I 

115TH CONGRESS 

2D SESSION H. R. 7383 

To break up large financial entities. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 20, 2018 

Mr. SHERMAN introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To break up large financial entities. 

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 ‘‘Too Big To Fail, Too 

5 Big To Exist Act’’. 

6 SEC. 2. TOO BIG TO FAIL, TOO BIG TO EXIST. 

7 (a) DEFINITIONS.—In this section— 

8 (1) the term ‘‘covered entity’’— 

9 (A) means a financial institution, as de10 fined in section 803 of the Payment, Clearing, 

11 and Settlement Supervision Act of 2010 (12 

12 U.S.C. 5462); and 


pbinns on DSK79D2C42PROD with BILLS
2 

•HR 7383 IH

1 (B) does not include— 

2 (i) a Farm Credit System institution 

3 chartered under and subject to the provi4 sions of the Farm Credit Act of 1971 (12 

5 U.S.C. 2001 et seq.); 

6 (ii) a governmental entity; or 

7 (iii) a regulated entity, as defined in 

8 section 1303 of the Federal Housing En9 terprises Financial Safety and Soundness 

10 Act of 1992 (12 U.S.C. 4502); and 

11 (2) the term ‘‘gross domestic product’’ means 

12 gross domestic product as calculated by the Bureau 

13 of Economic Analysis of the Department of Com14 merce. 

15 (b) LIMITATIONS.— 

16 (1) IN GENERAL.— 

17 (A) IN GENERAL.—On February 1, May 1, 

18 August 1, and November 1 of each year, no 

19 covered entity may be a ‘‘Too Big To Exist In20 stitution’’. 

21 (B) ENTITIES REQUIRED TO FILE FED22 ERAL RESERVE SYSTEMIC RISK PROFILE

23 FORM.—If, on February 1, May 1, August 1, or 

24 November 1 of any year, a covered entity has 

25 a total exposure, as reported by the covered enVerDate Sep 11 2014 00:57 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7383.IH H7383

pbinns on DSK79D2C42PROD with BILLS
3 

•HR 7383 IH

1 tity on the Federal Reserve form required to 

2 monitor the systemic risk profile of financial in3 stitutions for the previous reporting period, 

4 equal to or greater than 3 percent of the most 

5 recent estimate for annual gross domestic prod6 uct of the United States (in current dollars) for 

7 the previous calendar year, the Financial Sta8 bility Oversight Council may designate such 

9 covered entity as a ‘‘Too Big To Exist Institu10 tion’’. 

11 (C) OTHER REPORTING.— 

12 (i) IN GENERAL.—If a covered entity 

13 is not required to complete the Federal Re14 serve form required to monitor the sys15 temic risk profile of financial institutions, 

16 the Financial Stability Oversight Council 

17 shall design and assign a quarterly report18 ing form as appropriate for each covered 

19 entity with total assets greater than 

20 $50,000,000,000 that reflects the total li21 ability to U.S. persons of the financial in22 stitution, within 18 months of the date of 

23 enactment of this Act. 

24 (ii) DESIGNATION OF COMPANIES

25 WITH TOTAL LIABILITY TO U.S. PERSONS


pbinns on DSK79D2C42PROD with BILLS
4 

•HR 7383 IH

1 BETWEEN 3 TO 4 PERCENT OF GDP.—If, 

2 on February 1, May 1, August 1, or No3 vember 1 of any year, a covered entity de4 scribed under clause (i) has a total liability 

5 to U.S. persons, as reported by the covered 

6 entity on the form described under clause 

7 (i), equal to or greater than 3 percent but 

8 less than 4 percent of the most recent esti9 mate for annual gross domestic product of 

10 the United States (in current dollars) for 

11 the previous calendar year, the Financial 

12 Stability Oversight Council may designate 

13 such covered entity as a ‘‘Too Big To 

14 Exist Institution’’, if the Council deter15 mines such designation is appropriate. 

16 (iii) DESIGNATION OF COMPANIES

17 WITH TOTAL LIABILITY TO U.S. PERSONS

18 OVER 4 PERCENT OF GDP.—If, on Feb19 ruary 1, May 1, August 1, or November 1 

20 of any year, a covered entity described 

21 under clause (i) has a total liability to U.S. 

22 persons, as reported by the covered entity 

23 on the form described under clause (i), 

24 greater than 4 percent of the most recent 

25 estimate for annual gross domestic product 


pbinns on DSK79D2C42PROD with BILLS
5 

•HR 7383 IH

1 of the United States (in current dollars) 

2 for the previous calendar year, the Finan3 cial Stability Oversight Council may des4 ignate such covered entity as a ‘‘Too Big 

5 To Exist Institution’’, if the Council deter6 mines such designation is appropriate. 

7 (iv) EXEMPTIONS WHEN CALCU8 LATING LIABILITIES.—In calculating a cov9 ered entity’s total liability to U.S. persons 

10 under this subparagraph, such calculation 

11 shall not include— 

12 (I) any assets under management 

13 by the covered entity; and 

14 (II) with respect to a covered en15 tity that is an insurance company, any 

16 liabilities to pay out an insurance 

17 claim, so long as the insurance com18 pany meets all capital standards set 

19 by any State that regulates the insur20 ance company. 

21 (2) RESTRUCTURING.— 

22 (A) SUPERVISION.—The Vice Chair for 

23 Supervision of the Board of Governors of the 

24 Federal Reserve System, or during any period 

25 in which that position is vacant, the Chair of 


pbinns on DSK79D2C42PROD with BILLS
6 

•HR 7383 IH

1 the Board of Governors of the Federal Reserve 

2 System, shall require and supervise a ‘‘Too Big 

3 To Exist Institution’’ to restructure such that 

4 the entity is no longer a ‘‘Too Big To Exist In5 stitution’’ not later than 2 years after the date 

6 on which the entity was designated as a ‘‘Too 

7 Big To Exist Institution’’. 

8 (B) SUBSEQUENT REQUIREMENTS.—After 

9 the date on which a covered entity is required 

10 to restructure under subparagraph (A), the 

11 Vice Chair for Supervision of the Board of Gov12 ernors of the Federal Reserve System or, dur13 ing any period in which that position is vacant, 

14 the Chair of the Board of Governors of the 

15 Federal Reserve System, shall require and su16 pervise any ‘‘Too Big To Exist Institution’’ to 

17 restructure such that the entity is no longer a 

18 ‘‘Too Big To Exist Institution’’ not later than 

19 1 year after the entity is again designated as a 

20 ‘‘Too Big To Exist Institution’’. 

21 (c) PROHIBITION AGAINST USE OF FEDERAL RE22 SERVE FINANCING.—Notwithstanding any other provision 

23 of law (including regulations), any ‘‘Too Big To Exist In24 stitution’’ may not use or otherwise have access to ad25 vances from any Federal Reserve credit facility, the FedVerDate Sep 11 2014 00:57 Dec 27, 2018 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7383.IH H7383

pbinns on DSK79D2C42PROD with BILLS
7 

•HR 7383 IH

1 eral Reserve discount window, or any other program or 

2 facility made available under the Federal Reserve Act (12 

3 U.S.C. 221 et seq.), including any asset purchases, tem4 porary or bridge loans, government investments in debt 

5 or equity, or capital injections from any Federal institu6 tion. 

7 (d) PROHIBITION ON USE OF INSURED DEPOSITS.— 

8 (1) IN GENERAL.—Any ‘‘Too Big To Exist In9 stitution’’ that is an insured depository institution, 

10 or owns such an institution, may not use any in11 sured deposit amounts to fund— 

12 (A) any activity relating to hedging that is 

13 not directly related to commercial banking ac14 tivity at the insured bank; 

15 (B) any creation or use of derivatives for 

16 speculative purposes; 

17 (C) any activity related to the dealing of 

18 derivatives; 

19 (D) any creation of, or lending against, 

20 new or existing forms of structured or struc21 tured derivatives products, including collatera22 lized debt obligations, collateralized loan obliga23 tions, and synthetic derivatives of collateralized 

24 debt obligations and collateralized loan obliga25 tions; or 


pbinns on DSK79D2C42PROD with BILLS
8 

•HR 7383 IH

1 (E) any other form of speculative activity 

2 that regulators specify. 

3 (2) RISK OF LOSS.—A ‘‘Too Big To Exist Insti4 tution’’ may not conduct any activity listed in para5 graph (1) in such a manner that— 

6 (A) puts insured deposits at risk; or 

7 (B) creates a risk of loss to the Deposit 

8 Insurance Fund. 

9 (e) REPORT; TESTIMONY.—The Vice Chair for Su10 pervision of the Board of Governors of the Federal Re11 serve System, or during any period in which that position 

12 is vacant, the Chair of the Board of Governors of the Fed13 eral Reserve System, and the Chair of the Financial Sta14 bility Oversight Council shall annually testify before the 

15 Committee on Banking, Housing, and Urban Affairs of 

16 the Senate and the Committee on Financial Services of 

17 the House of Representatives and submit to those commit18 tees an annual report the restructuring and designation 

19 under subsection (b)(2). 

20 (f) EFFECTIVE DATE.—Subsections (c) and (d) shall 

21 apply to a covered entity 90 days after the date on which 

22 a covered entity is designated as a ‘‘Too Big To Exist 

23 Institution’’. 

Æ 


pbinns on DSK79D2C42PROD with BILLS