I 

113TH CONGRESS 

2D SESSION H. R. 5461 

To clarify the application of certain leverage and risk-based requirements 

under the Dodd-Frank Wall Street Reform and Consumer Protection 

Act, to improve upon the definitions provided for points and fees in 

connection with a mortgage transaction, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 15, 2014 

Mr. BARR (for himself, Mr. GARY G. MILLER of California, Mr. HUIZENGA

of Michigan, and Mr. DAVID SCOTT of Georgia) introduced the following 

bill; which was referred to the Committee on Financial Services, and in 

addition to the Committee on Agriculture, for a period to be subsequently 

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To clarify the application of certain leverage and risk-based 

requirements under the Dodd-Frank Wall Street Reform 

and Consumer Protection Act, to improve upon the definitions provided for points and fees in connection with 

a mortgage transaction, 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. TABLE OF CONTENTS. 

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

Sec. 1. Table of contents. 


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TITLE I—INSURANCE CAPITAL STANDARDS 

Sec. 101. Short title. 

Sec. 102. Clarification of application of leverage and risk-based capital requirements. 

TITLE II—COLLATERALIZED LOAN OBLIGATIONS 

Sec. 201. Short title. 

Sec. 202. Rules of construction relating to collateralized loan obligations. 

TITLE III—DEFINITION OF POINTS AND FEES IN MORTGAGE 

TRANSACTIONS 

Sec. 301. Short title. 

Sec. 302. Definition of points and fees. 

Sec. 303. Rulemaking. 

TITLE IV—BUSINESS RISK MITIGATION AND PRICE 

STABILIZATION 

Sec. 401. Short title. 

Sec. 402. Margin requirements. 

Sec. 403. Implementation. 

1 TITLE I—INSURANCE CAPITAL 

2 STANDARDS 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘Insurance Capital 

5 Standards Clarification Act of 2014’’. 

6 SEC. 102. CLARIFICATION OF APPLICATION OF LEVERAGE 

7 AND RISK-BASED CAPITAL REQUIREMENTS. 

8 Section 171 of the Dodd-Frank Wall Street Reform 

9 and Consumer Protection Act (12 U.S.C. 5371) is amend10 ed— 

11 (1) in subsection (a), by adding at the end the 

12 following: 

13 ‘‘(4) BUSINESS OF INSURANCE.—The term 

14 ‘business of insurance’ has the same meaning as in 

15 section 1002(3). 


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1 ‘‘(5) PERSON REGULATED BY A STATE INSUR2 ANCE REGULATOR.—The term ‘person regulated by 

3 a State insurance regulator’ has the same meaning 

4 as in section 1002(22). 

5 ‘‘(6) REGULATED FOREIGN SUBSIDIARY AND

6 REGULATED FOREIGN AFFILIATE.—The terms ‘regu7 lated foreign subsidiary’ and ‘regulated foreign affil8 iate’ mean a person engaged in the business of in9 surance in a foreign country that is regulated by a 

10 foreign insurance regulatory authority that is a 

11 member of the International Association of Insur12 ance Supervisors or other comparable foreign insur13 ance regulatory authority as determined by the 

14 Board of Governors following consultation with the 

15 State insurance regulators, including the lead State 

16 insurance commissioner (or similar State official) of 

17 the insurance holding company system as deter18 mined by the procedures within the Financial Anal19 ysis Handbook adopted by the National Association 

20 of Insurance Commissioners, where the person, or 

21 its principal United States insurance affiliate, has 

22 its principal place of business or is domiciled, but 

23 only to the extent that— 

24 ‘‘(A) such person acts in its capacity as a 

25 regulated insurance entity; and 


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1 ‘‘(B) the Board of Governors does not de2 termine that the capital requirements in a spe3 cific foreign jurisdiction are inadequate. 

4 ‘‘(7) CAPACITY AS A REGULATED INSURANCE

5 ENTITY.—The term ‘capacity as a regulated insur6 ance entity’— 

7 ‘‘(A) includes any action or activity under8 taken by a person regulated by a State insur9 ance regulator or a regulated foreign subsidiary 

10 or regulated foreign affiliate of such person, as 

11 those actions relate to the provision of insur12 ance, or other activities necessary to engage in 

13 the business of insurance; and 

14 ‘‘(B) does not include any action or activ15 ity, including any financial activity, that is not 

16 regulated by a State insurance regulator or a 

17 foreign agency or authority and subject to State 

18 insurance capital requirements or, in the case of 

19 a regulated foreign subsidiary or regulated for20 eign affiliate, capital requirements imposed by a 

21 foreign insurance regulatory authority.’’; and 

22 (2) by adding at the end the following new sub23 section: 

24 ‘‘(c) CLARIFICATION.— 


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1 ‘‘(1) IN GENERAL.—In establishing the min2 imum leverage capital requirements and minimum 

3 risk-based capital requirements on a consolidated 

4 basis for a depository institution holding company or 

5 a nonbank financial company supervised by the 

6 Board of Governors as required under paragraphs 

7 (1) and (2) of subsection (b), the appropriate Fed8 eral banking agencies shall not be required to in9 clude, for any purpose of this section (including in 

10 any determination of consolidation), a person regu11 lated by a State insurance regulator or a regulated 

12 foreign subsidiary or a regulated foreign affiliate of 

13 such person engaged in the business of insurance, to 

14 the extent that such person acts in its capacity as 

15 a regulated insurance entity. 

16 ‘‘(2) RULE OF CONSTRUCTION ON BOARD’S AU17 THORITY.—This subsection shall not be construed to 

18 prohibit, modify, limit, or otherwise supersede any 

19 other provision of Federal law that provides the 

20 Board of Governors authority to issue regulations 

21 and orders relating to capital requirements for de22 pository institution holding companies or nonbank fi23 nancial companies supervised by the Board of Gov24 ernors. 


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1 ‘‘(3) RULE OF CONSTRUCTION ON ACCOUNTING

2 PRINCIPLES.— 

3 ‘‘(A) IN GENERAL.—A depository institu4 tion holding company or nonbank financial com5 pany supervised by the Board of Governors of 

6 the Federal Reserve that is also a person regu7 lated by a State insurance regulator that is en8 gaged in the business of insurance that files fi9 nancial statements with a State insurance regu10 lator or the National Association of Insurance 

11 Commissioners utilizing only Statutory Ac12 counting Principles in accordance with State 

13 law, shall not be required by the Board under 

14 the authority of this section or the authority of 

15 the Home Owners’ Loan Act to prepare such fi16 nancial statements in accordance with Generally 

17 Accepted Accounting Principles. 

18 ‘‘(B) PRESERVATION OF AUTHORITY.— 

19 Nothing in subparagraph (A) shall limit the au20 thority of the Board under any other applicable 

21 provision of law to conduct any regulatory or 

22 supervisory activity of a depository institution 

23 holding company or non-bank financial com24 pany supervised by the Board of Governors, in25 cluding the collection or reporting of any inforVerDate Sep 11 2014 21:49 Sep 16, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5461.IH H5461

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1 mation on an entity or group-wide basis. Noth2 ing in this paragraph shall excuse the Board 

3 from its obligations to comply with section 

4 161(a) of the Dodd-Frank Wall Street Reform 

5 and Consumer Protection Act (12 U.S.C. 

6 5361(a)) and section 10(b)(2) of the Home 

7 Owners’ Loan Act (12 U.S.C. 1467a(b)(2)), as 

8 appropriate.’’. 

9 TITLE II—COLLATERALIZED 

10 LOAN OBLIGATIONS 

11 SEC. 201. SHORT TITLE. 

12 This title may be cited as the ‘‘Restoring Proven Fi13 nancing for American Employers Act’’. 

14 SEC. 202. RULES OF CONSTRUCTION RELATING TO 

15 COLLATERALIZED LOAN OBLIGATIONS. 

16 Section 13(g) of the Bank Holding Company Act of 

17 1956 (12 U.S.C. 1851(g)) is amended by adding at the 

18 end the following new paragraphs: 

19 ‘‘(4) COLLATERALIZED LOAN OBLIGATIONS.— 

20 ‘‘(A) INAPPLICABILITY TO CERTAIN

21 COLLATERALIZED LOAN OBLIGATIONS.—Noth22 ing in this section shall be construed to require 

23 the divestiture, prior to July 21, 2017, of any 

24 debt securities of collateralized loan obligations, 


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1 if such debt securities were issued before Janu2 ary 31, 2014. 

3 ‘‘(B) OWNERSHIP INTEREST WITH RE4 SPECT TO COLLATERALIZED LOAN OBLIGA5 TIONS.—A banking entity shall not be consid6 ered to have an ownership interest in a 

7 collateralized loan obligation because it ac8 quires, has acquired, or retains a debt security 

9 in such collateralized loan obligation if the debt 

10 security has no indicia of ownership other than 

11 the right of the banking entity to participate in 

12 the removal for cause, or in the selection of a 

13 replacement after removal for cause or resigna14 tion, of an investment manager or investment 

15 adviser of the collateralized loan obligation. 

16 ‘‘(C) DEFINITIONS.—For purposes of this 

17 paragraph: 

18 ‘‘(i) COLLATERALIZED LOAN OBLIGA19 TION.—The term ‘collateralized loan obli20 gation’ means any issuing entity of an 

21 asset-backed security, as defined in section 

22 3(a)(77) of the Securities Exchange Act of 

23 1934 (15 U.S.C. 78c(a)(77)), that is com24 prised primarily of commercial loans. 


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1 ‘‘(ii) REMOVAL FOR CAUSE.—An in2 vestment manager or investment adviser 

3 shall be deemed to be removed ‘for cause’ 

4 if the investment manager or investment 

5 adviser is removed as a result of— 

6 ‘‘(I) a breach of a material term 

7 of the applicable management or advi8 sory agreement or the agreement gov9 erning the collateralized loan obliga10 tion; 

11 ‘‘(II) the inability of the invest12 ment manager or investment adviser 

13 to continue to perform its obligations 

14 under any such agreement; 

15 ‘‘(III) any other action or inac16 tion by the investment manager or in17 vestment adviser that has or could 

18 reasonably be expected to have a ma19 terially adverse effect on the 

20 collateralized loan obligation, if the in21 vestment manager or investment ad22 viser fails to cure or take reasonable 

23 steps to cure such effect within a rea24 sonable time; or 


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1 ‘‘(IV) a comparable event or cir2 cumstance that threatens, or could 

3 reasonably be expected to threaten, 

4 the interests of holders of the debt se5 curities.’’. 

6 TITLE III—DEFINITION OF 

7 POINTS AND FEES IN MORT8 GAGE TRANSACTIONS 

9 SEC. 301. SHORT TITLE. 

10 This title may be cited as the ‘‘Mortgage Choice Act 

11 of 2014’’. 

12 SEC. 302. DEFINITION OF POINTS AND FEES. 

13 (a) AMENDMENT TO SECTION 103 OF TILA.—Sec14 tion 103(bb)(4) of the Truth in Lending Act (15 U.S.C. 

15 1602(bb)(4)) is amended— 

16 (1) by striking ‘‘paragraph (1)(B)’’ and insert17 ing ‘‘paragraph (1)(A) and section 129C’’; 

18 (2) in subparagraph (C)— 

19 (A) by inserting ‘‘and insurance’’ after 

20 ‘‘taxes’’; 

21 (B) in clause (ii), by inserting ‘‘, except as 

22 retained by a creditor or its affiliate as a result 

23 of their participation in an affiliated business 

24 arrangement (as defined in section 2(7) of the 

25 Real Estate Settlement Procedures Act of 1974 


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1 (12 U.S.C. 2602(7))’’ after ‘‘compensation’’; 

2 and 

3 (C) by striking clause (iii) and inserting 

4 the following: 

5 ‘‘(iii) the charge is— 

6 ‘‘(I) a bona fide third-party 

7 charge not retained by the mortgage 

8 originator, creditor, or an affiliate of 

9 the creditor or mortgage originator; or 

10 ‘‘(II) a charge set forth in section 

11 106(e)(1);’’; and 

12 (3) in subparagraph (D)— 

13 (A) by striking ‘‘accident,’’; and 

14 (B) by striking ‘‘or any payments’’ and in15 serting ‘‘and any payments’’. 

16 (b) AMENDMENT TO SECTION 129C OF TILA.—Sec17 tion 129C of the Truth in Lending Act (15 U.S.C. 1639c) 

18 is amended— 

19 (1) in subsection (a)(5)(C), by striking ‘‘103’’ 

20 and all that follows through ‘‘or mortgage origi21 nator’’ and inserting ‘‘103(bb)(4)’’; and 

22 (2) in subsection (b)(2)(C)(i), by striking ‘‘103’’ 

23 and all that follows through ‘‘or mortgage origi24 nator)’’ and inserting ‘‘103(bb)(4)’’. 


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1 SEC. 303. RULEMAKING. 

2 Not later than the end of the 90-day period beginning 

3 on the date of the enactment of this Act, the Bureau of 

4 Consumer Financial Protection shall issue final regula5 tions to carry out the amendments made by this Act, and 

6 such regulations shall be effective upon issuance. 

7 TITLE IV—BUSINESS RISK MITI8 GATION AND PRICE STA9 BILIZATION 

10 SEC. 401. SHORT TITLE. 

11 This title may be cited as the ‘‘Business Risk Mitiga12 tion and Price Stabilization Act of 2013’’. 

13 SEC. 402. MARGIN REQUIREMENTS. 

14 (a) COMMODITY EXCHANGE ACT AMENDMENT.— 

15 Section 4s(e) of the Commodity Exchange Act (7 U.S.C. 

16 6s(e)), as added by section 731 of the Dodd-Frank Wall 

17 Street Reform and Consumer Protection Act, is amended 

18 by adding at the end the following new paragraph: 

19 ‘‘(4) APPLICABILITY WITH RESPECT TO

20 COUNTERPARTIES.—The requirements of paragraphs 

21 (2)(A)(ii) and (2)(B)(ii), including the initial and 

22 variation margin requirements imposed by rules 

23 adopted pursuant to paragraphs (2)(A)(ii) and 

24 (2)(B)(ii), shall not apply to a swap in which a 

25 counterparty qualifies for an exception under section 

26 2(h)(7)(A), or an exemption issued under section 


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1 4(c)(1) from the requirements of section 2(h)(1)(A) 

2 for cooperative entities as defined in such exemption, 

3 or satisfies the criteria in section 2(h)(7)(D).’’. 

4 (b) SECURITIES EXCHANGE ACT AMENDMENT.— 

5 Section 15F(e) of the Securities Exchange Act of 1934 

6 (15 U.S.C. 78o–10(e)), as added by section 764(a) of the 

7 Dodd-Frank Wall Street Reform and Consumer Protec8 tion Act, is amended by adding at the end the following 

9 new paragraph: 

10 ‘‘(4) APPLICABILITY WITH RESPECT TO

11 COUNTERPARTIES.—The requirements of paragraphs 

12 (2)(A)(ii) and (2)(B)(ii) shall not apply to a secu13 rity-based swap in which a counterparty qualifies for 

14 an exception under section 3C(g)(1) or satisfies the 

15 criteria in section 3C(g)(4).’’. 

16 SEC. 403. IMPLEMENTATION. 

17 The amendments made by this title to the Commodity 

18 Exchange Act shall be implemented— 

19 (1) without regard to— 

20 (A) chapter 35 of title 44, United States 

21 Code; and 

22 (B) the notice and comment provisions of 

23 section 553 of title 5, United States Code; 


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1 (2) through the promulgation of an interim 

2 final rule, pursuant to which public comment will be 

3 sought before a final rule is issued; and 

4 (3) such that paragraph (1) shall apply solely 

5 to changes to rules and regulations, or proposed 

6 rules and regulations, that are limited to and di7 rectly a consequence of such amendments. 

Æ 


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