decision is predicated) 

15 and shall issue and serve upon each party to the pro16 ceeding an order or orders consistent with the provi17 sions of this section. Judicial review of any such 

18 order shall be exclusively as provided in this sub19 section. Unless a petition for review is timely filed in 

20 a court of appeals of the United States, as provided 

21 in paragraph (4), and thereafter until the record in 

22 the proceeding has been filed as provided in para23 graph (4), the Bureau may at any time, upon such 

24 notice and in such manner as the Bureau shall deter25 mine proper, modify, terminate, or set aside any such 
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1 order. Upon filing of the record as provided, the Bu2 reau may modify, terminate, or set aside any such 

3 order with permission of the court. 

4 (4) APPEAL TO COURT OF APPEALS.—Any party 

5 to any proceeding under this subsection may obtain 

6 a review of any order served pursuant to this sub7 section (other than an order issued with the consent 

8 of the person concerned) by the filing in the court of 

9 appeals of the United States for the circuit in which 

10 the principal office of the covered person is located, or 

11 in the United States Court of Appeals for the District 

12 of Columbia Circuit, within 30 days after the date of 

13 service of such order, a written petition praying that 

14 the order of the Bureau be modified, terminated, or 

15 set aside. A copy of such petition shall be forthwith 

16 transmitted by the clerk of the court to the Bureau, 

17 and thereupon the Bureau shall file in the court the 

18 record in the proceeding, as provided in section 2112 

19 of title 28 of the United States Code. Upon the filing 

20 of such petition, such court shall have jurisdiction, 

21 which upon the filing of the record shall except as 

22 provided in the last sentence of paragraph (3) be ex23 clusive, to affirm, modify, terminate, or set aside, in 

24 whole or in part, the order of the Bureau. Review of 

25 such proceedings shall be had as provided in chapter 
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1 7 of title 5 of the United States Code. The judgment 

2 and decree of the court shall be final, except that the 

3 same shall be subject to review by the Supreme Court 

4 of the United States, upon certiorari, as provided in 

5 section 1254 of title 28 of the United States Code. 

6 (5) NO STAY.—The commencement of proceedings 

7 for judicial review under paragraph (4) shall not, un8 less specifically ordered by the court, operate as a 

9 stay of any order issued by the Bureau. 

10 (c) SPECIAL RULES FOR TEMPORARY CEASE-AND-DE11 SIST PROCEEDINGS.— 

12 (1) IN GENERAL.—Whenever the Bureau deter13 mines that the violation specified in the notice of 

14 charges served upon a person, including a service pro15 vider, pursuant to subsection (b), or the continuation 

16 thereof, is likely to cause the person to be insolvent or 

17 otherwise prejudice the interests of consumers before 

18 the completion of the proceedings conducted pursuant 

19 to subsection (b), the Bureau may issue a temporary 

20 order requiring the person to cease and desist from 

21 any such violation or practice and to take affirmative 

22 action to prevent or remedy such insolvency or other 

23 condition pending completion of such proceedings. 

24 Such order may include any requirement authorized 

25 under this subtitle. Such order shall become effective 
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1 upon service upon the person and, unless set aside, 

2 limited, or suspended by a court in proceedings au3 thorized by paragraph (2), shall remain effective and 

4 enforceable pending the completion of the administra5 tive proceedings pursuant to such notice and until 

6 such time as the Bureau shall dismiss the charges 

7 specified in such notice, or if a cease-and-desist order 

8 is issued against the person, until the effective date of 

9 such order. 

10 (2) APPEAL.—Not later than 10 days after the 

11 covered person or service provider concerned has been 

12 served with a temporary cease-and-desist order, the 

13 person may apply to the United States district court 

14 for the judicial district in which the residence or 

15 principal office or place of business of the person is 

16 located, or the United States District Court for the 

17 District of Columbia, for an injunction setting aside, 

18 limiting, or suspending the enforcement, operation, or 

19 effectiveness of such order pending the completion of 

20 the administrative proceedings pursuant to the notice 

21 of charges served upon the person under subsection 

22 (b), and such court shall have jurisdiction to issue 

23 such injunction. 

24 (3) INCOMPLETE OR INACCURATE RECORDS.— 
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1 (A) TEMPORARY ORDER.—If a notice of 

2 charges served under subsection (b) specifies, on 

3 the basis of particular facts and circumstances, 

4 that the books and records of a covered person or 

5 service provider are so incomplete or inaccurate 

6 that the Bureau is unable to determine the fi7 nancial condition of that person or the details or 

8 purpose of any transaction or transactions that 

9 may have a material effect on the financial con10 dition of that person, the Bureau may issue a 

11 temporary order requiring— 

12 (i) the cessation of any activity or 

13 practice which gave rise, whether in whole 

14 or in part, to the incomplete or inaccurate 

15 state of the books or records; or 

16 (ii) affirmative action to restore such 

17 books or records to a complete and accurate 

18 state, until the completion of the pro19 ceedings under subsection (b)(1). 

20 (B) EFFECTIVE PERIOD.—Any temporary 

21 order issued under subparagraph (A)— 

22 (i) shall become effective upon service; 

23 and 

24 (ii) unless set aside, limited, or sus25 pended by a court in proceedings under 
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1 paragraph (2), shall remain in effect and 

2 enforceable until the earlier of— 

3 (I) the completion of the pro4 ceeding initiated under subsection (b) 

5 in connection with the notice of 

6 charges; or 

7 (II) the date the Bureau deter8 mines, by examination or otherwise, 

9 that the books and records of the cov10 ered person or service provider are ac11 curate and reflect the financial condi12 tion thereof. 

13 (d) SPECIAL RULES FOR ENFORCEMENT OF OR14 DERS.— 

15 (1) IN GENERAL.—The Bureau may in its dis16 cretion apply to the United States district court with17 in the jurisdiction of which the principal office or 

18 place of business of the person is located, for the en19 forcement of any effective and outstanding notice or 

20 order issued under this section, and such court shall 

21 have jurisdiction and power to order and require 

22 compliance herewith. 

23 (2) EXCEPTION.—Except as otherwise provided 

24 in this subsection, no court shall have jurisdiction to 

25 affect by injunction or otherwise the issuance or en-
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1 forcement of any notice or order or to review, modify, 

2 suspend, terminate, or set aside any such notice or 

3 order. 

4 (e) RULES.—The Bureau shall prescribe rules estab5 lishing such procedures as may be necessary to carry out 

6 this section. 

7 SEC. 1054. LITIGATION AUTHORITY. 

8 (a) IN GENERAL.—If any person violates a Federal 

9 consumer financial law, the Bureau may, subject to sections 

10 1024, 1025, and 1026, commence a civil action against such 

11 person to impose a civil penalty or to seek all appropriate 

12 legal and equitable relief including a permanent or tem13 porary injunction as permitted by law. 

14 (b) REPRESENTATION.—The Bureau may act in its 

15 own name and through its own attorneys in enforcing any 

16 provision of this title, rules thereunder, or any other law 

17 or regulation, or in any action, suit, or proceeding to which 

18 the Bureau is a party. 

19 (c) COMPROMISE OF ACTIONS.—The Bureau may com20 promise or settle any action if such compromise is approved 

21 by the court. 

22 (d) NOTICE TO THE ATTORNEY GENERAL.—When 

23 commencing a civil action under Federal consumer finan24 cial law, or any rule thereunder, the Bureau shall notify 

25 the Attorney General and, with respect to a civil action 
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1 against an insured depository institution or insured credit 

2 union, the appropriate prudential regulator. 

3 (e) APPEARANCE BEFORE THE SUPREME COURT.— 

4 The Bureau may represent itself in its own name before 

5 the Supreme Court of the United States, provided that the 

6 Bureau makes a written request to the Attorney General 

7 within the 10-day period which begins on the date of entry 

8 of the judgment which would permit any party to file a 

9 petition for writ of certiorari, and the Attorney General 

10 concurs with such request or fails to take action within 60 

11 days of the request of the Bureau. 

12 (f) FORUM.—Any civil action brought under this title 

13 may be brought in a United States district court or in any 

14 court of competent jurisdiction of a state in a district in 

15 which the defendant is located or resides or is doing busi16 ness, and such court shall have jurisdiction to enjoin such 

17 person and to require compliance with any Federal con18 sumer financial law. 

19 (g) TIME FOR BRINGING ACTION.— 

20 (1) IN GENERAL.—Except as otherwise permitted 

21 by law or equity, no action may be brought under 

22 this title more than 3 years after the date of discovery 

23 of the violation to which an action relates. 

24 (2) LIMITATIONS UNDER OTHER FEDERAL

25 LAWS.— 
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1 (A) IN GENERAL.—For purposes of this sub2 section, an action arising under this title does 

3 not include claims arising solely under enumer4 ated consumer laws. 

5 (B) BUREAU AUTHORITY.—In any action 

6 arising solely under an enumerated consumer 

7 law, the Bureau may commence, defend, or inter8 vene in the action in accordance with the re9 quirements of that provision of law, as applica10 ble. 

11 (C) TRANSFERRED AUTHORITY.—In any 

12 action arising solely under laws for which au13 thorities were transferred under subtitles F and 

14 H, the Bureau may commence, defend, or inter15 vene in the action in accordance with the re16 quirements of that provision of law, as applica17 ble. 

18 SEC. 1055. RELIEF AVAILABLE. 

19 (a) ADMINISTRATIVE PROCEEDINGS OR COURT AC20 TIONS.— 

21 (1) JURISDICTION.—The court (or the Bureau, as 

22 the case may be) in an action or adjudication pro23 ceeding brought under Federal consumer financial 

24 law, shall have jurisdiction to grant any appropriate 

25 legal or equitable relief with respect to a violation of 
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1 Federal consumer financial law, including a violation 

2 of a rule or order prescribed under a Federal con3 sumer financial law. 

4 (2) RELIEF.—Relief under this section may in5 clude, without limitation— 

6 (A) rescission or reformation of contracts; 

7 (B) refund of moneys or return of real 

8 property; 

9 (C) restitution; 

10 (D) disgorgement or compensation for un11 just enrichment; 

12 (E) payment of damages or other monetary 

13 relief; 

14 (F) public notification regarding the viola15 tion, including the costs of notification; 

16 (G) limits on the activities or functions of 

17 the person; and 

18 (H) civil money penalties, as set forth more 

19 fully in subsection (c). 

20 (3) NO EXEMPLARY OR PUNITIVE DAMAGES.— 

21 Nothing in this subsection shall be construed as au22 thorizing the imposition of exemplary or punitive 

23 damages. 

24 (b) RECOVERY OF COSTS.—In any action brought by 

25 the Bureau, a State attorney general, or any State regulator 
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1 to enforce any Federal consumer financial law, the Bureau, 

2 the State attorney general, or the State regulator may re3 cover its costs in connection with prosecuting such action 

4 if the Bureau, the State attorney general, or the State regu5 lator is the prevailing party in the action. 

6 (c) CIVIL MONEY PENALTY IN COURT AND ADMINIS7 TRATIVE ACTIONS.— 

8 (1) IN GENERAL.—Any person that violates, 

9 through any act or omission, any provision of Federal 

10 consumer financial law shall forfeit and pay a civil 

11 penalty pursuant to this subsection. 

12 (2) PENALTY AMOUNTS.— 

13 (A) FIRST TIER.—For any violation of a 

14 law, rule, or final order or condition imposed in 

15 writing by the Bureau, a civil penalty may not 

16 exceed $5,000 for each day during which such 

17 violation or failure to pay continues. 

18 (B) SECOND TIER.—Notwithstanding para19 graph (A), for any person that recklessly engages 

20 in a violation of a Federal consumer financial 

21 law, a civil penalty may not exceed $25,000 for 

22 each day during which such violation continues. 

23 (C) THIRD TIER.—Notwithstanding sub24 paragraphs (A) and (B), for any person that 

25 knowingly violates a Federal consumer financial 
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1 law, a civil penalty may not exceed $1,000,000 

2 for each day during which such violation con3 tinues. 

4 (3) MITIGATING FACTORS.—In determining the 

5 amount of any penalty assessed under paragraph (2), 

6 the Bureau or the court shall take into account the 

7 appropriateness of the penalty with respect to— 

8 (A) the size of financial resources and good 

9 faith of the person charged; 

10 (B) the gravity of the violation or failure to 

11 pay; 

12 (C) the severity of the risks to or losses of 

13 the consumer, which may take into account the 

14 number of products or services sold or provided; 

15 (D) the history of previous violations; and 

16 (E) such other matters as justice may re17 quire. 

18 (4) AUTHORITY TO MODIFY OR REMIT PEN19 ALTY.—The Bureau may compromise, modify, or 

20 remit any penalty which may be assessed or had al21 ready been assessed under paragraph (2). The amount 

22 of such penalty, when finally determined, shall be ex23 clusive of any sums owed by the person to the United 

24 States in connection with the costs of the proceeding, 
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1 and may be deducted from any sums owing by the 

2 United States to the person charged. 

3 (5) NOTICE AND HEARING.—No civil penalty 

4 may be assessed under this subsection with respect to 

5 a violation of any Federal consumer financial law, 

6 unless— 

7 (A) the Bureau gives notice and an oppor8 tunity for a hearing to the person accused of the 

9 violation; or 

10 (B) the appropriate court has ordered such 

11 assessment and entered judgment in favor of the 

12 Bureau. 

13 SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS. 

14 If the Bureau obtains evidence that any person, domes15 tic or foreign, has engaged in conduct that may constitute 

16 a violation of Federal criminal law, the Bureau shall have 

17 the power to transmit such evidence to the Attorney General 

18 of the United States, who may institute criminal pro19 ceedings under appropriate law. Nothing in this section af20 fects any other authority of the Bureau to disclose informa21 tion. 

22 SEC. 1057. EMPLOYEE PROTECTION. 

23 (a) IN GENERAL.—No covered person or service pro24 vider shall terminate or in any other way discriminate 

25 against, or cause to be terminated or discriminated against, 
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1 any covered employee or any authorized representative of 

2 covered employees by reason of the fact that such employee 

3 or representative, whether at the initiative of the employee 

4 or in the ordinary course of the duties of the employee (or 

5 any person acting pursuant to a request of the employee), 

6 has— 

7 (1) provided, caused to be provided, or is about 

8 to provide or cause to be provided, information to the 

9 employer, the Bureau, or any other State, local, or 

10 Federal, government authority or law enforcement 

11 agency relating to any violation of, or any act or 

12 omission that the employee reasonably believes to be 

13 a violation of, any provision of this title or any other 

14 provision of law that is subject to the jurisdiction of 

15 the Bureau, or any rule, order, standard, or prohibi16 tion prescribed by the Bureau; 

17 (2) testified or will testify in any proceeding re18 sulting from the administration or enforcement of 

19 any provision of this title or any other provision of 

20 law that is subject to the jurisdiction of the Bureau, 

21 or any rule, order, standard, or prohibition prescribed 

22 by the Bureau; 

23 (3) filed, instituted, or caused to be filed or insti24 tuted any proceeding under any Federal consumer fi25 nancial law; or 
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1 (4) objected to, or refused to participate in, any 

2 activity, policy, practice, or assigned task that the 

3 employee (or other such person) reasonably believed to 

4 be in violation of any law, rule, order, standard, or 

5 prohibition, subject to the jurisdiction of, or enforce6 able by, the Bureau. 

7 (b) DEFINITION OF COVERED EMPLOYEE.—For the 

8 purposes of this section, the term ‘‘covered employee’’ means 

9 any individual performing tasks related to the offering or 

10 provision of a consumer financial product or service. 

11 (c) PROCEDURES AND TIMETABLES.— 

12 (1) COMPLAINT.— 

13 (A) IN GENERAL.—A person who believes 

14 that he or she has been discharged or otherwise 

15 discriminated against by any person in viola16 tion of subsection (a) may, not later than 180 

17 days after the date on which such alleged viola18 tion occurs, file (or have any person file on his 

19 or her behalf) a complaint with the Secretary of 

20 Labor alleging such discharge or discrimination 

21 and identifying the person responsible for such 

22 act. 

23 (B) ACTIONS OF SECRETARY OF LABOR.— 

24 Upon receipt of such a complaint, the Secretary 

25 of Labor shall notify, in writing, the person 
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1 named in the complaint who is alleged to have 

2 committed the violation, of— 

3 (i) the filing of the complaint; 

4 (ii) the allegations contained in the 

5 complaint; 

6 (iii) the substance of evidence sup7 porting the complaint; and 

8 (iv) opportunities that will be afforded 

9 to such person under paragraph (2). 

10 (2) INVESTIGATION BY SECRETARY OF LABOR.— 

11 (A) IN GENERAL.—Not later than 60 days 

12 after the date of receipt of a complaint filed 

13 under paragraph (1), and after affording the 

14 complainant and the person named in the com15 plaint who is alleged to have committed the vio16 lation that is the basis for the complaint an op17 portunity to submit to the Secretary of Labor a 

18 written response to the complaint and an oppor19 tunity to meet with a representative of the Sec20 retary of Labor to present statements from wit21 nesses, the Secretary of Labor shall— 

22 (i) initiate an investigation and deter23 mine whether there is reasonable cause to 

24 believe that the complaint has merit; and 
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1 (ii) notify the complainant and the 

2 person alleged to have committed the viola3 tion of subsection (a), in writing, of such 

4 determination. 

5 (B) NOTICE OF RELIEF AVAILABLE.—If the 

6 Secretary of Labor concludes that there is rea7 sonable cause to believe that a violation of sub8 section (a) has occurred, the Secretary of Labor 

9 shall, together with the notice under subpara10 graph (A)(ii), issue a preliminary order pro11 viding the relief prescribed by paragraph (4)(B). 

12 (C) REQUEST FOR HEARING.—Not later 

13 than 30 days after the date of receipt of notifica14 tion of a determination of the Secretary of Labor 

15 under this paragraph, either the person alleged 

16 to have committed the violation or the complain17 ant may file objections to the findings or pre18 liminary order, or both, and request a hearing 

19 on the record. The filing of such objections shall 

20 not operate to stay any reinstatement remedy 

21 contained in the preliminary order. Any such 

22 hearing shall be conducted expeditiously, and if 

23 a hearing is not requested in such 30-day period, 

24 the preliminary order shall be deemed a final 

25 order that is not subject to judicial review. 
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1 (3) GROUNDS FOR DETERMINATION OF COM2 PLAINTS.— 

3 (A) IN GENERAL.—The Secretary of Labor 

4 shall dismiss a complaint filed under this sub5 section, and shall not conduct an investigation 

6 otherwise required under paragraph (2), unless 

7 the complainant makes a prima facie showing 

8 that any behavior described in paragraphs (1) 

9 through (4) of subsection (a) was a contributing 

10 factor in the unfavorable personnel action alleged 

11 in the complaint. 

12 (B) REBUTTAL EVIDENCE.—Notwith13 standing a finding by the Secretary of Labor 

14 that the complainant has made the showing re15 quired under subparagraph (A), no investigation 

16 otherwise required under paragraph (2) shall be 

17 conducted, if the employer demonstrates, by clear 

18 and convincing evidence, that the employer 

19 would have taken the same unfavorable personnel 

20 action in the absence of that behavior. 

21 (C) EVIDENTIARY STANDARDS.—The Sec22 retary of Labor may determine that a violation 

23 of subsection (a) has occurred only if the com24 plainant demonstrates that any behavior de25 scribed in paragraphs (1) through (4) of sub-
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1 section (a) was a contributing factor in the unfa2 vorable personnel action alleged in the com3 plaint. Relief may not be ordered under subpara4 graph (A) if the employer demonstrates by clear 

5 and convincing evidence that the employer would 

6 have taken the same unfavorable personnel ac7 tion in the absence of that behavior. 

8 (4) ISSUANCE OF FINAL ORDERS; REVIEW PROCE9 DURES.— 

10 (A) TIMING.—Not later than 120 days after 

11 the date of conclusion of any hearing under 

12 paragraph (2), the Secretary of Labor shall issue 

13 a final order providing the relief prescribed by 

14 this paragraph or denying the complaint. At any 

15 time before issuance of a final order, a pro16 ceeding under this subsection may be terminated 

17 on the basis of a settlement agreement entered 

18 into by the Secretary of Labor, the complainant, 

19 and the person alleged to have committed the 

20 violation. 

21 (B) PENALTIES.— 

22 (i) ORDER OF SECRETARY OF

23 LABOR.—If, in response to a complaint filed 

24 under paragraph (1), the Secretary of 

25 Labor determines that a violation of sub-
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1 section (a) has occurred, the Secretary of 

2 Labor shall order the person who committed 

3 such violation— 

4 (I) to take affirmative action to 

5 abate the violation; 

6 (II) to reinstate the complainant 

7 to his or her former position, together 

8 with compensation (including back 

9 pay) and restore the terms, conditions, 

10 and privileges associated with his or 

11 her employment; and 

12 (III) to provide compensatory 

13 damages to the complainant. 

14 (ii) PENALTY.—If an order is issued 

15 under clause (i), the Secretary of Labor, at 

16 the request of the complainant, shall assess 

17 against the person against whom the order 

18 is issued, a sum equal to the aggregate 

19 amount of all costs and expenses (including 

20 attorney fees and expert witness fees) rea21 sonably incurred, as determined by the Sec22 retary of Labor, by the complainant for, or 

23 in connection with, the bringing of the com24 plaint upon which the order was issued. 
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1 (C) PENALTY FOR FRIVOLOUS CLAIMS.—If 

2 the Secretary of Labor finds that a complaint 

3 under paragraph (1) is frivolous or has been 

4 brought in bad faith, the Secretary of Labor may 

5 award to the prevailing employer a reasonable 

6 attorney fee, not exceeding $1,000, to be paid by 

7 the complainant. 

8 (D) DE NOVO REVIEW.— 

9 (i) FAILURE OF THE SECRETARY TO

10 ACT.—If the Secretary of Labor has not 

11 issued a final order within 210 days after 

12 the date of filing of a complaint under this 

13 subsection, or within 90 days after the date 

14 of receipt of a written determination, the 

15 complainant may bring an action at law or 

16 equity for de novo review in the appropriate 

17 district court of the United States having 

18 jurisdiction, which shall have jurisdiction 

19 over such an action without regard to the 

20 amount in controversy, and which action 

21 shall, at the request of either party to such 

22 action, be tried by the court with a jury. 

23 (ii) PROCEDURES.—A proceeding 

24 under clause (i) shall be governed by the 

25 same legal burdens of proof specified in 
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1 paragraph (3). The court shall have juris2 diction to grant all relief necessary to make 

3 the employee whole, including injunctive re4 lief and compensatory damages, includ5 ing— 

6 (I) reinstatement with the same 

7 seniority status that the employee 

8 would have had, but for the discharge 

9 or discrimination; 

10 (II) the amount of back pay, with 

11 interest; and 

12 (III) compensation for any special 

13 damages sustained as a result of the 

14 discharge or discrimination, including 

15 litigation costs, expert witness fees, and 

16 reasonable attorney fees. 

17 (E) OTHER APPEALS.—Unless the com18 plainant brings an action under subparagraph 

19 (D), any person adversely affected or aggrieved 

20 by a final order issued under subparagraph (A) 

21 may file a petition for review of the order in the 

22 United States Court of Appeals for the circuit in 

23 which the violation with respect to which the 

24 order was issued, allegedly occurred or the cir25 cuit in which the complainant resided on the 
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1 date of such violation, not later than 60 days 

2 after the date of the issuance of the final order 

3 of the Secretary of Labor under subparagraph 

4 (A). Review shall conform to chapter 7 of title 5, 

5 United States Code. The commencement of pro6 ceedings under this subparagraph shall not, un7 less ordered by the court, operate as a stay of the 

8 order. An order of the Secretary of Labor with 

9 respect to which review could have been obtained 

10 under this subparagraph shall not be subject to 

11 judicial review in any criminal or other civil 

12 proceeding. 

13 (5) FAILURE TO COMPLY WITH ORDER.— 

14 (A) ACTIONS BY THE SECRETARY.—If any 

15 person has failed to comply with a final order 

16 issued under paragraph (4), the Secretary of 

17 Labor may file a civil action in the United 

18 States district court for the district in which the 

19 violation was found to have occurred, or in the 

20 United States district court for the District of 

21 Columbia, to enforce such order. In actions 

22 brought under this paragraph, the district courts 

23 shall have jurisdiction to grant all appropriate 

24 relief including injunctive relief and compen25 satory damages. 
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1 (B) CIVIL ACTIONS TO COMPEL COMPLI2 ANCE.—A person on whose behalf an order was 

3 issued under paragraph (4) may commence a 

4 civil action against the person to whom such 

5 order was issued to require compliance with such 

6 order. The appropriate United States district 

7 court shall have jurisdiction, without regard to 

8 the amount in controversy or the citizenship of 

9 the parties, to enforce such order. 

10 (C) AWARD OF COSTS AUTHORIZED.—The 

11 court, in issuing any final order under this 

12 paragraph, may award costs of litigation (in13 cluding reasonable attorney and expert witness 

14 fees) to any party, whenever the court determines 

15 such award is appropriate. 

16 (D) MANDAMUS PROCEEDINGS.—Any non17 discretionary duty imposed by this section shall 

18 be enforceable in a mandamus proceeding 

19 brought under section 1361 of title 28, United 

20 States Code. 

21 (d) UNENFORCEABILITY OF CERTAIN AGREEMENTS.— 

22 (1) NO WAIVER OF RIGHTS AND REMEDIES.—Ex23 cept as provided under paragraph (3), and notwith24 standing any other provision of law, the rights and 

25 remedies provided for in this section may not be 
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1 waived by any agreement, policy, form, or condition 

2 of employment, including by any predispute arbitra3 tion agreement. 

4 (2) NO PREDISPUTE ARBITRATION AGREE5 MENTS.—Except as provided under paragraph (3), 

6 and notwithstanding any other provision of law, no 

7 predispute arbitration agreement shall be valid or en8 forceable to the extent that it requires arbitration of 

9 a dispute arising under this section. 

10 (3) EXCEPTION.—Notwithstanding paragraphs 

11 (1) and (2), an arbitration provision in a collective 

12 bargaining agreement shall be enforceable as to dis13 putes arising under subsection (a)(4), unless the Bu14 reau determines, by rule, that such provision is incon15 sistent with the purposes of this title. 

16 SEC. 1058. EFFECTIVE DATE. 

17 This subtitle shall become effective on the designated 

18 transfer date. 

19 Subtitle F—Transfer of Functions 

20 and Personnel; Transitional 

21 Provisions 

22 SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTEC23 TION FUNCTIONS. 

24 (a) DEFINED TERMS.—For purposes of this subtitle— 
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1 (1) the term ‘‘consumer financial protection 

2 functions’’ means research, rulemaking, issuance of 

3 orders or guidance, supervision, examination, and en4 forcement activities, powers, and duties relating to the 

5 offering or provision of consumer financial products 

6 or services; and 

7 (2) the terms ‘‘transferor agency’’ and ‘‘trans8 feror agencies’’ mean, respectively— 

9 (A) the Board of Governors (and any Fed10 eral reserve bank, as the context requires), the 

11 Federal Deposit Insurance Corporation, the Fed12 eral Trade Commission, the National Credit 

13 Union Administration, the Office of the Comp14 troller of the Currency, the Office of Thrift Su15 pervision, and the Department of Housing and 

16 Urban Development, and the heads of those agen17 cies; and 

18 (B) the agencies listed in subparagraph (A), 

19 collectively. 

20 (b) IN GENERAL.—Except as provided in subsection 

21 (c), consumer financial protection functions are transferred 

22 as follows: 

23 (1) BOARD OF GOVERNORS.— 

24 (A) TRANSFER OF FUNCTIONS.—All con25 sumer financial protection functions of the 
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1 Board of Governors are transferred to the Bu2 reau. 

3 (B) BOARD OF GOVERNORS AUTHORITY.— 

4 The Bureau shall have all powers and duties 

5 that were vested in the Board of Governors, re6 lating to consumer financial protection func7 tions, on the day before the designated transfer 

8 date. 

9 (2) COMPTROLLER OF THE CURRENCY.— 

10 (A) TRANSFER OF FUNCTIONS.—All con11 sumer financial protection functions of the 

12 Comptroller of the Currency are transferred to 

13 the Bureau. 

14 (B) COMPTROLLER AUTHORITY.—The Bu15 reau shall have all powers and duties that were 

16 vested in the Comptroller of the Currency, relat17 ing to consumer financial protection functions, 

18 on the day before the designated transfer date. 

19 (3) DIRECTOR OF THE OFFICE OF THRIFT SU20 PERVISION.— 

21 (A) TRANSFER OF FUNCTIONS.—All con22 sumer financial protection functions of the Di23 rector of the Office of Thrift Supervision are 

24 transferred to the Bureau. 
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1 (B) DIRECTOR AUTHORITY.—The Bureau 

2 shall have all powers and duties that were vested 

3 in the Director of the Office of Thrift Super4 vision, relating to consumer financial protection 

5 functions, on the day before the designated trans6 fer date. 

7 (4) FEDERAL DEPOSIT INSURANCE CORPORA8 TION.— 

9 (A) TRANSFER OF FUNCTIONS.—All con10 sumer financial protection functions of the Fed11 eral Deposit Insurance Corporation are trans12 ferred to the Bureau. 

13 (B) CORPORATION AUTHORITY.—The Bu14 reau shall have all powers and duties that were 

15 vested in the Federal Deposit Insurance Corpora16 tion, relating to consumer financial protection 

17 functions, on the day before the designated trans18 fer date. 

19 (5) FEDERAL TRADE COMMISSION.— 

20 (A) TRANSFER OF FUNCTIONS.—The au21 thority of the Federal Trade Commission under 

22 an enumerated consumer law to prescribe rules, 

23 issue guidelines, or conduct a study or issue a 

24 report mandated under such law shall be trans25 ferred to the Bureau on the designated transfer 
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1 date. Nothing in this title shall be construed to 

2 require a mandatory transfer of any employee of 

3 the Federal Trade Commission. 

4 (B) BUREAU AUTHORITY.— 

5 (i) IN GENERAL.—The Bureau shall 

6 have all powers and duties under the enu7 merated consumer laws to prescribe rules, 

8 issue guidelines, or to conduct studies or 

9 issue reports mandated by such laws, that 

10 were vested in the Federal Trade Commis11 sion on the day before the designated trans12 fer date. 

13 (ii) FEDERAL TRADE COMMISSION

14 ACT.—Subject to subtitle B, the Bureau 

15 may enforce a rule prescribed under the 

16 Federal Trade Commission Act by the Fed17 eral Trade Commission with respect to an 

18 unfair or deceptive act or practice to the ex19 tent that such rule applies to a covered per20 son or service provider with respect to the 

21 offering or provision of a consumer finan22 cial product or service as if it were a rule 

23 prescribed under section 1031 of this title. 

24 (C) AUTHORITY OF THE FEDERAL TRADE

25 COMMISSION.— 
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1 (i) IN GENERAL.—No provision of this 

2 title shall be construed as modifying, lim3 iting, or otherwise affecting the authority of 

4 the Federal Trade Commission under the 

5 Federal Trade Commission Act or any other 

6 law, other than the authority under an enu7 merated consumer law to prescribe rules, 

8 issue official guidelines, or conduct a study 

9 or issue a report mandated under such law. 

10 (ii) COMMISSION AUTHORITY RELATING

11 TO RULES PRESCRIBED BY THE BUREAU.— 

12 Subject to subtitle B, the Federal Trade 

13 Commission shall have authority to enforce 

14 under the Federal Trade Commission Act 

15 (15 U.S.C. 41 et seq.) a rule prescribed by 

16 the Bureau under this title with respect to 

17 a covered person subject to the jurisdiction 

18 of the Federal Trade Commission under 

19 that Act, and a violation of such a rule by 

20 such a person shall be treated as a violation 

21 of a rule issued under section 18 of that Act 

22 (15 U.S.C. 57a) with respect to unfair or 

23 deceptive acts or practices. 

24 (D) COORDINATION.—To avoid duplication 

25 of or conflict between rules prescribed by the Bu-
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1 reau under section 1031 of this title and the Fed2 eral Trade Commission under section 

3 18(a)(1)(B) of the Federal Trade Commission 

4 Act that apply to a covered person or service 

5 provider with respect to the offering or provision 

6 of consumer financial products or services, the 

7 agencies shall negotiate an agreement with re8 spect to rulemaking by each agency, including 

9 consultation with the other agency prior to pro10 posing a rule and during the comment period. 

11 (E) DEFERENCE.—No provision of this title 

12 shall be construed as altering, limiting, expand13 ing, or otherwise affecting the deference that a 

14 court affords to the— 

15 (i) Federal Trade Commission in mak16 ing determinations regarding the meaning 

17 or interpretation of any provision of the 

18 Federal Trade Commission Act, or of any 

19 other Federal law for which the Commission 

20 has authority to prescribe rules; or 

21 (ii) Bureau in making determinations 

22 regarding the meaning or interpretation of 

23 any provision of a Federal consumer finan24 cial law (other than any law described in 

25 clause (i)). 
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1 (6) NATIONAL CREDIT UNION ADMINISTRA2 TION.— 

3 (A) TRANSFER OF FUNCTIONS.—All con4 sumer financial protection functions of the Na5 tional Credit Union Administration are trans6 ferred to the Bureau. 

7 (B) NATIONAL CREDIT UNION ADMINISTRA8 TION AUTHORITY.—The Bureau shall have all 

9 powers and duties that were vested in the Na10 tional Credit Union Administration, relating to 

11 consumer financial protection functions, on the 

12 day before the designated transfer date. 

13 (7) DEPARTMENT OF HOUSING AND URBAN DE14 VELOPMENT.— 

15 (A) TRANSFER OF FUNCTIONS.—All con16 sumer protection functions of the Secretary of the 

17 Department of Housing and Urban Development 

18 relating to the Real Estate Settlement Procedures 

19 Act of 1974 (12 U.S.C. 2601 et seq.) and the Se20 cure and Fair Enforcement for Mortgage Licens21 ing Act of 2008 (12 U.S.C. 5102 et seq.) are 

22 transferred to the Bureau. 

23 (B) AUTHORITY OF THE DEPARTMENT OF

24 HOUSING AND URBAN DEVELOPMENT.—The Bu25 reau shall have all powers and duties that were 
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1 vested in the Secretary of the Department of 

2 Housing and Urban Development relating to the 

3 Real Estate Settlement Procedures Act of 1974 

4 (12 U.S.C. 2601 et seq.), and the Secure and 

5 Fair Enforcement for Mortgage Licensing Act of 

6 2008 (12 U.S.C. 5101 et seq.), on the day before 

7 the designated transfer date. 

8 (c) TRANSFERS OF FUNCTIONS SUBJECT TO EXAMINA9 TION AND ENFORCEMENT AUTHORITY REMAINING WITH

10 TRANSFEROR AGENCIES.—The transfers of functions in 

11 subsection (b) do not affect the authority of the agencies 

12 identified in subsection (b) from conducting examinations 

13 or initiating and maintaining enforcement proceedings, in14 cluding performing appropriate supervisory and support 

15 functions relating thereto, in accordance with sections 1024, 

16 1025, and 1026. 

17 (d) EFFECTIVE DATE.—Subsections (b) and (c) shall 

18 become effective on the designated transfer date. 

19 SEC. 1062. DESIGNATED TRANSFER DATE. 

20 (a) IN GENERAL.—Not later than 60 days after the 

21 date of enactment of this Act, the Secretary shall— 

22 (1) in consultation with the Chairman of the 

23 Board of Governors, the Chairperson of the Corpora24 tion, the Chairman of the Federal Trade Commission, 

25 the Chairman of the National Credit Union Adminis-
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1 tration Board, the Comptroller of the Currency, the 

2 Director of the Office of Thrift Supervision, the Sec3 retary of the Department of Housing and Urban De4 velopment, and the Director of the Office of Manage5 ment and Budget, designate a single calendar date for 

6 the transfer of functions to the Bureau under section 

7 1061; and 

8 (2) publish notice of that designated date in the 

9 Federal Register. 

10 (b) CHANGING DESIGNATION.—The Secretary— 

11 (1) may, in consultation with the Chairman of 

12 the Board of Governors, the Chairperson of the Fed13 eral Deposit Insurance Corporation, the Chairman of 

14 the Federal Trade Commission, the Chairman of the 

15 National Credit Union Administration Board, the 

16 Comptroller of the Currency, the Director of the Office 

17 of Thrift Supervision, the Secretary of the Depart18 ment of Housing and Urban Development, and the 

19 Director of the Office of Management and Budget, 

20 change the date designated under subsection (a); and 

21 (2) shall publish notice of any changed des22 ignated date in the Federal Register. 

23 (c) PERMISSIBLE DATES.— 

24 (1) IN GENERAL.—Except as provided in para25 graph (2), any date designated under this section 
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1 shall be not earlier than 180 days, nor later than 18 

2 months, after the date of enactment of this Act. 

3 (2) EXTENSION OF TIME.—The Secretary may 

4 designate a date that is later than 18 months after the 

5 date of enactment of this Act if the Secretary trans6 mits to appropriate committees of Congress— 

7 (A) a written determination that orderly 

8 implementation of this title is not feasible before 

9 the date that is 18 months after the date of en10 actment of this Act; 

11 (B) an explanation of why an extension is 

12 necessary for the orderly implementation of this 

13 title; and 

14 (C) a description of the steps that will be 

15 taken to effect an orderly and timely implemen16 tation of this title within the extended time pe17 riod. 

18 (3) EXTENSION LIMITED.—In no case may any 

19 date designated under this section be later than 24 

20 months after the date of enactment of this Act. 

21 SEC. 1063. SAVINGS PROVISIONS. 

22 (a) BOARD OF GOVERNORS.— 

23 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA24 TIONS NOT AFFECTED.—Section 1061(b)(1) does not 

25 affect the validity of any right, duty, or obligation of 
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1 the United States, the Board of Governors (or any 

2 Federal reserve bank), or any other person that— 

3 (A) arises under any provision of law relat4 ing to any consumer financial protection func5 tion of the Board of Governors transferred to the 

6 Bureau by this title; and 

7 (B) existed on the day before the designated 

8 transfer date. 

9 (2) CONTINUATION OF SUITS.—No provision of 

10 this Act shall abate any proceeding commenced by or 

11 against the Board of Governors (or any Federal re12 serve bank) before the designated transfer date with 

13 respect to any consumer financial protection function 

14 of the Board of Governors (or any Federal reserve 

15 bank) transferred to the Bureau by this title, except 

16 that the Bureau, subject to sections 1024, 1025, and 

17 1026, shall be substituted for the Board of Governors 

18 (or Federal reserve bank) as a party to any such pro19 ceeding as of the designated transfer date. 

20 (b) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

21 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA22 TIONS NOT AFFECTED.—Section 1061(b)(4) does not 

23 affect the validity of any right, duty, or obligation of 

24 the United States, the Federal Deposit Insurance Cor-
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1 poration, the Board of Directors of that Corporation, 

2 or any other person, that— 

3 (A) arises under any provision of law relat4 ing to any consumer financial protection func5 tion of the Federal Deposit Insurance Corpora6 tion transferred to the Bureau by this title; and 

7 (B) existed on the day before the designated 

8 transfer date. 

9 (2) CONTINUATION OF SUITS.—No provision of 

10 this Act shall abate any proceeding commenced by or 

11 against the Federal Deposit Insurance Corporation 

12 (or the Board of Directors of that Corporation) before 

13 the designated transfer date with respect to any con14 sumer financial protection function of the Federal De15 posit Insurance Corporation transferred to the Bu16 reau by this title, except that the Bureau, subject to 

17 sections 1024, 1025, and 1026, shall be substituted for 

18 the Federal Deposit Insurance Corporation (or Board 

19 of Directors) as a party to any such proceeding as of 

20 the designated transfer date. 

21 (c) FEDERAL TRADE COMMISSION.—Section 

22 1061(b)(5) does not affect the validity of any right, duty, 

23 or obligation of the United States, the Federal Trade Com24 mission, or any other person, that— 
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1 (1) arises under any provision of law relating to 

2 any consumer financial protection function of the 

3 Federal Trade Commission transferred to the Bureau 

4 by this title; and 

5 (2) existed on the day before the designated 

6 transfer date. 

7 (d) NATIONAL CREDIT UNION ADMINISTRATION.— 

8 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA9 TIONS NOT AFFECTED.—Section 1061(b)(6) does not 

10 affect the validity of any right, duty, or obligation of 

11 the United States, the National Credit Union Admin12 istration, the National Credit Union Administration 

13 Board, or any other person, that— 

14 (A) arises under any provision of law relat15 ing to any consumer financial protection func16 tion of the National Credit Union Administra17 tion transferred to the Bureau by this title; and 

18 (B) existed on the day before the designated 

19 transfer date. 

20 (2) CONTINUATION OF SUITS.—No provision of 

21 this Act shall abate any proceeding commenced by or 

22 against the National Credit Union Administration 

23 (or the National Credit Union Administration Board) 

24 before the designated transfer date with respect to any 

25 consumer financial protection function of the Na-
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1 tional Credit Union Administration transferred to the 

2 Bureau by this title, except that the Bureau, subject 

3 to sections 1024, 1025, and 1026, shall be substituted 

4 for the National Credit Union Administration (or 

5 National Credit Union Administration Board) as a 

6 party to any such proceeding as of the designated 

7 transfer date. 

8 (e) OFFICE OF THE COMPTROLLER OF THE CUR9 RENCY.— 

10 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA11 TIONS NOT AFFECTED.—Section 1061(b)(2) does not 

12 affect the validity of any right, duty, or obligation of 

13 the United States, the Comptroller of the Currency, 

14 the Office of the Comptroller of the Currency, or any 

15 other person, that— 

16 (A) arises under any provision of law relat17 ing to any consumer financial protection func18 tion of the Comptroller of the Currency trans19 ferred to the Bureau by this title; and 

20 (B) existed on the day before the designated 

21 transfer date. 

22 (2) CONTINUATION OF SUITS.—No provision of 

23 this Act shall abate any proceeding commenced by or 

24 against the Comptroller of the Currency (or the Office 

25 of the Comptroller of the Currency) with respect to 
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1 any consumer financial protection function of the 

2 Comptroller of the Currency transferred to the Bureau 

3 by this title before the designated transfer date, except 

4 that the Bureau, subject to sections 1024, 1025, and 

5 1026, shall be substituted for the Comptroller of the 

6 Currency (or the Office of the Comptroller of the Cur7 rency) as a party to any such proceeding as of the 

8 designated transfer date. 

9 (f) OFFICE OF THRIFT SUPERVISION.— 

10 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA11 TIONS NOT AFFECTED.—Section 1061(b)(3) does not 

12 affect the validity of any right, duty, or obligation of 

13 the United States, the Director of the Office of Thrift 

14 Supervision, the Office of Thrift Supervision, or any 

15 other person, that— 

16 (A) arises under any provision of law relat17 ing to any consumer financial protection func18 tion of the Director of the Office of Thrift Super19 vision transferred to the Bureau by this title; 

20 and 

21 (B) that existed on the day before the des22 ignated transfer date. 

23 (2) CONTINUATION OF SUITS.—No provision of 

24 this Act shall abate any proceeding commenced by or 

25 against the Director of the Office of Thrift Super-
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1 vision (or the Office of Thrift Supervision) with re2 spect to any consumer financial protection function of 

3 the Director of the Office of Thrift Supervision trans4 ferred to the Bureau by this title before the designated 

5 transfer date, except that the Bureau, subject to sec6 tions 1024, 1025, and 1026, shall be substituted for 

7 the Director (or the Office of Thrift Supervision) as 

8 a party to any such proceeding as of the designated 

9 transfer date. 

10 (g) DEPARTMENT OF HOUSING AND URBAN DEVELOP11 MENT.— 

12 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA13 TIONS NOT AFFECTED.—Section 1061(b)(7) shall not 

14 affect the validity of any right, duty, or obligation of 

15 the United States, the Secretary of the Department of 

16 Housing and Urban Development (or the Department 

17 of Housing and Urban Development), or any other 

18 person, that— 

19 (A) arises under any provision of law relat20 ing to any function of the Secretary of the De21 partment of Housing and Urban Development 

22 with respect to the Real Estate Settlement Proce23 dures Act of 1974 (12 U.S.C. 2601 et seq.) or the 

24 Secure and Fair Enforcement for Mortgage Li-
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1 censing Act of 2008 (12 U.S.C. 5102 et seq.) 

2 transferred to the Bureau by this title; and 

3 (B) existed on the day before the designated 

4 transfer date. 

5 (2) CONTINUATION OF SUITS.—This title shall 

6 not abate any proceeding commenced by or against 

7 the Secretary of the Department of Housing and 

8 Urban Development (or the Department of Housing 

9 and Urban Development) with respect to any con10 sumer financial protection function of the Secretary 

11 of the Department of Housing and Urban Develop12 ment transferred to the Bureau by this title before the 

13 designated transfer date, except that the Bureau, sub14 ject to sections 1024, 1025, and 1026, shall be sub15 stituted for the Secretary of the Department of Hous16 ing and Urban Development (or the Department of 

17 Housing and Urban Development) as a party to any 

18 such proceeding as of the designated transfer date. 

19 (h) CONTINUATION OF EXISTING ORDERS, RULES, DE20 TERMINATIONS, AGREEMENTS, AND RESOLUTIONS.—All or21 ders, resolutions, determinations, agreements, and rules that 

22 have been issued, made, prescribed, or allowed to become 

23 effective by any transferor agency or by a court of com24 petent jurisdiction, in the performance of consumer finan25 cial protection functions that are transferred by this title 
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1 and that are in effect on the day before the designated trans2 fer date, shall continue in effect according to the terms of 

3 those orders, resolutions, determinations, agreements, and 

4 rules, and shall not be enforceable by or against the Bureau. 

5 (i) IDENTIFICATION OF RULES CONTINUED.—Not later 

6 than the designated transfer date, the Bureau— 

7 (1) shall, after consultation with the head of each 

8 transferor agency, identify the rules continued under 

9 subsection (h) that will be enforced by the Bureau; 

10 and 

11 (2) shall publish a list of such rules in the Fed12 eral Register. 

13 (j) STATUS OF RULES PROPOSED OR NOT YET EFFEC14 TIVE.— 

15 (1) PROPOSED RULES.—Any proposed rule of a 

16 transferor agency which that agency, in performing 

17 consumer financial protection functions transferred 

18 by this title, has proposed before the designated trans19 fer date, but has not been published as a final rule 

20 before that date, shall be deemed to be a proposed rule 

21 of the Bureau. 

22 (2) RULES NOT YET EFFECTIVE.—Any interim 

23 or final rule of a transferor agency which that agen24 cy, in performing consumer financial protection func25 tions transferred by this title, has published before the 
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1 designated transfer date, but which has not become ef2 fective before that date, shall become effective as a rule 

3 of the Bureau according to its terms. 

4 SEC. 1064. TRANSFER OF CERTAIN PERSONNEL. 

5 (a) IN GENERAL.— 

6 (1) CERTAIN FEDERAL RESERVE SYSTEM EM7 PLOYEES TRANSFERRED.— 

8 (A) IDENTIFYING EMPLOYEES FOR TRANS9 FER.—The Bureau and the Board of Governors 

10 shall— 

11 (i) jointly determine the number of em12 ployees of the Board of Governors necessary 

13 to perform or support the consumer finan14 cial protection functions of the Board of 

15 Governors that are transferred to the Bu16 reau by this title; and 

17 (ii) consistent with the number deter18 mined under clause (i), jointly identify em19 ployees of the Board of Governors for trans20 fer to the Bureau, in a manner that the Bu21 reau and the Board of Governors, in their 

22 sole discretion, determine equitable. 

23 (B) IDENTIFIED EMPLOYEES TRANS24 FERRED.—All employees of the Board of Gov25 ernors identified under subparagraph (A)(ii) 
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† HR 4173 EAS 

1 shall be transferred to the Bureau for employ2 ment. 

3 (C) FEDERAL RESERVE BANK EMPLOY4 EES.—Employees of any Federal reserve bank 

5 who, on the day before the designated transfer 

6 date, are performing consumer financial protec7 tion functions on behalf of the Board of Gov8 ernors shall be treated as employees of the Board 

9 of Governors for purposes of subparagraphs (A) 

10 and (B). 

11 (2) CERTAIN FDIC EMPLOYEES TRANSFERRED.— 

12 (A) IDENTIFYING EMPLOYEES FOR TRANS13 FER.—The Bureau and the Board of Directors of 

14 the Federal Deposit Insurance Corporation 

15 shall— 

16 (i) jointly determine the number of em17 ployees of that Corporation necessary to 

18 perform or support the consumer financial 

19 protection functions of the Corporation that 

20 are transferred to the Bureau by this title; 

21 and 

22 (ii) consistent with the number deter23 mined under clause (i), jointly identify em24 ployees of the Corporation for transfer to the 

25 Bureau, in a manner that the Bureau and 
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† HR 4173 EAS 

1 the Board of Directors of the Corporation, 

2 in their sole discretion, determine equitable. 

3 (B) IDENTIFIED EMPLOYEES TRANS4 FERRED.—All employees of the Corporation 

5 identified under subparagraph (A)(ii) shall be 

6 transferred to the Bureau for employment. 

7 (3) CERTAIN NCUA EMPLOYEES TRANSFERRED.— 

8 (A) IDENTIFYING EMPLOYEES FOR TRANS9 FER.—The Bureau and the National Credit 

10 Union Administration Board shall— 

11 (i) jointly determine the number of em12 ployees of the National Credit Union Ad13 ministration necessary to perform or sup14 port the consumer financial protection func15 tions of the National Credit Union Admin16 istration that are transferred to the Bureau 

17 by this title; and 

18 (ii) consistent with the number deter19 mined under clause (i), jointly identify em20 ployees of the National Credit Union Ad21 ministration for transfer to the Bureau, in 

22 a manner that the Bureau and the National 

23 Credit Union Administration Board, in 

24 their sole discretion, determine equitable. 
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† HR 4173 EAS 

1 (B) IDENTIFIED EMPLOYEES TRANS2 FERRED.—All employees of the National Credit 

3 Union Administration identified under subpara4 graph (A)(ii) shall be transferred to the Bureau 

5 for employment. 

6 (4) CERTAIN OFFICE OF THE COMPTROLLER OF

7 THE CURRENCY EMPLOYEES TRANSFERRED.— 

8 (A) IDENTIFYING EMPLOYEES FOR TRANS9 FER.—The Bureau and the Comptroller of the 

10 Currency shall— 

11 (i) jointly determine the number of em12 ployees of the Office of the Comptroller of 

13 the Currency necessary to perform or sup14 port the consumer financial protection func15 tions of the Office of the Comptroller of the 

16 Currency that are transferred to the Bureau 

17 by this title; and 

18 (ii) consistent with the number deter19 mined under clause (i), jointly identify em20 ployees of the Office of the Comptroller of 

21 the Currency for transfer to the Bureau, in 

22 a manner that the Bureau and the Office of 

23 the Comptroller of the Currency, in their 

24 sole discretion, determine equitable. 
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† HR 4173 EAS 

1 (B) IDENTIFIED EMPLOYEES TRANS2 FERRED.—All employees of the Office of the 

3 Comptroller of the Currency identified under 

4 subparagraph (A)(ii) shall be transferred to the 

5 Bureau for employment. 

6 (5) CERTAIN OFFICE OF THRIFT SUPERVISION

7 EMPLOYEES TRANSFERRED.— 

8 (A) IDENTIFYING EMPLOYEES FOR TRANS9 FER.—The Bureau and the Director of the Office 

10 of Thrift Supervision shall— 

11 (i) jointly determine the number of em12 ployees of the Office of Thrift Supervision 

13 necessary to perform or support the con14 sumer financial protection functions of the 

15 Office of Thrift Supervision that are trans16 ferred to the Bureau by this title; and 

17 (ii) consistent with the number deter18 mined under clause (i), jointly identify em19 ployees of the Office of Thrift Supervision 

20 for transfer to the Bureau, in a manner 

21 that the Bureau and the Office of Thrift Su22 pervision, in their sole discretion, determine 

23 equitable. 

24 (B) IDENTIFIED EMPLOYEES TRANS25 FERRED.—All employees of the Office of Thrift 
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† HR 4173 EAS 

1 Supervision identified under subparagraph 

2 (A)(ii) shall be transferred to the Bureau for em3 ployment. 

4 (6) CERTAIN EMPLOYEES OF DEPARTMENT OF

5 HOUSING AND URBAN DEVELOPMENT TRANS6 FERRED.— 

7 (A) IDENTIFYING EMPLOYEES FOR TRANS8 FER.—The Bureau and the Secretary of the De9 partment of Housing and Urban Development 

10 shall— 

11 (i) jointly determine the number of em12 ployees of the Department of Housing and 

13 Urban Development necessary to perform or 

14 support the consumer protection functions 

15 of the Department that are transferred to 

16 the Bureau by this title; and 

17 (ii) consistent with the number deter18 mined under clause (i), jointly identify em19 ployees of the Department of Housing and 

20 Urban Development for transfer to the Bu21 reau in a manner that the Bureau and the 

22 Secretary of the Department of Housing 

23 and Urban Development, in their sole dis24 cretion, deem equitable. 
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† HR 4173 EAS 

1 (B) IDENTIFIED EMPLOYEES TRANS2 FERRED.—All employees of the Department of 

3 Housing and Urban Development identified 

4 under subparagraph (A)(ii) shall be transferred 

5 to the Bureau for employment. 

6 (7) APPOINTMENT AUTHORITY FOR EXCEPTED

7 SERVICE AND SENIOR EXECUTIVE SERVICE TRANS8 FERRED.— 

9 (A) IN GENERAL.—In the case of an em10 ployee occupying a position in the excepted serv11 ice or the Senior Executive Service, any appoint12 ment authority established pursuant to law or 

13 regulations of the Office of Personnel Manage14 ment for filling such positions shall be trans15 ferred, subject to subparagraph (B). 

16 (B) DECLINING TRANSFERS ALLOWED.—An 

17 agency or entity may decline to make a transfer 

18 of authority under subparagraph (A) (and the 

19 employees appointed pursuant thereto) to the ex20 tent that such authority relates to positions ex21 cepted from the competitive service because of 

22 their confidential, policy-making, policy-deter23 mining, or policy-advocating character, and 

24 non-career positions in the Senior Executive 
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† HR 4173 EAS 

1 Service (within the meaning of section 

2 3132(a)(7) of title 5, United States Code). 

3 (b) TIMING OF TRANSFERS AND POSITION ASSIGN4 MENTS.—Each employee to be transferred under this section 

5 shall— 

6 (1) be transferred not later than 90 days after 

7 the designated transfer date; and 

8 (2) receive notice of a position assignment not 

9 later than 120 days after the effective date of his or 

10 her transfer. 

11 (c) TRANSFER OF FUNCTION.— 

12 (1) IN GENERAL.—Notwithstanding any other 

13 provision of law, the transfer of employees shall be 

14 deemed a transfer of functions for the purpose of sec15 tion 3503 of title 5, United States Code. 

16 (2) PRIORITY OF THIS TITLE.—If any provisions 

17 of this title conflict with any protection provided to 

18 transferred employees under section 3503 of title 5, 

19 United States Code, the provisions of this title shall 

20 control. 

21 (d) EQUAL STATUS AND TENURE POSITIONS.— 

22 (1) EMPLOYEES TRANSFERRED FROM FDIC, HUD, 

23 NCUA, OCC, AND OTS.—Each employee transferred 

24 from the Federal Deposit Insurance Corporation, the 

25 National Credit Union Administration, the Office of 
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† HR 4173 EAS 

1 the Comptroller of the Currency, the Office of Thrift 

2 Supervision, or the Department of Housing and 

3 Urban Development shall be placed in a position at 

4 the Bureau with the same status and tenure as that 

5 employee held on the day before the designated trans6 fer date. 

7 (2) EMPLOYEES TRANSFERRED FROM THE FED8 ERAL RESERVE SYSTEM.— 

9 (A) COMPARABILITY.—Each employee 

10 transferred from the Board of Governors or from 

11 a Federal reserve bank shall be placed in a posi12 tion with the same status and tenure as that of 

13 an employee transferring to the Bureau from the 

14 Office of the Comptroller of the Currency who 

15 perform similar functions and have similar peri16 ods of service. 

17 (B) SERVICE PERIODS CREDITED.—For 

18 purposes of this paragraph, periods of service 

19 with the Board of Governors or a Federal reserve 

20 bank shall be credited as periods of service with 

21 a Federal agency. 

22 (e) ADDITIONAL CERTIFICATION REQUIREMENTS LIM23 ITED.—Examiners transferred to the Bureau are not subject 

24 to any additional certification requirements before being 

25 placed in a comparable examiner position at the Bureau 
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† HR 4173 EAS 

1 examining the same types of institutions as they examined 

2 before they were transferred. 

3 (f) PERSONNEL ACTIONS LIMITED.— 

4 (1) 2-YEAR PROTECTION.—Except as provided in 

5 paragraph (2), each transferred employee holding a 

6 permanent position on the day before the designated 

7 transfer date may not, during the 2-year period be8 ginning on the designated transfer date, be involun9 tarily separated, or involuntarily reassigned outside 

10 his or her locality pay area, as defined by the Office 

11 of Personnel Management. 

12 (2) EXCEPTIONS.—Paragraph (1) does not limit 

13 the right of the Bureau— 

14 (A) to separate an employee for cause or for 

15 unacceptable performance; 

16 (B) to terminate an appointment to a posi17 tion excepted from the competitive service be18 cause of its confidential policy-making, policy19 determining, or policy-advocating character; or 

20 (C) to reassign a supervisory employee out21 side his or her locality pay area, as defined by 

22 the Office of Personnel Management, when the 

23 Bureau determines that the reassignment is nec24 essary for the efficient operation of the Bureau. 

25 (g) PAY.— 
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† HR 4173 EAS 

1 (1) 2-YEAR PROTECTION.—Except as provided in 

2 paragraph (2), each transferred employee shall, dur3 ing the 2-year period beginning on the designated 

4 transfer date, receive pay at a rate equal to not less 

5 than the basic rate of pay (including any geographic 

6 differential) that the employee received during the 

7 pay period immediately preceding the date of trans8 fer. 

9 (2) EXCEPTIONS.—Paragraph (1) does not limit 

10 the right of the Bureau to reduce the rate of basic pay 

11 of a transferred employee— 

12 (A) for cause; 

13 (B) for unacceptable performance; or 

14 (C) with the consent of the employee. 

15 (3) PROTECTION ONLY WHILE EMPLOYED.— 

16 Paragraph (1) applies to a transferred employee only 

17 while that employee remains employed by the Bureau. 

18 (4) PAY INCREASES PERMITTED.—Paragraph (1) 

19 does not limit the authority of the Bureau to increase 

20 the pay of a transferred employee. 

21 (h) REORGANIZATION.— 

22 (1) BETWEEN 1ST AND 3RD YEAR.— 

23 (A) IN GENERAL.—If the Bureau deter24 mines, during the 2-year period beginning 1 

25 year after the designated transfer date, that a re-
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† HR 4173 EAS 

1 organization of the staff of the Bureau is re2 quired— 

3 (i) that reorganization shall be deemed 

4 a ‘‘major reorganization’’ for purposes of af5 fording affected employees retirement under 

6 section 8336(d)(2) or 8414(b)(1)(B) of title 

7 5, United States Code; 

8 (ii) before the reorganization occurs, 

9 all employees in the same locality pay area 

10 as defined by the Office of Personnel Man11 agement shall be placed in a uniform posi12 tion classification system; and 

13 (iii) any resulting reduction in force 

14 shall be governed by the provisions of chap15 ter 35 of title 5, United States Code, except 

16 that the Bureau shall— 

17 (I) establish competitive areas (as 

18 that term is defined in regulations 

19 issued by the Office of Personnel Man20 agement) to include at a minimum all 

21 employees in the same locality pay 

22 area as defined by the Office of Per23 sonnel Management; 

24 (II) establish competitive levels 

25 (as that term is defined in regulations 
1419 

† HR 4173 EAS 

1 issued by the Office of Personnel Man2 agement) without regard to whether the 

3 particular employees have been ap4 pointed to positions in the competitive 

5 service or the excepted service; and 

6 (III) afford employees appointed 

7 to positions in the excepted service 

8 (other than to a position excepted from 

9 the competitive service because of its 

10 confidential policy-making, policy-de11 termining, or policy-advocating char12 acter) the same assignment rights to 

13 positions within the Bureau as em14 ployees appointed to positions in the 

15 competitive service. 

16 (B) SERVICE CREDIT FOR REDUCTIONS IN

17 FORCE.—For purposes of this paragraph, periods 

18 of service with a Federal home loan bank, a joint 

19 office of the Federal home loan banks, the Board 

20 of Governors, a Federal reserve bank, the Federal 

21 Deposit Insurance Corporation, or the National 

22 Credit Union Administration shall be credited as 

23 periods of service with a Federal agency. 

24 (2) AFTER 3RD YEAR.— 
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† HR 4173 EAS 

1 (A) IN GENERAL.—If the Bureau deter2 mines, at any time after the 3-year period begin3 ning on the designated transfer date, that a reor4 ganization of the staff of the Bureau is required, 

5 any resulting reduction in force shall be governed 

6 by the provisions of chapter 35 of title 5, United 

7 States Code, except that the Bureau shall estab8 lish competitive levels (as that term is defined in 

9 regulations issued by the Office of Personnel 

10 Management) without regard to types of ap11 pointment held by particular employees trans12 ferred under this section. 

13 (B) SERVICE CREDIT FOR REDUCTIONS IN

14 FORCE.—For purposes of this paragraph, periods 

15 of service with a Federal home loan bank, a joint 

16 office of the Federal home loan banks, the Board 

17 of Governors, a Federal reserve bank, the Federal 

18 Deposit Insurance Corporation, or the National 

19 Credit Union Administration shall be credited as 

20 periods of service with a Federal agency. 

21 (i) BENEFITS.— 

22 (1) RETIREMENT BENEFITS FOR TRANSFERRED

23 EMPLOYEES.— 

24 (A) IN GENERAL.— 
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† HR 4173 EAS 

1 (i) CONTINUATION OF EXISTING RE2 TIREMENT PLAN.—Except as provided in 

3 subparagraph (B), each transferred em4 ployee shall remain enrolled in his or her 

5 existing retirement plan, through any pe6 riod of continuous employment with the Bu7 reau. 

8 (ii) EMPLOYER CONTRIBUTION.—The 

9 Bureau shall pay any employer contribu10 tions to the existing retirement plan of each 

11 transferred employee, as required under that 

12 plan. 

13 (B) OPTION FOR EMPLOYEES TRANSFERRED

14 FROM FEDERAL RESERVE SYSTEM TO BE SUB15 JECT TO FEDERAL EMPLOYEE RETIREMENT PRO16 GRAM.— 

17 (i) ELECTION.—Any transferred em18 ployee who was enrolled in a Federal Re19 serve System retirement plan on the day be20 fore his or her transfer to the Bureau may, 

21 during the 1-year period beginning 6 

22 months after the designated transfer date, 

23 elect to be subject to the Federal employee 

24 retirement program. 
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† HR 4173 EAS 

1 (ii) EFFECTIVE DATE OF COVERAGE.— 

2 For any employee making an election under 

3 clause (i), coverage by the Federal employee 

4 retirement program shall begin 1 year after 

5 the designated transfer date. 

6 (C) BUREAU PARTICIPATION IN FEDERAL

7 RESERVE SYSTEM RETIREMENT PLAN.— 

8 (i) SEPARATE ACCOUNT IN FEDERAL

9 RESERVE SYSTEM RETIREMENT PLAN ES10 TABLISHED.—Notwithstanding any other 

11 provision of law, and subject to the terms 

12 and conditions of this section, a separate 

13 account in the Federal Reserve System re14 tirement plan shall be established for Bu15 reau employees who do not make the elec16 tion under subparagraph (B). 

17 (ii) FUNDS ATTRIBUTABLE TO TRANS18 FERRED EMPLOYEES REMAINING IN FED19 ERAL RESERVE SYSTEM RETIREMENT PLAN

20 TRANSFERRED.—The proportionate share of 

21 funds in the Federal Reserve System retire22 ment plan, including the proportionate 

23 share of any funding surplus in that plan, 

24 attributable to a transferred employee who 

25 does not make the election under subpara-
1423 

† HR 4173 EAS 

1 graph (B), shall be transferred to the ac2 count established under clause (i). 

3 (iii) EMPLOYER CONTRIBUTIONS DE4 POSITED.—The Bureau shall deposit into 

5 the account established under clause (i) the 

6 employer contributions that the Bureau 

7 makes on behalf of employees who do not 

8 make the election under subparagraph (B). 

9 (iv) ACCOUNT ADMINISTRATION.—The 

10 Bureau shall administer the account estab11 lished under clause (i) as a participating 

12 employer in the Federal Reserve System re13 tirement plan. 

14 (D) DEFINITIONS.—For purposes of this 

15 paragraph— 

16 (i) the term ‘‘existing retirement plan’’ 

17 means, with respect to any employee trans18 ferred under this section, the particular re19 tirement plan (including the Financial In20 stitutions Retirement Fund) and any asso21 ciated thrift savings plan of the agency or 

22 Federal reserve bank from which the em23 ployee was transferred, in which the em24 ployee was enrolled on the day before the 

25 designated transfer date; and 
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† HR 4173 EAS 

1 (ii) the term ‘‘Federal employee retire2 ment program’’ means the retirement pro3 gram for Federal employees established by 

4 chapter 84 of title 5, United States Code. 

5 (2) BENEFITS OTHER THAN RETIREMENT BENE6 FITS FOR TRANSFERRED EMPLOYEES.— 

7 (A) DURING 1ST YEAR.— 

8 (i) EXISTING PLANS CONTINUE.—Each 

9 transferred employee may, for 1 year after 

10 the designated transfer date, retain member11 ship in any other employee benefit program 

12 of the agency or bank from which the em13 ployee transferred, including a dental, vi14 sion, long term care, or life insurance pro15 gram, to which the employee belonged on the 

16 day before the designated transfer date. 

17 (ii) EMPLOYER CONTRIBUTION.—The 

18 Bureau shall reimburse the agency or bank 

19 from which an employee was transferred for 

20 any cost incurred by that agency or bank in 

21 continuing to extend coverage in the benefit 

22 program to the employee, as required under 

23 that program or negotiated agreements. 

24 (B) DENTAL, VISION, OR LIFE INSURANCE

25 AFTER 1ST YEAR.—If, after the 1-year period be-
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† HR 4173 EAS 

1 ginning on the designated transfer date, the Bu2 reau decides not to continue participation in 

3 any dental, vision, or life insurance program of 

4 an agency or bank from which an employee 

5 transferred, a transferred employee who is a 

6 member of such a program may, before the deci7 sion of the Bureau takes effect, elect to enroll, 

8 without regard to any regularly scheduled open 

9 season, in— 

10 (i) the enhanced dental benefits estab11 lished by chapter 89A of title 5, United 

12 States Code; 

13 (ii) the enhanced vision benefits estab14 lished by chapter 89B of title 5, United 

15 States Code; or 

16 (iii) the Federal Employees Group Life 

17 Insurance Program established by chapter 

18 87 of title 5, United States Code, without 

19 regard to any requirement of insurability. 

20 (C) LONG TERM CARE INSURANCE AFTER

21 1ST YEAR.—If, after the 1-year period beginning 

22 on the designated transfer date, the Bureau de23 cides not to continue participation in any long 

24 term care insurance program of an agency or 

25 bank from which an employee transferred, a 
1426 

† HR 4173 EAS 

1 transferred employee who is a member of such a 

2 program may, before the decision of the Bureau 

3 takes effect, elect to apply for coverage under the 

4 Federal Long Term Care Insurance Program es5 tablished by chapter 90 of title 5, United States 

6 Code, under the underwriting requirements ap7 plicable to a new active workforce member (as 

8 defined in part 875, title 5, Code of Federal Reg9 ulations). 

10 (D) EMPLOYEE CONTRIBUTION.—An indi11 vidual enrolled in the Federal Employees Health 

12 Benefits program shall pay any employee con13 tribution required by the plan. 

14 (E) ADDITIONAL FUNDING.—The Bureau 

15 shall transfer to the Federal Employees Health 

16 Benefits Fund established under section 8909 of 

17 title 5, United States Code, an amount deter18 mined by the Director of the Office of Personnel 

19 Management, after consultation with the Bureau 

20 and the Office of Management and Budget, to be 

21 necessary to reimburse the Fund for the cost to 

22 the Fund of providing benefits under this para23 graph. 

24 (F) CREDIT FOR TIME ENROLLED IN OTHER

25 PLANS.—For employees transferred under this 
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† HR 4173 EAS 

1 title, enrollment in a health benefits plan admin2 istered by a transferor agency or a Federal re3 serve bank, as the case may be, immediately be4 fore enrollment in a health benefits plan under 

5 chapter 89 of title 5, United States Code, shall 

6 be considered as enrollment in a health benefits 

7 plan under that chapter for purposes of section 

8 8905(b)(1)(A) of title 5, United States Code. 

9 (G) SPECIAL PROVISIONS TO ENSURE CON10 TINUATION OF LIFE INSURANCE BENEFITS.— 

11 (i) IN GENERAL.—An annuitant (as 

12 defined in section 8901(3) of title 5, United 

13 States Code) who is enrolled in a life insur14 ance plan administered by a transferor 

15 agency on the day before the designated 

16 transfer date shall be eligible for coverage by 

17 a life insurance plan under sections 

18 8706(b), 8714a, 8714b, and 8714c of title 5, 

19 United States Code, or in a life insurance 

20 plan established by the Bureau, without re21 gard to any regularly scheduled open season 

22 and requirement of insurability. 

23 (ii) EMPLOYEE CONTRIBUTION.—An 

24 individual enrolled in a life insurance plan 
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† HR 4173 EAS 

1 under this subparagraph shall pay any em2 ployee contribution required by the plan. 

3 (iii) ADDITIONAL FUNDING.—The Bu4 reau shall transfer to the Employees’ Life 

5 Insurance Fund established under section 

6 8714 of title 5, United States Code, an 

7 amount determined by the Director of the 

8 Office of Personnel Management, after con9 sultation with the Bureau and the Office of 

10 Management and Budget, to be necessary to 

11 reimburse the Fund for the cost to the Fund 

12 of providing benefits under this subpara13 graph not otherwise paid for by the em14 ployee under clause (ii). 

15 (iv) CREDIT FOR TIME ENROLLED IN

16 OTHER PLANS.—For employees transferred 

17 under this title, enrollment in a life insur18 ance plan administered by a transferor 

19 agency immediately before enrollment in a 

20 life insurance plan under chapter 87 of title 

21 5, United States Code, shall be considered 

22 as enrollment in a life insurance plan 

23 under that chapter for purposes of section 

24 8706(b)(1)(A) of title 5, United States Code. 
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† HR 4173 EAS 

1 (3) OPM RULES.—The Office of Personnel Man2 agement shall issue such rules as are necessary to 

3 carry out this subsection. 

4 (j) IMPLEMENTATION OF UNIFORM PAY AND CLASSI5 FICATION SYSTEM.—Not later than 2 years after the des6 ignated transfer date, the Bureau shall implement a uni7 form pay and classification system for all employees trans8 ferred under this title. 

9 (k) EQUITABLE TREATMENT.—In administering the 

10 provisions of this section, the Bureau— 

11 (1) shall take no action that would unfairly dis12 advantage transferred employees relative to each other 

13 based on their prior employment by the Board of 

14 Governors, the Federal Deposit Insurance Corpora15 tion, the Federal Trade Commission, the National 

16 Credit Union Administration, the Office of the Comp17 troller of the Currency, the Office of Thrift Super18 vision, a Federal reserve bank, a Federal home loan 

19 bank, or a joint office of the Federal home loan banks; 

20 and 

21 (2) may take such action as is appropriate in 

22 individual cases so that employees transferred under 

23 this section receive equitable treatment, with respect 

24 to the status, tenure, pay, benefits (other than benefits 

25 under programs administered by the Office of Per-
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† HR 4173 EAS 

1 sonnel Management), and accrued leave or vacation 

2 time of those employees, for prior periods of service 

3 with any Federal agency, including the Board of Gov4 ernors, the Corporation, the Federal Trade Commis5 sion, the National Credit Union Administration, the 

6 Office of the Comptroller of the Currency, the Office 

7 of Thrift Supervision, a Federal reserve bank, a Fed8 eral home loan bank, or a joint office of the Federal 

9 home loan banks. 

10 (l) IMPLEMENTATION.—In implementing the provi11 sions of this section, the Bureau shall coordinate with the 

12 Office of Personnel Management and other entities having 

13 expertise in matters related to employment to ensure a fair 

14 and orderly transition for affected employees. 

15 SEC. 1065. INCIDENTAL TRANSFERS. 

16 (a) INCIDENTAL TRANSFERS AUTHORIZED.—The Di17 rector of the Office of Management and Budget, in consulta18 tion with the Secretary, shall make such additional inci19 dental transfers and dispositions of assets and liabilities 

20 held, used, arising from, available, or to be made available, 

21 in connection with the functions transferred by this title, 

22 as the Director may determine necessary to accomplish the 

23 purposes of this title. 
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† HR 4173 EAS 

1 (b) SUNSET.—The authority provided in this section 

2 shall terminate 5 years after the date of enactment of this 

3 Act. 

4 SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY. 

5 (a) IN GENERAL.—The Secretary is authorized to per6 form the functions of the Bureau under this subtitle until 

7 the Director of the Bureau is confirmed by the Senate in 

8 accordance with section 1011. 

9 (b) INTERIM ADMINISTRATIVE SERVICES BY THE DE10 PARTMENT OF THE TREASURY.—The Department of the 

11 Treasury may provide administrative services necessary to 

12 support the Bureau before the designated transfer date. 

13 SEC. 1067. TRANSITION OVERSIGHT. 

14 (a) PURPOSE.—The purpose of this section is to ensure 

15 that the Bureau— 

16 (1) has an orderly and organized startup; 

17 (2) attracts and retains a qualified workforce; 

18 and 

19 (3) establishes comprehensive employee training 

20 and benefits programs. 

21 (b) REPORTING REQUIREMENT.— 

22 (1) IN GENERAL.—The Bureau shall submit an 

23 annual report to the Committee on Banking, Hous24 ing, and Urban Affairs of the Senate and the Com25 mittee on Financial Services of the House of Rep-
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† HR 4173 EAS 

1 resentatives that includes the plans described in para2 graph (2). 

3 (2) PLANS.—The plans described in this para4 graph are as follows: 

5 (A) TRAINING AND WORKFORCE DEVELOP6 MENT PLAN.—The Bureau shall submit a train7 ing and workforce development plan that in8 cludes, to the extent practicable— 

9 (i) identification of skill and technical 

10 expertise needs and actions taken to meet 

11 those requirements; 

12 (ii) steps taken to foster innovation 

13 and creativity; 

14 (iii) leadership development and suc15 cession planning; and 

16 (iv) effective use of technology by em17 ployees. 

18 (B) WORKPLACE FLEXIBILITIES PLAN.—The 

19 Bureau shall submit a workforce flexibility plan 

20 that includes, to the extent practicable— 

21 (i) telework; 

22 (ii) flexible work schedules; 

23 (iii) phased retirement; 

24 (iv) reemployed annuitants; 

25 (v) part-time work; 
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† HR 4173 EAS 

1 (vi) job sharing; 

2 (vii) parental leave benefits and 

3 childcare assistance; 

4 (viii) domestic partner benefits; 

5 (ix) other workplace flexibilities; or 

6 (x) any combination of the items de7 scribed in clauses (i) through (ix). 

8 (C) RECRUITMENT AND RETENTION PLAN.— 

9 The Bureau shall submit a recruitment and re10 tention plan that includes, to the extent prac11 ticable, provisions relating to— 

12 (i) the steps necessary to target highly 

13 qualified applicant pools with diverse back14 grounds; 

15 (ii) streamlined employment applica16 tion processes; 

17 (iii) the provision of timely notifica18 tion of the status of employment applica19 tions to applicants; and 

20 (iv) the collection of information to 

21 measure indicators of hiring effectiveness. 

22 (c) EXPIRATION.—The reporting requirement under 

23 subsection (b) shall terminate 5 years after the date of en24 actment of this Act. 
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1 (d) RULE OF CONSTRUCTION.—Nothing in this section 

2 may be construed to affect— 

3 (1) a collective bargaining agreement, as that 

4 term is defined in section 7103(a)(8) of title 5, United 

5 States Code, that is in effect on the date of enactment 

6 of this Act; or 

7 (2) the rights of employees under chapter 71 of 

8 title 5, United States Code. 

9 Subtitle G—Regulatory 

10 Improvements 

11 SEC. 1071. SMALL BUSINESS DATA COLLECTION. 

12 (a) IN GENERAL.—The Equal Credit Opportunity Act 

13 (15 U.S.C. 1691 et seq.) is amended by inserting after sec14 tion 704A the following: 

15 ‘‘SEC. 740B. SMALL BUSINESS LOAN DATA COLLECTION. 

16 ‘‘(a) PURPOSE.—The purpose of this section is to fa17 cilitate enforcement of fair lending laws and enable commu18 nities, governmental entities, and creditors to identify busi19 ness and community development needs and opportunities 

20 of women-owned and minority-owned small businesses. 

21 ‘‘(b) INFORMATION GATHERING.—Subject to the re22 quirements of this section, in the case of any application 

23 to a financial institution for credit for a small business, 

24 the financial institution shall— 
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1 ‘‘(1) inquire whether the small business is a 

2 women- or minority-owned small business, without 

3 regard to whether such application is received in per4 son, by mail, by telephone, by electronic mail or other 

5 form of electronic transmission, or by any other 

6 means, and whether or not such application is in re7 sponse to a solicitation by the financial institution; 

8 and 

9 ‘‘(2) maintain a record of the responses to such 

10 inquiry, separate from the application and accom11 panying information. 

12 ‘‘(c) RIGHT TO REFUSE.—Any applicant for credit 

13 may refuse to provide any information requested pursuant 

14 to subsection (b) in connection with any application for 

15 credit. 

16 ‘‘(d) NO ACCESS BY UNDERWRITERS.— 

17 ‘‘(1) LIMITATION.—Where feasible, no loan un18 derwriter or other officer or employee of a financial 

19 institution, or any affiliate of a financial institution, 

20 involved in making any determination concerning an 

21 application for credit shall have access to any infor22 mation provided by the applicant pursuant to a re23 quest under subsection (b) in connection with such 

24 application. 
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1 ‘‘(2) LIMITED ACCESS.—If a financial institu2 tion determines that a loan underwriter or other offi3 cer or employee of a financial institution, or any af4 filiate of a financial institution, involved in making 

5 any determination concerning an application for 

6 credit should have access to any information provided 

7 by the applicant pursuant to a request under sub8 section (b), the financial institution shall provide no9 tice to the applicant of the access of the underwriter 

10 to such information, along with notice that the finan11 cial institution may not discriminate on the basis of 

12 such information. 

13 ‘‘(e) FORM AND MANNER OF INFORMATION.— 

14 ‘‘(1) IN GENERAL.—Each financial institution 

15 shall compile and maintain, in accordance with regu16 lations of the Bureau, a record of the information 

17 provided by any loan applicant pursuant to a request 

18 under subsection (b). 

19 ‘‘(2) ITEMIZATION.—Information compiled and 

20 maintained under paragraph (1) shall be itemized in 

21 order to clearly and conspicuously disclose— 

22 ‘‘(A) the number of the application and the 

23 date on which the application was received; 

24 ‘‘(B) the type and purpose of the loan or 

25 other credit being applied for; 
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1 ‘‘(C) the amount of the credit or credit limit 

2 applied for, and the amount of the credit trans3 action or the credit limit approved for such ap4 plicant; 

5 ‘‘(D) the type of action taken with respect 

6 to such application, and the date of such action; 

7 ‘‘(E) the census tract in which is located the 

8 principal place of business of the small business 

9 loan applicant; 

10 ‘‘(F) the gross annual revenue of the busi11 ness in the last fiscal year of the small business 

12 loan applicant preceding the date of the applica13 tion; 

14 ‘‘(G) the race and ethnicity of the principal 

15 owners of the business; and 

16 ‘‘(H) any additional data that the Bureau 

17 determines would aid in fulfilling the purposes of 

18 this section. 

19 ‘‘(3) NO PERSONALLY IDENTIFIABLE INFORMA20 TION.—In compiling and maintaining any record of 

21 information under this section, a financial institution 

22 may not include in such record the name, specific ad23 dress (other than the census tract required under 

24 paragraph (1)(E)), telephone number, electronic mail 

25 address, or any other personally identifiable informa-
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1 tion concerning any individual who is, or is con2 nected with, the small business loan applicant. 

3 ‘‘(4) DISCRETION TO DELETE OR MODIFY PUB4 LICLY AVAILABLE DATA.—The Bureau may, at its dis5 cretion, delete or modify data collected under this sec6 tion which is or will be available to the public, if the 

7 Bureau determines that the deletion or modification 

8 of the data would advance a compelling privacy in9 terest. 

10 ‘‘(f) AVAILABILITY OF INFORMATION.— 

11 ‘‘(1) SUBMISSION TO BUREAU.—The data re12 quired to be compiled and maintained under this sec13 tion by any financial institution shall be submitted 

14 annually to the Bureau. 

15 ‘‘(2) AVAILABILITY OF INFORMATION.—Informa16 tion compiled and maintained under this section 

17 shall be— 

18 ‘‘(A) retained for not less than 3 years after 

19 the date of preparation; 

20 ‘‘(B) made available to any member of the 

21 public, upon request, in the form required under 

22 regulations prescribed by the Bureau; 

23 ‘‘(C) annually made available to the public 

24 generally by the Bureau, in such form and in 
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1 such manner as is determined appropriate by 

2 the Bureau. 

3 ‘‘(3) COMPILATION OF AGGREGATE DATA.—The 

4 Bureau may, at its discretion— 

5 ‘‘(A) compile and aggregate data collected 

6 under this section for its own use; and 

7 ‘‘(B) make public such compilations of ag8 gregate data. 

9 ‘‘(g) BUREAU ACTION.— 

10 ‘‘(1) IN GENERAL.—The Bureau shall prescribe 

11 such rules and issue such guidance as may be nec12 essary to carry out, enforce, and compile data pursu13 ant to this section. 

14 ‘‘(2) EXCEPTIONS.—The Bureau, by rule or 

15 order, may adopt exceptions to any requirement of 

16 this section and may, conditionally or uncondition17 ally, exempt any financial institution or class of fi18 nancial institutions from the requirements of this sec19 tion, as the Bureau deems necessary or appropriate 

20 to carry out the purposes of this section. 

21 ‘‘(3) GUIDANCE.—The Bureau shall issue guid22 ance designed to facilitate compliance with the re23 quirements of this section, including assisting finan24 cial institutions in working with applicants to deter-
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1 mine whether the applicants are women- or minority2 owned for purposes of this section. 

3 ‘‘(h) DEFINITIONS.—For purposes of this section, the 

4 following definitions shall apply: 

5 ‘‘(1) FINANCIAL INSTITUTION.—The term ‘finan6 cial institution’ means any partnership, company, 

7 corporation, association (incorporated or unincor8 porated), trust, estate, cooperative organization, or 

9 other entity that engages in any financial activity. 

10 ‘‘(2) MINORITY.—The term ‘minority’ has the 

11 same meaning as in section 1204(c)(3) of the Finan12 cial Institutions Reform, Recovery, and Enforcement 

13 Act of 1989. 

14 ‘‘(3) MINORITY-OWNED SMALL BUSINESS.—The 

15 term ‘minority-owned small business’ means a small 

16 business— 

17 ‘‘(A) more than 50 percent of the ownership 

18 or control of which is held by 1 or more minority 

19 individuals; and 

20 ‘‘(B) more than 50 percent of the net profit 

21 or loss of which accrues to 1 or more minority 

22 individuals. 

23 ‘‘(4) SMALL BUSINESS LOAN.—The term ‘small 

24 business loan’ shall be defined by the Bureau, which 

25 may take into account— 
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1 ‘‘(A) the gross revenues of the borrower; 

2 ‘‘(B) the total number of employees of the 

3 borrower; 

4 ‘‘(C) the industry in which the borrower has 

5 its primary operations; and 

6 ‘‘(D) the size of the loan. 

7 ‘‘(5) WOMEN-OWNED SMALL BUSINESS.—The 

8 term ‘women-owned small business’ means a busi9 ness— 

10 ‘‘(A) more than 50 percent of the ownership 

11 or control of which is held by 1 or more women; 

12 and 

13 ‘‘(B) more than 50 percent of the net profit 

14 or loss of which accrues to 1 or more women.’’. 

15 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

16 Section 701(b) of the Equal Credit Opportunity Act (15 

17 U.S.C. 1691(b)) is amended— 

18 (1) in paragraph (3), by striking ‘‘or’’ at the 

19 end; 

20 (2) in paragraph (4), by striking the period at 

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

22 (3) by inserting after paragraph (4), the fol23 lowing: 

24 ‘‘(5) to make an inquiry under section 704B, in 

25 accordance with the requirements of that section.’’. 
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1 (c) CLERICAL AMENDMENT.—The table of sections for 

2 title VII of the Consumer Credit Protection Act is amended 

3 by inserting after the item relating to section 704A the fol4 lowing new item: 

‘‘704B. Small business loan data collection.’’. 

5 (d) EFFECTIVE DATE.—This section shall become effec6 tive on the designated transfer date. 

7 SEC. 1072. GAO STUDY ON THE EFFECTIVENESS AND IM8 PACT OF VARIOUS APPRAISAL METHODS. 

9 (a) IN GENERAL.—The Government Accountability 

10 Office shall conduct a study on the effectiveness and impact 

11 of various appraisal methods, including the cost approach, 

12 the comparative sales approach, the income approach, and 

13 others that may be available. 

14 (b) STUDY.—Not later than— 

15 (1) 1 year after the date of enactment of this Act, 

16 the Government Accountability Office shall submit a 

17 study to the Committee on Banking, Housing, and 

18 Urban Affairs of the Senate and the Committee on 

19 Financial Services of the House of Representatives; 

20 (2) 90 days after the date of enactment of this 

21 Act, the Government Accountability Office shall pro22 vide a report on the status of the study and any pre23 liminary findings to the Committee on Banking, 

24 Housing, and Urban Affairs of the Senate and the 
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1 Committee on Financial Services of the House of Rep2 resentatives. 

3 (c) CONTENT OF STUDY.—The study required by this 

4 section shall include an examination of— 

5 (1) the prevalence, alone or in combination, of 

6 these approaches in purchase-money and refinance 

7 mortgage transactions; 

8 (2) the accuracy of the various approaches in as9 sessing the property as collateral; 

10 (3) whether and how the approaches contributed 

11 to price speculation in the previous cycle; 

12 (4) the costs to consumers of these approaches; 

13 (5) the disclosure of fees to consumers in the ap14 praisal process; 

15 (6) to what extent such approaches may be influ16 enced by a conflict of interest between the mortgage 

17 lender and the appraiser and the mechanism by 

18 which the lender selects and compensates the ap19 praiser; and 

20 (7) the suitability of appraisal approaches in 

21 rural versus urban areas. 
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1 SEC. 1073. PROHIBITED PAYMENTS TO MORTGAGE ORIGINA2 TORS. 

3 Section 129 of the Truth in Lending Act (15 U.S.C. 

4 1639) is amended by inserting after subsection (j) the fol5 lowing: 

6 ‘‘(k) PROHIBITION ON STEERING INCENTIVES.— 

7 ‘‘(1) IN GENERAL.—For any consumer credit 

8 transaction secured by real property or a dwelling, no 

9 loan originator shall receive from any person and no 

10 person shall pay to a loan originator, directly or in11 directly, compensation that varies based on the terms 

12 of the loan (other than the amount of the principal). 

13 ‘‘(2) RESTRUCTURING OF FINANCING ORIGINA14 TION FEE.— 

15 ‘‘(A) IN GENERAL.—For any consumer 

16 credit transaction secured by real property or a 

17 dwelling, a loan originator may not arrange for 

18 a consumer to finance through the rate any 

19 origination fee or cost except bona fide third 

20 party settlement charges not retained by the 

21 creditor or loan originator. 

22 ‘‘(B) EXCEPTION.—Notwithstanding sub23 paragraph (A), a loan originator may arrange 

24 for a consumer to finance through the rate an 

25 origination fee or cost if— 
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1 ‘‘(i) the loan originator does not re2 ceive any other compensation, directly or 

3 indirectly, from the consumer except the 

4 compensation that is financed through the 

5 rate; 

6 ‘‘(ii) no person who knows or has rea7 son to know of the consumer-paid com8 pensation to the loan originator, other than 

9 the consumer, pays any compensation to the 

10 loan originator, directly or indirectly, in 

11 connection with the transaction; and 

12 ‘‘(iii) the consumer does not make an 

13 upfront payment of discount points, origi14 nation points, or fees, however denominated 

15 (other than bona fide third party settlement 

16 charges). 

17 ‘‘(3) RULES OF CONSTRUCTION.—No provision of 

18 this subsection shall be construed as— 

19 ‘‘(A) limiting or affecting the amount of 

20 compensation received by a creditor upon the 

21 sale of a consummated loan to a subsequent pur22 chaser; 

23 ‘‘(B) restricting a consumer’s ability to fi24 nance, at the option of the consumer, including 

25 through principal or rate, any origination fees 
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1 or costs permitted under this subsection, or the 

2 loan originator’s right to receive such fees or 

3 costs (including compensation) from any person, 

4 subject to paragraph (2)(B), so long as such fees 

5 or costs do not vary based on the terms of the 

6 loan (other than the amount of the principal) or 

7 the consumer’s decision about whether to finance 

8 such fees or costs; or 

9 ‘‘(C) prohibiting incentive payments to a 

10 loan originator based on the number of loans 

11 originated within a specified period of time. 

12 ‘‘(4) LOAN ORIGINATOR.—For the purposes of 

13 this section, the term ‘loan originator’— 

14 ‘‘(A) means any person who, for direct or 

15 indirect compensation or gain, or in the expecta16 tion of direct or indirect compensation or gain, 

17 with respect to credit to be secured by real prop18 erty or a dwelling— 

19 ‘‘(i) arranges for an extension, re20 newal, or continuation of such credit; 

21 ‘‘(ii) takes an application for credit or 

22 assists a consumer in applying for such 

23 credit; or 

24 ‘‘(iii) offers or negotiates terms of such 

25 credit; 
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1 ‘‘(B) does not include any person who is not 

2 otherwise described in subparagraph (A) and 

3 who performs purely administrative or clerical 

4 tasks on behalf of a person who is described in 

5 subparagraph (A); and 

6 ‘‘(C) does not include a person that only 

7 performs real estate brokerage activities and is 

8 licensed or registered in accordance with appli9 cable State law, unless the person is compensated 

10 by a lender or other loan originator or by any 

11 agent of such lender or other loan originator.’’. 

12 SEC. 1074. MINIMUM STANDARDS FOR RESIDENTIAL MORT13 GAGE LOANS. 

14 (a) IN GENERAL.—No rule, order, or guidance issued 

15 by the Bureau under this title shall be construed as requir16 ing a depository institution to apply mortgage under17 writing standards that do not meet the minimum under18 writing standards required by the appropriate prudential 

19 regulator of the depository institution. 

20 (b) ABILITY TO REPAY.— 

21 (1) TILA AMENDMENT.—Section 129 of the 

22 Truth in Lending Act (15 U.S.C. 1639), as amended 

23 by section 1074 of this Act, is further amended by in24 serting after subsection (k) the following: 

25 ‘‘(l) ABILITY TO REPAY.— 
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1 ‘‘(1) IN GENERAL.—No creditor may make a 

2 loan secured by real property or a dwelling unless the 

3 creditor, based on verified and documented informa4 tion, determines that, at the time the loan is con5 summated, the consumer has a reasonable ability to 

6 repay the loan, according to its terms, and all appli7 cable taxes, insurance, and assessments. 

8 ‘‘(2) MULTIPLE LOANS.—If the creditor knows, 

9 or has reason to know, that 1 or more loans secured 

10 by the same real property or dwelling will be made 

11 to the same consumer, the creditor shall, based on 

12 verified and documented information, determine that 

13 the consumer has a reasonable ability to repay the 

14 combined payments of all loans on the same real 

15 property or dwelling according to the terms of those 

16 loans and all applicable taxes, insurance, and assess17 ments. 

18 ‘‘(3) BASIS FOR DETERMINATION.—A determina19 tion under this subsection of a consumer’s ability to 

20 repay a loan described in paragraph (1) shall include 

21 consideration of the consumer’s credit history, current 

22 income, expected income the consumer is reasonably 

23 assured of receiving, current obligations, debt-to-in24 come ratio or the residual income the consumer will 

25 have after paying non-mortgage debt and mortgage- 
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1 related obligations, employment status, and other fi2 nancial resources other than the consumer’s equity in 

3 the dwelling or real property that secures repayment 

4 of the loan. 

5 ‘‘(4) INCOME VERIFICATION.—A creditor shall 

6 verify amounts of income or assets that such creditor 

7 relies on to determine repayment ability, including 

8 expected income or assets, by reviewing the con9 sumer’s Internal Revenue Service Form W–2, tax re10 turns, payroll receipts, financial institution records, 

11 or other third-party documents that provide reason12 ably reliable evidence of the consumer’s income or as13 sets. In order to safeguard against fraudulent report14 ing, any consideration of a consumer’s income history 

15 in making a determination under this subsection 

16 shall include the verification of such income by the 

17 use of— 

18 ‘‘(A) Internal Revenue Service transcripts 

19 of tax returns; or 

20 ‘‘(B) a method that quickly and effectively 

21 verifies income documentation by a third party 

22 subject to rules prescribed by the Board. 

23 ‘‘(5) PRESUMPTION OF ABILITY TO REPAY.—Any 

24 creditor with respect to any consumer loan secured by 

25 real property or a dwelling is presumed to have com-
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† HR 4173 EAS 

1 plied with this subsection with respect to such loan if 

2 the creditor— 

3 ‘‘(A) verifies the consumer’s ability to repay 

4 as provided in paragraphs (1), (2), (3), and (4); 

5 and 

6 ‘‘(B) determines the consumer’s ability to 

7 repay using the maximum rate permitted under 

8 the loan during the first 5 years following con9 summation and a payment schedule that fully 

10 amortizes the loan and taking into account cur11 rent obligations and all applicable taxes, insur12 ance, and assessments. 

13 ‘‘(6) EXCEPTIONS TO PRESUMPTION.—Notwith14 standing paragraph (5), no presumption of compli15 ance shall be applied to a loan— 

16 ‘‘(A) for which the regular periodic pay17 ments for the loan may— 

18 ‘‘(i) result in an increase of the prin19 cipal balance; or 

20 ‘‘(ii) allow the consumer to defer re21 payment of principal. 

22 ‘‘(B) the terms of which result in a balloon 

23 payment, where a ‘balloon payment’ is a sched24 uled payment that is more than twice as large 

25 as the average of earlier scheduled payments; or 
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1 ‘‘(C) for which the total points and fees 

2 payable in connection with the loan exceed 3 

3 percent of the total loan amount, where ‘points 

4 and fees’ means points and fees as defined by 

5 section 103(aa)(4) of the Truth in Lending Act 

6 (15 U.S.C. 1602(aa)(4)), except that, for the pur7 poses of computing the total points and fees 

8 under this subparagraph, the total points and 

9 fees attributable to any premium for mortgage 

10 guarantee insurance provided by an agency of 

11 the Federal Government or an agency of a State 

12 shall exclude any amount of the points and fees 

13 for such insurance greater than 1 percent of the 

14 total loan amount. 

15 ‘‘(7) EXEMPTION.— 

16 ‘‘(A) The Board may revise, add to, or sub17 tract from the criteria under paragraphs (5) and 

18 (6) and subparagraphs (B) and (C) of this para19 graph upon a finding that such regulations are 

20 necessary or appropriate to effectuate the pur21 poses of this title, to prevent circumvention or 

22 evasion thereof, or to facilitate compliance with 

23 this subsection. 

24 ‘‘(B) BRIDGE LOANS.—This subsection does 

25 not apply to a temporary or ‘bridge’ loan with 
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1 a term of 12 months or less, including to any 

2 loan to purchase a new dwelling where the con3 sumer plans to sell a current dwelling within 12 

4 months. 

5 ‘‘(C) REVERSE MORTGAGES.—This sub6 section does not apply with respect to any re7 verse mortgage. 

8 ‘‘(8) SEASONAL INCOME.—If documented income, 

9 including income from a small business, is a repay10 ment source for an extension of credit secured by resi11 dential real estate or a dwelling, a creditor may con12 sider the seasonality and irregularity of such income 

13 in the underwriting of and scheduling of payments 

14 for such credit.’’. 

15 (2) CONFORMING AMENDMENT.—Section 129 of 

16 the Truth in Lending Act (15 U.S.C. 1639), as 

17 amended by this Act, is amended— 

18 (A) by redesignating subsections (k), (l), 

19 and (m) as subsections (m), (n), and (o), respec20 tively; and 

21 (B) in subsection (o), as so redesignated, by 

22 striking ‘‘(l)(2)’’ and inserting ‘‘(n)(2)’’. 
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1 SEC. 1075. PROHIBITION ON CERTAIN PREPAYMENT PEN2 ALTIES. 

3 (a) IN GENERAL.—Chapter 2 of the Truth in Lending 

4 Act (15 U.S.C. 1631 et seq.) is amended by inserting after 

5 section 129A (15 U.S.C. 1639a) the following new section: 

6 ‘‘SEC. 129B. PROHIBITION ON CERTAIN PREPAYMENT PEN7 ALTIES. 

8 ‘‘(a) PROHIBITED ON CERTAIN LOANS.—A residential 

9 mortgage loan that is not a qualified mortgage may not 

10 contain terms under which a consumer is required to pay 

11 a prepayment penalty for paying all or part of the prin12 cipal after the loan is consummated. 

13 ‘‘(b) PHASED-OUT PENALTIES ON QUALIFIED MORT14 GAGES.— 

15 ‘‘(1) IN GENERAL.—A qualified mortgage may 

16 not contain terms under which a consumer is re17 quired to pay a prepayment penalty for paying all 

18 or part of the principal after the loan is con19 summated in excess of— 

20 ‘‘(A) during the 1-year period beginning on 

21 the date on which the loan is consummated, an 

22 amount equal to 3 percent of the outstanding 

23 balance on the loan; 

24 ‘‘(B) during the 1-year period beginning 

25 immediately after the end of the period described 
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1 in subparagraph (A), an amount equal to 2 per2 cent of the outstanding balance on the loan; and 

3 ‘‘(C) during the 1-year period beginning 

4 immediately after the end of the 1-year period 

5 described in subparagraph (B), an amount equal 

6 to 1 percent of the outstanding balance on the 

7 loan. 

8 ‘‘(2) PROHIBITION.—After the end of the 3-year 

9 period beginning on the date on which the loan is 

10 consummated, no prepayment penalty may be im11 posed on a qualified mortgage. 

12 ‘‘(c) OPTION FOR NO PREPAYMENT PENALTY RE13 QUIRED.—A creditor may not offer a consumer a residen14 tial mortgage loan product that has a prepayment penalty 

15 for paying all or part of the principal after the loan is 

16 consummated as a term of the loan, without offering to the 

17 consumer a residential mortgage loan product that does not 

18 have a prepayment penalty as a term of the loan. 

19 ‘‘(d) PROHIBITIONS ON EVASIONS, STRUCTURING OF

20 TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 

21 creditor may not take any action in connection with a resi22 dential mortgage loan— 

23 ‘‘(1) to structure a loan transaction as an open 

24 end consumer credit plan or another form of loan for 
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1 the purpose and with the intent of evading the provi2 sions of this section; or 

3 ‘‘(2) to divide any loan transaction into separate 

4 parts for the purpose and with the intent of evading 

5 provisions of this section. 

6 ‘‘(e) PUBLICATION OF AVERAGE PRIME OFFER RATE

7 AND APR THRESHOLDS.—The Board— 

8 ‘‘(1) shall publish, and update at least weekly, 

9 average prime offer rates; 

10 ‘‘(2) may publish multiple rates based on vary11 ing types of mortgage transactions; and 

12 ‘‘(3) shall adjust the thresholds of 1.50 percentage 

13 points in subsection (g)(3)(A)(v)(I), 2.50 percentage 

14 points in subsection (g)(3)(A)(v)(II), and 3.50 per15 centage points in subsection (g)(3)(A)(v)(III), as nec16 essary to reflect significant changes in market condi17 tions and to effectuate the purposes of this section. 

18 ‘‘(f) REGULATIONS.— 

19 ‘‘(1) IN GENERAL.—The Bureau shall prescribe 

20 regulations to carry out this section. 

21 ‘‘(2) REVISION OF SAFE HARBOR CRITERIA.—The 

22 Bureau may prescribe regulations that revise, add to, 

23 or subtract from the criteria that define a qualified 

24 mortgage, upon a finding that such regulations are 

25 necessary or appropriate— 
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1 ‘‘(A) to ensure that responsible, affordable 

2 mortgage credit remains available to consumers 

3 in a manner consistent with the purposes of this 

4 section; 

5 ‘‘(B) to effectuate the purposes of this sec6 tion; 

7 ‘‘(C) to prevent circumvention or evasion 

8 thereof; or 

9 ‘‘(D) to facilitate compliance with this sec10 tion. 

11 ‘‘(3) INTERAGENCY HARMONIZATION.— 

12 ‘‘(A) DETERMINATION OF QUALIFYING

13 MORTGAGE TREATMENT.—The agencies and offi14 cials described in subparagraph (B) shall, in 

15 consultation with the Bureau, prescribe rules de16 fining the types of loans they insure, guarantee, 

17 or administer, as the case may be, that are 

18 qualified mortgages for purposes of this section, 

19 upon a finding that such rules are consistent 

20 with the purposes of this section or are appro21 priate to prevent circumvention or evasion there22 of or to facilitate compliance with this section. 

23 ‘‘(B) AGENCIES AND OFFICIALS.—The agen24 cies and officials described in this subparagraph 

25 are— 
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1 ‘‘(i) the Secretary of the Department of 

2 Housing and Urban Development, with re3 gard to mortgages insured under title II of 

4 the National Housing Act (12 U.S.C. 1707 

5 et seq.); 

6 ‘‘(ii) the Secretary of Veterans Affairs, 

7 with regard to a loan made or guaranteed 

8 by the Secretary of Veterans Affairs; 

9 ‘‘(iii) the Secretary of Agriculture, 

10 with regard to loans guaranteed by the Sec11 retary of Agriculture pursuant to section 

12 502 of the Housing Act of 1949 (42 U.S.C. 

13 1472(h)); 

14 ‘‘(iv) the Federal Housing Finance 

15 Agency, with regard to loans meeting the 

16 conforming loan standards of the Federal 

17 National Mortgage Association or the Fed18 eral Home Loan Mortgage Corporation; and 

19 ‘‘(v) the Rural Housing Service, with 

20 regard to loans insured by the Rural Hous21 ing Service. 

22 ‘‘(4) IMPLEMENTATION.—Regulations required or 

23 authorized to be prescribed under this subsection— 
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1 ‘‘(A) shall be prescribed in final form before 

2 the end of the 12-month period beginning on the 

3 date of enactment of this section; and 

4 ‘‘(B) shall take effect not later than 18 

5 months after the date of enactment of this sec6 tion. 

7 ‘‘(g) DEFINITIONS.—For purposes of this section, the 

8 following definitions shall apply: 

9 ‘‘(1) AVERAGE PRIME OFFER RATE.—The term 

10 ‘average prime offer rate’ means an annual percent11 age rate that is derived from average interest rates, 

12 points, and other loan pricing terms currently offered 

13 to consumers by a representative sample of creditors 

14 for mortgage transactions that have low-risk pricing 

15 characteristics. 

16 ‘‘(2) PREPAYMENT PENALTY.—The term ‘prepay17 ment penalty’ means any penalty for paying all or 

18 part of the principal on an extension of credit before 

19 the date on which the principal is due, including a 

20 computation of a refund of unearned interest by a 

21 method that is less favorable to the consumer than the 

22 actuarial method, as defined in section 933(d) of the 

23 Housing and Community Development Act of 1992 

24 (15 U.S.C. 1615(d)). 
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1 ‘‘(3) QUALIFIED MORTGAGE.—The term ‘quali2 fied mortgage’ means— 

3 ‘‘(A) any residential mortgage loan— 

4 ‘‘(i) that does not have an adjustable 

5 rate; 

6 ‘‘(ii) that does not allow a consumer to 

7 defer repayment of principal or interest, or 

8 is not otherwise deemed a ‘non-traditional 

9 mortgage’ under guidance, advisories, or 

10 regulations prescribed by the Bureau; 

11 ‘‘(iii) that does not provide for a re12 payment schedule that results in negative 

13 amortization at any time; 

14 ‘‘(iv) for which the terms are fully am15 ortizing and which does not result in a bal16 loon payment, where a ‘balloon payment’ is 

17 a scheduled payment that is more than 

18 twice as large as the average of earlier 

19 scheduled payments; 

20 ‘‘(v) which has an annual percentage 

21 rate that does not exceed the average prime 

22 offer rate for a comparable transaction, as 

23 of the date on which the interest rate is 

24 set— 
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1 ‘‘(I) by 1.5 or more percentage 

2 points, in the case of a first lien resi3 dential mortgage loan having an origi4 nal principal obligation amount that 

5 is equal to or less than the amount of 

6 the maximum limitation on the origi7 nal principal obligation of a mortgage 

8 in effect for a residence of the applica9 ble size, as of the date on which such 

10 interest rate is set, pursuant to the 

11 sixth sentence of section 305(a)(2) of 

12 the Federal Home Loan Mortgage Cor13 poration Act (12 U.S.C. 1454(a)(2)); 

14 ‘‘(II) by 2.5 or more percentage 

15 points, in the case of a first lien resi16 dential mortgage loan having an origi17 nal principal obligation amount that 

18 is more than the amount of the max19 imum limitation on the original prin20 cipal obligation of a mortgage in effect 

21 for a residence of the applicable size, as 

22 of the date on which such interest rate 

23 is set, pursuant to the sixth sentence of 

24 section 305(a)(2) of the Federal Home 
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1 Loan Mortgage Corporation Act (12 

2 U.S.C. 1454(a)(2)); or 

3 ‘‘(III) by 3.5 or more percentage 

4 points, in the case of a subordinate 

5 lien residential mortgage loan; 

6 ‘‘(vi) for which the income and finan7 cial resources relied upon to qualify the ob8 ligors on the loan are verified and docu9 mented; 

10 ‘‘(vii) for which the underwriting proc11 ess is based on a payment schedule that 

12 fully amortizes the loan over the loan term 

13 and takes into account all applicable taxes, 

14 insurance, and assessments; 

15 ‘‘(viii) that does not cause the total 

16 monthly debts of the consumer, including 

17 amounts under the loan, to exceed a per18 centage established by regulation of the 

19 monthly gross income of the consumer, or 

20 such other maximum percentage of such in21 come, as may be prescribed by regulation 

22 under subsection (g), which rules shall take 

23 into consideration the income of the con24 sumer available to pay regular expenses 
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1 after payment of all installment and revolv2 ing debt; 

3 ‘‘(ix) for which the total points and 

4 fees payable in connection with the loan do 

5 not exceed 2 percent of the total loan 

6 amount, where the term ‘points and fees’ 

7 means points and fees as defined by Section 

8 103(aa)(4) of the Truth in Lending Act (15 

9 U.S.C. 1602(aa)(4)); and 

10 ‘‘(x) for which the term of the loan does 

11 not exceed 30 years, except as such term 

12 may be extended under subsection (g); and 

13 ‘‘(B) any reverse mortgage that is insured 

14 by the Federal Housing Administration or com15 plies with the condition established in subpara16 graph (A)(v). 

17 ‘‘(4) RESIDENTIAL MORTGAGE LOAN.—The term 

18 ‘residential mortgage loan’ means any consumer cred19 it transaction that is secured by a mortgage, deed of 

20 trust, or other equivalent consensual security interest 

21 on a dwelling or on residential real property that in22 cludes a dwelling, other than a consumer credit trans23 action under an open end credit plan or an extension 

24 of credit relating to a plan described in section 

25 101(53D) of title 11, United States Code.’’. 
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1 (b) CONFORMING AMENDMENTS.—Section 129(c) of the 

2 Truth in Lending Act (15 U.S.C. 1639(c)) is amended— 

3 (1) by striking paragraph (2); 

4 (2) by striking ‘‘(1) IN GENERAL.—’’; and 

5 (3) by redesignating subparagraphs (A) and (B) 

6 as paragraphs (1) and (2), respectively. 

7 SEC. 1076. ASSISTANCE FOR ECONOMICALLY VULNERABLE 

8 INDIVIDUALS AND FAMILIES. 

9 (a) HERA AMENDMENTS.—Section 1132 of the Hous10 ing and Economic Recovery Act of 2008 (12 U.S.C. 1701x 

11 note) is amended— 

12 (1) in subsection (a), by inserting in each of 

13 paragraphs (1), (2), (3), and (4) ‘‘or economically 

14 vulnerable individuals and families’’ after ‘‘home15 buyers’’ each place that term appears; 

16 (2) in subsection (b)(1), by inserting ‘‘or eco17 nomically vulnerable individuals and families’’ after 

18 ‘‘homebuyers’’; 

19 (3) in subsection (c)(1)— 

20 (A) in subparagraph (A), by striking ‘‘or’’ 

21 at the end; 

22 (B) in subparagraph (B), by striking the 

23 period at the end and inserting ‘‘; or’’; and 

24 (C) by adding at the end the following: 

25 ‘‘(C) a nonprofit corporation that— 
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1 ‘‘(i) is exempt from taxation under sec2 tion 501(c)(3) of the Internal Revenue Code 

3 of 1986; and 

4 ‘‘(ii) specializes or has expertise in 

5 working with economically vulnerable indi6 viduals and families, but whose primary 

7 purpose is not provision of credit counseling 

8 services.’’; and 

9 (4) in subsection (d)(1), by striking ‘‘not more 

10 than 5’’. 

11 (b) APPLICABILITY.—Amendments made by subsection 

12 (a) shall not apply to programs authorized by section 1132 

13 of the Housing and Economic Recovery Act of 2008 (12 

14 U.S.C. 1701x note) that are funded with appropriations 

15 prior to fiscal year 2011. 

16 SEC. 1077. REMITTANCE TRANSFERS. 

17 (a) TREATMENT OF REMITTANCE TRANSFERS.—The 

18 Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) is 

19 amended— 

20 (1) in section 902(b) (15 U.S.C. 1693(b)), by in21 serting ‘‘and remittance’’ after ‘‘electronic fund’’; 

22 (2) by redesignating sections 919, 920, 921, and 

23 922 as sections 920, 921, 922, and 923, respectively; 

24 and 

25 (3) by inserting after section 918 the following: 
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1 ‘‘SEC. 919. REMITTANCE TRANSFERS. 

2 ‘‘(a) DISCLOSURES REQUIRED FOR REMITTANCE

3 TRANSFERS.— 

4 ‘‘(1) IN GENERAL.—Each remittance transfer 

5 provider shall make disclosures as required under this 

6 section and in accordance with rules prescribed by the 

7 Board. 

8 ‘‘(2) STOREFRONT DISCLOSURES.— 

9 ‘‘(A) IN GENERAL.—At every physical store10 front location owned or controlled by a remit11 tance transfer provider (with respect to remit12 tance transfer activities), the remittance transfer 

13 provider shall prominently post, and update 

14 daily, a notice describing a model transfer for 

15 the amounts of $100 and $200 (in United States 

16 dollars) showing the amount of currency that 

17 will be received by the designated recipient, 

18 using the values of the currency into which the 

19 funds will be exchanged for the 3 currencies to 

20 which that particular storefront sends the great21 est number of remittance transfer payments, 

22 measured irrespective of the value of such pay23 ments. The values shall include all fees charged 

24 by the remittance transfer provider, taken out of 

25 the $100 and $200 amounts. 
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1 ‘‘(B) ELECTRONIC DISCLOSURE.—Subject to 

2 the rules prescribed by the Board, a remittance 

3 transfer provider shall prominently post, and 

4 update daily, a notice describing a model trans5 fer, as described in subparagraph (A), on the 

6 Internet site owned or controlled by the remit7 tance transfer provider which senders use to elec8 tronically conduct remittance transfer trans9 actions. 

10 ‘‘(3) SPECIFIC DISCLOSURES.—In addition to 

11 any other disclosures applicable under this title, and 

12 subject to paragraph (4), a remittance transfer pro13 vider shall provide, in writing and in a form that the 

14 sender may keep, to each sender requesting a remit15 tance transfer, as applicable to the transaction— 

16 ‘‘(A) at the time at which the sender re17 quests a remittance transfer to be initiated, and 

18 prior to the sender making any payment in con19 nection with the remittance transfer, a disclosure 

20 describing the amount of currency that will be 

21 sent to the designated recipient, using the values 

22 of the currency into which the funds will be ex23 changed; and 
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1 ‘‘(B) at the time at which the sender makes 

2 payment in connection with the remittance 

3 transfer— 

4 ‘‘(i) a receipt showing— 

5 ‘‘(I) the information described in 

6 subparagraph (A); 

7 ‘‘(II) the promised date of delivery 

8 to the designated recipient; and 

9 ‘‘(III) the name and either the 

10 telephone number or the address of the 

11 designated recipient; and 

12 ‘‘(ii) a statement containing— 

13 ‘‘(I) information about the rights 

14 of the sender under this section regard15 ing the resolution of errors; and 

16 ‘‘(II) appropriate contact infor17 mation for— 

18 ‘‘(aa) the remittance transfer 

19 provider; and 

20 ‘‘(bb) each State or Federal 

21 agency supervising the remittance 

22 transfer provider, including its 

23 State licensing authority or Fed24 eral regulator, as applicable. 
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1 ‘‘(4) REQUIREMENTS RELATING TO DISCLO2 SURES.—With respect to each disclosure required to 

3 be provided under paragraph (3), and subject to 

4 paragraph (5), a remittance transfer provider shall— 

5 ‘‘(A) provide an initial notice and receipt, 

6 as required by subparagraphs (A) and (B) of 

7 paragraph (3), and an error resolution state8 ment, as required by subsection (c), that clearly 

9 and conspicuously describe the information re10 quired to be disclosed therein; and 

11 ‘‘(B) with respect to any transaction that a 

12 sender conducts electronically, comply with the 

13 Electronic Signatures in Global and National 

14 Commerce Act (15 U.S.C. 7001 et seq.). 

15 ‘‘(5) EXEMPTION AUTHORITY.—The Board may, 

16 by rule, permit a remittance transfer provider to sat17 isfy the requirements of— 

18 ‘‘(A) paragraph (3)(A) orally, if the trans19 action is conducted entirely by telephone; 

20 ‘‘(B) paragraph (3)(B), by mailing the doc21 uments required under such subparagraph to the 

22 sender, not later than 1 business day after the 

23 date on which the transaction is conducted, if the 

24 transaction is conducted entirely by telephone; 
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1 ‘‘(C) subparagraphs (A) and (B) of para2 graph (3) together in one written disclosure, but 

3 only to the extent that the information provided 

4 in accordance with paragraph (3)(A) is accurate 

5 at the time at which payment is made in connec6 tion with the subject remittance transfer; 

7 ‘‘(D) paragraph (3)(A), if a sender initiates 

8 a transaction to one of those countries displayed, 

9 in the exact amount of the transfers displayed 

10 pursuant to paragraph (2), if the Board finds it 

11 to be appropriate; and 

12 ‘‘(E) paragraph (3)(A), without compliance 

13 with section 101(c) of the Electronic Signatures 

14 in Global Commerce Act, if a sender initiates the 

15 transaction electronically and the information is 

16 displayed electronically in a manner that the 

17 sender can keep. 

18 ‘‘(b) FOREIGN LANGUAGE DISCLOSURES.— 

19 ‘‘(1) IN GENERAL.—The disclosures required 

20 under this section shall be made in English and in 

21 each of the same foreign languages principally used 

22 by the remittance transfer provider, or any of its 

23 agents, to advertise, solicit, or market, either orally or 

24 in writing, at that office. 
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1 ‘‘(2) ACCOUNTS.—In the case of a sender who 

2 holds a demand deposit, savings deposit, or other 

3 asset account with the remittance transfer provider 

4 (other than an occasional or incidental credit balance 

5 under an open end credit plan, as defined in section 

6 103(i) of the Truth in Lending Act), the disclosures 

7 required under this section shall be made in the lan8 guage or languages principally used by the remittance 

9 transfer provider to communicate to the sender with 

10 respect to the account. 

11 ‘‘(c) REMITTANCE TRANSFER ERRORS.— 

12 ‘‘(1) ERROR RESOLUTION.— 

13 ‘‘(A) IN GENERAL.—If a remittance transfer 

14 provider receives oral or written notice from the 

15 sender within 180 days of the promised date of 

16 delivery that an error occurred with respect to a 

17 remittance transfer, including the amount of 

18 currency designated in subsection (a)(3)(A) that 

19 was to be sent to the designated recipient of the 

20 remittance transfer, using the values of the cur21 rency into which the funds should have been ex22 changed, but was not made available to the des23 ignated recipient in the foreign country, the re24 mittance transfer provider shall resolve the error 
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1 pursuant to this subsection and investigate the 

2 reason for the error. 

3 ‘‘(B) REMEDIES.—Not later than 90 days 

4 after the date of receipt of a notice from the 

5 sender pursuant to subparagraph (A), the remit6 tance transfer provider shall, as applicable to the 

7 error and as designated by the sender— 

8 ‘‘(i) refund to the sender the total 

9 amount of funds tendered by the sender in 

10 connection with the remittance transfer 

11 which was not properly transmitted; 

12 ‘‘(ii) make available to the designated 

13 recipient, without additional cost to the des14 ignated recipient or to the sender, the 

15 amount appropriate to resolve the error; 

16 ‘‘(iii) provide such other remedy, as de17 termined appropriate by rule of the Board 

18 for the protection of senders; or 

19 ‘‘(iv) provide written notice to the 

20 sender that there was no error with an ex21 planation responding to the specific com22 plaint of the sender. 

23 ‘‘(2) RULES.—The Board shall establish, by rule 

24 issued not later than 1 calendar year after the date 

25 of enactment of the Restoring American Financial 
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1 Stability Act of 2010, clear and appropriate stand2 ards for remittance transfer providers with respect to 

3 error resolution relating to remittance transfers, to 

4 protect senders from such errors. Standards prescribed 

5 under this paragraph shall include appropriate 

6 standards regarding record keeping, as required, in7 cluding documentation— 

8 ‘‘(A) of the complaint of the sender; 

9 ‘‘(B) that the sender provides the remittance 

10 transfer provider with respect to the alleged 

11 error; and 

12 ‘‘(C) of the findings of the remittance trans13 fer provider regarding the investigation of the al14 leged error that the sender brought to their atten15 tion. 

16 ‘‘(d) APPLICABILITY OF THIS TITLE.— 

17 ‘‘(1) IN GENERAL.—A remittance transfer that is 

18 not an electronic fund transfer, as defined in section 

19 903, shall not be subject to any of the provisions of 

20 sections 905 through 913. A remittance transfer that 

21 is an electronic fund transfer, as defined in section 

22 903, shall be subject to all provisions of this title, ex23 cept for section 908, that are otherwise applicable to 

24 electronic fund transfers under this title. 
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1 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in this 

2 section shall be construed— 

3 ‘‘(A) to affect the application to any trans4 action, to any remittance provider, or to any 

5 other person of any of the provisions of sub6 chapter II of chapter 53 of title 31, United 

7 States Code, section 21 of the Federal Deposit 

8 Insurance Act (12 U.S.C. 1829b), or chapter 2 of 

9 title I of Public Law 91–508 (12 U.S.C. 1951– 

10 1959), or any regulations promulgated there11 under; or 

12 ‘‘(B) to cause any fund transfer that would 

13 not otherwise be treated as such under para14 graph (1) to be treated as an electronic fund 

15 transfer, or as otherwise subject to this title, for 

16 the purposes of any of the provisions referred to 

17 in subparagraph (A) or any regulations promul18 gated thereunder. 

19 ‘‘(e) ACTS OF AGENTS.—A remittance transfer pro20 vider shall be liable for any violation of this section by any 

21 agent, authorized delegate, or person affiliated with such 

22 provider, when such agent, authorized delegate, or affiliate 

23 acts for that remittance transfer provider. 

24 ‘‘(f) DEFINITIONS.—As used in this section— 
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1 ‘‘(1) the term ‘designated recipient’ means any 

2 person located in a foreign country and identified by 

3 the sender as the authorized recipient of a remittance 

4 transfer to be made by a remittance transfer provider, 

5 except that a designated recipient shall not be deemed 

6 to be a consumer for purposes of this Act; 

7 ‘‘(2) the term ‘remittance transfer’ means the 

8 electronic (as defined in section 106(2) of the Elec9 tronic Signatures in Global and National Commerce 

10 Act (15 U.S.C. 7006(2))) transfer of funds requested 

11 by a sender located in any State to a designated re12 cipient that is initiated by a remittance transfer pro13 vider, whether or not the sender holds an account 

14 with the remittance transfer provider or whether or 

15 not the remittance transfer is also an electronic fund 

16 transfer, as defined in section 903; 

17 ‘‘(3) the term ‘remittance transfer provider’ 

18 means any person or financial institution that pro19 vides remittance transfers for a consumer in the nor20 mal course of its business, whether or not the con21 sumer holds an account with such person or financial 

22 institution; and 

23 ‘‘(4) the term ‘sender’ means a consumer who re24 quests a remittance provider to send a remittance 

25 transfer for the consumer to a designated recipient.’’. 
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1 (b) AUTOMATED CLEARINGHOUSE SYSTEM.— 

2 (1) EXPANSION OF SYSTEM.—The Board of Gov3 ernors shall work with the Federal reserve banks to 

4 expand the use of the automated clearinghouse system 

5 for remittance transfers to foreign countries, with a 

6 focus on countries that receive significant remittance 

7 transfers from the United States, based on— 

8 (A) the number, volume, and size of such 

9 transfers; 

10 (B) the significance of the volume of such 

11 transfers relative to the external financial flows 

12 of the receiving country, including— 

13 (i) the total amount transferred; and 

14 (ii) the total volume of payments made 

15 by United States Government agencies to 

16 beneficiaries and retirees living abroad; 

17 (C) the feasibility of such an expansion; 

18 and 

19 (D) the ability of the Federal Reserve Sys20 tem to establish payment gateways in different 

21 geographic regions and currency zones to receive 

22 remittance transfers and route them through the 

23 payments systems in the destination countries. 

24 (2) REPORT TO CONGRESS.—Not later than one 

25 calendar year after the date of enactment of this Act, 
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1 and on April 30 biennially thereafter during the 10- 

2 year period beginning on that date of enactment, the 

3 Board of Governors shall submit a report to the Com4 mittee on Banking, Housing, and Urban Affairs of 

5 the Senate and the Committee on Financial Services 

6 of the House of Representatives on the status of the 

7 automated clearinghouse system and its progress in 

8 complying with the requirements of this subsection. 

9 The report shall include an analysis of adoption rates 

10 of International ACH Transactions rules and for11 mats, the efficacy of increasing adoption rates, and 

12 potential recommendations to increase adoption. 

13 (c) EXPANSION OF FINANCIAL INSTITUTION PROVISION

14 OF REMITTANCE TRANSFERS.— 

15 (1) PROVISION OF GUIDELINES TO INSTITU16 TIONS.—Each of the Federal banking agencies and the 

17 National Credit Union Administration shall provide 

18 guidelines to financial institutions under the jurisdic19 tion of the agency regarding the offering of low-cost 

20 remittance transfers and no-cost or low-cost basic con21 sumer accounts, as well as agency services to remit22 tance transfer providers. 

23 (2) ASSISTANCE TO FINANCIAL LITERACY COM24 MISSION.—As part of its duties as members of the Fi25 nancial Literacy and Education Commission, the Bu-
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1 reau, the Federal banking agencies, and the National 

2 Credit Union Administration shall assist the Finan3 cial Literacy and Education Commission in exe4 cuting the Strategy for Assuring Financial Empower5 ment (or the ‘‘SAFE Strategy’’), as it relates to re6 mittances. 

7 (d) FEDERAL CREDIT UNION ACT CONFORMING

8 AMENDMENT.—Paragraph (12) of section 107 of the Fed9 eral Credit Union Act (12 U.S.C. 1757) is amended to read 

10 as follows: 

11 ‘‘(12) in accordance with regulations prescribed 

12 by the Board— 

13 ‘‘(A) to sell, to persons in the field of mem14 bership, negotiable checks (including travelers 

15 checks), money orders, and other similar money 

16 transfer instruments (including international 

17 and domestic electronic fund transfers); 

18 ‘‘(B) to provide remittance transfers, as de19 fined in section 919 of the Electronic Fund 

20 Transfer Act, to persons in the field of member21 ship; and 

22 ‘‘(C) to cash checks and money orders for 

23 persons in the field of membership for a fee;’’. 
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1 SEC. 1078. DEPARTMENT OF THE TREASURY STUDY ON 

2 ENDING THE CONSERVATORSHIP OF FANNIE 

3 MAE, FREDDIE MAC, AND REFORMING THE 

4 HOUSING FINANCE SYSTEM. 

5 (a) STUDY REQUIRED.— 

6 (1) IN GENERAL.—The Secretary of the Treasury 

7 shall conduct a study of and develop recommendations 

8 regarding the options for ending the conservatorship 

9 of the Federal National Mortgage Association (in this 

10 section referred to as ‘‘Fannie Mae’’) and the Federal 

11 Home Loan Mortgage Corporation (in this section re12 ferred to as ‘‘Freddie Mac’’), while minimizing the 

13 cost to taxpayers, including such options as— 

14 (A) the gradual wind-down and liquidation 

15 of such entities; 

16 (B) the privatization of such entities; 

17 (C) the incorporation of the functions of 

18 such entities into a Federal agency; 

19 (D) the dissolution of Fannie Mae and 

20 Freddie Mac into smaller companies; or 

21 (E) any other measures the Secretary deter22 mines appropriate. 

23 (2) ANALYSES.—The study required under para24 graph (1) shall include an analysis of— 

25 (A) the role of the Federal Government in 

26 supporting a stable, well-functioning housing fi-
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1 nance system, and whether and to what extent 

2 the Federal Government should bear risks in 

3 meeting Federal housing finance objectives; 

4 (B) how the current structure of the housing 

5 finance system can be improved; 

6 (C) how the housing finance system should 

7 support the continued availability of mortgage 

8 credit to all segments of the market; 

9 (D) how the housing finance system should 

10 be structured to ensure that consumers continue 

11 to have access to 30-year, fixed rate, pre-payable 

12 mortgages and other mortgage products that have 

13 simple terms that can be easily understood; 

14 (E) the role of the Federal Housing Admin15 istration and the Department of Veterans Affairs 

16 in a future housing system; 

17 (F) the impact of reforms of the housing fi18 nance system on the financing of rental housing; 

19 (G) the impact of reforms of the housing fi20 nance system on secondary market liquidity; 

21 (H) the role of standardization in the hous22 ing finance system; 

23 (I) how housing finance systems in other 

24 countries offer insights that can help inform op25 tions for reform in the United States; and 
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1 (J) the options for transition to a reformed 

2 housing finance system. 

3 (b) REPORT AND RECOMMENDATIONS.—Not later than 

4 January 31, 2011, the Secretary of the Treasury shall sub5 mit the report and recommendations required under sub6 section (a) to the Committee on Banking, Housing, and 

7 Urban Affairs of the Senate and the Committee on Finan8 cial Services of the House of Representatives. 

9 SEC. 1079. REASONABLE FEES AND RULES FOR PAYMENT 

10 CARD TRANSACTIONS. 

11 The Electronic Fund Transfer Act (15 U.S.C. 1693 et 

12 seq.) is amended— 

13 (1) by redesignating sections 920 and 921 as sec14 tions 921 and 922, respectively; and 

15 (2) by inserting after section 919 the following: 

16 ‘‘SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT 

17 CARD TRANSACTIONS. 

18 ‘‘(a) REASONABLE INTERCHANGE TRANSACTION FEES

19 FOR ELECTRONIC DEBIT TRANSACTIONS.— 

20 ‘‘(1) REGULATORY AUTHORITY.—The Board shall 

21 have authority to establish rules, pursuant to section 

22 553 of title 5, United States Code, regarding any 

23 interchange transaction fee that an issuer or payment 

24 card network may charge with respect to an electronic 

25 debit transaction. 
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1 ‘‘(2) REASONABLE FEES.—The amount of any 

2 interchange transaction fee that an issuer or payment 

3 card network may charge with respect to an electronic 

4 debit transaction shall be reasonable and proportional 

5 to the actual cost incurred by the issuer or payment 

6 card network with respect to the transaction. 

7 ‘‘(3) RULEMAKING REQUIRED.—The Board shall 

8 issue final rules, not later than 9 months after the 

9 date of enactment of the Consumer Financial Protec10 tion Act of 2010, to establish standards for assessing 

11 whether the amount of any interchange transaction 

12 fee described in paragraph (2) is reasonable and pro13 portional to the actual cost incurred by the issuer or 

14 payment card network with respect to the transaction. 

15 ‘‘(4) CONSIDERATIONS.—In issuing rules re16 quired by this section, the Board shall— 

17 ‘‘(A) consider the functional similarity be18 tween— 

19 ‘‘(i) electronic debit transactions; and 

20 ‘‘(ii) checking transactions that are re21 quired within the Federal Reserve bank sys22 tem to clear at par; 

23 ‘‘(B) distinguish between— 

24 ‘‘(i) the actual incremental cost in25 curred by an issuer or payment card net-
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1 work for the role of the issuer or the pay2 ment card network in the authorization, 

3 clearance, or settlement of a particular elec4 tronic debit transaction, which cost shall be 

5 considered under paragraph (2); and 

6 ‘‘(ii) other costs incurred by an issuer 

7 or payment card network which are not spe8 cific to a particular electronic debit trans9 action, which costs shall not be considered 

10 under paragraph (2); and 

11 ‘‘(C) consult, as appropriate, with the 

12 Comptroller of the Currency, the Board of Direc13 tors of the Federal Deposit Insurance Corpora14 tion, the Director of the Office of Thrift Super15 vision, the National Credit Union Administra16 tion Board, the Administrator of the Small 

17 Business Administration, and the Director of the 

18 Bureau of Consumer Financial Protection. 

19 ‘‘(5) EXEMPTION FOR SMALL ISSUERS.—This 

20 subsection shall not apply to issuers that, together 

21 with affiliates, have assets of less than 

22 $10,000,000,000, and the Board shall exempt such 

23 issuers from rules issued under paragraph (3). 
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1 ‘‘(6) EFFECTIVE DATE.—Paragraph (2) shall be2 come effective 12 months after the date of enactment 

3 of the Consumer Financial Protection Act of 2010. 

4 ‘‘(b) LIMITATION ON ANTI-COMPETITIVE PAYMENT

5 CARD NETWORK RESTRICTIONS.— 

6 ‘‘(1) NO RESTRICTIONS ON OFFERING DISCOUNTS

7 FOR USE OF A COMPETING PAYMENT CARD NET8 WORK.—A payment card network shall not, directly 

9 or through any agent, processor, or licensed member 

10 of the network, by contract, requirement, condition, 

11 penalty, or otherwise, inhibit the ability of any per12 son to provide a discount or in-kind incentive for 

13 payment through the use of a card or device of an14 other payment card network, provided that the dis15 count or in-kind incentive only differentiates between 

16 payment card networks and not between other issuers. 

17 ‘‘(2) NO RESTRICTIONS ON OFFERING DISCOUNTS

18 FOR USE OF A FORM OF PAYMENT.—A payment card 

19 network shall not, directly or through any agent, 

20 processor, or licensed member of the network, by con21 tract, requirement, condition, penalty, or otherwise, 

22 inhibit the ability of any person to provide a discount 

23 or in-kind incentive for payment by the use of cash, 

24 check, debit card, or credit card. 
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1 ‘‘(3) NO RESTRICTIONS ON SETTING TRANS2 ACTION MINIMUMS OR MAXIMUMS.—A payment card 

3 network shall not, directly or through any agent, 

4 processor, or licensed member of the network, by con5 tract, requirement, condition, penalty, or otherwise, 

6 inhibit the ability of any person to set a minimum 

7 or maximum dollar value for the acceptance by that 

8 person of credit cards, provided that such minimum 

9 or maximum dollar value does not differentiate be10 tween issuers or between payment card networks. 

11 ‘‘(c) DEFINITIONS.—For purposes of this section, the 

12 following definitions shall apply: 

13 ‘‘(1) DEBIT CARD.—The term ‘debit card’— 

14 ‘‘(A) means any card, or other payment 

15 code or device, issued or approved for use 

16 through a payment card network to debit an 

17 asset account for the purpose of transferring 

18 money between accounts or obtaining goods or 

19 services, whether authorization is based on signa20 ture, PIN, or other means; 

21 ‘‘(B) includes general use prepaid cards, as 

22 that term is defined in section 915(a)(2)(A) (15 

23 U.S.C. 1693l–1(a)(2)(A)); and 

24 ‘‘(C) does not include paper checks. 
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1 ‘‘(2) CREDIT CARD.—The term ‘credit card’ has 

2 the same meaning as in section 103 of the Truth in 

3 Lending Act (15 U.S.C. 1602). 

4 ‘‘(3) DISCOUNT.—The term ‘discount’— 

5 ‘‘(A) means a reduction made from the 

6 price that customers are informed is the regular 

7 price; and 

8 ‘‘(B) does not include any means of increas9 ing the price that customers are informed is the 

10 regular price. 

11 ‘‘(4) ELECTRONIC DEBIT TRANSACTION.—The 

12 term ‘electronic debit transaction’ means a trans13 action in which a person uses a debit card to debit 

14 an asset account. 

15 ‘‘(5) INTERCHANGE TRANSACTION FEE.—The 

16 term ‘interchange transaction fee’ means any fee es17 tablished by a payment card network that has been 

18 established for the purpose of compensating an issuer 

19 or payment card network for its involvement in an 

20 electronic debit transaction. 

21 ‘‘(6) ISSUER.—The term ‘issuer’ means any per22 son who issues a debit card, or credit card, or the 

23 agent of such person with respect to such card. 

24 ‘‘(7) PAYMENT CARD NETWORK.—The term ‘pay25 ment card network’ means an entity that directly, or 
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1 through licensed members, processors, or agents, pro2 vides the proprietary services, infrastructure, and 

3 software that route information and data to conduct 

4 transaction authorization, clearance, and settlement, 

5 and that a person uses in order to accept as a form 

6 of payment a brand of debit card, credit card or other 

7 device that may be used to carry out debit or credit 

8 transactions.’’. 

9 SEC. 1079A. USE OF CONSUMER REPORTS. 

10 Section 615 of the Fair Credit Reporting Act (15 

11 U.S.C. 1681m) is amended— 

12 (1) in subsection (a)— 

13 (A) by redesignating paragraphs (2) and 

14 (3) as paragraphs (3) and (4), respectively; 

15 (B) by inserting after paragraph (1) the fol16 lowing: 

17 ‘‘(2) provide to the consumer written or elec18 tronic disclosure— 

19 ‘‘(A) of a numerical credit score as defined 

20 in section 609(f)(2)(A) used by such person in 

21 taking any adverse action based in whole or in 

22 part on any information in a consumer report; 

23 and 
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1 ‘‘(B) of the information set forth in sub2 paragraphs (B) through (E) of section 

3 609(f)(1);’’; and 

4 (C) in paragraph (4) (as so redesignated), 

5 by striking ‘‘paragraph (2)’’ and inserting 

6 ‘‘paragraph (3)’’; and 

7 (2) in subsection (h)(5)— 

8 (A) in subparagraph (C), by striking ‘‘; 

9 and’’ and inserting a semicolon; 

10 (B) in subparagraph (D), by striking the 

11 period and inserting ‘‘; and’’; and 

12 (C) by inserting at the end the following: 

13 ‘‘(E) include a statement informing the con14 sumer of— 

15 ‘‘(i) a numerical credit score as defined 

16 in section 609(f)(2)(A), used by such person 

17 in connection with the credit decision de18 scribed in paragraph (1) based in whole or 

19 in part on any information in a consumer 

20 report; and 

21 ‘‘(ii) the information set forth in sub22 paragraphs (B) through (E) of section 

23 609(f)(1).’’. 
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1 Subtitle H—Conforming 

2 Amendments 

3 SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL 

4 ACT. 

5 Effective on the date of enactment of this Act, the In6 spector General Act of 1978 (5 U.S.C. App. 3) is amended— 

7 (1) in section 8G(a)(2), by inserting ‘‘and the 

8 Bureau of Consumer Financial Protection’’ after 

9 ‘‘Board of Governors of the Federal Reserve System’’; 

10 (2) in section 8G(c), by adding at the end the 

11 following: ‘‘For purposes of implementing this section, 

12 the Chairman of the Board of Governors of the Fed13 eral Reserve System shall appoint the Inspector Gen14 eral of the Board of Governors of the Federal Reserve 

15 System and the Bureau of Consumer Financial Pro16 tection. The Inspector General of the Board of Gov17 ernors of the Federal Reserve System and the Bureau 

18 of Consumer Financial Protection shall have all of the 

19 authorities and responsibilities provided by this Act 

20 with respect to the Bureau of Consumer Financial 

21 Protection, as if the Bureau were part of the Board 

22 of Governors of the Federal Reserve System.’’; and 

23 (3) in section 8G(g)(3), by inserting ‘‘and the 

24 Bureau of Consumer Financial Protection’’ after 
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† HR 4173 EAS 

1 ‘‘Board of Governors of the Federal Reserve System’’ 

2 the first place that term appears. 

3 SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974. 

4 Effective on the date of enactment of this Act, section 

5 552a of title 5, United States Code, is amended by adding 

6 at the end the following: 

7 ‘‘(w) APPLICABILITY TO BUREAU OF CONSUMER FI8 NANCIAL PROTECTION.—Except as provided in the Con9 sumer Financial Protection Act of 2010, this section shall 

10 apply with respect to the Bureau of Consumer Financial 

11 Protection.’’. 

12 SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE 

13 TRANSACTION PARITY ACT OF 1982. 

14 (a) IN GENERAL.—The Alternative Mortgage Trans15 action Parity Act of 1982 (12 U.S.C. 3801 et seq.) is 

16 amended— 

17 (1) in section 803 (12 U.S.C. 3802(1)), by strik18 ing ‘‘1974’’ and all that follows through ‘‘described 

19 and defined’’ and inserting the following: ‘‘1974), in 

20 which the interest rate or finance charge may be ad21 justed or renegotiated, described and defined’’; and 

22 (2) in section 804 (12 U.S.C. 3803)— 

23 (A) in subsection (a)— 

24 (i) in each of paragraphs (1), (2), and 

25 (3), by inserting after ‘‘transactions made’’ 
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1 each place that term appears ‘‘on or before 

2 the designated transfer date, as determined 

3 under section 1062 of the Consumer Finan4 cial Protection Act of 2010,’’; 

5 (ii) in paragraph (2), by striking 

6 ‘‘and’’ at the end; 

7 (iii) in paragraph (3), by striking the 

8 period at the end and inserting ‘‘; and’’; 

9 and 

10 (iv) by adding at the end the following 

11 new paragraph: 

12 ‘‘(4) with respect to transactions made after the 

13 designated transfer date, only in accordance with reg14 ulations governing alternative mortgage transactions, 

15 as issued by the Bureau of Consumer Financial Pro16 tection for federally chartered housing creditors, in 

17 accordance with the rulemaking authority granted to 

18 the Bureau of Consumer Financial Protection with 

19 regard to federally chartered housing creditors under 

20 provisions of law other than this section.’’; 

21 (B) by striking subsection (c) and inserting 

22 the following: 

23 ‘‘(c) PREEMPTION OF STATE LAW.—An alternative 

24 mortgage transaction may be made by a housing creditor 

25 in accordance with this section, notwithstanding any State 
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† HR 4173 EAS 

1 constitution, law, or regulation that prohibits an alter2 native mortgage transaction. For purposes of this sub3 section, a State constitution, law, or regulation that pro4 hibits an alternative mortgage transaction does not include 

5 any State constitution, law, or regulation that regulates 

6 mortgage transactions generally, including any restriction 

7 on prepayment penalties or late charges.’’; and 

8 (C) by adding at the end the following: 

9 ‘‘(d) BUREAU ACTIONS.—The Bureau of Consumer Fi10 nancial Protection shall— 

11 ‘‘(1) review the regulations identified by the 

12 Comptroller of the Currency and the National Credit 

13 Union Administration, (as those rules exist on the 

14 designated transfer date), as applicable under para15 graphs (1) through (3) of subsection (a); 

16 ‘‘(2) determine whether such regulations are fair 

17 and not deceptive and otherwise meet the objectives of 

18 the Consumer Financial Protection Act of 2010; and 

19 ‘‘(3) promulgate regulations under subsection 

20 (a)(4) after the designated transfer date. 

21 ‘‘(e) DESIGNATED TRANSFER DATE.—As used in this 

22 section, the term ‘designated transfer date’ means the date 

23 determined under section 1062 of the Consumer Financial 

24 Protection Act of 2010.’’. 
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1 (b) EFFECTIVE DATE.—This section and the amend2 ments made by this section shall become effective on the des3 ignated transfer date. 

4 (c) RULE OF CONSTRUCTION.—The amendments made 

5 by subsection (a) shall not affect any transaction covered 

6 by the Alternative Mortgage Transaction Parity Act of l982 

7 (12 U.S.C. 3801 et seq.) and entered into on or before the 

8 designated transfer date. 

9 SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND 

10 TRANSFER ACT. 

11 The Electronic Fund Transfer Act (15 U.S.C. 1693 et 

12 seq.) is amended— 

13 (1) by striking ‘‘Board’’ each place that term ap14 pears and inserting ‘‘Bureau’’, except in section 918 

15 (as so designated by the Credit Card Act of 2009) (15 

16 U.S.C. 1693o); 

17 (2) in section 903 (15 U.S.C. 1693a), by striking 

18 paragraph (3) and inserting the following: 

19 ‘‘(3) the term ‘Bureau’ means the Bureau of 

20 Consumer Financial Protection;’’; 

21 (3) in section 916(d) (as so designated by section 

22 401 of the Credit CARD Act of 2009) (15 U.S.C. 

23 1693m)— 
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1 (A) by striking ‘‘FEDERAL RESERVE SYS2 TEM’’ and inserting ‘‘BUREAU OF CONSUMER FI3 NANCIAL PROTECTION’’; and 

4 (B) by striking ‘‘Federal Reserve System’’ 

5 and inserting ‘‘Bureau of Consumer Financial 

6 Protection’’; and 

7 (4) in section 918 (as so designated by the Credit 

8 CARD Act of 2009) (15 U.S.C. 1693o)— 

9 (A) in subsection (a)— 

10 (i) by striking ‘‘Compliance’’ and in11 serting ‘‘Except as otherwise provided by 

12 subtitle B of the Consumer Financial Pro13 tection Act of 2010, compliance’’; and 

14 (ii) by striking paragraph (2) and in15 serting the following: 

16 ‘‘(2) subtitle E of the Consumer Financial Pro17 tection Act of 2010, by the Bureau;’’; and 

18 (B) by striking subsection (c) and inserting 

19 the following: 

20 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

21 FEDERAL TRADE COMMISSION.—Except to the extent that 

22 enforcement of the requirements imposed under this title is 

23 specifically committed to some other Government agency 

24 under subsection (a), and subject to subtitle B of the Con25 sumer Financial Protection Act of 2010, the Federal Trade 
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1 Commission shall enforce such requirements. For the pur2 pose of the exercise by the Federal Trade Commission of 

3 its functions and powers under the Federal Trade Commis4 sion Act, a violation of any requirement imposed under this 

5 title shall be deemed a violation of a requirement imposed 

6 under that Act. All of the functions and powers of the Fed7 eral Trade Commission under the Federal Trade Commis8 sion Act are available to the Federal Trade Commission to 

9 enforce compliance by any person subject to the jurisdiction 

10 of the Federal Trade Commission with the requirements im11 posed under this title, irrespective of whether that person 

12 is engaged in commerce or meets any other jurisdictional 

13 tests under the Federal Trade Commission Act.’’. 

14 SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPOR15 TUNITY ACT. 

16 The Equal Credit Opportunity Act (15 U.S.C. 1691 

17 et seq.) is amended— 

18 (1) by striking ‘‘Board’’ each place that term ap19 pears and inserting ‘‘Bureau’’; 

20 (2) in section 702 (15 U.S.C. 1691a), by striking 

21 subsection (c) and inserting the following: 

22 ‘‘(c) The term ‘Bureau’ means the Bureau of Consumer 

23 Financial Protection.’’; 

24 (3) in section 703 (15 U.S.C. 1691b)— 
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1 (A) by striking the section heading and in2 serting the following: 

3 ‘‘SEC. 703. PROMULGATION OF REGULATIONS BY THE BU4 REAU.’’; 

5 (B) by striking ‘‘(a) REGULATIONS.—’’; 

6 (C) by striking subsection (b); 

7 (D) by redesignating paragraphs (1) 

8 through (5) as subsections (a) through (e), re9 spectively; and 

10 (E) in subsection (c), as so redesignated, by 

11 striking ‘‘paragraph (2)’’ and inserting ‘‘sub12 section (b)’’; 

13 (4) in section 704 (15 U.S.C. 1691c)— 

14 (A) in subsection (a)— 

15 (i) by striking ‘‘Compliance’’ and in16 serting ‘‘Except as otherwise provided by 

17 subtitle B of the Consumer Protection Fi18 nancial Protection Act of 2010’’; and 

19 (ii) by striking paragraph (2) and in20 serting the following: 

21 ‘‘(2) Subtitle E of the Consumer Financial Pro22 tection Act of 2010, by the Bureau.’’; 

23 (B) by striking subsection (c) and inserting 

24 the following: 
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1 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF FED2 ERAL TRADE COMMISSION.—Except to the extent that en3 forcement of the requirements imposed under this title is 

4 specifically committed to some other Government agency 

5 under subsection (a), and subject to subtitle B of the Con6 sumer Financial Protection Act of 2010, the Federal Trade 

7 Commission shall enforce such requirements. For the pur8 pose of the exercise by the Federal Trade Commission of 

9 its functions and powers under the Federal Trade Commis10 sion Act (15 U.S.C. 41 et seq.), a violation of any require11 ment imposed under this subchapter shall be deemed a vio12 lation of a requirement imposed under that Act. All of the 

13 functions and powers of the Federal Trade Commission 

14 under the Federal Trade Commission Act are available to 

15 the Federal Trade Commission to enforce compliance by 

16 any person with the requirements imposed under this title, 

17 irrespective of whether that person is engaged in commerce 

18 or meets any other jurisdictional tests under the Federal 

19 Trade Commission Act, including the power to enforce any 

20 rule prescribed by the Bureau under this title in the same 

21 manner as if the violation had been a violation of a Federal 

22 Trade Commission trade regulation rule.’’; and 

23 (C) in subsection (d), by striking ‘‘Board’’ 

24 and inserting ‘‘Bureau’’; and 

25 (5) in section 706(e) (15 U.S.C. 1691e(e))— 
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1 (A) in the subsection heading— 

2 (i) by striking ‘‘BOARD’’ each place 

3 that term appears and inserting ‘‘BU4 REAU’’; and 

5 (ii) by striking ‘‘FEDERAL RESERVE

6 SYSTEM’’ and inserting ‘‘BUREAU OF CON7 SUMER FINANCIAL PROTECTION’’; and 

8 (B) by striking ‘‘Federal Reserve System’’ 

9 and inserting ‘‘Bureau of Consumer Financial 

10 Protection’’. 

11 SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAIL12 ABILITY ACT. 

13 (a) AMENDMENT TO SECTION 603.—Section 603(d)(1) 

14 of the Expedited Funds Availability Act (12 U.S.C. 4002) 

15 is amended by inserting after ‘‘Board’’ the following ‘‘, 

16 jointly with the Director of the Bureau of Consumer Finan17 cial Protection,’’. 

18 (b) AMENDMENTS TO SECTION 604.—Section 604 of 

19 the Expedited Funds Availability Act (12 U.S.C. 4003) is 

20 amended— 

21 (1) by inserting after ‘‘Board’’ each place that 

22 term appears, other than in subsection (f), the fol23 lowing: ‘‘, jointly with the Director of the Bureau of 

24 Consumer Financial Protection,’’; and 
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1 (2) in subsection (f), by striking ‘‘Board.’’ each 

2 place that term appears and inserting the following: 

3 ‘‘Board, jointly with the Director of the Bureau of 

4 Consumer Financial Protection.’’. 

5 (c) AMENDMENTS TO SECTION 605.—Section 605 of 

6 the Expedited Funds Availability Act (12 U.S.C. 4004) is 

7 amended— 

8 (1) by inserting after ‘‘Board’’ each place that 

9 term appears, other than in the heading for section 

10 605(f)(1), the following: ‘‘, jointly with the Director of 

11 the Bureau of Consumer Financial Protection,’’; and 

12 (2) in subsection (f)(1), in the paragraph head13 ing, by inserting ‘‘AND BUREAU’’ after ‘‘BOARD’’. 

14 (d) AMENDMENTS TO SECTION 609.—Section 609 of 

15 the Expedited Funds Availability Act (12 U.S.C. 4008) is 

16 amended: 

17 (1) in subsection (a), by inserting after ‘‘Board’’ 

18 the following ‘‘, jointly with the Director of the Bu19 reau of Consumer Financial Protection,’’; and 

20 (2) by striking subsection (e) and inserting the 

21 following: 

22 ‘‘(e) CONSULTATIONS.—In prescribing regulations 

23 under subsections (a) and (b), the Board and the Director 

24 of the Bureau of Consumer Financial Protection, in the case 

25 of subsection (a), and the Board, in the case of subsection 
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1 (b), shall consult with the Comptroller of the Currency, the 

2 Board of Directors of the Federal Deposit Insurance Cor3 poration, and the National Credit Union Administration 

4 Board.’’. 

5 (e) EXPEDITED FUNDS AVAILABILITY IMPROVE6 MENTS.—Section 603 of the Expedited Funds Availability 

7 Act (12 U.S.C. 4002) is amended— 

8 (1) in subsection (a)(2)(D), by striking ‘‘$100’’ 

9 and inserting ‘‘$200’’; and 

10 (2) in subsection (b)(3)(C), in the subparagraph 

11 heading, by striking ‘‘$100’’ and inserting ‘‘$200’’; and 

12 (3) in subsection (c)(1)(B)(iii), in the clause 

13 heading, by striking ‘‘$100’’ and inserting ‘‘$200’’. 

14 (f) REGULAR ADJUSTMENTS FOR INFLATION.—Section 

15 607 of the Expedited Funds Availability Act (12 U.S.C. 

16 4006) is amended by adding at the end the following: 

17 ‘‘(f) ADJUSTMENTS TO DOLLAR AMOUNTS FOR INFLA18 TION.—The dollar amounts under this title shall be adjusted 

19 every 5 years after December 31, 2011, by the annual per20 centage increase in the Consumer Price Index for Urban 

21 Wage Earners and Clerical Workers, as published by the 

22 Bureau of Labor Statistics, rounded to the nearest multiple 

23 of $25.’’. 
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1 SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING 

2 ACT. 

3 The Fair Credit Billing Act (15 U.S.C. 1666–1666j) 

4 is amended by striking ‘‘Board’’ each place that term ap5 pears and inserting ‘‘Bureau’’. 

6 SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING 

7 ACT AND THE FAIR AND ACCURATE CREDIT 

8 TRANSACTIONS ACT. 

9 (a) FAIR CREDIT REPORTING ACT.—The Fair Credit 

10 Reporting Act (15 U.S.C. 1681 et seq.) is amended— 

11 (1) in section 603 (15 U.S.C. 1681a)— 

12 (A) by redesignating subsections (w) and 

13 (x) as subsections (x) and (y), respectively; and 

14 (B) by inserting after subsection (v) the fol15 lowing: 

16 ‘‘(w) The term ‘Bureau’ means the Bureau of Con17 sumer Financial Protection.’’; and 

18 (2) except as otherwise specifically provided in 

19 this subsection— 

20 (A) by striking ‘‘Federal Trade Commis21 sion’’ each place that term appears and inserting 

22 ‘‘Bureau’’; 

23 (B) by striking ‘‘FTC’’ each place that term 

24 appears and inserting ‘‘Bureau’’; 
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1 (C) by striking ‘‘the Commission’’ each 

2 place that term appears and inserting ‘‘the Bu3 reau’’; and 

4 (D) by striking ‘‘The Federal banking agen5 cies, the National Credit Union Administration, 

6 and the Commission shall jointly’’ each place 

7 that term appears and inserting ‘‘The Bureau 

8 shall’’; 

9 (3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), 

10 by striking ‘‘Board of Governors of the Federal Re11 serve System’’ and inserting ‘‘Bureau’’; 

12 (4) in section 604(g) (15 U.S.C. 1681b(g))— 

13 (A) in paragraph (3), by striking subpara14 graph (C) and inserting the following: 

15 ‘‘(C) as otherwise determined to be nec16 essary and appropriate, by regulation or order, 

17 by the Bureau (consistent with the enforcement 

18 authorities prescribed under section 621(b)), or 

19 the applicable State insurance authority (with 

20 respect to any person engaged in providing in21 surance or annuities).’’; 

22 (B) by striking paragraph (5) and inserting 

23 the following: 

24 ‘‘(5) REGULATIONS AND EFFECTIVE DATE FOR

25 PARAGRAPH (2).— 
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† HR 4173 EAS 

1 ‘‘(A) REGULATIONS REQUIRED.—The Bu2 reau may, after notice and opportunity for com3 ment, prescribe regulations that permit trans4 actions under paragraph (2) that are determined 

5 to be necessary and appropriate to protect legiti6 mate operational, transactional, risk, consumer, 

7 and other needs (and which shall include permit8 ting actions necessary for administrative 

9 verification purposes), consistent with the intent 

10 of paragraph (2) to restrict the use of medical 

11 information for inappropriate purposes.’’; and 

12 (C) by striking paragraph (6); 

13 (5) in section 611(e)(2) (15 U.S.C. 1681i(e)), by 

14 striking paragraph (2) and inserting the following: 

15 ‘‘(2) EXCLUSION.—Complaints received or ob16 tained by the Bureau pursuant to its investigative 

17 authority under the Consumer Financial Protection 

18 Act of 2010 shall not be subject to paragraph (1).’’; 

19 (6) in section 615(h)(6) (15 U.S.C. 

20 1681m(h)(6)), by striking subparagraph (A) and in21 serting the following: 

22 ‘‘(A) RULES REQUIRED.—The Bureau shall 

23 prescribe rules to carry out this subsection.’’; 

24 (7) in section 621 (15 U.S.C. 1681s)— 
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† HR 4173 EAS 

1 (A) by striking subsection (a) and inserting 

2 the following: 

3 ‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMIS4 SION.— 

5 ‘‘(1) IN GENERAL.—Except as otherwise provided 

6 by subtitle B of the Consumer Financial Protection 

7 Act of 2010, compliance with the requirements im8 posed under this title shall be enforced under the Fed9 eral Trade Commission Act (15 U.S.C. 41 et seq.) by 

10 the Federal Trade Commission, with respect to con11 sumer reporting agencies and all other persons subject 

12 thereto, except to the extent that enforcement of the re13 quirements imposed under this title is specifically 

14 committed to some other Government agency under 

15 subsection (b). For the purpose of the exercise by the 

16 Federal Trade Commission of its functions and pow17 ers under the Federal Trade Commission Act, a viola18 tion of any requirement or prohibition imposed under 

19 this title shall constitute an unfair or deceptive act or 

20 practice in commerce, in violation of section 5(a) of 

21 the Federal Trade Commission Act (15 U.S.C. 45(a)), 

22 and shall be subject to enforcement by the Federal 

23 Trade Commission under section 5(b) of that Act with 

24 respect to any consumer reporting agency or person 

25 that is subject to enforcement by the Federal Trade 
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1 Commission pursuant to this subsection, irrespective 

2 of whether that person is engaged in commerce or 

3 meets any other jurisdictional tests under the Federal 

4 Trade Commission Act. The Federal Trade Commis5 sion shall have such procedural, investigative, and en6 forcement powers (except as otherwise provided by 

7 subtitle B of the Consumer Financial Protection Act 

8 of 2010), including the power to issue procedural 

9 rules in enforcing compliance with the requirements 

10 imposed under this title and to require the filing of 

11 reports, the production of documents, and the appear12 ance of witnesses, as though the applicable terms and 

13 conditions of the Federal Trade Commission Act were 

14 part of this title. Any person violating any of the pro15 visions of this title shall be subject to the penalties 

16 and entitled to the privileges and immunities pro17 vided in the Federal Trade Commission Act as though 

18 the applicable terms and provisions of such Act are 

19 part of this title. 

20 ‘‘(2) PENALTIES.— 

21 ‘‘(A) KNOWING VIOLATIONS.—Except as oth22 erwise provided by subtitle B of the Consumer 

23 Financial Protection Act of 2010, in the event of 

24 a knowing violation, which constitutes a pattern 

25 or practice of violations of this title, the Federal 
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† HR 4173 EAS 

1 Trade Commission may commence a civil action 

2 to recover a civil penalty in a district court of 

3 the United States against any person that vio4 lates this title. In such action, such person shall 

5 be liable for a civil penalty of not more than 

6 $2,500 per violation. 

7 ‘‘(B) DETERMINING PENALTY AMOUNT.—In 

8 determining the amount of a civil penalty under 

9 subparagraph (A), the court shall take into ac10 count the degree of culpability, any history of 

11 such prior conduct, ability to pay, effect on abil12 ity to continue to do business, and such other 

13 matters as justice may require. 

14 ‘‘(C) LIMITATION.—Notwithstanding para15 graph (2), a court may not impose any civil 

16 penalty on a person for a violation of section 

17 623(a)(1), unless the person has been enjoined 

18 from committing the violation, or ordered not to 

19 commit the violation, in an action or proceeding 

20 brought by or on behalf of the Federal Trade 

21 Commission, and has violated the injunction or 

22 order, and the court may not impose any civil 

23 penalty for any violation occurring before the 

24 date of the violation of the injunction or order.’’; 
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1 (8) by striking subsection (b) and inserting the 

2 following: 

3 ‘‘(b) ENFORCEMENT BY OTHER AGENCIES.— 

4 ‘‘(1) IN GENERAL.—Except as otherwise provided 

5 by subtitle B of the Consumer Financial Protection 

6 Act of 2010, compliance with the requirements im7 posed under this title with respect to consumer report8 ing agencies, persons who use consumer reports from 

9 such agencies, persons who furnish information to 

10 such agencies, and users of information that are sub11 ject to section 615(d) shall be enforced under— 

12 ‘‘(A) section 8 of the Federal Deposit Insur13 ance Act (12 U.S.C. 1818), in the case of— 

14 ‘‘(i) any national bank, and any Fed15 eral branch or Federal agency of a foreign 

16 bank, by the Office of the Comptroller of the 

17 Currency; 

18 ‘‘(ii) any member bank of the Federal 

19 Reserve System (other than a national 

20 bank), a branch or agency of a foreign bank 

21 (other than a Federal branch, Federal agen22 cy, or insured State branch of a foreign 

23 bank), a commercial lending company 

24 owned or controlled by a foreign bank, and 

25 any organization operating under section 
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1 25 or 25A of the Federal Reserve Act, by the 

2 Board of Governors of the Federal Reserve 

3 System; and 

4 ‘‘(iii) any bank insured by the Federal 

5 Deposit Insurance Corporation (other than 

6 a member of the Federal Reserve System) 

7 and any insured State branch of a foreign 

8 bank, by the Board of Directors of the Fed9 eral Deposit Insurance Corporation; 

10 ‘‘(B) subtitle E of the Consumer Financial 

11 Protection Act of 2010, by the Bureau; 

12 ‘‘(C) the Federal Credit Union Act (12 

13 U.S.C. 1751 et seq.), by the Administrator of the 

14 National Credit Union Administration with re15 spect to any Federal credit union; 

16 ‘‘(D) subtitle IV of title 49, United States 

17 Code, by the Secretary of Transportation, with 

18 respect to all carriers subject to the jurisdiction 

19 of the Surface Transportation Board; 

20 ‘‘(E) the Federal Aviation Act of 1958 (49 

21 U.S.C. App. 1301 et seq.), by the Secretary of 

22 Transportation, with respect to any air carrier 

23 or foreign air carrier subject to that Act; 

24 ‘‘(F) the Packers and Stockyards Act, 1921 

25 (7 U.S.C. 181 et seq.) (except as provided in sec-
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1 tion 406 of that Act), by the Secretary of Agri2 culture, with respect to any activities subject to 

3 that Act; 

4 ‘‘(G) the Commodity Exchange Act, with re5 spect to a person subject to the jurisdiction of the 

6 Commodity Futures Trading Commission; and 

7 ‘‘(H) the Federal securities laws, and any 

8 other laws that are subject to the jurisdiction of 

9 the Securities and Exchange Commission, with 

10 respect to a person that is subject to the jurisdic11 tion of the Securities and Exchange Commission. 

12 ‘‘(2) INCORPORATED DEFINITIONS.—The terms 

13 used in paragraph (1) that are not defined in this 

14 title or otherwise defined in section 3(s) of the Federal 

15 Deposit Insurance Act (12 U.S.C. 1813(s)) have the 

16 same meanings as in section 1(b) of the International 

17 Banking Act of 1978 (12 U.S.C. 3101).’’; 

18 (9) by striking subsection (e) and inserting the 

19 following: 

20 ‘‘(e) REGULATORY AUTHORITY.—The Bureau shall 

21 prescribe such regulations as are necessary to carry out the 

22 purposes of this Act. The regulations prescribed by the Bu23 reau under this subsection shall apply to any person that 

24 is subject to this Act, notwithstanding the enforcement au25 thorities granted to other agencies under this section.’’; and 
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1 (10) in section 623 (15 U.S.C. 1681s–2)— 

2 (A) in subsection (a)(7), by striking sub3 paragraph (D) and inserting the following: 

4 ‘‘(D) MODEL DISCLOSURE.— 

5 ‘‘(i) DUTY OF BUREAU.—The Bureau 

6 shall prescribe a brief model disclosure that 

7 a financial institution may use to comply 

8 with subparagraph (A), which shall not ex9 ceed 30 words. 

10 ‘‘(ii) USE OF MODEL NOT RE11 QUIRED.—No provision of this paragraph 

12 may be construed to require a financial in13 stitution to use any such model form pre14 scribed by the Bureau. 

15 ‘‘(iii) COMPLIANCE USING MODEL.—A 

16 financial institution shall be deemed to be 

17 in compliance with subparagraph (A) if the 

18 financial institution uses any model form 

19 prescribed by the Bureau under this sub20 paragraph, or the financial institution uses 

21 any such model form and rearranges its for22 mat.’’; and 

23 (B) by striking subsection (e) and inserting 

24 the following: 
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1 ‘‘(e) ACCURACY GUIDELINES AND REGULATIONS RE2 QUIRED.— 

3 ‘‘(1) GUIDELINES.—The Bureau shall, with re4 spect to persons or entities that are subject to the en5 forcement authority of the Bureau under section 

6 621— 

7 ‘‘(A) establish and maintain guidelines for 

8 use by each person that furnishes information to 

9 a consumer reporting agency regarding the accu10 racy and integrity of the information relating to 

11 consumers that such entities furnish to consumer 

12 reporting agencies, and update such guidelines 

13 as often as necessary; and 

14 ‘‘(B) prescribe regulations requiring each 

15 person that furnishes information to a consumer 

16 reporting agency to establish reasonable policies 

17 and procedures for implementing the guidelines 

18 established pursuant to subparagraph (A). 

19 ‘‘(2) CRITERIA.—In developing the guidelines re20 quired by paragraph (1)(A), the Bureau shall— 

21 ‘‘(A) identify patterns, practices, and spe22 cific forms of activity that can compromise the 

23 accuracy and integrity of information furnished 

24 to consumer reporting agencies; 
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1 ‘‘(B) review the methods (including techno2 logical means) used to furnish information relat3 ing to consumers to consumer reporting agencies; 

4 ‘‘(C) determine whether persons that furnish 

5 information to consumer reporting agencies 

6 maintain and enforce policies to ensure the accu7 racy and integrity of information furnished to 

8 consumer reporting agencies; and 

9 ‘‘(D) examine the policies and processes that 

10 persons that furnish information to consumer re11 porting agencies employ to conduct reinvestiga12 tions and correct inaccurate information relating 

13 to consumers that has been furnished to con14 sumer reporting agencies.’’. 

15 (b) FAIR AND ACCURATE CREDIT TRANSACTIONS ACT

16 OF 2003.—Section 214(b)(1) of the Fair and Accurate Cred17 it Transactions Act of 2003 (15 U.S.C. 1681s–3 note) is 

18 amended by striking paragraph (1) and inserting the fol19 lowing: 

20 ‘‘(1) IN GENERAL.—Regulations to carry out sec21 tion 624 of the Fair Credit Reporting Act (15 U.S.C. 

22 1681s–3), shall be prescribed, as described in para23 graph (2), by— 
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1 ‘‘(A) the Commodity Futures Trading Com2 mission, with respect to entities subject to its en3 forcement authorities; 

4 ‘‘(B) the Securities and Exchange Commis5 sion, with respect to entities subject to its en6 forcement authorities; and 

7 ‘‘(C) the Bureau, with respect to other enti8 ties subject to this Act.’’. 

9 SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION 

10 PRACTICES ACT. 

11 The Fair Debt Collection Practices Act (15 U.S.C. 

12 1692 et seq.) is amended— 

13 (1) by striking ‘‘Commission’’ each place that 

14 term appears and inserting ‘‘Bureau’’; 

15 (2) in section 803 (15 U.S.C. 1692a)— 

16 (A) by striking paragraph (1) and inserting 

17 the following: 

18 ‘‘(1) The term ‘Bureau’ means the Bureau of 

19 Consumer Financial Protection.’’; 

20 (3) in section 814 (15 U.S.C. 1692l)— 

21 (A) by striking subsection (a) and inserting 

22 the following: 

23 ‘‘(a) FEDERAL TRADE COMMISSION.—Except as other24 wise provided by subtitle B of the Consumer Financial Pro25 tection Act of 2010, compliance with this title shall be en-
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† HR 4173 EAS 

1 forced by the Federal Trade Commission, except to the ex2 tent that enforcement of the requirements imposed under 

3 this title is specifically committed to another Government 

4 agency under subsection (b). For purpose of the exercise by 

5 the Federal Trade Commission of its functions and powers 

6 under the Federal Trade Commission Act (15 U.S.C. 41 et 

7 seq.), a violation of this title shall be deemed an unfair or 

8 deceptive act or practice in violation of that Act. All of the 

9 functions and powers of the Federal Trade Commission 

10 under the Federal Trade Commission Act are available to 

11 the Federal Trade Commission to enforce compliance by 

12 any person with this title, irrespective of whether that per13 son is engaged in commerce or meets any other jurisdic14 tional tests under the Federal Trade Commission Act, in15 cluding the power to enforce the provisions of this title, in 

16 the same manner as if the violation had been a violation 

17 of a Federal Trade Commission trade regulation rule.’’; and 

18 (B) in subsection (b)— 

19 (i) by striking ‘‘Compliance’’ and in20 serting ‘‘Except as otherwise provided by 

21 subtitle B of the Consumer Financial Pro22 tection Act of 2010, compliance’’; and 

23 (ii) by striking paragraph (2) and in24 serting the following: 
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1 ‘‘(2) subtitle E of the Consumer Financial Pro2 tection Act of 2010, by the Bureau;’’; and 

3 (4) in subsection (d), by striking ‘‘Neither the 

4 Commission’’ and all that follows through the end of 

5 the subsection and inserting the following: ‘‘The Bu6 reau may prescribe rules with respect to the collection 

7 of debts by debt collectors, as defined in this Act.’’. 

8 SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSUR9 ANCE ACT. 

10 The Federal Deposit Insurance Act (12 U.S.C. 1811 

11 et seq.) is amended— 

12 (1) in section 8(t) (12 U.S.C. 1818(t)), by add13 ing at the end the following: 

14 ‘‘(6) REFERRAL TO BUREAU OF CONSUMER FI15 NANCIAL PROTECTION.—Subject to subtitle B of the 

16 Consumer Financial Protection Act of 2010, each ap17 propriate Federal banking agency shall make a refer18 ral to the Bureau of Consumer Financial Protection 

19 when the Federal banking agency has a reasonable be20 lief that a violation of an enumerated consumer law, 

21 as defined in the Consumer Financial Protection Act 

22 of 2010, has been committed by any insured deposi23 tory institution or institution-affiliated party within 

24 the jurisdiction of that appropriate Federal banking 

25 agency.’’; and 
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1 (2) in section 43 (12 U.S.C. 1831t)— 

2 (A) in subsection (c), by striking ‘‘Federal 

3 Trade Commission’’ and inserting ‘‘Bureau’’; 

4 (B) in subsection (d), by striking ‘‘Federal 

5 Trade Commission’’ and inserting ‘‘Bureau’’; 

6 (C) in subsection (e)— 

7 (i) in paragraph (2), by striking ‘‘Fed8 eral Trade Commission’’ and inserting 

9 ‘‘Bureau’’; and 

10 (ii) by adding at the end the following 

11 new paragraph: 

12 ‘‘(5) BUREAU.—The term ‘Bureau’ means the 

13 Bureau of Consumer Financial Protection.’’; and 

14 (D) in subsection (f)— 

15 (i) by striking paragraph (1) and in16 serting the following: 

17 ‘‘(1) LIMITED ENFORCEMENT AUTHORITY.—Com18 pliance with the requirements of subsections (b), (c), 

19 and (e), and any regulation prescribed or order issued 

20 under such subsection, shall be enforced under the 

21 Consumer Financial Protection Act of 2010, by the 

22 Bureau, subject to subtitle B of the Consumer Finan23 cial Protection Act of 2010, and under the Federal 

24 Trade Commission Act (15 U.S.C. 41 et seq.) by the 

25 Federal Trade Commission.’’; and 
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† HR 4173 EAS 

1 (ii) in paragraph (2), by striking sub2 paragraph (C) and inserting the following: 

3 ‘‘(C) LIMITATION ON STATE ACTION WHILE

4 FEDERAL ACTION PENDING.—If the Bureau or 

5 Federal Trade Commission has instituted an en6 forcement action for a violation of this section, 

7 no appropriate State supervisory agency may, 

8 during the pendency of such action, bring an ac9 tion under this section against any defendant 

10 named in the complaint of the Bureau or Fed11 eral Trade Commission for any violation of this 

12 section that is alleged in that complaint.’’. 

13 SEC. 1091. AMENDMENTS TO THE GRAMM-LEACH-BLILEY 

14 ACT. 

15 Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 

16 6801 et seq.) is amended— 

17 (1) in section 504(a)(1) (15 U.S.C. 

18 6804(a)(1))— 

19 (A) by striking ‘‘The Federal banking agen20 cies, the National Credit Union Administration, 

21 the Secretary of the Treasury,’’ and inserting 

22 ‘‘The Bureau of Consumer Financial Protection 

23 and’’; and 

24 (B) by striking ‘‘, and the Federal Trade 

25 Commission’’; 
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1 (2) in section 505(a) (15 U.S.C. 6805(a))— 

2 (A) by striking ‘‘This subtitle’’ and all that 

3 follows through ‘‘as follows:’’ and inserting ‘‘Ex4 cept as otherwise provided by subtitle B of the 

5 Consumer Financial Protection Act of 2010, this 

6 subtitle and the regulations prescribed there7 under shall be enforced by the Bureau of Con8 sumer Financial Protection, the Federal func9 tional regulators, the State insurance authorities, 

10 and the Federal Trade Commission with respect 

11 to financial institutions and other persons sub12 ject to their jurisdiction under applicable law, as 

13 follows:’’; 

14 (B) in paragraph (1)— 

15 (i) in subparagraph (B), by inserting 

16 ‘‘and’’ after the semicolon; 

17 (ii) in subparagraph (C), by striking 

18 ‘‘; and’’ and inserting a period; and 

19 (iii) by striking subparagraph (D); 

20 and 

21 (C) by adding at the end the following: 

22 ‘‘(8) Under the Consumer Financial Protection 

23 Act of 2010, by the Bureau of Consumer Financial 

24 Protection, in the case of any financial institution 

25 and other covered person or service provider that is 
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† HR 4173 EAS 

1 subject to the jurisdiction of the Bureau under that 

2 Act, but not with respect to the standards under sec3 tion 501.’’; and 

4 (3) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), 

5 by inserting ‘‘, other than the Bureau of Consumer 

6 Financial Protection,’’ after ‘‘subsection (a)’’. 

7 SEC. 1092. AMENDMENTS TO THE HOME MORTGAGE DIS8 CLOSURE ACT. 

9 The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 

10 2801 et seq.) is amended— 

11 (1) except as otherwise specifically provided in 

12 this section, by striking ‘‘Board’’ each place that term 

13 appears and inserting ‘‘Bureau’’; 

14 (2) in section 303 (12 U.S.C. 2802)— 

15 (A) by redesignating paragraphs (1) 

16 through (6) as paragraphs (2) through (7), re17 spectively; and 

18 (B) by inserting before paragraph (2) the 

19 following: 

20 ‘‘(1) the term ‘Bureau’ means the Bureau of 

21 Consumer Financial Protection;’’; 

22 (3) in section 304 (12 U.S.C. 2803)— 

23 (A) in subsection (b)— 

24 (i) in paragraph (4), by inserting 

25 ‘‘age,’’ before ‘‘and gender’’; 
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1 (ii) in paragraph (3), by striking 

2 ‘‘and’’ at the end; 

3 (iii) in paragraph (4), by striking the 

4 period at the end and inserting a semicolon; 

5 and 

6 (iv) by adding at the end the following: 

7 ‘‘(5) the number and dollar amount of mortgage 

8 loans grouped according to measurements of— 

9 ‘‘(A) the total points and fees payable at 

10 origination in connection with the mortgage as 

11 determined by the Bureau, taking into account 

12 15 U.S.C. 1602(aa)(4); 

13 ‘‘(B) the difference between the annual per14 centage rate associated with the loan and a 

15 benchmark rate or rates for all loans; 

16 ‘‘(C) the term in months of any prepayment 

17 penalty or other fee or charge payable on repay18 ment of some portion of principal or the entire 

19 principal in advance of scheduled payments; and 

20 ‘‘(D) such other information as the Bureau 

21 may require; and 

22 ‘‘(6) the number and dollar amount of mortgage 

23 loans and completed applications grouped according 

24 to measurements of— 
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1 ‘‘(A) the value of the real property pledged 

2 or proposed to be pledged as collateral; 

3 ‘‘(B) the actual or proposed term in months 

4 of any introductory period after which the rate 

5 of interest may change; 

6 ‘‘(C) the presence of contractual terms or 

7 proposed contractual terms that would allow the 

8 mortgagor or applicant to make payments other 

9 than fully amortizing payments during any por10 tion of the loan term; 

11 ‘‘(D) the actual or proposed term in months 

12 of the mortgage loan; 

13 ‘‘(E) the channel through which application 

14 was made, including retail, broker, and other 

15 relevant categories; 

16 ‘‘(F) as the Bureau may determine to be 

17 appropriate, a unique identifier that identifies 

18 the loan originator as set forth in section 1503 

19 of the S.A.F.E. Mortgage Licensing Act of 2008; 

20 ‘‘(G) as the Bureau may determine to be 

21 appropriate, a universal loan identifier; 

22 ‘‘(H) as the Bureau may determine to be 

23 appropriate, the parcel number that corresponds 

24 to the real property pledged or proposed to be 

25 pledged as collateral; 
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1 ‘‘(I) the credit score of mortgage applicants 

2 and mortgagors, in such form as the Bureau 

3 may prescribe, except that the Bureau shall mod4 ify or require modification of credit score data 

5 that is or will be available to the public to pro6 tect the compelling privacy interest of the mort7 gage applicant or mortgagors; and 

8 ‘‘(J) such other information as the Bureau 

9 may require.’’; 

10 (B) in subsection (i), by striking ‘‘sub11 section (b)(4)’’ and inserting ‘‘subsections (b)(4), 

12 (b)(5), and (b)(6)’’; 

13 (C) in subsection (j)— 

14 (i) in paragraph (1), by striking ‘‘(as’’ 

15 and inserting ‘‘(containing loan-level and 

16 application-level information relating to 

17 disclosures required under subsections (a) 

18 and (b) and as otherwise’’; 

19 (ii) by striking paragraph (3) and in20 serting the following: 

21 ‘‘(3) CHANGE OF FORM NOT REQUIRED.—A de22 pository institution meets the disclosure requirement 

23 of paragraph (1) if the institution provides the infor24 mation required under such paragraph in such for25 mats as the Bureau may require’’; and 
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† HR 4173 EAS 

1 (iii) in paragraph (2)(A), by striking 

2 ‘‘in the format in which such information is 

3 maintained by the institution’’ and insert4 ing ‘‘in such formats as the Bureau may re5 quire’’; 

6 (D) in subsection (m), by striking para7 graph (2) and inserting the following: 

8 ‘‘(2) FORM OF INFORMATION.—In complying 

9 with paragraph (1), a depository institution shall 

10 provide the person requesting the information with a 

11 copy of the information requested in such formats as 

12 the Bureau may require’’; 

13 (E) by striking subsection (h) and inserting 

14 the following: 

15 ‘‘(h) SUBMISSION TO AGENCIES.— 

16 ‘‘(1) IN GENERAL.—The data required to be dis17 closed under subsection (b) shall be submitted to the 

18 Bureau or to the appropriate agency for the institu19 tion reporting under this title, in accordance with 

20 rules prescribed by the Bureau. Notwithstanding the 

21 requirement of subsection (a)(2)(A) for disclosure by 

22 census tract, the Bureau, in cooperation with other 

23 appropriate regulators described in paragraph (2), 

24 shall develop regulations that— 
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1 ‘‘(A) prescribe the format for such disclo2 sures, the method for submission of the data to 

3 the appropriate regulatory agency, and the pro4 cedures for disclosing the information to the pub5 lic; 

6 ‘‘(B) require the collection of data required 

7 to be disclosed under subsection (b) with respect 

8 to loans sold by each institution reporting under 

9 this title; 

10 ‘‘(C) require disclosure of the class of the 

11 purchaser of such loans; and 

12 ‘‘(D) permit any reporting institution to 

13 submit in writing to the Bureau or to the appro14 priate agency such additional data or expla15 nations as it deems relevant to the decision to 

16 originate or purchase mortgage loans. 

17 ‘‘(2) OTHER APPROPRIATE AGENCIES.—The ap18 propriate regulators described in this paragraph 

19 are— 

20 ‘‘(A) the Office of the Comptroller of the 

21 Currency (hereafter referred to in this Act as 

22 ‘Comptroller’) for national banks and Federal 

23 branches, Federal agencies of foreign banks, and 

24 savings associations; 
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1 ‘‘(B) the Federal Deposit Insurance Cor2 poration for banks insured by the Federal De3 posit Insurance Corporation (other than mem4 bers of the Federal Reserve System), mutual sav5 ings banks, insured State branches of foreign 

6 banks, and any other depository institution de7 scribed in section 303(2)(A) which is not other8 wise referred to in this paragraph; 

9 ‘‘(C) the National Credit Union Adminis10 tration Board for credit unions; and 

11 ‘‘(D) the Secretary of Housing and Urban 

12 Development for other lending institutions not 

13 regulated by the agencies referred to in subpara14 graphs (A) through (C).’’; and 

15 (F) by adding at the end the following: 

16 ‘‘(n) TIMING OF CERTAIN DISCLOSURES.—The data 

17 required to be disclosed under subsection (b) shall be sub18 mitted to the Bureau or to the appropriate agency for any 

19 institution reporting under this title, in accordance with 

20 regulations prescribed by the Bureau. Institutions shall not 

21 be required to report new data under paragraph (5) or (6) 

22 of subsection (b) before the first January 1 that occurs after 

23 the end of the 9-month period beginning on the date on 

24 which regulations are issued by the Bureau in final form 

25 with respect to such disclosures.’’; 
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† HR 4173 EAS 

1 (4) in section 305 (12 U.S.C. 2804)— 

2 (A) by striking subsection (b) and inserting 

3 the following: 

4 ‘‘(b) POWERS OF CERTAIN OTHER AGENCIES.— 

5 ‘‘(1) IN GENERAL.—Except as otherwise provided 

6 by subtitle B of the Consumer Financial Protection 

7 Act of 2010, compliance with the requirements of this 

8 title shall be enforced— 

9 ‘‘(A) under section 8 of the Federal Deposit 

10 Insurance Act, in the case of— 

11 ‘‘(i) any national bank, and any Fed12 eral branch or Federal agency of a foreign 

13 bank, by the Office of the Comptroller of the 

14 Currency; 

15 ‘‘(ii) any member bank of the Federal 

16 Reserve System (other than a national 

17 bank), branch or agency of a foreign bank 

18 (other than a Federal branch, Federal agen19 cy, and insured State branch of a foreign 

20 bank), commercial lending company owned 

21 or controlled by a foreign bank, and any or22 ganization operating under section 25 or 

23 25(a) of the Federal Reserve Act, by the 

24 Board; and 
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† HR 4173 EAS 

1 ‘‘(iii) any bank insured by the Federal 

2 Deposit Insurance Corporation (other than 

3 a member of the Federal Reserve System), 

4 any mutual savings bank as, defined in sec5 tion 3(f) of the Federal Deposit Insurance 

6 Act (12 U.S.C. 1813(f)), any insured State 

7 branch of a foreign bank, and any other de8 pository institution not referred to in this 

9 paragraph or subparagraph (B) or (C), by 

10 the Federal Deposit Insurance Corporation; 

11 ‘‘(B) under subtitle E of the Consumer Fi12 nancial Protection Act of 2010, by the Bureau; 

13 ‘‘(C) under the Federal Credit Union Act, 

14 by the Administrator of the National Credit 

15 Union Administration with respect to any in16 sured credit union; and 

17 ‘‘(D) with respect to other lending institu18 tions, by the Secretary of Housing and Urban 

19 Development. 

20 ‘‘(2) INCORPORATED DEFINITIONS.—The terms 

21 used in paragraph (1) that are not defined in this 

22 title or otherwise defined in section 3(s) of the Federal 

23 Deposit Insurance Act (12 U.S.C. 1813(s)) shall have 

24 the same meanings as in section 1(b) of the Inter-
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† HR 4173 EAS 

1 national Banking Act of 1978 (12 U.S.C. 3101).’’; 

2 and 

3 (B) by adding at the end the following: 

4 ‘‘(d) OVERALL ENFORCEMENT AUTHORITY OF THE

5 BUREAU OF CONSUMER FINANCIAL PROTECTION.—Subject 

6 to subtitle B of the Consumer Financial Protection Act of 

7 2010, enforcement of the requirements imposed under this 

8 title is committed to each of the agencies under subsection 

9 (b). The Bureau may exercise its authorities under the Con10 sumer Financial Protection Act of 2010 to exercise prin11 cipal authority to examine and enforce compliance by any 

12 person with the requirements of this title.’’; 

13 (5) in section 306 (12 U.S.C. 2805(b)), by strik14 ing subsection (b) and inserting the following: 

15 ‘‘(b) EXEMPTION AUTHORITY.—The Bureau may, by 

16 regulation, exempt from the requirements of this title any 

17 State-chartered depository institution within any State or 

18 subdivision thereof, if the agency determines that, under the 

19 law of such State or subdivision, that institution is subject 

20 to requirements that are substantially similar to those im21 posed under this title, and that such law contains adequate 

22 provisions for enforcement. Notwithstanding any other pro23 vision of this subsection, compliance with the requirements 

24 imposed under this subsection shall be enforced by the Office 

25 of the Comptroller of the Currency under section 8 of the 
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† HR 4173 EAS 

1 Federal Deposit Insurance Act, in the case of national 

2 banks and savings associations, the deposits of which are 

3 insured by the Federal Deposit Insurance Corporation.’’; 

4 and 

5 (6) by striking section 307 (12 U.S.C. 2806) and 

6 inserting the following: 

7 ‘‘SEC. 307. COMPLIANCE IMPROVEMENT METHODS. 

8 ‘‘(a) IN GENERAL.— 

9 ‘‘(1) CONSULTATION REQUIRED.—The Director of 

10 the Bureau of Consumer Financial Protection, with 

11 the assistance of the Secretary, the Director of the Bu12 reau of the Census, the Board of Governors of the Fed13 eral Reserve System, the Federal Deposit Insurance 

14 Corporation, and such other persons as the Bureau 

15 deems appropriate, shall develop or assist in the im16 provement of, methods of matching addresses and cen17 sus tracts to facilitate compliance by depository insti18 tutions in as economical a manner as possible with 

19 the requirements of this title. 

20 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

21 There are authorized to be appropriated, such sums as 

22 may be necessary to carry out this subsection. 

23 ‘‘(3) CONTRACTING AUTHORITY.—The Director of 

24 the Bureau of Consumer Financial Protection is au25 thorized to utilize, contract with, act through, or com-
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† HR 4173 EAS 

1 pensate any person or agency in order to carry out 

2 this subsection. 

3 ‘‘(b) RECOMMENDATIONS TO CONGRESS.—The Direc4 tor of the Bureau of Consumer Financial Protection shall 

5 recommend to the Committee on Banking, Housing, and 

6 Urban Affairs of the Senate and the Committee on Finan7 cial Services of the House of Representatives, such addi8 tional legislation as the Director of the Bureau of Consumer 

9 Financial Protection deems appropriate to carry out the 

10 purpose of this title.’’. 

11 SEC. 1093. AMENDMENTS TO THE HOMEOWNERS PROTEC12 TION ACT OF 1998. 

13 Section 10 of the Homeowners Protection Act of 1998 

14 (12 U.S.C. 4909) is amended— 

15 (1) in subsection (a)— 

16 (A) by striking ‘‘Compliance’’ and inserting 

17 ‘‘Except as otherwise provided by subtitle B of 

18 the Consumer Financial Protection Act of 2010, 

19 compliance’’; 

20 (B) in paragraph (2), by striking ‘‘and’’ at 

21 the end; 

22 (C) in paragraph (3), by striking the period 

23 at the end and inserting ‘‘; and’’; and 

24 (D) by adding at the end the following: 
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† HR 4173 EAS 

1 ‘‘(4) subtitle E of the Consumer Financial Pro2 tection Act of 2010, by the Bureau of Consumer Fi3 nancial Protection.’’; and 

4 (2) in subsection (b)(2), by inserting before the 

5 period at the end the following: ‘‘, subject to subtitle 

6 B of the Consumer Financial Protection Act of 2010’’. 

7 SEC. 1094. AMENDMENTS TO THE HOME OWNERSHIP AND 

8 EQUITY PROTECTION ACT OF 1994. 

9 The Home Ownership and Equity Protection Act of 

10 1994 (15 U.S.C. 1601 note) is amended— 

11 (1) in section 158(a), by striking ‘‘Consumer Ad12 visory Council of the Board’’ and inserting ‘‘Advisory 

13 Board to the Bureau’’; and 

14 (2) by striking ‘‘Board’’ each place that term ap15 pears and inserting ‘‘Bureau’’. 

16 SEC. 1095. AMENDMENTS TO THE OMNIBUS APPROPRIA17 TIONS ACT, 2009. 

18 Section 626 of the Omnibus Appropriations Act, 2009 

19 (15 U.S.C. 1638 note) is amended— 

20 (1) by striking subsection (a) and inserting the 

21 following: 

22 ‘‘(a)(1) The Bureau of Consumer Financial Protection 

23 shall have authority to prescribe rules with respect to mort24 gage loans in accordance with section 553 of title 5, United 

25 States Code. Such rulemaking shall relate to unfair or de-
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† HR 4173 EAS 

1 ceptive acts or practices regarding mortgage loans, which 

2 may include unfair or deceptive acts or practices involving 

3 loan modification and foreclosure rescue services. Any viola4 tion of a rule prescribed under this paragraph shall be 

5 treated as a violation of a rule prohibiting unfair, decep6 tive, or abusive acts or practices under the Consumer Fi7 nancial Protection Act of 2010 and a violation of a rule 

8 under section 18 of the Federal Trade Commission Act (15 

9 U.S.C. 57a) regarding unfair or deceptive acts or practices. 

10 ‘‘(2) The Bureau of Consumer Financial Protection 

11 shall enforce the rules issued under paragraph (1) in the 

12 same manner, by the same means, and with the same juris13 diction, powers, and duties, as though all applicable terms 

14 and provisions of the Consumer Financial Protection Act 

15 of 2010 were incorporated into and made part of this sub16 section.’’; and 

17 (2) in subsection (b)— 

18 (A) by striking paragraph (1) and inserting 

19 the following: 

20 ‘‘(1) Except as provided in paragraph (6), in 

21 any case in which the attorney general of a State has 

22 reason to believe that an interest of the residents of 

23 the State has been or is threatened or adversely af24 fected by the engagement of any person subject to a 

25 rule prescribed under subsection (a) in practices that 
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† HR 4173 EAS 

1 violate such rule, the State, as parens patriae, may 

2 bring a civil action on behalf of its residents in an 

3 appropriate district court of the United States or 

4 other court of competent jurisdiction— 

5 ‘‘(A) to enjoin that practice; 

6 ‘‘(B) to enforce compliance with the rule; 

7 ‘‘(C) to obtain damages, restitution, or other 

8 compensation on behalf of the residents of the 

9 State; or 

10 ‘‘(D) to obtain penalties and relief provided 

11 under the Consumer Financial Protection Act of 

12 2010, the Federal Trade Commission Act, and 

13 such other relief as the court deems appro14 priate.’’; 

15 (B) in paragraphs (2) and (3), by striking 

16 ‘‘the primary Federal regulator’’ each time the 

17 term appears and inserting ‘‘the Bureau of Con18 sumer Financial Protection or the Commission, 

19 as appropriate’’; 

20 (C) in paragraph (3), by inserting ‘‘and 

21 subject to subtitle B of the Consumer Financial 

22 Protection Act of 2010,’’ after ‘‘paragraph (2),’’; 

23 and 

24 (D) in paragraph (6), by striking ‘‘the pri25 mary Federal regulator’’ each place that term 
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† HR 4173 EAS 

1 appears and inserting ‘‘the Bureau of Consumer 

2 Financial Protection or the Commission’’. 

3 SEC. 1096. AMENDMENTS TO THE REAL ESTATE SETTLE4 MENT PROCEDURES ACT. 

5 The Real Estate Settlement Procedures Act of 1974 (12 

6 U.S.C. 2601 et seq.) is amended— 

7 (1) in section 3 (12 U.S.C. 2602)— 

8 (A) in paragraph (7), by striking ‘‘and’’ at 

9 the end; 

10 (B) in paragraph (8), by striking the period 

11 at the end and inserting ‘‘; and’’; and 

12 (C) by adding at the end the following: 

13 ‘‘(9) the term ‘Bureau’ means the Bureau of 

14 Consumer Financial Protection.’’; 

15 (2) in section 4 (12 U.S.C. 2603)— 

16 (A) in subsection (a), by striking the first 

17 sentence and inserting the following: ‘‘The Bu18 reau shall publish a single, integrated disclosure 

19 for mortgage loan transactions (including real 

20 estate settlement cost statements) which includes 

21 the disclosure requirements of this title, in con22 junction with the disclosure requirements of the 

23 Truth in Lending Act that, taken together, may 

24 apply to a transaction that is subject to both or 

25 either provisions of law. The purpose of such 
1534 

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1 model disclosure shall be to facilitate compliance 

2 with the disclosure requirements of this title and 

3 the Truth in Lending Act, and to aid the bor4 rower or lessee in understanding the transaction 

5 by utilizing readily understandable language to 

6 simplify the technical nature of the disclosures.’’; 

7 (B) by striking ‘‘Secretary’’ each place that 

8 term appears and inserting ‘‘Bureau’’; and 

9 (C) by striking ‘‘form’’ each place that term 

10 appears and inserting ‘‘forms’’; 

11 (3) in section 5 (12 U.S.C. 2604)— 

12 (A) by striking ‘‘Secretary’’ each place that 

13 term appears and inserting ‘‘Bureau’’; and 

14 (B) in subsection (a), by striking the first 

15 sentence and inserting the following: ‘‘The Bu16 reau shall prepare and distribute booklets jointly 

17 addressing compliance with the requirements of 

18 the Truth in Lending Act and the provisions of 

19 this title, in order to help persons borrowing 

20 money to finance the purchase of residential real 

21 estate better to understand the nature and costs 

22 of real estate settlement services.’’; 

23 (4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))— 

24 (A) by striking ‘‘Secretary’’ and inserting 

25 ‘‘Bureau’’; and 
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1 (B) by striking ‘‘, by regulations that shall 

2 take effect not later than April 20, 1991,’’; 

3 (5) in section 7(b) (12 U.S.C. 2606(b)) by strik4 ing ‘‘Secretary’’ and inserting ‘‘Bureau’’; 

5 (6) in section 8(d) (12 U.S.C. 2607(d))— 

6 (A) in the subsection heading, by inserting 

7 ‘‘BUREAU AND’’ before ‘‘SECRETARY’’; and 

8 (B) by striking paragraph (4), and insert9 ing the following: 

10 ‘‘(4) The Bureau, the Secretary, or the attorney 

11 general or the insurance commissioner of any State 

12 may bring an action to enjoin violations of this sec13 tion. Except, to the extent that a person is subject to 

14 the jurisdiction of the Bureau, the Secretary, or the 

15 attorney general or the insurance commissioner of 

16 any State, the Bureau shall have primary authority 

17 to enforce or administer this section, subject to sub18 title B of the Consumer Financial Protection Act of 

19 2010.’’. 

20 (7) in section 10(c) (12 U.S.C. 2609(c) and (d)), 

21 by striking ‘‘Secretary’’ and inserting ‘‘Bureau’’; 

22 (8) in section 16 (12 U.S.C. 2614), by inserting 

23 ‘‘the Bureau,’’ before ‘‘the Secretary’’; 
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† HR 4173 EAS 

1 (9) in section 18 (12 U.S.C. 2616), by striking 

2 ‘‘Secretary’’ each place that term appears and insert3 ing ‘‘Bureau’’; and 

4 (10) in section 19 (12 U.S.C. 2617)— 

5 (A) in the section heading by striking 

6 ‘‘SECRETARY’’ and inserting ‘‘BUREAU’’; 

7 (B) by striking ‘‘Secretary’’ each place that 

8 term appears and inserting ‘‘Bureau’’; 

9 (C) in subsection (b), by inserting ‘‘the Bu10 reau’’ before ‘‘the Secretary’’; and 

11 (D) in subsection (c), by inserting ‘‘or the 

12 Bureau’’ after ‘‘the Secretary’’ each time that 

13 term appears. 

14 SEC. 1097. AMENDMENTS TO THE RIGHT TO FINANCIAL PRI15 VACY ACT OF 1978. 

16 The Right to Financial Privacy Act of 1978 (12 U.S.C. 

17 3401 et seq.) is amended— 

18 (1) in section 1101— 

19 (A) in paragraph (6)— 

20 (i) in subparagraph (A), by inserting 

21 ‘‘and’’ after the semicolon; 

22 (ii) in subparagraph (B), by striking 

23 ‘‘and’’ at the end; and 

24 (iii) by striking subparagraph (C); 

25 and 
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1 (B) in paragraph (7), by striking subpara2 graph (E), and inserting the following: 

3 ‘‘(E) the Bureau of Consumer Financial 

4 Protection;’’; 

5 (2) in section 1112(e) (12 U.S.C. 3412(e)), by 

6 striking ‘‘and the Commodity Futures Trading Com7 mission is permitted’’ and inserting ‘‘the Commodity 

8 Futures Trading Commission, and the Bureau of 

9 Consumer Financial Protection is permitted’’; and 

10 (3) in section 1113 (12 U.S.C. 3413), by adding 

11 at the end the following new subsection: 

12 ‘‘(r) DISCLOSURE TO THE BUREAU OF CONSUMER FI13 NANCIAL PROTECTION.—Nothing in this title shall apply 

14 to the examination by or disclosure to the Bureau of Con15 sumer Financial Protection of financial records or informa16 tion in the exercise of its authority with respect to a finan17 cial institution.’’. 

18 SEC. 1098. AMENDMENTS TO THE SECURE AND FAIR EN19 FORCEMENT FOR MORTGAGE LICENSING ACT 

20 OF 2008. 

21 The S.A.F.E. Mortgage Licensing Act of 2008 (12 

22 U.S.C. 5101 et seq.) is amended— 

23 (1) by striking ‘‘a Federal banking agency’’ each 

24 place that term appears, other than in paragraphs (7) 
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† HR 4173 EAS 

1 and (11) of section 1503 and section 1507(a)(1), and 

2 inserting ‘‘the Bureau’’; 

3 (2) by striking ‘‘Federal banking agencies’’ each 

4 place that term appears and inserting ‘‘Bureau’’; and 

5 (3) by striking ‘‘Secretary’’ each place that term 

6 appears and inserting ‘‘Director’’; 

7 (4) in section 1503 (12 U.S.C. 5102)— 

8 (A) by redesignating paragraphs (2) 

9 through (12) as (3) through (13), respectively; 

10 (B) by striking paragraph (1) and inserting 

11 the following: 

12 ‘‘(1) BUREAU.—The term ‘Bureau’ means the 

13 Bureau of Consumer Financial Protection. 

14 ‘‘(2) FEDERAL BANKING AGENCY.—The term 

15 ‘Federal banking agency’ means the Board of Gov16 ernors of the Federal Reserve System, the Office of the 

17 Comptroller of the Currency, the National Credit 

18 Union Administration, and the Federal Deposit In19 surance Corporation.’’; and 

20 (C) by striking paragraph (10), as so des21 ignated by this section, and inserting the fol22 lowing: 

23 ‘‘(10) DIRECTOR.—The term ‘Director’ means 

24 the Director of the Bureau of Consumer Financial 

25 Protection.’’; and 
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1 (5) in section 1507 (12 U.S.C. 5106)— 

2 (A) in subsection (a)— 

3 (i) by striking paragraph (1) and in4 serting the following: 

5 ‘‘(1) IN GENERAL.—The Bureau shall develop 

6 and maintain a system for registering employees of a 

7 depository institution, employees of a subsidiary that 

8 is owned and controlled by a depository institution 

9 and regulated by a Federal banking agency, or em10 ployees of an institution regulated by the Farm Cred11 it Administration, as registered loan originators with 

12 the Nationwide Mortgage Licensing System and Reg13 istry. The system shall be implemented before the end 

14 of the 1-year period beginning on the date of enact15 ment of the Consumer Financial Protection Act of 

16 2010.’’; and 

17 (ii) in paragraph (2)— 

18 (I) by striking ‘‘appropriate Fed19 eral banking agency and the Farm 

20 Credit Administration’’ and inserting 

21 ‘‘Bureau’’; and 

22 (II) by striking ‘‘employees’s iden23 tity’’ and inserting ‘‘identity of the 

24 employee’’; and 
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1 (B) in subsection (b), by striking ‘‘through 

2 the Financial Institutions Examination Council, 

3 and the Farm Credit Administration’’, and in4 serting ‘‘and the Bureau of Consumer Financial 

5 Protection’’; 

6 (6) in section 1508 (12 U.S.C. 5107)— 

7 (A) by striking the section heading and in8 serting the following: ‘‘SEC. 1508. BUREAU OF

9 CONSUMER FINANCIAL PROTECTION

10 BACKUP AUTHORITY TO ESTABLISH LOAN

11 ORIGINATOR LICENSING SYSTEM.’’; and 

12 (B) by adding at the end the following: 

13 ‘‘(f) REGULATION AUTHORITY.— 

14 ‘‘(1) IN GENERAL.—The Bureau is authorized to 

15 promulgate regulations setting minimum net worth or 

16 surety bond requirements for residential mortgage 

17 loan originators and minimum requirements for re18 covery funds paid into by loan originators. 

19 ‘‘(2) CONSIDERATIONS.—In issuing regulations 

20 under paragraph (1), the Bureau shall take into ac21 count the need to provide originators adequate incen22 tives to originate affordable and sustainable mortgage 

23 loans, as well as the need to ensure a competitive 

24 origination market that maximizes consumer access to 

25 affordable and sustainable mortgage loans.’’; 
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1 (7) by striking section 1510 (12 U.S.C. 5109) 

2 and inserting the following: 

3 ‘‘SEC. 1510. FEES. 

4 ‘‘The Bureau, the Farm Credit Administration, and 

5 the Nationwide Mortgage Licensing System and Registry 

6 may charge reasonable fees to cover the costs of maintaining 

7 and providing access to information from the Nationwide 

8 Mortgage Licensing System and Registry, to the extent that 

9 such fees are not charged to consumers for access to such 

10 system and registry.’’; 

11 (8) by striking section 1513 (12 U.S.C. 5112) 

12 and inserting the following: 

13 ‘‘SEC. 1513. LIABILITY PROVISIONS. 

14 ‘‘The Bureau, any State official or agency, or any or15 ganization serving as the administrator of the Nationwide 

16 Mortgage Licensing System and Registry or a system estab17 lished by the Director under section 1509, or any officer 

18 or employee of any such entity, shall not be subject to any 

19 civil action or proceeding for monetary damages by reason 

20 of the good faith action or omission of any officer or em21 ployee of any such entity, while acting within the scope of 

22 office or employment, relating to the collection, furnishing, 

23 or dissemination of information concerning persons who are 

24 loan originators or are applying for licensing or registra25 tion as loan originators.’’; and 
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† HR 4173 EAS 

1 (9) in section 1514 (12 U.S.C. 5113) in the sec2 tion heading, by striking ‘‘UNDER HUD BACKUP

3 LICENSING SYSTEM’’ and inserting ‘‘BY THE BU4 REAU’’. 

5 SEC. 1099. AMENDMENTS TO THE TRUTH IN LENDING ACT. 

6 The Truth in Lending Act (15 U.S.C. 1601 et seq.) 

7 is amended— 

8 (1) in section 103 (5 U.S.C. 1602)— 

9 (A) by redesignating subsections (b) through 

10 (bb) as subsections (c) through (cc), respectively; 

11 and 

12 (B) by inserting after subsection (a) the fol13 lowing: 

14 ‘‘(b) BUREAU.—The term ‘Bureau’ means the Bureau 

15 of Consumer Financial Protection.’’; 

16 (2) by striking ‘‘Board’’ each place that term ap17 pears, other than in section 140(d) and section 

18 108(a), as amended by this section, and inserting 

19 ‘‘Bureau’’; 

20 (3) by striking ‘‘Federal Trade Commission’’ 

21 each place that term appears, other than in section 

22 108(c) and section 129(m), as amended by this Act, 

23 and other than in the context of a reference to the 

24 Federal Trade Commission Act, and inserting ‘‘Bu25 reau’’; 
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1 (4) in section 105(a) (15 U.S.C. 1604(a)), in the 

2 second sentence— 

3 (A) by striking ‘‘Except in the case of a 

4 mortgage referred to in section 103(aa), these 

5 regulations may contain such’’ and inserting 

6 ‘‘Except with respect to the provisions of section 

7 129 that apply to a mortgage referred to in sec8 tion 103(aa), such regulations may contain such 

9 additional requirements,’’; and 

10 (B) by inserting ‘‘all or’’ after ‘‘exceptions 

11 for’’; 

12 (5) in section 105(b) (15 U.S.C. 1604(b)), by 

13 striking the first sentence and inserting the following: 

14 ‘‘The Bureau shall publish a single, integrated disclo15 sure for mortgage loan transactions (including real 

16 estate settlement cost statements) which includes the 

17 disclosure requirements of this title in conjunction 

18 with the disclosure requirements of the Real Estate 

19 Settlement Procedures Act of 1974 that, taken to20 gether, may apply to a transaction that is subject to 

21 both or either provisions of law. The purpose of such 

22 model disclosure shall be to facilitate compliance with 

23 the disclosure requirements of this title and the Real 

24 Estate Settlement Procedures Act of 1974, and to aid 

25 the borrower or lessee in understanding the trans-
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† HR 4173 EAS 

1 action by utilizing readily understandable language 

2 to simplify the technical nature of the disclosures.’’; 

3 (6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), 

4 by inserting ‘‘all or’’ after ‘‘from all or part of this 

5 title’’; 

6 (7) in section 108 (15 U.S.C. 1607)— 

7 (A) by striking subsection (a) and inserting 

8 the following: 

9 ‘‘(a) ENFORCING AGENCIES.—Except as otherwise pro10 vided in subtitle B of the Consumer Financial Protection 

11 Act of 2010, compliance with the requirements imposed 

12 under this title shall be enforced under— 

13 ‘‘(1) section 8 of the Federal Deposit Insurance 

14 Act, in the case of— 

15 ‘‘(A) any national bank, and Federal 

16 branch or Federal agency of a foreign bank, by 

17 the Office of the Comptroller of the Currency; 

18 ‘‘(B) any member bank of the Federal Re19 serve System (other than a national bank), any 

20 branch or agency of a foreign bank (other than 

21 a Federal branch, Federal agency, or insured 

22 State branch of a foreign bank), any commercial 

23 lending company owned or controlled by a for24 eign bank, and organizations operating under 
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1 section 25 or 25(a) of the Federal Reserve Act, 

2 by the Board; and 

3 ‘‘(C) any bank insured by the Federal De4 posit Insurance Corporation (other than a mem5 ber of the Federal Reserve System) and an in6 sured State branch of a foreign bank, by the 

7 Board of Directors of the Federal Deposit Insur8 ance Corporation; 

9 ‘‘(2) subtitle E of the Consumer Financial Pro10 tection Act of 2010, by the Bureau; 

11 ‘‘(3) the Federal Credit Union Act, by the Direc12 tor of the National Credit Union Administration, 

13 with respect to any Federal credit union; 

14 ‘‘(4) the Federal Aviation Act of 1958, by the 

15 Secretary of Transportation, with respect to any air 

16 carrier or foreign air carrier subject to that Act; 

17 ‘‘(5) the Packers and Stockyards Act, 1921 (ex18 cept as provided in section 406 of that Act), by the 

19 Secretary of Agriculture, with respect to any activi20 ties subject to that Act; and 

21 ‘‘(6) the Farm Credit Act of 1971, by the Farm 

22 Credit Administration with respect to any Federal 

23 land bank, Federal land bank association, Federal in24 termediate credit bank, or production credit associa25 tion.’’; and 
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1 (B) by striking subsection (c) and inserting 

2 the following: 

3 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

4 FEDERAL TRADE COMMISSION.—Except to the extent that 

5 enforcement of the requirements imposed under this title is 

6 specifically committed to some other Government agency 

7 under subsection (a), and subject to subtitle B of the Con8 sumer Financial Protection Act of 2010, the Federal Trade 

9 Commission shall enforce such requirements. For the pur10 pose of the exercise by the Federal Trade Commission of 

11 its functions and powers under the Federal Trade Commis12 sion Act, a violation of any requirement imposed under this 

13 title shall be deemed a violation of a requirement imposed 

14 under that Act. All of the functions and powers of the Fed15 eral Trade Commission under the Federal Trade Commis16 sion Act are available to the Federal Trade Commission to 

17 enforce compliance by any person with the requirements 

18 under this title, irrespective of whether that person is en19 gaged in commerce or meets any other jurisdictional tests 

20 under the Federal Trade Commission Act.’’; 

21 (8) in section 129 (15 U.S.C. 1639), by striking 

22 subsection (m) and inserting the following: 

23 ‘‘(m) CIVIL PENALTIES IN FEDERAL TRADE COMMIS24 SION ENFORCEMENT ACTIONS.—For purposes of enforce25 ment by the Federal Trade Commission, any violation of 
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† HR 4173 EAS 

1 a regulation issued by the Bureau pursuant to subsection 

2 (l)(2) shall be treated as a violation of a rule promulgated 

3 under section 18 of the Federal Trade Commission Act (15 

4 U.S.C. 57a) regarding unfair or deceptive acts or prac5 tices.’’; and 

6 (9) in chapter 5 (15 U.S.C. 1667 et seq.)— 

7 (A) by striking ‘‘the Board’’ each place that 

8 term appears and inserting ‘‘the Bureau’’; and 

9 (B) by striking ‘‘The Board’’ each place 

10 that term appears and inserting ‘‘The Bureau’’. 

11 SEC. 1100. AMENDMENTS TO THE TRUTH IN SAVINGS ACT. 

12 The Truth in Savings Act (12 U.S.C. 4301 et seq.) is 

13 amended— 

14 (1) by striking ‘‘Board’’ each place that term ap15 pears and inserting ‘‘Bureau’’; 

16 (2) in section 270(a) (12 U.S.C. 4309)— 

17 (A) by striking ‘‘Compliance’’ and inserting 

18 ‘‘Except as otherwise provided in subtitle B of 

19 the Consumer Financial Protection Act of 2010, 

20 compliance’’; 

21 (B) in paragraph (1)— 

22 (i) in subparagraph (B), by striking 

23 ‘‘and’’ at the end; and 

24 (ii) by striking subparagraph (C); 
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1 (C) in paragraph (2), by striking the period 

2 at the end and inserting ‘‘; and’’; and 

3 (D) by adding at the end the following: 

4 ‘‘(3) subtitle E of the Consumer Financial Pro5 tection Act of 2010, by the Bureau.’’; 

6 (3) in section 272(b) (12 U.S.C. 4311(b)), by 

7 striking ‘‘regulation prescribed by the Board’’ each 

8 place that term appears and inserting ‘‘regulation 

9 prescribed by the Bureau’’; and 

10 (4) in section 274 (12 U.S.C. 4313), by striking 

11 paragraph (4) and inserting the following: 

12 ‘‘(4) BUREAU.—The term ‘Bureau’ means the 

13 Bureau of Consumer Financial Protection.’’. 

14 SEC. 1101. AMENDMENTS TO THE TELEMARKETING AND 

15 CONSUMER FRAUD AND ABUSE PREVENTION 

16 ACT. 

17 (a) AMENDMENTS TO SECTION 3.—Section 3 of the 

18 Telemarketing and Consumer Fraud and Abuse Prevention 

19 Act (15 U.S.C. 6102) is amended by striking subsections 

20 (b) and (c) and inserting the following: 

21 ‘‘(b) RULEMAKING AUTHORITY.—The Commission 

22 shall have authority to prescribe rules under subsection (a), 

23 in accordance with section 553 of title 5, United States 

24 Code. In prescribing a rule under this section that relates 

25 to the provision of a consumer financial product or service 
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1 that is subject to the Consumer Financial Protection Act 

2 of 2010, including any enumerated consumer law there3 under, the Commission shall consult with the Bureau of 

4 Consumer Financial Protection regarding the consistency 

5 of a proposed rule with standards, purposes, or objectives 

6 administered by the Bureau of Consumer Financial Protec7 tion. 

8 ‘‘(c) VIOLATIONS.—Any violation of any rule pre9 scribed under subsection (a)— 

10 ‘‘(1) shall be treated as a violation of a rule 

11 under section 18 of the Federal Trade Commission 

12 Act regarding unfair or deceptive acts or practices; 

13 and 

14 ‘‘(2) that is committed by a person subject to the 

15 Consumer Financial Protection Act of 2010 shall be 

16 treated as a violation of a rule under section 1031 of 

17 that Act regarding unfair, deceptive, or abusive acts 

18 or practices.’’. 

19 (b) AMENDMENTS TO SECTION 4.—Section 4(d) of the 

20 Telemarketing and Consumer Fraud and Abuse Prevention 

21 Act (15 U.S.C. 6103(d)) is amended by inserting after 

22 ‘‘Commission’’ each place that term appears the following: 

23 ‘‘or the Bureau of Consumer Financial Protection’’. 

24 (c) AMENDMENTS TO SECTION 5.—Section 5(c) of the 

25 Telemarketing and Consumer Fraud and Abuse Prevention 
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† HR 4173 EAS 

1 Act (15 U.S.C. 6104(c)) is amended by inserting after 

2 ‘‘Commission’’ each place that term appears the following: 

3 ‘‘or the Bureau of Consumer Financial Protection’’. 

4 (d) AMENDMENT TO SECTION 6.—Section 6 of the Tele5 marketing and Consumer Fraud and Abuse Prevention Act 

6 (15 U.S.C. 6105) is amended by adding at the end the fol7 lowing: 

8 ‘‘(d) ENFORCEMENT BY BUREAU OF CONSUMER FI9 NANCIAL PROTECTION.—Except as otherwise provided in 

10 sections 3(d), 3(e), 4, and 5, and subject to subtitle B of 

11 the Consumer Financial Protection Act of 2010, this Act 

12 shall be enforced by the Bureau of Consumer Financial Pro13 tection under subtitle E of the Consumer Financial Protec14 tion Act of 2010.’’. 

15 SEC. 1102. AMENDMENTS TO THE PAPERWORK REDUCTION 

16 ACT. 

17 (a) DESIGNATION AS AN INDEPENDENT AGENCY.—Sec18 tion 2(5) of the Paperwork Reduction Act (44 U.S.C. 

19 3502(5)) is amended by inserting ‘‘the Bureau of Consumer 

20 Financial Protection, the Office of Financial Research,’’ 

21 after ‘‘the Securities and Exchange Commission,’’. 

22 (b) COMPARABLE TREATMENT.—Section 3513 of title 

23 44, United States Code, is amended by adding at the end 

24 the following: 
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† HR 4173 EAS 

1 ‘‘(c) COMPARABLE TREATMENT.—Notwithstanding 

2 any other provision of law, the Director shall treat or re3 view a rule or order prescribed or proposed by the Director 

4 of the Bureau of Consumer Financial Protection on the 

5 same terms and conditions as apply to any rule or order 

6 prescribed or proposed by the Board of Governors of the 

7 Federal Reserve System.’’. 

8 SEC. 1103. ADJUSTMENTS FOR INFLATION IN THE TRUTH 

9 IN LENDING ACT. 

10 (a) CAPS.— 

11 (1) CREDIT TRANSACTIONS.—Section 104(3) of 

12 the Truth in Lending Act (15 U.S.C. 1603(3)) is 

13 amended by striking ‘‘$25,000’’ and inserting 

14 ‘‘$50,000’’. 

15 (2) CONSUMER LEASES.—Section 181(1) of the 

16 Truth in Lending Act (15 U.S.C. 1667(1)) is amend17 ed by striking ‘‘$25,000’’ and inserting ‘‘$50,000’’. 

18 (b) ADJUSTMENTS FOR INFLATION.—On and after De19 cember 31, 2011, the Bureau may adjust annually the dol20 lar amounts described in sections 104(3) and 181(1) of the 

21 Truth in Lending Act (as amended by this section), by the 

22 annual percentage increase in the Consumer Price Index 

23 for Urban Wage Earners and Clerical Workers, as published 

24 by the Bureau of Labor Statistics, rounded to the nearest 

25 multiple of $100, or $1,000, as applicable. 
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1 SEC. 1104. SMALL BUSINESS FAIRNESS AND REGULATORY 

2 TRANSPARENCY. 

3 (a) PANEL REQUIREMENT.—Section 609(d) of title 5, 

4 United States Code, is amended by striking ‘‘means the’’ 

5 and all that follows and inserting the following: ‘‘means— 

6 ‘‘(1) the Environmental Protection Agency; 

7 ‘‘(2) the Consumer Financial Protection Bureau 

8 of the Federal Reserve System; and 

9 ‘‘(3) the Occupational Safety and Health Ad10 ministration of the Department of Labor.’’. 

11 (b) INITIAL REGULATORY FLEXIBILITY ANALYSIS.— 

12 Section 603 of title 5, United States Code, is amended by 

13 adding at the end the following: 

14 ‘‘(d)(1) For a covered agency, as defined in section 

15 609(d)(2), each initial regulatory flexibility analysis shall 

16 include a description of— 

17 ‘‘(A) any projected increase in the cost of credit 

18 for small entities; 

19 ‘‘(B) any significant alternatives to the proposed 

20 rule which accomplish the stated objectives of applica21 ble statutes and which minimize any increase in the 

22 cost of credit for small entities; and 

23 ‘‘(C) advice and recommendations of representa24 tives of small entities relating to issues described in 

25 subparagraphs (A) and (B) and subsection (b). 
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1 ‘‘(2) A covered agency, as defined in section 609(d)(2), 

2 shall, for purposes of complying with paragraph (1)(C)— 

3 ‘‘(A) identify representatives of small entities in 

4 consultation with the Chief Counsel for Advocacy of 

5 the Small Business Administration; and 

6 ‘‘(B) collect advice and recommendations from 

7 the representatives identified under subparagraph (A) 

8 relating to issues described in subparagraphs (A) and 

9 (B) of paragraph (1) and subsection (b).’’. 

10 (c) FINAL REGULATORY FLEXIBILITY ANALYSIS.—Sec11 tion 604(a) of title 5, United States Code, is amended— 

12 (1) in paragraph (4), by striking ‘‘and’’ at the 

13 end; 

14 (2) in paragraph (5), by striking the period at 

15 the end and inserting ‘‘; and’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(6) for a covered agency, as defined in section 

18 609(d)(2), a description of the steps the agency has 

19 taken to minimize any additional cost of credit for 

20 small entities.’’. 

21 SEC. 1105. EFFECTIVE DATE. 

22 Except as otherwise provided in this subtitle and the 

23 amendments made by this subtitle, this subtitle and the 

24 amendments made by this subtitle, other than sections 1081 
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† HR 4173 EAS 

1 and 1082, shall become effective on the designated transfer 

2 date. 

3 TITLE XI—FEDERAL RESERVE 

4 SYSTEM PROVISIONS 

5 SEC. 1151. FEDERAL RESERVE ACT AMENDMENTS ON EMER6 GENCY LENDING AUTHORITY. 

7 (a) FEDERAL RESERVE ACT.—The third undesignated 

8 paragraph of section 13 of the Federal Reserve Act (12 

9 U.S.C. 343) (relating to emergency lending authority) is 

10 amended— 

11 (1) by inserting ‘‘(3)(A)’’ before ‘‘In unusual’’; 

12 (2) by striking ‘‘individual, partnership, or cor13 poration’’ the first place that term appears and in14 serting the following: ‘‘participant in any program or 

15 facility with broad-based eligibility’’; 

16 (3) by striking ‘‘exchange for an individual or a 

17 partnership or corporation’’ and inserting ‘‘ex18 change,’’; 

19 (4) by striking ‘‘such individual, partnership, or 

20 corporation’’ and inserting the following: ‘‘such par21 ticipant in any program or facility with broad-based 

22 eligibility’’; 

23 (5) by striking ‘‘for individuals, partnerships, 

24 corporations’’ and inserting ‘‘for any participant in 

25 any program or facility with broad-based eligibility’’; 
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1 (6) by striking ‘‘may prescribe.’’ and inserting 

2 the following: ‘‘may prescribe. 

3 ‘‘(B)(i) As soon as is practicable after the 

4 date of enactment of this subparagraph, the 

5 Board shall establish, by regulation, in consulta6 tion with the Secretary of the Treasury, the poli7 cies and procedures governing emergency lending 

8 under this paragraph. Such policies and proce9 dures shall be designed to ensure that any emer10 gency lending program or facility is for the pur11 pose of providing liquidity to the financial sys12 tem, and not to aid a failing financial company, 

13 and that the collateral for emergency loans is 

14 sufficient to protect taxpayers from and that any 

15 such program is terminated in a timely and or16 derly fashion losses. The policies and procedures 

17 established by the Board shall require that a 

18 Federal reserve bank assign, consistent with 

19 sound risk management practices and to ensure 

20 protection for the taxpayer, a lendable value to 

21 all collateral for a loan executed by a Federal re22 serve bank under this paragraph in determining 

23 whether the loan is secured satisfactorily for pur24 poses of this paragraph. 
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1 ‘‘(ii) The Board shall establish procedures to 

2 prohibit borrowing from programs and facilities 

3 by borrowers that are insolvent. Such procedures 

4 may include a certification from the chief execu5 tive officer (or other authorized officer) of the 

6 borrower, at the time the borrower initially bor7 rows under the program or facility (with a duty 

8 by the borrower to update the certification if the 

9 information in the certification materially 

10 changes), that the borrower is not insolvent. A 

11 borrower shall be considered insolvent for pur12 poses of this subparagraph, if the borrower is in 

13 bankruptcy, resolution under title II of the Re14 storing American Financial Stability Act of 

15 2010, or any other Federal or State insolvency 

16 proceeding. 

17 ‘‘(iii) A program or facility that is struc18 tured to remove assets from the balance sheet of 

19 a single and specific company, or that is estab20 lished for the purpose of assisting a single and 

21 specific company avoid bankruptcy, resolution 

22 under title II of the Restoring American Finan23 cial Stability Act of 2010, or any other Federal 

24 or State insolvency proceeding, shall not be con-
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1 sidered a program or facility with broad-based 

2 eligibility. 

3 ‘‘(iv) The Board may not establish any pro4 gram or facility under this paragraph without 

5 the prior approval of the Secretary of the Treas6 ury. 

7 ‘‘(C) The Board shall provide to the Com8 mittee on Banking, Housing, and Urban Affairs 

9 of the Senate and the Committee on Financial 

10 Services of the House of Representatives— 

11 ‘‘(i) not later than 7 days after pro12 viding any loan or other financial assist13 ance under this paragraph, a report that 

14 includes— 

15 ‘‘(I) the justification for the exer16 cise of authority to provide such assist17 ance; 

18 ‘‘(II) the identity of the recipients 

19 of such assistance; 

20 ‘‘(III) the date and amount of the 

21 assistance, and form in which the as22 sistance was provided; and 

23 ‘‘(IV) the material terms of the as24 sistance, including— 

25 ‘‘(aa) duration; 
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1 ‘‘(bb) collateral pledged and 

2 the value thereof; 

3 ‘‘(cc) all interest, fees, and 

4 other revenue or items of value to 

5 be received in exchange for the as6 sistance; 

7 ‘‘(dd) any requirements im8 posed on the recipient with respect 

9 to employee compensation, dis10 tribution of dividends, or any 

11 other corporate decision in ex12 change for the assistance; and 

13 ‘‘(ee) the expected costs to the 

14 taxpayers of such assistance; and 

15 ‘‘(ii) once every 30 days, with respect 

16 to any outstanding loan or other financial 

17 assistance under this paragraph, written 

18 updates on— 

19 ‘‘(I) the value of collateral; 

20 ‘‘(II) the amount of interest, fees, 

21 and other revenue or items of value re22 ceived in exchange for the assistance; 

23 and 

24 ‘‘(III) the expected or final cost to 

25 the taxpayers of such assistance. 
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1 ‘‘(D) The information submitted to Congress 

2 under subparagraph (C) related to— 

3 ‘‘(i) the identity of the participants in 

4 an emergency lending program or facility 

5 commenced under this paragraph; 

6 ‘‘(ii) the amounts borrowed by each 

7 participant in any such program or facil8 ity; 

9 ‘‘(iii) identifying details concerning 

10 the assets or collateral held by, under, or in 

11 connection with such a program or facility, 

12 shall be kept confidential, upon the written re13 quest of the Chairman of the Board, in which 

14 case such information shall be made available 

15 only to the Chairpersons and Ranking Members 

16 of the Committees described in subparagraph 

17 (C). 

18 ‘‘(E) If an entity to which a Federal reserve 

19 bank has provided a loan under this paragraph 

20 becomes a covered financial company, as defined 

21 in section 203 of the Restoring American Finan22 cial Stability Act of 2010, at any time while 

23 such loan is outstanding, and the Federal reserve 

24 bank incurs a realized net loss on the loan, then 

25 the Federal reserve bank shall have a claim equal 
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1 to the amount of the net realized loss against the 

2 covered entity, with the same priority as an obli3 gation to the Secretary of the Treasury under 

4 sections 210(n) and 210(o) of the Restoring 

5 American Financial Stability Act of 2010.’’. 

6 (b) CONFORMING AMENDMENT.—Section 507(a)(2) of 

7 title 11, United States Code, is amended by inserting 

8 ‘‘claims of any Federal reserve bank related to loans made 

9 through programs or facilities authorized under the third 

10 undesignated paragraph of the Federal Reserve Act (12 

11 U.S.C. 343),’’ after ‘‘this title,’’. 

12 SEC. 1152. REVIEWS OF SPECIAL FEDERAL RESERVE CREDIT 

13 FACILITIES. 

14 (a) REVIEWS.—Section 714 of title 31, United States 

15 Code, is amended by adding at the end the following: 

16 ‘‘(f) REVIEWS OF CREDIT FACILITIES OF THE FED17 ERAL RESERVE SYSTEM.— 

18 ‘‘(1) DEFINITION.—In this subsection, the term 

19 ‘credit facility’ means a program or facility, includ20 ing any special purpose vehicle or other entity estab21 lished by or on behalf of the Board of Governors of 

22 the Federal Reserve System or a Federal reserve bank, 

23 authorized by the Board of Governors under the third 

24 undesignated paragraph of section 13 of the Federal 
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1 Reserve Act (12 U.S.C. 343), that is not subject to 

2 audit under subsection (e), including— 

3 ‘‘(A) the Asset-Backed Commercial Paper 

4 Money Market Mutual Fund Liquidity Facility; 

5 ‘‘(B) the Term Asset-Backed Securities 

6 Loan Facility; 

7 ‘‘(C) the Primary Dealer Credit Facility; 

8 ‘‘(D) the Commercial Paper Funding Facil9 ity; and 

10 ‘‘(E) the Term Securities Lending Facility. 

11 ‘‘(2) AUTHORITY FOR REVIEWS AND EXAMINA12 TIONS.—Subject to paragraph (3), and notwith13 standing any limitation in subsection (b) on the au14 diting and oversight of certain functions of the Board 

15 of Governors of the Federal Reserve System or any 

16 Federal reserve bank, the Comptroller General of the 

17 United States may conduct reviews, including onsite 

18 examinations, of the Board of Governors, a Federal 

19 reserve bank, or a credit facility, if the Comptroller 

20 General determines that such reviews are appropriate, 

21 solely for the purposes of assessing, with respect to a 

22 credit facility— 

23 ‘‘(A) the operational integrity, accounting, 

24 financial reporting, and internal controls of the 

25 credit facility; 
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1 ‘‘(B) the effectiveness of the collateral poli2 cies established for the facility in mitigating risk 

3 to the relevant Federal reserve bank and tax4 payers; 

5 ‘‘(C) whether the credit facility inappropri6 ately favors one or more specific participants 

7 over other institutions eligible to utilize the facil8 ity; and 

9 ‘‘(D) the policies governing the use, selec10 tion, or payment of third-party contractors by or 

11 for any credit facility. 

12 ‘‘(3) REPORTS AND DELAYED DISCLOSURE.— 

13 ‘‘(A) REPORTS REQUIRED.—A report on 

14 each review conducted under paragraph (2) shall 

15 be submitted by the Comptroller General to the 

16 Congress before the end of the 90-day period be17 ginning on the date on which such review is 

18 completed. 

19 ‘‘(B) CONTENTS.—The report under sub20 paragraph (A) shall include a detailed descrip21 tion of the findings and conclusions of the Comp22 troller General with respect to the matters de23 scribed in paragraph (2) that were reviewed and 

24 are the subject of the report, together with such 

25 recommendations for legislative or administra-
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1 tive action relating to such matters as the Comp2 troller General may determine to be appropriate. 

3 ‘‘(C) DELAYED RELEASE OF CERTAIN IN4 FORMATION.— 

5 ‘‘(i) IN GENERAL.—The Comptroller 

6 General shall not disclose to any person or 

7 entity, including to Congress, the names or 

8 identifying details of specific participants 

9 in any credit facility, the amounts borrowed 

10 by specific participants in any credit facil11 ity, or identifying details regarding assets 

12 or collateral held by, under, or in connec13 tion with any credit facility, and any re14 port provided under subparagraph (A) shall 

15 be redacted to ensure that such names and 

16 details are not disclosed. 

17 ‘‘(ii) DELAYED RELEASE.—The non18 disclosure obligation under clause (i) shall 

19 expire with respect to any participant on 

20 the date on which the Board of Governors, 

21 directly or through a Federal reserve bank, 

22 publicly discloses the identity of the subject 

23 participant or the identifying details of the 

24 subject assets or collateral. 
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1 ‘‘(iii) GENERAL RELEASE.—The Comp2 troller General shall release a nonredacted 

3 version of any report on a credit facility 1 

4 year after the effective date of the termi5 nation by the Board of Governors of the au6 thorization for the credit facility. For pur7 poses of this clause, a credit facility shall be 

8 deemed to have terminated 24 months after 

9 the date on which the credit facility ceases 

10 to make extensions of credit and loans, un11 less the credit facility is otherwise termi12 nated by the Board of Governors. 

13 ‘‘(iv) EXCEPTIONS.—The nondisclosure 

14 obligation under clause (i) shall not apply 

15 to the credit facilities Maiden Lane, Maiden 

16 Lane II, and Maiden Lane III.’’. 

17 (b) ACCESS TO RECORDS.—Section 714(d) of title 31, 

18 United States Code, is amended— 

19 (1) in paragraph (2), by inserting ‘‘or any per20 son or entity described in paragraph (3)(A)’’ after 

21 ‘‘used by an agency’’; 

22 (2) in paragraph (3), by inserting ‘‘or (f)’’ after 

23 ‘‘subsection (e)’’ each place that term appears; and 

24 (3) in paragraph (3)(B), by adding at the end 

25 the following: ‘‘The Comptroller General may make 
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1 and retain copies of books, accounts, and other records 

2 provided under subparagraph (A) as the Comptroller 

3 General deems appropriate. The Comptroller General 

4 shall provide to any person or entity described in sub5 paragraph (A) a current list of officers and employees 

6 to whom, with proper identification, records and 

7 property may be made available, and who may make 

8 notes or copies necessary to carry out a review or ex9 amination under this subsection.’’. 

10 SEC. 1153. PUBLIC ACCESS TO INFORMATION. 

11 Section 2B of the Federal Reserve Act (12 U.S.C. 225b) 

12 is amended by adding at the end the following: 

13 ‘‘(c) PUBLIC ACCESS TO INFORMATION.—The Board 

14 shall place on its home Internet website, a link entitled 

15 ‘Audit’, which shall link to a webpage that shall serve as 

16 a repository of information made available to the public 

17 for a reasonable period of time, not less than 6 months fol18 lowing the date of release of the relevant information, in19 cluding— 

20 ‘‘(1) the reports prepared by the Comptroller 

21 General under section 714 of title 31, United States 

22 Code; 

23 ‘‘(2) the annual financial statements prepared 

24 by an independent auditor for the Board in accord25 ance with section 11B; 
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1 ‘‘(3) the reports to the Committee on Banking, 

2 Housing, and Urban Affairs of the Senate required 

3 under the third undesignated paragraph of section 13 

4 (relating to emergency lending authority); and 

5 ‘‘(4) such other information as the Board reason6 ably believes is necessary or helpful to the public in 

7 understanding the accounting, financial reporting, 

8 and internal controls of the Board and the Federal re9 serve banks.’’. 

10 SEC. 1154. LIQUIDITY EVENT DETERMINATION. 

11 (a) DETERMINATION AND WRITTEN RECOMMENDA12 TION.— 

13 (1) DETERMINATION REQUEST.—The Secretary 

14 may request the Corporation and the Board of Gov15 ernors to determine whether a liquidity event exists 

16 that warrants use of the guarantee program author17 ized under section 1155. 

18 (2) REQUIREMENTS OF DETERMINATION.—Any 

19 determination pursuant to paragraph (1) shall— 

20 (A) be written; and 

21 (B) contain an evaluation of the evidence 

22 that— 

23 (i) a liquidity event exists; 

24 (ii) failure to take action would have 

25 serious adverse effects on financial stability 
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1 or economic conditions in the United States; 

2 and 

3 (iii) actions authorized under section 

4 1155 are needed to avoid or mitigate poten5 tial adverse effects on the United States fi6 nancial system or economic conditions. 

7 (b) PROCEDURES.—Notwithstanding any other provi8 sion of Federal or State law, upon the determination of both 

the Corporation (upon a vote of not fewer than 2 9 ⁄3 of the 

10 members of the Corporation then serving) and the Board 

of Governors (upon a vote of not fewer than 2 11 ⁄3 of the mem12 bers of the Board of Governors then serving) under sub13 section (a) that a liquidity event exists that warrants use 

14 of the guarantee program authorized under section 1155, 

15 and with the written consent of the Secretary— 

16 (1) the Corporation shall take action in accord17 ance with section 1155(a); and 

18 (2) the Secretary (in consultation with the Presi19 dent) shall take action in accordance with section 

20 1155(c). 

21 (c) DOCUMENTATION AND REVIEW.— 

22 (1) DOCUMENTATION.—The Secretary shall— 

23 (A) maintain the written documentation of 

24 each determination of the Corporation and the 

25 Board of Governors under this section; and 
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1 (B) provide the documentation for review 

2 under paragraph (2). 

3 (2) GAO REVIEW.—The Comptroller General of 

4 the United States shall review and report to Congress 

5 on any determination of the Corporation and the 

6 Board of Governors under subsection (a), including— 

7 (A) the basis for the determination; and 

8 (B) the likely effect of the actions taken. 

9 (d) REPORT TO CONGRESS.—On the earlier of the date 

10 of a submission made to Congress under section 1155(c), 

11 or within 30 days of the date of a determination under sub12 section (a), the Secretary shall provide written notice of the 

13 determination of the Corporation and the Board of Gov14 ernors to the Committee on Banking, Housing, and Urban 

15 Affairs of the Senate and the Committee on Financial Serv16 ices of the House of Representatives, including a description 

17 of the basis for the determination. 

18 SEC. 1155. EMERGENCY FINANCIAL STABILIZATION. 

19 (a) IN GENERAL.—Upon the written determination of 

20 the Corporation and the Board of Governors under section 

21 1154, the Corporation shall create a widely available pro22 gram to guarantee obligations of solvent insured depository 

23 institutions or solvent depository institution holding com24 panies (including any affiliates thereof) during times of se25 vere economic distress, except that a guarantee of obliga-
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1 tions under this section may not include the provision of 

2 equity in any form. 

3 (b) RULEMAKING AND TERMS AND CONDITIONS.— 

4 (1) POLICIES AND PROCEDURES.—As soon as is 

5 practicable after the date of enactment of this Act, the 

6 Corporation shall establish, by regulation, and in 

7 consultation with the Secretary, policies and proce8 dures governing the issuance of guarantees authorized 

9 by this section. Such policies and procedures may in10 clude a requirement of collateral as a condition of 

11 any such guarantee. 

12 (2) TERMS AND CONDITIONS.—The terms and 

13 conditions of any guarantee program shall be estab14 lished by the Corporation, with the concurrence of the 

15 Secretary. 

16 (c) DETERMINATION OF GUARANTEED AMOUNT.— 

17 (1) IN GENERAL.—In connection with any pro18 gram established pursuant to subsection (a) and sub19 ject to paragraph (2) of this subsection, the Secretary 

20 (in consultation with the President) shall determine 

21 the maximum amount of debt outstanding that the 

22 Corporation may guarantee under this section, and 

23 the President may transmit to Congress a written re24 port on the plan of the Corporation to exercise the au25 thority under this section to issue guarantees up to 
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1 that maximum amount and a request for approval of 

2 such plan. The Corporation shall exercise the author3 ity under this section to issue guarantees up to that 

4 specified maximum amount upon passage of the joint 

5 resolution of approval, as provided in subsection (d). 

6 Absent such approval, the Corporation shall issue no 

7 such guarantees. 

8 (2) ADDITIONAL DEBT GUARANTEE AUTHOR9 ITY.—If the Secretary (in consultation with the Presi10 dent) determines, after a submission to Congress 

11 under paragraph (1), that the maximum guarantee 

12 amount should be raised, and the Council concurs 

13 with that determination, the President may transmit 

14 to Congress a written report on the plan of the Cor15 poration to exercise the authority under this section 

16 to issue guarantees up to the increased maximum debt 

17 guarantee amount. The Corporation shall exercise the 

18 authority under this section to issue guarantees up to 

19 that specified maximum amount upon passage of the 

20 joint resolution of approval, as provided in subsection 

21 (d). Absent such approval, the Corporation shall issue 

22 no such guarantees. 

23 (d) RESOLUTION OF APPROVAL.— 

24 (1) ADDITIONAL DEBT GUARANTEE AUTHOR25 ITY.—A request by the President under this section 
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1 shall be considered granted by Congress upon adop2 tion of a joint resolution approving such request. 

3 Such joint resolution shall be considered in the Senate 

4 under expedited procedures. 

5 (2) FAST TRACK CONSIDERATION IN SENATE.— 

6 (A) RECONVENING.—Upon receipt of a re7 quest under subsection (c), if the Senate has ad8 journed or recessed for more than 2 days, the 

9 majority leader of the Senate, after consultation 

10 with the minority leader of the Senate, shall no11 tify the Members of the Senate that, pursuant to 

12 this section, the Senate shall convene not later 

13 than the second calendar day after receipt of 

14 such message. 

15 (B) PLACEMENT ON CALENDAR.—Upon in16 troduction in the Senate, the joint resolution 

17 shall be placed immediately on the calendar. 

18 (C) FLOOR CONSIDERATION.— 

19 (i) IN GENERAL.—Notwithstanding 

20 Rule XXII of the Standing Rules of the 

21 Senate, it is in order at any time during 

22 the period beginning on the 4th day after 

23 the date on which Congress receives a re24 quest under subsection (c), and ending on 

25 the 7th day after that date (even though a 
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1 previous motion to the same effect has been 

2 disagreed to) to move to proceed to the con3 sideration of the joint resolution, and all 

4 points of order against the joint resolution 

5 (and against consideration of the joint reso6 lution) are waived. The motion to proceed is 

7 not debatable. The motion is not subject to 

8 a motion to postpone. A motion to recon9 sider the vote by which the motion is agreed 

10 to or disagreed to shall not be in order. If 

11 a motion to proceed to the consideration of 

12 the resolution is agreed to, the joint resolu13 tion shall remain the unfinished business 

14 until disposed of. 

15 (ii) DEBATE.—Debate on the joint res16 olution, and on all debatable motions and 

17 appeals in connection therewith, shall be 

18 limited to not more than 10 hours, which 

19 shall be divided equally between the major20 ity and minority leaders or their designees. 

21 A motion further to limit debate is in order 

22 and not debatable. An amendment to, or a 

23 motion to postpone, or a motion to proceed 

24 to the consideration of other business, or a 
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1 motion to recommit the joint resolution is 

2 not in order. 

3 (iii) VOTE ON PASSAGE.—The vote on 

4 passage shall occur immediately following 

5 the conclusion of the debate on the joint res6 olution, and a single quorum call at the 

7 conclusion of the debate if requested in ac8 cordance with the rules of the Senate. 

9 (iv) RULINGS OF THE CHAIR ON PRO10 CEDURE.—Appeals from the decisions of the 

11 Chair relating to the application of the 

12 rules of the Senate, as the case may be, to 

13 the procedure relating to a joint resolution 

14 shall be decided without debate. 

15 (3) RULES.— 

16 (A) COORDINATION WITH ACTION BY HOUSE

17 OF REPRESENTATIVES.—If, before the passage by 

18 the Senate of a joint resolution of the Senate, the 

19 Senate receives a joint resolution, from the 

20 House of Representatives, then the following pro21 cedures shall apply: 

22 (i) The joint resolution of the House of 

23 Representatives shall not be referred to a 

24 committee. 
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1 (ii) With respect to a joint resolution 

2 of the Senate— 

3 (I) the procedure in the Senate 

4 shall be the same as if no joint resolu5 tion had been received from the other 

6 House; but 

7 (II) the vote on passage shall be 

8 on the joint resolution of the House of 

9 Representatives. 

10 (B) TREATMENT OF JOINT RESOLUTION OF

11 HOUSE OF REPRESENTATIVES.—If the Senate 

12 fails to introduce or consider a joint resolution 

13 under this section, the joint resolution of the 

14 House of Representatives shall be entitled to ex15 pedited floor procedures under this subsection. 

16 (C) TREATMENT OF COMPANION MEAS17 URES.—If, following passage of the joint resolu18 tion in the Senate, the Senate then receives the 

19 companion measure from the House of Rep20 resentatives, the companion measure shall not be 

21 debatable. 

22 (D) RULES OF THE SENATE.—This sub23 section is enacted by Congress— 

24 (i) as an exercise of the rulemaking 

25 power of the Senate, and as such it is 
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1 deemed a part of the rules of the Senate, but 

2 applicable only with respect to the proce3 dure to be followed in the Senate in the case 

4 of a joint resolution, and it supersedes other 

5 rules, only to the extent that it is incon6 sistent with such rules; and 

7 (ii) with full recognition of the con8 stitutional right of the Senate to change the 

9 rules (so far as relating to the procedure of 

10 the Senate) at any time, in the same man11 ner, and to the same extent as in the case 

12 of any other rule of the Senate. 

13 (4) DEFINITION.—As used in this subsection, the 

14 term ‘‘joint resolution’’ means only a joint resolu15 tion— 

16 (A) that is introduced not later than 3 cal17 endar days after the date on which the request 

18 referred to in subsection (c) is received by Con19 gress; 

20 (B) that does not have a preamble; 

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

22 resolution relating to the approval of a plan to 

23 guarantee obligations under section 1155 of the 

24 Restoring American Financial Stability Act of 

25 2010’’; and 
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1 (D) the matter after the resolving clause of 

2 which is as follows: ‘‘That Congress approves the 

3 obligation of any amount described in section 

4 1155(c) of the Restoring American Financial 

5 Stability Act of 2010.’’. 

6 (e) FUNDING.— 

7 (1) FEES AND OTHER CHARGES.—The Corpora8 tion shall charge fees and other assessments to all par9 ticipants in the program established pursuant to this 

10 section, in such amounts as are necessary to offset 

11 projected losses and administrative expenses, includ12 ing amounts borrowed pursuant to paragraph (3), 

13 and such amounts shall be available to the Corpora14 tion. 

15 (2) EXCESS FUNDS.—If, at the conclusion of the 

16 program established under this section, there are any 

17 excess funds collected from the fees associated with 

18 such program, the funds shall be deposited in the 

19 General Fund of the Treasury. 

20 (3) AUTHORITY OF CORPORATION.—The Cor21 poration— 

22 (A) may borrow funds from the Secretary of 

23 the Treasury and issue obligations of the Cor24 poration to the Secretary for amounts borrowed, 

25 and the amounts borrowed shall be available to 
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1 the Corporation for purposes of carrying out a 

2 program established pursuant to this section, in3 cluding the payment of reasonable costs of ad4 ministering the program, and the obligations 

5 issued shall be repaid in full with interest 

6 through fees and charges paid by participants in 

7 accordance with paragraphs (1) and (4), as ap8 plicable; and 

9 (B) may not borrow funds from the Deposit 

10 Insurance Fund established pursuant to section 

11 11(a)(4) of the Federal Deposit Insurance Act. 

12 (4) BACKUP SPECIAL ASSESSMENTS.—To the ex13 tent that the funds collected pursuant to paragraph 

14 (1) are insufficient to cover any losses or expenses, in15 cluding amounts borrowed pursuant to paragraph 

16 (3), arising from a program established pursuant to 

17 this section, the Corporation shall impose a special 

18 assessment solely on participants in the program, in 

19 amounts necessary to address such insufficiency, and 

20 which shall be available to the Corporation to cover 

21 such losses or expenses. 

22 (5) AUTHORITY OF THE SECRETARY.—The Sec23 retary may purchase any obligations issued under 

24 paragraph (3)(A). For such purpose, the Secretary 

25 may use the proceeds of the sale of any securities 
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1 issued under chapter 31 of title 31, United States 

2 Code, and the purposes for which securities may be 

3 issued under that chapter 31 are extended to include 

4 such purchases, and the amount of any securities 

5 issued under that chapter 31 for such purpose shall 

6 be treated in the same manner as securities issued 

7 under section 208(n)(3)(B). 

8 (f) RULE OF CONSTRUCTION.—For purposes of this 

9 section, a guarantee of deposits held by insured depository 

10 institutions shall not be treated as a debt guarantee pro11 gram. 

12 (g) DEFINITIONS.—For purposes of this section, the 

13 following definitions shall apply: 

14 (1) COMPANY.—The term ‘‘company’’ means any 

15 entity other than a natural person that is incor16 porated or organized under Federal law or the laws 

17 of any State. 

18 (2) DEPOSITORY INSTITUTION HOLDING COM19 PANY.—The term ‘‘depository institution holding com20 pany’’ has the same meaning as in section 3 of the 

21 Federal Deposit Insurance Act (12 U.S.C. 1813). 

22 (3) LIQUIDITY EVENT.—The term ‘‘liquidity 

23 event’’ means— 
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1 (A) an exceptional and broad reduction in 

2 the general ability of financial market partici3 pants— 

4 (i) to sell financial assets without an 

5 unusual and significant discount; or 

6 (ii) to borrow using financial assets as 

7 collateral without an unusual and signifi8 cant increase in margin; or 

9 (B) an unusual and significant reduction 

10 in the ability of financial market participants to 

11 obtain unsecured credit. 

12 (4) SOLVENT.—The term ‘‘solvent’’ means that 

13 the value of the assets of an entity exceed its obliga14 tions to creditors. 

15 SEC. 1156. ADDITIONAL RELATED AMENDMENTS. 

16 (a) SUSPENSION OF PARALLEL FEDERAL DEPOSIT IN17 SURANCE ACT AUTHORITY.—Effective upon the date of en18 actment of this section, the Corporation may not exercise 

19 its authority under section 13(c)(4)(G)(i) of the Federal De20 posit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) to estab21 lish any widely available debt guarantee program for which 

22 section 1155 would provide authority. 

23 (b) FEDERAL DEPOSIT INSURANCE ACT.—Section 

24 13(c)(4)(G) of the Federal Deposit Insurance Act (12 U.S.C. 

25 1823(c)(4)(G)) is amended— 
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1 (1) in clause (i)— 

2 (A) in subclause (I), by inserting ‘‘for which 

3 the Corporation has been appointed receiver’’ be4 fore ‘‘would have serious’’; and 

5 (B) in the undesignated matter following 

6 subclause (II), by inserting ‘‘for the purpose of 

7 winding up the insured depository institution 

8 for which the Corporation has been appointed re9 ceiver’’ after ‘‘provide assistance under this sec10 tion’’; and 

11 (2) in clause (v)(I), by striking ‘‘The’’ and in12 serting ‘‘Not later than 3 days after making a deter13 mination under clause (i), the’’. 

14 (c) EFFECT OF DEFAULT ON AN FDIC GUARANTEE.— 

15 If an insured depository institution or depository institu16 tion holding company (as those terms are defined in section 

17 3 of the Federal Deposit Insurance Act) participating in 

18 a program under section 1155, or any participant in a debt 

19 guarantee program established pursuant to section 

20 13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults 

21 on any obligation guaranteed by the Corporation after the 

22 date of enactment of this Act, the Corporation shall— 

23 (1) appoint itself as receiver for the insured de24 pository institution that defaults; and 
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1 (2) with respect to any other participating com2 pany that is not an insured depository institution 

3 that defaults— 

4 (A) require— 

5 (i) consideration of whether a deter6 mination shall be made, as provided in sec7 tion 202 to resolve the company under sec8 tion 203; and 

9 (ii) the company to file a petition for 

10 bankruptcy under section 301 of title 11, 

11 United States Code, if the Corporation is 

12 not appointed receiver pursuant to section 

13 203 within 30 days of the date of default; 

14 or 

15 (B) file a petition for involuntary bank16 ruptcy on behalf of the company under section 

17 303 of title 11, United States Code. 

18 SEC. 1157. FEDERAL RESERVE ACT AMENDMENTS ON FED19 ERAL RESERVE BANK GOVERNANCE. 

20 The Federal Reserve Act (12 U.S.C. 221 et seq.) is 

21 amended in section 4 by adding at the end the following: 

22 ‘‘(25) SELECTION OF THE PRESIDENT OF THE

23 FEDERAL RESERVE BANK OF NEW YORK.—Notwith24 standing any other provision of this section, after the 

25 date of enactment of the Restoring American Finan-
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1 cial Stability Act of 2010, the president of the Federal 

2 Reserve Bank of New York shall be appointed by the 

3 President, by and with the advice and consent of the 

4 Senate, for terms of 5 years. 

5 ‘‘(26) LIMITATION ON ELIGIBILITY TO VOTE FOR

6 OR SERVE AS A FEDERAL RESERVE BANK DIREC7 TOR.—Notwithstanding any other provision of this 

8 section, after the date of enactment of the Restoring 

9 American Financial Stability Act of 2010, no com10 pany, or subsidiary or affiliate of a company that is 

11 supervised by the Board, may vote for members of the 

12 board of directors of a Federal reserve bank, and no 

13 past or current officer, director, or employee of such 

14 company, or subsidiary or affiliate of such company, 

15 may serve as a member of the board of directors of 

16 a Federal reserve bank.’’. 

17 SEC. 1158. AMENDMENTS TO THE FEDERAL RESERVE ACT 

18 RELATING TO SUPERVISION AND REGULA19 TION POLICY. 

20 (a) ESTABLISHMENT OF THE POSITION OF VICE

21 CHAIRMAN FOR SUPERVISION.— 

22 (1) POSITION ESTABLISHED.—The second undes23 ignated paragraph of section 10 of the Federal Re24 serve Act (12 U.S.C. 242) (relating to the Chairman 

25 and Vice Chairman of the Board) is amended by 
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1 striking the third sentence and inserting the fol2 lowing: ‘‘Of the persons thus appointed, 1 shall be 

3 designated by the President, by and with the advice 

4 and consent of the Senate, to serve as Chairman of 

5 the Board for a term of 4 years, and 2 shall be des6 ignated by the President, by and with the advice and 

7 consent of the Senate, to serve as Vice Chairmen of 

8 the Board, each for a term of 4 years, 1 of whom shall 

9 serve in the absence of the Chairman, as provided in 

10 the fourth undesignated paragraph of this section, 

11 and 1 of whom shall be designated Vice Chairman for 

12 Supervision. The Vice Chairman for Supervision 

13 shall develop policy recommendations for the Board 

14 regarding supervision and regulation of depository 

15 institution holding companies and other financial 

16 firms supervised by the Board, and shall oversee the 

17 supervision and regulation of such firms.’’. 

18 (2) EFFECTIVE DATE.—The amendment made by 

19 subsection (a) takes effect on the date of enactment of 

20 this title and applies to individuals who are des21 ignated by the President on or after that date to serve 

22 as Vice Chairman of Supervision. 

23 (b) FINANCIAL STABILITY AS BOARD FUNCTION.—Sec24 tion 10 of the Federal Reserve Act (12 U.S.C. 241) is 

25 amended by adding at the end the following: 
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1 ‘‘(11) FINANCIAL STABILITY FUNCTION.—The 

2 Board of Governors shall identify, measure, monitor, 

3 and mitigate risks to the financial stability of the 

4 United States.’’. 

5 (c) APPEARANCES BEFORE CONGRESS.—Section 10 of 

6 the Federal Reserve Act (12 U.S.C. 241) is amended by add7 ing at the end the following: 

8 ‘‘(12) APPEARANCES BEFORE CONGRESS.—The 

9 Vice Chairman for Supervision shall appear before 

10 the Committee on Banking, Housing, and Urban Af11 fairs of the Senate and the Committee on Financial 

12 Services of the House of Representatives and at semi13 annual hearings regarding the efforts, activities, ob14 jectives, and plans of the Board with respect to the 

15 conduct of supervision and regulation of depository 

16 institution holding companies and other financial 

17 firms supervised by the Board.’’. 

18 (d) BOARD RESPONSIBILITY TO SET SUPERVISION

19 AND REGULATORY POLICY.—Section 11 of the Federal Re20 serve Act (12 U.S.C. 248) (relating to enumerated powers 

21 of the Board) is amended by adding at the end of subsection 

22 (k) (relating to delegation) the following: ‘‘The Board of 

23 Governors may not delegate to a Federal reserve bank its 

24 functions for the establishment of policies for the super25 vision and regulation of depository institution holding com-
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1 panies and other financial firms supervised by the Board 

2 of Governors.’’. 

3 SEC. 1159. GAO AUDIT OF THE FEDERAL RESERVE FACILI4 TIES; PUBLICATION OF BOARD ACTIONS. 

5 (a) GAO AUDIT.— 

6 (1) IN GENERAL.—Notwithstanding section 

7 714(b) of title 31, United States Code, or any other 

8 provision of law, the Comptroller General of the 

9 United States (in this subsection referred to as the 

10 ‘‘Comptroller General’’) shall conduct a one-time 

11 audit of all loans and other financial assistance pro12 vided during the period beginning on December 1, 

13 2007 and ending on the date of enactment of this Act 

14 by the Board of Governors under the Asset-Backed 

15 Commercial Paper Money Market Mutual Fund Li16 quidity Facility, the Term Asset-Backed Securities 

17 Loan Facility, the Primary Dealer Credit Facility, 

18 the Commercial Paper Funding Facility, the Term 

19 Securities Lending Facility, the Term Auction Facil20 ity, Maiden Lane, Maiden Lane II, Maiden Lane III, 

21 the agency Mortgage-Backed Securities program, for22 eign currency liquidity swap lines, and any other 

23 program created as a result of the third undesignated 

24 paragraph of section 13 of the Federal Reserve Act. 
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1 (2) ASSESSMENTS.—In conducting the audit 

2 under paragraph (1), the Comptroller General shall 

3 assess— 

4 (A) the operational integrity, accounting, 

5 financial reporting, and internal controls of the 

6 credit facility; 

7 (B) the effectiveness of the collateral policies 

8 established for the facility in mitigating risk to 

9 the relevant Federal reserve bank and taxpayers; 

10 (C) whether the credit facility inappropri11 ately favors one or more specific participants 

12 over other institutions eligible to utilize the facil13 ity; 

14 (D) the policies governing the use, selection, 

15 or payment of third-party contractors by or for 

16 any credit facility; and 

17 (E) whether there were conflicts of interest 

18 with respect to the manner in which such facility 

19 was established or operated. 

20 (3) TIMING.—The audit required by this sub21 section shall be commenced not later than 30 days 

22 after the date of enactment of this Act, and shall be 

23 completed not later than 12 months after that date of 

24 enactment. 
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1 (4) REPORT REQUIRED.—The Comptroller Gen2 eral shall submit a report on the audit conducted 

3 under paragraph (1) to the Congress not later than 

4 12 months after the date of enactment of this Act, and 

5 such report shall be made available to— 

6 (A) the Speaker of the House of Representa7 tives; 

8 (B) the majority and minority leaders of 

9 the House of Representatives; 

10 (C) the majority and minority leaders of 

11 the Senate; 

12 (D) the Chairman and Ranking Member of 

13 the Committee on Banking, Housing, and Urban 

14 Affairs of the Senate and of the Committee on 

15 Financial Services of the House of Representa16 tives; and 

17 (E) any member of Congress who requests 

18 it. 

19 (b) AUDIT OF FEDERAL RESERVE BANK GOVERN20 ANCE.— 

21 (1) AUDIT.— 

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

23 after the date of enactment of this Act, the 

24 Comptroller General shall complete an audit of 
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1 the governance of the Federal reserve bank sys2 tem. 

3 (B) REQUIRED EXAMINATIONS.—The audit 

4 required under subparagraph (A) shall— 

5 (i) examine the extent to which the 

6 current system of appointing Federal re7 serve bank directors effectively represents 

8 ‘‘the public, without discrimination on the 

9 basis of race, creed, color, sex or national 

10 origin, and with due but not exclusive con11 sideration to the interests of agriculture, 

12 commerce, industry, services, labor, and 

13 consumers’’ in the selection of bank direc14 tors, as such requirement is set forth under 

15 section 4 of the Federal Reserve Act; 

16 (ii) examine whether there are actual 

17 or potential conflicts of interest created 

18 when the directors of Federal reserve banks, 

19 which execute the supervisory functions of 

20 the Board of Governors of the Federal Re21 serve System, are elected by member banks; 

22 (iii) examine the establishment and op23 erations of each facility described in sub24 section (a)(1) and each Federal reserve bank 
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1 involved in the establishment and oper2 ations thereof; and 

3 (iv) identify changes to selection proce4 dures for Federal reserve bank directors, or 

5 to other aspects of Federal reserve bank gov6 ernance, that would— 

7 (I) improve how the public is rep8 resented; 

9 (II) eliminate actual or potential 

10 conflicts of interest in bank super11 vision; 

12 (III) increase the availability of 

13 information useful for the formation 

14 and execution of monetary policy; or 

15 (IV) in other ways increase the ef16 fectiveness or efficiency of reserve 

17 banks. 

18 (2) REPORT REQUIRED.—A report on the audit 

19 conducted under paragraph (1) shall be submitted by 

20 the Comptroller General to the Congress before the end 

21 of the 90-day period beginning on the date on which 

22 such audit is completed, and such report shall be 

23 made available to— 

24 (A) the Speaker of the House of Representa25 tives; 
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1 (B) the majority and minority leaders of 

2 the House of Representatives; 

3 (C) the majority and minority leaders of 

4 the Senate; 

5 (D) the Chairman and Ranking Member of 

6 the Committee on Banking, Housing, and Urban 

7 Affairs of the Senate and of the Committee on 

8 Financial Services of the House of Representa9 tives; and 

10 (E) any member of Congress who requests 

11 it. 

12 (c) PUBLICATION OF BOARD ACTIONS.—Notwith13 standing any other provision of law, the Board of Governors 

14 shall publish on its website, not later than December 1, 

15 2010, with respect to all loans and other financial assist16 ance it has provided during the period beginning on Decem17 ber 1, 2007 and ending on the date of enactment of this 

18 Act under the Asset-Backed Commercial Paper Money Mar19 ket Mutual Fund Liquidity Facility, the Term Asset20 Backed Securities Loan Facility, the Primary Dealer Cred21 it Facility, the Commercial Paper Funding Facility, the 

22 Term Securities Lending Facility, the Term Auction Facil23 ity, Maiden Lane, Maiden Lane II, Maiden Lane III, the 

24 agency Mortgage-Backed Securities program, foreign cur25 rency liquidity swap lines, and any other program created 
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1 as a result of the third undesignated paragraph of section 

2 13 of the Federal Reserve Act— 

3 (1) the identity of each business, individual, en4 tity, or foreign central bank to which the Board of 

5 Governors has provided such assistance; 

6 (2) the type of financial assistance provided to 

7 that business, individual, entity, or foreign central 

8 bank; 

9 (3) the value or amount of that financial assist10 ance; 

11 (4) the date on which the financial assistance 

12 was provided; 

13 (5) the specific terms of any repayment expected, 

14 including the repayment time period, interest charges, 

15 collateral, limitations on executive compensation or 

16 dividends, and other material terms; and 

17 (6) the specific rationale for each such facility or 

18 program. 

19 TITLE XII—IMPROVING ACCESS 

20 TO MAINSTREAM FINANCIAL 

21 INSTITUTIONS 

22 SEC. 1201. SHORT TITLE. 

23 This title may be cited as the ‘‘Improving Access to 

24 Mainstream Financial Institutions Act of 2010’’. 
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1 SEC. 1202. PURPOSE. 

2 The purpose of this title is to encourage initiatives for 

3 financial products and services that are appropriate and 

4 accessible for millions of Americans who are not fully incor5 porated into the financial mainstream. 

6 SEC. 1203. DEFINITIONS. 

7 In this title, the following definitions shall apply: 

8 (1) ACCOUNT.—The term ‘‘account’’ means an 

9 agreement between an individual and an eligible enti10 ty under which the individual obtains from or 

11 through the entity 1 or more banking products and 

12 services, and includes a deposit account, a savings ac13 count (including a money market savings account), 

14 an account for a closed-end loan, and other products 

15 or services, as the Secretary deems appropriate. 

16 (2) COMMUNITY DEVELOPMENT FINANCIAL INSTI17 TUTION.—The term ‘‘community development finan18 cial institution’’ has the same meaning as in section 

19 103(5) of the Community Development Banking and 

20 Financial Institutions Act of 1994 (12 U.S.C. 

21 4702(5)). 

22 (3) ELIGIBLE ENTITY.—The term ‘‘eligible enti23 ty’’ means— 

24 (A) an organization described in section 

25 501(c)(3) of the Internal Revenue Code of 1986, 
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1 and exempt from tax under section 501(a) of 

2 such Code; 

3 (B) a federally insured depository institu4 tion; 

5 (C) a community development financial in6 stitution; 

7 (D) a State, local, or tribal government en8 tity; or 

9 (E) a partnership or other joint venture 

10 comprised of 1 or more of the entities described 

11 in subparagraphs (A) through (D), in accord12 ance with regulations prescribed by the Secretary 

13 under this title. 

14 (4) FEDERALLY INSURED DEPOSITORY INSTITU15 TION.—The term ‘‘federally insured depository insti16 tution’’ means any insured depository institution (as 

17 that term is defined in section 3 of the Federal De18 posit Insurance Act (12 U.S.C. 1813)) and any in19 sured credit union (as that term is defined in section 

20 101 of the Federal Credit Union Act (12 U.S.C. 

21 1752)). 

22 (5) PAYDAY LOAN.—The term ‘‘payday loan’’ 

23 means any transaction in which a small cash ad24 vance is made to a consumer in exchange for— 
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1 (A) the personal check or share draft of the 

2 consumer, in the amount of the advance plus a 

3 fee, where presentment or negotiation of such 

4 check or share draft is deferred by agreement of 

5 the parties until a designated future date; or 

6 (B) the authorization of the consumer to 

7 debit the transaction account or share draft ac8 count of the consumer, in the amount of the ad9 vance plus a fee, where such account will be deb10 ited on or after a designated future date. 

11 SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL 

12 INSTITUTIONS. 

13 (a) IN GENERAL.—The Secretary is authorized to es14 tablish a multiyear program of grants, cooperative agree15 ments, financial agency agreements, and similar contracts 

16 or undertakings to promote initiatives designed— 

17 (1) to enable low- and moderate-income individ18 uals to establish one or more accounts in a federally 

19 insured depository institution that are appropriate to 

20 meet the financial needs of such individuals; and 

21 (2) to improve access to the provision of ac22 counts, on reasonable terms, for low- and moderate23 income individuals. 

24 (b) PROGRAM ELIGIBILITY AND ACTIVITIES.— 
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1 (1) IN GENERAL.—The Secretary shall restrict 

2 participation in any program established under sub3 section (a) to an eligible entity. Subject to regulations 

4 prescribed by the Secretary under this title, 1 or more 

5 eligible entities may participate in 1 or several pro6 grams established under subsection (a). 

7 (2) ACCOUNT ACTIVITIES.—Subject to regulations 

8 prescribed by the Secretary, an eligible entity may, in 

9 participating in a program established under sub10 section (a), offer or provide to low- and moderate-in11 come individuals products and services relating to ac12 counts, including— 

13 (A) small-dollar value loans; and 

14 (B) financial education and counseling re15 lating to conducting transactions in and man16 aging accounts. 

17 SEC. 1205. LOW-COST ALTERNATIVES TO PAYDAY LOANS. 

18 (a) GRANTS AUTHORIZED.—The Secretary is author19 ized to establish multiyear demonstration programs by 

20 means of grants, cooperative agreements, financial agency 

21 agreements, and similar contracts or undertakings, with eli22 gible entities to provide low-cost, small loans to consumers 

23 that will provide alternatives to more costly payday loans. 

24 (b) TERMS AND CONDITIONS.— 
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1 (1) IN GENERAL.—Loans under this section shall 

2 be made on terms and conditions, and pursuant to 

3 lending practices, that are reasonable for consumers. 

4 (2) FINANCIAL LITERACY AND EDUCATION OP5 PORTUNITIES.— 

6 (A) IN GENERAL.—Each eligible entity 

7 awarded a grant under this section shall promote 

8 and take appropriate steps to ensure the provi9 sion of financial literacy and education opportu10 nities, such as relevant counseling services, edu11 cational courses, or wealth building programs, to 

12 each consumer provided with a loan pursuant to 

13 this section. 

14 (B) AUTHORITY TO EXPAND ACCESS.—As 

15 part of the grants, agreements, and undertakings 

16 established under this section, the Secretary may 

17 implement reasonable measures or programs de18 signed to expand access to financial literacy and 

19 education opportunities, including relevant 

20 counseling services, educational courses, or 

21 wealth building programs to be provided to indi22 viduals who obtain loans from eligible entities 

23 under this section. 
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1 SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

2 FUNDS. 

3 The Community Development Banking and Financial 

4 Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended 

5 by adding at the end the following: 

6 ‘‘SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

7 FUNDS. 

8 ‘‘(a) PURPOSES.—The purposes of this section are— 

9 ‘‘(1) to make financial assistance available from 

10 the Fund in order to help community development fi11 nancial institutions defray the costs of operating 

12 small dollar loan programs, by providing the 

13 amounts necessary for such institutions to establish 

14 their own loan loss reserve funds to mitigate some of 

15 the losses on such small dollar loan programs; and 

16 ‘‘(2) to encourage community development finan17 cial institutions to establish and maintain small dol18 lar loan programs that would help give consumers ac19 cess to mainstream financial institutions and combat 

20 payday lending. 

21 ‘‘(b) GRANTS.— 

22 ‘‘(1) LOAN-LOSS RESERVE FUND GRANTS.—The 

23 Fund shall make grants to community development 

24 financial institutions or to any partnership between 

25 such community development financial institutions 

26 and any other federally insured depository institution 
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1 with a primary mission to serve targeted investment 

2 areas, as such areas are defined under section 

3 103(16), to enable such institutions or any partner4 ship of such institutions to establish a loan-loss re5 serve fund in order to defray the costs of a small dol6 lar loan program established or maintained by such 

7 institution. 

8 ‘‘(2) MATCHING REQUIREMENT.—A community 

9 development financial institution or any partnership 

10 of institutions established pursuant to paragraph (1) 

11 shall provide non-Federal matching funds in an 

12 amount equal to 50 percent of the amount of any 

13 grant received under this section. 

14 ‘‘(3) USE OF FUNDS.—Any grant amounts re15 ceived by a community development financial institu16 tion or any partnership between or among such insti17 tutions under paragraph (1)— 

18 ‘‘(A) may not be used by such institution to 

19 provide direct loans to consumers; 

20 ‘‘(B) may be used by such institution to 

21 help recapture a portion or all of a defaulted 

22 loan made under the small dollar loan program 

23 of such institution; and 
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1 ‘‘(C) may be used to designate and utilize 

2 a fiscal agent for services normally provided by 

3 such an agent. 

4 ‘‘(4) TECHNICAL ASSISTANCE GRANTS.—The 

5 Fund shall make technical assistance grants to com6 munity development financial institutions or any 

7 partnership between or among such institutions to 

8 support and maintain a small dollar loan program. 

9 Any grant amounts received under this paragraph 

10 may be used for technology, staff support, and other 

11 costs associated with establishing a small dollar loan 

12 program. 

13 ‘‘(c) DEFINITIONS.—For purposes of this section— 

14 ‘‘(1) the term ‘consumer reporting agency that 

15 compiles and maintains files on consumers on a na16 tionwide basis’ has the same meaning given such term 

17 in section 603(p) of the Fair Credit Reporting Act 

18 (15 U.S.C. 1681a(p)); and 

19 ‘‘(2) the term ‘small dollar loan program’ means 

20 a loan program wherein a community development fi21 nancial institution or any partnership between or 

22 among such institutions offers loans to consumers 

23 that— 

24 ‘‘(A) are made in amounts not exceeding 

25 $2,500; 
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1 ‘‘(B) must be repaid in installments; 

2 ‘‘(C) have no pre-payment penalty; 

3 ‘‘(D) the institution has to report payments 

4 regarding the loan to at least 1 of the consumer 

5 reporting agencies that compiles and maintains 

6 files on consumers on a nationwide basis; and 

7 ‘‘(E) meet any other affordability require8 ments as may be established by the Adminis9 trator.’’. 

10 SEC. 1207. PROCEDURAL PROVISIONS. 

11 An eligible entity desiring to participate in a program 

12 or obtain a grant under this title shall submit an applica13 tion to the Secretary, in such form and containing such 

14 information as the Secretary may require. 

15 SEC. 1208. AUTHORIZATION OF APPROPRIATIONS. 

16 (a) AUTHORIZATION TO THE SECRETARY.—There are 

17 authorized to be appropriated to the Secretary, such sums 

18 as are necessary to both administer and fund the programs 

19 and projects authorized by this title, to remain available 

20 until expended. 

21 (b) AUTHORIZATION TO THE FUND.—There is author22 ized to be appropriated to the Fund for each fiscal year 

23 beginning in fiscal year 2010, an amount equal to the 

24 amount of the administrative costs of the Fund for the oper25 ation of the grant program established under this title. 
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1 SEC. 1209. REGULATIONS. 

2 (a) IN GENERAL.—The Secretary is authorized to pro3 mulgate regulations to implement and administer the grant 

4 programs and undertakings authorized by this title. 

5 (b) REGULATORY AUTHORITY.—Regulations pre6 scribed under this section may contain such classifications, 

7 differentiations, or other provisions, and may provide for 

8 such adjustments and exceptions for any class of grant pro9 grams, undertakings, or eligible entities, as, in the judgment 

10 of the Secretary, are necessary or proper to effectuate the 

11 purposes of this title, to prevent circumvention or evasion 

12 of this title, or to facilitate compliance with this title. 

13 SEC. 1210. EVALUATION AND REPORTS TO CONGRESS. 

14 For each fiscal year in which a program or project 

15 is carried out under this title, the Secretary shall submit 

16 a report to the Committee on Banking, Housing, and Urban 

17 Affairs of the Senate and the Committee on Financial Serv18 ices of the House of Representatives containing a descrip19 tion of the activities funded, amounts distributed, and 

20 measurable results, as appropriate and available. 

21 TITLE XIII—PAY IT BACK ACT 

22 SEC. 1301. SHORT TITLE. 

23 This title may be cited as the ‘‘Pay It Back Act’’. 

24 SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION. 

25 Section 115(a) of the Emergency Economic Stabiliza26 tion Act of 2008 (12 U.S.C. 5225(a)) is amended— 
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1 (1) in paragraph (3)— 

2 (A) by striking ‘‘If’’ and inserting ‘‘Except 

3 as provided in paragraph (4), if’’; 

4 (B) by striking ‘‘, $700,000,000,000, as such 

5 amount is reduced by $1,259,000,000, as such 

6 amount is reduced by $1,244,000,000’’ and in7 serting ‘‘$550,000,000,000’’; and 

8 (C) by striking ‘‘outstanding at any one 

9 time’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(4) If the Secretary, with the concurrence of the 

12 Chairman of the Board of Governors of the Federal 

13 Reserve System, determines that there is an imme14 diate and substantial threat to the economy arising 

15 from financial instability, the Secretary is authorized 

16 to purchase troubled assets under this Act in an 

17 amount equal to amounts received by the Secretary 

18 before, on, or after the date of enactment of the Pay 

19 It Back Act for repayment of the principal of finan20 cial assistance by an entity that has received finan21 cial assistance under the TARP or any other program 

22 enacted by the Secretary under the authorities grant23 ed to the Secretary under this Act, but only— 

24 ‘‘(A) to the extent necessary to address the 

25 threat; and 
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1 ‘‘(B) upon transmittal of such determina2 tion, in writing, to the appropriate committees 

3 of Congress.’’. 

4 SEC. 1303. REPORT. 

5 Section 106 of the Emergency Economic Stabilization 

6 Act of 2008 (12 U.S.C. 5216) is amended by inserting at 

7 the end the following: 

8 ‘‘(f) REPORT.—The Secretary of the Treasury shall re9 port to Congress every 6 months on amounts received and 

10 transferred to the general fund under subsection (d).’’. 

11 SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RE12 COVERY ACT OF 2008. 

13 (a) SALE OF FANNIE MAE OBLIGATIONS AND SECURI14 TIES BY THE TREASURY; DEFICIT REDUCTION.—Section 

15 304(g)(2) of the Federal National Mortgage Association 

16 Charter Act (12 U.S.C. 1719(g)(2)) is amended— 

17 (1) by redesignating subparagraph (C) as sub18 paragraph (D); and 

19 (2) by inserting after subparagraph (B) the fol20 lowing: 

21 ‘‘(C) DEFICIT REDUCTION.—The Secretary 

22 of the Treasury shall deposit in the General 

23 Fund of the Treasury any amounts received by 

24 the Secretary from the sale of any obligation ac-
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1 quired by the Secretary under this subsection, 

2 where such amounts shall be— 

3 ‘‘(i) dedicated for the sole purpose of 

4 deficit reduction; and 

5 ‘‘(ii) prohibited from use as an offset 

6 for other spending increases or revenue re7 ductions.’’. 

8 (b) SALE OF FREDDIE MAC OBLIGATIONS AND SECU9 RITIES BY THE TREASURY; DEFICIT REDUCTION.—Section 

10 306(l)(2) of the Federal Home Loan Mortgage Corporation 

11 Act (12 U.S.C. 1455(l)(2)) is amended— 

12 (1) by redesignating subparagraph (C) as sub13 paragraph (D); and 

14 (2) by inserting after subparagraph (B) the fol15 lowing: 

16 ‘‘(C) DEFICIT REDUCTION.—The Secretary 

17 of the Treasury shall deposit in the General 

18 Fund of the Treasury any amounts received by 

19 the Secretary from the sale of any obligation ac20 quired by the Secretary under this subsection, 

21 where such amounts shall be— 

22 ‘‘(i) dedicated for the sole purpose of 

23 deficit reduction; and 
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1 ‘‘(ii) prohibited from use as an offset 

2 for other spending increases or revenue re3 ductions.’’. 

4 (c) SALE OF FEDERAL HOME LOAN BANKS OBLIGA5 TIONS BY THE TREASURY; DEFICIT REDUCTION.—Section 

6 11(l)(2) of the Federal Home Loan Bank Act (12 U.S.C. 

7 1431(l)(2)) is amended— 

8 (1) by redesignating subparagraph (C) as sub9 paragraph (D); and 

10 (2) by inserting after subparagraph (B) the fol11 lowing: 

12 ‘‘(C) DEFICIT REDUCTION.—The Secretary 

13 of the Treasury shall deposit in the General 

14 Fund of the Treasury any amounts received by 

15 the Secretary from the sale of any obligation ac16 quired by the Secretary under this subsection, 

17 where such amounts shall be— 

18 ‘‘(i) dedicated for the sole purpose of 

19 deficit reduction; and 

20 ‘‘(ii) prohibited from use as an offset 

21 for other spending increases or revenue re22 ductions.’’. 

23 (d) REPAYMENT OF FEES.—Any periodic commitment 

24 fee or any other fee or assessment paid by the Federal Na25 tional Mortgage Association or Federal Home Loan Mort-
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1 gage Corporation to the Secretary of the Treasury as a re2 sult of any preferred stock purchase agreement, mortgage3 backed security purchase program, or any other program 

4 or activity authorized or carried out pursuant to the au5 thorities granted to the Secretary of the Treasury under sec6 tion 1117 of the Housing and Economic Recovery Act of 

7 2008 (Public Law 110–289; 122 Stat. 2683), including any 

8 fee agreed to by contract between the Secretary and the As9 sociation or Corporation, shall be deposited in the General 

10 Fund of the Treasury where such amounts shall be— 

11 (1) dedicated for the sole purpose of deficit re12 duction; and 

13 (2) prohibited from use as an offset for other 

14 spending increases or revenue reductions. 

15 SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT. 

16 The Director of the Federal Housing Finance Agency 

17 shall submit to Congress a report on the plans of the Agency 

18 to continue to support and maintain the Nation’s vital 

19 housing industry, while at the same time guaranteeing that 

20 the American taxpayer will not suffer unnecessary losses. 

21 SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS. 

22 (a) REJECTION OF ARRA FUNDS BY STATE.—Section 

23 1607 of the American Recovery and Reinvestment Act of 

24 2009 (Public Law 111–5; 123 Stat. 305) is amended by 

25 adding at the end the following: 
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1 ‘‘(d) STATEWIDE REJECTION OF FUNDS.—If funds 

2 provided to any State in any division of this Act are not 

3 accepted for use by the Governor of the State pursuant to 

4 subsection (a) or by the State legislature pursuant to sub5 section (b), then all such funds shall be— 

6 ‘‘(1) rescinded; and 

7 ‘‘(2) deposited in the General Fund of the Treas8 ury where such amounts shall be— 

9 ‘‘(A) dedicated for the sole purpose of deficit 

10 reduction; and 

11 ‘‘(B) prohibited from use as an offset for 

12 other spending increases or revenue reductions.’’. 

13 (b) WITHDRAWAL OR RECAPTURE OF UNOBLIGATED

14 FUNDS.—Title XVI of the American Recovery and Rein15 vestment Act of 2009 (Public Law 111–5; 123 Stat. 302) 

16 is amended by adding at the end the following: 

17 ‘‘SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED 

18 FUNDS. 

19 ‘‘Notwithstanding any other provision of this Act, if 

20 the head of any executive agency withdraws or recaptures 

21 for any reason funds appropriated or otherwise made avail22 able under this division, and such funds have not been obli23 gated by a State to a local government or for a specific 

24 project, such recaptured funds shall be— 

25 ‘‘(1) rescinded; and 
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1 ‘‘(2) deposited in the General Fund of the Treas2 ury where such amounts shall be— 

3 ‘‘(A) dedicated for the sole purpose of deficit 

4 reduction; and 

5 ‘‘(B) prohibited from use as an offset for 

6 other spending increases or revenue reductions.’’. 

7 (c) RETURN OF UNOBLIGATED FUNDS BY END OF

8 2012.—Section 1603 of the American Recovery and Rein9 vestment Act of 2009 (Public Law 111–5; 123 Stat. 302) 

10 is amended by— 

11 (1) striking ‘‘All funds’’ and inserting ‘‘(a) IN

12 GENERAL.—All funds’’; and 

13 (2) adding at the end the following: 

14 ‘‘(b) REPAYMENT OF UNOBLIGATED FUNDS.—Any dis15 cretionary appropriations made available in this division 

16 that have not been obligated as of December 31, 2012, are 

17 hereby rescinded, and such amounts shall be deposited in 

18 the General Fund of the Treasury where such amounts shall 

19 be— 

20 ‘‘(1) dedicated for the sole purpose of deficit re21 duction; and 

22 ‘‘(2) prohibited from use as an offset for other 

23 spending increases or revenue reductions. 

24 ‘‘(c) PRESIDENTIAL WAIVER AUTHORITY.— 
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1 ‘‘(1) IN GENERAL.—The President may waive the 

2 requirements under subsection (b), if the President de3 termines that it is not in the best interest of the Na4 tion to rescind a specific unobligated amount after 

5 December 31, 2012. 

6 ‘‘(2) REQUESTS.—The head of an executive agen7 cy may also apply to the President for a waiver from 

8 the requirements under subsection (b).’’. 

9 TITLE XIV—MISCELLANEOUS 

10 SEC. 1401. RESTRICTIONS ON USE OF FEDERAL FUNDS TO 

11 FINANCE BAILOUTS OF FOREIGN GOVERN12 MENTS. 

13 The Bretton Woods Agreements Act (22 U.S.C. 286 et 

14 seq.) is amended by adding at the end the following: 

15 ‘‘SEC. 68. RESTRICTIONS ON USE OF FEDERAL FUNDS TO FI16 NANCE BAILOUTS OF FOREIGN GOVERN17 MENTS. 

18 ‘‘(a) IN GENERAL.—The President shall direct the 

19 United States Executive Director of the International Mon20 etary Fund— 

21 ‘‘(1) to evaluate any proposed loan to a country 

22 by the Fund if the amount of the public debt of the 

23 country exceeds the gross domestic product of the 

24 country; 
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1 ‘‘(2) to determine whether or not the loan will be 

2 repaid and certify that determination to Congress. 

3 ‘‘(b) OPPOSITION TO LOANS UNLIKELY TO BE RE4 PAID.—If the Executive Director determines under sub5 section (a)(2) that a loan by the International Monetary 

6 Fund to a country will not be repaid, the President shall 

7 direct the Executive Director to use the voice and vote of 

8 the United States to vote in opposition to the proposed 

9 loan.’’. 

10 TITLE XV—CONGO CONFLICT 

11 MINERALS 

12 SEC. 1501. SENSE OF CONGRESS ON EXPLOITATION AND 

13 TRADE OF COLUMBITE-TANTALITE, CAS14 SITERITE, GOLD, AND WOLFRAMITE ORIGI15 NATING IN DEMOCRATIC REPUBLIC OF 

16 CONGO. 

17 It is the sense of Congress that the exploitation and 

18 trade of columbite-tantalite, cassiterite, gold, and wolf19 ramite in the eastern Democratic Republic of Congo is help20 ing to finance extreme levels of violence in the eastern 

21 Democratic Republic of Congo, particularly sexual and gen22 der-based violence, and contributing to an emergency hu23 manitarian situation therein, warranting the provisions of 

24 section 13(o) of the Securities Exchange Act of 1934, as 

25 added by section 1302. 
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1 SEC. 1502. DISCLOSURE TO SECURITIES AND EXCHANGE 

2 COMMISSION RELATING TO COLUMBITE-TAN3 TALITE, CASSITERITE, GOLD, AND WOLF4 RAMITE ORIGINATING IN DEMOCRATIC RE5 PUBLIC OF CONGO. 

6 Section 13 of the Securities Exchange Act of 1934 (15 

7 U.S.C. 78m), as amended by section 763 of this Act, is fur8 ther amended by adding at the end the following new sub9 section: 

10 ‘‘(o) DISCLOSURES TO COMMISSION RELATING TO CO11 LUMBITE-TANTALITE, CASSITERITE, GOLD, AND WOLF12 RAMITE ORIGINATING IN DEMOCRATIC REPUBLIC OF

13 CONGO.— 

14 ‘‘(1) IN GENERAL.—Not later than 180 days 

15 after the date of the enactment of this subsection, the 

16 Commission shall promulgate rules requiring any 

17 person described in paragraph (2)— 

18 ‘‘(A) to disclose annually to the Commission 

19 in a report— 

20 ‘‘(i) whether the columbite-tantalite, 

21 cassiterite, gold, or wolframite that was nec22 essary as described in paragraph (2)(A)(ii) 

23 in the year for which such report is sub24 mitted originated or may have originated 

25 in the Democratic Republic of Congo or an 

26 adjoining country; and 
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1 ‘‘(ii) a description of the measures 

2 taken by the person, which may include an 

3 independent audit, to exercise due diligence 

4 on the source and chain of custody of such 

5 columbite-tantalite, cassiterite, gold, or 

6 wolframite, or derivatives of such minerals, 

7 in order to ensure that the activities of such 

8 person that involve such minerals or deriva9 tives did not directly or indirectly finance 

10 or benefit armed groups in the Democratic 

11 Republic of Congo or an adjoining country; 

12 and 

13 ‘‘(B) make the information disclosed under 

14 subparagraph (A) available to the public on the 

15 Internet website of the person. 

16 ‘‘(2) PERSON DESCRIBED.— 

17 ‘‘(A) IN GENERAL.—A person is described 

18 in this paragraph if— 

19 ‘‘(i) the person is required to file re20 ports to the Commission under subsection 

21 (a)(2); and 

22 ‘‘(ii) columbite-tantalite, cassiterite, 

23 gold, or wolframite is necessary to the 

24 functionality or production of a product 

25 manufactured by such person. 
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1 ‘‘(B) DERIVATIVES.—For purposes of this 

2 paragraph, if a derivative of a mineral is nec3 essary to the functionality or production of a 

4 product manufactured by a person, such mineral 

5 shall also be considered necessary to the 

6 functionality or production of a product manu7 factured by the person. 

8 ‘‘(3) REVISIONS AND WAIVERS.—The Commis9 sion shall revise or temporarily waive the require10 ments described in paragraph (1) if the President de11 termines that such revision or waiver is in the public 

12 interest. 

13 ‘‘(4) TERMINATION OF DISCLOSURE REQUIRE14 MENTS.— 

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 subparagraph (B), the requirements of para17 graph (1) shall terminate on the date that is 5 

18 years after the date of the enactment of this sub19 section. 

20 ‘‘(B) EXTENSION BY SECRETARY OF

21 STATE.—The date described in subparagraph (A) 

22 shall be extended by 1 year for each year in 

23 which the Secretary of State certifies that armed 

24 parties to the ongoing armed conflict in the 

25 Democratic Republic of Congo or adjoining 
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1 countries continue to be directly involved and 

2 benefitting from commercial activity involving 

3 columbite-tantalite, cassiterite, gold, or wolf4 ramite. 

5 ‘‘(5) ADJOINING COUNTRY DEFINED.—In this 

6 subsection, the term ‘adjoining country’, with respect 

7 to the Democratic Republic of Congo, means a coun8 try that shares an internationally recognized border 

9 with the Democratic Republic of Congo.’’. 

10 SEC. 1503. REPORT. 

11 Not later than 2 years after the date of the enactment 

12 of this Act, the Comptroller General of the United States 

13 shall submit to Congress a report that includes the fol14 lowing: 

15 (1) An assessment of the effectiveness of section 

16 13(o) of the Securities Exchange Act of 1934, as 

17 added by section 1302, in promoting peace and secu18 rity in the eastern Democratic Republic of Congo. 

19 (2) A description of the problems, if any, encoun20 tered by the Securities and Exchange Commission in 

21 carrying out the provisions of such section 13(o). 

22 (3) A description of the adverse impacts of car23 rying out the provisions of such section 13(o), if any, 

24 on communities in the eastern Democratic Republic 

25 of Congo. 
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1 (4) Recommendations for legislative or regu2 latory actions that can be taken— 

3 (A) to improve the effectiveness of the provi4 sions of such section 13(o) to promote peace and 

5 security in the eastern Democratic Republic of 

6 Congo; 

7 (B) to resolve the problems described pursu8 ant to paragraph (2), if any; and 

9 (C) to mitigate the adverse impacts de10 scribed pursuant paragraph (3), if any. 

Amend the title so as to read: ‘‘An Act to promote 

the financial stability of the United States by improving 

accountability and transparency in the financial system, 

to end ‘too big to fail’, to protect the American taxpayer 

by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.’’. 

Attest: 

Secretary. 
111TH CONGRESS 

2D SESSION H.R. 4173 

AMENDMENTS