I 

111TH CONGRESS 

2D SESSION H. R. 5159 

To provide for a safe, accountable, fair, and efficient banking system, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 28, 2010 

Mr. MILLER of North Carolina (for himself, Mr. CHANDLER, Mr. COHEN, Mr. 

ELLISON, and Mr. SHERMAN) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To provide for a safe, accountable, fair, and efficient banking 

system, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Safe, Accountable, 

5 Fair, and Efficient Banking Act of 2010’’ or the ‘‘SAFE 

6 Banking Act of 2010’’. 

7 SEC. 2. DEFINITIONS. 

8 (a) IN GENERAL.—As used in this Act, the following 

9 definitions shall apply: 


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1 (1) APPROPRIATE FEDERAL REGULATOR.—The 

2 term ‘‘appropriate Federal regulator’’ means— 

3 (A) the Board of Governors of the Federal 

4 Reserve System (in this Act referred to as the 

5 ‘‘Board’’); 

6 (B) the Comptroller General of the United 

7 States (in this Act referred to as the ‘‘Comp8 troller’’); or 

9 (C) the Federal Deposit Insurance Cor10 poration (in this Act referred to as the ‘‘Cor11 poration’’). 

12 (2) AVERAGE TOTAL CONSOLIDATED ASSETS.— 

13 the term ‘‘average total consolidated assets’’ has the 

14 same meaning as in part 225 of title 12, Code of 

15 Federal Regulations, as in effect on the date of en16 actment of this Act, or any successor thereto. 

17 (3) FDIC-ASSESSED DEPOSITS.—The term 

18 ‘‘FDIC-assessed deposits’’ means the assessment 

19 base, as computed under part 327 of title 12, Code 

20 of Federal Regulations, as in effect on the date of 

21 enactment of this Act, or any successor thereto. 

22 (4) FINANCIAL COMPANY.—The term ‘‘financial 

23 company’’ means any nonbank financial company 

24 that is supervised by the Board. 


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1 (5) LIABILITIES.—The term ‘‘liabilities’’ equals 

2 a financial company’s total assets less tier 1 capital. 

3 (6) NONDEPOSIT LIABILITIES.—The term 

4 ‘‘nondeposit liabilities’’ means the total assets of a 

5 bank holding company, less tier 1 capital, less 

6 FDIC-assessed deposits. 

7 (7) TIER 1 CAPITAL.—The term ‘‘tier 1 capital’’ 

8 has the same meaning as in part 225 of title 12, 

9 Code of Federal Regulations, as in effect on the date 

10 of enactment of this Act, or any successor thereto. 

11 (b) NONBANK FINANCIAL COMPANY DEFINITIONS.— 

12 For purposes of this Act the following definitions shall 

13 apply: 

14 (1) FOREIGN NONBANK FINANCIAL COMPANY.— 

15 The term ‘‘foreign nonbank financial company’’ 

16 means a company (other than a company that is, or 

17 is treated in the United States, as a bank holding 

18 company or a subsidiary thereof) that is— 

19 (A) incorporated or organized in a country 

20 other than the United States; and 

21 (B) substantially engaged in, including 

22 through a branch in the United States, activi23 ties in the United States that are financial in 

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

25 Holding Company Act of 1956). 


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1 (2) U.S. NONBANK FINANCIAL COMPANY.—The 

2 term ‘‘U.S. nonbank financial company’’ means a 

3 company (other than a bank holding company or a 

4 subsidiary thereof) that is— 

5 (A) incorporated or organized under the 

6 laws of the United States or any State; and 

7 (B) substantially engaged in activities in 

8 the United States that are financial in nature 

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

10 Company Act of 1956). 

11 (3) NONBANK FINANCIAL COMPANY.—The term 

12 ‘‘nonbank financial company’’ means a U.S. 

13 nonbank financial company and a foreign nonbank 

14 financial company. 

15 SEC. 3. DEPOSIT CONCENTRATION LIMIT. 

16 Section 3(d) of the Bank Holding Company Act of 

17 1956 (12 U.S.C. 1842(d)) is amended— 

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

19 (A) and inserting the following: 

20 ‘‘(A) NATIONWIDE CONCENTRATION LIM21 ITS.—No bank holding company may hold more 

22 than 10 percent of the total amount of deposits 

23 of insured depository institutions in the United 

24 States.’’; and 


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1 (2) by striking paragraph (5) and inserting the 

2 following: 

3 ‘‘(5) ENFORCED COMPLIANCE.—The Board 

4 shall require any bank holding company having a de5 posit concentration in violation of this subsection to 

6 sell or otherwise transfer assets to unaffiliated firms 

7 to bring the company into compliance with this sub8 section.’’. 

9 SEC. 4. LEVERAGE RATIO AND SIZE REQUIREMENTS FOR 

10 BANK HOLDING COMPANIES. 

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

12 1841 et seq.) is amended by inserting after section 5 the 

13 following new section: 

14 ‘‘SEC. 5A. LIMITS ON LEVERAGE AND SIZE. 

15 ‘‘(a) LEVERAGE RATIO REQUIREMENTS FOR BANK

16 HOLDING COMPANIES AND FINANCIAL COMPANIES.— 

17 ‘‘(1) LEVERAGE RATIO.—No bank holding com18 pany or financial company may maintain tier 1 cap19 ital in an amount equal to less than 6 percent of av20 erage total consolidated assets. 

21 ‘‘(2) BALANCE SHEET LEVERAGE RATIO.—No 

22 bank holding company or financial company may 

23 maintain less than 6 percent of tier 1 capital for all 

24 outstanding balance sheet liabilities, as determined 


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1 under section 13(m) of the Securities Exchange Act 

2 of 1934 (15 U.S.C. 78m(m)). 

3 ‘‘(3) EXEMPTIONS.— 

4 ‘‘(A) IN GENERAL.—The Board may ad5 just the leverage ratio requirements provided in 

6 paragraph (1) or (2), for any class of institu7 tions, based upon the size or activity of such 

8 class of institutions. No adjustment made under 

9 this subparagraph may allow an institution to 

10 carry less capital than provided in paragraph 

11 (1) or (2). 

12 ‘‘(B) ADJUSTMENTS.—Consistent with this 

13 subsection, the Board may adjust, by rule, the 

14 definitions of the terms ‘leverage ratio’ and 

15 ‘balance sheet leverage ratio’ to harmonize such 

16 ratios with official international agreements re17 garding capital standards, only if the Board de18 termines that the international capital stand19 ards are commensurate with the credit, market, 

20 operational, or other risks posed by the bank 

21 holding companies or financial companies to 

22 which the international agreements regarding 

23 capital standards apply. 

24 ‘‘(C) AUTHORITY OF OTHER REGU25 LATORS.— 


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1 ‘‘(i) IN GENERAL.—The appropriate 

2 Federal regulator may, in a manner con3 sistent with this subsection, grant any 

4 bank holding company an emergency tem5 porary exemption from the ratio require6 ments provided in paragraph (1) or (2), 

7 where necessary to prevent an imminent 

8 threat to the financial stability of the 

9 United States. 

10 ‘‘(ii) PUBLICATION REQUIRED.—Any 

11 exemption granted under this subpara12 graph shall be published in the Federal 

13 Register within a reasonable period after 

14 the date on which such exemption is grant15 ed, not to exceed 90 days, and such publi16 cation shall provide— 

17 ‘‘(I) the name of the bank hold18 ing company or financial company 

19 being granted an exemption; 

20 ‘‘(II) the reason for the exemp21 tion; and 

22 ‘‘(III) the plan of the appropriate 

23 Federal regulator detailing the man24 ner by which the bank holding comVerDate Mar 15 2010 01:17 Apr 29, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5159.IH H5159

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1 pany shall be brought into compliance 

2 with paragraphs (1) and (2). 

3 ‘‘(4) LEVERAGE RATIO REQUIREMENTS FOR OP4 ERATING SUBSIDIARIES OF BANK HOLDING COMPA5 NIES AND FINANCIAL COMPANIES.—Notwithstanding 

6 any other provision of law applicable to insured de7 pository institutions, the Board shall, within 1 year 

8 of the date of enactment of the SAFE Banking Act 

9 of 2010, promulgate regulations establishing a lever10 age ratio and a balance sheet leverage ratio, in a 

11 manner consistent with paragraphs (1) and (2), for 

12 all operating subsidiaries of bank holding companies 

13 and financial companies. 

14 ‘‘(5) PROMPT CORRECTIVE ACTION.— 

15 ‘‘(A) AUTHORITIES.—The Board shall re16 quire any bank holding company or financial 

17 company that is in violation of paragraph (1) or 

18 (2) to raise capital, sell or otherwise transfer 

19 assets or off-balance sheet items to unaffiliated 

20 firms, or impose conditions on the manner in 

21 which the bank holding company conducts 1 or 

22 more activities to bring the company into com23 pliance with paragraphs (1) and (2). 

24 ‘‘(B) CORRECTIVE ACTION PLAN.—The 

25 Board shall, not later than 60 days after deterVerDate Mar 15 2010 01:17 Apr 29, 2010 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5159.IH H5159

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1 mining that a bank holding company or finan2 cial company is in violation of paragraph (1) or 

3 (2), present to the members of the Committee 

4 on Banking, Housing, and Urban Affairs of the 

5 Senate and the Committee on Financial Serv6 ices of the House of Representatives a plan de7 tailing the manner by which the bank holding 

8 company or financial company shall be brought 

9 into compliance with the applicable provision of 

10 law. 

11 ‘‘(C) REPORTS TO THE CONGRESS.— 

12 ‘‘(i) WRITTEN REPORTS.—The Board 

13 shall provide to the members of the Com14 mittee on Banking, Housing, and Urban 

15 Affairs of the Senate and the Committee 

16 on Financial Services of the House of Rep17 resentatives periodic reports for each 60- 

18 day period during which a corrective action 

19 plan required by subparagraph (B) has not 

20 been fulfilled. 

21 ‘‘(ii) TESTIMONY.—The Board shall 

22 provide testimony to the Committee on 

23 Banking, Housing, and Urban Affairs of 

24 the Senate and the Committee on Finan25 cial Services of the House of RepresentaVerDate Mar 15 2010 01:17 Apr 29, 2010 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5159.IH H5159

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1 tives for each 90-day period that a correc2 tive action plan required by subparagraph 

3 (B) has not been fulfilled. 

4 ‘‘(b) LIMITS ON NONDEPOSIT LIABILITIES FOR

5 BANK HOLDING COMPANIES AND FINANCIAL COMPA6 NIES.— 

7 ‘‘(1) BANK HOLDING COMPANIES.— 

8 ‘‘(A) LIMIT ON NONDEPOSIT LIABILITIES

9 FOR BANK HOLDING COMPANIES.—No bank 

10 holding company may possess nondeposit liabil11 ities exceeding 2 percent of the annual gross 

12 domestic product of the United States. 

13 ‘‘(B) DETERMINATION OF GROSS DOMES14 TIC PRODUCT.—The annual gross domestic 

15 product of the United States shall be deter16 mined for purposes of subparagraph (A) using 

17 the average of such product over the 16 cal18 endar quarters, as calculated by the Bureau of 

19 Economic Analysis of the Department of Com20 merce, most recently completed as of the time 

21 of the determination. 

22 ‘‘(C) OFF-BALANCE-SHEET LIABILITIES.— 

23 The computation of the limit under this para24 graph shall take into account off-balance-sheet 

25 liabilities. 


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1 ‘‘(D) TREATMENT OF INSURANCE COMPA2 NIES.—Notwithstanding the liability limit es3 tablished in this section, the Board may set a 

4 separate liability limit with respect to certain 

5 bank holding companies primarily engaged in 

6 the business of insurance, as the Board deems 

7 necessary in order to provide for consistent and 

8 equitable treatment of such institutions. In es9 tablishing such separate liability limits for in10 surance companies, for any insurance company 

11 with any subsidiary regulated by a State insur12 ance regulator, the Board shall consult the ap13 propriate State insurance regulator. 

14 ‘‘(E) TREATMENT OF FOREIGN DEPOS15 ITS.—Notwithstanding the definition of the 

16 term ‘nondeposit liabilities’ established in this 

17 section, the Board may exclude from its calcula18 tion of nondeposit liabilities any foreign and 

19 other deposits not covered by the definition of 

20 the term ‘FDIC-assessed deposits’, if the Board 

21 deems such action necessary to ensure the con22 sistent and equitable treatment of institutions 

23 with international operations. 

24 ‘‘(2) FINANCIAL COMPANIES.— 


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1 ‘‘(A) LIMIT ON NONDEPOSIT LIABILITIES

2 FOR FINANCIAL COMPANIES.—No financial 

3 company may possess nondeposit liabilities ex4 ceeding 3 percent of the annual gross domestic 

5 product of the United States. 

6 ‘‘(B) DETERMINATION OF GROSS DOMES7 TIC PRODUCT.—The annual gross domestic 

8 product of the United States shall be deter9 mined for purposes of subparagraph (A) using 

10 the average of such product over the 16 cal11 endar quarters, as calculated by the Bureau of 

12 Economic Analysis of the Department of Com13 merce, most recently completed as of the time 

14 of the determination. 

15 ‘‘(C) OFF-BALANCE-SHEET LIABILITIES.— 

16 The computation of the limit under this para17 graph shall take into account off-balance-sheet 

18 liabilities. 

19 ‘‘(D) TREATMENT OF INSURANCE COMPA20 NIES.—Notwithstanding the liability limit es21 tablished by this paragraph, the Board may set 

22 a separate liability limit with respect to insur23 ance companies or other financial companies, as 

24 the Board determines necessary in order to pro25 vide for consistent and equitable treatment of 


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1 such institutions. In establishing such separate 

2 liability limits for insurance companies, for any 

3 insurance company with any subsidiary regu4 lated by a State insurance regulator, the Board 

5 shall consult with the appropriate State insur6 ance regulator. 

7 ‘‘(E) TREATMENT OF FOREIGN DEPOS8 ITS.—Notwithstanding the definition of the 

9 term ‘nondeposit liabilities’ established in this 

10 section, the Board may exclude from its calcula11 tion of nondeposit liabilities any foreign and 

12 other deposits not covered by the definition of 

13 the term ‘FDIC-assessed deposits’, if the Board 

14 deems such action necessary to ensure the con15 sistent and equitable treatment of institutions 

16 with international operations. 

17 ‘‘(3) PROMPT CORRECTIVE ACTION.— 

18 ‘‘(A) AUTHORITIES.—The Board shall re19 quire any bank holding company or financial 

20 company that is in violation of a provision of 

21 paragraph (1) or (2), as applicable, to sell or 

22 otherwise transfer assets or off-balance-sheet 

23 items to unaffiliated firms, to terminate 1 or 

24 more activities, or to impose conditions on the 

25 manner in which the bank holding company or 


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1 financial company conducts 1 or more activities 

2 to bring the company into compliance with 

3 paragraphs (1) or (2), as applicable. 

4 ‘‘(B) CORRECTIVE ACTION PLAN.—The 

5 Board shall, not later than 60 days after deter6 mining that a bank holding company or finan7 cial company is in violation of paragraph (1) or 

8 (2), present to the members of the Committee 

9 on Banking, Housing, and Urban Affairs of the 

10 Senate and the Committee on Financial Serv11 ices of the House of Representatives a plan de12 tailing the manner by which the bank holding 

13 company or financial company shall be brought 

14 into compliance with the applicable provision. 

15 ‘‘(C) REPORTS TO THE CONGRESS.— 

16 ‘‘(i) WRITTEN REPORTS.—The Board 

17 shall provide to the members of the Com18 mittee on Banking, Housing, and Urban 

19 Affairs of the Senate and the Committee 

20 on Financial Services of the House of Rep21 resentatives periodic reports for each 60- 

22 day period during which a corrective action 

23 plan required by subparagraph (B) has not 

24 been fulfilled. 


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1 ‘‘(ii) TESTIMONY.—The Board shall 

2 provide testimony to the Committee on 

3 Banking, Housing, and Urban Affairs of 

4 the Senate and the Committee on Finan5 cial Services of the House of Representa6 tives for each 120-day period during which 

7 a corrective action plan required by sub8 paragraph (B) has not been fulfilled. 

9 ‘‘(c) DEFINITIONS.—As used in this section, the fol10 lowing definitions shall apply: 

11 ‘‘(1) APPROPRIATE FEDERAL REGULATOR.— 

12 The term ‘appropriate Federal regulator’ means— 

13 ‘‘(A) the Board of Governors of the Fed14 eral Reserve System (in this Act referred to as 

15 the ‘Board’); 

16 ‘‘(B) the Comptroller General of the 

17 United States (in this Act referred to as the 

18 ‘Comptroller’); or 

19 ‘‘(C) the Federal Deposit Insurance Cor20 poration (in this Act referred to as the ‘Cor21 poration’). 

22 ‘‘(2) AVERAGE TOTAL CONSOLIDATED AS23 SETS.—The term ‘average total consolidated assets’ 

24 has the same meaning as in part 225 of title 12, 


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1 Code of Federal Regulations, as in effect on the date 

2 of enactment of this Act, or any successor thereto. 

3 ‘‘(3) FDIC-ASSESSED DEPOSITS.—The term 

4 ‘FDIC-assessed deposits’ means the assessment 

5 base, as computed under part 327 of title 12, Code 

6 of Federal Regulations, as in effect on the date of 

7 enactment of this Act, or any successor thereto. 

8 ‘‘(4) FINANCIAL COMPANY.—The term ‘finan9 cial company’ means any nonbank financial company 

10 that is supervised by the Board. 

11 ‘‘(5) LIABILITIES.—The term ‘liabilities’ equals 

12 a financial company’s total assets less tier 1 capital. 

13 ‘‘(6) NONDEPOSIT LIABILITIES.—The term 

14 ‘nondeposit liabilities’ means the total assets of a 

15 bank holding company, less tier 1 capital, less 

16 FDIC-assessed deposits. 

17 ‘‘(7) FOREIGN NONBANK FINANCIAL COM18 PANY.—The term ‘foreign nonbank financial com19 pany’ means a company (other than a company that 

20 is, or is treated in the United States, as a bank 

21 holding company or a subsidiary thereof) that is— 

22 ‘‘(A) incorporated or organized in a coun23 try other than the United States; and 

24 ‘‘(B) substantially engaged in, including 

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1 ties in the United States that are financial in 

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

3 Holding Company Act of 1956). 

4 ‘‘(8) U.S. NONBANK FINANCIAL COMPANY.— 

5 The term ‘U.S. nonbank financial company’ means 

6 a company (other than a bank holding company or 

7 a subsidiary thereof) that is— 

8 ‘‘(A) incorporated or organized under the 

9 laws of the United States or any State; and 

10 ‘‘(B) substantially engaged in activities in 

11 the United States that are financial in nature 

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

13 Company Act of 1956). 

14 ‘‘(9) NONBANK FINANCIAL COMPANY.—The 

15 term ‘nonbank financial company’ means a U.S. 

16 nonbank financial company and a foreign nonbank 

17 financial company. 

18 ‘‘(10) TIER 1 CAPITAL.—The term ‘tier 1 cap19 ital’ has the same meaning as in part 225 of title 

20 12, Code of Federal Regulations, as in effect on the 

21 date of enactment of this section, or any successor 

22 thereto.’’. 


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1 SEC. 5. CAPITAL ASSESSMENT PROGRAM. 

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

3 1841 et seq.) is amended by inserting after section 7 the 

4 following new section: 

5 ‘‘SEC. 7A. CAPITAL ASSESSMENT PROGRAM. 

6 ‘‘(a) ANNUAL ASSESSMENTS.—Beginning 1 year 

7 after the date of enactment of the SAFE Banking Act 

8 of 2010, and annually thereafter, the Board shall conduct 

9 a capital assessment to estimate losses, revenues, and re10 serve needs for bank holding companies and financial com11 panies. 

12 ‘‘(b) REPORTS.—The Board shall provide a report on 

13 the results of the capital assessment program under this 

14 section to the Secretary, the members of the Committee 

15 on Banking, Housing, and Urban Affairs of the Senate, 

16 and the members of the Committee on Financial Services 

17 of the House of Representatives.’’. 

18 SEC. 6. AMENDMENT TO THE SECURITIES AND EXCHANGE 

19 ACT. 

20 Section 13 of the Securities Exchange Act of 1934 

21 (15 U.S.C. 78m) is amended by adding at the end the 

22 following new subsection: 

23 ‘‘(m) STANDARD BALANCE SHEET CALCULATION

24 FOR REPORTS.— 

25 ‘‘(1) ESTABLISHMENT OF STANDARD BALANCE

26 SHEET REPORTING.—Not later than 1 year after the 


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1 date of enactment of the SAFE Banking Act of 

2 2010, the Commission, or a standard setter des3 ignated by and under the oversight of the Commis4 sion, shall issue a rule requiring that each issuer of 

5 securities required to file reports under this section 

6 record all of its assets and liabilities on its balance 

7 sheets. The recorded amount of assets and liabilities 

8 shall reflect a reasonable assessment by the issuer of 

9 the most likely outcomes, given currently available 

10 information. Such issuers shall record all financings 

11 of assets for which the issuer has more than minimal 

12 economic risks or rewards. 

13 ‘‘(2) EXCLUSION FOR INDETERMINATE LIABIL14 ITIES.—If an issuer required to file reports under 

15 this section cannot determine the amount of a par16 ticular liability, for purposes of paragraph (1), such 

17 issuer may exclude that liability from its balance 

18 sheet only if it discloses an explanation of— 

19 ‘‘(A) the nature of the liability and pur20 pose for incurring it; 

21 ‘‘(B) the most likely and maximum loss 

22 that the issuer could incur from the liability; 

23 ‘‘(C) whether there is any recourse to the 

24 issuer by another party and, if so, under what 

25 conditions such recourse could occur; and 


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1 ‘‘(D) whether the issuer has any con2 tinuing involvement with an asset financed by 

3 the liability or any beneficial interest therein. 

4 ‘‘(3) RULEMAKING.—The Commission shall 

5 promulgate rules to ensure compliance with this sub6 section, including enforcement by the Commission 

7 and civil liability under the Securities Act of 1933 

8 and this title.’’. 

9 SEC. 7. EFFECTIVE DATE. 

10 (a) IN GENERAL.—This Act and the amendments 

11 made by this Act shall take effect upon the date of enact12 ment of this Act. 

13 (b) ALLOWANCE FOR BANK HOLDING COMPANIES

14 AND FINANCIAL COMPANIES NOT IN COMPLIANCE AT

15 DATE OF ENACTMENT.—Any institution that is in viola16 tion of— 

17 (1) the deposit concentration limit in section 

18 3(d)(2)(A) of the Bank Holding Act of 1956, as 

19 amended by this Act, as of the date of enactment of 

20 this Act, shall bring itself into compliance with that 

21 limit not later than 1 year after the date of enact22 ment of this Act; 

23 (2) the leverage ratios in section 5A of the 

24 Bank Holding Act of 1956, as amended by this Act, 

25 as of the date of enactment of this Act, shall bring 


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1 itself into compliance with those ratios, not later 

2 than 1 year after the date of enactment of this Act; 

3 and 

4 (3) the limits on nondeposit liabilities in section 

5 7A of the Bank Holding Company Act of 1956, as 

6 added by this Act, as of the date of enactment of 

7 this Act, shall bring itself into compliance with those 

8 limits, not later than 3 years after the date of enact9 ment of this Act. 

Æ 


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