H. R. 4173 

One Hundred Eleventh Congress 

of the 

United States of America 

AT THE SECOND SESSION 

Begun and held at the City of Washington on Tuesday, 

the fifth day of January, two thousand and ten 

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. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Dodd-Frank 

Wall Street Reform and Consumer Protection Act’’. 

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

is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Severability. 

Sec. 4. Effective date. 

Sec. 5. Budgetary effects. 

Sec. 6. Antitrust savings clause. 

TITLE I—FINANCIAL STABILITY 

Sec. 101. Short title. 

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. 

Sec. 122. GAO Audit of Council. 

Sec. 123. Study of the effects of size and complexity of financial institutions on capital market efficiency and economic growth. 

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. 
H. R. 4173—2 

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 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. 

Sec. 172. Examination and enforcement actions for insurance and orderly liquidation purposes. 

Sec. 173. Access to United States financial market by foreign institutions. 

Sec. 174. Studies and reports on holding company capital requirements. 

Sec. 175. International policy coordination. 

Sec. 176. Rule of construction. 

TITLE II—ORDERLY LIQUIDATION AUTHORITY 

Sec. 201. Definitions. 

Sec. 202. Judicial review. 

Sec. 203. Systemic risk determination. 

Sec. 204. Orderly liquidation of covered financial companies. 

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 certain activities by senior executives and directors. 

Sec. 214. Prohibition on taxpayer funding. 

Sec. 215. Study on secured creditor haircuts. 

Sec. 216. Study on bankruptcy process for financial and nonbank financial institutions 

Sec. 217. Study on international coordination relating to bankruptcy process for 

nonbank financial institutions 

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. 
H. R. 4173—3 

Sec. 327. Implementation plan and reports. 

Subtitle C—Federal Deposit Insurance Corporation 

Sec. 331. Deposit insurance reforms. 

Sec. 332. Elimination of procyclical assessments. 

Sec. 333. Enhanced access to information for deposit insurance purposes. 

Sec. 334. Transition reserve ratio requirements to reflect new assessment base. 

Sec. 335. Permanent increase in deposit and share insurance. 

Sec. 336. Management of the Federal Deposit Insurance Corporation. 

Subtitle D—Other Matters 

Sec. 341. Branching. 

Sec. 342. Office of Minority and Women Inclusion. 

Sec. 343. Insurance of transaction accounts. 

Subtitle E—Technical and Conforming Amendments 

Sec. 351. Effective date. 

Sec. 352. Balanced Budget and Emergency Deficit Control Act of 1985. 

Sec. 353. Bank Enterprise Act of 1991. 

Sec. 354. Bank Holding Company Act of 1956. 

Sec. 355. Bank Holding Company Act Amendments of 1970. 

Sec. 356. Bank Protection Act of 1968. 

Sec. 357. Bank Service Company Act. 

Sec. 358. Community Reinvestment Act of 1977. 

Sec. 359. Crime Control Act of 1990. 

Sec. 360. Depository Institution Management Interlocks Act. 

Sec. 361. Emergency Homeowners’ Relief Act. 

Sec. 362. Federal Credit Union Act. 

Sec. 363. Federal Deposit Insurance Act. 

Sec. 364. Federal Home Loan Bank Act. 

Sec. 365. Federal Housing Enterprises Financial Safety and Soundness Act of 1992. 

Sec. 366. Federal Reserve Act. 

Sec. 367. Financial Institutions Reform, Recovery, and Enforcement Act of 1989. 

Sec. 368. Flood Disaster Protection Act of 1973. 

Sec. 369. Home Owners’ Loan Act. 

Sec. 370. Housing Act of 1948. 

Sec. 371. Housing and Community Development Act of 1992. 

Sec. 372. Housing and Urban-Rural Recovery Act of 1983. 

Sec. 373. National Housing Act. 

Sec. 374. Neighborhood Reinvestment Corporation Act. 

Sec. 375. Public Law 93–100. 

Sec. 376. Securities Exchange Act of 1934. 

Sec. 377. Title 18, United States Code. 

Sec. 378. Title 31, United States Code. 

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. 

Sec. 404. Collection of systemic risk data; reports; examinations; disclosures. 

Sec. 405. Disclosure provision amendment. 

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. Federal Insurance Office. 

Subtitle B—State-Based Insurance Reform 

Sec. 511. Short title. 
H. R. 4173—4 

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. 

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. Consistent treatment of derivative transactions in lending limits. 

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. 

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

Sec. 618. Securities holding companies. 

Sec. 619. Prohibitions on proprietary trading and certain relationships with hedge 

funds and private equity funds. 

Sec. 620. Study of bank investment activities. 

Sec. 621. Conflicts of interest. 

Sec. 622. Concentration limits on large financial firms. 

Sec. 623. Interstate merger transactions. 

Sec. 624. Qualified thrift lenders. 

Sec. 625. Treatment of dividends by certain mutual holding companies. 

Sec. 626. Intermediate holding companies. 

Sec. 627. Interest-bearing transaction accounts authorized. 

Sec. 628. Credit card bank small business lending. 

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. Portfolio margining conforming changes. 

Sec. 714. Abusive swaps. 

Sec. 715. Authority to prohibit participation in swap activities. 
H. R. 4173—5 

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. 

Sec. 719. Studies. 

Sec. 720. Memorandum. 

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. 

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. Anti-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 Advisers Act of 1940. 

Sec. 771. Other authority. 

Sec. 772. Jurisdiction. 

Sec. 773. Civil penalties. 

Sec. 774. 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. 
H. R. 4173—6 

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

Sec. 810. Rulemaking. 

Sec. 811. Other authority. 

Sec. 812. Consultation. 

Sec. 813. Common framework for designated clearing entity risk management. 

Sec. 814. Effective date. 

TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE 

REGULATION OF SECURITIES 

Sec. 901. Short title. 

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. Study on enhancing investment adviser examinations. 

Sec. 915. Office of the Investor Advocate. 

Sec. 916. Streamlining of filing procedures for self-regulatory organizations. 

Sec. 917. Study regarding financial literacy among investors. 

Sec. 918. Study regarding mutual fund advertising. 

Sec. 919. Clarification of Commission authority to require investor disclosures before purchase of investment products and services. 

Sec. 919A. Study on conflicts of interest. 

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

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

Sec. 919D. Ombudsman. 

Subtitle B—Increasing Regulatory Enforcement and Remedies 

Sec. 921. Authority to restrict mandatory pre-dispute 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. 

Sec. 929D. Lost and stolen securities. 

Sec. 929E. Nationwide service of subpoenas. 

Sec. 929F. Formerly associated persons. 

Sec. 929G. Streamlined hiring authority for market specialists. 

Sec. 929H. SIPC Reforms. 

Sec. 929I. Protecting confidentiality of materials submitted to the Commission. 

Sec. 929J. Expansion of audit information to be produced and exchanged. 

Sec. 929K. Sharing privileged information with other authorities. 

Sec. 929L. Enhanced application of antifraud provisions. 

Sec. 929M. Aiding and abetting authority under the Securities Act and the Investment Company Act. 

Sec. 929N. Authority to impose penalties for aiding and abetting violations of the 

Investment Advisers Act. 

Sec. 929O. Aiding and abetting standard of knowledge satisfied by recklessness. 

Sec. 929P. Strengthening enforcement by the Commission. 

Sec. 929Q. Revision to recordkeeping rule. 

Sec. 929R. Beneficial ownership and short-swing profit reporting. 

Sec. 929S. Fingerprinting. 

Sec. 929T. Equal treatment of self-regulatory organization rules. 

Sec. 929U. Deadline for completing examinations, inspections and enforcement actions. 

Sec. 929V. Security Investor Protection Act amendments. 

Sec. 929W. Notice to missing security holders. 

Sec. 929X. Short sale reforms. 

Sec. 929Y. Study on extraterritorial private rights of action. 

Sec. 929Z. GAO study on securities litigation. 

Subtitle C—Improvements to the Regulation of Credit Rating Agencies 

Sec. 931. Findings. 
H. R. 4173—7 

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. Review of reliance on ratings. 

Sec. 939B. Elimination of exemption from fair disclosure rule. 

Sec. 939C. Securities and Exchange Commission study on strengthening credit rating agency independence. 

Sec. 939D. Government Accountability Office study on alternative business models. 

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

Sec. 939F. Study and rulemaking on assigned credit ratings. 

Sec. 939G. Effect of Rule 436(g). 

Sec. 939H. Sense of Congress. 

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. 

Sec. 946. Study on the macroeconomic effects of risk retention requirements. 

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. Enhanced compensation structure reporting. 

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. 

Sec. 967. Commission organizational study and reform. 

Sec. 968. Study on SEC revolving door. 

Subtitle G—Strengthening Corporate Governance 

Sec. 971. Proxy access. 

Sec. 972. 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. Funding for Governmental 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. 

Sec. 985. Technical corrections to Federal securities laws. 

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

Company Act of 1935. 
H. R. 4173—8 

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. 

Sec. 989F. GAO study of person to person lending. 

Sec. 989G. Exemption for nonaccelerated filers. 

Sec. 989H. Corrective responses by heads of certain establishments to deficiencies 

identified by Inspectors General. 

Sec. 989I. GAO study regarding exemption for smaller issuers. 

Sec. 989J. Further promoting the adoption of the NAIC Model Regulations that enhance protection of seniors and other consumers. 

Subtitle J—Securities and Exchange Commission Match Funding 

Sec. 991. Securities and Exchange Commission match 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 of Consumer Financial Protection. 

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. Exclusion for auto dealers. 

Sec. 1029A. 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. 

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. 
H. R. 4173—9 

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. Assistance for economically vulnerable individuals and families. 

Sec. 1073. Remittance transfers. 

Sec. 1074. Department of the Treasury study on ending the conservatorship of 

Fannie Mae, Freddie Mac, and reforming the housing finance system. 

Sec. 1075. Reasonable fees and rules for payment card transactions. 

Sec. 1076. Reverse mortgage study and regulations. 

Sec. 1077. Report on private education loans and private educational lenders. 

Sec. 1078. Study and report on credit scores. 

Sec. 1079. Review, report, and program with respect to exchange facilitators. 

Sec. 1079A. Financial fraud provisions. 

Subtitle H—Conforming Amendments 

Sec. 1081. Amendments to the Inspector General Act. 

Sec. 1082. Amendments to the Privacy Act of 1974. 

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 of 2003. 

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

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

Sec. 1091. Amendment to Federal Financial Institutions Examination Council Act 

of 1978. 

Sec. 1092. Amendments to the Federal Trade Commission Act. 

Sec. 1093. Amendments to the Gramm-Leach-Bliley Act. 

Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975. 

Sec. 1095. Amendments to the Homeowners Protection Act of 1998. 

Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of 1994. 

Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009. 

Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of 1974. 

Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act. 

Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978. 

Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. 

Sec. 1100A. Amendments to the Truth in Lending Act. 

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

Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and Abuse 

Prevention Act. 

Sec. 1100D. Amendments to the Paperwork Reduction Act. 

Sec. 1100E. Adjustments for inflation in the Truth in Lending Act. 

Sec. 1100F. Use of consumer reports. 

Sec. 1100G. Small business fairness and regulatory transparency. 

Sec. 1100H. Effective date. 

TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS 

Sec. 1101. Federal Reserve Act amendments on emergency lending authority. 

Sec. 1102. Reviews of special Federal reserve credit facilities. 

Sec. 1103. Public access to information. 

Sec. 1104. Liquidity event determination. 
H. R. 4173—10 

Sec. 1105. Emergency financial stabilization. 

Sec. 1106. Additional related amendments. 

Sec. 1107. Federal Reserve Act amendments on Federal reserve bank governance. 

Sec. 1108. Federal Reserve Act amendments on supervision and regulation policy. 

Sec. 1109. 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. 

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—MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT 

Sec. 1400. Short title; designation as enumerated consumer law. 

Subtitle A—Residential Mortgage Loan Origination Standards 

Sec. 1401. Definitions. 

Sec. 1402. Residential mortgage loan origination. 

Sec. 1403. Prohibition on steering incentives. 

Sec. 1404. Liability. 

Sec. 1405. Regulations. 

Sec. 1406. Study of shared appreciation mortgages. 

Subtitle B—Minimum Standards For Mortgages 

Sec. 1411. Ability to repay. 

Sec. 1412. Safe harbor and rebuttable presumption. 

Sec. 1413. Defense to foreclosure. 

Sec. 1414. Additional standards and requirements. 

Sec. 1415. Rule of construction. 

Sec. 1416. Amendments to civil liability provisions. 

Sec. 1417. Lender rights in the context of borrower deception. 

Sec. 1418. Six-month notice required before reset of hybrid adjustable rate mortgages. 

Sec. 1419. Required disclosures. 

Sec. 1420. Disclosures required in monthly statements for residential mortgage 

loans. 

Sec. 1421. Report by the GAO. 

Sec. 1422. State attorney general enforcement authority. 

Subtitle C—High-Cost Mortgages 

Sec. 1431. Definitions relating to high-cost mortgages. 

Sec. 1432. Amendments to existing requirements for certain mortgages. 

Sec. 1433. Additional requirements for certain mortgages. 

Subtitle D—Office of Housing Counseling 

Sec. 1441. Short title. 

Sec. 1442. Establishment of Office of Housing Counseling. 

Sec. 1443. Counseling procedures. 

Sec. 1444. Grants for housing counseling assistance. 

Sec. 1445. Requirements to use HUD-certified counselors under HUD programs. 

Sec. 1446. Study of defaults and foreclosures. 

Sec. 1447. Default and foreclosure database. 

Sec. 1448. Definitions for counseling-related programs. 

Sec. 1449. Accountability and transparency for grant recipients. 

Sec. 1450. Updating and simplification of mortgage information booklet. 
H. R. 4173—11 

Sec. 1451. Home inspection counseling. 

Sec. 1452. Warnings to homeowners of foreclosure rescue scams. 

Subtitle E—Mortgage Servicing 

Sec. 1461. Escrow and impound accounts relating to certain consumer credit transactions. 

Sec. 1462. Disclosure notice required for consumers who waive escrow services. 

Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments. 

Sec. 1464. Truth in Lending Act amendments. 

Sec. 1465. Escrows included in repayment analysis. 

Subtitle F—Appraisal Activities 

Sec. 1471. Property appraisal requirements. 

Sec. 1472. Appraisal independence requirements. 

Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC, Appraiser 

Independence Monitoring, Approved Appraiser Education, Appraisal 

Management Companies, Appraiser Complaint Hotline, Automated 

Valuation Models, and Broker Price Opinions. 

Sec. 1474. Equal Credit Opportunity Act amendment. 

Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment relating to 

certain appraisal fees. 

Sec. 1476. GAO study on the effectiveness and impact of various appraisal methods, valuation models and distributions channels, and on the Home 

Valuation Code of conduct and the Appraisal Subcommittee. 

Subtitle G—Mortgage Resolution and Modification 

Sec. 1481. Multifamily mortgage resolution program. 

Sec. 1482. Home Affordable Modification Program guidelines. 

Sec. 1483. Public availability of information of Making Home Affordable Program. 

Sec. 1484. Protecting tenants at foreclosure extension and clarification. 

Subtitle H—Miscellaneous Provisions 

Sec. 1491. Sense of Congress regarding the importance of government-sponsored 

enterprises reform to enhance the protection, limitation, and regulation 

of the terms of residential mortgage credit. 

Sec. 1492. GAO study report on government efforts to combat mortgage foreclosure 

rescue scams and loan modification fraud. 

Sec. 1493. Reporting of mortgage data by State. 

Sec. 1494. Study of effect of drywall presence on foreclosures. 

Sec. 1495. Definition. 

Sec. 1496. Emergency mortgage relief. 

Sec. 1497. Additional assistance for Neighborhood Stabilization Program. 

Sec. 1498. Legal assistance for foreclosure-related issues. 

TITLE XV—MISCELLANEOUS PROVISIONS 

Sec. 1501. Restrictions on use of United States funds for foreign governments; protection of American taxpayers. 

Sec. 1502. Conflict minerals. 

Sec. 1503. Reporting requirements regarding coal or other mine safety. 

Sec. 1504. Disclosure of payments by resource extraction issuers. 

Sec. 1505. Study by the Comptroller General. 

Sec. 1506. Study on core deposits and brokered deposits. 

TITLE XVI—SECTION 1256 CONTRACTS 

Sec. 1601. Certain swaps, etc., not treated as section 1256 contracts. 

SEC. 2. DEFINITIONS. 

As used in this Act, the following definitions shall apply, except 

as the context otherwise requires or as otherwise specifically provided in this Act: 

(1) AFFILIATE.—The term ‘‘affiliate’’ has the same meaning 

as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 

1813). 

(2) APPROPRIATE FEDERAL BANKING AGENCY.—On and after 

the transfer date, the term ‘‘appropriate Federal banking 

agency’’ has the same meaning as in section 3(q) of the Federal 

Deposit Insurance Act (12 U.S.C. 1813(q)), as amended by 

title III. 
H. R. 4173—12 

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

means the Board of Governors of the Federal Reserve System. 

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

Consumer Financial Protection established under title X. 

(5) COMMISSION.—The term ‘‘Commission’’ means the Securities and Exchange Commission, except in the context of the 

Commodity Futures Trading Commission. 

(6) COMMODITY FUTURES TERMS.—The terms ‘‘futures 

commission merchant’’, ‘‘swap’’, ‘‘swap dealer’’, ‘‘swap execution 

facility’’, ‘‘derivatives clearing organization’’, ‘‘board of trade’’, 

‘‘commodity trading advisor’’, ‘‘commodity pool’’, and ‘‘commodity 

pool operator’’ have the same meanings as given the terms 

in section 1a of the Commodity Exchange Act (7 U.S.C. 1 

et seq.). 

(7) CORPORATION.—The term ‘‘Corporation’’ means the Federal Deposit Insurance Corporation. 

(8) COUNCIL.—The term ‘‘Council’’ means the Financial Stability Oversight Council established under title I. 

(9) CREDIT UNION.—The term ‘‘credit union’’ means a Federal credit union, State credit union, or State-chartered credit 

union, as those terms are defined in section 101 of the Federal 

Credit Union Act (12 U.S.C. 1752). 

(10) FEDERAL BANKING AGENCY.—The term— 

(A) ‘‘Federal banking agency’’ means, individually, the 

Board of Governors, the Office of the Comptroller of the 

Currency, and the Corporation; and 

(B) ‘‘Federal banking agencies’’ means all of the agencies referred to in subparagraph (A), collectively. 

(11) FUNCTIONALLY REGULATED SUBSIDIARY.—The term 

‘‘functionally regulated subsidiary’’ has the same meaning as 

in section 5(c)(5) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1844(c)(5)). 

(12) PRIMARY FINANCIAL REGULATORY AGENCY.—The term 

‘‘primary financial regulatory agency’’ means— 

(A) the appropriate Federal banking agency, with 

respect to institutions described in section 3(q) of the Federal Deposit Insurance Act, except to the extent that an 

institution is or the activities of an institution are otherwise 

described in subparagraph (B), (C), (D), or (E); 

(B) the Securities and Exchange Commission, with 

respect to— 

(i) any broker or dealer that is registered with 

the Commission under the Securities Exchange Act 

of 1934, with respect to the activities of the broker 

or dealer that require the broker or dealer to be registered under that Act; 

(ii) any investment company that is registered with 

the Commission under the Investment Company Act 

of 1940, with respect to the activities of the investment 

company that require the investment company to be 

registered under that Act; 

(iii) any investment adviser that is registered with 

the Commission under the Investment Advisers Act 

of 1940, with respect to the investment advisory activities of such company and activities that are incidental 

to such advisory activities; 
H. R. 4173—13 

(iv) any clearing agency registered with the 

Commission under the Securities Exchange Act of 

1934, with respect to the activities of the clearing 

agency that require the agency to be registered under 

such Act; 

(v) any nationally recognized statistical rating 

organization registered with the Commission under the 

Securities Exchange Act of 1934; 

(vi) any transfer agent registered with the 

Commission under the Securities Exchange Act of 

1934; 

(vii) any exchange registered as a national securities exchange with the Commission under the Securities Exchange Act of 1934; 

(viii) any national securities association registered 

with the Commission under the Securities Exchange 

Act of 1934; 

(ix) any securities information processor registered 

with the Commission under the Securities Exchange 

Act of 1934; 

(x) the Municipal Securities Rulemaking Board 

established under the Securities Exchange Act of 1934; 

(xi) the Public Company Accounting Oversight 

Board established under the Sarbanes-Oxley Act of 

2002 (15 U.S.C. 7211 et seq.); 

(xii) the Securities Investor Protection Corporation 

established under the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.); and 

(xiii) any security-based swap execution facility, 

security-based swap data repository, security-based 

swap dealer or major security-based swap participant 

registered with the Commission under the Securities 

Exchange Act of 1934, with respect to the securitybased swap activities of the person that require such 

person to be registered under such Act; 

(C) the Commodity Futures Trading Commission, with 

respect to— 

(i) any futures commission merchant registered 

with the Commodity Futures Trading Commission 

under the Commodity Exchange Act (7 U.S.C. 1 et 

seq.), with respect to the activities of the futures 

commission merchant that require the futures commission merchant to be registered under that Act; 

(ii) any commodity pool operator registered with 

the Commodity Futures Trading Commission under 

the Commodity Exchange Act (7 U.S.C. 1 et seq.), 

with respect to the activities of the commodity pool 

operator that require the commodity pool operator to 

be registered under that Act, or a commodity pool, 

as defined in that Act; 

(iii) any commodity trading advisor or introducing 

broker registered with the Commodity Futures Trading 

Commission under the Commodity Exchange Act (7 

U.S.C. 1 et seq.), with respect to the activities of the 

commodity trading advisor or introducing broker that 

require the commodity trading adviser or introducing 

broker to be registered under that Act; 
H. R. 4173—14 

(iv) any derivatives clearing organization registered with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 

1 et seq.), with respect to the activities of the derivatives clearing organization that require the derivatives 

clearing organization to be registered under that Act; 

(v) any board of trade designated as a contract 

market by the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 

1 et seq.); 

(vi) any futures association registered with the 

Commodity Futures Trading Commission under the 

Commodity Exchange Act (7 U.S.C. 1 et seq.); 

(vii) any retail foreign exchange dealer registered 

with the Commodity Futures Trading Commission 

under the Commodity Exchange Act (7 U.S.C. 1 et 

seq.), with respect to the activities of the retail foreign 

exchange dealer that require the retail foreign 

exchange dealer to be registered under that Act; 

(viii) any swap execution facility, swap data repository, swap dealer, or major swap participant registered 

with the Commodity Futures Trading Commission 

under the Commodity Exchange Act (7 U.S.C. 1 et 

seq.) with respect to the swap activities of the person 

that require such person to be registered under that 

Act; and 

(ix) any registered entity under the Commodity 

Exchange Act (7 U.S.C. 1 et seq.), with respect to 

the activities of the registered entity that require the 

registered entity to be registered under that Act; 

(D) the State insurance authority of the State in which 

an insurance company is domiciled, with respect to the 

insurance activities and activities that are incidental to 

such insurance activities of an insurance company that 

is subject to supervision by the State insurance authority 

under State insurance law; and 

(E) the Federal Housing Finance Agency, with respect 

to Federal Home Loan Banks or the Federal Home Loan 

Bank System, and with respect to the Federal National 

Mortgage Association or the Federal Home Loan Mortgage 

Corporation. 

(13) PRUDENTIAL STANDARDS.—The term ‘‘prudential standards’’ means enhanced supervision and regulatory standards 

developed by the Board of Governors under section 165. 

(14) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury. 

(15) SECURITIES TERMS.—The— 

(A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’, ‘‘nationally recognized statistical rating organization’’, ‘‘security’’, and ‘‘securities laws’’ have the same meanings as in section 3 of 

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

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

as in section 202 of the Investment Advisers Act of 1940 

(15 U.S.C. 80b–2); and 

(C) term ‘‘investment company’’ has the same meaning 

as in section 3 of the Investment Company Act of 1940 

(15 U.S.C. 80a–3). 
H. R. 4173—15 

(16) STATE.—The term ‘‘State’’ means any State, commonwealth, territory, or possession of the United States, the District 

of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, 

Guam, or the United States Virgin Islands. 

(17) TRANSFER DATE.—The term ‘‘transfer date’’ means the 

date established under section 311. 

(18) OTHER INCORPORATED DEFINITIONS.— 

(A) FEDERAL DEPOSIT INSURANCE ACT.—The terms 

‘‘bank’’, ‘‘bank holding company’’, ‘‘control’’, ‘‘deposit’’, 

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

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

‘‘insured branch’’, ‘‘insured depository institution’’, ‘‘national 

member bank’’, ‘‘national nonmember bank’’, ‘‘savings 

association’’, ‘‘State bank’’, ‘‘State depository institution’’, 

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

savings association’’, and ‘‘subsidiary’’ have the same 

meanings as in section 3 of the Federal Deposit Insurance 

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

(B) HOLDING COMPANIES.—The term— 

(i) ‘‘bank holding company’’ has the same meaning 

as in section 2 of the Bank Holding Company Act 

of 1956 (12 U.S.C. 1841); 

(ii) ‘‘financial holding company’’ has the same 

meaning as in section 2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)); and 

(iii) ‘‘savings and loan holding company’’ has the 

same meaning as in section 10 of the Home Owners’ 

Loan Act (12 U.S.C. 1467a(a)). 

SEC. 3. SEVERABILITY. 

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

Act, or the application of such provision or amendment to any 

person or circumstance is held to be unconstitutional, the remainder 

of this Act, the amendments made by this Act, and the application 

of the provisions of such to any person or circumstance shall not 

be affected thereby. 

SEC. 4. EFFECTIVE DATE. 

Except as otherwise specifically provided in this Act or the 

amendments made by this Act, this Act and such amendments 

shall take effect 1 day after the date of enactment of this Act. 

SEC. 5. BUDGETARY EFFECTS. 

The budgetary effects of this Act, for the purpose of complying 

with the Statutory Pay-As-You-Go-Act of 2010, shall be determined 

by reference to the latest statement titled ‘‘Budgetary Effects of 

PAYGO Legislation’’ for this Act, jointly submitted for printing 

in the Congressional Record by the Chairmen of the House and 

Senate Budget Committees, provided that such statement has been 

submitted prior to the vote on passage in the House acting first 

on this conference report or amendment between the Houses. 

SEC. 6. ANTITRUST SAVINGS CLAUSE. 

Nothing in this Act, or any amendment made by this Act, 

shall be construed to modify, impair, or supersede the operation 

of any of the antitrust laws, unless otherwise specified. For purposes 

of this section, the term ‘‘antitrust laws’’ has the same meaning 
H. R. 4173—16 

as in subsection (a) of the first section of the Clayton Act, except 

that such term includes section 5 of the Federal Trade Commission 

Act, to the extent that such section 5 applies to unfair methods 

of competition. 

TITLE I—FINANCIAL STABILITY 

SEC. 101. SHORT TITLE. 

This title may be cited as the ‘‘Financial Stability Act of 2010’’. 

SEC. 102. DEFINITIONS. 

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

otherwise requires, the following definitions shall apply: 

(1) BANK HOLDING COMPANY.—The term ‘‘bank holding company’’ has the same meaning as in section 2 of the Bank 

Holding Company Act of 1956 (12 U.S.C. 1841). A foreign 

bank or company that is treated as a bank holding company 

for purposes of the Bank Holding Company Act of 1956, pursuant to section 8(a) of the International Banking Act of 1978 

(12 U.S.C. 3106(a)), shall be treated as a bank holding company 

for purposes of this title. 

(2) CHAIRPERSON.—The term ‘‘Chairperson’’ means the 

Chairperson of the Council. 

(3) MEMBER AGENCY.—The term ‘‘member agency’’ means 

an agency represented by a voting member of the Council. 

(4) NONBANK FINANCIAL COMPANY DEFINITIONS.— 

(A) FOREIGN NONBANK FINANCIAL COMPANY.—The term 

‘‘foreign nonbank financial company’’ means a company 

(other than a company that is, or is treated in the United 

States as, a bank holding company) that is— 

(i) incorporated or organized in a country other 

than the United States; and 

(ii) predominantly engaged in, including through 

a branch in the United States, financial activities, as 

defined in paragraph (6). 

(B) U.S. NONBANK FINANCIAL COMPANY.—The term 

‘‘U.S. nonbank financial company’’ means a company (other 

than a bank holding company, a Farm Credit System 

institution chartered and subject to the provisions of the 

Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), or a 

national securities exchange (or parent thereof), clearing 

agency (or parent thereof, unless the parent is a bank 

holding company), security-based swap execution facility, 

or security-based swap data repository registered with the 

Commission, or a board of trade designated as a contract 

market (or parent thereof), or a derivatives clearing 

organization (or parent thereof, unless the parent is a 

bank holding company), swap execution facility or a swap 

data repository registered with the Commodity Futures 

Trading Commission), that is— 

(i) incorporated or organized under the laws of 

the United States or any State; and 

(ii) predominantly engaged in financial activities, 

as defined in paragraph (6). 
H. R. 4173—17 

(C) NONBANK FINANCIAL COMPANY.—The term 

‘‘nonbank financial company’’ means a U.S. nonbank financial company and a foreign nonbank financial company. 

(D) NONBANK FINANCIAL COMPANY SUPERVISED BY THE

BOARD OF GOVERNORS.—The term ‘‘nonbank financial company supervised by the Board of Governors’’ means a 

nonbank financial company that the Council has determined under section 113 shall be supervised by the Board 

of Governors. 

(5) OFFICE OF FINANCIAL RESEARCH.—The term ‘‘Office of 

Financial Research’’ means the office established under section 

152. 

(6) PREDOMINANTLY ENGAGED.—A company is ‘‘predominantly engaged in financial activities’’ if— 

(A) the annual gross revenues derived by the company 

and all of its subsidiaries from activities that are financial 

in nature (as defined in section 4(k) of the Bank Holding 

Company Act of 1956) and, if applicable, from the ownership or control of one or more insured depository institutions, represents 85 percent or more of the consolidated 

annual gross revenues of the company; or 

(B) the consolidated assets of the company and all 

of its subsidiaries related to activities that are financial 

in nature (as defined in section 4(k) of the Bank Holding 

Company Act of 1956) and, if applicable, related to the 

ownership or control of one or more insured depository 

institutions, represents 85 percent or more of the consolidated assets of the company. 

(7) SIGNIFICANT INSTITUTIONS.—The terms ‘‘significant 

nonbank financial company’’ and ‘‘significant bank holding company’’ have the meanings given those terms by rule of the 

Board of Governors, but in no instance shall the term ‘‘significant nonbank financial company’’ include those entities that 

are excluded under paragraph (4)(B). 

(b) DEFINITIONAL CRITERIA.—The Board of Governors shall 

establish, by regulation, the requirements for determining if a company is predominantly engaged in financial activities, as defined 

in subsection (a)(6). 

(c) FOREIGN NONBANK FINANCIAL COMPANIES.—For purposes 

of the application of subtitles A and C (other than section 113(b)) 

with respect to a foreign nonbank financial company, references 

in this title to ‘‘company’’ or ‘‘subsidiary’’ include only the United 

States activities and subsidiaries of such foreign company, except 

as otherwise provided. 

Subtitle A—Financial Stability Oversight 

Council 

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ESTABLISHED. 

(a) ESTABLISHMENT.—Effective on the date of enactment of 

this Act, there is established the Financial Stability Oversight 

Council. 

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

members: 

(1) VOTING MEMBERS.—The voting members, who shall each 

have 1 vote on the Council shall be— 
H. R. 4173—18 

(A) the Secretary of the Treasury, who shall serve 

as Chairperson of the Council; 

(B) the Chairman of the Board of Governors; 

(C) the Comptroller of the Currency; 

(D) the Director of the Bureau; 

(E) the Chairman of the Commission; 

(F) the Chairperson of the Corporation; 

(G) the Chairperson of the Commodity Futures Trading 

Commission; 

(H) the Director of the Federal Housing Finance 

Agency; 

(I) the Chairman of the National Credit Union 

Administration Board; and 

(J) an independent member appointed by the President, 

by and with the advice and consent of the Senate, having 

insurance expertise. 

(2) NONVOTING MEMBERS.—The nonvoting members, who 

shall serve in an advisory capacity as a nonvoting member 

of the Council, shall be— 

(A) the Director of the Office of Financial Research; 

(B) the Director of the Federal Insurance Office; 

(C) a State insurance commissioner, to be designated 

by a selection process determined by the State insurance 

commissioners; 

(D) a State banking supervisor, to be designated by 

a selection process determined by the State banking supervisors; and 

(E) a State securities commissioner (or an officer performing like functions), to be designated by a selection 

process determined by such State securities commissioners. 

(3) NONVOTING MEMBER PARTICIPATION.—The nonvoting 

members of the Council shall not be excluded from any of 

the proceedings, meetings, discussions, or deliberations of the 

Council, except that the Chairperson may, upon an affirmative 

vote of the member agencies, exclude the nonvoting members 

from any of the proceedings, meetings, discussions, or deliberations of the Council when necessary to safeguard and promote 

the free exchange of confidential supervisory information. 

(c) TERMS; VACANCY.— 

(1) TERMS.—The independent member of the Council shall 

serve for a term of 6 years, and each nonvoting member 

described in subparagraphs (C), (D), and (E) of subsection (b)(2) 

shall serve for a term of 2 years. 

(2) VACANCY.—Any vacancy on the Council shall be filled 

in the manner in which the original appointment was made. 

(3) ACTING OFFICIALS MAY SERVE.—In the event of a vacancy 

in the office of the head of a member agency or department, 

and pending the appointment of a successor, or during the 

absence or disability of the head of a member agency or department, the acting head of the member agency or department 

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

agency or department head. 

(d) TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.— 

The Council may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions 

of the Council, including an advisory committee consisting of State 
H. R. 4173—19 

regulators, and the members of such committees may be members 

of the Council, or other persons, or both. 

(e) MEETINGS.— 

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

Chairperson or a majority of the members then serving, but 

not less frequently than quarterly. 

(2) RULES FOR CONDUCTING BUSINESS.—The Council shall 

adopt such rules as may be necessary for the conduct of the 

business of the Council. Such rules shall be rules of agency 

organization, procedure, or practice for purposes of section 553 

of title 5, United States Code. 

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

all decisions that it is authorized or required to make by a majority 

vote of the voting members then serving. 

(g) NONAPPLICABILITY OF FACA.—The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Council, or to 

any special advisory, technical, or professional committee appointed 

by the Council, except that, if an advisory, technical, or professional 

committee has one or more members who are not employees of 

or affiliated with the United States Government, the Council shall 

publish a list of the names of the members of such committee. 

(h) ASSISTANCE FROM FEDERAL AGENCIES.—Any department 

or agency of the United States may provide to the Council and 

any special advisory, technical, or professional committee appointed 

by the Council, such services, funds, facilities, staff, and other 

support services as the Council may determine advisable. 

(i) COMPENSATION OF MEMBERS.— 

(1) FEDERAL EMPLOYEE MEMBERS.—All members of the 

Council who are officers or employees of the United States 

shall serve without compensation in addition to that received 

for their services as officers or employees of the United States. 

(2) COMPENSATION FOR NON-FEDERAL MEMBER.—Section 

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

at the end the following: 

‘‘Independent Member of the Financial Stability Oversight 

Council (1).’’. 

(j) DETAIL OF GOVERNMENT EMPLOYEES.—Any employee of the 

Federal Government may be detailed to the Council without 

reimbursement, and such detail shall be without interruption or 

loss of civil service status or privilege. An employee of the Federal 

Government detailed to the Council shall report to and be subject 

to oversight by the Council during the assignment to the Council, 

and shall be compensated by the department or agency from which 

the employee was detailed. 

SEC. 112. COUNCIL AUTHORITY. 

(a) PURPOSES AND DUTIES OF THE COUNCIL.— 

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

(A) to identify risks to the financial stability of the 

United States that could arise from the material financial 

distress or failure, or ongoing activities, of large, interconnected bank holding companies or nonbank financial 

companies, or that could arise outside the financial services 

marketplace; 

(B) to promote market discipline, by eliminating 

expectations on the part of shareholders, creditors, and 
H. R. 4173—20 

counterparties of such companies that the Government will 

shield them from losses in the event of failure; and 

(C) to respond to emerging threats to the stability 

of the United States financial system. 

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

title— 

(A) collect information from member agencies, other 

Federal and State financial regulatory agencies, the Federal Insurance Office and, if necessary to assess risks to 

the United States financial system, direct the Office of 

Financial Research to collect information from bank holding 

companies and nonbank financial companies; 

(B) provide direction to, and request data and analyses 

from, the Office of Financial Research to support the work 

of the Council; 

(C) monitor the financial services marketplace in order 

to identify potential threats to the financial stability of 

the United States; 

(D) to monitor domestic and international financial 

regulatory proposals and developments, including insurance and accounting issues, and to advise Congress and 

make recommendations in such areas that will enhance 

the integrity, efficiency, competitiveness, and stability of 

the U.S. financial markets; 

(E) facilitate information sharing and coordination 

among the member agencies and other Federal and State 

agencies regarding domestic financial services policy 

development, rulemaking, examinations, reporting requirements, and enforcement actions; 

(F) recommend to the member agencies general supervisory priorities and principles reflecting the outcome of 

discussions among the member agencies; 

(G) identify gaps in regulation that could pose risks 

to the financial stability of the United States; 

(H) require supervision by the Board of Governors 

for nonbank financial companies that may pose risks to 

the financial stability of the United States in the event 

of their material financial distress or failure, or because 

of their activities pursuant to section 113; 

(I) make recommendations to the Board of Governors 

concerning the establishment of heightened prudential 

standards for risk-based capital, leverage, liquidity, contingent capital, resolution plans and credit exposure reports, 

concentration limits, enhanced public disclosures, and 

overall risk management for nonbank financial companies 

and large, interconnected bank holding companies supervised by the Board of Governors; 

(J) identify systemically important financial market 

utilities and payment, clearing, and settlement activities 

(as that term is defined in title VIII); 

(K) make recommendations to primary financial regulatory agencies to apply new or heightened standards and 

safeguards for financial activities or practices that could 

create or increase risks of significant liquidity, credit, or 

other problems spreading among bank holding companies, 

nonbank financial companies, and United States financial 

markets; 
H. R. 4173—21 

(L) review and, as appropriate, may submit comments 

to the Commission and any standard-setting body with 

respect to an existing or proposed accounting principle, 

standard, or procedure; 

(M) provide a forum for— 

(i) discussion and analysis of emerging market 

developments and financial regulatory issues; and 

(ii) resolution of jurisdictional disputes among the 

members of the Council; and 

(N) annually report to and testify before Congress on— 

(i) the activities of the Council; 

(ii) significant financial market and regulatory 

developments, including insurance and accounting 

regulations and standards, along with an assessment 

of those developments on the stability of the financial 

system; 

(iii) potential emerging threats to the financial 

stability of the United States; 

(iv) all determinations made under section 113 

or title VIII, and the basis for such determinations; 

(v) all recommendations made under section 119 

and the result of such recommendations; and 

(vi) recommendations— 

(I) to enhance the integrity, efficiency, 

competitiveness, and stability of United States 

financial markets; 

(II) to promote market discipline; and 

(III) to maintain investor confidence. 

(b) STATEMENTS BY VOTING MEMBERS OF THE COUNCIL.—At 

the time at which each report is submitted under subsection (a), 

each voting member of the Council shall— 

(1) if such member believes that the Council, the Government, and the private sector are taking all reasonable steps 

to ensure financial stability and to mitigate systemic risk that 

would negatively affect the economy, submit a signed statement 

to Congress stating such belief; or 

(2) if such member does not believe that all reasonable 

steps described under paragraph (1) are being taken, submit 

a signed statement to Congress stating what actions such 

member believes need to be taken in order to ensure that 

all reasonable steps described under paragraph (1) are taken. 

(c) TESTIMONY BY THE CHAIRPERSON.—The Chairperson shall 

appear before the Committee on Financial Services of the House 

of Representatives and the Committee on Banking, Housing, and 

Urban Affairs of the Senate at an annual hearing, after the report 

is submitted under subsection (a)— 

(1) to discuss the efforts, activities, objectives, and plans 

of the Council; and 

(2) to discuss and answer questions concerning such report. 

(d) AUTHORITY TO OBTAIN INFORMATION.— 

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

request the submission of, any data or information from the 

Office of Financial Research, member agencies, and the Federal 

Insurance Office, as necessary— 

(A) to monitor the financial services marketplace to 

identify potential risks to the financial stability of the 

United States; or 
H. R. 4173—22 

(B) to otherwise carry out any of the provisions of 

this title. 

(2) SUBMISSIONS BY THE OFFICE AND MEMBER AGENCIES.— 

Notwithstanding any other provision of law, the Office of Financial Research, any member agency, and the Federal Insurance 

Office, are authorized to submit information to the Council. 

(3) FINANCIAL DATA COLLECTION.— 

(A) IN GENERAL.—The Council, acting through the 

Office of Financial Research, may require the submission 

of periodic and other reports from any nonbank financial 

company or bank holding company for the purpose of 

assessing the extent to which a financial activity or financial market in which the nonbank financial company or 

bank holding company participates, or the nonbank financial company or bank holding company itself, poses a threat 

to the financial stability of the United States. 

(B) MITIGATION OF REPORT BURDEN.—Before requiring 

the submission of reports from any nonbank financial company or bank holding company that is regulated by a 

member agency or any primary financial regulatory agency, 

the Council, acting through the Office of Financial 

Research, shall coordinate with such agencies and shall, 

whenever possible, rely on information available from the 

Office of Financial Research or such agencies. 

(C) MITIGATION IN CASE OF FOREIGN FINANCIAL COMPANIES.—Before requiring the submission of reports from a 

company that is a foreign nonbank financial company or 

foreign-based bank holding company, the Council shall, 

acting through the Office of Financial Research, to the 

extent appropriate, consult with the appropriate foreign 

regulator of such company and, whenever possible, rely 

on information already being collected by such foreign regulator, with English translation. 

(4) BACK-UP EXAMINATION BY THE BOARD OF GOVERNORS.— 

If the Council is unable to determine whether the financial 

activities of a U.S. nonbank financial company pose a threat 

to the financial stability of the United States, based on information or reports obtained under paragraphs (1) and (3), discussions with management, and publicly available information, 

the Council may request the Board of Governors, and the 

Board of Governors is authorized, to conduct an examination 

of the U.S. nonbank financial company for the sole purpose 

of determining whether the nonbank financial company should 

be supervised by the Board of Governors for purposes of this 

title. 

(5) CONFIDENTIALITY.— 

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

Research, and the other member agencies shall maintain 

the confidentiality of any data, information, and reports 

submitted under this title. 

(B) RETENTION OF PRIVILEGE.—The submission of any 

nonpublicly available data or information under this subsection and subtitle B shall not constitute a waiver of, 

or otherwise affect, any privilege arising under Federal 

or State law (including the rules of any Federal or State 

court) to which the data or information is otherwise subject. 
H. R. 4173—23 

(C) FREEDOM OF INFORMATION ACT.—Section 552 of 

title 5, United States Code, including the exceptions thereunder, shall apply to any data or information submitted 

under this subsection and subtitle B. 

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION 

OF CERTAIN NONBANK FINANCIAL COMPANIES. 

(a) U.S. NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.— 

(1) DETERMINATION.—The Council, on a nondelegable basis 

and by a vote of not fewer than 2⁄3 of the voting members 

then serving, including an affirmative vote by the Chairperson, 

may determine that a U.S. nonbank financial company shall 

be supervised by the Board of Governors and shall be subject 

to prudential standards, in accordance with this title, if the 

Council determines that material financial distress at the U.S. 

nonbank financial company, or the nature, scope, size, scale, 

concentration, interconnectedness, or mix of the activities of 

the U.S. nonbank financial company, could pose a threat to 

the financial stability of the United States. 

(2) CONSIDERATIONS.—In making a determination under 

paragraph (1), the Council shall consider— 

(A) the extent of the leverage of the company; 

(B) the extent and nature of the off-balance-sheet exposures of the company; 

(C) the extent and nature of the transactions and relationships of the company with other significant nonbank 

financial companies and significant bank holding companies; 

(D) the importance of the company as a source of 

credit for households, businesses, and State and local 

governments and as a source of liquidity for the United 

States financial system; 

(E) the importance of the company as a source of 

credit for low-income, minority, or underserved communities, and the impact that the failure of such company 

would have on the availability of credit in such communities; 

(F) the extent to which assets are managed rather 

than owned by the company, and the extent to which 

ownership of assets under management is diffuse; 

(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company; 

(H) the degree to which the company is already regulated by 1 or more primary financial regulatory agencies; 

(I) the amount and nature of the financial assets of 

the company; 

(J) the amount and types of the liabilities of the company, including the degree of reliance on short-term 

funding; and 

(K) any other risk-related factors that the Council 

deems appropriate. 

(b) FOREIGN NONBANK FINANCIAL COMPANIES SUPERVISED BY

THE BOARD OF GOVERNORS.— (1) DETERMINATION.—The Council, on a nondelegable basis 

and by a vote of not fewer than 2⁄3 of the voting members 

then serving, including an affirmative vote by the Chairperson, 
H. R. 4173—24 

may determine that a foreign nonbank financial company shall 

be supervised by the Board of Governors and shall be subject 

to prudential standards, in accordance with this title, if the 

Council determines that material financial distress at the foreign nonbank financial company, or the nature, scope, size, 

scale, concentration, interconnectedness, or mix of the activities 

of the foreign nonbank financial company, could pose a threat 

to the financial stability of the United States. 

(2) CONSIDERATIONS.—In making a determination under 

paragraph (1), the Council shall consider— 

(A) the extent of the leverage of the company; 

(B) the extent and nature of the United States related 

off-balance-sheet exposures of the company; 

(C) the extent and nature of the transactions and relationships of the company with other significant nonbank 

financial companies and significant bank holding companies; 

(D) the importance of the company as a source of 

credit for United States households, businesses, and State 

and local governments and as a source of liquidity for 

the United States financial system; 

(E) the importance of the company as a source of 

credit for low-income, minority, or underserved communities in the United States, and the impact that the failure 

of such company would have on the availability of credit 

in such communities; 

(F) the extent to which assets are managed rather 

than owned by the company and the extent to which ownership of assets under management is diffuse; 

(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company; 

(H) the extent to which the company is subject to 

prudential standards on a consolidated basis in its home 

country that are administered and enforced by a comparable foreign supervisory authority; 

(I) the amount and nature of the United States financial assets of the company; 

(J) the amount and nature of the liabilities of the 

company used to fund activities and operations in the 

United States, including the degree of reliance on shortterm funding; and 

(K) any other risk-related factors that the Council 

deems appropriate. 

(c) ANTIEVASION.— 

(1) DETERMINATIONS.—In order to avoid evasion of this 

title, the Council, on its own initiative or at the request of 

the Board of Governors, may determine, on a nondelegable 

basis and by a vote of not fewer than 2⁄3 of the voting members 

then serving, including an affirmative vote by the Chairperson, 

that— 

(A) material financial distress related to, or the nature, 

scope, size, scale, concentration, interconnectedness, or mix 

of, the financial activities conducted directly or indirectly 

by a company incorporated or organized under the laws 

of the United States or any State or the financial activities 

in the United States of a company incorporated or organized in a country other than the United States would 
H. R. 4173—25 

pose a threat to the financial stability of the United States, 

based on consideration of the factors in subsection (a)(2) 

or (b)(2), as applicable; 

(B) the company is organized or operates in such a 

manner as to evade the application of this title; and 

(C) such financial activities of the company shall be 

supervised by the Board of Governors and subject to 

prudential standards in accordance with this title, consistent with paragraph (3). 

(2) REPORT.—Upon making a determination under paragraph (1), the Council shall submit a report to the appropriate 

committees of Congress detailing the reasons for making such 

determination. 

(3) CONSOLIDATED SUPERVISION OF ONLY FINANCIAL ACTIVITIES; ESTABLISHMENT OF AN INTERMEDIATE HOLDING COMPANY.— 

(A) ESTABLISHMENT OF AN INTERMEDIATE HOLDING

COMPANY.—Upon a determination under paragraph (1), the 

company that is the subject of the determination may establish an intermediate holding company in which the financial activities of such company and its subsidiaries shall 

be conducted (other than the activities described in section 

167(b)(2)) in compliance with any regulations or guidance 

provided by the Board of Governors. Such intermediate 

holding company shall be subject to the supervision of 

the Board of Governors and to prudential standards under 

this title as if the intermediate holding company were 

a nonbank financial company supervised by the Board of 

Governors. 

(B) ACTION OF THE BOARD OF GOVERNORS.—To facilitate 

the supervision of the financial activities subject to the 

determination in paragraph (1), the Board of Governors 

may require a company to establish an intermediate 

holding company, as provided for in section 167, which 

would be subject to the supervision of the Board of Governors and to prudential standards under this title, as 

if the intermediate holding company were a nonbank financial company supervised by the Board of Governors. 

(4) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL

DETERMINATION; JUDICIAL REVIEW.—Subsections (d) through (h) 

shall apply to determinations made by the Council pursuant 

to paragraph (1) in the same manner as such subsections 

apply to nonbank financial companies. 

(5) COVERED FINANCIAL ACTIVITIES.—For purposes of this 

subsection, the term ‘‘financial activities’’— 

(A) means activities that are financial in nature (as 

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

of 1956); 

(B) includes the ownership or control of one or more 

insured depository institutions; and 

(C) does not include internal financial activities conducted for the company or any affiliate thereof, including 

internal treasury, investment, and employee benefit functions. 

(6) ONLY FINANCIAL ACTIVITIES SUBJECT TO PRUDENTIAL

SUPERVISION.—Nonfinancial activities of the company shall not 
H. R. 4173—26 

be subject to supervision by the Board of Governors and prudential standards of the Board. For purposes of this Act, the 

financial activities that are the subject of the determination 

in paragraph (1) shall be subject to the same requirements 

as a nonbank financial company supervised by the Board of 

Governors. Nothing in this paragraph shall prohibit or limit 

the authority of the Board of Governors to apply prudential 

standards under this title to the financial activities that are 

subject to the determination in paragraph (1). 

(d) REEVALUATION AND RESCISSION.—The Council shall— 

(1) not less frequently than annually, reevaluate each determination made under subsections (a) and (b) with respect to 

such nonbank financial company supervised by the Board of 

Governors; and 

(2) rescind any such determination, if the Council, by a 

vote of not fewer than 2⁄3 of the voting members then serving, 

including an affirmative vote by the Chairperson, determines 

that the nonbank financial company no longer meets the standards under subsection (a) or (b), as applicable. 

(e) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL DETERMINATION.— 

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

financial company written notice of a proposed determination 

of the Council, including an explanation of the basis of the 

proposed determination of the Council, that a nonbank financial 

company shall be supervised by the Board of Governors and 

shall be subject to prudential standards in accordance with 

this title. 

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

receipt of any notice of a proposed determination under paragraph (1), the nonbank financial company may request, in 

writing, an opportunity for a written or oral hearing before 

the Council to contest the proposed determination. Upon receipt 

of a timely request, the Council shall fix a time (not later 

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

place at which such company may appear, personally or through 

counsel, to submit written materials (or, at the sole discretion 

of the Council, oral testimony and oral argument). 

(3) FINAL DETERMINATION.—Not later than 60 days after 

the date of a hearing under paragraph (2), the Council shall 

notify the nonbank financial company of the final determination 

of the Council, which shall contain a statement of the basis 

for the decision of the Council. 

(4) NO HEARING REQUESTED.—If a nonbank financial company does not make a timely request for a hearing, the Council 

shall notify the nonbank financial company, in writing, of the 

final determination of the Council under subsection (a) or (b), 

as applicable, not later than 10 days after the date by which 

the company may request a hearing under paragraph (2). 

(f) EMERGENCY EXCEPTION.— 

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

requirements of subsection (e) with respect to a nonbank financial company, if the Council determines, by a vote of not fewer 

than 2⁄3 of the voting members then serving, including an 

affirmative vote by the Chairperson, that such waiver or modification is necessary or appropriate to prevent or mitigate 
H. R. 4173—27 

threats posed by the nonbank financial company to the financial 

stability of the United States. 

(2) NOTICE.—The Council shall provide notice of a waiver 

or modification under this subsection to the nonbank financial 

company concerned as soon as practicable, but not later than 

24 hours after the waiver or modification is granted. 

(3) INTERNATIONAL COORDINATION.—In making a determination under paragraph (1), the Council shall consult with 

the appropriate home country supervisor, if any, of the foreign 

nonbank financial company that is being considered for such 

a determination. 

(4) OPPORTUNITY FOR HEARING.—The Council shall allow 

a nonbank financial company to request, in writing, an opportunity for a written or oral hearing before the Council to contest 

a waiver or modification under this subsection, not later than 

10 days after the date of receipt of notice of the waiver or 

modification by the company. Upon receipt of a timely request, 

the Council shall fix a time (not later than 15 days after 

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

nonbank financial company may appear, personally or through 

counsel, to submit written materials (or, at the sole discretion 

of the Council, oral testimony and oral argument). 

(5) NOTICE OF FINAL DETERMINATION.—Not later than 30 

days after the date of any hearing under paragraph (4), the 

Council shall notify the subject nonbank financial company 

of the final determination of the Council under this subsection, 

which shall contain a statement of the basis for the decision 

of the Council. 

(g) CONSULTATION.—The Council shall consult with the primary 

financial regulatory agency, if any, for each nonbank financial company or subsidiary of a nonbank financial company that is being 

considered for supervision by the Board of Governors under this 

section before the Council makes any final determination with 

respect to such nonbank financial company under subsection (a), 

(b), or (c). 

(h) JUDICIAL REVIEW.—If the Council makes a final determination under this section with respect to a nonbank financial company, 

such nonbank financial company may, not later than 30 days after 

the date of receipt of the notice of final determination under subsection (d)(2), (e)(3), or (f)(5), bring an action in the United States 

district court for the judicial district in which the home office 

of such nonbank financial company is located, or in the United 

States District Court for the District of Columbia, for an order 

requiring that the final determination be rescinded, and the court 

shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited 

to whether the final determination made under this section was 

arbitrary and capricious. 

(i) INTERNATIONAL COORDINATION.—In exercising its duties 

under this title with respect to foreign nonbank financial companies, 

foreign-based bank holding companies, and cross-border activities 

and markets, the Council shall consult with appropriate foreign 

regulatory authorities, to the extent appropriate. 
H. R. 4173—28 

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS. 

Not later than 180 days after the date of a final Council 

determination under section 113 that a nonbank financial company 

is to be supervised by the Board of Governors, such company 

shall register with the Board of Governors, on forms prescribed 

by the Board of Governors, which shall include such information 

as the Board of Governors, in consultation with the Council, may 

deem necessary or appropriate to carry out this title. 

SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS 

FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY 

THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING 

COMPANIES. 

(a) IN GENERAL.— 

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

the financial stability of the United States that could arise 

from the material financial distress, failure, or ongoing activities of large, interconnected financial institutions, the Council 

may make recommendations to the Board of Governors concerning the establishment and refinement of prudential standards and reporting and disclosure requirements applicable to 

nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies, 

that— 

(A) are more stringent than those applicable to other 

nonbank financial companies and bank holding companies 

that do not present similar risks to the financial stability 

of the United States; and 

(B) increase in stringency, based on the considerations 

identified in subsection (b)(3). 

(2) RECOMMENDED APPLICATION OF REQUIRED STANDARDS.— 

In making recommendations under this section, the Council 

may— 

(A) differentiate among companies that are subject to 

heightened standards on an individual basis or by category, 

taking into consideration their capital structure, riskiness, 

complexity, financial activities (including the financial 

activities of their subsidiaries), size, and any other riskrelated factors that the Council deems appropriate; or 

(B) recommend an asset threshold that is higher than 

$50,000,000,000 for the application of any standard 

described in subsections (c) through (g). 

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

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

under subsection (a) may include— 

(A) risk-based capital requirements; 

(B) leverage limits; 

(C) liquidity requirements; 

(D) resolution plan and credit exposure report requirements; 

(E) concentration limits; 

(F) a contingent capital requirement; 

(G) enhanced public disclosures; 

(H) short-term debt limits; and 

(I) overall risk management requirements. 
H. R. 4173—29 

(2) PRUDENTIAL STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In making recommendations concerning the standards 

set forth in paragraph (1) that would apply to foreign nonbank 

financial companies supervised by the Board of Governors or 

foreign-based bank holding companies, the Council shall— 

(A) give due regard to the principle of national treatment and equality of competitive opportunity; and 

(B) take into account the extent to which the foreign 

nonbank financial company or foreign-based bank holding 

company is subject on a consolidated basis to home country 

standards that are comparable to those applied to financial 

companies in the United States. 

(3) CONSIDERATIONS.—In making recommendations concerning prudential standards under paragraph (1), the Council 

shall— 

(A) take into account differences among nonbank financial companies supervised by the Board of Governors and 

bank holding companies described in subsection (a), based 

on— 

(i) the factors described in subsections (a) and 

(b) of section 113; 

(ii) whether the company owns an insured depository institution; 

(iii) nonfinancial activities and affiliations of the 

company; and 

(iv) any other factors that the Council determines 

appropriate; 

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

in the factors listed in subsections (a) and (b) of section 

113 would not result in sharp, discontinuous changes in 

the prudential standards established under section 165; 

and 

(C) adapt its recommendations as appropriate in light 

of any predominant line of business of such company, 

including assets under management or other activities for 

which particular standards may not be appropriate. 

(c) CONTINGENT CAPITAL.— (1) STUDY REQUIRED.—The Council shall conduct a study 

of the feasibility, benefits, costs, and structure of a contingent 

capital requirement for nonbank financial companies supervised 

by the Board of Governors and bank holding companies 

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

(A) an evaluation of the degree to which such requirement would enhance the safety and soundness of companies 

subject to the requirement, promote the financial stability 

of the United States, and reduce risks to United States 

taxpayers; 

(B) an evaluation of the characteristics and amounts 

of contingent capital that should be required; 

(C) an analysis of potential prudential standards that 

should be used to determine whether the contingent capital 

of a company would be converted to equity in times of 

financial stress; 

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

on the structure and operation of credit and other financial 

markets, and other economic effects of requiring contingent 

capital; 
H. R. 4173—30 

(E) an evaluation of the effects of such requirement 

on the international competitiveness of companies subject 

to the requirement and the prospects for international 

coordination in establishing such requirement; and 

(F) recommendations for implementing regulations. 

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

regarding the study required by paragraph (1) not later than 

2 years after the date of enactment of this Act. 

(3) RECOMMENDATIONS.— 

(A) IN GENERAL.—Subsequent to submitting a report 

to Congress under paragraph (2), the Council may make 

recommendations to the Board of Governors to require 

any nonbank financial company supervised by the Board 

of Governors and any bank holding company described 

in subsection (a) to maintain a minimum amount of contingent capital that is convertible to equity in times of financial stress. 

(B) FACTORS TO CONSIDER.—In making recommendations under this subsection, the Council shall consider— 

(i) an appropriate transition period for 

implementation of a conversion under this subsection; 

(ii) the factors described in subsection (b)(3); 

(iii) capital requirements applicable to a nonbank 

financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof; 

(iv) results of the study required by paragraph 

(1); and 

(v) any other factor that the Council deems appropriate. 

(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.— (1) RESOLUTION PLAN.—The Council may make recommendations to the Board of Governors concerning the 

requirement that each nonbank financial company supervised 

by the Board of Governors and each bank holding company 

described in subsection (a) report periodically to the Council, 

the Board of Governors, and the Corporation, the plan of such 

company for rapid and orderly resolution in the event of material financial distress or failure. 

(2) CREDIT EXPOSURE REPORT.—The Council may make recommendations to the Board of Governors concerning the advisability of requiring each nonbank financial company supervised 

by the Board of Governors and bank holding company described 

in subsection (a) to report periodically to the Council, the Board 

of Governors, and the Corporation on— 

(A) the nature and extent to which the company has 

credit exposure to other significant nonbank financial 

companies and significant bank holding companies; and 

(B) the nature and extent to which other such significant nonbank financial companies and significant bank 

holding companies have credit exposure to that company. 

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

the failure of any individual company could pose to nonbank financial companies supervised by the Board of Governors or bank 

holding companies described in subsection (a), the Council may 

make recommendations to the Board of Governors to prescribe 

standards to limit such risks, as set forth in section 165. 
H. R. 4173—31 

(f) ENHANCED PUBLIC DISCLOSURES.—The Council may make 

recommendations to the Board of Governors to require periodic 

public disclosures by bank holding companies described in subsection (a) and by nonbank financial companies supervised by the 

Board of Governors, in order to support market evaluation of the 

risk profile, capital adequacy, and risk management capabilities 

thereof. 

(g) SHORT-TERM DEBT LIMITS.—The Council may make recommendations to the Board of Governors to require short-term 

debt limits to mitigate the risks that an over-accumulation of such 

debt could pose to bank holding companies described in subsection 

(a), nonbank financial companies supervised by the Board of Governors, or the financial system. 

SEC. 116. REPORTS. 

(a) IN GENERAL.—Subject to subsection (b), the Council, acting 

through the Office of Financial Research, may require a bank 

holding company with total consolidated assets of $50,000,000,000 

or greater or a nonbank financial company supervised by the Board 

of Governors, and any subsidiary thereof, to submit certified reports 

to keep the Council informed as to— 

(1) the financial condition of the company; 

(2) systems for monitoring and controlling financial, operating, and other risks; 

(3) transactions with any subsidiary that is a depository 

institution; and 

(4) the extent to which the activities and operations of 

the company and any subsidiary thereof, could, under adverse 

circumstances, have the potential to disrupt financial markets 

or affect the overall financial stability of the United States. 

(b) USE OF EXISTING REPORTS.— 

(1) IN GENERAL.—For purposes of compliance with subsection (a), the Council, acting through the Office of Financial 

Research, shall, to the fullest extent possible, use— 

(A) reports that a bank holding company, nonbank 

financial company supervised by the Board of Governors, 

or any functionally regulated subsidiary of such company 

has been required to provide to other Federal or State 

regulatory agencies or to a relevant foreign supervisory 

authority; 

(B) information that is otherwise required to be 

reported publicly; and 

(C) externally audited financial statements. 

(2) AVAILABILITY.—Each bank holding company described 

in subsection (a) and nonbank financial company supervised 

by the Board of Governors, and any subsidiary thereof, shall 

provide to the Council, at the request of the Council, copies 

of all reports referred to in paragraph (1). 

(3) CONFIDENTIALITY.—The Council shall maintain the confidentiality of the reports obtained under subsection (a) and 

paragraph (1)(A) of this subsection. 

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE 

BANK HOLDING COMPANIES. 

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

(1) any entity that— 
H. R. 4173—32 

(A) was a bank holding company having total consolidated assets equal to or greater than $50,000,000,000 as 

of January 1, 2010; and 

(B) received financial assistance under or participated 

in the Capital Purchase Program established under the 

Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act of 2008; and 

(2) any successor entity (as defined by the Board of Governors, in consultation with the Council) to an entity described 

in paragraph (1). 

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

to be a bank holding company at any time after January 1, 2010, 

then such entity shall be treated as a nonbank financial company 

supervised by the Board of Governors, as if the Council had made 

a determination under section 113 with respect to that entity. 

(c) APPEAL.— 

(1) REQUEST FOR HEARING.—An entity may request, in 

writing, an opportunity for a written or oral hearing before 

the Council to appeal its treatment as a nonbank financial 

company supervised by the Board of Governors in accordance 

with this section. Upon receipt of the request, the Council 

shall fix a time (not later than 30 days after the date of 

receipt of the request) and place at which such entity may 

appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony 

and oral argument). 

(2) DECISION.— (A) PROPOSED DECISION.—A Council decision to grant 

an appeal under this subsection shall be made by a vote 

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

including an affirmative vote by the Chairperson. Not later 

than 60 days after the date of a hearing under paragraph 

(1), the Council shall submit a report to, and may testify 

before, the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the proposed decision of the Council regarding an appeal under paragraph 

(1), which report shall include a statement of the basis 

for the proposed decision of the Council. 

(B) NOTICE OF FINAL DECISION.—The Council shall 

notify the subject entity of the final decision of the Council 

regarding an appeal under paragraph (1), which notice 

shall contain a statement of the basis for the final decision 

of the Council, not later than 60 days after the later of— 

(i) the date of the submission of the report under 

subparagraph (A); or 

(ii) if, not later than 1 year after the date of 

submission of the report under subparagraph (A), the 

Committee on Banking, Housing, and Urban Affairs 

of the Senate or the Committee on Financial Services 

of the House of Representatives holds one or more 

hearings regarding such report, the date of the last 

such hearing. 

(C) CONSIDERATIONS.—In making a decision regarding 

an appeal under paragraph (1), the Council shall consider 

whether the company meets the standards under section 

113(a) or 113(b), as applicable, and the definition of the 
H. R. 4173—33 

term ‘‘nonbank financial company’’ under section 102. The 

decision of the Council shall be final, subject to the review 

under paragraph (3). 

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

subsection, the Council shall, not less frequently than annually, 

review and reevaluate the decision. 

SEC. 118. COUNCIL FUNDING. 

Any expenses of the Council shall be treated as expenses of, 

and paid by, the Office of Financial Research. 

SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES 

AMONG MEMBER AGENCIES. 

(a) REQUEST FOR COUNCIL RECOMMENDATION.—The Council 

shall seek to resolve a dispute among 2 or more member agencies, 

if— 

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

agency about the respective jurisdiction over a particular bank 

holding company, nonbank financial company, or financial 

activity or product (excluding matters for which another dispute 

mechanism specifically has been provided under title X); 

(2) the Council determines that the disputing agencies 

cannot, after a demonstrated good faith effort, resolve the dispute without the intervention of the Council; and 

(3) any of the member agencies involved in the dispute— 

(A) provides all other disputants prior notice of the 

intent to request dispute resolution by the Council; and 

(B) requests in writing, not earlier than 14 days after 

providing the notice described in subparagraph (A), that 

the Council seek to resolve the dispute. 

(b) COUNCIL RECOMMENDATION.—The Council shall seek to 

resolve each dispute described in subsection (a)— 

(1) within a reasonable time after receiving the dispute 

resolution request; 

(2) after consideration of relevant information provided by 

each agency party to the dispute; and 

(3) by agreeing with 1 of the disputants regarding the 

entirety of the matter, or by determining a compromise position. 

(c) FORM OF RECOMMENDATION.—Any Council recommendation 

under this section shall— 

(1) be in writing; 

(2) include an explanation of the reasons therefor; and 

(3) be approved by the affirmative vote of 2⁄3 of the voting 

members of the Council then serving. 

(d) NONBINDING EFFECT.—Any recommendation made by the 

Council under subsection (c) shall not be binding on the Federal 

agencies that are parties to the dispute. 

SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR 

PRACTICES FOR FINANCIAL STABILITY PURPOSES. 

(a) IN GENERAL.—The Council may provide for more stringent 

regulation of a financial activity by issuing recommendations to 

the primary financial regulatory agencies to apply new or heightened standards and safeguards, including standards enumerated 

in section 115, for a financial activity or practice conducted by 

bank holding companies or nonbank financial companies under 

their respective jurisdictions, if the Council determines that the 
H. R. 4173—34 

conduct, scope, nature, size, scale, concentration, or interconnectedness of such activity or practice could create or increase the risk 

of significant liquidity, credit, or other problems spreading among 

bank holding companies and nonbank financial companies, financial 

markets of the United States, or low-income, minority, or underserved communities. 

(b) PROCEDURE FOR RECOMMENDATIONS TO REGULATORS.— 

(1) NOTICE AND OPPORTUNITY FOR COMMENT.—The Council 

shall consult with the primary financial regulatory agencies 

and provide notice to the public and opportunity for comment 

for any proposed recommendation that the primary financial 

regulatory agencies apply new or heightened standards and 

safeguards for a financial activity or practice. 

(2) CRITERIA.—The new or heightened standards and safeguards for a financial activity or practice recommended under 

paragraph (1)— 

(A) shall take costs to long-term economic growth into 

account; and 

(B) may include prescribing the conduct of the activity 

or practice in specific ways (such as by limiting its scope, 

or applying particular capital or risk management requirements to the conduct of the activity) or prohibiting the 

activity or practice. 

(c) IMPLEMENTATION OF RECOMMENDED STANDARDS.— 

(1) ROLE OF PRIMARY FINANCIAL REGULATORY AGENCY.— 

(A) IN GENERAL.—Each primary financial regulatory 

agency may impose, require reports regarding, examine 

for compliance with, and enforce standards in accordance 

with this section with respect to those entities for which 

it is the primary financial regulatory agency. 

(B) RULE OF CONSTRUCTION.—The authority under this 

paragraph is in addition to, and does not limit, any other 

authority of a primary financial regulatory agency. Compliance by an entity with actions taken by a primary financial 

regulatory agency under this section shall be enforceable 

in accordance with the statutes governing the respective 

jurisdiction of the primary financial regulatory agency over 

the entity, as if the agency action were taken under those 

statutes. 

(2) IMPOSITION OF STANDARDS.—The primary financial regulatory agency shall impose the standards recommended by the 

Council in accordance with subsection (a), or similar standards 

that the Council deems acceptable, or shall explain in writing 

to the Council, not later than 90 days after the date on which 

the Council issues the recommendation, why the agency has 

determined not to follow the recommendation of the Council. 

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

on— 

(1) any recommendations issued by the Council under this 

section; 

(2) the implementation of, or failure to implement, such 

recommendation on the part of a primary financial regulatory 

agency; and 

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

agency exists for the nonbank financial company conducting 

financial activities or practices referred to in subsection (a), 
H. R. 4173—35 

recommendations for legislation that would prevent such activities or practices from threatening the stability of the financial 

system of the United States. 

(e) EFFECT OF RESCISSION OF IDENTIFICATION.— 

(1) NOTICE.—The Council may recommend to the relevant 

primary financial regulatory agency that a financial activity 

or practice no longer requires any standards or safeguards 

implemented under this section. 

(2) DETERMINATION OF PRIMARY FINANCIAL REGULATORY

AGENCY TO CONTINUE.— (A) IN GENERAL.—Upon receipt of a recommendation 

under paragraph (1), a primary financial regulatory agency 

that has imposed standards under this section shall determine whether such standards should remain in effect. 

(B) APPEAL PROCESS.—Each primary financial regulatory agency that has imposed standards under this section shall promulgate regulations to establish a procedure 

under which entities under its jurisdiction may appeal 

a determination by such agency under this paragraph that 

standards imposed under this section should remain in 

effect. 

SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY. 

(a) MITIGATORY ACTIONS.—If the Board of Governors determines that a bank holding company with total consolidated assets 

of $50,000,000,000 or more, or a nonbank financial company supervised by the Board of Governors, poses a grave threat to the 

financial stability of the United States, the Board of Governors, 

upon an affirmative vote of not fewer than 2⁄3 of the voting members 

of the Council then serving, shall— 

(1) limit the ability of the company to merge with, acquire, 

consolidate with, or otherwise become affiliated with another 

company; 

(2) restrict the ability of the company to offer a financial 

product or products; 

(3) require the company to terminate one or more activities; 

(4) impose conditions on the manner in which the company 

conducts 1 or more activities; or 

(5) if the Board of Governors determines that the actions 

described in paragraphs (1) through (4) are inadequate to mitigate a threat to the financial stability of the United States 

in its recommendation, require the company to sell or otherwise 

transfer assets or off-balance-sheet items to unaffiliated entities. 

(b) NOTICE AND HEARING.— 

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

with the Council, shall provide to a company described in 

subsection (a) written notice that such company is being considered for mitigatory action pursuant to this section, including 

an explanation of the basis for, and description of, the proposed 

mitigatory action. 

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

receipt of notice under paragraph (1), the company may request, 

in writing, an opportunity for a written or oral hearing before 

the Board of Governors to contest the proposed mitigatory 

action. Upon receipt of a timely request, the Board of Governors 

shall fix a time (not later than 30 days after the date of 
H. R. 4173—36 

receipt of the request) and place at which such company may 

appear, personally or through counsel, to submit written materials (or, at the discretion of the Board of Governors, in consultation with the Council, oral testimony and oral argument). 

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

a hearing under paragraph (2), or not later than 60 days 

after the provision of a notice under paragraph (1) if no hearing 

was held, the Board of Governors shall notify the company 

of the final decision of the Board of Governors, including the 

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

(a). 

(c) FACTORS FOR CONSIDERATION.—The Board of Governors and 

the Council shall take into consideration the factors set forth in 

subsection (a) or (b) of section 113, as applicable, in making any 

determination under subsection (a). 

(d) APPLICATION TO FOREIGN FINANCIAL COMPANIES.—The 

Board of Governors may prescribe regulations regarding the application of this section to foreign nonbank financial companies supervised by the Board of Governors and foreign-based bank holding 

companies— 

(1) giving due regard to the principle of national treatment 

and equality of competitive opportunity; and 

(2) taking into account the extent to which the foreign 

nonbank financial company or foreign-based bank holding company is subject on a consolidated basis to home country standards that are comparable to those applied to financial companies in the United States. 

SEC. 122. GAO AUDIT OF COUNCIL. 

(a) AUTHORITY TO AUDIT.—The Comptroller General of the 

United States may audit the activities of— 

(1) the Council; and 

(2) any person or entity acting on behalf of or under the 

authority of the Council, to the extent that such activities 

relate to work for the Council by such person or entity. 

(b) ACCESS TO INFORMATION.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

law, the Comptroller General shall, upon request and at such 

reasonable time and in such reasonable form as the Comptroller 

General may request, have access to— 

(A) any records or other information under the control 

of or used by the Council; 

(B) any records or other information under the control 

of a person or entity acting on behalf of or under the 

authority of the Council, to the extent that such records 

or other information is relevant to an audit under subsection (a); and 

(C) the officers, directors, employees, financial advisors, 

staff, working groups, and agents and representatives of 

the Council (as related to the activities on behalf of the 

Council of such agent or representative), at such reasonable 

times as the Comptroller General may request. 

(2) COPIES.—The Comptroller General may make and 

retain copies of such books, accounts, and other records, access 

to which is granted under this section, as the Comptroller 

General considers appropriate. 
H. R. 4173—37 

SEC. 123. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF FINANCIAL INSTITUTIONS ON CAPITAL MARKET EFFICIENCY 

AND ECONOMIC GROWTH. 

(a) STUDY REQUIRED.— 

(1) IN GENERAL.—The Chairperson of the Council shall 

carry out a study of the economic impact of possible financial 

services regulatory limitations intended to reduce systemic risk. 

Such study shall estimate the benefits and costs on the efficiency of capital markets, on the financial sector, and on 

national economic growth, of— 

(A) explicit or implicit limits on the maximum size 

of banks, bank holding companies, and other large financial 

institutions; 

(B) limits on the organizational complexity and diversification of large financial institutions; 

(C) requirements for operational separation between 

business units of large financial institutions in order to 

expedite resolution in case of failure; 

(D) limits on risk transfer between business units of 

large financial institutions; 

(E) requirements to carry contingent capital or similar 

mechanisms; 

(F) limits on commingling of commercial and financial 

activities by large financial institutions; 

(G) segregation requirements between traditional 

financial activities and trading or other high-risk operations in large financial institutions; and 

(H) other limitations on the activities or structure of 

large financial institutions that may be useful to limit 

systemic risk. 

(2) RECOMMENDATIONS.—The study required by this section 

shall include recommendations for the optimal structure of 

any limits considered in subparagraphs (A) through (E), in 

order to maximize their effectiveness and minimize their economic impact. 

(b) REPORT.—Not later than the end of the 180-day period 

beginning on the date of enactment of this title, and not later 

than every 5 years thereafter, the Chairperson shall issue a report 

to the Congress containing any findings and determinations made 

in carrying out the study required under subsection (a). 

Subtitle B—Office of Financial Research 

SEC. 151. DEFINITIONS. 

For purposes of this subtitle— 

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

Financial Research established under this subtitle and the 

Director thereof, respectively; 

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

as in title II, and includes an insured depository institution 

and an insurance company; 

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

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

research and analysis center established under section 154; 
H. R. 4173—38 

(5) the term ‘‘financial transaction data’’ means the structure and legal description of a financial contract, with sufficient 

detail to describe the rights and obligations between counterparties and make possible an independent valuation; 

(6) the term ‘‘position data’’— 

(A) means data on financial assets or liabilities held 

on the balance sheet of a financial company, where positions are created or changed by the execution of a financial 

transaction; and 

(B) includes information that identifies counterparties, 

the valuation by the financial company of the position, 

and information that makes possible an independent valuation of the position; 

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

agreement between 2 or more counterparties, describing rights 

and obligations relating to the future delivery of items of 

intrinsic or extrinsic value among the counterparties; and 

(8) the term ‘‘financial instrument’’ means a financial contract in which the terms and conditions are publicly available, 

and the roles of one or more of the counterparties are assignable 

without the consent of any of the other counterparties (including 

common stock of a publicly traded company, government bonds, 

or exchange traded futures and options contracts). 

SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED. 

(a) ESTABLISHMENT.—There is established within the Department of the Treasury the Office of Financial Research. 

(b) DIRECTOR.— 

(1) IN GENERAL.—The Office shall be headed by a Director, 

who shall be appointed by the President, by and with the 

advice and consent of the Senate. 

(2) TERM OF SERVICE.—The Director shall serve for a term 

of 6 years, except that, in the event that a successor is not 

nominated and confirmed by the end of the term of service 

of a Director, the Director may continue to serve until such 

time as the next Director is appointed and confirmed. 

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

at Level III of the Executive Schedule. 

(4) PROHIBITION ON DUAL SERVICE.—The individual serving 

in the position of Director may not, during such service, also 

serve as the head of any financial regulatory agency. 

(5) RESPONSIBILITIES, DUTIES, AND AUTHORITY.—The 

Director shall have sole discretion in the manner in which 

the Director fulfills the responsibilities and duties and exercises 

the authorities described in this subtitle. 

(c) BUDGET.—The Director, in consultation with the Chairperson, shall establish the annual budget of the Office. 

(d) OFFICE PERSONNEL.— 

(1) IN GENERAL.—The Director, in consultation with the 

Chairperson, may fix the number of, and appoint and direct, 

all employees of the Office. 

(2) COMPENSATION.—The Director, in consultation with the 

Chairperson, shall fix, adjust, and administer the pay for all 

employees of the Office, without regard to chapter 51 or subchapter III of chapter 53 of title 5, United States Code, relating 

to classification of positions and General Schedule pay rates. 
H. R. 4173—39 

(3) COMPARABILITY.—Section 1206(a) of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 1833b(a)) is amended— 

(A) by striking ‘‘Finance Board,’’ and inserting ‘‘Finance 

Board, the Office of Financial Research, and the Bureau 

of Consumer Financial Protection’’; and 

(B) by striking ‘‘and the Office of Thrift Supervision,’’. 

(4) SENIOR EXECUTIVES.—Section 3132(a)(1)(D) of title 5, 

United States Code, is amended by striking ‘‘and the National 

Credit Union Administration;’’ and inserting ‘‘the National 

Credit Union Administration, the Bureau of Consumer Financial Protection, and the Office of Financial Research;’’. 

(e) ASSISTANCE FROM FEDERAL AGENCIES.—Any department 

or agency of the United States may provide to the Office and 

any special advisory, technical, or professional committees 

appointed by the Office, such services, funds, facilities, staff, and 

other support services as the Office may determine advisable. Any 

Federal Government employee may be detailed to the Office without 

reimbursement, and such detail shall be without interruption or 

loss of civil service status or privilege. 

(f) PROCUREMENT OF TEMPORARY AND INTERMITTENT SERVICES.—The Director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates 

for individuals which do not exceed the daily equivalent of the 

annual rate of basic pay prescribed for Level V of the Executive 

Schedule under section 5316 of such title. 

(g) POST-EMPLOYMENT PROHIBITIONS.—The Secretary, with the 

concurrence of the Director of the Office of Government Ethics, 

shall issue regulations prohibiting the Director and any employee 

of the Office who has had access to the transaction or position 

data maintained by the Data Center or other business confidential 

information about financial entities required to report to the Office 

from being employed by or providing advice or consulting services 

to a financial company, for a period of 1 year after last having 

had access in the course of official duties to such transaction or 

position data or business confidential information, regardless of 

whether that entity is required to report to the Office. For employees 

whose access to business confidential information was limited, the 

regulations may provide, on a case-by-case basis, for a shorter 

period of post-employment prohibition, provided that the shorter 

period does not compromise business confidential information. 

(h) TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.— 

The Office, in consultation with the Chairperson, may appoint such 

special advisory, technical, or professional committees as may be 

useful in carrying out the functions of the Office, and the members 

of such committees may be staff of the Office, or other persons, 

or both. 

(i) FELLOWSHIP PROGRAM.—The Office, in consultation with 

the Chairperson, may establish and maintain an academic and 

professional fellowship program, under which qualified academics 

and professionals shall be invited to spend not longer than 2 years 

at the Office, to perform research and to provide advanced training 

for Office personnel. 

(j) EXECUTIVE SCHEDULE COMPENSATION.—Section 5314 of title 

5, United States Code, is amended by adding at the end the following new item: 

‘‘Director of the Office of Financial Research.’’. 
H. R. 4173—40 

SEC. 153. PURPOSE AND DUTIES OF THE OFFICE. 

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

support the Council in fulfilling the purposes and duties of the 

Council, as set forth in subtitle A, and to support member agencies, 

by— 

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

such data to the Council and member agencies; 

(2) standardizing the types and formats of data reported 

and collected; 

(3) performing applied research and essential long-term 

research; 

(4) developing tools for risk measurement and monitoring; 

(5) performing other related services; 

(6) making the results of the activities of the Office available to financial regulatory agencies; and 

(7) assisting such member agencies in determining the 

types and formats of data authorized by this Act to be collected 

by such member agencies. 

(b) ADMINISTRATIVE AUTHORITY.—The Office may— 

(1) share data and information, including software developed by the Office, with the Council, member agencies, and 

the Bureau of Economic Analysis, which shared data, information, and software— 

(A) shall be maintained with at least the same level 

of security as is used by the Office; and 

(B) may not be shared with any individual or entity 

without the permission of the Council; 

(2) sponsor and conduct research projects; and 

(3) assist, on a reimbursable basis, with financial analyses 

undertaken at the request of other Federal agencies that are 

not member agencies. 

(c) RULEMAKING AUTHORITY.— 

(1) SCOPE.—The Office, in consultation with the Chairperson, shall issue rules, regulations, and orders only to the 

extent necessary to carry out the purposes and duties described 

in paragraphs (1), (2), and (7) of subsection (a). 

(2) STANDARDIZATION.—Member agencies, in consultation 

with the Office, shall implement regulations promulgated by 

the Office under paragraph (1) to standardize the types and 

formats of data reported and collected on behalf of the Council, 

as described in subsection (a)(2). If a member agency fails 

to implement such regulations prior to the expiration of the 

3-year period following the date of publication of final regulations, the Office, in consultation with the Chairperson, may 

implement such regulations with respect to the financial entities under the jurisdiction of the member agency. This paragraph shall not supersede or interfere with the independent 

authority of a member agency under other law to collect data, 

in such format and manner as the member agency requires. 

(d) TESTIMONY.— 

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

to and testify before the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial 

Services of the House of Representatives annually on the activities of the Office, including the work of the Data Center and 

the Research and Analysis Center, and the assessment of the 
H. R. 4173—41 

Office of significant financial market developments and potential emerging threats to the financial stability of the United 

States. 

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

States shall have any authority to require the Director to 

submit the testimony required under paragraph (1) or other 

congressional testimony to any officer or agency of the United 

States for approval, comment, or review prior to the submission 

of such testimony. Any such testimony to Congress shall include 

a statement that the views expressed therein are those of 

the Director and do not necessarily represent the views of 

the President. 

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

reports to Congress concerning the financial stability of the United 

States. The Director shall notify the Council of any such additional 

reports provided to Congress. 

(f) SUBPOENA.— 

(1) IN GENERAL.—The Director may require from a financial 

company, by subpoena, the production of the data requested 

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

a written finding by the Director that— 

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

described under this subtitle; and 

(B) the Office has coordinated with the relevant primary financial regulatory agency, as required under section 

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

(2) FORMAT.—Subpoenas under paragraph (1) shall bear 

the signature of the Director, and shall be served by any 

person or class of persons designated by the Director for that 

purpose. 

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

to obey a subpoena, the subpoena shall be enforceable by order 

of any appropriate district court of the United States. Any 

failure to obey the order of the court may be punished by 

the court as a contempt of court. 

SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF PRIMARY PROGRAMMATIC UNITS. 

(a) IN GENERAL.—There are established within the Office, to 

carry out the programmatic responsibilities of the Office— 

(1) the Data Center; and 

(2) the Research and Analysis Center. 

(b) DATA CENTER.— 

(1) GENERAL DUTIES.— 

(A) DATA COLLECTION.—The Data Center, on behalf 

of the Council, shall collect, validate, and maintain all 

data necessary to carry out the duties of the Data Center, 

as described in this subtitle. The data assembled shall 

be obtained from member agencies, commercial data providers, publicly available data sources, and financial entities under subparagraph (B). 

(B) AUTHORITY.— 

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

by the Council or by the Director in consultation with 

the Council, require the submission of periodic and 

other reports from any financial company for the purpose of assessing the extent to which a financial 
H. R. 4173—42 

activity or financial market in which the financial company participates, or the financial company itself, poses 

a threat to the financial stability of the United States. 

(ii) MITIGATION OF REPORT BURDEN.—Before 

requiring the submission of a report from any financial 

company that is regulated by a member agency, any 

primary financial regulatory agency, a foreign supervisory authority, or the Office shall coordinate with 

such agencies or authority, and shall, whenever possible, rely on information available from such agencies 

or authority. 

(iii) COLLECTION OF FINANCIAL TRANSACTION AND

POSITION DATA.—The Office shall collect, on a schedule 

determined by the Director, in consultation with the 

Council, financial transaction data and position data 

from financial companies. 

(C) RULEMAKING.—The Office shall promulgate regulations pursuant to subsections (a)(1), (a)(2), (a)(7), and (c)(1) 

of section 153 regarding the type and scope of the data 

to be collected by the Data Center under this paragraph. 

(2) RESPONSIBILITIES.— 

(A) PUBLICATION.—The Data Center shall prepare and 

publish, in a manner that is easily accessible to the public— 

(i) a financial company reference database; 

(ii) a financial instrument reference database; and 

(iii) formats and standards for Office data, 

including standards for reporting financial transaction 

and position data to the Office. 

(B) CONFIDENTIALITY.—The Data Center shall not publish any confidential data under subparagraph (A). 

(3) INFORMATION SECURITY.—The Director shall ensure that 

data collected and maintained by the Data Center are kept 

secure and protected against unauthorized disclosure. 

(4) CATALOG OF FINANCIAL ENTITIES AND INSTRUMENTS.— 

The Data Center shall maintain a catalog of the financial 

entities and instruments reported to the Office. 

(5) AVAILABILITY TO THE COUNCIL AND MEMBER AGENCIES.— 

The Data Center shall make data collected and maintained 

by the Data Center available to the Council and member agencies, as necessary to support their regulatory responsibilities. 

(6) OTHER AUTHORITY.—The Office shall, after consultation 

with the member agencies, provide certain data to financial 

industry participants and to the general public to increase 

market transparency and facilitate research on the financial 

system, to the extent that intellectual property rights are not 

violated, business confidential information is properly protected, 

and the sharing of such information poses no significant threats 

to the financial system of the United States. 

(c) RESEARCH AND ANALYSIS CENTER.— 

(1) GENERAL DUTIES.—The Research and Analysis Center, 

on behalf of the Council, shall develop and maintain independent analytical capabilities and computing resources— 

(A) to develop and maintain metrics and reporting 

systems for risks to the financial stability of the United 

States; 
H. R. 4173—43 

(B) to monitor, investigate, and report on changes in 

systemwide risk levels and patterns to the Council and 

Congress; 

(C) to conduct, coordinate, and sponsor research to 

support and improve regulation of financial entities and 

markets; 

(D) to evaluate and report on stress tests or other 

stability-related evaluations of financial entities overseen 

by the member agencies; 

(E) to maintain expertise in such areas as may be 

necessary to support specific requests for advice and assistance from financial regulators; 

(F) to investigate disruptions and failures in the financial markets, report findings, and make recommendations 

to the Council based on those findings; 

(G) to conduct studies and provide advice on the impact 

of policies related to systemic risk; and 

(H) to promote best practices for financial risk management. 

(d) REPORTING RESPONSIBILITIES.— 

(1) REQUIRED REPORTS.—Not later than 2 years after the 

date of enactment of this Act, and not later than 120 days 

after the end of each fiscal year thereafter, the Office shall 

prepare and submit a report to Congress. 

(2) CONTENT.—Each report required by this subsection 

shall assess the state of the United States financial system, 

including— 

(A) an analysis of any threats to the financial stability 

of the United States; 

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

the mission of the Office; and 

(C) key findings from the research and analysis of 

the financial system by the Office. 

SEC. 155. FUNDING. 

(a) FINANCIAL RESEARCH FUND.— 

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

Treasury of the United States a separate fund to be known 

as the ‘‘Financial Research Fund’’. 

(2) FUND RECEIPTS.—All amounts provided to the Office 

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

receives under subsection (d) shall be deposited into the Financial Research Fund. 

(3) INVESTMENTS AUTHORIZED.— 

(A) AMOUNTS IN FUND MAY BE INVESTED.—The Director 

may request the Secretary to invest the portion of the 

Financial Research Fund that is not, in the judgment of 

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

(B) ELIGIBLE INVESTMENTS.—Investments shall be 

made by the Secretary in obligations of the United States 

or obligations that are guaranteed as to principal and 

interest by the United States, with maturities suitable 

to the needs of the Financial Research Fund, as determined 

by the Director. 

(4) INTEREST AND PROCEEDS CREDITED.—The interest on, 

and the proceeds from the sale or redemption of, any obligations 
H. R. 4173—44 

held in the Financial Research Fund shall be credited to and 

form a part of the Financial Research Fund. 

(b) USE OF FUNDS.— 

(1) IN GENERAL.—Funds obtained by, transferred to, or 

credited to the Financial Research Fund shall be immediately 

available to the Office, and shall remain available until 

expended, to pay the expenses of the Office in carrying out 

the duties and responsibilities of the Office. 

(2) FEES, ASSESSMENTS, AND OTHER FUNDS NOT GOVERNMENT FUNDS.—Funds obtained by, transferred to, or credited 

to the Financial Research Fund shall not be construed to be 

Government funds or appropriated moneys. 

(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Financial 

Research Fund shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or under 

any other authority, or for any other purpose. 

(c) INTERIM FUNDING.—During the 2-year period following the 

date of enactment of this Act, the Board of Governors shall provide 

to the Office an amount sufficient to cover the expenses of the 

Office. 

(d) PERMANENT SELF-FUNDING.—Beginning 2 years after the 

date of enactment of this Act, the Secretary shall establish, by 

regulation, and with the approval of the Council, an assessment 

schedule, including the assessment base and rates, applicable to 

bank holding companies with total consolidated assets of 

$50,000,000,000 or greater and nonbank financial companies supervised by the Board of Governors, that takes into account differences 

among such companies, based on the considerations for establishing 

the prudential standards under section 115, to collect assessments 

equal to the total expenses of the Office. 

SEC. 156. TRANSITION OVERSIGHT. 

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

the Office— 

(1) has an orderly and organized startup; 

(2) attracts and retains a qualified workforce; and 

(3) establishes comprehensive employee training and benefits programs. 

(b) REPORTING REQUIREMENT.— 

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

to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of 

the House of Representatives that includes the plans described 

in paragraph (2). 

(2) PLANS.—The plans described in this paragraph are as 

follows: 

(A) TRAINING AND WORKFORCE DEVELOPMENT PLAN.— 

The Office shall submit a training and workforce development plan that includes, to the extent practicable— 

(i) identification of skill and technical expertise 

needs and actions taken to meet those requirements; 

(ii) steps taken to foster innovation and creativity; 

(iii) leadership development and succession planning; and 

(iv) effective use of technology by employees. 
H. R. 4173—45 

(B) WORKPLACE FLEXIBILITY PLAN.—The Office shall 

submit a workforce flexibility plan that includes, to the 

extent practicable— 

(i) telework; 

(ii) flexible work schedules; 

(iii) phased retirement; 

(iv) reemployed annuitants; 

(v) part-time work; 

(vi) job sharing; 

(vii) parental leave benefits and childcare assistance; 

(viii) domestic partner benefits; 

(ix) other workplace flexibilities; or 

(x) any combination of the items described in 

clauses (i) through (ix). 

(C) RECRUITMENT AND RETENTION PLAN.—The Office 

shall submit a recruitment and retention plan that 

includes, to the extent practicable, provisions relating to— 

(i) the steps necessary to target highly qualified 

applicant pools with diverse backgrounds; 

(ii) streamlined employment application processes; 

(iii) the provision of timely notification of the 

status of employment applications to applicants; and 

(iv) the collection of information to measure indicators of hiring effectiveness. 

(c) EXPIRATION.—The reporting requirement under subsection 

(b) shall terminate 5 years after the date of enactment of this 

Act. 

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

construed to affect— 

(1) a collective bargaining agreement, as that term is 

defined in section 7103(a)(8) of title 5, United States Code, 

that is in effect on the date of enactment of this Act; or 

(2) the rights of employees under chapter 71 of title 5, 

United States Code. 

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 BY THE BOARD OF GOVERNORS. 

(a) REPORTS.— 

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

each nonbank financial company supervised by the Board of 

Governors, and any subsidiary thereof, to submit reports under 

oath, to keep the Board of Governors informed as to— 

(A) the financial condition of the company or subsidiary, systems of the company or subsidiary for monitoring and controlling financial, operating, and other risks, 

and the extent to which the activities and operations of 

the company or subsidiary pose a threat to the financial 

stability of the United States; and 

(B) compliance by the company or subsidiary with the 

requirements of this title. 
H. R. 4173—46 

(2) USE OF EXISTING REPORTS AND INFORMATION.—In carrying out subsection (a), the Board of Governors shall, to the 

fullest extent possible, use— 

(A) reports and supervisory information that a nonbank 

financial company or subsidiary thereof has been required 

to provide to other Federal or State regulatory agencies; 

(B) information otherwise obtainable from Federal or 

State regulatory agencies; 

(C) information that is otherwise required to be 

reported publicly; and 

(D) externally audited financial statements of such 

company or subsidiary. 

(3) AVAILABILITY.—Upon the request of the Board of Governors, a nonbank financial company supervised by the Board 

of Governors, or a subsidiary thereof, shall promptly provide 

to the Board of Governors any information described in paragraph (2). 

(b) EXAMINATIONS.— 

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

Governors may examine any nonbank financial company supervised by the Board of Governors and any subsidiary of such 

company, to inform the Board of Governors of— 

(A) the nature of the operations and financial condition 

of the company and such subsidiary; 

(B) the financial, operational, and other risks of the 

company or such subsidiary that may pose a threat to 

the safety and soundness of such company or subsidiary 

or to the financial stability of the United States; 

(C) the systems for monitoring and controlling such 

risks; and 

(D) compliance by the company or such subsidiary 

with the requirements of this title. 

(2) USE OF EXAMINATION REPORTS AND INFORMATION.—For 

purposes of this subsection, the Board of Governors shall, to 

the fullest extent possible, rely on reports of examination of 

any subsidiary depository institution or functionally regulated 

subsidiary made by the primary financial regulatory agency 

for that subsidiary, and on information described in subsection 

(a)(2). 

(c) COORDINATION WITH PRIMARY FINANCIAL REGULATORY

AGENCY.—The Board of Governors shall— 

(1) provide reasonable notice to, and consult with, the 

primary financial regulatory agency for any subsidiary before 

requiring a report or commencing an examination of such subsidiary under this section; and 

(2) avoid duplication of examination activities, reporting 

requirements, and requests for information, to the fullest extent 

possible. 

SEC. 162. ENFORCEMENT. 

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

nonbank financial company supervised by the Board of Governors 

and any subsidiaries of such company (other than any depository 

institution subsidiary) shall be subject to the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance 

Act (12 U.S.C. 1818), in the same manner and to the same extent 

as if the company were a bank holding company, as provided 
H. R. 4173—47 

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

1818(b)(3)). 

(b) ENFORCEMENT AUTHORITY FOR FUNCTIONALLY REGULATED

SUBSIDIARIES.— 

(1) REFERRAL.—If the Board of Governors determines that 

a condition, practice, or activity of a depository institution 

subsidiary or functionally regulated subsidiary of a nonbank 

financial company supervised by the Board of Governors does 

not comply with the regulations or orders prescribed by the 

Board of Governors under this Act, or otherwise poses a threat 

to the financial stability of the United States, the Board of 

Governors may recommend, in writing, to the primary financial 

regulatory agency for the subsidiary that such agency initiate 

a supervisory action or enforcement proceeding. The recommendation shall be accompanied by a written explanation 

of the concerns giving rise to the recommendation. 

(2) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS.— 

If, during the 60-day period beginning on the date on which 

the primary financial regulatory agency receives a recommendation under paragraph (1), the primary financial regulatory 

agency does not take supervisory or enforcement action against 

a subsidiary that is acceptable to the Board of Governors, 

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

take the recommended supervisory or enforcement action, as 

if the subsidiary were a bank holding company subject to supervision by the Board of Governors. 

SEC. 163. ACQUISITIONS. 

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

COMPANY.—For purposes of section 3 of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1842), a nonbank financial company supervised by the Board of Governors shall be deemed to be, and shall 

be treated as, a bank holding company. 

(b) ACQUISITION OF NONBANK COMPANIES.— (1) PRIOR NOTICE FOR LARGE ACQUISITIONS.—Notwithstanding section 4(k)(6)(B) of the Bank Holding Company Act 

of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank holding company 

with total consolidated assets equal to or greater than 

$50,000,000,000 or a nonbank financial company supervised 

by the Board of Governors shall not acquire direct or indirect 

ownership or control of any voting shares of any company 

(other than an insured depository institution) that is engaged 

in activities described in section 4(k) of the Bank Holding 

Company Act of 1956 having total consolidated assets of 

$10,000,000,000 or more, without providing written notice to 

the Board of Governors in advance of the transaction. 

(2) EXEMPTIONS.—The prior notice requirement in paragraph (1) shall not apply with regard to the acquisition of 

shares that would qualify for the exemptions in section 4(c) 

or section 4(k)(4)(E) of the Bank Holding Company Act of 

1956 (12 U.S.C. 1843(c) and (k)(4)(E)). 

(3) NOTICE PROCEDURES.—The notice procedures set forth 

in section 4(j)(1) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1843(j)(1)), without regard to section 4(j)(3) of that 

Act, shall apply to an acquisition of any company (other than 

an insured depository institution) by a bank holding company 

with total consolidated assets equal to or greater than 
H. R. 4173—48 

$50,000,000,000 or a nonbank financial company supervised 

by the Board of Governors, as described in paragraph (1), 

including any such company engaged in activities described 

in section 4(k) of that Act. 

(4) STANDARDS FOR REVIEW.—In addition to the standards 

provided in section 4(j)(2) of the Bank Holding Company Act 

of 1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall 

consider the extent to which the proposed acquisition would 

result in greater or more concentrated risks to global or United 

States financial stability or the United States economy. 

(5) HART-SCOTT-RODINO FILING REQUIREMENT.—Solely for 

purposes of section 7A(c)(8) of the Clayton Act (15 U.S.C. 

18a(c)(8)), the transactions subject to the requirements of paragraph (1) shall be treated as if Board of Governors approval 

is not required. 

SEC. 164. PROHIBITION AGAINST MANAGEMENT INTERLOCKS 

BETWEEN CERTAIN FINANCIAL COMPANIES. 

A nonbank financial company supervised by the Board of Governors shall be treated as a bank holding company for purposes 

of the Depository Institutions Management Interlocks Act (12 U.S.C. 

3201 et seq.), except that the Board of Governors shall not exercise 

the authority provided in section 7 of that Act (12 U.S.C. 3207) 

to permit service by a management official of a nonbank financial 

company supervised by the Board of Governors as a management 

official of any bank holding company with total consolidated assets 

equal to or greater than $50,000,000,000, or other nonaffiliated 

nonbank financial company supervised by the Board of Governors 

(other than to provide a temporary exemption for interlocks 

resulting from a merger, acquisition, or consolidation). 

SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS 

FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY 

THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING 

COMPANIES. 

(a) IN GENERAL.— (1) PURPOSE.—In order to prevent or mitigate risks to 

the financial stability of the United States that could arise 

from the material financial distress or failure, or ongoing activities, of large, interconnected financial institutions, the Board 

of Governors shall, on its own or pursuant to recommendations 

by the Council under section 115, establish prudential standards for nonbank financial companies supervised by the Board 

of Governors and bank holding companies with total consolidated assets equal to or greater than $50,000,000,000 that— 

(A) are more stringent than the standards and requirements applicable to nonbank financial companies and bank 

holding companies that do not present similar risks to 

the financial stability of the United States; and 

(B) increase in stringency, based on the considerations 

identified in subsection (b)(3). 

(2) TAILORED APPLICATION.— (A) IN GENERAL.—In prescribing more stringent 

prudential standards under this section, the Board of Governors may, on its own or pursuant to a recommendation 

by the Council in accordance with section 115, differentiate 

among companies on an individual basis or by category, 

taking into consideration their capital structure, riskiness, 
H. R. 4173—49 

complexity, financial activities (including the financial 

activities of their subsidiaries), size, and any other riskrelated factors that the Board of Governors deems appropriate. 

(B) ADJUSTMENT OF THRESHOLD FOR APPLICATION OF

CERTAIN STANDARDS.—The Board of Governors may, pursuant to a recommendation by the Council in accordance 

with section 115, establish an asset threshold above 

$50,000,000,000 for the application of any standard established under subsections (c) through (g). 

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— (1) IN GENERAL.— 

(A) REQUIRED STANDARDS.—The Board of Governors 

shall establish prudential standards for nonbank financial 

companies supervised by the Board of Governors and bank 

holding companies described in subsection (a), that shall 

include— 

(i) risk-based capital requirements and leverage 

limits, unless the Board of Governors, in consultation 

with the Council, determines that such requirements 

are not appropriate for a company subject to more 

stringent prudential standards because of the activities 

of such company (such as investment company activities or assets under management) or structure, in 

which case, the Board of Governors shall apply other 

standards that result in similarly stringent risk controls; 

(ii) liquidity requirements; 

(iii) overall risk management requirements; 

(iv) resolution plan and credit exposure report 

requirements; and 

(v) concentration limits. 

(B) ADDITIONAL STANDARDS AUTHORIZED.—The Board 

of Governors may establish additional prudential standards 

for nonbank financial companies supervised by the Board 

of Governors and bank holding companies described in 

subsection (a), that include— 

(i) a contingent capital requirement; 

(ii) enhanced public disclosures; 

(iii) short-term debt limits; and 

(iv) such other prudential standards as the Board 

or Governors, on its own or pursuant to a recommendation made by the Council in accordance with section 

115, determines are appropriate. 

(2) STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In 

applying the standards set forth in paragraph (1) to any foreign 

nonbank financial company supervised by the Board of Governors or foreign-based bank holding company, the Board of 

Governors shall— 

(A) give due regard to the principle of national treatment and equality of competitive opportunity; and 

(B) take into account the extent to which the foreign 

financial company is subject on a consolidated basis to 

home country standards that are comparable to those 

applied to financial companies in the United States. 

(3) CONSIDERATIONS.—In prescribing prudential standards 

under paragraph (1), the Board of Governors shall— 
H. R. 4173—50 

(A) take into account differences among nonbank financial companies supervised by the Board of Governors and 

bank holding companies described in subsection (a), based 

on— 

(i) the factors described in subsections (a) and 

(b) of section 113; 

(ii) whether the company owns an insured depository institution; 

(iii) nonfinancial activities and affiliations of the 

company; and 

(iv) any other risk-related factors that the Board 

of Governors determines appropriate; 

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

in the factors listed in subsections (a) and (b) of section 

113 would not result in sharp, discontinuous changes in 

the prudential standards established under paragraph (1) 

of this subsection; 

(C) take into account any recommendations of the 

Council under section 115; and 

(D) adapt the required standards as appropriate in 

light of any predominant line of business of such company, 

including assets under management or other activities for 

which particular standards may not be appropriate. 

(4) CONSULTATION.—Before imposing prudential standards 

or any other requirements pursuant to this section, including 

notices of deficiencies in resolution plans and more stringent 

requirements or divestiture orders resulting from such notices, 

that are likely to have a significant impact on a functionally 

regulated subsidiary or depository institution subsidiary of a 

nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), 

the Board of Governors shall consult with each Council member 

that primarily supervises any such subsidiary with respect 

to any such standard or requirement. 

(5) REPORT.—The Board of Governors shall submit an 

annual report to Congress regarding the implementation of 

the prudential standards required pursuant to paragraph (1), 

including the use of such standards to mitigate risks to the 

financial stability of the United States. 

(c) CONTINGENT CAPITAL.— 

(1) IN GENERAL.—Subsequent to submission by the Council 

of a report to Congress under section 115(c), the Board of 

Governors may issue regulations that require each nonbank 

financial company supervised by the Board of Governors and 

bank holding companies described in subsection (a) to maintain 

a minimum amount of contingent capital that is convertible 

to equity in times of financial stress. 

(2) FACTORS TO CONSIDER.—In issuing regulations under 

this subsection, the Board of Governors shall consider— 

(A) the results of the study undertaken by the Council, 

and any recommendations of the Council, under section 

115(c); 

(B) an appropriate transition period for implementation 

of contingent capital under this subsection; 

(C) the factors described in subsection (b)(3)(A); 

(D) capital requirements applicable to the nonbank 

financial company supervised by the Board of Governors 
H. R. 4173—51 

or a bank holding company described in subsection (a), 

and subsidiaries thereof; and 

(E) any other factor that the Board of Governors deems 

appropriate. 

(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.— 

(1) RESOLUTION PLAN.—The Board of Governors shall 

require each nonbank financial company supervised by the 

Board of Governors and bank holding companies described in 

subsection (a) to report periodically to the Board of Governors, 

the Council, and the Corporation the plan of such company 

for rapid and orderly resolution in the event of material financial distress or failure, which shall include— 

(A) information regarding the manner and extent to 

which any insured depository institution affiliated with 

the company is adequately protected from risks arising 

from the activities of any nonbank subsidiaries of the company; 

(B) full descriptions of the ownership structure, assets, 

liabilities, and contractual obligations of the company; 

(C) identification of the cross-guarantees tied to different securities, identification of major counterparties, and 

a process for determining to whom the collateral of the 

company is pledged; and 

(D) any other information that the Board of Governors 

and the Corporation jointly require by rule or order. 

(2) CREDIT EXPOSURE REPORT.—The Board of Governors 

shall require each nonbank financial company supervised by 

the Board of Governors and bank holding companies described 

in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation on— 

(A) the nature and extent to which the company has 

credit exposure to other significant nonbank financial 

companies and significant bank holding companies; and 

(B) the nature and extent to which other significant 

nonbank financial companies and significant bank holding 

companies have credit exposure to that company. 

(3) REVIEW.—The Board of Governors and the Corporation 

shall review the information provided in accordance with this 

subsection by each nonbank financial company supervised by 

the Board of Governors and bank holding company described 

in subsection (a). 

(4) NOTICE OF DEFICIENCIES.—If the Board of Governors 

and the Corporation jointly determine, based on their review 

under paragraph (3), that the resolution plan of a nonbank 

financial company supervised by the Board of Governors or 

a bank holding company described in subsection (a) is not 

credible or would not facilitate an orderly resolution of the 

company under title 11, United States Code— 

(A) the Board of Governors and the Corporation shall 

notify the company of the deficiencies in the resolution 

plan; and 

(B) the company shall resubmit the resolution plan 

within a timeframe determined by the Board of Governors 

and the Corporation, with revisions demonstrating that 

the plan is credible and would result in an orderly resolution under title 11, United States Code, including any 
H. R. 4173—52 

proposed changes in business operations and corporate 

structure to facilitate implementation of the plan. 

(5) FAILURE TO RESUBMIT CREDIBLE PLAN.— 

(A) IN GENERAL.—If a nonbank financial company 

supervised by the Board of Governors or a bank holding 

company described in subsection (a) fails to timely resubmit 

the resolution plan as required under paragraph (4), with 

such revisions as are required under subparagraph (B), 

the Board of Governors and the Corporation may jointly 

impose more stringent capital, leverage, or liquidity 

requirements, or restrictions on the growth, activities, or 

operations of the company, or any subsidiary thereof, until 

such time as the company resubmits a plan that remedies 

the deficiencies. 

(B) DIVESTITURE.—The Board of Governors and the 

Corporation, in consultation with the Council, may jointly 

direct a nonbank financial company supervised by the 

Board of Governors or a bank holding company described 

in subsection (a), by order, to divest certain assets or operations identified by the Board of Governors and the Corporation, to facilitate an orderly resolution of such company 

under title 11, United States Code, in the event of the 

failure of such company, in any case in which— 

(i) the Board of Governors and the Corporation 

have jointly imposed more stringent requirements on 

the company pursuant to subparagraph (A); and 

(ii) the company has failed, within the 2-year 

period beginning on the date of the imposition of such 

requirements under subparagraph (A), to resubmit the 

resolution plan with such revisions as were required 

under paragraph (4)(B). 

(6) NO LIMITING EFFECT.—A resolution plan submitted in 

accordance with this subsection shall not be binding on a bankruptcy court, a receiver appointed under title II, or any other 

authority that is authorized or required to resolve the nonbank 

financial company supervised by the Board, any bank holding 

company, or any subsidiary or affiliate of the foregoing. 

(7) NO PRIVATE RIGHT OF ACTION.—No private right of 

action may be based on any resolution plan submitted in accordance with this subsection. 

(8) RULES.—Not later than 18 months after the date of 

enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection. 

(e) CONCENTRATION LIMITS.— 

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

of any individual company could pose to a nonbank financial 

company supervised by the Board of Governors or a bank 

holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such 

risks. 

(2) LIMITATION ON CREDIT EXPOSURE.—The regulations prescribed by the Board of Governors under paragraph (1) shall 

prohibit each nonbank financial company supervised by the 

Board of Governors and bank holding company described in 

subsection (a) from having credit exposure to any unaffiliated 

company that exceeds 25 percent of the capital stock and surplus (or such lower amount as the Board of Governors may 
H. R. 4173—53 

determine by regulation to be necessary to mitigate risks to 

the financial stability of the United States) of the company. 

(3) CREDIT EXPOSURE.—For purposes of paragraph (2), 

‘‘credit exposure’’ to a company means— 

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

loans, deposits, and lines of credit; 

(B) all repurchase agreements and reverse repurchase 

agreements with the company, and all securities borrowing 

and lending transactions with the company, to the extent 

that such transactions create credit exposure for the 

nonbank financial company supervised by the Board of 

Governors or a bank holding company described in subsection (a); 

(C) all guarantees, acceptances, or letters of credit 

(including endorsement or standby letters of credit) issued 

on behalf of the company; 

(D) all purchases of or investment in securities issued 

by the company; 

(E) counterparty credit exposure to the company in 

connection with a derivative transaction between the 

nonbank financial company supervised by the Board of 

Governors or a bank holding company described in subsection (a) and the company; and 

(F) any other similar transactions that the Board of 

Governors, by regulation, determines to be a credit exposure for purposes of this section. 

(4) ATTRIBUTION RULE.—For purposes of this subsection, 

any transaction by a nonbank financial company supervised 

by the Board of Governors or a bank holding company described 

in subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are 

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

(5) RULEMAKING.—The Board of Governors may issue such 

regulations and orders, including definitions consistent with 

this section, as may be necessary to administer and carry 

out this subsection. 

(6) EXEMPTIONS.—This subsection shall not apply to any 

Federal home loan bank. The Board of Governors may, by 

regulation or order, exempt transactions, in whole or in part, 

from the definition of the term ‘‘credit exposure’’ for purposes 

of this subsection, if the Board of Governors finds that the 

exemption is in the public interest and is consistent with the 

purpose of this subsection. 

(7) TRANSITION PERIOD.— 

(A) IN GENERAL.—This subsection and any regulations 

and orders of the Board of Governors under this subsection 

shall not be effective until 3 years after the date of enactment of this Act. 

(B) EXTENSION AUTHORIZED.—The Board of Governors 

may extend the period specified in subparagraph (A) for 

not longer than an additional 2 years. 

(f) ENHANCED PUBLIC DISCLOSURES.—The Board of Governors 

may prescribe, by regulation, periodic public disclosures by nonbank 

financial companies supervised by the Board of Governors and 

bank holding companies described in subsection (a) in order to 

support market evaluation of the risk profile, capital adequacy, 

and risk management capabilities thereof. 
H. R. 4173—54 

(g) SHORT-TERM DEBT LIMITS.— 

(1) IN GENERAL.—In order to mitigate the risks that an 

over-accumulation of short-term debt could pose to financial 

companies and to the stability of the United States financial 

system, the Board of Governors may, by regulation, prescribe 

a limit on the amount of short-term debt, including off-balance 

sheet exposures, that may be accumulated by any bank holding 

company described in subsection (a) and any nonbank financial 

company supervised by the Board of Governors. 

(2) BASIS OF LIMIT.—Any limit prescribed under paragraph 

(1) shall be based on the short-term debt of the company 

described in paragraph (1) as a percentage of capital stock 

and surplus of the company or on such other measure as 

the Board of Governors considers appropriate. 

(3) SHORT-TERM DEBT DEFINED.—For purposes of this subsection, the term ‘‘short-term debt’’ means such liabilities with 

short-dated maturity that the Board of Governors identifies, 

by regulation, except that such term does not include insured 

deposits. 

(4) RULEMAKING AUTHORITY.—In addition to prescribing 

regulations under paragraphs (1) and (3), the Board of Governors may prescribe such regulations, including definitions 

consistent with this subsection, and issue such orders, as may 

be necessary to carry out this subsection. 

(5) AUTHORITY TO ISSUE EXEMPTIONS AND ADJUSTMENTS.— Notwithstanding the Bank Holding Company Act of 1956 (12 

U.S.C. 1841 et seq.), the Board of Governors may, if it determines such action is necessary to ensure appropriate heightened 

prudential supervision, with respect to a company described 

in paragraph (1) that does not control an insured depository 

institution, issue to such company an exemption from or adjustment to the limit prescribed under paragraph (1). 

(h) RISK COMMITTEE.— (1) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.—The Board of Governors shall require 

each nonbank financial company supervised by the Board of 

Governors that is a publicly traded company to establish a 

risk committee, as set forth in paragraph (3), not later than 

1 year after the date of receipt of a notice of final determination 

under section 113(e)(3) with respect to such nonbank financial 

company supervised by the Board of Governors. 

(2) CERTAIN BANK HOLDING COMPANIES.— 

(A) MANDATORY REGULATIONS.—The Board of Governors shall issue regulations requiring each bank holding 

company that is a publicly traded company and that has 

total consolidated assets of not less than $10,000,000,000 

to establish a risk committee, as set forth in paragraph 

(3). 

(B) PERMISSIVE REGULATIONS.—The Board of Governors 

may require each bank holding company that is a publicly 

traded company and that has total consolidated assets 

of less than $10,000,000,000 to establish a risk committee, 

as set forth in paragraph (3), as determined necessary 

or appropriate by the Board of Governors to promote sound 

risk management practices. 

(3) RISK COMMITTEE.—A risk committee required by this 

subsection shall— 
H. R. 4173—55 

(A) be responsible for the oversight of the enterprisewide risk management practices of the nonbank financial 

company supervised by the Board of Governors or bank 

holding company described in subsection (a), as applicable; 

(B) include such number of independent directors as 

the Board of Governors may determine appropriate, based 

on the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company 

supervised by the Board of Governors or a bank holding 

company described in subsection (a), as applicable; and 

(C) include at least 1 risk management expert having 

experience in identifying, assessing, and managing risk 

exposures of large, complex firms. 

(4) RULEMAKING.—The Board of Governors shall issue final 

rules to carry out this subsection, not later than 1 year after 

the transfer date, to take effect not later than 15 months 

after the transfer date. 

(i) STRESS TESTS.— 

(1) BY THE BOARD OF GOVERNORS.— 

(A) ANNUAL TESTS REQUIRED.—The Board of Governors, 

in coordination with the appropriate primary financial 

regulatory agencies and the Federal Insurance Office, shall 

conduct annual analyses in which nonbank financial 

companies supervised by the Board of Governors and bank 

holding companies described in subsection (a) are subject 

to evaluation of whether such companies have the capital, 

on a total consolidated basis, necessary to absorb losses 

as a result of adverse economic conditions. 

(B) TEST PARAMETERS AND CONSEQUENCES.—The Board 

of Governors— 

(i) shall provide for at least 3 different sets of 

conditions under which the evaluation required by this 

subsection shall be conducted, including baseline, 

adverse, and severely adverse; 

(ii) may require the tests described in subparagraph (A) at bank holding companies and nonbank 

financial companies, in addition to those for which 

annual tests are required under subparagraph (A); 

(iii) may develop and apply such other analytic 

techniques as are necessary to identify, measure, and 

monitor risks to the financial stability of the United 

States; 

(iv) shall require the companies described in 

subparagraph (A) to update their resolution plans 

required under subsection (d)(1), as the Board of Governors determines appropriate, based on the results 

of the analyses; and 

(v) shall publish a summary of the results of the 

tests required under subparagraph (A) or clause (ii) 

of this subparagraph. 

(2) BY THE COMPANY.— (A) REQUIREMENT.—A nonbank financial company 

supervised by the Board of Governors and a bank holding 

company described in subsection (a) shall conduct semiannual stress tests. All other financial companies that have 

total consolidated assets of more than $10,000,000,000 and 

are regulated by a primary Federal financial regulatory 
H. R. 4173—56 

agency shall conduct annual stress tests. The tests required 

under this subparagraph shall be conducted in accordance 

with the regulations prescribed under subparagraph (C). 

(B) REPORT.—A company required to conduct stress 

tests under subparagraph (A) shall submit a report to 

the Board of Governors and to its primary financial regulatory agency at such time, in such form, and containing 

such information as the primary financial regulatory 

agency shall require. 

(C) REGULATIONS.—Each Federal primary financial 

regulatory agency, in coordination with the Board of Governors and the Federal Insurance Office, shall issue consistent and comparable regulations to implement this paragraph that shall— 

(i) define the term ‘‘stress test’’ for purposes of 

this paragraph; 

(ii) establish methodologies for the conduct of 

stress tests required by this paragraph that shall provide for at least 3 different sets of conditions, including 

baseline, adverse, and severely adverse; 

(iii) establish the form and content of the report 

required by subparagraph (B); and 

(iv) require companies subject to this paragraph 

to publish a summary of the results of the required 

stress tests. 

(j) LEVERAGE LIMITATION.— 

(1) REQUIREMENT.—The Board of Governors shall require 

a bank holding company with total consolidated assets equal 

to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors to maintain a 

debt to equity ratio of no more than 15 to 1, upon a determination by the Council that such company poses a grave threat 

to the financial stability of the United States and that the 

imposition of such requirement is necessary to mitigate the 

risk that such company poses to the financial stability of the 

United States. Nothing in this paragraph shall apply to a 

Federal home loan bank. 

(2) CONSIDERATIONS.—In making a determination under 

this subsection, the Council shall consider the factors described 

in subsections (a) and (b) of section 113 and any other riskrelated factors that the Council deems appropriate. 

(3) REGULATIONS.—The Board of Governors shall promulgate regulations to establish procedures and timelines for complying with the requirements of this subsection. 

(k) INCLUSION OF OFF-BALANCE-SHEET ACTIVITIES IN COMPUTING CAPITAL REQUIREMENTS.— 

(1) IN GENERAL.—In the case of any bank holding company 

described in subsection (a) or nonbank financial company supervised by the Board of Governors, the computation of capital 

for purposes of meeting capital requirements shall take into 

account any off-balance-sheet activities of the company. 

(2) EXEMPTIONS.—If the Board of Governors determines 

that an exemption from the requirement under paragraph (1) 

is appropriate, the Board of Governors may exempt a company, 

or any transaction or transactions engaged in by such company, 

from the requirements of paragraph (1). 
H. R. 4173—57 

(3) OFF-BALANCE-SHEET ACTIVITIES DEFINED.—For purposes 

of this subsection, the term ‘‘off-balance-sheet activities’’ means 

an existing liability of a company that is not currently a balance 

sheet liability, but may become one upon the happening of 

some future event, including the following transactions, to the 

extent that they may create a liability: 

(A) Direct credit substitutes in which a bank substitutes its own credit for a third party, including standby 

letters of credit. 

(B) Irrevocable letters of credit that guarantee repayment of commercial paper or tax-exempt securities. 

(C) Risk participations in bankers’ acceptances. 

(D) Sale and repurchase agreements. 

(E) Asset sales with recourse against the seller. 

(F) Interest rate swaps. 

(G) Credit swaps. 

(H) Commodities contracts. 

(I) Forward contracts. 

(J) Securities contracts. 

(K) Such other activities or transactions as the Board 

of Governors may, by rule, define. 

SEC. 166. EARLY REMEDIATION REQUIREMENTS. 

(a) IN GENERAL.—The Board of Governors, in consultation with 

the Council and the Corporation, shall prescribe regulations establishing requirements to provide for the early remediation of financial 

distress of a nonbank financial company supervised by the Board 

of Governors or a bank holding company described in section 165(a), 

except that nothing in this subsection authorizes the provision 

of financial assistance from the Federal Government. 

(b) PURPOSE OF THE EARLY REMEDIATION REQUIREMENTS.— The purpose of the early remediation requirements under subsection 

(a) shall be to establish a series of specific remedial actions to 

be taken by a nonbank financial company supervised by the Board 

of Governors or a bank holding company described in section 165(a) 

that is experiencing increasing financial distress, in order to minimize the probability that the company will become insolvent and 

the potential harm of such insolvency to the financial stability 

of the United States. 

(c) REMEDIATION REQUIREMENTS.—The regulations prescribed 

by the Board of Governors under subsection (a) shall— 

(1) define measures of the financial condition of the company, including regulatory capital, liquidity measures, and 

other forward-looking indicators; and 

(2) establish requirements that increase in stringency as 

the financial condition of the company declines, including— 

(A) requirements in the initial stages of financial 

decline, including limits on capital distributions, acquisitions, and asset growth; and 

(B) requirements at later stages of financial decline, 

including a capital restoration plan and capital-raising 

requirements, limits on transactions with affiliates, 

management changes, and asset sales. 

SEC. 167. AFFILIATIONS. 

(a) AFFILIATIONS.—Nothing in this subtitle shall be construed 

to require a nonbank financial company supervised by the Board 
H. R. 4173—58 

of Governors, or a company that controls a nonbank financial company supervised by the Board of Governors, to conform the activities 

thereof to the requirements of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843). 

(b) REQUIREMENT.— 

(1) IN GENERAL.— 

(A) BOARD AUTHORITY.—If a nonbank financial company supervised by the Board of Governors conducts activities other than those that are determined to be financial 

in nature or incidental thereto under section 4(k) of the 

Bank Holding Company Act of 1956, the Board of Governors may require such company to establish and conduct 

all or a portion of such activities that are determined 

to be financial in nature or incidental thereto in or through 

an intermediate holding company established pursuant to 

regulation of the Board of Governors, not later than 90 

days (or such longer period as the Board of Governors 

may deem appropriate) after the date on which the 

nonbank financial company supervised by the Board of 

Governors is notified of the determination of the Board 

of Governors under this section. 

(B) NECESSARY ACTIONS.—Notwithstanding subparagraph (A), the Board of Governors shall require a nonbank 

financial company supervised by the Board of Governors 

to establish an intermediate holding company if the Board 

of Governors makes a determination that the establishment 

of such intermediate holding company is necessary to— 

(i) appropriately supervise activities that are determined to be financial in nature or incidental thereto; 

or 

(ii) to ensure that supervision by the Board of 

Governors does not extend to the commercial activities 

of such nonbank financial company. 

(2) INTERNAL FINANCIAL ACTIVITIES.—For purposes of this 

subsection, activities that are determined to be financial in 

nature or incidental thereto under section 4(k) of the Bank 

Holding Company Act of 1956, as described in paragraph (1), 

shall not include internal financial activities, including internal 

treasury, investment, and employee benefit functions. With 

respect to any internal financial activity engaged in for the 

company or an affiliate and a non-affiliate of such company 

during the year prior to the date of enactment of this Act, 

such company (or an affiliate that is not an intermediate 

holding company or subsidiary of an intermediate holding company) may continue to engage in such activity, as long as 

not less than 2/3 of the assets or 2/3 of the revenues generated 

from the activity are from or attributable to such company 

or an affiliate, subject to review by the Board of Governors, 

to determine whether engaging in such activity presents undue 

risk to such company or to the financial stability of the United 

States. 

(3) SOURCE OF STRENGTH.—A company that directly or 

indirectly controls an intermediate holding company established 

under this section shall serve as a source of strength to its 

subsidiary intermediate holding company. 

(4) PARENT COMPANY REPORTS.—The Board of Governors 

may, from time to time, require reports under oath from a 
H. R. 4173—59 

company that controls an intermediate holding company, and 

from the appropriate officers or directors of such company, 

solely for purposes of ensuring compliance with the provisions 

of this section, including assessing the ability of the company 

to serve as a source of strength to its subsidiary intermediate 

holding company pursuant to paragraph (3) and enforcing such 

compliance. 

(5) LIMITED PARENT COMPANY ENFORCEMENT.— 

(A) IN GENERAL.—In addition to any other authority 

of the Board of Governors, the Board of Governors may 

enforce compliance with the provisions of this subsection 

that are applicable to any company described in paragraph 

(1) that controls an intermediate holding company under 

section 8 of the Federal Deposit Insurance Act, and such 

company shall be subject to such section (solely for such 

purposes) in the same manner and to the same extent 

as if such company were a bank holding company. 

(B) APPLICATION OF OTHER ACT.—Any violation of this 

subsection by any company that controls an intermediate 

holding company may also be treated as a violation of 

the Federal Deposit Insurance Act for purposes of subparagraph (A). 

(C) NO EFFECT ON OTHER AUTHORITY.—No provision 

of this paragraph shall be construed as limiting any 

authority of the Board of Governors or any other Federal 

agency under any other provision of law. 

(c) REGULATIONS.—The Board of Governors— 

(1) shall promulgate regulations to establish the criteria 

for determining whether to require a nonbank financial company supervised by the Board of Governors to establish an 

intermediate holding company under subsection (b); and 

(2) may promulgate regulations to establish any restrictions 

or limitations on transactions between an intermediate holding 

company or a nonbank financial company supervised by the 

Board of Governors and its affiliates, as necessary to prevent 

unsafe and unsound practices in connection with transactions 

between such company, or any subsidiary thereof, and its 

parent company or affiliates that are not subsidiaries of such 

company, except that such regulations shall not restrict or 

limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or 

services. 

SEC. 168. REGULATIONS. 

The Board of Governors shall have authority to issue regulations to implement subtitles A and C and the amendments made 

thereunder. Except as otherwise specified in subtitle A or C, not 

later than 18 months after the effective date of this Act, the Board 

of Governors shall issue final regulations to implement subtitles 

A and C, and the amendments made thereunder. 

SEC. 169. AVOIDING DUPLICATION. 

The Board of Governors shall take any action that the Board 

of Governors deems appropriate to avoid imposing requirements 

under this subtitle that are duplicative of requirements applicable 

to bank holding companies and nonbank financial companies under 

other provisions of law. 
H. R. 4173—60 

SEC. 170. SAFE HARBOR. 

(a) REGULATIONS.—The Board of Governors shall promulgate 

regulations on behalf of, and in consultation with, the Council 

setting forth the criteria for exempting certain types or classes 

of U.S. nonbank financial companies or foreign nonbank financial 

companies from supervision by the Board of Governors. 

(b) CONSIDERATIONS.—In developing the criteria under subsection (a), the Board of Governors shall take into account the 

factors for consideration described in subsections (a) and (b) of 

section 113 in determining whether a U.S. nonbank financial company or foreign nonbank financial company shall be supervised 

by the Board of Governors. 

(c) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed to require supervision by the Board of Governors of 

a U.S. nonbank financial company or foreign nonbank financial 

company, if such company does not meet the criteria for exemption 

established under subsection (a). 

(d) REVISIONS.— 

(1) IN GENERAL.—The Board of Governors shall, in consultation with the Council, review the regulations promulgated 

under subsection (a), not less frequently than every 5 years, 

and based upon the review, the Board of Governors may revise 

such regulations on behalf of, and in consultation with, the 

Council to update as necessary the criteria set forth in such 

regulations. 

(2) TRANSITION PERIOD.—No revisions under paragraph (1) 

shall take effect before the end of the 2-year period after the 

date of publication of such revisions in final form. 

(e) REPORT.—The Chairman of the Board of Governors and 

the Chairperson of the Council shall submit a joint report to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives not later than 30 days after the date of the issuance in 

final form of regulations under subsection (a), or any subsequent 

revision to such regulations under subsection (d), as applicable. 

Such report shall include, at a minimum, the rationale for exemption and empirical evidence to support the criteria for exemption. 

SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS. 

(a) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

(1) GENERALLY APPLICABLE LEVERAGE CAPITAL REQUIREMENTS.—The term ‘‘generally applicable leverage capital 

requirements’’ means— 

(A) the minimum ratios of tier 1 capital to average 

total assets, as established by the appropriate Federal 

banking agencies to apply to insured depository institutions 

under the prompt corrective action regulations implementing section 38 of the Federal Deposit Insurance Act, 

regardless of total consolidated asset size or foreign financial exposure; and 

(B) includes the regulatory capital components in the 

numerator of that capital requirement, average total assets 

in the denominator of that capital requirement, and the 

required ratio of the numerator to the denominator. 
H. R. 4173—61 

(2) GENERALLY APPLICABLE RISK-BASED CAPITAL REQUIREMENTS.—The term ‘‘generally applicable risk-based capital 

requirements’’ means— 

(A) the risk-based capital requirements, as established 

by the appropriate Federal banking agencies to apply to 

insured depository institutions under the prompt corrective 

action regulations implementing section 38 of the Federal 

Deposit Insurance Act, regardless of total consolidated asset 

size or foreign financial exposure; and 

(B) includes the regulatory capital components in the 

numerator of those capital requirements, the risk-weighted 

assets in the denominator of those capital requirements, 

and the required ratio of the numerator to the denominator. 

(3) DEFINITION OF DEPOSITORY INSTITUTION HOLDING COMPANY.—The term ‘‘depository institution holding company’’ 

means a bank holding company or a savings and loan holding 

company (as those terms are defined in section 3 of the Federal 

Deposit Insurance Act) that is organized in the United States, 

including any bank or savings and loan holding company that 

is owned or controlled by a foreign organization, but does not 

include the foreign organization. 

(b) MINIMUM CAPITAL REQUIREMENTS.— 

(1) MINIMUM LEVERAGE CAPITAL REQUIREMENTS.—The 

appropriate Federal banking agencies shall establish minimum 

leverage capital requirements on a consolidated basis for 

insured depository institutions, depository institution holding 

companies, and nonbank financial companies supervised by 

the Board of Governors. The minimum leverage capital requirements established under this paragraph shall not be less than 

the generally applicable leverage capital requirements, which 

shall serve as a floor for any capital requirements that the 

agency may require, nor quantitatively lower than the generally 

applicable leverage capital requirements that were in effect 

for insured depository institutions as of the date of enactment 

of this Act. 

(2) MINIMUM RISK-BASED CAPITAL REQUIREMENTS.—The 

appropriate Federal banking agencies shall establish minimum 

risk-based capital requirements on a consolidated basis for 

insured depository institutions, depository institution holding 

companies, and nonbank financial companies supervised by 

the Board of Governors. The minimum risk-based capital 

requirements established under this paragraph shall not be 

less than the generally applicable risk-based capital requirements, which shall serve as a floor for any capital requirements 

that the agency may require, nor quantitatively lower than 

the generally applicable risk-based capital requirements that 

were in effect for insured depository institutions as of the 

date of enactment of this Act. 

(3) INVESTMENTS IN FINANCIAL SUBSIDIARIES.—For purposes 

of this section, investments in financial subsidiaries that 

insured depository institutions are required to deduct from 

regulatory capital under section 5136A of the Revised Statutes 

of the United States or section 46(a)(2) of the Federal Deposit 

Insurance Act need not be deducted from regulatory capital 

by depository institution holding companies or nonbank financial companies supervised by the Board of Governors, unless 

such capital deduction is required by the Board of Governors 
H. R. 4173—62 

or the primary financial regulatory agency in the case of 

nonbank financial companies supervised by the Board of Governors. 

(4) EFFECTIVE DATES AND PHASE-IN PERIODS.— 

(A) DEBT OR EQUITY INSTRUMENTS ON OR AFTER MAY

19, 2010.—For debt or equity instruments issued on or after 

May 19, 2010, by depository institution holding companies 

or by nonbank financial companies supervised by the Board 

of Governors, this section shall be deemed to have become 

effective as of May 19, 2010. 

(B) DEBT OR EQUITY INSTRUMENTS ISSUED BEFORE MAY

19, 2010.—For debt or equity instruments issued before May 

19, 2010, by depository institution holding companies or 

by nonbank financial companies supervised by the Board 

of Governors, any regulatory capital deductions required 

under this section shall be phased in incrementally over 

a period of 3 years, with the phase-in period to begin 

on January 1, 2013, except as set forth in subparagraph 

(C). 

(C) DEBT OR EQUITY INSTRUMENTS OF SMALLER INSTITUTIONS.—For debt or equity instruments issued before May 

19, 2010, by depository institution holding companies with 

total consolidated assets of less than $15,000,000,000 as 

of December 31, 2009, and by organizations that were 

mutual holding companies on May 19, 2010, the capital 

deductions that would be required for other institutions 

under this section are not required as a result of this 

section. 

(D) DEPOSITORY INSTITUTION HOLDING COMPANIES NOT

PREVIOUSLY SUPERVISED BY THE BOARD OF GOVERNORS.— 

For any depository institution holding company that was 

not supervised by the Board of Governors as of May 19, 

2010, the requirements of this section, except as set forth 

in subparagraphs (A) and (B), shall be effective 5 years 

after the date of enactment of this Act 

(E) CERTAIN BANK HOLDING COMPANY SUBSIDIARIES OF

FOREIGN BANKING ORGANIZATIONS.—For bank holding company subsidiaries of foreign banking organizations that 

have relied on Supervision and Regulation Letter SR-01- 

1 issued by the Board of Governors (as in effect on May 

19, 2010), the requirements of this section, except as set 

forth in subparagraph (A), shall be effective 5 years after 

the date of enactment of this Act. 

(5) EXCEPTIONS.—This section shall not apply to— 

(A) debt or equity instruments issued to the United 

States or any agency or instrumentality thereof pursuant 

to the Emergency Economic Stabilization Act of 2008, and 

prior to October 4, 2010; 

(B) any Federal home loan bank; or 

(C) any small bank holding company that is subject 

to the Small Bank Holding Company Policy Statement 

of the Board of Governors, as in effect on May 19, 2010. 

(6) STUDY AND REPORT ON SMALL INSTITUTION ACCESS TO

CAPITAL.— 

(A) STUDY REQUIRED.—The Comptroller General of the 

United States, after consultation with the Federal banking 
H. R. 4173—63 

agencies, shall conduct a study of access to capital by 

smaller insured depository institutions. 

(B) SCOPE.—For purposes of this study required by 

subparagraph (A), the term ‘‘smaller insured depository 

institution’’ means an insured depository institution with 

total consolidated assets of $5,000,000,000 or less. 

(C) REPORT TO CONGRESS.—Not later than 18 months 

after the date of enactment of this Act, the Comptroller 

General of the United States shall submit to the Committee 

on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House 

of Representatives a report summarizing the results of 

the study conducted under subparagraph (A), together with 

any recommendations for legislative or regulatory action 

that would enhance the access to capital of smaller insured 

depository institutions, in a manner that is consistent with 

safe and sound banking operations. 

(7) CAPITAL REQUIREMENTS TO ADDRESS ACTIVITIES THAT

POSE RISKS TO THE FINANCIAL SYSTEM.— 

(A) IN GENERAL.—Subject to the recommendations of 

the Council, in accordance with section 120, the Federal 

banking agencies shall develop capital requirements 

applicable to insured depository institutions, depository 

institution holding companies, and nonbank financial 

companies supervised by the Board of Governors that 

address the risks that the activities of such institutions 

pose, not only to the institution engaging in the activity, 

but to other public and private stakeholders in the event 

of adverse performance, disruption, or failure of the institution or the activity. 

(B) CONTENT.—Such rules shall address, at a minimum, the risks arising from— 

(i) significant volumes of activity in derivatives, 

securitized products purchased and sold, financial 

guarantees purchased and sold, securities borrowing 

and lending, and repurchase agreements and reverse 

repurchase agreements; 

(ii) concentrations in assets for which the values 

presented in financial reports are based on models 

rather than historical cost or prices deriving from deep 

and liquid 2-way markets; and 

(iii) concentrations in market share for any activity 

that would substantially disrupt financial markets if 

the institution is forced to unexpectedly cease the 

activity. 

SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR INSURANCE AND ORDERLY LIQUIDATION PURPOSES. 

(a) EXAMINATIONS FOR INSURANCE AND RESOLUTION PURPOSES.—Section 10(b)(3) of the Federal Deposit Insurance Act (12 

U.S.C. 1820(b)(3)) is amended— 

(1) by striking ‘‘In addition’’ and inserting the following: 

‘‘(A) IN GENERAL.—In addition’’; and 

(2) by striking ‘‘whenever the board of directors determines’’ 

and all that follows through the period and inserting the following: ‘‘or nonbank financial company supervised by the Board 

of Governors or a bank holding company described in section 
H. R. 4173—64 

165(a) of the Financial Stability Act of 2010, whenever the 

Board of Directors determines that a special examination of 

any such depository institution is necessary to determine the 

condition of such depository institution for insurance purposes, 

or of such nonbank financial company supervised by the Board 

of Governors or bank holding company described in section 

165(a) of the Financial Stability Act of 2010, for the purpose 

of implementing its authority to provide for orderly liquidation 

of any such company under title II of that Act, provided that 

such authority may not be used with respect to any such 

company that is in a generally sound condition. 

‘‘(B) LIMITATION.—Before conducting a special examination of a nonbank financial company supervised by the 

Board of Governors or a bank holding company described 

in section 165(a) of the Financial Stability Act of 2010, 

the Corporation shall review any available and acceptable 

resolution plan that the company has submitted in accordance with section 165(d) of that Act, consistent with the 

nonbinding effect of such plan, and available reports of 

examination, and shall coordinate to the maximum extent 

practicable with the Board of Governors, in order to minimize duplicative or conflicting examinations.’’. 

(b) ENFORCEMENT AUTHORITY.—Section 8(t) of the Federal 

Deposit Insurance Act (12 U.S.C. 1818(t)) is amended— 

(1) in paragraph (1), by inserting ‘‘, any depository institution holding company,’’ before ‘‘or any institution-affiliated 

party’’; 

(2) in paragraph (2)— 

(A) by striking ‘‘or’’ at the end of subparagraph (B); 

(B) at the end of subparagraph (C), by striking the 

period and inserting ‘‘or’’; and 

(C) by inserting at the end the following new subparagraph: 

‘‘(D) the conduct or threatened conduct (including any 

acts or omissions) of the depository institution holding company poses a risk to the Deposit Insurance Fund, provided 

that such authority may not be used with respect to a 

depository institution holding company that is in generally 

sound condition and whose conduct does not pose a foreseeable and material risk of loss to the Deposit Insurance 

Fund;’’; and 

(3) by adding at the end the following: 

‘‘(6) POWERS AND DUTIES WITH RESPECT TO DEPOSITORY

INSTITUTION HOLDING COMPANIES.—For purposes of exercising 

the backup authority provided in this subsection— 

‘‘(A) the Corporation shall have the same powers with 

respect to a depository institution holding company and 

its affiliates as the appropriate Federal banking agency 

has with respect to the holding company and its affiliates; 

and 

‘‘(B) the holding company and its affiliates shall have 

the same duties and obligations with respect to the Corporation as the holding company and its affiliates have 

with respect to the appropriate Federal banking agency.’’. 

(c) RULE OF CONSTRUCTION.—Nothing in this Act shall be construed to limit or curtail the Corporation’s current authority to 
H. R. 4173—65 

examine or bring enforcement actions with respect to any insured 

depository institution or institution-affiliated party. 

SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN 

INSTITUTIONS. 

(a) ESTABLISHMENT OF FOREIGN BANK OFFICES IN THE UNITED

STATES.—Section 7(d)(3) of the International Banking Act of 1978 

(12 U.S.C. 3105(d)(3)) is amended— 

(1) in subparagraph (C), by striking ‘‘and’’ at the end; 

(2) in subparagraph (D), by striking the period at the 

end of and inserting ‘‘; and’’; and 

(3) by adding at the end the following new subparagraph: 

‘‘(E) for a foreign bank that presents a risk to the 

stability of United States financial system, whether the 

home country of the foreign bank has adopted, or is making 

demonstrable progress toward adopting, an appropriate 

system of financial regulation for the financial system of 

such home country to mitigate such risk.’’. 

(b) TERMINATION OF FOREIGN BANK OFFICES IN THE UNITED

STATES.—Section 7(e)(1) of the International Banking Act of 1978 

(12 U.S.C. 3105(e)(1)) is amended— 

(1) in subparagraph (A), by striking ‘‘or’’ at the end; 

(2) in subparagraph (B), by striking the period at the 

end of and inserting ‘‘; or’’; and 

(3) by inserting after subparagraph (B), the following new 

subparagraph: 

‘‘(C) for a foreign bank that presents a risk to the 

stability of the United States financial system, the home 

country of the foreign bank has not adopted, or made 

demonstrable progress toward adopting, an appropriate 

system of financial regulation to mitigate such risk.’’. 

(c) REGISTRATION OR SUCCESSION TO A UNITED STATES BROKER

OR DEALER AND TERMINATION OF SUCH REGISTRATION.—Section 

15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is 

amended by adding at the end the following new subsections: 

‘‘(k) REGISTRATION OR SUCCESSION TO A UNITED STATES BROKER

OR DEALER.—In determining whether to permit a foreign person 

or an affiliate of a foreign person to register as a United States 

broker or dealer, or succeed to the registration of a United States 

broker or dealer, the Commission may consider whether, for a 

foreign person, or an affiliate of a foreign person that presents 

a risk to the stability of the United States financial system, the 

home country of the foreign person has adopted, or made demonstrable progress toward adopting, an appropriate system of financial 

regulation to mitigate such risk. 

‘‘(l) TERMINATION OF A UNITED STATES BROKER OR DEALER.— 

For a foreign person or an affiliate of a foreign person that presents 

such a risk to the stability of the United States financial system, 

the Commission may determine to terminate the registration of 

such foreign person or an affiliate of such foreign person as a 

broker or dealer in the United States, if the Commission determines 

that the home country of the foreign person has not adopted, 

or made demonstrable progress toward adopting, an appropriate 

system of financial regulation to mitigate such risk.’’. 
H. R. 4173—66 

SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY CAPITAL 

REQUIREMENTS. 

(a) STUDY OF HYBRID CAPITAL INSTRUMENTS.—The Comptroller 

General of the United States, in consultation with the Board of 

Governors, the Comptroller of the Currency, and the Corporation, 

shall conduct a study of the use of hybrid capital instruments 

as a component of Tier 1 capital for banking institutions and 

bank holding companies. The study shall consider— 

(1) the current use of hybrid capital instruments, such 

as trust preferred shares, as a component of Tier 1 capital; 

(2) the differences between the components of capital permitted for insured depository institutions and those permitted 

for companies that control insured depository institutions; 

(3) the benefits and risks of allowing such instruments 

to be used to comply with Tier 1 capital requirements; 

(4) the economic impact of prohibiting the use of such 

capital instruments for Tier 1; 

(5) a review of the consequences of disqualifying trust 

preferred instruments, and whether it could lead to the failure 

or undercapitalization of existing banking organizations; 

(6) the international competitive implications prohibiting 

hybrid capital instruments for Tier 1; 

(7) the impact on the cost and availability of credit in 

the United States from such a prohibition; 

(8) the availability of capital for financial institutions with less than $10,000,000,000 in total assets; and 

(9) any other relevant factors relating to the safety and 

soundness of our financial system and potential economic 

impact of such a prohibition. 

(b) STUDY OF FOREIGN BANK INTERMEDIATE HOLDING COMPANY

CAPITAL REQUIREMENTS.—The Comptroller General of the United 

States, in consultation with the Secretary, the Board of Governors, 

the Comptroller of the Currency, and the Corporation, shall conduct 

a study of capital requirements applicable to United States intermediate holding companies of foreign banks that are bank holding 

companies or savings and loan holding companies. The study shall 

consider— 

(1) current Board of Governors policy regarding the treatment of intermediate holding companies; 

(2) the principle of national treatment and equality of 

competitive opportunity for foreign banks operating in the 

United States; 

(3) the extent to which foreign banks are subject on a 

consolidated basis to home country capital standards comparable to United States capital standards; 

(4) potential effects on United States banking organizations 

operating abroad of changes to United States policy regarding 

intermediate holding companies; 

(5) the impact on the cost and availability of credit in 

the United States from a change in United States policy 

regarding intermediate holding companies; and 

(6) any other relevant factors relating to the safety and 

soundness of our financial system and potential economic 

impact of such a prohibition. 

(c) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States 

shall submit reports to the Committee on Banking, Housing, and 
H. R. 4173—67 

Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives summarizing the results of 

the studies required under subsection (a). The reports shall include 

specific recommendations for legislative or regulatory action 

regarding the treatment of hybrid capital instruments, including 

trust preferred shares, and shall explain the basis for such recommendations. 

SEC. 175. INTERNATIONAL POLICY COORDINATION. 

(a) BY THE PRESIDENT.—The President, or a designee of the 

President, may coordinate through all available international policy 

channels, similar policies as those found in United States law 

relating to limiting the scope, nature, size, scale, concentration, 

and interconnectedness of financial companies, in order to protect 

financial stability and the global economy. 

(b) BY THE COUNCIL.—The Chairperson of the Council, in consultation with the other members of the Council, shall regularly 

consult with the financial regulatory entities and other appropriate 

organizations of foreign governments or international organizations 

on matters relating to systemic risk to the international financial 

system. 

(c) BY THE BOARD OF GOVERNORS AND THE SECRETARY.—The 

Board of Governors and the Secretary shall consult with their 

foreign counterparts and through appropriate multilateral organizations to encourage comprehensive and robust prudential supervision 

and regulation for all highly leveraged and interconnected financial 

companies. 

SEC. 176. RULE OF CONSTRUCTION. 

No regulation or standard imposed under this title may be 

construed in a manner that would lessen the stringency of the 

requirements of any applicable primary financial regulatory agency 

or any other Federal or State agency that are otherwise applicable. 

This title, and the rules and regulations or orders prescribed pursuant to this title, do not divest any such agency of any authority 

derived from any other applicable law. 

TITLE II—ORDERLY LIQUIDATION 

AUTHORITY 

SEC. 201. DEFINITIONS. 

(a) IN GENERAL.—In this title, the following definitions shall 

apply: 

(1) ADMINISTRATIVE EXPENSES OF THE RECEIVER.—The term 

‘‘administrative expenses of the receiver’’ includes— 

(A) the actual, necessary costs and expenses incurred 

by the Corporation as receiver for a covered financial company in liquidating a covered financial company; and 

(B) any obligations that the Corporation as receiver 

for a covered financial company determines are necessary 

and appropriate to facilitate the smooth and orderly liquidation of the covered financial company. 

(2) BANKRUPTCY CODE.—The term ‘‘Bankruptcy Code’’ 

means title 11, United States Code. 

(3) BRIDGE FINANCIAL COMPANY.—The term ‘‘bridge financial company’’ means a new financial company organized by 
H. R. 4173—68 

the Corporation in accordance with section 210(h) for the purpose of resolving a covered financial company. 

(4) CLAIM.—The term ‘‘claim’’ means any right to payment, 

whether or not such right is reduced to judgment, liquidated, 

unliquidated, fixed, contingent, matured, unmatured, disputed, 

undisputed, legal, equitable, secured, or unsecured. 

(5) COMPANY.—The term ‘‘company’’ has the same meaning 

as in section 2(b) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1841(b)), except that such term includes any company described in paragraph (11), the majority of the securities 

of which are owned by the United States or any State. 

(6) COURT.—The term ‘‘Court’’ means the United States 

District Court for the District of Columbia, unless the context 

otherwise requires. 

(7) COVERED BROKER OR DEALER.—The term ‘‘covered 

broker or dealer’’ means a covered financial company that is 

a broker or dealer that— 

(A) is registered with the Commission under section 

15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 

78o(b)); and 

(B) is a member of SIPC. 

(8) COVERED FINANCIAL COMPANY.—The term ‘‘covered 

financial company’’— 

(A) means a financial company for which a determination has been made under section 203(b); and 

(B) does not include an insured depository institution. 

(9) COVERED SUBSIDIARY.—The term ‘‘covered subsidiary’’ 

means a subsidiary of a covered financial company, other 

than— 

(A) an insured depository institution; 

(B) an insurance company; or 

(C) a covered broker or dealer. 

(10) DEFINITIONS RELATING TO COVERED BROKERS AND

DEALERS.—The terms ‘‘customer’’, ‘‘customer name securities’’, 

‘‘customer property’’, and ‘‘net equity’’ in the context of a covered 

broker or dealer, have the same meanings as in section 16 

of the Securities Investor Protection Act of 1970 (15 U.S.C. 

78lll). 

(11) FINANCIAL COMPANY.—The term ‘‘financial company’’ 

means any company that— 

(A) is incorporated or organized under any provision 

of Federal law or the laws of any State; 

(B) is— 

(i) a bank holding company, as defined in section 

2(a) of the Bank Holding Company Act of 1956 (12 

U.S.C. 1841(a)); 

(ii) a nonbank financial company supervised by 

the Board of Governors; 

(iii) any company that is predominantly engaged 

in activities that the Board of Governors has determined are financial in nature or incidental thereto 

for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a 

company described in clause (i) or (ii); or 

(iv) any subsidiary of any company described in 

any of clauses (i) through (iii) that is predominantly 

engaged in activities that the Board of Governors has 
H. R. 4173—69 

determined are financial in nature or incidental thereto 

for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) (other than a 

subsidiary that is an insured depository institution 

or an insurance company); and 

(C) is not a Farm Credit System institution chartered 

under and subject to the provisions of the Farm Credit 

Act of 1971, as amended (12 U.S.C. 2001 et seq.), a governmental entity, or a regulated entity, as defined under section 1303(20) of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)). 

(12) FUND.—The term ‘‘Fund’’ means the Orderly Liquidation Fund established under section 210(n). 

(13) INSURANCE COMPANY.—The term ‘‘insurance company’’ 

means any entity that is— 

(A) engaged in the business of insurance; 

(B) subject to regulation by a State insurance regulator; 

and 

(C) covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency 

of an insurance company. 

(14) NONBANK FINANCIAL COMPANY.—The term ‘‘nonbank 

financial company’’ has the same meaning as in section 

102(a)(4)(C). 

(15) NONBANK FINANCIAL COMPANY SUPERVISED BY THE

BOARD OF GOVERNORS.—The term ‘‘nonbank financial company 

supervised by the Board of Governors’’ has the same meaning 

as in section 102(a)(4)(D). 

(16) SIPC.—The term ‘‘SIPC’’ means the Securities Investor 

Protection Corporation. 

(b) DEFINITIONAL CRITERIA.—For purpose of the definition of 

the term ‘‘financial company’’ under subsection (a)(11), no company 

shall be deemed to be predominantly engaged in activities that 

the Board of Governors has determined are financial in nature 

or incidental thereto for purposes of section 4(k) of the Bank Holding 

Company Act of 1956 (12 U.S.C. 1843(k)), if the consolidated revenues of such company from such activities constitute less than 

85 percent of the total consolidated revenues of such company, 

as the Corporation, in consultation with the Secretary, shall establish by regulation. In determining whether a company is a financial 

company under this title, the consolidated revenues derived from 

the ownership or control of a depository institution shall be 

included. 

SEC. 202. JUDICIAL REVIEW. 

(a) COMMENCEMENT OF ORDERLY LIQUIDATION.— (1) PETITION TO DISTRICT COURT.— (A) DISTRICT COURT REVIEW.— (i) PETITION TO DISTRICT COURT.—Subsequent to 

a determination by the Secretary under section 203 

that a financial company satisfies the criteria in section 

203(b), the Secretary shall notify the Corporation and 

the covered financial company. If the board of directors 

(or body performing similar functions) of the covered 

financial company acquiesces or consents to the 

appointment of the Corporation as receiver, the Secretary shall appoint the Corporation as receiver. If 
H. R. 4173—70 

the board of directors (or body performing similar functions) of the covered financial company does not 

acquiesce or consent to the appointment of the Corporation as receiver, the Secretary shall petition the United 

States District Court for the District of Columbia for 

an order authorizing the Secretary to appoint the Corporation as receiver. 

(ii) FORM AND CONTENT OF ORDER.—The Secretary 

shall present all relevant findings and the recommendation made pursuant to section 203(a) to the 

Court. The petition shall be filed under seal. 

(iii) DETERMINATION.—On a strictly confidential 

basis, and without any prior public disclosure, the 

Court, after notice to the covered financial company 

and a hearing in which the covered financial company 

may oppose the petition, shall determine whether the 

determination of the Secretary that the covered financial company is in default or in danger of default 

and satisfies the definition of a financial company 

under section 201(a)(11) is arbitrary and capricious. 

(iv) ISSUANCE OF ORDER.—If the Court determines 

that the determination of the Secretary that the covered financial company is in default or in danger of 

default and satisfies the definition of a financial company under section 201(a)(11)— 

(I) is not arbitrary and capricious, the Court 

shall issue an order immediately authorizing the 

Secretary to appoint the Corporation as receiver 

of the covered financial company; or 

(II) is arbitrary and capricious, the Court shall 

immediately provide to the Secretary a written 

statement of each reason supporting its determination, and afford the Secretary an immediate opportunity to amend and refile the petition under 

clause (i). 

(v) PETITION GRANTED BY OPERATION OF LAW.— 

If the Court does not make a determination within 

24 hours of receipt of the petition— 

(I) the petition shall be granted by operation 

of law; 

(II) the Secretary shall appoint the Corporation as receiver; and 

(III) liquidation under this title shall automatically and without further notice or action be 

commenced and the Corporation may immediately 

take all actions authorized under this title. 

(B) EFFECT OF DETERMINATION.—The determination of 

the Court under subparagraph (A) shall be final, and shall 

be subject to appeal only in accordance with paragraph 

(2). The decision shall not be subject to any stay or injunction pending appeal. Upon conclusion of its proceedings 

under subparagraph (A), the Court shall provide immediately for the record a written statement of each reason 

supporting the decision of the Court, and shall provide 

copies thereof to the Secretary and the covered financial 

company. 
H. R. 4173—71 

(C) CRIMINAL PENALTIES.—A person who recklessly discloses a determination of the Secretary under section 203(b) 

or a petition of the Secretary under subparagraph (A), 

or the pendency of court proceedings as provided for under 

subparagraph (A), shall be fined not more than $250,000, 

or imprisoned for not more than 5 years, or both. 

(2) APPEAL OF DECISIONS OF THE DISTRICT COURT.— 

(A) APPEAL TO COURT OF APPEALS.— 

(i) IN GENERAL.—Subject to clause (ii), the United 

States Court of Appeals for the District of Columbia 

Circuit shall have jurisdiction of an appeal of a final 

decision of the Court filed by the Secretary or a covered 

financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), not later than 30 

days after the date on which the decision of the Court 

is rendered or deemed rendered under this subsection. 

(ii) CONDITION OF JURISDICTION.—The Court of 

Appeals shall have jurisdiction of an appeal by a covered financial company only if the covered financial 

company did not acquiesce or consent to the appointment of a receiver by the Secretary under paragraph 

(1)(A). 

(iii) EXPEDITION.—The Court of Appeals shall consider any appeal under this subparagraph on an expedited basis. 

(iv) SCOPE OF REVIEW.—For an appeal taken under 

this subparagraph, review shall be limited to whether 

the determination of the Secretary that a covered 

financial company is in default or in danger of default 

and satisfies the definition of a financial company 

under section 201(a)(11) is arbitrary and capricious. 

(B) APPEAL TO THE SUPREME COURT.— 

(i) IN GENERAL.—A petition for a writ of certiorari 

to review a decision of the Court of Appeals under 

subparagraph (A) may be filed by the Secretary or 

the covered financial company, through its board of 

directors, notwithstanding section 210(a)(1)(A)(i), with 

the Supreme Court of the United States, not later 

than 30 days after the date of the final decision of 

the Court of Appeals, and the Supreme Court shall 

have discretionary jurisdiction to review such decision. 

(ii) WRITTEN STATEMENT.—In the event of a petition under clause (i), the Court of Appeals shall immediately provide for the record a written statement of 

each reason for its decision. 

(iii) EXPEDITION.—The Supreme Court shall consider any petition under this subparagraph on an expedited basis. 

(iv) SCOPE OF REVIEW.—Review by the Supreme 

Court under this subparagraph shall be limited to 

whether the determination of the Secretary that the 

covered financial company is in default or in danger 

of default and satisfies the definition of a financial 

company under section 201(a)(11) is arbitrary and 

capricious. 

(b) ESTABLISHMENT AND TRANSMITTAL OF RULES AND PROCE- DURES.— 
H. R. 4173—72 

(1) IN GENERAL.—Not later than 6 months after the date 

of enactment of this Act, the Court shall establish such rules 

and procedures as may be necessary to ensure the orderly 

conduct of proceedings, including rules and procedures to 

ensure that the 24-hour deadline is met and that the Secretary 

shall have an ongoing opportunity to amend and refile petitions 

under subsection (a)(1). 

(2) PUBLICATION OF RULES.—The rules and procedures 

established under paragraph (1), and any modifications of such 

rules and procedures, shall be recorded and shall be transmitted 

to— 

(A) the Committee on the Judiciary of the Senate; 

(B) the Committee on Banking, Housing, and Urban 

Affairs of the Senate; 

(C) the Committee on the Judiciary of the House of 

Representatives; and 

(D) the Committee on Financial Services of the House 

of Representatives. 

(c) PROVISIONS APPLICABLE TO FINANCIAL COMPANIES.— 

(1) BANKRUPTCY CODE.—Except as provided in this subsection, the provisions of the Bankruptcy Code and rules issued 

thereunder or otherwise applicable insolvency law, and not 

the provisions of this title, shall apply to financial companies 

that are not covered financial companies for which the Corporation has been appointed as receiver. 

(2) THIS TITLE.—The provisions of this title shall exclusively 

apply to and govern all matters relating to covered financial 

companies for which the Corporation is appointed as receiver, 

and no provisions of the Bankruptcy Code or the rules issued 

thereunder shall apply in such cases, except as expressly provided in this title. 

(d) TIME LIMIT ON RECEIVERSHIP AUTHORITY.— 

(1) BASELINE PERIOD.—Any appointment of the Corporation 

as receiver under this section shall terminate at the end of 

the 3-year period beginning on the date on which such appointment is made. 

(2) EXTENSION OF TIME LIMIT.—The time limit established 

in paragraph (1) may be extended by the Corporation for up 

to 1 additional year, if the Chairperson of the Corporation 

determines and certifies in writing to the Committee on 

Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives that continuation of the receivership is necessary— 

(A) to— 

(i) maximize the net present value return from 

the sale or other disposition of the assets of the covered 

financial company; or 

(ii) minimize the amount of loss realized upon 

the sale or other disposition of the assets of the covered 

financial company; and 

(B) to protect the stability of the financial system of 

the United States. 

(3) SECOND EXTENSION OF TIME LIMIT.— 

(A) IN GENERAL.—The time limit under this subsection, 

as extended under paragraph (2), may be extended for 
H. R. 4173—73 

up to 1 additional year, if the Chairperson of the Corporation, with the concurrence of the Secretary, submits the 

certifications described in paragraph (2). 

(B) ADDITIONAL REPORT REQUIRED.—Not later than 30 

days after the date of commencement of the extension 

under subparagraph (A), the Corporation shall submit a 

report to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the need 

for the extension and the specific plan of the Corporation 

to conclude the receivership before the end of the second 

extension. 

(4) ONGOING LITIGATION.—The time limit under this subsection, as extended under paragraph (3), may be further 

extended solely for the purpose of completing ongoing litigation 

in which the Corporation as receiver is a party, provided that 

the appointment of the Corporation as receiver shall terminate 

not later than 90 days after the date of completion of such 

litigation, if— 

(A) the Council determines that the Corporation used 

its best efforts to conclude the receivership in accordance 

with its plan before the end of the time limit described 

in paragraph (3); 

(B) the Council determines that the completion of 

longer-term responsibilities in the form of ongoing litigation 

justifies the need for an extension; and 

(C) the Corporation submits a report approved by the 

Council not later than 30 days after the date of the determinations by the Council under subparagraphs (A) and 

(B) to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of the House of Representatives, describing— 

(i) the ongoing litigation justifying the need for 

an extension; and 

(ii) the specific plan of the Corporation to complete 

the litigation and conclude the receivership. 

(5) REGULATIONS.—The Corporation may issue regulations 

governing the termination of receiverships under this title. 

(6) NO LIABILITY.—The Corporation and the Deposit Insurance Fund shall not be liable for unresolved claims arising 

from the receivership after the termination of the receivership. 

(e) STUDY OF BANKRUPTCY AND ORDERLY LIQUIDATION PROCESS

FOR FINANCIAL COMPANIES.— 

(1) STUDY.— 

(A) IN GENERAL.—The Administrative Office of the 

United States Courts and the Comptroller General of the 

United States shall each monitor the activities of the Court, 

and each such Office shall conduct separate studies 

regarding the bankruptcy and orderly liquidation process 

for financial companies under the Bankruptcy Code. 

(B) ISSUES TO BE STUDIED.—In conducting the study 

under subparagraph (A), the Administrative Office of the 

United States Courts and the Comptroller General of the 

United States each shall evaluate— 

(i) the effectiveness of chapter 7 or chapter 11 

of the Bankruptcy Code in facilitating the orderly liquidation or reorganization of financial companies; 
H. R. 4173—74 

(ii) ways to maximize the efficiency and effectiveness of the Court; and 

(iii) ways to make the orderly liquidation process 

under the Bankruptcy Code for financial companies 

more effective. 

(2) REPORTS.—Not later than 1 year after the date of enactment of this Act, in each successive year until the third year, 

and every fifth year after that date of enactment, the Administrative Office of the United States Courts and the Comptroller 

General of the United States shall submit to the Committee 

on Banking, Housing, and Urban Affairs and the Committee 

on the Judiciary of the Senate and the Committee on Financial 

Services and the Committee on the Judiciary of the House 

of Representatives separate reports summarizing the results 

of the studies conducted under paragraph (1). 

(f) STUDY OF INTERNATIONAL COORDINATION RELATING TO BANK- RUPTCY PROCESS FOR FINANCIAL COMPANIES.— 

(1) STUDY.— 

(A) IN GENERAL.—The Comptroller General of the 

United States shall conduct a study regarding international 

coordination relating to the orderly liquidation of financial 

companies under the Bankruptcy Code. 

(B) ISSUES TO BE STUDIED.—In conducting the study 

under subparagraph (A), the Comptroller General of the 

United States shall evaluate, with respect to the bankruptcy process for financial companies— 

(i) the extent to which international coordination 

currently exists; 

(ii) current mechanisms and structures for facilitating international cooperation; 

(iii) barriers to effective international coordination; 

and 

(iv) ways to increase and make more effective 

international coordination. 

(2) REPORT.—Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States 

shall submit to the Committee on Banking, Housing, and Urban 

Affairs and the Committee on the Judiciary of the Senate 

and the Committee on Financial Services and the Committee 

on the Judiciary of the House of Representatives and the Secretary a report summarizing the results of the study conducted 

under paragraph (1). 

(g) STUDY OF PROMPT CORRECTIVE ACTION IMPLEMENTATION

BY THE APPROPRIATE FEDERAL AGENCIES.— 

(1) STUDY.—The Comptroller General of the United States 

shall conduct a study regarding the implementation of prompt 

corrective action by the appropriate Federal banking agencies. 

(2) ISSUES TO BE STUDIED.—In conducting the study under 

paragraph (1), the Comptroller General shall evaluate— 

(A) the effectiveness of implementation of prompt 

corrective action by the appropriate Federal banking agencies and the resolution of insured depository institutions 

by the Corporation; and 

(B) ways to make prompt corrective action a more 

effective tool to resolve the insured depository institutions 

at the least possible long-term cost to the Deposit Insurance 

Fund. 
H. R. 4173—75 

(3) REPORT TO COUNCIL.—Not later than 1 year after the 

date of enactment of this Act, the Comptroller General shall 

submit a report to the Council on the results of the study 

conducted under this subsection. 

(4) COUNCIL REPORT OF ACTION.—Not later than 6 months 

after the date of receipt of the report from the Comptroller 

General under paragraph (3), the Council shall submit a report 

to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of 

the House of Representatives on actions taken in response 

to the report, including any recommendations made to the 

Federal primary financial regulatory agencies under section 

120. 

SEC. 203. SYSTEMIC RISK DETERMINATION. 

(a) WRITTEN RECOMMENDATION AND DETERMINATION.— 

(1) VOTE REQUIRED.— 

(A) IN GENERAL.—On their own initiative, or at the 

request of the Secretary, the Corporation and the Board 

of Governors shall consider whether to make a written 

recommendation described in paragraph (2) with respect 

to whether the Secretary should appoint the Corporation 

as receiver for a financial company. Such recommendation 

shall be made upon a vote of not fewer than 2⁄3 of the 

members of the Board of Governors then serving and 2⁄3

of the members of the board of directors of the Corporation 

then serving. 

(B) CASES INVOLVING BROKERS OR DEALERS.—In the 

case of a broker or dealer, or in which the largest United 

States subsidiary (as measured by total assets as of the 

end of the previous calendar quarter) of a financial company is a broker or dealer, the Commission and the Board 

of Governors, at the request of the Secretary, or on their 

own initiative, shall consider whether to make the written 

recommendation described in paragraph (2) with respect 

to the financial company. Subject to the requirements in 

paragraph (2), such recommendation shall be made upon 

a vote of not fewer than 2⁄3 of the members of the Board 

of Governors then serving and 2⁄3 of the members of the 

Commission then serving, and in consultation with the 

Corporation. 

(C) CASES INVOLVING INSURANCE COMPANIES.—In the 

case of an insurance company, or in which the largest 

United States subsidiary (as measured by total assets as 

of the end of the previous calendar quarter) of a financial 

company is an insurance company, the Director of the 

Federal Insurance Office and the Board of Governors, at 

the request of the Secretary or on their own initiative, 

shall consider whether to make the written recommendation described in paragraph (2) with respect to the financial 

company. Subject to the requirements in paragraph (2), 

such recommendation shall be made upon a vote of not 

fewer than 2⁄3 of the Board of Governors then serving 

and the affirmative approval of the Director of the Federal 

Insurance Office, and in consultation with the Corporation. 

(2) RECOMMENDATION REQUIRED.—Any written recommendation pursuant to paragraph (1) shall contain— 
H. R. 4173—76 

(A) an evaluation of whether the financial company 

is in default or in danger of default; 

(B) a description of the effect that the default of the 

financial company would have on financial stability in the 

United States; 

(C) a description of the effect that the default of the 

financial company would have on economic conditions or 

financial stability for low income, minority, or underserved 

communities; 

(D) a recommendation regarding the nature and the 

extent of actions to be taken under this title regarding 

the financial company; 

(E) an evaluation of the likelihood of a private sector 

alternative to prevent the default of the financial company; 

(F) an evaluation of why a case under the Bankruptcy 

Code is not appropriate for the financial company; 

(G) an evaluation of the effects on creditors, counterparties, and shareholders of the financial company and 

other market participants; and 

(H) an evaluation of whether the company satisfies 

the definition of a financial company under section 201. 

(b) DETERMINATION BY THE SECRETARY.—Notwithstanding any 

other provision of Federal or State law, the Secretary shall take 

action in accordance with section 202(a)(1)(A), if, upon the written 

recommendation under subsection (a), the Secretary (in consultation 

with the President) determines that— 

(1) the financial company is in default or in danger of 

default; 

(2) the failure of the financial company and its resolution 

under otherwise applicable Federal or State law would have 

serious adverse effects on financial stability in the United 

States; 

(3) no viable private sector alternative is available to prevent the default of the financial company; 

(4) any effect on the claims or interests of creditors, counterparties, and shareholders of the financial company and other 

market participants as a result of actions to be taken under 

this title is appropriate, given the impact that any action taken 

under this title would have on financial stability in the United 

States; 

(5) any action under section 204 would avoid or mitigate 

such adverse effects, taking into consideration the effectiveness 

of the action in mitigating potential adverse effects on the 

financial system, the cost to the general fund of the Treasury, 

and the potential to increase excessive risk taking on the part 

of creditors, counterparties, and shareholders in the financial 

company; 

(6) a Federal regulatory agency has ordered the financial 

company to convert all of its convertible debt instruments that 

are subject to the regulatory order; and 

(7) the company satisfies the definition of a financial company under section 201. 

(c) DOCUMENTATION AND REVIEW.— 

(1) IN GENERAL.—The Secretary shall— 

(A) document any determination under subsection (b); 

(B) retain the documentation for review under paragraph (2); and 
H. R. 4173—77 

(C) notify the covered financial company and the Corporation of such determination. 

(2) REPORT TO CONGRESS.—Not later than 24 hours after 

the date of appointment of the Corporation as receiver for 

a covered financial company, the Secretary shall provide written 

notice of the recommendations and determinations reached in 

accordance with subsections (a) and (b) to the Majority Leader 

and the Minority Leader of the Senate and the Speaker and 

the Minority Leader of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, 

and the Committee on Financial Services of the House of Representatives, which shall consist of a summary of the basis 

for the determination, including, to the extent available at 

the time of the determination— 

(A) the size and financial condition of the covered 

financial company; 

(B) the sources of capital and credit support that were 

available to the covered financial company; 

(C) the operations of the covered financial company 

that could have had a significant impact on financial stability, markets, or both; 

(D) identification of the banks and financial companies 

which may be able to provide the services offered by the 

covered financial company; 

(E) any potential international ramifications of resolution of the covered financial company under other 

applicable insolvency law; 

(F) an estimate of the potential effect of the resolution 

of the covered financial company under other applicable 

insolvency law on the financial stability of the United 

States; 

(G) the potential effect of the appointment of a receiver 

by the Secretary on consumers; 

(H) the potential effect of the appointment of a receiver 

by the Secretary on the financial system, financial markets, 

and banks and other financial companies; and 

(I) whether resolution of the covered financial company 

under other applicable insolvency law would cause banks 

or other financial companies to experience severe liquidity 

distress. 

(3) REPORTS TO CONGRESS AND THE PUBLIC.— 

(A) IN GENERAL.—Not later than 60 days after the 

date of appointment of the Corporation as receiver for 

a covered financial company, the Corporation shall file 

a report with the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives— 

(i) setting forth information on the financial condition of the covered financial company as of the date 

of the appointment, including a description of its assets 

and liabilities; 

(ii) describing the plan of, and actions taken by, 

the Corporation to wind down the covered financial 

company; 

(iii) explaining each instance in which the Corporation waived any applicable requirements of part 366 
H. R. 4173—78 

of title 12, Code of Federal Regulations (or any successor thereto) with respect to conflicts of interest by 

any person in the private sector who was retained 

to provide services to the Corporation in connection 

with such receivership; 

(iv) describing the reasons for the provision of any 

funding to the receivership out of the Fund; 

(v) setting forth the expected costs of the orderly 

liquidation of the covered financial company; 

(vi) setting forth the identity of any claimant that 

is treated in a manner different from other similarly 

situated claimants under subsection (b)(4), (d)(4), or 

(h)(5)(E), the amount of any additional payment to 

such claimant under subsection (d)(4), and the reason 

for any such action; and 

(vii) which report the Corporation shall publish 

on an online website maintained by the Corporation, 

subject to maintaining appropriate confidentiality. 

(B) AMENDMENTS.—The Corporation shall, on a timely 

basis, not less frequently than quarterly, amend or revise 

and resubmit the reports prepared under this paragraph, 

as necessary. 

(C) CONGRESSIONAL TESTIMONY.—The Corporation and 

the primary financial regulatory agency, if any, of the 

financial company for which the Corporation was appointed 

receiver under this title shall appear before Congress, if 

requested, not later than 30 days after the date on which 

the Corporation first files the reports required under 

subparagraph (A). 

(4) DEFAULT OR IN DANGER OF DEFAULT.—For purposes 

of this title, a financial company shall be considered to be 

in default or in danger of default if, as determined in accordance 

with subsection (b)— 

(A) a case has been, or likely will promptly be, commenced with respect to the financial company under the 

Bankruptcy Code; 

(B) the financial company has incurred, or is likely 

to incur, losses that will deplete all or substantially all 

of its capital, and there is no reasonable prospect for the 

company to avoid such depletion; 

(C) the assets of the financial company are, or are 

likely to be, less than its obligations to creditors and others; 

or 

(D) the financial company is, or is likely to be, unable 

to pay its obligations (other than those subject to a bona 

fide dispute) in the normal course of business. 

(5) GAO REVIEW.—The Comptroller General of the United 

States shall review and report to Congress on any determination under subsection (b), that results in the appointment of 

the Corporation as receiver, including— 

(A) the basis for the determination; 

(B) the purpose for which any action was taken pursuant thereto; 

(C) the likely effect of the determination and such 

action on the incentives and conduct of financial companies 

and their creditors, counterparties, and shareholders; and 
H. R. 4173—79 

(D) the likely disruptive effect of the determination 

and such action on the reasonable expectations of creditors, 

counterparties, and shareholders, taking into account the 

impact any action under this title would have on financial 

stability in the United States, including whether the rights 

of such parties will be disrupted. 

(d) CORPORATION POLICIES AND PROCEDURES.—As soon as is 

practicable after the date of enactment of this Act, the Corporation 

shall establish policies and procedures that are acceptable to the 

Secretary governing the use of funds available to the Corporation 

to carry out this title, including the terms and conditions for the 

provision and use of funds under sections 204(d), 210(h)(2)(G)(iv), 

and 210(h)(9). 

(e) TREATMENT OF INSURANCE COMPANIES AND INSURANCE COMPANY SUBSIDIARIES.— 

(1) IN GENERAL.—Notwithstanding subsection (b), if an 

insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is not excepted under 

paragraph (2), shall be conducted as provided under applicable 

State law. 

(2) EXCEPTION FOR SUBSIDIARIES AND AFFILIATES.—The 

requirement of paragraph (1) shall not apply with respect to 

any subsidiary or affiliate of an insurance company that is 

not itself an insurance company. 

(3) BACKUP AUTHORITY.—Notwithstanding paragraph (1), 

with respect to a covered financial company described in paragraph (1), if, after the end of the 60-day period beginning 

on the date on which a determination is made under section 

202(a) with respect to such company, the appropriate regulatory 

agency has not filed the appropriate judicial action in the 

appropriate State court to place such company into orderly 

liquidation under the laws and requirements of the State, the 

Corporation shall have the authority to stand in the place 

of the appropriate regulatory agency and file the appropriate 

judicial action in the appropriate State court to place such 

company into orderly liquidation under the laws and requirements of the State. 

SEC. 204. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES. 

(a) PURPOSE OF ORDERLY LIQUIDATION AUTHORITY.—It is the 

purpose of this title to provide the necessary authority to liquidate 

failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates 

such risk and minimizes moral hazard. The authority provided 

in this title shall be exercised in the manner that best fulfills 

such purpose, so that— 

(1) creditors and shareholders will bear the losses of the 

financial company; 

(2) management responsible for the condition of the financial company will not be retained; and 

(3) the Corporation and other appropriate agencies will 

take all steps necessary and appropriate to assure that all 

parties, including management, directors, and third parties, 

having responsibility for the condition of the financial company 
H. R. 4173—80 

bear losses consistent with their responsibility, including 

actions for damages, restitution, and recoupment of compensation and other gains not compatible with such responsibility. 

(b) CORPORATION AS RECEIVER.—Upon the appointment of the 

Corporation under section 202, the Corporation shall act as the 

receiver for the covered financial company, with all of the rights 

and obligations set forth in this title. 

(c) CONSULTATION.—The Corporation, as receiver— 

(1) shall consult with the primary financial regulatory 

agency or agencies of the covered financial company and its 

covered subsidiaries for purposes of ensuring an orderly liquidation of the covered financial company; 

(2) may consult with, or under subsection (a)(1)(B)(v) or 

(a)(1)(L) of section 210, acquire the services of, any outside 

experts, as appropriate to inform and aid the Corporation in 

the orderly liquidation process; 

(3) shall consult with the primary financial regulatory 

agency or agencies of any subsidiaries of the covered financial 

company that are not covered subsidiaries, and coordinate with 

such regulators regarding the treatment of such solvent subsidiaries and the separate resolution of any such insolvent subsidiaries under other governmental authority, as appropriate; and 

(4) shall consult with the Commission and the Securities 

Investor Protection Corporation in the case of any covered 

financial company for which the Corporation has been 

appointed as receiver that is a broker or dealer registered 

with the Commission under section 15(b) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78o(b)) and is a member 

of the Securities Investor Protection Corporation, for the purpose of determining whether to transfer to a bridge financial 

company organized by the Corporation as receiver, without 

consent of any customer, customer accounts of the covered 

financial company. 

(d) FUNDING FOR ORDERLY LIQUIDATION.—Upon its appointment as receiver for a covered financial company, and thereafter 

as the Corporation may, in its discretion, determine to be necessary 

or appropriate, the Corporation may make available to the receivership, subject to the conditions set forth in section 206 and subject 

to the plan described in section 210(n)(9), funds for the orderly 

liquidation of the covered financial company. All funds provided 

by the Corporation under this subsection shall have a priority 

of claims under subparagraph (A) or (B) of section 210(b)(1), as 

applicable, including funds used for— 

(1) making loans to, or purchasing any debt obligation 

of, the covered financial company or any covered subsidiary; 

(2) purchasing or guaranteeing against loss the assets of 

the covered financial company or any covered subsidiary, 

directly or through an entity established by the Corporation 

for such purpose; 

(3) assuming or guaranteeing the obligations of the covered 

financial company or any covered subsidiary to 1 or more 

third parties; 

(4) taking a lien on any or all assets of the covered financial 

company or any covered subsidiary, including a first priority 

lien on all unencumbered assets of the covered financial company or any covered subsidiary to secure repayment of any 

transactions conducted under this subsection; 
H. R. 4173—81 

(5) selling or transferring all, or any part, of such acquired 

assets, liabilities, or obligations of the covered financial company or any covered subsidiary; and 

(6) making payments pursuant to subsections (b)(4), (d)(4), 

and (h)(5)(E) of section 210. 

SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS AND 

DEALERS. 

(a) APPOINTMENT OF SIPC AS TRUSTEE.— 

(1) APPOINTMENT.—Upon the appointment of the Corporation as receiver for any covered broker or dealer, the Corporation shall appoint, without any need for court approval, the 

Securities Investor Protection Corporation to act as trustee 

for the liquidation under the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.) of the covered broker 

or dealer. 

(2) ACTIONS BY SIPC.— 

(A) FILING.—Upon appointment of SIPC under paragraph (1), SIPC shall promptly file with any Federal district 

court of competent jurisdiction specified in section 21 or 

27 of the Securities Exchange Act of 1934 (15 U.S.C. 78u, 

78aa), an application for a protective decree under the 

Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa 

et seq.) as to the covered broker or dealer. The Federal 

district court shall accept and approve the filing, including 

outside of normal business hours, and shall immediately 

issue the protective decree as to the covered broker or 

dealer. 

(B) ADMINISTRATION BY SIPC.—Following entry of the 

protective decree, and except as otherwise provided in this 

section, the determination of claims and the liquidation 

of assets retained in the receivership of the covered broker 

or dealer and not transferred to the bridge financial company shall be administered under the Securities Investor 

Protection Act of 1970 (15 U.S.C. 78aaa et seq.) by SIPC, 

as trustee for the covered broker or dealer. 

(C) DEFINITION OF FILING DATE.—For purposes of the 

liquidation proceeding, the term ‘‘filing date’’ means the 

date on which the Corporation is appointed as receiver 

of the covered broker or dealer. 

(D) DETERMINATION OF CLAIMS.—As trustee for the 

covered broker or dealer, SIPC shall determine and satisfy, 

consistent with this title and with the Securities Investor 

Protection Act of 1970 (15 U.S.C. 78aaa et seq.), all claims 

against the covered broker or dealer arising on or before 

the filing date. 

(b) POWERS AND DUTIES OF SIPC.— 

(1) IN GENERAL.—Except as provided in this section, upon 

its appointment as trustee for the liquidation of a covered 

broker or dealer, SIPC shall have all of the powers and duties 

provided by the Securities Investor Protection Act of 1970 (15 

U.S.C. 78aaa et seq.), including, without limitation, all rights 

of action against third parties, and shall conduct such liquidation in accordance with the terms of the Securities Investor 

Protection Act of 1970 (15 U.S.C. 78aaa et seq.), except that 

SIPC shall have no powers or duties with respect to assets 

and liabilities transferred by the Corporation from the covered 
H. R. 4173—82 

broker or dealer to any bridge financial company established 

in accordance with this title. 

(2) LIMITATION OF POWERS.—The exercise by SIPC of 

powers and functions as trustee under subsection (a) shall 

not impair or impede the exercise of the powers and duties 

of the Corporation with regard to— 

(A) any action, except as otherwise provided in this 

title— 

(i) to make funds available under section 204(d); 

(ii) to organize, establish, operate, or terminate 

any bridge financial company; 

(iii) to transfer assets and liabilities; 

(iv) to enforce or repudiate contracts; or 

(v) to take any other action relating to such bridge 

financial company under section 210; or 

(B) determining claims under subsection (e). 

(3) PROTECTIVE DECREE.—SIPC and the Corporation, in 

consultation with the Commission, shall jointly determine the 

terms of the protective decree to be filed by SIPC with any 

court of competent jurisdiction under section 21 or 27 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78u, 78aa), as 

required by subsection (a). 

(4) QUALIFIED FINANCIAL CONTRACTS.—Notwithstanding 

any provision of the Securities Investor Protection Act of 1970 

(15 U.S.C. 78aaa et seq.) to the contrary (including section 

5(b)(2)(C) of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights 

and obligations of any party to a qualified financial contract 

(as that term is defined in section 210(c)(8)) to which a covered 

broker or dealer for which the Corporation has been appointed 

receiver is a party shall be governed exclusively by section 

210, including the limitations and restrictions contained in 

section 210(c)(10)(B). 

(c) LIMITATION ON COURT ACTION.—Except as otherwise provided in this title, no court may take any action, including any 

action pursuant to the Securities Investor Protection Act of 1970 

(15 U.S.C. 78aaa et seq.) or the Bankruptcy Code, to restrain 

or affect the exercise of powers or functions of the Corporation 

as receiver for a covered broker or dealer and any claims against 

the Corporation as such receiver shall be determined in accordance 

with subsection (e) and such claims shall be limited to money 

damages. 

(d) ACTIONS BY CORPORATION AS RECEIVER.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

this title, no action taken by the Corporation as receiver with 

respect to a covered broker or dealer shall— 

(A) adversely affect the rights of a customer to customer property or customer name securities; 

(B) diminish the amount or timely payment of net 

equity claims of customers; or 

(C) otherwise impair the recoveries provided to a customer under the Securities Investor Protection Act of 1970 

(15 U.S.C. 78aaa et seq.). 

(2) NET PROCEEDS.—The net proceeds from any transfer, 

sale, or disposition of assets of the covered broker or dealer, 

or proceeds thereof by the Corporation as receiver for the covered broker or dealer shall be for the benefit of the estate 

of the covered broker or dealer, as provided in this title. 
H. R. 4173—83 

(e) CLAIMS AGAINST THE CORPORATION AS RECEIVER.—Any 

claim against the Corporation as receiver for a covered broker 

or dealer for assets transferred to a bridge financial company established with respect to such covered broker or dealer— 

(1) shall be determined in accordance with section 210(a)(2); 

and 

(2) may be reviewed by the appropriate district or territorial 

court of the United States in accordance with section 210(a)(5). 

(f) SATISFACTION OF CUSTOMER CLAIMS.— 

(1) OBLIGATIONS TO CUSTOMERS.—Notwithstanding any 

other provision of this title, all obligations of a covered broker 

or dealer or of any bridge financial company established with 

respect to such covered broker or dealer to a customer relating 

to, or net equity claims based upon, customer property or 

customer name securities shall be promptly discharged by SIPC, 

the Corporation, or the bridge financial company, as applicable, 

by the delivery of securities or the making of payments to 

or for the account of such customer, in a manner and in an 

amount at least as beneficial to the customer as would have 

been the case had the actual proceeds realized from the liquidation of the covered broker or dealer under this title been distributed in a proceeding under the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.) without the appointment 

of the Corporation as receiver and without any transfer of 

assets or liabilities to a bridge financial company, and with 

a filing date as of the date on which the Corporation is 

appointed as receiver. 

(2) SATISFACTION OF CLAIMS BY SIPC.—SIPC, as trustee 

for a covered broker or dealer, shall satisfy customer claims 

in the manner and amount provided under the Securities 

Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as 

if the appointment of the Corporation as receiver had not 

occurred, and with a filing date as of the date on which the 

Corporation is appointed as receiver. The Corporation shall 

satisfy customer claims, to the extent that a customer would 

have received more securities or cash with respect to the allocation of customer property had the covered financial company 

been subject to a proceeding under the Securities Investor 

Protection Act (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date 

as of the date on which the Corporation is appointed as receiver. 

(g) PRIORITIES.— 

(1) CUSTOMER PROPERTY.—As trustee for a covered broker 

or dealer, SIPC shall allocate customer property and deliver 

customer name securities in accordance with section 8(c) of 

the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff– 

2(c)). 

(2) OTHER CLAIMS.—All claims other than those described 

in paragraph (1) (including any unpaid claim by a customer 

for the allowed net equity claim of such customer from customer 

property) shall be paid in accordance with the priorities in 

section 210(b). 

(h) RULEMAKING.—The Commission and the Corporation, after 

consultation with SIPC, shall jointly issue rules to implement this 

section. 
H. R. 4173—84 

SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY 

LIQUIDATION ACTIONS. 

In taking action under this title, the Corporation shall— 

(1) determine that such action is necessary for purposes 

of the financial stability of the United States, and not for 

the purpose of preserving the covered financial company; 

(2) ensure that the shareholders of a covered financial 

company do not receive payment until after all other claims 

and the Fund are fully paid; 

(3) ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 210; 

(4) ensure that management responsible for the failed 

condition of the covered financial company is removed (if such 

management has not already been removed at the time at 

which the Corporation is appointed receiver); 

(5) ensure that the members of the board of directors 

(or body performing similar functions) responsible for the failed 

condition of the covered financial company are removed, if 

such members have not already been removed at the time 

the Corporation is appointed as receiver; and 

(6) not take an equity interest in or become a shareholder 

of any covered financial company or any covered subsidiary. 

SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF RECEIVER. 

The members of the board of directors (or body performing 

similar functions) of a covered financial company shall not be liable 

to the shareholders or creditors thereof for acquiescing in or consenting in good faith to the appointment of the Corporation as 

receiver for the covered financial company under section 203. 

SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS. 

(a) IN GENERAL.—Effective as of the date of the appointment 

of the Corporation as receiver for the covered financial company 

under section 202 or the appointment of SIPC as trustee for a 

covered broker or dealer under section 205, as applicable, any 

case or proceeding commenced with respect to the covered financial 

company under the Bankruptcy Code or the Securities Investor 

Protection Act of 1970 (15 U.S.C. 78aaa et seq.) shall be dismissed, 

upon notice to the bankruptcy court (with respect to a case commenced under the Bankruptcy Code), and upon notice to SIPC 

(with respect to a covered broker or dealer) and no such case 

or proceeding may be commenced with respect to a covered financial 

company at any time while the orderly liquidation is pending. 

(b) REVESTING OF ASSETS.—Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial 

company shall, to the extent they have vested in any entity other 

than the covered financial company as a result of any case or 

proceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.), or any similar provision 

of State liquidation or insolvency law applicable to the covered 

financial company, revest in the covered financial company. 

(c) LIMITATION.—Notwithstanding subsections (a) and (b), any 

order entered or other relief granted by a bankruptcy court prior 

to the date of appointment of the Corporation as receiver shall 
H. R. 4173—85 

continue with the same validity as if an orderly liquidation had 

not been commenced. 

SEC. 209. RULEMAKING; NON-CONFLICTING LAW. 

The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appropriate to implement this title, including rules and 

regulations with respect to the rights, interests, and priorities of 

creditors, counterparties, security entitlement holders, or other persons with respect to any covered financial company or any assets 

or other property of or held by such covered financial company, 

and address the potential for conflicts of interest between or among 

individual receiverships established under this title or under the 

Federal Deposit Insurance Act. To the extent possible, the Corporation shall seek to harmonize applicable rules and regulations 

promulgated under this section with the insolvency laws that would 

otherwise apply to a covered financial company. 

SEC. 210. POWERS AND DUTIES OF THE CORPORATION. 

(a) POWERS AND AUTHORITIES.— (1) GENERAL POWERS.— (A) SUCCESSOR TO COVERED FINANCIAL COMPANY.—The 

Corporation shall, upon appointment as receiver for a covered financial company under this title, succeed to— 

(i) all rights, titles, powers, and privileges of the 

covered financial company and its assets, and of any 

stockholder, member, officer, or director of such company; and 

(ii) title to the books, records, and assets of any 

previous receiver or other legal custodian of such covered financial company. 

(B) OPERATION OF THE COVERED FINANCIAL COMPANY

DURING THE PERIOD OF ORDERLY LIQUIDATION.—The Corporation, as receiver for a covered financial company, 

may— 

(i) take over the assets of and operate the covered 

financial company with all of the powers of the members or shareholders, the directors, and the officers 

of the covered financial company, and conduct all business of the covered financial company; 

(ii) collect all obligations and money owed to the 

covered financial company; 

(iii) perform all functions of the covered financial 

company, in the name of the covered financial company; 

(iv) manage the assets and property of the covered 

financial company, consistent with maximization of the 

value of the assets in the context of the orderly liquidation; and 

(v) provide by contract for assistance in fulfilling 

any function, activity, action, or duty of the Corporation 

as receiver. 

(C) FUNCTIONS OF COVERED FINANCIAL COMPANY OFFICERS, DIRECTORS, AND SHAREHOLDERS.—The Corporation 

may provide for the exercise of any function by any member 

or stockholder, director, or officer of any covered financial 

company for which the Corporation has been appointed 

as receiver under this title. 
H. R. 4173—86 

(D) ADDITIONAL POWERS AS RECEIVER.—The Corporation shall, as receiver for a covered financial company, 

and subject to all legally enforceable and perfected security 

interests and all legally enforceable security entitlements 

in respect of assets held by the covered financial company, 

liquidate, and wind-up the affairs of a covered financial 

company, including taking steps to realize upon the assets 

of the covered financial company, in such manner as the 

Corporation deems appropriate, including through the sale 

of assets, the transfer of assets to a bridge financial company established under subsection (h), or the exercise of 

any other rights or privileges granted to the receiver under 

this section. 

(E) ADDITIONAL POWERS WITH RESPECT TO FAILING

SUBSIDIARIES OF A COVERED FINANCIAL COMPANY.— 

(i) IN GENERAL.—In any case in which a receiver 

is appointed for a covered financial company under 

section 202, the Corporation may appoint itself as 

receiver of any covered subsidiary of the covered financial company that is organized under Federal law or 

the laws of any State, if the Corporation and the Secretary jointly determine that— 

(I) the covered subsidiary is in default or in 

danger of default; 

(II) such action would avoid or mitigate serious 

adverse effects on the financial stability or economic conditions of the United States; and 

(III) such action would facilitate the orderly 

liquidation of the covered financial company. 

(ii) TREATMENT AS COVERED FINANCIAL COMPANY.— If the Corporation is appointed as receiver of a covered 

subsidiary of a covered financial company under clause 

(i), the covered subsidiary shall thereafter be considered a covered financial company under this title, and 

the Corporation shall thereafter have all the powers 

and rights with respect to that covered subsidiary as 

it has with respect to a covered financial company 

under this title. 

(F) ORGANIZATION OF BRIDGE COMPANIES.—The Corporation, as receiver for a covered financial company, may 

organize a bridge financial company under subsection (h). 

(G) MERGER; TRANSFER OF ASSETS AND LIABILITIES.— 

(i) IN GENERAL.—Subject to clauses (ii) and (iii), 

the Corporation, as receiver for a covered financial 

company, may— 

(I) merge the covered financial company with 

another company; or 

(II) transfer any asset or liability of the covered financial company (including any assets and 

liabilities held by the covered financial company 

for security entitlement holders, any customer 

property, or any assets and liabilities associated 

with any trust or custody business) without 

obtaining any approval, assignment, or consent 

with respect to such transfer. 

(ii) FEDERAL AGENCY APPROVAL; ANTITRUST

REVIEW.—With respect to a transaction described in 
H. R. 4173—87 

clause (i)(I) that requires approval by a Federal 

agency— 

(I) the transaction may not be consummated 

before the 5th calendar day after the date of 

approval by the Federal agency responsible for 

such approval; 

(II) if, in connection with any such approval, 

a report on competitive factors is required, the 

Federal agency responsible for such approval shall 

promptly notify the Attorney General of the United 

States of the proposed transaction, and the 

Attorney General shall provide the required report 

not later than 10 days after the date of the request; 

and 

(III) if notification under section 7A of the 

Clayton Act is required with respect to such transaction, then the required waiting period shall end 

on the 15th day after the date on which the 

Attorney General and the Federal Trade Commission receive such notification, unless the waiting 

period is terminated earlier under subsection (b)(2) 

of such section 7A, or is extended pursuant to 

subsection (e)(2) of such section 7A. 

(iii) SETOFF.—Subject to the other provisions of 

this title, any transferee of assets from a receiver, 

including a bridge financial company, shall be subject 

to such claims or rights as would prevail over the 

rights of such transferee in such assets under 

applicable noninsolvency law. 

(H) PAYMENT OF VALID OBLIGATIONS.—The Corporation, 

as receiver for a covered financial company, shall, to the 

extent that funds are available, pay all valid obligations 

of the covered financial company that are due and payable 

at the time of the appointment of the Corporation as 

receiver, in accordance with the prescriptions and limitations of this title. 

(I) APPLICABLE NONINSOLVENCY LAW.—Except as may 

otherwise be provided in this title, the applicable noninsolvency law shall be determined by the noninsolvency choice 

of law rules otherwise applicable to the claims, rights, 

titles, persons, or entities at issue. 

(J) SUBPOENA AUTHORITY.— 

(i) IN GENERAL.—The Corporation, as receiver for 

a covered financial company, may, for purposes of carrying out any power, authority, or duty with respect 

to the covered financial company (including determining any claim against the covered financial company and determining and realizing upon any asset 

of any person in the course of collecting money due 

the covered financial company), exercise any power 

established under section 8(n) of the Federal Deposit 

Insurance Act, as if the Corporation were the appropriate Federal banking agency for the covered financial 

company, and the covered financial company were an 

insured depository institution. 

(ii) RULE OF CONSTRUCTION.—This subparagraph 

may not be construed as limiting any rights that the 
H. R. 4173—88 

Corporation, in any capacity, might otherwise have 

to exercise any powers described in clause (i) or under 

any other provision of law. 

(K) INCIDENTAL POWERS.—The Corporation, as receiver 

for a covered financial company, may exercise all powers 

and authorities specifically granted to receivers under this 

title, and such incidental powers as shall be necessary 

to carry out such powers under this title. 

(L) UTILIZATION OF PRIVATE SECTOR.—In carrying out 

its responsibilities in the management and disposition of 

assets from the covered financial company, the Corporation, 

as receiver for a covered financial company, may utilize 

the services of private persons, including real estate and 

loan portfolio asset management, property management, 

auction marketing, legal, and brokerage services, if such 

services are available in the private sector, and the Corporation determines that utilization of such services is 

practicable, efficient, and cost effective. 

(M) SHAREHOLDERS AND CREDITORS OF COVERED FINAN- CIAL COMPANY.—Notwithstanding any other provision of 

law, the Corporation, as receiver for a covered financial 

company, shall succeed by operation of law to the rights, 

titles, powers, and privileges described in subparagraph 

(A), and shall terminate all rights and claims that the 

stockholders and creditors of the covered financial company 

may have against the assets of the covered financial company or the Corporation arising out of their status as 

stockholders or creditors, except for their right to payment, 

resolution, or other satisfaction of their claims, as permitted 

under this section. The Corporation shall ensure that shareholders and unsecured creditors bear losses, consistent with 

the priority of claims provisions under this section. 

(N) COORDINATION WITH FOREIGN FINANCIAL AUTHORI- TIES.—The Corporation, as receiver for a covered financial 

company, shall coordinate, to the maximum extent possible, 

with the appropriate foreign financial authorities regarding 

the orderly liquidation of any covered financial company 

that has assets or operations in a country other than the 

United States. 

(O) RESTRICTION ON TRANSFERS.— 

(i) SELECTION OF ACCOUNTS FOR TRANSFER.—If the 

Corporation establishes one or more bridge financial 

companies with respect to a covered broker or dealer, 

the Corporation shall transfer to one of such bridge 

financial companies, all customer accounts of the covered broker or dealer, and all associated customer 

name securities and customer property, unless the Corporation, after consulting with the Commission and 

SIPC, determines that— 

(I) the customer accounts, customer name 

securities, and customer property are likely to be 

promptly transferred to another broker or dealer 

that is registered with the Commission under section 15(b) of the Securities Exchange Act of 1934 

(15 U.S.C. 73o(b)) and is a member of SIPC; or 

(II) the transfer of the accounts to a bridge 

financial company would materially interfere with 
H. R. 4173—89 

the ability of the Corporation to avoid or mitigate 

serious adverse effects on financial stability or economic conditions in the United States. 

(ii) TRANSFER OF PROPERTY.—SIPC, as trustee for 

the liquidation of the covered broker or dealer, and 

the Commission shall provide any and all reasonable 

assistance necessary to complete such transfers by the 

Corporation. 

(iii) CUSTOMER CONSENT AND COURT APPROVAL NOT

REQUIRED.—Neither customer consent nor court 

approval shall be required to transfer any customer 

accounts or associated customer name securities or 

customer property to a bridge financial company in 

accordance with this section. 

(iv) NOTIFICATION OF SIPC AND SHARING OF

INFORMATION.—The Corporation shall identify to SIPC 

the customer accounts and associated customer name 

securities and customer property transferred to the 

bridge financial company. The Corporation and SIPC 

shall cooperate in the sharing of any information necessary for each entity to discharge its obligations under 

this title and under the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.) including by 

providing access to the books and records of the covered 

financial company and any bridge financial company 

established in accordance with this title. 

(2) DETERMINATION OF CLAIMS.— (A) IN GENERAL.—The Corporation, as receiver for a 

covered financial company, shall report on claims, as set 

forth in section 203(c)(3). Subject to paragraph (4) of this 

subsection, the Corporation, as receiver for a covered financial company, shall determine claims in accordance with 

the requirements of this subsection and regulations prescribed under section 209. 

(B) NOTICE REQUIREMENTS.—The Corporation, as 

receiver for a covered financial company, in any case 

involving the liquidation or winding up of the affairs of 

a covered financial company, shall— 

(i) promptly publish a notice to the creditors of 

the covered financial company to present their claims, 

together with proof, to the receiver by a date specified 

in the notice, which shall be not earlier than 90 days 

after the date of publication of such notice; and 

(ii) republish such notice 1 month and 2 months, 

respectively, after the date of publication under clause 

(i). 

(C) MAILING REQUIRED.—The Corporation as receiver 

shall mail a notice similar to the notice published under 

clause (i) or (ii) of subparagraph (B), at the time of such 

publication, to any creditor shown on the books and records 

of the covered financial company— 

(i) at the last address of the creditor appearing 

in such books; 

(ii) in any claim filed by the claimant; or 

(iii) upon discovery of the name and address of 

a claimant not appearing on the books and records 

of the covered financial company, not later than 30 
H. R. 4173—90 

days after the date of the discovery of such name 

and address. 

(3) PROCEDURES FOR RESOLUTION OF CLAIMS.— 

(A) DECISION PERIOD.— 

(i) IN GENERAL.—Prior to the 180th day after the 

date on which a claim against a covered financial company is filed with the Corporation as receiver, or such 

later date as may be agreed as provided in clause 

(ii), the Corporation shall notify the claimant whether 

it allows or disallows the claim, in accordance with 

subparagraphs (B), (C), and (D). 

(ii) EXTENSION OF TIME.—By written agreement 

executed not later than 180 days after the date on 

which a claim against a covered financial company 

is filed with the Corporation, the period described in 

clause (i) may be extended by written agreement 

between the claimant and the Corporation. Failure 

to notify the claimant of any disallowance within the 

time period set forth in clause (i), as it may be extended 

by agreement under this clause, shall be deemed to 

be a disallowance of such claim, and the claimant 

may file or continue an action in court, as provided 

in paragraph (4). 

(iii) MAILING OF NOTICE SUFFICIENT.—The requirements of clause (i) shall be deemed to be satisfied 

if the notice of any decision with respect to any claim 

is mailed to the last address of the claimant which 

appears— 

(I) on the books, records, or both of the covered 

financial company; 

(II) in the claim filed by the claimant; or 

(III) in documents submitted in proof of the 

claim. 

(iv) CONTENTS OF NOTICE OF DISALLOWANCE.—If 

the Corporation as receiver disallows any claim filed 

under clause (i), the notice to the claimant shall contain— 

(I) a statement of each reason for the disallowance; and 

(II) the procedures required to file or continue 

an action in court, as provided in paragraph (4). 

(B) ALLOWANCE OF PROVEN CLAIM.—The receiver shall 

allow any claim received by the receiver on or before the 

date specified in the notice under paragraph (2)(B)(i), which 

is proved to the satisfaction of the receiver. 

(C) DISALLOWANCE OF CLAIMS FILED AFTER END OF

FILING PERIOD.— 

(i) IN GENERAL.—Except as provided in clause (ii), 

claims filed after the date specified in the notice published under paragraph (2)(B)(i) shall be disallowed, 

and such disallowance shall be final. 

(ii) CERTAIN EXCEPTIONS.—Clause (i) shall not 

apply with respect to any claim filed by a claimant 

after the date specified in the notice published under 

paragraph (2)(B)(i), and such claim may be considered 

by the receiver under subparagraph (B), if— 
H. R. 4173—91 

(I) the claimant did not receive notice of the 

appointment of the receiver in time to file such 

claim before such date; and 

(II) such claim is filed in time to permit payment of such claim. 

(D) AUTHORITY TO DISALLOW CLAIMS.— 

(i) IN GENERAL.—The Corporation may disallow 

any portion of any claim by a creditor or claim of 

a security, preference, setoff, or priority which is not 

proved to the satisfaction of the Corporation. 

(ii) PAYMENTS TO UNDERSECURED CREDITORS.—In 

the case of a claim against a covered financial company 

that is secured by any property or other asset of such 

covered financial company, the receiver— 

(I) may treat the portion of such claim which 

exceeds an amount equal to the fair market value 

of such property or other asset as an unsecured 

claim; and 

(II) may not make any payment with respect 

to such unsecured portion of the claim, other than 

in connection with the disposition of all claims 

of unsecured creditors of the covered financial company. 

(iii) EXCEPTIONS.—No provision of this paragraph 

shall apply with respect to— 

(I) any extension of credit from any Federal 

reserve bank, or the Corporation, to any covered 

financial company; or 

(II) subject to clause (ii), any legally enforceable and perfected security interest in the assets 

of the covered financial company securing any such 

extension of credit. 

(E) LEGAL EFFECT OF FILING.— (i) STATUTE OF LIMITATIONS TOLLED.—For purposes 

of any applicable statute of limitations, the filing of 

a claim with the receiver shall constitute a commencement of an action. 

(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to 

paragraph (8), the filing of a claim with the receiver 

shall not prejudice any right of the claimant to continue 

any action which was filed before the date of appointment of the receiver for the covered financial company. 

(4) JUDICIAL DETERMINATION OF CLAIMS.— 

(A) IN GENERAL.—Subject to subparagraph (B), a claimant may file suit on a claim (or continue an action commenced before the date of appointment of the Corporation 

as receiver) in the district or territorial court of the United 

States for the district within which the principal place 

of business of the covered financial company is located 

(and such court shall have jurisdiction to hear such claim). 

(B) TIMING.—A claim under subparagraph (A) may 

be filed before the end of the 60-day period beginning 

on the earlier of— 

(i) the end of the period described in paragraph 

(3)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in paragraph (3)(A)(ii)) with respect to any claim against a 
H. R. 4173—92 

covered financial company for which the Corporation 

is receiver; or 

(ii) the date of any notice of disallowance of such 

claim pursuant to paragraph (3)(A)(i). 

(C) STATUTE OF LIMITATIONS.—If any claimant fails 

to file suit on such claim (or to continue an action on 

such claim commenced before the date of appointment of 

the Corporation as receiver) prior to the end of the 60- 

day period described in subparagraph (B), the claim shall 

be deemed to be disallowed (other than any portion of 

such claim which was allowed by the receiver) as of the 

end of such period, such disallowance shall be final, and 

the claimant shall have no further rights or remedies with 

respect to such claim. 

(5) EXPEDITED DETERMINATION OF CLAIMS.— 

(A) PROCEDURE REQUIRED.—The Corporation shall 

establish a procedure for expedited relief outside of the 

claims process established under paragraph (3), for any 

claimant that alleges— 

(i) having a legally valid and enforceable or perfected security interest in property of a covered financial company or control of any legally valid and enforceable security entitlement in respect of any asset held 

by the covered financial company for which the Corporation has been appointed receiver; and 

(ii) that irreparable injury will occur if the claims 

procedure established under paragraph (3) is followed. 

(B) DETERMINATION PERIOD.—Prior to the end of the 

90-day period beginning on the date on which a claim 

is filed in accordance with the procedures established 

pursuant to subparagraph (A), the Corporation shall— 

(i) determine— 

(I) whether to allow or disallow such claim, 

or any portion thereof; or 

(II) whether such claim should be determined 

pursuant to the procedures established pursuant 

to paragraph (3); 

(ii) notify the claimant of the determination; and 

(iii) if the claim is disallowed, provide a statement 

of each reason for the disallowance and the procedure 

for obtaining a judicial determination. 

(C) PERIOD FOR FILING OR RENEWING SUIT.—Any claimant who files a request for expedited relief shall be permitted to file suit (or continue a suit filed before the date 

of appointment of the Corporation as receiver seeking a 

determination of the rights of the claimant with respect 

to such security interest (or such security entitlement) after 

the earlier of— 

(i) the end of the 90-day period beginning on the 

date of the filing of a request for expedited relief; 

or 

(ii) the date on which the Corporation denies the 

claim or a portion thereof. 

(D) STATUTE OF LIMITATIONS.—If an action described 

in subparagraph (C) is not filed, or the motion to renew 

a previously filed suit is not made, before the end of the 

30-day period beginning on the date on which such action 
H. R. 4173—93 

or motion may be filed in accordance with subparagraph 

(C), the claim shall be deemed to be disallowed as of 

the end of such period (other than any portion of such 

claim which was allowed by the receiver), such disallowance 

shall be final, and the claimant shall have no further 

rights or remedies with respect to such claim. 

(E) LEGAL EFFECT OF FILING.— 

(i) STATUTE OF LIMITATIONS TOLLED.—For purposes 

of any applicable statute of limitations, the filing of 

a claim with the receiver shall constitute a commencement of an action. 

(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to 

paragraph (8), the filing of a claim with the receiver 

shall not prejudice any right of the claimant to continue 

any action which was filed before the appointment 

of the Corporation as receiver for the covered financial 

company. 

(6) AGREEMENTS AGAINST INTEREST OF THE RECEIVER.— 

No agreement that tends to diminish or defeat the interest 

of the Corporation as receiver in any asset acquired by the 

receiver under this section shall be valid against the receiver, 

unless such agreement— 

(A) is in writing; 

(B) was executed by an authorized officer or representative of the covered financial company, or confirmed in the 

ordinary course of business by the covered financial company; and 

(C) has been, since the time of its execution, an official 

record of the company or the party claiming under the 

agreement provides documentation, acceptable to the 

receiver, of such agreement and its authorized execution 

or confirmation by the covered financial company. 

(7) PAYMENT OF CLAIMS.— (A) IN GENERAL.—Subject to subparagraph (B), the Corporation as receiver may, in its discretion and to the extent 

that funds are available, pay creditor claims, in such 

manner and amounts as are authorized under this section, 

which are— 

(i) allowed by the receiver; 

(ii) approved by the receiver pursuant to a final 

determination pursuant to paragraph (3) or (5), as 

applicable; or 

(iii) determined by the final judgment of a court 

of competent jurisdiction. 

(B) LIMITATION.—A creditor shall, in no event, receive 

less than the amount that the creditor is entitled to receive 

under paragraphs (2) and (3) of subsection (d), as 

applicable. 

(C) PAYMENT OF DIVIDENDS ON CLAIMS.—The Corporation as receiver may, in its sole discretion, and to the 

extent otherwise permitted by this section, pay dividends 

on proven claims at any time, and no liability shall attach 

to the Corporation as receiver, by reason of any such payment or for failure to pay dividends to a claimant whose 

claim is not proved at the time of any such payment. 

(D) RULEMAKING BY THE CORPORATION.—The Corporation may prescribe such rules, including definitions of 
H. R. 4173—94 

terms, as the Corporation deems appropriate to establish 

an interest rate for or to make payments of post-insolvency 

interest to creditors holding proven claims against the 

receivership estate of a covered financial company, except 

that no such interest shall be paid until the Corporation 

as receiver has satisfied the principal amount of all creditor 

claims. 

(8) SUSPENSION OF LEGAL ACTIONS.— 

(A) IN GENERAL.—After the appointment of the Corporation as receiver for a covered financial company, the 

Corporation may request a stay in any judicial action or 

proceeding in which such covered financial company is 

or becomes a party, for a period of not to exceed 90 days. 

(B) GRANT OF STAY BY ALL COURTS REQUIRED.—Upon 

receipt of a request by the Corporation pursuant to 

subparagraph (A), the court shall grant such stay as to 

all parties. 

(9) ADDITIONAL RIGHTS AND DUTIES.— 

(A) PRIOR FINAL ADJUDICATION.—The Corporation shall 

abide by any final, non-appealable judgment of any court 

of competent jurisdiction that was rendered before the 

appointment of the Corporation as receiver. 

(B) RIGHTS AND REMEDIES OF RECEIVER.—In the event 

of any appealable judgment, the Corporation as receiver 

shall— 

(i) have all the rights and remedies available to 

the covered financial company (before the date of 

appointment of the Corporation as receiver under section 202) and the Corporation, including removal to 

Federal court and all appellate rights; and 

(ii) not be required to post any bond in order 

to pursue such remedies. 

(C) NO ATTACHMENT OR EXECUTION.—No attachment 

or execution may be issued by any court upon assets in 

the possession of the Corporation as receiver for a covered 

financial company. 

(D) LIMITATION ON JUDICIAL REVIEW.—Except as otherwise provided in this title, no court shall have jurisdiction 

over— 

(i) any claim or action for payment from, or any 

action seeking a determination of rights with respect 

to, the assets of any covered financial company for 

which the Corporation has been appointed receiver, 

including any assets which the Corporation may 

acquire from itself as such receiver; or 

(ii) any claim relating to any act or omission of 

such covered financial company or the Corporation as 

receiver. 

(E) DISPOSITION OF ASSETS.—In exercising any right, 

power, privilege, or authority as receiver in connection 

with any covered financial company for which the Corporation is acting as receiver under this section, the Corporation 

shall, to the greatest extent practicable, conduct its operations in a manner that— 

(i) maximizes the net present value return from 

the sale or disposition of such assets; 
H. R. 4173—95 

(ii) minimizes the amount of any loss realized in 

the resolution of cases; 

(iii) mitigates the potential for serious adverse 

effects to the financial system; 

(iv) ensures timely and adequate competition and 

fair and consistent treatment of offerors; and 

(v) prohibits discrimination on the basis of race, 

sex, or ethnic group in the solicitation and consideration of offers. 

(10) STATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY

RECEIVER.— 

(A) IN GENERAL.—Notwithstanding any provision of 

any contract, the applicable statute of limitations with 

regard to any action brought by the Corporation as receiver 

for a covered financial company shall be— 

(i) in the case of any contract claim, the longer 

of— 

(I) the 6-year period beginning on the date 

on which the claim accrues; or 

(II) the period applicable under State law; and 

(ii) in the case of any tort claim, the longer of— 

(I) the 3-year period beginning on the date 

on which the claim accrues; or 

(II) the period applicable under State law. 

(B) DATE ON WHICH A CLAIM ACCRUES.—For purposes 

of subparagraph (A), the date on which the statute of 

limitations begins to run on any claim described in subparagraph (A) shall be the later of— 

(i) the date of the appointment of the Corporation 

as receiver under this title; or 

(ii) the date on which the cause of action accrues. 

(C) REVIVAL OF EXPIRED STATE CAUSES OF ACTION.— 

(i) IN GENERAL.—In the case of any tort claim 

described in clause (ii) for which the applicable statute 

of limitations under State law has expired not more 

than 5 years before the date of appointment of the 

Corporation as receiver for a covered financial company, the Corporation may bring an action as receiver 

on such claim without regard to the expiration of the 

statute of limitations. 

(ii) CLAIMS DESCRIBED.—A tort claim referred to 

in clause (i) is a claim arising from fraud, intentional 

misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the 

covered financial company. 

(11) AVOIDABLE TRANSFERS.— (A) FRAUDULENT TRANSFERS.—The Corporation, as 

receiver for any covered financial company, may avoid a 

transfer of any interest of the covered financial company 

in property, or any obligation incurred by the covered financial company, that was made or incurred at or within 

2 years before the date on which the Corporation was 

appointed receiver, if— 

(i) the covered financial company voluntarily or 

involuntarily— 

(I) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud 
H. R. 4173—96 

any entity to which the covered financial company 

was or became, on or after the date on which 

such transfer was made or such obligation was 

incurred, indebted; or 

(II) received less than a reasonably equivalent 

value in exchange for such transferor obligation; 

and 

(ii) the covered financial company voluntarily or 

involuntarily— 

(I) was insolvent on the date that such transfer 

was made or such obligation was incurred, or 

became insolvent as a result of such transfer or 

obligation; 

(II) was engaged in business or a transaction, 

or was about to engage in business or a transaction, for which any property remaining with the 

covered financial company was an unreasonably 

small capital; 

(III) intended to incur, or believed that the 

covered financial company would incur, debts that 

would be beyond the ability of the covered financial 

company to pay as such debts matured; or 

(IV) made such transfer to or for the benefit 

of an insider, or incurred such obligation to or 

for the benefit of an insider, under an employment 

contract and not in the ordinary course of business. 

(B) PREFERENTIAL TRANSFERS.—The Corporation as 

receiver for any covered financial company may avoid a 

transfer of an interest of the covered financial company 

in property— 

(i) to or for the benefit of a creditor; 

(ii) for or on account of an antecedent debt that 

was owed by the covered financial company before 

the transfer was made; 

(iii) that was made while the covered financial 

company was insolvent; 

(iv) that was made— 

(I) 90 days or less before the date on which 

the Corporation was appointed receiver; or 

(II) more than 90 days, but less than 1 year 

before the date on which the Corporation was 

appointed receiver, if such creditor at the time 

of the transfer was an insider; and 

(v) that enables the creditor to receive more than 

the creditor would receive if— 

(I) the covered financial company had been 

liquidated under chapter 7 of the Bankruptcy 

Code; 

(II) the transfer had not been made; and 

(III) the creditor received payment of such debt 

to the extent provided by the provisions of chapter 

7 of the Bankruptcy Code. 

(C) POST-RECEIVERSHIP TRANSACTIONS.—The Corporation as receiver for any covered financial company may 

avoid a transfer of property of the receivership that 

occurred after the Corporation was appointed receiver that 
H. R. 4173—97 

was not authorized under this title by the Corporation 

as receiver. 

(D) RIGHT OF RECOVERY.—To the extent that a transfer 

is avoided under subparagraph (A), (B), or (C), the Corporation may recover, for the benefit of the covered financial 

company, the property transferred or, if a court so orders, 

the value of such property (at the time of such transfer) 

from— 

(i) the initial transferee of such transfer or the 

person for whose benefit such transfer was made; or 

(ii) any immediate or mediate transferee of any 

such initial transferee. 

(E) RIGHTS OF TRANSFEREE OR OBLIGEE.—The Corporation may not recover under subparagraph (D)(ii) from— 

(i) any transferee that takes for value, including 

in satisfaction of or to secure a present or antecedent 

debt, in good faith, and without knowledge of the 

voidability of the transfer avoided; or 

(ii) any immediate or mediate good faith transferee 

of such transferee. 

(F) DEFENSES.—Subject to the other provisions of this 

title— 

(i) a transferee or obligee from which the Corporation seeks to recover a transfer or to avoid an obligation 

under subparagraph (A), (B), (C), or (D) shall have 

the same defenses available to a transferee or obligee 

from which a trustee seeks to recover a transfer or 

avoid an obligation under sections 547, 548, and 549 

of the Bankruptcy Code; and 

(ii) the authority of the Corporation to recover 

a transfer or avoid an obligation shall be subject to 

subsections (b) and (c) of section 546, section 547(c), 

and section 548(c) of the Bankruptcy Code. 

(G) RIGHTS UNDER THIS SECTION.—The rights of the 

Corporation as receiver under this section shall be superior 

to any rights of a trustee or any other party (other than 

a Federal agency) under the Bankruptcy Code. 

(H) RULES OF CONSTRUCTION; DEFINITIONS.—For purposes of— 

(i) subparagraphs (A) and (B)— 

(I) the term ‘‘insider’’ has the same meaning 

as in section 101(31) of the Bankruptcy Code; 

(II) a transfer is made when such transfer 

is so perfected that a bona fide purchaser from 

the covered financial company against whom 

applicable law permits such transfer to be perfected cannot acquire an interest in the property 

transferred that is superior to the interest in such 

property of the transferee, but if such transfer 

is not so perfected before the date on which the 

Corporation is appointed as receiver for the covered financial company, such transfer is made 

immediately before the date of such appointment; 

and 

(III) the term ‘‘value’’ means property, or satisfaction or securing of a present or antecedent debt 

of the covered financial company, but does not 
H. R. 4173—98 

include an unperformed promise to furnish support 

to the covered financial company; and 

(ii) subparagraph (B)— 

(I) the covered financial company is presumed 

to have been insolvent on and during the 90-day 

period immediately preceding the date of appointment of the Corporation as receiver; and 

(II) the term ‘‘insolvent’’ has the same meaning 

as in section 101(32) of the Bankruptcy Code. 

(12) SETOFF.— (A) GENERALLY.—Except as otherwise provided in this 

title, any right of a creditor to offset a mutual debt owed 

by the creditor to any covered financial company that arose 

before the Corporation was appointed as receiver for the 

covered financial company against a claim of such creditor 

may be asserted if enforceable under applicable noninsolvency law, except to the extent that— 

(i) the claim of the creditor against the covered 

financial company is disallowed; 

(ii) the claim was transferred, by an entity other 

than the covered financial company, to the creditor— 

(I) after the Corporation was appointed as 

receiver of the covered financial company; or 

(II)(aa) after the 90-day period preceding the 

date on which the Corporation was appointed as 

receiver for the covered financial company; and 

(bb) while the covered financial company was 

insolvent (except for a setoff in connection with 

a qualified financial contract); or 

(iii) the debt owed to the covered financial company 

was incurred by the covered financial company— 

(I) after the 90-day period preceding the date 

on which the Corporation was appointed as 

receiver for the covered financial company; 

(II) while the covered financial company was 

insolvent; and 

(III) for the purpose of obtaining a right of 

setoff against the covered financial company 

(except for a setoff in connection with a qualified 

financial contract). 

(B) INSUFFICIENCY.— 

(i) IN GENERAL.—Except with respect to a setoff 

in connection with a qualified financial contract, if 

a creditor offsets a mutual debt owed to the covered 

financial company against a claim of the covered financial company on or within the 90-day period preceding 

the date on which the Corporation is appointed as 

receiver for the covered financial company, the Corporation may recover from the creditor the amount 

so offset, to the extent that any insufficiency on the 

date of such setoff is less than the insufficiency on 

the later of— 

(I) the date that is 90 days before the date 

on which the Corporation is appointed as receiver 

for the covered financial company; or 

(II) the first day on which there is an insufficiency during the 90-day period preceding the date 
H. R. 4173—99 

on which the Corporation is appointed as receiver 

for the covered financial company. 

(ii) DEFINITION OF INSUFFICIENCY.—In this 

subparagraph, the term ‘‘insufficiency’’ means the 

amount, if any, by which a claim against the covered 

financial company exceeds a mutual debt owed to the 

covered financial company by the holder of such claim. 

(C) INSOLVENCY.—The term ‘‘insolvent’’ has the same 

meaning as in section 101(32) of the Bankruptcy Code. 

(D) PRESUMPTION OF INSOLVENCY.—For purposes of 

this paragraph, the covered financial company is presumed 

to have been insolvent on and during the 90-day period 

preceding the date of appointment of the Corporation as 

receiver. 

(E) LIMITATION.—Nothing in this paragraph (12) shall 

be the basis for any right of setoff where no such right 

exists under applicable noninsolvency law. 

(F) PRIORITY CLAIM.—Except as otherwise provided in 

this title, the Corporation as receiver for the covered financial company may sell or transfer any assets free and 

clear of the setoff rights of any party, except that such 

party shall be entitled to a claim, subordinate to the claims 

payable under subparagraphs (A), (B), (C), and (D) of subsection (b)(1), but senior to all other unsecured liabilities 

defined in subsection (b)(1)(E), in an amount equal to the 

value of such setoff rights. 

(13) ATTACHMENT OF ASSETS AND OTHER INJUNCTIVE

RELIEF.—Subject to paragraph (14), any court of competent 

jurisdiction may, at the request of the Corporation as receiver 

for a covered financial company, issue an order in accordance 

with Rule 65 of the Federal Rules of Civil Procedure, including 

an order placing the assets of any person designated by the 

Corporation under the control of the court and appointing a 

trustee to hold such assets. 

(14) STANDARDS.— (A) SHOWING.—Rule 65 of the Federal Rules of Civil 

Procedure shall apply with respect to any proceeding under 

paragraph (13), without regard to the requirement that 

the applicant show that the injury, loss, or damage is 

irreparable and immediate. 

(B) STATE PROCEEDING.—If, in the case of any proceeding in a State court, the court determines that rules 

of civil procedure available under the laws of the State 

provide substantially similar protections of the right of 

the parties to due process as provided under Rule 65 (as 

modified with respect to such proceeding by subparagraph 

(A)), the relief sought by the Corporation pursuant to paragraph (14) may be requested under the laws of such State. 

(15) TREATMENT OF CLAIMS ARISING FROM BREACH OF CONTRACTS EXECUTED BY THE CORPORATION AS RECEIVER.—Notwithstanding any other provision of this title, any final and nonappealable judgment for monetary damages entered against 

the Corporation as receiver for a covered financial company 

for the breach of an agreement executed or approved by the 

Corporation after the date of its appointment shall be paid 

as an administrative expense of the receiver. Nothing in this 

paragraph shall be construed to limit the power of a receiver 
H. R. 4173—100 

to exercise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement. 

(16) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.— 

(A) IN GENERAL.—The Corporation as receiver for a 

covered financial company shall, consistent with the 

accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of 

each receivership or other disposition of any covered financial company. 

(B) ANNUAL ACCOUNTING OR REPORT.—With respect to 

each receivership to which the Corporation is appointed, 

the Corporation shall make an annual accounting or report, 

as appropriate, available to the Secretary and the Comptroller General of the United States. 

(C) AVAILABILITY OF REPORTS.—Any report prepared 

pursuant to subparagraph (B) and section 203(c)(3) shall 

be made available to the public by the Corporation. 

(D) RECORDKEEPING REQUIREMENT.— 

(i) IN GENERAL.—The Corporation shall prescribe 

such regulations and establish such retention schedules 

as are necessary to maintain the documents and 

records of the Corporation generated in exercising the 

authorities of this title and the records of a covered 

financial company for which the Corporation is 

appointed receiver, with due regard for— 

(I) the avoidance of duplicative record retention; and 

(II) the expected evidentiary needs of the Corporation as receiver for a covered financial company and the public regarding the records of covered financial companies. 

(ii) RETENTION OF RECORDS.—Unless otherwise 

required by applicable Federal law or court order, the 

Corporation may not, at any time, destroy any records 

that are subject to clause (i). 

(iii) RECORDS DEFINED.—As used in this subparagraph, the terms ‘‘records’’ and ‘‘records of a covered 

financial company’’ mean any document, book, paper, 

map, photograph, microfiche, microfilm, computer or 

electronically-created record generated or maintained 

by the covered financial company in the course of and 

necessary to its transaction of business. 

(b) PRIORITY OF EXPENSES AND UNSECURED CLAIMS.— 

(1) IN GENERAL.—Unsecured claims against a covered financial company, or the Corporation as receiver for such covered 

financial company under this section, that are proven to the 

satisfaction of the receiver shall have priority in the following 

order: 

(A) Administrative expenses of the receiver. 

(B) Any amounts owed to the United States, unless 

the United States agrees or consents otherwise. 

(C) Wages, salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual 

(other than an individual described in subparagraph (G)), 

but only to the extent of $11,725 for each individual (as 

indexed for inflation, by regulation of the Corporation) 
H. R. 4173—101 

earned not later than 180 days before the date of appointment of the Corporation as receiver. 

(D) Contributions owed to employee benefit plans 

arising from services rendered not later than 180 days 

before the date of appointment of the Corporation as 

receiver, to the extent of the number of employees covered 

by each such plan, multiplied by $11,725 (as indexed for 

inflation, by regulation of the Corporation), less the aggregate amount paid to such employees under subparagraph 

(C), plus the aggregate amount paid by the receivership 

on behalf of such employees to any other employee benefit 

plan. 

(E) Any other general or senior liability of the covered 

financial company (which is not a liability described under 

subparagraph (F), (G), or (H)). 

(F) Any obligation subordinated to general creditors 

(which is not an obligation described under subparagraph 

(G) or (H)). 

(G) Any wages, salaries, or commissions, including 

vacation, severance, and sick leave pay earned, owed to 

senior executives and directors of the covered financial 

company. 

(H) Any obligation to shareholders, members, general 

partners, limited partners, or other persons, with interests 

in the equity of the covered financial company arising 

as a result of their status as shareholders, members, general partners, limited partners, or other persons with 

interests in the equity of the covered financial company. 

(2) POST-RECEIVERSHIP FINANCING PRIORITY.—In the event 

that the Corporation, as receiver for a covered financial company, is unable to obtain unsecured credit for the covered 

financial company from commercial sources, the Corporation 

as receiver may obtain credit or incur debt on the part of 

the covered financial company, which shall have priority over 

any or all administrative expenses of the receiver under paragraph (1)(A). 

(3) CLAIMS OF THE UNITED STATES.—Unsecured claims of 

the United States shall, at a minimum, have a higher priority 

than liabilities of the covered financial company that count 

as regulatory capital. 

(4) CREDITORS SIMILARLY SITUATED.—All claimants of a 

covered financial company that are similarly situated under 

paragraph (1) shall be treated in a similar manner, except 

that the Corporation may take any action (including making 

payments, subject to subsection (o)(1)(D)(i)) that does not 

comply with this subsection, if— 

(A) the Corporation determines that such action is 

necessary— 

(i) to maximize the value of the assets of the 

covered financial company; 

(ii) to initiate and continue operations essential 

to implementation of the receivership or any bridge 

financial company; 

(iii) to maximize the present value return from 

the sale or other disposition of the assets of the covered 

financial company; or 
H. R. 4173—102 

(iv) to minimize the amount of any loss realized 

upon the sale or other disposition of the assets of 

the covered financial company; and 

(B) all claimants that are similarly situated under 

paragraph (1) receive not less than the amount provided 

in paragraphs (2) and (3) of subsection (d). 

(5) SECURED CLAIMS UNAFFECTED.—This section shall not 

affect secured claims or security entitlements in respect of 

assets or property held by the covered financial company, except 

to the extent that the security is insufficient to satisfy the 

claim, and then only with regard to the difference between 

the claim and the amount realized from the security. 

(6) PRIORITY OF EXPENSES AND UNSECURED CLAIMS IN THE

ORDERLY LIQUIDATION OF SIPC MEMBER.—Where the Corporation 

is appointed as receiver for a covered broker or dealer, 

unsecured claims against such covered broker or dealer, or 

the Corporation as receiver for such covered broker or dealer 

under this section, that are proven to the satisfaction of the 

receiver under section 205(e), shall have the priority prescribed 

in paragraph (1), except that— 

(A) SIPC shall be entitled to recover administrative 

expenses incurred in performing its responsibilities under 

section 205 on an equal basis with the Corporation, in 

accordance with paragraph (1)(A); 

(B) the Corporation shall be entitled to recover any 

amounts paid to customers or to SIPC pursuant to section 

205(f), in accordance with paragraph (1)(B); 

(C) SIPC shall be entitled to recover any amounts 

paid out of the SIPC Fund to meet its obligations under 

section 205 and under the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall 

be subordinate to the claims payable under subparagraphs 

(A) and (B) of paragraph (1), but senior to all other claims; 

and 

(D) the Corporation may, after paying any proven 

claims to customers under section 205 and the Securities 

Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), 

and as provided above, pay dividends on other proven 

claims, in its discretion, and to the extent that funds are 

available, in accordance with the priorities set forth in 

paragraph (1). 

(c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF RECEIVER.— 

(1) AUTHORITY TO REPUDIATE CONTRACTS.—In addition to 

any other rights that a receiver may have, the Corporation 

as receiver for any covered financial company may disaffirm 

or repudiate any contract or lease— 

(A) to which the covered financial company is a party; 

(B) the performance of which the Corporation as 

receiver, in the discretion of the Corporation, determines 

to be burdensome; and 

(C) the disaffirmance or repudiation of which the Corporation as receiver determines, in the discretion of the 

Corporation, will promote the orderly administration of 

the affairs of the covered financial company. 

(2) TIMING OF REPUDIATION.—The Corporation, as receiver 

for any covered financial company, shall determine whether 
H. R. 4173—103 

or not to exercise the rights of repudiation under this section 

within a reasonable period of time. 

(3) CLAIMS FOR DAMAGES FOR REPUDIATION.— 

(A) IN GENERAL.—Except as provided in paragraphs 

(4), (5), and (6) and in subparagraphs (C), (D), and (E) 

of this paragraph, the liability of the Corporation as 

receiver for a covered financial company for the 

disaffirmance or repudiation of any contract pursuant to 

paragraph (1) shall be— 

(i) limited to actual direct compensatory damages; 

and 

(ii) determined as of— 

(I) the date of the appointment of the Corporation as receiver; or 

(II) in the case of any contract or agreement 

referred to in paragraph (8), the date of the 

disaffirmance or repudiation of such contract or 

agreement. 

(B) NO LIABILITY FOR OTHER DAMAGES.—For purposes 

of subparagraph (A), the term ‘‘actual direct compensatory 

damages’’ does not include— 

(i) punitive or exemplary damages; 

(ii) damages for lost profits or opportunity; or 

(iii) damages for pain and suffering. 

(C) MEASURE OF DAMAGES FOR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In the case of any qualified 

financial contract or agreement to which paragraph (8) 

applies, compensatory damages shall be— 

(i) deemed to include normal and reasonable costs 

of cover or other reasonable measures of damages utilized in the industries for such contract and agreement 

claims; and 

(ii) paid in accordance with this paragraph and 

subsection (d), except as otherwise specifically provided 

in this subsection. 

(D) MEASURE OF DAMAGES FOR REPUDIATION OR

DISAFFIRMANCE OF DEBT OBLIGATION.—In the case of any 

debt for borrowed money or evidenced by a security, actual 

direct compensatory damages shall be no less than the 

amount lent plus accrued interest plus any accreted 

original issue discount as of the date the Corporation was 

appointed receiver of the covered financial company and, 

to the extent that an allowed secured claim is secured 

by property the value of which is greater than the amount 

of such claim and any accrued interest through the date 

of repudiation or disaffirmance, such accrued interest 

pursuant to paragraph (1). 

(E) MEASURE OF DAMAGES FOR REPUDIATION OR

DISAFFIRMANCE OF CONTINGENT OBLIGATION.—In the case 

of any contingent obligation of a covered financial company 

consisting of any obligation under a guarantee, letter of 

credit, loan commitment, or similar credit obligation, the 

Corporation may, by rule or regulation, prescribe that 

actual direct compensatory damages shall be no less than 

the estimated value of the claim as of the date the Corporation was appointed receiver of the covered financial company, as such value is measured based on the likelihood 
H. R. 4173—104 

that such contingent claim would become fixed and the 

probable magnitude thereof. 

(4) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY

IS THE LESSEE.— 

(A) IN GENERAL.—If the Corporation as receiver disaffirms or repudiates a lease under which the covered 

financial company is the lessee, the receiver shall not be 

liable for any damages (other than damages determined 

pursuant to subparagraph (B)) for the disaffirmance or 

repudiation of such lease. 

(B) PAYMENTS OF RENT.—Notwithstanding subparagraph (A), the lessor under a lease to which subparagraph 

(A) would otherwise apply shall— 

(i) be entitled to the contractual rent accruing 

before the later of the date on which— 

(I) the notice of disaffirmance or repudiation 

is mailed; or 

(II) the disaffirmance or repudiation becomes 

effective, unless the lessor is in default or breach 

of the terms of the lease; 

(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; 

and 

(iii) have a claim for any unpaid rent, subject 

to all appropriate offsets and defenses, due as of the 

date of the appointment which shall be paid in accordance with this paragraph and subsection (d). 

(5) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY

IS THE LESSOR.— 

(A) IN GENERAL.—If the Corporation as receiver for 

a covered financial company repudiates an unexpired written lease of real property of the covered financial company 

under which the covered financial company is the lessor 

and the lessee is not, as of the date of such repudiation, 

in default, the lessee under such lease may either— 

(i) treat the lease as terminated by such repudiation; or 

(ii) remain in possession of the leasehold interest 

for the balance of the term of the lease, unless the 

lessee defaults under the terms of the lease after the 

date of such repudiation. 

(B) PROVISIONS APPLICABLE TO LESSEE REMAINING IN

POSSESSION.—If any lessee under a lease described in 

subparagraph (A) remains in possession of a leasehold 

interest pursuant to clause (ii) of subparagraph (A)— 

(i) the lessee— 

(I) shall continue to pay the contractual rent 

pursuant to the terms of the lease after the date 

of the repudiation of such lease; and 

(II) may offset against any rent payment which 

accrues after the date of the repudiation of the 

lease, any damages which accrue after such date 

due to the nonperformance of any obligation of 

the covered financial company under the lease 

after such date; and 

(ii) the Corporation as receiver shall not be liable 

to the lessee for any damages arising after such date 
H. R. 4173—105 

as a result of the repudiation, other than the amount 

of any offset allowed under clause (i)(II). 

(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.— 

(A) IN GENERAL.—If the receiver repudiates any contract (which meets the requirements of subsection (a)(6)) 

for the sale of real property, and the purchaser of such 

real property under such contract is in possession and 

is not, as of the date of such repudiation, in default, such 

purchaser may either— 

(i) treat the contract as terminated by such repudiation; or 

(ii) remain in possession of such real property. 

(B) PROVISIONS APPLICABLE TO PURCHASER REMAINING

IN POSSESSION.—If any purchaser of real property under 

any contract described in subparagraph (A) remains in 

possession of such property pursuant to clause (ii) of 

subparagraph (A)— 

(i) the purchaser— 

(I) shall continue to make all payments due 

under the contract after the date of the repudiation 

of the contract; and 

(II) may offset against any such payments any 

damages which accrue after such date due to the 

nonperformance (after such date) of any obligation 

of the covered financial company under the contract; and 

(ii) the Corporation as receiver shall— 

(I) not be liable to the purchaser for any damages arising after such date as a result of the 

repudiation, other than the amount of any offset 

allowed under clause (i)(II); 

(II) deliver title to the purchaser in accordance 

with the provisions of the contract; and 

(III) have no obligation under the contract 

other than the performance required under subclause (II). 

(C) ASSIGNMENT AND SALE ALLOWED.— (i) IN GENERAL.—No provision of this paragraph 

shall be construed as limiting the right of the Corporation as receiver to assign the contract described in 

subparagraph (A) and sell the property, subject to the 

contract and the provisions of this paragraph. 

(ii) NO LIABILITY AFTER ASSIGNMENT AND SALE.— 

If an assignment and sale described in clause (i) is 

consummated, the Corporation as receiver shall have 

no further liability under the contract described in 

subparagraph (A) or with respect to the real property 

which was the subject of such contract. 

(7) PROVISIONS APPLICABLE TO SERVICE CONTRACTS.— (A) SERVICES PERFORMED BEFORE APPOINTMENT.—In 

the case of any contract for services between any person 

and any covered financial company for which the Corporation has been appointed receiver, any claim of such person 

for services performed before the date of appointment shall 

be— 

(i) a claim to be paid in accordance with subsections (a), (b), and (d); and 
H. R. 4173—106 

(ii) deemed to have arisen as of the date on which 

the receiver was appointed. 

(B) SERVICES PERFORMED AFTER APPOINTMENT AND

PRIOR TO REPUDIATION.—If, in the case of any contract 

for services described in subparagraph (A), the Corporation 

as receiver accepts performance by the other person before 

making any determination to exercise the right of repudiation of such contract under this section— 

(i) the other party shall be paid under the terms 

of the contract for the services performed; and 

(ii) the amount of such payment shall be treated 

as an administrative expense of the receivership. 

(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT REPUDIATION.—The acceptance by the Corporation 

as receiver for services referred to in subparagraph (B) 

in connection with a contract described in subparagraph 

(B) shall not affect the right of the Corporation as receiver 

to repudiate such contract under this section at any time 

after such performance. 

(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.— 

(A) RIGHTS OF PARTIES TO CONTRACTS.—Subject to subsection (a)(8) and paragraphs (9) and (10) of this subsection, 

and notwithstanding any other provision of this section, 

any other provision of Federal law, or the law of any 

State, no person shall be stayed or prohibited from exercising— 

(i) any right that such person has to cause the 

termination, liquidation, or acceleration of any qualified financial contract with a covered financial company 

which arises upon the date of appointment of the Corporation as receiver for such covered financial company 

or at any time after such appointment; 

(ii) any right under any security agreement or 

arrangement or other credit enhancement related to 

one or more qualified financial contracts described in 

clause (i); or 

(iii) any right to offset or net out any termination 

value, payment amount, or other transfer obligation 

arising under or in connection with 1 or more contracts 

or agreements described in clause (i), including any 

master agreement for such contracts or agreements. 

(B) APPLICABILITY OF OTHER PROVISIONS.—Subsection 

(a)(8) shall apply in the case of any judicial action or 

proceeding brought against the Corporation as receiver 

referred to in subparagraph (A), or the subject covered 

financial company, by any party to a contract or agreement 

described in subparagraph (A)(i) with such covered financial company. 

(C) CERTAIN TRANSFERS NOT AVOIDABLE.— (i) IN GENERAL.—Notwithstanding subsection 

(a)(11), (a)(12), or (c)(12), section 5242 of the Revised 

Statutes of the United States, or any other provision 

of Federal or State law relating to the avoidance of 

preferential or fraudulent transfers, the Corporation, 

whether acting as the Corporation or as receiver for 

a covered financial company, may not avoid any 

transfer of money or other property in connection with 
H. R. 4173—107 

any qualified financial contract with a covered financial 

company. 

(ii) EXCEPTION FOR CERTAIN TRANSFERS.—Clause 

(i) shall not apply to any transfer of money or other 

property in connection with any qualified financial contract with a covered financial company if the transferee 

had actual intent to hinder, delay, or defraud such 

company, the creditors of such company, or the Corporation as receiver appointed for such company. 

(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.— For purposes of this subsection, the following definitions 

shall apply: 

(i) QUALIFIED FINANCIAL CONTRACT.—The term 

‘‘qualified financial contract’’ means any securities contract, commodity contract, forward contract, repurchase 

agreement, swap agreement, and any similar agreement that the Corporation determines by regulation, 

resolution, or order to be a qualified financial contract 

for purposes of this paragraph. 

(ii) SECURITIES CONTRACT.—The term ‘‘securities 

contract’’— 

(I) means a contract for the purchase, sale, 

or loan of a security, a certificate of deposit, a 

mortgage loan, any interest in a mortgage loan, 

a group or index of securities, certificates of 

deposit, or mortgage loans or interests therein 

(including any interest therein or based on the 

value thereof), or any option on any of the foregoing, including any option to purchase or sell 

any such security, certificate of deposit, mortgage 

loan, interest, group or index, or option, and 

including any repurchase or reverse repurchase 

transaction on any such security, certificate of 

deposit, mortgage loan, interest, group or index, 

or option (whether or not such repurchase or 

reverse repurchase transaction is a ‘‘repurchase 

agreement’’, as defined in clause (v)); 

(II) does not include any purchase, sale, or 

repurchase obligation under a participation in a 

commercial mortgage loan unless the Corporation 

determines by regulation, resolution, or order to 

include any such agreement within the meaning 

of such term; 

(III) means any option entered into on a 

national securities exchange relating to foreign 

currencies; 

(IV) means the guarantee (including by novation) by or to any securities clearing agency of 

any settlement of cash, securities, certificates of 

deposit, mortgage loans or interests therein, group 

or index of securities, certificates of deposit or 

mortgage loans or interests therein (including any 

interest therein or based on the value thereof) 

or an option on any of the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option (whether or not such 
H. R. 4173—108 

settlement is in connection with any agreement 

or transaction referred to in subclauses (I) through 

(XII) (other than subclause (II))); 

(V) means any margin loan; 

(VI) means any extension of credit for the 

clearance or settlement of securities transactions; 

(VII) means any loan transaction coupled with 

a securities collar transaction, any prepaid securities forward transaction, or any total return swap 

transaction coupled with a securities sale transaction; 

(VIII) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause; 

(IX) means any combination of the agreements 

or transactions referred to in this clause; 

(X) means any option to enter into any agreement or transaction referred to in this clause; 

(XI) means a master agreement that provides 

for an agreement or transaction referred to in any 

of subclauses (I) through (X), other than subclause 

(II), together with all supplements to any such 

master agreement, without regard to whether the 

master agreement provides for an agreement or 

transaction that is not a securities contract under 

this clause, except that the master agreement shall 

be considered to be a securities contract under 

this clause only with respect to each agreement 

or transaction under the master agreement that 

is referred to in any of subclauses (I) through 

(X), other than subclause (II); and 

(XII) means any security agreement or 

arrangement or other credit enhancement related 

to any agreement or transaction referred to in 

this clause, including any guarantee or reimbursement obligation in connection with any agreement 

or transaction referred to in this clause. 

(iii) COMMODITY CONTRACT.—The term ‘‘commodity 

contract’’ means— 

(I) with respect to a futures commission merchant, a contract for the purchase or sale of a 

commodity for future delivery on, or subject to 

the rules of, a contract market or board of trade; 

(II) with respect to a foreign futures commission merchant, a foreign future; 

(III) with respect to a leverage transaction 

merchant, a leverage transaction; 

(IV) with respect to a clearing organization, 

a contract for the purchase or sale of a commodity 

for future delivery on, or subject to the rules of, 

a contract market or board of trade that is cleared 

by such clearing organization, or commodity option 

traded on, or subject to the rules of, a contract 

market or board of trade that is cleared by such 

clearing organization; 

(V) with respect to a commodity options dealer, 

a commodity option; 
H. R. 4173—109 

(VI) any other agreement or transaction that 

is similar to any agreement or transaction referred 

to in this clause; 

(VII) any combination of the agreements or 

transactions referred to in this clause; 

(VIII) any option to enter into any agreement 

or transaction referred to in this clause; 

(IX) a master agreement that provides for an 

agreement or transaction referred to in any of 

subclauses (I) through (VIII), together with all 

supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not 

a commodity contract under this clause, except 

that the master agreement shall be considered 

to be a commodity contract under this clause only 

with respect to each agreement or transaction 

under the master agreement that is referred to 

in any of subclauses (I) through (VIII); or 

(X) any security agreement or arrangement 

or other credit enhancement related to any agreement or transaction referred to in this clause, 

including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause. 

(iv) FORWARD CONTRACT.—The term ‘‘forward contract’’ means— 

(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, 

or interest which is presently or in the future 

becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with 

a maturity date that is more than 2 days after 

the date on which the contract is entered into, 

including a repurchase or reverse repurchase 

transaction (whether or not such repurchase or 

reverse repurchase transaction is a ‘‘repurchase 

agreement’’, as defined in clause (v)), consignment, 

lease, swap, hedge transaction, deposit, loan, 

option, allocated transaction, unallocated transaction, or any other similar agreement; 

(II) any combination of agreements or transactions referred to in subclauses (I) and (III); 

(III) any option to enter into any agreement 

or transaction referred to in subclause (I) or (II); 

(IV) a master agreement that provides for an 

agreement or transaction referred to in subclause 

(I), (II), or (III), together with all supplements 

to any such master agreement, without regard to 

whether the master agreement provides for an 

agreement or transaction that is not a forward 

contract under this clause, except that the master 

agreement shall be considered to be a forward 

contract under this clause only with respect to 

each agreement or transaction under the master 
H. R. 4173—110 

agreement that is referred to in subclause (I), (II), 

or (III); or 

(V) any security agreement or arrangement 

or other credit enhancement related to any agreement or transaction referred to in subclause (I), 

(II), (III), or (IV), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

(v) REPURCHASE AGREEMENT.—The term 

‘‘repurchase agreement’’ (which definition also applies 

to a reverse repurchase agreement)— 

(I) means an agreement, including related 

terms, which provides for the transfer of one or 

more certificates of deposit, mortgage related securities (as such term is defined in section 3 of the 

Securities Exchange Act of 1934), mortgage loans, 

interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified 

foreign government securities (which, for purposes 

of this clause, means a security that is a direct 

obligation of, or that is fully guaranteed by, the 

central government of a member of the Organization for Economic Cooperation and Development, 

as determined by regulation or order adopted by 

the Board of Governors), or securities that are 

direct obligations of, or that are fully guaranteed 

by, the United States or any agency of the United 

States against the transfer of funds by the transferee of such certificates of deposit, eligible 

bankers’ acceptances, securities, mortgage loans, 

or interests with a simultaneous agreement by 

such transferee to transfer to the transferor thereof 

certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as 

described above, at a date certain not later than 

1 year after such transfers or on demand, against 

the transfer of funds, or any other similar agreement; 

(II) does not include any repurchase obligation 

under a participation in a commercial mortgage 

loan, unless the Corporation determines, by regulation, resolution, or order to include any such 

participation within the meaning of such term; 

(III) means any combination of agreements 

or transactions referred to in subclauses (I) and 

(IV); 

(IV) means any option to enter into any agreement or transaction referred to in subclause (I) 

or (III); 

(V) means a master agreement that provides 

for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without 

regard to whether the master agreement provides 

for an agreement or transaction that is not a 

repurchase agreement under this clause, except 
H. R. 4173—111 

that the master agreement shall be considered 

to be a repurchase agreement under this subclause 

only with respect to each agreement or transaction 

under the master agreement that is referred to 

in subclause (I), (III), or (IV); and 

(VI) means any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in subclause 

(I), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

(vi) SWAP AGREEMENT.—The term ‘‘swap agreement’’ means— 

(I) any agreement, including the terms and 

conditions incorporated by reference in any such 

agreement, which is an interest rate swap, option, 

future, or forward agreement, including a rate 

floor, rate cap, rate collar, cross-currency rate 

swap, and basis swap; a spot, same day-tomorrow, 

tomorrow-next, forward, or other foreign exchange, 

precious metals, or other commodity agreement; 

a currency swap, option, future, or forward agreement; an equity index or equity swap, option, 

future, or forward agreement; a debt index or debt 

swap, option, future, or forward agreement; a total 

return, credit spread or credit swap, option, future, 

or forward agreement; a commodity index or commodity swap, option, future, or forward agreement; 

weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option, 

future, or forward agreement; 

(II) any agreement or transaction that is 

similar to any other agreement or transaction 

referred to in this clause and that is of a type 

that has been, is presently, or in the future 

becomes, the subject of recurrent dealings in the 

swap or other derivatives markets (including terms 

and conditions incorporated by reference in such 

agreement) and that is a forward, swap, future, 

option, or spot transaction on one or more rates, 

currencies, commodities, equity securities or other 

equity instruments, debt securities or other debt 

instruments, quantitative measures associated 

with an occurrence, extent of an occurrence, or 

contingency associated with a financial, commercial, or economic consequence, or economic or 

financial indices or measures of economic or financial risk or value; 

(III) any combination of agreements or transactions referred to in this clause; 

(IV) any option to enter into any agreement 

or transaction referred to in this clause; 

(V) a master agreement that provides for an 

agreement or transaction referred to in subclause 

(I), (II), (III), or (IV), together with all supplements 
H. R. 4173—112 

to any such master agreement, without regard to 

whether the master agreement contains an agreement or transaction that is not a swap agreement 

under this clause, except that the master agreement shall be considered to be a swap agreement 

under this clause only with respect to each agreement or transaction under the master agreement 

that is referred to in subclause (I), (II), (III), or 

(IV); and 

(VI) any security agreement or arrangement 

or other credit enhancement related to any agreement or transaction referred to in any of subclauses (I) through (V), including any guarantee 

or reimbursement obligation in connection with 

any agreement or transaction referred to in any 

such clause. 

(vii) DEFINITIONS RELATING TO DEFAULT.—When 

used in this paragraph and paragraphs (9) and (10)— 

(I) the term ‘‘default’’ means, with respect to 

a covered financial company, any adjudication or 

other official decision by any court of competent 

jurisdiction, or other public authority pursuant to 

which the Corporation has been appointed 

receiver; and 

(II) the term ‘‘in danger of default’’ means 

a covered financial company with respect to which 

the Corporation or appropriate State authority has 

determined that— 

(aa) in the opinion of the Corporation or 

such authority— 

(AA) the covered financial company 

is not likely to be able to pay its obligations in the normal course of business; 

and 

(BB) there is no reasonable prospect 

that the covered financial company will 

be able to pay such obligations without 

Federal assistance; or 

(bb) in the opinion of the Corporation or 

such authority— 

(AA) the covered financial company 

has incurred or is likely to incur losses 

that will deplete all or substantially all 

of its capital; and 

(BB) there is no reasonable prospect 

that the capital will be replenished without Federal assistance. 

(viii) TREATMENT OF MASTER AGREEMENT AS ONE

AGREEMENT.—Any master agreement for any contract 

or agreement described in any of clauses (i) through 

(vi) (or any master agreement for such master agreement or agreements), together with all supplements 

to such master agreement, shall be treated as a single 

agreement and a single qualified financial contact. If 

a master agreement contains provisions relating to 

agreements or transactions that are not themselves 

qualified financial contracts, the master agreement 
H. R. 4173—113 

shall be deemed to be a qualified financial contract 

only with respect to those transactions that are themselves qualified financial contracts. 

(ix) TRANSFER.—The term ‘‘transfer’’ means every 

mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with 

property or with an interest in property, including 

retention of title as a security interest and foreclosure 

of the equity of redemption of the covered financial 

company. 

(x) PERSON.—The term ‘‘person’’ includes any 

governmental entity in addition to any entity included 

in the definition of such term in section 1, title 1, 

United States Code. 

(E) CLARIFICATION.—No provision of law shall be construed as limiting the right or power of the Corporation, 

or authorizing any court or agency to limit or delay, in 

any manner, the right or power of the Corporation to 

transfer any qualified financial contract or to disaffirm 

or repudiate any such contract in accordance with this 

subsection. 

(F) WALKAWAY CLAUSES NOT EFFECTIVE.— 

(i) IN GENERAL.—Notwithstanding the provisions 

of subparagraph (A) of this paragraph and sections 

403 and 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause 

shall be enforceable in a qualified financial contract 

of a covered financial company in default. 

(ii) LIMITED SUSPENSION OF CERTAIN OBLIGA- TIONS.—In the case of a qualified financial contract 

referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the 

time at which the Corporation is appointed as receiver 

until the earlier of— 

(I) the time at which such party receives notice 

that such contract has been transferred pursuant 

to paragraph (10)(A); or 

(II) 5:00 p.m. (eastern time) on the business 

day following the date of the appointment of the 

Corporation as receiver. 

(iii) WALKAWAY CLAUSE DEFINED.—For purposes 

of this subparagraph, the term ‘‘walkaway clause’’ 

means any provision in a qualified financial contract 

that suspends, conditions, or extinguishes a payment 

obligation of a party, in whole or in part, or does 

not create a payment obligation of a party that would 

otherwise exist, solely because of the status of such 

party as a nondefaulting party in connection with the 

insolvency of a covered financial company that is a 

party to the contract or the appointment of or the 

exercise of rights or powers by the Corporation as 

receiver for such covered financial company, and not 

as a result of the exercise by a party of any right 

to offset, setoff, or net obligations that exist under 

the contract, any other contract between those parties, 

or applicable law. 
H. R. 4173—114 

(G) CERTAIN OBLIGATIONS TO CLEARING ORGANIZATIONS.—In the event that the Corporation has been 

appointed as receiver for a covered financial company which 

is a party to any qualified financial contract cleared by 

or subject to the rules of a clearing organization (as defined 

in paragraph (9)(D)), the receiver shall use its best efforts 

to meet all margin, collateral, and settlement obligations 

of the covered financial company that arise under qualified 

financial contracts (other than any margin, collateral, or 

settlement obligation that is not enforceable against the 

receiver under paragraph (8)(F)(i) or paragraph (10)(B)), 

as required by the rules of the clearing organization when 

due. Notwithstanding any other provision of this title, if 

the receiver fails to satisfy any such margin, collateral, 

or settlement obligations under the rules of the clearing 

organization, the clearing organization shall have the 

immediate right to exercise, and shall not be stayed from 

exercising, all of its rights and remedies under its rules 

and applicable law with respect to any qualified financial 

contract of the covered financial company, including, without limitation, the right to liquidate all positions and collateral of such covered financial company under the company’s 

qualified financial contracts, and suspend or cease to act 

for such covered financial company, all in accordance with 

the rules of the clearing organization. 

(H) RECORDKEEPING.— 

(i) JOINT RULEMAKING.—The Federal primary 

financial regulatory agencies shall jointly prescribe 

regulations requiring that financial companies maintain such records with respect to qualified financial 

contracts (including market valuations) that the Federal primary financial regulatory agencies determine 

to be necessary or appropriate in order to assist the 

Corporation as receiver for a covered financial company 

in being able to exercise its rights and fulfill its obligations under this paragraph or paragraph (9) or (10). 

(ii) TIME FRAME.—The Federal primary financial 

regulatory agencies shall prescribe joint final or 

interim final regulations not later than 24 months 

after the date of enactment of this Act. 

(iii) BACK-UP RULEMAKING AUTHORITY.—If the Federal primary financial regulatory agencies do not prescribe joint final or interim final regulations within 

the time frame in clause (ii), the Chairperson of the 

Council shall prescribe, in consultation with the Corporation, the regulations required by clause (i). 

(iv) CATEGORIZATION AND TIERING.—The joint regulations prescribed under clause (i) shall, as appropriate, 

differentiate among financial companies by taking into 

consideration their size, risk, complexity, leverage, frequency and dollar amount of qualified financial contracts, interconnectedness to the financial system, and 

any other factors deemed appropriate. 

(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS.— 

(A) IN GENERAL.—In making any transfer of assets 

or liabilities of a covered financial company in default, 
H. R. 4173—115 

which includes any qualified financial contract, the Corporation as receiver for such covered financial company 

shall either— 

(i) transfer to one financial institution, other than 

a financial institution for which a conservator, receiver, 

trustee in bankruptcy, or other legal custodian has 

been appointed or which is otherwise the subject of 

a bankruptcy or insolvency proceeding— 

(I) all qualified financial contracts between 

any person or any affiliate of such person and 

the covered financial company in default; 

(II) all claims of such person or any affiliate 

of such person against such covered financial company under any such contract (other than any 

claim which, under the terms of any such contract, 

is subordinated to the claims of general unsecured 

creditors of such company); 

(III) all claims of such covered financial company against such person or any affiliate of such 

person under any such contract; and 

(IV) all property securing or any other credit 

enhancement for any contract described in subclause (I) or any claim described in subclause (II) 

or (III) under any such contract; or 

(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement 

referred to in clause (i) (with respect to such person 

and any affiliate of such person). 

(B) TRANSFER TO FOREIGN BANK, FINANCIAL INSTITUTION, OR BRANCH OR AGENCY THEREOF.—In transferring 

any qualified financial contracts and related claims and 

property under subparagraph (A)(i), the Corporation as 

receiver for the covered financial company shall not make 

such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch 

or agency of a foreign bank or financial institution unless, 

under the law applicable to such bank, financial institution, 

branch or agency, to the qualified financial contracts, and 

to any netting contract, any security agreement or arrangement or other credit enhancement related to one or more 

qualified financial contracts, the contractual rights of the 

parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit 

enhancements are enforceable substantially to the same 

extent as permitted under this section. 

(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES

OF A CLEARING ORGANIZATION.—In the event that the Corporation as receiver for a financial institution transfers 

any qualified financial contract and related claims, property, or credit enhancement pursuant to subparagraph 

(A)(i) and such contract is cleared by or subject to the 

rules of a clearing organization, the clearing organization 

shall not be required to accept the transferee as a member 

by virtue of the transfer. 

(D) DEFINITIONS.—For purposes of this paragraph— 
H. R. 4173—116 

(i) the term ‘‘financial institution’’ means a broker 

or dealer, a depository institution, a futures commission merchant, a bridge financial company, or any 

other institution determined by the Corporation, by 

regulation, to be a financial institution; and 

(ii) the term ‘‘clearing organization’’ has the same 

meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991. 

(10) NOTIFICATION OF TRANSFER.— 

(A) IN GENERAL.— (i) NOTICE.—The Corporation shall provide notice 

in accordance with clause (ii), if— 

(I) the Corporation as receiver for a covered 

financial company in default or in danger of default 

transfers any assets or liabilities of the covered 

financial company; and 

(II) the transfer includes any qualified financial contract. 

(ii) TIMING.—The Corporation as receiver for a covered financial company shall notify any person who 

is a party to any contract described in clause (i) of 

such transfer not later than 5:00 p.m. (eastern time) 

on the business day following the date of the appointment of the Corporation as receiver. 

(B) CERTAIN RIGHTS NOT ENFORCEABLE.— (i) RECEIVERSHIP.—A person who is a party to 

a qualified financial contract with a covered financial 

company may not exercise any right that such person 

has to terminate, liquidate, or net such contract under 

paragraph (8)(A) solely by reason of or incidental to 

the appointment under this section of the Corporation 

as receiver for the covered financial company (or the 

insolvency or financial condition of the covered financial company for which the Corporation has been 

appointed as receiver)— 

(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment; 

or 

(II) after the person has received notice that 

the contract has been transferred pursuant to 

paragraph (9)(A). 

(ii) NOTICE.—For purposes of this paragraph, the 

Corporation as receiver for a covered financial company 

shall be deemed to have notified a person who is a 

party to a qualified financial contract with such covered 

financial company, if the Corporation has taken steps 

reasonably calculated to provide notice to such person 

by the time specified in subparagraph (A). 

(C) TREATMENT OF BRIDGE FINANCIAL COMPANY.—For 

purposes of paragraph (9), a bridge financial company shall 

not be considered to be a financial institution for which 

a conservator, receiver, trustee in bankruptcy, or other 

legal custodian has been appointed, or which is otherwise 

the subject of a bankruptcy or insolvency proceeding. 

(D) BUSINESS DAY DEFINED.—For purposes of this paragraph, the term ‘‘business day’’ means any day other than 

any Saturday, Sunday, or any day on which either the 
H. R. 4173—117 

New York Stock Exchange or the Federal Reserve Bank 

of New York is closed. 

(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In exercising the rights of disaffirmance or 

repudiation of the Corporation as receiver with respect to any 

qualified financial contract to which a covered financial company is a party, the Corporation shall either— 

(A) disaffirm or repudiate all qualified financial contracts between— 

(i) any person or any affiliate of such person; and 

(ii) the covered financial company in default; or 

(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect 

to such person or any affiliate of such person). 

(12) CERTAIN SECURITY AND CUSTOMER INTERESTS NOT

AVOIDABLE.—No provision of this subsection shall be construed 

as permitting the avoidance of any— 

(A) legally enforceable or perfected security interest 

in any of the assets of any covered financial company, 

except in accordance with subsection (a)(11); or 

(B) legally enforceable interest in customer property, 

security entitlements in respect of assets or property held 

by the covered financial company for any security entitlement holder. 

(13) AUTHORITY TO ENFORCE CONTRACTS.— 

(A) IN GENERAL.—The Corporation, as receiver for a 

covered financial company, may enforce any contract, other 

than a liability insurance contract of a director or officer, 

a financial institution bond entered into by the covered 

financial company, notwithstanding any provision of the 

contract providing for termination, default, acceleration, 

or exercise of rights upon, or solely by reason of, insolvency, 

the appointment of or the exercise of rights or powers 

by the Corporation as receiver, the filing of the petition 

pursuant to section 202(a)(1), or the issuance of the recommendations or determination, or any actions or events 

occurring in connection therewith or as a result thereof, 

pursuant to section 203. 

(B) CERTAIN RIGHTS NOT AFFECTED.—No provision of 

this paragraph may be construed as impairing or affecting 

any right of the Corporation as receiver to enforce or 

recover under a liability insurance contract of a director 

or officer or financial institution bond under other 

applicable law. 

(C) CONSENT REQUIREMENT AND IPSO FACTO CLAUSES.— 

(i) IN GENERAL.—Except as otherwise provided by 

this section, no person may exercise any right or power 

to terminate, accelerate, or declare a default under 

any contract to which the covered financial company 

is a party (and no provision in any such contract providing for such default, termination, or acceleration 

shall be enforceable), or to obtain possession of or 

exercise control over any property of the covered financial company or affect any contractual rights of the 

covered financial company, without the consent of the 
H. R. 4173—118 

Corporation as receiver for the covered financial company during the 90 day period beginning from the 

appointment of the Corporation as receiver. 

(ii) EXCEPTIONS.—No provision of this subparagraph shall apply to a director or officer liability insurance contract or a financial institution bond, to the 

rights of parties to certain qualified financial contracts 

pursuant to paragraph (8), or to the rights of parties 

to netting contracts pursuant to subtitle A of title 

IV of the Federal Deposit Insurance Corporation 

Improvement Act of 1991 (12 U.S.C. 4401 et seq.), 

or shall be construed as permitting the Corporation 

as receiver to fail to comply with otherwise enforceable 

provisions of such contract. 

(D) CONTRACTS TO EXTEND CREDIT.—Notwithstanding 

any other provision in this title, if the Corporation as 

receiver enforces any contract to extend credit to the covered financial company or bridge financial company, any 

valid and enforceable obligation to repay such debt shall 

be paid by the Corporation as receiver, as an administrative 

expense of the receivership. 

(14) EXCEPTION FOR FEDERAL RESERVE BANKS AND CORPORATION SECURITY INTEREST.—No provision of this subsection shall 

apply with respect to— 

(A) any extension of credit from any Federal reserve 

bank or the Corporation to any covered financial company; 

or 

(B) any security interest in the assets of the covered 

financial company securing any such extension of credit. 

(15) SAVINGS CLAUSE.—The meanings of terms used in 

this subsection are applicable for purposes of this subsection 

only, and shall not be construed or applied so as to challenge 

or affect the characterization, definition, or treatment of any 

similar terms under any other statute, regulation, or rule, 

including the Gramm-Leach-Bliley Act, the Legal Certainty 

for Bank Products Act of 2000, the securities laws (as that 

term is defined in section 3(a)(47) of the Securities Exchange 

Act of 1934), and the Commodity Exchange Act. 

(16) ENFORCEMENT OF CONTRACTS GUARANTEED BY THE COV- ERED FINANCIAL COMPANY.— 

(A) IN GENERAL.—The Corporation, as receiver for a 

covered financial company or as receiver for a subsidiary 

of a covered financial company (including an insured 

depository institution) shall have the power to enforce contracts of subsidiaries or affiliates of the covered financial 

company, the obligations under which are guaranteed or 

otherwise supported by or linked to the covered financial 

company, notwithstanding any contractual right to cause 

the termination, liquidation, or acceleration of such contracts based solely on the insolvency, financial condition, 

or receivership of the covered financial company, if— 

(i) such guaranty or other support and all related 

assets and liabilities are transferred to and assumed 

by a bridge financial company or a third party (other 

than a third party for which a conservator, receiver, 

trustee in bankruptcy, or other legal custodian has 

been appointed, or which is otherwise the subject of 
H. R. 4173—119 

a bankruptcy or insolvency proceeding) within the 

same period of time as the Corporation is entitled 

to transfer the qualified financial contracts of such 

covered financial company; or 

(ii) the Corporation, as receiver, otherwise provides 

adequate protection with respect to such obligations. 

(B) RULE OF CONSTRUCTION.—For purposes of this 

paragraph, a bridge financial company shall not be considered to be a third party for which a conservator, receiver, 

trustee in bankruptcy, or other legal custodian has been 

appointed, or which is otherwise the subject of a bankruptcy 

or insolvency proceeding. 

(d) VALUATION OF CLAIMS IN DEFAULT.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

Federal law or the law of any State, and regardless of the 

method utilized by the Corporation for a covered financial company, including transactions authorized under subsection (h), 

this subsection shall govern the rights of the creditors of any 

such covered financial company. 

(2) MAXIMUM LIABILITY.—The maximum liability of the Corporation, acting as receiver for a covered financial company 

or in any other capacity, to any person having a claim against 

the Corporation as receiver or the covered financial company 

for which the Corporation is appointed shall equal the amount 

that such claimant would have received if— 

(A) the Corporation had not been appointed receiver 

with respect to the covered financial company; and 

(B) the covered financial company had been liquidated 

under chapter 7 of the Bankruptcy Code, or any similar 

provision of State insolvency law applicable to the covered 

financial company. 

(3) SPECIAL PROVISION FOR ORDERLY LIQUIDATION BY SIPC.— 

The maximum liability of the Corporation, acting as receiver 

or in its corporate capacity for any covered broker or dealer 

to any customer of such covered broker or dealer, with respect 

to customer property of such customer, shall be— 

(A) equal to the amount that such customer would 

have received with respect to such customer property in 

a case initiated by SIPC under the Securities Investor 

Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and 

(B) determined as of the close of business on the date 

on which the Corporation is appointed as receiver. 

(4) ADDITIONAL PAYMENTS AUTHORIZED.— 

(A) IN GENERAL.—Subject to subsection (o)(1)(D)(i), the 

Corporation, with the approval of the Secretary, may make 

additional payments or credit additional amounts to or 

with respect to or for the account of any claimant or category of claimants of the covered financial company, if 

the Corporation determines that such payments or credits 

are necessary or appropriate to minimize losses to the 

Corporation as receiver from the orderly liquidation of the 

covered financial company under this section. 

(B) LIMITATIONS.— 

(i) PROHIBITION.—The Corporation shall not make 

any payments or credit amounts to any claimant or 

category of claimants that would result in any claimant 

receiving more than the face value amount of any 
H. R. 4173—120 

claim that is proven to the satisfaction of the Corporation. 

(ii) NO OBLIGATION.—Notwithstanding any other 

provision of Federal or State law, or the Constitution 

of any State, the Corporation shall not be obligated, 

as a result of having made any payment under 

subparagraph (A) or credited any amount described 

in subparagraph (A) to or with respect to, or for the 

account, of any claimant or category of claimants, to 

make payments to any other claimant or category of 

claimants. 

(C) MANNER OF PAYMENT.—The Corporation may make 

payments or credit amounts under subparagraph (A) 

directly to the claimants or may make such payments 

or credit such amounts to a company other than a covered 

financial company or a bridge financial company established with respect thereto in order to induce such other 

company to accept liability for such claims. 

(e) LIMITATION ON COURT ACTION.—Except as provided in this 

title, no court may take any action to restrain or affect the exercise 

of powers or functions of the receiver hereunder, and any remedy 

against the Corporation or receiver shall be limited to money damages determined in accordance with this title. 

(f) LIABILITY OF DIRECTORS AND OFFICERS.— 

(1) IN GENERAL.—A director or officer of a covered financial 

company may be held personally liable for monetary damages 

in any civil action described in paragraph (2) by, on behalf 

of, or at the request or direction of the Corporation, which 

action is prosecuted wholly or partially for the benefit of the 

Corporation— 

(A) acting as receiver for such covered financial company; 

(B) acting based upon a suit, claim, or cause of action 

purchased from, assigned by, or otherwise conveyed by 

the Corporation as receiver; or 

(C) acting based upon a suit, claim, or cause of action 

purchased from, assigned by, or otherwise conveyed in 

whole or in part by a covered financial company or its 

affiliate in connection with assistance provided under this 

title. 

(2) ACTIONS COVERED.—Paragraph (1) shall apply with 

respect to actions for gross negligence, including any similar 

conduct or conduct that demonstrates a greater disregard of 

a duty of care (than gross negligence) including intentional 

tortious conduct, as such terms are defined and determined 

under applicable State law. 

(3) SAVINGS CLAUSE.—Nothing in this subsection shall 

impair or affect any right of the Corporation under other 

applicable law. 

(g) DAMAGES.—In any proceeding related to any claim against 

a director, officer, employee, agent, attorney, accountant, or 

appraiser of a covered financial company, or any other party 

employed by or providing services to a covered financial company, 

recoverable damages determined to result from the improvident 

or otherwise improper use or investment of any assets of the covered 

financial company shall include principal losses and appropriate 

interest. 
H. R. 4173—121 

(h) BRIDGE FINANCIAL COMPANIES.— 

(1) ORGANIZATION.— 

(A) PURPOSE.—The Corporation, as receiver for one 

or more covered financial companies or in anticipation of 

being appointed receiver for one or more covered financial 

companies, may organize one or more bridge financial 

companies in accordance with this subsection. 

(B) AUTHORITIES.—Upon the creation of a bridge financial company under subparagraph (A) with respect to a 

covered financial company, such bridge financial company 

may— 

(i) assume such liabilities (including liabilities 

associated with any trust or custody business, but 

excluding any liabilities that count as regulatory capital) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate; 

(ii) purchase such assets (including assets associated with any trust or custody business) of such covered financial company as the Corporation may, in 

its discretion, determine to be appropriate; and 

(iii) perform any other temporary function which 

the Corporation may, in its discretion, prescribe in 

accordance with this section. 

(2) CHARTER AND ESTABLISHMENT.— 

(A) ESTABLISHMENT.—Except as provided in subparagraph (H), where the covered financial company is a covered 

broker or dealer, the Corporation, as receiver for a covered 

financial company, may grant a Federal charter to and 

approve articles of association for one or more bridge financial company or companies, with respect to such covered 

financial company which shall, by operation of law and 

immediately upon issuance of its charter and approval 

of its articles of association, be established and operate 

in accordance with, and subject to, such charter, articles, 

and this section. 

(B) MANAGEMENT.—Upon its establishment, a bridge 

financial company shall be under the management of a 

board of directors appointed by the Corporation. 

(C) ARTICLES OF ASSOCIATION.—The articles of association and organization certificate of a bridge financial company shall have such terms as the Corporation may provide, 

and shall be executed by such representatives as the Corporation may designate. 

(D) TERMS OF CHARTER; RIGHTS AND PRIVILEGES.—Subject to and in accordance with the provisions of this subsection, the Corporation shall— 

(i) establish the terms of the charter of a bridge 

financial company and the rights, powers, authorities, 

and privileges of a bridge financial company granted 

by the charter or as an incident thereto; and 

(ii) provide for, and establish the terms and conditions governing, the management (including the bylaws 

and the number of directors of the board of directors) 

and operations of the bridge financial company. 

(E) TRANSFER OF RIGHTS AND PRIVILEGES OF COVERED

FINANCIAL COMPANY.— 
H. R. 4173—122 

(i) IN GENERAL.—Notwithstanding any other provision of Federal or State law, the Corporation may 

provide for a bridge financial company to succeed to 

and assume any rights, powers, authorities, or privileges of the covered financial company with respect 

to which the bridge financial company was established 

and, upon such determination by the Corporation, the 

bridge financial company shall immediately and by 

operation of law succeed to and assume such rights, 

powers, authorities, and privileges. 

(ii) EFFECTIVE WITHOUT APPROVAL.—Any succession to or assumption by a bridge financial company 

of rights, powers, authorities, or privileges of a covered 

financial company under clause (i) or otherwise shall 

be effective without any further approval under Federal or State law, assignment, or consent with respect 

thereto. 

(F) CORPORATE GOVERNANCE AND ELECTION AND DESIGNATION OF BODY OF LAW.—To the extent permitted by 

the Corporation and consistent with this section and any 

rules, regulations, or directives issued by the Corporation 

under this section, a bridge financial company may elect 

to follow the corporate governance practices and procedures 

that are applicable to a corporation incorporated under 

the general corporation law of the State of Delaware, or 

the State of incorporation or organization of the covered 

financial company with respect to which the bridge financial company was established, as such law may be amended 

from time to time. 

(G) CAPITAL.— (i) CAPITAL NOT REQUIRED.—Notwithstanding any 

other provision of Federal or State law, a bridge financial company may, if permitted by the Corporation, 

operate without any capital or surplus, or with such 

capital or surplus as the Corporation may in its discretion determine to be appropriate. 

(ii) NO CONTRIBUTION BY THE CORPORATION

REQUIRED.—The Corporation is not required to pay 

capital into a bridge financial company or to issue 

any capital stock on behalf of a bridge financial company established under this subsection. 

(iii) AUTHORITY.—If the Corporation determines 

that such action is advisable, the Corporation may 

cause capital stock or other securities of a bridge financial company established with respect to a covered 

financial company to be issued and offered for sale 

in such amounts and on such terms and conditions 

as the Corporation may, in its discretion, determine. 

(iv) OPERATING FUNDS IN LIEU OF CAPITAL AND

IMPLEMENTATION PLAN.—Upon the organization of a 

bridge financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or advisable, the Corporation may make available to the bridge financial company, subject to the 

plan described in subsection (n)(9), funds for the operation of the bridge financial company in lieu of capital. 

(H) BRIDGE BROKERS OR DEALERS.— 
H. R. 4173—123 

(i) IN GENERAL.—The Corporation, as receiver for 

a covered broker or dealer, may approve articles of 

association for one or more bridge financial companies 

with respect to such covered broker or dealer, which 

bridge financial company or companies shall, by operation of law and immediately upon approval of its 

articles of association— 

(I) be established and deemed registered with 

the Commission under the Securities Exchange 

Act of 1934 and a member of SIPC; 

(II) operate in accordance with such articles 

and this section; and 

(III) succeed to any and all registrations and 

memberships of the covered financial company 

with or in any self-regulatory organizations. 

(ii) OTHER REQUIREMENTS.—Except as provided in 

clause (i), and notwithstanding any other provision 

of this section, the bridge financial company shall be 

subject to the Federal securities laws and all requirements with respect to being a member of a self-regulatory organization, unless exempted from any such 

requirements by the Commission, as is necessary or 

appropriate in the public interest or for the protection 

of investors. 

(iii) TREATMENT OF CUSTOMERS.—Except as otherwise provided by this title, any customer of the covered 

broker or dealer whose account is transferred to a 

bridge financial company shall have all the rights, 

privileges, and protections under section 205(f) and 

under the Securities Investor Protection Act of 1970 

(15 U.S.C. 78aaa et seq.), that such customer would 

have had if the account were not transferred from 

the covered financial company under this subparagraph. 

(iv) OPERATION OF BRIDGE BROKERS OR DEALERS.— Notwithstanding any other provision of this title, the 

Corporation shall not operate any bridge financial company created by the Corporation under this title with 

respect to a covered broker or dealer in such a manner 

as to adversely affect the ability of customers to 

promptly access their customer property in accordance 

with applicable law. 

(3) INTERESTS IN AND ASSETS AND OBLIGATIONS OF COVERED

FINANCIAL COMPANY.—Notwithstanding paragraph (1) or (2) or 

any other provision of law— 

(A) a bridge financial company shall assume, acquire, 

or succeed to the assets or liabilities of a covered financial 

company (including the assets or liabilities associated with 

any trust or custody business) only to the extent that 

such assets or liabilities are transferred by the Corporation 

to the bridge financial company in accordance with, and 

subject to the restrictions set forth in, paragraph (1)(B); 

and 

(B) a bridge financial company shall not assume, 

acquire, or succeed to any obligation that a covered financial company for which the Corporation has been appointed 

receiver may have to any shareholder, member, general 
H. R. 4173—124 

partner, limited partner, or other person with an interest 

in the equity of the covered financial company that arises 

as a result of the status of that person having an equity 

claim in the covered financial company. 

(4) BRIDGE FINANCIAL COMPANY TREATED AS BEING IN

DEFAULT FOR CERTAIN PURPOSES.—A bridge financial company 

shall be treated as a covered financial company in default 

at such times and for such purposes as the Corporation may, 

in its discretion, determine. 

(5) TRANSFER OF ASSETS AND LIABILITIES.— 

(A) AUTHORITY OF CORPORATION.—The Corporation, as 

receiver for a covered financial company, may transfer 

any assets and liabilities of a covered financial company 

(including any assets or liabilities associated with any trust 

or custody business) to one or more bridge financial companies, in accordance with and subject to the restrictions 

of paragraph (1). 

(B) SUBSEQUENT TRANSFERS.—At any time after the 

establishment of a bridge financial company with respect 

to a covered financial company, the Corporation, as 

receiver, may transfer any assets and liabilities of such 

covered financial company as the Corporation may, in its 

discretion, determine to be appropriate in accordance with 

and subject to the restrictions of paragraph (1). 

(C) TREATMENT OF TRUST OR CUSTODY BUSINESS.—For 

purposes of this paragraph, the trust or custody business, 

including fiduciary appointments, held by any covered 

financial company is included among its assets and liabilities. 

(D) EFFECTIVE WITHOUT APPROVAL.—The transfer of 

any assets or liabilities, including those associated with 

any trust or custody business of a covered financial company, to a bridge financial company shall be effective without any further approval under Federal or State law, 

assignment, or consent with respect thereto. 

(E) EQUITABLE TREATMENT OF SIMILARLY SITUATED

CREDITORS.—The Corporation shall treat all creditors of 

a covered financial company that are similarly situated 

under subsection (b)(1), in a similar manner in exercising 

the authority of the Corporation under this subsection to 

transfer any assets or liabilities of the covered financial 

company to one or more bridge financial companies established with respect to such covered financial company, 

except that the Corporation may take any action (including 

making payments, subject to subsection (o)(1)(D)(i)) that 

does not comply with this subparagraph, if— 

(i) the Corporation determines that such action 

is necessary— 

(I) to maximize the value of the assets of the 

covered financial company; 

(II) to maximize the present value return from 

the sale or other disposition of the assets of the 

covered financial company; or 

(III) to minimize the amount of any loss 

realized upon the sale or other disposition of the 

assets of the covered financial company; and 
H. R. 4173—125 

(ii) all creditors that are similarly situated under 

subsection (b)(1) receive not less than the amount provided under paragraphs (2) and (3) of subsection (d). 

(F) LIMITATION ON TRANSFER OF LIABILITIES.—Notwithstanding any other provision of law, the aggregate amount 

of liabilities of a covered financial company that are transferred to, or assumed by, a bridge financial company from 

a covered financial company may not exceed the aggregate 

amount of the assets of the covered financial company 

that are transferred to, or purchased by, the bridge financial company from the covered financial company. 

(6) STAY OF JUDICIAL ACTION.—Any judicial action to which 

a bridge financial company becomes a party by virtue of its 

acquisition of any assets or assumption of any liabilities of 

a covered financial company shall be stayed from further proceedings for a period of not longer than 45 days (or such 

longer period as may be agreed to upon the consent of all 

parties) at the request of the bridge financial company. 

(7) AGREEMENTS AGAINST INTEREST OF THE BRIDGE FINAN- CIAL COMPANY.—No agreement that tends to diminish or defeat 

the interest of the bridge financial company in any asset of 

a covered financial company acquired by the bridge financial 

company shall be valid against the bridge financial company, 

unless such agreement— 

(A) is in writing; 

(B) was executed by an authorized officer or representative of the covered financial company or confirmed in the 

ordinary course of business by the covered financial company; and 

(C) has been on the official record of the company, 

since the time of its execution, or with which, the party 

claiming under the agreement provides documentation of 

such agreement and its authorized execution or confirmation by the covered financial company that is acceptable 

to the receiver. 

(8) NO FEDERAL STATUS.— (A) AGENCY STATUS.—A bridge financial company is 

not an agency, establishment, or instrumentality of the 

United States. 

(B) EMPLOYEE STATUS.—Representatives for purposes 

of paragraph (1)(B), directors, officers, employees, or agents 

of a bridge financial company are not, solely by virtue 

of service in any such capacity, officers or employees of 

the United States. Any employee of the Corporation or 

of any Federal instrumentality who serves at the request 

of the Corporation as a representative for purposes of paragraph (1)(B), director, officer, employee, or agent of a bridge 

financial company shall not— 

(i) solely by virtue of service in any such capacity 

lose any existing status as an officer or employee of 

the United States for purposes of title 5, United States 

Code, or any other provision of law; or 

(ii) receive any salary or benefits for service in 

any such capacity with respect to a bridge financial 

company in addition to such salary or benefits as are 

obtained through employment with the Corporation 

or such Federal instrumentality. 
H. R. 4173—126 

(9) FUNDING AUTHORIZED.—The Corporation may, subject 

to the plan described in subsection (n)(9), provide funding to 

facilitate any transaction described in subparagraph (A), (B), 

(C), or (D) of paragraph (13) with respect to any bridge financial 

company, or facilitate the acquisition by a bridge financial 

company of any assets, or the assumption of any liabilities, 

of a covered financial company for which the Corporation has 

been appointed receiver. 

(10) EXEMPT TAX STATUS.—Notwithstanding any other 

provision of Federal or State law, a bridge financial company, 

its franchise, property, and income shall be exempt from all 

taxation now or hereafter imposed by the United States, by 

any territory, dependency, or possession thereof, or by any 

State, county, municipality, or local taxing authority. 

(11) FEDERAL AGENCY APPROVAL; ANTITRUST REVIEW.—If 

a transaction involving the merger or sale of a bridge financial 

company requires approval by a Federal agency, the transaction 

may not be consummated before the 5th calendar day after 

the date of approval by the Federal agency responsible for 

such approval with respect thereto. If, in connection with any 

such approval a report on competitive factors from the Attorney 

General is required, the Federal agency responsible for such 

approval shall promptly notify the Attorney General of the 

proposed transaction and the Attorney General shall provide 

the required report within 10 days of the request. If a notification is required under section 7A of the Clayton Act with 

respect to such transaction, the required waiting period shall 

end on the 15th day after the date on which the Attorney 

General and the Federal Trade Commission receive such 

notification, unless the waiting period is terminated earlier 

under section 7A(b)(2) of the Clayton Act, or extended under 

section 7A(e)(2) of that Act. 

(12) DURATION OF BRIDGE FINANCIAL COMPANY.—Subject 

to paragraphs (13) and (14), the status of a bridge financial 

company as such shall terminate at the end of the 2-year 

period following the date on which it was granted a charter. 

The Corporation may, in its discretion, extend the status of 

the bridge financial company as such for no more than 3 additional 1-year periods. 

(13) TERMINATION OF BRIDGE FINANCIAL COMPANY STATUS.— 

The status of any bridge financial company as such shall terminate upon the earliest of— 

(A) the date of the merger or consolidation of the 

bridge financial company with a company that is not a 

bridge financial company; 

(B) at the election of the Corporation, the sale of a 

majority of the capital stock of the bridge financial company 

to a company other than the Corporation and other than 

another bridge financial company; 

(C) the sale of 80 percent, or more, of the capital 

stock of the bridge financial company to a person other 

than the Corporation and other than another bridge financial company; 

(D) at the election of the Corporation, either the 

assumption of all or substantially all of the liabilities of 

the bridge financial company by a company that is not 

a bridge financial company, or the acquisition of all or 
H. R. 4173—127 

substantially all of the assets of the bridge financial company by a company that is not a bridge financial company, 

or other entity as permitted under applicable law; and 

(E) the expiration of the period provided in paragraph 

(12), or the earlier dissolution of the bridge financial company, as provided in paragraph (15). 

(14) EFFECT OF TERMINATION EVENTS.— 

(A) MERGER OR CONSOLIDATION.—A merger or consolidation, described in paragraph (13)(A) shall be conducted 

in accordance with, and shall have the effect provided 

in, the provisions of applicable law. For the purpose of 

effecting such a merger or consolidation, the bridge financial company shall be treated as a corporation organized 

under the laws of the State of Delaware (unless the law 

of another State has been selected by the bridge financial 

company in accordance with paragraph (2)(F)), and the 

Corporation shall be treated as the sole shareholder thereof, 

notwithstanding any other provision of State or Federal 

law. 

(B) CHARTER CONVERSION.—Following the sale of a 

majority of the capital stock of the bridge financial company, as provided in paragraph (13)(B), the Corporation 

may amend the charter of the bridge financial company 

to reflect the termination of the status of the bridge financial company as such, whereupon the company shall have 

all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. 

In connection therewith, the Corporation may take such 

steps as may be necessary or convenient to reincorporate 

the bridge financial company under the laws of a State 

and, notwithstanding any provisions of Federal or State 

law, such State-chartered corporation shall be deemed to 

succeed by operation of law to such rights, titles, powers, 

and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge 

financial company had merged with the State-chartered 

corporation under provisions of the corporate laws of such 

State. 

(C) SALE OF STOCK.—Following the sale of 80 percent 

or more of the capital stock of a bridge financial company, 

as provided in paragraph (13)(C), the company shall have 

all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law. 

In connection therewith, the Corporation may take such 

steps as may be necessary or convenient to reincorporate 

the bridge financial company under the laws of a State 

and, notwithstanding any provisions of Federal or State 

law, the State-chartered corporation shall be deemed to 

succeed by operation of law to such rights, titles, powers 

and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge 

financial company had merged with the State-chartered 

corporation under provisions of the corporate laws of such 

State. 

(D) ASSUMPTION OF LIABILITIES AND SALE OF ASSETS.— Following the assumption of all or substantially all of the 

liabilities of the bridge financial company, or the sale of 
H. R. 4173—128 

all or substantially all of the assets of the bridge financial 

company, as provided in paragraph (13)(D), at the election 

of the Corporation, the bridge financial company may retain 

its status as such for the period provided in paragraph 

(12) or may be dissolved at the election of the Corporation. 

(E) AMENDMENTS TO CHARTER.—Following the consummation of a transaction described in subparagraph (A), 

(B), (C), or (D) of paragraph (13), the charter of the 

resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate. 

(15) DISSOLUTION OF BRIDGE FINANCIAL COMPANY.— (A) IN GENERAL.—Notwithstanding any other provision 

of Federal or State law, if the status of a bridge financial 

company as such has not previously been terminated by 

the occurrence of an event specified in subparagraph (A), 

(B), (C), or (D) of paragraph (13)— 

(i) the Corporation may, in its discretion, dissolve 

the bridge financial company in accordance with this 

paragraph at any time; and 

(ii) the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph 

upon the expiration of the 2-year period following the 

date on which the bridge financial company was chartered, or any extension thereof, as provided in paragraph (12). 

(B) PROCEDURES.—The Corporation shall remain the 

receiver for a bridge financial company for the purpose 

of dissolving the bridge financial company. The Corporation 

as receiver for a bridge financial company shall wind up 

the affairs of the bridge financial company in conformity 

with the provisions of law relating to the liquidation of 

covered financial companies under this title. With respect 

to any such bridge financial company, the Corporation as 

receiver shall have all the rights, powers, and privileges 

and shall perform the duties related to the exercise of 

such rights, powers, or privileges granted by law to the 

Corporation as receiver for a covered financial company 

under this title and, notwithstanding any other provision 

of law, in the exercise of such rights, powers, and privileges, 

the Corporation shall not be subject to the direction or 

supervision of any State agency or other Federal agency. 

(16) AUTHORITY TO OBTAIN CREDIT.— 

(A) IN GENERAL.—A bridge financial company may 

obtain unsecured credit and issue unsecured debt. 

(B) INABILITY TO OBTAIN CREDIT.—If a bridge financial 

company is unable to obtain unsecured credit or issue 

unsecured debt, the Corporation may authorize the 

obtaining of credit or the issuance of debt by the bridge 

financial company— 

(i) with priority over any or all of the obligations 

of the bridge financial company; 

(ii) secured by a lien on property of the bridge 

financial company that is not otherwise subject to a 

lien; or 

(iii) secured by a junior lien on property of the 

bridge financial company that is subject to a lien. 

(C) LIMITATIONS.— 
H. R. 4173—129 

(i) IN GENERAL.—The Corporation, after notice and 

a hearing, may authorize the obtaining of credit or 

the issuance of debt by a bridge financial company 

that is secured by a senior or equal lien on property 

of the bridge financial company that is subject to a 

lien, only if— 

(I) the bridge financial company is unable to 

otherwise obtain such credit or issue such debt; 

and 

(II) there is adequate protection of the interest 

of the holder of the lien on the property with 

respect to which such senior or equal lien is proposed to be granted. 

(ii) HEARING.—The hearing required pursuant to 

this subparagraph shall be before a court of the United 

States, which shall have jurisdiction to conduct such 

hearing and to authorize a bridge financial company 

to obtain secured credit under clause (i). 

(D) BURDEN OF PROOF.—In any hearing under this 

paragraph, the Corporation has the burden of proof on 

the issue of adequate protection. 

(E) QUALIFIED FINANCIAL CONTRACTS.—No credit or 

debt obtained or issued by a bridge financial company 

may contain terms that impair the rights of a counterparty 

to a qualified financial contract upon a default by the 

bridge financial company, other than the priority of such 

counterparty’s unsecured claim (after the exercise of rights) 

relative to the priority of the bridge financial company’s 

obligations in respect of such credit or debt, unless such 

counterparty consents in writing to any such impairment. 

(17) EFFECT ON DEBTS AND LIENS.—The reversal or modification on appeal of an authorization under this subsection 

to obtain credit or issue debt, or of a grant under this section 

of a priority or a lien, does not affect the validity of any 

debt so issued, or any priority or lien so granted, to an entity 

that extended such credit in good faith, whether or not such 

entity knew of the pendency of the appeal, unless such 

authorization and the issuance of such debt, or the granting 

of such priority or lien, were stayed pending appeal. 

(i) SHARING RECORDS.—If the Corporation has been appointed 

as receiver for a covered financial company, other Federal regulators 

shall make all records relating to the covered financial company 

available to the Corporation, which may be used by the Corporation 

in any manner that the Corporation determines to be appropriate. 

(j) EXPEDITED PROCEDURES FOR CERTAIN CLAIMS.— 

(1) TIME FOR FILING NOTICE OF APPEAL.—The notice of 

appeal of any order, whether interlocutory or final, entered 

in any case brought by the Corporation against a director, 

officer, employee, agent, attorney, accountant, or appraiser of 

the covered financial company, or any other person employed 

by or providing services to a covered financial company, shall 

be filed not later than 30 days after the date of entry of 

the order. The hearing of the appeal shall be held not later 

than 120 days after the date of the notice of appeal. The 

appeal shall be decided not later than 180 days after the 

date of the notice of appeal. 
H. R. 4173—130 

(2) SCHEDULING.—The court shall expedite the consideration of any case brought by the Corporation against a director, 

officer, employee, agent, attorney, accountant, or appraiser of 

a covered financial company or any other person employed 

by or providing services to a covered financial company. As 

far as practicable, the court shall give such case priority on 

its docket. 

(3) JUDICIAL DISCRETION.—The court may modify the 

schedule and limitations stated in paragraphs (1) and (2) in 

a particular case, based on a specific finding that the ends 

of justice that would be served by making such a modification 

would outweigh the best interest of the public in having the 

case resolved expeditiously. 

(k) FOREIGN INVESTIGATIONS.—The Corporation, as receiver for 

any covered financial company, and for purposes of carrying out 

any power, authority, or duty with respect to a covered financial 

company— 

(1) may request the assistance of any foreign financial 

authority and provide assistance to any foreign financial 

authority in accordance with section 8(v) of the Federal Deposit 

Insurance Act, as if the covered financial company were an 

insured depository institution, the Corporation were the appropriate Federal banking agency for the company, and any foreign 

financial authority were the foreign banking authority; and 

(2) may maintain an office to coordinate foreign investigations or investigations on behalf of foreign financial authorities. 

(l) PROHIBITION ON ENTERING SECRECY AGREEMENTS AND

PROTECTIVE ORDERS.—The Corporation may not enter into any 

agreement or approve any protective order which prohibits the 

Corporation from disclosing the terms of any settlement of an 

administrative or other action for damages or restitution brought 

by the Corporation in its capacity as receiver for a covered financial 

company. 

(m) LIQUIDATION OF CERTAIN COVERED FINANCIAL COMPANIES

OR BRIDGE FINANCIAL COMPANIES.— (1) IN GENERAL.—Except as specifically provided in this 

section, and notwithstanding any other provision of law, the 

Corporation, in connection with the liquidation of any covered 

financial company or bridge financial company with respect 

to which the Corporation has been appointed as receiver, shall— 

(A) in the case of any covered financial company or 

bridge financial company that is a stockbroker, but is not 

a member of the Securities Investor Protection Corporation, 

apply the provisions of subchapter III of chapter 7 of the 

Bankruptcy Code, in respect of the distribution to any 

customer of all customer name security and customer property and member property, as if such covered financial 

company or bridge financial company were a debtor for 

purposes of such subchapter; or 

(B) in the case of any covered financial company or 

bridge financial company that is a commodity broker, apply 

the provisions of subchapter IV of chapter 7 the Bankruptcy 

Code, in respect of the distribution to any customer of 

all customer property and member property, as if such 

covered financial company or bridge financial company 

were a debtor for purposes of such subchapter. 

(2) DEFINITIONS.—For purposes of this subsection— 
H. R. 4173—131 

(A) the terms ‘‘customer’’, ‘‘customer name security’’, 

and ‘‘customer property and member property’’ have the 

same meanings as in sections 741 and 761 of title 11, 

United States Code; and 

(B) the terms ‘‘commodity broker’’ and ‘‘stockbroker’’ 

have the same meanings as in section 101 of the Bankruptcy Code. 

(n) ORDERLY LIQUIDATION FUND.— 

(1) ESTABLISHMENT.—There is established in the Treasury 

of the United States a separate fund to be known as the 

‘‘Orderly Liquidation Fund’’, which shall be available to the 

Corporation to carry out the authorities contained in this title, 

for the cost of actions authorized by this title, including the 

orderly liquidation of covered financial companies, payment 

of administrative expenses, the payment of principal and 

interest by the Corporation on obligations issued under paragraph (5), and the exercise of the authorities of the Corporation 

under this title. 

(2) PROCEEDS.—Amounts received by the Corporation, 

including assessments received under subsection (o), proceeds 

of obligations issued under paragraph (5), interest and other 

earnings from investments, and repayments to the Corporation 

by covered financial companies, shall be deposited into the 

Fund. 

(3) MANAGEMENT.—The Corporation shall manage the 

Fund in accordance with this subsection and the policies and 

procedures established under section 203(d). 

(4) INVESTMENTS.—At the request of the Corporation, the 

Secretary may invest such portion of amounts held in the 

Fund that are not, in the judgment of the Corporation, required 

to meet the current needs of the Corporation, in obligations 

of the United States having suitable maturities, as determined 

by the Corporation. The interest on and the proceeds from 

the sale or redemption of such obligations shall be credited 

to the Fund. 

(5) AUTHORITY TO ISSUE OBLIGATIONS.— 

(A) CORPORATION AUTHORIZED TO ISSUE OBLIGATIONS.— 

Upon appointment by the Secretary of the Corporation 

as receiver for a covered financial company, the Corporation 

is authorized to issue obligations to the Secretary. 

(B) SECRETARY AUTHORIZED TO PURCHASE OBLIGATIONS.—The Secretary may, under such terms and conditions as the Secretary may require, purchase or agree 

to purchase any obligations issued under subparagraph 

(A), and for such purpose, the Secretary is authorized to 

use as a public debt transaction the proceeds of the sale 

of any securities issued under chapter 31 of title 31, United 

States Code, and the purposes for which securities may 

be issued under chapter 31 of title 31, United States Code, 

are extended to include such purchases. 

(C) INTEREST RATE.—Each purchase of obligations by 

the Secretary under this paragraph shall be upon such 

terms and conditions as to yield a return at a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations 

of the United States of comparable maturity, plus an 
H. R. 4173—132 

interest rate surcharge to be determined by the Secretary, 

which shall be greater than the difference between— 

(i) the current average rate on an index of corporate obligations of comparable maturity; and 

(ii) the current average rate on outstanding 

marketable obligations of the United States of comparable maturity. 

(D) SECRETARY AUTHORIZED TO SELL OBLIGATIONS.— 

The Secretary may sell, upon such terms and conditions 

as the Secretary shall determine, any of the obligations 

acquired under this paragraph. 

(E) PUBLIC DEBT TRANSACTIONS.—All purchases and 

sales by the Secretary of such obligations under this paragraph shall be treated as public debt transactions of the 

United States, and the proceeds from the sale of any obligations acquired by the Secretary under this paragraph shall 

be deposited into the Treasury of the United States as 

miscellaneous receipts. 

(6) MAXIMUM OBLIGATION LIMITATION.—The Corporation 

may not, in connection with the orderly liquidation of a covered 

financial company, issue or incur any obligation, if, after issuing 

or incurring the obligation, the aggregate amount of such obligations outstanding under this subsection for each covered financial company would exceed— 

(A) an amount that is equal to 10 percent of the total 

consolidated assets of the covered financial company, based 

on the most recent financial statement available, during 

the 30-day period immediately following the date of 

appointment of the Corporation as receiver (or a shorter 

time period if the Corporation has calculated the amount 

described under subparagraph (B)); and 

(B) the amount that is equal to 90 percent of the 

fair value of the total consolidated assets of each covered 

financial company that are available for repayment, after 

the time period described in subparagraph (A). 

(7) RULEMAKING.—The Corporation and the Secretary shall 

jointly, in consultation with the Council, prescribe regulations 

governing the calculation of the maximum obligation limitation 

defined in this paragraph. 

(8) RULE OF CONSTRUCTION.— 

(A) IN GENERAL.—Nothing in this section shall be construed to affect the authority of the Corporation under 

subsection (a) or (b) of section 14 or section 15(c)(5) of 

the Federal Deposit Insurance Act (12 U.S.C. 1824, 

1825(c)(5)), the management of the Deposit Insurance Fund 

by the Corporation, or the resolution of insured depository 

institutions, provided that— 

(i) the authorities of the Corporation contained 

in this title shall not be used to assist the Deposit 

Insurance Fund or to assist any financial company 

under applicable law other than this Act; 

(ii) the authorities of the Corporation relating to 

the Deposit Insurance Fund, or any other responsibilities of the Corporation under applicable law other 

than this title, shall not be used to assist a covered 

financial company pursuant to this title; and 
H. R. 4173—133 

(iii) the Deposit Insurance Fund may not be used 

in any manner to otherwise circumvent the purposes 

of this title. 

(B) VALUATION.—For purposes of determining the 

amount of obligations under this subsection— 

(i) the Corporation shall include as an obligation 

any contingent liability of the Corporation pursuant 

to this title; and 

(ii) the Corporation shall value any contingent 

liability at its expected cost to the Corporation. 

(9) ORDERLY LIQUIDATION AND REPAYMENT PLANS.— (A) ORDERLY LIQUIDATION PLAN.—Amounts in the Fund 

shall be available to the Corporation with regard to a 

covered financial company for which the Corporation is 

appointed receiver after the Corporation has developed an 

orderly liquidation plan that is acceptable to the Secretary 

with regard to such covered financial company, including 

the provision and use of funds, including taking any actions 

specified under section 204(d) and subsection (h)(2)(G)(iv) 

and (h)(9) of this section, and payments to third parties. 

The orderly liquidation plan shall take into account actions 

to avoid or mitigate potential adverse effects on low income, 

minority, or underserved communities affected by the 

failure of the covered financial company, and shall provide 

for coordination with the primary financial regulatory agencies, as appropriate, to ensure that such actions are taken. 

The Corporation may, at any time, amend any orderly 

liquidation plan approved by the Secretary with the concurrence of the Secretary. 

(B) MANDATORY REPAYMENT PLAN.— (i) IN GENERAL.—No amount authorized under 

paragraph (6)(B) may be provided by the Secretary 

to the Corporation under paragraph (5), unless an 

agreement is in effect between the Secretary and the 

Corporation that— 

(I) provides a specific plan and schedule to 

achieve the repayment of the outstanding amount 

of any borrowing under paragraph (5); and 

(II) demonstrates that income to the Corporation from the liquidated assets of the covered financial company and assessments under subsection 

(o) will be sufficient to amortize the outstanding 

balance within the period established in the repayment schedule and pay the interest accruing on 

such balance within the time provided in subsection (o)(1)(B). 

(ii) CONSULTATION WITH AND REPORT TO CON- GRESS.—The Secretary and the Corporation shall— 

(I) consult with the Committee on Banking, 

Housing, and Urban Affairs of the Senate and 

the Committee on Financial Services of the House 

of Representatives on the terms of any repayment 

schedule agreement; and 

(II) submit a copy of the repayment schedule 

agreement to the Committees described in subclause (I) before the end of the 30-day period beginning on the date on which any amount is provided 
H. R. 4173—134 

by the Secretary to the Corporation under paragraph (5). 

(10) IMPLEMENTATION EXPENSES.— 

(A) IN GENERAL.—Reasonable implementation expenses 

of the Corporation incurred after the date of enactment 

of this Act shall be treated as expenses of the Council. 

(B) REQUESTS FOR REIMBURSEMENT.—The Corporation 

shall periodically submit a request for reimbursement for 

implementation expenses to the Chairperson of the Council, 

who shall arrange for prompt reimbursement to the Corporation of reasonable implementation expenses. 

(C) DEFINITION.—As used in this paragraph, the term 

‘‘implementation expenses’’— 

(i) means costs incurred by the Corporation beginning on the date of enactment of this Act, as part 

of its efforts to implement this title that do not relate 

to a particular covered financial company; and 

(ii) includes the costs incurred in connection with 

the development of policies, procedures, rules, and 

regulations and other planning activities of the Corporation consistent with carrying out this title. 

(o) ASSESSMENTS.— 

(1) RISK-BASED ASSESSMENTS.— 

(A) ELIGIBLE FINANCIAL COMPANIES DEFINED.—For purposes of this subsection, the term ‘‘eligible financial company’’ means any bank holding company with total consolidated assets equal to or greater than $50,000,000,000 and 

any nonbank financial company supervised by the Board 

of Governors. 

(B) ASSESSMENTS.—The Corporation shall charge one 

or more risk-based assessments in accordance with the 

provisions of subparagraph (D), if such assessments are 

necessary to pay in full the obligations issued by the Corporation to the Secretary under this title within 60 months 

of the date of issuance of such obligations. 

(C) EXTENSIONS AUTHORIZED.—The Corporation may, 

with the approval of the Secretary, extend the time period 

under subparagraph (B), if the Corporation determines that 

an extension is necessary to avoid a serious adverse effect 

on the financial system of the United States. 

(D) APPLICATION OF ASSESSMENTS.—To meet the 

requirements of subparagraph (B), the Corporation shall— 

(i) impose assessments, as soon as practicable, on 

any claimant that received additional payments or 

amounts from the Corporation pursuant to subsection 

(b)(4), (d)(4), or (h)(5)(E), except for payments or 

amounts necessary to initiate and continue operations 

essential to implementation of the receivership or any 

bridge financial company, to recover on a cumulative 

basis, the entire difference between— 

(I) the aggregate value the claimant received 

from the Corporation on a claim pursuant to this 

title (including pursuant to subsection (b)(4), (d)(4), 

and (h)(5)(E)), as of the date on which such value 

was received; and 

(II) the value the claimant was entitled to 

receive from the Corporation on such claim solely 
H. R. 4173—135 

from the proceeds of the liquidation of the covered 

financial company under this title; and 

(ii) if the amounts to be recovered on a cumulative 

basis under clause (i) are insufficient to meet the 

requirements of subparagraph (B), after taking into 

account the considerations set forth in paragraph (4), 

impose assessments on— 

(I) eligible financial companies; and 

(II) financial companies with total consolidated 

assets equal to or greater than $50,000,000,000 

that are not eligible financial companies. 

(E) PROVISION OF FINANCING.—Payments or amounts 

necessary to initiate and continue operations essential to 

implementation of the receivership or any bridge financial 

company described in subparagraph (D)(i) shall not include 

the provision of financing, as defined by rule of the Corporation, to third parties. 

(2) GRADUATED ASSESSMENT RATE.—The Corporation shall 

impose assessments on a graduated basis, with financial companies having greater assets and risk being assessed at a higher 

rate. 

(3) NOTIFICATION AND PAYMENT.—The Corporation shall 

notify each financial company of that company’s assessment 

under this subsection. Any financial company subject to assessment under this subsection shall pay such assessment in accordance with the regulations prescribed pursuant to paragraph 

(6). 

(4) RISK-BASED ASSESSMENT CONSIDERATIONS.—In imposing 

assessments under paragraph (1)(D)(ii), the Corporation shall 

use a risk matrix. The Council shall make a recommendation 

to the Corporation on the risk matrix to be used in imposing 

such assessments, and the Corporation shall take into account 

any such recommendation in the establishment of the risk 

matrix to be used to impose such assessments. In recommending or establishing such risk matrix, the Council and 

the Corporation, respectively, shall take into account— 

(A) economic conditions generally affecting financial 

companies so as to allow assessments to increase during 

more favorable economic conditions and to decrease during 

less favorable economic conditions; 

(B) any assessments imposed on a financial company 

or an affiliate of a financial company that— 

(i) is an insured depository institution, assessed 

pursuant to section 7 or 13(c)(4)(G) of the Federal 

Deposit Insurance Act; 

(ii) is a member of the Securities Investor Protection Corporation, assessed pursuant to section 4 of 

the Securities Investor Protection Act of 1970 (15 

U.S.C. 78ddd); 

(iii) is an insured credit union, assessed pursuant 

to section 202(c)(1)(A)(i) of the Federal Credit Union 

Act (12 U.S.C. 1782(c)(1)(A)(i)); or 

(iv) is an insurance company, assessed pursuant 

to applicable State law to cover (or reimburse payments 

made to cover) the costs of the rehabilitation, liquidation, or other State insolvency proceeding with respect 

to 1 or more insurance companies; 
H. R. 4173—136 

(C) the risks presented by the financial company to 

the financial system and the extent to which the financial 

company has benefitted, or likely would benefit, from the 

orderly liquidation of a financial company under this title, 

including— 

(i) the amount, different categories, and concentrations of assets of the financial company and its affiliates, including both on-balance sheet and off-balance 

sheet assets; 

(ii) the activities of the financial company and 

its affiliates; 

(iii) the relevant market share of the financial 

company and its affiliates; 

(iv) the extent to which the financial company 

is leveraged; 

(v) the potential exposure to sudden calls on 

liquidity precipitated by economic distress; 

(vi) the amount, maturity, volatility, and stability 

of the company’s financial obligations to, and relationship with, other financial companies; 

(vii) the amount, maturity, volatility, and stability 

of the liabilities of the company, including the degree 

of reliance on short-term funding, taking into consideration existing systems for measuring a company’s riskbased capital; 

(viii) the stability and variety of the company’s 

sources of funding; 

(ix) the company’s importance as a source of credit 

for households, businesses, and State and local governments and as a source of liquidity for the financial 

system; 

(x) the extent to which assets are simply managed 

and not owned by the financial company and the extent 

to which ownership of assets under management is 

diffuse; and 

(xi) the amount, different categories, and concentrations of liabilities, both insured and uninsured, 

contingent and noncontingent, including both on-balance sheet and off-balance sheet liabilities, of the financial company and its affiliates; 

(D) any risks presented by the financial company 

during the 10-year period immediately prior to the appointment of the Corporation as receiver for the covered financial 

company that contributed to the failure of the covered 

financial company; and 

(E) such other risk-related factors as the Corporation, 

or the Council, as applicable, may determine to be appropriate. 

(5) COLLECTION OF INFORMATION.—The Corporation may 

impose on covered financial companies such collection of 

information requirements as the Corporation deems necessary 

to carry out this subsection after the appointment of the Corporation as receiver under this title. 

(6) RULEMAKING.— 

(A) IN GENERAL.—The Corporation shall prescribe regulations to carry out this subsection. The Corporation shall 
H. R. 4173—137 

consult with the Secretary in the development and finalization of such regulations. 

(B) EQUITABLE TREATMENT.—The regulations prescribed under subparagraph (A) shall take into account 

the differences in risks posed to the financial stability 

of the United States by financial companies, the differences 

in the liability structures of financial companies, and the 

different bases for other assessments that such financial 

companies may be required to pay, to ensure that assessed 

financial companies are treated equitably and that assessments under this subsection reflect such differences. 

(p) UNENFORCEABILITY OF CERTAIN AGREEMENTS.— 

(1) IN GENERAL.—No provision described in paragraph (2) 

shall be enforceable against or impose any liability on any 

person, as such enforcement or liability shall be contrary to 

public policy. 

(2) PROHIBITED PROVISIONS.—A provision described in this 

paragraph is any term contained in any existing or future 

standstill, confidentiality, or other agreement that, directly or 

indirectly— 

(A) affects, restricts, or limits the ability of any person 

to offer to acquire or acquire; 

(B) prohibits any person from offering to acquire or 

acquiring; or 

(C) prohibits any person from using any previously 

disclosed information in connection with any such offer 

to acquire or acquisition of, 

all or part of any covered financial company, including any 

liabilities, assets, or interest therein, in connection with any 

transaction in which the Corporation exercises its authority 

under this title. 

(q) OTHER EXEMPTIONS.— 

(1) IN GENERAL.—When acting as a receiver under this 

title— 

(A) the Corporation, including its franchise, its capital, 

reserves and surplus, and its income, shall be exempt from 

all taxation imposed by any State, county, municipality, 

or local taxing authority, except that any real property 

of the Corporation shall be subject to State, territorial, 

county, municipal, or local taxation to the same extent 

according to its value as other real property is taxed, except 

that, notwithstanding the failure of any person to challenge 

an assessment under State law of the value of such property, such value, and the tax thereon, shall be determined 

as of the period for which such tax is imposed; 

(B) no property of the Corporation shall be subject 

to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corporation; and 

(C) the Corporation shall not be liable for any amounts 

in the nature of penalties or fines, including those arising 

from the failure of any person to pay any real property, 

personal property, probate, or recording tax or any 

recording or filing fees when due; and 

(D) the Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising 
H. R. 4173—138 

under Federal, State, county, municipal, or local law, which 

was allegedly committed by the covered financial company, 

or persons acting on behalf of the covered financial company, prior to the appointment of the Corporation as 

receiver. 

(2) LIMITATION.—Paragraph (1) shall not apply with respect 

to any tax imposed (or other amount arising) under the Internal 

Revenue Code of 1986. 

(r) CERTAIN SALES OF ASSETS PROHIBITED.— 

(1) PERSONS WHO ENGAGED IN IMPROPER CONDUCT WITH, 

OR CAUSED LOSSES TO, COVERED FINANCIAL COMPANIES.—The 

Corporation shall prescribe regulations which, at a minimum, 

shall prohibit the sale of assets of a covered financial company 

by the Corporation to— 

(A) any person who— 

(i) has defaulted, or was a member of a partnership 

or an officer or director of a corporation that has 

defaulted, on 1 or more obligations, the aggregate 

amount of which exceeds $1,000,000, to such covered 

financial company; 

(ii) has been found to have engaged in fraudulent 

activity in connection with any obligation referred to 

in clause (i); and 

(iii) proposes to purchase any such asset in whole 

or in part through the use of the proceeds of a loan 

or advance of credit from the Corporation or from 

any covered financial company; 

(B) any person who participated, as an officer or 

director of such covered financial company or of any affiliate 

of such company, in a material way in any transaction 

that resulted in a substantial loss to such covered financial 

company; or 

(C) any person who has demonstrated a pattern or 

practice of defalcation regarding obligations to such covered 

financial company. 

(2) CONVICTED DEBTORS.—Except as provided in paragraph 

(3), a person may not purchase any asset of such institution 

from the receiver, if that person— 

(A) has been convicted of an offense under section 

215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 

1343, or 1344 of title 18, United States Code, or of conspiring to commit such an offense, affecting any covered 

financial company; and 

(B) is in default on any loan or other extension of 

credit from such covered financial company which, if not 

paid, will cause substantial loss to the Fund or the Corporation. 

(3) SETTLEMENT OF CLAIMS.—Paragraphs (1) and (2) shall 

not apply to the sale or transfer by the Corporation of any 

asset of any covered financial company to any person, if the 

sale or transfer of the asset resolves or settles, or is part 

of the resolution or settlement, of 1 or more claims that have 

been, or could have been, asserted by the Corporation against 

the person. 

(4) DEFINITION OF DEFAULT.—For purposes of this subsection, the term ‘‘default’’ means a failure to comply with 
H. R. 4173—139 

the terms of a loan or other obligation to such an extent 

that the property securing the obligation is foreclosed upon. 

(s) RECOUPMENT OF COMPENSATION FROM SENIOR EXECUTIVES

AND DIRECTORS.— 

(1) IN GENERAL.—The Corporation, as receiver of a covered 

financial company, may recover from any current or former 

senior executive or director substantially responsible for the 

failed condition of the covered financial company any compensation received during the 2-year period preceding the date on 

which the Corporation was appointed as the receiver of the 

covered financial company, except that, in the case of fraud, 

no time limit shall apply. 

(2) COST CONSIDERATIONS.—In seeking to recover any such 

compensation, the Corporation shall weigh the financial and 

deterrent benefits of such recovery against the cost of executing 

the recovery. 

(3) RULEMAKING.—The Corporation shall promulgate regulations to implement the requirements of this subsection, 

including defining the term ‘‘compensation’’ to mean any financial remuneration, including salary, bonuses, incentives, benefits, severance, deferred compensation, or golden parachute 

benefits, and any profits realized from the sale of the securities 

of the covered financial company. 

SEC. 211. MISCELLANEOUS PROVISIONS. 

(a) CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT

OF ASSETS FROM RECEIVER OR LIQUIDATING AGENT.—Section 

1032(1) of title 18, United States Code, is amended by inserting 

‘‘the Federal Deposit Insurance Corporation acting as receiver for 

a covered financial company, in accordance with title II of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act,’’ 

before ‘‘or the National Credit’’. 

(b) CONFORMING AMENDMENT.—Section 1032 of title 18, United 

States Code, is amended in the section heading, by striking ‘‘of 

financial institution’’. 

(c) FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT

ACT OF 1991.—Section 403(a) of the Federal Deposit Insurance 

Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is 

amended by inserting ‘‘section 210(c) of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, section 1367 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4617(d)),’’ after ‘‘section 11(e) of the Federal Deposit 

Insurance Act,’’. 

(d) FDIC INSPECTOR GENERAL REVIEWS.— 

(1) SCOPE.—The Inspector General of the Corporation shall 

conduct, supervise, and coordinate audits and investigations 

of the liquidation of any covered financial company by the 

Corporation as receiver under this title, including collecting 

and summarizing— 

(A) a description of actions taken by the Corporation 

as receiver; 

(B) a description of any material sales, transfers, mergers, obligations, purchases, and other material transactions 

entered into by the Corporation; 

(C) an evaluation of the adequacy of the policies and 

procedures of the Corporation under section 203(d) and 

orderly liquidation plan under section 210(n)(14); 
H. R. 4173—140 

(D) an evaluation of the utilization by the Corporation 

of the private sector in carrying out its functions, including 

the adequacy of any conflict-of-interest reviews; and 

(E) an evaluation of the overall performance of the 

Corporation in liquidating the covered financial company, 

including administrative costs, timeliness of liquidation 

process, and impact on the financial system. 

(2) FREQUENCY.—Not later than 6 months after the date 

of appointment of the Corporation as receiver under this title 

and every 6 months thereafter, the Inspector General of the 

Corporation shall conduct the audit and investigation described 

in paragraph (1). 

(3) REPORTS AND TESTIMONY.—The Inspector General of 

the Corporation shall include in the semiannual reports 

required by section 5(a) of the Inspector General Act of 1978 

(5 U.S.C. App.), a summary of the findings and evaluations 

under paragraph (1), and shall appear before the appropriate 

committees of Congress, if requested, to present each such 

report. 

(4) FUNDING.— 

(A) INITIAL FUNDING.—The expenses of the Inspector 

General of the Corporation in carrying out this subsection 

shall be considered administrative expenses of the receivership. 

(B) ADDITIONAL FUNDING.—If the maximum amount 

available to the Corporation as receiver under this title 

is insufficient to enable the Inspector General of the Corporation to carry out the duties under this subsection, 

the Corporation shall pay such additional amounts from 

assessments imposed under section 210. 

(5) TERMINATION OF RESPONSIBILITIES.—The duties and 

responsibilities of the Inspector General of the Corporation 

under this subsection shall terminate 1 year after the date 

of termination of the receivership under this title. 

(e) TREASURY INSPECTOR GENERAL REVIEWS.— (1) SCOPE.—The Inspector General of the Department of 

the Treasury shall conduct, supervise, and coordinate audits 

and investigations of actions taken by the Secretary related 

to the liquidation of any covered financial company under this 

title, including collecting and summarizing— 

(A) a description of actions taken by the Secretary 

under this title; 

(B) an analysis of the approval by the Secretary of 

the policies and procedures of the Corporation under section 

203 and acceptance of the orderly liquidation plan of the 

Corporation under section 210; and 

(C) an assessment of the terms and conditions underlying the purchase by the Secretary of obligations of the 

Corporation under section 210. 

(2) FREQUENCY.—Not later than 6 months after the date 

of appointment of the Corporation as receiver under this title 

and every 6 months thereafter, the Inspector General of the 

Department of the Treasury shall conduct the audit and investigation described in paragraph (1). 

(3) REPORTS AND TESTIMONY.—The Inspector General of 

the Department of the Treasury shall include in the semiannual 

reports required by section 5(a) of the Inspector General Act 
H. R. 4173—141 

of 1978 (5 U.S.C. App.), a summary of the findings and assessments under paragraph (1), and shall appear before the appropriate committees of Congress, if requested, to present each 

such report. 

(4) TERMINATION OF RESPONSIBILITIES.—The duties and 

responsibilities of the Inspector General of the Department 

of the Treasury under this subsection shall terminate 1 year 

after the date on which the obligations purchased by the Secretary from the Corporation under section 210 are fully 

redeemed. 

(f) PRIMARY FINANCIAL REGULATORY AGENCY INSPECTOR GENERAL REVIEWS.— 

(1) SCOPE.—Upon the appointment of the Corporation as 

receiver for a covered financial company supervised by a Federal primary financial regulatory agency or the Board of Governors under section 165, the Inspector General of the agency 

or the Board of Governors shall make a written report reviewing 

the supervision by the agency or the Board of Governors of 

the covered financial company, which shall— 

(A) evaluate the effectiveness of the agency or the 

Board of Governors in carrying out its supervisory responsibilities with respect to the covered financial company; 

(B) identify any acts or omissions on the part of agency 

or Board of Governors officials that contributed to the 

covered financial company being in default or in danger 

of default; 

(C) identify any actions that could have been taken 

by the agency or the Board of Governors that would have 

prevented the company from being in default or in danger 

of default; and 

(D) recommend appropriate administrative or legislative action. 

(2) REPORTS AND TESTIMONY.—Not later than 1 year after 

the date of appointment of the Corporation as receiver under 

this title, the Inspector General of the Federal primary financial 

regulatory agency or the Board of Governors shall provide 

the report required by paragraph (1) to such agency or the 

Board of Governors, and along with such agency or the Board 

of Governors, as applicable, shall appear before the appropriate 

committees of Congress, if requested, to present the report 

required by paragraph (1). Not later than 90 days after the 

date of receipt of the report required by paragraph (1), such 

agency or the Board of Governors, as applicable, shall provide 

a written report to Congress describing any actions taken in 

response to the recommendations in the report, and if no such 

actions were taken, describing the reasons why no actions 

were taken. 

SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVENTION OF 

CONFLICTS OF INTEREST. 

(a) NO OTHER FUNDING.—Funds for the orderly liquidation 

of any covered financial company under this title shall only be 

provided as specified under this title. 

(b) LIMIT ON GOVERNMENTAL ACTIONS.—No governmental 

entity may take any action to circumvent the purposes of this 

title. 
H. R. 4173—142 

(c) CONFLICT OF INTEREST.—In the event that the Corporation 

is appointed receiver for more than 1 covered financial company 

or is appointed receiver for a covered financial company and receiver 

for any insured depository institution that is an affiliate of such 

covered financial company, the Corporation shall take appropriate 

action, as necessary to avoid any conflicts of interest that may 

arise in connection with multiple receiverships. 

SEC. 213. BAN ON CERTAIN ACTIVITIES BY SENIOR EXECUTIVES AND 

DIRECTORS. 

(a) PROHIBITION AUTHORITY.—The Board of Governors or, if 

the covered financial company was not supervised by the Board 

of Governors, the Corporation, may exercise the authority provided 

by this section. 

(b) AUTHORITY TO ISSUE ORDER.—The appropriate agency 

described in subsection (a) may take any action authorized by 

subsection (c), if the agency determines that— 

(1) a senior executive or a director of the covered financial 

company, prior to the appointment of the Corporation as 

receiver, has, directly or indirectly— 

(A) violated— 

(i) any law or regulation; 

(ii) any cease-and-desist order which has become 

final; 

(iii) any condition imposed in writing by a Federal 

agency in connection with any action on any application, notice, or request by such company or senior 

executive; or 

(iv) any written agreement between such company 

and such agency; 

(B) engaged or participated in any unsafe or unsound 

practice in connection with any financial company; or 

(C) committed or engaged in any act, omission, or 

practice which constitutes a breach of the fiduciary duty 

of such senior executive or director; 

(2) by reason of the violation, practice, or breach described 

in any subparagraph of paragraph (1), such senior executive 

or director has received financial gain or other benefit by reason 

of such violation, practice, or breach and such violation, practice, or breach contributed to the failure of the company; and 

(3) such violation, practice, or breach— 

(A) involves personal dishonesty on the part of such 

senior executive or director; or 

(B) demonstrates willful or continuing disregard by 

such senior executive or director for the safety or soundness 

of such company. 

(c) AUTHORIZED ACTIONS.— 

(1) IN GENERAL.—The appropriate agency for a financial 

company, as described in subsection (a), may serve upon a 

senior executive or director described in subsection (b) a written 

notice of the intention of the agency to prohibit any further 

participation by such person, in any manner, in the conduct 

of the affairs of any financial company for a period of time 

determined by the appropriate agency to be commensurate 

with such violation, practice, or breach, provided such period 

shall be not less than 2 years. 
H. R. 4173—143 

(2) PROCEDURES.—The due process requirements and other 

procedures under section 8(e) of the Federal Deposit Insurance 

Act (12 U.S.C. 1818(e)) shall apply to actions under this section 

as if the covered financial company were an insured depository 

institution and the senior executive or director were an institution-affiliated party, as those terms are defined in that Act. 

(d) REGULATIONS.—The Corporation and the Board of Governors, in consultation with the Council, shall jointly prescribe 

rules or regulations to administer and carry out this section, 

including rules, regulations, or guidelines to further define the 

term senior executive for the purposes of this section. 

SEC. 214. PROHIBITION ON TAXPAYER FUNDING. 

(a) LIQUIDATION REQUIRED.—All financial companies put into 

receivership under this title shall be liquidated. No taxpayer funds 

shall be used to prevent the liquidation of any financial company 

under this title. 

(b) RECOVERY OF FUNDS.—All funds expended in the liquidation 

of a financial company under this title shall be recovered from 

the disposition of assets of such financial company, or shall be 

the responsibility of the financial sector, through assessments. 

(c) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no losses 

from the exercise of any authority under this title. 

SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS. 

(a) STUDY REQUIRED.—The Council shall conduct a study evaluating the importance of maximizing United States taxpayer protections and promoting market discipline with respect to the treatment 

of fully secured creditors in the utilization of the orderly liquidation 

authority authorized by this Act. In carrying out such study, the 

Council shall— 

(1) not be prejudicial to current or past laws or regulations 

with respect to secured creditor treatment in a resolution 

process; 

(2) study the similarities and differences between the resolution mechanisms authorized by the Bankruptcy Code, the 

Federal Deposit Insurance Corporation Improvement Act of 

1991, and the orderly liquidation authority authorized by this 

Act; 

(3) determine how various secured creditors are treated 

in such resolution mechanisms and examine how a haircut 

(of various degrees) on secured creditors could improve market 

discipline and protect taxpayers; 

(4) compare the benefits and dynamics of prudent lending 

practices by depository institutions in secured loans for consumers and small businesses to the lending practices of secured 

creditors to large, interconnected financial firms; 

(5) consider whether credit differs according to different 

types of collateral and different terms and timing of the extension of credit; amd 

(6) include an examination of stakeholders who were 

unsecured or under-collateralized and seek collateral when a 

firm is failing, and the impact that such behavior has on 

financial stability and an orderly resolution that protects taxpayers if the firm fails. 

(b) REPORT.—Not later than the end of the 1-year period beginning on the date of enactment of this Act, the Council shall issue 

a report to the Congress containing all findings and conclusions 
H. R. 4173—144 

made by the Council in carrying out the study required under 

subsection (a). 

SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINANCIAL AND 

NONBANK FINANCIAL INSTITUTIONS. 

(a) STUDY.— 

(1) IN GENERAL.—Upon enactment of this Act, the Board 

of Governors, in consultation with the Administrative Office 

of the United States Courts, shall conduct a study regarding 

the resolution of financial companies under the Bankruptcy 

Code, under chapter 7 or 11 thereof . 

(2) ISSUES TO BE STUDIED.—Issues to be studied under 

this section include— 

(A) the effectiveness of chapter 7 and chapter 11 of 

the Bankruptcy Code in facilitating the orderly resolution 

or reorganization of systemic financial companies; 

(B) whether a special financial resolution court or panel 

of special masters or judges should be established to oversee 

cases involving financial companies to provide for the resolution of such companies under the Bankruptcy Code, in 

a manner that minimizes adverse impacts on financial 

markets without creating moral hazard; 

(C) whether amendments to the Bankruptcy Code 

should be adopted to enhance the ability of the Code to 

resolve financial companies in a manner that minimizes 

adverse impacts on financial markets without creating 

moral hazard; 

(D) whether amendments should be made to the Bankruptcy Code, the Federal Deposit Insurance Act, and other 

insolvency laws to address the manner in which qualified 

financial contracts of financial companies are treated; and 

(E) the implications, challenges, and benefits to creating a new chapter or subchapter of the Bankruptcy Code 

to deal with financial companies. 

(b) REPORTS TO CONGRESS.—Not later than 1 year after the 

date of enactment of this Act, and in each successive year until 

the fifth year after the date of enactment of this Act, the Administrative Office of the United States courts shall submit to the 

Committees on Banking, Housing, and Urban Affairs and the 

Judiciary of the Senate and the Committees on Financial Services 

and the Judiciary of the House of Representatives a report summarizing the results of the study conducted under subsection (a). 

SEC. 217. STUDY ON INTERNATIONAL COORDINATION RELATING TO 

BANKRUPTCY PROCESS FOR NONBANK FINANCIAL 

INSTITUTIONS. 

(a) STUDY.— 

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

with the Administrative Office of the United States Courts, 

shall conduct a study regarding international coordination 

relating to the resolution of systemic financial companies under 

the United States Bankruptcy Code and applicable foreign law. 

(2) ISSUES TO BE STUDIED.—With respect to the bankruptcy 

process for financial companies, issues to be studied under 

this section include— 

(A) the extent to which international coordination currently exists; 
H. R. 4173—145 

(B) current mechanisms and structures for facilitating 

international cooperation; 

(C) barriers to effective international coordination; and 

(D) ways to increase and make more effective international coordination of the resolution of financial companies, so as to minimize the impact on the financial system 

without creating moral hazard. 

(b) REPORT TO CONGRESS.—Not later than 1 year after the 

date of enactment of this Act, the Administrative office of the 

United States Courts shall submit to the Committees on Banking, 

Housing, and Urban Affairs and the Judiciary of the Senate and 

the Committees on Financial Services and the Judiciary of the 

House of Representatives a report summarizing the results of the 

study conducted under subsection (a). 

TITLE III—TRANSFER OF POWERS TO 

THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE 

BOARD OF GOVERNORS 

SEC. 300. SHORT TITLE. 

This title may be cited as the ‘‘Enhancing Financial Institution 

Safety and Soundness Act of 2010’’. 

SEC. 301. PURPOSES. 

The purposes of this title are— 

(1) to provide for the safe and sound operation of the 

banking system of the United States; 

(2) to preserve and protect the dual system of Federal 

and State-chartered depository institutions; 

(3) to ensure the fair and appropriate supervision of each 

depository institution, regardless of the size or type of charter 

of the depository institution; and 

(4) to streamline and rationalize the supervision of depository institutions and the holding companies of depository 

institutions. 

SEC. 302. DEFINITION. 

In this title, the term ‘‘transferred employee’’ means, as the 

context requires, an employee transferred to the Office of the Comptroller of the Currency or the Corporation under section 322. 

Subtitle A—Transfer of Powers and Duties 

SEC. 311. TRANSFER DATE. 

(a) TRANSFER DATE.—Except as provided in subsection (b), the 

term ‘‘transfer date’’ means the date that is 1 year after the date 

of enactment of this Act. 

(b) EXTENSION PERMITTED.— 

(1) NOTICE REQUIRED.—The Secretary, in consultation with 

the Comptroller of the Currency, the Director of the Office 

of Thrift Supervision, the Chairman of the Board of Governors, 

and the Chairperson of the Corporation, may extend the period 

under subsection (a) and designate a transfer date that is 
H. R. 4173—146 

not later than 18 months after the date of enactment of this 

Act, if the Secretary transmits to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee 

on Financial Services of the House of Representatives— 

(A) a written determination that commencement of 

the orderly process to implement this title is not feasible 

by the date that is 1 year after the date of enactment 

of this Act; 

(B) an explanation of why an extension is necessary 

to commence the process of orderly implementation of this 

title; 

(C) the transfer date designated under this subsection; 

and 

(D) a description of the steps that will be taken to 

initiate the process of an orderly and timely implementation of this title within the extended time period. 

(2) PUBLICATION OF NOTICE.—Not later than 270 days after 

the date of enactment of this Act, the Secretary shall publish 

in the Federal Register notice of any transfer date designated 

under paragraph (1). 

SEC. 312. POWERS AND DUTIES TRANSFERRED. 

(a) EFFECTIVE DATE.—This section, and the amendments made 

by this section, shall take effect on the transfer date. 

(b) FUNCTIONS OF THE OFFICE OF THRIFT SUPERVISION.— (1) SAVINGS AND LOAN HOLDING COMPANY FUNCTIONS

TRANSFERRED.— (A) TRANSFER OF FUNCTIONS.—There are transferred 

to the Board of Governors all functions of the Office of 

Thrift Supervision and the Director of the Office of Thrift 

Supervision (including the authority to issue orders) 

relating to— 

(i) the supervision of— 

(I) any savings and loan holding company; and 

(II) any subsidiary (other than a depository 

institution) of a savings and loan holding company; 

and 

(ii) all rulemaking authority of the Office of Thrift 

Supervision and the Director of the Office of Thrift 

Supervision relating to savings and loan holding 

companies. 

(B) POWERS, AUTHORITIES, RIGHTS, AND DUTIES.—The 

Board of Governors shall succeed to all powers, authorities, 

rights, and duties that were vested in the Office of Thrift 

Supervision and the Director of the Office of Thrift Supervision on the day before the transfer date relating to the 

functions and authority transferred under subparagraph 

(A). 

(2) ALL OTHER FUNCTIONS TRANSFERRED.— (A) BOARD OF GOVERNORS.—All rulemaking authority 

of the Office of Thrift Supervision and the Director of 

the Office of Thrift Supervision under section 11 of the 

Home Owners’ Loan Act (12 U.S.C. 1468) relating to transactions with affiliates and extensions of credit to executive 

officers, directors, and principal shareholders and under 

section 5(q) of such Act relating to tying arrangements 

is transferred to the Board of Governors. 
H. R. 4173—147 

(B) COMPTROLLER OF THE CURRENCY.—Except as provided in paragraph (1) and subparagraph (A)— 

(i) there are transferred to the Office of the Comptroller of the Currency and the Comptroller of the 

Currency— 

(I) all functions of the Office of Thrift Supervision and the Director of the Office of Thrift 

Supervision, respectively, relating to Federal 

savings associations; and 

(II) all rulemaking authority of the Office of 

Thrift Supervision and the Director of the Office 

of Thrift Supervision, respectively, relating to 

savings associations; and 

(ii) the Office of the Comptroller of the Currency 

and the Comptroller of the Currency shall succeed 

to all powers, authorities, rights, and duties that were 

vested in the Office of Thrift Supervision and the 

Director of the Office of Thrift Supervision, respectively, on the day before the transfer date relating 

to the functions and authority transferred under clause 

(i). 

(C) CORPORATION.—Except as provided in paragraph 

(1) and subparagraphs (A) and (B)— 

(i) all functions of the Office of Thrift Supervision 

and the Director of the Office of Thrift Supervision 

relating to State savings associations are transferred 

to the Corporation; and 

(ii) the Corporation shall succeed to all powers, 

authorities, rights, and duties that were vested in the 

Office of Thrift Supervision and the Director of the 

Office of Thrift Supervision on the day before the 

transfer date relating to the functions transferred 

under clause (i). 

(c) CONFORMING AMENDMENTS.—Section 3 of the Federal 

Deposit Insurance Act (12 U.S.C. 1813) is amended— 

(1) in subsection (q), by striking paragraphs (1) through 

(4) and inserting the following: 

‘‘(1) the Office of the Comptroller of the Currency, in the 

case of— 

‘‘(A) any national banking association; 

‘‘(B) any Federal branch or agency of a foreign bank; 

and 

‘‘(C) any Federal savings association; 

‘‘(2) the Federal Deposit Insurance Corporation, in the case 

of— 

‘‘(A) any State nonmember insured bank; 

‘‘(B) any foreign bank having an insured branch; and 

‘‘(C) any State savings association; 

‘‘(3) the Board of Governors of the Federal Reserve System, 

in the case of— 

‘‘(A) any State member bank; 

‘‘(B) any branch or agency of a foreign bank with 

respect to any provision of the Federal Reserve Act which 

is made applicable under the International Banking Act 

of 1978; 

‘‘(C) any foreign bank which does not operate an 

insured branch; 
H. R. 4173—148 

‘‘(D) any agency or commercial lending company other 

than a Federal agency; 

‘‘(E) supervisory or regulatory proceedings arising from 

the authority given to the Board of Governors under section 

7(c)(1) of the International Banking Act of 1978, including 

such proceedings under the Financial Institutions Supervisory Act of 1966; 

‘‘(F) any bank holding company and any subsidiary 

(other than a depository institution) of a bank holding 

company; and 

‘‘(G) any savings and loan holding company and any 

subsidiary (other than a depository institution) of a savings 

and loan holding company.’’; and 

(2) in paragraphs (1) and (3) of subsection (u), by striking 

‘‘(other than a bank holding company’’ and inserting ‘‘(other 

than a bank holding company or savings and loan holding 

company’’. 

(d) CONSUMER PROTECTION.—Nothing in this section may be 

construed to limit or otherwise affect the transfer of powers under 

title X. 

SEC. 313. ABOLISHMENT. 

Effective 90 days after the transfer date, the Office of Thrift 

Supervision and the position of Director of the Office of Thrift 

Supervision are abolished. 

SEC. 314. AMENDMENTS TO THE REVISED STATUTES. 

(a) AMENDMENT TO SECTION 324.—Section 324 of the Revised 

Statutes of the United States (12 U.S.C. 1) is amended to read 

as follows: 

‘‘SEC. 324. COMPTROLLER OF THE CURRENCY. 

‘‘(a) OFFICE OF THE COMPTROLLER OF THE CURRENCY ESTAB- LISHED.—There is established in the Department of the Treasury 

a bureau to be known as the ‘Office of the Comptroller of the 

Currency’ which is charged with assuring the safety and soundness 

of, and compliance with laws and regulations, fair access to financial 

services, and fair treatment of customers by, the institutions and 

other persons subject to its jurisdiction. 

‘‘(b) COMPTROLLER OF THE CURRENCY.— 

‘‘(1) IN GENERAL.—The chief officer of the Office of the 

Comptroller of the Currency shall be known as the Comptroller 

of the Currency. The Comptroller of the Currency shall perform 

the duties of the Comptroller of the Currency under the general 

direction of the Secretary of the Treasury. The Secretary of 

the Treasury may not delay or prevent the issuance of any 

rule or the promulgation of any regulation by the Comptroller 

of the Currency, and may not intervene in any matter or 

proceeding before the Comptroller of the Currency (including 

agency enforcement actions), unless otherwise specifically provided by law. 

‘‘(2) ADDITIONAL AUTHORITY.—The Comptroller of the Currency shall have the same authority with respect to functions 

transferred to the Comptroller of the Currency under the 

Enhancing Financial Institution Safety and Soundness Act of 

2010 as was vested in the Director of the Office of Thrift 

Supervision on the transfer date, as defined in section 311 

of that Act.’’. 
H. R. 4173—149 

(b) SUPERVISION OF FEDERAL SAVINGS ASSOCIATIONS.—Chapter 

9 of title VII of the Revised Statutes of the United States (12 

U.S.C. 1 et seq.) is amended by inserting after section 327A (12 

U.S.C. 4a) the following: 

‘‘SEC. 327B. DEPUTY COMPTROLLER FOR THE SUPERVISION AND 

EXAMINATION OF FEDERAL SAVINGS ASSOCIATIONS. 

‘‘The Comptroller of the Currency shall designate a Deputy 

Comptroller, who shall be responsible for the supervision and examination of Federal savings associations.’’. 

(c) AMENDMENT TO SECTION 329.—Section 329 of the Revised 

Statutes of the United States (12 U.S.C. 11) is amended by inserting 

before the period at the end the following: ‘‘or any Federal savings 

association’’. 

(d) EFFECTIVE DATE.—This section, and the amendments made 

by this section, shall take effect on the transfer date. 

SEC. 315. FEDERAL INFORMATION POLICY. 

Section 3502(5) of title 44, United States Code, is amended 

by inserting ‘‘Office of the Comptroller of the Currency,’’ after 

‘‘the Securities and Exchange Commission,’’. 

SEC. 316. SAVINGS PROVISIONS. 

(a) OFFICE OF THRIFT SUPERVISION.— 

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Sections 312(b) and 313 shall not affect the validity 

of any right, duty, or obligation of the United States, the 

Director of the Office of Thrift Supervision, the Office of Thrift 

Supervision, or any other person, that existed on the day before 

the transfer date. 

(2) CONTINUATION OF SUITS.—This title shall not abate 

any action or proceeding commenced by or against the Director 

of the Office of Thrift Supervision or the Office of Thrift Supervision before the transfer date, except that— 

(A) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director 

of the Office of Thrift Supervision transferred to the Board 

of Governors by this title, the Board of Governors shall 

be substituted for the Office of Thrift Supervision or the 

Director of the Office of Thrift Supervision as a party 

to the action or proceeding on and after the transfer date; 

(B) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director 

of the Office of Thrift Supervision transferred to the Office 

of the Comptroller of the Currency or the Comptroller 

of the Currency by this title, the Office of the Comptroller 

of the Currency or the Comptroller of the Currency shall 

be substituted for the Office of Thrift Supervision or the 

Director of the Office of Thrift Supervision, as the case 

may be, as a party to the action or proceeding on and 

after the transfer date; and 

(C) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director 

of the Office of Thrift Supervision transferred to the Corporation by this title, the Corporation shall be substituted 

for the Office of Thrift Supervision or the Director of the 

Office of Thrift Supervision as a party to the action or 

proceeding on and after the transfer date. 
H. R. 4173—150 

(b) CONTINUATION OF EXISTING OTS ORDERS, RESOLUTIONS, 

DETERMINATIONS, AGREEMENTS, REGULATIONS, ETC.—All orders, 

resolutions, determinations, agreements, and regulations, 

interpretative rules, other interpretations, guidelines, procedures, 

and other advisory materials, that have been issued, made, prescribed, or allowed to become effective by the Office of Thrift Supervision or the Director of the Office of Thrift Supervision, or by 

a court of competent jurisdiction, in the performance of functions 

that are transferred by this title and that are in effect on the 

day before the transfer date, shall continue in effect according 

to the terms of such orders, resolutions, determinations, agreements, and regulations, interpretative rules, other interpretations, 

guidelines, procedures, and other advisory materials, and shall be 

enforceable by or against— 

(1) the Board of Governors, in the case of a function of 

the Office of Thrift Supervision or the Director of the Office 

of Thrift Supervision transferred to the Board of Governors, 

until modified, terminated, set aside, or superseded in accordance with applicable law by the Board of Governors, by any 

court of competent jurisdiction, or by operation of law; 

(2) the Office of the Comptroller of the Currency or the 

Comptroller of the Currency, in the case of a function of the 

Office of Thrift Supervision or the Director of the Office of 

Thrift Supervision transferred to the Office of the Comptroller 

of the Currency or the Comptroller of the Currency, respectively, until modified, terminated, set aside, or superseded in 

accordance with applicable law by the Office of the Comptroller 

of the Currency or the Comptroller of the Currency, by any 

court of competent jurisdiction, or by operation of law; and 

(3) the Corporation, in the case of a function of the Office 

of Thrift Supervision or the Director of the Office of Thrift 

Supervision transferred to the Corporation, until modified, 

terminated, set aside, or superseded in accordance with 

applicable law by the Corporation, by any court of competent 

jurisdiction, or by operation of law. 

(c) IDENTIFICATION OF REGULATIONS CONTINUED.— (1) BY THE BOARD OF GOVERNORS.—Not later than the 

transfer date, the Board of Governors shall— 

(A) identify the regulations continued under subsection 

(b) that will be enforced by the Board of Governors; and 

(B) publish a list of the regulations identified under 

subparagraph (A) in the Federal Register. 

(2) BY OFFICE OF THE COMPTROLLER OF THE CURRENCY.— 

Not later than the transfer date, the Office of the Comptroller 

of the Currency shall— 

(A) after consultation with the Corporation, identify 

the regulations continued under subsection (b) that will 

be enforced by the Office of the Comptroller of the Currency; and 

(B) publish a list of the regulations identified under 

subparagraph (A) in the Federal Register. 

(3) BY THE CORPORATION.—Not later than the transfer date, 

the Corporation shall— 

(A) after consultation with the Office of the Comptroller 

of the Currency, identify the regulations continued under 

subsection (b) that will be enforced by the Corporation; 

and 
H. R. 4173—151 

(B) publish a list of the regulations identified under 

subparagraph (A) in the Federal Register. 

(d) STATUS OF REGULATIONS PROPOSED OR NOT YET EFFECTIVE.— 

(1) PROPOSED REGULATIONS.—Any proposed regulation of 

the Office of Thrift Supervision, which the Office of Thrift 

Supervision in performing functions transferred by this title, 

has proposed before the transfer date but has not published 

as a final regulation before such date, shall be deemed to 

be a proposed regulation of the Office of the Comptroller of 

the Currency or the Board of Governors, as appropriate, 

according to the terms of the proposed regulation. 

(2) REGULATIONS NOT YET EFFECTIVE.—Any interim or final 

regulation of the Office of Thrift Supervision, which the Office 

of Thrift Supervision, in performing functions transferred by 

this title, has published before the transfer date but which 

has not become effective before that date, shall become effective 

as a regulation of the Office of the Comptroller of the Currency 

or the Board of Governors, as appropriate, according to the 

terms of the interim or final regulation, unless modified, terminated, set aside, or superseded in accordance with applicable 

law by the Office of the Comptroller of the Currency or the 

Board of Governors, as appropriate, by any court of competent 

jurisdiction, or by operation of law. 

SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING AGENCIES. 

On and after the transfer date, any reference in Federal law 

to the Director of the Office of Thrift Supervision or the Office 

of Thrift Supervision, in connection with any function of the Director 

of the Office of Thrift Supervision or the Office of Thrift Supervision 

transferred under section 312(b) or any other provision of this 

subtitle, shall be deemed to be a reference to the Comptroller 

of the Currency, the Office of the Comptroller of the Currency, 

the Chairperson of the Corporation, the Corporation, the Chairman 

of the Board of Governors, or the Board of Governors, as appropriate 

and consistent with the amendments made in subtitle E. 

SEC. 318. FUNDING. 

(a) COMPENSATION OF EXAMINERS.—Section 5240 of the Revised 

Statutes of the United States (12 U.S.C. 481 et seq.) is amended— 

(1) in the second undesignated paragraph (12 U.S.C. 481), 

in the fourth sentence, by striking ‘‘without regard to the provisions of other laws applicable to officers or employees of the 

United States’’ and inserting the following: ‘‘set and adjusted 

subject to chapter 71 of title 5, United States Code, and without 

regard to the provisions of other laws applicable to officers 

or employees of the United States’’; and 

(2) in the third undesignated paragraph (12 U.S.C. 482), 

in the first sentence, by striking ‘‘shall fix’’ and inserting ‘‘shall, 

subject to chapter 71 of title 5, United States Code, fix’’. 

(b) FUNDING OF OFFICE OF THE COMPTROLLER OF THE CURRENCY.—Chapter 4 of title LXII of the Revised Statutes is amended 

by inserting after section 5240 (12 U.S.C. 481, 482) the following: 

‘‘SEC. 5240A. The Comptroller of the Currency may collect 

an assessment, fee, or other charge from any entity described in 

section 3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
H. R. 4173—152 

1813(q)(1)), as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency. In establishing the amount of an assessment, fee, or charge collected from an entity under this section, 

the Comptroller of the Currency may take into account the nature 

and scope of the activities of the entity, the amount and type 

of assets that the entity holds, the financial and managerial condition of the entity, and any other factor, as the Comptroller of 

the Currency determines is appropriate. Funds derived from any 

assessment, fee, or charge collected or payment made pursuant 

to this section may be deposited by the Comptroller of the Currency 

in accordance with the provisions of section 5234. Such funds shall 

not be construed to be Government funds or appropriated monies, 

and shall not be subject to apportionment for purposes of chapter 

15 of title 31, United States Code, or any other provision of law. 

The authority of the Comptroller of the Currency under this section 

shall be in addition to the authority under section 5240. 

‘‘The Comptroller of the Currency shall have sole authority 

to determine the manner in which the obligations of the Office 

of the Comptroller of the Currency shall be incurred and its 

disbursements and expenses allowed and paid, in accordance with 

this section, except as provided in chapter 71 of title 5, United 

States Code (with respect to compensation).’’. 

(c) FUNDING OF BOARD OF GOVERNORS.—Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by adding at the 

end the following: 

‘‘(s) ASSESSMENTS, FEES, AND OTHER CHARGES FOR CERTAIN

COMPANIES.— 

‘‘(1) IN GENERAL.—The Board shall collect a total amount 

of assessments, fees, or other charges from the companies 

described in paragraph (2) that is equal to the total expenses 

the Board estimates are necessary or appropriate to carry out 

the supervisory and regulatory responsibilities of the Board 

with respect to such companies. 

‘‘(2) COMPANIES.—The companies described in this paragraph are— 

‘‘(A) all bank holding companies having total consolidated assets of $50,000,000,000 or more; 

‘‘(B) all savings and loan holding companies having 

total consolidated assets of $50,000,000,000 or more; and 

‘‘(C) all nonbank financial companies supervised by 

the Board under section 113 of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act.’’. 

(d) CORPORATION EXAMINATION FEES.—Section 10(e) of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by 

striking paragraph (1) and inserting the following: 

‘‘(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY

INSTITUTIONS.—The cost of conducting any regular examination 

or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) or of any entity described in section 

3(q)(2) may be assessed by the Corporation against the institution or entity to meet the expenses of the Corporation in carrying out such examinations.’’. 

(e) EFFECTIVE DATE.—This section, and the amendments made 

by this section, shall take effect on the transfer date. 
H. R. 4173—153 

SEC. 319. CONTRACTING AND LEASING AUTHORITY. 

Notwithstanding the Federal Property and Administrative 

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

of law (except the full and open competition requirements of the 

Competition in Contracting Act), the Office of the Comptroller of 

the Currency may— 

(1) enter into and perform contracts, execute instruments, 

and acquire real property (or property interest) as the Comptroller deems necessary to carry out the duties and responsibilities of the Office of the Comptroller of the Currency; and 

(2) hold, maintain, sell, lease, or otherwise dispose of the 

property (or property interest) acquired under paragraph (1). 

Subtitle B—Transitional Provisions 

SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY OF 

THE OFFICE OF THRIFT SUPERVISION. 

(a) IN GENERAL.—Before the transfer date, the Office of the 

Comptroller of the Currency, the Corporation, and the Board of 

Governors shall— 

(1) consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Office 

of the Comptroller of the Currency, the Corporation, and the 

Board of Governors in accordance with this title; 

(2) determine jointly, from time to time— 

(A) the amount of funds necessary to pay any expenses 

associated with the transfer of functions (including 

expenses for personnel, property, and administrative services) during the period beginning on the date of enactment 

of this Act and ending on the transfer date; 

(B) which personnel are appropriate to facilitate the 

orderly transfer of functions by this title; and 

(C) what property and administrative services are necessary to support the Office of the Comptroller of the 

Currency, the Corporation, and the Board of Governors 

during the period beginning on the date of enactment of 

this Act and ending on the transfer date; and 

(3) take such actions as may be necessary to provide for 

the orderly implementation of this title. 

(b) AGENCY CONSULTATION.—When requested jointly by the 

Office of the Comptroller of the Currency, the Corporation, and 

the Board of Governors to do so before the transfer date, the 

Office of Thrift Supervision shall— 

(1) pay to the Office of the Comptroller of the Currency, 

the Corporation, or the Board of Governors, as applicable, from 

funds obtained by the Office of Thrift Supervision through 

assessments, fees, or other charges that the Office of Thrift 

Supervision is authorized by law to impose, such amounts 

as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under subsection (a); 

(2) detail to the Office of the Comptroller of the Currency, 

the Corporation, or the Board of Governors, as applicable, such 

personnel as the Office of the Comptroller of the Currency, 

the Corporation, and the Board of Governors jointly determine 

to be appropriate under subsection (a); and 
H. R. 4173—154 

(3) make available to the Office of the Comptroller of the 

Currency, the Corporation, or the Board of Governors, as 

applicable, such property and provide to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such administrative services as the Office 

of the Comptroller of the Currency, the Corporation, and the 

Board of Governors jointly determine to be necessary under 

subsection (a). 

(c) NOTICE REQUIRED.—The Office of the Comptroller of the 

Currency, the Corporation, and the Board of Governors shall jointly 

give the Office of Thrift Supervision reasonable prior notice of 

any request that the Office of the Comptroller of the Currency, 

the Corporation, and the Board of Governors jointly intend to make 

under subsection (b). 

SEC. 322. TRANSFER OF EMPLOYEES. 

(a) IN GENERAL.— 

(1) OFFICE OF THRIFT SUPERVISION EMPLOYEES.— 

(A) IN GENERAL.—Except as provided in section 1064, 

all employees of the Office of Thrift Supervision shall be 

transferred to the Office of the Comptroller of the Currency 

or the Corporation for employment in accordance with this 

section. 

(B) ALLOCATING EMPLOYEES FOR TRANSFER TO

RECEIVING AGENCIES.—The Director of the Office of Thrift 

Supervision, the Comptroller of the Currency, and the 

Chairperson of the Corporation shall— 

(i) jointly determine the number of employees of 

the Office of Thrift Supervision necessary to perform 

or support the functions that are transferred to the 

Office of the Comptroller of the Currency or the Corporation by this title; and 

(ii) consistent with the determination under clause 

(i), jointly identify employees of the Office of Thrift 

Supervision for transfer to the Office of the Comptroller 

of the Currency or the Corporation. 

(2) EMPLOYEES TRANSFERRED; SERVICE PERIODS CREDITED.— For purposes of this section, periods of service with a Federal 

home loan bank, a joint office of Federal home loan banks, 

or a Federal reserve bank shall be credited as periods of service 

with a Federal agency. 

(3) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE TRANSFERRED.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), any appointment authority of the Office of Thrift 

Supervision under Federal law that relates to the functions 

transferred under section 312, including the regulations 

of the Office of Personnel Management, for filling the positions of employees in the excepted service shall be transferred to the Comptroller of the Currency or the Chairperson of the Corporation, as appropriate. 

(B) DECLINING TRANSFERS ALLOWED.—The Comptroller 

of the Currency or the Chairperson of the Corporation 

may decline to accept a transfer of authority under 

subparagraph (A) (and the employees appointed under that 

authority) to the extent that such authority relates to positions excepted from the competitive service because of their 
H. R. 4173—155 

confidential, policy-making, policy-determining, or policyadvocating character. 

(4) ADDITIONAL APPOINTMENT AUTHORITY.—Notwithstanding any other provision of law, the Office of the Comptroller of the Currency and the Corporation may appoint transferred employees to positions in the Office of the Comptroller 

of the Currency or the Corporation, respectively. 

(b) TIMING OF TRANSFERS AND POSITION ASSIGNMENTS.—Each 

employee to be transferred under subsection (a)(1) shall— 

(1) be transferred not later than 90 days after the transfer 

date; and 

(2) receive notice of the position assignment of the employee 

not later than 120 days after the effective date of the transfer 

of the employee. 

(c) TRANSFER OF FUNCTIONS.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

law, the transfer of employees under this subtitle shall be 

deemed a transfer of functions for the purpose of section 3503 

of title 5, United States Code. 

(2) PRIORITY.—If any provision of this subtitle conflicts 

with any protection provided to a transferred employee under 

section 3503 of title 5, United States Code, the provisions 

of this subtitle shall control. 

(d) EMPLOYEE STATUS AND ELIGIBILITY.—The transfer of functions and employees under this subtitle, and the abolishment of 

the Office of Thrift Supervision under section 313, shall not affect 

the status of the transferred employees as employees of an agency 

of the United States under any provision of law. 

(e) EQUAL STATUS AND TENURE POSITIONS.— 

(1) STATUS AND TENURE.—Each transferred employee from 

the Office of Thrift Supervision shall be placed in a position 

at the Office of the Comptroller of the Currency or the Corporation with the same status and tenure as the transferred 

employee held on the day before the date on which the employee 

was transferred. 

(2) FUNCTIONS.—To the extent practicable, each transferred 

employee shall be placed in a position at the Office of the 

Comptroller of the Currency or the Corporation, as applicable, 

responsible for the same functions and duties as the transferred 

employee had on the day before the date on which the employee 

was transferred, in accordance with the expertise and preferences of the transferred employee. 

(f) NO ADDITIONAL CERTIFICATION REQUIREMENTS.—An examiner who is a transferred employee shall not be subject to any 

additional certification requirements before being placed in a comparable position at the Office of the Comptroller of the Currency 

or the Corporation, if the examiner carries out examinations of 

the same type of institutions as an employee of the Office of the 

Comptroller of the Currency or the Corporation as the employee 

was responsible for carrying out before the date on which the 

employee was transferred. 

(g) PERSONNEL ACTIONS LIMITED.— 

(1) PROTECTION.— 

(A) IN GENERAL.—Except as provided in paragraph (2), 

each affected employee shall not, during the 30-month 

period beginning on the transfer date, be involuntarily 
H. R. 4173—156 

separated, or involuntarily reassigned outside his or her 

locality pay area. 

(B) AFFECTED EMPLOYEES.—For purposes of this paragraph, the term ‘‘affected employee’’ means— 

(i) an employee transferred from the Office of 

Thrift Supervision holding a permanent position on 

the day before the transfer date; and 

(ii) an employee of the Office of the Comptroller 

of the Currency or the Corporation holding a permanent position on the day before the transfer date. 

(2) EXCEPTIONS.—Paragraph (1) does not limit the right 

of the Office of the Comptroller of the Currency or the Corporation to— 

(A) separate an employee for cause or for unacceptable 

performance; 

(B) terminate an appointment to a position excepted 

from the competitive service because of its confidential 

policy-making, policy-determining, or policy-advocating 

character; or 

(C) reassign an employee outside such employee’s 

locality pay area when the Office of the Comptroller of 

the Currency or the Corporation determines that the 

reassignment is necessary for the efficient operation of 

the agency. 

(h) PAY.— (1) 30-MONTH PROTECTION.—Except as provided in paragraph (2), during the 30-month period beginning on the date 

on which the employee was transferred under this subtitle, 

a transferred employee shall be paid at a rate that is not 

less than the basic rate of pay, including any geographic differential, that the transferred employee received during the 

pay period immediately preceding the date on which the 

employee was transferred. Notwithstanding the preceding sentence, if the employee was receiving a higher rate of basic 

pay on a temporary basis (because of a temporary assignment, 

temporary promotion, or other temporary action) immediately 

before the transfer, the Agency may reduce the rate of basic 

pay on the date the rate would have been reduced but for 

the transfer, and the protected rate for the remainder of the 

30-month period will be the reduced rate that would have 

applied but for the transfer. 

(2) EXCEPTIONS.—The Comptroller of the Currency or the 

Corporation may reduce the rate of basic pay of a transferred 

employee— 

(A) for cause, including for unacceptable performance; 

or 

(B) with the consent of the transferred employee. 

(3) PROTECTION ONLY WHILE EMPLOYED.—This subsection 

shall apply to a transferred employee only during the period 

that the transferred employee remains employed by Office of 

the Comptroller of the Currency or the Corporation. 

(4) PAY INCREASES PERMITTED.—Nothing in this subsection 

shall limit the authority of the Comptroller of the Currency 

or the Chairperson of the Corporation to increase the pay 

of a transferred employee. 

(i) BENEFITS.— 

(1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES.— 
H. R. 4173—157 

(A) IN GENERAL.— 

(i) CONTINUATION OF EXISTING RETIREMENT PLAN.— 

Each transferred employee shall remain enrolled in 

the retirement plan of the transferred employee, for 

as long as the transferred employee is employed by 

the Office of the Comptroller of the Currency or the 

Corporation. 

(ii) EMPLOYER’S CONTRIBUTION.—The Comptroller 

of the Currency or the Chairperson of the Corporation, 

as appropriate, shall pay any employer contributions 

to the existing retirement plan of each transferred 

employee, as required under each such existing retirement plan. 

(B) DEFINITION.—In this paragraph, the term ‘‘existing 

retirement plan’’ means, with respect to a transferred 

employee, the retirement plan (including the Financial 

Institutions Retirement Fund), and any associated thrift 

savings plan, of the agency from which the employee was 

transferred in which the employee was enrolled on the 

day before the date on which the employee was transferred. 

(2) BENEFITS OTHER THAN RETIREMENT BENEFITS.— 

(A) DURING FIRST YEAR.— 

(i) EXISTING PLANS CONTINUE.—During the 1-year 

period following the transfer date, each transferred 

employee may retain membership in any employee benefit program (other than a retirement benefit program) 

of the agency from which the employee was transferred 

under this title, including any dental, vision, long term 

care, or life insurance program to which the employee 

belonged on the day before the transfer date. 

(ii) EMPLOYER’S CONTRIBUTION.—The Office of the 

Comptroller of the Currency or the Corporation, as 

appropriate, shall pay any employer cost required to 

extend coverage in the benefit program to the transferred employee as required under that program or 

negotiated agreements. 

(B) DENTAL, VISION, OR LIFE INSURANCE AFTER FIRST

YEAR.—If, after the 1-year period beginning on the transfer 

date, the Office of the Comptroller of the Currency or 

the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as the case 

may be, will not continue to participate in any dental, 

vision, or life insurance program of an agency from which 

an employee was transferred, a transferred employee who 

is a member of the program may, before the decision takes 

effect and without regard to any regularly scheduled open 

season, elect to enroll in— 

(i) the enhanced dental benefits program established under chapter 89A of title 5, United States 

Code; 

(ii) the enhanced vision benefits established under 

chapter 89B of title 5, United States Code; and 

(iii) the Federal Employees’ Group Life Insurance 

Program established under chapter 87 of title 5, United 

States Code, without regard to any requirement of 

insurability. 
H. R. 4173—158 

(C) LONG TERM CARE INSURANCE AFTER 1ST YEAR.— 

If, after the 1-year period beginning on the transfer date, 

the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of 

the Currency or the Corporation, as appropriate, will not 

continue to participate in any long term care insurance 

program of an agency from which an employee transferred, 

a transferred employee who is a member of such a program 

may, before the decision takes effect, elect to apply for 

coverage under the Federal Long Term Care Insurance 

Program established under chapter 90 of title 5, United 

States Code, under the underwriting requirements 

applicable to a new active workforce member, as described 

in part 875 of title 5, Code of Federal Regulations (or 

any successor thereto). 

(D) CONTRIBUTION OF TRANSFERRED EMPLOYEE.— 

(i) IN GENERAL.—Subject to clause (ii), a transferred employee who is enrolled in a plan under the 

Federal Employees Health Benefits Program shall pay 

any employee contribution required under the plan. 

(ii) COST DIFFERENTIAL.—The Office of the Comptroller of the Currency or the Corporation, as 

applicable, shall pay any difference in cost between 

the employee contribution required under the plan provided to transferred employees by the agency from 

which the employee transferred on the date of enactment of this Act and the plan provided by the Office 

of the Comptroller of the Currency or the Corporation, 

as the case may be, under this section. 

(iii) FUNDS TRANSFER.—The Office of the Comptroller of the Currency or the Corporation, as the case 

may be, shall transfer to the Employees Health Benefits Fund established under section 8909 of title 5, 

United States Code, an amount determined by the 

Director of the Office of Personnel Management, after 

consultation with the Comptroller of the Currency or 

the Chairperson of the Corporation, as the case may 

be, and the Office of Management and Budget, to be 

necessary to reimburse the Fund for the cost to the 

Fund of providing any benefits under this subparagraph that are not otherwise paid for by a transferred 

employee under clause (i). 

(E) SPECIAL PROVISIONS TO ENSURE CONTINUATION OF

LIFE INSURANCE BENEFITS.— 

(i) IN GENERAL.—An annuitant, as defined in section 8901 of title 5, United States Code, who is enrolled 

in a life insurance plan administered by an agency 

from which employees are transferred under this title 

on the day before the transfer date shall be eligible 

for coverage by a life insurance plan under sections 

8706(b), 8714a, 8714b, or 8714c of title 5, United States 

Code, or by a life insurance plan established by the 

Office of the Comptroller of the Currency or the Corporation, as applicable, without regard to any regularly 

scheduled open season or any requirement of insurability. 

(ii) CONTRIBUTION OF TRANSFERRED EMPLOYEE.— 
H. R. 4173—159 

(I) IN GENERAL.—Subject to subclause (II), a 

transferred employee enrolled in a life insurance 

plan under this subparagraph shall pay any 

employee contribution required by the plan. 

(II) COST DIFFERENTIAL.—The Office of the 

Comptroller of the Currency or the Corporation, 

as the case may be, shall pay any difference in 

cost between the benefits provided by the agency 

from which the employee transferred on the date 

of enactment of this Act and the benefits provided 

under this section. 

(III) FUNDS TRANSFER.—The Office of the 

Comptroller of the Currency or the Corporation, 

as the case may be, shall transfer to the Federal 

Employees’ Group Life Insurance Fund established 

under section 8714 of title 5, United States Code, 

an amount determined by the Director of the Office 

of Personnel Management, after consultation with 

the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be, 

and the Office of Management and Budget, to be 

necessary to reimburse the Federal Employees’ 

Group Life Insurance Fund for the cost to the 

Federal Employees’ Group Life Insurance Fund 

of providing benefits under this subparagraph not 

otherwise paid for by a transferred employee under 

subclause (I). 

(IV) CREDIT FOR TIME ENROLLED IN OTHER

PLANS.—For any transferred employee, enrollment 

in a life insurance plan administered by the agency 

from which the employee transferred, immediately 

before enrollment in a life insurance plan under 

chapter 87 of title 5, United States Code, shall 

be considered as enrollment in a life insurance 

plan under that chapter for purposes of section 

8706(b)(1)(A) of title 5, United States Code. 

(j) INCORPORATION INTO AGENCY PAY SYSTEM.—Not later than 

30 months after the transfer date, the Comptroller of the Currency 

and the Chairperson of the Corporation shall place each transferred 

employee into the established pay system and structure of the 

appropriate employing agency. 

(k) EQUITABLE TREATMENT.—In administering the provisions 

of this section, the Comptroller of the Currency and the Chairperson 

of the Corporation— 

(1) may not take any action that would unfairly disadvantage a transferred employee relative to any other employee 

of the Office of the Comptroller of the Currency or the Corporation on the basis of prior employment by the Office of Thrift 

Supervision; 

(2) may take such action as is appropriate in an individual 

case to ensure that a transferred employee receives equitable 

treatment, with respect to the status, tenure, pay, benefits 

(other than benefits under programs administered by the Office 

of Personnel Management), and accrued leave or vacation time 

for prior periods of service with any Federal agency of the 

transferred employee; 
H. R. 4173—160 

(3) shall, jointly with the Director of the Office of Thrift 

Supervision, develop and adopt procedures and safeguards 

designed to ensure that the requirements of this subsection 

are met; and 

(4) shall conduct a study detailing the position assignments 

of all employees transferred pursuant to subsection (a), 

describing the procedures and safeguards adopted pursuant 

to paragraph (3), and demonstrating that the requirements 

of this subsection have been met; and shall, not later than 

365 days after the transfer date, submit a copy of such study 

to Congress. 

(l) REORGANIZATION.— 

(1) IN GENERAL.—If the Comptroller of the Currency or 

the Chairperson of the Corporation determines, during the 

2-year period beginning 1 year after the transfer date, that 

a reorganization of the staff of the Office of the Comptroller 

of the Currency or the Corporation, respectively, is required, 

the reorganization shall be deemed a ‘‘major reorganization’’ 

for purposes of affording affected employees retirement under 

section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States 

Code. 

(2) SERVICE CREDIT.—For purposes of this subsection, 

periods of service with a Federal home loan bank or a joint 

office of Federal home loan banks shall be credited as periods 

of service with a Federal agency. 

SEC. 323. PROPERTY TRANSFERRED. 

(a) PROPERTY DEFINED.—For purposes of this section, the term 

‘‘property’’ includes all real property (including leaseholds) and all 

personal property, including computers, furniture, fixtures, equipment, books, accounts, records, reports, files, memoranda, paper, 

reports of examination, work papers, and correspondence related 

to such reports, and any other information or materials. 

(b) PROPERTY OF THE OFFICE OF THRIFT SUPERVISION.— (1) IN GENERAL.—No later than 90 days after the transfer 

date, all property of the Office of Thrift Supervision (other 

than property described under paragraph (b)(2)) that the Comptroller of the Currency and the Chairperson of the Corporation 

jointly determine is used, on the day before the transfer date, 

to perform or support the functions of the Office of Thrift 

Supervision transferred to the Office of the Comptroller of 

the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or 

the Corporation in a manner consistent with the transfer of 

employees under this subtitle. 

(2) PERSONAL PROPERTY.—All books, accounts, records, 

reports, files, memoranda, papers, documents, reports of examination, work papers, and correspondence of the Office of Thrift 

Supervision that the Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board 

of Governors jointly determine is used, on the day before the 

transfer date, to perform or support the functions of the Office 

of Thrift Supervision transferred to the Board of Governors 

under this title shall be transferred to the Board of Governors 

in a manner consistent with the purposes of this title. 

(c) CONTRACTS RELATED TO PROPERTY TRANSFERRED.—Each 

contract, agreement, lease, license, permit, and similar arrangement 
H. R. 4173—161 

relating to property transferred to the Office of the Comptroller 

of the Currency or the Corporation by this section shall be transferred to the Office of the Comptroller of the Currency or the 

Corporation, as appropriate, together with the property to which 

it relates. 

(d) PRESERVATION OF PROPERTY.—Property identified for 

transfer under this section shall not be altered, destroyed, or deleted 

before transfer under this section. 

SEC. 324. FUNDS TRANSFERRED. 

The funds that, on the day before the transfer date, the Director 

of the Office of Thrift Supervision (in consultation with the Comptroller of the Currency, the Chairperson of the Corporation, and 

the Chairman of the Board of Governors) determines are not necessary to dispose of the affairs of the Office of Thrift Supervision 

under section 325 and are available to the Office of Thrift Supervision to pay the expenses of the Office of Thrift Supervision— 

(1) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(2)(B), shall be transferred to the Office of the Comptroller of the Currency on 

the transfer date; 

(2) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(2)(C), shall be transferred to the Corporation on the transfer date; and 

(3) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(A), shall be transferred to the Board of Governors on the transfer date. 

SEC. 325. DISPOSITION OF AFFAIRS. 

(a) AUTHORITY OF DIRECTOR.—During the 90-day period beginning on the transfer date, the Director of the Office of Thrift 

Supervision— 

(1) shall, solely for the purpose of winding up the affairs 

of the Office of Thrift Supervision relating to any function 

transferred to the Office of the Comptroller of the Currency, 

the Corporation, or the Board of Governors under this title— 

(A) manage the employees of the Office of Thrift Supervision who have not yet been transferred and provide for 

the payment of the compensation and benefits of the 

employees that accrue before the date on which the 

employees are transferred under this title; and 

(B) manage any property of the Office of Thrift Supervision, until the date on which the property is transferred 

under section 323; and 

(2) may take any other action necessary to wind up the 

affairs of the Office of Thrift Supervision. 

(b) STATUS OF DIRECTOR.— 

(1) IN GENERAL.—Notwithstanding the transfer of functions 

under this subtitle, during the 90-day period beginning on 

the transfer date, the Director of the Office of Thrift Supervision 

shall retain and may exercise any authority vested in the 

Director of the Office of Thrift Supervision on the day before 

the transfer date, only to the extent necessary— 

(A) to wind up the Office of Thrift Supervision; and 

(B) to carry out the transfer under this subtitle during 

such 90-day period. 
H. R. 4173—162 

(2) OTHER PROVISIONS.—For purposes of paragraph (1), the 

Director of the Office of Thrift Supervision shall, during the 

90-day period beginning on the transfer date, continue to be— 

(A) treated as an officer of the United States; and 

(B) entitled to receive compensation at the same annual 

rate of basic pay that the Director of the Office of Thrift 

Supervision received on the day before the transfer date. 

SEC. 326. CONTINUATION OF SERVICES. 

Any agency, department, or other instrumentality of the United 

States, and any successor to any such agency, department, or 

instrumentality, that was, before the transfer date, providing support services to the Office of Thrift Supervision in connection with 

functions transferred to the Office of the Comptroller of the Currency, the Corporation or the Board of Governors under this title, 

shall— 

(1) continue to provide such services, subject to reimbursement by the Office of the Comptroller of the Currency, the 

Corporation, or the Board of Governors, until the transfer of 

functions under this title is complete; and 

(2) consult with the Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of 

Governors, as appropriate, to coordinate and facilitate a prompt 

and orderly transition. 

SEC. 327. IMPLEMENTATION PLAN AND REPORTS. 

(a) PLAN SUBMISSION.—Within 180 days of the enactment of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act, 

the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, shall 

jointly submit a plan to the Committee on Banking, Housing, and 

Urban Affairs of the Senate, the Committee on Financial Services 

of the House of Representatives, and the Inspectors General of 

the Department of the Treasury, the Corporation, and the Board 

of Governors detailing the steps the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the 

Office of Thrift Supervision will take to implement the provisions 

of sections 301 through 326, and the provisions of the amendments 

made by such sections. 

(b) INSPECTORS GENERAL REVIEW OF THE PLAN.—Within 60 

days of receiving the plan required under subsection (a), the Inspectors General of the Department of the Treasury, the Corporation, 

and the Board of Governors shall jointly provide a written report 

to the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision and 

shall submit a copy to the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives detailing whether the plan 

conforms with the provisions of sections 301 through 326, and 

the provisions of the amendments made by such sections, 

including— 

(1) whether the plan sufficiently takes into consideration 

the orderly transfer of personnel; 

(2) whether the plan describes procedures and safeguards 

to ensure that the Office of Thrift Supervision employees are 

not unfairly disadvantaged relative to employees of the Office 

of the Comptroller of the Currency and the Corporation; 
H. R. 4173—163 

(3) whether the plan sufficiently takes into consideration 

the orderly transfer of authority and responsibilities; 

(4) whether the plan sufficiently takes into consideration 

the effective transfer of funds; 

(5) whether the plan sufficiently takes in consideration 

the orderly transfer of property; and 

(6) any additional recommendations for an orderly and 

effective process. 

(c) IMPLEMENTATION REPORTS.—Not later than 6 months after 

the date on which the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services 

of the House of Representatives receives the report required under 

subsection (b), and every 6 months thereafter until all aspects 

of the plan have been implemented, the Inspectors General of 

the Department of the Treasury, the Corporation, and the Board 

of Governors shall jointly provide a written report on the status 

of the implementation of the plan to the Board of Governors, the 

Corporation, the Office of the Comptroller of the Currency, and 

the Office of Thrift Supervision and shall submit a copy to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives. 

Subtitle C—Federal Deposit Insurance 

Corporation 

SEC. 331. DEPOSIT INSURANCE REFORMS. 

(a) SIZE DISTINCTIONS.—Section 7(b)(2) of the Federal Deposit 

Insurance Act (12 U.S.C. 1817(b)(2)) is amended— 

(1) by striking subparagraph (D); and 

(2) by redesignating subparagraph (C) as subparagraph 

(D). 

(b) ASSESSMENT BASE.—The Corporation shall amend the regulations issued by the Corporation under section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) to define the 

term ‘‘assessment base’’ with respect to an insured depository 

institution for purposes of that section 7(b)(2), as an amount equal 

to— 

(1) the average consolidated total assets of the insured 

depository institution during the assessment period; minus 

(2) the sum of— 

(A) the average tangible equity of the insured depository institution during the assessment period; and 

(B) in the case of an insured depository institution 

that is a custodial bank (as defined by the Corporation, 

based on factors including the percentage of total revenues 

generated by custodial businesses and the level of assets 

under custody) or a banker’s bank (as that term is used 

in section 5136 of the Revised Statutes (12 U.S.C. 24)), 

an amount that the Corporation determines is necessary 

to establish assessments consistent with the definition 

under section 7(b)(1) of the Federal Deposit Insurance Act 

(12 U.S.C. 1817(b)(1)) for a custodial bank or a banker’s 

bank. 
H. R. 4173—164 

SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS. 

Section 7(e) of the Federal Deposit Insurance Act is amended— 

(1) in paragraph (2)— 

(A) by amending subparagraph (B) to read as follows: 

‘‘(B) LIMITATION.—The Board of Directors may, in its 

sole discretion, suspend or limit the declaration of payment 

of dividends under subparagraph (A).’’; 

(B) by amending subparagraph (C) to read as follows: 

‘‘(C) NOTICE AND OPPORTUNITY FOR COMMENT.—The 

Corporation shall prescribe, by regulation, after notice and 

opportunity for comment, the method for the declaration, 

calculation, distribution, and payment of dividends under 

this paragraph’’; and 

(C) by striking subparagraphs (D) through (G); and 

(2) in paragraph (4)(A) by striking ‘‘paragraphs (2)(D) and’’ 

and inserting ‘‘paragraphs (2) and’’. 

SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE PURPOSES. 

(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act 

is amended by striking ‘‘agreement’’ and inserting ‘‘consultation’’. 

(b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act 

is amended— 

(1) in clause (i), by striking ‘‘such as’’ and inserting 

‘‘including’’; and 

(2) in clause (iii), by striking ‘‘Corporation’’ and inserting 

‘‘Corporation, except as provided in section 7(a)(2)(B)’’. 

SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT 

NEW ASSESSMENT BASE. 

(a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act 

is amended to read as follows: 

‘‘(B) MINIMUM RESERVE RATIO.—The reserve ratio designated by the Board of Directors for any year may not 

be less than 1.35 percent of estimated insured deposits, 

or the comparable percentage of the assessment base set 

forth in paragraph (2)(C).’’. 

(b) Section 3(y)(3) of the Federal Deposit Insurance Act is 

amended by inserting ‘‘, or such comparable percentage of the 

assessment base set forth in section 7(b)(2)(C)’’ before the period. 

(c) For a period of not less than 5 years after the date of 

the enactment of this title, the Federal Deposit Insurance Corporation shall make available to the public the reserve ratio and the 

designated reserve ratio using both estimated insured deposits and 

the assessment base under section 7(b)(2)(C) of the Federal Deposit 

Insurance Act. 

(d) RESERVE RATIO.—Notwithstanding the timing requirements 

of section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act, the 

Corporation shall take such steps as may be necessary for the 

reserve ratio of the Deposit Insurance Fund to reach 1.35 percent 

of estimated insured deposits by September 30, 2020. 

(e) OFFSET.—In setting the assessments necessary to meet the 

requirements of subsection (d), the Corporation shall offset the 

effect of subsection (d) on insured depository institutions with total 

consolidated assets of less than $10,000,000,000. 
H. R. 4173—165 

SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE. 

(a) PERMANENT INCREASE IN DEPOSIT INSURANCE.—Section 

11(a)(1)(E) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(a)(1)(E)) is amended— 

(1) by striking ‘‘$100,000’’ and inserting ‘‘$250,000’’; and 

(2) by adding at the end the following new sentences: 

‘‘Notwithstanding any other provision of law, the increase in 

the standard maximum deposit insurance amount to $250,000 

shall apply to depositors in any institution for which the Corporation was appointed as receiver or conservator on or after 

January 1, 2008, and before October 3, 2008. The Corporation 

shall take such actions as are necessary to carry out the requirements of this section with respect to such depositors, without 

regard to any time limitations under this Act. In implementing 

this and the preceding 2 sentences, any payment on a deposit 

claim made by the Corporation as receiver or conservator to 

a depositor above the standard maximum deposit insurance 

amount in effect at the time of the appointment of the Corporation as receiver or conservator shall be deemed to be part 

of the net amount due to the depositor under subparagraph 

(B).’’ 

(b) PERMANENT INCREASE IN SHARE INSURANCE.—Section 

207(k)(5) of the Federal Credit Union Act (12 U.S.C. 1787(k)(5)) 

is amended by striking ‘‘$100,000’’ and inserting ‘‘$250,000’’. 

SEC. 336. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION. 

(a) IN GENERAL.—Section 2 of the Federal Deposit Insurance 

Act (12 U.S.C. 1812) is amended— 

(1) in subsection (a)(1)(B), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Director of the Consumer 

Financial Protection Bureau’’; 

(2) by amending subsection (d)(2) to read as follows: 

‘‘(2) ACTING OFFICIALS MAY SERVE.—In the event of a 

vacancy in the office of the Comptroller of the Currency or 

the office of Director of the Consumer Financial Protection 

Bureau and pending the appointment of a successor, or during 

the absence or disability of the Comptroller of the Currency 

or the Director of the Consumer Financial Protection Bureau, 

the acting Comptroller of the Currency or the acting Director 

of the Consumer Financial Protection Bureau, as the case may 

be, shall be a member of the Board of Directors in the place 

of the Comptroller or Director.’’; and 

(3) in subsection (f)(2), by striking ‘‘Office of Thrift Supervision’’ and inserting ‘‘Consumer Financial Protection Bureau’’. 

(b) EFFECTIVE DATE.—This section, and the amendments made 

by this section, shall take effect on the transfer date. 

Subtitle D—Other Matters 

SEC. 341. BRANCHING. 

Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 

1811 et seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 

1841 et seq.), or any other provision of Federal or State law, 

a savings association that becomes a bank may— 
H. R. 4173—166 

(1) continue to operate any branch or agency that the 

savings association operated immediately before the savings 

association became a bank; and 

(2) establish, acquire, and operate additional branches and 

agencies at any location within any State in which the savings 

association operated a branch immediately before the savings 

association became a bank, if the law of the State in which 

the branch is located, or is to be located, would permit establishment of the branch if the bank were a State bank chartered 

by such State. 

SEC. 342. OFFICE OF MINORITY AND WOMEN INCLUSION. 

(a) OFFICE OF MINORITY AND WOMEN INCLUSION.— (1) ESTABLISHMENT.— (A) IN GENERAL.—Except as provided in subparagraph 

(B), not later than 6 months after the date of enactment 

of this Act, each agency shall establish an Office of Minority 

and Women Inclusion that shall be responsible for all matters of the agency relating to diversity in management, 

employment, and business activities. 

(B) BUREAU.—The Bureau shall establish an Office 

of Minority and Women Inclusion not later than 6 months 

after the designated transfer date established under section 

1062. 

(2) TRANSFER OF RESPONSIBILITIES.—Each agency that, on 

the day before the date of enactment of this Act, assigned 

the responsibilities described in paragraph (1) (or comparable 

responsibilities) to another office of the agency shall ensure 

that such responsibilities are transferred to the Office. 

(3) DUTIES WITH RESPECT TO CIVIL RIGHTS LAWS.—The 

responsibilities described in paragraph (1) do not include 

enforcement of statutes, regulations, or executive orders pertaining to civil rights, except each Director shall coordinate 

with the agency administrator, or the designee of the agency 

administrator, regarding the design and implementation of any 

remedies resulting from violations of such statutes, regulations, 

or executive orders. 

(b) DIRECTOR.— (1) IN GENERAL.—The Director of each Office shall be 

appointed by, and shall report to, the agency administrator. 

The position of Director shall be a career reserved position 

in the Senior Executive Service, as that position is defined 

in section 3132 of title 5, United States Code, or an equivalent 

designation. 

(2) DUTIES.—Each Director shall develop standards for— 

(A) equal employment opportunity and the racial, 

ethnic, and gender diversity of the workforce and senior 

management of the agency; 

(B) increased participation of minority-owned and 

women-owned businesses in the programs and contracts 

of the agency, including standards for coordinating technical assistance to such businesses; and 

(C) assessing the diversity policies and practices of 

entities regulated by the agency. 

(3) OTHER DUTIES.—Each Director shall advise the agency 

administrator on the impact of the policies and regulations 

of the agency on minority-owned and women-owned businesses. 
H. R. 4173—167 

(4) RULE OF CONSTRUCTION.—Nothing in paragraph (2)(C) 

may be construed to mandate any requirement on or otherwise 

affect the lending policies and practices of any regulated entity, 

or to require any specific action based on the findings of the 

assessment. 

(c) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVITIES.— 

(1) IN GENERAL.—The Director of each Office shall develop 

and implement standards and procedures to ensure, to the 

maximum extent possible, the fair inclusion and utilization 

of minorities, women, and minority-owned and women-owned 

businesses in all business and activities of the agency at all 

levels, including in procurement, insurance, and all types of 

contracts. 

(2) CONTRACTS.—The procedures established by each 

agency for review and evaluation of contract proposals and 

for hiring service providers shall include, to the extent consistent with applicable law, a component that gives consideration to the diversity of the applicant. Such procedure shall 

include a written statement, in a form and with such content 

as the Director shall prescribe, that a contractor shall ensure, 

to the maximum extent possible, the fair inclusion of women 

and minorities in the workforce of the contractor and, as 

applicable, subcontractors. 

(3) TERMINATION.— 

(A) DETERMINATION.—The standards and procedures 

developed and implemented under this subsection shall 

include a procedure for the Director to make a determination whether an agency contractor, and, as applicable, a 

subcontractor has failed to make a good faith effort to 

include minorities and women in their workforce. 

(B) EFFECT OF DETERMINATION.— 

(i) RECOMMENDATION TO AGENCY ADMINISTRATOR.—Upon a determination described in subparagraph (A), the Director shall make a recommendation 

to the agency administrator that the contract be terminated. 

(ii) ACTION BY AGENCY ADMINISTRATOR.—Upon 

receipt of a recommendation under clause (i), the 

agency administrator may— 

(I) terminate the contract; 

(II) make a referral to the Office of Federal 

Contract Compliance Programs of the Department 

of Labor; or 

(III) take other appropriate action. 

(d) APPLICABILITY.—This section shall apply to all contracts 

of an agency for services of any kind, including the services of 

financial institutions, investment banking firms, mortgage banking 

firms, asset management firms, brokers, dealers, financial services 

entities, underwriters, accountants, investment consultants, and 

providers of legal services. The contracts referred to in this subsection include all contracts for all business and activities of an 

agency, at all levels, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the assets of the agency, the making of equity investments 

by the agency, and the implementation by the agency of programs 

to address economic recovery. 
H. R. 4173—168 

(e) REPORTS.—Each Office shall submit to Congress an annual 

report regarding the actions taken by the agency and the Office 

pursuant to this section, which shall include— 

(1) a statement of the total amounts paid by the agency 

to contractors since the previous report; 

(2) the percentage of the amounts described in paragraph 

(1) that were paid to contractors described in subsection (c)(1); 

(3) the successes achieved and challenges faced by the 

agency in operating minority and women outreach programs; 

(4) the challenges the agency may face in hiring qualified 

minority and women employees and contracting with qualified 

minority-owned and women-owned businesses; and 

(5) any other information, findings, conclusions, and recommendations for legislative or agency action, as the Director 

determines appropriate. 

(f) DIVERSITY IN AGENCY WORKFORCE.—Each agency shall take 

affirmative steps to seek diversity in the workforce of the agency 

at all levels of the agency in a manner consistent with applicable 

law. Such steps shall include— 

(1) recruiting at historically black colleges and universities, 

Hispanic-serving institutions, women’s colleges, and colleges 

that typically serve majority minority populations; 

(2) sponsoring and recruiting at job fairs in urban communities; 

(3) placing employment advertisements in newspapers and 

magazines oriented toward minorities and women; 

(4) partnering with organizations that are focused on developing opportunities for minorities and women to place talented 

young minorities and women in industry internships, summer 

employment, and full-time positions; 

(5) where feasible, partnering with inner-city high schools, 

girls’ high schools, and high schools with majority minority 

populations to establish or enhance financial literacy programs 

and provide mentoring; and 

(6) any other mass media communications that the Office 

determines necessary. 

(g) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

(1) AGENCY.—The term ‘‘agency’’ means— 

(A) the Departmental Offices of the Department of 

the Treasury; 

(B) the Corporation; 

(C) the Federal Housing Finance Agency; 

(D) each of the Federal reserve banks; 

(E) the Board; 

(F) the National Credit Union Administration; 

(G) the Office of the Comptroller of the Currency; 

(H) the Commission; and 

(I) the Bureau. 

(2) AGENCY ADMINISTRATOR.—The term ‘‘agency administrator’’ means the head of an agency. 

(3) MINORITY.—The term ‘‘minority’’ has the same meaning 

as in section 1204(c) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note). 

(4) MINORITY-OWNED BUSINESS.—The term ‘‘minority-owned 

business’’ has the same meaning as in section 21A(r)(4)(A) 
H. R. 4173—169 

of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)(A)), 

as in effect on the day before the transfer date. 

(5) OFFICE.—The term ‘‘Office’’ means the Office of Minority 

and Women Inclusion established by an agency under subsection (a). 

(6) WOMEN-OWNED BUSINESS.—The term ‘‘women-owned 

business’’ has the meaning given the term ‘‘women’s business’’ 

in section 21A(r)(4)(B) of the Federal Home Loan Bank Act 

(12 U.S.C. 1441a(r)(4)(B)), as in effect on the day before the 

transfer date. 

SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS. 

(a) BANKS AND SAVINGS ASSOCIATIONS.— (1) AMENDMENTS.—Section 11(a)(1) of the Federal Deposit 

Insurance Act (12 U.S.C. 1821(a)(1)) is amended— 

(A) in subparagraph (B)— 

(i) by striking ‘‘The net amount’’ and inserting 

the following: 

‘‘(i) IN GENERAL.—Subject to clause (ii), the net 

amount’’; and 

(ii) by adding at the end the following new clauses: 

‘‘(ii) INSURANCE FOR NONINTEREST-BEARING TRANS- ACTION ACCOUNTS.—Notwithstanding clause (i), the 

Corporation shall fully insure the net amount that 

any depositor at an insured depository institution 

maintains in a noninterest-bearing transaction 

account. Such amount shall not be taken into account 

when computing the net amount due to such depositor 

under clause (i). 

‘‘(iii) NONINTEREST-BEARING TRANSACTION ACCOUNT

DEFINED.—For purposes of this subparagraph, the term 

‘noninterest-bearing transaction account’ means a 

deposit or account maintained at an insured depository 

institution— 

‘‘(I) with respect to which interest is neither 

accrued nor paid; 

‘‘(II) on which the depositor or account holder 

is permitted to make withdrawals by negotiable 

or transferable instrument, payment orders of 

withdrawal, telephone or other electronic media 

transfers, or other similar items for the purpose 

of making payments or transfers to third parties 

or others; and 

‘‘(III) on which the insured depository institution does not reserve the right to require advance 

notice of an intended withdrawal.’’; and 

(B) in subparagraph (C), by striking ‘‘subparagraph 

(B)’’ and inserting ‘‘subparagraph (B)(i)’’. 

(2) EFFECTIVE DATE.—The amendments made by paragraph 

(1) shall take effect on December 31, 2010. 

(3) PROSPECTIVE REPEAL.—Effective January 1, 2013, section 11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(a)(1)), as amended by paragraph (1), is amended— 

(A) in subparagraph (B)— 

(i) by striking ‘‘DEPOSIT.—’’ and all that follows 

through ‘‘clause (ii), the net amount’’ and insert 

‘‘DEPOSIT.—The net amount’’; and 
H. R. 4173—170 

(ii) by striking clauses (ii) and (iii); and 

(B) in subparagraph (C), by striking ‘‘subparagraph 

(B)(i)’’ and inserting ‘‘subparagraph (B)’’. 

(b) CREDIT UNIONS.— 

(1) AMENDMENTS.—Section 207(k)(1) of the Federal Credit 

Union Act (12 U.S.C. 1787(k)(1)) is amended— 

(A) in subparagraph (A)— 

(i) by striking ‘‘Subject to the provisions of paragraph (2), the net amount’’ and inserting the following: 

‘‘(i) NET AMOUNT OF INSURANCE PAYABLE.—Subject 

to clause (ii) and the provisions of paragraph (2), the 

net amount’’; and 

(ii) by adding at the end the following new clauses: 

‘‘(ii) INSURANCE FOR NONINTEREST-BEARING TRANSACTION ACCOUNTS.—Notwithstanding clause (i), the 

Board shall fully insure the net amount that any 

member or depositor at an insured credit union maintains in a noninterest-bearing transaction account. 

Such amount shall not be taken into account when 

computing the net amount due to such member or 

depositor under clause (i). 

‘‘(iii) NONINTEREST-BEARING TRANSACTION ACCOUNT

DEFINED.—For purposes of this subparagraph, the term 

‘noninterest-bearing transaction account’ means an 

account or deposit maintained at an insured credit 

union— 

‘‘(I) with respect to which interest is neither 

accrued nor paid; 

‘‘(II) on which the account holder or depositor 

is permitted to make withdrawals by negotiable 

or transferable instrument, payment orders of 

withdrawal, telephone or other electronic media 

transfers, or other similar items for the purpose 

of making payments or transfers to third parties 

or others; and 

‘‘(III) on which the insured credit union does 

not reserve the right to require advance notice 

of an intended withdrawal.’’; and 

(B) in subparagraph (B), by striking ‘‘subparagraph 

(A)’’ and inserting ‘‘subparagraph (A)(i)’’. 

(2) EFFECTIVE DATE.—The amendments made by paragraph 

(1) shall take effect upon the date of the enactment of this 

Act 

(3) PROSPECTIVE REPEAL.—Effective January 1, 2013, section 207(k)(1) of the Federal Credit Union Act (12 U.S.C. 

1787(k)(1)), as amended by paragraph (1), is amended— 

(A) in subparagraph (A)— 

(i) by striking ‘‘(i) NET AMOUNT OF INSURANCE PAYABLE.—’’ and all that follows through ‘‘paragraph (2), 

the net amount’’ and inserting ‘‘Subject to the provisions of paragraph (2), the net amount’’; and 

(ii) by striking clauses (ii) and (iii); and 

(B) in subparagraph (B), by striking ‘‘subparagraph 

(A)(i)’’ and inserting ‘‘subparagraph (A)’’. 
H. R. 4173—171 

Subtitle E—Technical and Conforming 

Amendments 

SEC. 351. EFFECTIVE DATE. 

Except as provided in section 364(a), the amendments made 

by this subtitle shall take effect on the transfer date. 

SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL 

ACT OF 1985. 

Section 256(h) of the Balanced Budget and Emergency Deficit 

Control Act of 1985 (2 U.S.C. 906(h)) is amended— 

(1) in paragraph (4), by striking subparagraphs (C) and 

(G); and 

(2) by redesignating subparagraphs (D), (E), (F), and (H) 

as subparagraphs (C), (D), (E), and (F), respectively. 

SEC. 353. BANK ENTERPRISE ACT OF 1991. 

Section 232(a) of the Bank Enterprise Act of 1991 (12 U.S.C. 

1834(a)) is amended— 

(1) in the subsection heading, by striking ‘‘BY FEDERAL

RESERVE BOARD’’; 

(2) in paragraph (1)— 

(A) by striking ‘‘The Board of Governors of the Federal 

Reserve System,’’ and inserting ‘‘The Comptroller of the 

Currency’’; and 

(B) by striking ‘‘section 7(b)(2)(H)’’ and inserting ‘‘section 7(b)(2)(E)’’; 

(3) in paragraph (2)(A), by striking ‘‘Board’’ and inserting 

‘‘Comptroller’’; and 

(4) in paragraph (3)— 

(A) by redesignating subparagraphs (A) through (C) 

as subparagraphs (B) through (D), respectively; and 

(B) by inserting before subparagraph (B) the following: 

‘‘(A) COMPTROLLER.—The term ‘Comptroller’ means the 

Comptroller of the Currency.’’. 

SEC. 354. BANK HOLDING COMPANY ACT OF 1956. 

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

seq.) is amended— 

(1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)), strike ‘‘Director 

of the Office of Thrift Supervision’’ and inserting ‘‘appropriate 

Federal banking agency’’; 

(2) in section 4 (12 U.S.C. 1843)— 

(A) in subsection (i)— 

(i) in paragraph (4)— 

(I) in subparagraph (A)— 

(aa) in the subparagraph heading, by 

striking ‘‘TO DIRECTOR’’; and 

(bb) by striking ‘‘Board’’ and all that follows through the end of the subparagraph and 

inserting ‘‘Board shall solicit comments and 

recommendations from— 

‘‘(i) the Comptroller of the Currency, with respect 

to the acquisition of a Federal savings association; 

and 
H. R. 4173—172 

‘‘(ii) the Federal Deposit Insurance Corporation, 

with respect to the acquisition of a State savings 

association.’’. 

(II) in subparagraph (B), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘Comptroller of the Currency or the Federal Deposit 

Insurance Corporation, as applicable,’’; 

(ii) in paragraph (5)— 

(I) in subparagraph (B), by striking ‘‘Director 

with’’ and inserting ‘‘Comptroller of the Currency 

or the Federal Deposit Insurance Corporation, as 

applicable, with’’; and 

(II) by striking ‘‘Director’’ each place that term 

appears and inserting ‘‘Comptroller of the Currency or the Federal Deposit Insurance Corporation’’; 

(iii) in paragraph (6), by striking ‘‘Director’’ and 

inserting ‘‘Comptroller of the Currency or the Federal 

Deposit Insurance Corporation, as applicable,’’; and 

(iv) by striking paragraph (7); and 

(3) in section 5(f) (12 U.S.C. 1844(f))— 

(A) by striking ‘‘subpena’’ each place that term appears 

and inserting ‘‘subpoena’’; 

(B) by striking ‘‘subpenas’’ each place that term 

appears and inserting ‘‘subpoenas’’; and 

(C) by striking ‘‘subpenaed’’ and inserting ‘‘subpoenaed’’. 

SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF 1970. 

Section 106(b)(1) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972(1)) is amended in the undesignated 

matter following subparagraph (E) by inserting ‘‘issue such regulations as are necessary to carry out this section, and, in consultation 

with the Comptroller of the Currency and the Federal Deposit 

Insurance Company, may’’ after ‘‘The Board may’’. 

SEC. 356. BANK PROTECTION ACT OF 1968. 

The Bank Protection Act of 1968 (12 U.S.C. 1881 et seq.) 

is amended— 

(1) in section 2 (12 U.S.C. 1881), by striking ‘‘the term’’ 

and all that follows through the end of the section and inserting 

‘‘the term ‘Federal supervisory agency’ means the appropriate 

Federal banking agency, as defined in section 3(q) of the Federal 

Deposit Insurance Act (12 U.S.C. 1813(q)).’’; 

(2) in section 3 (12 U.S.C. 1882), by striking ‘‘and loan’’ 

each place that term appears; and 

(3) in section 5 (12 U.S.C. 1884), by striking ‘‘and loan’’. 

SEC. 357. BANK SERVICE COMPANY ACT. 

The Bank Service Company Act (12 U.S.C. 1861 et seq.) is 

amended— 

(1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))— 

(A) by inserting after ‘‘an insured bank,’’ the following: 

‘‘a savings association,’’; 

(B) by striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘appropriate Federal banking agency’’; 

and 
H. R. 4173—173 

(C) by striking ‘‘, the Federal Savings and Loan Insurance Corporation,’’; 

(2) in section 1(b)(5), by striking ‘‘term ‘insured depository 

institution’ has the same meaning as in section 3(c)’’ and 

inserting ‘‘terms ‘depository institution’ and ‘savings association’ 

have the same meanings as in section 3’’; and 

(3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)), by inserting 

‘‘each’’ after ‘‘notify’’. 

SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977. 

The Community Reinvestment Act of 1977 (12 U.S.C. 2901 

et seq.) is amended— 

(1) in section 803 (12 U.S.C. 2902)— 

(A) in paragraph (1)— 

(i) in subparagraph (A), by inserting ‘‘and Federal 

savings associations (the deposits of which are insured 

by the Federal Deposit Insurance Corporation)’’ after 

‘‘banks’’; 

(ii) in subparagraph (B), by striking ‘‘and bank 

holding companies’’ and inserting ‘‘, bank holding 

companies, and savings and loan holding companies’’; 

and 

(iii) in subparagraph (C), by striking ‘‘; and’’ and 

inserting ‘‘, and State savings associations (the deposits 

of which are insured by the Federal Deposit Insurance 

Corporation).’’; and 

(B) by striking paragraph (2) (relating to the Office 

of Thrift Supervision), as added by section 744(q) of the 

Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 (Public Law 101–73; 103 Stat. 440); and 

(2) in section 806 (12 U.S.C. 2905), by inserting ‘‘, except 

that the Comptroller of the Currency shall prescribe regulations 

applicable to savings associations and the Board of Governors 

shall prescribe regulations applicable to insured State member 

banks, bank holding companies and savings and loan holding 

companies,’’ after ‘‘supervisory agency’’. 

SEC. 359. CRIME CONTROL ACT OF 1990. 

The Crime Control Act of 1990 is amended— 

(1) in section 2539(c)(2) (28 U.S.C. 509 note)— 

(A) by striking subparagraphs (C) and (D); and 

(B) by redesignating subparagraphs (E) through (H) 

as subparagraphs (C) through (G), respectively; and 

(2) in section 2554(b)(2) (Public Law 101–647; 104 Stat. 

4890)— 

(A) in subparagraph (A), by striking ‘‘, the Director 

of the Office of Thrift Supervision,’’ and inserting ‘‘the 

Comptroller of the Currency’’; and 

(B) in subparagraph (B), by striking ‘‘, the Director’’ 

and all that follows through ‘‘Trust Corporation’’ and 

inserting ‘‘or the Federal Deposit Insurance Corporation’’. 

SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT. 

The Depository Institution Management Interlocks Act (12 

U.S.C. 3201 et seq.) is amended— 

(1) in section 207 (12 U.S.C. 3206)— 

(A) in paragraph (1), by inserting before the comma 

at the end the following: ‘‘and Federal savings associations 
H. R. 4173—174 

(the deposits of which are insured by the Federal Deposit 

Insurance Corporation)’’; 

(B) in paragraph (2), by striking ‘‘, and bank holding 

companies’’ and inserting ‘‘, bank holding companies, and 

savings and loan holding companies’’; 

(C) in paragraph (3), by striking ‘‘Corporation,’’ and 

inserting ‘‘Corporation and State savings associations (the 

deposits of which are insured by the Federal Deposit Insurance Corporation),’’; 

(D) by striking paragraph (4); 

(E) by redesignating paragraphs (5) and (6) as paragraphs (4) and (5), respectively; and 

(F) in paragraph (5), as so redesignated, by striking 

‘‘through (5)’’ and inserting ‘‘through (4)’’; 

(2) in section 209 (12 U.S.C. 3207)— 

(A) in paragraph (1), by inserting before the comma 

at the end the following: ‘‘and Federal savings associations 

(the deposits of which are insured by the Federal Deposit 

Insurance Corporation)’’; 

(B) in paragraph (2), by striking ‘‘, and bank holding 

companies’’ and inserting ‘‘, bank holding companies, and 

savings and loan holding companies’’; 

(C) in paragraph (3), by striking ‘‘Corporation,’’ and 

inserting ‘‘Corporation and State savings associations (the 

deposits of which are insured by the Federal Deposit Insurance Corporation),’’; 

(D) by striking paragraph (4); and 

(E) by redesignating paragraph (5) as paragraph (4); 

and 

(3) in section 210(a) (12 U.S.C. 3208(a))— 

(A) by striking ‘‘his’’ and inserting ‘‘the’’; and 

(B) by inserting ‘‘of the Attorney General’’ after 

‘‘enforcement functions’’. 

SEC. 361. EMERGENCY HOMEOWNERS’ RELIEF ACT. 

Section 110 of the Emergency Homeowners’ Relief Act (12 

U.S.C. 2709) is amended in the second sentence, by striking ‘‘Home 

Loan Bank Board, the Federal Savings and Loan Insurance Corporation’’ and inserting ‘‘Housing Finance Agency’’. 

SEC. 362. FEDERAL CREDIT UNION ACT. 

The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is 

amended— 

(1) in section 107(8) (12 U.S.C. 1757(8)), by striking ‘‘or 

the Federal Savings and Loan Insurance Corporation’’; 

(2) in section 205 (12 U.S.C. 1785)— 

(A) in subsection (b)(2)(G)(i), by striking ‘‘the Office 

of Thrift Supervision and’’; and 

(B) in subsection (i)(1), by striking ‘‘or the Federal 

Savings and Loan Insurance Corporation’’; and 

(3) in section 206(g)(7) (12 U.S.C. 1786(g)(7))— 

(A) in subparagraph (A)— 

(i) in clause (ii), by striking ‘‘(b)(8)’’ and inserting 

‘‘(b)(9)’’; 

(ii) in clause (v)— 

(I) by striking ‘‘depository’’ and inserting 

‘‘financial’’; and 

(II) by adding ‘‘and’’ at the end; 
H. R. 4173—175 

(iii) in clause (vi)— 

(I) by striking ‘‘Board’’ and inserting ‘‘Agency’’; 

and 

(II) by striking ‘‘; and’’ and inserting a period; 

and 

(iv) by striking clause (vii); and 

(B) in subparagraph (D)— 

(i) in clause (iii), by adding ‘‘and’’ at the end; 

(ii) in clause (iv)— 

(I) by striking ‘‘Board’’ and inserting ‘‘Agency’’; 

and 

(II) by striking ‘‘and’’ at the end; and 

(iii) by striking clause (v). 

SEC. 363. FEDERAL DEPOSIT INSURANCE ACT. 

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 

is amended— 

(1) in section 3 (12 U.S.C. 1813)— 

(A) in subsection (b)(1)(C), by striking ‘‘Director of the 

Office of Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency’’; 

(B) in subsection (l)(5), in the matter preceding 

subparagraph (A), by striking ‘‘Director of the Office of 

Thrift Supervision,’’; and 

(C) in subsection (z), by striking ‘‘the Director of the 

Office of Thrift Supervision,’’; 

(2) in section 7 (12 U.S.C. 1817)— 

(A) in subsection (a)— 

(i) in paragraph (2)— 

(I) in subparagraph (A)— 

(aa) in the first sentence, by striking ‘‘the 

Director of the Office of Thrift Supervision,’’; 

(bb) in the second sentence— 

(AA) by striking ‘‘the Director of the 

Office of Thrift Supervision,’’ and inserting 

‘‘to’’; and 

(BB) by inserting ‘‘to’’ before ‘‘any Federal home’’; and 

(cc) by striking ‘‘Finance Board’’ each place 

that term appears and inserting ‘‘Finance 

Agency’’; and 

(II) in subparagraph (B), by striking ‘‘the 

Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the 

Director of the Office of Thrift Supervision,’’ and 

inserting ‘‘the Comptroller of the Currency and 

the Board of Governors of the Federal Reserve 

System,’’; 

(ii) in paragraph (3), in the first sentence, by 

striking ‘‘Comptroller of the Currency, the Chairman 

of the Board of Governors of the Federal Reserve 

System, and the Director of the Office of Thrift Supervision.’’ and inserting ‘‘Comptroller of the Currency, 

and the Chairman of the Board of Governors of the 

Federal Reserve System.’’; 

(iii) in paragraph (6), by striking ‘‘section 

232(a)(3)(C)’’ and inserting ‘‘section 232(a)(3)(D)’’; and 
H. R. 4173—176 

(iv) in paragraph (7), by striking ‘‘, the Director 

of the Office of Thrift Supervision,’’; and 

(B) in subsection (n)— 

(i) in the heading, by striking ‘‘DIRECTOR OF THE

OFFICE OF THRIFT SUPERVISION’’ and inserting ‘‘COMPTROLLER OF THE CURRENCY’’; 

(ii) in the first sentence— 

(I) by striking ‘‘the Director of the Office of 

Thrift Supervision’’ and inserting ‘‘the Comptroller 

of the Currency’’; and 

(II) by inserting ‘‘Federal’’ before ‘‘savings 

associations’’; 

(iii) in the third sentence, by striking ‘‘, the 

Financing Corporation, and the Resolution Funding 

Corporation’’; and 

(iv) by striking ‘‘the Director’’ each place that term 

appears and inserting ‘‘the Comptroller’’; 

(3) in section 8 (12 U.S.C. 1818)— 

(A) in subsection (a)(8)(B)(ii), in the last sentence, by 

striking ‘‘Director of the Office of Thrift Supervision’’ each 

place that term appears and inserting ‘‘Comptroller of the 

Currency’’; 

(B) in subsection (b)(3)— 

(i) by inserting ‘‘any savings and loan holding company and any subsidiary (other than a depository 

institution) of a savings and loan holding company 

(as such terms are defined in section 10 of Home 

Owners’ Loan Act)), any noninsured State member 

bank’’ after ‘‘Bank Holding Company Act of 1956,’’; 

and 

(ii) by inserting ‘‘or against a savings and loan 

holding company or any subsidiary thereof (other than 

a depository institution or a subsidiary of such depository institution)’’ before the period at the end; 

(C) by striking paragraph (9) of subsection (b) and 

inserting the following new paragraph: 

‘‘(9) [Repealed]’’. 

(D) in subsection (e)(7)— 

(i) in subparagraph (A)— 

(I) in clause (v), by inserting ‘‘and’’ after the 

semicolon; 

(II) in clause (vi)— 

(aa) by striking ‘‘Board’’ and inserting 

‘‘Agency’’; and 

(bb) by striking ‘‘; and’’ and inserting a 

period; and 

(III) by striking clause (vii); and 

(ii) in subparagraph (D)— 

(I) in clause (iii), by inserting ‘‘and’’ after the 

semicolon; 

(II) in clause (iv)— 

(aa) by striking ‘‘Board’’ and inserting 

‘‘Agency’’; and 

(bb) by striking ‘‘; and’’ and inserting a 

period; and 

(III) by striking clause (v); 

(E) in subsection (j)— 
H. R. 4173—177 

(i) in paragraph (2), by striking ‘‘, or as a savings 

association under subsection (b)(9) of this section’’; 

(ii) in paragraph (3), by inserting ‘‘or’’ after the 

semicolon; 

(iii) in paragraph (4), by striking ‘‘; or’’ and 

inserting a comma; and 

(iv) by striking paragraph (5); 

(F) in subsection (o), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Comptroller of the 

Currency’’; and 

(G) in subsection (w)(3)(A), by striking ‘‘and the Office 

of Thrift Supervision’’; 

(4) in section 10 (12 U.S.C. 1820)— 

(A) in subsection (d)(5), by striking ‘‘or the Resolution 

Trust Corporation’’ each place that term appears; and 

(B) in subsection (k)(5)(B)— 

(i) in clause (ii), by inserting ‘‘and’’ after the semicolon; 

(ii) in clause (iii), by striking ‘‘; and’’ and inserting 

a period; and 

(iii) by striking clause (iv); 

(5) in section 11 (12 U.S.C. 1821)— 

(A) in subsection (c)— 

(i) in paragraph (2)(A)(ii), by striking ‘‘(other than 

section 21A of the Federal Home Loan Bank Act)’’; 

(ii) in paragraph (4), by striking ‘‘Except as otherwise provided in section 21A of the Federal Home 

Loan Bank Act and notwithstanding’’ and inserting 

‘‘Notwithstanding’’; 

(iii) in paragraph (6)— 

(I) in the heading, by striking ‘‘DIRECTOR OF

THE OFFICE OF THRIFT SUPERVISION’’ and inserting 

‘‘COMPTROLLER OF THE CURRENCY’’; 

(II) in subparagraph (A)— 

(aa) by striking ‘‘or the Resolution Trust 

Corporation’’; and 

(bb) by striking ‘‘Director of the Office of 

Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency’’; and 

(III) by amending subparagraph (B) to read 

as follows: 

‘‘(B) RECEIVER.—The Corporation may, at the discretion of the Comptroller of the Currency, be appointed 

receiver and the Corporation may accept any such appointment.’’; 

(iv) in paragraph (12)(A), by striking ‘‘or the Resolution Trust Corporation’’; 

(B) in subsection (d)— 

(i) in paragraph (17)(A), by striking ‘‘or the 

Director of the Office of Thrift Supervision’’; and 

(ii) in paragraph (18)(B), by striking ‘‘or the 

Director of the Office of Thrift Supervision’’; 

(C) in subsection (m)— 

(i) in paragraph (9), by striking ‘‘or the Director 

of the Office of Thrift Supervision, as appropriate’’; 
H. R. 4173—178 

(ii) in paragraph (16), by striking ‘‘or the Director 

of the Office of Thrift Supervision, as appropriate’’ 

each place that term appears; and 

(iii) in paragraph (18), by striking ‘‘or the Director 

of the Office of Thrift Supervision, as appropriate’’ 

each place that term appears; 

(D) in subsection (n)— 

(i) in paragraph (1)(A)— 

(I) by striking ‘‘, or the Director of the Office 

of Thrift Supervision, with respect to’’ and 

inserting ‘‘or’’; and 

(II) by striking ‘‘applicable,,’’ and inserting 

‘‘applicable,’’; 

(ii) in paragraph (2)(A), by striking ‘‘or the Director 

of the Office of Thrift Supervision’’; 

(iii) in paragraph (4)(D), by striking ‘‘and the 

Director of the Office of Thrift Supervision, as appropriate,’’; 

(iv) in paragraph (4)(G), by striking ‘‘and the 

Director of the Office of Thrift Supervision, as appropriate,’’; and 

(v) in paragraph (12)(B)— 

(I) by inserting ‘‘as’’ after ‘‘shall appoint the 

Corporation’’; 

(II) by striking ‘‘or the Director of the Office 

of Thrift Supervision, as appropriate,’’ each place 

such term appears; 

(E) in subsection (p)— 

(i) in paragraph (2)(B), by striking ‘‘the Corporation, the FSLIC Resolution Fund, or the Resolution 

Trust Corporation,’’ and inserting ‘‘or the Corporation,’’; 

and 

(ii) in paragraph (3)(B), by striking ‘‘, the FSLIC 

Resolution Fund, the Resolution Trust Corporation,’’; 

and 

(F) in subsection (r), by striking ‘‘and the Resolution 

Trust Corporation’’; 

(6) in section 13(k)(1)(A)(iv) (12 U.S.C. 1823(k)(1)(A)(iv)), 

by striking ‘‘Director of the Office of Thrift Supervision’’ and 

inserting ‘‘Comptroller of the Currency’’; 

(7) in section 18 (12 U.S.C. 1828)— 

(A) in subsection (c)(2)— 

(i) in subparagraph (A), by inserting ‘‘or a Federal 

savings association’’ before the semicolon; 

(ii) in subparagraph (B), by adding ‘‘and’’ at the 

end; 

(iii) in subparagraph (C), by striking ‘‘(except’’ and 

all that follows through ‘‘; and’’ and inserting ‘‘or a 

State savings association.’’; and 

(iv) by striking subparagraph (D); 

(B) in subsection (g)(1), by striking ‘‘the Director of 

the Office of Thrift Supervision’’and inserting ‘‘the Comptroller of the Currency’’; 

(C) in subsection (i)(2)(C), by striking ‘‘Director of the 

Office of Thrift Supervision’’ and inserting ‘‘Corporation’’; 

and 

(D) in subsection (m)— 
H. R. 4173—179 

(i) in paragraph (1)— 

(I) in subparagraph (A), by striking ‘‘and the 

Director of the Office of Thrift Supervision’’ and 

inserting ‘‘or the Comptroller of the Currency, as 

appropriate,’’; and 

(II) in subparagraph (B), by striking ‘‘and 

orders of the Director of the Office of Thrift Supervision’’ and inserting ‘‘of the Comptroller of the 

Currency and orders of the Corporation and the 

Comptroller of the Currency’’; 

(ii) in paragraph (2)— 

(I) in subparagraph (A), by striking ‘‘Director 

of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency, as appropriate,’’; and 

(II) in subparagraph (B)— 

(aa) in the matter before clause (i), by 

striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Corporation or the 

Comptroller of the Currency, as appropriate,’’; 

and 

(bb) in the matter following clause (ii)— 

(AA) in the first sentence, by striking 

‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Office of the Comptroller of the Currency, as appropriate,’’; 

and 

(BB) by striking the second sentence 

and inserting the following: ‘‘The Corporation or the Comptroller of the Currency, 

as appropriate, may take any other corrective measures with respect to the subsidiary, including the authority to require 

the subsidiary to terminate the activities 

or operations posing such risks, as the 

Corporation or the Comptroller of the Currency, respectively, may deem appropriate.’’; and 

(iii) in paragraph (3)— 

(I) in subparagraph (A), in the second sentence— 

(aa) by inserting ‘‘, in the case of a Federal 

savings association,’’ before ‘‘consult with’’; and 

(bb) by striking ‘‘Director of the Office of 

Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency’’; and 

(II) in subparagraph (B)— 

(aa) in the subparagraph heading, by 

striking ‘‘DIRECTOR’’ and inserting ‘‘COMP- TROLLER OF THE CURRENCY’’; 

(bb) by striking ‘‘Office of Thrift Supervision’’ and inserting ‘‘Comptroller of the Currency’’; 

(cc) by inserting a comma after ‘‘soundness’’; and 

(dd) by inserting ‘‘as to Federal savings 

associations’’ after ‘‘compliance’’; 

(8) in section 19(e) (12 U.S.C. 1829(e))— 
H. R. 4173—180 

(A) in paragraph (1), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Board of Governors 

of the Federal Reserve System’’; and 

(B) in paragraph (2), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Board of Governors 

of the Federal Reserve System’’; 

(9) in section 28 (12 U.S.C. 1831e)— 

(A) in subsection (e)— 

(i) in paragraph (2)— 

(I) in subparagraph (A)(ii), by striking 

‘‘Director of the Office of Thrift Supervision’’ and 

inserting ‘‘Comptroller of the Currency or the Corporation, as appropriate’’; 

(II) in subparagraph (C), by striking ‘‘Director 

of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency or the Corporation, 

as appropriate,’’; and 

(III) in subparagraph (F), by striking ‘‘Director 

of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency or the Corporation, 

as appropriate’’; and 

(ii) in paragraph (3)— 

(I) in subparagraph (A), by striking ‘‘Director 

of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency or the Corporation, 

as appropriate’’; and 

(II) in subparagraph (B), by striking ‘‘Director 

of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency or the Corporation, 

as appropriate,’’; and 

(B) in subsection (h)(2), by striking ‘‘Director of the 

Office of Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency, of the Corporation,’’; and 

(10) in section 33(e) (12 U.S.C. 1831j(e)), by striking ‘‘Federal Housing Finance Board, the Comptroller of the Currency, 

and the Director of the Office of Thrift Supervision’’ and 

inserting ‘‘Federal Housing Finance Agency and the Comptroller of the Currency’’. 

SEC. 364. FEDERAL HOME LOAN BANK ACT. 

(a) REPEAL OF SECTION 18(c).—Effective 90 days after the 

transfer date, section 18(c) of the Federal Home Loan Bank Act 

(12 U.S.C. 1438(c)) is repealed. 

(b) REPEAL OF SECTION 21A.—Section 21A of the Federal Home 

Loan Bank Act (12 U.S.C. 1441a) is repealed. 

SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND 

SOUNDNESS ACT OF 1992. 

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended— 

(1) in section 1315(b) (12 U.S.C. 4515(b)), by striking ‘‘the 

Federal Deposit Insurance Corporation, and the Office of Thrift 

Supervision.’’ and inserting ‘‘and the Federal Deposit Insurance 

Corporation.’’; and 

(2) in section 1317(c) (12 U.S.C. 4517(c)), by striking ‘‘the 

Federal Deposit Insurance Corporation, or the Director of the 

Office of Thrift Supervision’’ and inserting ‘‘or the Federal 

Deposit Insurance Corporation’’. 
H. R. 4173—181 

SEC. 366. FEDERAL RESERVE ACT. 

The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended— 

(1) in section 11(a)(2) (12 U.S.C. 248(a)(2))— 

(A) by inserting ‘‘State savings associations that are 

insured depository institutions (as defined in section 3 of 

the Federal Deposit Insurance Act),’’ after ‘‘case of insured’’; 

(B) by striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Comptroller of the Currency’’; 

(C) by inserting ‘‘Federal’’ before ‘‘savings association 

which’’; and 

(D) by striking ‘‘savings and loan association’’ and 

inserting ‘‘savings association’’; and 

(2) in section 19(b) (12 U.S.C. 461(b))— 

(A) in paragraph (1)(F), by striking ‘‘Director of the 

Office of Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency’’; and 

(B) in paragraph (4)(B), by striking ‘‘Director of the 

Office of Thrift Supervision’’ and inserting ‘‘Comptroller 

of the Currency’’. 

SEC. 367. FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND 

ENFORCEMENT ACT OF 1989. 

The Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 is amended— 

(1) in section 203 (12 U.S.C. 1812 note), by striking subsection (b); 

(2) in section 302(1) (12 U.S.C. 1467a note), by striking 

‘‘Director of the Office of Thrift Supervision’’ and inserting 

‘‘Comptroller of the Currency’’; 

(3) in section 305(12 U.S.C. 1464 note), by striking subsection (b); 

(4) in section 308 (12 U.S.C. 1463 note)— 

(A) in subsection (a), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Chairman of the 

Board of Governors of the Federal Reserve System, the 

Comptroller of the Currency, the Chairman of the National 

Credit Union Administration,’’; and 

(B) by adding at the end the following new subsection: 

‘‘(c) REPORTS.—The Secretary of the Treasury, the Chairman 

of the Board of Governors of the Federal Reserve System, the 

Comptroller of the Currency, the Chairman of the National Credit 

Union Administration, and the Chairperson of Board of Directors 

of the Federal Deposit Insurance Corporation shall each submit 

an annual report to the Congress containing a description of actions 

taken to carry out this section.’’; 

(5) in section 402 (12 U.S.C. 1437 note)— 

(A) in subsection (a), by striking ‘‘Director of the Office 

of Thrift Supervision’’ and inserting ‘‘Comptroller of the 

Currency’’; 

(B) by striking subsection (b); 

(C) in subsection (e)— 

(i) in paragraph (1), by striking ‘‘Office of Thrift 

Supervision’’ and inserting ‘‘Comptroller of the Currency’’; and 

(ii) in each of paragraphs (2), (3), and (4), by 

striking ‘‘Director of the Office of Thrift Supervision’’ 
H. R. 4173—182 

each place that term appears and inserting ‘‘Comptroller of the Currency’’; and 

(D) by striking ‘‘Federal Housing Finance Board’’ each 

place that term appears and inserting ‘‘Federal Housing 

Finance Agency’’; 

(6) in section 1103(a) (12 U.S.C. 3332(a)), by striking ‘‘and 

the Resolution Trust Corporation’’; 

(7) in section 1205(b) (12 U.S.C. 1818 note)— 

(A) in paragraph (1)— 

(i) by striking subparagraph (B); and 

(ii) by redesignating subparagraphs (C) through 

(F) as subparagraphs (B) through (E), respectively; 

and 

(B) in paragraph (2), by striking ‘‘paragraph (1)(F)’’ 

and inserting ‘‘paragraph (1)(E)’’; 

(8) in section 1206 (12 U.S.C. 1833b)— 

(A) by striking ‘‘Board, the Oversight Board of the 

Resolution Trust Corporation’’ and inserting ‘‘Agency, and’’; 

and 

(B) by striking ‘‘, and the Office of Thrift Supervision’’; 

(9) in section 1216 (12 U.S.C. 1833e)— 

(A) in subsection (a)— 

(i) in paragraph (3), by adding ‘‘and’’ at the end; 

(ii) in paragraph (4), by striking the semicolon 

at the end and inserting a period; 

(iii) by striking paragraphs (2), (5), and (6); and 

(iv) by redesignating paragraphs (3) and (4), as 

paragraphs (2) and (3), respectively; 

(B) in subsection (c)— 

(i) by striking ‘‘the Director of the Office of Thrift 

Supervision,’’ and inserting ‘‘and’’; and 

(ii) by striking ‘‘the Thrift Depositor Protection 

Oversight Board of the Resolution Trust Corporation, 

and the Resolution Trust Corporation’’; and 

(C) in subsection (d)— 

(i) by striking paragraphs (3), (5), and (6); and 

(ii) by redesignating paragraphs (4), (7), and (8) 

as paragraphs (3), (4), and (5), respectively. 

SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973. 

Section 3(a)(5) of the Flood Disaster Protection Act of 1973 

(42 U.S.C. 4003(a)(5)) is amended by striking ‘‘, the Office of Thrift 

Supervision’’. 

SEC. 369. HOME OWNERS’ LOAN ACT. 

The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is 

amended— 

(1) in section 1 (12 U.S.C. 1461), by striking the table 

of contents; 

(2) in section 2 (12 U.S.C. 1462), as amended by this 

Act— 

(A) by striking paragraphs (1) and (3); 

(B) by redesignating paragraph (2) as paragraph (1); 

(C) by redesignating paragraphs (4) through (9) as 

paragraphs (2) through (7), respectively; and 

(D) by adding at the end the following: 
H. R. 4173—183 

‘‘(8) BOARD.—The term ‘Board’, other than in the context 

of the Board of Directors of the Corporation, means the Board 

of Governors of the Federal Reserve System. 

‘‘(9) COMPTROLLER.—The term ‘Comptroller’ means the 

Comptroller of the Currency.’’; 

(3) in section 3 (12 U.S.C. 1462a)— 

(A) by striking the section heading and inserting the 

following: 

‘‘SEC. 3. ADMINISTRATIVE PROVISIONS.’’; 

(B) by striking subsections (a), (b), (c), (d), (g), (h), 

(i), and (j); 

(C) by redesignating subsections (e) and (f) as subsections (a) and (b), respectively; 

(D) in subsection (a), as so redesignated— 

(i) in the heading by striking ‘‘OF THE DIRECTOR’’; 

and 

(ii) in the matter preceding paragraph (1), by 

striking ‘‘The Director’’ and inserting ‘‘In accordance 

with subtitle A of title III of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, the appropriate Federal banking agency’’; and 

(E) in subsection (b), as so redesignated, by striking 

‘‘Director’’ and inserting ‘‘appropriate Federal banking 

agency’’; 

(4) in section 4 (12 U.S.C. 1463)— 

(A) in subsection (a)— 

(i) in the subsection heading, by striking ‘‘FEDERAL’’; 

(ii) by striking paragraphs (1) and (2) and inserting 

the following: 

‘‘(1) EXAMINATION AND SAFE AND SOUND OPERATION.— 

‘‘(A) FEDERAL SAVINGS ASSOCIATIONS.—The Comptroller 

shall provide for the examination and safe and sound operation of Federal savings associations. 

‘‘(B) STATE SAVINGS ASSOCIATIONS.—The Corporation 

shall provide for the examination and safe and sound operation of State savings associations. 

‘‘(2) REGULATIONS FOR SAVINGS ASSOCIATIONS.—The Comptroller may prescribe regulations with respect to savings 

associations, as the Comptroller determines to be appropriate 

to carry out the purposes of this Act.’’; and 

(iii) in paragraph (3), by striking ‘‘Director’’ each 

place that term appears and inserting ‘‘Comptroller 

and the Corporation’’; 

(B) in subsection (b)— 

(i) in paragraph (2)— 

(I) in subparagraph (A), by adding ‘‘and’’ at 

the end; 

(II) in subparagraph (B), by striking ‘‘; and’’ 

and inserting a period; and 

(III) by striking subparagraph (C); and 

(ii) by striking ‘‘Director’’ each place that term 

appears and inserting ‘‘Comptroller’’; 

(C) in subsection (c)— 
H. R. 4173—184 

(i) by striking ‘‘All regulations and policies of the 

Director’’ and inserting ‘‘The regulations of the Comptroller and the policies of the Comptroller and the 

Corporation’’; and 

(ii) by striking ‘‘of the Currency’’; 

(D) in subsection (e)(5), by striking ‘‘Director’’ and 

inserting ‘‘Comptroller’’; 

(E) in subsection (f), by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal 

banking agency’’; and 

(F) in subsection (h), by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal 

banking agency’’; 

(5) in section 5 (12 U.S.C. 1464)— 

(A) in subsection (a), by striking ‘‘Director’’, each place 

such term appears and inserting ‘‘Comptroller of the Currency’’; 

(B) in subsection (b), by striking ‘‘Director’’, each place 

such term appears and inserting ‘‘Comptroller of the Currency’’; 

(C) in subsection (c)— 

(i) in paragraph (5)— 

(I) in subparagraph (A), by striking ‘‘Director’’ 

and inserting ‘‘appropriate Federal banking 

agency’’; and 

(II) in subparagraph (B)— 

(aa) by striking ‘‘The Director’’ and 

inserting ‘‘The appropriate Federal banking 

agency’’; and 

(bb) by striking ‘‘the Director’’ and 

inserting ‘‘the appropriate Federal banking 

agency’’; 

(D) in subsection (d)— 

(i) in paragraph (1)— 

(I) in subparagraph (A)— 

(aa) in the first sentence, by striking 

‘‘Director’’ and inserting ‘‘appropriate Federal 

banking agency’’; 

(bb) in the second sentence— 

(AA) by striking ‘‘Director’s own name 

and through the Director’s own attorneys’’ 

and inserting ‘‘name of the appropriate 

Federal banking agency and through the 

attorneys of the appropriate Federal 

banking agency’’; and 

(BB) by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal banking agency’’; and 

(cc) in the third sentence, by striking 

‘‘Director’’ each place that term appears and 

inserting ‘‘Comptroller’’; 

(II) in subparagraph (B)— 

(aa) in clauses (i) through (iv), by striking 

‘‘Director’’ each place that term appears and 

inserting ‘‘appropriate Federal banking 

agency’’; 

(III) in clause (v)— 
H. R. 4173—185 

(aa) in the matter preceding subclause (I), 

by striking ‘‘Director’’ and inserting ‘‘appropriate Federal banking agency’’; 

(bb) in subclause (II), by striking ‘‘subpenas’’ and inserting ‘‘subpoenas’’; and 

(cc) in the matter following subclause (II), 

by striking ‘‘subpena’’ and inserting ‘‘subpoena’’; 

(IV) in clause (vi)— 

(aa) in the first sentence, by striking 

‘‘Director’’ and inserting ‘‘appropriate Federal 

banking agency’’; and 

(bb) in the second sentence, by striking 

‘‘Director’’ and inserting ‘‘Comptroller’’; 

(V) in clause (vii)— 

(aa) in the first sentence, by striking ‘‘subpena’’ and inserting ‘‘subpoena’’; 

(bb) in the second sentence, by striking 

‘‘subpenaed’’ and inserting ‘‘subpoenaed’’; and 

(cc) in the third sentence, by striking 

‘‘Director’’ and inserting ‘‘appropriate Federal 

banking agency’’; 

(ii) in paragraph (2)— 

(I) in subparagraph (A)— 

(aa) by striking ‘‘Director of the Office of 

Thrift Supervision’’ and inserting ‘‘appropriate 

Federal banking agency’’; 

(bb) by striking ‘‘any insured savings 

association’’ and inserting ‘‘an insured savings 

association’’; and 

(cc) by striking ‘‘Director determines, in 

the Director’s discretion’’ and inserting ‘‘appropriate Federal banking agency determines, in 

the discretion of the appropriate Federal 

banking agency’’; 

(II) in subparagraph (B), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘appropriate Federal banking agency’’; 

(III) in subparagraphs (C) and (D), by striking 

‘‘Director’’ and inserting ‘‘appropriate Federal 

banking agency’’; 

(IV) in subparagraph (E)— 

(aa) in clause (ii)— 

(AA) in the clause heading, by 

striking ‘‘OR RTC’’; and 

(BB) by striking ‘‘or the Resolution 

Trust Corporation, as appropriate,’’ each 

place that term appears; and 

(bb) by striking ‘‘Director’’ each place that 

term appears and inserting ‘‘appropriate Federal banking agency’’; and 

(iii) in paragraph (3)— 

(I) in subparagraph (A), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘Comptroller’’; and 

(II) in subparagraph (B)— 
H. R. 4173—186 

(aa) in the subparagraph heading, by 

striking ‘‘OR RTC’’; 

(bb) by striking ‘‘Corporation or the Resolution Trust’’; and 

(cc) by striking ‘‘Director’’ and inserting 

‘‘Comptroller’’; 

(iv) in paragraph (4), by striking ‘‘Director’’ and 

inserting ‘‘appropriate Federal banking agency’’; 

(v) in paragraph (6)— 

(I) in subparagraph (A), by striking ‘‘Director’’ 

and inserting ‘‘Comptroller’’; and 

(II) in subparagraphs (B) and (C), by striking 

‘‘Director’’ each place that term appears and 

inserting ‘‘appropriate Federal banking agency’’; 

(vi) in paragraph (7)— 

(I) in subparagraphs (A), (B), and (D), by 

striking ‘‘Director’’ each place that term appears 

and inserting ‘‘appropriate Federal banking 

agency’’; 

(II) in subparagraph (C), by striking ‘‘Director’’ 

and inserting ‘‘Federal Deposit Insurance Corporation or the Comptroller, as appropriate,’’; and 

(III) by striking subparagraph (E) and 

inserting the following: 

‘‘(E) ADMINISTRATION BY THE COMPTROLLER AND THE

CORPORATION.—The Comptroller may issue such regulations, and the appropriate Federal banking agency may 

issue such orders, including those issued pursuant to section 8 of the Federal Deposit Insurance Act, as may be 

necessary to administer and carry out this paragraph and 

to prevent evasion of this paragraph.’’; 

(E) in subsection (e)(2), strike ‘‘Director’’ and insert 

‘‘Comptroller’’; 

(F) in subsection (i)— 

(i) by striking ‘‘Director’’, each place such term 

appears, and inserting ‘‘Comptroller’’; 

(ii) in paragraph (2), in the heading, by striking 

‘‘DIRECTOR’’ and inserting ‘‘COMPTROLLER’’; 

(iii) in paragraph (5)(A), by striking ‘‘of the Currency’’; and 

(iv) except as provided in clauses (i) through (iii), 

by striking ‘‘Director’’ each place such term appears 

and inserting ‘‘Comptroller’’; 

(G) in subsection (o)— 

(i) in paragraph (1), by striking ‘‘Director’’ and 

inserting ‘‘Comptroller’’; and 

(ii) in paragraph (2)(B), by striking ‘‘Director’s 

determination’’ and inserting ‘‘determination of the 

Comptroller’’; 

(H) in subsections (m), (n), (o), and (p), by striking 

‘‘Director’’, each place such term appears, and inserting 

‘‘Comptroller’’; 

(I) in subsection (q)— 

(i) in paragraph (6), by striking ‘‘of Governors of 

the Federal Reserve System’’; 

(ii) by striking ‘‘Director’’ each place that term 

appears and inserting ‘‘Board’’; and 
H. R. 4173—187 

(iii) by inserting ‘‘in consultation with the Comptroller and the Corporation,’’ before ‘‘considers’’; 

(J) in subsection (r)(3), by striking ‘‘Director’’ and 

inserting ‘‘Comptroller of the Currency’’; 

(K) in subsection (s)— 

(i) in paragraph (1), strike ‘‘Director’’ and insert 

‘‘Comptroller of the Currency’’; 

(ii) in paragraph (2), strike ‘‘Director’’ and insert 

‘‘Comptroller of the Currency’’; 

(iii) in paragraph (3), by striking ‘‘Director’s discretion, the Director’’ and inserting ‘‘discretion of the 

appropriate Federal banking agency, the appropriate 

Federal banking agency,’’; 

(iv) in paragraph (4), by striking ‘‘Director’’ each 

place that term appears and inserting ‘‘appropriate 

Federal banking agency’’; and 

(v) in paragraph (5)— 

(I) by striking ‘‘Director’’, each place such term 

appears, and inserting ‘‘appropriate Federal 

banking agency’’; and 

(II) by striking ‘‘Director’s approval’’ and 

inserting ‘‘approval of the appropriate Federal 

banking agency’’; 

(L) in subsection (t)— 

(i) in paragraph (1), by striking subparagraph (D); 

(ii) by striking paragraph (3) and inserting the 

following: 

‘‘(3) [Repealed].’’; 

(iii) in paragraph (5)— 

(I) in subparagraph (B), by striking ‘‘Corporation, in its sole discretion’’ and inserting ‘‘appropriate Federal banking agency, in the sole discretion of the appropriate Federal banking agency’’; 

and 

(II) by striking subparagraph (D); 

(iv) in paragraph (6)— 

(I) by striking subparagraph (A) and inserting 

the following: 

‘‘(A) [Reserved].’’; 

(II) in subparagraph (B), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘appropriate Federal banking agency’’; 

(III) in subparagraph (C)— 

(aa) in clause (i), by striking ‘‘Director’s 

prior approval’’ and inserting ‘‘prior approval 

of the appropriate Federal banking agency’’; 

(bb) in clause (ii), by striking ‘‘Director’s 

discretion’’ and inserting ‘‘discretion of the 

appropriate Federal banking agency’’; and 

(cc) by striking ‘‘Director’’ each place that 

term appears and inserting ‘‘appropriate Federal banking agency’’; 

(IV) in subparagraph (E), by striking ‘‘Director 

shall’’ and inserting ‘‘appropriate Federal banking 

agency may’’; and 

(V) in subparagraph (F), by striking ‘‘Director’’ 

and all that follows through the end of the 
H. R. 4173—188 

subparagraph and inserting ‘‘appropriate Federal 

banking agency under this Act or any other provision of law.’’; 

(v) in paragraph (7), by striking ‘‘Director’’ each 

place that term appears and inserting ‘‘appropriate 

Federal banking agency’’; 

(vi) by striking paragraph (8) and inserting the 

following: 

‘‘(8) [Repealed].’’; 

(vii) in paragraph (9)— 

(I) in subparagraph (A), by striking ‘‘Director’’ 

and inserting ‘‘Comptroller’’; 

(II) in subparagraph (C), by striking ‘‘of the 

Currency’’; and 

(III) by striking subparagraph (B) and redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively; and 

(viii) except as provided in clauses (i) through (vii), 

by striking ‘‘Director’’ each place that term appears 

and inserting ‘‘appropriate Federal banking agency’’; 

(M) in subsection (u), by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal 

banking agency’’; 

(N) in subsection (v)— 

(i) in paragraph (2), by striking ‘‘Director’s determinations’’ and inserting ‘‘determinations of the appropriate Federal banking agency’’; and 

(ii) by striking ‘‘Director’’ each place that term 

appears and inserting ‘‘appropriate Federal banking 

agency’’; 

(O) in subsection (w)(1)— 

(i) in subparagraph (A)(II), by striking ‘‘Director’s 

intention’’ and inserting ‘‘intention of the Comptroller’’; 

and 

(ii) in subparagraph (B), by striking ‘‘Director’s 

intention’’ and inserting ‘‘intention of the Comptroller’’; 

and 

(P) except as provided in subparagraphs (A) through 

(J), by striking ‘‘Director’’ each place that term appears 

and inserting ‘‘Comptroller’’; 

(6) in section 8 (12 U.S.C. 1466a), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘Comptroller’’; 

(7) in section 9 (12 U.S.C. 1467)— 

(A) in subsection (a), by striking ‘‘assessed by the 

Director’’ and all that follows through the end of the subsection and inserting the following: ‘‘assessed by— 

‘‘(1) the Comptroller, against each such Federal savings 

association, as the Comptroller deems necessary or appropriate; 

and 

‘‘(2) the Corporation, against each such State savings 

association, as the Corporation deems necessary or appropriate.’’; 

(B) in subsection (b), by striking ‘‘Director’’, each place 

such term appears, and inserting ‘‘Comptroller or Corporation, as appropriate’’; 

(C) in subsection (e)— 
H. R. 4173—189 

(i) by striking ‘‘Only the Director’’ and inserting 

‘‘The Comptroller’’; and 

(ii) by striking ‘‘Director’s designee’’ and inserting 

‘‘designee of the Comptroller’’; 

(D) by striking subsection (f) and inserting the following: 

‘‘(f) [Reserved].’’; 

(E) in subsection (g)— 

(i) in paragraph (1), by striking ‘‘Director’’ and 

inserting ‘‘appropriate Federal banking agency’’; and 

(ii) in paragraph (2), by striking ‘‘Director, or the 

Corporation, as the case may be,’’ and inserting ‘‘appropriate Federal banking agency for the savings association’’; 

(F) in subsection (i), by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal 

banking agency’’; 

(G) in subsection (j), by striking ‘‘Director’s sole discretion’’ and inserting ‘‘sole discretion of the appropriate Federal banking agency’’; 

(H) in subsection (k), by striking ‘‘Director may assess 

against institutions for which the Director is the appropriate Federal banking agency, as defined in section 3 

of the Federal Deposit Insurance Act,’’ and inserting ‘‘appropriate Federal banking agency may assess against an 

institution’’; and 

(I) except as provided in subparagraphs (A) through 

(G), by striking ‘‘Director’’ each place that term appears 

and inserting ‘‘appropriate Federal banking agency’’; 

(8) in section 10 (12 U.S.C. 1467a)— 

(A) in subsection (a)(1), by striking ‘‘Director’’ each 

place that term appears and inserting ‘‘appropriate Federal 

banking agency’’; 

(B) in subsection (b)— 

(i) in paragraph (2), by striking ‘‘and the regional 

office of the Director of the district in which its principal office is located,’’; and 

(ii) in paragraph (6), by striking ‘‘Director’s own 

motion or application’’ and inserting ‘‘motion or application of the Board’’; 

(C) in subsection (c)— 

(i) in paragraph (2)(F), by striking ‘‘of Governors 

of the Federal Reserve System’’; 

(ii) in paragraph (4)(B), in the subparagraph 

heading, by striking ‘‘BY DIRECTOR’’; 

(iii) in paragraph (6)(D), in the subparagraph 

heading, by striking ‘‘BY DIRECTOR’’; and 

(iv) in paragraph (9)(E), by inserting ‘‘(in consultation with the appropriate Federal banking agency)’’ 

after ‘‘including a determination’’; 

(D) in subsection (g)(5)(B), by striking ‘‘the Director’s 

discretion’’ and inserting ‘‘the discretion of the Board’’; 

(E) in subsection (l), by striking ‘‘Director’’ each place 

that term appears and inserting ‘‘appropriate Federal 

banking agency’’; 

(F) in subsection (m), by striking ‘‘Director’’ and 

inserting ‘‘appropriate Federal banking agency’’; 
H. R. 4173—190 

(G) in subsection (p)— 

(i) in paragraph (1)— 

(I) by striking ‘‘Director determines’’ the 1st 

place such term appears and inserting ‘‘Board or 

the appropriate Federal banking agency for the 

savings association determines’’; 

(II) by striking ‘‘Director may’’ and inserting 

‘‘Board may’’; and 

(III) by striking ‘‘Director determines’’ the 2nd 

place such term appears and inserting ‘‘Board, in 

consultation with the appropriate Federal banking 

agency for the savings association determines’’; 

and 

(ii) in paragraph (2), by striking ‘‘Director’’, each 

place such term appears, and inserting ‘‘Board’’; 

(H) in subsection (q), by striking ‘‘Director’’, each place 

such term appears, and inserting ‘‘Board’’; 

(I) in subsection (r), by striking ‘‘Director’’, each place 

such term appears, and inserting ‘‘Board or appropriate 

Federal banking agency’’; 

(J) in subsection (s)— 

(i) in paragraph (2)— 

(I) in subparagraph (B)(ii), by striking ‘‘Director’s judgment’’ and inserting ‘‘judgment of the 

appropriate Federal banking agency for the 

savings association’’; and 

(II) by striking ‘‘Director’’ each place that term 

appears and inserting ‘‘appropriate Federal 

banking agency for the savings association’’; and 

(ii) in paragraph (4), by striking ‘‘Director’’ and 

inserting ‘‘Comptroller’’; and 

(K) except as provided in subparagraphs (A) through 

(J), by striking ‘‘Director’’ each place that term appears 

and inserting ‘‘Board’’; 

(9) in section 11 (12 U.S.C. 1468), by striking ‘‘Director’’ 

each place that term appears and inserting ‘‘appropriate Federal banking agency’’; 

(10) in section 12 (12 U.S.C. 1468a), by striking ‘‘the 

Director’’ and inserting ‘‘a Federal banking agency’’; and 

(11) in section 13 (12 U.S.C. 1468a) is amended by striking 

‘‘Director’’ and inserting ‘‘a Federal banking agency’’. 

SEC. 370. HOUSING ACT OF 1948. 

Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) 

is amended— 

(1) in the matter preceding paragraph (1), by striking ‘‘and 

the Director of the Office of Thrift Supervision’’ and inserting 

‘‘, the Comptroller of the Currency, and the Federal Deposit 

Insurance Corporation’’; and 

(2) in paragraph (3), by striking ‘‘Board’’ and inserting 

‘‘Agency’’. 

SEC. 371. HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992. 

Section 543 of the Housing and Community Development Act 

of 1992 (Public Law 102–550; 106 Stat. 3798) is amended— 

(1) in subsection (c)(1)— 

(A) by striking subparagraphs (D) through (F); and 
H. R. 4173—191 

(B) by redesignating subparagraphs (G) and (H) as 

subparagraphs (D) and (E), respectively; and 

(2) in subsection (f)— 

(A) in paragraph (2), by striking ‘‘the Office of Thrift 

Supervision,’’ each place that term appears; and 

(B) in paragraph (3)— 

(i) in the matter preceding subparagraph (A), by 

striking ‘‘the Office of Thrift Supervision,’’; and 

(ii) in subparagraph (D), by striking ‘‘Office of 

Thrift Supervision,’’. 

SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983. 

Section 469 of the Housing and Urban-Rural Recovery Act 

of 1983 (12 U.S.C. 1701p–1) is amended in the first sentence, 

by striking ‘‘Federal Home Loan Bank Board’’ and inserting ‘‘Federal Housing Finance Agency’’. 

SEC. 373. NATIONAL HOUSING ACT. 

Section 202(f) of the National Housing Act (12 U.S.C. 1708(f)) 

is amended— 

(1) by striking paragraph (5) and inserting the following: 

‘‘(5) if the mortgagee is a national bank, a subsidiary or 

affiliate of such bank, a Federal savings association or a subsidiary or affiliate of a savings association, the Comptroller 

of the Currency;’’; 

(2) in paragraph (6), by adding ‘‘and’’ at the end; 

(3) in paragraph (7)— 

(A) by inserting ‘‘or State savings association’’ after 

‘‘State bank’’; and 

(B) by striking ‘‘; and’’ and inserting a period; and 

(4) by striking paragraph (8). 

SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION ACT. 

Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act (42 U.S.C. 8105(c)(3)) is amended by striking ‘‘Federal 

Home Loan Bank Board’’ and inserting ‘‘Federal Housing Finance 

Agency’’. 

SEC. 375. PUBLIC LAW 93–100. 

Section 5(d) of Public Law 93–100 (12 U.S.C. 1470(a)) is 

amended— 

(1) in paragraph (1), by striking ‘‘Federal Savings and 

Loan Insurance Corporation with respect to insured institutions, the Board of Governors of the Federal Reserve System 

with respect to State member insured banks, and the Federal 

Deposit Insurance Corporation with respect to State nonmember insured banks’’ and inserting ‘‘appropriate Federal 

banking agency, with respect to the institutions subject to 

the jurisdiction of each such agency,’’; and 

(2) in paragraph (2), by striking ‘‘supervisory’’ and inserting 

‘‘banking’’. 

SEC. 376. SECURITIES EXCHANGE ACT OF 1934. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

is amended— 

(1) in section 3(a)(34) (15 U.S.C. 78c(a)(34))— 

(A) in subparagraph (A)— 
H. R. 4173—192 

(i) in clause (i), by striking ‘‘or a subsidiary or 

a department or division of any such bank’’ and 

inserting ‘‘a subsidiary or a department or division 

of any such bank, a Federal savings association (as 

defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation, or a subsidiary or department or division of any 

such Federal savings association’’; 

(ii) in clause (ii), by striking ‘‘or a subsidiary or 

a department or division of such subsidiary’’ and 

inserting ‘‘a subsidiary or a department or division 

of such subsidiary, or a savings and loan holding company’’; 

(iii) in clause (iii), by striking ‘‘or a subsidiary 

or department or division thereof;’’ and inserting ‘‘a 

subsidiary or department or division of any such bank, 

a State savings association (as defined in section 3(b)(3) 

of the Federal Deposit Insurance Act (12 U.S.C. 

1813(b)(3))), the deposits of which are insured by the 

Federal Deposit Insurance Corporation, or a subsidiary 

or a department or division of any such State savings 

association; and’’; 

(iv) by striking clause (iv); and 

(v) by redesignating clause (v) as clause (iv); 

(B) in subparagraph (B)— 

(i) in clause (i), by striking ‘‘or a subsidiary of 

any such bank’’ and inserting ‘‘a subsidiary of any 

such bank, a Federal savings association (as defined 

in section 3(b)(2) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(b)(2))), the deposits of which are 

insured by the Federal Deposit Insurance Corporation, 

or a subsidiary of any such Federal savings association’’; 

(ii) in clause (ii), by striking ‘‘or a subsidiary of 

a bank holding company which is a bank other than 

a bank specified in clause (i), (iii), or (iv) of this 

subparagraph’’ and inserting ‘‘a subsidiary of a bank 

holding company that is a bank other than a bank 

specified in clause (i) or (iii) of this subparagraph, 

or a savings and loan holding company’’; 

(iii) in clause (iii), by striking ‘‘or a subsidiary 

thereof;’’ and inserting ‘‘a subsidiary of any such bank, 

a State savings association (as defined in section 3(b)(3) 

of the Federal Deposit Insurance Act (12 U.S.C. 

1813(b)(3))), the deposits of which are insured by the 

Federal Deposit Insurance Corporation, or a subsidiary 

of any such State savings association; and’’; 

(iv) by striking clause (iv); and 

(v) by redesignating clause (v) as clause (iv); 

(C) in subparagraph (C)— 

(i) in clause (i), by striking ‘‘bank’’ and inserting 

‘‘bank or a Federal savings association (as defined in 

section 3(b)(2) of the Federal Deposit Insurance Act 

(12 U.S.C. 1813(b)(2))), the deposits of which are 

insured by the Federal Deposit Insurance Corporation’’; 
H. R. 4173—193 

(ii) in clause (ii), by striking ‘‘or a subsidiary of 

a bank holding company which is a bank other than 

a bank specified in clause (i), (iii), or (iv) of this 

subparagraph’’ and inserting ‘‘a subsidiary of a bank 

holding company that is a bank other than a bank 

specified in clause (i) or (iii) of this subparagraph, 

or a savings and loan holding company’’; 

(iii) in clause (iii), by striking ‘‘System)’’ and 

inserting, ‘‘System) or a State savings association (as 

defined in section 3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation; and’’; 

(iv) by striking clause (iv); and 

(v) by redesignating clause (v) as clause (iv); 

(D) in subparagraph (D)— 

(i) in clause (i), by inserting after ‘‘bank’’ the following: ‘‘or a Federal savings association (as defined 

in section 3(b)(2) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(b)(2))), the deposits of which are 

insured by the Federal Deposit Insurance Corporation’’; 

(ii) in clause (ii), by adding ‘‘and’’ at the end; 

(iii) by striking clause (iii); 

(iv) by redesignating clause (iv) as clause (iii); and 

(v) in clause (iii), as so redesignated, by inserting 

after ‘‘bank’’ the following: ‘‘or a State savings association (as defined in section 3(b)(3) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of 

which are insured by the Federal Deposit Insurance 

Corporation’’; 

(E) in subparagraph (F)— 

(i) in clause (i), by inserting after ‘‘bank’’ the following: ‘‘or a Federal savings association (as defined 

in section 3(b)(2) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(b)(2))), the deposits of which are 

insured by the Federal Deposit Insurance Corporation’’; 

(ii) by striking clause (ii); 

(iii) by redesignating clauses (iii), (iv), and (v) as 

clauses (ii), (iii), and (iv), respectively; and 

(iv) in clause (iii), as so redesignated, by inserting 

before the semicolon the following: ‘‘or a State savings 

association (as defined in section 3(b)(3) of the Federal 

Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the 

deposits of which are insured by the Federal Deposit 

Insurance Corporation’’; 

(F) in subparagraph (G)— 

(i) in clause (i), by inserting after ‘‘national bank’’ 

the following: ‘‘, a Federal savings association (as 

defined in section 3(b)(2) of the Federal Deposit Insurance Act), the deposits of which are insured by the 

Federal Deposit Insurance Corporation,’’; 

(ii) in clause (iii)— 

(I) by inserting after ‘‘bank)’’ the following: 

‘‘, a State savings association (as defined in section 

3(b)(3) of the Federal Deposit Insurance Act), the 

deposits of which are insured by the Federal 

Deposit Insurance Corporation,’’; and 
H. R. 4173—194 

(II) by adding ‘‘and’’ at the end; 

(iii) by striking clause (iv); and 

(iv) by redesignating clause (v) as clause (iv); and 

(G) in the undesignated matter following subparagraph 

(H), by striking ‘‘, and the term ‘District of Columbia 

savings and loan association’ means any association subject 

to examination and supervision by the Office of Thrift 

Supervision under section 8 of the Home Owners’ Loan 

Act of 1933’’; 

(2) in section 12(i) (15 U.S.C. 78l(i))— 

(A) in paragraph (1), by inserting after ‘‘national 

banks’’ the following: ‘‘and Federal savings associations, 

the accounts of which are insured by the Federal Deposit 

Insurance Corporation’’; 

(B) by striking ‘‘(3)’’ and all that follows through ‘‘vested 

in the Office of Thrift Supervision’’ and inserting ‘‘and 

(3) with respect to all other insured banks and State 

savings associations, the accounts of which are insured 

by the Federal Deposit Insurance Corporation, are vested 

in the Federal Deposit Insurance Corporation’’; and 

(C) in the second sentence, by striking ‘‘the Federal 

Deposit Insurance Corporation, and the Office of Thrift 

Supervision’’ and inserting ‘‘and the Federal Deposit Insurance Corporation’’; 

(3) in section 15C(g)(1) (15 U.S.C. 78o–5(g)(1)), by striking 

‘‘the Director of the Office of Thrift Supervision, the Federal 

Savings and Loan Insurance Corporation,’’; and 

(4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)), by striking 

‘‘, other than the Office of Thrift Supervision,’’. 

SEC. 377. TITLE 18, UNITED STATES CODE. 

Title 18, United States Code, is amended— 

(1) in section 212(c)(2)— 

(A) by striking subparagraph (C); and 

(B) by redesignating subparagraphs (D) through (H) 

as subparagraphs (C) through (G), respectively; 

(2) in section 657, by striking ‘‘Office of Thrift Supervision, 

the Resolution Trust Corporation,’’; 

(3) in section 981(a)(1)(D)— 

(A) by striking ‘‘Resolution Trust Corporation,’’; and 

(B) by striking ‘‘or the Office of Thrift Supervision’’; 

(4) in section 982(a)(3)— 

(A) by striking ‘‘Resolution Trust Corporation,’’; and 

(B) by striking ‘‘or the Office of Thrift Supervision’’; 

(5) in section 1006— 

(A) by striking ‘‘Office of Thrift Supervision,’’; and 

(B) by striking ‘‘the Resolution Trust Corporation,’’; 

(6) in section 1014— 

(A) by striking ‘‘the Office of Thrift Supervision’’; and 

(B) by striking ‘‘the Resolution Trust Corporation,’’; 

and 

(7) in section 1032(1)— 

(A) by striking ‘‘the Resolution Trust Corporation,’’; 

and 

(B) by striking ‘‘or the Director of the Office of Thrift 

Supervision’’. 
H. R. 4173—195 

SEC. 378. TITLE 31, UNITED STATES CODE. 

Title 31, United States Code, is amended— 

(1) in section 321— 

(A) in subsection (c)— 

(i) in paragraph (1), by adding ‘‘and’’ at the end; 

(ii) in paragraph (2), by striking ‘‘; and’’ and 

inserting a period; and 

(iii) by striking paragraph (3); and 

(B) by striking subsection (e); and 

(2) in section 714(a), by striking ‘‘the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.’’ 

and inserting ‘‘and the Office of the Comptroller of the Currency.’’. 

TITLE IV—REGULATION OF ADVISERS 

TO HEDGE FUNDS AND OTHERS 

SEC. 401. SHORT TITLE. 

This title may be cited as the ‘‘Private Fund Investment 

Advisers Registration Act of 2010’’. 

SEC. 402. DEFINITIONS. 

(a) INVESTMENT ADVISERS ACT OF 1940 DEFINITIONS.—Section 

202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 

2(a)) is amended by adding at the end the following: 

‘‘(29) The term ‘private fund’ means an issuer that would 

be an investment company, as defined in section 3 of the 

Investment Company Act of 1940 (15 U.S.C. 80a–3), but for 

section 3(c)(1) or 3(c)(7) of that Act. 

‘‘(30) The term ‘foreign private adviser’ means any investment adviser who— 

‘‘(A) has no place of business in the United States; 

‘‘(B) has, in total, fewer than 15 clients and investors 

in the United States in private funds advised by the investment adviser; 

‘‘(C) has aggregate assets under management attributable to clients in the United States and investors in 

the United States in private funds advised by the investment adviser of less than $25,000,000, or such higher 

amount as the Commission may, by rule, deem appropriate 

in accordance with the purposes of this title; and 

‘‘(D) neither— 

‘‘(i) holds itself out generally to the public in the 

United States as an investment adviser; nor 

‘‘(ii) acts as— 

‘‘(I) an investment adviser to any investment 

company registered under the Investment Company Act of 1940; or 

‘‘(II) a company that has elected to be a business development company pursuant to section 54 

of the Investment Company Act of 1940 (15 U.S.C. 

80a–53), and has not withdrawn its election.’’. 

(b) OTHER DEFINITIONS.—As used in this title, the terms 

‘‘investment adviser’’ and ‘‘private fund’’ have the same meanings 

as in section 202 of the Investment Advisers Act of 1940, as 

amended by this title. 
H. R. 4173—196 

SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED 

EXEMPTION FOR FOREIGN PRIVATE ADVISERS; LIMITED 

INTRASTATE EXEMPTION. 

Section 203(b) of the Investment Advisers Act of 1940 (15 

U.S.C. 80b–3(b)) is amended— 

(1) in paragraph (1), by inserting ‘‘, other than an investment adviser who acts as an investment adviser to any private 

fund,’’ before ‘‘all of whose’’; 

(2) by striking paragraph (3) and inserting the following: 

‘‘(3) any investment adviser that is a foreign private 

adviser;’’; and 

(3) in paragraph (5), by striking ‘‘or’’ at the end; 

(4) in paragraph (6)— 

(A) by striking ‘‘any investment adviser’’ and inserting 

‘‘(A) any investment adviser’’; 

(B) by redesignating subparagraphs (A) and (B) as 

clauses (i) and (ii), respectively; and 

(C) in clause (ii) (as so redesignated), by striking the 

period at the end and inserting ‘‘; or’’; and 

(D) by adding at the end the following: 

‘‘(B) any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading 

advisor and advises a private fund, provided that, if after the 

date of enactment of the Private Fund Investment Advisers Registration Act of 2010, the business of the advisor should become 

predominately the provision of securities-related advice, then such 

adviser shall register with the Commission.’’. 

(5) by adding at the end the following: 

‘‘(7) any investment adviser, other than any entity that 

has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–54), who solely advises— 

‘‘(A) small business investment companies that are 

licensees under the Small Business Investment Act of 1958; 

‘‘(B) entities that have received from the Small Business Administration notice to proceed to qualify for a 

license as a small business investment company under 

the Small Business Investment Act of 1958, which notice 

or license has not been revoked; or 

‘‘(C) applicants that are affiliated with 1 or more 

licensed small business investment companies described 

in subparagraph (A) and that have applied for another 

license under the Small Business Investment Act of 1958, 

which application remains pending.’’. 

SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS; DISCLOSURES. 

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–4) is amended— 

(1) by redesignating subsections (b) and (c) as subsections 

(c) and (d), respectively; and 

(2) by inserting after subsection (a) the following: 

‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 

‘‘(1) IN GENERAL.—The Commission may require any investment adviser registered under this title— 

‘‘(A) to maintain such records of, and file with the 

Commission such reports regarding, private funds advised 
H. R. 4173—197 

by the investment adviser, as necessary and appropriate 

in the public interest and for the protection of investors, 

or for the assessment of systemic risk by the Financial 

Stability Oversight Council (in this subsection referred to 

as the ‘Council’); and 

‘‘(B) to provide or make available to the Council those 

reports or records or the information contained therein. 

‘‘(2) TREATMENT OF RECORDS.—The records and reports of 

any private fund to which an investment adviser registered 

under this title provides investment advice shall be deemed 

to be the records and reports of the investment adviser. 

‘‘(3) REQUIRED INFORMATION.—The records and reports 

required to be maintained by an investment adviser and subject 

to inspection by the Commission under this subsection shall 

include, for each private fund advised by the investment 

adviser, a description of— 

‘‘(A) the amount of assets under management and use 

of leverage, including off-balance-sheet leverage; 

‘‘(B) counterparty credit risk exposure; 

‘‘(C) trading and investment positions; 

‘‘(D) valuation policies and practices of the fund; 

‘‘(E) types of assets held; 

‘‘(F) side arrangements or side letters, whereby certain 

investors in a fund obtain more favorable rights or entitlements than other investors; 

‘‘(G) trading practices; and 

‘‘(H) such other information as the Commission, in 

consultation with the Council, determines is necessary and 

appropriate in the public interest and for the protection 

of investors or for the assessment of systemic risk, which 

may include the establishment of different reporting 

requirements for different classes of fund advisers, based 

on the type or size of private fund being advised. 

‘‘(4) MAINTENANCE OF RECORDS.—An investment adviser 

registered under this title shall maintain such records of private 

funds advised by the investment adviser for such period or 

periods as the Commission, by rule, may prescribe as necessary 

and appropriate in the public interest and for the protection 

of investors, or for the assessment of systemic risk. 

‘‘(5) FILING OF RECORDS.—The Commission shall issue rules 

requiring each investment adviser to a private fund to file 

reports containing such information as the Commission deems 

necessary and appropriate in the public interest and for the 

protection of investors or for the assessment of systemic risk. 

‘‘(6) EXAMINATION OF RECORDS.— 

‘‘(A) PERIODIC AND SPECIAL EXAMINATIONS.—The 

Commission— 

‘‘(i) shall conduct periodic inspections of the records 

of private funds maintained by an investment adviser 

registered under this title in accordance with a 

schedule established by the Commission; and 

‘‘(ii) may conduct at any time and from time to 

time such additional, special, and other examinations 

as the Commission may prescribe as necessary and 

appropriate in the public interest and for the protection 

of investors, or for the assessment of systemic risk. 
H. R. 4173—198 

‘‘(B) AVAILABILITY OF RECORDS.—An investment adviser 

registered under this title shall make available to the 

Commission any copies or extracts from such records as 

may be prepared without undue effort, expense, or delay, 

as the Commission or its representatives may reasonably 

request. 

‘‘(7) INFORMATION SHARING.— 

‘‘(A) IN GENERAL.—The Commission shall make available to the Council copies of all reports, documents, records, 

and information filed with or provided to the Commission 

by an investment adviser under this subsection as the 

Council may consider necessary for the purpose of assessing 

the systemic risk posed by a private fund. 

‘‘(B) CONFIDENTIALITY.—The Council shall maintain 

the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality 

established for the Commission pursuant to paragraph (8). 

The Council shall be exempt from section 552 of title 5, 

United States Code, with respect to any information in 

any report, document, record, or information made available, to the Council under this subsection.’’. 

‘‘(8) COMMISSION CONFIDENTIALITY OF REPORTS.—Notwithstanding any other provision of law, the Commission may not 

be compelled to disclose any report or information contained 

therein required to be filed with the Commission under this 

subsection, except that nothing in this subsection authorizes 

the Commission— 

‘‘(A) to withhold information from Congress, upon an 

agreement of confidentiality; or 

‘‘(B) prevent the Commission from complying with— 

‘‘(i) a request for information from any other Federal department or agency or any self-regulatory 

organization requesting the report or information for 

purposes within the scope of its jurisdiction; or 

‘‘(ii) an order of a court of the United States in 

an action brought by the United States or the Commission. 

‘‘(9) OTHER RECIPIENTS CONFIDENTIALITY.—Any department, agency, or self-regulatory organization that receives 

reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with 

the level of confidentiality established for the Commission 

under paragraph (8). 

‘‘(10) PUBLIC INFORMATION EXCEPTION.— ‘‘(A) IN GENERAL.—The Commission, the Council, and 

any other department, agency, or self-regulatory organization that receives information, reports, documents, records, 

or information from the Commission under this subsection, 

shall be exempt from the provisions of section 552 of title 

5, United States Code, with respect to any such report, 

document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the 

same limitations on public disclosure as any facts 
H. R. 4173—199 

ascertained during an examination, as provided by section 

210(b) of this title. 

‘‘(B) PROPRIETARY INFORMATION.—For purposes of this 

paragraph, proprietary information includes sensitive, nonpublic information regarding— 

‘‘(i) the investment or trading strategies of the 

investment adviser; 

‘‘(ii) analytical or research methodologies; 

‘‘(iii) trading data; 

‘‘(iv) computer hardware or software containing 

intellectual property; and 

‘‘(v) any additional information that the Commission determines to be proprietary. 

‘‘(11) ANNUAL REPORT TO CONGRESS.—The Commission 

shall report annually to Congress on how the Commission has 

used the data collected pursuant to this subsection to monitor 

the markets for the protection of investors and the integrity 

of the markets.’’. 

SEC. 405. DISCLOSURE PROVISION AMENDMENT. 

Section 210(c) of the Investment Advisers Act of 1940 (15 

U.S.C. 80b–10(c)) is amended by inserting before the period at 

the end the following: ‘‘or for purposes of assessment of potential 

systemic risk’’. 

SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY. 

Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–11) is amended— 

(1) in subsection (a), by inserting before the period at 

the end of the first sentence the following: ‘‘, including rules 

and regulations defining technical, trade, and other terms used 

in this title, except that the Commission may not define the 

term ‘client’ for purposes of paragraphs (1) and (2) of section 

206 to include an investor in a private fund managed by an 

investment adviser, if such private fund has entered into an 

advisory contract with such adviser’’; and 

(2) by adding at the end the following: 

‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The Commission 

and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after 

the date of enactment of the Private Fund Investment Advisers 

Registration Act of 2010, jointly promulgate rules to establish the 

form and content of the reports required to be filed with the 

Commission under subsection 204(b) and with the Commodity 

Futures Trading Commission by investment advisers that are registered both under this title and the Commodity Exchange Act 

(7 U.S.C. 1a et seq.).’’. 

SEC. 407. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND 

ADVISERS. 

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–3) is amended by adding at the end the following: 

‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.—No 

investment adviser that acts as an investment adviser solely to 

1 or more venture capital funds shall be subject to the registration 

requirements of this title with respect to the provision of investment 

advice relating to a venture capital fund. Not later than 1 year 

after the date of enactment of this subsection, the Commission 
H. R. 4173—200 

shall issue final rules to define the term ‘venture capital fund’ 

for purposes of this subsection. The Commission shall require such 

advisers to maintain such records and provide to the Commission 

such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection 

of investors.’’. 

SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND 

ADVISERS. 

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–3) is amended by adding at the end the following: 

‘‘(m) EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND

ADVISERS.— 

‘‘(1) IN GENERAL.—The Commission shall provide an exemption from the registration requirements under this section to 

any investment adviser of private funds, if each of such investment adviser acts solely as an adviser to private funds and 

has assets under management in the United States of less 

than $150,000,000. 

‘‘(2) REPORTING.—The Commission shall require investment 

advisers exempted by reason of this subsection to maintain 

such records and provide to the Commission such annual or 

other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors. 

‘‘(n) REGISTRATION AND EXAMINATION OF MID-SIZED PRIVATE

FUND ADVISERS.—In prescribing regulations to carry out the 

requirements of this section with respect to investment advisers 

acting as investment advisers to mid-sized private funds, the 

Commission shall take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk, and shall provide for registration and examination procedures with respect to the investment advisers of such funds which 

reflect the level of systemic risk posed by such funds.’’. 

SEC. 409. FAMILY OFFICES. 

(a) IN GENERAL.—Section 202(a)(11) of the Investment Advisers 

Act of 1940 (15 U.S.C. 80b–2(a)(11)) is amended by striking ‘‘or 

(G)’’ and inserting the following: ‘‘; (G) any family office, as defined 

by rule, regulation, or order of the Commission, in accordance 

with the purposes of this title; or (H)’’. 

(b) RULEMAKING.—The rules, regulations, or orders issued by 

the Commission pursuant to section 202(a)(11)(G) of the Investment 

Advisers Act of 1940, as added by this section, regarding the definition of the term ‘‘family office’’ shall provide for an exemption 

that— 

(1) is consistent with the previous exemptive policy of the 

Commission, as reflected in exemptive orders for family offices 

in effect on the date of enactment of this Act, and the 

grandfathering provisions in paragraph (3); 

(2) recognizes the range of organizational, management, 

and employment structures and arrangements employed by 

family offices; and 

(3) does not exclude any person who was not registered 

or required to be registered under the Investment Advisers 

Act of 1940 on January 1, 2010 from the definition of the 

term ‘‘family office’’, solely because such person provides investment advice to, and was engaged before January 1, 2010 in 

providing investment advice to— 
H. R. 4173—201 

(A) natural persons who, at the time of their applicable 

investment, are officers, directors, or employees of the 

family office who— 

(i) have invested with the family office before 

January 1, 2010; and 

(ii) are accredited investors, as defined in Regulation D of the Commission (or any successor thereto) 

under the Securities Act of 1933, or, as the Commission 

may prescribe by rule, the successors-in-interest 

thereto; 

(B) any company owned exclusively and controlled by 

members of the family of the family office, or as the 

Commission may prescribe by rule; 

(C) any investment adviser registered under the Investment Adviser Act of 1940 that provides investment advice 

to the family office and who identifies investment 

opportunities to the family office, and invests in such transactions on substantially the same terms as the family office 

invests, but does not invest in other funds advised by 

the family office, and whose assets as to which the family 

office directly or indirectly provides investment advice represent, in the aggregate, not more than 5 percent of the 

value of the total assets as to which the family office 

provides investment advice. 

(c) ANTIFRAUD AUTHORITY.—A family office that would not be 

a family office, but for subsection (b)(3), shall be deemed to be 

an investment adviser for the purposes of paragraphs (1), (2) and 

(4) of section 206 of the Investment Advisers Act of 1940. 

SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD 

FOR FEDERAL REGISTRATION OF INVESTMENT ADVISERS. 

Section 203A(a) of the of the Investment Advisers Act of 1940 

(15 U.S.C. 80b–3a(a)) is amended— 

(1) by redesignating paragraph (2) as paragraph (3); and 

(2) by inserting after paragraph (1) the following: 

‘‘(2) TREATMENT OF MID-SIZED INVESTMENT ADVISERS.— ‘‘(A) IN GENERAL.—No investment adviser described 

in subparagraph (B) shall register under section 203, unless 

the investment adviser is an adviser to an investment 

company registered under the Investment Company Act 

of 1940, or a company which has elected to be a business 

development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn the 

election, except that, if by effect of this paragraph an 

investment adviser would be required to register with 15 

or more States, then the adviser may register under section 

203. 

‘‘(B) COVERED PERSONS.—An investment adviser 

described in this subparagraph is an investment adviser 

that— 

‘‘(i) is required to be registered as an investment 

adviser with the securities commissioner (or any 

agency or office performing like functions) of the State 

in which it maintains its principal office and place 

of business and, if registered, would be subject to examination as an investment adviser by any such commissioner, agency, or office; and 
H. R. 4173—202 

‘‘(ii) has assets under management between— 

‘‘(I) the amount specified under subparagraph 

(A) of paragraph (1), as such amount may have 

been adjusted by the Commission pursuant to that 

subparagraph; and 

‘‘(II) $100,000,000, or such higher amount as 

the Commission may, by rule, deem appropriate 

in accordance with the purposes of this title.’’. 

SEC. 411. CUSTODY OF CLIENT ASSETS. 

The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) 

is amended by adding at the end the following new section: 

‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS. 

‘‘An investment adviser registered under this title shall take 

such steps to safeguard client assets over which such adviser has 

custody, including, without limitation, verification of such assets 

by an independent public accountant, as the Commission may, 

by rule, prescribe.’’. 

SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY RULE COSTS. 

The Comptroller General of the United States shall— 

(1) conduct a study of— 

(A) the compliance costs associated with the current 

Securities and Exchange Commission rules 204–2 (17 

C.F.R. Parts 275.204–2) and rule 206(4)–2 (17 C.F.R. 

275.206(4)–2) under the Investment Advisers Act of 1940 

regarding custody of funds or securities of clients by investment advisers; and 

(B) the additional costs if subsection (b)(6) of rule 

206(4)–2 (17 C.F.R. 275.206(4)–2(b)(6)) relating to operational independence were eliminated; and 

(2) submit a report to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results 

of such study, not later than 3 years after the date of enactment 

of this Act. 

SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD. 

(a) IN GENERAL.—The Commission shall adjust any net worth 

standard for an accredited investor, as set forth in the rules of 

the Commission under the Securities Act of 1933, so that the 

individual net worth of any natural person, or joint net worth 

with the spouse of that person, at the time of purchase, is more 

than $1,000,000 (as such amount is adjusted periodically by rule 

of the Commission), excluding the value of the primary residence 

of such natural person, except that during the 4-year period that 

begins on the date of enactment of this Act, any net worth standard 

shall be $1,000,000, excluding the value of the primary residence 

of such natural person. 

(b) REVIEW AND ADJUSTMENT.— 

(1) INITIAL REVIEW AND ADJUSTMENT.— 

(A) INITIAL REVIEW.—The Commission may undertake 

a review of the definition of the term ‘‘accredited investor’’, 

as such term applies to natural persons, to determine 

whether the requirements of the definition, excluding the 

requirement relating to the net worth standard described 

in subsection (a), should be adjusted or modified for the 
H. R. 4173—203 

protection of investors, in the public interest, and in light 

of the economy. 

(B) ADJUSTMENT OR MODIFICATION.—Upon completion 

of a review under subparagraph (A), the Commission may, 

by notice and comment rulemaking, make such adjustments 

to the definition of the term ‘‘accredited investor’’, excluding 

adjusting or modifying the requirement relating to the 

net worth standard described in subsection (a), as such 

term applies to natural persons, as the Commission may 

deem appropriate for the protection of investors, in the 

public interest, and in light of the economy. 

(2) SUBSEQUENT REVIEWS AND ADJUSTMENT.— 

(A) SUBSEQUENT REVIEWS.—Not earlier than 4 years 

after the date of enactment of this Act, and not less frequently than once every 4 years thereafter, the Commission 

shall undertake a review of the definition, in its entirety, 

of the term ‘‘accredited investor’’, as defined in section 

230.215 of title 17, Code of Federal Regulations, or any 

successor thereto, as such term applies to natural persons, 

to determine whether the requirements of the definition 

should be adjusted or modified for the protection of investors, in the public interest, and in light of the economy. 

(B) ADJUSTMENT OR MODIFICATION.—Upon completion 

of a review under subparagraph (A), the Commission may, 

by notice and comment rulemaking, make such adjustments 

to the definition of the term ‘‘accredited investor’’, as 

defined in section 230.215 of title 17, Code of Federal 

Regulations, or any successor thereto, as such term applies 

to natural persons, as the Commission may deem appropriate for the protection of investors, in the public interest, 

and in light of the economy. 

SEC. 414. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES 

EXCHANGE ACT. 

The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) 

is further amended by adding at the end the following new section: 

‘‘SEC. 224. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES 

EXCHANGE ACT. 

‘‘Nothing in this title shall relieve any person of any obligation 

or duty, or affect the availability of any right or remedy available 

to the Commodity Futures Trading Commission or any private 

party, arising under the Commodity Exchange Act (7 U.S.C. 1 

et seq.) governing commodity pools, commodity pool operators, or 

commodity trading advisors.’’. 

SEC. 415. GAO STUDY AND REPORT ON ACCREDITED INVESTORS. 

The Comptroller General of the United States shall conduct 

a study on the appropriate criteria for determining the financial 

thresholds or other criteria needed to qualify for accredited investor 

status and eligibility to invest in private funds, and shall submit 

a report to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of the 

House of Representatives on the results of such study not later 

than 3 years after the date of enactment of this Act. 
H. R. 4173—204 

SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE FUNDS. 

The Comptroller General of the United States shall— 

(1) conduct a study of the feasibility of forming a selfregulatory organization to oversee private funds; and 

(2) submit a report to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results 

of such study, not later than 1 year after the date of enactment 

of this Act. 

SEC. 417. COMMISSION STUDY AND REPORT ON SHORT SELLING. 

(a) STUDIES.—The Division of Risk, Strategy, and Financial 

Innovation of the Commission shall conduct— 

(1) a study, taking into account current scholarship, on 

the state of short selling on national securities exchanges and 

in the over-the-counter markets, with particular attention to 

the impact of recent rule changes and the incidence of— 

(A) the failure to deliver shares sold short; or 

(B) delivery of shares on the fourth day following the 

short sale transaction; and 

(2) a study of— 

(A) the feasibility, benefits, and costs of requiring 

reporting publicly, in real time short sale positions of publicly listed securities, or, in the alternative, reporting such 

short positions in real time only to the Commission and 

the Financial Industry Regulatory Authority; and 

(B) the feasibility, benefits, and costs of conducting 

a voluntary pilot program in which public companies will 

agree to have all trades of their shares marked ‘‘short’’, 

‘‘market maker short’’, ‘‘buy’’, ‘‘buy-to-cover’’, or ‘‘long’’, and 

reported in real time through the Consolidated Tape. 

(b) REPORTS.—The Commission shall submit a report to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives— 

(1) on the results of the study required under subsection 

(a)(1), including recommendations for market improvements, 

not later than 2 years after the date of enactment of this 

Act; and 

(2) on the results of the study required under subsection 

(a)(2), not later than 1 year after the date of enactment of 

this Act. 

SEC. 418. QUALIFIED CLIENT STANDARD. 

Section 205(e) of the Investment Advisers Act of 1940 (15 

U.S.C. 80b–5(e)) is amended by adding at the end the following: 

‘‘With respect to any factor used in any rule or regulation by 

the Commission in making a determination under this subsection, 

if the Commission uses a dollar amount test in connection with 

such factor, such as a net asset threshold, the Commission shall, 

by order, not later than 1 year after the date of enactment of 

the Private Fund Investment Advisers Registration Act of 2010, 

and every 5 years thereafter, adjust for the effects of inflation 

on such test. Any such adjustment that is not a multiple of $100,000 

shall be rounded to the nearest multiple of $100,000.’’. 
H. R. 4173—205 

SEC. 419. TRANSITION PERIOD. 

Except as otherwise provided in this title, this title and the 

amendments made by this title shall become effective 1 year after 

the date of enactment of this Act, except that any investment 

adviser may, at the discretion of the investment adviser, register 

with the Commission under the Investment Advisers Act of 1940 

during that 1-year period, subject to the rules of the Commission. 

TITLE V—INSURANCE 

Subtitle A—Federal Insurance Office 

SEC. 501. SHORT TITLE. 

This subtitle may be cited as the ‘‘Federal Insurance Office 

Act of 2010’’. 

SEC. 502. FEDERAL INSURANCE OFFICE. 

(a) ESTABLISHMENT OF OFFICE.—Subchapter I of chapter 3 of 

subtitle I of title 31, United States Code, is amended— 

(1) by redesignating section 312 as section 315; 

(2) by redesignating section 313 as section 312; and 

(3) by inserting after section 312 (as so redesignated) the 

following new sections: 

‘‘SEC. 313. FEDERAL INSURANCE OFFICE. 

‘‘(a) ESTABLISHMENT.—There is established within the Department of the Treasury the Federal Insurance Office. 

‘‘(b) LEADERSHIP.—The Office shall be headed by a Director, 

who shall be appointed by the Secretary of the Treasury. The 

position of Director shall be a career reserved position in the Senior 

Executive Service, as that position is defined under section 3132 

of title 5, United States Code. 

‘‘(c) FUNCTIONS.— ‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF SECRETARY.— The Office, pursuant to the direction of the Secretary, shall 

have the authority— 

‘‘(A) to monitor all aspects of the insurance industry, 

including identifying issues or gaps in the regulation of 

insurers that could contribute to a systemic crisis in the 

insurance industry or the United States financial system; 

‘‘(B) to monitor the extent to which traditionally underserved communities and consumers, minorities (as such 

term is defined in section 1204(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 1811 note)), and low- and moderate-income persons 

have access to affordable insurance products regarding all 

lines of insurance, except health insurance; 

‘‘(C) to recommend to the Financial Stability Oversight 

Council that it designate an insurer, including the affiliates 

of such insurer, as an entity subject to regulation as a 

nonbank financial company supervised by the Board of 

Governors pursuant to title I of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act; 

‘‘(D) to assist the Secretary in administering the Terrorism Insurance Program established in the Department 
H. R. 4173—206 

of the Treasury under the Terrorism Risk Insurance Act 

of 2002 (15 U.S.C. 6701 note); 

‘‘(E) to coordinate Federal efforts and develop Federal 

policy on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary 

in negotiating covered agreements (as such term is defined 

in subsection (r)); 

‘‘(F) to determine, in accordance with subsection (f), 

whether State insurance measures are preempted by covered agreements; 

‘‘(G) to consult with the States (including State insurance regulators) regarding insurance matters of national 

importance and prudential insurance matters of international importance; and 

‘‘(H) to perform such other related duties and authorities as may be assigned to the Office by the Secretary. 

‘‘(2) ADVISORY FUNCTIONS.—The Office shall advise the Secretary on major domestic and prudential international insurance policy issues. 

‘‘(3) ADVISORY CAPACITY ON COUNCIL.—The Director shall 

serve in an advisory capacity on the Financial Stability Oversight Council established under the Financial Stability Act 

of 2010. 

‘‘(d) SCOPE.—The authority of the Office shall extend to all 

lines of insurance except— 

‘‘(1) health insurance, as determined by the Secretary in 

coordination with the Secretary of Health and Human Services 

based on section 2791 of the Public Health Service Act (42 

U.S.C. 300gg–91); 

‘‘(2) long-term care insurance, except long-term care insurance that is included with life or annuity insurance components, 

as determined by the Secretary in coordination with the Secretary of Health and Human Services, and in the case of 

long-term care insurance that is included with such components, the Secretary shall coordinate with the Secretary of 

Health and Human Services in performing the functions of 

the Office; and 

‘‘(3) crop insurance, as established by the Federal Crop 

Insurance Act (7 U.S.C. 1501 et seq.). 

‘‘(e) GATHERING OF INFORMATION.— 

‘‘(1) IN GENERAL.—In carrying out the functions required 

under subsection (c), the Office may— 

‘‘(A) receive and collect data and information on and 

from the insurance industry and insurers; 

‘‘(B) enter into information-sharing agreements; 

‘‘(C) analyze and disseminate data and information; 

and 

‘‘(D) issue reports regarding all lines of insurance 

except health insurance. 

‘‘(2) COLLECTION OF INFORMATION FROM INSURERS AND

AFFILIATES.— 

‘‘(A) IN GENERAL.—Except as provided in paragraph 

(3), the Office may require an insurer, or any affiliate 

of an insurer, to submit such data or information as the 
H. R. 4173—207 

Office may reasonably require in carrying out the functions 

described under subsection (c). 

‘‘(B) RULE OF CONSTRUCTION.—Notwithstanding any 

other provision of this section, for purposes of subparagraph 

(A), the term ‘insurer’ means any entity that writes insurance or reinsures risks and issues contracts or policies 

in 1 or more States. 

‘‘(3) EXCEPTION FOR SMALL INSURERS.—Paragraph (2) shall 

not apply with respect to any insurer or affiliate thereof that 

meets a minimum size threshold that the Office may establish, 

whether by order or rule. 

‘‘(4) ADVANCE COORDINATION.—Before collecting any data 

or information under paragraph (2) from an insurer, or affiliate 

of an insurer, the Office shall coordinate with each relevant 

Federal agency and State insurance regulator (or other relevant 

Federal or State regulatory agency, if any, in the case of an 

affiliate of an insurer) and any publicly available sources to 

determine if the information to be collected is available from, 

and may be obtained in a timely manner by, such Federal 

agency or State insurance regulator, individually or collectively, 

other regulatory agency, or publicly available sources. If the 

Director determines that such data or information is available, 

and may be obtained in a timely manner, from such an agency, 

regulator, regulatory agency, or source, the Director shall obtain 

the data or information from such agency, regulator, regulatory 

agency, or source. If the Director determines that such data 

or information is not so available, the Director may collect 

such data or information from an insurer (or affiliate) only 

if the Director complies with the requirements of subchapter 

I of chapter 35 of title 44, United States Code (relating to 

Federal information policy; commonly known as the Paperwork 

Reduction Act), in collecting such data or information. Notwithstanding any other provision of law, each such relevant Federal 

agency and State insurance regulator or other Federal or State 

regulatory agency is authorized to provide to the Office such 

data or information. 

‘‘(5) CONFIDENTIALITY.— 

‘‘(A) RETENTION OF PRIVILEGE.—The submission of any 

nonpublicly available data and information to the Office 

under this subsection shall not constitute a waiver of, 

or otherwise affect, any privilege arising under Federal 

or State law (including the rules of any Federal or State 

court) to which the data or information is otherwise subject. 

‘‘(B) CONTINUED APPLICATION OF PRIOR CONFIDENTIALITY AGREEMENTS.—Any requirement under Federal or 

State law to the extent otherwise applicable, or any requirement pursuant to a written agreement in effect between 

the original source of any nonpublicly available data or 

information and the source of such data or information 

to the Office, regarding the privacy or confidentiality of 

any data or information in the possession of the source 

to the Office, shall continue to apply to such data or 

information after the data or information has been provided 

pursuant to this subsection to the Office. 

‘‘(C) INFORMATION-SHARING AGREEMENT.—Any data or 

information obtained by the Office may be made available 
H. R. 4173—208 

to State insurance regulators, individually or collectively, 

through an information-sharing agreement that— 

‘‘(i) shall comply with applicable Federal law; and 

‘‘(ii) shall not constitute a waiver of, or otherwise 

affect, any privilege under Federal or State law 

(including the rules of any Federal or State court) 

to which the data or information is otherwise subject. 

‘‘(D) AGENCY DISCLOSURE REQUIREMENTS.—Section 552 

of title 5, United States Code, shall apply to any data 

or information submitted to the Office by an insurer or 

an affiliate of an insurer. 

‘‘(6) SUBPOENAS AND ENFORCEMENT.—The Director shall 

have the power to require by subpoena the production of the 

data or information requested under paragraph (2), but only 

upon a written finding by the Director that such data or 

information is required to carry out the functions described 

under subsection (c) and that the Office has coordinated with 

such regulator or agency as required under paragraph (4). 

Subpoenas shall bear the signature of the Director and shall 

be served by any person or class of persons designated by 

the Director for that purpose. In the case of contumacy or 

failure to obey a subpoena, the subpoena shall be enforceable 

by order of any appropriate district court of the United States. 

Any failure to obey the order of the court may be punished 

by the court as a contempt of court. 

‘‘(f) PREEMPTION OF STATE INSURANCE MEASURES.— 

‘‘(1) STANDARD.—A State insurance measure shall be preempted pursuant to this section or section 314 if, and only 

to the extent that the Director determines, in accordance with 

this subsection, that the measure— 

‘‘(A) results in less favorable treatment of a non-United 

States insurer domiciled in a foreign jurisdiction that is 

subject to a covered agreement than a United States 

insurer domiciled, licensed, or otherwise admitted in that 

State; and 

‘‘(B) is inconsistent with a covered agreement. 

‘‘(2) DETERMINATION.— ‘‘(A) NOTICE OF POTENTIAL INCONSISTENCY.—Before 

making any determination under paragraph (1), the 

Director shall— 

‘‘(i) notify and consult with the appropriate State 

regarding any potential inconsistency or preemption; 

‘‘(ii) notify and consult with the United States 

Trade Representative regarding any potential 

inconsistency or preemption; 

‘‘(iii) cause to be published in the Federal Register 

notice of the issue regarding the potential inconsistency 

or preemption, including a description of each State 

insurance measure at issue and any applicable covered 

agreement; 

‘‘(iv) provide interested parties a reasonable opportunity to submit written comments to the Office; and 

‘‘(v) consider any comments received. 

‘‘(B) SCOPE OF REVIEW.—For purposes of this subsection, any determination of the Director regarding State 

insurance measures, and any preemption under paragraph 

(1) as a result of such determination, shall be limited 
H. R. 4173—209 

to the subject matter contained within the covered agreement involved and shall achieve a level of protection for 

insurance or reinsurance consumers that is substantially 

equivalent to the level of protection achieved under State 

insurance or reinsurance regulation. 

‘‘(C) NOTICE OF DETERMINATION OF INCONSISTENCY.— 

Upon making any determination under paragraph (1), the 

Director shall— 

‘‘(i) notify the appropriate State of the determination and the extent of the inconsistency; 

‘‘(ii) establish a reasonable period of time, which 

shall not be less than 30 days, before the determination 

shall become effective; and 

‘‘(iii) notify the Committees on Financial Services 

and Ways and Means of the House of Representatives 

and the Committees on Banking, Housing, and Urban 

Affairs and Finance of the Senate. 

‘‘(3) NOTICE OF EFFECTIVENESS.—Upon the conclusion of 

the period referred to in paragraph (2)(C)(ii), if the basis for 

such determination still exists, the determination shall become 

effective and the Director shall— 

‘‘(A) cause to be published a notice in the Federal 

Register that the preemption has become effective, as well 

as the effective date; and 

‘‘(B) notify the appropriate State. 

‘‘(4) LIMITATION.—No State may enforce a State insurance 

measure to the extent that such measure has been preempted 

under this subsection. 

‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCEDURES ACT.— 

Determinations of inconsistency made pursuant to subsection (f)(2) 

shall be subject to the applicable provisions of subchapter II of 

chapter 5 of title 5, United States Code (relating to administrative 

procedure), and chapter 7 of such title (relating to judicial review), 

except that in any action for judicial review of a determination 

of inconsistency, the court shall determine the matter de novo. 

‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.—The Secretary 

may issue orders, regulations, policies, and procedures to implement 

this section. 

‘‘(i) CONSULTATION.—The Director shall consult with State 

insurance regulators, individually or collectively, to the extent the 

Director determines appropriate, in carrying out the functions of 

the Office. 

‘‘(j) SAVINGS PROVISIONS.—Nothing in this section shall— 

‘‘(1) preempt— 

‘‘(A) any State insurance measure that governs any 

insurer’s rates, premiums, underwriting, or sales practices; 

‘‘(B) any State coverage requirements for insurance; 

‘‘(C) the application of the antitrust laws of any State 

to the business of insurance; or 

‘‘(D) any State insurance measure governing the capital 

or solvency of an insurer, except to the extent that such 

State insurance measure results in less favorable treatment 

of a non-United State insurer than a United States insurer; 

‘‘(2) be construed to alter, amend, or limit any provision 

of the Consumer Financial Protection Agency Act of 2010; or 

‘‘(3) affect the preemption of any State insurance measure 

otherwise inconsistent with and preempted by Federal law. 
H. R. 4173—210 

‘‘(k) RETENTION OF EXISTING STATE REGULATORY AUTHORITY.— 

Nothing in this section or section 314 shall be construed to establish 

or provide the Office or the Department of the Treasury with 

general supervisory or regulatory authority over the business of 

insurance. 

‘‘(l) RETENTION OF AUTHORITY OF FEDERAL FINANCIAL REGULATORY AGENCIES.—Nothing in this section or section 314 shall 

be construed to limit the authority of any Federal financial regulatory agency, including the authority to develop and coordinate 

policy, negotiate, and enter into agreements with foreign governments, authorities, regulators, and multinational regulatory 

committees and to preempt State measures to affect uniformity 

with international regulatory agreements. 

‘‘(m) RETENTION OF AUTHORITY OF UNITED STATES TRADE REPRESENTATIVE.—Nothing in this section or section 314 shall be construed to affect the authority of the Office of the United States 

Trade Representative pursuant to section 141 of the Trade Act 

of 1974 (19 U.S.C. 2171) or any other provision of law, including 

authority over the development and coordination of United States 

international trade policy and the administration of the United 

States trade agreements program. 

‘‘(n) ANNUAL REPORTS TO CONGRESS.— 

‘‘(1) SECTION 313(f) REPORTS.—Beginning September 30, 

2011, the Director shall submit a report on or before September 

30 of each calendar year to the President and to the Committees 

on Financial Services and Ways and Means of the House of 

Representatives and the Committees on Banking, Housing, and 

Urban Affairs and Finance of the Senate on any actions taken 

by the Office pursuant to subsection (f) (regarding preemption 

of inconsistent State insurance measures). 

‘‘(2) INSURANCE INDUSTRY.—Beginning September 30, 2011, 

the Director shall submit a report on or before September 

30 of each calendar year to the President and to the Committee 

on Financial Services of the House of Representatives and 

the Committee on Banking, Housing, and Urban Affairs of 

the Senate on the insurance industry and any other information 

as deemed relevant by the Director or requested by such 

Committees. 

‘‘(o) REPORTS ON U.S. AND GLOBAL REINSURANCE MARKET.— 

The Director shall submit to the Committee on Financial Services 

of the House of Representatives and the Committee on Banking, 

Housing, and Urban Affairs of the Senate— 

‘‘(1) a report received not later than September 30, 2012, 

describing the breadth and scope of the global reinsurance 

market and the critical role such market plays in supporting 

insurance in the United States; and 

‘‘(2) a report received not later than January 1, 2013, 

and updated not later than January 1, 2015, describing the 

impact of part II of the Nonadmitted and Reinsurance Reform 

Act of 2010 on the ability of State regulators to access reinsurance information for regulated companies in their jurisdictions. 

‘‘(p) STUDY AND REPORT ON REGULATION OF INSURANCE.— ‘‘(1) IN GENERAL.—Not later than 18 months after the date 

of enactment of this section, the Director shall conduct a study 

and submit a report to Congress on how to modernize and 

improve the system of insurance regulation in the United 

States. 
H. R. 4173—211 

‘‘(2) CONSIDERATIONS.—The study and report required 

under paragraph (1) shall be based on and guided by the 

following considerations: 

‘‘(A) Systemic risk regulation with respect to insurance. 

‘‘(B) Capital standards and the relationship between 

capital allocation and liabilities, including standards 

relating to liquidity and duration risk. 

‘‘(C) Consumer protection for insurance products and 

practices, including gaps in State regulation. 

‘‘(D) The degree of national uniformity of State insurance regulation. 

‘‘(E) The regulation of insurance companies and affiliates on a consolidated basis. 

‘‘(F) International coordination of insurance regulation. 

‘‘(3) ADDITIONAL FACTORS.—The study and report required 

under paragraph (1) shall also examine the following factors: 

‘‘(A) The costs and benefits of potential Federal regulation of insurance across various lines of insurance (except 

health insurance). 

‘‘(B) The feasibility of regulating only certain lines 

of insurance at the Federal level, while leaving other lines 

of insurance to be regulated at the State level. 

‘‘(C) The ability of any potential Federal regulation 

or Federal regulators to eliminate or minimize regulatory 

arbitrage. 

‘‘(D) The impact that developments in the regulation 

of insurance in foreign jurisdictions might have on the 

potential Federal regulation of insurance. 

‘‘(E) The ability of any potential Federal regulation 

or Federal regulator to provide robust consumer protection 

for policyholders. 

‘‘(F) The potential consequences of subjecting insurance 

companies to a Federal resolution authority, including the 

effects of any Federal resolution authority— 

‘‘(i) on the operation of State insurance guaranty 

fund systems, including the loss of guaranty fund coverage if an insurance company is subject to a Federal 

resolution authority; 

‘‘(ii) on policyholder protection, including the loss 

of the priority status of policyholder claims over other 

unsecured general creditor claims; 

‘‘(iii) in the case of life insurance companies, on 

the loss of the special status of separate account assets 

and separate account liabilities; and 

‘‘(iv) on the international competitiveness of insurance companies. 

‘‘(G) Such other factors as the Director determines 

necessary or appropriate, consistent with the principles 

set forth in paragraph (2). 

‘‘(4) REQUIRED RECOMMENDATIONS.—The study and report 

required under paragraph (1) shall also contain any legislative, 

administrative, or regulatory recommendations, as the Director 

determines appropriate, to carry out or effectuate the findings 

set forth in such report. 

‘‘(5) CONSULTATION.—With respect to the study and report 

required under paragraph (1), the Director shall consult with 
H. R. 4173—212 

the State insurance regulators, consumer organizations, representatives of the insurance industry and policyholders, and 

other organizations and experts, as appropriate. 

‘‘(q) USE OF EXISTING RESOURCES.—To carry out this section, 

the Office may employ personnel, facilities, and any other resource 

of the Department of the Treasury available to the Secretary and 

the Secretary shall dedicate specific personnel to the Office. 

‘‘(r) DEFINITIONS.—In this section and section 314, the following 

definitions shall apply: 

‘‘(1) AFFILIATE.—The term ‘affiliate’ means, with respect 

to an insurer, any person who controls, is controlled by, or 

is under common control with the insurer. 

‘‘(2) COVERED AGREEMENT.—The term ‘covered agreement’ 

means a written bilateral or multilateral agreement regarding 

prudential measures with respect to the business of insurance 

or reinsurance that— 

‘‘(A) is entered into between the United States and 

one or more foreign governments, authorities, or regulatory 

entities; and 

‘‘(B) relates to the recognition of prudential measures 

with respect to the business of insurance or reinsurance 

that achieves a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level 

of protection achieved under State insurance or reinsurance 

regulation. 

‘‘(3) INSURER.—The term ‘insurer’ means any person 

engaged in the business of insurance, including reinsurance. 

‘‘(4) FEDERAL FINANCIAL REGULATORY AGENCY.—The term 

‘Federal financial regulatory agency’ means the Department 

of the Treasury, the Board of Governors of the Federal Reserve 

System, the Office of the Comptroller of the Currency, the 

Office of Thrift Supervision, the Securities and Exchange 

Commission, the Commodity Futures Trading Commission, the 

Federal Deposit Insurance Corporation, the Federal Housing 

Finance Agency, or the National Credit Union Administration. 

‘‘(5) NON-UNITED STATES INSURER.—The term ‘non-United 

States insurer’ means an insurer that is organized under the 

laws of a jurisdiction other than a State, but does not include 

any United States branch of such an insurer. 

‘‘(6) OFFICE.—The term ‘Office’ means the Federal Insurance Office established by this section. 

‘‘(7) STATE INSURANCE MEASURE.—The term ‘State insurance measure’ means any State law, regulation, administrative 

ruling, bulletin, guideline, or practice relating to or affecting 

prudential measures applicable to insurance or reinsurance. 

‘‘(8) STATE INSURANCE REGULATOR.—The term ‘State insurance regulator’ means any State regulatory authority responsible for the supervision of insurers. 

‘‘(9) SUBSTANTIALLY EQUIVALENT TO THE LEVEL OF PROTECTION ACHIEVED.—The term ‘substantially equivalent to the level 

of protection achieved’ means the prudential measures of a 

foreign government, authority, or regulatory entity achieve a 

similar outcome in consumer protection as the outcome achieved 

under State insurance or reinsurance regulation. 

‘‘(10) UNITED STATES INSURER.—The term ‘United States 

insurer’ means— 
H. R. 4173—213 

‘‘(A) an insurer that is organized under the laws of 

a State; or 

‘‘(B) a United States branch of a non-United States 

insurer. 

‘‘(s) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 

to be appropriated for the Office for each fiscal year such sums 

as may be necessary. 

‘‘SEC. 314. COVERED AGREEMENTS. 

‘‘(a) AUTHORITY.—The Secretary and the United States Trade 

Representative are authorized, jointly, to negotiate and enter into 

covered agreements on behalf of the United States. 

‘‘(b) REQUIREMENTS FOR CONSULTATION WITH CONGRESS.— 

‘‘(1) IN GENERAL.—Before initiating negotiations to enter 

into a covered agreement under subsection (a), during such 

negotiations, and before entering into any such agreement, 

the Secretary and the United States Trade Representative shall 

jointly consult with the Committee on Financial Services and 

the Committee on Ways and Means of the House of Representatives and the Committee on Banking, Housing, and Urban 

Affairs and the Committee on Finance of the Senate. 

‘‘(2) SCOPE.—The consultation described in paragraph (1) 

shall include consultation with respect to— 

‘‘(A) the nature of the agreement; 

‘‘(B) how and to what extent the agreement will achieve 

the applicable purposes, policies, priorities, and objectives 

of section 313 and this section; and 

‘‘(C) the implementation of the agreement, including 

the general effect of the agreement on existing State laws. 

‘‘(c) SUBMISSION AND LAYOVER PROVISIONS.—A covered agreement under subsection (a) may enter into force with respect to 

the United States only if— 

‘‘(1) the Secretary and the United States Trade Representative jointly submit to the congressional committees specified 

in subsection (b)(1), on a day on which both Houses of Congress 

are in session, a copy of the final legal text of the agreement; 

and 

‘‘(2) a period of 90 calendar days beginning on the date 

on which the copy of the final legal text of the agreement 

is submitted to the congressional committees under paragraph 

(1) has expired.’’. 

(b) DUTIES OF SECRETARY.—Section 321(a) of title 31, United 

States Code, is amended— 

(1) in paragraph (7), by striking ‘‘; and’’ and inserting 

a semicolon; 

(2) in paragraph (8)(C), by striking the period at the end 

and inserting ‘‘; and’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(9) advise the President on major domestic and international prudential policy issues in connection with all lines 

of insurance except health insurance.’’. 

(c) CLERICAL AMENDMENT.—The table of sections for subchapter 

I of chapter 3 of title 31, United States Code, is amended by 

striking the item relating to section 312 and inserting the following 

new items: 

‘‘Sec. 312. Terrorism and financial intelligence. 

‘‘Sec. 313. Federal Insurance Office. 
H. R. 4173—214 

‘‘Sec. 314. Covered agreements. 

‘‘Sec. 315. Continuing in office.’’. 

Subtitle B—State-Based Insurance Reform 

SEC. 511. SHORT TITLE. 

This subtitle may be cited as the ‘‘Nonadmitted and Reinsurance Reform Act of 2010’’. 

SEC. 512. EFFECTIVE DATE. 

Except as otherwise specifically provided in this subtitle, this 

subtitle shall take effect upon the expiration of the 12-month period 

beginning on the date of the enactment of this subtitle. 

PART I—NONADMITTED INSURANCE 

SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM 

TAXES. 

(a) HOME STATE’S EXCLUSIVE AUTHORITY.—No State other than 

the home State of an insured may require any premium tax payment for nonadmitted insurance. 

(b) ALLOCATION OF NONADMITTED PREMIUM TAXES.— (1) IN GENERAL.—The States may enter into a compact 

or otherwise establish procedures to allocate among the States 

the premium taxes paid to an insured’s home State described 

in subsection (a). 

(2) EFFECTIVE DATE.—Except as expressly otherwise provided in such compact or other procedures, any such compact 

or other procedures— 

(A) if adopted on or before the expiration of the 330- 

day period that begins on the date of the enactment of 

this subtitle, shall apply to any premium taxes that, on 

or after such date of enactment, are required to be paid 

to any State that is subject to such compact or procedures; 

and 

(B) if adopted after the expiration of such 330-day 

period, shall apply to any premium taxes that, on or after 

January 1 of the first calendar year that begins after 

the expiration of such 330-day period, are required to be 

paid to any State that is subject to such compact or procedures. 

(3) REPORT.—Upon the expiration of the 330-day period 

referred to in paragraph (2), the NAIC may submit a report 

to the Committee on Financial Services and the Committee 

on the Judiciary of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate 

identifying and describing any compact or other procedures 

for allocation among the States of premium taxes that have 

been adopted during such period by any States. 

(4) NATIONWIDE SYSTEM.—The Congress intends that each 

State adopt nationwide uniform requirements, forms, and procedures, such as an interstate compact, that provide for the 

reporting, payment, collection, and allocation of premium taxes 

for nonadmitted insurance consistent with this section. 

(c) ALLOCATION BASED ON TAX ALLOCATION REPORT.—To facilitate the payment of premium taxes among the States, an insured’s 

home State may require surplus lines brokers and insureds who 
H. R. 4173—215 

have independently procured insurance to annually file tax allocation reports with the insured’s home State detailing the portion 

of the nonadmitted insurance policy premium or premiums attributable to properties, risks, or exposures located in each State. 

The filing of a nonadmitted insurance tax allocation report and 

the payment of tax may be made by a person authorized by the 

insured to act as its agent. 

SEC. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED’S 

HOME STATE. 

(a) HOME STATE AUTHORITY.—Except as otherwise provided 

in this section, the placement of nonadmitted insurance shall be 

subject to the statutory and regulatory requirements solely of the 

insured’s home State. 

(b) BROKER LICENSING.—No State other than an insured’s home 

State may require a surplus lines broker to be licensed in order 

to sell, solicit, or negotiate nonadmitted insurance with respect 

to such insured. 

(c) ENFORCEMENT PROVISION.—With respect to section 521 and 

subsections (a) and (b) of this section, any law, regulation, provision, 

or action of any State that applies or purports to apply to nonadmitted insurance sold to, solicited by, or negotiated with an 

insured whose home State is another State shall be preempted 

with respect to such application. 

(d) WORKERS’ COMPENSATION EXCEPTION.—This section may 

not be construed to preempt any State law, rule, or regulation 

that restricts the placement of workers’ compensation insurance 

or excess insurance for self-funded workers’ compensation plans 

with a nonadmitted insurer. 

SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE. 

After the expiration of the 2-year period beginning on the 

date of the enactment of this subtitle, a State may not collect 

any fees relating to licensing of an individual or entity as a surplus 

lines broker in the State unless the State has in effect at such 

time laws or regulations that provide for participation by the State 

in the national insurance producer database of the NAIC, or any 

other equivalent uniform national database, for the licensure of 

surplus lines brokers and the renewal of such licenses. 

SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY. 

A State may not— 

(1) impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in 

a United States jurisdiction, except in conformance with such 

requirements and criteria in sections 5A(2) and 5C(2)(a) of 

the Non-Admitted Insurance Model Act, unless the State has 

adopted nationwide uniform requirements, forms, and procedures developed in accordance with section 521(b) of this subtitle that include alternative nationwide uniform eligibility 

requirements; or 

(2) prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance 

from, a nonadmitted insurer domiciled outside the United 

States that is listed on the Quarterly Listing of Alien Insurers 

maintained by the International Insurers Department of the 

NAIC. 
H. R. 4173—216 

SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL PURCHASERS. 

A surplus lines broker seeking to procure or place nonadmitted 

insurance in a State for an exempt commercial purchaser shall 

not be required to satisfy any State requirement to make a due 

diligence search to determine whether the full amount or type 

of insurance sought by such exempt commercial purchaser can 

be obtained from admitted insurers if— 

(1) the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that 

such insurance may or may not be available from the admitted 

market that may provide greater protection with more regulatory oversight; and 

(2) the exempt commercial purchaser has subsequently 

requested in writing the broker to procure or place such insurance from a nonadmitted insurer. 

SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET. 

(a) IN GENERAL.—The Comptroller General of the United States 

shall conduct a study of the nonadmitted insurance market to 

determine the effect of the enactment of this part on the size 

and market share of the nonadmitted insurance market for providing coverage typically provided by the admitted insurance 

market. 

(b) CONTENTS.—The study shall determine and analyze— 

(1) the change in the size and market share of the nonadmitted insurance market and in the number of insurance 

companies and insurance holding companies providing such 

business in the 18-month period that begins upon the effective 

date of this subtitle; 

(2) the extent to which insurance coverage typically provided by the admitted insurance market has shifted to the 

nonadmitted insurance market; 

(3) the consequences of any change in the size and market 

share of the nonadmitted insurance market, including differences in the price and availability of coverage available 

in both the admitted and nonadmitted insurance markets; 

(4) the extent to which insurance companies and insurance 

holding companies that provide both admitted and nonadmitted 

insurance have experienced shifts in the volume of business 

between admitted and nonadmitted insurance; and 

(5) the extent to which there has been a change in the 

number of individuals who have nonadmitted insurance policies, the type of coverage provided under such policies, and 

whether such coverage is available in the admitted insurance 

market. 

(c) CONSULTATION WITH NAIC.—In conducting the study under 

this section, the Comptroller General shall consult with the NAIC. 

(d) REPORT.—The Comptroller General shall complete the study 

under this section and submit a report to the Committee on 

Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives 

regarding the findings of the study not later than 30 months after 

the effective date of this subtitle. 

SEC. 527. DEFINITIONS. 

For purposes of this part, the following definitions shall apply: 
H. R. 4173—217 

(1) ADMITTED INSURER.—The term ‘‘admitted insurer’’ 

means, with respect to a State, an insurer licensed to engage 

in the business of insurance in such State. 

(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect 

to an insured, any entity that controls, is controlled by, or 

is under common control with the insured. 

(3) AFFILIATED GROUP.—The term ‘‘affiliated group’’ means 

any group of entities that are all affiliated. 

(4) CONTROL.—An entity has ‘‘control’’ over another entity 

if— 

(A) the entity directly or indirectly or acting through 

1 or more other persons owns, controls, or has the power 

to vote 25 percent or more of any class of voting securities 

of the other entity; or 

(B) the entity controls in any manner the election 

of a majority of the directors or trustees of the other entity. 

(5) EXEMPT COMMERCIAL PURCHASER.—The term ‘‘exempt 

commercial purchaser’’ means any person purchasing commercial insurance that, at the time of placement, meets the following requirements: 

(A) The person employs or retains a qualified risk 

manager to negotiate insurance coverage. 

(B) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess 

of $100,000 in the immediately preceding 12 months. 

(C)(i) The person meets at least 1 of the following 

criteria: 

(I) The person possesses a net worth in excess 

of $20,000,000, as such amount is adjusted pursuant 

to clause (ii). 

(II) The person generates annual revenues in 

excess of $50,000,000, as such amount is adjusted 

pursuant to clause (ii). 

(III) The person employs more than 500 full-time 

or full-time equivalent employees per individual 

insured or is a member of an affiliated group employing 

more than 1,000 employees in the aggregate. 

(IV) The person is a not-for-profit organization or 

public entity generating annual budgeted expenditures 

of at least $30,000,000, as such amount is adjusted 

pursuant to clause (ii). 

(V) The person is a municipality with a population 

in excess of 50,000 persons. 

(ii) Effective on the fifth January 1 occurring after 

the date of the enactment of this subtitle and each fifth 

January 1 occurring thereafter, the amounts in subclauses 

(I), (II), and (IV) of clause (i) shall be adjusted to reflect 

the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published 

by the Bureau of Labor Statistics of the Department of 

Labor. 

(6) HOME STATE.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘‘home State’’ means, with respect to an 

insured— 
H. R. 4173—218 

(i) the State in which an insured maintains its 

principal place of business or, in the case of an individual, the individual’s principal residence; or 

(ii) if 100 percent of the insured risk is located 

out of the State referred to in clause (i), the State 

to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated. 

(B) AFFILIATED GROUPS.—If more than 1 insured from 

an affiliated group are named insureds on a single nonadmitted insurance contract, the term ‘‘home State’’ means 

the home State, as determined pursuant to subparagraph 

(A), of the member of the affiliated group that has the 

largest percentage of premium attributed to it under such 

insurance contract. 

(7) INDEPENDENTLY PROCURED INSURANCE.—The term 

‘‘independently procured insurance’’ means insurance procured 

directly by an insured from a nonadmitted insurer. 

(8) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners or any successor entity. 

(9) NONADMITTED INSURANCE.—The term ‘‘nonadmitted 

insurance’’ means any property and casualty insurance permitted to be placed directly or through a surplus lines broker 

with a nonadmitted insurer eligible to accept such insurance. 

(10) NON-ADMITTED INSURANCE MODEL ACT.—The term 

‘‘Non-Admitted Insurance Model Act’’ means the provisions of 

the Non-Admitted Insurance Model Act, as adopted by the 

NAIC on August 3, 1994, and amended on September 30, 

1996, December 6, 1997, October 2, 1999, and June 8, 2002. 

(11) NONADMITTED INSURER.—The term ‘‘nonadmitted 

insurer’’— 

(A) means, with respect to a State, an insurer not 

licensed to engage in the business of insurance in such 

State; but 

(B) does not include a risk retention group, as that 

term is defined in section 2(a)(4) of the Liability Risk 

Retention Act of 1986 (15 U.S.C. 3901(a)(4)). 

(12) PREMIUM TAX.—The term ‘‘premium tax’’ means, with 

respect to surplus lines or independently procured insurance 

coverage, any tax, fee, assessment, or other charge imposed 

by a government entity directly or indirectly based on any 

payment made as consideration for an insurance contract for 

such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance. 

(13) QUALIFIED RISK MANAGER.—The term ‘‘qualified risk 

manager’’ means, with respect to a policyholder of commercial 

insurance, a person who meets all of the following requirements: 

(A) The person is an employee of, or third-party 

consultant retained by, the commercial policyholder. 

(B) The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance. 

(C) The person— 

(i)(I) has a bachelor’s degree or higher from an 

accredited college or university in risk management, 

business administration, finance, economics, or any 
H. R. 4173—219 

other field determined by a State insurance commissioner or other State regulatory official or entity to 

demonstrate minimum competence in risk management; and 

(II)(aa) has 3 years of experience in risk financing, 

claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or 

(bb) has— 

(AA) a designation as a Chartered Property 

and Casualty Underwriter (in this subparagraph 

referred to as ‘‘CPCU’’) issued by the American 

Institute for CPCU/Insurance Institute of America; 

(BB) a designation as an Associate in Risk 

Management (ARM) issued by the American 

Institute for CPCU/Insurance Institute of America; 

(CC) a designation as Certified Risk Manager 

(CRM) issued by the National Alliance for Insurance Education & Research; 

(DD) a designation as a RIMS Fellow (RF) 

issued by the Global Risk Management Institute; 

or 

(EE) any other designation, certification, or 

license determined by a State insurance commissioner or other State insurance regulatory official 

or entity to demonstrate minimum competency in 

risk management; 

(ii)(I) has at least 7 years of experience in risk 

financing, claims administration, loss prevention, risk 

and insurance coverage analysis, or purchasing 

commercial lines of insurance; and 

(II) has any 1 of the designations specified in 

subitems (AA) through (EE) of clause (i)(II)(bb); 

(iii) has at least 10 years of experience in risk 

financing, claims administration, loss prevention, risk 

and insurance coverage analysis, or purchasing 

commercial lines of insurance; or 

(iv) has a graduate degree from an accredited college or university in risk management, business 

administration, finance, economics, or any other field 

determined by a State insurance commissioner or other 

State regulatory official or entity to demonstrate minimum competence in risk management. 

(14) REINSURANCE.—The term ‘‘reinsurance’’ means the 

assumption by an insurer of all or part of a risk undertaken 

originally by another insurer. 

(15) SURPLUS LINES BROKER.—The term ‘‘surplus lines 

broker’’ means an individual, firm, or corporation which is 

licensed in a State to sell, solicit, or negotiate insurance on 

properties, risks, or exposures located or to be performed in 

a State with nonadmitted insurers. 

(16) STATE.—The term ‘‘State’’ includes any State of the 

United States, the District of Columbia, the Commonwealth 

of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin 

Islands, and American Samoa. 
H. R. 4173—220 

PART II—REINSURANCE 

SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE AGREEMENTS. 

(a) CREDIT FOR REINSURANCE.—If the State of domicile of a 

ceding insurer is an NAIC-accredited State, or has financial solvency 

requirements substantially similar to the requirements necessary 

for NAIC accreditation, and recognizes credit for reinsurance for 

the insurer’s ceded risk, then no other State may deny such credit 

for reinsurance. 

(b) ADDITIONAL PREEMPTION OF EXTRATERRITORIAL APPLICATION

OF STATE LAW.—In addition to the application of subsection (a), 

all laws, regulations, provisions, or other actions of a State that 

is not the domiciliary State of the ceding insurer, except those 

with respect to taxes and assessments on insurance companies 

or insurance income, are preempted to the extent that they— 

(1) restrict or eliminate the rights of the ceding insurer 

or the assuming insurer to resolve disputes pursuant to contractual arbitration to the extent such contractual provision is 

not inconsistent with the provisions of title 9, United States 

Code; 

(2) require that a certain State’s law shall govern the 

reinsurance contract, disputes arising from the reinsurance 

contract, or requirements of the reinsurance contract; 

(3) attempt to enforce a reinsurance contract on terms 

different than those set forth in the reinsurance contract, to 

the extent that the terms are not inconsistent with this part; 

or 

(4) otherwise apply the laws of the State to reinsurance 

agreements of ceding insurers not domiciled in that State. 

SEC. 532. REGULATION OF REINSURER SOLVENCY. 

(a) DOMICILIARY STATE REGULATION.—If the State of domicile 

of a reinsurer is an NAIC-accredited State or has financial solvency 

requirements substantially similar to the requirements necessary 

for NAIC accreditation, such State shall be solely responsible for 

regulating the financial solvency of the reinsurer. 

(b) NONDOMICILIARY STATES.— 

(1) LIMITATION ON FINANCIAL INFORMATION REQUIREMENTS.—If the State of domicile of a reinsurer is an NAICaccredited State or has financial solvency requirements 

substantially similar to the requirements necessary for NAIC 

accreditation, no other State may require the reinsurer to provide any additional financial information other than the 

information the reinsurer is required to file with its domiciliary 

State. 

(2) RECEIPT OF INFORMATION.—No provision of this section 

shall be construed as preventing or prohibiting a State that 

is not the State of domicile of a reinsurer from receiving a 

copy of any financial statement filed with its domiciliary State. 

SEC. 533. DEFINITIONS. 

For purposes of this part, the following definitions shall apply: 

(1) CEDING INSURER.—The term ‘‘ceding insurer’’ means 

an insurer that purchases reinsurance. 

(2) DOMICILIARY STATE.—The terms ‘‘State of domicile’’ and 

‘‘domiciliary State’’ mean, with respect to an insurer or 
H. R. 4173—221 

reinsurer, the State in which the insurer or reinsurer is incorporated or entered through, and licensed. 

(3) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners or any successor entity. 

(4) REINSURANCE.—The term ‘‘reinsurance’’ means the 

assumption by an insurer of all or part of a risk undertaken 

originally by another insurer. 

(5) REINSURER.— (A) IN GENERAL.—The term ‘‘reinsurer’’ means an 

insurer to the extent that the insurer— 

(i) is principally engaged in the business of reinsurance; 

(ii) does not conduct significant amounts of direct 

insurance as a percentage of its net premiums; and 

(iii) is not engaged in an ongoing basis in the 

business of soliciting direct insurance. 

(B) DETERMINATION.—A determination of whether an 

insurer is a reinsurer shall be made under the laws of 

the State of domicile in accordance with this paragraph. 

(6) STATE.—The term ‘‘State’’ includes any State of the 

United States, the District of Columbia, the Commonwealth 

of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin 

Islands, and American Samoa. 

PART III—RULE OF CONSTRUCTION 

SEC. 541. RULE OF CONSTRUCTION. 

Nothing in this subtitle or the amendments made by this subtitle shall be construed to modify, impair, or supersede the application of the antitrust laws. Any implied or actual conflict between 

this subtitle and any amendments to this subtitle and the antitrust 

laws shall be resolved in favor of the operation of the antitrust 

laws. 

SEC. 542. SEVERABILITY. 

If any section or subsection of this subtitle, or any application 

of such provision to any person or circumstance, is held to be 

unconstitutional, the remainder of this subtitle, and the application 

of the provision to any other person or circumstance, shall not 

be affected. 

TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION HOLDING COMPANIES AND 

DEPOSITORY INSTITUTIONS 

SEC. 601. SHORT TITLE. 

This title may be cited as the ‘‘Bank and Savings Association 

Holding Company and Depository Institution Regulatory Improvements Act of 2010’’. 

SEC. 602. DEFINITION. 

For purposes of this title, a company is a ‘‘commercial firm’’ 

if the annual gross revenues derived by the company and all of 

its affiliates from activities that are financial in nature (as defined 
H. R. 4173—222 

in section 4(k) of the Bank Holding Company Act of 1956 (12 

U.S.C. 1843(k))) and, if applicable, from the ownership or control 

of one or more insured depository institutions, represent less than 

15 percent of the consolidated annual gross revenues of the company. 

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. 

(a) MORATORIUM.— 

(1) DEFINITIONS.—In this subsection— 

(A) the term ‘‘credit card bank’’ means an institution 

described in section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 

(B) the term ‘‘industrial bank’’ means an institution 

described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and 

(C) the term ‘‘trust bank’’ means an institution 

described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)). 

(2) MORATORIUM ON PROVISION OF DEPOSIT INSURANCE.— 

The Corporation may not approve an application for deposit 

insurance under section 5 of the Federal Deposit Insurance 

Act (12 U.S.C. 1815) that is received after November 23, 2009, 

for an industrial bank, a credit card bank, or a trust bank 

that is directly or indirectly owned or controlled by a commercial firm. 

(3) CHANGE IN CONTROL.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), the appropriate Federal banking agency shall disapprove a change in control, as provided in section 7(j) 

of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)), 

of an industrial bank, a credit card bank, or a trust bank 

if the change in control would result in direct or indirect 

control of the industrial bank, credit card bank, or trust 

bank by a commercial firm. 

(B) EXCEPTIONS.—Subparagraph (A) shall not apply 

to a change in control of an industrial bank, credit card 

bank, or trust bank— 

(i) that— 

(I) is in danger of default, as determined by 

the appropriate Federal banking agency; 

(II) results from the merger or whole acquisition of a commercial firm that directly or indirectly 

controls the industrial bank, credit card bank, or 

trust bank in a bona fide merger with or acquisition by another commercial firm, as determined 

by the appropriate Federal banking agency; or 

(III) results from an acquisition of voting 

shares of a publicly traded company that controls 

an industrial bank, credit card bank, or trust bank, 

if, after the acquisition, the acquiring shareholder 

(or group of shareholders acting in concert) holds 

less than 25 percent of any class of the voting 

shares of the company; and 
H. R. 4173—223 

(ii) that has obtained all regulatory approvals 

otherwise required for such change of control under 

any applicable Federal or State law, including section 

7(j) of the Federal Deposit Insurance Act (12 U.S.C. 

1817(j)). 

(4) SUNSET.—This subsection shall cease to have effect 

3 years after the date of enactment of this Act. 

(b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF EXCEPTIONS UNDER THE BANK HOLDING COMPANY ACT OF 1956.— 

(1) STUDY REQUIRED.—The Comptroller General of the 

United States shall carry out a study to determine whether 

it is necessary, in order to strengthen the safety and soundness 

of institutions or the stability of the financial system, to eliminate the exceptions under section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) for institutions described 

in— 

(A) section 2(a)(5)(E) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(a)(5)(E)); 

(B) section 2(a)(5)(F) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(a)(5)(F)); 

(C) section 2(c)(2)(D) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)(D)); 

(D) section 2(c)(2)(F) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 

(E) section 2(c)(2)(H) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and 

(F) section 2(c)(2)(B) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)(B)). 

(2) CONTENT OF STUDY.— 

(A) IN GENERAL.—The study required under paragraph 

(1), with respect to the institutions referenced in each 

of subparagraphs (A) through (E) of paragraph (1), shall, 

to the extent feasible be based on information provided 

to the Comptroller General by the appropriate Federal 

or State regulator, and shall— 

(i) identify the types and number of institutions 

excepted from section 2 of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841) under each of the subparagraphs described in subparagraphs (A) through (E) 

of paragraph (1); 

(ii) generally describe the size and geographic locations of the institutions described in clause (i); 

(iii) determine the extent to which the institutions 

described in clause (i) are held by holding companies 

that are commercial firms; 

(iv) determine whether the institutions described 

in clause (i) have any affiliates that are commercial 

firms; 

(v) identify the Federal banking agency responsible 

for the supervision of the institutions described in 

clause (i) on and after the transfer date; 

(vi) determine the adequacy of the Federal bank 

regulatory framework applicable to each category of 

institution described in clause (i), including any restrictions (including limitations on affiliate transactions or 

cross-marketing) that apply to transactions between 
H. R. 4173—224 

an institution, the holding company of the institution, 

and any other affiliate of the institution; and 

(vii) evaluate the potential consequences of subjecting the institutions described in clause (i) to the 

requirements of the Bank Holding Company Act of 

1956, including with respect to the availability and 

allocation of credit, the stability of the financial system 

and the economy, the safe and sound operation of 

each category of institution, and the impact on the 

types of activities in which such institutions, and the 

holding companies of such institutions, may engage. 

(B) SAVINGS ASSOCIATIONS.—With respect to institutions described in paragraph (1)(F), the study required 

under paragraph (1) shall— 

(i) determine the adequacy of the Federal bank 

regulatory framework applicable to such institutions, 

including any restrictions (including limitations on 

affiliate transactions or cross-marketing) that apply 

to transactions between an institution, the holding 

company of the institution, and any other affiliate of 

the institution; and 

(ii) evaluate the potential consequences of subjecting the institutions described in paragraph (1)(F) 

to the requirements of the Bank Holding Company 

Act of 1956, including with respect to the availability 

and allocation of credit, the stability of the financial 

system and the economy, the safe and sound operation 

of such institutions, and the impact on the types of 

activities in which such institutions, and the holding 

companies of such institutions, may engage. 

(3) REPORT.—Not later than 18 months after the date of 

enactment of this Act, the Comptroller General shall submit 

to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of 

the House of Representatives a report on the study required 

under paragraph (1). 

SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES; 

REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES. 

(a) REPORTS BY BANK HOLDING COMPANIES.—Sections 5(c)(1) 

of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) 

is amended— 

(1) by striking subclause (A)(ii) and inserting the following: 

‘‘(ii) compliance by the bank holding company or 

subsidiary with— 

‘‘(I) this Act; 

‘‘(II) Federal laws that the Board has specific 

jurisdiction to enforce against the company or subsidiary; and 

‘‘(III) other than in the case of an insured 

depository institution or functionally regulated 

subsidiary, any other applicable provision of Federal law.’’; 

(2) by striking subparagraph (B) and inserting the following: 
H. R. 4173—225 

‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY

INFORMATION.—The Board shall, to the fullest extent possible, use— 

‘‘(i) reports and other supervisory information that 

the bank holding company or any subsidiary thereof 

has been required to provide to other Federal or State 

regulatory agencies; 

‘‘(ii) externally audited financial statements of the 

bank holding company or subsidiary; 

‘‘(iii) information otherwise available from Federal 

or State regulatory agencies; and 

‘‘(iv) information that is otherwise required to be 

reported publicly.’’; and 

(3) by adding at the end the following: 

‘‘(C) AVAILABILITY.—Upon the request of the Board, 

the bank holding company or a subsidiary of the bank 

holding company shall promptly provide to the Board any 

information described in clauses (i) through (iii) of subparagraph (B).’’. 

(b) EXAMINATIONS OF BANK HOLDING COMPANIES.—Section 

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

1844(c)(2)) is amended to read as follows: 

‘‘(2) EXAMINATIONS.— 

‘‘(A) IN GENERAL.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, the Board may 

make examinations of a bank holding company and each 

subsidiary of a bank holding company in order to— 

‘‘(i) inform the Board of— 

‘‘(I) the nature of the operations and financial 

condition of the bank holding company and the 

subsidiary; 

‘‘(II) the financial, operational, and other risks 

within the bank holding company system that may 

pose a threat to— 

‘‘(aa) the safety and soundness of the bank 

holding company or of any depository institution subsidiary of the bank holding company; 

or 

‘‘(bb) the stability of the financial system 

of the United States; and 

‘‘(III) the systems of the bank holding company 

for monitoring and controlling the risks described 

in subclause (II); and 

‘‘(ii) monitor the compliance of the bank holding 

company and the subsidiary with— 

‘‘(I) this Act; 

‘‘(II) Federal laws that the Board has specific 

jurisdiction to enforce against the company or subsidiary; and 

‘‘(III) other than in the case of an insured 

depository institution or functionally regulated 

subsidiary, any other applicable provisions of Federal law. 

‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For 

purposes of this paragraph, the Board shall, to the fullest 

extent possible, rely on— 
H. R. 4173—226 

‘‘(i) examination reports made by other Federal 

or State regulatory agencies relating to a bank holding 

company and any subsidiary of a bank holding company; and 

‘‘(ii) the reports and other information required 

under paragraph (1). 

‘‘(C) COORDINATION WITH OTHER REGULATORS.—The 

Board shall— 

‘‘(i) provide reasonable notice to, and consult with, 

the appropriate Federal banking agency, the Securities 

and Exchange Commission, the Commodity Futures 

Trading Commission, or State regulatory agency, as 

appropriate, for a subsidiary that is a depository 

institution or a functionally regulated subsidiary of 

a bank holding company before commencing an examination of the subsidiary under this section; and 

‘‘(ii) to the fullest extent possible, avoid duplication 

of examination activities, reporting requirements, and 

requests for information.’’. 

(c) AUTHORITY TO REGULATE FUNCTIONALLY REGULATED

SUBSIDIARIES OF BANK HOLDING COMPANIES.—The Bank Holding 

Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended— 

(1) in section 5(c)(5)(B) (12 U.S.C. 1844(c)(5)(B)), by striking 

clause (v) and inserting the following: 

‘‘(v) an entity that is subject to regulation by, 

or registration with, the Commodity Futures Trading 

Commission, with respect to activities conducted as 

a futures commission merchant, commodity trading 

adviser, commodity pool, commodity pool operator, 

swap execution facility, swap data repository, swap 

dealer, major swap participant, and activities that are 

incidental to such commodities and swaps activities.’’; 

and 

(2) by striking section 10A (12 U.S.C. 1848a). 

(d) ACQUISITIONS OF BANKS.—Section 3(c) of the Bank Holding 

Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding 

at the end the following: 

‘‘(7) FINANCIAL STABILITY.—In every case, the Board shall 

take into consideration the extent to which a proposed acquisition, merger, or consolidation would result in greater or more 

concentrated risks to the stability of the United States banking 

or financial system.’’. 

(e) ACQUISITIONS OF NONBANKS.— 

(1) NOTICE PROCEDURES.—Section 4(j)(2)(A) of the Bank 

Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is 

amended by striking ‘‘or unsound banking practices’’ and 

inserting ‘‘unsound banking practices, or risk to the stability 

of the United States banking or financial system’’. 

(2) ACTIVITIES THAT ARE FINANCIAL IN NATURE.—Section 

4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 

1843(k)(6)(B)) is amended to read as follows: 

‘‘(B) APPROVAL NOT REQUIRED FOR CERTAIN FINANCIAL

ACTIVITIES.— 

‘‘(i) IN GENERAL.—Except as provided in subsection 

(j) with regard to the acquisition of a savings association and clause (ii), a financial holding company may 
H. R. 4173—227 

commence any activity, or acquire any company, pursuant to paragraph (4) or any regulation prescribed or 

order issued under paragraph (5), without prior 

approval of the Board. 

‘‘(ii) EXCEPTION.—A financial holding company may 

not acquire a company, without the prior approval 

of the Board, in a transaction in which the total consolidated assets to be acquired by the financial holding 

company exceed $10,000,000,000. 

‘‘(iii) HART-SCOTT-RODINO FILING REQUIREMENT.— Solely for purposes of section 7A(c)(8) of the Clayton 

Act (15 U.S.C. 18a(c)(8)), the transactions subject to 

the requirements of this paragraph shall be treated 

as if the approval of the Board is not required.’’. 

(f) BANK MERGER ACT TRANSACTIONS.—Section 18(c)(5) of the 

Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, 

in the matter immediately following subparagraph (B), by striking 

‘‘and the convenience and needs of the community to be served’’ 

and inserting ‘‘the convenience and needs of the community to 

be served, and the risk to the stability of the United States banking 

or financial system’’. 

(g) REPORTS BY SAVINGS AND LOAN HOLDING COMPANIES.— 

Section 10(b)(2) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(b)(2) is amended— 

(1) by striking ‘‘Each savings’’ and inserting the following: 

‘‘(A) IN GENERAL.—Each savings’’; and 

(2) by adding at the end the following: 

‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY

INFORMATION.—The Board shall, to the fullest extent possible, use— 

‘‘(i) reports and other supervisory information that 

the savings and loan holding company or any subsidiary thereof has been required to provide to other 

Federal or State regulatory agencies; 

‘‘(ii) externally audited financial statements of the 

savings and loan holding company or subsidiary; 

‘‘(iii) information that is otherwise available from 

Federal or State regulatory agencies; and 

‘‘(iv) information that is otherwise required to be 

reported publicly. 

‘‘(C) AVAILABILITY.—Upon the request of the Board, 

a savings and loan holding company or a subsidiary of 

a savings and loan holding company shall promptly provide 

to the Board any information described in clauses (i) 

through (iii) of subparagraph (B).’’. 

(h) EXAMINATION OF SAVINGS AND LOAN HOLDING COMPANIES.— (1) DEFINITIONS.—Section 2 of the Home Owners’ Loan 

Act (12 U.S.C. 1462) is amended by adding at the end the 

following: 

‘‘(10) APPROPRIATE FEDERAL BANKING AGENCY.—The term 

‘appropriate Federal banking agency’ has the same meaning 

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

U.S.C. 1813(q)). 

‘‘(11) FUNCTIONALLY REGULATED SUBSIDIARY.—The term 

‘functionally regulated subsidiary’ has the same meaning as 

in section 5(c)(5) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1844(c)(5)).’’. 
H. R. 4173—228 

(2) EXAMINATION.—Section 10(b) of the Home Owners’ Loan 

Act (12 U.S.C. 1467a(b)) is amended by striking paragraph 

(4) and inserting the following: 

‘‘(4) EXAMINATIONS.— 

‘‘(A) IN GENERAL.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, the Board may 

make examinations of a savings and loan holding company 

and each subsidiary of a savings and loan holding company 

system, in order to— 

‘‘(i) inform the Board of— 

‘‘(I) the nature of the operations and financial 

condition of the savings and loan holding company 

and the subsidiary; 

‘‘(II) the financial, operational, and other risks 

within the savings and loan holding company 

system that may pose a threat to— 

‘‘(aa) the safety and soundness of the 

savings and loan holding company or of any 

depository institution subsidiary of the savings 

and loan holding company; or 

‘‘(bb) the stability of the financial system 

of the United States; and 

‘‘(III) the systems of the savings and loan 

holding company for monitoring and controlling 

the risks described in subclause (II); and 

‘‘(ii) monitor the compliance of the savings and 

loan holding company and the subsidiary with— 

‘‘(I) this Act; 

‘‘(II) Federal laws that the Board has specific 

jurisdiction to enforce against the company or subsidiary; and 

‘‘(III) other than in the case of an insured 

depository institution or functionally regulated 

subsidiary, any other applicable provisions of Federal law. 

‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For 

purposes of this subsection, the Board shall, to the fullest 

extent possible, rely on— 

‘‘(i) the examination reports made by other Federal 

or State regulatory agencies relating to a savings and 

loan holding company and any subsidiary; and 

‘‘(ii) the reports and other information required 

under paragraph (2). 

‘‘(C) COORDINATION WITH OTHER REGULATORS.—The 

Board shall— 

‘‘(i) provide reasonable notice to, and consult with, 

the appropriate Federal banking agency, the Securities 

and Exchange Commission, the Commodity Futures 

Trading Commission, or State regulatory agency, as 

appropriate, for a subsidiary that is a depository 

institution or a functionally regulated subsidiary of 

a savings and loan holding company before commencing an examination of the subsidiary under this 

section; and 

‘‘(ii) to the fullest extent possible, avoid duplication 

of examination activities, reporting requirements, and 

requests for information.’’. 
H. R. 4173—229 

(i) DEFINITION OF THE TERM ‘‘SAVINGS AND LOAN HOLDING

COMPANY’’.—Section 10(a)(1)(D)(ii) of the Home Owners’ Loan Act 

(12 U.S.C. 1467a(a)(1)(D)(ii)) is amended to read as follows: 

‘‘(ii) EXCLUSION.—The term ‘savings and loan 

holding company’ does not include— 

‘‘(I) a bank holding company that is registered 

under, and subject to, the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841 et seq.), or to any 

company directly or indirectly controlled by such 

company (other than a savings association); 

‘‘(II) a company that controls a savings association that functions solely in a trust or fiduciary 

capacity as described in section 2(c)(2)(D) of the 

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

1841(c)(2)(D)); or 

‘‘(III) a company described in subsection 

(c)(9)(C) solely by virtue of such company’s control 

of an intermediate holding company established 

pursuant to section 10A.’’. 

(j) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE 

ACTIVITIES OF DEPOSITORY INSTITUTION SUBSIDIARIES 

OF HOLDING COMPANIES. 

(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 

1811 et seq.) is amended by inserting after section 25 the following 

new section: 

‘‘SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDIARIES OF 

HOLDING COMPANIES. 

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System. 

‘‘(2) FUNCTIONALLY REGULATED SUBSIDIARY.—The term 

‘functionally regulated subsidiary’ has the same meaning as 

in section 5(c)(5) of the Bank Holding Company Act. 

‘‘(3) LEAD INSURED DEPOSITORY INSTITUTION.—The term 

‘lead insured depository institution’ has the same meaning as 

in section 2(o)(8) of the Bank Holding Company Act. 

‘‘(b) EXAMINATION REQUIREMENTS.—Subject to subtitle B of the 

Consumer Financial Protection Act of 2010, the Board shall examine 

the activities of a nondepository institution subsidiary (other than 

a functionally regulated subsidiary or a subsidiary of a depository 

institution) of a depository institution holding company that are 

permissible for the insured depository institution subsidiaries of 

the depository institution holding company in the same manner, 

subject to the same standards, and with the same frequency as 

would be required if such activities were conducted in the lead 

insured depository institution of the depository institution holding 

company. 

‘‘(c) STATE COORDINATION.— ‘‘(1) CONSULTATION AND COORDINATION.—If a nondepository 

institution subsidiary is supervised by a State bank supervisor 

or other State regulatory authority, the Board, in conducting 

the examinations required in subsection (b), shall consult and 

coordinate with such State regulator. 
H. R. 4173—230 

‘‘(2) ALTERNATING EXAMINATIONS PERMITTED.—The 

examinations required under subsection (b) may be conducted 

in joint or alternating manner with a State regulator, if the 

Board determines that an examination of a nondepository 

institution subsidiary conducted by the State carries out the 

purposes of this section. 

‘‘(d) APPROPRIATE FEDERAL BANKING AGENCY BACKUP EXAMINATION AUTHORITY.— 

‘‘(1) IN GENERAL.—In the event that the Board does not 

conduct examinations required under subsection (b) in the same 

manner, subject to the same standards, and with the same 

frequency as would be required if such activities were conducted 

by the lead insured depository institution subsidiary of the 

depository institution holding company, the appropriate Federal 

banking agency for the lead insured depository institution may 

recommend in writing (which shall include a written explanation of the concerns giving rise to the recommendation) that 

the Board perform the examination required under subsection 

(b). 

‘‘(2) EXAMINATION BY AN APPROPRIATE FEDERAL BANKING

AGENCY.—If the Board does not, before the end of the 60- 

day period beginning on the date on which the Board receives 

a recommendation under paragraph (1), begin an examination 

as required under subsection (b) or provide a written explanation or plan to the appropriate Federal banking agency 

making such recommendation responding to the concerns raised 

by the appropriate Federal banking agency for the lead insured 

depository institution, the appropriate Federal banking agency 

for the lead insured depository institution may, subject to the 

Consumer Financial Protection Act of 2010, examine the activities that are permissible for a depository institution subsidiary 

conducted by such nondepository institution subsidiary (other 

than a functionally regulated subsidiary or a subsidiary of 

a depository institution) of the depository institution holding 

company as if the nondepository institution subsidiary were 

an insured depository institution for which the appropriate 

Federal banking agency of the lead insured depository institution was the appropriate Federal banking agency, to determine 

whether the activities— 

‘‘(A) pose a material threat to the safety and soundness 

of any insured depository institution subsidiary of the 

depository institution holding company; 

‘‘(B) are conducted in accordance with applicable Federal law; and 

‘‘(C) are subject to appropriate systems for monitoring 

and controlling the financial, operating, and other material 

risks of the activities that may pose a material threat 

to the safety and soundness of the insured depository 

institution subsidiaries of the holding company. 

‘‘(3) AGENCY COORDINATION WITH THE BOARD.—An appropriate Federal banking agency that conducts an examination 

pursuant to paragraph (2) shall coordinate examination of the 

activities of nondepository institution subsidiaries described in 

subsection (b) with the Board in a manner that— 

‘‘(A) avoids duplication; 

‘‘(B) shares information relevant to the supervision 

of the depository institution holding company; 
H. R. 4173—231 

‘‘(C) achieves the objectives of subsection (b); and 

‘‘(D) ensures that the depository institution holding 

company and the subsidiaries of the depository institution 

holding company are not subject to conflicting supervisory 

demands by such agency and the Board. 

‘‘(4) FEE PERMITTED FOR EXAMINATION COSTS.—An appropriate Federal banking agency that conducts an examination 

or enforcement action pursuant to this section may collect an 

assessment, fee, or such other charge from the subsidiary as 

the appropriate Federal banking agency determines necessary 

or appropriate to carry out the responsibilities of the appropriate Federal banking agency in connection with such examination. 

‘‘(e) REFERRALS FOR ENFORCEMENT BY APPROPRIATE FEDERAL

BANKING AGENCY.— 

‘‘(1) RECOMMENDATION OF ENFORCEMENT ACTION.—The 

appropriate Federal banking agency for the lead insured depository institution, based upon its examination of a nondepository 

institution subsidiary conducted pursuant to subsection (d), 

or other relevant information, may submit to the Board, in 

writing, a recommendation that the Board take enforcement 

action against such nondepository institution subsidiary, 

together with an explanation of the concerns giving rise to 

the recommendation, if the appropriate Federal banking agency 

determines (by a vote of its members, if applicable) that the 

activities of the nondepository institution subsidiary pose a 

material threat to the safety and soundness of any insured 

depository institution subsidiary of the depository institution 

holding company. 

‘‘(2) BACK-UP AUTHORITY OF THE APPROPRIATE FEDERAL

BANKING AGENCY.—If, within the 60-day period beginning on 

the date on which the Board receives a recommendation under 

paragraph (1), the Board does not take enforcement action 

against the nondepository institution subsidiary or provide a 

plan for supervisory or enforcement action that is acceptable 

to the appropriate Federal banking agency that made the recommendation pursuant to paragraph (1), such agency may take 

the recommended enforcement action against the nondepository 

institution subsidiary, in the same manner as if the nondepository institution subsidiary were an insured depository institution for which the agency was the appropriate Federal banking 

agency. 

‘‘(f) COORDINATION AMONG APPROPRIATE FEDERAL BANKING

AGENCIES.—Each Federal banking agency, prior to or when exercising authority under subsection (d) or (e) shall— 

‘‘(1) provide reasonable notice to, and consult with, the 

appropriate Federal banking agency or State bank supervisor 

(or other State regulatory agency) of the nondepository institution subsidiary of a depository institution holding company 

that is described in subsection (d) before commencing any examination of the subsidiary; 

‘‘(2) to the fullest extent possible— 

‘‘(A) rely on the examinations, inspections, and reports 

of the appropriate Federal banking agency or the State 

bank supervisor (or other State regulatory agency) of the 

subsidiary; 
H. R. 4173—232 

‘‘(B) avoid duplication of examination activities, 

reporting requirements, and requests for information; and 

‘‘(C) ensure that the depository institution holding company and the subsidiaries of the depository institution 

holding company are not subject to conflicting supervisory 

demands by the appropriate Federal banking agencies. 

‘‘(g) RULE OF CONSTRUCTION.—No provision of this section shall 

be construed as limiting any authority of the Board, the Corporation, or the Comptroller of the Currency under any other provision 

of law.’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 

shall take effect on the transfer date. 

SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO 

REMAIN WELL CAPITALIZED AND WELL MANAGED. 

(a) AMENDMENT.—Section 4(l)(1) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1843(l)(1)) is amended— 

(1) in subparagraph (B), by striking ‘‘and’’ at the end; 

(2) by redesignating subparagraph (C) as subparagraph 

(D); 

(3) by inserting after subparagraph (B) the following: 

‘‘(C) the bank holding company is well capitalized and 

well managed; and’’; and 

(4) in subparagraph (D)(ii), as so redesignated, by striking 

‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A), 

(B), and (C)’’. 

(b) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 10(c)(2) 

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

by adding at the end the following new subparagraph: 

‘‘(H) Any activity that is permissible for a financial 

holding company (as such term is defined under section 

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

1841(p)) to conduct under section 4(k) of the Bank Holding 

Company Act of 1956 if— 

‘‘(i) the savings and loan holding company meets 

all of the criteria to qualify as a financial holding 

company, and complies with all of the requirements 

applicable to a financial holding company, under sections 4(l) and 4(m) of the Bank Holding Company 

Act and section 804(c) of the Community Reinvestment 

Act of 1977 (12 U.S.C. 2903(c)) as if the savings and 

loan holding company was a bank holding company; 

and 

‘‘(ii) the savings and loan holding company conducts the activity in accordance with the same terms, 

conditions, and requirements that apply to the conduct 

of such activity by a bank holding company under 

the Bank Holding Company Act of 1956 and the 

Board’s regulations and interpretations under such 

Act.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS. 

(a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of the Bank 

Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended 

by striking ‘‘adequately capitalized and adequately managed’’ and 

inserting ‘‘well capitalized and well managed’’. 
H. R. 4173—233 

(b) INTERSTATE BANK MERGERS.—Section 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended 

by striking ‘‘will continue to be adequately capitalized and adequately managed’’ and inserting ‘‘will be well capitalized and well 

managed’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH AFFILIATES. 

(a) AFFILIATE TRANSACTIONS.—Section 23A of the Federal 

Reserve Act (12 U.S.C. 371c) is amended— 

(1) in subsection (b)— 

(A) in paragraph (1), by striking subparagraph (D) 

and inserting the following: 

‘‘(D) any investment fund with respect to which a 

member bank or affiliate thereof is an investment adviser; 

and’’; and 

(B) in paragraph (7)— 

(i) in subparagraph (A), by inserting before the 

semicolon at the end the following: ‘‘, including a purchase of assets subject to an agreement to repurchase’’; 

(ii) in subparagraph (C), by striking ‘‘, including 

assets subject to an agreement to repurchase,’’; 

(iii) in subparagraph (D)— 

(I) by inserting ‘‘or other debt obligations’’ after 

‘‘acceptance of securities’’; and 

(II) by striking ‘‘or’’ at the end; and 

(iv) by adding at the end the following: 

‘‘(F) a transaction with an affiliate that involves the 

borrowing or lending of securities, to the extent that the 

transaction causes a member bank or a subsidiary to have 

credit exposure to the affiliate; or 

‘‘(G) a derivative transaction, as defined in paragraph 

(3) of section 5200(b) of the Revised Statutes of the United 

States (12 U.S.C. 84(b)), with an affiliate, to the extent 

that the transaction causes a member bank or a subsidiary 

to have credit exposure to the affiliate;’’; 

(2) in subsection (c)— 

(A) in paragraph (1)— 

(i) in the matter preceding subparagraph (A), by 

striking ‘‘subsidiary’’ and all that follows through ‘‘time 

of the transaction’’ and inserting ‘‘subsidiary, and any 

credit exposure of a member bank or a subsidiary 

to an affiliate resulting from a securities borrowing 

or lending transaction, or a derivative transaction, 

shall be secured at all times’’; and 

(ii) in each of subparagraphs (A) through (D), by 

striking ‘‘or letter of credit’’ and inserting ‘‘letter of 

credit, or credit exposure’’; 

(B) by striking paragraph (2); 

(C) by redesignating paragraphs (3) through (5) as 

paragraphs (2) through (4), respectively; 

(D) in paragraph (2), as so redesignated, by inserting 

before the period at the end ‘‘, or credit exposure to an 

affiliate resulting from a securities borrowing or lending 

transaction, or derivative transaction’’; and 
H. R. 4173—234 

(E) in paragraph (3), as so redesignated— 

(i) by inserting ‘‘or other debt obligations’’ after 

‘‘securities’’; and 

(ii) by striking ‘‘or guarantee’’ and all that follows 

through ‘‘behalf of,’’ and inserting ‘‘guarantee, acceptance, or letter of credit issued on behalf of, or credit 

exposure from a securities borrowing or lending transaction, or derivative transaction to,’’; 

(3) in subsection (d)(4), in the matter preceding subparagraph (A), by striking ‘‘or issuing’’ and all that follows through 

‘‘behalf of,’’ and inserting ‘‘issuing a guarantee, acceptance, 

or letter of credit on behalf of, or having credit exposure 

resulting from a securities borrowing or lending transaction, 

or derivative transaction to,’’; and 

(4) in subsection (f)— 

(A) in paragraph (2)— 

(i) by striking ‘‘or order’’; 

(ii) by striking ‘‘if it finds’’ and all that follows 

through the end of the paragraph and inserting the 

following: ‘‘if— 

‘‘(i) the Board finds the exemption to be in the 

public interest and consistent with the purposes of 

this section, and notifies the Federal Deposit Insurance 

Corporation of such finding; and 

‘‘(ii) before the end of the 60-day period beginning 

on the date on which the Federal Deposit Insurance 

Corporation receives notice of the finding under clause 

(i), the Federal Deposit Insurance Corporation does 

not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable 

risk to the Deposit Insurance Fund.’’; 

(iii) by striking the Board and inserting the following: 

‘‘(A) IN GENERAL.—The Board’’; and 

(iv) by adding at the end the following: 

‘‘(B) ADDITIONAL EXEMPTIONS.— ‘‘(i) NATIONAL BANKS.—The Comptroller of the Currency may, by order, exempt a transaction of a national 

bank from the requirements of this section if— 

‘‘(I) the Board and the Office of the Comptroller of the Currency jointly find the exemption 

to be in the public interest and consistent with 

the purposes of this section and notify the Federal 

Deposit Insurance Corporation of such finding; and 

‘‘(II) before the end of the 60-day period beginning on the date on which the Federal Deposit 

Insurance Corporation receives notice of the 

finding under subclause (I), the Federal Deposit 

Insurance Corporation does not object, in writing, 

to the finding, based on a determination that the 

exemption presents an unacceptable risk to the 

Deposit Insurance Fund. 

‘‘(ii) STATE BANKS.—The Federal Deposit Insurance 

Corporation may, by order, exempt a transaction of 

a State nonmember bank, and the Board may, by order, 

exempt a transaction of a State member bank, from 

the requirements of this section if— 
H. R. 4173—235 

‘‘(I) the Board and the Federal Deposit Insurance Corporation jointly find that the exemption 

is in the public interest and consistent with the 

purposes of this section; and 

‘‘(II) the Federal Deposit Insurance Corporation finds that the exemption does not present 

an unacceptable risk to the Deposit Insurance 

Fund.’’; and 

(B) by adding at the end the following: 

‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.—The Board may 

issue such regulations or interpretations as the Board determines are necessary or appropriate with respect to the manner 

in which a netting agreement may be taken into account in 

determining the amount of a covered transaction between a 

member bank or a subsidiary and an affiliate, including the 

extent to which netting agreements between a member bank 

or a subsidiary and an affiliate may be taken into account 

in determining whether a covered transaction is fully secured 

for purposes of subsection (d)(4). An interpretation under this 

paragraph with respect to a specific member bank, subsidiary, 

or affiliate shall be issued jointly with the appropriate Federal 

banking agency for such member bank, subsidiary, or affiliate.’’. 

(b) TRANSACTIONS WITH AFFILIATES.—Section 23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e)) is amended— 

(1) by striking the undesignated matter following subparagraph (B); 

(2) by redesignating subparagraphs (A) and (B) as clauses 

(i) and (ii), respectively, and adjusting the clause margins 

accordingly; 

(3) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and adjusting the subparagraph margins accordingly; 

(4) by striking ‘‘The Board’’ and inserting the following: 

‘‘(1) IN GENERAL.—The Board’’; 

(5) in paragraph (1)(B), as so redesignated— 

(A) in the matter preceding clause (i), by inserting 

before ‘‘regulations’’ the following: ‘‘subject to paragraph 

(2), if the Board finds that an exemption or exclusion 

is in the public interest and is consistent with the purposes 

of this section, and notifies the Federal Deposit Insurance 

Corporation of such finding,’’; and 

(B) in clause (ii), by striking the comma at the end 

and inserting a period; and 

(6) by adding at the end the following: 

‘‘(2) EXCEPTION.—The Board may grant an exemption or 

exclusion under this subsection only if, during the 60-day period 

beginning on the date of receipt of notice of the finding from 

the Board under paragraph (1)(B), the Federal Deposit Insurance Corporation does not object, in writing, to such exemption 

or exclusion, based on a determination that the exemption 

presents an unacceptable risk to the Deposit Insurance Fund.’’. 

(c) HOME OWNERS’ LOAN ACT.—Section 11 of the Home Owners’ 

Loan Act (12 U.S.C. 1468) is amended by adding at the end the 

following: 

‘‘(d) EXEMPTIONS.— 
H. R. 4173—236 

‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The Comptroller of 

the Currency may, by order, exempt a transaction of a Federal 

savings association from the requirements of this section if— 

‘‘(A) the Board and the Office of the Comptroller of 

the Currency jointly find the exemption to be in the public 

interest and consistent with the purposes of this section 

and notify the Federal Deposit Insurance Corporation of 

such finding; and 

‘‘(B) before the end of the 60-day period beginning 

on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under subparagraph 

(A), the Federal Deposit Insurance Corporation does not 

object, in writing, to the finding, based on a determination 

that the exemption presents an unacceptable risk to the 

Deposit Insurance Fund. 

‘‘(2) STATE SAVINGS ASSOCIATION.—The Federal Deposit 

Insurance Corporation may, by order, exempt a transaction 

of a State savings association from the requirements of this 

section if the Board and the Federal Deposit Insurance Corporation jointly find that— 

‘‘(A) the exemption is in the public interest and consistent with the purposes of this section; and 

‘‘(B) the exemption does not present an unacceptable 

risk to the Deposit Insurance Fund.’’. 

(d) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 1 year after the transfer date. 

SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL SUBSIDIARIES. 

(a) AMENDMENT.—Section 23A(e) of the Federal Reserve Act 

(12 U.S.C. 371c(e)) is amended— 

(1) by striking paragraph (3); and 

(2) by redesignating paragraph (4) as paragraph (3). 

(b) PROSPECTIVE APPLICATION OF AMENDMENT.—The amendments made by this section shall apply with respect to any covered 

transaction between a bank and a subsidiary of the bank, as those 

terms are defined in section 23A of the Federal Reserve Act (12 

U.S.C. 371c), that is entered into on or after the date of enactment 

of this Act. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 1 year after the transfer date. 

SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON 

DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, 

REVERSE REPURCHASE AGREEMENTS, AND SECURITIES 

LENDING AND BORROWING TRANSACTIONS. 

(a) NATIONAL BANKS.—Section 5200(b) of the Revised Statutes 

of the United States (12 U.S.C. 84(b)) is amended— 

(1) in paragraph (1), by striking ‘‘shall include’’ and all 

that follows through the end of the paragraph and inserting 

the following: ‘‘shall include— 

‘‘(A) all direct or indirect advances of funds to a person 

made on the basis of any obligation of that person to 

repay the funds or repayable from specific property pledged 

by or on behalf of the person; 

‘‘(B) to the extent specified by the Comptroller of the 

Currency, any liability of a national banking association 
H. R. 4173—237 

to advance funds to or on behalf of a person pursuant 

to a contractual commitment; and 

‘‘(C) any credit exposure to a person arising from a 

derivative transaction, repurchase agreement, reverse 

repurchase agreement, securities lending transaction, or 

securities borrowing transaction between the national 

banking association and the person;’’; 

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

and inserting ‘‘; and’’; and 

(3) by adding at the end the following: 

‘‘(3) the term ‘derivative transaction’ includes any transaction that is a contract, agreement, swap, warrant, note, or 

option that is based, in whole or in part, on the value of, 

any interest in, or any quantitative measure or the occurrence 

of any event relating to, one or more commodities, securities, 

currencies, interest or other rates, indices, or other assets.’’. 

(b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the Home 

Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended by striking 

‘‘Director’’ each place that term appears and inserting ‘‘Comptroller 

of the Currency’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 1 year after the transfer date. 

SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS 

IN LENDING LIMITS. 

(a) AMENDMENT.—Section 18 of the Federal Deposit Insurance 

Act (12 U.S.C. 1828) is amended by adding at the end the following: 

‘‘(y) STATE LENDING LIMIT TREATMENT OF DERIVATIVES TRANS- ACTIONS.—An insured State bank may engage in a derivative transaction, as defined in section 5200(b)(3) of the Revised Statutes 

of the United States (12 U.S.C. 84(b)(3)), only if the law with 

respect to lending limits of the State in which the insured State 

bank is chartered takes into consideration credit exposure to derivative transactions.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section 

shall take effect 18 months after the transfer date. 

SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS. 

(a) CONVERSION OF A NATIONAL BANKING ASSOCIATION.—The 

Act entitled ‘‘An Act to provide for the conversion of national 

banking associations into and their merger or consolidation with 

State banks, and for other purposes.’’ (12 U.S.C. 214 et seq.) is 

amended by adding at the end the following: 

‘‘SEC. 10. PROHIBITION ON CONVERSION. 

‘‘A national banking association may not convert to a State 

bank or State savings association during any period in which the 

national banking association is subject to a cease and desist order 

(or other formal enforcement order) issued by, or a memorandum 

of understanding entered into with, the Comptroller of the Currency 

with respect to a significant supervisory matter.’’. 

(b) CONVERSION OF A STATE BANK OR SAVINGS ASSOCIATION.— Section 5154 of the Revised Statutes of the United States (12 

U.S.C. 35) is amended by adding at the end the following: ‘‘The 

Comptroller of the Currency may not approve the conversion of 

a State bank or State savings association to a national banking 

association or Federal savings association during any period in 

which the State bank or State savings association is subject to 
H. R. 4173—238 

a cease and desist order (or other formal enforcement order) issued 

by, or a memorandum of understanding entered into with, a State 

bank supervisor or the appropriate Federal banking agency with 

respect to a significant supervisory matter or a final enforcement 

action by a State Attorney General.’’. 

(c) CONVERSION OF A FEDERAL SAVINGS ASSOCIATION.—Section 

5(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(i)) is amended 

by adding at the end the following: 

‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY FEDERAL

SAVINGS ASSOCIATIONS.—A Federal savings association may not 

convert to a State bank or State savings association during 

any period in which the Federal savings association is subject 

to a cease and desist order (or other formal enforcement order) 

issued by, or a memorandum of understanding entered into 

with, the Office of Thrift Supervision or the Comptroller of 

the Currency with respect to a significant supervisory matter.’’. 

(d) EXCEPTION.—The prohibition on the approval of conversions 

under the amendments made by subsections (a), (b), and (c) shall 

not apply, if— 

(1) the Federal banking agency that would be the appropriate Federal banking agency after the proposed conversion 

gives the appropriate Federal banking agency or State bank 

supervisor that issued the cease and desist order (or other 

formal enforcement order) or memorandum of understanding, 

as appropriate, written notice of the proposed conversion 

including a plan to address the significant supervisory matter 

in a manner that is consistent with the safe and sound operation of the institution; 

(2) within 30 days of receipt of the written notice required 

under paragraph (1), the appropriate Federal banking agency 

or State bank supervisor that issued the cease and desist order 

(or other formal enforcement order) or memorandum of understanding, as appropriate, does not object to the conversion 

or the plan to address the significant supervisory matter; 

(3) after conversion of the insured depository institution, 

the appropriate Federal banking agency after the conversion 

implements such plan; and 

(4) in the case of a final enforcement action by a State 

Attorney General, approval of the conversion is conditioned 

on compliance by the insured depository institution with the 

terms of such final enforcement action. 

(e) NOTIFICATION OF PENDING ENFORCEMENT ACTIONS.— 

(1) COPY OF CONVERSION APPLICATION.—At the time an 

insured depository institution files a conversion application, 

the insured depository institution shall transmit a copy of the 

conversion application to— 

(A) the appropriate Federal banking agency for the 

insured depository institution; and 

(B) the Federal banking agency that would be the 

appropriate Federal banking agency of the insured depository institution after the proposed conversion. 

(2) NOTIFICATION AND ACCESS TO INFORMATION.—Upon 

receipt of a copy of the application described in paragraph 

(1), the appropriate Federal banking agency for the insured 

depository institution proposing the conversion shall— 

(A) notify the Federal banking agency that would be 

the appropriate Federal banking agency for the institution 
H. R. 4173—239 

after the proposed conversion in writing of any ongoing 

supervisory or investigative proceedings that the appropriate Federal banking agency for the institution proposing 

to convert believes is likely to result, in the near term 

and absent the proposed conversion, in a cease and desist 

order (or other formal enforcement order) or memorandum 

of understanding with respect to a significant supervisory 

matter; and 

(B) provide the Federal banking agency that would 

be the appropriate Federal banking agency for the institution after the proposed conversion access to all investigative 

and supervisory information relating to the proceedings 

described in subparagraph (A). 

SEC. 613. DE NOVO BRANCHING INTO STATES. 

(a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the Revised Statutes of the United States (12 U.S.C. 36(g)(1)(A)) is amended to 

read as follows: 

‘‘(A) the law of the State in which the branch is located, 

or is to be located, would permit establishment of the 

branch, if the national bank were a State bank chartered 

by such State; and’’. 

(b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) of the Federal 

Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to 

read as follows: 

‘‘(i) the law of the State in which the branch is 

located, or is to be located, would permit establishment 

of the branch, if the bank were a State bank chartered 

by such State; and’’. 

SEC. 614. LENDING LIMITS TO INSIDERS. 

(a) EXTENSIONS OF CREDIT.—Section 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended— 

(1) by striking the period at the end and inserting ‘‘; or’’; 

(2) by striking ‘‘a person’’ and inserting ‘‘the person’’; 

(3) by striking ‘‘extends credit by making’’ and inserting 

the following: ‘‘extends credit to a person by— 

‘‘(I) making’’; and 

(4) by adding at the end the following: 

‘‘(II) having credit exposure to the person 

arising from a derivative transaction (as defined 

in section 5200(b) of the Revised Statutes of the 

United States (12 U.S.C. 84(b))), repurchase agreement, reverse repurchase agreement, securities 

lending transaction, or securities borrowing transaction between the member bank and the person.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 1 year after the transfer date. 

SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS. 

(a) AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.— 

Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) 

is amended by adding at the end the following: 

‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.— 

‘‘(1) IN GENERAL.—An insured depository institution may 

not purchase an asset from, or sell an asset to, an executive 

officer, director, or principal shareholder of the insured depository institution, or any related interest of such person (as 
H. R. 4173—240 

such terms are defined in section 22(h) of Federal Reserve 

Act), unless— 

‘‘(A) the transaction is on market terms; and 

‘‘(B) if the transaction represents more than 10 percent 

of the capital stock and surplus of the insured depository 

institution, the transaction has been approved in advance 

by a majority of the members of the board of directors 

of the insured depository institution who do not have an 

interest in the transaction. 

‘‘(2) RULEMAKING.—The Board of Governors of the Federal 

Reserve System may issue such rules as may be necessary 

to define terms and to carry out the purposes this subsection. 

Before proposing or adopting a rule under this paragraph, 

the Board of Governors of the Federal Reserve System shall 

consult with the Comptroller of the Currency and the Corporation as to the terms of the rule.’’. 

(b) AMENDMENTS TO THE FEDERAL RESERVE ACT.—Section 22(d) 

of the Federal Reserve Act (12 U.S.C. 375) is amended to read 

as follows: 

‘‘(d) [Reserved]’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS. 

(a) CAPITAL LEVELS OF BANK HOLDING COMPANIES.—Section 

5(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) 

is amended— 

(1) by inserting after ‘‘orders’’ the following: ‘‘, including 

regulations and orders relating to the capital requirements 

for bank holding companies,’’; and 

(2) by adding at the end the following: ‘‘In establishing 

capital regulations pursuant to this subsection, the Board shall 

seek to make such requirements countercyclical, so that the 

amount of capital required to be maintained by a company 

increases in times of economic expansion and decreases in 

times of economic contraction, consistent with the safety and 

soundness of the company.’’. 

(b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLDING COMPANIES.—Section 10(g)(1) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(g)(1)) is amended— 

(1) by inserting after ‘‘orders’’ the following: ‘‘, including 

regulations and orders relating to capital requirements for 

savings and loan holding companies,’’; and 

(2) by inserting at the end the following: ‘‘In establishing 

capital regulations pursuant to this subsection, the appropriate 

Federal banking agency shall seek to make such requirements 

countercyclical so that the amount of capital required to be 

maintained by a company increases in times of economic expansion and decreases in times of economic contraction, consistent 

with the safety and soundness of the company.’’. 

(c) CAPITAL LEVELS OF INSURED DEPOSITORY INSTITUTIONS.— Section 908(a)(1) of the International Lending Supervision Act of 

1983 (12 U.S.C. 3907(a)(1)) is amended by adding at the end the 

following: ‘‘Each appropriate Federal banking agency shall seek 

to make the capital standards required under this section or other 

provisions of Federal law for insured depository institutions countercyclical so that the amount of capital required to be maintained 
H. R. 4173—241 

by an insured depository institution increases in times of economic 

expansion and decreases in times of economic contraction, consistent 

with the safety and soundness of the insured depository institution.’’ 

(d) SOURCE OF STRENGTH.—The Federal Deposit Insurance Act 

(12 U.S.C. 1811 et seq.) is amended by inserting after section 

38 (12 U.S.C. 1831o) the following: 

‘‘SEC. 38A. SOURCE OF STRENGTH. 

‘‘(a) HOLDING COMPANIES.—The appropriate Federal banking 

agency for a bank holding company or savings and loan holding 

company shall require the bank holding company or savings and 

loan holding company to serve as a source of financial strength 

for any subsidiary of the bank holding company or savings and 

loan holding company that is a depository institution. 

‘‘(b) OTHER COMPANIES.—If an insured depository institution 

is not the subsidiary of a bank holding company or savings and 

loan holding company, the appropriate Federal banking agency 

for the insured depository institution shall require any company 

that directly or indirectly controls the insured depository institution 

to serve as a source of financial strength for such institution. 

‘‘(c) REPORTS.—The appropriate Federal banking agency for 

an insured depository institution described in subsection (b) may, 

from time to time, require the company, or a company that directly 

or indirectly controls the insured depository institution, to submit 

a report, under oath, for the purposes of— 

‘‘(1) assessing the ability of such company to comply with 

the requirement under subsection (b); and 

‘‘(2) enforcing the compliance of such company with the 

requirement under subsection (b). 

‘‘(d) RULES.—Not later than 1 year after the transfer date, 

as defined in section 311 of the Enhancing Financial Institution 

Safety and Soundness Act of 2010, the appropriate Federal banking 

agencies shall jointly issue final rules to carry out this section. 

‘‘(e) DEFINITION.—In this section, the term ‘source of financial 

strength’ means the ability of a company that directly or indirectly 

owns or controls an insured depository institution to provide financial assistance to such insured depository institution in the event 

of the financial distress of the insured depository institution.’’. 

(e) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING 

COMPANY FRAMEWORK. 

(a) AMENDMENT.—Section 17 of the Securities Exchange Act 

of 1934 (15 U.S.C. 78q) is amended— 

(1) by striking subsection (i); and 

(2) by redesignating subsections (j) and (k) as subsections 

(i) and (j), respectively. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the transfer date. 

SEC. 618. SECURITIES HOLDING COMPANIES. 

(a) DEFINITIONS.—In this section— 

(1) the term ‘‘associated person of a securities holding company’’ means a person directly or indirectly controlling, controlled by, or under common control with, a securities holding 

company; 
H. R. 4173—242 

(2) the term ‘‘foreign bank’’ has the same meaning as 

in section 1(b)(7) of the International Banking Act of 1978 

(12 U.S.C. 3101(7)); 

(3) the term ‘‘insured bank’’ has the same meaning as 

in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 

1813); 

(4) the term ‘‘securities holding company’’— 

(A) means— 

(i) a person (other than a natural person) that 

owns or controls 1 or more brokers or dealers registered 

with the Commission; and 

(ii) the associated persons of a person described 

in clause (i); and 

(B) does not include a person that is— 

(i) a nonbank financial company supervised by the 

Board under title I; 

(ii) an insured bank (other than an institution 

described in subparagraphs (D), (F), or (H) of section 

2(c)(2) of the Bank Holding Company Act of 1956 (12 

U.S.C. 1841(c)(2)) or a savings association; 

(iii) an affiliate of an insured bank (other than 

an institution described in subparagraphs (D), (F), or 

(H) of section 2(c)(2) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)) or an affiliate of 

a savings association; 

(iv) a foreign bank, foreign company, or company 

that is described in section 8(a) of the International 

Banking Act of 1978 (12 U.S.C. 3106(a)); 

(v) a foreign bank that controls, directly or 

indirectly, a corporation chartered under section 25A 

of the Federal Reserve Act (12 U.S.C. 611 et seq.); 

or 

(vi) subject to comprehensive consolidated supervision by a foreign regulator; 

(5) the term ‘‘supervised securities holding company’’ means 

a securities holding company that is supervised by the Board 

of Governors under this section; and 

(6) the terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding company’’, 

‘‘company’’, ‘‘control’’, ‘‘savings association’’, and ‘‘subsidiary’’ 

have the same meanings as in section 2 of the Bank Holding 

Company Act of 1956. 

(b) SUPERVISION OF A SECURITIES HOLDING COMPANY NOT

HAVING A BANK OR SAVINGS ASSOCIATION AFFILIATE.— 

(1) IN GENERAL.—A securities holding company that is 

required by a foreign regulator or provision of foreign law 

to be subject to comprehensive consolidated supervision may 

register with the Board of Governors under paragraph (2) to 

become a supervised securities holding company. Any securities 

holding company filing such a registration shall be supervised 

in accordance with this section, and shall comply with the 

rules and orders prescribed by the Board of Governors 

applicable to supervised securities holding companies. 

(2) REGISTRATION AS A SUPERVISED SECURITIES HOLDING

COMPANY.— 

(A) REGISTRATION.—A securities holding company that 

elects to be subject to comprehensive consolidated supervision shall register by filing with the Board of Governors 
H. R. 4173—243 

such information and documents as the Board of Governors, 

by regulation, may prescribe as necessary or appropriate 

in furtherance of the purposes of this section. 

(B) EFFECTIVE DATE.—A securities holding company 

that registers under subparagraph (A) shall be deemed 

to be a supervised securities holding company, effective 

on the date that is 45 days after the date of receipt of 

the registration information and documents under subparagraph (A) by the Board of Governors, or within such shorter 

period as the Board of Governors, by rule or order, may 

determine. 

(c) SUPERVISION OF SECURITIES HOLDING COMPANIES.— 

(1) RECORDKEEPING AND REPORTING.— 

(A) RECORDKEEPING AND REPORTING REQUIRED.—Each 

supervised securities holding company and each affiliate 

of a supervised securities holding company shall make 

and keep for periods determined by the Board of Governors 

such records, furnish copies of such records, and make 

such reports, as the Board of Governors determines to 

be necessary or appropriate to carry out this section, to 

prevent evasions thereof, and to monitor compliance by 

the supervised securities holding company or affiliate with 

applicable provisions of law. 

(B) FORM AND CONTENTS.— 

(i) IN GENERAL.—Any record or report required 

to be made, furnished, or kept under this paragraph 

shall— 

(I) be prepared in such form and according 

to such specifications (including certification by 

a registered public accounting firm), as the Board 

of Governors may require; and 

(II) be provided promptly to the Board of Governors at any time, upon request by the Board 

of Governors. 

(ii) CONTENTS.—Records and reports required to 

be made, furnished, or kept under this paragraph may 

include— 

(I) a balance sheet or income statement of 

the supervised securities holding company or an 

affiliate of a supervised securities holding company; 

(II) an assessment of the consolidated capital 

and liquidity of the supervised securities holding 

company; 

(III) a report by an independent auditor 

attesting to the compliance of the supervised securities holding company with the internal risk 

management and internal control objectives of the 

supervised securities holding company; and 

(IV) a report concerning the extent to which 

the supervised securities holding company or affiliate has complied with the provisions of this section and any regulations prescribed and orders 

issued under this section. 

(2) USE OF EXISTING REPORTS.— (A) IN GENERAL.—The Board of Governors shall, to 

the fullest extent possible, accept reports in fulfillment 
H. R. 4173—244 

of the requirements of this paragraph that a supervised 

securities holding company or an affiliate of a supervised 

securities holding company has been required to provide 

to another regulatory agency or a self-regulatory organization. 

(B) AVAILABILITY.—A supervised securities holding 

company or an affiliate of a supervised securities holding 

company shall promptly provide to the Board of Governors, 

at the request of the Board of Governors, any report 

described in subparagraph (A), as permitted by law. 

(3) EXAMINATION AUTHORITY.— 

(A) FOCUS OF EXAMINATION AUTHORITY.—The Board 

of Governors may make examinations of any supervised 

securities holding company and any affiliate of a supervised 

securities holding company to carry out this subsection, 

to prevent evasions thereof, and to monitor compliance 

by the supervised securities holding company or affiliate 

with applicable provisions of law. 

(B) DEFERENCE TO OTHER EXAMINATIONS.—For purposes of this subparagraph, the Board of Governors shall, 

to the fullest extent possible, use the reports of examination 

made by other appropriate Federal or State regulatory 

authorities with respect to any functionally regulated subsidiary or any institution described in subparagraph (D), 

(F), or (H) of section 2(c)(2) of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841(c)(2)). 

(d) CAPITAL AND RISK MANAGEMENT.— 

(1) IN GENERAL.—The Board of Governors shall, by regulation or order, prescribe capital adequacy and other risk management standards for supervised securities holding companies 

that are appropriate to protect the safety and soundness of 

the supervised securities holding companies and address the 

risks posed to financial stability by supervised securities 

holding companies. 

(2) DIFFERENTIATION.—In imposing standards under this 

subsection, the Board of Governors may differentiate among 

supervised securities holding companies on an individual basis, 

or by category, taking into consideration the requirements 

under paragraph (3). 

(3) CONTENT.—Any standards imposed on a supervised 

securities holding company under this subsection shall take 

into account— 

(A) the differences among types of business activities 

carried out by the supervised securities holding company; 

(B) the amount and nature of the financial assets of 

the supervised securities holding company; 

(C) the amount and nature of the liabilities of the 

supervised securities holding company, including the 

degree of reliance on short-term funding; 

(D) the extent and nature of the off-balance sheet 

exposures of the supervised securities holding company; 

(E) the extent and nature of the transactions and relationships of the supervised securities holding company with 

other financial companies; 

(F) the importance of the supervised securities holding 

company as a source of credit for households, businesses, 
H. R. 4173—245 

and State and local governments, and as a source of 

liquidity for the financial system; and 

(G) the nature, scope, and mix of the activities of 

the supervised securities holding company. 

(4) NOTICE.—A capital requirement imposed under this 

subsection may not take effect earlier than 180 days after 

the date on which a supervised securities holding company 

is provided notice of the capital requirement. 

(e) OTHER PROVISIONS OF LAW APPLICABLE TO SUPERVISED

SECURITIES HOLDING COMPANIES.— (1) FEDERAL DEPOSIT INSURANCE ACT.—Subsections (b), (c) 

through (s), and (u) of section 8 of the Federal Deposit Insurance 

Act (12 U.S.C. 1818) shall apply to any supervised securities 

holding company, and to any subsidiary (other than a bank 

or an institution described in subparagraph (D), (F), or (H) 

of section 2(c)(2) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1841(c)(2))) of a supervised securities holding company, in the same manner as such subsections apply to a 

bank holding company for which the Board of Governors is 

the appropriate Federal banking agency. For purposes of 

applying such subsections to a supervised securities holding 

company or a subsidiary (other than a bank or an institution 

described in subparagraph (D), (F), or (H) of section 2(c)(2) 

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

1841(c)(2))) of a supervised securities holding company, the 

Board of Governors shall be deemed the appropriate Federal 

banking agency for the supervised securities holding company 

or subsidiary. 

(2) BANK HOLDING COMPANY ACT OF 1956.—Except as the 

Board of Governors may otherwise provide by regulation or 

order, a supervised securities holding company shall be subject 

to the provisions of the Bank Holding Company Act of 1956 

(12 U.S.C. 1841 et seq.) in the same manner and to the same 

extent a bank holding company is subject to such provisions, 

except that a supervised securities holding company may not, 

by reason of this paragraph, be deemed to be a bank holding 

company for purposes of section 4 of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1843). 

SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN 

RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE 

EQUITY FUNDS. 

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

seq.) is amended by adding at the end the following: 

‘‘SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN 

RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY 

FUNDS. 

‘‘(a) IN GENERAL.— 

‘‘(1) PROHIBITION.—Unless otherwise provided in this section, a banking entity shall not— 

‘‘(A) engage in proprietary trading; or 

‘‘(B) acquire or retain any equity, partnership, or other 

ownership interest in or sponsor a hedge fund or a private 

equity fund. 

‘‘(2) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD.—Any nonbank financial company supervised by the 

Board that engages in proprietary trading or takes or retains 
H. R. 4173—246 

any equity, partnership, or other ownership interest in or sponsors a hedge fund or a private equity fund shall be subject, 

by rule, as provided in subsection (b)(2), to additional capital 

requirements for and additional quantitative limits with 

regards to such proprietary trading and taking or retaining 

any equity, partnership, or other ownership interest in or 

sponsorship of a hedge fund or a private equity fund, except 

that permitted activities as described in subsection (d) shall 

not be subject to the additional capital and additional quantitative limits except as provided in subsection (d)(3), as if 

the nonbank financial company supervised by the Board were 

a banking entity. 

‘‘(b) STUDY AND RULEMAKING.— 

‘‘(1) STUDY.—Not later than 6 months after the date of 

enactment of this section, the Financial Stability Oversight 

Council shall study and make recommendations on implementing the provisions of this section so as to— 

‘‘(A) promote and enhance the safety and soundness 

of banking entities; 

‘‘(B) protect taxpayers and consumers and enhance 

financial stability by minimizing the risk that insured 

depository institutions and the affiliates of insured depository institutions will engage in unsafe and unsound activities; 

‘‘(C) limit the inappropriate transfer of Federal subsidies from institutions that benefit from deposit insurance 

and liquidity facilities of the Federal Government to 

unregulated entities; 

‘‘(D) reduce conflicts of interest between the selfinterest of banking entities and nonbank financial companies supervised by the Board, and the interests of the 

customers of such entities and companies; 

‘‘(E) limit activities that have caused undue risk or 

loss in banking entities and nonbank financial companies 

supervised by the Board, or that might reasonably be 

expected to create undue risk or loss in such banking 

entities and nonbank financial companies supervised by 

the Board; 

‘‘(F) appropriately accommodate the business of insurance within an insurance company, subject to regulation 

in accordance with the relevant insurance company investment laws, while protecting the safety and soundness of 

any banking entity with which such insurance company 

is affiliated and of the United States financial system; 

and 

‘‘(G) appropriately time the divestiture of illiquid assets 

that are affected by the implementation of the prohibitions 

under subsection (a). 

‘‘(2) RULEMAKING.— ‘‘(A) IN GENERAL.—Unless otherwise provided in this 

section, not later than 9 months after the completion of 

the study under paragraph (1), the appropriate Federal 

banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, 

shall consider the findings of the study under paragraph 

(1) and adopt rules to carry out this section, as provided 

in subparagraph (B). 
H. R. 4173—247 

‘‘(B) COORDINATED RULEMAKING.— 

‘‘(i) REGULATORY AUTHORITY.—The regulations 

issued under this paragraph shall be issued by— 

‘‘(I) the appropriate Federal banking agencies, 

jointly, with respect to insured depository institutions; 

‘‘(II) the Board, with respect to any company 

that controls an insured depository institution, or 

that is treated as a bank holding company for 

purposes of section 8 of the International Banking 

Act, any nonbank financial company supervised 

by the Board, and any subsidiary of any of the 

foregoing (other than a subsidiary for which an 

agency described in subclause (I), (III), or (IV) 

is the primary financial regulatory agency); 

‘‘(III) the Commodity Futures Trading 

Commission, with respect to any entity for which 

the Commodity Futures Trading Commission is 

the primary financial regulatory agency, as defined 

in section 2 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act; and 

‘‘(IV) the Securities and Exchange Commission, with respect to any entity for which the Securities and Exchange Commission is the primary 

financial regulatory agency, as defined in section 

2 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

‘‘(ii) COORDINATION, CONSISTENCY, AND COMPARABILITY.—In developing and issuing regulations 

pursuant to this section, the appropriate Federal 

banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading 

Commission shall consult and coordinate with each 

other, as appropriate, for the purposes of assuring, 

to the extent possible, that such regulations are comparable and provide for consistent application and 

implementation of the applicable provisions of this section to avoid providing advantages or imposing disadvantages to the companies affected by this subsection 

and to protect the safety and soundness of banking 

entities and nonbank financial companies supervised 

by the Board. 

‘‘(iii) COUNCIL ROLE.—The Chairperson of the 

Financial Stability Oversight Council shall be responsible for coordination of the regulations issued under 

this section. 

‘‘(c) EFFECTIVE DATE.— ‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) 

and (3), this section shall take effect on the earlier of— 

‘‘(A) 12 months after the date of the issuance of final 

rules under subsection (b); or 

‘‘(B) 2 years after the date of enactment of this section. 

‘‘(2) CONFORMANCE PERIOD FOR DIVESTITURE.—A banking 

entity or nonbank financial company supervised by the Board 

shall bring its activities and investments into compliance with 

the requirements of this section not later than 2 years after 

the date on which the requirements become effective pursuant 
H. R. 4173—248 

to this section or 2 years after the date on which the entity 

or company becomes a nonbank financial company supervised 

by the Board. The Board may, by rule or order, extend this 

two-year period for not more than one year at a time, if, 

in the judgment of the Board, such an extension is consistent 

with the purposes of this section and would not be detrimental 

to the public interest. The extensions made by the Board under 

the preceding sentence may not exceed an aggregate of 3 years. 

‘‘(3) EXTENDED TRANSITION FOR ILLIQUID FUNDS.— 

‘‘(A) APPLICATION.—The Board may, upon the application of a banking entity, extend the period during which 

the banking entity, to the extent necessary to fulfill a 

contractual obligation that was in effect on May 1, 2010, 

may take or retain its equity, partnership, or other ownership interest in, or otherwise provide additional capital 

to, an illiquid fund. 

‘‘(B) TIME LIMIT ON APPROVAL.—The Board may grant 

1 extension under subparagraph (A), which may not exceed 

5 years. 

‘‘(4) DIVESTITURE REQUIRED.—Except as otherwise provided 

in subsection (d)(1)(G), a banking entity may not engage in 

any activity prohibited under subsection (a)(1)(B) after the earlier of— 

‘‘(A) the date on which the contractual obligation to 

invest in the illiquid fund terminates; and 

‘‘(B) the date on which any extensions granted by the 

Board under paragraph (3) expire. 

‘‘(5) ADDITIONAL CAPITAL DURING TRANSITION PERIOD.—Notwithstanding paragraph (2), on the date on which the rules 

are issued under subsection (b)(2), the appropriate Federal 

banking agencies, the Securities and Exchange Commission, 

and the Commodity Futures Trading Commission shall issue 

rules, as provided in subsection (b)(2), to impose additional 

capital requirements, and any other restrictions, as appropriate, 

on any equity, partnership, or ownership interest in or sponsorship of a hedge fund or private equity fund by a banking 

entity. 

‘‘(6) SPECIAL RULEMAKING.—Not later than 6 months after 

the date of enactment of this section, the Board shall issues 

rules to implement paragraphs (2) and (3). 

‘‘(d) PERMITTED ACTIVITIES.— 

‘‘(1) IN GENERAL.—Notwithstanding the restrictions under 

subsection (a), to the extent permitted by any other provision 

of Federal or State law, and subject to the limitations under 

paragraph (2) and any restrictions or limitations that the appropriate Federal banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading Commission, 

may determine, the following activities (in this section referred 

to as ‘permitted activities’) are permitted: 

‘‘(A) The purchase, sale, acquisition, or disposition of 

obligations of the United States or any agency thereof, 

obligations, participations, or other instruments of or issued 

by the Government National Mortgage Association, the 

Federal National Mortgage Association, the Federal Home 

Loan Mortgage Corporation, a Federal Home Loan Bank, 

the Federal Agricultural Mortgage Corporation, or a Farm 

Credit System institution chartered under and subject to 
H. R. 4173—249 

the provisions of the Farm Credit Act of 1971 (12 U.S.C. 

2001 et seq.), and obligations of any State or of any political 

subdivision thereof. 

‘‘(B) The purchase, sale, acquisition, or disposition of 

securities and other instruments described in subsection 

(h)(4) in connection with underwriting or market-makingrelated activities, to the extent that any such activities 

permitted by this subparagraph are designed not to exceed 

the reasonably expected near term demands of clients, 

customers, or counterparties. 

‘‘(C) Risk-mitigating hedging activities in connection 

with and related to individual or aggregated positions, 

contracts, or other holdings of a banking entity that are 

designed to reduce the specific risks to the banking entity 

in connection with and related to such positions, contracts, 

or other holdings. 

‘‘(D) The purchase, sale, acquisition, or disposition of 

securities and other instruments described in subsection 

(h)(4) on behalf of customers. 

‘‘(E) Investments in one or more small business investment companies, as defined in section 102 of the Small 

Business Investment Act of 1958 (15 U.S.C. 662), investments designed primarily to promote the public welfare, 

of the type permitted under paragraph (11) of section 5136 

of the Revised Statutes of the United States (12 U.S.C. 

24), or investments that are qualified rehabilitation 

expenditures with respect to a qualified rehabilitated 

building or certified historic structure, as such terms are 

defined in section 47 of the Internal Revenue Code of 

1986 or a similar State historic tax credit program. 

‘‘(F) The purchase, sale, acquisition, or disposition of 

securities and other instruments described in subsection 

(h)(4) by a regulated insurance company directly engaged 

in the business of insurance for the general account of 

the company and by any affiliate of such regulated insurance company, provided that such activities by any affiliate 

are solely for the general account of the regulated insurance 

company, if— 

‘‘(i) the purchase, sale, acquisition, or disposition 

is conducted in compliance with, and subject to, the 

insurance company investment laws, regulations, and 

written guidance of the State or jurisdiction in which 

each such insurance company is domiciled; and 

‘‘(ii) the appropriate Federal banking agencies, 

after consultation with the Financial Stability Oversight Council and the relevant insurance commissioners of the States and territories of the United 

States, have not jointly determined, after notice and 

comment, that a particular law, regulation, or written 

guidance described in clause (i) is insufficient to protect 

the safety and soundness of the banking entity, or 

of the financial stability of the United States. 

‘‘(G) Organizing and offering a private equity or hedge 

fund, including serving as a general partner, managing 

member, or trustee of the fund and in any manner selecting 

or controlling (or having employees, officers, directors, or 

agents who constitute) a majority of the directors, trustees, 
H. R. 4173—250 

or management of the fund, including any necessary 

expenses for the foregoing, only if— 

‘‘(i) the banking entity provides bona fide trust, 

fiduciary, or investment advisory services; 

‘‘(ii) the fund is organized and offered only in 

connection with the provision of bona fide trust, fiduciary, or investment advisory services and only to persons that are customers of such services of the banking 

entity; 

‘‘(iii) the banking entity does not acquire or retain 

an equity interest, partnership interest, or other 

ownership interest in the funds except for a de minimis 

investment subject to and in compliance with paragraph (4); 

‘‘(iv) the banking entity complies with the restrictions under paragraphs (1) and (2) of subparagraph 

(f); 

‘‘(v) the banking entity does not, directly or 

indirectly, guarantee, assume, or otherwise insure the 

obligations or performance of the hedge fund or private 

equity fund or of any hedge fund or private equity 

fund in which such hedge fund or private equity fund 

invests; 

‘‘(vi) the banking entity does not share with the 

hedge fund or private equity fund, for corporate, marketing, promotional, or other purposes, the same name 

or a variation of the same name; 

‘‘(vii) no director or employee of the banking entity 

takes or retains an equity interest, partnership 

interest, or other ownership interest in the hedge fund 

or private equity fund, except for any director or 

employee of the banking entity who is directly engaged 

in providing investment advisory or other services to 

the hedge fund or private equity fund; and 

‘‘(viii) the banking entity discloses to prospective 

and actual investors in the fund, in writing, that any 

losses in such hedge fund or private equity fund are 

borne solely by investors in the fund and not by the 

banking entity, and otherwise complies with any additional rules of the appropriate Federal banking agencies, the Securities and Exchange Commission, or the 

Commodity Futures Trading Commission, as provided 

in subsection (b)(2), designed to ensure that losses 

in such hedge fund or private equity fund are borne 

solely by investors in the fund and not by the banking 

entity. 

‘‘(H) Proprietary trading conducted by a banking entity 

pursuant to paragraph (9) or (13) of section 4(c), provided 

that the trading occurs solely outside of the United States 

and that the banking entity is not directly or indirectly 

controlled by a banking entity that is organized under 

the laws of the United States or of one or more States. 

‘‘(I) The acquisition or retention of any equity, partnership, or other ownership interest in, or the sponsorship 

of, a hedge fund or a private equity fund by a banking 

entity pursuant to paragraph (9) or (13) of section 4(c) 
H. R. 4173—251 

solely outside of the United States, provided that no ownership interest in such hedge fund or private equity fund 

is offered for sale or sold to a resident of the United 

States and that the banking entity is not directly or 

indirectly controlled by a banking entity that is organized 

under the laws of the United States or of one or more 

States. 

‘‘(J) Such other activity as the appropriate Federal 

banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission 

determine, by rule, as provided in subsection (b)(2), would 

promote and protect the safety and soundness of the 

banking entity and the financial stability of the United 

States. 

‘‘(2) LIMITATION ON PERMITTED ACTIVITIES.— 

‘‘(A) IN GENERAL.—No transaction, class of transactions, or activity may be deemed a permitted activity 

under paragraph (1) if the transaction, class of transactions, 

or activity— 

‘‘(i) would involve or result in a material conflict 

of interest (as such term shall be defined by rule as 

provided in subsection (b)(2)) between the banking 

entity and its clients, customers, or counterparties; 

‘‘(ii) would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets 

or high-risk trading strategies (as such terms shall 

be defined by rule as provided in subsection (b)(2)); 

‘‘(iii) would pose a threat to the safety and soundness of such banking entity; or 

‘‘(iv) would pose a threat to the financial stability 

of the United States. 

‘‘(B) RULEMAKING.—The appropriate Federal banking 

agencies, the Securities and Exchange Commission, and 

the Commodity Futures Trading Commission shall issue 

regulations to implement subparagraph (A), as part of the 

regulations issued under subsection (b)(2). 

‘‘(3) CAPITAL AND QUANTITATIVE LIMITATIONS.—The appropriate Federal banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading Commission 

shall, as provided in subsection (b)(2), adopt rules imposing 

additional capital requirements and quantitative limitations, 

including diversification requirements, regarding the activities 

permitted under this section if the appropriate Federal banking 

agencies, the Securities and Exchange Commission, and the 

Commodity Futures Trading Commission determine that additional capital and quantitative limitations are appropriate to 

protect the safety and soundness of banking entities engaged 

in such activities. 

‘‘(4) DE MINIMIS INVESTMENT.— ‘‘(A) IN GENERAL.—A banking entity may make and 

retain an investment in a hedge fund or private equity 

fund that the banking entity organizes and offers, subject 

to the limitations and restrictions in subparagraph (B) 

for the purposes of— 

‘‘(i) establishing the fund and providing the fund 

with sufficient initial equity for investment to permit 

the fund to attract unaffiliated investors; or 
H. R. 4173—252 

‘‘(ii) making a de minimis investment. 

‘‘(B) LIMITATIONS AND RESTRICTIONS ON INVESTMENTS.— 

‘‘(i) REQUIREMENT TO SEEK OTHER INVESTORS.— 

A banking entity shall actively seek unaffiliated investors to reduce or dilute the investment of the banking 

entity to the amount permitted under clause (ii). 

‘‘(ii) LIMITATIONS ON SIZE OF INVESTMENTS.—Notwithstanding any other provision of law, investments 

by a banking entity in a hedge fund or private equity 

fund shall— 

‘‘(I) not later than 1 year after the date of 

establishment of the fund, be reduced through 

redemption, sale, or dilution to an amount that 

is not more than 3 percent of the total ownership 

interests of the fund; 

‘‘(II) be immaterial to the banking entity, as 

defined, by rule, pursuant to subsection (b)(2), but 

in no case may the aggregate of all of the interests 

of the banking entity in all such funds exceed 

3 percent of the Tier 1 capital of the banking 

entity. 

‘‘(iii) CAPITAL.—For purposes of determining 

compliance with applicable capital standards under 

paragraph (3), the aggregate amount of the outstanding 

investments by a banking entity under this paragraph, 

including retained earnings, shall be deducted from 

the assets and tangible equity of the banking entity, 

and the amount of the deduction shall increase 

commensurate with the leverage of the hedge fund 

or private equity fund. 

‘‘(C) EXTENSION.—Upon an application by a banking 

entity, the Board may extend the period of time to meet 

the requirements under subparagraph (B)(ii)(I) for 2 additional years, if the Board finds that an extension would 

be consistent with safety and soundness and in the public 

interest. 

‘‘(e) ANTI-EVASION.— ‘‘(1) RULEMAKING.—The appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall issue regulations, 

as part of the rulemaking provided for in subsection (b)(2), 

regarding internal controls and recordkeeping, in order to 

insure compliance with this section. 

‘‘(2) TERMINATION OF ACTIVITIES OR INVESTMENT.—Notwithstanding any other provision of law, whenever an appropriate 

Federal banking agency, the Securities and Exchange Commission, or the Commodity Futures Trading Commission, as appropriate, has reasonable cause to believe that a banking entity 

or nonbank financial company supervised by the Board under 

the respective agency’s jurisdiction has made an investment 

or engaged in an activity in a manner that functions as an 

evasion of the requirements of this section (including through 

an abuse of any permitted activity) or otherwise violates the 

restrictions under this section, the appropriate Federal banking 

agency, the Securities and Exchange Commission, or the Commodity Futures Trading Commission, as appropriate, shall 
H. R. 4173—253 

order, after due notice and opportunity for hearing, the banking 

entity or nonbank financial company supervised by the Board 

to terminate the activity and, as relevant, dispose of the investment. Nothing in this paragraph shall be construed to limit 

the inherent authority of any Federal agency or State regulatory authority to further restrict any investments or activities 

under otherwise applicable provisions of law. 

‘‘(f) LIMITATIONS ON RELATIONSHIPS WITH HEDGE FUNDS AND

PRIVATE EQUITY FUNDS.— 

‘‘(1) IN GENERAL.—No banking entity that serves, directly 

or indirectly, as the investment manager, investment adviser, 

or sponsor to a hedge fund or private equity fund, or that 

organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), and no affiliate of such entity, 

may enter into a transaction with the fund, or with any other 

hedge fund or private equity fund that is controlled by such 

fund, that would be a covered transaction, as defined in section 

23A of the Federal Reserve Act (12 U.S.C. 371c), with the 

hedge fund or private equity fund, as if such banking entity 

and the affiliate thereof were a member bank and the hedge 

fund or private equity fund were an affiliate thereof. 

‘‘(2) TREATMENT AS MEMBER BANK.—A banking entity that 

serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity 

fund, or that organizes and offers a hedge fund or private 

equity fund pursuant to paragraph (d)(1)(G), shall be subject 

to section 23B of the Federal Reserve Act (12 U.S.C. 371c– 

1), as if such banking entity were a member bank and such 

hedge fund or private equity fund were an affiliate thereof. 

‘‘(3) PERMITTED SERVICES.— 

‘‘(A) IN GENERAL.—Notwithstanding paragraph (1), the 

Board may permit a banking entity to enter into any prime 

brokerage transaction with any hedge fund or private 

equity fund in which a hedge fund or private equity fund 

managed, sponsored, or advised by such banking entity 

has taken an equity, partnership, or other ownership 

interest, if— 

‘‘(i) the banking entity is in compliance with each 

of the limitations set forth in subsection (d)(1)(G) with 

regard to a hedge fund or private equity fund organized 

and offered by such banking entity; 

‘‘(ii) the chief executive officer (or equivalent 

officer) of the banking entity certifies in writing 

annually (with a duty to update the certification if 

the information in the certification materially changes) 

that the conditions specified in subsection (d)(1)(g)(v) 

are satisfied; and 

‘‘(iii) the Board has determined that such transaction is consistent with the safe and sound operation 

and condition of the banking entity. 

‘‘(B) TREATMENT OF PRIME BROKERAGE TRANSACTIONS.— 

For purposes of subparagraph (A), a prime brokerage transaction described in subparagraph (A) shall be subject to 

section 23B of the Federal Reserve Act (12 U.S.C. 371c1) as if the counterparty were an affiliate of the banking 

entity. 
H. R. 4173—254 

‘‘(4) APPLICATION TO NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD.—The appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall adopt rules, as provided in subsection (b)(2), imposing additional capital charges 

or other restrictions for nonbank financial companies supervised 

by the Board to address the risks to and conflicts of interest 

of banking entities described in paragraphs (1), (2), and (3) 

of this subsection. 

‘‘(g) RULES OF CONSTRUCTION.— ‘‘(1) LIMITATION ON CONTRARY AUTHORITY.—Except as provided in this section, notwithstanding any other provision of 

law, the prohibitions and restrictions under this section shall 

apply to activities of a banking entity or nonbank financial 

company supervised by the Board, even if such activities are 

authorized for a banking entity or nonbank financial company 

supervised by the Board. 

‘‘(2) SALE OR SECURITIZATION OF LOANS.—Nothing in this 

section shall be construed to limit or restrict the ability of 

a banking entity or nonbank financial company supervised 

by the Board to sell or securitize loans in a manner otherwise 

permitted by law. 

‘‘(3) AUTHORITY OF FEDERAL AGENCIES AND STATE REGU- LATORY AUTHORITIES.—Nothing in this section shall be construed to limit the inherent authority of any Federal agency 

or State regulatory authority under otherwise applicable provisions of law. 

‘‘(h) DEFINITIONS.—In this section, the following definitions 

shall apply: 

‘‘(1) BANKING ENTITY.—The term ‘banking entity’ means 

any insured depository institution (as defined in section 3 of 

the Federal Deposit Insurance Act (12 U.S.C. 1813)), any company that controls an insured depository institution, or that 

is treated as a bank holding company for purposes of section 

8 of the International Banking Act of 1978, and any affiliate 

or subsidiary of any such entity. For purposes of this paragraph, 

the term ‘insured depository institution’ does not include an 

institution that functions solely in a trust or fiduciary capacity, 

if— 

‘‘(A) all or substantially all of the deposits of such 

institution are in trust funds and are received in a bona 

fide fiduciary capacity; 

‘‘(B) no deposits of such institution which are insured 

by the Federal Deposit Insurance Corporation are offered 

or marketed by or through an affiliate of such institution; 

‘‘(C) such institution does not accept demand deposits 

or deposits that the depositor may withdraw by check 

or similar means for payment to third parties or others 

or make commercial loans; and 

‘‘(D) such institution does not— 

‘‘(i) obtain payment or payment related services 

from any Federal Reserve bank, including any service 

referred to in section 11A of the Federal Reserve Act 

(12 U.S.C. 248a); or 

‘‘(ii) exercise discount or borrowing privileges 

pursuant to section 19(b)(7) of the Federal Reserve 

Act (12 U.S.C. 461(b)(7)). 
H. R. 4173—255 

‘‘(2) HEDGE FUND; PRIVATE EQUITY FUND.—The terms ‘hedge 

fund’ and ‘private equity fund’ mean an issuer that would 

be an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for section 

3(c)(1) or 3(c)(7) of that Act, or such similar funds as the 

appropriate Federal banking agencies, the Securities and 

Exchange Commission, and the Commodity Futures Trading 

Commission may, by rule, as provided in subsection (b)(2), 

determine. 

‘‘(3) NONBANK FINANCIAL COMPANY SUPERVISED BY THE

BOARD.—The term ‘nonbank financial company supervised by 

the Board’ means a nonbank financial company supervised 

by the Board of Governors, as defined in section 102 of the 

Financial Stability Act of 2010. 

‘‘(4) PROPRIETARY TRADING.—The term ‘proprietary trading’, 

when used with respect to a banking entity or nonbank financial 

company supervised by the Board, means engaging as a principal for the trading account of the banking entity or nonbank 

financial company supervised by the Board in any transaction 

to purchase or sell, or otherwise acquire or dispose of, any 

security, any derivative, any contract of sale of a commodity 

for future delivery, any option on any such security, derivative, 

or contract, or any other security or financial instrument that 

the appropriate Federal banking agencies, the Securities and 

Exchange Commission, and the Commodity Futures Trading 

Commission may, by rule as provided in subsection (b)(2), determine. 

‘‘(5) SPONSOR.—The term to ‘sponsor’ a fund means— 

‘‘(A) to serve as a general partner, managing member, 

or trustee of a fund; 

‘‘(B) in any manner to select or to control (or to have 

employees, officers, or directors, or agents who constitute) 

a majority of the directors, trustees, or management of 

a fund; or 

‘‘(C) to share with a fund, for corporate, marketing, 

promotional, or other purposes, the same name or a variation of the same name. 

‘‘(6) TRADING ACCOUNT.—The term ‘trading account’ means 

any account used for acquiring or taking positions in the securities and instruments described in paragraph (4) principally 

for the purpose of selling in the near term (or otherwise with 

the intent to resell in order to profit from short-term price 

movements), and any such other accounts as the appropriate 

Federal banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading Commission 

may, by rule as provided in subsection (b)(2), determine. 

‘‘(7) ILLIQUID FUND.— ‘‘(A) IN GENERAL.—The term ‘illiquid fund’ means a 

hedge fund or private equity fund that— 

‘‘(i) as of May 1, 2010, was principally invested 

in, or was invested and contractually committed to 

principally invest in, illiquid assets, such as portfolio 

companies, real estate investments, and venture capital investments; and 

‘‘(ii) makes all investments pursuant to, and consistent with, an investment strategy to principally 

invest in illiquid assets. In issuing rules regarding 
H. R. 4173—256 

this subparagraph, the Board shall take into consideration the terms of investment for the hedge fund or 

private equity fund, including contractual obligations, 

the ability of the fund to divest of assets held by 

the fund, and any other factors that the Board determines are appropriate. 

‘‘(B) HEDGE FUND.—For the purposes of this paragraph, 

the term ‘hedge fund’ means any fund identified under 

subsection (h)(2), and does not include a private equity 

fund, as such term is used in section 203(m) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(m)).’’. 

SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES. 

(a) STUDY.— (1) IN GENERAL.—Not later than 18 months after the date 

of enactment of this Act, the appropriate Federal banking agencies shall jointly review and prepare a report on the activities 

that a banking entity, as such term is defined in the Bank 

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

engage in under Federal and State law, including activities 

authorized by statute and by order, interpretation and guidance. 

(2) CONTENT.—In carrying out the study under paragraph 

(1), the appropriate Federal banking agencies shall review and 

consider— 

(A) the type of activities or investments; 

(B) any financial, operational, managerial, or reputation risks associated with or presented as a result of the 

banking entity engaged in the activity or making the investment; and 

(C) risk mitigation activities undertaken by the 

banking entity with regard to the risks. 

(b) REPORT AND RECOMMENDATIONS TO THE COUNCIL AND TO

CONGRESS.—The appropriate Federal banking agencies shall submit 

to the Council, the Committee on Financial Services of the House 

of Representatives, and the Committee on Banking, Housing, and 

Urban Affairs of the Senate the study conducted pursuant to subsection (a) no later than 2 months after its completion. In addition 

to the information described in subsection (a), the report shall 

include recommendations regarding— 

(1) whether each activity or investment has or could have 

a negative effect on the safety and soundness of the banking 

entity or the United States financial system; 

(2) the appropriateness of the conduct of each activity or 

type of investment by banking entities; and 

(3) additional restrictions as may be necessary to address 

risks to safety and soundness arising from the activities or 

types of investments described in subsection (a). 

SEC. 621. CONFLICTS OF INTEREST. 

(a) IN GENERAL.—The Securities Act of 1933 (15 U.S.C. 77a 

et seq.) is amended by inserting after section 27A the following: 

‘‘SEC. 27B. CONFLICTS OF INTEREST RELATING TO CERTAIN 

SECURITIZATIONS. 

‘‘(a) IN GENERAL.—An underwriter, placement agent, initial 

purchaser, or sponsor, or any affiliate or subsidiary of any such 

entity, of an asset-backed security (as such term is defined in 
H. R. 4173—257 

section 3 of the Securities and Exchange Act of 1934 (15 U.S.C. 

78c), which for the purposes of this section shall include a synthetic 

asset-backed security), shall not, at any time for a period ending 

on the date that is one year after the date of the first closing 

of the sale of the asset-backed security, engage in any transaction 

that would involve or result in any material conflict of interest 

with respect to any investor in a transaction arising out of such 

activity. 

‘‘(b) RULEMAKING.—Not later than 270 days after the date 

of enactment of this section, the Commission shall issue rules 

for the purpose of implementing subsection (a). 

‘‘(c) EXCEPTION.—The prohibitions of subsection (a) shall not 

apply to— 

‘‘(1) risk-mitigating hedging activities in connection with 

positions or holdings arising out of the underwriting, placement, 

initial purchase, or sponsorship of an asset-backed security, 

provided that such activities are designed to reduce the specific 

risks to the underwriter, placement agent, initial purchaser, 

or sponsor associated with positions or holdings arising out 

of such underwriting, placement, initial purchase, or sponsorship; or 

‘‘(2) purchases or sales of asset-backed securities made 

pursuant to and consistent with— 

‘‘(A) commitments of the underwriter, placement agent, 

initial purchaser, or sponsor, or any affiliate or subsidiary 

of any such entity, to provide liquidity for the asset-backed 

security, or 

‘‘(B) bona fide market-making in the asset backed security. 

‘‘(d) RULE OF CONSTRUCTION.—This subsection shall not otherwise limit the application of section 15G of the Securities Exchange 

Act of 1934.’’. 

(b) EFFECTIVE DATE.—Section 27B of the Securities Act of 1933, 

as added by this section, shall take effect on the effective date 

of final rules issued by the Commission under subsection (b) of 

such section 27B, except that subsections (b) and (d) of such section 

27B shall take effect on the date of enactment of this Act. 

SEC. 622. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS. 

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

seq.) is amended by adding at the end the following: 

‘‘SEC. 14. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS. 

‘‘(a) DEFINITIONS.—In this section— 

‘‘(1) the term ‘Council’ means the Financial Stability Oversight Council; 

‘‘(2) the term ‘financial company’ means— 

‘‘(A) an insured depository institution; 

‘‘(B) a bank holding company; 

‘‘(C) a savings and loan holding company; 

‘‘(D) a company that controls an insured depository 

institution; 

‘‘(E) a nonbank financial company supervised by the 

Board under title I of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act; and 

‘‘(F) a foreign bank or company that is treated as 

a bank holding company for purposes of this Act; and 

‘‘(3) the term ‘liabilities’ means— 
H. R. 4173—258 

‘‘(A) with respect to a United States financial company— 

‘‘(i) the total risk-weighted assets of the financial 

company, as determined under the risk-based capital 

rules applicable to bank holding companies, as adjusted 

to reflect exposures that are deducted from regulatory 

capital; less 

‘‘(ii) the total regulatory capital of the financial 

company under the risk-based capital rules applicable 

to bank holding companies; 

‘‘(B) with respect to a foreign-based financial company— 

‘‘(i) the total risk-weighted assets of the United 

States operations of the financial company, as determined under the applicable risk-based capital rules, 

as adjusted to reflect exposures that are deducted from 

regulatory capital; less 

‘‘(ii) the total regulatory capital of the United 

States operations of the financial company, as determined under the applicable risk-based capital rules; 

and 

‘‘(C) with respect to an insurance company or other 

nonbank financial company supervised by the Board, such 

assets of the company as the Board shall specify by rule, 

in order to provide for consistent and equitable treatment 

of such companies. 

‘‘(b) CONCENTRATION LIMIT.—Subject to the recommendations 

by the Council under subsection (e), a financial company may not 

merge or consolidate with, acquire all or substantially all of the 

assets of, or otherwise acquire control of, another company, if the 

total consolidated liabilities of the acquiring financial company upon 

consummation of the transaction would exceed 10 percent of the 

aggregate consolidated liabilities of all financial companies at the 

end of the calendar year preceding the transaction. 

‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With the prior written consent of the Board, the concentration limit under subsection 

(b) shall not apply to an acquisition— 

‘‘(1) of a bank in default or in danger of default; 

‘‘(2) with respect to which assistance is provided by the 

Federal Deposit Insurance Corporation under section 13(c) of 

the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or 

‘‘(3) that would result only in a de minimis increase in 

the liabilities of the financial company. 

‘‘(d) RULEMAKING AND GUIDANCE.—The Board shall issue regulations implementing this section in accordance with the recommendations of the Council under subsection (e), including the 

definition of terms, as necessary. The Board may issue interpretations or guidance regarding the application of this section to an 

individual financial company or to financial companies in general. 

‘‘(e) COUNCIL STUDY AND RULEMAKING.— 

‘‘(1) STUDY AND RECOMMENDATIONS.—Not later than 6 

months after the date of enactment of this section, the Council 

shall— 

‘‘(A) complete a study of the extent to which the concentration limit under this section would affect financial 

stability, moral hazard in the financial system, the efficiency and competitiveness of United States financial firms 
H. R. 4173—259 

and financial markets, and the cost and availability of 

credit and other financial services to households and 

businesses in the United States; and 

‘‘(B) make recommendations regarding any modifications to the concentration limit that the Council determines 

would more effectively implement this section. 

‘‘(2) RULEMAKING.—Not later than 9 months after the date 

of completion of the study under paragraph (1), and notwithstanding subsections (b) and (d), the Board shall issue final 

regulations implementing this section, which shall reflect any 

recommendations by the Council under paragraph (1)(B).’’. 

SEC. 623. INTERSTATE MERGER TRANSACTIONS. 

(a) INTERSTATE MERGER TRANSACTIONS.—Section 18(c) of the 

Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by 

adding at the end the following: 

‘‘(13)(A) Except as provided in subparagraph (B), the responsible 

agency may not approve an application for an interstate merger 

transaction if the resulting insured depository institution (including 

all insured depository institutions which are affiliates of the 

resulting insured depository institution), upon consummation of 

the transaction, would control more than 10 percent of the total 

amount of deposits of insured depository institutions in the United 

States. 

‘‘(B) Subparagraph (A) shall not apply to an interstate merger 

transaction that involves 1 or more insured depository institutions 

in default or in danger of default, or with respect to which the 

Corporation provides assistance under section 13. 

‘‘(C) In this paragraph— 

‘‘(i) the term ‘interstate merger transaction’ means a merger 

transaction involving 2 or more insured depository institutions 

that have different home States and that are not affiliates; 

and 

‘‘(ii) the term ‘home State’ means— 

‘‘(I) with respect to a national bank, the State in which 

the main office of the bank is located; 

‘‘(II) with respect to a State bank or State savings 

association, the State by which the State bank or State 

savings association is chartered; and 

‘‘(III) with respect to a Federal savings association, 

the State in which the home office (as defined by the 

regulations of the Director of the Office of Thrift Supervision, or, on and after the transfer date, the Comptroller 

of the Currency) of the Federal savings association is 

located.’’. 

(b) ACQUISITIONS BY BANK HOLDING COMPANIES.— (1) IN GENERAL.—Section 4 of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1843) is amended— 

(A) in subsection (i), by adding at the end the following: 

‘‘(8) INTERSTATE ACQUISITIONS.— 

‘‘(A) IN GENERAL.—The Board may not approve an 

application by a bank holding company to acquire an 

insured depository institution under subsection (c)(8) or 

any other provision of this Act if— 

‘‘(i) the home State of such insured depository 

institution is a State other than the home State of 

the bank holding company; and 
H. R. 4173—260 

‘‘(ii) the applicant (including all insured depository 

institutions which are affiliates of the applicant) controls, or upon consummation of the transaction would 

control, more than 10 percent of the total amount 

of deposits of insured depository institutions in the 

United States. 

‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply 

to an acquisition that involves an insured depository 

institution in default or in danger of default, or with respect 

to which the Federal Deposit Insurance Corporation provides assistance under section 13 of the Federal Deposit 

Insurance Act (12 U.S.C. 1823).’’; and 

(B) in subsection (k)(6)(B), by striking ‘‘savings association’’ and inserting ‘‘insured depository institution’’. 

(2) DEFINITIONS.—Section 2(o)(4) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(o)(4)) is amended— 

(A) in subparagraph (B), by striking ‘‘and’’ at the end; 

(B) in subparagraph (C)(ii), by striking the period at 

the end and inserting a semicolon; and 

(C) by adding at the end the following: 

‘‘(D) with respect to a State savings association, the 

State by which the savings association is chartered; and 

‘‘(E) with respect to a Federal savings association, the 

State in which the home office (as defined by the regulations of the Director of the Office of Thrift Supervision, 

or, on and after the transfer date, the Comptroller of the 

Currency) of the Federal savings association is located.’’. 

(c) ACQUISITIONS BY SAVINGS AND LOAN HOLDING COMPANIES.— Section 10(e)(2) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(e)(2)) is amended— 

(1) in paragraph (2)— 

(A) in subparagraph (C), by striking ‘‘or’’ at the end; 

(B) in subparagraph (D), by striking the period at 

the end and inserting ‘‘, or’’; and 

(C) by adding at the end the following: 

‘‘(E) in the case of an application by a savings and 

loan holding company to acquire an insured depository 

institution, if— 

‘‘(i) the home State of the insured depository 

institution is a State other than the home State of 

the savings and loan holding company; 

‘‘(ii) the applicant (including all insured depository 

institutions which are affiliates of the applicant) controls, or upon consummation of the transaction would 

control, more than 10 percent of the total amount 

of deposits of insured depository institutions in the 

United States; and 

‘‘(iii) the acquisition does not involve an insured 

depository institution in default or in danger of default, 

or with respect to which the Federal Deposit Insurance 

Corporation provides assistance under section 13 of 

the Federal Deposit Insurance Act (12 U.S.C. 1823).’’; 

and 

(2) by adding at the end the following: 

‘‘(7) DEFINITIONS.—For purposes of paragraph (2)(E)— 

‘‘(A) the terms ‘default’, ‘in danger of default’, and 

‘insured depository institution’ have the same meanings 
H. R. 4173—261 

as in section 3 of the Federal Deposit Insurance Act (12 

U.S.C. 1813); and 

‘‘(B) the term ‘home State’ means— 

‘‘(i) with respect to a national bank, the State 

in which the main office of the bank is located; 

‘‘(ii) with respect to a State bank or State savings 

association, the State by which the savings association 

is chartered; 

‘‘(iii) with respect to a Federal savings association, 

the State in which the home office (as defined by 

the regulations of the Director of the Office of Thrift 

Supervision, or, on and after the transfer date, the 

Comptroller of the Currency) of the Federal savings 

association is located; and 

‘‘(iv) with respect to a savings and loan holding 

company, the State in which the amount of total 

deposits of all insured depository institution subsidiaries of such company was the greatest on the date 

on which the company became a savings and loan 

holding company.’’. 

SEC. 624. QUALIFIED THRIFT LENDERS. 

Section 10(m)(3) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(m)(3)) is amended— 

(1) by striking subparagraph (A) and inserting the following: 

‘‘(A) IN GENERAL.—A savings association that fails to 

become or remain a qualified thrift lender shall immediately be subject to the restrictions under subparagraph 

(B).’’; and 

(2) in subparagraph (B)(i), by striking subclause (III) and 

inserting the following: 

‘‘(III) DIVIDENDS.—The savings association 

may not pay dividends, except for dividends that— 

‘‘(aa) would be permissible for a national 

bank; 

‘‘(bb) are necessary to meet obligations of 

a company that controls such savings association; and 

‘‘(cc) are specifically approved by the 

Comptroller of the Currency and the Board 

after a written request submitted to the Comptroller of the Currency and the Board by the 

savings association not later than 30 days 

before the date of the proposed payment. 

‘‘(IV) REGULATORY AUTHORITY.—A savings 

association that fails to become or remain a qualified thrift lender shall be deemed to have violated 

section 5 of the Home Owners’ Loan Act (12 U.S.C. 

1464) and subject to actions authorized by section 

5(d) of the Home Owners’ Loan Act (12 U.S.C. 

1464(d)).’’. 

SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING 

COMPANIES. 

(a) IN GENERAL.—Section 10(o) of the Home Owners’ Loan 

Act (12 U.S.C. 1467a(o) is amended by adding at the end the 

following: 
H. R. 4173—262 

‘‘(11) DIVIDENDS.— 

‘‘(A) DECLARATION OF DIVIDENDS.— 

‘‘(i) ADVANCE NOTICE REQUIRED.—Each subsidiary 

of a mutual holding company that is a savings association shall give the appropriate Federal banking agency 

and the Board notice not later than 30 days before 

the date of a proposed declaration by the board of 

directors of the savings association of any dividend 

on the guaranty, permanent, or other nonwithdrawable 

stock of the savings association. 

‘‘(ii) INVALID DIVIDENDS.—Any dividend described 

in clause (i) that is declared without giving notice 

to the appropriate Federal banking agency and the 

Board under clause (i), or that is declared during the 

30-day period preceding the date of a proposed declaration for which notice is given to the appropriate Federal 

banking agency and the Board under clause (i), shall 

be invalid and shall confer no rights or benefits upon 

the holder of any such stock. 

‘‘(B) WAIVER OF DIVIDENDS.—A mutual holding company may waive the right to receive any dividend declared 

by a subsidiary of the mutual holding company, if— 

‘‘(i) no insider of the mutual holding company, 

associate of an insider, or tax-qualified or non-taxqualified employee stock benefit plan of the mutual 

holding company holds any share of the stock in the 

class of stock to which the waiver would apply; or 

‘‘(ii) the mutual holding company gives written 

notice to the Board of the intent of the mutual holding 

company to waive the right to receive dividends, not 

later than 30 days before the date of the proposed 

date of payment of the dividend, and the Board does 

not object to the waiver. 

‘‘(C) RESOLUTION INCLUDED IN WAIVER NOTICE.—A 

notice of a waiver under subparagraph (B) shall include 

a copy of the resolution of the board of directors of the 

mutual holding company, in such form and substance as 

the Board may determine, together with any supporting 

materials relied upon by the board of directors of the 

mutual holding company, concluding that the proposed dividend waiver is consistent with the fiduciary duties of the 

board of directors to the mutual members of the mutual 

holding company. 

‘‘(D) STANDARDS FOR WAIVER OF DIVIDEND.—The Board 

may not object to a waiver of dividends under subparagraph 

(B) if— 

‘‘(i) the waiver would not be detrimental to the 

safe and sound operation of the savings association; 

‘‘(ii) the board of directors of the mutual holding 

company expressly determines that a waiver of the 

dividend by the mutual holding company is consistent 

with the fiduciary duties of the board of directors to 

the mutual members of the mutual holding company; 

and 

‘‘(iii) the mutual holding company has, prior to 

December 1, 2009— 
H. R. 4173—263 

‘‘(I) reorganized into a mutual holding company under subsection (o); 

‘‘(II) issued minority stock either from its midtier stock holding company or its subsidiary stock 

savings association; and 

‘‘(III) waived dividends it had a right to receive 

from the subsidiary stock savings association. 

‘‘(E) VALUATION.— 

‘‘(i) IN GENERAL.—The appropriate Federal banking 

agency shall consider waived dividends in determining 

an appropriate exchange ratio in the event of a full 

conversion to stock form. 

‘‘(ii) EXCEPTION.—In the case of a savings association that has reorganized into a mutual holding company, has issued minority stock from a mid-tier stock 

holding company or a subsidiary stock savings association of the mutual holding company, and has waived 

dividends it had a right to receive from a subsidiary 

savings association before December 1, 2009, the appropriate Federal banking agency shall not consider 

waived dividends in determining an appropriate 

exchange ratio in the event of a full conversion to 

stock form.’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 

shall take effect on the transfer date. 

SEC. 626. INTERMEDIATE HOLDING COMPANIES. 

The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is 

amended by inserting after section 10 (12 U.S.C. 1467a) the following new section: 

‘‘SEC. 10A. INTERMEDIATE HOLDING COMPANIES. 

‘‘(a) DEFINITION.—For purposes of this section: 

‘‘(1) FINANCIAL ACTIVITIES.—The term ‘financial activities’ 

means activities described in clauses (i) and (ii) of section 

10(c)(9)(A). 

‘‘(2) GRANDFATHERED UNITARY SAVINGS AND LOAN HOLDING

COMPANY.—The term ‘grandfathered unitary savings and loan 

holding company’ means a company described in section 

10(c)(9)(C). 

‘‘(3) INTERNAL FINANCIAL ACTIVITIES.—The term ‘internal 

financial activities’ includes— 

‘‘(A) internal financial activities conducted by a grandfathered savings and loan holding company or any affiliate; 

and 

‘‘(B) internal treasury, investment, and employee benefit functions. 

‘‘(b) REQUIREMENT.— ‘‘(1) IN GENERAL.— ‘‘(A) ACTIVITIES OTHER THAN FINANCIAL ACTIVITIES.— 

If a grandfathered unitary savings and loan holding company conducts activities other than financial activities, the 

Board may require such company to establish and conduct 

all or a portion of such financial activities in or through 

an intermediate holding company, which shall be a savings 

and loan holding company, established pursuant to regulations of the Board, not later than 90 days (or such longer 
H. R. 4173—264 

period as the Board may deem appropriate) after the 

transfer date. 

‘‘(B) OTHER ACTIVITIES.—Notwithstanding subparagraph (A), the Board shall require a grandfathered unitary 

savings and loan holding company to establish an intermediate holding company if the Board makes a determination that the establishment of such intermediate holding 

company is necessary— 

‘‘(i) to appropriately supervise activities that are 

determined to be financial activities; or 

‘‘(ii) to ensure that supervision by the Board does 

not extend to the activities of such company that are 

not financial activities. 

‘‘(2) INTERNAL FINANCIAL ACTIVITIES.— 

‘‘(A) TREATMENT OF INTERNAL FINANCIAL ACTIVITIES.— 

For purposes of this subsection, the internal financial 

activities of a grandfathered unitary savings and loan 

holding company shall not be required to be placed in 

an intermediate holding company. 

‘‘(B) GRANDFATHERED ACTIVITIES.—A grandfathered 

unitary savings and loan holding company may continue 

to engage in an internal financial activity, subject to review 

by the Board to determine whether engaging in such 

activity presents undue risk to the grandfathered unitary 

savings and loan holding company or to the financial stability of the United States, if— 

‘‘(i) the grandfathered unitary savings and loan 

holding company engaged in the activity during the 

year before the date of enactment of this section; and 

‘‘(ii) at least 2⁄3 of the assets or 2⁄3 of the revenues 

generated from the activity are from or attributable 

to the grandfathered unitary savings and loan holding 

company. 

‘‘(3) SOURCE OF STRENGTH.—A grandfathered unitary 

savings and loan holding company that directly or indirectly 

controls an intermediate holding company established under 

this section shall serve as a source of strength to its subsidiary 

intermediate holding company. 

‘‘(4) PARENT COMPANY REPORTS.—The Board, may from time 

to time, examine and require reports under oath from a grandfathered unitary savings and loan holding company that controls an intermediate holding company, and from the appropriate officers or directors of such company, solely for purposes 

of ensuring compliance with the provisions of this section, 

including assessing the ability of the company to serve as 

a source of strength to its subsidiary intermediate holding 

company as required under paragraph (3) and enforcing compliance with such requirement. 

‘‘(5) LIMITED PARENT COMPANY ENFORCEMENT.— ‘‘(A) IN GENERAL.—In addition to any other authority 

of the Board, the Board may enforce compliance with the 

provisions of this subsection that are applicable to any 

company described in paragraph (1)(A) that controls an 

intermediate holding company under section 8 of the Federal Deposit Insurance Act, and a company described in 

paragraph (1)(A) shall be subject to such section (solely 

for purposes of this subparagraph) in the same manner 
H. R. 4173—265 

and to the same extent as if the company described in 

paragraph (1)(A) were a savings and loan holding company. 

‘‘(B) APPLICATION OF OTHER ACT.—Any violation of this 

subsection by a grandfathered unitary savings and loan 

holding company that controls an intermediate holding 

company may also be treated as a violation of the Federal 

Deposit Insurance Act for purposes of subparagraph (A). 

‘‘(C) NO EFFECT ON OTHER AUTHORITY.—No provision 

of this paragraph shall be construed as limiting any 

authority of the Board or any other Federal agency under 

any other provision of law. 

‘‘(c) REGULATIONS.—The Board— 

‘‘(1) shall promulgate regulations to establish the criteria 

for determining whether to require a grandfathered unitary 

savings and loan holding company to establish an intermediate 

holding company under subsection (b); and 

‘‘(2) may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate 

holding company or a parent of such company and its affiliates, 

as necessary to prevent unsafe and unsound practices in connection with transactions between the intermediate holding company, or any subsidiary thereof, and its parent company or 

affiliates that are not subsidiaries of the intermediate holding 

company, except that such regulations shall not restrict or 

limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or 

services. 

‘‘(d) RULES OF CONSTRUCTION.— ‘‘(1) ACTIVITIES.—Nothing in this section shall be construed 

to require a grandfathered unitary savings and loan holding 

company to conform its activities to permissible activities. 

‘‘(2) PERMISSIBLE CORPORATE REORGANIZATION.—The formation of an intermediate holding company as required in subsection (b) shall be presumed to be a permissible corporate 

reorganization as described in section 10(c)(9)(D).’’. 

SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED. 

(a) REPEAL OF PROHIBITION ON PAYMENT OF INTEREST ON

DEMAND DEPOSITS.— (1) FEDERAL RESERVE ACT.—Section 19(i) of the Federal 

Reserve Act (12 U.S.C. 371a) is amended to read as follows: 

‘‘(i) [Repealed]’’. 

(2) HOME OWNERS’ LOAN ACT.—The first sentence of section 

5(b)(1)(B) of the Home Owners’ Loan Act (12 U.S.C. 

1464(b)(1)(B)) is amended by striking ‘‘savings association may 

not—’’ and all that follows through ‘‘(ii) permit any’’ and 

inserting ‘‘savings association may not permit any’’. 

(3) FEDERAL DEPOSIT INSURANCE ACT.—Section 18(g) of the 

Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended 

to read as follows: 

‘‘(g) [Repealed]’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection 

(a) shall take effect 1 year after the date of the enactment of 

this Act. 

SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING. 

Section 2(c)(2)(F)(v) of the Bank Holding Company Act of 1956 

(12 U.S.C. 1841(c)(2)(F)(v)) is amended by inserting before the 
H. R. 4173—266 

period the following: ‘‘, other than credit card loans that are made 

to businesses that meet the criteria for a small business concern 

to be eligible for business loans under regulations established by 

the Small Business Administration under part 121 of title 13, 

Code of Federal Regulations’’. 

TITLE VII—WALL STREET 

TRANSPARENCY AND ACCOUNTABILITY 

SEC. 701. SHORT TITLE. 

This title may be cited as the ‘‘Wall Street Transparency and 

Accountability Act of 2010’’. 

Subtitle A—Regulation of Over-theCounter Swaps Markets 

PART I—REGULATORY AUTHORITY 

SEC. 711. DEFINITIONS. 

In this subtitle, the terms ‘‘prudential regulator’’, ‘‘swap’’, ‘‘swap 

dealer’’, ‘‘major swap participant’’, ‘‘swap data repository’’, ‘‘associated person of a swap dealer or major swap participant’’, ‘‘eligible 

contract participant’’, ‘‘swap execution facility’’, ‘‘security-based 

swap’’, ‘‘security-based swap dealer’’, ‘‘major security-based swap 

participant’’, and ‘‘associated person of a security-based swap dealer 

or major security-based swap participant’’ have the meanings given 

the terms in section 1a of the Commodity Exchange Act (7 U.S.C. 

1a), including any modification of the meanings under section 721(b) 

of this Act. 

SEC. 712. REVIEW OF REGULATORY AUTHORITY. 

(a) CONSULTATION.— (1) COMMODITY FUTURES TRADING COMMISSION.—Before 

commencing any rulemaking or issuing an order regarding 

swaps, swap dealers, major swap participants, swap data 

repositories, derivative clearing organizations with regard to 

swaps, persons associated with a swap dealer or major swap 

participant, eligible contract participants, or swap execution 

facilities pursuant to this subtitle, the Commodity Futures 

Trading Commission shall consult and coordinate to the extent 

possible with the Securities and Exchange Commission and 

the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible. 

(2) SECURITIES AND EXCHANGE COMMISSION.—Before commencing any rulemaking or issuing an order regarding securitybased swaps, security-based swap dealers, major security-based 

swap participants, security-based swap data repositories, 

clearing agencies with regard to security-based swaps, persons 

associated with a security-based swap dealer or major securitybased swap participant, eligible contract participants with 

regard to security-based swaps, or security-based swap execution facilities pursuant to subtitle B, the Securities and 

Exchange Commission shall consult and coordinate to the 
H. R. 4173—267 

extent possible with the Commodity Futures Trading Commission and the prudential regulators for the purposes of assuring 

regulatory consistency and comparability, to the extent possible. 

(3) PROCEDURES AND DEADLINE.—Such regulations shall 

be prescribed in accordance with applicable requirements of 

title 5, United States Code, and shall be issued in final form 

not later than 360 days after the date of enactment of this 

Act. 

(4) APPLICABILITY.—The requirements of paragraphs (1) 

and (2) shall not apply to an order issued— 

(A) in connection with or arising from a violation or 

potential violation of any provision of the Commodity 

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

(B) in connection with or arising from a violation or 

potential violation of any provision of the securities laws; 

or 

(C) in any proceeding that is conducted on the record 

in accordance with sections 556 and 557 of title 5, United 

States Code. 

(5) EFFECT.—Nothing in this subsection authorizes any 

consultation or procedure for consultation that is not consistent 

with the requirements of subchapter II of chapter 5, and chapter 

7, of title 5, United States Code (commonly known as the 

‘‘Administrative Procedure Act’’). 

(6) RULES; ORDERS.—In developing and promulgating rules 

or orders pursuant to this subsection, each Commission shall 

consider the views of the prudential regulators. 

(7) TREATMENT OF SIMILAR PRODUCTS AND ENTITIES.— (A) IN GENERAL.—In adopting rules and orders under 

this subsection, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall 

treat functionally or economically similar products or entities described in paragraphs (1) and (2) in a similar 

manner. 

(B) EFFECT.—Nothing in this subtitle requires the 

Commodity Futures Trading Commission or the Securities 

and Exchange Commission to adopt joint rules or orders 

that treat functionally or economically similar products 

or entities described in paragraphs (1) and (2) in an identical manner. 

(8) MIXED SWAPS.—The Commodity Futures Trading 

Commission and the Securities and Exchange Commission, 

after consultation with the Board of Governors, shall jointly 

prescribe such regulations regarding mixed swaps, as described 

in section 1a(47)(D) of the Commodity Exchange Act (7 U.S.C. 

1a(47)(D)) and in section 3(a)(68)(D) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78c(a)(68)(D)), as may be necessary 

to carry out the purposes of this title. 

(b) LIMITATION.— (1) COMMODITY FUTURES TRADING COMMISSION.—Nothing 

in this title, unless specifically provided, confers jurisdiction 

on the Commodity Futures Trading Commission to issue a 

rule, regulation, or order providing for oversight or regulation 

of— 

(A) security-based swaps; or 

(B) with regard to its activities or functions concerning 

security-based swaps— 
H. R. 4173—268 

(i) security-based swap dealers; 

(ii) major security-based swap participants; 

(iii) security-based swap data repositories; 

(iv) associated persons of a security-based swap 

dealer or major security-based swap participant; 

(v) eligible contract participants with respect to 

security-based swaps; or 

(vi) swap execution facilities with respect to security-based swaps. 

(2) SECURITIES AND EXCHANGE COMMISSION.—Nothing in 

this title, unless specifically provided, confers jurisdiction on 

the Securities and Exchange Commission or State securities 

regulators to issue a rule, regulation, or order providing for 

oversight or regulation of— 

(A) swaps; or 

(B) with regard to its activities or functions concerning 

swaps— 

(i) swap dealers; 

(ii) major swap participants; 

(iii) swap data repositories; 

(iv) persons associated with a swap dealer or major 

swap participant; 

(v) eligible contract participants with respect to 

swaps; or 

(vi) swap execution facilities with respect to swaps. 

(3) PROHIBITION ON CERTAIN FUTURES ASSOCIATIONS AND

NATIONAL SECURITIES ASSOCIATIONS.— (A) FUTURES ASSOCIATIONS.—Notwithstanding any 

other provision of law (including regulations), unless otherwise authorized by this title, no futures association registered under section 17 of the Commodity Exchange Act 

(7 U.S.C. 21) may issue a rule, regulation, or order for 

the oversight or regulation of, or otherwise assert jurisdiction over, for any purpose, any security-based swap, except 

that this subparagraph shall not limit the authority of 

a registered futures association to examine for compliance 

with, and enforce, its rules on capital adequacy. 

(B) NATIONAL SECURITIES ASSOCIATIONS.—Notwithstanding any other provision of law (including regulations), 

unless otherwise authorized by this title, no national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) may issue 

a rule, regulation, or order for the oversight or regulation 

of, or otherwise assert jurisdiction over, for any purpose, 

any swap, except that this subparagraph shall not limit 

the authority of a national securities association to examine 

for compliance with, and enforce, its rules on capital adequacy. 

(c) OBJECTION TO COMMISSION REGULATION.— (1) FILING OF PETITION FOR REVIEW.— 

(A) IN GENERAL.—If either Commission referred to in 

this section determines that a final rule, regulation, or 

order of the other Commission conflicts with subsection 

(a)(7) or (b), then the complaining Commission may obtain 

review of the final rule, regulation, or order in the United 

States Court of Appeals for the District of Columbia Circuit 

by filing in the court, not later than 60 days after the 
H. R. 4173—269 

date of publication of the final rule, regulation, or order, 

a written petition requesting that the rule, regulation, or 

order be set aside. 

(B) EXPEDITED PROCEEDING.—A proceeding described 

in subparagraph (A) shall be expedited by the United States 

Court of Appeals for the District of Columbia Circuit. 

(2) TRANSMITTAL OF PETITION AND RECORD.— 

(A) IN GENERAL.—A copy of a petition described in 

paragraph (1) shall be transmitted not later than 1 business 

day after the date of filing by the complaining Commission 

to the Secretary of the responding Commission. 

(B) DUTY OF RESPONDING COMMISSION.—On receipt of 

the copy of a petition described in paragraph (1), the 

responding Commission shall file with the United States 

Court of Appeals for the District of Columbia Circuit— 

(i) a copy of the rule, regulation, or order under 

review (including any documents referred to therein); 

and 

(ii) any other materials prescribed by the United 

States Court of Appeals for the District of Columbia 

Circuit. 

(3) STANDARD OF REVIEW.—The United States Court of 

Appeals for the District of Columbia Circuit shall— 

(A) give deference to the views of neither Commission; 

and 

(B) determine to affirm or set aside a rule, regulation, 

or order of the responding Commission under this subsection, based on the determination of the court as to 

whether the rule, regulation, or order is in conflict with 

subsection (a)(7) or (b), as applicable. 

(4) JUDICIAL STAY.—The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate 

as a stay of the rule, regulation, or order until the date on 

which the determination of the United States Court of Appeals 

for the District of Columbia Circuit is final (including any 

appeal of the determination). 

(d) JOINT RULEMAKING.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

this title and subsections (b) and (c), the Commodity Futures 

Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall further 

define the terms ‘‘swap’’, ‘‘security-based swap’’, ‘‘swap dealer’’, 

‘‘security-based swap dealer’’, ‘‘major swap participant’’, ‘‘major 

security-based swap participant’’, ‘‘eligible contract participant’’, 

and ‘‘security-based swap agreement’’ in section 1a(47)(A)(v) 

of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v)) and 

section 3(a)(78) of the Securities Exchange Act of 1934 (15 

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

(2) AUTHORITY OF THE COMMISSIONS.— 

(A) IN GENERAL.—Notwithstanding any other provision 

of this title, the Commodity Futures Trading Commission 

and the Securities and Exchange Commission, in consultation with the Board of Governors, shall jointly adopt such 

other rules regarding such definitions as the Commodity 

Futures Trading Commission and the Securities and 
H. R. 4173—270 

Exchange Commission determine are necessary and appropriate, in the public interest, and for the protection of 

investors. 

(B) TRADE REPOSITORY RECORDKEEPING.—Notwithstanding any other provision of this title, the Commodity 

Futures Trading Commission and the Securities and 

Exchange Commission, in consultation with the Board of 

Governors, shall engage in joint rulemaking to jointly adopt 

a rule or rules governing the books and records that are 

required to be kept and maintained regarding securitybased swap agreements by persons that are registered as 

swap data repositories under the Commodity Exchange 

Act, including uniform rules that specify the data elements 

that shall be collected and maintained by each repository. 

(C) BOOKS AND RECORDS.—Notwithstanding any other 

provision of this title, the Commodity Futures Trading 

Commission and the Securities and Exchange Commission, 

in consultation with the Board of Governors, shall engage 

in joint rulemaking to jointly adopt a rule or rules governing books and records regarding security-based swap 

agreements, including daily trading records, for swap 

dealers, major swap participants, security-based swap 

dealers, and security-based swap participants. 

(D) COMPARABLE RULES.—Rules and regulations prescribed jointly under this title by the Commodity Futures 

Trading Commission and the Securities and Exchange 

Commission shall be comparable to the maximum extent 

possible, taking into consideration differences in 

instruments and in the applicable statutory requirements. 

(E) TRACKING UNCLEARED TRANSACTIONS.—Any rules 

prescribed under subparagraph (A) shall require the 

maintenance of records of all activities relating to securitybased swap agreement transactions defined under subparagraph (A) that are not cleared. 

(F) SHARING OF INFORMATION.—The Commodity 

Futures Trading Commission shall make available to the 

Securities and Exchange Commission information relating 

to security-based swap agreement transactions defined in 

subparagraph (A) that are not cleared. 

(3) FINANCIAL STABILITY OVERSIGHT COUNCIL.—In the event 

that the Commodity Futures Trading Commission and the Securities and Exchange Commission fail to jointly prescribe rules 

pursuant to paragraph (1) or (2) in a timely manner, at the 

request of either Commission, the Financial Stability Oversight 

Council shall resolve the dispute— 

(A) within a reasonable time after receiving the 

request; 

(B) after consideration of relevant information provided 

by each Commission; and 

(C) by agreeing with 1 of the Commissions regarding 

the entirety of the matter or by determining a compromise 

position. 

(4) JOINT INTERPRETATION.—Any interpretation of, or guidance by either Commission regarding, a provision of this title, 

shall be effective only if issued jointly by the Commodity 

Futures Trading Commission and the Securities and Exchange 

Commission, after consultation with the Board of Governors, 
H. R. 4173—271 

if this title requires the Commodity Futures Trading Commission and the Securities and Exchange Commission to issue 

joint regulations to implement the provision. 

(e) GLOBAL RULEMAKING TIMEFRAME.—Unless otherwise provided in this title, or an amendment made by this title, the Commodity Futures Trading Commission or the Securities and Exchange 

Commission, or both, shall individually, and not jointly, promulgate 

rules and regulations required of each Commission under this title 

or an amendment made by this title not later than 360 days 

after the date of enactment of this Act. 

(f) RULES AND REGISTRATION BEFORE FINAL EFFECTIVE

DATES.—Beginning on the date of enactment of this Act and notwithstanding the effective date of any provision of this Act, the 

Commodity Futures Trading Commission and the Securities and 

Exchange Commission may, in order to prepare for the effective 

dates of the provisions of this Act— 

(1) promulgate rules, regulations, or orders permitted or 

required by this Act; 

(2) conduct studies and prepare reports and recommendations required by this Act; 

(3) register persons under the provisions of this Act; and 

(4) exempt persons, agreements, contracts, or transactions 

from provisions of this Act, under the terms contained in this 

Act, 

provided, however, that no action by the Commodity Futures 

Trading Commission or the Securities and Exchange Commission 

described in paragraphs (1) through (4) shall become effective prior 

to the effective date applicable to such action under the provisions 

of this Act. 

SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES. 

(a) SECURITIES EXCHANGE ACT OF 1934.—Section 15(c)(3) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended 

by adding at the end the following: 

‘‘(C) Notwithstanding any provision of sections 

2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act 

and the rules and regulations thereunder, and pursuant 

to an exemption granted by the Commission under section 

36 of this title or pursuant to a rule or regulation, cash 

and securities may be held by a broker or dealer registered 

pursuant to subsection (b)(1) and also registered as a 

futures commission merchant pursuant to section 4f(a)(1) 

of the Commodity Exchange Act, in a portfolio margining 

account carried as a futures account subject to section 

4d of the Commodity Exchange Act and the rules and 

regulations thereunder, pursuant to a portfolio margining 

program approved by the Commodity Futures Trading 

Commission, and subject to subchapter IV of chapter 7 

of title 11 of the United States Code and the rules and 

regulations thereunder. The Commission shall consult with 

the Commodity Futures Trading Commission to adopt rules 

to ensure that such transactions and accounts are subject 

to comparable requirements to the extent practicable for 

similar products.’’. 

(b) COMMODITY EXCHANGE ACT.—Section 4d of the Commodity 

Exchange Act (7 U.S.C. 6d) is amended by adding at the end 

the following: 
H. R. 4173—272 

‘‘(h) Notwithstanding subsection (a)(2) or the rules and regulations thereunder, and pursuant to an exemption granted by the 

Commission under section 4(c) of this Act or pursuant to a rule 

or regulation, a futures commission merchant that is registered 

pursuant to section 4f(a)(1) of this Act and also registered as a 

broker or dealer pursuant to section 15(b)(1) of the Securities 

Exchange Act of 1934 may, pursuant to a portfolio margining program approved by the Securities and Exchange Commission pursuant to section 19(b) of the Securities Exchange Act of 1934, hold 

in a portfolio margining account carried as a securities account 

subject to section 15(c)(3) of the Securities Exchange Act of 1934 

and the rules and regulations thereunder, a contract for the purchase or sale of a commodity for future delivery or an option 

on such a contract, and any money, securities or other property 

received from a customer to margin, guarantee or secure such 

a contract, or accruing to a customer as the result of such a 

contract. The Commission shall consult with the Securities and 

Exchange Commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to 

the extent practical for similar products.’’. 

(c) DUTY OF COMMODITY FUTURES TRADING COMMISSION.—Section 20 of the Commodity Exchange Act (7 U.S.C. 24) is amended 

by adding at the end the following: 

‘‘(c) The Commission shall exercise its authority to ensure that 

securities held in a portfolio margining account carried as a futures 

account are customer property and the owners of those accounts 

are customers for the purposes of subchapter IV of chapter 7 of 

title 11 of the United States Code.’’. 

SEC. 714. ABUSIVE SWAPS. 

The Commodity Futures Trading Commission or the Securities 

and Exchange Commission, or both, individually may, by rule or 

order— 

(1) collect information as may be necessary concerning 

the markets for any types of— 

(A) swap (as defined in section 1a of the Commodity 

Exchange Act (7 U.S.C. 1a)); or 

(B) security-based swap (as defined in section 1a of 

the Commodity Exchange Act (7 U.S.C. 1a)); and 

(2) issue a report with respect to any types of swaps or 

security-based swaps that the Commodity Futures Trading 

Commission or the Securities and Exchange Commission determines to be detrimental to— 

(A) the stability of a financial market; or 

(B) participants in a financial market. 

SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES. 

Except as provided in section 4 of the Commodity Exchange 

Act (7 U.S.C. 6), if the Commodity Futures Trading Commission 

or the Securities and Exchange Commission determines that the 

regulation of swaps or security-based swaps markets in a foreign 

country undermines the stability of the United States financial 

system, either Commission, in consultation with the Secretary of 

the Treasury, may prohibit an entity domiciled in the foreign 

country from participating in the United States in any swap or 

security-based swap activities. 
H. R. 4173—273 

SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS 

OF SWAPS ENTITIES. 

(a) PROHIBITION ON FEDERAL ASSISTANCE.—Notwithstanding 

any other provision of law (including regulations), no Federal assistance may be provided to any swaps entity with respect to any 

swap, security-based swap, or other activity of the swaps entity. 

(b) DEFINITIONS.—In this section: 

(1) FEDERAL ASSISTANCE.—The term ‘‘Federal assistance’’ 

means the use of any advances from any Federal Reserve 

credit facility or discount window that is not part of a program 

or facility with broad-based eligibility under section 13(3)(A) 

of the Federal Reserve Act, Federal Deposit Insurance Corporation insurance or guarantees for the purpose of— 

(A) making any loan to, or purchasing any stock, equity 

interest, or debt obligation of, any swaps entity; 

(B) purchasing the assets of any swaps entity; 

(C) guaranteeing any loan or debt issuance of any 

swaps entity; or 

(D) entering into any assistance arrangement 

(including tax breaks), loss sharing, or profit sharing with 

any swaps entity. 

(2) SWAPS ENTITY.— 

(A) IN GENERAL.—The term ‘‘swaps entity’’ means any 

swap dealer, security-based swap dealer, major swap 

participant, major security-based swap participant, that 

is registered under— 

(i) the Commodity Exchange Act (7 U.S.C. 1 et 

seq.); or 

(ii) the Securities Exchange Act of 1934 (15 U.S.C. 

78a et seq.). 

(B) EXCLUSION.—The term ‘‘swaps entity’’ does not 

include any major swap participant or major security-based 

swap participant that is an insured depository institution. 

(c) AFFILIATES OF INSURED DEPOSITORY INSTITUTIONS.—The 

prohibition on Federal assistance contained in subsection (a) does 

not apply to and shall not prevent an insured depository institution 

from having or establishing an affiliate which is a swaps entity, 

as long as such insured depository institution is part of a bank 

holding company, or savings and loan holding company, that is 

supervised by the Federal Reserve and such swaps entity affiliate 

complies with sections 23A and 23B of the Federal Reserve Act 

and such other requirements as the Commodity Futures Trading 

Commission or the Securities Exchange Commission, as appropriate, and the Board of Governors of the Federal Reserve System, 

may determine to be necessary and appropriate. 

(d) ONLY BONA FIDE HEDGING AND TRADITIONAL BANK ACTIVI- TIES PERMITTED.—The prohibition in subsection (a) shall apply to 

any insured depository institution unless the insured depository 

institution limits its swap or security-based swap activities to: 

(1) Hedging and other similar risk mitigating activities 

directly related to the insured depository institution’s activities. 

(2) Acting as a swaps entity for swaps or security-based 

swaps involving rates or reference assets that are permissible 

for investment by a national bank under the paragraph designated as ‘‘Seventh.’’ of section 5136 of the Revised Statutes 

of the United States ( 12 U.S.C. 24), other than as described 

in paragraph (3). 
H. R. 4173—274 

(3) LIMITATION ON CREDIT DEFAULT SWAPS.—Acting as a 

swaps entity for credit default swaps, including swaps or security-based swaps referencing the credit risk of asset-backed 

securities as defined in section 3(a)(77) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78c(a)(77)) (as amended by 

this Act) shall not be considered a bank permissible activity 

for purposes of subsection (d)(2) unless such swaps or securitybased swaps are cleared by a derivatives clearing organization 

(as such term is defined in section la of the Commodity 

Exchange Act (7 U.S.C. la)) or a clearing agency (as such 

term is defined in section 3 of the Securities Exchange Act 

(15 U.S.C. 78c)) that is registered, or exempt from registration, 

as a derivatives clearing organization under the Commodity 

Exchange Act or as a clearing agency under the Securities 

Exchange Act, respectively. 

(e) EXISTING SWAPS AND SECURITY-BASED SWAPS.—The prohibition in subsection (a) shall only apply to swaps or security-based 

swaps entered into by an insured depository institution after the 

end of the transition period described in subsection (f). 

(f) TRANSITION PERIOD.—To the extent an insured depository 

institution qualifies as a ‘‘swaps entity’’ and would be subject to 

the Federal assistance prohibition in subsection (a), the appropriate 

Federal banking agency, after consulting with and considering the 

views of the Commodity Futures Trading Commission or the Securities Exchange Commission, as appropriate, shall permit the insured 

depository institution up to 24 months to divest the swaps entity 

or cease the activities that require registration as a swaps entity. 

In establishing the appropriate transition period to effect such 

divestiture or cessation of activities, which may include making 

the swaps entity an affiliate of the insured depository institution, 

the appropriate Federal banking agency shall take into account 

and make written findings regarding the potential impact of such 

divestiture or cessation of activities on the insured depository 

institution’s (1) mortgage lending, (2) small business lending, (3) 

job creation, and (4) capital formation versus the potential negative 

impact on insured depositors and the Deposit Insurance Fund of 

the Federal Deposit Insurance Corporation. The appropriate Federal 

banking agency may consider such other factors as may be appropriate. The appropriate Federal banking agency may place such 

conditions on the insured depository institution’s divestiture or 

ceasing of activities of the swaps entity as it deems necessary 

and appropriate. The transition period under this subsection may 

be extended by the appropriate Federal banking agency, after consultation with the Commodity Futures Trading Commission and 

the Securities and Exchange Commission, for a period of up to 

1 additional year. 

(g) EXCLUDED ENTITIES.—For purposes of this section, the term 

‘‘swaps entity’’ shall not include any insured depository institution 

under the Federal Deposit Insurance Act or a covered financial 

company under title II which is in a conservatorship, receivership, 

or a bridge bank operated by the Federal Deposit Insurance Corporation. 

(h) EFFECTIVE DATE.—The prohibition in subsection (a) shall 

be effective 2 years following the date on which this Act is effective. 

(i) LIQUIDATION REQUIRED.— 

(1) IN GENERAL.— 
H. R. 4173—275 

(A) FDIC INSURED INSTITUTIONS.—All swaps entities 

that are FDIC insured institutions that are put into 

receivership or declared insolvent as a result of swap or 

security-based swap activity of the swaps entities shall 

be subject to the termination or transfer of that swap 

or security-based swap activity in accordance with 

applicable law prescribing the treatment of those contracts. 

No taxpayer funds shall be used to prevent the receivership 

of any swap entity resulting from swap or security-based 

swap activity of the swaps entity. 

(B) INSTITUTIONS THAT POSE A SYSTEMIC RISK AND ARE

SUBJECT TO HEIGHTENED PRUDENTIAL SUPERVISION AS REGULATED UNDER SECTION 113.—All swaps entities that are 

institutions that pose a systemic risk and are subject to 

heightened prudential supervision as regulated under section 113, that are put into receivership or declared insolvent 

as a result of swap or security-based swap activity of the 

swaps entities shall be subject to the termination or 

transfer of that swap or security-based swap activity in 

accordance with applicable law prescribing the treatment 

of those contracts. No taxpayer funds shall be used to 

prevent the receivership of any swap entity resulting from 

swap or security-based swap activity of the swaps entity. 

(C) NON-FDIC INSURED, NON-SYSTEMICALLY SIGNIFICANT INSTITUTIONS NOT SUBJECT TO HEIGHTENED PRUDENTIAL SUPERVISION AS REGULATED UNDER SECTION 113.—No 

taxpayer resources shall be used for the orderly liquidation 

of any swaps entities that are non-FDIC insured, nonsystemically significant institutions not subject to heightened prudential supervision as regulated under section 113. 

(2) RECOVERY OF FUNDS.—All funds expended on the termination or transfer of the swap or security-based swap activity 

of the swaps entity shall be recovered in accordance with 

applicable law from the disposition of assets of such swap 

entity or through assessments, including on the financial sector 

as provided under applicable law. 

(3) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no 

losses from the exercise of any authority under this title. 

(j) PROHIBITION ON UNREGULATED COMBINATION OF SWAPS

ENTITIES AND BANKING.—At no time following adoption of the rules 

in subsection (k) may a bank or bank holding company be permitted 

to be or become a swap entity unless it conducts its swap or 

security-based swap activity in compliance with such minimum 

standards set by its prudential regulator as are reasonably calculated to permit the swaps entity to conduct its swap or securitybased swap activities in a safe and sound manner and mitigate 

systemic risk. 

(k) RULES.—In prescribing rules, the prudential regulator for 

a swaps entity shall consider the following factors: 

(1) The expertise and managerial strength of the swaps 

entity, including systems for effective oversight. 

(2) The financial strength of the swaps entity. 

(3) Systems for identifying, measuring and controlling risks 

arising from the swaps entity’s operations. 

(4) Systems for identifying, measuring and controlling the 

swaps entity’s participation in existing markets. 
H. R. 4173—276 

(5) Systems for controlling the swaps entity’s participation 

or entry into in new markets and products. 

(l) AUTHORITY OF THE FINANCIAL STABILITY OVERSIGHT

COUNCIL.—The Financial Stability Oversight Council may determine that, when other provisions established by this Act are insufficient to effectively mitigate systemic risk and protect taxpayers, 

that swaps entities may no longer access Federal assistance with 

respect to any swap, security-based swap, or other activity of the 

swaps entity. Any such determination by the Financial Stability 

Oversight Council of a prohibition of federal assistance shall be 

made on an institution-by-institution basis, and shall require the 

vote of not fewer than two-thirds of the members of the Financial 

Stability Oversight Council, which must include the vote by the 

Chairman of the Council, the Chairman of the Board of Governors 

of the Federal Reserve System, and the Chairperson of the Federal 

Deposit Insurance Corporation. Notice and hearing requirements 

for such determinations shall be consistent with the standards 

provided in title I. 

(m) BAN ON PROPRIETARY TRADING IN DERIVATIVES.—An 

insured depository institution shall comply with the prohibition 

on proprietary trading in derivatives as required by section 619 

of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act. 

SEC. 717. NEW PRODUCT APPROVAL CFTC—SEC PROCESS. 

(a) AMENDMENTS TO THE COMMODITY EXCHANGE ACT.—Section 

2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) 

is amended— 

(1) in clause (i) by striking ‘‘This’’ and inserting ‘‘(I) Except 

as provided in subclause (II), this’’; and 

(2) by adding at the end of clause (i) the following: 

‘‘(II) This Act shall apply to and the Commission shall have jurisdiction with respect to 

accounts, agreements, and transactions involving, 

and may permit the listing for trading pursuant 

to section 5c(c) of, a put, call, or other option 

on 1 or more securities (as defined in section 2(a)(1) 

of the Securities Act of 1933 or section 3(a)(10) 

of the Securities Exchange Act of 1934 on the 

date of enactment of the Futures Trading Act of 

1982), including any group or index of such securities, or any interest therein or based on the value 

thereof, that is exempted by the Securities and 

Exchange Commission pursuant to section 36(a)(1) 

of the Securities Exchange Act of 1934 with the 

condition that the Commission exercise concurrent 

jurisdiction over such put, call, or other option; 

provided, however, that nothing in this paragraph 

shall be construed to affect the jurisdiction and 

authority of the Securities and Exchange Commission over such put, call, or other option.’’. 

(b) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.— 

The Securities Exchange Act of 1934 is amended by adding the 

following section after section 3A (15 U.S.C. 78c–1): 

‘‘SEC. 3B. SECURITIES-RELATED DERIVATIVES. 

‘‘(a) Any agreement, contract, or transaction (or class thereof) 

that is exempted by the Commodity Futures Trading Commission 
H. R. 4173—277 

pursuant to section 4(c)(1) of the Commodity Exchange Act (7 

U.S.C. 6(c)(1)) with the condition that the Commission exercise 

concurrent jurisdiction over such agreement, contract, or transaction 

(or class thereof) shall be deemed a security for purposes of the 

securities laws. 

‘‘(b) With respect to any agreement, contract, or transaction 

(or class thereof) that is exempted by the Commodity Futures 

Trading Commission pursuant to section 4(c)(1) of the Commodity 

Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract, 

or transaction (or class thereof), references in the securities laws 

to the ‘purchase’ or ‘sale’ of a security shall be deemed to include 

the execution, termination (prior to its scheduled maturity date), 

assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under such agreement, contract, 

or transaction, as the context may require.’’. 

(c) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Section 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) 

is amended by adding at the end the following: 

‘‘(10) Notwithstanding paragraph (2), the time period 

within which the Commission is required by order to approve 

a proposed rule change or institute proceedings to determine 

whether the proposed rule change should be disapproved is 

stayed pending a determination by the Commission upon the 

request of the Commodity Futures Trading Commission or its 

Chairman that the Commission issue a determination as to 

whether a product that is the subject of such proposed rule 

change is a security pursuant to section 718 of the Wall Street 

Transparency and Accountability Act of 2010.’’. 

(d) AMENDMENT TO COMMODITY EXCHANGE ACT.—Section 

5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(1)) is 

amended— 

(1) by striking ‘‘Subject to paragraph (2)’’ and inserting 

the following: 

‘‘(A) ELECTION.—Subject to paragraph (2)’’; and 

(2) by adding at the end the following: 

‘‘(B) CERTIFICATION.—The certification of a product 

pursuant to this paragraph shall be stayed pending a determination by the Commission upon the request of the Securities and Exchange Commission or its Chairman that the 

Commission issue a determination as to whether the 

product that is the subject of such certification is a contract 

of sale of a commodity for future delivery, an option on 

such a contract, or an option on a commodity pursuant 

to section 718 of the Wall Street Transparency and Accountability Act of 2010.’’. 

SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS. 

(a) PROCESS FOR DETERMINING THE STATUS OF A NOVEL DERIVATIVE PRODUCT.— 

(1) NOTICE.— (A) IN GENERAL.—Any person filing a proposal to list 

or trade a novel derivative product that may have elements 

of both securities and contracts of sale of a commodity 

for future delivery (or options on such contracts or options 

on commodities) may concurrently provide notice and furnish a copy of such filing with the Securities and Exchange 
H. R. 4173—278 

Commission and the Commodity Futures Trading Commission. Any such notice shall state that notice has been 

made with both Commissions. 

(B) NOTIFICATION.—If no concurrent notice is made 

pursuant to subparagraph (A), within 5 business days after 

determining that a proposal that seeks to list or trade 

a novel derivative product may have elements of both securities and contracts of sale of a commodity for future 

delivery (or options on such contracts or options on 

commodities), the Securities and Exchange Commission or 

the Commodity Futures Trading Commission, as applicable, 

shall notify the other Commission and provide a copy of 

such filing to the other Commission. 

(2) REQUEST FOR DETERMINATION.— 

(A) IN GENERAL.—No later than 21 days after receipt 

of a notice under paragraph (1), or upon its own initiative 

if no such notice is received, the Commodity Futures 

Trading Commission may request that the Securities and 

Exchange Commission issue a determination as to whether 

a product is a security, as defined in section 3(a)(10) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)). 

(B) REQUEST.—No later than 21 days after receipt of 

a notice under paragraph (1), or upon its own initiative 

if no such notice is received, the Securities and Exchange 

Commission may request that the Commodity Futures 

Trading Commission issue a determination as to whether 

a product is a contract of sale of a commodity for future 

delivery, an option on such a contract, or an option on 

a commodity subject to the Commodity Futures Trading 

Commission’s exclusive jurisdiction under section 2(a)(1)(A) 

of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)). 

(C) REQUIREMENT RELATING TO REQUEST.—A request 

under subparagraph (A) or (B) shall be made by submitting 

such request, in writing, to the Securities and Exchange 

Commission or the Commodity Futures Trading Commission, as applicable. 

(D) EFFECT.—Nothing in this paragraph shall be construed to prevent— 

(i) the Commodity Futures Trading Commission 

from requesting that the Securities and Exchange 

Commission grant an exemption pursuant to section 

36(a)(1) of the Securities Exchange Act of 1934 (15 

U.S.C. 78mm(a)(1)) with respect to a product that is 

the subject of a filing under paragraph (1); or 

(ii) the Securities and Exchange Commission from 

requesting that the Commodity Futures Trading 

Commission grant an exemption pursuant to section 

4(c)(1) of the Commodity Exchange Act (7 U.S.C. 

6(c)(1)) with respect to a product that is the subject 

of a filing under paragraph (1), 

Provided, however, that nothing in this subparagraph shall 

be construed to require the Commodity Futures Trading 

Commission or the Securities and Exchange Commission 

to issue an exemption requested pursuant to this subparagraph; provided further, That an order granting or denying 

an exemption described in this subparagraph and issued 
H. R. 4173—279 

under paragraph (3)(B) shall not be subject to judicial 

review pursuant to subsection (b). 

(E) WITHDRAWAL OF REQUEST.—A request under 

subparagraph (A) or (B) may be withdrawn by the Commission making the request at any time prior to a determination being made pursuant to paragraph (3) for any reason 

by providing written notice to the head of the other 

Commission. 

(3) DETERMINATION.—Notwithstanding any other provision 

of law, no later than 120 days after the date of receipt of 

a request— 

(A) under subparagraph (A) or (B) of paragraph (2), 

unless such request has been withdrawn pursuant to paragraph (2)(E), the Securities and Exchange Commission or 

the Commodity Futures Trading Commission, as applicable, 

shall, by order, issue the determination requested in 

subparagraph (A) or (B) of paragraph (2), as applicable, 

and the reasons therefor; or 

(B) under paragraph (2)(D), unless such request has 

been withdrawn, the Securities and Exchange Commission 

or the Commodity Futures Trading Commission, as 

applicable, shall grant an exemption or provide reasons 

for not granting such exemption, provided that any decision 

by the Securities and Exchange Commission not to grant 

such exemption shall not be reviewable under section 25 

of the Securities Exchange Act of 1934 (15 U.S.C. 78y). 

(b) JUDICIAL RESOLUTION.— (1) IN GENERAL.—The Commodity Futures Trading 

Commission or the Securities and Exchange Commission may 

petition the United States Court of Appeals for the District 

of Columbia Circuit for review of a final order of the other 

Commission issued pursuant to subsection (a)(3)(A), with 

respect to a novel derivative product that may have elements 

of both securities and contracts of sale of a commodity for 

future delivery (or options on such contracts or options on 

commodities) that it believes affects its statutory jurisdiction 

within 60 days after the date of entry of such order, a written 

petition requesting a review of the order. Any such proceeding 

shall be expedited by the Court of Appeals. 

(2) TRANSMITTAL OF PETITION AND RECORD.—A copy of a 

petition described in paragraph (1) shall be transmitted not 

later than 1 business day after filing by the complaining 

Commission to the responding Commission. On receipt of the 

petition, the responding Commission shall file with the court 

a copy of the order under review and any documents referred 

to therein, and any other materials prescribed by the court. 

(3) STANDARD OF REVIEW.—The court, in considering a petition filed pursuant to paragraph (1), shall give no deference 

to, or presumption in favor of, the views of either Commission. 

(4) JUDICIAL STAY.—The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate 

as a stay of the order, until the date on which the determination 

of the court is final (including any appeal of the determination). 

SEC. 719. STUDIES. 

(a) STUDY ON EFFECTS OF POSITION LIMITS ON TRADING ON

EXCHANGES IN THE UNITED STATES.— 
H. R. 4173—280 

(1) STUDY.—The Commodity Futures Trading Commission, 

in consultation with each entity that is a designated contract 

market under the Commodity Exchange Act, shall conduct a 

study of the effects (if any) of the position limits imposed 

pursuant to the other provisions of this title on excessive speculation and on the movement of transactions from exchanges 

in the United States to trading venues outside the United 

States. 

(2) REPORT TO THE CONGRESS.—Within 12 months after 

the imposition of position limits pursuant to the other provisions of this title, the Commodity Futures Trading Commission, 

in consultation with each entity that is a designated contract 

market under the Commodity Exchange Act, shall submit to 

the Congress a report on the matters described in paragraph 

(1). 

(3) REQUIRED HEARING.—Within 30 legislative days after 

the submission to the Congress of the report described in paragraph (2), the Committee on Agriculture of the House of Representatives shall hold a hearing examining the findings of 

the report. 

(4) BIENNIAL REPORTING.—In addition to the study required 

in paragraph (1), the Chairman of the Commodity Futures 

Trading Commission shall prepare and submit to the Congress 

biennial reports on the growth or decline of the derivatives 

markets in the United States and abroad, which shall include 

assessments of the causes of any such growth or decline, the 

effectiveness of regulatory regimes in managing systemic risk, 

a comparison of the costs of compliance at the time of the 

report for market participants subject to regulation by the 

United States with the costs of compliance in December 2008 

for the market participants, and the quality of the available 

data. In preparing the report, the Chairman shall solicit the 

views of, consult with, and address the concerns raised by, 

market participants, regulators, legislators, and other 

interested parties. 

(b) STUDY ON FEASIBILITY OF REQUIRING USE OF STANDARDIZED

ALGORITHMIC DESCRIPTIONS FOR FINANCIAL DERIVATIVES.— 

(1) IN GENERAL.—The Securities and Exchange Commission 

and the Commodity Futures Trading Commission shall conduct 

a joint study of the feasibility of requiring the derivatives 

industry to adopt standardized computer-readable algorithmic 

descriptions which may be used to describe complex and 

standardized financial derivatives. 

(2) GOALS.—The algorithmic descriptions defined in the 

study shall be designed to facilitate computerized analysis of 

individual derivative contracts and to calculate net exposures 

to complex derivatives. The algorithmic descriptions shall be 

optimized for simultaneous use by— 

(A) commercial users and traders of derivatives; 

(B) derivative clearing houses, exchanges and electronic trading platforms; 

(C) trade repositories and regulator investigations of 

market activities; and 

(D) systemic risk regulators. 

The study will also examine the extent to which the algorithmic 

description, together with standardized and extensible legal 
H. R. 4173—281 

definitions, may serve as the binding legal definition of derivative contracts. The study will examine the logistics of possible 

implementations of standardized algorithmic descriptions for 

derivatives contracts. The study shall be limited to electronic 

formats for exchange of derivative contract descriptions and 

will not contemplate disclosure of proprietary valuation models. 

(3) INTERNATIONAL COORDINATION.—In conducting the 

study, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall coordinate the study 

with international financial institutions and regulators as 

appropriate and practical. 

(4) REPORT.—Within 8 months after the date of the enactment of this Act, the Securities and Exchange Commission 

and the Commodity Futures Trading Commission shall jointly 

submit to the Committees on Agriculture and on Financial 

Services of the House of Representatives and the Committees 

on Agriculture, Nutrition, and Forestry and on Banking, 

Housing, and Urban Affairs of the Senate a written report 

which contains the results of the study required by paragraphs 

(1) through (3). 

(c) INTERNATIONAL SWAP REGULATION.— 

(1) IN GENERAL.—The Commodity Futures Trading 

Commission and the Securities and Exchange Commission shall 

jointly conduct a study— 

(A) relating to— 

(i) swap regulation in the United States, Asia, 

and Europe; and 

(ii) clearing house and clearing agency regulation 

in the United States, Asia, and Europe; and 

(B) that identifies areas of regulation that are similar 

in the United States, Asia and Europe and other areas 

of regulation that could be harmonized 

(2) REPORT.—Not later than 18 months after the date of 

enactment of this Act, the Commodity Futures Trading 

Commission and the Securities and Exchange Commission shall 

submit to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Agriculture and 

the Committee on Financial Services of the House of Representatives a report that includes a description of the results of 

the study under subsection (a), including— 

(A) identification of the major exchanges and their 

regulator in each geographic area for the trading of swaps 

and security-based swaps including a listing of the major 

contracts and their trading volumes and notional values 

as well as identification of the major swap dealers participating in such markets; 

(B) identification of the major clearing houses and 

clearing agencies and their regulator in each geographic 

area for the clearing of swaps and security-based swaps, 

including a listing of the major contracts and the clearing 

volumes and notional values as well as identification of 

the major clearing members of such clearing houses and 

clearing agencies in such markets; 

(C) a description of the comparative methods of clearing 

swaps in the United States, Asia, and Europe; and 
H. R. 4173—282 

(D) a description of the various systems used for establishing margin on individual swaps, security-based swaps, 

and swap portfolios. 

(d) STABLE VALUE CONTRACTS.— 

(1) DETERMINATION.— 

(A) STATUS.—Not later than 15 months after the date 

of the enactment of this Act, the Securities and Exchange 

Commission and the Commodity Futures Trading Commission shall, jointly, conduct a study to determine whether 

stable value contracts fall within the definition of a swap. 

In making the determination required under this subparagraph, the Commissions jointly shall consult with the 

Department of Labor, the Department of the Treasury, 

and the State entities that regulate the issuers of stable 

value contracts. 

(B) REGULATIONS.—If the Commissions determine that 

stable value contracts fall within the definition of a swap, 

the Commissions jointly shall determine if an exemption 

for stable value contracts from the definition of swap is 

appropriate and in the public interest. The Commissions 

shall issue regulations implementing the determinations 

required under this paragraph. Until the effective date 

of such regulations, and notwithstanding any other provision of this title, the requirements of this title shall not 

apply to stable value contracts. 

(C) LEGAL CERTAINTY.—Stable value contracts in effect 

prior to the effective date of the regulations described in 

subparagraph (B) shall not be considered swaps. 

(2) DEFINITION.—For purposes of this subsection, the term 

‘‘stable value contract’’ means any contract, agreement, or transaction that provides a crediting interest rate and guaranty 

or financial assurance of liquidity at contract or book value 

prior to maturity offered by a bank, insurance company, or 

other State or federally regulated financial institution for the 

benefit of any individual or commingled fund available as an 

investment in an employee benefit plan (as defined in section 

3(3) of the Employee Retirement Income Security Act of 1974, 

including plans described in section 3(32) of such Act) subject 

to participant direction, an eligible deferred compensation plan 

(as defined in section 457(b) of the Internal Revenue Code 

of 1986) that is maintained by an eligible employer described 

in section 457(e)(1)(A) of such Code, an arrangement described 

in section 403(b) of such Code, or a qualified tuition program 

(as defined in section 529 of such Code). 

SEC. 720. MEMORANDUM. 

(a)(1) The Commodity Futures Trading Commission and the 

Federal Energy Regulatory Commission shall, not later than 180 

days after the date of the enactment of this Act, negotiate a memorandum of understanding to establish procedures for— 

(A) applying their respective authorities in a manner so 

as to ensure effective and efficient regulation in the public 

interest; 

(B) resolving conflicts concerning overlapping jurisdiction 

between the 2 agencies; and 

(C) avoiding, to the extent possible, conflicting or duplicative regulation. 
H. R. 4173—283 

(2) Such memorandum and any subsequent amendments to 

the memorandum shall be promptly submitted to the appropriate 

committees of Congress. 

(b) The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission shall, not later than 180 days 

after the date of the enactment of this section, negotiate a memorandum of understanding to share information that may be 

requested where either Commission is conducting an investigation 

into potential manipulation, fraud, or market power abuse in markets subject to such Commission’s regulation or oversight. Shared 

information shall remain subject to the same restrictions on disclosure applicable to the Commission initially holding the information. 

PART II—REGULATION OF SWAP MARKETS 

SEC. 721. DEFINITIONS. 

(a) IN GENERAL.—Section 1a of the Commodity Exchange Act 

(7 U.S.C. 1a) is amended— 

(1) by redesignating paragraphs (2), (3) and (4), (5) through 

(17), (18) through (23), (24) through (28), (29), (30), (31) through 

(33), and (34) as paragraphs (6), (8) and (9), (11) through 

(23), (26) through (31), (34) through (38), (40), (41), (44) through 

(46), and (51), respectively; 

(2) by inserting after paragraph (1) the following: 

‘‘(2) APPROPRIATE FEDERAL BANKING AGENCY.—The term 

‘appropriate Federal banking agency’— 

‘‘(A) has the meaning given the term in section 3 

of the Federal Deposit Insurance Act (12 U.S.C. 1813); 

‘‘(B) means the Board in the case of a noninsured 

State bank; and 

‘‘(C) is the Farm Credit Administration for farm credit 

system institutions. 

‘‘(3) ASSOCIATED PERSON OF A SECURITY-BASED SWAP DEALER

OR MAJOR SECURITY-BASED SWAP PARTICIPANT.—The term ‘associated person of a security-based swap dealer or major securitybased swap participant’ has the meaning given the term in 

section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

78c(a)). 

‘‘(4) ASSOCIATED PERSON OF A SWAP DEALER OR MAJOR SWAP

PARTICIPANT.— 

‘‘(A) IN GENERAL.—The term ‘associated person of a 

swap dealer or major swap participant’ means a person 

who is associated with a swap dealer or major swap participant as a partner, officer, employee, or agent (or any person 

occupying a similar status or performing similar functions), 

in any capacity that involves— 

‘‘(i) the solicitation or acceptance of swaps; or 

‘‘(ii) the supervision of any person or persons so 

engaged. 

‘‘(B) EXCLUSION.—Other than for purposes of section 

4s(b)(6), the term ‘associated person of a swap dealer or 

major swap participant’ does not include any person associated with a swap dealer or major swap participant the 

functions of which are solely clerical or ministerial. 

‘‘(5) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System.’’; 
H. R. 4173—284 

(3) by inserting after paragraph (6) (as redesignated by 

paragraph (1)) the following: 

‘‘(7) CLEARED SWAP.—The term ‘cleared swap’ means any 

swap that is, directly or indirectly, submitted to and cleared 

by a derivatives clearing organization registered with the 

Commission.’’; 

(4) in paragraph (9) (as redesignated by paragraph (1)), 

by striking ‘‘except onions’’ and all that follows through the 

period at the end and inserting the following: ‘‘except onions 

(as provided by the first section of Public Law 85–839 (7 U.S.C. 

13–1)) and motion picture box office receipts (or any index, 

measure, value, or data related to such receipts), and all services, rights, and interests (except motion picture box office 

receipts, or any index, measure, value or data related to such 

receipts) in which contracts for future delivery are presently 

or in the future dealt in.’’; 

(5) by inserting after paragraph (9) (as redesignated by 

paragraph (1)) the following: 

‘‘(10) COMMODITY POOL.— 

‘‘(A) IN GENERAL.—The term ‘commodity pool’ means 

any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity 

interests, including any— 

‘‘(i) commodity for future delivery, security futures 

product, or swap; 

‘‘(ii) agreement, contract, or transaction described 

in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

‘‘(iii) commodity option authorized under section 

4c; or 

‘‘(iv) leverage transaction authorized under section 

19. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘commodity pool’ any investment trust, syndicate, or 

similar form of enterprise if the Commission determines 

that the rule or regulation will effectuate the purposes 

of this Act.’’; 

(6) by striking paragraph (11) (as redesignated by paragraph (1)) and inserting the following: 

‘‘(11) COMMODITY POOL OPERATOR.— 

‘‘(A) IN GENERAL.—The term ‘commodity pool operator’ 

means any person— 

‘‘(i) engaged in a business that is of the nature 

of a commodity pool, investment trust, syndicate, or 

similar form of enterprise, and who, in connection 

therewith, solicits, accepts, or receives from others, 

funds, securities, or property, either directly or through 

capital contributions, the sale of stock or other forms 

of securities, or otherwise, for the purpose of trading 

in commodity interests, including any— 

‘‘(I) commodity for future delivery, security 

futures product, or swap; 

‘‘(II) agreement, contract, or transaction 

described in section 2(c)(2)(C)(i) or section 

2(c)(2)(D)(i); 

‘‘(III) commodity option authorized under section 4c; or 
H. R. 4173—285 

‘‘(IV) leverage transaction authorized under 

section 19; or 

‘‘(ii) who is registered with the Commission as 

a commodity pool operator. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘commodity pool operator’ any person engaged in a 

business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise if the 

Commission determines that the rule or regulation will 

effectuate the purposes of this Act.’’; 

(7) in paragraph (12) (as redesignated by paragraph (1)), 

in subparagraph (A)— 

(A) in clause (i)— 

(i) in subclause (I), by striking ‘‘made or to be 

made on or subject to the rules of a contract market 

or derivatives transaction execution facility’’ and 

inserting ‘‘, security futures product, or swap’’; 

(ii) by redesignating subclauses (II) and (III) as 

subclauses (III) and (IV); 

(iii) by inserting after subclause (I) the following: 

‘‘(II) any agreement, contract, or transaction 

described in section 2(c)(2)(C)(i) or section 

2(c)(2)(D)(i)’’; and 

(iv) in subclause (IV) (as so redesignated), by 

striking ‘‘or’’; 

(B) in clause (ii), by striking the period at the end 

and inserting a semicolon; and 

(C) by adding at the end the following: 

‘‘(iii) is registered with the Commission as a commodity trading advisor; or 

‘‘(iv) the Commission, by rule or regulation, may 

include if the Commission determines that the rule 

or regulation will effectuate the purposes of this Act.’’; 

(8) in paragraph (17) (as redesignated by paragraph (1)), 

in subparagraph (A), in the matter preceding clause (i), by 

striking ‘‘paragraph (12)(A)’’ and inserting ‘‘paragraph (18)(A)’’; 

(9) in paragraph (18) (as redesignated by paragraph (1))— 

(A) in subparagraph (A)— 

(i) in the matter following clause (vii)(III)— 

(I) by striking ‘‘section 1a (11)(A)’’ and 

inserting ‘‘paragraph (17)(A)’’; and (II) by striking ‘‘$25,000,000’’ and inserting ‘‘$50,000,000’’; and 

(ii) in clause (xi), in the matter preceding subclause 

(I), by striking ‘‘total assets in an amount’’ and 

inserting ‘‘amounts invested on a discretionary basis, 

the aggregate of which is’’; 

(10) by striking paragraph (22) (as redesignated by paragraph (1)) and inserting the following: 

‘‘(22) FLOOR BROKER.— ‘‘(A) IN GENERAL.—The term ‘floor broker’ means any 

person— 

‘‘(i) who, in or surrounding any pit, ring, post, 

or other place provided by a contract market for the 

meeting of persons similarly engaged, shall purchase 

or sell for any other person— 
H. R. 4173—286 

‘‘(I) any commodity for future delivery, security 

futures product, or swap; or 

‘‘(II) any commodity option authorized under 

section 4c; or 

‘‘(ii) who is registered with the Commission as 

a floor broker. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘floor broker’ any person in or surrounding any pit, 

ring, post, or other place provided by a contract market 

for the meeting of persons similarly engaged who trades 

for any other person if the Commission determines that 

the rule or regulation will effectuate the purposes of this 

Act.’’; 

(11) by striking paragraph (23) (as redesignated by paragraph (1)) and inserting the following: 

‘‘(23) FLOOR TRADER.— 

‘‘(A) IN GENERAL.—The term ‘floor trader’ means any 

person— 

‘‘(i) who, in or surrounding any pit, ring, post, 

or other place provided by a contract market for the 

meeting of persons similarly engaged, purchases, or 

sells solely for such person’s own account— 

‘‘(I) any commodity for future delivery, security 

futures product, or swap; or 

‘‘(II) any commodity option authorized under 

section 4c; or 

‘‘(ii) who is registered with the Commission as 

a floor trader. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘floor trader’ any person in or surrounding any pit, 

ring, post, or other place provided by a contract market 

for the meeting of persons similarly engaged who trades 

solely for such person’s own account if the Commission 

determines that the rule or regulation will effectuate the 

purposes of this Act.’’; 

(12) by inserting after paragraph (23) (as redesignated 

by paragraph (1)) the following: 

‘‘(24) FOREIGN EXCHANGE FORWARD.—The term ‘foreign 

exchange forward’ means a transaction that solely involves 

the exchange of 2 different currencies on a specific future 

date at a fixed rate agreed upon on the inception of the contract 

covering the exchange. 

‘‘(25) FOREIGN EXCHANGE SWAP.—The term ‘foreign 

exchange swap’ means a transaction that solely involves— 

‘‘(A) an exchange of 2 different currencies on a specific 

date at a fixed rate that is agreed upon on the inception 

of the contract covering the exchange; and 

‘‘(B) a reverse exchange of the 2 currencies described 

in subparagraph (A) at a later date and at a fixed rate 

that is agreed upon on the inception of the contract covering 

the exchange.’’; 

(13) by striking paragraph (28) (as redesignated by paragraph (1)) and inserting the following: 

‘‘(28) FUTURES COMMISSION MERCHANT.— 
H. R. 4173—287 

‘‘(A) IN GENERAL.—The term ‘futures commission merchant’ means an individual, association, partnership, corporation, or trust— 

‘‘(i) that— 

‘‘(I) is— 

‘‘(aa) engaged in soliciting or in accepting 

orders for— 

‘‘(AA) the purchase or sale of a commodity for future delivery; 

‘‘(BB) a security futures product; 

‘‘(CC) a swap; 

‘‘(DD) any agreement, contract, or 

transaction described in section 

2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

‘‘(EE) any commodity option authorized under section 4c; or 

‘‘(FF) any leverage transaction 

authorized under section 19; or 

‘‘(bb) acting as a counterparty in any 

agreement, contract, or transaction described 

in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

and 

‘‘(II) in or in connection with the activities 

described in items (aa) or (bb) of subclause (I), 

accepts any money, securities, or property (or 

extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result 

or may result therefrom; or 

‘‘(ii) that is registered with the Commission as 

a futures commission merchant. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘futures commission merchant’ any person who 

engages in soliciting or accepting orders for, or acting as 

a counterparty in, any agreement, contract, or transaction 

subject to this Act, and who accepts any money, securities, 

or property (or extends credit in lieu thereof) to margin, 

guarantee, or secure any trades or contracts that result 

or may result therefrom, if the Commission determines 

that the rule or regulation will effectuate the purposes 

of this Act.’’; 

(14) in paragraph (30) (as redesignated by paragraph (1)), 

in subparagraph (B), by striking ‘‘state’’ and inserting ‘‘State’’; 

(15) by striking paragraph (31) (as redesignated by paragraph (1)) and inserting the following: 

‘‘(31) INTRODUCING BROKER.— 

‘‘(A) IN GENERAL.—The term ‘introducing broker’ means 

any person (except an individual who elects to be and 

is registered as an associated person of a futures commission merchant)— 

‘‘(i) who— 

‘‘(I) is engaged in soliciting or in accepting 

orders for— 

‘‘(aa) the purchase or sale of any commodity for future delivery, security futures 

product, or swap; 
H. R. 4173—288 

‘‘(bb) any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

‘‘(cc) any commodity option authorized 

under section 4c; or 

‘‘(dd) any leverage transaction authorized 

under section 19; and 

‘‘(II) does not accept any money, securities, 

or property (or extend credit in lieu thereof) to 

margin, guarantee, or secure any trades or contracts that result or may result therefrom; or 

‘‘(ii) who is registered with the Commission as 

an introducing broker. 

‘‘(B) FURTHER DEFINITION.—The Commission, by rule 

or regulation, may include within, or exclude from, the 

term ‘introducing broker’ any person who engages in soliciting or accepting orders for any agreement, contract, or 

transaction subject to this Act, and who does not accept 

any money, securities, or property (or extend credit in 

lieu thereof) to margin, guarantee, or secure any trades 

or contracts that result or may result therefrom, if the 

Commission determines that the rule or regulation will 

effectuate the purposes of this Act.’’; 

(16) by inserting after paragraph (31) (as redesignated 

by paragraph (1)) the following: 

‘‘(32) MAJOR SECURITY-BASED SWAP PARTICIPANT.—The term 

‘major security-based swap participant’ has the meaning given 

the term in section 3(a) of the Securities Exchange Act of 

1934 (15 U.S.C. 78c(a)). 

‘‘(33) MAJOR SWAP PARTICIPANT.— ‘‘(A) IN GENERAL.—The term ‘major swap participant’ 

means any person who is not a swap dealer, and— 

‘‘(i) maintains a substantial position in swaps for 

any of the major swap categories as determined by 

the Commission, excluding— 

‘‘(I) positions held for hedging or mitigating 

commercial risk; and 

‘‘(II) positions maintained by any employee 

benefit plan (or any contract held by such a plan) 

as defined in paragraphs (3) and (32) of section 

3 of the Employee Retirement Income Security 

Act of 1974 (29 U.S.C. 1002) for the primary purpose of hedging or mitigating any risk directly 

associated with the operation of the plan; 

‘‘(ii) whose outstanding swaps create substantial 

counterparty exposure that could have serious adverse 

effects on the financial stability of the United States 

banking system or financial markets; or 

‘‘(iii)(I) is a financial entity that is highly leveraged 

relative to the amount of capital it holds and that 

is not subject to capital requirements established by 

an appropriate Federal banking agency; and 

‘‘(II) maintains a substantial position in outstanding swaps in any major swap category as determined by the Commission. 

‘‘(B) DEFINITION OF SUBSTANTIAL POSITION.—For purposes of subparagraph (A), the Commission shall define 
H. R. 4173—289 

by rule or regulation the term ‘substantial position’ at 

the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can 

significantly impact the financial system of the United 

States. In setting the definition under this subparagraph, 

the Commission shall consider the person’s relative position 

in uncleared as opposed to cleared swaps and may take 

into consideration the value and quality of collateral held 

against counterparty exposures. 

‘‘(C) SCOPE OF DESIGNATION.—For purposes of subparagraph (A), a person may be designated as a major swap 

participant for 1 or more categories of swaps without being 

classified as a major swap participant for all classes of 

swaps. 

‘‘(D) EXCLUSIONS.—The definition under this paragraph 

shall not include an entity whose primary business is providing financing, and uses derivatives for the purpose of 

hedging underlying commercial risks related to interest 

rate and foreign currency exposures, 90 percent or more 

of which arise from financing that facilitates the purchase 

or lease of products, 90 percent or more of which are 

manufactured by the parent company or another subsidiary 

of the parent company.’’; 

(17) by inserting after paragraph (38) (as redesignated 

by paragraph (1)) the following: 

‘‘(39) PRUDENTIAL REGULATOR.—The term ‘prudential regulator’ means— 

‘‘(A) the Board in the case of a swap dealer, major 

swap participant, security-based swap dealer, or major 

security-based swap participant that is— 

‘‘(i) a State-chartered bank that is a member of 

the Federal Reserve System; 

‘‘(ii) a State-chartered branch or agency of a foreign 

bank; 

‘‘(iii) any foreign bank which does not operate an 

insured branch; 

‘‘(iv) any organization operating under section 25A 

of the Federal Reserve Act or having an agreement 

with the Board under section 225 of the Federal 

Reserve Act; 

‘‘(v) any bank holding company (as defined in section 2 of the Bank Holding Company Act of 1965 

(12 U.S.C. 1841)), any foreign bank (as defined in 

section 1(b)(7) of the International Banking Act of 1978 

(12 U.S.C. 3101(b)(7)) that is treated as a bank holding 

company under section 8(a) of the International 

Banking Act of 1978 (12 U.S.C. 3106(a)), and any subsidiary of such a company or foreign bank (other than 

a subsidiary that is described in subparagraph (A) 

or (B) or that is required to be registered with the 

Commission as a swap dealer or major swap participant under this Act or with the Securities and 

Exchange Commission as a security-based swap dealer 

or major security-based swap participant); 
H. R. 4173—290 

‘‘(vi) after the transfer date (as defined in section 

311 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), any savings and loan holding 

company (as defined in section 10 of the Home Owners’ 

Loan Act (12 U.S.C. 1467a)) and any subsidiary of 

such company (other than a subsidiary that is 

described in subparagraph (A) or (B) or that is required 

to be registered as a swap dealer or major swap participant with the Commission under this Act or with the 

Securities and Exchange Commission as a securitybased swap dealer or major security-based swap 

participant); or 

‘‘(vii) any organization operating under section 25A 

of the Federal Reserve Act (12U.S.C. 611 et seq.) or 

having an agreement with the Board under section 

25 of the Federal Reserve Act (12 U.S.C. 601 et seq.); 

‘‘(B) the Office of the Comptroller of the Currency 

in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap 

participant that is— 

‘‘(i) a national bank; 

‘‘(ii) a federally chartered branch or agency of a 

foreign bank; or 

‘‘(iii) any Federal savings association; 

‘‘(C) the Federal Deposit Insurance Corporation in the 

case of a swap dealer, major swap participant, securitybased swap dealer, or major security-based swap participant that is— 

‘‘(i) a State-chartered bank that is not a member 

of the Federal Reserve System; or 

‘‘(ii) any State savings association; 

‘‘(D) the Farm Credit Administration, in the case of 

a swap dealer, major swap participant, security-based swap 

dealer, or major security-based swap participant that is 

an institution chartered under the Farm Credit Act of 

1971 (12 U.S.C. 2001 et seq.); and 

‘‘(E) the Federal Housing Finance Agency in the case 

of a swap dealer, major swap participant, security-based 

swap dealer, or major security-based swap participant that 

is a regulated entity (as such term is defined in section 

1303 of the Federal Housing Enterprises Financial Safety 

and Soundness Act of 1992).’’; 

(18) in paragraph (40) (as redesignated by paragraph (1))— 

(A) by striking subparagraph (B); 

(B) by redesignating subparagraphs (C), (D), and (E) 

as subparagraphs (B), (C), and (F), respectively; 

(C) in subparagraph (C) (as so redesignated), by 

striking ‘‘and’’; and 

(D) by inserting after subparagraph (C) (as so redesignated) the following: 

‘‘(D) a swap execution facility registered under section 

5h; 

‘‘(E) a swap data repository registered under section 

21; and’’; 

(19) by inserting after paragraph (41) (as redesignated 

by paragraph (1)) the following: 
H. R. 4173—291 

‘‘(42) SECURITY-BASED SWAP.—The term ‘security-based 

swap’ has the meaning given the term in section 3(a) of the 

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

‘‘(43) SECURITY-BASED SWAP DEALER.—The term ‘securitybased swap dealer’ has the meaning given the term in section 

3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).’’; 

(20) in paragraph (46) (as redesignated by paragraph (1)), 

by striking ‘‘subject to section 2(h)(7)’’ and inserting ‘‘subject 

to section 2(h)(5)’’; 

(21) by inserting after paragraph (46) (as redesignated 

by paragraph (1)) the following: 

‘‘(47) SWAP.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘swap’ means any agreement, contract, or 

transaction— 

‘‘(i) that is a put, call, cap, floor, collar, or similar 

option of any kind that is for the purchase or sale, 

or based on the value, of 1 or more interest or other 

rates, currencies, commodities, securities, instruments 

of indebtedness, indices, quantitative measures, or 

other financial or economic interests or property of 

any kind; 

‘‘(ii) that provides for any purchase, sale, payment, 

or delivery (other than a dividend on an equity security) that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event 

or contingency associated with a potential financial, 

economic, or commercial consequence; 

‘‘(iii) that provides on an executory basis for the 

exchange, on a fixed or contingent basis, of 1 or more 

payments based on the value or level of 1 or more 

interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative 

measures, or other financial or economic interests or 

property of any kind, or any interest therein or based 

on the value thereof, and that transfers, as between 

the parties to the transaction, in whole or in part, 

the financial risk associated with a future change in 

any such value or level without also conveying a current or future direct or indirect ownership interest 

in an asset (including any enterprise or investment 

pool) or liability that incorporates the financial risk 

so transferred, including any agreement, contract, or 

transaction commonly known as— 

‘‘(I) an interest rate swap; 

‘‘(II) a rate floor; 

‘‘(III) a rate cap; 

‘‘(IV) a rate collar; 

‘‘(V) a cross-currency rate swap; 

‘‘(VI) a basis swap; 

‘‘(VII) a currency swap; 

‘‘(VIII) a foreign exchange swap; 

‘‘(IX) a total return swap; 

‘‘(X) an equity index swap; 

‘‘(XI) an equity swap; 

‘‘(XII) a debt index swap; 

‘‘(XIII) a debt swap; 
H. R. 4173—292 

‘‘(XIV) a credit spread; 

‘‘(XV) a credit default swap; 

‘‘(XVI) a credit swap; 

‘‘(XVII) a weather swap; 

‘‘(XVIII) an energy swap; 

‘‘(XIX) a metal swap; 

‘‘(XX) an agricultural swap; 

‘‘(XXI) an emissions swap; and 

‘‘(XXII) a commodity swap; 

‘‘(iv) that is an agreement, contract, or transaction 

that is, or in the future becomes, commonly known 

to the trade as a swap; 

‘‘(v) including any security-based swap agreement 

which meets the definition of ‘swap agreement’ as 

defined in section 206A of the Gramm-Leach-Bliley 

Act (15 U.S.C. 78c note) of which a material term 

is based on the price, yield, value, or volatility of any 

security or any group or index of securities, or any 

interest therein; or 

‘‘(vi) that is any combination or permutation of, 

or option on, any agreement, contract, or transaction 

described in any of clauses (i) through (v). 

‘‘(B) EXCLUSIONS.—The term ‘swap’ does not include— 

‘‘(i) any contract of sale of a commodity for future 

delivery (or option on such a contract), leverage contract authorized under section 19, security futures 

product, or agreement, contract, or transaction 

described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 

‘‘(ii) any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the 

transaction is intended to be physically settled; 

‘‘(iii) any put, call, straddle, option, or privilege 

on any security, certificate of deposit, or group or index 

of securities, including any interest therein or based 

on the value thereof, that is subject to— 

‘‘(I) the Securities Act of 1933 (15 U.S.C. 77a 

et seq.); and 

‘‘(II) the Securities Exchange Act of 1934 (15 

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

‘‘(iv) any put, call, straddle, option, or privilege 

relating to a foreign currency entered into on a national 

securities exchange registered pursuant to section 6(a) 

of the Securities Exchange Act of 1934 (15 U.S.C. 

78f(a)); 

‘‘(v) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities 

on a fixed basis that is subject to— 

‘‘(I) the Securities Act of 1933 (15 U.S.C. 77a 

et seq.); and 

‘‘(II) the Securities Exchange Act of 1934 (15 

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

‘‘(vi) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities 

on a contingent basis that is subject to the Securities 

Act of 1933 (15 U.S.C. 77a et seq.) and the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et seq.), unless 

the agreement, contract, or transaction predicates the 
H. R. 4173—293 

purchase or sale on the occurrence of a bona fide 

contingency that might reasonably be expected to affect 

or be affected by the creditworthiness of a party other 

than a party to the agreement, contract, or transaction; 

‘‘(vii) any note, bond, or evidence of indebtedness 

that is a security, as defined in section 2(a)(1) of the 

Securities Act of 1933 (15 U.S.C. 77b(a)(1)); 

‘‘(viii) any agreement, contract, or transaction that 

is— 

‘‘(I) based on a security; and 

‘‘(II) entered into directly or through an underwriter (as defined in section 2(a)(11) of the Securities Act of 1933 (15 U.S.C. 77b(a)(11)) by the issuer 

of such security for the purposes of raising capital, 

unless the agreement, contract, or transaction is 

entered into to manage a risk associated with capital raising; 

‘‘(ix) any agreement, contract, or transaction a 

counterparty of which is a Federal Reserve bank, the 

Federal Government, or a Federal agency that is 

expressly backed by the full faith and credit of the 

United States; and 

‘‘(x) any security-based swap, other than a securitybased swap as described in subparagraph (D). 

‘‘(C) RULE OF CONSTRUCTION REGARDING MASTER

AGREEMENTS.— 

‘‘(i) IN GENERAL.—Except as provided in clause 

(ii), the term ‘swap’ includes a master agreement that 

provides for an agreement, contract, or transaction that 

is a swap under subparagraph (A), together with each 

supplement to any master agreement, without regard 

to whether the master agreement contains an agreement, contract, or transaction that is not a swap pursuant to subparagraph (A). 

‘‘(ii) EXCEPTION.—For purposes of clause (i), the 

master agreement shall be considered to be a swap 

only with respect to each agreement, contract, or transaction covered by the master agreement that is a swap 

pursuant to subparagraph (A). 

‘‘(D) MIXED SWAP.—The term ‘security-based swap’ 

includes any agreement, contract, or transaction that is 

as described in section 3(a)(68)(A) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and also 

is based on the value of 1 or more interest or other rates, 

currencies, commodities, instruments of indebtedness, 

indices, quantitative measures, other financial or economic 

interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence, 

non-occurrence, or the extent of the occurrence of an event 

or contingency associated with a potential financial, economic, or commercial consequence (other than an event 

described in subparagraph (A)(iii)). 

‘‘(E) TREATMENT OF FOREIGN EXCHANGE SWAPS AND

FORWARDS.— 

‘‘(i) IN GENERAL.—Foreign exchange swaps and foreign exchange forwards shall be considered swaps 

under this paragraph unless the Secretary makes a 
H. R. 4173—294 

written determination under section 1b that either foreign exchange swaps or foreign exchange forwards or 

both— 

‘‘(I) should be not be regulated as swaps under 

this Act; and 

‘‘(II) are not structured to evade the DoddFrank Wall Street Reform and Consumer Protection Act in violation of any rule promulgated by 

the Commission pursuant to section 721(c) of that 

Act. 

‘‘(ii) CONGRESSIONAL NOTICE; EFFECTIVENESS.—The 

Secretary shall submit any written determination 

under clause (i) to the appropriate committees of Congress, including the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee 

on Agriculture of the House of Representatives. Any 

such written determination by the Secretary shall not 

be effective until it is submitted to the appropriate 

committees of Congress. 

‘‘(iii) REPORTING.—Notwithstanding a written 

determination by the Secretary under clause (i), all 

foreign exchange swaps and foreign exchange forwards 

shall be reported to either a swap data repository, 

or, if there is no swap data repository that would 

accept such swaps or forwards, to the Commission 

pursuant to section 4r within such time period as 

the Commission may by rule or regulation prescribe. 

‘‘(iv) BUSINESS STANDARDS.—Notwithstanding a 

written determination by the Secretary pursuant to 

clause (i), any party to a foreign exchange swap or 

forward that is a swap dealer or major swap participant 

shall conform to the business conduct standards contained in section 4s(h). 

‘‘(v) SECRETARY.—For purposes of this subparagraph, the term ‘Secretary’ means the Secretary of 

the Treasury. 

‘‘(F) EXCEPTION FOR CERTAIN FOREIGN EXCHANGE SWAPS

AND FORWARDS.— ‘‘(i) REGISTERED ENTITIES.—Any foreign exchange 

swap and any foreign exchange forward that is listed 

and traded on or subject to the rules of a designated 

contract market or a swap execution facility, or that 

is cleared by a derivatives clearing organization, shall 

not be exempt from any provision of this Act or amendments made by the Wall Street Transparency and 

Accountability Act of 2010 prohibiting fraud or manipulation. 

‘‘(ii) RETAIL TRANSACTIONS.—Nothing in subparagraph (E) shall affect, or be construed to affect, the 

applicability of this Act or the jurisdiction of the 

Commission with respect to agreements, contracts, or 

transactions in foreign currency pursuant to section 

2(c)(2). 

‘‘(48) SWAP DATA REPOSITORY.—The term ‘swap data repository’ means any person that collects and maintains information 

or records with respect to transactions or positions in, or the 

terms and conditions of, swaps entered into by third parties 
H. R. 4173—295 

for the purpose of providing a centralized recordkeeping facility 

for swaps. 

‘‘(49) SWAP DEALER.— 

‘‘(A) IN GENERAL.—The term ‘swap dealer’ means any 

person who— 

‘‘(i) holds itself out as a dealer in swaps; 

‘‘(ii) makes a market in swaps; 

‘‘(iii) regularly enters into swaps with counterparties as an ordinary course of business for its own 

account; or 

‘‘(iv) engages in any activity causing the person 

to be commonly known in the trade as a dealer or 

market maker in swaps, 

provided however, in no event shall an insured depository 

institution be considered to be a swap dealer to the extent 

it offers to enter into a swap with a customer in connection 

with originating a loan with that customer. 

‘‘(B) INCLUSION.—A person may be designated as a 

swap dealer for a single type or single class or category 

of swap or activities and considered not to be a swap 

dealer for other types, classes, or categories of swaps or 

activities. 

‘‘(C) EXCEPTION.—The term ‘swap dealer’ does not 

include a person that enters into swaps for such person’s 

own account, either individually or in a fiduciary capacity, 

but not as a part of a regular business. 

‘‘(D) DE MINIMIS EXCEPTION.—The Commission shall 

exempt from designation as a swap dealer an entity that 

engages in a de minimis quantity of swap dealing in connection with transactions with or on behalf of its customers. 

The Commission shall promulgate regulations to establish 

factors with respect to the making of this determination 

to exempt. 

‘‘(50) SWAP EXECUTION FACILITY.—The term ‘swap execution 

facility’ means a trading system or platform in which multiple 

participants have the ability to execute or trade swaps by 

accepting bids and offers made by multiple participants in 

the facility or system, through any means of interstate commerce, including any trading facility, that— 

‘‘(A) facilitates the execution of swaps between persons; 

and 

‘‘(B) is not a designated contract market.’’. 

(22) in paragraph (51) (as redesignated by paragraph (1)), 

in subparagraph (A)(i), by striking ‘‘partipants’’ and inserting 

‘‘participants’’. 

(b) AUTHORITY TO DEFINE TERMS.—The Commodity Futures 

Trading Commission may adopt a rule to define— 

(1) the term ‘‘commercial risk’’; and 

(2) any other term included in an amendment to the Commodity Exchange Act (7 U.S.C. 1 et seq.) made by this subtitle. 

(c) MODIFICATION OF DEFINITIONS.—To include transactions and 

entities that have been structured to evade this subtitle (or an 

amendment made by this subtitle), the Commodity Futures Trading 

Commission shall adopt a rule to further define the terms ‘‘swap’’, 

‘‘swap dealer’’, ‘‘major swap participant’’, and ‘‘eligible contract 

participant’’. 
H. R. 4173—296 

(d) EXEMPTIONS.—Section 4(c)(1) of the Commodity Exchange 

Act (7 U.S.C. 6(c)(1)) is amended by striking ‘‘except that’’ and 

all that follows through the period at the end and inserting the 

following: ‘‘except that— 

‘‘(A) unless the Commission is expressly authorized by any 

provision described in this subparagraph to grant exemptions, 

with respect to amendments made by subtitle A of the Wall 

Street Transparency and Accountability Act of 2010— 

‘‘(i) with respect to— 

‘‘(I) paragraphs (2), (3), (4), (5), and (7), paragraph 

(18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38), 

(39), (41), (42), (46), (47), (48), and (49) of section 

1a, and sections 2(a)(13), 2(c)(1)(D), 4a(a), 4a(b), 4d(c), 

4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c), 5b(i), 

8e, and 21; and 

‘‘(II) section 206(e) of the Gramm-Leach-Bliley Act 

(Public Law 106–102; 15 U.S.C. 78c note); and 

‘‘(ii) in sections 721(c) and 742 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act; and 

‘‘(B) the Commission and the Securities and Exchange 

Commission may by rule, regulation, or order jointly exclude 

any agreement, contract, or transaction from section 2(a)(1)(D)) 

if the Commissions determine that the exemption would be 

consistent with the public interest.’’. 

(e) CONFORMING AMENDMENTS.— 

(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act 

(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended— 

(A) in item (cc)— 

(i) in subitem (AA), by striking ‘‘section 1a(20)’’ 

and inserting ‘‘section 1a’’; and 

(ii) in subitem (BB), by striking ‘‘section 1a(20)’’ 

and inserting ‘‘section 1a’’; and 

(B) in item (dd), by striking ‘‘section 1a(12)(A)(ii)’’ and 

inserting ‘‘section 1a(18)(A)(ii)’’. 

(2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 

6m(3)) is amended by striking ‘‘section 1a(6)’’ and inserting 

‘‘section 1a’’. 

(3) Section 4q(a)(1) of the Commodity Exchange Act (7 

U.S.C. 6o–1(a)(1)) is amended by striking ‘‘section 1a(4)’’ and 

inserting ‘‘section 1a(9)’’. 

(4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C. 

7(e)(1)) is amended by striking ‘‘section 1a(4)’’ and inserting 

‘‘section 1a(9)’’. 

(5) Section 5a(b)(2)(F) of the Commodity Exchange Act 

(7 U.S.C. 7a(b)(2)(F)) is amended by striking ‘‘section 1a(4)’’ 

and inserting ‘‘section 1a(9)’’. 

(6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C. 

7a–1(a)) is amended, in the matter preceding paragraph (1), 

by striking ‘‘section 1a(9)’’ and inserting ‘‘section 1a’’. 

(7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7 

U.S.C. 7a–2(c)(2)(B)) is amended by striking ‘‘section 1a(4)’’ 

and inserting ‘‘section 1a(9)’’. 

(8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of 

1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended— 

(A) in subclause (I), by striking ‘‘section 1a(12)(B)(ii)’’ 

and inserting ‘‘section 1a(18)(B)(ii)’’; and 
H. R. 4173—297 

(B) in subclause (II), by striking ‘‘section 1a(12)’’ and 

inserting ‘‘section 1a(18)’’. 

(9) Section 402 of the Legal Certainty for Bank Products 

Act of 2000 (7 U.S.C. 27 et seq.) is amended— 

(A) in subsection (a)(7), by striking ‘‘section 1a(20)’’ 

and inserting ‘‘section 1a’’; 

(B) in subsection (b)(2), by striking ‘‘section 1a(12)’’ 

and inserting ‘‘section 1a’’; and 

(C) in subsection (c), by striking ‘‘section 1a(4)’’ and 

inserting ‘‘section 1a’’. 

(10) The first section of Public Law 85–839 (7 U.S.C. 13– 

1) is amended in subsection (a), in the first sentence, by 

inserting ‘‘motion picture box office receipts (or any index, 

measure, value, or data related to such receipts) or’’ after 

‘‘sale of’’. 

(f) EFFECTIVE DATE.—Notwithstanding any other provision of 

this Act, the amendments made by subsection (a)(4) shall take 

effect on June 1, 2010. 

SEC. 722. JURISDICTION. 

(a) EXCLUSIVE JURISDICTION.—Section 2(a)(1) of the Commodity 

Exchange Act (7 U.S.C. 2(a)(1)) is amended— 

(1) in subparagraph (A), in the first sentence— 

(A) by inserting ‘‘the Wall Street Transparency and 

Accountability Act of 2010 (including an amendment made 

by that Act) and’’ after ‘‘otherwise provided in’’; 

(B) by striking ‘‘(C) and (D)’’ and inserting ‘‘(C), (D), 

and (I)’’; 

(C) by striking ‘‘(c) through (i) of this section’’ and 

inserting ‘‘(c) and (f)’’; 

(D) by striking ‘‘contracts of sale’’ and inserting ‘‘swaps 

or contracts of sale’’; and 

(E) by striking ‘‘or derivatives transaction execution 

facility registered pursuant to section 5 or 5a’’ and inserting 

‘‘pursuant to section 5 or a swap execution facility pursuant 

to section 5h’’; and 

(2) by adding at the end the following: 

‘‘(G)(i) Nothing in this paragraph shall limit the jurisdiction conferred on the Securities and Exchange Commission by the Wall Street Transparency and Accountability 

Act of 2010 with regard to security-based swap agreements 

as defined pursuant to section 3(a)(78) of the Securities 

Exchange Act of 1934, and security-based swaps. 

‘‘(ii) In addition to the authority of the Securities and 

Exchange Commission described in clause (i), nothing in 

this subparagraph shall limit or affect any statutory 

authority of the Commission with respect to an agreement, 

contract, or transaction described in clause (i). 

‘‘(H) Notwithstanding any other provision of law, the 

Wall Street Transparency and Accountability Act of 2010 

shall not apply to, and the Commodity Futures Trading 

Commission shall have no jurisdiction under such Act (or 

any amendments to the Commodity Exchange Act made 

by such Act) with respect to, any security other than a 

security-based swap.’’. 
H. R. 4173—298 

(b) REGULATION OF SWAPS UNDER FEDERAL AND STATE LAW.— 

Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is amended 

by adding at the end the following: 

‘‘(h) REGULATION OF SWAPS AS INSURANCE UNDER STATE LAW.— 

A swap— 

‘‘(1) shall not be considered to be insurance; and 

‘‘(2) may not be regulated as an insurance contract under 

the law of any State.’’. 

(c) AGREEMENTS, CONTRACTS, AND TRANSACTIONS TRADED ON

AN ORGANIZED EXCHANGE.—Section 2(c)(2)(A) of the Commodity 

Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended— 

(1) in clause (i), by striking ‘‘or’’ at the end; 

(2) by redesignating clause (ii) as clause (iii); and 

(3) by inserting after clause (i) the following: 

‘‘(ii) a swap; or’’. 

(d) APPLICABILITY.—Section 2 of the Commodity Exchange Act 

(7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by adding 

at the end the following: 

‘‘(i) APPLICABILITY.—The provisions of this Act relating to swaps 

that were enacted by the Wall Street Transparency and Accountability Act of 2010 (including any rule prescribed or regulation 

promulgated under that Act), shall not apply to activities outside 

the United States unless those activities— 

‘‘(1) have a direct and significant connection with activities 

in, or effect on, commerce of the United States; or 

‘‘(2) contravene such rules or regulations as the Commission 

may prescribe or promulgate as are necessary or appropriate 

to prevent the evasion of any provision of this Act that was 

enacted by the Wall Street Transparency and Accountability 

Act of 2010.’’. 

(e) FEDERAL ENERGY REGULATORY COMMISSION.—Section 

2(a)(1) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended 

by adding at the end the following: 

‘‘(I)(i) Nothing in this Act shall limit or affect any 

statutory authority of the Federal Energy Regulatory 

Commission or a State regulatory authority (as defined 

in section 3(21) of the Federal Power Act (16 U.S.C. 796(21)) 

with respect to an agreement, contract, or transaction that 

is entered into pursuant to a tariff or rate schedule 

approved by the Federal Energy Regulatory Commission 

or a State regulatory authority and is— 

‘‘(I) not executed, traded, or cleared on a registered 

entity or trading facility; or 

‘‘(II) executed, traded, or cleared on a registered 

entity or trading facility owned or operated by a 

regional transmission organization or independent 

system operator. 

‘‘(ii) In addition to the authority of the Federal Energy 

Regulatory Commission or a State regulatory authority 

described in clause (i), nothing in this subparagraph shall 

limit or affect— 

‘‘(I) any statutory authority of the Commission 

with respect to an agreement, contract, or transaction 

described in clause (i); or 

‘‘(II) the jurisdiction of the Commission under 

subparagraph (A) with respect to an agreement, contract, or transaction that is executed, traded, or cleared 
H. R. 4173—299 

on a registered entity or trading facility that is not 

owned or operated by a regional transmission organization or independent system operator (as defined by 

sections 3(27) and (28) of the Federal Power Act (16 

U.S.C. 796(27), 796(28)).’’. 

(f) PUBLIC INTEREST WAIVER.—Section 4(c) of the Commodity 

Exchange Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is 

amended by adding at the end the following: 

‘‘(6) If the Commission determines that the exemption 

would be consistent with the public interest and the purposes 

of this Act, the Commission shall, in accordance with paragraphs (1) and (2), exempt from the requirements of this Act 

an agreement, contract, or transaction that is entered into— 

‘‘(A) pursuant to a tariff or rate schedule approved 

or permitted to take effect by the Federal Energy Regulatory Commission; 

‘‘(B) pursuant to a tariff or rate schedule establishing 

rates or charges for, or protocols governing, the sale of 

electric energy approved or permitted to take effect by 

the regulatory authority of the State or municipality having 

jurisdiction to regulate rates and charges for the sale of 

electric energy within the State or municipality; or 

‘‘(C) between entities described in section 201(f) of the 

Federal Power Act (16 U.S.C. 824(f)).’’. 

(g) AUTHORITY OF FERC.—Nothing in the Wall Street Transparency and Accountability Act of 2010 or the amendments to 

the Commodity Exchange Act made by such Act shall limit or 

affect any statutory enforcement authority of the Federal Energy 

Regulatory Commission pursuant to section 222 of the Federal 

Power Act and section 4A of the Natural Gas Act that existed 

prior to the date of enactment of the Wall Street Transparency 

and Accountability Act of 2010. 

(h) DETERMINATION.—The Commodity Exchange Act is 

amended by inserting after section 1a (7 U.S.C. 1a) the following: 

‘‘SEC. 1b. REQUIREMENTS OF SECRETARY OF THE TREASURY 

REGARDING EXEMPTION OF FOREIGN EXCHANGE SWAPS 

AND FOREIGN EXCHANGE FORWARDS FROM DEFINITION 

OF THE TERM ‘SWAP’. 

‘‘(a) REQUIRED CONSIDERATIONS.—In determining whether to 

exempt foreign exchange swaps and foreign exchange forwards from 

the definition of the term ‘swap’, the Secretary of the Treasury 

(referred to in this section as the ‘Secretary’) shall consider— 

‘‘(1) whether the required trading and clearing of foreign 

exchange swaps and foreign exchange forwards would create 

systemic risk, lower transparency, or threaten the financial 

stability of the United States; 

‘‘(2) whether foreign exchange swaps and foreign exchange 

forwards are already subject to a regulatory scheme that is 

materially comparable to that established by this Act for other 

classes of swaps; 

‘‘(3) the extent to which bank regulators of participants 

in the foreign exchange market provide adequate supervision, 

including capital and margin requirements; 

‘‘(4) the extent of adequate payment and settlement systems; and 
H. R. 4173—300 

‘‘(5) the use of a potential exemption of foreign exchange 

swaps and foreign exchange forwards to evade otherwise 

applicable regulatory requirements. 

‘‘(b) DETERMINATION.—If the Secretary makes a determination 

to exempt foreign exchange swaps and foreign exchange forwards 

from the definition of the term ‘swap’, the Secretary shall submit 

to the appropriate committees of Congress a determination that 

contains— 

‘‘(1) an explanation regarding why foreign exchange swaps 

and foreign exchange forwards are qualitatively different from 

other classes of swaps in a way that would make the foreign 

exchange swaps and foreign exchange forwards ill-suited for 

regulation as swaps; and 

‘‘(2) an identification of the objective differences of foreign 

exchange swaps and foreign exchange forwards with respect 

to standard swaps that warrant an exempted status. 

‘‘(c) EFFECT OF DETERMINATION.—A determination by the Secretary under subsection (b) shall not exempt any foreign exchange 

swaps and foreign exchange forwards traded on a designated contract market or swap execution facility from any applicable antifraud and antimanipulation provision under this title.’’. 

SEC. 723. CLEARING. 

(a) CLEARING REQUIREMENT.— 

(1) IN GENERAL.—Section 2 of the Commodity Exchange 

Act (7 U.S.C. 2) is amended— 

(A) by striking subsections (d), (e), (g), and (h); and 

(B) by redesignating subsection (i) as subsection (g). 

(2) SWAPS; LIMITATION ON PARTICIPATION.—Section 2 of the 

Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph (1)) is amended by inserting after subsection (c) the 

following: 

‘‘(d) SWAPS.—Nothing in this Act (other than subparagraphs 

(A), (B), (C), (D), (G), and (H) of subsection (a)(1), subsections 

(f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a, 

4b, and 4b–1, subsections (a), (b), and (g) of section 4c, sections 

4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 

5b, 5c, 5e, and 5h, subsections (c) and (d) of section 6, sections 

6c, 6d, 8, 8a, and 9, subsections (e)(2), (f), and (h) of section 12, 

subsections (a) and (b) of section 13, sections 17, 20, 21, and 22(a)(4), 

and any other provision of this Act that is applicable to registered 

entities or Commission registrants) governs or applies to a swap. 

‘‘(e) LIMITATION ON PARTICIPATION.—It shall be unlawful for 

any person, other than an eligible contract participant, to enter 

into a swap unless the swap is entered into on, or subject to 

the rules of, a board of trade designated as a contract market 

under section 5.’’. 

(3) MANDATORY CLEARING OF SWAPS.—Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by inserting 

after subsection (g) (as redesignated by paragraph (1)(B)) the 

following: 

‘‘(h) CLEARING REQUIREMENT.— 

‘‘(1) IN GENERAL.— 

‘‘(A) STANDARD FOR CLEARING.—It shall be unlawful 

for any person to engage in a swap unless that person 

submits such swap for clearing to a derivatives clearing 
H. R. 4173—301 

organization that is registered under this Act or a derivatives clearing organization that is exempt from registration 

under this Act if the swap is required to be cleared. 

‘‘(B) OPEN ACCESS.—The rules of a derivatives clearing 

organization described in subparagraph (A) shall— 

‘‘(i) prescribe that all swaps (but not contracts 

of sale of a commodity for future delivery or options 

on such contracts) submitted to the derivatives clearing 

organization with the same terms and conditions are 

economically equivalent within the derivatives clearing 

organization and may be offset with each other within 

the derivatives clearing organization; and 

‘‘(ii) provide for non-discriminatory clearing of a 

swap (but not a contract of sale of a commodity for 

future delivery or option on such contract) executed 

bilaterally or on or through the rules of an unaffiliated 

designated contract market or swap execution facility. 

‘‘(2) COMMISSION REVIEW.— 

‘‘(A) COMMISSION-INITIATED REVIEW.— 

‘‘(i) The Commission on an ongoing basis shall 

review each swap, or any group, category, type, or 

class of swaps to make a determination as to whether 

the swap or group, category, type, or class of swaps 

should be required to be cleared. 

‘‘(ii) The Commission shall provide at least a 30- 

day public comment period regarding any determination made under clause (i). 

‘‘(B) SWAP SUBMISSIONS.— ‘‘(i) A derivatives clearing organization shall 

submit to the Commission each swap, or any group, 

category, type, or class of swaps that it plans to accept 

for clearing, and provide notice to its members (in 

a manner to be determined by the Commission) of 

the submission. 

‘‘(ii) Any swap or group, category, type, or class 

of swaps listed for clearing by a derivative clearing 

organization as of the date of enactment of this subsection shall be considered submitted to the Commission. 

‘‘(iii) The Commission shall— 

‘‘(I) make available to the public submissions 

received under clauses (i) and (ii); 

‘‘(II) review each submission made under 

clauses (i) and (ii), and determine whether the 

swap, or group, category, type, or class of swaps 

described in the submission is required to be 

cleared; and 

‘‘(III) provide at least a 30-day public comment 

period regarding its determination as to whether 

the clearing requirement under paragraph (1)(A) 

shall apply to the submission. 

‘‘(C) DEADLINE.—The Commission shall make its determination under subparagraph (B)(iii) not later than 90 

days after receiving a submission made under subparagraphs (B)(i) and (B)(ii), unless the submitting derivatives 

clearing organization agrees to an extension for the time 

limitation established under this subparagraph. 
H. R. 4173—302 

‘‘(D) DETERMINATION.— 

‘‘(i) In reviewing a submission made under 

subparagraph (B), the Commission shall review 

whether the submission is consistent with section 

5b(c)(2). 

‘‘(ii) In reviewing a swap, group of swaps, or class 

of swaps pursuant to subparagraph (A) or a submission 

made under subparagraph (B), the Commission shall 

take into account the following factors: 

‘‘(I) The existence of significant outstanding 

notional exposures, trading liquidity, and adequate 

pricing data. 

‘‘(II) The availability of rule framework, 

capacity, operational expertise and resources, and 

credit support infrastructure to clear the contract 

on terms that are consistent with the material 

terms and trading conventions on which the contract is then traded. 

‘‘(III) The effect on the mitigation of systemic 

risk, taking into account the size of the market 

for such contract and the resources of the derivatives clearing organization available to clear the 

contract. 

‘‘(IV) The effect on competition, including 

appropriate fees and charges applied to clearing. 

‘‘(V) The existence of reasonable legal certainty 

in the event of the insolvency of the relevant 

derivatives clearing organization or 1 or more of 

its clearing members with regard to the treatment 

of customer and swap counterparty positions, 

funds, and property. 

‘‘(iii) In making a determination under subparagraph (A) or (B)(iii) that the clearing requirement shall 

apply, the Commission may require such terms and 

conditions to the requirement as the Commission determines to be appropriate. 

‘‘(E) RULES.—Not later than 1 year after the date of 

the enactment of this subsection, the Commission shall 

adopt rules for a derivatives clearing organization’s submission for review, pursuant to this paragraph, of a swap, 

or a group, category, type, or class of swaps, that it seeks 

to accept for clearing. Nothing in this subparagraph limits 

the Commission from making a determination under 

subparagraph (B)(iii) for swaps described in subparagraph 

(B)(ii). 

‘‘(3) STAY OF CLEARING REQUIREMENT.— ‘‘(A) IN GENERAL.—After making a determination 

pursuant to paragraph (2)(B), the Commission, on application of a counterparty to a swap or on its own initiative, 

may stay the clearing requirement of paragraph (1) until 

the Commission completes a review of the terms of the 

swap (or the group, category, type, or class of swaps) and 

the clearing arrangement. 

‘‘(B) DEADLINE.—The Commission shall complete a 

review undertaken pursuant to subparagraph (A) not later 

than 90 days after issuance of the stay, unless the derivatives clearing organization that clears the swap, or group, 
H. R. 4173—303 

category, type, or class of swaps agrees to an extension 

of the time limitation established under this subparagraph. 

‘‘(C) DETERMINATION.—Upon completion of the review 

undertaken pursuant to subparagraph (A), the Commission 

may— 

‘‘(i) determine, unconditionally or subject to such 

terms and conditions as the Commission determines 

to be appropriate, that the swap, or group, category, 

type, or class of swaps must be cleared pursuant to 

this subsection if it finds that such clearing is consistent with paragraph (2)(D); or 

‘‘(ii) determine that the clearing requirement of 

paragraph (1) shall not apply to the swap, or group, 

category, type, or class of swaps. 

‘‘(D) RULES.—Not later than 1 year after the date 

of the enactment of the Wall Street Transparency and 

Accountability Act of 2010, the Commission shall adopt 

rules for reviewing, pursuant to this paragraph, a derivatives clearing organization’s clearing of a swap, or a group, 

category, type, or class of swaps, that it has accepted for 

clearing. 

‘‘(4) PREVENTION OF EVASION.— 

‘‘(A) IN GENERAL.—The Commission shall prescribe 

rules under this subsection (and issue interpretations of 

rules prescribed under this subsection) as determined by 

the Commission to be necessary to prevent evasions of 

the mandatory clearing requirements under this Act. 

‘‘(B) DUTY OF COMMISSION TO INVESTIGATE AND TAKE

CERTAIN ACTIONS.—To the extent the Commission finds 

that a particular swap, group, category, type, or class of 

swaps would otherwise be subject to mandatory clearing 

but no derivatives clearing organization has listed the 

swap, group, category, type, or class of swaps for clearing, 

the Commission shall— 

‘‘(i) investigate the relevant facts and circumstances; 

‘‘(ii) within 30 days issue a public report containing 

the results of the investigation; and 

‘‘(iii) take such actions as the Commission determines to be necessary and in the public interest, which 

may include requiring the retaining of adequate 

margin or capital by parties to the swap, group, category, type, or class of swaps. 

‘‘(C) EFFECT ON AUTHORITY.—Nothing in this paragraph— 

‘‘(i) authorizes the Commission to adopt rules 

requiring a derivatives clearing organization to list 

for clearing a swap, group, category, type, or class 

of swaps if the clearing of the swap, group, category, 

type, or class of swaps would threaten the financial 

integrity of the derivatives clearing organization; and 

‘‘(ii) affects the authority of the Commission to 

enforce the open access provisions of paragraph (1)(B) 

with respect to a swap, group, category, type, or class 

of swaps that is listed for clearing by a derivatives 

clearing organization. 
H. R. 4173—304 

‘‘(5) REPORTING TRANSITION RULES.—Rules adopted by the 

Commission under this section shall provide for the reporting 

of data, as follows: 

‘‘(A) Swaps entered into before the date of the enactment of this subsection shall be reported to a registered 

swap data repository or the Commission no later than 

180 days after the effective date of this subsection. 

‘‘(B) Swaps entered into on or after such date of enactment shall be reported to a registered swap data repository 

or the Commission no later than the later of— 

‘‘(i) 90 days after such effective date; or 

‘‘(ii) such other time after entering into the swap 

as the Commission may prescribe by rule or regulation. 

‘‘(6) CLEARING TRANSITION RULES.— 

‘‘(A) Swaps entered into before the date of the enactment of this subsection are exempt from the clearing 

requirements of this subsection if reported pursuant to 

paragraph (5)(A). 

‘‘(B) Swaps entered into before application of the 

clearing requirement pursuant to this subsection are 

exempt from the clearing requirements of this subsection 

if reported pursuant to paragraph (5)(B). 

‘‘(7) EXCEPTIONS.— 

‘‘(A) IN GENERAL.—The requirements of paragraph 

(1)(A) shall not apply to a swap if 1 of the counterparties 

to the swap— 

‘‘(i) is not a financial entity; 

‘‘(ii) is using swaps to hedge or mitigate commercial 

risk; and 

‘‘(iii) notifies the Commission, in a manner set 

forth by the Commission, how it generally meets its 

financial obligations associated with entering into noncleared swaps. 

‘‘(B) OPTION TO CLEAR.—The application of the clearing 

exception in subparagraph (A) is solely at the discretion 

of the counterparty to the swap that meets the conditions 

of clauses (i) through (iii) of subparagraph (A). 

‘‘(C) FINANCIAL ENTITY DEFINITION.— ‘‘(i) IN GENERAL.—For the purposes of this paragraph, the term ‘financial entity’ means— 

‘‘(I) a swap dealer; 

‘‘(II) a security-based swap dealer; 

‘‘(III) a major swap participant; 

‘‘(IV) a major security-based swap participant; 

‘‘(V) a commodity pool; 

‘‘(VI) a private fund as defined in section 

202(a) of the Investment Advisers Act of 1940 (15 

U.S.C. 80-b-2(a)); 

‘‘(VII) an employee benefit plan as defined in 

paragraphs (3) and (32) of section 3 of the 

Employee Retirement Income Security Act of 1974 

(29 U.S.C. 1002); 

‘‘(VIII) a person predominantly engaged in 

activities that are in the business of banking, or 

in activities that are financial in nature, as defined 

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

of 1956. 
H. R. 4173—305 

‘‘(ii) EXCLUSION.—The Commission shall consider 

whether to exempt small banks, savings associations, 

farm credit system institutions, and credit unions, 

including— 

‘‘(I) depository institutions with total assets 

of $10,000,000,000 or less; 

‘‘(II) farm credit system institutions with total 

assets of $10,000,000,000 or less; or 

‘‘(III) credit unions with total assets of 

$10,000,000,000 or less. 

‘‘(iii) LIMITATION.—Such definition shall not 

include an entity whose primary business is providing 

financing, and uses derivatives for the purpose of 

hedging underlying commercial risks related to interest 

rate and foreign currency exposures, 90 percent or 

more of which arise from financing that facilitates 

the purchase or lease of products, 90 percent or more 

of which are manufactured by the parent company 

or another subsidiary of the parent company. 

‘‘(D) TREATMENT OF AFFILIATES.— 

‘‘(i) IN GENERAL.—An affiliate of a person that 

qualifies for an exception under subparagraph (A) 

(including affiliate entities predominantly engaged in 

providing financing for the purchase of the merchandise or manufactured goods of the person) may qualify 

for the exception only if the affiliate, acting on behalf 

of the person and as an agent, uses the swap to hedge 

or mitigate the commercial risk of the person or other 

affiliate of the person that is not a financial entity. 

‘‘(ii) PROHIBITION RELATING TO CERTAIN AFFILI- ATES.—The exception in clause (i) shall not apply if 

the affiliate is— 

‘‘(I) a swap dealer; 

‘‘(II) a security-based swap dealer; 

‘‘(III) a major swap participant; 

‘‘(IV) a major security-based swap participant; 

‘‘(V) an issuer that would be an investment 

company, as defined in section 3 of the Investment 

Company Act of 1940 (15 U.S.C. 80a–3), but for 

paragraph (1) or (7) of subsection (c) of that Act 

(15 U.S.C. 80a–3(c)); 

‘‘(VI) a commodity pool; or 

‘‘(VII) a bank holding company with over $50,000,000,000 in consolidated assets. 

‘‘(iii) TRANSITION RULE FOR AFFILIATES.—An affiliate, subsidiary, or a wholly owned entity of a person 

that qualifies for an exception under subparagraph 

(A) and is predominantly engaged in providing 

financing for the purchase or lease of merchandise 

or manufactured goods of the person shall be exempt 

from the margin requirement described in section 4s(e) 

and the clearing requirement described in paragraph 

(1) with regard to swaps entered into to mitigate the 

risk of the financing activities for not less than a 

2-year period beginning on the date of enactment of 

this clause. 

‘‘(E) ELECTION OF COUNTERPARTY.— 
H. R. 4173—306 

‘‘(i) SWAPS REQUIRED TO BE CLEARED.—With 

respect to any swap that is subject to the mandatory 

clearing requirement under this subsection and entered 

into by a swap dealer or a major swap participant 

with a counterparty that is not a swap dealer, major 

swap participant, security-based swap dealer, or major 

security-based swap participant, the counterparty shall 

have the sole right to select the derivatives clearing 

organization at which the swap will be cleared. 

‘‘(ii) SWAPS NOT REQUIRED TO BE CLEARED.—With 

respect to any swap that is not subject to the mandatory clearing requirement under this subsection and 

entered into by a swap dealer or a major swap participant with a counterparty that is not a swap dealer, 

major swap participant, security-based swap dealer, 

or major security-based swap participant, the 

counterparty— 

‘‘(I) may elect to require clearing of the swap; 

and 

‘‘(II) shall have the sole right to select the 

derivatives clearing organization at which the 

swap will be cleared. 

‘‘(F) ABUSE OF EXCEPTION.—The Commission may prescribe such rules or issue interpretations of the rules as 

the Commission determines to be necessary to prevent 

abuse of the exceptions described in this paragraph. The 

Commission may also request information from those persons claiming the clearing exception as necessary to prevent 

abuse of the exceptions described in this paragraph. 

‘‘(8) TRADE EXECUTION.— ‘‘(A) IN GENERAL.—With respect to transactions 

involving swaps subject to the clearing requirement of paragraph (1), counterparties shall— 

‘‘(i) execute the transaction on a board of trade 

designated as a contract market under section 5; or 

‘‘(ii) execute the transaction on a swap execution 

facility registered under 5h or a swap execution facility 

that is exempt from registration under section 5h(f) 

of this Act. 

‘‘(B) EXCEPTION.—The requirements of clauses (i) and 

(ii) of subparagraph (A) shall not apply if no board of 

trade or swap execution facility makes the swap available 

to trade or for swap transactions subject to the clearing 

exception under paragraph (7).’’. 

(b) COMMODITY EXCHANGE ACT.—Section 2 of the Commodity 

Exchange Act (7 U.S.C. 2) is amended by adding at the end the 

following: 

‘‘(j) COMMITTEE APPROVAL BY BOARD.—Exemptions from the 

requirements of subsection (h)(1) to clear a swap and subsection 

(h)(8) to execute a swap through a board of trade or swap execution 

facility shall be available to a counterparty that is an issuer of 

securities that are registered under section 12 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78l) or that is required to file 

reports pursuant to section 15(d) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78o) only if an appropriate committee of the 

issuer’s board or governing body has reviewed and approved its 

decision to enter into swaps that are subject to such exemptions.’’. 
H. R. 4173—307 

(c) GRANDFATHER PROVISIONS.— 

(1) LEGAL CERTAINTY FOR CERTAIN TRANSACTIONS IN EXEMPT

COMMODITIES.—Not later than 60 days after the date of enactment of this Act, a person may submit to the Commodity 

Futures Trading Commission a petition to remain subject to 

section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) 

(as in effect on the day before the date of enactment of this 

Act). 

(2) CONSIDERATION; AUTHORITY OF COMMODITY FUTURES

TRADING COMMISSION.—The Commodity Futures Trading 

Commission— 

(A) shall consider any petition submitted under 

subparagraph (A) in a prompt manner; and 

(B) may allow a person to continue operating subject 

to section 2(h) of the Commodity Exchange Act (7 U.S.C. 

2(h)) (as in effect on the day before the date of enactment 

of this Act) for not longer than a 1-year period. 

(3) AGRICULTURAL SWAPS.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), no person shall offer to enter into, enter into, or confirm 

the execution of, any swap in an agricultural commodity 

(as defined by the Commodity Futures Trading Commission). 

(B) EXCEPTION.—Notwithstanding subparagraph (A), a 

person may offer to enter into, enter into, or confirm the 

execution of, any swap in an agricultural commodity pursuant to section 4(c) of the Commodity Exchange Act (7 

U.S.C. 6(c)) or any rule, regulation, or order issued thereunder (including any rule, regulation, or order in effect 

as of the date of enactment of this Act) by the Commodity 

Futures Trading Commission to allow swaps under such 

terms and conditions as the Commission shall prescribe. 

(4) REQUIRED REPORTING.—If the exception described in 

section 2(h)(8)(B) of the Commodity Exchange Act applies, the 

counterparties shall comply with any recordkeeping and transaction reporting requirements that may be prescribed by the 

Commission with respect to swaps subject to section 2(h)(8)(B) 

of the Commodity Exchange Act. 

SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT. 

(a) SEGREGATION REQUIREMENTS FOR CLEARED SWAPS.—Section 

4d of the Commodity Exchange Act (7 U.S.C. 6d) (as amended 

by section 732) is amended by adding at the end the following: 

‘‘(f) SWAPS.— 

‘‘(1) REGISTRATION REQUIREMENT.—It shall be unlawful for 

any person to accept any money, securities, or property (or 

to extend any credit in lieu of money, securities, or property) 

from, for, or on behalf of a swaps customer to margin, guarantee, or secure a swap cleared by or through a derivatives 

clearing organization (including money, securities, or property 

accruing to the customer as the result of such a swap), unless 

the person shall have registered under this Act with the 

Commission as a futures commission merchant, and the registration shall not have expired nor been suspended nor 

revoked. 

‘‘(2) CLEARED SWAPS.— 
H. R. 4173—308 

‘‘(A) SEGREGATION REQUIRED.—A futures commission 

merchant shall treat and deal with all money, securities, 

and property of any swaps customer received to margin, 

guarantee, or secure a swap cleared by or though a derivatives clearing organization (including money, securities, or 

property accruing to the swaps customer as the result 

of such a swap) as belonging to the swaps customer. 

‘‘(B) COMMINGLING PROHIBITED.—Money, securities, 

and property of a swaps customer described in subparagraph (A) shall be separately accounted for and shall not 

be commingled with the funds of the futures commission 

merchant or be used to margin, secure, or guarantee any 

trades or contracts of any swaps customer or person other 

than the person for whom the same are held. 

‘‘(3) EXCEPTIONS.— 

‘‘(A) USE OF FUNDS.— 

‘‘(i) IN GENERAL.—Notwithstanding paragraph (2), 

money, securities, and property of swap customers of 

a futures commission merchant described in paragraph 

(2) may, for convenience, be commingled and deposited 

in the same account or accounts with any bank or 

trust company or with a derivatives clearing organization. 

‘‘(ii) WITHDRAWAL.—Notwithstanding paragraph 

(2), such share of the money, securities, and property 

described in clause (i) as in the normal course of business shall be necessary to margin, guarantee, secure, 

transfer, adjust, or settle a cleared swap with a derivatives clearing organization, or with any member of 

the derivatives clearing organization, may be withdrawn and applied to such purposes, including the 

payment of commissions, brokerage, interest, taxes, 

storage, and other charges, lawfully accruing in connection with the cleared swap. 

‘‘(B) COMMISSION ACTION.—Notwithstanding paragraph 

(2), in accordance with such terms and conditions as the 

Commission may prescribe by rule, regulation, or order, 

any money, securities, or property of the swaps customers 

of a futures commission merchant described in paragraph 

(2) may be commingled and deposited in customer accounts 

with any other money, securities, or property received by 

the futures commission merchant and required by the 

Commission to be separately accounted for and treated 

and dealt with as belonging to the swaps customer of 

the futures commission merchant. 

‘‘(4) PERMITTED INVESTMENTS.—Money described in paragraph (2) may be invested in obligations of the United States, 

in general obligations of any State or of any political subdivision 

of a State, and in obligations fully guaranteed as to principal 

and interest by the United States, or in any other investment 

that the Commission may by rule or regulation prescribe, and 

such investments shall be made in accordance with such rules 

and regulations and subject to such conditions as the Commission may prescribe. 

‘‘(5) COMMODITY CONTRACT.—A swap cleared by or through 

a derivatives clearing organization shall be considered to be 

a commodity contract as such term is defined in section 761 
H. R. 4173—309 

of title 11, United States Code, with regard to all money, 

securities, and property of any swaps customer received by 

a futures commission merchant or a derivatives clearing 

organization to margin, guarantee, or secure the swap 

(including money, securities, or property accruing to the customer as the result of the swap). 

‘‘(6) PROHIBITION.—It shall be unlawful for any person, 

including any derivatives clearing organization and any depository institution, that has received any money, securities, or 

property for deposit in a separate account or accounts as provided in paragraph (2) to hold, dispose of, or use any such 

money, securities, or property as belonging to the depositing 

futures commission merchant or any person other than the 

swaps customer of the futures commission merchant.’’. 

(b) BANKRUPTCY TREATMENT OF CLEARED SWAPS.—Section 761 

of title 11, United States Code, is amended— 

(1) in paragraph (4), by striking subparagraph (F) and 

inserting the following: 

‘‘(F)(i) any other contract, option, agreement, or transaction that is similar to a contract, option, agreement, 

or transaction referred to in this paragraph; and 

‘‘(ii) with respect to a futures commission merchant 

or a clearing organization, any other contract, option, agreement, or transaction, in each case, that is cleared by a 

clearing organization;’’; and 

(2) in paragraph (9)(A)(i), by striking ‘‘the commodity 

futures account’’ and inserting ‘‘a commodity contract account’’. 

(c) SEGREGATION REQUIREMENTS FOR UNCLEARED SWAPS.—Section 4s of the Commodity Exchange Act (as added by section 731) 

is amended by adding at the end the following: 

‘‘(l) SEGREGATION REQUIREMENTS.— 

‘‘(1) SEGREGATION OF ASSETS HELD AS COLLATERAL IN

UNCLEARED SWAP TRANSACTIONS.— 

‘‘(A) NOTIFICATION.—A swap dealer or major swap 

participant shall be required to notify the counterparty 

of the swap dealer or major swap participant at the beginning of a swap transaction that the counterparty has the 

right to require segregation of the funds or other property 

supplied to margin, guarantee, or secure the obligations 

of the counterparty. 

‘‘(B) SEGREGATION AND MAINTENANCE OF FUNDS.—At 

the request of a counterparty to a swap that provides 

funds or other property to a swap dealer or major swap 

participant to margin, guarantee, or secure the obligations 

of the counterparty, the swap dealer or major swap participant shall— 

‘‘(i) segregate the funds or other property for the 

benefit of the counterparty; and 

‘‘(ii) in accordance with such rules and regulations 

as the Commission may promulgate, maintain the 

funds or other property in a segregated account separate from the assets and other interests of the swap 

dealer or major swap participant. 

‘‘(2) APPLICABILITY.—The requirements described in paragraph (1) shall— 
H. R. 4173—310 

‘‘(A) apply only to a swap between a counterparty and 

a swap dealer or major swap participant that is not submitted for clearing to a derivatives clearing organization; 

and 

‘‘(B)(i) not apply to variation margin payments; or 

‘‘(ii) not preclude any commercial arrangement 

regarding— 

‘‘(I) the investment of segregated funds or other 

property that may only be invested in such investments 

as the Commission may permit by rule or regulation; 

and 

‘‘(II) the related allocation of gains and losses 

resulting from any investment of the segregated funds 

or other property. 

‘‘(3) USE OF INDEPENDENT THIRD-PARTY CUSTODIANS.—The 

segregated account described in paragraph (1) shall be— 

‘‘(A) carried by an independent third-party custodian; 

and 

‘‘(B) designated as a segregated account for and on 

behalf of the counterparty. 

‘‘(4) REPORTING REQUIREMENT.—If the counterparty does 

not choose to require segregation of the funds or other property 

supplied to margin, guarantee, or secure the obligations of 

the counterparty, the swap dealer or major swap participant 

shall report to the counterparty of the swap dealer or major 

swap participant on a quarterly basis that the back office 

procedures of the swap dealer or major swap participant 

relating to margin and collateral requirements are in compliance with the agreement of the counterparties.’’. 

SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS. 

(a) REGISTRATION REQUIREMENT.—Section 5b of the Commodity 

Exchange Act (7 U.S.C. 7a–1) is amended by striking subsections 

(a) and (b) and inserting the following: 

‘‘(a) REGISTRATION REQUIREMENT.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 

it shall be unlawful for a derivatives clearing organization, 

directly or indirectly, to make use of the mails or any means 

or instrumentality of interstate commerce to perform the functions of a derivatives clearing organization with respect to— 

‘‘(A) a contract of sale of a commodity for future 

delivery (or an option on the contract of sale) or option 

on a commodity, in each case, unless the contract or option 

is— 

‘‘(i) excluded from this Act by subsection 

(a)(1)(C)(i), (c), or (f) of section 2; or 

‘‘(ii) a security futures product cleared by a clearing 

agency registered with the Securities and Exchange 

Commission under the Securities Exchange Act of 1934 

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

‘‘(B) a swap. 

‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to a derivatives clearing organization that is registered with the Commission. 

‘‘(b) VOLUNTARY REGISTRATION.—A person that clears 1 or more 

agreements, contracts, or transactions that are not required to 
H. R. 4173—311 

be cleared under this Act may register with the Commission as 

a derivatives clearing organization.’’. 

(b) REGISTRATION FOR DEPOSITORY INSTITUTIONS AND CLEARING

AGENCIES; EXEMPTIONS; COMPLIANCE OFFICER; ANNUAL REPORTS.— 

Section 5b of the Commodity Exchange Act (7 U.S.C. 7a–1) is 

amended by adding at the end the following: 

‘‘(g) EXISTING DEPOSITORY INSTITUTIONS AND CLEARING AGENCIES.— 

‘‘(1) IN GENERAL.—A depository institution or clearing 

agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 

78a et seq.) that is required to be registered as a derivatives 

clearing organization under this section is deemed to be registered under this section to the extent that, before the date 

of enactment of this subsection— 

‘‘(A) the depository institution cleared swaps as a multilateral clearing organization; or 

‘‘(B) the clearing agency cleared swaps. 

‘‘(2) CONVERSION OF DEPOSITORY INSTITUTIONS.—A depository institution to which this subsection applies may, by the 

vote of the shareholders owning not less than 51 percent of 

the voting interests of the depository institution, be converted 

into a State corporation, partnership, limited liability company, 

or similar legal form pursuant to a plan of conversion, if the 

conversion is not in contravention of applicable State law. 

‘‘(3) SHARING OF INFORMATION.—The Securities and 

Exchange Commission shall make available to the Commission, 

upon request, all information determined to be relevant by 

the Securities and Exchange Commission regarding a clearing 

agency deemed to be registered with the Commission under 

paragraph (1). 

‘‘(h) EXEMPTIONS.—The Commission may exempt, conditionally 

or unconditionally, a derivatives clearing organization from registration under this section for the clearing of swaps if the Commission 

determines that the derivatives clearing organization is subject 

to comparable, comprehensive supervision and regulation by the 

Securities and Exchange Commission or the appropriate government authorities in the home country of the organization. Such 

conditions may include, but are not limited to, requiring that the 

derivatives clearing organization be available for inspection by the 

Commission and make available all information requested by the 

Commission. 

‘‘(i) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(1) IN GENERAL.—Each derivatives clearing organization 

shall designate an individual to serve as a chief compliance 

officer. 

‘‘(2) DUTIES.—The chief compliance officer shall— 

‘‘(A) report directly to the board or to the senior officer 

of the derivatives clearing organization; 

‘‘(B) review the compliance of the derivatives clearing 

organization with respect to the core principles described 

in subsection (c)(2); 

‘‘(C) in consultation with the board of the derivatives 

clearing organization, a body performing a function similar 

to the board of the derivatives clearing organization, or 

the senior officer of the derivatives clearing organization, 

resolve any conflicts of interest that may arise; 
H. R. 4173—312 

‘‘(D) be responsible for administering each policy and 

procedure that is required to be established pursuant to 

this section; 

‘‘(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions, 

including each rule prescribed by the Commission under 

this section; 

‘‘(F) establish procedures for the remediation of noncompliance issues identified by the compliance officer 

through any— 

‘‘(i) compliance office review; 

‘‘(ii) look-back; 

‘‘(iii) internal or external audit finding; 

‘‘(iv) self-reported error; or 

‘‘(v) validated complaint; and 

‘‘(G) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

‘‘(3) ANNUAL REPORTS.— 

‘‘(A) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

‘‘(i) the compliance of the derivatives clearing 

organization of the compliance officer with respect to 

this Act (including regulations); and 

‘‘(ii) each policy and procedure of the derivatives 

clearing organization of the compliance officer 

(including the code of ethics and conflict of interest 

policies of the derivatives clearing organization). 

‘‘(B) REQUIREMENTS.—A compliance report under 

subparagraph (A) shall— 

‘‘(i) accompany each appropriate financial report 

of the derivatives clearing organization that is required 

to be furnished to the Commission pursuant to this 

section; and 

‘‘(ii) include a certification that, under penalty of 

law, the compliance report is accurate and complete.’’. 

(c) CORE PRINCIPLES FOR DERIVATIVES CLEARING ORGANIZATIONS.—Section 5b(c) of the Commodity Exchange Act (7 U.S.C. 

7a–1(c)) is amended by striking paragraph (2) and inserting the 

following: 

‘‘(2) CORE PRINCIPLES FOR DERIVATIVES CLEARING ORGANIZATIONS.— 

‘‘(A) COMPLIANCE.— 

‘‘(i) IN GENERAL.—To be registered and to maintain 

registration as a derivatives clearing organization, a 

derivatives clearing organization shall comply with 

each core principle described in this paragraph and 

any requirement that the Commission may impose by 

rule or regulation pursuant to section 8a(5). 

‘‘(ii) DISCRETION OF DERIVATIVES CLEARING

ORGANIZATION.—Subject to any rule or regulation prescribed by the Commission, a derivatives clearing 

organization shall have reasonable discretion in establishing the manner by which the derivatives clearing 
H. R. 4173—313 

organization complies with each core principle 

described in this paragraph. 

‘‘(B) FINANCIAL RESOURCES.— 

‘‘(i) IN GENERAL.—Each derivatives clearing 

organization shall have adequate financial, operational, 

and managerial resources, as determined by the 

Commission, to discharge each responsibility of the 

derivatives clearing organization. 

‘‘(ii) MINIMUM AMOUNT OF FINANCIAL RESOURCES.— 

Each derivatives clearing organization shall possess 

financial resources that, at a minimum, exceed the 

total amount that would— 

‘‘(I) enable the organization to meet its financial obligations to its members and participants 

notwithstanding a default by the member or 

participant creating the largest financial exposure 

for that organization in extreme but plausible 

market conditions; and 

‘‘(II) enable the derivatives clearing organization to cover the operating costs of the derivatives 

clearing organization for a period of 1 year (as 

calculated on a rolling basis). 

‘‘(C) PARTICIPANT AND PRODUCT ELIGIBILITY.— 

‘‘(i) IN GENERAL.—Each derivatives clearing 

organization shall establish— 

‘‘(I) appropriate admission and continuing 

eligibility standards (including sufficient financial 

resources and operational capacity to meet obligations arising from participation in the derivatives 

clearing organization) for members of, and participants in, the derivatives clearing organization; and 

‘‘(II) appropriate standards for determining the 

eligibility of agreements, contracts, or transactions 

submitted to the derivatives clearing organization 

for clearing. 

‘‘(ii) REQUIRED PROCEDURES.—Each derivatives 

clearing organization shall establish and implement 

procedures to verify, on an ongoing basis, the compliance of each participation and membership requirement of the derivatives clearing organization. 

‘‘(iii) REQUIREMENTS.—The participation and membership requirements of each derivatives clearing 

organization shall— 

‘‘(I) be objective; 

‘‘(II) be publicly disclosed; and 

‘‘(III) permit fair and open access. 

‘‘(D) RISK MANAGEMENT.— ‘‘(i) IN GENERAL.—Each derivatives clearing 

organization shall ensure that the derivatives clearing 

organization possesses the ability to manage the risks 

associated with discharging the responsibilities of the 

derivatives clearing organization through the use of 

appropriate tools and procedures. 

‘‘(ii) MEASUREMENT OF CREDIT EXPOSURE.—Each 

derivatives clearing organization shall— 

‘‘(I) not less than once during each business 

day of the derivatives clearing organization, 
H. R. 4173—314 

measure the credit exposures of the derivatives 

clearing organization to each member and participant of the derivatives clearing organization; and 

‘‘(II) monitor each exposure described in subclause (I) periodically during the business day of 

the derivatives clearing organization. 

‘‘(iii) LIMITATION OF EXPOSURE TO POTENTIAL

LOSSES FROM DEFAULTS.—Each derivatives clearing 

organization, through margin requirements and other 

risk control mechanisms, shall limit the exposure of 

the derivatives clearing organization to potential losses 

from defaults by members and participants of the 

derivatives clearing organization to ensure that— 

‘‘(I) the operations of the derivatives clearing 

organization would not be disrupted; and 

‘‘(II) nondefaulting members or participants 

would not be exposed to losses that nondefaulting 

members or participants cannot anticipate or control. 

‘‘(iv) MARGIN REQUIREMENTS.—The margin 

required from each member and participant of a derivatives clearing organization shall be sufficient to cover 

potential exposures in normal market conditions. 

‘‘(v) REQUIREMENTS REGARDING MODELS AND

PARAMETERS.—Each model and parameter used in setting margin requirements under clause (iv) shall be— 

‘‘(I) risk-based; and 

‘‘(II) reviewed on a regular basis. 

‘‘(E) SETTLEMENT PROCEDURES.—Each derivatives 

clearing organization shall— 

‘‘(i) complete money settlements on a timely basis 

(but not less frequently than once each business day); 

‘‘(ii) employ money settlement arrangements to 

eliminate or strictly limit the exposure of the derivatives clearing organization to settlement bank risks 

(including credit and liquidity risks from the use of 

banks to effect money settlements); 

‘‘(iii) ensure that money settlements are final when 

effected; 

‘‘(iv) maintain an accurate record of the flow of 

funds associated with each money settlement; 

‘‘(v) possess the ability to comply with each term 

and condition of any permitted netting or offset 

arrangement with any other clearing organization; 

‘‘(vi) regarding physical settlements, establish 

rules that clearly state each obligation of the derivatives clearing organization with respect to physical 

deliveries; and 

‘‘(vii) ensure that each risk arising from an obligation described in clause (vi) is identified and managed. 

‘‘(F) TREATMENT OF FUNDS.— 

‘‘(i) REQUIRED STANDARDS AND PROCEDURES.—Each 

derivatives clearing organization shall establish standards and procedures that are designed to protect and 

ensure the safety of member and participant funds 

and assets. 
H. R. 4173—315 

‘‘(ii) HOLDING OF FUNDS AND ASSETS.—Each derivatives clearing organization shall hold member and 

participant funds and assets in a manner by which 

to minimize the risk of loss or of delay in the access 

by the derivatives clearing organization to the assets 

and funds. 

‘‘(iii) PERMISSIBLE INVESTMENTS.—Funds and 

assets invested by a derivatives clearing organization 

shall be held in instruments with minimal credit, 

market, and liquidity risks. 

‘‘(G) DEFAULT RULES AND PROCEDURES.— 

‘‘(i) IN GENERAL.—Each derivatives clearing 

organization shall have rules and procedures designed 

to allow for the efficient, fair, and safe management 

of events during which members or participants— 

‘‘(I) become insolvent; or 

‘‘(II) otherwise default on the obligations of 

the members or participants to the derivatives 

clearing organization. 

‘‘(ii) DEFAULT PROCEDURES.—Each derivatives 

clearing organization shall— 

‘‘(I) clearly state the default procedures of the 

derivatives clearing organization; 

‘‘(II) make publicly available the default rules 

of the derivatives clearing organization; and 

‘‘(III) ensure that the derivatives clearing 

organization may take timely action— 

‘‘(aa) to contain losses and liquidity pressures; and 

‘‘(bb) to continue meeting each obligation 

of the derivatives clearing organization. 

‘‘(H) RULE ENFORCEMENT.—Each derivatives clearing 

organization shall— 

‘‘(i) maintain adequate arrangements and 

resources for— 

‘‘(I) the effective monitoring and enforcement 

of compliance with the rules of the derivatives 

clearing organization; and 

‘‘(II) the resolution of disputes; 

‘‘(ii) have the authority and ability to discipline, 

limit, suspend, or terminate the activities of a member 

or participant due to a violation by the member or 

participant of any rule of the derivatives clearing 

organization; and 

‘‘(iii) report to the Commission regarding rule 

enforcement activities and sanctions imposed against 

members and participants as provided in clause (ii). 

‘‘(I) SYSTEM SAFEGUARDS.—Each derivatives clearing 

organization shall— 

‘‘(i) establish and maintain a program of risk analysis and oversight to identify and minimize sources 

of operational risk through the development of appropriate controls and procedures, and automated systems, that are reliable, secure, and have adequate scalable capacity; 
H. R. 4173—316 

‘‘(ii) establish and maintain emergency procedures, 

backup facilities, and a plan for disaster recovery that 

allows for— 

‘‘(I) the timely recovery and resumption of 

operations of the derivatives clearing organization; 

and 

‘‘(II) the fulfillment of each obligation and 

responsibility of the derivatives clearing organization; and 

‘‘(iii) periodically conduct tests to verify that the 

backup resources of the derivatives clearing organization are sufficient to ensure daily processing, clearing, 

and settlement. 

‘‘(J) REPORTING.—Each derivatives clearing organization shall provide to the Commission all information that 

the Commission determines to be necessary to conduct 

oversight of the derivatives clearing organization. 

‘‘(K) RECORDKEEPING.—Each derivatives clearing 

organization shall maintain records of all activities related 

to the business of the derivatives clearing organization 

as a derivatives clearing organization— 

‘‘(i) in a form and manner that is acceptable to 

the Commission; and 

‘‘(ii) for a period of not less than 5 years. 

‘‘(L) PUBLIC INFORMATION.— 

‘‘(i) IN GENERAL.—Each derivatives clearing 

organization shall provide to market participants sufficient information to enable the market participants 

to identify and evaluate accurately the risks and costs 

associated with using the services of the derivatives 

clearing organization. 

‘‘(ii) AVAILABILITY OF INFORMATION.—Each derivatives clearing organization shall make information concerning the rules and operating and default procedures 

governing the clearing and settlement systems of the 

derivatives clearing organization available to market 

participants. 

‘‘(iii) PUBLIC DISCLOSURE.—Each derivatives 

clearing organization shall disclose publicly and to the 

Commission information concerning— 

‘‘(I) the terms and conditions of each contract, 

agreement, and transaction cleared and settled by 

the derivatives clearing organization; 

‘‘(II) each clearing and other fee that the 

derivatives clearing organization charges the members and participants of the derivatives clearing 

organization; 

‘‘(III) the margin-setting methodology, and the 

size and composition, of the financial resource 

package of the derivatives clearing organization; 

‘‘(IV) daily settlement prices, volume, and open 

interest for each contract settled or cleared by 

the derivatives clearing organization; and 

‘‘(V) any other matter relevant to participation 

in the settlement and clearing activities of the 

derivatives clearing organization. 
H. R. 4173—317 

‘‘(M) INFORMATION-SHARING.—Each derivatives 

clearing organization shall— 

‘‘(i) enter into, and abide by the terms of, each 

appropriate and applicable domestic and international 

information-sharing agreement; and 

‘‘(ii) use relevant information obtained from each 

agreement described in clause (i) in carrying out the 

risk management program of the derivatives clearing 

organization. 

‘‘(N) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this Act, a derivatives clearing organization shall not— 

‘‘(i) adopt any rule or take any action that results 

in any unreasonable restraint of trade; or 

‘‘(ii) impose any material anticompetitive burden. 

‘‘(O) GOVERNANCE FITNESS STANDARDS.— 

‘‘(i) GOVERNANCE ARRANGEMENTS.—Each derivatives clearing organization shall establish governance 

arrangements that are transparent— 

‘‘(I) to fulfill public interest requirements; and 

‘‘(II) to permit the consideration of the views 

of owners and participants. 

‘‘(ii) FITNESS STANDARDS.—Each derivatives 

clearing organization shall establish and enforce appropriate fitness standards for— 

‘‘(I) directors; 

‘‘(II) members of any disciplinary committee; 

‘‘(III) members of the derivatives clearing 

organization; 

‘‘(IV) any other individual or entity with direct 

access to the settlement or clearing activities of 

the derivatives clearing organization; and 

‘‘(V) any party affiliated with any individual 

or entity described in this clause. 

‘‘(P) CONFLICTS OF INTEREST.—Each derivatives 

clearing organization shall— 

‘‘(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the 

derivatives clearing organization; and 

‘‘(ii) establish a process for resolving conflicts of 

interest described in clause (i). 

‘‘(Q) COMPOSITION OF GOVERNING BOARDS.—Each 

derivatives clearing organization shall ensure that the composition of the governing board or committee of the derivatives clearing organization includes market participants. 

‘‘(R) LEGAL RISK.—Each derivatives clearing organization shall have a well-founded, transparent, and enforceable 

legal framework for each aspect of the activities of the 

derivatives clearing organization.’’. 

(d) CONFLICTS OF INTEREST.—The Commodity Futures Trading 

Commission shall adopt rules mitigating conflicts of interest in 

connection with the conduct of business by a swap dealer or a 

major swap participant with a derivatives clearing organization, 

board of trade, or a swap execution facility that clears or trades 

swaps in which the swap dealer or major swap participant has 

a material debt or material equity investment. 
H. R. 4173—318 

(e) REPORTING REQUIREMENTS.—Section 5b of the Commodity 

Exchange Act (7 U.S.C. 7a–1) (as amended by subsection (b)) is 

amended by adding at the end the following: 

‘‘(k) REPORTING REQUIREMENTS.— 

‘‘(1) DUTY OF DERIVATIVES CLEARING ORGANIZATIONS.—Each 

derivatives clearing organization that clears swaps shall provide 

to the Commission all information that is determined by the 

Commission to be necessary to perform each responsibility of 

the Commission under this Act. 

‘‘(2) DATA COLLECTION AND MAINTENANCE REQUIREMENTS.— 

The Commission shall adopt data collection and maintenance 

requirements for swaps cleared by derivatives clearing 

organizations that are comparable to the corresponding requirements for— 

‘‘(A) swaps data reported to swap data repositories; 

and 

‘‘(B) swaps traded on swap execution facilities. 

‘‘(3) REPORTS ON SECURITY-BASED SWAP AGREEMENTS TO

BE SHARED WITH THE SECURITIES AND EXCHANGE COMMISSION.— 

‘‘(A) IN GENERAL.—A derivatives clearing organization 

that clears security-based swap agreements (as defined 

in section 1a(47)(A)(v)) shall, upon request, open to inspection and examination to the Securities and Exchange 

Commission all books and records relating to such securitybased swap agreements, consistent with the confidentiality 

and disclosure requirements of section 8. 

‘‘(B) JURISDICTION.—Nothing in this paragraph shall 

affect the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for a 

derivatives clearing organization that is registered with 

the Commission. 

‘‘(4) INFORMATION SHARING.—Subject to section 8, and upon 

request, the Commission shall share information collected 

under paragraph (2) with— 

‘‘(A) the Board; 

‘‘(B) the Securities and Exchange Commission; 

‘‘(C) each appropriate prudential regulator; 

‘‘(D) the Financial Stability Oversight Council; 

‘‘(E) the Department of Justice; and 

‘‘(F) any other person that the Commission determines 

to be appropriate, including— 

‘‘(i) foreign financial supervisors (including foreign 

futures authorities); 

‘‘(ii) foreign central banks; and 

‘‘(iii) foreign ministries. 

‘‘(5) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.— 

Before the Commission may share information with any entity 

described in paragraph (4)— 

‘‘(A) the Commission shall receive a written agreement 

from each entity stating that the entity shall abide by 

the confidentiality requirements described in section 8 

relating to the information on swap transactions that is 

provided; and 

‘‘(B) each entity shall agree to indemnify the Commission for any expenses arising from litigation relating to 

the information provided under section 8. 
H. R. 4173—319 

‘‘(6) PUBLIC INFORMATION.—Each derivatives clearing 

organization that clears swaps shall provide to the Commission 

(including any designee of the Commission) information under 

paragraph (2) in such form and at such frequency as is required 

by the Commission to comply with the public reporting requirements contained in section 2(a)(13).’’. 

(f) PUBLIC DISCLOSURE.—Section 8(e) of the Commodity 

Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence— 

(1) by inserting ‘‘, central bank and ministries,’’ after 

‘‘department’’ each place it appears; and 

(2) by striking ‘‘. is a party.’’ and inserting ‘‘, is a party.’’. 

(g) LEGAL CERTAINTY FOR IDENTIFIED BANKING PRODUCTS.— 

(1) REPEALS.—The Legal Certainty for Bank Products Act 

of 2000 (7 U.S.C. 27 et seq.) is amended— 

(A) by striking sections 404 and 407 (7 U.S.C. 27b, 

27e); 

(B) in section 402 (7 U.S.C. 27), by striking subsection 

(d); and 

(C) in section 408 (7 U.S.C. 27f)— 

(i) in subsection (c)— 

(I) by striking ‘‘in the case’’ and all that follows 

through ‘‘a hybrid’’ and inserting ‘‘in the case of 

a hybrid’’; 

(II) by striking ‘‘; or’’ and inserting a period; 

and 

(III) by striking paragraph (2); 

(ii) by striking subsection (b); and 

(iii) by redesignating subsection (c) as subsection 

(b). 

(2) LEGAL CERTAINTY FOR BANK PRODUCTS ACT OF 2000.— Section 403 of the Legal Certainty for Bank Products Act of 

2000 (7 U.S.C. 27a) is amended to read as follows: 

‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. 

‘‘(a) EXCLUSION.—Except as provided in subsection (b) or (c)— 

‘‘(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.) 

shall not apply to, and the Commodity Futures Trading 

Commission shall not exercise regulatory authority under the 

Commodity Exchange Act (7 U.S.C. 1 et seq.) with respect 

to, an identified banking product; and 

‘‘(2) the definitions of ‘security-based swap’ in section 

3(a)(68) of the Securities Exchange Act of 1934 and ‘securitybased swap agreement’ in section 1a(47)(A)(v) of the Commodity 

Exchange Act and section 3(a)(78) of the Securities Exchange 

Act of 1934 do not include any identified bank product. 

‘‘(b) EXCEPTION.—An appropriate Federal banking agency may 

except an identified banking product of a bank under its regulatory 

jurisdiction from the exclusion in subsection (a) if the agency determines, in consultation with the Commodity Futures Trading 

Commission and the Securities and Exchange Commission, that 

the product— 

‘‘(1) would meet the definition of a ‘swap’ under section 

1a(47) of the Commodity Exchange Act (7 U.S.C. 1a) or a 

‘security-based swap’ under that section 3(a)(68) of the Securities Exchange Act of 1934; and 

‘‘(2) has become known to the trade as a swap or securitybased swap, or otherwise has been structured as an identified 
H. R. 4173—320 

banking product for the purpose of evading the provisions of 

the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities 

Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange 

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

‘‘(c) EXCEPTION.—The exclusions in subsection (a) shall not 

apply to an identified bank product that— 

‘‘(1) is a product of a bank that is not under the regulatory 

jurisdiction of an appropriate Federal banking agency; 

‘‘(2) meets the definition of swap in section 1a(47) of the 

Commodity Exchange Act or security-based swap in section 

3(a)(68) of the Securities Exchange Act of 1934; and 

‘‘(3) has become known to the trade as a swap or securitybased swap, or otherwise has been structured as an identified 

banking product for the purpose of evading the provisions of 

the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities 

Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange 

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

(h) REDUCING CLEARING SYSTEMIC RISK.—Section 5b(f)(1) of 

the Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by 

adding at the end the following: ‘‘In order to minimize systemic 

risk, under no circumstances shall a derivatives clearing organization be compelled to accept the counterparty credit risk of another 

clearing organization.’’. 

SEC. 726. RULEMAKING ON CONFLICT OF INTEREST. 

(a) IN GENERAL.—In order to mitigate conflicts of interest, 

not later than 180 days after the date of enactment of the Wall 

Street Transparency and Accountability Act of 2010, the Commodity 

Futures Trading Commission shall adopt rules which may include 

numerical limits on the control of, or the voting rights with respect 

to, any derivatives clearing organization that clears swaps, or swap 

execution facility or board of trade designated as a contract market 

that posts swaps or makes swaps available for trading, by a bank 

holding company (as defined in section 2 of the Bank Holding 

Company Act of 1956 (12 U.S.C. 1841)) with total consolidated 

assets of $50,000,000,000 or more, a nonbank financial company 

(as defined in section 102) supervised by the Board, an affiliate 

of such a bank holding company or nonbank financial company, 

a swap dealer, major swap participant, or associated person of 

a swap dealer or major swap participant. 

(b) PURPOSES.—The Commission shall adopt rules if it determines, after the review described in subsection (a), that such rules 

are necessary or appropriate to improve the governance of, or to 

mitigate systemic risk, promote competition, or mitigate conflicts 

of interest in connection with a swap dealer or major swap participant’s conduct of business with, a derivatives clearing organization, 

contract market, or swap execution facility that clears or posts 

swaps or makes swaps available for trading and in which such 

swap dealer or major swap participant has a material debt or 

equity investment. 

(c) CONSIDERATIONS.—In adopting rules pursuant to this section, the Commodity Futures Trading Commission shall consider 

any conflicts of interest arising from the amount of equity owned 

by a single investor, the ability to vote, cause the vote of, or 

withhold votes entitled to be cast on any matters by the holders 

of the ownership interest, and the governance arrangements of 

any derivatives clearing organization that clears swaps, or swap 
H. R. 4173—321 

execution facility or board of trade designated as a contract market 

that posts swaps or makes swaps available for trading. 

SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA. 

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) 

is amended by adding at the end the following: 

‘‘(13) PUBLIC AVAILABILITY OF SWAP TRANSACTION DATA.— 

‘‘(A) DEFINITION OF REAL-TIME PUBLIC REPORTING.— 

In this paragraph, the term ‘real-time public reporting’ 

means to report data relating to a swap transaction, 

including price and volume, as soon as technologically practicable after the time at which the swap transaction has 

been executed. 

‘‘(B) PURPOSE.—The purpose of this section is to 

authorize the Commission to make swap transaction and 

pricing data available to the public in such form and at 

such times as the Commission determines appropriate to 

enhance price discovery. 

‘‘(C) GENERAL RULE.—The Commission is authorized 

and required to provide by rule for the public availability 

of swap transaction and pricing data as follows: 

‘‘(i) With respect to those swaps that are subject 

to the mandatory clearing requirement described in 

subsection (h)(1) (including those swaps that are 

excepted from the requirement pursuant to subsection 

(h)(7)), the Commission shall require real-time public 

reporting for such transactions. 

‘‘(ii) With respect to those swaps that are not subject to the mandatory clearing requirement described 

in subsection (h)(1), but are cleared at a registered 

derivatives clearing organization, the Commission shall 

require real-time public reporting for such transactions. 

‘‘(iii) With respect to swaps that are not cleared 

at a registered derivatives clearing organization and 

which are reported to a swap data repository or the 

Commission under subsection (h)(6), the Commission 

shall require real-time public reporting for such transactions, in a manner that does not disclose the business 

transactions and market positions of any person. 

‘‘(iv) With respect to swaps that are determined 

to be required to be cleared under subsection (h)(2) 

but are not cleared, the Commission shall require realtime public reporting for such transactions. 

‘‘(D) REGISTERED ENTITIES AND PUBLIC REPORTING.— 

The Commission may require registered entities to publicly 

disseminate the swap transaction and pricing data required 

to be reported under this paragraph. 

‘‘(E) RULEMAKING REQUIRED.—With respect to the rule 

providing for the public availability of transaction and 

pricing data for swaps described in clauses (i) and (ii) 

of subparagraph (C), the rule promulgated by the Commission shall contain provisions— 

‘‘(i) to ensure such information does not identify 

the participants; 
H. R. 4173—322 

‘‘(ii) to specify the criteria for determining what 

constitutes a large notional swap transaction (block 

trade) for particular markets and contracts; 

‘‘(iii) to specify the appropriate time delay for 

reporting large notional swap transactions (block 

trades) to the public; and 

‘‘(iv) that take into account whether the public 

disclosure will materially reduce market liquidity. 

‘‘(F) TIMELINESS OF REPORTING.—Parties to a swap 

(including agents of the parties to a swap) shall be responsible for reporting swap transaction information to the 

appropriate registered entity in a timely manner as may 

be prescribed by the Commission. 

‘‘(G) REPORTING OF SWAPS TO REGISTERED SWAP DATA

REPOSITORIES.—Each swap (whether cleared or uncleared) 

shall be reported to a registered swap data repository. 

‘‘(14) SEMIANNUAL AND ANNUAL PUBLIC REPORTING OF

AGGREGATE SWAP DATA.— 

‘‘(A) IN GENERAL.—In accordance with subparagraph 

(B), the Commission shall issue a written report on a 

semiannual and annual basis to make available to the 

public information relating to— 

‘‘(i) the trading and clearing in the major swap 

categories; and 

‘‘(ii) the market participants and developments in 

new products. 

‘‘(B) USE; CONSULTATION.—In preparing a report under 

subparagraph (A), the Commission shall— 

‘‘(i) use information from swap data repositories 

and derivatives clearing organizations; and 

‘‘(ii) consult with the Office of the Comptroller 

of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be 

necessary. 

‘‘(C) AUTHORITY OF THE COMMISSION.—The Commission 

may, by rule, regulation, or order, delegate the public 

reporting responsibilities of the Commission under this 

paragraph in accordance with such terms and conditions 

as the Commission determines to be appropriate and in 

the public interest.’’. 

SEC. 728. SWAP DATA REPOSITORIES. 

The Commodity Exchange Act is amended by inserting after 

section 20 (7 U.S.C. 24) the following: 

‘‘SEC. 21. SWAP DATA REPOSITORIES. 

‘‘(a) REGISTRATION REQUIREMENT.— 

‘‘(1) REQUIREMENT; AUTHORITY OF DERIVATIVES CLEARING

ORGANIZATION.— 

‘‘(A) IN GENERAL.—It shall be unlawful for any person, 

unless registered with the Commission, directly or 

indirectly to make use of the mails or any means or 

instrumentality of interstate commerce to perform the functions of a swap data repository. 

‘‘(B) REGISTRATION OF DERIVATIVES CLEARING

ORGANIZATIONS.—A derivatives clearing organization may 

register as a swap data repository. 
H. R. 4173—323 

‘‘(2) INSPECTION AND EXAMINATION.—Each registered swap 

data repository shall be subject to inspection and examination 

by any representative of the Commission. 

‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.— 

‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a swap data repository, the swap data repository shall comply with— 

‘‘(i) the requirements and core principles described 

in this section; and 

‘‘(ii) any requirement that the Commission may 

impose by rule or regulation pursuant to section 8a(5). 

‘‘(B) REASONABLE DISCRETION OF SWAP DATA REPOSITORY.—Unless otherwise determined by the Commission 

by rule or regulation, a swap data repository described 

in subparagraph (A) shall have reasonable discretion in 

establishing the manner in which the swap data repository 

complies with the core principles described in this section. 

‘‘(b) STANDARD SETTING.— 

‘‘(1) DATA IDENTIFICATION.— 

‘‘(A) IN GENERAL.—In accordance with subparagraph 

(B), the Commission shall prescribe standards that specify 

the data elements for each swap that shall be collected 

and maintained by each registered swap data repository. 

‘‘(B) REQUIREMENT.—In carrying out subparagraph (A), 

the Commission shall prescribe consistent data element 

standards applicable to registered entities and reporting 

counterparties. 

‘‘(2) DATA COLLECTION AND MAINTENANCE.—The Commission shall prescribe data collection and data maintenance standards for swap data repositories. 

‘‘(3) COMPARABILITY.—The standards prescribed by the 

Commission under this subsection shall be comparable to the 

data standards imposed by the Commission on derivatives 

clearing organizations in connection with their clearing of 

swaps. 

‘‘(c) DUTIES.—A swap data repository shall— 

‘‘(1) accept data prescribed by the Commission for each 

swap under subsection (b); 

‘‘(2) confirm with both counterparties to the swap the 

accuracy of the data that was submitted; 

‘‘(3) maintain the data described in paragraph (1) in such 

form, in such manner, and for such period as may be required 

by the Commission; 

‘‘(4)(A) provide direct electronic access to the Commission 

(or any designee of the Commission, including another registered entity); and 

‘‘(B) provide the information described in paragraph (1) 

in such form and at such frequency as the Commission may 

require to comply with the public reporting requirements contained in section 2(a)(13); 

‘‘(5) at the direction of the Commission, establish automated 

systems for monitoring, screening, and analyzing swap data, 

including compliance and frequency of end user clearing exemption claims by individual and affiliated entities; 

‘‘(6) maintain the privacy of any and all swap transaction 

information that the swap data repository receives from a swap 

dealer, counterparty, or any other registered entity; and 
H. R. 4173—324 

‘‘(7) on a confidential basis pursuant to section 8, upon 

request, and after notifying the Commission of the request, 

make available all data obtained by the swap data repository, 

including individual counterparty trade and position data, to— 

‘‘(A) each appropriate prudential regulator; 

‘‘(B) the Financial Stability Oversight Council; 

‘‘(C) the Securities and Exchange Commission; 

‘‘(D) the Department of Justice; and 

‘‘(E) any other person that the Commission determines 

to be appropriate, including— 

‘‘(i) foreign financial supervisors (including foreign 

futures authorities); 

‘‘(ii) foreign central banks; and 

‘‘(iii) foreign ministries; and 

‘‘(8) establish and maintain emergency procedures, backup 

facilities, and a plan for disaster recovery that allows for the 

timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the organization. 

‘‘(d) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.— 

Before the swap data repository may share information with any 

entity described in subsection (c)(7)— 

‘‘(1) the swap data repository shall receive a written agreement from each entity stating that the entity shall abide by 

the confidentiality requirements described in section 8 relating 

to the information on swap transactions that is provided; and 

‘‘(2) each entity shall agree to indemnify the swap data 

repository and the Commission for any expenses arising from 

litigation relating to the information provided under section 

8. 

‘‘(e) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— ‘‘(1) IN GENERAL.—Each swap data repository shall designate an individual to serve as a chief compliance officer. 

‘‘(2) DUTIES.—The chief compliance officer shall— 

‘‘(A) report directly to the board or to the senior officer 

of the swap data repository; 

‘‘(B) review the compliance of the swap data repository 

with respect to the requirements and core principles 

described in this section; 

‘‘(C) in consultation with the board of the swap data 

repository, a body performing a function similar to the 

board of the swap data repository, or the senior officer 

of the swap data repository, resolve any conflicts of interest 

that may arise; 

‘‘(D) be responsible for administering each policy and 

procedure that is required to be established pursuant to 

this section; 

‘‘(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions, 

including each rule prescribed by the Commission under 

this section; 

‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer 

through any— 

‘‘(i) compliance office review; 

‘‘(ii) look-back; 

‘‘(iii) internal or external audit finding; 

‘‘(iv) self-reported error; or 
H. R. 4173—325 

‘‘(v) validated complaint; and 

‘‘(G) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

‘‘(3) ANNUAL REPORTS.— 

‘‘(A) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

‘‘(i) the compliance of the swap data repository 

of the chief compliance officer with respect to this 

Act (including regulations); and 

‘‘(ii) each policy and procedure of the swap data 

repository of the chief compliance officer (including 

the code of ethics and conflict of interest policies of 

the swap data repository). 

‘‘(B) REQUIREMENTS.—A compliance report under 

subparagraph (A) shall— 

‘‘(i) accompany each appropriate financial report 

of the swap data repository that is required to be 

furnished to the Commission pursuant to this section; 

and 

‘‘(ii) include a certification that, under penalty of 

law, the compliance report is accurate and complete. 

‘‘(f) CORE PRINCIPLES APPLICABLE TO SWAP DATA REPOSITORIES.— 

‘‘(1) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this Act, a swap data 

repository shall not— 

‘‘(A) adopt any rule or take any action that results 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

the trading, clearing, or reporting of transactions. 

‘‘(2) GOVERNANCE ARRANGEMENTS.—Each swap data repository shall establish governance arrangements that are transparent— 

‘‘(A) to fulfill public interest requirements; and 

‘‘(B) to support the objectives of the Federal Government, owners, and participants. 

‘‘(3) CONFLICTS OF INTEREST.—Each swap data repository 

shall— 

‘‘(A) establish and enforce rules to minimize conflicts 

of interest in the decision-making process of the swap data 

repository; and 

‘‘(B) establish a process for resolving conflicts of 

interest described in subparagraph (A). 

‘‘(4) ADDITIONAL DUTIES DEVELOPED BY COMMISSION.— ‘‘(A) IN GENERAL.—The Commission may develop 1 or 

more additional duties applicable to swap data repositories. 

‘‘(B) CONSIDERATION OF EVOLVING STANDARDS.—In 

developing additional duties under subparagraph (A), the 

Commission may take into consideration any evolving 

standard of the United States or the international community. 

‘‘(C) ADDITIONAL DUTIES FOR COMMISSION DESIGNEES.— The Commission shall establish additional duties for any 

registrant described in section 1a(48) in order to minimize 
H. R. 4173—326 

conflicts of interest, protect data, ensure compliance, and 

guarantee the safety and security of the swap data repository. 

‘‘(g) REQUIRED REGISTRATION FOR SWAP DATA REPOSITORIES.— Any person that is required to be registered as a swap data repository under this section shall register with the Commission regardless of whether that person is also licensed as a bank or registered 

with the Securities and Exchange Commission as a swap data 

repository. 

‘‘(h) RULES.—The Commission shall adopt rules governing persons that are registered under this section.’’. 

SEC. 729. REPORTING AND RECORDKEEPING. 

The Commodity Exchange Act is amended by inserting after 

section 4q (7 U.S.C. 6o–1) the following: 

‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS. 

‘‘(a) REQUIRED REPORTING OF SWAPS NOT ACCEPTED BY ANY

DERIVATIVES CLEARING ORGANIZATION.— ‘‘(1) IN GENERAL.—Each swap that is not accepted for 

clearing by any derivatives clearing organization shall be 

reported to— 

‘‘(A) a swap data repository described in section 21; 

or 

‘‘(B) in the case in which there is no swap data repository that would accept the swap, to the Commission pursuant to this section within such time period as the Commission may by rule or regulation prescribe. 

‘‘(2) TRANSITION RULE FOR PREENACTMENT SWAPS.— ‘‘(A) SWAPS ENTERED INTO BEFORE THE DATE OF ENACT- MENT OF THE WALL STREET TRANSPARENCY AND ACCOUNT- ABILITY ACT OF 2010.—Each swap entered into before the 

date of enactment of the Wall Street Transparency and 

Accountability Act of 2010, the terms of which have not 

expired as of the date of enactment of that Act, shall 

be reported to a registered swap data repository or the 

Commission by a date that is not later than— 

‘‘(i) 30 days after issuance of the interim final 

rule; or 

‘‘(ii) such other period as the Commission determines to be appropriate. 

‘‘(B) COMMISSION RULEMAKING.—The Commission shall 

promulgate an interim final rule within 90 days of the 

date of enactment of this section providing for the reporting 

of each swap entered into before the date of enactment 

as referenced in subparagraph (A). 

‘‘(C) EFFECTIVE DATE.—The reporting provisions 

described in this section shall be effective upon the enactment of this section. 

‘‘(3) REPORTING OBLIGATIONS.— 

‘‘(A) SWAPS IN WHICH ONLY 1 COUNTERPARTY IS A SWAP

DEALER OR MAJOR SWAP PARTICIPANT.—With respect to a 

swap in which only 1 counterparty is a swap dealer or 

major swap participant, the swap dealer or major swap 

participant shall report the swap as required under paragraphs (1) and (2). 

‘‘(B) SWAPS IN WHICH 1 COUNTERPARTY IS A SWAP

DEALER AND THE OTHER A MAJOR SWAP PARTICIPANT.—With 
H. R. 4173—327 

respect to a swap in which 1 counterparty is a swap dealer 

and the other a major swap participant, the swap dealer 

shall report the swap as required under paragraphs (1) 

and (2). 

‘‘(C) OTHER SWAPS.—With respect to any other swap 

not described in subparagraph (A) or (B), the counterparties 

to the swap shall select a counterparty to report the swap 

as required under paragraphs (1) and (2). 

‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any individual or entity 

that enters into a swap shall meet each requirement described 

in subsection (c) if the individual or entity did not— 

‘‘(1) clear the swap in accordance with section 2(h)(1); or 

‘‘(2) have the data regarding the swap accepted by a swap 

data repository in accordance with rules (including timeframes) 

adopted by the Commission under section 21. 

‘‘(c) REQUIREMENTS.—An individual or entity described in subsection (b) shall— 

‘‘(1) upon written request from the Commission, provide 

reports regarding the swaps held by the individual or entity 

to the Commission in such form and in such manner as the 

Commission may request; and 

‘‘(2) maintain books and records pertaining to the swaps 

held by the individual or entity in such form, in such manner, 

and for such period as the Commission may require, which 

shall be open to inspection by— 

‘‘(A) any representative of the Commission; 

‘‘(B) an appropriate prudential regulator; 

‘‘(C) the Securities and Exchange Commission; 

‘‘(D) the Financial Stability Oversight Council; and 

‘‘(E) the Department of Justice. 

‘‘(d) IDENTICAL DATA.—In prescribing rules under this section, 

the Commission shall require individuals and entities described 

in subsection (b) to submit to the Commission a report that contains 

data that is not less comprehensive than the data required to 

be collected by swap data repositories under section 21.’’. 

SEC. 730. LARGE SWAP TRADER REPORTING. 

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 

by adding after section 4s (as added by section 731) the following: 

‘‘SEC. 4t. LARGE SWAP TRADER REPORTING. 

‘‘(a) PROHIBITION.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 

it shall be unlawful for any person to enter into any swap 

that the Commission determines to perform a significant price 

discovery function with respect to registered entities if— 

‘‘(A) the person directly or indirectly enters into the 

swap during any 1 day in an amount equal to or in excess 

of such amount as shall be established periodically by 

the Commission; and 

‘‘(B) the person directly or indirectly has or obtains 

a position in the swap equal to or in excess of such amount 

as shall be established periodically by the Commission. 

‘‘(2) EXCEPTION.—Paragraph (1) shall not apply if— 

‘‘(A) the person files or causes to be filed with the 

properly designated officer of the Commission such reports 
H. R. 4173—328 

regarding any transactions or positions described in subparagraphs (A) and (B) of paragraph (1) as the Commission 

may require by rule or regulation; and 

‘‘(B) in accordance with the rules and regulations of 

the Commission, the person keeps books and records of 

all such swaps and any transactions and positions in any 

related commodity traded on or subject to the rules of 

any designated contract market or swap execution facility, 

and of cash or spot transactions in, inventories of, and 

purchase and sale commitments of, such a commodity. 

‘‘(b) REQUIREMENTS.— ‘‘(1) IN GENERAL.—Books and records described in subsection (a)(2)(B) shall— 

‘‘(A) show such complete details concerning all transactions and positions as the Commission may prescribe 

by rule or regulation; 

‘‘(B) be open at all times to inspection and examination 

by any representative of the Commission; and 

‘‘(C) be open at all times to inspection and examination 

by the Securities and Exchange Commission, to the extent 

such books and records relate to transactions in swaps 

(as that term is defined in section 1a(47)(A)(v)), and consistent with the confidentiality and disclosure requirements 

of section 8. 

‘‘(2) JURISDICTION.—Nothing in paragraph (1) shall affect 

the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for large swap traders 

under this section. 

‘‘(c) APPLICABILITY.—For purposes of this section, the swaps, 

futures, and cash or spot transactions and positions of any person 

shall include the swaps, futures, and cash or spot transactions 

and positions of any persons directly or indirectly controlled by 

the person. 

‘‘(d) SIGNIFICANT PRICE DISCOVERY FUNCTION.—In making a 

determination as to whether a swap performs or affects a significant 

price discovery function with respect to registered entities, the 

Commission shall consider the factors described in section 4a(a)(3).’’. 

SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND 

MAJOR SWAP PARTICIPANTS. 

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 

by inserting after section 4r (as added by section 729) the following: 

‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND 

MAJOR SWAP PARTICIPANTS. 

‘‘(a) REGISTRATION.— ‘‘(1) SWAP DEALERS.—It shall be unlawful for any person 

to act as a swap dealer unless the person is registered as 

a swap dealer with the Commission. 

‘‘(2) MAJOR SWAP PARTICIPANTS.—It shall be unlawful for 

any person to act as a major swap participant unless the 

person is registered as a major swap participant with the 

Commission. 

‘‘(b) REQUIREMENTS.— 

‘‘(1) IN GENERAL.—A person shall register as a swap dealer 

or major swap participant by filing a registration application 

with the Commission. 

‘‘(2) CONTENTS.— 
H. R. 4173—329 

‘‘(A) IN GENERAL.—The application shall be made in 

such form and manner as prescribed by the Commission, 

and shall contain such information, as the Commission 

considers necessary concerning the business in which the 

applicant is or will be engaged. 

‘‘(B) CONTINUAL REPORTING.—A person that is registered as a swap dealer or major swap participant shall 

continue to submit to the Commission reports that contain 

such information pertaining to the business of the person 

as the Commission may require. 

‘‘(3) EXPIRATION.—Each registration under this section shall 

expire at such time as the Commission may prescribe by rule 

or regulation. 

‘‘(4) RULES.—Except as provided in subsections (d) and 

(e), the Commission may prescribe rules applicable to swap 

dealers and major swap participants, including rules that limit 

the activities of swap dealers and major swap participants. 

‘‘(5) TRANSITION.—Rules under this section shall provide 

for the registration of swap dealers and major swap participants 

not later than 1 year after the date of enactment of the Wall 

Street Transparency and Accountability Act of 2010. 

‘‘(6) STATUTORY DISQUALIFICATION.—Except to the extent 

otherwise specifically provided by rule, regulation, or order, 

it shall be unlawful for a swap dealer or a major swap participant to permit any person associated with a swap dealer or 

a major swap participant who is subject to a statutory disqualification to effect or be involved in effecting swaps on behalf 

of the swap dealer or major swap participant, if the swap 

dealer or major swap participant knew, or in the exercise 

of reasonable care should have known, of the statutory disqualification. 

‘‘(c) DUAL REGISTRATION.— 

‘‘(1) SWAP DEALER.—Any person that is required to be registered as a swap dealer under this section shall register with 

the Commission regardless of whether the person also is a 

depository institution or is registered with the Securities and 

Exchange Commission as a security-based swap dealer. 

‘‘(2) MAJOR SWAP PARTICIPANT.—Any person that is required 

to be registered as a major swap participant under this section 

shall register with the Commission regardless of whether the 

person also is a depository institution or is registered with 

the Securities and Exchange Commission as a major securitybased swap participant. 

‘‘(d) RULEMAKINGS.— 

‘‘(1) IN GENERAL.—The Commission shall adopt rules for 

persons that are registered as swap dealers or major swap 

participants under this section. 

‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.— ‘‘(A) IN GENERAL.—The Commission may not prescribe 

rules imposing prudential requirements on swap dealers 

or major swap participants for which there is a prudential 

regulator. 

‘‘(B) APPLICABILITY.—Subparagraph (A) does not limit 

the authority of the Commission to prescribe rules as 

directed under this section. 

‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

‘‘(1) IN GENERAL.— 
H. R. 4173—330 

‘‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS

THAT ARE BANKS.—Each registered swap dealer and major 

swap participant for which there is a prudential regulator 

shall meet such minimum capital requirements and minimum initial and variation margin requirements as the 

prudential regulator shall by rule or regulation prescribe 

under paragraph (2)(A). 

‘‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS

THAT ARE NOT BANKS.—Each registered swap dealer and 

major swap participant for which there is not a prudential 

regulator shall meet such minimum capital requirements 

and minimum initial and variation margin requirements 

as the Commission shall by rule or regulation prescribe 

under paragraph (2)(B). 

‘‘(2) RULES.— 

‘‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS

THAT ARE BANKS.—The prudential regulators, in consultation with the Commission and the Securities and Exchange 

Commission, shall jointly adopt rules for swap dealers and 

major swap participants, with respect to their activities 

as a swap dealer or major swap participant, for which 

there is a prudential regulator imposing— 

‘‘(i) capital requirements; and 

‘‘(ii) both initial and variation margin requirements 

on all swaps that are not cleared by a registered derivatives clearing organization. 

‘‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS

THAT ARE NOT BANKS.—The Commission shall adopt rules 

for swap dealers and major swap participants, with respect 

to their activities as a swap dealer or major swap participant, for which there is not a prudential regulator 

imposing— 

‘‘(i) capital requirements; and 

‘‘(ii) both initial and variation margin requirements 

on all swaps that are not cleared by a registered derivatives clearing organization. 

‘‘(C) CAPITAL.—In setting capital requirements for a 

person that is designated as a swap dealer or a major 

swap participant for a single type or single class or category 

of swap or activities, the prudential regulator and the 

Commission shall take into account the risks associated 

with other types of swaps or classes of swaps or categories 

of swaps engaged in and the other activities conducted 

by that person that are not otherwise subject to regulation 

applicable to that person by virtue of the status of the 

person as a swap dealer or a major swap participant. 

‘‘(3) STANDARDS FOR CAPITAL AND MARGIN.— ‘‘(A) IN GENERAL.—To offset the greater risk to the 

swap dealer or major swap participant and the financial 

system arising from the use of swaps that are not cleared, 

the requirements imposed under paragraph (2) shall— 

‘‘(i) help ensure the safety and soundness of the 

swap dealer or major swap participant; and 

‘‘(ii) be appropriate for the risk associated with 

the non-cleared swaps held as a swap dealer or major 

swap participant. 

‘‘(B) RULE OF CONSTRUCTION.— 
H. R. 4173—331 

‘‘(i) IN GENERAL.—Nothing in this section shall 

limit, or be construed to limit, the authority— 

‘‘(I) of the Commission to set financial responsibility rules for a futures commission merchant 

or introducing broker registered pursuant to section 4f(a) (except for section 4f(a)(3)) in accordance 

with section 4f(b); or 

‘‘(II) of the Securities and Exchange Commission to set financial responsibility rules for a 

broker or dealer registered pursuant to section 

15(b) of the Securities Exchange Act of 1934 (15 

U.S.C. 78o(b)) (except for section 15(b)(11) of that 

Act (15 U.S.C. 78o(b)(11)) in accordance with section 15(c)(3) of the Securities Exchange Act of 1934 

(15 U.S.C. 78o(c)(3)). 

‘‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER

DEALERS.—A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any 

applicable capital requirements to which such futures 

commission merchant, introducing broker, broker, or 

dealer is subject to under this Act or the Securities 

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

‘‘(C) MARGIN REQUIREMENTS.—In prescribing margin 

requirements under this subsection, the prudential regulator with respect to swap dealers and major swap participants for which it is the prudential regulator and the 

Commission with respect to swap dealers and major swap 

participants for which there is no prudential regulator 

shall permit the use of noncash collateral, as the regulator 

or the Commission determines to be consistent with— 

‘‘(i) preserving the financial integrity of markets 

trading swaps; and 

‘‘(ii) preserving the stability of the United States 

financial system. 

‘‘(D) COMPARABILITY OF CAPITAL AND MARGIN REQUIREMENTS.— 

‘‘(i) IN GENERAL.—The prudential regulators, the 

Commission, and the Securities and Exchange 

Commission shall periodically (but not less frequently 

than annually) consult on minimum capital requirements and minimum initial and variation margin 

requirements. 

‘‘(ii) COMPARABILITY.—The entities described in 

clause (i) shall, to the maximum extent practicable, 

establish and maintain comparable minimum capital 

requirements and minimum initial and variation 

margin requirements, including the use of non cash 

collateral, for— 

‘‘(I) swap dealers; and 

‘‘(II) major swap participants. 

‘‘(f) REPORTING AND RECORDKEEPING.— 

‘‘(1) IN GENERAL.—Each registered swap dealer and major 

swap participant— 
H. R. 4173—332 

‘‘(A) shall make such reports as are required by the 

Commission by rule or regulation regarding the transactions and positions and financial condition of the registered swap dealer or major swap participant; 

‘‘(B)(i) for which there is a prudential regulator, shall 

keep books and records of all activities related to the business as a swap dealer or major swap participant in such 

form and manner and for such period as may be prescribed 

by the Commission by rule or regulation; and 

‘‘(ii) for which there is no prudential regulator, shall 

keep books and records in such form and manner and 

for such period as may be prescribed by the Commission 

by rule or regulation; 

‘‘(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission; and 

‘‘(D) shall keep any such books and records relating 

to swaps defined in section 1a(47)(A)(v) open to inspection 

and examination by the Securities and Exchange Commission. 

‘‘(2) RULES.—The Commission shall adopt rules governing 

reporting and recordkeeping for swap dealers and major swap 

participants. 

‘‘(g) DAILY TRADING RECORDS.— 

‘‘(1) IN GENERAL.—Each registered swap dealer and major 

swap participant shall maintain daily trading records of the 

swaps of the registered swap dealer and major swap participant 

and all related records (including related cash or forward transactions) and recorded communications, including electronic 

mail, instant messages, and recordings of telephone calls, for 

such period as may be required by the Commission by rule 

or regulation. 

‘‘(2) INFORMATION REQUIREMENTS.—The daily trading 

records shall include such information as the Commission shall 

require by rule or regulation. 

‘‘(3) COUNTERPARTY RECORDS.—Each registered swap dealer 

and major swap participant shall maintain daily trading records 

for each counterparty in a manner and form that is identifiable 

with each swap transaction. 

‘‘(4) AUDIT TRAIL.—Each registered swap dealer and major 

swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions. 

‘‘(5) RULES.—The Commission shall adopt rules governing 

daily trading records for swap dealers and major swap participants. 

‘‘(h) BUSINESS CONDUCT STANDARDS.— ‘‘(1) IN GENERAL.—Each registered swap dealer and major 

swap participant shall conform with such business conduct 

standards as prescribed in paragraph (3) and as may be prescribed by the Commission by rule or regulation that relate 

to— 

‘‘(A) fraud, manipulation, and other abusive practices 

involving swaps (including swaps that are offered but not 

entered into); 

‘‘(B) diligent supervision of the business of the registered swap dealer and major swap participant; 

‘‘(C) adherence to all applicable position limits; and 
H. R. 4173—333 

‘‘(D) such other matters as the Commission determines 

to be appropriate. 

‘‘(2) RESPONSIBILITIES WITH RESPECT TO SPECIAL ENTITIES.— 

‘‘(A) ADVISING SPECIAL ENTITIES.—A swap dealer or 

major swap participant that acts as an advisor to a special 

entity regarding a swap shall comply with the requirements 

of subparagraph (4) with respect to such Special Entity. 

‘‘(B) ENTERING OF SWAPS WITH RESPECT TO SPECIAL

ENTITIES.—A swap dealer that enters into or offers to enter 

into swap with a Special Entity shall comply with the 

requirements of subparagraph (5) with respect to such 

Special Entity. 

‘‘(C) SPECIAL ENTITY DEFINED.—For purposes of this 

subsection, the term ‘special entity’ means— 

‘‘(i) a Federal agency; 

‘‘(ii) a State, State agency, city, county, municipality, or other political subdivision of a State; 

‘‘(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security 

Act of 1974 (29 U.S.C. 1002); 

‘‘(iv) any governmental plan, as defined in section 

3 of the Employee Retirement Income Security Act 

of 1974 (29 U.S.C. 1002); or 

‘‘(v) any endowment, including an endowment that 

is an organization described in section 501(c)(3) of the 

Internal Revenue Code of 1986. 

‘‘(3) BUSINESS CONDUCT REQUIREMENTS.—Business conduct 

requirements adopted by the Commission shall— 

‘‘(A) establish a duty for a swap dealer or major swap 

participant to verify that any counterparty meets the eligibility standards for an eligible contract participant; 

‘‘(B) require disclosure by the swap dealer or major 

swap participant to any counterparty to the transaction 

(other than a swap dealer, major swap participant, securitybased swap dealer, or major security-based swap participant) of— 

‘‘(i) information about the material risks and 

characteristics of the swap; 

‘‘(ii) any material incentives or conflicts of interest 

that the swap dealer or major swap participant may 

have in connection with the swap; and 

‘‘(iii)(I) for cleared swaps, upon the request of the 

counterparty, receipt of the daily mark of the transaction from the appropriate derivatives clearing 

organization; and 

‘‘(II) for uncleared swaps, receipt of the daily mark 

of the transaction from the swap dealer or the major 

swap participant; 

‘‘(C) establish a duty for a swap dealer or major swap 

participant to communicate in a fair and balanced manner 

based on principles of fair dealing and good faith; and 

‘‘(D) establish such other standards and requirements 

as the Commission may determine are appropriate in the 

public interest, for the protection of investors, or otherwise 

in furtherance of the purposes of this Act. 

‘‘(4) SPECIAL REQUIREMENTS FOR SWAP DEALERS ACTING AS

ADVISORS.— 
H. R. 4173—334 

‘‘(A) IN GENERAL.—It shall be unlawful for a swap 

dealer or major swap participant— 

‘‘(i) to employ any device, scheme, or artifice to 

defraud any Special Entity or prospective customer 

who is a Special Entity; 

‘‘(ii) to engage in any transaction, practice, or 

course of business that operates as a fraud or deceit 

on any Special Entity or prospective customer who 

is a Special Entity; or 

‘‘(iii) to engage in any act, practice, or course of 

business that is fraudulent, deceptive or manipulative. 

‘‘(B) DUTY.—Any swap dealer that acts as an advisor 

to a Special Entity shall have a duty to act in the best 

interests of the Special Entity. 

‘‘(C) REASONABLE EFFORTS.—Any swap dealer that acts 

as an advisor to a Special Entity shall make reasonable 

efforts to obtain such information as is necessary to make 

a reasonable determination that any swap recommended 

by the swap dealer is in the best interests of the Special 

Entity, including information relating to— 

‘‘(i) the financial status of the Special Entity; 

‘‘(ii) the tax status of the Special Entity; 

‘‘(iii) the investment or financing objectives of the 

Special Entity; and 

‘‘(iv) any other information that the Commission 

may prescribe by rule or regulation. 

‘‘(5) SPECIAL REQUIREMENTS FOR SWAP DEALERS AS

COUNTERPARTIES TO SPECIAL ENTITIES.— 

‘‘(A) Any swap dealer or major swap participant that 

offers to enter or enters into a swap with a Special Entity 

shall— 

‘‘(i) comply with any duty established by the 

Commission for a swap dealer or major swap participant, with respect to a counterparty that is an eligible 

contract participant within the meaning of subclause 

(I) or (II) of clause (vii) of section 1a(18) of this Act, 

that requires the swap dealer or major swap participant to have a reasonable basis to believe that the 

counterparty that is a Special Entity has an independent representative that— 

‘‘(I) has sufficient knowledge to evaluate the 

transaction and risks; 

‘‘(II) is not subject to a statutory disqualification; 

‘‘(III) is independent of the swap dealer or 

major swap participant; 

‘‘(IV) undertakes a duty to act in the best 

interests of the counterparty it represents; 

‘‘(V) makes appropriate disclosures; 

‘‘(VI) will provide written representations to 

the Special Entity regarding fair pricing and the 

appropriateness of the transaction; and 

‘‘(VII) in the case of employee benefit plans 

subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section 

3 of that Act (29 U.S.C. 1002); and 
H. R. 4173—335 

‘‘(ii) before the initiation of the transaction, disclose 

to the Special Entity in writing the capacity in which 

the swap dealer is acting; and 

‘‘(B) the Commission may establish such other standards and requirements as the Commission may determine 

are appropriate in the public interest, for the protection 

of investors, or otherwise in furtherance of the purposes 

of this Act. 

‘‘(6) RULES.—The Commission shall prescribe rules under 

this subsection governing business conduct standards for swap 

dealers and major swap participants. 

‘‘(7) APPLICABILITY.—This section shall not apply with 

respect to a transaction that is— 

‘‘(A) initiated by a Special Entity on an exchange or 

swap execution facility; and 

‘‘(B) one in which the swap dealer or major swap 

participant does not know the identity of the counterparty 

to the transaction. 

‘‘(i) DOCUMENTATION STANDARDS.— 

‘‘(1) IN GENERAL.—Each registered swap dealer and major 

swap participant shall conform with such standards as may 

be prescribed by the Commission by rule or regulation that 

relate to timely and accurate confirmation, processing, netting, 

documentation, and valuation of all swaps. 

‘‘(2) RULES.—The Commission shall adopt rules governing 

documentation standards for swap dealers and major swap 

participants. 

‘‘(j) DUTIES.—Each registered swap dealer and major swap 

participant at all times shall comply with the following requirements: 

‘‘(1) MONITORING OF TRADING.—The swap dealer or major 

swap participant shall monitor its trading in swaps to prevent 

violations of applicable position limits. 

‘‘(2) RISK MANAGEMENT PROCEDURES.—The swap dealer or 

major swap participant shall establish robust and professional 

risk management systems adequate for managing the dayto-day business of the swap dealer or major swap participant. 

‘‘(3) DISCLOSURE OF GENERAL INFORMATION.—The swap 

dealer or major swap participant shall disclose to the Commission and to the prudential regulator for the swap dealer or 

major swap participant, as applicable, information concerning— 

‘‘(A) terms and conditions of its swaps; 

‘‘(B) swap trading operations, mechanisms, and practices; 

‘‘(C) financial integrity protections relating to swaps; 

and 

‘‘(D) other information relevant to its trading in swaps. 

‘‘(4) ABILITY TO OBTAIN INFORMATION.—The swap dealer 

or major swap participant shall— 

‘‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any 

of the functions described in this section; and 

‘‘(B) provide the information to the Commission and 

to the prudential regulator for the swap dealer or major 

swap participant, as applicable, on request. 
H. R. 4173—336 

‘‘(5) CONFLICTS OF INTEREST.—The swap dealer and major 

swap participant shall implement conflict-of-interest systems 

and procedures that— 

‘‘(A) establish structural and institutional safeguards 

to ensure that the activities of any person within the firm 

relating to research or analysis of the price or market 

for any commodity or swap or acting in a role of providing 

clearing activities or making determinations as to accepting 

clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, 

or oversight of persons whose involvement in pricing, 

trading, or clearing activities might potentially bias their 

judgment or supervision and contravene the core principles 

of open access and the business conduct standards 

described in this Act; and 

‘‘(B) address such other issues as the Commission 

determines to be appropriate. 

‘‘(6) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this Act, a swap dealer 

or major swap participant shall not— 

‘‘(A) adopt any process or take any action that results 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

trading or clearing. 

‘‘(7) RULES.—The Commission shall prescribe rules under 

this subsection governing duties of swap dealers and major 

swap participants. 

‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(1) IN GENERAL.—Each swap dealer and major swap 

participant shall designate an individual to serve as a chief 

compliance officer. 

‘‘(2) DUTIES.—The chief compliance officer shall— 

‘‘(A) report directly to the board or to the senior officer 

of the swap dealer or major swap participant; 

‘‘(B) review the compliance of the swap dealer or major 

swap participant with respect to the swap dealer and major 

swap participant requirements described in this section; 

‘‘(C) in consultation with the board of directors, a body 

performing a function similar to the board, or the senior 

officer of the organization, resolve any conflicts of interest 

that may arise; 

‘‘(D) be responsible for administering each policy and 

procedure that is required to be established pursuant to 

this section; 

‘‘(E) ensure compliance with this Act (including regulations) relating to swaps, including each rule prescribed 

by the Commission under this section; 

‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer 

through any— 

‘‘(i) compliance office review; 

‘‘(ii) look-back; 

‘‘(iii) internal or external audit finding; 

‘‘(iv) self-reported error; or 

‘‘(v) validated complaint; and 
H. R. 4173—337 

‘‘(G) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

‘‘(3) ANNUAL REPORTS.— ‘‘(A) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

‘‘(i) the compliance of the swap dealer or major 

swap participant with respect to this Act (including 

regulations); and 

‘‘(ii) each policy and procedure of the swap dealer 

or major swap participant of the chief compliance 

officer (including the code of ethics and conflict of 

interest policies). 

‘‘(B) REQUIREMENTS.—A compliance report under 

subparagraph (A) shall— 

‘‘(i) accompany each appropriate financial report 

of the swap dealer or major swap participant that 

is required to be furnished to the Commission pursuant 

to this section; and 

‘‘(ii) include a certification that, under penalty of 

law, the compliance report is accurate and complete.’’. 

SEC. 732. CONFLICTS OF INTEREST. 

Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is 

amended— 

(1) by redesignating subsection (c) as subsection (e); and 

(2) by inserting after subsection (b) the following: 

‘‘(c) CONFLICTS OF INTEREST.—The Commission shall require 

that futures commission merchants and introducing brokers implement conflict-of-interest systems and procedures that— 

‘‘(1) establish structural and institutional safeguards to 

ensure that the activities of any person within the firm relating 

to research or analysis of the price or market for any commodity 

are separated by appropriate informational partitions within 

the firm from the review, pressure, or oversight of persons 

whose involvement in trading or clearing activities might potentially bias the judgment or supervision of the persons; and 

‘‘(2) address such other issues as the Commission determines to be appropriate. 

‘‘(d) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—Each 

futures commission merchant shall designate an individual to serve 

as its Chief Compliance Officer and perform such duties and responsibilities as shall be set forth in regulations to be adopted by 

the Commission or rules to be adopted by a futures association 

registered under section 17.’’. 

SEC. 733. SWAP EXECUTION FACILITIES. 

The Commodity Exchange Act is amended by inserting after 

section 5g (7 U.S.C. 7b–2) the following: 

‘‘SEC. 5h. SWAP EXECUTION FACILITIES. 

‘‘(a) REGISTRATION.— 

‘‘(1) IN GENERAL.—No person may operate a facility for 

the trading or processing of swaps unless the facility is registered as a swap execution facility or as a designated contract 

market under this section. 
H. R. 4173—338 

‘‘(2) DUAL REGISTRATION.—Any person that is registered 

as a swap execution facility under this section shall register 

with the Commission regardless of whether the person also 

is registered with the Securities and Exchange Commission 

as a swap execution facility. 

‘‘(b) TRADING AND TRADE PROCESSING.— 

‘‘(1) IN GENERAL.—Except as specified in paragraph (2), 

a swap execution facility that is registered under subsection 

(a) may— 

‘‘(A) make available for trading any swap; and 

‘‘(B) facilitate trade processing of any swap. 

‘‘(2) AGRICULTURAL SWAPS.—A swap execution facility may 

not list for trading or confirm the execution of any swap in 

an agricultural commodity (as defined by the Commission) 

except pursuant to a rule or regulation of the Commission 

allowing the swap under such terms and conditions as the 

Commission shall prescribe. 

‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE SWAPS BY

CONTRACT MARKETS.—A board of trade that operates a contract 

market shall, to the extent that the board of trade also operates 

a swap execution facility and uses the same electronic trade execution system for listing and executing trades of swaps on or through 

the contract market and the swap execution facility, identify 

whether the electronic trading of such swaps is taking place on 

or through the contract market or the swap execution facility. 

‘‘(d) RULE-WRITING.— 

‘‘(1) The Securities and Exchange Commission and Commodity Futures Trading Commission may promulgate rules 

defining the universe of swaps that can be executed on a 

swap execution facility. These rules shall take into account 

the price and nonprice requirements of the counterparties to 

a swap and the goal of this section as set forth in subsection 

(e). 

‘‘(2) For all swaps that are not required to be executed 

through a swap execution facility as defined in paragraph (1), 

such trades may be executed through any other available means 

of interstate commerce. 

‘‘(3) The Securities and Exchange Commission and Commodity Futures Trading Commission shall update these rules 

as necessary to account for technological and other innovation. 

‘‘(e) RULE OF CONSTRUCTION.—The goal of this section is to 

promote the trading of swaps on swap execution facilities and 

to promote pre-trade price transparency in the swaps market. 

‘‘(f) CORE PRINCIPLES FOR SWAP EXECUTION FACILITIES.— 

‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 

‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a swap execution facility, the swap execution 

facility shall comply with— 

‘‘(i) the core principles described in this subsection; 

and 

‘‘(ii) any requirement that the Commission may 

impose by rule or regulation pursuant to section 8a(5). 

‘‘(B) REASONABLE DISCRETION OF SWAP EXECUTION

FACILITY.—Unless otherwise determined by the Commission by rule or regulation, a swap execution facility 
H. R. 4173—339 

described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the swap execution facility complies with the core principles described 

in this subsection. 

‘‘(2) COMPLIANCE WITH RULES.—A swap execution facility 

shall— 

‘‘(A) establish and enforce compliance with any rule 

of the swap execution facility, including— 

‘‘(i) the terms and conditions of the swaps traded 

or processed on or through the swap execution facility; 

and 

‘‘(ii) any limitation on access to the swap execution 

facility; 

‘‘(B) establish and enforce trading, trade processing, 

and participation rules that will deter abuses and have 

the capacity to detect, investigate, and enforce those rules, 

including means— 

‘‘(i) to provide market participants with impartial 

access to the market; and 

‘‘(ii) to capture information that may be used in 

establishing whether rule violations have occurred; 

‘‘(C) establish rules governing the operation of the 

facility, including rules specifying trading procedures to 

be used in entering and executing orders traded or posted 

on the facility, including block trades; and 

‘‘(D) provide by its rules that when a swap dealer 

or major swap participant enters into or facilitates a swap 

that is subject to the mandatory clearing requirement of 

section 2(h), the swap dealer or major swap participant 

shall be responsible for compliance with the mandatory 

trading requirement under section 2(h)(8). 

‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MANIPULATION.— 

The swap execution facility shall permit trading only in swaps 

that are not readily susceptible to manipulation. 

‘‘(4) MONITORING OF TRADING AND TRADE PROCESSING.— The swap execution facility shall— 

‘‘(A) establish and enforce rules or terms and conditions 

defining, or specifications detailing— 

‘‘(i) trading procedures to be used in entering and 

executing orders traded on or through the facilities 

of the swap execution facility; and 

‘‘(ii) procedures for trade processing of swaps on 

or through the facilities of the swap execution facility; 

and 

‘‘(B) monitor trading in swaps to prevent manipulation, 

price distortion, and disruptions of the delivery or cash 

settlement process through surveillance, compliance, and 

disciplinary practices and procedures, including methods 

for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions. 

‘‘(5) ABILITY TO OBTAIN INFORMATION.—The swap execution 

facility shall— 

‘‘(A) establish and enforce rules that will allow the 

facility to obtain any necessary information to perform 

any of the functions described in this section; 

‘‘(B) provide the information to the Commission on 

request; and 
H. R. 4173—340 

‘‘(C) have the capacity to carry out such international 

information-sharing agreements as the Commission may 

require. 

‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 

‘‘(A) IN GENERAL.—To reduce the potential threat of 

market manipulation or congestion, especially during 

trading in the delivery month, a swap execution facility 

that is a trading facility shall adopt for each of the contracts 

of the facility, as is necessary and appropriate, position 

limitations or position accountability for speculators. 

‘‘(B) POSITION LIMITS.—For any contract that is subject 

to a position limitation established by the Commission 

pursuant to section 4a(a), the swap execution facility 

shall— 

‘‘(i) set its position limitation at a level no higher 

than the Commission limitation; and 

‘‘(ii) monitor positions established on or through 

the swap execution facility for compliance with the 

limit set by the Commission and the limit, if any, 

set by the swap execution facility. 

‘‘(7) FINANCIAL INTEGRITY OF TRANSACTIONS.—The swap 

execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of swaps entered 

on or through the facilities of the swap execution facility, 

including the clearance and settlement of the swaps pursuant 

to section 2(h)(1). 

‘‘(8) EMERGENCY AUTHORITY.—The swap execution facility 

shall adopt rules to provide for the exercise of emergency 

authority, in consultation or cooperation with the Commission, 

as is necessary and appropriate, including the authority to 

liquidate or transfer open positions in any swap or to suspend 

or curtail trading in a swap. 

‘‘(9) TIMELY PUBLICATION OF TRADING INFORMATION.— ‘‘(A) IN GENERAL.—The swap execution facility shall 

make public timely information on price, trading volume, 

and other trading data on swaps to the extent prescribed 

by the Commission. 

‘‘(B) CAPACITY OF SWAP EXECUTION FACILITY.—The 

swap execution facility shall be required to have the 

capacity to electronically capture and transmit trade 

information with respect to transactions executed on the 

facility. 

‘‘(10) RECORDKEEPING AND REPORTING.— 

‘‘(A) IN GENERAL.—A swap execution facility shall— 

‘‘(i) maintain records of all activities relating to 

the business of the facility, including a complete audit 

trail, in a form and manner acceptable to the Commission for a period of 5 years; 

‘‘(ii) report to the Commission, in a form and 

manner acceptable to the Commission, such information as the Commission determines to be necessary 

or appropriate for the Commission to perform the 

duties of the Commission under this Act; and 

‘‘(iii) shall keep any such records relating to swaps 

defined in section 1a(47)(A)(v) open to inspection and 

examination by the Securities and Exchange Commission.’’ 
H. R. 4173—341 

‘‘(B) REQUIREMENTS.—The Commission shall adopt 

data collection and reporting requirements for swap execution facilities that are comparable to corresponding requirements for derivatives clearing organizations and swap data 

repositories. 

‘‘(11) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this Act, the swap execution facility shall not— 

‘‘(A) adopt any rules or taking any actions that result 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

trading or clearing. 

‘‘(12) CONFLICTS OF INTEREST.—The swap execution facility 

shall— 

‘‘(A) establish and enforce rules to minimize conflicts 

of interest in its decision-making process; and 

‘‘(B) establish a process for resolving the conflicts of 

interest. 

‘‘(13) FINANCIAL RESOURCES.— 

‘‘(A) IN GENERAL.—The swap execution facility shall 

have adequate financial, operational, and managerial 

resources to discharge each responsibility of the swap 

execution facility. 

‘‘(B) DETERMINATION OF RESOURCE ADEQUACY.—The 

financial resources of a swap execution facility shall be 

considered to be adequate if the value of the financial 

resources exceeds the total amount that would enable the 

swap execution facility to cover the operating costs of the 

swap execution facility for a 1-year period, as calculated 

on a rolling basis. 

‘‘(14) SYSTEM SAFEGUARDS.—The swap execution facility 

shall— 

‘‘(A) establish and maintain a program of risk analysis 

and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that— 

‘‘(i) are reliable and secure; and 

‘‘(ii) have adequate scalable capacity; 

‘‘(B) establish and maintain emergency procedures, 

backup facilities, and a plan for disaster recovery that 

allow for— 

‘‘(i) the timely recovery and resumption of operations; and 

‘‘(ii) the fulfillment of the responsibilities and 

obligations of the swap execution facility; and 

‘‘(C) periodically conduct tests to verify that the backup 

resources of the swap execution facility are sufficient to 

ensure continued— 

‘‘(i) order processing and trade matching; 

‘‘(ii) price reporting; 

‘‘(iii) market surveillance and 

‘‘(iv) maintenance of a comprehensive and accurate 

audit trail. 

‘‘(15) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— ‘‘(A) IN GENERAL.—Each swap execution facility shall 

designate an individual to serve as a chief compliance 

officer. 
H. R. 4173—342 

‘‘(B) DUTIES.—The chief compliance officer shall— 

‘‘(i) report directly to the board or to the senior 

officer of the facility; 

‘‘(ii) review compliance with the core principles 

in this subsection; 

‘‘(iii) in consultation with the board of the facility, 

a body performing a function similar to that of a board, 

or the senior officer of the facility, resolve any conflicts 

of interest that may arise; 

‘‘(iv) be responsible for establishing and administering the policies and procedures required to be 

established pursuant to this section; 

‘‘(v) ensure compliance with this Act and the rules 

and regulations issued under this Act, including rules 

prescribed by the Commission pursuant to this section; 

and 

‘‘(vi) establish procedures for the remediation of 

noncompliance issues found during compliance office 

reviews, look backs, internal or external audit findings, 

self-reported errors, or through validated complaints. 

‘‘(C) REQUIREMENTS FOR PROCEDURES.—In establishing 

procedures under subparagraph (B)(vi), the chief compliance officer shall design the procedures to establish the 

handling, management response, remediation, retesting, 

and closing of noncompliance issues. 

‘‘(D) ANNUAL REPORTS.— 

‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer 

shall annually prepare and sign a report that contains 

a description of— 

‘‘(I) the compliance of the swap execution 

facility with this Act; and 

‘‘(II) the policies and procedures, including the 

code of ethics and conflict of interest policies, of 

the swap execution facility. 

‘‘(ii) REQUIREMENTS.—The chief compliance officer 

shall— 

‘‘(I) submit each report described in clause 

(i) with the appropriate financial report of the 

swap execution facility that is required to be submitted to the Commission pursuant to this section; 

and 

‘‘(II) include in the report a certification that, 

under penalty of law, the report is accurate and 

complete. 

‘‘(g) EXEMPTIONS.—The Commission may exempt, conditionally 

or unconditionally, a swap execution facility from registration under 

this section if the Commission finds that the facility is subject 

to comparable, comprehensive supervision and regulation on a 

consolidated basis by the Securities and Exchange Commission, 

a prudential regulator, or the appropriate governmental authorities 

in the home country of the facility. 

‘‘(h) RULES.—The Commission shall prescribe rules governing 

the regulation of alternative swap execution facilities under this 

section.’’. 
H. R. 4173—343 

SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND 

EXEMPT BOARDS OF TRADE. 

(a) IN GENERAL.—Sections 5a and 5d of the Commodity 

Exchange Act (7 U.S.C. 7a, 7a–3) are repealed. 

(b) CONFORMING AMENDMENTS.— 

(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 

2) is amended— 

(A) in subsection (a)(1)(A), in the first sentence, by 

striking ‘‘or 5a’’; and 

(B) in paragraph (2) of subsection (g) (as redesignated 

by section 723(a)(1)(B)), by striking ‘‘section 5a of this 

Act’’ and all that follows through ‘‘5d of this Act’’ and 

inserting ‘‘section 5b of this Act’’. 

(2) Section 6(g)(1)(A) of the Securities Exchange Act of 

1934 (15 U.S.C. 78f(g)(1)(A)) is amended— 

(A) by striking ‘‘that—’’ and all that follows through 

‘‘(i) has been designated’’ and inserting ‘‘that has been 

designated’’; 

(B) by striking ‘‘; or’’ and inserting ‘‘; and’’ and 

(C) by striking clause (ii). 

(c) ABILITY TO PETITION COMMISSION.— 

(1) IN GENERAL.—Prior to the final effective dates in this 

title, a person may petition the Commodity Futures Trading 

Commission to remain subject to the provisions of section 5d 

of the Commodity Exchange Act, as such provisions existed 

prior to the effective date of this subtitle. 

(2) CONSIDERATION OF PETITION.—The Commodity Futures 

Trading Commission shall consider any petition submitted 

under paragraph (1) in a prompt manner and may allow a 

person to continue operating subject to the provisions of section 

5d of the Commodity Exchange Act for up to 1 year after 

the effective date of this subtitle. 

SEC. 735. DESIGNATED CONTRACT MARKETS. 

(a) CRITERIA FOR DESIGNATION.—Section 5 of the Commodity 

Exchange Act (7 U.S.C. 7) is amended by striking subsection (b). 

(b) CORE PRINCIPLES FOR CONTRACT MARKETS.—Section 5 of 

the Commodity Exchange Act (7 U.S.C. 7) is amended by striking 

subsection (d) and inserting the following: 

‘‘(d) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

‘‘(1) DESIGNATION AS CONTRACT MARKET.— 

‘‘(A) IN GENERAL.—To be designated, and maintain a 

designation, as a contract market, a board of trade shall 

comply with— 

‘‘(i) any core principle described in this subsection; 

and 

‘‘(ii) any requirement that the Commission may 

impose by rule or regulation pursuant to section 8a(5). 

‘‘(B) REASONABLE DISCRETION OF CONTRACT MARKET.— 

Unless otherwise determined by the Commission by rule 

or regulation, a board of trade described in subparagraph 

(A) shall have reasonable discretion in establishing the 

manner in which the board of trade complies with the 

core principles described in this subsection. 

‘‘(2) COMPLIANCE WITH RULES.— 
H. R. 4173—344 

‘‘(A) IN GENERAL.—The board of trade shall establish, 

monitor, and enforce compliance with the rules of the contract market, including— 

‘‘(i) access requirements; 

‘‘(ii) the terms and conditions of any contracts to 

be traded on the contract market; and 

‘‘(iii) rules prohibiting abusive trade practices on 

the contract market. 

‘‘(B) CAPACITY OF CONTRACT MARKET.—The board of 

trade shall have the capacity to detect, investigate, and 

apply appropriate sanctions to any person that violates 

any rule of the contract market. 

‘‘(C) REQUIREMENT OF RULES.—The rules of the contract 

market shall provide the board of trade with the ability 

and authority to obtain any necessary information to perform any function described in this subsection, including 

the capacity to carry out such international informationsharing agreements as the Commission may require. 

‘‘(3) CONTRACTS NOT READILY SUBJECT TO MANIPULATION.— 

The board of trade shall list on the contract market only contracts that are not readily susceptible to manipulation. 

‘‘(4) PREVENTION OF MARKET DISRUPTION.—The board of 

trade shall have the capacity and responsibility to prevent 

manipulation, price distortion, and disruptions of the delivery 

or cash-settlement process through market surveillance, compliance, and enforcement practices and procedures, including— 

‘‘(A) methods for conducting real-time monitoring of 

trading; and 

‘‘(B) comprehensive and accurate trade reconstructions. 

‘‘(5) POSITION LIMITATIONS OR ACCOUNTABILITY.— ‘‘(A) IN GENERAL.—To reduce the potential threat of 

market manipulation or congestion (especially during 

trading in the delivery month), the board of trade shall 

adopt for each contract of the board of trade, as is necessary 

and appropriate, position limitations or position accountability for speculators. 

‘‘(B) MAXIMUM ALLOWABLE POSITION LIMITATION.—For 

any contract that is subject to a position limitation established by the Commission pursuant to section 4a(a), the 

board of trade shall set the position limitation of the board 

of trade at a level not higher than the position limitation 

established by the Commission. 

‘‘(6) EMERGENCY AUTHORITY.—The board of trade, in consultation or cooperation with the Commission, shall adopt rules 

to provide for the exercise of emergency authority, as is necessary and appropriate, including the authority— 

‘‘(A) to liquidate or transfer open positions in any contract; 

‘‘(B) to suspend or curtail trading in any contract; 

and 

‘‘(C) to require market participants in any contract 

to meet special margin requirements. 

‘‘(7) AVAILABILITY OF GENERAL INFORMATION.—The board 

of trade shall make available to market authorities, market 

participants, and the public accurate information concerning— 

‘‘(A) the terms and conditions of the contracts of the 

contract market; and 
H. R. 4173—345 

‘‘(B)(i) the rules, regulations, and mechanisms for executing transactions on or through the facilities of the contract market; and 

‘‘(ii) the rules and specifications describing the operation of the contract market’s— 

‘‘(I) electronic matching platform; or 

‘‘(II) trade execution facility. 

‘‘(8) DAILY PUBLICATION OF TRADING INFORMATION.—The 

board of trade shall make public daily information on settlement prices, volume, open interest, and opening and closing 

ranges for actively traded contracts on the contract market. 

‘‘(9) EXECUTION OF TRANSACTIONS.— 

‘‘(A) IN GENERAL.—The board of trade shall provide 

a competitive, open, and efficient market and mechanism 

for executing transactions that protects the price discovery 

process of trading in the centralized market of the board 

of trade. 

‘‘(B) RULES.—The rules of the board of trade may 

authorize, for bona fide business purposes— 

‘‘(i) transfer trades or office trades; 

‘‘(ii) an exchange of— 

‘‘(I) futures in connection with a cash commodity transaction; 

‘‘(II) futures for cash commodities; or 

‘‘(III) futures for swaps; or 

‘‘(iii) a futures commission merchant, acting as 

principal or agent, to enter into or confirm the execution of a contract for the purchase or sale of a commodity for future delivery if the contract is reported, 

recorded, or cleared in accordance with the rules of 

the contract market or a derivatives clearing organization. 

‘‘(10) TRADE INFORMATION.—The board of trade shall maintain rules and procedures to provide for the recording and 

safe storage of all identifying trade information in a manner 

that enables the contract market to use the information— 

‘‘(A) to assist in the prevention of customer and market 

abuses; and 

‘‘(B) to provide evidence of any violations of the rules 

of the contract market. 

‘‘(11) FINANCIAL INTEGRITY OF TRANSACTIONS.—The board 

of trade shall establish and enforce— 

‘‘(A) rules and procedures for ensuring the financial 

integrity of transactions entered into on or through the 

facilities of the contract market (including the clearance 

and settlement of the transactions with a derivatives 

clearing organization); and 

‘‘(B) rules to ensure— 

‘‘(i) the financial integrity of any— 

‘‘(I) futures commission merchant; and 

‘‘(II) introducing broker; and 

‘‘(ii) the protection of customer funds. 

‘‘(12) PROTECTION OF MARKETS AND MARKET PARTICIPANTS.—The board of trade shall establish and enforce rules— 
H. R. 4173—346 

‘‘(A) to protect markets and market participants from 

abusive practices committed by any party, including abusive practices committed by a party acting as an agent 

for a participant; and 

‘‘(B) to promote fair and equitable trading on the contract market. 

‘‘(13) DISCIPLINARY PROCEDURES.—The board of trade shall 

establish and enforce disciplinary procedures that authorize 

the board of trade to discipline, suspend, or expel members 

or market participants that violate the rules of the board of 

trade, or similar methods for performing the same functions, 

including delegation of the functions to third parties. 

‘‘(14) DISPUTE RESOLUTION.—The board of trade shall establish and enforce rules regarding, and provide facilities for alternative dispute resolution as appropriate for, market participants and any market intermediaries. 

‘‘(15) GOVERNANCE FITNESS STANDARDS.—The board of trade 

shall establish and enforce appropriate fitness standards for 

directors, members of any disciplinary committee, members 

of the contract market, and any other person with direct access 

to the facility (including any party affiliated with any person 

described in this paragraph). 

‘‘(16) CONFLICTS OF INTEREST.—The board of trade shall 

establish and enforce rules— 

‘‘(A) to minimize conflicts of interest in the decisionmaking process of the contract market; and 

‘‘(B) to establish a process for resolving conflicts of 

interest described in subparagraph (A). 

‘‘(17) COMPOSITION OF GOVERNING BOARDS OF CONTRACT

MARKETS.—The governance arrangements of the board of trade 

shall be designed to permit consideration of the views of market 

participants. 

‘‘(18) RECORDKEEPING.—The board of trade shall maintain 

records of all activities relating to the business of the contract 

market— 

‘‘(A) in a form and manner that is acceptable to the 

Commission; and 

‘‘(B) for a period of at least 5 years. 

‘‘(19) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this Act, the board 

of trade shall not— 

‘‘(A) adopt any rule or taking any action that results 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

trading on the contract market. 

‘‘(20) SYSTEM SAFEGUARDS.—The board of trade shall— 

‘‘(A) establish and maintain a program of risk analysis 

and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated 

systems, that are reliable, secure, and have adequate scalable capacity; 

‘‘(B) establish and maintain emergency procedures, 

backup facilities, and a plan for disaster recovery that 

allow for the timely recovery and resumption of operations 

and the fulfillment of the responsibilities and obligations 

of the board of trade; and 
H. R. 4173—347 

‘‘(C) periodically conduct tests to verify that backup 

resources are sufficient to ensure continued order processing and trade matching, price reporting, market surveillance, and maintenance of a comprehensive and accurate 

audit trail. 

‘‘(21) FINANCIAL RESOURCES.— ‘‘(A) IN GENERAL.—The board of trade shall have adequate financial, operational, and managerial resources to 

discharge each responsibility of the board of trade. 

‘‘(B) DETERMINATION OF ADEQUACY.—The financial 

resources of the board of trade shall be considered to be 

adequate if the value of the financial resources exceeds 

the total amount that would enable the contract market 

to cover the operating costs of the contract market for 

a 1-year period, as calculated on a rolling basis. 

‘‘(22) DIVERSITY OF BOARD OF DIRECTORS.—The board of 

trade, if a publicly traded company, shall endeavor to recruit 

individuals to serve on the board of directors and the other 

decision-making bodies (as determined by the Commission) of 

the board of trade from among, and to have the composition 

of the bodies reflect, a broad and culturally diverse pool of 

qualified candidates. 

‘‘(23) SECURITIES AND EXCHANGE COMMISSION.—The board 

of trade shall keep any such records relating to swaps defined 

in section 1a(47)(A)(v) open to inspection and examination by 

the Securities and Exchange Commission.’’. 

SEC. 736. MARGIN. 

Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 12a(7)) 

is amended— 

(1) in subparagraph (C), by striking ‘‘, excepting the setting 

of levels of margin’’; 

(2) by redesignating subparagraphs (D) through (F) as subparagraphs (E) through (G), respectively; and 

(3) by inserting after subparagraph (C) the following: 

‘‘(D) margin requirements, provided that the rules, 

regulations, or orders shall— 

‘‘(i) be limited to protecting the financial integrity 

of the derivatives clearing organization; 

‘‘(ii) be designed for risk management purposes 

to protect the financial integrity of transactions; and 

‘‘(iii) not set specific margin amounts;’’. 

SEC. 737. POSITION LIMITS. 

(a) AGGREGATE POSITION LIMITS.—Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 6a(a)) is amended— 

(1) by inserting after ‘‘(a)’’ the following: 

‘‘(1) IN GENERAL.—’’; 

(2) in the first sentence, by striking ‘‘on electronic trading 

facilities with respect to a significant price discovery contract’’ 

and inserting ‘‘swaps that perform or affect a significant price 

discovery function with respect to registered entities’’; 

(3) in the second sentence— 

(A) by inserting ‘‘, including any group or class of 

traders,’’ after ‘‘held by any person’’; and 

(B) by striking ‘‘on an electronic trading facility with 

respect to a significant price discovery contract,’’ and 

inserting ‘‘swaps traded on or subject to the rules of a 
H. R. 4173—348 

designated contract market or a swap execution facility, 

or swaps not traded on or subject to the rules of a designated contract market or a swap execution facility that 

performs a significant price discovery function with respect 

to a registered entity,’’; and 

(4) by adding at the end the following: 

‘‘(2) ESTABLISHMENT OF LIMITATIONS.— 

‘‘(A) IN GENERAL.—In accordance with the standards 

set forth in paragraph (1) of this subsection and consistent 

with the good faith exception cited in subsection (b)(2), 

with respect to physical commodities other than excluded 

commodities as defined by the Commission, the Commission shall by rule, regulation, or order establish limits 

on the amount of positions, as appropriate, other than 

bona fide hedge positions, that may be held by any person 

with respect to contracts of sale for future delivery or 

with respect to options on the contracts or commodities 

traded on or subject to the rules of a designated contract 

market. 

‘‘(B) TIMING.— 

‘‘(i) EXEMPT COMMODITIES.—For exempt commodities, the limits required under subparagraph (A) shall 

be established within 180 days after the date of the 

enactment of this paragraph. 

‘‘(ii) AGRICULTURAL COMMODITIES.—For agricultural commodities, the limits required under subparagraph (A) shall be established within 270 days after 

the date of the enactment of this paragraph. 

‘‘(C) GOAL.—In establishing the limits required under 

subparagraph (A), the Commission shall strive to ensure 

that trading on foreign boards of trade in the same commodity will be subject to comparable limits and that any 

limits to be imposed by the Commission will not cause 

price discovery in the commodity to shift to trading on 

the foreign boards of trade. 

‘‘(3) SPECIFIC LIMITATIONS.—In establishing the limits 

required in paragraph (2), the Commission, as appropriate, 

shall set limits— 

‘‘(A) on the number of positions that may be held 

by any person for the spot month, each other month, and 

the aggregate number of positions that may be held by 

any person for all months; and 

‘‘(B) to the maximum extent practicable, in its discretion— 

‘‘(i) to diminish, eliminate, or prevent excessive 

speculation as described under this section; 

‘‘(ii) to deter and prevent market manipulation, 

squeezes, and corners; 

‘‘(iii) to ensure sufficient market liquidity for bona 

fide hedgers; and 

‘‘(iv) to ensure that the price discovery function 

of the underlying market is not disrupted. 

‘‘(4) SIGNIFICANT PRICE DISCOVERY FUNCTION.—In making 

a determination whether a swap performs or affects a significant price discovery function with respect to regulated markets, 

the Commission shall consider, as appropriate: 
H. R. 4173—349 

‘‘(A) PRICE LINKAGE.—The extent to which the swap 

uses or otherwise relies on a daily or final settlement 

price, or other major price parameter, of another contract 

traded on a regulated market based upon the same underlying commodity, to value a position, transfer or convert 

a position, financially settle a position, or close out a position. 

‘‘(B) ARBITRAGE.—The extent to which the price for 

the swap is sufficiently related to the price of another 

contract traded on a regulated market based upon the 

same underlying commodity so as to permit market participants to effectively arbitrage between the markets by 

simultaneously maintaining positions or executing trades 

in the swaps on a frequent and recurring basis. 

‘‘(C) MATERIAL PRICE REFERENCE.—The extent to 

which, on a frequent and recurring basis, bids, offers, or 

transactions in a contract traded on a regulated market 

are directly based on, or are determined by referencing, 

the price generated by the swap. 

‘‘(D) MATERIAL LIQUIDITY.—The extent to which the 

volume of swaps being traded in the commodity is sufficient 

to have a material effect on another contract traded on 

a regulated market. 

‘‘(E) OTHER MATERIAL FACTORS.—Such other material 

factors as the Commission specifies by rule or regulation 

as relevant to determine whether a swap serves a significant price discovery function with respect to a regulated 

market. 

‘‘(5) ECONOMICALLY EQUIVALENT CONTRACTS.— 

‘‘(A) Notwithstanding any other provision of this section, the Commission shall establish limits on the amount 

of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may 

be held by any person with respect to swaps that are 

economically equivalent to contracts of sale for future 

delivery or to options on the contracts or commodities 

traded on or subject to the rules of a designated contract 

market subject to paragraph (2). 

‘‘(B) In establishing limits pursuant to subparagraph 

(A), the Commission shall— 

‘‘(i) develop the limits concurrently with limits 

established under paragraph (2), and the limits shall 

have similar requirements as under paragraph (3)(B); 

and 

‘‘(ii) establish the limits simultaneously with limits 

established under paragraph (2). 

‘‘(6) AGGREGATE POSITION LIMITS.—The Commission shall, 

by rule or regulation, establish limits (including related hedge 

exemption provisions) on the aggregate number or amount of 

positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by 

any person, including any group or class of traders, for each 

month across— 

‘‘(A) contracts listed by designated contract markets; 

‘‘(B) with respect to an agreement contract, or transaction that settles against any price (including the daily 

or final settlement price) of 1 or more contracts listed 
H. R. 4173—350 

for trading on a registered entity, contracts traded on a 

foreign board of trade that provides members or other 

participants located in the United States with direct access 

to its electronic trading and order matching system; and 

‘‘(C) swap contracts that perform or affect a significant 

price discovery function with respect to regulated entities. 

‘‘(7) EXEMPTIONS.—The Commission, by rule, regulation, 

or order, may exempt, conditionally or unconditionally, any 

person or class of persons, any swap or class of swaps, any 

contract of sale of a commodity for future delivery or class 

of such contracts, any option or class of options, or any transaction or class of transactions from any requirement it may 

establish under this section with respect to position limits.’’. 

(b) CONFORMING AMENDMENTS.—Section 4a(b) of the Commodity Exchange Act (7 U.S.C. 6a(b)) is amended— 

(1) in paragraph (1), by striking ‘‘or derivatives transaction 

execution facility or facilities or electronic trading facility’’ and 

inserting ‘‘or swap execution facility or facilities’’; and 

(2) in paragraph (2), by striking ‘‘or derivatives transaction 

execution facility or facilities or electronic trading facility’’ and 

inserting ‘‘or swap execution facility’’. 

(c) BONA FIDE HEDGING TRANSACTION.—Section 4a(c) of the 

Commodity Exchange Act is amended— 

(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 

(2) by adding at the end the following: 

‘‘(2) For the purposes of implementation of subsection (a)(2) 

for contracts of sale for future delivery or options on the contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that— 

‘‘(A)(i) represents a substitute for transactions made 

or to be made or positions taken or to be taken at a 

later time in a physical marketing channel; 

‘‘(ii) is economically appropriate to the reduction of 

risks in the conduct and management of a commercial 

enterprise; and 

‘‘(iii) arises from the potential change in the value 

of— 

‘‘(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates 

owning, producing, manufacturing, processing, or merchandising; 

‘‘(II) liabilities that a person owns or anticipates 

incurring; or 

‘‘(III) services that a person provides, purchases, 

or anticipates providing or purchasing; or 

‘‘(B) reduces risks attendant to a position resulting 

from a swap that— 

‘‘(i) was executed opposite a counterparty for which 

the transaction would qualify as a bona fide hedging 

transaction pursuant to subparagraph (A); or 

‘‘(ii) meets the requirements of subparagraph (A).’’. 

(d) EFFECTIVE DATE.—This section and the amendments made 

by this section shall become effective on the date of the enactment 

of this section. 
H. R. 4173—351 

SEC. 738. FOREIGN BOARDS OF TRADE. 

(a) IN GENERAL.—Section 4(b) of the Commodity Exchange Act 

(7 U.S.C. 6(b)) is amended— 

(1) in the first sentence, by striking ‘‘The Commission’’ 

and inserting the following: 

‘‘(2) PERSONS LOCATED IN THE UNITED STATES.— ‘‘(A) IN GENERAL.—The Commission’’; 

(2) in the second sentence, by striking ‘‘Such rules and 

regulations’’ and inserting the following: 

‘‘(B) DIFFERENT REQUIREMENTS.—Rules and regulations 

described in subparagraph (A)’’; 

(3) in the third sentence— 

(A) by striking ‘‘No rule or regulation’’ and inserting 

the following: 

‘‘(C) PROHIBITION.—Except as provided in paragraphs 

(1) and (2), no rule or regulation’’; 

(B) by striking ‘‘that (1) requires’’ and inserting the 

following: ‘‘that— 

‘‘(i) requires’’; and 

(C) by striking ‘‘market, or (2) governs’’ and inserting 

the following: ‘‘market; or 

‘‘(ii) governs’’; and 

(4) by inserting before paragraph (2) (as designated by 

paragraph (1)) the following: 

‘‘(1) FOREIGN BOARDS OF TRADE.— ‘‘(A) REGISTRATION.—The Commission may adopt rules 

and regulations requiring registration with the Commission 

for a foreign board of trade that provides the members 

of the foreign board of trade or other participants located 

in the United States with direct access to the electronic 

trading and order matching system of the foreign board 

of trade, including rules and regulations prescribing procedures and requirements applicable to the registration of 

such foreign boards of trade. For purposes of this paragraph, ‘direct access’ refers to an explicit grant of authority 

by a foreign board of trade to an identified member or 

other participant located in the United States to enter 

trades directly into the trade matching system of the foreign board of trade. In adopting such rules and regulations, 

the commission shall consider— 

‘‘(i) whether any such foreign board of trade is 

subject to comparable, comprehensive supervision and 

regulation by the appropriate governmental authorities 

in the foreign board of trade’s home country; and 

‘‘(ii) any previous commission findings that the 

foreign board of trade is subject to comparable comprehensive supervision and regulation by the appropriate government authorities in the foreign board of 

trade’s home country. 

‘‘(B) LINKED CONTRACTS.—The Commission may not 

permit a foreign board of trade to provide to the members 

of the foreign board of trade or other participants located 

in the United States direct access to the electronic trading 

and order-matching system of the foreign board of trade 

with respect to an agreement, contract, or transaction that 

settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on 
H. R. 4173—352 

a registered entity, unless the Commission determines 

that— 

‘‘(i) the foreign board of trade makes public daily 

trading information regarding the agreement, contract, 

or transaction that is comparable to the daily trading 

information published by the registered entity for the 

1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of 

trade settles; and 

‘‘(ii) the foreign board of trade (or the foreign 

futures authority that oversees the foreign board of 

trade)— 

‘‘(I) adopts position limits (including related 

hedge exemption provisions) for the agreement, 

contract, or transaction that are comparable to 

the position limits (including related hedge exemption provisions) adopted by the registered entity 

for the 1 or more contracts against which the 

agreement, contract, or transaction traded on the 

foreign board of trade settles; 

‘‘(II) has the authority to require or direct 

market participants to limit, reduce, or liquidate 

any position the foreign board of trade (or the 

foreign futures authority that oversees the foreign 

board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, 

excessive speculation as described in section 4a, 

price distortion, or disruption of delivery or the 

cash settlement process; 

‘‘(III) agrees to promptly notify the Commission, with regard to the agreement, contract, or 

transaction that settles against any price 

(including the daily or final settlement price) of 

1 or more contracts listed for trading on a registered entity, of any change regarding— 

‘‘(aa) the information that the foreign 

board of trade will make publicly available; 

‘‘(bb) the position limits that the foreign 

board of trade or foreign futures authority will 

adopt and enforce; 

‘‘(cc) the position reductions required to 

prevent manipulation, excessive speculation as 

described in section 4a, price distortion, or 

disruption of delivery or the cash settlement 

process; and 

‘‘(dd) any other area of interest expressed 

by the Commission to the foreign board of 

trade or foreign futures authority; 

‘‘(IV) provides information to the Commission 

regarding large trader positions in the agreement, 

contract, or transaction that is comparable to the 

large trader position information collected by the 

Commission for the 1 or more contracts against 

which the agreement, contract, or transaction 

traded on the foreign board of trade settles; and 

‘‘(V) provides the Commission such information as is necessary to publish reports on aggregate 
H. R. 4173—353 

trader positions for the agreement, contract, or 

transaction traded on the foreign board of trade 

that are comparable to such reports on aggregate 

trader positions for the 1 or more contracts against 

which the agreement, contract, or transaction 

traded on the foreign board of trade settles. 

‘‘(C) EXISTING FOREIGN BOARDS OF TRADE.—Subparagraphs (A) and (B) shall not be effective with respect to 

any foreign board of trade to which, prior to the date 

of enactment of this paragraph, the Commission granted 

direct access permission until the date that is 180 days 

after that date of enactment.’’. 

(b) LIABILITY OF REGISTERED PERSONS TRADING ON A FOREIGN

BOARD OF TRADE.—Section 4 of the Commodity Exchange Act (7 

U.S.C. 6) is amended— 

(1) in subsection (a), in the matter preceding paragraph 

(1), by inserting ‘‘or by subsection (e)’’ after ‘‘Unless exempted 

by the Commission pursuant to subsection (c)’’; and 

(2) by adding at the end the following: 

‘‘(e) LIABILITY OF REGISTERED PERSONS TRADING ON A FOREIGN

BOARD OF TRADE.— 

‘‘(1) IN GENERAL.—A person registered with the Commission, or exempt from registration by the Commission, under 

this Act may not be found to have violated subsection (a) 

with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person— 

‘‘(A) has reason to believe that the transaction and 

the contract is made on or subject to the rules of a foreign 

board of trade that is— 

‘‘(i) legally organized under the laws of a foreign 

country; 

‘‘(ii) authorized to act as a board of trade by a 

foreign futures authority; and 

‘‘(iii) subject to regulation by the foreign futures 

authority; and 

‘‘(B) has not been determined by the Commission to 

be operating in violation of subsection (a). 

‘‘(2) RULE OF CONSTRUCTION.—Nothing in this subsection 

shall be construed as implying or creating any presumption 

that a board of trade, exchange, or market is located outside 

the United States, or its territories or possessions, for purposes 

of subsection (a).’’. 

(c) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES CONTRACTS.—Section 22(a) of the Commodity Exchange Act (7 U.S.C. 

25(a)) (as amended by section 739) is amended by adding at the 

end the following: 

‘‘(6) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES CONTRACTS.—A contract of sale of a commodity for future delivery 

traded or executed on or through the facilities of a board of trade, 

exchange, or market located outside the United States for purposes 

of section 4(a) shall not be void, voidable, or unenforceable, and 

a party to such a contract shall not be entitled to rescind or 

recover any payment made with respect to the contract, based 

on the failure of the foreign board of trade to comply with any 

provision of this Act.’’. 
H. R. 4173—354 

SEC. 739. LEGAL CERTAINTY FOR SWAPS. 

Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) 

is amended by striking paragraph (4) and inserting the following: 

‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELIGIBLE COUNTERPAR- TIES.— ‘‘(A) IN GENERAL.—No hybrid instrument sold to any 

investor shall be void, voidable, or unenforceable, and no party 

to a hybrid instrument shall be entitled to rescind, or recover 

any payment made with respect to, the hybrid instrument 

under this section or any other provision of Federal or State 

law, based solely on the failure of the hybrid instrument to 

comply with the terms or conditions of section 2(f) or regulations 

of the Commission. 

‘‘(B) SWAPS.—No agreement, contract, or transaction 

between eligible contract participants or persons reasonably 

believed to be eligible contract participants shall be void, voidable, or unenforceable, and no party to such agreement, contract, or transaction shall be entitled to rescind, or recover 

any payment made with respect to, the agreement, contract, 

or transaction under this section or any other provision of 

Federal or State law, based solely on the failure of the agreement, contract, or transaction— 

‘‘(i) to meet the definition of a swap under section 

1a; or 

‘‘(ii) to be cleared in accordance with section 2(h)(1). 

‘‘(5) LEGAL CERTAINTY FOR LONG-TERM SWAPS ENTERED INTO

BEFORE THE DATE OF ENACTMENT OF THE WALL STREET TRANS- PARENCY AND ACCOUNTABILITY ACT OF 2010.— 

‘‘(A) EFFECT ON SWAPS.—Unless specifically reserved in 

the applicable swap, neither the enactment of the Wall Street 

Transparency and Accountability Act of 2010, nor any requirement under that Act or an amendment made by that Act, 

shall constitute a termination event, force majeure, illegality, 

increased costs, regulatory change, or similar event under a 

swap (including any related credit support arrangement) that 

would permit a party to terminate, renegotiate, modify, amend, 

or supplement 1 or more transactions under the swap. 

‘‘(B) POSITION LIMITS.—Any position limit established under 

the Wall Street Transparency and Accountability Act of 2010 

shall not apply to a position acquired in good faith prior to 

the effective date of any rule, regulation, or order under the 

Act that establishes the position limit; provided, however, that 

such positions shall be attributed to the trader if the trader’s 

position is increased after the effective date of such position 

limit rule, regulation, or order.’’. 

SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS. 

Sections 408 and 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) are repealed. 

SEC. 741. ENFORCEMENT. 

(a) ENFORCEMENT AUTHORITY.—The Commodity Exchange Act 

is amended by inserting after section 4b (7 U.S.C. 6b) the following: 

‘‘SEC. 4b–1. ENFORCEMENT AUTHORITY. 

‘‘(a) COMMODITY FUTURES TRADING COMMISSION.—Except as 

provided in subsections (b), (c), and (d), the Commission shall have 

exclusive authority to enforce the provisions of subtitle A of the 
H. R. 4173—355 

Wall Street Transparency and Accountability Act of 2010 with 

respect to any person. 

‘‘(b) PRUDENTIAL REGULATORS.—The prudential regulators shall 

have exclusive authority to enforce the provisions of section 4s(e) 

with respect to swap dealers or major swap participants for which 

they are the prudential regulator. 

‘‘(c) REFERRALS.— 

‘‘(1) PRUDENTIAL REGULATORS.—If the prudential regulator 

for a swap dealer or major swap participant has cause to 

believe that the swap dealer or major swap participant, or 

any affiliate or division of the swap dealer or major swap 

participant, may have engaged in conduct that constitutes a 

violation of the nonprudential requirements of this Act 

(including section 4s or rules adopted by the Commission under 

that section), the prudential regulator may promptly notify 

the Commission in a written report that includes— 

‘‘(A) a request that the Commission initiate an enforcement proceeding under this Act; and 

‘‘(B) an explanation of the facts and circumstances 

that led to the preparation of the written report. 

‘‘(2) COMMISSION.—If the Commission has cause to believe 

that a swap dealer or major swap participant that has a prudential regulator may have engaged in conduct that constitutes 

a violation of any prudential requirement of section 4s or rules 

adopted by the Commission under that section, the Commission 

may notify the prudential regulator of the conduct in a written 

report that includes— 

‘‘(A) a request that the prudential regulator initiate 

an enforcement proceeding under this Act or any other 

Federal law (including regulations); and 

‘‘(B) an explanation of the concerns of the Commission, 

and a description of the facts and circumstances, that led 

to the preparation of the written report. 

‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.— 

‘‘(1) INITIATION OF ENFORCEMENT PROCEEDING BY PRUDENTIAL REGULATOR.—If the Commission does not initiate an 

enforcement proceeding before the end of the 90-day period 

beginning on the date on which the Commission receives a 

written report under subsection (c)(1), the prudential regulator 

may initiate an enforcement proceeding. 

‘‘(2) INITIATION OF ENFORCEMENT PROCEEDING BY COMMISSION.—If the prudential regulator does not initiate an enforcement proceeding before the end of the 90-day period beginning 

on the date on which the prudential regulator receives a written 

report under subsection (c)(2), the Commission may initiate 

an enforcement proceeding.’’. 

(b) CONFORMING AMENDMENTS.— 

(1) Section 4b of the Commodity Exchange Act (7 U.S.C. 

6b) is amended— 

(A) in subsection (a)(2), by striking ‘‘or other agreement, contract, or transaction subject to paragraphs (1) 

and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’; 

(B) in subsection (b), by striking ‘‘or other agreement, 

contract or transaction subject to paragraphs (1) and (2) 

of section 5a(g),’’ and inserting ‘‘or swap,’’; and 

(C) by adding at the end the following: 
H. R. 4173—356 

‘‘(e) It shall be unlawful for any person, directly or indirectly, 

by the use of any means or instrumentality of interstate commerce, 

or of the mails, or of any facility of any registered entity, in 

or in connection with any order to make, or the making of, any 

contract of sale of any commodity for future delivery (or option 

on such a contract), or any swap, on a group or index of securities 

(or any interest therein or based on the value thereof)— 

‘‘(1) to employ any device, scheme, or artifice to defraud; 

‘‘(2) to make any untrue statement of a material fact or 

to omit to state a material fact necessary in order to make 

the statements made, in the light of the circumstances under 

which they were made, not misleading; or 

‘‘(3) to engage in any act, practice, or course of business 

which operates or would operate as a fraud or deceit upon 

any person.’’. 

(2) Section 4c(a)(1) of the Commodity Exchange Act (7 

U.S.C. 6c(a)(1)) is amended by inserting ‘‘or swap’’ before ‘‘if 

the transaction is used or may be used’’. 

(3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 

9) is amended in the first sentence by inserting ‘‘or of any 

swap,’’ before ‘‘or has willfully made’’. 

(4) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 

13b) is amended in the first sentence, in the matter preceding 

the proviso, by inserting ‘‘or of any swap,’’ before ‘‘or otherwise 

is violating’’. 

(5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C. 

13a–1(a)) is amended in the matter preceding the proviso by 

inserting ‘‘or any swap’’ after ‘‘commodity for future delivery’’. 

(6) Section 9 of the Commodity Exchange Act (7 U.S.C. 

13) is amended— 

(A) in subsection (a)— 

(i) in paragraph (2), by inserting ‘‘or of any swap,’’ 

before ‘‘or to corner’’; and 

(ii) in paragraph (4), by inserting ‘‘swap data 

repository,’’ before ‘‘or futures association’’ and 

(B) in subsection (e)(1)— 

(i) by inserting ‘‘swap data repository,’’ before ‘‘or 

registered futures association’’; and 

(ii) by inserting ‘‘, or swaps,’’ before ‘‘on the basis’’. 

(7) Section 9(a) of the Commodity Exchange Act (7 U.S.C. 

13(a)) is amended by adding at the end the following: 

‘‘(6) Any person to abuse the end user clearing exemption 

under section 2(h)(4), as determined by the Commission.’’. 

(8) Section 2(c)(2)(B) of the Commodity Exchange Act (7 

U.S.C. 2(c)(2)(B)) is amended— 

(A) by striking ‘‘(dd),’’ each place it appears; 

(B) in clause (iii), by inserting ‘‘, and accounts or pooled 

investment vehicles described in clause (vi),’’ before ‘‘shall 

be subject to’’; and 

(C) by adding at the end the following: 

‘‘(vi) This Act applies to, and the Commission shall 

have jurisdiction over, an account or pooled investment 

vehicle that is offered for the purpose of trading, or 

that trades, any agreement, contract, or transaction 

in foreign currency described in clause (i).’’. 

(9) Section 2(c)(2)(C) of the Commodity Exchange Act (7 

U.S.C. 2(c)(2)(C)) is amended— 
H. R. 4173—357 

(A) by striking ‘‘(dd),’’ each place it appears; 

(B) in clause (ii)(I), by inserting ‘‘, and accounts or 

pooled investment vehicles described in clause (vii),’’ before 

‘‘shall be subject to’’; and 

(C) by adding at the end the following: 

‘‘(vii) This Act applies to, and the Commission 

shall have jurisdiction over, an account or pooled 

investment vehicle that is offered for the purpose of 

trading, or that trades, any agreement, contract, or 

transaction in foreign currency described in clause (i).’’. 

(10) Section 1a(19)(A)(iv)(II) of the Commodity Exchange 

Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section 

721(a)(1)) is amended by inserting before the semicolon at the 

end the following: ‘‘provided, however, that for purposes of 

section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the term ‘eligible 

contract participant’ shall not include a commodity pool in 

which any participant is not otherwise an eligible contract 

participant’’. 

(11) Section 6(e) of the Commodity Exchange Act (7 U.S.C. 

9a) is amended by adding at the end the following: 

‘‘(4) Any designated clearing organization that knowingly 

or recklessly evades or participates in or facilitates an evasion 

of the requirements of section 2(h) shall be liable for a civil 

money penalty in twice the amount otherwise available for 

a violation of section 2(h). 

‘‘(5) Any swap dealer or major swap participant that knowingly or recklessly evades or participates in or facilitates an 

evasion of the requirements of section 2(h) shall be liable for 

a civil money penalty in twice the amount otherwise available 

for a violation of section 2(h).’’. 

(c) SAVINGS CLAUSE.—Notwithstanding any other provision of 

this title, nothing in this subtitle shall be construed as divesting 

any appropriate Federal banking agency of any authority it may 

have to establish or enforce, with respect to a person for which 

such agency is the appropriate Federal banking agency, prudential 

or other standards pursuant to authority granted by Federal law 

other than this title. 

SEC. 742. RETAIL COMMODITY TRANSACTIONS. 

(a) IN GENERAL.—Section 2(c) of the Commodity Exchange Act 

(7 U.S.C. 2(c)) is amended— 

(1) in paragraph (1), by striking ‘‘5a (to the extent provided 

in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ and inserting ‘‘, 5b, 

or 12(e)(2)(B))’’; and 

(2) in paragraph (2), by adding at the end the following: 

‘‘(D) RETAIL COMMODITY TRANSACTIONS.— 

‘‘(i) APPLICABILITY.—Except as provided in clause 

(ii), this subparagraph shall apply to any agreement, 

contract, or transaction in any commodity that is— 

‘‘(I) entered into with, or offered to (even if 

not entered into with), a person that is not an 

eligible contract participant or eligible commercial 

entity; and 

‘‘(II) entered into, or offered (even if not 

entered into), on a leveraged or margined basis, 

or financed by the offeror, the counterparty, or 
H. R. 4173—358 

a person acting in concert with the offeror or 

counterparty on a similar basis. 

‘‘(ii) EXCEPTIONS.—This subparagraph shall not 

apply to— 

‘‘(I) an agreement, contract, or transaction 

described in paragraph (1) or subparagraphs (A), 

(B), or (C), including any agreement, contract, or 

transaction specifically excluded from subparagraph (A), (B), or (C); 

‘‘(II) any security; 

‘‘(III) a contract of sale that— 

‘‘(aa) results in actual delivery within 28 

days or such other longer period as the 

Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity 

involved; or 

‘‘(bb) creates an enforceable obligation to 

deliver between a seller and a buyer that have 

the ability to deliver and accept delivery, 

respectively, in connection with the line of 

business of the seller and buyer; or 

‘‘(IV) an agreement, contract, or transaction 

that is listed on a national securities exchange 

registered under section 6(a) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78f(a)); or 

‘‘(V) an identified banking product, as defined 

in section 402(b) of the Legal Certainty for Bank 

Products Act of 2000 (7 U.S.C.27(b)). 

‘‘(iii) ENFORCEMENT.—Sections 4(a), 4(b), and 4b 

apply to any agreement, contract, or transaction 

described in clause (i), as if the agreement, contract, 

or transaction was a contract of sale of a commodity 

for future delivery. 

‘‘(iv) ELIGIBLE COMMERCIAL ENTITY.—For purposes 

of this subparagraph, an agricultural producer, packer, 

or handler shall be considered to be an eligible commercial entity for any agreement, contract, or transaction 

for a commodity in connection with the line of business 

of the agricultural producer, packer, or handler.’’. 

(b) GRAMM-LEACH-BLILEY ACT.—Section 206(a) of the GrammLeach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) is 

amended, in the matter preceding paragraph (1), by striking ‘‘For 

purposes of’’ and inserting ‘‘Except as provided in subsection (e), 

for purposes of’’. 

(c) CONFORMING AMENDMENTS RELATING TO RETAIL FOREIGN

EXCHANGE TRANSACTIONS.— 

(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act 

(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended— 

(A) in item (aa), by inserting ‘‘United States’’ before 

‘‘financial institution’’; 

(B) by striking items (dd) and (ff); 

(C) by redesignating items (ee) and (gg) as items (dd) 

and (ff), respectively; and 

(D) in item (dd) (as so redesignated), by striking the 

semicolon and inserting ‘‘; or’’. 
H. R. 4173—359 

(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 

2(c)(2)) (as amended by subsection (a)(2)) is amended by adding 

at the end the following: 

‘‘(E) PROHIBITION.— 

‘‘(i) DEFINITION OF FEDERAL REGULATORY

AGENCY.—In this subparagraph, the term ‘Federal 

regulatory agency’ means— 

‘‘(I) the Commission; 

‘‘(II) the Securities and Exchange Commission; 

‘‘(III) an appropriate Federal banking agency; 

‘‘(IV) the National Credit Union Association; 

and 

‘‘(V) the Farm Credit Administration. 

‘‘(ii) PROHIBITION.— 

‘‘(I) IN GENERAL.—Except as provided in subclause (II), a person described in subparagraph 

(B)(i)(II) for which there is a Federal regulatory 

agency shall not offer to, or enter into with, a 

person that is not an eligible contract participant, 

any agreement, contract, or transaction in foreign 

currency described in subparagraph (B)(i)(I) except 

pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, 

or transaction under such terms and conditions 

as the Federal regulatory agency shall prescribe. 

‘‘(II) EFFECTIVE DATE.—With regard to persons 

described in subparagraph (B)(i)(II) for which a 

Federal regulatory agency has issued a proposed 

rule concerning agreements, contracts, or transactions in foreign currency described in subparagraph (B)(i)(I) prior to the date of enactment of 

this subclause, subclause (I) shall take effect 90 

days after the date of enactment of this subclause. 

‘‘(iii) REQUIREMENTS OF RULES AND REGULATIONS.— 

‘‘(I) IN GENERAL.—The rules and regulations 

described in clause (ii) shall prescribe appropriate 

requirements with respect to— 

‘‘(aa) disclosure; 

‘‘(bb) recordkeeping; 

‘‘(cc) capital and margin; 

‘‘(dd) reporting; 

‘‘(ee) business conduct; 

‘‘(ff) documentation; and 

‘‘(gg) such other standards or requirements as the Federal regulatory agency shall 

determine to be necessary. 

‘‘(II) TREATMENT.—The rules or regulations 

described in clause (ii) shall treat all agreements, 

contracts, and transactions in foreign currency 

described in subparagraph (B)(i)(I), and all agreements, contracts, and transactions in foreign currency that are functionally or economically similar 

to agreements, contracts, or transactions described 

in subparagraph (B)(i)(I), similarly.’’. 
H. R. 4173—360 

SEC. 743. OTHER AUTHORITY. 

Unless otherwise provided by the amendments made by this 

subtitle, the amendments made by this subtitle do not divest any 

appropriate Federal banking agency, the Commodity Futures 

Trading Commission, the Securities and Exchange Commission, 

or other Federal or State agency of any authority derived from 

any other applicable law. 

SEC. 744. RESTITUTION REMEDIES. 

Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a– 

1(d)) is amended by adding at the end the following: 

‘‘(3) EQUITABLE REMEDIES.—In any action brought under 

this section, the Commission may seek, and the court may 

impose, on a proper showing, on any person found in the 

action to have committed any violation, equitable remedies 

including— 

‘‘(A) restitution to persons who have sustained losses 

proximately caused by such violation (in the amount of 

such losses); and 

‘‘(B) disgorgement of gains received in connection with 

such violation.’’. 

SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES. 

(a) EFFECT OF INTERPRETATION.—Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 7a–2(a)) is amended by striking 

paragraph (2) and inserting the following: 

‘‘(2) EFFECT OF INTERPRETATION.—An interpretation issued 

under paragraph (1) may provide the exclusive means for complying with each section described in paragraph (1).’’. 

(b) NEW CONTRACTS, NEW RULES, AND RULE AMENDMENTS.— 

Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is 

amended by striking subsection (c) and inserting the following: 

‘‘(c) NEW CONTRACTS, NEW RULES, AND RULE AMENDMENTS.— 

‘‘(1) IN GENERAL.—A registered entity may elect to list 

for trading or accept for clearing any new contract, or other 

instrument, or may elect to approve and implement any new 

rule or rule amendment, by providing to the Commission (and 

the Secretary of the Treasury, in the case of a contract of 

sale of a government security for future delivery (or option 

on such a contract) or a rule or rule amendment specifically 

related to such a contract) a written certification that the 

new contract or instrument or clearing of the new contract 

or instrument, new rule, or rule amendment complies with 

this Act (including regulations under this Act). 

‘‘(2) RULE REVIEW.—The new rule or rule amendment 

described in paragraph (1) shall become effective, pursuant 

to the certification of the registered entity and notice of such 

certification to its members (in a manner to be determined 

by the Commission), on the date that is 10 business days 

after the date on which the Commission receives the certification (or such shorter period as determined by the Commission 

by rule or regulation) unless the Commission notifies the registered entity within such time that it is staying the certification 

because there exist novel or complex issues that require additional time to analyze, an inadequate explanation by the 

submitting registered entity, or a potential inconsistency with 

this Act (including regulations under this Act). 
H. R. 4173—361 

‘‘(3) STAY OF CERTIFICATION FOR RULES.— 

‘‘(A) A notification by the Commission pursuant to 

paragraph (2) shall stay the certification of the new rule 

or rule amendment for up to an additional 90 days from 

the date of the notification. 

‘‘(B) A rule or rule amendment subject to a stay pursuant to subparagraph (A) shall become effective, pursuant 

to the certification of the registered entity, at the expiration 

of the period described in subparagraph (A) unless the 

Commission— 

‘‘(i) withdraws the stay prior to that time; or 

‘‘(ii) notifies the registered entity during such 

period that it objects to the proposed certification on 

the grounds that it is inconsistent with this Act 

(including regulations under this Act). 

‘‘(C) The Commission shall provide a not less than 

30-day public comment period, within the 90-day period 

in which the stay is in effect as described in subparagraph 

(A), whenever the Commission reviews a rule or rule 

amendment pursuant to a notification by the Commission 

under this paragraph. 

‘‘(4) PRIOR APPROVAL.— 

‘‘(A) IN GENERAL.—A registered entity may request that 

the Commission grant prior approval to any new contract 

or other instrument, new rule, or rule amendment. 

‘‘(B) PRIOR APPROVAL REQUIRED.—Notwithstanding any 

other provision of this section, a designated contract market 

shall submit to the Commission for prior approval each 

rule amendment that materially changes the terms and 

conditions, as determined by the Commission, in any contract of sale for future delivery of a commodity specifically 

enumerated in section 1a(10) (or any option thereon) traded 

through its facilities if the rule amendment applies to 

contracts and delivery months which have already been 

listed for trading and have open interest. 

‘‘(C) DEADLINE.—If prior approval is requested under 

subparagraph (A), the Commission shall take final action 

on the request not later than 90 days after submission 

of the request, unless the person submitting the request 

agrees to an extension of the time limitation established 

under this subparagraph. 

‘‘(5) APPROVAL.— 

‘‘(A) RULES.—The Commission shall approve a new 

rule, or rule amendment, of a registered entity unless the 

Commission finds that the new rule, or rule amendment, 

is inconsistent with this subtitle (including regulations). 

‘‘(B) CONTRACTS AND INSTRUMENTS.—The Commission 

shall approve a new contract or other instrument unless 

the Commission finds that the new contract or other 

instrument would violate this Act (including regulations). 

‘‘(C) SPECIAL RULE FOR REVIEW AND APPROVAL OF EVENT

CONTRACTS AND SWAPS CONTRACTS.— ‘‘(i) EVENT CONTRACTS.—In connection with the 

listing of agreements, contracts, transactions, or swaps 

in excluded commodities that are based upon the occurrence, extent of an occurrence, or contingency (other 

than a change in the price, rate, value, or levels of 
H. R. 4173—362 

a commodity described in section 1a(2)(i)), by a designated contract market or swap execution facility, the 

Commission may determine that such agreements, contracts, or transactions are contrary to the public 

interest if the agreements, contracts, or transactions 

involve— 

‘‘(I) activity that is unlawful under any Federal 

or State law; 

‘‘(II) terrorism; 

‘‘(III) assassination; 

‘‘(IV) war; 

‘‘(V) gaming; or 

‘‘(VI) other similar activity determined by the 

Commission, by rule or regulation, to be contrary 

to the public interest. 

‘‘(ii) PROHIBITION.—No agreement, contract, or 

transaction determined by the Commission to be contrary to the public interest under clause (i) may be 

listed or made available for clearing or trading on 

or through a registered entity. 

‘‘(iii) SWAPS CONTRACTS.— 

‘‘(I) IN GENERAL.—In connection with the 

listing of a swap for clearing by a derivatives 

clearing organization, the Commission shall determine, upon request or on its own motion, the initial 

eligibility, or the continuing qualification, of a 

derivatives clearing organization to clear such a 

swap under those criteria, conditions, or rules that 

the Commission, in its discretion, determines. 

‘‘(II) REQUIREMENTS.—Any such criteria, conditions, or rules shall consider— 

‘‘(aa) the financial integrity of the derivatives clearing organization; and 

‘‘(bb) any other factors which the Commission determines may be appropriate. 

‘‘(iv) DEADLINE.—The Commission shall take final 

action under clauses (i) and (ii) in not later than 90 

days from the commencement of its review unless the 

party seeking to offer the contract or swap agrees 

to an extension of this time limitation.’’. 

(c) VIOLATION OF CORE PRINCIPLES.—Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended by striking subsection (d). 

SEC. 746. INSIDER TRADING. 

Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) 

is amended by adding at the end the following: 

‘‘(3) CONTRACT OF SALE.—It shall be unlawful for any 

employee or agent of any department or agency of the Federal 

Government who, by virtue of the employment or position of 

the employee or agent, acquires information that may affect 

or tend to affect the price of any commodity in interstate 

commerce, or for future delivery, or any swap, and which 

information has not been disseminated by the department or 

agency of the Federal Government holding or creating the 

information in a manner which makes it generally available 

to the trading public, or disclosed in a criminal, civil, or 
H. R. 4173—363 

administrative hearing, or in a congressional, administrative, 

or Government Accountability Office report, hearing, audit, or 

investigation, to use the information in his personal capacity 

and for personal gain to enter into, or offer to enter into— 

‘‘(A) a contract of sale of a commodity for future 

delivery (or option on such a contract); 

‘‘(B) an option (other than an option executed or traded 

on a national securities exchange registered pursuant to 

section 6(a) of the Securities Exchange Act of 1934 (15 

U.S.C. 78f(a)); or 

‘‘(C) a swap. 

‘‘(4) NONPUBLIC INFORMATION.— 

‘‘(A) IMPARTING OF NONPUBLIC INFORMATION.—It shall 

be unlawful for any employee or agent of any department 

or agency of the Federal Government who, by virtue of 

the employment or position of the employee or agent, 

acquires information that may affect or tend to affect the 

price of any commodity in interstate commerce, or for future 

delivery, or any swap, and which information has not been 

disseminated by the department or agency of the Federal 

Government holding or creating the information in a 

manner which makes it generally available to the trading 

public, or disclosed in a criminal, civil, or administrative 

hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity 

and for personal gain with intent to assist another person, 

directly or indirectly, to use the information to enter into, 

or offer to enter into— 

‘‘(i) a contract of sale of a commodity for future 

delivery (or option on such a contract); 

‘‘(ii) an option (other than an option executed or 

traded on a national securities exchange registered 

pursuant to section 6(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78f(a)); or 

‘‘(iii) a swap. 

‘‘(B) KNOWING USE.—It shall be unlawful for any person 

who receives information imparted by any employee or 

agent of any department or agency of the Federal Government as described in subparagraph (A) to knowingly use 

such information to enter into, or offer to enter into— 

‘‘(i) a contract of sale of a commodity for future 

delivery (or option on such a contract); 

‘‘(ii) an option (other than an option executed or 

traded on a national securities exchange registered 

pursuant to section 6(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78f(a)); or 

‘‘(iii) a swap. 

‘‘(C) THEFT OF NONPUBLIC INFORMATION.—It shall be 

unlawful for any person to steal, convert, or misappropriate, 

by any means whatsoever, information held or created 

by any department or agency of the Federal Government 

that may affect or tend to affect the price of any commodity 

in interstate commerce, or for future delivery, or any swap, 

where such person knows, or acts in reckless disregard 

of the fact, that such information has not been disseminated 

by the department or agency of the Federal Government 
H. R. 4173—364 

holding or creating the information in a manner which 

makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or 

in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and 

to use such information, or to impart such information 

with the intent to assist another person, directly or 

indirectly, to use such information to enter into, or offer 

to enter into— 

‘‘(i) a contract of sale of a commodity for future 

delivery (or option on such a contract); 

‘‘(ii) an option (other than an option executed or 

traded on a national securities exchange registered 

pursuant to section 6(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78f(a)); or 

‘‘(iii) a swap, provided, however, that nothing in 

this subparagraph shall preclude a person that has 

provided information concerning, or generated by, the 

person, its operations or activities, to any employee 

or agent of any department or agency of the Federal 

Government, voluntarily or as required by law, from 

using such information to enter into, or offer to enter 

into, a contract of sale, option, or swap described in 

clauses (i), (ii), or (iii).’’. 

SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY. 

Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) 

(as amended by section 746) is amended by adding at the end 

the following: 

‘‘(5) DISRUPTIVE PRACTICES.—It shall be unlawful for any 

person to engage in any trading, practice, or conduct on or 

subject to the rules of a registered entity that— 

‘‘(A) violates bids or offers; 

‘‘(B) demonstrates intentional or reckless disregard for 

the orderly execution of transactions during the closing 

period; or 

‘‘(C) is, is of the character of, or is commonly known 

to the trade as, ‘spoofing’ (bidding or offering with the 

intent to cancel the bid or offer before execution). 

‘‘(6) RULEMAKING AUTHORITY.—The Commission may make 

and promulgate such rules and regulations as, in the judgment 

of the Commission, are reasonably necessary to prohibit the 

trading practices described in paragraph (5) and any other 

trading practice that is disruptive of fair and equitable trading. 

‘‘(7) USE OF SWAPS TO DEFRAUD.—It shall be unlawful for 

any person to enter into a swap knowing, or acting in reckless 

disregard of the fact, that its counterparty will use the swap 

as part of a device, scheme, or artifice to defraud any third 

party.’’. 

SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION. 

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 

by adding at the end the following: 

‘‘SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION. 

‘‘(a) DEFINITIONS.—In this section: 
H. R. 4173—365 

‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION.—The 

term ‘covered judicial or administrative action’ means any 

judicial or administrative action brought by the Commission 

under this Act that results in monetary sanctions exceeding 

$1,000,000. 

‘‘(2) FUND.—The term ‘Fund’ means the Commodity 

Futures Trading Commission Customer Protection Fund established under subsection (g). 

‘‘(3) MONETARY SANCTIONS.—The term ‘monetary sanctions’, 

when used with respect to any judicial or administrative action 

means— 

‘‘(A) any monies, including penalties, disgorgement, 

restitution, and interest ordered to be paid; and 

‘‘(B) any monies deposited into a disgorgement fund 

or other fund pursuant to section 308(b) of the SarbanesOxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such 

action or any settlement of such action. 

‘‘(4) ORIGINAL INFORMATION.—The term ‘original information’ means information that— 

‘‘(A) is derived from the independent knowledge or 

analysis of a whistleblower; 

‘‘(B) is not known to the Commission from any other 

source, unless the whistleblower is the original source of 

the information; and 

‘‘(C) is not exclusively derived from an allegation made 

in a judicial or administrative hearing, in a governmental 

report, hearing, audit, or investigation, or from the news 

media, unless the whistleblower is a source of the information. 

‘‘(5) RELATED ACTION.—The term ‘related action’, when used 

with respect to any judicial or administrative action brought 

by the Commission under this Act, means any judicial or 

administrative action brought by an entity described in subclauses (I) through (VI) of subsection (h)(2)(C) that is based 

upon the original information provided by a whistleblower 

pursuant to subsection (a) that led to the successful enforcement 

of the Commission action. 

‘‘(6) SUCCESSFUL RESOLUTION.—The term ‘successful resolution’, when used with respect to any judicial or administrative 

action brought by the Commission under this Act, includes 

any settlement of such action. 

‘‘(7) WHISTLEBLOWER.—The term ‘whistleblower’ means any 

individual, or 2 or more individuals acting jointly, who provides 

information relating to a violation of this Act to the Commission, in a manner established by rule or regulation by the 

Commission. 

‘‘(b) AWARDS.— 

‘‘(1) IN GENERAL.—In any covered judicial or administrative 

action, or related action, the Commission, under regulations 

prescribed by the Commission and subject to subsection (c), 

shall pay an award or awards to 1 or more whistleblowers 

who voluntarily provided original information to the Commission that led to the successful enforcement of the covered 

judicial or administrative action, or related action, in an aggregate amount equal to— 
H. R. 4173—366 

‘‘(A) not less than 10 percent, in total, of what has 

been collected of the monetary sanctions imposed in the 

action or related actions; and 

‘‘(B) not more than 30 percent, in total, of what has 

been collected of the monetary sanctions imposed in the 

action or related actions. 

‘‘(2) PAYMENT OF AWARDS.—Any amount paid under paragraph (1) shall be paid from the Fund. 

‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL OF

AWARD.— 

‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— ‘‘(A) DISCRETION.—The determination of the amount 

of an award made under subsection (b) shall be in the 

discretion of the Commission. 

‘‘(B) CRITERIA.—In determining the amount of an 

award made under subsection (b), the Commission— 

‘‘(i) shall take into consideration— 

‘‘(I) the significance of the information provided by the whistleblower to the success of the 

covered judicial or administrative action; 

‘‘(II) the degree of assistance provided by the 

whistleblower and any legal representative of the 

whistleblower in a covered judicial or administrative action; 

‘‘(III) the programmatic interest of the 

Commission in deterring violations of the Act 

(including regulations under the Act) by making 

awards to whistleblowers who provide information 

that leads to the successful enforcement of such 

laws; and 

‘‘(IV) such additional relevant factors as the 

Commission may establish by rule or regulation; 

and 

‘‘(ii) shall not take into consideration the balance 

of the Fund. 

‘‘(2) DENIAL OF AWARD.—No award under subsection (b) 

shall be made— 

‘‘(A) to any whistleblower who is, or was at the time 

the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee 

of— 

‘‘(i) a appropriate regulatory agency; 

‘‘(ii) the Department of Justice; 

‘‘(iii) a registered entity; 

‘‘(iv) a registered futures association; 

‘‘(v) a self-regulatory organization as defined in 

section 3(a) of the Securities Exchange Act of 1934 

(15 U.S.C. 78c(a)); or 

‘‘(vi) a law enforcement organization; 

‘‘(B) to any whistleblower who is convicted of a criminal 

violation related to the judicial or administrative action 

for which the whistleblower otherwise could receive an 

award under this section; 

‘‘(C) to any whistleblower who submits information 

to the Commission that is based on the facts underlying 

the covered action submitted previously by another whistleblower; 
H. R. 4173—367 

‘‘(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission 

may, by rule or regulation, require. 

‘‘(d) REPRESENTATION.— 

‘‘(1) PERMITTED REPRESENTATION.—Any whistleblower who 

makes a claim for an award under subsection (b) may be 

represented by counsel. 

‘‘(2) REQUIRED REPRESENTATION.— 

‘‘(A) IN GENERAL.—Any whistleblower who anonymously makes a claim for an award under subsection (b) 

shall be represented by counsel if the whistleblower submits the information upon which the claim is based. 

‘‘(B) DISCLOSURE OF IDENTITY.—Prior to the payment 

of an award, a whistleblower shall disclose the identity 

of the whistleblower and provide such other information 

as the Commission may require, directly or through counsel 

for the whistleblower. 

‘‘(e) NO CONTRACT NECESSARY.—No contract with the Commission is necessary for any whistleblower to receive an award under 

subsection (b), unless otherwise required by the Commission, by 

rule or regulation. 

‘‘(f) APPEALS.— 

‘‘(1) IN GENERAL.—Any determination made under this section, including whether, to whom, or in what amount to make 

awards, shall be in the discretion of the Commission. 

‘‘(2) APPEALS.—Any determination described in paragraph 

(1) may be appealed to the appropriate court of appeals of 

the United States not more than 30 days after the determination is issued by the Commission. 

‘‘(3) REVIEW.—The court shall review the determination 

made by the Commission in accordance with section 7064 of 

title 5, United States Code. 

‘‘(g) COMMODITY FUTURES TRADING COMMISSION CUSTOMER

PROTECTION FUND.— 

‘‘(1) ESTABLISHMENT.—There is established in the Treasury 

of the United States a revolving fund to be known as the 

‘Commodity Futures Trading Commission Customer Protection 

Fund’. 

‘‘(2) USE OF FUND.—The Fund shall be available to the 

Commission, without further appropriation or fiscal year limitation, for— 

‘‘(A) the payment of awards to whistleblowers as provided in subsection (a); and 

‘‘(B) the funding of customer education initiatives 

designed to help customers protect themselves against 

fraud or other violations of this Act, or the rules and 

regulations thereunder. 

‘‘(3) DEPOSITS AND CREDITS.—There shall be deposited into 

or credited to the Fund: 

‘‘(A) MONETARY SANCTIONS.—Any monetary sanctions 

collected by the Commission in any covered judicial or 

administrative action that is not otherwise distributed to 

victims of a violation of this Act or the rules and regulations 

thereunder underlying such action, unless the balance of 

the Fund at the time the monetary judgment is collected 

exceeds $100,000,000. 
H. R. 4173—368 

‘‘(B) ADDITIONAL AMOUNTS.—If the amounts deposited 

into or credited to the Fund under subparagraph (A) are 

not sufficient to satisfy an award made under subsection 

(b), there shall be deposited into or credited to the Fund 

an amount equal to the unsatisfied portion of the award 

from any monetary sanction collected by the Commission 

in any judicial or administrative action brought by the 

Commission under this Act that is based on information 

provided by a whistleblower. 

‘‘(C) INVESTMENT INCOME.—All income from investments made under paragraph (4). 

‘‘(4) INVESTMENTS.— 

‘‘(A) AMOUNTS IN FUND MAY BE INVESTED.—The 

Commission may request the Secretary of the Treasury 

to invest the portion of the Fund that is not, in the Commission’s judgment, required to meet the current needs of 

the Fund. 

‘‘(B) ELIGIBLE INVESTMENTS.—Investments shall be 

made by the Secretary of the Treasury in obligations of 

the United States or obligations that are guaranteed as 

to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined 

by the Commission. 

‘‘(C) INTEREST AND PROCEEDS CREDITED.—The interest 

on, and the proceeds from the sale or redemption of, any 

obligations held in the Fund shall be credited to, and 

form a part of, the Fund. 

‘‘(5) REPORTS TO CONGRESS.—Not later than October 30 

of each year, the Commission shall transmit to the Committee 

on Agriculture, Nutrition, and Forestry of the Senate, and 

the Committee on Agriculture of the House of Representatives 

a report on— 

‘‘(A) the Commission’s whistleblower award program 

under this section, including a description of the number 

of awards granted and the types of cases in which awards 

were granted during the preceding fiscal year; 

‘‘(B) customer education initiatives described in paragraph (2)(B) that were funded by the Fund during the 

preceding fiscal year; 

‘‘(C) the balance of the Fund at the beginning of the 

preceding fiscal year; 

‘‘(D) the amounts deposited into or credited to the 

Fund during the preceding fiscal year; 

‘‘(E) the amount of earnings on investments of amounts 

in the Fund during the preceding fiscal year; 

‘‘(F) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection 

(b); 

‘‘(G) the amount paid from the Fund during the preceding fiscal year for customer education initiatives 

described in paragraph (2)(B); 

‘‘(H) the balance of the Fund at the end of the preceding 

fiscal year; and 

‘‘(I) a complete set of audited financial statements, 

including a balance sheet, income statement, and cash 

flow analysis. 

‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 
H. R. 4173—369 

‘‘(1) PROHIBITION AGAINST RETALIATION.— 

‘‘(A) IN GENERAL.—No employer may discharge, 

demote, suspend, threaten, harass, directly or indirectly, 

or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because 

of any lawful act done by the whistleblower— 

‘‘(i) in providing information to the Commission 

in accordance with subsection (b); or 

‘‘(ii) in assisting in any investigation or judicial 

or administrative action of the Commission based upon 

or related to such information. 

‘‘(B) ENFORCEMENT.— 

‘‘(i) CAUSE OF ACTION.—An individual who alleges 

discharge or other discrimination in violation of 

subparagraph (A) may bring an action under this subsection in the appropriate district court of the United 

States for the relief provided in subparagraph (C), 

unless the individual who is alleging discharge or other 

discrimination in violation of subparagraph (A) is an 

employee of the Federal Government, in which case 

the individual shall only bring an action under section 

1221 of title 5, United States Code. 

‘‘(ii) SUBPOENAS.—A subpoena requiring the 

attendance of a witness at a trial or hearing conducted 

under this subsection may be served at any place in 

the United States. 

‘‘(iii) STATUTE OF LIMITATIONS.—An action under 

this subsection may not be brought more than 2 years 

after the date on which the violation reported in 

subparagraph (A) is committed. 

‘‘(C) RELIEF.—Relief for an individual prevailing in an 

action brought under subparagraph (B) shall include— 

‘‘(i) reinstatement with the same seniority status 

that the individual would have had, but for the 

discrimination; 

‘‘(ii) the amount of back pay otherwise owed to 

the individual, with interest; and 

‘‘(iii) compensation for any special damages sustained as a result of the discharge or discrimination, 

including litigation costs, expert witness fees, and 

reasonable attorney’s fees. 

‘‘(2) CONFIDENTIALITY.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the Commission, and any officer or 

employee of the Commission, shall not disclose any information, including information provided by a whistleblower 

to the Commission, which could reasonably be expected 

to reveal the identity of a whistleblower, except in accordance with the provisions of section 552a of title 5, United 

States Code, unless and until required to be disclosed to 

a defendant or respondent in connection with a public 

proceeding instituted by the Commission or any entity 

described in subparagraph (C). For purposes of section 

552 of title 5, United States Code, this paragraph shall 

be considered a statute described in subsection (b)(3)(B) 

of such section 552. 
H. R. 4173—370 

‘‘(B) EFFECT.—Nothing in this paragraph is intended 

to limit the ability of the Attorney General to present 

such evidence to a grand jury or to share such evidence 

with potential witnesses or defendants in the course of 

an ongoing criminal investigation. 

‘‘(C) AVAILABILITY TO GOVERNMENT AGENCIES.— 

‘‘(i) IN GENERAL.—Without the loss of its status 

as confidential in the hands of the Commission, all 

information referred to in subparagraph (A) may, in 

the discretion of the Commission, when determined 

by the Commission to be necessary or appropriate to 

accomplish the purposes of this Act and protect customers and in accordance with clause (ii), be made 

available to— 

‘‘(I) the Department of Justice; 

‘‘(II) an appropriate department or agency of 

the Federal Government, acting within the scope 

of its jurisdiction; 

‘‘(III) a registered entity, registered futures 

association, or self-regulatory organization as 

defined in section 3(a) of the Securities Exchange 

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

‘‘(IV) a State attorney general in connection 

with any criminal investigation; 

‘‘(V) an appropriate department or agency of 

any State, acting within the scope of its jurisdiction; and 

‘‘(VI) a foreign futures authority. 

‘‘(ii) MAINTENANCE OF INFORMATION.—Each of the 

entities, agencies, or persons described in clause (i) 

shall maintain information described in that clause 

as confidential, in accordance with the requirements 

in subparagraph (A). 

‘‘(iii) STUDY ON IMPACT OF FOIA EXEMPTION ON

COMMODITY FUTURES TRADING COMMISSION.— ‘‘(I) STUDY.—The Inspector General of the 

Commission shall conduct a study— 

‘‘(aa) on whether the exemption under section 552(b)(3) of title 5, United States Code 

(known as the Freedom of Information Act) 

established in paragraph (2)(A) aids whistleblowers in disclosing information to the 

Commission; 

‘‘(bb) on what impact the exemption has 

had on the public’s ability to access information about the Commission’s regulation of commodity futures and option markets; and 

‘‘(cc) to make any recommendations on 

whether the Commission should continue to 

use the exemption. 

‘‘(II) REPORT.—Not later than 30 months after 

the date of enactment of this clause, the Inspector 

General shall— 

‘‘(aa) submit a report on the findings of 

the study required under this clause to the 

Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on 
H. R. 4173—371 

Financial Services of the House of Representatives; and 

‘‘(bb) make the report available to the 

public through publication of a report on the 

website of the Commission. 

‘‘(3) RIGHTS RETAINED.—Nothing in this section shall be 

deemed to diminish the rights, privileges, or remedies of any 

whistleblower under any Federal or State law, or under any 

collective bargaining agreement. 

‘‘(i) RULEMAKING AUTHORITY.—The Commission shall have the 

authority to issue such rules and regulations as may be necessary 

or appropriate to implement the provisions of this section consistent 

with the purposes of this section. 

‘‘(j) IMPLEMENTING RULES.—The Commission shall issue final 

rules or regulations implementing the provisions of this section 

not later than 270 days after the date of enactment of the Wall 

Street Transparency and Accountability Act of 2010. 

‘‘(k) ORIGINAL INFORMATION.—Information submitted to the 

Commission by a whistleblower in accordance with rules or regulations implementing this section shall not lose its status as original 

information solely because the whistleblower submitted such 

information prior to the effective date of such rules or regulations, 

provided such information was submitted after the date of enactment of the Wall Street Transparency and Accountability Act of 

2010. 

‘‘(l) AWARDS.—A whistleblower may receive an award pursuant 

to this section regardless of whether any violation of a provision 

of this Act, or a rule or regulation thereunder, underlying the 

judicial or administrative action upon which the award is based 

occurred prior to the date of enactment of the Wall Street Transparency and Accountability Act of 2010. 

‘‘(m) PROVISION OF FALSE INFORMATION.—A whistleblower who 

knowingly and willfully makes any false, fictitious, or fraudulent 

statement or representation, or who makes or uses any false writing 

or document knowing the same to contain any false, fictitious, 

or fraudulent statement or entry, shall not be entitled to an award 

under this section and shall be subject to prosecution under section 

1001 of title 18, United States Code. 

‘‘(n) NONENFORCEABILITY OF CERTAIN PROVISIONS WAIVING

RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.— 

‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The rights and 

remedies provided for in this section may not be waived by 

any agreement, policy form, or condition of employment 

including by a predispute arbitration agreement. 

‘‘(2) PREDISPUTE ARBITRATION AGREEMENTS.—No predispute 

arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.’’. 

SEC. 749. CONFORMING AMENDMENTS. 

(a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) 

(as amended by section 724) is amended— 

(1) in subsection (a)— 

(A) in the matter preceding paragraph (1)— 

(i) by striking ‘‘engage as’’ and inserting ‘‘be a’’; 

and 
H. R. 4173—372 

(ii) by striking ‘‘or introducing broker’’ and all that 

follows through ‘‘or derivatives transaction execution 

facility’’; 

(B) in paragraph (1), by striking ‘‘or introducing 

broker’’; and 

(C) in paragraph (2), by striking ‘‘if a futures commission merchant,’’; and 

(2) by adding at the end the following: 

‘‘(g) It shall be unlawful for any person to be an introducing 

broker unless such person shall have registered under this Act 

with the Commission as an introducing broker and such registration 

shall not have expired nor been suspended nor revoked.’’. 

(b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 

6m(3)) is amended— 

(1) by striking ‘‘(3) Subsection (1) of this section’’ and 

inserting the following: 

‘‘(3) EXCEPTION.— 

‘‘(A) IN GENERAL.—Paragraph (1)’’; and 

(2) by striking ‘‘to any investment trust’’ and all that follows 

through the period at the end and inserting the following: 

‘‘to any commodity pool that is engaged primarily in trading 

commodity interests. 

‘‘(B) ENGAGED PRIMARILY.—For purposes of subparagraph 

(A), a commodity trading advisor or a commodity pool shall 

be considered to be ‘engaged primarily’ in the business of being 

a commodity trading advisor or commodity pool if it is or 

holds itself out to the public as being engaged primarily, or 

proposes to engage primarily, in the business of advising on 

commodity interests or investing, reinvesting, owning, holding, 

or trading in commodity interests, respectively. 

‘‘(C) COMMODITY INTERESTS.—For purposes of this paragraph, commodity interests shall include contracts of sale of 

a commodity for future delivery, options on such contracts, 

security futures, swaps, leverage contracts, foreign exchange, 

spot and forward contracts on physical commodities, and any 

monies held in an account used for trading commodity 

interests.’’. 

(c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a– 

2) is amended— 

(1) in subsection (a)(1)— 

(A) by striking ‘‘, 5a(d),’’; and 

(B) by striking ‘‘and section (2)(h)(7) with respect to 

significant price discovery contracts,’’; and 

(2) in subsection (f)(1), by striking ‘‘section 4d(c) of this 

Act’’ and inserting ‘‘section 4d(e)’’. 

(d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) 

is amended by striking ‘‘or revocation of the right of an electronic 

trading facility to rely on the exemption set forth in section 2(h)(3) 

with respect to a significant price discovery contract,’’. 

(e) Section 6(b) of the Commodity Exchange Act (7 U.S.C. 

8(b)) is amended in the first sentence by striking ‘‘, or to revoke 

the right of an electronic trading facility to rely on the exemption 

set forth in section 2(h)(3) with respect to a significant price discovery contract,’’. 

(f) Section 12(e)(2)(B) of the Commodity Exchange Act (7 U.S.C. 

16(e)(2)(B)) is amended— 
H. R. 4173—373 

(1) by striking ‘‘section 2(c), 2(d), 2(f), or 2(g) of this Act’’ 

and inserting ‘‘section 2(c) or 2(f) of this Act’’; and 

(2) by striking ‘‘2(h) or’’. 

(g) Section 17(r)(1) of the Commodity Exchange Act (7 U.S.C. 

21(r)(1)) is amended by striking ‘‘section 4d(c) of this Act’’ and 

inserting ‘‘section 4d(e)’’. 

(h) Section 22 of the Commodity Exchange Act is amended— 

(1) in subsection (a)(1)(B), by— 

(A) inserting ‘‘or any swap’’ after ‘‘commodity)’’; and 

(B) inserting ‘‘or any swap’’ after ‘‘such contract’’; 

(2) in subsection (a)(1)(C), by adding at the end the following: 

‘‘(iv) a swap; or’’; and 

(3) in subsection (b)(1)(A), by striking ‘‘section 2(h)(7) or 

sections 5 through 5c’’ and inserting ‘‘section 5, 5b, 5c, 5h, 

or 21’’. 

(i) Section 408(2)(C) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended— 

(1) by striking ‘‘section 2(c), 2(d), 2(f), or (2)(g) of such 

Act’’ and inserting ‘‘section 2(c), 2(f), or 2(i) of that Act’’; and 

(2) by striking ‘‘2(h) or’’. 

SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS. 

(a) INTERAGENCY WORKING GROUP.—There is established to 

carry out this section an interagency working group (referred to 

in this section as the ‘‘interagency group’’) composed of the following 

members or designees: 

(1) The Chairman of the Commodity Futures Trading 

Commission (referred to in this section as the ‘‘Commission’’), 

who shall serve as Chairman of the interagency group. 

(2) The Secretary of Agriculture. 

(3) The Secretary of the Treasury. 

(4) The Chairman of the Securities and Exchange Commission. 

(5) The Administrator of the Environmental Protection 

Agency. 

(6) The Chairman of the Federal Energy Regulatory 

Commission. 

(7) The Commissioner of the Federal Trade Commission. 

(8) The Administrator of the Energy Information Administration. 

(b) ADMINISTRATIVE SUPPORT.—The Commission shall provide 

the interagency group such administrative support services as are 

necessary to enable the interagency group to carry out the functions 

of the interagency group under this section. 

(c) CONSULTATION.—In carrying out this section, the interagency group shall consult with representatives of exchanges, 

clearinghouses, self-regulatory bodies, major carbon market participants, consumers, and the general public, as the interagency group 

determines to be appropriate. 

(d) STUDY.—The interagency group shall conduct a study on 

the oversight of existing and prospective carbon markets to ensure 

an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets. 

(e) REPORT.—Not later than 180 days after the date of enactment of this Act, the interagency group shall submit to Congress 

a report on the results of the study conducted under subsection 
H. R. 4173—374 

(b), including recommendations for the oversight of existing and 

prospective carbon markets to ensure an efficient, secure, and transparent carbon market, including oversight of spot markets and 

derivative markets. 

SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE. 

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) 

(as amended by section 727) is amended by adding at the end 

the following: 

‘‘(15) ENERGY AND ENVIRONMENTAL MARKETS ADVISORY

COMMITTEE.— 

‘‘(A) ESTABLISHMENT.— 

‘‘(i) IN GENERAL.—An Energy and Environmental 

Markets Advisory Committee is hereby established. 

‘‘(ii) MEMBERSHIP.—The Committee shall have 9 

members. 

‘‘(iii) ACTIVITIES.—The Committee’s objectives and 

scope of activities shall be— 

‘‘(I) to conduct public meetings; 

‘‘(II) to submit reports and recommendations 

to the Commission (including dissenting or 

minority views, if any); and 

‘‘(III) otherwise to serve as a vehicle for discussion and communication on matters of concern to 

exchanges, firms, end users, and regulators 

regarding energy and environmental markets and 

their regulation by the Commission. 

‘‘(B) REQUIREMENTS.— 

‘‘(i) IN GENERAL.—The Committee shall hold public 

meetings at such intervals as are necessary to carry 

out the functions of the Committee, but not less frequently than 2 times per year. 

‘‘(ii) MEMBERS.—Members shall be appointed to 

3-year terms, but may be removed for cause by vote 

of the Commission. 

‘‘(C) APPOINTMENT.—The Commission shall appoint 

members with a wide diversity of opinion and who represent a broad spectrum of interests, including hedgers 

and consumers. 

‘‘(D) REIMBURSEMENT.—Members shall be entitled to 

per diem and travel expense reimbursement by the 

Commission. 

‘‘(E) FACA.—The Committee shall not be subject to 

the Federal Advisory Committee Act (5 U.S.C. App.).’’. 

SEC. 752. INTERNATIONAL HARMONIZATION. 

(a) In order to promote effective and consistent global regulation 

of swaps and security-based swaps, the Commodity Futures Trading 

Commission, the Securities and Exchange Commission, and the 

prudential regulators (as that term is defined in section 1a(39) 

of the Commodity Exchange Act), as appropriate, shall consult 

and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation (including fees) of swaps, security-based swaps, swap entities, 

and security-based swap entities and may agree to such information-sharing arrangements as may be deemed to be necessary or 
H. R. 4173—375 

appropriate in the public interest or for the protection of investors, 

swap counterparties, and security-based swap counterparties. 

(b) In order to promote effective and consistent global regulation 

of contracts of sale of a commodity for future delivery and options 

on such contracts, the Commodity Futures Trading Commission 

shall consult and coordinate with foreign regulatory authorities 

on the establishment of consistent international standards with 

respect to the regulation of contracts of sale of a commodity for 

future delivery and options on such contracts, and may agree to 

such information-sharing arrangements as may be deemed necessary or appropriate in the public interest for the protection of 

users of contracts of sale of a commodity for future delivery. 

SEC. 753. ANTI-MANIPULATION AUTHORITY. 

(a) PROHIBITION REGARDING MANIPULATION AND FALSE

INFORMATION.—Subsection (c) of section 6 of the Commodity 

Exchange Act (7 U.S.C. 9, 15) is amended to read as follows: 

‘‘(c) PROHIBITION REGARDING MANIPULATION AND FALSE

INFORMATION.— ‘‘(1) PROHIBITION AGAINST MANIPULATION.—It shall be 

unlawful for any person, directly or indirectly, to use or employ, 

or attempt to use or employ, in connection with any swap, 

or a contract of sale of any commodity in interstate commerce, 

or for future delivery on or subject to the rules of any registered 

entity, any manipulative or deceptive device or contrivance, 

in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after the date 

of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, provided no rule or regulation promulgated by the Commission shall require any person to disclose 

to another person nonpublic information that may be material 

to the market price, rate, or level of the commodity transaction, 

except as necessary to make any statement made to the other 

person in or in connection with the transaction not misleading 

in any material respect. 

‘‘(A) SPECIAL PROVISION FOR MANIPULATION BY FALSE

REPORTING.—Unlawful manipulation for purposes of this 

paragraph shall include, but not be limited to, delivering, 

or causing to be delivered for transmission through the 

mails or interstate commerce, by any means of communication whatsoever, a false or misleading or inaccurate report 

concerning crop or market information or conditions that 

affect or tend to affect the price of any commodity in 

interstate commerce, knowing, or acting in reckless disregard of the fact that such report is false, misleading 

or inaccurate. 

‘‘(B) EFFECT ON OTHER LAW.—Nothing in this paragraph shall affect, or be construed to affect, the applicability 

of section 9(a)(2). 

‘‘(C) GOOD FAITH MISTAKES.—Mistakenly transmitting, 

in good faith, false or misleading or inaccurate information 

to a price reporting service would not be sufficient to violate 

subsection (c)(1)(A). 

‘‘(2) PROHIBITION REGARDING FALSE INFORMATION.—It shall 

be unlawful for any person to make any false or misleading 

statement of a material fact to the Commission, including in 

any registration application or any report filed with the 
H. R. 4173—376 

Commission under this Act, or any other information relating 

to a swap, or a contract of sale of a commodity, in interstate 

commerce, or for future delivery on or subject to the rules 

of any registered entity, or to omit to state in any such statement any material fact that is necessary to make any statement 

of a material fact made not misleading in any material respect, 

if the person knew, or reasonably should have known, the 

statement to be false or misleading. 

‘‘(3) OTHER MANIPULATION.—In addition to the prohibition 

in paragraph (1), it shall be unlawful for any person, directly 

or indirectly, to manipulate or attempt to manipulate the price 

of any swap, or of any commodity in interstate commerce, 

or for future delivery on or subject to the rules of any registered 

entity. 

‘‘(4) ENFORCEMENT.— 

‘‘(A) AUTHORITY OF COMMISSION.—If the Commission 

has reason to believe that any person (other than a registered entity) is violating or has violated this subsection, 

or any other provision of this Act (including any rule, 

regulation, or order of the Commission promulgated in 

accordance with this subsection or any other provision of 

this Act), the Commission may serve upon the person a 

complaint. 

‘‘(B) CONTENTS OF COMPLAINT.—A complaint under 

subparagraph (A) shall— 

‘‘(i) contain a description of the charges against 

the person that is the subject of the complaint; and 

‘‘(ii) have attached or contain a notice of hearing 

that specifies the date and location of the hearing 

regarding the complaint. 

‘‘(C) HEARING.—A hearing described in subparagraph 

(B)(ii)— 

‘‘(i) shall be held not later than 3 days after service 

of the complaint described in subparagraph (A); 

‘‘(ii) shall require the person to show cause 

regarding why— 

‘‘(I) an order should not be made— 

‘‘(aa) to prohibit the person from trading 

on, or subject to the rules of, any registered 

entity; and 

‘‘(bb) to direct all registered entities to 

refuse all privileges to the person until further 

notice of the Commission; and 

‘‘(II) the registration of the person, if registered 

with the Commission in any capacity, should not 

be suspended or revoked; and 

‘‘(iii) may be held before— 

‘‘(I) the Commission; or 

‘‘(II) an administrative law judge designated 

by the Commission, under which the administrative law judge shall ensure that all evidence is 

recorded in written form and submitted to the 

Commission. 

‘‘(5) SUBPOENA.—For the purpose of securing effective 

enforcement of the provisions of this Act, for the purpose of 

any investigation or proceeding under this Act, and for the 

purpose of any action taken under section 12(f), any member 
H. R. 4173—377 

of the Commission or any Administrative Law Judge or other 

officer designated by the Commission (except as provided in 

paragraph (7)) may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and 

require the production of any books, papers, correspondence, 

memoranda, or other records that the Commission deems relevant or material to the inquiry. 

‘‘(6) WITNESSES.—The attendance of witnesses and the 

production of any such records may be required from any place 

in the United States, any State, or any foreign country or 

jurisdiction at any designated place of hearing. 

‘‘(7) SERVICE.—A subpoena issued under this section may 

be served upon any person who is not to be found within 

the territorial jurisdiction of any court of the United States 

in such manner as the Federal Rules of Civil Procedure prescribe for service of process in a foreign country, except that 

a subpoena to be served on a person who is not to be found 

within the territorial jurisdiction of any court of the United 

States may be issued only on the prior approval of the Commission. 

‘‘(8) REFUSAL TO OBEY.—In case of contumacy by, or refusal 

to obey a subpoena issued to, any person, the Commission 

may invoke the aid of any court of the United States within 

the jurisdiction in which the investigation or proceeding is 

conducted, or where such person resides or transacts business, 

in requiring the attendance and testimony of witnesses and 

the production of books, papers, correspondence, memoranda, 

and other records. Such court may issue an order requiring 

such person to appear before the Commission or member or 

Administrative Law Judge or other officer designated by the 

Commission, there to produce records, if so ordered, or to give 

testimony touching the matter under investigation or in question. 

‘‘(9) FAILURE TO OBEY.—Any failure to obey such order 

of the court may be punished by the court as a contempt 

thereof. All process in any such case may be served in the 

judicial district wherein such person is an inhabitant or transacts business or wherever such person may be found. 

‘‘(10) EVIDENCE.—On the receipt of evidence under paragraph (4)(C)(iii), the Commission may— 

‘‘(A) prohibit the person that is the subject of the 

hearing from trading on, or subject to the rules of, any 

registered entity and require all registered entities to refuse 

the person all privileges on the registered entities for such 

period as the Commission may require in the order; 

‘‘(B) if the person is registered with the Commission 

in any capacity, suspend, for a period not to exceed 180 

days, or revoke, the registration of the person; 

‘‘(C) assess such person— 

‘‘(i) a civil penalty of not more than an amount 

equal to the greater of— 

‘‘(I) $140,000; or 

‘‘(II) triple the monetary gain to such person 

for each such violation; or 

‘‘(ii) in any case of manipulation or attempted 

manipulation in violation of this subsection or section 
H. R. 4173—378 

9(a)(2), a civil penalty of not more than an amount 

equal to the greater of— 

‘‘(I) $1,000,000; or 

‘‘(II) triple the monetary gain to the person 

for each such violation; and 

‘‘(D) require restitution to customers of damages proximately caused by violations of the person. 

‘‘(11) ORDERS.— 

‘‘(A) NOTICE.—The Commission shall provide to a person described in paragraph (10) and the appropriate governing board of the registered entity notice of the order 

described in paragraph (10) by— 

‘‘(i) registered mail; 

‘‘(ii) certified mail; or 

‘‘(iii) personal delivery. 

‘‘(B) REVIEW.— 

‘‘(i) IN GENERAL.—A person described in paragraph 

(10) may obtain a review of the order or such other 

equitable relief as determined to be appropriate by 

a court described in clause (ii). 

‘‘(ii) PETITION.—To obtain a review or other relief 

under clause (i), a person may, not later than 15 days 

after notice is given to the person under clause (i), 

file a written petition to set aside the order with the 

United States Court of Appeals— 

‘‘(I) for the circuit in which the petitioner carries out the business of the petitioner; or 

‘‘(II) in the case of an order denying registration, the circuit in which the principal place of 

business of the petitioner is located, as listed on 

the application for registration of the petitioner. 

‘‘(C) PROCEDURE.— 

‘‘(i) DUTY OF CLERK OF APPROPRIATE COURT.—The 

clerk of the appropriate court under subparagraph 

(B)(ii) shall transmit to the Commission a copy of a 

petition filed under subparagraph (B)(ii). 

‘‘(ii) DUTY OF COMMISSION.—In accordance with 

section 2112 of title 28, United States Code, the 

Commission shall file in the appropriate court 

described in subparagraph (B)(ii) the record theretofore 

made. 

‘‘(iii) JURISDICTION OF APPROPRIATE COURT.—Upon 

the filing of a petition under subparagraph (B)(ii), the 

appropriate court described in subparagraph (B)(ii) 

may affirm, set aside, or modify the order of the 

Commission.’’. 

(b) CEASE AND DESIST ORDERS, FINES.—Section 6(d) of the 

Commodity Exchange Act (7 U.S.C. 13b) is amended to read as 

follows: 

‘‘(d) If any person (other than a registered entity), is violating 

or has violated subsection (c) or any other provisions of this Act 

or of the rules, regulations, or orders of the Commission thereunder, 

the Commission may, upon notice and hearing, and subject to 

appeal as in other cases provided for in subsection (c), make and 

enter an order directing that such person shall cease and desist 

therefrom and, if such person thereafter and after the lapse of 

the period allowed for appeal of such order or after the affirmance 
H. R. 4173—379 

of such order, shall knowingly fail or refuse to obey or comply 

with such order, such person, upon conviction thereof, shall be 

fined not more than the higher of $140,000 or triple the monetary 

gain to such person, or imprisoned for not more than 1 year, 

or both, except that if such knowing failure or refusal to obey 

or comply with such order involves any offense within subsection 

(a) or (b) of section 9, such person, upon conviction thereof, shall 

be subject to the penalties of said subsection (a) or (b): Provided, 

That any such cease and desist order under this subsection against 

any respondent in any case of manipulation shall be issued only 

in conjunction with an order issued against such respondent under 

subsection (c).’’. 

(c) MANIPULATIONS; PRIVATE RIGHTS OF ACTION.—Section 

22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is 

amended by striking subparagraph (D) and inserting the following: 

‘‘(D) who purchased or sold a contract referred to in 

subparagraph (B) hereof or swap if the violation constitutes— 

‘‘(i) the use or employment of, or an attempt to use 

or employ, in connection with a swap, or a contract of 

sale of a commodity, in interstate commerce, or for future 

delivery on or subject to the rules of any registered entity, 

any manipulative device or contrivance in contravention 

of such rules and regulations as the Commission shall 

promulgate by not later than 1 year after the date of 

enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act; or 

‘‘(ii) a manipulation of the price of any such contract 

or swap or the price of the commodity underlying such 

contract or swap.’’. 

(d) EFFECTIVE DATE.— 

(1) The amendments made by this section shall take effect 

on the date on which the final rule promulgated by the Commodity Futures Trading Commission pursuant to this Act takes 

effect. 

(2) Paragraph (1) shall not preclude the Commission from 

undertaking prior to the effective date any rulemaking necessary to implement the amendments contained in this section. 

SEC. 754. EFFECTIVE DATE. 

Unless otherwise provided in this title, the provisions of this 

subtitle shall take effect on the later of 360 days after the date 

of the enactment of this subtitle or, to the extent a provision 

of this subtitle requires a rulemaking, not less than 60 days after 

publication of the final rule or regulation implementing such provision of this subtitle. 

Subtitle B—Regulation of Security-Based 

Swap Markets 

SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 

1934. 

(a) DEFINITIONS.—Section 3(a) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78c(a)) is amended— 
H. R. 4173—380 

(1) in subparagraphs (A) and (B) of paragraph (5), by 

inserting ‘‘(not including security-based swaps, other than security-based swaps with or for persons that are not eligible contract participants)’’ after ‘‘securities’’ each place that term 

appears; 

(2) in paragraph (10), by inserting ‘‘security-based swap,’’ 

after ‘‘security future,’’; 

(3) in paragraph (13), by adding at the end the following: 

‘‘For security-based swaps, such terms include the execution, 

termination (prior to its scheduled maturity date), assignment, 

exchange, or similar transfer or conveyance of, or extinguishing 

of rights or obligations under, a security-based swap, as the 

context may require.’’; 

(4) in paragraph (14), by adding at the end the following: 

‘‘For security-based swaps, such terms include the execution, 

termination (prior to its scheduled maturity date), assignment, 

exchange, or similar transfer or conveyance of, or extinguishing 

of rights or obligations under, a security-based swap, as the 

context may require.’’; 

(5) in paragraph (39)— 

(A) in subparagraph (B)(i)— 

(i) in subclause (I), by striking ‘‘or government 

securities dealer’’ and inserting ‘‘government securities 

dealer, security-based swap dealer, or major securitybased swap participant’’; and 

(ii) in subclause (II), by inserting ‘‘security-based 

swap dealer, major security-based swap participant,’’ 

after ‘‘government securities dealer,’’; 

(B) in subparagraph (C), by striking ‘‘or government 

securities dealer’’ and inserting ‘‘government securities 

dealer, security-based swap dealer, or major security-based 

swap participant’’; and 

(C) in subparagraph (D), by inserting ‘‘security-based 

swap dealer, major security-based swap participant,’’ after 

‘‘government securities dealer,’’; and 

(6) by adding at the end the following: 

‘‘(65) ELIGIBLE CONTRACT PARTICIPANT.—The term ‘eligible 

contract participant’ has the same meaning as in section 1a 

of the Commodity Exchange Act (7 U.S.C. 1a). 

‘‘(66) MAJOR SWAP PARTICIPANT.—The term ‘major swap 

participant’ has the same meaning as in section 1a of the 

Commodity Exchange Act (7 U.S.C. 1a). 

‘‘(67) MAJOR SECURITY-BASED SWAP PARTICIPANT.— 

‘‘(A) IN GENERAL.—The term ‘major security-based 

swap participant’ means any person— 

‘‘(i) who is not a security-based swap dealer; and 

‘‘(ii)(I) who maintains a substantial position in 

security-based swaps for any of the major securitybased swap categories, as such categories are determined by the Commission, excluding both positions 

held for hedging or mitigating commercial risk and 

positions maintained by any employee benefit plan (or 

any contract held by such a plan) as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) 

for the primary purpose of hedging or mitigating any 

risk directly associated with the operation of the plan; 
H. R. 4173—381 

‘‘(II) whose outstanding security-based swaps 

create substantial counterparty exposure that could 

have serious adverse effects on the financial stability 

of the United States banking system or financial markets; or 

‘‘(III) that is a financial entity that— 

‘‘(aa) is highly leveraged relative to the amount 

of capital such entity holds and that is not subject 

to capital requirements established by an appropriate Federal banking agency; and 

‘‘(bb) maintains a substantial position in outstanding security-based swaps in any major security-based swap category, as such categories are 

determined by the Commission. 

‘‘(B) DEFINITION OF SUBSTANTIAL POSITION.—For purposes of subparagraph (A), the Commission shall define, 

by rule or regulation, the term ‘substantial position’ at 

the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can 

significantly impact the financial system of the United 

States. In setting the definition under this subparagraph, 

the Commission shall consider the person’s relative position 

in uncleared as opposed to cleared security-based swaps 

and may take into consideration the value and quality 

of collateral held against counterparty exposures. 

‘‘(C) SCOPE OF DESIGNATION.—For purposes of subparagraph (A), a person may be designated as a major securitybased swap participant for 1 or more categories of securitybased swaps without being classified as a major securitybased swap participant for all classes of security-based 

swaps. 

‘‘(68) SECURITY-BASED SWAP.— ‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘security-based swap’ means any agreement, 

contract, or transaction that— 

‘‘(i) is a swap, as that term is defined under section 

1a of the Commodity Exchange Act (without regard 

to paragraph (47)(B)(x) of such section); and 

‘‘(ii) is based on— 

‘‘(I) an index that is a narrow-based security 

index, including any interest therein or on the 

value thereof; 

‘‘(II) a single security or loan, including any 

interest therein or on the value thereof; or 

‘‘(III) the occurrence, nonoccurrence, or extent 

of the occurrence of an event relating to a single 

issuer of a security or the issuers of securities 

in a narrow-based security index, provided that 

such event directly affects the financial statements, financial condition, or financial obligations 

of the issuer. 

‘‘(B) RULE OF CONSTRUCTION REGARDING MASTER

AGREEMENTS.—The term ‘security-based swap’ shall be construed to include a master agreement that provides for 

an agreement, contract, or transaction that is a securitybased swap pursuant to subparagraph (A), together with 
H. R. 4173—382 

all supplements to any such master agreement, without 

regard to whether the master agreement contains an agreement, contract, or transaction that is not a security-based 

swap pursuant to subparagraph (A), except that the master 

agreement shall be considered to be a security-based swap 

only with respect to each agreement, contract, or transaction under the master agreement that is a securitybased swap pursuant to subparagraph (A). 

‘‘(C) EXCLUSIONS.—The term ‘security-based swap’ does 

not include any agreement, contract, or transaction that 

meets the definition of a security-based swap only because 

such agreement, contract, or transaction references, is 

based upon, or settles through the transfer, delivery, or 

receipt of an exempted security under paragraph (12), as 

in effect on the date of enactment of the Futures Trading 

Act of 1982 (other than any municipal security as defined 

in paragraph (29) as in effect on the date of enactment 

of the Futures Trading Act of 1982), unless such agreement, 

contract, or transaction is of the character of, or is commonly known in the trade as, a put, call, or other option. 

‘‘(D) MIXED SWAP.—The term ‘security-based swap’ 

includes any agreement, contract, or transaction that is 

as described in subparagraph (A) and also is based on 

the value of 1 or more interest or other rates, currencies, 

commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or 

property of any kind (other than a single security or a 

narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or 

commercial consequence (other than an event described 

in subparagraph (A)(ii)(III)). 

‘‘(E) RULE OF CONSTRUCTION REGARDING USE OF THE

TERM INDEX.—The term ‘index’ means an index or group 

of securities, including any interest therein or based on 

the value thereof. 

‘‘(69) SWAP.—The term ‘swap’ has the same meaning as 

in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). 

‘‘(70) PERSON ASSOCIATED WITH A SECURITY-BASED SWAP

DEALER OR MAJOR SECURITY-BASED SWAP PARTICIPANT.— 

‘‘(A) IN GENERAL.—The term ‘person associated with 

a security-based swap dealer or major security-based swap 

participant’ or ‘associated person of a security-based swap 

dealer or major security-based swap participant’ means— 

‘‘(i) any partner, officer, director, or branch manager of such security-based swap dealer or major security-based swap participant (or any person occupying 

a similar status or performing similar functions); 

‘‘(ii) any person directly or indirectly controlling, 

controlled by, or under common control with such security-based swap dealer or major security-based swap 

participant; or 

‘‘(iii) any employee of such security-based swap 

dealer or major security-based swap participant. 

‘‘(B) EXCLUSION.—Other than for purposes of section 

15F(l)(2), the term ‘person associated with a security-based 

swap dealer or major security-based swap participant’ or 
H. R. 4173—383 

‘associated person of a security-based swap dealer or major 

security-based swap participant’ does not include any person associated with a security-based swap dealer or major 

security-based swap participant whose functions are solely 

clerical or ministerial. 

‘‘(71) SECURITY-BASED SWAP DEALER.— 

‘‘(A) IN GENERAL.—The term ‘security-based swap 

dealer’ means any person who— 

‘‘(i) holds themself out as a dealer in securitybased swaps; 

‘‘(ii) makes a market in security-based swaps; 

‘‘(iii) regularly enters into security-based swaps 

with counterparties as an ordinary course of business 

for its own account; or 

‘‘(iv) engages in any activity causing it to be commonly known in the trade as a dealer or market maker 

in security-based swaps. 

‘‘(B) DESIGNATION BY TYPE OR CLASS.—A person may 

be designated as a security-based swap dealer for a single 

type or single class or category of security-based swap 

or activities and considered not to be a security-based swap 

dealer for other types, classes, or categories of securitybased swaps or activities. 

‘‘(C) EXCEPTION.—The term ‘security-based swap 

dealer’ does not include a person that enters into securitybased swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of regular 

business. 

‘‘(D) DE MINIMIS EXCEPTION.—The Commission shall 

exempt from designation as a security-based swap dealer 

an entity that engages in a de minimis quantity of securitybased swap dealing in connection with transactions with 

or on behalf of its customers. The Commission shall promulgate regulations to establish factors with respect to the 

making of any determination to exempt. 

‘‘(72) APPROPRIATE FEDERAL BANKING AGENCY.—The term 

‘appropriate Federal banking agency’ has the same meaning 

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

U.S.C. 1813(q)). 

‘‘(73) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System. 

‘‘(74) PRUDENTIAL REGULATOR.—The term ‘prudential regulator’ has the same meaning as in section 1a of the Commodity 

Exchange Act (7 U.S.C. 1a). 

‘‘(75) SECURITY-BASED SWAP DATA REPOSITORY.—The term 

‘security-based swap data repository’ means any person that 

collects and maintains information or records with respect to 

transactions or positions in, or the terms and conditions of, 

security-based swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for security-based swaps. 

‘‘(76) SWAP DEALER.—The term ‘swap dealer’ has the same 

meaning as in section 1a of the Commodity Exchange Act 

(7 U.S.C. 1a). 

‘‘(77) SECURITY-BASED SWAP EXECUTION FACILITY.—The 

term ‘security-based swap execution facility’ means a trading 

system or platform in which multiple participants have the 
H. R. 4173—384 

ability to execute or trade security-based swaps by accepting 

bids and offers made by multiple participants in the facility 

or system, through any means of interstate commerce, including 

any trading facility, that— 

‘‘(A) facilitates the execution of security-based swaps 

between persons; and 

‘‘(B) is not a national securities exchange. 

‘‘(78) SECURITY-BASED SWAP AGREEMENT.— 

‘‘(A) IN GENERAL.—For purposes of sections 9, 10, 16, 

20, and 21A of this Act, and section 17 of the Securities 

Act of 1933 (15 U.S.C. 77q), the term ‘security-based swap 

agreement’ means a swap agreement as defined in section 

206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) 

of which a material term is based on the price, yield, 

value, or volatility of any security or any group or index 

of securities, or any interest therein. 

‘‘(B) EXCLUSIONS.—The term ‘security-based swap 

agreement’ does not include any security-based swap.’’. 

(b) AUTHORITY TO FURTHER DEFINE TERMS.—The Securities 

and Exchange Commission may, by rule, further define— 

(1) the term ‘‘commercial risk’’; 

(2) any other term included in an amendment to the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) made by this 

subtitle; and 

(3) the terms ‘‘security-based swap’’, ‘‘security-based swap 

dealer’’, ‘‘major security-based swap participant’’, and ‘‘eligible 

contract participant’’, with regard to security-based swaps (as 

such terms are defined in the amendments made by subsection 

(a)) for the purpose of including transactions and entities that 

have been structured to evade this subtitle or the amendments 

made by this subtitle. 

SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITYBASED SWAP AGREEMENTS. 

(a) REPEAL.—Sections 206B and 206C of the Gramm-LeachBliley Act (Public Law 106–102; 15 U.S.C. 78c note) are repealed. 

(b) CONFORMING AMENDMENTS TO GRAMM-LEACH-BLILEY.—Section 206A(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) 

is amended in the material preceding paragraph (1), by striking 

‘‘Except as’’ and all that follows through ‘‘that—’’ and inserting 

the following: ‘‘Except as provided in subsection (b), as used in 

this section, the term ‘swap agreement’ means any agreement, 

contract, or transaction that—’’. 

(c) CONFORMING AMENDMENTS TO THE SECURITIES ACT OF

1933.— 

(1) Section 2A of the Securities Act of 1933 (15 U.S.C. 

77b–1) is amended— 

(A) by striking subsection (a) and reserving that subsection; and 

(B) by striking ‘‘(as defined in section 206B of the 

Gramm-Leach-Bliley Act)’’ each place that such term 

appears and inserting ‘‘(as defined in section 3(a)(78) of 

the Securities Exchange Act of 1934)’’. 

(2) Section 17 of the Securities Act of 1933 (15 U.S.C. 

77q) is amended— 

(A) in subsection (a)— 
H. R. 4173—385 

(i) by inserting ‘‘(including security-based swaps)’’ 

after ‘‘securities’’; and 

(ii) by striking ‘‘(as defined in section 206B of 

the Gramm-Leach-Bliley Act)’’ and inserting ‘‘(as 

defined in section 3(a)(78) of the Securities Exchange 

Act)’’; and 

(B) in subsection (d), by striking ‘‘206B of the GrammLeach-Bliley Act’’ and inserting ‘‘3(a)(78) of the Securities 

Exchange Act of 1934’’. 

(d) CONFORMING AMENDMENTS TO THE SECURITIES EXCHANGE

ACT OF 1934.—The Securities Exchange Act of 1934 (15 U.S.C. 

78a et seq.) is amended— 

(1) in section 3A (15 U.S.C. 78c–1)— 

(A) by striking subsection (a) and reserving that subsection; and 

(B) by striking ‘‘(as defined in section 206B of the 

Gramm-Leach-Bliley Act)’’ each place that the term 

appears; 

(2) in section 9 (15 U.S.C. 78i)— 

(A) in subsection (a), by striking paragraphs (2) 

through (5) and inserting the following: 

‘‘(2) To effect, alone or with 1 or more other persons, a series 

of transactions in any security registered on a national securities 

exchange, any security not so registered, or in connection with 

any security-based swap or security-based swap agreement with 

respect to such security creating actual or apparent active trading 

in such security, or raising or depressing the price of such security, 

for the purpose of inducing the purchase or sale of such security 

by others. 

‘‘(3) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering 

for sale or purchasing or offering to purchase the security, a security-based swap, or a security-based swap agreement with respect 

to such security, to induce the purchase or sale of any security 

registered on a national securities exchange, any security not so 

registered, any security-based swap, or any security-based swap 

agreement with respect to such security by the circulation or 

dissemination in the ordinary course of business of information 

to the effect that the price of any such security will or is likely 

to rise or fall because of market operations of any 1 or more 

persons conducted for the purpose of raising or depressing the 

price of such security. 

‘‘(4) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering 

for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect 

to such security, to make, regarding any security registered on 

a national securities exchange, any security not so registered, any 

security-based swap, or any security-based swap agreement with 

respect to such security, for the purpose of inducing the purchase 

or sale of such security, such security-based swap, or such securitybased swap agreement any statement which was at the time and 

in the light of the circumstances under which it was made, false 

or misleading with respect to any material fact, and which that 

person knew or had reasonable ground to believe was so false 

or misleading. 
H. R. 4173—386 

‘‘(5) For a consideration, received directly or indirectly from 

a broker, dealer, security-based swap dealer, major security-based 

swap participant, or other person selling or offering for sale or 

purchasing or offering to purchase the security, a security-based 

swap, or security-based swap agreement with respect to such security, to induce the purchase of any security registered on a national 

securities exchange, any security not so registered, any securitybased swap, or any security-based swap agreement with respect 

to such security by the circulation or dissemination of information 

to the effect that the price of any such security will or is likely 

to rise or fall because of the market operations of any 1 or more 

persons conducted for the purpose of raising or depressing the 

price of such security.’’; and 

(B) in subsection (i), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act)’’; 

(3) in section 10 (15 U.S.C. 78j)— 

(A) in subsection (b), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act),’’ each place that 

term appears; and 

(B) in the matter following subsection (b), by striking 

‘‘(as defined in section 206B of the Gramm-Leach-Bliley 

Act), in each place that such terms appear’’; 

(4) in section 15 (15 U.S.C. 78o)— 

(A) in subsection (c)(1)(A), by striking ‘‘(as defined in 

section 206B of the Gramm-Leach-Bliley Act),’’; 

(B) in subparagraphs (B) and (C) of subsection (c)(1), 

by striking ‘‘(as defined in section 206B of the GrammLeach-Bliley Act)’’ each place that term appears; 

(C) by redesignating subsection (i), as added by section 

303(f) of the Commodity Futures Modernization Act of 2000 

(Public Law 106–554; 114 Stat. 2763A–455)), as subsection 

(j); and 

(D) in subsection (j), as redesignated by subparagraph 

(C), by striking ‘‘(as defined in section 206B of the GrammLeach-Bliley Act)’’; 

(5) in section 16 (15 U.S.C. 78p)— 

(A) in subsection (a)(2)(C), by striking ‘‘(as defined 

in section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 

78c note))’’; 

(B) in subsection (a)(3)(B), by inserting ‘‘or securitybased swaps’’ after ‘‘security-based swap agreement’’; 

(C) in the first sentence of subsection (b), by striking 

‘‘(as defined in section 206B of the Gramm-Leach-Bliley 

Act)’’; 

(D) in the third sentence of subsection (b), by striking 

‘‘(as defined in section 206B of the Gramm-Leach Bliley 

Act)’’ and inserting ‘‘or a security-based swap’’; and 

(E) in subsection (g), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act)’’; 

(6) in section 20 (15 U.S.C. 78t), 

(A) in subsection (d), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act)’’; and 

(B) in subsection (f), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act)’’; and 

(7) in section 21A (15 U.S.C. 78u–1)— 

(A) in subsection (a)(1), by striking ‘‘(as defined in 

section 206B of the Gramm-Leach-Bliley Act)’’; and 
H. R. 4173—387 

(B) in subsection (g), by striking ‘‘(as defined in section 

206B of the Gramm-Leach-Bliley Act)’’. 

SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934. 

(a) CLEARING FOR SECURITY-BASED SWAPS.—The Securities 

Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by 

inserting after section 3B (as added by section 717 of this Act): 

‘‘SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS. 

‘‘(a) IN GENERAL.— ‘‘(1) STANDARD FOR CLEARING.—It shall be unlawful for 

any person to engage in a security-based swap unless that 

person submits such security-based swap for clearing to a 

clearing agency that is registered under this Act or a clearing 

agency that is exempt from registration under this Act if the 

security-based swap is required to be cleared. 

‘‘(2) OPEN ACCESS.—The rules of a clearing agency described 

in paragraph (1) shall— 

‘‘(A) prescribe that all security-based swaps submitted 

to the clearing agency with the same terms and conditions 

are economically equivalent within the clearing agency and 

may be offset with each other within the clearing agency; 

and 

‘‘(B) provide for non-discriminatory clearing of a security-based swap executed bilaterally or on or through the 

rules of an unaffiliated national securities exchange or 

security-based swap execution facility. 

‘‘(b) COMMISSION REVIEW.— ‘‘(1) COMMISSION-INITIATED REVIEW.— ‘‘(A) The Commission on an ongoing basis shall review 

each security-based swap, or any group, category, type, 

or class of security-based swaps to make a determination 

that such security-based swap, or group, category, type, 

or class of security-based swaps should be required to be 

cleared. 

‘‘(B) The Commission shall provide at least a 30-day 

public comment period regarding any determination under 

subparagraph (A). 

‘‘(2) SWAP SUBMISSIONS.— ‘‘(A) A clearing agency shall submit to the Commission 

each security-based swap, or any group, category, type, 

or class of security-based swaps that it plans to accept 

for clearing and provide notice to its members (in a manner 

to be determined by the Commission) of such submission. 

‘‘(B) Any security-based swap or group, category, type, 

or class of security-based swaps listed for clearing by a 

clearing agency as of the date of enactment of this subsection shall be considered submitted to the Commission. 

‘‘(C) The Commission shall— 

‘‘(i) make available to the public any submission 

received under subparagraphs (A) and (B); 

‘‘(ii) review each submission made under subparagraphs (A) and (B), and determine whether the security-based swap, or group, category, type, or class of 

security-based swaps, described in the submission is 

required to be cleared; and 

‘‘(iii) provide at least a 30-day public comment 

period regarding its determination whether the 
H. R. 4173—388 

clearing requirement under subsection (a)(1) shall 

apply to the submission. 

‘‘(3) DEADLINE.—The Commission shall make its determination under paragraph (2)(C) not later than 90 days after 

receiving a submission made under paragraphs (2)(A) and 

(2)(B), unless the submitting clearing agency agrees to an extension for the time limitation established under this paragraph. 

‘‘(4) DETERMINATION.— 

‘‘(A) In reviewing a submission made under paragraph 

(2), the Commission shall review whether the submission 

is consistent with section 17A. 

‘‘(B) In reviewing a security-based swap, group of security-based swaps or class of security-based swaps pursuant 

to paragraph (1) or a submission made under paragraph 

(2), the Commission shall take into account the following 

factors: 

‘‘(i) The existence of significant outstanding 

notional exposures, trading liquidity and adequate 

pricing data. 

‘‘(ii) The availability of rule framework, capacity, 

operational expertise and resources, and credit support 

infrastructure to clear the contract on terms that are 

consistent with the material terms and trading conventions on which the contract is then traded. 

‘‘(iii) The effect on the mitigation of systemic risk, 

taking into account the size of the market for such 

contract and the resources of the clearing agency available to clear the contract. 

‘‘(iv) The effect on competition, including appropriate fees and charges applied to clearing. 

‘‘(v) The existence of reasonable legal certainty 

in the event of the insolvency of the relevant clearing 

agency or 1 or more of its clearing members with 

regard to the treatment of customer and security-based 

swap counterparty positions, funds, and property. 

‘‘(C) In making a determination under subsection (b)(1) 

or paragraph (2)(C) that the clearing requirement shall 

apply, the Commission may require such terms and conditions to the requirement as the Commission determines 

to be appropriate. 

‘‘(5) RULES.—Not later than 1 year after the date of the 

enactment of this section, the Commission shall adopt rules 

for a clearing agency’s submission for review, pursuant to this 

subsection, of a security-based swap, or a group, category, type, 

or class of security-based swaps, that it seeks to accept for 

clearing. Nothing in this paragraph limits the Commission 

from making a determination under paragraph (2)(C) for security-based swaps described in paragraph (2)(B). 

‘‘(c) STAY OF CLEARING REQUIREMENT.— 

‘‘(1) IN GENERAL.—After making a determination pursuant 

to subsection (b)(2), the Commission, on application of a 

counterparty to a security-based swap or on its own initiative, 

may stay the clearing requirement of subsection (a)(1) until 

the Commission completes a review of the terms of the securitybased swap (or the group, category, type, or class of securitybased swaps) and the clearing arrangement. 
H. R. 4173—389 

‘‘(2) DEADLINE.—The Commission shall complete a review 

undertaken pursuant to paragraph (1) not later than 90 days 

after issuance of the stay, unless the clearing agency that 

clears the security-based swap, or group, category, type, or 

class of security-based swaps, agrees to an extension of the 

time limitation established under this paragraph. 

‘‘(3) DETERMINATION.—Upon completion of the review 

undertaken pursuant to paragraph (1), the Commission may— 

‘‘(A) determine, unconditionally or subject to such 

terms and conditions as the Commission determines to 

be appropriate, that the security-based swap, or group, 

category, type, or class of security-based swaps, must be 

cleared pursuant to this subsection if it finds that such 

clearing is consistent with subsection (b)(4); or 

‘‘(B) determine that the clearing requirement of subsection (a)(1) shall not apply to the security-based swap, 

or group, category, type, or class of security-based swaps. 

‘‘(4) RULES.—Not later than 1 year after the date of the 

enactment of this section, the Commission shall adopt rules 

for reviewing, pursuant to this subsection, a clearing agency’s 

clearing of a security-based swap, or a group, category, type, 

or class of security-based swaps, that it has accepted for 

clearing. 

‘‘(d) PREVENTION OF EVASION.— 

‘‘(1) IN GENERAL.—The Commission shall prescribe rules 

under this section (and issue interpretations of rules prescribed 

under this section), as determined by the Commission to be 

necessary to prevent evasions of the mandatory clearing 

requirements under this Act. 

‘‘(2) DUTY OF COMMISSION TO INVESTIGATE AND TAKE CER- TAIN ACTIONS.—To the extent the Commission finds that a 

particular security-based swap or any group, category, type, 

or class of security-based swaps that would otherwise be subject 

to mandatory clearing but no clearing agency has listed the 

security-based swap or the group, category, type, or class of 

security-based swaps for clearing, the Commission shall— 

‘‘(A) investigate the relevant facts and circumstances; 

‘‘(B) within 30 days issue a public report containing 

the results of the investigation; and 

‘‘(C) take such actions as the Commission determines 

to be necessary and in the public interest, which may 

include requiring the retaining of adequate margin or capital by parties to the security-based swap or the group, 

category, type, or class of security-based swaps. 

‘‘(3) EFFECT ON AUTHORITY.—Nothing in this subsection— 

‘‘(A) authorizes the Commission to adopt rules 

requiring a clearing agency to list for clearing a securitybased swap or any group, category, type, or class of security-based swaps if the clearing of the security-based swap 

or the group, category, type, or class of security-based 

swaps would threaten the financial integrity of the clearing 

agency; and 

‘‘(B) affects the authority of the Commission to enforce 

the open access provisions of subsection (a)(2) with respect 

to a security-based swap or the group, category, type, or 

class of security-based swaps that is listed for clearing 

by a clearing agency. 
H. R. 4173—390 

‘‘(e) REPORTING TRANSITION RULES.—Rules adopted by the 

Commission under this section shall provide for the reporting of 

data, as follows: 

‘‘(1) Security-based swaps entered into before the date of 

the enactment of this section shall be reported to a registered 

security-based swap data repository or the Commission no later 

than 180 days after the effective date of this section. 

‘‘(2) Security-based swaps entered into on or after such 

date of enactment shall be reported to a registered securitybased swap data repository or the Commission no later than 

the later of— 

‘‘(A) 90 days after such effective date; or 

‘‘(B) such other time after entering into the securitybased swap as the Commission may prescribe by rule or 

regulation. 

‘‘(f) CLEARING TRANSITION RULES.— 

‘‘(1) Security-based swaps entered into before the date of 

the enactment of this section are exempt from the clearing 

requirements of this subsection if reported pursuant to subsection (e)(1). 

‘‘(2) Security-based swaps entered into before application 

of the clearing requirement pursuant to this section are exempt 

from the clearing requirements of this section if reported pursuant to subsection (e)(2). 

‘‘(g) EXCEPTIONS.— 

‘‘(1) IN GENERAL.—The requirements of subsection (a)(1) 

shall not apply to a security-based swap if 1 of the counterparties to the security-based swap— 

‘‘(A) is not a financial entity; 

‘‘(B) is using security-based swaps to hedge or mitigate 

commercial risk; and 

‘‘(C) notifies the Commission, in a manner set forth 

by the Commission, how it generally meets its financial 

obligations associated with entering into non-cleared security-based swaps. 

‘‘(2) OPTION TO CLEAR.—The application of the clearing 

exception in paragraph (1) is solely at the discretion of the 

counterparty to the security-based swap that meets the conditions of subparagraphs (A) through (C) of paragraph (1). 

‘‘(3) FINANCIAL ENTITY DEFINITION.— 

‘‘(A) IN GENERAL.—For the purposes of this subsection, 

the term ‘financial entity’ means— 

‘‘(i) a swap dealer; 

‘‘(ii) a security-based swap dealer; 

‘‘(iii) a major swap participant; 

‘‘(iv) a major security-based swap participant; 

‘‘(v) a commodity pool as defined in section 1a(10) 

of the Commodity Exchange Act; 

‘‘(vi) a private fund as defined in section 202(a) 

of the Investment Advisers Act of 1940 (15 U.S.C. 

80–b–2(a)); 

‘‘(vii) an employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002); 

‘‘(viii) a person predominantly engaged in activities 

that are in the business of banking or financial in 
H. R. 4173—391 

nature, as defined in section 4(k) of the Bank Holding 

Company Act of 1956. 

‘‘(B) EXCLUSION.—The Commission shall consider 

whether to exempt small banks, savings associations, farm 

credit system institutions, and credit unions, including— 

‘‘(i) depository institutions with total assets of 

$10,000,000,000 or less; 

‘‘(ii) farm credit system institutions with total 

assets of $10,000,000,000 or less; or 

‘‘(iii) credit unions with total assets of 

$10,000,000,000 or less. 

‘‘(4) TREATMENT OF AFFILIATES.— 

‘‘(A) IN GENERAL.—An affiliate of a person that qualifies 

for an exception under this subsection (including affiliate 

entities predominantly engaged in providing financing for 

the purchase of the merchandise or manufactured goods 

of the person) may qualify for the exception only if the 

affiliate, acting on behalf of the person and as an agent, 

uses the security-based swap to hedge or mitigate the 

commercial risk of the person or other affiliate of the 

person that is not a financial entity. 

‘‘(B) PROHIBITION RELATING TO CERTAIN AFFILIATES.— 

The exception in subparagraph (A) shall not apply if the 

affiliate is— 

‘‘(i) a swap dealer; 

‘‘(ii) a security-based swap dealer; 

‘‘(iii) a major swap participant; 

‘‘(iv) a major security-based swap participant; 

‘‘(v) an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for paragraph 

(1) or (7) of subsection (c) of that Act (15 U.S.C. 80a– 

3(c)); 

‘‘(vi) a commodity pool; or 

‘‘(vii) a bank holding company with over 

$50,000,000,000 in consolidated assets. 

‘‘(C) TRANSITION RULE FOR AFFILIATES.—An affiliate, 

subsidiary, or a wholly owned entity of a person that qualifies for an exception under subparagraph (A) and is 

predominantly engaged in providing financing for the purchase or lease of merchandise or manufactured goods of 

the person shall be exempt from the margin requirement 

described in section 15F(e) and the clearing requirement 

described in subsection (a) with regard to security-based 

swaps entered into to mitigate the risk of the financing 

activities for not less than a 2-year period beginning on 

the date of enactment of this subparagraph. 

‘‘(5) ELECTION OF COUNTERPARTY.— 

‘‘(A) SECURITY-BASED SWAPS REQUIRED TO BE

CLEARED.—With respect to any security-based swap that 

is subject to the mandatory clearing requirement under 

subsection (a) and entered into by a security-based swap 

dealer or a major security-based swap participant with 

a counterparty that is not a swap dealer, major swap 

participant, security-based swap dealer, or major securitybased swap participant, the counterparty shall have the 
H. R. 4173—392 

sole right to select the clearing agency at which the security-based swap will be cleared. 

‘‘(B) SECURITY-BASED SWAPS NOT REQUIRED TO BE

CLEARED.—With respect to any security-based swap that 

is not subject to the mandatory clearing requirement under 

subsection (a) and entered into by a security-based swap 

dealer or a major security-based swap participant with 

a counterparty that is not a swap dealer, major swap 

participant, security-based swap dealer, or major securitybased swap participant, the counterparty— 

‘‘(i) may elect to require clearing of the securitybased swap; and 

‘‘(ii) shall have the sole right to select the clearing 

agency at which the security-based swap will be 

cleared. 

‘‘(6) ABUSE OF EXCEPTION.—The Commission may prescribe 

such rules or issue interpretations of the rules as the Commission determines to be necessary to prevent abuse of the exceptions described in this subsection. The Commission may also 

request information from those persons claiming the clearing 

exception as necessary to prevent abuse of the exceptions 

described in this subsection. 

‘‘(h) TRADE EXECUTION.— 

‘‘(1) IN GENERAL.—With respect to transactions involving 

security-based swaps subject to the clearing requirement of 

subsection (a)(1), counterparties shall— 

‘‘(A) execute the transaction on an exchange; or 

‘‘(B) execute the transaction on a security-based swap 

execution facility registered under section 3D or a securitybased swap execution facility that is exempt from registration under section 3D(e). 

‘‘(2) EXCEPTION.—The requirements of subparagraphs (A) 

and (B) of paragraph (1) shall not apply if no exchange or 

security-based swap execution facility makes the security-based 

swap available to trade or for security-based swap transactions 

subject to the clearing exception under subsection (g). 

‘‘(i) BOARD APPROVAL.—Exemptions from the requirements of 

this section to clear a security-based swap or execute a securitybased swap through a national securities exchange or securitybased swap execution facility shall be available to a counterparty 

that is an issuer of securities that are registered under section 

12 or that is required to file reports pursuant to section 15(d), 

only if an appropriate committee of the issuer’s board or governing 

body has reviewed and approved the issuer’s decision to enter 

into security-based swaps that are subject to such exemptions. 

‘‘(j) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(1) IN GENERAL.—Each registered clearing agency shall 

designate an individual to serve as a chief compliance officer. 

‘‘(2) DUTIES.—The chief compliance officer shall— 

‘‘(A) report directly to the board or to the senior officer 

of the clearing agency; 

‘‘(B) in consultation with its board, a body performing 

a function similar thereto, or the senior officer of the registered clearing agency, resolve any conflicts of interest 

that may arise; 
H. R. 4173—393 

‘‘(C) be responsible for administering each policy and 

procedure that is required to be established pursuant to 

this section; 

‘‘(D) ensure compliance with this title (including regulations issued under this title) relating to agreements, contracts, or transactions, including each rule prescribed by 

the Commission under this section; 

‘‘(E) establish procedures for the remediation of noncompliance issues identified by the compliance officer 

through any— 

‘‘(i) compliance office review; 

‘‘(ii) look-back; 

‘‘(iii) internal or external audit finding; 

‘‘(iv) self-reported error; or 

‘‘(v) validated complaint; and 

‘‘(F) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

‘‘(3) ANNUAL REPORTS.— 

‘‘(A) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

‘‘(i) the compliance of the registered clearing 

agency or security-based swap execution facility of the 

compliance officer with respect to this title (including 

regulations under this title); and 

‘‘(ii) each policy and procedure of the registered 

clearing agency of the compliance officer (including 

the code of ethics and conflict of interest policies of 

the registered clearing agency). 

‘‘(B) REQUIREMENTS.—A compliance report under 

subparagraph (A) shall— 

‘‘(i) accompany each appropriate financial report 

of the registered clearing agency that is required to 

be furnished to the Commission pursuant to this section; and 

‘‘(ii) include a certification that, under penalty of 

law, the compliance report is accurate and complete.’’. 

(b) CLEARING AGENCY REQUIREMENTS.—Section 17A of the 

Securities Exchange Act of 1934 (15 U.S.C. 78q–1) is amended 

by adding at the end the following: 

‘‘(g) REGISTRATION REQUIREMENT.—It shall be unlawful for a 

clearing agency, unless registered with the Commission, directly 

or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a clearing 

agency with respect to a security-based swap. 

‘‘(h) VOLUNTARY REGISTRATION.—A person that clears agreements, contracts, or transactions that are not required to be cleared 

under this title may register with the Commission as a clearing 

agency. 

‘‘(i) STANDARDS FOR CLEARING AGENCIES CLEARING SECURITYBASED SWAP TRANSACTIONS.—To be registered and to maintain 

registration as a clearing agency that clears security-based swap 

transactions, a clearing agency shall comply with such standards 

as the Commission may establish by rule. In establishing any 

such standards, and in the exercise of its oversight of such a 
H. R. 4173—394 

clearing agency pursuant to this title, the Commission may conform 

such standards or oversight to reflect evolving United States and 

international standards. Except where the Commission determines 

otherwise by rule or regulation, a clearing agency shall have reasonable discretion in establishing the manner in which it complies 

with any such standards. 

‘‘(j) RULES.—The Commission shall adopt rules governing persons that are registered as clearing agencies for security-based 

swaps under this title. 

‘‘(k) EXEMPTIONS.—The Commission may exempt, conditionally 

or unconditionally, a clearing agency from registration under this 

section for the clearing of security-based swaps if the Commission 

determines that the clearing agency is subject to comparable, comprehensive supervision and regulation by the Commodity Futures 

Trading Commission or the appropriate government authorities 

in the home country of the agency. Such conditions may include, 

but are not limited to, requiring that the clearing agency be available for inspection by the Commission and make available all 

information requested by the Commission. 

‘‘(l) EXISTING DEPOSITORY INSTITUTIONS AND DERIVATIVE

CLEARING ORGANIZATIONS.— 

‘‘(1) IN GENERAL.—A depository institution or derivative 

clearing organization registered with the Commodity Futures 

Trading Commission under the Commodity Exchange Act that 

is required to be registered as a clearing agency under this 

section is deemed to be registered under this section solely 

for the purpose of clearing security-based swaps to the extent 

that, before the date of enactment of this subsection— 

‘‘(A) the depository institution cleared swaps as a multilateral clearing organization; or 

‘‘(B) the derivative clearing organization cleared swaps 

pursuant to an exemption from registration as a clearing 

agency. 

‘‘(2) CONVERSION OF DEPOSITORY INSTITUTIONS.—A depository institution to which this subsection applies may, by the 

vote of the shareholders owning not less than 51 percent of 

the voting interests of the depository institution, be converted 

into a State corporation, partnership, limited liability company, 

or similar legal form pursuant to a plan of conversion, if the 

conversion is not in contravention of applicable State law. 

‘‘(3) SHARING OF INFORMATION.—The Commodity Futures 

Trading Commission shall make available to the Commission, 

upon request, all information determined to be relevant by 

the Commodity Futures Trading Commission regarding a 

derivatives clearing organization deemed to be registered with 

the Commission under paragraph (1). 

‘‘(m) MODIFICATION OF CORE PRINCIPLES.—The Commission 

may conform the core principles established in this section to reflect 

evolving United States and international standards.’’. 

(c) SECURITY-BASED SWAP EXECUTION FACILITIES.—The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended 

by inserting after section 3C (as added by subsection (a) of this 

section) the following: 

‘‘SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES. 

‘‘(a) REGISTRATION.— 
H. R. 4173—395 

‘‘(1) IN GENERAL.—No person may operate a facility for 

the trading or processing of security-based swaps, unless the 

facility is registered as a security-based swap execution facility 

or as a national securities exchange under this section. 

‘‘(2) DUAL REGISTRATION.—Any person that is registered 

as a security-based swap execution facility under this section 

shall register with the Commission regardless of whether the 

person also is registered with the Commodity Futures Trading 

Commission as a swap execution facility. 

‘‘(b) TRADING AND TRADE PROCESSING.—A security-based swap 

execution facility that is registered under subsection (a) may— 

‘‘(1) make available for trading any security-based swap; 

and 

‘‘(2) facilitate trade processing of any security-based swap. 

‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE SECURITYBASED SWAPS BY NATIONAL SECURITIES EXCHANGES.—A national 

securities exchange shall, to the extent that the exchange also 

operates a security-based swap execution facility and uses the same 

electronic trade execution system for listing and executing trades 

of security-based swaps on or through the exchange and the facility, 

identify whether electronic trading of such security-based swaps 

is taking place on or through the national securities exchange 

or the security-based swap execution facility. 

‘‘(d) CORE PRINCIPLES FOR SECURITY-BASED SWAP EXECUTION

FACILITIES.— 

‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 

‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a security-based swap execution facility, the 

security-based swap execution facility shall comply with— 

‘‘(i) the core principles described in this subsection; 

and 

‘‘(ii) any requirement that the Commission may 

impose by rule or regulation. 

‘‘(B) REASONABLE DISCRETION OF SECURITY-BASED SWAP

EXECUTION FACILITY.—Unless otherwise determined by the 

Commission, by rule or regulation, a security-based swap 

execution facility described in subparagraph (A) shall have 

reasonable discretion in establishing the manner in which 

it complies with the core principles described in this subsection. 

‘‘(2) COMPLIANCE WITH RULES.—A security-based swap 

execution facility shall— 

‘‘(A) establish and enforce compliance with any rule 

established by such security-based swap execution facility, 

including— 

‘‘(i) the terms and conditions of the security-based 

swaps traded or processed on or through the facility; 

and 

‘‘(ii) any limitation on access to the facility; 

‘‘(B) establish and enforce trading, trade processing, 

and participation rules that will deter abuses and have 

the capacity to detect, investigate, and enforce those rules, 

including means— 

‘‘(i) to provide market participants with impartial 

access to the market; and 

‘‘(ii) to capture information that may be used in 

establishing whether rule violations have occurred; and 
H. R. 4173—396 

‘‘(C) establish rules governing the operation of the 

facility, including rules specifying trading procedures to 

be used in entering and executing orders traded or posted 

on the facility, including block trades. 

‘‘(3) SECURITY-BASED SWAPS NOT READILY SUSCEPTIBLE TO

MANIPULATION.—The security-based swap execution facility 

shall permit trading only in security-based swaps that are 

not readily susceptible to manipulation. 

‘‘(4) MONITORING OF TRADING AND TRADE PROCESSING.— 

The security-based swap execution facility shall— 

‘‘(A) establish and enforce rules or terms and conditions 

defining, or specifications detailing— 

‘‘(i) trading procedures to be used in entering and 

executing orders traded on or through the facilities 

of the security-based swap execution facility; and 

‘‘(ii) procedures for trade processing of securitybased swaps on or through the facilities of the securitybased swap execution facility; and 

‘‘(B) monitor trading in security-based swaps to prevent 

manipulation, price distortion, and disruptions of the 

delivery or cash settlement process through surveillance, 

compliance, and disciplinary practices and procedures, 

including methods for conducting real-time monitoring of 

trading and comprehensive and accurate trade reconstructions. 

‘‘(5) ABILITY TO OBTAIN INFORMATION.—The security-based 

swap execution facility shall— 

‘‘(A) establish and enforce rules that will allow the 

facility to obtain any necessary information to perform 

any of the functions described in this subsection; 

‘‘(B) provide the information to the Commission on 

request; and 

‘‘(C) have the capacity to carry out such international 

information-sharing agreements as the Commission may 

require. 

‘‘(6) FINANCIAL INTEGRITY OF TRANSACTIONS.—The securitybased swap execution facility shall establish and enforce rules 

and procedures for ensuring the financial integrity of securitybased swaps entered on or through the facilities of the securitybased swap execution facility, including the clearance and 

settlement of security-based swaps pursuant to section 3C(a)(1). 

‘‘(7) EMERGENCY AUTHORITY.—The security-based swap 

execution facility shall adopt rules to provide for the exercise 

of emergency authority, in consultation or cooperation with 

the Commission, as is necessary and appropriate, including 

the authority to liquidate or transfer open positions in any 

security-based swap or to suspend or curtail trading in a security-based swap. 

‘‘(8) TIMELY PUBLICATION OF TRADING INFORMATION.— 

‘‘(A) IN GENERAL.—The security-based swap execution 

facility shall make public timely information on price, 

trading volume, and other trading data on security-based 

swaps to the extent prescribed by the Commission. 

‘‘(B) CAPACITY OF SECURITY-BASED SWAP EXECUTION

FACILITY.—The security-based swap execution facility shall 

be required to have the capacity to electronically capture 
H. R. 4173—397 

and transmit and disseminate trade information with 

respect to transactions executed on or through the facility. 

‘‘(9) RECORDKEEPING AND REPORTING.— 

‘‘(A) IN GENERAL.—A security-based swap execution 

facility shall— 

‘‘(i) maintain records of all activities relating to 

the business of the facility, including a complete audit 

trail, in a form and manner acceptable to the Commission for a period of 5 years; and 

‘‘(ii) report to the Commission, in a form and 

manner acceptable to the Commission, such information as the Commission determines to be necessary 

or appropriate for the Commission to perform the 

duties of the Commission under this title. 

‘‘(B) REQUIREMENTS.—The Commission shall adopt 

data collection and reporting requirements for securitybased swap execution facilities that are comparable to corresponding requirements for clearing agencies and securitybased swap data repositories. 

‘‘(10) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this title, the securitybased swap execution facility shall not— 

‘‘(A) adopt any rules or taking any actions that result 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

trading or clearing. 

‘‘(11) CONFLICTS OF INTEREST.—The security-based swap 

execution facility shall— 

‘‘(A) establish and enforce rules to minimize conflicts 

of interest in its decision-making process; and 

‘‘(B) establish a process for resolving the conflicts of 

interest. 

‘‘(12) FINANCIAL RESOURCES.— 

‘‘(A) IN GENERAL.—The security-based swap execution 

facility shall have adequate financial, operational, and 

managerial resources to discharge each responsibility of 

the security-based swap execution facility, as determined 

by the Commission. 

‘‘(B) DETERMINATION OF RESOURCE ADEQUACY.—The 

financial resources of a security-based swap execution 

facility shall be considered to be adequate if the value 

of the financial resources— 

‘‘(i) enables the organization to meet its financial 

obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and 

‘‘(ii) exceeds the total amount that would enable 

the security-based swap execution facility to cover the 

operating costs of the security-based swap execution 

facility for a 1-year period, as calculated on a rolling 

basis. 

‘‘(13) SYSTEM SAFEGUARDS.—The security-based swap 

execution facility shall— 
H. R. 4173—398 

‘‘(A) establish and maintain a program of risk analysis 

and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that— 

‘‘(i) are reliable and secure; and 

‘‘(ii) have adequate scalable capacity; 

‘‘(B) establish and maintain emergency procedures, 

backup facilities, and a plan for disaster recovery that 

allow for— 

‘‘(i) the timely recovery and resumption of operations; and 

‘‘(ii) the fulfillment of the responsibilities and 

obligations of the security-based swap execution 

facility; and 

‘‘(C) periodically conduct tests to verify that the backup 

resources of the security-based swap execution facility are 

sufficient to ensure continued— 

‘‘(i) order processing and trade matching; 

‘‘(ii) price reporting; 

‘‘(iii) market surveillance; and 

‘‘(iv) maintenance of a comprehensive and accurate 

audit trail. 

‘‘(14) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(A) IN GENERAL.—Each security-based swap execution 

facility shall designate an individual to serve as a chief 

compliance officer. 

‘‘(B) DUTIES.—The chief compliance officer shall— 

‘‘(i) report directly to the board or to the senior 

officer of the facility; 

‘‘(ii) review compliance with the core principles 

in this subsection; 

‘‘(iii) in consultation with the board of the facility, 

a body performing a function similar to that of a board, 

or the senior officer of the facility, resolve any conflicts 

of interest that may arise; 

‘‘(iv) be responsible for establishing and administering the policies and procedures required to be 

established pursuant to this section; 

‘‘(v) ensure compliance with this title and the rules 

and regulations issued under this title, including rules 

prescribed by the Commission pursuant to this section; 

‘‘(vi) establish procedures for the remediation of 

noncompliance issues found during— 

‘‘(I) compliance office reviews; 

‘‘(II) look backs; 

‘‘(III) internal or external audit findings; 

‘‘(IV) self-reported errors; or 

‘‘(V) through validated complaints; and 

‘‘(vii) establish and follow appropriate procedures 

for the handling, management response, remediation, 

retesting, and closing of noncompliance issues. 

‘‘(C) ANNUAL REPORTS.— 

‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer 

shall annually prepare and sign a report that contains 

a description of— 
H. R. 4173—399 

‘‘(I) the compliance of the security-based swap 

execution facility with this title; and 

‘‘(II) the policies and procedures, including the 

code of ethics and conflict of interest policies, of 

the security-based security-based swap execution 

facility. 

‘‘(ii) REQUIREMENTS.—The chief compliance officer 

shall— 

‘‘(I) submit each report described in clause 

(i) with the appropriate financial report of the 

security-based swap execution facility that is 

required to be submitted to the Commission pursuant to this section; and 

‘‘(II) include in the report a certification that, 

under penalty of law, the report is accurate and 

complete. 

‘‘(e) EXEMPTIONS.—The Commission may exempt, conditionally 

or unconditionally, a security-based swap execution facility from 

registration under this section if the Commission finds that the 

facility is subject to comparable, comprehensive supervision and 

regulation on a consolidated basis by the Commodity Futures 

Trading Commission. 

‘‘(f) RULES.—The Commission shall prescribe rules governing 

the regulation of security-based swap execution facilities under 

this section.’’. 

(d) SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITYBASED SWAP TRANSACTIONS.—The Securities Exchange Act of 1934 

(15 U.S.C. 78a et seq.) is amended by inserting after section 3D 

(as added by subsection (b)) the following: 

‘‘SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS. 

‘‘(a) REGISTRATION REQUIREMENT.—It shall be unlawful for any 

person to accept any money, securities, or property (or to extend 

any credit in lieu of money, securities, or property) from, for, or 

on behalf of a security-based swaps customer to margin, guarantee, 

or secure a security-based swap cleared by or through a clearing 

agency (including money, securities, or property accruing to the 

customer as the result of such a security-based swap), unless the 

person shall have registered under this title with the Commission 

as a broker, dealer, or security-based swap dealer, and the registration shall not have expired nor been suspended nor revoked. 

‘‘(b) CLEARED SECURITY-BASED SWAPS.— 

‘‘(1) SEGREGATION REQUIRED.—A broker, dealer, or securitybased swap dealer shall treat and deal with all money, securities, and property of any security-based swaps customer 

received to margin, guarantee, or secure a security-based swap 

cleared by or though a clearing agency (including money, securities, or property accruing to the security-based swaps customer 

as the result of such a security-based swap) as belonging to 

the security-based swaps customer. 

‘‘(2) COMMINGLING PROHIBITED.—Money, securities, and 

property of a security-based swaps customer described in paragraph (1) shall be separately accounted for and shall not be 

commingled with the funds of the broker, dealer, or securitybased swap dealer or be used to margin, secure, or guarantee 
H. R. 4173—400 

any trades or contracts of any security-based swaps customer 

or person other than the person for whom the same are held. 

‘‘(c) EXCEPTIONS.— 

‘‘(1) USE OF FUNDS.— 

‘‘(A) IN GENERAL.—Notwithstanding subsection (b), 

money, securities, and property of a security-based swaps 

customer of a broker, dealer, or security-based swap dealer 

described in subsection (b) may, for convenience, be 

commingled and deposited in the same 1 or more accounts 

with any bank or trust company or with a clearing agency. 

‘‘(B) WITHDRAWAL.—Notwithstanding subsection (b), 

such share of the money, securities, and property described 

in subparagraph (A) as in the normal course of business 

shall be necessary to margin, guarantee, secure, transfer, 

adjust, or settle a cleared security-based swap with a 

clearing agency, or with any member of the clearing agency, 

may be withdrawn and applied to such purposes, including 

the payment of commissions, brokerage, interest, taxes, 

storage, and other charges, lawfully accruing in connection 

with the cleared security-based swap. 

‘‘(2) COMMISSION ACTION.—Notwithstanding subsection (b), 

in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, 

securities, or property of the security-based swaps customer 

of a broker, dealer, or security-based swap dealer described 

in subsection (b) may be commingled and deposited as provided 

in this section with any other money, securities, or property 

received by the broker, dealer, or security-based swap dealer 

and required by the Commission to be separately accounted 

for and treated and dealt with as belonging to the securitybased swaps customer of the broker, dealer, or security-based 

swap dealer. 

‘‘(d) PERMITTED INVESTMENTS.—Money described in subsection 

(b) may be invested in obligations of the United States, in general 

obligations of any State or of any political subdivision of a State, 

and in obligations fully guaranteed as to principal and interest 

by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments 

shall be made in accordance with such rules and regulations and 

subject to such conditions as the Commission may prescribe. 

‘‘(e) PROHIBITION.—It shall be unlawful for any person, 

including any clearing agency and any depository institution, that 

has received any money, securities, or property for deposit in a 

separate account or accounts as provided in subsection (b) to hold, 

dispose of, or use any such money, securities, or property as 

belonging to the depositing broker, dealer, or security-based swap 

dealer or any person other than the swaps customer of the broker, 

dealer, or security-based swap dealer. 

‘‘(f) SEGREGATION REQUIREMENTS FOR UNCLEARED SECURITYBASED SWAPS.— 

‘‘(1) SEGREGATION OF ASSETS HELD AS COLLATERAL IN

UNCLEARED SECURITY-BASED SWAP TRANSACTIONS.— ‘‘(A) NOTIFICATION.—A security-based swap dealer or 

major security-based swap participant shall be required 

to notify the counterparty of the security-based swap dealer 

or major security-based swap participant at the beginning 

of a security-based swap transaction that the counterparty 
H. R. 4173—401 

has the right to require segregation of the funds of other 

property supplied to margin, guarantee, or secure the 

obligations of the counterparty. 

‘‘(B) SEGREGATION AND MAINTENANCE OF FUNDS.—At 

the request of a counterparty to a security-based swap 

that provides funds or other property to a security-based 

swap dealer or major security-based swap participant to 

margin, guarantee, or secure the obligations of the 

counterparty, the security-based swap dealer or major security-based swap participant shall— 

‘‘(i) segregate the funds or other property for the 

benefit of the counterparty; and 

‘‘(ii) in accordance with such rules and regulations 

as the Commission may promulgate, maintain the 

funds or other property in a segregated account separate from the assets and other interests of the securitybased swap dealer or major security-based swap 

participant. 

‘‘(2) APPLICABILITY.—The requirements described in paragraph (1) shall— 

‘‘(A) apply only to a security-based swap between a 

counterparty and a security-based swap dealer or major 

security-based swap participant that is not submitted for 

clearing to a clearing agency; and 

‘‘(B)(i) not apply to variation margin payments; or 

‘‘(ii) not preclude any commercial arrangement 

regarding— 

‘‘(I) the investment of segregated funds or other 

property that may only be invested in such investments 

as the Commission may permit by rule or regulation; 

and 

‘‘(II) the related allocation of gains and losses 

resulting from any investment of the segregated funds 

or other property. 

‘‘(3) USE OF INDEPENDENT THIRD-PARTY CUSTODIANS.—The 

segregated account described in paragraph (1) shall be— 

‘‘(A) carried by an independent third-party custodian; 

and 

‘‘(B) designated as a segregated account for and on 

behalf of the counterparty. 

‘‘(4) REPORTING REQUIREMENT.—If the counterparty does 

not choose to require segregation of the funds or other property 

supplied to margin, guarantee, or secure the obligations of 

the counterparty, the security-based swap dealer or major security-based swap participant shall report to the counterparty 

of the security-based swap dealer or major security-based swap 

participant on a quarterly basis that the back office procedures 

of the security-based swap dealer or major security-based swap 

participant relating to margin and collateral requirements are 

in compliance with the agreement of the counterparties. 

‘‘(g) BANKRUPTCY.—A security-based swap, as defined in section 

3(a)(68) shall be considered to be a security as such term is used 

in section 101(53A)(B) and subchapter III of title 11, United States 

Code. An account that holds a security-based swap, other than 

a portfolio margining account referred to in section 15(c)(3)(C) shall 

be considered to be a securities account, as that term is defined 

in section 741 of title 11, United States Code. The definitions 
H. R. 4173—402 

of the terms ‘purchase’ and ‘sale’ in section 3(a)(13) and (14) shall 

be applied to the terms ‘purchase’ and ‘sale’, as used in section 

741 of title 11, United States Code. The term ‘customer’, as defined 

in section 741 of title 11, United States Code, excludes any person, 

to the extent that such person has a claim based on any open 

repurchase agreement, open reverse repurchase agreement, stock 

borrowed agreement, non-cleared option, or non-cleared securitybased swap except to the extent of any margin delivered to or 

by the customer with respect to which there is a customer protection 

requirement under section 15(c)(3) or a segregation requirement.’’. 

(e) TRADING IN SECURITY-BASED SWAPS.—Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding 

at the end the following: 

‘‘(l) SECURITY-BASED SWAPS.—It shall be unlawful for any person to effect a transaction in a security-based swap with or for 

a person that is not an eligible contract participant, unless such 

transaction is effected on a national securities exchange registered 

pursuant to subsection (b).’’. 

(f) ADDITIONS OF SECURITY-BASED SWAPS TO CERTAIN ENFORCE- MENT PROVISIONS.—Section 9(b) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78i(b)) is amended by striking paragraphs (1) 

through (3) and inserting the following: 

‘‘(1) any transaction in connection with any security 

whereby any party to such transaction acquires— 

‘‘(A) any put, call, straddle, or other option or privilege 

of buying the security from or selling the security to 

another without being bound to do so; 

‘‘(B) any security futures product on the security; or 

‘‘(C) any security-based swap involving the security 

or the issuer of the security; 

‘‘(2) any transaction in connection with any security with 

relation to which such person has, directly or indirectly, any 

interest in any— 

‘‘(A) such put, call, straddle, option, or privilege; 

‘‘(B) such security futures product; or 

‘‘(C) such security-based swap; or 

‘‘(3) any transaction in any security for the account of 

any person who such person has reason to believe has, and 

who actually has, directly or indirectly, any interest in any— 

‘‘(A) such put, call, straddle, option, or privilege; 

‘‘(B) such security futures product with relation to such 

security; or 

‘‘(C) any security-based swap involving such security 

or the issuer of such security.’’. 

(g) RULEMAKING AUTHORITY TO PREVENT FRAUD, MANIPULATION AND DECEPTIVE CONDUCT IN SECURITY-BASED SWAPS.—Section 

9 of the Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended 

by adding at the end the following: 

‘‘(j) It shall be unlawful for any person, directly or indirectly, 

by the use of any means or instrumentality of interstate commerce 

or of the mails, or of any facility of any national securities exchange, 

to effect any transaction in, or to induce or attempt to induce 

the purchase or sale of, any security-based swap, in connection 

with which such person engages in any fraudulent, deceptive, or 

manipulative act or practice, makes any fictitious quotation, or 

engages in any transaction, practice, or course of business which 

operates as a fraud or deceit upon any person. The Commission 
H. R. 4173—403 

shall, for the purposes of this subsection, by rules and regulations 

define, and prescribe means reasonably designed to prevent, such 

transactions, acts, practices, and courses of business as are fraudulent, deceptive, or manipulative, and such quotations as are fictitious.’’. 

(h) POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-BASED SWAPS.—The Securities Exchange Act of 1934 is 

amended by inserting after section 10A (15 U.S.C. 78j–1) the following: 

‘‘SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR 

SECURITY-BASED SWAPS AND LARGE TRADER REPORTING. 

‘‘(a) POSITION LIMITS.—As a means reasonably designed to prevent fraud and manipulation, the Commission shall, by rule or 

regulation, as necessary or appropriate in the public interest or 

for the protection of investors, establish limits (including related 

hedge exemption provisions) on the size of positions in any securitybased swap that may be held by any person. In establishing such 

limits, the Commission may require any person to aggregate positions in— 

‘‘(1) any security-based swap and any security or loan or 

group of securities or loans on which such security-based swap 

is based, which such security-based swap references, or to which 

such security-based swap is related as described in paragraph 

(68) of section 3(a), and any other instrument relating to such 

security or loan or group or index of securities or loans; or 

‘‘(2) any security-based swap and— 

‘‘(A) any security or group or index of securities, the 

price, yield, value, or volatility of which, or of which any 

interest therein, is the basis for a material term of such 

security-based swap as described in paragraph (68) of section 3(a); and 

‘‘(B) any other instrument relating to the same security 

or group or index of securities described under subparagraph (A). 

‘‘(b) EXEMPTIONS.—The Commission, by rule, regulation, or 

order, may conditionally or unconditionally exempt any person or 

class of persons, any security-based swap or class of security-based 

swaps, or any transaction or class of transactions from any requirement the Commission may establish under this section with respect 

to position limits. 

‘‘(c) SRO RULES.— 

‘‘(1) IN GENERAL.—As a means reasonably designed to prevent fraud or manipulation, the Commission, by rule, regulation, or order, as necessary or appropriate in the public interest, 

for the protection of investors, or otherwise in furtherance 

of the purposes of this title, may direct a self-regulatory 

organization— 

‘‘(A) to adopt rules regarding the size of positions in 

any security-based swap that may be held by— 

‘‘(i) any member of such self-regulatory organization; or 

‘‘(ii) any person for whom a member of such selfregulatory organization effects transactions in such 

security-based swap; and 
H. R. 4173—404 

‘‘(B) to adopt rules reasonably designed to ensure 

compliance with requirements prescribed by the Commission under this subsection. 

‘‘(2) REQUIREMENT TO AGGREGATE POSITIONS.—In establishing the limits under paragraph (1), the self-regulatory 

organization may require such member or person to aggregate 

positions in— 

‘‘(A) any security-based swap and any security or loan 

or group or narrow-based security index of securities or 

loans on which such security-based swap is based, which 

such security-based swap references, or to which such security-based swap is related as described in section 3(a)(68), 

and any other instrument relating to such security or loan 

or group or narrow-based security index of securities or 

loans; or 

‘‘(B)(i) any security-based swap; and 

‘‘(ii) any security-based swap and any other instrument 

relating to the same security or group or narrow-based 

security index of securities. 

‘‘(d) LARGE TRADER REPORTING.—The Commission, by rule or 

regulation, may require any person that effects transactions for 

such person’s own account or the account of others in any securitiesbased swap or uncleared security-based swap and any security 

or loan or group or narrow-based security index of securities or 

loans as set forth in paragraphs (1) and (2) of subsection (a) under 

this section to report such information as the Commission may 

prescribe regarding any position or positions in any security-based 

swap or uncleared security-based swap and any security or loan 

or group or narrow-based security index of securities or loans and 

any other instrument relating to such security or loan or group 

or narrow-based security index of securities or loans as set forth 

in paragraphs (1) and (2) of subsection (a) under this section.’’. 

(i) PUBLIC REPORTING AND REPOSITORIES FOR SECURITY-BASED

SWAPS.—Section 13 of the Securities Exchange Act of 1934 (15 

U.S.C. 78m) is amended by adding at the end the following: 

‘‘(m) PUBLIC AVAILABILITY OF SECURITY-BASED SWAP TRANS- ACTION DATA.— ‘‘(1) IN GENERAL.— ‘‘(A) DEFINITION OF REAL-TIME PUBLIC REPORTING.— 

In this paragraph, the term ‘real-time public reporting’ 

means to report data relating to a security-based swap 

transaction, including price and volume, as soon as technologically practicable after the time at which the securitybased swap transaction has been executed. 

‘‘(B) PURPOSE.—The purpose of this subsection is to 

authorize the Commission to make security-based swap 

transaction and pricing data available to the public in 

such form and at such times as the Commission determines 

appropriate to enhance price discovery. 

‘‘(C) GENERAL RULE.—The Commission is authorized 

to provide by rule for the public availability of securitybased swap transaction, volume, and pricing data as follows: 

‘‘(i) With respect to those security-based swaps 

that are subject to the mandatory clearing requirement 

described in section 3C(a)(1) (including those securitybased swaps that are excepted from the requirement 
H. R. 4173—405 

pursuant to section 3C(g)), the Commission shall 

require real-time public reporting for such transactions. 

‘‘(ii) With respect to those security-based swaps 

that are not subject to the mandatory clearing requirement described in section 3C(a)(1), but are cleared 

at a registered clearing agency, the Commission shall 

require real-time public reporting for such transactions. 

‘‘(iii) With respect to security-based swaps that 

are not cleared at a registered clearing agency and 

which are reported to a security-based swap data 

repository or the Commission under section 3C(a)(6), 

the Commission shall require real-time public 

reporting for such transactions, in a manner that does 

not disclose the business transactions and market positions of any person. 

‘‘(iv) With respect to security-based swaps that 

are determined to be required to be cleared under 

section 3C(b) but are not cleared, the Commission shall 

require real-time public reporting for such transactions. 

‘‘(D) REGISTERED ENTITIES AND PUBLIC REPORTING.— 

The Commission may require registered entities to publicly 

disseminate the security-based swap transaction and 

pricing data required to be reported under this paragraph. 

‘‘(E) RULEMAKING REQUIRED.—With respect to the rule 

providing for the public availability of transaction and 

pricing data for security-based swaps described in clauses 

(i) and (ii) of subparagraph (C), the rule promulgated by 

the Commission shall contain provisions— 

‘‘(i) to ensure such information does not identify 

the participants; 

‘‘(ii) to specify the criteria for determining what 

constitutes a large notional security-based swap transaction (block trade) for particular markets and contracts; 

‘‘(iii) to specify the appropriate time delay for 

reporting large notional security-based swap transactions (block trades) to the public; and 

‘‘(iv) that take into account whether the public 

disclosure will materially reduce market liquidity. 

‘‘(F) TIMELINESS OF REPORTING.—Parties to a securitybased swap (including agents of the parties to a securitybased swap) shall be responsible for reporting securitybased swap transaction information to the appropriate registered entity in a timely manner as may be prescribed 

by the Commission. 

‘‘(G) REPORTING OF SWAPS TO REGISTERED SECURITYBASED SWAP DATA REPOSITORIES.—Each security-based 

swap (whether cleared or uncleared) shall be reported to 

a registered security-based swap data repository. 

‘‘(H) REGISTRATION OF CLEARING AGENCIES.—A clearing 

agency may register as a security-based swap data repository. 

‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORTING OF AGGRE- GATE SECURITY-BASED SWAP DATA.— 
H. R. 4173—406 

‘‘(A) IN GENERAL.—In accordance with subparagraph 

(B), the Commission shall issue a written report on a 

semiannual and annual basis to make available to the 

public information relating to— 

‘‘(i) the trading and clearing in the major securitybased swap categories; and 

‘‘(ii) the market participants and developments in 

new products. 

‘‘(B) USE; CONSULTATION.—In preparing a report under 

subparagraph (A), the Commission shall— 

‘‘(i) use information from security-based swap data 

repositories and clearing agencies; and 

‘‘(ii) consult with the Office of the Comptroller 

of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be 

necessary. 

‘‘(C) AUTHORITY OF COMMISSION.—The Commission 

may, by rule, regulation, or order, delegate the public 

reporting responsibilities of the Commission under this 

paragraph in accordance with such terms and conditions 

as the Commission determines to be appropriate and in 

the public interest. 

‘‘(n) SECURITY-BASED SWAP DATA REPOSITORIES.— 

‘‘(1) REGISTRATION REQUIREMENT.—It shall be unlawful for 

any person, unless registered with the Commission, directly 

or indirectly, to make use of the mails or any means or 

instrumentality of interstate commerce to perform the functions 

of a security-based swap data repository. 

‘‘(2) INSPECTION AND EXAMINATION.—Each registered security-based swap data repository shall be subject to inspection 

and examination by any representative of the Commission. 

‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.— 

‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a security-based swap data repository, the 

security-based swap data repository shall comply with— 

‘‘(i) the requirements and core principles described 

in this subsection; and 

‘‘(ii) any requirement that the Commission may 

impose by rule or regulation. 

‘‘(B) REASONABLE DISCRETION OF SECURITY-BASED SWAP

DATA REPOSITORY.—Unless otherwise determined by the 

Commission, by rule or regulation, a security-based swap 

data repository described in subparagraph (A) shall have 

reasonable discretion in establishing the manner in which 

the security-based swap data repository complies with the 

core principles described in this subsection. 

‘‘(4) STANDARD SETTING.— ‘‘(A) DATA IDENTIFICATION.— ‘‘(i) IN GENERAL.—In accordance with clause (ii), 

the Commission shall prescribe standards that specify 

the data elements for each security-based swap that 

shall be collected and maintained by each registered 

security-based swap data repository. 

‘‘(ii) REQUIREMENT.—In carrying out clause (i), the 

Commission shall prescribe consistent data element 

standards applicable to registered entities and 

reporting counterparties. 
H. R. 4173—407 

‘‘(B) DATA COLLECTION AND MAINTENANCE.—The 

Commission shall prescribe data collection and data 

maintenance standards for security-based swap data repositories. 

‘‘(C) COMPARABILITY.—The standards prescribed by the 

Commission under this subsection shall be comparable to 

the data standards imposed by the Commission on clearing 

agencies in connection with their clearing of security-based 

swaps. 

‘‘(5) DUTIES.—A security-based swap data repository shall— 

‘‘(A) accept data prescribed by the Commission for each 

security-based swap under subsection (b); 

‘‘(B) confirm with both counterparties to the securitybased swap the accuracy of the data that was submitted; 

‘‘(C) maintain the data described in subparagraph (A) 

in such form, in such manner, and for such period as 

may be required by the Commission; 

‘‘(D)(i) provide direct electronic access to the Commission (or any designee of the Commission, including another 

registered entity); and 

‘‘(ii) provide the information described in subparagraph 

(A) in such form and at such frequency as the Commission 

may require to comply with the public reporting requirements set forth in subsection (m); 

‘‘(E) at the direction of the Commission, establish automated systems for monitoring, screening, and analyzing 

security-based swap data; 

‘‘(F) maintain the privacy of any and all security-based 

swap transaction information that the security-based swap 

data repository receives from a security-based swap dealer, 

counterparty, or any other registered entity; and 

‘‘(G) on a confidential basis pursuant to section 24, 

upon request, and after notifying the Commission of the 

request, make available all data obtained by the securitybased swap data repository, including individual 

counterparty trade and position data, to— 

‘‘(i) each appropriate prudential regulator; 

‘‘(ii) the Financial Stability Oversight Council; 

‘‘(iii) the Commodity Futures Trading Commission; 

‘‘(iv) the Department of Justice; and 

‘‘(v) any other person that the Commission determines to be appropriate, including— 

‘‘(I) foreign financial supervisors (including foreign futures authorities); 

‘‘(II) foreign central banks; and 

‘‘(III) foreign ministries. 

‘‘(H) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—Before the security-based swap data repository may 

share information with any entity described in subparagraph (G)— 

‘‘(i) the security-based swap data repository shall 

receive a written agreement from each entity stating 

that the entity shall abide by the confidentiality 

requirements described in section 24 relating to the 

information on security-based swap transactions that 

is provided; and 
H. R. 4173—408 

‘‘(ii) each entity shall agree to indemnify the security-based swap data repository and the Commission 

for any expenses arising from litigation relating to 

the information provided under section 24. 

‘‘(6) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(A) IN GENERAL.—Each security-based swap data 

repository shall designate an individual to serve as a chief 

compliance officer. 

‘‘(B) DUTIES.—The chief compliance officer shall— 

‘‘(i) report directly to the board or to the senior 

officer of the security-based swap data repository; 

‘‘(ii) review the compliance of the security-based 

swap data repository with respect to the requirements 

and core principles described in this subsection; 

‘‘(iii) in consultation with the board of the securitybased swap data repository, a body performing a function similar to the board of the security-based swap 

data repository, or the senior officer of the securitybased swap data repository, resolve any conflicts of 

interest that may arise; 

‘‘(iv) be responsible for administering each policy 

and procedure that is required to be established pursuant to this section; 

‘‘(v) ensure compliance with this title (including 

regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; 

‘‘(vi) establish procedures for the remediation of 

noncompliance issues identified by the chief compliance 

officer through any— 

‘‘(I) compliance office review; 

‘‘(II) look-back; 

‘‘(III) internal or external audit finding; 

‘‘(IV) self-reported error; or 

‘‘(V) validated complaint; and 

‘‘(vii) establish and follow appropriate procedures 

for the handling, management response, remediation, 

retesting, and closing of noncompliance issues. 

‘‘(C) ANNUAL REPORTS.— 

‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer 

shall annually prepare and sign a report that contains 

a description of— 

‘‘(I) the compliance of the security-based swap 

data repository of the chief compliance officer with 

respect to this title (including regulations); and 

‘‘(II) each policy and procedure of the securitybased swap data repository of the chief compliance 

officer (including the code of ethics and conflict 

of interest policies of the security-based swap data 

repository). 

‘‘(ii) REQUIREMENTS.—A compliance report under 

clause (i) shall— 

‘‘(I) accompany each appropriate financial 

report of the security-based swap data repository 

that is required to be furnished to the Commission 

pursuant to this section; and 
H. R. 4173—409 

‘‘(II) include a certification that, under penalty 

of law, the compliance report is accurate and complete. 

‘‘(7) CORE PRINCIPLES APPLICABLE TO SECURITY-BASED SWAP

DATA REPOSITORIES.— 

‘‘(A) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this title, the swap 

data repository shall not— 

‘‘(i) adopt any rule or take any action that results 

in any unreasonable restraint of trade; or 

‘‘(ii) impose any material anticompetitive burden 

on the trading, clearing, or reporting of transactions. 

‘‘(B) GOVERNANCE ARRANGEMENTS.—Each securitybased swap data repository shall establish governance 

arrangements that are transparent— 

‘‘(i) to fulfill public interest requirements; and 

‘‘(ii) to support the objectives of the Federal 

Government, owners, and participants. 

‘‘(C) CONFLICTS OF INTEREST.—Each security-based 

swap data repository shall— 

‘‘(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the 

security-based swap data repository; and 

‘‘(ii) establish a process for resolving any conflicts 

of interest described in clause (i). 

‘‘(D) ADDITIONAL DUTIES DEVELOPED BY COMMISSION.— 

‘‘(i) IN GENERAL.—The Commission may develop 

1 or more additional duties applicable to security-based 

swap data repositories. 

‘‘(ii) CONSIDERATION OF EVOLVING STANDARDS.—In 

developing additional duties under subparagraph (A), 

the Commission may take into consideration any 

evolving standard of the United States or the international community. 

‘‘(iii) ADDITIONAL DUTIES FOR COMMISSION DESIGNEES.—The Commission shall establish additional 

duties for any registrant described in section 

13(m)(2)(C) in order to minimize conflicts of interest, 

protect data, ensure compliance, and guarantee the 

safety and security of the security-based swap data 

repository. 

‘‘(8) REQUIRED REGISTRATION FOR SECURITY-BASED SWAP

DATA REPOSITORIES.—Any person that is required to be registered as a security-based swap data repository under this 

subsection shall register with the Commission, regardless of 

whether that person is also licensed under the Commodity 

Exchange Act as a swap data repository. 

‘‘(9) RULES.—The Commission shall adopt rules governing 

persons that are registered under this subsection.’’. 

SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP 

DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS. 

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.) is amended by inserting after section 15E 

(15 U.S.C. 78o–7) the following: 
H. R. 4173—410 

‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED 

SWAP DEALERS AND MAJOR SECURITY-BASED SWAP 

PARTICIPANTS. 

‘‘(a) REGISTRATION.— ‘‘(1) SECURITY-BASED SWAP DEALERS.—It shall be unlawful 

for any person to act as a security-based swap dealer unless 

the person is registered as a security-based swap dealer with 

the Commission. 

‘‘(2) MAJOR SECURITY-BASED SWAP PARTICIPANTS.—It shall 

be unlawful for any person to act as a major security-based 

swap participant unless the person is registered as a major 

security-based swap participant with the Commission. 

‘‘(b) REQUIREMENTS.— ‘‘(1) IN GENERAL.—A person shall register as a securitybased swap dealer or major security-based swap participant 

by filing a registration application with the Commission. 

‘‘(2) CONTENTS.— ‘‘(A) IN GENERAL.—The application shall be made in 

such form and manner as prescribed by the Commission, 

and shall contain such information, as the Commission 

considers necessary concerning the business in which the 

applicant is or will be engaged. 

‘‘(B) CONTINUAL REPORTING.—A person that is registered as a security-based swap dealer or major securitybased swap participant shall continue to submit to the 

Commission reports that contain such information pertaining to the business of the person as the Commission 

may require. 

‘‘(3) EXPIRATION.—Each registration under this section shall 

expire at such time as the Commission may prescribe by rule 

or regulation. 

‘‘(4) RULES.—Except as provided in subsections (d) and 

(e), the Commission may prescribe rules applicable to securitybased swap dealers and major security-based swap participants, 

including rules that limit the activities of non-bank securitybased swap dealers and major security-based swap participants. 

‘‘(5) TRANSITION.—Not later than 1 year after the date 

of enactment of the Wall Street Transparency and Accountability Act of 2010, the Commission shall issue rules under 

this section to provide for the registration of security-based 

swap dealers and major security-based swap participants. 

‘‘(6) STATUTORY DISQUALIFICATION.—Except to the extent 

otherwise specifically provided by rule, regulation, or order 

of the Commission, it shall be unlawful for a security-based 

swap dealer or a major security-based swap participant to 

permit any person associated with a security-based swap dealer 

or a major security-based swap participant who is subject to 

a statutory disqualification to effect or be involved in effecting 

security-based swaps on behalf of the security-based swap 

dealer or major security-based swap participant, if the securitybased swap dealer or major security-based swap participant 

knew, or in the exercise of reasonable care should have known, 

of the statutory disqualification. 

‘‘(c) DUAL REGISTRATION.— ‘‘(1) SECURITY-BASED SWAP DEALER.—Any person that is 

required to be registered as a security-based swap dealer under 

this section shall register with the Commission, regardless 
H. R. 4173—411 

of whether the person also is registered with the Commodity 

Futures Trading Commission as a swap dealer. 

‘‘(2) MAJOR SECURITY-BASED SWAP PARTICIPANT.—Any person that is required to be registered as a major security-based 

swap participant under this section shall register with the 

Commission, regardless of whether the person also is registered 

with the Commodity Futures Trading Commission as a major 

swap participant. 

‘‘(d) RULEMAKING.— 

‘‘(1) IN GENERAL.—The Commission shall adopt rules for 

persons that are registered as security-based swap dealers or 

major security-based swap participants under this section. 

‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.— 

‘‘(A) IN GENERAL.—The Commission may not prescribe 

rules imposing prudential requirements on security-based 

swap dealers or major security-based swap participants 

for which there is a prudential regulator. 

‘‘(B) APPLICABILITY.—Subparagraph (A) does not limit 

the authority of the Commission to prescribe rules as 

directed under this section. 

‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

‘‘(1) IN GENERAL.— 

‘‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—Each 

registered security-based swap dealer and major securitybased swap participant for which there is not a prudential 

regulator shall meet such minimum capital requirements 

and minimum initial and variation margin requirements 

as the prudential regulator shall by rule or regulation 

prescribe under paragraph (2)(A). 

‘‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.— 

Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation prescribe under paragraph (2)(B). 

‘‘(2) RULES.— 

‘‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—The 

prudential regulators, in consultation with the Commission 

and the Commodity Futures Trading Commission, shall 

adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities 

as a swap dealer or major swap participant, for which 

there is a prudential regulator imposing— 

‘‘(i) capital requirements; and 

‘‘(ii) both initial and variation margin requirements 

on all security-based swaps that are not cleared by 

a registered clearing agency. 

‘‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.— 

The Commission shall adopt rules for security-based swap 

dealers and major security-based swap participants, with 

respect to their activities as a swap dealer or major swap 
H. R. 4173—412 

participant, for which there is not a prudential regulator 

imposing— 

‘‘(i) capital requirements; and 

‘‘(ii) both initial and variation margin requirements 

on all swaps that are not cleared by a registered 

clearing agency. 

‘‘(C) CAPITAL.—In setting capital requirements for a 

person that is designated as a security-based swap dealer 

or a major security-based swap participant for a single 

type or single class or category of security-based swap 

or activities, the prudential regulator and the Commission 

shall take into account the risks associated with other 

types of security-based swaps or classes of security-based 

swaps or categories of security-based swaps engaged in 

and the other activities conducted by that person that 

are not otherwise subject to regulation applicable to that 

person by virtue of the status of the person. 

‘‘(3) STANDARDS FOR CAPITAL AND MARGIN.— 

‘‘(A) IN GENERAL.—To offset the greater risk to the 

security-based swap dealer or major security-based swap 

participant and the financial system arising from the use 

of security-based swaps that are not cleared, the requirements imposed under paragraph (2) shall — 

‘‘(i) help ensure the safety and soundness of the 

security-based swap dealer or major security-based 

swap participant; and 

‘‘(ii) be appropriate for the risk associated with 

the non-cleared security-based swaps held as a security-based swap dealer or major security-based swap 

participant. 

‘‘(B) RULE OF CONSTRUCTION.— ‘‘(i) IN GENERAL.—Nothing in this section shall 

limit, or be construed to limit, the authority— 

‘‘(I) of the Commission to set financial responsibility rules for a broker or dealer registered 

pursuant to section 15(b) (except for section 

15(b)(11) thereof) in accordance with section 

15(c)(3); or 

‘‘(II) of the Commodity Futures Trading 

Commission to set financial responsibility rules 

for a futures commission merchant or introducing 

broker registered pursuant to section 4f(a) of the 

Commodity Exchange Act (except for section 

4f(a)(3) thereof) in accordance with section 4f(b) 

of the Commodity Exchange Act. 

‘‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER

DEALERS.—A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any 

applicable capital requirements to which such futures 

commission merchant, introducing broker, broker, or 

dealer is subject to under this title or the Commodity 

Exchange Act. 

‘‘(C) MARGIN REQUIREMENTS.—In prescribing margin 

requirements under this subsection, the prudential regulator with respect to security-based swap dealers and major 

security-based swap participants that are depository 
H. R. 4173—413 

institutions, and the Commission with respect to securitybased swap dealers and major security-based swap participants that are not depository institutions shall permit the 

use of noncash collateral, as the regulator or the Commission determines to be consistent with— 

‘‘(i) preserving the financial integrity of markets 

trading security-based swaps; and 

‘‘(ii) preserving the stability of the United States 

financial system. 

‘‘(D) COMPARABILITY OF CAPITAL AND MARGIN REQUIRE- MENTS.— 

‘‘(i) IN GENERAL.—The prudential regulators, the 

Commission, and the Securities and Exchange 

Commission shall periodically (but not less frequently 

than annually) consult on minimum capital requirements and minimum initial and variation margin 

requirements. 

‘‘(ii) COMPARABILITY.—The entities described in 

clause (i) shall, to the maximum extent practicable, 

establish and maintain comparable minimum capital 

requirements and minimum initial and variation 

margin requirements, including the use of noncash 

collateral, for— 

‘‘(I) security-based swap dealers; and 

‘‘(II) major security-based swap participants. 

‘‘(f) REPORTING AND RECORDKEEPING.— 

‘‘(1) IN GENERAL.—Each registered security-based swap 

dealer and major security-based swap participant— 

‘‘(A) shall make such reports as are required by the 

Commission, by rule or regulation, regarding the transactions and positions and financial condition of the registered security-based swap dealer or major security-based 

swap participant; 

‘‘(B)(i) for which there is a prudential regulator, shall 

keep books and records of all activities related to the business as a security-based swap dealer or major securitybased swap participant in such form and manner and for 

such period as may be prescribed by the Commission by 

rule or regulation; and 

‘‘(ii) for which there is no prudential regulator, shall 

keep books and records in such form and manner and 

for such period as may be prescribed by the Commission 

by rule or regulation; and 

‘‘(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission. 

‘‘(2) RULES.—The Commission shall adopt rules governing 

reporting and recordkeeping for security-based swap dealers 

and major security-based swap participants. 

‘‘(g) DAILY TRADING RECORDS.— 

‘‘(1) IN GENERAL.—Each registered security-based swap 

dealer and major security-based swap participant shall maintain daily trading records of the security-based swaps of the 

registered security-based swap dealer and major security-based 

swap participant and all related records (including related cash 

or forward transactions) and recorded communications, 

including electronic mail, instant messages, and recordings of 
H. R. 4173—414 

telephone calls, for such period as may be required by the 

Commission by rule or regulation. 

‘‘(2) INFORMATION REQUIREMENTS.—The daily trading 

records shall include such information as the Commission shall 

require by rule or regulation. 

‘‘(3) COUNTERPARTY RECORDS.—Each registered securitybased swap dealer and major security-based swap participant 

shall maintain daily trading records for each counterparty in 

a manner and form that is identifiable with each securitybased swap transaction. 

‘‘(4) AUDIT TRAIL.—Each registered security-based swap 

dealer and major security-based swap participant shall maintain a complete audit trail for conducting comprehensive and 

accurate trade reconstructions. 

‘‘(5) RULES.—The Commission shall adopt rules governing 

daily trading records for security-based swap dealers and major 

security-based swap participants. 

‘‘(h) BUSINESS CONDUCT STANDARDS.— 

‘‘(1) IN GENERAL.—Each registered security-based swap 

dealer and major security-based swap participant shall conform 

with such business conduct standards as prescribed in paragraph (3) and as may be prescribed by the Commission by 

rule or regulation that relate to— 

‘‘(A) fraud, manipulation, and other abusive practices 

involving security-based swaps (including security-based 

swaps that are offered but not entered into); 

‘‘(B) diligent supervision of the business of the registered security-based swap dealer and major securitybased swap participant; 

‘‘(C) adherence to all applicable position limits; and 

‘‘(D) such other matters as the Commission determines 

to be appropriate. 

‘‘(2) RESPONSIBILITIES WITH RESPECT TO SPECIAL ENTITIES.— 

‘‘(A) ADVISING SPECIAL ENTITIES.—A security-based 

swap dealer or major security-based swap participant that 

acts as an advisor to special entity regarding a securitybased swap shall comply with the requirements of paragraph (4) with respect to such special entity. 

‘‘(B) ENTERING OF SECURITY-BASED SWAPS WITH

RESPECT TO SPECIAL ENTITIES.—A security-based swap 

dealer that enters into or offers to enter into securitybased swap with a special entity shall comply with the 

requirements of paragraph (5) with respect to such special 

entity. 

‘‘(C) SPECIAL ENTITY DEFINED.—For purposes of this 

subsection, the term ‘special entity’ means— 

‘‘(i) a Federal agency; 

‘‘(ii) a State, State agency, city, county, municipality, or other political subdivision of a State or; 

‘‘(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security 

Act of 1974 (29 U.S.C. 1002); 

‘‘(iv) any governmental plan, as defined in section 

3 of the Employee Retirement Income Security Act 

of 1974 (29 U.S.C. 1002); or 
H. R. 4173—415 

‘‘(v) any endowment, including an endowment that 

is an organization described in section 501(c)(3) of the 

Internal Revenue Code of 1986. 

‘‘(3) BUSINESS CONDUCT REQUIREMENTS.—Business conduct 

requirements adopted by the Commission shall— 

‘‘(A) establish a duty for a security-based swap dealer 

or major security-based swap participant to verify that 

any counterparty meets the eligibility standards for an 

eligible contract participant; 

‘‘(B) require disclosure by the security-based swap 

dealer or major security-based swap participant to any 

counterparty to the transaction (other than a securitybased swap dealer, major security-based swap participant, 

security-based swap dealer, or major security-based swap 

participant) of— 

‘‘(i) information about the material risks and 

characteristics of the security-based swap; 

‘‘(ii) any material incentives or conflicts of interest 

that the security-based swap dealer or major securitybased swap participant may have in connection with 

the security-based swap; and 

‘‘(iii)(I) for cleared security-based swaps, upon the 

request of the counterparty, receipt of the daily mark 

of the transaction from the appropriate derivatives 

clearing organization; and 

‘‘(II) for uncleared security-based swaps, receipt 

of the daily mark of the transaction from the securitybased swap dealer or the major security-based swap 

participant; 

‘‘(C) establish a duty for a security-based swap dealer 

or major security-based swap participant to communicate 

in a fair and balanced manner based on principles of fair 

dealing and good faith; and 

‘‘(D) establish such other standards and requirements 

as the Commission may determine are appropriate in the 

public interest, for the protection of investors, or otherwise 

in furtherance of the purposes of this Act. 

‘‘(4) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP

DEALERS ACTING AS ADVISORS.— 

‘‘(A) IN GENERAL.—It shall be unlawful for a securitybased swap dealer or major security-based swap participant— 

‘‘(i) to employ any device, scheme, or artifice to 

defraud any special entity or prospective customer who 

is a special entity; 

‘‘(ii) to engage in any transaction, practice, or 

course of business that operates as a fraud or deceit 

on any special entity or prospective customer who is 

a special entity; or 

‘‘(iii) to engage in any act, practice, or course of 

business that is fraudulent, deceptive, or manipulative. 

‘‘(B) DUTY.—Any security-based swap dealer that acts 

as an advisor to a special entity shall have a duty to 

act in the best interests of the special entity. 

‘‘(C) REASONABLE EFFORTS.—Any security-based swap 

dealer that acts as an advisor to a special entity shall 

make reasonable efforts to obtain such information as is 
H. R. 4173—416 

necessary to make a reasonable determination that any 

security-based swap recommended by the security-based 

swap dealer is in the best interests of the special entity, 

including information relating to— 

‘‘(i) the financial status of the special entity; 

‘‘(ii) the tax status of the special entity; 

‘‘(iii) the investment or financing objectives of the 

special entity; and 

‘‘(iv) any other information that the Commission 

may prescribe by rule or regulation. 

‘‘(5) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP

DEALERS AS COUNTERPARTIES TO SPECIAL ENTITIES.— 

‘‘(A) IN GENERAL.—Any security-based swap dealer or 

major security-based swap participant that offers to or 

enters into a security-based swap with a special entity 

shall— 

‘‘(i) comply with any duty established by the 

Commission for a security-based swap dealer or major 

security-based swap participant, with respect to a 

counterparty that is an eligible contract participant 

within the meaning of subclause (I) or (II) of clause 

(vii) of section 1a(18) of the Commodity Exchange Act, 

that requires the security-based swap dealer or major 

security-based swap participant to have a reasonable 

basis to believe that the counterparty that is a special 

entity has an independent representative that— 

‘‘(I) has sufficient knowledge to evaluate the 

transaction and risks; 

‘‘(II) is not subject to a statutory disqualification; 

‘‘(III) is independent of the security-based 

swap dealer or major security-based swap participant; 

‘‘(IV) undertakes a duty to act in the best 

interests of the counterparty it represents; 

‘‘(V) makes appropriate disclosures; 

‘‘(VI) will provide written representations to 

the special entity regarding fair pricing and the 

appropriateness of the transaction; and 

‘‘(VII) in the case of employee benefit plans 

subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section 

3 of that Act (29 U.S.C. 1002); and 

‘‘(ii) before the initiation of the transaction, disclose 

to the special entity in writing the capacity in which 

the security-based swap dealer is acting. 

‘‘(B) COMMISSION AUTHORITY.—The Commission may 

establish such other standards and requirements under 

this paragraph as the Commission may determine are 

appropriate in the public interest, for the protection of 

investors, or otherwise in furtherance of the purposes of 

this Act. 

‘‘(6) RULES.—The Commission shall prescribe rules under 

this subsection governing business conduct standards for security-based swap dealers and major security-based swap participants. 
H. R. 4173—417 

‘‘(7) APPLICABILITY.—This subsection shall not apply with 

respect to a transaction that is— 

‘‘(A) initiated by a special entity on an exchange or 

security-based swaps execution facility; and 

‘‘(B) the security-based swap dealer or major securitybased swap participant does not know the identity of the 

counterparty to the transaction.’’ 

‘‘(i) DOCUMENTATION STANDARDS.— 

‘‘(1) IN GENERAL.—Each registered security-based swap 

dealer and major security-based swap participant shall conform 

with such standards as may be prescribed by the Commission, 

by rule or regulation, that relate to timely and accurate confirmation, processing, netting, documentation, and valuation 

of all security-based swaps. 

‘‘(2) RULES.—The Commission shall adopt rules governing 

documentation standards for security-based swap dealers and 

major security-based swap participants. 

‘‘(j) DUTIES.—Each registered security-based swap dealer and 

major security-based swap participant shall, at all times, comply 

with the following requirements: 

‘‘(1) MONITORING OF TRADING.—The security-based swap 

dealer or major security-based swap participant shall monitor 

its trading in security-based swaps to prevent violations of 

applicable position limits. 

‘‘(2) RISK MANAGEMENT PROCEDURES.—The security-based 

swap dealer or major security-based swap participant shall 

establish robust and professional risk management systems 

adequate for managing the day-to-day business of the securitybased swap dealer or major security-based swap participant. 

‘‘(3) DISCLOSURE OF GENERAL INFORMATION.—The securitybased swap dealer or major security-based swap participant 

shall disclose to the Commission and to the prudential regulator 

for the security-based swap dealer or major security-based swap 

participant, as applicable, information concerning— 

‘‘(A) terms and conditions of its security-based swaps; 

‘‘(B) security-based swap trading operations, mechanisms, and practices; 

‘‘(C) financial integrity protections relating to securitybased swaps; and 

‘‘(D) other information relevant to its trading in security-based swaps. 

‘‘(4) ABILITY TO OBTAIN INFORMATION.—The security-based 

swap dealer or major security-based swap participant shall— 

‘‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any 

of the functions described in this section; and 

‘‘(B) provide the information to the Commission and 

to the prudential regulator for the security-based swap 

dealer or major security-based swap participant, as 

applicable, on request. 

‘‘(5) CONFLICTS OF INTEREST.—The security-based swap 

dealer and major security-based swap participant shall implement conflict-of-interest systems and procedures that— 

‘‘(A) establish structural and institutional safeguards 

to ensure that the activities of any person within the firm 

relating to research or analysis of the price or market 

for any security-based swap or acting in a role of providing 
H. R. 4173—418 

clearing activities or making determinations as to accepting 

clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, 

or oversight of persons whose involvement in pricing, 

trading, or clearing activities might potentially bias their 

judgment or supervision and contravene the core principles 

of open access and the business conduct standards 

described in this title; and 

‘‘(B) address such other issues as the Commission 

determines to be appropriate. 

‘‘(6) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this title, the securitybased swap dealer or major security-based swap participant 

shall not— 

‘‘(A) adopt any process or take any action that results 

in any unreasonable restraint of trade; or 

‘‘(B) impose any material anticompetitive burden on 

trading or clearing. 

‘‘(7) RULES.—The Commission shall prescribe rules under 

this subsection governing duties of security-based swap dealers 

and major security-based swap participants. 

‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

‘‘(1) IN GENERAL.—Each security-based swap dealer and 

major security-based swap participant shall designate an individual to serve as a chief compliance officer. 

‘‘(2) DUTIES.—The chief compliance officer shall— 

‘‘(A) report directly to the board or to the senior officer 

of the security-based swap dealer or major security-based 

swap participant; 

‘‘(B) review the compliance of the security-based swap 

dealer or major security-based swap participant with 

respect to the security-based swap dealer and major security-based swap participant requirements described in this 

section; 

‘‘(C) in consultation with the board of directors, a body 

performing a function similar to the board, or the senior 

officer of the organization, resolve any conflicts of interest 

that may arise; 

‘‘(D) be responsible for administering each policy and 

procedure that is required to be established pursuant to 

this section; 

‘‘(E) ensure compliance with this title (including regulations) relating to security-based swaps, including each rule 

prescribed by the Commission under this section; 

‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer 

through any— 

‘‘(i) compliance office review; 

‘‘(ii) look-back; 

‘‘(iii) internal or external audit finding; 

‘‘(iv) self-reported error; or 

‘‘(v) validated complaint; and 

‘‘(G) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

‘‘(3) ANNUAL REPORTS.— 
H. R. 4173—419 

‘‘(A) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

‘‘(i) the compliance of the security-based swap 

dealer or major swap participant with respect to this 

title (including regulations); and 

‘‘(ii) each policy and procedure of the securitybased swap dealer or major security-based swap 

participant of the chief compliance officer (including 

the code of ethics and conflict of interest policies). 

‘‘(B) REQUIREMENTS.—A compliance report under 

subparagraph (A) shall— 

‘‘(i) accompany each appropriate financial report 

of the security-based swap dealer or major securitybased swap participant that is required to be furnished 

to the Commission pursuant to this section; and 

‘‘(ii) include a certification that, under penalty of 

law, the compliance report is accurate and complete. 

‘‘(l) ENFORCEMENT AND ADMINISTRATIVE PROCEEDING

AUTHORITY.— 

‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.— 

‘‘(A) SECURITIES AND EXCHANGE COMMISSION.—Except 

as provided in subparagraph (B), (C), or (D), the Commission shall have primary authority to enforce subtitle B, 

and the amendments made by subtitle B of the Wall Street 

Transparency and Accountability Act of 2010, with respect 

to any person. 

‘‘(B) PRUDENTIAL REGULATORS.—The prudential regulators shall have exclusive authority to enforce the provisions of subsection (e) and other prudential requirements 

of this title (including risk management standards), with 

respect to security-based swap dealers or major securitybased swap participants for which they are the prudential 

regulator. 

‘‘(C) REFERRAL.— ‘‘(i) VIOLATIONS OF NONPRUDENTIAL REQUIRE- MENTS.—If the appropriate Federal banking agency for 

security-based swap dealers or major security-based 

swap participants that are depository institutions has 

cause to believe that such security-based swap dealer 

or major security-based swap participant may have 

engaged in conduct that constitutes a violation of the 

nonprudential requirements of this section or rules 

adopted by the Commission thereunder, the agency 

may recommend in writing to the Commission that 

the Commission initiate an enforcement proceeding as 

authorized under this title. The recommendation shall 

be accompanied by a written explanation of the concerns giving rise to the recommendation. 

‘‘(ii) VIOLATIONS OF PRUDENTIAL REQUIREMENTS.— If the Commission has cause to believe that a securities-based swap dealer or major securities-based swap 

participant that has a prudential regulator may have 

engaged in conduct that constitute a violation of the 

prudential requirements of subsection (e) or rules 

adopted thereunder, the Commission may recommend 
H. R. 4173—420 

in writing to the prudential regulator that the prudential regulator initiate an enforcement proceeding as 

authorized under this title. The recommendation shall 

be accompanied by a written explanation of the concerns giving rise to the recommendation. 

‘‘(D) BACKSTOP ENFORCEMENT AUTHORITY.— 

‘‘(i) INITIATION OF ENFORCEMENT PROCEEDING BY

PRUDENTIAL REGULATOR.—If the Commission does not 

initiate an enforcement proceeding before the end of 

the 90-day period beginning on the date on which 

the Commission receives a written report under subsection (C)(i), the prudential regulator may initiate 

an enforcement proceeding. 

‘‘(ii) INITIATION OF ENFORCEMENT PROCEEDING BY

COMMISSION.—If the prudential regulator does not initiate an enforcement proceeding before the end of the 

90-day period beginning on the date on which the 

prudential regulator receives a written report under 

subsection (C)(ii), the Commission may initiate an 

enforcement proceeding. 

‘‘(2) CENSURE, DENIAL, SUSPENSION; NOTICE AND HEARING.— 

The Commission, by order, shall censure, place limitations on 

the activities, functions, or operations of, or revoke the registration of any security-based swap dealer or major security-based 

swap participant that has registered with the Commission 

pursuant to subsection (b) if the Commission finds, on the 

record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public 

interest and that such security-based swap dealer or major 

security-based swap participant, or any person associated with 

such security-based swap dealer or major security-based swap 

participant effecting or involved in effecting transactions in 

security-based swaps on behalf of such security-based swap 

dealer or major security-based swap participant, whether prior 

or subsequent to becoming so associated— 

‘‘(A) has committed or omitted any act, or is subject 

to an order or finding, enumerated in subparagraph (A), 

(D), or (E) of paragraph (4) of section 15(b); 

‘‘(B) has been convicted of any offense specified in 

subparagraph (B) of such paragraph (4) within 10 years 

of the commencement of the proceedings under this subsection; 

‘‘(C) is enjoined from any action, conduct, or practice 

specified in subparagraph (C) of such paragraph (4); 

‘‘(D) is subject to an order or a final order specified 

in subparagraph (F) or (H), respectively, of such paragraph 

(4); or 

‘‘(E) has been found by a foreign financial regulatory 

authority to have committed or omitted any act, or violated 

any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). 

‘‘(3) ASSOCIATED PERSONS.—With respect to any person who 

is associated, who is seeking to become associated, or, at the 

time of the alleged misconduct, who was associated or was 

seeking to become associated with a security-based swap dealer 

or major security-based swap participant for the purpose of 

effecting or being involved in effecting security-based swaps 
H. R. 4173—421 

on behalf of such security-based swap dealer or major securitybased swap participant, the Commission, by order, shall censure, place limitations on the activities or functions of such 

person, or suspend for a period not exceeding 12 months, or 

bar such person from being associated with a security-based 

swap dealer or major security-based swap participant, if the 

Commission finds, on the record after notice and opportunity 

for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person— 

‘‘(A) has committed or omitted any act, or is subject 

to an order or finding, enumerated in subparagraph (A), 

(D), or (E) of paragraph (4) of section 15(b); 

‘‘(B) has been convicted of any offense specified in 

subparagraph (B) of such paragraph (4) within 10 years 

of the commencement of the proceedings under this subsection; 

‘‘(C) is enjoined from any action, conduct, or practice 

specified in subparagraph (C) of such paragraph (4); 

‘‘(D) is subject to an order or a final order specified 

in subparagraph (F) or (H), respectively, of such paragraph 

(4); or 

‘‘(E) has been found by a foreign financial regulatory 

authority to have committed or omitted any act, or violated 

any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). 

‘‘(4) UNLAWFUL CONDUCT.—It shall be unlawful— 

‘‘(A) for any person as to whom an order under paragraph (3) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a security-based swap dealer or major security-based swap 

participant in contravention of such order; or 

‘‘(B) for any security-based swap dealer or major security-based swap participant to permit such a person, without the consent of the Commission, to become or remain 

a person associated with the security-based swap dealer 

or major security-based swap participant in contravention 

of such order, if such security-based swap dealer or major 

security-based swap participant knew, or in the exercise 

of reasonable care should have known, of such order.’’. 

(b) SAVINGS CLAUSE.—Notwithstanding any other provision of 

this title, nothing in this subtitle shall be construed as divesting 

any appropriate Federal banking agency of any authority it may 

have to establish or enforce, with respect to a person for which 

such agency is the appropriate Federal banking agency, prudential 

or other standards pursuant to authority by Federal law other 

than this title. 

SEC. 765. RULEMAKING ON CONFLICT OF INTEREST. 

(a) IN GENERAL.—In order to mitigate conflicts of interest, 

not later than 180 days after the date of enactment of the Wall 

Street Transparency and Accountability Act of 2010, the Securities 

and Exchange Commission shall adopt rules which may include 

numerical limits on the control of, or the voting rights with respect 

to, any clearing agency that clears security-based swaps, or on 

the control of any security-based swap execution facility or national 

securities exchange that posts or makes available for trading security-based swaps, by a bank holding company (as defined in section 
H. R. 4173—422 

2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)) 

with total consolidated assets of $50,000,000,000 or more, a nonbank 

financial company (as defined in section 102) supervised by the 

Board of Governors of the Federal Reserve System, affiliate of 

such a bank holding company or nonbank financial company, a 

security-based swap dealer, major security-based swap participant, 

or person associated with a security-based swap dealer or major 

security-based swap participant. 

(b) PURPOSES.—The Securities and Exchange Commission shall 

adopt rules if the Commission determines, after the review 

described in subsection (a), that such rules are necessary or appropriate to improve the governance of, or to mitigate systemic risk, 

promote competition, or mitigate conflicts of interest in connection 

with a security-based swap dealer or major security-based swap 

participant’s conduct of business with, a clearing agency, national 

securities exchange, or security-based swap execution facility that 

clears, posts, or makes available for trading security-based swaps 

and in which such security-based swap dealer or major securitybased swap participant has a material debt or equity investment. 

(c) CONSIDERATIONS.—In adopting rules pursuant to this section, the Securities and Exchange Commission shall consider any 

conflicts of interest arising from the amount of equity owned by 

a single investor, the ability to vote, cause the vote of, or withhold 

votes entitled to be cast on any matters by the holders of the 

ownership interest, and the governance arrangements of any derivatives clearing organization that clears swaps, or swap execution 

facility or board of trade designated as a contract market that 

posts swaps or makes swaps available for trading. 

SEC. 766. REPORTING AND RECORDKEEPING. 

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.) is amended by inserting after section 13 the 

following: 

‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED SWAPS. 

‘‘(a) REQUIRED REPORTING OF SECURITY-BASED SWAPS NOT

ACCEPTED BY ANY CLEARING AGENCY OR DERIVATIVES CLEARING

ORGANIZATION.— ‘‘(1) IN GENERAL.—Each security-based swap that is not 

accepted for clearing by any clearing agency or derivatives 

clearing organization shall be reported to— 

‘‘(A) a security-based swap data repository described 

in section 13(n); or 

‘‘(B) in the case in which there is no security-based 

swap data repository that would accept the security-based 

swap, to the Commission pursuant to this section within 

such time period as the Commission may by rule or regulation prescribe. 

‘‘(2) TRANSITION RULE FOR PREENACTMENT SECURITY-BASED

SWAPS.— 

‘‘(A) SECURITY-BASED SWAPS ENTERED INTO BEFORE THE

DATE OF ENACTMENT OF THE WALL STREET TRANSPARENCY

AND ACCOUNTABILITY ACT OF 2010.—Each security-based 

swap entered into before the date of enactment of the 

Wall Street Transparency and Accountability Act of 2010, 

the terms of which have not expired as of the date of 

enactment of that Act, shall be reported to a registered 
H. R. 4173—423 

security-based swap data repository or the Commission 

by a date that is not later than— 

‘‘(i) 30 days after issuance of the interim final 

rule; or 

‘‘(ii) such other period as the Commission determines to be appropriate. 

‘‘(B) COMMISSION RULEMAKING.—The Commission shall 

promulgate an interim final rule within 90 days of the 

date of enactment of this section providing for the reporting 

of each security-based swap entered into before the date 

of enactment as referenced in subparagraph (A). 

‘‘(C) EFFECTIVE DATE.—The reporting provisions 

described in this section shall be effective upon the date 

of the enactment of this section. 

‘‘(3) REPORTING OBLIGATIONS.— 

‘‘(A) SECURITY-BASED SWAPS IN WHICH ONLY 1

COUNTERPARTY IS A SECURITY-BASED SWAP DEALER OR

MAJOR SECURITY-BASED SWAP PARTICIPANT.—With respect 

to a security-based swap in which only 1 counterparty 

is a security-based swap dealer or major security-based 

swap participant, the security-based swap dealer or major 

security-based swap participant shall report the securitybased swap as required under paragraphs (1) and (2). 

‘‘(B) SECURITY-BASED SWAPS IN WHICH 1 COUNTERPARTY

IS A SECURITY-BASED SWAP DEALER AND THE OTHER A MAJOR

SECURITY-BASED SWAP PARTICIPANT.—With respect to a 

security-based swap in which 1 counterparty is a securitybased swap dealer and the other a major security-based 

swap participant, the security-based swap dealer shall 

report the security-based swap as required under paragraphs (1) and (2). 

‘‘(C) OTHER SECURITY-BASED SWAPS.—With respect to 

any other security-based swap not described in subparagraph (A) or (B), the counterparties to the security-based 

swap shall select a counterparty to report the securitybased swap as required under paragraphs (1) and (2). 

‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any individual or entity 

that enters into a security-based swap shall meet each requirement 

described in subsection (c) if the individual or entity did not— 

‘‘(1) clear the security-based swap in accordance with section 3C(a)(1); or 

‘‘(2) have the data regarding the security-based swap 

accepted by a security-based swap data repository in accordance 

with rules (including timeframes) adopted by the Commission 

under this title. 

‘‘(c) REQUIREMENTS.—An individual or entity described in subsection (b) shall— 

‘‘(1) upon written request from the Commission, provide 

reports regarding the security-based swaps held by the individual or entity to the Commission in such form and in such 

manner as the Commission may request; and 

‘‘(2) maintain books and records pertaining to the securitybased swaps held by the individual or entity in such form, 

in such manner, and for such period as the Commission may 

require, which shall be open to inspection by— 

‘‘(A) any representative of the Commission; 

‘‘(B) an appropriate prudential regulator; 
H. R. 4173—424 

‘‘(C) the Commodity Futures Trading Commission; 

‘‘(D) the Financial Stability Oversight Council; and 

‘‘(E) the Department of Justice. 

‘‘(d) IDENTICAL DATA.—In prescribing rules under this section, 

the Commission shall require individuals and entities described 

in subsection (b) to submit to the Commission a report that contains 

data that is not less comprehensive than the data required to 

be collected by security-based swap data repositories under this 

title.’’. 

(b) BENEFICIAL OWNERSHIP REPORTING.—Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended— 

(1) in subsection (d)(1), by inserting ‘‘or otherwise becomes 

or is deemed to become a beneficial owner of any of the foregoing 

upon the purchase or sale of a security-based swap that the 

Commission may define by rule, and’’ after ‘‘Alaska Native 

Claims Settlement Act,’’; and 

(2) in subsection (g)(1), by inserting ‘‘or otherwise becomes 

or is deemed to become a beneficial owner of any security 

of a class described in subsection (d)(1) upon the purchase 

or sale of a security-based swap that the Commission may 

define by rule’’ after ‘‘subsection (d)(1) of this section’’. 

(c) REPORTS BY INSTITUTIONAL INVESTMENT MANAGERS.—Section 13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 

78m(f)(1)) is amended by inserting ‘‘or otherwise becomes or is 

deemed to become a beneficial owner of any security of a class 

described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by rule,’’ after 

‘‘subsection (d)(1) of this section’’. 

(d) ADMINISTRATIVE PROCEEDING AUTHORITY.—Section 15(b)(4) 

of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is 

amended— 

(1) in subparagraph (C), by inserting ‘‘security-based swap 

dealer, major security-based swap participant,’’ after ‘‘government securities dealer,’’; and 

(2) in subparagraph (F), by striking ‘‘broker or dealer’’ 

and inserting ‘‘broker, dealer, security-based swap dealer, or 

a major security-based swap participant’’. 

(e) SECURITY-BASED SWAP BENEFICIAL OWNERSHIP.—Section 13 

of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended 

by adding at the end the following: 

‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this section and 

section 16, a person shall be deemed to acquire beneficial ownership 

of an equity security based on the purchase or sale of a securitybased swap, only to the extent that the Commission, by rule, 

determines after consultation with the prudential regulators and 

the Secretary of the Treasury, that the purchase or sale of the 

security-based swap, or class of security-based swap, provides 

incidents of ownership comparable to direct ownership of the equity 

security, and that it is necessary to achieve the purposes of this 

section that the purchase or sale of the security-based swaps, or 

class of security-based swap, be deemed the acquisition of beneficial 

ownership of the equity security.’’. 

SEC. 767. STATE GAMING AND BUCKET SHOP LAWS. 

Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

78bb(a)) is amended to read as follows: 

‘‘(a) LIMITATION ON JUDGMENTS.— 
H. R. 4173—425 

‘‘(1) IN GENERAL.—No person permitted to maintain a suit 

for damages under the provisions of this title shall recover, 

through satisfaction of judgment in 1 or more actions, a total 

amount in excess of the actual damages to that person on 

account of the act complained of. Except as otherwise specifically provided in this title, nothing in this title shall affect 

the jurisdiction of the securities commission (or any agency 

or officer performing like functions) of any State over any 

security or any person insofar as it does not conflict with 

the provisions of this title or the rules and regulations under 

this title. 

‘‘(2) RULE OF CONSTRUCTION.—Except as provided in subsection (f), the rights and remedies provided by this title shall 

be in addition to any and all other rights and remedies that 

may exist at law or in equity. 

‘‘(3) STATE BUCKET SHOP LAWS.—No State law which prohibits or regulates the making or promoting of wagering or 

gaming contracts, or the operation of ‘bucket shops’ or other 

similar or related activities, shall invalidate— 

‘‘(A) any put, call, straddle, option, privilege, or other 

security subject to this title (except any security that has 

a pari-mutuel payout or otherwise is determined by the 

Commission, acting by rule, regulation, or order, to be 

appropriately subject to such laws), or apply to any activity 

which is incidental or related to the offer, purchase, sale, 

exercise, settlement, or closeout of any such security; 

‘‘(B) any security-based swap between eligible contract 

participants; or 

‘‘(C) any security-based swap effected on a national 

securities exchange registered pursuant to section 6(b). 

‘‘(4) OTHER STATE PROVISIONS.—No provision of State law 

regarding the offer, sale, or distribution of securities shall apply 

to any transaction in a security-based swap or a security futures 

product, except that this paragraph may not be construed as 

limiting any State antifraud law of general applicability. A 

security-based swap may not be regulated as an insurance 

contract under any provision of State law.’’. 

SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT 

OF SECURITY-BASED SWAPS. 

(a) DEFINITIONS.—Section 2(a) of the Securities Act of 1933 

(15 U.S.C. 77b(a)) is amended— 

(1) in paragraph (1), by inserting ‘‘security-based swap,’’ 

after ‘‘security future,’’; 

(2) in paragraph (3), by adding at the end the following: 

‘‘Any offer or sale of a security-based swap by or on behalf 

of the issuer of the securities upon which such security-based 

swap is based or is referenced, an affiliate of the issuer, or 

an underwriter, shall constitute a contract for sale of, sale 

of, offer for sale, or offer to sell such securities.’’; and 

(3) by adding at the end the following: 

‘‘(17) The terms ‘swap’ and ‘security-based swap’ have the 

same meanings as in section 1a of the Commodity Exchange 

Act (7 U.S.C. 1a). 

‘‘(18) The terms ‘purchase’ or ‘sale’ of a security-based swap 

shall be deemed to mean the execution, termination (prior 

to its scheduled maturity date), assignment, exchange, or 
H. R. 4173—426 

similar transfer or conveyance of, or extinguishing of rights 

or obligations under, a security-based swap, as the context 

may require.’’. 

(b) REGISTRATION OF SECURITY-BASED SWAPS.—Section 5 of the 

Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at 

the end the following: 

‘‘(d) Notwithstanding the provisions of section 3 or 4, unless 

a registration statement meeting the requirements of section 10(a) 

is in effect as to a security-based swap, it shall be unlawful for 

any person, directly or indirectly, to make use of any means or 

instruments of transportation or communication in interstate commerce or of the mails to offer to sell, offer to buy or purchase 

or sell a security-based swap to any person who is not an eligible 

contract participant as defined in section 1a(18) of the Commodity 

Exchange Act (7 U.S.C. 1a(18)).’’. 

SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 

1940. 

Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 

80a–2) is amended by adding at the end the following: 

‘‘(54) The terms ‘commodity pool’, ‘commodity pool operator’, 

‘commodity trading advisor’, ‘major swap participant’, ‘swap’, 

‘swap dealer’, and ‘swap execution facility’ have the same 

meanings as in section 1a of the Commodity Exchange Act 

(7 U.S.C. 1a).’’. 

SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 

1940. 

Section 202(a) of the Investment Advisers Act of 1940 (15 

U.S.C. 80b–2) is amended by adding at the end the following: 

‘‘(29) The terms ‘commodity pool’, ‘commodity pool operator’, 

‘commodity trading advisor’, ‘major swap participant’, ‘swap’, 

‘swap dealer’, and ‘swap execution facility’ have the same 

meanings as in section 1a of the Commodity Exchange Act 

(7 U.S.C. 1a).’’. 

SEC. 771. OTHER AUTHORITY. 

Unless otherwise provided by its terms, this subtitle does not 

divest any appropriate Federal banking agency, the Securities and 

Exchange Commission, the Commodity Futures Trading Commission, or any other Federal or State agency, of any authority derived 

from any other provision of applicable law. 

SEC. 772. JURISDICTION. 

(a) IN GENERAL.—Section 36 of the Securities Exchange Act 

of 1934 (15 U.S.C. 78mm) is amended by adding at the end the 

following: 

‘‘(c) DERIVATIVES.—Unless the Commission is expressly authorized by any provision described in this subsection to grant exemptions, the Commission shall not grant exemptions, with respect 

to amendments made by subtitle B of the Wall Street Transparency 

and Accountability Act of 2010, with respect to paragraphs (65), 

(66), (68), (69), (70), (71), (72), (73), (74), (75), (76), and (79) of 

section 3(a), and sections 10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 

17A(h), 17A(i), 17A(j), 17A(k), and 17A(l); provided that the Commission shall have exemptive authority under this title with respect 

to security-based swaps as to the same matters that the Commodity 
H. R. 4173—427 

Futures Trading Commission has under the Wall Street Transparency and Accountability Act of 2010 with respect to swaps, 

including under section 4(c) of the Commodity Exchange Act.’’. 

(b) RULE OF CONSTRUCTION.—Section 30 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding 

at the end the following: 

‘‘(c) RULE OF CONSTRUCTION.—No provision of this title that 

was added by the Wall Street Transparency and Accountability 

Act of 2010, or any rule or regulation thereunder, shall apply 

to any person insofar as such person transacts a business in security-based swaps without the jurisdiction of the United States, 

unless such person transacts such business in contravention of 

such rules and regulations as the Commission may prescribe as 

necessary or appropriate to prevent the evasion of any provision 

of this title that was added by the Wall Street Transparency and 

Accountability Act of 2010. This subsection shall not be construed 

to limit the jurisdiction of the Commission under any provision 

of this title, as in effect prior to the date of enactment of the 

Wall Street Transparency and Accountability Act of 2010.’’. 

SEC. 773. CIVIL PENALTIES. 

Section 21B of the Securities Exchange Act of 1934 (15 U.S.C. 

78p-2) is amended by adding at the end the following: 

‘‘(f) SECURITY-BASED SWAPS.— 

‘‘(1) CLEARING AGENCY.—Any clearing agency that knowingly or recklessly evades or participates in or facilitates an 

evasion of the requirements of section 3C shall be liable for 

a civil money penalty in twice the amount otherwise available 

for a violation of section 3C. 

‘‘(2) SECURITY-BASED SWAP DEALER OR MAJOR SECURITY- BASED SWAP PARTICIPANT.—Any security-based swap dealer or 

major security-based swap participant that knowingly or recklessly evades or participates in or facilitates an evasion of 

the requirements of section 3C shall be liable for a civil money 

penalty in twice the amount otherwise available for a violation 

of section 3C.’’. 

SEC. 774. EFFECTIVE DATE. 

Unless otherwise provided, the provisions of this subtitle shall 

take effect on the later of 360 days after the date of the enactment 

of this subtitle or, to the extent a provision of this subtitle requires 

a rulemaking, not less than 60 days after publication of the final 

rule or regulation implementing such provision of this subtitle. 

TITLE VIII—PAYMENT, CLEARING, AND 

SETTLEMENT SUPERVISION 

SEC. 801. SHORT TITLE. 

This title may be cited as the ‘‘Payment, Clearing, and Settlement Supervision Act of 2010’’. 

SEC. 802. FINDINGS AND PURPOSES. 

(a) FINDINGS.—Congress finds the following: 

(1) The proper functioning of the financial markets is 

dependent upon safe and efficient arrangements for the clearing 
H. R. 4173—428 

and settlement of payment, securities, and other financial transactions. 

(2) Financial market utilities that conduct or support multilateral payment, clearing, or settlement activities may reduce 

risks for their participants and the broader financial system, 

but such utilities may also concentrate and create new risks 

and thus must be well designed and operated in a safe and 

sound manner. 

(3) Payment, clearing, and settlement activities conducted 

by financial institutions also present important risks to the 

participating financial institutions and to the financial system. 

(4) Enhancements to the regulation and supervision of 

systemically important financial market utilities and the conduct of systemically important payment, clearing, and settlement activities by financial institutions are necessary— 

(A) to provide consistency; 

(B) to promote robust risk management and safety 

and soundness; 

(C) to reduce systemic risks; and 

(D) to support the stability of the broader financial 

system. 

(b) PURPOSE.—The purpose of this title is to mitigate systemic 

risk in the financial system and promote financial stability by— 

(1) authorizing the Board of Governors to promote uniform 

standards for the— 

(A) management of risks by systemically important 

financial market utilities; and 

(B) conduct of systemically important payment, 

clearing, and settlement activities by financial institutions; 

(2) providing the Board of Governors an enhanced role 

in the supervision of risk management standards for systemically important financial market utilities; 

(3) strengthening the liquidity of systemically important 

financial market utilities; and 

(4) providing the Board of Governors an enhanced role 

in the supervision of risk management standards for systemically important payment, clearing, and settlement activities 

by financial institutions. 

SEC. 803. DEFINITIONS. 

In this title, the following definitions shall apply: 

(1) APPROPRIATE FINANCIAL REGULATOR.—The term ‘‘appropriate financial regulator’’ means— 

(A) the primary financial regulatory agency, as defined 

in section 2 of this Act; 

(B) the National Credit Union Administration, with 

respect to any insured credit union under the Federal 

Credit Union Act (12 U.S.C. 1751 et seq.); and 

(C) the Board of Governors, with respect to organizations operating under section 25A of the Federal Reserve 

Act (12 U.S.C. 611), and any other financial institution 

engaged in a designated activity. 

(2) DESIGNATED ACTIVITY.—The term ‘‘designated activity’’ 

means a payment, clearing, or settlement activity that the 

Council has designated as systemically important under section 

804. 
H. R. 4173—429 

(3) DESIGNATED CLEARING ENTITY.—The term ‘‘designated 

clearing entity’’ means a designated financial market utility 

that is a derivatives clearing organization registered under 

section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) 

or a clearing agency registered with the Securities and 

Exchange Commission under section 17A of the Securities 

Exchange Act of 1934 (15 U.S.C. 78q-1). 

(4) DESIGNATED FINANCIAL MARKET UTILITY.—The term 

‘‘designated financial market utility’’ means a financial market 

utility that the Council has designated as systemically important under section 804. 

(5) FINANCIAL INSTITUTION.— 

(A) IN GENERAL.—The term ‘‘financial institution’’ 

means— 

(i) a depository institution, as defined in section 

3 of the Federal Deposit Insurance Act (12 U.S.C. 

1813); 

(ii) a branch or agency of a foreign bank, as defined 

in section 1(b) of the International Banking Act of 

1978 (12 U.S.C. 3101); 

(iii) an organization operating under section 25 

or 25A of the Federal Reserve Act (12 U.S.C. 601– 

604a and 611 through 631); 

(iv) a credit union, as defined in section 101 of 

the Federal Credit Union Act (12 U.S.C. 1752); 

(v) a broker or dealer, as defined in section 3 

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

(vi) an investment company, as defined in section 

3 of the Investment Company Act of 1940 (15 U.S.C. 

80a–3); 

(vii) an insurance company, as defined in section 

2 of the Investment Company Act of 1940 (15 U.S.C. 

80a–2); 

(viii) an investment adviser, as defined in section 

202 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–2); 

(ix) a futures commission merchant, commodity 

trading advisor, or commodity pool operator, as defined 

in section 1a of the Commodity Exchange Act (7 U.S.C. 

1a); and 

(x) any company engaged in activities that are 

financial in nature or incidental to a financial activity, 

as described in section 4 of the Bank Holding Company 

Act of 1956 (12 U.S.C. 1843(k)). 

(B) EXCLUSIONS.—The term ‘‘financial institution’’ does 

not include designated contract markets, registered futures 

associations, swap data repositories, and swap execution 

facilities registered under the Commodity Exchange Act 

(7 U.S.C. 1 et seq.), or national securities exchanges, 

national securities associations, alternative trading systems, securities information processors solely with respect 

to the activities of the entity as a securities information 

processor, security-based swap data repositories, and swap 

execution facilities registered under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et seq.), or designated 

clearing entities, provided that the exclusions in this 
H. R. 4173—430 

subparagraph apply only with respect to the activities that 

require the entity to be so registered. 

(6) FINANCIAL MARKET UTILITY.— 

(A) INCLUSION.—The term ‘‘financial market utility’’ 

means any person that manages or operates a multilateral 

system for the purpose of transferring, clearing, or settling 

payments, securities, or other financial transactions among 

financial institutions or between financial institutions and 

the person. 

(B) EXCLUSIONS.—The term ‘‘financial market utility’’ 

does not include— 

(i) designated contract markets, registered futures 

associations, swap data repositories, and swap execution facilities registered under the Commodity 

Exchange Act (7 U.S.C. 1 et seq.), or national securities 

exchanges, national securities associations, alternative 

trading systems, security-based swap data repositories, 

and swap execution facilities registered under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), 

solely by reason of their providing facilities for comparison of data respecting the terms of settlement of securities or futures transactions effected on such exchange 

or by means of any electronic system operated or controlled by such entities, provided that the exclusions 

in this clause apply only with respect to the activities 

that require the entity to be so registered; and 

(ii) any broker, dealer, transfer agent, or investment company, or any futures commission merchant, 

introducing broker, commodity trading advisor, or commodity pool operator, solely by reason of functions 

performed by such institution as part of brokerage, 

dealing, transfer agency, or investment company activities, or solely by reason of acting on behalf of a financial market utility or a participant therein in connection with the furnishing by the financial market utility 

of services to its participants or the use of services 

of the financial market utility by its participants, provided that services performed by such institution do 

not constitute critical risk management or processing 

functions of the financial market utility. 

(7) PAYMENT, CLEARING, OR SETTLEMENT ACTIVITY.— 

(A) IN GENERAL.—The term ‘‘payment, clearing, or 

settlement activity’’ means an activity carried out by 1 

or more financial institutions to facilitate the completion 

of financial transactions, but shall not include any offer 

or sale of a security under the Securities Act of 1933 

(15 U.S.C. 77a et seq.), or any quotation, order entry, 

negotiation, or other pre-trade activity or execution activity. 

(B) FINANCIAL TRANSACTION.—For the purposes of 

subparagraph (A), the term ‘‘financial transaction’’ 

includes— 

(i) funds transfers; 

(ii) securities contracts; 

(iii) contracts of sale of a commodity for future 

delivery; 

(iv) forward contracts; 

(v) repurchase agreements; 
H. R. 4173—431 

(vi) swaps; 

(vii) security-based swaps; 

(viii) swap agreements; 

(ix) security-based swap agreements; 

(x) foreign exchange contracts; 

(xi) financial derivatives contracts; and 

(xii) any similar transaction that the Council determines to be a financial transaction for purposes of 

this title. 

(C) INCLUDED ACTIVITIES.—When conducted with 

respect to a financial transaction, payment, clearing, and 

settlement activities may include— 

(i) the calculation and communication of unsettled 

financial transactions between counterparties; 

(ii) the netting of transactions; 

(iii) provision and maintenance of trade, contract, 

or instrument information; 

(iv) the management of risks and activities associated with continuing financial transactions; 

(v) transmittal and storage of payment instructions; 

(vi) the movement of funds; 

(vii) the final settlement of financial transactions; 

and 

(viii) other similar functions that the Council may 

determine. 

(D) EXCLUSION.—Payment, clearing, and settlement 

activities shall not include public reporting of swap transaction data under section 727 or 763(i) of the Wall Street 

Transparency and Accountability Act of 2010. 

(8) SUPERVISORY AGENCY.— (A) IN GENERAL.—The term ‘‘Supervisory Agency’’ 

means the Federal agency that has primary jurisdiction 

over a designated financial market utility under Federal 

banking, securities, or commodity futures laws, as follows: 

(i) The Securities and Exchange Commission, with 

respect to a designated financial market utility that 

is a clearing agency registered with the Securities and 

Exchange Commission. 

(ii) The Commodity Futures Trading Commission, 

with respect to a designated financial market utility 

that is a derivatives clearing organization registered 

with the Commodity Futures Trading Commission. 

(iii) The appropriate Federal banking agency, with 

respect to a designated financial market utility that 

is an institution described in section 3(q) of the Federal 

Deposit Insurance Act. 

(iv) The Board of Governors, with respect to a 

designated financial market utility that is otherwise 

not subject to the jurisdiction of any agency listed 

in clauses (i), (ii), and (iii). 

(B) MULTIPLE AGENCY JURISDICTION.—If a designated 

financial market utility is subject to the jurisdictional 

supervision of more than 1 agency listed in subparagraph 

(A), then such agencies should agree on 1 agency to act 

as the Supervisory Agency, and if such agencies cannot 

agree on which agency has primary jurisdiction, the Council 
H. R. 4173—432 

shall decide which agency is the Supervisory Agency for 

purposes of this title. 

(9) SYSTEMICALLY IMPORTANT AND SYSTEMIC IMPORTANCE.— 

The terms ‘‘systemically important’’ and ‘‘systemic importance’’ 

mean a situation where the failure of or a disruption to the 

functioning of a financial market utility or the conduct of a 

payment, clearing, or settlement activity could create, or 

increase, the risk of significant liquidity or credit problems 

spreading among financial institutions or markets and thereby 

threaten the stability of the financial system of the United 

States. 

SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE. 

(a) DESIGNATION.— 

(1) FINANCIAL STABILITY OVERSIGHT COUNCIL.—The Council, 

on a nondelegable basis and by a vote of not fewer than 2⁄3

of members then serving, including an affirmative vote by 

the Chairperson of the Council, shall designate those financial 

market utilities or payment, clearing, or settlement activities 

that the Council determines are, or are likely to become, 

systemically important. 

(2) CONSIDERATIONS.—In determining whether a financial 

market utility or payment, clearing, or settlement activity is, 

or is likely to become, systemically important, the Council 

shall take into consideration the following: 

(A) The aggregate monetary value of transactions processed by the financial market utility or carried out through 

the payment, clearing, or settlement activity. 

(B) The aggregate exposure of the financial market 

utility or a financial institution engaged in payment, 

clearing, or settlement activities to its counterparties. 

(C) The relationship, interdependencies, or other interactions of the financial market utility or payment, clearing, 

or settlement activity with other financial market utilities 

or payment, clearing, or settlement activities. 

(D) The effect that the failure of or a disruption to 

the financial market utility or payment, clearing, or settlement activity would have on critical markets, financial 

institutions, or the broader financial system. 

(E) Any other factors that the Council deems appropriate. 

(b) RESCISSION OF DESIGNATION.— 

(1) IN GENERAL.—The Council, on a nondelegable basis 

and by a vote of not fewer than 2⁄3 of members then serving, 

including an affirmative vote by the Chairperson of the Council, 

shall rescind a designation of systemic importance for a designated financial market utility or designated activity if the 

Council determines that the utility or activity no longer meets 

the standards for systemic importance. 

(2) EFFECT OF RESCISSION.—Upon rescission, the financial 

market utility or financial institutions conducting the activity 

will no longer be subject to the provisions of this title or 

any rules or orders prescribed under this title. 

(c) CONSULTATION AND NOTICE AND OPPORTUNITY FOR

HEARING.— 
H. R. 4173—433 

(1) CONSULTATION.—Before making any determination 

under subsection (a) or (b), the Council shall consult with 

the relevant Supervisory Agency and the Board of Governors. 

(2) ADVANCE NOTICE AND OPPORTUNITY FOR HEARING.— 

(A) IN GENERAL.—Before making any determination 

under subsection (a) or (b), the Council shall provide the 

financial market utility or, in the case of a payment, 

clearing, or settlement activity, financial institutions with 

advance notice of the proposed determination of the 

Council. 

(B) NOTICE IN FEDERAL REGISTER.—The Council shall 

provide such advance notice to financial institutions by 

publishing a notice in the Federal Register. 

(C) REQUESTS FOR HEARING.—Within 30 days from the 

date of any notice of the proposed determination of the 

Council, the financial market utility or, in the case of 

a payment, clearing, or settlement activity, a financial 

institution engaged in the designated activity may request, 

in writing, an opportunity for a written or oral hearing 

before the Council to demonstrate that the proposed designation or rescission of designation is not supported by 

substantial evidence. 

(D) WRITTEN SUBMISSIONS.—Upon receipt of a timely 

request, the Council shall fix a time, not more than 30 

days after receipt of the request, unless extended at the 

request of the financial market utility or financial institution, and place at which the financial market utility or 

financial institution may appear, personally or through 

counsel, to submit written materials, or, at the sole discretion of the Council, oral testimony or oral argument. 

(3) EMERGENCY EXCEPTION.— (A) WAIVER OR MODIFICATION BY VOTE OF THE

COUNCIL.—The Council may waive or modify the requirements of paragraph (2) if the Council determines, by an 

affirmative vote of not fewer than 2⁄3 of members then 

serving, including an affirmative vote by the Chairperson 

of the Council, that the waiver or modification is necessary 

to prevent or mitigate an immediate threat to the financial 

system posed by the financial market utility or the payment, clearing, or settlement activity. 

(B) NOTICE OF WAIVER OR MODIFICATION.—The Council 

shall provide notice of the waiver or modification to the 

financial market utility concerned or, in the case of a 

payment, clearing, or settlement activity, to financial 

institutions, as soon as practicable, which shall be no later 

than 24 hours after the waiver or modification in the 

case of a financial market utility and 3 business days 

in the case of financial institutions. The Council shall provide the notice to financial institutions by posting a notice 

on the website of the Council and by publishing a notice 

in the Federal Register. 

(d) NOTIFICATION OF FINAL DETERMINATION.— 

(1) AFTER HEARING.—Within 60 days of any hearing under 

subsection (c)(2), the Council shall notify the financial market 

utility or financial institutions of the final determination of 

the Council in writing, which shall include findings of fact 

upon which the determination of the Council is based. 
H. R. 4173—434 

(2) WHEN NO HEARING REQUESTED.—If the Council does 

not receive a timely request for a hearing under subsection 

(c)(2), the Council shall notify the financial market utility or 

financial institutions of the final determination of the Council 

in writing not later than 30 days after the expiration of the 

date by which a financial market utility or a financial institution could have requested a hearing. All notices to financial 

institutions under this subsection shall be published in the 

Federal Register. 

(e) EXTENSION OF TIME PERIODS.—The Council may extend 

the time periods established in subsections (c) and (d) as the Council 

determines to be necessary or appropriate. 

SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL 

MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES. 

(a) AUTHORITY TO PRESCRIBE STANDARDS.— 

(1) BOARD OF GOVERNORS.—Except as provided in paragraph (2), the Board of Governors, by rule or order, and in 

consultation with the Council and the Supervisory Agencies, 

shall prescribe risk management standards, taking into consideration relevant international standards and existing prudential requirements, governing— 

(A) the operations related to the payment, clearing, 

and settlement activities of designated financial market 

utilities; and 

(B) the conduct of designated activities by financial 

institutions. 

(2) SPECIAL PROCEDURES FOR DESIGNATED CLEARING ENTITIES AND DESIGNATED ACTIVITIES OF CERTAIN FINANCIAL INSTITUTIONS.— 

(A) CFTC AND COMMISSION.—The Commodity Futures 

Trading Commission and the Commission may each prescribe regulations, in consultation with the Council and 

the Board of Governors, containing risk management standards, taking into consideration relevant international 

standards and existing prudential requirements, for those 

designated clearing entities and financial institutions 

engaged in designated activities for which each is the 

Supervisory Agency or the appropriate financial regulator, 

governing— 

(i) the operations related to payment, clearing, and 

settlement activities of such designated clearing entities; and 

(ii) the conduct of designated activities by such 

financial institutions. 

(B) REVIEW AND DETERMINATION.—The Board of Governors may determine that existing prudential requirements of the Commodity Futures Trading Commission, the 

Commission, or both (including requirements prescribed 

pursuant to subparagraph (A)) with respect to designated 

clearing entities and financial institutions engaged in designated activities for which the Commission or the Commodity Futures Trading Commission is the Supervisory 

Agency or the appropriate financial regulator are insufficient to prevent or mitigate significant liquidity, credit, 
H. R. 4173—435 

operational, or other risks to the financial markets or to 

the financial stability of the United States. 

(C) WRITTEN DETERMINATION.—Any determination by 

the Board of Governors under subparagraph (B) shall be 

provided in writing to the Commodity Futures Trading 

Commission or the Commission, as applicable, and the 

Council, and shall explain why existing prudential requirements, considered as a whole, are insufficient to ensure 

that the operations and activities of the designated clearing 

entities or the activities of financial institutions described 

in subparagraph (B) will not pose significant liquidity, 

credit, operational, or other risks to the financial markets 

or to the financial stability of the United States. The Board 

of Governors’ determination shall contain a detailed analysis supporting its findings and identify the specific prudential requirements that are insufficient. 

(D) CFTC AND COMMISSION RESPONSE.—The Commodity Futures Trading Commission or the Commission, 

as applicable, shall within 60 days either object to the 

Board of Governors’ determination with a detailed analysis 

as to why existing prudential requirements are sufficient, 

or submit an explanation to the Council and the Board 

of Governors describing the actions to be taken in response 

to the Board of Governors’ determination. 

(E) AUTHORIZATION.—Upon an affirmative vote by not 

fewer than 2/3 of members then serving on the Council, 

the Council shall either find that the response submitted 

under subparagraph (D) is sufficient, or require the Commodity Futures Trading Commission, or the Commission, 

as applicable, to prescribe such risk management standards 

as the Council determines is necessary to address the specific prudential requirements that are determined to be 

insufficient.’’ 

(b) OBJECTIVES AND PRINCIPLES.—The objectives and principles 

for the risk management standards prescribed under subsection 

(a) shall be to— 

(1) promote robust risk management; 

(2) promote safety and soundness; 

(3) reduce systemic risks; and 

(4) support the stability of the broader financial system. 

(c) SCOPE.—The standards prescribed under subsection (a) may 

address areas such as— 

(1) risk management policies and procedures; 

(2) margin and collateral requirements; 

(3) participant or counterparty default policies and procedures; 

(4) the ability to complete timely clearing and settlement 

of financial transactions; 

(5) capital and financial resource requirements for designated financial market utilities; and 

(6) other areas that are necessary to achieve the objectives 

and principles in subsection (b). 

(d) LIMITATION ON SCOPE.—Except as provided in subsections 

(e) and (f) of section 807, nothing in this title shall be construed 

to permit the Council or the Board of Governors to take any action 

or exercise any authority granted to the Commodity Futures 

Trading Commission under section 2(h) of the Commodity Exchange 
H. R. 4173—436 

Act or the Securities and Exchange Commission under section 3C(a) 

of the Securities Exchange Act of 1934, including— 

(1) the approval of, disapproval of, or stay of the clearing 

requirement for any group, category, type, or class of swaps 

that a designated clearing entity may accept for clearing; 

(2) the determination that any group, category, type, or 

class of swaps shall be subject to the mandatory clearing 

requirement of section 2(h)(1) of the Commodity Exchange Act 

or section 3C(a)(1) of the Securities Exchange Act of 1934; 

(3) the determination that any person is exempt from the 

mandatory clearing requirement of section 2(h)(1) of the Commodity Exchange Act or section 3C(a)(1) of the Securities 

Exchange Act of 1934; or 

(4) any authority granted to the Commodity Futures 

Trading Commission or the Securities and Exchange Commission with respect to transaction reporting or trade execution. 

(e) THRESHOLD LEVEL.—The standards prescribed under subsection (a) governing the conduct of designated activities by financial 

institutions shall, where appropriate, establish a threshold as to 

the level or significance of engagement in the activity at which 

a financial institution will become subject to the standards with 

respect to that activity. 

(f) COMPLIANCE REQUIRED.—Designated financial market utilities and financial institutions subject to the standards prescribed 

under subsection (a) for a designated activity shall conduct their 

operations in compliance with the applicable risk management 

standards. 

SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILITIES. 

(a) FEDERAL RESERVE ACCOUNT AND SERVICES.—The Board 

of Governors may authorize a Federal Reserve Bank to establish 

and maintain an account for a designated financial market utility 

and provide the services listed in section 11A(b) of the Federal 

Reserve Act (12 U.S.C. 248a(b)) and deposit accounts under the 

first undesignated paragraph of section 13 of the Federal Reserve 

Act (12 U.S.C. 342) to the designated financial market utility that 

the Federal Reserve Bank is authorized under the Federal Reserve 

Act to provide to a depository institution, subject to any applicable 

rules, orders, standards, or guidelines prescribed by the Board 

of Governors. 

(b) ADVANCES.—The Board of Governors may authorize a Federal Reserve bank under section 10B of the Federal Reserve Act 

(12 U.S.C. 347b) to provide to a designated financial market utility 

discount and borrowing privileges only in unusual or exigent circumstances, upon the affirmative vote of a majority of the Board 

of Governors then serving (or such other number in accordance 

with the provisions of section 11(r)(2) of the Federal Reserve Act 

(12 U.S.C. 248(r)(2)) after consultation with the Secretary, and 

upon a showing by the designated financial market utility that 

it is unable to secure adequate credit accommodations from other 

banking institutions. All such discounts and borrowing privileges 

shall be subject to such other limitations, restrictions, and regulations as the Board of Governors may prescribe. Access to discount 

and borrowing privileges under section 10B of the Federal Reserve 

Act as authorized in this section does not require a designated 
H. R. 4173—437 

financial market utility to be or become a bank or bank holding 

company. 

(c) EARNINGS ON FEDERAL RESERVE BALANCES.—A Federal 

Reserve Bank may pay earnings on balances maintained by or 

on behalf of a designated financial market utility in the same 

manner and to the same extent as the Federal Reserve Bank 

may pay earnings to a depository institution under the Federal 

Reserve Act, subject to any applicable rules, orders, standards, 

or guidelines prescribed by the Board of Governors. 

(d) RESERVE REQUIREMENTS.—The Board of Governors may 

exempt a designated financial market utility from, or modify any, 

reserve requirements under section 19 of the Federal Reserve Act 

(12 U.S.C. 461) applicable to a designated financial market utility. 

(e) CHANGES TO RULES, PROCEDURES, OR OPERATIONS.— 

(1) ADVANCE NOTICE.— 

(A) ADVANCE NOTICE OF PROPOSED CHANGES

REQUIRED.—A designated financial market utility shall provide notice 60 days in advance notice to its Supervisory 

Agency of any proposed change to its rules, procedures, 

or operations that could, as defined in rules of each Supervisory Agency, materially affect, the nature or level of 

risks presented by the designated financial market utility. 

(B) TERMS AND STANDARDS PRESCRIBED BY THE SUPER- VISORY AGENCIES.—Each Supervisory Agency, in consultation with the Board of Governors, shall prescribe regulations that define and describe the standards for determining when notice is required to be provided under 

subparagraph (A). 

(C) CONTENTS OF NOTICE.—The notice of a proposed 

change shall describe— 

(i) the nature of the change and expected effects 

on risks to the designated financial market utility, 

its participants, or the market; and 

(ii) how the designated financial market utility 

plans to manage any identified risks. 

(D) ADDITIONAL INFORMATION.—The Supervisory 

Agency may require a designated financial market utility 

to provide any information necessary to assess the effect 

the proposed change would have on the nature or level 

of risks associated with the designated financial market 

utility’s payment, clearing, or settlement activities and the 

sufficiency of any proposed risk management techniques. 

(E) NOTICE OF OBJECTION.—The Supervisory Agency 

shall notify the designated financial market utility of any 

objection regarding the proposed change within 60 days 

from the later of— 

(i) the date that the notice of the proposed change 

is received; or 

(ii) the date any further information requested 

for consideration of the notice is received. 

(F) CHANGE NOT ALLOWED IF OBJECTION.—A designated 

financial market utility shall not implement a change to 

which the Supervisory Agency has an objection. 

(G) CHANGE ALLOWED IF NO OBJECTION WITHIN 60

DAYS.—A designated financial market utility may implement a change if it has not received an objection to the 

proposed change within 60 days of the later of— 
H. R. 4173—438 

(i) the date that the Supervisory Agency receives 

the notice of proposed change; or 

(ii) the date the Supervisory Agency receives any 

further information it requests for consideration of the 

notice. 

(H) REVIEW EXTENSION FOR NOVEL OR COMPLEX

ISSUES.—The Supervisory Agency may, during the 60-day 

review period, extend the review period for an additional 

60 days for proposed changes that raise novel or complex 

issues, subject to the Supervisory Agency providing the 

designated financial market utility with prompt written 

notice of the extension. Any extension under this subparagraph will extend the time periods under subparagraphs 

(E) and (G). 

(I) CHANGE ALLOWED EARLIER IF NOTIFIED OF NO OBJECTION.—A designated financial market utility may implement a change in less than 60 days from the date of 

receipt of the notice of proposed change by the Supervisory 

Agency, or the date the Supervisory Agency receives any 

further information it requested, if the Supervisory Agency 

notifies the designated financial market utility in writing 

that it does not object to the proposed change and authorizes the designated financial market utility to implement 

the change on an earlier date, subject to any conditions 

imposed by the Supervisory Agency. 

(2) EMERGENCY CHANGES.— 

(A) IN GENERAL.—A designated financial market utility 

may implement a change that would otherwise require 

advance notice under this subsection if it determines that— 

(i) an emergency exists; and 

(ii) immediate implementation of the change is 

necessary for the designated financial market utility 

to continue to provide its services in a safe and sound 

manner. 

(B) NOTICE REQUIRED WITHIN 24 HOURS.—The designated financial market utility shall provide notice of any 

such emergency change to its Supervisory Agency, as soon 

as practicable, which shall be no later than 24 hours after 

implementation of the change. 

(C) CONTENTS OF EMERGENCY NOTICE.—In addition to 

the information required for changes requiring advance 

notice, the notice of an emergency change shall describe— 

(i) the nature of the emergency; and 

(ii) the reason the change was necessary for the 

designated financial market utility to continue to provide its services in a safe and sound manner. 

(D) MODIFICATION OR RESCISSION OF CHANGE MAY BE

REQUIRED.—The Supervisory Agency may require modification or rescission of the change if it finds that the change 

is not consistent with the purposes of this Act or any 

applicable rules, orders, or standards prescribed under section 805(a). 

(3) COPYING THE BOARD OF GOVERNORS.—The Supervisory 

Agency shall provide the Board of Governors concurrently with 

a complete copy of any notice, request, or other information 

it issues, submits, or receives under this subsection. 
H. R. 4173—439 

(4) CONSULTATION WITH BOARD OF GOVERNORS.—Before 

taking any action on, or completing its review of, a change 

proposed by a designated financial market utility, the Supervisory Agency shall consult with the Board of Governors. 

SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST 

DESIGNATED FINANCIAL MARKET UTILITIES. 

(a) EXAMINATION.—Notwithstanding any other provision of law 

and subject to subsection (d), the Supervisory Agency shall conduct 

examinations of a designated financial market utility at least once 

annually in order to determine the following: 

(1) The nature of the operations of, and the risks borne 

by, the designated financial market utility. 

(2) The financial and operational risks presented by the 

designated financial market utility to financial institutions, 

critical markets, or the broader financial system. 

(3) The resources and capabilities of the designated financial market utility to monitor and control such risks. 

(4) The safety and soundness of the designated financial 

market utility. 

(5) The designated financial market utility’s compliance 

with— 

(A) this title; and 

(B) the rules and orders prescribed under this title. 

(b) SERVICE PROVIDERS.—Whenever a service integral to the 

operation of a designated financial market utility is performed 

for the designated financial market utility by another entity, 

whether an affiliate or non-affiliate and whether on or off the 

premises of the designated financial market utility, the Supervisory 

Agency may examine whether the provision of that service is in 

compliance with applicable law, rules, orders, and standards to 

the same extent as if the designated financial market utility were 

performing the service on its own premises. 

(c) ENFORCEMENT.—For purposes of enforcing the provisions 

of this title, a designated financial market utility shall be subject 

to, and the appropriate Supervisory Agency shall have authority 

under the provisions of subsections (b) through (n) of section 8 

of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same 

manner and to the same extent as if the designated financial 

market utility was an insured depository institution and the Supervisory Agency was the appropriate Federal banking agency for 

such insured depository institution. 

(d) BOARD OF GOVERNORS INVOLVEMENT IN EXAMINATIONS.— 

(1) BOARD OF GOVERNORS CONSULTATION ON EXAMINATION

PLANNING.—The Supervisory Agency shall consult annually 

with the Board of Governors regarding the scope and methodology of any examination conducted under subsections (a) and 

(b). The Supervisory Agency shall lead all examinations conducted under subsections (a) and (b) 

(2) BOARD OF GOVERNORS PARTICIPATION IN EXAMINATION.— 

The Board of Governors may, in its discretion, participate in 

any examination led by a Supervisory Agency and conducted 

under subsections (a) and (b). 

(e) BOARD OF GOVERNORS ENFORCEMENT RECOMMENDATIONS.— (1) RECOMMENDATION.—The Board of Governors may, after 

consulting with the Council and the Supervisory Agency, at 

any time recommend to the Supervisory Agency that such 
H. R. 4173—440 

agency take enforcement action against a designated financial 

market utility in order to prevent or mitigate significant 

liquidity, credit, operational, or other risks to the financial 

markets or to the financial stability of the United States. Any 

such recommendation for enforcement action shall provide a 

detailed analysis supporting the recommendation of the Board 

of Governors. 

(2) CONSIDERATION.—The Supervisory Agency shall consider the recommendation of the Board of Governors and submit 

a response to the Board of Governors within 60 days. 

(3) BINDING ARBITRATION.—If the Supervisory Agency 

rejects, in whole or in part, the recommendation of the Board 

of Governors, the Board of Governors may refer the recommendation to the Council for a binding decision on whether 

an enforcement action is warranted. 

(4) ENFORCEMENT ACTION.—Upon an affirmative vote by 

a majority of the Council in favor of the Board of Governors’ 

recommendation under paragraph (3), the Council may require 

the Supervisory Agency to— 

(A) exercise the enforcement authority referenced in 

subsection (c); and 

(B) take enforcement action against the designated 

financial market utility. 

(f) EMERGENCY ENFORCEMENT ACTIONS BY THE BOARD OF GOVERNORS.— 

(1) IMMINENT RISK OF SUBSTANTIAL HARM.—The Board of 

Governors may, after consulting with the Supervisory Agency 

and upon an affirmative vote by a majority the Council, take 

enforcement action against a designated financial market utility 

if the Board of Governors has reasonable cause to conclude 

that— 

(A) either— 

(i) an action engaged in, or contemplated by, a 

designated financial market utility (including any 

change proposed by the designated financial market 

utility to its rules, procedures, or operations that would 

otherwise be subject to section 806(e)) poses an 

imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system 

of the United States; or 

(ii) the condition of a designated financial market 

utility poses an imminent risk of substantial harm 

to financial institutions, critical markets, or the 

broader financial system; and 

(B) the imminent risk of substantial harm precludes 

the Board of Governors’ use of the procedures in subsection 

(e). 

(2) ENFORCEMENT AUTHORITY.—For purposes of taking 

enforcement action under paragraph (1), a designated financial 

market utility shall be subject to, and the Board of Governors 

shall have authority under the provisions of subsections (b) 

through (n) of section 8 of the Federal Deposit Insurance Act 

(12 U.S.C. 1818) in the same manner and to the same extent 

as if the designated financial market utility was an insured 

depository institution and the Board of Governors was the 

appropriate Federal banking agency for such insured depository 

institution. 
H. R. 4173—441 

SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST 

FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR 

DESIGNATED ACTIVITIES. 

(a) EXAMINATION.—The appropriate financial regulator is 

authorized to examine a financial institution subject to the standards prescribed under section 805(a) for a designated activity in 

order to determine the following: 

(1) The nature and scope of the designated activities 

engaged in by the financial institution. 

(2) The financial and operational risks the designated 

activities engaged in by the financial institution may pose 

to the safety and soundness of the financial institution. 

(3) The financial and operational risks the designated 

activities engaged in by the financial institution may pose 

to other financial institutions, critical markets, or the broader 

financial system. 

(4) The resources available to and the capabilities of the 

financial institution to monitor and control the risks described 

in paragraphs (2) and (3). 

(5) The financial institution’s compliance with this title 

and the rules and orders prescribed under section 805(a). 

(b) ENFORCEMENT.—For purposes of enforcing the provisions 

of this title, and the rules and orders prescribed under this section, 

a financial institution subject to the standards prescribed under 

section 805(a) for a designated activity shall be subject to, and 

the appropriate financial regulator shall have authority under the 

provisions of subsections (b) through (n) of section 8 of the Federal 

Deposit Insurance Act (12 U.S.C. 1818) in the same manner and 

to the same extent as if the financial institution was an insured 

depository institution and the appropriate financial regulator was 

the appropriate Federal banking agency for such insured depository 

institution. 

(c) TECHNICAL ASSISTANCE.—The Board of Governors shall consult with and provide such technical assistance as may be required 

by the appropriate financial regulators to ensure that the rules 

and orders prescribed under this title are interpreted and applied 

in as consistent and uniform a manner as practicable. 

(d) DELEGATION.— 

(1) EXAMINATION.— 

(A) REQUEST TO BOARD OF GOVERNORS.—The appropriate financial regulator may request the Board of Governors to conduct or participate in an examination of a 

financial institution subject to the standards prescribed 

under section 805(a) for a designated activity in order 

to assess the compliance of such financial institution with— 

(i) this title; or 

(ii) the rules or orders prescribed under this title. 

(B) EXAMINATION BY BOARD OF GOVERNORS.—Upon 

receipt of an appropriate written request, the Board of 

Governors will conduct the examination under such terms 

and conditions to which the Board of Governors and the 

appropriate financial regulator mutually agree. 

(2) ENFORCEMENT.— 

(A) REQUEST TO BOARD OF GOVERNORS.—The appropriate financial regulator may request the Board of Governors to enforce this title or the rules or orders prescribed 
H. R. 4173—442 

under this title against a financial institution that is subject to the standards prescribed under section 805(a) for 

a designated activity. 

(B) ENFORCEMENT BY BOARD OF GOVERNORS.—Upon 

receipt of an appropriate written request, the Board of 

Governors shall determine whether an enforcement action 

is warranted, and, if so, it shall enforce compliance with 

this title or the rules or orders prescribed under this title 

and, if so, the financial institution shall be subject to, 

and the Board of Governors shall have authority under 

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

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

in the same manner and to the same extent as if the 

financial institution was an insured depository institution 

and the Board of Governors was the appropriate Federal 

banking agency for such insured depository institution. 

(e) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS.— 

(1) EXAMINATION AND ENFORCEMENT.—Notwithstanding 

any other provision of law, the Board of Governors may— 

(A) conduct an examination of the type described in 

subsection (a) of any financial institution that is subject 

to the standards prescribed under section 805(a) for a designated activity; and 

(B) enforce the provisions of this title or any rules 

or orders prescribed under this title against any financial 

institution that is subject to the standards prescribed under 

section 805(a) for a designated activity. 

(2) LIMITATIONS.— (A) EXAMINATION.—The Board of Governors may exercise the authority described in paragraph (1)(A) only if 

the Board of Governors has— 

(i) reasonable cause to believe that a financial 

institution is not in compliance with this title or the 

rules or orders prescribed under this title with respect 

to a designated activity; 

(ii) notified, in writing, the appropriate financial 

regulator and the Council of its belief under clause 

(i) with supporting documentation included; 

(iii) requested the appropriate financial regulator 

to conduct a prompt examination of the financial 

institution; 

(iv) either— 

(I) not been afforded a reasonable opportunity 

to participate in an examination of the financial 

institution by the appropriate financial regulator 

within 30 days after the date of the Board’s 

notification under clause (ii); or 

(II) reasonable cause to believe that the financial institution’s noncompliance with this title or 

the rules or orders prescribed under this title poses 

a substantial risk to other financial institutions, 

critical markets, or the broader financial system, 

subject to the Board of Governors affording the 

appropriate financial regulator a reasonable opportunity to participate in the examination; and 

(v) obtained the approval of the Council upon an 

affirmative vote by a majority of the Council. 
H. R. 4173—443 

(B) ENFORCEMENT.—The Board of Governors may exercise the authority described in paragraph (1)(B) only if 

the Board of Governors has— 

(i) reasonable cause to believe that a financial 

institution is not in compliance with this title or the 

rules or orders prescribed under this title with respect 

to a designated activity; 

(ii) notified, in writing, the appropriate financial 

regulator and the Council of its belief under clause 

(i) with supporting documentation included and with 

a recommendation that the appropriate financial regulator take 1 or more specific enforcement actions 

against the financial institution; 

(iii) either— 

(I) not been notified, in writing, by the appropriate financial regulator of the commencement 

of an enforcement action recommended by the 

Board of Governors against the financial institution within 60 days from the date of the notification under clause (ii); or 

(II) reasonable cause to believe that the financial institution’s noncompliance with this title or 

the rules or orders prescribed under this title poses 

significant liquidity, credit, operational, or other 

risks to the financial markets or to the financial 

stability of the United States, subject to the Board 

of Governors notifying the appropriate financial 

regulator of the Board’s enforcement action; and 

(iv) obtained the approval of the Council upon 

an affirmative vote by a majority of the Council. 

(3) ENFORCEMENT PROVISIONS.—For purposes of taking 

enforcement action under paragraph (1), the financial institution shall be subject to, and the Board of Governors shall 

have authority under the provisions of subsections (b) through 

(n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 

1818) in the same manner and to the same extent as if the 

financial institution was an insured depository institution and 

the Board of Governors was the appropriate Federal banking 

agency for such insured depository institution. 

SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS. 

(a) INFORMATION TO ASSESS SYSTEMIC IMPORTANCE.— 

(1) FINANCIAL MARKET UTILITIES.—The Council is authorized to require any financial market utility to submit such 

information as the Council may require for the sole purpose 

of assessing whether that financial market utility is systemically important, but only if the Council has reasonable cause 

to believe that the financial market utility meets the standards 

for systemic importance set forth in section 804. 

(2) FINANCIAL INSTITUTIONS ENGAGED IN PAYMENT, 

CLEARING, OR SETTLEMENT ACTIVITIES.—The Council is authorized to require any financial institution to submit such information as the Council may require for the sole purpose of assessing 

whether any payment, clearing, or settlement activity engaged 

in or supported by a financial institution is systemically important, but only if the Council has reasonable cause to believe 
H. R. 4173—444 

that the activity meets the standards for systemic importance 

set forth in section 804. 

(b) REPORTING AFTER DESIGNATION.— 

(1) DESIGNATED FINANCIAL MARKET UTILITIES.—The Board 

of Governors and the Council may each require a designated 

financial market utility to submit reports or data to the Board 

of Governors and the Council in such frequency and form 

as deemed necessary by the Board of Governors or the Council 

in order to assess the safety and soundness of the utility 

and the systemic risk that the utility’s operations pose to the 

financial system. 

(2) FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR

DESIGNATED ACTIVITIES.—The Board of Governors and the 

Council may each require 1 or more financial institutions subject to the standards prescribed under section 805(a) for a 

designated activity to submit, in such frequency and form as 

deemed necessary by the Board of Governors or the Council, 

reports and data to the Board of Governors and the Council 

solely with respect to the conduct of the designated activity 

and solely to assess whether— 

(A) the rules, orders, or standards prescribed under 

section 805(a) with respect to the designated activity appropriately address the risks to the financial system presented 

by such activity; and 

(B) the financial institutions are in compliance with 

this title and the rules and orders prescribed under section 

805(a) with respect to the designated activity. 

(3) LIMITATION.—The Board of Governors may, upon an 

affirmative vote by a majority of the Council, prescribe regulations under this section that impose a recordkeeping or 

reporting requirement on designated clearing entities or financial institutions engaged in designated activities that are subject to standards that have been prescribed under section 

805(a)(2). 

(c) COORDINATION WITH APPROPRIATE FEDERAL SUPERVISORY

AGENCY.— 

(1) ADVANCE COORDINATION.—Before requesting any material information from, or imposing reporting or recordkeeping 

requirements on, any financial market utility or any financial 

institution engaged in a payment, clearing, or settlement 

activity, the Board of Governors or the Council shall coordinate 

with the Supervisory Agency for a financial market utility 

or the appropriate financial regulator for a financial institution 

to determine if the information is available from or may be 

obtained by the agency in the form, format, or detail required 

by the Board of Governors or the Council. 

(2) SUPERVISORY REPORTS.—Notwithstanding any other 

provision of law, the Supervisory Agency, the appropriate financial regulator, and the Board of Governors are authorized to 

disclose to each other and the Council copies of its examination 

reports or similar reports regarding any financial market utility 

or any financial institution engaged in payment, clearing, or 

settlement activities. 

(d) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL SUPER- VISORY AGENCY.—If the information, report, records, or data 

requested by the Board of Governors or the Council under subsection (c)(1) are not provided in full by the Supervisory Agency 
H. R. 4173—445 

or the appropriate financial regulator in less than 15 days after 

the date on which the material is requested, the Board of Governors 

or the Council may request the information or impose recordkeeping 

or reporting requirements directly on such persons as provided 

in subsections (a) and (b) with notice to the agency. 

(e) SHARING OF INFORMATION.— 

(1) MATERIAL CONCERNS.—Notwithstanding any other 

provision of law, the Board of Governors, the Council, the 

appropriate financial regulator, and any Supervisory Agency 

are authorized to— 

(A) promptly notify each other of material concerns 

about a designated financial market utility or any financial 

institution engaged in designated activities; and 

(B) share appropriate reports, information, or data 

relating to such concerns. 

(2) OTHER INFORMATION.—Notwithstanding any other 

provision of law, the Board of Governors, the Council, the 

appropriate financial regulator, or any Supervisory Agency may, 

under such terms and conditions as it deems appropriate, provide confidential supervisory information and other information 

obtained under this title to each other, and to the Secretary, 

Federal Reserve Banks, State financial institution supervisory 

agencies, foreign financial supervisors, foreign central banks, 

and foreign finance ministries, subject to reasonable assurances 

of confidentiality, provided, however, that no person or entity 

receiving information pursuant to this section may disseminate 

such information to entities or persons other than those listed 

in this paragraph without complying with applicable law, 

including section 8 of the Commodity Exchange Act (7 U.S.C. 

12). 

(f) PRIVILEGE MAINTAINED.—The Board of Governors, the 

Council, the appropriate financial regulator, and any Supervisory 

Agency providing reports or data under this section shall not be 

deemed to have waived any privilege applicable to those reports 

or data, or any portion thereof, by providing the reports or data 

to the other party or by permitting the reports or data, or any 

copies thereof, to be used by the other party. 

(g) DISCLOSURE EXEMPTION.—Information obtained by the 

Board of Governors, the Supervisory Agencies, or the Council under 

this section and any materials prepared by the Board of Governors, 

the Supervisory Agencies, or the Council regarding their assessment 

of the systemic importance of financial market utilities or any 

payment, clearing, or settlement activities engaged in by financial 

institutions, and in connection with their supervision of designated 

financial market utilities and designated activities, shall be confidential supervisory information exempt from disclosure under section 552 of title 5, United States Code. For purposes of such section 

552, this subsection shall be considered a statute described in 

subsection (b)(3) of such section 552. 

SEC. 810. RULEMAKING. 

The Board of Governors, the Supervisory Agencies, and the 

Council are authorized to prescribe such rules and issue such orders 

as may be necessary to administer and carry out their respective 

authorities and duties granted under this title and prevent evasions 

thereof. 
H. R. 4173—446 

SEC. 811. OTHER AUTHORITY. 

Unless otherwise provided by its terms, this title does not 

divest any appropriate financial regulator, any Supervisory Agency, 

or any other Federal or State agency, of any authority derived 

from any other applicable law, except that any standards prescribed 

by the Board of Governors under section 805 shall supersede any 

less stringent requirements established under other authority to 

the extent of any conflict. 

SEC. 812. CONSULTATION. 

(a) CFTC.—The Commodity Futures Trading Commission shall 

consult with the Board of Governors— 

(1) prior to exercising its authorities under sections 

2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C), 2(h)(4)(A), and 2(h)(4)(B) of 

the Commodity Exchange Act, as amended by the Wall Street 

Transparency and Accountability Act of 2010; 

(2) with respect to any rule or rule amendment of a derivatives clearing organization for which a stay of certification 

has been issued under section 745(b)(3) of the Wall Street 

Transparency and Accountability Act of 2010; and 

(3) prior to exercising its rulemaking authorities under 

section 728 of the Wall Street Transparency and Accountability 

Act of 2010. 

(b) SEC.—The Commission shall consult with the Board of 

Governors— 

(1) prior to exercising its authorities under sections 

3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C), 3C(a)(4)(A), and 3C(a)(4)(B) 

of the Securities Exchange Act of 1934, as amended by the 

Wall Street Transparency and Accountability Act of 2010; 

(2) with respect to any proposed rule change of a clearing 

agency for which an extension of the time for review has 

been designated under section 19(b)(2) of the Securities 

Exchange Act of 1934; and 

(3) prior to exercising its rulemaking authorities under 

section 13(n) of the Securities Exchange Act of 1934, as added 

by section 763(i) of the Wall Street Transparency and Accountability Act of 2010. 

SEC. 813. COMMON FRAMEWORK FOR DESIGNATED CLEARING ENTITY 

RISK MANAGEMENT. 

The Commodity Futures Trading Commission and the Commission shall coordinate with the Board of Governors to jointly develop 

risk management supervision programs for designated clearing entities. Not later than 1 year after the date of enactment of this 

Act, the Commodity Futures Trading Commission, the Commission, 

and the Board of Governors shall submit a joint report to the 

Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate, and 

the Committee on Financial Services and the Committee on Agriculture of the House of Representatives recommendations for— 

(1) improving consistency in the designated clearing entity 

oversight programs of the Commission and the Commodity 

Futures Trading Commission; 

(2) promoting robust risk management by designated 

clearing entities; 

(3) promoting robust risk management oversight by regulators of designated clearing entities; and 
H. R. 4173—447 

(4) improving regulators’ ability to monitor the potential 

effects of designated clearing entity risk management on the 

stability of the financial system of the United States. 

SEC. 814. EFFECTIVE DATE. 

This title is effective as of the date of enactment of this Act. 

TITLE IX—INVESTOR PROTECTIONS 

AND IMPROVEMENTS TO THE REGULATION OF SECURITIES 

SEC. 901. SHORT TITLE. 

This title may be cited as the ‘‘Investor Protection and Securities Reform Act of 2010’’. 

Subtitle A—Increasing Investor Protection 

SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED. 

Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a 

et seq.) is amended by adding at the end the following: 

‘‘SEC. 39. INVESTOR ADVISORY COMMITTEE. 

‘‘(a) ESTABLISHMENT AND PURPOSE.— ‘‘(1) ESTABLISHMENT.—There is established within the 

Commission the Investor Advisory Committee (referred to in 

this section as the ‘Committee’). 

‘‘(2) PURPOSE.—The Committee shall— 

‘‘(A) advise and consult with the Commission on— 

‘‘(i) regulatory priorities of the Commission; 

‘‘(ii) issues relating to the regulation of securities 

products, trading strategies, and fee structures, and 

the effectiveness of disclosure; 

‘‘(iii) initiatives to protect investor interest; and 

‘‘(iv) initiatives to promote investor confidence and 

the integrity of the securities marketplace; and 

‘‘(B) submit to the Commission such findings and recommendations as the Committee determines are appropriate, including recommendations for proposed legislative 

changes. 

‘‘(b) MEMBERSHIP.— ‘‘(1) IN GENERAL.—The members of the Committee shall 

be— 

‘‘(A) the Investor Advocate; 

‘‘(B) a representative of State securities commissions; 

‘‘(C) a representative of the interests of senior citizens; 

and 

‘‘(D) not fewer than 10, and not more than 20, members 

appointed by the Commission, from among individuals 

who— 

‘‘(i) represent the interests of individual equity 

and debt investors, including investors in mutual 

funds; 

‘‘(ii) represent the interests of institutional investors, including the interests of pension funds and registered investment companies; 
H. R. 4173—448 

‘‘(iii) are knowledgeable about investment issues 

and decisions; and 

‘‘(iv) have reputations of integrity. 

‘‘(2) TERM.—Each member of the Committee appointed 

under paragraph (1)(B) shall serve for a term of 4 years. 

‘‘(3) MEMBERS NOT COMMISSION EMPLOYEES.—Members 

appointed under paragraph (1)(B) shall not be deemed to be 

employees or agents of the Commission solely because of membership on the Committee. 

‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; ASSISTANT SEC- RETARY.— 

‘‘(1) IN GENERAL.—The members of the Committee shall 

elect, from among the members of the Committee— 

‘‘(A) a chairman, who may not be employed by an 

issuer; 

‘‘(B) a vice chairman, who may not be employed by 

an issuer; 

‘‘(C) a secretary; and 

‘‘(D) an assistant secretary. 

‘‘(2) TERM.—Each member elected under paragraph (1) 

shall serve for a term of 3 years in the capacity for which 

the member was elected under paragraph (1). 

‘‘(d) MEETINGS.— 

‘‘(1) FREQUENCY OF MEETINGS.—The Committee shall 

meet— 

‘‘(A) not less frequently than twice annually, at the 

call of the chairman of the Committee; and 

‘‘(B) from time to time, at the call of the Commission. 

‘‘(2) NOTICE.—The chairman of the Committee shall give 

the members of the Committee written notice of each meeting, 

not later than 2 weeks before the date of the meeting. 

‘‘(e) COMPENSATION AND TRAVEL EXPENSES.—Each member of 

the Committee who is not a full-time employee of the United States 

shall— 

‘‘(1) be entitled to receive compensation at a rate not to 

exceed the daily equivalent of the annual rate of basic pay 

in effect for a position at level V of the Executive Schedule 

under section 5316 of title 5, United States Code, for each 

day during which the member is engaged in the actual performance of the duties of the Committee; and 

‘‘(2) while away from the home or regular place of business 

of the member in the performance of services for the Committee, 

be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently 

in the Government service are allowed expenses under section 

5703(b) of title 5, United States Code. 

‘‘(f) STAFF.—The Commission shall make available to the Committee such staff as the chairman of the Committee determines 

are necessary to carry out this section. 

‘‘(g) REVIEW BY COMMISSION.—The Commission shall— 

‘‘(1) review the findings and recommendations of the Committee; and 

‘‘(2) each time the Committee submits a finding or recommendation to the Commission, promptly issue a public statement— 

‘‘(A) assessing the finding or recommendation of the 

Committee; and 
H. R. 4173—449 

‘‘(B) disclosing the action, if any, the Commission 

intends to take with respect to the finding or recommendation. 

‘‘(h) COMMITTEE FINDINGS.—Nothing in this section shall 

require the Commission to agree to or act upon any finding or 

recommendation of the Committee. 

‘‘(i) FEDERAL ADVISORY COMMITTEE ACT.—The Federal Advisory 

Committee Act (5 U.S.C. App.) shall not apply with respect to 

the Committee and its activities. 

‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 

to be appropriated to the Commission such sums as are necessary 

to carry out this section.’’. 

SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO 

ENGAGE IN INVESTOR TESTING. 

Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is 

amended by adding at the end the following: 

‘‘(e) EVALUATION OF RULES OR PROGRAMS.—For the purpose 

of evaluating any rule or program of the Commission issued or 

carried out under any provision of the securities laws, as defined 

in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 

78c), and the purposes of considering, proposing, adopting, or 

engaging in any such rule or program or developing new rules 

or programs, the Commission may— 

‘‘(1) gather information from and communicate with investors or other members of the public; 

‘‘(2) engage in such temporary investor testing programs 

as the Commission determines are in the public interest or 

would protect investors; and 

‘‘(3) consult with academics and consultants, as necessary 

to carry out this subsection. 

‘‘(f) RULE OF CONSTRUCTION.—For purposes of the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.), any action taken under 

subsection (e) shall not be construed to be a collection of information.’’. 

SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF 

BROKERS, DEALERS, AND INVESTMENT ADVISERS. 

(a) DEFINITION.—For purposes of this section, the term ‘‘retail 

customer’’ means a natural person, or the legal representative of 

such natural person, who— 

(1) receives personalized investment advice about securities 

from a broker or dealer or investment adviser; and 

(2) uses such advice primarily for personal, family, or 

household purposes. 

(b) STUDY.—The Commission shall conduct a study to 

evaluate— 

(1) the effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, persons 

associated with brokers or dealers, and persons associated with 

investment advisers for providing personalized investment 

advice and recommendations about securities to retail customers imposed by the Commission and a national securities 

association, and other Federal and State legal or regulatory 

standards; and 

(2) whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the 

protection of retail customers relating to the standards of care 
H. R. 4173—450 

for brokers, dealers, investment advisers, persons associated 

with brokers or dealers, and persons associated with investment 

advisers for providing personalized investment advice about 

securities to retail customers that should be addressed by rule 

or statute. 

(c) CONSIDERATIONS.—In conducting the study required under 

subsection (b), the Commission shall consider— 

(1) the effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, persons 

associated with brokers or dealers, and persons associated with 

investment advisers for providing personalized investment 

advice and recommendations about securities to retail customers imposed by the Commission and a national securities 

association, and other Federal and State legal or regulatory 

standards; 

(2) whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the 

protection of retail customers relating to the standards of care 

for brokers, dealers, investment advisers, persons associated 

with brokers or dealers, and persons associated with investment 

advisers for providing personalized investment advice about 

securities to retail customers that should be addressed by rule 

or statute; 

(3) whether retail customers understand that there are 

different standards of care applicable to brokers, dealers, investment advisers, persons associated with brokers or dealers, and 

persons associated with investment advisers in the provision 

of personalized investment advice about securities to retail 

customers; 

(4) whether the existence of different standards of care 

applicable to brokers, dealers, investment advisers, persons 

associated with brokers or dealers, and persons associated with 

investment advisers is a source of confusion for retail customers 

regarding the quality of personalized investment advice that 

retail customers receive; 

(5) the regulatory, examination, and enforcement resources 

devoted to, and activities of, the Commission, the States, and 

a national securities association to enforce the standards of 

care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with 

investment advisers when providing personalized investment 

advice and recommendations about securities to retail customers, including— 

(A) the effectiveness of the examinations of brokers, 

dealers, and investment advisers in determining compliance with regulations; 

(B) the frequency of the examinations; and 

(C) the length of time of the examinations; 

(6) the substantive differences in the regulation of brokers, 

dealers, and investment advisers, when providing personalized 

investment advice and recommendations about securities to 

retail customers; 

(7) the specific instances related to the provision of 

personalized investment advice about securities in which— 

(A) the regulation and oversight of investment advisers 

provide greater protection to retail customers than the 

regulation and oversight of brokers and dealers; and 
H. R. 4173—451 

(B) the regulation and oversight of brokers and dealers 

provide greater protection to retail customers than the 

regulation and oversight of investment advisers; 

(8) the existing legal or regulatory standards of State securities regulators and other regulators intended to protect retail 

customers; 

(9) the potential impact on retail customers, including the 

potential impact on access of retail customers to the range 

of products and services offered by brokers and dealers, of 

imposing upon brokers, dealers, and persons associated with 

brokers or dealers— 

(A) the standard of care applied under the Investment 

Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) for providing 

personalized investment advice about securities to retail 

customers of investment advisers, as interpreted by the 

Commission and the courts; and 

(B) other requirements of the Investment Advisers Act 

of 1940 (15 U.S.C. 80b–1 et seq.); 

(10) the potential impact of eliminating the broker and 

dealer exclusion from the definition of ‘‘investment adviser’’ 

under section 202(a)(11)(C) of the Investment Advisers Act 

of 1940 (15 U.S.C. 80b–2(a)(11)(C)), in terms of— 

(A) the impact and potential benefits and harm to 

retail customers that could result from such a change, 

including any potential impact on access to personalized 

investment advice and recommendations about securities 

to retail customers or the availability of such advice and 

recommendations; 

(B) the number of additional entities and individuals 

that would be required to register under, or become subject 

to, the Investment Advisers Act of 1940 (15 U.S.C. 80b– 

1 et seq.), and the additional requirements to which brokers, dealers, and persons associated with brokers and 

dealers would become subject, including— 

(i) any potential additional associated person 

licensing, registration, and examination requirements; 

and 

(ii) the additional costs, if any, to the additional 

entities and individuals; and 

(C) the impact on Commission and State resources 

to— 

(i) conduct examinations of registered investment 

advisers and the representatives of registered investment advisers, including the impact on the examination cycle; and 

(ii) enforce the standard of care and other 

applicable requirements imposed under the Investment 

Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.); 

(11) the varying level of services provided by brokers, 

dealers, investment advisers, persons associated with brokers 

or dealers, and persons associated with investment advisers 

to retail customers and the varying scope and terms of retail 

customer relationships of brokers, dealers, investment advisers, 

persons associated with brokers or dealers, and persons associated with investment advisers with such retail customers; 

(12) the potential impact upon retail customers that could 

result from potential changes in the regulatory requirements 
H. R. 4173—452 

or legal standards of care affecting brokers, dealers, investment 

advisers, persons associated with brokers or dealers, and persons associated with investment advisers relating to their 

obligations to retail customers regarding the provision of investment advice, including any potential impact on— 

(A) protection from fraud; 

(B) access to personalized investment advice, and recommendations about securities to retail customers; or 

(C) the availability of such advice and recommendations; 

(13) the potential additional costs and expenses to— 

(A) retail customers regarding and the potential impact 

on the profitability of their investment decisions; and 

(B) brokers, dealers, and investment advisers resulting 

from potential changes in the regulatory requirements or 

legal standards affecting brokers, dealers, investment 

advisers, persons associated with brokers or dealers, and 

persons associated with investment advisers relating to 

their obligations, including duty of care, to retail customers; 

and 

(14) any other consideration that the Commission considers 

necessary and appropriate in determining whether to conduct 

a rulemaking under subsection (f). 

(d) REPORT.— 

(1) IN GENERAL.—Not later than 6 months after the date 

of enactment of this Act, the Commission shall submit a report 

on the study required under subsection (b) to— 

(A) the Committee on Banking, Housing, and Urban 

Affairs of the Senate; and 

(B) the Committee on Financial Services of the House 

of Representatives. 

(2) CONTENT REQUIREMENTS.—The report required under 

paragraph (1) shall describe the findings, conclusions, and recommendations of the Commission from the study required 

under subsection (b), including— 

(A) a description of the considerations, analysis, and 

public and industry input that the Commission considered, 

as required under subsection (b), to make such findings, 

conclusions, and policy recommendations; and 

(B) an analysis of whether any identified legal or regulatory gaps, shortcomings, or overlap in legal or regulatory 

standards in the protection of retail customers relating 

to the standards of care for brokers, dealers, investment 

advisers, persons associated with brokers or dealers, and 

persons associated with investment advisers for providing 

personalized investment advice about securities to retail 

customers. 

(e) PUBLIC COMMENT.—The Commission shall seek and consider 

public input, comments, and data in order to prepare the report 

required under subsection (d). 

(f) RULEMAKING.—The Commission may commence a rulemaking, as necessary or appropriate in the public interest and 

for the protection of retail customers (and such other customers 

as the Commission may by rule provide), to address the legal 

or regulatory standards of care for brokers, dealers, investment 

advisers, persons associated with brokers or dealers, and persons 

associated with investment advisers for providing personalized 
H. R. 4173—453 

investment advice about securities to such retail customers. The 

Commission shall consider the findings conclusions, and recommendations of the study required under subsection (b). 

(g) AUTHORITY TO ESTABLISH A FIDUCIARY DUTY FOR BROKERS

AND DEALERS.— 

(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended 

by adding at the end the following: 

‘‘(k) STANDARD OF CONDUCT.— 

‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

this Act or the Investment Advisers Act of 1940, the Commission may promulgate rules to provide that, with respect to 

a broker or dealer, when providing personalized investment 

advice about securities to a retail customer (and such other 

customers as the Commission may by rule provide), the 

standard of conduct for such broker or dealer with respect 

to such customer shall be the same as the standard of conduct 

applicable to an investment adviser under section 211 of the 

Investment Advisers Act of 1940. The receipt of compensation 

based on commission or other standard compensation for the 

sale of securities shall not, in and of itself, be considered 

a violation of such standard applied to a broker or dealer. 

Nothing in this section shall require a broker or dealer or 

registered representative to have a continuing duty of care 

or loyalty to the customer after providing personalized investment advice about securities. 

‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OFFERED.—Where 

a broker or dealer sells only proprietary or other limited range 

of products, as determined by the Commission, the Commission 

may by rule require that such broker or dealer provide notice 

to each retail customer and obtain the consent or acknowledgment of the customer. The sale of only proprietary or other 

limited range of products by a broker or dealer shall not, 

in and of itself, be considered a violation of the standard set 

forth in paragraph (1). 

‘‘(l) OTHER MATTERS.—The Commission shall— 

‘‘(1) facilitate the provision of simple and clear disclosures 

to investors regarding the terms of their relationships with 

brokers, dealers, and investment advisers, including any material conflicts of interest; and 

‘‘(2) examine and, where appropriate, promulgate rules 

prohibiting or restricting certain sales practices, conflicts of 

interest, and compensation schemes for brokers, dealers, and 

investment advisers that the Commission deems contrary to 

the public interest and the protection of investors.’’. 

(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the 

Investment Advisers Act of 1940, is further amended by adding 

at the end the following new subsections: 

‘‘(g) STANDARD OF CONDUCT.— ‘‘(1) IN GENERAL.—The Commission may promulgate rules 

to provide that the standard of conduct for all brokers, dealers, 

and investment advisers, when providing personalized investment advice about securities to retail customers (and such 

other customers as the Commission may by rule provide), shall 

be to act in the best interest of the customer without regard 

to the financial or other interest of the broker, dealer, or investment adviser providing the advice. In accordance with such 
H. R. 4173—454 

rules, any material conflicts of interest shall be disclosed and 

may be consented to by the customer. Such rules shall provide 

that such standard of conduct shall be no less stringent than 

the standard applicable to investment advisers under section 

206(1) and (2) of this Act when providing personalized investment advice about securities, except the Commission shall not 

ascribe a meaning to the term ‘customer’ that would include 

an investor in a private fund managed by an investment 

adviser, where such private fund has entered into an advisory 

contract with such adviser. The receipt of compensation based 

on commission or fees shall not, in and of itself, be considered 

a violation of such standard applied to a broker, dealer, or 

investment adviser. 

‘‘(2) RETAIL CUSTOMER DEFINED.—For purposes of this subsection, the term ‘retail customer’ means a natural person, 

or the legal representative of such natural person, who— 

‘‘(A) receives personalized investment advice about 

securities from a broker, dealer, or investment adviser; 

and 

‘‘(B) uses such advice primarily for personal, family, 

or household purposes. 

‘‘(h) OTHER MATTERS.—The Commission shall— 

‘‘(1) facilitate the provision of simple and clear disclosures 

to investors regarding the terms of their relationships with 

brokers, dealers, and investment advisers, including any material conflicts of interest; and 

‘‘(2) examine and, where appropriate, promulgate rules 

prohibiting or restricting certain sales practices, conflicts of 

interest, and compensation schemes for brokers, dealers, and 

investment advisers that the Commission deems contrary to 

the public interest and the protection of investors.’’. 

(h) HARMONIZATION OF ENFORCEMENT.— 

(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the 

Securities Exchange Act of 1934, as amended by subsection 

(g)(1), is further amended by adding at the end the following 

new subsection: 

‘‘(m) HARMONIZATION OF ENFORCEMENT.—The enforcement 

authority of the Commission with respect to violations of the 

standard of conduct applicable to a broker or dealer providing 

personalized investment advice about securities to a retail customer 

shall include— 

‘‘(1) the enforcement authority of the Commission with 

respect to such violations provided under this Act; and 

‘‘(2) the enforcement authority of the Commission with 

respect to violations of the standard of conduct applicable to 

an investment adviser under the Investment Advisers Act of 

1940, including the authority to impose sanctions for such 

violations, and 

the Commission shall seek to prosecute and sanction violators of 

the standard of conduct applicable to a broker or dealer providing 

personalized investment advice about securities to a retail customer 

under this Act to same extent as the Commission prosecutes and 

sanctions violators of the standard of conduct applicable to an 

investment advisor under the Investment Advisers Act of 1940.’’. 

(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the 

Investment Advisers Act of 1940, as amended by subsection 
H. R. 4173—455 

(g)(2), is further amended by adding at the end the following 

new subsection: 

‘‘(i) HARMONIZATION OF ENFORCEMENT.—The enforcement 

authority of the Commission with respect to violations of the 

standard of conduct applicable to an investment adviser shall 

include— 

‘‘(1) the enforcement authority of the Commission with 

respect to such violations provided under this Act; and 

‘‘(2) the enforcement authority of the Commission with 

respect to violations of the standard of conduct applicable to 

a broker or dealer providing personalized investment advice 

about securities to a retail customer under the Securities 

Exchange Act of 1934, including the authority to impose sanctions for such violations, and 

the Commission shall seek to prosecute and sanction violators of 

the standard of conduct applicable to an investment adviser under 

this Act to same extent as the Commission prosecutes and sanctions 

violators of the standard of conduct applicable to a broker or dealer 

providing personalized investment advice about securities to a retail 

customer under the Securities Exchange Act of 1934.’’. 

SEC. 914. STUDY ON ENHANCING INVESTMENT ADVISER EXAMINATIONS. 

(a) STUDY REQUIRED.— (1) IN GENERAL.—The Commission shall review and analyze 

the need for enhanced examination and enforcement resources 

for investment advisers. 

(2) AREAS OF CONSIDERATION.—The study required by this 

subsection shall examine— 

(A) the number and frequency of examinations of 

investment advisers by the Commission over the 5 years 

preceding the date of the enactment of this subtitle; 

(B) the extent to which having Congress authorize 

the Commission to designate one or more self-regulatory 

organizations to augment the Commission’s efforts in overseeing investment advisers would improve the frequency 

of examinations of investment advisers; and 

(C) current and potential approaches to examining the 

investment advisory activities of dually registered brokerdealers and investment advisers or affiliated broker-dealers 

and investment advisers. 

(b) REPORT REQUIRED.—The Commission shall report its 

findings to the Committee on Financial Services of the House of 

Representatives and the Committee on Banking, Housing, and 

Urban Affairs of the Senate, not later than 180 days after the 

date of enactment of this subtitle, and shall use such findings 

to revise its rules and regulations, as necessary. The report shall 

include a discussion of regulatory or legislative steps that are 

recommended or that may be necessary to address concerns identified in the study. 

SEC. 915. OFFICE OF THE INVESTOR ADVOCATE. 

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 

78d) is amended by adding at the end the following: 

‘‘(g) OFFICE OF THE INVESTOR ADVOCATE.— 

‘‘(1) OFFICE ESTABLISHED.—There is established within the 

Commission the Office of the Investor Advocate (in this subsection referred to as the ‘Office’). 
H. R. 4173—456 

‘‘(2) INVESTOR ADVOCATE.— 

‘‘(A) IN GENERAL.—The head of the Office shall be 

the Investor Advocate, who shall— 

‘‘(i) report directly to the Chairman; and 

‘‘(ii) be appointed by the Chairman, in consultation 

with the Commission, from among individuals having 

experience in advocating for the interests of investors 

in securities and investor protection issues, from the 

perspective of investors. 

‘‘(B) COMPENSATION.—The annual rate of pay for the 

Investor Advocate shall be equal to the highest rate of 

annual pay for other senior executives who report to the 

Chairman of the Commission. 

‘‘(C) LIMITATION ON SERVICE.—An individual who 

serves as the Investor Advocate may not be employed by 

the Commission— 

‘‘(i) during the 2-year period ending on the date 

of appointment as Investor Advocate; or 

‘‘(ii) during the 5-year period beginning on the 

date on which the person ceases to serve as the 

Investor Advocate. 

‘‘(3) STAFF OF OFFICE.—The Investor Advocate, after consultation with the Chairman of the Commission, may retain 

or employ independent counsel, research staff, and service staff, 

as the Investor Advocate deems necessary to carry out the 

functions, powers, and duties of the Office. 

‘‘(4) FUNCTIONS OF THE INVESTOR ADVOCATE.—The Investor 

Advocate shall— 

‘‘(A) assist retail investors in resolving significant problems such investors may have with the Commission or 

with self-regulatory organizations; 

‘‘(B) identify areas in which investors would benefit 

from changes in the regulations of the Commission or the 

rules of self-regulatory organizations; 

‘‘(C) identify problems that investors have with financial service providers and investment products; 

‘‘(D) analyze the potential impact on investors of— 

‘‘(i) proposed regulations of the Commission; and 

‘‘(ii) proposed rules of self-regulatory organizations 

registered under this title; and 

‘‘(E) to the extent practicable, propose to the Commission changes in the regulations or orders of the Commission 

and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the 

interests of investors. 

‘‘(5) ACCESS TO DOCUMENTS.—The Commission shall ensure 

that the Investor Advocate has full access to the documents 

of the Commission and any self-regulatory organization, as 

necessary to carry out the functions of the Office. 

‘‘(6) ANNUAL REPORTS.— ‘‘(A) REPORT ON OBJECTIVES.— ‘‘(i) IN GENERAL.—Not later than June 30 of each 

year after 2010, the Investor Advocate shall submit 

to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial 

Services of the House of Representatives a report on 
H. R. 4173—457 

the objectives of the Investor Advocate for the following 

fiscal year. 

‘‘(ii) CONTENTS.—Each report required under 

clause (i) shall contain full and substantive analysis 

and explanation. 

‘‘(B) REPORT ON ACTIVITIES.— 

‘‘(i) IN GENERAL.—Not later than December 31 of 

each year after 2010, the Investor Advocate shall 

submit to the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on 

Financial Services of the House of Representatives a 

report on the activities of the Investor Advocate during 

the immediately preceding fiscal year. 

‘‘(ii) CONTENTS.—Each report required under 

clause (i) shall include— 

‘‘(I) appropriate statistical information and full 

and substantive analysis; 

‘‘(II) information on steps that the Investor 

Advocate has taken during the reporting period 

to improve investor services and the responsiveness of the Commission and self-regulatory 

organizations to investor concerns; 

‘‘(III) a summary of the most serious problems 

encountered by investors during the reporting 

period; 

‘‘(IV) an inventory of the items described in 

subclause (III) that includes— 

‘‘(aa) identification of any action taken by 

the Commission or the self-regulatory 

organization and the result of such action; 

‘‘(bb) the length of time that each item 

has remained on such inventory; and 

‘‘(cc) for items on which no action has 

been taken, the reasons for inaction, and an 

identification of any official who is responsible 

for such action; 

‘‘(V) recommendations for such administrative 

and legislative actions as may be appropriate to 

resolve problems encountered by investors; and 

‘‘(VI) any other information, as determined 

appropriate by the Investor Advocate. 

‘‘(iii) INDEPENDENCE.—Each report required under 

this paragraph shall be provided directly to the 

Committees listed in clause (i) without any prior review 

or comment from the Commission, any commissioner, 

any other officer or employee of the Commission, or 

the Office of Management and Budget. 

‘‘(iv) CONFIDENTIALITY.—No report required under 

clause (i) may contain confidential information. 

‘‘(7) REGULATIONS.—The Commission shall, by regulation, 

establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor 

Advocate, not later than 3 months after the date of such submission.’’. 
H. R. 4173—458 

SEC. 916. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY ORGANIZATIONS. 

(a) FILING PROCEDURES.—Section 19(b) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by striking 

paragraph (2) (including the undesignated matter immediately following subparagraph (B)) and inserting the following: 

‘‘(2) APPROVAL PROCESS.— ‘‘(A) APPROVAL PROCESS ESTABLISHED.— ‘‘(i) IN GENERAL.—Except as provided in clause 

(ii), not later than 45 days after the date of publication 

of a proposed rule change under paragraph (1), the 

Commission shall— 

‘‘(I) by order, approve or disapprove the proposed rule change; or 

‘‘(II) institute proceedings under subparagraph 

(B) to determine whether the proposed rule change 

should be disapproved. 

‘‘(ii) EXTENSION OF TIME PERIOD.—The Commission 

may extend the period established under clause (i) 

by not more than an additional 45 days, if— 

‘‘(I) the Commission determines that a longer 

period is appropriate and publishes the reasons 

for such determination; or 

‘‘(II) the self-regulatory organization that filed 

the proposed rule change consents to the longer 

period. 

‘‘(B) PROCEEDINGS.— ‘‘(i) NOTICE AND HEARING.—If the Commission does 

not approve or disapprove a proposed rule change 

under subparagraph (A), the Commission shall provide 

to the self-regulatory organization that filed the proposed rule change— 

‘‘(I) notice of the grounds for disapproval under 

consideration; and 

‘‘(II) opportunity for hearing, to be concluded 

not later than 180 days after the date of publication of notice of the filing of the proposed rule 

change. 

‘‘(ii) ORDER OF APPROVAL OR DISAPPROVAL.— 

‘‘(I) IN GENERAL.—Except as provided in subclause (II), not later than 180 days after the date 

of publication under paragraph (1), the Commission shall issue an order approving or disapproving 

the proposed rule change. 

‘‘(II) EXTENSION OF TIME PERIOD.—The 

Commission may extend the period for issuance 

under clause (I) by not more than 60 days, if— 

‘‘(aa) the Commission determines that a 

longer period is appropriate and publishes the 

reasons for such determination; or 

‘‘(bb) the self-regulatory organization that 

filed the proposed rule change consents to the 

longer period. 

‘‘(C) STANDARDS FOR APPROVAL AND DISAPPROVAL.— ‘‘(i) APPROVAL.—The Commission shall approve a 

proposed rule change of a self-regulatory organization 

if it finds that such proposed rule change is consistent 
H. R. 4173—459 

with the requirements of this title and the rules and 

regulations issued under this title that are applicable 

to such organization. 

‘‘(ii) DISAPPROVAL.—The Commission shall disapprove a proposed rule change of a self-regulatory 

organization if it does not make a finding described 

in clause (i). 

‘‘(iii) TIME FOR APPROVAL.—The Commission may 

not approve a proposed rule change earlier than 30 

days after the date of publication under paragraph 

(1), unless the Commission finds good cause for so 

doing and publishes the reason for the finding. 

‘‘(D) RESULT OF FAILURE TO INSTITUTE OR CONCLUDE

PROCEEDINGS.—A proposed rule change shall be deemed 

to have been approved by the Commission, if— 

‘‘(i) the Commission does not approve or disapprove 

the proposed rule change or begin proceedings under 

subparagraph (B) within the period described in 

subparagraph (A); or 

‘‘(ii) the Commission does not issue an order 

approving or disapproving the proposed rule change 

under subparagraph (B) within the period described 

in subparagraph (B)(ii). 

‘‘(E) PUBLICATION DATE BASED ON FEDERAL REGISTER

PUBLISHING.—For purposes of this paragraph, if, after filing 

a proposed rule change with the Commission pursuant 

to paragraph (1), a self-regulatory organization publishes 

a notice of the filing of such proposed rule change, together 

with the substantive terms of such proposed rule change, 

on a publicly accessible website, the Commission shall 

thereafter send the notice to the Federal Register for 

publication thereof under paragraph (1) within 15 days 

of the date on which such website publication is made. 

If the Commission fails to send the notice for publication 

thereof within such 15 day period, then the date of publication shall be deemed to be the date on which such website 

publication was made. 

‘‘(F) RULEMAKING.— ‘‘(i) IN GENERAL.—Not later than 180 days after 

the date of enactment of the Investor Protection and 

Securities Reform Act of 2010, after consultation with 

other regulatory agencies, the Commission shall 

promulgate rules setting forth the procedural requirements of the proceedings required under this paragraph. 

‘‘(ii) NOTICE AND COMMENT NOT REQUIRED.—The 

rules promulgated by the Commission under clause 

(i) are not required to include republication of proposed 

rule changes or solicitation of public comment.’’. 

(b) CLARIFICATION OF FILING DATE.— 

(1) RULE OF CONSTRUCTION.—Section 19(b) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding 

at the end the following: 

‘‘(10) RULE OF CONSTRUCTION RELATING TO FILING DATE

OF PROPOSED RULE CHANGES.— ‘‘(A) IN GENERAL.—For purposes of this subsection, the 

date of filing of a proposed rule change shall be deemed 
H. R. 4173—460 

to be the date on which the Commission receives the proposed rule change. 

‘‘(B) EXCEPTION.—A proposed rule change has not been 

received by the Commission for purposes of subparagraph 

(A) if, not later than 7 business days after the date of 

receipt by the Commission, the Commission notifies the 

self-regulatory organization that such proposed rule change 

does not comply with the rules of the Commission relating 

to the required form of a proposed rule change, except 

that if the Commission determines that the proposed rule 

change is unusually lengthy and is complex or raises novel 

regulatory issues, the Commission shall inform the selfregulatory organization of such determination not later 

than 7 business days after the date of receipt by the 

Commission and, for the purposes of subparagraph (A), 

a proposed rule change has not been received by the 

Commission, if, not later than 21 days after the date of 

receipt by the Commission, the Commission notifies the 

self-regulatory organization that such proposed rule change 

does not comply with the rules of the Commission relating 

to the required form of a proposed rule change.’’. 

(2) PUBLICATION.—Section 19(b)(1) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by 

striking ‘‘upon’’ and inserting ‘‘as soon as practicable after 

the date of’’. 

(c) EFFECTIVE DATE OF PROPOSED RULES.—Section 19(b)(3) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is 

amended— 

(1) in subparagraph (A)— 

(A) by striking ‘‘may take effect’’ and inserting ‘‘shall 

take effect’’; and 

(B) by inserting ‘‘on any person, whether or not the 

person is a member of the self-regulatory organization’’ 

after ‘‘charge imposed by the self-regulatory organization’’; 

and 

(2) in subparagraph (C)— 

(A) by amending the second sentence to read as follows: 

‘‘At any time within the 60-day period beginning on the 

date of filing of such a proposed rule change in accordance 

with the provisions of paragraph (1), the Commission summarily may temporarily suspend the change in the rules 

of the self-regulatory organization made thereby, if it 

appears to the Commission that such action is necessary 

or appropriate in the public interest, for the protection 

of investors, or otherwise in furtherance of the purposes 

of this title.’’; 

(B) by inserting after the second sentence the following: 

‘‘If the Commission takes such action, the Commission 

shall institute proceedings under paragraph (2)(B) to determine whether the proposed rule should be approved or 

disapproved.’’; and 

(C) in the third sentence, by striking ‘‘the preceding 

sentence’’ and inserting ‘‘this subparagraph’’. 

(d) CONFORMING CHANGE.—Section 19(b)(4)(D) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read 

as follows: 
H. R. 4173—461 

‘‘(D)(i) The Commission shall order the temporary 

suspension of any change in the rules of a clearing agency 

made by a proposed rule change that has taken effect 

under paragraph (3), if the appropriate regulatory agency 

for the clearing agency notifies the Commission not later 

than 30 days after the date on which the proposed rule 

change was filed of— 

‘‘(I) the determination by the appropriate regulatory agency that the rules of such clearing agency, 

as so changed, may be inconsistent with the safeguarding of securities or funds in the custody or control 

of such clearing agency or for which it is responsible; 

and 

‘‘(II) the reasons for the determination described 

in subclause (I). 

‘‘(ii) If the Commission takes action under clause (i), 

the Commission shall institute proceedings under paragraph (2)(B) to determine if the proposed rule change 

should be approved or disapproved.’’. 

SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS. 

(a) IN GENERAL.—The Commission shall conduct a study to 

identify— 

(1) the existing level of financial literacy among retail 

investors, including subgroups of investors identified by the 

Commission; 

(2) methods to improve the timing, content, and format 

of disclosures to investors with respect to financial intermediaries, investment products, and investment services; 

(3) the most useful and understandable relevant information that retail investors need to make informed financial 

decisions before engaging a financial intermediary or purchasing an investment product or service that is typically sold 

to retail investors, including shares of open-end companies, 

as that term is defined in section 5 of the Investment Company 

Act of 1940 (15 U.S.C. 80a–5) that are registered under section 

8 of that Act; 

(4) methods to increase the transparency of expenses and 

conflicts of interests in transactions involving investment services and products, including shares of open-end companies 

described in paragraph (3); 

(5) the most effective existing private and public efforts 

to educate investors; and 

(6) in consultation with the Financial Literacy and Education Commission, a strategy (including, to the extent practicable, measurable goals and objectives) to increase the financial literacy of investors in order to bring about a positive 

change in investor behavior. 

(b) REPORT.—Not later than 2 years after the date of enactment 

of this Act, the Commission shall submit a report on the study 

required under subsection (a) to— 

(1) the Committee on Banking, Housing, and Urban Affairs 

of the Senate; and 

(2) the Committee on Financial Services of the House of 

Representatives. 
H. R. 4173—462 

SEC. 918. STUDY REGARDING MUTUAL FUND ADVERTISING. 

(a) IN GENERAL.—The Comptroller General of the United States 

shall conduct a study on mutual fund advertising to identify— 

(1) existing and proposed regulatory requirements for openend investment company advertisements; 

(2) current marketing practices for the sale of open-end 

investment company shares, including the use of past performance data, funds that have merged, and incubator funds; 

(3) the impact of such advertising on consumers; and 

(4) recommendations to improve investor protections in 

mutual fund advertising and additional information necessary 

to ensure that investors can make informed financial decisions 

when purchasing shares. 

(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States 

shall submit a report on the results of the study conducted under 

subsection (a) to— 

(1) the Committee on Banking, Housing, and Urban Affairs 

of the United States Senate; and 

(2) the Committee on Financial Services of the House of 

Representatives. 

SEC. 919. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE 

INVESTOR DISCLOSURES BEFORE PURCHASE OF INVESTMENT PRODUCTS AND SERVICES. 

Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 

78o) is amended by adding at the end the following: 

‘‘(n) DISCLOSURES TO RETAIL INVESTORS.— 

‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

the securities laws, the Commission may issue rules designating 

documents or information that shall be provided by a broker 

or dealer to a retail investor before the purchase of an investment product or service by the retail investor. 

‘‘(2) CONSIDERATIONS.—In developing any rules under paragraph (1), the Commission shall consider whether the rules 

will promote investor protection, efficiency, competition, and 

capital formation. 

‘‘(3) FORM AND CONTENTS OF DOCUMENTS AND INFORMATION.—Any documents or information designated under a rule 

promulgated under paragraph (1) shall— 

‘‘(A) be in a summary format; and 

‘‘(B) contain clear and concise information about— 

‘‘(i) investment objectives, strategies, costs, and 

risks; and 

‘‘(ii) any compensation or other financial incentive 

received by a broker, dealer, or other intermediary 

in connection with the purchase of retail investment 

products.’’. 

SEC. 919A. STUDY ON CONFLICTS OF INTEREST. 

(a) IN GENERAL.—The Comptroller General of the United States 

shall conduct a study— 

(1) to identify and examine potential conflicts of interest 

that exist between the staffs of the investment banking and 

equity and fixed income securities analyst functions within 

the same firm; and 
H. R. 4173—463 

(2) to make recommendations to Congress designed to protect investors in light of such conflicts. 

(b) CONSIDERATIONS.—In conducting the study under subsection 

(a), the Comptroller General shall— 

(1) consider— 

(A) the potential for investor harm resulting from conflicts, including consideration of the forms of misconduct 

engaged in by the several securities firms and individuals 

that entered into the Global Analyst Research Settlements 

in 2003 (also known as the ‘‘Global Settlement’’); 

(B) the nature and benefits of the undertakings to 

which those firms agreed in enforcement proceedings, 

including firewalls between research and investment 

banking, separate reporting lines, dedicated legal and 

compliance staffs, allocation of budget, physical separation, 

compensation, employee performance evaluations, coverage 

decisions, limitations on soliciting investment banking business, disclosures, transparency, and other measures; 

(C) whether any such undertakings should be codified 

and applied permanently to securities firms, or whether 

the Commission should adopt rules applying any such 

undertakings to securities firms; and 

(D) whether to recommend regulatory or legislative 

measures designed to mitigate possible adverse consequences to investors arising from the conflicts of interest 

or to enhance investor protection or confidence in the integrity of the securities markets; and 

(2) consult with State attorneys general, State securities 

officials, the Commission, the Financial Industry Regulatory 

Authority (‘‘FINRA’’), NYSE Regulation, investor advocates, 

brokers, dealers, retail investors, institutional investors, and 

academics. 

(c) REPORT.—The Comptroller General shall submit a report 

on the results of the study required by this section to the Committee 

on Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives, 

not later than 18 months after the date of enactment of this Act. 

SEC. 919B. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION 

ON INVESTMENT ADVISERS AND BROKER-DEALERS. 

(a) STUDY.— 

(1) IN GENERAL.—Not later than 6 months after the date 

of enactment of this Act, the Commission shall complete a 

study, including recommendations, of ways to improve the 

access of investors to registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information) about registered and previously registered investment advisers, associated persons of 

investment advisers, brokers and dealers and their associated 

persons on the existing Central Registration Depository and 

Investment Adviser Registration Depository systems, as well 

as identify additional information that should be made publicly 

available. 

(2) CONTENTS.—The study required by subsection (a) shall 

include an analysis of the advantages and disadvantages of 

further centralizing access to the information contained in the 

2 systems, including— 
H. R. 4173—464 

(A) identification of those data pertinent to investors; 

and 

(B) the identification of the method and format for 

displaying and publishing such data to enhance accessibility by and utility to investors. 

(b) IMPLEMENTATION.—Not later than 18 months after the date 

of completion of the study required by subsection (a), the Commission shall implement any recommendations of the study. 

SEC. 919C. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL DESIGNATIONS. 

(a) IN GENERAL.—The Comptroller General of the United States 

shall conduct a study to evaluate— 

(1) the effectiveness of State and Federal regulations to 

protect investors and other consumers from individuals who 

hold themselves out as financial planners through the use 

of misleading titles, designations, or marketing materials; 

(2) current State and Federal oversight structure and regulations for financial planners; and 

(3) legal or regulatory gaps in the regulation of financial 

planners and other individuals who provide or offer to provide 

financial planning services to consumers. 

(b) CONSIDERATIONS.—In conducting the study required under 

subsection (a), the Comptroller General shall consider— 

(1) the role of financial planners in providing advice 

regarding the management of financial resources, including 

investment planning, income tax planning, education planning, 

retirement planning, estate planning, and risk management; 

(2) whether current regulations at the State and Federal 

level provide adequate ethical and professional standards for 

financial planners; 

(3) the possible risk posed to investors and other consumers 

by individuals who hold themselves out as financial planners 

or as otherwise providing financial planning services in connection with the sale of financial products, including insurance 

and securities; 

(4) the possible risk posed to investors and other consumers 

by individuals who otherwise use titles, designations, or marketing materials in a misleading way in connection with the 

delivery of financial advice; 

(6) the ability of investors and other consumers to understand licensing requirements and standards of care that apply 

to individuals who hold themselves out as financial planners 

or as otherwise providing financial planning services; 

(7) the possible benefits to investors and other consumers 

of regulation and professional oversight of financial planners; 

and 

(8) any other consideration that the Comptroller General 

deems necessary or appropriate to effectively execute the study 

required under subsection (a). 

(c) RECOMMENDATIONS.—In providing recommendations for the 

appropriate regulation of financial planners and other individuals 

who provide or offer to provide financial planning services, in order 

to protect investors and other consumers of financial planning services, the Comptroller General shall consider— 
H. R. 4173—465 

(1) the appropriate structure for regulation of financial 

planners and individuals providing financial planning services; 

and 

(2) the appropriate scope of the regulations needed to protect investors and other consumers, including but not limited 

to the need to establish competency standards, practice standards, ethical guidelines, disciplinary authority, and transparency to investors and other consumers. 

(d) REPORT.— 

(1) IN GENERAL.—Not later than 180 days after the date 

of enactment of this Act, the Comptroller General shall submit 

a report on the study required under subsection (a) to— 

(A) the Committee on Banking, Housing, and Urban 

Affairs of the Senate; 

(B) the Special Committee on Aging of the Senate; 

and 

(C) the Committee on Financial Services of the House 

of Representatives. 

(2) CONTENT REQUIREMENTS.—The report required under 

paragraph (1) shall describe the findings and determinations 

made by the Comptroller General in carrying out the study 

required under subsection (a), including a description of the 

considerations, analysis, and government, public, industry, nonprofit and consumer input that the Comptroller General considered to make such findings, conclusions, and legislative, regulatory, or other recommendations. 

SEC. 919D. OMBUDSMAN. 

Section 4(g) of the Securities Exchange Act of 1934, as added 

by section 914, is amended by adding at the end the following: 

‘‘(8) OMBUDSMAN.— ‘‘(A) APPOINTMENT.—Not later than 180 days after the 

date on which the first Investor Advocate is appointed 

under paragraph (2)(A)(i), the Investor Advocate shall 

appoint an Ombudsman, who shall report directly to the 

Investor Advocate. 

‘‘(B) DUTIES.—The Ombudsman appointed under 

subparagraph (A) shall— 

‘‘(i) act as a liaison between the Commission and 

any retail investor in resolving problems that retail 

investors may have with the Commission or with selfregulatory organizations; 

‘‘(ii) review and make recommendations regarding 

policies and procedures to encourage persons to present 

questions to the Investor Advocate regarding compliance with the securities laws; and 

‘‘(iii) establish safeguards to maintain the confidentiality of communications between the persons 

described in clause (ii) and the Ombudsman. 

‘‘(C) LIMITATION.—In carrying out the duties of the 

Ombudsman under subparagraph (B), the Ombudsman 

shall utilize personnel of the Commission to the extent 

practicable. Nothing in this paragraph shall be construed 

as replacing, altering, or diminishing the activities of any 

ombudsman or similar office of any other agency. 

‘‘(D) REPORT.—The Ombudsman shall submit a semiannual report to the Investor Advocate that describes the 
H. R. 4173—466 

activities and evaluates the effectiveness of the Ombudsman during the preceding year. The Investor Advocate 

shall include the reports required under this section in 

the reports required to be submitted by the Inspector Advocate under paragraph (6).’’. 

Subtitle B—Increasing Regulatory 

Enforcement and Remedies 

SEC. 921. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE 

ARBITRATION. 

(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o), 

as amended by this title, is further amended by adding at the 

end the following new subsection: 

‘‘(o) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.—The Commission, by rule, may prohibit, or impose conditions 

or limitations on the use of, agreements that require customers 

or clients of any broker, dealer, or municipal securities dealer 

to arbitrate any future dispute between them arising under the 

Federal securities laws, the rules and regulations thereunder, or 

the rules of a self-regulatory organization if it finds that such 

prohibition, imposition of conditions, or limitations are in the public 

interest and for the protection of investors.’’. 

(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 1940.—Section 205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 

5) is amended by adding at the end the following new subsection: 

‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRA- TION.—The Commission, by rule, may prohibit, or impose conditions 

or limitations on the use of, agreements that require customers 

or clients of any investment adviser to arbitrate any future dispute 

between them arising under the Federal securities laws, the rules 

and regulations thereunder, or the rules of a self-regulatory 

organization if it finds that such prohibition, imposition of conditions, or limitations are in the public interest and for the protection 

of investors.’’. 

SEC. 922. WHISTLEBLOWER PROTECTION. 

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.) is amended by inserting after section 21E 

the following: 

‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION. 

‘‘(a) DEFINITIONS.—In this section the following definitions shall 

apply: 

‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION.—The 

term ‘covered judicial or administrative action’ means any 

judicial or administrative action brought by the Commission 

under the securities laws that results in monetary sanctions 

exceeding $1,000,000. 

‘‘(2) FUND.—The term ‘Fund’ means the Securities and 

Exchange Commission Investor Protection Fund. 

‘‘(3) ORIGINAL INFORMATION.—The term ‘original information’ means information that— 
H. R. 4173—467 

‘‘(A) is derived from the independent knowledge or 

analysis of a whistleblower; 

‘‘(B) is not known to the Commission from any other 

source, unless the whistleblower is the original source of 

the information; and 

‘‘(C) is not exclusively derived from an allegation made 

in a judicial or administrative hearing, in a governmental 

report, hearing, audit, or investigation, or from the news 

media, unless the whistleblower is a source of the information. 

‘‘(4) MONETARY SANCTIONS.—The term ‘monetary sanctions’, 

when used with respect to any judicial or administrative action, 

means— 

‘‘(A) any monies, including penalties, disgorgement, 

and interest, ordered to be paid; and 

‘‘(B) any monies deposited into a disgorgement fund 

or other fund pursuant to section 308(b) of the SarbanesOxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such 

action or any settlement of such action. 

‘‘(5) RELATED ACTION.—The term ‘related action’, when used 

with respect to any judicial or administrative action brought 

by the Commission under the securities laws, means any 

judicial or administrative action brought by an entity described 

in subclauses (I) through (IV) of subsection (h)(2)(D)(i) that 

is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful 

enforcement of the Commission action. 

‘‘(6) WHISTLEBLOWER.—The term ‘whistleblower’ means any 

individual who provides, or 2 or more individuals acting jointly 

who provide, information relating to a violation of the securities 

laws to the Commission, in a manner established, by rule 

or regulation, by the Commission. 

‘‘(b) AWARDS.— ‘‘(1) IN GENERAL.—In any covered judicial or administrative 

action, or related action, the Commission, under regulations 

prescribed by the Commission and subject to subsection (c), 

shall pay an award or awards to 1 or more whistleblowers 

who voluntarily provided original information to the Commission that led to the successful enforcement of the covered 

judicial or administrative action, or related action, in an aggregate amount equal to— 

‘‘(A) not less than 10 percent, in total, of what has 

been collected of the monetary sanctions imposed in the 

action or related actions; and 

‘‘(B) not more than 30 percent, in total, of what has 

been collected of the monetary sanctions imposed in the 

action or related actions. 

‘‘(2) PAYMENT OF AWARDS.—Any amount paid under paragraph (1) shall be paid from the Fund. 

‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL OF

AWARD.— 

‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— ‘‘(A) DISCRETION.—The determination of the amount 

of an award made under subsection (b) shall be in the 

discretion of the Commission. 

‘‘(B) CRITERIA.—In determining the amount of an 

award made under subsection (b), the Commission— 
H. R. 4173—468 

‘‘(i) shall take into consideration— 

‘‘(I) the significance of the information provided by the whistleblower to the success of the 

covered judicial or administrative action; 

‘‘(II) the degree of assistance provided by the 

whistleblower and any legal representative of the 

whistleblower in a covered judicial or administrative action; 

‘‘(III) the programmatic interest of the 

Commission in deterring violations of the securities laws by making awards to whistleblowers who 

provide information that lead to the successful 

enforcement of such laws; and 

‘‘(IV) such additional relevant factors as the 

Commission may establish by rule or regulation; 

and 

‘‘(ii) shall not take into consideration the balance 

of the Fund. 

‘‘(2) DENIAL OF AWARD.—No award under subsection (b) 

shall be made— 

‘‘(A) to any whistleblower who is, or was at the time 

the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee 

of— 

‘‘(i) an appropriate regulatory agency; 

‘‘(ii) the Department of Justice; 

‘‘(iii) a self-regulatory organization; 

‘‘(iv) the Public Company Accounting Oversight 

Board; or 

‘‘(v) a law enforcement organization; 

‘‘(B) to any whistleblower who is convicted of a criminal 

violation related to the judicial or administrative action 

for which the whistleblower otherwise could receive an 

award under this section; 

‘‘(C) to any whistleblower who gains the information 

through the performance of an audit of financial statements 

required under the securities laws and for whom such 

submission would be contrary to the requirements of section 

10A of the Securities Exchange Act of 1934 (15 U.S.C. 

78j–1); or 

‘‘(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission 

may, by rule, require. 

‘‘(d) REPRESENTATION.— 

‘‘(1) PERMITTED REPRESENTATION.—Any whistleblower who 

makes a claim for an award under subsection (b) may be 

represented by counsel. 

‘‘(2) REQUIRED REPRESENTATION.— 

‘‘(A) IN GENERAL.—Any whistleblower who anonymously makes a claim for an award under subsection (b) 

shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is 

based. 

‘‘(B) DISCLOSURE OF IDENTITY.—Prior to the payment 

of an award, a whistleblower shall disclose the identity 

of the whistleblower and provide such other information 
H. R. 4173—469 

as the Commission may require, directly or through counsel 

for the whistleblower. 

‘‘(e) NO CONTRACT NECESSARY.—No contract with the Commission is necessary for any whistleblower to receive an award under 

subsection (b), unless otherwise required by the Commission by 

rule or regulation. 

‘‘(f) APPEALS.—Any determination made under this section, 

including whether, to whom, or in what amount to make awards, 

shall be in the discretion of the Commission. Any such determination, except the determination of the amount of an award if the 

award was made in accordance with subsection (b), may be appealed 

to the appropriate court of appeals of the United States not more 

than 30 days after the determination is issued by the Commission. 

The court shall review the determination made by the Commission 

in accordance with section 706 of title 5, United States Code. 

‘‘(g) INVESTOR PROTECTION FUND.— 

‘‘(1) FUND ESTABLISHED.—There is established in the 

Treasury of the United States a fund to be known as the 

‘Securities and Exchange Commission Investor Protection 

Fund’. 

‘‘(2) USE OF FUND.—The Fund shall be available to the 

Commission, without further appropriation or fiscal year limitation, for— 

‘‘(A) paying awards to whistleblowers as provided in 

subsection (b); and 

‘‘(B) funding the activities of the Inspector General 

of the Commission under section 4(i). 

‘‘(3) DEPOSITS AND CREDITS.— 

‘‘(A) IN GENERAL.—There shall be deposited into or 

credited to the Fund an amount equal to— 

‘‘(i) any monetary sanction collected by the 

Commission in any judicial or administrative action 

brought by the Commission under the securities laws 

that is not added to a disgorgement fund or other 

fund under section 308 of the Sarbanes-Oxley Act of 

2002 (15 U.S.C. 7246) or otherwise distributed to victims of a violation of the securities laws, or the rules 

and regulations thereunder, underlying such action, 

unless the balance of the Fund at the time the monetary sanction is collected exceeds $300,000,000; 

‘‘(ii) any monetary sanction added to a 

disgorgement fund or other fund under section 308 

of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) 

that is not distributed to the victims for whom the 

Fund was established, unless the balance of the 

disgorgement fund at the time the determination is 

made not to distribute the monetary sanction to such 

victims exceeds $200,000,000; and 

‘‘(iii) all income from investments made under 

paragraph (4). 

‘‘(B) ADDITIONAL AMOUNTS.—If the amounts deposited 

into or credited to the Fund under subparagraph (A) are 

not sufficient to satisfy an award made under subsection 

(b), there shall be deposited into or credited to the Fund 

an amount equal to the unsatisfied portion of the award 

from any monetary sanction collected by the Commission 
H. R. 4173—470 

in the covered judicial or administrative action on which 

the award is based. 

‘‘(4) INVESTMENTS.— 

‘‘(A) AMOUNTS IN FUND MAY BE INVESTED.—The 

Commission may request the Secretary of the Treasury 

to invest the portion of the Fund that is not, in the discretion of the Commission, required to meet the current needs 

of the Fund. 

‘‘(B) ELIGIBLE INVESTMENTS.—Investments shall be 

made by the Secretary of the Treasury in obligations of 

the United States or obligations that are guaranteed as 

to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined 

by the Commission on the record. 

‘‘(C) INTEREST AND PROCEEDS CREDITED.—The interest 

on, and the proceeds from the sale or redemption of, any 

obligations held in the Fund shall be credited to the Fund. 

‘‘(5) REPORTS TO CONGRESS.—Not later than October 30 

of each fiscal year beginning after the date of enactment of 

this subsection, the Commission shall submit to the Committee 

on Banking, Housing, and Urban Affairs of the Senate, and 

the Committee on Financial Services of the House of Representatives a report on— 

‘‘(A) the whistleblower award program, established 

under this section, including— 

‘‘(i) a description of the number of awards granted; 

and 

‘‘(ii) the types of cases in which awards were 

granted during the preceding fiscal year; 

‘‘(B) the balance of the Fund at the beginning of the 

preceding fiscal year; 

‘‘(C) the amounts deposited into or credited to the 

Fund during the preceding fiscal year; 

‘‘(D) the amount of earnings on investments made 

under paragraph (4) during the preceding fiscal year; 

‘‘(E) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection 

(b); 

‘‘(F) the balance of the Fund at the end of the preceding 

fiscal year; and 

‘‘(G) a complete set of audited financial statements, 

including— 

‘‘(i) a balance sheet; 

‘‘(ii) income statement; and 

‘‘(iii) cash flow analysis. 

‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 

‘‘(1) PROHIBITION AGAINST RETALIATION.— 

‘‘(A) IN GENERAL.—No employer may discharge, 

demote, suspend, threaten, harass, directly or indirectly, 

or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because 

of any lawful act done by the whistleblower— 

‘‘(i) in providing information to the Commission 

in accordance with this section; 

‘‘(ii) in initiating, testifying in, or assisting in any 

investigation or judicial or administrative action of 
H. R. 4173—471 

the Commission based upon or related to such information; or 

‘‘(iii) in making disclosures that are required or 

protected under the Sarbanes-Oxley Act of 2002 (15 

U.S.C. 7201 et seq.), the Securities Exchange Act of 

1934 (15 U.S.C. 78a et seq.), including section 10A(m) 

of such Act (15 U.S.C. 78f(m)), section 1513(e) of title 

18, United States Code, and any other law, rule, or 

regulation subject to the jurisdiction of the Commission. 

‘‘(B) ENFORCEMENT.— ‘‘(i) CAUSE OF ACTION.—An individual who alleges 

discharge or other discrimination in violation of 

subparagraph (A) may bring an action under this subsection in the appropriate district court of the United 

States for the relief provided in subparagraph (C). 

‘‘(ii) SUBPOENAS.—A subpoena requiring the 

attendance of a witness at a trial or hearing conducted 

under this section may be served at any place in the 

United States. 

‘‘(iii) STATUTE OF LIMITATIONS.— 

‘‘(I) IN GENERAL.—An action under this subsection may not be brought— 

‘‘(aa) more than 6 years after the date 

on which the violation of subparagraph (A) 

occurred; or 

‘‘(bb) more than 3 years after the date 

when facts material to the right of action are 

known or reasonably should have been known 

by the employee alleging a violation of 

subparagraph (A). 

‘‘(II) REQUIRED ACTION WITHIN 10 YEARS.—Notwithstanding subclause (I), an action under this 

subsection may not in any circumstance be brought 

more than 10 years after the date on which the 

violation occurs. 

‘‘(C) RELIEF.—Relief for an individual prevailing in an 

action brought under subparagraph (B) shall include— 

‘‘(i) reinstatement with the same seniority status 

that the individual would have had, but for the 

discrimination; 

‘‘(ii) 2 times the amount of back pay otherwise 

owed to the individual, with interest; and 

‘‘(iii) compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees. 

‘‘(2) CONFIDENTIALITY.— ‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the Commission and any officer or 

employee of the Commission shall not disclose any information, including information provided by a whistleblower 

to the Commission, which could reasonably be expected 

to reveal the identity of a whistleblower, except in accordance with the provisions of section 552a of title 5, United 

States Code, unless and until required to be disclosed to 

a defendant or respondent in connection with a public 

proceeding instituted by the Commission or any entity 

described in subparagraph (C). For purposes of section 
H. R. 4173—472 

552 of title 5, United States Code, this paragraph shall 

be considered a statute described in subsection (b)(3)(B) 

of such section. 

‘‘(B) EXEMPTED STATUTE.—For purposes of section 552 

of title 5, United States Code, this paragraph shall be 

considered a statute described in subsection (b)(3)(B) of 

such section 552. 

‘‘(C) RULE OF CONSTRUCTION.—Nothing in this section 

is intended to limit, or shall be construed to limit, the 

ability of the Attorney General to present such evidence 

to a grand jury or to share such evidence with potential 

witnesses or defendants in the course of an ongoing 

criminal investigation. 

‘‘(D) AVAILABILITY TO GOVERNMENT AGENCIES.— 

‘‘(i) IN GENERAL.—Without the loss of its status 

as confidential in the hands of the Commission, all 

information referred to in subparagraph (A) may, in 

the discretion of the Commission, when determined 

by the Commission to be necessary to accomplish the 

purposes of this Act and to protect investors, be made 

available to— 

‘‘(I) the Attorney General of the United States; 

‘‘(II) an appropriate regulatory authority; 

‘‘(III) a self-regulatory organization; 

‘‘(IV) a State attorney general in connection 

with any criminal investigation; 

‘‘(V) any appropriate State regulatory 

authority; 

‘‘(VI) the Public Company Accounting Oversight Board; 

‘‘(VII) a foreign securities authority; and 

‘‘(VIII) a foreign law enforcement authority. 

‘‘(ii) CONFIDENTIALITY.— 

‘‘(I) IN GENERAL.—Each of the entities 

described in subclauses (I) through (VI) of clause 

(i) shall maintain such information as confidential 

in accordance with the requirements established 

under subparagraph (A). 

‘‘(II) FOREIGN AUTHORITIES.—Each of the entities described in subclauses (VII) and (VIII) of 

clause (i) shall maintain such information in 

accordance with such assurances of confidentiality 

as the Commission determines appropriate. 

‘‘(3) RIGHTS RETAINED.—Nothing in this section shall be 

deemed to diminish the rights, privileges, or remedies of any 

whistleblower under any Federal or State law, or under any 

collective bargaining agreement. 

‘‘(i) PROVISION OF FALSE INFORMATION.—A whistleblower shall 

not be entitled to an award under this section if the whistleblower— 

‘‘(1) knowingly and willfully makes any false, fictitious, 

or fraudulent statement or representation; or 

‘‘(2) uses any false writing or document knowing the writing 

or document contains any false, fictitious, or fraudulent statement or entry. 

‘‘(j) RULEMAKING AUTHORITY.—The Commission shall have the 

authority to issue such rules and regulations as may be necessary 
H. R. 4173—473 

or appropriate to implement the provisions of this section consistent 

with the purposes of this section.’’. 

(b) PROTECTION FOR EMPLOYEES OF NATIONALLY RECOGNIZED

STATISTICAL RATING ORGANIZATIONS.—Section 1514A(a) of title 18, 

United States Code, is amended— 

(1) by inserting ‘‘or nationally recognized statistical rating 

organization (as defined in section 3(a) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78c),’’ after ‘‘78o(d)),’’; and 

(2) by inserting ‘‘or nationally recognized statistical rating 

organization’’ after ‘‘such company’’. 

(c) SECTION 1514A OF TITLE 18, UNITED STATES CODE.— (1) STATUTE OF LIMITATIONS; JURY TRIAL.—Section 

1514A(b)(2) of title 18, United States Code, is amended— 

(A) in subparagraph (D)— 

(i) by striking ‘‘90’’ and inserting ‘‘180’’; and 

(ii) by striking the period at the end and inserting 

‘‘, or after the date on which the employee became 

aware of the violation.’’; and 

(B) by adding at the end the following: 

‘‘(E) JURY TRIAL.—A party to an action brought under 

paragraph (1)(B) shall be entitled to trial by jury.’’. 

(2) PRIVATE SECURITIES LITIGATION WITNESSES; NONENFORCEABILITY; INFORMATION.—Section 1514A of title 18, 

United States Code, is amended by adding at the end the 

following: 

‘‘(e) NONENFORCEABILITY OF CERTAIN PROVISIONS WAIVING

RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.— ‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The rights and 

remedies provided for in this section may not be waived by 

any agreement, policy form, or condition of employment, 

including by a predispute arbitration agreement. 

‘‘(2) PREDISPUTE ARBITRATION AGREEMENTS.—No predispute 

arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.’’. 

(d) STUDY OF WHISTLEBLOWER PROTECTION PROGRAM.— (1) STUDY.—The Inspector General of the Commission shall 

conduct a study of the whistleblower protections established 

under the amendments made by this section, including— 

(A) whether the final rules and regulation issued under 

the amendments made by this section have made the 

whistleblower protection program (referred to in this subsection as the ‘‘program’’) clearly defined and user-friendly; 

(B) whether the program is promoted on the website 

of the Commission and has been widely publicized; 

(C) whether the Commission is prompt in— 

(i) responding to— 

(I) information provided by whistleblowers; 

and 

(II) applications for awards filed by whistleblowers; 

(ii) updating whistleblowers about the status of 

their applications; and 

(iii) otherwise communicating with the interested 

parties; 

(D) whether the minimum and maximum reward levels 

are adequate to entice whistleblowers to come forward with 
H. R. 4173—474 

information and whether the reward levels are so high 

as to encourage illegitimate whistleblower claims; 

(E) whether the appeals process has been unduly 

burdensome for the Commission; 

(F) whether the funding mechanism for the Investor 

Protection Fund is adequate; 

(G) whether, in the interest of protecting investors 

and identifying and preventing fraud, it would be useful 

for Congress to consider empowering whistleblowers or 

other individuals, who have already attempted to pursue 

the case through the Commission, to have a private right 

of action to bring suit based on the facts of the same 

case, on behalf of the Government and themselves, against 

persons who have committee securities fraud; 

(H)(i) whether the exemption under section 552(b)(3) 

of title 5 (known as the Freedom of Information Act) established in section 21F(h)(2)(A) of the Securities Exchange 

Act of 1934, as added by this Act, aids whistleblowers 

in disclosing information to the Commission; 

(ii) what impact the exemption described in clause 

(i) has had on the ability of the public to access information 

about the regulation and enforcement by the Commission 

of securities; and 

(iii) any recommendations on whether the exemption 

described in clause (i) should remain in effect; and 

(I) such other matters as the Inspector General deems 

appropriate. 

(2) REPORT.—Not later than 30 months after the date of 

enactment of this Act, the Inspector General shall— 

(A) submit a report on the findings of the study 

required under paragraph (1) to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House; and 

(B) make the report described in subparagraph (A) 

available to the public through publication of the report 

on the website of the Commission. 

SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION. 

(a) IN GENERAL.— (1) SECURITIES ACT OF 1933.—Section 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by 

inserting ‘‘and section 21F of the Securities Exchange Act of 

1934’’ after ‘‘the Sarbanes-Oxley Act of 2002’’. 

(2) INVESTMENT COMPANY ACT OF 1940.—Section 42(e)(3)(A) 

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

41(e)(3)(A)) is amended by inserting ‘‘and section 21F of the 

Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley 

Act of 2002’’. 

(3) INVESTMENT ADVISERS ACT OF 1940.—Section 209(e)(3)(A) 

of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 

9(e)(3)(A)) is amended by inserting ‘‘and section 21F of the 

Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley 

Act of 2002’’. 

(b) SECURITIES EXCHANGE ACT.— (1) SECTION 21.—Section 21(d)(3)(C)(i) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended 
H. R. 4173—475 

by inserting ‘‘and section 21F of this title’’ after ‘‘the SarbanesOxley Act of 2002’’. 

(2) SECTION 21A.—Section 21A of the Securities Exchange 

Act of 1934 (15 U.S.C. 78u–1) is amended— 

(A) in subsection (d)(1) by— 

(i) striking ‘‘(subject to subsection (e))’’; and 

(ii) inserting ‘‘and section 21F of this title’’ after 

‘‘the Sarbanes-Oxley Act of 2002’’; 

(B) by striking subsection (e); and 

(C) by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. 

SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR 

WHISTLEBLOWER PROTECTION. 

(a) IMPLEMENTING RULES.—The Commission shall issue final 

regulations implementing the provisions of section 21F of the Securities Exchange Act of 1934, as added by this subtitle, not later 

than 270 days after the date of enactment of this Act. 

(b) ORIGINAL INFORMATION.—Information provided to the 

Commission in writing by a whistleblower shall not lose the status 

of original information (as defined in section 21F(a)(3) of the Securities Exchange Act of 1934, as added by this subtitle) solely because 

the whistleblower provided the information prior to the effective 

date of the regulations, if the information is provided by the whistleblower after the date of enactment of this subtitle. 

(c) AWARDS.—A whistleblower may receive an award pursuant 

to section 21F of the Securities Exchange Act of 1934, as added 

by this subtitle, regardless of whether any violation of a provision 

of the securities laws, or a rule or regulation thereunder, underlying 

the judicial or administrative action upon which the award is based, 

occurred prior to the date of enactment of this subtitle. 

(d) ADMINISTRATION AND ENFORCEMENT.—The Securities and 

Exchange Commission shall establish a separate office within the 

Commission to administer and enforce the provisions of section 

21F of the Securities Exchange Act of 1934 (as add by section 

922(a)). Such office shall report annually to the Committee on 

Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on 

its activities, whistleblower complaints, and the response of the 

Commission to such complaints. 

SEC. 925. COLLATERAL BARS. 

(a) SECURITIES EXCHANGE ACT OF 1934.— 

(1) SECTION 15.—Section 15(b)(6)(A) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by 

striking ‘‘12 months, or bar such person from being associated 

with a broker or dealer,’’ and inserting ‘‘12 months, or bar 

any such person from being associated with a broker, dealer, 

investment adviser, municipal securities dealer, municipal 

advisor, transfer agent, or nationally recognized statistical 

rating organization,’’. 

(2) SECTION 15B.—Section 15B(c)(4) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended by 

striking ‘‘twelve months or bar any such person from being 

associated with a municipal securities dealer,’’ and inserting 

‘‘12 months or bar any such person from being associated with 

a broker, dealer, investment adviser, municipal securities 
H. R. 4173—476 

dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,’’. 

(3) SECTION 17A.—Section 17A(c)(4)(C) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) is amended 

by striking ‘‘twelve months or bar any such person from being 

associated with the transfer agent,’’ and inserting ‘‘12 months 

or bar any such person from being associated with any transfer 

agent, broker, dealer, investment adviser, municipal securities 

dealer, municipal advisor, or nationally recognized statistical 

rating organization,’’. 

(b) INVESTMENT ADVISERS ACT OF 1940.—Section 203(f) of the 

Investment Advisers Act of 1940 (15 U.S.C. 80b–3(f)) is amended 

by striking ‘‘twelve months or bar any such person from being 

associated with an investment adviser,’’ and inserting ‘‘12 months 

or bar any such person from being associated with an investment 

adviser, broker, dealer, municipal securities dealer, municipal 

advisor, transfer agent, or nationally recognized statistical rating 

organization,’’. 

SEC. 926. DISQUALIFYING FELONS AND OTHER ‘‘BAD ACTORS’’ FROM 

REGULATION D OFFERINGS. 

Not later than 1 year after the date of enactment of this 

Act, the Commission shall issue rules for the disqualification of 

offerings and sales of securities made under section 230.506 of 

title 17, Code of Federal Regulations, that— 

(1) are substantially similar to the provisions of section 

230.262 of title 17, Code of Federal Regulations, or any successor thereto; and 

(2) disqualify any offering or sale of securities by a person 

that— 

(A) is subject to a final order of a State securities 

commission (or an agency or officer of a State performing 

like functions), a State authority that supervises or examines banks, savings associations, or credit unions, a State 

insurance commission (or an agency or officer of a State 

performing like functions), an appropriate Federal banking 

agency, or the National Credit Union Administration, 

that— 

(i) bars the person from— 

(I) association with an entity regulated by such 

commission, authority, agency, or officer; 

(II) engaging in the business of securities, 

insurance, or banking; or 

(III) engaging in savings association or credit 

union activities; or 

(ii) constitutes a final order based on a violation 

of any law or regulation that prohibits fraudulent, 

manipulative, or deceptive conduct within the 10-year 

period ending on the date of the filing of the offer 

or sale; or 

(B) has been convicted of any felony or misdemeanor 

in connection with the purchase or sale of any security 

or involving the making of any false filing with the Commission. 
H. R. 4173—477 

SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION 

RULES. 

Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

78cc(a)) is amended by striking ‘‘an exchange required thereby’’ 

and inserting ‘‘a self-regulatory organization,’’. 

SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT 

ADVISERS ACT OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS. 

Section 205(a) of the Investment Advisers Act of 1940 (15 

U.S.C. 80b–5(a)) is amended, in the matter preceding paragraph 

(1)— 

(1) by striking ‘‘, unless exempt from registration pursuant 

to section 203(b),’’ and inserting ‘‘registered or required to be 

registered with the Commission’’; 

(2) by striking ‘‘make use of the mails or any means or 

instrumentality of interstate commerce, directly or indirectly, 

to’’; and 

(3) by striking ‘‘to’’ after ‘‘in any way’’. 

SEC. 929. UNLAWFUL MARGIN LENDING. 

Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 

U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; and’’ and inserting 

‘‘; or’’. 

SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND 

AFFILIATES OF PUBLICLY TRADED COMPANIES. 

Section 1514A of title 18, United States Code, is amended 

by inserting ‘‘including any subsidiary or affiliate whose financial 

information is included in the consolidated financial statements 

of such company’’ after ‘‘the Securities Exchange Act of 1934 (15 

U.S.C. 78o(d))’’. 

SEC. 929B. FAIR FUND AMENDMENTS. 

Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

7246(a)) is amended— 

(1) by striking subsection (a) and inserting the following: 

‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RELIEF OF VICTIMS.— 

If, in any judicial or administrative action brought by the Commission under the securities laws, the Commission obtains a civil 

penalty against any person for a violation of such laws, or such 

person agrees, in settlement of any such action, to such civil penalty, 

the amount of such civil penalty shall, on the motion or at the 

direction of the Commission, be added to and become part of a 

disgorgement fund or other fund established for the benefit of 

the victims of such violation.’’; 

(2) in subsection (b)— 

(A) by striking ‘‘for a disgorgement fund described in 

subsection (a)’’ and inserting ‘‘for a disgorgement fund or 

other fund described in subsection (a)’’; and 

(B) by striking ‘‘in the disgorgement fund’’ and 

inserting ‘‘in such fund’’; and 

(3) by striking subsection (e). 

SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS. 

Section 4(h) of the Securities Investor Protection Act of 1970 

(15 U.S.C. 78ddd(h)) is amended in the first sentence, by striking 

‘‘$1,000,000,000’’ and inserting ‘‘$2,500,000,000’’. 
H. R. 4173—478 

SEC. 929D. LOST AND STOLEN SECURITIES. 

Section 17(f)(1) of the Securities Exchange Act of 1934 (15 

U.S.C. 78q(f)(1)) is amended— 

(1) in subparagraph (A), by striking ‘‘missing, lost, counterfeit, or stolen securities’’ and inserting ‘‘securities that are 

missing, lost, counterfeit, stolen, or cancelled’’; and 

(2) in subparagraph (B), by striking ‘‘or stolen’’ and 

inserting ‘‘stolen, cancelled, or reported in such other manner 

as the Commission, by rule, may prescribe’’. 

SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS. 

(a) SECURITIES ACT OF 1933.—Section 22(a) of the Securities 

Act of 1933 (15 U.S.C. 77v(a)) is amended by inserting after the 

second sentence the following: ‘‘In any action or proceeding 

instituted by the Commission under this title in a United States 

district court for any judicial district, a subpoena issued to compel 

the attendance of a witness or the production of documents or 

tangible things (or both) at a hearing or trial may be served at 

any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued 

under the preceding sentence.’’. 

(b) SECURITIES EXCHANGE ACT OF 1934.—Section 27 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended by 

inserting after the third sentence the following: ‘‘In any action 

or proceeding instituted by the Commission under this title in 

a United States district court for any judicial district, a subpoena 

issued to compel the attendance of a witness or the production 

of documents or tangible things (or both) at a hearing or trial 

may be served at any place within the United States. Rule 

45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 

apply to a subpoena issued under the preceding sentence.’’. 

(c) INVESTMENT COMPANY ACT OF 1940.—Section 44 of the 

Investment Company Act of 1940 (15 U.S.C. 80a–43) is amended 

by inserting after the fourth sentence the following: ‘‘In any action 

or proceeding instituted by the Commission under this title in 

a United States district court for any judicial district, a subpoena 

issued to compel the attendance of a witness or the production 

of documents or tangible things (or both) at a hearing or trial 

may be served at any place within the United States. Rule 

45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 

apply to a subpoena issued under the preceding sentence.’’. 

(d) INVESTMENT ADVISERS ACT OF 1940.—Section 214 of the 

Investment Advisers Act of 1940 (15 U.S.C. 80b–14) is amended 

by inserting after the third sentence the following: ‘‘In any action 

or proceeding instituted by the Commission under this title in 

a United States district court for any judicial district, a subpoena 

issued to compel the attendance of a witness or the production 

of documents or tangible things (or both) at a hearing or trial 

may be served at any place within the United States. Rule 

45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 

apply to a subpoena issued under the preceding sentence.’’. 

SEC. 929F. FORMERLY ASSOCIATED PERSONS. 

(a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SECURITIES RULEMAKING BOARD.—Section 15B(c)(8) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78o–4(c)(8)) is amended by striking ‘‘any member 
H. R. 4173—479 

or employee’’ and inserting ‘‘any person who is, or at the time 

of the alleged violation or abuse was, a member or employee’’. 

(b) PERSON ASSOCIATED WITH A GOVERNMENT SECURITIES

BROKER OR DEALER.—Section 15C(c) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78o–5(c)) is amended— 

(1) in paragraph (1)(C), by striking ‘‘any person associated, 

or seeking to become associated,’’ and inserting ‘‘any person 

who is, or at the time of the alleged misconduct was, associated 

or seeking to become associated’’; and 

(2) in paragraph (2)— 

(A) in subparagraph (A), by inserting ‘‘, seeking to 

become associated, or, at the time of the alleged misconduct, 

associated or seeking to become associated’’ after ‘‘any person associated’’; and 

(B) in subparagraph (B), by inserting ‘‘, seeking to 

become associated, or, at the time of the alleged misconduct, 

associated or seeking to become associated’’ after ‘‘any person associated’’. 

(c) PERSON ASSOCIATED WITH A MEMBER OF A NATIONAL SECURITIES EXCHANGE OR REGISTERED SECURITIES ASSOCIATION.—Section 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 

78u(a)(1)) is amended, in the first sentence, by inserting ‘‘, or, 

as to any act or practice, or omission to act, while associated 

with a member, formerly associated’’ after ‘‘member or a person 

associated’’. 

(d) PARTICIPANT OF A REGISTERED CLEARING AGENCY.—Section 

21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) 

is amended, in the first sentence, by inserting ‘‘or, as to any act 

or practice, or omission to act, while a participant, was a participant,’’ after ‘‘in which such person is a participant,’’. 

(e) OFFICER OR DIRECTOR OF A SELF-REGULATORY ORGANIZATION.—Section 19(h)(4) of the Securities Exchange Act of 1934 (15 

U.S.C. 78s(h)(4)) is amended— 

(1) by striking ‘‘any officer or director’’ and inserting ‘‘any 

person who is, or at the time of the alleged misconduct was, 

an officer or director’’; and 

(2) by striking ‘‘such officer or director’’ and inserting ‘‘such 

person’’. 

(f) OFFICER OR DIRECTOR OF AN INVESTMENT COMPANY.—Section 36(a) of the Investment Company Act of 1940 (15 U.S.C. 

80a–35(a)) is amended— 

(1) by striking ‘‘a person serving or acting’’ and inserting 

‘‘a person who is, or at the time of the alleged misconduct 

was, serving or acting’’; and 

(2) by striking ‘‘such person so serves or acts’’ and inserting 

‘‘such person so serves or acts, or at the time of the alleged 

misconduct, so served or acted’’. 

(g) PERSON ASSOCIATED WITH A PUBLIC ACCOUNTING FIRM.— 

(1) SARBANES-OXLEY ACT OF 2002 AMENDMENT.—Section 

2(a)(9) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) 

is amended by adding at the end the following: 

‘‘(C) INVESTIGATIVE AND ENFORCEMENT AUTHORITY.— 

For purposes of sections 3(c), 101(c), 105, and 107(c) and 

the rules of the Board and Commission issued thereunder, 

except to the extent specifically excepted by such rules, 

the terms defined in subparagraph (A) shall include any 
H. R. 4173—480 

person associated, seeking to become associated, or formerly 

associated with a public accounting firm, except that— 

‘‘(i) the authority to conduct an investigation of 

such person under section 105(b) shall apply only with 

respect to any act or practice, or omission to act, by 

the person while such person was associated or seeking 

to become associated with a registered public 

accounting firm; and 

‘‘(ii) the authority to commence a disciplinary proceeding under section 105(c)(1), or impose sanctions 

under section 105(c)(4), against such person shall apply 

only with respect to— 

‘‘(I) conduct occurring while such person was 

associated or seeking to become associated with 

a registered public accounting firm; or 

‘‘(II) non-cooperation, as described in section 

105(b)(3), with respect to a demand in a Board 

investigation for testimony, documents, or other 

information relating to a period when such person 

was associated or seeking to become associated 

with a registered public accounting firm.’’. 

(2) SECURITIES EXCHANGE ACT OF 1934 AMENDMENT.—Section 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 

78u(a)(1)) is amended by striking ‘‘or a person associated with 

such a firm’’ and inserting ‘‘, a person associated with such 

a firm, or, as to any act, practice, or omission to act, while 

associated with such firm, a person formerly associated with 

such a firm’’. 

(h) SUPERVISORY PERSONNEL OF AN AUDIT FIRM.—Section 

105(c)(6) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6)) 

is amended— 

(1) in subparagraph (A), by striking ‘‘the supervisory personnel’’ and inserting ‘‘any person who is, or at the time of 

the alleged failure reasonably to supervise was, a supervisory 

person’’; and 

(2) in subparagraph (B)— 

(A) by striking ‘‘No associated person’’ and inserting 

‘‘No current or former supervisory person’’; and 

(B) by striking ‘‘any other person’’ and inserting ‘‘any 

associated person’’. 

(i) MEMBER OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT

BOARD.—Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15 

U.S.C. 7217(d)(3)) is amended by striking ‘‘any member’’ and 

inserting ‘‘any person who is, or at the time of the alleged misconduct was, a member’’. 

SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIALISTS. 

(a) APPOINTMENT AUTHORITY.—Section 3114 of title 5, United 

States Code, is amended by striking the section heading and all 

that follows through the end of subsection (a) and inserting the 

following: 
H. R. 4173—481 

‘‘§ 3114. Appointment of candidates to certain positions in 

the competitive service by the Securities and 

Exchange Commission 

‘‘(a) APPLICABILITY.—This section applies with respect to any 

position of accountant, economist, and securities compliance examiner at the Commission that is in the competitive service, and 

any position at the Commission in the competitive service that 

requires specialized knowledge of financial and capital market 

formation or regulation, financial market structures or surveillance, 

or information technology.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

31 of title 5, United States Code, is amended by striking the 

item relating to section 3114 and inserting the following: 

‘‘3114. Appointment of candidates to positions in the competitive service by the Securities and Exchange Commission.’’. 

(c) PAY AUTHORITY.—The Commission may set the rate of pay 

for experts and consultants appointed under the authority of section 

3109 of title 5, United States Code, in the same manner in which 

it sets the rate of pay for employees of the Commission. 

SEC. 929H. SIPC REFORMS. 

(a) INCREASING THE CASH LIMIT OF PROTECTION.—Section 9 

of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff– 

3) is amended— 

(1) in subsection (a)(1), by striking ‘‘$100,000 for each such 

customer’’ and inserting ‘‘the standard maximum cash advance 

amount for each such customer, as determined in accordance 

with subsection (d)’’; and 

(2) by adding the following new subsections: 

‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT DEFINED.— 

For purposes of this section, the term ‘standard maximum cash 

advance amount’ means $250,000, as such amount may be adjusted 

after December 31, 2010, as provided under subsection (e). 

‘‘(e) INFLATION ADJUSTMENT.— 

‘‘(1) IN GENERAL.—Not later than January 1, 2011, and 

every 5 years thereafter, and subject to the approval of the 

Commission as provided under section 3(e)(2), the Board of 

Directors of SIPC shall determine whether an inflation adjustment to the standard maximum cash advance amount is appropriate. If the Board of Directors of SIPC determines such an 

adjustment is appropriate, then the standard maximum cash 

advance amount shall be an amount equal to— 

‘‘(A) $250,000 multiplied by— 

‘‘(B) the ratio of the annual value of the Personal 

Consumption Expenditures Chain-Type Price Index (or any 

successor index thereto), published by the Department of 

Commerce, for the calendar year preceding the year in 

which such determination is made, to the published annual 

value of such index for the calendar year preceding the 

year in which this subsection was enacted. 

The index values used in calculations under this paragraph 

shall be, as of the date of the calculation, the values most 

recently published by the Department of Commerce. 

‘‘(2) ROUNDING.—If the standard maximum cash advance 

amount determined under paragraph (1) for any period is not 
H. R. 4173—482 

a multiple of $10,000, the amount so determined shall be 

rounded down to the nearest $10,000. 

‘‘(3) PUBLICATION AND REPORT TO THE CONGRESS.—Not later 

than April 5 of any calendar year in which a determination 

is required to be made under paragraph (1)— 

‘‘(A) the Commission shall publish in the Federal Register the standard maximum cash advance amount; and 

‘‘(B) the Board of Directors of SIPC shall submit a 

report to the Congress stating the standard maximum cash 

advance amount. 

‘‘(4) IMPLEMENTATION PERIOD.—Any adjustment to the 

standard maximum cash advance amount shall take effect on 

January 1 of the year immediately succeeding the calendar 

year in which such adjustment is made. 

‘‘(5) INFLATION ADJUSTMENT CONSIDERATIONS.—In making 

any determination under paragraph (1) to increase the standard 

maximum cash advance amount, the Board of Directors of 

SIPC shall consider— 

‘‘(A) the overall state of the fund and the economic 

conditions affecting members of SIPC; 

‘‘(B) the potential problems affecting members of SIPC; 

and 

‘‘(C) such other factors as the Board of Directors of 

SIPC may determine appropriate.’’. 

(b) LIQUIDATION OF A CARRYING BROKER-DEALER.—Section 

5(a)(3) of the Securities Investor Protection Act of 1970 (15 U.S.C. 

78eee(a)(3)) is amended— 

(1) by striking the undesignated matter immediately following subparagraph (B); 

(2) in subparagraph (A), by striking ‘‘any member of SIPC’’ 

and inserting ‘‘the member’’; 

(3) in subparagraph (B), by striking the comma at the 

end and inserting a period; 

(4) by striking ‘‘If SIPC’’ and inserting the following: 

‘‘(A) IN GENERAL.—SIPC may, upon notice to a member 

of SIPC, file an application for a protective decree with 

any court of competent jurisdiction specified in section 21(e) 

or 27 of the Securities Exchange Act of 1934, except that 

no such application shall be filed with respect to a member, 

the only customers of which are persons whose claims 

could not be satisfied by SIPC advances pursuant to section 

9, if SIPC’’; and 

(5) by adding at the end the following: 

‘‘(B) CONSENT REQUIRED.—No member of SIPC that 

has a customer may enter into an insolvency, receivership, 

or bankruptcy proceeding, under Federal or State law, without the specific consent of SIPC, except as provided in 

title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’. 

SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED 

TO THE COMMISSION. 

(a) SECURITIES EXCHANGE ACT OF 1934.—Section 24 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78x) is amended— 

(1) in subsection (d), by striking ‘‘subsection (e)’’ and 

inserting ‘‘subsection (f)’’; 

(2) by redesignating subsection (e) as subsection (f); and 
H. R. 4173—483 

(3) by inserting after subsection (d) the following: 

‘‘(e) RECORDS OBTAINED FROM REGISTERED PERSONS.— 

‘‘(1) IN GENERAL.—Except as provided in subsection (f), 

the Commission shall not be compelled to disclose records or 

information obtained pursuant to section 17(b), or records or 

information based upon or derived from such records or 

information, if such records or information have been obtained 

by the Commission for use in furtherance of the purposes 

of this title, including surveillance, risk assessments, or other 

regulatory and oversight activities. 

‘‘(2) TREATMENT OF INFORMATION.—For purposes of section 

552 of title 5, United States Code, this subsection shall be 

considered a statute described in subsection (b)(3)(B) of such 

section 552. Collection of information pursuant to section 17 

shall be an administrative action involving an agency against 

specific individuals or agencies pursuant to section 3518(c)(1) 

of title 44, United States Code.’’. 

(b) INVESTMENT COMPANY ACT OF 1940.—Section 31 of the 

Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended— 

(1) by striking subsection (c) and inserting the following: 

‘‘(c) LIMITATIONS ON DISCLOSURE BY COMMISSION.—Notwithstanding any other provision of law, the Commission shall not 

be compelled to disclose any records or information provided to 

the Commission under this section, or records or information based 

upon or derived from such records or information, if such records 

or information have been obtained by the Commission for use 

in furtherance of the purposes of this title, including surveillance, 

risk assessments, or other regulatory and oversight activities. 

Nothing in this subsection authorizes the Commission to withhold 

information from the Congress or prevent the Commission from 

complying with a request for information from any other Federal 

department or agency requesting the information for purposes 

within the scope of jurisdiction of that department or agency, or 

complying with an order of a court of the United States in an 

action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this section 

shall be considered a statute described in subsection (b)(3)(B) of 

such section 552. Collection of information pursuant to section 

31 shall be an administrative action involving an agency against 

specific individuals or agencies pursuant to section 3518(c)(1) of 

title 44, United States Code.’’; 

(2) by striking subsection (d); and 

(3) by redesignating subsections (e) and (f) as subsections 

(d) and (e), respectively. 

(c) INVESTMENT ADVISERS ACT OF 1940.—Section 210 of the 

Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended 

by adding at the end the following: 

‘‘(d) LIMITATIONS ON DISCLOSURE BY THE COMMISSION.—Notwithstanding any other provision of law, the Commission shall 

not be compelled to disclose any records or information provided 

to the Commission under section 204, or records or information 

based upon or derived from such records or information, if such 

records or information have been obtained by the Commission for 

use in furtherance of the purposes of this title, including surveillance, risk assessments, or other regulatory and oversight activities. 

Nothing in this subsection authorizes the Commission to withhold 

information from the Congress or prevent the Commission from 
H. R. 4173—484 

complying with a request for information from any other Federal 

department or agency requesting the information for purposes 

within the scope of jurisdiction of that department or agency, or 

complying with an order of a court of the United States in an 

action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this subsection 

shall be considered a statute described in subsection (b)(3)(B) of 

such section 552. Collection of information pursuant to section 

204 shall be an administrative action involving an agency against 

specific individuals or agencies pursuant to section 3518(c)(1) of 

title 44, United States Code.’’. 

SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED 

AND EXCHANGED. 

Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) 

is amended— 

(1) by striking subsection (b) and inserting the following: 

‘‘(b) PRODUCTION OF DOCUMENTS.— 

‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a foreign public 

accounting firm performs material services upon which a registered public accounting firm relies in the conduct of an audit 

or interim review, issues an audit report, performs audit work, 

or conducts interim reviews, the foreign public accounting firm 

shall— 

‘‘(A) produce the audit work papers of the foreign public 

accounting firm and all other documents of the firm related 

to any such audit work or interim review to the Commission 

or the Board, upon request of the Commission or the Board; 

and 

‘‘(B) be subject to the jurisdiction of the courts of the 

United States for purposes of enforcement of any request 

for such documents. 

‘‘(2) OTHER PRODUCTION.—Any registered public accounting 

firm that relies, in whole or in part, on the work of a foreign 

public accounting firm in issuing an audit report, performing 

audit work, or conducting an interim review, shall— 

‘‘(A) produce the audit work papers of the foreign public 

accounting firm and all other documents related to any 

such work in response to a request for production by the 

Commission or the Board; and 

‘‘(B) secure the agreement of any foreign public 

accounting firm to such production, as a condition of the 

reliance by the registered public accounting firm on the 

work of that foreign public accounting firm.’’; 

(2) by redesignating subsection (d) as subsection (g); and 

(3) by inserting after subsection (c) the following: 

‘‘(d) SERVICE OF REQUESTS OR PROCESS.— 

‘‘(1) IN GENERAL.—Any foreign public accounting firm that 

performs work for a domestic registered public accounting firm 

shall furnish to the domestic registered public accounting firm 

a written irrevocable consent and power of attorney that designates the domestic registered public accounting firm as an 

agent upon whom may be served any request by the Commission or the Board under this section or upon whom may be 

served any process, pleadings, or other papers in any action 

brought to enforce this section. 
H. R. 4173—485 

‘‘(2) SPECIFIC AUDIT WORK.—Any foreign public accounting 

firm that performs material services upon which a registered 

public accounting firm relies in the conduct of an audit or 

interim review, issues an audit report, performs audit work, 

or, performs interim reviews, shall designate to the Commission 

or the Board an agent in the United States upon whom may 

be served any request by the Commission or the Board under 

this section or upon whom may be served any process, pleading, 

or other papers in any action brought to enforce this section. 

‘‘(e) SANCTIONS.—A willful refusal to comply, in whole in or 

in part, with any request by the Commission or the Board under 

this section, shall be deemed a violation of this Act. 

‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION OBLIGATIONS.— 

Notwithstanding any other provisions of this section, the staff of 

the Commission or the Board may allow a foreign public accounting 

firm that is subject to this section to meet production obligations 

under this section through alternate means, such as through foreign 

counterparts of the Commission or the Board.’’. 

SEC. 929K. SHARING PRIVILEGED INFORMATION WITH OTHER 

AUTHORITIES. 

Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 

78x) is amended— 

(1) in subsection (d), as amended by subsection (d)(1)(A), 

by striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’; 

(2) in subsection (e), as added by subsection (d)(1)(C), by 

striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’; 

(3) by redesignating subsection (f) as subsection (g); and 

(4) by inserting after subsection (e) the following: 

‘‘(f) SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORI- TIES.— ‘‘(1) PRIVILEGED INFORMATION PROVIDED BY THE COMMIS- SION.—The Commission shall not be deemed to have waived 

any privilege applicable to any information by transferring 

that information to or permitting that information to be used 

by— 

‘‘(A) any agency (as defined in section 6 of title 18, 

United States Code); 

‘‘(B) the Public Company Accounting Oversight Board; 

‘‘(C) any self-regulatory organization; 

‘‘(D) any foreign securities authority; 

‘‘(E) any foreign law enforcement authority; or 

‘‘(F) any State securities or law enforcement authority. 

‘‘(2) NONDISCLOSURE OF PRIVILEGED INFORMATION PROVIDED

TO THE COMMISSION.—The Commission shall not be compelled 

to disclose privileged information obtained from any foreign 

securities authority, or foreign law enforcement authority, if 

the authority has in good faith determined and represented 

to the Commission that the information is privileged. 

‘‘(3) NONWAIVER OF PRIVILEGED INFORMATION PROVIDED TO

THE COMMISSION.— ‘‘(A) IN GENERAL.—Federal agencies, State securities 

and law enforcement authorities, self-regulatory organizations, and the Public Company Accounting Oversight Board 

shall not be deemed to have waived any privilege applicable 

to any information by transferring that information to or 

permitting that information to be used by the Commission. 
H. R. 4173—486 

‘‘(B) EXCEPTION.—The provisions of subparagraph (A) 

shall not apply to a self-regulatory organization or the 

Public Company Accounting Oversight Board with respect 

to information used by the Commission in an action against 

such organization. 

‘‘(4) DEFINITIONS.—For purposes of this subsection— 

‘‘(A) the term ‘privilege’ includes any work-product 

privilege, attorney-client privilege, governmental privilege, 

or other privilege recognized under Federal, State, or foreign law; 

‘‘(B) the term ‘foreign law enforcement authority’ 

means any foreign authority that is empowered under foreign law to detect, investigate or prosecute potential violations of law; and 

‘‘(C) the term ‘State securities or law enforcement 

authority’ means the authority of any State or territory 

that is empowered under State or territory law to detect, 

investigate, or prosecute potential violations of law.’’. 

SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

is amended— 

(1) in section 9— 

(A) by striking ‘‘registered on a national securities 

exchange’’ each place that term appears and inserting 

‘‘other than a government security’’; 

(B) in subsection (b), by striking ‘‘by use of any facility 

of a national securities exchange,’’; and 

(C) in subsection (c), by inserting after ‘‘unlawful for 

any’’ the following: ‘‘broker, dealer, or’’; 

(2) in section 10(a)(1), by striking ‘‘registered on a national 

securities exchange’’ and inserting ‘‘other than a government 

security’’; and 

(3) in section 15(c)(1)(A), by striking ‘‘otherwise than on 

a national securities exchange of which it is a member’’. 

SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT AND THE INVESTMENT COMPANY ACT. 

(a) UNDER THE SECURITIES ACT OF 1933.—Section 15 of the 

Securities Act of 1933 (15 U.S.C. 77o) is amended— 

(1) by striking ‘‘Every person who’’ and inserting ‘‘(a) 

CONTROLLING PERSONS.—Every person who’’; and 

(2) by adding at the end the following: 

‘‘(b) PROSECUTION OF PERSONS WHO AID AND ABET VIOLA- TIONS.—For purposes of any action brought by the Commission 

under subparagraph (b) or (d) of section 20, any person that knowingly or recklessly provides substantial assistance to another person 

in violation of a provision of this Act, or of any rule or regulation 

issued under this Act, shall be deemed to be in violation of such 

provision to the same extent as the person to whom such assistance 

is provided.’’. 

(b) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section 

48 of the Investment Company Act of 1940 (15 U.S.C. 80a–48) 

is amended by redesignating subsection (b) as subsection (c) and 

inserting after subsection (a) the following: 

‘‘(b) For purposes of any action brought by the Commission 

under subsection (d) or (e) of section 42, any person that knowingly 

or recklessly provides substantial assistance to another person in 
H. R. 4173—487 

violation of a provision of this Act, or of any rule or regulation 

issued under this Act, shall be deemed to be in violation of such 

provision to the same extent as the person to whom such assistance 

is provided.’’. 

SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING VIOLATIONS OF THE INVESTMENT ADVISERS ACT. 

Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–9) is amended by inserting at the end the following new subsection: 

‘‘(f) AIDING AND ABETTING.—For purposes of any action brought 

by the Commission under subsection (e), any person that knowingly 

or recklessly has aided, abetted, counseled, commanded, induced, 

or procured a violation of any provision of this Act, or of any 

rule, regulation, or order hereunder, shall be deemed to be in 

violation of such provision, rule, regulation, or order to the same 

extent as the person that committed such violation.’’. 

SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY RECKLESSNESS. 

Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 

78t(e)) is amended by inserting ‘‘or recklessly’’ after ‘‘knowingly’’. 

SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION. 

(a) AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND

DESIST PROCEEDINGS.— (1) UNDER THE SECURITIES ACT OF 1933.—Section 8A of 

the Securities Act of 1933 (15 U.S.C. 77h–1) is amended by 

adding at the end the following new subsection: 

‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.— 

‘‘(1) GROUNDS.—In any cease-and-desist proceeding under 

subsection (a), the Commission may impose a civil penalty 

on a person if the Commission finds, on the record, after notice 

and opportunity for hearing, that— 

‘‘(A) such person— 

‘‘(i) is violating or has violated any provision of 

this title, or any rule or regulation issued under this 

title; or 

‘‘(ii) is or was a cause of the violation of any 

provision of this title, or any rule or regulation thereunder; and 

‘‘(B) such penalty is in the public interest. 

‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 

‘‘(A) FIRST TIER.—The maximum amount of a penalty 

for each act or omission described in paragraph (1) shall 

be $7,500 for a natural person or $75,000 for any other 

person. 

‘‘(B) SECOND TIER.—Notwithstanding subparagraph 

(A), the maximum amount of penalty for each such act 

or omission shall be $75,000 for a natural person or 

$375,000 for any other person, if the act or omission 

described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory 

requirement. 

‘‘(C) THIRD TIER.—Notwithstanding subparagraphs (A) 

and (B), the maximum amount of penalty for each such 

act or omission shall be $150,000 for a natural person 

or $725,000 for any other person, if— 
H. R. 4173—488 

‘‘(i) the act or omission described in paragraph 

(1) involved fraud, deceit, manipulation, or deliberate 

or reckless disregard of a regulatory requirement; and 

‘‘(ii) such act or omission directly or indirectly 

resulted in— 

‘‘(I) substantial losses or created a significant 

risk of substantial losses to other persons; or 

‘‘(II) substantial pecuniary gain to the person 

who committed the act or omission. 

‘‘(3) EVIDENCE CONCERNING ABILITY TO PAY.—In any proceeding in which the Commission may impose a penalty under 

this section, a respondent may present evidence of the ability 

of the respondent to pay such penalty. The Commission may, 

in its discretion, consider such evidence in determining whether 

such penalty is in the public interest. Such evidence may relate 

to the extent of the ability of the respondent to continue in 

business and the collectability of a penalty, taking into account 

any other claims of the United States or third parties upon 

the assets of the respondent and the amount of the assets 

of the respondent.’’. 

(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 

21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u– 

2(a)) is amended— 

(A) by striking the matter following paragraph (4); 

(B) in the matter preceding paragraph (1), by inserting 

after ‘‘opportunity for hearing,’’ the following: ‘‘that such 

penalty is in the public interest and’’; 

(C) by redesignating paragraphs (1) through (4) as 

subparagraphs (A) through (D), respectively, and adjusting 

the margins accordingly; 

(D) by striking ‘‘In any proceeding’’ and inserting the 

following: 

‘‘(1) IN GENERAL.—In any proceeding’’; and 

(E) by adding at the end the following: 

‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding 

instituted under section 21C against any person, the Commission may impose a civil penalty, if the Commission finds, on 

the record after notice and opportunity for hearing, that such 

person— 

‘‘(A) is violating or has violated any provision of this 

title, or any rule or regulation issued under this title; 

or 

‘‘(B) is or was a cause of the violation of any provision 

of this title, or any rule or regulation issued under this 

title.’’. 

(3) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section 

9(d)(1) of the Investment Company Act of 1940 (15 U.S.C. 

80a–9(d)(1)) is amended— 

(A) by striking the matter following subparagraph (C); 

(B) in the matter preceding subparagraph (A), by 

inserting after ‘‘opportunity for hearing,’’ the following: 

‘‘that such penalty is in the public interest, and’’; 

(C) by redesignating subparagraphs (A) through (C) 

as clauses (i) through (iii), respectively, and adjusting the 

margins accordingly; 

(D) by striking ‘‘In any proceeding’’ and inserting the 

following: 
H. R. 4173—489 

‘‘(A) IN GENERAL.—In any proceeding’’; and 

(E) by adding at the end the following: 

‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (f) against any 

person, the Commission may impose a civil penalty if the 

Commission finds, on the record, after notice and opportunity for hearing, that such person— 

‘‘(i) is violating or has violated any provision of 

this title, or any rule or regulation issued under this 

title; or 

‘‘(ii) is or was a cause of the violation of any 

provision of this title, or any rule or regulation issued 

under this title.’’. 

(4) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 

203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 

80b–3(i)(1)) is amended— 

(A) by striking the matter following subparagraph (D); 

(B) in the matter preceding subparagraph (A), by 

inserting after ‘‘opportunity for hearing,’’ the following: 

‘‘that such penalty is in the public interest and’’; 

(C) by redesignating subparagraphs (A) through (D) 

as clauses (i) through (iv), respectively, and adjusting the 

margins accordingly; 

(D) by striking ‘‘In any proceeding’’ and inserting the 

following: 

‘‘(A) IN GENERAL.—In any proceeding’’; and 

(E) by adding at the end the following new subparagraph: 

‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (k) against any 

person, the Commission may impose a civil penalty if the 

Commission finds, on the record, after notice and opportunity for hearing, that such person— 

‘‘(i) is violating or has violated any provision of 

this title, or any rule or regulation issued under this 

title; or 

‘‘(ii) is or was a cause of the violation of any 

provision of this title, or any rule or regulation issued 

under this title.’’. 

(b) EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVISIONS OF THE FEDERAL SECURITIES LAWS.— 

(1) UNDER THE SECURITIES ACT OF 1933.—Section 22 of 

the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 

adding at the end the following new subsection: 

‘‘(c) EXTRATERRITORIAL JURISDICTION.—The district courts of 

the United States and the United States courts of any Territory 

shall have jurisdiction of an action or proceeding brought or 

instituted by the Commission or the United States alleging a violation of section 17(a) involving— 

‘‘(1) conduct within the United States that constitutes 

significant steps in furtherance of the violation, even if the 

securities transaction occurs outside the United States and 

involves only foreign investors; or 

‘‘(2) conduct occurring outside the United States that has 

a foreseeable substantial effect within the United States.’’. 
H. R. 4173—490 

(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 

27 of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) 

is amended— 

(A) by striking ‘‘The district’’ and inserting the following: 

‘‘(a) IN GENERAL.—The district’’; and 

(B) by adding at the end the following new subsection: 

‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of 

the United States and the United States courts of any Territory 

shall have jurisdiction of an action or proceeding brought or 

instituted by the Commission or the United States alleging a violation of the antifraud provisions of this title involving— 

‘‘(1) conduct within the United States that constitutes 

significant steps in furtherance of the violation, even if the 

securities transaction occurs outside the United States and 

involves only foreign investors; or 

‘‘(2) conduct occurring outside the United States that has 

a foreseeable substantial effect within the United States.’’. 

(3) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 

214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 

14) is amended— 

(A) by striking ‘‘The district’’ and inserting the following: 

‘‘(a) IN GENERAL.—The district’’; and 

(B) by adding at the end the following new subsection: 

‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of 

the United States and the United States courts of any Territory 

shall have jurisdiction of an action or proceeding brought or 

instituted by the Commission or the United States alleging a violation of section 206 involving— 

‘‘(1) conduct within the United States that constitutes 

significant steps in furtherance of the violation, even if the 

violation is committed by a foreign adviser and involves only 

foreign investors; or 

‘‘(2) conduct occurring outside the United States that has 

a foreseeable substantial effect within the United States.’’. 

(c) CONTROL PERSON LIABILITY UNDER THE SECURITIES

EXCHANGE ACT OF 1934.—Section 20(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78t(a)) is amended by inserting after ‘‘controlled person is liable’’ the following: ‘‘(including to the Commission 

in any action brought under paragraph (1) or (3) of section 21(d))’’. 

SEC. 929Q. REVISION TO RECORDKEEPING RULE. 

(a) INVESTMENT COMPANY ACT OF 1940 AMENDMENTS.—Section 

31 of the Investment Company Act of 1940 (15 U.S.C. 80a–30) 

is amended— 

(1) in subsection (a)(1), by adding at the end the following: 

‘‘Each person having custody or use of the securities, deposits, 

or credits of a registered investment company shall maintain 

and preserve all records that relate to the custody or use 

by such person of the securities, deposits, or credits of the 

registered investment company for such period or periods as 

the Commission, by rule or regulation, may prescribe, as necessary or appropriate in the public interest or for the protection 

of investors.’’; and 

(2) in subsection (b), by adding at the end the following: 

‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR USE.— 
H. R. 4173—491 

‘‘(A) IN GENERAL.—Records of persons having custody 

or use of the securities, deposits, or credits of a registered 

investment company that relate to such custody or use, 

are subject at any time, or from time to time, to such 

reasonable periodic, special, or other examinations and 

other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the 

protection of investors. 

‘‘(B) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.—Any person that is subject to regulation and examination by a Federal financial institution regulatory agency 

(as such term is defined under section 212(c)(2) of title 

18, United States Code) may satisfy any examination 

request, information request, or document request 

described under subparagraph (A), by providing to the 

Commission a detailed listing, in writing, of the securities, 

deposits, or credits of the registered investment company 

within the custody or use of such person.’’. 

(b) INVESTMENT ADVISERS ACT OF 1940 AMENDMENT.—Section 

204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–4) 

is amended by adding at the end the following new subsection: 

‘‘(d) RECORDS OF PERSONS WITH CUSTODY OR USE.— 

‘‘(1) IN GENERAL.—Records of persons having custody or 

use of the securities, deposits, or credits of a client, that relate 

to such custody or use, are subject at any time, or from time 

to time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection 

of investors. 

‘‘(2) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.— 

Any person that is subject to regulation and examination by 

a Federal financial institution regulatory agency (as such term 

is defined under section 212(c)(2) of title 18, United States 

Code) may satisfy any examination request, information 

request, or document request described under paragraph (1), 

by providing the Commission with a detailed listing, in writing, 

of the securities, deposits, or credits of the client within the 

custody or use of such person.’’. 

SEC. 929R. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT 

REPORTING. 

(a) BENEFICIAL OWNERSHIP REPORTING.—Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended— 

(1) in subsection (d)(1)— 

(A) by inserting after ‘‘within ten days after such 

acquisition’’ the following: ‘‘or within such shorter time 

as the Commission may establish by rule’’; and 

(B) by striking ‘‘send to the issuer of the security 

at its principal executive office, by registered or certified 

mail, send to each exchange where the security is traded, 

and’’; 

(2) in subsection (d)(2)— 

(A) by striking ‘‘in the statements to the issuer and 

the exchange, and’’; and 
H. R. 4173—492 

(B) by striking ‘‘shall be transmitted to the issuer 

and the exchange and’’; 

(3) in subsection (g)(1), by striking ‘‘shall send to the issuer 

of the security and’’; and 

(4) in subsection (g)(2)— 

(A) by striking ‘‘sent to the issuer and’’; and 

(B) by striking ‘‘shall be transmitted to the issuer 

and’’. 

(b) SHORT-SWING PROFIT REPORTING.—Section 16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended— 

(1) in paragraph (1), by striking ‘‘(and, if such security 

is registered on a national securities exchange, also with the 

exchange)’’; and 

(2) in paragraph (2)(B), by inserting after ‘‘officer’’ the 

following: ‘‘, or within such shorter time as the Commission 

may establish by rule’’. 

SEC. 929S. FINGERPRINTING. 

Section 17(f)(2) of the Securities Exchange Act of 1934 (15 

U.S.C. 78q(f)(2)) is amended— 

(1) in the first sentence, by striking ‘‘and registered clearing 

agency,’’ and inserting ‘‘registered clearing agency, registered 

securities information processor, national securities exchange, 

and national securities association’’; and 

(2) in the second sentence, by striking ‘‘or clearing agency,’’ 

and inserting ‘‘clearing agency, securities information processor, 

national securities exchange, or national securities association,’’. 

SEC. 929T. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION 

RULES. 

Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

78cc(a)) is amended by striking ‘‘an exchange required thereby’’ 

and inserting ‘‘a self-regulatory organization,’’. 

SEC. 929U. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS 

AND ENFORCEMENT ACTIONS. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

is amended by inserting after section 4D the following new section: 

‘‘SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND COMPLIANCE EXAMINATIONS AND INSPECTIONS. 

‘‘(a) ENFORCEMENT INVESTIGATIONS.— 

‘‘(1) IN GENERAL.—Not later than 180 days after the date 

on which Commission staff provide a written Wells notification 

to any person, the Commission staff shall either file an action 

against such person or provide notice to the Director of the 

Division of Enforcement of its intent to not file an action. 

‘‘(2) EXCEPTIONS FOR CERTAIN COMPLEX ACTIONS.—Notwithstanding paragraph (1), if the Director of the Division of 

Enforcement of the Commission or the Director’s designee determines that a particular enforcement investigation is sufficiently 

complex such that a determination regarding the filing of an 

action against a person cannot be completed within the deadline 

specified in paragraph (1), the Director of the Division of 

Enforcement of the Commission or the Director’s designee may, 

after providing notice to the Chairman of the Commission, 
H. R. 4173—493 

extend such deadline as needed for one additional 180-day 

period. If after the additional 180-day period the Director of 

the Division of Enforcement of the Commission or the Director’s 

designee determines that a particular enforcement investigation 

is sufficiently complex such that a determination regarding 

the filing of an action against a person cannot be completed 

within the additional 180-day period, the Director of the Division of Enforcement of the Commission or the Director’s designee may, after providing notice to and receiving approval 

of the Commission, extend such deadline as needed for one 

or more additional successive 180-day periods. 

‘‘(b) COMPLIANCE EXAMINATIONS AND INSPECTIONS.— 

‘‘(1) IN GENERAL.—Not later than 180 days after the date 

on which Commission staff completes the on-site portion of 

its compliance examination or inspection or receives all records 

requested from the entity being examined or inspected, whichever is later, Commission staff shall provide the entity being 

examined or inspected with written notification indicating 

either that the examination or inspection has concluded, has 

concluded without findings, or that the staff requests the entity 

undertake corrective action. 

‘‘(2) EXCEPTION FOR CERTAIN COMPLEX ACTIONS.—Notwithstanding paragraph (1), if the head of any division or office 

within the Commission responsible for compliance examinations 

and inspections or his designee determines that a particular 

compliance examination or inspection is sufficiently complex 

such that a determination regarding concluding the examination or inspection, or regarding the staff requests the entity 

undertake corrective action, cannot be completed within the 

deadline specified in paragraph (1), the head of any division 

or office within the Commission responsible for compliance 

examinations and inspections or his designee may, after providing notice to the Chairman of the Commission, extend such 

deadline as needed for one additional 180-day period.’’. 

SEC. 929V. SECURITY INVESTOR PROTECTION ACT AMENDMENTS. 

(a) INCREASING THE MINIMUM ASSESSMENT PAID BY SIPC MEMBERS.—Section 4(d)(1)(C) of the Securities Investor Protection Act 

of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by striking ‘‘$150 

per annum’’ and inserting the following: ‘‘0.02 percent of the gross 

revenues from the securities business of such member of SIPC’’. 

(b) INCREASING THE FINE FOR PROHIBITED ACTS UNDER SIPA.— 

Section 14(c) of the Securities Investor Protection Act of 1970 (15 

U.S.C. 78jjj(c)) is amended— 

(1) in paragraph (1), by striking ‘‘$50,000’’ and inserting 

‘‘$250,000’’; and 

(2) in paragraph (2), by striking ‘‘$50,000’’ and inserting 

‘‘$250,000’’. 

(c) PENALTY FOR MISREPRESENTATION OF SIPC MEMBERSHIP

OR PROTECTION.—Section 14 of the Securities Investor Protection 

Act of 1970 (15 U.S.C. 78jjj) is amended by adding at the end 

the following new subsection: 

‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP OR PROTECTION.— 

‘‘(1) IN GENERAL.—Any person who falsely represents by 

any means (including, without limitation, through the Internet 

or any other medium of mass communication), with actual 
H. R. 4173—494 

knowledge of the falsity of the representation and with an 

intent to deceive or cause injury to another, that such person, 

or another person, is a member of SIPC or that any person 

or account is protected or is eligible for protection under this 

Act or by SIPC, shall be liable for any damages caused thereby 

and shall be fined not more than $250,000 or imprisoned for 

not more than 5 years. 

‘‘(2) INJUNCTIONS.—Any court having jurisdiction of a civil 

action arising under this Act may grant temporary injunctions 

and final injunctions on such terms as the court deems reasonable to prevent or restrain any violation of paragraph (1). 

Any such injunction may be served anywhere in the United 

States on the person enjoined, shall be operative throughout 

the United States, and shall be enforceable, by proceedings 

in contempt or otherwise, by any United States court having 

jurisdiction over that person. The clerk of the court granting 

the injunction shall, when requested by any other court in 

which enforcement of the injunction is sought, transmit 

promptly to the other court a certified copy of all papers in 

the case on file in such clerk’s office.’’. 

SEC. 929W. NOTICE TO MISSING SECURITY HOLDERS. 

Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 

78q–1) is amended by adding at the end the following new subsection: 

‘‘(g) DUE DILIGENCE FOR THE DELIVERY OF DIVIDENDS, 

INTEREST, AND OTHER VALUABLE PROPERTY RIGHTS.— 

‘‘(1) REVISION OF RULES REQUIRED.—The Commission shall 

revise its regulations in section 240.17Ad–17 of title 17, Code 

of Federal Regulations, as in effect on December 8, 1997, to 

extend the application of such section to brokers and dealers 

and to provide for the following: 

‘‘(A) A requirement that the paying agent provide a 

single written notification to each missing security holder 

that the missing security holder has been sent a check 

that has not yet been negotiated. The written notification 

may be sent along with a check or other mailing subsequently sent to the missing security holder but must be 

provided no later than 7 months after the sending of the 

not yet negotiated check. 

‘‘(B) An exclusion for paying agents from the notification requirements when the value of the not yet negotiated 

check is less than $25. 

‘‘(C) A provision clarifying that the requirements 

described in subparagraph (A) shall have no effect on State 

escheatment laws. 

‘‘(D) For purposes of such revised regulations— 

‘‘(i) a security holder shall be considered a ‘missing 

security holder’ if a check is sent to the security holder 

and the check is not negotiated before the earlier of 

the paying agent sending the next regularly scheduled 

check or the elapsing of 6 months after the sending 

of the not yet negotiated check; and 

‘‘(ii) the term ‘paying agent’ includes any issuer, 

transfer agent, broker, dealer, investment adviser, 

indenture trustee, custodian, or any other person that 
H. R. 4173—495 

accepts payments from the issuer of a security and 

distributes the payments to the holders of the security. 

‘‘(2) RULEMAKING.—The Commission shall adopt such rules, 

regulations, and orders necessary to implement this subsection 

no later than 1 year after the date of enactment of this subsection. In proposing such rules, the Commission shall seek 

to minimize disruptions to current systems used by or on behalf 

of paying agents to process payment to account holders and 

avoid requiring multiple paying agents to send written notification to a missing security holder regarding the same not yet 

negotiated check.’’. 

SEC. 929X. SHORT SALE REFORMS. 

(a) SHORT SALE DISCLOSURE.—Section 13(f) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (3), (4), (5), 

and (6), respectively, and inserting after paragraph (1) the following: 

‘‘(2) The Commission shall prescribe rules providing for 

the public disclosure of the name of the issuer and the title, 

class, CUSIP number, aggregate amount of the number of 

short sales of each security, and any additional information 

determined by the Commission following the end of the 

reporting period. At a minimum, such public disclosure shall 

occur every month.’’. 

(b) SHORT SELLING ENFORCEMENT.—Section 9 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78i) is amended— 

(1) by redesignating subsections (d), (e), (f), (g), (h), and 

(i) as subsections (e), (f), (g), (h), (i), and (j), respectively; and 

(2) inserting after subsection (c), the following new subsection: 

‘‘(d) TRANSACTIONS RELATING TO SHORT SALES OF SECURITIES.— 

It shall be unlawful for any person, directly or indirectly, by the 

use of the mails or any means or instrumentality of interstate 

commerce, or of any facility of any national securities exchange, 

or for any member of a national securities exchange to effect, 

alone or with one or more other persons, a manipulative short 

sale of any security. The Commission shall issue such other rules 

as are necessary or appropriate to ensure that the appropriate 

enforcement options and remedies are available for violations of 

this subsection in the public interest or for the protection of investors.’’. 

(c) INVESTOR NOTIFICATION.—Section 15 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78o) is amended— 

(1) by redesignating subsections (e), (f), (g), (h), and (i) 

as subsections (f), (g), (h), (i), and (j), respectively; and 

(2) inserting after subsection (d) the following new subsection: 

‘‘(e) NOTICES TO CUSTOMERS REGARDING SECURITIES LENDING.— 

Every registered broker or dealer shall provide notice to its customers that they may elect not to allow their fully paid securities 

to be used in connection with short sales. If a broker or dealer 

uses a customer’s securities in connection with short sales, the 

broker or dealer shall provide notice to its customer that the broker 

or dealer may receive compensation in connection with lending 

the customer’s securities. The Commission, by rule, as it deems 

necessary or appropriate in the public interest and for the protection 
H. R. 4173—496 

of investors, may prescribe the form, content, time, and manner 

of delivery of any notice required under this paragraph.’’. 

SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF 

ACTION. 

(a) IN GENERAL.—The Securities and Exchange Commission 

of the United States shall solicit public comment and thereafter 

conduct a study to determine the extent to which private rights 

of action under the antifraud provisions of the Securities and 

Exchange Act of 1934 (15 U.S.C. 78u-4) should be extended to 

cover— 

(1) conduct within the United States that constitutes a 

significant step in the furtherance of the violation, even if 

the securities transaction occurs outside the United States and 

involves only foreign investors; and 

(2) conduct occurring outside the United States that has 

a foreseeable substantial effect within the United States. 

(b) CONTENTS.—The study shall consider and analyze, among 

other things— 

(1) the scope of such a private right of action, including 

whether it should extend to all private actors or whether it 

should be more limited to extend just to institutional investors 

or otherwise; 

(2) what implications such a private right of action would 

have on international comity; 

(3) the economic costs and benefits of extending a private 

right of action for transnational securities frauds; and 

(4) whether a narrower extraterritorial standard should 

be adopted. 

(c) REPORT.—A report of the study shall be submitted and 

recommendations made to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial 

Services of the House not later than 18 months after the date 

of enactment of this Act. 

SEC. 929Z. GAO STUDY ON SECURITIES LITIGATION. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study on the impact of authorizing a private right of 

action against any person who aids or abets another person in 

violation of the securities laws. To the extent feasible, this study 

shall include— 

(1) a review of the role of secondary actors in companies 

issuance of securities; 

(2) the courts interpretation of the scope of liability for 

secondary actors under Federal securities laws after January 

14, 2008; and 

(3) the types of lawsuits decided under the Private Securities Litigation Act of 1995. 

(b) REPORT.—Not later than 1 year after the date of enactment 

of this Act, the Comptroller General shall submit a report to Congress on the findings of the study required under subsection (a). 
H. R. 4173—497 

Subtitle C—Improvements to the 

Regulation of Credit Rating Agencies 

SEC. 931. FINDINGS. 

Congress finds the following: 

(1) Because of the systemic importance of credit ratings 

and the reliance placed on credit ratings by individual and 

institutional investors and financial regulators, the activities 

and performances of credit rating agencies, including nationally 

recognized statistical rating organizations, are matters of 

national public interest, as credit rating agencies are central 

to capital formation, investor confidence, and the efficient 

performance of the United States economy. 

(2) Credit rating agencies, including nationally recognized 

statistical rating organizations, play a critical ‘‘gatekeeper’’ role 

in the debt market that is functionally similar to that of securities analysts, who evaluate the quality of securities in the 

equity market, and auditors, who review the financial statements of firms. Such role justifies a similar level of public 

oversight and accountability. 

(3) Because credit rating agencies perform evaluative and 

analytical services on behalf of clients, much as other financial 

‘‘gatekeepers’’ do, the activities of credit rating agencies are 

fundamentally commercial in character and should be subject 

to the same standards of liability and oversight as apply to 

auditors, securities analysts, and investment bankers. 

(4) In certain activities, particularly in advising arrangers 

of structured financial products on potential ratings of such 

products, credit rating agencies face conflicts of interest that 

need to be carefully monitored and that therefore should be 

addressed explicitly in legislation in order to give clearer 

authority to the Securities and Exchange Commission. 

(5) In the recent financial crisis, the ratings on structured 

financial products have proven to be inaccurate. This inaccuracy 

contributed significantly to the mismanagement of risks by 

financial institutions and investors, which in turn adversely 

impacted the health of the economy in the United States and 

around the world. Such inaccuracy necessitates increased 

accountability on the part of credit rating agencies. 

SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF NATIONALLY RECOGNIZED STATISTICAL 

RATING ORGANIZATIONS. 

(a) IN GENERAL.—Section 15E of the Securities Exchange Act 

of 1934 (15 U.S.C. 78o–7) is amended— 

(1) in subsection (b)— 

(A) in paragraph (1)(A), by striking ‘‘furnished’’ and 

inserting ‘‘filed’’ and by striking ‘‘furnishing’’ and inserting 

‘‘filing’’; 

(B) in paragraph (1)(B), by striking ‘‘furnishing’’ and 

inserting ‘‘filing’’; and 

(C) in the first sentence of paragraph (2), by striking 

‘‘furnish to’’ and inserting ‘‘file with’’; 

(2) in subsection (c)— 

(A) in paragraph (2)— 
H. R. 4173—498 

(i) in the second sentence, by inserting ‘‘any other 

provision of this section, or’’ after ‘‘Notwithstanding’’; 

and 

(ii) by inserting after the period at the end the 

following: ‘‘Nothing in this paragraph may be construed 

to afford a defense against any action or proceeding 

brought by the Commission to enforce the antifraud 

provisions of the securities laws.’’; and 

(B) by adding at the end the following: 

‘‘(3) INTERNAL CONTROLS OVER PROCESSES FOR DETERMINING

CREDIT RATINGS.— 

‘‘(A) IN GENERAL.—Each nationally recognized statistical rating organization shall establish, maintain, enforce, 

and document an effective internal control structure governing the implementation of and adherence to policies, 

procedures, and methodologies for determining credit 

ratings, taking into consideration such factors as the 

Commission may prescribe, by rule. 

‘‘(B) ATTESTATION REQUIREMENT.—The Commission 

shall prescribe rules requiring each nationally recognized 

statistical rating organization to submit to the Commission 

an annual internal controls report, which shall contain— 

‘‘(i) a description of the responsibility of the 

management of the nationally recognized statistical 

rating organization in establishing and maintaining 

an effective internal control structure under subparagraph (A); 

‘‘(ii) an assessment of the effectiveness of the 

internal control structure of the nationally recognized 

statistical rating organization; and 

‘‘(iii) the attestation of the chief executive officer, 

or equivalent individual, of the nationally recognized 

statistical rating organization.’’; 

(3) in subsection (d)— 

(A) by inserting after ‘‘or revoke the registration of 

any nationally recognized statistical rating organization’’ 

the following: ‘‘, or with respect to any person who is 

associated with, who is seeking to become associated with, 

or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a nationally 

recognized statistical rating organization, the Commission, 

by order, shall censure, place limitations on the activities 

or functions of such person, suspend for a period not 

exceeding 1 year, or bar such person from being associated 

with a nationally recognized statistical rating organization,’’; 

(B) by inserting ‘‘bar’’ after ‘‘placing of limitations, 

suspension,’’; 

(C) in paragraph (2), by striking ‘‘furnished to’’ and 

inserting ‘‘filed with’’; 

(D) in paragraph (2), by redesignating subparagraphs 

(A) and (B) as clauses (i) and (ii), respectively, and 

adjusting the clause margins accordingly; 

(E) by redesignating paragraphs (1) through (5) as 

subparagraphs (A) through (E), respectively, and adjusting 

the subparagraph margins accordingly; 
H. R. 4173—499 

(F) in the matter preceding subparagraph (A), as so 

redesignated, by striking ‘‘The Commission’’ and inserting 

the following: 

‘‘(1) IN GENERAL.—The Commission’’; 

(G) in subparagraph (D), as so redesignated— 

(i) by striking ‘‘furnish’’ and inserting ‘‘file’’; and 

(ii) by striking ‘‘or’’ at the end. 

(H) in subparagraph (E), as so redesignated, by striking 

the period at the end and inserting a semicolon; and 

(I) by adding at the end the following: 

‘‘(F) has failed reasonably to supervise, with a view 

to preventing a violation of the securities laws, an individual who commits such a violation, if the individual 

is subject to the supervision of that person. 

‘‘(2) SUSPENSION OR REVOCATION FOR PARTICULAR CLASS

OF SECURITIES.— 

‘‘(A) IN GENERAL.—The Commission may temporarily 

suspend or permanently revoke the registration of a nationally recognized statistical rating organization with respect 

to a particular class or subclass of securities, if the Commission finds, on the record after notice and opportunity for 

hearing, that the nationally recognized statistical rating 

organization does not have adequate financial and managerial resources to consistently produce credit ratings with 

integrity. 

‘‘(B) CONSIDERATIONS.—In making any determination 

under subparagraph (A), the Commission shall consider— 

‘‘(i) whether the nationally recognized statistical 

rating organization has failed over a sustained period 

of time, as determined by the Commission, to produce 

ratings that are accurate for that class or subclass 

of securities; and 

‘‘(ii) such other factors as the Commission may 

determine.’’; 

(4) in subsection (h), by adding at the end the following: 

‘‘(3) SEPARATION OF RATINGS FROM SALES AND MARKETING.— ‘‘(A) RULES REQUIRED.—The Commission shall issue 

rules to prevent the sales and marketing considerations 

of a nationally recognized statistical rating organization 

from influencing the production of ratings by the nationally 

recognized statistical rating organization. 

‘‘(B) CONTENTS OF RULES.—The rules issued under 

subparagraph (A) shall provide for— 

‘‘(i) exceptions for small nationally recognized 

statistical rating organizations with respect to which 

the Commission determines that the separation of the 

production of ratings and sales and marketing activities is not appropriate; and 

‘‘(ii) suspension or revocation of the registration 

of a nationally recognized statistical rating organization, if the Commission finds, on the record, after notice 

and opportunity for a hearing, that— 

‘‘(I) the nationally recognized statistical rating 

organization has committed a violation of a rule 

issued under this subsection; and 

‘‘(II) the violation of a rule issued under this 

subsection affected a rating. 
H. R. 4173—500 

‘‘(4) LOOK-BACK REQUIREMENT.— 

‘‘(A) REVIEW BY THE NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.—Each nationally recognized 

statistical rating organization shall establish, maintain, 

and enforce policies and procedures reasonably designed 

to ensure that, in any case in which an employee of a 

person subject to a credit rating of the nationally recognized 

statistical rating organization or the issuer, underwriter, 

or sponsor of a security or money market instrument subject to a credit rating of the nationally recognized statistical 

rating organization was employed by the nationally recognized statistical rating organization and participated in 

any capacity in determining credit ratings for the person 

or the securities or money market instruments during the 

1-year period preceding the date an action was taken with 

respect to the credit rating, the nationally recognized statistical rating organization shall— 

‘‘(i) conduct a review to determine whether any 

conflicts of interest of the employee influenced the 

credit rating; and 

‘‘(ii) take action to revise the rating if appropriate, 

in accordance with such rules as the Commission shall 

prescribe. 

‘‘(B) REVIEW BY COMMISSION.— 

‘‘(i) IN GENERAL.—The Commission shall conduct 

periodic reviews of the policies described in subparagraph (A) and the implementation of the policies at 

each nationally recognized statistical rating organization to ensure they are reasonably designed and implemented to most effectively eliminate conflicts of 

interest. 

‘‘(ii) TIMING OF REVIEWS.—The Commission shall 

review the code of ethics and conflict of interest policy 

of each nationally recognized statistical rating 

organization— 

‘‘(I) not less frequently than annually; and 

‘‘(II) whenever such policies are materially 

modified or amended. 

‘‘(5) REPORT TO COMMISSION ON CERTAIN EMPLOYMENT

TRANSITIONS.— 

‘‘(A) REPORT REQUIRED.—Each nationally recognized 

statistical rating organization shall report to the Commission any case such organization knows or can reasonably 

be expected to know where a person associated with such 

organization within the previous 5 years obtains employment with any obligor, issuer, underwriter, or sponsor of 

a security or money market instrument for which the 

organization issued a credit rating during the 12-month 

period prior to such employment, if such employee— 

‘‘(i) was a senior officer of such organization; 

‘‘(ii) participated in any capacity in determining 

credit ratings for such obligor, issuer, underwriter, or 

sponsor; or 

‘‘(iii) supervised an employee described in clause 

(ii). 
H. R. 4173—501 

‘‘(B) PUBLIC DISCLOSURE.—Upon receiving such a 

report, the Commission shall make such information publicly available.’’; 

(5) in subsection (j)— 

(A) by striking ‘‘Each’’ and inserting the following: 

‘‘(1) IN GENERAL.—Each’’; and 

(B) by adding at the end the following: 

‘‘(2) LIMITATIONS.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), an individual designated under paragraph (1) may 

not, while serving in the designated capacity— 

‘‘(i) perform credit ratings; 

‘‘(ii) participate in the development of ratings 

methodologies or models; 

‘‘(iii) perform marketing or sales functions; or 

‘‘(iv) participate in establishing compensation 

levels, other than for employees working for that individual. 

‘‘(B) EXCEPTION.—The Commission may exempt a small 

nationally recognized statistical rating organization from 

the limitations under this paragraph, if the Commission 

finds that compliance with such limitations would impose 

an unreasonable burden on the nationally recognized statistical rating organization. 

‘‘(3) OTHER DUTIES.—Each individual designated under 

paragraph (1) shall establish procedures for the receipt, retention, and treatment of— 

‘‘(A) complaints regarding credit ratings, models, methodologies, and compliance with the securities laws and 

the policies and procedures developed under this section; 

and 

‘‘(B) confidential, anonymous complaints by employees 

or users of credit ratings. 

‘‘(4) COMPENSATION.—The compensation of each compliance 

officer appointed under paragraph (1) shall not be linked to 

the financial performance of the nationally recognized statistical rating organization and shall be arranged so as to ensure 

the independence of the officer’s judgment. 

‘‘(5) ANNUAL REPORTS REQUIRED.— 

‘‘(A) ANNUAL REPORTS REQUIRED.—Each individual designated under paragraph (1) shall submit to the nationally 

recognized statistical rating organization an annual report 

on the compliance of the nationally recognized statistical 

rating organization with the securities laws and the policies 

and procedures of the nationally recognized statistical 

rating organization that includes— 

‘‘(i) a description of any material changes to the 

code of ethics and conflict of interest policies of the 

nationally recognized statistical rating organization; 

and 

‘‘(ii) a certification that the report is accurate and 

complete. 

‘‘(B) SUBMISSION OF REPORTS TO THE COMMISSION.— 

Each nationally recognized statistical rating organization 

shall file the reports required under subparagraph (A) 

together with the financial report that is required to be 

submitted to the Commission under this section.’’; 
H. R. 4173—502 

(6) in subsection (k), by striking ‘‘furnish to’’ and inserting 

‘‘file with’’; 

(7) in subsection (l)(2)(A)(i), by striking ‘‘furnished’’ and 

inserting ‘‘filed’’; and 

(8) by striking subsection (p) and inserting the following: 

‘‘(p) REGULATION OF NATIONALLY RECOGNIZED STATISTICAL

RATING ORGANIZATIONS.— 

‘‘(1) ESTABLISHMENT OF OFFICE OF CREDIT RATINGS.— 

‘‘(A) OFFICE ESTABLISHED.—The Commission shall 

establish within the Commission an Office of Credit Ratings 

(referred to in this subsection as the ‘Office’) to administer 

the rules of the Commission— 

‘‘(i) with respect to the practices of nationally recognized statistical rating organizations in determining 

ratings, for the protection of users of credit ratings 

and in the public interest; 

‘‘(ii) to promote accuracy in credit ratings issued 

by nationally recognized statistical rating organizations; and 

‘‘(iii) to ensure that such ratings are not unduly 

influenced by conflicts of interest. 

‘‘(B) DIRECTOR OF THE OFFICE.—The head of the Office 

shall be the Director, who shall report to the Chairman. 

‘‘(2) STAFFING.—The Office established under this subsection shall be staffed sufficiently to carry out fully the requirements of this section. The staff shall include persons with 

knowledge of and expertise in corporate, municipal, and structured debt finance. 

‘‘(3) COMMISSION EXAMINATIONS.— 

‘‘(A) ANNUAL EXAMINATIONS REQUIRED.—The Office 

shall conduct an examination of each nationally recognized 

statistical rating organization at least annually. 

‘‘(B) CONDUCT OF EXAMINATIONS.—Each examination 

under subparagraph (A) shall include a review of— 

‘‘(i) whether the nationally recognized statistical 

rating organization conducts business in accordance 

with the policies, procedures, and rating methodologies 

of the nationally recognized statistical rating organization; 

‘‘(ii) the management of conflicts of interest by 

the nationally recognized statistical rating organization; 

‘‘(iii) implementation of ethics policies by the 

nationally recognized statistical rating organization; 

‘‘(iv) the internal supervisory controls of the nationally recognized statistical rating organization; 

‘‘(v) the governance of the nationally recognized 

statistical rating organization; 

‘‘(vi) the activities of the individual designated by 

the nationally recognized statistical rating organization 

under subsection (j)(1); 

‘‘(vii) the processing of complaints by the nationally 

recognized statistical rating organization; and 

‘‘(viii) the policies of the nationally recognized 

statistical rating organization governing the postemployment activities of former staff of the nationally 

recognized statistical rating organization. 
H. R. 4173—503 

‘‘(C) INSPECTION REPORTS.—The Commission shall 

make available to the public, in an easily understandable 

format, an annual report summarizing— 

‘‘(i) the essential findings of all examinations conducted under subparagraph (A), as deemed appropriate 

by the Commission; 

‘‘(ii) the responses by the nationally recognized 

statistical rating organizations to any material regulatory deficiencies identified by the Commission under 

clause (i); and 

‘‘(iii) whether the nationally recognized statistical 

rating organizations have appropriately addressed the 

recommendations of the Commission contained in previous reports under this subparagraph. 

‘‘(4) RULEMAKING AUTHORITY.—The Commission shall— 

‘‘(A) establish, by rule, fines, and other penalties 

applicable to any nationally recognized statistical rating 

organization that violates the requirements of this section 

and the rules thereunder; and 

‘‘(B) issue such rules as may be necessary to carry 

out this section. 

‘‘(q) TRANSPARENCY OF RATINGS PERFORMANCE.— 

‘‘(1) RULEMAKING REQUIRED.—The Commission shall, by 

rule, require that each nationally recognized statistical rating 

organization publicly disclose information on the initial credit 

ratings determined by the nationally recognized statistical 

rating organization for each type of obligor, security, and money 

market instrument, and any subsequent changes to such credit 

ratings, for the purpose of allowing users of credit ratings 

to evaluate the accuracy of ratings and compare the performance of ratings by different nationally recognized statistical 

rating organizations. 

‘‘(2) CONTENT.—The rules of the Commission under this 

subsection shall require, at a minimum, disclosures that— 

‘‘(A) are comparable among nationally recognized 

statistical rating organizations, to allow users of credit 

ratings to compare the performance of credit ratings across 

nationally recognized statistical rating organizations; 

‘‘(B) are clear and informative for investors having 

a wide range of sophistication who use or might use credit 

ratings; 

‘‘(C) include performance information over a range of 

years and for a variety of types of credit ratings, including 

for credit ratings withdrawn by the nationally recognized 

statistical rating organization; 

‘‘(D) are published and made freely available by the 

nationally recognized statistical rating organization, on an 

easily accessible portion of its website, and in writing, 

when requested; 

‘‘(E) are appropriate to the business model of a nationally recognized statistical rating organization; and 

‘‘(F) each nationally recognized statistical rating 

organization include an attestation with any credit rating 

it issues affirming that no part of the rating was influenced 

by any other business activities, that the rating was based 

solely on the merits of the instruments being rated, and 
H. R. 4173—504 

that such rating was an independent evaluation of the 

risks and merits of the instrument. 

‘‘(r) CREDIT RATINGS METHODOLOGIES.—The Commission shall 

prescribe rules, for the protection of investors and in the public 

interest, with respect to the procedures and methodologies, 

including qualitative and quantitative data and models, used by 

nationally recognized statistical rating organizations that require 

each nationally recognized statistical rating organization— 

‘‘(1) to ensure that credit ratings are determined using 

procedures and methodologies, including qualitative and quantitative data and models, that are— 

‘‘(A) approved by the board of the nationally recognized 

statistical rating organization, a body performing a function 

similar to that of a board; and 

‘‘(B) in accordance with the policies and procedures 

of the nationally recognized statistical rating organization 

for the development and modification of credit rating procedures and methodologies; 

‘‘(2) to ensure that when material changes to credit rating 

procedures and methodologies (including changes to qualitative 

and quantitative data and models) are made, that— 

‘‘(A) the changes are applied consistently to all credit 

ratings to which the changed procedures and methodologies 

apply; 

‘‘(B) to the extent that changes are made to credit 

rating surveillance procedures and methodologies, the 

changes are applied to then-current credit ratings by the 

nationally recognized statistical rating organization within 

a reasonable time period determined by the Commission, 

by rule; and 

‘‘(C) the nationally recognized statistical rating 

organization publicly discloses the reason for the change; 

and 

‘‘(3) to notify users of credit ratings— 

‘‘(A) of the version of a procedure or methodology, 

including the qualitative methodology or quantitative 

inputs, used with respect to a particular credit rating; 

‘‘(B) when a material change is made to a procedure 

or methodology, including to a qualitative model or quantitative inputs; 

‘‘(C) when a significant error is identified in a procedure or methodology, including a qualitative or quantitative 

model, that may result in credit rating actions; and 

‘‘(D) of the likelihood of a material change described 

in subparagraph (B) resulting in a change in current credit 

ratings. 

‘‘(s) TRANSPARENCY OF CREDIT RATING METHODOLOGIES AND

INFORMATION REVIEWED.— ‘‘(1) FORM FOR DISCLOSURES.—The Commission shall 

require, by rule, each nationally recognized statistical rating 

organization to prescribe a form to accompany the publication 

of each credit rating that discloses— 

‘‘(A) information relating to— 

‘‘(i) the assumptions underlying the credit rating 

procedures and methodologies; 

‘‘(ii) the data that was relied on to determine the 

credit rating; and 
H. R. 4173—505 

‘‘(iii) if applicable, how the nationally recognized 

statistical rating organization used servicer or remittance reports, and with what frequency, to conduct 

surveillance of the credit rating; and 

‘‘(B) information that can be used by investors and 

other users of credit ratings to better understand credit 

ratings in each class of credit rating issued by the nationally recognized statistical rating organization. 

‘‘(2) FORMAT.—The form developed under paragraph (1) 

shall— 

‘‘(A) be easy to use and helpful for users of credit 

ratings to understand the information contained in the 

report; 

‘‘(B) require the nationally recognized statistical rating 

organization to provide the content described in paragraph 

(3)(B) in a manner that is directly comparable across types 

of securities; and 

‘‘(C) be made readily available to users of credit ratings, 

in electronic or paper form, as the Commission may, by 

rule, determine. 

‘‘(3) CONTENT OF FORM.— 

‘‘(A) QUALITATIVE CONTENT.—Each nationally recognized statistical rating organization shall disclose on the 

form developed under paragraph (1)— 

‘‘(i) the credit ratings produced by the nationally 

recognized statistical rating organization; 

‘‘(ii) the main assumptions and principles used 

in constructing procedures and methodologies, 

including qualitative methodologies and quantitative 

inputs and assumptions about the correlation of 

defaults across underlying assets used in rating structured products; 

‘‘(iii) the potential limitations of the credit ratings, 

and the types of risks excluded from the credit ratings 

that the nationally recognized statistical rating 

organization does not comment on, including liquidity, 

market, and other risks; 

‘‘(iv) information on the uncertainty of the credit 

rating, including— 

‘‘(I) information on the reliability, accuracy, 

and quality of the data relied on in determining 

the credit rating; and 

‘‘(II) a statement relating to the extent to 

which data essential to the determination of the 

credit rating were reliable or limited, including— 

‘‘(aa) any limits on the scope of historical 

data; and 

‘‘(bb) any limits in accessibility to certain 

documents or other types of information that 

would have better informed the credit rating; 

‘‘(v) whether and to what extent third party due 

diligence services have been used by the nationally 

recognized statistical rating organization, a description 

of the information that such third party reviewed in 

conducting due diligence services, and a description 

of the findings or conclusions of such third party; 
H. R. 4173—506 

‘‘(vi) a description of the data about any obligor, 

issuer, security, or money market instrument that were 

relied upon for the purpose of determining the credit 

rating; 

‘‘(vii) a statement containing an overall assessment 

of the quality of information available and considered 

in producing a rating for an obligor, security, or money 

market instrument, in relation to the quality of 

information available to the nationally recognized 

statistical rating organization in rating similar 

issuances; 

‘‘(viii) information relating to conflicts of interest 

of the nationally recognized statistical rating organization; and 

‘‘(ix) such additional information as the Commission may require. 

‘‘(B) QUANTITATIVE CONTENT.—Each nationally recognized statistical rating organization shall disclose on the 

form developed under this subsection— 

‘‘(i) an explanation or measure of the potential 

volatility of the credit rating, including— 

‘‘(I) any factors that might lead to a change 

in the credit ratings; and 

‘‘(II) the magnitude of the change that a user 

can expect under different market conditions; 

‘‘(ii) information on the content of the rating, 

including— 

‘‘(I) the historical performance of the rating; 

and 

‘‘(II) the expected probability of default and 

the expected loss in the event of default; 

‘‘(iii) information on the sensitivity of the rating 

to assumptions made by the nationally recognized 

statistical rating organization, including— 

‘‘(I) 5 assumptions made in the ratings process 

that, without accounting for any other factor, 

would have the greatest impact on a rating if 

the assumptions were proven false or inaccurate; 

and 

‘‘(II) an analysis, using specific examples, of 

how each of the 5 assumptions identified under 

subclause (I) impacts a rating; 

‘‘(iv) such additional information as may be 

required by the Commission. 

‘‘(4) DUE DILIGENCE SERVICES FOR ASSET-BACKED SECURITIES.— 

‘‘(A) FINDINGS.—The issuer or underwriter of any assetbacked security shall make publicly available the findings 

and conclusions of any third-party due diligence report 

obtained by the issuer or underwriter. 

‘‘(B) CERTIFICATION REQUIRED.—In any case in which 

third-party due diligence services are employed by a nationally recognized statistical rating organization, an issuer, 

or an underwriter, the person providing the due diligence 

services shall provide to any nationally recognized statistical rating organization that produces a rating to which 
H. R. 4173—507 

such services relate, written certification, as provided in 

subparagraph (C). 

‘‘(C) FORMAT AND CONTENT.—The Commission shall 

establish the appropriate format and content for the written 

certifications required under subparagraph (B), to ensure 

that providers of due diligence services have conducted 

a thorough review of data, documentation, and other relevant information necessary for a nationally recognized 

statistical rating organization to provide an accurate rating. 

‘‘(D) DISCLOSURE OF CERTIFICATION.—The Commission 

shall adopt rules requiring a nationally recognized statistical rating organization, at the time at which the nationally recognized statistical rating organization produces a 

rating, to disclose the certification described in subparagraph (B) to the public in a manner that allows the public 

to determine the adequacy and level of due diligence services provided by a third party. 

‘‘(t) CORPORATE GOVERNANCE, ORGANIZATION, AND MANAGEMENT OF CONFLICTS OF INTEREST.— 

‘‘(1) BOARD OF DIRECTORS.—Each nationally recognized 

statistical rating organization shall have a board of directors. 

‘‘(2) INDEPENDENT DIRECTORS.— 

‘‘(A) IN GENERAL.—At least 1⁄2 of the board of directors, 

but not fewer than 2 of the members thereof, shall be 

independent of the nationally recognized statistical rating 

agency. A portion of the independent directors shall include 

users of ratings from a nationally recognized statistical 

rating organization. 

‘‘(B) INDEPENDENCE DETERMINATION.—In order to be 

considered independent for purposes of this subsection, a 

member of the board of directors of a nationally recognized 

statistical rating organization— 

‘‘(i) may not, other than in his or her capacity 

as a member of the board of directors or any committee 

thereof— 

‘‘(I) accept any consulting, advisory, or other 

compensatory fee from the nationally recognized 

statistical rating organization; or 

‘‘(II) be a person associated with the nationally 

recognized statistical rating organization or with 

any affiliated company thereof; and 

‘‘(ii) shall be disqualified from any deliberation 

involving a specific rating in which the independent 

board member has a financial interest in the outcome 

of the rating. 

‘‘(C) COMPENSATION AND TERM.—The compensation of 

the independent members of the board of directors of a 

nationally recognized statistical rating organization shall 

not be linked to the business performance of the nationally 

recognized statistical rating organization, and shall be 

arranged so as to ensure the independence of their judgment. The term of office of the independent directors shall 

be for a pre-agreed fixed period, not to exceed 5 years, 

and shall not be renewable. 

‘‘(3) DUTIES OF BOARD OF DIRECTORS.—In addition to the 

overall responsibilities of the board of directors, the board shall 

oversee— 
H. R. 4173—508 

‘‘(A) the establishment, maintenance, and enforcement 

of policies and procedures for determining credit ratings; 

‘‘(B) the establishment, maintenance, and enforcement 

of policies and procedures to address, manage, and disclose 

any conflicts of interest; 

‘‘(C) the effectiveness of the internal control system 

with respect to policies and procedures for determining 

credit ratings; and 

‘‘(D) the compensation and promotion policies and practices of the nationally recognized statistical rating organization. 

‘‘(4) TREATMENT OF NRSRO SUBSIDIARIES.—If a nationally 

recognized statistical rating organization is a subsidiary of a 

parent entity, the board of the directors of the parent entity 

may satisfy the requirements of this subsection by assigning 

to a committee of such board of directors the duties under 

paragraph (3), if— 

‘‘(A) at least 1⁄2 of the members of the committee 

(including the chairperson of the committee) are independent, as defined in this section; and 

‘‘(B) at least 1 member of the committee is a user 

of ratings from a nationally recognized statistical rating 

organization. 

‘‘(5) EXCEPTION AUTHORITY.—If the Commission finds that 

compliance with the provisions of this subsection present an 

unreasonable burden on a small nationally recognized statistical rating organization, the Commission may permit the 

nationally recognized statistical rating organization to delegate 

such responsibilities to a committee that includes at least one 

individual who is a user of ratings of a nationally recognized 

statistical rating organization.’’. 

(b) CONFORMING AMENDMENT.—Section 3(a)(62) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(62)) is amended by 

striking subparagraph (A) and redesignating subparagraphs (B) 

and (C) as subparagraphs (A) and (B), respectively. 

SEC. 933. STATE OF MIND IN PRIVATE ACTIONS. 

(a) ACCOUNTABILITY.—Section 15E(m) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78o–7(m)) is amended to read 

as follows: 

‘‘(m) ACCOUNTABILITY.— 

‘‘(1) IN GENERAL.—The enforcement and penalty provisions 

of this title shall apply to statements made by a credit rating 

agency in the same manner and to the same extent as such 

provisions apply to statements made by a registered public 

accounting firm or a securities analyst under the securities 

laws, and such statements shall not be deemed forward-looking 

statements for the purposes of section 21E. 

‘‘(2) RULEMAKING.—The Commission shall issue such rules 

as may be necessary to carry out this subsection.’’. 

(b) STATE OF MIND.—Section 21D(b)(2) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78u–4(b)(2)) is amended— 

(1) by striking ‘‘In any’’ and inserting the following: 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), in any’’; and 

(2) by adding at the end the following: 
H. R. 4173—509 

‘‘(B) EXCEPTION.—In the case of an action for money 

damages brought against a credit rating agency or a 

controlling person under this title, it shall be sufficient, 

for purposes of pleading any required state of mind in 

relation to such action, that the complaint state with 

particularity facts giving rise to a strong inference that 

the credit rating agency knowingly or recklessly failed— 

‘‘(i) to conduct a reasonable investigation of the 

rated security with respect to the factual elements 

relied upon by its own methodology for evaluating 

credit risk; or 

‘‘(ii) to obtain reasonable verification of such factual elements (which verification may be based on 

a sampling technique that does not amount to an audit) 

from other sources that the credit rating agency considered to be competent and that were independent of 

the issuer and underwriter.’’. 

SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY 

AUTHORITIES. 

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 

78o–7), as amended by this subtitle, is amended by adding at 

the end the following: 

‘‘(u) DUTY TO REPORT TIPS ALLEGING MATERIAL VIOLATIONS

OF LAW.— 

‘‘(1) DUTY TO REPORT.—Each nationally recognized statistical rating organization shall refer to the appropriate law 

enforcement or regulatory authorities any information that the 

nationally recognized statistical rating organization receives 

from a third party and finds credible that alleges that an 

issuer of securities rated by the nationally recognized statistical 

rating organization has committed or is committing a material 

violation of law that has not been adjudicated by a Federal 

or State court. 

‘‘(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1) 

may be construed to require a nationally recognized statistical 

rating organization to verify the accuracy of the information 

described in paragraph (1).’’. 

SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER 

THAN THE ISSUER IN RATING DECISIONS. 

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 

78o–7), as amended by this subtitle, is amended by adding at 

the end the following: 

‘‘(v) INFORMATION FROM SOURCES OTHER THAN THE ISSUER.— 

In producing a credit rating, a nationally recognized statistical 

rating organization shall consider information about an issuer that 

the nationally recognized statistical rating organization has, or 

receives from a source other than the issuer or underwriter, that 

the nationally recognized statistical rating organization finds credible and potentially significant to a rating decision.’’. 

SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS. 

Not later than 1 year after the date of enactment of this 

Act, the Commission shall issue rules that are reasonably designed 

to ensure that any person employed by a nationally recognized 

statistical rating organization to perform credit ratings— 
H. R. 4173—510 

(1) meets standards of training, experience, and competence 

necessary to produce accurate ratings for the categories of 

issuers whose securities the person rates; and 

(2) is tested for knowledge of the credit rating process. 

SEC. 937. TIMING OF REGULATIONS. 

Unless otherwise specifically provided in this subtitle, the 

Commission shall issue final regulations, as required by this subtitle 

and the amendments made by this subtitle, not later than 1 year 

after the date of enactment of this Act. 

SEC. 938. UNIVERSAL RATINGS SYMBOLS. 

(a) RULEMAKING.—The Commission shall require, by rule, each 

nationally recognized statistical rating organization to establish, 

maintain, and enforce written policies and procedures that— 

(1) assess the probability that an issuer of a security or 

money market instrument will default, fail to make timely 

payments, or otherwise not make payments to investors in 

accordance with the terms of the security or money market 

instrument; 

(2) clearly define and disclose the meaning of any symbol 

used by the nationally recognized statistical rating organization 

to denote a credit rating; and 

(3) apply any symbol described in paragraph (2) in a 

manner that is consistent for all types of securities and money 

market instruments for which the symbol is used. 

(b) RULE OF CONSTRUCTION.—Nothing in this section shall prohibit a nationally recognized statistical rating organization from 

using distinct sets of symbols to denote credit ratings for different 

types of securities or money market instruments. 

SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS. 

(a) FEDERAL DEPOSIT INSURANCE ACT.—The Federal Deposit 

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

(1) in section 7(b)(1)(E)(i), by striking ‘‘credit rating entities, 

and other private economic’’ and insert ‘‘private economic, 

credit,’’; 

(2) in section 28(d)— 

(A) in the subsection heading, by striking ‘‘NOT OF

INVESTMENT GRADE’’; 

(B) in paragraph (1), by striking ‘‘not of investment 

grade’’ and inserting ‘‘that does not meet standards of 

credit-worthiness as established by the Corporation’’; 

(C) in paragraph (2), by striking ‘‘not of investment 

grade’’; 

(D) by striking paragraph (3); 

(E) by redesignating paragraph (4) as paragraph (3); 

and 

(F) in paragraph (3), as so redesignated— 

(i) by striking subparagraph (A); 

(ii) by redesignating subparagraphs (B) and (C) 

as subparagraphs (A) and (B), respectively; and 

(iii) in subparagraph (B), as so redesignated, by 

striking ‘‘not of investment grade’’ and inserting ‘‘that 

does not meet standards of credit-worthiness as established by the Corporation’’; and 

(3) in section 28(e)— 
H. R. 4173—511 

(A) in the subsection heading, by striking ‘‘NOT OF

INVESTMENT GRADE’’; 

(B) in paragraph (1), by striking ‘‘not of investment 

grade’’ and inserting ‘‘that does not meet standards of 

credit-worthiness as established by the Corporation’’; and 

(C) in paragraphs (2) and (3), by striking ‘‘not of investment grade’’ each place that it appears and inserting ‘‘that 

does not meet standards of credit-worthiness established 

by the Corporation’’. 

(b) FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND

SOUNDNESS ACT OF 1992.—Section 1319 of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 

4519) is amended by striking ‘‘that is a nationally recognized statistical rating organization, as such term is defined in section 3(a) 

of the Securities Exchange Act of 1934,’’. 

(c) INVESTMENT COMPANY ACT OF 1940.—Section 

6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 U.S.C. 80a– 

6(a)(5)(A)(iv)(I)) is amended by striking ‘‘is rated investment grade 

by not less than 1 nationally recognized statistical rating organization’’ and inserting ‘‘meets such standards of credit-worthiness as 

the Commission shall adopt’’. 

(d) REVISED STATUTES.—Section 5136A of title LXII of the 

Revised Statutes of the United States (12 U.S.C. 24a) is amended— 

(1) in subsection (a)(2)(E), by striking ‘‘any applicable 

rating’’ and inserting ‘‘standards of credit-worthiness established by the Comptroller of the Currency’’; 

(2) in the heading for subsection (a)(3) by striking ‘‘RATING

OR COMPARABLE REQUIREMENT’’ and inserting ‘‘REQUIREMENT’’; 

(3) subsection (a)(3), by amending subparagraph (A) to 

read as follows: 

‘‘(A) IN GENERAL.—A national bank meets the requirements of this paragraph if the bank is one of the 100 

largest insured banks and has not fewer than 1 issue 

of outstanding debt that meets standards of credit-worthiness or other criteria as the Secretary of the Treasury 

and the Board of Governors of the Federal Reserve System 

may jointly establish.’’. 

(4) in the heading for subsection (f), by striking ‘‘MAINTAIN

PUBLIC RATING OR’’ and inserting ‘‘MEET STANDARDS OF CREDIT- WORTHINESS’’; and 

(5) in subsection (f)(1), by striking ‘‘any applicable rating’’ 

and inserting ‘‘standards of credit-worthiness established by 

the Comptroller of the Currency’’. 

(e) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a) Securities 

Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) is amended— 

(1) in paragraph (41), by striking ‘‘is rated in one of the 

two highest rating categories by at least one nationally recognized statistical rating organization’’ and inserting ‘‘meets 

standards of credit-worthiness as established by the Commission’’; and 

(2) in paragraph (53)(A), by striking ‘‘is rated in 1 of the 

4 highest rating categories by at least 1 nationally recognized 

statistical rating organization’’ and inserting ‘‘meets standards 

of credit-worthiness as established by the Commission’’. 

(f) WORLD BANK DISCUSSIONS.—Section 3(a)(6) of the amendment in the nature of a substitute to the text of H.R. 4645, as 

ordered reported from the Committee on Banking, Finance and 
H. R. 4173—512 

Urban Affairs on September 22, 1988, as enacted into law by 

section 555 of Public Law 100–461, (22 U.S.C. 286hh(a)(6)), is 

amended by striking ‘‘credit rating’’ and inserting ‘‘credit-worthiness’’. 

(g) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 2 years after the date of enactment of this Act. 

(h) STUDY AND REPORT.— (1) IN GENERAL.—Commission shall undertake a study on 

the feasability and desirability of— 

(A) standardizing credit ratings terminology, so that 

all credit rating agencies issue credit ratings using identical 

terms; 

(B) standardizing the market stress conditions under 

which ratings are evaluated; 

(C) requiring a quantitative correspondence between 

credit ratings and a range of default probabilities and 

loss expectations under standardized conditions of economic 

stress; and 

(D) standardizing credit rating terminology across 

asset classes, so that named ratings correspond to a 

standard range of default probabilities and expected losses 

independent of asset class and issuing entity. 

(2) REPORT.—Not later than 1 year after the date of enactment of this Act, the Commission shall submit to Congress 

a report containing the findings of the study under paragraph 

(1) and the recommendations, if any, of the Commission with 

respect to the study. 

SEC. 939A. REVIEW OF RELIANCE ON RATINGS. 

(a) AGENCY REVIEW.—Not later than 1 year after the date 

of the enactment of this subtitle, each Federal agency shall, to 

the extent applicable, review— 

(1) any regulation issued by such agency that requires 

the use of an assessment of the credit-worthiness of a security 

or money market instrument; and 

(2) any references to or requirements in such regulations 

regarding credit ratings. 

(b) MODIFICATIONS REQUIRED.—Each such agency shall modify 

any such regulations identified by the review conducted under 

subsection (a) to remove any reference to or requirement of reliance 

on credit ratings and to substitute in such regulations such standard 

of credit-worthiness as each respective agency shall determine as 

appropriate for such regulations. In making such determination, 

such agencies shall seek to establish, to the extent feasible, uniform 

standards of credit-worthiness for use by each such agency, taking 

into account the entities regulated by each such agency and the 

purposes for which such entities would rely on such standards 

of credit-worthiness. 

(c) REPORT.—Upon conclusion of the review required under 

subsection (a), each Federal agency shall transmit a report to Congress containing a description of any modification of any regulation 

such agency made pursuant to subsection (b). 

SEC. 939B. ELIMINATION OF EXEMPTION FROM FAIR DISCLOSURE 

RULE. 

Not later than 90 days after the date of enactment of this 

subtitle, the Securities Exchange Commission shall revise Regulation FD (17 C.F.R. 243.100) to remove from such regulation the 
H. R. 4173—513 

exemption for entities whose primary business is the issuance of 

credit ratings (17 C.F.R. 243.100(b)(2)(iii)). 

SEC. 939C. SECURITIES AND EXCHANGE COMMISSION STUDY ON 

STRENGTHENING CREDIT RATING AGENCY INDEPENDENCE. 

(a) STUDY.—The Commission shall conduct a study of— 

(1) the independence of nationally recognized statistical 

rating organizations; and 

(2) how the independence of nationally recognized statistical rating organizations affects the ratings issued by the 

nationally recognized statistical rating organizations. 

(b) SUBJECTS FOR EVALUATION.—In conducting the study under 

subsection (a), the Commission shall evaluate— 

(1) the management of conflicts of interest raised by a 

nationally recognized statistical rating organization providing 

other services, including risk management advisory services, 

ancillary assistance, or consulting services; 

(2) the potential impact of rules prohibiting a nationally 

recognized statistical rating organization that provides a rating 

to an issuer from providing other services to the issuer; and 

(3) any other issue relating to nationally recognized statistical rating organizations, as the Chairman of the Commission 

determines is appropriate. 

(c) REPORT.—Not later than 3 years after the date of enactment 

of this Act, the Chairman of the Commission shall submit to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives a report on the results of the study conducted under subsection (a), including recommendations, if any, for improving the 

integrity of ratings issued by nationally recognized statistical rating 

organizations. 

SEC. 939D. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON ALTERNATIVE BUSINESS MODELS. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study on alternative means for compensating nationally 

recognized statistical rating organizations in order to create incentives for nationally recognized statistical rating organizations to 

provide more accurate credit ratings, including any statutory 

changes that would be required to facilitate the use of an alternative 

means of compensation. 

(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General shall submit to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives a report on the results of the study conducted under subsection (a), including recommendations, if any, for providing incentives to credit rating agencies to improve the credit rating process. 

SEC. 939E. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE 

CREATION OF AN INDEPENDENT PROFESSIONAL 

ANALYST ORGANIZATION. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study on the feasibility and merits of creating an independent professional organization for rating analysts employed by 

nationally recognized statistical rating organizations that would 

be responsible for— 
H. R. 4173—514 

(1) establishing independent standards for governing the 

profession of rating analysts; 

(2) establishing a code of ethical conduct; and 

(3) overseeing the profession of rating analysts. 

(b) REPORT.—Not later than 1 year after the date of publication 

of the rules issued by the Commission pursuant to section 936, 

the Comptroller General shall submit to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee 

on Financial Services of the House of Representatives a report 

on the results of the study conducted under subsection (a). 

SEC. 939F. STUDY AND RULEMAKING ON ASSIGNED CREDIT RATINGS. 

(a) DEFINITION.—In this section, the term ‘‘structured finance 

product’’ means an asset-backed security, as defined in section 

3(a)(77) of the Securities Exchange Act of 1934, as added by section 

941, and any structured product based on an asset-backed security, 

as determined by the Commission, by rule. 

(b) STUDY.—The Commission shall carry out a study of— 

(1) the credit rating process for structured finance products 

and the conflicts of interest associated with the issuer-pay 

and the subscriber-pay models; 

(2) the feasibility of establishing a system in which a public 

or private utility or a self-regulatory organization assigns 

nationally recognized statistical rating organizations to determine the credit ratings of structured finance products, 

including— 

(A) an assessment of potential mechanisms for determining fees for the nationally recognized statistical rating 

organizations; 

(B) appropriate methods for paying fees to the nationally recognized statistical rating organizations; 

(C) the extent to which the creation of such a system 

would be viewed as the creation of moral hazard by the 

Federal Government; and 

(D) any constitutional or other issues concerning the 

establishment of such a system; 

(3) the range of metrics that could be used to determine 

the accuracy of credit ratings; and 

(4) alternative means for compensating nationally recognized statistical rating organizations that would create incentives for accurate credit ratings. 

(c) REPORT AND RECOMMENDATION.—Not later than 24 months 

after the date of enactment of this Act, the Commission shall 

submit to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of the 

House of Representatives a report that contains— 

(1) the findings of the study required under subsection 

(b); and 

(2) any recommendations for regulatory or statutory 

changes that the Commission determines should be made to 

implement the findings of the study required under subsection 

(b). 

(d) RULEMAKING.— 

(1) RULEMAKING.—After submission of the report under 

subsection (c), the Commission shall, by rule, as the Commission determines is necessary or appropriate in the public 

interest or for the protection of investors, establish a system 
H. R. 4173—515 

for the assignment of nationally recognized statistical rating 

organizations to determine the initial credit ratings of structured finance products, in a manner that prevents the issuer, 

sponsor, or underwriter of the structured finance product from 

selecting the nationally recognized statistical rating organization that will determine the initial credit ratings and monitor 

such credit ratings. In issuing any rule under this paragraph, 

the Commission shall give thorough consideration to the provisions of section 15E(w) of the Securities Exchange Act of 1934, 

as that provision would have been added by section 939D 

of H.R. 4173 (111th Congress), as passed by the Senate on 

May 20, 2010, and shall implement the system described in 

such section 939D unless the Commission determines that an 

alternative system would better serve the public interest and 

the protection of investors. 

(2) RULE OF CONSTRUCTION.—Nothing in this subsection 

may be construed to limit or suspend any other rulemaking 

authority of the Commission. 

SEC. 939G. EFFECT OF RULE 436(G). 

Rule 436(g), promulgated by the Securities and Exchange 

Commission under the Securities Act of 1933, shall have no force 

or effect. 

SEC. 939H. SENSE OF CONGRESS. 

It is the sense of Congress that the Securities and Exchange 

Commission should exercise the rulemaking authority of the 

Commission under section 15E(h)(2)(B) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78o–7(h)(2)(B)) to prevent improper conflicts 

of interest arising from employees of nationally recognized statistical rating organizations providing services to issuers of securities 

that are unrelated to the issuance of credit ratings, including consulting, advisory, and other services. 

Subtitle D—Improvements to the AssetBacked Securitization Process 

SEC. 941. REGULATION OF CREDIT RISK RETENTION. 

(a) DEFINITION OF ASSET-BACKED SECURITY.—Section 3(a) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended 

by adding at the end the following: 

‘‘(77) ASSET-BACKED SECURITY.—The term ‘asset-backed 

security’— 

‘‘(A) means a fixed-income or other security 

collateralized by any type of self-liquidating financial asset 

(including a loan, a lease, a mortgage, or a secured or 

unsecured receivable) that allows the holder of the security 

to receive payments that depend primarily on cash flow 

from the asset, including— 

‘‘(i) a collateralized mortgage obligation; 

‘‘(ii) a collateralized debt obligation; 

‘‘(iii) a collateralized bond obligation; 

‘‘(iv) a collateralized debt obligation of asset-backed 

securities; 

‘‘(v) a collateralized debt obligation of collateralized 

debt obligations; and 
H. R. 4173—516 

‘‘(vi) a security that the Commission, by rule, determines to be an asset-backed security for purposes of 

this section; and 

‘‘(B) does not include a security issued by a finance 

subsidiary held by the parent company or a company controlled by the parent company, if none of the securities 

issued by the finance subsidiary are held by an entity 

that is not controlled by the parent company.’’. 

(b) CREDIT RISK RETENTION.—The Securities Exchange Act of 

1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 

15F, as added by this Act, the following: 

‘‘SEC. 15G. CREDIT RISK RETENTION. 

‘‘(a) DEFINITIONS.—In this section— 

‘‘(1) the term ‘Federal banking agencies’ means the Office 

of the Comptroller of the Currency, the Board of Governors 

of the Federal Reserve System, and the Federal Deposit Insurance Corporation; 

‘‘(2) the term ‘insured depository institution’ has the same 

meaning as in section 3(c) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(c)); 

‘‘(3) the term ‘securitizer’ means— 

‘‘(A) an issuer of an asset-backed security; or 

‘‘(B) a person who organizes and initiates an assetbacked securities transaction by selling or transferring 

assets, either directly or indirectly, including through an 

affiliate, to the issuer; and 

‘‘(4) the term ‘originator’ means a person who— 

‘‘(A) through the extension of credit or otherwise, creates a financial asset that collateralizes an asset-backed 

security; and 

‘‘(B) sells an asset directly or indirectly to a securitizer. 

‘‘(b) REGULATIONS REQUIRED.— 

‘‘(1) IN GENERAL.—Not later than 270 days after the date 

of enactment of this section, the Federal banking agencies 

and the Commission shall jointly prescribe regulations to 

require any securitizer to retain an economic interest in a 

portion of the credit risk for any asset that the securitizer, 

through the issuance of an asset-backed security, transfers, 

sells, or conveys to a third party. 

‘‘(2) RESIDENTIAL MORTGAGES.—Not later than 270 days 

after the date of the enactment of this section, the Federal 

banking agencies, the Commission, the Secretary of Housing 

and Urban Development, and the Federal Housing Finance 

Agency, shall jointly prescribe regulations to require any 

securitizer to retain an economic interest in a portion of the 

credit risk for any residential mortgage asset that the 

securitizer, through the issuance of an asset-backed security, 

transfers, sells, or conveys to a third party. 

‘‘(c) STANDARDS FOR REGULATIONS.— 

‘‘(1) STANDARDS.—The regulations prescribed under subsection (b) shall— 

‘‘(A) prohibit a securitizer from directly or indirectly 

hedging or otherwise transferring the credit risk that the 

securitizer is required to retain with respect to an asset; 

‘‘(B) require a securitizer to retain— 
H. R. 4173—517 

‘‘(i) not less than 5 percent of the credit risk for 

any asset— 

‘‘(I) that is not a qualified residential mortgage 

that is transferred, sold, or conveyed through the 

issuance of an asset-backed security by the 

securitizer; or 

‘‘(II) that is a qualified residential mortgage 

that is transferred, sold, or conveyed through the 

issuance of an asset-backed security by the 

securitizer, if 1 or more of the assets that 

collateralize the asset-backed security are not 

qualified residential mortgages; or 

‘‘(ii) less than 5 percent of the credit risk for an 

asset that is not a qualified residential mortgage that 

is transferred, sold, or conveyed through the issuance 

of an asset-backed security by the securitizer, if the 

originator of the asset meets the underwriting standards prescribed under paragraph (2)(B); 

‘‘(C) specify— 

‘‘(i) the permissible forms of risk retention for purposes of this section; 

‘‘(ii) the minimum duration of the risk retention 

required under this section; and 

‘‘(iii) that a securitizer is not required to retain 

any part of the credit risk for an asset that is transferred, sold or conveyed through the issuance of an 

asset-backed security by the securitizer, if all of the 

assets that collateralize the asset-backed security are 

qualified residential mortgages; 

‘‘(D) apply, regardless of whether the securitizer is 

an insured depository institution; 

‘‘(E) with respect to a commercial mortgage, specify 

the permissible types, forms, and amounts of risk retention 

that would meet the requirements of subparagraph (B), 

which in the determination of the Federal banking agencies 

and the Commission may include— 

‘‘(i) retention of a specified amount or percentage 

of the total credit risk of the asset; 

‘‘(ii) retention of the first-loss position by a thirdparty purchaser that specifically negotiates for the purchase of such first loss position, holds adequate financial resources to back losses, provides due diligence 

on all individual assets in the pool before the issuance 

of the asset-backed securities, and meets the same 

standards for risk retention as the Federal banking 

agencies and the Commission require of the securitizer; 

‘‘(iii) a determination by the Federal banking agencies and the Commission that the underwriting standards and controls for the asset are adequate; and 

‘‘(iv) provision of adequate representations and 

warranties and related enforcement mechanisms; and 

‘‘(F) establish appropriate standards for retention of 

an economic interest with respect to collateralized debt 

obligations, securities collateralized by collateralized debt 

obligations, and similar instruments collateralized by other 

asset-backed securities; and 

‘‘(G) provide for— 
H. R. 4173—518 

‘‘(i) a total or partial exemption of any 

securitization, as may be appropriate in the public 

interest and for the protection of investors; 

‘‘(ii) a total or partial exemption for the 

securitization of an asset issued or guaranteed by the 

United States, or an agency of the United States, as 

the Federal banking agencies and the Commission 

jointly determine appropriate in the public interest 

and for the protection of investors, except that, for 

purposes of this clause, the Federal National Mortgage 

Association and the Federal Home Loan Mortgage Corporation are not agencies of the United States; 

‘‘(iii) a total or partial exemption for any assetbacked security that is a security issued or guaranteed 

by any State of the United States, or by any political 

subdivision of a State or territory, or by any public 

instrumentality of a State or territory that is exempt 

from the registration requirements of the Securities 

Act of 1933 by reason of section 3(a)(2) of that Act 

(15 U.S.C. 77c(a)(2)), or a security defined as a qualified 

scholarship funding bond in section 150(d)(2) of the 

Internal Revenue Code of 1986, as may be appropriate 

in the public interest and for the protection of investors; and 

‘‘(iv) the allocation of risk retention obligations 

between a securitizer and an originator in the case 

of a securitizer that purchases assets from an originator, as the Federal banking agencies and the 

Commission jointly determine appropriate. 

‘‘(2) ASSET CLASSES.— ‘‘(A) ASSET CLASSES.—The regulations prescribed under 

subsection (b) shall establish asset classes with separate 

rules for securitizers of different classes of assets, including 

residential mortgages, commercial mortgages, commercial 

loans, auto loans, and any other class of assets that the 

Federal banking agencies and the Commission deem appropriate. 

‘‘(B) CONTENTS.—For each asset class established 

under subparagraph (A), the regulations prescribed under 

subsection (b) shall include underwriting standards established by the Federal banking agencies that specify the 

terms, conditions, and characteristics of a loan within the 

asset class that indicate a low credit risk with respect 

to the loan. 

‘‘(d) ORIGINATORS.—In determining how to allocate risk retention obligations between a securitizer and an originator under subsection (c)(1)(E)(iv), the Federal banking agencies and the Commission shall— 

‘‘(1) reduce the percentage of risk retention obligations 

required of the securitizer by the percentage of risk retention 

obligations required of the originator; and 

‘‘(2) consider— 

‘‘(A) whether the assets sold to the securitizer have 

terms, conditions, and characteristics that reflect low credit 

risk; 

‘‘(B) whether the form or volume of transactions in 

securitization markets creates incentives for imprudent 
H. R. 4173—519 

origination of the type of loan or asset to be sold to the 

securitizer; and 

‘‘(C) the potential impact of the risk retention obligations on the access of consumers and businesses to credit 

on reasonable terms, which may not include the transfer 

of credit risk to a third party. 

‘‘(e) EXEMPTIONS, EXCEPTIONS, AND ADJUSTMENTS.— 

‘‘(1) IN GENERAL.—The Federal banking agencies and the 

Commission may jointly adopt or issue exemptions, exceptions, 

or adjustments to the rules issued under this section, including 

exemptions, exceptions, or adjustments for classes of institutions or assets relating to the risk retention requirement and 

the prohibition on hedging under subsection (c)(1). 

‘‘(2) APPLICABLE STANDARDS.—Any exemption, exception, 

or adjustment adopted or issued by the Federal banking agencies and the Commission under this paragraph shall— 

‘‘(A) help ensure high quality underwriting standards 

for the securitizers and originators of assets that are 

securitized or available for securitization; and 

‘‘(B) encourage appropriate risk management practices 

by the securitizers and originators of assets, improve the 

access of consumers and businesses to credit on reasonable 

terms, or otherwise be in the public interest and for the 

protection of investors. 

‘‘(3) CERTAIN INSTITUTIONS AND PROGRAMS EXEMPT.— 

‘‘(A) FARM CREDIT SYSTEM INSTITUTIONS.—Notwithstanding any other provision of this section, the requirements of this section shall not apply to any loan or other 

financial asset made, insured, guaranteed, or purchased 

by any institution that is subject to the supervision of 

the Farm Credit Administration, including the Federal 

Agricultural Mortgage Corporation. 

‘‘(B) OTHER FEDERAL PROGRAMS.—This section shall 

not apply to any residential, multifamily, or health care 

facility mortgage loan asset, or securitization based directly 

or indirectly on such an asset, which is insured or guaranteed by the United States or an agency of the United 

States. For purposes of this subsection, the Federal 

National Mortgage Association, the Federal Home Loan 

Mortgage Corporation, and the Federal home loan banks 

shall not be considered an agency of the United States. 

‘‘(4) EXEMPTION FOR QUALIFIED RESIDENTIAL MORTGAGES.— 

‘‘(A) IN GENERAL.—The Federal banking agencies, the 

Commission, the Secretary of Housing and Urban Development, and the Director of the Federal Housing Finance 

Agency shall jointly issue regulations to exempt qualified 

residential mortgages from the risk retention requirements 

of this subsection. 

‘‘(B) QUALIFIED RESIDENTIAL MORTGAGE.—The Federal 

banking agencies, the Commission, the Secretary of 

Housing and Urban Development, and the Director of the 

Federal Housing Finance Agency shall jointly define the 

term ‘qualified residential mortgage’ for purposes of this 

subsection, taking into consideration underwriting and 

product features that historical loan performance data 

indicate result in a lower risk of default, such as— 
H. R. 4173—520 

‘‘(i) documentation and verification of the financial 

resources relied upon to qualify the mortgagor; 

‘‘(ii) standards with respect to— 

‘‘(I) the residual income of the mortgagor after 

all monthly obligations; 

‘‘(II) the ratio of the housing payments of the 

mortgagor to the monthly income of the mortgagor; 

‘‘(III) the ratio of total monthly installment 

payments of the mortgagor to the income of the 

mortgagor; 

‘‘(iii) mitigating the potential for payment shock 

on adjustable rate mortgages through product features 

and underwriting standards; 

‘‘(iv) mortgage guarantee insurance or other types 

of insurance or credit enhancement obtained at the 

time of origination, to the extent such insurance or 

credit enhancement reduces the risk of default; and 

‘‘(v) prohibiting or restricting the use of balloon 

payments, negative amortization, prepayment penalties, interest-only payments, and other features that 

have been demonstrated to exhibit a higher risk of 

borrower default. 

‘‘(C) LIMITATION ON DEFINITION.—The Federal banking 

agencies, the Commission, the Secretary of Housing and 

Urban Development, and the Director of the Federal 

Housing Finance Agency in defining the term ‘qualified 

residential mortgage’, as required by subparagraph (B), 

shall define that term to be no broader than the definition 

‘qualified mortgage’ as the term is defined under section 

129C(c)(2) of the Truth in Lending Act, as amended by 

the Consumer Financial Protection Act of 2010, and regulations adopted thereunder. 

‘‘(5) CONDITION FOR QUALIFIED RESIDENTIAL MORTGAGE

EXEMPTION.—The regulations issued under paragraph (4) shall 

provide that an asset-backed security that is collateralized by 

tranches of other asset-backed securities shall not be exempt 

from the risk retention requirements of this subsection. 

‘‘(6) CERTIFICATION.—The Commission shall require an 

issuer to certify, for each issuance of an asset-backed security 

collateralized exclusively by qualified residential mortgages, 

that the issuer has evaluated the effectiveness of the internal 

supervisory controls of the issuer with respect to the process 

for ensuring that all assets that collateralize the asset-backed 

security are qualified residential mortgages. 

‘‘(f) ENFORCEMENT.—The regulations issued under this section 

shall be enforced by— 

‘‘(1) the appropriate Federal banking agency, with respect 

to any securitizer that is an insured depository institution; 

and 

‘‘(2) the Commission, with respect to any securitizer that 

is not an insured depository institution. 

‘‘(g) AUTHORITY OF COMMISSION.—The authority of the Commission under this section shall be in addition to the authority of 

the Commission to otherwise enforce the securities laws. 

‘‘(h) AUTHORITY TO COORDINATE ON RULEMAKING.—The Chairperson of the Financial Stability Oversight Council shall coordinate 

all joint rulemaking required under this section. 
H. R. 4173—521 

‘‘(i) EFFECTIVE DATE OF REGULATIONS.—The regulations issued 

under this section shall become effective— 

‘‘(1) with respect to securitizers and originators of assetbacked securities backed by residential mortgages, 1 year after 

the date on which final rules under this section are published 

in the Federal Register; and 

‘‘(2) with respect to securitizers and originators of all other 

classes of asset-backed securities, 2 years after the date on 

which final rules under this section are published in the Federal 

Register.’’. 

(c) STUDY ON RISK RETENTION.— (1) STUDY.—The Board of Governors of the Federal Reserve 

System, in coordination and consultation with the Comptroller 

of the Currency, the Director of the Office of Thrift Supervision, 

the Chairperson of the Federal Deposit Insurance Corporation, 

and the Securities and Exchange Commission shall conduct 

a study of the combined impact on each individual class of 

asset-backed security established under section 15G(c)(2) of 

the Securities Exchange Act of 1934, as added by subsection 

(b), of— 

(A) the new credit risk retention requirements contained in the amendment made by subsection (b), including 

the effect credit risk retention requirements have on 

increasing the market for Federally subsidized loans; and 

(B) the Financial Accounting Statements 166 and 167 

issued by the Financial Accounting Standards Board. 

(2) REPORT.—Not later than 90 days after the date of 

enactment of this Act, the Board of Governors of the Federal 

Reserve System shall submit to Congress a report on the study 

conducted under paragraph (1). Such report shall include statutory and regulatory recommendations for eliminating any negative impacts on the continued viability of the asset-backed 

securitization markets and on the availability of credit for 

new lending identified by the study conducted under paragraph 

(1). 

SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES. 

(a) SECURITIES EXCHANGE ACT OF 1934.—Section 15(d) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended— 

(1) by striking ‘‘(d) Each’’ and inserting the following: 

‘‘(d) SUPPLEMENTARY AND PERIODIC INFORMATION.— 

‘‘(1) IN GENERAL.—Each’’; 

(2) in the third sentence, by inserting after ‘‘securities 

of each class’’ the following: ‘‘, other than any class of assetbacked securities,’’; and 

(3) by adding at the end the following: 

‘‘(2) ASSET-BACKED SECURITIES.— 

‘‘(A) SUSPENSION OF DUTY TO FILE.—The Commission 

may, by rule or regulation, provide for the suspension 

or termination of the duty to file under this subsection 

for any class of asset-backed security, on such terms and 

conditions and for such period or periods as the Commission 

deems necessary or appropriate in the public interest or 

for the protection of investors. 

‘‘(B) CLASSIFICATION OF ISSUERS.—The Commission 

may, for purposes of this subsection, classify issuers and 
H. R. 4173—522 

prescribe requirements appropriate for each class of issuers 

of asset-backed securities.’’. 

(b) SECURITIES ACT OF 1933.—Section 7 of the Securities Act 

of 1933 (15 U.S.C. 77g) is amended by adding at the end the 

following: 

‘‘(c) DISCLOSURE REQUIREMENTS.— ‘‘(1) IN GENERAL.—The Commission shall adopt regulations 

under this subsection requiring each issuer of an asset-backed 

security to disclose, for each tranche or class of security, 

information regarding the assets backing that security. 

‘‘(2) CONTENT OF REGULATIONS.—In adopting regulations 

under this subsection, the Commission shall— 

‘‘(A) set standards for the format of the data provided 

by issuers of an asset-backed security, which shall, to the 

extent feasible, facilitate comparison of such data across 

securities in similar types of asset classes; and 

‘‘(B) require issuers of asset-backed securities, at a 

minimum, to disclose asset-level or loan-level data, if such 

data are necessary for investors to independently perform 

due diligence, including— 

‘‘(i) data having unique identifiers relating to loan 

brokers or originators; 

‘‘(ii) the nature and extent of the compensation 

of the broker or originator of the assets backing the 

security; and 

‘‘(iii) the amount of risk retention by the originator 

and the securitizer of such assets.’’. 

SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED 

OFFERINGS. 

Not later than 180 days after the date of enactment of this 

Act, the Securities and Exchange Commission shall prescribe regulations on the use of representations and warranties in the market 

for asset-backed securities (as that term is defined in section 3(a)(77) 

of the Securities Exchange Act of 1934, as added by this subtitle) 

that— 

(1) require each national recognized statistical rating 

organization to include in any report accompanying a credit 

rating a description of— 

(A) the representations, warranties, and enforcement 

mechanisms available to investors; and 

(B) how they differ from the representations, warranties, and enforcement mechanisms in issuances of similar 

securities; and 

(2) require any securitizer (as that term is defined in section 

15G(a) of the Securities Exchange Act of 1934, as added by 

this subtitle) to disclose fulfilled and unfulfilled repurchase 

requests across all trusts aggregated by the securitizer, so 

that investors may identify asset originators with clear underwriting deficiencies. 

SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT 

OF 1933. 

(a) EXEMPTION ELIMINATED.—Section 4 of the Securities Act 

of 1933 (15 U.S.C. 77d) is amended— 

(1) by striking paragraph (5); and 

(2) by striking ‘‘(6) transactions’’ and inserting the following: 
H. R. 4173—523 

‘‘(5) transactions’’. 

(b) CONFORMING AMENDMENT.—Section 3(a)(4)(B)(vii)(I) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is 

amended by striking ‘‘4(6)’’ and inserting ‘‘4(5)’’. 

SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSETBACKED SECURITIES ISSUES. 

Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as 

amended by this subtitle, is amended by adding at the end the 

following: 

‘‘(d) REGISTRATION STATEMENT FOR ASSET-BACKED SECURITIES.—Not later than 180 days after the date of enactment of 

this subsection, the Commission shall issue rules relating to the 

registration statement required to be filed by any issuer of an 

asset-backed security (as that term is defined in section 3(a)(77) 

of the Securities Exchange Act of 1934) that require any issuer 

of an asset-backed security— 

‘‘(1) to perform a review of the assets underlying the assetbacked security; and 

‘‘(2) to disclose the nature of the review under paragraph 

(1).’’. 

SEC. 946. STUDY ON THE MACROECONOMIC EFFECTS OF RISK RETENTION REQUIREMENTS. 

(a) STUDY REQUIRED.—The Chairman of the Financial Services 

Oversight Council shall carry out a study on the macroeconomic 

effects of the risk retention requirements under this subtitle, and 

the amendments made by this subtitle, with emphasis placed on 

potential beneficial effects with respect to stabilizing the real estate 

market. Such study shall include— 

(1) an analysis of the effects of risk retention on real 

estate asset price bubbles, including a retrospective estimate 

of what fraction of real estate losses may have been averted 

had such requirements been in force in recent years; 

(2) an analysis of the feasibility of minimizing real estate 

price bubbles by proactively adjusting the percentage of risk 

retention that must be borne by creditors and securitizers of 

real estate debt, as a function of regional or national market 

conditions; 

(3) a comparable analysis for proactively adjusting mortgage origination requirements; 

(4) an assessment of whether such proactive adjustments 

should be made by an independent regulator, or in a formulaic 

and transparent manner; 

(5) an assessment of whether such adjustments should 

take place independently or in concert with monetary policy; 

and 

(6) recommendations for implementation and enabling 

legislation. 

(b) REPORT.—Not later than the end of the 180-day period 

beginning on the date of the enactment of this title, the Chairman 

of the Financial Services Oversight Council shall issue a report 

to the Congress containing any findings and determinations made 

in carrying out the study required under subsection (a). 
H. R. 4173—524 

Subtitle E—Accountability and Executive 

Compensation 

SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION 

DISCLOSURES. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

is amended by inserting after section 14 (15 U.S.C. 78n) the following: 

‘‘SEC. 14A. SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION. 

‘‘(a) SEPARATE RESOLUTION REQUIRED.— 

‘‘(1) IN GENERAL.—Not less frequently than once every 3 

years, a proxy or consent or authorization for an annual or 

other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure 

shall include a separate resolution subject to shareholder vote 

to approve the compensation of executives, as disclosed pursuant to section 229.402 of title 17, Code of Federal Regulations, 

or any successor thereto. 

‘‘(2) FREQUENCY OF VOTE.—Not less frequently than once 

every 6 years, a proxy or consent or authorization for an annual 

or other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure 

shall include a separate resolution subject to shareholder vote 

to determine whether votes on the resolutions required under 

paragraph (1) will occur every 1, 2, or 3 years. 

‘‘(3) EFFECTIVE DATE.—The proxy or consent or authorization for the first annual or other meeting of the shareholders 

occurring after the end of the 6-month period beginning on 

the date of enactment of this section shall include— 

‘‘(A) the resolution described in paragraph (1); and 

‘‘(B) a separate resolution subject to shareholder vote 

to determine whether votes on the resolutions required 

under paragraph (1) will occur every 1, 2, or 3 years. 

‘‘(b) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE COM- PENSATION.— 

‘‘(1) DISCLOSURE.—In any proxy or consent solicitation 

material (the solicitation of which is subject to the rules of 

the Commission pursuant to subsection (a)) for a meeting of 

the shareholders occurring after the end of the 6-month period 

beginning on the date of enactment of this section, at which 

shareholders are asked to approve an acquisition, merger, 

consolidation, or proposed sale or other disposition of all or 

substantially all the assets of an issuer, the person making 

such solicitation shall disclose in the proxy or consent solicitation material, in a clear and simple form in accordance with 

regulations to be promulgated by the Commission, any agreements or understandings that such person has with any named 

executive officers of such issuer (or of the acquiring issuer, 

if such issuer is not the acquiring issuer) concerning any type 

of compensation (whether present, deferred, or contingent) that 

is based on or otherwise relates to the acquisition, merger, 

consolidation, sale, or other disposition of all or substantially 

all of the assets of the issuer and the aggregate total of all 

such compensation that may (and the conditions upon which 
H. R. 4173—525 

it may) be paid or become payable to or on behalf of such 

executive officer. 

‘‘(2) SHAREHOLDER APPROVAL.—Any proxy or consent or 

authorization relating to the proxy or consent solicitation material containing the disclosure required by paragraph (1) shall 

include a separate resolution subject to shareholder vote to 

approve such agreements or understandings and compensation 

as disclosed, unless such agreements or understandings have 

been subject to a shareholder vote under subsection (a). 

‘‘(c) RULE OF CONSTRUCTION.—The shareholder vote referred 

to in subsections (a) and (b) shall not be binding on the issuer 

or the board of directors of an issuer, and may not be construed— 

‘‘(1) as overruling a decision by such issuer or board of 

directors; 

‘‘(2) to create or imply any change to the fiduciary duties 

of such issuer or board of directors; 

‘‘(3) to create or imply any additional fiduciary duties for 

such issuer or board of directors; or 

‘‘(4) to restrict or limit the ability of shareholders to make 

proposals for inclusion in proxy materials related to executive 

compensation. 

‘‘(d) DISCLOSURE OF VOTES.—Every institutional investment 

manager subject to section 13(f) shall report at least annually 

how it voted on any shareholder vote pursuant to subsections (a) 

and (b), unless such vote is otherwise required to be reported 

publicly by rule or regulation of the Commission. 

‘‘(e) EXEMPTION.—The Commission may, by rule or order, 

exempt an issuer or class of issuers from the requirement under 

subsection (a) or (b). In determining whether to make an exemption 

under this subsection, the Commission shall take into account, 

among other considerations, whether the requirements under subsections (a) and (b) disproportionately burdens small issuers.’’. 

SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE. 

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 

U.S.C. 78 et seq.) is amended by inserting after section 10B, as 

added by section 753, the following: 

‘‘SEC. 10C. COMPENSATION COMMITTEES. 

‘‘(a) INDEPENDENCE OF COMPENSATION COMMITTEES.— ‘‘(1) LISTING STANDARDS.—The Commission shall, by rule, 

direct the national securities exchanges and national securities 

associations to prohibit the listing of any equity security of 

an issuer, other than an issuer that is a controlled company, 

limited partnership, company in bankruptcy proceedings, openended management investment company that is registered 

under the Investment Company Act of 1940, or a foreign private 

issuer that provides annual disclosures to shareholders of the 

reasons that the foreign private issuer does not have an independent compensation committee, that does not comply with 

the requirements of this subsection. 

‘‘(2) INDEPENDENCE OF COMPENSATION COMMITTEES.—The 

rules of the Commission under paragraph (1) shall require 

that each member of the compensation committee of the board 

of directors of an issuer be— 

‘‘(A) a member of the board of directors of the issuer; 

and 

‘‘(B) independent. 
H. R. 4173—526 

‘‘(3) INDEPENDENCE.—The rules of the Commission under 

paragraph (1) shall require that, in determining the definition 

of the term ‘independence’ for purposes of paragraph (2), the 

national securities exchanges and the national securities 

associations shall consider relevant factors, including— 

‘‘(A) the source of compensation of a member of the 

board of directors of an issuer, including any consulting, 

advisory, or other compensatory fee paid by the issuer 

to such member of the board of directors; and 

‘‘(B) whether a member of the board of directors of 

an issuer is affiliated with the issuer, a subsidiary of the 

issuer, or an affiliate of a subsidiary of the issuer. 

‘‘(4) EXEMPTION AUTHORITY.—The rules of the Commission 

under paragraph (1) shall permit a national securities exchange 

or a national securities association to exempt a particular relationship from the requirements of paragraph (2), with respect 

to the members of a compensation committee, as the national 

securities exchange or national securities association determines is appropriate, taking into consideration the size of an 

issuer and any other relevant factors. 

‘‘(b) INDEPENDENCE OF COMPENSATION CONSULTANTS AND

OTHER COMPENSATION COMMITTEE ADVISERS.— 

‘‘(1) IN GENERAL.—The compensation committee of an issuer 

may only select a compensation consultant, legal counsel, or 

other adviser to the compensation committee after taking into 

consideration the factors identified by the Commission under 

paragraph (2). 

‘‘(2) RULES.—The Commission shall identify factors that 

affect the independence of a compensation consultant, legal 

counsel, or other adviser to a compensation committee of an 

issuer. Such factors shall be competitively neutral among categories of consultants, legal counsel, or other advisers and 

preserve the ability of compensation committees to retain the 

services of members of any such category, and shall include— 

‘‘(A) the provision of other services to the issuer by 

the person that employs the compensation consultant, legal 

counsel, or other adviser; 

‘‘(B) the amount of fees received from the issuer by 

the person that employs the compensation consultant, legal 

counsel, or other adviser, as a percentage of the total 

revenue of the person that employs the compensation 

consultant, legal counsel, or other adviser; 

‘‘(C) the policies and procedures of the person that 

employs the compensation consultant, legal counsel, or 

other adviser that are designed to prevent conflicts of 

interest; 

‘‘(D) any business or personal relationship of the compensation consultant, legal counsel, or other adviser with 

a member of the compensation committee; and 

‘‘(E) any stock of the issuer owned by the compensation 

consultant, legal counsel, or other adviser. 

‘‘(c) COMPENSATION COMMITTEE AUTHORITY RELATING TO COMPENSATION CONSULTANTS.— 

‘‘(1) AUTHORITY TO RETAIN COMPENSATION CONSULTANT.— 
H. R. 4173—527 

‘‘(A) IN GENERAL.—The compensation committee of an 

issuer, in its capacity as a committee of the board of directors, may, in its sole discretion, retain or obtain the advice 

of a compensation consultant. 

‘‘(B) DIRECT RESPONSIBILITY OF COMPENSATION COMMITTEE.—The compensation committee of an issuer shall 

be directly responsible for the appointment, compensation, 

and oversight of the work of a compensation consultant. 

‘‘(C) RULE OF CONSTRUCTION.—This paragraph may not 

be construed— 

‘‘(i) to require the compensation committee to 

implement or act consistently with the advice or recommendations of the compensation consultant; or 

‘‘(ii) to affect the ability or obligation of a compensation committee to exercise its own judgment in 

fulfillment of the duties of the compensation committee. 

‘‘(2) DISCLOSURE.—In any proxy or consent solicitation 

material for an annual meeting of the shareholders (or a special 

meeting in lieu of the annual meeting) occurring on or after 

the date that is 1 year after the date of enactment of this 

section, each issuer shall disclose in the proxy or consent material, in accordance with regulations of the Commission, 

whether— 

‘‘(A) the compensation committee of the issuer retained 

or obtained the advice of a compensation consultant; and 

‘‘(B) the work of the compensation consultant has 

raised any conflict of interest and, if so, the nature of 

the conflict and how the conflict is being addressed. 

‘‘(d) AUTHORITY TO ENGAGE INDEPENDENT LEGAL COUNSEL AND

OTHER ADVISERS.— ‘‘(1) IN GENERAL.—The compensation committee of an 

issuer, in its capacity as a committee of the board of directors, 

may, in its sole discretion, retain and obtain the advice of 

independent legal counsel and other advisers. 

‘‘(2) DIRECT RESPONSIBILITY OF COMPENSATION COM- MITTEE.—The compensation committee of an issuer shall be 

directly responsible for the appointment, compensation, and 

oversight of the work of independent legal counsel and other 

advisers. 

‘‘(3) RULE OF CONSTRUCTION.—This subsection may not be 

construed— 

‘‘(A) to require a compensation committee to implement 

or act consistently with the advice or recommendations 

of independent legal counsel or other advisers under this 

subsection; or 

‘‘(B) to affect the ability or obligation of a compensation 

committee to exercise its own judgment in fulfillment of 

the duties of the compensation committee. 

‘‘(e) COMPENSATION OF COMPENSATION CONSULTANTS, INDE- PENDENT LEGAL COUNSEL, AND OTHER ADVISERS.—Each issuer shall 

provide for appropriate funding, as determined by the compensation 

committee in its capacity as a committee of the board of directors, 

for payment of reasonable compensation— 

‘‘(1) to a compensation consultant; and 

‘‘(2) to independent legal counsel or any other adviser to 

the compensation committee. 
H. R. 4173—528 

‘‘(f) COMMISSION RULES.— 

‘‘(1) IN GENERAL.—Not later than 360 days after the date 

of enactment of this section, the Commission shall, by rule, 

direct the national securities exchanges and national securities 

associations to prohibit the listing of any security of an issuer 

that is not in compliance with the requirements of this section. 

‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The rules of the 

Commission under paragraph (1) shall provide for appropriate 

procedures for an issuer to have a reasonable opportunity to 

cure any defects that would be the basis for the prohibition 

under paragraph (1), before the imposition of such prohibition. 

‘‘(3) EXEMPTION AUTHORITY.— 

‘‘(A) IN GENERAL.—The rules of the Commission under 

paragraph (1) shall permit a national securities exchange 

or a national securities association to exempt a category 

of issuers from the requirements under this section, as 

the national securities exchange or the national securities 

association determines is appropriate. 

‘‘(B) CONSIDERATIONS.—In determining appropriate 

exemptions under subparagraph (A), the national securities 

exchange or the national securities association shall take 

into account the potential impact of the requirements of 

this section on smaller reporting issuers. 

‘‘(g) CONTROLLED COMPANY EXEMPTION.— 

‘‘(1) IN GENERAL.—This section shall not apply to any controlled company. 

‘‘(2) DEFINITION.—For purposes of this section, the term 

‘controlled company’ means an issuer— 

‘‘(A) that is listed on a national securities exchange 

or by a national securities association; and 

‘‘(B) that holds an election for the board of directors 

of the issuer in which more than 50 percent of the voting 

power is held by an individual, a group, or another issuer.’’. 

(b) STUDY AND REPORT.— 

(1) STUDY.—The Securities and Exchange Commission shall 

conduct a study and review of the use of compensation consultants and the effects of such use. 

(2) REPORT.—Not later than 2 years after the date of the 

enactment of this Act, the Commission shall submit a report 

to Congress on the results of the study and review required 

by this subsection. 

SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES. 

(a) DISCLOSURE OF PAY VERSUS PERFORMANCE.—Section 14 

of the Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended 

by this title, is amended by adding at the end the following: 

‘‘(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.—The Commission shall, by rule, require each issuer to disclose in any proxy 

or consent solicitation material for an annual meeting of the shareholders of the issuer a clear description of any compensation 

required to be disclosed by the issuer under section 229.402 of 

title 17, Code of Federal Regulations (or any successor thereto), 

including information that shows the relationship between executive 

compensation actually paid and the financial performance of the 

issuer, taking into account any change in the value of the shares 

of stock and dividends of the issuer and any distributions. The 
H. R. 4173—529 

disclosure under this subsection may include a graphic representation of the information required to be disclosed.’’. 

(b) ADDITIONAL DISCLOSURE REQUIREMENTS.— (1) IN GENERAL.—The Commission shall amend section 

229.402 of title 17, Code of Federal Regulations, to require 

each issuer to disclose in any filing of the issuer described 

in section 229.10(a) of title 17, Code of Federal Regulations 

(or any successor thereto)— 

(A) the median of the annual total compensation of 

all employees of the issuer, except the chief executive officer 

(or any equivalent position) of the issuer; 

(B) the annual total compensation of the chief executive 

officer (or any equivalent position) of the issuer; and 

(C) the ratio of the amount described in subparagraph 

(A) to the amount described in subparagraph (B). 

(2) TOTAL COMPENSATION.—For purposes of this subsection, 

the total compensation of an employee of an issuer shall be 

determined in accordance with section 229.402(c)(2)(x) of title 

17, Code of Federal Regulations, as in effect on the day before 

the date of enactment of this Act. 

SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. 

The Securities Exchange Act of 1934 is amended by inserting 

after section 10C, as added by section 952, the following: 

‘‘SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION 

POLICY. 

‘‘(a) LISTING STANDARDS.—The Commission shall, by rule, direct 

the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that does 

not comply with the requirements of this section. 

‘‘(b) RECOVERY OF FUNDS.—The rules of the Commission under 

subsection (a) shall require each issuer to develop and implement 

a policy providing— 

‘‘(1) for disclosure of the policy of the issuer on incentivebased compensation that is based on financial information 

required to be reported under the securities laws; and 

‘‘(2) that, in the event that the issuer is required to prepare 

an accounting restatement due to the material noncompliance 

of the issuer with any financial reporting requirement under 

the securities laws, the issuer will recover from any current 

or former executive officer of the issuer who received incentivebased compensation (including stock options awarded as compensation) during the 3-year period preceding the date on which 

the issuer is required to prepare an accounting restatement, 

based on the erroneous data, in excess of what would have 

been paid to the executive officer under the accounting restatement.’’. 

SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR 

HEDGING. 

Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 

78n), as amended by this title, is amended by adding at the end 

the following: 

‘‘(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND DIRECTORS.— 

The Commission shall, by rule, require each issuer to disclose 

in any proxy or consent solicitation material for an annual meeting 

of the shareholders of the issuer whether any employee or member 
H. R. 4173—530 

of the board of directors of the issuer, or any designee of such 

employee or member, is permitted to purchase financial instruments 

(including prepaid variable forward contracts, equity swaps, collars, 

and exchange funds) that are designed to hedge or offset any 

decrease in the market value of equity securities— 

‘‘(1) granted to the employee or member of the board of 

directors by the issuer as part of the compensation of the 

employee or member of the board of directors; or 

‘‘(2) held, directly or indirectly, by the employee or member 

of the board of directors.’’. 

SEC. 956. ENHANCED COMPENSATION STRUCTURE REPORTING. 

(a) ENHANCED DISCLOSURE AND REPORTING OF COMPENSATION

ARRANGEMENTS.— 

(1) IN GENERAL.—Not later than 9 months after the date 

of enactment of this title, the appropriate Federal regulators 

jointly shall prescribe regulations or guidelines to require each 

covered financial institution to disclose to the appropriate Federal regulator the structures of all incentive-based compensation arrangements offered by such covered financial institutions 

sufficient to determine whether the compensation structure— 

(A) provides an executive officer, employee, director, 

or principal shareholder of the covered financial institution 

with excessive compensation, fees, or benefits; or 

(B) could lead to material financial loss to the covered 

financial institution. 

(2) RULES OF CONSTRUCTION.—Nothing in this section shall 

be construed as requiring the reporting of the actual compensation of particular individuals. Nothing in this section shall 

be construed to require a covered financial institution that 

does not have an incentive-based payment arrangement to 

make the disclosures required under this subsection. 

(b) PROHIBITION ON CERTAIN COMPENSATION ARRANGEMENTS.— 

Not later than 9 months after the date of enactment of this title, 

the appropriate Federal regulators shall jointly prescribe regulations or guidelines that prohibit any types of incentive-based payment arrangement, or any feature of any such arrangement, that 

the regulators determine encourages inappropriate risks by covered 

financial institutions— 

(1) by providing an executive officer, employee, director, 

or principal shareholder of the covered financial institution 

with excessive compensation, fees, or benefits; or 

(2) that could lead to material financial loss to the covered 

financial institution. 

(c) STANDARDS.—The appropriate Federal regulators shall— 

(1) ensure that any standards for compensation established 

under subsections (a) or (b) are comparable to the standards 

established under section of the Federal Deposit Insurance 

Act (12 U.S.C. 2 1831p–1) for insured depository institutions; 

and 

(2) in establishing such standards under such subsections, 

take into consideration the compensation standards described 

in section 39(c) of the Federal Deposit Insurance Act (12 U.S.C. 

1831p– 9 1(c)). 

(d) ENFORCEMENT.—The provisions of this section and the regulations issued under this section shall be enforced under section 
H. R. 4173—531 

505 of the Gramm-Leach-Bliley Act and, for purposes of such section, a violation of this section or such regulations shall be treated 

as a violation of subtitle A of title V of such Act. 

(e) DEFINITIONS.—As used in this section— 

(1) the term ‘‘appropriate Federal regulator’’ means the 

Board of Governors of the Federal Reserve System, the Office 

of the Comptroller of the Currency, the Board of Directors 

of the Federal Deposit Insurance Corporation, the Director 

of the Office of Thrift Supervision, the National Credit Union 

Administration Board, the Securities and Exchange Commission, the Federal Housing Finance Agency; and 

(2) the term ‘‘covered financial institution’’ means— 

(A) a depository institution or depository institution 

holding company, as such terms are defined in section 

3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); 

(B) a broker-dealer registered under section 15 of the 

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

(C) a credit union, as described in section 19(b)(1)(A)(iv) 

of the Federal Reserve Act; 

(D) an investment advisor, as such term is defined 

in section 202(a)(11) of the Investment Advisers Act of 

1940 (15 U.S.C. 80b-2(a)(11)); 

(E) the Federal National Mortgage Association; 

(F) the Federal Home Loan Mortgage Corporation; and 

(G) any other financial institution that the appropriate 

Federal regulators, jointly, by rule, determine should be 

treated as a covered financial institution for purposes of 

this section. 

(f) EXEMPTION FOR CERTAIN FINANCIAL INSTITUTIONS.—The 

requirements of this section shall not apply to covered financial 

institutions with assets of less than $1,000,000,000. 

SEC. 957. VOTING BY BROKERS. 

Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C. 

78f(b)) is amended— 

(1) in paragraph (9)— 

(A) in subparagraph (A), by redesignating clauses (i) 

through (v) as subclauses (I) through (V), respectively, and 

adjusting the margins accordingly; 

(B) by redesignating subparagraphs (A) through (D) 

as clauses (i) through (iv), respectively, and adjusting the 

margins accordingly; 

(C) by inserting ‘‘(A)’’ after ‘‘(9)’’; and 

(D) in the matter immediately following clause (iv), 

as so redesignated, by striking ‘‘As used’’ and inserting 

the following: 

‘‘(B) As used’’. 

(2) by adding at the end the following: 

‘‘(10)(A) The rules of the exchange prohibit any member 

that is not the beneficial owner of a security registered under 

section 12 from granting a proxy to vote the security in connection with a shareholder vote described in subparagraph (B), 

unless the beneficial owner of the security has instructed the 

member to vote the proxy in accordance with the voting instructions of the beneficial owner. 

‘‘(B) A shareholder vote described in this subparagraph 

is a shareholder vote with respect to the election of a member 
H. R. 4173—532 

of the board of directors of an issuer, executive compensation, 

or any other significant matter, as determined by the Commission, by rule, and does not include a vote with respect to 

the uncontested election of a member of the board of directors 

of any investment company registered under the Investment 

Company Act of 1940 (15 U.S.C. 80b–1 et seq.). 

‘‘(C) Nothing in this paragraph shall be construed to prohibit a national securities exchange from prohibiting a member 

that is not the beneficial owner of a security registered under 

section 12 from granting a proxy to vote the security in connection with a shareholder vote not described in subparagraph 

(A).’’. 

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

Commission 

SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY 

CONTROLS. 

(a) ANNUAL REPORTS AND CERTIFICATION.—Not later than 90 

days after the end of each fiscal year, the Commission shall submit 

a report to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of the 

House of Representatives on the conduct by the Commission of 

examinations of registered entities, enforcement investigations, and 

review of corporate financial securities filings. 

(b) CONTENTS OF REPORTS.—Each report under subsection (a) 

shall contain— 

(1) an assessment, as of the end of the most recent fiscal 

year, of the effectiveness of— 

(A) the internal supervisory controls of the Commission; and 

(B) the procedures of the Commission applicable to 

the staff of the Commission who perform examinations 

of registered entities, enforcement investigations, and 

reviews of corporate financial securities filings; 

(2) a certification that the Commission has adequate 

internal supervisory controls to carry out the duties of the 

Commission described in paragraph (1)(B); and 

(3) a summary by the Comptroller General of the United 

States of the review carried out under subsection (d). 

(c) CERTIFICATION.— 

(1) SIGNATURE.—The certification under subsection (b)(2) 

shall be signed by the Director of the Division of Enforcement, 

the Director of the Division of Corporation Finance, and the 

Director of the Office of Compliance Inspections and Examinations (or the head of any successor division or office). 

(2) CONTENT OF CERTIFICATION.—Each individual described 

in paragraph (1) shall certify that the individual— 

(A) is directly responsible for establishing and 

maintaining the internal supervisory controls of the Division or Office of which the individual is the head; 

(B) is knowledgeable about the internal supervisory 

controls of the Division or Office of which the individual 

is the head; 
H. R. 4173—533 

(C) has evaluated the effectiveness of the internal 

supervisory controls during the 90-day period ending on 

the final day of the fiscal year to which the report relates; 

and 

(D) has disclosed to the Commission any significant 

deficiencies in the design or operation of internal supervisory controls that could adversely affect the ability of 

the Division or Office to consistently conduct inspections, 

or investigations, or reviews of filings with professional 

competence and integrity. 

(d) NEW DIRECTOR OR ACTING DIRECTOR.—Notwithstanding 

subsection (a), if the Director of the Division of Enforcement, the 

Director of the Division of Corporate Finance, or the Director of 

the Office of Compliance Inspections and Examinations has served 

as Director of the Division or Office for less than 90 days on 

the date on which a report is required to be submitted under 

subsection (a), the Commission may submit the report on the date 

on which the Director has served as Director for 90 days. If there 

is no Director of the Division of Enforcement, the Division of Corporate Finance, or the Office of Compliance Inspections and 

Examinations, on the date on which a report is required to be 

submitted under subsection (a), the Acting Director of the Division 

or Office may make the certification required under subsection 

(c). 

(e) REVIEW BY THE COMPTROLLER GENERAL.— (1) REPORT.—The Comptroller General of the United States 

shall submit to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services 

of the House of Representatives a report that contains a review 

of the adequacy and effectiveness of the internal supervisory 

control structure and procedures described in subsection (b)(1), 

not less frequently than once every 3 years, at a time to 

coincide with the publication of the reports of the Commission 

under this section. 

(2) AUTHORITY TO HIRE EXPERTS.—The Comptroller General 

of the United States may hire independent consultants with 

specialized expertise in any area relevant to the duties of 

the Comptroller General described in this section, in order 

to assist the Comptroller General in carrying out such duties. 

SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT. 

(a) TRIENNIAL REPORT REQUIRED.—Once every 3 years, the 

Comptroller General of the United States shall submit a report 

to the Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House 

of Representatives on the quality of personnel management by 

the Commission. 

(b) CONTENTS OF REPORT.—Each report under subsection (a) 

shall include— 

(1) an evaluation of— 

(A) the effectiveness of supervisors in using the skills, 

talents, and motivation of the employees of the Commission 

to achieve the goals of the Commission; 

(B) the criteria for promoting employees of the Commission to supervisory positions; 

(C) the fairness of the application of the promotion 

criteria to the decisions of the Commission; 
H. R. 4173—534 

(D) the competence of the professional staff of the 

Commission; 

(E) the efficiency of communication between the units 

of the Commission regarding the work of the Commission 

(including communication between divisions and between 

subunits of a division) and the efforts by the Commission 

to promote such communication; 

(F) the turnover within subunits of the Commission, 

including the consideration of supervisors whose subordinates have an unusually high rate of turnover; 

(G) whether there are excessive numbers of low-level, 

mid-level, or senior-level managers; 

(H) any initiatives of the Commission that increase 

the competence of the staff of the Commission; 

(I) the actions taken by the Commission regarding 

employees of the Commission who have failed to perform 

their duties and circumstances under which the Commission has issued to employees a notice of termination; and 

(J) such other factors relating to the management of 

the Commission as the Comptroller General determines 

are appropriate; 

(2) an evaluation of any improvements made with respect 

to the areas described in paragraph (1) since the date of submission of the previous report; and 

(3) recommendations for how the Commission can use the 

human resources of the Commission more effectively and efficiently to carry out the mission of the Commission. 

(c) CONSULTATION.—In preparing the report under subsection 

(a), the Comptroller General shall consult with current employees 

of the Commission, retired employees and other former employees 

of the Commission, the Inspector General of the Commission, persons that have business before the Commission, any union representing the employees of the Commission, private management 

consultants, academics, and any other source that the Comptroller 

General deems appropriate. 

(d) REPORT BY COMMISSION.—Not later than 90 days after 

the date on which the Comptroller General submits each report 

under subsection (a), the Commission shall submit to the Committee 

on Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives 

a report describing the actions taken by the Commission in response 

to the recommendations contained in the report under subsection 

(a). 

(e) REIMBURSEMENTS FOR COST OF REPORTS.— 

(1) REIMBURSEMENTS REQUIRED.—The Commission shall 

reimburse the Government Accountability Office for the full 

cost of making the reports under this section, as billed therefor 

by the Comptroller General. 

(2) CREDITING AND USE OF REIMBURSEMENTS.—Such 

reimbursements shall— 

(A) be credited to the appropriation account ‘‘Salaries 

and Expenses, Government Accountability Office’’ current 

when the payment is received; and 

(B) remain available until expended. 

(f) AUTHORITY TO HIRE EXPERTS.—The Comptroller General 

of the United States may hire independent consultants with specialized expertise in any area relevant to the duties of the Comptroller 
H. R. 4173—535 

General described in this section, in order to assist the Comptroller 

General in carrying out such duties. 

SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT. 

(a) REPORTS OF COMMISSION.— (1) ANNUAL REPORTS REQUIRED.—Not later than 6 months 

after the end of each fiscal year, the Commission shall publish 

and submit to Congress a report that— 

(A) describes the responsibility of the management of 

the Commission for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and 

(B) contains an assessment of the effectiveness of the 

internal control structure and procedures for financial 

reporting of the Commission during that fiscal year. 

(2) ATTESTATION.—The reports required under paragraph 

(1) shall be attested to by the Chairman and chief financial 

officer of the Commission. 

(b) REPORT BY COMPTROLLER GENERAL.— (1) REPORT REQUIRED.—Not later than 6 months after the 

end of the first fiscal year after the date of enactment of 

this Act, the Comptroller General of the United States shall 

submit a report to Congress that assesses— 

(A) the effectiveness of the internal control structure 

and procedures of the Commission for financial reporting; 

and 

(B) the assessment of the Commission under subsection 

(a)(1)(B). 

(2) ATTESTATION.—The Comptroller General shall attest 

to, and report on, the assessment made by the Commission 

under subsection (a). 

(c) REIMBURSEMENTS FOR COST OF REPORTS.— (1) REIMBURSEMENTS REQUIRED.—The Commission shall 

reimburse the Government Accountability Office for the full 

cost of making the reports under subsection (b), as billed 

therefor by the Comptroller General. 

(2) CREDITING AND USE OF REIMBURSEMENTS.—Such 

reimbursements shall— 

(A) be credited to the appropriation account ‘‘Salaries 

and Expenses, Government Accountability Office’’ current 

when the payment is received; and 

(B) remain available until expended. 

SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS. 

(a) REPORT REQUIRED.—Not later than 2 years after the date 

of enactment of this Act, and every 3 years thereafter, the Comptroller General of the United States shall submit to the Committee 

on Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives 

a report that includes an evaluation of the oversight by the Commission of national securities associations registered under section 

15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) 

with respect to— 

(1) the governance of such national securities associations, 

including the identification and management of conflicts of 

interest by such national securities associations, together with 

an analysis of the impact of any conflicts of interest on the 
H. R. 4173—536 

regulatory enforcement or rulemaking by such national securities associations; 

(2) the examinations carried out by the national securities 

associations, including the expertise of the examiners; 

(3) the executive compensation practices of such national 

securities associations; 

(4) the arbitration services provided by the national securities associations; 

(5) the review performed by national securities associations 

of advertising by the members of the national securities associations; 

(6) the cooperation with and assistance to State securities 

administrators by the national securities associations to promote investor protection; 

(7) how the funding of national securities associations is 

used to support the mission of the national securities associations, including— 

(A) the methods of funding; 

(B) the sufficiency of funds; 

(C) how funds are invested by the national securities 

association pending use; and 

(D) the impact of the methods, sufficiency, and investment of funds on regulatory enforcement by the national 

securities associations; 

(8) the policies regarding the employment of former 

employees of national securities associations by regulated entities; 

(9) the ongoing effectiveness of the rules of the national 

securities associations in achieving the goals of the rules; 

(10) the transparency of governance and activities of the 

national securities associations; and 

(11) any other issue that has an impact, as determined 

by the Comptroller General, on the effectiveness of such 

national securities associations in performing their mission and 

in dealing fairly with investors and members; 

(b) REIMBURSEMENTS FOR COST OF REPORTS.— (1) REIMBURSEMENTS REQUIRED.—The Commission shall 

reimburse the Government Accountability Office for the full 

cost of making the reports under subsection (a), as billed 

therefor by the Comptroller General. 

(2) CREDITING AND USE OF REIMBURSEMENTS.—Such 

reimbursements shall— 

(A) be credited to the appropriation account ‘‘Salaries 

and Expenses, Government Accountability Office’’ current 

when the payment is received; and 

(B) remain available until expended. 

SEC. 965. COMPLIANCE EXAMINERS. 

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 

78d) is amended by adding at the end the following: 

‘‘(h) EXAMINERS.— ‘‘(1) DIVISION OF TRADING AND MARKETS.—The Division of 

Trading and Markets of the Commission, or any successor 

organizational unit, shall have a staff of examiners who shall— 

‘‘(A) perform compliance inspections and examinations 

of entities under the jurisdiction of that Division; and 

‘‘(B) report to the Director of that Division. 
H. R. 4173—537 

‘‘(2) DIVISION OF INVESTMENT MANAGEMENT.—The Division 

of Investment Management of the Commission, or any successor 

organizational unit, shall have a staff of examiners who shall— 

‘‘(A) perform compliance inspections and examinations 

of entities under the jurisdiction of that Division; and 

‘‘(B) report to the Director of that Division.’’. 

SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION. 

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

is amended by inserting after section 4C (15 U.S.C. 78d–3) the 

following: 

‘‘SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL. 

‘‘(a) SUGGESTION SUBMISSIONS BY COMMISSION EMPLOYEES.— 

‘‘(1) HOTLINE ESTABLISHED.—The Inspector General of the 

Commission shall establish and maintain a telephone hotline 

or other electronic means for the receipt of— 

‘‘(A) suggestions by employees of the Commission for 

improvements in the work efficiency, effectiveness, and 

productivity, and the use of the resources, of the Commission; and 

‘‘(B) allegations by employees of the Commission of 

waste, abuse, misconduct, or mismanagement within the 

Commission. 

‘‘(2) CONFIDENTIALITY.—The Inspector General shall maintain as confidential— 

‘‘(A) the identity of any individual who provides 

information by the means established under paragraph 

(1), unless the individual requests otherwise, in writing; 

and 

‘‘(B) at the request of any such individual, any specific 

information provided by the individual. 

‘‘(b) CONSIDERATION OF REPORTS.—The Inspector General shall 

consider any suggestions or allegations received by the means established under subsection (a)(1), and shall recommend appropriate 

action in relation to such suggestions or allegations. 

‘‘(c) RECOGNITION.—The Inspector General may recognize any 

employee who makes a suggestion under subsection (a)(1) (or by 

other means) that would or does— 

‘‘(1) increase the work efficiency, effectiveness, or productivity of the Commission; or 

‘‘(2) reduce waste, abuse, misconduct, or mismanagement 

within the Commission. 

‘‘(d) REPORT.—The Inspector General of the Commission shall 

submit to Congress an annual report containing a description of— 

‘‘(1) the nature, number, and potential benefits of any 

suggestions received under subsection (a); 

‘‘(2) the nature, number, and seriousness of any allegations 

received under subsection (a); 

‘‘(3) any recommendations made or actions taken by the 

Inspector General in response to substantiated allegations 

received under subsection (a); and 

‘‘(4) any action the Commission has taken in response 

to suggestions or allegations received under subsection (a). 

‘‘(e) FUNDING.—The activities of the Inspector General under 

this subsection shall be funded by the Securities and Exchange 
H. R. 4173—538 

Commission Investor Protection Fund established under section 

21F.’’. 

SEC. 967. COMMISSION ORGANIZATIONAL STUDY AND REFORM. 

(a) STUDY REQUIRED.— 

(1) IN GENERAL.—Not later than the end of the 90-day 

period beginning on the date of the enactment of this subtitle, 

the Securities and Exchange Commission (hereinafter in this 

section referred to as the ‘‘SEC’’) shall hire an independent 

consultant of high caliber and with expertise in organizational 

restructuring and the operations of capital markets to examine 

the internal operations, structure, funding, and the need for 

comprehensive reform of the SEC, as well as the SEC’s relationship with and the reliance on self-regulatory organizations and 

other entities relevant to the regulation of securities and the 

protection of securities investors that are under the SEC’s 

oversight. 

(2) SPECIFIC AREAS FOR STUDY.—The study required under 

paragraph (1) shall, at a minimum, include the study of— 

(A) the possible elimination of unnecessary or redundant units at the SEC; 

(B) improving communications between SEC offices 

and divisions; 

(C) the need to put in place a clear chain-of-command 

structure, particularly for enforcement examinations and 

compliance inspections; 

(D) the effect of high-frequency trading and other 

technological advances on the market and what the SEC 

requires to monitor the effect of such trading and advances 

on the market; 

(E) the SEC’s hiring authorities, workplace policies, 

and personal practices, including— 

(i) whether there is a need to further streamline 

hiring authorities for those who are not lawyers, 

accountants, compliance examiners, or economists; 

(ii) whether there is a need for further pay reforms; 

(iii) the diversity of skill sets of SEC employees 

and whether the present skill set diversity efficiently 

and effectively fosters the SEC’s mission of investor 

protection; and 

(iv) the application of civil service laws by the 

SEC; 

(F) whether the SEC’s oversight and reliance on selfregulatory organizations promotes efficient and effective 

governance for the securities markets; and 

(G) whether adjusting the SEC’s reliance on self-regulatory organizations is necessary to promote more efficient 

and effective governance for the securities markets. 

(b) CONSULTANT REPORT.—Not later than the end of the 150- 

day period after being retained, the independent consultant hired 

pursuant to subsection (a)(1) shall issue a report to the SEC and 

the Congress containing— 

(1) a detailed description of any findings and conclusions 

made while carrying out the study required under subsection 

(a)(1); and 

(2) recommendations for legislative, regulatory, or administrative action that the consultant determines appropriate to 
H. R. 4173—539 

enable the SEC and other entities on which the consultant 

reports to perform their statutorily or otherwise mandated missions. 

(c) SEC REPORT.—Not later than the end of the 6-month period 

beginning on the date the consultant issues the report under subsection (b), and every 6-months thereafter during the 2-year period 

following the date on which the consultant issues such report, 

the SEC shall issue a report to the Committee on Financial Services 

of the House of Representatives and the Committee on Banking, 

Housing, and Urban Affairs of the Senate describing the SEC’s 

implementation of the regulatory and administrative recommendations contained in the consultant’s report. 

SEC. 968. STUDY ON SEC REVOLVING DOOR. 

(a) GOVERNMENT ACCOUNTABILITY OFFICE STUDY.—The Comptroller General of the United States shall conduct a study that 

will— 

(1) review the number of employees who leave the Securities and Exchange Commission to work for financial institutions 

regulated by such Commission; 

(2) determine how many employees who leave the Securities 

and Exchange Commission worked on cases that involved financial institutions regulated by such Commission; 

(3) review the length of time employees work for the Securities and Exchange Commission before leaving to be employed 

by financial institutions regulated by such Commission; 

(4) review existing internal controls and make recommendations on strengthening such controls to ensure that 

employees of the Securities and Exchange Commission who 

are later employed by financial institutions did not assist such 

institutions in violating any rules or regulations of the Commission during the course of their employment with such Commission; 

(5) determine if greater post-employment restrictions are 

necessary to prevent employees of the Securities and Exchange 

Commission from being employed by financial institutions after 

employment with such Commission; 

(6) determine if the volume of employees of the Securities 

and Exchange Commission who are later employed by financial 

institutions has led to inefficiencies in enforcement; 

(7) determine if employees of the Securities and Exchange 

Commission who are later employed by financial institutions 

assisted such institutions in circumventing Federal rules and 

regulations while employed by such Commission; 

(8) review any information that may address the volume 

of employees of the Securities and Exchange Commission who 

are later employed by financial institutions, and make recommendations to Congress; and 

(9) review other additional issues as may be raised during 

the course of the study conducted under this subsection. 

(b) REPORT.—Not later than 1 year after the date of the enactment of this subtitle, the Comptroller General of the United States 

shall submit to the Committee on Financial Services of the House 

of Representatives and the Committee on Banking, Housing, and 

Urban Affairs of the Senate a report on the results of the study 

required by subsection (a). 
H. R. 4173—540 

Subtitle G—Strengthening Corporate 

Governance 

SEC. 971. PROXY ACCESS. 

(a) PROXY ACCESS.—Section 14(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78n(a)) is amended— 

(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 

(2) by adding at the end the following: 

‘‘(2) The rules and regulations prescribed by the Commission 

under paragraph (1) may include— 

‘‘(A) a requirement that a solicitation of proxy, consent, 

or authorization by (or on behalf of) an issuer include a nominee 

submitted by a shareholder to serve on the board of directors 

of the issuer; and 

‘‘(B) a requirement that an issuer follow a certain procedure 

in relation to a solicitation described in subparagraph (A).’’. 

(b) REGULATIONS.—The Commission may issue rules permitting 

the use by a shareholder of proxy solicitation materials supplied 

by an issuer of securities for the purpose of nominating individuals 

to membership on the board of directors of the issuer, under such 

terms and conditions as the Commission determines are in the 

interests of shareholders and for the protection of investors. 

(c) EXEMPTIONS.—The Commission may, by rule or order, 

exempt an issuer or class of issuers from the requirement made 

by this section or an amendment made by this section. In determining whether to make an exemption under this subsection, the 

Commission shall take into account, among other considerations, 

whether the requirement in the amendment made by subsection 

(a) disproportionately burdens small issuers. 

SEC. 972. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES. 

The Securities Exchange Act of 1934 (15 U.S. C. 78a et seq.) 

is amended by inserting after section 14A, as added by this title, 

the following: 

‘‘SEC. 14B. CORPORATE GOVERNANCE. 

‘‘Not later than 180 days after the date of enactment of this 

subsection, the Commission shall issue rules that require an issuer 

to disclose in the annual proxy sent to investors the reasons why 

the issuer has chosen— 

‘‘(1) the same person to serve as chairman of the board 

of directors and chief executive officer (or in equivalent positions); or 

‘‘(2) different individuals to serve as chairman of the board 

of directors and chief executive officer (or in equivalent positions 

of the issuer).’’. 

Subtitle H—Municipal Securities 

SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO 

THE BOARD OF THE MSRB. 

(a) REGISTRATION OF MUNICIPAL SECURITIES DEALERS AND

MUNICIPAL ADVISORS.—Section 15B(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78o–4(a)) is amended— 
H. R. 4173—541 

(1) in paragraph (1)— 

(A) by inserting ‘‘(A)’’ after ‘‘(1)’’; and 

(B) by adding at the end the following: 

‘‘(B) It shall be unlawful for a municipal advisor to 

provide advice to or on behalf of a municipal entity or 

obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake 

a solicitation of a municipal entity or obligated person, 

unless the municipal advisor is registered in accordance 

with this subsection.’’; 

(2) in paragraph (2), by inserting ‘‘or municipal advisor’’ 

after ‘‘municipal securities dealer’’ each place that term appears; 

(3) in paragraph (3), by inserting ‘‘or municipal advisor’’ 

after ‘‘municipal securities dealer’’ each place that term appears; 

(4) in paragraph (4), by striking ‘‘dealer, or municipal securities dealer or class of brokers, dealers, or municipal securities 

dealers’’ and inserting ‘‘dealer, municipal securities dealer, or 

municipal advisor, or class of brokers, dealers, municipal securities dealers, or municipal advisors’’; and 

(5) by adding at the end the following: 

‘‘(5) No municipal advisor shall make use of the mails 

or any means or instrumentality of interstate commerce to 

provide advice to or on behalf of a municipal entity or obligated 

person with respect to municipal financial products, the 

issuance of municipal securities, or to undertake a solicitation 

of a municipal entity or obligated person, in connection with 

which such municipal advisor engages in any fraudulent, deceptive, or manipulative act or practice.’’. 

(b) MUNICIPAL SECURITIES RULEMAKING BOARD.—Section 

15B(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o– 

4(b)) is amended— 

(1) in paragraph (1)— 

(A) in the first sentence, by striking ‘‘Not later than’’ 

and all that follows through ‘‘appointed by the Commission’’ 

and inserting ‘‘The Municipal Securities Rulemaking Board 

shall be composed of 15 members, or such other number 

of members as specified by rules of the Board pursuant 

to paragraph (2)(B),’’; 

(B) by striking the second sentence and inserting the 

following: ‘‘The members of the Board shall serve as members for a term of 3 years or for such other terms as 

specified by rules of the Board pursuant to paragraph 

(2)(B), and shall consist of (A) 8 individuals who are independent of any municipal securities broker, municipal securities dealer, or municipal advisor, at least 1 of whom 

shall be representative of institutional or retail investors 

in municipal securities, at least 1 of whom shall be representative of municipal entities, and at least 1 of whom 

shall be a member of the public with knowledge of or 

experience in the municipal industry (which members are 

hereinafter referred to as ‘public representatives’); and (B) 

7 individuals who are associated with a broker, dealer, 

municipal securities dealer, or municipal advisor, including 

at least 1 individual who is associated with and representative of brokers, dealers, or municipal securities dealers 

that are not banks or subsidiaries or departments or divisions of banks (which members are hereinafter referred 
H. R. 4173—542 

to as ‘broker-dealer representatives’), at least 1 individual 

who is associated with and representative of municipal 

securities dealers which are banks or subsidiaries or 

departments or divisions of banks (which members are 

hereinafter referred to as ‘bank representatives’), and at 

least 1 individual who is associated with a municipal 

advisor (which members are hereinafter referred to as 

‘advisor representatives’ and, together with the brokerdealer representatives and the bank representatives, are 

referred to as ‘regulated representatives’). Each member 

of the board shall be knowledgeable of matters related 

to the municipal securities markets.’’; and 

(C) in the third sentence, by striking ‘‘initial’’; 

(2) in paragraph (2)— 

(A) in the matter preceding subparagraph (A)— 

(i) by inserting before the period at the end of 

the first sentence the following: ‘‘and advice provided 

to or on behalf of municipal entities or obligated persons by brokers, dealers, municipal securities dealers, 

and municipal advisors with respect to municipal 

financial products, the issuance of municipal securities, 

and solicitations of municipal entities or obligated persons undertaken by brokers, dealers, municipal securities dealers, and municipal advisors’’; and 

(ii) by striking the second sentence; 

(B) in subparagraph (A)— 

(i) in the matter preceding clause (i)— 

(I) by inserting ‘‘, and no broker, dealer, municipal securities dealer, or municipal advisor shall 

provide advice to or on behalf of a municipal entity 

or obligated person with respect to municipal 

financial products or the issuance of municipal 

securities,’’ after ‘‘sale of, any municipal security’’; 

and 

(II) by inserting ‘‘and municipal entities or 

obligated persons’’ after ‘‘protection of investors’’; 

(ii) in clause (i), by striking ‘‘municipal securities 

brokers and municipal securities dealers’’ each place 

that term appears and inserting ‘‘municipal securities 

brokers, municipal securities dealers, and municipal 

advisors’’; 

(iii) in clause (ii), by adding ‘‘and’’ at the end; 

(iv) in clause (iii), by striking ‘‘; and’’ and inserting 

a period; and 

(v) by striking clause (iv); 

(C) by amending subparagraph (B) to read as follows: 

‘‘(B) establish fair procedures for the nomination and election of members of the Board and assure fair representation 

in such nominations and elections of public representatives, 

broker dealer representatives, bank representatives, and 

advisor representatives. Such rules— 

‘‘(i) shall provide that the number of public representatives of the Board shall at all times exceed the total number 

of regulated representatives and that the membership shall 

at all times be as evenly divided in number as possible 

between public representatives and regulated representatives; 
H. R. 4173—543 

‘‘(ii) shall specify the length or lengths of terms members shall serve; 

‘‘(iii) may increase the number of members which shall 

constitute the whole Board, provided that such number 

is an odd number; and 

‘‘(iv) shall establish requirements regarding the 

independence of public representatives.’’. 

(D) in subparagraph (C)— 

(i) by inserting ‘‘and municipal financial products’’ 

after ‘‘municipal securities’’ the first two times that 

term appears; 

(ii) by inserting ‘‘, municipal entities, obligated 

persons,’’ before ‘‘and the public interest’’; 

(iii) by striking ‘‘between’’ and inserting ‘‘among’’; 

(iv) by striking ‘‘issuers, municipal securities brokers, or municipal securities dealers, to fix’’ and 

inserting ‘‘municipal entities, obligated persons, municipal securities brokers, municipal securities dealers, 

or municipal advisors, to fix’’; and 

(v) by striking ‘‘brokers or municipal securities 

dealers, to regulate’’ and inserting ‘‘brokers, municipal 

securities dealers, or municipal advisors, to regulate’’; 

(E) in subparagraph (D)— 

(i) by inserting ‘‘and advice concerning municipal 

financial products’’ after ‘‘transactions in municipal 

securities’’; 

(ii) by striking ‘‘That no’’ and inserting ‘‘that no’’; 

(iii) by inserting ‘‘municipal advisor,’’ before ‘‘or 

person associated’’; and 

(iv) by striking ‘‘a municipal securities broker or 

municipal securities dealer may be compelled’’ and 

inserting ‘‘a municipal securities broker, municipal 

securities dealer, or municipal advisor may be compelled’’; 

(F) in subparagraph (E)— 

(i) by striking ‘‘municipal securities brokers and 

municipal securities dealers’’ and inserting ‘‘municipal 

securities brokers, municipal securities dealers, and 

municipal advisors’’; and 

(ii) by striking ‘‘municipal securities broker or 

municipal securities dealer’’ and inserting ‘‘municipal 

securities broker, municipal securities dealer, or municipal advisor’’; 

(G) in subparagraph (G), by striking ‘‘municipal securities brokers and municipal securities dealers’’ and inserting 

‘‘municipal securities brokers, municipal securities dealers, 

and municipal advisors’’; 

(H) in subparagraph (J)— 

(i) by striking ‘‘municipal securities broker and 

each municipal securities dealer’’ and inserting ‘‘municipal securities broker, municipal securities dealer, and 

municipal advisor’’; and 

(ii) by striking the period at the end of the second 

sentence and inserting ‘‘, which may include charges 

for failure to submit to the Board, or to any information 

system operated by the Board, within the prescribed 

timeframes, any items of information or documents 
H. R. 4173—544 

required to be submitted under any rule issued by 

the Board.’’; 

(I) in subparagraph (K)— 

(i) by inserting ‘‘broker, dealer, or’’ before ‘‘municipal securities dealer’’ each place that term appears; 

and 

(ii) by striking ‘‘municipal securities investment 

portfolio’’ and inserting ‘‘related account of a broker, 

dealer, or municipal securities dealer’’; and 

(J) by adding at the end the following: 

‘‘(L) with respect to municipal advisors— 

‘‘(i) prescribe means reasonably designed to prevent acts, practices, and courses of business as are 

not consistent with a municipal advisor’s fiduciary duty 

to its clients; 

‘‘(ii) provide continuing education requirements for 

municipal advisors; 

‘‘(iii) provide professional standards; and 

‘‘(iv) not impose a regulatory burden on small 

municipal advisors that is not necessary or appropriate 

in the public interest and for the protection of investors, municipal entities, and obligated persons, provided that there is robust protection of investors 

against fraud.’’; 

(3) by redesignating paragraph (3) as paragraph (7); and 

(4) by inserting after paragraph (2) the following: 

‘‘(3) The Board, in conjunction with or on behalf of any 

Federal financial regulator or self-regulatory organization, 

may— 

‘‘(A) establish information systems; and 

‘‘(B) assess such reasonable fees and charges for the 

submission of information to, or the receipt of information 

from, such systems from any persons which systems may 

be developed for the purposes of serving as a repository 

of information from municipal market participants or otherwise in furtherance of the purposes of the Board, a Federal 

financial regulator, or a self-regulatory organization, except 

that the Board— 

‘‘(i) may not charge a fee to municipal entities 

or obligated persons to submit documents or other 

information to the Board or charge a fee to any person 

to obtain, directly from the Internet site of the Board, 

documents or information submitted by municipal entities, obligated persons, brokers, dealers, municipal 

securities dealers, or municipal advisors, including 

documents submitted under the rules of the Board 

or the Commission; and 

‘‘(ii) shall not be prohibited from charging commercially reasonable fees for automated subscription-based 

feeds or similar services, or for charging for other 

data or document-based services customized upon 

request of any person, made available to commercial 

enterprises, municipal securities market professionals, 

or the general public, whether delivered through the 

Internet or any other means, that contain all or part 

of the documents or information, subject to approval 

of the fees by the Commission under section 19(b). 
H. R. 4173—545 

‘‘(4) The Board may provide guidance and assistance in 

the enforcement of, and examination for, compliance with the 

rules of the Board to the Commission, a registered securities 

association under section 15A, or any other appropriate regulatory agency, as applicable. 

‘‘(5) The Board, the Commission, and a registered securities 

association under section 15A, or the designees of the Board, 

the Commission, or such association, shall meet not less frequently than 2 times a year— 

‘‘(A) to describe the work of the Board, the Commission, 

and the registered securities association involving the regulation of municipal securities; and 

‘‘(B) to share information about— 

‘‘(i) the interpretation of the Board, the Commission, and the registered securities association of Board 

rules; and 

‘‘(ii) examination and enforcement of compliance 

with Board rules.’’. 

(c) DISCIPLINE OF BROKERS, DEALERS, MUNICIPAL SECURITIES

DEALERS AND MUNICIPAL ADVISORS; FIDUCIARY DUTY OF MUNICIPAL

ADVISORS.—Section 15B(c) of the Securities Exchange Act of 1934 

(15 U.S.C. 78o–4(c)) is amended— 

(1) in paragraph (1), by inserting ‘‘, and no broker, dealer, 

municipal securities dealer, or municipal advisor shall make 

use of the mails or any means or instrumentality of interstate 

commerce to provide advice to or on behalf of a municipal 

entity or obligated person with respect to municipal financial 

products, the issuance of municipal securities, or to undertake 

a solicitation of a municipal entity or obligated person,’’ after 

‘‘any municipal security’’; 

(2) by adding at the end of paragraph (1) the following: 

‘‘A municipal advisor and any person associated with such 

municipal advisor shall be deemed to have a fiduciary duty 

to any municipal entity for whom such municipal advisor acts 

as a municipal advisor, and no municipal advisor may engage 

in any act, practice, or course of business which is not consistent 

with a municipal advisor’s fiduciary duty or that is in contravention of any rule of the Board.’’. 

(3) in paragraph (2), by inserting ‘‘or municipal advisor’’ 

after ‘‘municipal securities dealer’’ each place that term appears; 

(4) in paragraph (3)— 

(A) by inserting ‘‘or municipal entities or obligated 

person’’ after ‘‘protection of investors’’ each place that term 

appears; and 

(B) by inserting ‘‘or municipal advisor’’ after ‘‘municipal 

securities dealer’’ each place that term appears; 

(5) in paragraph (4), by inserting ‘‘or municipal advisor’’ 

after ‘‘municipal securities dealer or obligated person’’ each 

place that term appears; 

(6) in paragraph (6)(B), by inserting ‘‘or municipal entities 

or obligated person’’ after ‘‘protection of investors’’; 

(7) in paragraph (7)— 

(A) in subparagraph (A)— 

(i) in clause (i), by striking ‘‘; and’’ and inserting 

a semicolon; 

(ii) in clause (ii), by striking the period and 

inserting ‘‘; and’’; and 
H. R. 4173—546 

(iii) by adding at the end the following: 

‘‘(iii) the Commission, or its designee, in the case 

of municipal advisors.’’. 

(B) in subparagraph (B), by inserting ‘‘or municipal 

entities or obligated person’’ after ‘‘protection of investors’’; 

and 

(8) by adding at the end the following: 

‘‘(9)(A) Fines collected by the Commission for violations 

of the rules of the Board shall be equally divided between 

the Commission and the Board. 

‘‘(B) Fines collected by a registered securities association 

under section 15A(7) with respect to violations of the rules 

of the Board shall be accounted for by such registered securities 

association separately from other fines collected under section 

15A(7) and shall be allocated between such registered securities 

association and the Board, and such allocation shall require 

the registered securities association to pay to the Board 1⁄3

of all fines collected by the registered securities association 

reasonably allocable to violations of the rules of the Board, 

or such other portion of such fines as may be directed by 

the Commission upon agreement between the registered securities association and the Board.’’. 

(d) ISSUANCE OF MUNICIPAL SECURITIES.—Section 15B(d)(2) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(d)) is 

amended— 

(1) by striking ‘‘through a municipal securities broker or 

municipal securities dealer or otherwise’’ and inserting ‘‘through 

a municipal securities broker, municipal securities dealer, 

municipal advisor, or otherwise’’; and 

(2) by inserting ‘‘or municipal advisors’’ before ‘‘to furnish’’. 

(e) DEFINITIONS.—Section 15B of the Securities Exchange Act 

of 1934 (15 U.S.C. 78o–4) is amended by adding at the end the 

following: 

‘‘(e) DEFINITIONS.—For purposes of this section— 

‘‘(1) the term ‘Board’ means the Municipal Securities Rulemaking Board established under subsection (b)(1); 

‘‘(2) the term ‘guaranteed investment contract’ includes 

any investment that has specified withdrawal or reinvestment 

provisions and a specifically negotiated or bid interest rate, 

and also includes any agreement to supply investments on 

2 or more future dates, such as a forward supply contract; 

‘‘(3) the term ‘investment strategies’ includes plans or programs for the investment of the proceeds of municipal securities 

that are not municipal derivatives, guaranteed investment contracts, and the recommendation of and brokerage of municipal 

escrow investments; 

‘‘(4) the term ‘municipal advisor’— 

‘‘(A) means a person (who is not a municipal entity 

or an employee of a municipal entity) that— 

‘‘(i) provides advice to or on behalf of a municipal 

entity or obligated person with respect to municipal 

financial products or the issuance of municipal securities, including advice with respect to the structure, 

timing, terms, and other similar matters concerning 

such financial products or issues; or 

‘‘(ii) undertakes a solicitation of a municipal entity; 
H. R. 4173—547 

‘‘(B) includes financial advisors, guaranteed investment 

contract brokers, third-party marketers, placement agents, 

solicitors, finders, and swap advisors, if such persons are 

described in any of clauses (i) through (iii) of subparagraph 

(A); and 

‘‘(C) does not include a broker, dealer, or municipal 

securities dealer serving as an underwriter (as defined 

in section 2(a)(11) of the Securities Act of 1933) (15 U.S.C. 

77b(a)(11)), any investment adviser registered under the 

Investment Advisers Act of 1940, or persons associated 

with such investment advisers who are providing investment advice, any commodity trading advisor registered 

under the Commodity Exchange Act or persons associated 

with a commodity trading advisor who are providing advice 

related to swaps, attorneys offering legal advice or providing services that are of a traditional legal nature, or 

engineers providing engineering advice; 

‘‘(5) the term ‘municipal financial product’ means municipal 

derivatives, guaranteed investment contracts, and investment 

strategies; 

‘‘(6) the term ‘rules of the Board’ means the rules proposed 

and adopted by the Board under subsection (b)(2); 

‘‘(7) the term ‘person associated with a municipal advisor’ 

or ‘associated person of an advisor’ means— 

‘‘(A) any partner, officer, director, or branch manager 

of such municipal advisor (or any person occupying a 

similar status or performing similar functions); 

‘‘(B) any other employee of such municipal advisor 

who is engaged in the management, direction, supervision, 

or performance of any activities relating to the provision 

of advice to or on behalf of a municipal entity or obligated 

person with respect to municipal financial products or the 

issuance of municipal securities; and 

‘‘(C) any person directly or indirectly controlling, controlled by, or under common control with such municipal 

advisor; 

‘‘(8) the term ‘municipal entity’ means any State, political 

subdivision of a State, or municipal corporate instrumentality 

of a State, including— 

‘‘(A) any agency, authority, or instrumentality of the 

State, political subdivision, or municipal corporate 

instrumentality; 

‘‘(B) any plan, program, or pool of assets sponsored 

or established by the State, political subdivision, or municipal corporate instrumentality or any agency, authority, 

or instrumentality thereof; and 

‘‘(C) any other issuer of municipal securities; 

‘‘(9) the term ‘solicitation of a municipal entity or obligated 

person’ means a direct or indirect communication with a municipal entity or obligated person made by a person, for direct 

or indirect compensation, on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser 

(as defined in section 202 of the Investment Advisers Act of 

1940) that does not control, is not controlled by, or is not 

under common control with the person undertaking such solicitation for the purpose of obtaining or retaining an engagement 

by a municipal entity or obligated person of a broker, dealer, 
H. R. 4173—548 

municipal securities dealer, or municipal advisor for or in 

connection with municipal financial products, the issuance of 

municipal securities, or of an investment adviser to provide 

investment advisory services to or on behalf of a municipal 

entity; and 

‘‘(10) the term ‘obligated person’ means any person, 

including an issuer of municipal securities, who is either generally or through an enterprise, fund, or account of such person, 

committed by contract or other arrangement to support the 

payment of all or part of the obligations on the municipal 

securities to be sold in an offering of municipal securities.’’. 

(f) REGISTERED SECURITIES ASSOCIATION.—Section 15A(b) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78o–3(b)) is amended 

by adding at the end the following: 

‘‘(15) The rules of the association provide that the association shall— 

‘‘(A) request guidance from the Municipal Securities 

Rulemaking Board in interpretation of the rules of the 

Municipal Securities Rulemaking Board; and 

‘‘(B) provide information to the Municipal Securities 

Rulemaking Board about the enforcement actions and 

examinations of the association under section 15B(b)(2)(E), 

so that the Municipal Securities Rulemaking Board may— 

‘‘(i) assist in such enforcement actions and 

examinations; and 

‘‘(ii) evaluate the ongoing effectiveness of the rules 

of the Board.’’. 

(g) REGISTRATION AND REGULATION OF BROKERS AND

DEALERS.—Section 15 of the Securities Exchange Act of 1934 is 

amended— 

(1) in subsection (b)(4), by inserting ‘‘municipal advisor,’’ 

after ‘‘municipal securities dealer’’ each place that term appears; 

and 

(2) in subsection (c), by inserting ‘‘broker, dealer, or’’ before 

‘‘municipal securities dealer’’ each place that term appears. 

(h) ACCOUNTS AND RECORDS, REPORTS, EXAMINATIONS OF

EXCHANGES, MEMBERS, AND OTHERS.—Section 17(a)(1) of the Securities Exchange Act of 1934 is amended by inserting ‘‘municipal 

advisor,’’ after ‘‘municipal securities dealer’’. 

(i) EFFECTIVE DATE.—This section, and the amendments made 

by this section, shall take effect on October 1, 2010. 

SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF 

INCREASED DISCLOSURE TO INVESTORS. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study and review of the disclosure required to be made 

by issuers of municipal securities. 

(b) SUBJECTS FOR EVALUATION.—In conducting the study under 

subsection (a), the Comptroller General of the United States shall— 

(1) broadly describe— 

(A) the size of the municipal securities markets and 

the issuers and investors; and 

(B) the disclosures provided by issuers to investors; 

(2) compare the amount, frequency, and quality of disclosures that issuers of municipal securities are required by law 

to provide for the benefit of municipal securities holders, 

including the amount of and frequency of disclosures actually 
H. R. 4173—549 

provided by issuers of municipal securities, with the amount 

of and frequency of disclosures that issuers of corporate securities provide for the benefit of corporate securities holders, 

taking into account the differences between issuers of municipal 

securities and issuers of corporate securities; 

(3) evaluate the costs and benefits to various types of 

issuers of municipal securities of requiring issuers of municipal 

bonds to provide additional financial disclosures for the benefit 

of investors; 

(4) evaluate the potential benefit to investors from additional financial disclosures by issuers of municipal bonds; and 

(5) make recommendations relating to disclosure requirements for municipal issuers, including the advisability of the 

repeal or retention of section 15B(d) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78o–4(d)) (commonly known as the 

‘‘Tower Amendment’’). 

(c) REPORT.—Not later than 24 months after the date of enactment of this Act, the Comptroller General of the United States 

shall submit a report to Congress on the results of the study 

conducted under subsection (a), including recommendations for how 

to improve disclosure by issuers of municipal securities. 

SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE 

MUNICIPAL SECURITIES MARKETS. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study of the municipal securities markets. 

(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States 

shall submit a report to the Committee on Banking, Housing, and 

Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, with copies to the Special 

Committee on Aging of the Senate and the Commission, on the 

results of the study conducted under subsection (a), including— 

(1) an analysis of the mechanisms for trading, quality 

of trade executions, market transparency, trade reporting, price 

discovery, settlement clearing, and credit enhancements; 

(2) the needs of the markets and investors and the impact 

of recent innovations; 

(3) recommendations for how to improve the transparency, 

efficiency, fairness, and liquidity of trading in the municipal 

securities markets, including with reference to items listed 

in paragraph (1); and 

(4) potential uses of derivatives in the municipal securities 

markets. 

(c) RESPONSES.—Not later than 180 days after receipt of the 

report required under subsection (b), the Commission shall submit 

a response to the Committee on Banking, Housing, and Urban 

Affairs of the Senate, and the Committee on Financial Services 

of the House of Representatives, with a copy to the Special Committee on Aging of the Senate, stating the actions the Commission 

has taken in response to the recommendations contained in such 

report. 

SEC. 978. FUNDING FOR GOVERNMENTAL ACCOUNTING STANDARDS 

BOARD. 

(a) AMENDMENT TO THE SECURITIES ACT OF 1933.—Section 19 

of the Securities Act of 1933 (15 U.S.C. 77s), as amended by section 

912, is further amended by adding at the end the following: 
H. R. 4173—550 

‘‘(g) FUNDING FOR THE GASB.— 

‘‘(1) IN GENERAL.—The Commission may, subject to the 

limitations imposed by section 15B of the Securities Exchange 

Act of 1934 (15 U.S.C. 78o–4), require a national securities 

association registered under the Securities Exchange Act of 

1934 to establish— 

‘‘(A) a reasonable annual accounting support fee to 

adequately fund the annual budget of the Governmental 

Accounting Standards Board (referred to in this subsection 

as the ‘GASB’); and 

‘‘(B) rules and procedures, in consultation with the 

principal organizations representing State governors, legislators, local elected officials, and State and local finance 

officers, to provide for the equitable allocation, assessment, 

and collection of the accounting support fee established 

under subparagraph (A) from the members of the association, and the remittance of all such accounting support 

fees to the Financial Accounting Foundation. 

‘‘(2) ANNUAL BUDGET.—For purposes of this subsection, the 

annual budget of the GASB is the annual budget reviewed 

and approved according to the internal procedures of the Financial Accounting Foundation. 

‘‘(3) USE OF FUNDS.—Any fees or funds collected under 

this subsection shall be used to support the efforts of the 

GASB to establish standards of financial accounting and 

reporting recognized as generally accepted accounting principles 

applicable to State and local governments of the United States. 

‘‘(4) LIMITATION ON FEE.—The annual accounting support 

fees collected under this subsection for a fiscal year shall not 

exceed the recoverable annual budgeted expenses of the GASB 

(which may include operating expenses, capital, and accrued 

items). 

‘‘(5) RULES OF CONSTRUCTION.— ‘‘(A) FEES NOT PUBLIC MONIES.—Accounting support 

fees collected under this subsection and other receipts of 

the GASB shall not be considered public monies of the 

United States. 

‘‘(B) LIMITATION ON AUTHORITY OF THE COMMISSION.— Nothing in this subsection shall be construed to— 

‘‘(i) provide the Commission or any national securities association direct or indirect oversight of the 

budget or technical agenda of the GASB; or 

‘‘(ii) affect the setting of generally accepted 

accounting principles by the GASB. 

‘‘(C) NONINTERFERENCE WITH STATES.—Nothing in this 

subsection shall be construed to impair or limit the 

authority of a State or local government to establish 

accounting and financial reporting standards.’’. 

(b) STUDY OF FUNDING FOR GOVERNMENTAL ACCOUNTING

STANDARDS BOARD.— 

(1) STUDY.—The Comptroller General of the United States 

shall conduct a study that evaluates— 

(A) the role and importance of the Governmental 

Accounting Standards Board in the municipal securities 

markets; and 

(B) the manner and the level at which the Governmental Accounting Standards Board has been funded. 
H. R. 4173—551 

(2) CONSULTATION.—In conducting the study required 

under paragraph (1), the Comptroller General shall consult 

with the principal organizations representing State governors, 

legislators, local elected officials, and State and local finance 

officers. 

(3) REPORT.—Not later than 180 days after the date of 

enactment of this Act, the Comptroller General shall submit 

to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of 

the House of Representatives a report on the study required 

under paragraph (1). 

SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES. 

(a) IN GENERAL.—There shall be in the Commission an Office 

of Municipal Securities, which shall— 

(1) administer the rules of the Commission with respect 

to the practices of municipal securities brokers and dealers, 

municipal securities advisors, municipal securities investors, 

and municipal securities issuers; and 

(2) coordinate with the Municipal Securities Rulemaking 

Board for rulemaking and enforcement actions as required by 

law. 

(b) DIRECTOR OF THE OFFICE.—The head of the Office of Municipal Securities shall be the Director, who shall report to the Chairman. 

(c) STAFFING.— (1) IN GENERAL.—The Office of Municipal Securities shall 

be staffed sufficiently to carry out the requirements of this 

section. 

(2) REQUIREMENT.—The staff of the Office of Municipal 

Securities shall include individuals with knowledge of and 

expertise in municipal finance. 

Subtitle I—Public Company Accounting 

Oversight Board, Portfolio Margining, 

and Other Matters 

SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN AUTHORITIES. 

(a) DEFINITION.—Section 2(a) of the Sarbanes-Oxley Act of 2002 

(15 U.S.C. 7201(a)) is amended by adding at the end the following: 

‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHORITY.—The term 

‘foreign auditor oversight authority’ means any governmental 

body or other entity empowered by a foreign government to 

conduct inspections of public accounting firms or otherwise 

to administer or enforce laws related to the regulation of public 

accounting firms.’’. 

(b) AVAILABILITY TO SHARE INFORMATION.—Section 105(b)(5) 

of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended 

by adding at the end the following: 

‘‘(C) AVAILABILITY TO FOREIGN OVERSIGHT AUTHORITIES.—Without the loss of its status as confidential and 

privileged in the hands of the Board, all information 

referred to in subparagraph (A) that relates to a public 

accounting firm that a foreign government has empowered 
H. R. 4173—552 

a foreign auditor oversight authority to inspect or otherwise 

enforce laws with respect to, may, at the discretion of 

the Board, be made available to the foreign auditor oversight authority, if— 

‘‘(i) the Board finds that it is necessary to accomplish the purposes of this Act or to protect investors; 

‘‘(ii) the foreign auditor oversight authority provides— 

‘‘(I) such assurances of confidentiality as the 

Board may request; 

‘‘(II) a description of the applicable information 

systems and controls of the foreign auditor oversight authority; and 

‘‘(III) a description of the laws and regulations 

of the foreign government of the foreign auditor 

oversight authority that are relevant to information access; and 

‘‘(iii) the Board determines that it is appropriate 

to share such information.’’. 

(c) CONFORMING AMENDMENT.—Section 105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by 

striking ‘‘subparagraph (B)’’ and inserting ‘‘subparagraphs (B) and 

(C)’’. 

SEC. 982. OVERSIGHT OF BROKERS AND DEALERS. 

(a) DEFINITIONS.— (1) DEFINITIONS AMENDED.—Title I of the Sarbanes-Oxley 

Act of 2002 (15 U.S.C. 7201 et seq.) is amended by adding 

at the end the following new section: 

‘‘SEC. 110. DEFINITIONS. 

‘‘For the purposes of this title, the following definitions shall 

apply: 

‘‘(1) AUDIT.—The term ‘audit’ means an examination of 

the financial statements, reports, documents, procedures, controls, or notices of any issuer, broker, or dealer by an independent public accounting firm in accordance with the rules 

of the Board or the Commission, for the purpose of expressing 

an opinion on the financial statements or providing an audit 

report. 

‘‘(2) AUDIT REPORT.—The term ‘audit report’ means a document, report, notice, or other record— 

‘‘(A) prepared following an audit performed for purposes of compliance by an issuer, broker, or dealer with 

the requirements of the securities laws; and 

‘‘(B) in which a public accounting firm either— 

‘‘(i) sets forth the opinion of that firm regarding 

a financial statement, report, notice, or other document, procedures, or controls; or 

‘‘(ii) asserts that no such opinion can be expressed. 

‘‘(3) BROKER.—The term ‘broker’ means a broker (as such 

term is defined in section 3(a)(4) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a 

balance sheet, income statement, or other financial statement 

under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 

where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting 

firm. 
H. R. 4173—553 

‘‘(4) DEALER.—The term ‘dealer’ means a dealer (as such 

term is defined in section 3(a)(5) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a 

balance sheet, income statement, or other financial statement 

under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 

where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting 

firm. 

‘‘(5) PROFESSIONAL STANDARDS.—The term ‘professional 

standards’ means— 

‘‘(A) accounting principles that are— 

‘‘(i) established by the standard setting body 

described in section 19(b) of the Securities Act of 1933, 

as amended by this Act, or prescribed by the Commission under section 19(a) of that Act (15 U.S.C. 17a(s)) 

or section 13(b) of the Securities Exchange Act of 1934 

(15 U.S.C. 78a(m)); and 

‘‘(ii) relevant to audit reports for particular issuers, 

brokers, or dealers, or dealt with in the quality control 

system of a particular registered public accounting 

firm; and 

‘‘(B) auditing standards, standards for attestation 

engagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board 

or the Commission determines— 

‘‘(i) relate to the preparation or issuance of audit 

reports for issuers, brokers, or dealers; and 

‘‘(ii) are established or adopted by the Board under 

section 103(a), or are promulgated as rules of the 

Commission. 

‘‘(6) SELF-REGULATORY ORGANIZATION.—The term ‘self-regulatory organization’ has the same meaning as in section 3(a) 

of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).’’. 

(2) CONFORMING AMENDMENT.—Section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in 

the matter preceding paragraph (1), by striking ‘‘In this’’ and 

inserting ‘‘Except as otherwise specifically provided in this Act, 

in this’’. 

(b) ESTABLISHMENT AND ADMINISTRATION OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.—Section 101 of the SarbanesOxley Act of 2002 (15 U.S.C. 7211) is amended— 

(1) by striking ‘‘issuers’’ each place that term appears and 

inserting ‘‘issuers, brokers, and dealers’’; and 

(2) in subsection (a)— 

(A) by striking ‘‘public companies’’ and inserting 

‘‘companies’’; and 

(B) by striking ‘‘for companies the securities of which 

are sold to, and held by and for, public investors’’. 

(c) REGISTRATION WITH THE BOARD.—Section 102 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amended— 

(1) in subsection (a)— 

(A) by striking ‘‘Beginning 180’’ and all that follows 

through ‘‘101(d), it’’ and inserting ‘‘It’’; and 

(B) by striking ‘‘issuer’’ and inserting ‘‘issuer, broker, 

or dealer’’; 

(2) in subsection (b)— 
H. R. 4173—554 

(A) in paragraph (2)(A), by striking ‘‘issuers’’ and 

inserting ‘‘issuers, brokers, and dealers’’; and 

(B) by striking ‘‘issuer’’ each place that term appears 

and inserting ‘‘issuer, broker, or dealer’’. 

(d) AUDITING AND INDEPENDENCE.—Section 103(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended— 

(1) in paragraph (1), by striking ‘‘and such ethics standards’’ 

and inserting ‘‘such ethics standards, and such independence 

standards’’; 

(2) in paragraph (2)(A)(iii), by striking ‘‘describe in each 

audit report’’ and inserting ‘‘in each audit report for an issuer, 

describe’’; and 

(3) in paragraph (2)(B)(i), by striking ‘‘issuers’’ and 

inserting ‘‘issuers, brokers, and dealers’’. 

(e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNTING FIRMS.— 

(1) AMENDMENTS.—Section 104(a) of the Sarbanes-Oxley 

Act of 2002 (15 U.S.C. 7214(a)) is amended— 

(A) by striking ‘‘The Board shall’’ and inserting the 

following: 

‘‘(1) INSPECTIONS GENERALLY.—The Board shall’’; and 

(B) by adding at the end the following: 

‘‘(2) INSPECTIONS OF AUDIT REPORTS FOR BROKERS AND

DEALERS.— 

‘‘(A) The Board may, by rule, conduct and require 

a program of inspection in accordance with paragraph (1), 

on a basis to be determined by the Board, of registered 

public accounting firms that provide one or more audit 

reports for a broker or dealer. The Board, in establishing 

such a program, may allow for differentiation among classes 

of brokers and dealers, as appropriate. 

‘‘(B) If the Board determines to establish a program 

of inspection pursuant to subparagraph (A), the Board shall 

consider in establishing any inspection schedules whether 

differing schedules would be appropriate with respect to 

registered public accounting firms that issue audit reports 

only for one or more brokers or dealers that do not receive, 

handle, or hold customer securities or cash or are not 

a member of the Securities Investor Protection Corporation. 

‘‘(C) Any rules of the Board pursuant to this paragraph 

shall be subject to prior approval by the Commission pursuant to section 107(b) before the rules become effective, 

including an opportunity for public notice and comment. 

‘‘(D) Notwithstanding anything to the contrary in section 102 of this Act, a public accounting firm shall not 

be required to register with the Board if the public 

accounting firm is exempt from the inspection program 

which may be established by the Board under subparagraph (A).’’. 

(2) CONFORMING AMENDMENT.—Section 17(e)(1)(A) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is 

amended by striking ‘‘registered public accounting firm’’ and 

inserting ‘‘independent public accounting firm, or by a registered public accounting firm if the firm is required to be 

registered under the Sarbanes-Oxley Act of 2002,’’. 

(f) INVESTIGATIONS AND DISCIPLINARY PROCEEDINGS.—Section 

105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

7215(c)(7)(B)) is amended— 
H. R. 4173—555 

(1) in the subparagraph heading, by inserting ‘‘, BROKER, 

OR DEALER’’ after ‘‘ISSUER’’; 

(2) by striking ‘‘any issuer’’ each place that term appears 

and inserting ‘‘any issuer, broker, or dealer’’; and 

(3) by striking ‘‘an issuer under this subsection’’ and 

inserting ‘‘a registered public accounting firm under this subsection’’. 

(g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 106(a) of the 

Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended— 

(1) in paragraph (1), by striking ‘‘issuer’’ and inserting 

‘‘issuer, broker, or dealer’’; and 

(2) in paragraph (2), by striking ‘‘issuers’’ and inserting 

‘‘issuers, brokers, or dealers’’. 

(h) FUNDING.—Section 109 of the Sarbanes-Oxley Act of 2002 

(15 U.S.C. 7219) is amended— 

(1) in subsection (c)(2), by striking ‘‘subsection (i)’’ and 

inserting ‘‘subsection (j)’’; 

(2) in subsection (d)— 

(A) in paragraph (2), by striking ‘‘allowing for differentiation among classes of issuers, as appropriate’’ and 

inserting ‘‘and among brokers and dealers, in accordance 

with subsection (h), and allowing for differentiation among 

classes of issuers, brokers and dealers, as appropriate’’; 

and 

(B) by adding at the end the following: 

‘‘(3) BROKERS AND DEALERS.—The Board shall begin the 

allocation, assessment, and collection of fees under paragraph 

(2) with respect to brokers and dealers with the payment of 

support fees to fund the first full fiscal year beginning after 

the date of enactment of the Investor Protection and Securities 

Reform Act of 2010.’’; 

(3) by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively; and 

(4) by inserting after subsection (g) the following: 

‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES AMONG BROKERS AND DEALERS.— 

‘‘(1) OBLIGATION TO PAY.—Each broker or dealer shall pay 

to the Board the annual accounting support fee allocated to 

such broker or dealer under this section. 

‘‘(2) ALLOCATION.—Any amount due from a broker or dealer 

(or from a particular class of brokers and dealers) under this 

section shall be allocated among brokers and dealers and payable by the broker or dealer (or the brokers and dealers in 

the particular class, as applicable). 

‘‘(3) PROPORTIONALITY.—The amount due from a broker 

or dealer shall be in proportion to the net capital of the broker 

or dealer (before or after any adjustments), compared to the 

total net capital of all brokers and dealers (before or after 

any adjustments), in accordance with rules issued by the 

Board.’’. 

(i) REFERRAL OF INVESTIGATIONS TO A SELF-REGULATORY

ORGANIZATION.—Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 

2002 (15 U.S.C. 7215(b)(4)(B)) is amended— 

(1) by redesignating clauses (ii) and (iii) as clauses (iii) 

and (iv), respectively; and 

(2) by inserting after clause (i) the following: 
H. R. 4173—556 

‘‘(ii) to a self-regulatory organization, in the case 

of an investigation that concerns an audit report for 

a broker or dealer that is under the jurisdiction of 

such self-regulatory organization;’’. 

(j) USE OF DOCUMENTS RELATED TO AN INSPECTION OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of 

2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is amended— 

(1) in subclause (III), by striking ‘‘and’’ at the end; 

(2) in subclause (IV), by striking the comma and inserting 

‘‘; and’’; and 

(3) by inserting after subclause (IV) the following: 

‘‘(V) a self-regulatory organization, with 

respect to an audit report for a broker or dealer 

that is under the jurisdiction of such self-regulatory organization,’’. 

SEC. 983. PORTFOLIO MARGINING. 

(a) ADVANCES.—Section 9(a)(1) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff3(a)(1)) is amended by inserting 

‘‘or options on commodity futures contracts’’ after ‘‘claim for securities’’. 

(b) DEFINITIONS.—Section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is amended— 

(1) by striking paragraph (2) and inserting the following: 

‘‘(2) CUSTOMER.— 

‘‘(A) IN GENERAL.—The term ‘customer’ of a debtor 

means any person (including any person with whom the 

debtor deals as principal or agent) who has a claim on 

account of securities received, acquired, or held by the 

debtor in the ordinary course of its business as a broker 

or dealer from or for the securities accounts of such person 

for safekeeping, with a view to sale, to cover consummated 

sales, pursuant to purchases, as collateral, security, or 

for purposes of effecting transfer. 

‘‘(B) INCLUDED PERSONS.—The term ‘customer’ 

includes— 

‘‘(i) any person who has deposited cash with the 

debtor for the purpose of purchasing securities; 

‘‘(ii) any person who has a claim against the debtor 

for cash, securities, futures contracts, or options on 

futures contracts received, acquired, or held in a portfolio margining account carried as a securities account 

pursuant to a portfolio margining program approved 

by the Commission; and 

‘‘(iii) any person who has a claim against the debtor 

arising out of sales or conversions of such securities. 

‘‘(C) EXCLUDED PERSONS.—The term ‘customer’ does 

not include any person, to the extent that— 

‘‘(i) the claim of such person arises out of transactions with a foreign subsidiary of a member of SIPC; 

or 

‘‘(ii) such person has a claim for cash or securities 

which by contract, agreement, or understanding, or 

by operation of law, is part of the capital of the debtor, 

or is subordinated to the claims of any or all creditors 

of the debtor, notwithstanding that some ground exists 
H. R. 4173—557 

for declaring such contract, agreement, or understanding void or voidable in a suit between the claimant and the debtor.’’; 

(2) in paragraph (4)— 

(A) in subparagraph (C), by striking ‘‘and’’ at the end; 

(B) by redesignating subparagraph (D) as subparagraph (E); and 

(C) by inserting after subparagraph (C) the following: 

‘‘(D) in the case of a portfolio margining account of 

a customer that is carried as a securities account pursuant 

to a portfolio margining program approved by the Commission, a futures contract or an option on a futures contract 

received, acquired, or held by or for the account of a debtor 

from or for such portfolio margining account, and the proceeds thereof; and’’; 

(3) in paragraph (9), in the matter following subparagraph 

(L), by inserting after ‘‘Such term’’ the following: ‘‘includes 

revenues earned by a broker or dealer in connection with a 

transaction in the portfolio margining account of a customer 

carried as securities accounts pursuant to a portfolio margining 

program approved by the Commission. Such term’’; and 

(4) in paragraph (11)— 

(A) in subparagraph (A)— 

(i) by striking ‘‘filing date, all’’ and all that follows 

through the end of the subparagraph and inserting 

the following: ‘‘filing date— 

‘‘(i) all securities positions of such customer (other 

than customer name securities reclaimed by such customer); and 

‘‘(ii) all positions in futures contracts and options 

on futures contracts held in a portfolio margining 

account carried as a securities account pursuant to 

a portfolio margining program approved by the 

Commission, including all property collateralizing such 

positions, to the extent that such property is not otherwise included herein; minus’’; and 

(B) in the matter following subparagraph (C), by 

striking ‘‘In determining’’ and inserting the following: ‘‘A 

claim for a commodity futures contract received, acquired, 

or held in a portfolio margining account pursuant to a 

portfolio margining program approved by the Commission 

or a claim for a security futures contract, shall be deemed 

to be a claim with respect to such contract as of the 

filing date, and such claim shall be treated as a claim 

for cash. In determining’’. 

SEC. 984. LOAN OR BORROWING OF SECURITIES. 

(a) RULEMAKING AUTHORITY.—Section 10 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78j) is amended by adding at 

the end the following: 

‘‘(c)(1) To effect, accept, or facilitate a transaction involving 

the loan or borrowing of securities in contravention of such 

rules and regulations as the Commission may prescribe as 

necessary or appropriate in the public interest or for the protection of investors. 

‘‘(2) Nothing in paragraph (1) may be construed to limit 

the authority of the appropriate Federal banking agency (as 
H. R. 4173—558 

defined in section 3(q) of the Federal Deposit Insurance Act 

(12 U.S.C. 1813(q))), the National Credit Union Administration, 

or any other Federal department or agency having a responsibility under Federal law to prescribe rules or regulations 

restricting transactions involving the loan or borrowing of securities in order to protect the safety and soundness of a financial 

institution or to protect the financial system from systemic 

risk.’’. 

(b) RULEMAKING REQUIRED.—Not later than 2 years after the 

date of enactment of this Act, the Commission shall promulgate 

rules that are designed to increase the transparency of information 

available to brokers, dealers, and investors, with respect to the 

loan or borrowing of securities. 

SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS. 

(a) SECURITIES ACT OF 1933.—The Securities Act of 1933 (15 

U.S.C. 77a et seq.) is amended— 

(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking ‘‘individual;’’ and inserting ‘‘individual,’’; 

(2) in section 18 (15 U.S.C. 77r)— 

(A) in subsection (b)(1)(C), by striking ‘‘is a security’’ 

and inserting ‘‘a security’’; and 

(B) in subsection (c)(2)(B)(i), by striking ‘‘State, or’’ 

and inserting ‘‘State or’’; 

(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by striking 

‘‘in paragraph (1) of (3)’’ and inserting ‘‘in paragraph (1) or 

(3)’’; and 

(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z–2(c)(1)(B)(ii)), 

by striking ‘‘business entity;’’ and inserting ‘‘business entity,’’. 

(b) SECURITIES EXCHANGE ACT OF 1934.—The Securities 

Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended— 

(1) in section 2 (15 U.S.C. 78b), by striking ‘‘affected’’ and 

inserting ‘‘effected’’; 

(2) in section 3 (15 U.S.C. 78c)— 

(A) in subsection (a)(55)(A), by striking ‘‘section 3(a)(12) 

of the Securities Exchange Act of 1934’’ and inserting ‘‘section 3(a)(12) of this title’’; and 

(B) in subsection (g), by striking ‘‘company, account 

person, or entity’’ and inserting ‘‘company, account, person, 

or entity’’; 

(3) in section 10A(i)(1)(B) (15 U.S.C. 78j–1(i)(1)(B))— 

(A) in the subparagraph heading, by striking ‘‘MINIMUS’’ 

and inserting ‘‘MINIMIS’’; and 

(B) in clause (i), by striking ‘‘nonaudit’’ and inserting 

‘‘non-audit’’; 

(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking 

‘‘earning statement’’ and inserting ‘‘earnings statement’’; 

(5) in section 15 (15 U.S.C. 78o)— 

(A) in subsection (b)(1)— 

(i) in subparagraph (B), by striking ‘‘The order 

granting’’ and all that follows through ‘‘from such membership.’’; and 

(ii) in the undesignated matter immediately following subparagraph (B), by inserting after the first 

sentence the following: ‘‘The order granting registration 

shall not be effective until such broker or dealer has 

become a member of a registered securities association, 
H. R. 4173—559 

or until such broker or dealer has become a member 

of a national securities exchange, if such broker or 

dealer effects transactions solely on that exchange, 

unless the Commission has exempted such broker or 

dealer, by rule or order, from such membership.’’; 

(6) in section 15C(a)(2) (15 U.S.C. 78o–5(a)(2))— 

(A) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and adjusting the subparagraph margins accordingly; 

(B) in subparagraph (B), as so redesignated, by striking 

‘‘The order granting’’ and all that follows through ‘‘from 

such membership.’’; and 

(C) in the matter following subparagraph (B), as so 

redesignated, by inserting after the first sentence the following: ‘‘The order granting registration shall not be effective until such government securities broker or government 

securities dealer has become a member of a national securities exchange registered under section 6 of this title, or 

a securities association registered under section 15A of 

this title, unless the Commission has exempted such 

government securities broker or government securities 

dealer, by rule or order, from such membership.’’; 

(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by 

striking ‘‘15A(k) gives’’ and inserting ‘‘15A(k), give’’; and 

(8) in section 21C(c)(2) (15 U.S.C. 78u–3(c)(2)), by striking 

‘‘paragraph (1) subsection’’ and inserting ‘‘Paragraph (1)’’. 

(c) TRUST INDENTURE ACT OF 1939.—The Trust Indenture Act 

of 1939 (15 U.S.C. 77aaa et seq.) is amended— 

(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking ‘‘section 2 of such Act’’ and inserting ‘‘section 2(a) of such Act’’; 

and 

(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by striking 

‘‘, in the’’ and inserting ‘‘in the’’. 

(d) INVESTMENT COMPANY ACT OF 1940.—The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended— 

(1) in section 2(a)(19) (15 U.S.C. 80a–2(a)(19)), in the 

matter following subparagraph (B)(vii)— 

(A) by striking ‘‘clause (vi)’’ each place that term 

appears and inserting ‘‘clause (vii)’’; and 

(B) in each of subparagraphs (A)(vi) and (B)(vi), by 

adding ‘‘and’’ at the end of subclause (III); 

(2) in section 9(b)(4)(B) (15 U.S.C. 80a–9(b)(4)(B)), by 

adding ‘‘or’’ after the semicolon at the end; 

(3) in section 12(d)(1)(J) (15 U.S.C. 80a–12(d)(1)(J)), by 

striking ‘‘any provision of this subsection’’ and inserting ‘‘any 

provision of this paragraph’’; 

(4) in section 17(f) (15 U.S.C. 80a–17(f))— 

(A) in paragraph (4), by striking ‘‘No such member’’ 

and inserting ‘‘No member of a national securities 

exchange’’; and 

(B) in paragraph (6), by striking ‘‘company may serve’’ 

and inserting ‘‘company, may serve’’; and 

(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 

60(a)(3)(B)(iii))— 

(A) by striking ‘‘paragraph (1) of section 205’’ and 

inserting ‘‘section 205(a)(1)’’; and 
H. R. 4173—560 

(B) by striking ‘‘clause (A) or (B) of that section’’ and 

inserting ‘‘paragraph (1) or (2) of section 205(b)’’. 

(e) INVESTMENT ADVISERS ACT OF 1940.—The Investment 

Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended— 

(1) in section 203 (15 U.S.C. 80b–3)— 

(A) in subsection (c)(1)(A), by striking ‘‘principal business office and’’ and inserting ‘‘principal office, principal 

place of business, and’’; and 

(B) in subsection (k)(4)(B), in the matter following 

clause (ii), by striking ‘‘principal place of business’’ and 

inserting ‘‘principal office or place of business’’; 

(2) in section 206(3) (15 U.S.C. 80b–6(3)), by adding ‘‘or’’ 

after the semicolon at the end; 

(3) in section 213(a) (15 U.S.C. 80b–13(a)), by striking 

‘‘principal place of business’’ and inserting ‘‘principal office or 

place of business’’; and 

(4) in section 222 (15 U.S.C. 80b–18a), by striking ‘‘principal 

place of business’’ each place that term appears and inserting 

‘‘principal office and place of business’’. 

SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE 

PUBLIC UTILITY HOLDING COMPANY ACT OF 1935. 

(a) SECURITIES EXCHANGE ACT OF 1934.—The Securities 

Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended— 

(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking 

‘‘the Public Utility Holding Company Act of 1935 (15 U.S.C. 

79a et seq.),’’; 

(2) in section 12(k) (15 U.S.C. 78l(k)), by amending paragraph (7) to read as follows:

‘‘(7) DEFINITION.—For purposes of this subsection, the term 

‘emergency’ means— 

‘‘(A) a major market disturbance characterized by or 

constituting— 

‘‘(i) sudden and excessive fluctuations of securities 

prices generally, or a substantial threat thereof, that 

threaten fair and orderly markets; or 

‘‘(ii) a substantial disruption of the safe or efficient 

operation of the national system for clearance and 

settlement of transactions in securities, or a substantial threat thereof; or 

‘‘(B) a major disturbance that substantially disrupts, 

or threatens to substantially disrupt— 

‘‘(i) the functioning of securities markets, investment companies, or any other significant portion or 

segment of the securities markets; or 

‘‘(ii) the transmission or processing of securities 

transactions.’’; and 

(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking 

‘‘section 18(c) of the Public Utility Holding Company Act of 

1935,’’. 

(b) TRUST INDENTURE ACT OF 1939.—The Trust Indenture Act 

of 1939 (15 U.S.C. 77aaa et seq.) is amended— 

(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph 

(17) and inserting the following: 

‘‘(17) The terms ‘Securities Act of 1933’ and ‘Securities 

Exchange Act of 1934’ shall be deemed to refer, respectively, 
H. R. 4173—561 

to such Acts, as amended, whether amended prior to or after 

the enactment of this title.’’; 

(2) in section 308 (15 U.S.C. 77hhh), by striking ‘‘Securities 

Act of 1933, the Securities Exchange Act of 1934, or the Public 

Utility Holding Company Act of 1935’’ each place that term 

appears and inserting ‘‘Securities Act of 1933 or the Securities 

Exchange Act of 1934’’; 

(3) in section 310 (15 U.S.C. 77jjj), by striking subsection 

(c); 

(4) in section 311 (15 U.S.C. 77kkk), by striking subsection 

(c); 

(5) in section 323(b) (15 U.S.C. 77www(b)), by striking 

‘‘Securities Act of 1933, or the Securities Exchange Act of 

1934, or the Public Utility Holding Company Act of 1935’’ 

and inserting ‘‘Securities Act of 1933 or the Securities Exchange 

Act of 1934’’; and 

(6) in section 326 (15 U.S.C. 77zzz), by striking ‘‘Securities 

Act of 1933, or the Securities Exchange Act of 1934, or the 

Public Utility Holding Company Act of 1935,’’ and inserting 

‘‘Securities Act of 1933 or the Securities Exchange Act of 1934’’. 

(c) INVESTMENT COMPANY ACT OF 1940.—The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended— 

(1) in section 2(a)(44) (15 U.S.C. 80a–2(a)(44)), by striking 

‘‘ ‘Public Utility Holding Company Act of 1935’,’’; 

(2) in section 3(c) (15 U.S.C. 80a–3(c)), by striking paragraph (8) and inserting the following: 

‘‘(8) [Repealed]’’; 

(3) in section 38(b) (15 U.S.C. 80a–37(b)), by striking ‘‘the 

Public Utility Holding Company Act of 1935,’’; and 

(4) in section 50 (15 U.S.C. 80a–49), by striking ‘‘the Public 

Utility Holding Company Act of 1935,’’. 

(d) INVESTMENT ADVISERS ACT OF 1940.—Section 202(a)(21) 

of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(21)) 

is amended by striking ‘‘ ‘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. 

(a) IN GENERAL.—Section 38(k) of the Federal Deposit Insurance Act (U.S.C. 1831o(k)) is amended— 

(1) in paragraph (2), by striking subparagraph (B) and 

inserting the following: 

‘‘(B) MATERIAL LOSS DEFINED.—The term ‘material loss’ 

means any estimated loss in excess of— 

‘‘(i) $200,000,000, if the loss occurs during the 

period beginning on January 1, 2010, and ending on 

December 31, 2011; 

‘‘(ii) $150,000,000, if the loss occurs during the 

period beginning on January 1, 2012, and ending on 

December 31, 2013; and 

‘‘(iii) $50,000,000, if the loss occurs on or after 

January 1, 2014, provided that if the inspector general 

of a Federal banking agency certifies to the Committee 

on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House 
H. R. 4173—562 

of Representatives that the number of projected failures of depository institutions that would require material loss reviews for the following 12 months will be 

greater than 30 and would hinder the effectiveness 

of its oversight functions, then the definition of ‘material loss’ shall be $75,000,000 for a duration of 1 year 

from the date of the certification.’’; 

(2) in paragraph (4)(A) by striking ‘‘the report’’ and 

inserting ‘‘any report on losses required under this subsection,’’; 

(3) by striking paragraph (6); 

(4) by redesignating paragraph (5) as paragraph (6); and 

(5) by inserting after paragraph (4) the following: 

‘‘(5) LOSSES THAT ARE NOT MATERIAL.— 

‘‘(A) SEMIANNUAL REPORT.—For the 6-month period 

ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of each Federal banking agency 

shall— 

‘‘(i) identify losses that the Inspector General estimates have been incurred by the Deposit Insurance 

Fund during that 6-month period, with respect to the 

insured depository institutions supervised by the Federal banking agency; 

‘‘(ii) for each loss incurred by the Deposit Insurance 

Fund that is not a material loss, determine— 

‘‘(I) the grounds identified by the Federal 

banking agency or State bank supervisor for 

appointing the Corporation as receiver under section 11(c)(5); and 

‘‘(II) whether any unusual circumstances exist 

that might warrant an in-depth review of the loss; 

and 

‘‘(iii) prepare and submit a written report to the 

appropriate Federal banking agency and to Congress 

on the results of any determination by the Inspector 

General, including— 

‘‘(I) an identification of any loss that warrants 

an in-depth review, together with the reasons why 

such review is warranted, or, if the Inspector General determines that no review is warranted, an 

explanation of such determination; and 

‘‘(II) for each loss identified under subclause 

(I) that warrants an in-depth review, the date 

by which such review, and a report on such review 

prepared in a manner consistent with reports 

under paragraph (1)(A), will be completed and submitted to the Federal banking agency and Congress. 

‘‘(B) DEADLINE FOR SEMIANNUAL REPORT.—The 

Inspector General of each Federal banking agency shall— 

‘‘(i) submit each report required under paragraph 

(A) expeditiously, and not later than 90 days after 

the end of the 6-month period covered by the report; 

and 

‘‘(ii) provide a copy of the report required under 

paragraph (A) to any Member of Congress, upon 

request.’’. 
H. R. 4173—563 

(b) TECHNICAL AND CONFORMING AMENDMENT.—The heading 

for subsection (k) of section 38 of the Federal Deposit Insurance 

Act (U.S.C. 1831o(k)) is amended to read as follows: 

‘‘(k) REVIEWS REQUIRED WHEN DEPOSIT INSURANCE FUND

INCURS LOSSES.—’’. 

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. 

(a) IN GENERAL.—Section 216(j) of the Federal Credit Union 

Act (12 U.S.C. 1790d(j)) is amended to read as follows: 

‘‘(j) REVIEWS REQUIRED WHEN SHARE INSURANCE FUND EXPERIENCES LOSSES.— 

‘‘(1) IN GENERAL.—If the Fund incurs a material loss with 

respect to an insured credit union, the Inspector General of 

the Board shall— 

‘‘(A) submit to the Board a written report reviewing 

the supervision of the credit union by the Administration 

(including the implementation of this section by the 

Administration), which shall include— 

‘‘(i) a description of the reasons why the problems 

of the credit union resulted in a material loss to the 

Fund; and 

‘‘(ii) recommendations for preventing any such loss 

in the future; and 

‘‘(B) submit a copy of the report under subparagraph 

(A) to— 

‘‘(i) the Comptroller General of the United States; 

‘‘(ii) the Corporation; 

‘‘(iii) in the case of a report relating to a State 

credit union, the appropriate State supervisor; and 

‘‘(iv) to any Member of Congress, upon request. 

‘‘(2) MATERIAL LOSS DEFINED.—For purposes of determining 

whether the Fund has incurred a material loss with respect 

to an insured credit union, a loss is material if it exceeds 

the sum of— 

‘‘(A) $25,000,000; and 

‘‘(B) an amount equal to 10 percent of the total assets 

of the credit union on the date on which the Board initiated 

assistance under section 208 or was appointed liquidating 

agent. 

‘‘(3) PUBLIC DISCLOSURE REQUIRED.— 

‘‘(A) IN GENERAL.—The Board shall disclose a report 

under this subsection, upon request under section 552 of 

title 5, United States Code, without excising— 

‘‘(i) any portion under section 552(b)(5) of title 

5, United States Code; or 

‘‘(ii) any information about the insured credit union 

(other than trade secrets) under section 552(b)(8) of 

title 5, United States Code. 

‘‘(B) RULE OF CONSTRUCTION.—Subparagraph (A) may 

not be construed as requiring the agency to disclose the 

name of any customer of the insured credit union (other 

than an institution-affiliated party), or information from 

which the identity of such customer could reasonably be 

ascertained. 
H. R. 4173—564 

‘‘(4) LOSSES THAT ARE NOT MATERIAL.— 

‘‘(A) SEMIANNUAL REPORT.—For the 6-month period 

ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of the Board shall— 

‘‘(i) identify any losses that the Inspector General 

estimates were incurred by the Fund during such 6- 

month period, with respect to insured credit unions; 

‘‘(ii) for each loss to the Fund that is not a material 

loss, determine— 

‘‘(I) the grounds identified by the Board or 

the State official having jurisdiction over a State 

credit union for appointing the Board as the liquidating agent for any Federal or State credit union; 

and 

‘‘(II) whether any unusual circumstances exist 

that might warrant an in-depth review of the loss; 

and 

‘‘(iii) prepare and submit a written report to the 

Board and to Congress on the results of the determinations of the Inspector General that includes— 

‘‘(I) an identification of any loss that warrants 

an in-depth review, and the reasons such review 

is warranted, or if the Inspector General determines that no review is warranted, an explanation 

of such determination; and 

‘‘(II) for each loss identified in subclause (I) 

that warrants an in-depth review, the date by 

which such review, and a report on the review 

prepared in a manner consistent with reports 

under paragraph (1)(A), will be completed. 

‘‘(B) DEADLINE FOR SEMIANNUAL REPORT.—The 

Inspector General of the Board shall— 

‘‘(i) submit each report required under subparagraph (A) expeditiously, and not later than 90 days 

after the end of the 6-month period covered by the 

report; and 

‘‘(ii) provide a copy of the report required under 

subparagraph (A) to any Member of Congress, upon 

request. 

‘‘(5) GAO REVIEW.—The Comptroller General of the United 

States shall, under such conditions as the Comptroller General 

determines to be appropriate— 

‘‘(A) review each report made under paragraph (1), 

including the extent to which the Inspector General of 

the Board complied with the requirements under section 

8L of the Inspector General Act of 1978 (5 U.S.C. App.) 

with respect to each such report; and 

‘‘(B) recommend improvements to the supervision of 

insured credit unions (including improvements relating to 

the implementation of this section).’’. 

SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY TRADING. 

(a) DEFINITIONS.—In this section— 

(1) the term ‘‘covered entity’’ means— 

(A) an insured depository institution, an affiliate of 

an insured depository institution, a bank holding company, 
H. R. 4173—565 

a financial holding company, or a subsidiary of a bank 

holding company or a financial holding company, as those 

terms are defined in the Bank Holding Company Act of 

1956 (12 U.S.C. 1841 et seq.); and 

(B) any other entity, as the Comptroller General of 

the United States may determine; and 

(2) the term ‘‘proprietary trading’’ means the act of a covered entity investing as a principal in securities, commodities, 

derivatives, hedge funds, private equity firms, or such other 

financial products or entities as the Comptroller General may 

determine. 

(b) STUDY.— 

(1) IN GENERAL.—The Comptroller General of the United 

States shall conduct a study regarding the risks and conflicts 

associated with proprietary trading by and within covered entities, including an evaluation of— 

(A) whether proprietary trading presents a material 

systemic risk to the stability of the United States financial 

system, and if so, the costs and benefits of options for 

mitigating such systemic risk; 

(B) whether proprietary trading presents material risks 

to the safety and soundness of the covered entities that 

engage in such activities, and if so, the costs and benefits 

of options for mitigating such risks; 

(C) whether proprietary trading presents material conflicts of interest between covered entities that engage in 

proprietary trading and the clients of the institutions who 

use the firm to execute trades or who rely on the firm 

to manage assets, and if so, the costs and benefits of 

options for mitigating such conflicts of interest; 

(D) whether adequate disclosure regarding the risks 

and conflicts of proprietary trading is provided to the 

depositors, trading and asset management clients, and 

investors of covered entities that engage in proprietary 

trading, and if not, the costs and benefits of options for 

the improvement of such disclosure; and 

(E) whether the banking, securities, and commodities 

regulators of institutions that engage in proprietary trading 

have in place adequate systems and controls to monitor 

and contain any risks and conflicts of interest related to 

proprietary trading, and if not, the costs and benefits of 

options for the improvement of such systems and controls. 

(2) CONSIDERATIONS.—In carrying out the study required 

under paragraph (1), the Comptroller General shall consider— 

(A) current practice relating to proprietary trading; 

(B) the advisability of a complete ban on proprietary 

trading; 

(C) limitations on the scope of activities that covered 

entities may engage in with respect to proprietary trading; 

(D) the advisability of additional capital requirements 

for covered entities that engage in proprietary trading; 

(E) enhanced restrictions on transactions between 

affiliates related to proprietary trading; 

(F) enhanced accounting disclosures relating to proprietary trading; 

(G) enhanced public disclosure relating to proprietary 

trading; and 
H. R. 4173—566 

(H) any other options the Comptroller General deems 

appropriate. 

(c) REPORT TO CONGRESS.—Not later than 15 months after 

the date of enactment of this Act, the Comptroller General shall 

submit a report to Congress on the results of the study conducted 

under subsection (b). 

(d) ACCESS BY COMPTROLLER GENERAL.—For purposes of conducting the study required under subsection (b), the Comptroller 

General shall have access, upon request, to any information, data, 

schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property 

belonging to or in use by a covered entity that engages in proprietary trading, and to the officers, directors, employees, independent 

public accountants, financial advisors, staff, and agents and representatives of a covered entity (as related to the activities of 

the agent or representative on behalf of the covered entity), at 

such reasonable times as the Comptroller General may request. 

The Comptroller General may make and retain copies of books, 

records, accounts, and other records, as the Comptroller General 

deems appropriate. 

(e) CONFIDENTIALITY OF REPORTS.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

Comptroller General may not disclose information regarding— 

(A) any proprietary trading activity of a covered entity, 

unless such information is disclosed at a level of generality 

that does not reveal the investment or trading position 

or strategy of the covered entity for any specific security, 

commodity, derivative, or other investment or financial 

product; or 

(B) any individual interviewed by the Comptroller General for purposes of the study under subsection (b), unless 

such information is disclosed at a level of generality that 

does not reveal— 

(i) the name of or identifying details relating to 

such individual; or 

(ii) in the case of an individual who is an employee 

of a third party that provides professional services 

to a covered entity believed to be engaged in proprietary trading, the name of or any identifying details 

relating to such third party. 

(2) EXCEPTIONS.—The Comptroller General may disclose 

the information described in paragraph (1)— 

(A) to a department, agency, or official of the Federal 

Government, for official use, upon request; 

(B) to a committee of Congress, upon request; and 

(C) to a court, upon an order of such court. 

SEC. 989A. SENIOR INVESTOR PROTECTIONS. 

(a) DEFINITIONS.—As used in this section— 

(1) the term ‘‘eligible entity’’ means— 

(A) a securities commission (or any agency or office 

performing like functions) of a State that the Office determines has adopted rules on the appropriate use of designations in the offer or sale of securities or the provision 

of investment advice that meet or exceed the minimum 

requirements of the NASAA Model Rule on the Use of 
H. R. 4173—567 

Senior-Specific Certifications and Professional Designations 

(or any successor thereto); 

(B) the insurance commission (or any agency or office 

performing like functions) of any State that the Office 

determines has— 

(i) adopted rules on the appropriate use of designations in the sale of insurance products that, to the 

extent practicable, conform to the minimum requirements of the National Association of Insurance 

Commissioners Model Regulation on the Use of SeniorSpecific Certifications and Professional Designations 

in the Sale of Life Insurance and Annuities (or any 

successor thereto); and 

(ii) adopted rules with respect to fiduciary or suitability requirements in the sale of annuities that meet 

or exceed the minimum requirements established by 

the Suitability in Annuity Transactions Model Regulation of the National Association of Insurance Commissioners (or any successor thereto); or 

(C) a consumer protection agency of any State, if— 

(i) the securities commission (or any agency or 

office performing like functions) of the State is eligible 

under subparagraph (A); or 

(ii) the insurance commission (or any agency or 

office performing like functions) of the State is eligible 

under subparagraph (B); 

(2) the term ‘‘financial product’’ means a security, an insurance product (including an insurance product that pays a 

return, whether fixed or variable), a bank product, and a loan 

product; 

(3) the term ‘‘misleading designation’’— 

(A) means a certification, professional designation, or 

other purported credential that indicates or implies that 

a salesperson or adviser has special certification or training 

in advising or servicing seniors; and 

(B) does not include a certification, professional designation, license, or other credential that— 

(i) was issued by or obtained from an academic 

institution having regional accreditation; 

(ii) meets the standards for certifications and 

professional designations outlined by the NASAA 

Model Rule on the Use of Senior-Specific Certifications 

and Professional Designations (or any successor 

thereto) or by the Model Regulations on the Use of 

Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities, 

adopted by the National Association of Insurance 

Commissioners (or any successor thereto); or 

(iii) was issued by or obtained from a State; 

(4) the term ‘‘misleading or fraudulent marketing’’ means 

the use of a misleading designation by a person that sells 

to or advises a senior in connection with the sale of a financial 

product; 

(5) the term ‘‘NASAA’’ means the North American Securities Administrators Association; 

(6) the term ‘‘Office’’ means the Office of Financial Literacy 

of the Bureau; 
H. R. 4173—568 

(7) the term ‘‘senior’’ means any individual who has 

attained the age of 62 years or older; and 

(8) the term ‘‘State’’ has the same meaning as in section 

3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). 

(b) GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS

FROM BEING MISLED BY FALSE DESIGNATIONS.—The Office shall 

establish a program under which the Office may make grants 

to States or eligible entities— 

(1) to hire staff to identify, investigate, and prosecute 

(through civil, administrative, or criminal enforcement actions) 

cases involving misleading or fraudulent marketing; 

(2) to fund technology, equipment, and training for regulators, prosecutors, and law enforcement officers, in order to 

identify salespersons and advisers who target seniors through 

the use of misleading designations; 

(3) to fund technology, equipment, and training for prosecutors to increase the successful prosecution of salespersons and 

advisers who target seniors with the use of misleading designations; 

(4) to provide educational materials and training to regulators on the appropriateness of the use of designations by 

salespersons and advisers in connection with the sale and marketing of financial products; 

(5) to provide educational materials and training to seniors 

to increase awareness and understanding of misleading or 

fraudulent marketing; 

(6) to develop comprehensive plans to combat misleading 

or fraudulent marketing of financial products to seniors; and 

(7) to enhance provisions of State law to provide protection 

for seniors against misleading or fraudulent marketing. 

(c) APPLICATIONS.—A State or eligible entity desiring a grant 

under this section shall submit an application to the Office, in 

such form and in such a manner as the Office may determine, 

that includes— 

(1) a proposal for activities to protect seniors from misleading or fraudulent marketing that are proposed to be funded 

using a grant under this section, including— 

(A) an identification of the scope of the problem of 

misleading or fraudulent marketing in the State; 

(B) a description of how the proposed activities would— 

(i) protect seniors from misleading or fraudulent 

marketing in the sale of financial products, including 

by proactively identifying victims of misleading and 

fraudulent marketing who are seniors; 

(ii) assist in the investigation and prosecution of 

those using misleading or fraudulent marketing; and 

(iii) discourage and reduce cases of misleading or 

fraudulent marketing; and 

(C) a description of how the proposed activities would 

be coordinated with other State efforts; and 

(2) any other information, as the Office determines is appropriate. 

(d) PERFORMANCE OBJECTIVES AND REPORTING REQUIREMENTS.—The Office may establish such performance objectives and 

reporting requirements for States and eligible entities receiving 

a grant under this section as the Office determines are necessary 
H. R. 4173—569 

to carry out and assess the effectiveness of the program under 

this section. 

(e) MAXIMUM AMOUNT.—The amount of a grant under this 

section may not exceed— 

(1) $500,000 for each of 3 consecutive fiscal years, if the 

recipient is a State, or an eligible entity of a State, that has 

adopted rules— 

(A) on the appropriate use of designations in the offer 

or sale of securities or investment advice that meet or 

exceed the minimum requirements of the NASAA Model 

Rule on the Use of Senior-Specific Certifications and Professional Designations (or any successor thereto); 

(B) on the appropriate use of designations in the sale 

of insurance products that, to the extent practicable, conform to the minimum requirements of the National Association of Insurance Commissioners Model Regulation on the 

Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (or 

any successor thereto); and 

(C) with respect to fiduciary or suitability requirements 

in the sale of annuities that meet or exceed the minimum 

requirements established by the Suitability in Annuity 

Transactions Model Regulation of the National Association 

of Insurance Commissioners (or any successor thereto); and 

(2) $100,000 for each of 3 consecutive fiscal years, if the 

recipient is a State, or an eligible entity of a State, that has 

adopted— 

(A) rules on the appropriate use of designations in 

the offer or sale of securities or investment advice that 

meet or exceed the minimum requirements of the NASAA 

Model Rule on the Use of Senior-Specific Certifications 

and Professional Designations (or any successor thereto); 

or 

(B) rules— 

(i) on the appropriate use of designations in the 

sale of insurance products that, to the extent practicable, conform to the minimum requirements of the 

National Association of Insurance Commissioners 

Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of 

Life Insurance and Annuities (or any successor 

thereto); and 

(ii) with respect to fiduciary or suitability requirements in the sale of annuities that meet or exceed 

the minimum requirements established by the Suitability in Annuity Transactions Model Regulation of 

the National Association of Insurance Commissioners 

(or any successor thereto). 

(f) SUBGRANTS.—A State or eligible entity that receives a grant 

under this section may make a subgrant, as the State or eligible 

entity determines is necessary to carry out the activities funded 

using a grant under this section. 

(g) REAPPLICATION.—A State or eligible entity that receives 

a grant under this section may reapply for a grant under this 

section, notwithstanding the limitations on grant amounts under 

subsection (e). 
H. R. 4173—570 

(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 

to be appropriated to carry out this section, $8,000,000 for each 

of fiscal years 2011 through 2015. 

SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL 

INDEPENDENCE. 

Section 8G of the Inspector General Act of 1978 (5 U.S.C. 

App.) is amended— 

(1) in subsection (a)(4)— 

(A) in the matter preceding subparagraph (A), by 

inserting ‘‘the board or commission of the designated Federal entity, or in the event the designated Federal entity 

does not have a board or commission,’’ after ‘‘means’’; 

(B) in subparagraph (A), by striking ‘‘and’’ after the 

semicolon; and 

(C) by adding after subparagraph (B) the following: 

‘‘(C) with respect to the Federal Labor Relations 

Authority, such term means the members of the Authority 

(described under section 7104 of title 5, United States 

Code); 

‘‘(D) with respect to the National Archives and Records 

Administration, such term means the Archivist of the 

United States; 

‘‘(E) with respect to the National Credit Union 

Administration, such term means the National Credit 

Union Administration Board (described under section 102 

of the Federal Credit Union Act (12 U.S.C. 1752a); 

‘‘(F) with respect to the National Endowment of the 

Arts, such term means the National Council on the Arts; 

‘‘(G) with respect to the National Endowment for the 

Humanities, such term means the National Council on 

the Humanities; and 

‘‘(H) with respect to the Peace Corps, such term means 

the Director of the Peace Corps;’’; and 

(2) in subsection (h), by inserting ‘‘if the designated Federal 

entity is not a board or commission, include’’ after ‘‘designated 

Federal entities and’’. 

SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY. 

Section 5(a) of the Inspector General Act of 1978 (5 U.S.C. 

App.) is amended— 

(1) in paragraph (12), by striking ‘‘and’’ after the semicolon; 

(2) in paragraph (13), by striking the period and inserting 

a semicolon; and 

(3) by adding at the end the following: 

‘‘(14)(A) an appendix containing the results of any peer 

review conducted by another Office of Inspector General during 

the reporting period; or 

‘‘(B) if no peer review was conducted within that reporting 

period, a statement identifying the date of the last peer review 

conducted by another Office of Inspector General; 

‘‘(15) a list of any outstanding recommendations from any 

peer review conducted by another Office of Inspector General 

that have not been fully implemented, including a statement 

describing the status of the implementation and why 

implementation is not complete; and 

‘‘(16) a list of any peer reviews conducted by the Inspector 

General of another Office of the Inspector General during the 
H. R. 4173—571 

reporting period, including a list of any outstanding recommendations made from any previous peer review (including 

any peer review conducted before the reporting period) that 

remain outstanding or have not been fully implemented.’’. 

SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED FEDERAL ENTITIES. 

Section 8G(e) of the Inspector General Act of 1978 (5 U.S.C. 

App.) is amended— 

(1) by redesignating the sentences following ‘‘(e)’’ as paragraph (2); and 

(2) by striking ‘‘(e)’’ and inserting the following: 

‘‘(e)(1) In the case of a designated Federal entity for which 

a board or commission is the head of the designated Federal entity, 

a removal under this subsection may only be made upon the written 

concurrence of a 2⁄3 majority of the board or commission.’’. 

SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY 

SYSTEM. 

(a) COUNCIL OF INSPECTORS GENERAL ON FINANCIAL OVER- SIGHT.— (1) ESTABLISHMENT AND MEMBERSHIP.—There is established 

a Council of Inspectors General on Financial Oversight (in 

this section referred to as the ‘‘Council of Inspectors General’’) 

chaired by the Inspector General of the Department of the 

Treasury and composed of the inspectors general of the following: 

(A) The Board of Governors of the Federal Reserve 

System. 

(B) The Commodity Futures Trading Commission. 

(C) The Department of Housing and Urban Development. 

(D) The Department of the Treasury. 

(E) The Federal Deposit Insurance Corporation. 

(F) The Federal Housing Finance Agency. 

(G) The National Credit Union Administration. 

(H) The Securities and Exchange Commission. 

(I) The Troubled Asset Relief Program (until the termination of the authority of the Special Inspector General 

for such program under section 121(k) of the Emergency 

Economic Stabilization Act of 2008 (12 U.S.C. 5231(k))). 

(2) DUTIES.— (A) MEETINGS.—The Council of Inspectors General 

shall meet not less than once each quarter, or more frequently if the chair considers it appropriate, to facilitate 

the sharing of information among inspectors general and 

to discuss the ongoing work of each inspector general who 

is a member of the Council of Inspectors General, with 

a focus on concerns that may apply to the broader financial 

sector and ways to improve financial oversight. 

(B) ANNUAL REPORT.—Each year the Council of Inspectors General shall submit to the Council and to Congress 

a report including— 

(i) for each inspector general who is a member 

of the Council of Inspectors General, a section within 

the exclusive editorial control of such inspector general 

that highlights the concerns and recommendations of 

such inspector general in such inspector general’s 
H. R. 4173—572 

ongoing and completed work, with a focus on issues 

that may apply to the broader financial sector; and 

(ii) a summary of the general observations of the 

Council of Inspectors General based on the views 

expressed by each inspector general as required by 

clause (i), with a focus on measures that should be 

taken to improve financial oversight. 

(3) WORKING GROUPS TO EVALUATE COUNCIL.— 

(A) CONVENING A WORKING GROUP.—The Council of 

Inspectors General may, by majority vote, convene a 

Council of Inspectors General Working Group to evaluate 

the effectiveness and internal operations of the Council. 

(B) PERSONNEL AND RESOURCES.—The inspectors general who are members of the Council of Inspectors General 

may detail staff and resources to a Council of Inspectors 

General Working Group established under this paragraph 

to enable it to carry out its duties. 

(C) REPORTS.—A Council of Inspectors General 

Working Group established under this paragraph shall 

submit regular reports to the Council and to Congress 

on its evaluations pursuant to this paragraph. 

(b) RESPONSE TO REPORT BY COUNCIL.—The Council shall 

respond to the concerns raised in the report of the Council of 

Inspectors General under subsection (a)(2)(B) for such year. 

SEC. 989F. GAO STUDY OF PERSON TO PERSON LENDING. 

(a) STUDY.— (1) IN GENERAL.—The Comptroller General of the United 

States shall conduct a study of person to person lending to 

determine the optimal Federal regulatory structure. 

(2) CONSULTATION.—In conducting the study required 

under paragraph (1), the Comptroller General shall consult 

with Federal banking agencies, the Commission, consumer 

groups, outside experts, and the person to person lending 

industry. 

(3) CONTENT OF STUDY.—The study required under paragraph (1) shall include an examination of— 

(A) the regulatory structure as it exists on the date 

of enactment of this Act, as determined by the Commission, 

with particular attention to— 

(i) the application of the Securities Act of 1933 

to person to person lending platforms; 

(ii) the posting of consumer loan information on 

the EDGAR database of the Commission; and 

(iii) the treatment of privately held person to person lending platforms as public companies; 

(B) the State and other Federal regulators responsible 

for the oversight and regulation of person to person lending 

markets; 

(C) any Federal, State, or local government or private 

studies of person to person lending completed or in progress 

on the date of enactment of this Act; 

(D) consumer privacy and data protections, minimum 

credit standards, anti-money laundering and risk management in the regulatory structure as it exists on the date 

of enactment of this Act, and whether additional or alternative safeguards are needed; and 
H. R. 4173—573 

(E) the uses of person to person lending. 

(b) REPORT.— (1) IN GENERAL.—Not later than 1 year after the date 

of enactment of this Act, the Comptroller General shall submit 

a report on the study required under subsection (a) to the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House 

of Representatives. 

(2) CONTENT OF REPORT.—The report required under paragraph (1) shall include alternative regulatory options, 

including— 

(A) the involvement of other Federal agencies; and 

(B) alternative approaches by the Commission and recommendations on whether the alternative approaches are 

effective. 

SEC. 989G. EXEMPTION FOR NONACCELERATED FILERS. 

(a) EXEMPTION.—Section 404 of the Sarbanes-Oxley Act of 2002 

is amended by adding at the end the following: 

‘‘(c) EXEMPTION FOR SMALLER ISSUERS.—Subsection (b) shall 

not apply with respect to any audit report prepared for an issuer 

that is neither a ‘large accelerated filer’ nor an ‘accelerated filer’ 

as those terms are defined in Rule 12b–2 of the Commission (17 

C.F.R. 240.12b–2).’’. 

(b) STUDY.—The Securities and Exchange Commission shall 

conduct a study to determine how the Commission could reduce 

the burden of complying with section 404(b) of the Sarbanes-Oxley 

Act of 2002 for companies whose market capitalization is between 

$75,000,000 and $250,000,000 for the relevant reporting period 

while maintaining investor protections for such companies. The 

study shall also consider whether any such methods of reducing 

the compliance burden or a complete exemption for such companies 

from compliance with such section would encourage companies to 

list on exchanges in the United States in their initial public 

offerings. Not later than 9 months after the date of the enactment 

of this subtitle, the Commission shall transmit a report of such 

study to Congress. 

SEC. 989H. CORRECTIVE RESPONSES BY HEADS OF CERTAIN 

ESTABLISHMENTS TO DEFICIENCIES IDENTIFIED BY 

INSPECTORS GENERAL. 

The Chairman of the Board of Governors of the Federal Reserve 

System, the Chairman of the Commodity Futures Trading Commission, the Chairman of the National Credit Union Administration, 

the Director of the Pension Benefit Guaranty Corporation, and 

the Chairman of the Securities and Exchange Commission shall 

each— 

(1) take action to address deficiencies identified by a report 

or investigation of the Inspector General of the establishment 

concerned; or 

(2) certify to both Houses of Congress that no action is 

necessary or appropriate in connection with a deficiency 

described in paragraph (1). 

SEC. 989I. GAO STUDY REGARDING EXEMPTION FOR SMALLER 

ISSUERS. 

(a) STUDY REGARDING EXEMPTION FOR SMALLER ISSUERS.—The 

Comptroller General of the United States shall carry out a study 
H. R. 4173—574 

on the impact of the amendments made by this Act to section 

404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), which 

shall include an analysis of— 

(1) whether issuers that are exempt from such section 

404(b) have fewer or more restatements of published accounting 

statements than issuers that are required to comply with such 

section 404(b); 

(2) the cost of capital for issuers that are exempt from 

such section 404(b) compared to the cost of capital for issuers 

that are required to comply with such section 404(b); 

(3) whether there is any difference in the confidence of 

investors in the integrity of financial statements of issuers 

that comply with such section 404(b) and issuers that are 

exempt from compliance with such section 404(b); 

(4) whether issuers that do not receive the attestation 

for internal controls required under such section 404(b) should 

be required to disclose the lack of such attestation to investors; 

and 

(5) the costs and benefits to issuers that are exempt from 

such section 404(b) that voluntarily have obtained the attestation of an independent auditor. 

(b) REPORT.—Not later than 3 years after the date of enactment 

of this Act, the Comptroller General shall submit to the Committee 

on Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives 

a report on the results of the study required under subsection 

(a). 

SEC. 989J. FURTHER PROMOTING THE ADOPTION OF THE NAIC MODEL 

REGULATIONS THAT ENHANCE PROTECTION OF SENIORS 

AND OTHER CONSUMERS. 

(a) IN GENERAL.—The Commission shall treat as exempt securities described under section 3(a)(8) of the Securities Act of 1933 

(15 U.S.C. 77c(a)(8)) any insurance or endowment policy or annuity 

contract or optional annuity contract— 

(1) the value of which does not vary according to the 

performance of a separate account; 

(2) that— 

(A) satisfies standard nonforfeiture laws or similar 

requirements of the applicable State at the time of issue; 

or 

(B) in the absence of applicable standard nonforfeiture 

laws or requirements, satisfies the Model Standard Nonforfeiture Law for Life Insurance or Model Standard Nonforfeiture Law for Individual Deferred Annuities, or any successor model law, as published by the National Association 

of Insurance Commissioners; and 

(3) that is issued— 

(A) on and after June 16, 2013, in a State, or issued 

by an insurance company that is domiciled in a State, 

that— 

(i) adopts rules that govern suitability requirements in the sale of an insurance or endowment policy 

or annuity contract or optional annuity contract, which 

shall substantially meet or exceed the minimum 

requirements established by the Suitability in Annuity 

Transactions Model Regulation adopted by the 
H. R. 4173—575 

National Association of Insurance Commissioners in 

March 2010; and 

(ii) adopts rules that substantially meet or exceed 

the minimum requirements of any successor modifications to the model regulations described in subparagraph (A) within 5 years of the adoption by the Association of any further successors thereto; or 

(B) by an insurance company that adopts and implements practices on a nationwide basis for the sale of any 

insurance or endowment policy or annuity contract or 

optional annuity contract that meet or exceed the minimum 

requirements established by the National Association of 

Insurance Commissioners Suitability in Annuity Transactions Model Regulation (Model 275), and any successor 

thereto, and is therefore subject to examination by the 

State of domicile of the insurance company, or by any 

other State where the insurance company conducts sales 

of such products, for the purpose of monitoring compliance 

under this section. 

(b) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed to affect whether any insurance or endowment policy 

or annuity contract or optional annuity contract that is not described 

in this section is or is not an exempt security under section 3(a)(8) 

of the Securities Act of 1933 (15 U.S.C. 77c(a)(8)). 

Subtitle J—Securities and Exchange 

Commission Match Funding 

SEC. 991. SECURITIES AND EXCHANGE COMMISSION MATCH FUNDING. 

(a) MATCH FUNDING AUTHORITY.— 

(1) AMENDMENTS.—Section 31 of the Securities Exchange 

Act of 1934 (15 U.S.C. 78ee) is amended— 

(A) by striking subsection (a) and inserting the following: 

‘‘(a) RECOVERY OF COSTS OF ANNUAL APPROPRIATION.—The 

Commission shall, in accordance with this section, collect transaction fees and assessments that are designed to recover the costs 

to the Government of the annual appropriation to the Commission 

by Congress.’’; 

(B) in subsection (e)(2), by striking ‘‘September 30’’ 

and inserting ‘‘September 25’’; 

(C) in subsection (g), by striking ‘‘April 30 of the fiscal 

year preceding the fiscal year to which such rate applies’’ 

and inserting ‘‘30 days after the date on which an Act 

making a regular appropriation to the Commission for such 

fiscal year is enacted’’; 

(D) by striking subsection (j) and inserting the following: 

‘‘(j) ADJUSTMENTS TO FEE RATES.— ‘‘(1) ANNUAL ADJUSTMENT.—Subject to subsections (i)(1)(B) 

and (k), for each fiscal year, the Commission shall by order 

adjust each of the rates applicable under subsections (b) and 

(c) for such fiscal year to a uniform adjusted rate that, when 

applied to the baseline estimate of the aggregate dollar amount 

of sales for such fiscal year, is reasonably likely to produce 
H. R. 4173—576 

aggregate fee collections under this section (including assessments collected under subsection (d) of this section) that are 

equal to the regular appropriation to the Commission by Congress for such fiscal year. 

‘‘(2) MID-YEAR ADJUSTMENT.—Subject to subsections 

(i)(1)(B) and (k), for each fiscal year, the Commission shall 

determine, by March 1 of such fiscal year, whether, based 

on the actual aggregate dollar volume of sales during the first 

5 months of such fiscal year, the baseline estimate of the 

aggregate dollar volume of sales used under paragraph (1) 

for such fiscal year is reasonably likely to be 10 percent (or 

more) greater or less than the actual aggregate dollar volume 

of sales for such fiscal year. If the Commission so determines, 

the Commission shall by order, no later than March 1, adjust 

each of the rates applicable under subsections (b) and (c) for 

such fiscal year to a uniform adjusted rate that, when applied 

to the revised estimate of the aggregate dollar amount of sales 

for the remainder of such fiscal year, is reasonably likely to 

produce aggregate fee collections under this section (including 

fees collected during such five-month period and assessments 

collected under subsection (d) of this section) that are equal 

to the regular appropriation to the Commission by Congress 

for such fiscal year. In making such revised estimate, the 

Commission shall, after consultation with the Congressional 

Budget Office and the Office of Management and Budget, use 

the same methodology required by subsection (l). 

‘‘(3) REVIEW.—In exercising its authority under this subsection, the Commission shall not be required to comply with 

the provisions of section 553 of title 5, United States Code. 

An adjusted rate prescribed under paragraph (1) or (2) and 

published under subsection (g) shall not be subject to judicial 

review. 

‘‘(4) EFFECTIVE DATE.— 

‘‘(A) ANNUAL ADJUSTMENT.—Subject to subsections 

(i)(1)(B) and (k), an adjusted rate prescribed under paragraph (1) shall take effect on the later of— 

‘‘(i) the first day of the fiscal year to which such 

rate applies; or 

‘‘(ii) 60 days after the date on which an Act making 

a regular appropriation to the Commission for such 

fiscal year is enacted. 

‘‘(B) MID-YEAR ADJUSTMENT.—An adjusted rate prescribed under paragraph (2) shall take effect on April 1 

of the fiscal year to which such rate applies.’’; 

(E) in subsection (k), by striking ‘‘30 days’’ and 

inserting ‘‘60 days’’; and 

(F) in subsection (l), by striking ‘‘DEFINITIONS.—’’ and 

all that follows through ‘‘SALES.—The baseline’’ and 

inserting ‘‘BASELINE ESTIMATE OF THE AGGREGATE DOLLAR

AMOUNT OF SALES.—The baseline’’. 

(2) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the later of— 

(A) October 1, 2011; or 

(B) the date of enactment of an Act making a regular 

appropriation to the Commission for fiscal year 2012. 

(b) AMENDMENTS TO REGISTRATION FEE PROVISIONS.— 
H. R. 4173—577 

(1) SECTION 6(b) OF THE SECURITIES ACT OF 1933.—Section 

6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is amended— 

(A) by striking ‘‘offsetting’’ each place that term 

appears and inserting ‘‘fee’’; 

(B) by striking paragraphs (1), (3), (4), (6), (8), and 

(9); 

(C) by redesignating paragraph (2) as paragraph (1); 

(D) by redesignating paragraph (5) as paragraph (2); 

(E) by redesignating paragraph (7) as paragraph (3); 

(F) by redesignating paragraph (10) as paragraph (5); 

(G) by redesignating paragraph (11) as paragraph (6); 

(H) in paragraph (1), as so redesignated, by striking 

‘‘paragraph (5) or (6).’’ and inserting ‘‘paragraph (2).’’; 

(I) in paragraph (2), as so redesignated— 

(i) by striking ‘‘of the fiscal years 2003 through 

2011’’ and inserting ‘‘fiscal year’’; and 

(ii) by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraph (1)’’; 

(J) by inserting after paragraph (3), as so redesignated, 

the following: 

‘‘(4) REVIEW AND EFFECTIVE DATE.—In exercising its 

authority under this subsection, the Commission shall not be 

required to comply with the provisions of section 553 of title 

5, United States Code. An adjusted rate prescribed under paragraph (2) and published under paragraph (5) shall not be subject to judicial review. An adjusted rate prescribed under paragraph (2) shall take effect on the first day of the fiscal year 

to which such rate applies.’’; 

(K) in paragraph (5), as redesignated, by striking ‘‘April 

30’’ and inserting ‘‘August 31’’; 

(L) in paragraph (6), as so redesignated— 

(i) by striking ‘‘of the fiscal years 2002 through 

2011’’ and inserting ‘‘fiscal year’’; and 

(ii) by inserting at the end of the table in subparagraph (A) the following: 

‘‘2012 ................................................... $425,000,000 

2013 ..................................................... $455,000,000 

2014 ..................................................... $485,000,000 

2015 ..................................................... $515,000,000 

2016 ..................................................... $550,000,000 

2017 ..................................................... $585,000,000 

2018 ..................................................... $620,000,000 

2019 ..................................................... $660,000,000 

2020 ..................................................... $705,000,000 

2021 and each fiscal year thereafter An amount that is equal to the target 

fee collection amount for the prior fiscal year, adjusted by the rate of inflation.’’. 

(2) SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF

1934.—Section 13(e) of the Securities Exchange Act of 1934 

(15 U.S.C. 78m(e)) is amended— 

(A) in paragraph (3), by striking ‘‘paragraphs (5) and 

(6)’’ and inserting ‘‘paragraph (4)’’; 

(B) by striking paragraphs (4), (5), and (6); 

(C) by inserting after paragraph (3) the following: 
H. R. 4173—578 

‘‘(4) ANNUAL ADJUSTMENT.—For each fiscal year, the 

Commission shall by order adjust the rate required by paragraph (3) for such fiscal year to a rate that is equal to the 

rate (expressed in dollars per million) that is applicable under 

section 6(b) of the Securities Act of 1933 for such fiscal year. 

‘‘(5) FEE COLLECTIONS.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter 

shall be deposited and credited as general revenue of the 

Treasury and shall not be available for obligation. 

‘‘(6) EFFECTIVE DATE; PUBLICATION.—In exercising its 

authority under this subsection, the Commission shall not be 

required to comply with the provisions of section 553 of title 

5, United States Code. An adjusted rate prescribed under paragraph (4) shall be published and take effect in accordance 

with section 6(b) of the Securities Act of 1933 (15 U.S.C. 

77f(b)).’’; and 

(D) by striking paragraphs (8), (9), and (10). 

(3) SECTION 14(g) OF THE SECURITIES EXCHANGE ACT OF

1934.—Section 14(g) of the Securities Exchange Act of 1934 

(15 U.S.C. 78n(g)) is amended— 

(A) in paragraph (1), by striking ‘‘paragraphs (5) and 

(6)’’ each time that term appears and inserting ‘‘paragraph 

(4)’’; 

(B) in paragraph (3), by striking ‘‘paragraphs (5) and 

(6)’’ and inserting ‘‘paragraph (4)’’; 

(C) by striking paragraphs (4), (5), and (6); 

(D) by inserting after paragraph (3) the following: 

‘‘(4) ANNUAL ADJUSTMENT.—For each fiscal year, the 

Commission shall by order adjust the rate required by paragraphs (1) and (3) for such fiscal year to a rate that is equal 

to the rate (expressed in dollars per million) that is applicable 

under section 6(b) of the Securities Act of 1933 (15 U.S.C. 

77f(b)) for such fiscal year. 

‘‘(5) FEE COLLECTION.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter 

shall be deposited and credited as general revenue of the 

Treasury and shall not be available for obligation. 

‘‘(6) REVIEW; EFFECTIVE DATE; PUBLICATION.—In exercising 

its authority under this subsection, the Commission shall not 

be required to comply with the provisions of section 553 of 

title 5, United States Code. An adjusted rate prescribed under 

paragraph (4) shall be published and take effect in accordance 

with section 6(b) of the Securities Act of 1933 (15 U.S.C. 

77f(b)).’’; 

(E) by striking paragraphs (8), (9), and (10); and 

(F) by redesignating paragraph (11) as paragraph (8). 

(4) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on October 1, 2011, except that for 

fiscal year 2012, the Commission shall publish the rate established under section 6(b) of the Securities Act of 1933 (15 

U.S.C. 77f(b)), as amended by this Act, on August 31, 2011. 

(c) AUTHORIZATION OF APPROPRIATIONS.—Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read 

as follows: 
H. R. 4173—579 

‘‘SEC. 35. AUTHORIZATION OF APPROPRIATIONS. 

‘‘In addition to any other funds authorized to be appropriated 

to the Commission, there are authorized to be appropriated to 

carry out the functions, powers, and duties of the Commission— 

‘‘(1) for fiscal year 2011, $1,300,000,000; 

‘‘(2) for fiscal year 2012, $1,500,000,000; 

‘‘(3) for fiscal year 2013, $1,750,000,000; 

‘‘(4) for fiscal year 2014, $2,000,000,000; and 

‘‘(5) for fiscal year 2015, $2,250,000,000.’’. 

(d) TRANSMITTAL OF BUDGET REQUESTS.— 

(1) AMENDMENT.—Section 31 of the Securities Exchange 

Act of 1934 (15 U.S.C. 78ee) is amended by adding at the 

end the following: 

‘‘(m) TRANSMITTAL OF COMMISSION BUDGET REQUESTS.— 

‘‘(1) BUDGET REQUIRED.—For fiscal year 2012, and each 

fiscal year thereafter, the Commission shall prepare and submit 

a budget to the President. Whenever the Commission submits 

a budget estimate or request to the President or the Office 

of Management and Budget, the Commission shall concurrently 

transmit copies of the estimate or request to the Committee 

on Appropriations of the Senate, the Committee on Appropriations of the House of Representatives, the Committee on 

Banking, Housing, and Urban Affairs of the Senate, and the 

Committee on Financial Services of the House of Representatives. 

‘‘(2) SUBMISSION TO CONGRESS.—The President shall submit 

each budget submitted under paragraph (1) to Congress, in 

unaltered form, together with the annual budget for the 

Administration submitted by the President. 

‘‘(3) CONTENTS.—The Commission shall include in each 

budget submitted under paragraph (1)— 

‘‘(A) an itemization of the amount of funds necessary 

to carry out the functions of the Commission. 

‘‘(B) an amount to be designated as contingency funding 

to be used by the Commission to address unanticipated 

needs; and 

‘‘(C) a designation of any activities of the Commission 

for which multi-year budget authority would be suitable.’’. 

(2) BUDGET OF THE PRESIDENT.—For fiscal year 2012, and 

each fiscal year thereafter, the annual budget for the Administration submitted by the President to Congress shall reflect 

the amendments made by this section. 

(e) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.— 

(1) AMENDMENT.—Section 4 of the Securities Exchange Act 

of 1934 (15 U.S.C. 78d), as amended by this Act, is amended 

by adding at the end the following: 

‘‘(i) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.— 

‘‘(1) RESERVE FUND ESTABLISHED.—There is established in 

the Treasury of the United States a separate fund, to be known 

as the ‘Securities and Exchange Commission Reserve Fund’ 

(referred to in this subsection as the ‘Reserve Fund’). 

‘‘(2) RESERVE FUND AMOUNTS.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), any registration fees collected by the Commission under 

section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) 

or section 24(f) of the Investment Company Act of 1940 
H. R. 4173—580 

(15 U.S.C. 80a-24(f)) shall be deposited into the Reserve 

Fund. 

‘‘(B) LIMITATIONS.—For any 1 fiscal year— 

‘‘(i) the amount deposited in the Fund may not 

exceed $50,000,000; and 

‘‘(ii) the balance in the Fund may not exceed 

$100,000,000. 

‘‘(C) EXCESS FEES.—Any amounts in excess of the 

limitations described in subparagraph (B) that the Commission collects from registration fees under section 6(b) of 

the Securities Act of 1933 (15 U.S.C. 77f(b)) or section 

24(f) of the Investment Company Act of 1940 (15 U.S.C. 

80a-24(f)) shall be deposited in the General Fund of the 

Treasury of the United States and shall not be available 

for obligation by the Commission. 

‘‘(3) USE OF AMOUNTS IN RESERVE FUND.—The Commission 

may obligate amounts in the Reserve Fund, not to exceed 

a total of $100,000,000 in any 1 fiscal year, as the Commission 

determines is necessary to carry out the functions of the 

Commission. Any amounts in the reserve fund shall remain 

available until expended. Not later than 10 days after the 

date on which the Commission obligates amounts under this 

paragraph, the Commission shall notify Congress of the date, 

amount, and purpose of the obligation. 

‘‘(4) RULE OF CONSTRUCTION.—Amounts collected and 

deposited in the Reserve Fund shall not be construed to be 

Government funds or appropriated monies and shall not be 

subject to apportionment for the purpose of chapter 15 of title 

31, United States Code, or under any other authority.’’. 

(2) EFFECTIVE DATE.—The amendment made by this subsection shall take effect on October 1, 2011. 

TITLE X—BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

SEC. 1001. SHORT TITLE. 

This title may be cited as the ‘‘Consumer Financial Protection 

Act of 2010’’. 

SEC. 1002. DEFINITIONS. 

Except as otherwise provided in this title, for purposes of this 

title, the following definitions shall apply: 

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

controls, is controlled by, or is under common control with 

another person. 

(2) BUREAU.—The term ‘‘Bureau’’ means the Bureau of 

Consumer Financial Protection. 

(3) BUSINESS OF INSURANCE.—The term ‘‘business of insurance’’ means the writing of insurance or the reinsuring of 

risks by an insurer, including all acts necessary to such writing 

or reinsuring and the activities relating to the writing of insurance or the reinsuring of risks conducted by persons who act 

as, or are, officers, directors, agents, or employees of insurers 

or who are other persons authorized to act on behalf of such 

persons. 
H. R. 4173—581 

(4) CONSUMER.—The term ‘‘consumer’’ means an individual 

or an agent, trustee, or representative acting on behalf of 

an individual. 

(5) CONSUMER FINANCIAL PRODUCT OR SERVICE.—The term 

‘‘consumer financial product or service’’ means any financial 

product or service that is described in one or more categories 

under— 

(A) paragraph (15) and is offered or provided for use 

by consumers primarily for personal, family, or household 

purposes; or 

(B) clause (i), (iii), (ix), or (x) of paragraph (15)(A), 

and is delivered, offered, or provided in connection with 

a consumer financial product or service referred to in 

subparagraph (A). 

(6) COVERED PERSON.—The term ‘‘covered person’’ means— 

(A) any person that engages in offering or providing 

a consumer financial product or service; and 

(B) any affiliate of a person described in subparagraph 

(A) if such affiliate acts as a service provider to such 

person. 

(7) CREDIT.—The term ‘‘credit’’ means the right granted 

by a person to a consumer to defer payment of a debt, incur 

debt and defer its payment, or purchase property or services 

and defer payment for such purchase. 

(8) DEPOSIT-TAKING ACTIVITY.—The term ‘‘deposit-taking 

activity’’ means— 

(A) the acceptance of deposits, maintenance of deposit 

accounts, or the provision of services related to the acceptance of deposits or the maintenance of deposit accounts; 

(B) the acceptance of funds, the provision of other 

services related to the acceptance of funds, or the maintenance of member share accounts by a credit union; or 

(C) the receipt of funds or the equivalent thereof, as 

the Bureau may determine by rule or order, received or 

held by a covered person (or an agent for a covered person) 

for the purpose of facilitating a payment or transferring 

funds or value of funds between a consumer and a third 

party. 

(9) DESIGNATED TRANSFER DATE.—The term ‘‘designated 

transfer date’’ means the date established under section 1062. 

(10) DIRECTOR.—The term ‘‘Director’’ means the Director 

of the Bureau. 

(11) ELECTRONIC CONDUIT SERVICES.—The term ‘‘electronic 

conduit services’’— 

(A) means the provision, by a person, of electronic 

data transmission, routing, intermediate or transient storage, or connections to a telecommunications system or network; and 

(B) does not include a person that provides electronic 

conduit services if, when providing such services, the person— 

(i) selects or modifies the content of the electronic 

data; 

(ii) transmits, routes, stores, or provides connections for electronic data, including financial data, in 

a manner that such financial data is differentiated 

from other types of data of the same form that such 
H. R. 4173—582 

person transmits, routes, or stores, or with respect 

to which, provides connections; or 

(iii) is a payee, payor, correspondent, or similar 

party to a payment transaction with a consumer. 

(12) ENUMERATED CONSUMER LAWS.—Except as otherwise 

specifically provided in section 1029, subtitle G or subtitle 

H, the term ‘‘enumerated consumer laws’’ means— 

(A) the Alternative Mortgage Transaction Parity Act 

of 1982 (12 U.S.C. 3801 et seq.); 

(B) the Consumer Leasing Act of 1976 (15 U.S.C. 1667 

et seq.); 

(C) the Electronic Fund Transfer Act (15 U.S.C. 1693 

et seq.), except with respect to section 920 of that Act; 

(D) the Equal Credit Opportunity Act (15 U.S.C. 1691 

et seq.); 

(E) the Fair Credit Billing Act (15 U.S.C. 1666 et 

seq.); 

(F) the Fair Credit Reporting Act (15 U.S.C. 1681 

et seq.), except with respect to sections 615(e) and 628 

of that Act (15 U.S.C. 1681m(e), 1681w); 

(G) the Home Owners Protection Act of 1998 (12 U.S.C. 

4901 et seq.); 

(H) the Fair Debt Collection Practices Act (15 U.S.C. 

1692 et seq.); 

(I) subsections (b) through (f) of section 43 of the Federal Deposit Insurance Act (12 U.S.C. 1831t(c)–(f)); 

(J) sections 502 through 509 of the Gramm-LeachBliley Act (15 U.S.C. 6802–6809) except for section 505 

as it applies to section 501(b); 

(K) the Home Mortgage Disclosure Act of 1975 (12 

U.S.C. 2801 et seq.); 

(L) the Home Ownership and Equity Protection Act 

of 1994 (15 U.S.C. 1601 note); 

(M) the Real Estate Settlement Procedures Act of 1974 

(12 U.S.C. 2601 et seq.); 

(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12 

U.S.C. 5101 et seq.); 

(O) the Truth in Lending Act (15 U.S.C. 1601 et seq.); 

(P) the Truth in Savings Act (12 U.S.C. 4301 et seq.); 

(Q) section 626 of the Omnibus Appropriations Act, 

2009 (Public Law 111–8); and 

(R) the Interstate Land Sales Full Disclosure Act (15 

U.S.C. 1701). 

(13) FAIR LENDING.—The term ‘‘fair lending’’ means fair, 

equitable, and nondiscriminatory access to credit for consumers. 

(14) FEDERAL CONSUMER FINANCIAL LAW.—The term ‘‘Federal consumer financial law’’ means the provisions of this title, 

the enumerated consumer laws, the laws for which authorities 

are transferred under subtitles F and H, and any rule or 

order prescribed by the Bureau under this title, an enumerated 

consumer law, or pursuant to the authorities transferred under 

subtitles F and H. The term does not include the Federal 

Trade Commission Act. 

(15) FINANCIAL PRODUCT OR SERVICE.— 

(A) IN GENERAL.—The term ‘‘financial product or 

service’’ means— 
H. R. 4173—583 

(i) extending credit and servicing loans, including 

acquiring, purchasing, selling, brokering, or other 

extensions of credit (other than solely extending 

commercial credit to a person who originates consumer 

credit transactions); 

(ii) extending or brokering leases of personal or 

real property that are the functional equivalent of purchase finance arrangements, if— 

(I) the lease is on a non-operating basis; 

(II) the initial term of the lease is at least 

90 days; and 

(III) in the case of a lease involving real property, at the inception of the initial lease, the transaction is intended to result in ownership of the 

leased property to be transferred to the lessee, 

subject to standards prescribed by the Bureau; 

(iii) providing real estate settlement services, 

except such services excluded under subparagraph (C), 

or performing appraisals of real estate or personal 

property; 

(iv) engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a 

custodian of funds or any financial instrument for use 

by or on behalf of a consumer; 

(v) selling, providing, or issuing stored value or 

payment instruments, except that, in the case of a 

sale of, or transaction to reload, stored value, only 

if the seller exercises substantial control over the terms 

or conditions of the stored value provided to the consumer where, for purposes of this clause— 

(I) a seller shall not be found to exercise 

substantial control over the terms or conditions 

of the stored value if the seller is not a party 

to the contract with the consumer for the stored 

value product, and another person is principally 

responsible for establishing the terms or conditions 

of the stored value; and 

(II) advertising the nonfinancial goods or services of the seller on the stored value card or device 

is not in itself an exercise of substantial control 

over the terms or conditions; 

(vi) providing check cashing, check collection, or 

check guaranty services; 

(vii) providing payments or other financial data 

processing products or services to a consumer by any 

technological means, including processing or storing 

financial or banking data for any payment instrument, 

or through any payments systems or network used 

for processing payments data, including payments 

made through an online banking system or mobile 

telecommunications network, except that a person shall 

not be deemed to be a covered person with respect 

to financial data processing solely because the person— 
H. R. 4173—584 

(I) is a merchant, retailer, or seller of any 

nonfinancial good or service who engages in financial data processing by transmitting or storing payments data about a consumer exclusively for purpose of initiating payments instructions by the 

consumer to pay such person for the purchase 

of, or to complete a commercial transaction for, 

such nonfinancial good or service sold directly by 

such person to the consumer; or 

(II) provides access to a host server to a person 

for purposes of enabling that person to establish 

and maintain a website; 

(viii) providing financial advisory services (other 

than services relating to securities provided by a person 

regulated by the Commission or a person regulated 

by a State securities Commission, but only to the extent 

that such person acts in a regulated capacity) to consumers on individual financial matters or relating to 

proprietary financial products or services (other than 

by publishing any bona fide newspaper, news magazine, or business or financial publication of general 

and regular circulation, including publishing market 

data, news, or data analytics or investment information 

or recommendations that are not tailored to the individual needs of a particular consumer), including— 

(I) providing credit counseling to any consumer; and 

(II) providing services to assist a consumer 

with debt management or debt settlement, modifying the terms of any extension of credit, or 

avoiding foreclosure; 

(ix) collecting, analyzing, maintaining, or providing 

consumer report information or other account information, including information relating to the credit history 

of consumers, used or expected to be used in connection 

with any decision regarding the offering or provision 

of a consumer financial product or service, except to 

the extent that— 

(I) a person— 

(aa) collects, analyzes, or maintains 

information that relates solely to the transactions between a consumer and such person; 

(bb) provides the information described in 

item (aa) to an affiliate of such person; or 

(cc) provides information that is used or 

expected to be used solely in any decision 

regarding the offering or provision of a product 

or service that is not a consumer financial 

product or service, including a decision for 

employment, government licensing, or a residential lease or tenancy involving a consumer; 

and 

(II) the information described in subclause 

(I)(aa) is not used by such person or affiliate in 

connection with any decision regarding the offering 

or provision of a consumer financial product or 
H. R. 4173—585 

service to the consumer, other than credit 

described in section 1027(a)(2)(A); 

(x) collecting debt related to any consumer financial product or service; and 

(xi) such other financial product or service as may 

be defined by the Bureau, by regulation, for purposes 

of this title, if the Bureau finds that such financial 

product or service is— 

(I) entered into or conducted as a subterfuge 

or with a purpose to evade any Federal consumer 

financial law; or 

(II) permissible for a bank or for a financial 

holding company to offer or to provide under any 

provision of a Federal law or regulation applicable 

to a bank or a financial holding company, and 

has, or likely will have, a material impact on consumers. 

(B) RULE OF CONSTRUCTION.— 

(i) IN GENERAL.—For purposes of subparagraph 

(A)(xi)(II), and subject to clause (ii) of this subparagraph, the following activities provided to a covered 

person shall not, for purposes of this title, be considered 

incidental or complementary to a financial activity 

permissible for a financial holding company to engage 

in under any provision of a Federal law or regulation 

applicable to a financial holding company: 

(I) Providing information products or services 

to a covered person for identity authentication. 

(II) Providing information products or services 

for fraud or identify theft detection, prevention, 

or investigation. 

(III) Providing document retrieval or delivery 

services. 

(IV) Providing public records information 

retrieval. 

(V) Providing information products or services 

for anti-money laundering activities. 

(ii) LIMITATION.—Nothing in clause (i) may be construed as modifying or limiting the authority of the 

Bureau to exercise any— 

(I) examination or enforcement powers 

authority under this title with respect to a covered 

person or service provider engaging in an activity 

described in subparagraph (A)(ix); or 

(II) powers authorized by this title to prescribe 

rules, issue orders, or take other actions under 

any enumerated consumer law or law for which 

the authorities are transferred under subtitle F 

or H. 

(C) EXCLUSIONS.—The term ‘‘financial product or 

service’’ does not include— 

(i) the business of insurance; or 

(ii) electronic conduit services. 

(16) FOREIGN EXCHANGE.—The term ‘‘foreign exchange’’ 

means the exchange, for compensation, of currency of the 

United States or of a foreign government for currency of another 

government. 
H. R. 4173—586 

(17) INSURED CREDIT UNION.—The term ‘‘insured credit 

union’’ has the same meaning as in section 101 of the Federal 

Credit Union Act (12 U.S.C. 1752). 

(18) PAYMENT INSTRUMENT.—The term ‘‘payment 

instrument’’ means a check, draft, warrant, money order, traveler’s check, electronic instrument, or other instrument, payment of funds, or monetary value (other than currency). 

(19) PERSON.—The term ‘‘person’’ means an individual, 

partnership, company, corporation, association (incorporated or 

unincorporated), trust, estate, cooperative organization, or other 

entity. 

(20) PERSON REGULATED BY THE COMMODITY FUTURES

TRADING COMMISSION.—The term ‘‘person regulated by the Commodity Futures Trading Commission’’ means any person that 

is registered, or required by statute or regulation to be registered, with the Commodity Futures Trading Commission, but 

only to the extent that the activities of such person are subject 

to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act. 

(21) PERSON REGULATED BY THE COMMISSION.—The term 

‘‘person regulated by the Commission’’ means a person who 

is— 

(A) a broker or dealer that is required to be registered 

under the Securities Exchange Act of 1934; 

(B) an investment adviser that is registered under 

the Investment Advisers Act of 1940; 

(C) an investment company that is required to be registered under the Investment Company Act of 1940, and 

any company that has elected to be regulated as a business 

development company under that Act; 

(D) a national securities exchange that is required 

to be registered under the Securities Exchange Act of 1934; 

(E) a transfer agent that is required to be registered 

under the Securities Exchange Act of 1934; 

(F) a clearing corporation that is required to be registered under the Securities Exchange Act of 1934; 

(G) any self-regulatory organization that is required 

to be registered with the Commission; 

(H) any nationally recognized statistical rating 

organization that is required to be registered with the 

Commission; 

(I) any securities information processor that is required 

to be registered with the Commission; 

(J) any municipal securities dealer that is required 

to be registered with the Commission; 

(K) any other person that is required to be registered 

with the Commission under the Securities Exchange Act 

of 1934; and 

(L) any employee, agent, or contractor acting on behalf 

of, registered with, or providing services to, any person 

described in any of subparagraphs (A) through (K), but 

only to the extent that any person described in any of 

subparagraphs (A) through (K), or the employee, agent, 

or contractor of such person, acts in a regulated capacity. 

(22) PERSON REGULATED BY A STATE INSURANCE REGULATOR.—The term ‘‘person regulated by a State insurance regulator’’ means any person that is engaged in the business of 
H. R. 4173—587 

insurance and subject to regulation by any State insurance 

regulator, but only to the extent that such person acts in 

such capacity. 

(23) PERSON THAT PERFORMS INCOME TAX PREPARATION

ACTIVITIES FOR CONSUMERS.—The term ‘‘person that performs 

income tax preparation activities for consumers’’ means— 

(A) any tax return preparer (as defined in section 

7701(a)(36) of the Internal Revenue Code of 1986), regardless of whether compensated, but only to the extent that 

the person acts in such capacity; 

(B) any person regulated by the Secretary under section 

330 of title 31, United States Code, but only to the extent 

that the person acts in such capacity; and 

(C) any authorized IRS e-file Providers (as defined 

for purposes of section 7216 of the Internal Revenue Code 

of 1986), but only to the extent that the person acts in 

such capacity. 

(24) PRUDENTIAL REGULATOR.—The term ‘‘prudential regulator’’ means— 

(A) in the case of an insured depository institution 

or depository institution holding company (as defined in 

section 3 of the Federal Deposit Insurance Act), or subsidiary of such institution or company, the appropriate 

Federal banking agency, as that term is defined in section 

3 of the Federal Deposit Insurance Act; and 

(B) in the case of an insured credit union, the National 

Credit Union Administration. 

(25) RELATED PERSON.—The term ‘‘related person’’— 

(A) shall apply only with respect to a covered person 

that is not a bank holding company (as that term is defined 

in section 2 of the Bank Holding Company Act of 1956), 

credit union, or depository institution; 

(B) shall be deemed to mean a covered person for 

all purposes of any provision of Federal consumer financial 

law; and 

(C) means— 

(i) any director, officer, or employee charged with 

managerial responsibility for, or controlling shareholder of, or agent for, such covered person; 

(ii) any shareholder, consultant, joint venture 

partner, or other person, as determined by the Bureau 

(by rule or on a case-by-case basis) who materially 

participates in the conduct of the affairs of such covered 

person; and 

(iii) any independent contractor (including any 

attorney, appraiser, or accountant) who knowingly or 

recklessly participates in any— 

(I) violation of any provision of law or regulation; or 

(II) breach of a fiduciary duty. 

(26) SERVICE PROVIDER.— 

(A) IN GENERAL.—The term ‘‘service provider’’ means 

any person that provides a material service to a covered 

person in connection with the offering or provision by such 

covered person of a consumer financial product or service, 

including a person that— 
H. R. 4173—588 

(i) participates in designing, operating, or 

maintaining the consumer financial product or service; 

or 

(ii) processes transactions relating to the consumer 

financial product or service (other than unknowingly 

or incidentally transmitting or processing financial 

data in a manner that such data is undifferentiated 

from other types of data of the same form as the 

person transmits or processes). 

(B) EXCEPTIONS.—The term ‘‘service provider’’ does not 

include a person solely by virtue of such person offering 

or providing to a covered person— 

(i) a support service of a type provided to 

businesses generally or a similar ministerial service; 

or 

(ii) time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media. 

(C) RULE OF CONSTRUCTION.—A person that is a service 

provider shall be deemed to be a covered person to the 

extent that such person engages in the offering or provision 

of its own consumer financial product or service. 

(27) STATE.—The term ‘‘State’’ means any State, territory, 

or possession of the United States, the District of Columbia, 

the Commonwealth of Puerto Rico, the Commonwealth of the 

Northern Mariana Islands, Guam, American Samoa, or the 

United States Virgin Islands or any federally recognized Indian 

tribe, as defined by the Secretary of the Interior under section 

104(a) of the Federally Recognized Indian Tribe List Act of 

1994 (25 U.S.C. 479a–1(a)). 

(28) STORED VALUE.— (A) IN GENERAL.—The term ‘‘stored value’’ means funds 

or monetary value represented in any electronic format, 

whether or not specially encrypted, and stored or capable 

of storage on electronic media in such a way as to be 

retrievable and transferred electronically, and includes a 

prepaid debit card or product, or any other similar product, 

regardless of whether the amount of the funds or monetary 

value may be increased or reloaded. 

(B) EXCLUSION.—Notwithstanding subparagraph (A), 

the term ‘‘stored value’’ does not include a special purpose 

card or certificate, which shall be defined for purposes 

of this paragraph as funds or monetary value represented 

in any electronic format, whether or not specially 

encrypted, that is— 

(i) issued by a merchant, retailer, or other seller 

of nonfinancial goods or services; 

(ii) redeemable only for transactions with the merchant, retailer, or seller of nonfinancial goods or services or with an affiliate of such person, which affiliate 

itself is a merchant, retailer, or seller of nonfinancial 

goods or services; 

(iii) issued in a specified amount that, except in 

the case of a card or product used solely for telephone 

services, may not be increased or reloaded; 

(iv) purchased on a prepaid basis in exchange for 

payment; and 
H. R. 4173—589 

(v) honored upon presentation to such merchant, 

retailer, or seller of nonfinancial goods or services or 

an affiliate of such person, which affiliate itself is 

a merchant, retailer, or seller of nonfinancial goods 

or services, only for any nonfinancial goods or services. 

(29) TRANSMITTING OR EXCHANGING FUNDS.—The term 

‘‘transmitting or exchanging funds’’ means receiving currency, 

monetary value, or payment instruments from a consumer for 

the purpose of exchanging or transmitting the same by any 

means, including transmission by wire, facsimile, electronic 

transfer, courier, the Internet, or through bill payment services 

or through other businesses that facilitate third-party transfers 

within the United States or to or from the United States. 

Subtitle A—Bureau of Consumer Financial 

Protection 

SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION. 

(a) BUREAU ESTABLISHED.—There is established in the Federal 

Reserve System, an independent bureau to be known as the ‘‘Bureau 

of Consumer Financial Protection’’, which shall regulate the offering 

and provision of consumer financial products or services under 

the Federal consumer financial laws. The Bureau shall be considered an Executive agency, as defined in section 105 of title 5, 

United States Code. Except as otherwise provided expressly by 

law, all Federal laws dealing with public or Federal contracts, 

property, works, officers, employees, budgets, or funds, including 

the provisions of chapters 5 and 7 of title 5, shall apply to the 

exercise of the powers of the Bureau. 

(b) DIRECTOR AND DEPUTY DIRECTOR.— (1) IN GENERAL.—There is established the position of the 

Director, who shall serve as the head of the Bureau. 

(2) APPOINTMENT.—Subject to paragraph (3), the Director 

shall be appointed by the President, by and with the advice 

and consent of the Senate. 

(3) QUALIFICATION.—The President shall nominate the 

Director from among individuals who are citizens of the United 

States. 

(4) COMPENSATION.—The Director shall be compensated at 

the rate prescribed for level II of the Executive Schedule under 

section 5313 of title 5, United States Code. 

(5) DEPUTY DIRECTOR.—There is established the position 

of Deputy Director, who shall— 

(A) be appointed by the Director; and 

(B) serve as acting Director in the absence or unavailability of the Director. 

(c) TERM.— (1) IN GENERAL.—The Director shall serve for a term of 

5 years. 

(2) EXPIRATION OF TERM.—An individual may serve as 

Director after the expiration of the term for which appointed, 

until a successor has been appointed and qualified. 

(3) REMOVAL FOR CAUSE.—The President may remove the 

Director for inefficiency, neglect of duty, or malfeasance in 

office. 
H. R. 4173—590 

(d) SERVICE RESTRICTION.—No Director or Deputy Director may 

hold any office, position, or employment in any Federal reserve 

bank, Federal home loan bank, covered person, or service provider 

during the period of service of such person as Director or Deputy 

Director. 

(e) OFFICES.—The principal office of the Bureau shall be in 

the District of Columbia. The Director may establish regional offices 

of the Bureau, including in cities in which the Federal reserve 

banks, or branches of such banks, are located, in order to carry 

out the responsibilities assigned to the Bureau under the Federal 

consumer financial laws. 

SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS. 

(a) POWERS OF THE BUREAU.—The Bureau is authorized to 

establish the general policies of the Bureau with respect to all 

executive and administrative functions, including— 

(1) the establishment of rules for conducting the general 

business of the Bureau, in a manner not inconsistent with 

this title; 

(2) to bind the Bureau and enter into contracts; 

(3) directing the establishment and maintenance of divisions or other offices within the Bureau, in order to carry 

out the responsibilities under the Federal consumer financial 

laws, and to satisfy the requirements of other applicable law; 

(4) to coordinate and oversee the operation of all administrative, enforcement, and research activities of the Bureau; 

(5) to adopt and use a seal; 

(6) to determine the character of and the necessity for 

the obligations and expenditures of the Bureau; 

(7) the appointment and supervision of personnel employed 

by the Bureau; 

(8) the distribution of business among personnel appointed 

and supervised by the Director and among administrative units 

of the Bureau; 

(9) the use and expenditure of funds; 

(10) implementing the Federal consumer financial laws 

through rules, orders, guidance, interpretations, statements of 

policy, examinations, and enforcement actions; and 

(11) performing such other functions as may be authorized 

or required by law. 

(b) DELEGATION OF AUTHORITY.—The Director of the Bureau 

may delegate to any duly authorized employee, representative, or 

agent any power vested in the Bureau by law. 

(c) AUTONOMY OF THE BUREAU.— 

(1) COORDINATION WITH THE BOARD OF GOVERNORS.—Notwithstanding any other provision of law applicable to the supervision or examination of persons with respect to Federal consumer financial laws, the Board of Governors may delegate 

to the Bureau the authorities to examine persons subject to 

the jurisdiction of the Board of Governors for compliance with 

the Federal consumer financial laws. 

(2) AUTONOMY.—Notwithstanding the authorities granted 

to the Board of Governors under the Federal Reserve Act, 

the Board of Governors may not— 

(A) intervene in any matter or proceeding before the 

Director, including examinations or enforcement actions, 

unless otherwise specifically provided by law; 
H. R. 4173—591 

(B) appoint, direct, or remove any officer or employee 

of the Bureau; or 

(C) merge or consolidate the Bureau, or any of the 

functions or responsibilities of the Bureau, with any division or office of the Board of Governors or the Federal 

reserve banks. 

(3) RULES AND ORDERS.—No rule or order of the Bureau 

shall be subject to approval or review by the Board of Governors. The Board of Governors may not delay or prevent 

the issuance of any rule or order of the Bureau. 

(4) RECOMMENDATIONS AND TESTIMONY.—No officer or 

agency of the United States shall have any authority to require 

the Director or any other officer of the Bureau to submit legislative recommendations, or testimony or comments on legislation, 

to any officer or agency of the United States for approval, 

comments, or review prior to the submission of such recommendations, testimony, or comments to the Congress, if such 

recommendations, testimony, or comments to the Congress 

include a statement indicating that the views expressed therein 

are those of the Director or such officer, and do not necessarily 

reflect the views of the Board of Governors or the President. 

(5) CLARIFICATION OF AUTONOMY OF THE BUREAU IN LEGAL

PROCEEDINGS.—The Bureau shall not be liable under any provision of law for any action or inaction of the Board of Governors, 

and the Board of Governors shall not be liable under any 

provision of law for any action or inaction of the Bureau. 

SEC. 1013. ADMINISTRATION. 

(a) PERSONNEL.— 

(1) APPOINTMENT.— 

(A) IN GENERAL.—The Director may fix the number 

of, and appoint and direct, all employees of the Bureau, 

in accordance with the applicable provisions of title 5, 

United States Code. 

(B) EMPLOYEES OF THE BUREAU.—The Director is 

authorized to employ attorneys, compliance examiners, 

compliance supervision analysts, economists, statisticians, 

and other employees as may be deemed necessary to conduct the business of the Bureau. Unless otherwise provided 

expressly by law, any individual appointed under this section shall be an employee as defined in section 2105 of 

title 5, United States Code, and subject to the provisions 

of such title and other laws generally applicable to the 

employees of an Executive agency. 

(C) WAIVER AUTHORITY.— 

(i) IN GENERAL.—In making any appointment 

under subparagraph (A), the Director may waive the 

requirements of chapter 33 of title 5, United States 

Code, and the regulations implementing such chapter, 

to the extent necessary to appoint employees on terms 

and conditions that are consistent with those set forth 

in section 11(1) of the Federal Reserve Act (12 U.S.C. 

248(1)), while providing for— 

(I) fair, credible, and transparent methods of 

establishing qualification requirements for, recruitment for, and appointments to positions; 
H. R. 4173—592 

(II) fair and open competition and equitable 

treatment in the consideration and selection of 

individuals to positions; 

(III) fair, credible, and transparent methods 

of assigning, reassigning, detailing, transferring, 

and promoting employees. 

(ii) VETERANS PREFERENCES.—In implementing 

this subparagraph, the Director shall comply with the 

provisions of section 2302(b)(11), regarding veterans’ 

preference requirements, in a manner consistent with 

that in which such provisions are applied under 

chapter 33 of title 5, United States Code. The authority 

under this subparagraph to waive the requirements 

of that chapter 33 shall expire 5 years after the date 

of enactment of this Act. 

(2) COMPENSATION.—Notwithstanding any otherwise 

applicable provision of title 5, United States Code, concerning 

compensation, including the provisions of chapter 51 and 

chapter 53, the following provisions shall apply with respect 

to employees of the Bureau: 

(A) The rates of basic pay for all employees of the 

Bureau may be set and adjusted by the Director. 

(B) The Director shall at all times provide compensation (including benefits) to each class of employees that, 

at a minimum, are comparable to the compensation and 

benefits then being provided by the Board of Governors 

for the corresponding class of employees. 

(C) All such employees shall be compensated (including 

benefits) on terms and conditions that are consistent with 

the terms and conditions set forth in section 11(l) of the 

Federal Reserve Act (12 U.S.C. 248(l)). 

(3) BUREAU PARTICIPATION IN FEDERAL RESERVE SYSTEM

RETIREMENT PLAN AND FEDERAL RESERVE SYSTEM THRIFT

PLAN.— 

(A) EMPLOYEE ELECTION.—Employees appointed to the 

Bureau may elect to participate in either— 

(i) both the Federal Reserve System Retirement 

Plan and the Federal Reserve System Thrift Plan, 

under the same terms on which such participation 

is offered to employees of the Board of Governors who 

participate in such plans and under the terms and 

conditions specified under section 1064(i)(1)(C); or 

(ii) the Civil Service Retirement System under 

chapter 83 of title 5, United States Code, or the Federal 

Employees Retirement System under chapter 84 of 

title 5, United States Code, if previously covered under 

one of those Federal employee retirement systems. 

(B) ELECTION PERIOD.—Bureau employees shall make 

an election under this paragraph not later than 1 year 

after the date of appointment by, or transfer under subtitle 

F to, the Bureau. Participation in, and benefit accruals 

under, any other retirement plan established or maintained 

by the Federal Government shall end not later than the 

date on which participation in, and benefit accruals under, 

the Federal Reserve System Retirement Plan and Federal 

Reserve System Thrift Plan begin. 
H. R. 4173—593 

(C) EMPLOYER CONTRIBUTION.—The Bureau shall pay 

an employer contribution to the Federal Reserve System 

Retirement Plan, in the amount established as an employer 

contribution under the Federal Employees Retirement 

System, as established under chapter 84 of title 5, United 

States Code, for each Bureau employee who elects to 

participate in the Federal Reserve System Retirement Plan. 

The Bureau shall pay an employer contribution to the 

Federal Reserve System Thrift Plan for each Bureau 

employee who elects to participate in such plan, as required 

under the terms of such plan. 

(D) CONTROLLED GROUP STATUS.—The Bureau is the 

same employer as the Federal Reserve System (as comprised of the Board of Governors and each of the 12 Federal 

reserve banks prior to the date of enactment of this Act) 

for purposes of subsections (b), (c), (m), and (o) of section 

414 of the Internal Revenue Code of 1986, (26 U.S.C. 

414). 

(4) LABOR-MANAGEMENT RELATIONS.—Chapter 71 of title 

5, United States Code, shall apply to the Bureau and the 

employees of the Bureau. 

(5) AGENCY OMBUDSMAN.— 

(A) ESTABLISHMENT REQUIRED.—Not later than 180 

days after the designated transfer date, the Bureau shall 

appoint an ombudsman. 

(B) DUTIES OF OMBUDSMAN.—The ombudsman 

appointed in accordance with subparagraph (A) shall— 

(i) act as a liaison between the Bureau and any 

affected person with respect to any problem that such 

party may have in dealing with the Bureau, resulting 

from the regulatory activities of the Bureau; and 

(ii) assure that safeguards exist to encourage 

complainants to come forward and preserve confidentiality. 

(b) SPECIFIC FUNCTIONAL UNITS.— 

(1) RESEARCH.—The Director shall establish a unit whose 

functions shall include researching, analyzing, and reporting 

on— 

(A) developments in markets for consumer financial 

products or services, including market areas of alternative 

consumer financial products or services with high growth 

rates and areas of risk to consumers; 

(B) access to fair and affordable credit for traditionally 

underserved communities; 

(C) consumer awareness, understanding, and use of 

disclosures and communications regarding consumer financial products or services; 

(D) consumer awareness and understanding of costs, 

risks, and benefits of consumer financial products or services; 

(E) consumer behavior with respect to consumer financial products or services, including performance on mortgage loans; and 

(F) experiences of traditionally underserved consumers, 

including un-banked and under-banked consumers. 
H. R. 4173—594 

(2) COMMUNITY AFFAIRS.—The Director shall establish a 

unit whose functions shall include providing information, guidance, and technical assistance regarding the offering and provision of consumer financial products or services to traditionally 

underserved consumers and communities. 

(3) COLLECTING AND TRACKING COMPLAINTS.— 

(A) IN GENERAL.—The Director shall establish a unit 

whose functions shall include establishing a single, tollfree telephone number, a website, and a database or utilizing an existing database to facilitate the centralized 

collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services. 

The Director shall coordinate with the Federal Trade 

Commission or other Federal agencies to route complaints 

to such agencies, where appropriate. 

(B) ROUTING CALLS TO STATES.—To the extent practicable, State agencies may receive appropriate complaints 

from the systems established under subparagraph (A), if— 

(i) the State agency system has the functional 

capacity to receive calls or electronic reports routed 

by the Bureau systems; 

(ii) the State agency has satisfied any conditions 

of participation in the system that the Bureau may 

establish, including treatment of personally identifiable 

information and sharing of information on complaint 

resolution or related compliance procedures and 

resources; and 

(iii) participation by the State agency includes 

measures necessary to provide for protection of personally identifiable information that conform to the standards for protection of the confidentiality of personally 

identifiable information and for data integrity and 

security that apply to the Federal agencies described 

in subparagraph (D). 

(C) REPORTS TO THE CONGRESS.—The Director shall 

present an annual report to Congress not later than March 

31 of each year on the complaints received by the Bureau 

in the prior year regarding consumer financial products 

and services. Such report shall include information and 

analysis about complaint numbers, complaint types, and, 

where applicable, information about resolution of complaints. 

(D) DATA SHARING REQUIRED.—To facilitate preparation 

of the reports required under subparagraph (C), supervision 

and enforcement activities, and monitoring of the market 

for consumer financial products and services, the Bureau 

shall share consumer complaint information with prudential regulators, the Federal Trade Commission, other Federal agencies, and State agencies, subject to the standards 

applicable to Federal agencies for protection of the confidentiality of personally identifiable information and for data 

security and integrity. The prudential regulators, the Federal Trade Commission, and other Federal agencies shall 

share data relating to consumer complaints regarding consumer financial products and services with the Bureau, 

subject to the standards applicable to Federal agencies 
H. R. 4173—595 

for protection of confidentiality of personally identifiable 

information and for data security and integrity. 

(c) OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY.— 

(1) ESTABLISHMENT.—The Director shall establish within 

the Bureau the Office of Fair Lending and Equal Opportunity. 

(2) FUNCTIONS.—The Office of Fair Lending and Equal 

Opportunity shall have such powers and duties as the Director 

may delegate to the Office, including— 

(A) providing oversight and enforcement of Federal 

laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau, including the Equal 

Credit Opportunity Act and the Home Mortgage Disclosure 

Act; 

(B) coordinating fair lending efforts of the Bureau with 

other Federal agencies and State regulators, as appropriate, to promote consistent, efficient, and effective 

enforcement of Federal fair lending laws; 

(C) working with private industry, fair lending, civil 

rights, consumer and community advocates on the promotion of fair lending compliance and education; and 

(D) providing annual reports to Congress on the efforts 

of the Bureau to fulfill its fair lending mandate. 

(3) ADMINISTRATION OF OFFICE.—There is established the 

position of Assistant Director of the Bureau for Fair Lending 

and Equal Opportunity, who— 

(A) shall be appointed by the Director; and 

(B) shall carry out such duties as the Director may 

delegate to such Assistant Director. 

(d) OFFICE OF FINANCIAL EDUCATION.— 

(1) ESTABLISHMENT.—The Director shall establish an Office 

of Financial Education, which shall be responsible for developing and implementing initiatives intended to educate and 

empower consumers to make better informed financial 

decisions. 

(2) OTHER DUTIES.—The Office of Financial Education shall 

develop and implement a strategy to improve the financial 

literacy of consumers that includes measurable goals and objectives, in consultation with the Financial Literacy and Education 

Commission, consistent with the National Strategy for Financial Literacy, through activities including providing opportunities for consumers to access— 

(A) financial counseling, including community-based 

financial counseling, where practicable; 

(B) information to assist with the evaluation of credit 

products and the understanding of credit histories and 

scores; 

(C) savings, borrowing, and other services found at 

mainstream financial institutions; 

(D) activities intended to— 

(i) prepare the consumer for educational expenses 

and the submission of financial aid applications, and 

other major purchases; 

(ii) reduce debt; and 

(iii) improve the financial situation of the consumer; 
H. R. 4173—596 

(E) assistance in developing long-term savings strategies; and 

(F) wealth building and financial services during the 

preparation process to claim earned income tax credits 

and Federal benefits. 

(3) COORDINATION.—The Office of Financial Education shall 

coordinate with other units within the Bureau in carrying 

out its functions, including— 

(A) working with the Community Affairs Office to 

implement the strategy to improve financial literacy of 

consumers; and 

(B) working with the research unit established by the 

Director to conduct research related to consumer financial 

education and counseling. 

(4) REPORT.—Not later than 24 months after the designated 

transfer date, and annually thereafter, the Director shall 

submit a report on its financial literacy activities and strategy 

to improve financial literacy of consumers to— 

(A) the Committee on Banking, Housing, and Urban 

Affairs of the Senate; and 

(B) the Committee on Financial Services of the House 

of Representatives. 

(5) MEMBERSHIP IN FINANCIAL LITERACY AND EDUCATION

COMMISSION.—Section 513(c)(1) of the Financial Literacy and 

Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended— 

(A) in subparagraph (B), by striking ‘‘and’’ at the end; 

(B) by redesignating subparagraph (C) as subparagraph (D); and 

(C) by inserting after subparagraph (B) the following 

new subparagraph: 

‘‘(C) the Director of the Bureau of Consumer Financial 

Protection; and’’. 

(6) CONFORMING AMENDMENT.—Section 513(d) of the Financial Literacy and Education Improvement Act (20 U.S.C. 

9702(d)) is amended by adding at the end the following: ‘‘The 

Director of the Bureau of Consumer Financial Protection shall 

serve as the Vice Chairman.’’. 

(7) STUDY AND REPORT ON FINANCIAL LITERACY PROGRAM.— 

(A) IN GENERAL.—The Comptroller General of the 

United States shall conduct a study to identify— 

(i) the feasibility of certification of persons providing the programs or performing the activities 

described in paragraph (2), including recognizing outstanding programs, and developing guidelines and 

resources for community-based practitioners, 

including— 

(I) a potential certification process and standards for certification; 

(II) appropriate certifying entities; 

(III) resources required for funding such a 

process; and 

(IV) a cost-benefit analysis of such certification; 

(ii) technological resources intended to collect, analyze, evaluate, or promote financial literacy and counseling programs; 
H. R. 4173—597 

(iii) effective methods, tools, and strategies 

intended to educate and empower consumers about 

personal finance management; and 

(iv) recommendations intended to encourage the 

development of programs that effectively improve 

financial education outcomes and empower consumers 

to make better informed financial decisions based on 

findings. 

(B) REPORT.—Not later than 1 year after the date 

of enactment of this Act, the Comptroller General of the 

United States shall submit a report on the results of the 

study conducted under this paragraph to the Committee 

on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House 

of Representatives. 

(e) OFFICE OF SERVICE MEMBER AFFAIRS.— 

(1) IN GENERAL.—The Director shall establish an Office 

of Service Member Affairs, which shall be responsible for developing and implementing initiatives for service members and 

their families intended to— 

(A) educate and empower service members and their 

families to make better informed decisions regarding consumer financial products and services; 

(B) coordinate with the unit of the Bureau established 

under subsection (b)(3), in order to monitor complaints 

by service members and their families and responses to 

those complaints by the Bureau or other appropriate Federal or State agency; and 

(C) coordinate efforts among Federal and State agencies, as appropriate, regarding consumer protection measures relating to consumer financial products and services 

offered to, or used by, service members and their families. 

(2) COORDINATION.— (A) REGIONAL SERVICES.—The Director is authorized 

to assign employees of the Bureau as may be deemed 

necessary to conduct the business of the Office of Service 

Member Affairs, including by establishing and maintaining 

the functions of the Office in regional offices of the Bureau 

located near military bases, military treatment facilities, 

or other similar military facilities. 

(B) AGREEMENTS.—The Director is authorized to enter 

into memoranda of understanding and similar agreements 

with the Department of Defense, including any branch 

or agency as authorized by the department, in order to 

carry out the business of the Office of Service Member 

Affairs. 

(3) DEFINITION.—As used in this subsection, the term 

‘‘service member’’ means any member of the United States 

Armed Forces and any member of the National Guard or 

Reserves. 

(f) TIMING.—The Office of Fair Lending and Equal Opportunity, 

the Office of Financial Education, and the Office of Service Member 

Affairs shall each be established not later than 1 year after the 

designated transfer date. 

(g) OFFICE OF FINANCIAL PROTECTION FOR OLDER AMERICANS.— (1) ESTABLISHMENT.—Before the end of the 180-day period 

beginning on the designated transfer date, the Director shall 
H. R. 4173—598 

establish the Office of Financial Protection for Older Americans, 

the functions of which shall include activities designed to facilitate the financial literacy of individuals who have attained 

the age of 62 years or more (in this subsection, referred to 

as ‘‘seniors’’) on protection from unfair, deceptive, and abusive 

practices and on current and future financial choices, including 

through the dissemination of materials to seniors on such 

topics. 

(2) ASSISTANT DIRECTOR.—The Office of Financial Protection for Older Americans (in this subsection referred to as 

the ‘‘Office’’) shall be headed by an assistant director. 

(3) DUTIES.—The Office shall— 

(A) develop goals for programs that provide seniors 

financial literacy and counseling, including programs 

that— 

(i) help seniors recognize warning signs of unfair, 

deceptive, or abusive practices, protect themselves from 

such practices; 

(ii) provide one-on-one financial counseling on 

issues including long-term savings and later-life economic security; and 

(iii) provide personal consumer credit advocacy to 

respond to consumer problems caused by unfair, deceptive, or abusive practices; 

(B) monitor certifications or designations of financial 

advisors who advise seniors and alert the Commission and 

State regulators of certifications or designations that are 

identified as unfair, deceptive, or abusive; 

(C) not later than 18 months after the date of the 

establishment of the Office, submit to Congress and the 

Commission any legislative and regulatory recommendations on the best practices for— 

(i) disseminating information regarding the legitimacy of certifications of financial advisers who advise 

seniors; 

(ii) methods in which a senior can identify the 

financial advisor most appropriate for the senior’s 

needs; and 

(iii) methods in which a senior can verify a financial advisor’s credentials; 

(D) conduct research to identify best practices and 

effective methods, tools, technology and strategies to educate and counsel seniors about personal finance management with a focus on— 

(i) protecting themselves from unfair, deceptive, 

and abusive practices; 

(ii) long-term savings; and 

(iii) planning for retirement and long-term care; 

(E) coordinate consumer protection efforts of seniors 

with other Federal agencies and State regulators, as appropriate, to promote consistent, effective, and efficient 

enforcement; and 

(F) work with community organizations, non-profit 

organizations, and other entities that are involved with 

educating or assisting seniors (including the National Education and Resource Center on Women and Retirement 

Planning). 
H. R. 4173—599 

SEC. 1014. CONSUMER ADVISORY BOARD. 

(a) ESTABLISHMENT REQUIRED.—The Director shall establish 

a Consumer Advisory Board to advise and consult with the Bureau 

in the exercise of its functions under the Federal consumer financial 

laws, and to provide information on emerging practices in the 

consumer financial products or services industry, including regional 

trends, concerns, and other relevant information. 

(b) MEMBERSHIP.—In appointing the members of the Consumer 

Advisory Board, the Director shall seek to assemble experts in 

consumer protection, financial services, community development, 

fair lending and civil rights, and consumer financial products or 

services and representatives of depository institutions that primarily serve underserved communities, and representatives of 

communities that have been significantly impacted by higher-priced 

mortgage loans, and seek representation of the interests of covered 

persons and consumers, without regard to party affiliation. Not 

fewer than 6 members shall be appointed upon the recommendation 

of the regional Federal Reserve Bank Presidents, on a rotating 

basis. 

(c) MEETINGS.—The Consumer Advisory Board shall meet from 

time to time at the call of the Director, but, at a minimum, shall 

meet at least twice in each year. 

(d) COMPENSATION AND TRAVEL EXPENSES.—Members of the 

Consumer Advisory Board who are not full-time employees of the 

United States shall— 

(1) be entitled to receive compensation at a rate fixed 

by the Director while attending meetings of the Consumer 

Advisory Board, including travel time; and 

(2) be allowed travel expenses, including transportation 

and subsistence, while away from their homes or regular places 

of business. 

SEC. 1015. COORDINATION. 

The Bureau shall coordinate with the Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, and other Federal agencies and State regulators, as appropriate, to promote consistent regulatory treatment of consumer 

financial and investment products and services. 

SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS. 

(a) APPEARANCES BEFORE CONGRESS.—The Director of the 

Bureau shall appear before the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial 

Services and the Committee on Energy and Commerce of the House 

of Representatives at semi-annual hearings regarding the reports 

required under subsection (b). 

(b) REPORTS REQUIRED.—The Bureau shall, concurrent with 

each semi-annual hearing referred to in subsection (a), prepare 

and submit to the President and to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee 

on Financial Services and the Committee on Energy and Commerce 

of the House of Representatives, a report, beginning with the session 

following the designated transfer date. The Bureau may also submit 

such report to the Committee on Commerce, Science, and Transportation of the Senate. 

(c) CONTENTS.—The reports required by subsection (b) shall 

include— 
H. R. 4173—600 

(1) a discussion of the significant problems faced by consumers in shopping for or obtaining consumer financial products 

or services; 

(2) a justification of the budget request of the previous 

year; 

(3) a list of the significant rules and orders adopted by 

the Bureau, as well as other significant initiatives conducted 

by the Bureau, during the preceding year and the plan of 

the Bureau for rules, orders, or other initiatives to be undertaken during the upcoming period; 

(4) an analysis of complaints about consumer financial 

products or services that the Bureau has received and collected 

in its central database on complaints during the preceding 

year; 

(5) a list, with a brief statement of the issues, of the 

public supervisory and enforcement actions to which the Bureau 

was a party during the preceding year; 

(6) the actions taken regarding rules, orders, and supervisory actions with respect to covered persons which are not 

credit unions or depository institutions; 

(7) an assessment of significant actions by State attorneys 

general or State regulators relating to Federal consumer financial law; 

(8) an analysis of the efforts of the Bureau to fulfill the 

fair lending mission of the Bureau; and 

(9) an analysis of the efforts of the Bureau to increase 

workforce and contracting diversity consistent with the procedures established by the Office of Minority and Women Inclusion. 

SEC. 1017. FUNDING; PENALTIES AND FINES. 

(a) TRANSFER OF FUNDS FROM BOARD OF GOVERNORS.— 

(1) IN GENERAL.—Each year (or quarter of such year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors shall transfer to the Bureau 

from the combined earnings of the Federal Reserve System, 

the amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau under Federal 

consumer financial law, taking into account such other sums 

made available to the Bureau from the preceding year (or 

quarter of such year). 

(2) FUNDING CAP.— 

(A) IN GENERAL.—Notwithstanding paragraph (1), and 

in accordance with this paragraph, the amount that shall 

be transferred to the Bureau in each fiscal year shall 

not exceed a fixed percentage of the total operating 

expenses of the Federal Reserve System, as reported in 

the Annual Report, 2009, of the Board of Governors, equal 

to— 

(i) 10 percent of such expenses in fiscal year 2011; 

(ii) 11 percent of such expenses in fiscal year 2012; 

and 

(iii) 12 percent of such expenses in fiscal year 

2013, and in each year thereafter. 

(B) ADJUSTMENT OF AMOUNT.—The dollar amount 

referred to in subparagraph (A)(iii) shall be adjusted 
H. R. 4173—601 

annually, using the percent increase, if any, in the employment cost index for total compensation for State and local 

government workers published by the Federal Government, 

or the successor index thereto, for the 12-month period 

ending on September 30 of the year preceding the transfer. 

(C) REVIEWABILITY.—Notwithstanding any other provision in this title, the funds derived from the Federal 

Reserve System pursuant to this subsection shall not be 

subject to review by the Committees on Appropriations 

of the House of Representatives and the Senate. 

(3) TRANSITION PERIOD.—Beginning on the date of enactment of this Act and until the designated transfer date, the 

Board of Governors shall transfer to the Bureau the amount 

estimated by the Secretary needed to carry out the authorities 

granted to the Bureau under Federal consumer financial law, 

from the date of enactment of this Act until the designated 

transfer date. 

(4) BUDGET AND FINANCIAL MANAGEMENT.— 

(A) FINANCIAL OPERATING PLANS AND FORECASTS.—The 

Director shall provide to the Director of the Office of 

Management and Budget copies of the financial operating 

plans and forecasts of the Director, as prepared by the 

Director in the ordinary course of the operations of the 

Bureau, and copies of the quarterly reports of the financial 

condition and results of operations of the Bureau, as prepared by the Director in the ordinary course of the operations of the Bureau. 

(B) FINANCIAL STATEMENTS.—The Bureau shall prepare 

annually a statement of— 

(i) assets and liabilities and surplus or deficit; 

(ii) income and expenses; and 

(iii) sources and application of funds. 

(C) FINANCIAL MANAGEMENT SYSTEMS.—The Bureau 

shall implement and maintain financial management systems that comply substantially with Federal financial 

management systems requirements and applicable Federal 

accounting standards. 

(D) ASSERTION OF INTERNAL CONTROLS.—The Director 

shall provide to the Comptroller General of the United 

States an assertion as to the effectiveness of the internal 

controls that apply to financial reporting by the Bureau, 

using the standards established in section 3512(c) of title 

31, United States Code. 

(E) RULE OF CONSTRUCTION.—This subsection may not 

be construed as implying any obligation on the part of 

the Director to consult with or obtain the consent or 

approval of the Director of the Office of Management and 

Budget with respect to any report, plan, forecast, or other 

information referred to in subparagraph (A) or any jurisdiction or oversight over the affairs or operations of the 

Bureau. 

(F) FINANCIAL STATEMENTS.—The financial statements 

of the Bureau shall not be consolidated with the financial 

statements of either the Board of Governors or the Federal 

Reserve System. 

(5) AUDIT OF THE BUREAU.— 
H. R. 4173—602 

(A) IN GENERAL.—The Comptroller General shall 

annually audit the financial transactions of the Bureau 

in accordance with the United States generally accepted 

government auditing standards, as may be prescribed by 

the Comptroller General of the United States. The audit 

shall be conducted at the place or places where accounts 

of the Bureau are normally kept. The representatives of 

the Government Accountability Office shall have access 

to the personnel and to all books, accounts, documents, 

papers, records (including electronic records), reports, files, 

and all other papers, automated data, things, or property 

belonging to or under the control of or used or employed 

by the Bureau pertaining to its financial transactions and 

necessary to facilitate the audit, and such representatives 

shall be afforded full facilities for verifying transactions 

with the balances or securities held by depositories, fiscal 

agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the 

Bureau shall remain in possession and custody of the 

Bureau. The Comptroller General may obtain and duplicate 

any such books, accounts, documents, records, working 

papers, automated data and files, or other information 

relevant to such audit without cost to the Comptroller 

General, and the right of access of the Comptroller General 

to such information shall be enforceable pursuant to section 

716(c) of title 31, United States Code. 

(B) REPORT.—The Comptroller General shall submit 

to the Congress a report of each annual audit conducted 

under this subsection. The report to the Congress shall 

set forth the scope of the audit and shall include the 

statement of assets and liabilities and surplus or deficit, 

the statement of income and expenses, the statement of 

sources and application of funds, and such comments and 

information as may be deemed necessary to inform Congress of the financial operations and condition of the 

Bureau, together with such recommendations with respect 

thereto as the Comptroller General may deem advisable. 

A copy of each report shall be furnished to the President 

and to the Bureau at the time submitted to the Congress. 

(C) ASSISTANCE AND COSTS.—For the purpose of conducting an audit under this subsection, the Comptroller 

General may, in the discretion of the Comptroller General, 

employ by contract, without regard to section 3709 of the 

Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public 

accountants for temporary periods or for special purposes. 

Upon the request of the Comptroller General, the Director 

of the Bureau shall transfer to the Government Accountability Office from funds available, the amount requested 

by the Comptroller General to cover the full costs of any 

audit and report conducted by the Comptroller General. 

The Comptroller General shall credit funds transferred 

to the account established for salaries and expenses of 

the Government Accountability Office, and such amount 

shall be available upon receipt and without fiscal year 

limitation to cover the full costs of the audit and report. 

(b) CONSUMER FINANCIAL PROTECTION FUND.— 
H. R. 4173—603 

(1) SEPARATE FUND IN FEDERAL RESERVE ESTABLISHED.— 

There is established in the Federal Reserve a separate fund, 

to be known as the ‘‘Bureau of Consumer Financial Protection 

Fund’’ (referred to in this section as the ‘‘Bureau Fund’’). The 

Bureau Fund shall be maintained and established at a Federal 

reserve bank, in accordance with such requirements as the 

Board of Governors may impose. 

(2) FUND RECEIPTS.—All amounts transferred to the Bureau 

under subsection (a) shall be deposited into the Bureau Fund. 

(3) INVESTMENT AUTHORITY.— 

(A) AMOUNTS IN BUREAU FUND MAY BE INVESTED.— 

The Bureau may request the Board of Governors to direct 

the investment of the portion of the Bureau Fund that 

is not, in the judgment of the Bureau, required to meet 

the current needs of the Bureau. 

(B) ELIGIBLE INVESTMENTS.—Investments authorized 

by this paragraph shall be made in obligations of the 

United States or obligations that are guaranteed as to 

principal and interest by the United States, with maturities 

suitable to the needs of the Bureau Fund, as determined 

by the Bureau. 

(C) INTEREST AND PROCEEDS CREDITED.—The interest 

on, and the proceeds from the sale or redemption of, any 

obligations held in the Bureau Fund shall be credited to 

the Bureau Fund. 

(c) USE OF FUNDS.— 

(1) IN GENERAL.—Funds obtained by, transferred to, or 

credited to the Bureau Fund shall be immediately available 

to the Bureau and under the control of the Director, and shall 

remain available until expended, to pay the expenses of the 

Bureau in carrying out its duties and responsibilities. The 

compensation of the Director and other employees of the Bureau 

and all other expenses thereof may be paid from, obtained 

by, transferred to, or credited to the Bureau Fund under this 

section. 

(2) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds 

obtained by or transferred to the Bureau Fund shall not be 

construed to be Government funds or appropriated monies. 

(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Bureau 

Fund and in the Civil Penalty Fund established under subsection (d) shall not be subject to apportionment for purposes 

of chapter 15 of title 31, United States Code, or under any 

other authority. 

(d) PENALTIES AND FINES.— 

(1) ESTABLISHMENT OF VICTIMS RELIEF FUND.—There is 

established in the Federal Reserve a separate fund, to be known 

as the ‘‘Consumer Financial Civil Penalty Fund’’ (referred to 

in this section as the ‘‘Civil Penalty Fund’’). The Civil Penalty 

Fund shall be maintained and established at a Federal reserve 

bank, in accordance with such requirements as the Board of 

Governors may impose. If the Bureau obtains a civil penalty 

against any person in any judicial or administrative action 

under Federal consumer financial laws, the Bureau shall 

deposit into the Civil Penalty Fund, the amount of the penalty 

collected. 
H. R. 4173—604 

(2) PAYMENT TO VICTIMS.—Amounts in the Civil Penalty 

Fund shall be available to the Bureau, without fiscal year 

limitation, for payments to the victims of activities for which 

civil penalties have been imposed under the Federal consumer 

financial laws. To the extent that such victims cannot be located 

or such payments are otherwise not practicable, the Bureau 

may use such funds for the purpose of consumer education 

and financial literacy programs. 

(e) AUTHORIZATION OF APPROPRIATIONS; ANNUAL REPORT.— 

(1) DETERMINATION REGARDING NEED FOR APPROPRIATED

FUNDS.— (A) IN GENERAL.—The Director is authorized to determine that sums available to the Bureau under this section 

will not be sufficient to carry out the authorities of the 

Bureau under Federal consumer financial law for the 

upcoming year. 

(B) REPORT REQUIRED.—When making a determination 

under subparagraph (A), the Director shall prepare a report 

regarding the funding of the Bureau, including the assets 

and liabilities of the Bureau, and the extent to which 

the funding needs of the Bureau are anticipated to exceed 

the level of the amount set forth in subsection (a)(2). The 

Director shall submit the report to the President and to 

the Committee on Appropriations of the Senate and the 

Committee on Appropriations of the House of Representatives. 

(2) AUTHORIZATION OF APPROPRIATIONS.—If the Director 

makes the determination and submits the report pursuant to 

paragraph (1), there are hereby authorized to be appropriated 

to the Bureau, for the purposes of carrying out the authorities 

granted in Federal consumer financial law, $200,000,000 for 

each of fiscal years 2010, 2011, 2012, 2013, and 2014. 

(3) APPORTIONMENT.—Notwithstanding any other provision 

of law, the amounts in paragraph (2) shall be subject to apportionment under section 1517 of title 31, United States Code, 

and restrictions that generally apply to the use of appropriated 

funds in title 31, United States Code, and other laws. 

(4) ANNUAL REPORT.—The Director shall prepare and 

submit a report, on an annual basis, to the Committee on 

Appropriations of the Senate and the Committee on Appropriations of the House of Representatives regarding the financial 

operating plans and forecasts of the Director, the financial 

condition and results of operations of the Bureau, and the 

sources and application of funds of the Bureau, including any 

funds appropriated in accordance with this subsection. 

SEC. 1018. EFFECTIVE DATE. 

This subtitle shall become effective on the date of enactment 

of this Act. 

Subtitle B—General Powers of the Bureau 

SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS. 

(a) PURPOSE.—The Bureau shall seek to implement and, where 

applicable, enforce Federal consumer financial law consistently for 

the purpose of ensuring that all consumers have access to markets 
H. R. 4173—605 

for consumer financial products and services and that markets 

for consumer financial products and services are fair, transparent, 

and competitive. 

(b) OBJECTIVES.—The Bureau is authorized to exercise its 

authorities under Federal consumer financial law for the purposes 

of ensuring that, with respect to consumer financial products and 

services— 

(1) consumers are provided with timely and understandable 

information to make responsible decisions about financial transactions; 

(2) consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination; 

(3) outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce 

unwarranted regulatory burdens; 

(4) Federal consumer financial law is enforced consistently, 

without regard to the status of a person as a depository institution, in order to promote fair competition; and 

(5) markets for consumer financial products and services 

operate transparently and efficiently to facilitate access and 

innovation. 

(c) FUNCTIONS.—The primary functions of the Bureau are— 

(1) conducting financial education programs; 

(2) collecting, investigating, and responding to consumer 

complaints; 

(3) collecting, researching, monitoring, and publishing 

information relevant to the functioning of markets for consumer 

financial products and services to identify risks to consumers 

and the proper functioning of such markets; 

(4) subject to sections 1024 through 1026, supervising covered persons for compliance with Federal consumer financial 

law, and taking appropriate enforcement action to address violations of Federal consumer financial law; 

(5) issuing rules, orders, and guidance implementing Federal consumer financial law; and 

(6) performing such support activities as may be necessary 

or useful to facilitate the other functions of the Bureau. 

SEC. 1022. RULEMAKING AUTHORITY. 

(a) IN GENERAL.—The Bureau is authorized to exercise its 

authorities under Federal consumer financial law to administer, 

enforce, and otherwise implement the provisions of Federal consumer financial law. 

(b) RULEMAKING, ORDERS, AND GUIDANCE.— 

(1) GENERAL AUTHORITY.—The Director may prescribe rules 

and issue orders and guidance, as may be necessary or appropriate to enable the Bureau to administer and carry out the 

purposes and objectives of the Federal consumer financial laws, 

and to prevent evasions thereof. 

(2) STANDARDS FOR RULEMAKING.—In prescribing a rule 

under the Federal consumer financial laws— 

(A) the Bureau shall consider— 

(i) the potential benefits and costs to consumers 

and covered persons, including the potential reduction 

of access by consumers to consumer financial products 

or services resulting from such rule; and 
H. R. 4173—606 

(ii) the impact of proposed rules on covered persons, as described in section 1026, and the impact 

on consumers in rural areas; 

(B) the Bureau shall consult with the appropriate 

prudential regulators or other Federal agencies prior to 

proposing a rule and during the comment process regarding 

consistency with prudential, market, or systemic objectives 

administered by such agencies; and 

(C) if, during the consultation process described in 

subparagraph (B), a prudential regulator provides the 

Bureau with a written objection to the proposed rule of 

the Bureau or a portion thereof, the Bureau shall include 

in the adopting release a description of the objection and 

the basis for the Bureau decision, if any, regarding such 

objection, except that nothing in this clause shall be construed as altering or limiting the procedures under section 

1023 that may apply to any rule prescribed by the Bureau. 

(3) EXEMPTIONS.— 

(A) IN GENERAL.—The Bureau, by rule, may conditionally or unconditionally exempt any class of covered 

persons, service providers, or consumer financial products 

or services, from any provision of this title, or from any 

rule issued under this title, as the Bureau determines 

necessary or appropriate to carry out the purposes and 

objectives of this title, taking into consideration the factors 

in subparagraph (B). 

(B) FACTORS.—In issuing an exemption, as permitted 

under subparagraph (A), the Bureau shall, as appropriate, 

take into consideration— 

(i) the total assets of the class of covered persons; 

(ii) the volume of transactions involving consumer 

financial products or services in which the class of 

covered persons engages; and 

(iii) existing provisions of law which are applicable 

to the consumer financial product or service and the 

extent to which such provisions provide consumers with 

adequate protections. 

(4) EXCLUSIVE RULEMAKING AUTHORITY.— (A) IN GENERAL.—Notwithstanding any other provisions of Federal law and except as provided in section 

1061(b)(5), to the extent that a provision of Federal consumer financial law authorizes the Bureau and another 

Federal agency to issue regulations under that provision 

of law for purposes of assuring compliance with Federal 

consumer financial law and any regulations thereunder, 

the Bureau shall have the exclusive authority to prescribe 

rules subject to those provisions of law. 

(B) DEFERENCE.—Notwithstanding any power granted 

to any Federal agency or to the Council under this title, 

and subject to section 1061(b)(5)(E), the deference that 

a court affords to the Bureau with respect to a determination by the Bureau regarding the meaning or interpretation 

of any provision of a Federal consumer financial law shall 

be applied as if the Bureau were the only agency authorized 

to apply, enforce, interpret, or administer the provisions 

of such Federal consumer financial law. 

(c) MONITORING.— 
H. R. 4173—607 

(1) IN GENERAL.—In order to support its rulemaking and 

other functions, the Bureau shall monitor for risks to consumers 

in the offering or provision of consumer financial products 

or services, including developments in markets for such products or services. 

(2) CONSIDERATIONS.—In allocating its resources to perform 

the monitoring required by this section, the Bureau may consider, among other factors— 

(A) likely risks and costs to consumers associated with 

buying or using a type of consumer financial product or 

service; 

(B) understanding by consumers of the risks of a type 

of consumer financial product or service; 

(C) the legal protections applicable to the offering or 

provision of a consumer financial product or service, 

including the extent to which the law is likely to adequately 

protect consumers; 

(D) rates of growth in the offering or provision of 

a consumer financial product or service; 

(E) the extent, if any, to which the risks of a consumer 

financial product or service may disproportionately affect 

traditionally underserved consumers; or 

(F) the types, number, and other pertinent characteristics of covered persons that offer or provide the consumer 

financial product or service. 

(3) SIGNIFICANT FINDINGS.— 

(A) IN GENERAL.—The Bureau shall publish not fewer 

than 1 report of significant findings of its monitoring 

required by this subsection in each calendar year, beginning 

with the first calendar year that begins at least 1 year 

after the designated transfer date. 

(B) CONFIDENTIAL INFORMATION.—The Bureau may 

make public such information obtained by the Bureau 

under this section as is in the public interest, through 

aggregated reports or other appropriate formats designed 

to protect confidential information in accordance with paragraphs (4), (6), (8), and (9). 

(4) COLLECTION OF INFORMATION.— (A) IN GENERAL.—In conducting any monitoring or 

assessment required by this section, the Bureau shall have 

the authority to gather information from time to time 

regarding the organization, business conduct, markets, and 

activities of covered persons and service providers. 

(B) METHODOLOGY.—In order to gather information 

described in subparagraph (A), the Bureau may— 

(i) gather and compile information from a variety 

of sources, including examination reports concerning 

covered persons or service providers, consumer complaints, voluntary surveys and voluntary interviews 

of consumers, surveys and interviews with covered persons and service providers, and review of available 

databases; and 

(ii) require covered persons and service providers 

participating in consumer financial services markets 

to file with the Bureau, under oath or otherwise, in 

such form and within such reasonable period of time 

as the Bureau may prescribe by rule or order, annual 
H. R. 4173—608 

or special reports, or answers in writing to specific 

questions, furnishing information described in paragraph (4), as necessary for the Bureau to fulfill the 

monitoring, assessment, and reporting responsibilities 

imposed by Congress. 

(C) LIMITATION.—The Bureau may not use its authorities under this paragraph to obtain records from covered 

persons and service providers participating in consumer 

financial services markets for purposes of gathering or 

analyzing the personally identifiable financial information 

of consumers. 

(5) LIMITED INFORMATION GATHERING.—In order to assess 

whether a nondepository is a covered person, as defined in 

section 1002, the Bureau may require such nondepository to 

file with the Bureau, under oath or otherwise, in such form 

and within such reasonable period of time as the Bureau may 

prescribe by rule or order, annual or special reports, or answers 

in writing to specific questions. 

(6) CONFIDENTIALITY RULES.— 

(A) RULEMAKING.—The Bureau shall prescribe rules 

regarding the confidential treatment of information 

obtained from persons in connection with the exercise of 

its authorities under Federal consumer financial law. 

(B) ACCESS BY THE BUREAU TO REPORTS OF OTHER

REGULATORS.— 

(i) EXAMINATION AND FINANCIAL CONDITION

REPORTS.—Upon providing reasonable assurances of 

confidentiality, the Bureau shall have access to any 

report of examination or financial condition made by 

a prudential regulator or other Federal agency having 

jurisdiction over a covered person or service provider, 

and to all revisions made to any such report. 

(ii) PROVISION OF OTHER REPORTS TO THE

BUREAU.—In addition to the reports described in clause 

(i), a prudential regulator or other Federal agency 

having jurisdiction over a covered person or service 

provider may, in its discretion, furnish to the Bureau 

any other report or other confidential supervisory 

information concerning any insured depository institution, credit union, or other entity examined by such 

agency under authority of any provision of Federal 

law. 

(C) ACCESS BY OTHER REGULATORS TO REPORTS OF THE

BUREAU.— 

(i) EXAMINATION REPORTS.—Upon providing 

reasonable assurances of confidentiality, a prudential 

regulator, a State regulator, or any other Federal 

agency having jurisdiction over a covered person or 

service provider shall have access to any report of 

examination made by the Bureau with respect to such 

person, and to all revisions made to any such report. 

(ii) PROVISION OF OTHER REPORTS TO OTHER REGULATORS.—In addition to the reports described in clause 

(i), the Bureau may, in its discretion, furnish to a 

prudential regulator or other agency having jurisdiction over a covered person or service provider any 
H. R. 4173—609 

other report or other confidential supervisory information concerning such person examined by the Bureau 

under the authority of any other provision of Federal 

law. 

(7) REGISTRATION.— 

(A) IN GENERAL.—The Bureau may prescribe rules 

regarding registration requirements applicable to a covered 

person, other than an insured depository institution, 

insured credit union, or related person. 

(B) REGISTRATION INFORMATION.—Subject to rules prescribed by the Bureau, the Bureau may publicly disclose 

registration information to facilitate the ability of consumers to identify covered persons that are registered with 

the Bureau. 

(C) CONSULTATION WITH STATE AGENCIES.—In developing and implementing registration requirements under 

this paragraph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate. 

(8) PRIVACY CONSIDERATIONS.—In collecting information 

from any person, publicly releasing information held by the 

Bureau, or requiring covered persons to publicly report information, the Bureau shall take steps to ensure that proprietary, 

personal, or confidential consumer information that is protected 

from public disclosure under section 552(b) or 552a of title 

5, United States Code, or any other provision of law, is not 

made public under this title. 

(9) CONSUMER PRIVACY.— 

(A) IN GENERAL.—The Bureau may not obtain from 

a covered person or service provider any personally identifiable financial information about a consumer from the financial records of the covered person or service provider, 

except— 

(i) if the financial records are reasonably described 

in a request by the Bureau and the consumer provides 

written permission for the disclosure of such information by the covered person or service provider to the 

Bureau; or 

(ii) as may be specifically permitted or required 

under other applicable provisions of law and in accordance with the Right to Financial Privacy Act of 1978 

(12 U.S.C. 3401 et seq.). 

(B) TREATMENT OF COVERED PERSON OR SERVICE PROVIDER.—With respect to the application of any provision 

of the Right to Financial Privacy Act of 1978, to a disclosure 

by a covered person or service provider subject to this 

subsection, the covered person or service provider shall 

be treated as if it were a ‘‘financial institution’’, as defined 

in section 1101 of that Act (12 U.S.C. 3401). 

(d) ASSESSMENT OF SIGNIFICANT RULES.— (1) IN GENERAL.—The Bureau shall conduct an assessment 

of each significant rule or order adopted by the Bureau under 

Federal consumer financial law. The assessment shall address, 

among other relevant factors, the effectiveness of the rule or 

order in meeting the purposes and objectives of this title and 

the specific goals stated by the Bureau. The assessment shall 
H. R. 4173—610 

reflect available evidence and any data that the Bureau reasonably may collect. 

(2) REPORTS.—The Bureau shall publish a report of its 

assessment under this subsection not later than 5 years after 

the effective date of the subject rule or order. 

(3) PUBLIC COMMENT REQUIRED.—Before publishing a report 

of its assessment, the Bureau shall invite public comment on 

recommendations for modifying, expanding, or eliminating the 

newly adopted significant rule or order. 

SEC. 1023. REVIEW OF BUREAU REGULATIONS. 

(a) REVIEW OF BUREAU REGULATIONS.—On the petition of a 

member agency of the Council, the Council may set aside a final 

regulation prescribed by the Bureau, or any provision thereof, if 

the Council decides, in accordance with subsection (c), that the 

regulation or provision would put the safety and soundness of 

the United States banking system or the stability of the financial 

system of the United States at risk. 

(b) PETITION.— 

(1) PROCEDURE.—An agency represented by a member of 

the Council may petition the Council, in writing, and in accordance with rules prescribed pursuant to subsection (f), to stay 

the effectiveness of, or set aside, a regulation if the member 

agency filing the petition— 

(A) has in good faith attempted to work with the 

Bureau to resolve concerns regarding the effect of the rule 

on the safety and soundness of the United States banking 

system or the stability of the financial system of the United 

States; and 

(B) files the petition with the Council not later than 

10 days after the date on which the regulation has been 

published in the Federal Register. 

(2) PUBLICATION.—Any petition filed with the Council 

under this section shall be published in the Federal Register 

and transmitted contemporaneously with filing to the Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives. 

(c) STAYS AND SET ASIDES.— 

(1) STAY.— 

(A) IN GENERAL.—Upon the request of any member 

agency, the Chairperson of the Council may stay the 

effectiveness of a regulation for the purpose of allowing 

appropriate consideration of the petition by the Council. 

(B) EXPIRATION.—A stay issued under this paragraph 

shall expire on the earlier of— 

(i) 90 days after the date of filing of the petition 

under subsection (b); or 

(ii) the date on which the Council makes a decision 

under paragraph (3). 

(2) NO ADVERSE INFERENCE.—After the expiration of any 

stay imposed under this section, no inference shall be drawn 

regarding the validity or enforceability of a regulation which 

was the subject of the petition. 

(3) VOTE.— (A) IN GENERAL.—The decision to issue a stay of, or 

set aside, any regulation under this section shall be made 
H. R. 4173—611 

only with the affirmative vote in accordance with subparagraph (B) of 2⁄3 of the members of the Council then serving. 

(B) AUTHORIZATION TO VOTE.—A member of the Council 

may vote to stay the effectiveness of, or set aside, a final 

regulation prescribed by the Bureau only if the agency 

or department represented by that member has— 

(i) considered any relevant information provided 

by the agency submitting the petition and by the 

Bureau; and 

(ii) made an official determination, at a public 

meeting where applicable, that the regulation which 

is the subject of the petition would put the safety 

and soundness of the United States banking system 

or the stability of the financial system of the United 

States at risk. 

(4) DECISIONS TO SET ASIDE.— 

(A) EFFECT OF DECISION.—A decision by the Council 

to set aside a regulation prescribed by the Bureau, or 

provision thereof, shall render such regulation, or provision 

thereof, unenforceable. 

(B) TIMELY ACTION REQUIRED.—The Council may not 

issue a decision to set aside a regulation, or provision 

thereof, which is the subject of a petition under this section 

after the expiration of the later of— 

(i) 45 days following the date of filing of the petition, unless a stay is issued under paragraph (1); or 

(ii) the expiration of a stay issued by the Council 

under this section. 

(C) SEPARATE AUTHORITY.—The issuance of a stay 

under this section does not affect the authority of the 

Council to set aside a regulation. 

(5) DISMISSAL DUE TO INACTION.—A petition under this 

section shall be deemed dismissed if the Council has not issued 

a decision to set aside a regulation, or provision thereof, within 

the period for timely action under paragraph (4)(B). 

(6) PUBLICATION OF DECISION.—Any decision under this 

subsection to issue a stay of, or set aside, a regulation or 

provision thereof shall be published by the Council in the 

Federal Register as soon as practicable after the decision is 

made, with an explanation of the reasons for the decision. 

(7) RULEMAKING PROCEDURES INAPPLICABLE.—The notice 

and comment procedures under section 553 of title 5, United 

States Code, shall not apply to any decision under this section 

of the Council to issue a stay of, or set aside, a regulation. 

(8) JUDICIAL REVIEW OF DECISIONS BY THE COUNCIL.—A 

decision by the Council to set aside a regulation prescribed 

by the Bureau, or provision thereof, shall be subject to review 

under chapter 7 of title 5, United States Code. 

(d) APPLICATION OF OTHER LAW.—Nothing in this section shall 

be construed as altering, limiting, or restricting the application 

of any other provision of law, except as otherwise specifically provided in this section, including chapter 5 and chapter 7 of title 

5, United States Code, to a regulation which is the subject of 

a petition filed under this section. 

(e) SAVINGS CLAUSE.—Nothing in this section shall be construed 

as limiting or restricting the Bureau from engaging in a rulemaking 

in accordance with applicable law. 
H. R. 4173—612 

(f) IMPLEMENTING RULES.—The Council shall prescribe procedural rules to implement this section. 

SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS. 

(a) SCOPE OF COVERAGE.— 

(1) APPLICABILITY.—Notwithstanding any other provision 

of this title, and except as provided in paragraph (3), this 

section shall apply to any covered person who— 

(A) offers or provides origination, brokerage, or servicing of loans secured by real estate for use by consumers 

primarily for personal, family, or household purposes, or 

loan modification or foreclosure relief services in connection 

with such loans; 

(B) is a larger participant of a market for other consumer financial products or services, as defined by rule 

in accordance with paragraph (2); 

(C) the Bureau has reasonable cause to determine, 

by order, after notice to the covered person and a reasonable opportunity for such covered person to respond, based 

on complaints collected through the system under section 

1013(b)(3) or information from other sources, that such 

covered person is engaging, or has engaged, in conduct 

that poses risks to consumers with regard to the offering 

or provision of consumer financial products or services; 

(D) offers or provides to a consumer any private education loan, as defined in section 140 of the Truth in 

Lending Act (15 U.S.C. 1650), notwithstanding section 

1027(a)(2)(A) and subject to section 1027(a)(2)(C); or 

(E) offers or provides to a consumer a payday loan. 

(2) RULEMAKING TO DEFINE COVERED PERSONS SUBJECT TO

THIS SECTION.—The Bureau shall consult with the Federal 

Trade Commission prior to issuing a rule, in accordance with 

paragraph (1)(B), to define covered persons subject to this section. The Bureau shall issue its initial rule not later than 

1 year after the designated transfer date. 

(3) RULES OF CONSTRUCTION.— (A) CERTAIN PERSONS EXCLUDED.—This section shall 

not apply to persons described in section 1025(a) or 1026(a). 

(B) ACTIVITY LEVELS.—For purposes of computing 

activity levels under paragraph (1) or rules issued thereunder, activities of affiliated companies (other than insured 

depository institutions or insured credit unions) shall be 

aggregated. 

(b) SUPERVISION.— 

(1) IN GENERAL.—The Bureau shall require reports and 

conduct examinations on a periodic basis of persons described 

in subsection (a)(1) for purposes of— 

(A) assessing compliance with the requirements of Federal consumer financial law; 

(B) obtaining information about the activities and 

compliance systems or procedures of such person; and 

(C) detecting and assessing risks to consumers and 

to markets for consumer financial products and services. 

(2) RISK-BASED SUPERVISION PROGRAM.—The Bureau shall 

exercise its authority under paragraph (1) in a manner designed 

to ensure that such exercise, with respect to persons described 

in subsection (a)(1), is based on the assessment by the Bureau 
H. R. 4173—613 

of the risks posed to consumers in the relevant product markets 

and geographic markets, and taking into consideration, as 

applicable— 

(A) the asset size of the covered person; 

(B) the volume of transactions involving consumer 

financial products or services in which the covered person 

engages; 

(C) the risks to consumers created by the provision 

of such consumer financial products or services; 

(D) the extent to which such institutions are subject 

to oversight by State authorities for consumer protection; 

and 

(E) any other factors that the Bureau determines to 

be relevant to a class of covered persons. 

(3) COORDINATION.—To minimize regulatory burden, the 

Bureau shall coordinate its supervisory activities with the 

supervisory activities conducted by prudential regulators and 

the State bank regulatory authorities, including establishing 

their respective schedules for examining persons described in 

subsection (a)(1) and requirements regarding reports to be submitted by such persons. 

(4) USE OF EXISTING REPORTS.—The Bureau shall, to the 

fullest extent possible, use— 

(A) reports pertaining to persons described in subsection (a)(1) that have been provided or required to have 

been provided to a Federal or State agency; and 

(B) information that has been reported publicly. 

(5) PRESERVATION OF AUTHORITY.—Nothing in this title 

may be construed as limiting the authority of the Director 

to require reports from persons described in subsection (a)(1), 

as permitted under paragraph (1), regarding information owned 

or under the control of such person, regardless of whether 

such information is maintained, stored, or processed by another 

person. 

(6) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau 

shall provide the Commissioner of Internal Revenue with any 

report of examination or related information identifying possible 

tax law noncompliance. 

(7) REGISTRATION, RECORDKEEPING AND OTHER REQUIREMENTS FOR CERTAIN PERSONS.— 

(A) IN GENERAL.—The Bureau shall prescribe rules 

to facilitate supervision of persons described in subsection 

(a)(1) and assessment and detection of risks to consumers. 

(B) RECORDKEEPING.—The Bureau may require a person described in subsection (a)(1), to generate, provide, 

or retain records for the purposes of facilitating supervision 

of such persons and assessing and detecting risks to consumers. 

(C) REQUIREMENTS CONCERNING OBLIGATIONS.—The 

Bureau may prescribe rules regarding a person described 

in subsection (a)(1), to ensure that such persons are legitimate entities and are able to perform their obligations 

to consumers. Such requirements may include background 

checks for principals, officers, directors, or key personnel 

and bonding or other appropriate financial requirements. 
H. R. 4173—614 

(D) CONSULTATION WITH STATE AGENCIES.—In developing and implementing requirements under this paragraph, the Bureau shall consult with State agencies 

regarding requirements or systems (including coordinated 

or combined systems for registration), where appropriate. 

(c) ENFORCEMENT AUTHORITY.— 

(1) THE BUREAU TO HAVE ENFORCEMENT AUTHORITY.— 

Except as provided in paragraph (3) and section 1061, with 

respect to any person described in subsection (a)(1), to the 

extent that Federal law authorizes the Bureau and another 

Federal agency to enforce Federal consumer financial law, the 

Bureau shall have exclusive authority to enforce that Federal 

consumer financial law. 

(2) REFERRAL.—Any Federal agency authorized to enforce 

a Federal consumer financial law described in paragraph (1) 

may recommend in writing to the Bureau that the Bureau 

initiate an enforcement proceeding, as the Bureau is authorized 

by that Federal law or by this title. 

(3) COORDINATION WITH THE FEDERAL TRADE COMMISSION.— 

(A) IN GENERAL.—The Bureau and the Federal Trade 

Commission shall negotiate an agreement for coordinating 

with respect to enforcement actions by each agency 

regarding the offering or provision of consumer financial 

products or services by any covered person that is described 

in subsection (a)(1), or service providers thereto. The agreement shall include procedures for notice to the other 

agency, where feasible, prior to initiating a civil action 

to enforce any Federal law regarding the offering or provision of consumer financial products or services. 

(B) CIVIL ACTIONS.—Whenever a civil action has been 

filed by, or on behalf of, the Bureau or the Federal Trade 

Commission for any violation of any provision of Federal 

law described in subparagraph (A), or any regulation prescribed under such provision of law— 

(i) the other agency may not, during the pendency 

of that action, institute a civil action under such provision of law against any defendant named in the complaint in such pending action for any violation alleged 

in the complaint; and 

(ii) the Bureau or the Federal Trade Commission 

may intervene as a party in any such action brought 

by the other agency, and, upon intervening— 

(I) be heard on all matters arising in such 

enforcement action; and 

(II) file petitions for appeal in such actions. 

(C) AGREEMENT TERMS.—The terms of any agreement 

negotiated under subparagraph (A) may modify or supersede the provisions of subparagraph (B). 

(D) DEADLINE.—The agencies shall reach the agreement required under subparagraph (A) not later than 6 

months after the designated transfer date. 

(d) EXCLUSIVE RULEMAKING AND EXAMINATION AUTHORITY.— Notwithstanding any other provision of Federal law and except 

as provided in section 1061, to the extent that Federal law authorizes the Bureau and another Federal agency to issue regulations 

or guidance, conduct examinations, or require reports from a person 

described in subsection (a)(1) under such law for purposes of 
H. R. 4173—615 

assuring compliance with Federal consumer financial law and any 

regulations thereunder, the Bureau shall have the exclusive 

authority to prescribe rules, issue guidance, conduct examinations, 

require reports, or issue exemptions with regard to a person 

described in subsection (a)(1), subject to those provisions of law. 

(e) SERVICE PROVIDERS.—A service provider to a person 

described in subsection (a)(1) shall be subject to the authority 

of the Bureau under this section, to the same extent as if such 

service provider were engaged in a service relationship with a 

bank, and the Bureau were an appropriate Federal banking agency 

under section 7(c) of the Bank Service Company Act (12 U.S.C. 

1867(c)). In conducting any examination or requiring any report 

from a service provider subject to this subsection, the Bureau shall 

coordinate with the appropriate prudential regulator, as applicable. 

(f) PRESERVATION OF FARM CREDIT ADMINISTRATION

AUTHORITY.—No provision of this title may be construed as modifying, limiting, or otherwise affecting the authority of the Farm 

Credit Administration. 

SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS. 

(a) SCOPE OF COVERAGE.—This section shall apply to any covered person that is— 

(1) an insured depository institution with total assets of 

more than $10,000,000,000 and any affiliate thereof; or 

(2) an insured credit union with total assets of more than 

$10,000,000,000 and any affiliate thereof. 

(b) SUPERVISION.— (1) IN GENERAL.—The Bureau shall have exclusive 

authority to require reports and conduct examinations on a 

periodic basis of persons described in subsection (a) for purposes 

of— 

(A) assessing compliance with the requirements of Federal consumer financial laws; 

(B) obtaining information about the activities subject 

to such laws and the associated compliance systems or 

procedures of such persons; and 

(C) detecting and assessing associated risks to consumers and to markets for consumer financial products 

and services. 

(2) COORDINATION.—To minimize regulatory burden, the 

Bureau shall coordinate its supervisory activities with the 

supervisory activities conducted by prudential regulators and 

the State bank regulatory authorities, including consultation 

regarding their respective schedules for examining such persons 

described in subsection (a) and requirements regarding reports 

to be submitted by such persons. 

(3) USE OF EXISTING REPORTS.—The Bureau shall, to the 

fullest extent possible, use— 

(A) reports pertaining to a person described in subsection (a) that have been provided or required to have 

been provided to a Federal or State agency; and 

(B) information that has been reported publicly. 

(4) PRESERVATION OF AUTHORITY.—Nothing in this title 

may be construed as limiting the authority of the Director 

to require reports from a person described in subsection (a), 

as permitted under paragraph (1), regarding information owned 
H. R. 4173—616 

or under the control of such person, regardless of whether 

such information is maintained, stored, or processed by another 

person. 

(5) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau 

shall provide the Commissioner of Internal Revenue with any 

report of examination or related information identifying possible 

tax law noncompliance. 

(c) PRIMARY ENFORCEMENT AUTHORITY.— 

(1) THE BUREAU TO HAVE PRIMARY ENFORCEMENT

AUTHORITY.—To the extent that the Bureau and another Federal agency are authorized to enforce a Federal consumer financial law, the Bureau shall have primary authority to enforce 

that Federal consumer financial law with respect to any person 

described in subsection (a). 

(2) REFERRAL.—Any Federal agency, other than the Federal 

Trade Commission, that is authorized to enforce a Federal 

consumer financial law may recommend, in writing, to the 

Bureau that the Bureau initiate an enforcement proceeding 

with respect to a person described in subsection (a), as the 

Bureau is authorized to do by that Federal consumer financial 

law. 

(3) BACKUP ENFORCEMENT AUTHORITY OF OTHER FEDERAL

AGENCY.—If the Bureau does not, before the end of the 120- 

day period beginning on the date on which the Bureau receives 

a recommendation under paragraph (2), initiate an enforcement 

proceeding, the other agency referred to in paragraph (2) may 

initiate an enforcement proceeding, including performing follow 

up supervisory and support functions incidental thereto, to 

assure compliance with such proceeding. 

(d) SERVICE PROVIDERS.—A service provider to a person 

described in subsection (a) shall be subject to the authority of 

the Bureau under this section, to the same extent as if the Bureau 

were an appropriate Federal banking agency under section 7(c) 

of the Bank Service Company Act 12 U.S.C. 1867(c). In conducting 

any examination or requiring any report from a service provider 

subject to this subsection, the Bureau shall coordinate with the 

appropriate prudential regulator. 

(e) SIMULTANEOUS AND COORDINATED SUPERVISORY ACTION.— 

(1) EXAMINATIONS.—A prudential regulator and the Bureau 

shall, with respect to each insured depository institution, 

insured credit union, or other covered person described in subsection (a) that is supervised by the prudential regulator and 

the Bureau, respectively— 

(A) coordinate the scheduling of examinations of the 

insured depository institution, insured credit union, or 

other covered person described in subsection (a); 

(B) conduct simultaneous examinations of each insured 

depository institution or insured credit union, unless such 

institution requests examinations to be conducted separately; 

(C) share each draft report of examination with the 

other agency and permit the receiving agency a reasonable 

opportunity (which shall not be less than a period of 30 

days after the date of receipt) to comment on the draft 

report before such report is made final; and 
H. R. 4173—617 

(D) prior to issuing a final report of examination or 

taking supervisory action, take into consideration concerns, 

if any, raised in the comments made by the other agency. 

(2) COORDINATION WITH STATE BANK SUPERVISORS.—The 

Bureau shall pursue arrangements and agreements with State 

bank supervisors to coordinate examinations, consistent with 

paragraph (1). 

(3) AVOIDANCE OF CONFLICT IN SUPERVISION.— 

(A) REQUEST.—If the proposed supervisory determinations of the Bureau and a prudential regulator (in this 

section referred to collectively as the ‘‘agencies’’) are conflicting, an insured depository institution, insured credit 

union, or other covered person described in subsection (a) 

may request the agencies to coordinate and present a joint 

statement of coordinated supervisory action. 

(B) JOINT STATEMENT.—The agencies shall provide a 

joint statement under subparagraph (A), not later than 

30 days after the date of receipt of the request of the 

insured depository institution, credit union, or covered person described in subsection (a). 

(4) APPEALS TO GOVERNING PANEL.— 

(A) IN GENERAL.—If the agencies do not resolve the 

conflict or issue a joint statement required by subparagraph 

(B), or if either of the agencies takes or attempts to take 

any supervisory action relating to the request for the joint 

statement without the consent of the other agency, an 

insured depository institution, insured credit union, or 

other covered person described in subsection (a) may 

institute an appeal to a governing panel, as provided in 

this subsection, not later than 30 days after the expiration 

of the period during which a joint statement is required 

to be filed under paragraph (3)(B). 

(B) COMPOSITION OF GOVERNING PANEL.—The governing panel for an appeal under this paragraph shall 

be composed of— 

(i) a representative from the Bureau and a representative of the prudential regulator, both of whom— 

(I) have not participated in the material supervisory determinations under appeal; and 

(II) do not directly or indirectly report to the 

person who participated materially in the supervisory determinations under appeal; and 

(ii) one individual representative, to be determined 

on a rotating basis, from among the Board of Governors, the Corporation, the National Credit Union 

Administration, and the Office of the Comptroller of 

the Currency, other than any agency involved in the 

subject dispute. 

(C) CONDUCT OF APPEAL.—In an appeal under this 

paragraph— 

(i) the insured depository institution, insured 

credit union, or other covered person described in subsection (a)— 

(I) shall include in its appeal all the facts 

and legal arguments pertaining to the matter; and 
H. R. 4173—618 

(II) may, through counsel, employees, or representatives, appear before the governing panel 

in person or by telephone; and 

(ii) the governing panel— 

(I) may request the insured depository institution, insured credit union, or other covered person 

described in subsection (a), the Bureau, or the 

prudential regulator to produce additional information relevant to the appeal; and 

(II) by a majority vote of its members, shall 

provide a final determination, in writing, not later 

than 30 days after the date of filing of an 

informationally complete appeal, or such longer 

period as the panel and the insured depository 

institution, insured credit union, or other covered 

person described in subsection (a) may jointly 

agree. 

(D) PUBLIC AVAILABILITY OF DETERMINATIONS.—A governing panel shall publish all information contained in 

a determination by the governing panel, with appropriate 

redactions of information that would be subject to an 

exemption from disclosure under section 552 of title 5, 

United States Code. 

(E) PROHIBITION AGAINST RETALIATION.—The Bureau 

and the prudential regulators shall prescribe rules to provide safeguards from retaliation against the insured depository institution, insured credit union, or other covered person described in subsection (a) instituting an appeal under 

this paragraph, as well as their officers and employees. 

(F) LIMITATION.—The process provided in this paragraph shall not apply to a determination by a prudential 

regulator to appoint a conservator or receiver for an insured 

depository institution or a liquidating agent for an insured 

credit union, as the case may be, or a decision to take 

action pursuant to section 38 of the Federal Deposit Insurance Act (12 U.S.C. 1831o) or section 212 of the Federal 

Credit Union Act (112 U.S.C. 1790a), as applicable. 

(G) EFFECT ON OTHER AUTHORITY.—Nothing in this 

section shall modify or limit the authority of the Bureau 

to interpret, or take enforcement action under, any Federal 

consumer financial law, or the authority of a prudential 

regulator to interpret or take enforcement action under 

any other provision of Federal law for safety and soundness 

purposes. 

SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT 

UNIONS. 

(a) SCOPE OF COVERAGE.—This section shall apply to any covered person that is— 

(1) an insured depository institution with total assets of 

$10,000,000,000 or less; or 

(2) an insured credit union with total assets of 

$10,000,000,000 or less. 

(b) REPORTS.—The Director may require reports from a person 

described in subsection (a), as necessary to support the role of 

the Bureau in implementing Federal consumer financial law, to 
H. R. 4173—619 

support its examination activities under subsection (c), and to assess 

and detect risks to consumers and consumer financial markets. 

(1) USE OF EXISTING REPORTS.—The Bureau shall, to the 

fullest extent possible, use— 

(A) reports pertaining to a person described in subsection (a) that have been provided or required to have 

been provided to a Federal or State agency; and 

(B) information that has been reported publicly. 

(2) PRESERVATION OF AUTHORITY.—Nothing in this subsection may be construed as limiting the authority of the 

Director from requiring from a person described in subsection 

(a), as permitted under paragraph (1), information owned or 

under the control of such person, regardless of whether such 

information is maintained, stored, or processed by another person. 

(3) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau 

shall provide the Commissioner of Internal Revenue with any 

report of examination or related information identifying possible 

tax law noncompliance. 

(c) EXAMINATIONS.— 

(1) IN GENERAL.—The Bureau may, at its discretion, include 

examiners on a sampling basis of the examinations performed 

by the prudential regulator to assess compliance with the 

requirements of Federal consumer financial law of persons 

described in subsection (a). 

(2) AGENCY COORDINATION.—The prudential regulator 

shall— 

(A) provide all reports, records, and documentation 

related to the examination process for any institution 

included in the sample referred to in paragraph (1) to 

the Bureau on a timely and continual basis; 

(B) involve such Bureau examiner in the entire examination process for such person; and 

(C) consider input of the Bureau concerning the scope 

of an examination, conduct of the examination, the contents 

of the examination report, the designation of matters 

requiring attention, and examination ratings. 

(d) ENFORCEMENT.— (1) IN GENERAL.—Except for requiring reports under subsection (b), the prudential regulator is authorized to enforce 

the requirements of Federal consumer financial laws and, with 

respect to a covered person described in subsection (a), shall 

have exclusive authority (relative to the Bureau) to enforce 

such laws . 

(2) COORDINATION WITH PRUDENTIAL REGULATOR.— 

(A) REFERRAL.—When the Bureau has reason to believe 

that a person described in subsection (a) has engaged in 

a material violation of a Federal consumer financial law, 

the Bureau shall notify the prudential regulator in writing 

and recommend appropriate action to respond. 

(B) RESPONSE.—Upon receiving a recommendation 

under subparagraph (A), the prudential regulator shall provide a written response to the Bureau not later than 60 

days thereafter. 

(e) SERVICE PROVIDERS.—A service provider to a substantial 

number of persons described in subsection (a) shall be subject 

to the authority of the Bureau under section 1025 to the same 
H. R. 4173—620 

extent as if the Bureau were an appropriate Federal bank agency 

under section 7(c) of the Bank Service Company Act (12 U.S.C. 

1867(c)). When conducting any examination or requiring any report 

from a service provider subject to this subsection, the Bureau shall 

coordinate with the appropriate prudential regulator. 

SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVATION OF AUTHORITIES. 

(a) EXCLUSION FOR MERCHANTS, RETAILERS, AND OTHER

SELLERS OF NONFINANCIAL GOODS OR SERVICES.— 

(1) SALE OR BROKERAGE OF NONFINANCIAL GOOD OR

SERVICE.—The Bureau may not exercise any rulemaking, supervisory, enforcement or other authority under this title with 

respect to a person who is a merchant, retailer, or seller of 

any nonfinancial good or service and is engaged in the sale 

or brokerage of such nonfinancial good or service, except to 

the extent that such person is engaged in offering or providing 

any consumer financial product or service, or is otherwise subject to any enumerated consumer law or any law for which 

authorities are transferred under subtitle F or H. 

(2) OFFERING OR PROVISION OF CERTAIN CONSUMER FINANCIAL PRODUCTS OR SERVICES IN CONNECTION WITH THE SALE

OR BROKERAGE OF NONFINANCIAL GOOD OR SERVICE.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), and subject to subparagraph (C), the Bureau may 

not exercise any rulemaking, supervisory, enforcement, or 

other authority under this title with respect to a merchant, 

retailer, or seller of nonfinancial goods or services, but 

only to the extent that such person— 

(i) extends credit directly to a consumer, in a case 

in which the good or service being provided is not 

itself a consumer financial product or service (other 

than credit described in this subparagraph), exclusively 

for the purpose of enabling that consumer to purchase 

such nonfinancial good or service directly from the 

merchant, retailer, or seller; 

(ii) directly, or through an agreement with another 

person, collects debt arising from credit extended as 

described in clause (i); or 

(iii) sells or conveys debt described in clause (i) 

that is delinquent or otherwise in default. 

(B) APPLICABILITY.—Subparagraph (A) does not apply 

to any credit transaction or collection of debt, other than 

as described in subparagraph (C)(i), arising from a transaction described in subparagraph (A)— 

(i) in which the merchant, retailer, or seller of 

nonfinancial goods or services assigns, sells or otherwise conveys to another person such debt owed by 

the consumer (except for a sale of debt that is delinquent or otherwise in default, as described in subparagraph (A)(iii)); 

(ii) in which the credit extended significantly 

exceeds the market value of the nonfinancial good or 

service provided, or the Bureau otherwise finds that 

the sale of the nonfinancial good or service is done 

as a subterfuge, so as to evade or circumvent the 

provisions of this title; or 
H. R. 4173—621 

(iii) in which the merchant, retailer, or seller of 

nonfinancial goods or services regularly extends credit 

and the credit is subject to a finance charge. 

(C) LIMITATIONS.— 

(i) IN GENERAL.—Notwithstanding subparagraph 

(B), subparagraph (A) shall apply with respect to a 

merchant, retailer, or seller of nonfinancial goods or 

services that is not engaged significantly in offering 

or providing consumer financial products or services. 

(ii) EXCEPTION.—Subparagraph (A) and clause (i) 

of this subparagraph do not apply to any merchant, 

retailer, or seller of nonfinancial goods or services— 

(I) if such merchant, retailer, or seller of nonfinancial goods or services is engaged in a transaction described in subparagraph (B)(i) or (B)(ii); 

or 

(II) to the extent that such merchant, retailer, 

or seller is subject to any enumerated consumer 

law or any law for which authorities are transferred under subtitle F or H, but the Bureau may 

exercise such authority only with respect to that 

law. 

(D) RULES.— 

(i) AUTHORITY OF OTHER AGENCIES.—No provision 

of this title shall be construed as modifying, limiting, 

or superseding the supervisory or enforcement 

authority of the Federal Trade Commission or any 

other agency (other than the Bureau) with respect 

to credit extended, or the collection of debt arising 

from such extension, directly by a merchant or retailer 

to a consumer exclusively for the purpose of enabling 

that consumer to purchase nonfinancial goods or services directly from the merchant or retailer. 

(ii) SMALL BUSINESSES.—A merchant, retailer, or 

seller of nonfinancial goods or services that would 

otherwise be subject to the authority of the Bureau 

solely by virtue of the application of subparagraph 

(B)(iii) shall be deemed not to be engaged significantly 

in offering or providing consumer financial products 

or services under subparagraph (C)(i), if such person— 

(I) only extends credit for the sale of nonfinancial goods or services, as described in 

subparagraph (A)(i); 

(II) retains such credit on its own accounts 

(except to sell or convey such debt that is delinquent or otherwise in default); and 

(III) meets the relevant industry size threshold 

to be a small business concern, based on annual 

receipts, pursuant to section 3 of the Small Business Act (15 U.S.C. 632) and the implementing 

rules thereunder. 

(iii) INITIAL YEAR.—A merchant, retailer, or seller 

of nonfinancial goods or services shall be deemed to 

meet the relevant industry size threshold described 

in clause (ii)(III) during the first year of operations 

of that business concern if, during that year, the 
H. R. 4173—622 

receipts of that business concern reasonably are 

expected to meet that size threshold. 

(iv) OTHER STANDARDS FOR SMALL BUSINESS.—With 

respect to a merchant, retailer, or seller of nonfinancial 

goods or services that is a classified on a basis other 

than annual receipts for the purposes of section 3 

of the Small Business Act (15 U.S.C. 632) and the 

implementing rules thereunder, such merchant, 

retailer, or seller shall be deemed to meet the relevant 

industry size threshold described in clause (ii)(III) if 

such merchant, retailer, or seller meets the relevant 

industry size threshold to be a small business concern 

based on the number of employees, or other such 

applicable measure, established under that Act. 

(E) EXCEPTION FROM STATE ENFORCEMENT.—To the 

extent that the Bureau may not exercise authority under 

this subsection with respect to a merchant, retailer, or 

seller of nonfinancial goods or services, no action by a 

State attorney general or State regulator with respect to 

a claim made under this title may be brought under subsection 1042(a), with respect to an activity described in 

any of clauses (i) through (iii) of subparagraph (A) by 

such merchant, retailer, or seller of nonfinancial goods 

or services. 

(b) EXCLUSION FOR REAL ESTATE BROKERAGE ACTIVITIES.— (1) REAL ESTATE BROKERAGE ACTIVITIES EXCLUDED.—Without limiting subsection (a), and except as permitted in paragraph (2), the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority under this title with 

respect to a person that is licensed or registered as a real 

estate broker or real estate agent, in accordance with State 

law, to the extent that such person— 

(A) acts as a real estate agent or broker for a buyer, 

seller, lessor, or lessee of real property; 

(B) brings together parties interested in the sale, purchase, lease, rental, or exchange of real property; 

(C) negotiates, on behalf of any party, any portion 

of a contract relating to the sale, purchase, lease, rental, 

or exchange of real property (other than in connection 

with the provision of financing with respect to any such 

transaction); or 

(D) offers to engage in any activity, or act in any 

capacity, described in subparagraph (A), (B), or (C). 

(2) DESCRIPTION OF ACTIVITIES.—The Bureau may exercise 

rulemaking, supervisory, enforcement, or other authority under 

this title with respect to a person described in paragraph (1) 

when such person is— 

(A) engaged in an activity of offering or providing 

any consumer financial product or service, except that the 

Bureau may exercise such authority only with respect to 

that activity; or 

(B) otherwise subject to any enumerated consumer law 

or any law for which authorities are transferred under 

subtitle F or H, but the Bureau may exercise such authority 

only with respect to that law. 

(c) EXCLUSION FOR MANUFACTURED HOME RETAILERS AND MOD- ULAR HOME RETAILERS.— 
H. R. 4173—623 

(1) IN GENERAL.—The Director may not exercise any rulemaking, supervisory, enforcement, or other authority over a 

person to the extent that— 

(A) such person is not described in paragraph (2); 

and 

(B) such person— 

(i) acts as an agent or broker for a buyer or seller 

of a manufactured home or a modular home; 

(ii) facilitates the purchase by a consumer of a 

manufactured home or modular home, by negotiating 

the purchase price or terms of the sales contract (other 

than providing financing with respect to such transaction); or 

(iii) offers to engage in any activity described in 

clause (i) or (ii). 

(2) DESCRIPTION OF ACTIVITIES.—A person is described in 

this paragraph to the extent that such person is engaged in 

the offering or provision of any consumer financial product 

or service or is otherwise subject to any enumerated consumer 

law or any law for which authorities are transferred under 

subtitle F or H. 

(3) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

(A) MANUFACTURED HOME.—The term ‘‘manufactured 

home’’ has the same meaning as in section 603 of the 

National Manufactured Housing Construction and Safety 

Standards Act of 1974 (42 U.S.C. 5402). 

(B) MODULAR HOME.—The term ‘‘modular home’’ means 

a house built in a factory in 2 or more modules that 

meet the State or local building codes where the house 

will be located, and where such modules are transported 

to the building site, installed on foundations, and completed. 

(d) EXCLUSION FOR ACCOUNTANTS AND TAX PREPARERS.— (1) IN GENERAL.—Except as permitted in paragraph (2), 

the Bureau may not exercise any rulemaking, supervisory, 

enforcement, or other authority over— 

(A) any person that is a certified public accountant, 

permitted to practice as a certified public accounting firm, 

or certified or licensed for such purpose by a State, or 

any individual who is employed by or holds an ownership 

interest with respect to a person described in this subparagraph, when such person is performing or offering to perform— 

(i) customary and usual accounting activities, 

including the provision of accounting, tax, advisory, 

or other services that are subject to the regulatory 

authority of a State board of accountancy or a Federal 

authority; or 

(ii) other services that are incidental to such customary and usual accounting activities, to the extent 

that such incidental services are not offered or provided— 

(I) by the person separate and apart from such 

customary and usual accounting activities; or 

(II) to consumers who are not receiving such 

customary and usual accounting activities; or 
H. R. 4173—624 

(B) any person, other than a person described in 

subparagraph (A) that performs income tax preparation 

activities for consumers. 

(2) DESCRIPTION OF ACTIVITIES.— 

(A) IN GENERAL.—Paragraph (1) shall not apply to 

any person described in paragraph (1)(A) or (1)(B) to the 

extent that such person is engaged in any activity which 

is not a customary and usual accounting activity described 

in paragraph (1)(A) or incidental thereto but which is the 

offering or provision of any consumer financial product 

or service, except to the extent that a person described 

in paragraph (1)(A) is engaged in an activity which is 

a customary and usual accounting activity described in 

paragraph (1)(A), or incidental thereto. 

(B) NOT A CUSTOMARY AND USUAL ACCOUNTING

ACTIVITY.—For purposes of this subsection, extending or 

brokering credit is not a customary and usual accounting 

activity, or incidental thereto. 

(C) RULE OF CONSTRUCTION.—For purposes of subparagraphs (A) and (B), a person described in paragraph (1)(A) 

shall not be deemed to be extending credit, if such person 

is only extending credit directly to a consumer, exclusively 

for the purpose of enabling such consumer to purchase 

services described in clause (i) or (ii) of paragraph (1)(A) 

directly from such person, and such credit is— 

(i) not subject to a finance charge; and 

(ii) not payable by written agreement in more than 

4 installments. 

(D) OTHER LIMITATIONS.—Paragraph (1) does not apply 

to any person described in paragraph (1)(A) or (1)(B) that 

is otherwise subject to any enumerated consumer law or 

any law for which authorities are transferred under subtitle 

F or H. 

(e) EXCLUSION FOR PRACTICE OF LAW.— 

(1) IN GENERAL.—Except as provided under paragraph (2), 

the Bureau may not exercise any supervisory or enforcement 

authority with respect to an activity engaged in by an attorney 

as part of the practice of law under the laws of a State in 

which the attorney is licensed to practice law. 

(2) RULE OF CONSTRUCTION.—Paragraph (1) shall not be 

construed so as to limit the exercise by the Bureau of any 

supervisory, enforcement, or other authority regarding the 

offering or provision of a consumer financial product or service 

described in any subparagraph of section 1002(5)— 

(A) that is not offered or provided as part of, or incidental to, the practice of law, occurring exclusively within 

the scope of the attorney-client relationship; or 

(B) that is otherwise offered or provided by the attorney 

in question with respect to any consumer who is not 

receiving legal advice or services from the attorney in 

connection with such financial product or service. 

(3) EXISTING AUTHORITY.—Paragraph (1) shall not be construed so as to limit the authority of the Bureau with respect 

to any attorney, to the extent that such attorney is otherwise 

subject to any of the enumerated consumer laws or the authorities transferred under subtitle F or H. 
H. R. 4173—625 

(f) EXCLUSION FOR PERSONS REGULATED BY A STATE INSURANCE

REGULATOR.— 

(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of any 

State insurance regulator to adopt rules, initiate enforcement 

proceedings, or take any other action with respect to a person 

regulated by a State insurance regulator. Except as provided 

in paragraph (2), the Bureau shall have no authority to exercise 

any power to enforce this title with respect to a person regulated 

by a State insurance regulator. 

(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) does not 

apply to any person described in such paragraph to the extent 

that such person is engaged in the offering or provision of 

any consumer financial product or service or is otherwise subject to any enumerated consumer law or any law for which 

authorities are transferred under subtitle F or H. 

(3) STATE INSURANCE AUTHORITY UNDER GRAMM-LEACHBLILEY.—Notwithstanding paragraph (2), the Bureau shall not 

exercise any authorities that are granted a State insurance 

authority under section 505(a)(6) of the Gramm-Leach-Bliley 

Act with respect to a person regulated by a State insurance 

authority. 

(g) EXCLUSION FOR EMPLOYEE BENEFIT AND COMPENSATION

PLANS AND CERTAIN OTHER ARRANGEMENTS UNDER THE INTERNAL

REVENUE CODE OF 1986.— 

(1) PRESERVATION OF AUTHORITY OF OTHER AGENCIES.— 

No provision of this title shall be construed as altering, 

amending, or affecting the authority of the Secretary of the 

Treasury, the Secretary of Labor, or the Commissioner of 

Internal Revenue to adopt regulations, initiate enforcement 

proceedings, or take any actions with respect to any specified 

plan or arrangement. 

(2) ACTIVITIES NOT CONSTITUTING THE OFFERING OR PROVI- SION OF ANY CONSUMER FINANCIAL PRODUCT OR SERVICE.—For 

purposes of this title, a person shall not be treated as having 

engaged in the offering or provision of any consumer financial 

product or service solely because such person is— 

(A) a specified plan or arrangement; 

(B) engaged in the activity of establishing or 

maintaining, for the benefit of employees of such person 

(or for members of an employee organization), any specified 

plan or arrangement; or 

(C) engaged in the activity of establishing or 

maintaining a qualified tuition program under section 

529(b)(1) of the Internal Revenue Code of 1986 offered 

by a State or other prepaid tuition program offered by 

a State. 

(3) LIMITATION ON BUREAU AUTHORITY.— (A) IN GENERAL.—Except as provided under subparagraphs (B) and (C), the Bureau may not exercise any rulemaking or enforcement authority with respect to products 

or services that relate to any specified plan or arrangement. 

(B) BUREAU ACTION PURSUANT TO AGENCY REQUEST.— 

(i) AGENCY REQUEST.—The Secretary and the Secretary of Labor may jointly issue a written request 

to the Bureau regarding implementation of appropriate 

consumer protection standards under this title with 
H. R. 4173—626 

respect to the provision of services relating to any 

specified plan or arrangement. 

(ii) AGENCY RESPONSE.—In response to a request 

by the Bureau, the Secretary and the Secretary of 

Labor shall jointly issue a written response, not later 

than 90 days after receipt of such request, to grant 

or deny the request of the Bureau regarding 

implementation of appropriate consumer protection 

standards under this title with respect to the provision 

of services relating to any specified plan or arrangement. 

(iii) SCOPE OF BUREAU ACTION.—Subject to a 

request or response pursuant to clause (i) or clause 

(ii) by the agencies made under this subparagraph, 

the Bureau may exercise rulemaking authority, and 

may act to enforce a rule prescribed pursuant to such 

request or response, in accordance with the provisions 

of this title. A request or response made by the Secretary and the Secretary of Labor under this subparagraph shall describe the basis for, and scope of, appropriate consumer protection standards to be implemented under this title with respect to the provision 

of services relating to any specified plan or arrangement. 

(C) DESCRIPTION OF PRODUCTS OR SERVICES.—To the 

extent that a person engaged in providing products or 

services relating to any specified plan or arrangement is 

subject to any enumerated consumer law or any law for 

which authorities are transferred under subtitle F or H, 

subparagraph (A) shall not apply with respect to that law. 

(4) SPECIFIED PLAN OR ARRANGEMENT.—For purposes of 

this subsection, the term ‘‘specified plan or arrangement’’ means 

any plan, account, or arrangement described in section 220, 

223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the Internal 

Revenue Code of 1986, or any employee benefit or compensation 

plan or arrangement, including a plan that is subject to title 

I of the Employee Retirement Income Security Act of 1974, 

or any prepaid tuition program offered by a State. 

(h) PERSONS REGULATED BY A STATE SECURITIES COMMISSION.— 

(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of any 

securities commission (or any agency or office performing like 

functions) of any State to adopt rules, initiate enforcement 

proceedings, or take any other action with respect to a person 

regulated by any securities commission (or any agency or office 

performing like functions) of any State. Except as permitted 

in paragraph (2) and subsection (f), the Bureau shall have 

no authority to exercise any power to enforce this title with 

respect to a person regulated by any securities commission 

(or any agency or office performing like functions) of any State, 

but only to the extent that the person acts in such regulated 

capacity. 

(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) shall not 

apply to any person to the extent such person is engaged 

in the offering or provision of any consumer financial product 

or service, or is otherwise subject to any enumerated consumer 
H. R. 4173—627 

law or any law for which authorities are transferred under 

subtitle F or H. 

(i) EXCLUSION FOR PERSONS REGULATED BY THE COMMISSION.— 

(1) IN GENERAL.—No provision of this title may be construed as altering, amending, or affecting the authority of the 

Commission to adopt rules, initiate enforcement proceedings, 

or take any other action with respect to a person regulated 

by the Commission. The Bureau shall have no authority to 

exercise any power to enforce this title with respect to a person 

regulated by the Commission. 

(2) CONSULTATION AND COORDINATION.—Notwithstanding 

paragraph (1), the Commission shall consult and coordinate, 

where feasible, with the Bureau with respect to any rule 

(including any advance notice of proposed rulemaking) 

regarding an investment product or service that is the same 

type of product as, or that competes directly with, a consumer 

financial product or service that is subject to the jurisdiction 

of the Bureau under this title or under any other law. In 

carrying out this paragraph, the agencies shall negotiate an 

agreement to establish procedures for such coordination, 

including procedures for providing advance notice to the Bureau 

when the Commission is initiating a rulemaking. 

(j) EXCLUSION FOR PERSONS REGULATED BY THE COMMODITY

FUTURES TRADING COMMISSION.— 

(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of the 

Commodity Futures Trading Commission to adopt rules, initiate 

enforcement proceedings, or take any other action with respect 

to a person regulated by the Commodity Futures Trading 

Commission. The Bureau shall have no authority to exercise 

any power to enforce this title with respect to a person regulated 

by the Commodity Futures Trading Commission. 

(2) CONSULTATION AND COORDINATION.—Notwithstanding 

paragraph (1), the Commodity Futures Trading Commission 

shall consult and coordinate with the Bureau with respect 

to any rule (including any advance notice of proposed rulemaking) regarding a product or service that is the same type 

of product as, or that competes directly with, a consumer financial product or service that is subject to the jurisdiction of 

the Bureau under this title or under any other law. 

(k) EXCLUSION FOR PERSONS REGULATED BY THE FARM CREDIT

ADMINISTRATION.— 

(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of the 

Farm Credit Administration to adopt rules, initiate enforcement 

proceedings, or take any other action with respect to a person 

regulated by the Farm Credit Administration. The Bureau shall 

have no authority to exercise any power to enforce this title 

with respect to a person regulated by the Farm Credit Administration. 

(2) DEFINITION.—For purposes of this subsection, the term 

‘‘person regulated by the Farm Credit Administration’’ means 

any Farm Credit System institution that is chartered and subject to the provisions of the Farm Credit Act of 1971 (12 

U.S.C. 2001 et seq.). 

(l) EXCLUSION FOR ACTIVITIES RELATING TO CHARITABLE CON- TRIBUTIONS.— 
H. R. 4173—628 

(1) IN GENERAL.—The Director and the Bureau may not 

exercise any rulemaking, supervisory, enforcement, or other 

authority, including authority to order penalties, over any 

activities related to the solicitation or making of voluntary 

contributions to a tax-exempt organization as recognized by 

the Internal Revenue Service, by any agent, volunteer, or representative of such organizations to the extent the organization, 

agent, volunteer, or representative thereof is soliciting or providing advice, information, education, or instruction to any 

donor or potential donor relating to a contribution to the 

organization. 

(2) LIMITATION.—The exclusion in paragraph (1) does not 

apply to other activities not described in paragraph (1) that 

are the offering or provision of any consumer financial product 

or service, or are otherwise subject to any enumerated consumer 

law or any law for which authorities are transferred under 

subtitle F or H. 

(m) INSURANCE.—The Bureau may not define as a financial 

product or service, by regulation or otherwise, engaging in the 

business of insurance. 

(n) LIMITED AUTHORITY OF THE BUREAU.—Notwithstanding subsections (a) through (h) and (l), a person subject to or described 

in one or more of such provisions— 

(1) may be a service provider; and 

(2) may be subject to requests from, or requirements 

imposed by, the Bureau regarding information in order to carry 

out the responsibilities and functions of the Bureau and in 

accordance with section 1022, 1052, or 1053. 

(o) NO AUTHORITY TO IMPOSE USURY LIMIT.—No provision of 

this title shall be construed as conferring authority on the Bureau 

to establish a usury limit applicable to an extension of credit offered 

or made by a covered person to a consumer, unless explicitly authorized by law. 

(p) ATTORNEY GENERAL.—No provision of this title, including 

section 1024(c)(1), shall affect the authorities of the Attorney General under otherwise applicable provisions of law. 

(q) SECRETARY OF THE TREASURY.—No provision of this title 

shall affect the authorities of the Secretary, including with respect 

to prescribing rules, initiating enforcement proceedings, or taking 

other actions with respect to a person that performs income tax 

preparation activities for consumers. 

(r) DEPOSIT INSURANCE AND SHARE INSURANCE.—Nothing in 

this title shall affect the authority of the Corporation under the 

Federal Deposit Insurance Act or the National Credit Union 

Administration Board under the Federal Credit Union Act as to 

matters related to deposit insurance and share insurance, respectively. 

(s) FAIR HOUSING ACT.—No provision of this title shall be 

construed as affecting any authority arising under the Fair Housing 

Act. 

SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE 

ARBITRATION. 

(a) STUDY AND REPORT.—The Bureau shall conduct a study 

of, and shall provide a report to Congress concerning, the use 

of agreements providing for arbitration of any future dispute 
H. R. 4173—629 

between covered persons and consumers in connection with the 

offering or providing of consumer financial products or services. 

(b) FURTHER AUTHORITY.—The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement 

between a covered person and a consumer for a consumer financial 

product or service providing for arbitration of any future dispute 

between the parties, if the Bureau finds that such a prohibition 

or imposition of conditions or limitations is in the public interest 

and for the protection of consumers. The findings in such rule 

shall be consistent with the study conducted under subsection (a). 

(c) LIMITATION.—The authority described in subsection (b) may 

not be construed to prohibit or restrict a consumer from entering 

into a voluntary arbitration agreement with a covered person after 

a dispute has arisen. 

(d) EFFECTIVE DATE.—Notwithstanding any other provision of 

law, any regulation prescribed by the Bureau under subsection 

(b) shall apply, consistent with the terms of the regulation, to 

any agreement between a consumer and a covered person entered 

into after the end of the 180-day period beginning on the effective 

date of the regulation, as established by the Bureau. 

SEC. 1029. EXCLUSION FOR AUTO DEALERS. 

(a) SALE, SERVICING, AND LEASING OF MOTOR VEHICLES

EXCLUDED.—Except as permitted in subsection (b), the Bureau may 

not exercise any rulemaking, supervisory, enforcement or any other 

authority, including any authority to order assessments, over a 

motor vehicle dealer that is predominantly engaged in the sale 

and servicing of motor vehicles, the leasing and servicing of motor 

vehicles, or both. 

(b) CERTAIN FUNCTIONS EXCEPTED.—Subsection (a) shall not 

apply to any person, to the extent that such person— 

(1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions 

involving real property; 

(2) operates a line of business— 

(A) that involves the extension of retail credit or retail 

leases involving motor vehicles; and 

(B) in which— 

(i) the extension of retail credit or retail leases 

are provided directly to consumers; and 

(ii) the contract governing such extension of retail 

credit or retail leases is not routinely assigned to an 

unaffiliated third party finance or leasing source; or 

(3) offers or provides a consumer financial product or 

service not involving or related to the sale, financing, leasing, 

rental, repair, refurbishment, maintenance, or other servicing 

of motor vehicles, motor vehicle parts, or any related or 

ancillary product or service. 

(c) PRESERVATION OF AUTHORITIES OF OTHER AGENCIES.— Except as provided in subsections (b) and (d), nothing in this 

title, including subtitle F, shall be construed as modifying, limiting, 

or superseding the operation of any provision of Federal law, or 

otherwise affecting the authority of the Board of Governors, the 

Federal Trade Commission, or any other Federal agency, with 

respect to a person described in subsection (a). 

(d) FEDERAL TRADE COMMISSION AUTHORITY.—Notwithstanding 

section 18 of the Federal Trade Commission Act, the Federal Trade 
H. R. 4173—630 

Commission is authorized to prescribe rules under sections 5 and 

18(a)(1)(B) of the Federal Trade Commission Act. in accordance 

with section 553 of title 5, United States Code, with respect to 

a person described in subsection (a). 

(e) COORDINATION WITH OFFICE OF SERVICE MEMBER

AFFAIRS.—The Board of Governors and the Federal Trade Commission shall coordinate with the Office of Service Member Affairs, 

to ensure that— 

(1) service members and their families are educated and 

empowered to make better informed decisions regarding consumer financial products and services offered by motor vehicle 

dealers, with a focus on motor vehicle dealers in the proximity 

of military installations; and 

(2) complaints by service members and their families concerning such motor vehicle dealers are effectively monitored 

and responded to, and where appropriate, enforcement action 

is pursued by the authorized agencies. 

(f) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

(1) MOTOR VEHICLE.—The term ‘‘motor vehicle’’ means— 

(A) any self-propelled vehicle designed for transporting 

persons or property on a street, highway, or other road; 

(B) recreational boats and marine equipment; 

(C) motorcycles; 

(D) motor homes, recreational vehicle trailers, and 

slide-in campers, as those terms are defined in sections 

571.3 and 575.103 (d) of title 49, Code of Federal Regulations, or any successor thereto; and 

(E) other vehicles that are titled and sold through 

dealers. 

(2) MOTOR VEHICLE DEALER.—The term ‘‘motor vehicle 

dealer’’ means any person or resident in the United States, 

or any territory of the United States, who— 

(A) is licensed by a State, a territory of the United 

States, or the District of Columbia to engage in the sale 

of motor vehicles; and 

(B) takes title to, holds an ownership in, or takes 

physical custody of motor vehicles. 

SEC. 1029A. EFFECTIVE DATE. 

This subtitle shall become effective on the designated transfer 

date, except that sections 1022, 1024, and 1025(e) shall become 

effective on the date of enactment of this Act. 

Subtitle C—Specific Bureau Authorities 

SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR 

PRACTICES. 

(a) IN GENERAL.—The Bureau may take any action authorized 

under subtitle E to prevent a covered person or service provider 

from committing or engaging in an unfair, deceptive, or abusive 

act or practice under Federal law in connection with any transaction 

with a consumer for a consumer financial product or service, or 

the offering of a consumer financial product or service. 

(b) RULEMAKING.—The Bureau may prescribe rules applicable 

to a covered person or service provider identifying as unlawful 
H. R. 4173—631 

unfair, deceptive, or abusive acts or practices in connection with 

any transaction with a consumer for a consumer financial product 

or service, or the offering of a consumer financial product or service. 

Rules under this section may include requirements for the purpose 

of preventing such acts or practices. 

(c) UNFAIRNESS.— 

(1) IN GENERAL.—The Bureau shall have no authority under 

this section to declare an act or practice in connection with 

a transaction with a consumer for a consumer financial product 

or service, or the offering of a consumer financial product 

or service, to be unlawful on the grounds that such act or 

practice is unfair, unless the Bureau has a reasonable basis 

to conclude that— 

(A) the act or practice causes or is likely to cause 

substantial injury to consumers which is not reasonably 

avoidable by consumers; and 

(B) such substantial injury is not outweighed by 

countervailing benefits to consumers or to competition. 

(2) CONSIDERATION OF PUBLIC POLICIES.—In determining 

whether an act or practice is unfair, the Bureau may consider 

established public policies as evidence to be considered with 

all other evidence. Such public policy considerations may not 

serve as a primary basis for such determination. 

(d) ABUSIVE.—The Bureau shall have no authority under this 

section to declare an act or practice abusive in connection with 

the provision of a consumer financial product or service, unless 

the act or practice— 

(1) materially interferes with the ability of a consumer 

to understand a term or condition of a consumer financial 

product or service; or 

(2) takes unreasonable advantage of— 

(A) a lack of understanding on the part of the consumer 

of the material risks, costs, or conditions of the product 

or service; 

(B) the inability of the consumer to protect the interests 

of the consumer in selecting or using a consumer financial 

product or service; or 

(C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer. 

(e) CONSULTATION.—In prescribing rules under this section, 

the Bureau shall consult with the Federal banking agencies, or 

other Federal agencies, as appropriate, concerning the consistency 

of the proposed rule with prudential, market, or systemic objectives 

administered by such agencies. 

(f) CONSIDERATION OF SEASONAL INCOME.—The rules of the 

Bureau under this section shall provide, with respect to an extension 

of credit secured by residential real estate or a dwelling, if documented income of the borrower, including income from a small 

business, is a repayment source for an extension of credit secured 

by residential real estate or a dwelling, the creditor may consider 

the seasonality and irregularity of such income in the underwriting 

of and scheduling of payments for such credit. 

SEC. 1032. DISCLOSURES. 

(a) IN GENERAL.—The Bureau may prescribe rules to ensure 

that the features of any consumer financial product or service, 

both initially and over the term of the product or service, are 
H. R. 4173—632 

fully, accurately, and effectively disclosed to consumers in a manner 

that permits consumers to understand the costs, benefits, and risks 

associated with the product or service, in light of the facts and 

circumstances. 

(b) MODEL DISCLOSURES.— 

(1) IN GENERAL.—Any final rule prescribed by the Bureau 

under this section requiring disclosures may include a model 

form that may be used at the option of the covered person 

for provision of the required disclosures. 

(2) FORMAT.—A model form issued pursuant to paragraph 

(1) shall contain a clear and conspicuous disclosure that, at 

a minimum— 

(A) uses plain language comprehensible to consumers; 

(B) contains a clear format and design, such as an 

easily readable type font; and 

(C) succinctly explains the information that must be 

communicated to the consumer. 

(3) CONSUMER TESTING.—Any model form issued pursuant 

to this subsection shall be validated through consumer testing. 

(c) BASIS FOR RULEMAKING.—In prescribing rules under this 

section, the Bureau shall consider available evidence about consumer awareness, understanding of, and responses to disclosures 

or communications about the risks, costs, and benefits of consumer 

financial products or services. 

(d) SAFE HARBOR.—Any covered person that uses a model form 

included with a rule issued under this section shall be deemed 

to be in compliance with the disclosure requirements of this section 

with respect to such model form. 

(e) TRIAL DISCLOSURE PROGRAMS.— 

(1) IN GENERAL.—The Bureau may permit a covered person 

to conduct a trial program that is limited in time and scope, 

subject to specified standards and procedures, for the purpose 

of providing trial disclosures to consumers that are designed 

to improve upon any model form issued pursuant to subsection 

(b)(1), or any other model form issued to implement an enumerated statute, as applicable. 

(2) SAFE HARBOR.—The standards and procedures issued 

by the Bureau shall be designed to encourage covered persons 

to conduct trial disclosure programs. For the purposes of administering this subsection, the Bureau may establish a limited 

period during which a covered person conducting a trial disclosure program shall be deemed to be in compliance with, or 

may be exempted from, a requirement of a rule or an enumerated consumer law. 

(3) PUBLIC DISCLOSURE.—The rules of the Bureau shall 

provide for public disclosure of trial disclosure programs, which 

public disclosure may be limited, to the extent necessary to 

encourage covered persons to conduct effective trials. 

(f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not later than 

1 year after the designated transfer date, the Bureau shall propose 

for public comment rules and model disclosures that combine the 

disclosures required under the Truth in Lending Act and sections 

4 and 5 of the Real Estate Settlement Procedures Act of 1974, 

into a single, integrated disclosure for mortgage loan transactions 

covered by those laws, unless the Bureau determines that any 

proposal issued by the Board of Governors and the Secretary of 

Housing and Urban Development carries out the same purpose. 
H. R. 4173—633 

SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION. 

(a) IN GENERAL.—Subject to rules prescribed by the Bureau, 

a covered person shall make available to a consumer, upon request, 

information in the control or possession of the covered person concerning the consumer financial product or service that the consumer 

obtained from such covered person, including information relating 

to any transaction, series of transactions, or to the account including 

costs, charges and usage data. The information shall be made 

available in an electronic form usable by consumers. 

(b) EXCEPTIONS.—A covered person may not be required by 

this section to make available to the consumer— 

(1) any confidential commercial information, including an 

algorithm used to derive credit scores or other risk scores 

or predictors; 

(2) any information collected by the covered person for 

the purpose of preventing fraud or money laundering, or 

detecting, or making any report regarding other unlawful or 

potentially unlawful conduct; 

(3) any information required to be kept confidential by 

any other provision of law; or 

(4) any information that the covered person cannot retrieve 

in the ordinary course of its business with respect to that 

information. 

(c) NO DUTY TO MAINTAIN RECORDS.—Nothing in this section 

shall be construed to impose any duty on a covered person to 

maintain or keep any information about a consumer. 

(d) STANDARDIZED FORMATS FOR DATA.—The Bureau, by rule, 

shall prescribe standards applicable to covered persons to promote 

the development and use of standardized formats for information, 

including through the use of machine readable files, to be made 

available to consumers under this section. 

(e) CONSULTATION.—The Bureau shall, when prescribing any 

rule under this section, consult with the Federal banking agencies 

and the Federal Trade Commission to ensure, to the extent appropriate, that the rules— 

(1) impose substantively similar requirements on covered 

persons; 

(2) take into account conditions under which covered persons do business both in the United States and in other countries; and 

(3) do not require or promote the use of any particular 

technology in order to develop systems for compliance. 

SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES. 

(a) TIMELY REGULATOR RESPONSE TO CONSUMERS.—The Bureau 

shall establish, in consultation with the appropriate Federal regulatory agencies, reasonable procedures to provide a timely response 

to consumers, in writing where appropriate, to complaints against, 

or inquiries concerning, a covered person, including— 

(1) steps that have been taken by the regulator in response 

to the complaint or inquiry of the consumer; 

(2) any responses received by the regulator from the covered 

person; and 

(3) any follow-up actions or planned follow-up actions by 

the regulator in response to the complaint or inquiry of the 

consumer. 
H. R. 4173—634 

(b) TIMELY RESPONSE TO REGULATOR BY COVERED PERSON.— 

A covered person subject to supervision and primary enforcement 

by the Bureau pursuant to section 1025 shall provide a timely 

response, in writing where appropriate, to the Bureau, the prudential regulators, and any other agency having jurisdiction over such 

covered person concerning a consumer complaint or inquiry, 

including— 

(1) steps that have been taken by the covered person to 

respond to the complaint or inquiry of the consumer; 

(2) responses received by the covered person from the consumer; and 

(3) follow-up actions or planned follow-up actions by the 

covered person to respond to the complaint or inquiry of the 

consumer. 

(c) PROVISION OF INFORMATION TO CONSUMERS.— 

(1) IN GENERAL.—A covered person subject to supervision 

and primary enforcement by the Bureau pursuant to section 

1025 shall, in a timely manner, comply with a consumer request 

for information in the control or possession of such covered 

person concerning the consumer financial product or service 

that the consumer obtained from such covered person, including 

supporting written documentation, concerning the account of 

the consumer. 

(2) EXCEPTIONS.—A covered person subject to supervision 

and primary enforcement by the Bureau pursuant to section 

1025, a prudential regulator, and any other agency having 

jurisdiction over a covered person subject to supervision and 

primary enforcement by the Bureau pursuant to section 1025 

may not be required by this section to make available to the 

consumer— 

(A) any confidential commercial information, including 

an algorithm used to derive credit scores or other risk 

scores or predictors; 

(B) any information collected by the covered person 

for the purpose of preventing fraud or money laundering, 

or detecting or making any report regarding other unlawful 

or potentially unlawful conduct; 

(C) any information required to be kept confidential 

by any other provision of law; or 

(D) any nonpublic or confidential information, 

including confidential supervisory information. 

(d) AGREEMENTS WITH OTHER AGENCIES.—The Bureau shall 

enter into a memorandum of understanding with any affected Federal regulatory agency regarding procedures by which any covered 

person, and the prudential regulators, and any other agency having 

jurisdiction over a covered person, including the Secretary of the 

Department of Housing and Urban Development and the Secretary 

of Education, shall comply with this section. 

SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN. 

(a) ESTABLISHMENT.—The Secretary, in consultation with the 

Director, shall designate a Private Education Loan Ombudsman 

(in this section referred to as the ‘‘Ombudsman’’) within the Bureau, 

to provide timely assistance to borrowers of private education loans. 

(b) PUBLIC INFORMATION.—The Secretary and the Director shall 

disseminate information about the availability and functions of 

the Ombudsman to borrowers and potential borrowers, as well 
H. R. 4173—635 

as institutions of higher education, lenders, guaranty agencies, loan 

servicers, and other participants in private education student loan 

programs. 

(c) FUNCTIONS OF OMBUDSMAN.—The Ombudsman designated 

under this subsection shall— 

(1) in accordance with regulations of the Director, receive, 

review, and attempt to resolve informally complaints from borrowers of loans described in subsection (a), including, as appropriate, attempts to resolve such complaints in collaboration 

with the Department of Education and with institutions of 

higher education, lenders, guaranty agencies, loan servicers, 

and other participants in private education loan programs; 

(2) not later than 90 days after the designated transfer 

date, establish a memorandum of understanding with the student loan ombudsman established under section 141(f) of the 

Higher Education Act of 1965 (20 U.S.C. 1018(f)), to ensure 

coordination in providing assistance to and serving borrowers 

seeking to resolve complaints related to their private education 

or Federal student loans; 

(3) compile and analyze data on borrower complaints 

regarding private education loans; and 

(4) make appropriate recommendations to the Director, 

the Secretary, the Secretary of Education, the Committee on 

Banking, Housing, and Urban Affairs and the Committee on 

Health, Education, Labor, and Pensions of the Senate and 

the Committee on Financial Services and the Committee on 

Education and Labor of the House of Representatives. 

(d) ANNUAL REPORTS.— (1) IN GENERAL.—The Ombudsman shall prepare an annual 

report that describes the activities, and evaluates the effectiveness of the Ombudsman during the preceding year. 

(2) SUBMISSION.—The report required by paragraph (1) 

shall be submitted on the same date annually to the Secretary, 

the Secretary of Education, the Committee on Banking, 

Housing, and Urban Affairs and the Committee on Health, 

Education, Labor, and Pensions of the Senate and the Committee on Financial Services and the Committee on Education 

and Labor of the House of Representatives. 

(e) DEFINITIONS.—For purposes of this section, the terms ‘‘private education loan’’ and ‘‘institution of higher education’’ have 

the same meanings as in section 140 of the Truth in Lending 

Act (15 U.S.C. 1650). 

SEC. 1036. PROHIBITED ACTS. 

(a) IN GENERAL.—It shall be unlawful for— 

(1) any covered person or service provider— 

(A) to offer or provide to a consumer any financial 

product or service not in conformity with Federal consumer 

financial law, or otherwise commit any act or omission 

in violation of a Federal consumer financial law; or 

(B) to engage in any unfair, deceptive, or abusive act 

or practice; 

(2) any covered person or service provider to fail or refuse, 

as required by Federal consumer financial law, or any rule 

or order issued by the Bureau thereunder— 

(A) to permit access to or copying of records; 

(B) to establish or maintain records; or 
H. R. 4173—636 

(C) to make reports or provide information to the 

Bureau; or 

(3) any person to knowingly or recklessly provide substantial assistance to a covered person or service provider in violation of the provisions of section 1031, or any rule or order 

issued thereunder, and notwithstanding any provision of this 

title, the provider of such substantial assistance shall be 

deemed to be in violation of that section to the same extent 

as the person to whom such assistance is provided. 

(b) EXCEPTION.—No person shall be held to have violated subsection (a)(1) solely by virtue of providing or selling time or space 

to a covered person or service provider placing an advertisement. 

SEC. 1037. EFFECTIVE DATE. 

This subtitle shall take effect on the designated transfer date. 

Subtitle D—Preservation of State Law 

SEC. 1041. RELATION TO STATE LAW. 

(a) IN GENERAL.— 

(1) RULE OF CONSTRUCTION.—This title, other than sections 

1044 through 1048, may not be construed as annulling, altering, 

or affecting, or exempting any person subject to the provisions 

of this title from complying with, the statutes, regulations, 

orders, or interpretations in effect in any State, except to the 

extent that any such provision of law is inconsistent with 

the provisions of this title, and then only to the extent of 

the inconsistency. 

(2) GREATER PROTECTION UNDER STATE LAW.—For purposes 

of this subsection, a statute, regulation, order, or interpretation 

in effect in any State is not inconsistent with the provisions 

of this title if the protection that such statute, regulation, 

order, or interpretation affords to consumers is greater than 

the protection provided under this title. A determination 

regarding whether a statute, regulation, order, or interpretation 

in effect in any State is inconsistent with the provisions of 

this title may be made by the Bureau on its own motion 

or in response to a nonfrivolous petition initiated by any 

interested person. 

(b) RELATION TO OTHER PROVISIONS OF ENUMERATED CONSUMER LAWS THAT RELATE TO STATE LAW.—No provision of this 

title, except as provided in section 1083, shall be construed as 

modifying, limiting, or superseding the operation of any provision 

of an enumerated consumer law that relates to the application 

of a law in effect in any State with respect to such Federal law. 

(c) ADDITIONAL CONSUMER PROTECTION REGULATIONS IN

RESPONSE TO STATE ACTION.— (1) NOTICE OF PROPOSED RULE REQUIRED.—The Bureau 

shall issue a notice of proposed rulemaking whenever a majority 

of the States has enacted a resolution in support of the 

establishment or modification of a consumer protection regulation by the Bureau. 

(2) BUREAU CONSIDERATIONS REQUIRED FOR ISSUANCE OF

FINAL REGULATION.—Before prescribing a final regulation based 

upon a notice issued pursuant to paragraph (1), the Bureau 

shall take into account whether— 
H. R. 4173—637 

(A) the proposed regulation would afford greater protection to consumers than any existing regulation; 

(B) the intended benefits of the proposed regulation 

for consumers would outweigh any increased costs or 

inconveniences for consumers, and would not discriminate 

unfairly against any category or class of consumers; and 

(C) a Federal banking agency has advised that the 

proposed regulation is likely to present an unacceptable 

safety and soundness risk to insured depository institutions. 

(3) EXPLANATION OF CONSIDERATIONS.—The Bureau— 

(A) shall include a discussion of the considerations 

required in paragraph (2) in the Federal Register notice 

of a final regulation prescribed pursuant to this subsection; 

and 

(B) whenever the Bureau determines not to prescribe 

a final regulation, shall publish an explanation of such 

determination in the Federal Register, and provide a copy 

of such explanation to each State that enacted a resolution 

in support of the proposed regulation, the Committee on 

Banking, Housing, and Urban Affairs of the Senate, and 

the Committee on Financial Services of the House of Representatives. 

(4) RESERVATION OF AUTHORITY.—No provision of this subsection shall be construed as limiting or restricting the 

authority of the Bureau to enhance consumer protection standards established pursuant to this title in response to its own 

motion or in response to a request by any other interested 

person. 

(5) RULE OF CONSTRUCTION.—No provision of this subsection shall be construed as exempting the Bureau from complying with subchapter II of chapter 5 of title 5, United States 

Code. 

(6) DEFINITION.—For purposes of this subsection, the term 

‘‘consumer protection regulation’’ means a regulation that the 

Bureau is authorized to prescribe under the Federal consumer 

financial laws. 

SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES. 

(a) IN GENERAL.— 

(1) ACTION BY STATE.—Except as provided in paragraph 

(2), the attorney general (or the equivalent thereof) of any 

State may bring a civil action in the name of such State 

in any district court of the United States in that State or 

in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or 

regulations issued under this title, and to secure remedies 

under provisions of this title or remedies otherwise provided 

under other law. A State regulator may bring a civil action 

or other appropriate proceeding to enforce the provisions of 

this title or regulations issued under this title with respect 

to any entity that is State-chartered, incorporated, licensed, 

or otherwise authorized to do business under State law (except 

as provided in paragraph (2)), and to secure remedies under 

provisions of this title or remedies otherwise provided under 

other provisions of law with respect to such an entity. 
H. R. 4173—638 

(2) ACTION BY STATE AGAINST NATIONAL BANK OR FEDERAL

SAVINGS ASSOCIATION TO ENFORCE RULES.— 

(A) IN GENERAL.—Except as permitted under subparagraph (B), the attorney general (or equivalent thereof) of 

any State may not bring a civil action in the name of 

such State against a national bank or Federal savings 

association to enforce a provision of this title. 

(B) ENFORCEMENT OF RULES PERMITTED.—The attorney 

general (or the equivalent thereof) of any State may bring 

a civil action in the name of such State against a national 

bank or Federal savings association in any district court 

of the United States in the State or in State court that 

is located in that State and that has jurisdiction over 

the defendant to enforce a regulation prescribed by the 

Bureau under a provision of this title and to secure remedies under provisions of this title or remedies otherwise 

provided under other law. 

(3) RULE OF CONSTRUCTION.—No provision of this title shall 

be construed as modifying, limiting, or superseding the operation of any provision of an enumerated consumer law that 

relates to the authority of a State attorney general or State 

regulator to enforce such Federal law. 

(b) CONSULTATION REQUIRED.— 

(1) NOTICE.— 

(A) IN GENERAL.—Before initiating any action in a 

court or other administrative or regulatory proceeding 

against any covered person as authorized by subsection 

(a) to enforce any provision of this title, including any 

regulation prescribed by the Bureau under this title, a 

State attorney general or State regulator shall timely provide a copy of the complete complaint to be filed and 

written notice describing such action or proceeding to the 

Bureau and the prudential regulator, if any, or the designee 

thereof. 

(B) EMERGENCY ACTION.—If prior notice is not practicable, the State attorney general or State regulator shall 

provide a copy of the complete complaint and the notice 

to the Bureau and the prudential regulator, if any, immediately upon instituting the action or proceeding. 

(C) CONTENTS OF NOTICE.—The notification required 

under this paragraph shall, at a minimum, describe— 

(i) the identity of the parties; 

(ii) the alleged facts underlying the proceeding; 

and 

(iii) whether there may be a need to coordinate 

the prosecution of the proceeding so as not to interfere 

with any action, including any rulemaking, undertaken 

by the Bureau, a prudential regulator, or another Federal agency. 

(2) BUREAU RESPONSE.—In any action described in paragraph (1), the Bureau may— 

(A) intervene in the action as a party; 

(B) upon intervening— 

(i) remove the action to the appropriate United 

States district court, if the action was not originally 

brought there; and 
H. R. 4173—639 

(ii) be heard on all matters arising in the action; 

and 

(C) appeal any order or judgment, to the same extent 

as any other party in the proceeding may. 

(c) REGULATIONS.—The Bureau shall prescribe regulations to 

implement the requirements of this section and, from time to time, 

provide guidance in order to further coordinate actions with the 

State attorneys general and other regulators. 

(d) PRESERVATION OF STATE AUTHORITY.— (1) STATE CLAIMS.—No provision of this section shall be 

construed as altering, limiting, or affecting the authority of 

a State attorney general or any other regulatory or enforcement 

agency or authority to bring an action or other regulatory 

proceeding arising solely under the law in effect in that State. 

(2) STATE SECURITIES REGULATORS.—No provision of this 

title shall be construed as altering, limiting, or affecting the 

authority of a State securities commission (or any agency or 

office performing like functions) under State law to adopt rules, 

initiate enforcement proceedings, or take any other action with 

respect to a person regulated by such commission or authority. 

(3) STATE INSURANCE REGULATORS.—No provision of this 

title shall be construed as altering, limiting, or affecting the 

authority of a State insurance commission or State insurance 

regulator under State law to adopt rules, initiate enforcement 

proceedings, or take any other action with respect to a person 

regulated by such commission or regulator. 

SEC. 1043. PRESERVATION OF EXISTING CONTRACTS. 

This title, and regulations, orders, guidance, and interpretations 

prescribed, issued, or established by the Bureau, shall not be construed to alter or affect the applicability of any regulation, order, 

guidance, or interpretation prescribed, issued, and established by 

the Comptroller of the Currency or the Director of the Office of 

Thrift Supervision regarding the applicability of State law under 

Federal banking law to any contract entered into on or before 

the date of enactment of this Act, by national banks, Federal 

savings associations, or subsidiaries thereof that are regulated and 

supervised by the Comptroller of the Currency or the Director 

of the Office of Thrift Supervision, respectively. 

SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL 

BANKS AND SUBSIDIARIES CLARIFIED. 

(a) IN GENERAL.—Chapter one of title LXII of the Revised 

Statutes of the United States (12 U.S.C. 21 et seq.) is amended 

by inserting after section 5136B the following new section: 

‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL 

BANKS AND SUBSIDIARIES CLARIFIED. 

‘‘(a) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) NATIONAL BANK.—The term ‘national bank’ includes— 

‘‘(A) any bank organized under the laws of the United 

States; and 

‘‘(B) any Federal branch established in accordance with 

the International Banking Act of 1978. 

‘‘(2) STATE CONSUMER FINANCIAL LAWS.—The term ‘State 

consumer financial law’ means a State law that does not directly 

or indirectly discriminate against national banks and that 
H. R. 4173—640 

directly and specifically regulates the manner, content, or terms 

and conditions of any financial transaction (as may be authorized for national banks to engage in), or any account related 

thereto, with respect to a consumer. 

‘‘(3) OTHER DEFINITIONS.—The terms ‘affiliate’, ‘subsidiary’, 

‘includes’, and ‘including’ have the same meanings as in section 

3 of the Federal Deposit Insurance Act. 

‘‘(b) PREEMPTION STANDARD.— 

‘‘(1) IN GENERAL.—State consumer financial laws are preempted, only if— 

‘‘(A) application of a State consumer financial law 

would have a discriminatory effect on national banks, in 

comparison with the effect of the law on a bank chartered 

by that State; 

‘‘(B) in accordance with the legal standard for preemption in the decision of the Supreme Court of the United 

States in Barnett Bank of Marion County, N. A. v. Nelson, 

Florida Insurance Commissioner, et al., 517 U.S. 25 (1996), 

the State consumer financial law prevents or significantly 

interferes with the exercise by the national bank of its 

powers; and any preemption determination under this 

subparagraph may be made by a court, or by regulation 

or order of the Comptroller of the Currency on a caseby-case basis, in accordance with applicable law; or 

‘‘(C) the State consumer financial law is preempted 

by a provision of Federal law other than this title. 

‘‘(2) SAVINGS CLAUSE.—This title and section 24 of the 

Federal Reserve Act (12 U.S.C. 371) do not preempt, annul, 

or affect the applicability of any State law to any subsidiary 

or affiliate of a national bank (other than a subsidiary or 

affiliate that is chartered as a national bank). 

‘‘(3) CASE-BY-CASE BASIS.— 

‘‘(A) DEFINITION.—As used in this section the term 

‘case-by-case basis’ refers to a determination pursuant to 

this section made by the Comptroller concerning the impact 

of a particular State consumer financial law on any national 

bank that is subject to that law, or the law of any other 

State with substantively equivalent terms. 

‘‘(B) CONSULTATION.—When making a determination 

on a case-by-case basis that a State consumer financial 

law of another State has substantively equivalent terms 

as one that the Comptroller is preempting, the Comptroller 

shall first consult with the Bureau of Consumer Financial 

Protection and shall take the views of the Bureau into 

account when making the determination. 

‘‘(4) RULE OF CONSTRUCTION.—This title does not occupy 

the field in any area of State law. 

‘‘(5) STANDARDS OF REVIEW.— 

‘‘(A) PREEMPTION.—A court reviewing any determinations made by the Comptroller regarding preemption of 

a State law by this title or section 24 of the Federal 

Reserve Act (12 U.S.C. 371) shall assess the validity of 

such determinations, depending upon the thoroughness evident in the consideration of the agency, the validity of 

the reasoning of the agency, the consistency with other 

valid determinations made by the agency, and other factors 
H. R. 4173—641 

which the court finds persuasive and relevant to its decision. 

‘‘(B) SAVINGS CLAUSE.—Except as provided in subparagraph (A), nothing in this section shall affect the deference 

that a court may afford to the Comptroller in making 

determinations regarding the meaning or interpretation 

of title LXII of the Revised Statutes of the United States 

or other Federal laws. 

‘‘(6) COMPTROLLER DETERMINATION NOT DELEGABLE.—Any 

regulation, order, or determination made by the Comptroller 

of the Currency under paragraph (1)(B) shall be made by the 

Comptroller, and shall not be delegable to another officer or 

employee of the Comptroller of the Currency. 

‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation or order of the 

Comptroller of the Currency prescribed under subsection (b)(1)(B), 

shall be interpreted or applied so as to invalidate, or otherwise 

declare inapplicable to a national bank, the provision of the State 

consumer financial law, unless substantial evidence, made on the 

record of the proceeding, supports the specific finding regarding 

the preemption of such provision in accordance with the legal 

standard of the decision of the Supreme Court of the United States 

in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25 (1996). 

‘‘(d) PERIODIC REVIEW OF PREEMPTION DETERMINATIONS.— 

‘‘(1) IN GENERAL.—The Comptroller of the Currency shall 

periodically conduct a review, through notice and public comment, of each determination that a provision of Federal law 

preempts a State consumer financial law. The agency shall 

conduct such review within the 5-year period after prescribing 

or otherwise issuing such determination, and at least once 

during each 5-year period thereafter. After conducting the 

review of, and inspecting the comments made on, the determination, the agency shall publish a notice in the Federal 

Register announcing the decision to continue or rescind the 

determination or a proposal to amend the determination. Any 

such notice of a proposal to amend a determination and the 

subsequent resolution of such proposal shall comply with the 

procedures set forth in subsections (a) and (b) of section 5244 

of the Revised Statutes of the United States (12 U.S.C. 43 

(a), (b)). 

‘‘(2) REPORTS TO CONGRESS.—At the time of issuing a review 

conducted under paragraph (1), the Comptroller of the Currency 

shall submit a report regarding such review to the Committee 

on Financial Services of the House of Representatives and 

the Committee on Banking, Housing, and Urban Affairs of 

the Senate. The report submitted to the respective committees 

shall address whether the agency intends to continue, rescind, 

or propose to amend any determination that a provision of 

Federal law preempts a State consumer financial law, and 

the reasons therefor. 

‘‘(e) APPLICATION OF STATE CONSUMER FINANCIAL LAW TO

SUBSIDIARIES AND AFFILIATES.—Notwithstanding any provision of 

this title or section 24 of Federal Reserve Act (12 U.S.C. 371), 

a State consumer financial law shall apply to a subsidiary or 

affiliate of a national bank (other than a subsidiary or affiliate 

that is chartered as a national bank) to the same extent that 
H. R. 4173—642 

the State consumer financial law applies to any person, corporation, 

or other entity subject to such State law. 

‘‘(f) PRESERVATION OF POWERS RELATED TO CHARGING

INTEREST.—No provision of this title shall be construed as altering 

or otherwise affecting the authority conferred by section 5197 of 

the Revised Statutes of the United States (12 U.S.C. 85) for the 

charging of interest by a national bank at the rate allowed by 

the laws of the State, territory, or district where the bank is 

located, including with respect to the meaning of ‘interest’ under 

such provision. 

‘‘(g) TRANSPARENCY OF OCC PREEMPTION DETERMINATIONS.— The Comptroller of the Currency shall publish and update no less 

frequently than quarterly, a list of preemption determinations by 

the Comptroller of the Currency then in effect that identifies the 

activities and practices covered by each determination and the 

requirements and constraints determined to be preempted.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

one of title LXII of the Revised Statutes of the United States 

is amended by inserting after the item relating to section 5136B 

the following new item: 

‘‘Sec. 5136C. State law preemption standards for national banks and subsidiaries 

clarified.’’. 

SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY 

INSTITUTION SUBSIDIARIES. 

Section 5136C of the Revised Statutes of the United States 

(as added by this subtitle) is amended by adding at the end the 

following: 

‘‘(h) CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY

INSTITUTION SUBSIDIARIES AND AFFILIATES OF NATIONAL BANKS.— ‘‘(1) DEFINITIONS.—For purposes of this subsection, the 

terms ‘depository institution’, ‘subsidiary’, and ‘affiliate’ have 

the same meanings as in section 3 of the Federal Deposit 

Insurance Act. 

‘‘(2) RULE OF CONSTRUCTION.—No provision of this title 

or section 24 of the Federal Reserve Act (12 U.S.C. 371) shall 

be construed as preempting, annulling, or affecting the applicability of State law to any subsidiary, affiliate, or agent of 

a national bank (other than a subsidiary, affiliate, or agent 

that is chartered as a national bank).’’. 

SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL 

SAVINGS ASSOCIATIONS AND SUBSIDIARIES CLARIFIED. 

(a) IN GENERAL.—The Home Owners’ Loan Act (12 U.S.C. 1461 

et seq.) is amended by inserting after section 5 the following new 

section: 

‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS 

ASSOCIATIONS CLARIFIED. 

‘‘(a) IN GENERAL.—Any determination by a court or by the 

Director or any successor officer or agency regarding the relation 

of State law to a provision of this Act or any regulation or order 

prescribed under this Act shall be made in accordance with the 

laws and legal standards applicable to national banks regarding 

the preemption of State law. 

‘‘(b) PRINCIPLES OF CONFLICT PREEMPTION APPLICABLE.—Notwithstanding the authorities granted under sections 4 and 5, this 

Act does not occupy the field in any area of State law.’’. 
H. R. 4173—643 

(b) CLERICAL AMENDMENT.—The table of sections for the Home 

Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended by striking 

the item relating to section 6 and inserting the following new 

item: 

‘‘Sec. 6. State law preemption standards for Federal savings associations and 

subsidiaries clarified.’’. 

SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND 

SAVINGS ASSOCIATIONS. 

(a) NATIONAL BANKS.—Section 5136C of the Revised Statutes 

of the United States (as added by this subtitle) is amended by 

adding at the end the following: 

‘‘(i) VISITORIAL POWERS.— 

‘‘(1) IN GENERAL.—In accordance with the decision of the 

Supreme Court of the United States in Cuomo v. Clearing 

House Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision 

of this title which relates to visitorial powers or otherwise 

limits or restricts the visitorial authority to which any national 

bank is subject shall be construed as limiting or restricting 

the authority of any attorney general (or other chief law enforcement officer) of any State to bring an action against a national 

bank in a court of appropriate jurisdiction to enforce an 

applicable law and to seek relief as authorized by such law. 

‘‘(j) ENFORCEMENT ACTIONS.—The ability of the Comptroller 

of the Currency to bring an enforcement action under this title 

or section 5 of the Federal Trade Commission Act does not preclude 

any private party from enforcing rights granted under Federal 

or State law in the courts.’’. 

(b) SAVINGS ASSOCIATIONS.—Section 6 of the Home Owners’ 

Loan Act (as added by this title) is amended by adding at the 

end the following: 

‘‘(c) VISITORIAL POWERS.—The provisions of sections 5136C(i) 

of the Revised Statutes of the United States shall apply to Federal 

savings associations, and any subsidiary thereof, to the same extent 

and in the same manner as if such savings associations, or subsidiaries thereof, were national banks or subsidiaries of national banks, 

respectively.’’ 

‘‘(d) ENFORCEMENT ACTIONS.—The ability of the Comptroller 

of the Currency to bring an enforcement action under this Act 

or section 5 of the Federal Trade Commission Act does not preclude 

any private party from enforcing rights granted under Federal 

or State law in the courts.’’. 

SEC. 1048. EFFECTIVE DATE. 

This subtitle shall become effective on the designated transfer 

date. 

Subtitle E—Enforcement Powers 

SEC. 1051. DEFINITIONS. 

For purposes of this subtitle, the following definitions shall 

apply: 

(1) BUREAU INVESTIGATION.—The term ‘‘Bureau investigation’’ means any inquiry conducted by a Bureau investigator 

for the purpose of ascertaining whether any person is or has 
H. R. 4173—644 

been engaged in any conduct that is a violation, as defined 

in this section. 

(2) BUREAU INVESTIGATOR.—The term ‘‘Bureau investigator’’ means any attorney or investigator employed by the 

Bureau who is charged with the duty of enforcing or carrying 

into effect any Federal consumer financial law. 

(3) CUSTODIAN.—The term ‘‘custodian’’ means the custodian 

or any deputy custodian designated by the Bureau. 

(4) DOCUMENTARY MATERIAL.—The term ‘‘documentary 

material’’ includes the original or any copy of any book, document, record, report, memorandum, paper, communication, tabulation, chart, logs, electronic files, or other data or data compilations stored in any medium. 

(5) VIOLATION.—The term ‘‘violation’’ means any act or 

omission that, if proved, would constitute a violation of any 

provision of Federal consumer financial law. 

SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY. 

(a) JOINT INVESTIGATIONS.— 

(1) IN GENERAL.—The Bureau or, where appropriate, a 

Bureau investigator, may engage in joint investigations and 

requests for information, as authorized under this title. 

(2) FAIR LENDING.—The authority under paragraph (1) 

includes matters relating to fair lending, and where appropriate, joint investigations with, and requests for information 

from, the Secretary of Housing and Urban Development, the 

Attorney General of the United States, or both. 

(b) SUBPOENAS.— (1) IN GENERAL.—The Bureau or a Bureau investigator 

may issue subpoenas for the attendance and testimony of witnesses and the production of relevant papers, books, documents, 

or other material in connection with hearings under this title. 

(2) FAILURE TO OBEY.—In the case of contumacy or refusal 

to obey a subpoena issued pursuant to this paragraph and 

served upon any person, the district court of the United States 

for any district in which such person is found, resides, or 

transacts business, upon application by the Bureau or a Bureau 

investigator and after notice to such person, may issue an 

order requiring such person to appear and give testimony or 

to appear and produce documents or other material. 

(3) CONTEMPT.—Any failure to obey an order of the court 

under this subsection may be punished by the court as a 

contempt thereof. 

(c) DEMANDS.— 

(1) IN GENERAL.—Whenever the Bureau has reason to 

believe that any person may be in possession, custody, or control 

of any documentary material or tangible things, or may have 

any information, relevant to a violation, the Bureau may, before 

the institution of any proceedings under the Federal consumer 

financial law, issue in writing, and cause to be served upon 

such person, a civil investigative demand requiring such person 

to— 

(A) produce such documentary material for inspection 

and copying or reproduction in the form or medium 

requested by the Bureau; 

(B) submit such tangible things; 

(C) file written reports or answers to questions; 
H. R. 4173—645 

(D) give oral testimony concerning documentary material, tangible things, or other information; or 

(E) furnish any combination of such material, answers, 

or testimony. 

(2) REQUIREMENTS.—Each civil investigative demand shall 

state the nature of the conduct constituting the alleged violation 

which is under investigation and the provision of law applicable 

to such violation. 

(3) PRODUCTION OF DOCUMENTS.—Each civil investigative 

demand for the production of documentary material shall— 

(A) describe each class of documentary material to 

be produced under the demand with such definiteness and 

certainty as to permit such material to be fairly identified; 

(B) prescribe a return date or dates which will provide 

a reasonable period of time within which the material 

so demanded may be assembled and made available for 

inspection and copying or reproduction; and 

(C) identify the custodian to whom such material shall 

be made available. 

(4) PRODUCTION OF THINGS.—Each civil investigative 

demand for the submission of tangible things shall— 

(A) describe each class of tangible things to be submitted under the demand with such definiteness and certainty as to permit such things to be fairly identified; 

(B) prescribe a return date or dates which will provide 

a reasonable period of time within which the things so 

demanded may be assembled and submitted; and 

(C) identify the custodian to whom such things shall 

be submitted. 

(5) DEMAND FOR WRITTEN REPORTS OR ANSWERS.—Each civil 

investigative demand for written reports or answers to questions shall— 

(A) propound with definiteness and certainty the 

reports to be produced or the questions to be answered; 

(B) prescribe a date or dates at which time written 

reports or answers to questions shall be submitted; and 

(C) identify the custodian to whom such reports or 

answers shall be submitted. 

(6) ORAL TESTIMONY.—Each civil investigative demand for 

the giving of oral testimony shall— 

(A) prescribe a date, time, and place at which oral 

testimony shall be commenced; and 

(B) identify a Bureau investigator who shall conduct 

the investigation and the custodian to whom the transcript 

of such investigation shall be submitted. 

(7) SERVICE.—Any civil investigative demand issued, and 

any enforcement petition filed, under this section may be 

served— 

(A) by any Bureau investigator at any place within 

the territorial jurisdiction of any court of the United States; 

and 

(B) upon any person who is not found within the territorial jurisdiction of any court of the United States— 

(i) in such manner as the Federal Rules of Civil 

Procedure prescribe for service in a foreign nation; 

and 
H. R. 4173—646 

(ii) to the extent that the courts of the United 

States have authority to assert jurisdiction over such 

person, consistent with due process, the United States 

District Court for the District of Columbia shall have 

the same jurisdiction to take any action respecting 

compliance with this section by such person that such 

district court would have if such person were personally 

within the jurisdiction of such district court. 

(8) METHOD OF SERVICE.—Service of any civil investigative 

demand or any enforcement petition filed under this section 

may be made upon a person, including any legal entity, by— 

(A) delivering a duly executed copy of such demand 

or petition to the individual or to any partner, executive 

officer, managing agent, or general agent of such person, 

or to any agent of such person authorized by appointment 

or by law to receive service of process on behalf of such 

person; 

(B) delivering a duly executed copy of such demand 

or petition to the principal office or place of business of 

the person to be served; or 

(C) depositing a duly executed copy in the United 

States mails, by registered or certified mail, return receipt 

requested, duly addressed to such person at the principal 

office or place of business of such person. 

(9) PROOF OF SERVICE.— (A) IN GENERAL.—A verified return by the individual 

serving any civil investigative demand or any enforcement 

petition filed under this section setting forth the manner 

of such service shall be proof of such service. 

(B) RETURN RECEIPTS.—In the case of service by registered or certified mail, such return shall be accompanied 

by the return post office receipt of delivery of such demand 

or enforcement petition. 

(10) PRODUCTION OF DOCUMENTARY MATERIAL.—The 

production of documentary material in response to a civil investigative demand shall be made under a sworn certificate, in 

such form as the demand designates, by the person, if a natural 

person, to whom the demand is directed or, if not a natural 

person, by any person having knowledge of the facts and circumstances relating to such production, to the effect that all 

of the documentary material required by the demand and in 

the possession, custody, or control of the person to whom the 

demand is directed has been produced and made available 

to the custodian. 

(11) SUBMISSION OF TANGIBLE THINGS.—The submission of 

tangible things in response to a civil investigative demand 

shall be made under a sworn certificate, in such form as the 

demand designates, by the person to whom the demand is 

directed or, if not a natural person, by any person having 

knowledge of the facts and circumstances relating to such 

production, to the effect that all of the tangible things required 

by the demand and in the possession, custody, or control of 

the person to whom the demand is directed have been submitted 

to the custodian. 

(12) SEPARATE ANSWERS.—Each reporting requirement or 

question in a civil investigative demand shall be answered 

separately and fully in writing under oath, unless it is objected 
H. R. 4173—647 

to, in which event the reasons for the objection shall be stated 

in lieu of an answer, and it shall be submitted under a sworn 

certificate, in such form as the demand designates, by the 

person, if a natural person, to whom the demand is directed 

or, if not a natural person, by any person responsible for 

answering each reporting requirement or question, to the effect 

that all information required by the demand and in the possession, custody, control, or knowledge of the person to whom 

the demand is directed has been submitted. 

(13) TESTIMONY.— (A) IN GENERAL.— (i) OATH AND RECORDATION.—The examination of 

any person pursuant to a demand for oral testimony 

served under this subsection shall be taken before 

an officer authorized to administer oaths and affirmations by the laws of the United States or of the place 

at which the examination is held. The officer before 

whom oral testimony is to be taken shall put the 

witness on oath or affirmation and shall personally, 

or by any individual acting under the direction of and 

in the presence of the officer, record the testimony 

of the witness. 

(ii) TRANSCRIPTION.—The testimony shall be taken 

stenographically and transcribed. 

(iii) TRANSMISSION TO CUSTODIAN.—After the testimony is fully transcribed, the officer investigator before 

whom the testimony is taken shall promptly transmit 

a copy of the transcript of the testimony to the custodian. 

(B) PARTIES PRESENT.—Any Bureau investigator before 

whom oral testimony is to be taken shall exclude from 

the place where the testimony is to be taken all other 

persons, except the person giving the testimony, the 

attorney for that person, the officer before whom the testimony is to be taken, an investigator or representative 

of an agency with which the Bureau is engaged in a joint 

investigation, and any stenographer taking such testimony. 

(C) LOCATION.—The oral testimony of any person taken 

pursuant to a civil investigative demand shall be taken 

in the judicial district of the United States in which such 

person resides, is found, or transacts business, or in such 

other place as may be agreed upon by the Bureau investigator before whom the oral testimony of such person is 

to be taken and such person. 

(D) ATTORNEY REPRESENTATION.— 

(i) IN GENERAL.—Any person compelled to appear 

under a civil investigative demand for oral testimony 

pursuant to this section may be accompanied, represented, and advised by an attorney. 

(ii) AUTHORITY.—The attorney may advise a person 

described in clause (i), in confidence, either upon the 

request of such person or upon the initiative of the 

attorney, with respect to any question asked of such 

person. 

(iii) OBJECTIONS.—A person described in clause (i), 

or the attorney for that person, may object on the 

record to any question, in whole or in part, and such 
H. R. 4173—648 

person shall briefly state for the record the reason 

for the objection. An objection may properly be made, 

received, and entered upon the record when it is 

claimed that such person is entitled to refuse to answer 

the question on grounds of any constitutional or other 

legal right or privilege, including the privilege against 

self-incrimination, but such person shall not otherwise 

object to or refuse to answer any question, and such 

person or attorney shall not otherwise interrupt the 

oral examination. 

(iv) REFUSAL TO ANSWER.—If a person described 

in clause (i) refuses to answer any question— 

(I) the Bureau may petition the district court 

of the United States pursuant to this section for 

an order compelling such person to answer such 

question; and 

(II) if the refusal is on grounds of the privilege 

against self-incrimination, the testimony of such 

person may be compelled in accordance with the 

provisions of section 6004 of title 18, United States 

Code. 

(E) TRANSCRIPTS.—For purposes of this subsection— 

(i) after the testimony of any witness is fully transcribed, the Bureau investigator shall afford the witness (who may be accompanied by an attorney) a 

reasonable opportunity to examine the transcript; 

(ii) the transcript shall be read to or by the witness, 

unless such examination and reading are waived by 

the witness; 

(iii) any changes in form or substance which the 

witness desires to make shall be entered and identified 

upon the transcript by the Bureau investigator, with 

a statement of the reasons given by the witness for 

making such changes; 

(iv) the transcript shall be signed by the witness, 

unless the witness in writing waives the signing, is 

ill, cannot be found, or refuses to sign; and 

(v) if the transcript is not signed by the witness 

during the 30-day period following the date on which 

the witness is first afforded a reasonable opportunity 

to examine the transcript, the Bureau investigator 

shall sign the transcript and state on the record the 

fact of the waiver, illness, absence of the witness, or 

the refusal to sign, together with any reasons given 

for the failure to sign. 

(F) CERTIFICATION BY INVESTIGATOR.—The Bureau 

investigator shall certify on the transcript that the witness 

was duly sworn by him or her and that the transcript 

is a true record of the testimony given by the witness, 

and the Bureau investigator shall promptly deliver the 

transcript or send it by registered or certified mail to 

the custodian. 

(G) COPY OF TRANSCRIPT.—The Bureau investigator 

shall furnish a copy of the transcript (upon payment of 

reasonable charges for the transcript) to the witness only, 

except that the Bureau may for good cause limit such 
H. R. 4173—649 

witness to inspection of the official transcript of his testimony. 

(H) WITNESS FEES.—Any witness appearing for the 

taking of oral testimony pursuant to a civil investigative 

demand shall be entitled to the same fees and mileage 

which are paid to witnesses in the district courts of the 

United States. 

(d) CONFIDENTIAL TREATMENT OF DEMAND MATERIAL.— 

(1) IN GENERAL.—Documentary materials and tangible 

things received as a result of a civil investigative demand 

shall be subject to requirements and procedures regarding confidentiality, in accordance with rules established by the Bureau. 

(2) DISCLOSURE TO CONGRESS.—No rule established by the 

Bureau regarding the confidentiality of materials submitted 

to, or otherwise obtained by, the Bureau shall be intended 

to prevent disclosure to either House of Congress or to an 

appropriate committee of the Congress, except that the Bureau 

is permitted to adopt rules allowing prior notice to any party 

that owns or otherwise provided the material to the Bureau 

and had designated such material as confidential. 

(e) PETITION FOR ENFORCEMENT.— 

(1) IN GENERAL.—Whenever any person fails to comply 

with any civil investigative demand duly served upon him 

under this section, or whenever satisfactory copying or reproduction of material requested pursuant to the demand cannot 

be accomplished and such person refuses to surrender such 

material, the Bureau, through such officers or attorneys as 

it may designate, may file, in the district court of the United 

States for any judicial district in which such person resides, 

is found, or transacts business, and serve upon such person, 

a petition for an order of such court for the enforcement of 

this section. 

(2) SERVICE OF PROCESS.—All process of any court to which 

application may be made as provided in this subsection may 

be served in any judicial district. 

(f) PETITION FOR ORDER MODIFYING OR SETTING ASIDE

DEMAND.— 

(1) IN GENERAL.—Not later than 20 days after the service 

of any civil investigative demand upon any person under subsection (b), or at any time before the return date specified 

in the demand, whichever period is shorter, or within such 

period exceeding 20 days after service or in excess of such 

return date as may be prescribed in writing, subsequent to 

service, by any Bureau investigator named in the demand, 

such person may file with the Bureau a petition for an order 

by the Bureau modifying or setting aside the demand. 

(2) COMPLIANCE DURING PENDENCY.—The time permitted 

for compliance with the demand in whole or in part, as determined proper and ordered by the Bureau, shall not run during 

the pendency of a petition under paragraph (1) at the Bureau, 

except that such person shall comply with any portions of 

the demand not sought to be modified or set aside. 

(3) SPECIFIC GROUNDS.—A petition under paragraph (1) 

shall specify each ground upon which the petitioner relies in 

seeking relief, and may be based upon any failure of the demand 

to comply with the provisions of this section, or upon any 

constitutional or other legal right or privilege of such person. 
H. R. 4173—650 

(g) CUSTODIAL CONTROL.—At any time during which any custodian is in custody or control of any documentary material, tangible 

things, reports, answers to questions, or transcripts of oral testimony given by any person in compliance with any civil investigative 

demand, such person may file, in the district court of the United 

States for the judicial district within which the office of such custodian is situated, and serve upon such custodian, a petition for 

an order of such court requiring the performance by such custodian 

of any duty imposed upon him by this section or rule promulgated 

by the Bureau. 

(h) JURISDICTION OF COURT.— (1) IN GENERAL.—Whenever any petition is filed in any 

district court of the United States under this section, such 

court shall have jurisdiction to hear and determine the matter 

so presented, and to enter such order or orders as may be 

required to carry out the provisions of this section. 

(2) APPEAL.—Any final order entered as described in paragraph (1) shall be subject to appeal pursuant to section 1291 

of title 28, United States Code. 

SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS. 

(a) IN GENERAL.—The Bureau is authorized to conduct hearings 

and adjudication proceedings with respect to any person in the 

manner prescribed by chapter 5 of title 5, United States Code 

in order to ensure or enforce compliance with— 

(1) the provisions of this title, including any rules prescribed by the Bureau under this title; and 

(2) any other Federal law that the Bureau is authorized 

to enforce, including an enumerated consumer law, and any 

regulations or order prescribed thereunder, unless such Federal 

law specifically limits the Bureau from conducting a hearing 

or adjudication proceeding and only to the extent of such limitation. 

(b) SPECIAL RULES FOR CEASE-AND-DESIST PROCEEDINGS.— (1) ORDERS AUTHORIZED.— (A) IN GENERAL.—If, in the opinion of the Bureau, 

any covered person or service provider is engaging or has 

engaged in an activity that violates a law, rule, or any 

condition imposed in writing on the person by the Bureau, 

the Bureau may, subject to sections 1024, 1025, and 1026, 

issue and serve upon the covered person or service provider 

a notice of charges in respect thereof. 

(B) CONTENT OF NOTICE.—The notice under subparagraph (A) shall contain a statement of the facts constituting 

the alleged violation or violations, and shall fix a time 

and place at which a hearing will be held to determine 

whether an order to cease and desist should issue against 

the covered person or service provider, such hearing to 

be held not earlier than 30 days nor later than 60 days 

after the date of service of such notice, unless an earlier 

or a later date is set by the Bureau, at the request of 

any party so served. 

(C) CONSENT.—Unless the party or parties served 

under subparagraph (B) appear at the hearing personally 

or by a duly authorized representative, such person shall 

be deemed to have consented to the issuance of the ceaseand-desist order. 
H. R. 4173—651 

(D) PROCEDURE.—In the event of consent under 

subparagraph (C), or if, upon the record, made at any 

such hearing, the Bureau finds that any violation specified 

in the notice of charges has been established, the Bureau 

may issue and serve upon the covered person or service 

provider an order to cease and desist from the violation 

or practice. Such order may, by provisions which may be 

mandatory or otherwise, require the covered person or 

service provider to cease and desist from the subject 

activity, and to take affirmative action to correct the conditions resulting from any such violation. 

(2) EFFECTIVENESS OF ORDER.—A cease-and-desist order 

shall become effective at the expiration of 30 days after the 

date of service of an order under paragraph (1) upon the covered 

person or service provider concerned (except in the case of 

a cease-and-desist order issued upon consent, which shall 

become effective at the time specified therein), and shall remain 

effective and enforceable as provided therein, except to such 

extent as the order is stayed, modified, terminated, or set 

aside by action of the Bureau or a reviewing court. 

(3) DECISION AND APPEAL.—Any hearing provided for in 

this subsection shall be held in the Federal judicial district 

or in the territory in which the residence or principal office 

or place of business of the person is located unless the person 

consents to another place, and shall be conducted in accordance 

with the provisions of chapter 5 of title 5 of the United States 

Code. After such hearing, and within 90 days after the Bureau 

has notified the parties that the case has been submitted to 

the Bureau for final decision, the Bureau shall render its decision (which shall include findings of fact upon which its decision 

is predicated) and shall issue and serve upon each party to 

the proceeding an order or orders consistent with the provisions 

of this section. Judicial review of any such order shall be 

exclusively as provided in this subsection. Unless a petition 

for review is timely filed in a court of appeals of the United 

States, as provided in paragraph (4), and thereafter until the 

record in the proceeding has been filed as provided in paragraph 

(4), the Bureau may at any time, upon such notice and in 

such manner as the Bureau shall determine proper, modify, 

terminate, or set aside any such order. Upon filing of the 

record as provided, the Bureau may modify, terminate, or set 

aside any such order with permission of the court. 

(4) APPEAL TO COURT OF APPEALS.—Any party to any proceeding under this subsection may obtain a review of any 

order served pursuant to this subsection (other than an order 

issued with the consent of the person concerned) by the filing 

in the court of appeals of the United States for the circuit 

in which the principal office of the covered person is located, 

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

Columbia Circuit, within 30 days after the date of service 

of such order, a written petition praying that the order of 

the Bureau be modified, terminated, or set aside. A copy of 

such petition shall be forthwith transmitted by the clerk of 

the court to the Bureau, and thereupon the Bureau shall file 

in the court the record in the proceeding, as provided in section 

2112 of title 28 of the United States Code. Upon the filing 

of such petition, such court shall have jurisdiction, which upon 
H. R. 4173—652 

the filing of the record shall except as provided in the last 

sentence of paragraph (3) be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Bureau. 

Review of such proceedings shall be had as provided in chapter 

7 of title 5 of the United States Code. The judgment and 

decree of the court shall be final, except that the same shall 

be subject to review by the Supreme Court of the United 

States, upon certiorari, as provided in section 1254 of title 

28 of the United States Code. 

(5) NO STAY.—The commencement of proceedings for 

judicial review under paragraph (4) shall not, unless specifically 

ordered by the court, operate as a stay of any order issued 

by the Bureau. 

(c) SPECIAL RULES FOR TEMPORARY CEASE-AND-DESIST PROCEEDINGS.— 

(1) IN GENERAL.—Whenever the Bureau determines that 

the violation specified in the notice of charges served upon 

a person, including a service provider, pursuant to subsection 

(b), or the continuation thereof, is likely to cause the person 

to be insolvent or otherwise prejudice the interests of consumers 

before the completion of the proceedings conducted pursuant 

to subsection (b), the Bureau may issue a temporary order 

requiring the person to cease and desist from any such violation 

or practice and to take affirmative action to prevent or remedy 

such insolvency or other condition pending completion of such 

proceedings. Such order may include any requirement authorized under this subtitle. Such order shall become effective upon 

service upon the person and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph 

(2), shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice 

and until such time as the Bureau shall dismiss the charges 

specified in such notice, or if a cease-and-desist order is issued 

against the person, until the effective date of such order. 

(2) APPEAL.—Not later than 10 days after the covered person or service provider concerned has been served with a temporary cease-and-desist order, the person may apply to the 

United States district court for the judicial district in which 

the residence or principal office or place of business of the 

person is located, or the United States District Court for the 

District of Columbia, for an injunction setting aside, limiting, 

or suspending the enforcement, operation, or effectiveness of 

such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the 

person under subsection (b), and such court shall have jurisdiction to issue such injunction. 

(3) INCOMPLETE OR INACCURATE RECORDS.— 

(A) TEMPORARY ORDER.—If a notice of charges served 

under subsection (b) specifies, on the basis of particular 

facts and circumstances, that the books and records of 

a covered person or service provider are so incomplete 

or inaccurate that the Bureau is unable to determine the 

financial condition of that person or the details or purpose 

of any transaction or transactions that may have a material 

effect on the financial condition of that person, the Bureau 

may issue a temporary order requiring— 
H. R. 4173—653 

(i) the cessation of any activity or practice which 

gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or 

(ii) affirmative action to restore such books or 

records to a complete and accurate state, until the 

completion of the proceedings under subsection (b)(1). 

(B) EFFECTIVE PERIOD.—Any temporary order issued 

under subparagraph (A)— 

(i) shall become effective upon service; and 

(ii) unless set aside, limited, or suspended by a 

court in proceedings under paragraph (2), shall remain 

in effect and enforceable until the earlier of— 

(I) the completion of the proceeding initiated 

under subsection (b) in connection with the notice 

of charges; or 

(II) the date the Bureau determines, by examination or otherwise, that the books and records 

of the covered person or service provider are 

accurate and reflect the financial condition thereof. 

(d) SPECIAL RULES FOR ENFORCEMENT OF ORDERS.— 

(1) IN GENERAL.—The Bureau may in its discretion apply 

to the United States district court within the jurisdiction of 

which the principal office or place of business of the person 

is located, for the enforcement of any effective and outstanding 

notice or order issued under this section, and such court shall 

have jurisdiction and power to order and require compliance 

herewith. 

(2) EXCEPTION.—Except as otherwise provided in this subsection, no court shall have jurisdiction to affect by injunction 

or otherwise the issuance or enforcement of any notice or order 

or to review, modify, suspend, terminate, or set aside any 

such notice or order. 

(e) RULES.—The Bureau shall prescribe rules establishing such 

procedures as may be necessary to carry out this section. 

SEC. 1054. LITIGATION AUTHORITY. 

(a) IN GENERAL.—If any person violates a Federal consumer 

financial law, the Bureau may, subject to sections 1024, 1025, 

and 1026, commence a civil action against such person to impose 

a civil penalty or to seek all appropriate legal and equitable relief 

including a permanent or temporary injunction as permitted by 

law. 

(b) REPRESENTATION.—The Bureau may act in its own name 

and through its own attorneys in enforcing any provision of this 

title, rules thereunder, or any other law or regulation, or in any 

action, suit, or proceeding to which the Bureau is a party. 

(c) COMPROMISE OF ACTIONS.—The Bureau may compromise 

or settle any action if such compromise is approved by the court. 

(d) NOTICE TO THE ATTORNEY GENERAL.— 

(1) IN GENERAL.—When commencing a civil action under 

Federal consumer financial law, or any rule thereunder, the 

Bureau shall notify the Attorney General and, with respect 

to a civil action against an insured depository institution or 

insured credit union, the appropriate prudential regulator. 

(2) NOTICE AND COORDINATION.— 

(A) NOTICE OF OTHER ACTIONS.—In addition to any 

notice required under paragraph (1), the Bureau shall 
H. R. 4173—654 

notify the Attorney General concerning any action, suit, 

or proceeding to which the Bureau is a party, except an 

action, suit, or proceeding that involves the offering or 

provision of consumer financial products or services. 

(B) COORDINATION.—In order to avoid conflicts and 

promote consistency regarding litigation of matters under 

Federal law, the Attorney General and the Bureau shall 

consult regarding the coordination of investigations and 

proceedings, including by negotiating an agreement for 

coordination by not later than 180 days after the designated 

transfer date. The agreement under this subparagraph 

shall include provisions to ensure that parallel investigations and proceedings involving the Federal consumer 

financial laws are conducted in a manner that avoids conflicts and does not impede the ability of the Attorney General to prosecute violations of Federal criminal laws. 

(C) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to limit the authority of the 

Bureau under this title, including the authority to interpret 

Federal consumer financial law. 

(e) APPEARANCE BEFORE THE SUPREME COURT.—The Bureau 

may represent itself in its own name before the Supreme Court 

of the United States, provided that the Bureau makes a written 

request to the Attorney General within the 10-day period which 

begins on the date of entry of the judgment which would permit 

any party to file a petition for writ of certiorari, and the Attorney 

General concurs with such request or fails to take action within 

60 days of the request of the Bureau. 

(f) FORUM.—Any civil action brought under this title may be 

brought in a United States district court or in any court of competent jurisdiction of a state in a district in which the defendant 

is located or resides or is doing business, and such court shall 

have jurisdiction to enjoin such person and to require compliance 

with any Federal consumer financial law. 

(g) TIME FOR BRINGING ACTION.— 

(1) IN GENERAL.—Except as otherwise permitted by law 

or equity, no action may be brought under this title more 

than 3 years after the date of discovery of the violation to 

which an action relates. 

(2) LIMITATIONS UNDER OTHER FEDERAL LAWS.— 

(A) IN GENERAL.—An action arising under this title 

does not include claims arising solely under enumerated 

consumer laws. 

(B) BUREAU AUTHORITY.—In any action arising solely 

under an enumerated consumer law, the Bureau may commence, defend, or intervene in the action in accordance 

with the requirements of that provision of law, as 

applicable. 

(C) TRANSFERRED AUTHORITY.—In any action arising 

solely under laws for which authorities were transferred 

under subtitles F and H, the Bureau may commence, 

defend, or intervene in the action in accordance with the 

requirements of that provision of law, as applicable. 

SEC. 1055. RELIEF AVAILABLE. 

(a) ADMINISTRATIVE PROCEEDINGS OR COURT ACTIONS.— 
H. R. 4173—655 

(1) JURISDICTION.—The court (or the Bureau, as the case 

may be) in an action or adjudication proceeding brought under 

Federal consumer financial law, shall have jurisdiction to grant 

any appropriate legal or equitable relief with respect to a violation of Federal consumer financial law, including a violation 

of a rule or order prescribed under a Federal consumer financial 

law. 

(2) RELIEF.—Relief under this section may include, without 

limitation— 

(A) rescission or reformation of contracts; 

(B) refund of moneys or return of real property; 

(C) restitution; 

(D) disgorgement or compensation for unjust enrichment; 

(E) payment of damages or other monetary relief; 

(F) public notification regarding the violation, including 

the costs of notification; 

(G) limits on the activities or functions of the person; 

and 

(H) civil money penalties, as set forth more fully in 

subsection (c). 

(3) NO EXEMPLARY OR PUNITIVE DAMAGES.—Nothing in this 

subsection shall be construed as authorizing the imposition 

of exemplary or punitive damages. 

(b) RECOVERY OF COSTS.—In any action brought by the Bureau, 

a State attorney general, or any State regulator to enforce any 

Federal consumer financial law, the Bureau, the State attorney 

general, or the State regulator may recover its costs in connection 

with prosecuting such action if the Bureau, the State attorney 

general, or the State regulator is the prevailing party in the action. 

(c) CIVIL MONEY PENALTY IN COURT AND ADMINISTRATIVE

ACTIONS.— 

(1) IN GENERAL.—Any person that violates, through any 

act or omission, any provision of Federal consumer financial 

law shall forfeit and pay a civil penalty pursuant to this subsection. 

(2) PENALTY AMOUNTS.— (A) FIRST TIER.—For any violation of a law, rule, or 

final order or condition imposed in writing by the Bureau, 

a civil penalty may not exceed $5,000 for each day during 

which such violation or failure to pay continues. 

(B) SECOND TIER.—Notwithstanding paragraph (A), for 

any person that recklessly engages in a violation of a 

Federal consumer financial law, a civil penalty may not 

exceed $25,000 for each day during which such violation 

continues. 

(C) THIRD TIER.—Notwithstanding subparagraphs (A) 

and (B), for any person that knowingly violates a Federal 

consumer financial law, a civil penalty may not exceed 

$1,000,000 for each day during which such violation continues. 

(3) MITIGATING FACTORS.—In determining the amount of 

any penalty assessed under paragraph (2), the Bureau or the 

court shall take into account the appropriateness of the penalty 

with respect to— 

(A) the size of financial resources and good faith of 

the person charged; 
H. R. 4173—656 

(B) the gravity of the violation or failure to pay; 

(C) the severity of the risks to or losses of the consumer, which may take into account the number of products 

or services sold or provided; 

(D) the history of previous violations; and 

(E) such other matters as justice may require. 

(4) AUTHORITY TO MODIFY OR REMIT PENALTY.—The Bureau 

may compromise, modify, or remit any penalty which may 

be assessed or had already been assessed under paragraph 

(2). The amount of such penalty, when finally determined, 

shall be exclusive of any sums owed by the person to the 

United States in connection with the costs of the proceeding, 

and may be deducted from any sums owing by the United 

States to the person charged. 

(5) NOTICE AND HEARING.—No civil penalty may be assessed 

under this subsection with respect to a violation of any Federal 

consumer financial law, unless— 

(A) the Bureau gives notice and an opportunity for 

a hearing to the person accused of the violation; or 

(B) the appropriate court has ordered such assessment 

and entered judgment in favor of the Bureau. 

SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS. 

If the Bureau obtains evidence that any person, domestic or 

foreign, has engaged in conduct that may constitute a violation 

of Federal criminal law, the Bureau shall transmit such evidence 

to the Attorney General of the United States, who may institute 

criminal proceedings under appropriate law. Nothing in this section 

affects any other authority of the Bureau to disclose information. 

SEC. 1057. EMPLOYEE PROTECTION. 

(a) IN GENERAL.—No covered person or service provider shall 

terminate or in any other way discriminate against, or cause to 

be terminated or discriminated against, any covered employee or 

any authorized representative of covered employees by reason of 

the fact that such employee or representative, whether at the initiative of the employee or in the ordinary course of the duties of 

the employee (or any person acting pursuant to a request of the 

employee), has— 

(1) provided, caused to be provided, or is about to provide 

or cause to be provided, information to the employer, the 

Bureau, or any other State, local, or Federal, government 

authority or law enforcement agency relating to any violation 

of, or any act or omission that the employee reasonably believes 

to be a violation of, any provision of this title or any other 

provision of law that is subject to the jurisdiction of the Bureau, 

or any rule, order, standard, or prohibition prescribed by the 

Bureau; 

(2) testified or will testify in any proceeding resulting from 

the administration or enforcement of any provision of this title 

or any other provision of law that is subject to the jurisdiction 

of the Bureau, or any rule, order, standard, or prohibition 

prescribed by the Bureau; 

(3) filed, instituted, or caused to be filed or instituted 

any proceeding under any Federal consumer financial law; or 

(4) objected to, or refused to participate in, any activity, 

policy, practice, or assigned task that the employee (or other 

such person) reasonably believed to be in violation of any law, 
H. R. 4173—657 

rule, order, standard, or prohibition, subject to the jurisdiction 

of, or enforceable by, the Bureau. 

(b) DEFINITION OF COVERED EMPLOYEE.—For the purposes of 

this section, the term ‘‘covered employee’’ means any individual 

performing tasks related to the offering or provision of a consumer 

financial product or service. 

(c) PROCEDURES AND TIMETABLES.— 

(1) COMPLAINT.— 

(A) IN GENERAL.—A person who believes that he or 

she has been discharged or otherwise discriminated against 

by any person in violation of subsection (a) may, not later 

than 180 days after the date on which such alleged violation 

occurs, file (or have any person file on his or her behalf) 

a complaint with the Secretary of Labor alleging such 

discharge or discrimination and identifying the person 

responsible for such act. 

(B) ACTIONS OF SECRETARY OF LABOR.—Upon receipt 

of such a complaint, the Secretary of Labor shall notify, 

in writing, the person named in the complaint who is 

alleged to have committed the violation, of— 

(i) the filing of the complaint; 

(ii) the allegations contained in the complaint; 

(iii) the substance of evidence supporting the complaint; and 

(iv) opportunities that will be afforded to such 

person under paragraph (2). 

(2) INVESTIGATION BY SECRETARY OF LABOR.— (A) IN GENERAL.—Not later than 60 days after the 

date of receipt of a complaint filed under paragraph (1), 

and after affording the complainant and the person named 

in the complaint who is alleged to have committed the 

violation that is the basis for the complaint an opportunity 

to submit to the Secretary of Labor a written response 

to the complaint and an opportunity to meet with a representative of the Secretary of Labor to present statements 

from witnesses, the Secretary of Labor shall— 

(i) initiate an investigation and determine whether 

there is reasonable cause to believe that the complaint 

has merit; and 

(ii) notify the complainant and the person alleged 

to have committed the violation of subsection (a), in 

writing, of such determination. 

(B) NOTICE OF RELIEF AVAILABLE.—If the Secretary 

of Labor concludes that there is reasonable cause to believe 

that a violation of subsection (a) has occurred, the Secretary 

of Labor shall, together with the notice under subparagraph 

(A)(ii), issue a preliminary order providing the relief prescribed by paragraph (4)(B). 

(C) REQUEST FOR HEARING.—Not later than 30 days 

after the date of receipt of notification of a determination 

of the Secretary of Labor under this paragraph, either 

the person alleged to have committed the violation or the 

complainant may file objections to the findings or preliminary order, or both, and request a hearing on the record. 

The filing of such objections shall not operate to stay any 

reinstatement remedy contained in the preliminary order. 

Any such hearing shall be conducted expeditiously, and 
H. R. 4173—658 

if a hearing is not requested in such 30-day period, the 

preliminary order shall be deemed a final order that is 

not subject to judicial review. 

(3) GROUNDS FOR DETERMINATION OF COMPLAINTS.— 

(A) IN GENERAL.—The Secretary of Labor shall dismiss 

a complaint filed under this subsection, and shall not conduct an investigation otherwise required under paragraph 

(2), unless the complainant makes a prima facie showing 

that any behavior described in paragraphs (1) through 

(4) of subsection (a) was a contributing factor in the 

unfavorable personnel action alleged in the complaint. 

(B) REBUTTAL EVIDENCE.—Notwithstanding a finding 

by the Secretary of Labor that the complainant has made 

the showing required under subparagraph (A), no investigation otherwise required under paragraph (2) shall be conducted, if the employer demonstrates, by clear and convincing evidence, that the employer would have taken the 

same unfavorable personnel action in the absence of that 

behavior. 

(C) EVIDENTIARY STANDARDS.—The Secretary of Labor 

may determine that a violation of subsection (a) has 

occurred only if the complainant demonstrates that any 

behavior described in paragraphs (1) through (4) of subsection (a) was a contributing factor in the unfavorable 

personnel action alleged in the complaint. Relief may not 

be ordered under subparagraph (A) if the employer demonstrates by clear and convincing evidence that the 

employer would have taken the same unfavorable personnel 

action in the absence of that behavior. 

(4) ISSUANCE OF FINAL ORDERS; REVIEW PROCEDURES.— (A) TIMING.—Not later than 120 days after the date 

of conclusion of any hearing under paragraph (2), the Secretary of Labor shall issue a final order providing the 

relief prescribed by this paragraph or denying the complaint. At any time before issuance of a final order, a 

proceeding under this subsection may be terminated on 

the basis of a settlement agreement entered into by the 

Secretary of Labor, the complainant, and the person alleged 

to have committed the violation. 

(B) PENALTIES.— 

(i) ORDER OF SECRETARY OF LABOR.—If, in response 

to a complaint filed under paragraph (1), the Secretary 

of Labor determines that a violation of subsection (a) 

has occurred, the Secretary of Labor shall order the 

person who committed such violation— 

(I) to take affirmative action to abate the violation; 

(II) to reinstate the complainant to his or her 

former position, together with compensation 

(including back pay) and restore the terms, conditions, and privileges associated with his or her 

employment; and 

(III) to provide compensatory damages to the 

complainant. 

(ii) PENALTY.—If an order is issued under clause 

(i), the Secretary of Labor, at the request of the 

complainant, shall assess against the person against 
H. R. 4173—659 

whom the order is issued, a sum equal to the aggregate 

amount of all costs and expenses (including attorney 

fees and expert witness fees) reasonably incurred, as 

determined by the Secretary of Labor, by the complainant for, or in connection with, the bringing of the 

complaint upon which the order was issued. 

(C) PENALTY FOR FRIVOLOUS CLAIMS.—If the Secretary 

of Labor finds that a complaint under paragraph (1) is 

frivolous or has been brought in bad faith, the Secretary 

of Labor may award to the prevailing employer a reasonable attorney fee, not exceeding $1,000, to be paid by 

the complainant. 

(D) DE NOVO REVIEW.— 

(i) FAILURE OF THE SECRETARY TO ACT.—If the 

Secretary of Labor has not issued a final order within 

210 days after the date of filing of a complaint under 

this subsection, or within 90 days after the date of 

receipt of a written determination, the complainant 

may bring an action at law or equity for de novo 

review in the appropriate district court of the United 

States having jurisdiction, which shall have jurisdiction 

over such an action without regard to the amount 

in controversy, and which action shall, at the request 

of either party to such action, be tried by the court 

with a jury. 

(ii) PROCEDURES.—A proceeding under clause (i) 

shall be governed by the same legal burdens of proof 

specified in paragraph (3). The court shall have jurisdiction to grant all relief necessary to make the 

employee whole, including injunctive relief and 

compensatory damages, including— 

(I) reinstatement with the same seniority 

status that the employee would have had, but 

for the discharge or discrimination; 

(II) the amount of back pay, with interest; 

and 

(III) compensation for any special damages 

sustained as a result of the discharge or discrimination, including litigation costs, expert witness 

fees, and reasonable attorney fees. 

(E) OTHER APPEALS.—Unless the complainant brings 

an action under subparagraph (D), any person adversely 

affected or aggrieved by a final order issued under subparagraph (A) may file a petition for review of the order in 

the United States Court of Appeals for the circuit in which 

the violation with respect to which the order was issued, 

allegedly occurred or the circuit in which the complainant 

resided on the date of such violation, not later than 60 

days after the date of the issuance of the final order of 

the Secretary of Labor under subparagraph (A). Review 

shall conform to chapter 7 of title 5, United States Code. 

The commencement of proceedings under this subparagraph shall not, unless ordered by the court, operate as 

a stay of the order. An order of the Secretary of Labor 

with respect to which review could have been obtained 

under this subparagraph shall not be subject to judicial 

review in any criminal or other civil proceeding. 
H. R. 4173—660 

(5) FAILURE TO COMPLY WITH ORDER.— (A) ACTIONS BY THE SECRETARY.—If any person has 

failed to comply with a final order issued under paragraph 

(4), the Secretary of Labor may file a civil action in the 

United States district court for the district in which the 

violation was found to have occurred, or in the United 

States district court for the District of Columbia, to enforce 

such order. In actions brought under this paragraph, the 

district courts shall have jurisdiction to grant all appropriate relief including injunctive relief and compensatory 

damages. 

(B) CIVIL ACTIONS TO COMPEL COMPLIANCE.—A person 

on whose behalf an order was issued under paragraph 

(4) may commence a civil action against the person to 

whom such order was issued to require compliance with 

such order. The appropriate United States district court 

shall have jurisdiction, without regard to the amount in 

controversy or the citizenship of the parties, to enforce 

such order. 

(C) AWARD OF COSTS AUTHORIZED.—The court, in 

issuing any final order under this paragraph, may award 

costs of litigation (including reasonable attorney and expert 

witness fees) to any party, whenever the court determines 

such award is appropriate. 

(D) MANDAMUS PROCEEDINGS.—Any nondiscretionary 

duty imposed by this section shall be enforceable in a 

mandamus proceeding brought under section 1361 of title 

28, United States Code. 

(d) UNENFORCEABILITY OF CERTAIN AGREEMENTS.— 

(1) NO WAIVER OF RIGHTS AND REMEDIES.—Except as provided under paragraph (3), and notwithstanding any other 

provision of law, the rights and remedies provided for in this 

section may not be waived by any agreement, policy, form, 

or condition of employment, including by any predispute 

arbitration agreement. 

(2) NO PREDISPUTE ARBITRATION AGREEMENTS.—Except as 

provided under paragraph (3), and notwithstanding any other 

provision of law, no predispute arbitration agreement shall 

be valid or enforceable to the extent that it requires arbitration 

of a dispute arising under this section. 

(3) EXCEPTION.—Notwithstanding paragraphs (1) and (2), 

an arbitration provision in a collective bargaining agreement 

shall be enforceable as to disputes arising under subsection 

(a)(4), unless the Bureau determines, by rule, that such provision is inconsistent with the purposes of this title. 

SEC. 1058. EFFECTIVE DATE. 

This subtitle shall become effective on the designated transfer 

date. 

Subtitle F—Transfer of Functions and 

Personnel; Transitional Provisions 

SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS. 

(a) DEFINED TERMS.—For purposes of this subtitle— 
H. R. 4173—661 

(1) the term ‘‘consumer financial protection functions’’ 

means— 

(A) all authority to prescribe rules or issue orders 

or guidelines pursuant to any Federal consumer financial 

law, including performing appropriate functions to promulgate and review such rules, orders, and guidelines; and 

(B) the examination authority described in subsection 

(c)(1), with respect to a person described in subsection 

1025(a); and 

(2) the terms ‘‘transferor agency’’ and ‘‘transferor agencies’’ 

mean, respectively— 

(A) the Board of Governors (and any Federal reserve 

bank, as the context requires), the Federal Deposit Insurance Corporation, the Federal Trade Commission, the 

National Credit Union Administration, the Office of the 

Comptroller of the Currency, the Office of Thrift Supervision, and the Department of Housing and Urban Development, and the heads of those agencies; and 

(B) the agencies listed in subparagraph (A), collectively. 

(b) IN GENERAL.—Except as provided in subsection (c), consumer financial protection functions are transferred as follows: 

(1) BOARD OF GOVERNORS.— 

(A) TRANSFER OF FUNCTIONS.—All consumer financial 

protection functions of the Board of Governors are transferred to the Bureau. 

(B) BOARD OF GOVERNORS AUTHORITY.—The Bureau 

shall have all powers and duties that were vested in the 

Board of Governors, relating to consumer financial protection functions, on the day before the designated transfer 

date. 

(2) COMPTROLLER OF THE CURRENCY.— (A) TRANSFER OF FUNCTIONS.—All consumer financial 

protection functions of the Comptroller of the Currency 

are transferred to the Bureau. 

(B) COMPTROLLER AUTHORITY.—The Bureau shall have 

all powers and duties that were vested in the Comptroller 

of the Currency, relating to consumer financial protection 

functions, on the day before the designated transfer date. 

(3) DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.— 

(A) TRANSFER OF FUNCTIONS.—All consumer financial 

protection functions of the Director of the Office of Thrift 

Supervision are transferred to the Bureau. 

(B) DIRECTOR AUTHORITY.—The Bureau shall have all 

powers and duties that were vested in the Director of 

the Office of Thrift Supervision, relating to consumer financial protection functions, on the day before the designated 

transfer date. 

(4) FEDERAL DEPOSIT INSURANCE CORPORATION.— (A) TRANSFER OF FUNCTIONS.—All consumer financial 

protection functions of the Federal Deposit Insurance Corporation are transferred to the Bureau. 

(B) CORPORATION AUTHORITY.—The Bureau shall have 

all powers and duties that were vested in the Federal 

Deposit Insurance Corporation, relating to consumer financial protection functions, on the day before the designated 

transfer date. 

(5) FEDERAL TRADE COMMISSION.— 
H. R. 4173—662 

(A) TRANSFER OF FUNCTIONS.—The authority of the 

Federal Trade Commission under an enumerated consumer 

law to prescribe rules, issue guidelines, or conduct a study 

or issue a report mandated under such law shall be transferred to the Bureau on the designated transfer date. 

Nothing in this title shall be construed to require a mandatory transfer of any employee of the Federal Trade Commission. 

(B) BUREAU AUTHORITY.— 

(i) IN GENERAL.—The Bureau shall have all powers 

and duties under the enumerated consumer laws to 

prescribe rules, issue guidelines, or to conduct studies 

or issue reports mandated by such laws, that were 

vested in the Federal Trade Commission on the day 

before the designated transfer date. 

(ii) FEDERAL TRADE COMMISSION ACT.—Subject to 

subtitle B, the Bureau may enforce a rule prescribed 

under the Federal Trade Commission Act by the Federal Trade Commission with respect to an unfair or 

deceptive act or practice to the extent that such rule 

applies to a covered person or service provider with 

respect to the offering or provision of a consumer financial product or service as if it were a rule prescribed 

under section 1031 of this title. 

(C) AUTHORITY OF THE FEDERAL TRADE COMMISSION.— 

(i) IN GENERAL.—No provision of this title shall 

be construed as modifying, limiting, or otherwise 

affecting the authority of the Federal Trade Commission (including its authority with respect to affiliates 

described in section 1025(a)(1)) under the Federal 

Trade Commission Act or any other law, other than 

the authority under an enumerated consumer law to 

prescribe rules, issue official guidelines, or conduct 

a study or issue a report mandated under such law. 

(ii) COMMISSION AUTHORITY RELATING TO RULES

PRESCRIBED BY THE BUREAU.—Subject to subtitle B, 

the Federal Trade Commission shall have authority 

to enforce under the Federal Trade Commission Act 

(15 U.S.C. 41 et seq.) a rule prescribed by the Bureau 

under this title with respect to a covered person subject 

to the jurisdiction of the Federal Trade Commission 

under that Act, and a violation of such a rule by 

such a person shall be treated as a violation of a 

rule issued under section 18 of that Act (15 U.S.C. 

57a) with respect to unfair or deceptive acts or practices. 

(D) COORDINATION.—To avoid duplication of or conflict 

between rules prescribed by the Bureau under section 1031 

of this title and the Federal Trade Commission under section 18(a)(1)(B) of the Federal Trade Commission Act that 

apply to a covered person or service provider with respect 

to the offering or provision of consumer financial products 

or services, the agencies shall negotiate an agreement with 

respect to rulemaking by each agency, including consultation with the other agency prior to proposing a rule and 

during the comment period. 
H. R. 4173—663 

(E) DEFERENCE.—No provision of this title shall be 

construed as altering, limiting, expanding, or otherwise 

affecting the deference that a court affords to the— 

(i) Federal Trade Commission in making determinations regarding the meaning or interpretation of 

any provision of the Federal Trade Commission Act, 

or of any other Federal law for which the Commission 

has authority to prescribe rules; or 

(ii) Bureau in making determinations regarding 

the meaning or interpretation of any provision of a 

Federal consumer financial law (other than any law 

described in clause (i)). 

(6) NATIONAL CREDIT UNION ADMINISTRATION.— 

(A) TRANSFER OF FUNCTIONS.—All consumer financial 

protection functions of the National Credit Union Administration are transferred to the Bureau. 

(B) NATIONAL CREDIT UNION ADMINISTRATION

AUTHORITY.—The Bureau shall have all powers and duties 

that were vested in the National Credit Union Administration, relating to consumer financial protection functions, 

on the day before the designated transfer date. 

(7) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.— 

(A) TRANSFER OF FUNCTIONS.—All consumer protection 

functions of the Secretary of the Department of Housing 

and Urban Development relating to the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.), 

the Secure and Fair Enforcement for Mortgage Licensing 

Act of 2008 (12 U.S.C. 5102 et seq.), and the Interstate 

Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.) 

are transferred to the Bureau. 

(B) AUTHORITY OF THE DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT.—The Bureau shall have all powers 

and duties that were vested in the Secretary of the Department of Housing and Urban Development relating to the 

Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 

2601 et seq.), the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.), and 

the Interstate Land Sales Full Disclosure Act (15 U.S.C. 

1701 et seq.), on the day before the designated transfer 

date. 

(c) AUTHORITIES OF THE PRUDENTIAL REGULATORS.— 

(1) EXAMINATION.—A transferor agency that is a prudential 

regulator shall have— 

(A) authority to require reports from and conduct 

examinations for compliance with Federal consumer financial laws with respect to a person described in section 

1025(a), that is incidental to the backup and enforcement 

procedures provided to the regulator under section 1025(c); 

and 

(B) exclusive authority (relative to the Bureau) to 

require reports from and conduct examinations for compliance with Federal consumer financial laws with respect 

to a person described in section 1026(a), except as provided 

to the Bureau under subsections (b) and (c) of section 

1026. 

(2) ENFORCEMENT.— 
H. R. 4173—664 

(A) LIMITATION.—The authority of a transferor agency 

that is a prudential regulator to enforce compliance with 

Federal consumer financial laws with respect to a person 

described in section 1025(a), shall be limited to the backup 

and enforcement procedures in described in section 1025(c). 

(B) EXCLUSIVE AUTHORITY.—A transferor agency that 

is a prudential regulator shall have exclusive authority 

(relative to the Bureau) to enforce compliance with Federal 

consumer financial laws with respect to a person described 

in section 1026(a), except as provided to the Bureau under 

subsections (b) and (c) of section 1026. 

(C) STATUTORY ENFORCEMENT.—For purposes of carrying out the authorities under, and subject to the limitations of, subtitle B, each prudential regulator may enforce 

compliance with the requirements imposed under this title, 

and any rule or order prescribed by the Bureau under 

this title, under— 

(i) the Federal Credit Union Act (12 U.S.C. 1751 

et seq.), by the National Credit Union Administration 

Board with respect to any covered person or service 

provider that is an insured credit union, or service 

provider thereto, or any affiliate of an insured credit 

union, who is subject to the jurisdiction of the Board 

under that Act; and 

(ii) section 8 of the Federal Deposit Insurance Act 

(12 U.S.C. 1818), by the appropriate Federal banking 

agency, as defined in section 3(q) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(q)), with respect to a 

covered person or service provider that is a person 

described in section 3(q) of that Act and who is subject 

to the jurisdiction of that agency, as set forth in sections 3(q) and 8 of the Federal Deposit Insurance Act; 

or 

(iii) the Bank Service Company Act (12 U.S.C. 

1861 et seq.). 

(d) EFFECTIVE DATE.—Subsections (b) and (c) shall become effective on the designated transfer date. 

SEC. 1062. DESIGNATED TRANSFER DATE. 

(a) IN GENERAL.—Not later than 60 days after the date of 

enactment of this Act, the Secretary shall— 

(1) in consultation with the Chairman of the Board of 

Governors, the Chairperson of the Corporation, the Chairman 

of the Federal Trade Commission, the Chairman of the National 

Credit Union Administration Board, the Comptroller of the 

Currency, the Director of the Office of Thrift Supervision, the 

Secretary of the Department of Housing and Urban Development, and the Director of the Office of Management and Budget, 

designate a single calendar date for the transfer of functions 

to the Bureau under section 1061; and 

(2) publish notice of that designated date in the Federal 

Register. 

(b) CHANGING DESIGNATION.—The Secretary— 

(1) may, in consultation with the Chairman of the Board 

of Governors, the Chairperson of the Federal Deposit Insurance 

Corporation, the Chairman of the Federal Trade Commission, 

the Chairman of the National Credit Union Administration 
H. R. 4173—665 

Board, the Comptroller of the Currency, the Director of the 

Office of Thrift Supervision, the Secretary of the Department 

of Housing and Urban Development, and the Director of the 

Office of Management and Budget, change the date designated 

under subsection (a); and 

(2) shall publish notice of any changed designated date 

in the Federal Register. 

(c) PERMISSIBLE DATES.— 

(1) IN GENERAL.—Except as provided in paragraph (2), any 

date designated under this section shall be not earlier than 

180 days, nor later than 12 months, after the date of enactment 

of this Act. 

(2) EXTENSION OF TIME.—The Secretary may designate a 

date that is later than 12 months after the date of enactment 

of this Act if the Secretary transmits to appropriate committees 

of Congress— 

(A) a written determination that orderly implementation of this title is not feasible before the date that is 

12 months after the date of enactment of this Act; 

(B) an explanation of why an extension is necessary 

for the orderly implementation of this title; and 

(C) a description of the steps that will be taken to 

effect an orderly and timely implementation of this title 

within the extended time period. 

(3) EXTENSION LIMITED.—In no case may any date designated under this section be later than 18 months after the 

date of enactment of this Act. 

SEC. 1063. SAVINGS PROVISIONS. 

(a) BOARD OF GOVERNORS.— 

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(1) does not affect the validity of 

any right, duty, or obligation of the United States, the Board 

of Governors (or any Federal reserve bank), or any other person 

that— 

(A) arises under any provision of law relating to any 

consumer financial protection function of the Board of Governors transferred to the Bureau by this title; and 

(B) existed on the day before the designated transfer 

date. 

(2) CONTINUATION OF SUITS.—No provision of this Act shall 

abate any proceeding commenced by or against the Board of 

Governors (or any Federal reserve bank) before the designated 

transfer date with respect to any consumer financial protection 

function of the Board of Governors (or any Federal reserve 

bank) transferred to the Bureau by this title, except that the 

Bureau, subject to sections 1024, 1025, and 1026, shall be 

substituted for the Board of Governors (or Federal reserve 

bank) as a party to any such proceeding as of the designated 

transfer date. 

(b) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(4) does not affect the validity of 

any right, duty, or obligation of the United States, the Federal 

Deposit Insurance Corporation, the Board of Directors of that 

Corporation, or any other person, that— 
H. R. 4173—666 

(A) arises under any provision of law relating to any 

consumer financial protection function of the Federal 

Deposit Insurance Corporation transferred to the Bureau 

by this title; and 

(B) existed on the day before the designated transfer 

date. 

(2) CONTINUATION OF SUITS.—No provision of this Act shall 

abate any proceeding commenced by or against the Federal 

Deposit Insurance Corporation (or the Board of Directors of 

that Corporation) before the designated transfer date with 

respect to any consumer financial protection function of the 

Federal Deposit Insurance Corporation transferred to the 

Bureau by this title, except that the Bureau, subject to sections 

1024, 1025, and 1026, shall be substituted for the Federal 

Deposit Insurance Corporation (or Board of Directors) as a 

party to any such proceeding as of the designated transfer 

date. 

(c) FEDERAL TRADE COMMISSION.—Section 1061(b)(5) does not 

affect the validity of any right, duty, or obligation of the United 

States, the Federal Trade Commission, or any other person, that— 

(1) arises under any provision of law relating to any consumer financial protection function of the Federal Trade 

Commission transferred to the Bureau by this title; and 

(2) existed on the day before the designated transfer date. 

(d) NATIONAL CREDIT UNION ADMINISTRATION.— (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(6) does not affect the validity of 

any right, duty, or obligation of the United States, the National 

Credit Union Administration, the National Credit Union 

Administration Board, or any other person, that— 

(A) arises under any provision of law relating to any 

consumer financial protection function of the National 

Credit Union Administration transferred to the Bureau 

by this title; and 

(B) existed on the day before the designated transfer 

date. 

(2) CONTINUATION OF SUITS.—No provision of this Act shall 

abate any proceeding commenced by or against the National 

Credit Union Administration (or the National Credit Union 

Administration Board) before the designated transfer date with 

respect to any consumer financial protection function of the 

National Credit Union Administration transferred to the 

Bureau by this title, except that the Bureau, subject to sections 

1024, 1025, and 1026, shall be substituted for the National 

Credit Union Administration (or National Credit Union 

Administration Board) as a party to any such proceeding as 

of the designated transfer date. 

(e) OFFICE OF THE COMPTROLLER OF THE CURRENCY.— (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(2) does not affect the validity of 

any right, duty, or obligation of the United States, the Comptroller of the Currency, the Office of the Comptroller of the 

Currency, or any other person, that— 

(A) arises under any provision of law relating to any 

consumer financial protection function of the Comptroller 

of the Currency transferred to the Bureau by this title; 

and 
H. R. 4173—667 

(B) existed on the day before the designated transfer 

date. 

(2) CONTINUATION OF SUITS.—No provision of this Act shall 

abate any proceeding commenced by or against the Comptroller 

of the Currency (or the Office of the Comptroller of the Currency) with respect to any consumer financial protection function of the Comptroller of the Currency transferred to the 

Bureau by this title before the designated transfer date, except 

that the Bureau, subject to sections 1024, 1025, and 1026, 

shall be substituted for the Comptroller of the Currency (or 

the Office of the Comptroller of the Currency) as a party to 

any such proceeding as of the designated transfer date. 

(f) OFFICE OF THRIFT SUPERVISION.— 

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(3) does not affect the validity of 

any right, duty, or obligation of the United States, the Director 

of the Office of Thrift Supervision, the Office of Thrift Supervision, or any other person, that— 

(A) arises under any provision of law relating to any 

consumer financial protection function of the Director of 

the Office of Thrift Supervision transferred to the Bureau 

by this title; and 

(B) that existed on the day before the designated 

transfer date. 

(2) CONTINUATION OF SUITS.—No provision of this Act shall 

abate any proceeding commenced by or against the Director 

of the Office of Thrift Supervision (or the Office of Thrift Supervision) with respect to any consumer financial protection function of the Director of the Office of Thrift Supervision transferred to the Bureau by this title before the designated transfer 

date, except that the Bureau, subject to sections 1024, 1025, 

and 1026, shall be substituted for the Director (or the Office 

of Thrift Supervision) as a party to any such proceeding as 

of the designated transfer date. 

(g) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.— 

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT

AFFECTED.—Section 1061(b)(7) shall not affect the validity of 

any right, duty, or obligation of the United States, the Secretary 

of the Department of Housing and Urban Development (or 

the Department of Housing and Urban Development), or any 

other person, that— 

(A) arises under any provision of law relating to any 

function of the Secretary of the Department of Housing 

and Urban Development with respect to the Real Estate 

Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.), 

the Secure and Fair Enforcement for Mortgage Licensing 

Act of 2008 (12 U.S.C. 5102 et seq.), or the Interstate 

Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq) 

transferred to the Bureau by this title; and 

(B) existed on the day before the designated transfer 

date. 

(2) CONTINUATION OF SUITS.—This title shall not abate 

any proceeding commenced by or against the Secretary of the 

Department of Housing and Urban Development (or the Department of Housing and Urban Development) with respect to 

any consumer financial protection function of the Secretary 
H. R. 4173—668 

of the Department of Housing and Urban Development transferred to the Bureau by this title before the designated transfer 

date, except that the Bureau, subject to sections 1024, 1025, 

and 1026, shall be substituted for the Secretary of the Department of Housing and Urban Development (or the Department 

of Housing and Urban Development) as a party to any such 

proceeding as of the designated transfer date. 

(h) CONTINUATION OF EXISTING ORDERS, RULINGS, DETERMINATIONS, AGREEMENTS, AND RESOLUTIONS.— 

(1) IN GENERAL.—Except as provided in paragraph (2) and 

under subsection (i), all orders, resolutions, determinations, 

agreements, and rulings that have been issued, made, prescribed, or allowed to become effective by any transferor agency 

or by a court of competent jurisdiction, in the performance 

of consumer financial protection functions that are transferred 

by this title and that are in effect on the day before the 

designated transfer date, shall continue in effect, and shall 

continue to be enforceable by the appropriate transferor agency, 

according to the terms of those orders, resolutions, determinations, agreements, and rulings, and shall not be enforceable 

by or against the Bureau. 

(2) EXCEPTION FOR ORDERS APPLICABLE TO PERSONS

DESCRIBED IN SECTION 1025(a).—All orders, resolutions, determinations, agreements, and rulings that have been issued, 

made, prescribed, or allowed to become effective by any transferor agency or by a court of competent jurisdiction, in the 

performance of consumer financial protection functions that 

are transferred by this title and that are in effect on the 

day before the designated transfer date with respect to any 

person described in section 1025(a), shall continue in effect, 

according to the terms of those orders, resolutions, determinations, agreements, and rulings, and shall be enforceable by 

or against the Bureau or transferor agency. 

(i) IDENTIFICATION OF RULES AND ORDERS CONTINUED.—Not 

later than the designated transfer date, the Bureau— 

(1) shall, after consultation with the head of each transferor 

agency, identify the rules and orders that will be enforced 

by the Bureau; and 

(2) shall publish a list of such rules and orders in the 

Federal Register. 

(j) STATUS OF RULES PROPOSED OR NOT YET EFFECTIVE.— 

(1) PROPOSED RULES.—Any proposed rule of a transferor 

agency which that agency, in performing consumer financial 

protection functions transferred by this title, has proposed 

before the designated transfer date, but has not been published 

as a final rule before that date, shall be deemed to be a 

proposed rule of the Bureau. 

(2) RULES NOT YET EFFECTIVE.—Any interim or final rule 

of a transferor agency which that agency, in performing consumer financial protection functions transferred by this title, 

has published before the designated transfer date, but which 

has not become effective before that date, shall become effective 

as a rule of the Bureau according to its terms. 

SEC. 1064. TRANSFER OF CERTAIN PERSONNEL. 

(a) IN GENERAL.— 
H. R. 4173—669 

(1) CERTAIN FEDERAL RESERVE SYSTEM EMPLOYEES TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the Board of Governors shall— 

(i) jointly determine the number of employees of 

the Board of Governors necessary to perform or support 

the consumer financial protection functions of the 

Board of Governors that are transferred to the Bureau 

by this title; and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the Board of 

Governors for transfer to the Bureau, in a manner 

that the Bureau and the Board of Governors, in their 

sole discretion, determine equitable. 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the Board of Governors identified under 

subparagraph (A)(ii) shall be transferred to the Bureau 

for employment. 

(C) FEDERAL RESERVE BANK EMPLOYEES.—Employees 

of any Federal reserve bank who are performing consumer 

financial protection functions on behalf of the Board of 

Governors shall be treated as employees of the Board of 

Governors for purposes of subparagraphs (A) and (B). 

(2) CERTAIN FDIC EMPLOYEES TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the Board of Directors of the Federal Deposit 

Insurance Corporation shall— 

(i) jointly determine the number of employees of 

that Corporation necessary to perform or support the 

consumer financial protection functions of the Corporation that are transferred to the Bureau by this title; 

and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the Corporation 

for transfer to the Bureau, in a manner that the 

Bureau and the Board of Directors of the Corporation, 

in their sole discretion, determine equitable. 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the Corporation identified under subparagraph (A)(ii) shall be transferred to the Bureau for employment. 

(3) CERTAIN NCUA EMPLOYEES TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the National Credit Union Administration 

Board shall— 

(i) jointly determine the number of employees of 

the National Credit Union Administration necessary 

to perform or support the consumer financial protection 

functions of the National Credit Union Administration 

that are transferred to the Bureau by this title; and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the National 

Credit Union Administration for transfer to the 

Bureau, in a manner that the Bureau and the National 

Credit Union Administration Board, in their sole 

discretion, determine equitable. 
H. R. 4173—670 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the National Credit Union Administration 

identified under subparagraph (A)(ii) shall be transferred 

to the Bureau for employment. 

(4) CERTAIN OFFICE OF THE COMPTROLLER OF THE CURRENCY

EMPLOYEES TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the Comptroller of the Currency shall— 

(i) jointly determine the number of employees of 

the Office of the Comptroller of the Currency necessary 

to perform or support the consumer financial protection 

functions of the Office of the Comptroller of the Currency that are transferred to the Bureau by this title; 

and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the Office of 

the Comptroller of the Currency for transfer to the 

Bureau, in a manner that the Bureau and the Office 

of the Comptroller of the Currency, in their sole discretion, determine equitable. 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the Office of the Comptroller of the Currency 

identified under subparagraph (A)(ii) shall be transferred 

to the Bureau for employment. 

(5) CERTAIN OFFICE OF THRIFT SUPERVISION EMPLOYEES

TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the Director of the Office of Thrift Supervision 

shall— 

(i) jointly determine the number of employees of 

the Office of Thrift Supervision necessary to perform 

or support the consumer financial protection functions 

of the Office of Thrift Supervision that are transferred 

to the Bureau by this title; and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the Office of 

Thrift Supervision for transfer to the Bureau, in a 

manner that the Bureau and the Office of Thrift Supervision, in their sole discretion, determine equitable. 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the Office of Thrift Supervision identified 

under subparagraph (A)(ii) shall be transferred to the 

Bureau for employment. 

(6) CERTAIN EMPLOYEES OF DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT TRANSFERRED.— 

(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The 

Bureau and the Secretary of the Department of Housing 

and Urban Development shall— 

(i) jointly determine the number of employees of 

the Department of Housing and Urban Development 

necessary to perform or support the consumer protection functions of the Department that are transferred 

to the Bureau by this title; and 

(ii) consistent with the number determined under 

clause (i), jointly identify employees of the Department 

of Housing and Urban Development for transfer to 

the Bureau in a manner that the Bureau and the 
H. R. 4173—671 

Secretary of the Department of Housing and Urban 

Development, in their sole discretion, deem equitable. 

(B) IDENTIFIED EMPLOYEES TRANSFERRED.—All 

employees of the Department of Housing and Urban 

Development identified under subparagraph (A)(ii) shall 

be transferred to the Bureau for employment. 

(7) CONSUMER EDUCATION, FINANCIAL LITERACY, CONSUMER

COMPLAINTS, AND RESEARCH FUNCTIONS.—The Bureau and each 

of the transferor agencies (except the Federal Trade Commission) shall jointly determine the number of employees and 

the types and grades of employees necessary to perform the 

functions of the Bureau under subtitle A, including consumer 

education, financial literacy, policy analysis, responses to consumer complaints and inquiries, research, and similar functions. All employees jointly identified under this paragraph 

shall be transferred to the Bureau for employment. 

(8) AUTHORITY OF THE PRESIDENT TO RESOLVE DISPUTES.— 

(A) ACTION AUTHORIZED.—In the event that the Bureau 

and a transferor agency are unable to reach an agreement 

under paragraphs (1) through (7) by the designated transfer 

date, the President, or the designee thereof, may issue 

an order or directive to the transferor agency to effect 

the transfer of personnel and property under this subtitle. 

(B) TRANSMITTAL TO CONGRESS REQUIRED.—If an order 

or directive is issued under subparagraph (A), the President 

shall transmit a copy of the written determination made 

with respect to such order or directive, including an explanation for the need for the order or directive, to the Committee on Banking, Housing, and Urban Affairs and the 

Committee on Appropriations of the Senate and the Committee on Financial Services and the Committee on Appropriations of the House of Representatives. 

(C) SUNSET.—The authority provided in this paragraph 

shall terminate 3 years after the designated transfer date. 

(9) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE AND

SENIOR EXECUTIVE SERVICE TRANSFERRED.— (A) IN GENERAL.—In the case of an employee occupying 

a position in the excepted service or the Senior Executive 

Service, any appointment authority established pursuant 

to law or regulations of the Office of Personnel Management 

for filling such positions shall be transferred, subject to 

subparagraph (B). 

(B) DECLINING TRANSFERS ALLOWED.—An agency or 

entity may decline to make a transfer of authority under 

subparagraph (A) (and the employees appointed pursuant 

thereto) to the extent that such authority relates to positions excepted from the competitive service because of their 

confidential, policy-making, policy-determining, or policyadvocating character, and non-career positions in the 

Senior Executive Service (within the meaning of section 

3132(a)(7) of title 5, United States Code). 

(b) TIMING OF TRANSFERS AND POSITION ASSIGNMENTS.—Each 

employee to be transferred under this section shall— 

(1) be transferred not later than 90 days after the designated transfer date; and 

(2) receive notice of a position assignment not later than 

120 days after the effective date of his or her transfer. 
H. R. 4173—672 

(c) TRANSFER OF FUNCTION.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

law, the transfer of employees shall be deemed a transfer 

of functions for the purpose of section 3503 of title 5, United 

States Code. 

(2) PRIORITY OF THIS TITLE.—If any provisions of this title 

conflict with any protection provided to transferred employees 

under section 3503 of title 5, United States Code, the provisions 

of this title shall control. 

(d) EQUAL STATUS AND TENURE POSITIONS.— 

(1) EMPLOYEES TRANSFERRED FROM THE FEDERAL RESERVE

SYSTEM, FDIC, HUD, NCUA, OCC, AND OTS.—Each employee transferred to the Bureau from the Board of Governors, a Federal 

reserve bank, the Federal Deposit Insurance Corporation, the 

Department of Housing and Urban Development, the National 

Credit Union Administration, the Office of the Comptroller 

of the Currency, or the Office of Thrift Supervision shall be 

placed in a position at the Bureau with the same status and 

tenure as that employee held on the day before the designated 

transfer date. 

(2) EMPLOYEES TRANSFERRED FROM THE FEDERAL RESERVE

SYSTEM.—For purposes of determining the status and position 

placement of a transferred employee, any period of service 

with the Board of Governors or a Federal reserve bank shall 

be credited as a period of service with a Federal agency. 

(e) ADDITIONAL CERTIFICATION REQUIREMENTS LIMITED.— 

Examiners transferred to the Bureau are not subject to any additional certification requirements before being placed in a comparable 

examiner position at the Bureau examining the same types of 

institutions as they examined before they were transferred. 

(f) PERSONNEL ACTIONS LIMITED.— 

(1) 2-YEAR PROTECTION.—Except as provided in paragraph 

(2), each transferred employee holding a permanent position 

on the day before the designated transfer date may not, during 

the 2-year period beginning on the designated transfer date, 

be involuntarily separated, or involuntarily reassigned outside 

his or her locality pay area. 

(2) EXCEPTIONS.—Paragraph (1) does not limit the right 

of the Bureau— 

(A) to separate an employee for cause or for unacceptable performance; 

(B) to terminate an appointment to a position excepted 

from the competitive service because of its confidential 

policy-making, policy-determining, or policy-advocating 

character; or 

(C) to reassign a supervisory employee outside of his 

or her locality pay area when the Bureau determines that 

the reassignment is necessary for the efficient operation 

of the Bureau. 

(g) PAY.— 

(1) 2-YEAR PROTECTION.— 

(A) IN GENERAL.—Except as provided in paragraph (2), 

each transferred employee shall, during the 2-year period 

beginning on the designated transfer date, receive pay at 

a rate equal to not less than the basic rate of pay (including 

any geographic differential) that the employee received 
H. R. 4173—673 

during the pay period immediately preceding the date of 

transfer. 

(B) LIMITATION.—Notwithstanding subparagraph (A), 

if the employee was receiving a higher rate of basic pay 

on a temporary basis (because of a temporary assignment, 

temporary promotion, or other temporary action) immediately before the date of transfer, the Bureau may reduce 

the rate of basic pay on the date on which the rate would 

have been reduced but for the transfer, and the protected 

rate for the remainder of the 2-year period shall be the 

reduced rate that would have applied, but for the transfer. 

(2) EXCEPTIONS.—Paragraph (1) does not limit the right 

of the Bureau to reduce the rate of basic pay of a transferred 

employee— 

(A) for cause; 

(B) for unacceptable performance; or 

(C) with the consent of the employee. 

(3) PROTECTION ONLY WHILE EMPLOYED.—Paragraph (1) 

applies to a transferred employee only while that employee 

remains employed by the Bureau. 

(4) PAY INCREASES PERMITTED.—Paragraph (1) does not 

limit the authority of the Bureau to increase the pay of a 

transferred employee. 

(h) REORGANIZATION.— 

(1) BETWEEN 1ST AND 3RD YEAR.— (A) IN GENERAL.—If the Bureau determines, during 

the 2-year period beginning 1 year after the designated 

transfer date, that a reorganization of the staff of the 

Bureau is required— 

(i) that reorganization shall be deemed a ‘‘substantial reorganization’’ for purposes of affording affected 

employees retirement under section 8336(d)(2) or 

8414(b)(1)(B) of title 5, United States Code; 

(ii) before the reorganization occurs, all employees 

in the same locality pay area as defined by the Office 

of Personnel Management shall be placed in a uniform 

position classification system; and 

(iii) any resulting reduction in force shall be governed by the provisions of chapter 35 of title 5, United 

States Code, except that the Bureau shall— 

(I) establish competitive areas (as that term 

is defined in regulations issued by the Office of 

Personnel Management) to include at a minimum 

all employees in the same locality pay area as 

defined by the Office of Personnel Management; 

(II) establish competitive levels (as that term 

is defined in regulations issued by the Office of 

Personnel Management) without regard to whether 

the particular employees have been appointed to 

positions in the competitive service or the excepted 

service; and 

(III) afford employees appointed to positions 

in the excepted service (other than to a position 

excepted from the competitive service because of 

its confidential policy-making, policy-determining, 

or policy-advocating character) the same assignment rights to positions within the Bureau as 
H. R. 4173—674 

employees appointed to positions in the competitive service. 

(B) SERVICE CREDIT FOR REDUCTIONS IN FORCE.—For 

purposes of this paragraph, periods of service with a Federal home loan bank, a joint office of the Federal home 

loan banks, the Board of Governors, a Federal reserve 

bank, the Federal Deposit Insurance Corporation, or the 

National Credit Union Administration shall be credited 

as periods of service with a Federal agency. 

(2) AFTER 3RD YEAR.— (A) IN GENERAL.—If the Bureau determines, at any 

time after the 3-year period beginning on the designated 

transfer date, that a reorganization of the staff of the 

Bureau is required, any resulting reduction in force shall 

be governed by the provisions of chapter 35 of title 5, 

United States Code, except that the Bureau shall establish 

competitive levels (as that term is defined in regulations 

issued by the Office of Personnel Management) without 

regard to types of appointment held by particular 

employees transferred under this section. 

(B) SERVICE CREDIT FOR REDUCTIONS IN FORCE.—For 

purposes of this paragraph, periods of service with a Federal home loan bank, a joint office of the Federal home 

loan banks, the Board of Governors, a Federal reserve 

bank, the Federal Deposit Insurance Corporation, or the 

National Credit Union Administration shall be credited 

as periods of service with a Federal agency. 

(i) BENEFITS.— (1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES.— 

(A) IN GENERAL.— (i) CONTINUATION OF EXISTING RETIREMENT PLAN.— Unless an election is made under clause (iii) or 

subparagraph (B), each employee transferred pursuant 

to this subtitle shall remain enrolled in the existing 

retirement plan of that employee as of the date of 

transfer, through any period of continuous employment 

with the Bureau. 

(ii) EMPLOYER CONTRIBUTION.—The Bureau shall 

pay any employer contributions to the existing retirement plan of each transferred employee, as required 

under that plan. 

(iii) OPTION TO ELECT INTO THE FEDERAL RESERVE

SYSTEM RETIREMENT PLAN AND FEDERAL RESERVE

SYSTEM THRIFT PLAN.—Any employee transferred 

pursuant to this subtitle may, during the 1-year period 

beginning 6 months after the designated transfer date, 

elect to end their participation and benefit accruals 

under their existing retirement plan or plans and elect 

to participate in both the Federal Reserve System 

Retirement Plan and the Federal Reserve System 

Thrift Plan, through any period of continuous employment with the Bureau, under the same terms as are 

applicable to Federal Reserve System transferred 

employees, as provided in subparagraph (C). An election of coverage by the Federal Reserve System Retirement Plan and the Federal Reserve System Thrift Plan 

shall begin on the day following the end of the 18- 
H. R. 4173—675 

month period beginning on the designated transfer 

date, and benefit accruals under the existing retirement plan of the transferred employee shall end on 

the last day of the 18-month period beginning on the 

designated transfer date If an employee elects to 

participate in the Federal Reserve System Retirement 

Plan and the Federal Reserve System Thrift Plan, 

all of the service of the employee that was creditable 

under their existing retirement plan shall be transferred to the Federal Reserve System Retirement Plan 

on the day following the end of the 18-month period 

beginning on the designated transfer date. 

(iv) BUREAU CONTRIBUTION.—The Bureau shall pay 

an employer contribution to the Federal Reserve 

System Retirement Plan, in the amount established 

as an employer contribution under the Federal 

Employees Retirement System, as established under 

chapter 84 of title 5, United States Code, for each 

Bureau employee who elects to participate in the Federal Reserve System Retirement Plan under this 

subparagraph. The Bureau shall pay an employer contribution to the Federal Reserve System Thrift Plan 

for each Bureau employee who elects to participate 

in such plan, as required under the terms of the Federal Reserve System Thrift Plan. 

(v) ADDITIONAL FUNDING.—The Bureau shall 

transfer to the Federal Reserve System Retirement 

Plan an amount determined by the Board of Governors, 

in consultation with the Bureau, to be necessary to 

reimburse the Federal Reserve System Retirement 

Plan for the costs to such plan of providing benefits 

to employees electing coverage under the Federal 

Reserve System Retirement Plan under subparagraph 

(iii), and who were transferred to the Bureau from 

outside of the Federal Reserve System. 

(vi) OPTION TO ELECT INTO THRIFT PLAN CREATED

BY THE BUREAU.—If the Bureau chooses to establish 

a thrift plan, the employees transferred pursuant to 

this subtitle shall have the option to elect, under such 

terms and conditions as the Bureau may establish, 

coverage under such a thrift plan established by the 

Bureau. Transferred employees may not remain in the 

thrift plan of the agency from which the employee 

transferred under this subtitle, if the employee elects 

to participate in a thrift plan established by the 

Bureau. 

(B) OPTION FOR EMPLOYEES TRANSFERRED FROM FEDERAL RESERVE SYSTEM TO BE SUBJECT TO THE FEDERAL

EMPLOYEE RETIREMENT PROGRAM.— 

(i) ELECTION.—Any Federal Reserve System transferred employee who was enrolled in the Federal 

Reserve System Retirement Plan on the day before 

the date of his or her transfer to the Bureau may, 

during the 1-year period beginning 6 months after 

the designated transfer date, elect to be subject to 

the Federal Employee Retirement Program. 
H. R. 4173—676 

(ii) EFFECTIVE DATE OF COVERAGE.—An election 

of coverage by the Federal Employee Retirement Program under this subparagraph shall begin on the day 

following the end of the 18-month period beginning 

on the designated transfer date, and benefit accruals 

under the existing retirement plan of the Federal 

Reserve System transferred employee shall end on the 

last day of the 18-month period beginning on the designated transfer date. 

(C) BUREAU PARTICIPATION IN FEDERAL RESERVE

SYSTEM RETIREMENT PLAN.— (i) BENEFITS PROVIDED.—Federal Reserve System 

employees transferred pursuant to this subtitle shall 

continue to be eligible to participate in the Federal 

Reserve System Retirement Plan and Federal Reserve 

System Thrift Plan through any period of continuous 

employment with the Bureau, unless the employee 

makes an election under subparagraph (A)(vi) or (B). 

The retirement benefits, formulas, and features offered 

to the Federal Reserve System transferred employees 

shall be the same as those offered to employees of 

the Board of Governors who participate in the Federal 

Reserve System Retirement Plan and the Federal 

Reserve System Thrift Plan, as amended from time 

to time. 

(ii) LIMITATION.—The Bureau shall not have 

responsibility or authority— 

(I) to amend an existing retirement plan 

(including the Federal Reserve System Retirement 

Plan or Federal Reserve System Thrift Plan); 

(II) for administering an existing retirement 

plan (including the Federal Reserve System Retirement Plan or Federal Reserve System Thrift Plan); 

or 

(III) for ensuring the plans comply with 

applicable laws, fiduciary rules, and related 

responsibilities. 

(iii) TAX QUALIFIED STATUS.—Notwithstanding any 

other provision of law, providing benefits to Federal 

Reserve System employees transferred to the Bureau 

pursuant to this subtitle, and to employees who elect 

coverage pursuant to subparagraph (A)(iii) or under 

section 1013(a)(2)(B), shall not cause any existing 

retirement plan (including the Federal Reserve System 

Retirement Plan and the Federal Reserve System 

Thrift Plan) to lose its tax-qualified status under sections 401(a) and 501(a) of the Internal Revenue Code 

of 1986. 

(iv) BUREAU CONTRIBUTION.—The Bureau shall pay 

any employer contributions to the existing retirement 

plan (including the Federal Reserve System Retirement 

Plan and the Federal Reserve System Thrift Plan) 

for each Federal Reserve System transferred employee 

participating in those plans, as required under the 

plan, after the designated transfer date. 

(v) CONTROLLED GROUP STATUS.—The Bureau is 

the same employer as the Federal Reserve System 
H. R. 4173—677 

(as comprised of the Board of Governors and each 

of the 12 Federal reserve banks prior to the date of 

enactment of this Act) for purposes of subsections (b), 

(c), (m), and (o) of section 414 of the Internal Revenue 

Code of 1986 (26 U.S.C. 414). 

(D) DEFINITIONS.—For purposes of this paragraph— 

(i) the term ‘‘existing retirement plan’’ means, with 

respect to an employee transferred pursuant to this 

subtitle, the retirement plan (including the Financial 

Institutions Retirement Fund) and any associated 

thrift savings plan, of the agency from which the 

employee was transferred under this subtitle, in which 

the employee was enrolled on the day before the date 

on which the employee was transferred; 

(ii) the term ‘‘Federal Employee Retirement Program’’ means either the Civil Service Retirement 

System established under chapter 83 of title 5, United 

States Code, or the Federal Employees Retirement 

System established under chapter 84 of title 5, United 

States Code, depending upon the service history of 

the individual; 

(iii) the term ‘‘Federal Reserve System transferred 

employee’’ means a transferred employee who is an 

employee of the Board of Governors or a Federal 

reserve bank on the day before the designated transfer 

date, and who is transferred to the Bureau on the 

designated transfer date pursuant to this subtitle; 

(iv) the term ‘‘Federal Reserve System Retirement 

Plan’’ means the Retirement Plan for Employees of 

the Federal Reserve System; and 

(v) the term ‘‘Federal Reserve System Thrift Plan’’ 

means the Thrift Plan for Employees of the Federal 

Reserve System. 

(2) BENEFITS OTHER THAN RETIREMENT BENEFITS FOR

TRANSFERRED EMPLOYEES.— (A) DURING 1ST YEAR.— (i) EXISTING PLANS CONTINUE.—Each employee 

transferred pursuant to this subtitle may, for 1 year 

after the designated transfer date, retain membership 

in any other employee benefit program of the agency 

or bank from which the employee transferred, including 

a medical, dental, vision, long term care, or life insurance program, to which the employee belonged on the 

day before the designated transfer date. 

(ii) EMPLOYER CONTRIBUTION.—The Bureau shall 

reimburse the agency or bank from which an employee 

was transferred for any cost incurred by that agency 

or bank in continuing to extend coverage in the benefit 

program to the employee, as required under that program or negotiated agreements. 

(B) MEDICAL, DENTAL, VISION, OR LIFE INSURANCE

AFTER FIRST YEAR.—If, at the end of the 1-year period 

beginning on the designated transfer date, the Bureau 

has not established its own, or arranged for participation 

in another entity’s, medical, dental, vision, or life insurance 

program, an employee transferred pursuant to this subtitle 

who was a member of such a program at the agency or 
H. R. 4173—678 

Federal reserve bank from which the employee transferred 

may, before the coverage of that employee ends under 

subparagraph (A)(i), elect to enroll, without regard to any 

regularly scheduled open season, in— 

(i) the enhanced dental benefits program established under chapter 89A of title 5, United States 

Code; 

(ii) the enhanced vision benefits established under 

chapter 89B of title 5, United States Code; 

(iii) the Federal Employees Group Life Insurance 

Program established under chapter 87 of title 5, United 

States Code, without regard to any requirement of 

insurability; and 

(iv) the Federal Employees Health Benefits Program established under chapter 89 of title 5, United 

States Code. 

(C) LONG TERM CARE INSURANCE AFTER 1ST YEAR.— 

If, at the end of the 1-year period beginning on the designated transfer date, the Bureau has not established its 

own, or arranged for participation in another entity’s, long 

term care insurance program, an employee transferred 

pursuant to this subtitle who was a member of such a 

program at the agency or Federal reserve bank from which 

the employee transferred may, before the coverage of that 

employee ends under subparagraph (A)(i), elect to apply 

for coverage under the Federal Long Term Care Insurance 

Program established under chapter 90 of title 5, United 

States Code, under the underwriting requirements 

applicable to a new active workforce member (as defined 

in part 875 of title 5, Code of Federal Regulations). 

(D) EMPLOYEE CONTRIBUTION.—An individual enrolled 

in the Federal Employees Health Benefits program shall 

pay any employee contribution required by the plan. 

(E) ADDITIONAL FUNDING.—The Bureau shall transfer 

to the Federal Employees Health Benefits Fund established 

under section 8909 of title 5, United States Code, an 

amount determined by the Director of the Office of Personnel Management, after consultation with the Bureau 

and the Office of Management and Budget, to be necessary 

to reimburse the Fund for the cost to the Fund of providing 

benefits under this paragraph. 

(F) CREDIT FOR TIME ENROLLED IN OTHER PLANS.— 

For employees transferred under this title, enrollment in 

a health benefits plan administered by a transferor agency 

or a Federal reserve bank, as the case may be, immediately 

before enrollment in a health benefits plan under chapter 

89 of title 5, United States Code, shall be considered as 

enrollment in a health benefits plan under that chapter 

for purposes of section 8905(b)(1)(A) of title 5, United States 

Code. 

(G) SPECIAL PROVISIONS TO ENSURE CONTINUATION OF

LIFE INSURANCE BENEFITS.— (i) IN GENERAL.—An annuitant (as defined in section 8901(3) of title 5, United States Code) who is 

enrolled in a life insurance plan administered by a 

transferor agency on the day before the designated 

transfer date shall be eligible for coverage by a life 
H. R. 4173—679 

insurance plan under sections 8706(b), 8714a, 8714b, 

and 8714c of title 5, United States Code, or in a life 

insurance plan established by the Bureau, without 

regard to any regularly scheduled open season and 

requirement of insurability. 

(ii) EMPLOYEE CONTRIBUTION.—An individual 

enrolled in a life insurance plan under this subparagraph shall pay any employee contribution required 

by the plan. 

(iii) ADDITIONAL FUNDING.—The Bureau shall 

transfer to the Employees’ Life Insurance Fund established under section 8714 of title 5, United States 

Code, an amount determined by the Director of the 

Office of Personnel Management, after consultation 

with the Bureau and the Office of Management and 

Budget, to be necessary to reimburse the Fund for 

the cost to the Fund of providing benefits under this 

subparagraph not otherwise paid for by the employee 

under clause (ii). 

(iv) CREDIT FOR TIME ENROLLED IN OTHER PLANS.— 

For employees transferred under this title, enrollment 

in a life insurance plan administered by a transferor 

agency immediately before enrollment in a life insurance plan under chapter 87 of title 5, United States 

Code, shall be considered as enrollment in a life insurance plan under that chapter for purposes of section 

8706(b)(1)(A) of title 5, United States Code. 

(3) OPM RULES.—The Office of Personnel Management 

shall issue such rules as are necessary to carry out this subsection. 

(j) IMPLEMENTATION OF UNIFORM PAY AND CLASSIFICATION

SYSTEM.—Not later than 2 years after the designated transfer date, 

the Bureau shall implement a uniform pay and classification system 

for all employees transferred under this title. 

(k) EQUITABLE TREATMENT.—In administering the provisions 

of this section, the Bureau— 

(1) shall take no action that would unfairly disadvantage 

transferred employees relative to each other based on their 

prior employment by the Board of Governors, the Federal 

Deposit Insurance Corporation, the Department of Housing and 

Urban Development, the National Credit Union Administration, 

the Office of the Comptroller of the Currency, the Office of 

Thrift Supervision, a Federal reserve bank, a Federal home 

loan bank, or a joint office of the Federal home loan banks; 

and 

(2) may take such action as is appropriate in individual 

cases so that employees transferred under this section receive 

equitable treatment, with respect to the status, tenure, pay, 

benefits (other than benefits under programs administered by 

the Office of Personnel Management), and accrued leave or 

vacation time of those employees, for prior periods of service 

with any Federal agency, including the Board of Governors, 

the Corporation, the Department of Housing and Urban 

Development, the National Credit Union Administration, the 

Office of the Comptroller of the Currency, the Office of Thrift 

Supervision, a Federal reserve bank, a Federal home loan bank, 

or a joint office of the Federal home loan banks. 
H. R. 4173—680 

(l) IMPLEMENTATION.—In implementing the provisions of this 

section, the Bureau shall coordinate with the Office of Personnel 

Management and other entities having expertise in matters related 

to employment to ensure a fair and orderly transition for affected 

employees. 

SEC. 1065. INCIDENTAL TRANSFERS. 

(a) INCIDENTAL TRANSFERS AUTHORIZED.—The Director of the 

Office of Management and Budget, in consultation with the Secretary, shall make such additional incidental transfers and dispositions of assets and liabilities held, used, arising from, available, 

or to be made available, in connection with the functions transferred 

by this title, as the Director may determine necessary to accomplish 

the purposes of this title. 

(b) SUNSET.—The authority provided in this section shall terminate 5 years after the date of enactment of this Act. 

SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY. 

(a) IN GENERAL.—The Secretary is authorized to perform the 

functions of the Bureau under this subtitle until the Director of 

the Bureau is confirmed by the Senate in accordance with section 

1011. 

(b) INTERIM ADMINISTRATIVE SERVICES BY THE DEPARTMENT

OF THE TREASURY.—The Department of the Treasury may provide 

administrative services necessary to support the Bureau before 

the designated transfer date. 

SEC. 1067. TRANSITION OVERSIGHT. 

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

the Bureau— 

(1) has an orderly and organized startup; 

(2) attracts and retains a qualified workforce; and 

(3) establishes comprehensive employee training and benefits programs. 

(b) REPORTING REQUIREMENT.— (1) IN GENERAL.—The Bureau shall submit an annual 

report to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services 

of the House of Representatives that includes the plans 

described in paragraph (2). 

(2) PLANS.—The plans described in this paragraph are as 

follows: 

(A) TRAINING AND WORKFORCE DEVELOPMENT PLAN.— 

The Bureau shall submit a training and workforce development plan that includes, to the extent practicable— 

(i) identification of skill and technical expertise 

needs and actions taken to meet those requirements; 

(ii) steps taken to foster innovation and creativity; 

(iii) leadership development and succession planning; and 

(iv) effective use of technology by employees. 

(B) WORKPLACE FLEXIBILITIES PLAN.—The Bureau shall 

submit a workforce flexibility plan that includes, to the 

extent practicable— 

(i) telework; 

(ii) flexible work schedules; 

(iii) phased retirement; 

(iv) reemployed annuitants; 
H. R. 4173—681 

(v) part-time work; 

(vi) job sharing; 

(vii) parental leave benefits and childcare assistance; 

(viii) domestic partner benefits; 

(ix) other workplace flexibilities; or 

(x) any combination of the items described in 

clauses (i) through (ix). 

(C) RECRUITMENT AND RETENTION PLAN.—The Bureau 

shall submit a recruitment and retention plan that 

includes, to the extent practicable, provisions relating to— 

(i) the steps necessary to target highly qualified 

applicant pools with diverse backgrounds; 

(ii) streamlined employment application processes; 

(iii) the provision of timely notification of the 

status of employment applications to applicants; and 

(iv) the collection of information to measure indicators of hiring effectiveness. 

(c) EXPIRATION.—The reporting requirement under subsection 

(b) shall terminate 5 years after the date of enactment of this 

Act. 

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

construed to affect— 

(1) a collective bargaining agreement, as that term is 

defined in section 7103(a)(8) of title 5, United States Code, 

that is in effect on the date of enactment of this Act; or 

(2) the rights of employees under chapter 71 of title 5, 

United States Code. 

(e) PARTICIPATION IN EXAMINATIONS.—In order to prepare the 

Bureau to conduct examinations under section 1025 upon the designated transfer date, the Bureau and the applicable prudential 

regulator may agree to include, on a sampling basis, examiners 

on examinations of the compliance with Federal consumer financial 

law of institutions described in section 1025(a) conducted by the 

prudential regulators prior to the designated transfer date. 

Subtitle G—Regulatory Improvements 

SEC. 1071. SMALL BUSINESS DATA COLLECTION. 

(a) IN GENERAL.—The Equal Credit Opportunity Act (15 U.S.C. 

1691 et seq.) is amended by inserting after section 704A the following: 

‘‘SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION. 

‘‘(a) PURPOSE.—The purpose of this section is to facilitate 

enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community 

development needs and opportunities of women-owned, minorityowned, and small businesses. 

‘‘(b) INFORMATION GATHERING.—Subject to the requirements 

of this section, in the case of any application to a financial institution for credit for women-owned, minority-owned, or small business, 

the financial institution shall— 

‘‘(1) inquire whether the business is a women-owned, 

minority-owned, or small business, without regard to whether 

such application is received in person, by mail, by telephone, 
H. R. 4173—682 

by electronic mail or other form of electronic transmission, 

or by any other means, and whether or not such application 

is in response to a solicitation by the financial institution; 

and 

‘‘(2) maintain a record of the responses to such inquiry, 

separate from the application and accompanying information. 

‘‘(c) RIGHT TO REFUSE.—Any applicant for credit may refuse 

to provide any information requested pursuant to subsection (b) 

in connection with any application for credit. 

‘‘(d) NO ACCESS BY UNDERWRITERS.— ‘‘(1) LIMITATION.—Where feasible, no loan underwriter or 

other officer or employee of a financial institution, or any affiliate of a financial institution, involved in making any determination concerning an application for credit shall have access 

to any information provided by the applicant pursuant to a 

request under subsection (b) in connection with such application. 

‘‘(2) LIMITED ACCESS.—If a financial institution determines 

that a loan underwriter or other officer or employee of a financial institution, or any affiliate of a financial institution, 

involved in making any determination concerning an application for credit should have access to any information provided 

by the applicant pursuant to a request under subsection (b), 

the financial institution shall provide notice to the applicant 

of the access of the underwriter to such information, along 

with notice that the financial institution may not discriminate 

on the basis of such information. 

‘‘(e) FORM AND MANNER OF INFORMATION.— ‘‘(1) IN GENERAL.—Each financial institution shall compile 

and maintain, in accordance with regulations of the Bureau, 

a record of the information provided by any loan applicant 

pursuant to a request under subsection (b). 

‘‘(2) ITEMIZATION.—Information compiled and maintained 

under paragraph (1) shall be itemized in order to clearly and 

conspicuously disclose— 

‘‘(A) the number of the application and the date on 

which the application was received; 

‘‘(B) the type and purpose of the loan or other credit 

being applied for; 

‘‘(C) the amount of the credit or credit limit applied 

for, and the amount of the credit transaction or the credit 

limit approved for such applicant; 

‘‘(D) the type of action taken with respect to such 

application, and the date of such action; 

‘‘(E) the census tract in which is located the principal 

place of business of the women-owned, minority-owned, 

or small business loan applicant; 

‘‘(F) the gross annual revenue of the business in the 

last fiscal year of the women-owned, minority-owned, or 

small business loan applicant preceding the date of the 

application; 

‘‘(G) the race, sex, and ethnicity of the principal owners 

of the business; and 

‘‘(H) any additional data that the Bureau determines 

would aid in fulfilling the purposes of this section. 

‘‘(3) NO PERSONALLY IDENTIFIABLE INFORMATION.—In compiling and maintaining any record of information under this 
H. R. 4173—683 

section, a financial institution may not include in such record 

the name, specific address (other than the census tract required 

under paragraph (1)(E)), telephone number, electronic mail 

address, or any other personally identifiable information concerning any individual who is, or is connected with, the womenowned, minority-owned, or small business loan applicant. 

‘‘(4) DISCRETION TO DELETE OR MODIFY PUBLICLY AVAILABLE

DATA.—The Bureau may, at its discretion, delete or modify 

data collected under this section which is or will be available 

to the public, if the Bureau determines that the deletion or 

modification of the data would advance a privacy interest. 

‘‘(f) AVAILABILITY OF INFORMATION.— 

‘‘(1) SUBMISSION TO BUREAU.—The data required to be compiled and maintained under this section by any financial 

institution shall be submitted annually to the Bureau. 

‘‘(2) AVAILABILITY OF INFORMATION.—Information compiled 

and maintained under this section shall be— 

‘‘(A) retained for not less than 3 years after the date 

of preparation; 

‘‘(B) made available to any member of the public, upon 

request, in the form required under regulations prescribed 

by the Bureau; 

‘‘(C) annually made available to the public generally 

by the Bureau, in such form and in such manner as is 

determined by the Bureau, by regulation. 

‘‘(3) COMPILATION OF AGGREGATE DATA.—The Bureau may, 

at its discretion— 

‘‘(A) compile and aggregate data collected under this 

section for its own use; and 

‘‘(B) make public such compilations of aggregate data. 

‘‘(g) BUREAU ACTION.— 

‘‘(1) IN GENERAL.—The Bureau shall prescribe such rules 

and issue such guidance as may be necessary to carry out, 

enforce, and compile data pursuant to this section. 

‘‘(2) EXCEPTIONS.—The Bureau, by rule or order, may adopt 

exceptions to any requirement of this section and may, conditionally or unconditionally, exempt any financial institution 

or class of financial institutions from the requirements of this 

section, as the Bureau deems necessary or appropriate to carry 

out the purposes of this section. 

‘‘(3) GUIDANCE.—The Bureau shall issue guidance designed 

to facilitate compliance with the requirements of this section, 

including assisting financial institutions in working with 

applicants to determine whether the applicants are womenowned, minority-owned, or small businesses for purposes of 

this section. 

‘‘(h) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) FINANCIAL INSTITUTION.—The term ‘financial institution’ means any partnership, company, corporation, association 

(incorporated or unincorporated), trust, estate, cooperative 

organization, or other entity that engages in any financial 

activity. 

‘‘(2) SMALL BUSINESS.—The term ‘small business’ has the 

same meaning as the term ‘small business concern’ in section 

3 of the Small Business Act (15 U.S.C. 632). 
H. R. 4173—684 

‘‘(3) SMALL BUSINESS LOAN.—The term ‘small business loan’ 

means a loan made to a small business. 

‘‘(4) MINORITY.—The term ‘minority’ has the same meaning 

as in section 1204(c)(3) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989. 

‘‘(5) MINORITY-OWNED BUSINESS.—The term ‘minorityowned business’ means a business— 

‘‘(A) more than 50 percent of the ownership or control 

of which is held by 1 or more minority individuals; and 

‘‘(B) more than 50 percent of the net profit or loss 

of which accrues to 1 or more minority individuals. 

‘‘(6) WOMEN-OWNED BUSINESS.—The term ‘women-owned 

business’ means a business— 

‘‘(A) more than 50 percent of the ownership or control 

of which is held by 1 or more women; and 

‘‘(B) more than 50 percent of the net profit or loss 

of which accrues to 1 or more women.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—Section 701(b) 

of the Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is 

amended— 

(1) in paragraph (3), by striking ‘‘or’’ at the end; 

(2) in paragraph (4), by striking the period at the end 

and inserting ‘‘; or’’; and 

(3) by inserting after paragraph (4), the following: 

‘‘(5) to make an inquiry under section 704B, in accordance 

with the requirements of that section.’’. 

(c) CLERICAL AMENDMENT.—The table of sections for title VII 

of the Consumer Credit Protection Act is amended by inserting 

after the item relating to section 704A the following new item: 

‘‘704B. Small business loan data collection.’’. 

(d) EFFECTIVE DATE.—This section shall become effective on 

the designated transfer date. 

SEC. 1072. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND FAMILIES. 

(a) HERA AMENDMENTS.—Section 1132 of the Housing and 

Economic Recovery Act of 2008 (12 U.S.C. 1701x note) is amended— 

(1) in subsection (a), by inserting in each of paragraphs 

(1), (2), (3), and (4) ‘‘or economically vulnerable individuals 

and families’’ after ‘‘homebuyers’’ each place that term appears; 

(2) in subsection (b)(1), by inserting ‘‘or economically 

vulnerable individuals and families’’ after ‘‘homebuyers’’; 

(3) in subsection (c)(1)— 

(A) in subparagraph (A), by striking ‘‘or’’ at the end; 

(B) in subparagraph (B), by striking the period at 

the end and inserting ‘‘; or’’; and 

(C) by adding at the end the following: 

‘‘(C) a nonprofit corporation that— 

‘‘(i) is exempt from taxation under section 501(c)(3) 

of the Internal Revenue Code of 1986; and 

‘‘(ii) specializes or has expertise in working with 

economically vulnerable individuals and families, but 

whose primary purpose is not provision of credit counseling services.’’; and 

(4) in subsection (d)(1), by striking ‘‘not more than 5’’. 
H. R. 4173—685 

(b) APPLICABILITY.—Amendments made by subsection (a) shall 

not apply to programs authorized by section 1132 of the Housing 

and Economic Recovery Act of 2008 (12 U.S.C. 1701x note) that 

are funded with appropriations prior to fiscal year 2011. 

SEC. 1073. REMITTANCE TRANSFERS. 

(a) TREATMENT OF REMITTANCE TRANSFERS.—The Electronic 

Fund Transfer Act (15 U.S.C. 1693 et seq.) is amended— 

(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting ‘‘and 

remittance’’ after ‘‘electronic fund’’; 

(2) in section 904(c) (15 U.S.C. 1693b(c)), in the first sentence, by inserting ‘‘or remittance transfers’’ after ‘‘electronic 

fund transfers’’; 

(3) by redesignating sections 919, 920, 921, and 922 as 

sections 920, 921, 922, and 923, respectively; and 

(4) by inserting after section 918 the following: 

‘‘SEC. 919. REMITTANCE TRANSFERS. 

‘‘(a) DISCLOSURES REQUIRED FOR REMITTANCE TRANSFERS.— ‘‘(1) IN GENERAL.—Each remittance transfer provider shall 

make disclosures as required under this section and in accordance with rules prescribed by the Board. Disclosures required 

under this section shall be in addition to any other disclosures 

applicable under this title. 

‘‘(2) DISCLOSURES.—Subject to rules prescribed by the 

Board, a remittance transfer provider shall provide, in writing 

and in a form that the sender may keep, to each sender 

requesting a remittance transfer, as applicable to the transaction— 

‘‘(A) at the time at which the sender requests a remittance transfer to be initiated, and prior to the sender 

making any payment in connection with the remittance 

transfer, a disclosure describing— 

‘‘(i) the amount of currency that will be received 

by the designated recipient, using the values of the 

currency into which the funds will be exchanged; 

‘‘(ii) the amount of transfer and any other fees 

charged by the remittance transfer provider for the 

remittance transfer; and 

‘‘(iii) any exchange rate to be used by the remittance transfer provider for the remittance transfer, 

to the nearest 1/100th of a point; and 

‘‘(B) at the time at which the sender makes payment 

in connection with the remittance transfer— 

‘‘(i) a receipt showing— 

‘‘(I) the information described in subparagraph 

(A); 

‘‘(II) the promised date of delivery to the designated recipient; and 

‘‘(III) the name and either the telephone 

number or the address of the designated recipient, 

if either the telephone number or the address of 

the designated recipient is provided by the sender; 

and 

‘‘(ii) a statement containing— 

‘‘(I) information about the rights of the sender 

under this section regarding the resolution of 

errors; and 
H. R. 4173—686 

‘‘(II) appropriate contact information for— 

‘‘(aa) the remittance transfer provider; and 

‘‘(bb) the State agency that regulates the 

remittance transfer provider and the Board, 

including the toll-free telephone number established under section 1013 of the Consumer 

Financial Protection Act of 2010. 

‘‘(3) REQUIREMENTS RELATING TO DISCLOSURES.—With 

respect to each disclosure required to be provided under paragraph (2) a remittance transfer provider shall— 

‘‘(A) provide an initial notice and receipt, as required 

by subparagraphs (A) and (B) of paragraph (2), and an 

error resolution statement, as required by subsection (d), 

that clearly and conspicuously describe the information 

required to be disclosed therein; and 

‘‘(B) with respect to any transaction that a sender 

conducts electronically, comply with the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 

7001 et seq.). 

‘‘(4) EXCEPTION FOR DISCLOSURES OF AMOUNT RECEIVED.— 

‘‘(A) IN GENERAL.—Subject to the rules prescribed by 

the Board, and except as provided under subparagraph 

(B), the disclosures required regarding the amount of currency that will be received by the designated recipient 

shall be deemed to be accurate, so long as the disclosures 

provide a reasonably accurate estimate of the foreign currency to be received. This paragraph shall apply only to 

a remittance transfer provider who is an insured depository 

institution, as defined in section 3 of the Federal Deposit 

Insurance Act (12 U.S.C. 1813), or an insured credit union, 

as defined in section 101 of the Federal Credit Union 

Act (12 U.S.C. 1752), and if— 

‘‘(i) a remittance transfer is conducted through 

a demand deposit, savings deposit, or other asset 

account that the sender holds with such remittance 

transfer provider; and 

‘‘(ii) at the time at which the sender requests the 

transaction, the remittance transfer provider is unable 

to know, for reasons beyond its control, the amount 

of currency that will be made available to the designated recipient. 

‘‘(B) DEADLINE.—The application of subparagraph (A) 

shall terminate 5 years after the date of enactment of 

the Consumer Financial Protection Act of 2010, unless 

the Board determines that termination of such provision 

would negatively affect the ability of remittance transfer 

providers described in subparagraph (A) to send remittances to locations in foreign countries, in which case, 

the Board may, by rule, extend the application of subparagraph (A) to not longer than 10 years after the date of 

enactment of the Consumer Financial Protection Act of 

2010. 

‘‘(5) EXEMPTION AUTHORITY.—The Board may, by rule, 

permit a remittance transfer provider to satisfy the requirements of— 

‘‘(A) paragraph (2)(A) orally, if the transaction is conducted entirely by telephone; 
H. R. 4173—687 

‘‘(B) paragraph (2)(B), in the case of a transaction 

conducted entirely by telephone, by mailing the disclosures 

required under such subparagraph to the sender, not later 

than 1 business day after the date on which the transaction 

is conducted, or by including such documents in the next 

periodic statement, if the telephone transaction is conducted through a demand deposit, savings deposit, or other 

asset account that the sender holds with the remittance 

transfer provider; 

‘‘(C) subparagraphs (A) and (B) of paragraph (2) 

together in one written disclosure, but only to the extent 

that the information provided in accordance with paragraph 

(3)(A) is accurate at the time at which payment is made 

in connection with the subject remittance transfer; and 

‘‘(D) paragraph (2)(A), without compliance with section 

101(c) of the Electronic Signatures in Global Commerce 

Act, if a sender initiates the transaction electronically and 

the information is displayed electronically in a manner 

that the sender can keep. 

‘‘(6) STOREFRONT AND INTERNET NOTICES.— 

‘‘(A) IN GENERAL.— 

‘‘(i) PROMINENT POSTING.—Subject to subparagraph 

(B), the Board may prescribe rules to require a remittance transfer provider to prominently post, and timely 

update, a notice describing a model remittance transfer 

for one or more amounts, as the Board may determine, 

which notice shall show the amount of currency that 

will be received by the designated recipient, using the 

values of the currency into which the funds will be 

exchanged. 

‘‘(ii) ONSITE DISPLAYS.—The Board may require the 

notice prescribed under this subparagraph to be displayed in every physical storefront location owned or 

controlled by the remittance transfer provider. 

‘‘(iii) INTERNET NOTICES.—Subject to paragraph (3), 

the Board shall prescribe rules to require a remittance 

transfer provider that provides remittance transfers 

via the Internet to provide a notice, comparable to 

a storefront notice described in this subparagraph, 

located on the home page or landing page (with respect 

to such remittance transfer services) owned or controlled by the remittance transfer provider. 

‘‘(iv) RULEMAKING AUTHORITY.—In prescribing 

rules under this subparagraph, the Board may impose 

standards or requirements regarding the provision of 

the storefront and Internet notices required under this 

subparagraph and the provision of the disclosures 

required under paragraphs (2) and (3). 

‘‘(B) STUDY AND ANALYSIS.—Prior to proposing rules 

under subparagraph (A), the Board shall undertake appropriate studies and analyses, which shall be consistent with 

section 904(a)(2), and may include an advanced notice of 

proposed rulemaking, to determine whether a storefront 

notice or Internet notice facilitates the ability of a consumer— 

‘‘(i) to compare prices for remittance transfers; and 
H. R. 4173—688 

‘‘(ii) to understand the types and amounts of any 

fees or costs imposed on remittance transfers. 

‘‘(b) FOREIGN LANGUAGE DISCLOSURES.—The disclosures 

required under this section shall be made in English and in each 

of the foreign languages principally used by the remittance transfer 

provider, or any of its agents, to advertise, solicit, or market, 

either orally or in writing, at that office. 

‘‘(c) REGULATIONS REGARDING TRANSFERS TO CERTAIN

NATIONS.—If the Board determines that a recipient nation does 

not legally allow, or the method by which transactions are made 

in the recipient country do not allow, a remittance transfer provider 

to know the amount of currency that will be received by the designated recipient, the Board may prescribe rules (not later than 

18 months after the date of enactment of the Consumer Financial 

Protection Act of 2010) addressing the issue, which rules shall 

include standards for a remittance transfer provider to provide— 

‘‘(1) a receipt that is consistent with subsections (a) and 

(b); and 

‘‘(2) a reasonably accurate estimate of the foreign currency 

to be received, based on the rate provided to the sender by 

the remittance transfer provider at the time at which the 

transaction was initiated by the sender. 

‘‘(d) REMITTANCE TRANSFER ERRORS.— 

‘‘(1) ERROR RESOLUTION.— 

‘‘(A) IN GENERAL.—If a remittance transfer provider 

receives oral or written notice from the sender within 180 

days of the promised date of delivery that an error occurred 

with respect to a remittance transfer, including the amount 

of currency designated in subsection (a)(3)(A) that was 

to be sent to the designated recipient of the remittance 

transfer, using the values of the currency into which the 

funds should have been exchanged, but was not made 

available to the designated recipient in the foreign country, 

the remittance transfer provider shall resolve the error 

pursuant to this subsection and investigate the reason 

for the error. 

‘‘(B) REMEDIES.—Not later than 90 days after the date 

of receipt of a notice from the sender pursuant to subparagraph (A), the remittance transfer provider shall, as 

applicable to the error and as designated by the sender— 

‘‘(i) refund to the sender the total amount of funds 

tendered by the sender in connection with the remittance transfer which was not properly transmitted; 

‘‘(ii) make available to the designated recipient, 

without additional cost to the designated recipient or 

to the sender, the amount appropriate to resolve the 

error; 

‘‘(iii) provide such other remedy, as determined 

appropriate by rule of the Board for the protection 

of senders; or 

‘‘(iv) provide written notice to the sender that there 

was no error with an explanation responding to the 

specific complaint of the sender. 

‘‘(2) RULES.—The Board shall establish, by rule issued not 

later than 18 months after the date of enactment of the Consumer Financial Protection Act of 2010, clear and appropriate 

standards for remittance transfer providers with respect to 
H. R. 4173—689 

error resolution relating to remittance transfers, to protect 

senders from such errors. Standards prescribed under this paragraph shall include appropriate standards regarding record 

keeping, as required, including documentation— 

‘‘(A) of the complaint of the sender; 

‘‘(B) that the sender provides the remittance transfer 

provider with respect to the alleged error; and 

‘‘(C) of the findings of the remittance transfer provider 

regarding the investigation of the alleged error that the 

sender brought to their attention. 

‘‘(3) CANCELLATION AND REFUND POLICY RULES.—Not later 

than 18 months after the date of enactment of the Consumer 

Financial Protection Act of 2010, the Board shall issue final 

rules regarding appropriate remittance transfer cancellation 

and refund policies for consumers. 

‘‘(e) APPLICABILITY OF THIS TITLE.— 

‘‘(1) IN GENERAL.—A remittance transfer that is not an 

electronic fund transfer, as defined in section 903, shall not 

be subject to any of the provisions of sections 905 through 

913. A remittance transfer that is an electronic fund transfer, 

as defined in section 903, shall be subject to all provisions 

of this title, except for section 908, that are otherwise applicable 

to electronic fund transfers under this title. 

‘‘(2) RULE OF CONSTRUCTION.—Nothing in this section shall 

be construed— 

‘‘(A) to affect the application to any transaction, to 

any remittance provider, or to any other person of any 

of the provisions of subchapter II of chapter 53 of title 

31, United States Code, section 21 of the Federal Deposit 

Insurance Act (12 U.S.C. 1829b), or chapter 2 of title I 

of Public Law 91–508 (12 U.S.C. 1951–1959), or any regulations promulgated thereunder; or 

‘‘(B) to cause any fund transfer that would not otherwise be treated as such under paragraph (1) to be treated 

as an electronic fund transfer, or as otherwise subject to 

this title, for the purposes of any of the provisions referred 

to in subparagraph (A) or any regulations promulgated 

thereunder. 

‘‘(f) ACTS OF AGENTS.— 

‘‘(1) IN GENERAL.—A remittance transfer provider shall be 

liable for any violation of this section by any agent, authorized 

delegate, or person affiliated with such provider, when such 

agent, authorized delegate, or affiliate acts for that remittance 

transfer provider. 

‘‘(2) OBLIGATIONS OF REMITTANCE TRANSFER PROVIDERS.— 

The Board shall prescribe rules to implement appropriate 

standards or conditions of, liability of a remittance transfer 

provider, including a provider who acts through an agent or 

authorized delegate. An agency charged with enforcing the 

requirements of this section, or rules prescribed by the Board 

under this section, may consider, in any action or other proceeding against a remittance transfer provider, the extent to 

which the provider had established and maintained policies 

or procedures for compliance, including policies, procedures, 

or other appropriate oversight measures designed to assure 

compliance by an agent or authorized delegate acting for such 

provider. 
H. R. 4173—690 

‘‘(g) DEFINITIONS.—As used in this section— 

‘‘(1) the term ‘designated recipient’ means any person 

located in a foreign country and identified by the sender as 

the authorized recipient of a remittance transfer to be made 

by a remittance transfer provider, except that a designated 

recipient shall not be deemed to be a consumer for purposes 

of this Act; 

‘‘(2) the term ‘remittance transfer’— 

‘‘(A) means the electronic (as defined in section 106(2) 

of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2))) transfer of funds requested 

by a sender located in any State to a designated recipient 

that is initiated by a remittance transfer provider, whether 

or not the sender holds an account with the remittance 

transfer provider or whether or not the remittance transfer 

is also an electronic fund transfer, as defined in section 

903; and 

‘‘(B) does not include a transfer described in subparagraph (A) in an amount that is equal to or lesser than 

the amount of a small-value transaction determined, by 

rule, to be excluded from the requirements under section 

906(a); 

‘‘(3) the term ‘remittance transfer provider’ means any person or financial institution that provides remittance transfers 

for a consumer in the normal course of its business, whether 

or not the consumer holds an account with such person or 

financial institution; and 

‘‘(4) the term ‘sender’ means a consumer who requests 

a remittance provider to send a remittance transfer for the 

consumer to a designated recipient.’’. 

(b) AUTOMATED CLEARINGHOUSE SYSTEM.— (1) EXPANSION OF SYSTEM.—The Board of Governors shall 

work with the Federal reserve banks and the Department of 

the Treasury to expand the use of the automated clearinghouse 

system and other payment mechanisms for remittance transfers 

to foreign countries, with a focus on countries that receive 

significant remittance transfers from the United States, based 

on— 

(A) the number, volume, and size of such transfers; 

(B) the significance of the volume of such transfers 

relative to the external financial flows of the receiving 

country, including— 

(i) the total amount transferred; and 

(ii) the total volume of payments made by United 

States Government agencies to beneficiaries and 

retirees living abroad; 

(C) the feasibility of such an expansion; and 

(D) the ability of the Federal Reserve System to establish payment gateways in different geographic regions and 

currency zones to receive remittance transfers and route 

them through the payments systems in the destination 

countries. 

(2) REPORT TO CONGRESS.—Not later than one calendar 

year after the date of enactment of this Act, and on April 

30 biennially thereafter during the 10-year period beginning 

on that date of enactment, the Board of Governors shall submit 

a report to the Committee on Banking, Housing, and Urban 
H. R. 4173—691 

Affairs of the Senate and the Committee on Financial Services 

of the House of Representatives on the status of the automated 

clearinghouse system and its progress in complying with the 

requirements of this subsection. The report shall include an 

analysis of adoption rates of International ACH Transactions 

rules and formats, the efficacy of increasing adoption rates, 

and potential recommendations to increase adoption. 

(c) EXPANSION OF FINANCIAL INSTITUTION PROVISION OF REMITTANCE TRANSFERS.— 

(1) PROVISION OF GUIDELINES TO INSTITUTIONS.—Each of 

the Federal banking agencies and the National Credit Union 

Administration shall provide guidelines to financial institutions 

under the jurisdiction of the agency regarding the offering 

of low-cost remittance transfers and no-cost or low-cost basic 

consumer accounts, as well as agency services to remittance 

transfer providers. 

(2) ASSISTANCE TO FINANCIAL LITERACY COMMISSION.—As 

part of its duties as members of the Financial Literacy and 

Education Commission, the Bureau, the Federal banking agencies, and the National Credit Union Administration shall assist 

the Financial Literacy and Education Commission in executing 

the Strategy for Assuring Financial Empowerment (or the 

‘‘SAFE Strategy’’), as it relates to remittances. 

(d) FEDERAL CREDIT UNION ACT CONFORMING AMENDMENT.— 

Paragraph (12) of section 107 of the Federal Credit Union Act 

(12 U.S.C. 1757) is amended to read as follows: 

‘‘(12) in accordance with regulations prescribed by the 

Board— 

‘‘(A) to sell, to persons in the field of membership, 

negotiable checks (including travelers checks), money 

orders, and other similar money transfer instruments 

(including international and domestic electronic fund transfers and remittance transfers, as defined in section 919 

of the Electronic Fund Transfer Act); and 

‘‘(B) to cash checks and money orders for persons in 

the field of membership for a fee;’’. 

(e) REPORT ON FEASIBILITY OF AND IMPEDIMENTS TO USE OF

REMITTANCE HISTORY IN CALCULATION OF CREDIT SCORE.—Before 

the end of the 365-day period beginning on the date of enactment 

of this Act, the Director shall submit a report to the President, 

the Committee on Banking, Housing, and Urban Affairs of the 

Senate, and the Committee on Financial Services of the House 

of Representatives regarding— 

(1) the manner in which the remittance history of a consumer could be used to enhance the credit score of the consumer; 

(2) the current legal and business model barriers and 

impediments that impede the use of the remittance history 

of the consumer to enhance the credit score of the consumer; 

and 

(3) recommendations on the manner in which maximum 

transparency and disclosure to consumers of exchange rates 

for remittance transfers subject to this title and the amendments made by this title may be accomplished, whether or 

not such exchange rates are known at the time of origination 

or payment by the consumer for the remittance transfer, 

including disclosure to the sender of the actual exchange rate 
H. R. 4173—692 

used and the amount of currency that the recipient of the 

remittance transfer received, using the values of the currency 

into which the funds were exchanged, as contained in sections 

919(a)(2)(D) and 919(a)(3) of the Electronic Fund Transfer Act 

(as amended by this section). 

SEC. 1074. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE 

CONSERVATORSHIP OF FANNIE MAE, FREDDIE MAC, AND 

REFORMING THE HOUSING FINANCE SYSTEM. 

(a) STUDY REQUIRED.— 

(1) IN GENERAL.—The Secretary of the Treasury shall conduct a study of and develop recommendations regarding the 

options for ending the conservatorship of the Federal National 

Mortgage Association (in this section referred to as ‘‘Fannie 

Mae’’) and the Federal Home Loan Mortgage Corporation (in 

this section referred to as ‘‘Freddie Mac’’), while minimizing 

the cost to taxpayers, including such options as— 

(A) the gradual wind-down and liquidation of such 

entities; 

(B) the privatization of such entities; 

(C) the incorporation of the functions of such entities 

into a Federal agency; 

(D) the dissolution of Fannie Mae and Freddie Mac 

into smaller companies; or 

(E) any other measures the Secretary determines 

appropriate. 

(2) ANALYSES.—The study required under paragraph (1) 

shall include an analysis of— 

(A) the role of the Federal Government in supporting 

a stable, well-functioning housing finance system, and 

whether and to what extent the Federal Government should 

bear risks in meeting Federal housing finance objectives; 

(B) how the current structure of the housing finance 

system can be improved; 

(C) how the housing finance system should support 

the continued availability of mortgage credit to all segments 

of the market; 

(D) how the housing finance system should be structured to ensure that consumers continue to have access 

to 30-year, fixed rate, pre-payable mortgages and other 

mortgage products that have simple terms that can be 

easily understood; 

(E) the role of the Federal Housing Administration 

and the Department of Veterans Affairs in a future housing 

system; 

(F) the impact of reforms of the housing finance system 

on the financing of rental housing; 

(G) the impact of reforms of the housing finance system 

on secondary market liquidity; 

(H) the role of standardization in the housing finance 

system; 

(I) how housing finance systems in other countries 

offer insights that can help inform options for reform in 

the United States; and 

(J) the options for transition to a reformed housing 

finance system. 
H. R. 4173—693 

(b) REPORT AND RECOMMENDATIONS.—Not later than January 

31, 2011, the Secretary of the Treasury shall submit the report 

and recommendations required under subsection (a) to the Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives. 

SEC. 1075. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS. 

(a) IN GENERAL.—The Electronic Fund Transfer Act (15 U.S.C. 

1693 et seq.) is amended— 

(1) by redesignating sections 920 and 921 as sections 921 

and 922, respectively; and 

(2) by inserting after section 919 the following: 

‘‘SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS. 

‘‘(a) REASONABLE INTERCHANGE TRANSACTION FEES FOR ELEC- TRONIC DEBIT TRANSACTIONS.— ‘‘(1) REGULATORY AUTHORITY OVER INTERCHANGE TRANS- ACTION FEES.—The Board may prescribe regulations, pursuant 

to section 553 of title 5, United States Code, regarding any 

interchange transaction fee that an issuer may receive or charge 

with respect to an electronic debit transaction, to implement 

this subsection (including related definitions), and to prevent 

circumvention or evasion of this subsection. 

‘‘(2) REASONABLE INTERCHANGE TRANSACTION FEES.—The 

amount of any interchange transaction fee that an issuer may 

receive or charge with respect to an electronic debit transaction 

shall be reasonable and proportional to the cost incurred by 

the issuer with respect to the transaction. 

‘‘(3) RULEMAKING REQUIRED.— ‘‘(A) IN GENERAL.—The Board shall prescribe regulations in final form not later than 9 months after the date 

of enactment of the Consumer Financial Protection Act 

of 2010, to establish standards for assessing whether the 

amount of any interchange transaction fee described in 

paragraph (2) is reasonable and proportional to the cost 

incurred by the issuer with respect to the transaction. 

‘‘(B) INFORMATION COLLECTION.—The Board may 

require any issuer (or agent of an issuer) or payment 

card network to provide the Board with such information 

as may be necessary to carry out the provisions of this 

subsection and the Board, in issuing rules under subparagraph (A) and on at least a bi-annual basis thereafter, 

shall disclose such aggregate or summary information concerning the costs incurred, and interchange transaction 

fees charged or received, by issuers or payment card networks in connection with the authorization, clearance or 

settlement of electronic debit transactions as the Board 

considers appropriate and in the public interest. 

‘‘(4) CONSIDERATIONS; CONSULTATION.—In prescribing regulations under paragraph (3)(A), the Board shall— 

‘‘(A) consider the functional similarity between— 

‘‘(i) electronic debit transactions; and 

‘‘(ii) checking transactions that are required within 

the Federal Reserve bank system to clear at par; 

‘‘(B) distinguish between— 
H. R. 4173—694 

‘‘(i) the incremental cost incurred by an issuer 

for the role of the issuer in the authorization, clearance, 

or settlement of a particular electronic debit transaction, which cost shall be considered under paragraph 

(2); and 

‘‘(ii) other costs incurred by an issuer which are 

not specific to a particular electronic debit transaction, 

which costs shall not be considered under paragraph 

(2); and 

‘‘(C) consult, as appropriate, with the Comptroller of 

the Currency, the Board of Directors of the Federal Deposit 

Insurance Corporation, the Director of the Office of Thrift 

Supervision, the National Credit Union Administration 

Board, the Administrator of the Small Business Administration, and the Director of the Bureau of Consumer Financial Protection. 

‘‘(5) ADJUSTMENTS TO INTERCHANGE TRANSACTION FEES FOR

FRAUD PREVENTION COSTS.— 

‘‘(A) ADJUSTMENTS.—The Board may allow for an 

adjustment to the fee amount received or charged by an 

issuer under paragraph (2), if— 

‘‘(i) such adjustment is reasonably necessary to 

make allowance for costs incurred by the issuer in 

preventing fraud in relation to electronic debit transactions involving that issuer; and 

‘‘(ii) the issuer complies with the fraud-related 

standards established by the Board under subparagraph (B), which standards shall— 

‘‘(I) be designed to ensure that any fraudrelated adjustment of the issuer is limited to the 

amount described in clause (i) and takes into 

account any fraud-related reimbursements 

(including amounts from charge-backs) received 

from consumers, merchants, or payment card networks in relation to electronic debit transactions 

involving the issuer; and 

‘‘(II) require issuers to take effective steps to 

reduce the occurrence of, and costs from, fraud 

in relation to electronic debit transactions, 

including through the development and 

implementation of cost-effective fraud prevention 

technology. 

‘‘(B) RULEMAKING REQUIRED.— 

‘‘(i) IN GENERAL.—The Board shall prescribe regulations in final form not later than 9 months after 

the date of enactment of the Consumer Financial 

Protection Act of 2010, to establish standards for 

making adjustments under this paragraph. 

‘‘(ii) FACTORS FOR CONSIDERATION.—In issuing the 

standards and prescribing regulations under this paragraph, the Board shall consider— 

‘‘(I) the nature, type, and occurrence of fraud 

in electronic debit transactions; 

‘‘(II) the extent to which the occurrence of 

fraud depends on whether authorization in an electronic debit transaction is based on signature, PIN, 

or other means; 
H. R. 4173—695 

‘‘(III) the available and economical means by 

which fraud on electronic debit transactions may 

be reduced; 

‘‘(IV) the fraud prevention and data security 

costs expended by each party involved in electronic 

debit transactions (including consumers, persons 

who accept debit cards as a form of payment, financial institutions, retailers and payment card networks); 

‘‘(V) the costs of fraudulent transactions 

absorbed by each party involved in such transactions (including consumers, persons who accept 

debit cards as a form of payment, financial institutions, retailers and payment card networks); 

‘‘(VI) the extent to which interchange transaction fees have in the past reduced or increased 

incentives for parties involved in electronic debit 

transactions to reduce fraud on such transactions; 

and 

‘‘(VII) such other factors as the Board considers appropriate. 

‘‘(6) EXEMPTION FOR SMALL ISSUERS.— 

‘‘(A) IN GENERAL.—This subsection shall not apply to 

any issuer that, together with its affiliates, has assets 

of less than $10,000,000,000, and the Board shall exempt 

such issuers from regulations prescribed under paragraph 

(3)(A). 

‘‘(B) DEFINITION.—For purposes of this paragraph, the 

term ‘‘issuer’’ shall be limited to the person holding the 

asset account that is debited through an electronic debit 

transaction. 

‘‘(7) EXEMPTION FOR GOVERNMENT-ADMINISTERED PAYMENT

PROGRAMS AND RELOADABLE PREPAID CARDS.— 

‘‘(A) IN GENERAL.—This subsection shall not apply to 

an interchange transaction fee charged or received with 

respect to an electronic debit transaction in which a person 

uses— 

‘‘(i) a debit card or general-use prepaid card that 

has been provided to a person pursuant to a Federal, 

State or local government-administered payment program, in which the person may only use the debit 

card or general-use prepaid card to transfer or debit 

funds, monetary value, or other assets that have been 

provided pursuant to such program; or 

‘‘(ii) a plastic card, payment code, or device that 

is— 

‘‘(I) linked to funds, monetary value, or assets 

which are purchased or loaded on a prepaid basis; 

‘‘(II) not issued or approved for use to access 

or debit any account held by or for the benefit 

of the card holder (other than a subaccount or 

other method of recording or tracking funds purchased or loaded on the card on a prepaid basis); 

‘‘(III) redeemable at multiple, unaffiliated merchants or service providers, or automated teller 

machines; 
H. R. 4173—696 

‘‘(IV) used to transfer or debit funds, monetary 

value, or other assets; and 

‘‘(V) reloadable and not marketed or labeled 

as a gift card or gift certificate. 

‘‘(B) EXCEPTION.—Notwithstanding subparagraph (A), 

after the end of the 1-year period beginning on the effective 

date provided in paragraph (9), this subsection shall apply 

to an interchange transaction fee charged or received with 

respect to an electronic debit transaction described in 

subparagraph (A)(i) in which a person uses a generaluse prepaid card, or an electronic debit transaction 

described in subparagraph (A)(ii), if any of the following 

fees may be charged to a person with respect to the card: 

‘‘(i) A fee for an overdraft, including a shortage 

of funds or a transaction processed for an amount 

exceeding the account balance. 

‘‘(ii) A fee imposed by the issuer for the first withdrawal per month from an automated teller machine 

that is part of the issuer’s designated automated teller 

machine network. 

‘‘(C) DEFINITION.—For purposes of subparagraph (B), 

the term ‘designated automated teller machine network’ 

means either— 

‘‘(i) all automated teller machines identified in the 

name of the issuer; or 

‘‘(ii) any network of automated teller machines 

identified by the issuer that provides reasonable and 

convenient access to the issuer’s customers. 

‘‘(D) REPORTING.—Beginning 12 months after the date 

of enactment of the Consumer Financial Protection Act 

of 2010, the Board shall annually provide a report to the 

Congress regarding — 

‘‘(i) the prevalence of the use of general-use prepaid 

cards in Federal, State or local government-administered payment programs; and 

‘‘(ii) the interchange transaction fees and cardholder fees charged with respect to the use of such 

general-use prepaid cards. 

‘‘(8) REGULATORY AUTHORITY OVER NETWORK FEES.— 

‘‘(A) IN GENERAL.—The Board may prescribe regulations, pursuant to section 553 of title 5, United States 

Code, regarding any network fee. 

‘‘(B) LIMITATION.—The authority under subparagraph 

(A) to prescribe regulations shall be limited to regulations 

to ensure that— 

‘‘(i) a network fee is not used to directly or 

indirectly compensate an issuer with respect to an 

electronic debit transaction; and 

‘‘(ii) a network fee is not used to circumvent or 

evade the restrictions of this subsection and regulations prescribed under such subsection. 

‘‘(C) RULEMAKING REQUIRED.—The Board shall prescribe regulations in final form before the end of the 9- 

month period beginning on the date of the enactment of 

the Consumer Financial Protection Act of 2010, to carry 

out the authorities provided under subparagraph (A). 
H. R. 4173—697 

‘‘(9) EFFECTIVE DATE.—This subsection shall take effect 

at the end of the 12-month period beginning on the date of 

the enactment of the Consumer Financial Protection Act of 

2010. 

‘‘(b) LIMITATION ON PAYMENT CARD NETWORK RESTRICTIONS.— 

‘‘(1) PROHIBITIONS AGAINST EXCLUSIVITY ARRANGEMENTS.— 

‘‘(A) NO EXCLUSIVE NETWORK.—The Board shall, before 

the end of the 1-year period beginning on the date of 

the enactment of the Consumer Financial Protection Act 

of 2010, prescribe regulations providing that an issuer or 

payment card network shall not directly or through any 

agent, processor, or licensed member of a payment card 

network, by contract, requirement, condition, penalty, or 

otherwise, restrict the number of payment card networks 

on which an electronic debit transaction may be processed 

to— 

‘‘(i) 1 such network; or 

‘‘(ii) 2 or more such networks which are owned, 

controlled, or otherwise operated by — 

‘‘(I) affiliated persons; or 

‘‘(II) networks affiliated with such issuer. 

‘‘(B) NO ROUTING RESTRICTIONS.—The Board shall, 

before the end of the 1-year period beginning on the date 

of the enactment of the Consumer Financial Protection 

Act of 2010, prescribe regulations providing that an issuer 

or payment card network shall not, directly or through 

any agent, processor, or licensed member of the network, 

by contract, requirement, condition, penalty, or otherwise, 

inhibit the ability of any person who accepts debit cards 

for payments to direct the routing of electronic debit transactions for processing over any payment card network that 

may process such transactions. 

‘‘(2) LIMITATION ON RESTRICTIONS ON OFFERING DISCOUNTS

FOR USE OF A FORM OF PAYMENT.— ‘‘(A) IN GENERAL.—A payment card network shall not, 

directly or through any agent, processor, or licensed 

member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person 

to provide a discount or in-kind incentive for payment 

by the use of cash, checks, debit cards, or credit cards 

to the extent that— 

‘‘(i) in the case of a discount or in-kind incentive 

for payment by the use of debit cards, the discount 

or in-kind incentive does not differentiate on the basis 

of the issuer or the payment card network; 

‘‘(ii) in the case of a discount or in-kind incentive 

for payment by the use of credit cards, the discount 

or in-kind incentive does not differentiate on the basis 

of the issuer or the payment card network; and 

‘‘(iii) to the extent required by Federal law and 

applicable State law, such discount or in-kind incentive 

is offered to all prospective buyers and disclosed clearly 

and conspicuously. 

‘‘(B) LAWFUL DISCOUNTS.—For purposes of this paragraph, the network may not penalize any person for the 

providing of a discount that is in compliance with Federal 

law and applicable State law. 
H. R. 4173—698 

‘‘(3) LIMITATION ON RESTRICTIONS ON SETTING TRANSACTION

MINIMUMS OR MAXIMUMS.— 

‘‘(A) IN GENERAL.—A payment card network shall not, 

directly or through any agent, processor, or licensed 

member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability— 

‘‘(i) of any person to set a minimum dollar value 

for the acceptance by that person of credit cards, to 

the extent that — 

‘‘(I) such minimum dollar value does not differentiate between issuers or between payment 

card networks; and 

‘‘(II) such minimum dollar value does not 

exceed $10.00; or 

‘‘(ii) of any Federal agency or institution of higher 

education to set a maximum dollar value for the acceptance by that Federal agency or institution of higher 

education of credit cards, to the extent that such maximum dollar value does not differentiate between 

issuers or between payment card networks. 

‘‘(B) INCREASE IN MINIMUM DOLLAR AMOUNT.—The 

Board may, by regulation prescribed pursuant to section 

553 of title 5, United States Code, increase the amount 

of the dollar value listed in subparagraph (A)(i)(II). 

‘‘(4) RULE OF CONSTRUCTION:.—No provision of this subsection shall be construed to authorize any person— 

‘‘(A) to discriminate between debit cards within a payment card network on the basis of the issuer that issued 

the debit card; or 

‘‘(B) to discriminate between credit cards within a payment card network on the basis of the issuer that issued 

the credit card. 

‘‘(c) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

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

that controls, is controlled by, or is under common control 

with another company. 

‘‘(2) DEBIT CARD.—The term ‘debit card’— 

‘‘(A) means any card, or other payment code or device, 

issued or approved for use through a payment card network 

to debit an asset account (regardless of the purpose for 

which the account is established), whether authorization 

is based on signature, PIN, or other means; 

‘‘(B) includes a general-use prepaid card, as that term 

is defined in section 915(a)(2)(A); and 

‘‘(C) does not include paper checks. 

‘‘(3) CREDIT CARD.—The term ‘credit card’ has the same 

meaning as in section 103 of the Truth in Lending Act. 

‘‘(4) DISCOUNT.—The term ‘discount’— 

‘‘(A) means a reduction made from the price that customers are informed is the regular price; and 

‘‘(B) does not include any means of increasing the 

price that customers are informed is the regular price. 

‘‘(5) ELECTRONIC DEBIT TRANSACTION.—The term ‘electronic 

debit transaction’ means a transaction in which a person uses 

a debit card. 

‘‘(6) FEDERAL AGENCY.—The term ‘Federal agency’ means— 
H. R. 4173—699 

‘‘(A) an agency (as defined in section 101 of title 31, 

United States Code); and 

‘‘(B) a Government corporation (as defined in section 

103 of title 5, United States Code). 

‘‘(7) INSTITUTION OF HIGHER EDUCATION.—The term ‘institution of higher education’ has the same meaning as in 101 

and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001, 

1002). 

‘‘(8) INTERCHANGE TRANSACTION FEE.—The term ‘interchange transaction fee’ means any fee established, charged 

or received by a payment card network for the purpose of 

compensating an issuer for its involvement in an electronic 

debit transaction. 

‘‘(9) ISSUER.—The term ‘issuer’ means any person who 

issues a debit card, or credit card, or the agent of such person 

with respect to such card. 

‘‘(10) NETWORK FEE.—The term ‘network fee’ means any 

fee charged and received by a payment card network with 

respect to an electronic debit transaction, other than an interchange transaction fee. 

‘‘(11) PAYMENT CARD NETWORK.—The term ‘payment card 

network’ means an entity that directly, or through licensed 

members, processors, or agents, provides the proprietary services, infrastructure, and software that route information and 

data to conduct debit card or credit card transaction authorization, clearance, and settlement, and that a person uses in 

order to accept as a form of payment a brand of debit card, 

credit card or other device that may be used to carry out 

debit or credit transactions. 

‘‘(d) ENFORCEMENT.— 

‘‘(1) IN GENERAL.—Compliance with the requirements 

imposed under this section shall be enforced under section 

918. 

‘‘(2) EXCEPTION.—Sections 916 and 917 shall not apply 

with respect to this section or the requirements imposed pursuant to this section.’’. 

(b) AMENDMENT TO THE FOOD AND NUTRITION ACT OF 2008.— 

Section 7(h)(10) of the Food and Nutrition Act of 2008 (7 U.S.C. 

2016(h)(10)) is amended to read as follows: 

‘‘(10) FEDERAL LAW NOT APPLICABLE.—Section 920 of the 

Electronic Fund Transfer Act shall not apply to electronic benefit transfer or reimbursement systems under this Act.’’. 

(c) AMENDMENT TO THE FARM SECURITY AND RURAL INVESTMENT

ACT OF 2002.—Section 4402 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 3007) is amended by adding at the 

end the following new subsection: 

‘‘(f) FEDERAL LAW NOT APPLICABLE.—Section 920 of the Electronic Fund Transfer Act shall not apply to electronic benefit 

transfer systems established under this section.’’. 

(d) AMENDMENT TO THE CHILD NUTRITION ACT OF 1966.—Section 11 of the Child Nutrition Act of 1966 (42 U.S.C. 1780) is 

amended by adding at the end the following: 

‘‘(c) FEDERAL LAW NOT APPLICABLE.—Section 920 of the Electronic Fund Transfer Act shall not apply to electronic benefit 

transfer systems established under this Act or the Richard B. 

Russell National School Lunch Act (42 U.S.C. 1751 et seq.).’’. 
H. R. 4173—700 

SEC. 1076. REVERSE MORTGAGE STUDY AND REGULATIONS. 

(a) STUDY.—Not later than 1 year after the designated transfer 

date, the Bureau shall conduct a study on reverse mortgage transactions. 

(b) REGULATIONS.— 

(1) IN GENERAL.—If the Bureau determines through the 

study required under subsection (a) that conditions or limitations on reverse mortgage transactions are necessary or appropriate for accomplishing the purposes and objectives of this 

title, including protecting borrowers with respect to the 

obtaining of reverse mortgage loans for the purpose of funding 

investments, annuities, and other investment products and the 

suitability of a borrower in obtaining a reverse mortgage for 

such purpose. 

(2) IDENTIFIED PRACTICES AND INTEGRATED DISCLOSURES.— 

The regulations prescribed under paragraph (1) may, as the 

Bureau may so determine— 

(A) identify any practice as unfair, deceptive, or abusive 

in connection with a reverse mortgage transaction; and 

(B) provide for an integrated disclosure standard and 

model disclosures for reverse mortgage transactions, consistent with section 4302(d), that combines the relevant 

disclosures required under the Truth in Lending Act (15 

U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures Act, with the disclosures required to be provided 

to consumers for Home Equity Conversion Mortgages under 

section 255 of the National Housing Act. 

(c) RULE OF CONSTRUCTION.—This section shall not be construed as limiting the authority of the Bureau to issue regulations, 

orders, or guidance that apply to reverse mortgages prior to the 

completion of the study required under subsection (a). 

SEC. 1077. REPORT ON PRIVATE EDUCATION LOANS AND PRIVATE 

EDUCATIONAL LENDERS. 

(a) REPORT.—Not later than 2 years after the date of enactment 

of this Act, the Director and the Secretary of Education, in consultation with the Commissioners of the Federal Trade Commission, 

and the Attorney General of the United States, shall submit a 

report to the Committee on Banking, Housing, and Urban Affairs 

and the Committee on Health, Education, Labor, and Pensions 

of the Senate and the Committee on Financial Services and the 

Committee on Education and Labor of the House of Representatives, 

on private education loans (as that term is defined in section 

140 of the Truth in Lending Act (15 U.S.C. 1650)) and private 

educational lenders (as that term is defined in such section). 

(b) CONTENT.—The report required by this section shall 

examine, at a minimum— 

(1) the growth and changes of the private education loan 

market in the United States; 

(2) factors influencing such growth and changes; 

(3) the extent to which students and parents of students 

rely on private education loans to finance postsecondary education and the private education loan indebtedness of borrowers; 

(4) the characteristics of private education loan borrowers, 

including— 
H. R. 4173—701 

(A) the types of institutions of higher education that 

they attend; 

(B) socioeconomic characteristics (including income and 

education levels, racial characteristics, geographical background, age, and gender); 

(C) what other forms of financing borrowers use to 

pay for education; 

(D) whether they exhaust their Federal loan options 

before taking out a private loan; 

(E) whether such borrowers are dependent or independent students (as determined under part F of title IV 

of the Higher Education Act of 1965) or parents of such 

students; 

(F) whether such borrowers are students enrolled in 

a program leading to a certificate, license, or credential 

other than a degree, an associates degree, a baccalaureate 

degree, or a graduate or professional degree; and 

(G) if practicable, employment and repayment behaviors; 

(5) the characteristics of private educational lenders, 

including whether such creditors are for-profit, non-profit, or 

institutions of higher education; 

(6) the underwriting criteria used by private educational 

lenders, including the use of cohort default rate (as such term 

is defined in section 435(m) of the Higher Education Act of 

1965); 

(7) the terms, conditions, and pricing of private education 

loans; 

(8) the consumer protections available to private education 

loan borrowers, including the effectiveness of existing disclosures and requirements and borrowers’ awareness and understanding about terms and conditions of various financial products; 

(9) whether Federal regulators and the public have access 

to information sufficient to provide them with assurances that 

private education loans are provided in accord with the Nation’s 

fair lending laws and that allows public officials to determine 

lender compliance with fair lending laws; and 

(10) any statutory or legislative recommendations necessary 

to improve consumer protections for private education loan 

borrowers and to better enable Federal regulators and the 

public to ascertain private educational lender compliance with 

fair lending laws. 

SEC. 1078. STUDY AND REPORT ON CREDIT SCORES. 

(a) STUDY.—The Bureau shall conduct a study on the nature, 

range, and size of variations between the credit scores sold to 

creditors and those sold to consumers by consumer reporting agencies that compile and maintain files on consumers on a nationwide 

basis (as defined in section 603(p) of the Fair Credit Reporting 

Act; 15 U.S.C. 1681a(p)), and whether such variations disadvantage 

consumers. 

(b) REPORT TO CONGRESS.—The Bureau shall submit a report 

to Congress on the results of the study conducted under subsection 

(a) not later than 1 year after the date of enactment of this Act. 
H. R. 4173—702 

SEC. 1079. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO 

EXCHANGE FACILITATORS. 

(a) REVIEW.—The Director shall review all Federal laws and 

regulations relating to the protection of consumers who use 

exchange facilitators for transactions primarily for personal, family, 

or household purposes. 

(b) REPORT.—Not later than 1 year after the designated transfer 

date, the Director shall submit to Congress a report describing— 

(1) recommendations for legislation to ensure the appropriate protection of consumers who use exchange facilitators 

for transactions primarily for personal, family, or household 

purposes; 

(2) recommendations for updating the regulations of Federal departments and agencies to ensure the appropriate protection of such consumers; and 

(3) recommendations for regulations to ensure the appropriate protection of such consumers. 

(c) PROGRAM.—Not later than 2 years after the date of the 

submission of the report under subsection (b), the Bureau shall, 

consistent with subtitle B, propose regulations or otherwise establish a program to protect consumers who use exchange facilitators. 

(d) EXCHANGE FACILITATOR DEFINED.—In this section, the term 

‘‘exchange facilitator’’ means a person that— 

(1) facilitates, for a fee, an exchange of like kind property 

by entering into an agreement with a taxpayer by which the 

exchange facilitator acquires from the taxpayer the contractual 

rights to sell the taxpayer’s relinquished property and transfers 

a replacement property to the taxpayer as a qualified intermediary (within the meaning of Treasury Regulations section 

1.1031(k)–1(g)(4)) or enters into an agreement with the taxpayer to take title to a property as an exchange accommodation 

titleholder (within the meaning of Revenue Procedure 2000– 

37) or enters into an agreement with a taxpayer to act as 

a qualified trustee or qualified escrow holder (within the 

meaning of Treasury Regulations section 1.1031(k)–1(g)(3)); 

(2) maintains an office for the purpose of soliciting business 

to perform the services described in paragraph (1); or 

(3) advertises any of the services described in paragraph 

(1) or solicits clients in printed publications, direct mail, television or radio advertisements, telephone calls, facsimile transmissions, or other electronic communications directed to the 

general public for purposes of providing any such services. 

SEC. 1079A. FINANCIAL FRAUD PROVISIONS. 

(a) SENTENCING GUIDELINES.— 

(1) SECURITIES FRAUD.— 

(A) DIRECTIVE.—Pursuant to its authority under section 994 of title 28, United States Code, and in accordance 

with this paragraph, the United States Sentencing 

Commission shall review and, if appropriate, amend the 

Federal Sentencing Guidelines and policy statements 

applicable to persons convicted of offenses relating to securities fraud or any other similar provision of law, in order 

to reflect the intent of Congress that penalties for the 

offenses under the guidelines and policy statements appropriately account for the potential and actual harm to the 

public and the financial markets from the offenses. 
H. R. 4173—703 

(B) REQUIREMENTS.—In making any amendments to 

the Federal Sentencing Guidelines and policy statements 

under subparagraph (A), the United States Sentencing 

Commission shall— 

(i) ensure that the guidelines and policy statements, particularly section 2B1.1(b)(14) and section 

2B1.1(b)(17) (and any successors thereto), reflect— 

(I) the serious nature of the offenses described 

in subparagraph (A); 

(II) the need for an effective deterrent and 

appropriate punishment to prevent the offenses; 

and 

(III) the effectiveness of incarceration in furthering the objectives described in subclauses (I) 

and (II); 

(ii) consider the extent to which the guidelines 

appropriately account for the potential and actual harm 

to the public and the financial markets resulting from 

the offenses; 

(iii) ensure reasonable consistency with other relevant directives and guidelines and Federal statutes; 

(iv) make any necessary conforming changes to 

guidelines; and 

(v) ensure that the guidelines adequately meet 

the purposes of sentencing, as set forth in section 

3553(a)(2) of title 18, United States Code. 

(2) FINANCIAL INSTITUTION FRAUD.— 

(A) DIRECTIVE.—Pursuant to its authority under section 994 of title 28, United States Code, and in accordance 

with this paragraph, the United States Sentencing 

Commission shall review and, if appropriate, amend the 

Federal Sentencing Guidelines and policy statements 

applicable to persons convicted of fraud offenses relating 

to financial institutions or federally related mortgage loans 

and any other similar provisions of law, to reflect the 

intent of Congress that the penalties for the offenses under 

the guidelines and policy statements ensure appropriate 

terms of imprisonment for offenders involved in substantial 

bank frauds or other frauds relating to financial institutions. 

(B) REQUIREMENTS.—In making any amendments to 

the Federal Sentencing Guidelines and policy statements 

under subparagraph (A), the United States Sentencing 

Commission shall— 

(i) ensure that the guidelines and policy statements 

reflect— 

(I) the serious nature of the offenses described 

in subparagraph (A); 

(II) the need for an effective deterrent and 

appropriate punishment to prevent the offenses; 

and 

(III) the effectiveness of incarceration in furthering the objectives described in subclauses (I) 

and (II); 

(ii) consider the extent to which the guidelines 

appropriately account for the potential and actual harm 
H. R. 4173—704 

to the public and the financial markets resulting from 

the offenses; 

(iii) ensure reasonable consistency with other relevant directives and guidelines and Federal statutes; 

(iv) make any necessary conforming changes to 

guidelines; and 

(v) ensure that the guidelines adequately meet 

the purposes of sentencing, as set forth in section 

3553(a)(2) of title 18, United States Code. 

(b) EXTENSION OF STATUTE OF LIMITATIONS FOR SECURITIES

FRAUD VIOLATIONS.— 

(1) IN GENERAL.—Chapter 213 of title 18, United States 

Code, is amended by adding at the end the following: 

‘‘§ 3301. Securities fraud offenses 

‘‘(a) DEFINITION.—In this section, the term ‘securities fraud 

offense’ means a violation of, or a conspiracy or an attempt to 

violate— 

‘‘(1) section 1348; 

‘‘(2) section 32(a) of the Securities Exchange Act of 1934 

(15 U.S.C. 78ff(a)); 

‘‘(3) section 24 of the Securities Act of 1933 (15 U.S.C. 

77x); 

‘‘(4) section 217 of the Investment Advisers Act of 1940 

(15 U.S.C. 80b–17); 

‘‘(5) section 49 of the Investment Company Act of 1940 

(15 U.S.C. 80a–48); or 

‘‘(6) section 325 of the Trust Indenture Act of 1939 (15 

U.S.C. 77yyy). 

‘‘(b) LIMITATION.—No person shall be prosecuted, tried, or punished for a securities fraud offense, unless the indictment is found 

or the information is instituted within 6 years after the commission 

of the offense.’’. 

(2) TECHNICAL AND CONFORMING AMENDMENT.—The table 

of sections for chapter 213 of title 18, United States Code, 

is amended by adding at the end the following: 

‘‘3301. Securities fraud offenses.’’. 

(c) AMENDMENTS TO THE FALSE CLAIMS ACT RELATING TO

LIMITATIONS ON ACTIONS.—Section 3730(h) of title 31, United States 

Code, is amended— 

(1) in paragraph (1), by striking ‘‘or agent on behalf of 

the employee, contractor, or agent or associated others in furtherance of other efforts to stop 1 or more violations of this 

subchapter’’ and inserting ‘‘agent or associated others in furtherance of an action under this section or other efforts to 

stop 1 or more violations of this subchapter’’; and 

(2) by adding at the end the following: 

‘‘(3) LIMITATION ON BRINGING CIVIL ACTION.—A civil action 

under this subsection may not be brought more than 3 years 

after the date when the retaliation occurred.’’. 
H. R. 4173—705 

Subtitle H—Conforming Amendments 

SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT. 

Effective on the date of enactment of this Act, the Inspector 

General Act of 1978 (5 U.S.C. App. 3) is amended— 

(1) in section 8G(a)(2), by inserting ‘‘and the Bureau of 

Consumer Financial Protection’’ after ‘‘Board of Governors of 

the Federal Reserve System’’; 

(2) in section 8G(c), by adding at the end the following: 

‘‘For purposes of implementing this section, the Chairman of 

the Board of Governors of the Federal Reserve System shall 

appoint the Inspector General of the Board of Governors of 

the Federal Reserve System and the Bureau of Consumer 

Financial Protection. The Inspector General of the Board of 

Governors of the Federal Reserve System and the Bureau of 

Consumer Financial Protection shall have all of the authorities 

and responsibilities provided by this Act with respect to the 

Bureau of Consumer Financial Protection, as if the Bureau 

were part of the Board of Governors of the Federal Reserve 

System.’’; and 

(3) in section 8G(g)(3), by inserting ‘‘and the Bureau of 

Consumer Financial Protection’’ after ‘‘Board of Governors of 

the Federal Reserve System’’ the first place that term appears. 

SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974. 

Effective on the date of enactment of this Act, section 552a 

of title 5, United States Code, is amended by adding at the end 

the following: 

‘‘(w) APPLICABILITY TO BUREAU OF CONSUMER FINANCIAL

PROTECTION.—Except as provided in the Consumer Financial 

Protection Act of 2010, this section shall apply with respect to 

the Bureau of Consumer Financial Protection.’’. 

SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 1982. 

(a) IN GENERAL.—The Alternative Mortgage Transaction Parity 

Act of 1982 (12 U.S.C. 3801 et seq.) is amended— 

(1) in section 803 (12 U.S.C. 3802(1)), by striking ‘‘1974’’ 

and all that follows through ‘‘described and defined’’ and 

inserting the following: ‘‘1974), in which the interest rate or 

finance charge may be adjusted or renegotiated, described and 

defined’’; and 

(2) in section 804 (12 U.S.C. 3803)— 

(A) in subsection (a)— 

(i) in each of paragraphs (1), (2), and (3), by 

inserting after ‘‘transactions made’’ each place that 

term appears ‘‘on or before the designated transfer 

date, as determined under section 1062 of the Consumer Financial Protection Act of 2010,’’; 

(ii) in paragraph (2), by striking ‘‘and’’ at the end; 

(iii) in paragraph (3), by striking the period at 

the end and inserting ‘‘; and’’; and 

(iv) by adding at the end the following new paragraph: 

‘‘(4) with respect to transactions made after the designated 

transfer date, only in accordance with regulations governing 

alternative mortgage transactions, as issued by the Bureau 
H. R. 4173—706 

of Consumer Financial Protection for federally chartered 

housing creditors, in accordance with the rulemaking authority 

granted to the Bureau of Consumer Financial Protection with 

regard to federally chartered housing creditors under provisions 

of law other than this section.’’; 

(B) by striking subsection (c) and inserting the following: 

‘‘(c) PREEMPTION OF STATE LAW.—An alternative mortgage 

transaction may be made by a housing creditor in accordance with 

this section, notwithstanding any State constitution, law, or regulation that prohibits an alternative mortgage transaction. For purposes of this subsection, a State constitution, law, or regulation 

that prohibits an alternative mortgage transaction does not include 

any State constitution, law, or regulation that regulates mortgage 

transactions generally, including any restriction on prepayment 

penalties or late charges.’’; and 

(C) by adding at the end the following: 

‘‘(d) BUREAU ACTIONS.—The Bureau of Consumer Financial 

Protection shall— 

‘‘(1) review the regulations identified by the Comptroller 

of the Currency and the National Credit Union Administration, 

(as those rules exist on the designated transfer date), as 

applicable under paragraphs (1) through (3) of subsection (a); 

‘‘(2) determine whether such regulations are fair and not 

deceptive and otherwise meet the objectives of the Consumer 

Financial Protection Act of 2010; and 

‘‘(3) promulgate regulations under subsection (a)(4) after 

the designated transfer date. 

‘‘(e) DESIGNATED TRANSFER DATE.—As used in this section, 

the term ‘designated transfer date’ means the date determined 

under section 1062 of the Consumer Financial Protection Act of 

2010.’’. 

(b) EFFECTIVE DATE.—This section and the amendments made 

by this section shall become effective on the designated transfer 

date. 

(c) RULE OF CONSTRUCTION.—The amendments made by subsection (a) shall not affect any transaction covered by the Alternative Mortgage Transaction Parity Act of l982 (12 U.S.C. 3801 

et seq.) and entered into on or before the designated transfer 

date. 

SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT. 

The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) 

is amended— 

(1) by striking ‘‘Board’’ each place that term appears and 

inserting ‘‘Bureau’’, except in subsections (a) and (e) of section 

904 (as amended in paragraph (3) of this section) and in 918 

(15 U.S.C. 1693o) (as so designated by the Credit Card Act 

of 2009) and section 920 (as added by section 1076); 

(2) in section 903 (15 U.S.C. 1693a)— 

(A) by redesignating paragraphs (3) through (11) as 

paragraphs (4) through (12), respectively; and 

(B) by inserting after paragraph (3) the following: 

‘‘(4) the term ‘Bureau’ means the Bureau of Consumer 

Financial Protection;’’; 

(3) in section 904 (15 U.S.C. 1693b)— 
H. R. 4173—707 

(A) in subsection (a), by striking ‘‘(a) PRESCRIPTION

BY BOARD.—The Board shall prescribe regulations to carry 

out the purposes of this title.’’ and inserting the following: 

‘‘(a) PRESCRIPTION BY THE BUREAU AND THE BOARD.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 

the Bureau shall prescribe rules to carry out the purposes 

of this title. 

‘‘(2) AUTHORITY OF THE BOARD.—The Board shall have sole 

authority to prescribe rules— 

‘‘(A) to carry out the purposes of this title with respect 

to a person described in section 1029(a) of the Consumer 

Financial Protection Act of 2010; and 

‘‘(B) to carry out the purposes of section 920.’’; and 

(B) by adding at the end the following new subsection: 

‘‘(e) DEFERENCE.—No provision of this title may be construed 

as altering, limiting, or otherwise affecting the deference that a 

court affords to— 

‘‘(1) the Bureau in making determinations regarding the 

meaning or interpretation of any provision of this title for 

which the Bureau has authority to prescribe regulations; or 

‘‘(2) the Board in making determinations regarding the 

meaning or interpretation of section 920.’’. 

(4) in section 916(d) (15 U.S.C. 1693m) (as so designated 

by the Credit CARD Act of 2009)— 

(A) in the subsection heading, by striking ‘‘OF BOARD

OR APPROVAL OF DULY AUTHORIZED OFFICIAL OR EMPLOYEE

OF FEDERAL RESERVE SYSTEM’’; 

(B) by inserting ‘‘Bureau or the’’ before ‘‘Board’’ each 

place that term appears; and 

(C) by inserting ‘‘Bureau of Consumer Financial Protection or the’’ before ‘‘Federal Reserve System’’; and 

(5) in section 918 (15 U.S.C. 1693o) (as so designated 

by the Credit CARD Act of 2009)— 

(A) in subsection (a)— 

(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject 

to subtitle B of the Consumer Financial Protection 

Act of 2010, compliance’’; 

(ii) by striking paragraphs (1) and (2), and 

inserting the following: 

‘‘(1) section 8 of the Federal Deposit Insurance Act, by 

the appropriate Federal banking agency, as defined in section 

3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), 

with respect to— 

‘‘(A) national banks, Federal savings associations, and 

Federal branches and Federal agencies of foreign banks; 

‘‘(B) member banks of the Federal Reserve System 

(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, 

and insured State branches of foreign banks), commercial 

lending companies owned or controlled by foreign banks, 

and organizations operating under section 25 or 25A of 

the Federal Reserve Act; and 

‘‘(C) banks and State savings associations insured by 

the Federal Deposit Insurance Corporation (other than 

members of the Federal Reserve System), and insured State 

branches of foreign banks;’’; 
H. R. 4173—708 

(iii) by redesignating paragraphs (3) through (5) 

as paragraphs (2) through (4), respectively; 

(iv) in paragraph (2) (as so redesignated), by 

striking the period at the end and inserting a semicolon; 

(v) in paragraph (3) (as so redesignated), by 

striking ‘‘and’’ at the end; 

(vi) in paragraph (4) (as so redesignated), by 

striking the period at the end and inserting ‘‘and’’; 

and 

(vii) by adding at the end the following: 

‘‘(5) subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau, with respect to any person subject 

to this title, except that the Bureau shall not have authority 

to enforce the requirements of section 920 or any regulations 

prescribed by the Board under section 920.’’; 

(B) in subsection (b), by inserting ‘‘any of paragraphs 

(1) through (4) of’’ before ‘‘subsection (a)’’ each place that 

term appears; and 

(C) by striking subsection (c) and inserting the following: 

‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE FEDERAL TRADE

COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some 

other Government agency under any of paragraphs (1) through 

(4) of subsection (a), and subject to subtitle B of the Consumer 

Financial Protection Act of 2010, the Federal Trade Commission 

shall be authorized to enforce such requirements. For the purpose 

of the exercise by the Federal Trade Commission of its functions 

and powers under the Federal Trade Commission Act, a violation 

of any requirement imposed under this title shall be deemed a 

violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade 

Commission to enforce compliance by any person subject to the 

jurisdiction of the Federal Trade Commission with the requirements 

imposed under this title, irrespective of whether that person is 

engaged in commerce or meets any other jurisdictional tests under 

the Federal Trade Commission Act.’’. 

SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT. 

The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) 

is amended— 

(1) by striking ‘‘Board’’ each place that term appears, other 

than in section 703(f) (as added by this section) and section 

704(a)(4) (15 U.S.C. 1691c(a)(4)), and inserting ‘‘Bureau’’; 

(2) in section 702 (15 U.S.C. 1691a), by striking subsection 

(c) and inserting the following: 

‘‘(c) The term ‘Bureau’ means the Bureau of Consumer Financial 

Protection.’’; 

(3) in section 703 (15 U.S.C. 1691b)— 

(A) by striking the section heading and inserting the 

following: 

‘‘SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.’’; 

(B) by striking ‘‘(a) REGULATIONS.—’’; 

(C) by striking subsection (b); 
H. R. 4173—709 

(D) by redesignating paragraphs (1) through (5) as 

subsections (a) through (e), respectively; 

(E) in subsection (c), as so redesignated, by striking 

‘‘paragraph (2)’’ and inserting ‘‘subsection (b)’’; and 

(F) by adding at the end the following: 

‘‘(f) BOARD AUTHORITY.—Notwithstanding subsection (a), the 

Board shall prescribe regulations to carry out the purposes of this 

title with respect to a person described in section 1029(a) of the 

Consumer Financial Protection Act of 2010. These regulations may 

contain but are not limited to such classifications, differentiation, 

or other provision, and may provide for such adjustments and 

exceptions for any class of transactions, as in the judgment of 

the Board are necessary or proper to effectuate the purposes of 

this title, to prevent circumvention or evasion thereof, or to facilitate 

or substantiate compliance therewith. 

‘‘(g) DEFERENCE.—Notwithstanding any power granted to any 

Federal agency under this title, the deference that a court affords 

to a Federal agency with respect to a determination made by 

such agency relating to the meaning or interpretation of any provision of this title that is subject to the jurisdiction of such agency 

shall be applied as if that agency were the only agency authorized 

to apply, enforce, interpret, or administer the provisions of this 

title’’; 

(4) in section 704 (15 U.S.C. 1691c)— 

(A) in subsection (a)— 

(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject 

to subtitle B of the Consumer Protection Financial 

Protection Act of 2010’’; 

(ii) by striking paragraphs (1) and (2) and inserting 

the following: 

‘‘(1) section 8 of the Federal Deposit Insurance Act, by 

the appropriate Federal banking agency, as defined in section 

3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), 

with respect to— 

‘‘(A) national banks, Federal savings associations, and 

Federal branches and Federal agencies of foreign banks; 

‘‘(B) member banks of the Federal Reserve System 

(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, 

and insured State branches of foreign banks), commercial 

lending companies owned or controlled by foreign banks, 

and organizations operating under section 25 or 25A of 

the Federal Reserve Act; and 

‘‘(C) banks and State savings associations insured by 

the Federal Deposit Insurance Corporation (other than 

members of the Federal Reserve System), and insured State 

branches of foreign banks;’’; 

(iii) by redesignating paragraphs (3) through (9) 

as paragraphs (2) through (8), respectively; 

(iv) in paragraph (7) (as so redesignated), by 

striking ‘‘and’’ at the end; 

(v) in paragraph (8) (as so redesignated), by 

striking the period at the end, and inserting ‘‘; and’’; 

and 

(vi) by adding at the end the following: 
H. R. 4173—710 

‘‘(9) Subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau, with respect to any person subject 

to this title.’’; 

(B) by striking subsection (c) and inserting the following: 

‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF FEDERAL TRADE

COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some 

other Government agency under any of paragraphs (1) through 

(8) of subsection (a), and subject to subtitle B of the Consumer 

Financial Protection Act of 2010, the Federal Trade Commission 

shall be authorized to enforce such requirements. For the purpose 

of the exercise by the Federal Trade Commission of its functions 

and powers under the Federal Trade Commission Act (15 U.S.C. 

41 et seq.), a violation of any requirement imposed under this 

subchapter shall be deemed a violation of a requirement imposed 

under that Act. All of the functions and powers of the Federal 

Trade Commission under the Federal Trade Commission Act are 

available to the Federal Trade Commission to enforce compliance 

by any person with the requirements imposed under this title, 

irrespective of whether that person is engaged in commerce or 

meets any other jurisdictional tests under the Federal Trade 

Commission Act, including the power to enforce any rule prescribed 

by the Bureau under this title in the same manner as if the 

violation had been a violation of a Federal Trade Commission 

trade regulation rule.’’; and 

(C) in subsection (d), by striking ‘‘Board’’ and inserting 

‘‘Bureau’’; 

(5) in section 706(e) (15 U.S.C. 1691e(e))— 

(A) in the subsection heading— 

(i) by striking ‘‘BOARD’’ each place that term 

appears and inserting ‘‘BUREAU’’; and 

(ii) by striking ‘‘FEDERAL RESERVE SYSTEM’’ and 

inserting ‘‘BUREAU OF CONSUMER FINANCIAL PROTECTION’’; and 

(B) by striking ‘‘Federal Reserve System’’ and inserting 

‘‘Bureau of Consumer Financial Protection’’; 

(6) in section 706(g) (15 U.S.C. 1691e(g)), by striking ‘‘(3)’’ 

and inserting ‘‘(9)’’; and 

(7) in section 706(f) (15 U.S.C. 1691e(f)), by striking ‘‘two 

years from’’ each place that term appears and inserting ‘‘5 

years after’’. 

SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY 

ACT. 

(a) AMENDMENT TO SECTION 603.—Section 603(d)(1) of the Expedited Funds Availability Act (12 U.S.C. 4002) is amended by 

inserting after ‘‘Board’’ the following ‘‘, jointly with the Director 

of the Bureau of Consumer Financial Protection,’’. 

(b) AMENDMENTS TO SECTION 604.—Section 604 of the Expedited Funds Availability Act (12 U.S.C. 4003) is amended— 

(1) by inserting after ‘‘Board’’ each place that term appears, 

other than in subsection (f), the following: ‘‘, jointly with the 

Director of the Bureau of Consumer Financial Protection,’’; 

and 
H. R. 4173—711 

(2) in subsection (f), by striking ‘‘Board.’’ each place that 

term appears and inserting the following: ‘‘Board, jointly with 

the Director of the Bureau of Consumer Financial Protection.’’. 

(c) AMENDMENTS TO SECTION 605.—Section 605 of the Expedited 

Funds Availability Act (12 U.S.C. 4004) is amended— 

(1) by inserting after ‘‘Board’’ each place that term appears, 

other than in the heading for section 605(f)(1), the following: 

‘‘, jointly with the Director of the Bureau of Consumer Financial 

Protection,’’; and 

(2) in subsection (f)(1), in the paragraph heading, by 

inserting ‘‘AND BUREAU’’ after ‘‘BOARD’’. 

(d) AMENDMENTS TO SECTION 609.—Section 609 of the Expedited Funds Availability Act (12 U.S.C. 4008) is amended: 

(1) in subsection (a), by inserting after ‘‘Board’’ the following 

‘‘, jointly with the Director of the Bureau of Consumer Financial 

Protection,’’; and 

(2) by striking subsection (e) and inserting the following: 

‘‘(e) CONSULTATIONS.—In prescribing regulations under subsections (a) and (b), the Board and the Director of the Bureau 

of Consumer Financial Protection, in the case of subsection (a), 

and the Board, in the case of subsection (b), shall consult with 

the Comptroller of the Currency, the Board of Directors of the 

Federal Deposit Insurance Corporation, and the National Credit 

Union Administration Board.’’. 

(e) EXPEDITED FUNDS AVAILABILITY IMPROVEMENTS.—Section 

603 of the Expedited Funds Availability Act (12 U.S.C. 4002) is 

amended— 

(1) in subsection (a)(2)(D), by striking ‘‘$100’’ and inserting ‘‘$200’’; and 

(2) in subsection (b)(3)(C), in the subparagraph heading, 

by striking ‘‘$100’’ and inserting ‘‘$200’’; and 

(3) in subsection (c)(1)(B)(iii), in the clause heading, by 

striking ‘‘$100’’ and inserting ‘‘$200’’. 

(f) REGULAR ADJUSTMENTS FOR INFLATION.—Section 607 of the 

Expedited Funds Availability Act (12 U.S.C. 4006) is amended 

by adding at the end the following: 

‘‘(f) ADJUSTMENTS TO DOLLAR AMOUNTS FOR INFLATION.—The 

dollar amounts under this title shall be adjusted every 5 years 

after December 31, 2011, by the annual percentage increase in 

the Consumer Price Index for Urban Wage Earners and Clerical 

Workers, as published by the Bureau of Labor Statistics, rounded 

to the nearest multiple of $25.’’. 

SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT. 

The Fair Credit Billing Act (15 U.S.C. 1666–1666j) is amended 

by striking ‘‘Board’’ each place that term appears, other than in 

section 105(i) (as added by this subtitle) and inserting ‘‘Bureau’’. 

SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND 

THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT 

OF 2003. 

(a) FAIR CREDIT REPORTING ACT.—The Fair Credit Reporting 

Act (15 U.S.C. 1681 et seq.) is amended— 

(1) in section 603 (15 U.S.C. 1681a)— 

(A) by redesignating subsections (w) and (x) as subsections (x) and (y), respectively; and 

(B) by inserting after subsection (v) the following: 
H. R. 4173—712 

‘‘(w) The term ‘Bureau’ means the Bureau of Consumer Financial Protection.’’; and 

(2) except as otherwise specifically provided in this subsection— 

(A) by striking ‘‘Federal Trade Commission’’ each place 

that term appears and inserting ‘‘Bureau’’; 

(B) by striking ‘‘FTC’’ each place that term appears 

and inserting ‘‘Bureau’’; 

(C) by striking ‘‘the Commission’’ each place that term 

appears, other than sections 615(e) (15 U.S.C. 1681m(e)) 

and 628(a)(1) (15 U.S.C. 1681w(a)(1)), and inserting ‘‘the 

Bureau’’; and 

(D) by striking ‘‘The Federal banking agencies, the 

National Credit Union Administration, and the Commission 

shall jointly’’ each place that term appears, other than 

section 615(e)(1) (15 U.S.C. 1681m(e)) and section 628(a)(1) 

(15 U.S.C. 1681w(a)(1)), and inserting ‘‘The Bureau shall’’; 

(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by striking 

‘‘Board of Governors of the Federal Reserve System’’ and 

inserting ‘‘Bureau’’; 

(4) in section 604(g) (15 U.S.C. 1681b(g))— 

(A) in paragraph (3), by striking subparagraph (C) 

and inserting the following: 

‘‘(C) as otherwise determined to be necessary and 

appropriate, by regulation or order, by the Bureau or the 

applicable State insurance authority (with respect to any 

person engaged in providing insurance or annuities).’’; and 

(B) by striking paragraph (5) and inserting the following: 

‘‘(5) REGULATIONS AND EFFECTIVE DATE FOR PARAGRAPH

(2).— ‘‘(A) REGULATIONS REQUIRED.—The Bureau may, after 

notice and opportunity for comment, prescribe regulations 

that permit transactions under paragraph (2) that are 

determined to be necessary and appropriate to protect 

legitimate operational, transactional, risk, consumer, and 

other needs (and which shall include permitting actions 

necessary for administrative verification purposes), consistent with the intent of paragraph (2) to restrict the 

use of medical information for inappropriate purposes.’’; 

(5) in section 605(h)(2)(A) (15 U.S.C. 1681c(h)(2)(A)), by 

striking ‘‘with respect to the entities that are subject to their 

respective enforcement authority under section 621’’ and 

inserting ‘‘, in consultation with the Federal banking agencies, 

the National Credit Union Administration, and the Federal 

Trade Commission,’’. 

(6) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking 

paragraph (2) and inserting the following: 

‘‘(2) EXCLUSION.—Complaints received or obtained by the 

Bureau pursuant to its investigative authority under the Consumer Financial Protection Act of 2010 shall not be subject 

to paragraph (1).’’; 

(7) in section 615(d)(2)(B) (15 U.S.C. 1681m(d)(2)(B)), by 

striking ‘‘the Federal banking agencies’’ and inserting ‘‘the Federal Trade Commission, the Federal banking agencies,’’; 

(8) in section 615(e)(1) (15 U.S.C. 1681m(e)(1)), by striking 

‘‘and the Commission’’ and inserting ‘‘the Federal Trade 
H. R. 4173—713 

Commission, the Commodity Futures Trading Commission, and 

the Securities and Exchange Commission’’; 

(9) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by striking 

subparagraph (A) and inserting the following: 

‘‘(A) RULES REQUIRED.—The Bureau shall prescribe 

rules to carry out this subsection.’’; 

(10) in section 621 (15 U.S.C. 1681s)— 

(A) by striking subsection (a) and inserting the following: 

‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMISSION.— ‘‘(1) IN GENERAL.—The Federal Trade Commission shall 

be authorized to enforce compliance with the requirements 

imposed by this title under the Federal Trade Commission 

Act (15 U.S.C. 41 et seq.), with respect to consumer reporting 

agencies and all other persons subject thereto, except to the 

extent that enforcement of the requirements imposed under 

this title is specifically committed to some other Government 

agency under any of subparagraphs (A) through (G) of subsection (b)(1), and subject to subtitle B of the Consumer Financial Protection Act of 2010, subsection (b). For the purpose 

of the exercise by the Federal Trade Commission of its functions 

and powers under the Federal Trade Commission Act, a violation of any requirement or prohibition imposed under this title 

shall constitute an unfair or deceptive act or practice in commerce, in violation of section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)), and shall be subject to enforcement 

by the Federal Trade Commission under section 5(b) of that 

Act with respect to any consumer reporting agency or person 

that is subject to enforcement by the Federal Trade Commission 

pursuant to this subsection, irrespective of whether that person 

is engaged in commerce or meets any other jurisdictional tests 

under the Federal Trade Commission Act. The Federal Trade 

Commission shall have such procedural, investigative, and 

enforcement powers, including the power to issue procedural 

rules in enforcing compliance with the requirements imposed 

under this title and to require the filing of reports, the production of documents, and the appearance of witnesses, as though 

the applicable terms and conditions of the Federal Trade 

Commission Act were part of this title. Any person violating 

any of the provisions of this title shall be subject to the penalties 

and entitled to the privileges and immunities provided in the 

Federal Trade Commission Act as though the applicable terms 

and provisions of such Act are part of this title. 

‘‘(2) PENALTIES.— 

‘‘(A) KNOWING VIOLATIONS.—Except as otherwise provided by subtitle B of the Consumer Financial Protection 

Act of 2010, in the event of a knowing violation, which 

constitutes a pattern or practice of violations of this title, 

the Federal Trade Commission may commence a civil action 

to recover a civil penalty in a district court of the United 

States against any person that violates this title. In such 

action, such person shall be liable for a civil penalty of 

not more than $2,500 per violation. 

‘‘(B) DETERMINING PENALTY AMOUNT.—In determining 

the amount of a civil penalty under subparagraph (A), 

the court shall take into account the degree of culpability, 

any history of such prior conduct, ability to pay, effect 
H. R. 4173—714 

on ability to continue to do business, and such other matters as justice may require. 

‘‘(C) LIMITATION.—Notwithstanding paragraph (2), a 

court may not impose any civil penalty on a person for 

a violation of section 623(a)(1), unless the person has been 

enjoined from committing the violation, or ordered not to 

commit the violation, in an action or proceeding brought 

by or on behalf of the Federal Trade Commission, and 

has violated the injunction or order, and the court may 

not impose any civil penalty for any violation occurring 

before the date of the violation of the injunction or order.’’; 

(B) by striking subsection (b) and inserting the following: 

‘‘(b) ENFORCEMENT BY OTHER AGENCIES.— 

‘‘(1) IN GENERAL.—Subject to subtitle B of the Consumer 

Financial Protection Act of 2010, compliance with the requirements imposed under this title with respect to consumer 

reporting agencies, persons who use consumer reports from 

such agencies, persons who furnish information to such agencies, and users of information that are subject to section 615(d) 

shall be enforced under— 

‘‘(A) section 8 of the Federal Deposit Insurance Act 

(12 U.S.C. 1818), by the appropriate Federal banking 

agency, as defined in section 3(q) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(q)), with respect to— 

‘‘(i) any national bank or State savings association, 

and any Federal branch or Federal agency of a foreign 

bank; 

‘‘(ii) any member bank of the Federal Reserve 

System (other than a national bank), a branch or 

agency of a foreign bank (other than a Federal branch, 

Federal agency, or insured State branch of a foreign 

bank), a commercial lending company owned or controlled by a foreign bank, and any organization operating under section 25 or 25A of the Federal Reserve 

Act; and 

‘‘(iii) any bank or Federal savings association 

insured by the Federal Deposit Insurance Corporation 

(other than a member of the Federal Reserve System) 

and any insured State branch of a foreign bank; 

‘‘(B) the Federal Credit Union Act (12 U.S.C. 1751 

et seq.), by the Administrator of the National Credit Union 

Administration with respect to any Federal credit union; 

‘‘(C) subtitle IV of title 49, United States Code, by 

the Secretary of Transportation, with respect to all carriers 

subject to the jurisdiction of the Surface Transportation 

Board; 

‘‘(D) the Federal Aviation Act of 1958 (49 U.S.C. App. 

1301 et seq.), by the Secretary of Transportation, with 

respect to any air carrier or foreign air carrier subject 

to that Act; 

‘‘(E) the Packers and Stockyards Act, 1921 (7 U.S.C. 

181 et seq.) (except as provided in section 406 of that 

Act), by the Secretary of Agriculture, with respect to any 

activities subject to that Act; 
H. R. 4173—715 

‘‘(F) the Commodity Exchange Act, with respect to 

a person subject to the jurisdiction of the Commodity 

Futures Trading Commission; 

‘‘(G) the Federal securities laws, and any other laws 

that are subject to the jurisdiction of the Securities and 

Exchange Commission, with respect to a person that is 

subject to the jurisdiction of the Securities and Exchange 

Commission; and 

‘‘(H) subtitle E of the Consumer Financial Protection 

Act of 2010, by the Bureau, with respect to any person 

subject to this title. 

‘‘(2) INCORPORATED DEFINITIONS.—The terms used in paragraph (1) that are not defined in this title or otherwise defined 

in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(s)) have the same meanings as in section 1(b) of the 

International Banking Act of 1978 (12 U.S.C. 3101).’’; 

(C) in subsection (c)(2)— 

(i) by inserting ‘‘and the Federal Trade Commission’’ before ‘‘or the appropriate’’; and 

(ii) by inserting ‘‘and the Federal Trade Commission’’ before ‘‘or appropriate’’ each place that term 

appears; 

(D) in subsection (c)(4), by inserting before ‘‘or the 

appropriate’’ each place that term appears the following: 

‘‘, the Federal Trade Commission,’’; 

(E) by striking subsection (e) and inserting the following: 

‘‘(e) REGULATORY AUTHORITY.— ‘‘(1) IN GENERAL.—The Bureau shall prescribe such regulations as are necessary to carry out the purposes of this title, 

except with respect to sections 615(e) and 628. The Bureau 

may prescribe regulations as may be necessary or appropriate 

to administer and carry out the purposes and objectives of 

this title, and to prevent evasions thereof or to facilitate compliance therewith. Except as provided in section 1029(a) of the 

Consumer Financial Protection Act of 2010, the regulations 

prescribed by the Bureau under this title shall apply to any 

person that is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section. 

‘‘(2) DEFERENCE.—Notwithstanding any power granted to 

any Federal agency under this title, the deference that a court 

affords to a Federal agency with respect to a determination 

made by such agency relating to the meaning or interpretation 

of any provision of this title that is subject to the jurisdiction 

of such agency shall be applied as if that agency were the 

only agency authorized to apply, enforce, interpret, or administer the provisions of this title The regulations prescribed 

by the Bureau under this title shall apply to any person that 

is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section.’’; and 

(F) in subsection (f)(2), by striking ‘‘the Federal banking 

agencies’’ and insert ‘‘the Federal Trade Commission, the 

Federal banking agencies,’’; 

(11) in section 623 (15 U.S.C. 1681s–2)— 

(A) in subsection (a)(7), by striking subparagraph (D) 

and inserting the following: 

‘‘(D) MODEL DISCLOSURE.— 
H. R. 4173—716 

‘‘(i) DUTY OF BUREAU.—The Bureau shall prescribe 

a brief model disclosure that a financial institution 

may use to comply with subparagraph (A), which shall 

not exceed 30 words. 

‘‘(ii) USE OF MODEL NOT REQUIRED.—No provision 

of this paragraph may be construed to require a financial institution to use any such model form prescribed 

by the Bureau. 

‘‘(iii) COMPLIANCE USING MODEL.—A financial 

institution shall be deemed to be in compliance with 

subparagraph (A) if the financial institution uses any 

model form prescribed by the Bureau under this 

subparagraph, or the financial institution uses any 

such model form and rearranges its format.’’; 

(B) in subsection (a)(8), by inserting ‘‘, in consultation 

with the Federal Trade Commission, the Federal banking 

agencies, and the National Credit Union Administration,’’ 

before ‘‘shall jointly’’; and 

(C) by striking subsection (e) and inserting the following: 

‘‘(e) ACCURACY GUIDELINES AND REGULATIONS REQUIRED.— 

‘‘(1) GUIDELINES.—The Bureau shall, with respect to persons or entities that are subject to the enforcement authority 

of the Bureau under section 621— 

‘‘(A) establish and maintain guidelines for use by each 

person that furnishes information to a consumer reporting 

agency regarding the accuracy and integrity of the information relating to consumers that such entities furnish to 

consumer reporting agencies, and update such guidelines 

as often as necessary; and 

‘‘(B) prescribe regulations requiring each person that 

furnishes information to a consumer reporting agency to 

establish reasonable policies and procedures for implementing the guidelines established pursuant to subparagraph (A). 

‘‘(2) CRITERIA.—In developing the guidelines required by 

paragraph (1)(A), the Bureau shall— 

‘‘(A) identify patterns, practices, and specific forms of 

activity that can compromise the accuracy and integrity 

of information furnished to consumer reporting agencies; 

‘‘(B) review the methods (including technological 

means) used to furnish information relating to consumers 

to consumer reporting agencies; 

‘‘(C) determine whether persons that furnish information to consumer reporting agencies maintain and enforce 

policies to ensure the accuracy and integrity of information 

furnished to consumer reporting agencies; and 

‘‘(D) examine the policies and processes that persons 

that furnish information to consumer reporting agencies 

employ to conduct reinvestigations and correct inaccurate 

information relating to consumers that has been furnished 

to consumer reporting agencies.’’; 

(12) in section 628(a)(1) (15 U.S.C. 1681w(a)(1)), by striking 

‘‘Not later than’’ and all that follows through ‘‘Exchange 

Commission,’’ and inserting ‘‘The Federal Trade Commission, 

the Securities and Exchange Commission, the Commodity 

Futures Trading Commission, the Federal banking agencies, 
H. R. 4173—717 

and the National Credit Union Administration, with respect 

to the entities that are subject to their respective enforcement 

authority under section 621,’’; and 

(13) in section 628(a)(3) (15 U.S.C. 1681w(a)(3)), by striking 

‘‘the Federal banking agencies, the National Credit Union 

Administration, the Commission, and the Securities and 

Exchange Commission’’ and inserting ‘‘the agencies identified 

in paragraph (1)’’. 

(b) FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003.— 

The Fair and Accurate Credit Transactions Act of 2003 (Public 

Law 108–159) is amended— 

(1) in section 112(b) (15 U.S.C. 1681c–1 note), by striking 

‘‘Commission’’ and inserting ‘‘Bureau’’; 

(2) in section 211(d) (15 U.S.C. 1681j note), by striking 

‘‘Commission’’ each place that term appears and inserting 

‘‘Bureau’’; 

(3) in section 214(b) (15 U.S.C. 1681s–3 note), by striking 

paragraph (1) and inserting the following: 

‘‘(1) IN GENERAL.—Regulations to carry out section 624 

of the Fair Credit Reporting Act (15 U.S.C. 1681s–3), shall 

be prescribed, as described in paragraph (2), by— 

‘‘(A) the Commodity Futures Trading Commission, with 

respect to entities subject to its enforcement authorities; 

‘‘(B) the Securities and Exchange Commission, with 

respect to entities subject to its enforcement authorities; 

and 

‘‘(C) the Bureau, with respect to other entities subject 

to this Act.’’; and 

(4) in section 214(e)(1) (15 U.S.C. 1681s–3 note), by striking 

‘‘Commission’’ and inserting ‘‘Bureau’’. 

SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES 

ACT. 

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et 

seq.) is amended— 

(1) by striking ‘‘Commission’’ each place that term appears 

and inserting ‘‘Bureau’’; 

(2) in section 803 (15 U.S.C. 1692a)— 

(A) by striking paragraph (1) and inserting the following: 

‘‘(1) The term ‘Bureau’ means the Bureau of Consumer 

Financial Protection.’’; 

(3) in section 814 (15 U.S.C. 1692l)— 

(A) by striking subsection (a) and inserting the following: 

‘‘(a) FEDERAL TRADE COMMISSION.—The Federal Trade Commission shall be authorized to enforce compliance with this title, except 

to the extent that enforcement of the requirements imposed under 

this title is specifically committed to another Government agency 

under any of paragraphs (1) through (5) of subsection (b), subject 

to subtitle B of the Consumer Financial Protection Act of 2010. 

For purpose of the exercise by the Federal Trade Commission 

of its functions and powers under the Federal Trade Commission 

Act (15 U.S.C. 41 et seq.), a violation of this title shall be deemed 

an unfair or deceptive act or practice in violation of that Act. 

All of the functions and powers of the Federal Trade Commission 
H. R. 4173—718 

under the Federal Trade Commission Act are available to the Federal Trade Commission to enforce compliance by any person with 

this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests under the Federal 

Trade Commission Act, including the power to enforce the provisions 

of this title, in the same manner as if the violation had been 

a violation of a Federal Trade Commission trade regulation rule.’’; 

and 

(B) in subsection (b)— 

(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject 

to subtitle B of the Consumer Financial Protection 

Act of 2010, compliance’’; 

(ii) by striking paragraphs (1) and (2) and inserting 

the following: 

‘‘(1) section 8 of the Federal Deposit Insurance Act, by 

the appropriate Federal banking agency, as defined in section 

3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), 

with respect to— 

‘‘(A) national banks, Federal savings associations, and 

Federal branches and Federal agencies of foreign banks; 

‘‘(B) member banks of the Federal Reserve System 

(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, 

and insured State branches of foreign banks), commercial 

lending companies owned or controlled by foreign banks, 

and organizations operating under section 25 or 25A of 

the Federal Reserve Act; and 

‘‘(C) banks and State savings associations insured by 

the Federal Deposit Insurance Corporation (other than 

members of the Federal Reserve System), and insured State 

branches of foreign banks;’’; 

(iii) by redesignating paragraphs (3) through (6), 

as paragraphs (2) through (5), respectively; 

(iv) in paragraph (4) (as so redesignated), by 

striking ‘‘and’’ at the end; 

(v) in paragraph (5) (as so redesignated), by 

striking the period at the end and inserting ‘‘; and’’; 

and 

(vi) by inserting before the undesignated matter 

at the end the following: 

‘‘(6) subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau, with respect to any person subject 

to this title.’’. 

(4) in subsection (d), by striking ‘‘Neither the Commission’’ 

and all that follows through the end of the subsection and 

inserting the following: ‘‘Except as provided in section 1029(a) 

of the Consumer Financial Protection Act of 2010, the Bureau 

may prescribe rules with respect to the collection of debts 

by debt collectors, as defined in this title.’’. 

SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT. 

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 

is amended— 

(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the 

end the following: 
H. R. 4173—719 

‘‘(6) REFERRAL TO BUREAU OF CONSUMER FINANCIAL PROTECTION.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, each appropriate Federal banking agency 

shall make a referral to the Bureau of Consumer Financial 

Protection when the Federal banking agency has a reasonable 

belief that a violation of an enumerated consumer law, as 

defined in the Consumer Financial Protection Act of 2010, 

has been committed by any insured depository institution or 

institution-affiliated party within the jurisdiction of that appropriate Federal banking agency.’’; and 

(2) in section 43 (12 U.S.C. 1831t)— 

(A) in subsection (c), by striking ‘‘Federal Trade 

Commission’’ and inserting ‘‘Bureau’’; 

(B) in subsection (d), by striking ‘‘Federal Trade 

Commission’’ and inserting ‘‘Bureau’’; 

(C) in subsection (e)— 

(i) in paragraph (2), by striking ‘‘Federal Trade 

Commission’’ and inserting ‘‘Bureau’’; and 

(ii) by adding at the end the following new paragraph: 

‘‘(5) BUREAU.—The term ‘Bureau’ means the Bureau of 

Consumer Financial Protection.’’; and 

(D) in subsection (f)— 

(i) by striking paragraph (1) and inserting the 

following: 

‘‘(1) LIMITED ENFORCEMENT AUTHORITY.—Compliance with 

the requirements of subsections (b), (c), and (e), and any regulation prescribed or order issued under such subsection, shall 

be enforced under the Consumer Financial Protection Act of 

2010, by the Bureau, subject to subtitle B of the Consumer 

Financial Protection Act of 2010, and under the Federal Trade 

Commission Act (15 U.S.C. 41 et seq.) by the Federal Trade 

Commission.’’; and 

(ii) in paragraph (2), by striking subparagraph (C) 

and inserting the following: 

‘‘(C) LIMITATION ON STATE ACTION WHILE FEDERAL

ACTION PENDING.—If the Bureau or Federal Trade Commission has instituted an enforcement action for a violation 

of this section, no appropriate State supervisory agency 

may, during the pendency of such action, bring an action 

under this section against any defendant named in the 

complaint of the Bureau or Federal Trade Commission 

for any violation of this section that is alleged in that 

complaint.’’. 

SEC. 1091. AMENDMENT TO FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978. 

Section 1004(a)(4) of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by 

striking ‘‘Director, Office of Thrift Supervision’’ and inserting 

‘‘Director of the Consumer Financial Protection Bureau’’. 

SEC. 1092. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT. 

Section 18(f) of the Federal Trade Commission Act (15 U.S.C. 

57a(f)) is amended— 

(1) by striking the subsection heading and inserting the 

following: 
H. R. 4173—720 

‘‘(f) DEFINITIONS OF BANKS, SAVINGS AND LOAN INSTITUTIONS, 

AND FEDERAL CREDIT UNIONS.—’’. 

(2) by striking paragraph (1) and inserting the following: 

‘‘(1) [Repealed.]’’; 

(3) by striking paragraphs (5) through (7); 

(4) in paragraph (2)— 

(A) by striking ‘‘(2) ENFORCEMENT’’ and all that follows 

through ‘‘in the case of’’ and inserting the following: 

‘‘(2) DEFINITION.—For purposes of this Act, the term ‘bank’ 

means’’; 

(B) in subparagraph (A), by striking ‘‘, by the division’’ 

and all that follows through ‘‘Currency’’; 

(C) in subparagraph (B)— 

(i) by striking ‘‘, by the division’’ and all that 

follows through ‘‘System’’; and 

(ii) by striking ‘‘25(a)’’ and inserting ‘‘25A’’; and 

(D) in subparagraph (C)— 

(i) by striking ‘‘(other’’ and inserting ‘‘(other than’’; 

and 

(ii) by striking ‘‘, by the division’’ and all that 

follows through ‘‘Corporation’’; 

(5) in paragraph (3), by striking ‘‘Compliance’’ and all that 

follows through ‘‘as defined in’’ and inserting the following: 

‘‘For purposes of this Act, the term ‘‘savings and loan institution’’ has the same meaning as in’’; and 

(6) in paragraph (4), by striking ‘‘Compliance’’ and all that 

follows through ‘‘credit unions under’’ and inserting the following: ‘‘For purposes of this Act, the term ‘‘Federal credit 

union’’ has the same meaning as in’’. 

SEC. 1093. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT. 

Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et 

seq.) is amended— 

(1) in section 501(b) (15 U.S.C. 6801(b)), by inserting ‘‘, 

other than the Bureau of Consumer Financial Protection,’’ after 

‘‘505(a)’’; 

(2) in section 502(e)(5) (15 U.S.C. 6802(e)(5)), by inserting 

‘‘the Bureau of Consumer Financial Protection’’ after 

‘‘(including’’; 

(3) in section 504(a) (15 U.S.C. 6804(a))— 

(A) by striking paragraphs (1) and (2) and inserting 

the following: 

‘‘(1) RULEMAKING.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(C), the Bureau of Consumer Financial Protection and the 

Securities and Exchange Commission shall have authority 

to prescribe such regulations as may be necessary to carry 

out the purposes of this subtitle with respect to financial 

institutions and other persons subject to their respective 

jurisdiction under section 505 (and notwithstanding subtitle B of the Consumer Financial Protection Act of 2010), 

except that the Bureau of Consumer Financial Protection 

shall not have authority to prescribe regulations with 

respect to the standards under section 501. 

‘‘(B) CFTC.—The Commodity Futures Trading 

Commission shall have authority to prescribe such regulations as may be necessary to carry out the purposes of 
H. R. 4173—721 

this subtitle with respect to financial institutions and other 

persons subject to the jurisdiction of the Commodity 

Futures Trading Commission under section 5g of the Commodity Exchange Act. 

‘‘(C) FEDERAL TRADE COMMISSION AUTHORITY.—Notwithstanding the authority of the Bureau of Consumer 

Financial Protection under subparagraph (A), the Federal 

Trade Commission shall have authority to prescribe such 

regulations as may be necessary to carry out the purposes 

of this subtitle with respect to any financial institution 

that is a person described in section 1029(a) of the Consumer Financial Protection Act of 2010. 

‘‘(D) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to alter, affect, or otherwise limit 

the authority of a State insurance authority to adopt regulations to carry out this subtitle. 

‘‘(2) COORDINATION, CONSISTENCY, AND COMPARABILITY.— 

Each of the agencies authorized under paragraph (1) to prescribe regulations shall consult and coordinate with the other 

such agencies and, as appropriate, and with representatives 

of State insurance authorities designated by the National 

Association of Insurance Commissioners, for the purpose of 

assuring, to the extent possible, that the regulations prescribed 

by each such agency are consistent and comparable with the 

regulations prescribed by the other such agencies.’’; and 

(B) in paragraph (3), by striking ‘‘, and shall be issued 

in final form not later than 6 months after the date of 

enactment of this Act’’; 

(4) in section 505(a) (15 U.S.C. 6805(a))— 

(A) by striking ‘‘This subtitle’’ and all that follows 

through ‘‘as follows:’’ and inserting ‘‘Subject to subtitle 

B of the Consumer Financial Protection Act of 2010, this 

subtitle and the regulations prescribed thereunder shall 

be enforced by the Bureau of Consumer Financial Protection, the Federal functional regulators, the State insurance 

authorities, and the Federal Trade Commission with 

respect to financial institutions and other persons subject 

to their jurisdiction under applicable law, as follows:’’; 

(B) in paragraph (1)— 

(i) in the matter preceding subparagraph (A), by 

inserting ‘‘by the appropriate Federal banking agency, 

as defined in section 3(q) of the Federal Deposit Insurance Act,’’ after ‘‘Act,’’; 

(ii) in subparagraph (A), by striking ‘‘, by the Office 

of the Comptroller of the Currency’’; 

(iii) in subparagraph (B), by striking ‘‘, by the 

Board of Governors of the Federal Reserve System’’; 

(iv) in subparagraph (C), by striking ‘‘, by the 

Board of Directors of the Federal Deposit Insurance 

Corporation’’; and 

(v) in subparagraph (D), by striking ‘‘, by the 

Director of the Office of Thrift Supervision’’; and 

(C) by adding at the end the following: 

‘‘(8) Under subtitle E of the Consumer Financial Protection 

Act of 2010, by the Bureau of Consumer Financial Protection, 

in the case of any financial institution and other covered person 

or service provider that is subject to the jurisdiction of the 
H. R. 4173—722 

Bureau and any person subject to this subtitle, but not with 

respect to the standards under section 501.’’; 

(5) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by inserting 

‘‘, other than the Bureau of Consumer Financial Protection,’’ 

after ‘‘subsection (a)’’; and 

(6) in section 507(b) (15 U.S.C. 6807), by striking ‘‘Federal 

Trade Commission’’ and inserting ‘‘Bureau of Consumer Financial Protection’’. 

SEC. 1094. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT 

OF 1975. 

The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 

et seq.) is amended— 

(1) by striking ‘‘Board’’ each place that term appears, other 

than in sections 303, 304(h), 305(b) (as amended by this section), and 307(a) (as amended by this section) and inserting 

‘‘Bureau’’. 

(2) in section 303 (12 U.S.C. 2802)— 

(A) by redesignating paragraphs (1) through (6) as 

paragraphs (2) through (7), respectively; and 

(B) by inserting before paragraph (2) the following: 

‘‘(1) the term ‘Bureau’ means the Bureau of Consumer 

Financial Protection;’’; 

(3) in section 304 (12 U.S.C. 2803)— 

(A) in subsection (b)— 

(i) in paragraph (4), by inserting ‘‘age,’’ before ‘‘and 

gender’’; 

(ii) in paragraph (3), by striking ‘‘and’’ at the end; 

(iii) in paragraph (4), by striking the period at 

the end and inserting a semicolon; and 

(iv) by adding at the end the following: 

‘‘(5) the number and dollar amount of mortgage loans 

grouped according to measurements of— 

‘‘(A) the total points and fees payable at origination 

in connection with the mortgage as determined by the 

Bureau, taking into account 15 U.S.C. 1602(aa)(4); 

‘‘(B) the difference between the annual percentage rate 

associated with the loan and a benchmark rate or rates 

for all loans; 

‘‘(C) the term in months of any prepayment penalty 

or other fee or charge payable on repayment of some portion 

of principal or the entire principal in advance of scheduled 

payments; and 

‘‘(D) such other information as the Bureau may require; 

and 

‘‘(6) the number and dollar amount of mortgage loans and 

completed applications grouped according to measurements of— 

‘‘(A) the value of the real property pledged or proposed 

to be pledged as collateral; 

‘‘(B) the actual or proposed term in months of any 

introductory period after which the rate of interest may 

change; 

‘‘(C) the presence of contractual terms or proposed 

contractual terms that would allow the mortgagor or 

applicant to make payments other than fully amortizing 

payments during any portion of the loan term; 
H. R. 4173—723 

‘‘(D) the actual or proposed term in months of the 

mortgage loan; 

‘‘(E) the channel through which application was made, 

including retail, broker, and other relevant categories; 

‘‘(F) as the Bureau may determine to be appropriate, 

a unique identifier that identifies the loan originator as 

set forth in section 1503 of the S.A.F.E. Mortgage Licensing 

Act of 2008; 

‘‘(G) as the Bureau may determine to be appropriate, 

a universal loan identifier; 

‘‘(H) as the Bureau may determine to be appropriate, 

the parcel number that corresponds to the real property 

pledged or proposed to be pledged as collateral; 

‘‘(I) the credit score of mortgage applicants and mortgagors, in such form as the Bureau may prescribe; and 

‘‘(J) such other information as the Bureau may 

require.’’; 

(B) by striking subsection (h) and inserting the following: 

‘‘(h) SUBMISSION TO AGENCIES.— 

‘‘(1) IN GENERAL.—The data required to be disclosed under 

subsection (b) shall be submitted to the Bureau or to the 

appropriate agency for the institution reporting under this title, 

in accordance with rules prescribed by the Bureau. Notwithstanding the requirement of subsection (a)(2)(A) for disclosure 

by census tract, the Bureau, in consultation with other appropriate agencies described in paragraph (2) and, after notice 

and comment, shall develop regulations that— 

‘‘(A) prescribe the format for such disclosures, the 

method for submission of the data to the appropriate 

agency, and the procedures for disclosing the information 

to the public; 

‘‘(B) require the collection of data required to be disclosed under subsection (b) with respect to loans sold by 

each institution reporting under this title; 

‘‘(C) require disclosure of the class of the purchaser 

of such loans; 

‘‘(D) permit any reporting institution to submit in 

writing to the Bureau or to the appropriate agency such 

additional data or explanations as it deems relevant to 

the decision to originate or purchase mortgage loans; and 

‘‘(E) modify or require modification of itemized information, for the purpose of protecting the privacy interests 

of the mortgage applicants or mortgagors, that is or will 

be available to the public. 

‘‘(2) OTHER APPROPRIATE AGENCIES.—The appropriate agencies described in this paragraph are— 

‘‘(A) the appropriate Federal banking agencies, as 

defined in section 3(q) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(q)), with respect to the entities that 

are subject to the jurisdiction of each such agency, respectively; 

‘‘(B) the Federal Deposit Insurance Corporation for 

banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System), 

mutual savings banks, insured State branches of foreign 

banks, and any other depository institution described in 
H. R. 4173—724 

section 303(2)(A) which is not otherwise referred to in 

this paragraph; 

‘‘(C) the National Credit Union Administration Board 

with respect to credit unions; and 

‘‘(D) the Secretary of Housing and Urban Development 

with respect to other lending institutions not regulated 

by the agencies referred to in subparagraph (A) or (B). 

‘‘(3) RULES FOR MODIFICATIONS UNDER PARAGRAPH (1).— 

‘‘(A) APPLICATION.—A modification under paragraph 

(1)(E) shall apply to information concerning— 

‘‘(i) credit score data described in subsection 

(b)(6)(I), in a manner that is consistent with the purpose described in paragraph (1)(E); and 

‘‘(ii) age or any other category of data described 

in paragraph (5) or (6) of subsection (b), as the Bureau 

determines to be necessary to satisfy the purpose 

described in paragraph (1)(E), and in a manner consistent with that purpose. 

‘‘(B) STANDARDS.—The Bureau shall prescribe standards for any modification under paragraph (1)(E) to effectuate the purposes of this title, in light of the privacy 

interests of mortgage applicants or mortgagors. Where necessary to protect the privacy interests of mortgage 

applicants or mortgagors, the Bureau shall provide for 

the disclosure of information described in subparagraph 

(A) in aggregate or other reasonably modified form, in 

order to effectuate the purposes of this title.’’; 

(C) in subsection (i), by striking ‘‘subsection (b)(4)’’ 

and inserting ‘‘subsections (b)(4), (b)(5), and (b)(6)’’; 

(D) in subsection (j)— 

(i) by striking paragraph (3) and inserting the 

following: 

‘‘(3) CHANGE OF FORM NOT REQUIRED.—A depository institution meets the disclosure requirement of paragraph (1) if the 

institution provides the information required under such paragraph in such formats as the Bureau may require’’; and 

(ii) in paragraph (2)(A), by striking ‘‘in the format 

in which such information is maintained by the institution’’ and inserting ‘‘in such formats as the Bureau 

may require’’; 

(E) in subsection (m), by striking paragraph (2) and 

inserting the following: 

‘‘(2) FORM OF INFORMATION.—In complying with paragraph 

(1), a depository institution shall provide the person requesting 

the information with a copy of the information requested in 

such formats as the Bureau may require.’’; and 

(F) by adding at the end the following: 

‘‘(n) TIMING OF CERTAIN DISCLOSURES.—The data required to 

be disclosed under subsection (b) shall be submitted to the Bureau 

or to the appropriate agency for any institution reporting under 

this title, in accordance with regulations prescribed by the Bureau. 

Institutions shall not be required to report new data under paragraph (5) or (6) of subsection (b) before the first January 1 that 

occurs after the end of the 9-month period beginning on the date 

on which regulations are issued by the Bureau in final form with 

respect to such disclosures.’’; 

(4) in section 305 (12 U.S.C. 2804)— 
H. R. 4173—725 

(A) by striking subsection (b) and inserting the following: 

‘‘(b) POWERS OF CERTAIN OTHER AGENCIES.— 

‘‘(1) IN GENERAL.—Subject to subtitle B of the Consumer 

Financial Protection Act of 2010, compliance with the requirements of this title shall be enforced— 

‘‘(A) under section 8 of the Federal Deposit Insurance 

Act, the appropriate Federal banking agency, as defined 

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

U.S.C. 1813(q)), with respect to— 

‘‘(i) any national bank or Federal savings association, and any Federal branch or Federal agency of 

a foreign bank; 

‘‘(ii) any member bank of the Federal Reserve 

System (other than a national bank), branch or agency 

of a foreign bank (other than a Federal branch, Federal 

agency, and insured State branch of a foreign bank), 

commercial lending company owned or controlled by 

a foreign bank, and any organization operating under 

section 25 or 25A of the Federal Reserve Act; and 

‘‘(iii) any bank or State savings association insured 

by the Federal Deposit Insurance Corporation (other 

than a member of the Federal Reserve System), any 

mutual savings bank as, defined in section 3(f) of the 

Federal Deposit Insurance Act (12 U.S.C. 1813(f)), any 

insured State branch of a foreign bank, and any other 

depository institution not referred to in this paragraph 

or subparagraph (B) or (C); 

‘‘(B) under subtitle E of the Consumer Financial Protection Act of 2010, by the Bureau, with respect to any person 

subject to this subtitle; 

‘‘(C) under the Federal Credit Union Act, by the 

Administrator of the National Credit Union Administration 

with respect to any insured credit union; and 

‘‘(D) with respect to other lending institutions, by the 

Secretary of Housing and Urban Development. 

‘‘(2) INCORPORATED DEFINITIONS.—The terms used in paragraph (1) that are not defined in this title or otherwise defined 

in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(s)) shall have the same meanings as in section 1(b) of 

the International Banking Act of 1978 (12 U.S.C. 3101).’’; and 

(B) by adding at the end the following: 

‘‘(d) OVERALL ENFORCEMENT AUTHORITY OF THE BUREAU OF

CONSUMER FINANCIAL PROTECTION.—Subject to subtitle B of the 

Consumer Financial Protection Act of 2010, enforcement of the 

requirements imposed under this title is committed to each of 

the agencies under subsection (b). To facilitate research, examinations, and enforcement, all data collected pursuant to section 304 

shall be available to the entities listed under subsection (b). The 

Bureau may exercise its authorities under the Consumer Financial 

Protection Act of 2010 to exercise principal authority to examine 

and enforce compliance by any person with the requirements of 

this title.’’; 

(5) in section 306 (12 U.S.C. 2805(b)), by striking subsection 

(b) and inserting the following: 

‘‘(b) EXEMPTION AUTHORITY.—The Bureau may, by regulation, 

exempt from the requirements of this title any State-chartered 
H. R. 4173—726 

depository institution within any State or subdivision thereof, if 

the agency determines that, under the law of such State or subdivision, that institution is subject to requirements that are substantially similar to those imposed under this title, and that such 

law contains adequate provisions for enforcement. Notwithstanding 

any other provision of this subsection, compliance with the requirements imposed under this subsection shall be enforced by the Office 

of the Comptroller of the Currency under section 8 of the Federal 

Deposit Insurance Act, in the case of national banks and Federal 

savings associations, the deposits of which are insured by the Federal Deposit Insurance Corporation.’’; and 

(6) by striking section 307 (12 U.S.C. 2806) and inserting 

the following: 

‘‘SEC. 307. COMPLIANCE IMPROVEMENT METHODS. 

‘‘(a) IN GENERAL.— ‘‘(1) CONSULTATION REQUIRED.—The Director of the Bureau 

of Consumer Financial Protection, with the assistance of the 

Secretary, the Director of the Bureau of the Census, the Board 

of Governors of the Federal Reserve System, the Federal 

Deposit Insurance Corporation, and such other persons as the 

Bureau deems appropriate, shall develop or assist in the 

improvement of, methods of matching addresses and census 

tracts to facilitate compliance by depository institutions in as 

economical a manner as possible with the requirements of 

this title. 

‘‘(2) AUTHORIZATION OF APPROPRIATIONS.—There are 

authorized to be appropriated, such sums as may be necessary 

to carry out this subsection. 

‘‘(3) CONTRACTING AUTHORITY.—The Director of the Bureau 

of Consumer Financial Protection is authorized to utilize, contract with, act through, or compensate any person or agency 

in order to carry out this subsection. 

‘‘(b) RECOMMENDATIONS TO CONGRESS.—The Director of the 

Bureau of Consumer Financial Protection shall recommend to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives, such additional legislation as the Director of the Bureau 

of Consumer Financial Protection deems appropriate to carry out 

the purpose of this title.’’. 

SEC. 1095. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT 

OF 1998. 

Section 10 of the Homeowners Protection Act of 1998 (12 U.S.C. 

4909) is amended— 

(1) in subsection (a)— 

(A) by striking ‘‘Compliance’’ and all that follows 

through the end of paragraph (1) and inserting the following: ‘‘Subject to subtitle B of the Consumer Financial 

Protection Act of 2010, compliance with the requirements 

imposed under this Act shall be enforced under— 

‘‘(1) section 8 of the Federal Deposit Insurance Act, by 

the appropriate Federal banking agency (as defined in section 

3(q) of that Act), with respect to— 

‘‘(A) insured depository institutions (as defined in section 3(c)(2) of that Act); 

‘‘(B) depository institutions described in clause (i), (ii), 

or (iii) of section 19(b)(1)(A) of the Federal Reserve Act 
H. R. 4173—727 

which are not insured depository institutions (as defined 

in section 3(c)(2) of the Federal Deposit Insurance Act); 

and 

‘‘(C) depository institutions described in clause (v) or 

(vi) of section 19(b)(1)(A) of the Federal Reserve Act which 

are not insured depository institutions (as defined in section 

3(c)(2) of the Federal Deposit Insurance Act);’’; 

(B) in paragraph (2), by striking ‘‘and’’ at the end; 

(C) in paragraph (3), by striking the period at the 

end and inserting ‘‘; and’’; and 

(D) by adding at the end the following: 

‘‘(4) subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau of Consumer Financial Protection, with 

respect to any person subject to this Act.’’; and 

(2) in subsection (b)(2), by inserting before the period at 

the end the following: ‘‘, subject to subtitle B of the Consumer 

Financial Protection Act of 2010’’. 

SEC. 1096. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY 

PROTECTION ACT OF 1994. 

The Home Ownership and Equity Protection Act of 1994 (15 

U.S.C. 1601 note) is amended— 

(1) in section 158(a), by striking ‘‘Board of Governors of 

the Federal Reserve System, in consultation with the Consumer 

Advisory Council of the Board’’ and inserting ‘‘Bureau, in consultation with the Advisory Board to the Bureau’’; and 

(2) in section 158(b), by striking ‘‘Board of Governors of 

the Federal Reserve System’’ and inserting ‘‘Bureau’’. 

SEC. 1097. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT, 

2009. 

Section 626 of the Omnibus Appropriations Act, 2009 (15 U.S.C. 

1638 note) is amended— 

(1) by striking subsection (a) and inserting the following: 

‘‘(a)(1) The Bureau of Consumer Financial Protection shall have 

authority to prescribe rules with respect to mortgage loans in 

accordance with section 553 of title 5, United States Code. Such 

rulemaking shall relate to unfair or deceptive acts or practices 

regarding mortgage loans, which may include unfair or deceptive 

acts or practices involving loan modification and foreclosure rescue 

services. Any violation of a rule prescribed under this paragraph 

shall be treated as a violation of a rule prohibiting unfair, deceptive, 

or abusive acts or practices under the Consumer Financial Protection Act of 2010 and a violation of a rule under section 18 of 

the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair 

or deceptive acts or practices. 

‘‘(2) The Bureau of Consumer Financial Protection shall enforce 

the rules issued under paragraph (1) in the same manner, by 

the same means, and with the same jurisdiction, powers, and duties, 

as though all applicable terms and provisions of the Consumer 

Financial Protection Act of 2010 were incorporated into and made 

part of this subsection. 

‘‘(3) Subject to subtitle B of the Consumer Financial Protection 

Act of 2010, the Federal Trade Commission shall enforce the rules 

issued under paragraph (1), in the same manner, by the same 

means, and with the same jurisdiction, as though all applicable 

terms and provisions of the Federal Trade Commission Act were 

incorporated into and made part of this section.’’; and 
H. R. 4173—728 

(2) in subsection (b)— 

(A) by striking paragraph (1) and inserting the following: 

‘‘(1) Except as provided in paragraph (6), in any case in 

which the attorney general of a State has reason to believe 

that an interest of the residents of the State has been or 

is threatened or adversely affected by the engagement of any 

person subject to a rule prescribed under subsection (a) in 

practices that violate such rule, the State, as parens patriae, 

may bring a civil action on behalf of its residents in an appropriate district court of the United States or other court of 

competent jurisdiction— 

‘‘(A) to enjoin that practice; 

‘‘(B) to enforce compliance with the rule; 

‘‘(C) to obtain damages, restitution, or other compensation on behalf of the residents of the State; or 

‘‘(D) to obtain penalties and relief provided under the 

Consumer Financial Protection Act of 2010, the Federal 

Trade Commission Act, and such other relief as the court 

deems appropriate.’’; 

(B) in paragraphs (2) and (3), by striking ‘‘the primary 

Federal regulator’’ each time the term appears and 

inserting ‘‘the Bureau of Consumer Financial Protection 

or the Commission, as appropriate’’; 

(C) in paragraph (3), by inserting ‘‘and subject to subtitle B of the Consumer Financial Protection Act of 2010,’’ 

after ‘‘paragraph (2),’’; and 

(D) in paragraph (6), by striking ‘‘the primary Federal 

regulator’’ each place that term appears and inserting ‘‘the 

Bureau of Consumer Financial Protection or the Commission’’. 

SEC. 1098. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974. 

The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 

2601 et seq.) is amended— 

(1) in section 3 (12 U.S.C. 2602)— 

(A) in paragraph (7), by striking ‘‘and’’ at the end; 

(B) in paragraph (8), by striking the period at the 

end and inserting ‘‘; and’’; and 

(C) by adding at the end the following: 

‘‘(9) the term ‘Bureau’ means the Bureau of Consumer 

Financial Protection.’’; 

(2) in section 4 (12 U.S.C. 2603)— 

(A) in subsection (a), by striking the first sentence 

and inserting the following: ‘‘The Bureau shall publish 

a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) 

which includes the disclosure requirements of this section 

and section 5, in conjunction with the disclosure requirements of the Truth in Lending Act that, taken together, 

may apply to a transaction that is subject to both or either 

provisions of law. The purpose of such model disclosure 

shall be to facilitate compliance with the disclosure requirements of this title and the Truth in Lending Act, and 
H. R. 4173—729 

to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures.’’; 

(B) by striking ‘‘Secretary’’ each place that term 

appears and inserting ‘‘Bureau’’; and 

(C) by striking ‘‘form’’ each place that term appears 

and inserting ‘‘forms’’; 

(3) in section 5 (12 U.S.C. 2604)— 

(A) by striking ‘‘Secretary’’ each place that term 

appears and inserting ‘‘Bureau’’; and 

(B) in subsection (a), by striking the first sentence 

and inserting the following: ‘‘The Bureau shall prepare 

and distribute booklets jointly addressing compliance with 

the requirements of the Truth in Lending Act and the 

provisions of this title, in order to help persons borrowing 

money to finance the purchase of residential real estate 

better to understand the nature and costs of real estate 

settlement services.’’; 

(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))— 

(A) by striking ‘‘Secretary’’ and inserting ‘‘Bureau’’; 

and 

(B) by striking ‘‘, by regulations that shall take effect 

not later than April 20, 1991,’’; 

(5) in section 7(b) (12 U.S.C. 2606(b)) by striking ‘‘Secretary’’ and inserting ‘‘Bureau’’; 

(6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking 

‘‘Secretary’’ and inserting ‘‘Bureau’’; 

(7) in section 8(d) (12 U.S.C. 2607(d))— 

(A) in the subsection heading, by inserting ‘‘BUREAU

AND’’ before ‘‘SECRETARY’’; and 

(B) by striking paragraph (4), and inserting the following: 

‘‘(4) The Bureau, the Secretary, or the attorney general 

or the insurance commissioner of any State may bring an 

action to enjoin violations of this section. Except, to the extent 

that a person is subject to the jurisdiction of the Bureau, 

the Secretary, or the attorney general or the insurance commissioner of any State, the Bureau shall have primary authority 

to enforce or administer this section, subject to subtitle B 

of the Consumer Financial Protection Act of 2010.’’; 

(8) in section 10(c) (12 U.S.C. 2609(c) and (d)), by striking 

‘‘Secretary’’ and inserting ‘‘Bureau’’; 

(9) in section 16 (12 U.S.C. 2614), by inserting ‘‘the 

Bureau,’’ before ‘‘the Secretary’’; 

(10) in section 18 (12 U.S.C. 2616), by striking ‘‘Secretary’’ 

each place that term appears and inserting ‘‘Bureau’’; and 

(11) in section 19 (12 U.S.C. 2617)— 

(A) in the section heading by striking ‘‘SECRETARY’’ 

and inserting ‘‘BUREAU’’; 

(B) in subsection (a), by striking ‘‘Secretary’’ each place 

that term appears and inserting ‘‘Bureau’’; and 

(C) in subsections (b) and (c), by striking ‘‘the Secretary’’ each place that term appears and inserting ‘‘the 

Bureau’’. 
H. R. 4173—730 

SEC. 1098A. AMENDMENTS TO THE INTERSTATE LAND SALES FULL 

DISCLOSURE ACT. 

The Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 

et seq.) is amended— 

(1) by striking ‘‘Secretary’’ each place that term appears 

and inserting ‘‘Director’’; 

(2) by striking ‘‘Department of Housing and Urban Development’’ each place that term appears and inserting ‘‘Bureau 

of Consumer Financial Protection’’; 

(3) by striking ‘‘Department’’ each place that term appears 

and inserting ‘‘Bureau’’; 

(4) in section 1402 (15 U.S.C. 1701)— 

(A) by striking paragraph (1) and inserting the following: 

‘‘(1) ‘Director’ means the Director of the Bureau of Consumer Financial Protection;’’; 

(B) in paragraph (10), by striking ‘‘and’’ at the end; 

(C) in paragraph (11), by striking the period at the 

end and inserting ‘‘; and’’; and 

(D) by adding at the end the following: 

‘‘(12) ‘Bureau’ means the Bureau of Consumer Financial 

Protection.’’; and 

(5) in section 1416(a) (15 U.S.C. 1715(a)), by striking ‘‘Secretary of Housing and Urban Development’’ and inserting 

‘‘Director of the Bureau of Consumer Financial Protection’’. 

SEC. 1099. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT 

OF 1978. 

The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 

et seq.) is amended— 

(1) in section 1101— 

(A) in paragraph (6)— 

(i) in subparagraph (A), by inserting ‘‘and’’ after 

the semicolon; 

(ii) in subparagraph (B), by striking ‘‘and’’ at the 

end; and 

(iii) by striking subparagraph (C); and 

(B) in paragraph (7), by striking subparagraph (B), 

and inserting the following: 

‘‘(B) the Bureau of Consumer Financial Protection;’’; 

(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking ‘‘and 

the Commodity Futures Trading Commission is permitted’’ and 

inserting ‘‘the Commodity Futures Trading Commission, and 

the Bureau of Consumer Financial Protection is permitted’’; 

and 

(3) in section 1113 (12 U.S.C. 3413), by adding at the 

end the following new subsection: 

‘‘(r) DISCLOSURE TO THE BUREAU OF CONSUMER FINANCIAL

PROTECTION.—Nothing in this title shall apply to the examination 

by or disclosure to the Bureau of Consumer Financial Protection 

of financial records or information in the exercise of its authority 

with respect to a financial institution.’’. 

SEC. 1100. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT 

FOR MORTGAGE LICENSING ACT OF 2008. 

The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 

et seq.) is amended— 
H. R. 4173—731 

(1) by striking ‘‘a Federal banking agency’’ each place that 

term appears, other than in paragraphs (7) and (11) of section 

1503 and section 1507(a)(1), and inserting ‘‘the Bureau’’; 

(2) by striking ‘‘Federal banking agencies’’ each place that 

term appears and inserting ‘‘Bureau’’; and 

(3) by striking ‘‘Secretary’’ each place that term appears 

and inserting ‘‘Director’’; 

(4) in section 1503 (12 U.S.C. 5102)— 

(A) by redesignating paragraphs (2) through (12) as 

(3) through (13), respectively; 

(B) by striking paragraph (1) and inserting the following: 

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

Consumer Financial Protection. 

‘‘(2) FEDERAL BANKING AGENCY.—The term ‘Federal 

banking agency’ means the Board of Governors of the Federal 

Reserve System, the Office of the Comptroller of the Currency, 

the National Credit Union Administration, and the Federal 

Deposit Insurance Corporation.’’; and 

(C) by striking paragraph (10), as so designated by 

this section, and inserting the following: 

‘‘(10) DIRECTOR.—The term ‘Director’ means the Director 

of the Bureau of Consumer Financial Protection.’’; and 

(5) in section 1507 (12 U.S.C. 5106)— 

(A) in subsection (a)— 

(i) by striking paragraph (1) and inserting the 

following: 

‘‘(1) IN GENERAL.—The Bureau shall develop and maintain 

a system for registering employees of a depository institution, 

employees of a subsidiary that is owned and controlled by 

a depository institution and regulated by a Federal banking 

agency, or employees of an institution regulated by the Farm 

Credit Administration, as registered loan originators with the 

Nationwide Mortgage Licensing System and Registry. The 

system shall be implemented before the end of the 1-year 

period beginning on the date of enactment of the Consumer 

Financial Protection Act of 2010.’’; and 

(ii) in paragraph (2)— 

(I) by striking ‘‘appropriate Federal banking 

agency and the Farm Credit Administration’’ and 

inserting ‘‘Bureau’’; and 

(II) by striking ‘‘employees’s identity’’ and 

inserting ‘‘identity of the employee’’; and 

(B) in subsection (b), by striking ‘‘through the Financial 

Institutions Examination Council, and the Farm Credit 

Administration’’, and inserting ‘‘and the Bureau of Consumer Financial Protection’’; 

(6) in section 1508 (12 U.S.C. 5107)— 

(A) by striking the section heading and inserting the 

following: ‘‘SEC. 1508. BUREAU OF CONSUMER FINANCIAL

PROTECTION BACKUP AUTHORITY TO ESTABLISH LOAN

ORIGINATOR LICENSING SYSTEM.’’; and 

(B) by adding at the end the following: 

‘‘(f) REGULATION AUTHORITY.— 
H. R. 4173—732 

‘‘(1) IN GENERAL.—The Bureau is authorized to promulgate 

regulations setting minimum net worth or surety bond requirements for residential mortgage loan originators and minimum 

requirements for recovery funds paid into by loan originators. 

‘‘(2) CONSIDERATIONS.—In issuing regulations under paragraph (1), the Bureau shall take into account the need to 

provide originators adequate incentives to originate affordable 

and sustainable mortgage loans, as well as the need to ensure 

a competitive origination market that maximizes consumer 

access to affordable and sustainable mortgage loans.’’; 

(7) by striking section 1510 (12 U.S.C. 5109) and inserting 

the following: 

‘‘SEC. 1510. FEES. 

‘‘The Bureau, the Farm Credit Administration, and the Nationwide Mortgage Licensing System and Registry may charge reasonable fees to cover the costs of maintaining and providing access 

to information from the Nationwide Mortgage Licensing System 

and Registry, to the extent that such fees are not charged to 

consumers for access to such system and registry.’’; 

(8) by striking section 1513 (12 U.S.C. 5112) and inserting 

the following: 

‘‘SEC. 1513. LIABILITY PROVISIONS. 

‘‘The Bureau, any State official or agency, or any organization 

serving as the administrator of the Nationwide Mortgage Licensing 

System and Registry or a system established by the Director under 

section 1509, or any officer or employee of any such entity, shall 

not be subject to any civil action or proceeding for monetary damages by reason of the good faith action or omission of any officer 

or employee of any such entity, while acting within the scope 

of office or employment, relating to the collection, furnishing, or 

dissemination of information concerning persons who are loan originators or are applying for licensing or registration as loan originators.’’; and 

(9) in section 1514 (12 U.S.C. 5113) in the section heading, 

by striking ‘‘UNDER HUD BACKUP LICENSING SYSTEM’’ and 

inserting ‘‘BY THE BUREAU’’. 

SEC. 1100A. AMENDMENTS TO THE TRUTH IN LENDING ACT. 

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended— 

(1) in section 103 (15 U.S.C. 1602)— 

(A) by redesignating subsections (b) through (bb) as 

subsections (c) through (cc), respectively; and 

(B) by inserting after subsection (a) the following: 

‘‘(b) BUREAU.—The term ‘Bureau’ means the Bureau of Consumer Financial Protection.’’; 

(2) by striking ‘‘Board’’ each place that term appears, other 

than in section 140(d) and sections 105(i) and 108(a), as 

amended by this section, and inserting ‘‘Bureau’’; 

(3) by striking ‘‘Federal Trade Commission’’ each place 

that term appears, other than in section 108(c) and section 

129(m), as amended by this Act, and other than in the context 

of a reference to the Federal Trade Commission Act, and 

inserting ‘‘Bureau’’; 

(4) in section 105(a) (15 U.S.C. 1604(a)), in the second 

sentence— 
H. R. 4173—733 

(A) by striking ‘‘Except in the case of a mortgage 

referred to in section 103(aa), these regulations may contain 

such’’ and inserting ‘‘Except with respect to the provisions 

of section 129 that apply to a mortgage referred to in 

section 103(aa), such regulations may contain such additional requirements,’’; and 

(B) by inserting ‘‘all or’’ after ‘‘exceptions for’’; 

(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the 

first sentence and inserting the following: ‘‘The Bureau shall 

publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which 

includes the disclosure requirements of this title in conjunction 

with the disclosure requirements of the Real Estate Settlement 

Procedures Act of 1974 that, taken together, may apply to 

a transaction that is subject to both or either provisions of 

law. The purpose of such model disclosure shall be to facilitate 

compliance with the disclosure requirements of this title and 

the Real Estate Settlement Procedures Act of 1974, and to 

aid the borrower or lessee in understanding the transaction 

by utilizing readily understandable language to simplify the 

technical nature of the disclosures.’’; 

(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by inserting 

‘‘all or’’ after ‘‘from all or part of this title’’; 

(7) in section 105 (15 U.S.C. 1604), by adding at the end 

the following: 

‘‘(i) AUTHORITY OF THE BOARD TO PRESCRIBE

RULES.—Notwithstanding subsection (a), the Board 

shall have authority to prescribe rules under this title 

with respect to a person described in section 1029(a) 

of the Consumer Financial Protection Act of 2010. 

Regulations prescribed under this subsection may contain such classifications, differentiations, or other 

provisions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this 

title, to prevent circumvention or evasion thereof, or 

to facilitate compliance therewith.’’; 

(8) in section 108 (15 U.S.C. 1604), by adding at the end 

the following: 

(A) by striking subsection (a) and inserting the following: 

‘‘(a) ENFORCING AGENCIES.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with the 

requirements imposed under this title shall be enforced under— 

‘‘(1) section 8 of the Federal Deposit Insurance Act, by 

the appropriate Federal banking agency, as defined in section 

3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), 

with respect to— 

‘‘(A) national banks, Federal savings associations, and 

Federal branches and Federal agencies of foreign banks; 

‘‘(B) member banks of the Federal Reserve System 

(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, 

and insured State branches of foreign banks), commercial 

lending companies owned or controlled by foreign banks, 

and organizations operating under section 25 or 25A of 

the Federal Reserve Act; and 
H. R. 4173—734 

‘‘(C) banks and State savings associations insured by 

the Federal Deposit Insurance Corporation (other than 

members of the Federal Reserve System), and insured State 

branches of foreign banks; 

‘‘(2) the Federal Credit Union Act, by the Director of the 

National Credit Union Administration, with respect to any 

Federal credit union; 

‘‘(3) the Federal Aviation Act of 1958, by the Secretary 

of Transportation, with respect to any air carrier or foreign 

air carrier subject to that Act; 

‘‘(4) the Packers and Stockyards Act, 1921 (except as provided in section 406 of that Act), by the Secretary of Agriculture, 

with respect to any activities subject to that Act; 

‘‘(5) the Farm Credit Act of 1971, by the Farm Credit 

Administration with respect to any Federal land bank, Federal 

land bank association, Federal intermediate credit bank, or 

production credit association; and 

‘‘(6) subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau, with respect to any person subject 

to this title.’’; and 

(B) by striking subsection (c) and inserting the following: 

‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE FEDERAL TRADE

COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some 

other Government agency under any of paragraphs (1) through 

(5) of subsection (a), and subject to subtitle B of the Consumer 

Financial Protection Act of 2010, the Federal Trade Commission 

shall be authorized to enforce such requirements. For the purpose 

of the exercise by the Federal Trade Commission of its functions 

and powers under the Federal Trade Commission Act, a violation 

of any requirement imposed under this title shall be deemed a 

violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade 

Commission to enforce compliance by any person with the requirements under this title, irrespective of whether that person is 

engaged in commerce or meets any other jurisdictional tests under 

the Federal Trade Commission Act.’’; and 

(9) in section 129 (15 U.S.C. 1639), by striking subsection 

(m) and inserting the following: 

‘‘(m) CIVIL PENALTIES IN FEDERAL TRADE COMMISSION

ENFORCEMENT ACTIONS.—For purposes of enforcement by the Federal Trade Commission, any violation of a regulation issued by 

the Bureau pursuant to subsection (l)(2) shall be treated as a 

violation of a rule promulgated under section 18 of the Federal 

Trade Commission Act (15 U.S.C. 57a) regarding unfair or deceptive 

acts or practices.’’; and 

(10) in chapter 5 (15 U.S.C. 1667 et seq.)— 

(A) by striking ‘‘the Board’’ each place that term 

appears and inserting ‘‘the Bureau’’; and 

(B) by striking ‘‘The Board’’ each place that term 

appears and inserting ‘‘The Bureau’’. 

SEC. 1100B. AMENDMENTS TO THE TRUTH IN SAVINGS ACT. 

The Truth in Savings Act (12 U.S.C. 4301 et seq.) is amended— 
H. R. 4173—735 

(1) by striking ‘‘Board’’ each place that term appears, other 

than in section 272(b) (12 U.S.C. 4311), and inserting ‘‘Bureau’’; 

(2) in section 270(a) (12 U.S.C. 4309)— 

(A) by striking ‘‘Compliance’’ and all that follows 

through the end of paragraph (1) and inserting: ‘‘Subject 

to subtitle B of the Consumer Financial Protection Act 

of 2010, compliance with the requirements imposed under 

this subtitle shall be enforced under— 

‘‘(1) section 8 of the Federal Deposit Insurance Act by 

the appropriate Federal banking agency (as defined in section 

3(q) of that Act), with respect to— 

‘‘(A) insured depository institutions (as defined in section 3(c)(2) of that Act); 

‘‘(B) depository institutions described in clause (i), (ii), 

or (iii) of section 19(b)(1)(A) of the Federal Reserve Act 

which are not insured depository institutions (as defined 

in section 3(c)(2) of the Federal Deposit Insurance Act); 

and 

‘‘(C) depository institutions described in clause (v) or 

(vi) of section 19(b)(1)(A) of the Federal Reserve Act which 

are not insured depository institutions (as defined in section 

3(c)(2) of the Federal Deposit Insurance Act);’’; 

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

end and inserting ‘‘; and’’; and 

(C) by adding at the end the following: 

‘‘(3) subtitle E of the Consumer Financial Protection Act 

of 2010, by the Bureau, with respect to any person subject 

to this subtitle.’’; 

(3) in section 272(b) (12 U.S.C. 4311(b)), by striking ‘‘regulation prescribed by the Board’’ each place that term appears 

and inserting ‘‘regulation prescribed by the Bureau’’; and 

(4) in section 274 (12 U.S.C. 4313), by striking paragraph 

(4) and inserting the following: 

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

Consumer Financial Protection.’’. 

SEC. 1100C. AMENDMENTS TO THE TELEMARKETING AND CONSUMER 

FRAUD AND ABUSE PREVENTION ACT. 

(a) AMENDMENTS TO SECTION 3.—Section 3 of the Telemarketing 

and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6102) 

is amended by striking subsections (b) and (c) and inserting the 

following: 

‘‘(b) RULEMAKING AUTHORITY.—The Commission shall have 

authority to prescribe rules under subsection (a), in accordance 

with section 553 of title 5, United States Code. In prescribing 

a rule under this section that relates to the provision of a consumer 

financial product or service that is subject to the Consumer Financial Protection Act of 2010, including any enumerated consumer 

law thereunder, the Commission shall consult with the Bureau 

of Consumer Financial Protection regarding the consistency of a 

proposed rule with standards, purposes, or objectives administered 

by the Bureau of Consumer Financial Protection. 

‘‘(c) VIOLATIONS.—Any violation of any rule prescribed under 

subsection (a)— 

‘‘(1) shall be treated as a violation of a rule under section 

18 of the Federal Trade Commission Act regarding unfair or 

deceptive acts or practices; and 
H. R. 4173—736 

‘‘(2) that is committed by a person subject to the Consumer 

Financial Protection Act of 2010 shall be treated as a violation 

of a rule under section 1031 of that Act regarding unfair, 

deceptive, or abusive acts or practices.’’. 

(b) AMENDMENTS TO SECTION 4.—Section 4(d) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (15 

U.S.C. 6103(d)) is amended by inserting after ‘‘Commission’’ each 

place that term appears the following: ‘‘or the Bureau of Consumer 

Financial Protection’’. 

(c) AMENDMENTS TO SECTION 5.—Section 5(c) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (15 

U.S.C. 6104(c)) is amended by inserting after ‘‘Commission’’ each 

place that term appears the following: ‘‘or the Bureau of Consumer 

Financial Protection’’. 

(d) AMENDMENT TO SECTION 6.—Section 6 of the Telemarketing 

and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) 

is amended by adding at the end the following: 

‘‘(d) ENFORCEMENT BY BUREAU OF CONSUMER FINANCIAL

PROTECTION.—Except as otherwise provided in sections 3(d), 3(e), 

4, and 5, and subject to subtitle B of the Consumer Financial 

Protection Act of 2010, this Act shall be enforced by the Bureau 

of Consumer Financial Protection under subtitle E of the Consumer 

Financial Protection Act of 2010, with respect to the offering or 

provision of a consumer financial product or service subject to 

that Act.’’. 

SEC. 1100D. AMENDMENTS TO THE PAPERWORK REDUCTION ACT. 

(a) DESIGNATION AS AN INDEPENDENT AGENCY.—Section 2(5) 

of the Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended 

by inserting ‘‘the Bureau of Consumer Financial Protection, the 

Office of Financial Research,’’ after ‘‘the Securities and Exchange 

Commission,’’. 

(b) COMPARABLE TREATMENT.—Section 3513 of title 44, United 

States Code, is amended by adding at the end the following: 

‘‘(c) COMPARABLE TREATMENT.—Notwithstanding any other 

provision of law, the Director shall treat or review a rule or order 

prescribed or proposed by the Director of the Bureau of Consumer 

Financial Protection on the same terms and conditions as apply 

to any rule or order prescribed or proposed by the Board of Governors of the Federal Reserve System.’’. 

SEC. 1100E. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING 

ACT. 

(a) CAPS.— 

(1) CREDIT TRANSACTIONS.—Section 104(3) of the Truth in 

Lending Act (15 U.S.C. 1603(3)) is amended by striking 

‘‘$25,000’’ and inserting ‘‘$50,000’’. 

(2) CONSUMER LEASES.—Section 181(1) of the Truth in 

Lending Act (15 U.S.C. 1667(1)) is amended by striking 

‘‘$25,000’’ and inserting ‘‘$50,000’’. 

(b) ADJUSTMENTS FOR INFLATION.—On and after December 31, 

2011, the Bureau shall adjust annually the dollar amounts described 

in sections 104(3) and 181(1) of the Truth in Lending Act (as 

amended by this section), by the annual percentage increase in 

the Consumer Price Index for Urban Wage Earners and Clerical 

Workers, as published by the Bureau of Labor Statistics, rounded 

to the nearest multiple of $100, or $1,000, as applicable. 
H. R. 4173—737 

SEC. 1100F. USE OF CONSUMER REPORTS. 

Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) 

is amended— 

(1) in subsection (a)— 

(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; 

(B) by inserting after paragraph (1) the following: 

‘‘(2) provide to the consumer written or electronic disclosure— 

‘‘(A) of a numerical credit score as defined in section 

609(f)(2)(A) used by such person in taking any adverse 

action based in whole or in part on any information in 

a consumer report; and 

‘‘(B) of the information set forth in subparagraphs (B) 

through (E) of section 609(f)(1);’’; and 

(C) in paragraph (4) (as so redesignated), by striking 

‘‘paragraph (2)’’ and inserting ‘‘paragraph (3)’’; and 

(2) in subsection (h)(5)— 

(A) in subparagraph (C), by striking ‘‘; and’’ and 

inserting a semicolon; 

(B) in subparagraph (D), by striking the period and 

inserting ‘‘; and’’; and 

(C) by inserting at the end the following: 

‘‘(E) include a statement informing the consumer of— 

‘‘(i) a numerical credit score as defined in section 

609(f)(2)(A), used by such person in making the credit 

decision described in paragraph (1) based in whole 

or in part on any information in a consumer report; 

and 

‘‘(ii) the information set forth in subparagraphs 

(B) through (E) of section 609(f)(1).’’. 

SEC. 1100G. SMALL BUSINESS FAIRNESS AND REGULATORY TRANSPARENCY. 

(a) PANEL REQUIREMENT.—Section 609(d) of title 5, United 

States Code, is amended by striking ‘‘means the’’ and all that 

follows and inserting the following: ‘‘means— 

‘‘(1) the Environmental Protection Agency; 

‘‘(2) the Consumer Financial Protection Bureau of the Federal Reserve System; and 

‘‘(3) the Occupational Safety and Health Administration 

of the Department of Labor.’’. 

(b) INITIAL REGULATORY FLEXIBILITY ANALYSIS.—Section 603 

of title 5, United States Code, is amended by adding at the end 

the following: 

‘‘(d)(1) For a covered agency, as defined in section 609(d)(2), 

each initial regulatory flexibility analysis shall include a description 

of— 

‘‘(A) any projected increase in the cost of credit for small 

entities; 

‘‘(B) any significant alternatives to the proposed rule which 

accomplish the stated objectives of applicable statutes and 

which minimize any increase in the cost of credit for small 

entities; and 

‘‘(C) advice and recommendations of representatives of 

small entities relating to issues described in subparagraphs 

(A) and (B) and subsection (b). 
H. R. 4173—738 

‘‘(2) A covered agency, as defined in section 609(d)(2), shall, 

for purposes of complying with paragraph (1)(C)— 

‘‘(A) identify representatives of small entities in consultation with the Chief Counsel for Advocacy of the Small Business 

Administration; and 

‘‘(B) collect advice and recommendations from the representatives identified under subparagraph (A) relating to 

issues described in subparagraphs (A) and (B) of paragraph 

(1) and subsection (b).’’. 

(c) FINAL REGULATORY FLEXIBILITY ANALYSIS.—Section 604(a) 

of title 5, United States Code, is amended— 

(1) in paragraph (4), by striking ‘‘and’’ at the end; 

(2) in paragraph (5), by striking the period at the end 

and inserting ‘‘; and’’; and 

(3) by adding at the end the following: 

‘‘(6) for a covered agency, as defined in section 609(d)(2), 

a description of the steps the agency has taken to minimize 

any additional cost of credit for small entities.’’. 

SEC. 1100H. EFFECTIVE DATE. 

Except as otherwise provided in this subtitle and the amendments made by this subtitle, this subtitle and the amendments 

made by this subtitle, other than sections 1081 and 1082, shall 

become effective on the designated transfer date. 

TITLE XI—FEDERAL RESERVE SYSTEM 

PROVISIONS 

SEC. 1101. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY 

LENDING AUTHORITY. 

(a) FEDERAL RESERVE ACT.—The third undesignated paragraph 

of section 13 of the Federal Reserve Act (12 U.S.C. 343) (relating 

to emergency lending authority) is amended— 

(1) by inserting ‘‘(3)(A)’’ before ‘‘In unusual’’; 

(2) by striking ‘‘individual, partnership, or corporation’’ the 

first place that term appears and inserting the following: 

‘‘participant in any program or facility with broad-based eligibility’’; 

(3) by striking ‘‘exchange for an individual or a partnership 

or corporation’’ and inserting ‘‘exchange,’’; 

(4) by striking ‘‘such individual, partnership, or corporation’’ and inserting the following: ‘‘such participant in any program or facility with broad-based eligibility’’; 

(5) by striking ‘‘for individuals, partnerships, corporations’’ 

and inserting ‘‘for any participant in any program or facility 

with broad-based eligibility’’; and 

(6) by striking ‘‘may prescribe.’’ and inserting the following: 

‘‘may prescribe. 

‘‘(B)(i) As soon as is practicable after the date of enactment of this subparagraph, the Board shall establish, by 

regulation, in consultation with the Secretary of the 

Treasury, the policies and procedures governing emergency 

lending under this paragraph. Such policies and procedures 

shall be designed to ensure that any emergency lending 

program or facility is for the purpose of providing liquidity 

to the financial system, and not to aid a failing financial 
H. R. 4173—739 

company, and that the security for emergency loans is 

sufficient to protect taxpayers from losses and that any 

such program is terminated in a timely and orderly fashion. 

The policies and procedures established by the Board shall 

require that a Federal reserve bank assign, consistent with 

sound risk management practices and to ensure protection 

for the taxpayer, a lendable value to all collateral for a 

loan executed by a Federal reserve bank under this paragraph in determining whether the loan is secured satisfactorily for purposes of this paragraph. 

‘‘(ii) The Board shall establish procedures to prohibit 

borrowing from programs and facilities by borrowers that 

are insolvent. Such procedures may include a certification 

from the chief executive officer (or other authorized officer) 

of the borrower, at the time the borrower initially borrows 

under the program or facility (with a duty by the borrower 

to update the certification if the information in the certification materially changes), that the borrower is not insolvent. A borrower shall be considered insolvent for purposes 

of this subparagraph, if the borrower is in bankruptcy, 

resolution under title II of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, or any other Federal 

or State insolvency proceeding. 

‘‘(iii) A program or facility that is structured to remove 

assets from the balance sheet of a single and specific company, or that is established for the purpose of assisting 

a single and specific company avoid bankruptcy, resolution 

under title II of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, or any other Federal or State 

insolvency proceeding, shall not be considered a program 

or facility with broad-based eligibility. 

‘‘(iv) The Board may not establish any program or 

facility under this paragraph without the prior approval 

of the Secretary of the Treasury. 

‘‘(C) The Board shall provide to the Committee on 

Banking, Housing, and Urban Affairs of the Senate and 

the Committee on Financial Services of the House of Representatives— 

‘‘(i) not later than 7 days after the Board authorizes 

any loan or other financial assistance under this paragraph, a report that includes— 

‘‘(I) the justification for the exercise of 

authority to provide such assistance; 

‘‘(II) the identity of the recipients of such 

assistance; 

‘‘(III) the date and amount of the assistance, 

and form in which the assistance was provided; 

and 

‘‘(IV) the material terms of the assistance, 

including— 

‘‘(aa) duration; 

‘‘(bb) collateral pledged and the value 

thereof; 

‘‘(cc) all interest, fees, and other revenue 

or items of value to be received in exchange 

for the assistance; 
H. R. 4173—740 

‘‘(dd) any requirements imposed on the 

recipient with respect to employee compensation, distribution of dividends, or any other 

corporate decision in exchange for the assistance; and 

‘‘(ee) the expected costs to the taxpayers 

of such assistance; and 

‘‘(ii) once every 30 days, with respect to any outstanding loan or other financial assistance under this 

paragraph, written updates on— 

‘‘(I) the value of collateral; 

‘‘(II) the amount of interest, fees, and other 

revenue or items of value received in exchange 

for the assistance; and 

‘‘(III) the expected or final cost to the taxpayers of such assistance. 

‘‘(D) The information required to be submitted to Congress under subparagraph (C) related to— 

‘‘(i) the identity of the participants in an emergency 

lending program or facility commenced under this 

paragraph; 

‘‘(ii) the amounts borrowed by each participant 

in any such program or facility; 

‘‘(iii) identifying details concerning the assets or 

collateral held by, under, or in connection with such 

a program or facility, 

shall be kept confidential, upon the written request of 

the Chairman of the Board, in which case such information 

shall be made available only to the Chairpersons or 

Ranking Members of the Committees described in subparagraph (C). 

‘‘(E) If an entity to which a Federal reserve bank 

has provided a loan under this paragraph becomes a covered financial company, as defined in section 201 of the 

Dodd-Frank Wall Street Reform and Consumer Protection 

Act, at any time while such loan is outstanding, and the 

Federal reserve bank incurs a realized net loss on the 

loan, then the Federal reserve bank shall have a claim 

equal to the amount of the net realized loss against the 

covered entity, with the same priority as an obligation 

to the Secretary of the Treasury under section 210(b) of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’. 

(b) CONFORMING AMENDMENT.—Section 507(a)(2) of title 11, 

United States Code, is amended by inserting ‘‘unsecured claims 

of any Federal reserve bank related to loans made through programs 

or facilities authorized under section 13(3) of the Federal Reserve 

Act (12 U.S.C. 343),’’ after ‘‘this title,’’. 

(c) REFERENCES.—On and after the date of enactment of this 

Act, any reference in any provision of Federal law to the third 

undesignated paragraph of section 13 of the Federal Reserve Act 

(12 U.S.C. 343) shall be deemed to be a reference to section 13(3) 

of the Federal Reserve Act, as so designated by this section. 

SEC. 1102. AUDITS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES. 

(a) AUDITS.—Section 714 of title 31, United States Code, is 

amended by adding at the end the following: 
H. R. 4173—741 

‘‘(f) AUDITS OF CREDIT FACILITIES OF THE FEDERAL RESERVE

SYSTEM.— 

‘‘(1) DEFINITIONS.—In this subsection, the following definitions shall apply: 

‘‘(A) CREDIT FACILITY.—The term ‘credit facility’ means 

a program or facility, including any special purpose vehicle 

or other entity established by or on behalf of the Board 

of Governors of the Federal Reserve System or a Federal 

reserve bank, authorized by the Board of Governors under 

section 13(3) of the Federal Reserve Act (12 U.S.C. 343), 

that is not subject to audit under subsection (e). 

‘‘(B) COVERED TRANSACTION.—The term ‘covered transaction’ means any open market transaction or discount 

window advance that meets the definition of ‘covered transaction’ in section 11(s) of the Federal Reserve Act. 

‘‘(2) AUTHORITY FOR AUDITS AND EXAMINATIONS.—Subject 

to paragraph (3), and notwithstanding any limitation in subsection (b) on the auditing and oversight of certain functions 

of the Board of Governors of the Federal Reserve System or 

any Federal reserve bank, the Comptroller General of the 

United States may conduct audits, including onsite examinations, of the Board of Governors, a Federal reserve bank, or 

a credit facility, if the Comptroller General determines that 

such audits are appropriate, solely for the purposes of assessing, 

with respect to a credit facility or a covered transaction— 

‘‘(A) the operational integrity, accounting, financial 

reporting, and internal controls governing the credit facility 

or covered transaction; 

‘‘(B) the effectiveness of the security and collateral 

policies established for the facility or covered transaction 

in mitigating risk to the relevant Federal reserve bank 

and taxpayers; 

‘‘(C) whether the credit facility or the conduct of a 

covered transaction inappropriately favors one or more specific participants over other institutions eligible to utilize 

the facility; and 

‘‘(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility 

or to conduct any covered transaction. 

‘‘(3) REPORTS AND DELAYED DISCLOSURE.— 

‘‘(A) REPORTS REQUIRED.—A report on each audit conducted under paragraph (2) shall be submitted by the 

Comptroller General to the Congress before the end of 

the 90-day period beginning on the date on which such 

audit is completed. 

‘‘(B) CONTENTS.—The report under subparagraph (A) 

shall include a detailed description of the findings and 

conclusions of the Comptroller General with respect to 

the matters described in paragraph (2) that were audited 

and are the subject of the report, together with such recommendations for legislative or administrative action 

relating to such matters as the Comptroller General may 

determine to be appropriate. 

‘‘(C) DELAYED RELEASE OF CERTAIN INFORMATION.— ‘‘(i) IN GENERAL.—The Comptroller General shall 

not disclose to any person or entity, including to Congress, the names or identifying details of specific 
H. R. 4173—742 

participants in any credit facility or covered transaction, the amounts borrowed by or transferred by 

or to specific participants in any credit facility or covered transaction, or identifying details regarding assets 

or collateral held or transferred by, under, or in connection with any credit facility or covered transaction, 

and any report provided under subparagraph (A) shall 

be redacted to ensure that such names and details 

are not disclosed. 

‘‘(ii) DELAYED RELEASE.—The nondisclosure obligation under clause (i) shall expire with respect to any 

participant on the date on which the Board of Governors, directly or through a Federal reserve bank, 

publicly discloses the identity of the subject participant 

or the identifying details of the subject assets, collateral, or transaction. 

‘‘(iii) GENERAL RELEASE.—The Comptroller General 

shall release a nonredacted version of any report on 

a credit facility 1 year after the effective date of the 

termination by the Board of Governors of the 

authorization for the credit facility. For purposes of 

this clause, a credit facility shall be deemed to have 

terminated 24 months after the date on which the 

credit facility ceases to make extensions of credit and 

loans, unless the credit facility is otherwise terminated 

by the Board of Governors. 

‘‘(iv) EXCEPTIONS.—The nondisclosure obligation 

under clause (i) shall not apply to the credit facilities 

Maiden Lane, Maiden Lane II, and Maiden Lane III. 

‘‘(v) RELEASE OF COVERED TRANSACTION INFORMATION.—The Comptroller General shall release a nonredacted version of any report regarding covered transactions upon the release of the information regarding 

such covered transactions by the Board of Governors 

of the Federal Reserve System, as provided in section 

11(s) of the Federal Reserve Act.’’. 

(b) ACCESS TO RECORDS.—Section 714(d) of title 31, United 

States Code, is amended— 

(1) in paragraph (2), by inserting ‘‘or any person or entity 

described in paragraph (3)(A)’’ after ‘‘used by an agency’’; 

(2) in paragraph (3), by inserting ‘‘or (f)’’ after ‘‘subsection 

(e)’’ each place that term appears; 

(3) in clauses (i) and (ii) of paragraph (3)(A), by inserting 

‘‘or the Federal Reserve banks’’ after ‘‘by the Board’’ each place 

that term appears; 

(4) in paragraph (3)(A)(ii), by inserting ‘‘participating in 

or’’ after ‘‘any entity’’; and 

(5) in paragraph (3)(B), by adding at the end the following: 

‘‘The Comptroller General may make and retain copies of books, 

accounts, and other records provided under subparagraph (A) 

as the Comptroller General deems appropriate. The Comptroller 

General shall provide to any person or entity described in 

subparagraph (A) a current list of officers and employees to 

whom, with proper identification, records and property may 

be made available, and who may make notes or copies necessary 

to carry out a audit or examination under this subsection.’’. 
H. R. 4173—743 

SEC. 1103. PUBLIC ACCESS TO INFORMATION. 

(a) IN GENERAL.—Section 2B of the Federal Reserve Act (12 

U.S.C. 225b) is amended by adding at the end the following: 

‘‘(c) PUBLIC ACCESS TO INFORMATION.—The Board shall place 

on its home Internet website, a link entitled ‘Audit’, which shall 

link to a webpage that shall serve as a repository of information 

made available to the public for a reasonable period of time, not 

less than 6 months following the date of release of the relevant 

information, including— 

‘‘(1) the reports prepared by the Comptroller General under 

section 714 of title 31, United States Code; 

‘‘(2) the annual financial statements prepared by an independent auditor for the Board in accordance with section 11B; 

‘‘(3) the reports to the Committee on Banking, Housing, 

and Urban Affairs of the Senate required under section 13(3) 

(relating to emergency lending authority); and 

‘‘(4) such other information as the Board reasonably 

believes is necessary or helpful to the public in understanding 

the accounting, financial reporting, and internal controls of 

the Board and the Federal reserve banks.’’. 

(b) FEDERAL RESERVE TRANSPARENCY AND RELEASE OF

INFORMATION.—Section 11 of the Federal Reserve Act (12 U.S.C. 

248) is amended by adding at the end the following new subsection: 

‘‘(s) FEDERAL RESERVE TRANSPARENCY AND RELEASE OF

INFORMATION.— ‘‘(1) IN GENERAL.—In order to ensure the disclosure in 

a timely manner consistent with the purposes of this Act of 

information concerning the borrowers and counterparties 

participating in emergency credit facilities, discount window 

lending programs, and open market operations authorized or 

conducted by the Board or a Federal reserve bank, the Board 

of Governors shall disclose, as provided in paragraph (2)— 

‘‘(A) the names and identifying details of each borrower, 

participant, or counterparty in any credit facility or covered 

transaction; 

‘‘(B) the amount borrowed by or transferred by or to 

a specific borrower, participant, or counterparty in any 

credit facility or covered transaction; 

‘‘(C) the interest rate or discount paid by each borrower, 

participant, or counterparty in any credit facility or covered 

transaction; and 

‘‘(D) information identifying the types and amounts 

of collateral pledged or assets transferred in connection 

with participation in any credit facility or covered transaction. 

‘‘(2) MANDATORY RELEASE DATE.—In the case of— 

‘‘(A) a credit facility, the Board shall disclose the 

information described in paragraph (1) on the date that 

is 1 year after the effective date of the termination by 

the Board of the authorization of the credit facility; and 

‘‘(B) a covered transaction, the Board shall disclose 

the information described in paragraph (1) on the last 

day of the eighth calendar quarter following the calendar 

quarter in which the covered transaction was conducted. 

‘‘(3) EARLIER RELEASE DATE AUTHORIZED.—The Chairman 

of the Board may publicly release the information described 

in paragraph (1) before the relevant date specified in paragraph 
H. R. 4173—744 

(2), if the Chairman determines that such disclosure would 

be in the public interest and would not harm the effectiveness 

of the relevant credit facility or the purpose or conduct of 

covered transactions. 

‘‘(4) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

‘‘(A) CREDIT FACILITY.—The term ‘credit facility’ has 

the same meaning as in section 714(f)(1)(A) of title 31, 

United States Code. 

‘‘(B) COVERED TRANSACTION.—The term ‘covered transaction’ means— 

‘‘(i) any open market transaction with a nongovernmental third party conducted under the first undesignated paragraph of section 14 or subparagraph (a), 

(b), or (c) of the 2nd undesignated paragraph of such 

section, after the date of enactment of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act; and 

‘‘(ii) any advance made under section 10B after 

the date of enactment of that Act. 

‘‘(5) TERMINATION OF CREDIT FACILITY BY OPERATION OF

LAW.—A credit facility shall be deemed to have terminated 

as of the end of the 24-month period beginning on the date 

on which the credit facility ceases to make extensions of credit 

and loans, unless the credit facility is otherwise terminated 

by the Board before such date. 

‘‘(6) CONSISTENT TREATMENT OF INFORMATION.—Except as 

provided in this subsection or section 13(3)(D), or in section 

714(f)(3)(C) of title 31, United States Code, the information 

described in paragraph (1) and information concerning the 

transactions described in section 714(f) of such title, shall be 

confidential, including for purposes of section 552(b)(3) of title 

5 of such Code, until the relevant mandatory release date 

described in paragraph (2), unless the Chairman of the Board 

determines that earlier disclosure of such information would 

be in the public interest and would not harm the effectiveness 

of the relevant credit facility or the purpose of conduct of 

the relevant transactions. 

‘‘(7) PROTECTION OF PERSONAL PRIVACY.—This subsection 

and section 13(3)(C), section 714(f)(3)(C) of title 31, United 

States Code, and subsection (a) or (c) of section 1109 of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act 

shall not be construed as requiring any disclosure of nonpublic 

personal information (as defined for purposes of section 502 

of the Gramm-Leach-Bliley Act (12 U.S.C. 6802)) concerning 

any individual who is referenced in collateral pledged or assets 

transferred in connection with a credit facility or covered transaction, unless the person is a borrower, participant, or 

counterparty under the credit facility or covered transaction. 

‘‘(8) STUDY OF FOIA EXEMPTION IMPACT.— ‘‘(A) STUDY.—The Inspector General of the Board of 

Governors of the Federal Reserve System shall— 

‘‘(i) conduct a study on the impact that the exemption from section 552(b)(3) of title 5 (known as the 

Freedom of Information Act) established under paragraph (6) has had on the ability of the public to access 

information about the administration by the Board 

of Governors of emergency credit facilities, discount 
H. R. 4173—745 

window lending programs, and open market operations; 

and 

‘‘(ii) make any recommendations on whether the 

exemption described in clause (i) should remain in 

effect. 

‘‘(B) REPORT.—Not later than 30 months after the date 

of enactment of this section, the Inspector General of the 

Board of Governors of the Federal Reserve System shall 

submit a report on the findings of the study required under 

subparagraph (A) to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on 

Financial Services of the House of Representatives, and 

publish the report on the website of the Board. 

‘‘(9) RULE OF CONSTRUCTION.—Nothing in this section is 

meant to affect any pending litigation or lawsuit filed under 

section 552 of title 5, United States Code (popularly known 

as the Freedom of Information Act), on or before the date 

of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’. 

SEC. 1104. LIQUIDITY EVENT DETERMINATION. 

(a) DETERMINATION AND WRITTEN RECOMMENDATION.— 

(1) DETERMINATION REQUEST.—The Secretary may request 

the Corporation and the Board of Governors to determine 

whether a liquidity event exists that warrants use of the guarantee program authorized under section 1105. 

(2) REQUIREMENTS OF DETERMINATION.—Any determination 

pursuant to paragraph (1) shall— 

(A) be written; and 

(B) contain an evaluation of the evidence that— 

(i) a liquidity event exists; 

(ii) failure to take action would have serious 

adverse effects on financial stability or economic conditions in the United States; and 

(iii) actions authorized under section 1105 are 

needed to avoid or mitigate potential adverse effects 

on the United States financial system or economic 

conditions. 

(b) PROCEDURES.—Notwithstanding any other provision of Federal or State law, upon the determination of both the Corporation 

(upon a vote of not fewer than 2⁄3 of the members of the Corporation 

then serving) and the Board of Governors (upon a vote of not 

fewer than 2⁄3 of the members of the Board of Governors then 

serving) under subsection (a) that a liquidity event exists that 

warrants use of the guarantee program authorized under section 

1105, and with the written consent of the Secretary— 

(1) the Corporation shall take action in accordance with 

section 1105(a); and 

(2) the Secretary (in consultation with the President) shall 

take action in accordance with section 1105(c). 

(c) DOCUMENTATION AND REVIEW.— (1) DOCUMENTATION.—The Secretary shall— 

(A) maintain the written documentation of each determination of the Corporation and the Board of Governors 

under this section; and 

(B) provide the documentation for review under paragraph (2). 
H. R. 4173—746 

(2) GAO REVIEW.—The Comptroller General of the United 

States shall review and report to Congress on any determination of the Corporation and the Board of Governors under 

subsection (a), including— 

(A) the basis for the determination; and 

(B) the likely effect of the actions taken. 

(d) REPORT TO CONGRESS.—On the earlier of the date of a 

submission made to Congress under section 1105(c), or within 30 

days of the date of a determination under subsection (a), the Secretary shall provide written notice of the determination of the 

Corporation and the Board of Governors to the Committee on 

Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, 

including a description of the basis for the determination. 

SEC. 1105. EMERGENCY FINANCIAL STABILIZATION. 

(a) IN GENERAL.—Upon the written determination of the Corporation and the Board of Governors under section 1104, the Corporation shall create a widely available program to guarantee 

obligations of solvent insured depository institutions or solvent 

depository institution holding companies (including any affiliates 

thereof) during times of severe economic distress, except that a 

guarantee of obligations under this section may not include the 

provision of equity in any form. 

(b) RULEMAKING AND TERMS AND CONDITIONS.— (1) POLICIES AND PROCEDURES.—As soon as is practicable 

after the date of enactment of this Act, the Corporation shall 

establish, by regulation, and in consultation with the Secretary, 

policies and procedures governing the issuance of guarantees 

authorized by this section. Such policies and procedures may 

include a requirement of collateral as a condition of any such 

guarantee. 

(2) TERMS AND CONDITIONS.—The terms and conditions of 

any guarantee program shall be established by the Corporation, 

with the concurrence of the Secretary. 

(c) DETERMINATION OF GUARANTEED AMOUNT.— (1) IN GENERAL.—In connection with any program established pursuant to subsection (a) and subject to paragraph 

(2) of this subsection, the Secretary (in consultation with the 

President) shall determine the maximum amount of debt outstanding that the Corporation may guarantee under this section, and the President may transmit to Congress a written 

report on the plan of the Corporation to exercise the authority 

under this section to issue guarantees up to that maximum 

amount and a request for approval of such plan. The Corporation shall exercise the authority under this section to issue 

guarantees up to that specified maximum amount upon passage 

of the joint resolution of approval, as provided in subsection 

(d). Absent such approval, the Corporation shall issue no such 

guarantees. 

(2) ADDITIONAL DEBT GUARANTEE AUTHORITY.—If the Secretary (in consultation with the President) determines, after 

a submission to Congress under paragraph (1), that the maximum guarantee amount should be raised, and the Council 

concurs with that determination, the President may transmit 

to Congress a written report on the plan of the Corporation 

to exercise the authority under this section to issue guarantees 
H. R. 4173—747 

up to the increased maximum debt guarantee amount. The 

Corporation shall exercise the authority under this section to 

issue guarantees up to that specified maximum amount upon 

passage of the joint resolution of approval, as provided in 

subsection (d). Absent such approval, the Corporation shall 

issue no such guarantees. 

(d) RESOLUTION OF APPROVAL.— 

(1) ADDITIONAL DEBT GUARANTEE AUTHORITY.—A request 

by the President under this section shall be considered granted 

by Congress upon adoption of a joint resolution approving such 

request. Such joint resolution shall be considered in the Senate 

under expedited procedures. 

(2) FAST TRACK CONSIDERATION IN SENATE.— 

(A) RECONVENING.—Upon receipt of a request under 

subsection (c), if the Senate has adjourned or recessed 

for more than 2 days, the majority leader of the Senate, 

after consultation with the minority leader of the Senate, 

shall notify the Members of the Senate that, pursuant 

to this section, the Senate shall convene not later than 

the second calendar day after receipt of such message. 

(B) PLACEMENT ON CALENDAR.—Upon introduction in 

the Senate, the joint resolution shall be placed immediately 

on the calendar. 

(C) FLOOR CONSIDERATION.— 

(i) IN GENERAL.—Notwithstanding Rule XXII of the 

Standing Rules of the Senate, it is in order at any 

time during the period beginning on the 4th day after 

the date on which Congress receives a request under 

subsection (c), and ending on the 7th day after that 

date (even though a previous motion to the same effect 

has been disagreed to) to move to proceed to the consideration of the joint resolution, and all points of order 

against the joint resolution (and against consideration 

of the joint resolution) are waived. The motion to proceed is not debatable. The motion is not subject to 

a motion to postpone. A motion to reconsider the vote 

by which the motion is agreed to or disagreed to shall 

not be in order. If a motion to proceed to the consideration of the resolution is agreed to, the joint resolution 

shall remain the unfinished business until disposed 

of. 

(ii) DEBATE.—Debate on the joint resolution, and 

on all debatable motions and appeals in connection 

therewith, shall be limited to not more than 10 hours, 

which shall be divided equally between the majority 

and minority leaders or their designees. A motion further to limit debate is in order and not debatable. 

An amendment to, or a motion to postpone, or a motion 

to proceed to the consideration of other business, or 

a motion to recommit the joint resolution is not in 

order. 

(iii) VOTE ON PASSAGE.—The vote on passage shall 

occur immediately following the conclusion of the 

debate on the joint resolution, and a single quorum 

call at the conclusion of the debate if requested in 

accordance with the rules of the Senate. 
H. R. 4173—748 

(iv) RULINGS OF THE CHAIR ON PROCEDURE.— 

Appeals from the decisions of the Chair relating to 

the application of the rules of the Senate, as the case 

may be, to the procedure relating to a joint resolution 

shall be decided without debate. 

(3) RULES.— 

(A) COORDINATION WITH ACTION BY HOUSE OF REPRESENTATIVES.—If, before the passage by the Senate of 

a joint resolution of the Senate, the Senate receives a 

joint resolution, from the House of Representatives, then 

the following procedures shall apply: 

(i) The joint resolution of the House of Representatives shall not be referred to a committee. 

(ii) With respect to a joint resolution of the 

Senate— 

(I) the procedure in the Senate shall be the 

same as if no joint resolution had been received 

from the other House; but 

(II) the vote on passage shall be on the joint 

resolution of the House of Representatives. 

(B) TREATMENT OF JOINT RESOLUTION OF HOUSE OF

REPRESENTATIVES.—If the Senate fails to introduce or consider a joint resolution under this section, the joint resolution of the House of Representatives shall be entitled to 

expedited floor procedures under this subsection. 

(C) TREATMENT OF COMPANION MEASURES.—If, following passage of the joint resolution in the Senate, the 

Senate then receives the companion measure from the 

House of Representatives, the companion measure shall 

not be debatable. 

(D) RULES OF THE SENATE.—This subsection is enacted 

by Congress— 

(i) as an exercise of the rulemaking power of the 

Senate, and as such it is deemed a part of the rules 

of the Senate, but applicable only with respect to the 

procedure to be followed in the Senate in the case 

of a joint resolution, and it supersedes other rules, 

only to the extent that it is inconsistent with such 

rules; and 

(ii) with full recognition of the constitutional right 

of the Senate to change the rules (so far as relating 

to the procedure of the Senate) at any time, in the 

same manner, and to the same extent as in the case 

of any other rule of the Senate. 

(4) DEFINITION.—As used in this subsection, the term ‘‘joint 

resolution’’ means only a joint resolution— 

(A) that is introduced not later than 3 calendar days 

after the date on which the request referred to in subsection 

(c) is received by Congress; 

(B) that does not have a preamble; 

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

relating to the approval of a plan to guarantee obligations 

under section 1105 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act’’; and 

(D) the matter after the resolving clause of which 

is as follows: ‘‘That Congress approves the obligation of 
H. R. 4173—749 

any amount described in section 1105(c) of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act.’’. 

(e) FUNDING.— 

(1) FEES AND OTHER CHARGES.—The Corporation shall 

charge fees and other assessments to all participants in the 

program established pursuant to this section, in such amounts 

as are necessary to offset projected losses and administrative 

expenses, including amounts borrowed pursuant to paragraph 

(3), and such amounts shall be available to the Corporation. 

(2) EXCESS FUNDS.—If, at the conclusion of the program 

established under this section, there are any excess funds collected from the fees associated with such program, the funds 

shall be deposited in the General Fund of the Treasury. 

(3) AUTHORITY OF CORPORATION.—The Corporation— 

(A) may borrow funds from the Secretary of the 

Treasury and issue obligations of the Corporation to the 

Secretary for amounts borrowed, and the amounts borrowed 

shall be available to the Corporation for purposes of carrying out a program established pursuant to this section, 

including the payment of reasonable costs of administering 

the program, and the obligations issued shall be repaid 

in full with interest through fees and charges paid by 

participants in accordance with paragraphs (1) and (4), 

as applicable; and 

(B) may not borrow funds from the Deposit Insurance 

Fund established pursuant to section 11(a)(4) of the Federal 

Deposit Insurance Act. 

(4) BACKUP SPECIAL ASSESSMENTS.—To the extent that the 

funds collected pursuant to paragraph (1) are insufficient to 

cover any losses or expenses, including amounts borrowed 

pursuant to paragraph (3), arising from a program established 

pursuant to this section, the Corporation shall impose a special 

assessment solely on participants in the program, in amounts 

necessary to address such insufficiency, and which shall be 

available to the Corporation to cover such losses or expenses. 

(5) AUTHORITY OF THE SECRETARY.—The Secretary may 

purchase any obligations issued under paragraph (3)(A). For 

such purpose, the Secretary may use the proceeds of the sale 

of any securities issued under chapter 31 of title 31, United 

States Code, and the purposes for which securities may be 

issued under that chapter 31 are extended to include such 

purchases, and the amount of any securities issued under that 

chapter 31 for such purpose shall be treated in the same 

manner as securities issued under section 208(n)(5)(E). 

(f) RULE OF CONSTRUCTION.—For purposes of this section, a 

guarantee of deposits held by insured depository institutions shall 

not be treated as a debt guarantee program. 

(g) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

(1) COMPANY.—The term ‘‘company’’ means any entity other 

than a natural person that is incorporated or organized under 

Federal law or the laws of any State. 

(2) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term 

‘‘depository institution holding company’’ has the same meaning 

as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 

1813). 

(3) LIQUIDITY EVENT.—The term ‘‘liquidity event’’ means— 
H. R. 4173—750 

(A) an exceptional and broad reduction in the general 

ability of financial market participants— 

(i) to sell financial assets without an unusual and 

significant discount; or 

(ii) to borrow using financial assets as collateral 

without an unusual and significant increase in margin; 

or 

(B) an unusual and significant reduction in the ability 

of financial market participants to obtain unsecured credit. 

(4) SOLVENT.—The term ‘‘solvent’’ means that the value 

of the assets of an entity exceed its obligations to creditors. 

SEC. 1106. ADDITIONAL RELATED AMENDMENTS. 

(a) SUSPENSION OF PARALLEL FEDERAL DEPOSIT INSURANCE ACT

AUTHORITY.—Effective upon the date of enactment of this section, 

the Corporation may not exercise its authority under section 

13(c)(4)(G)(i) of the Federal Deposit Insurance Act (12 U.S.C. 

1823(c)(4)(G)(i)) to establish any widely available debt guarantee 

program for which section 1105 would provide authority. 

(b) FEDERAL DEPOSIT INSURANCE ACT.—Section 13(c)(4)(G) of 

the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) is 

amended— 

(1) in clause (i)— 

(A) in subclause (I), by inserting ‘‘for which the Corporation has been appointed receiver’’ before ‘‘would have 

serious’’; and 

(B) in the undesignated matter following subclause 

(II), by inserting ‘‘for the purpose of winding up the insured 

depository institution for which the Corporation has been 

appointed receiver’’ after ‘‘provide assistance under this 

section’’; and 

(2) in clause (v)(I), by striking ‘‘The’’ and inserting ‘‘Not 

later than 3 days after making a determination under clause 

(i), the’’. 

(c) EFFECT OF DEFAULT ON AN FDIC GUARANTEE.—If an insured 

depository institution or depository institution holding company 

(as those terms are defined in section 3 of the Federal Deposit 

Insurance Act) participating in a program under section 1105, or 

any participant in a debt guarantee program established pursuant 

to section 13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults 

on any obligation guaranteed by the Corporation after the date 

of enactment of this Act, the Corporation shall— 

(1) appoint itself as receiver for the insured depository 

institution that defaults; and 

(2) with respect to any other participating company that 

is not an insured depository institution that defaults— 

(A) require— 

(i) consideration of whether a determination shall 

be made, as provided in section 203 to resolve the 

company under section 202; and 

(ii) the company to file a petition for bankruptcy 

under section 301 of title 11, United States Code, if 

the Corporation is not appointed receiver pursuant 

to section 202 within 30 days of the date of default; 

or 
H. R. 4173—751 

(B) file a petition for involuntary bankruptcy on behalf 

of the company under section 303 of title 11, United States 

Code. 

SEC. 1107. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL 

RESERVE BANK GOVERNANCE. 

The 5th subparagraph of the 4th undesignated paragraph of 

section 4 of the Federal Reserve Act (12 U.S.C. 341) is amended 

by striking the 2nd sentence and inserting the following: ‘‘The 

president shall be the chief executive officer of the bank and shall 

be appointed by the Class B and Class C directors of the bank, 

with the approval of the Board of Governors of the Federal Reserve 

System, for a term of 5 years; and all other executive officers 

and all employees of the bank shall be directly responsible to 

the president.’’. 

SEC. 1108. FEDERAL RESERVE ACT AMENDMENTS ON SUPERVISION 

AND REGULATION POLICY. 

(a) ESTABLISHMENT OF THE POSITION OF VICE CHAIRMAN FOR

SUPERVISION.— (1) POSITION ESTABLISHED.—The second undesignated paragraph of section 10 of the Federal Reserve Act (12 U.S.C. 

242) (relating to the Chairman and Vice Chairman of the Board) 

is amended by striking the third sentence and inserting the 

following: ‘‘Of the persons thus appointed, 1 shall be designated 

by the President, by and with the advice and consent of the 

Senate, to serve as Chairman of the Board for a term of 4 

years, and 2 shall be designated by the President, by and 

with the advice and consent of the Senate, to serve as Vice 

Chairmen of the Board, each for a term of 4 years, 1 of whom 

shall serve in the absence of the Chairman, as provided in 

the fourth undesignated paragraph of this section, and 1 of 

whom shall be designated Vice Chairman for Supervision. The 

Vice Chairman for Supervision shall develop policy recommendations for the Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the Board, and shall oversee the supervision and regulation of such firms.’’. 

(2) EFFECTIVE DATE.—The amendment made by subsection 

(a) takes effect on the date of enactment of this title and 

applies to individuals who are designated by the President 

on or after that date to serve as Vice Chairman of Supervision. 

(b) APPEARANCES BEFORE CONGRESS.—Section 10 of the Federal 

Reserve Act (12 U.S.C. 241 et seq.) is amended by adding at the 

end the following: 

‘‘(12) APPEARANCES BEFORE CONGRESS.—The Vice Chairman for Supervision shall appear before the Committee on 

Banking, Housing, and Urban Affairs of the Senate and the 

Committee on Financial Services of the House of Representatives and at semi-annual hearings regarding the efforts, activities, objectives, and plans of the Board with respect to the 

conduct of supervision and regulation of depository institution 

holding companies and other financial firms supervised by the 

Board.’’. 

(c) BOARD RESPONSIBILITY TO SET SUPERVISION AND REGU- LATORY POLICY.—Section 11 of the Federal Reserve Act (12 U.S.C. 

248) (relating to enumerated powers of the Board) is amended 

by adding at the end of subsection (k) (relating to delegation) 
H. R. 4173—752 

the following: ‘‘The Board of Governors may not delegate to a 

Federal reserve bank its functions for the establishment of policies 

for the supervision and regulation of depository institution holding 

companies and other financial firms supervised by the Board of 

Governors.’’. 

(d) EXERCISE OF FEDERAL RESERVE AUTHORITY.— 

(1) NO DECISIONS BY FEDERAL RESERVE BANK PRESIDENTS.— 

No provision of title I relating to the authority of the Board 

of Governors shall be construed as conferring any decisionmaking authority on presidents of Federal reserve banks. 

(2) VOTING DECISIONS BY BOARD.—The Board of Governors 

shall not delegate the authority to make any voting decision 

that the Board of Governors is authorized or required to make 

under title I of this Act in contravention of section 11(k) of 

the Federal Reserve Act. 

SEC. 1109. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES; 

PUBLICATION OF BOARD ACTIONS. 

(a) GAO AUDIT.— 

(1) IN GENERAL.—Notwithstanding section 714(b) of title 

31, United States Code, or any other provision of law, the 

Comptroller General of the United States (in this subsection 

referred to as the ‘‘Comptroller General’’) shall conduct a onetime audit of all loans and other financial assistance provided 

during the period beginning on December 1, 2007 and ending 

on the date of enactment of this Act by the Board of Governors 

or a Federal reserve bank under the Asset-Backed Commercial 

Paper Money Market Mutual Fund Liquidity Facility, the Term 

Asset-Backed Securities Loan Facility, the Primary Dealer 

Credit Facility, the Commercial Paper Funding Facility, the 

Term Securities Lending Facility, the Term Auction Facility, 

Maiden Lane, Maiden Lane II, Maiden Lane III, the agency 

Mortgage-Backed Securities program, foreign currency liquidity 

swap lines, and any other program created as a result of 

section 13(3) of the Federal Reserve Act (as so designated 

by this title). 

(2) ASSESSMENTS.—In conducting the audit under paragraph (1), the Comptroller General shall assess— 

(A) the operational integrity, accounting, financial 

reporting, and internal controls of the credit facility; 

(B) the effectiveness of the security and collateral policies established for the facility in mitigating risk to the 

relevant Federal reserve bank and taxpayers; 

(C) whether the credit facility inappropriately favors 

one or more specific participants over other institutions 

eligible to utilize the facility; 

(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility; 

and 

(E) whether there were conflicts of interest with respect 

to the manner in which such facility was established or 

operated. 

(3) TIMING.—The audit required by this subsection shall 

be commenced not later than 30 days after the date of enactment of this Act, and shall be completed not later than 12 

months after that date of enactment. 
H. R. 4173—753 

(4) REPORT REQUIRED.—The Comptroller General shall 

submit a report on the audit conducted under paragraph (1) 

to the Congress not later than 12 months after the date of 

enactment of this Act, and such report shall be made available 

to— 

(A) the Speaker of the House of Representatives; 

(B) the majority and minority leaders of the House 

of Representatives; 

(C) the majority and minority leaders of the Senate; 

(D) the Chairman and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the 

Senate and of the Committee on Financial Services of the 

House of Representatives; and 

(E) any member of Congress who requests it. 

(b) AUDIT OF FEDERAL RESERVE BANK GOVERNANCE.— 

(1) AUDIT.— 

(A) IN GENERAL.—Not later than 1 year after the date 

of enactment of this Act, the Comptroller General shall 

complete an audit of the governance of the Federal reserve 

bank system. 

(B) REQUIRED EXAMINATIONS.—The audit required 

under subparagraph (A) shall— 

(i) examine the extent to which the current system 

of appointing Federal reserve bank directors effectively 

represents ‘‘the public, without discrimination on the 

basis of race, creed, color, sex or national origin, and 

with due but not exclusive consideration to the 

interests of agriculture, commerce, industry, services, 

labor, and consumers’’ in the selection of bank directors, as such requirement is set forth under section 

4 of the Federal Reserve Act; 

(ii) examine whether there are actual or potential 

conflicts of interest created when the directors of Federal reserve banks, which execute the supervisory functions of the Board of Governors of the Federal Reserve 

System, are elected by member banks; 

(iii) examine the establishment and operations of 

each facility described in subsection (a)(1) and each 

Federal reserve bank involved in the establishment 

and operations thereof; and 

(iv) identify changes to selection procedures for 

Federal reserve bank directors, or to other aspects 

of Federal reserve bank governance, that would— 

(I) improve how the public is represented; 

(II) eliminate actual or potential conflicts of 

interest in bank supervision; 

(III) increase the availability of information 

useful for the formation and execution of monetary 

policy; or 

(IV) in other ways increase the effectiveness 

or efficiency of reserve banks. 

(2) REPORT REQUIRED.—A report on the audit conducted 

under paragraph (1) shall be submitted by the Comptroller 

General to the Congress before the end of the 90-day period 

beginning on the date on which such audit is completed, and 

such report shall be made available to— 

(A) the Speaker of the House of Representatives; 
H. R. 4173—754 

(B) the majority and minority leaders of the House 

of Representatives; 

(C) the majority and minority leaders of the Senate; 

(D) the Chairman and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the 

Senate and of the Committee on Financial Services of the 

House of Representatives; and 

(E) any member of Congress who requests it. 

(c) PUBLICATION OF BOARD ACTIONS.—Notwithstanding any 

other provision of law, the Board of Governors shall publish on 

its website, not later than December 1, 2010, with respect to all 

loans and other financial assistance provided during the period 

beginning on December 1, 2007 and ending on the date of enactment 

of this Act under the Asset-Backed Commercial Paper Money 

Market Mutual Fund Liquidity Facility, the Term Asset-Backed 

Securities Loan Facility, the Primary Dealer Credit Facility, the 

Commercial Paper Funding Facility, the Term Securities Lending 

Facility, the Term Auction Facility, Maiden Lane, Maiden Lane 

II, Maiden Lane III, the agency Mortgage-Backed Securities program, foreign currency liquidity swap lines, and any other program 

created as a result of section 13(3) of the Federal Reserve Act 

(as so designated by this title)— 

(1) the identity of each business, individual, entity, or foreign central bank to which the Board of Governors or a Federal 

reserve bank has provided such assistance; 

(2) the type of financial assistance provided to that business, individual, entity, or foreign central bank; 

(3) the value or amount of that financial assistance; 

(4) the date on which the financial assistance was provided; 

(5) the specific terms of any repayment expected, including 

the repayment time period, interest charges, collateral, limitations on executive compensation or dividends, and other material terms; and 

(6) the specific rationale for each such facility or program. 

TITLE XII—IMPROVING ACCESS TO 

MAINSTREAM FINANCIAL INSTITUTIONS 

SEC. 1201. SHORT TITLE. 

This title may be cited as the ‘‘Improving Access to Mainstream 

Financial Institutions Act of 2010’’. 

SEC. 1202. PURPOSE. 

The purpose of this title is to encourage initiatives for financial 

products and services that are appropriate and accessible for millions of Americans who are not fully incorporated into the financial 

mainstream. 

SEC. 1203. DEFINITIONS. 

In this title, the following definitions shall apply: 

(1) ACCOUNT.—The term ‘‘account’’ means an agreement 

between an individual and an eligible entity under which the 

individual obtains from or through the entity 1 or more banking 

products and services, and includes a deposit account, a savings 
H. R. 4173—755 

account (including a money market savings account), an account 

for a closed-end loan, and other products or services, as the 

Secretary deems appropriate. 

(2) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.— The term ‘‘community development financial institution’’ has 

the same meaning as in section 103(5) of the Community 

Development Banking and Financial Institutions Act of 1994 

(12 U.S.C. 4702(5)). 

(3) ELIGIBLE ENTITY.—The term ‘‘eligible entity’’ means— 

(A) an organization described in section 501(c)(3) of 

the Internal Revenue Code of 1986, and exempt from tax 

under section 501(a) of such Code; 

(B) a federally insured depository institution; 

(C) a community development financial institution; 

(D) a State, local, or tribal government entity; or 

(E) a partnership or other joint venture comprised 

of 1 or more of the entities described in subparagraphs 

(A) through (D), in accordance with regulations prescribed 

by the Secretary under this title. 

(4) FEDERALLY INSURED DEPOSITORY INSTITUTION.—The 

term ‘‘federally insured depository institution’’ means any 

insured depository institution (as that term is defined in section 

3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) and 

any insured credit union (as that term is defined in section 

101 of the Federal Credit Union Act (12 U.S.C. 1752)). 

SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS. 

(a) IN GENERAL.—The Secretary is authorized to establish a 

multiyear program of grants, cooperative agreements, financial 

agency agreements, and similar contracts or undertakings to promote initiatives designed— 

(1) to enable low- and moderate-income individuals to 

establish one or more accounts in a federally insured depository 

institution that are appropriate to meet the financial needs 

of such individuals; and 

(2) to improve access to the provision of accounts, on reasonable terms, for low- and moderate-income individuals. 

(b) PROGRAM ELIGIBILITY AND ACTIVITIES.— (1) IN GENERAL.—The Secretary shall restrict participation 

in any program established under subsection (a) to an eligible 

entity. Subject to regulations prescribed by the Secretary under 

this title, 1 or more eligible entities may participate in 1 or 

several programs established under subsection (a). 

(2) ACCOUNT ACTIVITIES.—Subject to regulations prescribed 

by the Secretary, an eligible entity may, in participating in 

a program established under subsection (a), offer or provide 

to low- and moderate-income individuals products and services 

relating to accounts, including— 

(A) small-dollar value loans; and 

(B) financial education and counseling relating to conducting transactions in and managing accounts. 

SEC. 1205. LOW-COST ALTERNATIVES TO SMALL DOLLAR LOANS. 

(a) GRANTS AUTHORIZED.—The Secretary is authorized to establish multiyear demonstration programs by means of grants, cooperative agreements, financial agency agreements, and similar contracts 

or undertakings, with eligible entities to provide low-cost, small 
H. R. 4173—756 

loans to consumers that will provide alternatives to more costly 

small dollar loans. 

(b) TERMS AND CONDITIONS.— (1) IN GENERAL.—Loans under this section shall be made 

on terms and conditions, and pursuant to lending practices, 

that are reasonable for consumers. 

(2) FINANCIAL LITERACY AND EDUCATION OPPORTUNITIES.— (A) IN GENERAL.—Each eligible entity awarded a grant 

under this section shall promote and take appropriate steps 

to ensure the provision of financial literacy and education 

opportunities, such as relevant counseling services, educational courses, or wealth building programs, to each consumer provided with a loan pursuant to this section. 

(B) AUTHORITY TO EXPAND ACCESS.—As part of the 

grants, agreements, and undertakings established under 

this section, the Secretary may implement reasonable 

measures or programs designed to expand access to financial literacy and education opportunities, including relevant 

counseling services, educational courses, or wealth building 

programs to be provided to individuals who obtain loans 

from eligible entities under this section. 

SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS. 

The Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended by adding 

at the end the following: 

‘‘SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS. 

‘‘(a) PURPOSES.—The purposes of this section are— 

‘‘(1) to make financial assistance available from the Fund 

in order to help community development financial institutions 

defray the costs of operating small dollar loan programs, by 

providing the amounts necessary for such institutions to establish their own loan loss reserve funds to mitigate some of 

the losses on such small dollar loan programs; and 

‘‘(2) to encourage community development financial institutions to establish and maintain small dollar loan programs 

that would help give consumers access to mainstream financial 

institutions and combat high cost small dollar lending. 

‘‘(b) GRANTS.— ‘‘(1) LOAN-LOSS RESERVE FUND GRANTS.—The Fund shall 

make grants to community development financial institutions 

or to any partnership between such community development 

financial institutions and any other federally insured depository 

institution with a primary mission to serve targeted investment 

areas, as such areas are defined under section 103(16), to 

enable such institutions or any partnership of such institutions 

to establish a loan-loss reserve fund in order to defray the 

costs of a small dollar loan program established or maintained 

by such institution. 

‘‘(2) MATCHING REQUIREMENT.—A community development 

financial institution or any partnership of institutions established pursuant to paragraph (1) shall provide non-Federal 

matching funds in an amount equal to 50 percent of the amount 

of any grant received under this section. 

‘‘(3) USE OF FUNDS.—Any grant amounts received by a 

community development financial institution or any partnership between or among such institutions under paragraph (1)— 
H. R. 4173—757 

‘‘(A) may not be used by such institution to provide 

direct loans to consumers; 

‘‘(B) may be used by such institution to help recapture 

a portion or all of a defaulted loan made under the small 

dollar loan program of such institution; and 

‘‘(C) may be used to designate and utilize a fiscal 

agent for services normally provided by such an agent. 

‘‘(4) TECHNICAL ASSISTANCE GRANTS.—The Fund shall make 

technical assistance grants to community development financial 

institutions or any partnership between or among such institutions to support and maintain a small dollar loan program. 

Any grant amounts received under this paragraph may be 

used for technology, staff support, and other costs associated 

with establishing a small dollar loan program. 

‘‘(c) DEFINITIONS.—For purposes of this section— 

‘‘(1) the term ‘consumer reporting agency that compiles 

and maintains files on consumers on a nationwide basis’ has 

the same meaning given such term in section 603(p) of the 

Fair Credit Reporting Act (15 U.S.C. 1681a(p)); and 

‘‘(2) the term ‘small dollar loan program’ means a loan 

program wherein a community development financial institution or any partnership between or among such institutions 

offers loans to consumers that— 

‘‘(A) are made in amounts not exceeding $2,500; 

‘‘(B) must be repaid in installments; 

‘‘(C) have no pre-payment penalty; 

‘‘(D) the institution has to report payments regarding 

the loan to at least 1 of the consumer reporting agencies 

that compiles and maintains files on consumers on a nationwide basis; and 

‘‘(E) meet any other affordability requirements as may 

be established by the Administrator.’’. 

SEC. 1207. PROCEDURAL PROVISIONS. 

An eligible entity desiring to participate in a program or obtain 

a grant under this title shall submit an application to the Secretary, 

in such form and containing such information as the Secretary 

may require. 

SEC. 1208. AUTHORIZATION OF APPROPRIATIONS. 

(a) AUTHORIZATION TO THE SECRETARY.—There are authorized 

to be appropriated to the Secretary, such sums as are necessary 

to both administer and fund the programs and projects authorized 

by this title, to remain available until expended. 

(b) AUTHORIZATION TO THE FUND.—There is authorized to be 

appropriated to the Fund for each fiscal year beginning in fiscal 

year 2010, an amount equal to the amount of the administrative 

costs of the Fund for the operation of the grant program established 

under this title. 

SEC. 1209. REGULATIONS. 

(a) IN GENERAL.—The Secretary is authorized to promulgate 

regulations to implement and administer the grant programs and 

undertakings authorized by this title. 

(b) REGULATORY AUTHORITY.—Regulations prescribed under 

this section may contain such classifications, differentiations, or 

other provisions, and may provide for such adjustments and exceptions for any class of grant programs, undertakings, or eligible 
H. R. 4173—758 

entities, as, in the judgment of the Secretary, are necessary or 

proper to effectuate the purposes of this title, to prevent circumvention or evasion of this title, or to facilitate compliance with this 

title. 

SEC. 1210. EVALUATION AND REPORTS TO CONGRESS. 

For each fiscal year in which a program or project is carried 

out under this title, the Secretary shall submit a report to the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives containing a description of the activities funded, amounts 

distributed, and measurable results, as appropriate and available. 

TITLE XIII—PAY IT BACK ACT 

SEC. 1301. SHORT TITLE. 

This title may be cited as the ‘‘Pay It Back Act’’. 

SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION. 

Section 115(a) of the Emergency Economic Stabilization Act 

of 2008 (12 U.S.C. 5225(a)) is amended— 

(1) in paragraph (3)— 

(A) by striking ‘‘, $700,000,000,000, as such amount 

is reduced by $1,259,000,000, as such amount is reduced 

by $1,244,000,000’’ and inserting ‘‘$475,000,000,000’’; and 

(B) by striking ‘‘outstanding at any one time’’; and 

(2) by adding at the end the following: 

‘‘(4) For purposes of this subsection, the amount of 

authority considered to be exercised by the Secretary shall 

not be reduced by— 

‘‘(A) any amounts received by the Secretary before, 

on, or after the date of enactment of the Pay It Back 

Act from repayment of the principal of financial assistance 

by an entity that has received financial assistance under 

the TARP or any other program enacted by the Secretary 

under the authorities granted to the Secretary under this 

Act; 

‘‘(B) any amounts committed for any guarantees pursuant to the TARP that became or become uncommitted; 

or 

‘‘(C) any losses realized by the Secretary. 

‘‘(5) No authority under this Act may be used to incur 

any obligation for a program or initiative that was not initiated 

prior to June 25, 2010.’’. 

SEC. 1303. REPORT. 

Section 106 of the Emergency Economic Stabilization Act of 

2008 (12 U.S.C. 5216) is amended by inserting at the end the 

following: 

‘‘(f) REPORT.—The Secretary of the Treasury shall report to 

Congress every 6 months on amounts received and transferred 

to the general fund under subsection (d).’’. 
H. R. 4173—759 

SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT 

OF 2008. 

(a) SALE OF FANNIE MAE OBLIGATIONS AND SECURITIES BY

THE TREASURY; DEFICIT REDUCTION.—Section 304(g)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 

1719(g)(2)) is amended— 

(1) by redesignating subparagraph (C) as subparagraph 

(D); and 

(2) by inserting after subparagraph (B) the following: 

‘‘(C) DEFICIT REDUCTION.—The Secretary of the 

Treasury shall deposit in the General Fund of the Treasury 

any amounts received by the Secretary from the sale of 

any obligation acquired by the Secretary under this subsection, where such amounts shall be— 

‘‘(i) dedicated for the sole purpose of deficit reduction; and 

‘‘(ii) prohibited from use as an offset for other 

spending increases or revenue reductions.’’. 

(b) SALE OF FREDDIE MAC OBLIGATIONS AND SECURITIES BY

THE TREASURY; DEFICIT REDUCTION.—Section 306(l)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(l)(2)) 

is amended— 

(1) by redesignating subparagraph (C) as subparagraph 

(D); and 

(2) by inserting after subparagraph (B) the following: 

‘‘(C) DEFICIT REDUCTION.—The Secretary of the 

Treasury shall deposit in the General Fund of the Treasury 

any amounts received by the Secretary from the sale of 

any obligation acquired by the Secretary under this subsection, where such amounts shall be— 

‘‘(i) dedicated for the sole purpose of deficit reduction; and 

‘‘(ii) prohibited from use as an offset for other 

spending increases or revenue reductions.’’. 

(c) SALE OF FEDERAL HOME LOAN BANKS OBLIGATIONS BY THE

TREASURY; DEFICIT REDUCTION.—Section 11(l)(2) of the Federal 

Home Loan Bank Act (12 U.S.C. 1431(l)(2)) is amended— 

(1) by redesignating subparagraph (C) as subparagraph 

(D); and 

(2) by inserting after subparagraph (B) the following: 

‘‘(C) DEFICIT REDUCTION.—The Secretary of the 

Treasury shall deposit in the General Fund of the Treasury 

any amounts received by the Secretary from the sale of 

any obligation acquired by the Secretary under this subsection, where such amounts shall be— 

‘‘(i) dedicated for the sole purpose of deficit reduction; and 

‘‘(ii) prohibited from use as an offset for other 

spending increases or revenue reductions.’’. 

(d) REPAYMENT OF FEES.—Any periodic commitment fee or any 

other fee or assessment paid by the Federal National Mortgage 

Association or Federal Home Loan Mortgage Corporation to the 

Secretary of the Treasury as a result of any preferred stock purchase 

agreement, mortgage-backed security purchase program, or any 

other program or activity authorized or carried out pursuant to 

the authorities granted to the Secretary of the Treasury under 

section 1117 of the Housing and Economic Recovery Act of 2008 
H. R. 4173—760 

(Public Law 110–289; 122 Stat. 2683), including any fee agreed 

to by contract between the Secretary and the Association or Corporation, shall be deposited in the General Fund of the Treasury 

where such amounts shall be— 

(1) dedicated for the sole purpose of deficit reduction; and 

(2) prohibited from use as an offset for other spending 

increases or revenue reductions. 

SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT. 

The Director of the Federal Housing Finance Agency shall 

submit to Congress a report on the plans of the Agency to continue 

to support and maintain the Nation’s vital housing industry, while 

at the same time guaranteeing that the American taxpayer will 

not suffer unnecessary losses. 

SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS. 

(a) REJECTION OF ARRA FUNDS BY STATE.—Section 1607 of 

the American Recovery and Reinvestment Act of 2009 (Public Law 

111–5; 123 Stat. 305) is amended by adding at the end the following: 

‘‘(d) STATEWIDE REJECTION OF FUNDS.—If funds provided to 

any State in any division of this Act are not accepted for use 

by the Governor of the State pursuant to subsection (a) or by 

the State legislature pursuant to subsection (b), then all such funds 

shall be— 

‘‘(1) rescinded; and 

‘‘(2) deposited in the General Fund of the Treasury where 

such amounts shall be— 

‘‘(A) dedicated for the sole purpose of deficit reduction; 

and 

‘‘(B) prohibited from use as an offset for other spending 

increases or revenue reductions.’’. 

(b) WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.— Title XVI of the American Recovery and Reinvestment Act of 2009 

(Public Law 111–5; 123 Stat. 302) is amended by adding at the 

end the following: 

‘‘SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS. 

‘‘Notwithstanding any other provision of this Act, if the head 

of any executive agency withdraws or recaptures for any reason 

funds appropriated or otherwise made available under this division, 

and such funds have not been obligated by a State to a local 

government or for a specific project, such recaptured funds shall 

be— 

‘‘(1) rescinded; and 

‘‘(2) deposited in the General Fund of the Treasury where 

such amounts shall be— 

‘‘(A) dedicated for the sole purpose of deficit reduction; 

and 

‘‘(B) prohibited from use as an offset for other spending 

increases or revenue reductions.’’. 

(c) RETURN OF UNOBLIGATED FUNDS BY END OF 2012.—Section 

1603 of the American Recovery and Reinvestment Act of 2009 

(Public Law 111–5; 123 Stat. 302) is amended by— 

(1) striking ‘‘All funds’’ and inserting ‘‘(a) IN GENERAL.— 

All funds’’; and 

(2) adding at the end the following: 

‘‘(b) REPAYMENT OF UNOBLIGATED FUNDS.—Any discretionary 

appropriations made available in this division that have not been 
H. R. 4173—761 

obligated as of December 31, 2012, are hereby rescinded, and such 

amounts shall be deposited in the General Fund of the Treasury 

where such amounts shall be— 

‘‘(1) dedicated for the sole purpose of deficit reduction; 

and 

‘‘(2) prohibited from use as an offset for other spending 

increases or revenue reductions. 

‘‘(c) PRESIDENTIAL WAIVER AUTHORITY.— 

‘‘(1) IN GENERAL.—The President may waive the requirements under subsection (b), if the President determines that 

it is not in the best interest of the Nation to rescind a specific 

unobligated amount after December 31, 2012. 

‘‘(2) REQUESTS.—The head of an executive agency may also 

apply to the President for a waiver from the requirements 

under subsection (b).’’. 

TITLE XIV—MORTGAGE REFORM AND 

ANTI-PREDATORY LENDING ACT 

SEC. 1400. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER 

LAW. 

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

Reform and Anti-Predatory Lending Act’’. 

(b) DESIGNATION AS ENUMERATED CONSUMER LAW UNDER THE

PURVIEW OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION.— 

Subtitles A, B, C, and E and sections 1471, 1472, 1475, and 1476, 

and the amendments made by such subtitles and sections, shall 

be enumerated consumer laws, as defined in section 1002, and 

come under the purview of the Bureau of Consumer Financial 

Protection for purposes of title X, including the transfer of functions 

and personnel under subtitle F of title X and the savings provisions 

of such subtitle. 

(c) REGULATIONS; EFFECTIVE DATE.— 

(1) REGULATIONS.—The regulations required to be prescribed under this title or the amendments made by this title 

shall— 

(A) be prescribed in final form before the end of the 

18-month period beginning on the designated transfer date; 

and 

(B) take effect not later than 12 months after the 

date of issuance of the regulations in final form. 

(2) EFFECTIVE DATE ESTABLISHED BY RULE.—Except as provided in paragraph (3), a section, or provision thereof, of this 

title shall take effect on the date on which the final regulations 

implementing such section, or provision, take effect. 

(3) EFFECTIVE DATE.—A section of this title for which regulations have not been issued on the date that is 18 months 

after the designated transfer date shall take effect on such 

date. 
H. R. 4173—762 

Subtitle A—Residential Mortgage Loan 

Origination Standards 

SEC. 1401. DEFINITIONS. 

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) 

is amended by adding at the end the following new subsection: 

‘‘(cc) DEFINITIONS RELATING TO MORTGAGE ORIGINATION AND

RESIDENTIAL MORTGAGE LOANS.— 

‘‘(1) COMMISSION.—Unless otherwise specified, the term 

‘Commission’ means the Federal Trade Commission. 

‘‘(2) MORTGAGE ORIGINATOR.—The term ‘mortgage originator’— 

‘‘(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect 

compensation or gain— 

‘‘(i) takes a residential mortgage loan application; 

‘‘(ii) assists a consumer in obtaining or applying 

to obtain a residential mortgage loan; or 

‘‘(iii) offers or negotiates terms of a residential 

mortgage loan; 

‘‘(B) includes any person who represents to the public, 

through advertising or other means of communicating or 

providing information (including the use of business cards, 

stationery, brochures, signs, rate lists, or other promotional 

items), that such person can or will provide any of the 

services or perform any of the activities described in 

subparagraph (A); 

‘‘(C) does not include any person who is (i) not otherwise described in subparagraph (A) or (B) and who performs 

purely administrative or clerical tasks on behalf of a person 

who is described in any such subparagraph, or (ii) an 

employee of a retailer of manufactured homes who is not 

described in clause (i) or (iii) of subparagraph (A) and 

who does not advise a consumer on loan terms (including 

rates, fees, and other costs); 

‘‘(D) does not include a person or entity that only 

performs real estate brokerage activities and is licensed 

or registered in accordance with applicable State law, 

unless such person or entity is compensated by a lender, 

a mortgage broker, or other mortgage originator or by 

any agent of such lender, mortgage broker, or other mortgage originator; 

‘‘(E) does not include, with respect to a residential 

mortgage loan, a person, estate, or trust that provides 

mortgage financing for the sale of 3 properties in any 

12-month period to purchasers of such properties, each 

of which is owned by such person, estate, or trust and 

serves as security for the loan, provided that such loan— 

‘‘(i) is not made by a person, estate, or trust that 

has constructed, or acted as a contractor for the 

construction of, a residence on the property in the 

ordinary course of business of such person, estate, or 

trust; 

‘‘(ii) is fully amortizing; 
H. R. 4173—763 

‘‘(iii) is with respect to a sale for which the seller 

determines in good faith and documents that the buyer 

has a reasonable ability to repay the loan; 

‘‘(iv) has a fixed rate or an adjustable rate that 

is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate 

increases; and 

‘‘(v) meets any other criteria the Board may prescribe; 

‘‘(F) does not include the creditor (except the creditor 

in a table-funded transaction) under paragraph (1), (2), 

or (4) of section 129B(c); and 

‘‘(G) does not include a servicer or servicer employees, 

agents and contractors, including but not limited to those 

who offer or negotiate terms of a residential mortgage 

loan for purposes of renegotiating, modifying, replacing 

and subordinating principal of existing mortgages where 

borrowers are behind in their payments, in default or have 

a reasonable likelihood of being in default or falling behind. 

‘‘(3) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.—The term ‘Nationwide Mortgage Licensing System and 

Registry’ has the same meaning as in the Secure and Fair 

Enforcement for Mortgage Licensing Act of 2008. 

‘‘(4) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR.—For purposes of this subsection, a person ‘assists a 

consumer in obtaining or applying to obtain a residential mortgage loan’ by, among other things, advising on residential mortgage loan terms (including rates, fees, and other costs), preparing residential mortgage loan packages, or collecting 

information on behalf of the consumer with regard to a residential mortgage loan. 

‘‘(5) RESIDENTIAL MORTGAGE LOAN.—The term ‘residential 

mortgage loan’ means any consumer credit transaction that 

is secured by a mortgage, deed of trust, or other equivalent 

consensual security interest on a dwelling or on residential 

real property that includes a dwelling, other than a consumer 

credit transaction under an open end credit plan or, for purposes of sections 129B and 129C and section 128(a) (16), (17), 

(18), and (19), and sections 128(f) and 130(k), and any regulations promulgated thereunder, an extension of credit relating 

to a plan described in section 101(53D) of title 11, United 

States Code. 

‘‘(6) SECRETARY.—The term ‘Secretary’, when used in 

connection with any transaction or person involved with a 

residential mortgage loan, means the Secretary of Housing 

and Urban Development. 

‘‘(7) SERVICER.—The term ‘servicer’ has the same meaning 

as in section 6(i)(2) of the Real Estate Settlement Procedures 

Act of 1974 (12 U.S.C. 2605(i)(2)).’’. 

SEC. 1402. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended— 

(1) by redesignating the 2nd of the 2 sections designated 

as section 129 (15 U.S.C. 1639a) (relating to duty of servicers 

of residential mortgages) as section 129A; and 
H. R. 4173—764 

(2) by inserting after section 129A (as so redesignated) 

the following new section: 

‘‘§ 129B. Residential mortgage loan origination 

‘‘(a) FINDING AND PURPOSE.— 

‘‘(1) FINDING.—The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible, 

affordable mortgage credit remains available to consumers. 

‘‘(2) PURPOSE.—It is the purpose of this section and section 

129C to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability 

to repay the loans and that are understandable and not unfair, 

deceptive or abusive. 

‘‘(b) DUTY OF CARE.— 

‘‘(1) STANDARD.—Subject to regulations prescribed under 

this subsection, each mortgage originator shall, in addition 

to the duties imposed by otherwise applicable provisions of 

State or Federal law— 

‘‘(A) be qualified and, when required, registered and 

licensed as a mortgage originator in accordance with 

applicable State or Federal law, including the Secure and 

Fair Enforcement for Mortgage Licensing Act of 2008; and 

‘‘(B) include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide 

Mortgage Licensing System and Registry. 

‘‘(2) COMPLIANCE PROCEDURES REQUIRED.—The Board shall 

prescribe regulations requiring depository institutions to establish and maintain procedures reasonably designed to assure 

and monitor the compliance of such depository institutions, 

the subsidiaries of such institutions, and the employees of 

such institutions or subsidiaries with the requirements of this 

section and the registration procedures established under section 1507 of the Secure and Fair Enforcement for Mortgage 

Licensing Act of 2008.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

2 of the Truth in Lending Act is amended by inserting after the 

item relating to section 129 the following new items: 

‘‘129A. Fiduciary duty of servicers of pooled residential mortgages. 

‘‘129B. Residential mortgage loan origination.’’. 

SEC. 1403. PROHIBITION ON STEERING INCENTIVES. 

Section 129B of the Truth in Lending Act (as added by section 

1402(a)) is amended by inserting after subsection (b) the following 

new subsection: 

‘‘(c) PROHIBITION ON STEERING INCENTIVES.— 

‘‘(1) IN GENERAL.—For any residential mortgage loan, no 

mortgage originator shall receive from any person and no person shall pay to a mortgage originator, directly or indirectly, 

compensation that varies based on the terms of the loan (other 

than the amount of the principal). 

‘‘(2) RESTRUCTURING OF FINANCING ORIGINATION FEE.— 

‘‘(A) IN GENERAL.—For any mortgage loan, a mortgage 

originator may not receive from any person other than 

the consumer and no person, other than the consumer, 

who knows or has reason to know that a consumer has 
H. R. 4173—765 

directly compensated or will directly compensate a mortgage originator may pay a mortgage originator any origination fee or charge except bona fide third party charges 

not retained by the creditor, mortgage originator, or an 

affiliate of the creditor or mortgage originator . 

‘‘(B) EXCEPTION.—Notwithstanding subparagraph (A), 

a mortgage originator may receive from a person other 

than the consumer an origination fee or charge, and a 

person other than the consumer may pay a mortgage originator an origination fee or charge, if— 

‘‘(i) the mortgage originator does not receive any 

compensation directly from the consumer; and 

‘‘(ii) the consumer does not make an upfront payment of discount points, origination points, or fees, 

however denominated (other than bona fide third party 

charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except 

that the Board may, by rule, waive or provide exemptions to this clause if the Board determines that such 

waiver or exemption is in the interest of consumers 

and in the public interest. 

‘‘(3) REGULATIONS.—The Board shall prescribe regulations 

to prohibit— 

‘‘(A) mortgage originators from steering any consumer 

to a residential mortgage loan that— 

‘‘(i) the consumer lacks a reasonable ability to 

repay (in accordance with regulations prescribed under 

section 129C(a)); or 

‘‘(ii) has predatory characteristics or effects (such 

as equity stripping, excessive fees, or abusive terms); 

‘‘(B) mortgage originators from steering any consumer 

from a residential mortgage loan for which the consumer 

is qualified that is a qualified mortgage (as defined in 

section 129C(b)(2)) to a residential mortgage loan that is 

not a qualified mortgage; 

‘‘(C) abusive or unfair lending practices that promote 

disparities among consumers of equal credit worthiness 

but of different race, ethnicity, gender, or age; and 

‘‘(D) mortgage originators from— 

‘‘(i) mischaracterizing the credit history of a consumer or the residential mortgage loans available to 

a consumer; 

‘‘(ii) mischaracterizing or suborning the 

mischaracterization of the appraised value of the property securing the extension of credit; or 

‘‘(iii) if unable to suggest, offer, or recommend to 

a consumer a loan that is not more expensive than 

a loan for which the consumer qualifies, discouraging 

a consumer from seeking a residential mortgage loan 

secured by a consumer’s principal dwelling from 

another mortgage originator. 

‘‘(4) RULES OF CONSTRUCTION.—No provision of this subsection shall be construed as— 

‘‘(A) permitting any yield spread premium or other 

similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect 

compensation from all sources permitted to a mortgage 
H. R. 4173—766 

originator to vary based on the terms of the loan (other 

than the amount of the principal); 

‘‘(B) limiting or affecting the amount of compensation 

received by a creditor upon the sale of a consummated 

loan to a subsequent purchaser; 

‘‘(C) restricting a consumer’s ability to finance, at the 

option of the consumer, including through principal or rate, 

any origination fees or costs permitted under this subsection, or the mortgage originator’s right to receive such 

fees or costs (including compensation) from any person, 

subject to paragraph (2)(B), so long as such fees or costs 

do not vary based on the terms of the loan (other than 

the amount of the principal) or the consumer’s decision 

about whether to finance such fees or costs; or 

‘‘(D) prohibiting incentive payments to a mortgage 

originator based on the number of residential mortgage 

loans originated within a specified period of time.’’. 

SEC. 1404. LIABILITY. 

Section 129B of the Truth in Lending Act is amended by 

inserting after subsection (c) (as added by section 1403) the following new subsection: 

‘‘(d) LIABILITY FOR VIOLATIONS.— ‘‘(1) IN GENERAL.—For purposes of providing a cause of 

action for any failure by a mortgage originator, other than 

a creditor, to comply with any requirement imposed under 

this section and any regulation prescribed under this section, 

section 130 shall be applied with respect to any such failure 

by substituting ‘mortgage originator’ for ‘creditor’ each place 

such term appears in each such subsection. 

‘‘(2) MAXIMUM.—The maximum amount of any liability of 

a mortgage originator under paragraph (1) to a consumer for 

any violation of this section shall not exceed the greater of 

actual damages or an amount equal to 3 times the total amount 

of direct and indirect compensation or gain accruing to the 

mortgage originator in connection with the residential mortgage 

loan involved in the violation, plus the costs to the consumer 

of the action, including a reasonable attorney’s fee.’’. 

SEC. 1405. REGULATIONS. 

(a) DISCRETIONARY REGULATORY AUTHORITY.—Section 129B of 

the Truth in Lending Act is amended by inserting after subsection 

(d) (as added by section 1404) the following new subsection: 

‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.— ‘‘(1) IN GENERAL.—The Board shall, by regulations, prohibit 

or condition terms, acts or practices relating to residential 

mortgage loans that the Board finds to be abusive, unfair, 

deceptive, predatory, necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section 

and section 129C, necessary or proper to effectuate the purposes 

of this section and section 129C, to prevent circumvention or 

evasion thereof, or to facilitate compliance with such sections, 

or are not in the interest of the borrower. 

‘‘(2) APPLICATION.—The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans 

and shall be applied in the same manner as regulations prescribed under section 105. 
H. R. 4173—767 

‘‘(f) Section 129B and any regulations promulgated thereunder 

do not apply to an extension of credit relating to a plan described 

in section 101(53D) of title 11, United States Code.’’. 

(b) DISCLOSURES.—Notwithstanding any other provision of this 

title, in order to improve consumer awareness and understanding 

of transactions involving residential mortgage loans through the 

use of disclosures, the Board may, by rule, exempt from or modify 

disclosure requirements, in whole or in part, for any class of residential mortgage loans if the Board determines that such exemption 

or modification is in the interest of consumers and in the public 

interest. 

SEC. 1406. STUDY OF SHARED APPRECIATION MORTGAGES. 

(a) STUDY.—The Secretary of Housing and Urban Development, 

in consultation with the Secretary of the Treasury and other relevant agencies, shall conduct a comprehensive study to determine 

prudent statutory and regulatory requirements sufficient to provide 

for the widespread use of shared appreciation mortgages to 

strengthen local housing markets, provide new opportunities for 

affordable homeownership, and enable homeowners at risk of foreclosure to refinance or modify their mortgages. 

(b) REPORT.—Not later than the expiration of the 6-month 

period beginning on the date of the enactment of this Act, the 

Secretary of Housing and Urban Development shall submit a report 

to the Congress on the results of the study, which shall include 

recommendations for the regulatory and legislative requirements 

referred to in subsection (a). 

Subtitle B—Minimum Standards For 

Mortgages 

SEC. 1411. ABILITY TO REPAY. 

(a) IN GENERAL.— 

(1) RULE OF CONSTRUCTION.—No regulation, order, or guidance issued by the Bureau under this title shall be construed 

as requiring a depository institution to apply mortgage underwriting standards that do not meet the minimum underwriting 

standards required by the appropriate prudential regulator of 

the depository institution. 

(2) AMENDMENT TO TRUTH IN LENDING ACT.—Chapter 2 

of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended 

by inserting after section 129B (as added by section 1402(a)) 

the following new section: 

‘‘§ 129C. Minimum standards for residential mortgage loans 

‘‘(a) ABILITY TO REPAY.— 

‘‘(1) IN GENERAL.—In accordance with regulations prescribed by the Board, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good 

faith determination based on verified and documented information that, at the time the loan is consummated, the consumer 

has a reasonable ability to repay the loan, according to its 

terms, and all applicable taxes, insurance (including mortgage 

guarantee insurance), and assessments. 

‘‘(2) MULTIPLE LOANS.—If the creditor knows, or has reason 

to know, that 1 or more residential mortgage loans secured 
H. R. 4173—768 

by the same dwelling will be made to the same consumer, 

the creditor shall make a reasonable and good faith determination, based on verified and documented information, that the 

consumer has a reasonable ability to repay the combined payments of all loans on the same dwelling according to the terms 

of those loans and all applicable taxes, insurance (including 

mortgage guarantee insurance), and assessments. 

‘‘(3) BASIS FOR DETERMINATION.—A determination under 

this subsection of a consumer’s ability to repay a residential 

mortgage loan shall include consideration of the consumer’s 

credit history, current income, expected income the consumer 

is reasonably assured of receiving, current obligations, debtto-income ratio or the residual income the consumer will have 

after paying non-mortgage debt and mortgage-related obligations, employment status, and other financial resources other 

than the consumer’s equity in the dwelling or real property 

that secures repayment of the loan. A creditor shall determine 

the ability of the consumer to repay using a payment schedule 

that fully amortizes the loan over the term of the loan. 

‘‘(4) INCOME VERIFICATION.—A creditor making a residential 

mortgage loan shall verify amounts of income or assets that 

such creditor relies on to determine repayment ability, including 

expected income or assets, by reviewing the consumer’s Internal 

Revenue Service Form W–2, tax returns, payroll receipts, financial institution records, or other third-party documents that 

provide reasonably reliable evidence of the consumer’s income 

or assets. In order to safeguard against fraudulent reporting, 

any consideration of a consumer’s income history in making 

a determination under this subsection shall include the 

verification of such income by the use of— 

‘‘(A) Internal Revenue Service transcripts of tax 

returns; or 

‘‘(B) a method that quickly and effectively verifies 

income documentation by a third party subject to rules 

prescribed by the Board. 

‘‘(5) EXEMPTION.—With respect to loans made, guaranteed, 

or insured by Federal departments or agencies identified in 

subsection (b)(3)(B)(ii), such departments or agencies may 

exempt refinancings under a streamlined refinancing from this 

income verification requirement as long as the following conditions are met: 

‘‘(A) The consumer is not 30 days or more past due 

on the prior existing residential mortgage loan. 

‘‘(B) The refinancing does not increase the principal 

balance outstanding on the prior existing residential mortgage loan, except to the extent of fees and charges allowed 

by the department or agency making, guaranteeing, or 

insuring the refinancing. 

‘‘(C) Total points and fees (as defined in section 

103(aa)(4), other than bona fide third party charges not 

retained by the mortgage originator, creditor, or an affiliate 

of the creditor or mortgage originator) payable in connection with the refinancing do not exceed 3 percent of the 

total new loan amount. 

‘‘(D) The interest rate on the refinanced loan is lower 

than the interest rate of the original loan, unless the borrower is refinancing from an adjustable rate to a fixed- 
H. R. 4173—769 

rate loan, under guidelines that the department or agency 

shall establish for loans they make, guarantee, or issue. 

‘‘(E) The refinancing is subject to a payment schedule 

that will fully amortize the refinancing in accordance with 

the regulations prescribed by the department or agency 

making, guaranteeing, or insuring the refinancing. 

‘‘(F) The terms of the refinancing do not result in 

a balloon payment, as defined in subsection (b)(2)(A)(ii). 

‘‘(G) Both the residential mortgage loan being 

refinanced and the refinancing satisfy all requirements 

of the department or agency making, guaranteeing, or 

insuring the refinancing. 

‘‘(6) NONSTANDARD LOANS.— 

‘‘(A) VARIABLE RATE LOANS THAT DEFER REPAYMENT

OF ANY PRINCIPAL OR INTEREST.—For purposes of determining, under this subsection, a consumer’s ability to repay 

a variable rate residential mortgage loan that allows or 

requires the consumer to defer the repayment of any principal or interest, the creditor shall use a fully amortizing 

repayment schedule. 

‘‘(B) INTEREST-ONLY LOANS.—For purposes of determining, under this subsection, a consumer’s ability to repay 

a residential mortgage loan that permits or requires the 

payment of interest only, the creditor shall use the payment 

amount required to amortize the loan by its final maturity. 

‘‘(C) CALCULATION FOR NEGATIVE AMORTIZATION.—In 

making any determination under this subsection, a creditor 

shall also take into consideration any balance increase 

that may accrue from any negative amortization provision. 

‘‘(D) CALCULATION PROCESS.—For purposes of making 

any determination under this subsection, a creditor shall 

calculate the monthly payment amount for principal and 

interest on any residential mortgage loan by assuming— 

‘‘(i) the loan proceeds are fully disbursed on the 

date of the consummation of the loan; 

‘‘(ii) the loan is to be repaid in substantially equal 

monthly amortizing payments for principal and 

interest over the entire term of the loan with no balloon 

payment, unless the loan contract requires more rapid 

repayment (including balloon payment), in which case 

the calculation shall be made (I) in accordance with 

regulations prescribed by the Board, with respect to 

any loan which has an annual percentage rate that 

does not exceed the average prime offer rate for a 

comparable transaction, as of the date the interest 

rate is set, by 1.5 or more percentage points for a 

first lien residential mortgage loan; and by 3.5 or more 

percentage points for a subordinate lien residential 

mortgage loan; or (II) using the contract’s repayment 

schedule, with respect to a loan which has an annual 

percentage rate, as of the date the interest rate is 

set, that is at least 1.5 percentage points above the 

average prime offer rate for a first lien residential 

mortgage loan; and 3.5 percentage points above the 

average prime offer rate for a subordinate lien residential mortgage loan; and 
H. R. 4173—770 

‘‘(iii) the interest rate over the entire term of the 

loan is a fixed rate equal to the fully indexed rate 

at the time of the loan closing, without considering 

the introductory rate. 

‘‘(E) REFINANCE OF HYBRID LOANS WITH CURRENT

LENDER.—In considering any application for refinancing 

an existing hybrid loan by the creditor into a standard 

loan to be made by the same creditor in any case in 

which there would be a reduction in monthly payment 

and the mortgagor has not been delinquent on any payment 

on the existing hybrid loan, the creditor may— 

‘‘(i) consider the mortgagor’s good standing on the 

existing mortgage; 

‘‘(ii) consider if the extension of new credit would 

prevent a likely default should the original mortgage 

reset and give such concerns a higher priority as an 

acceptable underwriting practice; and 

‘‘(iii) offer rate discounts and other favorable terms 

to such mortgagor that would be available to new 

customers with high credit ratings based on such 

underwriting practice. 

‘‘(7) FULLY-INDEXED RATE DEFINED.—For purposes of this 

subsection, the term ‘fully indexed rate’ means the index rate 

prevailing on a residential mortgage loan at the time the loan 

is made plus the margin that will apply after the expiration 

of any introductory interest rates. 

‘‘(8) REVERSE MORTGAGES AND BRIDGE LOANS.—This subsection shall not apply with respect to any reverse mortgage 

or temporary or bridge loan with a term of 12 months or 

less, including to any loan to purchase a new dwelling where 

the consumer plans to sell a different dwelling within 12 

months. 

‘‘(9) SEASONAL INCOME.—If documented income, including 

income from a small business, is a repayment source for a 

residential mortgage loan, a creditor may consider the 

seasonality and irregularity of such income in the underwriting 

of and scheduling of payments for such credit.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

2 of the Truth in Lending Act is amended by inserting after the 

item relating to section 129B (as added by section 1402(b)) the 

following new item: 

‘‘129C. Minimum standards for residential mortgage loans.’’. 

SEC. 1412. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 

Section 129C of the Truth in Lending Act is amended by 

inserting after subsection (a) (as added by section 1411) the following new subsection: 

‘‘(b) PRESUMPTION OF ABILITY TO REPAY.— 

‘‘(1) IN GENERAL.—Any creditor with respect to any residential mortgage loan, and any assignee of such loan subject to 

liability under this title, may presume that the loan has met 

the requirements of subsection (a), if the loan is a qualified 

mortgage. 

‘‘(2) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

‘‘(A) QUALIFIED MORTGAGE.—The term ‘qualified mortgage’ means any residential mortgage loan— 
H. R. 4173—771 

‘‘(i) for which the regular periodic payments for 

the loan may not— 

‘‘(I) result in an increase of the principal balance; or 

‘‘(II) except as provided in subparagraph (E), 

allow the consumer to defer repayment of principal; 

‘‘(ii) except as provided in subparagraph (E), the 

terms of which do not result in a balloon payment, 

where a ‘balloon payment’ is a scheduled payment 

that is more than twice as large as the average of 

earlier scheduled payments; 

‘‘(iii) for which the income and financial resources 

relied upon to qualify the obligors on the loan are 

verified and documented; 

‘‘(iv) in the case of a fixed rate loan, for which 

the underwriting process is based on a payment 

schedule that fully amortizes the loan over the loan 

term and takes into account all applicable taxes, insurance, and assessments; 

‘‘(v) in the case of an adjustable rate loan, for 

which the underwriting is based on the maximum rate 

permitted under the loan during the first 5 years, 

and a payment schedule that fully amortizes the loan 

over the loan term and takes into account all applicable 

taxes, insurance, and assessments; 

‘‘(vi) that complies with any guidelines or regulations established by the Board relating to ratios of 

total monthly debt to monthly income or alternative 

measures of ability to pay regular expenses after payment of total monthly debt, taking into account the 

income levels of the borrower and such other factors 

as the Board may determine relevant and consistent 

with the purposes described in paragraph (3)(B)(i); 

‘‘(vii) for which the total points and fees (as defined 

in subparagraph (C)) payable in connection with the 

loan do not exceed 3 percent of the total loan amount; 

‘‘(viii) for which the term of the loan does not 

exceed 30 years, except as such term may be extended 

under paragraph (3), such as in high-cost areas; and 

‘‘(ix) in the case of a reverse mortgage (except 

for the purposes of subsection (a) of section 129C, 

to the extent that such mortgages are exempt 

altogether from those requirements), a reverse mortgage which meets the standards for a qualified mortgage, as set by the Board in rules that are consistent 

with the purposes of this subsection. 

‘‘(B) AVERAGE PRIME OFFER RATE.—The term ‘average 

prime offer rate’ means the average prime offer rate for 

a comparable transaction as of the date on which the 

interest rate for the transaction is set, as published by 

the Board.. 

‘‘(C) POINTS AND FEES.— 

‘‘(i) IN GENERAL.—For purposes of subparagraph 

(A), the term ‘points and fees’ means points and fees 

as defined by section 103(aa)(4) (other than bona fide 
H. R. 4173—772 

third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator). 

‘‘(ii) COMPUTATION.—For purposes of computing 

the total points and fees under this subparagraph, 

the total points and fees shall exclude either of the 

amounts described in the following subclauses, but not 

both: 

‘‘(I) Up to and including 2 bona fide discount 

points payable by the consumer in connection with 

the mortgage, but only if the interest rate from 

which the mortgage’s interest rate will be discounted does not exceed by more than 1 percentage 

point the average prime offer rate. 

‘‘(II) Unless 2 bona fide discount points have 

been excluded under subclause (I), up to and 

including 1 bona fide discount point payable by 

the consumer in connection with the mortgage, 

but only if the interest rate from which the mortgage’s interest rate will be discounted does not 

exceed by more than 2 percentage points the average prime offer rate. 

‘‘(iii) BONA FIDE DISCOUNT POINTS DEFINED.—For 

purposes of clause (ii), the term ‘bona fide discount 

points’ means loan discount points which are knowingly 

paid by the consumer for the purpose of reducing, 

and which in fact result in a bona fide reduction of, 

the interest rate or time-price differential applicable 

to the mortgage. 

‘‘(iv) INTEREST RATE REDUCTION.—Subclauses (I) 

and (II) of clause (ii) shall not apply to discount points 

used to purchase an interest rate reduction unless 

the amount of the interest rate reduction purchased 

is reasonably consistent with established industry 

norms and practices for secondary mortgage market 

transactions. 

‘‘(D) SMALLER LOANS.—The Board shall prescribe rules 

adjusting the criteria under subparagraph (A)(vii) in order 

to permit lenders that extend smaller loans to meet the 

requirements of the presumption of compliance under paragraph (1). In prescribing such rules, the Board shall consider the potential impact of such rules on rural areas 

and other areas where home values are lower. 

‘‘(E) BALLOON LOANS.—The Board may, by regulation, 

provide that the term ‘qualified mortgage’ includes a balloon loan— 

‘‘(i) that meets all of the criteria for a qualified 

mortgage under subparagraph (A) (except clauses 

(i)(II), (ii), (iv), and (v) of such subparagraph); 

‘‘(ii) for which the creditor makes a determination 

that the consumer is able to make all scheduled payments, except the balloon payment, out of income or 

assets other than the collateral; 

‘‘(iii) for which the underwriting is based on a 

payment schedule that fully amortizes the loan over 

a period of not more than 30 years and takes into 
H. R. 4173—773 

account all applicable taxes, insurance, and assessments; and 

‘‘(iv) that is extended by a creditor that— 

‘‘(I) operates predominantly in rural or underserved areas; 

‘‘(II) together with all affiliates, has total 

annual residential mortgage loan originations that 

do not exceed a limit set by the Board; 

‘‘(III) retains the balloon loans in portfolio; 

and 

‘‘(IV) meets any asset size threshold and any 

other criteria as the Board may establish, consistent with the purposes of this subtitle. 

‘‘(3) REGULATIONS.— 

‘‘(A) IN GENERAL.—The Board shall prescribe regulations to carry out the purposes of this subsection. 

‘‘(B) REVISION OF SAFE HARBOR CRITERIA.— 

‘‘(i) IN GENERAL.—The Board may prescribe regulations that revise, add to, or subtract from the criteria 

that define a qualified mortgage upon a finding that 

such regulations are necessary or proper to ensure 

that responsible, affordable mortgage credit remains 

available to consumers in a manner consistent with 

the purposes of this section, necessary and appropriate 

to effectuate the purposes of this section and section 

129B, to prevent circumvention or evasion thereof, or 

to facilitate compliance with such sections. 

‘‘(ii) LOAN DEFINITION.—The following agencies 

shall, in consultation with the Board, prescribe rules 

defining the types of loans they insure, guarantee, 

or administer, as the case may be, that are qualified 

mortgages for purposes of paragraph (2)(A), and such 

rules may revise, add to, or subtract from the criteria 

used to define a qualified mortgage under paragraph 

(2)(A), upon a finding that such rules are consistent 

with the purposes of this section and section 129B, 

to prevent circumvention or evasion thereof, or to facilitate compliance with such sections: 

‘‘(I) The Department of Housing and Urban 

Development, with regard to mortgages insured 

under the National Housing Act (12 U.S.C. 1707 

et seq.). 

‘‘(II) The Department of Veterans Affairs, with 

regard to a loan made or guaranteed by the Secretary of Veterans Affairs. 

‘‘(III) The Department of Agriculture, with 

regard loans guaranteed by the Secretary of Agriculture pursuant to 42 U.S.C. 1472(h). 

‘‘(IV) The Rural Housing Service, with regard 

to loans insured by the Rural Housing Service.’’. 

SEC. 1413. DEFENSE TO FORECLOSURE. 

Section 130 of the Truth in Lending Act (15 U.S.C. 1640) 

is amended by adding at the end the following new subsection: 

‘‘(k) DEFENSE TO FORECLOSURE.— ‘‘(1) IN GENERAL.—Notwithstanding any other provision of 

law, when a creditor, assignee, or other holder of a residential 
H. R. 4173—774 

mortgage loan or anyone acting on behalf of such creditor, 

assignee, or holder, initiates a judicial or nonjudicial foreclosure 

of the residential mortgage loan, or any other action to collect 

the debt in connection with such loan, a consumer may assert 

a violation by a creditor of paragraph (1) or (2) of section 

129B(c), or of section 129C(a), as a matter of defense by 

recoupment or set off without regard for the time limit on 

a private action for damages under subsection (e). 

‘‘(2) AMOUNT OF RECOUPMENT OR SETOFF.— 

‘‘(A) IN GENERAL.—The amount of recoupment or setoff under paragraph (1) shall equal the amount to which 

the consumer would be entitled under subsection (a) for 

damages for a valid claim brought in an original action 

against the creditor, plus the costs to the consumer of 

the action, including a reasonable attorney’s fee. 

‘‘(B) SPECIAL RULE.—Where such judgment is rendered 

after the expiration of the applicable time limit on a private 

action for damages under subsection (e), the amount of 

recoupment or set-off under paragraph (1) derived from 

damages under subsection (a)(4) shall not exceed the 

amount to which the consumer would have been entitled 

under subsection (a)(4) for damages computed up to the 

day preceding the expiration of the applicable time limit.’’. 

SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS. 

(a) IN GENERAL.—Section 129C of the Truth in Lending Act 

is amended by inserting after subsection (b) (as added by this 

title) the following new subsections: 

‘‘(c) PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.— 

‘‘(1) PROHIBITED ON CERTAIN LOANS.— ‘‘(A) IN GENERAL.—A residential mortgage loan that 

is not a ‘qualified mortgage’, as defined under subsection 

(b)(2), may not contain terms under which a consumer 

must pay a prepayment penalty for paying all or part 

of the principal after the loan is consummated. 

‘‘(B) EXCLUSIONS.—For purposes of this subsection, a 

‘qualified mortgage’ may not include a residential mortgage 

loan that— 

‘‘(i) has an adjustable rate; or 

‘‘(ii) has an annual percentage rate that exceeds 

the average prime offer rate for a comparable transaction, as of the date the interest rate is set— 

‘‘(I) by 1.5 or more percentage points, in the 

case of a first lien residential mortgage loan having 

a original principal obligation amount that is equal 

to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable 

size, as of the date of such interest rate set, pursuant to the 6th sentence of section 305(a)(2) the 

Federal Home Loan Mortgage Corporation Act (12 

U.S.C. 1454(a)(2)); 

‘‘(II) by 2.5 or more percentage points, in the 

case of a first lien residential mortgage loan having 

a original principal obligation amount that is more 

than the amount of the maximum limitation on 

the original principal obligation of mortgage in 
H. R. 4173—775 

effect for a residence of the applicable size, as 

of the date of such interest rate set, pursuant 

to the 6th sentence of section 305(a)(2) the Federal 

Home Loan Mortgage Corporation Act (12 U.S.C. 

1454(a)(2)); and 

‘‘(III) by 3.5 or more percentage points, in the 

case of a subordinate lien residential mortgage 

loan. 

‘‘(2) PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR

THRESHOLDS.—The Board— 

‘‘(A) shall publish, and update at least weekly, average 

prime offer rates; 

‘‘(B) may publish multiple rates based on varying types 

of mortgage transactions; and 

‘‘(C) shall adjust the thresholds established under subclause (I), (II), and (III) of paragraph (1)(B)(ii) as necessary 

to reflect significant changes in market conditions and 

to effectuate the purposes of the Mortgage Reform and 

Anti-Predatory Lending Act. 

‘‘(3) PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES.— 

A qualified mortgage (as defined in subsection (b)(2)) may not 

contain terms under which a consumer must pay a prepayment 

penalty for paying all or part of the principal after the loan 

is consummated in excess of the following limitations: 

‘‘(A) During the 1-year period beginning on the date 

the loan is consummated, the prepayment penalty shall 

not exceed an amount equal to 3 percent of the outstanding 

balance on the loan. 

‘‘(B) During the 1-year period beginning after the 

period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of 

the outstanding balance on the loan. 

‘‘(C) During the 1-year period beginning after the 1- 

year period described in subparagraph (B), the prepayment 

penalty shall not exceed an amount equal to 1 percent 

of the outstanding balance on the loan. 

‘‘(D) After the end of the 3-year period beginning on 

the date the loan is consummated, no prepayment penalty 

may be imposed on a qualified mortgage. 

‘‘(4) OPTION FOR NO PREPAYMENT PENALTY REQUIRED.—A 

creditor may not offer a consumer a residential mortgage loan 

product that has a prepayment penalty for paying all or part 

of the principal after the loan is consummated as a term of 

the loan without offering the consumer a residential mortgage 

loan product that does not have a prepayment penalty as a 

term of the loan. 

‘‘(d) SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.—No 

creditor may finance, directly or indirectly, in connection with any 

residential mortgage loan or with any extension of credit under 

an open end consumer credit plan secured by the principal dwelling 

of the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, lossof-income, life, or health insurance, or any payments directly or 

indirectly for any debt cancellation or suspension agreement or 

contract, except that— 
H. R. 4173—776 

‘‘(1) insurance premiums or debt cancellation or suspension 

fees calculated and paid in full on a monthly basis shall not 

be considered financed by the creditor; and 

‘‘(2) this subsection shall not apply to credit unemployment 

insurance for which the unemployment insurance premiums 

are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid 

pursuant to another insurance contract and not paid to an 

affiliate of the creditor. 

‘‘(e) ARBITRATION.— ‘‘(1) IN GENERAL.—No residential mortgage loan and no 

extension of credit under an open end consumer credit plan 

secured by the principal dwelling of the consumer may include 

terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling 

any claims arising out of the transaction. 

‘‘(2) POST-CONTROVERSY AGREEMENTS.—Subject to paragraph (3), paragraph (1) shall not be construed as limiting 

the right of the consumer and the creditor or any assignee 

to agree to arbitration or any other nonjudicial procedure as 

the method for resolving any controversy at any time after 

a dispute or claim under the transaction arises. 

‘‘(3) NO WAIVER OF STATUTORY CAUSE OF ACTION.—No provision of any residential mortgage loan or of any extension of 

credit under an open end consumer credit plan secured by 

the principal dwelling of the consumer, and no other agreement 

between the consumer and the creditor relating to the residential mortgage loan or extension of credit referred to in paragraph (1), shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court 

of the United States, or any other court of competent jurisdiction, pursuant to section 130 or any other provision of law, 

for damages or other relief in connection with any alleged 

violation of this section, any other provision of this title, or 

any other Federal law. 

‘‘(f) MORTGAGES WITH NEGATIVE AMORTIZATION.—No creditor 

may extend credit to a borrower in connection with a consumer 

credit transaction under an open or closed end consumer credit 

plan secured by a dwelling or residential real property that includes 

a dwelling, other than a reverse mortgage, that provides or permits 

a payment plan that may, at any time over the term of the extension 

of credit, result in negative amortization unless, before such transaction is consummated— 

‘‘(1) the creditor provides the consumer with a statement 

that— 

‘‘(A) the pending transaction will or may, as the case 

may be, result in negative amortization; 

‘‘(B) describes negative amortization in such manner 

as the Board shall prescribe; 

‘‘(C) negative amortization increases the outstanding 

principal balance of the account; and 

‘‘(D) negative amortization reduces the consumer’s 

equity in the dwelling or real property; and 

‘‘(2) in the case of a first-time borrower with respect to 

a residential mortgage loan that is not a qualified mortgage, 

the first-time borrower provides the creditor with sufficient 
H. R. 4173—777 

documentation to demonstrate that the consumer received 

homeownership counseling from organizations or counselors 

certified by the Secretary of Housing and Urban Development 

as competent to provide such counseling.’’. 

(b) CONFORMING AMENDMENT RELATING TO ENFORCEMENT.— 

Section 108(a) of the Truth in Lending Act (15 U.S.C. 1607(a)) 

is amended by inserting after paragraph (6) the following new 

paragraph: 

‘‘(7) sections 21B and 21C of the Securities Exchange Act 

of 1934, in the case of a broker or dealer, other than a depository 

institution, by the Securities and Exchange Commission.’’. 

(c) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTECTION.—Section 129C of the Truth in Lending Act is amended by 

inserting after subsection (f) (as added by subsection (a)) the following new subsection: 

‘‘(g) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTECTION.— 

‘‘(1) DEFINITION.—For purposes of this subsection, the term 

‘anti-deficiency law’ means the law of any State which provides 

that, in the event of foreclosure on the residential property 

of a consumer securing a mortgage, the consumer is not liable, 

in accordance with the terms and limitations of such State 

law, for any deficiency between the sale price obtained on 

such property through foreclosure and the outstanding balance 

of the mortgage. 

‘‘(2) NOTICE AT TIME OF CONSUMMATION.—In the case of 

any residential mortgage loan that is, or upon consummation 

will be, subject to protection under an anti-deficiency law, the 

creditor or mortgage originator shall provide a written notice 

to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the 

loss of such protection before such loan is consummated. 

‘‘(3) NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS

OF PROTECTION.—In the case of any residential mortgage loan 

that is subject to protection under an anti-deficiency law, if 

a creditor or mortgage originator provides an application to 

a consumer, or receives an application from a consumer, for 

any type of refinancing for such loan that would cause the 

loan to lose the protection of such anti-deficiency law, the 

creditor or mortgage originator shall provide a written notice 

to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the 

loss of such protection before any agreement for any such 

refinancing is consummated.’’. 

(d) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.— 

Section 129C of the Truth in Lending Act is amended by inserting 

after subsection (g) (as added by subsection (c)) the following new 

subsection: 

‘‘(h) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.— 

In the case of any residential mortgage loan, a creditor shall disclose 

prior to settlement or, in the case of a person becoming a creditor 

with respect to an existing residential mortgage loan, at the time 

such person becomes a creditor— 

‘‘(1) the creditor’s policy regarding the acceptance of partial 

payments; and 
H. R. 4173—778 

‘‘(2) if partial payments are accepted, how such payments 

will be applied to such mortgage and if such payments will 

be placed in escrow. 

‘‘(i) TIMESHARE PLANS.—This section and any regulations 

promulgated under this section do not apply to an extension of 

credit relating to a plan described in section 101(53D) of title 

11, United States Code.’’. 

SEC. 1415. RULE OF CONSTRUCTION. 

Except as otherwise expressly provided in section 129B or 129C 

of the Truth in Lending Act (as added by this title), no provision 

of such section 129B or 129C shall be construed as superseding, 

repealing, or affecting any duty, right, obligation, privilege, or 

remedy of any person under any other provision of the Truth 

in Lending Act or any other provision of Federal or State law. 

SEC. 1416. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 

(a) INCREASE IN AMOUNT OF CIVIL MONEY PENALTIES FOR CERTAIN VIOLATIONS.—Section 130(a) of the Truth in Lending Act (15 

U.S.C. 1640(a)) is amended— 

(1) in paragraph (2)(A)(ii)— 

(A) by striking ‘‘$100’’ and inserting ‘‘$200’’; and 

(B) by striking ‘‘$1,000’’ and inserting ‘‘$2,000’’; 

(2) in paragraph (2)(B), by striking ‘‘$500,000’’ and inserting 

‘‘$1,000,000’’; and 

(3) in paragraph (4), by inserting ‘‘, paragraph (1) or (2) 

of section 129B(c), or section 129C(a)’’ after ‘‘section 129’’. 

(b) STATUTE OF LIMITATIONS EXTENDED FOR SECTION 129 VIOLATIONS.—Section 130(e) of the Truth in Lending Act (15 U.S.C. 

1640(e)) is amended— 

(1) in the first sentence, by striking ‘‘Any action’’ and 

inserting ‘‘Except as provided in the subsequent sentence, any 

action’’; and 

(2) by inserting after the first sentence the following new 

sentence: ‘‘Any action under this section with respect to any 

violation of section 129, 129B, or 129C may be brought in 

any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning 

on the date of the occurrence of the violation.’’. 

SEC. 1417. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION. 

Section 130 of the Truth in Lending Act (15 U.S.C. 1640) 

is amended by adding after subsection (k) (as added by this title) 

the following new subsection: 

‘‘(l) EXEMPTION FROM LIABILITY AND RESCISSION IN CASE OF

BORROWER FRAUD OR DECEPTION.—In addition to any other remedy 

available by law or contract, no creditor or assignee shall be liable 

to an obligor under this section, if such obligor, or co-obligor has 

been convicted of obtaining by actual fraud such residential mortgage loan.’’. 

SEC. 1418. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID 

ADJUSTABLE RATE MORTGAGES. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 128 

the following new section: 
H. R. 4173—779 

‘‘§ 128A. Reset of hybrid adjustable rate mortgages 

‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DEFINED.—For purposes of this section, the term ‘hybrid adjustable rate mortgage’ 

means a consumer credit transaction secured by the consumer’s 

principal residence with a fixed interest rate for an introductory 

period that adjusts or resets to a variable interest rate after such 

period. 

‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—During the 1-month 

period that ends 6 months before the date on which the interest 

rate in effect during the introductory period of a hybrid adjustable 

rate mortgage adjusts or resets to a variable interest rate or, 

in the case of such an adjustment or resetting that occurs within 

the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written 

notice, separate and distinct from all other correspondence to the 

consumer, that includes the following: 

‘‘(1) Any index or formula used in making adjustments 

to or resetting the interest rate and a source of information 

about the index or formula. 

‘‘(2) An explanation of how the new interest rate and payment would be determined, including an explanation of how 

the index was adjusted, such as by the addition of a margin. 

‘‘(3) A good faith estimate, based on accepted industry 

standards, of the creditor or servicer of the amount of the 

monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this estimate 

is based. 

‘‘(4) A list of alternatives consumers may pursue before 

the date of adjustment or reset, and descriptions of the actions 

consumers must take to pursue these alternatives, including— 

‘‘(A) refinancing; 

‘‘(B) renegotiation of loan terms; 

‘‘(C) payment forbearances; and 

‘‘(D) pre-foreclosure sales. 

‘‘(5) The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably 

available to the consumer that have been certified or approved 

and made publicly available by the Secretary of Housing and 

Urban Development or a State housing finance authority (as 

defined in section 1301 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989). 

‘‘(6) The address, telephone number, and Internet address 

for the State housing finance authority (as so defined) for 

the State in which the consumer resides. 

‘‘(c) SAVINGS CLAUSE.—The Board may require the notice in 

paragraph (b) or other notice consistent with this Act for adjustable 

rate mortgage loans that are not hybrid adjustable rate mortgage 

loans.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

2 of the Truth in Lending Act is amended by inserting after the 

item relating to section 128 the following new item: 

‘‘128A. Reset of hybrid adjustable rate mortgages.’’. 

SEC. 1419. REQUIRED DISCLOSURES. 

Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) 

is amended by adding at the end the following new paragraphs: 
H. R. 4173—780 

‘‘(16) In the case of a variable rate residential mortgage 

loan for which an escrow or impound account will be established 

for the payment of all applicable taxes, insurance, and assessments— 

‘‘(A) the amount of initial monthly payment due under 

the loan for the payment of principal and interest, and 

the amount of such initial monthly payment including the 

monthly payment deposited in the account for the payment 

of all applicable taxes, insurance, and assessments; and 

‘‘(B) the amount of the fully indexed monthly payment 

due under the loan for the payment of principal and 

interest, and the amount of such fully indexed monthly 

payment including the monthly payment deposited in the 

account for the payment of all applicable taxes, insurance, 

and assessments. 

‘‘(17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services 

provided in connection with the loan, the amount of charges 

that are included in the loan and the amount of such charges 

the borrower must pay at closing, the approximate amount 

of the wholesale rate of funds in connection with the loan, 

and the aggregate amount of other fees or required payments 

in connection with the loan. 

‘‘(18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by 

the consumer, and any additional amount received by the originator from the creditor. 

‘‘(19) In the case of a residential mortgage loan, the total 

amount of interest that the consumer will pay over the life 

of the loan as a percentage of the principal of the loan. Such 

amount shall be computed assuming the consumer makes each 

monthly payment in full and on-time, and does not make any 

over-payments.’’. 

SEC. 1420. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR 

RESIDENTIAL MORTGAGE LOANS. 

Section 128 of the Truth in Lending Act (15 U.S.C. 1638) 

is amended by adding at the end the following new subsection: 

‘‘(f) PERIODIC STATEMENTS FOR RESIDENTIAL MORTGAGE

LOANS.— 

‘‘(1) IN GENERAL.—The creditor, assignee, or servicer with 

respect to any residential mortgage loan shall transmit to the 

obligor, for each billing cycle, a statement setting forth each 

of the following items, to the extent applicable, in a conspicuous 

and prominent manner: 

‘‘(A) The amount of the principal obligation under the 

mortgage. 

‘‘(B) The current interest rate in effect for the loan. 

‘‘(C) The date on which the interest rate may next 

reset or adjust. 

‘‘(D) The amount of any prepayment fee to be charged, 

if any. 

‘‘(E) A description of any late payment fees. 

‘‘(F) A telephone number and electronic mail address 

that may be used by the obligor to obtain information 

regarding the mortgage. 
H. R. 4173—781 

‘‘(G) The names, addresses, telephone numbers, and 

Internet addresses of counseling agencies or programs 

reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State 

housing finance authority (as defined in section 1301 of 

the Financial Institutions Reform, Recovery, and Enforcement Act of 1989). 

‘‘(H) Such other information as the Board may prescribe in regulations. 

‘‘(2) DEVELOPMENT AND USE OF STANDARD FORM.—The 

Board shall develop and prescribe a standard form for the 

disclosure required under this subsection, taking into account 

that the statements required may be transmitted in writing 

or electronically. 

‘‘(3) EXCEPTION.—Paragraph (1) shall not apply to any fixed 

rate residential mortgage loan where the creditor, assignee, 

or servicer provides the obligor with a coupon book that provides 

the obligor with substantially the same information as required 

in paragraph (1).’’. 

SEC. 1421. REPORT BY THE GAO. 

(a) REPORT REQUIRED.—The Comptroller General of the United 

States shall conduct a study to determine the effects the enactment 

of this Act will have on the availability and affordability of credit 

for consumers, small businesses, homebuyers, and mortgage 

lending, including the effect— 

(1) on the mortgage market for mortgages that are not 

within the safe harbor provided in the amendments made by 

this subtitle; 

(2) on the ability of prospective homebuyers to obtain 

financing; 

(3) on the ability of homeowners facing resets or adjustments to refinance—for example, do they have fewer refinancing options due to the unavailability of certain loan products that were available before the enactment of this Act; 

(4) on minorities’ ability to access affordable credit compared with other prospective borrowers; 

(5) on home sales and construction; 

(6) of extending the rescission right, if any, on adjustable 

rate loans and its impact on litigation; 

(7) of State foreclosure laws and, if any, an investor’s 

ability to transfer a property after foreclosure; 

(8) of expanding the existing provisions of the Home Ownership and Equity Protection Act of 1994; 

(9) of prohibiting prepayment penalties on high-cost mortgages; and 

(10) of establishing counseling services under the Department of Housing and Urban Development and offered through 

the Office of Housing Counseling. 

(b) REPORT.—Before the end of the 1-year period beginning 

on the date of the enactment of this Act, the Comptroller General 

shall submit a report to the Congress containing the findings and 

conclusions of the Comptroller General with respect to the study 

conducted pursuant to subsection (a). 

(c) EXAMINATION RELATED TO CERTAIN CREDIT RISK RETENTION

PROVISIONS.—The report required by subsection (b) shall also 
H. R. 4173—782 

include an analysis by the Comptroller General of the effect on 

the capital reserves and funding of lenders of credit risk retention 

provisions for non-qualified mortgages, including an analysis of 

the exceptions and adjustments authorized in section 129C(b)(3) 

of the Truth in Lending Act and a recommendation on whether 

a uniform standard is needed. 

(d) ANALYSIS OF CREDIT RISK RETENTION PROVISIONS.—The 

report required by subsection (b) shall also include— 

(1) an analysis by the Comptroller General of whether 

the credit risk retention provisions have significantly reduced 

risks to the larger credit market of the repackaging and selling 

of securitized loans on a secondary market; and 

(2) recommendations to the Congress on adjustments that 

should be made, or additional measures that should be undertaken. 

SEC. 1422. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY. 

Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) 

is amended by striking ‘‘section 129 may also’’ and inserting ‘‘section 

129, 129B, 129C, 129D, 129E, 129F, 129G, or 129H of this Act 

may also’’. 

Subtitle C—High-Cost Mortgages 

SEC. 1431. DEFINITIONS RELATING TO HIGH-COST MORTGAGES. 

(a) HIGH-COST MORTGAGE DEFINED.—Section 103(aa) of the 

Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by striking 

all that precedes paragraph (2) and inserting the following: 

‘‘(aa) HIGH-COST MORTGAGE.— ‘‘(1) DEFINITION.— ‘‘(A) IN GENERAL.—The term ‘high-cost mortgage’, and 

a mortgage referred to in this subsection, means a consumer credit transaction that is secured by the consumer’s 

principal dwelling, other than a reverse mortgage transaction, if— 

‘‘(i) in the case of a credit transaction secured— 

‘‘(I) by a first mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more 

than 6.5 percentage points (8.5 percentage points, 

if the dwelling is personal property and the transaction is for less than $50,000) the average prime 

offer rate, as defined in section 129C(b)(2)(B), for 

a comparable transaction; or 

‘‘(II) by a subordinate or junior mortgage on 

the consumer’s principal dwelling, the annual 

percentage rate at consummation of the transaction will exceed by more than 8.5 percentage 

points the average prime offer rate, as defined 

in section 129C(b)(2)(B), for a comparable transaction; 

‘‘(ii) the total points and fees payable in connection 

with the transaction, other than bona fide third party 

charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator, exceed— 
H. R. 4173—783 

‘‘(I) in the case of a transaction for $20,000 

or more, 5 percent of the total transaction amount; 

or 

‘‘(II) in the case of a transaction for less than 

$20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar 

amount as the Board shall prescribe by regulation); 

or 

‘‘(iii) the credit transaction documents permit the 

creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction 

closing or such fees or penalties exceed, in the aggregate, more than 2 percent of the amount prepaid. 

‘‘(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT.—For 

purposes of subparagraph (A)(i), the annual percentage 

rate of interest shall be determined based on the following 

interest rate: 

‘‘(i) In the case of a fixed-rate transaction in which 

the annual percentage rate will not vary during the 

term of the loan, the interest rate in effect on the 

date of consummation of the transaction. 

‘‘(ii) In the case of a transaction in which the 

rate of interest varies solely in accordance with an 

index, the interest rate determined by adding the index 

rate in effect on the date of consummation of the 

transaction to the maximum margin permitted at any 

time during the loan agreement. 

‘‘(iii) In the case of any other transaction in which 

the rate may vary at any time during the term of 

the loan for any reason, the interest charged on the 

transaction at the maximum rate that may be charged 

during the term of the loan. 

‘‘(C) MORTGAGE INSURANCE.—For the purposes of computing the total points and fees under paragraph (4), the 

total points and fees shall exclude— 

‘‘(i) any premium provided by an agency of the 

Federal Government or an agency of a State; 

‘‘(ii) any amount that is not in excess of the amount 

payable under policies in effect at the time of origination under section 203(c)(2)(A) of the National Housing 

Act (12 U.S.C. 1709(c)(2)(A)), provided that the premium, charge, or fee is required to be refundable on 

a pro-rated basis and the refund is automatically issued 

upon notification of the satisfaction of the underlying 

mortgage loan; and 

‘‘(iii) any premium paid by the consumer after 

closing.’’. 

(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 103(aa)(2) 

of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended 

by striking subparagraph (B) and inserting the following new 

subparagraph: 

‘‘(B) An increase or decrease under subparagraph (A)— 

‘‘(i) may not result in the number of percentage 

points referred to in paragraph (1)(A)(i)(I) being less 

than 6 percentage points or greater than 10 percentage 

points; and 
H. R. 4173—784 

‘‘(ii) may not result in the number of percentage 

points referred to in paragraph (1)(A)(i)(II) being less 

than 8 percentage points or greater than 12 percentage 

points.’’. 

(c) POINTS AND FEES DEFINED.— 

(1) IN GENERAL.—Section 103(aa)(4) of the Truth in Lending 

Act (15 U.S.C. 1602(aa)(4)) is amended— 

(A) by striking subparagraph (B) and inserting the 

following: 

‘‘(B) all compensation paid directly or indirectly by 

a consumer or creditor to a mortgage originator from any 

source, including a mortgage originator that is also the 

creditor in a table-funded transaction;’’; 

(B) by redesignating subparagraph (D) as subparagraph (G); and 

(C) by inserting after subparagraph (C) the following 

new subparagraphs: 

‘‘(D) premiums or other charges payable at or before 

closing for any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, 

loss-of-income, life or health insurance, or any payments 

directly or indirectly for any debt cancellation or suspension 

agreement or contract, except that insurance premiums 

or debt cancellation or suspension fees calculated and paid 

in full on a monthly basis shall not be considered financed 

by the creditor; 

‘‘(E) the maximum prepayment fees and penalties 

which may be charged or collected under the terms of 

the credit transaction; 

‘‘(F) all prepayment fees or penalties that are incurred 

by the consumer if the loan refinances a previous loan 

made or currently held by the same creditor or an affiliate 

of the creditor; and’’. 

(2) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS.—Section 103(aa) of the Truth in Lending 

Act (15 U.S.C. 1602(aa)) is amended— 

(A) by redesignating paragraph (5) as paragraph (6); 

and 

(B) by inserting after paragraph (4) the following new 

paragraph: 

‘‘(5) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS.—In the case of open-end consumer credit 

plans, points and fees shall be calculated, for purposes of this 

section and section 129, by adding the total points and fees 

known at or before closing, including the maximum prepayment 

penalties which may be charged or collected under the terms 

of the credit transaction, plus the minimum additional fees 

the consumer would be required to pay to draw down an amount 

equal to the total credit line.’’. 

(d) BONA FIDE DISCOUNT LOAN DISCOUNT POINTS.—Section 103 

of the Truth in Lending Act (15 U.S.C. 1602) is amended by 

inserting after subsection (cc) (as added by section 1401) the following new subsection: 

‘‘(dd) BONA FIDE DISCOUNT POINTS AND PREPAYMENT PENALTIES.—For the purposes of determining the amount of points 

and fees for purposes of subsection (aa), either the amounts 
H. R. 4173—785 

described in paragraph (1) or (2) of the following paragraphs, but 

not both, shall be excluded: 

‘‘(1) Up to and including 2 bona fide discount points payable 

by the consumer in connection with the mortgage, but only 

if the interest rate from which the mortgage’s interest rate 

will be discounted does not exceed by more than 1 percentage 

point— 

‘‘(A) the average prime offer rate, as defined in section 

129C; or 

‘‘(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

‘‘(2) Unless 2 bona fide discount points have been excluded 

under paragraph (1), up to and including 1 bona fide discount 

point payable by the consumer in connection with the mortgage, 

but only if the interest rate from which the mortgage’s interest 

rate will be discounted does not exceed by more than 2 percentage points— 

‘‘(A) the average prime offer rate, as defined in section 

129C; or 

‘‘(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

‘‘(3) For purposes of paragraph (1), the term ‘bona fide 

discount points’ means loan discount points which are knowingly paid by the consumer for the purpose of reducing, and 

which in fact result in a bona fide reduction of, the interest 

rate or time-price differential applicable to the mortgage. 

‘‘(4) Paragraphs (1) and (2) shall not apply to discount 

points used to purchase an interest rate reduction unless the 

amount of the interest rate reduction purchased is reasonably 

consistent with established industry norms and practices for 

secondary mortgage market transactions.’’. 

SEC. 1432. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN 

MORTGAGES. 

(a) PREPAYMENT PENALTY PROVISIONS.—Section 129(c)(2) of the 

Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed. 

(b) NO BALLOON PAYMENTS.—Section 129(e) of the Truth in 

Lending Act (15 U.S.C. 1639(e)) is amended to read as follows: 

‘‘(e) NO BALLOON PAYMENTS.—No high-cost mortgage may contain a scheduled payment that is more than twice as large as 

the average of earlier scheduled payments. This subsection shall 

not apply when the payment schedule is adjusted to the seasonal 

or irregular income of the consumer.’’. 

SEC. 1433. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES. 

(a) ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.—Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended— 

(1) by redesignating subsections (j), (k), (l) and (m) as 

subsections (n), (o), (p), and (q) respectively; and 

(2) by inserting after subsection (i) the following new subsections: 

‘‘(j) RECOMMENDED DEFAULT.—No creditor shall recommend or 

encourage default on an existing loan or other debt prior to and 

in connection with the closing or planned closing of a high-cost 
H. R. 4173—786 

mortgage that refinances all or any portion of such existing loan 

or debt. 

‘‘(k) LATE FEES.— 

‘‘(1) IN GENERAL.—No creditor may impose a late payment 

charge or fee in connection with a high-cost mortgage— 

‘‘(A) in an amount in excess of 4 percent of the amount 

of the payment past due; 

‘‘(B) unless the loan documents specifically authorize 

the charge or fee; 

‘‘(C) before the end of the 15-day period beginning 

on the date the payment is due, or in the case of a loan 

on which interest on each installment is paid in advance, 

before the end of the 30-day period beginning on the date 

the payment is due; or 

‘‘(D) more than once with respect to a single late payment. 

‘‘(2) COORDINATION WITH SUBSEQUENT LATE FEES.—If a payment is otherwise a full payment for the applicable period 

and is paid on its due date or within an applicable grace 

period, and the only delinquency or insufficiency of payment 

is attributable to any late fee or delinquency charge assessed 

on any earlier payment, no late fee or delinquency charge 

may be imposed on such payment. 

‘‘(3) FAILURE TO MAKE INSTALLMENT PAYMENT.—If, in the 

case of a loan agreement the terms of which provide that 

any payment shall first be applied to any past due principal 

balance, the consumer fails to make an installment payment 

and the consumer subsequently resumes making installment 

payments but has not paid all past due installments, the creditor may impose a separate late payment charge or fee for 

any principal due (without deduction due to late fees or related 

fees) until the default is cured. 

‘‘(l) ACCELERATION OF DEBT.—No high-cost mortgage may contain a provision which permits the creditor to accelerate the indebtedness, except when repayment of the loan has been accelerated 

by default in payment, or pursuant to a due-on-sale provision, 

or pursuant to a material violation of some other provision of 

the loan document unrelated to payment schedule. 

‘‘(m) RESTRICTION ON FINANCING POINTS AND FEES.—No creditor may directly or indirectly finance, in connection with any highcost mortgage, any of the following: 

‘‘(1) Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate 

of the creditor is the noteholder of the note being refinanced. 

‘‘(2) Any points or fees.’’. 

(b) PROHIBITIONS ON EVASIONS.—Section 129 of the Truth in 

Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as so redesignated by subsection (a)(1)) the following 

new subsection: 

‘‘(r) PROHIBITIONS ON EVASIONS, STRUCTURING OF TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A creditor may not 

take any action in connection with a high-cost mortgage— 

‘‘(1) to structure a loan transaction as an open-end credit 

plan or another form of loan for the purpose and with the 

intent of evading the provisions of this title; or 
H. R. 4173—787 

‘‘(2) to divide any loan transaction into separate parts for 

the purpose and with the intent of evading provisions of this 

title.’’. 

(c) MODIFICATION OR DEFERRAL FEES.—Section 129 of the Truth 

in Lending Act (15 U.S.C. 1639) is amended by inserting after 

subsection (r) (as added by subsection (b) of this section) the following new subsection: 

‘‘(s) MODIFICATION AND DEFERRAL FEES PROHIBITED.—A creditor, successor in interest, assignee, or any agent of any of the 

above, may not charge a consumer any fee to modify, renew, extend, 

or amend a high-cost mortgage, or to defer any payment due under 

the terms of such mortgage.’’. 

(d) PAYOFF STATEMENT.—Section 129 of the Truth in Lending 

Act (15 U.S.C. 1639) is amended by inserting after subsection 

(s) (as added by subsection (c) of this section) the following new 

subsection: 

‘‘(t) PAYOFF STATEMENT.— 

‘‘(1) FEES.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), no creditor or servicer may charge a fee for informing 

or transmitting to any person the balance due to pay off 

the outstanding balance on a high-cost mortgage. 

‘‘(B) TRANSACTION FEE.—When payoff information 

referred to in subparagraph (A) is provided by facsimile 

transmission or by a courier service, a creditor or servicer 

may charge a processing fee to cover the cost of such 

transmission or service in an amount not to exceed an 

amount that is comparable to fees imposed for similar 

services provided in connection with consumer credit transactions that are secured by the consumer’s principal 

dwelling and are not high-cost mortgages. 

‘‘(C) FEE DISCLOSURE.—Prior to charging a transaction 

fee as provided in subparagraph (B), a creditor or servicer 

shall disclose that payoff balances are available for free 

pursuant to subparagraph (A). 

‘‘(D) MULTIPLE REQUESTS.—If a creditor or servicer has 

provided payoff information referred to in subparagraph 

(A) without charge, other than the transaction fee allowed 

by subparagraph (B), on 4 occasions during a calendar 

year, the creditor or servicer may thereafter charge a 

reasonable fee for providing such information during the 

remainder of the calendar year. 

‘‘(2) PROMPT DELIVERY.—Payoff balances shall be provided 

within 5 business days after receiving a request by a consumer 

or a person authorized by the consumer to obtain such information.’’. 

(e) PRE-LOAN COUNSELING REQUIRED.—Section 129 of the Truth 

in Lending Act (15 U.S.C. 1639) is amended by inserting after 

subsection t) (as added by subsection (d) of this section) the following 

new subsection: 

‘‘(u) PRE-LOAN COUNSELING.— 

‘‘(1) IN GENERAL.—A creditor may not extend credit to 

a consumer under a high-cost mortgage without first receiving 

certification from a counselor that is approved by the Secretary 

of Housing and Urban Development, or at the discretion of 
H. R. 4173—788 

the Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. Such counselor shall not be employed by the creditor 

or an affiliate of the creditor or be affiliated with the creditor. 

‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUNSELING.—No 

counselor may certify that a consumer has received counseling 

on the advisability of the high-cost mortgage unless the counselor can verify that the consumer has received each statement 

required (in connection with such loan) by this section or the 

Real Estate Settlement Procedures Act of 1974 with respect 

to the transaction. 

‘‘(3) REGULATIONS.—The Board may prescribe such regulations as the Board determines to be appropriate to carry out 

the requirements of paragraph (1).’’. 

(f) CORRECTIONS AND UNINTENTIONAL VIOLATIONS.—Section 129 

of the Truth in Lending Act (15 U.S.C. 1639) is amended by 

inserting after subsection (u) (as added by subsection (e)) the following new subsection: 

‘‘(v) CORRECTIONS AND UNINTENTIONAL VIOLATIONS.—A creditor 

or assignee in a high-cost mortgage who, when acting in good 

faith, fails to comply with any requirement under this section 

will not be deemed to have violated such requirement if the creditor 

or assignee establishes that either— 

‘‘(1) within 30 days of the loan closing and prior to the 

institution of any action, the consumer is notified of or discovers 

the violation, appropriate restitution is made, and whatever 

adjustments are necessary are made to the loan to either, 

at the choice of the consumer— 

‘‘(A) make the loan satisfy the requirements of this 

chapter; or 

‘‘(B) in the case of a high-cost mortgage, change the 

terms of the loan in a manner beneficial to the consumer 

so that the loan will no longer be a high-cost mortgage; 

or 

‘‘(2) within 60 days of the creditor’s discovery or receipt 

of notification of an unintentional violation or bona fide error 

and prior to the institution of any action, the consumer is 

notified of the compliance failure, appropriate restitution is 

made, and whatever adjustments are necessary are made to 

the loan to either, at the choice of the consumer— 

‘‘(A) make the loan satisfy the requirements of this 

chapter; or 

‘‘(B) in the case of a high-cost mortgage, change the 

terms of the loan in a manner beneficial so that the loan 

will no longer be a high-cost mortgage.’’. 

Subtitle D—Office of Housing Counseling 

SEC. 1441. SHORT TITLE. 

This subtitle may be cited as the ‘‘Expand and Preserve Home 

Ownership Through Counseling Act’’. 

SEC. 1442. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING. 

Section 4 of the Department of Housing and Urban Development Act (42 U.S.C. 3533) is amended by adding at the end the 

following new subsection: 
H. R. 4173—789 

‘‘(g) OFFICE OF HOUSING COUNSELING.— 

‘‘(1) ESTABLISHMENT.—There is established, in the Department, the Office of Housing Counseling. 

‘‘(2) DIRECTOR.—There is established the position of 

Director of Housing Counseling. The Director shall be the head 

of the Office of Housing Counseling and shall be appointed 

by, and shall report to, the Secretary. Such position shall be 

a career-reserved position in the Senior Executive Service. 

‘‘(3) FUNCTIONS.— 

‘‘(A) IN GENERAL.—The Director shall have primary 

responsibility within the Department for all activities and 

matters relating to homeownership counseling and rental 

housing counseling, including— 

‘‘(i) research, grant administration, public outreach, and policy development relating to such counseling; and 

‘‘(ii) establishment, coordination, and administration of all regulations, requirements, standards, and 

performance measures under programs and laws 

administered by the Department that relate to housing 

counseling, homeownership counseling (including 

maintenance of homes), mortgage-related counseling 

(including home equity conversion mortgages and 

credit protection options to avoid foreclosure), and 

rental housing counseling, including the requirements, 

standards, and performance measures relating to 

housing counseling. 

‘‘(B) SPECIFIC FUNCTIONS.—The Director shall carry out 

the functions assigned to the Director and the Office under 

this section and any other provisions of law. Such functions 

shall include establishing rules necessary for— 

‘‘(i) the counseling procedures under section 

106(g)(1) of the Housing and Urban Development Act 

of 1968 (12 U.S.C. 1701x(h)(1)); 

‘‘(ii) carrying out all other functions of the Secretary under section 106(g) of the Housing and Urban 

Development Act of 1968, including the establishment, 

operation, and publication of the availability of the 

toll-free telephone number under paragraph (2) of such 

section; 

‘‘(iii) contributing to the distribution of home 

buying information booklets pursuant to section 5 of 

the Real Estate Settlement Procedures Act of 1974 

(12 U.S.C. 2604); 

‘‘(iv) carrying out the certification program under 

section 106(e) of the Housing and Urban Development 

Act of 1968 (12 U.S.C. 1701x(e)); 

‘‘(v) carrying out the assistance program under 

section 106(a)(4) of the Housing and Urban Development Act of 1968, including criteria for selection of 

applications to receive assistance; 

‘‘(vi) carrying out any functions regarding abusive, 

deceptive, or unscrupulous lending practices relating 

to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the 

study under section 6 of the Expand and Preserve 

Home Ownership Through Counseling Act; 
H. R. 4173—790 

‘‘(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection; 

‘‘(viii) collaborating with community-based 

organizations with expertise in the field of housing 

counseling; and 

‘‘(ix) providing for the building of capacity to provide housing counseling services in areas that lack 

sufficient services, including underdeveloped areas that 

lack basic water and sewer systems, electricity services, 

and safe, sanitary housing. 

‘‘(4) ADVISORY COMMITTEE.— 

‘‘(A) IN GENERAL.—The Secretary shall appoint an 

advisory committee to provide advice regarding the carrying out of the functions of the Director. 

‘‘(B) MEMBERS.—Such advisory committee shall consist 

of not more than 12 individuals, and the membership of 

the committee shall equally represent the mortgage and 

real estate industry, including consumers and housing 

counseling agencies certified by the Secretary. 

‘‘(C) TERMS.—Except as provided in subparagraph (D), 

each member of the advisory committee shall be appointed 

for a term of 3 years. Members may be reappointed at 

the discretion of the Secretary. 

‘‘(D) TERMS OF INITIAL APPOINTEES.—As designated by 

the Secretary at the time of appointment, of the members 

first appointed to the advisory committee, 4 shall be 

appointed for a term of 1 year and 4 shall be appointed 

for a term of 2 years. 

‘‘(E) PROHIBITION OF PAY; TRAVEL EXPENSES.—Members 

of the advisory committee shall serve without pay, but 

shall receive travel expenses, including per diem in lieu 

of subsistence, in accordance with applicable provisions 

under subchapter I of chapter 57 of title 5, United States 

Code. 

‘‘(F) ADVISORY ROLE ONLY.—The advisory committee 

shall have no role in reviewing or awarding housing counseling grants. 

‘‘(5) SCOPE OF HOMEOWNERSHIP COUNSELING.—In carrying 

out the responsibilities of the Director, the Director shall ensure 

that homeownership counseling provided by, in connection with, 

or pursuant to any function, activity, or program of the Department addresses the entire process of homeownership, including 

the decision to purchase a home, the selection and purchase 

of a home, issues arising during or affecting the period of 

ownership of a home (including refinancing, default and foreclosure, and other financial decisions), and the sale or other 

disposition of a home.’’. 

SEC. 1443. COUNSELING PROCEDURES. 

(a) IN GENERAL.—Section 106 of the Housing and Urban 

Development Act of 1968 (12 U.S.C. 1701x) is amended by adding 

at the end the following new subsection: 

‘‘(g) PROCEDURES AND ACTIVITIES.— 

‘‘(1) COUNSELING PROCEDURES.— 
H. R. 4173—791 

‘‘(A) IN GENERAL.—The Secretary shall establish, 

coordinate, and monitor the administration by the Department of Housing and Urban Development of the counseling 

procedures for homeownership counseling and rental 

housing counseling provided in connection with any program of the Department, including all requirements, standards, and performance measures that relate to homeownership and rental housing counseling. 

‘‘(B) HOMEOWNERSHIP COUNSELING.—For purposes of 

this subsection and as used in the provisions referred to 

in this subparagraph, the term ‘homeownership counseling’ 

means counseling related to homeownership and residential 

mortgage loans. Such term includes counseling related to 

homeownership and residential mortgage loans that is provided pursuant to— 

‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20)); 

‘‘(ii) in the United States Housing Act of 1937— 

‘‘(I) section 9(e) (42 U.S.C. 1437g(e)); 

‘‘(II) section 8(y)(1)(D) (42 U.S.C. 

1437f(y)(1)(D)); 

‘‘(III) section 18(a)(4)(D) (42 U.S.C. 

1437p(a)(4)(D)); 

‘‘(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4)); 

‘‘(V) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4)); 

‘‘(VI) section 33(d)(2)(B) (42 U.S.C. 1437z– 

5(d)(2)(B)); 

‘‘(VII) sections 302(b)(6) and 303(b)(7) (42 

U.S.C. 1437aaa–1(b)(6), 1437aaa–2(b)(7)); and 

‘‘(VIII) section 304(c)(4) (42 U.S.C. 1437aaa– 

3(c)(4)); 

‘‘(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (42 U.S.C. 

1437f note); 

‘‘(iv) sections 233(b)(2) and 258(b) of the CranstonGonzalez National Affordable Housing Act (42 U.S.C. 

12773(b)(2), 12808(b)); 

‘‘(v) this section and section 101(e) of the Housing 

and Urban Development Act of 1968 (12 U.S.C. 1701x, 

1701w(e)); 

‘‘(vi) section 220(d)(2)(G) of the Low-Income 

Housing Preservation and Resident Homeownership 

Act of 1990 (12 U.S.C. 4110(d)(2)(G)); 

‘‘(vii) sections 422(b)(6), 423(b)(7), 424(c)(4), 

442(b)(6), and 443(b)(6) of the Cranston-Gonzalez 

National Affordable Housing Act (42 U.S.C. 

12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6), and 

12893(b)(6)); 

‘‘(viii) section 491(b)(1)(F)(iii) of the McKinneyVento Homeless Assistance Act (42 U.S.C. 

11408(b)(1)(F)(iii)); 

‘‘(ix) sections 202(3) and 810(b)(2)(A) of the Native 

American Housing and Self-Determination Act of 1996 

(25 U.S.C. 4132(3), 4229(b)(2)(A)); 

‘‘(x) in the National Housing Act— 

‘‘(I) in section 203 (12 U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2) 
H. R. 4173—792 

of subsection (b), subsection (c)(2)(A), and subsection (r)(4); 

‘‘(II) subsections (a) and (c)(3) of section 237 

(12 U.S.C. 1715z–2); and 

‘‘(III) subsections (d)(2)(B) and (m)(1) of section 

255 (12 U.S.C. 1715z–20); 

‘‘(xi) section 502(h)(4)(B) of the Housing Act of 

1949 (42 U.S.C. 1472(h)(4)(B)); 

‘‘(xii) section 508 of the Housing and Urban 

Development Act of 1970 (12 U.S.C. 1701z–7); and 

‘‘(xiii) section 106 of the Energy Policy Act of 1992 

(42 U.S.C. 12712 note). 

‘‘(C) RENTAL HOUSING COUNSELING.—For purposes of 

this subsection, the term ‘rental housing counseling’ means 

counseling related to rental of residential property, which 

may include counseling regarding future homeownership 

opportunities and providing referrals for renters and 

prospective renters to entities providing counseling and 

shall include counseling related to such topics that is provided pursuant to— 

‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20)); 

‘‘(ii) in the United States Housing Act of 1937— 

‘‘(I) section 9(e) (42 U.S.C. 1437g(e)); 

‘‘(II) section 18(a)(4)(D) (42 U.S.C. 

1437p(a)(4)(D)); 

‘‘(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4)); 

‘‘(IV) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4)); 

‘‘(V) section 33(d)(2)(B) (42 U.S.C. 1437z– 

5(d)(2)(B)); and 

‘‘(VI) section 302(b)(6) (42 U.S.C. 1437aaa– 

1(b)(6)); 

‘‘(iii) section 233(b)(2) of the Cranston-Gonzalez 

National Affordable Housing Act (42 U.S.C. 

12773(b)(2)); 

‘‘(iv) section 106 of the Housing and Urban 

Development Act of 1968 (12 U.S.C. 1701x); 

‘‘(v) section 422(b)(6) of the Cranston-Gonzalez 

National Affordable Housing Act (42 U.S.C. 

12872(b)(6)); 

‘‘(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento 

Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii)); 

‘‘(vii) sections 202(3) and 810(b)(2)(A) of the Native 

American Housing and Self-Determination Act of 1996 

(25 U.S.C. 4132(3), 4229(b)(2)(A)); and 

‘‘(viii) the rental assistance program under section 

8 of the United States Housing Act of 1937 (42 U.S.C. 

1437f). 

‘‘(2) STANDARDS FOR MATERIALS.—The Secretary, in consultation with the advisory committee established under subsection (g)(4) of the Department of Housing and Urban Development Act, shall establish standards for materials and forms 

to be used, as appropriate, by organizations providing homeownership counseling services, including any recipients of assistance pursuant to subsection (a)(4). 

‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 
H. R. 4173—793 

‘‘(A) CERTIFICATION.—The Secretary shall provide for 

the certification of various computer software programs 

for consumers to use in evaluating different residential 

mortgage loan proposals. The Secretary shall require, for 

such certification, that the mortgage software systems take 

into account— 

‘‘(i) the consumer’s financial situation and the cost 

of maintaining a home, including insurance, taxes, and 

utilities; 

‘‘(ii) the amount of time the consumer expects to 

remain in the home or expected time to maturity of 

the loan; and 

‘‘(iii) such other factors as the Secretary considers 

appropriate to assist the consumer in evaluating 

whether to pay points, to lock in an interest rate, 

to select an adjustable or fixed rate loan, to select 

a conventional or government-insured or guaranteed 

loan and to make other choices during the loan application process. 

If the Secretary determines that available existing software 

is inadequate to assist consumers during the residential 

mortgage loan application process, the Secretary shall 

arrange for the development by private sector software 

companies of new mortgage software systems that meet 

the Secretary’s specifications. 

‘‘(B) USE AND INITIAL AVAILABILITY.—Such certified 

computer software programs shall be used to supplement, 

not replace, housing counseling. The Secretary shall provide 

that such programs are initially used only in connection 

with the assistance of housing counselors certified pursuant 

to subsection (e). 

‘‘(C) AVAILABILITY.—After a period of initial availability 

under subparagraph (B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make 

mortgage software systems certified pursuant to this paragraph widely available through the Internet and at public 

locations, including public libraries, senior-citizen centers, 

public housing sites, offices of public housing agencies that 

administer rental housing assistance vouchers, and housing 

counseling centers. 

‘‘(D) BUDGET COMPLIANCE.—This paragraph shall be 

effective only to the extent that amounts to carry out 

this paragraph are made available in advance in appropriations Acts. 

‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA CAMPAIGNS TO

PROMOTE HOUSING COUNSELING.— 

‘‘(A) IN GENERAL.—The Director of Housing Counseling 

shall develop, implement, and conduct national public 

service multimedia campaigns designed to make persons 

facing mortgage foreclosure, persons considering a 

subprime mortgage loan to purchase a home, elderly persons, persons who face language barriers, low-income persons, minorities, and other potentially vulnerable consumers aware that it is advisable, before seeking or 

maintaining a residential mortgage loan, to obtain homeownership counseling from an unbiased and reliable 
H. R. 4173—794 

sources and that such homeownership counseling is available, including through programs sponsored by the Secretary of Housing and Urban Development. 

‘‘(B) CONTACT INFORMATION.—Each segment of the 

multimedia campaign under subparagraph (A) shall publicize the toll-free telephone number and website of the 

Department of Housing and Urban Development through 

which persons seeking housing counseling can locate a 

housing counseling agency in their State that is certified 

by the Secretary of Housing and Urban Development and 

can provide advice on buying a home, renting, defaults, 

foreclosures, credit issues, and reverse mortgages. 

‘‘(C) AUTHORIZATION OF APPROPRIATIONS.—There are 

authorized to be appropriated to the Secretary, not to 

exceed $3,000,000 for fiscal years 2009, 2010, and 2011, 

for the development, implementation, and conduct of 

national public service multimedia campaigns under this 

paragraph. 

‘‘(D) FORECLOSURE RESCUE EDUCATION PROGRAMS.— 

‘‘(i) IN GENERAL.—Ten percent of any funds appropriated pursuant to the authorization under subparagraph (C) shall be used by the Director of Housing 

Counseling to conduct an education program in areas 

that have a high density of foreclosure. Such program 

shall involve direct mailings to persons living in such 

areas describing— 

‘‘(I) tips on avoiding foreclosure rescue scams; 

‘‘(II) tips on avoiding predatory lending mortgage agreements; 

‘‘(III) tips on avoiding for-profit foreclosure 

counseling services; and 

‘‘(IV) local counseling resources that are 

approved by the Department of Housing and 

Urban Development. 

‘‘(ii) PROGRAM EMPHASIS.—In conducting the education program described under clause (i), the Director 

of Housing Counseling shall also place an emphasis 

on serving communities that have a high percentage 

of retirement communities or a high percentage of 

low-income minority communities. 

‘‘(iii) TERMS DEFINED.—For purposes of this 

subparagraph: 

‘‘(I) HIGH DENSITY OF FORECLOSURES.—An area 

has a ‘high density of foreclosures’ if such area 

is one of the metropolitan statistical areas (as that 

term is defined by the Director of the Office of 

Management and Budget) with the highest home 

foreclosure rates. 

‘‘(II) HIGH PERCENTAGE OF RETIREMENT

COMMUNITIES.—An area has a ‘high percentage of 

retirement communities’ if such area is one of the 

metropolitan statistical areas (as that term is 

defined by the Director of the Office of Management and Budget) with the highest percentage 

of residents aged 65 or older. 

‘‘(III) HIGH PERCENTAGE OF LOW-INCOME

MINORITY COMMUNITIES.—An area has a ‘high 
H. R. 4173—795 

percentage of low-income minority communities’ 

if such area contains a higher-than-normal 

percentage of residents who are both minorities 

and low-income, as defined by the Director of 

Housing Counseling. 

‘‘(5) EDUCATION PROGRAMS.—The Secretary shall provide 

advice and technical assistance to States, units of general local 

government, and nonprofit organizations regarding the 

establishment and operation of, including assistance with the 

development of content and materials for, educational programs 

to inform and educate consumers, particularly those most 

vulnerable with respect to residential mortgage loans (such 

as elderly persons, persons facing language barriers, low-income 

persons, minorities, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing, 

home equity loans, home repair loans, and where appropriate 

by region, any requirements and costs associated with obtaining 

flood or other disaster-specific insurance coverage.’’. 

(b) CONFORMING AMENDMENTS TO GRANT PROGRAM FOR HOME- OWNERSHIP COUNSELING ORGANIZATIONS.—Section 106(c)(5)(A)(ii) of 

the Housing and Urban Development Act of 1968 (12 U.S.C. 

1701x(c)(5)(A)(ii)) is amended— 

(1) in subclause (III), by striking ‘‘and’’ at the end; 

(2) in subclause (IV) by striking the period at the end 

and inserting ‘‘; and’’; and 

(3) by inserting after subclause (IV) the following new 

subclause: 

‘‘(V) notify the housing or mortgage applicant 

of the availability of mortgage software systems 

provided pursuant to subsection (g)(3).’’. 

SEC. 1444. GRANTS FOR HOUSING COUNSELING ASSISTANCE. 

Section 106(a) of the Housing and Urban Development Act 

of 1968 (12 U.S.C. 1701x(a)) is amended by adding at the end 

the following new paragraph: 

‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING ASSISTANCE.— ‘‘(A) IN GENERAL.—The Secretary shall make financial 

assistance available under this paragraph to HUD-approved 

housing counseling agencies and State housing finance agencies. 

‘‘(B) QUALIFIED ENTITIES.—The Secretary shall establish 

standards and guidelines for eligibility of organizations 

(including governmental and nonprofit organizations) to receive 

assistance under this paragraph, in accordance with subparagraph (D). 

‘‘(C) DISTRIBUTION.—Assistance made available under this 

paragraph shall be distributed in a manner that encourages 

efficient and successful counseling programs and that ensures 

adequate distribution of amounts for rural areas having 

traditionally low levels of access to such counseling services, 

including areas with insufficient access to the Internet. In 

distributing such assistance, the Secretary may give priority 

consideration to entities serving areas with the highest home 

foreclosure rates. 

‘‘(D) LIMITATION ON DISTRIBUTION OF ASSISTANCE.— ‘‘(i) IN GENERAL.—None of the amounts made available 

under this paragraph shall be distributed to— 
H. R. 4173—796 

‘‘(I) any organization which has been convicted 

for a violation under Federal law relating to an election 

for Federal office; or 

‘‘(II) any organization which employs applicable 

individuals. 

‘‘(ii) DEFINITION OF APPLICABLE INDIVIDUALS.—In this 

subparagraph, the term ‘applicable individual’ means an 

individual who— 

‘‘(I) is— 

‘‘(aa) employed by the organization in a permanent or temporary capacity; 

‘‘(bb) contracted or retained by the organization; or 

‘‘(cc) acting on behalf of, or with the express 

or apparent authority of, the organization; and 

‘‘(II) has been convicted for a violation under Federal law relating to an election for Federal office. 

‘‘(E) GRANTMAKING PROCESS.—In making assistance available under this paragraph, the Secretary shall consider appropriate ways of streamlining and improving the processes for 

grant application, review, approval, and award. 

‘‘(F) AUTHORIZATION OF APPROPRIATIONS.—There are 

authorized to be appropriated $45,000,000 for each of fiscal 

years 2009 through 2012 for— 

‘‘(i) the operations of the Office of Housing Counseling 

of the Department of Housing and Urban Development; 

‘‘(ii) the responsibilities of the Director of Housing 

Counseling under paragraphs (2) through (5) of subsection 

(g); and 

‘‘(iii) assistance pursuant to this paragraph for entities 

providing homeownership and rental counseling.’’. 

SEC. 1445. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS 

UNDER HUD PROGRAMS. 

Section 106(e) of the Housing and Urban Development Act 

of 1968 (12 U.S.C. 1701x(e)) is amended— 

(1) by striking paragraph (1) and inserting the following 

new paragraph: 

‘‘(1) REQUIREMENT FOR ASSISTANCE.—An organization may 

not receive assistance for counseling activities under subsection 

(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under section 

101(e), unless the organization, or the individuals through 

which the organization provides such counseling, has been certified by the Secretary under this subsection as competent 

to provide such counseling.’’; 

(2) in paragraph (2)— 

(A) by inserting ‘‘and for certifying organizations’’ 

before the period at the end of the first sentence; and 

(B) in the second sentence by striking ‘‘for certification’’ 

and inserting ‘‘, for certification of an organization, that 

each individual through which the organization provides 

counseling shall demonstrate, and, for certification of an 

individual,’’; 

(3) in paragraph (3), by inserting ‘‘organizations and’’ before 

‘‘individuals’’; 

(4) by redesignating paragraph (3) as paragraph (5); and 
H. R. 4173—797 

(5) by inserting after paragraph (2) the following new paragraphs: 

‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—Any homeownership counseling or rental housing counseling (as such terms 

are defined in subsection (g)(1)) required under, or provided 

in connection with, any program administered by the Department of Housing and Urban Development shall be provided 

only by organizations or counselors certified by the Secretary 

under this subsection as competent to provide such counseling. 

‘‘(4) OUTREACH.—The Secretary shall take such actions as 

the Secretary considers appropriate to ensure that individuals 

and organizations providing homeownership or rental housing 

counseling are aware of the certification requirements and 

standards of this subsection and of the training and certification 

programs under subsection (f).’’. 

SEC. 1446. STUDY OF DEFAULTS AND FORECLOSURES. 

The Secretary of Housing and Urban Development shall conduct 

an extensive study of the root causes of default and foreclosure 

of home loans, using as much empirical data as are available. 

The study shall also examine the role of escrow accounts in helping 

prime and nonprime borrowers to avoid defaults and foreclosures, 

and the role of computer registries of mortgages, including those 

used for trading mortgage loans. Not later than 12 months after 

the date of the enactment of this Act, the Secretary shall submit 

to the Congress a preliminary report regarding the study. Not 

later than 24 months after such date of enactment, the Secretary 

shall submit a final report regarding the results of the study, 

which shall include any recommended legislation relating to the 

study, and recommendations for best practices and for a process 

to identify populations that need counseling the most. 

SEC. 1447. DEFAULT AND FORECLOSURE DATABASE. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban 

Development and the Director of the Bureau, in consultation with 

the Federal agencies responsible for regulation of banking and 

financial institutions involved in residential mortgage lending and 

servicing, shall establish and maintain a database of information 

on foreclosures and defaults on mortgage loans for one- to fourunit residential properties and shall make such information publicly 

available, subject to subsection (e). 

(b) CENSUS TRACT DATA.—Information in the database may 

be collected, aggregated, and made available on a census tract 

basis. 

(c) REQUIREMENTS.—Information collected and made available 

through the database shall include— 

(1) the number and percentage of such mortgage loans 

that are delinquent by more than 30 days; 

(2) the number and percentage of such mortgage loans 

that are delinquent by more than 90 days; 

(3) the number and percentage of such properties that 

are real estate-owned; 

(4) number and percentage of such mortgage loans that 

are in the foreclosure process; 

(5) the number and percentage of such mortgage loans 

that have an outstanding principal obligation amount that is 

greater than the value of the property for which the loan 

was made; and 
H. R. 4173—798 

(6) such other information as the Secretary of Housing 

and Urban Development and the Director of the Bureau consider appropriate. 

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

construed to encourage discriminatory or unsound allocation of 

credit or lending policies or practices. 

(e) PRIVACY AND CONFIDENTIALITY.—In establishing and 

maintaining the database described in subsection (a), the Secretary 

of Housing and Urban Development and the Director of the Bureau 

shall— 

(1) be subject to the standards applicable to Federal agencies for the protection of the confidentiality of personally identifiable information and for data security and integrity; 

(2) implement the necessary measures to conform to the 

standards for data integrity and security described in paragraph 

(1); and 

(3) collect and make available information under this section, in accordance with paragraphs (5) and (6) of section 

1022(c) and the rules prescribed under such paragraphs, in 

order to protect privacy and confidentiality. 

SEC. 1448. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS. 

Section 106 of the Housing and Urban Development Act of 

1968 (12 U.S.C. 1701x), as amended by the preceding provisions 

of this subtitle, is amended by adding at the end the following 

new subsection: 

‘‘(h) DEFINITIONS.—For purposes of this section: 

‘‘(1) NONPROFIT ORGANIZATION.—The term ‘nonprofit 

organization’ has the meaning given such term in section 104(5) 

of the Cranston-Gonzalez National Affordable Housing Act (42 

U.S.C. 12704(5)), except that subparagraph (D) of such section 

shall not apply for purposes of this section. 

‘‘(2) STATE.—The term ‘State’ means each of the several 

States, the Commonwealth of Puerto Rico, the District of 

Columbia, the Commonwealth of the Northern Mariana Islands, 

Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession of the United 

States. 

‘‘(3) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘unit 

of general local government’ means any city, county, parish, 

town, township, borough, village, or other general purpose political subdivision of a State. 

‘‘(4) HUD-APPROVED COUNSELING AGENCY.—The term 

‘HUD-approved counseling agency’ means a private or public 

nonprofit organization that is— 

‘‘(A) exempt from taxation under section 501(c) of the 

Internal Revenue Code of 1986; and 

‘‘(B) certified by the Secretary to provide housing counseling services. 

‘‘(5) STATE HOUSING FINANCE AGENCY.—The term ‘State 

housing finance agency’ means any public body, agency, or 

instrumentality specifically created under State statute that 

is authorised to finance activities designed to provide housing 

and related facilities throughout an entire State through land 

acquisition, construction, or rehabilitation.’’. 
H. R. 4173—799 

SEC. 1449. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS. 

Section 106 of the Housing and Urban Development Act of 

1968 (12 U.S.C. 1701x), as amended by the preceding provisions 

of this subtitle, is amended by adding at the end the following: 

‘‘(i) ACCOUNTABILITY FOR RECIPIENTS OF COVERED ASSISTANCE.— 

‘‘(1) TRACKING OF FUNDS.—The Secretary shall— 

‘‘(A) develop and maintain a system to ensure that 

any organization or entity that receives any covered assistance uses all amounts of covered assistance in accordance 

with this section, the regulations issued under this section, 

and any requirements or conditions under which such 

amounts were provided; and 

‘‘(B) require any organization or entity, as a condition 

of receipt of any covered assistance, to agree to comply 

with such requirements regarding covered assistance as 

the Secretary shall establish, which shall include— 

‘‘(i) appropriate periodic financial and grant 

activity reporting, record retention, and audit requirements for the duration of the covered assistance to 

the organization or entity to ensure compliance with 

the limitations and requirements of this section, the 

regulations under this section, and any requirements 

or conditions under which such amounts were provided; 

and 

‘‘(ii) any other requirements that the Secretary 

determines are necessary to ensure appropriate 

administration and compliance. 

‘‘(2) MISUSE OF FUNDS.—If any organization or entity that 

receives any covered assistance is determined by the Secretary 

to have used any covered assistance in a manner that is materially in violation of this section, the regulations issued under 

this section, or any requirements or conditions under which 

such assistance was provided— 

‘‘(A) the Secretary shall require that, within 12 months 

after the determination of such misuse, the organization 

or entity shall reimburse the Secretary for such misused 

amounts and return to the Secretary any such amounts 

that remain unused or uncommitted for use; and 

‘‘(B) such organization or entity shall be ineligible, 

at any time after such determination, to apply for or receive 

any further covered assistance. 

The remedies under this paragraph are in addition to any 

other remedies that may be available under law. 

‘‘(3) COVERED ASSISTANCE.—For purposes of this subsection, 

the term ‘covered assistance’ means any grant or other financial 

assistance provided under this section.’’. 

SEC. 1450. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET. 

Section 5 of the Real Estate Settlement Procedures Act of 

1974 (12 U.S.C. 2604) is amended— 

(1) in the section heading, by striking ‘‘SPECIAL’’ and 

inserting ‘‘HOME BUYING’’; 

(2) by striking subsections (a) and (b) and inserting the 

following new subsections: 
H. R. 4173—800 

‘‘(a) PREPARATION AND DISTRIBUTION.—The Director of the 

Bureau of Consumer Financial Protection (hereafter in this section 

referred to as the ‘Director’) shall prepare, at least once every 

5 years, a booklet to help consumers applying for federally related 

mortgage loans to understand the nature and costs of real estate 

settlement services. The Director shall prepare the booklet in various languages and cultural styles, as the Director determines to 

be appropriate, so that the booklet is understandable and accessible 

to homebuyers of different ethnic and cultural backgrounds. The 

Director shall distribute such booklets to all lenders that make 

federally related mortgage loans. The Director shall also distribute 

to such lenders lists, organized by location, of homeownership counselors certified under section 106(e) of the Housing and Urban 

Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying 

with the requirement under subsection (c) of this section. 

‘‘(b) CONTENTS.—Each booklet shall be in such form and detail 

as the Director shall prescribe and, in addition to such other 

information as the Director may provide, shall include in plain 

and understandable language the following information: 

‘‘(1) A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a 

federally related mortgage loan. The description and explanation shall provide general information about the mortgage 

process as well as specific information concerning, at a minimum— 

‘‘(A) balloon payments; 

‘‘(B) prepayment penalties; 

‘‘(C) the advantages of prepayment; and 

‘‘(D) the trade-off between closing costs and the interest 

rate over the life of the loan. 

‘‘(2) An explanation and sample of the uniform settlement 

statement required by section 4. 

‘‘(3) A list and explanation of lending practices, including 

those prohibited by the Truth in Lending Act or other applicable 

Federal law, and of other unfair practices and unreasonable 

or unnecessary charges to be avoided by the prospective buyer 

with respect to a real estate settlement. 

‘‘(4) A list and explanation of questions a consumer 

obtaining a federally related mortgage loan should ask 

regarding the loan, including whether the consumer will have 

the ability to repay the loan, whether the consumer sufficiently 

shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan 

will benefit the borrower. 

‘‘(5) An explanation of the right of rescission as to certain 

transactions provided by sections 125 and 129 of the Truth 

in Lending Act. 

‘‘(6) A brief explanation of the nature of a variable rate 

mortgage and a reference to the booklet entitled ‘Consumer 

Handbook on Adjustable Rate Mortgages’, published by the 

Director, or to any suitable substitute of such booklet that 

the Director may subsequently adopt pursuant to such section. 

‘‘(7) A brief explanation of the nature of a home equity 

line of credit and a reference to the pamphlet required to 

be provided under section 127A of the Truth in Lending Act. 

‘‘(8) Information about homeownership counseling services 

made available pursuant to section 106(a)(4) of the Housing 
H. R. 4173—801 

and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), 

a recommendation that the consumer use such services, and 

notification that a list of certified providers of homeownership 

counseling in the area, and their contact information, is available. 

‘‘(9) An explanation of the nature and purpose of escrow 

accounts when used in connection with loans secured by residential real estate and the requirements under section 10 of 

this Act regarding such accounts. 

‘‘(10) An explanation of the choices available to buyers 

of residential real estate in selecting persons to provide necessary services incidental to a real estate settlement. 

‘‘(11) An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction. 

‘‘(12) An explanation of the nature and purpose of real 

estate appraisals, including the difference between an appraisal 

and a home inspection. 

‘‘(13) Notice that the Office of Housing of the Department 

of Housing and Urban Development has made publicly available 

a brochure regarding loan fraud and a World Wide Web address 

and toll-free telephone number for obtaining the brochure. 

The booklet prepared pursuant to this section shall take into consideration differences in real estate settlement procedures that may 

exist among the several States and territories of the United States 

and among separate political subdivisions within the same State 

and territory.’’; 

(3) in subsection (c), by inserting at the end the following 

new sentence: ‘‘Each lender shall also include with the booklet 

a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 106(e) of the 

Housing and Urban Development Act of 1968 (12 U.S.C. 

1701x(e)) and located in the area of the lender.’’; and 

(4) in subsection (d), by inserting after the period at the 

end of the first sentence the following: ‘‘The lender shall provide 

the booklet in the version that is most appropriate for the 

person receiving it.’’. 

SEC. 1451. HOME INSPECTION COUNSELING. 

(a) PUBLIC OUTREACH.— 

(1) IN GENERAL.—The Secretary of Housing and Urban 

Development (in this section referred to as the ‘‘Secretary’’) 

shall take such actions as may be necessary to inform potential 

homebuyers of the availability and importance of obtaining 

an independent home inspection. Such actions shall include— 

(A) publication of the HUD/FHA form HUD 92564– 

CN entitled ‘‘For Your Protection: Get a Home Inspection’’, 

in both English and Spanish languages; 

(B) publication of the HUD/FHA booklet entitled ‘‘For 

Your Protection: Get a Home Inspection’’, in both English 

and Spanish languages; 

(C) development and publication of a HUD booklet 

entitled ‘‘For Your Protection—Get a Home Inspection’’ that 

does not reference FHA-insured homes, in both English 

and Spanish languages; and 

(D) publication of the HUD document entitled ‘‘Ten 

Important Questions To Ask Your Home Inspector’’, in 

both English and Spanish languages. 
H. R. 4173—802 

(2) AVAILABILITY.—The Secretary shall make the materials 

specified in paragraph (1) available for electronic access and, 

where appropriate, inform potential homebuyers of such availability through home purchase counseling public service 

announcements and toll-free telephone hotlines of the Department of Housing and Urban Development. The Secretary shall 

give special emphasis to reaching first-time and low-income 

homebuyers with these materials and efforts. 

(3) UPDATING.—The Secretary may periodically update and 

revise such materials, as the Secretary determines to be appropriate. 

(b) REQUIREMENT FOR FHA-APPROVED LENDERS.—Each mortgagee approved for participation in the mortgage insurance programs under title II of the National Housing Act shall provide 

prospective homebuyers, at first contact, whether upon pre-qualification, pre-approval, or initial application, the materials specified 

in subparagraphs (A), (B), and (D) of subsection (a)(1). 

(c) REQUIREMENTS FOR HUD-APPROVED COUNSELING AGENCIES.—Each counseling agency certified pursuant by the Secretary 

to provide housing counseling services shall provide each of their 

clients, as part of the home purchase counseling process, the materials specified in subparagraphs (C) and (D) of subsection (a)(1). 

(d) TRAINING.—Training provided the Department of Housing 

and Urban Development for housing counseling agencies, whether 

such training is provided directly by the Department or otherwise, 

shall include— 

(1) providing information on counseling potential homebuyers of the availability and importance of getting an independent home inspection; 

(2) providing information about the home inspection 

process, including the reasons for specific inspections such as 

radon and lead-based paint testing; 

(3) providing information about advising potential homebuyers on how to locate and select a qualified home inspector; 

and 

(4) review of home inspection public outreach materials 

of the Department. 

SEC. 1452. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE 

SCAMS. 

(a) ASSISTANCE TO NRC.—Notwithstanding any other provision 

of law, of any amounts made available for any fiscal year pursuant 

to section 106(a)(4)(F) of the Housing and Urban Development 

Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by section 1444), 

10 percent shall be used only for assistance to the Neighborhood 

Reinvestment Corporation for activities, in consultation with 

servicers of residential mortgage loans, to provide notice to borrowers under such loans who are delinquent with respect to payments due under such loans that makes such borrowers aware 

of the dangers of fraudulent activities associated with foreclosure. 

(b) NOTICE.—The Neighborhood Reinvestment Corporation, in 

consultation with servicers of residential mortgage loans, shall use 

the amounts provided pursuant to subsection (a) to carry out activities to inform borrowers under residential mortgage loans— 

(1) that the foreclosure process is complex and can be 

confusing; 
H. R. 4173—803 

(2) that the borrower may be approached during the foreclosure process by persons regarding saving their home and 

they should use caution in any such dealings; 

(3) that there are Federal Government and nonprofit agencies that may provide information about the foreclosure process, 

including the Department of Housing and Urban Development; 

(4) that they should contact their lender immediately, contact the Department of Housing and Urban Development to 

find a housing counseling agency certified by the Department 

to assist in avoiding foreclosure, or visit the Department’s 

website regarding tips for avoiding foreclosure; and 

(5) of the telephone number of the loan servicer or successor, the telephone number of the Department of Housing 

and Urban Development housing counseling line, and the Uniform Resource Locators (URLs) for the Department of Housing 

and Urban Development Web sites for housing counseling and 

for tips for avoiding foreclosure. 

Subtitle E—Mortgage Servicing 

SEC. 1461. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN 

CONSUMER CREDIT TRANSACTIONS. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129C 

(as added by section 1411) the following new section: 

‘‘§ 129D. Escrow or impound accounts relating to certain consumer credit transactions 

‘‘(a) IN GENERAL.—Except as provided in subsection (b), (c), 

(d), or (e), a creditor, in connection with the consummation of 

a consumer credit transaction secured by a first lien on the principal 

dwelling of the consumer, other than a consumer credit transaction 

under an open end credit plan or a reverse mortgage, shall establish, 

before the consummation of such transaction, an escrow or impound 

account for the payment of taxes and hazard insurance, and, if 

applicable, flood insurance, mortgage insurance, ground rents, and 

any other required periodic payments or premiums with respect 

to the property or the loan terms, as provided in, and in accordance 

with, this section. 

‘‘(b) WHEN REQUIRED.—No impound, trust, or other type of 

account for the payment of property taxes, insurance premiums, 

or other purposes relating to the property may be required as 

a condition of a real property sale contract or a loan secured 

by a first deed of trust or mortgage on the principal dwelling 

of the consumer, other than a consumer credit transaction under 

an open end credit plan or a reverse mortgage, except when— 

‘‘(1) any such impound, trust, or other type of escrow or 

impound account for such purposes is required by Federal 

or State law; 

‘‘(2) a loan is made, guaranteed, or insured by a State 

or Federal governmental lending or insuring agency; 

‘‘(3) the transaction is secured by a first mortgage or lien 

on the consumer’s principal dwelling having an original principal obligation amount that— 

‘‘(A) does not exceed the amount of the maximum 

limitation on the original principal obligation of mortgage 
H. R. 4173—804 

in effect for a residence of the applicable size, as of the 

date such interest rate set, pursuant to the sixth sentence 

of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate as defined 

in section 129C by 1.5 or more percentage points; or 

‘‘(B) exceeds the amount of the maximum limitation 

on the original principal obligation of mortgage in effect 

for a residence of the applicable size, as of the date such 

interest rate set, pursuant to the sixth sentence of section 

305(a)(2) the Federal Home Loan Mortgage Corporation 

Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate 

will exceed the average prime offer rate as defined in 

section 129C by 2.5 or more percentage points; or 

‘‘(4) so required pursuant to regulation. 

‘‘(c) EXEMPTIONS.—The Board may, by regulation, exempt from 

the requirements of subsection (a) a creditor that— 

‘‘(1) operates predominantly in rural or underserved areas; 

‘‘(2) together with all affiliates, has total annual mortgage 

loan originations that do not exceed a limit set by the Board; 

‘‘(3) retains its mortgage loan originations in portfolio; and 

‘‘(4) meets any asset size threshold and any other criteria 

the Board may establish, consistent with the purposes of this 

subtitle. 

‘‘(d) DURATION OF MANDATORY ESCROW OR IMPOUND

ACCOUNT.—An escrow or impound account established pursuant 

to subsection (b) shall remain in existence for a minimum period 

of 5 years, beginning with the date of the consummation of the 

loan, unless and until— 

‘‘(1) such borrower has sufficient equity in the dwelling 

securing the consumer credit transaction so as to no longer 

be required to maintain private mortgage insurance; 

‘‘(2) such borrower is delinquent; 

‘‘(3) such borrower otherwise has not complied with the 

legal obligation, as established by rule; or 

‘‘(4) the underlying mortgage establishing the account is 

terminated. 

‘‘(e) LIMITED EXEMPTIONS FOR LOANS SECURED BY SHARES IN

A COOPERATIVE OR IN WHICH AN ASSOCIATION MUST MAINTAIN

A MASTER INSURANCE POLICY.—Escrow accounts need not be established for loans secured by shares in a cooperative. Insurance premiums need not be included in escrow accounts for loans secured 

by dwellings or units, where the borrower must join an association 

as a condition of ownership, and that association has an obligation 

to the dwelling or unit owners to maintain a master policy insuring 

the dwellings or units. 

‘‘(f) CLARIFICATION ON ESCROW ACCOUNTS FOR LOANS NOT

MEETING STATUTORY TEST.—For mortgages not covered by the 

requirements of subsection (b), no provision of this section shall 

be construed as precluding the establishment of an impound, trust, 

or other type of account for the payment of property taxes, insurance 

premiums, or other purposes relating to the property— 

‘‘(1) on terms mutually agreeable to the parties to the 

loan; 

‘‘(2) at the discretion of the lender or servicer, as provided 

by the contract between the lender or servicer and the borrower; 

or 
H. R. 4173—805 

‘‘(3) pursuant to the requirements for the escrowing of 

flood insurance payments for regulated lending institutions in 

section 102(d) of the Flood Disaster Protection Act of 1973. 

‘‘(g) ADMINISTRATION OF MANDATORY ESCROW OR IMPOUND

ACCOUNTS.— 

‘‘(1) IN GENERAL.—Except as may otherwise be provided 

for in this title or in regulations prescribed by the Board, 

escrow or impound accounts established pursuant to subsection 

(b) shall be established in a federally insured depository institution or credit union. 

‘‘(2) ADMINISTRATION.—Except as provided in this section 

or regulations prescribed under this section, an escrow or 

impound account subject to this section shall be administered 

in accordance with— 

‘‘(A) the Real Estate Settlement Procedures Act of 1974 

and regulations prescribed under such Act; 

‘‘(B) the Flood Disaster Protection Act of 1973 and 

regulations prescribed under such Act; and 

‘‘(C) the law of the State, if applicable, where the 

real property securing the consumer credit transaction is 

located. 

‘‘(3) APPLICABILITY OF PAYMENT OF INTEREST.—If prescribed 

by applicable State or Federal law, each creditor shall pay 

interest to the consumer on the amount held in any impound, 

trust, or escrow account that is subject to this section in the 

manner as prescribed by that applicable State or Federal law. 

‘‘(4) PENALTY COORDINATION WITH RESPA.—Any action or 

omission on the part of any person which constitutes a violation 

of the Real Estate Settlement Procedures Act of 1974 or any 

regulation prescribed under such Act for which the person 

has paid any fine, civil money penalty, or other damages shall 

not give rise to any additional fine, civil money penalty, or 

other damages under this section, unless the action or omission 

also constitutes a direct violation of this section. 

‘‘(h) DISCLOSURES RELATING TO MANDATORY ESCROW OR

IMPOUND ACCOUNT.—In the case of any impound, trust, or escrow 

account that is required under subsection (b), the creditor shall 

disclose by written notice to the consumer at least 3 business 

days before the consummation of the consumer credit transaction 

giving rise to such account or in accordance with timeframes established in prescribed regulations the following information: 

‘‘(1) The fact that an escrow or impound account will be 

established at consummation of the transaction. 

‘‘(2) The amount required at closing to initially fund the 

escrow or impound account. 

‘‘(3) The amount, in the initial year after the consummation 

of the transaction, of the estimated taxes and hazard insurance, 

including flood insurance, if applicable, and any other required 

periodic payments or premiums that reflects, as appropriate, 

either the taxable assessed value of the real property securing 

the transaction, including the value of any improvements on 

the property or to be constructed on the property (whether 

or not such construction will be financed from the proceeds 

of the transaction) or the replacement costs of the property. 

‘‘(4) The estimated monthly amount payable to be escrowed 

for taxes, hazard insurance (including flood insurance, if 
H. R. 4173—806 

applicable) and any other required periodic payments or premiums. 

‘‘(5) The fact that, if the consumer chooses to terminate 

the account in the future, the consumer will become responsible 

for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other required periodic payments or premiums on the property unless a new escrow or 

impound account is established. 

‘‘(6) Such other information as the Board determines necessary for the protection of the consumer. 

‘‘(i) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) FLOOD INSURANCE.—The term ‘flood insurance’ means 

flood insurance coverage provided under the national flood 

insurance program pursuant to the National Flood Insurance 

Act of 1968. 

‘‘(2) HAZARD INSURANCE.—The term ‘hazard insurance’ shall 

have the same meaning as provided for ‘hazard insurance’, 

‘casualty insurance’, ‘homeowner’s insurance’, or other similar 

term under the law of the State where the real property 

securing the consumer credit transaction is located.’’. 

(b) EXEMPTIONS AND MODIFICATIONS.—The Board may prescribe 

rules that revise, add to, or subtract from the criteria of section 

129D(b) of the Truth in Lending Act if the Board determines that 

such rules are in the interest of consumers and in the public 

interest. 

(c) CLERICAL AMENDMENT.—The table of sections for chapter 

2 of the Truth in Lending Act is amended by inserting after the 

item relating to section 129C (as added by section 1411) the following new item: 

‘‘129D. Escrow or impound accounts relating to certain consumer credit transactions.’’. 

SEC. 1462. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO 

WAIVE ESCROW SERVICES. 

Section 129D of the Truth in Lending Act (as added by section 

1461) is amended by adding at the end the following new subsection: 

‘‘(j) DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE

ESCROW SERVICES.— ‘‘(1) IN GENERAL.—If— 

‘‘(A) an impound, trust, or other type of account for 

the payment of property taxes, insurance premiums, or 

other purposes relating to real property securing a consumer credit transaction is not established in connection 

with the transaction; or 

‘‘(B) a consumer chooses, and provides written notice 

to the creditor or servicer of such choice, at any time 

after such an account is established in connection with 

any such transaction and in accordance with any statute, 

regulation, or contractual agreement, to close such account, 

the creditor or servicer shall provide a timely and clearly written disclosure to the consumer that advises the consumer of 

the responsibilities of the consumer and implications for the 

consumer in the absence of any such account. 

‘‘(2) DISCLOSURE REQUIREMENTS.—Any disclosure provided 

to a consumer under paragraph (1) shall include the following: 
H. R. 4173—807 

‘‘(A) Information concerning any applicable fees or costs 

associated with either the non-establishment of any such 

account at the time of the transaction, or any subsequent 

closure of any such account. 

‘‘(B) A clear and prominent statement that the consumer is responsible for personally and directly paying 

the non-escrowed items, in addition to paying the mortgage 

loan payment, in the absence of any such account, and 

the fact that the costs for taxes, insurance, and related 

fees can be substantial. 

‘‘(C) A clear explanation of the consequences of any 

failure to pay non-escrowed items, including the possible 

requirement for the forced placement of insurance by the 

creditor or servicer and the potentially higher cost 

(including any potential commission payments to the 

servicer) or reduced coverage for the consumer in the event 

of any such creditor-placed insurance. 

‘‘(D) Such other information as the Board determines 

necessary for the protection of the consumer.’’. 

SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 

AMENDMENTS. 

(a) SERVICER PROHIBITIONS.—Section 6 of the Real Estate 

Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended 

by adding at the end the following new subsections: 

‘‘(k) SERVICER PROHIBITIONS.— 

‘‘(1) IN GENERAL.—A servicer of a federally related mortgage 

shall not— 

‘‘(A) obtain force-placed hazard insurance unless there 

is a reasonable basis to believe the borrower has failed 

to comply with the loan contract’s requirements to maintain 

property insurance; 

‘‘(B) charge fees for responding to valid qualified written requests (as defined in regulations which the Bureau 

of Consumer Financial Protection shall prescribe) under 

this section; 

‘‘(C) fail to take timely action to respond to a borrower’s 

requests to correct errors relating to allocation of payments, 

final balances for purposes of paying off the loan, or 

avoiding foreclosure, or other standard servicer’s duties; 

‘‘(D) fail to respond within 10 business days to a 

request from a borrower to provide the identity, address, 

and other relevant contact information about the owner 

or assignee of the loan; or 

‘‘(E) fail to comply with any other obligation found 

by the Bureau of Consumer Financial Protection, by regulation, to be appropriate to carry out the consumer protection 

purposes of this Act. 

‘‘(2) FORCE-PLACED INSURANCE DEFINED.—For purposes of 

this subsection and subsections (l) and (m), the term ‘forceplaced insurance’ means hazard insurance coverage obtained 

by a servicer of a federally related mortgage when the borrower 

has failed to maintain or renew hazard insurance on such 

property as required of the borrower under the terms of the 

mortgage. 

‘‘(l) REQUIREMENTS FOR FORCE-PLACED INSURANCE.—A servicer 

of a federally related mortgage shall not be construed as having 
H. R. 4173—808 

a reasonable basis for obtaining force-placed insurance unless the 

requirements of this subsection have been met. 

‘‘(1) WRITTEN NOTICES TO BORROWER.—A servicer may not 

impose any charge on any borrower for force-placed insurance 

with respect to any property securing a federally related mortgage unless— 

‘‘(A) the servicer has sent, by first-class mail, a written 

notice to the borrower containing— 

‘‘(i) a reminder of the borrower’s obligation to maintain hazard insurance on the property securing the 

federally related mortgage; 

‘‘(ii) a statement that the servicer does not have 

evidence of insurance coverage of such property; 

‘‘(iii) a clear and conspicuous statement of the 

procedures by which the borrower may demonstrate 

that the borrower already has insurance coverage; and 

‘‘(iv) a statement that the servicer may obtain such 

coverage at the borrower’s expense if the borrower 

does not provide such demonstration of the borrower’s 

existing coverage in a timely manner; 

‘‘(B) the servicer has sent, by first-class mail, a second 

written notice, at least 30 days after the mailing of the 

notice under subparagraph (A) that contains all the 

information described in each clause of such subparagraph; 

and 

‘‘(C) the servicer has not received from the borrower 

any demonstration of hazard insurance coverage for the 

property securing the mortgage by the end of the 15-day 

period beginning on the date the notice under subparagraph 

(B) was sent by the servicer. 

‘‘(2) SUFFICIENCY OF DEMONSTRATION.—A servicer of a federally related mortgage shall accept any reasonable form of 

written confirmation from a borrower of existing insurance 

coverage, which shall include the existing insurance policy 

number along with the identity of, and contact information 

for, the insurance company or agent, or as otherwise required 

by the Bureau of Consumer Financial Protection. 

‘‘(3) TERMINATION OF FORCE-PLACED INSURANCE.—Within 

15 days of the receipt by a servicer of confirmation of a borrower’s existing insurance coverage, the servicer shall— 

‘‘(A) terminate the force-placed insurance; and 

‘‘(B) refund to the consumer all force-placed insurance 

premiums paid by the borrower during any period during 

which the borrower’s insurance coverage and the forceplaced insurance coverage were each in effect, and any 

related fees charged to the consumer’s account with respect 

to the force-placed insurance during such period. 

‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD DISASTER

PROTECTION ACT.—No provision of this section shall be construed as prohibiting a servicer from providing simultaneous 

or concurrent notice of a lack of flood insurance pursuant 

to section 102(e) of the Flood Disaster Protection Act of 1973. 

‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE CHARGES.— 

All charges, apart from charges subject to State regulation as the 

business of insurance, related to force-placed insurance imposed 

on the borrower by or through the servicer shall be bona fide 

and reasonable.’’. 
H. R. 4173—809 

(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) of the Real 

Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is 

amended— 

(1) in paragraphs (1)(B) and (2)(B), by striking ‘‘$1,000’’ 

each place such term appears and inserting ‘‘$2,000’’; and 

(2) in paragraph (2)(B)(i), by striking ‘‘$500,000’’ and 

inserting ‘‘$1,000,000’’. 

(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of the Real 

Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is 

amended— 

(1) in paragraph (1)(A), by striking ‘‘20 days’’ and inserting 

‘‘5 days’’; 

(2) in paragraph (2), by striking ‘‘60 days’’ and inserting 

‘‘30 days’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(4) LIMITED EXTENSION OF RESPONSE TIME.—The 30-day 

period described in paragraph (2) may be extended for not 

more than 15 days if, before the end of such 30-day period, 

the servicer notifies the borrower of the extension and the 

reasons for the delay in responding.’’. 

(d) PROMPT REFUND OF ESCROW ACCOUNTS UPON PAYOFF.— 

Section 6(g) of the Real Estate Settlement Procedures Act of 1974 

(12 U.S.C. 2605(g)) is amended by adding at the end the following 

new sentence: ‘‘Any balance in any such account that is within 

the servicer’s control at the time the loan is paid off shall be 

promptly returned to the borrower within 20 business days or 

credited to a similar account for a new mortgage loan to the borrower with the same lender.’’. 

SEC. 1464. TRUTH IN LENDING ACT AMENDMENTS. 

(a) REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.—Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 

et seq.) is amended by inserting after section 129E (as added 

by section 1472) the following new section: 

‘‘§ 129F. Requirements for prompt crediting of home loan 

payments 

‘‘(a) IN GENERAL.—In connection with a consumer credit transaction secured by a consumer’s principal dwelling, no servicer shall 

fail to credit a payment to the consumer’s loan account as of 

the date of receipt, except when a delay in crediting does not 

result in any charge to the consumer or in the reporting of negative 

information to a consumer reporting agency, except as required 

in subsection (b). 

‘‘(b) EXCEPTION.—If a servicer specifies in writing requirements 

for the consumer to follow in making payments, but accepts a 

payment that does not conform to the requirements, the servicer 

shall credit the payment as of 5 days after receipt.’’. 

(b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 of the Truth 

in Lending Act (15 U.S.C. 1631 et seq.), as amended by this title, 

is amended by inserting after section 129F (as added by subsection 

(a)) the following new section: 

‘‘§ 129G. Requests for payoff amounts of home loan 

‘‘A creditor or servicer of a home loan shall send an accurate 

payoff balance within a reasonable time, but in no case more 
H. R. 4173—810 

than 7 business days, after the receipt of a written request for 

such balance from or on behalf of the borrower.’’. 

SEC. 1465. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 

Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) 

is amended by adding at the end the following new paragraph: 

‘‘(4) REPAYMENT ANALYSIS REQUIRED TO INCLUDE ESCROW

PAYMENTS.— 

‘‘(A) IN GENERAL.—In the case of any consumer credit 

transaction secured by a first mortgage or lien on the 

principal dwelling of the consumer, other than a consumer 

credit transaction under an open end credit plan or a 

reverse mortgage, for which an impound, trust, or other 

type of account has been or will be established in connection 

with the transaction for the payment of property taxes, 

hazard and flood (if any) insurance premiums, or other 

periodic payments or premiums with respect to the property, the information required to be provided under subsection (a) with respect to the number, amount, and due 

dates or period of payments scheduled to repay the total 

of payments shall take into account the amount of any 

monthly payment to such account for each such repayment 

in accordance with section 10(a)(2) of the Real Estate 

Settlement Procedures Act of 1974. 

‘‘(B) ASSESSMENT VALUE.—The amount taken into 

account under subparagraph (A) for the payment of property taxes, hazard and flood (if any) insurance premiums, 

or other periodic payments or premiums with respect to 

the property shall reflect the taxable assessed value of 

the real property securing the transaction after the consummation of the transaction, including the value of any 

improvements on the property or to be constructed on 

the property (whether or not such construction will be 

financed from the proceeds of the transaction), if known, 

and the replacement costs of the property for hazard insurance, in the initial year after the transaction.’’. 

Subtitle F—Appraisal Activities 

SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS. 

Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et 

seq.) is amended by inserting after 129G (as added by section 

1464(b)) the following new section: 

‘‘§ 129H. Property appraisal requirements 

‘‘(a) IN GENERAL.—A creditor may not extend credit in the 

form of a higher-risk mortgage to any consumer without first 

obtaining a written appraisal of the property to be mortgaged 

prepared in accordance with the requirements of this section. 

‘‘(b) APPRAISAL REQUIREMENTS.— ‘‘(1) PHYSICAL PROPERTY VISIT.—Subject to the rules prescribed under paragraph (4), an appraisal of property to be 

secured by a higher-risk mortgage does not meet the requirement of this section unless it is performed by a certified or 

licensed appraiser who conducts a physical property visit of 

the interior of the mortgaged property. 

‘‘(2) SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES.— 
H. R. 4173—811 

‘‘(A) IN GENERAL.—If the purpose of a higher-risk mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at 

a price that was lower than the current sale price of the 

property, the creditor shall obtain a second appraisal from 

a different certified or licensed appraiser. The second 

appraisal shall include an analysis of the difference in 

sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale. 

‘‘(B) NO COST TO APPLICANT.—The cost of any second 

appraisal required under subparagraph (A) may not be 

charged to the applicant. 

‘‘(3) CERTIFIED OR LICENSED APPRAISER DEFINED.—For purposes of this section, the term ‘certified or licensed appraiser’ 

means a person who— 

‘‘(A) is, at a minimum, certified or licensed by the 

State in which the property to be appraised is located; 

and 

‘‘(B) performs each appraisal in conformity with the 

Uniform Standards of Professional Appraisal Practice and 

title XI of the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989, and the regulations prescribed under such title, as in effect on the date of the 

appraisal. 

‘‘(4) REGULATIONS.— 

‘‘(A) IN GENERAL.—The Board, the Comptroller of the 

Currency, the Federal Deposit Insurance Corporation, the 

National Credit Union Administration Board, the Federal 

Housing Finance Agency, and the Bureau shall jointly prescribe regulations to implement this section. 

‘‘(B) EXEMPTION.—The agencies listed in subparagraph 

(A) may jointly exempt, by rule, a class of loans from 

the requirements of this subsection or subsection (a) if 

the agencies determine that the exemption is in the public 

interest and promotes the safety and soundness of creditors. 

‘‘(c) FREE COPY OF APPRAISAL.—A creditor shall provide 1 copy 

of each appraisal conducted in accordance with this section in 

connection with a higher-risk mortgage to the applicant without 

charge, and at least 3 days prior to the transaction closing date. 

‘‘(d) CONSUMER NOTIFICATION.—At the time of the initial mortgage application, the applicant shall be provided with a statement 

by the creditor that any appraisal prepared for the mortgage is 

for the sole use of the creditor, and that the applicant may choose 

to have a separate appraisal conducted at the expense of the 

applicant. 

‘‘(e) VIOLATIONS.—In addition to any other liability to any person under this title, a creditor found to have willfully failed to 

obtain an appraisal as required in this section shall be liable 

to the applicant or borrower for the sum of $2,000. 

‘‘(f) HIGHER-RISK MORTGAGE DEFINED.—For purposes of this 

section, the term ‘higher-risk mortgage’ means a residential mortgage loan, other than a reverse mortgage loan that is a qualified 

mortgage, as defined in section 129C, secured by a principal 

dwelling— 
H. R. 4173—812 

‘‘(1) that is not a qualified mortgage, as defined in section 

129C; and 

‘‘(2) with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as defined 

in section 129C, as of the date the interest rate is set— 

‘‘(A) by 1.5 or more percentage points, in the case 

of a first lien residential mortgage loan having an original 

principal obligation amount that does not exceed the 

amount of the maximum limitation on the original principal 

obligation of mortgage in effect for a residence of the 

applicable size, as of the date of such interest rate set, 

pursuant to the sixth sentence of section 305(a)(2) the 

Federal Home Loan Mortgage Corporation Act (12 U.S.C. 

1454(a)(2)); 

‘‘(B) by 2.5 or more percentage points, in the case 

of a first lien residential mortgage loan having an original 

principal obligation amount that exceeds the amount of 

the maximum limitation on the original principal obligation 

of mortgage in effect for a residence of the applicable size, 

as of the date of such interest rate set, pursuant to the 

sixth sentence of section 305(a)(2) the Federal Home Loan 

Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and 

‘‘(C) by 3.5 or more percentage points for a subordinate 

lien residential mortgage loan.’’. 

SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129D 

(as added by section 1461(a)) the following new section: 

‘‘§ 129E. Appraisal independence requirements 

‘‘(a) IN GENERAL.—It shall be unlawful, in extending credit 

or in providing any services for a consumer credit transaction 

secured by the principal dwelling of the consumer, to engage in 

any act or practice that violates appraisal independence as described 

in or pursuant to regulations prescribed under this section. 

‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of subsection (a), 

acts or practices that violate appraisal independence shall include— 

‘‘(1) any appraisal of a property offered as security for 

repayment of the consumer credit transaction that is conducted 

in connection with such transaction in which a person with 

an interest in the underlying transaction compensates, coerces, 

extorts, colludes, instructs, induces, bribes, or intimidates a 

person, appraisal management company, firm, or other entity 

conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised 

value assigned, under the appraisal, to the property to be 

based on any factor other than the independent judgment of 

the appraiser; 

‘‘(2) mischaracterizing, or suborning any 

mischaracterization of, the appraised value of the property 

securing the extension of the credit; 

‘‘(3) seeking to influence an appraiser or otherwise to 

encourage a targeted value in order to facilitate the making 

or pricing of the transaction; and 
H. R. 4173—813 

‘‘(4) withholding or threatening to withhold timely payment 

for an appraisal report or for appraisal services rendered when 

the appraisal report or services are provided for in accordance 

with the contract between the parties. 

‘‘(c) EXCEPTIONS.—The requirements of subsection (b) shall not 

be construed as prohibiting a mortgage lender, mortgage broker, 

mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, 

or any other person with an interest in a real estate transaction 

from asking an appraiser to undertake 1 or more of the following: 

‘‘(1) Consider additional, appropriate property information, 

including the consideration of additional comparable properties 

to make or support an appraisal. 

‘‘(2) Provide further detail, substantiation, or explanation 

for the appraiser’s value conclusion. 

‘‘(3) Correct errors in the appraisal report. 

‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.—No certified 

or licensed appraiser conducting, and no appraisal management 

company procuring or facilitating, an appraisal in connection with 

a consumer credit transaction secured by the principal dwelling 

of a consumer may have a direct or indirect interest, financial 

or otherwise, in the property or transaction involving the appraisal. 

‘‘(e) MANDATORY REPORTING.—Any mortgage lender, mortgage 

broker, mortgage banker, real estate broker, appraisal management 

company, employee of an appraisal management company, or any 

other person involved in a real estate transaction involving an 

appraisal in connection with a consumer credit transaction secured 

by the principal dwelling of a consumer who has a reasonable 

basis to believe an appraiser is failing to comply with the Uniform 

Standards of Professional Appraisal Practice, is violating applicable 

laws, or is otherwise engaging in unethical or unprofessional conduct, shall refer the matter to the applicable State appraiser certifying and licensing agency. 

‘‘(f) NO EXTENSION OF CREDIT.—In connection with a consumer 

credit transaction secured by a consumer’s principal dwelling, a 

creditor who knows, at or before loan consummation, of a violation 

of the appraisal independence standards established in subsections 

(b) or (d) shall not extend credit based on such appraisal unless 

the creditor documents that the creditor has acted with reasonable 

diligence to determine that the appraisal does not materially misstate or misrepresent the value of such dwelling. 

‘‘(g) RULES AND INTERPRETIVE GUIDELINES.— 

‘‘(1) IN GENERAL.—Except as provided under paragraph 

(2), the Board, the Comptroller of the Currency, the Federal 

Deposit Insurance Corporation, the National Credit Union 

Administration Board, the Federal Housing Finance Agency, 

and the Bureau may jointly issue rules, interpretive guidelines, 

and general statements of policy with respect to acts or practices that violate appraisal independence in the provision of 

mortgage lending services for a consumer credit transaction 

secured by the principal dwelling of the consumer and mortgage 

brokerage services for such a transaction, within the meaning 

of subsections (a), (b), (c), (d), (e), (f), (h), and (i). 

‘‘(2) INTERIM FINAL REGULATIONS.—The Board shall, for 

purposes of this section, prescribe interim final regulations 

no later than 90 days after the date of enactment of this 

section defining with specificity acts or practices that violate 
H. R. 4173—814 

appraisal independence in the provision of mortgage lending 

services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage services 

for such a transaction and defining any terms in this section 

or such regulations. Rules prescribed by the Board under this 

paragraph shall be deemed to be rules prescribed by the agencies jointly under paragraph (1). 

‘‘(h) APPRAISAL REPORT PORTABILITY.—Consistent with the 

requirements of this section, the Board, the Comptroller of the 

Currency, the Federal Deposit Insurance Corporation, the National 

Credit Union Administration Board, the Federal Housing Finance 

Agency, and the Bureau may jointly issue regulations that address 

the issue of appraisal report portability, including regulations that 

ensure the portability of the appraisal report between lenders for 

a consumer credit transaction secured by a 1-4 unit single family 

residence that is the principal dwelling of the consumer, or mortgage 

brokerage services for such a transaction. 

‘‘(i) CUSTOMARY AND REASONABLE FEE.— 

‘‘(1) IN GENERAL.—Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of 

the property being appraised. Evidence for such fees may be 

established by objective third-party information, such as 

government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude 

assignments ordered by known appraisal management companies. 

‘‘(2) FEE APPRAISER DEFINITION.—For purposes of this section, the term ‘fee appraiser’ means a person who is not an 

employee of the mortgage loan originator or appraisal management company engaging the appraiser and is— 

‘‘(A) a State licensed or certified appraiser who receives 

a fee for performing an appraisal and certifies that the 

appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice; or 

‘‘(B) a company not subject to the requirements of 

section 1124 of the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) 

that utilizes the services of State licensed or certified 

appraisers and receives a fee for performing appraisals 

in accordance with the Uniform Standards of Professional 

Appraisal Practice. 

‘‘(3) EXCEPTION FOR COMPLEX ASSIGNMENTS.—In the case 

of an appraisal involving a complex assignment, the customary 

and reasonable fee may reflect the increased time, difficulty, 

and scope of the work required for such an appraisal and 

include an amount over and above the customary and reasonable fee for non-complex assignments. 

‘‘(j) SUNSET.—Effective on the date the interim final regulations 

are promulgated pursuant to subsection (g), the Home Valuation 

Code of Conduct announced by the Federal Housing Finance Agency 

on December 23, 2008, shall have no force or effect. 

‘‘(k) PENALTIES.— 

‘‘(1) FIRST VIOLATION.—In addition to the enforcement 

provisions referred to in section 130, each person who violates 

this section shall forfeit and pay a civil penalty of not more 

than $10,000 for each day any such violation continues. 
H. R. 4173—815 

‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of any person 

on whom a civil penalty has been imposed under paragraph 

(1), paragraph (1) shall be applied by substituting ‘$20,000’ 

for ‘$10,000’ with respect to all subsequent violations. 

‘‘(3) ASSESSMENT.—The agency referred to in subsection 

(a) or (c) of section 108 with respect to any person described 

in paragraph (1) shall assess any penalty under this subsection 

to which such person is subject.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 

2 of the Truth in Lending Act is amended by inserting after the 

item relating to section 129D (as added by section 1461(c)) the 

following new items: 

‘‘129E. Appraisal independence requirements. 

‘‘129F. Requirements for prompt crediting of home loan payments. 

‘‘129G. Requests for payoff amounts of home loan. 

‘‘129H. Property appraisal requirements.’’. 

(c) DEFERENCE.—Section 105 of the Truth in Lending Act (15 

U.S.C. 1604) is amended by adding at the end the following: 

‘‘(h) DEFERENCE.—Notwithstanding any power granted to any 

Federal agency under this title, the deference that a court affords 

to the Bureau with respect to a determination made by the Bureau 

relating to the meaning or interpretation of any provision of this 

title, other than section 129E or 129H, shall be applied as if the 

Bureau were the only agency authorized to apply, enforce, interpret, 

or administer the provisions of this title.’’. 

(d) CONFORMING AMENDMENTS IN TITLE X NOT APPLICABLE

TO SECTIONS 129E AND 129H.—Notwithstanding section 1099A, 

the term ‘‘Board’’ in sections 129E and 129H, as added by this 

subtitle, shall not be substituted by the term ‘‘Bureau’’. 

SEC. 1473. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE 

OF FFIEC, APPRAISER INDEPENDENCE MONITORING, 

APPROVED APPRAISER EDUCATION, APPRAISAL MANAGEMENT COMPANIES, APPRAISER COMPLAINT HOTLINE, 

AUTOMATED VALUATION MODELS, AND BROKER PRICE 

OPINIONS. 

(a) THRESHOLD LEVELS.—Section 1112(b) of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3341(b)) is amended by inserting before the period the following: ‘‘, and receives concurrence from the Bureau of Consumer 

Financial Protection that such threshold level provides reasonable 

protection for consumers who purchase 1–4 unit single-family residences’’. 

(b) ANNUAL REPORT OF APPRAISAL SUBCOMMITTEE.—Section 

1103(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the end by 

inserting the following new paragraph: 

‘‘(5) transmit an annual report to the Congress not later 

than June 15 of each year that describes the manner in which 

each function assigned to the Appraisal Subcommittee has been 

carried out during the preceding year. The report shall also 

detail the activities of the Appraisal Subcommittee, including 

the results of all audits of State appraiser regulatory agencies, 

and provide an accounting of disapproved actions and warnings 

taken in the previous year, including a description of the conditions causing the disapproval and actions taken to achieve 

compliance.’’. 
H. R. 4173—816 

(c) OPEN MEETINGS.—Section 1104(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3333(b)) is amended— 

(1) by inserting ‘‘in public session after notice in the Federal 

Register, but may close certain portions of these meetings 

related to personnel and review of preliminary State audit 

reports,’’ after ‘‘shall meet’’; and 

(2) by adding after the final period the following: ‘‘The 

subject matter discussed in any closed or executive session 

shall be described in the Federal Register notice of the 

meeting.’’. 

(d) REGULATIONS.—Section 1106 of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) 

is amended— 

(1) by inserting ‘‘prescribe regulations in accordance with 

chapter 5 of title 5, United States Code (commonly referred 

to as the Administrative Procedures Act) after notice and opportunity for comment,’’ after ‘‘hold hearings’’; and 

(2) at the end by inserting ‘‘Any regulations prescribed 

by the Appraisal Subcommittee shall (unless otherwise provided 

in this title) be limited to the following functions: temporary 

practice, national registry, information sharing, and enforcement. For purposes of prescribing regulations, the Appraisal 

Subcommittee shall establish an advisory committee of industry 

participants, including appraisers, lenders, consumer advocates, 

real estate agents, and government agencies, and hold meetings 

as necessary to support the development of regulations.’’. 

(e) APPRAISAL REVIEWS AND COMPLEX APPRAISALS.— (1) SECTION 1110.—Section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3339) is amended— 

(A) in paragraph (1), by striking ‘‘and’’; 

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

end and inserting ‘‘; and’’; and 

(C) by inserting after paragraph (2) the following: 

‘‘(3) that such appraisals shall be subject to appropriate 

review for compliance with the Uniform Standards of Professional Appraisal Practice.’’. 

(2) SECTION 1113.—Section 1113 of the Financial Institutions and Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3342) is amended by inserting before the period the 

following: ‘‘, where a complex 1-to-4 unit single family residential appraisal means an appraisal for which the property to 

be appraised, the form of ownership, the property characteristics, or the market conditions are atypical’’. 

(f) APPRAISAL MANAGEMENT SERVICES.— (1) SUPERVISION OF THIRD PARTY PROVIDERS OF APPRAISAL

MANAGEMENT SERVICES.—Section 1103(a) of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 3332(a)) (as previously amended by this section) 

is amended— 

(A) by amending paragraph (1) to read as follows: 

‘‘(1) monitor the requirements established by States— 

‘‘(A) for the certification and licensing of individuals 

who are qualified to perform appraisals in connection with 

federally related transactions, including a code of professional responsibility; and 
H. R. 4173—817 

‘‘(B) for the registration and supervision of the operations and activities of an appraisal management company;’’; and 

(B) by adding at the end the following new paragraph: 

‘‘(6) maintain a national registry of appraisal management 

companies that either are registered with and subject to supervision of a State appraiser certifying and licensing agency or 

are operating subsidiaries of a Federally regulated financial 

institution.’’. 

(2) APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIRE- MENTS.—Title XI of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et 

seq.) is amended by adding at the end the following new section 

(and amending the table of contents accordingly): 

‘‘SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIREMENTS. 

‘‘(a) IN GENERAL.—The Board of Governors of the Federal 

Reserve System, the Comptroller of the Currency, the Federal 

Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau 

of Consumer Financial Protection shall jointly, by rule, establish 

minimum requirements to be applied by a State in the registration 

of appraisal management companies. Such requirements shall 

include a requirement that such companies— 

‘‘(1) register with and be subject to supervision by a State 

appraiser certifying and licensing agency in each State in which 

such company operates; 

‘‘(2) verify that only licensed or certified appraisers are 

used for federally related transactions; 

‘‘(3) require that appraisals coordinated by an appraisal 

management company comply with the Uniform Standards of 

Professional Appraisal Practice; and 

‘‘(4) require that appraisals are conducted independently 

and free from inappropriate influence and coercion pursuant 

to the appraisal independence standards established under section 129E of the Truth in Lending Act. 

‘‘(b) RELATION TO STATE LAW.—Nothing in this section shall 

be construed to prevent States from establishing requirements in 

addition to any rules promulgated under subsection (a). 

‘‘(c) FEDERALLY REGULATED FINANCIAL INSTITUTIONS.—The 

requirements of subsection (a) shall apply to an appraisal management company that is a subsidiary owned and controlled by a 

financial institution and regulated by a Federal financial institution 

regulatory agency. An appraisal management company that is a 

subsidiary owned and controlled by a financial institution regulated 

by a Federal financial institution regulatory agency shall not be 

required to register with a State. 

‘‘(d) REGISTRATION LIMITATIONS.—An appraisal management 

company shall not be registered by a State or included on the 

national registry if such company, in whole or in part, directly 

or indirectly, is owned by any person who has had an appraiser 

license or certificate refused, denied, cancelled, surrendered in lieu 

of revocation, or revoked in any State. Additionally, each person 

that owns more than 10 percent of an appraisal management company shall be of good moral character, as determined by the State 

appraiser certifying and licensing agency, and shall submit to a 
H. R. 4173—818 

background investigation carried out by the State appraiser certifying and licensing agency. 

‘‘(e) REPORTING.—The Board of Governors of the Federal 

Reserve System, the Comptroller of the Currency, the Federal 

Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau 

of Consumer Financial Protection shall jointly promulgate regulations for the reporting of the activities of appraisal management 

companies to the Appraisal Subcommittee in determining the payment of the annual registry fee. 

‘‘(f) EFFECTIVE DATE.— 

‘‘(1) IN GENERAL.—No appraisal management company may 

perform services related to a federally related transaction in 

a State after the date that is 36 months after the date on 

which the regulations required to be prescribed under subsection (a) are prescribed in final form unless such company 

is registered with such State or subject to oversight by a Federal 

financial institutions regulatory agency. 

‘‘(2) EXTENSION OF EFFECTIVE DATE.—Subject to the 

approval of the Council, the Appraisal Subcommittee may 

extend by an additional 12 months the requirements for the 

registration and supervision of appraisal management companies if it makes a written finding that a State has made 

substantial progress in establishing a State appraisal management company registration and supervision system that appears 

to conform with the provisions of this title.’’. 

(3) STATE APPRAISER CERTIFYING AND LICENSING AGENCY

AUTHORITY.—Section 1117 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is 

amended by adding at the end the following: ‘‘The duties of 

such agency may additionally include the registration and 

supervision of appraisal management companies and the addition of information about the appraisal management company 

to the national registry.’’. 

(4) APPRAISAL MANAGEMENT COMPANY DEFINITION.—Section 

1121 of the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (12 U.S.C. 3350) is amended by adding 

at the end the following: 

‘‘(11) APPRAISAL MANAGEMENT COMPANY.—The term 

‘appraisal management company’ means, in connection with 

valuing properties collateralizing mortgage loans or mortgages 

incorporated into a securitization, any external third party 

authorized either by a creditor of a consumer credit transaction 

secured by a consumer’s principal dwelling or by an underwriter 

of or other principal in the secondary mortgage markets, that 

oversees a network or panel of more than 15 certified or licensed 

appraisers in a State or 25 or more nationally within a given 

year— 

‘‘(A) to recruit, select, and retain appraisers; 

‘‘(B) to contract with licensed and certified appraisers 

to perform appraisal assignments; 

‘‘(C) to manage the process of having an appraisal 

performed, including providing administrative duties such 

as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for 
H. R. 4173—819 

services provided, and reimbursing appraisers for services 

performed; or 

‘‘(D) to review and verify the work of appraisers.’’. 

(g) STATE AGENCY REPORTING REQUIREMENT.—Section 1109(a) 

of the Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 (12 U.S.C. 3338(a)) is amended— 

(1) by striking ‘‘and’’ after the semicolon in paragraph 

(1); 

(2) by redesignating paragraph (2) as paragraph (4); and 

(3) by inserting after paragraph (1) the following new paragraphs: 

‘‘(2) transmit reports on the issuance and renewal of 

licenses and certifications, sanctions, disciplinary actions, 

license and certification revocations, and license and certification suspensions on a timely basis to the national registry 

of the Appraisal Subcommittee; 

‘‘(3) transmit reports on a timely basis of supervisory activities involving appraisal management companies or other thirdparty providers of appraisals and appraisal management services, including investigations initiated and disciplinary actions 

taken; and’’. 

(h) REGISTRY FEES MODIFIED.— 

(1) IN GENERAL.—Section 1109(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3338(a)) is amended— 

(A) by amending paragraph (4) (as modified by section 

1473(g)) to read as follows: 

‘‘(4) collect— 

‘‘(A) from such individuals who perform or seek to 

perform appraisals in federally related transactions, an 

annual registry fee of not more than $40, such fees to 

be transmitted by the State agencies to the Council on 

an annual basis; and 

‘‘(B) from an appraisal management company that 

either has registered with a State appraiser certifying and 

licensing agency in accordance with this title or operates 

as a subsidiary of a federally regulated financial institution, 

an annual registry fee of— 

‘‘(i) in the case of such a company that has been 

in existence for more than a year, $25 multiplied by 

the number of appraisers working for or contracting 

with such company in such State during the previous 

year, but where such $25 amount may be adjusted, 

up to a maximum of $50, at the discretion of the 

Appraisal Subcommittee, if necessary to carry out the 

Subcommittee’s functions under this title; and 

‘‘(ii) in the case of such a company that has not 

been in existence for more than a year, $25 multiplied 

by an appropriate number to be determined by the 

Appraisal Subcommittee, and where such number will 

be used for determining the fee of all such companies 

that were not in existence for more than a year, but 

where such $25 amount may be adjusted, up to a 

maximum of $50, at the discretion of the Appraisal 

Subcommittee, if necessary to carry out the Subcommittee’s functions under this title.’’; and 
H. R. 4173—820 

(B) by amending the matter following paragraph (4), 

as redesignated, to read as follows: 

‘‘Subject to the approval of the Council, the Appraisal Subcommittee 

may adjust the dollar amount of registry fees under paragraph 

(4)(A), up to a maximum of $80 per annum, as necessary to carry 

out its functions under this title. The Appraisal Subcommittee 

shall consider at least once every 5 years whether to adjust the 

dollar amount of the registry fees to account for inflation. In implementing any change in registry fees, the Appraisal Subcommittee 

shall provide flexibility to the States for multi-year certifications 

and licenses already in place, as well as a transition period to 

implement the changes in registry fees. In establishing the amount 

of the annual registry fee for an appraisal management company, 

the Appraisal Subcommittee shall have the discretion to impose 

a minimum annual registry fee for an appraisal management company to protect against the under reporting of the number of 

appraisers working for or contracted by the appraisal management 

company.’’. 

(2) INCREMENTAL REVENUES.—Incremental revenues collected pursuant to the increases required by this subsection 

shall be placed in a separate account at the United States 

Treasury, entitled the ‘‘Appraisal Subcommittee Account’’. 

(i) GRANTS AND REPORTS.—Section 1109(b) of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3338(b)) is amended— 

(1) by striking ‘‘and’’ after the semicolon in paragraph 

(3); 

(2) by striking the period at the end of paragraph (4) 

and inserting a semicolon; 

(3) by adding at the end the following new paragraphs: 

‘‘(5) to make grants to State appraiser certifying and 

licensing agencies, in accordance with policies to be developed 

by the Appraisal Subcommittee, to support the efforts of such 

agencies to comply with this title, including— 

‘‘(A) the complaint process, complaint investigations, 

and appraiser enforcement activities of such agencies; and 

‘‘(B) the submission of data on State licensed and certified appraisers and appraisal management companies to 

the National appraisal registry, including information 

affirming that the appraiser or appraisal management company meets the required qualification criteria and formal 

and informal disciplinary actions; and 

‘‘(6) to report to all State appraiser certifying and licensing 

agencies when a license or certification is surrendered, revoked, 

or suspended.’’. 

Obligations authorized under this subsection may not exceed 75 

percent of the fiscal year total of incremental increase in fees 

collected and deposited in the ‘‘Appraisal Subcommittee Account’’ 

pursuant to subsection (h). 

(j) CRITERIA.—Section 1116 of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) 

is amended— 

(1) in subsection (c), by inserting ‘‘whose criteria for the 

licensing of a real estate appraiser currently meet or exceed 

the minimum criteria issued by the Appraisal Qualifications 

Board of The Appraisal Foundation for the licensing of real 

estate appraisers’’ before the period at the end; and 
H. R. 4173—821 

(2) by striking subsection (e) and inserting the following 

new subsection: 

‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.—Any requirements established for individuals in the position of ‘Trainee 

Appraiser’ and ‘Supervisory Appraiser’ shall meet or exceed the 

minimum qualification requirements of the Appraiser Qualifications 

Board of The Appraisal Foundation. The Appraisal Subcommittee 

shall have the authority to enforce these requirements.’’. 

(k) MONITORING OF STATE APPRAISER CERTIFYING AND

LICENSING AGENCIES.—Section 1118 of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347) 

is amended— 

(1) by amending subsection (a) to read as follows: 

‘‘(a) IN GENERAL.—The Appraisal Subcommittee shall monitor 

each State appraiser certifying and licensing agency for the purposes of determining whether such agency— 

‘‘(1) has policies, practices, funding, staffing, and procedures 

that are consistent with this title; 

‘‘(2) processes complaints and completes investigations in 

a reasonable time period; 

‘‘(3) appropriately disciplines sanctioned appraisers and 

appraisal management companies; 

‘‘(4) maintains an effective regulatory program; and 

‘‘(5) reports complaints and disciplinary actions on a timely 

basis to the national registries on appraisers and appraisal 

management companies maintained by the Appraisal Subcommittee. 

The Appraisal Subcommittee shall have the authority to remove 

a State licensed or certified appraiser or a registered appraisal 

management company from a national registry on an interim basis, 

not to exceed 90 days, pending State agency action on licensing, 

certification, registration, and disciplinary proceedings. The 

Appraisal Subcommittee and all agencies, instrumentalities, and 

Federally recognized entities under this title shall not recognize 

appraiser certifications and licenses from States whose appraisal 

policies, practices, funding, staffing, or procedures are found to 

be inconsistent with this title. The Appraisal Subcommittee shall 

have the authority to impose sanctions, as described in this section, 

against a State agency that fails to have an effective appraiser 

regulatory program. In determining whether such a program is 

effective, the Appraisal Subcommittee shall include an analysis 

of the licensing and certification of appraisers, the registration 

of appraisal management companies, the issuance of temporary 

licenses and certifications for appraisers, the receiving and tracking 

of submitted complaints against appraisers and appraisal management companies, the investigation of complaints, and enforcement 

actions against appraisers and appraisal management companies. 

The Appraisal Subcommittee shall have the authority to impose 

interim actions and suspensions against a State agency as an 

alternative to, or in advance of, the derecognition of a State agency.’’. 

(2) in subsection (b)(2), by inserting after ‘‘authority’’ the 

following: ‘‘or sufficient funding’’. 

(l) RECIPROCITY.—Subsection (b) of section 1122 of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3351(b)) is amended to read as follows: 

‘‘(b) RECIPROCITY.—Notwithstanding any other provisions of 

this title, a federally related transaction shall not be appraised 
H. R. 4173—822 

by a certified or licensed appraiser unless the State appraiser 

certifying or licensing agency of the State certifying or licensing 

such appraiser has in place a policy of issuing a reciprocal certification or license for an individual from another State when— 

‘‘(1) the appraiser licensing and certification program of 

such other State is in compliance with the provisions of this 

title; and 

‘‘(2) the appraiser holds a valid certification from a State 

whose requirements for certification or licensing meet or exceed 

the licensure standards established by the State where an 

individual seeks appraisal licensure.’’. 

(m) CONSIDERATION OF PROFESSIONAL APPRAISAL DESIGNATIONS.—Section 1122(d) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is 

amended by striking ‘‘shall not exclude’’ and all that follows through 

the end of the subsection and inserting the following: ‘‘may include 

education achieved, experience, sample appraisals, and references 

from prior clients. Membership in a nationally recognized professional appraisal organization may be a criteria considered, though 

lack of membership therein shall not be the sole bar against consideration for an assignment under these criteria.’’. 

(n) APPRAISER INDEPENDENCE.—Section 1122 of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3351) is amended by adding at the end the following new 

subsection: 

‘‘(g) APPRAISER INDEPENDENCE MONITORING.—The Appraisal 

Subcommittee shall monitor each State appraiser certifying and 

licensing agency for the purpose of determining whether such 

agency’s policies, practices, and procedures are consistent with the 

purposes of maintaining appraiser independence and whether such 

State has adopted and maintains effective laws, regulations, and 

policies aimed at maintaining appraiser independence.’’. 

(o) APPRAISER EDUCATION.—Section 1122 of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3351) is amended by inserting after subsection (g) (as added 

by subsection (l) of this section) the following new subsection: 

‘‘(h) APPROVED EDUCATION.—The Appraisal Subcommittee shall 

encourage the States to accept courses approved by the Appraiser 

Qualification Board’s Course Approval Program.’’. 

(p) APPRAISAL COMPLAINT HOTLINE.—Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 3351), as amended by this section, is amended by adding 

at the end the following new subsection: 

‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.—If, 6 months 

after the date of the enactment of this subsection, the Appraisal 

Subcommittee determines that no national hotline exists to receive 

complaints of non-compliance with appraisal independence standards and Uniform Standards of Professional Appraisal Practice, 

including complaints from appraisers, individuals, or other entities 

concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, the Appraisal Subcommittee shall establish and operate such a national hotline, which 

shall include a toll-free telephone number and an email address. 

If the Appraisal Subcommittee operates such a national hotline, 

the Appraisal Subcommittee shall refer complaints for further action 

to appropriate governmental bodies, including a State appraiser 

certifying and licensing agency, a financial institution regulator, 
H. R. 4173—823 

or other appropriate legal authorities. For complaints referred to 

State appraiser certifying and licensing agencies or to Federal regulators, the Appraisal Subcommittee shall have the authority to 

follow up such complaint referrals in order to determine the status 

of the resolution of the complaint.’’. 

(q) AUTOMATED VALUATION MODELS.—Title XI of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3331 et seq.), as amended by this section, is amended by 

adding at the end the following new section (and amending the 

table of contents accordingly): 

‘‘SEC. 1125. AUTOMATED VALUATION MODELS USED TO ESTIMATE 

COLLATERAL VALUE FOR MORTGAGE LENDING PURPOSES. 

‘‘(a) IN GENERAL.—Automated valuation models shall adhere 

to quality control standards designed to— 

‘‘(1) ensure a high level of confidence in the estimates 

produced by automated valuation models; 

‘‘(2) protect against the manipulation of data; 

‘‘(3) seek to avoid conflicts of interest; 

‘‘(4) require random sample testing and reviews; and 

‘‘(5) account for any other such factor that the agencies 

listed in subsection (b) determine to be appropriate. 

‘‘(b) ADOPTION OF REGULATIONS.—The Board, the Comptroller 

of the Currency, the Federal Deposit Insurance Corporation, the 

National Credit Union Administration Board, the Federal Housing 

Finance Agency, and the Bureau of Consumer Financial Protection, 

in consultation with the staff of the Appraisal Subcommittee and 

the Appraisal Standards Board of the Appraisal Foundation, shall 

promulgate regulations to implement the quality control standards 

required under this section. 

‘‘(c) ENFORCEMENT.—Compliance with regulations issued under 

this subsection shall be enforced by— 

‘‘(1) with respect to a financial institution, or subsidiary 

owned and controlled by a financial institution and regulated 

by a Federal financial institution regulatory agency, the Federal 

financial institution regulatory agency that acts as the primary 

Federal supervisor of such financial institution or subsidiary; 

and 

‘‘(2) with respect to other participants in the market for 

appraisals of 1-to-4 unit single family residential real estate, 

the Federal Trade Commission, the Bureau of Consumer Financial Protection, and a State attorney general. 

‘‘(d) AUTOMATED VALUATION MODEL DEFINED.—For purposes 

of this section, the term ‘automated valuation model’ means any 

computerized model used by mortgage originators and secondary 

market issuers to determine the collateral worth of a mortgage 

secured by a consumer’s principal dwelling.’’. 

(r) BROKER PRICE OPINIONS.—Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3331 et seq.), as amended by this section, is amended by adding 

at the end the following new section (and amending the table 

of contents accordingly): 

‘‘SEC. 1126. BROKER PRICE OPINIONS. 

‘‘(a) GENERAL PROHIBITION.—In conjunction with the purchase 

of a consumer’s principal dwelling, broker price opinions may not 

be used as the primary basis to determine the value of a piece 
H. R. 4173—824 

of property for the purpose of a loan origination of a residential 

mortgage loan secured by such piece of property. 

‘‘(b) BROKER PRICE OPINION DEFINED.—For purposes of this 

section, the term ‘broker price opinion’ means an estimate prepared 

by a real estate broker, agent, or sales person that details the 

probable selling price of a particular piece of real estate property 

and provides a varying level of detail about the property’s condition, 

market, and neighborhood, and information on comparable sales, 

but does not include an automated valuation model, as defined 

in section 1125(c).’’. 

(s) AMENDMENTS TO APPRAISAL SUBCOMMITTEE.—Section 1011 

of the Federal Financial Institutions Examination Council Act of 

1978 (12 U.S.C. 3310) is amended— 

(1) in the first sentence, by adding before the period the 

following: ‘‘, the Bureau of Consumer Financial Protection, and 

the Federal Housing Finance Agency’’; and 

(2) by inserting at the end the following: ‘‘At all times 

at least one member of the Appraisal Subcommittee shall have 

demonstrated knowledge and competence through licensure, 

certification, or professional designation within the appraisal 

profession.’’. 

(t) TECHNICAL CORRECTIONS.— 

(1) Section 1119(a)(2) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) 

is amended by striking ‘‘council,’’ and inserting ‘‘Council,’’. 

(2) Section 1121(6) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) 

is amended by striking ‘‘Corporations,’’ and inserting ‘‘Corporation,’’. 

(3) Section 1121(8) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) 

is amended by striking ‘‘council’’ and inserting ‘‘Council’’. 

(4) Section 1122 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 

amended— 

(A) in subsection (a)(1) by moving the left margin of 

subparagraphs (A), (B), and (C) 2 ems to the right; and 

(B) in subsection (c)— 

(i) by striking ‘‘Federal Financial Institutions 

Examination Council’’ and inserting ‘‘Financial Institutions Examination Council’’; and 

(ii) by striking ‘‘the council’s functions’’ and 

inserting ‘‘the Council’s functions’’. 

SEC. 1474. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT. 

Subsection (e) of section 701 of the Equal Credit Opportunity 

Act (15 U.S.C. 1691) is amended to read as follows: 

‘‘(e) COPIES FURNISHED TO APPLICANTS.— 

‘‘(1) IN GENERAL.—Each creditor shall furnish to an 

applicant a copy of any and all written appraisals and valuations developed in connection with the applicant’s application 

for a loan that is secured or would have been secured by 

a first lien on a dwelling promptly upon completion, but in 

no case later than 3 days prior to the closing of the loan, 

whether the creditor grants or denies the applicant’s request 

for credit or the application is incomplete or withdrawn. 
H. R. 4173—825 

‘‘(2) WAIVER.—The applicant may waive the 3 day requirement provided for in paragraph (1), except where otherwise 

required in law. 

‘‘(3) REIMBURSEMENT.—The applicant may be required to 

pay a reasonable fee to reimburse the creditor for the cost 

of the appraisal, except where otherwise required in law. 

‘‘(4) FREE COPY.—Notwithstanding paragraph (3), the creditor shall provide a copy of each written appraisal or valuation 

at no additional cost to the applicant. 

‘‘(5) NOTIFICATION TO APPLICANTS.—At the time of application, the creditor shall notify an applicant in writing of the 

right to receive a copy of each written appraisal and valuation 

under this subsection. 

‘‘(6) VALUATION DEFINED.—For purposes of this subsection, 

the term ‘valuation’ shall include any estimate of the value 

of a dwelling developed in connection with a creditor’s decision 

to provide credit, including those values developed pursuant 

to a policy of a government sponsored enterprise or by an 

automated valuation model, a broker price opinion, or other 

methodology or mechanism.’’. 

SEC. 1475. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 

AMENDMENT RELATING TO CERTAIN APPRAISAL FEES. 

Section 4 of the Real Estate Settlement Procedures Act of 

1974 is amended by adding at the end the following new subsection: 

‘‘(c) The standard form described in subsection (a) may include, 

in the case of an appraisal coordinated by an appraisal management 

company (as such term is defined in section 1121(11) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 3350(11))), a clear disclosure of— 

‘‘(1) the fee paid directly to the appraiser by such company; 

and 

‘‘(2) the administration fee charged by such company.’’. 

SEC. 1476. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS APPRAISAL METHODS, VALUATION MODELS AND 

DISTRIBUTIONS CHANNELS, AND ON THE HOME VALUATION CODE OF CONDUCT AND THE APPRAISAL SUBCOMMITTEE. 

(a) IN GENERAL.—The Government Accountability Office shall 

conduct a study on— 

(1) the effectiveness and impact of— 

(A) appraisal methods, including the cost approach, 

the comparative sales approach, the income approach, and 

others that may be available; 

(B) appraisal valuation models, including licensed and 

certified appraisals, broker-priced opinions, and automated 

valuation models; and 

(C) appraisal distribution channels, including appraisal 

management companies, independent appraisal operations 

within mortgage originators, and fee-for-service appraisers; 

(2) the Home Valuation Code of Conduct; and 

(3) the Appraisal Subcommittee’s functions pursuant to 

title XI of the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989. 

(b) STUDY.—Not later than— 

(1) 12 months after the date of enactment of this Act, 

the Government Accountability Office shall submit a study 
H. R. 4173—826 

to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of 

the House of Representatives; and 

(2) 90 days after the date of enactment of this Act, the 

Government Accountability Office shall provide a report on 

the status of the study and any preliminary findings to the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House 

of Representatives. 

(c) CONTENT OF STUDY.—The study required by this section 

shall include an examination of the following: 

(1) APPRAISAL APPROACHES, VALUATION MODELS, AND DISTRIBUTION CHANNELS.— 

(A) The prevalence, alone or in combination, of certain 

appraisal approaches, models, and channels in purchasemoney and refinance mortgage transactions. 

(B) The accuracy of these approaches, models, and 

channels in assessing the property as collateral. 

(C) Whether and how these approaches, models, and 

channels contributed to price speculation during the previous cycle. 

(D) The costs to consumers of these approaches, models, 

and channels. 

(E) The disclosure of fees to consumers in the appraisal 

process. 

(F) To what extent the usage of these approaches, 

models, and channels may be influenced by a conflict of 

interest between the mortgage lender and the appraiser 

and the mechanism by which the lender selects and compensates the appraiser. 

(G) The suitability of these approaches, models, and 

channels in rural versus urban areas. 

(2) HOME VALUATION CODE OF CONDUCT (HVCC).— 

(A) How the HVCC affects mortgage lenders’ selection 

of appraisers. 

(B) How the HVCC affects State regulation of 

appraisers and appraisal distribution channels. 

(C) How the HVCC affects the quality and cost of 

appraisals and the length of time to obtain an appraisal. 

(D) How the HVCC affects mortgage brokers, small 

businesses, and consumers. 

(d) ADDITIONAL STUDY REQUIRED.— 

(1) IN GENERAL.—Not later than 18 months after the date 

of enactment of this Act, the Government Accountability Office 

shall submit a study to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives. 

(2) CONTENT OF ADDITIONAL STUDY.—The study required 

under paragraph (1) shall include— 

(A) an examination of— 

(i) the Appraisal Subcommittee’s ability to monitor 

and enforce State and Federal certification requirements and standards, including by providing a summary with a statistical breakdown of enforcement 

actions taken during the last 10 years; 
H. R. 4173—827 

(ii) whether existing Federal financial institutions 

regulatory agency exemptions on appraisals for federally related transactions needs to be revised; and 

(iii) whether new means of data collection, such 

as the establishment of a national repository, would 

benefit the Appraisal Subcommittee’s ability to perform 

its functions; and 

(B) recommendations from this examination for 

administrative and legislative action at the Federal and 

State level. 

Subtitle G—Mortgage Resolution and 

Modification 

SEC. 1481. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban 

Development shall develop a program under this subsection to 

ensure the protection of current and future tenants and at-risk 

multifamily properties, where feasible, based on criteria that may 

include— 

(1) creating sustainable financing of such properties, that 

may take into consideration such factors as— 

(A) the rental income generated by such properties; 

and 

(B) the preservation of adequate operating reserves; 

(2) maintaining the level of Federal, State, and city subsidies in effect as of the date of the enactment of this Act; 

(3) providing funds for rehabilitation; and 

(4) facilitating the transfer of such properties, when appropriate and with the agreement of owners, to responsible new 

owners and ensuring affordability of such properties. 

(b) COORDINATION.—The Secretary of Housing and Urban 

Development may, in carrying out the program developed under 

this section, coordinate with the Secretary of the Treasury, the 

Federal Deposit Insurance Corporation, the Board of Governors 

of the Federal Reserve System, the Federal Housing Finance 

Agency, and any other Federal Government agency that the Secretary considers appropriate. 

(c) DEFINITION.—For purposes of this section, the term ‘‘multifamily properties’’ means a residential structure that consists of 

5 or more dwelling units. 

(d) PREVENTION OF QUALIFICATION FOR CRIMINAL APPLICANTS.— (1) IN GENERAL.—No person shall be eligible to begin 

receiving assistance from the Making Home Affordable Program 

authorized under the Emergency Economic Stabilization Act 

of 2008 (12 U.S.C. 5201 et seq.), or any other mortgage assistance program authorized or funded by that Act, on or after 

60 days after the date of the enactment of this Act, if such 

person, in connection with a mortgage or real estate transaction, 

has been convicted, within the last 10 years, of any one of 

the following: 

(A) Felony larceny, theft, fraud, or forgery. 

(B) Money laundering. 

(C) Tax evasion. 

(2) PROCEDURES.—The Secretary shall establish procedures 

to ensure compliance with this subsection. 
H. R. 4173—828 

(3) REPORT.—The Secretary shall report to the Committee 

on Financial Services of the House of Representatives and 

the Committee on Banking, Housing, and Urban Affairs of 

the Senate regarding the implementation of this provision. 

The report shall also describe the steps taken to implement 

this subsection. 

SEC. 1482. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES. 

(a) NET PRESENT VALUE INPUT DATA.—The Secretary of the 

Treasury (in this section referred to as the ‘‘Secretary’’) shall revise 

the supplemental directives and other guidelines for the Home 

Affordable Modification Program of the Making Home Affordable 

initiative of the Secretary of the Treasury, authorized under the 

Emergency Economic Stabilization Act of 2008 (Public Law 110– 

343), to require each mortgage servicer participating in such program to provide each borrower under a mortgage whose request 

for a mortgage modification under the Program is denied with 

all borrower-related and mortgage-related input data used in any 

net present value (NPV) analyses performed in connection with 

the subject mortgage. Such input data shall be provided to the 

borrower at the time of such denial. 

(b) WEB-BASED SITE FOR NPV CALCULATOR AND APPLICATION.— (1) NPV CALCULATOR.—In carrying out the Home Affordable Modification Program, the Secretary shall establish and 

maintain a site on the World Wide Web that provides a calculator for net present value analyses of a mortgage, based on 

the Secretary’s methodology for calculating such value, that 

mortgagors can use to enter information regarding their own 

mortgages and that provides a determination after entering 

such information regarding a mortgage of whether such mortgage would be accepted or rejected for modification under the 

Program, using such methodology. 

(2) DISCLOSURE.—Such Web site shall also prominently 

disclose that each mortgage servicer participating in such Program may use a method for calculating net present value 

of a mortgage that is different than the method used by such 

calculator. 

(3) APPLICATION.—The Secretary shall make a reasonable 

effort to include on such World Wide Web site a method for 

homeowners to apply for a mortgage modification under the 

Home Affordable Modification Program. 

(c) PUBLIC AVAILABILITY OF NPV METHODOLOGY, COMPUTER

MODEL, AND VARIABLES.—The Secretary shall make publicly available, including by posting on a World Wide Web site of the Secretary— 

(1) the Secretary’s methodology and computer model, 

including all formulae used in such computer model, used for 

calculating net present value of a mortgage that is used by 

the calculator established pursuant to subsection (b); and 

(2) all non-proprietary variables used in such net present 

value analysis. 

SEC. 1483. PUBLIC AVAILABILITY OF INFORMATION OF MAKING HOME 

AFFORDABLE PROGRAM. 

(a) REVISIONS TO PROGRAM GUIDELINES.—The Secretary of the 

Treasury (in this section referred to as the ‘‘Secretary’’) shall revise 

the guidelines for the Home Affordable Modification Program of 

the Making Home Affordable initiative of the Secretary of the 
H. R. 4173—829 

Treasury, authorized under the Emergency Economic Stabilization 

Act of 2008 (Public Law 110–343), to provide that the data being 

collected by the Secretary from each mortgage servicer and lender 

participating in the Program is made public in accordance with 

subsection (b). 

(b) PUBLIC AVAILABILITY.—Data shall be made available 

according to the following guidelines: 

(1) Not more than 14 days after each monthly deadline 

for submission of data by mortgage servicers and lenders 

participating in the Program, reports shall be made publicly 

available by means of a World Wide Web site of the Secretary, 

and by submitting a report to the Congress, that shall includes 

the following information: 

(A) The number of requests for mortgage modifications 

under the Program that the servicer or lender has received. 

(B) The number of requests for mortgage modifications 

under the Program that the servicer or lender has processed. 

(C) The number of requests for mortgage modifications 

under the Program that the servicer or lender has 

approved. 

(D) The number of requests for mortgage modifications 

under the Program that the servicer or lender has denied. 

(2) Not more than 60 days after each monthly deadline 

for submission of data by mortgage servicers and lenders 

participating in the Program, the Secretary shall make data 

tables available to the public at the individual record level. 

The Secretary shall issue regulations prescribing— 

(A) the procedures for disclosing such data to the 

public; and 

(B) such deletions as the Secretary may determine 

to be appropriate to protect any privacy interest of any 

mortgage modification applicant, including the deletion or 

alteration of the applicant’s name and identification 

number. 

SEC. 1484. PROTECTING TENANTS AT FORECLOSURE EXTENSION AND 

CLARIFICATION. 

The Protecting Tenants at Foreclosure Act is amended— 

(1) in section 702 (12 U.S.C. 5220 note)— 

(A) in subsection (a)(2), by striking ‘‘, as of the date 

of such notice of foreclosure’’; and 

(B) in subsection (c), by inserting after the period the 

following: ‘‘For purposes of this section, the date of a notice 

of foreclosure shall be deemed to be the date on which 

complete title to a property is transferred to a successor 

entity or person as a result of an order of a court or 

pursuant to provisions in a mortgage, deed of trust, or 

security deed.’’; and 

(2) in section 704 (12 U.S.C. 5201 note), by striking ‘‘2012’’ 

and inserting ‘‘2014’’. 
H. R. 4173—830 

Subtitle H—Miscellaneous Provisions 

SEC. 1491. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF 

GOVERNMENT-SPONSORED ENTERPRISES REFORM TO 

ENHANCE THE PROTECTION, LIMITATION, AND REGULATION OF THE TERMS OF RESIDENTIAL MORTGAGE 

CREDIT. 

(a) FINDINGS.—The Congress finds as follows: 

(1) The Government-sponsored enterprises, Federal 

National Mortgage Association (Fannie Mae) and the Federal 

Home Loan Mortgage Corporation (Freddie Mac), were chartered by Congress to ensure a reliable and affordable supply 

of mortgage funding, but enjoy a dual legal status as privately 

owned corporations with Government mandated affordable 

housing goals. 

(2) In 1996, the Department of Housing and Urban Development required that 42 percent of Fannie Mae’s and Freddie 

Mac’s mortgage financing should go to borrowers with income 

levels below the median for a given area. 

(3) In 2004, the Department of Housing and Urban Development revised those goals, increasing them to 56 percent of 

their overall mortgage purchases by 2008, and additionally 

mandated that 12 percent of all mortgage purchases by Fannie 

Mae and Freddie Mac be ‘‘special affordable’’ loans made to 

borrowers with incomes less than 60 percent of an area’s 

median income, a target that ultimately increased to 28 percent 

for 2008. 

(4) To help fulfill those mandated affordable housing goals, 

in 1995 the Department of Housing and Urban Development 

authorized Fannie Mae and Freddie Mac to purchase subprime 

securities that included loans made to low-income borrowers. 

(5) After this authorization to purchase subprime securities, 

subprime and near-prime loans increased from 9 percent of 

securitized mortgages in 2001 to 40 percent in 2006, while 

the market share of conventional mortgages dropped from 78.8 

percent in 2003 to 50.1 percent by 2007 with a corresponding 

increase in subprime and Alt-A loans from 10.1 percent to 

32.7 percent over the same period. 

(6) In 2004 alone, Fannie Mae and Freddie Mac purchased $175,000,000,000 in subprime mortgage securities, which 

accounted for 44 percent of the market that year, and from 

2005 through 2007, Fannie Mae and Freddie Mac purchased 

approximately $1,000,000,000,000 in subprime and Alt-A loans, 

while Fannie Mae’s acquisitions of mortgages with less than 

10 percent down payments almost tripled. 

(7) According to data from the Federal Housing Finance 

Agency (FHFA) for the fourth quarter of 2008, Fannie Mae 

and Freddie Mac own or guarantee 75 percent of all newly 

originated mortgages, and Fannie Mae and Freddie Mac currently own 13.3 percent of outstanding mortgage debt in the 

United States and have issued mortgage-backed securities for 

31.0 percent of the residential debt market, a combined total 

of 44.3 percent of outstanding mortgage debt in the United 

States. 

(8) On September 7, 2008, the FHFA placed Fannie Mae 

and Freddie Mac into conservatorship, with the Treasury 
H. R. 4173—831 

Department subsequently agreeing to purchase at least 

$200,000,000,000 of preferred stock from each enterprise in 

exchange for warrants for the purchase of 79.9 percent of 

each enterprise’s common stock. 

(9) The conservatorship for Fannie Mae and Freddie Mac 

has potentially exposed taxpayers to upwards of 

$5,300,000,000,000 worth of risk. 

(10) The hybrid public-private status of Fannie Mae and 

Freddie Mac is untenable and must be resolved to assure that 

consumers are offered and receive residential mortgage loans 

on terms that reasonably reflect their ability to repay the 

loans and that are understandable and not unfair, deceptive, 

or abusive. 

(b) SENSE OF THE CONGRESS.—It is the sense of the Congress 

that efforts to enhance by the protection, limitation, and regulation 

of the terms of residential mortgage credit and the practices related 

to such credit would be incomplete without enactment of meaningful 

structural reforms of Fannie Mae and Freddie Mac. 

SEC. 1492. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE FORECLOSURE RESCUE SCAMS AND 

LOAN MODIFICATION FRAUD. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study of the current inter-agency efforts of the Secretary 

of the Treasury, the Secretary of Housing and Urban Development, 

the Attorney General, and the Federal Trade Commission to crackdown on mortgage foreclosure rescue scams and loan modification 

fraud in order to advise the Congress to the risks and vulnerabilities 

of emerging schemes in the loan modification arena. 

(b) REPORT.— (1) IN GENERAL.—The Comptroller General shall submit 

a report to the Congress on the study conducted under subsection (a) containing such recommendations for legislative and 

administrative actions as the Comptroller General may determine to be appropriate in addition to the recommendations 

required under paragraph (2). 

(2) SPECIFIC TOPICS.—The report made under paragraph 

(1) shall include— 

(A) an evaluation of the effectiveness of the interagency task force current efforts to combat mortgage foreclosure rescue scams and loan modification fraud scams; 

(B) specific recommendations on agency or legislative 

action that are essential to properly protect homeowners 

from mortgage foreclosure rescue scams and loan modification fraud scams; and 

(C) the adequacy of financial resources that the Federal 

Government is allocating to— 

(i) crackdown on loan modification and foreclosure 

rescue scams; and 

(ii) the education of homeowners about fraudulent 

scams relating to loan modification and foreclosure 

rescues. 

SEC. 1493. REPORTING OF MORTGAGE DATA BY STATE. 

(a) IN GENERAL.—Section 104(a) of the Helping Families Save 

Their Homes Act of 2009 (division A of Public Law 111–22) is 

amended— 
H. R. 4173—832 

(1) in paragraph (2), by striking ‘‘resulting’’ and inserting 

‘‘in each State that result’’; 

(2) in paragraph (3), by inserting ‘‘each State for’’ after 

‘‘modifications in’’; and 

(3) in paragraph (4), by inserting ‘‘in each State’’ after 

‘‘total number of loans’’. 

(b) CONFORMING AMENDMENT.—Section 104(b)(1)(A) of such Act 

is amended by adding at the end the following sentence: ‘‘Not 

later than 60 days after the date of the enactment of the DoddFrank Wall Street Reform and Consumer Protection Act, the Comptroller of the Currency and the Director of the Office of Thrift 

Supervision shall update such requirements to reflect amendments 

made to this section by such Act.’’. 

SEC. 1494. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES. 

(a) STUDY.—The Secretary of Housing and Urban Development, 

in consultation with the Secretary of the Treasury, shall conduct 

a study of the effect on residential mortgage loan foreclosures 

of— 

(1) the presence in residential structures subject to such 

mortgage loans of drywall that was imported from China during 

the period beginning with 2004 and ending at the end of 2007; 

and 

(2) the availability of property insurance for residential 

structures in which such drywall is present. 

(b) REPORT.—Not later than the expiration of the 120-day period 

beginning on the date of the enactment of this Act, the Secretary 

of Housing and Urban Development shall submit to the Congress 

a report on the study conducted under subsection (a) containing 

its findings, conclusions, and recommendations. 

SEC. 1495. DEFINITION. 

For purposes of this title, the term ‘‘designated transfer date’’ 

means the date established under section 1062 of this Act. 

SEC. 1496. EMERGENCY MORTGAGE RELIEF. 

(a) EMERGENCY HOMEOWNERS’ RELIEF FUND.—Effective October 

1, 2010, and notwithstanding any other provision of law, there 

is hereby made available to the Secretary of Housing and Urban 

Development such sums as are necessary to provide $1,000,000,000 

in assistance through the Emergency Homeowners’ Relief Fund, 

which such Secretary shall establish pursuant to section 107 of 

the Emergency Housing Act of 1975 (12 U.S.C. 2706), as such 

Act is amended by this section, for use for emergency mortgage 

assistance in accordance with title I of such Act. 

(b) REAUTHORIZATION OF EMERGENCY MORTGAGE RELIEF PROGRAM.—Title I of the Emergency Housing Act of 1975 is amended— 

(1) in section 103 (12 U.S.C. 2702)— 

(A) in paragraph (2)— 

(i) by striking ‘‘have indicated’’ and all that follows 

through ‘‘regulation of the holder’’ and insert ‘‘have 

certified’’; 

(ii) by striking ‘‘(such as the volume of delinquent 

loans in its portfolio)’’; and 

(iii) by striking ‘‘, except that such statement’’ and 

all that follows through ‘‘purposes of this title’’; and 
H. R. 4173—833 

(B) in paragraph (4), by inserting ‘‘or medical conditions’’ after ‘‘adverse economic conditions’’; 

(2) in section 104 (12 U.S.C. 2703)— 

(A) in subsection (b), by striking ‘‘, but such assistance’’ 

and all that follows through the period at the end and 

inserting the following: ‘‘. The amount of assistance provided to a homeowner under this title shall be an amount 

that the Secretary determines is reasonably necessary to 

supplement such amount as the homeowner is capable 

of contributing toward such mortgage payment, except that 

the aggregate amount of such assistance provided for any 

homeowner shall not exceed $50,000.’’; 

(B) in subsection (d), by striking ‘‘interest on a loan 

or advance’’ and all that follows through the end of the 

subsection and inserting the following: ‘‘(1) the rate of 

interest on any loan or advance of credit insured under 

this title shall be fixed for the life of the loan or advance 

of credit and shall not exceed the rate of interest that 

is generally charged for mortgages on single-family housing 

insured by the Secretary of Housing and Urban Development under title II of the National Housing Act at the 

time such loan or advance of credit is made, and (2) no 

interest shall be charged on interest which is deferred 

on a loan or advance of credit made under this title. In 

establishing rates, terms and conditions for loans or 

advances of credit made under this title, the Secretary 

shall take into account a homeowner’s ability to repay 

such loan or advance of credit.’’; and 

(C) in subsection (e), by inserting after the period at 

the end of the first sentence the following: ‘‘Any eligible 

homeowner who receives a grant or an advance of credit 

under this title may repay the loan in full, without penalty, 

by lump sum or by installment payments at any time 

before the loan becomes due and payable.’’; 

(3) in section 105 (12 U.S.C. 2704)— 

(A) by striking subsection (b); 

(B) in subsection (e)— 

(i) by inserting ‘‘and emergency mortgage relief 

payments made under section 106’’ after ‘‘insured 

under this section’’; and 

(ii) by striking ‘‘$1,500,000,000 at any one time’’ 

and inserting ‘‘$3,000,000,000’’; 

(C) by redesignating subsections (c), (d), and (e) as 

subsections (b), (c), and (d), respectively; and 

(D) by adding at the end the following new subsection: 

‘‘(e) The Secretary shall establish underwriting guidelines or 

procedures to allocate amounts made available for loans and 

advances insured under this section and for emergency relief payments made under section 106 based on the likelihood that a 

mortgagor will be able to resume mortgage payments, pursuant 

to the requirement under section 103(5).’’; 

(4) in section 107— 

(A) by striking ‘‘(a)’’; and 

(B) by striking subsection (b); 

(5) in section 108 (12 U.S.C. 2707), by adding at the end 

the following new subsection: 
H. R. 4173—834 

‘‘(d) COVERAGE OF EXISTING PROGRAMS.—The Secretary shall 

allow funds to be administered by a State that has an existing 

program that is determined by the Secretary to provide substantially similar assistance to homeowners. After such determination 

is made such State shall not be required to modify such program 

to comply with the provisions of this title.’’; 

(6) in section 109 (12 U.S.C. 2708)— 

(A) in the section heading, by striking ‘‘AUTHORIZATION

AND’’; 

(B) by striking subsection (a); 

(C) by striking ‘‘(b)’’; and 

(D) by striking ‘‘1977’’ and inserting ‘‘2011’’; 

(7) by striking sections 110, 111, and 113 (12 U.S.C. 2709, 

2710, 2712); and 

(8) by redesignating section 112 (12 U.S.C. 2711) as section 

110. 

SEC. 1497. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD STABILIZATION PROGRAM. 

(a) IN GENERAL.—Effective October 1, 2010, out of funds in 

the Treasury not otherwise appropriated, there is hereby made 

available to the Secretary of Housing and Urban Development 

$1,000,000,000, and the Secretary of Housing and Urban Development shall use such amounts for assistance to States and units 

of general local government for the redevelopment of abandoned 

and foreclosed homes, in accordance with the same provisions 

applicable under the second undesignated paragraph under the 

heading ‘‘Community Planning and Development—Community 

Development Fund’’ in title XII of division A of the American 

Recovery and Reinvestment Act of 2009 (Public Law 111–5; 123 

Stat. 217) to amounts made available under such second undesignated paragraph, except as follows: 

(1) Notwithstanding the matter of such second undesignated paragraph that precedes the first proviso, amounts made 

available by this section shall remain available until expended. 

(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such 

second undesignated paragraph shall not apply to amounts 

made available by this section. 

(3) Amounts made available by this section shall be allocated based on a funding formula for such amounts established 

by the Secretary in accordance with section 2301(b) of the 

Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301 

note), except that— 

(A) notwithstanding paragraph (2) of such section 

2301(b), the formula shall be established not later than 

30 days after the date of the enactment of this Act; 

(B) notwithstanding such section 2301(b), each State 

shall receive, at a minimum, not less than 0.5 percent 

of funds made available under this section; 

(C) the Secretary may establish a minimum grant 

amount for direct allocations to units of general local 

government located within a State, which shall not exceed 

$1,000,000; 

(D) each State and local government receiving grant 

amounts shall establish procedures to create preferences 
H. R. 4173—835 

for the development of affordable rental housing for properties assisted with amounts made available by this section; 

and 

(E) the Secretary may use not more than 2 percent 

of the funds made available under this section for technical 

assistance to grantees. 

(4) Paragraph (1) of section 2301(c) of the Housing and 

Economic Recovery Act of 2008 shall not apply to amounts 

made available by this section. 

(5) The fourth proviso from the end of such second undesignated paragraph shall be applied to amounts made available 

by this section by substituting ‘‘2013’’ for ‘‘2012’’. 

(6) Notwithstanding section 2301(a) of the Housing and 

Economic Recovery Act of 2008, the term ‘‘State’’ means any 

State, as defined in section 102 of the Housing and Community 

Development Act of 1974 (42 U.S.C. 5302), and the District 

of Columbia, for purposes of this section and this title, as 

applied to amounts made available by this section. 

(7)(A) None of the amounts made available by this section 

shall be distributed to— 

(i) any organization which has been convicted for a 

violation under Federal law relating to an election for 

Federal office; or 

(ii) any organization which employs applicable individuals. 

(B) In this paragraph, the term ‘‘applicable individual’’ 

means an individual who— 

(i) is— 

(I) employed by the organization in a permanent 

or temporary capacity; 

(II) contracted or retained by the organization; 

or 

(III) acting on behalf of, or with the express or 

apparent authority of, the organization; and 

(ii) has been convicted for a violation under Federal 

law relating to an election for Federal office. 

(8) An eligible entity receiving a grant under this section 

shall, to the maximum extent feasible, provide for the hiring 

of employees who reside in the vicinity, as such term is defined 

by the Secretary, of projects funded under this section or contract with small businesses that are owned and operated by 

persons residing in the vicinity of such projects. 

(b) ADDITIONAL AMENDMENTS.— 

(1) SECTION 2301.—Section 2301(f)(3)(A)(ii) of the Housing 

and Economic Recovery Act of 2008 (42 U.S.C. 

5301(f)(3)(A)(ii))— 

(A) is amended by striking ‘‘for the purchase and 

redevelopment of abandoned and foreclosed upon homes 

or residential properties that will be used’’; and 

(B) shall apply with respect to any unexpended or 

unobligated balances, including recaptured and reallocated 

funds made available under this Act, section 2301 of the 

Housing and Economic Recovery Act of 2008 (42 U.S.C. 

5301), and the heading ‘‘Community Planning and Development—Community Development Fund’’ in title XII of division A of the American Recovery and Reinvestment Act 

of 2009 (Public Law 111-5; 123 Stat. 217). 
H. R. 4173—836 

(2) NOTICE OF FORECLOSURE.—For any amounts made 

available under this section, under division B, title III of the 

Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301), 

or under the heading ‘‘Community Planning and Development— 

Community Development Fund’’ in title XII of division A of 

the American Recovery and Reinvestment Act of 2009 (Public 

Law 111-5; 123 Stat. 217), the date of a notice of foreclosure 

shall be deemed to be the date on which complete title to 

a property is transferred to a successor entity or person as 

a result of an order of a court or pursuant to provisions in 

a mortgage, deed of trust, or security deed. 

SEC. 1498. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban 

Development (hereafter in this section referred to as the ‘‘Secretary’’) shall establish a program for making grants for providing 

a full range of foreclosure legal assistance to low- and moderateincome homeowners and tenants related to home ownership 

preservation, home foreclosure prevention, and tenancy associated 

with home foreclosure. 

(b) COMPETITIVE ALLOCATION.—The Secretary shall allocate 

amounts made available for grants under this section to State 

and local legal organizations on the basis of a competitive process. 

For purposes of this subsection ‘‘State and local legal organizations’’ 

are those State and local organizations whose primary business 

or mission is to provide legal assistance. 

(c) PRIORITY TO CERTAIN AREAS.—In allocating amounts in 

accordance with subsection (b), the Secretary shall give priority 

consideration to State and local legal organizations that are operating in the 125 metropolitan statistical areas (as that term is 

defined by the Director of the Office of Management and Budget) 

with the highest home foreclosure rates. 

(d) LEGAL ASSISTANCE.— (1) IN GENERAL.—Any State or local legal organization that 

receives financial assistance pursuant to this section may use 

such amounts only to assist— 

(A) homeowners of owner-occupied homes with mortgages in default, in danger of default, or subject to or 

at risk of foreclosure; and 

(B) tenants at risk of or subject to eviction as a result 

of foreclosure of the property in which such tenant resides. 

(2) COMMENCE USE WITHIN 90 DAYS.—Any State or local 

legal organization that receives financial assistance pursuant 

to this section shall begin using any financial assistance 

received under this section within 90 days after receipt of 

the assistance. 

(3) PROHIBITION ON CLASS ACTIONS.—No funds provided 

to a State or local legal organization under this section may 

be used to support any class action litigation. 

(4) LIMITATION ON LEGAL ASSISTANCE.—Legal assistance 

funded with amounts provided under this section shall be limited to mortgage-related default, eviction, or foreclosure proceedings, without regard to whether such foreclosure is judicial 

or nonjudicial. 

(5) EFFECTIVE DATE.—Notwithstanding any other provision 

of this Act, this subsection shall take effect on the date of 

the enactment of this Act. 
H. R. 4173—837 

(e) LIMITATION ON DISTRIBUTION OF ASSISTANCE.— (1) IN GENERAL.—None of the amounts made available 

under this section shall be distributed to— 

(A) any organization which has been convicted for a 

violation under Federal law relating to an election for 

Federal office; or 

(B) any organization which employs applicable individuals. 

(2) DEFINITION OF APPLICABLE INDIVIDUALS.—In this subsection, the term ‘‘applicable individual’’ means an individual 

who— 

(A) is— 

(i) employed by the organization in a permanent 

or temporary capacity; 

(ii) contracted or retained by the organization; or 

(iii) acting on behalf of, or with the express or 

apparent authority of, the organization; and 

(B) has been convicted for a violation under Federal 

law relating to an election for Federal office. 

(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 

to be appropriated to the Secretary $35,000,000 for each of fiscal 

years 2011 through 2012 for grants under this section. 

TITLE XV—MISCELLANEOUS 

PROVISIONS 

SEC. 1501. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR 

FOREIGN GOVERNMENTS; PROTECTION OF AMERICAN 

TAXPAYERS. 

The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) 

is amended by adding at the end the following: 

‘‘SEC. 68. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS. 

‘‘(a) IN GENERAL.—The Secretary of the Treasury shall instruct 

the United States Executive Director at the International Monetary 

Fund— 

‘‘(1) to evaluate, prior to consideration by the Board of 

Executive Directors of the Fund , any proposal submitted to 

the Board for the Fund to make a loan to a country if— 

‘‘(A) the amount of the public debt of the country 

exceeds the gross domestic product of the country as of 

the most recent year for which such information is available; and 

‘‘(B) the country is not eligible for assistance from 

the International Development Association. 

‘‘(2) OPPOSITION TO LOANS UNLIKELY TO BE REPAID IN

FULL.—If any such evaluation indicates that the proposed loan 

is not likely to be repaid in full, the Secretary of the Treasury 

shall instruct the United States Executive Director at the Fund 

to use the voice and vote of the United States to oppose the 

proposal. 

‘‘(b) REPORTS TO CONGRESS.—Within 30 days after the Board 

of Executive Directors of the Fund approves a proposal described 

in subsection (a), and annually thereafter by June 30, for the 
H. R. 4173—838 

duration of any program approved under such proposals, the Secretary of the Treasury shall report in writing to the Committee 

on Financial Services of the House of Representatives and the 

Committee on Foreign Relations and the Committee on Banking, 

Housing, and Urban Affairs of the Senate assessing the likelihood 

that loans made pursuant to such proposals will be repaid in 

full, including— 

‘‘(1) the borrowing country’s current debt status, including, 

to the extent possible, its maturity structure, whether it has 

fixed or floating rates, whether it is indexed, and by whom 

it is held; 

‘‘(2) the borrowing country’s external and internal 

vulnerabilities that could potentially affect its ability to repay; 

and 

‘‘(3) the borrowing country’s debt management strategy.’’. 

SEC. 1502. CONFLICT MINERALS. 

(a) SENSE OF CONGRESS ON EXPLOITATION AND TRADE OF CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF

THE CONGO.—It is the sense of Congress that the exploitation 

and trade of conflict minerals originating in the Democratic Republic 

of the Congo is helping to finance conflict characterized by extreme 

levels of violence in the eastern Democratic Republic of the Congo, 

particularly sexual- and gender-based violence, and contributing 

to an emergency humanitarian situation therein, warranting the 

provisions of section 13(p) of the Securities Exchange Act of 1934, 

as added by subsection (b). 

(b) DISCLOSURE RELATING TO CONFLICT MINERALS ORIGINATING

IN THE DEMOCRATIC REPUBLIC OF THE CONGO.—Section 13 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended 

by this Act, is amended by adding at the end the following new 

subsection: 

‘‘(p) DISCLOSURES RELATING TO CONFLICT MINERALS ORIGI- NATING IN THE DEMOCRATIC REPUBLIC OF THE CONGO.— ‘‘(1) REGULATIONS.— ‘‘(A) IN GENERAL.—Not later than 270 days after the 

date of the enactment of this subsection, the Commission 

shall promulgate regulations requiring any person 

described in paragraph (2) to disclose annually, beginning 

with the person’s first full fiscal year that begins after 

the date of promulgation of such regulations, whether conflict minerals that are necessary as described in paragraph 

(2)(B), in the year for which such reporting is required, 

did originate in the Democratic Republic of the Congo 

or an adjoining country and, in cases in which such conflict 

minerals did originate in any such country, submit to the 

Commission a report that includes, with respect to the 

period covered by the report— 

‘‘(i) a description of the measures taken by the 

person to exercise due diligence on the source and 

chain of custody of such minerals, which measures 

shall include an independent private sector audit of 

such report submitted through the Commission that 

is conducted in accordance with standards established 

by the Comptroller General of the United States, in 

accordance with rules promulgated by the Commission, 

in consultation with the Secretary of State; and 
H. R. 4173—839 

‘‘(ii) a description of the products manufactured 

or contracted to be manufactured that are not DRC 

conflict free (‘DRC conflict free’ is defined to mean 

the products that do not contain minerals that directly 

or indirectly finance or benefit armed groups in the 

Democratic Republic of the Congo or an adjoining 

country), the entity that conducted the independent 

private sector audit in accordance with clause (i), the 

facilities used to process the conflict minerals, the 

country of origin of the conflict minerals, and the 

efforts to determine the mine or location of origin with 

the greatest possible specificity. 

‘‘(B) CERTIFICATION.—The person submitting a report 

under subparagraph (A) shall certify the audit described 

in clause (i) of such subparagraph that is included in such 

report. Such a certified audit shall constitute a critical 

component of due diligence in establishing the source and 

chain of custody of such minerals. 

‘‘(C) UNRELIABLE DETERMINATION.—If a report required 

to be submitted by a person under subparagraph (A) relies 

on a determination of an independent private sector audit, 

as described under subparagraph (A)(i), or other due diligence processes previously determined by the Commission 

to be unreliable, the report shall not satisfy the requirements of the regulations promulgated under subparagraph 

(A)(i). 

‘‘(D) DRC CONFLICT FREE.—For purposes of this paragraph, a product may be labeled as ‘DRC conflict free’ 

if the product does not contain conflict minerals that 

directly or indirectly finance or benefit armed groups in 

the Democratic Republic of the Congo or an adjoining 

country. 

‘‘(E) INFORMATION AVAILABLE TO THE PUBLIC.—Each 

person described under paragraph (2) shall make available 

to the public on the Internet website of such person the 

information disclosed by such person under subparagraph 

(A). 

‘‘(2) PERSON DESCRIBED.—A person is described in this paragraph if— 

‘‘(A) the person is required to file reports with the 

Commission pursuant to paragraph (1)(A); and 

‘‘(B) conflict minerals are necessary to the functionality 

or production of a product manufactured by such person. 

‘‘(3) REVISIONS AND WAIVERS.—The Commission shall revise 

or temporarily waive the requirements described in paragraph 

(1) if the President transmits to the Commission a determination that— 

‘‘(A) such revision or waiver is in the national security 

interest of the United States and the President includes 

the reasons therefor; and 

‘‘(B) establishes a date, not later than 2 years after 

the initial publication of such exemption, on which such 

exemption shall expire. 

‘‘(4) TERMINATION OF DISCLOSURE REQUIREMENTS.—The 

requirements of paragraph (1) shall terminate on the date 

on which the President determines and certifies to the appropriate congressional committees, but in no case earlier than 
H. R. 4173—840 

the date that is one day after the end of the 5-year period 

beginning on the date of the enactment of this subsection, 

that no armed groups continue to be directly involved and 

benefitting from commercial activity involving conflict minerals. 

‘‘(5) DEFINITIONS.—For purposes of this subsection, the 

terms ‘adjoining country’, ‘appropriate congressional committees’, ‘armed group’, and ‘conflict mineral’ have the meaning 

given those terms under section 1502 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act.’’. 

(c) STRATEGY AND MAP TO ADDRESS LINKAGES BETWEEN CONFLICT MINERALS AND ARMED GROUPS.— 

(1) STRATEGY.— 

(A) IN GENERAL.—Not later than 180 days after the 

date of the enactment of this Act, the Secretary of State, 

in consultation with the Administrator of the United States 

Agency for International Development, shall submit to the 

appropriate congressional committees a strategy to address 

the linkages between human rights abuses, armed groups, 

mining of conflict minerals, and commercial products. 

(B) CONTENTS.—The strategy required by subparagraph (A) shall include the following: 

(i) A plan to promote peace and security in the 

Democratic Republic of the Congo by supporting efforts 

of the Government of the Democratic Republic of the 

Congo, including the Ministry of Mines and other relevant agencies, adjoining countries, and the international community, in particular the United Nations 

Group of Experts on the Democratic Republic of Congo, 

to— 

(I) monitor and stop commercial activities 

involving the natural resources of the Democratic 

Republic of the Congo that contribute to the activities of armed groups and human rights violations 

in the Democratic Republic of the Congo; and 

(II) develop stronger governance and economic 

institutions that can facilitate and improve transparency in the cross-border trade involving the 

natural resources of the Democratic Republic of 

the Congo to reduce exploitation by armed groups 

and promote local and regional development. 

(ii) A plan to provide guidance to commercial entities seeking to exercise due diligence on and formalize 

the origin and chain of custody of conflict minerals 

used in their products and on their suppliers to ensure 

that conflict minerals used in the products of such 

suppliers do not directly or indirectly finance armed 

conflict or result in labor or human rights violations. 

(iii) A description of punitive measures that could 

be taken against individuals or entities whose commercial activities are supporting armed groups and human 

rights violations in the Democratic Republic of the 

Congo. 

(2) MAP.— 

(A) IN GENERAL.—Not later than 180 days after the 

date of the enactment of this Act, the Secretary of State 

shall, in accordance with the recommendation of the United 
H. R. 4173—841 

Nations Group of Experts on the Democratic Republic of 

the Congo in their December 2008 report— 

(i) produce a map of mineral-rich zones, trade 

routes, and areas under the control of armed groups 

in the Democratic Republic of the Congo and adjoining 

countries based on data from multiple sources, 

including— 

(I) the United Nations Group of Experts on 

the Democratic Republic of the Congo; 

(II) the Government of the Democratic 

Republic of the Congo, the governments of 

adjoining countries, and the governments of other 

Member States of the United Nations; and 

(III) local and international nongovernmental 

organizations; 

(ii) make such map available to the public; and 

(iii) provide to the appropriate congressional 

committees an explanatory note describing the sources 

of information from which such map is based and 

the identification, where possible, of the armed groups 

or other forces in control of the mines depicted. 

(B) DESIGNATION.—The map required under subparagraph (A) shall be known as the ‘‘Conflict Minerals Map’’, 

and mines located in areas under the control of armed 

groups in the Democratic Republic of the Congo and 

adjoining countries, as depicted on such Conflict Minerals 

Map, shall be known as ‘‘Conflict Zone Mines’’. 

(C) UPDATES.—The Secretary of State shall update the 

map required under subparagraph (A) not less frequently 

than once every 180 days until the date on which the 

disclosure requirements under paragraph (1) of section 

13(p) of the Securities Exchange Act of 1934, as added 

by subsection (b), terminate in accordance with the provisions of paragraph (4) of such section 13(p). 

(D) PUBLICATION IN FEDERAL REGISTER.—The Secretary 

of State shall add minerals to the list of minerals in the 

definition of conflict minerals under section 1502, as appropriate. The Secretary shall publish in the Federal Register 

notice of intent to declare a mineral as a conflict mineral 

included in such definition not later than one year before 

such declaration. 

(d) REPORTS.— 

(1) BASELINE REPORT.—Not later than 1 year after the 

date of the enactment of this Act and annually thereafter 

until the termination of the disclosure requirements under 

section 13(p) of the Securities Exchange Act of 1934, the Comptroller General of the United States shall submit to appropriate 

congressional committees a report that includes an assessment 

of the rate of sexual- and gender-based violence in war-torn 

areas of the Democratic Republic of the Congo and adjoining 

countries. 

(2) REGULAR REPORT ON EFFECTIVENESS.—Not later than 

2 years after the date of the enactment of this Act and annually 

thereafter, the Comptroller General of the United States shall 

submit to the appropriate congressional committees a report 

that includes the following: 
H. R. 4173—842 

(A) An assessment of the effectiveness of section 13(p) 

of the Securities Exchange Act of 1934, as added by subsection (b), in promoting peace and security in the Democratic Republic of the Congo and adjoining countries. 

(B) A description of issues encountered by the Securities and Exchange Commission in carrying out the provisions of such section 13(p). 

(C)(i) A general review of persons described in clause 

(ii) and whether information is publicly available about— 

(I) the use of conflict minerals by such persons; 

and 

(II) whether such conflict minerals originate from 

the Democratic Republic of the Congo or an adjoining 

country. 

(ii) A person is described in this clause if— 

(I) the person is not required to file reports with 

the Securities and Exchange Commission pursuant to 

section 13(p)(1)(A) of the Securities Exchange Act of 

1934, as added by subsection (b); and 

(II) conflict minerals are necessary to the 

functionality or production of a product manufactured 

by such person. 

(3) REPORT ON PRIVATE SECTOR AUDITING.—Not later than 

30 months after the date of the enactment of this Act, and 

annually thereafter, the Secretary of Commerce shall submit 

to the appropriate congressional committees a report that 

includes the following: 

(A) An assessment of the accuracy of the independent 

private sector audits and other due diligence processes 

described under section 13(p) of the Securities Exchange 

Act of 1934. 

(B) Recommendations for the processes used to carry 

out such audits, including ways to— 

(i) improve the accuracy of such audits; and 

(ii) establish standards of best practices. 

(C) A listing of all known conflict mineral processing 

facilities worldwide. 

(e) DEFINITIONS.—For purposes of this section: 

(1) ADJOINING COUNTRY.—The term ‘‘adjoining country’’, 

with respect to the Democratic Republic of the Congo, means 

a country that shares an internationally recognized border with 

the Democratic Republic of the Congo. 

(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term 

‘‘appropriate congressional committees’’ means— 

(A) the Committee on Appropriations, the Committee 

on Foreign Affairs, the Committee on Ways and Means, 

and the Committee on Financial Services of the House 

of Representatives; and 

(B) the Committee on Appropriations, the Committee 

on Foreign Relations, the Committee on Finance, and the 

Committee on Banking, Housing, and Urban Affairs of 

the Senate. 

(3) ARMED GROUP.—The term ‘‘armed group’’ means an 

armed group that is identified as perpetrators of serious human 

rights abuses in the annual Country Reports on Human Rights 

Practices under sections 116(d) and 502B(b) of the Foreign 

Assistance Act of 1961 (22 U.S.C. 2151n(d) and 2304(b)) relating 
H. R. 4173—843 

to the Democratic Republic of the Congo or an adjoining 

country. 

(4) CONFLICT MINERAL.—The term ‘‘conflict mineral’’ 

means— 

(A) columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives; or 

(B) any other mineral or its derivatives determined 

by the Secretary of State to be financing conflict in the 

Democratic Republic of the Congo or an adjoining country. 

(5) UNDER THE CONTROL OF ARMED GROUPS.—The term 

‘‘under the control of armed groups’’ means areas within the 

Democratic Republic of the Congo or adjoining countries in 

which armed groups— 

(A) physically control mines or force labor of civilians 

to mine, transport, or sell conflict minerals; 

(B) tax, extort, or control any part of trade routes 

for conflict minerals, including the entire trade route from 

a Conflict Zone Mine to the point of export from the Democratic Republic of the Congo or an adjoining country; or 

(C) tax, extort, or control trading facilities, in whole 

or in part, including the point of export from the Democratic 

Republic of the Congo or an adjoining country. 

SEC. 1503. REPORTING REQUIREMENTS REGARDING COAL OR OTHER 

MINE SAFETY. 

(a) REPORTING MINE SAFETY INFORMATION.—Each issuer that 

is required to file reports pursuant to section 13(a) or 15(d) of 

the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o) and 

that is an operator, or that has a subsidiary that is an operator, 

of a coal or other mine shall include, in each periodic report filed 

with the Commission under the securities laws on or after the 

date of enactment of this Act, the following information for the 

time period covered by such report: 

(1) For each coal or other mine of which the issuer or 

a subsidiary of the issuer is an operator— 

(A) the total number of violations of mandatory health 

or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other 

mine safety or health hazard under section 104 of the 

Federal Mine Safety and Health Act of 1977 (30 U.S.C. 

814) for which the operator received a citation from the 

Mine Safety and Health Administration; 

(B) the total number of orders issued under section 

104(b) of such Act (30 U.S.C. 814(b)); 

(C) the total number of citations and orders for 

unwarrantable failure of the mine operator to comply with 

mandatory health or safety standards under section 104(d) 

of such Act (30 U.S.C. 814(d)); 

(D) the total number of flagrant violations under section 110(b)(2) of such Act (30 U.S.C. 820(b)(2)); 

(E) the total number of imminent danger orders issued 

under section 107(a) of such Act (30 U.S.C. 817(a)); 

(F) the total dollar value of proposed assessments from 

the Mine Safety and Health Administration under such 

Act (30 U.S.C. 801 et seq.); and 

(G) the total number of mining-related fatalities. 
H. R. 4173—844 

(2) A list of such coal or other mines, of which the issuer 

or a subsidiary of the issuer is an operator, that receive written 

notice from the Mine Safety and Health Administration of— 

(A) a pattern of violations of mandatory health or 

safety standards that are of such nature as could have 

significantly and substantially contributed to the cause 

and effect of coal or other mine health or safety hazards 

under section 104(e) of such Act (30 U.S.C. 814(e)); or 

(B) the potential to have such a pattern. 

(3) Any pending legal action before the Federal Mine Safety 

and Health Review Commission involving such coal or other 

mine. 

(b) REPORTING SHUTDOWNS AND PATTERNS OF VIOLATIONS.— 

Beginning on and after the date of enactment of this Act, each 

issuer that is an operator, or that has a subsidiary that is an 

operator, of a coal or other mine shall file a current report with 

the Commission on Form 8–K (or any successor form) disclosing 

the following regarding each coal or other mine of which the issuer 

or subsidiary is an operator: 

(1) The receipt of an imminent danger order issued under 

section 107(a) of the Federal Mine Safety and Health Act of 

1977 (30 U.S.C. 817(a)). 

(2) The receipt of written notice from the Mine Safety 

and Health Administration that the coal or other mine has— 

(A) a pattern of violations of mandatory health or 

safety standards that are of such nature as could have 

significantly and substantially contributed to the cause 

and effect of coal or other mine health or safety hazards 

under section 104(e) of such Act (30 U.S.C. 814(e)); or 

(B) the potential to have such a pattern. 

(c) RULE OF CONSTRUCTION.—Nothing in this section shall be 

construed to affect any obligation of a person to make a disclosure 

under any other applicable law in effect before, on, or after the 

date of enactment of this Act. 

(d) COMMISSION AUTHORITY.— 

(1) ENFORCEMENT.—A violation by any person of this section, or any rule or regulation of the Commission issued under 

this section, shall be treated for all purposes in the same 

manner as a violation of the Securities Exchange Act of 1934 

(15 U.S.C. 78a et seq.) or the rules and regulations issued 

thereunder, consistent with the provisions of this section, and 

any such person shall be subject to the same penalties, and 

to the same extent, as for a violation of such Act or the rules 

or regulations issued thereunder. 

(2) RULES AND REGULATIONS.—The Commission is authorized to issue such rules or regulations as are necessary or 

appropriate for the protection of investors and to carry out 

the purposes of this section. 

(e) DEFINITIONS.—In this section— 

(1) the terms ‘‘issuer’’ and ‘‘securities laws’’ have the 

meaning given the terms in section 3 of the Securities Exchange 

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

(2) the term ‘‘coal or other mine’’ means a coal or other 

mine, as defined in section 3 of the Federal Mine Safety and 

Health Act of 1977 (30 U.S.C. 802), that is subject to the 

provisions of such Act (30 U.S.C. 801 et seq.); and 
H. R. 4173—845 

(3) the term ‘‘operator’’ has the meaning given the term 

in section 3 of the Federal Mine Safety and Health Act of 

1977 (30 U.S.C. 802). 

(f) EFFECTIVE DATE.—This section shall take effect on the day 

that is 30 days after the date of enactment of this Act. 

SEC. 1504. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION 

ISSUERS. 

Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 

78m), as amended by this Act, is amended by adding at the end 

the following: 

‘‘(q) DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION

ISSUERS.— 

‘‘(1) DEFINITIONS.—In this subsection— 

‘‘(A) the term ‘commercial development of oil, natural 

gas, or minerals’ includes exploration, extraction, processing, export, and other significant actions relating to 

oil, natural gas, or minerals, or the acquisition of a license 

for any such activity, as determined by the Commission; 

‘‘(B) the term ‘foreign government’ means a foreign 

government, a department, agency, or instrumentality of 

a foreign government, or a company owned by a foreign 

government, as determined by the Commission; 

‘‘(C) the term ‘payment’— 

‘‘(i) means a payment that is— 

‘‘(I) made to further the commercial development of oil, natural gas, or minerals; and 

‘‘(II) not de minimis; and 

‘‘(ii) includes taxes, royalties, fees (including 

license fees), production entitlements, bonuses, and 

other material benefits, that the Commission, consistent with the guidelines of the Extractive Industries 

Transparency Initiative (to the extent practicable), 

determines are part of the commonly recognized revenue stream for the commercial development of oil, 

natural gas, or minerals; 

‘‘(D) the term ‘resource extraction issuer’ means an 

issuer that— 

‘‘(i) is required to file an annual report with the 

Commission; and 

‘‘(ii) engages in the commercial development of 

oil, natural gas, or minerals; 

‘‘(E) the term ‘interactive data format’ means an electronic data format in which pieces of information are identified using an interactive data standard; and 

‘‘(F) the term ‘interactive data standard’ means 

standardized list of electronic tags that mark information 

included in the annual report of a resource extraction 

issuer. 

‘‘(2) DISCLOSURE.— 

‘‘(A) INFORMATION REQUIRED.—Not later than 270 days 

after the date of enactment of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, the Commission 

shall issue final rules that require each resource extraction 

issuer to include in an annual report of the resource extraction issuer information relating to any payment made by 

the resource extraction issuer, a subsidiary of the resource 
H. R. 4173—846 

extraction issuer, or an entity under the control of the 

resource extraction issuer to a foreign government or the 

Federal Government for the purpose of the commercial 

development of oil, natural gas, or minerals, including— 

‘‘(i) the type and total amount of such payments 

made for each project of the resource extraction issuer 

relating to the commercial development of oil, natural 

gas, or minerals; and 

‘‘(ii) the type and total amount of such payments 

made to each government. 

‘‘(B) CONSULTATION IN RULEMAKING.—In issuing rules 

under subparagraph (A), the Commission may consult with 

any agency or entity that the Commission determines is 

relevant. 

‘‘(C) INTERACTIVE DATA FORMAT.—The rules issued 

under subparagraph (A) shall require that the information 

included in the annual report of a resource extraction issuer 

be submitted in an interactive data format. 

‘‘(D) INTERACTIVE DATA STANDARD.— 

‘‘(i) IN GENERAL.—The rules issued under subparagraph (A) shall establish an interactive data standard 

for the information included in the annual report of 

a resource extraction issuer. 

‘‘(ii) ELECTRONIC TAGS.—The interactive data 

standard shall include electronic tags that identify, 

for any payments made by a resource extraction issuer 

to a foreign government or the Federal Government— 

‘‘(I) the total amounts of the payments, by 

category; 

‘‘(II) the currency used to make the payments; 

‘‘(III) the financial period in which the payments were made; 

‘‘(IV) the business segment of the resource 

extraction issuer that made the payments; 

‘‘(V) the government that received the payments, and the country in which the government 

is located; 

‘‘(VI) the project of the resource extraction 

issuer to which the payments relate; and 

‘‘(VII) such other information as the Commission may determine is necessary or appropriate 

in the public interest or for the protection of investors. 

‘‘(E) INTERNATIONAL TRANSPARENCY EFFORTS.—To the 

extent practicable, the rules issued under subparagraph 

(A) shall support the commitment of the Federal Government to international transparency promotion efforts 

relating to the commercial development of oil, natural gas, 

or minerals. 

‘‘(F) EFFECTIVE DATE.—With respect to each resource 

extraction issuer, the final rules issued under subparagraph 

(A) shall take effect on the date on which the resource 

extraction issuer is required to submit an annual report 

relating to the fiscal year of the resource extraction issuer 

that ends not earlier than 1 year after the date on which 

the Commission issues final rules under subparagraph (A). 

‘‘(3) PUBLIC AVAILABILITY OF INFORMATION.— 
H. R. 4173—847 

‘‘(A) IN GENERAL.—To the extent practicable, the 

Commission shall make available online, to the public, 

a compilation of the information required to be submitted 

under the rules issued under paragraph (2)(A). 

‘‘(B) OTHER INFORMATION.—Nothing in this paragraph 

shall require the Commission to make available online 

information other than the information required to be submitted under the rules issued under paragraph (2)(A). 

‘‘(4) AUTHORIZATION OF APPROPRIATIONS.—There are 

authorized to be appropriated to the Commission such sums 

as may be necessary to carry out this subsection.’’. 

SEC. 1505. STUDY BY THE COMPTROLLER GENERAL. 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States 

shall issue a report assessing the relative independence, effectiveness, and expertise of presidentially appointed inspectors general 

and inspectors general of designated Federal entities, as such term 

is defined under section 8G of the Inspector General Act of 1978, 

and the effects on independence of the amendments to the Inspector 

General Act of 1978 made by this Act. 

(b) REPORT.—The report required by subsection (a) shall be 

issued to the Committees on Financial Services and Oversight and 

Government Reform of the House of Representatives and the 

Committees on Banking, Housing, and Urban Affairs and Homeland 

Security and Governmental Affairs of the Senate. 

SEC. 1506. STUDY ON CORE DEPOSITS AND BROKERED DEPOSITS. 

(a) STUDY.—The Corporation shall conduct a study to 

evaluate— 

(1) the definition of core deposits for the purpose of calculating the insurance premiums of banks; 

(2) the potential impact on the Deposit Insurance Fund 

of revising the definitions of brokered deposits and core deposits 

to better distinguish between them; 

(3) an assessment of the differences between core deposits 

and brokered deposits and their role in the economy and 

banking sector of the United States; 

(4) the potential stimulative effect on local economies of 

redefining core deposits; and 

(5) the competitive parity between large institutions and 

community banks that could result from redefining core 

deposits. 

(b) REPORT TO CONGRESS.—Not later than 1 year after the 

date of enactment of this Act, the Corporation shall submit to 

the Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House 

of Representatives a report on the results of the study under subsection (a) that includes legislative recommendations, if any, to 

address concerns arising in connection with the definitions of core 

deposits and brokered deposits. 
H. R. 4173—848 

TITLE XVI—SECTION 1256 CONTRACTS 

SEC. 1601. CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256 CONTRACTS. 

(a) IN GENERAL.—Subsection (b) of section 1256 of the Internal 

Revenue Code of 1986 is amended— 

(1) by redesignating paragraphs (1) through (5) as subparagraphs (A) through (E), respectively, and by indenting such 

subparagraphs (as so redesignated) accordingly, 

(2) by striking ‘‘For purposes of’’ and inserting the following: 

‘‘(1) IN GENERAL.—For purposes of’’, and 

(3) by striking the last sentence and inserting the following 

new paragraph: 

‘‘(2) EXCEPTIONS.—The term ‘section 1256 contract’ shall 

not include— 

‘‘(A) any securities futures contract or option on such 

a contract unless such contract or option is a dealer securities futures contract, or 

‘‘(B) any interest rate swap, currency swap, basis swap, 

interest rate cap, interest rate floor, commodity swap, 

equity swap, equity index swap, credit default swap, or 

similar agreement.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after the date of the enactment of this Act. 

Speaker of the House of Representatives. 

Vice President of the United States and

President of the Senate.