II 

Calendar No. 349 

111TH CONGRESS 

2D SESSION S. 3217 

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. 

IN THE SENATE OF THE UNITED STATES 

APRIL 15, 2010 

Mr. DODD, from the Committee on Banking, Housing, and Urban Affairs, reported the following original bill; which was read twice and placed on the 

calendar 

A BILL 

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. 

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


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Restoring American Financial Stability Act of 2010’’. 

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

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Severability. 

Sec. 4. Effective date. 

TITLE I—FINANCIAL STABILITY 

Sec. 101. Short title. 

Sec. 102. Definitions. 

Subtitle A—Financial Stability Oversight Council 

Sec. 111. Financial Stability Oversight Council established. 

Sec. 112. Council authority. 

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

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

of Governors. 

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

companies supervised by the Board of Governors and certain 

bank holding companies. 

Sec. 116. Reports. 

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

Sec. 118. Council funding. 

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

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

stability purposes. 

Sec. 121. Mitigation of risks to financial stability. 

Subtitle B—Office of Financial Research 

Sec. 151. Definitions. 

Sec. 152. Office of Financial Research established. 

Sec. 153. Purpose and duties of the Office. 

Sec. 154. Organizational structure; responsibilities of primary programmatic 

units. 

Sec. 155. Funding. 

Sec. 156. Transition oversight. 

Subtitle C—Additional Board of Governors Authority for Certain Nonbank 

Financial Companies and Bank Holding Companies 

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


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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. 

TITLE II—ORDERLY LIQUIDATION AUTHORITY 

Sec. 201. Definitions. 

Sec. 202. Orderly Liquidation Authority Panel. 

Sec. 203. Systemic risk determination. 

Sec. 204. Orderly liquidation. 

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

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

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

Sec. 208. Dismissal and exclusion of other actions. 

Sec. 209. Rulemaking; non-conflicting law. 

Sec. 210. Powers and duties of the corporation. 

Sec. 211. Miscellaneous provisions. 

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. 

Sec. 322. Transfer of employees. 

Sec. 323. Property transferred. 

Sec. 324. Funds transferred. 

Sec. 325. Disposition of affairs. 

Sec. 326. Continuation of services. 

Subtitle C—Federal Deposit Insurance Corporation 


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Sec. 331. Deposit insurance reforms. 

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

Subtitle D—Termination of Federal Thrift Charter 

Sec. 341. Termination of Federal savings associations. 

Sec. 342. Branching. 

TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND 

OTHERS 

Sec. 401. Short title. 

Sec. 402. Definitions. 

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

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

Sec. 405. Disclosure provision eliminated. 

Sec. 406. Clarification of rulemaking authority. 

Sec. 407. Exemption of venture capital fund advisers. 

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

Sec. 409. Family offices. 

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

Sec. 411. Custody of client assets. 

Sec. 412. Adjusting the accredited investor standard for inflation. 

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

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

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

Sec. 416. Transition period. 

TITLE V—INSURANCE 

Subtitle A—Office of National Insurance 

Sec. 501. Short title. 

Sec. 502. Establishment of Office of National Insurance. 

Subtitle B—State-based Insurance Reform 

Sec. 511. Short title. 

Sec. 512. Effective date. 

PART I—NONADMITTED INSURANCE

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

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

Sec. 523. Participation in national producer database. 

Sec. 524. Uniform standards for surplus lines eligibility. 

Sec. 525. Streamlined application for commercial purchasers. 

Sec. 526. GAO study of nonadmitted insurance market. 

Sec. 527. Definitions. 

PART II—REINSURANCE

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

Sec. 532. Regulation of reinsurer solvency. 

Sec. 533. Definitions. 


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

Sec. 612. Restriction on conversions of troubled banks. 

Sec. 613. De novo branching into States. 

Sec. 614. Lending limits to insiders. 

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

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

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

Sec. 618. Securities holding companies. 

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

companies. 

Sec. 620. Concentration limits on large financial firms. 

TITLE VII—IMPROVEMENTS TO REGULATION OF OVER-THECOUNTER DERIVATIVES MARKETS 

Sec. 701. Short title. 

Sec. 702. Findings and purposes. 

Subtitle A—Regulation of Swap Markets 

Sec. 711. Definitions. 

Sec. 712. Jurisdiction. 

Sec. 713. Clearing. 

Sec. 714. Public reporting of aggregate swap data. 

Sec. 715. Swap repositories. 

Sec. 716. Reporting and recordkeeping. 

Sec. 717. Registration and regulation of swap dealers and major swap participants. 

Sec. 718. Segregation of assets held as collateral in swap transactions. 

Sec. 719. Conflicts of interest. 

Sec. 720. Alternative swap execution facilities. 


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Sec. 721. Derivatives transaction execution facilities and exempt boards of 

trade. 

Sec. 722. Designated contract markets. 

Sec. 723. Margin. 

Sec. 724. Position limits. 

Sec. 725. Enhanced authority over registered entities. 

Sec. 726. Foreign boards of trade. 

Sec. 727. Legal certainty for swaps. 

Sec. 728. FDICIA amendments. 

Sec. 729. Primary enforcement authority. 

Sec. 730. Enforcement. 

Sec. 731. Retail commodity transactions. 

Sec. 732. Large swap trader reporting. 

Sec. 733. Other authority. 

Sec. 734. Antitrust. 

Subtitle B—Regulation of Security-Based Swap Markets 

Sec. 751. Definitions under the Securities Exchange Act of 1934. 

Sec. 752. Repeal of prohibition on regulation of security-based swaps. 

Sec. 753. Amendments to the Securities Exchange Act of 1934. 

Sec. 754. Segregation of assets held as collateral in security-based swap transactions. 

Sec. 755. Reporting and recordkeeping. 

Sec. 756. State gaming and bucket shop laws. 

Sec. 757. Amendments to the Securities Act of 1933; treatment of securitybased swaps. 

Sec. 758. Other authority. 

Sec. 759. Jurisdiction. 

Subtitle C—Other Provisions 

Sec. 761. International harmonization. 

Sec. 762. Interagency cooperation. 

Sec. 763. Study and report on implementation. 

Sec. 764. Recommendations for changes to insolvency laws. 

Sec. 765. Effective date. 

TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT 

SUPERVISION 

Sec. 801. Short title. 

Sec. 802. Findings and purposes. 

Sec. 803. Definitions. 

Sec. 804. Designation of systemic importance. 

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

payment, clearing, or settlement activities. 

Sec. 806. Operations of designated financial market utilities. 

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

market utilities. 

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

subject to standards for designated activities. 

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

Sec. 810. Rulemaking. 

Sec. 811. Other authority. 

Sec. 812. Effective date. 


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TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO 

THE REGULATION OF SECURITIES 

Subtitle A—Increasing Investor Protection 

Sec. 911. Investor Advisory Committee established. 

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

testing. 

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

investment advisers. 

Sec. 914. Office of the Investor Advocate. 

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

Sec. 916. Study regarding financial literacy among investors. 

Sec. 917. Study regarding mutual fund advertising. 

Sec. 918. Clarification of Commission authority to require investor disclosures 

before purchase of investment products and services. 

Sec. 919. Study on conflicts of interest. 

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

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

Subtitle B—Increasing Regulatory Enforcement and Remedies 

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

Sec. 922. Whistleblower protection. 

Sec. 923. Conforming amendments for whistleblower protection. 

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

Sec. 925. Collateral bars. 

Sec. 926. Authority of State regulators over Regulation D offerings. 

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

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

does not apply to State-registered advisers. 

Sec. 929. Unlawful margin lending. 

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

traded companies. 

Sec. 929B. FAIR Fund amendments. 

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

Subtitle C—Improvements to the Regulation of Credit Rating Agencies 

Sec. 931. Findings. 

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

recognized statistical rating organizations. 

Sec. 933. State of mind in private actions. 

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

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

rating decisions. 

Sec. 936. Qualification standards for credit rating analysts. 

Sec. 937. Timing of regulations. 

Sec. 938. Universal ratings symbols. 

Sec. 939. Government Accountability Office study and Federal agency review of 

required uses of nationally recognized statistical rating organization ratings. 

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

rating agency independence. 


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Sec. 939B. Government Accountability Office study on alternative business 

models. 

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

Subtitle D—Improvements to the Asset-Backed Securitization Process 

Sec. 941. Regulation of credit risk retention. 

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

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

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

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

issues. 

Subtitle E—Accountability and Executive Compensation 

Sec. 951. Shareholder vote on executive compensation disclosures. 

Sec. 952. Compensation committee independence. 

Sec. 953. Executive compensation disclosures. 

Sec. 954. Recovery of erroneously awarded compensation. 

Sec. 955. Disclosure regarding employee and director hedging. 

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

Sec. 957. Voting by brokers. 

Subtitle F—Improvements to the Management of the Securities and 

Exchange Commission 

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

Sec. 962. Triennial report on personnel management. 

Sec. 963. Annual financial controls audit. 

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

Sec. 965. Compliance examiners. 

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

Subtitle G—Strengthening Corporate Governance 

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

Sec. 972. Proxy access. 

Sec. 973. Disclosures regarding chairman and CEO structures. 

Subtitle H—Municipal Securities 

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

MSRB. 

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

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

markets. 

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

Sec. 979. Commission Office of Municipal Securities. 

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

and Other Matters 

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

Sec. 982. Oversight of brokers and dealers. 

Sec. 983. Portfolio margining. 


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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. 

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. Changes in appointment of certain Inspectors General. 

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

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

TITLE X—BUREAU OF CONSUMER FINANCIAL PROTECTION 

Sec. 1001. Short title. 

Sec. 1002. Definitions. 

Subtitle A—Bureau of Consumer Financial Protection 

Sec. 1011. Establishment of the Bureau. 

Sec. 1012. Executive and administrative powers. 

Sec. 1013. Administration. 

Sec. 1014. Consumer Advisory Board. 

Sec. 1015. Coordination. 

Sec. 1016. Appearances before and reports to Congress. 

Sec. 1017. Funding; penalties and fines. 

Sec. 1018. Effective date. 

Subtitle B—General Powers of the Bureau 

Sec. 1021. Purpose, objectives, and functions. 

Sec. 1022. Rulemaking authority. 

Sec. 1023. Review of Bureau regulations. 

Sec. 1024. Supervision of nondepository covered persons. 

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

unions. 

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

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

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

Sec. 1029. Effective date. 

Subtitle C—Specific Bureau Authorities 

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

Sec. 1032. Disclosures. 

Sec. 1033. Consumer rights to access information. 

Sec. 1034. Response to consumer complaints and inquiries. 

Sec. 1035. Private education loan ombudsman. 

Sec. 1036. Prohibited acts. 

Sec. 1037. Effective date. 


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Subtitle D—Preservation of State Law 

Sec. 1041. Relation to State law. 

Sec. 1042. Preservation of enforcement powers of States. 

Sec. 1043. Preservation of existing contracts. 

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

clarified. 

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

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

subsidiaries clarified. 

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

Sec. 1048. Effective date. 

Subtitle E—Enforcement Powers 

Sec. 1051. Definitions. 

Sec. 1052. Investigations and administrative discovery. 

Sec. 1053. Hearings and adjudication proceedings. 

Sec. 1054. Litigation authority. 

Sec. 1055. Relief available. 

Sec. 1056. Referrals for criminal proceedings. 

Sec. 1057. Employee protection. 

Sec. 1058. Effective date. 

Subtitle F—Transfer of Functions and Personnel; Transitional Provisions 

Sec. 1061. Transfer of consumer financial protection functions. 

Sec. 1062. Designated transfer date. 

Sec. 1063. Savings provisions. 

Sec. 1064. Transfer of certain personnel. 

Sec. 1065. Incidental transfers. 

Sec. 1066. Interim authority of the Secretary. 

Sec. 1067. Transition oversight. 

Subtitle G—Regulatory Improvements 

Sec. 1071. Collection of deposit account data. 

Sec. 1072. Small business data collection. 

Sec. 1073. GAO study on the effectiveness and impact of various appraisal 

methods. 

Sec. 1074. Prohibition on certain prepayment penalties. 

Sec. 1075. Assistance for economically vulnerable individuals and families. 

Sec. 1076. Remittance transfers. 

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. 


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

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

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

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

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

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

1994. 

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

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

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

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

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

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

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

Prevention Act. 

Sec. 1102. Amendments to the Paperwork Reduction Act. 

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

Sec. 1104. Effective date. 

TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS 

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

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

Sec. 1153. Public access to information. 

Sec. 1154. Liquidity event determination. 

Sec. 1155. Emergency financial stabilization. 

Sec. 1156. Additional related amendments. 

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

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

regulation policy. 

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. 

1 SEC. 2. DEFINITIONS. 

2 As used in this Act, the following definitions shall 

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


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

2 any company that controls, is controlled by, or is 

3 under common control with another company. 

4 (2) APPROPRIATE FEDERAL BANKING AGEN5 CY.—On and after the transfer date, the term ‘‘ap6 propriate Federal banking agency’’ has the same 

7 meaning as in section 3(q) of the Federal Deposit 

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

9 title III. 

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

11 of Governors’’ means the Board of Governors of the 

12 Federal Reserve System. 

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

14 Bureau of Consumer Financial Protection estab15 lished under title X. 

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

17 means the Securities and Exchange Commission, ex18 cept in the context of the Commodity Futures Trad19 ing Commission. 

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

21 means the Federal Deposit Insurance Corporation. 

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

23 Financial Stability Oversight Council established 

24 under title I. 


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

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

3 State-chartered credit union, as those terms are de4 fined in section 101 of the Federal Credit Union Act 

5 (12 U.S.C. 1752). 

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

7 (A) ‘‘Federal banking agency’’ means, indi8 vidually, the Board of Governors, the Office of 

9 the Comptroller of the Currency, and the Cor10 poration; and 

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

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

13 collectively. 

14 (10) FUNCTIONALLY REGULATED SUB15 SIDIARY.—The term ‘‘functionally regulated sub16 sidiary’’ has the same meaning as in section 5(c)(5) 

17 of the Bank Holding Company Act of 1956 (12 

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

19 (11) PRIMARY FINANCIAL REGULATORY AGEN20 CY.—The term ‘‘primary financial regulatory agen21 cy’’ means— 

22 (A) the appropriate Federal banking agen23 cy, with respect to institutions described in sec24 tion 3(q) of the Federal Deposit Insurance Act, 

25 except to the extent that an institution is or the 


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1 activities of an institution are otherwise subject 

2 to the jurisdiction of an agency listed in sub3 paragraph (B), (C), (D), or (E); 

4 (B) the Securities and Exchange Commis5 sion, with respect to— 

6 (i) any broker or dealer that is reg7 istered with the Commission under the Se8 curities Exchange Act of 1934; 

9 (ii) any investment company that is 

10 registered with the Commission under the 

11 Investment Company Act of 1940; 

12 (iii) any investment adviser that is 

13 registered with the Commission under the 

14 Investment Advisers Act of 1940, with re15 spect to the investment advisory activities 

16 of such company and activities that are in17 cidental to such advisory activities; and 

18 (iv) any clearing agency registered 

19 with the Commission under the Securities 

20 Exchange Act of 1934; 

21 (C) the Commodity Futures Trading Com22 mission, with respect to any futures commission 

23 merchant, any commodity trading adviser, and 

24 any commodity pool operator registered with 

25 the Commodity Futures Trading Commission 


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1 under the Commodity Exchange Act, with re2 spect to the commodities activities of such enti3 ty and activities that are incidental to such 

4 commodities activities; 

5 (D) the State insurance authority of the 

6 State in which an insurance company is domi7 ciled, with respect to the insurance activities 

8 and activities that are incidental to such insur9 ance activities of an insurance company that is 

10 subject to supervision by the State insurance 

11 authority under State insurance law; and 

12 (E) the Federal Housing Finance Agency, 

13 with respect to Federal Home Loan Banks or 

14 the Federal Home Loan Bank System, and 

15 with respect to the Federal National Mortgage 

16 Association or the Federal Home Loan Mort17 gage Corporation. 

18 (12) PRUDENTIAL STANDARDS.—The term 

19 ‘‘prudential standards’’ means enhanced supervision 

20 and regulatory standards developed by the Board of 

21 Governors under section 115 or 165. 

22 (13) SECRETARY.—The term ‘‘Secretary’’ 

23 means the Secretary of the Treasury. 

24 (14) SECURITIES TERMS.—The— 


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1 (A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’, 

2 ‘‘nationally recognized statistical ratings organi3 zation’’, ‘‘security’’, and ‘‘securities laws’’ have 

4 the same meanings as in section 3 of the Secu5 rities Exchange Act of 1934 (15 U.S.C. 78c); 

6 (B) term ‘‘investment adviser’’ has the 

7 same meaning as in section 202 of the Invest8 ment Advisers Act of 1940 (15 U.S.C. 80b–2); 

9 and 

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

11 same meaning as in section 3 of the Investment 

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

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

14 State, commonwealth, territory, or possession of the 

15 United States, the District of Columbia, the Com16 monwealth of Puerto Rico, the Commonwealth of the 

17 Northern Mariana Islands, American Samoa, Guam, 

18 or the United States Virgin Islands. 

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

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

21 (17) OTHER INCORPORATED DEFINITIONS.— 

22 (A) FEDERAL DEPOSIT INSURANCE ACT.— 

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

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

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


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

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

3 ‘‘including’’, ‘‘insured branch’’, ‘‘insured deposi4 tory institution’’, ‘‘national member bank’’, 

5 ‘‘national nonmember bank’’, ‘‘savings associa6 tion’’, ‘‘State bank’’, ‘‘State depository institu7 tion’’, ‘‘State member bank’’, ‘‘State non8 member bank’’, ‘‘State savings association’’, 

9 and ‘‘subsidiary’’ have the same meanings as in 

10 section 3 of the Federal Deposit Insurance Act 

11 (12 U.S.C. 1813). 

12 (B) HOLDING COMPANIES.—The term— 

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

14 same meaning as in section 2 of the Bank 

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

16 1841); 

17 (ii) ‘‘financial holding company’’ has 

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

19 Bank Holding Company Act of 1956 (12 

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

21 (iii) ‘‘savings and loan holding com22 pany’’ has the same meaning as in section 

23 10 of the Home Owners’ Loan Act (12 

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


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1 SEC. 3. SEVERABILITY. 

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

3 this Act, or the application of such provision or amend4 ment to any person or circumstance is held to be unconsti5 tutional, the remainder of this Act, the amendments made 

6 by this Act, and the application of the provisions of such 

7 to any person or circumstance shall not be affected there8 by. 

9 SEC. 4. EFFECTIVE DATE. 

10 Except as otherwise specifically provided in this Act 

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

12 amendments shall take effect 1 day after the date of en13 actment of this Act. 

14 TITLE I—FINANCIAL STABILITY 

15 SEC. 101. SHORT TITLE. 

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

17 of 2010’’. 

18 SEC. 102. DEFINITIONS. 

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

20 the context otherwise requires, the following definitions 

21 shall apply: 

22 (1) BANK HOLDING COMPANY.—The term 

23 ‘‘bank holding company’’ has the same meaning as 

24 in section 2 of the Bank Holding Company Act of 

25 1956 (12 U.S.C. 1841). A foreign bank or company 

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1 poses of the Bank Holding Company Act of 1956, 

2 pursuant to section 8(a) of the International Bank3 ing Act of 1978 (12 U.S.C. 3106(a)), shall be treat4 ed as a bank holding company for purposes of this 

5 title. 

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

7 means the Chairperson of the Council. 

8 (3) MEMBER AGENCY.—The term ‘‘member 

9 agency’’ means an agency represented by a voting 

10 member of the Council. 

11 (4) NONBANK FINANCIAL COMPANY DEFINI12 TIONS.— 

13 (A) FOREIGN NONBANK FINANCIAL COM14 PANY.—The term ‘‘foreign nonbank financial 

15 company’’ means a company (other than a com16 pany that is, or is treated in the United States 

17 as, a bank holding company or a subsidiary 

18 thereof) that is— 

19 (i) incorporated or organized in a 

20 country other than the United States; and 

21 (ii) substantially engaged in, including 

22 through a branch in the United States, ac23 tivities in the United States that are finan24 cial in nature (as defined in section 4(k) of 

25 the Bank Holding Company Act of 1956). 


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1 (B) U.S. NONBANK FINANCIAL COM2 PANY.—The term ‘‘U.S. nonbank financial com3 pany’’ means a company (other than a bank 

4 holding company or a subsidiary thereof, or a 

5 Farm Credit System institution chartered and 

6 subject to the provisions of the Farm Credit 

7 Act of 1971 (12 U.S.C. 2001 et. seq.)) that 

8 is— 

9 (i) incorporated or organized under 

10 the laws of the United States or any State; 

11 and 

12 (ii) substantially engaged in activities 

13 in the United States that are financial in 

14 nature (as defined in section 4(k) of the 

15 Bank Holding Company Act of 1956). 

16 (C) NONBANK FINANCIAL COMPANY.—The 

17 term ‘‘nonbank financial company’’ means a 

18 U.S. nonbank financial company and a foreign 

19 nonbank financial company. 

20 (D) NONBANK FINANCIAL COMPANY SU21 PERVISED BY THE BOARD OF GOVERNORS.— 

22 The term ‘‘nonbank financial company super23 vised by the Board of Governors’’ means a 

24 nonbank financial company that the Council 


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1 has determined under section 113 shall be su2 pervised by the Board of Governors. 

3 (5) OFFICE OF FINANCIAL RESEARCH.—The 

4 term ‘‘Office of Financial Research’’ means the of5 fice established under section 152. 

6 (6) SIGNIFICANT INSTITUTIONS.—The terms 

7 ‘‘significant nonbank financial company’’ and ‘‘sig8 nificant bank holding company’’ have the meanings 

9 given those terms by rule of the Board of Governors. 

10 (b) DEFINITIONAL CRITERIA.—The Board of Gov11 ernors shall establish, by regulation, the criteria to deter12 mine whether a company is substantially engaged in activi13 ties in the United States that are financial in nature (as 

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

15 of 1956) for purposes of the definitions of the terms ‘‘U.S. 

16 nonbank financial company’’ and ‘‘foreign nonbank finan17 cial company’’ under subsection (a)(4). 

18 (c) FOREIGN NONBANK FINANCIAL COMPANIES.— 

19 For purposes of the authority of the Board of Governors 

20 under this title with respect to foreign nonbank financial 

21 companies, references in this title to ‘‘company’’ or ‘‘sub22 sidiary’’ include only the United States activities and sub23 sidiaries of such foreign company. 


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1 Subtitle A—Financial Stability 

2 Oversight Council 

3 SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ES4 TABLISHED. 

5 (a) ESTABLISHMENT.—Effective on the date of en6 actment of this Act, there is established the Financial Sta7 bility Oversight Council. 

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

9 following members: 

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

11 who shall each have 1 vote on the Council shall be— 

12 (A) the Secretary of the Treasury, who 

13 shall serve as Chairperson of the Council; 

14 (B) the Chairman of the Board of Gov15 ernors; 

16 (C) the Comptroller of the Currency; 

17 (D) the Director of the Bureau; 

18 (E) the Chairman of the Commission; 

19 (F) the Chairperson of the Corporation; 

20 (G) the Chairperson of the Commodity Fu21 tures Trading Commission; 

22 (H) the Director of the Federal Housing 

23 Finance Agency; and 


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1 (I) an independent member appointed by 

2 the President, by and with the advice and con3 sent of the Senate, having insurance expertise. 

4 (2) NONVOTING MEMBERS.—The Director of 

5 the Office of Financial Research— 

6 (A) shall serve in an advisory capacity as 

7 a nonvoting member of the Council; and 

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

9 proceedings, meetings, discussions, or delibera10 tions of the Council. 

11 (c) TERMS; VACANCY.— 

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

13 Council shall serve for a term of 6 years. 

14 (2) VACANCY.—Any vacancy on the Council 

15 shall be filled in the manner in which the original 

16 appointment was made. 

17 (3) ACTING OFFICIALS MAY SERVE.—In the 

18 event of a vacancy in the office of the head of a 

19 member agency or department, and pending the ap20 pointment of a successor, or during the absence or 

21 disability of the head of a member agency or depart22 ment, the acting head of the member agency or de23 partment shall serve as a member of the Council in 

24 the place of that agency or department head. 


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1 (d) TECHNICAL AND PROFESSIONAL ADVISORY COM2 MITTEES.—The Council may appoint such special advi3 sory, technical, or professional committees as may be use4 ful in carrying out the functions of the Council, including 

5 an advisory committee consisting of State regulators, and 

6 the members of such committees may be members of the 

7 Council, or other persons, or both. 

8 (e) MEETINGS.— 

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

10 of the Chairperson or a majority of the members 

11 then serving, but not less frequently than quarterly. 

12 (2) RULES FOR CONDUCTING BUSINESS.—The 

13 Council shall adopt such rules as may be necessary 

14 for the conduct of the business of the Council. Such 

15 rules shall be rules of agency organization, proce16 dure, or practice for purposes of section 553 of title 

17 5, United States Code. 

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

19 shall make all decisions that it is authorized or required 

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

21 (g) NONAPPLICABILITY OF FACA.—The Federal Ad22 visory Committee Act (5 U.S.C. App.) shall not apply to 

23 the Council, or to any special advisory, technical, or pro24 fessional committee appointed by the Council, except that, 

25 if an advisory, technical, or professional committee has 


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1 one or more members who are not employees of or affili2 ated with the United States Government, the Council shall 

3 publish a list of the names of the members of such com4 mittee. 

5 (h) ASSISTANCE FROM FEDERAL AGENCIES.—Any 

6 department or agency of the United States may provide 

7 to the Council and any special advisory, technical, or pro8 fessional committee appointed by the Council, such serv9 ices, funds, facilities, staff, and other support services as 

10 the Council may determine advisable. 

11 (i) COMPENSATION OF MEMBERS.— 

12 (1) FEDERAL EMPLOYEE MEMBERS.—All mem13 bers of the Council who are officers or employees of 

14 the United States shall serve without compensation 

15 in addition to that received for their services as offi16 cers or employees of the United States. 

17 (2) COMPENSATION FOR NON-FEDERAL MEM18 BER.—Section 5314 of title 5, United States Code, 

19 is amended by adding at the end the following: 

20 ‘‘Independent Member of the Financial Stability 

21 Oversight Council (1).’’. 

22 (j) DETAIL OF GOVERNMENT EMPLOYEES.—Any em23 ployee of the Federal Government may be detailed to the 

24 Council without reimbursement, and such detail shall be 

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1 lege. An employee of the Federal Government detailed to 

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

3 the Council during the assignment to the Council, and 

4 shall be compensated by the department or agency from 

5 which the employee was detailed. 

6 SEC. 112. COUNCIL AUTHORITY. 

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

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

9 are— 

10 (A) to identify risks to the financial sta11 bility of the United States that could arise from 

12 the material financial distress or failure of 

13 large, interconnected bank holding companies or 

14 nonbank financial companies; 

15 (B) to promote market discipline, by elimi16 nating expectations on the part of shareholders, 

17 creditors, and counterparties of such companies 

18 that the Government will shield them from 

19 losses in the event of failure; and 

20 (C) to respond to emerging threats to the 

21 stability of the United States financial markets. 

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

23 with this title— 

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1 latory agencies and, if necessary to assess risks 

2 to the United States financial system, direct the 

3 Office of Financial Research to collect informa4 tion from bank holding companies and nonbank 

5 financial companies; 

6 (B) provide direction to, and request data 

7 and analyses from, the Office of Financial Re8 search to support the work of the Council; 

9 (C) monitor the financial services market10 place in order to identify potential threats to 

11 the financial stability of the United States; 

12 (D) facilitate information sharing and co13 ordination among the member agencies and 

14 other Federal and State agencies regarding do15 mestic financial services policy development, 

16 rulemaking, examinations, reporting require17 ments, and enforcement actions; 

18 (E) recommend to the member agencies 

19 general supervisory priorities and principles re20 flecting the outcome of discussions among the 

21 member agencies; 

22 (F) identify gaps in regulation that could 

23 pose risks to the financial stability of the 

24 United States; 


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1 (G) require supervision by the Board of 

2 Governors for nonbank financial companies that 

3 may pose risks to the financial stability of the 

4 United States in the event of their material fi5 nancial distress or failure, pursuant to section 

6 113; 

7 (H) make recommendations to the Board 

8 of Governors concerning the establishment of 

9 heightened prudential standards for risk-based 

10 capital, leverage, liquidity, contingent capital, 

11 resolution plans and credit exposure reports, 

12 concentration limits, enhanced public disclo13 sures, and overall risk management for 

14 nonbank financial companies and large, inter15 connected bank holding companies supervised 

16 by the Board of Governors; 

17 (I) identify systemically important finan18 cial market utilities and payment, clearing, and 

19 settlement activities (as that term is defined in 

20 title VIII), and require such utilities and activi21 ties to be subject to standards established by 

22 the Board of Governors; 

23 (J) make recommendations to primary fi24 nancial regulatory agencies to apply new or 

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1 cial activities or practices that could create or 

2 increase risks of significant liquidity, credit, or 

3 other problems spreading among bank holding 

4 companies, nonbank financial companies, and 

5 United States financial markets; 

6 (K) make determinations regarding exemp7 tions in title VII, where necessary; 

8 (L) provide a forum for— 

9 (i) discussion and analysis of emerg10 ing market developments and financial reg11 ulatory issues; and 

12 (ii) resolution of jurisdictional dis13 putes among the members of the Council; 

14 and 

15 (M) annually report to and testify before 

16 Congress on— 

17 (i) the activities of the Council; 

18 (ii) significant financial market devel19 opments and potential emerging threats to 

20 the financial stability of the United States; 

21 (iii) all determinations made under 

22 section 113 or title VIII, and the basis for 

23 such determinations; and 

24 (iv) recommendations— 


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1 (I) to enhance the integrity, effi2 ciency, competitiveness, and stability 

3 of United States financial markets; 

4 (II) to promote market discipline; 

5 and 

6 (III) to maintain investor con7 fidence. 

8 (b) AUTHORITY TO OBTAIN INFORMATION.— 

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

10 and may request the submission of, any data or in11 formation from the Office of Financial Research and 

12 member agencies, as necessary— 

13 (A) to monitor the financial services mar14 ketplace to identify potential risks to the finan15 cial stability of the United States; or 

16 (B) to otherwise carry out any of the pro17 visions of this title. 

18 (2) SUBMISSIONS BY THE OFFICE AND MEMBER

19 AGENCIES.—Notwithstanding any other provision of 

20 law, the Office of Financial Research and any mem21 ber agency are authorized to submit information to 

22 the Council. 

23 (3) FINANCIAL DATA COLLECTION.— 

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

25 through the Office of Financial Research, may 


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1 require the submission of periodic and other re2 ports from any nonbank financial company or 

3 bank holding company for the purpose of as4 sessing the extent to which a financial activity 

5 or financial market in which the nonbank finan6 cial company or bank holding company partici7 pates, or the nonbank financial company or 

8 bank holding company itself, poses a threat to 

9 the financial stability of the United States. 

10 (B) MITIGATION OF REPORT BURDEN.— 

11 Before requiring the submission of reports from 

12 any nonbank financial company or bank holding 

13 company that is regulated by a member agency 

14 or any primary financial regulatory agency, the 

15 Council, acting through the Office of Financial 

16 Research, shall coordinate with such agencies 

17 and shall, whenever possible, rely on informa18 tion available from the Office of Financial Re19 search or such agencies. 

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

21 GOVERNORS.—If the Council is unable to determine 

22 whether the financial activities of a nonbank finan23 cial company pose a threat to the financial stability 

24 of the United States, based on information or re25 ports obtained under paragraph (3), discussions with 


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1 management, and publicly available information, the 

2 Council may request the Board of Governors, and 

3 the Board of Governors is authorized, to conduct an 

4 examination of the nonbank financial company for 

5 the sole purpose of determining whether the 

6 nonbank financial company should be supervised by 

7 the Board of Governors for purposes of this title. 

8 (5) CONFIDENTIALITY.— 

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

10 of Financial Research, and the other member 

11 agencies shall maintain the confidentiality of 

12 any data, information, and reports submitted 

13 under this subsection and subtitle B. 

14 (B) RETENTION OF PRIVILEGE.—The sub15 mission of any nonpublicly available data or in16 formation under this subsection and subtitle B 

17 shall not constitute a waiver of, or otherwise af18 fect, any privilege arising under Federal or 

19 State law (including the rules of any Federal or 

20 State court) to which the data or information is 

21 otherwise subject. 

22 (C) FREEDOM OF INFORMATION ACT.— 

23 Section 552 of title 5, United States Code, in24 cluding the exceptions thereunder, shall apply 


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1 to any data or information submitted under this 

2 subsection and subtitle B. 

3 SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REG4 ULATION OF CERTAIN NONBANK FINANCIAL 

5 COMPANIES. 

6 (a) U.S. NONBANK FINANCIAL COMPANIES SUPER7 VISED BY THE BOARD OF GOVERNORS.— 

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

10 of the members then serving, including an affirma11 tive vote by the Chairperson, may determine that a 

12 U.S. nonbank financial company shall be supervised 

13 by the Board of Governors and shall be subject to 

14 prudential standards, in accordance with this title, if 

15 the Council determines that material financial dis16 tress at the U.S. nonbank financial company would 

17 pose a threat to the financial stability of the United 

18 States. 

19 (2) CONSIDERATIONS.—Each determination 

20 under paragraph (1) shall be based on a consider21 ation by the Council of— 

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

23 (B) the amount and nature of the financial 

24 assets of the company; 


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1 (C) the amount and types of the liabilities 

2 of the company, including the degree of reliance 

3 on short-term funding; 

4 (D) the extent and types of the off-bal5 ance-sheet exposures of the company; 

6 (E) the extent and types of the trans7 actions and relationships of the company with 

8 other significant nonbank financial companies 

9 and significant bank holding companies; 

10 (F) the importance of the company as a 

11 source of credit for households, businesses, and 

12 State and local governments and as a source of 

13 liquidity for the United States financial system; 

14 (G) the recommendation, if any, of a mem15 ber of the Council; 

16 (H) the operation of, or ownership interest 

17 in, any clearing, settlement, or payment busi18 ness of the company; 

19 (I) the extent to which— 

20 (i) assets are managed rather than 

21 owned by the company; and 

22 (ii) ownership of assets under man23 agement is diffuse; and 

24 (J) any other factors that the Council 

25 deems appropriate. 


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1 (b) FOREIGN NONBANK FINANCIAL COMPANIES SU2 PERVISED BY THE BOARD OF GOVERNORS.— 

3 (1) DETERMINATION.—The Council, on a nondelegable basis and by a vote of not fewer than 2 4 ⁄3

5 of the members then serving, including an affirma6 tive vote by the Chairperson, may determine that a 

7 foreign nonbank financial company that has sub8 stantial assets or operations in the United States 

9 shall be supervised by the Board of Governors and 

10 shall be subject to prudential standards in accord11 ance with this title, if the Council determines that 

12 material financial distress at the foreign nonbank fi13 nancial company would pose a threat to the financial 

14 stability of the United States. 

15 (2) CONSIDERATIONS.—Each determination 

16 under paragraph (1) shall be based on a consider17 ation by the Council of— 

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

19 (B) the amount and nature of the United 

20 States financial assets of the company; 

21 (C) the amount and types of the liabilities 

22 of the company used to fund activities and op23 erations in the United States, including the de24 gree of reliance on short-term funding; 


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

2 off-balance-sheet exposure of the company; 

3 (E) the extent and type of the transactions 

4 and relationships of the company with other 

5 significant nonbank financial companies and 

6 bank holding companies; 

7 (F) the importance of the company as a 

8 source of credit for United States households, 

9 businesses, and State and local governments, 

10 and as a source of liquidity for the United 

11 States financial system; 

12 (G) the recommendation, if any, of a mem13 ber of the Council; 

14 (H) the extent to which— 

15 (i) assets are managed rather than 

16 owned by the company; and 

17 (ii) ownership of assets under man18 agement is diffuse; and 

19 (I) any other factors that the Council 

20 deems appropriate. 

21 (c) REEVALUATION AND RESCISSION.—The Council 

22 shall— 

23 (1) not less frequently than annually, reevaluate 

24 each determination made under subsections (a) and 


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1 (b) with respect to each nonbank financial company 

2 supervised by the Board of Governors; and 

3 (2) rescind any such determination, if the 

Council, by a vote of not fewer than 2 4 ⁄3 of the mem5 bers then serving, including an affirmative vote by 

6 the Chairperson, determines that the nonbank finan7 cial company no longer meets the standards under 

8 subsection (a) or (b), as applicable. 

9 (d) NOTICE AND OPPORTUNITY FOR HEARING AND

10 FINAL DETERMINATION.— 

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

12 a nonbank financial company written notice of a 

13 proposed determination of the Council, including an 

14 explanation of the basis of the proposed determina15 tion of the Council, that such nonbank financial 

16 company shall be supervised by the Board of Gov17 ernors and shall be subject to prudential standards 

18 in accordance with this title. 

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

20 the date of receipt of any notice of a proposed deter21 mination under paragraph (1), the nonbank finan22 cial company may request, in writing, an oppor23 tunity for a written or oral hearing before the Coun24 cil to contest the proposed determination. Upon re25 ceipt of a timely request, the Council shall fix a time 


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1 (not later than 30 days after the date of receipt of 

2 the request) and place at which such company may 

3 appear, personally or through counsel, to submit 

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

5 Council, oral testimony and oral argument). 

6 (3) FINAL DETERMINATION.—Not later than 60 

7 days after the date of a hearing under paragraph 

8 (2), the Council shall notify the nonbank financial 

9 company of the final determination of the Council, 

10 which shall contain a statement of the basis for the 

11 decision of the Council. 

12 (4) NO HEARING REQUESTED.—If a nonbank 

13 financial company does not make a timely request 

14 for a hearing, the Council shall notify the nonbank 

15 financial company, in writing, of the final determina16 tion of the Council under subsection (a) or (b), as 

17 applicable, not later than 10 days after the date by 

18 which the company may request a hearing under 

19 paragraph (2). 

20 (e) EMERGENCY EXCEPTION.— 

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

22 modify the requirements of subsection (d) with re23 spect to a nonbank financial company, if the Council 

determines, by a vote of not fewer than 2 24 ⁄3 of the 

25 members then serving, including an affirmative vote 


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1 by the Chairperson, that such waiver or modification 

2 is necessary or appropriate to prevent or mitigate 

3 threats posed by the nonbank financial company to 

4 the financial stability of the United States. 

5 (2) NOTICE.—The Council shall provide notice 

6 of a waiver or modification under this paragraph to 

7 the nonbank financial company concerned as soon as 

8 practicable, but not later than 24 hours after the 

9 waiver or modification is granted. 

10 (3) OPPORTUNITY FOR HEARING.—The Council 

11 shall allow a nonbank financial company to request, 

12 in writing, an opportunity for a written or oral hear13 ing before the Council to contest a waiver or modi14 fication under this paragraph, not later than 10 

15 days after the date of receipt of notice of the waiver 

16 or modification by the company. Upon receipt of a 

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

18 than 15 days after the date of receipt of the request) 

19 and place at which the nonbank financial company 

20 may appear, personally or through counsel, to sub21 mit written materials (or, at the sole discretion of 

22 the Council, oral testimony and oral argument). 

23 (4) NOTICE OF FINAL DETERMINATION.—Not 

24 later than 30 days after the date of any hearing 

25 under paragraph (3), the Council shall notify the 


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1 subject nonbank financial company of the final de2 termination of the Council under this paragraph, 

3 which shall contain a statement of the basis for the 

4 decision of the Council. 

5 (f) CONSULTATION.—The Council shall consult with 

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

7 nonbank financial company or subsidiary of a nonbank fi8 nancial company that is being considered for supervision 

9 by the Board of Governors under this section before the 

10 Council makes any final determination with respect to 

11 such nonbank financial company under subsection (a), (b), 

12 or (c). 

13 (g) JUDICIAL REVIEW.—If the Council makes a final 

14 determination under this section with respect to a 

15 nonbank financial company, such nonbank financial com16 pany may, not later than 30 days after the date of receipt 

17 of the notice of final determination under subsection 

18 (d)(3) or (e)(4), bring an action in the United States dis19 trict court for the judicial district in which the home office 

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

21 United States District Court for the District of Columbia, 

22 for an order requiring that the final determination be re23 scinded, and the court shall, upon review, dismiss such ac24 tion or direct the final determination to be rescinded. Re25 view of such an action shall be limited to whether the final 


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1 determination made under this section was arbitrary and 

2 capricious. 

3 SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPA4 NIES SUPERVISED BY THE BOARD OF GOV5 ERNORS. 

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

7 Council determination under section 113 that a nonbank 

8 financial company is to be supervised by the Board of Gov9 ernors, such company shall register with the Board of 

10 Governors, on forms prescribed by the Board of Gov11 ernors, which shall include such information as the Board 

12 of Governors, in consultation with the Council, may deem 

13 necessary or appropriate to carry out this title. 

14 SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL 

15 STANDARDS FOR NONBANK FINANCIAL COM16 PANIES SUPERVISED BY THE BOARD OF GOV17 ERNORS AND CERTAIN BANK HOLDING COM18 PANIES. 

19 (a) IN GENERAL.— 

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

21 risks to the financial stability of the United States 

22 that could arise from the material financial distress 

23 or failure of large, interconnected financial institu24 tions, the Council may make recommendations to 

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1 ment and refinement of prudential standards and re2 porting and disclosure requirements applicable to 

3 nonbank financial companies supervised by the 

4 Board of Governors and large, interconnected bank 

5 holding companies, that— 

6 (A) are more stringent than those applica7 ble to other nonbank financial companies and 

8 bank holding companies that do not present 

9 similar risks to the financial stability of the 

10 United States; and 

11 (B) increase in stringency, based on the 

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

13 (2) LIMITATION ON BANK HOLDING COMPA14 NIES.—Any standards recommended under sub15 sections (b) through (f) shall not apply to any bank 

16 holding company with total consolidated assets of 

17 less than $50,000,000,000. The Council may rec18 ommend an asset threshold greater than 

19 $50,000,000,000 for the applicability of any par20 ticular standard under those subsections. 

21 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

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

23 Council under subsection (a) may include— 

24 (A) risk-based capital requirements; 

25 (B) leverage limits; 


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1 (C) liquidity requirements; 

2 (D) resolution plan and credit exposure re3 port requirements; 

4 (E) concentration limits; 

5 (F) a contingent capital requirement; 

6 (G) enhanced public disclosures; and 

7 (H) overall risk management requirements. 

8 (2) PRUDENTIAL STANDARDS FOR FOREIGN FI9 NANCIAL COMPANIES.—In making recommendations 

10 concerning the standards set forth in paragraph (1) 

11 that would apply to foreign nonbank financial com12 panies supervised by the Board of Governors or for13 eign-based bank holding companies, the Council 

14 shall give due regard to the principle of national 

15 treatment and competitive equity. 

16 (3) CONSIDERATIONS.—In making rec17 ommendations concerning prudential standards 

18 under paragraph (1), the Council shall— 

19 (A) take into account differences among 

20 nonbank financial companies supervised by the 

21 Board of Governors and bank holding compa22 nies described in subsection (a), based on— 

23 (i) the factors described in subsections 

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


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1 (ii) whether the company owns an in2 sured depository institution; 

3 (iii) nonfinancial activities and affili4 ations of the company; and 

5 (iv) any other factors that the Council 

6 determines appropriate; and 

7 (B) to the extent possible, ensure that 

8 small changes in the factors listed in sub9 sections (a) and (b) of section 113 would not 

10 result in sharp, discontinuous changes in the 

11 prudential standards established under para12 graph (1). 

13 (c) CONTINGENT CAPITAL.— 

14 (1) STUDY REQUIRED.—The Council shall con15 duct a study of the feasibility, benefits, costs, and 

16 structure of a contingent capital requirement for 

17 nonbank financial companies supervised by the 

18 Board of Governors and bank holding companies de19 scribed in subsection (a), which study shall in20 clude— 

21 (A) an evaluation of the degree to which 

22 such requirement would enhance the safety and 

23 soundness of companies subject to the require24 ment, promote the financial stability of the 


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1 United States, and reduce risks to United 

2 States taxpayers; 

3 (B) an evaluation of the characteristics 

4 and amounts of convertible debt that should be 

5 required; 

6 (C) an analysis of potential prudential 

7 standards that should be used to determine 

8 whether the contingent capital of a company 

9 would be converted to equity in times of finan10 cial stress; 

11 (D) an evaluation of the costs to compa12 nies, the effects on the structure and operation 

13 of credit and other financial markets, and other 

14 economic effects of requiring contingent capital; 

15 (E) an evaluation of the effects of such re16 quirement on the international competitiveness 

17 of companies subject to the requirement and 

18 the prospects for international coordination in 

19 establishing such requirement; and 

20 (F) recommendations for implementing 

21 regulations. 

22 (2) REPORT.—The Council shall submit a re23 port to Congress regarding the study required by 

24 paragraph (1) not later than 2 years after the date 

25 of enactment of this Act. 


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1 (3) RECOMMENDATIONS.— 

2 (A) IN GENERAL.—Subsequent to submit3 ting a report to Congress under paragraph (2), 

4 the Council may make recommendations to the 

5 Board of Governors to require any nonbank fi6 nancial company supervised by the Board of 

7 Governors and any bank holding company de8 scribed in subsection (a) to maintain a min9 imum amount of long-term hybrid debt that is 

10 convertible to equity in times of financial stress. 

11 (B) FACTORS TO CONSIDER.—In making 

12 recommendations under this subsection, the 

13 Council shall consider— 

14 (i) an appropriate transition period 

15 for implementation of a conversion under 

16 this subsection; 

17 (ii) the factors described in subsection 

18 (b)(3); 

19 (iii) capital requirements applicable to 

20 a nonbank financial company supervised by 

21 the Board of Governors or a bank holding 

22 company described in subsection (a), and 

23 subsidiaries thereof; 

24 (iv) results of the study required by 

25 paragraph (1); and 


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1 (v) any other factor that the Council 

2 deems appropriate. 

3 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE4 PORTS.— 

5 (1) RESOLUTION PLAN.—The Council may 

6 make recommendations to the Board of Governors 

7 concerning the requirement that each nonbank fi8 nancial company supervised by the Board of Gov9 ernors and each bank holding company described in 

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

11 Board of Governors, and the Corporation, the plan 

12 of such company for rapid and orderly resolution in 

13 the event of material financial distress or failure. 

14 (2) CREDIT EXPOSURE REPORT.—The Council 

15 may make recommendations to the Board of Gov16 ernors concerning the advisability of requiring each 

17 nonbank financial company supervised by the Board 

18 of Governors and bank holding company described in 

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

20 the Board of Governors, and the Corporation on— 

21 (A) the nature and extent to which the 

22 company has credit exposure to other signifi23 cant nonbank financial companies and signifi24 cant bank holding companies; and 


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1 (B) the nature and extent to which other 

2 such significant nonbank financial companies 

3 and significant bank holding companies have 

4 credit exposure to that company. 

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

6 risks that the failure of any individual company could pose 

7 to nonbank financial companies supervised by the Board 

8 of Governors or bank holding companies described in sub9 section (a), the Council may make recommendations to the 

10 Board of Governors to prescribe standards to limit such 

11 risks, as set forth in section 165. 

12 (f) ENHANCED PUBLIC DISCLOSURES.—The Council 

13 may make recommendations to the Board of Governors 

14 to require periodic public disclosures by bank holding com15 panies described in subsection (a) and by nonbank finan16 cial companies supervised by the Board of Governors, in 

17 order to support market evaluation of the risk profile, cap18 ital adequacy, and risk management capabilities thereof. 

19 SEC. 116. REPORTS. 

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

21 Council, acting through the Office of Financial Research, 

22 may require a bank holding company with total consoli23 dated assets of $50,000,000,000 or greater or a nonbank 

24 financial company supervised by the Board of Governors, 


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1 and any subsidiary thereof, to submit certified reports to 

2 keep the Council informed as to— 

3 (1) the financial condition of the company; 

4 (2) systems for monitoring and controlling fi5 nancial, operating, and other risks; 

6 (3) transactions with any subsidiary that is a 

7 depository institution; and 

8 (4) the extent to which the activities and oper9 ations of the company and any subsidiary thereof, 

10 could, under adverse circumstances, have the poten11 tial to disrupt financial markets or affect the overall 

12 financial stability of the United States. 

13 (b) USE OF EXISTING REPORTS.— 

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

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

16 Office of Financial Research, shall, to the fullest ex17 tent possible, use— 

18 (A) reports that a bank holding company, 

19 nonbank financial company supervised by the 

20 Board of Governors, or any functionally regu21 lated subsidiary of such company has been re22 quired to provide to other Federal or State reg23 ulatory agencies; 

24 (B) information that is otherwise required 

25 to be reported publicly; and 


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1 (C) externally audited financial statements. 

2 (2) AVAILABILITY.—Each bank holding com3 pany described in subsection (a) and nonbank finan4 cial company supervised by the Board of Governors, 

5 and any subsidiary thereof, shall provide to the 

6 Council, at the request of the Council, copies of all 

7 reports referred to in paragraph (1). 

8 (3) CONFIDENTIALITY.—The Council shall 

9 maintain the confidentiality of the reports obtained 

10 under subsection (a) and paragraph (1)(A) of this 

11 subsection. 

12 SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT 

13 CEASE TO BE BANK HOLDING COMPANIES. 

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

15 entity or a successor entity that— 

16 (1) was a bank holding company having total 

17 consolidated assets equal to or greater than 

18 $50,000,000,000 as of January 1, 2010; and 

19 (2) received financial assistance under or par20 ticipated in the Capital Purchase Program estab21 lished under the Troubled Asset Relief Program au22 thorized by the Emergency Economic Stabilization 

23 Act of 2008. 

24 (b) TREATMENT.—If an entity described in sub25 section (a) ceases to be a bank holding company at any 


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1 time after January 1, 2010, then such entity shall be 

2 treated as a nonbank financial company supervised by the 

3 Board of Governors, as if the Council had made a deter4 mination under section 113 with respect to that entity. 

5 (c) APPEAL.— 

6 (1) REQUEST FOR HEARING.—An entity may 

7 request, in writing, an opportunity for a written or 

8 oral hearing before the Council to appeal its treat9 ment as a nonbank financial company supervised by 

10 the Board of Governors in accordance with this sec11 tion. Upon receipt of the request, the Council shall 

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

13 receipt of the request) and place at which such enti14 ty may appear, personally or through counsel, to 

15 submit written materials (or, at the sole discretion 

16 of the Council, oral testimony and oral argument). 

17 (2) DECISION.— 

18 (A) PROPOSED DECISION.—Not later than 

19 60 days after the date of a hearing under para20 graph (1), the Council shall submit a report to, 

21 and may testify before, the Committee on 

22 Banking, Housing, and Urban Affairs of the 

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1 peal under paragraph (1), which report shall in2 clude a statement of the basis for the proposed 

3 decision of the Council. 

4 (B) NOTICE OF FINAL DECISION.—The 

5 Council shall notify the subject entity of the 

6 final decision of the Council regarding an ap7 peal under paragraph (1), which notice shall 

8 contain a statement of the basis for the final 

9 decision of the Council, not later than 60 days 

10 after the later of— 

11 (i) the date of the submission of the 

12 report under subparagraph (A); or 

13 (ii) if the Committee on Banking, 

14 Housing, and Urban Affairs of the Senate 

15 or the Committee on Financial Services of 

16 the House of Representatives holds one or 

17 more hearings regarding such report, the 

18 date of the last such hearing. 

19 (C) CONSIDERATIONS.—In making a deci20 sion regarding an appeal under paragraph (1), 

21 the Council shall consider whether the company 

22 meets the standards under section 113(a) or 

23 113(b), as applicable, and the definition of the 

24 term ‘‘nonbank financial company’’ under sec25 tion 102. The decision of the Council shall be 


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1 final, subject to the review under paragraph 

2 (3). 

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

4 under this subsection, the Council shall, not less fre5 quently than annually, review and reevaluate the de6 cision. 

7 SEC. 118. COUNCIL FUNDING. 

8 Any expenses of the Council shall be treated as ex9 penses of, and paid by, the Office of Financial Research. 

10 SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL 

11 DISPUTES AMONG MEMBER AGENCIES. 

12 (a) REQUEST FOR DISPUTE RESOLUTION.—The 

13 Council shall resolve a dispute among 2 or more member 

14 agencies, if— 

15 (1) a member agency has a dispute with an16 other member agency about the respective jurisdic17 tion over a particular bank holding company, 

18 nonbank financial company, or financial activity or 

19 product (excluding matters for which another dis20 pute mechanism specifically has been provided under 

21 Federal law); 

22 (2) the Council determines that the disputing 

23 agencies cannot, after a demonstrated good faith ef24 fort, resolve the dispute without the intervention of 

25 the Council; and 


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

2 dispute— 

3 (A) provides all other disputants prior no4 tice of the intent to request dispute resolution 

5 by the Council; and 

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

7 days after providing the notice described in sub8 paragraph (A), that the Council resolve the dis9 pute. 

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

11 each dispute described in subsection (a)— 

12 (1) within a reasonable time after receiving the 

13 dispute resolution request; 

14 (2) after consideration of relevant information 

15 provided by each agency party to the dispute; and 

16 (3) by agreeing with 1 of the disputants regard17 ing the entirety of the matter, or by determining a 

18 compromise position. 

19 (c) FORM AND BINDING EFFECT.—A Council deci20 sion under this section shall— 

21 (1) be in writing; 

22 (2) include an explanation of the reasons there23 for; and 

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

25 parties to the dispute. 


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1 SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVI2 TIES OR PRACTICES FOR FINANCIAL STA3 BILITY PURPOSES. 

4 (a) IN GENERAL.—The Council may issue rec5 ommendations to the primary financial regulatory agen6 cies to apply new or heightened standards and safeguards, 

7 including standards enumerated in section 115, for a fi8 nancial activity or practice conducted by bank holding 

9 companies or nonbank financial companies under their re10 spective jurisdictions, if the Council determines that the 

11 conduct of such activity or practice could create or in12 crease the risk of significant liquidity, credit, or other 

13 problems spreading among bank holding companies and 

14 nonbank financial companies or the financial markets of 

15 the United States. 

16 (b) PROCEDURE FOR RECOMMENDATIONS TO REGU17 LATORS.— 

18 (1) NOTICE AND OPPORTUNITY FOR COM19 MENT.—The Council shall consult with the primary 

20 financial regulatory agencies and provide notice to 

21 the public and opportunity for comment for any pro22 posed recommendation that the primary financial 

23 regulatory agencies apply new or heightened stand24 ards and safeguards for a financial activity or prac25 tice. 


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1 (2) CRITERIA.—The new or heightened stand2 ards and safeguards for a financial activity or prac3 tice recommended under paragraph (1)— 

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

5 growth into account; and 

6 (B) may include prescribing the conduct of 

7 the activity or practice in specific ways (such as 

8 by limiting its scope, or applying particular cap9 ital or risk management requirements to the 

10 conduct of the activity) or prohibiting the activ11 ity or practice. 

12 (c) IMPLEMENTATION OF RECOMMENDED STAND13 ARDS.— 

14 (1) ROLE OF PRIMARY FINANCIAL REGULATORY

15 AGENCY.— 

16 (A) IN GENERAL.—Each primary financial 

17 regulatory agency may impose, require reports 

18 regarding, examine for compliance with, and en19 force standards in accordance with this section 

20 with respect to those entities for which it is the 

21 primary financial regulatory agency. 

22 (B) RULE OF CONSTRUCTION.—The au23 thority under this paragraph is in addition to, 

24 and does not limit, any other authority of a pri25 mary financial regulatory agency. Compliance 


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1 by an entity with actions taken by a primary fi2 nancial regulatory agency under this section 

3 shall be enforceable in accordance with the stat4 utes governing the respective jurisdiction of the 

5 primary financial regulatory agency over the en6 tity, as if the agency action were taken under 

7 those statutes. 

8 (2) IMPOSITION OF STANDARDS.—The primary 

9 financial regulatory agency shall impose the stand10 ards recommended by the Council in accordance 

11 with subsection (a), or similar standards that the 

12 Council deems acceptable, or shall explain in writing 

13 to the Council, not later than 90 days after the date 

14 on which the Council issues the recommendation, 

15 why the agency has determined not to follow the rec16 ommendation of the Council. 

17 (d) REPORT TO CONGRESS.—The Council shall re18 port to Congress on— 

19 (1) any recommendations issued by the Council 

20 under this section; 

21 (2) the implementation of, or failure to imple22 ment such recommendation on the part of a primary 

23 financial regulatory agency; and 

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

25 regulatory agency exists for the nonbank financial 


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1 company conducting financial activities or practices 

2 referred to in subsection (a), recommendations for 

3 legislation that would prevent such activities or prac4 tices from threatening the stability of the financial 

5 system of the United States. 

6 (e) EFFECT OF RESCISSION OF IDENTIFICATION.— 

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

8 the relevant primary financial regulatory agency that 

9 a financial activity or practice no longer requires any 

10 standards or safeguards implemented under this sec11 tion. 

12 (2) DETERMINATION OF PRIMARY FINANCIAL

13 REGULATORY AGENCY TO CONTINUE.— 

14 (A) IN GENERAL.—Upon receipt of a rec15 ommendation under paragraph (1), a primary 

16 financial regulatory agency that has imposed 

17 standards under this section shall determine 

18 whether standards that it has imposed under 

19 this section should remain in effect. 

20 (B) APPEAL PROCESS.—Each primary fi21 nancial regulatory agency that has imposed 

22 standards under this section shall promulgate 

23 regulations to establish a procedure under 

24 which entities under its jurisdiction may appeal 

25 a determination by such agency under this 


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1 paragraph that standards imposed under this 

2 section should remain in effect. 

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

4 (a) MITIGATORY ACTIONS.—If the Board of Gov5 ernors determines that a bank holding company with total 

6 consolidated assets of $50,000,000,000 or more, or a 

7 nonbank financial company supervised by the Board of 

8 Governors, poses a grave threat to the financial stability 

9 of the United States, the Board of Governors, upon an 

affirmative vote of not fewer than 2 10 ⁄3 of the Council mem11 bers then serving, shall require the subject company— 

12 (1) to terminate one or more activities; 

13 (2) to impose conditions on the manner in 

14 which the company conducts one or more activities; 

15 or 

16 (3) if the Board of Governors determines that 

17 such action is inadequate to mitigate a threat to the 

18 financial stability of the United States in its rec19 ommendation, to sell or otherwise transfer assets or 

20 off-balance-sheet items to unaffiliated entities. 

21 (b) NOTICE AND HEARING.— 

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

23 consultation with the Council, shall provide to a 

24 company described in subsection (a) written notice 

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1 tory action pursuant to this section, including an ex2 planation of the basis for, and description of, the 

3 proposed mitigatory action. 

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

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

6 the company may request, in writing, an opportunity 

7 for a written or oral hearing before the Board of 

8 Governors to contest the proposed mitigatory action. 

9 Upon receipt of a timely request, the Board of Gov10 ernors shall fix a time (not later than 30 days after 

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

12 which such company may appear, personally or 

13 through counsel, to submit written materials (or, at 

14 the discretion of the Board of Governors, in con15 sultation with the Council, oral testimony and oral 

16 argument). 

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

18 the date of a hearing under paragraph (2), or not 

19 later than 60 days after the provision of a notice 

20 under paragraph (1) if no hearing was held, the 

21 Board of Governors shall notify the company of the 

22 final decision of the Board of Governors, including 

23 the results of the vote of the Council, as described 

24 in subsection (a). 


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

2 Governors and the Council shall take into consideration 

3 the factors set forth in subsection (a) or (b) of section 

4 113, as applicable, in a determination described in sub5 section (a) and in a decision described in subsection (b). 

6 (d) APPLICATION TO FOREIGN FINANCIAL COMPA7 NIES.—The Board of Governors may prescribe regulations 

8 regarding the application of this section to foreign 

9 nonbank financial companies supervised by the Board of 

10 Governors and foreign-based bank holding companies, giv11 ing due regard to the principle of national treatment and 

12 competitive equity. 

13 Subtitle B—Office of Financial 

14 Research 

15 SEC. 151. DEFINITIONS. 

16 For purposes of this subtitle— 

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

18 the Office of Financial Research established under 

19 this subtitle and the Director thereof, respectively; 

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

21 meaning as in title II, and includes an insured de22 pository institution and an insurance company; 

23 (3) the term ‘‘Data Center’’ means the data 

24 center established under section 154; 


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

2 means the research and analysis center established 

3 under section 154; 

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

5 the structure and legal description of a financial 

6 contract, with sufficient detail to describe the rights 

7 and obligations between counterparties and make 

8 possible an independent valuation; 

9 (6) the term ‘‘position data’’— 

10 (A) means data on financial assets or li11 abilities held on the balance sheet of a financial 

12 company, where positions are created or 

13 changed by the execution of a financial trans14 action; and 

15 (B) includes information that identifies 

16 counterparties, the valuation by the financial 

17 company of the position, and information that 

18 makes possible an independent valuation of the 

19 position; 

20 (7) the term ‘‘financial contract’’ means a le21 gally binding agreement between 2 or more counter22 parties, describing rights and obligations relating to 

23 the future delivery of items of intrinsic or extrinsic 

24 value among the counterparties; and 


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1 (8) the term ‘‘financial instrument’’ means a fi2 nancial contract in which the terms and conditions 

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

4 of the counterparties are assignable without the con5 sent of any of the other counterparties (including 

6 common stock of a publicly traded company, govern7 ment bonds, or exchange traded futures and options 

8 contracts). 

9 SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED. 

10 (a) ESTABLISHMENT.—There is established within 

11 the Department of the Treasury the Office of Financial 

12 Research. 

13 (b) DIRECTOR.— 

14 (1) IN GENERAL.—The Office shall be headed 

15 by a Director, who shall be appointed by the Presi16 dent, by and with the advice and consent of the Sen17 ate. 

18 (2) TERM OF SERVICE.—The Director shall 

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

20 that a successor is not nominated and confirmed by 

21 the end of the term of service of a Director, the Di22 rector may continue to serve until such time as the 

23 next Director is appointed and confirmed. 

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

25 compensated at level III of the Executive Schedule. 


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1 (4) PROHIBITION ON DUAL SERVICE.—The in2 dividual serving in the position of Director may not, 

3 during such service, also serve as the head of any fi4 nancial regulatory agency. 

5 (5) RESPONSIBILITIES, DUTIES, AND AUTHOR6 ITY.—The Director shall have sole discretion in the 

7 manner in which the Director fulfills the responsibil8 ities and duties and exercises the authorities de9 scribed in this subtitle. 

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

11 Chairperson, shall establish the annual budget of the Of12 fice. 

13 (d) OFFICE PERSONNEL.— 

14 (1) IN GENERAL.—The Director, in consulta15 tion with the Chairperson, may fix the number of, 

16 and appoint and direct, all employees of the Office. 

17 (2) COMPENSATION.—The Director, in con18 sultation with the Chairperson, shall fix, adjust, and 

19 administer the pay for all employees of the Office, 

20 without regard to chapter 51 or subchapter III of 

21 chapter 53 of title 5, United States Code, relating 

22 to classification of positions and General Schedule 

23 pay rates. 

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

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1 forcement Act of 1989 (12 U.S.C. 1833b(a)) is 

2 amended— 

3 (A) by striking ‘‘Finance Board,’’ and in4 serting ‘‘Finance Board, the Office of Financial 

5 Research, and the Bureau of Consumer Finan6 cial Protection’’; and 

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

8 Supervision,’’. 

9 (e) ASSISTANCE FROM FEDERAL AGENCIES.—Any 

10 department or agency of the United States may provide 

11 to the Office and any special advisory, technical, or profes12 sional committees appointed by the Office, such services, 

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

14 Office may determine advisable. Any Federal Government 

15 employee may be detailed to the Office without reimburse16 ment, and such detail shall be without interruption or loss 

17 of civil service status or privilege. 

18 (f) PROCUREMENT OF TEMPORARY AND INTERMIT19 TENT SERVICES.—The Director may procure temporary 

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

21 United States Code, at rates for individuals which do not 

22 exceed the daily equivalent of the annual rate of basic pay 

23 prescribed for level V of the Executive Schedule under sec24 tion 5316 of such title. 


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1 (g) CONTRACTING AND LEASING AUTHORITY.—Not2 withstanding the Federal Property and Administrative 

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

4 provision of law, the Director may— 

5 (1) enter into and perform contracts, execute 

6 instruments, and acquire, in any lawful manner, 

7 such goods and services, or personal or real property 

8 (or property interest), as the Director deems nec9 essary to carry out the duties and responsibilities of 

10 the Office; and 

11 (2) hold, maintain, sell, lease, or otherwise dis12 pose of the property (or property interest) acquired 

13 under paragraph (1). 

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

15 the Office who has had access to the transaction or posi16 tion data maintained by the Data Center or other business 

17 confidential information about financial entities required 

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

19 after last having access to such transaction or position 

20 data or business confidential information, be employed by 

21 or provide advice or consulting services to a financial com22 pany, regardless of whether that entity is required to re23 port to the Office. For staff whose access to business con24 fidential information was limited, the Director may pro25 vide, on a case-by-case basis, for a shorter period of postVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00066 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 employment prohibition, provided that the shorter period 

2 does not compromise business confidential information. 

3 (i) TECHNICAL AND PROFESSIONAL ADVISORY COM4 MITTEES.—The Office, in consultation with the Chair5 person, may appoint such special advisory, technical, or 

6 professional committees as may be useful in carrying out 

7 the functions of the Office, and the members of such com8 mittees may be staff of the Office, or other persons, or 

9 both. 

10 (j) FELLOWSHIP PROGRAM.—The Office, in consulta11 tion with the Chairperson, may establish and maintain an 

12 academic and professional fellowship program, under 

13 which qualified academics and professionals shall be in14 vited to spend not longer than 2 years at the Office, to 

15 perform research and to provide advanced training for Of16 fice personnel. 

17 (k) EXECUTIVE SCHEDULE COMPENSATION.—Sec18 tion 5314 of title 5, United States Code, is amended by 

19 adding at the end the following new item: 

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

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

22 (a) PURPOSE AND DUTIES.—The purpose of the Of23 fice is to support the Council in fulfilling the purposes and 

24 duties of the Council, as set forth in subtitle A, and to 

25 support member agencies, by— 


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

2 providing such data to the Council and member 

3 agencies; 

4 (2) standardizing the types and formats of data 

5 reported and collected; 

6 (3) performing applied research and essential 

7 long-term research; 

8 (4) developing tools for risk measurement and 

9 monitoring; 

10 (5) performing other related services; 

11 (6) making the results of the activities of the 

12 Office available to financial regulatory agencies; and 

13 (7) assisting such member agencies in deter14 mining the types and formats of data authorized by 

15 this Act to be collected by such member agencies. 

16 (b) ADMINISTRATIVE AUTHORITY.—The Office 

17 may— 

18 (1) share data and information, including soft19 ware developed by the Office, with the Council and 

20 member agencies, which shared data, information, 

21 and software— 

22 (A) shall be maintained with at least the 

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

24 and 


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1 (B) may not be shared with any individual 

2 or entity without the permission of the Council; 

3 (2) sponsor and conduct research projects; and 

4 (3) assist, on a reimbursable basis, with finan5 cial analyses undertaken at the request of other 

6 Federal agencies that are not member agencies. 

7 (c) RULEMAKING AUTHORITY.— 

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

9 the Chairperson, shall issue rules, regulations, and 

10 orders only to the extent necessary to carry out the 

11 purposes and duties described in paragraphs (1), 

12 (2), and (7) of subsection (a). 

13 (2) STANDARDIZATION.—Member agencies, in 

14 consultation with the Office, shall implement regula15 tions promulgated by the Office under paragraph (1) 

16 to standardize the types and formats of data re17 ported and collected on behalf of the Council, as de18 scribed in subsection (a)(2). If a member agency 

19 fails to implement such regulations prior to the expi20 ration of the 3-year period following the date of pub21 lication of final regulations, the Office, in consulta22 tion with the Chairperson, may implement such reg23 ulations with respect to the financial entities under 

24 the jurisdiction of the member agency. 

25 (d) TESTIMONY.— 


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

2 shall report to and testify before the Committee on 

3 Banking, Housing, and Urban Affairs of the Senate 

4 and the Committee on Financial Services of the 

5 House of Representatives annually on the activities 

6 of the Office, including the work of the Data Center 

7 and the Research and Analysis Center, and the as8 sessment of the Office of significant financial market 

9 developments and potential emerging threats to the 

10 financial stability of the United States. 

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

12 the United States shall have any authority to require 

13 the Director to submit the testimony required under 

14 paragraph (1) or other Congressional testimony to 

15 any officer or agency of the United States for ap16 proval, comment, or review prior to the submission 

17 of such testimony. Any such testimony to Congress 

18 shall include a statement that the views expressed 

19 therein are those of the Director and do not nec20 essarily represent the views of the President. 

21 (e) ADDITIONAL REPORTS.—The Director may pro22 vide additional reports to Congress concerning the finan23 cial stability of the United States. The Director shall no24 tify the Council of any such additional reports provided 

25 to Congress. 


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1 (f) SUBPOENA.— 

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

3 by subpoena, the production of the data requested 

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

5 only upon a written finding by the Director that— 

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

7 functions described under this subtitle; and 

8 (B) the Office has coordinated with such 

9 agency, as required under section 

10 154(b)(1)(B)(ii). 

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

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

13 served by any person or class of persons designated 

14 by the Director for that purpose. 

15 (3) ENFORCEMENT.—In the case of contumacy 

16 or failure to obey a subpoena, the subpoena shall be 

17 enforceable by order of any appropriate district 

18 court of the United States. Any failure to obey the 

19 order of the court may be punished by the court as 

20 a contempt of court. 

21 SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBIL22 ITIES OF PRIMARY PROGRAMMATIC UNITS. 

23 (a) IN GENERAL.—There are established within the 

24 Office, to carry out the programmatic responsibilities of 

25 the Office— 


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1 (1) the Data Center; and 

2 (2) the Research and Analysis Center. 

3 (b) DATA CENTER.— 

4 (1) GENERAL DUTIES.— 

5 (A) DATA COLLECTION.—The Data Cen6 ter, on behalf of the Council, shall collect, vali7 date, and maintain all data necessary to carry 

8 out the duties of the Data Center, as described 

9 in this subtitle. The data assembled shall be ob10 tained from member agencies, commercial data 

11 providers, publicly available data sources, and 

12 financial entities under subparagraph (B). 

13 (B) AUTHORITY.— 

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

15 determined by the Council or by the Direc16 tor in consultation with the Council, re17 quire the submission of periodic and other 

18 reports from any financial company for the 

19 purpose of assessing the extent to which a 

20 financial activity or financial market in 

21 which the financial company participates, 

22 or the financial company itself, poses a 

23 threat to the financial stability of the 

24 United States. 


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1 (ii) MITIGATION OF REPORT BUR2 DEN.—Before requiring the submission of 

3 a report from any financial company that 

4 is regulated by a member agency or any 

5 primary financial regulatory agency, the 

6 Office shall coordinate with such agencies 

7 and shall, whenever possible, rely on infor8 mation available from such agencies. 

9 (C) RULEMAKING.—The Office shall pro10 mulgate regulations pursuant to subsections 

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

12 regarding the type and scope of the data to be 

13 collected by the Data Center under this para14 graph. 

15 (2) RESPONSIBILITIES.— 

16 (A) PUBLICATION.—The Data Center shall 

17 prepare and publish, in a manner that is easily 

18 accessible to the public— 

19 (i) a financial company reference 

20 database; 

21 (ii) a financial instrument reference 

22 database; and 

23 (iii) formats and standards for Office 

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1 nancial transaction and position data to 

2 the Office. 

3 (B) CONFIDENTIALITY.—The Data Center 

4 shall not publish any confidential data under 

5 subparagraph (A). 

6 (3) INFORMATION SECURITY.—The Director 

7 shall ensure that data collected and maintained by 

8 the Data Center are kept secure and protected 

9 against unauthorized disclosure. 

10 (4) CATALOG OF FINANCIAL ENTITIES AND IN11 STRUMENTS.—The Data Center shall maintain a 

12 catalog of the financial entities and instruments re13 ported to the Office. 

14 (5) AVAILABILITY TO THE COUNCIL AND MEM15 BER AGENCIES.—The Data Center shall make data 

16 collected and maintained by the Data Center avail17 able to the Council and member agencies, as nec18 essary to support their regulatory responsibilities. 

19 (6) OTHER AUTHORITY.—The Office shall, 

20 after consultation with the member agencies, provide 

21 certain data to financial industry participants and to 

22 the general public to increase market transparency 

23 and facilitate research on the financial system, to 

24 the extent that intellectual property rights are not 

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1 erly protected, and the sharing of such information 

2 poses no significant threats to the financial system 

3 of the United States. 

4 (c) RESEARCH AND ANALYSIS CENTER.— 

5 (1) GENERAL DUTIES.—The Research and 

6 Analysis Center, on behalf of the Council, shall de7 velop and maintain independent analytical capabili8 ties and computing resources— 

9 (A) to develop and maintain metrics and 

10 reporting systems for risks to the financial sta11 bility of the United States; 

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

13 changes in system-wide risk levels and patterns 

14 to the Council and Congress; 

15 (C) to conduct, coordinate, and sponsor re16 search to support and improve regulation of fi17 nancial entities and markets; 

18 (D) to evaluate and report on stress tests 

19 or other stability-related evaluations of financial 

20 entities overseen by the member agencies; 

21 (E) to maintain expertise in such areas as 

22 may be necessary to support specific requests 

23 for advice and assistance from financial regu24 lators; 


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1 (F) to investigate disruptions and failures 

2 in the financial markets, report findings, and 

3 make recommendations to the Council based on 

4 those findings; 

5 (G) to conduct studies and provide advice 

6 on the impact of policies related to systemic 

7 risk; and 

8 (H) to promote best practices for financial 

9 risk management. 

10 (d) REPORTING RESPONSIBILITIES.— 

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

12 years after the date of enactment of this Act, and 

13 not later than 120 days after the end of each fiscal 

14 year thereafter, the Office shall prepare and submit 

15 a report to Congress. 

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

17 subsection shall assess the state of the United States 

18 financial system, including— 

19 (A) an analysis of any threats to the finan20 cial stability of the United States; 

21 (B) the status of the efforts of the Office 

22 in meeting the mission of the Office; and 

23 (C) key findings from the research and 

24 analysis of the financial system by the Office. 


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1 SEC. 155. FUNDING. 

2 (a) FINANCIAL RESEARCH FUND.— 

3 (1) FUND ESTABLISHED.—There is established 

4 in the Treasury of the United States a separate fund 

5 to be known as the ‘‘Financial Research Fund’’. 

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

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

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

9 deposited into the Financial Research Fund. 

10 (3) INVESTMENTS AUTHORIZED.— 

11 (A) AMOUNTS IN FUND MAY BE IN12 VESTED.—The Director may request the Sec13 retary to invest the portion of the Financial Re14 search Fund that is not, in the judgment of the 

15 Director, required to meet the needs of the Of16 fice. 

17 (B) ELIGIBLE INVESTMENTS.—Invest18 ments shall be made by the Secretary in obliga19 tions of the United States or obligations that 

20 are guaranteed as to principal and interest by 

21 the United States, with maturities suitable to 

22 the needs of the Financial Research Fund, as 

23 determined by the Director. 

24 (4) INTEREST AND PROCEEDS CREDITED.—The 

25 interest on, and the proceeds from the sale or re26 demption of, any obligations held in the Financial 


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1 Research Fund shall be credited to and form a part 

2 of the Financial Research Fund. 

3 (b) USE OF FUNDS.— 

4 (1) IN GENERAL.—Funds obtained by, trans5 ferred to, or credited to the Financial Research 

6 Fund shall be immediately available to the Office, 

7 and shall remain available until expended, to pay the 

8 expenses of the Office in carrying out the duties and 

9 responsibilities of the Office. 

10 (2) FEES, ASSESSMENTS, AND OTHER FUNDS

11 NOT GOVERNMENT FUNDS.—Funds obtained by, 

12 transferred to, or credited to the Financial Research 

13 Fund shall not be construed to be Government funds 

14 or appropriated monies. 

15 (3) AMOUNTS NOT SUBJECT TO APPORTION16 MENT.—Notwithstanding any other provision of law, 

17 amounts in the Financial Research Fund shall not 

18 be subject to apportionment for purposes of chapter 

19 15 of title 31, United States Code, or under any 

20 other authority, or for any other purpose. 

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

22 following the date of enactment of this Act, the Board of 

23 Governors shall provide to the Office an amount sufficient 

24 to cover the expenses of the Office. 

25 (d) PERMANENT SELF-FUNDING.— 


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

2 date of enactment of this Act, the Secretary shall es3 tablish, by regulation, and with the approval of the 

4 Council, an assessment schedule, including the as5 sessment base and rates, applicable to bank holding 

6 companies with total consolidated assets of 

7 $50,000,000,000 or greater and nonbank financial 

8 companies supervised by the Board of Governors, 

9 that takes into account differences among such com10 panies, based on the considerations for establishing 

11 the prudential standards under section 115, to col12 lect assessments equal to the estimated total ex13 penses of the Office. 

14 (2) SHORTFALL.—To the extent that the as15 sessments under paragraph (1) do not fully cover 

16 the total expenses of the Office, the Board of Gov17 ernors shall provide to the Office an amount suffi18 cient to cover the difference. 

19 SEC. 156. TRANSITION OVERSIGHT. 

20 (a) PURPOSE.—The purpose of this section is to en21 sure that the Office— 

22 (1) has an orderly and organized startup; 

23 (2) attracts and retains a qualified workforce; 

24 and 


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1 (3) establishes comprehensive employee training 

2 and benefits programs. 

3 (b) REPORTING REQUIREMENT.— 

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

5 annual report to the Committee on Banking, Hous6 ing, and Urban Affairs of the Senate and the Com7 mittee on Financial Services of the House of Rep8 resentatives that includes the plans described in 

9 paragraph (2). 

10 (2) PLANS.—The plans described in this para11 graph are as follows: 

12 (A) TRAINING AND WORKFORCE DEVELOP13 MENT PLAN.—The Office shall submit a train14 ing and workforce development plan that in15 cludes, to the extent practicable— 

16 (i) identification of skill and technical 

17 expertise needs and actions taken to meet 

18 those requirements; 

19 (ii) steps taken to foster innovation 

20 and creativity; 

21 (iii) leadership development and suc22 cession planning; and 

23 (iv) effective use of technology by em24 ployees. 


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1 (B) WORKPLACE FLEXIBILITY PLAN.—The 

2 Office shall submit a workforce flexibility plan 

3 that includes, to the extent practicable— 

4 (i) telework; 

5 (ii) flexible work schedules; 

6 (iii) phased retirement; 

7 (iv) reemployed annuitants; 

8 (v) part-time work; 

9 (vi) job sharing; 

10 (vii) parental leave benefits and 

11 childcare assistance; 

12 (viii) domestic partner benefits; 

13 (ix) other workplace flexibilities; or 

14 (x) any combination of the items de15 scribed in clauses (i) through (ix). 

16 (C) RECRUITMENT AND RETENTION

17 PLAN.—The Office shall submit a recruitment 

18 and retention plan that includes, to the extent 

19 practicable, provisions relating to— 

20 (i) the steps necessary to target highly 

21 qualified applicant pools with diverse back22 grounds; 

23 (ii) streamlined employment applica24 tion processes; 


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1 (iii) the provision of timely notifica2 tion of the status of employment applica3 tions to applicants; and 

4 (iv) the collection of information to 

5 measure indicators of hiring effectiveness. 

6 (c) EXPIRATION.—The reporting requirement under 

7 subsection (b) shall terminate 5 years after the date of 

8 enactment of this Act. 

9 (d) RULE OF CONSTRUCTION.—Nothing in this sec10 tion may be construed to affect— 

11 (1) a collective bargaining agreement, as that 

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

13 United States Code, that is in effect on the date of 

14 enactment of this Act; or 

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

16 title 5, United States Code. 

17 Subtitle C—Additional Board of 

18 Governors Authority for Certain 

19 Nonbank Financial Companies 

20 and Bank Holding Companies 

21 SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK 

22 FINANCIAL COMPANIES BY THE BOARD OF 

23 GOVERNORS. 

24 (a) REPORTS.— 


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

2 may require each nonbank financial company super3 vised by the Board of Governors, and any subsidiary 

4 thereof, to submit reports under oath, to keep the 

5 Board of Governors informed as to— 

6 (A) the financial condition of the company 

7 or subsidiary, systems of the company or sub8 sidiary for monitoring and controlling financial, 

9 operating, and other risks, and the extent to 

10 which the activities and operations of the com11 pany or subsidiary pose a threat to the financial 

12 stability of the United States; and 

13 (B) compliance by the company or sub14 sidiary with the requirements of this subtitle. 

15 (2) USE OF EXISTING REPORTS AND INFORMA16 TION.—In carrying out subsection (a), the Board of 

17 Governors shall, to the fullest extent possible, use— 

18 (A) reports and supervisory information 

19 that a nonbank financial company or subsidiary 

20 thereof has been required to provide to other 

21 Federal or State regulatory agencies; 

22 (B) information otherwise obtainable from 

23 Federal or State regulatory agencies; 

24 (C) information that is otherwise required 

25 to be reported publicly; and 


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1 (D) externally audited financial statements 

2 of such company or subsidiary. 

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

4 Board of Governors, a nonbank financial company 

5 supervised by the Board of Governors, or a sub6 sidiary thereof, shall promptly provide to the Board 

7 of Governors any information described in para8 graph (2). 

9 (b) EXAMINATIONS.— 

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

11 the Board of Governors may examine any nonbank 

12 financial company supervised by the Board of Gov13 ernors and any subsidiary of such company, to de14 termine— 

15 (A) the nature of the operations and finan16 cial condition of the company and such sub17 sidiary; 

18 (B) the financial, operational, and other 

19 risks within the company that may pose a 

20 threat to the safety and soundness of such com21 pany or to the financial stability of the United 

22 States; 

23 (C) the systems for monitoring and con24 trolling such risks; and 


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1 (D) compliance by the company with the 

2 requirements of this subtitle. 

3 (2) USE OF EXAMINATION REPORTS AND IN4 FORMATION.—For purposes of this subsection, the 

5 Board of Governors shall, to the fullest extent pos6 sible, rely on reports of examination of any deposi7 tory institution subsidiary or functionally regulated 

8 subsidiary made by the primary financial regulatory 

9 agency for that subsidiary, and on information de10 scribed in subsection (a)(2). 

11 (c) COORDINATION WITH PRIMARY FINANCIAL REG12 ULATORY AGENCY.—The Board of Governors shall— 

13 (1) provide to the primary financial regulatory 

14 agency for any company or subsidiary, reasonable 

15 notice before requiring a report, requesting informa16 tion, or commencing an examination of such sub17 sidiary under this section; and 

18 (2) avoid duplication of examination activities, 

19 reporting requirements, and requests for informa20 tion, to the extent possible. 

21 SEC. 162. ENFORCEMENT. 

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

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

24 of Governors and any subsidiaries of such company (other 

25 than any depository institution subsidiary) shall be subject 


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

2 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), 

3 in the same manner and to the same extent as if the com4 pany were a bank holding company, as provided in section 

5 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 

6 1818(b)(3)). 

7 (b) ENFORCEMENT AUTHORITY FOR FUNCTIONALLY

8 REGULATED SUBSIDIARIES.— 

9 (1) REFERRAL.—If the Board of Governors de10 termines that a condition, practice, or activity of a 

11 depository institution subsidiary or functionally reg12 ulated subsidiary of a nonbank financial company 

13 supervised by the Board of Governors does not com14 ply with the regulations or orders prescribed by the 

15 Board of Governors under this Act, or otherwise 

16 poses a threat to the financial stability of the United 

17 States, the Board of Governors may recommend, in 

18 writing, to the primary financial regulatory agency 

19 for the subsidiary that such agency initiate a super20 visory action or enforcement proceeding. The rec21 ommendation shall be accompanied by a written ex22 planation of the concerns giving rise to the rec23 ommendation. 

24 (2) BACK-UP AUTHORITY OF THE BOARD OF

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1 ning on the date on which the primary financial reg2 ulatory agency receives a recommendation under 

3 paragraph (1), the primary financial regulatory 

4 agency does not take supervisory or enforcement ac5 tion against a subsidiary that is acceptable to the 

6 Board of Governors, the Board of Governors (upon 

7 a vote of its members) may take the recommended 

8 supervisory or enforcement action, as if the sub9 sidiary were a bank holding company subject to su10 pervision by the Board of Governors. 

11 SEC. 163. ACQUISITIONS. 

12 (a) ACQUISITIONS OF BANKS; TREATMENT AS A

13 BANK HOLDING COMPANY.—For purposes of section 3 of 

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

15 1842), a nonbank financial company supervised by the 

16 Board of Governors shall be deemed to be, and shall be 

17 treated as, a bank holding company. 

18 (b) ACQUISITION OF NONBANK COMPANIES.— 

19 (1) PRIOR NOTICE FOR LARGE ACQUISITIONS.— 

20 Notwithstanding section 4(k)(6)(B) of the Bank 

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

22 1843(k)(6)(B)), a bank holding company with total 

23 consolidated assets equal to or greater than 

24 $50,000,000,000 or a nonbank financial company 

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1 quire direct or indirect ownership or control of any 

2 voting shares of any company (other than an insured 

3 depository institution) that is engaged in activities 

4 described in section 4(k) of the Bank Holding Com5 pany Act of 1956 having total consolidated assets of 

6 $10,000,000,000 or more, without providing written 

7 notice to the Board of Governors in advance of the 

8 transaction. 

9 (2) EXEMPTIONS.—The prior notice require10 ment in paragraph (1) shall not apply with regard 

11 to the acquisition of shares that would qualify for 

12 the exemptions in section 4(c) or section 4(k)(4)(E) 

13 of the Bank Holding Company Act of 1956 (12 

14 U.S.C. 1843(c) and (k)(4)(E)). 

15 (3) NOTICE PROCEDURES.—The notice proce16 dures set forth in section 4(j)(1) of the Bank Hold17 ing Company Act of 1956 (12 U.S.C. 1843(j)(1)), 

18 without regard to section 4(j)(3) of that Act, shall 

19 apply to an acquisition of any company (other than 

20 an insured depository institution) by a bank holding 

21 company with total consolidated assets equal to or 

22 greater than $50,000,000,000 or a nonbank finan23 cial company supervised by the Board of Governors, 

24 as described in paragraph (1), including any such 


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1 company engaged in activities described in section 

2 4(k) of that Act. 

3 (4) STANDARDS FOR REVIEW.—In addition to 

4 the standards provided in section 4(j)(2) of the 

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

6 1843(j)(2)), the Board of Governors shall consider 

7 the extent to which the proposed acquisition would 

8 result in greater or more concentrated risks to global 

9 or United States financial stability or the United 

10 States economy. 

11 SEC. 164. PROHIBITION AGAINST MANAGEMENT INTER12 LOCKS BETWEEN CERTAIN FINANCIAL COM13 PANIES. 

14 A nonbank financial company supervised by the 

15 Board of Governors shall be treated as a bank holding 

16 company for purposes of the Depository Institutions Man17 agement Interlocks Act (12 U.S.C. 3201 et seq.), except 

18 that the Board of Governors shall not exercise the author19 ity provided in section 7 of that Act (12 U.S.C. 3207) 

20 to permit service by a management official of a nonbank 

21 financial company supervised by the Board of Governors 

22 as a management official of any bank holding company 

23 with total consolidated assets equal to or greater than 

24 $50,000,000,000, or other nonaffiliated nonbank financial 

25 company supervised by the Board of Governors (other 


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1 than to provide a temporary exemption for interlocks re2 sulting from a merger, acquisition, or consolidation). 

3 SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL 

4 STANDARDS FOR NONBANK FINANCIAL COM5 PANIES SUPERVISED BY THE BOARD OF GOV6 ERNORS AND CERTAIN BANK HOLDING COM7 PANIES. 

8 (a) IN GENERAL.— 

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

10 risks to the financial stability of the United States 

11 that could arise from the material financial distress 

12 or failure of large, interconnected financial institu13 tions, the Board of Governors shall, on its own or 

14 pursuant to recommendations by the Council under 

15 section 115, establish prudential standards and re16 porting and disclosure requirements applicable to 

17 nonbank financial companies supervised by the 

18 Board of Governors and large, interconnected bank 

19 holding companies that— 

20 (A) are more stringent than the standards 

21 and requirements applicable to nonbank finan22 cial companies and bank holding companies 

23 that do not present similar risks to the financial 

24 stability of the United States; and 


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1 (B) increase in stringency, based on the 

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

3 (2) LIMITATION ON BANK HOLDING COMPA4 NIES.—Any standards established under subsections 

5 (b) through (f) shall not apply to any bank holding 

6 company with total consolidated assets of less than 

7 $50,000,000,000, but the Board of Governors may 

8 establish an asset threshold greater than 

9 $50,000,000,000 for the applicability of any par10 ticular standard under subsections (b) through (f). 

11 (b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

12 (1) IN GENERAL.— 

13 (A) REQUIRED STANDARDS.—The Board 

14 of Governors shall, by regulation or order, es15 tablish prudential standards for nonbank finan16 cial companies supervised by the Board of Gov17 ernors and bank holding companies described in 

18 subsection (a), that shall include— 

19 (i) risk-based capital requirements; 

20 (ii) leverage limits; 

21 (iii) liquidity requirements; 

22 (iv) resolution plan and credit expo23 sure report requirements; and 

24 (v) concentration limits. 


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1 (B) ADDITIONAL STANDARDS AUTHOR2 IZED.—The Board of Governors may, by regu3 lation or order, establish prudential standards 

4 for nonbank financial companies supervised by 

5 the Board of Governors and bank holding com6 panies described in subsection (a), that in7 clude— 

8 (i) a contingent capital requirement; 

9 (ii) enhanced public disclosures; and 

10 (iii) overall risk management require11 ments. 

12 (2) PRUDENTIAL STANDARDS FOR FOREIGN FI13 NANCIAL COMPANIES.—In applying the standards 

14 set forth in paragraph (1) to foreign nonbank finan15 cial companies supervised by the Board of Governors 

16 and to foreign-based bank holding companies, the 

17 Board of Governors shall give due regard to the 

18 principle of national treatment and competitive eq19 uity. 

20 (3) CONSIDERATIONS.—In prescribing pruden21 tial standards under paragraph (1), the Board of 

22 Governors shall— 

23 (A) take into account differences among 

24 nonbank financial companies supervised by the 


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1 Board of Governors and bank holding compa2 nies described in subsection (a), based on— 

3 (i) the factors described in subsections 

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

5 (ii) whether the company owns an in6 sured depository institution; 

7 (iii) nonfinancial activities and affili8 ations of the company; and 

9 (iv) any other factors that the Board 

10 of Governors determines appropriate; 

11 (B) to the extent possible, ensure that 

12 small changes in the factors listed in sub13 sections (a) and (b) of section 113 would not 

14 result in sharp, discontinuous changes in the 

15 prudential standards established under para16 graph (1) of this subsection; and 

17 (C) take into account any recommenda18 tions of the Council under section 115. 

19 (4) REPORT.—The Board of Governors shall 

20 submit an annual report to Congress regarding the 

21 implementation of the prudential standards required 

22 pursuant to paragraph (1), including the use of such 

23 standards to mitigate risks to the financial stability 

24 of the United States. 

25 (c) CONTINGENT CAPITAL.— 


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1 (1) IN GENERAL.—Subsequent to submission by 

2 the Council of a report to Congress under section 

3 115(c), the Board of Governors may promulgate reg4 ulations that require each nonbank financial com5 pany supervised by the Board of Governors and 

6 bank holding companies described in subsection (a) 

7 to maintain a minimum amount of long-term hybrid 

8 debt that is convertible to equity in times of finan9 cial stress. 

10 (2) FACTORS TO CONSIDER.—In establishing 

11 regulations under this subsection, the Board of Gov12 ernors shall consider— 

13 (A) the results of the study undertaken by 

14 the Council, and any recommendations of the 

15 Council, under section 115(c); 

16 (B) an appropriate transition period for 

17 implementation of a conversion under this sub18 section; 

19 (C) the factors described in subsection 

20 (b)(3)(A); 

21 (D) capital requirements applicable to the 

22 nonbank financial company supervised by the 

23 Board of Governors or a bank holding company 

24 described in subsection (a), and subsidiaries 

25 thereof; and 


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1 (E) any other factor that the Board of 

2 Governors deems appropriate. 

3 (d) RESOLUTION PLAN AND CREDIT EXPOSURE RE4 PORTS.— 

5 (1) RESOLUTION PLAN.—The Board of Gov6 ernors shall require each nonbank financial company 

7 supervised by the Board of Governors and bank 

8 holding companies described in subsection (a) to re9 port periodically to the Board of Governors, the 

10 Council, and the Corporation the plan of such com11 pany for rapid and orderly resolution in the event of 

12 material financial distress or failure. 

13 (2) CREDIT EXPOSURE REPORT.—The Board of 

14 Governors shall require each nonbank financial com15 pany supervised by the Board of Governors and 

16 bank holding companies described in subsection (a) 

17 to report periodically to the Board of Governors, the 

18 Council, and the Corporation on— 

19 (A) the nature and extent to which the 

20 company has credit exposure to other signifi21 cant nonbank financial companies and signifi22 cant bank holding companies; and 

23 (B) the nature and extent to which other 

24 significant nonbank financial companies and 


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1 significant bank holding companies have credit 

2 exposure to that company. 

3 (3) REVIEW.—The Board of Governors and the 

4 Corporation shall review the information provided in 

5 accordance with this section by each nonbank finan6 cial company supervised by the Board of Governors 

7 and bank holding company described in subsection 

8 (a). 

9 (4) NOTICE OF DEFICIENCIES.—If the Board of 

10 Governors and the Corporation jointly determine, 

11 based on their review under paragraph (3), that the 

12 resolution plan of a nonbank financial company su13 pervised by the Board of Governors or a bank hold14 ing company described in subsection (a) is not cred15 ible or would not facilitate an orderly resolution of 

16 the company under title 11, United States Code— 

17 (A) the Board of Governors and the Cor18 poration shall notify the company, as applica19 ble, of the deficiencies in the resolution plan; 

20 and 

21 (B) the company shall resubmit the resolu22 tion plan within a time frame determined by the 

23 Board of Governors and the Corporation, with 

24 revisions demonstrating that the plan is credible 

25 and would result in an orderly resolution under 


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1 title 11, United States Code, including any pro2 posed changes in business operations and cor3 porate structure to facilitate implementation of 

4 the plan. 

5 (5) FAILURE TO RESUBMIT CREDIBLE PLAN.— 

6 (A) IN GENERAL.—If a nonbank financial 

7 company supervised by the Board of Governors 

8 or a bank holding company described in sub9 section (a) fails to timely resubmit the resolu10 tion plan as required under paragraph (4), with 

11 such revisions as are required under subpara12 graph (B), the Board of Governors and the 

13 Corporation may jointly impose more stringent 

14 capital, leverage, or liquidity requirements, or 

15 restrictions on the growth, activities, or oper16 ations of the company, or any subsidiary there17 of, until such time as the company resubmits a 

18 plan that remedies the deficiencies. 

19 (B) DIVESTITURE.—The Board of Gov20 ernors and the Corporation, in consultation 

21 with the Council, may direct a nonbank finan22 cial company supervised by the Board of Gov23 ernors or a bank holding company described in 

24 subsection (a), by order, to divest certain assets 

25 or operations identified by the Board of GovVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00097 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ernors and the Corporation, to facilitate an or2 derly resolution of such company under title 11, 

3 United States Code, in the event of the failure 

4 of such company, in any case in which— 

5 (i) the Board of Governors and the 

6 Corporation have jointly imposed more 

7 stringent requirements on the company 

8 pursuant to subparagraph (A); and 

9 (ii) the company has failed, within the 

10 2-year period beginning on the date of the 

11 imposition of such requirements under sub12 paragraph (A), to resubmit the resolution 

13 plan with such revisions as were required 

14 under paragraph (4)(B). 

15 (6) RULES.—Not later than 18 months after 

16 the date of enactment of this Act, the Board of Gov17 ernors and the Corporation shall jointly issue final 

18 rules implementing this subsection. 

19 (e) CONCENTRATION LIMITS.— 

20 (1) STANDARDS.—In order to limit the risks 

21 that the failure of any individual company could 

22 pose to a nonbank financial company supervised by 

23 the Board of Governors or a bank holding company 

24 described in subsection (a), the Board of Governors, 


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1 by regulation, shall prescribe standards that limit 

2 such risks. 

3 (2) LIMITATION ON CREDIT EXPOSURE.—The 

4 regulations prescribed by the Board of Governors 

5 under paragraph (1) shall prohibit each nonbank fi6 nancial company supervised by the Board of Gov7 ernors and bank holding company described in sub8 section (a) from having credit exposure to any unaf9 filiated company that exceeds 25 percent of the cap10 ital stock and surplus (or such lower amount as the 

11 Board of Governors may determine by regulation to 

12 be necessary to mitigate risks to the financial sta13 bility of the United States) of the company. 

14 (3) CREDIT EXPOSURE.—For purposes of para15 graph (2), ‘‘credit exposure’’ to a company means— 

16 (A) all extensions of credit to the company, 

17 including loans, deposits, and lines of credit; 

18 (B) all repurchase agreements and reverse 

19 repurchase agreements with the company; 

20 (C) all securities borrowing and lending 

21 transactions with the company, to the extent 

22 that such transactions create credit exposure 

23 for the nonbank financial company supervised 

24 by the Board of Governors or a bank holding 

25 company described in subsection (a); 


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1 (D) all guarantees, acceptances, or letters 

2 of credit (including endorsement or standby let3 ters of credit) issued on behalf of the company; 

4 (E) all purchases of or investment in secu5 rities issued by the company; 

6 (F) counterparty credit exposure to the 

7 company in connection with a derivative trans8 action between the nonbank financial company 

9 supervised by the Board of Governors or a bank 

10 holding company described in subsection (a) 

11 and the company; and 

12 (G) any other similar transactions that the 

13 Board of Governors, by regulation, determines 

14 to be a credit exposure for purposes of this sec15 tion. 

16 (4) ATTRIBUTION RULE.—For purposes of this 

17 subsection, any transaction by a nonbank financial 

18 company supervised by the Board of Governors or a 

19 bank holding company described in subsection (a) 

20 with any person is a transaction with a company, to 

21 the extent that the proceeds of the transaction are 

22 used for the benefit of, or transferred to, that com23 pany. 

24 (5) RULEMAKING.—The Board of Governors 

25 may issue such regulations and orders, including 


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1 definitions consistent with this section, as may be 

2 necessary to administer and carry out this sub3 section. 

4 (6) EXEMPTIONS.—The Board of Governors 

5 may, by regulation or order, exempt transactions, in 

6 whole or in part, from the definition of ‘‘credit expo7 sure’’ for purposes of this subsection, if the Board 

8 of Governors finds that the exemption is in the pub9 lic interest and is consistent with the purpose of this 

10 subsection. 

11 (7) TRANSITION PERIOD.— 

12 (A) IN GENERAL.—This subsection and 

13 any regulations and orders of the Board of Gov14 ernors under this subsection shall not be effec15 tive until 3 years after the date of enactment 

16 of this Act. 

17 (B) EXTENSION AUTHORIZED.—The 

18 Board of Governors may extend the period 

19 specified in subparagraph (A) for not longer 

20 than an additional 2 years. 

21 (f) ENHANCED PUBLIC DISCLOSURES.—The Board 

22 of Governors may prescribe, by regulation, periodic public 

23 disclosures by nonbank financial companies supervised by 

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1 uation of the risk profile, capital adequacy, and risk man2 agement capabilities thereof. 

3 (g) RISK COMMITTEE.— 

4 (1) NONBANK FINANCIAL COMPANIES SUPER5 VISED BY THE BOARD OF GOVERNORS.—The Board 

6 of Governors shall require each nonbank financial 

7 company supervised by the Board of Governors that 

8 is a publicly traded company to establish a risk com9 mittee, as set forth in paragraph (3), not later than 

10 1 year after the date of receipt of a notice of final 

11 determination under section 113(d)(3) with respect 

12 to such nonbank financial company supervised by 

13 the Board of Governors. 

14 (2) CERTAIN BANK HOLDING COMPANIES.— 

15 (A) MANDATORY REGULATIONS.—The 

16 Board of Governors shall issue regulations re17 quiring each bank holding company that is a 

18 publicly traded company and that has total con19 solidated assets of not less than 

20 $10,000,000,000 to establish a risk committee, 

21 as set forth in paragraph (3). 

22 (B) PERMISSIVE REGULATIONS.—The 

23 Board of Governors may require each bank 

24 holding company that is a publicly traded com25 pany and that has total consolidated assets of 


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1 less than $10,000,000,000 to establish a risk 

2 committee, as set forth in paragraph (3), as de3 termined necessary or appropriate by the Board 

4 of Governors to promote sound risk manage5 ment practices. 

6 (3) RISK COMMITTEE.—A risk committee re7 quired by this subsection shall— 

8 (A) be responsible for the oversight of the 

9 enterprise-wide risk management practices of 

10 the nonbank financial company supervised by 

11 the Board of Governors or bank holding com12 pany described in subsection (a), as applicable; 

13 (B) include such number of independent 

14 directors as the Board of Governors may deter15 mine appropriate, based on the nature of oper16 ations, size of assets, and other appropriate cri17 teria related to the nonbank financial company 

18 supervised by the Board of Governors or a bank 

19 holding company described in subsection (a), as 

20 applicable; and 

21 (C) include at least 1 risk management ex22 pert having experience in identifying, assessing, 

23 and managing risk exposures of large, complex 

24 firms. 


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1 (4) RULEMAKING.—The Board of Governors 

2 shall issue final rules to carry out this subsection, 

3 not later than 1 year after the transfer date, to take 

4 effect not later than 15 months after the transfer 

5 date. 

6 (h) STRESS TESTS.—The Board of Governors shall 

7 conduct analyses in which nonbank financial companies 

8 supervised by the Board of Governors and bank holding 

9 companies described in subsection (a) are subject to eval10 uation of whether the companies have the capital, on a 

11 total consolidated basis, necessary to absorb losses as a 

12 result of adverse economic conditions. The Board of Gov13 ernors may develop and apply such other analytic tech14 niques as are necessary to identify, measure, and monitor 

15 risks to the financial stability of the United States. 

16 SEC. 166. EARLY REMEDIATION REQUIREMENTS. 

17 (a) IN GENERAL.—The Board of Governors, in con18 sultation with the Council and the Corporation, shall pre19 scribe regulations establishing requirements to provide for 

20 the early remediation of financial distress of a nonbank 

21 financial company supervised by the Board of Governors 

22 or a bank holding company described in section 165(a), 

23 except that nothing in this subsection authorizes the provi24 sion of financial assistance from the Federal Government. 


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1 (b) PURPOSE OF THE EARLY REMEDIATION RE2 QUIREMENTS.—The purpose of the early remediation re3 quirements under subsection (a) shall be to establish a se4 ries of specific remedial actions to be taken by a nonbank 

5 financial company supervised by the Board of Governors 

6 or a bank holding company described in section 165(a) 

7 that is experiencing increasing financial distress, in order 

8 to minimize the probability that the company will become 

9 insolvent and the potential harm of such insolvency to the 

10 financial stability of the United States. 

11 (c) REMEDIATION REQUIREMENTS.—The regulations 

12 prescribed by the Board of Governors under subsection (a) 

13 shall— 

14 (1) define measures of the financial condition of 

15 the company, including regulatory capital, liquidity 

16 measures, and other forward-looking indicators; and 

17 (2) establish requirements that increase in 

18 stringency as the financial condition of the company 

19 declines, including— 

20 (A) requirements in the initial stages of fi21 nancial decline, including limits on capital dis22 tributions, acquisitions, and asset growth; and 

23 (B) requirements at later stages of finan24 cial decline, including a capital restoration plan 

25 and capital-raising requirements, limits on 


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1 transactions with affiliates, management 

2 changes, and asset sales. 

3 SEC. 167. AFFILIATIONS. 

4 (a) AFFILIATIONS.—Nothing in this subtitle shall be 

5 construed to require a nonbank financial company super6 vised by the Board of Governors, or a company that con7 trols a nonbank financial company supervised by the 

8 Board of Governors, to conform the activities thereof to 

9 the requirements of section 4 of the Bank Holding Com10 pany Act of 1956 (12 U.S.C. 1843). 

11 (b) REQUIREMENT.— 

12 (1) IN GENERAL.—If a nonbank financial com13 pany supervised by the Board of Governors conducts 

14 activities other than those that are determined to be 

15 financial in nature or incidental thereto under sec16 tion 4(k) of the Bank Holding Company Act of 

17 1956, the Board of Governors may require such 

18 company to establish and conduct such activities 

19 that are determined to be financial in nature or inci20 dental thereto in an intermediate holding company 

21 established pursuant to regulation of the Board of 

22 Governors, not later than 90 days after the date on 

23 which the nonbank financial company supervised by 

24 the Board of Governors was notified of the deter25 mination under section 113(a). 


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1 (2) INTERNAL FINANCIAL ACTIVITIES.—For 

2 purposes of this subsection, activities that are deter3 mined to be financial in nature or incidental thereto 

4 under section 4(k) of the Bank Holding Company 

5 Act of 1956, as described in paragraph (1), shall not 

6 include internal financial activities conducted for a 

7 nonbank financial company supervised by the Board 

8 of Governors or any affiliate, including internal 

9 treasury, investment, and employee benefit func10 tions. With respect to any internal financial activity 

11 of such company during the year prior to the date 

12 of enactment of this Act, such company may con13 tinue to engage in such activity as long as at least 

2⁄3 of the assets or 2 14 ⁄3 of the revenues generated 

15 from the activity are from or attributable to such 

16 company, subject to review by the Board of Gov17 ernors, to determine whether engaging in such activ18 ity presents undue risk to such company or to the 

19 financial stability of the United States. 

20 (c) REGULATIONS.—The Board of Governors— 

21 (1) shall promulgate regulations to establish the 

22 criteria for determining whether to require a 

23 nonbank financial company supervised by the Board 

24 of Governors to establish an intermediate holding 

25 company under subsection (a); and 


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1 (2) may promulgate regulations to establish any 

2 restrictions or limitations on transactions between 

3 an intermediate holding company or a nonbank fi4 nancial company supervised by the Board of Gov5 ernors and its affiliates, as necessary to prevent un6 safe and unsound practices in connection with trans7 actions between such company, or any subsidiary 

8 thereof, and its parent company or affiliates that are 

9 not subsidiaries of such company, except that such 

10 regulations shall not restrict or limit any transaction 

11 in connection with the bona fide acquisition or lease 

12 by an unaffiliated person of assets, goods, or serv13 ices. 

14 SEC. 168. REGULATIONS. 

15 Except as otherwise specified in this subtitle, not 

16 later than 18 months after the transfer date, the Board 

17 of Governors shall issue final regulations to implement 

18 this subtitle and the amendments made by this subtitle. 

19 SEC. 169. AVOIDING DUPLICATION. 

20 The Board of Governors shall take any action that 

21 the Board of Governors deems appropriate to avoid impos22 ing requirements under this subtitle that are duplicative 

23 of requirements applicable to bank holding companies and 

24 nonbank financial companies under other provisions of 

25 law. 


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1 SEC. 170. SAFE HARBOR. 

2 (a) REGULATIONS.—The Board of Governors shall 

3 promulgate regulations on behalf of, and in consultation 

4 with, the Council setting forth the criteria for exempting 

5 certain types or classes of U.S. nonbank financial compa6 nies or foreign nonbank financial companies from super7 vision by the Board of Governors. 

8 (b) CONSIDERATIONS.—In developing the criteria 

9 under subsection (a), the Board of Governors shall take 

10 into account the factors for consideration described in sub11 sections (a) and (b) of section 113 in determining whether 

12 a U.S. nonbank financial company or foreign nonbank fi13 nancial company shall be supervised by the Board of Gov14 ernors. 

15 (c) RULE OF CONSTRUCTION.—Nothing in this sec16 tion shall be construed to require supervision by the Board 

17 of Governors of a U.S. nonbank financial company or for18 eign nonbank financial company, if such company does not 

19 meet the criteria for exemption established under sub20 section (a). 

21 (d) UPDATE.—The Board of Governors shall, in con22 sultation with the Council, review the regulations promul23 gated under subsection (a), not less frequently than every 

24 5 years, and based upon the review, the Board of Gov25 ernors may revise such regulations on behalf of, and in 


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1 consultation with, the Council to update as necessary the 

2 criteria set forth in such regulations. 

3 (e) TRANSITION PERIOD.—No revisions under sub4 section (d) shall take effect before the end of the 2-year 

5 period after the date of publication of such revisions in 

6 final form. 

7 (f) REPORT.—The Chairperson of the Board of Gov8 ernors and the Chairperson of the Council shall submit 

9 a joint report to the Committee on Banking, Housing, and 

10 Urban Affairs of the Senate and the Committee on Finan11 cial Services of the House of Representatives not later 

12 than 30 days after the date of the issuance in final form 

13 of the regulations under subsection (a), or any subsequent 

14 revision to such regulations under subsection (d), as appli15 cable. Such report shall include, at a minimum, the ration16 ale for exemption and empirical evidence to support the 

17 criteria for exemption. 

18 TITLE II—ORDERLY 

19 LIQUIDATION AUTHORITY 

20 SEC. 201. DEFINITIONS. 

21 In this title, the following definitions shall apply: 

22 (1) ADMINISTRATIVE EXPENSES OF THE RE23 CEIVER.—The term ‘‘administrative expenses of the 

24 receiver’’ includes— 


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1 (A) the actual, necessary costs and ex2 penses incurred by the Corporation as receiver 

3 for a covered financial company in liquidating a 

4 covered financial company; and 

5 (B) any obligations that the Corporation 

6 as receiver for a covered financial company de7 termines are necessary and appropriate to fa8 cilitate the smooth and orderly liquidation of 

9 the covered financial company. 

10 (2) BANKRUPTCY CODE.—The term ‘‘Bank11 ruptcy Code’’ means title 11, United States Code. 

12 (3) BRIDGE FINANCIAL COMPANY.—The term 

13 ‘‘bridge financial company’’ means a new financial 

14 company organized by the Corporation in accordance 

15 with section 210(h) for the purpose of resolving a 

16 covered financial company. 

17 (4) CLAIM.—The term ‘‘claim’’ means any right 

18 of payment, whether or not such right is reduced to 

19 judgment, liquidated, unliquidated, fixed, contingent, 

20 matured, unmatured, disputed, undisputed, legal, eq21 uitable, secured, or unsecured. 

22 (5) COMPANY.—The term ‘‘company’’ has the 

23 same meaning as in section 2(b) of the Bank Hold24 ing Company Act of 1956 (12 U.S.C. 1841(b)), ex25 cept that such term includes any company described 


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1 in paragraph (11), the majority of the securities of 

2 which are owned by the United States or any State. 

3 (6) COVERED BROKER OR DEALER.—The term 

4 ‘‘covered broker or dealer’’ means a covered financial 

5 company that is a broker or dealer that— 

6 (A) is registered with the Commission 

7 under section 15(b) of the Securities Exchange 

8 Act of 1934 (15 U.S.C. 78o(b)); and 

9 (B) is a member of SIPC. 

10 (7) COVERED FINANCIAL COMPANY.—The term 

11 ‘‘covered financial company’’— 

12 (A) means a financial company for which 

13 a determination has been made under section 

14 203(b); and 

15 (B) does not include an insured depository 

16 institution. 

17 (8) COVERED SUBSIDIARY.—The term ‘‘covered 

18 subsidiary’’ means a subsidiary of a covered finan19 cial company, other than— 

20 (A) an insured depository institution; 

21 (B) an insurance company; or 

22 (C) a covered broker or dealer. 

23 (9) DEFINITIONS RELATING TO COVERED BRO24 KERS AND DEALERS.—The terms ‘‘customer’’, ‘‘cus25 tomer name securities’’, ‘‘customer property’’, and 


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1 ‘‘net equity’’ in the context of a covered broker or 

2 dealer, have the same meanings as in section 16 of 

3 the Securities Investor Protection Act of 1970 (15 

4 U.S.C. 78lll). 

5 (10) FINANCIAL COMPANY.—The term ‘‘finan6 cial company’’ means any company that— 

7 (A) is incorporated or organized under any 

8 provision of Federal law or the laws of any 

9 State; 

10 (B) is— 

11 (i) a bank holding company, as de12 fined in section 2(a) of the Bank Holding 

13 Company Act of 1956 (12 U.S.C. 

14 1841(a)), and including any company de15 scribed in paragraph (5); 

16 (ii) a nonbank financial company su17 pervised by the Board of Governors; 

18 (iii) any company that is predomi19 nantly engaged in activities that the Board 

20 of Governors has determined are financial 

21 in nature or incidental thereto for purposes 

22 of section 4(k) of the Bank Holding Com23 pany Act of 1956 (12 U.S.C. 1843(k)) 

24 other than a company described in clause 

25 (i) or (ii); or 


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1 (iv) any subsidiary of any company 

2 described in any of clauses (i) through (iii) 

3 (other than a subsidiary that is an insured 

4 depository institution or an insurance com5 pany); and 

6 (C) is not a Farm Credit System institu7 tion chartered under and subject to the provi8 sions of the Farm Credit Act of 1971, as 

9 amended (12 U.S.C. 2001 et seq.). 

10 (11) FUND.—The term ‘‘Fund’’ means the Or11 derly Liquidation Fund established under section 

12 210(n). 

13 (12) INSURANCE COMPANY.—The term ‘‘insur14 ance company’’ means any entity that is— 

15 (A) engaged in the business of insurance; 

16 (B) subject to regulation by a State insur17 ance regulator; and 

18 (C) covered by a State law that is designed 

19 to specifically deal with the rehabilitation, liq20 uidation, or insolvency of an insurance com21 pany. 

22 (13) NONBANK FINANCIAL COMPANY.—The 

23 term ‘‘nonbank financial company’’ has the same 

24 meaning as in section 102(a)(4)(C). 


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1 (14) NONBANK FINANCIAL COMPANY SUPER2 VISED BY THE BOARD OF GOVERNORS.—The term 

3 ‘‘nonbank financial company supervised by the 

4 Board of Governors’’ has the same meaning as in 

5 section 102(a)(3)(D). 

6 (15) PANEL.—The term ‘‘Panel’’ means the Or7 derly Liquidation Authority Panel established under 

8 section 202. 

9 (16) SIPC.—The term ‘‘SIPC’’ means the Se10 curities Investor Protection Corporation. 

11 SEC. 202. ORDERLY LIQUIDATION AUTHORITY PANEL. 

12 (a) ORDERLY LIQUIDATION AUTHORITY PANEL.— 

13 (1) ESTABLISHMENT.—There is established in 

14 the United States Bankruptcy Court for the District 

15 of Delaware, an Orderly Liquidation Authority 

16 Panel. The Chief Judge of the United States Bank17 ruptcy Court for the District of Delaware shall ap18 point judges to the Panel, consistent with paragraph 

19 (2). In making such appointments, the Chief Judge 

20 shall consider the expertise in financial matters of 

21 each judge. 

22 (2) COMPOSITION.—The Panel shall be com23 posed of 3 judges from the United States Bank24 ruptcy Court for the District of Delaware. 


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1 (3) JURISDICTION.—The Panel shall have origi2 nal and exclusive jurisdiction of proceedings to con3 sider petitions by the Secretary under subsection 

4 (b)(1). 

5 (b) COMMENCEMENT OF ORDERLY LIQUIDATION.— 

6 (1) PETITION TO PANEL.— 

7 (A) ORDERLY LIQUIDATION AUTHORITY

8 PANEL.— 

9 (i) PETITION TO PANEL.—Subsequent 

10 to a determination by the Secretary under 

11 section 203 that a financial company meets 

12 the criteria in section 203(b), the Sec13 retary, upon notice to the Corporation and 

14 the covered financial company, shall peti15 tion the Panel for an order authorizing the 

16 Secretary to appoint the Corporation as re17 ceiver. 

18 (ii) FORM AND CONTENT OF

19 ORDER.—The Secretary shall present all 

20 relevant findings and the recommendation 

21 made pursuant to section 203(a) to the 

22 Panel. The petition shall be filed under 

23 seal. 

24 (iii) DETERMINATION.—On a strictly 

25 confidential basis, and without any prior 


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1 public disclosure, the Panel, after notice to 

2 the covered financial company and a hear3 ing in which the covered financial company 

4 may oppose the petition, shall determine, 

5 within 24 hours of receipt of the petition 

6 filed by the Secretary, whether the deter7 mination of the Secretary that the covered 

8 financial company is in default or in dan9 ger of default is supported by substantial 

10 evidence. 

11 (iv) ISSUANCE OF ORDER.—If the 

12 Panel determines that the determination of 

13 the Secretary that the covered financial 

14 company is in default or in danger of de15 fault— 

16 (I) is supported by substantial 

17 evidence, the Panel shall issue an 

18 order immediately authorizing the 

19 Secretary to appoint the Corporation 

20 as receiver of the covered financial 

21 company; or 

22 (II) is not supported by substan23 tial evidence, the Panel shall imme24 diately provide to the Secretary a 

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1 porting its determination, and afford 

2 the Secretary an immediate oppor3 tunity to amend and refile the petition 

4 under clause (i). 

5 (B) EFFECT OF DETERMINATION.—The 

6 determination of the Panel under subparagraph 

7 (A) shall be final, and shall be subject to appeal 

8 only in accordance with paragraph (2). The de9 cision shall not be subject to any stay or injunc10 tion pending appeal. Upon conclusion of its pro11 ceedings under subparagraph (A), the Panel 

12 shall provide immediately for the record a writ13 ten statement of each reason supporting the de14 cision of the Panel, and shall provide copies 

15 thereof to the Secretary and the covered finan16 cial company. 

17 (C) CRIMINAL PENALTIES.—A person who 

18 recklessly discloses a determination of the Sec19 retary under section 203(b) or a petition of the 

20 Secretary under subparagraph (A), or the pend21 ency of court proceedings as provided for under 

22 subparagraph (A), shall be fined not more than 

23 $250,000, or imprisoned for not more than 5 

24 years, or both. 

25 (2) APPEAL OF DECISIONS OF THE PANEL.— 


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1 (A) APPEAL TO COURT OF APPEALS.— 

2 (i) IN GENERAL.—Subject to clause 

3 (ii), the United States Court of Appeals for 

4 the Third Circuit shall have jurisdiction of 

5 an appeal of a final decision of the Panel 

6 filed by the Secretary or a covered finan7 cial company, through its board of direc8 tors, notwithstanding section 

9 210(a)(1)(A)(i), not later than 30 days 

10 after the date on which the decision of the 

11 Panel is rendered or deemed rendered 

12 under this subsection. 

13 (ii) CONDITION OF JURISDICTION.— 

14 The Court of Appeals shall have jurisdic15 tion of an appeal by a covered financial 

16 company only if the covered financial com17 pany did not acquiesce or consent to the 

18 appointment of a receiver by the Secretary 

19 under paragraph (1)(A). 

20 (iii) EXPEDITION.—The Court of Ap21 peals shall consider any appeal under this 

22 subparagraph on an expedited basis. 

23 (iv) SCOPE OF REVIEW.—For an ap24 peal taken under this subparagraph, review 

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1 tion of the Secretary that a covered finan2 cial company is in default or in danger of 

3 default is supported by substantial evi4 dence. 

5 (B) APPEAL TO THE SUPREME COURT.— 

6 (i) IN GENERAL.—A petition for a 

7 writ of certiorari to review a decision of 

8 the Court of Appeals under subparagraph 

9 (A) may be filed by the Secretary or the 

10 covered financial company, through its 

11 board of directors, notwithstanding section 

12 210(a)(1)(A)(i), with the Supreme Court 

13 of the United States, not later than 30 

14 days after the date of the final decision of 

15 the Court of Appeals, and the Supreme 

16 Court shall have discretionary jurisdiction 

17 to review such decision. 

18 (ii) WRITTEN STATEMENT.—In the 

19 event of a petition under clause (i), the 

20 Court of Appeals shall immediately provide 

21 for the record a written statement of each 

22 reason for its decision. 

23 (iii) EXPEDITION.—The Supreme 

24 Court shall consider any petition under 

25 this subparagraph on an expedited basis. 


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1 (iv) SCOPE OF REVIEW.—Review by 

2 the Supreme Court under this subpara3 graph shall be limited to whether the de4 termination of the Secretary that the cov5 ered financial company is in default or in 

6 danger of default is supported by substan7 tial evidence. 

8 (c) ESTABLISHMENT AND TRANSMITTAL OF RULES

9 AND PROCEDURES.— 

10 (1) IN GENERAL.—Not later than 6 months 

11 after the date of enactment of this Act, the Panel 

12 shall establish such rules and procedures as may be 

13 necessary to ensure the orderly conduct of pro14 ceedings, including rules and procedures to ensure 

15 that the 24-hour deadline is met and that the Sec16 retary shall have an ongoing opportunity to amend 

17 and refile petitions under subsection (b)(1). The 

18 rules and procedures shall include provisions for the 

19 appointment of judges to the Panel, such that the 

20 composition of the Panel is established in advance of 

21 the filing of a petition under subsection (b). 

22 (2) PUBLICATION OF RULES.—The rules and 

23 procedures established under paragraph (1), and any 

24 modifications of such rules and procedures, shall be 

25 recorded and shall be transmitted to— 


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1 (A) each judge of the Panel; 

2 (B) the Chief Judge of the United States 

3 Bankruptcy Court for the District of Delaware; 

4 (C) the Committee on the Judiciary of the 

5 Senate; 

6 (D) the Committee on Banking, Housing, 

7 and Urban Affairs of the Senate; 

8 (E) the Committee on the Judiciary of the 

9 House of Representatives; and 

10 (F) the Committee on Financial Services 

11 of the House of Representatives. 

12 (d) PROVISIONS APPLICABLE TO FINANCIAL COMPA13 NIES.— 

14 (1) BANKRUPTCY CODE.—Except as provided in 

15 this subsection, the provisions of the Bankruptcy 

16 Code and rules issued thereunder, and not the provi17 sions of this title, shall apply to financial companies 

18 that are not covered financial companies for which 

19 the Corporation has been appointed as receiver. 

20 (2) THIS TITLE.—The provisions of this title 

21 shall exclusively apply to and govern all matters re22 lating to covered financial companies for which the 

23 Corporation is appointed as receiver, and no provi24 sions of the Bankruptcy Code or the rules issued 

25 thereunder shall apply in such cases. 


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1 (e) STUDY OF BANKRUPTCY AND ORDERLY LIQUIDA2 TION PROCESS FOR FINANCIAL COMPANIES.— 

3 (1) STUDY.— 

4 (A) IN GENERAL.—The Administrative Of5 fice of the United States Courts and the Comp6 troller General of the United States shall each 

7 monitor the activities of the Panel, and each 

8 such Office shall conduct separate studies re9 garding the bankruptcy and orderly liquidation 

10 process for financial companies under the 

11 Bankruptcy Code. 

12 (B) ISSUES TO BE STUDIED.—In con13 ducting the study under subparagraph (A), the 

14 Administrative Office of the United States 

15 Courts and the Comptroller General of the 

16 United States each shall evaluate— 

17 (i) the effectiveness of chapter 7 or 

18 chapter 11 of the Bankruptcy Code in fa19 cilitating the orderly liquidation or reorga20 nization of financial companies; 

21 (ii) ways to maximize the efficiency 

22 and effectiveness of the Panel; and 

23 (iii) ways to make the orderly liquida24 tion process under the Bankruptcy Code 

25 for financial companies more effective. 


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

2 date of enactment of this Act, in each successive 

3 year until the third year, and every fifth year after 

4 that date of enactment, the Administrative Office of 

5 the United States Courts and the Comptroller Gen6 eral of the United States shall submit to the Com7 mittee on Banking, Housing, and Urban Affairs and 

8 the Committee on the Judiciary of the Senate and 

9 the Committee on Financial Services and the Com10 mittee on the Judiciary of the House of Representa11 tives separate reports summarizing the results of the 

12 studies conducted under paragraph (1). 

13 (f) STUDY OF INTERNATIONAL COORDINATION RE14 LATING TO BANKRUPTCY PROCESS FOR FINANCIAL COM15 PANIES.— 

16 (1) STUDY.— 

17 (A) IN GENERAL.—The Comptroller Gen18 eral of the United States shall conduct a study 

19 regarding international coordination relating to 

20 the orderly liquidation of financial companies 

21 under the Bankruptcy Code. 

22 (B) ISSUES TO BE STUDIED.—In con23 ducting the study under subparagraph (A), the 

24 Comptroller General of the United States shall 


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1 evaluate, with respect to the bankruptcy process 

2 for financial companies— 

3 (i) the extent to which international 

4 coordination currently exists; 

5 (ii) current mechanisms and struc6 tures for facilitating international coopera7 tion; 

8 (iii) barriers to effective international 

9 coordination; and 

10 (iv) ways to increase and make more 

11 effective international coordination. 

12 (2) REPORT.—Not later than 1 year after the 

13 date of enactment of this Act, the Comptroller Gen14 eral of the United States shall submit to the Com15 mittee on Banking, Housing, and Urban Affairs and 

16 the Committee on the Judiciary of the Senate and 

17 the Committee on Financial Services and the Com18 mittee on the Judiciary of the House of Representa19 tives and the Secretary a report summarizing the re20 sults of the study conducted under paragraph (1). 

21 SEC. 203. SYSTEMIC RISK DETERMINATION. 

22 (a) WRITTEN RECOMMENDATION AND DETERMINA23 TION.— 

24 (1) VOTE REQUIRED.— 


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1 (A) IN GENERAL.—On their own initiative, 

2 or at the request of the Secretary, the Corpora3 tion and the Board of Governors shall consider 

4 whether to make a written recommendation de5 scribed in paragraph (2) with respect to wheth6 er the Secretary should appoint the Corporation 

7 as receiver for a financial company. Such rec8 ommendation shall be made upon a vote of not 

fewer than 2 9 ⁄3 of the members of the Board of 

Governors then serving and 2 10 ⁄3 of the members 

11 of the board of directors of the Corporation 

12 then serving. 

13 (B) CASES INVOLVING COVERED BROKERS

14 OR DEALERS.—In the case of a covered broker 

15 or dealer, or in which the largest United States 

16 subsidiary (as measured by total assets as of 

17 the end of the previous calendar quarter) of a 

18 financial company is a covered broker or dealer, 

19 the Commission and the Board of Governors, at 

20 the request of the Secretary, or on their own 

21 initiative, shall consider whether to make the 

22 written recommendation described in paragraph 

23 (2) with respect to the financial company. Sub24 ject to the requirements in paragraph (2), such 

25 recommendation shall be made upon a vote of 


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not fewer than 2 1 ⁄3 of the members of the Board 

2 of Governors then serving and the members of 

3 the Commission then serving, and in consulta4 tion with the Corporation. 

5 (2) RECOMMENDATION REQUIRED.—Any writ6 ten recommendation pursuant to paragraph (1) shall 

7 contain— 

8 (A) an evaluation of whether the financial 

9 company is in default or in danger of default; 

10 (B) a description of the effect that the de11 fault of the financial company would have on fi12 nancial stability in the United States; 

13 (C) a recommendation regarding the na14 ture and the extent of actions to be taken under 

15 this title regarding the financial company; 

16 (D) an evaluation of the likelihood of a pri17 vate sector alternative to prevent the default of 

18 the financial company; 

19 (E) an evaluation of why a case under the 

20 Bankruptcy Code is not appropriate for the fi21 nancial company; and 

22 (F) an evaluation of the effects on credi23 tors, counterparties, and shareholders of the fi24 nancial company and other market participants. 


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1 (b) DETERMINATION BY THE SECRETARY.—Notwith2 standing any other provision of Federal or State law, the 

3 Secretary shall take action in accordance with section 

4 202(b)(1)(A), if, upon the written recommendation under 

5 subsection (a), the Secretary (in consultation with the 

6 President) determines that— 

7 (1) the financial company is in default or in 

8 danger of default; 

9 (2) the failure of the financial company and its 

10 resolution under otherwise applicable Federal or 

11 State law would have serious adverse effects on fi12 nancial stability in the United States; 

13 (3) no viable private sector alternative is avail14 able to prevent the default of the financial company; 

15 (4) any effect on the claims or interests of 

16 creditors, counterparties, and shareholders of the fi17 nancial company and other market participants as a 

18 result of actions to be taken under this title is ap19 propriate, given the impact that any action taken 

20 under this title would have on financial stability in 

21 the United States; 

22 (5) any action under section 204 would avoid or 

23 mitigate such adverse effects, taking into consider24 ation the effectiveness of the action in mitigating po25 tential adverse effects on the financial system, the 


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1 cost to the general fund of the Treasury, and the po2 tential to increase excessive risk taking on the part 

3 of creditors, counterparties, and shareholders in the 

4 financial company; and 

5 (6) a Federal regulatory agency has ordered the 

6 financial company to convert all of its convertible 

7 debt instruments that are subject to the regulatory 

8 order. 

9 (c) DOCUMENTATION AND REVIEW.— 

10 (1) IN GENERAL.—The Secretary shall— 

11 (A) document any determination under 

12 subsection (b); 

13 (B) retain the documentation for review 

14 under paragraph (2); and 

15 (C) notify the covered financial company 

16 and the Corporation of such determination. 

17 (2) REPORT TO CONGRESS.—Not later than 24 

18 hours after the date of appointment of the Corpora19 tion as receiver for a covered financial company, the 

20 Secretary shall provide written notice of the rec21 ommendations and determinations reached in ac22 cordance with subsections (a) and (b) to the Major23 ity Leader and the Minority Leader of the Senate 

24 and the Speaker and the Minority Leader of the 

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1 ing, Housing, and Urban Affairs of the Senate, and 

2 the Committee on Financial Services of the House of 

3 Representatives, which shall consist of a summary of 

4 the basis for the determination, including, to the ex5 tent available at the time of the determination— 

6 (A) the size and financial condition of the 

7 covered financial company; 

8 (B) the sources of capital and credit sup9 port that were available to the covered financial 

10 company; 

11 (C) the operations of the covered financial 

12 company that could have had a significant im13 pact on financial stability, markets, or both; 

14 (D) identification of the banks and finan15 cial companies which may be able to provide the 

16 services offered by the covered financial com17 pany; 

18 (E) any potential international ramifica19 tions of resolution of the covered financial com20 pany under other applicable insolvency law; 

21 (F) an estimate of the potential effect of 

22 the resolution of the covered financial company 

23 under other applicable insolvency law on the fi24 nancial stability of the United States; 


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1 (G) the potential effect of the appointment 

2 of a receiver by the Secretary on consumers; 

3 (H) the potential effect of the appointment 

4 of a receiver by the Secretary on the financial 

5 system, financial markets, and banks and other 

6 financial companies; and 

7 (I) whether resolution of the covered finan8 cial company under other applicable insolvency 

9 law would cause banks or other financial com10 panies to experience severe liquidity distress. 

11 (3) REPORTS TO CONGRESS AND THE PUB12 LIC.— 

13 (A) IN GENERAL.—Not later than 60 days 

14 after the date of appointment of the Corpora15 tion as receiver for a covered financial company, 

16 the Corporation, as receiver, shall— 

17 (i) prepare reports setting forth infor18 mation on the assets and liabilities of the 

19 covered financial company as of the date of 

20 the appointment; 

21 (ii) file such reports with the Com22 mittee on Banking, Housing, and Urban 

23 Affairs of the Senate, and the Committee 

24 on Financial Services of the House of Rep25 resentatives; and 


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1 (iii) publish such reports on an online 

2 website maintained by the Corporation. 

3 (B) AMENDMENTS.—The Corporation 

4 shall, on a timely basis, not less frequently than 

5 quarterly, amend or revise and resubmit the re6 ports prepared under this paragraph, as nec7 essary. 

8 (4) DEFAULT OR IN DANGER OF DEFAULT.— 

9 For purposes of this title, a financial company shall 

10 be considered to be in default or in danger of default 

11 if, as determined in accordance with subsection 

12 (b)— 

13 (A) a case has been, or likely will promptly 

14 be, commenced with respect to the financial 

15 company under the Bankruptcy Code; 

16 (B) the financial company has incurred, or 

17 is likely to incur, losses that will deplete all or 

18 substantially all of its capital, and there is no 

19 reasonable prospect for the company to avoid 

20 such depletion; 

21 (C) the assets of the financial company 

22 are, or are likely to be, less than its obligations 

23 to creditors and others; or 

24 (D) the financial company is, or is likely to 

25 be, unable to pay its obligations (other than 


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1 those subject to a bona fide dispute) in the nor2 mal course of business. 

3 (5) GAO REVIEW.—The Comptroller General of 

4 the United States shall review and report to Con5 gress on any determination under subsection (b), 

6 that results in the appointment of the Corporation 

7 as receiver, including— 

8 (A) the basis for the determination; 

9 (B) the purpose for which any action was 

10 taken pursuant thereto; 

11 (C) the likely effect of the determination 

12 and such action on the incentives and conduct 

13 of financial companies and their creditors, 

14 counterparties, and shareholders; and 

15 (D) the likely disruptive effect of the deter16 mination and such action on the reasonable ex17 pectations of creditors, counterparties, and 

18 shareholders, taking into account the impact 

19 any action under this title would have on finan20 cial stability in the United States, including 

21 whether the rights of such parties will be dis22 rupted. 

23 (d) CORPORATION POLICIES AND PROCEDURES.—As 

24 soon as is practicable after the date of enactment of this 

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1 dures that are acceptable to the Secretary governing the 

2 use of funds available to the Corporation to carry out this 

3 title, including the terms and conditions for the provision 

4 and use of funds under sections 204(d), 210(h)(2)(G)(iv), 

5 and 210(h)(9). 

6 (e) TREATMENT OF INSURANCE COMPANIES AND IN7 SURANCE COMPANY SUBSIDIARIES.— 

8 (1) IN GENERAL.—Notwithstanding subsection 

9 (b), if an insurance company is a covered financial 

10 company or a subsidiary or affiliate of a covered fi11 nancial company, the liquidation or rehabilitation of 

12 such insurance company, and any subsidiary or affil13 iate of such company that is not excepted under 

14 paragraph (2), shall be conducted as provided under 

15 such State law. 

16 (2) EXCEPTION FOR SUBSIDIARIES AND AFFILI17 ATES.—The requirement of paragraph (1) shall not 

18 apply with respect to any subsidiary or affiliate of 

19 an insurance company that is not itself an insurance 

20 company. 

21 (3) BACKUP AUTHORITY.—Notwithstanding 

22 paragraph (1), with respect to a covered financial 

23 company described in paragraph (1), if, after the 

24 end of the 60-day period beginning on the date on 

25 which a determination is made under section 202(b) 


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1 with respect to such company, the appropriate regu2 latory agency has not filed the appropriate judicial 

3 action in the appropriate State court to place such 

4 company into orderly liquidation under the laws and 

5 requirements of the State, the Corporation shall 

6 have the authority to stand in the place of the ap7 propriate regulatory agency and file the appropriate 

8 judicial action in the appropriate State court to 

9 place such company into orderly liquidation under 

10 the laws and requirements of the State. 

11 SEC. 204. ORDERLY LIQUIDATION. 

12 (a) PURPOSE OF ORDERLY LIQUIDATION AUTHOR13 ITY.—It is the purpose of this title to provide the nec14 essary authority to liquidate failing financial companies 

15 that pose a significant risk to the financial stability of the 

16 United States in a manner that mitigates such risk and 

17 minimizes moral hazard. The authority provided in this 

18 title shall be exercised in the manner that best fulfills such 

19 purpose, with the strong presumption that— 

20 (1) creditors and shareholders will bear the 

21 losses of the financial company; 

22 (2) management responsible for the condition of 

23 the financial company will not be retained; and 

24 (3) the Corporation and other appropriate 

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1 priate to assure that all parties, including manage2 ment and third parties, having responsibility for the 

3 condition of the financial company bear losses con4 sistent with their responsibility, including actions for 

5 damages, restitution, and recoupment of compensa6 tion and other gains not compatible with such re7 sponsibility. 

8 (b) CORPORATION AS RECEIVER.—Upon the appoint9 ment of the Corporation under section 202, the Corpora10 tion shall act as the receiver for the covered financial com11 pany, with all of the rights and obligations set forth in 

12 this title. 

13 (c) CONSULTATION.—The Corporation, as receiver— 

14 (1) shall consult with the primary financial reg15 ulatory agency or agencies of the covered financial 

16 company and its covered subsidiaries for purposes of 

17 ensuring an orderly liquidation of the covered finan18 cial company; 

19 (2) may consult with, or under subsection 

20 (a)(1)(B)(v) or (a)(1)(L) of section 210, acquire the 

21 services of, any outside experts, as appropriate to in22 form and aid the Corporation in the orderly liquida23 tion process; 

24 (3) shall consult with the primary financial reg25 ulatory agency or agencies of any subsidiaries of the 


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1 covered financial company that are not covered sub2 sidiaries, and coordinate with such regulators re3 garding the treatment of such solvent subsidiaries 

4 and the separate resolution of any such insolvent 

5 subsidiaries under other governmental authority, as 

6 appropriate; and 

7 (4) shall consult with the Commission and the 

8 Securities Investor Protection Corporation in the 

9 case of any covered financial company for which the 

10 Corporation has been appointed as receiver that is a 

11 broker or dealer registered with the Commission 

12 under section 15(b) of the Securities Exchange Act 

13 of 1934 (15 U.S.C. 78o(b)) and is a member of the 

14 Securities Investor Protection Corporation, for the 

15 purpose of determining whether to transfer to a 

16 bridge financial company organized by the Corpora17 tion as receiver, without consent of any customer, 

18 customer accounts of the covered financial company. 

19 (d) FUNDING FOR ORDERLY LIQUIDATION.—Upon 

20 its appointment as receiver for a covered financial com21 pany, and thereafter as the Corporation may, in its discre22 tion, determine to be necessary or appropriate, the Cor23 poration may make available to the receivership, subject 

24 to the conditions set forth in section 206 and subject to 


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1 the plan described in section 210(n)(13), funds for the or2 derly liquidation of the covered financial company. 

3 SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS 

4 AND DEALERS. 

5 (a) APPOINTMENT OF SIPC AS TRUSTEE FOR PRO6 TECTION OF CUSTOMER SECURITIES AND PROPERTY.— 

7 Upon the appointment of the Corporation as receiver for 

8 any covered broker or dealer, the Corporation shall ap9 point, without any need for court approval, the Securities 

10 Investor Protection Corporation to act as trustee for liq11 uidation under the Securities Investor Protection Act of 

12 1970 (15 U.S.C. 78aaa et seq.) of the covered broker or 

13 dealer. 

14 (b) POWERS AND DUTIES OF SIPC.— 

15 (1) IN GENERAL.—Except as provided in this 

16 section, upon its appointment as trustee for the liq17 uidation of a covered broker or dealer, SIPC shall 

18 have all of the powers and duties provided by the Se19 curities Investor Protection Act of 1970 (15 U.S.C. 

20 78aaa et seq.), including, without limitation, all 

21 rights of action against third parties, but shall have 

22 no powers or duties with respect to assets and liabil23 ities transferred by the Corporation from the covered 

24 broker or dealer to any bridge financial company es25 tablished in accordance with this title. 


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1 (2) LIMITATION OF POWERS.—The exercise by 

2 SIPC of powers and functions as trustee under sub3 section (a) shall not impair or impede the exercise 

4 of the powers and duties of the Corporation with re5 gard to— 

6 (A) any action, except as otherwise pro7 vided in this title— 

8 (i) to make funds available under sec9 tion 204(d); 

10 (ii) to organize, establish, operate, or 

11 terminate any bridge financial company; 

12 (iii) to transfer assets and liabilities; 

13 (iv) to enforce or repudiate contracts; 

14 or 

15 (v) to take any other action relating 

16 to such bridge financial company under 

17 section 210; or 

18 (B) determining claims under subsection 

19 (d). 

20 (3) QUALIFIED FINANCIAL CONTRACTS.—Not21 withstanding any provision of the Securities Investor 

22 Protection Act of 1970 to the contrary (including 

23 section 5(b)(2)(C) of that Act (15 U.S.C. 

24 78eee(b)(2)(C))), the rights and obligations of any 

25 party to a qualified financial contract (as that term 


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1 is defined in section 210(c)(8)) to which a covered 

2 broker or dealer described in subsection (a) is a 

3 party shall be governed exclusively by section 210, 

4 including the limitations and restrictions contained 

5 in section 210(c)(10)(B). 

6 (c) LIMITATION ON COURT ACTION.—Except as oth7 erwise provided in this title, no court may take any action, 

8 including any action pursuant to the Securities Investor 

9 Protection Act of 1970 or the Bankruptcy Code, to re10 strain or affect the exercise of powers or functions of the 

11 Corporation as receiver for a covered broker or dealer and 

12 any claims against the Corporation as such receiver shall 

13 be determined in accordance with subsection (e) and such 

14 claims shall be limited to money damages. 

15 (d) ACTIONS BY CORPORATION AS RECEIVER.— 

16 (1) IN GENERAL.—Notwithstanding any other 

17 provision of this title, no action taken by the Cor18 poration, as receiver with respect to a covered broker 

19 or dealer, shall— 

20 (A) adversely affect the rights of a cus21 tomer to customer property or customer name 

22 securities; 

23 (B) diminish the amount or timely pay24 ment of net equity claims of customers; or 


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1 (C) otherwise impair the recoveries pro2 vided to a customer under the Securities Inves3 tor Protection Act of 1970 (15 U.S.C. 78aaa et 

4 seq.). 

5 (2) NET PROCEEDS.—The net proceeds from 

6 any transfer, sale, or disposition of assets by the 

7 Corporation as receiver for the covered broker or 

8 dealer shall be for the benefit of the estate of the 

9 covered broker or dealer, as provided in this title. 

10 (e) CLAIMS AGAINST THE CORPORATION AS RE11 CEIVER.—Any claim against the Corporation as receiver 

12 for a covered broker or dealer for assets transferred to 

13 a bridge financial company established with respect to 

14 such covered broker or dealer— 

15 (1) shall be determined in accordance with sec16 tion 210(a)(2); and 

17 (2) may be reviewed by the appropriate district 

18 or territorial court of the United States in accord19 ance with section 210(a)(5). 

20 (f) SATISFACTION OF CUSTOMER CLAIMS.— 

21 (1) OBLIGATIONS TO CUSTOMERS.—Notwith22 standing any other provision of this title, all obliga23 tions of a covered broker or dealer or of any bridge 

24 financial company established with respect to such 

25 covered broker or dealer to a customer relating to, 


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1 or net equity claims based upon, customer property 

2 shall be promptly discharged by the delivery of secu3 rities or the making of payments to or for the ac4 count of such customer, in a manner and in an 

5 amount at least as beneficial to the customer as 

6 would have been the case had the covered broker or 

7 dealer been subject to a proceeding under the Secu8 rities Investor Protection Act of 1970 (15 U.S.C. 

9 78aaa et seq.) without the appointment of the Cor10 poration as receiver, and with a filing date as of the 

11 date on which the Corporation is appointed as re12 ceiver. 

13 (2) SATISFACTION OF CLAIMS BY SIPC.—SIPC, 

14 as trustee for a covered broker or dealer, shall sat15 isfy customer claims in the manner and amount pro16 vided under the Securities Investor Protection Act of 

17 1970 (15 U.S.C. 78aaa et seq.), as if the appoint18 ment of the Corporation as receiver had not oc19 curred, and with a filing date as of the date on 

20 which the Corporation is appointed as receiver. The 

21 Corporation shall satisfy customer claims, to the ex22 tent that a customer would have received more secu23 rities or cash with respect to the allocation of cus24 tomer property had the covered financial company 

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1 vestor Protection Act (15 U.S.C. 78aaa et seq.) 

2 without the appointment of the Corporation as re3 ceiver, and with a filing date as of the date on which 

4 the Corporation is appointed as receiver. 

5 (g) PRIORITIES.— 

6 (1) CUSTOMER PROPERTY.—As trustee for a 

7 covered broker or dealer, SIPC shall allocate cus8 tomer property and deliver customer name securities 

9 in accordance with section 8(c) of the Securities In10 vestor Protection Act of 1970 (15 U.S.C. 78fff– 

11 2(c)). 

12 (2) OTHER CLAIMS.—All claims other than 

13 those described in paragraph (1) (including any un14 paid claim by a customer for the allowed net equity 

15 claim of such customer from customer property) 

16 shall be paid in accordance with the priorities in sec17 tion 210(b). 

18 (h) RULEMAKING.—The Commission and the Cor19 poration, after consultation with SIPC, shall jointly issue 

20 rules to implement this section. 

21 SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL 

22 ORDERLY LIQUIDATION ACTIONS. 

23 In taking action under this title, the Corporation 

24 shall— 


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1 (1) determine that such action is necessary for 

2 purposes of the financial stability of the United 

3 States, and not for the purpose of preserving the 

4 covered financial company; 

5 (2) ensure that the shareholders of a covered fi6 nancial company do not receive payment until after 

7 all other claims and the Fund are fully paid; 

8 (3) ensure that unsecured creditors bear losses 

9 in accordance with the priority of claim provisions in 

10 section 210; 

11 (4) ensure that management responsible for the 

12 failed condition of the covered financial company is 

13 removed (if such management has not already been 

14 removed at the time at which the Corporation is ap15 pointed receiver); and 

16 (5) not take an equity interest in or become a 

17 shareholder of any covered financial company or any 

18 covered subsidiary. 

19 SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN 

20 APPOINTMENT OF RECEIVER. 

21 The members of the board of directors (or body per22 forming similar functions) of a covered financial company 

23 shall not be liable to the shareholders or creditors thereof 

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1 pointment of the Corporation as receiver for the covered 

2 financial company under section 203. 

3 SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS. 

4 (a) IN GENERAL.—Effective as of the date of the ap5 pointment of the Corporation as receiver for the covered 

6 financial company under section 202 or the appointment 

7 of SIPC as trustee for a covered broker or dealer under 

8 section 205, as applicable, any case or proceeding com9 menced with respect to the covered financial company 

10 under the Bankruptcy Code or the Securities Investor 

11 Protection Act of 1970 shall be dismissed, upon notice to 

12 the Bankruptcy Court (with respect to a case commenced 

13 under the Bankruptcy Code), and upon notice to SIPC 

14 (with respect to a covered broker or dealer) and no such 

15 case or proceeding may be commenced with respect to a 

16 covered financial company at any time while the orderly 

17 liquidation is pending. 

18 (b) REVESTING OF ASSETS.—Effective as of the date 

19 of appointment of the Corporation as receiver, the assets 

20 of a covered financial company shall, to the extent they 

21 have vested in any entity other than the covered financial 

22 company as a result of any case or proceeding commenced 

23 with respect to the covered financial company under the 

24 Bankruptcy Code, the Securities Investor Protection Act 

25 of 1970, or any similar provision of State liquidation or 


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1 insolvency law applicable to the covered financial company, 

2 revest in the covered financial company. 

3 (c) LIMITATION.—Notwithstanding subsections (a) 

4 and (b), any order entered or other relief granted by a 

5 bankruptcy court prior to the date of appointment of the 

6 Corporation as receiver shall continue with the same valid7 ity as if an orderly liquidation had not been commenced. 

8 SEC. 209. RULEMAKING; NON-CONFLICTING LAW. 

9 The Corporation shall, in consultation with the Coun10 cil, prescribe such rules or regulations as the Corporation 

11 considers necessary or appropriate to implement this title, 

12 including rules and regulations with respect to the rights, 

13 interests, and priorities of creditors, counterparties, secu14 rity entitlement holders, or other persons with respect to 

15 any covered financial company or any assets or other prop16 erty of or held by such covered financial company. To the 

17 extent possible, the Corporation shall seek to harmonize 

18 applicable rules and regulations promulgated under this 

19 section with the insolvency laws that would otherwise 

20 apply to a covered financial company. 

21 SEC. 210. POWERS AND DUTIES OF THE CORPORATION. 

22 (a) POWERS AND AUTHORITIES.— 

23 (1) GENERAL POWERS.— 

24 (A) SUCCESSOR TO COVERED FINANCIAL

25 COMPANY.—The Corporation shall, upon apVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00146 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 pointment as receiver for a covered financial 

2 company under this title, succeed to— 

3 (i) all rights, titles, powers, and privi4 leges of the covered financial company and 

5 its assets, and of any stockholder, member, 

6 officer, or director of such company; and 

7 (ii) title to the books, records, and as8 sets of any previous receiver or other legal 

9 custodian of such covered financial com10 pany. 

11 (B) OPERATION OF THE COVERED FINAN12 CIAL COMPANY DURING THE PERIOD OF OR13 DERLY LIQUIDATION.—The Corporation, as re14 ceiver for a covered financial company, may— 

15 (i) take over the assets of and operate 

16 the covered financial company with all of 

17 the powers of the members or share18 holders, the directors, and the officers of 

19 the covered financial company, and con20 duct all business of the covered financial 

21 company; 

22 (ii) collect all obligations and money 

23 owed to the covered financial company; 


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1 (iii) perform all functions of the cov2 ered financial company, in the name of the 

3 covered financial company; 

4 (iv) manage the assets and property 

5 of the covered financial company, con6 sistent with maximization of the value of 

7 the assets in the context of the orderly liq8 uidation; and 

9 (v) provide by contract for assistance 

10 in fulfilling any function, activity, action, 

11 or duty of the Corporation as receiver. 

12 (C) FUNCTIONS OF COVERED FINANCIAL

13 COMPANY OFFICERS, DIRECTORS, AND SHARE14 HOLDERS.— 

15 (i) IN GENERAL.—The Corporation 

16 may provide for the exercise of any func17 tion by any member or stockholder, direc18 tor, or officer of any covered financial com19 pany for which the Corporation has been 

20 appointed as receiver under this title. 

21 (ii) PRESUMPTION.—There shall be a 

22 strong presumption that the Corporation, 

23 as receiver for a covered financial com24 pany, will remove management responsible 


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1 for the failed condition of the covered fi2 nancial company. 

3 (D) ADDITIONAL POWERS AS RECEIVER.— 

4 The Corporation shall, as receiver for a covered 

5 financial company, and subject to all legally en6 forceable and perfected security interests and 

7 all legally enforceable security entitlements in 

8 respect of assets held by the covered financial 

9 company, liquidate, and wind-up the affairs of 

10 a covered financial company, including taking 

11 steps to realize upon the assets of the covered 

12 financial company, in such manner as the Cor13 poration deems appropriate, including through 

14 the sale of assets, the transfer of assets to a 

15 bridge financial company established under sub16 section (h), or the exercise of any other rights 

17 or privileges granted to the receiver under this 

18 section. 

19 (E) ADDITIONAL POWERS WITH RESPECT

20 TO FAILING SUBSIDIARIES OF A COVERED FI21 NANCIAL COMPANY.— 

22 (i) IN GENERAL.—In any case in 

23 which a receiver is appointed for a covered 

24 financial company under section 202, the 

25 Corporation may appoint itself as receiver 


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1 of any subsidiary (other than an insured 

2 depository institution, any covered broker 

3 or dealer, or an insurance company) of the 

4 covered financial company that is orga5 nized under Federal law or the laws of any 

6 State, if the Corporation and the Secretary 

7 jointly determine that— 

8 (I) the subsidiary is in default or 

9 in danger of default; 

10 (II) such action would avoid or 

11 mitigate serious adverse effects on the 

12 financial stability or economic condi13 tions of the United States; and 

14 (III) such action would facilitate 

15 the orderly liquidation of the covered 

16 financial company. 

17 (ii) TREATMENT AS COVERED FINAN18 CIAL COMPANY.—If the Corporation is ap19 pointed as receiver of a subsidiary of a cov20 ered financial company under clause (i), 

21 the subsidiary shall thereafter be consid22 ered a covered financial company under 

23 this title, and the Corporation shall there24 after have all the powers and rights with 

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1 spect to a covered financial company under 

2 this title. 

3 (F) ORGANIZATION OF BRIDGE COMPA4 NIES.—The Corporation, as receiver for a cov5 ered financial company, may organize a bridge 

6 financial company under subsection (h). 

7 (G) MERGER; TRANSFER OF ASSETS AND

8 LIABILITIES.— 

9 (i) IN GENERAL.—Subject to clauses 

10 (ii) and (iii), the Corporation, as receiver 

11 for a covered financial company, may— 

12 (I) merge the covered financial 

13 company with another company; or 

14 (II) transfer any asset or liability 

15 of the covered financial company (in16 cluding any assets and liabilities held 

17 by the covered financial company for 

18 security entitlement holders, any cus19 tomer property, or any assets and li20 abilities associated with any trust or 

21 custody business) without obtaining 

22 any approval, assignment, or consent 

23 with respect to such transfer. 

24 (ii) FEDERAL AGENCY APPROVAL; 

25 ANTITRUST REVIEW.—With respect to a 


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1 transaction described in clause (i)(I) that 

2 requires approval by a Federal agency— 

3 (I) the transaction may not be 

4 consummated before the 5th calendar 

5 day after the date of approval by the 

6 Federal agency responsible for such 

7 approval; 

8 (II) if, in connection with any 

9 such approval, a report on competitive 

10 factors is required, the Federal agency 

11 responsible for such approval shall 

12 promptly notify the Attorney General 

13 of the United States of the proposed 

14 transaction, and the Attorney General 

15 shall provide the required report not 

16 later than 10 days after the date of 

17 the request; and 

18 (III) if notification under section 

19 7A of the Clayton Act is required with 

20 respect to such transaction, then the 

21 required waiting period shall end on 

22 the 15th day after the date on which 

23 the Attorney General and the Federal 

24 Trade Commission receive such notifi25 cation, unless the waiting period is 


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1 terminated earlier under subsection 

2 (b)(2) of such section 7A, or is ex3 tended pursuant to subsection (e)(2) 

4 of such section 7A. 

5 (iii) SETOFF.—Subject to the other 

6 provisions of this title, any transferee of 

7 assets from a receiver, including a bridge 

8 financial company, shall be subject to such 

9 claims or rights as would prevail over the 

10 rights of such transferee in such assets 

11 under applicable noninsolvency law. 

12 (H) PAYMENT OF VALID OBLIGATIONS.— 

13 The Corporation, as receiver for a covered fi14 nancial company, shall, to the extent that funds 

15 are available, pay all valid obligations of the 

16 covered financial company that are due and 

17 payable at the time of the appointment of the 

18 Corporation as receiver, in accordance with the 

19 prescriptions and limitations of this title. 

20 (I) APPLICABLE NONINSOLVENCY LAW.— 

21 Except as may otherwise be provided in this 

22 title, the applicable noninsolvency law shall be 

23 determined by the noninsolvency choice of law 

24 rules otherwise applicable to the claims, rights, 

25 titles, persons, or entities at issue. 


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1 (J) SUBPOENA AUTHORITY.— 

2 (i) IN GENERAL.—The Corporation, 

3 as receiver for a covered financial com4 pany, may, for purposes of carrying out 

5 any power, authority, or duty with respect 

6 to the covered financial company (includ7 ing determining any claim against the cov8 ered financial company and determining 

9 and realizing upon any asset of any person 

10 in the course of collecting money due the 

11 covered financial company), exercise any 

12 power established under section 8(n) of the 

13 Federal Deposit Insurance Act, as if the 

14 Corporation were the appropriate Federal 

15 banking agency for the covered financial 

16 company, and the covered financial com17 pany were an insured depository institu18 tion. 

19 (ii) RULE OF CONSTRUCTION.—This 

20 subparagraph may not be construed as 

21 limiting any rights that the Corporation, in 

22 any capacity, might otherwise have to exer23 cise any powers described in clause (i) or 

24 under any other provision of law. 


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1 (K) INCIDENTAL POWERS.—The Corpora2 tion, as receiver for a covered financial com3 pany, may exercise all powers and authorities 

4 specifically granted to receivers under this title, 

5 and such incidental powers as shall be nec6 essary to carry out such powers under this title. 

7 (L) UTILIZATION OF PRIVATE SECTOR.— 

8 In carrying out its responsibilities in the man9 agement and disposition of assets from the cov10 ered financial company, the Corporation, as re11 ceiver for a covered financial company, may uti12 lize the services of private persons, including 

13 real estate and loan portfolio asset manage14 ment, property management, auction mar15 keting, legal, and brokerage services, if such 

16 services are available in the private sector, and 

17 the Corporation determines that utilization of 

18 such services is practicable, efficient, and cost 

19 effective. 

20 (M) SHAREHOLDERS AND CREDITORS OF

21 COVERED FINANCIAL COMPANY.—Notwith22 standing any other provision of law, the Cor23 poration, as receiver for a covered financial 

24 company, shall succeed by operation of law to 

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1 scribed in subparagraph (A), and shall termi2 nate all rights and claims that the stockholders 

3 and creditors of the covered financial company 

4 may have against the assets of the covered fi5 nancial company or the Corporation arising out 

6 of their status as stockholders or creditors, ex7 cept for their right to payment, resolution, or 

8 other satisfaction of their claims, as permitted 

9 under this section. The Corporation shall en10 sure that shareholders and unsecured creditors 

11 bear losses, consistent with the priority of 

12 claims provisions under this section. 

13 (N) COORDINATION WITH FOREIGN FINAN14 CIAL AUTHORITIES.—The Corporation, as re15 ceiver for a covered financial company, shall co16 ordinate, to the maximum extent possible, with 

17 the appropriate foreign financial authorities re18 garding the orderly liquidation of any covered 

19 financial company that has assets or operations 

20 in a country other than the United States. 

21 (O) RESTRICTION ON TRANSFERS TO

22 BRIDGE FINANCIAL COMPANY.— 

23 (i) SECTION OF ACCOUNTS FOR

24 TRANSFER.—If the Corporation establishes 

25 one or more bridge financial companies 


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1 with respect to a covered broker or dealer, 

2 the Corporation shall transfer to a bridge 

3 financial company, all customer accounts 

4 of the covered financial company, unless 

5 the Corporation, after consulting with the 

6 Commission and SIPC, determines that— 

7 (I) the customer accounts are 

8 likely to be promptly transferred to 

9 another covered broker or dealer; or 

10 (II) the transfer of the accounts 

11 to a bridge financial company would 

12 materially interfere with the ability of 

13 the Corporation to avoid or mitigate 

14 serious adverse effects on financial 

15 stability or economic conditions in the 

16 United States. 

17 (ii) TRANSFER OF PROPERTY.—SIPC, 

18 as trustee for the liquidation of the covered 

19 broker or dealer, and the Commission, 

20 shall provide any and all reasonable assist21 ance necessary to complete such transfers 

22 by the Corporation. 

23 (iii) CUSTOMER CONSENT AND COURT

24 APPROVAL NOT REQUIRED.—Neither cus25 tomer consent nor court approval shall be 


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1 required to transfer any customer accounts 

2 and associated customer property to a 

3 bridge financial company in accordance 

4 with this section. 

5 (iv) NOTIFICATION OF SIPC AND

6 SHARING OF INFORMATION.—The Corpora7 tion shall identify to SIPC the customer 

8 accounts and associated customer property 

9 transferred to the bridge financial com10 pany. The Corporation and SIPC shall co11 operate in the sharing of any information 

12 necessary for each entity to discharge its 

13 obligations under this title and under the 

14 Securities Investor Protection Act of 1970 

15 (15 U.S.C. 78aaa et seq.) including by pro16 viding access to the books and records of 

17 the covered financial company and any 

18 bridge financial company established in ac19 cordance with this title. 

20 (2) DETERMINATION OF CLAIMS.— 

21 (A) IN GENERAL.—The Corporation, as re22 ceiver for a covered financial company, shall re23 port on claims, as set forth in section 203(c)(3). 

24 Subject to paragraph (4) of this subsection, the 

25 Corporation, as receiver for a covered financial 


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1 company, shall determine claims in accordance 

2 with the requirements of this subsection and 

3 regulations prescribed under section 209. 

4 (B) NOTICE REQUIREMENTS.—The Cor5 poration, as receiver for a covered financial 

6 company, in any case involving the liquidation 

7 or winding up of the affairs of a covered finan8 cial company, shall— 

9 (i) promptly publish a notice to the 

10 creditors of the covered financial company 

11 to present their claims, together with 

12 proof, to the receiver by a date specified in 

13 the notice, which shall be not earlier than 

14 90 days after the date of publication of 

15 such notice; and 

16 (ii) republish such notice 1 month and 

17 2 months, respectively, after the date of 

18 publication under clause (i). 

19 (C) MAILING REQUIRED.—The Corpora20 tion as receiver shall mail a notice similar to 

21 the notice published under clause (i) or (ii) of 

22 subparagraph (B), at the time of such publica23 tion, to any creditor shown on the books and 

24 records of the covered financial company— 


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1 (i) at the last address of the creditor 

2 appearing in such books; 

3 (ii) in any claim filed by the claimant; 

4 or 

5 (iii) upon discovery of the name and 

6 address of a claimant not appearing on the 

7 books and records of the covered financial 

8 company, not later than 30 days after the 

9 date of the discovery of such name and ad10 dress. 

11 (3) PROCEDURES FOR RESOLUTION OF

12 CLAIMS.— 

13 (A) DECISION PERIOD.— 

14 (i) IN GENERAL.—Prior to the 180th 

15 day after the date on which a claim 

16 against a covered financial company is 

17 filed with the Corporation as receiver, or 

18 such later date as may be agreed as pro19 vided in clause (ii), the Corporation shall 

20 notify the claimant whether it accepts or 

21 objects to the claim, in accordance with 

22 subparagraphs (B), (C), and (D). 

23 (ii) EXTENSION OF TIME.—By written 

24 agreement executed not later than 180 

25 days after the date on which a claim 


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1 against a covered financial company is 

2 filed with the Corporation, the period de3 scribed in clause (i) may be extended by 

4 written agreement between the claimant 

5 and the Corporation. Failure to notify the 

6 claimant of any disallowance within the 

7 time period set forth in clause (i), as it 

8 may be extended by agreement under this 

9 clause, shall be deemed to be a disallow10 ance of such claim, and the claimant may 

11 file or continue an action in court, as pro12 vided in paragraph (4). 

13 (iii) MAILING OF NOTICE SUFFI14 CIENT.—The requirements of clause (i) 

15 shall be deemed to be satisfied if the notice 

16 of any decision with respect to any claim 

17 is mailed to the last address of the claim18 ant which appears— 

19 (I) on the books, records, or both 

20 of the covered financial company; 

21 (II) in the claim filed by the 

22 claimant; or 

23 (III) in documents submitted in 

24 proof of the claim. 


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1 (iv) CONTENTS OF NOTICE OF DIS2 ALLOWANCE.—If the Corporation as re3 ceiver objects to any claim filed under 

4 clause (i), the notice to the claimant shall 

5 contain— 

6 (I) a statement of each reason 

7 for the disallowance; and 

8 (II) the procedures required to 

9 file or continue an action in court, as 

10 provided in paragraph (4). 

11 (B) ALLOWANCE OF PROVEN CLAIM.—The 

12 receiver shall allow any claim received by the 

13 receiver on or before the date specified in the 

14 notice under paragraph (2)(B)(i), which is 

15 proved to the satisfaction of the receiver. 

16 (C) DISALLOWANCE OF CLAIMS FILED

17 AFTER END OF FILING PERIOD.— 

18 (i) IN GENERAL.—Except as provided 

19 in clause (ii), claims filed after the date 

20 specified in the notice published under 

21 paragraph (2)(B)(i) shall be disallowed, 

22 and such disallowance shall be final. 

23 (ii) CERTAIN EXCEPTIONS.—Clause 

24 (i) shall not apply with respect to any 

25 claim filed by a claimant after the date 


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1 specified in the notice published under 

2 paragraph (2)(B)(i), and such claim may 

3 be considered by the receiver under sub4 paragraph (B), if— 

5 (I) the claimant did not receive 

6 notice of the appointment of the re7 ceiver in time to file such claim before 

8 such date; and 

9 (II) such claim is filed in time to 

10 permit payment of such claim. 

11 (D) AUTHORITY TO DISALLOW CLAIMS.— 

12 (i) IN GENERAL.—The Corporation 

13 may object to any portion of any claim by 

14 a creditor or claim of a security, pref15 erence, setoff, or priority which is not 

16 proved to the satisfaction of the Corpora17 tion. 

18 (ii) PAYMENTS TO UNDERSECURED

19 CREDITORS.—In the case of a claim 

20 against a covered financial company that is 

21 secured by any property or other asset of 

22 such covered financial company, the re23 ceiver— 

24 (I) may treat the portion of such 

25 claim which exceeds an amount equal 


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1 to the fair market value of such prop2 erty or other asset as an unsecured 

3 claim; and 

4 (II) may not make any payment 

5 with respect to such unsecured por6 tion of the claim, other than in con7 nection with the disposition of all 

8 claims of unsecured creditors of the 

9 covered financial company. 

10 (iii) EXCEPTIONS.—No provision of 

11 this paragraph shall apply with respect 

12 to— 

13 (I) any extension of credit from 

14 any Federal reserve bank, or the Cor15 poration, to any covered financial 

16 company; or 

17 (II) subject to clause (ii), any le18 gally enforceable and perfected secu19 rity interest in the assets of the cov20 ered financial company securing any 

21 such extension of credit. 

22 (E) LEGAL EFFECT OF FILING.— 

23 (i) STATUTE OF LIMITATIONS

24 TOLLED.—For purposes of any applicable 

25 statute of limitations, the filing of a claim 


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1 with the receiver shall constitute a com2 mencement of an action. 

3 (ii) NO PREJUDICE TO OTHER AC4 TIONS.—Subject to paragraph (8), the fil5 ing of a claim with the receiver shall not 

6 prejudice any right of the claimant to con7 tinue any action which was filed before the 

8 date of appointment of the receiver for the 

9 covered financial company. 

10 (4) JUDICIAL DETERMINATION OF CLAIMS.— 

11 (A) IN GENERAL.—Subject to subpara12 graph (B), a claimant may file suit on a claim 

13 (or continue an action commenced before the 

14 date of appointment of the Corporation as re15 ceiver) in the district or territorial court of the 

16 United States for the district within which the 

17 principal place of business of the covered finan18 cial company is located (and such court shall 

19 have jurisdiction to hear such claim). 

20 (B) TIMING.—A claim under subparagraph 

21 (A) may be filed before the end of the 60-day 

22 period beginning on the earlier of— 

23 (i) the end of the period described in 

24 paragraph (3)(A)(i) (or, if extended by 

25 agreement of the Corporation and the 


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1 claimant, the period described in para2 graph (3)(A)(ii)) with respect to any claim 

3 against a covered financial company for 

4 which the Corporation is receiver; or 

5 (ii) the date of any notice of disallow6 ance of such claim pursuant to paragraph 

7 (3)(A)(i). 

8 (C) STATUTE OF LIMITATIONS.—If any 

9 claimant fails to file suit on such claim (or to 

10 continue an action on such claim commenced 

11 before the date of appointment of the Corpora12 tion as receiver) prior to the end of the 60-day 

13 period described in subparagraph (B), the claim 

14 shall be deemed to be disallowed (other than 

15 any portion of such claim which was allowed by 

16 the receiver) as of the end of such period, such 

17 disallowance shall be final, and the claimant 

18 shall have no further rights or remedies with re19 spect to such claim. 

20 (5) EXPEDITED DETERMINATION OF CLAIMS.— 

21 (A) PROCEDURE REQUIRED.—The Cor22 poration shall establish a procedure for expe23 dited relief outside of the claims process estab24 lished under paragraph (3), for any claimant 

25 that alleges— 


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1 (i) the existence of a legally valid and 

2 enforceable or perfected security interest in 

3 property of a covered financial company, or 

4 is an entitlement holder that has obtained 

5 control of any legally valid and enforceable 

6 security entitlement in respect of any asset 

7 held by the covered financial company for 

8 which the Corporation has been appointed 

9 receiver; and 

10 (ii) that irreparable injury will occur 

11 if the claims procedure established under 

12 paragraph (3) is followed. 

13 (B) DETERMINATION PERIOD.—Prior to 

14 the end of the 90-day period beginning on the 

15 date on which a claim is filed in accordance 

16 with the procedures established pursuant to 

17 subparagraph (A), the Corporation shall— 

18 (i) determine— 

19 (I) whether to allow or disallow 

20 such claim, or any portion thereof; or 

21 (II) whether such claim should be 

22 determined pursuant to the proce23 dures established pursuant to para24 graph (3); 


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1 (ii) notify the claimant of the deter2 mination; and 

3 (iii) if the claim is disallowed, provide 

4 a statement of each reason for the dis5 allowance and the procedure for obtaining 

6 a judicial determination. 

7 (C) PERIOD FOR FILING OR RENEWING

8 SUIT.—Any claimant who files a request for ex9 pedited relief shall be permitted to file suit (or 

10 continue a suit filed before the date of appoint11 ment of the Corporation as receiver seeking a 

12 determination of the rights of the claimant with 

13 respect to such security interest (or such secu14 rity entitlement) after the earlier of— 

15 (i) the end of the 90-day period begin16 ning on the date of the filing of a request 

17 for expedited relief; or 

18 (ii) the date on which the Corporation 

19 denies the claim or a portion thereof. 

20 (D) STATUTE OF LIMITATIONS.—If an ac21 tion described in subparagraph (C) is not filed, 

22 or the motion to renew a previously filed suit is 

23 not made, before the end of the 30-day period 

24 beginning on the date on which such action or 

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1 paragraph (C), the claim shall be deemed to be 

2 disallowed as of the end of such period (other 

3 than any portion of such claim which was al4 lowed by the receiver), such disallowance shall 

5 be final, and the claimant shall have no further 

6 rights or remedies with respect to such claim. 

7 (E) LEGAL EFFECT OF FILING.— 

8 (i) STATUTE OF LIMITATIONS

9 TOLLED.—For purposes of any applicable 

10 statute of limitations, the filing of a claim 

11 with the receiver shall constitute a com12 mencement of an action. 

13 (ii) NO PREJUDICE TO OTHER AC14 TIONS.—Subject to paragraph (8), the fil15 ing of a claim with the receiver shall not 

16 prejudice any right of the claimant to con17 tinue any action which was filed before the 

18 appointment of the Corporation as receiver 

19 for the covered financial company. 

20 (6) AGREEMENTS AGAINST INTEREST OF THE

21 RECEIVER.—No agreement that tends to diminish or 

22 defeat the interest of the Corporation as receiver in 

23 any asset acquired by the receiver under this section 

24 shall be valid against the receiver, unless such agree25 ment— 


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1 (A) is in writing; 

2 (B) was executed by an authorized officer 

3 or representative of the covered financial com4 pany, or confirmed in the ordinary course of 

5 business by the covered financial company; and 

6 (C) has been, since the time of its execu7 tion, an official record of the company or the 

8 party claiming under the agreement provides 

9 documentation, acceptable to the receiver, of 

10 such agreement and its authorized execution or 

11 confirmation by the covered financial company. 

12 (7) PAYMENT OF CLAIMS.— 

13 (A) IN GENERAL.—Subject to subpara14 graph (B), the Corporation as receiver may, in 

15 its discretion and to the extent that funds are 

16 available, pay creditor claims, in such manner 

17 and amounts as are authorized under this sec18 tion, which are— 

19 (i) allowed by the receiver; 

20 (ii) approved by the receiver pursuant 

21 to a final determination pursuant to para22 graph (3) or (5), as applicable; or 

23 (iii) determined by the final judgment 

24 of a court of competent jurisdiction. 


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1 (B) LIMITATION.—A creditor shall, in no 

2 event, receive less than the amount that the 

3 creditor is entitled to receive under paragraphs 

4 (2) and (3) of subsection (d), as applicable. 

5 (C) PAYMENT OF DIVIDENDS ON

6 CLAIMS.—The Corporation as receiver may, in 

7 its sole discretion, and to the extent otherwise 

8 permitted by this section, pay dividends on 

9 proven claims at any time, and no liability shall 

10 attach to the Corporation as receiver, by reason 

11 of any such payment or for failure to pay divi12 dends to a claimant whose claim is not proved 

13 at the time of any such payment. 

14 (D) RULEMAKING BY THE CORPORA15 TION.—The Corporation may prescribe such 

16 rules, including definitions of terms, as the Cor17 poration deems appropriate to establish an in18 terest rate for or to make payments of post-in19 solvency interest to creditors holding proven 

20 claims against the receivership estate of a cov21 ered financial company, except that no such in22 terest shall be paid until the Corporation as re23 ceiver has satisfied the principal amount of all 

24 creditor claims. 

25 (8) SUSPENSION OF LEGAL ACTIONS.— 


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1 (A) IN GENERAL.—After the appointment 

2 of the Corporation as receiver for a covered fi3 nancial company, the Corporation may request 

4 a stay in any judicial action or proceeding in 

5 which such covered financial company is or be6 comes a party, for a period of not to exceed 90 

7 days. 

8 (B) GRANT OF STAY BY ALL COURTS RE9 QUIRED.—Upon receipt of a request by the Cor10 poration pursuant to subparagraph (A), the 

11 court shall grant such stay as to all parties. 

12 (9) ADDITIONAL RIGHTS AND DUTIES.— 

13 (A) PRIOR FINAL ADJUDICATION.—The 

14 Corporation shall abide by any final, non-ap15 pealable judgment of any court of competent ju16 risdiction that was rendered before the appoint17 ment of the Corporation as receiver. 

18 (B) RIGHTS AND REMEDIES OF RE19 CEIVER.—In the event of any appealable judg20 ment, the Corporation as receiver shall— 

21 (i) have all the rights and remedies 

22 available to the covered financial company 

23 (before the date of appointment of the Cor24 poration as receiver under section 202) 


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1 and the Corporation, including removal to 

2 Federal court and all appellate rights; and 

3 (ii) not be required to post any bond 

4 in order to pursue such remedies. 

5 (C) NO ATTACHMENT OR EXECUTION.—No 

6 attachment or execution may be issued by any 

7 court upon assets in the possession of the Cor8 poration as receiver for a covered financial com9 pany. 

10 (D) LIMITATION ON JUDICIAL REVIEW.— 

11 Except as otherwise provided in this title, no 

12 court shall have jurisdiction over— 

13 (i) any claim or action for payment 

14 from, or any action seeking a determina15 tion of rights with respect to, the assets of 

16 any covered financial company for which 

17 the Corporation has been appointed re18 ceiver, including any assets which the Cor19 poration may acquire from itself as such 

20 receiver; or 

21 (ii) any claim relating to any act or 

22 omission of such covered financial company 

23 or the Corporation as receiver. 

24 (E) DISPOSITION OF ASSETS.—In exer25 cising any right, power, privilege, or authority 


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1 as receiver in connection with any covered fi2 nancial company for which the Corporation is 

3 acting as receiver under this section, the Cor4 poration shall, to the greatest extent prac5 ticable, conduct its operations in a manner 

6 that— 

7 (i) maximizes the net present value 

8 return from the sale or disposition of such 

9 assets; 

10 (ii) minimizes the amount of any loss 

11 realized in the resolution of cases; 

12 (iii) mitigates the potential for serious 

13 adverse effects to the financial system; 

14 (iv) ensures timely and adequate com15 petition and fair and consistent treatment 

16 of offerors; and 

17 (v) prohibits discrimination on the 

18 basis of race, sex, or ethnic group in the 

19 solicitation and consideration of offers. 

20 (10) STATUTE OF LIMITATIONS FOR ACTIONS

21 BROUGHT BY RECEIVER.— 

22 (A) IN GENERAL.—Notwithstanding any 

23 provision of any contract, the applicable statute 

24 of limitations with regard to any action brought 


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1 by the Corporation as receiver for a covered fi2 nancial company shall be— 

3 (i) in the case of any contract claim, 

4 the longer of— 

5 (I) the 6-year period beginning 

6 on the date on which the claim ac7 crues; or 

8 (II) the period applicable under 

9 State law; and 

10 (ii) in the case of any tort claim, the 

11 longer of— 

12 (I) the 3-year period beginning 

13 on the date on which the claim ac14 crues; or 

15 (II) the period applicable under 

16 State law. 

17 (B) DATE ON WHICH A CLAIM ACCRUES.— 

18 For purposes of subparagraph (A), the date on 

19 which the statute of limitations begins to run 

20 on any claim described in subparagraph (A) 

21 shall be the later of— 

22 (i) the date of the appointment of the 

23 Corporation as receiver under this title; or 

24 (ii) the date on which the cause of ac25 tion accrues. 


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1 (C) REVIVAL OF EXPIRED STATE CAUSES

2 OF ACTION.— 

3 (i) IN GENERAL.—In the case of any 

4 tort claim described in clause (ii) for which 

5 the applicable statute of limitations under 

6 State law has expired not more than 5 

7 years before the date of appointment of the 

8 Corporation as receiver for a covered fi9 nancial company, the Corporation may 

10 bring an action as receiver on such claim 

11 without regard to the expiration of the 

12 statute of limitations. 

13 (ii) CLAIMS DESCRIBED.—A tort 

14 claim referred to in clause (i) is a claim 

15 arising from fraud, intentional misconduct 

16 resulting in unjust enrichment, or inten17 tional misconduct resulting in substantial 

18 loss to the covered financial company. 

19 (11) AVOIDABLE TRANSFERS.— 

20 (A) FRAUDULENT TRANSFERS.—The Cor21 poration, as receiver for any covered financial 

22 company, may avoid a transfer of any interest 

23 of the covered financial company in property, or 

24 any obligation incurred by the covered financial 

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1 in 2 years before the time of commencement, 

2 if— 

3 (i) the covered financial company vol4 untarily or involuntarily— 

5 (I) made such transfer or in6 curred such obligation with actual in7 tent to hinder, delay, or defraud any 

8 entity to which the covered financial 

9 company was or became, on or after 

10 the date on which such transfer was 

11 made or such obligation was incurred, 

12 indebted; or 

13 (II) received less than a reason14 ably equivalent value in exchange for 

15 such transferor obligation; and 

16 (ii) the covered financial company vol17 untarily or involuntarily— 

18 (I) was insolvent on the date that 

19 such transfer was made or such obli20 gation was incurred, or became insol21 vent as a result of such transfer or 

22 obligation; 

23 (II) was engaged in business or a 

24 transaction, or was about to engage in 

25 business or a transaction, for which 


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1 any property remaining with the cov2 ered financial company was an unrea3 sonably small capital; 

4 (III) intended to incur, or be5 lieved that the covered financial com6 pany would incur, debts that would be 

7 beyond the ability of the covered fi8 nancial company to pay as such debts 

9 matured; or 

10 (IV) made such transfer to or for 

11 the benefit of an insider, or incurred 

12 such obligation to or for the benefit of 

13 an insider, under an employment con14 tract and not in the ordinary course 

15 of business. 

16 (B) PREFERENTIAL TRANSFERS.—The 

17 Corporation as receiver for any covered finan18 cial company may avoid a transfer of an inter19 est of the covered financial company in prop20 erty— 

21 (i) to or for the benefit of a creditor; 

22 (ii) for or on account of an antecedent 

23 debt that was owed by the covered finan24 cial company before the transfer was made; 


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1 (iii) that was made while the covered 

2 financial company was insolvent; 

3 (iv) that was made— 

4 (I) 90 days or less before the 

5 date on which the Corporation was 

6 appointed receiver; or 

7 (II) more than 90 days, but less 

8 than 1 year before the date on which 

9 the Corporation was appointed re10 ceiver, if such creditor at the time of 

11 the transfer was an insider; and 

12 (v) that enables the creditor to receive 

13 more than the creditor would receive if— 

14 (I) the covered financial company 

15 had been liquidated under chapter 7 

16 of the Bankruptcy Code; 

17 (II) the transfer had not been 

18 made; and 

19 (III) the creditor received pay20 ment of such debt to the extent pro21 vided by the provisions of chapter 7 of 

22 the Bankruptcy Code. 

23 (C) POST-RECEIVERSHIP TRANSACTIONS.— 

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1 erty of the receivership that occurred after the 

2 Corporation was appointed receiver that was 

3 not authorized under this title by the Corpora4 tion as receiver. 

5 (D) RIGHT OF RECOVERY.—To the extent 

6 that a transfer is avoided under subparagraph 

7 (A), (B), or (C), the Corporation may recover, 

8 for the benefit of the covered financial com9 pany, the property transferred or, if a court so 

10 orders, the value of such property (at the time 

11 of such transfer) from— 

12 (i) the initial transferee of such trans13 fer or the person for whose benefit such 

14 transfer was made; or 

15 (ii) any immediate or mediate trans16 feree of any such initial transferee. 

17 (E) RIGHTS OF TRANSFEREE OR OBLI18 GEE.—The Corporation may not recover under 

19 subparagraph (D)(ii) from— 

20 (i) any transferee that takes for value, 

21 including in satisfaction of or to secure a 

22 present or antecedent debt, in good faith, 

23 and without knowledge of the voidability of 

24 the transfer avoided; or 


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1 (ii) any immediate or mediate good 

2 faith transferee of such transferee. 

3 (F) DEFENSES.—Subject to the other pro4 visions of this title— 

5 (i) a transferee or obligee from which 

6 the Corporation seeks to recover a transfer 

7 or to avoid an obligation under subpara8 graph (A), (B), (C), or (D) shall have the 

9 same defenses available to a transferee or 

10 obligee from which a trustee seeks to re11 cover a transfer or avoid an obligation 

12 under; and 

13 (ii) the authority of the Corporation 

14 to recover a transfer or avoid an obligation 

15 shall be subject to subsections (b) and (c) 

16 of section 546, section 547(c), and section 

17 548(c) of the Bankruptcy Code. 

18 (G) RIGHTS UNDER THIS SECTION.—The 

19 rights of the Corporation as receiver under this 

20 section shall be superior to any rights of a 

21 trustee or any other party (other than a Fed22 eral agency) under the Bankruptcy Code. 

23 (H) RULES OF CONSTRUCTION; DEFINI24 TIONS.—For purposes of— 

25 (i) subparagraphs (A) and (B)— 


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1 (I) the term ‘‘insider’’ has the 

2 same meaning as in section 101(31) 

3 of the Bankruptcy Code; 

4 (II) a transfer is made when 

5 such transfer is so perfected that a 

6 bona fide purchaser from the covered 

7 financial company against whom ap8 plicable law permits such transfer to 

9 be perfected cannot acquire an inter10 est in the property transferred that is 

11 superior to the interest in such prop12 erty of the transferee, but if such 

13 transfer is not so perfected before the 

14 date on which the Corporation is ap15 pointed as receiver for the covered fi16 nancial company, such transfer is 

17 made immediately before the date of 

18 such appointment; and 

19 (III) the term ‘‘value’’ means 

20 property, or satisfaction or securing of 

21 a present or antecedent debt of the 

22 covered financial company, but does 

23 not include an unperformed promise 

24 to furnish support to the covered fi25 nancial company; and 


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1 (ii) subparagraph (B)— 

2 (I) the covered financial company 

3 is presumed to have been insolvent on 

4 and during the 90-day period imme5 diately preceding the date of appoint6 ment of the Corporation as receiver; 

7 and 

8 (II) the term ‘‘insolvent’’ has the 

9 same meaning as in section 101(32) 

10 of the Bankruptcy Code. 

11 (12) SETOFF.— 

12 (A) GENERALLY.—Except as otherwise 

13 provided in this title, any right of a creditor to 

14 offset a mutual debt owed by the creditor to 

15 any covered financial company that arose before 

16 the Corporation was appointed as receiver for 

17 the covered financial company against a claim 

18 of such creditor may be asserted if enforceable 

19 under applicable noninsolvency law, except to 

20 the extent that— 

21 (i) the claim of the creditor against 

22 the covered financial company is dis23 allowed; 


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1 (ii) the claim was transferred, by an 

2 entity other than the covered financial 

3 company, to the creditor— 

4 (I) after the Corporation was ap5 pointed as receiver of the covered fi6 nancial company; or 

7 (II)(aa) after the 90-day period 

8 preceding the date on which the Cor9 poration was appointed as receiver for 

10 the covered financial company; and 

11 (bb) while the covered financial 

12 company was insolvent (except for a 

13 setoff in connection with a qualified 

14 financial contract); or 

15 (iii) the debt owed to the covered fi16 nancial company was incurred by the cov17 ered financial company— 

18 (I) after the 90-day period pre19 ceding the date on which the Corpora20 tion was appointed as receiver for the 

21 covered financial company; 

22 (II) while the covered financial 

23 company was insolvent; and 

24 (III) for the purpose of obtaining 

25 a right of setoff against the covered 


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1 financial company (except for a setoff 

2 in connection with a qualified finan3 cial contract). 

4 (B) INSUFFICIENCY.— 

5 (i) IN GENERAL.—Except with respect 

6 to a setoff in connection with a qualified fi7 nancial contract, if a creditor offsets a mu8 tual debt owed to the covered financial 

9 company against a claim of the covered fi10 nancial company on or within the 90-day 

11 period preceding the date on which the 

12 Corporation is appointed as receiver for 

13 the covered financial company, the Cor14 poration may recover from the creditor the 

15 amount so offset, to the extent that any in16 sufficiency on the date of such setoff is less 

17 than the insufficiency on the later of— 

18 (I) the date that is 90 days be19 fore the date on which the Corpora20 tion is appointed as receiver for the 

21 covered financial company; or 

22 (II) the first day on which there 

23 is an insufficiency during the 90-day 

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1 ceiver for the covered financial com2 pany. 

3 (ii) DEFINITION OF INSUFFI4 CIENCY.—In this subparagraph, the term 

5 ‘‘insufficiency’’ means the amount, if any, 

6 by which a claim against the covered finan7 cial company exceeds a mutual debt owed 

8 to the covered financial company by the 

9 holder of such claim. 

10 (C) INSOLVENCY.—The term ‘‘insolvent’’ 

11 has the same meaning as in section 101(32) of 

12 the Bankruptcy Code. 

13 (D) PRESUMPTION OF INSOLVENCY.—For 

14 purposes of this paragraph, the covered finan15 cial company is presumed to have been insol16 vent on and during the 90-day period preceding 

17 the date of appointment of the Corporation as 

18 receiver. 

19 (E) LIMITATION.—Nothing in this para20 graph (12) shall be the basis for any right of 

21 setoff where no such right exists under applica22 ble noninsolvency law. 

23 (F) PRIORITY CLAIM.—Except as other24 wise provided in this title, the Corporation as 

25 receiver for the covered financial company may 


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1 sell or transfer any assets free and clear of the 

2 setoff rights of any party, except that such 

3 party shall be entitled to a claim, subordinate 

4 to the claims payable under subparagraphs (A), 

5 (B), and (C) of subsection (b)(1), but senior to 

6 all other unsecured liabilities defined in sub7 section (b)(1)(D), in an amount equal to the 

8 value of such setoff rights. 

9 (13) ATTACHMENT OF ASSETS AND OTHER IN10 JUNCTIVE RELIEF.—Subject to paragraph (14), any 

11 court of competent jurisdiction may, at the request 

12 of the Corporation as receiver for a covered financial 

13 company, issue an order in accordance with Rule 65 

14 of the Federal Rules of Civil Procedure, including an 

15 order placing the assets of any person designated by 

16 the Corporation under the control of the court and 

17 appointing a trustee to hold such assets. 

18 (14) STANDARDS.— 

19 (A) SHOWING.—Rule 65 of the Federal 

20 Rules of Civil Procedure shall apply with re21 spect to any proceeding under paragraph (13), 

22 without regard to the requirement that the ap23 plicant show that the injury, loss, or damage is 

24 irreparable and immediate. 


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1 (B) STATE PROCEEDING.—If, in the case 

2 of any proceeding in a State court, the court 

3 determines that rules of civil procedure avail4 able under the laws of the State provide sub5 stantially similar protections of the right of the 

6 parties to due process as provided under Rule 

7 65 (as modified with respect to such proceeding 

8 by subparagraph (A)), the relief sought by the 

9 Corporation pursuant to paragraph (14) may be 

10 requested under the laws of such State. 

11 (15) TREATMENT OF CLAIMS ARISING FROM

12 BREACH OF CONTRACTS EXECUTED BY THE COR13 PORATION AS RECEIVER.—Notwithstanding any 

14 other provision of this title, any final and non-ap15 pealable judgment for monetary damages entered 

16 against the Corporation as receiver for a covered fi17 nancial company for the breach of an agreement exe18 cuted or approved by the Corporation after the date 

19 of its appointment shall be paid as an administrative 

20 expense of the receiver. Nothing in this paragraph 

21 shall be construed to limit the power of a receiver 

22 to exercise any rights under contract or law, includ23 ing to terminate, breach, cancel, or otherwise dis24 continue such agreement. 


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1 (16) ACCOUNTING AND RECORDKEEPING RE2 QUIREMENTS.— 

3 (A) IN GENERAL.—The Corporation as re4 ceiver for a covered financial company shall, 

5 consistent with the accounting and reporting 

6 practices and procedures established by the 

7 Corporation, maintain a full accounting of each 

8 receivership or other disposition of any covered 

9 financial company. 

10 (B) ANNUAL ACCOUNTING OR REPORT.— 

11 With respect to each receivership to which the 

12 Corporation is appointed, the Corporation shall 

13 make an annual accounting or report, as appro14 priate, available to the Secretary and the Comp15 troller General of the United States. 

16 (C) AVAILABILITY OF REPORTS.—Any re17 port prepared pursuant to subparagraph (B) 

18 and section 203(c)(3) shall be made available to 

19 the public by the Corporation. 

20 (D) RECORDKEEPING REQUIREMENT.— 

21 (i) IN GENERAL.—The Corporation 

22 shall prescribe such regulations and estab23 lish such retention schedules as are nec24 essary to maintain the documents and 

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1 ercising the authorities of this title and the 

2 records of a covered financial company for 

3 which the Corporation is appointed re4 ceiver, with due regard for— 

5 (I) the avoidance of duplicative 

6 record retention; and 

7 (II) the expected evidentiary 

8 needs of the Corporation as receiver 

9 for a covered financial company and 

10 the public regarding the records of 

11 covered financial companies. 

12 (ii) RETENTION OF RECORDS.—Un13 less otherwise required by applicable Fed14 eral law or court order, the Corporation 

15 may not, at any time, destroy any records 

16 that are subject to clause (i). 

17 (iii) RECORDS DEFINED.—As used in 

18 this subparagraph, the terms ‘‘records’’ 

19 and ‘‘records of a covered financial com20 pany’’ mean any document, book, paper, 

21 map, photograph, microfiche, microfilm, 

22 computer or electronically-created record 

23 generated or maintained by the covered fi24 nancial company in the course of and nec25 essary to its transaction of business. 


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1 (b) PRIORITY OF EXPENSES AND UNSECURED

2 CLAIMS.— 

3 (1) IN GENERAL.—Unsecured claims against a 

4 covered financial company, or the Corporation as re5 ceiver for such covered financial company under this 

6 section, that are proven to the satisfaction of the re7 ceiver shall have priority in the following order: 

8 (A) Administrative expenses of the re9 ceiver. 

10 (B) Any amounts owed to the United 

11 States, unless the United States agrees or con12 sents otherwise. 

13 (C) Any other general or senior liability of 

14 the covered financial company (which is not a 

15 liability described under subparagraph (D) or 

16 (E)). 

17 (D) Any obligation subordinated to general 

18 creditors (which is not an obligation described 

19 under subparagraph (E)). 

20 (E) Any obligation to shareholders, mem21 bers, general partners, limited partners, or 

22 other persons, with interests in the equity of 

23 the covered financial company arising as a re24 sult of their status as shareholders, members, 

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1 sons with interests in the equity of the covered 

2 financial company. 

3 (2) POST-RECEIVERSHIP FINANCING PRI4 ORITY.—In the event that the Corporation, as re5 ceiver for a covered financial company, is unable to 

6 obtain unsecured credit for the covered financial 

7 company from commercial sources, the Corporation 

8 as receiver may obtain credit or incur debt on the 

9 part of the covered financial company, which shall 

10 have priority over any or all administrative expenses 

11 of the receiver under paragraph (1)(A). 

12 (3) CLAIMS OF THE UNITED STATES.—Unse13 cured claims of the United States shall, at a min14 imum, have a higher priority than liabilities of the 

15 covered financial company that count as regulatory 

16 capital. 

17 (4) CREDITORS SIMILARLY SITUATED.—All 

18 claimants of a covered financial company that are 

19 similarly situated under paragraph (1) shall be 

20 treated in a similar manner, except that the Cor21 poration as receiver may take any action (including 

22 making payments, subject to subsection 

23 (o)(1)(E)(ii)) that does not comply with this sub24 section, if— 


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1 (A) the Corporation determines that such 

2 action is necessary— 

3 (i) to maximize the value of the assets 

4 of the covered financial company; 

5 (ii) to maximize the present value re6 turn from the sale or other disposition of 

7 the assets of the covered financial com8 pany; or 

9 (iii) to minimize the amount of any 

10 loss realized upon the sale or other disposi11 tion of the assets of the covered financial 

12 company; and 

13 (B) all claimants that are similarly situ14 ated under paragraph (1) receive not less than 

15 the amount provided in paragraphs (2) and (3) 

16 of subsection (d). 

17 (5) SECURED CLAIMS UNAFFECTED.—This sec18 tion shall not affect secured claims or security enti19 tlements in respect of assets or property held by the 

20 covered financial company, except to the extent that 

21 the security is insufficient to satisfy the claim, and 

22 then only with regard to the difference between the 

23 claim and the amount realized from the security. 

24 (6) PRIORITY OF EXPENSES AND UNSECURED

25 CLAIMS IN THE ORDERLY LIQUIDATION OF SIPC


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1 MEMBER.—Where the Corporation is appointed as 

2 receiver for a covered broker or dealer, unsecured 

3 claims against such covered broker or dealer, or the 

4 Corporation as receiver for such covered broker or 

5 dealer under this section, that are proven to the sat6 isfaction of the receiver under section 205(e), shall 

7 have the priority prescribed in paragraph (1), except 

8 that— 

9 (A) SIPC shall be entitled to recover ad10 ministrative expenses incurred in performing its 

11 responsibilities under section 205 on an equal 

12 basis with the Corporation, in accordance with 

13 paragraph (1)(A); 

14 (B) the Corporation shall be entitled to re15 cover any amounts paid to customers or to 

16 SIPC pursuant to section 205(f), in accordance 

17 with paragraph (1)(B); 

18 (C) SIPC shall be entitled to recover any 

19 amounts paid out of the SIPC Fund to meet its 

20 obligations under section 205 and under the Se21 curities Investor Protection Act of 1970 (15 

22 U.S.C. 78aaa et seq.), which claim shall be sub23 ordinate to the claims payable under subpara24 graphs (A) and (B) of paragraph (1), but sen25 ior to all other claims; and 


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1 (D) the Corporation may, after paying any 

2 proven claims to customers under section 205 

3 and the Securities Investor Protection Act of 

4 1970 (15 U.S.C. 78aaa et seq.), and as pro5 vided above, pay dividends on other proven 

6 claims, in its discretion, and to the extent that 

7 funds are available, in accordance with the pri8 orities set forth in paragraph (1). 

9 (c) PROVISIONS RELATING TO CONTRACTS ENTERED

10 INTO BEFORE APPOINTMENT OF RECEIVER.— 

11 (1) AUTHORITY TO REPUDIATE CONTRACTS.— 

12 In addition to any other rights that a receiver may 

13 have, the Corporation as receiver for any covered fi14 nancial company may disaffirm or repudiate any 

15 contract or lease— 

16 (A) to which the covered financial company 

17 is a party; 

18 (B) the performance of which the Corpora19 tion as receiver, in the discretion of the Cor20 poration, determines to be burdensome; and 

21 (C) the disaffirmance or repudiation of 

22 which the Corporation as receiver determines, 

23 in the discretion of the Corporation, will pro24 mote the orderly administration of the affairs of 

25 the covered financial company. 


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1 (2) TIMING OF REPUDIATION.—The Corpora2 tion, as receiver for any covered financial company, 

3 shall determine whether or not to exercise the rights 

4 of repudiation under this section within a reasonable 

5 period of time. 

6 (3) CLAIMS FOR DAMAGES FOR REPUDI7 ATION.— 

8 (A) IN GENERAL.—Except as provided in 

9 paragraphs (4), (5), and (6) and in subpara10 graphs (C), (D), and (E) of this paragraph, the 

11 liability of the Corporation as receiver for a cov12 ered financial company for the disaffirmance or 

13 repudiation of any contract pursuant to para14 graph (1) shall be— 

15 (i) limited to actual direct compen16 satory damages; and 

17 (ii) determined as of— 

18 (I) the date of the appointment 

19 of the Corporation as receiver; or 

20 (II) in the case of any contract 

21 or agreement referred to in paragraph 

22 (8), the date of the disaffirmance or 

23 repudiation of such contract or agree24 ment. 


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1 (B) NO LIABILITY FOR OTHER DAM2 AGES.—For purposes of subparagraph (A), the 

3 term ‘‘actual direct compensatory damages’’ 

4 does not include— 

5 (i) punitive or exemplary damages; 

6 (ii) damages for lost profits or oppor7 tunity; or 

8 (iii) damages for pain and suffering. 

9 (C) MEASURE OF DAMAGES FOR REPUDI10 ATION OF QUALIFIED FINANCIAL CONTRACTS.— 

11 In the case of any qualified financial contract 

12 or agreement to which paragraph (8) applies, 

13 compensatory damages shall be— 

14 (i) deemed to include normal and rea15 sonable costs of cover or other reasonable 

16 measures of damages utilized in the indus17 tries for such contract and agreement 

18 claims; and 

19 (ii) paid in accordance with this para20 graph and subsection (d), except as other21 wise specifically provided in this sub22 section. 

23 (D) MEASURE OF DAMAGES FOR REPUDI24 ATION OR DISAFFIRMANCE OF DEBT OBLIGA25 TION.—In the case of any debt for borrowed 


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1 money or evidenced by a security, actual direct 

2 compensatory damages shall be no less than the 

3 amount lent plus accrued interest plus any 

4 accreted original issue discount as of the date 

5 the Corporation was appointed receiver of the 

6 covered financial company and, to the extent 

7 that an allowed secured claim is secured by 

8 property the value of which is greater than the 

9 amount of such claim and any accrued interest 

10 through the date of repudiation or 

11 disaffirmance, such accrued interest pursuant 

12 to paragraph (1). 

13 (E) MEASURE OF DAMAGES FOR REPUDI14 ATION OR DISAFFIRMANCE OF CONTINGENT OB15 LIGATION.—In the case of any contingent obli16 gation of a covered financial company con17 sisting of any obligation under a guarantee, let18 ter of credit, loan commitment, or similar credit 

19 obligation, the Corporation may, by rule or reg20 ulation, prescribe that actual direct compen21 satory damages shall be no less than the esti22 mated value of the claim as of the date the Cor23 poration was appointed receiver of the covered 

24 financial company, as such value is measured 

25 based on the likelihood that such contingent 


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1 claim would become fixed and the probable 

2 magnitude thereof. 

3 (4) LEASES UNDER WHICH THE COVERED FI4 NANCIAL COMPANY IS THE LESSEE.— 

5 (A) IN GENERAL.—If the Corporation as 

6 receiver disaffirms or repudiates a lease under 

7 which the covered financial company is the les8 see, the receiver shall not be liable for any dam9 ages (other than damages determined pursuant 

10 to subparagraph (B)) for the disaffirmance or 

11 repudiation of such lease. 

12 (B) PAYMENTS OF RENT.—Notwith13 standing subparagraph (A), the lessor under a 

14 lease to which subparagraph (A) would other15 wise apply shall— 

16 (i) be entitled to the contractual rent 

17 accruing before the later of the date on 

18 which— 

19 (I) the notice of disaffirmance or 

20 repudiation is mailed; or 

21 (II) the disaffirmance or repudi22 ation becomes effective, unless the les23 sor is in default or breach of the 

24 terms of the lease; 


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1 (ii) have no claim for damages under 

2 any acceleration clause or other penalty 

3 provision in the lease; and 

4 (iii) have a claim for any unpaid rent, 

5 subject to all appropriate offsets and de6 fenses, due as of the date of the appoint7 ment which shall be paid in accordance 

8 with this paragraph and subsection (d). 

9 (5) LEASES UNDER WHICH THE COVERED FI10 NANCIAL COMPANY IS THE LESSOR.— 

11 (A) IN GENERAL.—If the Corporation as 

12 receiver for a covered financial company repudi13 ates an unexpired written lease of real property 

14 of the covered financial company under which 

15 the covered financial company is the lessor and 

16 the lessee is not, as of the date of such repudi17 ation, in default, the lessee under such lease 

18 may either— 

19 (i) treat the lease as terminated by 

20 such repudiation; or 

21 (ii) remain in possession of the lease22 hold interest for the balance of the term of 

23 the lease, unless the lessee defaults under 

24 the terms of the lease after the date of 

25 such repudiation. 


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1 (B) PROVISIONS APPLICABLE TO LESSEE

2 REMAINING IN POSSESSION.—If any lessee 

3 under a lease described in subparagraph (A) re4 mains in possession of a leasehold interest pur5 suant to clause (ii) of subparagraph (A)— 

6 (i) the lessee— 

7 (I) shall continue to pay the con8 tractual rent pursuant to the terms of 

9 the lease after the date of the repudi10 ation of such lease; and 

11 (II) may offset against any rent 

12 payment which accrues after the date 

13 of the repudiation of the lease, any 

14 damages which accrue after such date 

15 due to the nonperformance of any ob16 ligation of the covered financial com17 pany under the lease after such date; 

18 and 

19 (ii) the Corporation as receiver shall 

20 not be liable to the lessee for any damages 

21 arising after such date as a result of the 

22 repudiation, other than the amount of any 

23 offset allowed under clause (i)(II). 

24 (6) CONTRACTS FOR THE SALE OF REAL PROP25 ERTY.— 


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1 (A) IN GENERAL.—If the receiver repudi2 ates any contract (which meets the require3 ments of subsection (a)(6)) for the sale of real 

4 property, and the purchaser of such real prop5 erty under such contract is in possession and is 

6 not, as of the date of such repudiation, in de7 fault, such purchaser may either— 

8 (i) treat the contract as terminated by 

9 such repudiation; or 

10 (ii) remain in possession of such real 

11 property. 

12 (B) PROVISIONS APPLICABLE TO PUR13 CHASER REMAINING IN POSSESSION.—If any 

14 purchaser of real property under any contract 

15 described in subparagraph (A) remains in pos16 session of such property pursuant to clause (ii) 

17 of subparagraph (A)— 

18 (i) the purchaser— 

19 (I) shall continue to make all 

20 payments due under the contract after 

21 the date of the repudiation of the con22 tract; and 

23 (II) may offset against any such 

24 payments any damages which accrue 

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1 performance (after such date) of any 

2 obligation of the covered financial 

3 company under the contract; and 

4 (ii) the Corporation as receiver shall— 

5 (I) not be liable to the purchaser 

6 for any damages arising after such 

7 date as a result of the repudiation, 

8 other than the amount of any offset 

9 allowed under clause (i)(II); 

10 (II) deliver title to the purchaser 

11 in accordance with the provisions of 

12 the contract; and 

13 (III) have no obligation under 

14 the contract other than the perform15 ance required under subclause (II). 

16 (C) ASSIGNMENT AND SALE ALLOWED.— 

17 (i) IN GENERAL.—No provision of this 

18 paragraph shall be construed as limiting 

19 the right of the Corporation as receiver to 

20 assign the contract described in subpara21 graph (A) and sell the property, subject to 

22 the contract and the provisions of this 

23 paragraph. 

24 (ii) NO LIABILITY AFTER ASSIGNMENT

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1 scribed in clause (i) is consummated, the 

2 Corporation as receiver shall have no fur3 ther liability under the contract described 

4 in subparagraph (A) or with respect to the 

5 real property which was the subject of such 

6 contract. 

7 (7) PROVISIONS APPLICABLE TO SERVICE CON8 TRACTS.— 

9 (A) SERVICES PERFORMED BEFORE AP10 POINTMENT.—In the case of any contract for 

11 services between any person and any covered fi12 nancial company for which the Corporation has 

13 been appointed receiver, any claim of such per14 son for services performed before the date of 

15 appointment shall be— 

16 (i) a claim to be paid in accordance 

17 with subsections (a), (b), and (d); and 

18 (ii) deemed to have arisen as of the 

19 date on which the receiver was appointed. 

20 (B) SERVICES PERFORMED AFTER AP21 POINTMENT AND PRIOR TO REPUDIATION.—If, 

22 in the case of any contract for services de23 scribed in subparagraph (A), the Corporation as 

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1 cise the right of repudiation of such contract 

2 under this section— 

3 (i) the other party shall be paid under 

4 the terms of the contract for the services 

5 performed; and 

6 (ii) the amount of such payment shall 

7 be treated as an administrative expense of 

8 the receivership. 

9 (C) ACCEPTANCE OF PERFORMANCE NO

10 BAR TO SUBSEQUENT REPUDIATION.—The ac11 ceptance by the Corporation as receiver for 

12 services referred to in subparagraph (B) in con13 nection with a contract described in subpara14 graph (B) shall not affect the right of the Cor15 poration as receiver to repudiate such contract 

16 under this section at any time after such per17 formance. 

18 (8) CERTAIN QUALIFIED FINANCIAL CON19 TRACTS.— 

20 (A) RIGHTS OF PARTIES TO CONTRACTS.— 

21 Subject to subsection (a)(8) and paragraphs (9) 

22 and (10) of this subsection, and notwith23 standing any other provision of this section, any 

24 other provision of Federal law, or the law of 


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1 any State, no person shall be stayed or prohib2 ited from exercising— 

3 (i) any right that such person has to 

4 cause the termination, liquidation, or accel5 eration of any qualified financial contract 

6 with a covered financial company which 

7 arises upon the date of appointment of the 

8 Corporation as receiver for such covered fi9 nancial company at any time after such 

10 appointment; 

11 (ii) any right under any security 

12 agreement or arrangement or other credit 

13 enhancement related to one or more quali14 fied financial contracts described in clause 

15 (i); or 

16 (iii) any right to offset or net out any 

17 termination value, payment amount, or 

18 other transfer obligation arising under or 

19 in connection with 1 or more contracts or 

20 agreements described in clause (i), includ21 ing any master agreement for such con22 tracts or agreements. 

23 (B) APPLICABILITY OF OTHER PROVI24 SIONS.—Subsection (a)(8) shall apply in the 

25 case of any judicial action or proceeding 


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1 brought against the Corporation as receiver re2 ferred to in subparagraph (A), or the subject 

3 covered financial company, by any party to a 

4 contract or agreement described in subpara5 graph (A)(i) with such covered financial com6 pany. 

7 (C) CERTAIN TRANSFERS NOT AVOID8 ABLE.— 

9 (i) IN GENERAL.—Notwithstanding 

10 subsection (a)(11), (a)(12), or (c)(12), sec11 tion 5242 of the Revised Statutes of the 

12 United States, or any other provision of 

13 Federal or State law relating to the avoid14 ance of preferential or fraudulent trans15 fers, the Corporation, whether acting as 

16 the Corporation or as receiver for a cov17 ered financial company, may not avoid any 

18 transfer of money or other property in con19 nection with any qualified financial con20 tract with a covered financial company. 

21 (ii) EXCEPTION FOR CERTAIN TRANS22 FERS.—Clause (i) shall not apply to any 

23 transfer of money or other property in con24 nection with any qualified financial con25 tract with a covered financial company if 


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1 the transferee had actual intent to hinder, 

2 delay, or defraud such company, the credi3 tors of such company, or the Corporation 

4 as receiver appointed for such company. 

5 (D) CERTAIN CONTRACTS AND AGREE6 MENTS DEFINED.—For purposes of this sub7 section, the following definitions shall apply: 

8 (i) QUALIFIED FINANCIAL CON9 TRACT.—The term ‘‘qualified financial 

10 contract’’ means any securities contract, 

11 commodity contract, forward contract, re12 purchase agreement, swap agreement, and 

13 any similar agreement that the Corpora14 tion determines by regulation, resolution, 

15 or order to be a qualified financial contract 

16 for purposes of this paragraph. 

17 (ii) SECURITIES CONTRACT.—The 

18 term ‘‘securities contract’’— 

19 (I) means a contract for the pur20 chase, sale, or loan of a security, a 

21 certificate of deposit, a mortgage loan, 

22 any interest in a mortgage loan, a 

23 group or index of securities, certifi24 cates of deposit, or mortgage loans or 

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1 est therein or based on the value 

2 thereof), or any option on any of the 

3 foregoing, including any option to 

4 purchase or sell any such security, 

5 certificate of deposit, mortgage loan, 

6 interest, group or index, or option, 

7 and including any repurchase or re8 verse repurchase transaction on any 

9 such security, certificate of deposit, 

10 mortgage loan, interest, group or 

11 index, or option (whether or not such 

12 repurchase or reverse repurchase 

13 transaction is a ‘‘repurchase agree14 ment’’, as defined in clause (v)); 

15 (II) does not include any pur16 chase, sale, or repurchase obligation 

17 under a participation in a commercial 

18 mortgage loan unless the Corporation 

19 determines by regulation, resolution, 

20 or order to include any such agree21 ment within the meaning of such 

22 term; 

23 (III) means any option entered 

24 into on a national securities exchange 

25 relating to foreign currencies; 


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1 (IV) means the guarantee (in2 cluding by novation) by or to any se3 curities clearing agency of any settle4 ment of cash, securities, certificates of 

5 deposit, mortgage loans or interests 

6 therein, group or index of securities, 

7 certificates of deposit or mortgage 

8 loans or interests therein (including 

9 any interest therein or based on the 

10 value thereof) or an option on any of 

11 the foregoing, including any option to 

12 purchase or sell any such security, 

13 certificate of deposit, mortgage loan, 

14 interest, group or index, or option 

15 (whether or not such settlement is in 

16 connection with any agreement or 

17 transaction referred to in subclauses 

18 (I) through (XII) (other than sub19 clause (II))); 

20 (V) means any margin loan; 

21 (VI) means any extension of 

22 credit for the clearance or settlement 

23 of securities transactions; 

24 (VII) means any loan transaction 

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1 action, any prepaid securities forward 

2 transaction, or any total return swap 

3 transaction coupled with a securities 

4 sale transaction; 

5 (VIII) means any other agree6 ment or transaction that is similar to 

7 any agreement or transaction referred 

8 to in this clause; 

9 (IX) means any combination of 

10 the agreements or transactions re11 ferred to in this clause; 

12 (X) means any option to enter 

13 into any agreement or transaction re14 ferred to in this clause; 

15 (XI) means a master agreement 

16 that provides for an agreement or 

17 transaction referred to in any of sub18 clauses (I) through (X), other than 

19 subclause (II), together with all sup20 plements to any such master agree21 ment, without regard to whether the 

22 master agreement provides for an 

23 agreement or transaction that is not a 

24 securities contract under this clause, 

25 except that the master agreement 


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1 shall be considered to be a securities 

2 contract under this clause only with 

3 respect to each agreement or trans4 action under the master agreement 

5 that is referred to in any of sub6 clauses (I) through (X), other than 

7 subclause (II); and 

8 (XII) means any security agree9 ment or arrangement or other credit 

10 enhancement related to any agree11 ment or transaction referred to in this 

12 clause, including any guarantee or re13 imbursement obligation in connection 

14 with any agreement or transaction re15 ferred to in this clause. 

16 (iii) COMMODITY CONTRACT.—The 

17 term ‘‘commodity contract’’ means— 

18 (I) with respect to a futures com19 mission merchant, a contract for the 

20 purchase or sale of a commodity for 

21 future delivery on, or subject to the 

22 rules of, a contract market or board 

23 of trade; 


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1 (II) with respect to a foreign fu2 tures commission merchant, a foreign 

3 future; 

4 (III) with respect to a leverage 

5 transaction merchant, a leverage 

6 transaction; 

7 (IV) with respect to a clearing 

8 organization, a contract for the pur9 chase or sale of a commodity for fu10 ture delivery on, or subject to the 

11 rules of, a contract market or board 

12 of trade that is cleared by such clear13 ing organization, or commodity option 

14 traded on, or subject to the rules of, 

15 a contract market or board of trade 

16 that is cleared by such clearing orga17 nization; 

18 (V) with respect to a commodity 

19 options dealer, a commodity option; 

20 (VI) any other agreement or 

21 transaction that is similar to any 

22 agreement or transaction referred to 

23 in this clause; 


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1 (VII) any combination of the 

2 agreements or transactions referred to 

3 in this clause; 

4 (VIII) any option to enter into 

5 any agreement or transaction referred 

6 to in this clause; 

7 (IX) a master agreement that 

8 provides for an agreement or trans9 action referred to in any of subclauses 

10 (I) through (VIII), together with all 

11 supplements to any such master 

12 agreement, without regard to whether 

13 the master agreement provides for an 

14 agreement or transaction that is not a 

15 commodity contract under this clause, 

16 except that the master agreement 

17 shall be considered to be a commodity 

18 contract under this clause only with 

19 respect to each agreement or trans20 action under the master agreement 

21 that is referred to in any of sub22 clauses (I) through (VIII); or 

23 (X) any security agreement or 

24 arrangement or other credit enhance25 ment related to any agreement or 


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1 transaction referred to in this clause, 

2 including any guarantee or reimburse3 ment obligation in connection with 

4 any agreement or transaction referred 

5 to in this clause. 

6 (iv) FORWARD CONTRACT.—The term 

7 ‘‘forward contract’’ means— 

8 (I) a contract (other than a com9 modity contract) for the purchase, 

10 sale, or transfer of a commodity or 

11 any similar good, article, service, 

12 right, or interest which is presently or 

13 in the future becomes the subject of 

14 dealing in the forward contract trade, 

15 or product or byproduct thereof, with 

16 a maturity date that is more than 10 

17 days after the date on which the con18 tract is entered into, including a re19 purchase or reverse repurchase trans20 action (whether or not such repur21 chase or reverse repurchase trans22 action is a ‘‘repurchase agreement’’, 

23 as defined in clause (v)), consignment, 

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1 action, unallocated transaction, or any 

2 other similar agreement; 

3 (II) any combination of agree4 ments or transactions referred to in 

5 subclauses (I) and (III); 

6 (III) any option to enter into any 

7 agreement or transaction referred to 

8 in subclause (I) or (II); 

9 (IV) a master agreement that 

10 provides for an agreement or trans11 action referred to in subclause (I), 

12 (II), or (III), together with all supple13 ments to any such master agreement, 

14 without regard to whether the master 

15 agreement provides for an agreement 

16 or transaction that is not a forward 

17 contract under this clause, except that 

18 the master agreement shall be consid19 ered to be a forward contract under 

20 this clause only with respect to each 

21 agreement or transaction under the 

22 master agreement that is referred to 

23 in subclause (I), (II), or (III); or 

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1 ment related to any agreement or 

2 transaction referred to in subclause 

3 (I), (II), (III), or (IV), including any 

4 guarantee or reimbursement obliga5 tion in connection with any agreement 

6 or transaction referred to in any such 

7 subclause. 

8 (v) REPURCHASE AGREEMENT.—The 

9 term ‘‘repurchase agreement’’ (which defi10 nition also applies to a reverse repurchase 

11 agreement)— 

12 (I) means an agreement, includ13 ing related terms, which provides for 

14 the transfer of one or more certifi15 cates of deposit, mortgage related se16 curities (as such term is defined in 

17 section 3 of the Securities Exchange 

18 Act of 1934), mortgage loans, inter19 ests in mortgage-related securities or 

20 mortgage loans, eligible bankers’ ac21 ceptances, qualified foreign govern22 ment securities (which, for purposes 

23 of this clause, means a security that is 

24 a direct obligation of, or that is fully 

25 guaranteed by, the central government 


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1 of a member of the Organization for 

2 Economic Cooperation and Develop3 ment, as determined by regulation or 

4 order adopted by the Board of Gov5 ernors), or securities that are direct 

6 obligations of, or that are fully guar7 anteed by, the United States or any 

8 agency of the United States against 

9 the transfer of funds by the transferee 

10 of such certificates of deposit, eligible 

11 bankers’ acceptances, securities, mort12 gage loans, or interests with a simul13 taneous agreement by such transferee 

14 to transfer to the transferor thereof 

15 certificates of deposit, eligible bank16 ers’ acceptances, securities, mortgage 

17 loans, or interests as described above, 

18 at a date certain not later than 1 year 

19 after such transfers or on demand, 

20 against the transfer of funds, or any 

21 other similar agreement; 

22 (II) does not include any repur23 chase obligation under a participation 

24 in a commercial mortgage loan, unless 

25 the Corporation determines, by reguVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00218 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 lation, resolution, or order to include 

2 any such participation within the 

3 meaning of such term; 

4 (III) means any combination of 

5 agreements or transactions referred to 

6 in subclauses (I) and (IV); 

7 (IV) means any option to enter 

8 into any agreement or transaction re9 ferred to in subclause (I) or (III); 

10 (V) means a master agreement 

11 that provides for an agreement or 

12 transaction referred to in subclause 

13 (I), (III), or (IV), together with all 

14 supplements to any such master 

15 agreement, without regard to whether 

16 the master agreement provides for an 

17 agreement or transaction that is not a 

18 repurchase agreement under this 

19 clause, except that the master agree20 ment shall be considered to be a re21 purchase agreement under this sub22 clause only with respect to each agree23 ment or transaction under the master 

24 agreement that is referred to in sub25 clause (I), (III), or (IV); and 


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1 (VI) means any security agree2 ment or arrangement or other credit 

3 enhancement related to any agree4 ment or transaction referred to in 

5 subclause (I), (III), (IV), or (V), in6 cluding any guarantee or reimburse7 ment obligation in connection with 

8 any agreement or transaction referred 

9 to in any such subclause. 

10 (vi) SWAP AGREEMENT.—The term 

11 ‘‘swap agreement’’ means— 

12 (I) any agreement, including the 

13 terms and conditions incorporated by 

14 reference in any such agreement, 

15 which is an interest rate swap, option, 

16 future, or forward agreement, includ17 ing a rate floor, rate cap, rate collar, 

18 cross-currency rate swap, and basis 

19 swap; a spot, same day-tomorrow, to20 morrow-next, forward, or other for21 eign exchange, precious metals, or 

22 other commodity agreement; a cur23 rency swap, option, future, or forward 

24 agreement; an equity index or equity 

25 swap, option, future, or forward 


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1 agreement; a debt index or debt swap, 

2 option, future, or forward agreement; 

3 a total return, credit spread or credit 

4 swap, option, future, or forward 

5 agreement; a commodity index or 

6 commodity swap, option, future, or 

7 forward agreement; weather swap, op8 tion, future, or forward agreement; an 

9 emissions swap, option, future, or for10 ward agreement; or an inflation swap, 

11 option, future, or forward agreement; 

12 (II) any agreement or transaction 

13 that is similar to any other agreement 

14 or transaction referred to in this 

15 clause and that is of a type that has 

16 been, is presently, or in the future be17 comes, the subject of recurrent deal18 ings in the swap or other derivatives 

19 markets (including terms and condi20 tions incorporated by reference in 

21 such agreement) and that is a for22 ward, swap, future, option, or spot 

23 transaction on one or more rates, cur24 rencies, commodities, equity securities 

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1 curities or other debt instruments, 

2 quantitative measures associated with 

3 an occurrence, extent of an occur4 rence, or contingency associated with 

5 a financial, commercial, or economic 

6 consequence, or economic or financial 

7 indices or measures of economic or fi8 nancial risk or value; 

9 (III) any combination of agree10 ments or transactions referred to in 

11 this clause; 

12 (IV) any option to enter into any 

13 agreement or transaction referred to 

14 in this clause; 

15 (V) a master agreement that pro16 vides for an agreement or transaction 

17 referred to in subclause (I), (II), (III), 

18 or (IV), together with all supplements 

19 to any such master agreement, with20 out regard to whether the master 

21 agreement contains an agreement or 

22 transaction that is not a swap agree23 ment under this clause, except that 

24 the master agreement shall be consid25 ered to be a swap agreement under 


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1 this clause only with respect to each 

2 agreement or transaction under the 

3 master agreement that is referred to 

4 in subclause (I), (II), (III), or (IV); 

5 and 

6 (VI) any security agreement or 

7 arrangement or other credit enhance8 ment related to any agreement or 

9 transaction referred to in any of 

10 clauses (I) through (V), including any 

11 guarantee or reimbursement obliga12 tion in connection with any agreement 

13 or transaction referred to in any such 

14 clause. 

15 (vii) DEFINITIONS RELATING TO DE16 FAULT.—When used in this paragraph and 

17 paragraph (10)— 

18 (I) the term ‘‘default’’ means, 

19 with respect to a covered financial 

20 company, any adjudication or other 

21 official decision by any court of com22 petent jurisdiction, or other public au23 thority pursuant to which the Cor24 poration has been appointed receiver; 

25 and 


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1 (II) the term ‘‘in danger of de2 fault’’ means a covered financial com3 pany with respect to which the Cor4 poration or appropriate State author5 ity has determined that— 

6 (aa) in the opinion of the 

7 Corporation or such authority— 

8 (AA) the covered finan9 cial company is not likely to 

10 be able to pay its obligations 

11 in the normal course of busi12 ness; and 

13 (BB) there is no rea14 sonable prospect that the 

15 covered financial company 

16 will be able to pay such obli17 gations without Federal as18 sistance; or 

19 (bb) in the opinion of the 

20 Corporation or such authority— 

21 (AA) the covered finan22 cial company has incurred or 

23 is likely to incur losses that 

24 will deplete all or substan25 tially all of its capital; and 


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1 (BB) there is no rea2 sonable prospect that the 

3 capital will be replenished 

4 without Federal assistance. 

5 (viii) TREATMENT OF MASTER AGREE6 MENT AS ONE AGREEMENT.—Any master 

7 agreement for any contract or agreement 

8 described in any of clauses (i) through (vi) 

9 (or any master agreement for such master 

10 agreement or agreements), together with 

11 all supplements to such master agreement, 

12 shall be treated as a single agreement and 

13 a single qualified financial contact. If a 

14 master agreement contains provisions re15 lating to agreements or transactions that 

16 are not themselves qualified financial con17 tracts, the master agreement shall be 

18 deemed to be a qualified financial contract 

19 only with respect to those transactions that 

20 are themselves qualified financial con21 tracts. 

22 (ix) TRANSFER.—The term ‘‘transfer’’ 

23 means every mode, direct or indirect, abso24 lute or conditional, voluntary or involun25 tary, of disposing of or parting with propVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00225 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 erty or with an interest in property, includ2 ing retention of title as a security interest 

3 and foreclosure of the equity of redemption 

4 of the covered financial company. 

5 (x) PERSON.—The term ‘‘person’’ in6 cludes any governmental entity in addition 

7 to any entity included in the definition of 

8 such term in section 1, title 1, United 

9 States Code. 

10 (E) CLARIFICATION.—No provision of law 

11 shall be construed as limiting the right or 

12 power of the Corporation, or authorizing any 

13 court or agency to limit or delay, in any man14 ner, the right or power of the Corporation to 

15 transfer any qualified financial contract in ac16 cordance with paragraphs (9) and (10) of this 

17 subsection or to disaffirm or repudiate any such 

18 contract in accordance with subsection (c)(1). 

19 (F) WALKAWAY CLAUSES NOT EFFEC20 TIVE.— 

21 (i) IN GENERAL.—Notwithstanding 

22 the provisions of subparagraph (A) of this 

23 paragraph and sections 403 and 404 of the 

24 Federal Deposit Insurance Corporation 

25 Improvement Act of 1991, no walkaway 


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1 clause shall be enforceable in a qualified fi2 nancial contract of a covered financial 

3 company in default. 

4 (ii) LIMITED SUSPENSION OF CERTAIN

5 OBLIGATIONS.—In the case of a qualified 

6 financial contract referred to in clause (i), 

7 any payment or delivery obligations other8 wise due from a party pursuant to the 

9 qualified financial contract shall be sus10 pended from the time at which the Cor11 poration is appointed as receiver until the 

12 earlier of— 

13 (I) the time at which such party 

14 receives notice that such contract has 

15 been transferred pursuant to para16 graph (10)(A); or 

17 (II) 5:00 p.m. (eastern time) on 

18 the 5th business day following the 

19 date of the appointment of the Cor20 poration as receiver. 

21 (iii) WALKAWAY CLAUSE DEFINED.— 

22 For purposes of this subparagraph, the 

23 term ‘‘walkaway clause’’ means any provi24 sion in a qualified financial contract that 

25 suspends, conditions, or extinguishes a 


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1 payment obligation of a party, in whole or 

2 in part, or does not create a payment obli3 gation of a party that would otherwise 

4 exist, solely because of the status of such 

5 party as a nondefaulting party in connec6 tion with the insolvency of a covered finan7 cial company that is a party to the con8 tract or the appointment of or the exercise 

9 of rights or powers by the Corporation as 

10 receiver for such covered financial com11 pany, and not as a result of the exercise by 

12 a party of any right to offset, setoff, or net 

13 obligations that exist under the contract, 

14 any other contract between those parties, 

15 or applicable law. 

16 (iv) CERTAIN OBLIGATIONS TO CLEAR17 ING ORGANIZATIONS.—In the event that 

18 the Corporation has been appointed as re19 ceiver for a covered financial company 

20 which is a party to any qualified financial 

21 contract cleared by or subject to the rules 

22 of a clearing organization (as defined in 

23 subsection (c)(9)(D)), the receiver shall use 

24 its best efforts to meet all margin, collat25 eral, and settlement obligations of the covVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00228 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ered financial company that arise under 

2 qualified financial contracts (other than 

3 any margin, collateral, or settlement obli4 gation that is not enforceable against the 

5 receiver under paragraph (8)(F)(i) or 

6 paragraph (10)(B)), as required by the 

7 rules of the clearing organization when 

8 due, and such obligations shall not be sus9 pended pursuant to paragraph (8)(F)(ii). 

10 Notwithstanding paragraph (8)(F)(ii) or 

11 (10)(B), if the receiver fails to satisfy any 

12 such margin, collateral, or settlement obli13 gations under the rules of the clearing or14 ganization, the clearing organization shall 

15 have the immediate right to exercise, and 

16 shall not be stayed from exercising, all of 

17 its rights and remedies under its rules and 

18 applicable law with respect to any qualified 

19 financial contract of the covered financial 

20 company, including, without limitation, the 

21 right to liquidate all positions and collat22 eral of such covered financial company 

23 under the company’s qualified financial 

24 contracts, and suspend or cease to act for 

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1 cordance with the rules of the clearing or2 ganization. 

3 (G) RECORDKEEPING.— 

4 (i) JOINT RULEMAKING.—The Federal 

5 primary financial regulatory agencies shall 

6 jointly prescribe regulations requiring that 

7 financial companies maintain such records 

8 with respect to qualified financial contracts 

9 (including market valuations) that the 

10 Federal primary financial regulatory agen11 cies determine to be necessary or appro12 priate in order to assist the Corporation as 

13 receiver for a covered financial company in 

14 being able to exercise its rights and fulfill 

15 its obligations under this paragraph or 

16 paragraph (9) or (10). 

17 (ii) TIMEFRAME.—The Federal pri18 mary financial regulatory agencies shall 

19 prescribe joint final or interim final regula20 tions not later than 24 months after the 

21 date of enactment of this Act. 

22 (iii) BACK-UP RULEMAKING AUTHOR23 ITY.—If the Federal primary financial reg24 ulatory agencies do not prescribe joint final 

25 or interim final regulations within the time 


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1 frame in clause (ii), the Chairperson of the 

2 Council shall prescribe, in consultation 

3 with the Corporation, the regulations re4 quired by clause (i). 

5 (iv) CATEGORIZATION AND

6 TIERING.—The joint regulations prescribed 

7 under clause (i) shall, as appropriate, dif8 ferentiate among financial companies by 

9 taking into consideration their size, risk, 

10 complexity, leverage, frequency and dollar 

11 amount of qualified financial contracts, 

12 interconnectedness to the financial system, 

13 and any other factors deemed appropriate. 

14 (9) TRANSFER OF QUALIFIED FINANCIAL CON15 TRACTS.— 

16 (A) IN GENERAL.—In making any transfer 

17 of assets or liabilities of a covered financial 

18 company in default, which includes any quali19 fied financial contract, the Corporation as re20 ceiver for such covered financial company shall 

21 either— 

22 (i) transfer to one financial institu23 tion, other than a financial institution for 

24 which a conservator, receiver, trustee in 

25 bankruptcy, or other legal custodian has 


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1 been appointed or which is otherwise the 

2 subject of a bankruptcy or insolvency pro3 ceeding— 

4 (I) all qualified financial con5 tracts between any person or any af6 filiate of such person and the covered 

7 financial company in default; 

8 (II) all claims of such person or 

9 any affiliate of such person against 

10 such covered financial company under 

11 any such contract (other than any 

12 claim which, under the terms of any 

13 such contract, is subordinated to the 

14 claims of general unsecured creditors 

15 of such company); 

16 (III) all claims of such covered fi17 nancial company against such person 

18 or any affiliate of such person under 

19 any such contract; and 

20 (IV) all property securing or any 

21 other credit enhancement for any con22 tract described in subclause (I) or any 

23 claim described in subclause (II) or 

24 (III) under any such contract; or 


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1 (ii) transfer none of the qualified fi2 nancial contracts, claims, property or other 

3 credit enhancement referred to in clause (i) 

4 (with respect to such person and any affil5 iate of such person). 

6 (B) TRANSFER TO FOREIGN BANK, FINAN7 CIAL INSTITUTION, OR BRANCH OR AGENCY

8 THEREOF.—In transferring any qualified finan9 cial contracts and related claims and property 

10 under subparagraph (A)(i), the Corporation as 

11 receiver for the covered financial company shall 

12 not make such transfer to a foreign bank, fi13 nancial institution organized under the laws of 

14 a foreign country, or a branch or agency of a 

15 foreign bank or financial institution unless, 

16 under the law applicable to such bank, financial 

17 institution, branch or agency, to the qualified 

18 financial contracts, and to any netting contract, 

19 any security agreement or arrangement or other 

20 credit enhancement related to one or more 

21 qualified financial contracts, the contractual 

22 rights of the parties to such qualified financial 

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1 hancements are enforceable substantially to the 

2 same extent as permitted under this section. 

3 (C) TRANSFER OF CONTRACTS SUBJECT

4 TO THE RULES OF A CLEARING ORGANIZA5 TION.—In the event that the Corporation as re6 ceiver for a financial institution transfers any 

7 qualified financial contract and related claims, 

8 property, or credit enhancement pursuant to 

9 subparagraph (A)(i) and such contract is 

10 cleared by or subject to the rules of a clearing 

11 organization, the clearing organization shall not 

12 be required to accept the transferee as a mem13 ber by virtue of the transfer. 

14 (D) DEFINITIONS.—For purposes of this 

15 paragraph— 

16 (i) the term ‘‘financial institution’’ 

17 means a broker or dealer, a depository in18 stitution, a futures commission merchant, 

19 a bridge financial company, or any other 

20 institution determined by the Corporation, 

21 by regulation, to be a financial institution; 

22 and 

23 (ii) the term ‘‘clearing organization’’ 

24 has the same meaning as in section 402 of 


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1 the Federal Deposit Insurance Corporation 

2 Improvement Act of 1991. 

3 (10) NOTIFICATION OF TRANSFER.— 

4 (A) IN GENERAL.— 

5 (i) NOTICE.—The Corporation shall 

6 provide notice in accordance with clause 

7 (ii), if— 

8 (I) the Corporation as receiver 

9 for a covered financial company in de10 fault or in danger of default transfers 

11 any assets or liabilities of the covered 

12 financial company; and 

13 (II) the transfer includes any 

14 qualified financial contract. 

15 (ii) TIMING.—The Corporation as re16 ceiver for a covered financial company 

17 shall notify any person who is a party to 

18 any contract described in clause (i) of such 

19 transfer not later than 5:00 p.m. (eastern 

20 time) on the 5th business day following the 

21 date of the appointment of the Corporation 

22 as receiver. 

23 (B) CERTAIN RIGHTS NOT ENFORCE24 ABLE.— 


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1 (i) RECEIVERSHIP.—A person who is 

2 a party to a qualified financial contract 

3 with a covered financial company may not 

4 exercise any right that such person has to 

5 terminate, liquidate, or net such contract 

6 under paragraph (8)(A) solely by reason of 

7 or incidental to the appointment under this 

8 section of the Corporation as receiver for 

9 the covered financial company (or the in10 solvency or financial condition of the cov11 ered financial company for which the Cor12 poration has been appointed as receiver)— 

13 (I) until 5:00 p.m. (eastern time) 

14 on the 5th business day following the 

15 date of the appointment; or 

16 (II) after the person has received 

17 notice that the contract has been 

18 transferred pursuant to paragraph 

19 (9)(A). 

20 (ii) NOTICE.—For purposes of this 

21 paragraph, the Corporation as receiver for 

22 a covered financial company shall be 

23 deemed to have notified a person who is a 

24 party to a qualified financial contract with 

25 such covered financial company, if the CorVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00236 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 poration has taken steps reasonably cal2 culated to provide notice to such person by 

3 the time specified in subparagraph (A). 

4 (C) TREATMENT OF BRIDGE FINANCIAL

5 COMPANY.—For purposes of paragraph (9), a 

6 bridge financial company shall not be consid7 ered to be a covered financial company for 

8 which a conservator, receiver, trustee in bank9 ruptcy, or other legal custodian has been ap10 pointed, or which is otherwise the subject of a 

11 bankruptcy or insolvency proceeding. 

12 (D) BUSINESS DAY DEFINED.—For pur13 poses of this paragraph, the term ‘‘business 

14 day’’ means any day other than any Saturday, 

15 Sunday, or any day on which either the New 

16 York Stock Exchange or the Federal Reserve 

17 Bank of New York is closed. 

18 (11) DISAFFIRMANCE OR REPUDIATION OF

19 QUALIFIED FINANCIAL CONTRACTS.—In exercising 

20 the rights of disaffirmance or repudiation of the 

21 Corporation as receiver with respect to any qualified 

22 financial contract to which a covered financial com23 pany is a party, the Corporation shall either— 

24 (A) disaffirm or repudiate all qualified fi25 nancial contracts between— 


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1 (i) any person or any affiliate of such 

2 person; and 

3 (ii) the covered financial company in 

4 default; or 

5 (B) disaffirm or repudiate none of the 

6 qualified financial contracts referred to in sub7 paragraph (A) (with respect to such person or 

8 any affiliate of such person). 

9 (12) CERTAIN SECURITY AND CUSTOMER IN10 TERESTS NOT AVOIDABLE.—No provision of this 

11 subsection shall be construed as permitting the 

12 avoidance of any— 

13 (A) legally enforceable or perfected secu14 rity interest in any of the assets of any covered 

15 financial company, except in accordance with 

16 subsection (a)(11); or 

17 (B) legally enforceable interest in customer 

18 property, security entitlements in respect of as19 sets or property held by the covered financial 

20 company for any security entitlement holder. 

21 (13) AUTHORITY TO ENFORCE CONTRACTS.— 

22 (A) IN GENERAL.—The Corporation, as re23 ceiver for a covered financial company, may en24 force any contract, other than a liability insur25 ance contract of a director or officer, a financial 


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1 institution bond entered into by the covered fi2 nancial company, notwithstanding any provision 

3 of the contract providing for termination, de4 fault, acceleration, or exercise of rights upon, or 

5 solely by reason of, insolvency, the appointment 

6 of or the exercise of rights or powers by the 

7 Corporation as receiver, the filing of the peti8 tion pursuant to section 202(c)(1), or the 

9 issuance of the recommendations or determina10 tion, or any actions or events occurring in con11 nection therewith or as a result thereof, pursu12 ant to section 203. 

13 (B) CERTAIN RIGHTS NOT AFFECTED.— 

14 No provision of this paragraph may be con15 strued as impairing or affecting any right of the 

16 Corporation as receiver to enforce or recover 

17 under a liability insurance contract of a director 

18 or officer or financial institution bond under 

19 other applicable law. 

20 (C) CONSENT REQUIREMENT AND IPSO

21 FACTO CLAUSES.— 

22 (i) IN GENERAL.—Except as otherwise 

23 provided by this section, no person may ex24 ercise any right or power to terminate, ac25 celerate, or declare a default under any 


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1 contract to which the covered financial 

2 company is a party (and no provision in 

3 any such contract providing for such de4 fault, termination, or acceleration shall be 

5 enforceable), or to obtain possession of or 

6 exercise control over any property of the 

7 covered financial company or affect any 

8 contractual rights of the covered financial 

9 company, without the consent of the Cor10 poration as receiver for the covered finan11 cial company during the 90 day period be12 ginning from the appointment of the Cor13 poration as receiver. 

14 (ii) EXCEPTIONS.—No provision of 

15 this subparagraph shall apply to a director 

16 or officer liability insurance contract or a 

17 financial institution bond, to the rights of 

18 parties to certain qualified financial con19 tracts pursuant to paragraph (8), or to the 

20 rights of parties to netting contracts pur21 suant to subtitle A of title IV of the Fed22 eral Deposit Insurance Corporation Im23 provement Act of 1991 (12 U.S.C. 4401 et 

24 seq.), or shall be construed as permitting 

25 the Corporation as receiver to fail to comVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00240 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ply with otherwise enforceable provisions of 

2 such contract. 

3 (D) CONTRACTS TO EXTEND CREDIT.— 

4 Notwithstanding any other provision in this 

5 title, if the Corporation as receiver enforces any 

6 contract to extend credit to the covered finan7 cial company or bridge financial company, any 

8 valid and enforceable obligation to repay such 

9 debt shall be paid by the Corporation as re10 ceiver, as an administrative expense of the re11 ceivership. 

12 (14) EXCEPTION FOR FEDERAL RESERVE

13 BANKS AND CORPORATION SECURITY INTEREST.— 

14 No provision of this subsection shall apply with re15 spect to— 

16 (A) any extension of credit from any Fed17 eral reserve bank or the Corporation to any cov18 ered financial company; or 

19 (B) any security interest in the assets of 

20 the covered financial company securing any 

21 such extension of credit. 

22 (15) SAVINGS CLAUSE.—The meanings of terms 

23 used in this subsection are applicable for purposes of 

24 this subsection only, and shall not be construed or 

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1 tion, definition, or treatment of any similar terms 

2 under any other statute, regulation, or rule, includ3 ing the Gramm-Leach-Bliley Act, the Legal Cer4 tainty for Bank Products Act of 2000, the securities 

5 laws (as that term is defined in section 3(a)(47) of 

6 the Securities Exchange Act of 1934), and the Com7 modity Exchange Act. 

8 (16) ENFORCEMENT OF CONTRACTS GUARAN9 TEED BY THE COVERED FINANCIAL COMPANY.— 

10 (A) IN GENERAL.—The Corporation, as re11 ceiver for a covered financial company or as re12 ceiver for a subsidiary of a covered financial 

13 company (including an insured depository insti14 tution) shall have the power to enforce con15 tracts of subsidiaries or affiliates of the covered 

16 financial company, the obligations under which 

17 are guaranteed or otherwise supported by or 

18 linked to the covered financial company, not19 withstanding any contractual right to cause the 

20 termination, liquidation, or acceleration of such 

21 contracts based solely on the insolvency, finan22 cial condition, or receivership of the covered fi23 nancial company, if— 

24 (i) such guaranty or other support 

25 and all related assets and liabilities are 


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1 transferred to and assumed by a bridge fi2 nancial company or a third party (other 

3 than a third party for which a conservator, 

4 receiver, trustee in bankruptcy, or other 

5 legal custodian has been appointed, or 

6 which is otherwise the subject of a bank7 ruptcy or insolvency proceeding) within the 

8 same period of time as the Corporation is 

9 entitled to transfer the qualified financial 

10 contracts of such covered financial com11 pany; or 

12 (ii) the Corporation, as receiver, oth13 erwise provides adequate protection with 

14 respect to such obligations. 

15 (B) RULE OF CONSTRUCTION.—For pur16 poses of this paragraph, a bridge financial com17 pany shall not be considered to be a third party 

18 for which a conservator, receiver, trustee in 

19 bankruptcy, or other legal custodian has been 

20 appointed, or which is otherwise the subject of 

21 a bankruptcy or insolvency proceeding. 

22 (d) VALUATION OF CLAIMS IN DEFAULT.— 

23 (1) IN GENERAL.—Notwithstanding any other 

24 provision of Federal law or the law of any State, and 

25 regardless of the method utilized by the Corporation 


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1 for a covered financial company, including trans2 actions authorized under subsection (h), this sub3 section shall govern the rights of the creditors of any 

4 such covered financial company. 

5 (2) MAXIMUM LIABILITY.—The maximum li6 ability of the Corporation, acting as receiver for a 

7 covered financial company or in any other capacity, 

8 to any person having a claim against the Corpora9 tion as receiver or the covered financial company for 

10 which the Corporation is appointed shall equal the 

11 amount that such claimant would have received if— 

12 (A) the Corporation had not been ap13 pointed receiver with respect to the covered fi14 nancial company; and 

15 (B) the covered financial company had 

16 been liquidated under chapter 7 of the Bank17 ruptcy Code, or any similar provision of State 

18 insolvency law applicable to the covered finan19 cial company. 

20 (3) SPECIAL PROVISION FOR ORDERLY LIQ21 UIDATION BY SIPC.—The maximum liability of the 

22 Corporation, acting as receiver or in its corporate 

23 capacity for any covered broker or dealer to any cus24 tomer of such covered broker or dealer, with respect 

25 to customer property of such customer, shall be— 


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1 (A) equal to the amount that such cus2 tomer would have received with respect to such 

3 customer property in a case initiated by SIPC 

4 under the Securities Investor Protection Act of 

5 1970 (15 U.S.C. 78aaa et seq.); and 

6 (B) determined as of the close of business 

7 on the date on which the Corporation is ap8 pointed as receiver. 

9 (4) ADDITIONAL PAYMENTS AUTHORIZED.— 

10 (A) IN GENERAL.—Subject to subsection 

11 (o)(1)(E)(ii), the Corporation, with the approval 

12 of the Secretary, may make additional pay13 ments or credit additional amounts to or with 

14 respect to or for the account of any claimant or 

15 category of claimants of the covered financial 

16 company, if the Corporation determines that 

17 such payments or credits are necessary or ap18 propriate to minimize losses to the Corporation 

19 as receiver from the orderly liquidation of the 

20 covered financial company under this section. 

21 (B) LIMITATION.—Notwithstanding any 

22 other provision of Federal or State law, or the 

23 constitution of any State, the Corporation shall 

24 not be obligated, as a result of having made any 

25 payment under subparagraph (A) or credited 


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1 any amount described in subparagraph (A) to 

2 or with respect to or for the account of any 

3 claimant or category of claimants, to make pay4 ments to any other claimant or category of 

5 claimants. 

6 (C) MANNER OF PAYMENT.—The Corpora7 tion may make payments or credit amounts 

8 under subparagraph (A) directly to the claim9 ants or may make such payments or credit such 

10 amounts to a company other than a covered fi11 nancial company or a bridge financial company 

12 established with respect thereto in order to in13 duce such other company to accept liability for 

14 such claims. 

15 (e) LIMITATION ON COURT ACTION.—Except as pro16 vided in this title, no court may take any action to restrain 

17 or affect the exercise of powers or functions of the receiver 

18 hereunder, and any remedy against the Corporation or re19 ceiver shall be limited to money damages determined in 

20 accordance with this title. 

21 (f) LIABILITY OF DIRECTORS AND OFFICERS.— 

22 (1) IN GENERAL.—A director or officer of a 

23 covered financial company may be held personally 

24 liable for monetary damages in any civil action de25 scribed in paragraph (2) by, on behalf of, or at the 


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1 request or direction of the Corporation, which action 

2 is prosecuted wholly or partially for the benefit of 

3 the Corporation— 

4 (A) acting as receiver for such covered fi5 nancial company; 

6 (B) acting based upon a suit, claim, or 

7 cause of action purchased from, assigned by, or 

8 otherwise conveyed by the Corporation as re9 ceiver; or 

10 (C) acting based upon a suit, claim, or 

11 cause of action purchased from, assigned by, or 

12 otherwise conveyed in whole or in part by a cov13 ered financial company or its affiliate in con14 nection with assistance provided under this 

15 title. 

16 (2) ACTIONS COVERED.—Paragraph (1) shall 

17 apply with respect to actions for gross negligence, 

18 including any similar conduct or conduct that dem19 onstrates a greater disregard of a duty of care (than 

20 gross negligence) including intentional tortious con21 duct, as such terms are defined and determined 

22 under applicable State law. 

23 (3) SAVINGS CLAUSE.—Nothing in this sub24 section shall impair or affect any right of the Cor25 poration under other applicable law. 


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1 (g) DAMAGES.—In any proceeding related to any 

2 claim against a director, officer, employee, agent, attorney, 

3 accountant, or appraiser of a covered financial company, 

4 or any other party employed by or providing services to 

5 a covered financial company, recoverable damages deter6 mined to result from the improvident or otherwise im7 proper use or investment of any assets of the covered fi8 nancial company shall include principal losses and appro9 priate interest. 

10 (h) BRIDGE FINANCIAL COMPANIES.— 

11 (1) ORGANIZATION.— 

12 (A) PURPOSE.—The Corporation, as re13 ceiver for one or more covered financial compa14 nies or in anticipation of being appointed re15 ceiver for one or more covered financial compa16 nies, may organize one or more bridge financial 

17 companies in accordance with this subsection. 

18 (B) AUTHORITIES.—Upon the creation of 

19 a bridge financial company under subparagraph 

20 (A) with respect to a covered financial com21 pany, such bridge financial company may— 

22 (i) assume such liabilities (including 

23 liabilities associated with any trust or cus24 tody business, but excluding any liabilities 

25 that count as regulatory capital) of such 


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1 covered financial company as the Corpora2 tion may, in its discretion, determine to be 

3 appropriate; 

4 (ii) purchase such assets (including 

5 assets associated with any trust or custody 

6 business) of such covered financial com7 pany as the Corporation may, in its discre8 tion, determine to be appropriate; and 

9 (iii) perform any other temporary 

10 function which the Corporation may, in its 

11 discretion, prescribe in accordance with 

12 this section. 

13 (2) CHARTER AND ESTABLISHMENT.— 

14 (A) ESTABLISHMENT.—Except as provided 

15 in subparagraph (H), where the covered finan16 cial company is a covered broker or dealer, the 

17 Corporation, as receiver for a covered financial 

18 company, may grant a Federal charter to and 

19 approve articles of association for one or more 

20 bridge financial company or companies, with re21 spect to such covered financial company which 

22 shall, by operation of law and immediately upon 

23 issuance of its charter and approval of its arti24 cles of association, be established and operate 


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1 in accordance with, and subject to, such char2 ter, articles, and this section. 

3 (B) MANAGEMENT.—Upon its establish4 ment, a bridge financial company shall be under 

5 the management of a board of directors ap6 pointed by the Corporation. 

7 (C) ARTICLES OF ASSOCIATION.—The arti8 cles of association and organization certificate 

9 of a bridge financial company shall have such 

10 terms as the Corporation may provide, and 

11 shall be executed by such representatives as the 

12 Corporation may designate. 

13 (D) TERMS OF CHARTER; RIGHTS AND

14 PRIVILEGES.—Subject to and in accordance 

15 with the provisions of this subsection, the Cor16 poration shall— 

17 (i) establish the terms of the charter 

18 of a bridge financial company and the 

19 rights, powers, authorities, and privileges 

20 of a bridge financial company granted by 

21 the charter or as an incident thereto; and 

22 (ii) provide for, and establish the 

23 terms and conditions governing, the man24 agement (including the bylaws and the 

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1 tors) and operations of the bridge financial 

2 company. 

3 (E) TRANSFER OF RIGHTS AND PRIVI4 LEGES OF COVERED FINANCIAL COMPANY.— 

5 (i) IN GENERAL.—Notwithstanding 

6 any other provision of Federal or State 

7 law, the Corporation may provide for a 

8 bridge financial company to succeed to and 

9 assume any rights, powers, authorities, or 

10 privileges of the covered financial company 

11 with respect to which the bridge financial 

12 company was established and, upon such 

13 determination by the Corporation, the 

14 bridge financial company shall immediately 

15 and by operation of law succeed to and as16 sume such rights, powers, authorities, and 

17 privileges. 

18 (ii) EFFECTIVE WITHOUT AP19 PROVAL.—Any succession to or assumption 

20 by a bridge financial company of rights, 

21 powers, authorities, or privileges of a cov22 ered financial company under clause (i) or 

23 otherwise shall be effective without any 

24 further approval under Federal or State 


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1 law, assignment, or consent with respect 

2 thereto. 

3 (F) CORPORATE GOVERNANCE AND ELEC4 TION AND DESIGNATION OF BODY OF LAW.—To 

5 the extent permitted by the Corporation and 

6 consistent with this section and any rules, regu7 lations, or directives issued by the Corporation 

8 under this section, a bridge financial company 

9 may elect to follow the corporate governance 

10 practices and procedures that are applicable to 

11 a corporation incorporated under the general 

12 corporation law of the State of Delaware, or the 

13 State of incorporation or organization of the 

14 covered financial company with respect to which 

15 the bridge financial company was established, 

16 as such law may be amended from time to time. 

17 (G) CAPITAL.— 

18 (i) CAPITAL NOT REQUIRED.—Not19 withstanding any other provision of Fed20 eral or State law, a bridge financial com21 pany may, if permitted by the Corporation, 

22 operate without any capital or surplus, or 

23 with such capital or surplus as the Cor24 poration may in its discretion determine to 

25 be appropriate. 


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1 (ii) NO CONTRIBUTION BY THE COR2 PORATION REQUIRED.—The Corporation is 

3 not required to pay capital into a bridge fi4 nancial company or to issue any capital 

5 stock on behalf of a bridge financial com6 pany established under this subsection. 

7 (iii) AUTHORITY.—If the Corporation 

8 determines that such action is advisable, 

9 the Corporation may cause capital stock or 

10 other securities of a bridge financial com11 pany established with respect to a covered 

12 financial company to be issued and offered 

13 for sale in such amounts and on such 

14 terms and conditions as the Corporation 

15 may, in its discretion, determine. 

16 (iv) OPERATING FUNDS IN LIEU OF

17 CAPITAL AND IMPLEMENTATION PLAN.— 

18 Upon the organization of a bridge financial 

19 company, and thereafter as the Corpora20 tion may, in its discretion, determine to be 

21 necessary or advisable, the Corporation 

22 may make available to the bridge financial 

23 company, subject to the plan described in 

24 subsection (n)(13), funds for the operation 


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1 of the bridge financial company in lieu of 

2 capital. 

3 (H) BRIDGE BROKERS OR DEALERS.— 

4 (i) IN GENERAL.—The Corporation, 

5 as receiver for a covered broker or dealer, 

6 may approve articles of association for one 

7 or more bridge financial companies with 

8 respect to such covered broker or dealer, 

9 which bridge financial company or compa10 nies shall, by operation of law and imme11 diately upon approval of its articles of as12 sociation— 

13 (I) be established and deemed 

14 registered with the Commission under 

15 the Securities Exchange Act of 1934 

16 and a member of SIPC; 

17 (II) operate in accordance with 

18 such articles and this section; and 

19 (III) succeed to any and all reg20 istrations and memberships of the 

21 covered financial company with or in 

22 any self-regulatory organizations. 

23 (ii) OTHER REQUIREMENTS.—Except 

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1 tion, the bridge financial company shall be 

2 subject to the Federal securities laws and 

3 all requirements with respect to being a 

4 member of a self-regulatory organization, 

5 unless exempted from any such require6 ments by the Commission, as is necessary 

7 or appropriate in the public interest or for 

8 the protection of investors. 

9 (iii) TREATMENT OF CUSTOMERS.— 

10 Except as otherwise provided by this title, 

11 any customer of the covered broker or 

12 dealer whose account is transferred to a 

13 bridge financial company shall have all the 

14 rights, privileges, and protections under 

15 section 205(f) and under the Securities In16 vestor Protection Act of 1970 (15 U.S.C. 

17 78aaa et seq.), that such customer would 

18 have had if the account were not trans19 ferred from the covered financial company 

20 under this subparagraph. 

21 (iv) OPERATION OF BRIDGE BROKERS

22 OR DEALERS.—Notwithstanding any other 

23 provision of this title, the Corporation shall 

24 not operate any bridge financial company 

25 created by the Corporation under this title 


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1 with respect to a covered broker or dealer 

2 in such a manner as to adversely affect the 

3 ability of customers to promptly access 

4 their customer property in accordance with 

5 applicable law. 

6 (3) INTERESTS IN AND ASSETS AND OBLIGA7 TIONS OF COVERED FINANCIAL COMPANY.—Notwith8 standing paragraph (1) or (2) or any other provision 

9 of law— 

10 (A) a bridge financial company shall as11 sume, acquire, or succeed to the assets or liabil12 ities of a covered financial company (including 

13 the assets or liabilities associated with any trust 

14 or custody business) only to the extent that 

15 such assets or liabilities are transferred by the 

16 Corporation to the bridge financial company in 

17 accordance with, and subject to the restrictions 

18 set forth in, paragraph (1)(B); and 

19 (B) a bridge financial company shall not 

20 assume, acquire, or succeed to any obligation 

21 that a covered financial company for which the 

22 Corporation has been appointed receiver may 

23 have to any shareholder, member, general part24 ner, limited partner, or other person with an in25 terest in the equity of the covered financial 


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1 company that arises as a result of the status of 

2 that person having an equity claim in the cov3 ered financial company. 

4 (4) BRIDGE FINANCIAL COMPANY TREATED AS

5 BEING IN DEFAULT FOR CERTAIN PURPOSES.—A 

6 bridge financial company shall be treated as a cov7 ered financial company in default at such times and 

8 for such purposes as the Corporation may, in its dis9 cretion, determine. 

10 (5) TRANSFER OF ASSETS AND LIABILITIES.— 

11 (A) AUTHORITY OF CORPORATION.—The 

12 Corporation, as receiver for a covered financial 

13 company, may transfer any assets and liabilities 

14 of a covered financial company (including any 

15 assets or liabilities associated with any trust or 

16 custody business) to one or more bridge finan17 cial companies, in accordance with and subject 

18 to the restrictions of paragraph (1). 

19 (B) SUBSEQUENT TRANSFERS.—At any 

20 time after the establishment of a bridge finan21 cial company with respect to a covered financial 

22 company, the Corporation, as receiver, may 

23 transfer any assets and liabilities of such cov24 ered financial company as the Corporation may, 

25 in its discretion, determine to be appropriate in 


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1 accordance with and subject to the restrictions 

2 of paragraph (1). 

3 (C) TREATMENT OF TRUST OR CUSTODY

4 BUSINESS.—For purposes of this paragraph, 

5 the trust or custody business, including fidu6 ciary appointments, held by any covered finan7 cial company is included among its assets and 

8 liabilities. 

9 (D) EFFECTIVE WITHOUT APPROVAL.— 

10 The transfer of any assets or liabilities, includ11 ing those associated with any trust or custody 

12 business of a covered financial company, to a 

13 bridge financial company shall be effective with14 out any further approval under Federal or 

15 State law, assignment, or consent with respect 

16 thereto. 

17 (E) EQUITABLE TREATMENT OF SIMI18 LARLY SITUATED CREDITORS.—The Corpora19 tion shall treat all creditors of a covered finan20 cial company that are similarly situated under 

21 subsection (b)(1), in a similar manner in exer22 cising the authority of the Corporation under 

23 this subsection to transfer any assets or liabil24 ities of the covered financial company to one or 

25 more bridge financial companies established 


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1 with respect to such covered financial company, 

2 except that the Corporation may take any ac3 tion (including making payments, subject to 

4 subsection (o)(1)(E)(ii)) that does not comply 

5 with this subparagraph, if— 

6 (i) the Corporation determines that 

7 such action is necessary— 

8 (I) to maximize the value of the 

9 assets of the covered financial com10 pany; 

11 (II) to maximize the present 

12 value return from the sale or other 

13 disposition of the assets of the covered 

14 financial company; or 

15 (III) to minimize the amount of 

16 any loss realized upon the sale or 

17 other disposition of the assets of the 

18 covered financial company; and 

19 (ii) all creditors that are similarly sit20 uated under subsection (b)(1) receive not 

21 less than the amount provided under para22 graphs (2) and (3) of subsection (d). 

23 (F) LIMITATION ON TRANSFER OF LIABIL24 ITIES.—Notwithstanding any other provision of 

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1 ered financial company that are transferred to, 

2 or assumed by, a bridge financial company from 

3 a covered financial company may not exceed the 

4 aggregate amount of the assets of the covered 

5 financial company that are transferred to, or 

6 purchased by, the bridge financial company 

7 from the covered financial company. 

8 (6) STAY OF JUDICIAL ACTION.—Any judicial 

9 action to which a bridge financial company becomes 

10 a party by virtue of its acquisition of any assets or 

11 assumption of any liabilities of a covered financial 

12 company shall be stayed from further proceedings 

13 for a period of not longer than 45 days (or such 

14 longer period as may be agreed to upon the consent 

15 of all parties) at the request of the bridge financial 

16 company. 

17 (7) AGREEMENTS AGAINST INTEREST OF THE

18 BRIDGE FINANCIAL COMPANY.—No agreement that 

19 tends to diminish or defeat the interest of the bridge 

20 financial company in any asset of a covered financial 

21 company acquired by the bridge financial company 

22 shall be valid against the bridge financial company, 

23 unless such agreement— 

24 (A) is in writing; 


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1 (B) was executed by an authorized officer 

2 or representative of the covered financial com3 pany or confirmed in the ordinary course of 

4 business by the covered financial company; and 

5 (C) has been on the official record of the 

6 company, since the time of its execution, or 

7 with which, the party claiming under the agree8 ment provides documentation of such agreement 

9 and its authorized execution or confirmation by 

10 the covered financial company that is acceptable 

11 to the receiver. 

12 (8) NO FEDERAL STATUS.— 

13 (A) AGENCY STATUS.—A bridge financial 

14 company is not an agency, establishment, or in15 strumentality of the United States. 

16 (B) EMPLOYEE STATUS.—Representatives 

17 for purposes of paragraph (1)(B), directors, of18 ficers, employees, or agents of a bridge financial 

19 company are not, solely by virtue of service in 

20 any such capacity, officers or employees of the 

21 United States. Any employee of the Corporation 

22 or of any Federal instrumentality who serves at 

23 the request of the Corporation as a representa24 tive for purposes of paragraph (1)(B), director, 


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1 officer, employee, or agent of a bridge financial 

2 company shall not— 

3 (i) solely by virtue of service in any 

4 such capacity lose any existing status as 

5 an officer or employee of the United States 

6 for purposes of title 5, United States Code, 

7 or any other provision of law; or 

8 (ii) receive any salary or benefits for 

9 service in any such capacity with respect to 

10 a bridge financial company in addition to 

11 such salary or benefits as are obtained 

12 through employment with the Corporation 

13 or such Federal instrumentality. 

14 (9) FUNDING AUTHORIZED.—The Corporation 

15 may, subject to the plan described in subsection 

16 (n)(13), provide funding to facilitate any transaction 

17 described in subparagraph (A), (B), (C), or (D) of 

18 paragraph (13) with respect to any bridge financial 

19 company, or facilitate the acquisition by a bridge fi20 nancial company of any assets, or the assumption of 

21 any liabilities, of a covered financial company for 

22 which the Corporation has been appointed receiver. 

23 (10) EXEMPT TAX STATUS.—Notwithstanding 

24 any other provision of Federal or State law, a bridge 

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1 come shall be exempt from all taxation now or here2 after imposed by the United States, by any territory, 

3 dependency, or possession thereof, or by any State, 

4 county, municipality, or local taxing authority. 

5 (11) FEDERAL AGENCY APPROVAL; ANTITRUST

6 REVIEW.—If a transaction involving the merger or 

7 sale of a bridge financial company requires approval 

8 by a Federal agency, the transaction may not be 

9 consummated before the 5th calendar day after the 

10 date of approval by the Federal agency responsible 

11 for such approval with respect thereto. If, in connec12 tion with any such approval a report on competitive 

13 factors from the Attorney General is required, the 

14 Federal agency responsible for such approval shall 

15 promptly notify the Attorney General of the pro16 posed transaction and the Attorney General shall 

17 provide the required report within 10 days of the re18 quest. If a notification is required under section 7A 

19 of the Clayton Act with respect to such transaction, 

20 the required waiting period shall end on the 15th 

21 day after the date on which the Attorney General 

22 and the Federal Trade Commission receive such no23 tification, unless the waiting period is terminated 

24 earlier under section 7A(b)(2) of the Clayton Act, or 

25 extended under section 7A(e)(2) of that Act. 


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1 (12) DURATION OF BRIDGE FINANCIAL COM2 PANY.—Subject to paragraphs (13) and (14), the 

3 status of a bridge financial company as such shall 

4 terminate at the end of the 2-year period following 

5 the date on which it was granted a charter. The 

6 Corporation may, in its discretion, extend the status 

7 of the bridge financial company as such for no more 

8 than 3 additional 1-year periods. 

9 (13) TERMINATION OF BRIDGE FINANCIAL COM10 PANY STATUS.—The status of any bridge financial 

11 company as such shall terminate upon the earliest 

12 of— 

13 (A) the date of the merger or consolidation 

14 of the bridge financial company with a company 

15 that is not a bridge financial company; 

16 (B) at the election of the Corporation, the 

17 sale of a majority of the capital stock of the 

18 bridge financial company to a company other 

19 than the Corporation and other than another 

20 bridge financial company; 

21 (C) the sale of 80 percent, or more, of the 

22 capital stock of the bridge financial company to 

23 a person other than the Corporation and other 

24 than another bridge financial company; 


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1 (D) at the election of the Corporation, ei2 ther the assumption of all or substantially all of 

3 the liabilities of the bridge financial company by 

4 a company that is not a bridge financial com5 pany, or the acquisition of all or substantially 

6 all of the assets of the bridge financial company 

7 by a company that is not a bridge financial 

8 company, or other entity as permitted under 

9 applicable law; and 

10 (E) the expiration of the period provided in 

11 paragraph (12), or the earlier dissolution of the 

12 bridge financial company, as provided in para13 graph (15). 

14 (14) EFFECT OF TERMINATION EVENTS.— 

15 (A) MERGER OR CONSOLIDATION.—A 

16 merger or consolidation, described in paragraph 

17 (12)(A) shall be conducted in accordance with, 

18 and shall have the effect provided in, the provi19 sions of applicable law. For the purpose of ef20 fecting such a merger or consolidation, the 

21 bridge financial company shall be treated as a 

22 corporation organized under the laws of the 

23 State of Delaware (unless the law of another 

24 State has been selected by the bridge financial 

25 company in accordance with paragraph (2)(F)), 


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1 and the Corporation shall be treated as the sole 

2 shareholder thereof, notwithstanding any other 

3 provision of State or Federal law. 

4 (B) CHARTER CONVERSION.—Following 

5 the sale of a majority of the capital stock of the 

6 bridge financial company, as provided in para7 graph (13)(B), the Corporation may amend the 

8 charter of the bridge financial company to re9 flect the termination of the status of the bridge 

10 financial company as such, whereupon the com11 pany shall have all of the rights, powers, and 

12 privileges under its constituent documents and 

13 applicable Federal or State law. In connection 

14 therewith, the Corporation may take such steps 

15 as may be necessary or convenient to reincor16 porate the bridge financial company under the 

17 laws of a State and, notwithstanding any provi18 sions of Federal or State law, such State-char19 tered corporation shall be deemed to succeed by 

20 operation of law to such rights, titles, powers, 

21 and interests of the bridge financial company as 

22 the Corporation may provide, with the same ef23 fect as if the bridge financial company had 

24 merged with the State-chartered corporation 


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1 under provisions of the corporate laws of such 

2 State. 

3 (C) SALE OF STOCK.—Following the sale 

4 of 80 percent or more of the capital stock of a 

5 bridge financial company, as provided in para6 graph (13)(C), the company shall have all of 

7 the rights, powers, and privileges under its con8 stituent documents and applicable Federal or 

9 State law. In connection therewith, the Cor10 poration may take such steps as may be nec11 essary or convenient to reincorporate the bridge 

12 financial company under the laws of a State 

13 and, notwithstanding any provisions of Federal 

14 or State law, the State-chartered corporation 

15 shall be deemed to succeed by operation of law 

16 to such rights, titles, powers and interests of 

17 the bridge financial company as the Corpora18 tion may provide, with the same effect as if the 

19 bridge financial company had merged with the 

20 State-chartered corporation under provisions of 

21 the corporate laws of such State. 

22 (D) ASSUMPTION OF LIABILITIES AND

23 SALE OF ASSETS.—Following the assumption of 

24 all or substantially all of the liabilities of the 

25 bridge financial company, or the sale of all or 


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1 substantially all of the assets of the bridge fi2 nancial company, as provided in paragraph 

3 (13)(D), at the election of the Corporation, the 

4 bridge financial company may retain its status 

5 as such for the period provided in paragraph 

6 (12) or may be dissolved at the election of the 

7 Corporation. 

8 (E) AMENDMENTS TO CHARTER.—Fol9 lowing the consummation of a transaction de10 scribed in subparagraph (A), (B), (C), or (D) 

11 of paragraph (13), the charter of the resulting 

12 company shall be amended to reflect the termi13 nation of bridge financial company status, if ap14 propriate. 

15 (15) DISSOLUTION OF BRIDGE FINANCIAL COM16 PANY.— 

17 (A) IN GENERAL.—Notwithstanding any 

18 other provision of Federal or State law, if the 

19 status of a bridge financial company as such 

20 has not previously been terminated by the oc21 currence of an event specified in subparagraph 

22 (A), (B), (C), or (D) of paragraph (13)— 

23 (i) the Corporation may, in its discre24 tion, dissolve the bridge financial company 


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1 in accordance with this paragraph at any 

2 time; and 

3 (ii) the Corporation shall promptly 

4 commence dissolution proceedings in ac5 cordance with this paragraph upon the ex6 piration of the 2-year period following the 

7 date on which the bridge financial com8 pany was chartered, or any extension 

9 thereof, as provided in paragraph (12). 

10 (B) PROCEDURES.—The Corporation shall 

11 remain the receiver for a bridge financial com12 pany for the purpose of dissolving the bridge fi13 nancial company. The Corporation as receiver 

14 for a bridge financial company shall wind up 

15 the affairs of the bridge financial company in 

16 conformity with the provisions of law relating to 

17 the liquidation of covered financial companies 

18 under this title. With respect to any such bridge 

19 financial company, the Corporation as receiver 

20 shall have all the rights, powers, and privileges 

21 and shall perform the duties related to the exer22 cise of such rights, powers, or privileges granted 

23 by law to the Corporation as receiver for a cov24 ered financial company under this title and, 

25 notwithstanding any other provision of law, in 


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1 the exercise of such rights, powers, and privi2 leges, the Corporation shall not be subject to 

3 the direction or supervision of any State agency 

4 or other Federal agency. 

5 (16) AUTHORITY TO OBTAIN CREDIT.— 

6 (A) IN GENERAL.—A bridge financial com7 pany may obtain unsecured credit and issue un8 secured debt. 

9 (B) INABILITY TO OBTAIN CREDIT.—If a 

10 bridge financial company is unable to obtain 

11 unsecured credit or issue unsecured debt, the 

12 Corporation may authorize the obtaining of 

13 credit or the issuance of debt by the bridge fi14 nancial company— 

15 (i) with priority over any or all of the 

16 obligations of the bridge financial com17 pany; 

18 (ii) secured by a lien on property of 

19 the bridge financial company that is not 

20 otherwise subject to a lien; or 

21 (iii) secured by a junior lien on prop22 erty of the bridge financial company that 

23 is subject to a lien. 

24 (C) LIMITATIONS.— 


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1 (i) IN GENERAL.—The Corporation, 

2 after notice and a hearing, may authorize 

3 the obtaining of credit or the issuance of 

4 debt by a bridge financial company that is 

5 secured by a senior or equal lien on prop6 erty of the bridge financial company that 

7 is subject to a lien, only if— 

8 (I) the bridge financial company 

9 is unable to otherwise obtain such 

10 credit or issue such debt; and 

11 (II) there is adequate protection 

12 of the interest of the holder of the lien 

13 on the property with respect to which 

14 such senior or equal lien is proposed 

15 to be granted. 

16 (ii) HEARING.—The hearing required 

17 pursuant to this subparagraph shall be be18 fore a court of the United States, which 

19 shall have jurisdiction to conduct such 

20 hearing. 

21 (D) BURDEN OF PROOF.—In any hearing 

22 under this paragraph, the Corporation has the 

23 burden of proof on the issue of adequate protec24 tion. 


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1 (E) QUALIFIED FINANCIAL CONTRACTS.— 

2 No credit or debt obtained or issued by a bridge 

3 financial company may contain terms that im4 pair the rights of a counterparty to a qualified 

5 financial contract upon a default by the bridge 

6 financial company, other than the priority of 

7 such counterparty’s unsecured claim (after the 

8 exercise of rights) relative to the priority of the 

9 bridge financial company’s obligations in re10 spect of such credit or debt, unless such 

11 counterparty consents in writing to any such 

12 impairment. 

13 (17) EFFECT ON DEBTS AND LIENS.—The re14 versal or modification on appeal of an authorization 

15 under this subsection to obtain credit or issue debt, 

16 or of a grant under this section of a priority or a 

17 lien, does not affect the validity of any debt so 

18 issued, or any priority or lien so granted, to an enti19 ty that extended such credit in good faith, whether 

20 or not such entity knew of the pendency of the ap21 peal, unless such authorization and the issuance of 

22 such debt, or the granting of such priority or lien, 

23 were stayed pending appeal. 

24 (i) SHARING RECORDS.—If the Corporation has been 

25 appointed as receiver for a covered financial company, 


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1 other Federal regulators shall make all records relating 

2 to the covered financial company available to the Corpora3 tion, which may be used by the Corporation in any manner 

4 that the Corporation determines to be appropriate. 

5 (j) EXPEDITED PROCEDURES FOR CERTAIN

6 CLAIMS.— 

7 (1) TIME FOR FILING NOTICE OF APPEAL.— 

8 The notice of appeal of any order, whether interlocu9 tory or final, entered in any case brought by the 

10 Corporation against a director, officer, employee, 

11 agent, attorney, accountant, or appraiser of the cov12 ered financial company, or any other person em13 ployed by or providing services to a covered financial 

14 company, shall be filed not later than 30 days after 

15 the date of entry of the order. The hearing of the 

16 appeal shall be held not later than 120 days after 

17 the date of the notice of appeal. The appeal shall be 

18 decided not later than 180 days after the date of the 

19 notice of appeal. 

20 (2) SCHEDULING.—The court shall expedite the 

21 consideration of any case brought by the Corpora22 tion against a director, officer, employee, agent, at23 torney, accountant, or appraiser of a covered finan24 cial company or any other person employed by or 

25 providing services to a covered financial company. 


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1 As far as practicable, the court shall give such case 

2 priority on its docket. 

3 (3) JUDICIAL DISCRETION.—The court may 

4 modify the schedule and limitations stated in para5 graphs (1) and (2) in a particular case, based on a 

6 specific finding that the ends of justice that would 

7 be served by making such a modification would out8 weigh the best interest of the public in having the 

9 case resolved expeditiously. 

10 (k) FOREIGN INVESTIGATIONS.—The Corporation, as 

11 receiver for any covered financial company, and for pur12 poses of carrying out any power, authority, or duty with 

13 respect to a covered financial company— 

14 (1) may request the assistance of any foreign fi15 nancial authority and provide assistance to any for16 eign financial authority in accordance with section 

17 8(v) of the Federal Deposit Insurance Act, as if the 

18 covered financial company were an insured deposi19 tory institution, the Corporation were the appro20 priate Federal banking agency for the company, and 

21 any foreign financial authority were the foreign 

22 banking authority; and 

23 (2) may maintain an office to coordinate for24 eign investigations or investigations on behalf of for25 eign financial authorities. 


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1 (l) PROHIBITION ON ENTERING SECRECY AGREE2 MENTS AND PROTECTIVE ORDERS.—The Corporation 

3 may not enter into any agreement or approve any protec4 tive order which prohibits the Corporation from disclosing 

5 the terms of any settlement of an administrative or other 

6 action for damages or restitution brought by the Corpora7 tion in its capacity as receiver for a covered financial com8 pany. 

9 (m) LIQUIDATION OF CERTAIN COVERED FINANCIAL

10 COMPANIES OR BRIDGE FINANCIAL COMPANIES.— 

11 (1) IN GENERAL.—Except as specifically pro12 vided in this section, and notwithstanding any other 

13 provision of law, the Corporation, in connection with 

14 the liquidation of any covered financial company or 

15 bridge financial company with respect to which the 

16 Corporation has been appointed as receiver, shall— 

17 (A) in the case of any covered financial 

18 company or bridge financial company that is or 

19 has a subsidiary that is a stockbroker, but is 

20 not a member of the Securities Investor Protec21 tion Corporation, apply the provisions of sub22 chapter III of chapter 7 of the Bankruptcy 

23 Code, in respect of the distribution to any cus24 tomer of all customer name securities and cus25 tomer property, as if such covered financial 


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1 company or bridge financial company were a 

2 debtor for purposes of such subchapter; or 

3 (B) in the case of any covered financial 

4 company or bridge financial company that is a 

5 commodity broker, apply the provisions of sub6 chapter IV of chapter 7 the Bankruptcy Code, 

7 in respect of the distribution to any customer of 

8 all customer property, as if such covered finan9 cial company or bridge financial company were 

10 a debtor for purposes of such subchapter. 

11 (2) DEFINITIONS.—For purposes of this sub12 section— 

13 (A) the terms ‘‘customer’’, ‘‘customer 

14 name securities’’, and ‘‘customer property’’ 

15 have the same meanings as in section 741 of 

16 title 11, United States Code; and 

17 (B) the terms ‘‘commodity broker’’ and 

18 ‘‘stockbroker’’ have the same meanings as in 

19 section 101 of the Bankruptcy Code. 

20 (n) ORDERLY LIQUIDATION FUND.— 

21 (1) ESTABLISHMENT.—There is established in 

22 the Treasury of the United States a separate fund 

23 to be known as the ‘‘Orderly Liquidation Fund’’, 

24 which shall be available to the Corporation to carry 

25 out the authorities contained in this title, for the 


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1 cost of actions authorized by this title, including the 

2 orderly liquidation of covered financial companies, 

3 payment of administrative expenses, the payment of 

4 principal and interest by the Corporation on obliga5 tions issued under paragraph (9), and the exercise 

6 of the authorities of the Corporation under this title. 

7 (2) PROCEEDS.—Amounts received by the Cor8 poration, including assessments received under sub9 section (o), proceeds of obligations issued under 

10 paragraph (9), interest and other earnings from in11 vestments, and repayments to the Corporation by 

12 covered financial companies, shall be deposited into 

13 the Fund. 

14 (3) MANAGEMENT.—The Corporation shall 

15 manage the Fund in accordance with this subsection 

16 and the policies and procedures established under 

17 section 203(d). 

18 (4) INVESTMENTS.—The Corporation shall in19 vest amounts in the Fund in accordance with para20 graph (8). 

21 (5) TARGET SIZE OF THE FUND.—The target 

22 size of the Fund (in this section referred to as ‘‘tar23 get size’’) shall be $50,000,000,000, adjusted for in24 flation on a periodic basis by the Corporation. 


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1 (6) INITIAL CAPITALIZATION PERIOD.—The 

2 Corporation shall impose risk-based assessments as 

3 provided under subsection (o), during the period be4 ginning one year after the date of enactment of this 

5 Act and ending on the date on which the Fund 

6 reaches the target size (in this section referred to as 

7 the ‘‘initial capitalization period’’), provided that the 

8 initial capitalization period shall be not shorter than 

9 5 years, and not longer than 10 years, after the date 

10 of enactment of this Act. The Corporation, with the 

11 approval of the Secretary, may extend the initial 

12 capitalization period for a longer period, as deter13 mined necessary by the Corporation, if the Corpora14 tion is appointed receiver for a covered financial 

15 company under this title and the Fund incurs a loss 

16 before the expiration of such period. 

17 (7) MAINTAINING THE FUND.—Upon the expi18 ration of the initial capitalization period, the Cor19 poration shall suspend assessments, except as set 

20 forth in subsection (o)(1). 

21 (8) INVESTMENTS.—At the request of the Cor22 poration, the Secretary may invest such portion of 

23 amounts held in the Fund that are not, in the judg24 ment of the Corporation, required to meet the cur25 rent needs of the Corporation, in obligations of the 


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1 United States having suitable maturities, as deter2 mined by the Corporation. The interest on and the 

3 proceeds from the sale or redemption of such obliga4 tions shall be credited to the Fund. 

5 (9) AUTHORITY TO ISSUE OBLIGATIONS.— 

6 (A) CORPORATION AUTHORIZED TO ISSUE

7 OBLIGATIONS.—Upon appointment by the Sec8 retary of the Corporation as receiver for a cov9 ered financial company, the Corporation is au10 thorized to issue obligations to the Secretary. 

11 (B) SECRETARY AUTHORIZED TO PUR12 CHASE OBLIGATIONS.—The Secretary may, 

13 under such terms and conditions as the Sec14 retary may require, purchase or agree to pur15 chase any obligations issued under subpara16 graph (A), and for such purpose, the Secretary 

17 is authorized to use as a public debt transaction 

18 the proceeds of the sale of any securities issued 

19 under chapter 31 of title 31, United States 

20 Code, and the purposes for which securities 

21 may be issued under chapter 31 of title 31, 

22 United States Code, are extended to include 

23 such purchases. 

24 (C) INTEREST RATE.—Each purchase of 

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1 graph shall be upon such terms and conditions 

2 as to yield a return at a rate determined by the 

3 Secretary, taking into consideration the current 

4 average yield on outstanding marketable obliga5 tions of the United States of comparable matu6 rity. 

7 (D) SECRETARY AUTHORIZED TO SELL OB8 LIGATIONS.—The Secretary may sell, upon such 

9 terms and conditions as the Secretary shall de10 termine, any of the obligations acquired under 

11 this paragraph. 

12 (E) PUBLIC DEBT TRANSACTIONS.—All 

13 purchases and sales by the Secretary of such 

14 obligations under this paragraph shall be treat15 ed as public debt transactions of the United 

16 States, and the proceeds from the sale of any 

17 obligations acquired by the Secretary under this 

18 paragraph shall be deposited into the Treasury 

19 of the United States as miscellaneous receipts. 

20 (10) MAXIMUM OBLIGATION LIMITATION.—The 

21 Corporation may not, in connection with the orderly 

22 liquidation of a covered financial company, issue or 

23 incur any obligation, if, after issuing or incurring 

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1 tions outstanding under this subsection would exceed 

2 the sum of— 

3 (A) the amount of cash or the cash equiva4 lents held by the Fund; and 

5 (B) the amount that is equal to 90 percent 

6 of the fair value of assets from each covered fi7 nancial company that are available to repay the 

8 Corporation. 

9 (11) RULEMAKING.—The Corporation and the 

10 Secretary shall jointly, in consultation with the 

11 Council, prescribe regulations governing the calcula12 tion of the maximum obligation limitation defined in 

13 this paragraph. 

14 (12) RELIANCE ON PRIVATE SECTOR FUND15 ING.—The Corporation may exercise its authority 

16 under paragraph (9) only after the cash and cash 

17 equivalents held by the Fund have been drawn down 

18 to facilitate the orderly liquidation of a covered fi19 nancial company. 

20 (13) RULE OF CONSTRUCTION.— 

21 (A) IN GENERAL.—Nothing in this section 

22 shall be construed to affect the authority of the 

23 Corporation under subsection (a) or (b) of sec24 tion 14 or section 15(c)(5) of the Federal De25 posit Insurance Act (12 U.S.C. 1824, 


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1 1825(c)(5)), the management of the Deposit In2 surance Fund by the Corporation, or the resolu3 tion of insured depository institutions, provided 

4 that— 

5 (i) none of the authorities contained 

6 in this title shall be used to assist the De7 posit Insurance Fund with any of the other 

8 responsibilities of the Corporation under 

9 applicable law other than this title; and 

10 (ii) the authorities of the Corporation 

11 relating to the Deposit Insurance Fund, or 

12 any other responsibilities of the Corpora13 tion, shall not be used to assist a covered 

14 financial company pursuant to this title. 

15 (B) VALUATION.—For purposes of deter16 mining the amount of obligations under this 

17 subsection— 

18 (i) the Corporation shall include as an 

19 obligation any contingent liability of the 

20 Corporation pursuant to this title; and 

21 (ii) the Corporation shall value any 

22 contingent liability at its expected cost to 

23 the Corporation. 

24 (14) ORDERLY LIQUIDATION PLAN.—Amounts 

25 in the Fund shall be available to the Corporation 


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1 with regard to a covered financial company for 

2 which the Corporation is appointed receiver after the 

3 Corporation has developed an orderly liquidation 

4 plan that is acceptable to the Secretary with regard 

5 to such covered financial company, including the 

6 provision and use of funds under section 204(d) and 

7 subsection (h)(2)(G)(iv) and (h)(9) of this section. 

8 The Corporation may, at any time, amend any or9 derly liquidation plan approved by the Secretary 

10 with the concurrence of the Secretary. 

11 (o) ASSESSMENTS.— 

12 (1) RISK-BASED ASSESSMENTS.— 

13 (A) ASSESSMENTS TO CAPITALIZE THE

14 FUND.— 

15 (i) IN GENERAL.—Except as provided 

16 under subparagraph (C)(ii), the Corpora17 tion shall impose risk-based assessments 

18 on eligible financial companies to capitalize 

19 the Fund during the initial capitalization 

20 period, taking into account the consider21 ations set forth in paragraph (4). 

22 (ii) SUSPENSION OF ASSESSMENTS.— 

23 The Corporation shall suspend the imposi24 tion of assessments under clause (i) fol25 lowing a determination by the Corporation 


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1 that the Fund has reached the target size 

2 described in subsection (n). 

3 (B) ELIGIBLE FINANCIAL COMPANIES DE4 FINED.—For purposes of this subsection, the 

5 term ‘‘eligible financial company’’ means any 

6 bank holding company with total consolidated 

7 assets equal to or greater than 

8 $50,000,000,000 and any nonbank financial 

9 company supervised by the Board of Governors. 

10 (C) ADDITIONAL ASSESSMENTS.—The Cor11 poration shall charge one or more risk-based as12 sessments in accordance with the provisions of 

13 subparagraph (E), if— 

14 (i) the Fund falls below the target 

15 size after the initial capitalization period, 

16 in order to restore the Fund to the target 

17 size over a period of time determined by 

18 the Corporation; 

19 (ii) the Corporation is appointed re20 ceiver for a covered financial company and 

21 the Fund incurs a loss during the initial 

22 capitalization period with respect to that 

23 covered financial company; or 

24 (iii) such assessments are necessary to 

25 pay in full the obligations issued by the 


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1 Corporation to the Secretary within 60 

2 months of the date of issuance of such ob3 ligations. 

4 (D) EXTENSIONS AUTHORIZED.—The Cor5 poration may, with the approval of the Sec6 retary, extend the time period under subpara7 graph (C)(iii), if the Corporation determines 

8 that an extension is necessary to avoid a serious 

9 adverse effect on the financial system of the 

10 United States. 

11 (E) APPLICATION OF ADDITIONAL ASSESS12 MENTS.—To meet the requirements of subpara13 graph (C), the Corporation shall, taking into 

14 account the considerations set forth in para15 graph (4), impose assessments— 

16 (i) on— 

17 (I) eligible financial companies; 

18 and 

19 (II) financial companies with 

20 total consolidated assets over 

21 $50,000,000,000 that are not eligible 

22 financial companies; and 

23 (ii) at a substantially higher rate than 

24 otherwise would be assessed on any finan25 cial company that received payments or 


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1 credit pursuant to subsection (b)(4), 

2 (d)(4), or (h)(5)(E). 

3 (F) NEW ELIGIBLE FINANCIAL COMPA4 NIES.—The Corporation shall impose an assess5 ment, in an amount determined by the Corpora6 tion in consultation with the Secretary and tak7 ing into account the considerations set forth in 

8 paragraph (4), on any company that becomes 

9 an eligible financial company after the initial 

10 capitalization period. 

11 (2) GRADUATED ASSESSMENT RATE.—The Cor12 poration shall impose assessments on a graduated 

13 basis, with financial companies having greater assets 

14 being assessed at a higher rate. 

15 (3) NOTIFICATION AND PAYMENT.—The Cor16 poration shall notify each financial company of that 

17 company’s assessment under this subsection. Any fi18 nancial company subject to assessment under this 

19 subsection shall pay such assessment in accordance 

20 with the regulations prescribed pursuant to para21 graph (6). 

22 (4) RISK-BASED ASSESSMENT CONSIDER23 ATIONS.—In imposing assessments under this sub24 section, the Corporation shall— 


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1 (A) take into account economic conditions 

2 generally affecting financial companies, so as to 

3 allow assessments to be lower during less favor4 able economic conditions; 

5 (B) take into account any assessments im6 posed on— 

7 (i) an insured depository institution 

8 subsidiary of a financial company pursuant 

9 to section 7 or section 13(c)(4)(G) of the 

10 Federal Deposit Insurance Act (12 U.S.C. 

11 1817, 1823(c)(4)(G)); 

12 (ii) a financial company or subsidiary 

13 of such company that is a member of SIPC 

14 pursuant to section 4 of the Securities In15 vestor Protection Act of 1970 (15 U.S.C. 

16 78ddd); and 

17 (iii) a financial company or subsidiary 

18 of such company that is an insurance com19 pany pursuant to applicable State law to 

20 cover (or reimburse payments made to 

21 cover) the costs of rehabilitation, liquida22 tion, or other State insolvency proceeding 

23 with respect to one or more insurance com24 panies; 


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1 (C) take into account the financial condi2 tion of the financial company, including the ex3 tent and type of off-balance-sheet exposures of 

4 the financial company; 

5 (D) take into account the risks presented 

6 by the financial company to the financial sta7 bility of the United States economy; 

8 (E) take into account the extent to which 

9 the financial company or group of financial 

10 companies has benefitted, or likely would ben11 efit, from the orderly liquidation of a covered fi12 nancial company and the use of the Fund under 

13 this title; 

14 (F) distinguish among different classes of 

15 assets or different types of financial companies 

16 (including distinguishing among different types 

17 of financial companies, based on their levels of 

18 capital and leverage) in order to establish com19 parable assessment bases among financial com20 panies subject to this subsection; 

21 (G) establish the parameters for the grad22 uated assessment requirement in paragraph (2); 

23 and 

24 (H) take into account such other factors as 

25 the Corporation deems appropriate. 


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1 (5) COLLECTION OF INFORMATION.—The Cor2 poration may impose on covered financial companies 

3 such collection of information requirements as the 

4 Corporation deems necessary to carry out this sub5 section after the appointment of the Corporation as 

6 receiver under this title. 

7 (6) RULEMAKING.— 

8 (A) IN GENERAL.—The Corporation shall, 

9 in consultation with the Secretary and the 

10 Council, prescribe regulations to carry out this 

11 subsection. 

12 (B) EQUITABLE TREATMENT.—The regu13 lations prescribed under subparagraph (A) shall 

14 take into account the differences in risks posed 

15 to the financial stability of the United States by 

16 financial companies, the differences in the li17 ability structures of financial companies, and 

18 the different bases for other assessments that 

19 such financial companies may be required to 

20 pay, to ensure that assessed financial compa21 nies are treated equitably and that assessments 

22 under this subsection reflect such differences. 

23 (p) UNENFORCEABILITY OF CERTAIN AGREE24 MENTS.— 


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1 (1) IN GENERAL.—No provision described in 

2 paragraph (2) shall be enforceable against or impose 

3 any liability on any person, as such enforcement or 

4 liability shall be contrary to public policy. 

5 (2) PROHIBITED PROVISIONS.—A provision de6 scribed in this paragraph is any term contained in 

7 any existing or future standstill, confidentiality, or 

8 other agreement that, directly or indirectly— 

9 (A) affects, restricts, or limits the ability 

10 of any person to offer to acquire or acquire; 

11 (B) prohibits any person from offering to 

12 acquire or acquiring; or 

13 (C) prohibits any person from using any 

14 previously disclosed information in connection 

15 with any such offer to acquire or acquisition of, 

16 all or part of any covered financial company, includ17 ing any liabilities, assets, or interest therein, in con18 nection with any transaction in which the Corpora19 tion exercises its authority under this title. 

20 (q) OTHER EXEMPTIONS.— 

21 (1) IN GENERAL.—When acting as a receiver 

22 under this title— 

23 (A) the Corporation, including its fran24 chise, its capital, reserves and surplus, and its 

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1 posed by any State, county, municipality, or 

2 local taxing authority, except that any real 

3 property of the Corporation shall be subject to 

4 State, territorial, county, municipal, or local 

5 taxation to the same extent according to its 

6 value as other real property is taxed, except 

7 that, notwithstanding the failure of any person 

8 to challenge an assessment under State law of 

9 the value of such property, such value, and the 

10 tax thereon, shall be determined as of the pe11 riod for which such tax is imposed; 

12 (B) no property of the Corporation shall be 

13 subject to levy, attachment, garnishment, fore14 closure, or sale without the consent of the Cor15 poration, nor shall any involuntary lien attach 

16 to the property of the Corporation; and 

17 (C) the Corporation shall not be liable for 

18 any amounts in the nature of penalties or fines, 

19 including those arising from the failure of any 

20 person to pay any real property, personal prop21 erty, probate, or recording tax or any recording 

22 or filing fees when due; and 

23 (D) the Corporation shall be exempt from 

24 all prosecution by the United States or any 

25 State, county, municipality, or local authority 


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1 for any criminal offense arising under Federal, 

2 State, county, municipal, or local law, which 

3 was allegedly committed by the covered finan4 cial company, or persons acting on behalf of the 

5 covered financial company, prior to the appoint6 ment of the Corporation as receiver. 

7 (2) LIMITATION.—Paragraph (1) shall not 

8 apply with respect to any tax imposed (or other 

9 amount arising) under the Internal Revenue Code of 

10 1986. 

11 (r) CERTAIN SALES OF ASSETS PROHIBITED.— 

12 (1) PERSONS WHO ENGAGED IN IMPROPER CON13 DUCT WITH, OR CAUSED LOSSES TO, COVERED FI14 NANCIAL COMPANIES.—The Corporation shall pre15 scribe regulations which, at a minimum, shall pro16 hibit the sale of assets of a covered financial com17 pany by the Corporation to— 

18 (A) any person who— 

19 (i) has defaulted, or was a member of 

20 a partnership or an officer or director of a 

21 corporation that has defaulted, on 1 or 

22 more obligations, the aggregate amount of 

23 which exceeds $1,000,000, to such covered 

24 financial company; 


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1 (ii) has been found to have engaged in 

2 fraudulent activity in connection with any 

3 obligation referred to in clause (i); and 

4 (iii) proposes to purchase any such 

5 asset in whole or in part through the use 

6 of the proceeds of a loan or advance of 

7 credit from the Corporation or from any 

8 covered financial company; 

9 (B) any person who participated, as an of10 ficer or director of such covered financial com11 pany or of any affiliate of such company, in a 

12 material way in any transaction that resulted in 

13 a substantial loss to such covered financial com14 pany; or 

15 (C) any person who has demonstrated a 

16 pattern or practice of defalcation regarding ob17 ligations to such covered financial company. 

18 (2) CONVICTED DEBTORS.—Except as provided 

19 in paragraph (3), a person may not purchase any 

20 asset of such institution from the receiver, if that 

21 person— 

22 (A) has been convicted of an offense under 

23 section 215, 656, 657, 1005, 1006, 1007, 1008, 

24 1014, 1032, 1341, 1343, or 1344 of title 18, 

25 United States Code, or of conspiring to commit 


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1 such an offense, affecting any covered financial 

2 company; and 

3 (B) is in default on any loan or other ex4 tension of credit from such covered financial 

5 company which, if not paid, will cause substan6 tial loss to the Fund or the Corporation. 

7 (3) SETTLEMENT OF CLAIMS.—Paragraphs (1) 

8 and (2) shall not apply to the sale or transfer by the 

9 Corporation of any asset of any covered financial 

10 company to any person, if the sale or transfer of the 

11 asset resolves or settles, or is part of the resolution 

12 or settlement, of 1 or more claims that have been, 

13 or could have been, asserted by the Corporation 

14 against the person. 

15 (4) DEFINITION OF DEFAULT.—For purposes 

16 of this subsection, the term ‘‘default’’ means a fail17 ure to comply with the terms of a loan or other obli18 gation to such an extent that the property securing 

19 the obligation is foreclosed upon. 

20 SEC. 211. MISCELLANEOUS PROVISIONS. 

21 (a) CLARIFICATION OF PROHIBITION REGARDING

22 CONCEALMENT OF ASSETS FROM RECEIVER OR LIQUI23 DATING AGENT.—Section 1032(1) of title 18, United 

24 States Code, is amended by inserting ‘‘the Federal Deposit 

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1 nancial company, in accordance with title II of the Restor2 ing American Financial Stability Act of 2010,’’ before ‘‘or 

3 the National Credit’’. 

4 (b) CONFORMING AMENDMENT.—Section 1032 of 

5 title 18, United States Code, is amended in the section 

6 heading, by striking ‘‘of financial institution’’. 

7 (c) FEDERAL DEPOSIT INSURANCE CORPORATION

8 IMPROVEMENT ACT OF 1991.—Section 403(a) of the Fed9 eral Deposit Insurance Corporation Improvement Act of 

10 1991 (12 U.S.C. 4403(a)) is amended by inserting ‘‘sec11 tion 210(c) of the Restoring American Financial Stability 

12 Act of 2010, section 1367 of the Federal Housing Enter13 prises Financial Safety and Soundness Act of 1992 (12 

14 U.S.C. 4617(d)),’’ after ‘‘section 11(e) of the Federal De15 posit Insurance Act,’’. 

16 TITLE III—TRANSFER OF POW17 ERS TO THE COMPTROLLER 

18 OF THE CURRENCY, THE COR19 PORATION, AND THE BOARD 

20 OF GOVERNORS 

21 SEC. 300. SHORT TITLE. 

22 This title may be cited as the ‘‘Enhancing Financial 

23 Institution Safety and Soundness Act of 2010’’. 

24 SEC. 301. PURPOSES. 

25 The purposes of this title are— 


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1 (1) to provide for the safe and sound operation 

2 of the banking system of the United States; 

3 (2) to preserve and protect the dual system of 

4 Federal and State-chartered depository institutions; 

5 (3) to ensure the fair and appropriate super6 vision of each depository institution, regardless of 

7 the size or type of charter of the depository institu8 tion; and 

9 (4) to streamline and rationalize the supervision 

10 of depository institutions and the holding companies 

11 of depository institutions. 

12 SEC. 302. DEFINITION. 

13 In this title, the term ‘‘transferred employee’’ means, 

14 as the context requires, an employee transferred to the 

15 Office of the Comptroller of the Currency or the Corpora16 tion under section 322. 

17 Subtitle A—Transfer of Powers and 

18 Duties 

19 SEC. 311. TRANSFER DATE. 

20 (a) TRANSFER DATE.—Except as provided in sub21 section (b), the term ‘‘transfer date’’ means the date that 

22 is 1 year after the date of enactment of this Act. 

23 (b) EXTENSION PERMITTED.— 

24 (1) NOTICE REQUIRED.—The Secretary, in con25 sultation with the Comptroller of the Currency, the 


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1 Director of the Office of Thrift Supervision, the 

2 Chairman of the Board of Governors, and the Chair3 person of the Corporation, may extend the period 

4 under subsection (a) and designate a transfer date 

5 that is not later than 18 months after the date of 

6 enactment of this Act, if the Secretary transmits to 

7 the Committee on Banking, Housing, and Urban Af8 fairs of the Senate and the Committee on Financial 

9 Services of the House of Representatives— 

10 (A) a written determination that com11 mencement of the orderly process to implement 

12 this title is not feasible by the date that is 1 

13 year after the date of enactment of this Act; 

14 (B) an explanation of why an extension is 

15 necessary to commence the process of orderly 

16 implementation of this title; 

17 (C) the transfer date designated under this 

18 subsection; and 

19 (D) a description of the steps that will be 

20 taken to initiate the process of an orderly and 

21 timely implementation of this title within the 

22 extended time period. 

23 (2) PUBLICATION OF NOTICE.—Not later than 

24 270 days after the date of enactment of this Act, the 

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1 tice of any transfer date designated under paragraph 

2 (1). 

3 SEC. 312. POWERS AND DUTIES TRANSFERRED. 

4 (a) EFFECTIVE DATE.—This section, and the amend5 ments made by this section, shall take effect on the trans6 fer date. 

7 (b) FUNCTIONS OF THE OFFICE OF THRIFT SUPER8 VISION.— 

9 (1) SAVINGS AND LOAN HOLDING COMPANY

10 FUNCTIONS TRANSFERRED.— 

11 (A) BOARD OF GOVERNORS.—There are 

12 transferred to the Board of Governors all func13 tions of the Office of Thrift Supervision and the 

14 Director of the Office of Thrift Supervision (in15 cluding the authority to issue orders) relating 

16 to— 

17 (i) the supervision of— 

18 (I) any savings and loan holding 

19 company— 

20 (aa) having 

21 $50,000,000,000 or more in total 

22 consolidated assets; or 

23 (bb) that is a foreign bank; 

24 and 


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1 (II) any subsidiary (other than a 

2 depository institution) of a savings 

3 and loan holding company described 

4 in subclause (I); and 

5 (ii) all rulemaking authority of the Of6 fice of Thrift Supervision and the Director 

7 of the Office of Thrift Supervision relating 

8 to savings and loan holding companies. 

9 (B) COMPTROLLER OF THE CURRENCY.— 

10 Except as provided in subparagraph (A), there 

11 are transferred to the Office of the Comptroller 

12 of the Currency all functions of the Office of 

13 Thrift Supervision and the Director of the Of14 fice of Thrift Supervision (including the author15 ity to issue orders) relating to the supervision 

16 of— 

17 (i) any savings and loan holding com18 pany (other than a foreign bank)— 

19 (I) having less than 

20 $50,000,000,000 in total consolidated 

21 assets; and 

22 (II) having— 

23 (aa) a subsidiary that is an 

24 insured depository institution, if 

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1 tutions are Federal depository in2 stitutions; or 

3 (bb) a subsidiary that is a 

4 Federal depository institution 

5 and a subsidiary that is a State 

6 depository institution, if the total 

7 consolidated assets of all subsidi8 aries that are Federal depository 

9 institutions exceed the total con10 solidated assets of all subsidiaries 

11 that are State depository institu12 tions; and 

13 (ii) any subsidiary (other than a de14 pository institution) of a savings and loan 

15 holding company described in clause (i). 

16 (C) CORPORATION.—Except as provided in 

17 subparagraph (A), there are transferred to the 

18 Corporation all functions of the Office of Thrift 

19 Supervision and the Director of the Office of 

20 Thrift Supervision (including the authority to 

21 issue orders) relating to the supervision of— 

22 (i) any savings and loan holding com23 pany (other than a foreign bank)— 


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1 (I) having less than 

2 $50,000,000,000 in total consolidated 

3 assets; and 

4 (II) having— 

5 (aa) a subsidiary that is an 

6 insured depository institution, if 

7 all such insured depository insti8 tutions are State depository insti9 tutions; or 

10 (bb) a subsidiary that is a 

11 Federal depository institution 

12 and a subsidiary that is a State 

13 depository institution, if the total 

14 consolidated assets of all subsidi15 aries that are State depository 

16 institutions exceed the total con17 solidated assets of all subsidiaries 

18 that are Federal depository insti19 tutions; and 

20 (ii) any subsidiary (other than a de21 pository institution) of a savings and loan 

22 holding company described in clause (i). 

23 (2) ALL OTHER FUNCTIONS TRANSFERRED.— 

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1 vision and the Director of the Office of Thrift 

2 Supervision under section 11 of the Home Own3 ers’ Loan Act (12 U.S.C. 1468) relating to 

4 transactions with affiliates and extensions of 

5 credit to executive officers, directors, and prin6 cipal shareholders is transferred to the Board 

7 of Governors. 

8 (B) COMPTROLLER OF THE CURRENCY.— 

9 Except as provided in subparagraph (A), there 

10 are transferred to the Comptroller of the Cur11 rency all functions of the Office of Thrift Su12 pervision and the Director of the Office of 

13 Thrift Supervision relating to Federal savings 

14 associations. 

15 (C) CORPORATION.—Except as provided in 

16 paragraph (1), all functions of the Office of 

17 Thrift Supervision and the Director of the Of18 fice of Thrift Supervision relating to State sav19 ings associations are transferred to the Cor20 poration. 

21 (D) COMPTROLLER OF THE CURRENCY

22 AND THE CORPORATION.—All rulemaking au23 thority of the Office of Thrift Supervision and 

24 the Director of the Office of Thrift Supervision 

25 relating to savings associations is transferred 


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1 to, and shall be exercised jointly by, the Comp2 troller of the Currency and the Corporation. 

3 (c) CERTAIN FUNCTIONS OF THE BOARD OF GOV4 ERNORS.— 

5 (1) BANK HOLDING COMPANY FUNCTIONS

6 TRANSFERRED.— 

7 (A) COMPTROLLER OF THE CURRENCY.— 

8 Except as provided in subparagraph (C), there 

9 are transferred to the Office of the Comptroller 

10 of the Currency all functions of the Board of 

11 Governors (including any Federal reserve bank) 

12 relating to the supervision of— 

13 (i) any bank holding company (other 

14 than a foreign bank)— 

15 (I) having less than 

16 $50,000,000,000 in total consolidated 

17 assets; and 

18 (II) having— 

19 (aa) a subsidiary that is an 

20 insured depository institution, if 

21 all such insured depository insti22 tutions are Federal depository in23 stitutions; or 

24 (bb) a subsidiary that is a 

25 Federal depository institution 


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1 and a subsidiary that is a State 

2 depository institution, if the total 

3 consolidated assets of all subsidi4 aries that are Federal depository 

5 institutions exceed the total con6 solidated assets of all subsidiaries 

7 that are State depository institu8 tions; and 

9 (ii) any subsidiary (other than a de10 pository institution) of a bank holding 

11 company that is described in clause (i). 

12 (B) CORPORATION.—Except as provided in 

13 subparagraph (C), there are transferred to the 

14 Corporation all functions of the Board of Gov15 ernors (including any Federal reserve bank) re16 lating to the supervision of— 

17 (i) any bank holding company (other 

18 than a foreign bank)— 

19 (I) having less than 

20 $50,000,000,000 in total consolidated 

21 assets; and 

22 (II) having— 

23 (aa) a subsidiary that is an 

24 insured depository institution, if 

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1 tutions are State depository insti2 tutions; or 

3 (bb) a subsidiary that is a 

4 Federal depository institution 

5 and a subsidiary that is a State 

6 depository institution, if the total 

7 consolidated assets of all subsidi8 aries that are State depository 

9 institutions exceed the total con10 solidated assets of all subsidiaries 

11 that are Federal depository insti12 tutions; and 

13 (ii) any subsidiary (other than a de14 pository institution) of a bank holding 

15 company that is described in clause (i). 

16 (C) RULEMAKING AUTHORITY.—No rule17 making authority of the Board of Governors is 

18 transferred to the Office of the Comptroller of 

19 the Currency or the Corporation under this 

20 paragraph. 

21 (2) OTHER FUNCTIONS TRANSFERRED.—There 

22 are transferred to the Corporation all functions 

23 (other than rulemaking authority under the Federal 

24 Reserve Act) of the Board of Governors (and any 


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1 Federal reserve bank) relating to the supervision of 

2 insured State member banks. 

3 (d) CONFORMING AMENDMENTS.— 

4 (1) FEDERAL DEPOSIT INSURANCE ACT.—Sec5 tion 3(q) of the Federal Deposit Insurance Act (12 

6 U.S.C. 1813(q)) is amended by striking paragraphs 

7 (1) through (4) and inserting the following: 

8 ‘‘(1) the Office of the Comptroller of the Cur9 rency, in the case of— 

10 ‘‘(A) any national banking association; 

11 ‘‘(B) any Federal branch or agency of a 

12 foreign bank; 

13 ‘‘(C) any bank holding company (other 

14 than a foreign bank)— 

15 ‘‘(i) having less than $50,000,000,000 

16 in total consolidated assets; and 

17 ‘‘(ii) having— 

18 ‘‘(I) a subsidiary that is an in19 sured depository institution, if all 

20 such insured depository institutions 

21 are Federal depository institutions; or 

22 ‘‘(II) a subsidiary that is a Fed23 eral depository institution and a sub24 sidiary that is a State depository in25 stitution, if the total consolidated asVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00306 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 sets of all subsidiaries that are Fed2 eral depository institutions exceed the 

3 total consolidated assets of all subsidi4 aries that are State depository institu5 tions; 

6 ‘‘(D) any subsidiary (other than a deposi7 tory institution) of a bank holding company 

8 that is described in subparagraph (C); 

9 ‘‘(E) any Federal savings association; 

10 ‘‘(F) any savings and loan holding com11 pany (other than a foreign bank)— 

12 ‘‘(i) having less than $50,000,000,000 

13 in total consolidated assets; and 

14 ‘‘(ii) having— 

15 ‘‘(I) a subsidiary that is an in16 sured depository institution, if all 

17 such insured depository institutions 

18 are Federal depository institutions; or 

19 ‘‘(II) a subsidiary that is a Fed20 eral depository institution and a sub21 sidiary that is a State depository in22 stitution, if the total consolidated as23 sets of all subsidiaries that are Fed24 eral depository institutions exceed the 

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1 aries that are State depository institu2 tions; and 

3 ‘‘(G) any subsidiary (other than a deposi4 tory institution) of a savings and loan holding 

5 company that is described in subparagraph (F); 

6 ‘‘(2) the Federal Deposit Insurance Corpora7 tion, in the case of— 

8 ‘‘(A) any insured State bank; 

9 ‘‘(B) any foreign bank having an insured 

10 branch; 

11 ‘‘(C) any State savings association; 

12 ‘‘(D) any bank holding company (other 

13 than a foreign bank)— 

14 ‘‘(i) having less than $50,000,000,000 

15 in total consolidated assets; and 

16 ‘‘(ii) having— 

17 ‘‘(I) a subsidiary that is an in18 sured depository institution, if all 

19 such insured depository institutions 

20 are State depository institutions; or 

21 ‘‘(II) a subsidiary that is a Fed22 eral depository institution and a sub23 sidiary that is a State depository in24 stitution, if the total consolidated as25 sets of all subsidiaries that are State 


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1 depository institutions exceed the total 

2 consolidated assets of all subsidiaries 

3 that are Federal depository institu4 tions; 

5 ‘‘(E) any subsidiary (other than a deposi6 tory institution) of a bank holding company 

7 that is described in subparagraph (D); 

8 ‘‘(F) any savings and loan holding com9 pany (other than a foreign bank)— 

10 ‘‘(i) having less than $50,000,000,000 

11 in total consolidated assets; and 

12 ‘‘(ii) having— 

13 ‘‘(I) a subsidiary that is an in14 sured depository institution, if all 

15 such insured depository institutions 

16 are State depository institutions; or 

17 ‘‘(II) a subsidiary that is a Fed18 eral depository institution and a sub19 sidiary that is a State depository in20 stitution, if the total consolidated as21 sets of all subsidiaries that are State 

22 depository institutions exceed the total 

23 consolidated assets of all subsidiaries 

24 that are Federal depository institu25 tions; and 


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1 ‘‘(G) any subsidiary (other than a deposi2 tory institution) of a savings and loan holding 

3 company that is described in subparagraph (F); 

4 ‘‘(3) the Board of Governors of the Federal Re5 serve System, in the case of— 

6 ‘‘(A) any noninsured State member bank; 

7 ‘‘(B) any branch or agency of a foreign 

8 bank with respect to any provision of the Fed9 eral Reserve Act which is made applicable 

10 under the International Banking Act of 1978; 

11 ‘‘(C) any foreign bank which does not op12 erate an insured branch; 

13 ‘‘(D) any agency or commercial lending 

14 company other than a Federal agency; 

15 ‘‘(E) supervisory or regulatory proceedings 

16 arising from the authority given to the Board 

17 of Governors under section 7(c)(1) of the Inter18 national Banking Act of 1978, including such 

19 proceedings under the Financial Institutions 

20 Supervisory Act of 1966; 

21 ‘‘(F) any bank holding company having 

22 total consolidated assets of $50,000,000,000 or 

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1 pository institution) of such a bank holding 

2 company; and 

3 ‘‘(G) any savings and loan holding com4 pany having total consolidated assets of 

5 $50,000,000,000 or more, any savings and loan 

6 holding company that is a foreign bank, and 

7 any subsidiary (other than a depository institu8 tion) of such a savings and loan holding com9 pany.’’. 

10 (2) CERTAIN REFERENCES IN THE BANK HOLD11 ING COMPANY ACT OF 1956.— 

12 (A) COMPTROLLER OF THE CURRENCY.— 

13 On or after the transfer date, in the case of a 

14 bank holding company described in section 

15 3(q)(1)(C) of the Federal Deposit Insurance 

16 Act, as amended by this Act, any reference in 

17 the Bank Holding Company Act of 1956 (12 

18 U.S.C. 1841 et seq.) to the Board of Governors 

19 shall be deemed to be a reference to the Office 

20 of the Comptroller of the Currency. 

21 (B) CORPORATION.—On or after the trans22 fer date, in the case of a bank holding company 

23 described in section 3(q)(2)(D) of the Federal 

24 Deposit Insurance Act, as amended by this Act, 

25 any reference in the Bank Holding Company 


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1 Act of 1956 (12 U.S.C. 1841 et seq.) to the 

2 Board of Governors shall be deemed to be a ref3 erence to the Corporation. 

4 (C) RULE OF CONSTRUCTION.—Notwith5 standing subparagraph (A) or (B), the Board of 

6 Governors shall retain all rulemaking authority 

7 under the Bank Holding Company Act of 1956 

8 (12 U.S.C. 1841 et seq.). 

9 (3) CONSULTATION IN HOLDING COMPANY

10 RULEMAKING.— 

11 (A) BANK HOLDING COMPANIES.—Section 

12 5 of the Bank Holding Company Act of 1956 

13 (12 U.S.C. 1844) is amended by adding at the 

14 end the following: 

15 ‘‘(h) CONSULTATION IN RULEMAKING.—Before pro16 posing or adopting regulations under this Act that apply 

17 to bank holding companies having less than 

18 $50,000,000,000 in total consolidated assets, the Board 

19 of Governors shall consult with the Comptroller of the 

20 Currency and the Federal Deposit Insurance Corporation 

21 as to the terms of such regulations.’’. 

22 (B) SAVINGS AND LOAN HOLDING COMPA23 NIES.— 

24 (i) HOME OWNERS’ LOAN ACT.—Sec25 tion 10 of the Home Owners’ Loan Act 


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1 (12 U.S.C. 1467a) is amended by adding 

2 at the end the following: 

3 ‘‘(u) CONSULTATION IN RULEMAKING.—Before pro4 posing or adopting regulations under this section that 

5 apply to savings and loan holding companies having less 

6 than $50,000,000,000 in total consolidated assets, the 

7 Board of Governors shall consult with the Comptroller of 

8 the Currency and the Federal Deposit Insurance Corpora9 tion as to the terms of such regulations.’’. 

10 (ii) FEDERAL DEPOSIT INSURANCE

11 ACT.—Section 19 of the Federal Deposit 

12 Insurance Act (12 U.S.C. 1829) is amend13 ed— 

14 (I) in subsection (d)(2), by in15 serting ‘‘, in consultation with the 

16 Corporation and the Comptroller of 

17 the Currency,’’ after ‘‘System’’; and 

18 (II) in subsection (e)(2), by strik19 ing ‘‘Director of the Office of Thrift 

20 Supervision’’ and inserting ‘‘Board of 

21 Governors of the Federal Reserve Sys22 tem, in consultation with the Corpora23 tion and the Comptroller of the Cur24 rency,’’. 

25 (4) FEDERAL DEPOSIT INSURANCE ACT.— 


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1 (A) APPLICATION.—Section 8(b)(3) of the 

2 Federal Deposit Insurance Act (12 U.S.C. 

3 1818(b)(3)) is amended to read as follows: 

4 ‘‘(3) APPLICATION TO BANK HOLDING COMPANIES, 

5 SAVINGS AND LOAN HOLDING COMPANIES, AND EDGE

6 AND AGREEMENT CORPORATIONS.— 

7 ‘‘(A) APPLICATION.—This subsection, sub8 sections (c) through (s) and subsection (u) of this 

9 section, and section 50 shall apply to— 

10 ‘‘(i) any bank holding company, and any 

11 subsidiary (other than a bank) of a bank hold12 ing company, as those terms are defined in sec13 tion 2 of the Bank Holding Company Act of 

14 1956 (12 U.S.C. 1841), as if such company or 

15 subsidiary was an insured depository institution 

16 for which the appropriate Federal banking 

17 agency for the bank holding company was the 

18 appropriate Federal banking agency; 

19 ‘‘(ii) any savings and loan holding com20 pany, and any subsidiary (other than a deposi21 tory institution) of a savings and loan holding 

22 company, as those terms are defined in section 

23 10 of the Home Owners’ Loan Act (12 U.S.C. 

24 1467a), as if such company or subsidiary was 

25 an insured depository institution for which the 


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1 appropriate Federal banking agency for the sav2 ings and loan holding company was the appro3 priate Federal banking agency; and 

4 ‘‘(iii) any organization organized and oper5 ated under section 25A of the Federal Reserve 

6 Act (12 U.S.C. 611 et seq.) or operating under 

7 section 25 of the Federal Reserve Act (12 

8 U.S.C. 601 et seq.) and any noninsured State 

9 member bank, as if such organization was a 

10 bank holding company for which the Board of 

11 Governors of the Federal Reserve System was 

12 the appropriate Federal banking agency. 

13 ‘‘(B) RULE OF CONSTRUCTION.—Nothing in 

14 this paragraph may be construed to alter or affect 

15 the authority of an appropriate Federal banking 

16 agency to initiate enforcement proceedings, issue di17 rectives, or take other remedial action under any 

18 other provision of law.’’. 

19 (B) CONFORMING AMENDMENT.—Section 

20 8(b)(9) of the Federal Deposit Insurance Act 

21 (12 U.S.C. 1818(b)(9)) is amended to read as 

22 follows: 

23 ‘‘(9) [Reserved].’’. 

24 (e) DETERMINATION OF TOTAL CONSOLIDATED AS25 SETS.— 


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1 (1) REGULATIONS.— 

2 (A) IN GENERAL.—Not later than 180 

3 days after the date of enactment of this Act, 

4 the Office of the Comptroller of the Currency, 

5 the Corporation, and the Board of Governors, 

6 in order to avoid disruptive transfers of regu7 latory responsibility, shall issue joint regula8 tions that specify— 

9 (i) the source of data for determining 

10 the total consolidated assets of a deposi11 tory institution, bank holding company, or 

12 savings and loan holding company for pur13 poses of this Act, and the amendments 

14 made by this Act, including the amend15 ments to section 3(q) of the Federal De16 posit Insurance Act (12 U.S.C. 1813(q)); 

17 and 

18 (ii) the interval and frequency at 

19 which the total consolidated assets of a de20 pository institution, bank holding company, 

21 or savings and loan holding company will 

22 be determined. 

23 (B) CONTENT.—The regulations issued 

24 under subparagraph (A)— 


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1 (i) shall use information contained in 

2 the reports described in paragraph (2), 

3 other regulatory reports, audited financial 

4 statements, or other comparable sources; 

5 (ii) shall establish the frequency with 

6 which the total consolidated assets of de7 pository institutions, bank holding compa8 nies, and savings and loan companies are 

9 determined, at an interval that— 

10 (I) avoids undue disruption in 

11 regulatory oversight; 

12 (II) facilitates nondisruptive 

13 transfers of regulatory responsibility; 

14 and 

15 (III) is not shorter than 2 years; 

16 and 

17 (iii) may provide for more frequent 

18 determinations of the total consolidated as19 sets of a depository institution, bank hold20 ing company, or savings and loan holding 

21 company, to take into account a trans22 action outside the ordinary course of busi23 ness, including a merger, acquisition, or 

24 other circumstance, as determined jointly 

25 by the Office of the Comptroller of the 


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1 Currency, the Corporation, and the Board 

2 of Governors, by rule. 

3 (2) INTERIM PROVISIONS.—Until the date on 

4 which final regulations issued under paragraph (1) 

5 are effective, for purposes this Act, and the amend6 ments made by this Act, including the amendments 

7 to section 3(q) of the Federal Deposit Insurance Act 

8 (12 U.S.C. 1813(q)), the total consolidated assets 

9 of— 

10 (A) a depository institution shall be deter11 mined by reference to the total consolidated as12 sets reported in the most recent Consolidated 

13 Report of Income and Condition or Thrift Fi14 nancial Report (or any successor thereto) filed 

15 by the depository institution with the Corpora16 tion or the Office of Thrift Supervision before 

17 the transfer date; 

18 (B) a bank holding company shall be de19 termined by reference to the total consolidated 

20 assets reported in the most recent Consolidated 

21 Financial Statements for Bank Holding Compa22 nies (commonly referred to as the ‘‘FR Y–9C’’, 

23 or any successor thereto) filed by the bank 

24 holding company with the Board of Governors 

25 before the transfer date; and 


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1 (C) a savings and loan holding company 

2 shall be determined by reference to the total 

3 consolidated assets reported in the applicable 

4 schedule of the most recent Thrift Financial 

5 Report (or any successor thereto) filed by the 

6 savings and loan holding company with the Of7 fice of Thrift Supervision before the transfer 

8 date. 

9 (f) CONSUMER PROTECTION.—Nothing in this sec10 tion may be construed to limit or otherwise affect the 

11 transfer of powers under title X. 

12 SEC. 313. ABOLISHMENT. 

13 Effective 90 days after the transfer date, the Office 

14 of Thrift Supervision and the position of Director of the 

15 Office of Thrift Supervision are abolished. 

16 SEC. 314. AMENDMENTS TO THE REVISED STATUTES. 

17 (a) AMENDMENT TO SECTION 324.—Section 324 of 

18 the Revised Statutes of the United States (12 U.S.C. 1) 

19 is amended to read as follows: 

20 ‘‘SEC. 324. COMPTROLLER OF THE CURRENCY. 

21 ‘‘(a) OFFICE OF THE COMPTROLLER OF THE CUR22 RENCY ESTABLISHED.—There is established in the De23 partment of the Treasury a bureau to be known as the 

24 ‘Office of the Comptroller of the Currency’ which is 

25 charged with assuring the safety and soundness of, and 


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1 compliance with laws and regulations, fair access to finan2 cial services, and fair treatment of customers by, the insti3 tutions and other persons subject to its jurisdiction. 

4 ‘‘(b) COMPTROLLER OF THE CURRENCY.— 

5 ‘‘(1) IN GENERAL.—The chief officer of the Of6 fice of the Comptroller of the Currency shall be 

7 known as the Comptroller of the Currency. The 

8 Comptroller of the Currency shall perform the duties 

9 of the Comptroller of the Currency under the gen10 eral direction of the Secretary of the Treasury. The 

11 Secretary of the Treasury may not delay or prevent 

12 the issuance of any rule or the promulgation of any 

13 regulation by the Comptroller of the Currency, and 

14 may not intervene in any matter or proceeding be15 fore the Comptroller of the Currency (including 

16 agency enforcement actions), unless otherwise spe17 cifically provided by law. 

18 ‘‘(2) ADDITIONAL AUTHORITY.—The Comp19 troller of the Currency shall have the same authority 

20 with respect to functions transferred to the Comp21 troller of the Currency under the Enhancing Finan22 cial Institution Safety and Soundness Act of 2010 

23 (including matters that were within the jurisdiction 

24 of the Director of the Office of Thrift Supervision or 

25 the Office of Thrift Supervision on the day before 


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1 the transfer date under that Act) as was vested in 

2 the Director of the Office of Thrift Supervision on 

3 the transfer date under that Act.’’. 

4 (b) AMENDMENT TO SECTION 329.—Section 329 of 

5 the Revised Statutes of the United States (12 U.S.C. 11) 

6 is amended by inserting before the period at the end the 

7 following: ‘‘or any Federal savings association’’. 

8 (c) EFFECTIVE DATE.—This section, and the amend9 ments made by this section, shall take effect on the trans10 fer date. 

11 SEC. 315. FEDERAL INFORMATION POLICY. 

12 Section 3502(5) of title 44, United States Code, is 

13 amended by inserting ‘‘Office of the Comptroller of the 

14 Currency,’’ after ‘‘the Securities and Exchange Commis15 sion,’’. 

16 SEC. 316. SAVINGS PROVISIONS. 

17 (a) OFFICE OF THRIFT SUPERVISION.— 

18 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA19 TIONS NOT AFFECTED.—Sections 312(b) and 313 

20 shall not affect the validity of any right, duty, or ob21 ligation of the United States, the Director of the Of22 fice of Thrift Supervision, the Office of Thrift Su23 pervision, or any other person, that existed on the 

24 day before the transfer date. 


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1 (2) CONTINUATION OF SUITS.—This title shall 

2 not abate any action or proceeding commenced by or 

3 against the Director of the Office of Thrift Super4 vision or the Office of Thrift Supervision before the 

5 transfer date, except that, for any action or pro6 ceeding arising out of a function of the Director of 

7 the Office of Thrift Supervision or the Office of 

8 Thrift Supervision that is transferred to the Comp9 troller of the Currency, the Office of the Comptroller 

10 of the Currency, the Chairperson of the Corporation, 

11 the Corporation, the Chairman of the Board of Gov12 ernors, or the Board of Governors by this subtitle, 

13 the Comptroller of the Currency, the Office of the 

14 Comptroller of the Currency, the Chairperson of the 

15 Corporation, the Corporation, the Chairman of the 

16 Board of Governors, or the Board of Governors shall 

17 be substituted for the Director of the Office of 

18 Thrift Supervision or the Office of Thrift Super19 vision, as appropriate, as a party to the action or 

20 proceeding as of the transfer date. 

21 (b) BOARD OF GOVERNORS.— 

22 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA23 TIONS NOT AFFECTED.—Section 312(c) shall not af24 fect the validity of any right, duty, or obligation of 

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1 eral reserve bank, or any other person, that existed 

2 on the day before the transfer date. 

3 (2) CONTINUATION OF SUITS.—This title shall 

4 not abate any action or proceeding commenced by or 

5 against the Board of Governors or a Federal reserve 

6 bank before the transfer date, except that, for any 

7 action or proceeding arising out of a function of the 

8 Board of Governors or a Federal reserve bank trans9 ferred to the Comptroller of the Currency, the Office 

10 of the Comptroller of the Currency, the Chairperson 

11 of the Corporation, or the Corporation by this sub12 title, the Comptroller of the Currency, the Office of 

13 the Comptroller of the Currency, the Chairperson of 

14 the Corporation, or the Corporation shall be sub15 stituted for the Board of Governors or the Federal 

16 reserve bank, as appropriate, as a party to the ac17 tion or proceeding, as of the transfer date. 

18 (c) CONTINUATION OF EXISTING ORDERS, RESOLU19 TIONS, DETERMINATIONS, AGREEMENTS, REGULATIONS, 

20 AND OTHER MATERIALS.— 

21 (1) OFFICE OF THRIFT SUPERVISION.—All or22 ders, resolutions, determinations, agreements, regu23 lations, interpretative rules, other interpretations, 

24 guidelines, procedures, and other advisory materials 

25 that have been issued, made, prescribed, or allowed 


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1 to become effective by the Office of Thrift Super2 vision, or by a court of competent jurisdiction, in the 

3 performance of functions of the Office of Thrift Su4 pervision that are transferred by this subtitle and 

5 that are in effect on the day before the transfer 

6 date, shall continue in effect according to the terms 

7 of those materials, and shall be enforceable by or 

8 against the Office of the Comptroller of the Cur9 rency, the Corporation, or the Board of Governors, 

10 as appropriate, until modified, terminated, set aside, 

11 or superseded in accordance with applicable law by 

12 the Office of the Comptroller of the Currency, the 

13 Corporation, or the Board of Governors, as appro14 priate, by any court of competent jurisdiction, or by 

15 operation of law. 

16 (2) BOARD OF GOVERNORS.—All orders, resolu17 tions, determinations, agreements, regulations, inter18 pretative rules, other interpretations, guidelines, pro19 cedures, and other advisory materials, that have 

20 been issued, made, prescribed, or allowed to become 

21 effective by the Board of Governors, or by a court 

22 of competent jurisdiction, in the performance of 

23 functions of the Board of Governors that are trans24 ferred by this subtitle and that are in effect on the 

25 day before the transfer date, shall continue in effect 


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1 according to the terms of those materials, and shall 

2 be enforceable by or against the Office of the Comp3 troller of the Currency or the Corporation, as appro4 priate, until modified, terminated, set aside, or su5 perseded in accordance with applicable law by the 

6 Office of the Comptroller of the Currency or the 

7 Corporation, as appropriate, by any court of com8 petent jurisdiction, or by operation of law. 

9 (d) IDENTIFICATION OF REGULATIONS CONTIN10 UED.— 

11 (1) BY THE OFFICE OF THE COMPTROLLER OF

12 THE CURRENCY.—Not later than the transfer date, 

13 the Office of the Comptroller of the Currency 

14 shall— 

15 (A) in consultation with the Corporation, 

16 identify the regulations continued under sub17 section (c) that will be enforced by the Office 

18 of the Comptroller of the Currency; and 

19 (B) publish a list of such regulations in the 

20 Federal Register. 

21 (2) BY THE CORPORATION.—Not later than the 

22 transfer date, the Corporation shall— 

23 (A) in consultation with the Office of the 

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1 lations continued under subsection (c) that will 

2 be enforced by the Corporation; and 

3 (B) publish a list of such regulations in the 

4 Federal Register. 

5 (3) BY THE BOARD OF GOVERNORS.—Not later 

6 than the transfer date, the Board of Governors 

7 shall— 

8 (A) in consultation with the Office of the 

9 Comptroller of the Currency and the Corpora10 tion, identify the regulations continued under 

11 subsection (c) that will be enforced by the 

12 Board of Governors; and 

13 (B) publish a list of such regulations in the 

14 Federal Register. 

15 (e) STATUS OF REGULATIONS PROPOSED OR NOT

16 YET EFFECTIVE.— 

17 (1) PROPOSED REGULATIONS.—Any proposed 

18 regulation of the Office of Thrift Supervision or the 

19 Board of Governors, which that agency, in per20 forming functions transferred by this subtitle, has 

21 proposed before the transfer date, but has not pub22 lished as a final regulation before that date, shall be 

23 deemed to be a proposed regulation of the Office of 

24 the Comptroller of the Currency, the Corporation, or 


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1 the Board of Governors, as appropriate, according to 

2 its terms. 

3 (2) REGULATIONS NOT YET EFFECTIVE.—Any 

4 interim or final regulation of the Office of Thrift Su5 pervision or the Board of Governors, which that 

6 agency, in performing functions transferred by this 

7 subtitle, has published before the transfer date, but 

8 which has not become effective before that date, 

9 shall become effective as a regulation of the Office 

10 of the Comptroller of the Currency, the Corporation, 

11 or the Board of Governors, as appropriate, according 

12 to its terms. 

13 SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL 

14 BANKING AGENCIES. 

15 (a) DIRECTOR OF THE OFFICE OF THRIFT SUPER16 VISION AND THE OFFICE OF THRIFT SUPERVISION.—Ex17 cept as provided in section 312(d)(2), on and after the 

18 transfer date, any reference in Federal law to the Director 

19 of the Office of Thrift Supervision or the Office of Thrift 

20 Supervision, in connection with any function of the Direc21 tor of the Office of Thrift Supervision or the Office of 

22 Thrift Supervision transferred under section 312(b) or 

23 any other provision of this subtitle, shall be deemed to be 

24 a reference to the Comptroller of the Currency, the Office 

25 of the Comptroller of the Currency, the Chairperson of 


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1 the Corporation, the Corporation, the Chairman of the 

2 Board of Governors, or the Board of Governors, as appro3 priate. 

4 (b) BOARD OF GOVERNORS.—Except as provided in 

5 section 312(d)(2), on and after the transfer date, any ref6 erence in Federal law to the Board of Governors or any 

7 Federal reserve bank, in connection with any function of 

8 the Board of Governors or any Federal reserve bank 

9 transferred under section 312(c) or any other provision 

10 of this subtitle, shall be deemed to be a reference to the 

11 Comptroller of the Currency, the Office of the Comptroller 

12 of the Currency, the Chairperson of the Corporation, or 

13 the Corporation, as appropriate. 

14 SEC. 318. FUNDING. 

15 (a) FUNDING OF OFFICE OF THE COMPTROLLER OF

16 THE CURRENCY.— 

17 (1) AUTHORITY TO COLLECT ASSESSMENTS, 

18 FEES, AND OTHER CHARGES, AND TO RECEIVE

19 TRANSFERRED FUNDS.—Chapter 4 of title LXII of 

20 the Revised Statutes is amended by inserting after 

21 section 5240 (12 U.S.C. 481, 482) the following: 

22 ‘‘SEC. 5240A. The Comptroller of the Currency may 

23 collect an assessment, fee, or other charge from any entity 

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1 termines is necessary or appropriate to carry out the re2 sponsibilities of the Office of the Comptroller of the Cur3 rency. The Comptroller of the Currency also may collect 

4 an assessment, fee, or other charge from any entity, the 

5 activities of which are supervised by the Comptroller of 

6 the Currency under section 6 of the Bank Holding Com7 pany Act of 1956, as the Comptroller determines is nec8 essary or appropriate to carry out the responsibilities of 

9 the Office of the Comptroller of the Currency in connec10 tion with such activities. In establishing the amount of an 

11 assessment, fee, or charge collected from an entity under 

12 this section, the Comptroller of the Currency may take 

13 into account the funds transferred to the Office of the 

14 Comptroller of the Currency under this section, the nature 

15 and scope of the activities of the entity, the amount and 

16 type of assets that the entity holds, the financial and man17 agerial condition of the entity, and any other factor, as 

18 the Comptroller of the Currency determines is appro19 priate. Funds derived from any assessment, fee, or charge 

20 collected or payment made pursuant to this section may 

21 be deposited by the Comptroller of the Currency in accord22 ance with the provisions of section 5234. Such funds shall 

23 not be construed to be Government funds or appropriated 

24 monies, and shall not be subject to apportionment for pur25 poses of chapter 15 of title 31, United States Code, or 


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1 any other provision of law. The authority of the Comp2 troller of the Currency under this section shall be in addi3 tion to the authority under section 5240. 

4 ‘‘The Comptroller of the Currency shall have sole au5 thority to determine the manner in which the obligations 

6 of the Office of the Comptroller of the Currency shall be 

7 incurred and its disbursements and expenses allowed and 

8 paid, in accordance with this section.’’. 

9 (2) PROMOTING PARITY IN SUPERVISION

10 FEES.— 

11 (A) PROPOSAL REQUIRED.— 

12 (i) IN GENERAL.—The Comptroller of 

13 the Currency shall submit to the Board of 

14 Directors of the Corporation a proposal to 

15 promote parity in the examination fees 

16 paid by State and Federal depository insti17 tutions having total consolidated assets of 

18 less than $50,000,000,000. 

19 (ii) CONTENTS.—The proposal sub20 mitted under clause (i) shall recommend a 

21 transfer from the Corporation to the Office 

22 of the Comptroller of the Currency of a 

23 percentage of the amount that the Office 

24 of the Comptroller of the Currency esti25 mates is necessary or appropriate to carry 


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1 out the responsibilities of the Office of the 

2 Comptroller of the Currency associated 

3 with the supervision of Federal depository 

4 institutions having total consolidated assets 

5 of less than $50,000,000,000. 

6 (iii) DATA COLLECTION.—The Cor7 poration shall assist the Office of the 

8 Comptroller of the Currency in collecting 

9 data relative to the supervision of State de10 pository institutions to develop the pro11 posal submitted under clause (i). 

12 (B) VOTE.—Not later than 60 days after 

13 the date of receipt of the proposal under sub14 paragraph (A), the Board of Directors of the 

15 Corporation shall— 

16 (i) vote on the proposal; and 

17 (ii) promptly implement a plan to pe18 riodically transfer to the Office of the 

19 Comptroller of the Currency a percentage 

20 of the amount that the Office of the Comp21 troller of the Currency estimates is nec22 essary or appropriate to carry out the re23 sponsibilities of the Office of the Comp24 troller of the Currency associated with the 

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1 tions having total consolidated assets of 

2 less than $50,000,000,000, as approved by 

3 the Board of Directors of the Corporation. 

4 (C) REPORT TO CONGRESS.—Not later 

5 than 30 days after date of the vote of the 

6 Board of Directors of the Corporation under 

7 subparagraph (B), the Corporation shall submit 

8 to the Committee on Banking, Housing, and 

9 Urban Affairs of the Senate and the Committee 

10 on Financial Services of the House of Rep11 resentatives a report describing— 

12 (i) the proposal made to the Board of 

13 Directors of the Corporation by the Comp14 troller of the Currency; and 

15 (ii) the decision resulting from the 

16 vote of the Board of Directors of the Cor17 poration. 

18 (D) FAILURE TO APPROVE PLAN.—If, on 

19 the date that is 2 years after the date of enact20 ment of this Act, the Board of Directors of the 

21 Corporation has failed to approve a plan under 

22 subparagraph (B), the Council shall approve a 

23 plan using the dispute resolution procedures 

24 under section 119. 


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1 (b) FUNDING OF BOARD OF GOVERNORS.—Section 

2 11 of the Federal Reserve Act (12 U.S.C. 248) is amended 

3 by adding at the end the following: 

4 ‘‘(s) ASSESSMENTS, FEES, AND OTHER CHARGES

5 FOR CERTAIN COMPANIES.— 

6 ‘‘(1) IN GENERAL.—The Board shall collect a 

7 total amount of assessments, fees, or other charges 

8 from the companies described in paragraph (2) that 

9 is equal to the total expenses the Board estimates 

10 are necessary or appropriate to carry out the respon11 sibilities of the Board with respect to such compa12 nies. 

13 ‘‘(2) COMPANIES.—The companies described in 

14 this paragraph are— 

15 ‘‘(A) all bank holding companies having 

16 total consolidated assets of $50,000,000,000 or 

17 more; 

18 ‘‘(B) all savings and loan holding compa19 nies having total consolidated assets of 

20 $50,000,000,000 or more; and 

21 ‘‘(C) all nonbank financial companies su22 pervised by the Board under section 113 of the 

23 Restoring American Financial Stability Act of 

24 2010.’’. 


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1 (c) CORPORATION EXAMINATION FEES.—Section 

2 10(e) of the Federal Deposit Insurance Act (12 U.S.C. 

3 1820(e)) is amended by striking paragraph (1) and insert4 ing the following: 

5 ‘‘(1) REGULAR AND SPECIAL EXAMINATIONS OF

6 DEPOSITORY INSTITUTIONS.—The cost of conducting 

7 any regular examination or special examination of 

8 any depository institution under subsection (b)(2), 

9 (b)(3), or (d) or of any entity described in section 

10 3(q)(2) may be assessed by the Corporation against 

11 the institution or entity to meet the expenses of the 

12 Corporation in carrying out such examinations, or as 

13 the Corporation determines is necessary or appro14 priate to carry out the responsibilities of the Cor15 poration. The Corporation may also collect an as16 sessment, fee, or other charge from any entity, the 

17 activities of which are supervised by the Corporation 

18 under section 6 of the Bank Holding Company Act 

19 of 1956, as the Corporation determines is necessary 

20 or appropriate to carry out the responsibilities of the 

21 Corporation in connection with such activities.’’. 

22 (d) EFFECTIVE DATE.—This section, and the amend23 ments made by this section, shall take effect on the trans24 fer date. 


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1 SEC. 319. CONTRACTING AND LEASING AUTHORITY. 

2 Notwithstanding the Federal Property and Adminis3 trative Services Act of 1949 (41 U.S.C. 251 et seq.) or 

4 any other provision of law, the Office of the Comptroller 

5 of the Currency may— 

6 (1) enter into and perform contracts, execute 

7 instruments, and acquire, in any lawful manner, 

8 such goods and services, or personal or real property 

9 (or property interest) as the Comptroller deems nec10 essary to carry out the duties and responsibilities of 

11 the Office of the Comptroller of the Currency; and 

12 (2) hold, maintain, sell, lease, or otherwise dis13 pose of the property (or property interest) acquired 

14 under paragraph (1). 

15 Subtitle B—Transitional Provisions 

16 SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROP17 ERTY. 

18 (a) OFFICE OF THRIFT SUPERVISION.— 

19 (1) IN GENERAL.—Before the transfer date, the 

20 Office of the Comptroller of the Currency, the Cor21 poration, and the Board of Governors shall— 

22 (A) consult and cooperate with the Office 

23 of Thrift Supervision to facilitate the orderly 

24 transfer of functions to the Office of the Comp25 troller of the Currency, the Corporation, and 


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1 the Board of Governors in accordance with this 

2 title; 

3 (B) determine jointly, from time to time— 

4 (i) the amount of funds necessary to 

5 pay any expenses associated with the 

6 transfer of functions (including expenses 

7 for personnel, property, and administrative 

8 services) during the period beginning on 

9 the date of enactment of this Act and end10 ing on the transfer date; 

11 (ii) which personnel are appropriate to 

12 facilitate the orderly transfer of functions 

13 by this title; and 

14 (iii) what property and administrative 

15 services are necessary to support the Office 

16 of the Comptroller of the Currency, the 

17 Corporation, and the Board of Governors 

18 during the period beginning on the date of 

19 enactment of this Act and ending on the 

20 transfer date; and 

21 (C) take such actions as may be necessary 

22 to provide for the orderly implementation of 

23 this title. 

24 (2) AGENCY CONSULTATION.—When requested 

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1 rency, the Corporation, and the Board of Governors 

2 to do so before the transfer date, the Office of Thrift 

3 Supervision shall— 

4 (A) pay to the Office of the Comptroller of 

5 the Currency, the Corporation, or the Board of 

6 Governors, as applicable, from funds obtained 

7 by the Office of Thrift Supervision through as8 sessments, fees, or other charges that the Office 

9 of Thrift Supervision is authorized by law to 

10 impose, such amounts as the Office of the 

11 Comptroller of the Currency, the Corporation, 

12 and the Board of Governors jointly determine 

13 to be necessary under paragraph (1); 

14 (B) detail to the Office of the Comptroller 

15 of the Currency, the Corporation, or the Board 

16 of Governors, as applicable, such personnel as 

17 the Office of the Comptroller of the Currency, 

18 the Corporation, and the Board of Governors 

19 jointly determine to be appropriate under para20 graph (1); and 

21 (C) make available to the Office of the 

22 Comptroller of the Currency, the Corporation, 

23 or the Board of Governors, as applicable, such 

24 property and provide to the Office of the Comp25 troller of the Currency, the Corporation, or the 


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1 Board of Governors, as applicable, such admin2 istrative services as the Office of the Comp3 troller of the Currency, the Corporation, and 

4 the Board of Governors jointly determine to be 

5 necessary under paragraph (1). 

6 (3) NOTICE REQUIRED.—The Office of the 

7 Comptroller of the Currency, the Corporation, and 

8 the Board of Governors shall jointly give the Office 

9 of Thrift Supervision reasonable prior notice of any 

10 request that the Office of the Comptroller of the 

11 Currency, the Corporation, and the Board of Gov12 ernors jointly intend to make under paragraph (2). 

13 (b) BOARD OF GOVERNORS.— 

14 (1) IN GENERAL.—Before the transfer date, the 

15 Office of the Comptroller of the Currency and the 

16 Corporation shall— 

17 (A) consult and cooperate with the Board 

18 of Governors to facilitate the orderly transfer of 

19 functions to the Office of the Comptroller of the 

20 Currency and the Corporation in accordance 

21 with this title; 

22 (B) determine jointly, from time to time— 

23 (i) the amount of funds necessary to 

24 pay any expenses associated with the 

25 transfer of functions (including expenses 


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1 for personnel, property, and administrative 

2 services) during the period beginning on 

3 the date of enactment of this Act and end4 ing on the transfer date; 

5 (ii) which personnel are appropriate to 

6 facilitate the orderly transfer of functions 

7 by this title; and 

8 (iii) what property and administrative 

9 services are necessary to support the Office 

10 of the Comptroller of the Currency and the 

11 Corporation during the period beginning 

12 on the date of enactment of this Act and 

13 ending on the transfer date; and 

14 (C) take such actions as may be necessary 

15 to provide for the orderly implementation of 

16 this title. 

17 (2) AGENCY CONSULTATION.—When requested 

18 jointly by the Office of the Comptroller of the Cur19 rency and the Corporation to do so before the trans20 fer date, the Board of Governors shall— 

21 (A) pay to the Office of the Comptroller of 

22 the Currency or the Corporation, as applicable, 

23 from funds obtained by the Board of Governors 

24 through assessments, fees, or other charges 

25 that the Board of Governors is authorized by 


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1 law to impose, such amounts as the Office of 

2 the Comptroller of the Currency and the Cor3 poration jointly determine to be necessary 

4 under paragraph (1); 

5 (B) detail to the Office of the Comptroller 

6 of the Currency or the Corporation, as applica7 ble, such personnel as the Office of the Comp8 troller of the Currency and the Corporation 

9 jointly determine to be appropriate under para10 graph (1); and 

11 (C) make available to the Office of the 

12 Comptroller of the Currency or the Corporation, 

13 as applicable, such property and provide to the 

14 Office of the Comptroller of the Currency or the 

15 Corporation, as applicable, such administrative 

16 services as the Office of the Comptroller of the 

17 Currency and the Corporation jointly determine 

18 to be necessary under paragraph (1). 

19 (3) NOTICE REQUIRED.—The Office of the 

20 Comptroller of the Currency and the Corporation 

21 shall jointly give the Board of Governors reasonable 

22 prior notice of any request that the Office of the 

23 Comptroller of the Currency and the Corporation 

24 jointly intend to make under paragraph (2). 


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1 SEC. 322. TRANSFER OF EMPLOYEES. 

2 (a) IN GENERAL.— 

3 (1) OFFICE OF THRIFT SUPERVISION EMPLOY4 EES.— 

5 (A) IN GENERAL.—All employees of the 

6 Office of Thrift Supervision shall be transferred 

7 to the Office of the Comptroller of the Currency 

8 or the Corporation for employment in accord9 ance with this section. 

10 (B) ALLOCATING EMPLOYEES FOR TRANS11 FER TO RECEIVING AGENCIES.—The Director of 

12 the Office of Thrift Supervision, the Comp13 troller of the Currency, and the Chairperson of 

14 the Corporation shall— 

15 (i) jointly determine the number of 

16 employees of the Office of Thrift Super17 vision necessary to perform or support the 

18 functions that are transferred to the Office 

19 of the Comptroller of the Currency or the 

20 Corporation by this title; and 

21 (ii) consistent with the determination 

22 under clause (i), jointly identify employees 

23 of the Office of Thrift Supervision for 

24 transfer to the Office of the Comptroller of 

25 the Currency or the Corporation. 


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1 (2) BOARD OF GOVERNORS.—The Comptroller 

2 of the Currency, the Chairperson of the Corporation, 

3 and the Chairman of the Board of Governors shall— 

4 (A) jointly determine the number of em5 ployees of the Board of Governors (including 

6 employees of the Federal reserve banks who, on 

7 the day before the transfer date, are performing 

8 functions on behalf of the Board of Governors) 

9 necessary to perform or support the functions 

10 that are transferred to the Office of the Comp11 troller of the Currency or the Corporation 

12 under this title; and 

13 (B) consistent with the determination 

14 under subparagraph (A), jointly identify em15 ployees of the Board of Governors (including 

16 employees of the Federal reserve banks who, on 

17 the day before the transfer date, are performing 

18 functions on behalf of the Board of Governors) 

19 for transfer to the Office of the Comptroller of 

20 the Currency or the Corporation. 

21 (3) EMPLOYEES TRANSFERRED; SERVICE PERI22 ODS CREDITED.—For purposes of this section, peri23 ods of service with a Federal home loan bank, a 

24 joint office of Federal home loan banks, or a Federal 


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1 reserve bank shall be credited as periods of service 

2 with a Federal agency. 

3 (4) APPOINTMENT AUTHORITY FOR EXCEPTED

4 SERVICE TRANSFERRED.— 

5 (A) IN GENERAL.—Except as provided in 

6 subparagraph (B), any appointment authority 

7 of the Office of Thrift Supervision or the Board 

8 of Governors under Federal law that relates to 

9 the functions transferred under section 312, in10 cluding the regulations of the Office of Per11 sonnel Management, for filling the positions of 

12 employees in the excepted service shall be trans13 ferred to the Comptroller of the Currency or 

14 the Chairperson of the Corporation, as appro15 priate. 

16 (B) DECLINING TRANSFERS ALLOWED.— 

17 The Office of the Comptroller of the Currency 

18 or the Chairperson of the Corporation may de19 cline to accept a transfer of authority under 

20 subparagraph (A) (and the employees appointed 

21 under that authority) to the extent that such 

22 authority relates to positions excepted from the 

23 competitive service because of their confidential, 

24 policy-making, policy-determining, or policy-ad25 vocating character. 


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1 (5) ADDITIONAL APPOINTMENT AUTHORITY.— 

2 Notwithstanding any other provision of law, the Of3 fice of the Comptroller of the Currency and the Cor4 poration may appoint transferred employees to posi5 tions in the Office of the Comptroller of the Cur6 rency or the Corporation, respectively. For purposes 

7 of this paragraph, an employee transferred from any 

8 Federal reserve bank shall be treated as an employee 

9 of the Board of Governors. 

10 (b) TIMING OF TRANSFERS AND POSITION ASSIGN11 MENTS.—Each employee to be transferred under sub12 section (a)(1) shall— 

13 (1) be transferred not later than 90 days after 

14 the transfer date; and 

15 (2) receive notice of the position assignment of 

16 the employee not later than 120 days after the effec17 tive date of the transfer of the employee. 

18 (c) TRANSFER OF FUNCTIONS.— 

19 (1) IN GENERAL.—Notwithstanding any other 

20 provision of law, the transfer of employees under 

21 this subtitle shall be deemed a transfer of functions 

22 for the purpose of section 3503 of title 5, United 

23 States Code. 

24 (2) PRIORITY.—If any provision of this subtitle 

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1 ferred employee under section 3503 of title 5, 

2 United States Code, the provisions of this subtitle 

3 shall control. 

4 (d) EMPLOYEE STATUS AND ELIGIBILITY.—The 

5 transfer of functions and employees under this subtitle, 

6 and the abolishment of the Office of Thrift Supervision 

7 under section 313, shall not affect the status of the trans8 ferred employees as employees of an agency of the United 

9 States under any provision of law. 

10 (e) EQUAL STATUS AND TENURE POSITIONS.— 

11 (1) STATUS AND TENURE.— 

12 (A) OFFICE OF THRIFT SUPERVISION.— 

13 Each transferred employee from the Office of 

14 Thrift Supervision shall be placed in a position 

15 at the Office of the Comptroller of the Currency 

16 or the Corporation with the same status and 

17 tenure as the transferred employee held on the 

18 day before the date on which the employee was 

19 transferred. 

20 (B) BOARD OF GOVERNORS.—Each trans21 ferred employee from the Board of Governors 

22 or from a Federal reserve bank shall be placed 

23 in a position with the same status and tenure 

24 as employees of the Office of the Comptroller of 

25 the Currency or the Corporation who perform 


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1 similar functions and have similar periods of 

2 service. 

3 (2) FUNCTIONS.—To the extent practicable, 

4 each transferred employee shall be placed in a posi5 tion at the Office of the Comptroller of the Currency 

6 or the Corporation, as applicable, responsible for the 

7 same functions and duties as the transferred em8 ployee had on the day before the date on which the 

9 employee was transferred, in accordance with the ex10 pertise and preferences of the transferred employee. 

11 (f) NO ADDITIONAL CERTIFICATION REQUIRE12 MENTS.—An examiner who is a transferred employee shall 

13 not be subject to any additional certification requirements 

14 before being placed in a comparable position at the Office 

15 of the Comptroller of the Currency or the Corporation, 

16 if the examiner carries out examinations of the same type 

17 of institutions as an employee of the Office of the Comp18 troller of the Currency or the Corporation as the employee 

19 was responsible for carrying out before the date on which 

20 the employee was transferred. 

21 (g) PERSONNEL ACTIONS LIMITED.— 

22 (1) 2-YEAR PROTECTION.—Except as provided 

23 in paragraph (2), during the 2-year period beginning 

24 on the transfer date, an employee holding a perma25 nent position on the day before the date on which 


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1 the employee was transferred shall not be involun2 tarily separated or involuntarily reassigned outside 

3 the locality pay area (as defined by the Office of 

4 Personnel Management) of the employee. 

5 (2) EXCEPTIONS.—The Comptroller of the Cur6 rency and the Chairperson of the Corporation, as 

7 applicable, may— 

8 (A) separate a transferred employee for 

9 cause, including for unacceptable performance; 

10 or 

11 (B) terminate an appointment to a position 

12 excepted from the competitive service because of 

13 its confidential policy-making, policy-deter14 mining, or policy-advocating character. 

15 (h) PAY.— 

16 (1) 2-YEAR PROTECTION.—Except as provided 

17 in paragraph (2), during the 2-year period beginning 

18 on the date on which the employee was transferred 

19 under this subtitle, a transferred employee shall be 

20 paid at a rate that is not less than the basic rate 

21 of pay, including any geographic differential, that 

22 the transferred employee received during the pay pe23 riod immediately preceding the date on which the 

24 employee was transferred. 


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1 (2) EXCEPTIONS.—The Comptroller of the Cur2 rency, the Chairperson of the Corporation, or the 

3 Chairman of the Board of Governors may reduce the 

4 rate of basic pay of a transferred employee— 

5 (A) for cause, including for unacceptable 

6 performance; or 

7 (B) with the consent of the transferred 

8 employee. 

9 (3) PROTECTION ONLY WHILE EMPLOYED.— 

10 This subsection shall apply to a transferred em11 ployee only during the period that the transferred 

12 employee remains employed by Office of the Comp13 troller of the Currency or the Corporation. 

14 (4) PAY INCREASES PERMITTED.—Nothing in 

15 this subsection shall limit the authority of the Comp16 troller of the Currency or the Chairperson of the 

17 Corporation to increase the pay of a transferred em18 ployee. 

19 (i) BENEFITS.— 

20 (1) RETIREMENT BENEFITS FOR TRANSFERRED

21 EMPLOYEES.— 

22 (A) IN GENERAL.— 

23 (i) CONTINUATION OF EXISTING RE24 TIREMENT PLAN.—Each transferred em25 ployee shall remain enrolled in the retireVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00348 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ment plan of the transferred employee, for 

2 as long as the transferred employee is em3 ployed by the Office of the Comptroller of 

4 the Currency or the Corporation. 

5 (ii) EMPLOYER’S CONTRIBUTION.— 

6 The Comptroller of the Currency or the 

7 Chairperson of the Corporation, as appro8 priate, shall pay any employer contribu9 tions to the existing retirement plan of 

10 each transferred employee, as required 

11 under each such existing retirement plan. 

12 (B) OPTION FOR EMPLOYEES TRANS13 FERRED FROM FEDERAL RESERVE SYSTEM TO

14 BE SUBJECT TO FEDERAL EMPLOYEE RETIRE15 MENT PROGRAM.— 

16 (i) ELECTION.—Any transferred em17 ployee who was enrolled in a Federal Re18 serve System retirement plan on the day 

19 before the date of the transfer of the em20 ployee to the Office of the Comptroller of 

21 the Currency or the Corporation may, dur22 ing the period beginning 6 months after 

23 the transfer date and ending 1 year after 

24 the transfer date, elect to be subject to the 

25 Federal employee retirement program. 


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1 (ii) EFFECTIVE DATE OF COV2 ERAGE.—For any employee making an 

3 election under clause (i), coverage by the 

4 Federal employee retirement program shall 

5 begin 1 year after the transfer date. 

6 (C) AGENCY PARTICIPATION IN FEDERAL

7 RESERVE SYSTEM RETIREMENT PLAN.— 

8 (i) SEPARATE ACCOUNT IN FEDERAL

9 RESERVE SYSTEM RETIREMENT PLAN ES10 TABLISHED.—A separate account in the 

11 Federal Reserve System retirement plan 

12 shall be established for employees trans13 ferred to the Office of the Comptroller of 

14 the Currency or the Corporation under this 

15 title who do not make the election under 

16 subparagraph (B). 

17 (ii) FUNDS ATTRIBUTABLE TO TRANS18 FERRED EMPLOYEES REMAINING IN FED19 ERAL RESERVE SYSTEM RETIREMENT

20 PLAN TRANSFERRED.—The proportionate 

21 share of funds in the Federal Reserve Sys22 tem retirement plan, including the propor23 tionate share of any funding surplus in 

24 that plan, attributable to a transferred em25 ployee who does not make the election 


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1 under subparagraph (B), shall be trans2 ferred to the account established under 

3 clause (i). 

4 (iii) EMPLOYER CONTRIBUTIONS DE5 POSITED.—The Office of the Comptroller 

6 of the Currency or the Corporation, as ap7 propriate, shall deposit into the account es8 tablished under clause (i) the employer 

9 contributions that the Office of the Comp10 troller of the Currency or the Corporation, 

11 respectively, makes on behalf of trans12 ferred employees who do not make an elec13 tion under subparagraph (B). 

14 (iv) ACCOUNT ADMINISTRATION.—The 

15 Office of the Comptroller of the Currency 

16 or the Corporation, as appropriate, shall 

17 administer the account established under 

18 clause (i) as a participation employer in 

19 the Federal Reserve System retirement 

20 plan. 

21 (D) DEFINITION.—In this paragraph, the 

22 term ‘‘existing retirement plan’’ means, with re23 spect to a transferred employee, the retirement 

24 plan (including the Financial Institutions Re25 tirement Fund), and any associated thrift savVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00351 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ings plan, of the agency from which the em2 ployee was transferred in which the employee 

3 was enrolled on the day before the date on 

4 which the employee was transferred. 

5 (2) BENEFITS OTHER THAN RETIREMENT BEN6 EFITS.— 

7 (A) DURING FIRST YEAR.— 

8 (i) EXISTING PLANS CONTINUE.— 

9 During the 1-year period following the 

10 transfer date, each transferred employee 

11 may retain membership in any employee 

12 benefit program (other than a retirement 

13 benefit program) of the agency from which 

14 the employee was transferred under this 

15 title, including any dental, vision, long 

16 term care, or life insurance program to 

17 which the employee belonged on the day 

18 before the transfer date. 

19 (ii) EMPLOYER’S CONTRIBUTION.— 

20 The Office of the Comptroller of the Cur21 rency or the Corporation, as appropriate, 

22 shall pay any employer cost required to ex23 tend coverage in the benefit program to 

24 the transferred employee as required under 

25 that program or negotiated agreements. 


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1 (B) DENTAL, VISION, OR LIFE INSURANCE

2 AFTER FIRST YEAR.—If, after the 1-year period 

3 beginning on the transfer date, the Office of the 

4 Comptroller of the Currency or the Corporation 

5 determines that the Office of the Comptroller of 

6 the Currency or the Corporation, as the case 

7 may be, will not continue to participate in any 

8 dental, vision, or life insurance program of an 

9 agency from which an employee was trans10 ferred, a transferred employee who is a member 

11 of the program may, before the decision takes 

12 effect and without regard to any regularly 

13 scheduled open season, elect to enroll in— 

14 (i) the enhanced dental benefits pro15 gram established under chapter 89A of 

16 title 5, United States Code; 

17 (ii) the enhanced vision benefits estab18 lished under chapter 89B of title 5, United 

19 States Code; and 

20 (iii) the Federal Employees’ Group 

21 Life Insurance Program established under 

22 chapter 87 of title 5, United States Code, 

23 without regard to any requirement of in24 surability. 


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1 (C) LONG TERM CARE INSURANCE AFTER

2 1ST YEAR.—If, after the 1-year period begin3 ning on the transfer date, the Office of the 

4 Comptroller of the Currency or the Corporation 

5 determines that the Office of the Comptroller of 

6 the Currency or the Corporation, as appro7 priate, will not continue to participate in any 

8 long term care insurance program of an agency 

9 from which an employee transferred, a trans10 ferred employee who is a member of such a pro11 gram may, before the decision takes effect, elect 

12 to apply for coverage under the Federal Long 

13 Term Care Insurance Program established 

14 under chapter 90 of title 5, United States Code, 

15 under the underwriting requirements applicable 

16 to a new active workforce member, as described 

17 in part 875 of title 5, Code of Federal Regula18 tions (or any successor thereto). 

19 (D) CONTRIBUTION OF TRANSFERRED EM20 PLOYEE.— 

21 (i) IN GENERAL.—Subject to clause 

22 (ii), a transferred employee who is enrolled 

23 in a plan under the Federal Employees 

24 Health Benefits Program shall pay any 


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1 employee contribution required under the 

2 plan. 

3 (ii) COST DIFFERENTIAL.—The Office 

4 of the Comptroller of the Currency or the 

5 Corporation, as applicable, shall pay any 

6 difference in cost between the employee 

7 contribution required under the plan pro8 vided to transferred employees by the 

9 agency from which the employee trans10 ferred on the date of enactment of this Act 

11 and the plan provided by the Office of the 

12 Comptroller of the Currency or the Cor13 poration, as the case may be, under this 

14 section. 

15 (iii) FUNDS TRANSFER.—The Office 

16 of the Comptroller of the Currency or the 

17 Corporation, as the case may be, shall 

18 transfer to the Employees Health Benefits 

19 Fund established under section 8909 of 

20 title 5, United States Code, an amount de21 termined by the Director of the Office of 

22 Personnel Management, after consultation 

23 with the Comptroller of the Currency or 

24 the Chairperson of the Corporation, as the 

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1 ment and Budget, to be necessary to reim2 burse the Fund for the cost to the Fund 

3 of providing any benefits under this sub4 paragraph that are not otherwise paid for 

5 by a transferred employee under clause (i). 

6 (E) SPECIAL PROVISIONS TO ENSURE CON7 TINUATION OF LIFE INSURANCE BENEFITS.— 

8 (i) IN GENERAL.—An annuitant, as 

9 defined in section 8901 of title 5, United 

10 States Code, who is enrolled in a life insur11 ance plan administered by an agency from 

12 which employees are transferred under this 

13 title on the day before the transfer date 

14 shall be eligible for coverage by a life in15 surance plan under sections 8706(b), 

16 8714a, 8714b, or 8714c of title 5, United 

17 States Code, or by a life insurance plan es18 tablished by the Office of the Comptroller 

19 of the Currency or the Corporation, as ap20 plicable, without regard to any regularly 

21 scheduled open season or any requirement 

22 of insurability. 

23 (ii) CONTRIBUTION OF TRANSFERRED

24 EMPLOYEE.— 


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1 (I) IN GENERAL.—Subject to 

2 subclause (II), a transferred employee 

3 enrolled in a life insurance plan under 

4 this subparagraph shall pay any em5 ployee contribution required by the 

6 plan. 

7 (II) COST DIFFERENTIAL.—The 

8 Office of the Comptroller of the Cur9 rency or the Corporation, as the case 

10 may be, shall pay any difference in 

11 cost between the benefits provided by 

12 the agency from which the employee 

13 transferred on the date of enactment 

14 of this Act and the benefits provided 

15 under this section. 

16 (III) FUNDS TRANSFER.—The 

17 Office of the Comptroller of the Cur18 rency or the Corporation, as the case 

19 may be, shall transfer to the Federal 

20 Employees’ Group Life Insurance 

21 Fund established under section 8714 

22 of title 5, United States Code, an 

23 amount determined by the Director of 

24 the Office of Personnel Management, 

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1 troller of the Currency or the Chair2 person of the Corporation, as the case 

3 may be, and the Office of Manage4 ment and Budget, to be necessary to 

5 reimburse the Federal Employees’ 

6 Group Life Insurance Fund for the 

7 cost to the Federal Employees’ Group 

8 Life Insurance Fund of providing ben9 efits under this subparagraph not oth10 erwise paid for by a transferred em11 ployee under subclause (I). 

12 (IV) CREDIT FOR TIME EN13 ROLLED IN OTHER PLANS.—For any 

14 transferred employee, enrollment in a 

15 life insurance plan administered by 

16 the agency from which the employee 

17 transferred, immediately before enroll18 ment in a life insurance plan under 

19 chapter 87 of title 5, United States 

20 Code, shall be considered as enroll21 ment in a life insurance plan under 

22 that chapter for purposes of section 

23 8706(b)(1)(A) of title 5, United 

24 States Code. 


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1 (j) INCORPORATION INTO AGENCY PAY SYSTEM.— 

2 Not later than 2 years after the transfer date, the Comp3 troller of the Currency and the Chairperson of the Cor4 poration shall place each transferred employee into the es5 tablished pay system and structure of the appropriate em6 ploying agency. 

7 (k) EQUITABLE TREATMENT.—In administering the 

8 provisions of this section, the Comptroller of the Currency 

9 and the Chairperson of the Corporation— 

10 (1) may not take any action that would unfairly 

11 disadvantage a transferred employee relative to any 

12 other employee of the Office of the Comptroller of 

13 the Currency or the Corporation on the basis of 

14 prior employment by the Office of Thrift Super15 vision, the Board of Governors, or a Federal reserve 

16 bank; and 

17 (2) may take such action as is appropriate in 

18 an individual case to ensure that a transferred em19 ployee receives equitable treatment, with respect to 

20 the status, tenure, pay, benefits (other than benefits 

21 under programs administered by the Office of Per22 sonnel Management), and accrued leave or vacation 

23 time for prior periods of service with any Federal 

24 agency of the transferred employee. 

25 (l) REORGANIZATION.— 


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1 (1) IN GENERAL.—If the Comptroller of the 

2 Currency or the Chairperson of the Corporation de3 termines, during the 2-year period beginning 1 year 

4 after the transfer date, that a reorganization of the 

5 staff of the Office of the Comptroller of the Cur6 rency or the Corporation, respectively, is required, 

7 the reorganization shall be deemed a ‘‘major reorga8 nization’’ for purposes of affording affected employ9 ees retirement under section 8336(d)(2) or 

10 8414(b)(1)(B) of title 5, United States Code. 

11 (2) SERVICE CREDIT.—For purposes of this 

12 subsection, periods of service with a Federal home 

13 loan bank, a joint office of Federal home loan banks 

14 or a Federal reserve bank shall be credited as peri15 ods of service with a Federal agency. 

16 SEC. 323. PROPERTY TRANSFERRED. 

17 (a) PROPERTY DEFINED.—For purposes of this sec18 tion, the term ‘‘property’’ includes all real property (in19 cluding leaseholds) and all personal property, including 

20 computers, furniture, fixtures, equipment, books, ac21 counts, records, reports, files, memoranda, paper, reports 

22 of examination, work papers, and correspondence related 

23 to such reports, and any other information or materials. 

24 (b) PROPERTY OF THE OFFICE OF THRIFT SUPER25 VISION.—Not later than 90 days after the transfer date, 


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1 all property of the Office of Thrift Supervision that the 

2 Comptroller of the Currency and the Chairperson of the 

3 Corporation jointly determine is used, on the day before 

4 the transfer date, to perform or support the functions of 

5 the Office of Thrift Supervision transferred to the Office 

6 of the Comptroller of the Currency or the Corporation 

7 under this title, shall be transferred to the Office of the 

8 Comptroller of the Currency or the Corporation in a man9 ner consistent with the transfer of employees under this 

10 subtitle. 

11 (c) PROPERTY OF THE BOARD OF GOVERNORS.— 

12 (1) IN GENERAL.—Not later than 90 days after 

13 the transfer date, all property of the Board of Gov14 ernors that the Office of the Comptroller of the Cur15 rency, the Corporation, and the Board of Governors 

16 jointly determine is used, on the day before the 

17 transfer date, to perform or support the functions of 

18 the Board of Governor transferred to the Office of 

19 the Comptroller of the Currency or the Corporation 

20 under this title, shall be transferred to the Office of 

21 the Comptroller of the Currency or the Corporation 

22 in a manner consistent with the transfer of employ23 ees under this subtitle. 

24 (2) PROPERTY OF FEDERAL RESERVE

25 BANKS.—Any property of any Federal reserve bank 


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1 that, on the day before the transfer date, is used to 

2 perform or support the functions of the Board of 

3 Governors transferred to the Office of the Comp4 troller of the Currency or the Corporation by this 

5 title shall be treated as property of the Board of 

6 Governors for purposes of paragraph (1). 

7 (d) CONTRACTS RELATED TO PROPERTY TRANS8 FERRED.—Each contract, agreement, lease, license, per9 mit, and similar arrangement relating to property trans10 ferred to the Office of the Comptroller of the Currency 

11 or the Corporation by this section shall be transferred to 

12 the Office of the Comptroller of the Currency or the Cor13 poration, as appropriate, together with the property to 

14 which it relates. 

15 (e) PRESERVATION OF PROPERTY.—Property identi16 fied for transfer under this section shall not be altered, 

17 destroyed, or deleted before transfer under this section. 

18 SEC. 324. FUNDS TRANSFERRED. 

19 The funds that, on the day before the transfer date, 

20 the Director of the Office of Thrift Supervision (in con21 sultation with the Comptroller of the Currency, the Chair22 person of the Corporation, and the Chairman of the Board 

23 of Governors) determines are not necessary to dispose of 

24 the affairs of the Office of Thrift Supervision under sec25 tion 325 and are available to the Office of Thrift SuperVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00362 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 vision to pay the expenses of the Office of Thrift Super2 vision— 

3 (1) relating to the functions of the Office of 

4 Thrift Supervision transferred under section 

5 312(b)(1)(B), shall be transferred to the Office of 

6 the Comptroller of the Currency on the transfer 

7 date; 

8 (2) relating to the functions of the Office of 

9 Thrift Supervision transferred under section 

10 312(b)(1)(C), shall be transferred to the Corporation 

11 on the transfer date; and 

12 (3) relating to the functions of the Office of 

13 Thrift Supervision transferred under section 

14 312(b)(1)(A), shall be transferred to the Board of 

15 Governors on the transfer date. 

16 SEC. 325. DISPOSITION OF AFFAIRS. 

17 (a) AUTHORITY OF DIRECTOR.—During the 90-day 

18 period beginning on the transfer date, the Director of the 

19 Office of Thrift Supervision— 

20 (1) shall, solely for the purpose of winding up 

21 the affairs of the Office of Thrift Supervision relat22 ing to any function transferred to the Office of the 

23 Comptroller of the Currency, the Corporation, or the 

24 Board of Governors under this title— 


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1 (A) manage the employees of the Office of 

2 Thrift Supervision who have not yet been trans3 ferred and provide for the payment of the com4 pensation and benefits of the employees that ac5 crue before the date on which the employees are 

6 transferred under this title; and 

7 (B) manage any property of the Office of 

8 Thrift Supervision, until the date on which the 

9 property is transferred under section 323; and 

10 (2) may take any other action necessary to 

11 wind up the affairs of the Office of Thrift Super12 vision. 

13 (b) STATUS OF DIRECTOR.— 

14 (1) IN GENERAL.—Notwithstanding the trans15 fer of functions under this subtitle, during the 90- 

16 day period beginning on the transfer date, the Direc17 tor of the Office of Thrift Supervision shall retain 

18 and may exercise any authority vested in the Direc19 tor of the Office of Thrift Supervision on the day be20 fore the transfer date, only to the extent necessary— 

21 (A) to wind up the Office of Thrift Super22 vision; and 

23 (B) to carry out the transfer under this 

24 subtitle during such 90-day period. 


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1 (2) OTHER PROVISIONS.—For purposes of 

2 paragraph (1), the Director of the Office of Thrift 

3 Supervision shall, during the 90-day period begin4 ning on the transfer date, continue to be— 

5 (A) treated as an officer of the United 

6 States; and 

7 (B) entitled to receive compensation at the 

8 same annual rate of basic pay that the Director 

9 of the Office of Thrift Supervision received on 

10 the day before the transfer date. 

11 (c) AUTHORITY OF CHAIRMAN OF THE BOARD OF

12 GOVERNORS.—During the 90-day period beginning on the 

13 transfer date, the Chairman of the Board of Governors 

14 shall— 

15 (1) manage the employees of the Board of Gov16 ernors who have not yet been transferred under this 

17 title and provide for the payment of the compensa18 tion and benefits of the employees that accrue before 

19 the date on which the employees are transferred 

20 under this title; and 

21 (2) manage any property of the Board of Gov22 ernors that is transferred under this title, until the 

23 date on which the property is transferred under sec24 tion 323. 


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1 SEC. 326. CONTINUATION OF SERVICES. 

2 Any agency, department, or other instrumentality of 

3 the United States, and any successor to any such agency, 

4 department, or instrumentality, that was, before the trans5 fer date, providing support services to the Office of Thrift 

6 Supervision or the Board of Governors in connection with 

7 functions transferred to the Office of the Comptroller of 

8 the Currency, the Corporation or the Board of Governors 

9 under this title, shall— 

10 (1) continue to provide such services, subject to 

11 reimbursement by the Office of the Comptroller of 

12 the Currency, the Corporation, or the Board of Gov13 ernors, until the transfer of functions under this 

14 title is complete; and 

15 (2) consult with the Comptroller of the Cur16 rency, the Chairperson of the Corporation, or the 

17 Chairman of the Board of Governors, as appro18 priate, to coordinate and facilitate a prompt and or19 derly transition. 

20 Subtitle C—Federal Deposit 

21 Insurance Corporation 

22 SEC. 331. DEPOSIT INSURANCE REFORMS. 

23 (a) SIZE DISTINCTIONS.—Section 7(b)(2) of the Fed24 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is 

25 amended— 

26 (1) by striking subparagraph (D); and 


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1 (2) by redesignating subparagraph (C) as sub2 paragraph (D). 

3 (b) ASSESSMENT BASE.— 

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the Corporation shall amend the regula6 tions issued by the Corporation under section 

7 7(b)(2) of the Federal Deposit Insurance Act (12 

8 U.S.C. 1817(b)(2)) to define the term ‘‘assessment 

9 base’’ with respect to an insured depository institu10 tion for purposes of that section 7(b)(2), as an 

11 amount equal to— 

12 (A) the average total consolidated assets of 

13 the insured depository institution during the as14 sessment period; minus 

15 (B) the sum of— 

16 (i) the average tangible equity of the 

17 insured depository institution during the 

18 assessment period; and 

19 (ii) the average long-term unsecured 

20 debt of the insured depository institution 

21 during the assessment period. 

22 (2) DETERMINATION.—If, not later than 1 year 

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1 mittee on Financial Services of the House of Rep2 resentatives, in writing, a finding that an amend3 ment to the rules of the Corporation regarding the 

4 definition of the term ‘‘assessment base’’, as pro5 vided in paragraph (1), would reduce the effective6 ness of the risk-based assessment system of the Cor7 poration or increase the risk of loss to the Deposit 

8 Insurance Fund, the Corporation may— 

9 (A) continue in effect the definition of the 

10 term ‘‘assessment base’’, as in effect on the day 

11 before the date of enactment of this Act; or 

12 (B) establish, by rule, a definition of the 

13 term ‘‘assessment base’’ that the Corporation 

14 deems appropriate. 

15 SEC. 332. MANAGEMENT OF THE FEDERAL DEPOSIT INSUR16 ANCE CORPORATION. 

17 (a) IN GENERAL.—Section 2 of the Federal Deposit 

18 Insurance Act (12 U.S.C. 1812) is amended— 

19 (1) in subsection (a)(1)(B), by striking ‘‘Direc20 tor of the Office of Thrift Supervision’’ and insert21 ing ‘‘Director of the Consumer Financial Protection 

22 Bureau’’; 

23 (2) by amending subsection (d)(2) to read as 

24 follows: 


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1 ‘‘(2) ACTING OFFICIALS MAY SERVE.—In the 

2 event of a vacancy in the Office of the Comptroller 

3 of the Currency and pending the appointment of a 

4 successor, or during the absence or disability of the 

5 Comptroller of the Currency, the acting Comptroller 

6 of the Currency shall be a member of the Board of 

7 Directors in the place of the Comptroller of the Cur8 rency.’’; and 

9 (3) in subsection (f)(2), by striking ‘‘or of the 

10 Office of Thrift Supervision’’. 

11 (b) EFFECTIVE DATE.—This section, and the amend12 ments made by this section, shall take effect on the trans13 fer date. 

14 Subtitle D—Termination of Federal 

15 Thrift Charter 

16 SEC. 341. TERMINATION OF FEDERAL SAVINGS ASSOCIA17 TIONS. 

18 (a) IN GENERAL.—Beginning on the date of enact19 ment of this Act, the Director of the Office of Thrift Su20 pervision, or the Comptroller of the Currency, may not 

21 issue a charter for a Federal savings association under 

22 section 5 of the Home Owners’ Loan Act (12 U.S.C. 

23 1464). 


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1 (b) CONFORMING AMENDMENT.—Section 5(a) of the 

2 Home Owner’s Loan Act (12 U.S.C. 1464(a)) is amended 

3 to read as follows: 

4 ‘‘(a) IN GENERAL.—In order to provide thrift institu5 tions for the deposit of funds and for the extension of cred6 it for homes and other goods and services, the Comptroller 

7 of the Currency is authorized, under such regulations as 

8 the Comptroller of the Currency may prescribe, to provide 

9 for the examination, operation, and regulation of associa10 tions to be known as ‘Federal savings associations’ (in11 cluding Federal savings banks), giving primary consider12 ation to the best practices of thrift institutions in the 

13 United States. The lending and investment powers con14 ferred by this section are intended to encourage such insti15 tutions to provide credit for housing safely and soundly.’’. 

16 (c) PROSPECTIVE REPEAL.—Effective on the date on 

17 which the Comptroller of the Currency determines that no 

18 Federal savings associations exist, section 5 of the Home 

19 Owner’s Loan Act (12 U.S.C. 1464) is repealed. 

20 SEC. 342. BRANCHING. 

21 Notwithstanding the Federal Deposit Insurance Act 

22 (12 U.S.C. 1811 et seq.), the Bank Holding Company Act 

23 of 1956 (12 U.S.C. 1841 et seq.), or any other provision 

24 of Federal or State law, a savings association that be25 comes a bank may continue to operate any branch or 


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1 agency that the savings association operated immediately 

2 before the savings association became a bank. 

3 TITLE IV—REGULATION OF AD4 VISERS TO HEDGE FUNDS 

5 AND OTHERS 

6 SEC. 401. SHORT TITLE. 

7 This title may be cited as the ‘‘Private Fund Invest8 ment Advisers Registration Act of 2010’’. 

9 SEC. 402. DEFINITIONS. 

10 (a) INVESTMENT ADVISERS ACT OF 1940 DEFINI11 TIONS.—Section 202(a) of the Investment Advisers Act of 

12 1940 (15 U.S.C. 80b–2(a)) is amended by adding at the 

13 end the following: 

14 ‘‘(29) The term ‘private fund’ means an issuer 

15 that would be an investment company, as defined in 

16 section 3 of the Investment Company Act of 1940 

17 (15 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) 

18 of that Act. 

19 ‘‘(30) The term ‘foreign private adviser’ means 

20 any investment adviser who— 

21 ‘‘(A) has no place of business in the 

22 United States; 

23 ‘‘(B) has, in total, fewer than 15 clients 

24 who are domiciled in or residents of the United 

25 States; 


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1 ‘‘(C) has aggregate assets under manage2 ment attributable to clients in the United 

3 States and investors in the United States in 

4 private funds advised by the investment adviser 

5 of less than $25,000,000, or such higher 

6 amount as the Commission may, by rule, deem 

7 appropriate in accordance with the purposes of 

8 this title; and 

9 ‘‘(D) neither— 

10 ‘‘(i) holds itself out generally to the 

11 public in the United States as an invest12 ment adviser; nor 

13 ‘‘(ii) acts as— 

14 ‘‘(I) an investment adviser to any 

15 investment company registered under 

16 the Investment Company Act of 1940; 

17 or 

18 ‘‘(II) a company that has elected 

19 to be a business development company 

20 pursuant to section 54 of the Invest21 ment Company Act of 1940 (15 

22 U.S.C. 80a–53), and has not with23 drawn its election.’’. 

24 (b) OTHER DEFINITIONS.—As used in this title, the 

25 terms ‘‘investment adviser’’ and ‘‘private fund’’ have the 


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1 same meanings as in section 202 of the Investment Advis2 ers Act of 1940, as amended by this title. 

3 SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; 

4 LIMITED EXEMPTION FOR FOREIGN PRIVATE 

5 ADVISERS; LIMITED INTRASTATE EXEMP6 TION. 

7 Section 203(b) of the Investment Advisers Act of 

8 1940 (15 U.S.C. 80b–3(b)) is amended— 

9 (1) in paragraph (1), by inserting ‘‘, other than 

10 an investment adviser who acts as an investment ad11 viser to any private fund,’’ before ‘‘all of whose’’; 

12 (2) by striking paragraph (3) and inserting the 

13 following: 

14 ‘‘(3) any investment adviser that is a foreign 

15 private adviser;’’; and 

16 (3) in paragraph (5), by striking ‘‘or’’ at the 

17 end; 

18 (4) in paragraph (6), by striking the period at 

19 the end and inserting ‘‘; or’’; and 

20 (5) by adding at the end the following: 

21 ‘‘(7) any investment adviser, other than any en22 tity that has elected to be regulated or is regulated 

23 as a business development company pursuant to sec24 tion 54 of the Investment Company Act of 1940 (15 

25 U.S.C. 80a–54), who solely advises— 


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1 ‘‘(A) small business investment companies 

2 that are licensees under the Small Business In3 vestment Act of 1958; 

4 ‘‘(B) entities that have received from the 

5 Small Business Administration notice to pro6 ceed to qualify for a license as a small business 

7 investment company under the Small Business 

8 Investment Act of 1958, which notice or license 

9 has not been revoked; or 

10 ‘‘(C) applicants that are affiliated with 1 

11 or more licensed small business investment 

12 companies described in subparagraph (A) and 

13 that have applied for another license under the 

14 Small Business Investment Act of 1958, which 

15 application remains pending.’’. 

16 SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; 

17 EXAMINATIONS; DISCLOSURES. 

18 Section 204 of the Investment Advisers Act of 1940 

19 (15 U.S.C. 80b–4) is amended— 

20 (1) by redesignating subsections (b) and (c) as 

21 subsections (c) and (d), respectively; and 

22 (2) by inserting after subsection (a) the fol23 lowing: 

24 ‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 


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1 ‘‘(1) IN GENERAL.—The Commission may re2 quire any investment adviser registered under this 

3 title— 

4 ‘‘(A) to maintain such records of, and file 

5 with the Commission such reports regarding, 

6 private funds advised by the investment adviser, 

7 as necessary and appropriate in the public in8 terest and for the protection of investors, or for 

9 the assessment of systemic risk by the Finan10 cial Stability Oversight Council (in this sub11 section referred to as the ‘Council’); and 

12 ‘‘(B) to provide or make available to the 

13 Council those reports or records or the informa14 tion contained therein. 

15 ‘‘(2) TREATMENT OF RECORDS.—The records 

16 and reports of any private fund to which an invest17 ment adviser registered under this title provides in18 vestment advice shall be deemed to be the records 

19 and reports of the investment adviser. 

20 ‘‘(3) REQUIRED INFORMATION.—The records 

21 and reports required to be maintained by a private 

22 fund and subject to inspection by the Commission 

23 under this subsection shall include, for each private 

24 fund advised by the investment adviser, a description 

25 of— 


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1 ‘‘(A) the amount of assets under manage2 ment and use of leverage; 

3 ‘‘(B) counterparty credit risk exposure; 

4 ‘‘(C) trading and investment positions; 

5 ‘‘(D) valuation policies and practices of the 

6 fund; 

7 ‘‘(E) types of assets held; 

8 ‘‘(F) side arrangements or side letters, 

9 whereby certain investors in a fund obtain more 

10 favorable rights or entitlements than other in11 vestors; 

12 ‘‘(G) trading practices; and 

13 ‘‘(H) such other information as the Com14 mission, in consultation with the Council, deter15 mines is necessary and appropriate in the pub16 lic interest and for the protection of investors 

17 or for the assessment of systemic risk, which 

18 may include the establishment of different re19 porting requirements for different classes of 

20 fund advisers, based on the type or size of pri21 vate fund being advised. 

22 ‘‘(4) MAINTENANCE OF RECORDS.—An invest23 ment adviser registered under this title shall main24 tain such records of private funds advised by the in25 vestment adviser for such period or periods as the 


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1 Commission, by rule, may prescribe as necessary and 

2 appropriate in the public interest and for the protec3 tion of investors, or for the assessment of systemic 

4 risk. 

5 ‘‘(5) FILING OF RECORDS.—The Commission 

6 shall issue rules requiring each investment adviser to 

7 a private fund to file reports containing such infor8 mation as the Commission deems necessary and ap9 propriate in the public interest and for the protec10 tion of investors or for the assessment of systemic 

11 risk. 

12 ‘‘(6) EXAMINATION OF RECORDS.— 

13 ‘‘(A) PERIODIC AND SPECIAL EXAMINA14 TIONS.—The Commission— 

15 ‘‘(i) shall conduct periodic inspections 

16 of all records of private funds maintained 

17 by an investment adviser registered under 

18 this title in accordance with a schedule es19 tablished by the Commission; and 

20 ‘‘(ii) may conduct at any time and 

21 from time to time such additional, special, 

22 and other examinations as the Commission 

23 may prescribe as necessary and appro24 priate in the public interest and for the 


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1 protection of investors, or for the assess2 ment of systemic risk. 

3 ‘‘(B) AVAILABILITY OF RECORDS.—An in4 vestment adviser registered under this title shall 

5 make available to the Commission any copies or 

6 extracts from such records as may be prepared 

7 without undue effort, expense, or delay, as the 

8 Commission or its representatives may reason9 ably request. 

10 ‘‘(7) INFORMATION SHARING.— 

11 ‘‘(A) IN GENERAL.—The Commission shall 

12 make available to the Council copies of all re13 ports, documents, records, and information filed 

14 with or provided to the Commission by an in15 vestment adviser under this subsection as the 

16 Council may consider necessary for the purpose 

17 of assessing the systemic risk posed by a pri18 vate fund. 

19 ‘‘(B) CONFIDENTIALITY.—The Council 

20 shall maintain the confidentiality of information 

21 received under this paragraph in all such re22 ports, documents, records, and information, in 

23 a manner consistent with the level of confiden24 tiality established by the Commission pursuant 

25 to paragraph (8). The Council shall be exempt 


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1 from section 552 of title 5, United States Code, 

2 with respect to any information in any report, 

3 document, record, or information made avail4 able, to the Council under this subsection.’’. 

5 ‘‘(8) COMMISSION CONFIDENTIALITY OF RE6 PORTS.—Notwithstanding any other provision of 

7 law, the Commission may not be compelled to dis8 close any report or information contained therein re9 quired to be filed with the Commission under this 

10 subsection, except that nothing in this subsection 

11 authorizes the Commission— 

12 ‘‘(A) to withhold information from Con13 gress, upon an agreement of confidentiality; or 

14 ‘‘(B) prevent the Commission from com15 plying with— 

16 ‘‘(i) a request for information from 

17 any other Federal department or agency or 

18 any self-regulatory organization requesting 

19 the report or information for purposes 

20 within the scope of its jurisdiction; or 

21 ‘‘(ii) an order of a court of the United 

22 States in an action brought by the United 

23 States or the Commission. 

24 ‘‘(9) OTHER RECIPIENTS CONFIDENTIALITY.— 

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1 tion that receives reports or information from the 

2 Commission under this subsection shall maintain the 

3 confidentiality of such reports, documents, records, 

4 and information in a manner consistent with the 

5 level of confidentiality established for the Commis6 sion under paragraph (8). 

7 ‘‘(10) PUBLIC INFORMATION EXCEPTION.— 

8 ‘‘(A) IN GENERAL.—The Commission, the 

9 Council, and any other department, agency, or 

10 self-regulatory organization that receives infor11 mation, reports, documents, records, or infor12 mation from the Commission under this sub13 section, shall be exempt from the provisions of 

14 section 552 of title 5, United States Code, with 

15 respect to any such report, document, record, or 

16 information. Any proprietary information of an 

17 investment adviser ascertained by the Commis18 sion from any report required to be filed with 

19 the Commission pursuant to this subsection 

20 shall be subject to the same limitations on pub21 lic disclosure as any facts ascertained during an 

22 examination, as provided by section 210(b) of 

23 this title. 


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1 ‘‘(B) PROPRIETARY INFORMATION.—For 

2 purposes of this paragraph, proprietary infor3 mation includes— 

4 ‘‘(i) sensitive, non-public information 

5 regarding the investment or trading strate6 gies of the investment adviser; 

7 ‘‘(ii) analytical or research methodolo8 gies; 

9 ‘‘(iii) trading data; 

10 ‘‘(iv) computer hardware or software 

11 containing intellectual property; and 

12 ‘‘(v) any additional information that 

13 the Commission determines to be propri14 etary. 

15 ‘‘(11) ANNUAL REPORT TO CONGRESS.—The 

16 Commission shall report annually to Congress on 

17 how the Commission has used the data collected 

18 pursuant to this subsection to monitor the markets 

19 for the protection of investors and the integrity of 

20 the markets.’’. 

21 SEC. 405. DISCLOSURE PROVISION ELIMINATED. 

22 Section 210(c) of the Investment Advisers Act of 

23 1940 (15 U.S.C. 80b–10(c)) is amended by inserting be24 fore the period at the end the following: ‘‘or for purposes 

25 of assessment of potential systemic risk’’. 


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1 SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY. 

2 Section 211 of the Investment Advisers Act of 1940 

3 (15 U.S.C. 80b–11) is amended— 

4 (1) in subsection (a), by inserting before the pe5 riod at the end of the first sentence the following: 

6 ‘‘, including rules and regulations defining technical, 

7 trade, and other terms used in this title, except that 

8 the Commission may not define the term ‘client’ for 

9 purposes of paragraphs (1) and (2) of section 206 

10 to include an investor in a private fund managed by 

11 an investment adviser, if such private fund has en12 tered into an advisory contract with such adviser’’; 

13 and 

14 (2) by adding at the end the following: 

15 ‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The 

16 Commission and the Commodity Futures Trading Com17 mission shall, after consultation with the Council but not 

18 later than 12 months after the date of enactment of the 

19 Private Fund Investment Advisers Registration Act of 

20 2010, jointly promulgate rules to establish the form and 

21 content of the reports required to be filed with the Com22 mission under subsection 204(b) and with the Commodity 

23 Futures Trading Commission by investment advisers that 

24 are registered both under this title and the Commodity 

25 Exchange Act (7 U.S.C. 1a et seq.).’’. 


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1 SEC. 407. EXEMPTION OF VENTURE CAPITAL FUND ADVIS2 ERS. 

3 Section 203 of the Investment Advisers Act of 1940 

4 (15 U.S.C. 80b–3) is amended by adding at the end the 

5 following: 

6 ‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND AD7 VISERS.—No investment adviser shall be subject to the 

8 registration requirements of this title with respect to the 

9 provision of investment advice relating to a venture capital 

10 fund. Not later than 6 months after the date of enactment 

11 of this subsection, the Commission shall issue final rules 

12 to define the term ‘venture capital fund’ for purposes of 

13 this subsection.’’. 

14 SEC. 408. EXEMPTION OF AND RECORD KEEPING BY PRI15 VATE EQUITY FUND ADVISERS. 

16 Section 203 of the Investment Advisers Act of 1940 

17 (15 U.S.C. 80b–3) is amended by adding at the end the 

18 following: 

19 ‘‘(m) EXEMPTION OF AND REPORTING BY PRIVATE

20 EQUITY FUND ADVISERS.— 

21 ‘‘(1) IN GENERAL.—Except as provided in this 

22 subsection, no investment adviser shall be subject to 

23 the registration or reporting requirements of this 

24 title with respect to the provision of investment ad25 vice relating to a private equity fund or funds. 


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1 ‘‘(2) MAINTENANCE OF RECORDS AND ACCESS

2 BY COMMISSION.—Not later than 6 months after the 

3 date of enactment of this subsection, the Commis4 sion shall issue final rules— 

5 ‘‘(A) to require investment advisers de6 scribed in paragraph (1) to maintain such 

7 records and provide to the Commission such an8 nual or other reports as the Commission taking 

9 into account fund size, governance, investment 

10 strategy, risk, and other factors, as the Com11 mission determines necessary and appropriate 

12 in the public interest and for the protection of 

13 investors; and 

14 ‘‘(B) to define the term ‘private equity 

15 fund’ for purposes of this subsection.’’. 

16 SEC. 409. FAMILY OFFICES. 

17 (a) IN GENERAL.—Section 202(a)(11) of the Invest18 ment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)) is 

19 amended by striking ‘‘or (G)’’ and inserting the following: 

20 ‘‘; (G) any family office, as defined by rule, regulation, 

21 or order of the Commission, in accordance with the pur22 poses of this title; or (H)’’. 

23 (b) RULEMAKING.—The rules, regulations, or orders 

24 issued by the Commission pursuant to section 

25 202(a)(11)(G) of the Investment Advisers Act of 1940, as 


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1 added by this section, regarding the definition of the term 

2 ‘‘family office’’ shall provide for an exemption that— 

3 (1) is consistent with the previous exemptive 

4 policy of the Commission, as reflected in exemptive 

5 orders for family offices in effect on the date of en6 actment of this Act; and 

7 (2) recognizes the range of organizational, man8 agement, and employment structures and arrange9 ments employed by family offices. 

10 SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET 

11 THRESHOLD FOR FEDERAL REGISTRATION 

12 OF INVESTMENT ADVISERS. 

13 Section 203A(a)(1) of the Investment Advisers Act 

14 of 1940 (15 U.S.C. 80b–3a(a)(1)) is amended — 

15 (1) in subparagraph (A)— 

16 (A) by striking ‘‘$25,000,000’’ and insert17 ing ‘‘$100,000,000’’; and 

18 (B) by striking ‘‘or’’ at the end; 

19 (2) in subparagraph (B), by striking the period 

20 at the end and inserting ‘‘; or’’; and 

21 (3) by adding at the end the following: 

22 ‘‘(C) is an adviser to a company that has 

23 elected to be a business development company 

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1 pany Act of 1940, and has not withdrawn its 

2 election.’’. 

3 SEC. 411. CUSTODY OF CLIENT ASSETS. 

4 The Investment Advisers Act of 1940 (15 U.S.C. 

5 80b–1 et seq.) is amended by adding at the end the fol6 lowing new section: 

7 ‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS. 

8 ‘‘An investment adviser registered under this title 

9 shall take such steps to safeguard client assets over which 

10 such adviser has custody, including, without limitation, 

11 verification of such assets by an independent public ac12 countant, as the Commission may, by rule, prescribe.’’. 

13 SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STAND14 ARD FOR INFLATION. 

15 The Commission shall, by rule— 

16 (1) increase the financial threshold for an ac17 credited investor, as set forth in the rules of the 

18 Commission under the Securities Act of 1933, by 

19 calculating an amount that is greater than the 

20 amount in effect on the date of enactment of this 

21 Act of $200,000 income for a natural person (or 

22 $300,000 for a couple) and $1,000,000 in assets, as 

23 the Commission determines is appropriate and in the 

24 public interest, in light of price inflation since those 

25 figures were determined; and 


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1 (2) adjust that threshold not less frequently 

2 than once every 5 years, to reflect the percentage in3 crease in the cost of living. 

4 SEC. 413. GAO STUDY AND REPORT ON ACCREDITED INVES5 TORS. 

6 The Comptroller General of the United States shall 

7 conduct a study on the appropriate criteria for deter8 mining the financial thresholds or other criteria needed 

9 to qualify for accredited investor status and eligibility to 

10 invest in private funds, and shall submit a report to the 

11 Committee on Banking, Housing, and Urban Affairs of 

12 the Senate and the Committee on Financial Services of 

13 the House of Representatives on the results of such study 

14 not later than 1 year after the date of enactment of this 

15 Act. 

16 SEC. 414. GAO STUDY ON SELF-REGULATORY ORGANIZA17 TION FOR PRIVATE FUNDS. 

18 The Comptroller General of the United States shall— 

19 (1) conduct a study of the feasibility of forming 

20 a self-regulatory organization to oversee private 

21 funds; and 

22 (2) submit a report to the Committee on Bank23 ing, Housing, and Urban Affairs of the Senate and 

24 the Committee on Financial Services of the House of 

25 Representatives on the results of such study, not 


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1 later than 1 year after the date of enactment of this 

2 Act. 

3 SEC. 415. COMMISSION STUDY AND REPORT ON SHORT 

4 SELLING. 

5 (a) STUDY.—The Division of Risk, Strategy, and Fi6 nancial Innovation of the Commission shall conduct a 

7 study, taking into account current scholarship, on the 

8 state of short selling on national securities exchanges and 

9 in the over-the-counter markets, with particular attention 

10 to the impact of recent rule changes and the incidence 

11 of— 

12 (1) the failure to deliver shares sold short; or 

13 (2) delivery of shares on the fourth day fol14 lowing the short sale transaction. 

15 (b) REPORT.—The Division of Risk, Strategy, and 

16 Financial Innovation shall submit a report, together with 

17 any recommendations for market improvements, including 

18 consideration of real time reporting of short sale positions, 

19 to the Committee on Banking, Housing, and Urban Af20 fairs of the Senate and the Committee on Financial Serv21 ices of the House of Representatives on the results of the 

22 study conducted under subsection (a), not later than 2 

23 years after the date of enactment of this Act. 


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1 SEC. 416. TRANSITION PERIOD. 

2 Except as otherwise provided in this title, this title 

3 and the amendments made by this title shall become effec4 tive 1 year after the date of enactment of this Act, except 

5 that any investment adviser may, at the discretion of the 

6 investment adviser, register with the Commission under 

7 the Investment Advisers Act of 1940 during that 1-year 

8 period, subject to the rules of the Commission. 

9 TITLE V—INSURANCE 

10 Subtitle A—Office of National 

11 Insurance 

12 SEC. 501. SHORT TITLE. 

13 This subtitle may be cited as the ‘‘Office of National 

14 Insurance Act of 2010’’. 

15 SEC. 502. ESTABLISHMENT OF OFFICE OF NATIONAL IN16 SURANCE. 

17 (a) ESTABLISHMENT OF OFFICE.—Subchapter I of 

18 chapter 3 of subtitle I of title 31, United States Code, 

19 is amended— 

20 (1) by redesignating section 312 as section 315; 

21 (2) by redesignating section 313 as section 312; 

22 and 

23 (3) by inserting after section 312 (as so redes24 ignated) the following new sections: 


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1 ‘‘SEC. 313. OFFICE OF NATIONAL INSURANCE. 

2 ‘‘(a) ESTABLISHMENT.—There is established within 

3 the Department of the Treasury the Office of National 

4 Insurance. 

5 ‘‘(b) LEADERSHIP.—The Office shall be headed by a 

6 Director, who shall be appointed by the Secretary of the 

7 Treasury. The position of Director shall be a career re8 served position in the Senior Executive Service, as that 

9 position is defined under section 3132 of title 5, United 

10 States Code. 

11 ‘‘(c) FUNCTIONS.— 

12 ‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF

13 SECRETARY.—The Office, pursuant to the direction 

14 of the Secretary, shall have the authority— 

15 ‘‘(A) to monitor all aspects of the insur16 ance industry, including identifying issues or 

17 gaps in the regulation of insurers that could 

18 contribute to a systemic crisis in the insurance 

19 industry or the United States financial system; 

20 ‘‘(B) to recommend to the Financial Sta21 bility Oversight Council that it designate an in22 surer, including the affiliates of such insurer, as 

23 an entity subject to regulation as a nonbank fi24 nancial company supervised by the Board of 

25 Governors pursuant to title I of the Restoring 

26 American Financial Stability Act of 2010; 


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1 ‘‘(C) to assist the Secretary in admin2 istering the Terrorism Insurance Program es3 tablished in the Department of the Treasury 

4 under the Terrorism Risk Insurance Act of 

5 2002 (15 U.S.C. 6701 note); 

6 ‘‘(D) to coordinate Federal efforts and de7 velop Federal policy on prudential aspects of 

8 international insurance matters, including rep9 resenting the United States, as appropriate, in 

10 the International Association of Insurance Su11 pervisors (or a successor entity) and assisting 

12 the Secretary in negotiating International In13 surance Agreements on Prudential Measures; 

14 ‘‘(E) to determine, in accordance with sub15 section (f), whether State insurance measures 

16 are preempted by International Insurance 

17 Agreements on Prudential Measures; 

18 ‘‘(F) to consult with the States (including 

19 State insurance regulators) regarding insurance 

20 matters of national importance and prudential 

21 insurance matters of international importance; 

22 and 

23 ‘‘(G) to perform such other related duties 

24 and authorities as may be assigned to the Of25 fice by the Secretary. 


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1 ‘‘(2) ADVISORY FUNCTIONS.—The Office shall 

2 advise the Secretary on major domestic and pruden3 tial international insurance policy issues. 

4 ‘‘(d) SCOPE.—The authority of the Office shall ex5 tend to all lines of insurance except health insurance, as 

6 such insurance is determined by the Secretary based on 

7 section 2791 of the Public Health Service Act (42 U.S.C. 

8 300gg–91), and crop insurance, as established by the Fed9 eral Crop Insurance Act (7 U.S.C. 1501 et seq.). 

10 ‘‘(e) GATHERING OF INFORMATION.— 

11 ‘‘(1) IN GENERAL.—In carrying out the func12 tions required under subsection (c), the Office 

13 may— 

14 ‘‘(A) receive and collect data and informa15 tion on and from the insurance industry and in16 surers; 

17 ‘‘(B) enter into information-sharing agree18 ments; 

19 ‘‘(C) analyze and disseminate data and in20 formation; and 

21 ‘‘(D) issue reports regarding all lines of in22 surance except health insurance. 

23 ‘‘(2) COLLECTION OF INFORMATION FROM IN24 SURERS AND AFFILIATES.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 paragraph (3), the Office may require an in3 surer, or any affiliate of an insurer, to submit 

4 such data or information as the Office may rea5 sonably require in carrying out the functions 

6 described under subsection (c). 

7 ‘‘(B) RULE OF CONSTRUCTION.—Notwith8 standing any other provision of this section, for 

9 purposes of subparagraph (A), the term ’in10 surer’ means any person that is authorized to 

11 write insurance or reinsure risks and issue con12 tracts or policies in 1 or more States. 

13 ‘‘(3) EXCEPTION FOR SMALL INSURERS.—Para14 graph (2) shall not apply with respect to any insurer 

15 or affiliate thereof that meets a minimum size 

16 threshold that the Office may establish, whether by 

17 order or rule. 

18 ‘‘(4) ADVANCE COORDINATION.—Before col19 lecting any data or information under paragraph (2) 

20 from an insurer, or any affiliate of an insurer, the 

21 Office shall coordinate with each relevant State in22 surance regulator (or other relevant Federal or State 

23 regulatory agency, if any, in the case of an affiliate 

24 of an insurer) to determine if the information to be 

25 collected is available from, or may be obtained in a 


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1 timely manner by, such State insurance regulator, 

2 individually or collectively, another regulatory agen3 cy, or publicly available sources. Notwithstanding 

4 any other provision of law, each such relevant State 

5 insurance regulator or other Federal or State regu6 latory agency is authorized to provide to the Office 

7 such data or information. 

8 ‘‘(5) CONFIDENTIALITY.— 

9 ‘‘(A) RETENTION OF PRIVILEGE.—The 

10 submission of any nonpublicly available data 

11 and information to the Office under this sub12 section shall not constitute a waiver of, or oth13 erwise affect, any privilege arising under Fed14 eral or State law (including the rules of any 

15 Federal or State court) to which the data or in16 formation is otherwise subject. 

17 ‘‘(B) CONTINUED APPLICATION OF PRIOR

18 CONFIDENTIALITY AGREEMENTS.—Any require19 ment under Federal or State law to the extent 

20 otherwise applicable, or any requirement pursu21 ant to a written agreement in effect between 

22 the original source of any nonpublicly available 

23 data or information and the source of such data 

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1 tion in the possession of the source to the Of2 fice, shall continue to apply to such data or in3 formation after the data or information has 

4 been provided pursuant to this subsection to the 

5 Office. 

6 ‘‘(C) INFORMATION SHARING AGREE7 MENT.—Any data or information obtained by 

8 the Office may be made available to State in9 surance regulators, individually or collectively, 

10 through an information sharing agreement 

11 that— 

12 ‘‘(i) shall comply with applicable Fed13 eral law; and 

14 ‘‘(ii) shall not constitute a waiver of, 

15 or otherwise affect, any privilege under 

16 Federal or State law (including the rules 

17 of any Federal or State Court) to which 

18 the data or information is otherwise sub19 ject. 

20 ‘‘(D) AGENCY DISCLOSURE REQUIRE21 MENTS.—Section 552 of title 5, United States 

22 Code, shall apply to any data or information 

23 submitted to the Office by an insurer or an af24 filiate of an insurer. 


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1 ‘‘(6) SUBPOENAS AND ENFORCEMENT.—The 

2 Director shall have the power to require by subpoena 

3 the production of the data or information requested 

4 under paragraph (2), but only upon a written find5 ing by the Director that such data or information is 

6 required to carry out the functions described under 

7 subsection (c) and that the Office has coordinated 

8 with such regulator or agency as required under 

9 paragraph (4). Subpoenas shall bear the signature of 

10 the Director and shall be served by any person or 

11 class of persons designated by the Director for that 

12 purpose. In the case of contumacy or failure to obey 

13 a subpoena, the subpoena shall be enforceable by 

14 order of any appropriate district court of the United 

15 States. Any failure to obey the order of the court 

16 may be punished by the court as a contempt of 

17 court. 

18 ‘‘(f) PREEMPTION OF STATE INSURANCE MEAS19 URES.— 

20 ‘‘(1) STANDARD.—A State insurance measure 

21 shall be preempted if, and only to the extent that the 

22 Director determines, in accordance with this sub23 section, that the measure— 

24 ‘‘(A) results in less favorable treatment of 

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1 eign jurisdiction that is subject to an inter2 national insurance agreement on prudential 

3 measures than a United States insurer domi4 ciled, licensed, or otherwise admitted in that 

5 State; and 

6 ‘‘(B) is inconsistent with an International 

7 Insurance Agreement on Prudential Measures. 

8 ‘‘(2) DETERMINATION.— 

9 ‘‘(A) NOTICE OF POTENTIAL INCONSIST10 ENCY.—Before making any determination 

11 under paragraph (1), the Director shall— 

12 ‘‘(i) notify and consult with the appro13 priate State regarding any potential incon14 sistency or preemption; 

15 ‘‘(ii) cause to be published in the Fed16 eral Register notice of the issue regarding 

17 the potential inconsistency or preemption, 

18 including a description of each State insur19 ance measure at issue and any applicable 

20 International Insurance Agreement on 

21 Prudential Measures; 

22 ‘‘(iii) provide interested parties a rea23 sonable opportunity to submit written com24 ments to the Office; and 

25 ‘‘(iv) consider any comments received. 


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1 ‘‘(B) SCOPE OF REVIEW.—For purposes of 

2 this subsection, the determination of the Direc3 tor regarding State insurance measures shall be 

4 limited to the subject matter contained within 

5 the international insurance agreement on pru6 dential measure involved. 

7 ‘‘(C) NOTICE OF DETERMINATION OF IN8 CONSISTENCY.—Upon making any determina9 tion under paragraph (1), the Director shall— 

10 ‘‘(i) notify the appropriate State of 

11 the determination and the extent of the in12 consistency; 

13 ‘‘(ii) establish a reasonable period of 

14 time, which shall not be less than 30 days, 

15 before the determination shall become ef16 fective; and 

17 ‘‘(iii) notify the Committee on Bank18 ing, Housing, and Urban Affairs of the 

19 Senate and the Committee on Financial 

20 Services of the House of Representatives of 

21 the inconsistency. 

22 ‘‘(3) NOTICE OF EFFECTIVENESS.—Upon the 

23 conclusion of the period referred to in paragraph 

24 (2)(C)(ii), if the basis for such determination still 


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1 exists, the determination shall become effective and 

2 the Director shall— 

3 ‘‘(A) cause to be published a notice in the 

4 Federal Register that the preemption has be5 come effective, as well as the effective date; and 

6 ‘‘(B) notify the appropriate State. 

7 ‘‘(4) LIMITATION.—No State may enforce a 

8 State insurance measure to the extent that such 

9 measure has been preempted under this subsection. 

10 ‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCE11 DURES ACT.—Determinations of inconsistency made pur12 suant to subsection (f)(2) shall be subject to the applicable 

13 provisions of subchapter II of chapter 5 of title 5, United 

14 States Code (relating to administrative procedure), and 

15 chapter 7 of such title (relating to judicial review). 

16 ‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.— 

17 The Secretary may issue orders, regulations, policies, and 

18 procedures to implement this section. 

19 ‘‘(i) CONSULTATION.—The Director shall consult 

20 with State insurance regulators, individually or collec21 tively, to the extent the Director determines appropriate, 

22 in carrying out the functions of the Office. 

23 ‘‘(j) SAVINGS PROVISIONS.—Nothing in this section 

24 shall— 

25 ‘‘(1) preempt— 


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1 ‘‘(A) any State insurance measure that 

2 governs any insurer’s rates, premiums, under3 writing, or sales practices; 

4 ‘‘(B) any State coverage requirements for 

5 insurance; 

6 ‘‘(C) the application of the antitrust laws 

7 of any State to the business of insurance; or 

8 ‘‘(D) any State insurance measure gov9 erning the capital or solvency of an insurer, ex10 cept to the extent that such State insurance 

11 measure results in less favorable treatment of a 

12 non-United State insurer than a United States 

13 insurer; 

14 ‘‘(2) be construed to alter, amend, or limit any 

15 provision of the Consumer Financial Protection 

16 Agency Act of 2010; or 

17 ‘‘(3) affect the preemption of any State insur18 ance measure otherwise inconsistent with and pre19 empted by Federal law. 

20 ‘‘(k) RETENTION OF EXISTING STATE REGULATORY

21 AUTHORITY.—Nothing in this section or section 314 shall 

22 be construed to establish or provide the Office or the De23 partment of the Treasury with general supervisory or reg24 ulatory authority over the business of insurance. 


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1 ‘‘(l) ANNUAL REPORT TO CONGRESS.—Beginning 

2 September 30, 2011, the Director shall submit a report 

3 on or before September 30 of each calendar year to the 

4 President and to the Committee on Banking, Housing, 

5 and Urban Affairs of the Senate and the Committee on 

6 Financial Services of the House of Representatives on the 

7 insurance industry, any actions taken by the Office pursu8 ant to subsection (f) (regarding preemption of inconsistent 

9 State insurance measures), and any other information as 

10 deemed relevant by the Director or as requested by such 

11 Committees. 

12 ‘‘(m) STUDY AND REPORT ON REGULATION OF IN13 SURANCE.— 

14 ‘‘(1) IN GENERAL.—Not later than 18 months 

15 after the date of enactment of this section, the Di16 rector shall conduct a study and submit a report to 

17 Congress on how to modernize and improve the sys18 tem of insurance regulation in the United States. 

19 ‘‘(2) CONSIDERATIONS.—The study and report 

20 required under paragraph (1) shall be based on and 

21 guided by the following considerations: 

22 ‘‘(A) Systemic risk regulation with respect 

23 to insurance. 

24 ‘‘(B) Capital standards and the relation25 ship between capital allocation and liabilities, 


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1 including standards relating to liquidity and du2 ration risk. 

3 ‘‘(C) Consumer protection for insurance 

4 products and practices, including gaps in state 

5 regulation. 

6 ‘‘(D) The degree of national uniformity of 

7 state insurance regulation. 

8 ‘‘(E) The regulation of insurance compa9 nies and affiliates on a consolidated basis. 

10 ‘‘(F) International coordination of insur11 ance regulation. 

12 ‘‘(3) ADDITIONAL FACTORS.—The study and 

13 report required under paragraph (1) shall also exam14 ine the following factors: 

15 ‘‘(A) The costs and benefits of potential 

16 Federal regulation of insurance across various 

17 lines of insurance (except health insurance). 

18 ‘‘(B) The feasibility of regulating only cer19 tain lines of insurance at the Federal level, 

20 while leaving other lines of insurance to be reg21 ulated at the State level. 

22 ‘‘(C) The ability of any potential Federal 

23 regulation or Federal regulators to eliminate or 

24 minimize regulatory arbitrage. 


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1 ‘‘(D) The impact that developments in the 

2 regulation of insurance in foreign jurisdictions 

3 might have on the potential Federal regulation 

4 of insurance. 

5 ‘‘(E) The ability of any potential Federal 

6 regulation or Federal regulator to provide ro7 bust consumer protection for policyholders. 

8 ‘‘(F) The potential consequences of sub9 jecting insurance companies to a Federal reso10 lution authority, including the effects of any 

11 Federal resolution authority— 

12 ‘‘(i) on the operation of State insur13 ance guaranty fund systems, including the 

14 loss of guaranty fund coverage if an insur15 ance company is subject to a Federal reso16 lution authority; 

17 ‘‘(ii) on policyholder protection, in18 cluding the loss of the priority status of 

19 policyholder claims over other unsecured 

20 general creditor claims; 

21 ‘‘(iii) in the case of life insurance 

22 companies, the loss of the special status of 

23 separate account assets and separate ac24 count liabilities; and 


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1 ‘‘(iv) on the international competitive2 ness of insurance companies. 

3 ‘‘(G) Such other factors as the Director 

4 determines necessary or appropriate, consistent 

5 with the principles set forth in paragraph (2). 

6 ‘‘(4) REQUIRED RECOMMENDATIONS.—The 

7 study and report required under paragraph (1) shall 

8 also contain any legislative, administrative, or regu9 latory recommendations, as the Director determines 

10 appropriate, to carry out or effectuate the findings 

11 set forth in such report. 

12 ‘‘(5) CONSULTATION.—With respect to the 

13 study and report required under paragraph (1), the 

14 Director shall consult with the National Association 

15 of Insurance Commissioners, consumer organiza16 tions, representatives of the insurance industry and 

17 policyholders, and other organizations and experts, 

18 as appropriate. 

19 ‘‘(n) USE OF EXISTING RESOURCES.—To carry out 

20 this section, the Office may employ personnel, facilities, 

21 and any other resource of the Department of the Treasury 

22 available to the Secretary. 

23 ‘‘(o) DEFINITIONS.—In this section and section 314, 

24 the following definitions shall apply: 


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

2 with respect to an insurer, any person who controls, 

3 is controlled by, or is under common control with the 

4 insurer. 

5 ‘‘(2) INSURER.—The term ‘insurer’ means any 

6 person engaged in the business of insurance, includ7 ing reinsurance. 

8 ‘‘(3) INTERNATIONAL INSURANCE AGREEMENT

9 ON PRUDENTIAL MEASURES.—The term ‘Inter10 national Insurance Agreement on Prudential Meas11 ures’ means a written bilateral or multilateral agree12 ment entered into between the United States and a 

13 foreign government, authority, or regulatory entity 

14 regarding prudential measures applicable to the 

15 business of insurance or reinsurance. 

16 ‘‘(4) NON-UNITED STATES INSURER.—The term 

17 ‘non-United States insurer’ means an insurer that is 

18 organized under the laws of a jurisdiction other than 

19 a State, but does not include any United States 

20 branch of such an insurer. 

21 ‘‘(5) OFFICE.—The term ‘Office’ means the Of22 fice of National Insurance established by this sec23 tion. 

24 ‘‘(6) STATE INSURANCE MEASURE.—The term 

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1 ulation, administrative ruling, bulletin, guideline, or 

2 practice relating to or affecting prudential measures 

3 applicable to insurance or reinsurance. 

4 ‘‘(7) STATE INSURANCE REGULATOR.—The 

5 term ‘State insurance regulator’ means any State 

6 regulatory authority responsible for the supervision 

7 of insurers. 

8 ‘‘(8) UNITED STATES INSURER.—The term 

9 ‘United States insurer’ means— 

10 ‘‘(A) an insurer that is organized under 

11 the laws of a State; or 

12 ‘‘(B) a United States branch of a non13 United States insurer. 

14 ‘‘(p) AUTHORIZATION OF APPROPRIATIONS.—There 

15 are authorized to be appropriated for the Office for each 

16 fiscal year such sums as may be necessary. 

17 ‘‘SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON 

18 PRUDENTIAL MEASURES. 

19 ‘‘(a) IN GENERAL.—The Secretary of the Treasury 

20 is authorized to negotiate and enter into International In21 surance Agreements on Prudential Measures on behalf of 

22 the United States. 

23 ‘‘(b) SAVINGS PROVISION.—Nothing in this section or 

24 section 313 shall be construed to affect the development 

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1 icy or the administration of the United States trade agree2 ments program. It is to be understood that the negotiation 

3 of International Insurance Agreements on Prudential 

4 Measures under such sections is consistent with the re5 quirement of this subsection. 

6 ‘‘(c) CONSULTATION.—The Secretary shall consult 

7 with the United States Trade Representative on the nego8 tiation of International Insurance Agreements on Pruden9 tial Measures, including prior to initiating and concluding 

10 any such agreements.’’. 

11 (b) DUTIES OF SECRETARY.—Section 321(a) of title 

12 31, United States Code, is amended— 

13 (1) in paragraph (7), by striking ‘‘; and’’ and 

14 inserting a semicolon; 

15 (2) in paragraph (8)(C), by striking the period 

16 at the end and inserting ‘‘; and’’; and 

17 (3) by adding at the end the following new 

18 paragraph: 

19 ‘‘(9) advise the President on major domestic 

20 and international prudential policy issues in connec21 tion with all lines of insurance except health insur22 ance.’’. 

23 (c) CLERICAL AMENDMENT.—The table of sections 

24 for subchapter I of chapter 3 of title 31, United States 


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1 Code, is amended by striking the item relating to section 

2 312 and inserting the following new items: 

‘‘Sec. 312. Terrorism and financial intelligence. 

‘‘Sec. 313. Office of National Insurance. 

‘‘Sec. 314. International insurance agreements on prudential measures. 

‘‘Sec. 315. Continuing in office.’’. 

3 Subtitle B—State-based Insurance 

4 Reform 

5 SEC. 511. SHORT TITLE. 

6 This subtitle may be cited as the ‘‘Nonadmitted and 

7 Reinsurance Reform Act of 2010’’. 

8 SEC. 512. EFFECTIVE DATE. 

9 Except as otherwise specifically provided in this sub10 title, this subtitle shall take effect upon the expiration of 

11 the 12-month period beginning on the date of the enact12 ment of this subtitle. 

13 PART I—NONADMITTED INSURANCE 

14 SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF 

15 PREMIUM TAXES. 

16 (a) HOME STATE’S EXCLUSIVE AUTHORITY.—No 

17 State other than the home State of an insured may require 

18 any premium tax payment for nonadmitted insurance. 

19 (b) ALLOCATION OF NONADMITTED PREMIUM

20 TAXES.— 

21 (1) IN GENERAL.—The States may enter into a 

22 compact or otherwise establish procedures to allocate 


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1 among the States the premium taxes paid to an in2 sured’s home State described in subsection (a). 

3 (2) EFFECTIVE DATE.—Except as expressly 

4 otherwise provided in such compact or other proce5 dures, any such compact or other procedures— 

6 (A) if adopted on or before the expiration 

7 of the 330-day period that begins on the date 

8 of the enactment of this subtitle, shall apply to 

9 any premium taxes that, on or after such date 

10 of enactment, are required to be paid to any 

11 State that is subject to such compact or proce12 dures; and 

13 (B) if adopted after the expiration of such 

14 330-day period, shall apply to any premium 

15 taxes that, on or after January 1 of the first 

16 calendar year that begins after the expiration of 

17 such 330-day period, are required to be paid to 

18 any State that is subject to such compact or 

19 procedures. 

20 (3) REPORT.—Upon the expiration of the 330- 

21 day period referred to in paragraph (2), the NAIC 

22 may submit a report to the Committee on Financial 

23 Services and Committee on the Judiciary of the 

24 House of Representatives and the Committee on 

25 Banking, Housing, and Urban Affairs of the Senate 


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1 identifying and describing any compact or other pro2 cedures for allocation among the States of premium 

3 taxes that have been adopted during such period by 

4 any States. 

5 (4) NATIONWIDE SYSTEM.—The Congress in6 tends that each State adopt nationwide uniform re7 quirements, forms, and procedures, such as an inter8 state compact, that provides for the reporting, pay9 ment, collection, and allocation of premium taxes for 

10 nonadmitted insurance consistent with this section. 

11 (c) ALLOCATION BASED ON TAX ALLOCATION RE12 PORT.—To facilitate the payment of premium taxes 

13 among the States, an insured’s home State may require 

14 surplus lines brokers and insureds who have independently 

15 procured insurance to annually file tax allocation reports 

16 with the insured’s home State detailing the portion of the 

17 nonadmitted insurance policy premium or premiums at18 tributable to properties, risks, or exposures located in each 

19 State. The filing of a nonadmitted insurance tax allocation 

20 report and the payment of tax may be made by a person 

21 authorized by the insured to act as its agent. 

22 SEC. 522. REGULATION OF NONADMITTED INSURANCE BY 

23 INSURED’S HOME STATE. 

24 (a) HOME STATE AUTHORITY.—Except as otherwise 

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1 surance shall be subject to the statutory and regulatory 

2 requirements solely of the insured’s home State. 

3 (b) BROKER LICENSING.—No State other than an in4 sured’s home State may require a surplus lines broker to 

5 be licensed in order to sell, solicit, or negotiate non6 admitted insurance with respect to such insured. 

7 (c) ENFORCEMENT PROVISION.—With respect to sec8 tion 521 and subsections (a) and (b) of this section, any 

9 law, regulation, provision, or action of any State that ap10 plies or purports to apply to nonadmitted insurance sold 

11 to, solicited by, or negotiated with an insured whose home 

12 State is another State shall be preempted with respect to 

13 such application. 

14 (d) WORKERS’ COMPENSATION EXCEPTION.—This 

15 section may not be construed to preempt any State law, 

16 rule, or regulation that restricts the placement of workers’ 

17 compensation insurance or excess insurance for self-fund18 ed workers’ compensation plans with a nonadmitted in19 surer. 

20 SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATA21 BASE. 

22 After the expiration of the 2-year period beginning 

23 on the date of the enactment of this subtitle, a State may 

24 not collect any fees relating to licensing of an individual 

25 or entity as a surplus lines broker in the State unless the 


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1 State has in effect at such time laws or regulations that 

2 provide for participation by the State in the national in3 surance producer database of the NAIC, or any other 

4 equivalent uniform national database, for the licensure of 

5 surplus lines brokers and the renewal of such licenses. 

6 SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELI7 GIBILITY. 

8 A State may not— 

9 (1) impose eligibility requirements on, or other10 wise establish eligibility criteria for, nonadmitted in11 surers domiciled in a United States jurisdiction, ex12 cept in conformance with such requirements and cri13 teria in sections 5A(2) and 5C(2)(a) of the Non-Ad14 mitted Insurance Model Act, unless the State has 

15 adopted nationwide uniform requirements, forms, 

16 and procedures developed in accordance with section 

17 521(b) of this subtitle that include alternative na18 tionwide uniform eligibility requirements; or 

19 (2) prohibit a surplus lines broker from placing 

20 nonadmitted insurance with, or procuring non21 admitted insurance from, a nonadmitted insurer 

22 domiciled outside the United States that is listed on 

23 the Quarterly Listing of Alien Insurers maintained 

24 by the International Insurers Department of the 

25 NAIC. 


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1 SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL 

2 PURCHASERS. 

3 A surplus lines broker seeking to procure or place 

4 nonadmitted insurance in a State for an exempt commer5 cial purchaser shall not be required to satisfy any State 

6 requirement to make a due diligence search to determine 

7 whether the full amount or type of insurance sought by 

8 such exempt commercial purchaser can be obtained from 

9 admitted insurers if— 

10 (1) the broker procuring or placing the surplus 

11 lines insurance has disclosed to the exempt commer12 cial purchaser that such insurance may or may not 

13 be available from the admitted market that may pro14 vide greater protection with more regulatory over15 sight; and 

16 (2) the exempt commercial purchaser has sub17 sequently requested in writing the broker to procure 

18 or place such insurance from a nonadmitted insurer. 

19 SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MAR20 KET. 

21 (a) IN GENERAL.—The Comptroller General of the 

22 United States shall conduct a study of the nonadmitted 

23 insurance market to determine the effect of the enactment 

24 of this part on the size and market share of the non25 admitted insurance market for providing coverage typi26 cally provided by the admitted insurance market. 


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1 (b) CONTENTS.—The study shall determine and ana2 lyze— 

3 (1) the change in the size and market share of 

4 the nonadmitted insurance market and in the num5 ber of insurance companies and insurance holding 

6 companies providing such business in the 18-month 

7 period that begins upon the effective date of this 

8 subtitle; 

9 (2) the extent to which insurance coverage typi10 cally provided by the admitted insurance market has 

11 shifted to the nonadmitted insurance market; 

12 (3) the consequences of any change in the size 

13 and market share of the nonadmitted insurance 

14 market, including differences in the price and avail15 ability of coverage available in both the admitted 

16 and nonadmitted insurance markets; 

17 (4) the extent to which insurance companies 

18 and insurance holding companies that provide both 

19 admitted and nonadmitted insurance have experi20 enced shifts in the volume of business between ad21 mitted and nonadmitted insurance; and 

22 (5) the extent to which there has been a change 

23 in the number of individuals who have nonadmitted 

24 insurance policies, the type of coverage provided 


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1 under such policies, and whether such coverage is 

2 available in the admitted insurance market. 

3 (c) CONSULTATION WITH NAIC.—In conducting the 

4 study under this section, the Comptroller General shall 

5 consult with the NAIC. 

6 (d) REPORT.—The Comptroller General shall com7 plete the study under this section and submit a report to 

8 the Committee on Banking, Housing, and Urban Affairs 

9 of the Senate and the Committee on Financial Services 

10 of the House of Representatives regarding the findings of 

11 the study not later than 30 months after the effective date 

12 of this subtitle. 

13 SEC. 527. DEFINITIONS. 

14 For purposes of this part, the following definitions 

15 shall apply: 

16 (1) ADMITTED INSURER.—The term ‘‘admitted 

17 insurer’’ means, with respect to a State, an insurer 

18 licensed to engage in the business of insurance in 

19 such State. 

20 (2) AFFILIATE.—The term ‘‘affiliate’’ means, 

21 with respect to an insured, any entity that controls, 

22 is controlled by, or is under common control with the 

23 insured. 


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1 (3) AFFILIATED GROUP.—The term ‘‘affiliated 

2 group’’ means any group of entities that are all af3 filiated. 

4 (4) CONTROL.—An entity has ‘‘control’’ over 

5 another entity if— 

6 (A) the entity directly or indirectly or act7 ing through 1 or more other persons owns, con8 trols, or has the power to vote 25 percent or 

9 more of any class of voting securities of the 

10 other entity; or 

11 (B) the entity controls in any manner the 

12 election of a majority of the directors or trust13 ees of the other entity. 

14 (5) EXEMPT COMMERCIAL PURCHASER.—The 

15 term ‘‘exempt commercial purchaser’’ means any 

16 person purchasing commercial insurance that, at the 

17 time of placement, meets the following requirements: 

18 (A) The person employs or retains a quali19 fied risk manager to negotiate insurance cov20 erage. 

21 (B) The person has paid aggregate nation22 wide commercial property and casualty insur23 ance premiums in excess of $100,000 in the im24 mediately preceding 12 months. 


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1 (C)(i) The person meets at least 1 of the 

2 following criteria: 

3 (I) The person possesses a net worth 

4 in excess of $20,000,000, as such amount 

5 is adjusted pursuant to clause (ii). 

6 (II) The person generates annual rev7 enues in excess of $50,000,000, as such 

8 amount is adjusted pursuant to clause (ii). 

9 (III) The person employs more than 

10 500 full-time or full-time equivalent em11 ployees per individual insured or is a mem12 ber of an affiliated group employing more 

13 than 1,000 employees in the aggregate. 

14 (IV) The person is a not-for-profit or15 ganization or public entity generating an16 nual budgeted expenditures of at least 

17 $30,000,000, as such amount is adjusted 

18 pursuant to clause (ii). 

19 (V) The person is a municipality with 

20 a population in excess of 50,000 persons. 

21 (ii) Effective on the fifth January 1 occur22 ring after the date of the enactment of this sub23 title and each fifth January 1 occurring there24 after, the amounts in subclauses (I), (II), and 

25 (IV) of clause (i) shall be adjusted to reflect the 


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1 percentage change for such 5-year period in the 

2 Consumer Price Index for All Urban Con3 sumers published by the Bureau of Labor Sta4 tistics of the Department of Labor. 

5 (6) HOME STATE.— 

6 (A) IN GENERAL.—Except as provided in 

7 subparagraph (B), the term ‘‘home State’’ 

8 means, with respect to an insured— 

9 (i) the State in which an insured 

10 maintains its principal place of business or, 

11 in the case of an individual, the individ12 ual’s principal residence; or 

13 (ii) if 100 percent of the insured risk 

14 is located out of the State referred to in 

15 subparagraph (A), the State to which the 

16 greatest percentage of the insured’s tax17 able premium for that insurance contract 

18 is allocated. 

19 (B) AFFILIATED GROUPS.—If more than 1 

20 insured from an affiliated group are named in21 sureds on a single nonadmitted insurance con22 tract, the term ‘‘home State’’ means the home 

23 State, as determined pursuant to subparagraph 

24 (A), of the member of the affiliated group that 


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1 has the largest percentage of premium attrib2 uted to it under such insurance contract. 

3 (7) INDEPENDENTLY PROCURED INSURANCE.— 

4 The term ‘‘independently procured insurance’’ 

5 means insurance procured directly by an insured 

6 from a nonadmitted insurer. 

7 (8) NAIC.—The term ‘‘NAIC’’ means the Na8 tional Association of Insurance Commissioners or 

9 any successor entity. 

10 (9) NONADMITTED INSURANCE.—The term 

11 ‘‘nonadmitted insurance’’ means any property and 

12 casualty insurance permitted to be placed directly or 

13 through a surplus lines broker with a nonadmitted 

14 insurer eligible to accept such insurance. 

15 (10) NON-ADMITTED INSURANCE MODEL

16 ACT.—The term ‘‘Non-Admitted Insurance Model 

17 Act’’ means the provisions of the Non-Admitted In18 surance Model Act, as adopted by the NAIC on Au19 gust 3, 1994, and amended on September 30, 1996, 

20 December 6, 1997, October 2, 1999, and June 8, 

21 2002. 

22 (11) NONADMITTED INSURER.—The term 

23 ‘‘nonadmitted insurer’’— 


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1 (A) means, with respect to a State, an in2 surer not licensed to engage in the business of 

3 insurance in such State; but 

4 (B) does not include a risk retention 

5 group, as that term is defined in section 2(a)(4) 

6 of the Liability Risk Retention Act of 1986 (15 

7 U.S.C. 3901(a)(4)). 

8 (12) QUALIFIED RISK MANAGER.—The term 

9 ‘‘qualified risk manager’’ means, with respect to a 

10 policyholder of commercial insurance, a person who 

11 meets all of the following requirements: 

12 (A) The person is an employee of, or third 

13 party consultant retained by, the commercial 

14 policyholder. 

15 (B) The person provides skilled services in 

16 loss prevention, loss reduction, or risk and in17 surance coverage analysis, and purchase of in18 surance. 

19 (C) The person— 

20 (i)(I) has a bachelor’s degree or high21 er from an accredited college or university 

22 in risk management, business administra23 tion, finance, economics, or any other field 

24 determined by a State insurance commis25 sioner or other State regulatory official or 


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1 entity to demonstrate minimum com2 petence in risk management; and 

3 (II)(aa) has 3 years of experience in 

4 risk financing, claims administration, loss 

5 prevention, risk and insurance analysis, or 

6 purchasing commercial lines of insurance; 

7 or 

8 (bb) has 1 of the following designa9 tions: 

10 (AA) a designation as a Char11 tered Property and Casualty Under12 writer (in this subparagraph referred 

13 to as ‘‘CPCU’’) issued by the Amer14 ican Institute for CPCU/Insurance In15 stitute of America; 

16 (BB) a designation as an Asso17 ciate in Risk Management (ARM) 

18 issued by the American Institute for 

19 CPCU/Insurance Institute of America; 

20 (CC) a designation as Certified 

21 Risk Manager (CRM) issued by the 

22 National Alliance for Insurance Edu23 cation & Research; 


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1 (DD) a designation as a RIMS 

2 Fellow (RF) issued by the Global Risk 

3 Management Institute; or 

4 (EE) any other designation, cer5 tification, or license determined by a 

6 State insurance commissioner or other 

7 State insurance regulatory official or 

8 entity to demonstrate minimum com9 petency in risk management; 

10 (ii)(I) has at least 7 years of experi11 ence in risk financing, claims administra12 tion, loss prevention, risk and insurance 

13 coverage analysis, or purchasing commer14 cial lines of insurance; and 

15 (II) has any 1 of the designations 

16 specified in subitems (AA) through (EE) 

17 of clause (i)(II)(bb); 

18 (iii) has at least 10 years of experi19 ence in risk financing, claims administra20 tion, loss prevention, risk and insurance 

21 coverage analysis, or purchasing commer22 cial lines of insurance; or 

23 (iv) has a graduate degree from an 

24 accredited college or university in risk 

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1 nance, economics, or any other field deter2 mined by a State insurance commissioner 

3 or other State regulatory official or entity 

4 to demonstrate minimum competence in 

5 risk management. 

6 (13) PREMIUM TAX.—The term ‘‘premium tax’’ 

7 means, with respect to surplus lines or independently 

8 procured insurance coverage, any tax, fee, assess9 ment, or other charge imposed by a government en10 tity directly or indirectly based on any payment 

11 made as consideration for an insurance contract for 

12 such insurance, including premium deposits, assess13 ments, registration fees, and any other compensation 

14 given in consideration for a contract of insurance. 

15 (14) SURPLUS LINES BROKER.—The term ‘‘sur16 plus lines broker’’ means an individual, firm, or cor17 poration which is licensed in a State to sell, solicit, 

18 or negotiate insurance on properties, risks, or expo19 sures located or to be performed in a State with 

20 nonadmitted insurers. 

21 PART II—REINSURANCE 

22 SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND 

23 REINSURANCE AGREEMENTS. 

24 (a) CREDIT FOR REINSURANCE.—If the State of 

25 domicile of a ceding insurer is an NAIC-accredited State, 


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1 or has financial solvency requirements substantially simi2 lar to the requirements necessary for NAIC accreditation, 

3 and recognizes credit for reinsurance for the insurer’s 

4 ceded risk, then no other State may deny such credit for 

5 reinsurance. 

6 (b) ADDITIONAL PREEMPTION OF

7 EXTRATERRITORIAL APPLICATION OF STATE LAW.—In 

8 addition to the application of subsection (a), all laws, regu9 lations, provisions, or other actions of a State that is not 

10 the domiciliary State of the ceding insurer, except those 

11 with respect to taxes and assessments on insurance com12 panies or insurance income, are preempted to the extent 

13 that they— 

14 (1) restrict or eliminate the rights of the ceding 

15 insurer or the assuming insurer to resolve disputes 

16 pursuant to contractual arbitration to the extent 

17 such contractual provision is not inconsistent with 

18 the provisions of title 9, United States Code; 

19 (2) require that a certain State’s law shall gov20 ern the reinsurance contract, disputes arising from 

21 the reinsurance contract, or requirements of the re22 insurance contract; 

23 (3) attempt to enforce a reinsurance contract 

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1 surance contract, to the extent that the terms are 

2 not inconsistent with this part; or 

3 (4) otherwise apply the laws of the State to re4 insurance agreements of ceding insurers not domi5 ciled in that State. 

6 SEC. 532. REGULATION OF REINSURER SOLVENCY. 

7 (a) DOMICILIARY STATE REGULATION.—If the State 

8 of domicile of a reinsurer is an NAIC-accredited State or 

9 has financial solvency requirements substantially similar 

10 to the requirements necessary for NAIC accreditation, 

11 such State shall be solely responsible for regulating the 

12 financial solvency of the reinsurer. 

13 (b) NONDOMICILIARY STATES.— 

14 (1) LIMITATION ON FINANCIAL INFORMATION

15 REQUIREMENTS.—If the State of domicile of a rein16 surer is an NAIC-accredited State or has financial 

17 solvency requirements substantially similar to the re18 quirements necessary for NAIC accreditation, no 

19 other State may require the reinsurer to provide any 

20 additional financial information other than the infor21 mation the reinsurer is required to file with its 

22 domiciliary State. 

23 (2) RECEIPT OF INFORMATION.—No provision 

24 of this section shall be construed as preventing or 

25 prohibiting a State that is not the State of domicile 


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1 of a reinsurer from receiving a copy of any financial 

2 statement filed with its domiciliary State. 

3 SEC. 533. DEFINITIONS. 

4 For purposes of this part, the following definitions 

5 shall apply: 

6 (1) CEDING INSURER.—The term ‘‘ceding in7 surer’’ means an insurer that purchases reinsurance. 

8 (2) DOMICILIARY STATE.—The terms ‘‘State of 

9 domicile’’ and ‘‘domiciliary State’’ mean, with re10 spect to an insurer or reinsurer, the State in which 

11 the insurer or reinsurer is incorporated or entered 

12 through, and licensed. 

13 (3) REINSURANCE.—The term ‘‘reinsurance’’ 

14 means the assumption by an insurer of all or part 

15 of a risk undertaken originally by another insurer. 

16 (4) REINSURER.— 

17 (A) IN GENERAL.—The term ‘‘reinsurer’’ 

18 means an insurer to the extent that the in19 surer— 

20 (i) is principally engaged in the busi21 ness of reinsurance; 

22 (ii) does not conduct significant 

23 amounts of direct insurance as a percent24 age of its net premiums; and 


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1 (iii) is not engaged in an ongoing 

2 basis in the business of soliciting direct in3 surance. 

4 (B) DETERMINATION.—A determination of 

5 whether an insurer is a reinsurer shall be made 

6 under the laws of the State of domicile in ac7 cordance with this paragraph. 

8 PART III—RULE OF CONSTRUCTION 

9 SEC. 541. RULE OF CONSTRUCTION. 

10 Nothing in this subtitle or the amendments made by 

11 this subtitle shall be construed to modify, impair, or super12 sede the application of the antitrust laws. Any implied or 

13 actual conflict between this subtitle and any amendments 

14 to this subtitle and the antitrust laws shall be resolved 

15 in favor of the operation of the antitrust laws. 

16 SEC. 542. SEVERABILITY. 

17 If any section or subsection of this subtitle, or any 

18 application of such provision to any person or cir19 cumstance, is held to be unconstitutional, the remainder 

20 of this subtitle, and the application of the provision to any 

21 other person or circumstance, shall not be affected. 


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1 TITLE VI—IMPROVEMENTS TO 

2 REGULATION OF BANK AND 

3 SAVINGS ASSOCIATION HOLD4 ING COMPANIES AND DEPOSI5 TORY INSTITUTIONS 

6 SEC. 601. SHORT TITLE. 

7 This title may be cited as the ‘‘Bank and Savings 

8 Association Holding Company and Depository Institution 

9 Regulatory Improvements Act of 2010’’. 

10 SEC. 602. DEFINITION. 

11 In this title, the term ‘‘commercial firm’’ means any 

12 entity that derives not less than 15 percent of the consoli13 dated annual gross revenues of the entity, including all 

14 affiliates of the entity, from engaging in activities that are 

15 not financial in nature or incidental to activities that are 

16 financial in nature, as provided in section 4(k) of the Bank 

17 Holding Company Act of 1956 (12 U.S.C. 1843(k)). 

18 SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF 

19 CREDIT CARD BANKS, INDUSTRIAL LOAN 

20 COMPANIES, AND CERTAIN OTHER COMPA21 NIES UNDER THE BANK HOLDING COMPANY 

22 ACT OF 1956. 

23 (a) MORATORIUM.— 

24 (1) DEFINITIONS.—In this subsection— 


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1 (A) the term ‘‘credit card bank’’ means an 

2 institution described in section 2(c)(2)(F) of the 

3 Bank Holding Company Act of 1956 (12 

4 U.S.C. 1841(c)(2)(F)); 

5 (B) the term ‘‘industrial bank’’ means an 

6 institution described in section 2(c)(2)(H) of 

7 the Bank Holding Company Act of 1956 (12 

8 U.S.C. 1841(c)(2)(H)); and 

9 (C) the term ‘‘trust bank’’ means an insti10 tution described in section 2(c)(2)(D) of the 

11 Bank Holding Company Act of 1956 (12 

12 U.S.C. 1841(c)(2)(D)). 

13 (2) MORATORIUM ON PROVISION OF DEPOSIT

14 INSURANCE.—The Corporation may not approve an 

15 application for deposit insurance under section 5 of 

16 the Federal Deposit Insurance Act (12 U.S.C. 1815) 

17 that is received after November 10, 2009, for an in18 dustrial bank, a credit card bank, or a trust bank 

19 that is directly or indirectly owned or controlled by 

20 a commercial firm. 

21 (3) CHANGE IN CONTROL.— 

22 (A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the appropriate Federal 

24 banking agency shall disapprove a change in 

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1 eral Deposit Insurance Act (12 U.S.C. 1817(j)), 

2 of an industrial bank, a credit card bank, or a 

3 trust bank if the change in control would result 

4 in direct or indirect control of the industrial 

5 bank, credit card bank, or trust bank by a com6 mercial firm. 

7 (B) EXCEPTIONS.—Subparagraph (A) 

8 shall not apply to a change in control of an in9 dustrial bank, credit card bank, or trust bank 

10 that— 

11 (i) is in danger of default, as deter12 mined by the appropriate Federal banking 

13 agency; or 

14 (ii) results from the merger or whole 

15 acquisition of a commercial firm that di16 rectly or indirectly controls the industrial 

17 bank, credit card bank, or trust bank in a 

18 bona fide merger with or acquisition by an19 other commercial firm, as determined by 

20 the appropriate Federal banking agency. 

21 (4) SUNSET.—This subsection shall cease to 

22 have effect 3 years after the date of enactment of 

23 this Act. 


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1 (b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY

2 OF EXCEPTIONS UNDER THE BANK HOLDING COMPANY

3 ACT OF 1956.— 

4 (1) STUDY REQUIRED.—The Comptroller Gen5 eral of the United States shall carry out a study to 

6 determine whether it is necessary, in order to 

7 strengthen the safety and soundness of institutions 

8 or the stability of the financial system, to eliminate 

9 the exceptions under section 2 of the Bank Holding 

10 Company Act of 1956 (12 U.S.C. 1841) for institu11 tions described in— 

12 (A) section 2(a)(5)(E) of the Bank Hold13 ing Company Act of 1956 (12 U.S.C. 

14 1841(a)(5)(E)); 

15 (B) section 2(a)(5)(F) of the Bank Hold16 ing Company Act of 1956 (12 U.S.C. 

17 1841(a)(5)(F)); 

18 (C) section 2(c)(2)(D) of the Bank Hold19 ing Company Act of 1956 (12 U.S.C. 

20 1841(c)(2)(D)); 

21 (D) section 2(c)(2)(F) of the Bank Hold22 ing Company Act of 1956 (12 U.S.C. 

23 1841(c)(2)(F)); 


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1 (E) section 2(c)(2)(H) of the Bank Hold2 ing Company Act of 1956 (12 U.S.C. 

3 1841(c)(2)(H)); and 

4 (F) section 2(c)(2)(B) of the Bank Hold5 ing Company Act of 1956 (12 U.S.C. 

6 1841(c)(2)(B)). 

7 (2) CONTENT OF STUDY.— 

8 (A) IN GENERAL.—The study required 

9 under paragraph (1), with respect to the insti10 tutions referenced in each of subparagraphs (A) 

11 through (E) of paragraph (1), shall, to the ex12 tent feasible be based on information provided 

13 to the Comptroller General by the appropriate 

14 Federal or State regulator, and shall— 

15 (i) identify the types and number of 

16 institutions excepted from section 2 of the 

17 Bank Holding Company Act of 1956 (12 

18 U.S.C. 1841) under each of the subpara19 graphs described in subparagraphs (A) 

20 through (E) of paragraph (1); 

21 (ii) generally describe the size and ge22 ographic locations of the institutions de23 scribed in clause (i); 

24 (iii) determine the extent to which the 

25 institutions described in clause (i) are held 


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1 by holding companies that are commercial 

2 firms; 

3 (iv) determine whether the institutions 

4 described in clause (i) have any affiliates 

5 that are commercial firms; 

6 (v) identify the Federal banking agen7 cy responsible for the supervision of the in8 stitutions described in clause (i) on and 

9 after the transfer date; 

10 (vi) determine the adequacy of the 

11 Federal bank regulatory framework appli12 cable to each category of institution de13 scribed in clause (i), including any restric14 tions (including limitations on affiliate 

15 transactions or cross-marketing) that apply 

16 to transactions between an institution, the 

17 holding company of the institution, and 

18 any other affiliate of the institution; and 

19 (vii) evaluate the potential con20 sequences of subjecting the institutions de21 scribed in clause (i) to the requirements of 

22 the Bank Holding Company Act of 1956, 

23 including with respect to the availability 

24 and allocation of credit, the stability of the 

25 financial system and the economy, the safe 


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1 and sound operation of each category of 

2 institution, and the impact on the types of 

3 activities in which such institutions, and 

4 the holding companies of such institutions, 

5 may engage. 

6 (B) SAVINGS ASSOCIATIONS.—With respect 

7 to institutions described in paragraph (1)(F), 

8 the study required under paragraph (1) shall— 

9 (i) determine the adequacy of the 

10 Federal bank regulatory framework appli11 cable to such institutions, including any re12 strictions (including limitations on affiliate 

13 transactions or cross-marketing) that apply 

14 to transactions between an institution, the 

15 holding company of the institution, and 

16 any other affiliate of the institution; and 

17 (ii) evaluate the potential con18 sequences of subjecting the institutions de19 scribed in paragraph (1)(F) to the require20 ments of the Bank Holding Company Act 

21 of 1956, including with respect to the 

22 availability and allocation of credit, the 

23 stability of the financial system and the 

24 economy, the safe and sound operation of 

25 such institutions, and the impact on the 


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1 types of activities in which such institu2 tions, and the holding companies of such 

3 institutions, may engage. 

4 (3) REPORT.—Not later than 18 months after 

5 the date of enactment of this Act, the Comptroller 

6 General shall submit to the Committee on Banking, 

7 Housing, and Urban Affairs of the Senate and the 

8 Committee on Financial Services of the House of 

9 Representatives a report on the study required 

10 under paragraph (1). 

11 SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COM12 PANIES; REGULATION OF FUNCTIONALLY 

13 REGULATED SUBSIDIARIES. 

14 (a) REPORTS BY BANK HOLDING COMPANIES.—Sec15 tions 5(c)(1) of the Bank Holding Company Act of 1956 

16 (12 U.S.C. 1844(c)(1)) is amended— 

17 (1) by striking subparagraph (B) and inserting 

18 the following: 

19 ‘‘(B) USE OF EXISTING REPORTS AND

20 OTHER SUPERVISORY INFORMATION.—The ap21 propriate Federal banking agency for a bank 

22 holding company shall, to the fullest extent pos23 sible, use— 

24 ‘‘(i) reports and other supervisory in25 formation that the bank holding company 


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1 or any subsidiary thereof has been required 

2 to provide to other Federal or State regu3 latory agencies; 

4 ‘‘(ii) externally audited financial state5 ments of the bank holding company or 

6 subsidiary; 

7 ‘‘(iii) information otherwise available 

8 from Federal or State regulatory agencies; 

9 and 

10 ‘‘(iv) information that is otherwise re11 quired to be reported publicly.’’; and 

12 (2) by adding at the end the following: 

13 ‘‘(C) AVAILABILITY.—Upon the request of 

14 the appropriate Federal banking agency for a 

15 bank holding company, the bank holding com16 pany or a subsidiary of the bank holding com17 pany shall promptly provide to the appropriate 

18 Federal banking agency any information de19 scribed in clauses (i) through (iii) of subpara20 graph (B).’’. 

21 (b) EXAMINATIONS OF BANK HOLDING COMPA22 NIES.—Section 5(c)(2) of the Bank Holding Company Act 

23 of 1956 (12 U.S.C. 1844(c)(2)) is amended to read as 

24 follows: 

25 ‘‘(2) EXAMINATIONS.— 


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1 ‘‘(A) IN GENERAL.—The appropriate Fed2 eral banking agency for a bank holding com3 pany may make examinations of the bank hold4 ing company and each subsidiary of the bank 

5 holding company in order to— 

6 ‘‘(i) inform such appropriate Federal 

7 banking agency of— 

8 ‘‘(I) the nature of the operations 

9 and financial condition of the bank 

10 holding company and the subsidiary; 

11 ‘‘(II) the financial, operational, 

12 and other risks within the bank hold13 ing company system that may pose a 

14 threat to— 

15 ‘‘(aa) the safety and sound16 ness of the bank holding com17 pany or of any depository institu18 tion subsidiary of the bank hold19 ing company; or 

20 ‘‘(bb) the stability of the fi21 nancial system of the United 

22 States; and 

23 ‘‘(III) the systems of the bank 

24 holding company for monitoring and 


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1 controlling the risks described in sub2 clause (II); and 

3 ‘‘(ii) enforce the compliance of the 

4 bank holding company and the subsidiary 

5 with this Act and any other Federal law 

6 that such appropriate Federal banking 

7 agency has specific jurisdiction to enforce 

8 against the bank holding company or sub9 sidiary. 

10 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI11 NATIONS.—For purposes of this paragraph, the 

12 appropriate Federal banking agency for a bank 

13 holding company shall, to the fullest extent pos14 sible, rely on— 

15 ‘‘(i) examination reports made by 

16 other Federal or State regulatory agencies 

17 relating to the bank holding company and 

18 any subsidiary of the bank holding com19 pany; and 

20 ‘‘(ii) the reports and other informa21 tion required under paragraph (1). 

22 ‘‘(C) COORDINATION WITH OTHER REGU23 LATORS.—The appropriate Federal banking 

24 agency for a bank holding company shall— 


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1 ‘‘(i) provide reasonable notice to, and 

2 consult with, the appropriate Federal 

3 banking agency or State regulatory agency 

4 of a subsidiary that is a depository institu5 tion or a functionally regulated subsidiary 

6 before commencing an examination of the 

7 subsidiary under this section; and 

8 ‘‘(ii) to the fullest extent possible, 

9 avoid duplication of examination activities, 

10 reporting requirements, and requests for 

11 information.’’. 

12 (c) AUTHORITY TO REGULATE FUNCTIONALLY REG13 ULATED SUBSIDIARIES OF BANK HOLDING COMPA14 NIES.—The Bank Holding Company Act of 1956 (12 

15 U.S.C. 1841 et seq.) is amended— 

16 (1) in section 5(c) (12 U.S.C. 1844(c)), by 

17 striking paragraphs (3) and (4) and inserting the 

18 following: 

19 ‘‘(3) [Reserved] 

20 ‘‘(4) [Reserved]’’; and 

21 (2) by striking section 10A (12 U.S.C. 1848a). 

22 (d) ACQUISITIONS OF BANKS.—Section 3(c) of the 

23 Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) 

24 is amended by adding at the end the following: 


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1 ‘‘(7) FINANCIAL STABILITY.—In every case, the 

2 appropriate Federal banking agency of a bank hold3 ing company shall take into consideration the extent 

4 to which a proposed acquisition, merger, or consoli5 dation would result in greater or more concentrated 

6 risks to the stability of the United States banking or 

7 financial system.’’. 

8 (e) ACQUISITIONS OF NONBANKS.— 

9 (1) NOTICE PROCEDURES.—Section 4(j)(2)(A) 

10 of the Bank Holding Company Act of 1956 (12 

11 U.S.C. 1843(j)(2)(A)) is amended by striking ‘‘or 

12 unsound banking practices’’ and inserting ‘‘unsound 

13 banking practices, or risk to the stability of the 

14 United States banking or financial system’’. 

15 (2) ACTIVITIES THAT ARE FINANCIAL IN NA16 TURE.—Section 4(k)(6)(B) of the Bank Holding 

17 Company Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is 

18 amended to read as follows: 

19 ‘‘(B) APPROVAL NOT REQUIRED FOR CER20 TAIN FINANCIAL ACTIVITIES.— 

21 ‘‘(i) IN GENERAL.—Except as pro22 vided in clause (ii), a financial holding 

23 company may commence any activity or ac24 quire any company, pursuant to paragraph 

25 (4) or any regulation prescribed or order 


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1 issued under paragraph (5), without prior 

2 approval of the appropriate Federal bank3 ing agency for the financial holding com4 pany. 

5 ‘‘(ii) EXCEPTION.—A financial hold6 ing company may not acquire a company, 

7 without the prior approval of the appro8 priate Federal banking agency for the fi9 nancial holding company, in a transaction 

10 in which the total consolidated assets to be 

11 acquired by the financial holding company 

12 exceed $25,000,000,000.’’. 

13 (f) BANK MERGER ACT TRANSACTIONS.—Section 

14 18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 

15 1828(c)(5)) is amended, in the matter immediately fol16 lowing subparagraph (B), by striking ‘‘and the conven17 ience and needs of the community to be served’’ and in18 serting ‘‘the convenience and needs of the community to 

19 be served, and the risk to the stability of the United States 

20 banking or financial system’’. 

21 (g) REPORTS BY SAVINGS AND LOAN HOLDING COM22 PANIES.—Section 10(b)(2) of the Home Owners’ Loan Act 

23 (12 U.S.C. 1467a(b)(2) is amended— 

24 (1) by striking ‘‘Each savings’’ and inserting 

25 the following: 


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1 ‘‘(A) IN GENERAL.—Each savings’’; and 

2 (2) by adding at the end the following: 

3 ‘‘(B) USE OF EXISTING REPORTS AND

4 OTHER SUPERVISORY INFORMATION.—The ap5 propriate Federal banking agency for a savings 

6 and loan holding company shall, to the fullest 

7 extent possible, use— 

8 ‘‘(i) reports and other supervisory in9 formation that the savings and loan hold10 ing company or any subsidiary thereof has 

11 been required to provide to other Federal 

12 or State regulatory agencies; 

13 ‘‘(ii) externally audited financial state14 ments of the savings and loan holding com15 pany or subsidiary; 

16 ‘‘(iii) information that is otherwise 

17 available from Federal or State regulatory 

18 agencies; and 

19 ‘‘(iv) information that is otherwise re20 quired to be reported publicly. 

21 ‘‘(C) AVAILABILITY.—Upon the request of 

22 the appropriate Federal banking agency for a 

23 savings and loan holding company, the savings 

24 and loan holding company or a subsidiary of 

25 the savings and loan holding company shall 


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1 promptly provide to the appropriate Federal 

2 banking agency any information described in 

3 clauses (i) through (iii) of subparagraph (B).’’. 

4 (h) EXAMINATION OF SAVINGS AND LOAN HOLDING

5 COMPANIES.— 

6 (1) DEFINITIONS.—Section 2 of the Home 

7 Owners’ Loan Act (12 U.S.C. 1462) is amended by 

8 adding at the end the following: 

9 ‘‘(10) APPROPRIATE FEDERAL BANKING AGEN10 CY.—The term ‘appropriate Federal banking agency’ 

11 has the same meaning as in section 3(q) of the Fed12 eral Deposit Insurance Act (12 U.S.C. 1813(q)). 

13 ‘‘(11) FUNCTIONALLY REGULATED SUB14 SIDIARY.—The term ‘functionally regulated sub15 sidiary’ has the same meaning as in section 5(c)(5) 

16 of the Bank Holding Company Act of 1956 (12 

17 U.S.C. 1844(c)(5)).’’. 

18 (2) EXAMINATION.—Section 10(b) of the Home 

19 Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended 

20 by striking paragraph (4) and inserting the fol21 lowing: 

22 ‘‘(4) EXAMINATIONS.— 

23 ‘‘(A) IN GENERAL.—The appropriate Fed24 eral banking agency for a savings and loan 

25 holding company may make examinations of the 


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1 savings and loan holding company and each 

2 subsidiary of the savings and loan holding com3 pany system, in order to— 

4 ‘‘(i) inform such appropriate Federal 

5 banking agency of— 

6 ‘‘(I) the nature of the operations 

7 and financial condition of the savings 

8 and loan holding company and the 

9 subsidiary; 

10 ‘‘(II) the financial, operational, 

11 and other risks within the savings and 

12 loan holding company that may pose a 

13 threat to— 

14 ‘‘(aa) the safety and sound15 ness of the savings and loan 

16 holding company or of any depos17 itory institution subsidiary of the 

18 savings and loan holding com19 pany; or 

20 ‘‘(bb) the stability of the fi21 nancial system of the United 

22 States; and 

23 ‘‘(III) the systems of the savings 

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1 toring and controlling the risks de2 scribed in subclause (II); and 

3 ‘‘(ii) enforce the compliance of the 

4 savings and loan holding company and the 

5 subsidiary with this Act and any other 

6 Federal law that such appropriate Federal 

7 banking agency has specific jurisdiction to 

8 enforce against the savings and loan hold9 ing company or subsidiary. 

10 ‘‘(B) USE OF REPORTS TO REDUCE EXAMI11 NATIONS.—For purposes of this subsection, the 

12 appropriate Federal banking agency for a sav13 ings and loan holding company shall, to the 

14 fullest extent possible, rely on— 

15 ‘‘(i) the examination reports made by 

16 other Federal or State regulatory agencies 

17 relating to the savings and loan holding 

18 company and any subsidiary; and 

19 ‘‘(ii) the reports and other informa20 tion required under paragraph (2). 

21 ‘‘(C) COORDINATION WITH OTHER REGU22 LATORS.—The appropriate Federal banking 

23 agency for a savings and loan holding company 

24 shall— 


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1 ‘‘(i) provide reasonable notice to, and 

2 consult with, the appropriate Federal 

3 banking agency or State regulatory agency 

4 of a subsidiary that is a depository institu5 tion or a functionally regulated subsidiary 

6 before commencing an examination of the 

7 subsidiary under this section; and 

8 ‘‘(ii) to the fullest extent possible, 

9 avoid duplication of examination activities, 

10 reporting requirements, and requests for 

11 information.’’. 

12 (i) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect on the transfer date. 

14 SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMIS15 SIBLE ACTIVITIES OF DEPOSITORY INSTITU16 TION SUBSIDIARIES OF HOLDING COMPA17 NIES. 

18 Section 6 of the Bank Holding Company Act of 1956 

19 (12 U.S.C. 1845) is amended to read as follows: 

20 ‘‘SEC. 6. ASSURING CONSISTENT OVERSIGHT OF PERMIS21 SIBLE ACTIVITIES OF DEPOSITORY INSTITU22 TION SUBSIDIARIES OF HOLDING COMPA23 NIES. 

24 ‘‘(a) DEFINITIONS.— 

25 ‘‘(1) DEFINITIONS.—In this section— 


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1 ‘‘(A) the term ‘depository institution hold2 ing company’ has the same meaning as in sec3 tion 3(w) of the Federal Deposit Insurance Act 

4 (12 U.S.C. 1813(w)); 

5 ‘‘(B) the term ‘functionally regulated sub6 sidiary’ has the same meaning as in section 

7 5(c)(5); and 

8 ‘‘(C) the term ‘lead Federal banking agen9 cy’ means— 

10 ‘‘(i) the Office of the Comptroller of 

11 the Currency, in the case of any depository 

12 institution holding company having— 

13 ‘‘(I) a subsidiary that is an in14 sured depository institution, if all 

15 such insured depository institutions 

16 are Federal depository institutions; or 

17 ‘‘(II) a subsidiary that is a Fed18 eral depository institution and a sub19 sidiary that is a State depository in20 stitution, if the total consolidated as21 sets of all subsidiaries that are Fed22 eral depository institutions exceed the 

23 total consolidated assets of all subsidi24 aries that are State depository institu25 tions; and 


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1 ‘‘(ii) the Federal Deposit Insurance 

2 Corporation, in the case of any depository 

3 institution holding company having— 

4 ‘‘(I) a subsidiary that is an in5 sured depository institution, if all 

6 such insured depository institutions 

7 are State depository institutions; or 

8 ‘‘(II) a subsidiary that is a Fed9 eral depository institution and a sub10 sidiary that is a State depository in11 stitution, if the total consolidated as12 sets of all subsidiaries that are State 

13 depository institutions exceed the total 

14 consolidated assets of all subsidiaries 

15 that are Federal depository institu16 tions. 

17 ‘‘(2) DETERMINATION OF TOTAL CONSOLI18 DATED ASSETS.—For purposes of paragraph (1)(A), 

19 the total consolidated assets of a depository institu20 tion shall be determined in the same manner that 

21 total consolidated assets of depository institutions 

22 are determined for purposes of section 3(q) of the 

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

24 ‘‘(b) LEAD AGENCY SUPERVISION.— 


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1 ‘‘(1) IN GENERAL.—The lead Federal banking 

2 agency for each depository institution holding com3 pany shall make examinations of the activities of 

4 each nondepository institution subsidiary (other than 

5 a functionally regulated subsidiary) of the depository 

6 institution holding company that are permissible for 

7 depository institution subsidiaries of the depository 

8 institution holding company, to determine whether 

9 the activities— 

10 ‘‘(A) present safety and soundness risks to 

11 any depository institution subsidiary of the de12 pository institution holding company; 

13 ‘‘(B) are conducted in accordance with ap14 plicable law; and 

15 ‘‘(C) are subject to appropriate systems for 

16 monitoring and controlling the financial, oper17 ating, and other risks of the activity and pro18 tecting the depository institution subsidiaries of 

19 the holding company. 

20 ‘‘(2) PROCESS FOR EXAMINATION.—An exam21 ination under paragraph (1) shall be carried out 

22 under the authority of the lead Federal banking 

23 agency, as if the nondepository institution subsidiary 

24 were an insured depository institution for which the 


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1 lead Federal banking agency is the appropriate Fed2 eral banking agency. 

3 ‘‘(c) COORDINATION.—For each depository institu4 tion holding company for which the Board of Governors 

5 is the appropriate Federal banking agency, the lead Fed6 eral banking agency of the depository institution holding 

7 company shall coordinate the supervision of the activities 

8 of subsidiaries described in subsection (b) with the Board 

9 of Governors, in a manner that— 

10 ‘‘(1) avoids duplication; 

11 ‘‘(2) shares information relevant to the super12 vision of the depository institution holding company 

13 by each agency; 

14 ‘‘(3) achieves the objectives of subsection (b); 

15 and 

16 ‘‘(4) ensures that the depository institution 

17 holding company and the subsidiaries of the deposi18 tory institution holding company are not subject to 

19 conflicting supervisory demands by the 2 agencies. 

20 ‘‘(d) REFERRALS FOR ENFORCEMENT.— 

21 ‘‘(1) RECOMMENDATION OF ACTION BY BOARD

22 OF GOVERNORS.—The lead Federal banking agency 

23 for a depository institution holding company, based 

24 on information obtained pursuant to the responsibil25 ities of the agency under subsection (b), may submit 


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1 to the Board of Governors, in writing, a rec2 ommendation that the Board of Governors take en3 forcement action against a nondepository institution 

4 subsidiary (other than a functionally regulated sub5 sidiary) of the depository institution holding com6 pany, together with an explanation of the concerns 

7 giving rise to the recommendation. 

8 ‘‘(2) BACK-UP AUTHORITY OF THE LEAD FED9 ERAL BANKING AGENCY.—If, within the 60-day pe10 riod beginning on the date on which the Board of 

11 Governors receives a recommendation under para12 graph (1), the Board of Governors does not take en13 forcement action against a nondepository institution 

14 subsidiary or provide a plan for enforcement action 

15 that is acceptable to the lead Federal banking agen16 cy, the lead Federal banking agency (upon the au17 thorization of the Comptroller, or the Federal De18 posit Insurance Corporation, upon a vote of its 

19 members, as applicable) may take the recommended 

20 enforcement action, in the same manner as if the 

21 subsidiary were an insured depository institution for 

22 which the lead Federal banking agency is the appro23 priate Federal banking agency.’’. 


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1 SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COM2 PANIES TO REMAIN WELL CAPITALIZED AND 

3 WELL MANAGED. 

4 (a) AMENDMENT.—Section 4(l)(1) of the Bank Hold5 ing Company Act of 1956 (12 U.S.C. 1843(l)(1)) is 

6 amended— 

7 (1) in subparagraph (B), by striking ‘‘and’’ at 

8 the end; 

9 (2) by redesignating subparagraph (C) as sub10 paragraph (D); 

11 (3) by inserting after subparagraph (B) the fol12 lowing: 

13 ‘‘(C) the bank holding company is well 

14 capitalized and well managed; and’’; and 

15 (4) in subparagraph (D)(ii), as so redesignated, 

16 by striking ‘‘subparagraphs (A) and (B)’’ and insert17 ing ‘‘subparagraphs (A), (B), and (C)’’. 

18 (b) EFFECTIVE DATE.—The amendments made by 

19 this section shall take effect on the transfer date. 

20 SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS. 

21 (a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of 

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

23 1842(d)(1)(A)) is amended by striking ‘‘adequately cap24 italized and adequately managed’’ and inserting ‘‘well cap25 italized and well managed’’. 


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1 (b) INTERSTATE BANK MERGERS.—Section 

2 44(b)(4)(B) of the Federal Deposit Insurance Act (12 

3 U.S.C. 1831u(b)(4)(B)) is amended by striking ‘‘will con4 tinue to be adequately capitalized and adequately man5 aged’’ and inserting ‘‘will be well capitalized and well man6 aged’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on the transfer date. 

9 SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK 

10 TRANSACTIONS WITH AFFILIATES. 

11 (a) AFFILIATE TRANSACTIONS.—Section 23A of the 

12 Federal Reserve Act (12 U.S.C. 371c) is amended— 

13 (1) in subsection (b)— 

14 (A) in paragraph (1), by striking subpara15 graph (D) and inserting the following: 

16 ‘‘(D) any investment fund with respect to 

17 which a member bank or affiliate thereof is an 

18 investment adviser; and’’; and 

19 (B) in paragraph (7)— 

20 (i) in subparagraph (A), by inserting 

21 before the semicolon at the end the fol22 lowing: ‘‘, including a purchase of assets 

23 subject to an agreement to repurchase’’; 


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1 (ii) in subparagraph (C), by striking 

2 ‘‘, including assets subject to an agreement 

3 to repurchase,’’; 

4 (iii) in subparagraph (D)— 

5 (I) by inserting ‘‘or other debt 

6 obligations’’ after ‘‘acceptance of secu7 rities’’; and 

8 (II) by striking ‘‘or’’ at the end; 

9 and 

10 (iv) by adding at the end the fol11 lowing: 

12 ‘‘(F) a transaction with an affiliate that 

13 involves the borrowing or lending of securities, 

14 to the extent that the transaction causes a 

15 member bank or a subsidiary to have credit ex16 posure to the affiliate; or 

17 ‘‘(G) a derivative transaction, as defined in 

18 paragraph (3) of section 5200(b) of the Revised 

19 Statutes of the United States (12 U.S.C. 

20 84(b)), with an affiliate, to the extent that the 

21 transaction causes a member bank or a sub22 sidiary to have credit exposure to the affiliate;’’; 

23 (2) in subsection (c)— 

24 (A) in paragraph (1)— 


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1 (i) in the matter preceding subpara2 graph (A), by striking ‘‘subsidiary’’ and all 

3 that follows through ‘‘time of the trans4 action’’ and inserting ‘‘subsidiary, and any 

5 credit exposure of a member bank or a 

6 subsidiary to an affiliate resulting from a 

7 securities borrowing or lending transaction, 

8 or a derivative transaction, shall be se9 cured at all times’’; and 

10 (ii) in each of subparagraphs (A) 

11 through (D), by striking ‘‘or letter of cred12 it’’ and inserting ‘‘letter of credit, or credit 

13 exposure’’; 

14 (B) by striking paragraph (2); 

15 (C) by redesignating paragraphs (3) 

16 through (5) as paragraphs (2) through (4), re17 spectively; 

18 (D) in paragraph (2), as so redesignated, 

19 by inserting before the period at the end ‘‘, or 

20 credit exposure to an affiliate resulting from a 

21 securities borrowing or lending transaction, or 

22 derivative transaction’’; and 

23 (E) in paragraph (3), as so redesignated— 

24 (i) by inserting ‘‘or other debt obliga25 tions’’ after ‘‘securities’’; and 


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1 (ii) by striking ‘‘or guarantee’’ and all 

2 that follows through ‘‘behalf of,’’ and in3 serting ‘‘guarantee, acceptance, or letter of 

4 credit issued on behalf of, or credit expo5 sure from a securities borrowing or lending 

6 transaction, or derivative transaction to,’’; 

7 (3) in subsection (d)(4), in the matter pre8 ceding subparagraph (A), by striking ‘‘or issuing’’ 

9 and all that follows through ‘‘behalf of,’’ and insert10 ing ‘‘issuing a guarantee, acceptance, or letter of 

11 credit on behalf of, or having credit exposure result12 ing from a securities borrowing or lending trans13 action, or derivative transaction to,’’; and 

14 (4) in subsection (f)— 

15 (A) in paragraph (2)— 

16 (i) by striking ‘‘or order’’; 

17 (ii) by striking ‘‘if it finds’’ and all 

18 that follows through the end of the para19 graph and inserting the following: ‘‘if— 

20 ‘‘(i) the Board finds the exemption to 

21 be in the public interest and consistent 

22 with the purposes of this section, and noti23 fies the Federal Deposit Insurance Cor24 poration of such finding; and 


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1 ‘‘(ii) before the end of the 60-day pe2 riod beginning on the date on which the 

3 Federal Deposit Insurance Corporation re4 ceives notice of the finding under clause 

5 (i), the Federal Deposit Insurance Cor6 poration does not object, in writing, to the 

7 finding, based on a determination that the 

8 exemption presents an unacceptable risk to 

9 the Deposit Insurance Fund.’’; 

10 (iii) by striking the Board and insert11 ing the following: 

12 ‘‘(A) IN GENERAL.—The Board’’; and 

13 (iv) by adding at the end the fol14 lowing: 

15 ‘‘(B) ADDITIONAL EXEMPTIONS.— 

16 ‘‘(i) NATIONAL BANKS.—The Comp17 troller of the Currency may, by order, ex18 empt a transaction of a national bank from 

19 the requirements of this section if— 

20 ‘‘(I) the Board and the Office of 

21 the Comptroller of the Currency joint22 ly find the exemption to be in the 

23 public interest and consistent with the 

24 purposes of this section and notify the 


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1 Federal Deposit Insurance Corpora2 tion of such finding; and 

3 ‘‘(II) before the end of the 60- 

4 day period beginning on the date on 

5 which the Federal Deposit Insurance 

6 Corporation receives notice of the 

7 finding under subclause (I), the Fed8 eral Deposit Insurance Corporation 

9 does not object, in writing, to the 

10 finding, based on a determination that 

11 the exemption presents an unaccept12 able risk to the Deposit Insurance 

13 Fund. 

14 ‘‘(ii) STATE BANKS.—The Federal 

15 Deposit Insurance Corporation may, by 

16 order, exempt a transaction of a State 

17 bank from the requirements of this section 

18 if— 

19 ‘‘(I) the Board and the Federal 

20 Deposit Insurance Corporation jointly 

21 find that the exemption is in the pub22 lic interest and consistent with the 

23 purposes of this section; and 

24 ‘‘(II) the Federal Deposit Insur25 ance Corporation finds that the exVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00458 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 emption does not present an unaccept2 able risk to the Deposit Insurance 

3 Fund.’’; and 

4 (B) by adding at the end the following: 

5 ‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.— 

6 The Board may issue such regulations or interpreta7 tions as the Board determines are necessary or ap8 propriate with respect to the manner in which a net9 ting agreement may be taken into account in deter10 mining the amount of a covered transaction between 

11 a member bank or a subsidiary and an affiliate, in12 cluding the extent to which netting agreements be13 tween a member bank or a subsidiary and an affil14 iate may be taken into account in determining 

15 whether a covered transaction is fully secured for 

16 purposes of subsection (d)(4). An interpretation 

17 under this paragraph with respect to a specific mem18 ber bank, subsidiary, or affiliate shall be issued 

19 jointly with the appropriate Federal banking agency 

20 for such member bank, subsidiary, or affiliate.’’. 

21 (b) TRANSACTIONS WITH AFFILIATES.—Section 

22 23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e)) 

23 is amended— 

24 (1) by striking the undesignated matter fol25 lowing subparagraph (B); 


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1 (2) by redesignating subparagraphs (A) and 

2 (B) as clauses (i) and (ii), respectively, and adjust3 ing the clause margins accordingly; 

4 (3) by redesignating paragraphs (1) and (2) as 

5 subparagraphs (A) and (B), respectively, and adjust6 ing the subparagraph margins accordingly; 

7 (4) by striking ‘‘The Board’’ and inserting the 

8 following: 

9 ‘‘(1) IN GENERAL.—The Board’’; 

10 (5) in paragraph (1)(B), as so redesignated— 

11 (A) in the matter preceding clause (i), by 

12 inserting before ‘‘regulations’’ the following: 

13 ‘‘subject to paragraph (2), if the Board finds 

14 that an exemption or exclusion is in the public 

15 interest and is consistent with the purposes of 

16 this section, and notifies the Federal Deposit 

17 Insurance Corporation of such finding,’’; and 

18 (B) in clause (ii), by striking the comma at 

19 the end and inserting a period; and 

20 (6) by adding at the end the following: 

21 ‘‘(2) EXCEPTION.—The Board may grant an 

22 exemption or exclusion under this subsection only if, 

23 during the 60-day period beginning on the date of 

24 receipt of notice of the finding from the Board 

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1 ance Corporation does not object, in writing, to such 

2 exemption or exclusion, based on a determination 

3 that the exemption presents an unacceptable risk to 

4 the Deposit Insurance Fund.’’. 

5 (c) HOME OWNERS’ LOAN ACT.—Section 11 of the 

6 Home Owners’ Loan Act (12 U.S.C. 1468) is amended 

7 by adding at the end the following: 

8 ‘‘(d) EXEMPTIONS.— 

9 ‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The 

10 Comptroller of the Currency may, by order, exempt 

11 a transaction of a Federal savings association from 

12 the requirements of this section if— 

13 ‘‘(A) the Board and the Office of the 

14 Comptroller of the Currency jointly find the ex15 emption to be in the public interest and con16 sistent with the purposes of this section and no17 tify the Federal Deposit Insurance Corporation 

18 of such finding; and 

19 ‘‘(B) before the end of the 60-day period 

20 beginning on the date on which the Federal De21 posit Insurance Corporation receives notice of 

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1 termination that the exemption presents an un2 acceptable risk to the Deposit Insurance Fund. 

3 ‘‘(2) STATE SAVINGS ASSOCIATION.—The Fed4 eral Deposit Insurance Corporation may, by order, 

5 exempt a transaction of a State savings association 

6 from the requirements of this section if the Board 

7 and the Federal Deposit Insurance Corporation 

8 jointly find that— 

9 ‘‘(A) the exemption is in the public interest 

10 and consistent with the purposes of this section; 

11 and 

12 ‘‘(B) the exemption does not present an 

13 unacceptable risk to the Deposit Insurance 

14 Fund.’’. 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 this section shall take effect 1 year after the transfer date. 

17 SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS 

18 WITH FINANCIAL SUBSIDIARIES. 

19 (a) AMENDMENT.—Section 23A(e) of the Federal Re20 serve Act (12 U.S.C. 371c(e)) is amended— 

21 (1) by striking paragraph (3); and 

22 (2) by redesignating paragraph (4) as para23 graph (3). 

24 (b) PROSPECTIVE APPLICATION OF AMENDMENT.— 

25 The amendments made by this section shall apply with 


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1 respect to any covered transaction between a bank and 

2 a subsidiary of the bank, as those terms are defined in 

3 section 23A of the Federal Reserve Act (12 U.S.C. 371c), 

4 that is entered into on or after the date of enactment of 

5 this Act. 

6 (c) EFFECTIVE DATE.—The amendments made by 

7 this section shall take effect 1 year after the transfer date. 

8 SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPO9 SURE ON DERIVATIVE TRANSACTIONS, RE10 PURCHASE AGREEMENTS, REVERSE REPUR11 CHASE AGREEMENTS, AND SECURITIES 

12 LENDING AND BORROWING TRANSACTIONS. 

13 (a) NATIONAL BANKS.—Section 5200(b) of the Re14 vised Statutes of the United States (12 U.S.C. 84(b)) is 

15 amended— 

16 (1) in paragraph (1), by striking ‘‘shall in17 clude’’ and all that follows through the end of the 

18 paragraph and inserting the following: ‘‘shall in19 clude— 

20 ‘‘(A) all direct or indirect advances of 

21 funds to a person made on the basis of any ob22 ligation of that person to repay the funds or re23 payable from specific property pledged by or on 

24 behalf of the person; 


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1 ‘‘(B) to the extent specified by the Comp2 troller of the Currency, any liability of a na3 tional banking association to advance funds to 

4 or on behalf of a person pursuant to a contrac5 tual commitment; and 

6 ‘‘(C) any credit exposure to a person aris7 ing from a derivative transaction, repurchase 

8 agreement, reverse repurchase agreement, secu9 rities lending transaction, or securities bor10 rowing transaction between the national bank11 ing association and the person;’’; 

12 (2) in paragraph (2), by striking the period at 

13 the end and inserting ‘‘; and’’; and 

14 (3) by adding at the end the following: 

15 ‘‘(3) the term ‘derivative transaction’ includes 

16 any transaction that is a contract, agreement, swap, 

17 warrant, note, or option that is based, in whole or 

18 in part, on the value of, any interest in, or any 

19 quantitative measure or the occurrence of any event 

20 relating to, one or more commodities, securities, cur21 rencies, interest or other rates, indices, or other as22 sets.’’. 

23 (b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the 

24 Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is 


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1 amended by striking ‘‘Director’’ each place that term ap2 pears and inserting ‘‘Comptroller of the Currency’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect 1 year after the transfer date. 

5 SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIM6 ITS TO INSURED STATE BANKS. 

7 (a) AMENDMENT.—Section 18 of the Federal Deposit 

8 Insurance Act (12 U.S.C. 1828) is amended by adding at 

9 the end the following: 

10 ‘‘(y) APPLICATION OF LENDING LIMITS TO INSURED

11 STATE BANKS.—Section 5200 of the Revised Statutes of 

12 the United States (12 U.S.C. 84) shall apply to each in13 sured State bank, in the same manner and to the same 

14 extent as if the insured State bank were a national bank15 ing association.’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall take effect 1 year after the transfer date. 

18 SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED 

19 BANKS. 

20 (a) CONVERSION OF A NATIONAL BANKING ASSOCIA21 TION TO A STATE BANK.—The Act entitled ‘‘An Act to 

22 provide for the conversion of national banking associations 

23 into and their merger or consolidation with State banks, 

24 and for other purposes.’’ (12 U.S.C. 214 et seq.) is amend25 ed by adding at the end the following: 


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1 ‘‘SEC. 10. PROHIBITION ON CONVERSION. 

2 ‘‘A national banking association may not convert to 

3 a State bank or State savings association during any pe4 riod in which the national banking association is subject 

5 to a cease and desist order (or other formal enforcement 

6 order) issued by, or a memorandum of understanding en7 tered into with, the Comptroller of the Currency with re8 spect to a significant supervisory matter.’’. 

9 (b) CONVERSION OF A STATE BANK TO A NATIONAL

10 BANK.—Section 5154 of the Revised Statutes of the 

11 United States (12 U.S.C. 35) is amended by adding at 

12 the end the following: ‘‘The Comptroller of the Currency 

13 may not approve the conversion of a State bank or State 

14 savings association to a national banking association dur15 ing any period in which the State bank or State savings 

16 association is subject to a cease and desist order (or other 

17 formal enforcement order) issued by, or a memorandum 

18 of understanding entered into with, a State bank super19 visor or the appropriate Federal banking agency with re20 spect to a significant supervisory matter.’’. 

21 (c) CONVERSION OF A FEDERAL SAVINGS ASSOCIA22 TION TO A NATIONAL OR STATE BANK OR STATE SAVINGS

23 ASSOCIATION.—Section 5(i) of the Home Owners’ Loan 

24 Act (12 U.S.C. 1464(i)) is amended by adding at the end 

25 the following: 


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1 ‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY

2 FEDERAL SAVINGS ASSOCIATIONS.—A Federal sav3 ings association may not convert to a national bank 

4 or State bank or State savings association during 

5 any period in which the Federal savings association 

6 is subject to a cease and desist order (or other for7 mal enforcement order) issued by, or a memorandum 

8 of understanding entered into with, the Office of 

9 Thrift Supervision or the Comptroller of the Cur10 rency with respect to a significant supervisory mat11 ter.’’. 

12 SEC. 613. DE NOVO BRANCHING INTO STATES. 

13 (a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the 

14 Revised Statutes of the United States (12 U.S.C. 

15 36(g)(1)(A)) is amended to read as follows: 

16 ‘‘(A) the law of the State in which the 

17 branch is located, or is to be located, would per18 mit establishment of the branch, if the national 

19 bank were a State bank chartered by such 

20 State; and’’. 

21 (b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) 

22 of the Federal Deposit Insurance Act (12 U.S.C. 

23 1828(d)(4)(A)(i)) is amended to read as follows: 

24 ‘‘(i) the law of the State in which the 

25 branch is located, or is to be located, would 


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1 permit establishment of the branch, if the 

2 bank were a State bank chartered by such 

3 State; and’’. 

4 SEC. 614. LENDING LIMITS TO INSIDERS. 

5 (a) EXTENSIONS OF CREDIT.—Section 

6 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C. 

7 375b(9)(D)(i)) is amended— 

8 (1) by striking the period at the end and insert9 ing ‘‘; or’’; 

10 (2) by striking ‘‘a person’’ and inserting ‘‘the 

11 person’’; 

12 (3) by striking ‘‘extends credit by making’’ and 

13 inserting the following: ‘‘extends credit to a person 

14 by— 

15 ‘‘(I) making’’; and 

16 (4) by adding at the end the following: 

17 ‘‘(II) having credit exposure to 

18 the person arising from a derivative 

19 transaction (as defined in section 

20 5200(b) of the Revised Statutes of the 

21 United States (12 U.S.C. 84(b))), re22 purchase agreement, reverse repur23 chase agreement, securities lending 

24 transaction, or securities borrowing 


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1 transaction between the member bank 

2 and the person.’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect 1 year after the transfer date. 

5 SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM 

6 INSIDERS. 

7 (a) AMENDMENT TO THE FEDERAL DEPOSIT INSUR8 ANCE ACT.—Section 18 of the Federal Deposit Insurance 

9 Act (12 U.S.C. 1828) is amended by adding at the end 

10 the following: 

11 ‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.— 

12 ‘‘(1) IN GENERAL.—An insured depository in13 stitution may not purchase an asset from, or sell an 

14 asset to, an executive officer, director, or principal 

15 shareholder of the insured depository institution, or 

16 any related interest of such person (as such terms 

17 are defined in section 22(h) of Federal Reserve Act), 

18 unless— 

19 ‘‘(A) the transaction is on market terms; 

20 and 

21 ‘‘(B) if the transaction represents more 

22 than 10 percent of the capital stock and surplus 

23 of the insured depository institution, the trans24 action has been approved in advance by a ma25 jority of the members of the board of directors 


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1 of the insured depository institution who do not 

2 have an interest in the transaction. 

3 ‘‘(2) RULEMAKING.—The Board of Governors 

4 of the Federal Reserve System may issue such rules 

5 as may be necessary to define terms and to carry 

6 out the purposes this subsection. Before proposing 

7 or adopting a rule under this paragraph, the Board 

8 of Governors of the Federal Reserve System shall 

9 consult with the Comptroller of the Currency and 

10 the Corporation as to the terms of the rule.’’. 

11 (b) AMENDMENTS TO THE FEDERAL RESERVE

12 ACT.—Section 22(d) of the Federal Reserve Act (12 

13 U.S.C. 375) is amended to read as follows: 

14 ‘‘(d) [Reserved]’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall take effect on the transfer date. 

17 SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF 

18 HOLDING COMPANIES. 

19 (a) CAPITAL LEVELS OF BANK HOLDING COMPA20 NIES.—Section 5(b) of the Bank Holding Company Act 

21 of 1956 (12 U.S.C. 1844(b)) is amended by inserting after 

22 ‘‘regulations’’ the following: ‘‘(including regulations relat23 ing to the capital requirements of bank holding compa24 nies)’’. 


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1 (b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLD2 ING COMPANIES.—Section 10(g)(1) of the Home Owners’ 

3 Loan Act (12 U.S.C. 1467a(g)(1)) is amended by insert4 ing after ‘‘orders’’ the following: ‘‘(including regulations 

5 relating to capital requirements for savings and loan hold6 ing companies)’’. 

7 (c) SOURCE OF STRENGTH.—The Federal Deposit 

8 Insurance Act (12 U.S.C. 1811 et seq.) is amended by 

9 inserting after section 38 (12 U.S.C. 1831o) the following: 

10 ‘‘SEC. 38A. SOURCE OF STRENGTH. 

11 ‘‘(a) HOLDING COMPANIES.—The appropriate Fed12 eral banking agency for a bank holding company or sav13 ings and loan holding company shall require the bank 

14 holding company or savings and loan holding company to 

15 serve as a source of financial strength for any subsidiary 

16 of the bank holding company or savings and loan holding 

17 company that is a depository institution. 

18 ‘‘(b) OTHER COMPANIES.—If an insured depository 

19 institution is not the subsidiary of a bank holding com20 pany or savings and loan holding company, the appro21 priate Federal banking agency for the insured depository 

22 institution shall require any company that directly or indi23 rectly controls the insured depository institution to serve 

24 as a source of financial strength for such institution. 


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1 ‘‘(c) REPORTS.—The appropriate Federal banking 

2 agency for an insured depository institution described in 

3 subsection (b) may, from time to time, require the com4 pany, or a company that directly or indirectly controls the 

5 insured depository institution to submit a report, under 

6 oath, for the purposes of— 

7 ‘‘(1) assessing the ability of such company to 

8 comply with the requirement under subsection (b); 

9 and 

10 ‘‘(2) enforcing the compliance of such company 

11 with the requirement under subsection (b). 

12 ‘‘(d) RULES.—Not later than 1 year after the trans13 fer date, as defined in section 311 of the Enhancing Fi14 nancial Institution Safety and Soundness Act of 2010, the 

15 appropriate Federal banking agencies shall jointly issue 

16 final rules to carry out this section. 

17 ‘‘(e) DEFINITION.—In this section, the term ‘source 

18 of financial strength’ means the ability of a company that 

19 directly or indirectly owns or controls an insured deposi20 tory institution to provide financial assistance to such in21 sured depository institution in the event of the financial 

22 distress of the insured depository institution.’’. 

23 (d) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect on the transfer date. 


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1 SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK 

2 HOLDING COMPANY FRAMEWORK. 

3 (a) AMENDMENT.—Section 17 of the Securities Ex4 change Act of 1934 (15 U.S.C. 78q) is amended— 

5 (1) by striking subsection (i); and 

6 (2) by redesignating subsections (j) and (k) as 

7 subsections (i) and (j), respectively. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall take effect on the transfer date. 

10 SEC. 618. SECURITIES HOLDING COMPANIES. 

11 (a) DEFINITIONS.—In this section— 

12 (1) the term ‘‘associated person of a securities 

13 holding company’’ means a person directly or indi14 rectly controlling, controlled by, or under common 

15 control with, a securities holding company; 

16 (2) the term ‘‘foreign bank’’ has the same 

17 meaning as in section 1(b)(7) of the International 

18 Banking Act of 1978 (12 U.S.C. 3101(b)(7)); 

19 (3) the term ‘‘insured bank’’ has the same 

20 meaning as in section 3 of the Federal Deposit In21 surance Act (12 U.S.C. 1813); 

22 (4) the term ‘‘securities holding company’’— 

23 (A) means— 

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1 kers or dealers registered with the Com2 mission; and 

3 (ii) the associated persons of a person 

4 described in clause (i); and 

5 (B) does not include a person that is— 

6 (i) a nonbank financial company su7 pervised by the Board under title I; 

8 (ii) an affiliate of an insured bank 

9 (other than an institution described in sub10 paragraphs (D), (F), or (H) of section 

11 2(c)(2) of the Bank Holding Company Act 

12 of 1956 (12 U.S.C. 1841(c)(2)) or an affil13 iate of a savings association; 

14 (iii) a foreign bank, foreign company, 

15 or company that is described in section 

16 8(a) of the International Banking Act of 

17 1978 (12 U.S.C. 3106(a)); 

18 (iv) a foreign bank that controls, di19 rectly or indirectly, a corporation chartered 

20 under section 25A of the Federal Reserve 

21 Act (12 U.S.C. 611 et seq.); or 

22 (v) subject to comprehensive consoli23 dated supervision by a foreign regulator; 

24 (5) the term ‘‘supervised securities holding com25 pany’’ means a securities holding company that is 


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1 supervised by the Board of Governors under this 

2 section; and 

3 (6) the terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank hold4 ing company’’, ‘‘company’’, ‘‘control’’, ‘‘savings asso5 ciation’’, and ‘‘subsidiary’’ have the same meanings 

6 as in section 2 of the Bank Holding Company Act 

7 of 1956. 

8 (b) SUPERVISION OF A SECURITIES HOLDING COM9 PANY NOT HAVING A BANK OR SAVINGS ASSOCIATION

10 AFFILIATE.— 

11 (1) IN GENERAL.—A securities holding com12 pany that is required by a foreign regulator or provi13 sion of foreign law to be subject to comprehensive 

14 consolidated supervision may register with the Board 

15 of Governors under paragraph (2) to become a su16 pervised securities holding company. Any securities 

17 holding company filing such a registration shall be 

18 supervised in accordance with this section, and shall 

19 comply with the rules and orders prescribed by the 

20 Board of Governors applicable to supervised securi21 ties holding companies. 

22 (2) REGISTRATION AS A SUPERVISED SECURI23 TIES HOLDING COMPANY.— 

24 (A) REGISTRATION.—A securities holding 

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1 sive consolidated supervision shall register by 

2 filing with the Board of Governors such infor3 mation and documents as the Board of Gov4 ernors, by regulation, may prescribe as nec5 essary or appropriate in furtherance of the pur6 poses of this section. 

7 (B) EFFECTIVE DATE.—A securities hold8 ing company that registers under subparagraph 

9 (A) shall be deemed to be a supervised securi10 ties holding company, effective on the date that 

11 is 45 days after the date of receipt of the reg12 istration information and documents under sub13 paragraph (A) by the Board of Governors, or 

14 within such shorter period as the Board of Gov15 ernors, by rule or order, may determine. 

16 (c) SUPERVISION OF SECURITIES HOLDING COMPA17 NIES.— 

18 (1) RECORDKEEPING AND REPORTING.— 

19 (A) RECORDKEEPING AND REPORTING RE20 QUIRED.—Each supervised securities holding 

21 company and each affiliate of a supervised secu22 rities holding company shall make and keep for 

23 periods determined by the Board of Governors 

24 such records, furnish copies of such records, 

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1 ernors determines to be necessary or appro2 priate to carry out this section, to prevent eva3 sions thereof, and to monitor compliance by the 

4 supervised securities holding company or affil5 iate with applicable provisions of law. 

6 (B) FORM AND CONTENTS.— 

7 (i) IN GENERAL.—Any record or re8 port required to be made, furnished, or 

9 kept under this paragraph shall— 

10 (I) be prepared in such form and 

11 according to such specifications (in12 cluding certification by a registered 

13 public accounting firm), as the Board 

14 of Governors may require; and 

15 (II) be provided promptly to the 

16 Board of Governors at any time, upon 

17 request by the Board of Governors. 

18 (ii) CONTENTS.—Records and reports 

19 required to be made, furnished, or kept 

20 under this paragraph may include— 

21 (I) a balance sheet or income 

22 statement of the supervised securities 

23 holding company or an affiliate of a 

24 supervised securities holding company; 


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1 (II) an assessment of the consoli2 dated capital and liquidity of the su3 pervised securities holding company; 

4 (III) a report by an independent 

5 auditor attesting to the compliance of 

6 the supervised securities holding com7 pany with the internal risk manage8 ment and internal control objectives of 

9 the supervised securities holding com10 pany; and 

11 (IV) a report concerning the ex12 tent to which the supervised securities 

13 holding company or affiliate has com14 plied with the provisions of this sec15 tion and any regulations prescribed 

16 and orders issued under this section. 

17 (2) USE OF EXISTING REPORTS.— 

18 (A) IN GENERAL.—The Board of Gov19 ernors shall, to the fullest extent possible, ac20 cept reports in fulfillment of the requirements 

21 of this paragraph that a supervised securities 

22 holding company or an affiliate of a supervised 

23 securities holding company has been required to 

24 provide to another regulatory agency or a self25 regulatory organization. 


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1 (B) AVAILABILITY.—A supervised securi2 ties holding company or an affiliate of a super3 vised securities holding company shall promptly 

4 provide to the Board of Governors, at the re5 quest of the Board of Governors, any report de6 scribed in subparagraph (A), as permitted by 

7 law. 

8 (3) EXAMINATION AUTHORITY.— 

9 (A) FOCUS OF EXAMINATION AUTHOR10 ITY.—The Board of Governors may make ex11 aminations of any supervised securities holding 

12 company and any affiliate of a supervised secu13 rities holding company to carry out this sub14 section, to prevent evasions thereof, and to 

15 monitor compliance by the supervised securities 

16 holding company or affiliate with applicable 

17 provisions of law. 

18 (B) DEFERENCE TO OTHER EXAMINA19 TIONS.—For purposes of this subparagraph, the 

20 Board of Governors shall, to the fullest extent 

21 possible, use the reports of examination made 

22 by other appropriate Federal or State regu23 latory authorities with respect to any function24 ally regulated subsidiary or any institution de25 scribed in subparagraph (D), (F), or (H) of 


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1 section 2(c)(2) of the Bank Holding Company 

2 Act of 1956 (12 U.S.C. 1841(c)(2)). 

3 (d) CAPITAL AND RISK MANAGEMENT.— 

4 (1) IN GENERAL.—The Board of Governors 

5 shall, by regulation or order, prescribe capital ade6 quacy and other risk management standards for su7 pervised securities holding companies that are ap8 propriate to protect the safety and soundness of the 

9 supervised securities holding companies and address 

10 the risks posed to financial stability by supervised 

11 securities holding companies. 

12 (2) DIFFERENTIATION.—In imposing standards 

13 under this subsection, the Board of Governors may 

14 differentiate among supervised securities holding 

15 companies on an individual basis, or by category, 

16 taking into consideration the requirements under 

17 paragraph (3). 

18 (3) CONTENT.—Any standards imposed on a 

19 supervised securities holding company under this 

20 subsection shall take into account— 

21 (A) the differences among types of busi22 ness activities carried out by the supervised se23 curities holding company; 


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1 (B) the amount and nature of the financial 

2 assets of the supervised securities holding com3 pany; 

4 (C) the amount and nature of the liabilities 

5 of the supervised securities holding company, 

6 including the degree of reliance on short-term 

7 funding; 

8 (D) the extent and nature of the off-bal9 ance sheet exposures of the supervised securi10 ties holding company; 

11 (E) the extent and nature of the trans12 actions and relationships of the supervised secu13 rities holding company with other financial 

14 companies; 

15 (F) the importance of the supervised secu16 rities holding company as a source of credit for 

17 households, businesses, and State and local gov18 ernments, and as a source of liquidity for the 

19 financial system; and 

20 (G) the nature, scope, and mix of the ac21 tivities of the supervised securities holding com22 pany. 

23 (4) NOTICE.—A capital requirement imposed 

24 under this subsection may not take effect earlier 

25 than 180 days after the date on which a supervised 


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1 securities holding company is provided notice of the 

2 capital requirement. 

3 (e) EXCEPTION FOR BANKS.—No bank shall be sub4 ject to any of the requirements set forth in subsections 

5 (c) and (d). 

6 (f) OTHER PROVISIONS OF LAW APPLICABLE TO SU7 PERVISED SECURITIES HOLDING COMPANIES.— 

8 (1) FEDERAL DEPOSIT INSURANCE ACT.—Sub9 sections (b), (c) through (s), and (u) of section 8 of 

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

11 shall apply to any supervised securities holding com12 pany, and to any subsidiary (other than a bank or 

13 an institution described in subparagraph (D), (F), 

14 or (H) of section 2(c)(2) of the Bank Holding Com15 pany Act of 1956 (12 U.S.C. 1841(c)(2))) of a su16 pervised securities holding company, in the same 

17 manner as such subsections apply to a bank holding 

18 company for which the Board of Governors is the 

19 appropriate Federal banking agency. For purposes 

20 of applying such subsections to a supervised securi21 ties holding company or a subsidiary (other than a 

22 bank or an institution described in subparagraph 

23 (D), (F), or (H) of section 2(c)(2) of the Bank 

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

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1 pany, the Board of Governors shall be deemed the 

2 appropriate Federal banking agency for the super3 vised securities holding company or subsidiary. 

4 (2) BANK HOLDING COMPANY ACT OF 1956.— 

5 Except as the Board of Governors may otherwise 

6 provide by regulation or order, a supervised securi7 ties holding company shall be subject to the provi8 sions of the Bank Holding Company Act of 1956 

9 (12 U.S.C. 1841 et seq.) in the same manner and 

10 to the same extent a bank holding company is sub11 ject to such provisions, except that a supervised se12 curities holding company may not, by reason of this 

13 paragraph, be deemed to be a bank holding company 

14 for purposes of section 4 of the Bank Holding Com15 pany Act of 1956 (12 U.S.C. 1843). 

16 SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY 

17 BANKS AND BANK HOLDING COMPANIES. 

18 (a) DEFINITIONS.—In this section— 

19 (1) the terms ‘‘hedge fund’’ and ‘‘private equity 

20 fund’’ mean a company or other entity that is ex21 empt from registration as an investment company 

22 pursuant to section 3(c)(1) or 3(c)(7) of the Invest23 ment Company Act of 1940 (15 U.S.C. 80a-3(c)(1) 

24 or 80a-3(c)(7)), or a similar fund, as jointly deter25 mined by the appropriate Federal banking agencies; 


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1 (2) the term ‘‘proprietary trading’’— 

2 (A) means purchasing or selling, or other3 wise acquiring or disposing of, stocks, bonds, 

4 options, commodities, derivatives, or other fi5 nancial instruments by an insured depository 

6 institution, a company that controls, directly or 

7 indirectly, an insured depository institution or 

8 is treated as a bank holding company for pur9 poses of the Bank Holding Company Act of 

10 1956 (12 U.S.C. 1841 et seq.), and any sub11 sidiary of such institution or company, for the 

12 trading book (or such other portfolio as the 

13 Federal banking agencies may determine) of 

14 such institution, company, or subsidiary; and 

15 (B) subject to such restrictions as the Fed16 eral banking agencies may determine, does not 

17 include purchasing or selling, or otherwise ac18 quiring or disposing of, stocks, bonds, options, 

19 commodities, derivatives, or other financial in20 struments on behalf of a customer, as part of 

21 market making activities, or otherwise in con22 nection with or in facilitation of customer rela23 tionships, including risk-mitigating hedging ac24 tivities related to such a purchase, sale, acquisi25 tion, or disposal; and 


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1 (3) the term ‘‘sponsoring’’, when used with re2 spect to a hedge fund or private equity fund, 

3 means— 

4 (A) serving as a general partner, managing 

5 member, or trustee of the fund; 

6 (B) in any manner selecting or controlling 

7 (or having employees, officers, directors, or 

8 agents who constitute) a majority of the direc9 tors, trustees, or management of the fund; or 

10 (C) sharing with the fund, for corporate, 

11 marketing, promotional, or other purposes, the 

12 same name or a variation of the same name. 

13 (b) PROHIBITION ON PROPRIETARY TRADING.— 

14 (1) IN GENERAL.—Subject to the recommenda15 tions and modifications of the Council under sub16 section (g), and except as provided in paragraph (2) 

17 or (3), the appropriate Federal banking agencies 

18 shall, through a rulemaking under subsection (g), 

19 jointly prohibit proprietary trading by an insured de20 pository institution, a company that controls, di21 rectly or indirectly, an insured depository institution 

22 or is treated as a bank holding company for pur23 poses of the Bank Holding Company Act of 1956 

24 (12 U.S.C. 1841 et seq.), and any subsidiary of such 

25 institution or company. 


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1 (2) EXCEPTED OBLIGATIONS.— 

2 (A) IN GENERAL.—The prohibition under 

3 this subsection shall not apply with respect to 

4 an investment that is otherwise authorized by 

5 Federal law in— 

6 (i) obligations of the United States or 

7 any agency of the United States, including 

8 obligations fully guaranteed as to principal 

9 and interest by the United States or an 

10 agency of the United States; 

11 (ii) obligations, participations, or 

12 other instruments of, or issued by, the 

13 Government National Mortgage Associa14 tion, the Federal National Mortgage Asso15 ciation, or the Federal Home Loan Mort16 gage Corporation, including obligations 

17 fully guaranteed as to principal and inter18 est by such entities; and 

19 (iii) obligations of any State or any 

20 political subdivision of a State. 

21 (B) CONDITIONS.—The appropriate Fed22 eral banking agencies may impose conditions on 

23 the conduct of investments described in sub24 paragraph (A). 


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1 (C) RULE OF CONSTRUCTION.—Nothing in 

2 subparagraph (A) may be construed to grant 

3 any authority to any person that is not other4 wise provided in Federal law. 

5 (3) FOREIGN ACTIVITIES.—An investment or 

6 activity conducted by a company pursuant to para7 graph (9) or (13) of section 4(c) of the Bank Hold8 ing Company Act of 1956 (12 U.S.C. 1843(c)) solely 

9 outside of the United States shall not be subject to 

10 the prohibition under paragraph (1), provided that 

11 the company is not directly or indirectly controlled 

12 by a company that is organized under the laws of 

13 the United States or of a State. 

14 (c) PROHIBITION ON SPONSORING AND INVESTING IN

15 HEDGE FUNDS AND PRIVATE EQUITY FUNDS.— 

16 (1) IN GENERAL.—Except as provided in para17 graph (2), and subject to the recommendations and 

18 modifications of the Council under subsection (g), 

19 the appropriate Federal banking agencies shall, 

20 through a rulemaking under subsection (g), jointly 

21 prohibit an insured depository institution, a com22 pany that controls, directly or indirectly, an insured 

23 depository institution or is treated as a bank holding 

24 company for purposes of the Bank Holding Com25 pany Act of 1956 (12 U.S.C. 1841 et seq.), or any 


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1 subsidiary of such institution or company, from 

2 sponsoring or investing in a hedge fund or a private 

3 equity fund. 

4 (2) APPLICATION TO FOREIGN ACTIVITIES OF

5 FOREIGN FIRMS.—An investment or activity con6 ducted by a company pursuant to paragraph (9) or 

7 (13) of section 4(c) of the Bank Holding Company 

8 Act of 1956 (12 U.S.C. 1843(c)) solely outside of 

9 the United States shall not be subject to the prohibi10 tions and restrictions under paragraph (1), provided 

11 that the company is not directly or indirectly con12 trolled by a company that is organized under the 

13 laws of the United States or of a State. 

14 (d) INVESTMENTS IN SMALL BUSINESS INVESTMENT

15 COMPANIES AND INVESTMENTS DESIGNED TO PROMOTE

16 THE PUBLIC WELFARE.— 

17 (1) IN GENERAL.—A prohibition imposed by 

18 the appropriate Federal banking agencies under sub19 section (c) shall not apply with respect an invest20 ment otherwise authorized under Federal law that 

21 is— 

22 (A) an investment in a small business in23 vestment company, as that term is defined in 

24 section 103 of the Small Business Investment 

25 Act of 1958 (15 U.S.C. 662); or 


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1 (B) designed primarily to promote the pub2 lic welfare, as provided in the 11th paragraph 

3 of section 5136 of the Revised Statutes (12 

4 U.S.C. 24). 

5 (2) RULE OF CONSTRUCTION.—Nothing in 

6 paragraph (1) may be construed to grant any au7 thority to any person that is not otherwise provided 

8 in Federal law. 

9 (e) LIMITATIONS ON RELATIONSHIPS WITH HEDGE

10 FUNDS AND PRIVATE EQUITY FUNDS.— 

11 (1) COVERED TRANSACTIONS.—An insured de12 pository institution, a company that controls, di13 rectly or indirectly, an insured depository institution 

14 or is treated as a bank holding company for pur15 poses of the Bank Holding Company Act of 1956 

16 (12 U.S.C. 1841 et seq.), and any subsidiary of such 

17 institution or company that serves, directly or indi18 rectly, as the investment manager or investment ad19 viser to a hedge fund or private equity fund may not 

20 enter into a covered transaction, as defined in sec21 tion 23A of the Federal Reserve Act (12 U.S.C. 

22 371c) with such hedge fund or private equity fund. 

23 (2) AFFILIATION.—An insured depository insti24 tution, a company that controls, directly or indi25 rectly, an insured depository institution or is treated 


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1 as a bank holding company for purposes of the Bank 

2 Holding Company Act of 1956 (12 U.S.C. 1841 et 

3 seq.), and any subsidiary of such institution or com4 pany that serves, directly or indirectly, as the invest5 ment manager or investment adviser to a hedge fund 

6 or private equity fund shall be subject to section 

7 23B of the Federal Reserve Act (12 U.S.C. 371c-1) 

8 as if such institution, company, or subsidiary were 

9 a member bank and such hedge fund or private eq10 uity fund were an affiliate. 

11 (f) CAPITAL AND QUANTITATIVE LIMITATIONS FOR

12 CERTAIN NONBANK FINANCIAL COMPANIES.— 

13 (1) IN GENERAL.—Except as provided in para14 graph (2), and subject to the recommendations and 

15 modifications of the Council under subsection (g), 

16 the Board of Governors shall adopt rules imposing 

17 additional capital requirements and specifying addi18 tional quantitative limits for nonbank financial com19 panies supervised by the Board of Governors under 

20 section 113 that engage in proprietary trading or 

21 sponsoring and investing in hedge funds and private 

22 equity funds. 

23 (2) EXCEPTIONS.—The rules under this sub24 section shall not apply with respect to the trading of 


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1 an investment that is otherwise authorized by Fed2 eral law— 

3 (A) in obligations of the United States or 

4 any agency of the United States, including obli5 gations fully guaranteed as to principal and in6 terest by the United States or an agency of the 

7 United States; 

8 (B) in obligations, participations, or other 

9 instruments of, or issued by, the Government 

10 National Mortgage Association, the Federal Na11 tional Mortgage Association, or the Federal 

12 Home Loan Mortgage Corporation, including 

13 obligations fully guaranteed as to principal and 

14 interest by such entities; 

15 (C) in obligations of any State or any po16 litical subdivision of a State; 

17 (D) in a small business investment com18 pany, as that term is defined in section 103 of 

19 the Small Business Investment Act of 1958 (15 

20 U.S.C. 662); or 

21 (E) that is designed primarily to promote 

22 the public welfare, as provided in the 11th 

23 paragraph of section 5136 of the Revised Stat24 utes (12 U.S.C. 24). 

25 (g) COUNCIL STUDY AND RULEMAKING.— 


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1 (1) STUDY AND RECOMMENDATIONS.—Not 

2 later than 6 months after the date of enactment of 

3 this Act, the Council— 

4 (A) shall complete a study of the defini5 tions under subsection (a) and the other provi6 sions under subsections (b) through (f), to as7 sess the extent to which the definitions under 

8 subsection (a) and the implementation of sub9 sections (a) through (f) would— 

10 (i) promote and enhance the safety 

11 and soundness of depository institutions 

12 and the affiliates of depository institutions; 

13 (ii) protect taxpayers and enhance fi14 nancial stability by minimizing the risk 

15 that depository institutions and the affili16 ates of depository institutions will engage 

17 in unsafe and unsound activities; 

18 (iii) limit the inappropriate transfer of 

19 Federal subsidies from institutions that 

20 benefit from deposit insurance and liquid21 ity facilities of the Federal Government to 

22 unregulated entities; 

23 (iv) reduce inappropriate conflicts of 

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1 stitutions, and financial companies super2 vised by the Board, and the interests of 

3 the customers of such institutions and 

4 companies; 

5 (v) raise the cost of credit or other fi6 nancial services, reduce the availability of 

7 credit or other financial services, or impose 

8 other costs on households and businesses 

9 in the United States; 

10 (vi) limit activities that have caused 

11 undue risk or loss in depository institu12 tions, affiliates of depository institutions, 

13 and financial companies supervised by the 

14 Board of Governors, or that might reason15 ably be expected to create undue risk or 

16 loss in such institutions, affiliates, and 

17 companies; and 

18 (vii) appropriately accommodates the 

19 business of insurance within an insurance 

20 company subject to regulation in accord21 ance with State insurance company invest22 ment laws; 

23 (B) shall make recommendations regarding 

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1 sections (b) through (f), including any modifica2 tions to the definitions, prohibitions, require3 ments, and limitations contained therein that 

4 the Council determines would more effectively 

5 implement the purposes of this section; and 

6 (C) may make recommendations for pro7 hibiting the conduct of the activities described 

8 in subsections (b) and (c) above a specific 

9 threshold amount and imposing additional cap10 ital requirements on activities conducted below 

11 such threshold amount. 

12 (2) RULEMAKING.—Not earlier than the date of 

13 completion of the study required under paragraph 

14 (1), and not later than 9 months after the date of 

15 completion of such study— 

16 (A) the appropriate Federal banking agen17 cies shall jointly issue final regulations imple18 menting subsections (b) through (e), which 

19 shall reflect any recommendations or modifica20 tions made by the Council pursuant to para21 graph (1)(B); and 

22 (B) the Board of Governors shall issue 

23 final regulations implementing subsection (f), 

24 which shall reflect any recommendations or 


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1 modifications made by the Council pursuant to 

2 paragraph (1)(B). 

3 (h) TRANSITION.— 

4 (1) IN GENERAL.—The final regulations issued 

5 by the appropriate Federal banking agencies and the 

6 Board of Governors under subsection (g)(2) shall 

7 provide that, effective 2 years after the date on 

8 which such final regulations are issued, no insured 

9 depository institution, company that controls, di10 rectly or indirectly, an insured depository institution, 

11 company that is treated as a bank holding company 

12 for purposes of the Bank Holding Company Act of 

13 1956 (12 U.S.C. 1841 et seq.), or subsidiary of such 

14 institution or company, may retain any investment 

15 or relationship prohibited under such regulations. 

16 (2) EXTENSION.— 

17 (A) IN GENERAL.—The appropriate Fed18 eral banking agency for an insured depository 

19 institution or a company described in paragraph 

20 (1) may, upon the application of any such com21 pany, extend the 2-year period under paragraph 

22 (1) with respect to such company, if the appro23 priate Federal banking agency determines that 

24 an extension would not be detrimental to the 

25 public interest. 


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1 (B) TIME PERIOD FOR EXTENSION.—An 

2 extension granted under subparagraph (A) may 

3 not exceed— 

4 (i) 1 year for each determination 

5 made by the appropriate Federal banking 

6 agency under subparagraph (A); and 

7 (ii) a total of 3 years with respect to 

8 any 1 company. 

9 SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL 

10 FIRMS. 

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

12 1841 et seq.) is amended by adding at the end the fol13 lowing: 

14 ‘‘SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL 

15 FIRMS. 

16 ‘‘(a) DEFINITIONS.—In this section— 

17 ‘‘(1) the term ‘Council’ means the Financial 

18 Stability Oversight Council; 

19 ‘‘(2) the term ‘financial company’ means— 

20 ‘‘(A) an insured depository institution; 

21 ‘‘(B) a bank holding company; 

22 ‘‘(C) a savings and loan holding company; 

23 ‘‘(D) a company that controls an insured 

24 depository institution; 


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1 ‘‘(E) a nonbank financial company super2 vised by the Board under title I of the Restor3 ing American Financial Stability Act of 2010; 

4 and 

5 ‘‘(F) a foreign bank or company that is 

6 treated as a bank holding company for purposes 

7 of this Act; and 

8 ‘‘(3) the term ‘liabilities’ means— 

9 ‘‘(A) with respect to a United States finan10 cial company— 

11 ‘‘(i) the total risk-weighted assets of 

12 the financial company, as determined 

13 under the risk-based capital rules applica14 ble to bank holding companies, as adjusted 

15 to reflect exposures that are deducted from 

16 regulatory capital; less 

17 ‘‘(ii) the total regulatory capital of the 

18 financial company under the risk-based 

19 capital rules applicable to bank holding 

20 companies; 

21 ‘‘(B) with respect to a foreign-based finan22 cial company— 

23 ‘‘(i) the total risk-weighted assets of 

24 the United States operations of the finan25 cial company, as determined under the apVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00497 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 plicable risk-based capital rules, as ad2 justed to reflect exposures that are de3 ducted from regulatory capital; less 

4 ‘‘(ii) the total regulatory capital of the 

5 United States operations of the financial 

6 company, as determined under the applica7 ble risk-based capital rules; and 

8 ‘‘(C) with respect to an insurance company 

9 or other nonbank financial company supervised 

10 by the Board, such assets of the company as 

11 the Board shall specify by rule, in order to pro12 vide for consistent and equitable treatment of 

13 such companies. 

14 ‘‘(b) CONCENTRATION LIMIT.—Subject to the rec15 ommendations by the Council under subsection (e), a fi16 nancial company may not merge or consolidate with, ac17 quire all or substantially all of the assets of, or otherwise 

18 acquire control of, another company, if the total consoli19 dated liabilities of the acquiring financial company upon 

20 consummation of the transaction would exceed 10 percent 

21 of the aggregate consolidated liabilities of all financial 

22 companies at the end of the calendar year preceding the 

23 transaction. 

24 ‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With 

25 the prior written consent of the Board, the concentration 


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1 limit under subsection (b) shall not apply to an acquisi2 tion— 

3 ‘‘(1) of a bank in default or in danger of de4 fault; 

5 ‘‘(2) with respect to which assistance is pro6 vided by the Federal Deposit Insurance Corporation 

7 under section 13(c) of the Federal Deposit Insur8 ance Act (12 U.S.C. 1823(c)); or 

9 ‘‘(3) that would result only in a de minimis in10 crease in the liabilities of the financial company. 

11 ‘‘(d) RULEMAKING AND GUIDANCE.—The Board 

12 shall issue regulations implementing this section in accord13 ance with the recommendations of the Council under sub14 section (e), including the definition of terms, as necessary. 

15 The Board may issue interpretations or guidance regard16 ing the application of this section to an individual financial 

17 company or to financial companies in general. 

18 ‘‘(e) COUNCIL STUDY AND RULEMAKING.— 

19 ‘‘(1) STUDY AND RECOMMENDATIONS.—Not 

20 later than 6 months after the date of enactment of 

21 this section, the Council shall— 

22 ‘‘(A) complete a study of the extent to 

23 which the concentration limit under this section 

24 would affect financial stability, moral hazard in 

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1 tiveness of United States financial firms and fi2 nancial markets, and the cost and availability of 

3 credit and other financial services to households 

4 and businesses in the United States; and 

5 ‘‘(B) make recommendations regarding any 

6 modifications to the concentration limit that the 

7 Council determines would more effectively im8 plement this section. 

9 ‘‘(2) RULEMAKING.—Not later than 9 months 

10 after the date of completion of the study under para11 graph (1), and notwithstanding subsections (b) and 

12 (d), the Board shall issue final regulations imple13 menting this section, which shall reflect any rec14 ommendations by the Council under paragraph 

15 (1)(B).’’. 

16 TITLE VII—IMPROVEMENTS TO 

17 REGULATION OF OVER-THE18 COUNTER DERIVATIVES MAR19 KETS 

20 SEC. 701. SHORT TITLE. 

21 This title may be cited as the ‘‘Over-the-Counter De22 rivatives Markets Act of 2010’’. 

23 SEC. 702. FINDINGS AND PURPOSES. 

24 (a) FINDINGS.—Congress finds that— 


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1 (1) in recent years, the global over-the-counter 

2 derivatives market in notional amounts outstanding 

3 has grown rapidly, from $91 trillion in 1998 to $592 

4 trillion in 2008 according to the Bank for Inter5 national Settlements; 

6 (2) the interconnectedness of the country’s larg7 est financial institutions through the unregulated de8 rivatives market raised significant concerns about 

9 counterparty risk exposures during the recent finan10 cial crisis; 

11 (3) a substantial amount of American taxpayer 

12 money was used to make counterparty payments be13 cause there was insufficient margin and capital held 

14 by large financial institutions; 

15 (4) although derivatives can be used to manage 

16 risk, they can also increase leverage and allow exces17 sive risk-taking because market participants can 

18 take large positions on a relatively small capital 

19 base; 

20 (5) in the over-the-counter derivatives market, 

21 margin requirements are set bilaterally and do not 

22 take into account the risk that each trade imposes 

23 on the rest of the financial system, thereby allowing 

24 systemically important exposures to build up without 


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1 sufficient capital to mitigate associated risks to 

2 American taxpayers and the financial system; 

3 (6) in the recent crisis, fears about 

4 counterparty risk exposures caused credit markets to 

5 freeze, as market participants questioned the viabil6 ity of counterparties and the safety of their own as7 sets; 

8 (7) lack of transparency about counterparty ex9 posures and valuation of derivatives positions made 

10 it more difficult for regulators to respond to the cri11 sis and made resolution of these positions more ex12 pensive for the taxpayer; 

13 (8) bilaterally-executed derivatives contracts can 

14 provide key benefits to certain market participants 

15 and should be permitted under comprehensive regu16 lation, but all derivatives activities should be accom17 panied by appropriate risk management and pruden18 tial standards; 

19 (9) the derivatives market suffers from a lack 

20 of reliable and accurate transaction information that 

21 is available to the public, investors, market partici22 pants, and regulators, hampering surveillance and 

23 oversight of such markets; 

24 (10) clearing more derivatives through well-reg25 ulated central counterparties will benefit the public 


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1 by reducing costs and risks to American taxpayers, 

2 the financial system, and market participants; 

3 (11) trading more derivatives on regulated ex4 changes should be encouraged because it will result 

5 in more price transparency, efficiency in execution, 

6 and liquidity; and 

7 (12) the Group of 20 nations agreed that— 

8 (A) all standardized over-the-counter deriv9 ative contracts should be traded on exchanges 

10 or electronic trading platforms, where appro11 priate, and cleared through central counterpar12 ties by the end of calendar year 2012 at the lat13 est; 

14 (B) over-the-counter derivative contracts 

15 should be reported to trade repositories; and 

16 (C) non-centrally cleared contracts should 

17 be subject to higher capital requirements. 

18 (b) PURPOSES.—The purposes of this title are— 

19 (1) to establish well-regulated markets for de20 rivatives to increase transparency and reduce costs 

21 and risks to American taxpayers, the financial sys22 tem, and market participants; and 

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1 pants, and the maintenance of fair and orderly mar2 kets to assure— 

3 (A) the prompt and accurate clearance and 

4 settlement of transactions in derivatives that 

5 can be cleared through a central counterparty; 

6 (B) the prompt and accurate reporting of 

7 transactions to regulators and trade reposi8 tories; 

9 (C) the availability to the public, investors, 

10 market participants, and regulators of reliable 

11 and accurate quotation and transaction infor12 mation in derivatives; 

13 (D) economically efficient execution of 

14 transactions in swaps and security-based swaps; 

15 and 

16 (E) fair competition among markets in the 

17 trading of swaps and security-based swaps. 

18 Subtitle A—Regulation of Swap 

19 Markets 

20 SEC. 711. DEFINITIONS. 

21 (a) AMENDMENTS TO DEFINITIONS IN THE COM22 MODITY EXCHANGE ACT.—Section 1a of the Commodity 

23 Exchange Act (7 U.S.C. 1a) is amended— 

24 (1) by redesignating paragraph (34) as para25 graph (35); 


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1 (2) by adding after paragraph (33) the fol2 lowing: 

3 ‘‘(34) SWAP.— 

4 ‘‘(A) IN GENERAL.—Except as provided in 

5 subparagraph (B), the term ‘swap’ means any 

6 agreement, contract, or transaction that— 

7 ‘‘(i) is a put, call, cap, floor, collar, or 

8 similar option of any kind for the purchase 

9 or sale of, or based on the value of, 1 or 

10 more interest or other rates, currencies, 

11 commodities, securities, instruments of in12 debtedness, indices, quantitative measures, 

13 or other financial or economic interests or 

14 property of any kind; 

15 ‘‘(ii) provides for any purchase, sale, 

16 payment, or delivery (other than a dividend 

17 on an equity security) that is dependent on 

18 the occurrence, nonoccurrence, or the ex19 tent of the occurrence of an event or con20 tingency associated with a potential finan21 cial, economic, or commercial consequence; 

22 ‘‘(iii) provides on an executory basis 

23 for the exchange, on a fixed or contingent 

24 basis, of 1 or more payments based on the 

25 value or level of 1 or more interest or other 


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1 rates, currencies, commodities, securities, 

2 instruments of indebtedness, indices, quan3 titative measures, or other financial or eco4 nomic interests or property of any kind, or 

5 any interest therein or based on the value 

6 thereof, and that transfers, as between the 

7 parties to the transaction, in whole or in 

8 part, the financial risk associated with a 

9 future change in any such value or level 

10 without also conveying a current or future 

11 direct or indirect ownership interest in an 

12 asset (including any enterprise or invest13 ment pool) or liability that incorporates the 

14 financial risk so transferred, including any 

15 agreement, contract, or transaction com16 monly known as an interest rate swap, a 

17 rate floor, rate cap, rate collar, cross-cur18 rency rate swap, basis swap, currency 

19 swap, total return swap, equity index swap, 

20 equity swap, debt index swap, debt swap, 

21 credit spread, credit default swap, credit 

22 swap, weather swap, energy swap, metal 

23 swap, agricultural swap, emissions swap, 

24 or commodity swap; 


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1 ‘‘(iv) is an agreement, contract, or 

2 transaction that is, or in the future be3 comes, commonly known to the trade as a 

4 swap; or 

5 ‘‘(v) is any combination or permuta6 tion of, or option on, any agreement, con7 tract, or transaction described in any of 

8 clauses (i) through (iv). 

9 ‘‘(B) EXCLUSIONS.—The term ‘swap’ does 

10 not include— 

11 ‘‘(i) any contract of sale of a com12 modity for future delivery or security fu13 tures product traded on or subject to the 

14 rules of any board of trade designated as 

15 a contract market under section 5 or 5f; 

16 ‘‘(ii) any sale of a nonfinancial com17 modity or any security for deferred ship18 ment or delivery, so long as such trans19 action is physically settled; 

20 ‘‘(iii) any put, call, straddle, option, or 

21 privilege on any security, certificate of de22 posit, or group or index of securities, in23 cluding any interest therein or based on 

24 the value thereof; 


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1 ‘‘(iv) any put, call, straddle, option, or 

2 privilege relating to foreign currency en3 tered into on a national securities exchange 

4 registered pursuant to section 6(a) of the 

5 Securities Exchange Act of 1934 (15 

6 U.S.C. 78f(a)); 

7 ‘‘(v) any agreement, contract, or 

8 transaction providing for the purchase or 

9 sale of 1 or more securities on a fixed 

10 basis; 

11 ‘‘(vi) any agreement, contract, or 

12 transaction providing for the purchase or 

13 sale of 1 or more securities on a contingent 

14 basis, unless such agreement, contract, or 

15 transaction predicates such purchase or 

16 sale on the occurrence of a bona fide con17 tingency that might reasonably be expected 

18 to affect or be affected by the creditworthi19 ness of a party other than a party to the 

20 agreement, contract, or transaction; 

21 ‘‘(vii) any note, bond, or evidence of 

22 indebtedness that is a security as defined 

23 in section 2(a)(1) of the Securities Act of 

24 1933 (15 U.S.C. 77b(a)(1)); or 


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1 ‘‘(viii) any agreement, contract, or 

2 transaction that is— 

3 ‘‘(I) based on a security; and 

4 ‘‘(II) entered into directly or 

5 through an underwriter, as that term 

6 is defined in section 2(a)(11) of the 

7 Securities Act of 1933 (15 U.S.C. 

8 77b(a)(11)), by the issuer of such se9 curity for the purposes of raising cap10 ital, unless such agreement, contract, 

11 or transaction is entered into to man12 age a risk associated with capital rais13 ing; 

14 ‘‘(ix) any foreign exchange swap; 

15 ‘‘(x) any foreign exchange forward; 

16 ‘‘(xi) any agreement, contract, or 

17 transaction a counterparty of which is a 

18 Federal Reserve bank, the United States 

19 Government, or an agency of the United 

20 States Government that is expressly 

21 backed by the full faith and credit of the 

22 United States; and 

23 ‘‘(xii) any security-based swap, other 

24 than a security-based swap as described in 

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1 change Act of 1934 (15 U.S.C. 

2 78c(a)(68)(C)). 

3 ‘‘(C) RULE OF CONSTRUCTION REGARDING

4 MASTER AGREEMENTS.—The term ‘swap’ shall 

5 be construed to include a master agreement 

6 that provides for an agreement, contract, or 

7 transaction that is a swap pursuant to subpara8 graph (A), together with all supplements to any 

9 such master agreement, without regard to 

10 whether the master agreement contains an 

11 agreement, contract, or transaction that is not 

12 a swap pursuant to subparagraph (A), except 

13 that the master agreement shall be considered 

14 to be a swap only with respect to each agree15 ment, contract, or transaction under the master 

16 agreement that is a swap pursuant to subpara17 graph (A).’’; 

18 (3) in paragraph (12)— 

19 (A) in subparagraph (A)— 

20 (i) in clause (ii), by striking ‘‘deter21 mined by the Commission’’ and inserting 

22 ‘‘determined jointly by the Commission 

23 and the Securities and Exchange Commis24 sion’’; 

25 (ii) in clause (v)— 


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1 (I) in subclause (I)— 

2 (aa) by inserting ‘‘net’’ after 

3 ‘‘total’’; and 

4 (bb) by inserting ‘‘or’’ after 

5 the semicolon; 

6 (II) in subclause (II), by striking 

7 ‘‘the obligations’’ and all that follows 

8 through ‘‘$1,000,000; and’’ and in9 serting the following: 

10 ‘‘(II) that—– 

11 ‘‘(aa) has total net assets 

12 exceeding $5,000,000; and’’; 

13 (iii) in clause (vii), by striking ‘‘except 

14 that’’ and all that follows through ‘‘section 

15 2(c)(2)(B)(ii);’’ and inserting the following: 

16 ‘‘except that such term does not include a 

17 State or an entity, political subdivision, in18 strumentality, agency, or department re19 ferred to in subclause (I) or (III) of this 

20 clause unless the State, entity, political 

21 subdivision, instrumentality, agency, or de22 partment owns and invests on a discre23 tionary basis $50,000,000 or more in in24 vestments, provided that, with respect to 

25 any State or entity, political subdivision, 


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1 instrumentality, agency or department of a 

2 State, such amount is exclusive of any pro3 ceeds from any offering of municipal secu4 rities as defined in section 3(a)(29) of the 

5 Securities Exchange Act of 1934 (15 

6 U.S.C. 78c(a)(29));’’; and 

7 (iv) in clause (xi), by striking ‘‘total 

8 assets in an amount’’ and inserting 

9 ‘‘amounts invested on a discretionary 

10 basis’’; 

11 (v) in clause (xi), by striking ‘‘an indi12 vidual’’ and all that follows through ‘‘of— 

13 ’’ and inserting ‘‘a natural person who—’’; 

14 and 

15 (vi) in clause (xi)— 

16 (I) in subclause (I), by inserting 

17 ‘‘owns and invests on a discretionary 

18 basis in excess of’’ before 

19 ‘‘$10,000,000’’; and 

20 (II) in subclause (II), by insert21 ing ‘‘owns and invests on a discre22 tionary basis in excess of’’ before 

23 ‘‘$5,000,000’’; and 

24 (B) in subparagraph (C), by striking ‘‘de25 termines’’ and inserting ‘‘and the Securities and 


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1 Exchange Commission may further jointly de2 termine’’; 

3 (4) in paragraph (29)— 

4 (A) by striking subparagraph (B); 

5 (B) by redesignating subparagraphs (C) 

6 and (D) as subparagraphs (B) and (C), respec7 tively; 

8 (C) by redesignating subparagraph (E) as 

9 subparagraph (F); 

10 (D) in subparagraph (C) (as so redesig11 nated), by striking ‘‘and’’; and 

12 (E) by inserting after subparagraph (C) 

13 (as so redesignated) the following: 

14 ‘‘(D) an alternative swap execution facility 

15 registered under section 5h; 

16 ‘‘(E) a swap repository; and’’; and 

17 (5) by adding after paragraph (35) (as so re18 designated) the following: 

19 ‘‘(36) BOARD.—The term ‘Board’ means the 

20 Board of Governors of the Federal Reserve System. 

21 ‘‘(37) SECURITY-BASED SWAP.—The term ‘se22 curity-based swap’ has the same meaning as in sec23 tion 3(a)(68) of the Securities Exchange Act of 

24 1934 (15 U.S.C. 78c(a)(68)). 

25 ‘‘(38) SWAP DEALER.— 


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1 ‘‘(A) IN GENERAL.—The term ‘swap deal2 er’ means any person engaged in the business 

3 of buying and selling swaps for such person’s 

4 own account, through a broker or otherwise. 

5 ‘‘(B) EXCEPTION.—The term ‘swap dealer’ 

6 does not include a person that buys or sells 

7 swaps for such person’s own account, either in8 dividually or in a fiduciary capacity, but not as 

9 a part of a regular business. 

10 ‘‘(39) MAJOR SWAP PARTICIPANT.— 

11 ‘‘(A) IN GENERAL.—The term ‘major swap 

12 participant’ means any person who is not a 

13 swap dealer and— 

14 ‘‘(i) who maintains a substantial net 

15 position in outstanding swaps, excluding 

16 positions held primarily for hedging, reduc17 ing, or otherwise mitigating commercial 

18 risk; or 

19 ‘‘(ii) whose failure to perform under 

20 the terms of its swaps would cause signifi21 cant credit losses to its swap counterpar22 ties. 

23 ‘‘(B) IMPLEMENTATION.—The Commission 

24 shall implement the definition under this para25 graph by rule or regulation in a manner that is 


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1 prudent for the effective monitoring, manage2 ment, and oversight of the financial system. 

3 ‘‘(40) MAJOR SECURITY-BASED SWAP PARTICI4 PANT.—The term ‘major security-based swap partic5 ipant’ has the same meaning as in section 3(a)(67) 

6 of the Securities Exchange Act of 1934 (15 U.S.C. 

7 78c(a)(67)). 

8 ‘‘(41) APPROPRIATE FEDERAL BANKING AGEN9 CY.—The term ‘appropriate Federal banking agency’ 

10 has the same meaning as in section 3 of the Federal 

11 Deposit Insurance Act (12 U.S.C. 1813). 

12 ‘‘(42) SECURITY-BASED SWAP DEALER.—The 

13 term ‘security-based swap dealer’ has the same 

14 meaning as in section 3(a)(71) of the Securities Ex15 change Act of 1934 (15 U.S.C. 78c(a)(71)). 

16 ‘‘(43) GOVERNMENT SECURITY.—The term 

17 ‘government security’ has the same meaning as in 

18 section 3(a)(42) of the Securities Exchange Act of 

19 1934 (15 U.S.C. 78c(a)(42)). 

20 ‘‘(44) FOREIGN EXCHANGE FORWARD.—The 

21 term ‘foreign exchange forward’ means a transaction 

22 that solely involves the exchange of 2 different cur23 rencies on a specific future date at a fixed rate 

24 agreed at the inception of the contract. 


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1 ‘‘(45) FOREIGN EXCHANGE SWAP.—The term 

2 ‘foreign exchange swap’ means a transaction that 

3 solely involves the exchange of 2 different currencies 

4 on a specific date at a fixed rate agreed at the incep5 tion of the contract, and a reverse exchange of the 

6 same 2 currencies at a date further in the future 

7 and at a fixed rate agreed at the inception of the 

8 contract. 

9 ‘‘(46) PERSON ASSOCIATED WITH A SECURITY10 BASED SWAP DEALER OR MAJOR SECURITY-BASED

11 SWAP PARTICIPANT.—The term ‘person associated 

12 with a security-based swap dealer or major security13 based swap participant’ has the same meaning as in 

14 section 3(a)(70) of the Securities Exchange Act of 

15 1934 (15 U.S.C. 78c(a)(70)). 

16 ‘‘(47) PERSON ASSOCIATED WITH A SWAP

17 DEALER OR MAJOR SWAP PARTICIPANT.—The term 

18 ‘person associated with a swap dealer or major swap 

19 participant’ or ‘associated person of a swap dealer or 

20 major swap participant’ means— 

21 ‘‘(A) any partner, officer, director, or 

22 branch manager of such swap dealer or major 

23 swap participant (or any person occupying a 

24 similar status or performing similar functions); 


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1 ‘‘(B) any person directly or indirectly con2 trolling, controlled by, or under common control 

3 with such swap dealer or major swap partici4 pant; or 

5 ‘‘(C) any employee of such swap dealer or 

6 major swap participant, except that any person 

7 associated with a swap dealer or major swap 

8 participant whose functions are solely clerical or 

9 ministerial shall not be included in the meaning 

10 of such term other than for purposes of section 

11 4s(b)(6) of this Act. 

12 ‘‘(48) SWAP REPOSITORY.—The term ‘swap re13 pository’ means any person that collects, calculates, 

14 processes, or prepares information with respect to 

15 transactions or positions in swaps or security-based 

16 swaps. 

17 ‘‘(49) PRIMARY FINANCIAL REGULATORY AGEN18 CY.—The term ‘primary financial regulatory agency’ 

19 has the same meaning as in section 2 of the Restor20 ing American Financial Stability Act of 2010.’’. 

21 (b) JOINT RULEMAKING ON FURTHER DEFINITION

22 OF TERMS.— 

23 (1) IN GENERAL.—The Commodity Futures 

24 Trading Commission and the Securities and Ex25 change Commission shall jointly adopt a rule or 


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1 rules further defining the terms ‘‘swap’’, ‘‘security2 based swap’’, ‘‘swap dealer’’, ‘‘security-based swap 

3 dealer’’, ‘‘major swap participant’’, ‘‘major security4 based swap participant’’, and ‘‘eligible contract par5 ticipant’’ not later than 180 days after the effective 

6 date of this title. 

7 (2) PREVENTION OF EVASIONS.—The Com8 modity Futures Trading Commission and the Securi9 ties and Exchange Commission may jointly prescribe 

10 rules defining the term ‘‘swap’’ or ‘‘security-based 

11 swap’’ to include transactions that have been struc12 tured to evade this title. 

13 (c) JOINT RULEMAKING UNDER THIS TITLE.— 

14 (1) UNIFORM RULES.—Rules and regulations 

15 prescribed jointly under this title by the Commodity 

16 Futures Trading Commission and the Securities and 

17 Exchange Commission shall be uniform. 

18 (2) FINANCIAL STABILITY OVERSIGHT COUN19 CIL.—In the event that the Commodity Futures 

20 Trading Commission and the Securities and Ex21 change Commission fail to jointly prescribe rules 

22 pursuant to paragraph (1) in a timely manner, at 

23 the request of either Commission, the Financial Sta24 bility Oversight Council shall resolve the dispute— 


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1 (A) within a reasonable time after receiv2 ing the request; 

3 (B) after consideration of relevant infor4 mation provided by each Commission; and 

5 (C) by agreeing with one of the Commis6 sions regarding the entirety of the matter or by 

7 determining a compromise position. 

8 (3) TREATMENT OF SIMILAR PRODUCTS.—In 

9 adopting joint rules and regulations under this title, 

10 the Commodity Futures Trading Commission and 

11 the Securities and Exchange Commission shall treat 

12 functionally or economically similar products simi13 larly. 

14 (4) TREATMENT OF DISSIMILAR PRODUCTS.— 

15 Nothing in this title shall be construed to require 

16 the Commodity Futures Trading Commission and 

17 the Securities and Exchange Commission to adopt 

18 joint rules that treat functionally or economically 

19 different products identically. 

20 (5) JOINT INTERPRETATION.—Any interpreta21 tion of, or guidance regarding, a provision of this 

22 title, shall be effective only if issued jointly by the 

23 Commodity Futures Trading Commission and the 

24 Securities and Exchange Commission if this title re25 quires the Commodity Futures Trading Commission 


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1 and the Securities and Exchange Commission to 

2 issue joint regulations to implement the provision. 

3 (d) EXEMPTIONS.—Section 4(c)(1) of the Commodity 

4 Exchange Act (7 U.S.C. 6(c)(1)) is amended by adding 

5 at the end the following: ‘‘The Commission shall not have 

6 the authority to grant exemptions from the swap-related 

7 provisions of the Over-the-Counter Derivatives Markets 

8 Act of 2010, except as expressly authorized under the pro9 visions of that Act.’’. 

10 SEC. 712. JURISDICTION. 

11 (a) EXCLUSIVE JURISDICTION.—The first sentence 

12 of section 2(a)(1)(A) of the Commodity Exchange Act (7 

13 U.S.C. 2(a)(1)(A)) is amended— 

14 (1) by inserting ‘‘the Over-the-Counter Deriva15 tives Markets Act of 2010 and’’ after ‘‘otherwise 

16 provided in’’; 

17 (2) by striking ‘‘subsections (c) through (i)’’ 

18 and inserting ‘‘subsections (c) and (f)’’; and 

19 (3) by striking ‘‘involving contracts of sale’’ and 

20 inserting ‘‘involving swaps, or contracts of sale’’. 

21 (b) ADDITIONS.—Section 2(c)(2)(A) of the Com22 modity Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended— 

23 (1) in clause (i), by striking ‘‘or’’; 

24 (2) by redesignating clause (ii) as clause (iii); 

25 and 


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1 (3) by inserting after clause (i) the following: 

2 ‘‘(ii) a swap; or’’. 

3 (c) LIMITATION.—Section 2 of the Commodity Ex4 change Act (7 U.S.C. 2) is amended by amending sub5 section (g) to read as follows: 

6 ‘‘(g) EXCLUSION FOR SECURITIES.—Notwith7 standing any other provision of law, the Over-the-Counter 

8 Derivatives Markets Act of 2010 shall not apply to, and 

9 the Commodity Futures Trading Commission shall have 

10 no jurisdiction under such Act (or any amendments to the 

11 Commodity Exchange Act made by such Act) with respect 

12 to, any security other than a security-based swap.’’. 

13 SEC. 713. CLEARING. 

14 (a) CLEARING REQUIREMENT.— 

15 (1) REPEALS.—Subsections (d), (e), and (h) of 

16 section 2 of the Commodity Exchange Act (7 U.S.C. 

17 2(d), 2(e), and 2(h)) are repealed. 

18 (2) APPLICABILITY.—Section 2 of the Com19 modity Exchange Act (7 U.S.C. 2) is further amend20 ed by inserting after subsection (c) the following: 

21 ‘‘(d) SWAPS.—Nothing in this Act, other than sub22 sections (a)(1)(A), (a)(1)(B), (a)(1)(C), (a)(1)(G), (f), 

23 and (j), sections 4a, 4b, 4b–1, 4c(a), 4c(b), 4o, 4r, 4s, 

24 4t, 4u, 5, 5b, 5c, 5h, 6(c), 6(d), 6c, 6d, 8, 8a, 9, 12(e)(2), 

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1 sions of this Act as are applicable by their terms to reg2 istered entities and Commission registrants, governs or 

3 applies to a swap. 

4 ‘‘(e) LIMITATION ON PARTICIPATION.—It shall be 

5 unlawful for any person, other than an eligible contract 

6 participant, to enter into a swap unless the swap is en7 tered into on or subject to the rules of a board of trade 

8 designated as a contract market under section 5.’’. 

9 (3) CLEARING REQUIREMENT.—Section 2 of 

10 the Commodity Exchange Act (7 U.S.C. 2) is fur11 ther amended by adding at the end the following: 

12 ‘‘(j) CLEARING REQUIREMENT.— 

13 ‘‘(1) SUBMISSION.— 

14 ‘‘(A) IN GENERAL.—Except as provided in 

15 paragraph (9), any person who is a party to a 

16 swap shall submit such swap for clearing to a 

17 derivatives clearing organization that is reg18 istered under this Act or a derivatives clearing 

19 organization that is exempt from registration 

20 under section 5b(j) of this Act. 

21 ‘‘(B) REQUIRED CONDITIONS.—The rules 

22 of a derivatives clearing organization described 

23 in subparagraph (A) shall— 

24 ‘‘(i) prescribe that all swaps with the 

25 same terms and conditions accepted for 


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1 clearing by the derivatives clearing organi2 zation are fungible and may be offset with 

3 each other; and 

4 ‘‘(ii) provide for nondiscriminatory 

5 clearing of a swap executed on or through 

6 the rules of an unaffiliated designated con7 tract market or an alternative swap execu8 tion facility. 

9 ‘‘(2) COMMISSION APPROVAL.— 

10 ‘‘(A) IN GENERAL.—A derivatives clearing 

11 organization shall submit to the Commission for 

12 prior approval any group, category, type, or 

13 class of swaps that the derivatives clearing or14 ganization seeks to accept for clearing, which 

15 submission the Commission shall make available 

16 to the public. 

17 ‘‘(B) DEADLINE.—The Commission shall 

18 take final action on a request submitted pursu19 ant to subparagraph (A) not later than 90 days 

20 after submission of the request, unless the de21 rivatives clearing organization submitting the 

22 request agrees to an extension of the time limi23 tation established under this subparagraph. 

24 ‘‘(C) APPROVAL.—The Commission shall 

25 approve, unconditionally or subject to such 


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1 terms and conditions as the Commission deter2 mines to be appropriate, any request submitted 

3 pursuant to subparagraph (A) if the Commis4 sion finds that the request is consistent with 

5 section 5b(c)(2). The Commission shall not ap6 prove any such request if the Commission does 

7 not make such finding. 

8 ‘‘(D) RULES.—Not later than 180 days 

9 after the date of the enactment of the Over-the10 Counter Derivatives Markets Act of 2010, the 

11 Commission shall adopt rules for a derivatives 

12 clearing organization’s submission for approval, 

13 pursuant to this paragraph, of any group, cat14 egory, type, or class of swaps that the deriva15 tive clearing organization seeks to accept for 

16 clearing. 

17 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At 

18 any time after issuance of an approval pursuant to 

19 paragraph (2): 

20 ‘‘(A) REVIEW PROCESS.—The Commission, 

21 on application of a counterparty to a swap or 

22 on its own initiative, may stay the clearing re23 quirement of paragraph (1) until the Commis24 sion completes a review of the terms of the 


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1 swap, or the group, category, type, or class of 

2 swaps, and the clearing arrangement. 

3 ‘‘(B) DEADLINE.—The Commission shall 

4 complete a review undertaken pursuant to sub5 paragraph (A) not later than 90 days after 

6 issuance of the stay, unless the derivatives 

7 clearing organization that clears the swap, or 

8 the group, category, type or class of swaps, 

9 agrees to an extension of the time limitation es10 tablished under this subparagraph. 

11 ‘‘(C) DETERMINATION.—Upon completion 

12 of the review undertaken pursuant to subpara13 graph (A)— 

14 ‘‘(i) the Commission may determine, 

15 unconditionally or subject to such terms 

16 and conditions as the Commission deter17 mines to be appropriate, that the swap, or 

18 the group, category, type, or class of 

19 swaps, must be cleared pursuant to this 

20 subsection if the Commission finds that 

21 such clearing— 

22 ‘‘(I) is consistent with section 

23 5b(c)(2); and 

24 ‘‘(II) is otherwise in the public 

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1 tors, and consistent with the purposes 

2 of this title; 

3 ‘‘(ii) the Commission may determine 

4 that the clearing requirement of paragraph 

5 (1) shall not apply to the swap, or the 

6 group, category, type, or class of swaps; or 

7 ‘‘(iii) if a determination is made that 

8 the clearing requirement of paragraph (1) 

9 shall no longer apply, then it shall still be 

10 permissible to clear such swap, or the 

11 group, category, type, or class of swaps. 

12 ‘‘(D) RULES.—Not later than 180 days 

13 after the date of the enactment of the Over-the14 Counter Derivatives Markets Act of 2010, the 

15 Commission shall adopt rules for reviewing, 

16 pursuant to this paragraph, a derivatives clear17 ing organization’s clearing of a swap, or a 

18 group, category, type, or class of swaps that the 

19 Commission has accepted for clearing. 

20 ‘‘(4) SWAPS REQUIRED TO BE ACCEPTED FOR

21 CLEARING.— 

22 ‘‘(A) RULEMAKING.—Not later than 180 

23 days of the date of enactment of the Over-the24 Counter Derivatives Markets Act of 2010, the 

25 Commission and the Securities and Exchange 


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1 Commission shall jointly adopt rules to further 

2 identify any group, category, type, or class of 

3 swaps not submitted for approval under para4 graph (2) that the Commission and Securities 

5 and Exchange Commission deem should be ac6 cepted for clearing. In adopting such rules, the 

7 Commission and the Securities and Exchange 

8 Commission shall take into account the fol9 lowing factors: 

10 ‘‘(i) The extent to which any of the 

11 terms of the group, category, type, or class 

12 of swaps, including price, are disseminated 

13 to third parties or are referenced in other 

14 agreements, contracts, or transactions. 

15 ‘‘(ii) The volume of transactions in 

16 the group, category, type, or class of 

17 swaps. 

18 ‘‘(iii) The extent to which the terms of 

19 the group, category, type, or class of swaps 

20 are similar to the terms of other agree21 ments, contracts, or transactions that are 

22 centrally cleared. 

23 ‘‘(iv) Whether any differences in the 

24 terms of the group, category, type, or class 

25 of swaps, compared to other agreements, 


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1 contracts, or transactions that are cen2 trally cleared, are of economic significance. 

3 ‘‘(v) Whether a derivatives clearing 

4 organization is prepared to clear the 

5 group, category, type, or class of swaps 

6 and such derivatives clearing organization 

7 has in place effective risk management sys8 tems. 

9 ‘‘(vi) Any other factors the Commis10 sion and the Securities and Exchange 

11 Commission determine to be appropriate. 

12 ‘‘(B) OTHER DESIGNATIONS.—At any time 

13 after the adoption of the rules required under 

14 subparagraph (A), the Commission may sepa15 rately designate a particular swap or class of 

16 swaps as subject to the clearing requirement in 

17 paragraph (1), taking into account the factors 

18 described in clauses (i) through (vi) of subpara19 graph (A) and the joint rules adopted under 

20 such subparagraph. 

21 ‘‘(5) PREVENTION OF EVASION.—The Commis22 sion and the Securities and Exchange Commission 

23 shall have authority to prescribe rules under this 

24 subsection, or issue interpretations of such rules, as 

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1 vided that any such rules or interpretations shall be 

2 issued jointly to be effective. 

3 ‘‘(6) REQUIRED REPORTING.— 

4 ‘‘(A) BOTH COUNTERPARTIES.—Both 

5 counterparties to a swap that is not cleared by 

6 any derivatives clearing organization shall re7 port such a swap either to a registered swap re8 pository described in section 21 or, if there is 

9 no repository that would accept the swap, to the 

10 Commission pursuant to section 4r. 

11 ‘‘(B) TIMING.—Counterparties to a swap 

12 shall submit the reports required under sub13 paragraph (A) not later than such time period 

14 as the Commission may by rule or regulation 

15 prescribe. 

16 ‘‘(7) TRANSITION RULES.— 

17 ‘‘(A) REPORTING TRANSITION RULES.— 

18 Rules adopted by the Commission under this 

19 section shall provide for the reporting of data, 

20 as follows: 

21 ‘‘(i) Swaps entered into before the 

22 date of the enactment of this subsection 

23 shall be reported to a registered swap re24 pository or the Commission not later than 


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1 180 days after the effective date of this 

2 subsection. 

3 ‘‘(ii) Swaps entered into on or after 

4 such date of enactment shall be reported to 

5 a registered swap repository or the Com6 mission not later than the later of— 

7 ‘‘(I) 90 days after such effective 

8 date; or 

9 ‘‘(II) such other time after enter10 ing into the swap as the Commission 

11 may prescribe by rule or regulation. 

12 ‘‘(B) CLEARING TRANSITION RULES.— 

13 ‘‘(i) Swaps entered into before the 

14 date of the enactment of this subsection 

15 are exempt from the clearing requirements 

16 of this subsection if reported pursuant to 

17 subparagraph (A)(i). 

18 ‘‘(ii) Swaps entered into before appli19 cation of the clearing requirement pursu20 ant to this subsection are exempt from the 

21 clearing requirements of this subsection if 

22 reported pursuant to subparagraph (A)(ii). 

23 ‘‘(8) TRADE EXECUTION.— 

24 ‘‘(A) IN GENERAL.—With respect to trans25 actions involving swaps subject to the clearing 


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1 requirement of paragraph (1), counterparties 

2 shall— 

3 ‘‘(i) execute the transaction on a 

4 board of trade designated as a contract 

5 market under section 5; or 

6 ‘‘(ii) execute the transaction on an al7 ternative swap execution facility registered 

8 under section 5h or an alternative swap 

9 execution facility that is exempt from reg10 istration under section 5h(f) of this Act. 

11 ‘‘(B) EXCEPTION.—The requirements of 

12 clauses (i) and (ii) of subparagraph (A) shall 

13 not apply if no board of trade or alternative 

14 swap execution facility makes the swap avail15 able to trade. 

16 ‘‘(9) EXEMPTIONS.— 

17 ‘‘(A) REQUIRED EXEMPTION.—Subject to 

18 paragraph (4), the Commission shall exempt a 

19 swap from the requirements of paragraphs (1) 

20 and (8) and any rules issued under this sub21 section, if no derivatives clearing organization 

22 registered under this Act or no derivatives 

23 clearing organization that is exempt from reg24 istration under section 5b(j) of this Act will ac25 cept the swap for clearing. 


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1 ‘‘(B) PERMISSIVE EXEMPTION.—Subject to 

2 paragraph (4), the Commission by rule or 

3 order, as the Commission deems consistent with 

4 the public interest, may conditionally or uncon5 ditionally exempt a swap from the requirements 

6 of paragraphs (1) and (8), and any rules issued 

7 under this subsection, if 1 of the counterparties 

8 to the swap— 

9 ‘‘(i) is not a swap dealer or major 

10 swap participant; and 

11 ‘‘(ii) does not meet the eligibility re12 quirements of any derivatives clearing or13 ganization that clears the swap. 

14 ‘‘(C) DETERMINATION OF THE FINANCIAL

15 STABILITY OVERSIGHT COUNCIL.—The Com16 mission may act by rule or order to exempt a 

17 swap from any requirement or rule under this 

18 subsection only if— 

19 ‘‘(i) the Commission has provided a 

20 written notice to the Financial Stability 

21 Oversight Council describing the proposed 

22 exemption; and 

23 ‘‘(ii) the Financial Stability Oversight 

24 Council has not made a determination and 

25 notified the Commission within 60 days of 


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1 receipt of such notice that such exemption 

2 would pose a threat to the stability of the 

3 United States financial system. 

4 ‘‘(D) OPTION TO CLEAR.—If a swap is ex5 empt from the clearing requirements of para6 graph (1)— 

7 ‘‘(i) the parties to the swap may sub8 mit the swap for clearing; and 

9 ‘‘(ii) the swap shall be submitted for 

10 clearing upon the request of a party to the 

11 swap.’’. 

12 (b) DERIVATIVES CLEARING ORGANIZATIONS.— 

13 (1) IN GENERAL.—Subsections (a) and (b) of 

14 section 5b of the Commodity Exchange Act (7 

15 U.S.C. 7a–1) are amended to read as follows: 

16 ‘‘(a) REGISTRATION REQUIREMENT.—It shall be un17 lawful for a derivatives clearing organization, unless reg18 istered with the Commission, directly or indirectly to make 

19 use of the mails or any means or instrumentality of inter20 state commerce to perform the functions of a derivatives 

21 clearing organization described in section 1a(9) with re22 spect to— 

23 ‘‘(1) a contract of sale of a commodity for fu24 ture delivery (or option on such a contract) or option 


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1 on a commodity, in each case unless the contract or 

2 option is— 

3 ‘‘(A) excluded from this Act by section 

4 2(a)(1)(C)(i), 2(c), or 2(f); or 

5 ‘‘(B) a security futures product cleared by 

6 a clearing agency registered with the Securities 

7 and Exchange Commission under the Securities 

8 Exchange Act of 1934 (15 U.S.C. 78a et seq.); 

9 or 

10 ‘‘(2) a swap. 

11 ‘‘(b) VOLUNTARY REGISTRATION.— 

12 ‘‘(1) DERIVATIVES CLEARING ORGANIZA13 TIONS.—A person that clears agreements, contracts, 

14 or transactions that are not required to be cleared 

15 under this Act may register with the Commission as 

16 a derivatives clearing organization. 

17 ‘‘(2) CLEARING AGENCIES.—A derivatives clear18 ing organization may clear security-based swaps that 

19 are required to be cleared by a person who is reg20 istered as a clearing agency under the Securities Ex21 change Act of 1934 (15 U.S.C. 78a et seq.).’’. 

22 (2) REQUIRED REGISTRATION.—Section 5b of 

23 the Commodity Exchange Act (7 U.S.C. 7a–1) is 

24 amended by adding at the end the following: 


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1 ‘‘(g) REQUIRED REGISTRATION FOR DEPOSITORY IN2 STITUTIONS AND CLEARING AGENCIES.—Any person that 

3 is required to be registered as a derivatives clearing orga4 nization under this section shall register with the Commis5 sion regardless of whether that person is also a depository 

6 institution (as that term is defined in section 3 of the Fed7 eral Deposit Insurance Act (12 U.S.C. 1813)) or a clear8 ing agency registered with the Securities and Exchange 

9 Commission under the Securities Exchange Act of 1934 

10 (15 U.S.C. 78a et seq.). 

11 ‘‘(h) HARMONIZATION OF RULES.—Not later than 

12 180 days after the effective date of the Over-the-Counter 

13 Derivatives Markets Act of 2010, the Commission and the 

14 Securities and Exchange Commission shall jointly adopt 

15 uniform rules governing— 

16 ‘‘(1) the clearing and settlement of swaps, as 

17 well as persons that are registered as derivatives 

18 clearing organizations for swaps under this section; 

19 and 

20 ‘‘(2) the clearing and settlement of security21 based swaps, as well as persons that are registered 

22 as clearing agencies for security-based swaps under 

23 the Securities Exchange Act of 1934 (15 U.S.C. 78a 

24 et seq.). 


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1 ‘‘(i) CONSULTATION.—The Commission and the Se2 curities and Exchange Commission shall consult with the 

3 appropriate Federal banking agencies and each other prior 

4 to adopting rules under this section with respect to swaps. 

5 ‘‘(j) EXEMPTIONS.—The Commission may exempt, 

6 conditionally or unconditionally, a derivatives clearing or7 ganization from registration under this section for the 

8 clearing of swaps if the Commission finds that such de9 rivatives clearing organization is subject to comparable, 

10 comprehensive supervision and regulation on a consoli11 dated basis by the Securities and Exchange Commission, 

12 an appropriate Federal banking agency, or the appropriate 

13 governmental authorities in the organization’s home coun14 try. 

15 ‘‘(k) DESIGNATION OF COMPLIANCE OFFICER.— 

16 ‘‘(1) IN GENERAL.—Each derivatives clearing 

17 organization shall designate an individual to serve as 

18 a compliance officer. 

19 ‘‘(2) DUTIES.—The compliance officer shall 

20 perform the following duties: 

21 ‘‘(A) Reporting directly to the board or to 

22 the senior officer of the derivatives clearing or23 ganization. 


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1 ‘‘(B) Reviewing the compliance of the de2 rivatives clearing organization with the core 

3 principles established in section 5b(c)(2). 

4 ‘‘(C) Consulting with the board of the de5 rivatives clearing organization, a body per6 forming a function similar to that of a board, 

7 or the senior officer of the derivatives clearing 

8 organization, to resolve any conflicts of interest 

9 that may arise. 

10 ‘‘(D) Administering the policies and proce11 dures of the derivatives clearing organization 

12 required to be established pursuant to this sec13 tion. 

14 ‘‘(E) Ensuring compliance with this Act 

15 and the rules and regulations issued there16 under, including rules prescribed by the Com17 mission pursuant to this section. 

18 ‘‘(F) Establishing procedures for remedi19 ation of noncompliance issues found during 

20 compliance office reviews, lookbacks, internal or 

21 external audit findings, self-reported errors, or 

22 through validated complaints. Procedures to be 

23 established under this subparagraph include 

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1 ment response, remediation, retesting, and clos2 ing of noncompliance issues. 

3 ‘‘(3) ANNUAL REPORTS REQUIRED.— 

4 ‘‘(A) IN GENERAL.—The compliance offi5 cer shall annually prepare and sign a report on 

6 the compliance of the derivatives clearing orga7 nization with this Act and the policies and pro8 cedures of the organization, including the code 

9 of ethics and conflict of interest policies of the 

10 organization, in accordance with rules pre11 scribed by the Commission. 

12 ‘‘(B) SUBMISSION.—The compliance report 

13 required under subparagraph (A) shall accom14 pany the financial reports of the derivatives 

15 clearing organization that are required to be 

16 furnished to the Commission pursuant to this 

17 section and shall include a certification that, 

18 under penalty of law, the report is accurate and 

19 complete.’’. 

20 (3) CORE PRINCIPLES.—Section 5b(c)(2) of the 

21 Commodity Exchange Act (7 U.S.C. 7a–1(c)(2)) is 

22 amended to read as follows: 

23 ‘‘(2) CORE PRINCIPLES FOR DERIVATIVES

24 CLEARING ORGANIZATIONS.— 

25 ‘‘(A) COMPLIANCE.— 


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1 ‘‘(i) IN GENERAL.—To be registered 

2 and to maintain registration as a deriva3 tives clearing organization, a derivatives 

4 clearing organization shall comply with the 

5 core principles established in this para6 graph and any requirement that the Com7 mission may impose by rule or regulation 

8 pursuant to section 8a(5). 

9 ‘‘(ii) REASONABLE DISCRETION.—Ex10 cept where the Commission determines 

11 otherwise by rule or regulation, a deriva12 tives clearing organization shall have rea13 sonable discretion in establishing the man14 ner in which it complies with the core prin15 ciples established in this paragraph. 

16 ‘‘(B) FINANCIAL RESOURCES.— 

17 ‘‘(i) IN GENERAL.—Each derivatives 

18 clearing organization shall have adequate 

19 financial, operational, and managerial re20 sources to discharge its responsibilities. 

21 ‘‘(ii) MINIMUM RESOURCES.—The fi22 nancial resources of each derivatives clear23 ing organization shall, at a minimum, ex24 ceed the total amount that would— 


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1 ‘‘(I) enable the organization to 

2 meet its financial obligations to its 

3 members and participants notwith4 standing a default by the member or 

5 participant creating the largest finan6 cial exposure for that organization in 

7 extreme but plausible market condi8 tions; and 

9 ‘‘(II) enable the organization to 

10 cover its operating costs for a period 

11 of 1 year, calculated on a rolling 

12 basis. 

13 ‘‘(C) PARTICIPANT AND PRODUCT ELIGI14 BILITY.— 

15 ‘‘(i) STANDARDS.—Each derivatives 

16 clearing organization shall establish— 

17 ‘‘(I) appropriate admission and 

18 continuing eligibility standards (in19 cluding sufficient financial resources 

20 and operational capacity to meet obli21 gations arising from participation in 

22 the derivatives clearing organization) 

23 for members of and participants in 

24 the organization; and 


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1 ‘‘(II) appropriate standards for 

2 determining eligibility of agreements, 

3 contracts, or transactions submitted 

4 to the organization for clearing. 

5 ‘‘(ii) ONGOING VERIFICATION.—Each 

6 derivatives clearing organization shall have 

7 procedures in place to verify that its par8 ticipation and membership requirements 

9 are met on an ongoing basis. 

10 ‘‘(iii) FAIR STANDARDS.—Each de11 rivatives clearing organization’s participa12 tion and membership requirements shall be 

13 objective, publicly disclosed, and permit 

14 fair and open access. 

15 ‘‘(D) RISK MANAGEMENT.— 

16 ‘‘(i) IN GENERAL.—Each derivatives 

17 clearing organization shall have the ability 

18 to manage the risks associated with dis19 charging the responsibilities of a deriva20 tives clearing organization through the use 

21 of appropriate tools and procedures. 

22 ‘‘(ii) CREDIT EXPOSURE.—Each de23 rivatives clearing organization shall meas24 ure its credit exposures to its members and 

25 participants at least once each business 


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1 day and shall monitor such exposures 

2 throughout the business day. 

3 ‘‘(iii) LIMITING EXPOSURE.—Through 

4 margin requirements and other risk control 

5 mechanisms, a derivatives clearing organi6 zation shall limit its exposures to potential 

7 losses from defaults by its members and 

8 participants so that the operations of the 

9 organization would not be disrupted and 

10 nondefaulting members or participants 

11 would not be exposed to losses that such 

12 members or participants cannot anticipate 

13 or control. 

14 ‘‘(iv) MARGIN REQUIREMENTS.—The 

15 margin required by a derivatives clearing 

16 organization from its members and partici17 pants shall be sufficient to cover potential 

18 exposures in normal market conditions. 

19 ‘‘(v) RISK-BASED MARGIN REQUIRE20 MENTS.—The models and parameters used 

21 by a derivatives clearing organization in 

22 setting the margin requirements under 

23 clause (iv) shall be risk-based and reviewed 

24 regularly. 


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1 ‘‘(E) SETTLEMENT PROCEDURES.—Each 

2 derivatives clearing organization shall— 

3 ‘‘(i) complete money settlements on a 

4 timely basis, and not less than once each 

5 business day; 

6 ‘‘(ii) employ money settlement ar7 rangements that eliminate or strictly limit 

8 the exposure of the organization to settle9 ment bank risks, such as credit and liquid10 ity risks from the use of banks to effect 

11 money settlements; 

12 ‘‘(iii) ensure money settlements are 

13 final when effected; 

14 ‘‘(iv) maintain an accurate record of 

15 the flow of funds associated with each 

16 money settlement; 

17 ‘‘(v) have the ability to comply with 

18 the terms and conditions of any permitted 

19 netting or offset arrangements with other 

20 clearing organizations; 

21 ‘‘(vi) for physical settlements, estab22 lish rules that clearly state the obligations 

23 of the organization with respect to physical 

24 deliveries; and 


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1 ‘‘(vii) identify and manage the risks 

2 from the obligations described under clause 

3 (vi). 

4 ‘‘(F) TREATMENT OF FUNDS.— 

5 ‘‘(i) SAFETY OF FUNDS.—Each de6 rivatives clearing organization shall have 

7 standards and procedures designed to pro8 tect and ensure the safety of member and 

9 participant funds and assets. 

10 ‘‘(ii) HOLDING OF FUNDS.—Each de11 rivatives clearing organization shall hold 

12 member and participant funds and assets 

13 in a manner whereby risk of loss or of 

14 delay in the organization’s access to the 

15 assets and funds is minimized. 

16 ‘‘(iii) MINIMIZING RISKS.—Assets and 

17 funds invested by a derivatives clearing or18 ganization shall be held in instruments 

19 with minimal credit, market, and liquidity 

20 risks. 

21 ‘‘(G) DEFAULT RULES AND PROCE22 DURES.— 

23 ‘‘(i) INSOLVENCY ISSUES.—Each de24 rivatives clearing organization shall have 

25 rules and procedures designed to allow for 


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1 the efficient, fair, and safe management of 

2 events when members or participants be3 come insolvent or otherwise default on 

4 their obligations to the organization. 

5 ‘‘(ii) DEFAULT PROCEDURES.—The 

6 default procedures of each derivatives 

7 clearing organization shall be clearly stat8 ed, and shall ensure that the organization 

9 can take timely action to contain losses 

10 and liquidity pressures and to continue 

11 meeting its obligations. 

12 ‘‘(iii) PUBLIC AVAILABILITY.—The de13 fault procedures of each derivatives clear14 ing organization shall be publicly available. 

15 ‘‘(H) ENFORCEMENT.—Each derivatives 

16 clearing organization shall— 

17 ‘‘(i) maintain adequate arrangements 

18 and resources for the effective— 

19 ‘‘(I) monitoring and enforcement 

20 of compliance with the rules of the or21 ganization; and 

22 ‘‘(II) resolution of disputes; and 

23 ‘‘(ii) have the authority and ability to 

24 discipline, limit, suspend, or terminate the 


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1 activities of a member or participant for 

2 violations of the rules of the organization. 

3 ‘‘(I) SYSTEM SAFEGUARDS.—Each deriva4 tives clearing organization shall— 

5 ‘‘(i) establish and maintain a program 

6 of risk analysis and oversight to identify 

7 and minimize sources of operational risk 

8 through the development of appropriate 

9 controls and procedures, and the develop10 ment of automated systems, that are reli11 able, secure, and have adequate scalable 

12 capacity; 

13 ‘‘(ii) establish and maintain emer14 gency procedures, backup facilities, and a 

15 plan for disaster recovery that allows for 

16 the timely recovery and resumption of op17 erations and the fulfillment of the respon18 sibilities and obligations of the organiza19 tion; and 

20 ‘‘(iii) periodically conduct tests to 

21 verify that backup resources are sufficient 

22 to ensure daily processing, clearing, and 

23 settlement. 

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1 sion all information necessary for the Commis2 sion to conduct oversight of the organization. 

3 ‘‘(K) RECORDKEEPING.—Each derivatives 

4 clearing organization shall maintain for a pe5 riod of 5 years records of all activities related 

6 to the business of the organization as a deriva7 tives clearing organization in a form and man8 ner acceptable to the Commission. 

9 ‘‘(L) PUBLIC INFORMATION.— 

10 ‘‘(i) IN GENERAL.—Each derivatives 

11 clearing organization shall provide market 

12 participants with sufficient information to 

13 identify and evaluate accurately the risks 

14 and costs associated with using the serv15 ices of the organization. 

16 ‘‘(ii) AVAILABILITY OF RULES.—Each 

17 derivatives clearing organization shall 

18 make information concerning the rules and 

19 operating procedures governing the clear20 ing and settlement systems (including de21 fault procedures) of the organization avail22 able to market participants. 

23 ‘‘(iii) ADDITIONAL DISCLOSURES.— 

24 Each derivatives clearing organization shall 


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1 disclose publicly, and to the Commission, 

2 information concerning— 

3 ‘‘(I) the terms and conditions of 

4 contracts, agreements, and trans5 actions cleared and settled by the or6 ganization; 

7 ‘‘(II) clearing and other fees that 

8 the organization charges its members 

9 and participants; 

10 ‘‘(III) the margin-setting method11 ology and the size and composition of 

12 the financial resource package of the 

13 organization; 

14 ‘‘(IV) other information relevant 

15 to participation in the settlement and 

16 clearing activities of the organization; 

17 and 

18 ‘‘(V) daily settlement prices, vol19 ume, and open interest for all con20 tracts settled or cleared by the organi21 zation. 

22 ‘‘(M) INFORMATION-SHARING.—Each de23 rivatives clearing organization shall— 

24 ‘‘(i) enter into and abide by the terms 

25 of all appropriate and applicable domestic 


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1 and international information-sharing 

2 agreements; and 

3 ‘‘(ii) use relevant information obtained 

4 from the agreements in carrying out the 

5 risk management program of the organiza6 tion. 

7 ‘‘(N) ANTITRUST CONSIDERATIONS.—Un8 less appropriate to achieve the purposes of this 

9 Act, a derivatives clearing organization shall 

10 avoid— 

11 ‘‘(i) adopting any rule or taking any 

12 action that results in any unreasonable re13 straint of trade; or 

14 ‘‘(ii) imposing any material anti15 competitive burden. 

16 ‘‘(O) GOVERNANCE FITNESS STAND17 ARDS.— 

18 ‘‘(i) TRANSPARENCY.—Each deriva19 tives clearing organization shall establish 

20 governance arrangements that are trans21 parent in order to fulfill public interest re22 quirements and to support the objectives of 

23 owners and participants. 

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1 lish and enforce appropriate fitness stand2 ards for directors, members of any discipli3 nary committee, members of the organiza4 tion, and any other persons with direct ac5 cess to the settlement or clearing activities 

6 of the organization, including any parties 

7 affiliated with any of the persons described 

8 in this clause. 

9 ‘‘(P) CONFLICTS OF INTEREST.—Each de10 rivatives clearing organization shall establish 

11 and enforce rules to minimize conflicts of inter12 est in the decision-making process of the orga13 nization and establish a process for resolving 

14 such conflicts of interest. 

15 ‘‘(Q) COMPOSITION OF THE BOARDS.— 

16 Each derivatives clearing organization shall en17 sure that the composition of the governing 

18 board or committee includes market partici19 pants. 

20 ‘‘(R) LEGAL RISK.—Each derivatives clear21 ing organization shall have a well-founded, 

22 transparent, and enforceable legal framework 

23 for each aspect of its activities. 

24 ‘‘(S) MODIFICATION OF CORE PRIN25 CIPLES.—The Commission may conform the 


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1 core principles established in this paragraph to 

2 reflect evolving United States and international 

3 standards.’’. 

4 (4) REPORTING.—Section 5b of the Commodity 

5 Exchange Act (7 U.S.C. 7a–1) is further amended 

6 by adding after subsection (k), as added by this sec7 tion, the following: 

8 ‘‘(l) REPORTING.— 

9 ‘‘(1) TRANSPARENCY.— 

10 ‘‘(A) IN GENERAL.—A derivatives clearing 

11 organization that clears swaps shall provide to 

12 the Commission and any swap repository des13 ignated by the Commission all information de14 termined by the Commission to be necessary to 

15 perform its responsibilities under this Act. 

16 ‘‘(B) DATA COLLECTION REQUIRE17 MENTS.—The Commission shall adopt data col18 lection and maintenance requirements for swaps 

19 cleared by derivatives clearing organizations 

20 that are comparable to the corresponding re21 quirements for swaps accepted by swap reposi22 tories and swaps traded on alternative swap 

23 execution facilities. 

24 ‘‘(C) REPORTS ON SECURITY-BASED SWAP

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1 RITIES AND EXCHANGE COMMISSION.—A de2 rivatives clearing organization that clears secu3 rity-based swap agreements (as defined in sec4 tion 3(a)(75) of the Securities Exchange Act) 

5 shall, upon request for the protection of inves6 tors and in the public interest, make available 

7 to the Securities and Exchange Commission all 

8 information relating to such security-based 

9 swap agreements. 

10 ‘‘(D) SHARING OF INFORMATION.—Subject 

11 to section 8, the Commission shall share such 

12 information, upon request, with the Board, the 

13 Securities and Exchange Commission, the ap14 propriate Federal banking agencies, the Finan15 cial Stability Oversight Council, and the De16 partment of Justice or to other persons the 

17 Commission deems appropriate, including for18 eign financial supervisors (including foreign fu19 tures authorities), foreign central banks, and 

20 foreign ministries. 

21 ‘‘(2) PUBLIC INFORMATION.—A derivatives 

22 clearing organization that clears swaps shall provide 

23 to the Commission, or its designee, such information 

24 as is required by, and in a form and at a frequency 

25 to be determined by, the Commission, in order to 


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1 comply with the public reporting requirements con2 tained in section 8(j).’’. 

3 (5) EXISTING DEPOSITORY INSTITUTIONS AND

4 CLEARING AGENCIES.—Section 5b(c) of the Com5 modity Exchange Act (7 U.S.C. 7a–1(c)) is amended 

6 by adding at the end the following: 

7 ‘‘(4) EXISTING DEPOSITORY INSTITUTIONS AND

8 CLEARING AGENCIES.—A depository institution (as 

9 that term is defined in section 3 of the Federal De10 posit Insurance Act (12 U.S.C. 1813)) or a clearing 

11 agency registered with the Securities and Exchange 

12 Commission under the Securities Exchange Act of 

13 1934 required to be registered as a derivatives clear14 ing organization under this section is deemed to be 

15 registered under this section to the extent that the 

16 depository institution cleared swaps, as defined in 

17 this Act, as a multilateral clearing organization or 

18 the clearing agency cleared swaps, as defined in this 

19 Act, before the date of the enactment of this para20 graph. Such depository institution or clearing agency 

21 shall be subject to the requirements of this Act and 

22 the regulations thereunder that are applicable to 

23 registered derivatives clearing organizations. A de24 pository institution to which this paragraph applies 

25 may, by the vote of the shareholders owning not less 


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1 than 51 percent of the voting interests of the insti2 tution, be converted into a State corporation, part3 nership, limited liability company, or other similar 

4 legal form pursuant to a plan of conversion, if the 

5 conversion is not in contravention of applicable State 

6 law.’’. 

7 (6) TECHNICAL CHANGE.—Section 8(e) of the 

8 Commodity Exchange Act (7 U.S.C. 12(e)) is 

9 amended in the last sentence— 

10 (A) by inserting ‘‘, central bank and min11 istries,’’ after ‘‘department’’ each place that 

12 term appears; and 

13 (B) by striking ‘‘futures authority.’’ and 

14 inserting ‘‘futures authority,’’. 

15 (c) LEGAL CERTAINTY FOR IDENTIFIED BANKING

16 PRODUCTS.— 

17 (1) REPEAL.—Sections 402(d), 404, 407, 

18 408(b), and 408(c)(2) of the Legal Certainty for 

19 Bank Products Act of 2000 (7 U.S.C. 27(d), 27b, 

20 27e, 27f(b), and 27f(c)(2)) are repealed. 

21 (2) LEGAL CERTAINTY.—Section 403 of the 

22 Legal Certainty for Bank Products Act of 2000 (7 

23 U.S.C. 27a) is amended to read as follows: 


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1 ‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. 

2 ‘‘(a) EXCLUSION.—Except as provided in subsection 

3 (b) or (c)— 

4 ‘‘(1) the Commodity Exchange Act shall not 

5 apply to, and the Commodity Futures Trading Com6 mission shall not exercise regulatory authority under 

7 such Act with respect to, an identified banking prod8 uct; and 

9 ‘‘(2) the definitions of ‘security-based swap’ in 

10 section 3(a)(68) of the Securities Exchange Act of 

11 1934 and ‘security-based swap agreement’ in section 

12 3(a)(75) of the Securities Exchange Act of 1934 do 

13 not include any identified banking product. 

14 ‘‘(b) EXCEPTION.—An appropriate Federal banking 

15 agency may except an identified banking product of a 

16 bank under its regulatory jurisdiction from the exclusions 

17 in subsection (a) if the agency determines, in consultation 

18 with the Commodity Futures Trading Commission and the 

19 Securities and Exchange Commission, that the product— 

20 ‘‘(1) would meet the definition of swap in sec21 tion 1a(34) of the Commodity Exchange Act or se22 curity-based swap in section 3(a)(68) of the Securi23 ties Exchange Act of 1934; and 

24 ‘‘(2) has become known to the trade as a swap 

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1 pose of evading the provisions of the Commodity Ex2 change Act (7 U.S.C. 1 et seq.), the Securities Act 

3 of 1933 (15 U.S.C. 77a et seq.), or the Securities 

4 Exchange Act of 1934 (15 U.S.C. 78a et seq.). 

5 ‘‘(c) EXCEPTION.—The exclusions in subsection (a) 

6 shall not apply to an identified banking product that— 

7 ‘‘(1) is a product of a bank that is not under 

8 the regulatory jurisdiction of an appropriate Federal 

9 banking agency; 

10 ‘‘(2) meets the definition of swap in section 

11 1a(34) of the Commodity Exchange Act or security12 based swap in section 3(a)(68) of the Securities Ex13 change Act of 1934; and 

14 ‘‘(3) has become known to the trade as a swap 

15 or security-based swap, or otherwise has been struc16 tured as an identified banking product for the pur17 pose of evading the provisions of the Commodity Ex18 change Act (7 U.S.C. 1 et seq.), the Securities Act 

19 of 1933 (15 U.S.C. 77a et seq.), or the Securities 

20 Exchange Act of 1934 (15 U.S.C. 78a et seq.).’’. 

21 SEC. 714. PUBLIC REPORTING OF AGGREGATE SWAP DATA. 

22 Section 8 of the Commodity Exchange Act (7 U.S.C. 

23 12) is amended by adding at the end the following: 

24 ‘‘(j) PUBLIC REPORTING OF AGGREGATE SWAP

25 DATA.— 


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1 ‘‘(1) IN GENERAL.—The Commission, or a per2 son designated by the Commission pursuant to para3 graph (2), shall make available to the public, in a 

4 manner that does not disclose the business trans5 actions and market positions of any person, aggre6 gate data on swap trading volumes and positions 

7 from the sources set forth in paragraph (3). 

8 ‘‘(2) DESIGNEE OF THE COMMISSION.—The 

9 Commission may designate a derivatives clearing or10 ganization or a swap repository to carry out the 

11 public reporting described in paragraph (1). 

12 ‘‘(3) SOURCES OF INFORMATION.—The sources 

13 of the information to be publicly reported as de14 scribed in paragraph (1) are— 

15 ‘‘(A) derivatives clearing organizations 

16 pursuant to section 5b(k)(2); 

17 ‘‘(B) swap repositories pursuant to section 

18 21(c)(3); and 

19 ‘‘(C) reports received by the Commission 

20 pursuant to section 4r.’’. 

21 SEC. 715. SWAP REPOSITORIES. 

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

23 is amended by inserting after section 20 the following: 

24 ‘‘SEC. 21. SWAP REPOSITORIES. 

25 ‘‘(a) REGISTRATION REQUIREMENT.— 


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1 ‘‘(1) IN GENERAL.—A person may register as a 

2 swap repository by filing with the Commission an 

3 application in such form as the Commission, by rule, 

4 may prescribe, containing the rules of the swap re5 pository and such other information and documenta6 tion as the Commission, by rule, may prescribe as 

7 necessary or appropriate in the public interest, for 

8 the protection of investors, or in the furtherance of 

9 the purposes of this section. 

10 ‘‘(2) INSPECTION AND EXAMINATION.—Reg11 istered swap repositories shall be subject to inspec12 tion and examination by any representative of the 

13 Commission. 

14 ‘‘(3) SHARING OF INFORMATION WITH SECURI15 TIES AND EXCHANGE COMMISSION.—Registered 

16 swap repositories shall make available to the Securi17 ties and Exchange Commission, upon request, all in18 formation relating to security-based swap agree19 ments that are maintained by such swap repository. 

20 ‘‘(b) STANDARD SETTING.— 

21 ‘‘(1) DATA IDENTIFICATION.—The Commission 

22 shall prescribe standards that specify the data ele23 ments for each swap that shall be collected and 

24 maintained by each registered swap repository. 


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1 ‘‘(2) DATA COLLECTION AND MAINTENANCE.— 

2 The Commission shall prescribe data collection and 

3 data maintenance standards for swap repositories. 

4 ‘‘(3) COMPARABILITY.—The standards pre5 scribed by the Commission under this subsection 

6 shall be comparable to the data standards imposed 

7 by the Commission on derivatives clearing organiza8 tions that clear swaps. 

9 ‘‘(c) DUTIES.—A swap repository shall— 

10 ‘‘(1) accept data prescribed by the Commission 

11 for each swap under subsection (b); 

12 ‘‘(2) maintain such data in such form and man13 ner and for such period as may be required by the 

14 Commission; 

15 ‘‘(3) provide to the Commission, or its designee, 

16 such information as is required by, and in a form 

17 and at a frequency to be determined by, the Com18 mission, in order to comply with the public reporting 

19 requirements contained in section 8(j); and 

20 ‘‘(4) make available, on a confidential basis 

21 pursuant to section 8, all data obtained by the swap 

22 repository, including individual counterparty trade 

23 and position data, to the Commission, the appro24 priate Federal banking agencies, the Financial Sta25 bility Oversight Council, the Securities and ExVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00559 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 change Commission, and the Department of Justice 

2 or to other persons the Commission deems appro3 priate, including foreign financial supervisors (in4 cluding foreign futures authorities), foreign central 

5 banks, and foreign ministries. 

6 ‘‘(d) REQUIRED REGISTRATION FOR SECURITY7 BASED SWAP REPOSITORIES.—Any person that is re8 quired to be registered as a swap repository under this 

9 section shall register with the Commission regardless of 

10 whether that person also is registered with the Securities 

11 and Exchange Commission as a security-based swap re12 pository. 

13 ‘‘(e) HARMONIZATION OF RULES.—Not later than 

14 180 days after the effective date of the Over-the-Counter 

15 Derivatives Markets Act of 2010, the Commission and the 

16 Securities and Exchange Commission shall jointly adopt 

17 uniform rules governing persons that are registered under 

18 this section and persons that are registered as security19 based swap repositories under the Securities Exchange 

20 Act of 1934 (15 U.S.C. 78a et seq.), including uniform 

21 rules that specify the data elements that shall be collected 

22 and maintained by each repository. 

23 ‘‘(f) EXEMPTIONS.—The Commission may exempt, 

24 conditionally or unconditionally, a swap repository from 

25 the requirements of this section if the Commission finds 


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1 that such swap repository is subject to comparable, com2 prehensive supervision and regulation on a consolidated 

3 basis by the Securities and Exchange Commission, an ap4 propriate Federal banking agency, or the appropriate gov5 ernmental authorities in the organization’s home coun6 try.’’. 

7 SEC. 716. REPORTING AND RECORDKEEPING. 

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

9 is amended by inserting after section 4q the following: 

10 ‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR CERTAIN 

11 SWAPS. 

12 ‘‘(a) IN GENERAL.—Any person who enters into a 

13 swap shall satisfy the reporting requirements of subsection 

14 (b), if such person— 

15 ‘‘(1) did not clear the swap in accordance with 

16 section 2(j)(1); and 

17 ‘‘(2) did not have data regarding the swap ac18 cepted by a swap repository in accordance with rules 

19 (including time frames) adopted by the Commission 

20 under section 21. 

21 ‘‘(b) REPORTS.—Any person described in subsection 

22 (a) shall— 

23 ‘‘(1) make such reports in such form and man24 ner and for such period as the Commission shall preVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00561 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 scribe by rule or regulation regarding the swaps held 

2 by the person; and 

3 ‘‘(2) keep books and records pertaining to the 

4 swaps held by the person in such form and manner 

5 and for such period as may be required by the Com6 mission, which books and records shall be open to 

7 inspection by any representative of the Commission, 

8 an appropriate Federal banking agency, the Securi9 ties and Exchange Commission, the Financial Sta10 bility Oversight Council, and the Department of Jus11 tice. 

12 ‘‘(c) IDENTICAL DATA.—In adopting rules under this 

13 section, the Commission shall require persons described in 

14 subsection (a) to report the same or a more comprehensive 

15 set of data than the Commission requires swap reposi16 tories to collect under section 21.’’. 

17 SEC. 717. REGISTRATION AND REGULATION OF SWAP DEAL18 ERS AND MAJOR SWAP PARTICIPANTS. 

19 (a) IN GENERAL.—The Commodity Exchange Act (7 

20 U.S.C. 1 et seq.) is amended by inserting after section 

21 4r (as added by section 716) the following: 

22 ‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEAL23 ERS AND MAJOR SWAP PARTICIPANTS. 

24 ‘‘(a) REGISTRATION.—It shall be unlawful for any 

25 person— 


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1 ‘‘(1) to act as a swap dealer unless such person 

2 is registered as a swap dealer with the Commission; 

3 and 

4 ‘‘(2) to act as a major swap participant unless 

5 such person shall have registered as a major swap 

6 participant with the Commission. 

7 ‘‘(b) REQUIREMENTS.— 

8 ‘‘(1) IN GENERAL.—A person shall register as 

9 a swap dealer or major swap participant by filing a 

10 registration application with the Commission. 

11 ‘‘(2) CONTENTS.—The application required 

12 under paragraph (1) shall be made in such form and 

13 manner as prescribed by the Commission, giving any 

14 information and facts as the Commission may deem 

15 necessary concerning the business in which the ap16 plicant is or will be engaged. Such person, when reg17 istered as a swap dealer or major swap participant, 

18 shall continue to report and furnish to the Commis19 sion such information pertaining to such person’s 

20 business as the Commission may require. 

21 ‘‘(3) EXPIRATION.—Each registration shall ex22 pire at such time as the Commission may by rule or 

23 regulation prescribe. 

24 ‘‘(4) RULES.—Except as provided in sub25 sections (c), (d), and (e), the Commission may preVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00563 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 scribe rules applicable to swap dealers and major 

2 swap participants, including rules that limit the ac3 tivities of swap dealers and major swap participants. 

4 ‘‘(5) TRANSITION.—Rules adopted under this 

5 section shall provide for the registration of swap 

6 dealers and major swap participants not later than 

7 1 year after the effective date of the Over-the8 Counter Derivatives Markets Act of 2010. 

9 ‘‘(6) STATUTORY DISQUALIFICATION.—Except 

10 to the extent otherwise specifically provided by rule, 

11 regulation, or order, it shall be unlawful for a swap 

12 dealer or a major swap participant to permit any 

13 person associated with a swap dealer or a major 

14 swap participant who is subject to a statutory dis15 qualification to effect or be involved in effecting 

16 swaps on behalf of such swap dealer or major swap 

17 participant, if such swap dealer or major swap par18 ticipant knew, or in the exercise of reasonable care 

19 should have known, of such statutory disqualifica20 tion. 

21 ‘‘(c) DUAL REGISTRATION.— 

22 ‘‘(1) SWAP DEALER.—Any person that is re23 quired to be registered as a swap dealer under this 

24 section shall register with the Commission regardless 

25 of whether that person also is a depository instituVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00564 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 tion or is registered with the Securities and Ex2 change Commission as a security-based swap dealer. 

3 ‘‘(2) MAJOR SWAP PARTICIPANT.—Any person 

4 that is required to be registered as a major swap 

5 participant under this section shall register with the 

6 Commission regardless of whether that person also 

7 is a depository institution or is registered with the 

8 Securities and Exchange Commission as a major se9 curity-based swap participant. 

10 ‘‘(d) JOINT RULES.— 

11 ‘‘(1) IN GENERAL.—Not later than 180 days 

12 after the effective date of the Over-the-Counter De13 rivatives Markets Act of 2010, the Commission and 

14 the Securities and Exchange Commission shall joint15 ly adopt uniform rules for persons that are reg16 istered— 

17 ‘‘(A) as swap dealers or major swap par18 ticipants under this section; and 

19 ‘‘(B) as security-based swap dealers or 

20 major security-based swap participants under 

21 the Securities Exchange Act of 1934 (15 

22 U.S.C. 78a et seq.). 

23 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE24 MENTS.—The Commission and the Securities and 

25 Exchange Commission shall not prescribe rules imVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00565 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 posing prudential requirements (including activity 

2 restrictions) on swap dealers, major swap partici3 pants, security-based swap dealers, or major secu4 rity-based swap participants that are depository in5 stitutions, as that term is defined in section 3 of the 

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

7 This provision shall not be construed as limiting the 

8 authority of the Commission and the Securities and 

9 Exchange Commission to prescribe appropriate busi10 ness conduct, reporting, and recordkeeping require11 ments to protect investors. 

12 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

13 ‘‘(1) IN GENERAL.— 

14 ‘‘(A) SWAP DEALERS AND MAJOR SWAP

15 PARTICIPANTS THAT ARE DEPOSITORY INSTITU16 TIONS.—Each registered swap dealer and major 

17 swap participant that is a depository institu18 tion, as that term is defined in section 3 of the 

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

20 1813), shall meet such minimum capital re21 quirements and minimum initial and variation 

22 margin requirements as the appropriate Federal 

23 banking agency shall by rule or regulation pre24 scribe under paragraph (2)(A) to help ensure 


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1 the safety and soundness of the swap dealer or 

2 major swap participant. 

3 ‘‘(B) SWAP DEALERS AND MAJOR SWAP

4 PARTICIPANTS THAT ARE NOT DEPOSITORY IN5 STITUTIONS.—Each registered swap dealer and 

6 major swap participant that is not a depository 

7 institution, as that term is defined in section 3 

8 of the Federal Deposit Insurance Act (12 

9 U.S.C. 1813), shall meet such minimum capital 

10 requirements and minimum initial and variation 

11 margin requirements as the Commission and 

12 the Securities and Exchange Commission shall 

13 by rule or regulation jointly prescribe under 

14 paragraph (2)(B) to help ensure the safety and 

15 soundness of the swap dealer or major swap 

16 participant. 

17 ‘‘(2) JOINT RULES.— 

18 ‘‘(A) SWAP DEALERS AND MAJOR SWAP

19 PARTICIPANTS THAT ARE DEPOSITORY INSTITU20 TIONS.—Not later than 180 days after the date 

21 of the enactment of the Over-the-Counter De22 rivatives Markets Act of 2010, the appropriate 

23 Federal banking agencies, in consultation with 

24 the Commission and the Securities and Ex25 change Commission, shall jointly adopt rules 


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1 imposing capital and margin requirements 

2 under this subsection for swap dealers and 

3 major swap participants that are depository in4 stitutions, as that term is defined in section 3 

5 of the Federal Deposit Insurance Act (12 

6 U.S.C. 1813). 

7 ‘‘(B) SWAP DEALERS AND MAJOR SWAP

8 PARTICIPANTS THAT ARE NOT DEPOSITORY IN9 STITUTIONS.—Not later than 180 days after 

10 the date of the enactment of the Over-the11 Counter Derivatives Markets Act of 2010, the 

12 Commission and the Securities and Exchange 

13 Commission shall jointly adopt rules imposing 

14 capital and margin requirements under this 

15 subsection for swap dealers and major swap 

16 participants that are not depository institutions, 

17 as that term is defined in section 3 of the Fed18 eral Deposit Insurance Act (12 U.S.C. 1813). 

19 ‘‘(3) CAPITAL.— 

20 ‘‘(A) SWAP DEALERS AND MAJOR SWAP

21 PARTICIPANTS THAT ARE DEPOSITORY INSTITU22 TIONS.—The capital requirements prescribed 

23 under paragraph (2)(A) for swap dealers and 

24 major swap participants that are depository in25 stitutions shall contain— 


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1 ‘‘(i) a capital requirement that is 

2 greater than zero for swaps that are 

3 cleared by a registered derivatives clearing 

4 organization or a derivatives clearing orga5 nization that is exempt from registration 

6 under section 5b(j) of this Act; and 

7 ‘‘(ii) to offset the greater risk to the 

8 swap dealer or major swap participant and 

9 to the financial system arising from the 

10 use of swaps that are not centrally cleared, 

11 substantially higher capital requirements 

12 for swaps that are not cleared by a reg13 istered derivatives clearing organization or 

14 a derivatives clearing organization that is 

15 exempt from registration under section 

16 5b(j) of this Act than for swaps that are 

17 centrally cleared. 

18 ‘‘(B) SWAP DEALERS AND MAJOR SWAP

19 PARTICIPANTS THAT ARE NOT DEPOSITORY IN20 STITUTIONS.—The capital requirements pre21 scribed under paragraph (2)(B) for swap deal22 ers and major swap participants that are not 

23 depository institutions shall be as strict as or 

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1 ticipants that are depository institutions under 

2 paragraph (2)(A). 

3 ‘‘(C) RULE OF CONSTRUCTION.— 

4 ‘‘(i) IN GENERAL.—Nothing in this 

5 section shall limit, or be construed to limit, 

6 the authority— 

7 ‘‘(I) of the Commission to set fi8 nancial responsibility rules for a fu9 tures commission merchant or intro10 ducing broker registered pursuant to 

11 section 4f(a) of this title (except for 

12 section 4f(a)(3) thereof) in accordance 

13 with section 4f(b) of this title; or 

14 ‘‘(II) of the Securities and Ex15 change Commission to set financial 

16 responsibility rules for a broker or 

17 dealer registered pursuant to section 

18 15(b) of the Securities Exchange Act 

19 of 1934 (except for section 15(b)(11) 

20 thereof) in accordance with section 

21 15(c)(3) of the Securities Exchange 

22 Act of 1934. 

23 ‘‘(ii) FUTURES COMMISSION MER24 CHANTS AND OTHER DEALERS.—A futures 

25 commission merchant, introducing broker, 


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1 broker, or dealer shall maintain sufficient 

2 capital to comply with the stricter of any 

3 applicable capital requirements to which 

4 such futures commission merchant, intro5 ducing broker, broker, or dealer is subject 

6 to under this title or the Securities Ex7 change Act of 1934. 

8 ‘‘(4) MARGIN.— 

9 ‘‘(A) SWAP DEALERS AND MAJOR SWAP

10 PARTICIPANTS THAT ARE DEPOSITORY INSTITU11 TIONS.— 

12 ‘‘(i) IN GENERAL.—The appropriate 

13 Federal banking agency for swap dealers 

14 and major swap participants that are de15 pository institutions shall impose both ini16 tial and variation margin requirements in 

17 accordance with paragraph (2)(A) on all 

18 swaps that are not cleared by a registered 

19 derivatives clearing organization or a de20 rivatives clearing organization that is ex21 empt from registration under section 5b(j) 

22 of this Act. 

23 ‘‘(ii) EXEMPTION.—The appropriate 

24 Federal banking agency for swap dealers 

25 and major swap participants that are deVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00571 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 pository institutions, by rule or order, as 

2 the agency deems consistent with the pub3 lic interest, may conditionally or uncondi4 tionally exempt a swap dealer or a major 

5 swap participant that is a depository insti6 tution from the requirements of this sub7 paragraph and the rules issued under this 

8 subparagraph with regard to any swap in 

9 which 1 of the counterparties is— 

10 ‘‘(I) not a swap dealer, major 

11 swap participant, security-based swap 

12 dealer, or a major security-based swap 

13 participant; 

14 ‘‘(II) using the swap as part of 

15 an effective hedge under generally ac16 cepted accounting principles; and 

17 ‘‘(III) predominantly engaged in 

18 activities that are not financial in na19 ture, as defined in section 4(k) of the 

20 Bank Holding Company Act of 1956 

21 (12 U.S.C. 1843(k)). 

22 ‘‘(iii) DETERMINATION OF THE FI23 NANCIAL STABILITY OVERSIGHT COUN24 CIL.—The appropriate Federal banking 

25 agency may act by rule or order to exempt 


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1 a swap dealer or major swap participant 

2 for which it is the primary financial regu3 latory agency from any requirement or rule 

4 under this subsection only if— 

5 ‘‘(I) the appropriate Federal 

6 banking agency has provided a written 

7 notice to the Financial Stability Over8 sight Council describing the proposed 

9 exemption; and 

10 ‘‘(II) the Financial Stability 

11 Oversight Council has not made a de12 termination and notified the appro13 priate Federal banking agency within 

14 60 days of receipt of such notice that 

15 such exemption would pose a threat to 

16 the stability of the United States fi17 nancial system. 

18 ‘‘(B) SWAP DEALERS AND MAJOR SWAP

19 PARTICIPANTS THAT ARE NOT DEPOSITORY IN20 STITUTIONS.— 

21 ‘‘(i) IN GENERAL.—The Commission 

22 and the Securities and Exchange Commis23 sion shall impose both initial and variation 

24 margin requirements in accordance with 

25 paragraph (2)(B) for swap dealers and 


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1 major swap participants that are not de2 pository institutions on all swaps that are 

3 not cleared by a registered derivatives 

4 clearing organization or a derivatives clear5 ing organization that is exempt from reg6 istration under section 5b(j) of this Act. 

7 Any such initial and variation margin re8 quirements shall be as strict as or stricter 

9 than the margin requirements prescribed 

10 under paragraph (4)(A). 

11 ‘‘(ii) EXEMPTION.—The Commission 

12 by rule or order, as the Commission deems 

13 consistent with the public interest, may 

14 conditionally or unconditionally exempt a 

15 swap dealer or a major swap participant 

16 that is not a depository institution from 

17 the requirements of this subparagraph and 

18 the rules issued under this subparagraph 

19 with regard to any swap in which 1 of the 

20 counterparties is— 

21 ‘‘(I) not a swap dealer, major 

22 swap participant, security-based swap 

23 dealer, or a major security-based swap 

24 participant; 


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1 ‘‘(II) using the swap as part of 

2 an effective hedge under generally ac3 cepted accounting principles; and 

4 ‘‘(III) predominantly engaged in 

5 activities that are not financial in na6 ture, as defined in section 4(k) of the 

7 Bank Holding Company Act of 1956 

8 (12 U.S.C. 1843(k)). 

9 ‘‘(iii) DETERMINATION OF THE FI10 NANCIAL STABILITY OVERSIGHT COUN11 CIL.—The Commission may act by rule or 

12 order to exempt a swap dealer or major 

13 swap participant that is not a depository 

14 institution from any requirement or rule 

15 under this subsection only if— 

16 ‘‘(I) the Commission has pro17 vided a written notice to the Financial 

18 Stability Oversight Council describing 

19 the proposed exemption; and 

20 ‘‘(II) the Financial Stability 

21 Oversight Council has not made a de22 termination and notified the Commis23 sion within 60 days of receipt of such 

24 notice that such exemption would pose 


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1 a threat to the stability of the United 

2 States financial system. 

3 ‘‘(5) MARGIN REQUIREMENTS.—In prescribing 

4 margin requirements under this subsection, the ap5 propriate Federal banking agency with respect to 

6 swap dealers and major swap participants that are 

7 depository institutions and the Commission and the 

8 Securities and Exchange Commission with respect to 

9 swap dealers and major swap participants that are 

10 not depository institutions may permit the use of 

11 noncash collateral, as the agency or the Commission 

12 and the Securities and Exchange Commission deter13 mines to be consistent with— 

14 ‘‘(A) preserving the financial integrity of 

15 markets trading swaps; and 

16 ‘‘(B) preserving the stability of the United 

17 States financial system. 

18 ‘‘(6) REQUESTED MARGIN.—If any party to a 

19 swap that is exempt from the margin requirements 

20 of paragraph (4)(A)(i) pursuant to the provisions of 

21 paragraph (4)(A)(ii) or from the margin require22 ments of paragraph (4)(B)(i) pursuant to the provi23 sions of paragraph (4)(B)(ii) requests that such 

24 swap be margined, then— 

25 ‘‘(A) the exemption shall not apply; and 


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1 ‘‘(B) the counterparty to such swap shall 

2 provide the requested margin. 

3 ‘‘(f) REPORTING AND RECORDKEEPING.— 

4 ‘‘(1) IN GENERAL.—Each registered swap deal5 er and major swap participant— 

6 ‘‘(A) shall make such reports as are pre7 scribed by rule or regulation regarding the 

8 transactions and positions and financial condi9 tion of such dealer or participant; 

10 ‘‘(B) that is— 

11 ‘‘(i) a depository institution shall keep 

12 books and records of all activities related 

13 to its business as a swap dealer or major 

14 swap participant in such form and manner 

15 and for such period as may be prescribed 

16 by rule or regulation by the appropriate 

17 Federal banking agency; and 

18 ‘‘(ii) not a depository institution shall 

19 keep books and records in such form and 

20 manner and for such period as may be pre21 scribed by rule or regulation pursuant to 

22 paragraph (2); and 

23 ‘‘(C) shall keep such books and records 

24 open to inspection and examination by any rep25 resentative of the Commission. 


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1 ‘‘(2) RULES.—Not later than 1 year after the 

2 date of the enactment of the Over-the-Counter De3 rivatives Markets Act of 2010, the Commission and 

4 the Securities and Exchange Commission shall joint5 ly adopt rules governing reporting and recordkeeping 

6 for swap dealers, major swap participants, security7 based swap dealers, and major security-based swap 

8 participants that are not depository institutions. 

9 ‘‘(g) DAILY TRADING RECORDS.— 

10 ‘‘(1) IN GENERAL.—Each registered swap deal11 er and major swap participant shall, for such period 

12 as may be prescribed by rule or regulation, maintain 

13 daily trading records of that dealer’s or partici14 pant’s— 

15 ‘‘(A) swaps and all related records (includ16 ing related cash or forward transactions); and 

17 ‘‘(B) recorded communications, including 

18 the electronic mail, instant messages, and re19 cordings of telephone calls. 

20 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

21 trading records required to be maintained under 

22 paragraph (1) shall include such information as shall 

23 be prescribed by rule or regulation. 

24 ‘‘(3) CUSTOMER RECORDS.—Each registered 

25 swap dealer and major swap participant shall mainVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00578 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 tain daily trading records for each customer or 

2 counterparty in such manner and form as to be 

3 identifiable with each swap transaction. 

4 ‘‘(4) AUDIT TRAIL.— 

5 ‘‘(A) MAINTENANCE OF AUDIT TRAIL.— 

6 Each registered swap dealer and major swap 

7 participant shall maintain a complete audit trail 

8 for conducting comprehensive and accurate 

9 trade reconstructions. 

10 ‘‘(B) PERMISSIBLE COMPLIANCE BY ENTI11 TY OTHER THAN DEALER OR PARTICIPANT.—A 

12 registered swap repository may, at the request 

13 of a registered swap dealer or major swap par14 ticipant, satisfy the requirement of subpara15 graph (A) on behalf of such registered swap 

16 dealer or major swap participant. 

17 ‘‘(5) RULES.—Not later than 1 year after the 

18 date of the enactment of the Over-the-Counter De19 rivatives Markets Act of 2010, the Commission and 

20 the Securities and Exchange Commission shall joint21 ly adopt rules governing daily trading records for 

22 swap dealers, major swap participants, security23 based swap dealers, and major security-based swap 

24 participants. 

25 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 


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1 ‘‘(1) IN GENERAL.—Each registered swap deal2 er and major swap participant shall conform with 

3 such business conduct standards as may be pre4 scribed by rule or regulation, including any stand5 ards addressing— 

6 ‘‘(A) fraud, manipulation, and other abu7 sive practices involving swaps (including swaps 

8 that are offered but not entered into); 

9 ‘‘(B) diligent supervision of its business as 

10 a swap dealer; 

11 ‘‘(C) adherence to all applicable position 

12 limits; and 

13 ‘‘(D) such other matters as the Commis14 sion shall determine to be necessary or appro15 priate. 

16 ‘‘(2) BUSINESS CONDUCT REQUIREMENTS.— 

17 Business conduct requirements adopted by the Com18 mission pursuant to paragraph (1) shall— 

19 ‘‘(A) establish the standard of care for a 

20 swap dealer or major swap participant to verify 

21 that any counterparty meets the eligibility 

22 standards for an eligible contract participant; 

23 ‘‘(B) require disclosure by the swap dealer 

24 or major swap participant to any counterparty 

25 to the transaction (other than a swap dealer, 


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1 major swap participant, security-based swap 

2 dealer, or major security-based swap partici3 pant) of— 

4 ‘‘(i) information about the material 

5 risks and characteristics of the swap; 

6 ‘‘(ii) the source and amount of any 

7 fees or other material remuneration that 

8 the swap dealer or major swap participant 

9 would directly or indirectly expect to re10 ceive in connection with the swap; and 

11 ‘‘(iii) any other material incentives or 

12 conflicts of interest that the swap dealer or 

13 major swap participant may have in con14 nection with the swap; 

15 ‘‘(C) establish a standard of conduct for a 

16 swap dealer or major swap participant to com17 municate in a fair and balanced manner based 

18 on principles of fair dealing and good faith; 

19 ‘‘(D) establish a standard of conduct for a 

20 swap dealer or major swap participant, with re21 spect to a counterparty that is an eligible con22 tract participant within the meaning of sub23 clause (I) or (II) of clause (vii) of section 

24 1a(12) of this Act, to have a reasonable basis 


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1 to believe that the counterparty has an inde2 pendent representative that— 

3 ‘‘(i) has sufficient knowledge to evalu4 ate the transaction and risks; 

5 ‘‘(ii) is not subject to a statutory dis6 qualification; 

7 ‘‘(iii) is independent of the swap deal8 er or major swap participant; 

9 ‘‘(iv) undertakes a duty to act in the 

10 best interests of the counterparty it rep11 resents; 

12 ‘‘(v) makes appropriate disclosures; 

13 and 

14 ‘‘(vi) will provide written representa15 tions to the eligible contract participant re16 garding fair pricing and the appropriate17 ness of the transaction; and 

18 ‘‘(E) establish such other standards and 

19 requirements as the Commission may determine 

20 are necessary or appropriate in the public inter21 est, for the protection of investors, or otherwise 

22 in furtherance of the purposes of this title. 

23 ‘‘(3) RULES.—Not later than 1 year after the 

24 date of enactment of the Over-the-Counter Deriva25 tives Markets Act of 2010, the Commission and the 


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1 Securities and Exchange Commission shall jointly 

2 prescribe rules under this subsection governing busi3 ness conduct standards for swap dealers, major swap 

4 participants, security-based swap dealers, and major 

5 security-based swap participants. 

6 ‘‘(i) DOCUMENTATION AND BACK OFFICE STAND7 ARDS.— 

8 ‘‘(1) IN GENERAL.—Each registered swap deal9 er and major swap participant shall conform with 

10 standards, as may be prescribed by rule or regula11 tion, addressing timely and accurate confirmation, 

12 processing, netting, documentation, and valuation of 

13 all swaps. 

14 ‘‘(2) RULES.—Not later than 1 year after the 

15 date of the enactment of the Over-the-Counter De16 rivatives Markets Act of 2010, the Commission and 

17 the Securities and Exchange Commission shall joint18 ly adopt rules governing documentation and back of19 fice standards for swap dealers, major swap partici20 pants, security-based swap dealers, and major secu21 rity-based swap participants. 

22 ‘‘(j) DEALER RESPONSIBILITIES.—Each registered 

23 swap dealer and major swap participant shall, at all times, 

24 comply with the following requirements: 


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1 ‘‘(1) MONITORING OF TRADING.—The swap 

2 dealer or major swap participant shall monitor its 

3 trading in swaps to prevent violations of applicable 

4 position limits. 

5 ‘‘(2) DISCLOSURE OF GENERAL INFORMA6 TION.—The swap dealer or major swap participant 

7 shall disclose to the Commission information con8 cerning— 

9 ‘‘(A) terms and conditions of its swaps; 

10 ‘‘(B) swap trading operations, mechanisms, 

11 and practices; 

12 ‘‘(C) financial integrity protections relating 

13 to swaps; and 

14 ‘‘(D) other information relevant to its trad15 ing in swaps. 

16 ‘‘(3) ABILITY TO OBTAIN INFORMATION.—The 

17 swap dealer or major swap participant shall— 

18 ‘‘(A) establish and enforce internal systems 

19 and procedures to obtain any necessary infor20 mation to perform any of the functions de21 scribed in this section; and 

22 ‘‘(B) provide the information to the Com23 mission upon request. 


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1 ‘‘(4) CONFLICTS OF INTEREST.—The swap 

2 dealer and major swap participant shall implement 

3 conflict of interest systems and procedures that— 

4 ‘‘(A) establish structural and institutional 

5 safeguards to assure that the activities of any 

6 person within the firm relating to research or 

7 analysis of the price or market for any com8 modity are separated by appropriate informa9 tional partitions within the firm from the re10 view, pressure, or oversight of those whose in11 volvement in trading or clearing activities might 

12 potentially bias their judgment or supervision; 

13 and 

14 ‘‘(B) address such other issues as the 

15 Commission determines appropriate. 

16 ‘‘(5) ANTITRUST CONSIDERATIONS.—Unless 

17 necessary or appropriate to achieve the purposes of 

18 this Act, a swap dealer or major swap participant 

19 shall avoid— 

20 ‘‘(A) adopting any processes or taking any 

21 actions that result in any unreasonable re22 straints of trade; or 

23 ‘‘(B) imposing any material anticompeti24 tive burden on trading. 


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1 ‘‘(k) RULES.—The Commission and the Securities 

2 and Exchange Commission shall consult with each other 

3 prior to adopting any rules under the Over-the-Counter 

4 Derivatives Markets Act of 2010.’’. 

5 (b) CONFLICT OF INTERESTS.—The Commodity Fu6 tures Trading Commission and the Securities and Ex7 change Commission shall jointly adopt rules mitigating 

8 conflicts of interest in connection with a swap dealer, secu9 rity-based swap dealer, major swap participant, or major 

10 security-based swap participant’s conduct of business with 

11 a derivatives clearing organization, clearing agency, board 

12 of trade, or an alternative swap execution facility that 

13 clears or trades swaps in which such swap dealer, security14 based swap dealer, major swap participant, or major secu15 rity-based swap participant has a material debt or equity 

16 investment. 

17 SEC. 718. SEGREGATION OF ASSETS HELD AS COLLATERAL 

18 IN SWAP TRANSACTIONS. 

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

20 is amended by inserting after section 4s (as added by sec21 tion 717) the following: 

22 ‘‘SEC. 4t. SEGREGATION OF ASSETS HELD AS COLLATERAL 

23 IN SWAP TRANSACTIONS. 

24 ‘‘(a) CLEARED SWAPS.—A swap dealer, futures com25 mission merchant, or derivatives clearing organization by 


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1 or through which funds or other property provided as ini2 tial margin or collateral are held to margin, guarantee, 

3 or secure the obligations of a counterparty under a swap 

4 to be cleared by or through a derivatives clearing organiza5 tion shall segregate, maintain, and use the funds or other 

6 property provided as initial margin or collateral for the 

7 benefit of the counterparty, in accordance with such rules 

8 and regulations as the Commission shall prescribe for 

9 swap dealers that are not depository institutions, as that 

10 term is defined in section 3 of the Federal Deposit Insur11 ance Act (12 U.S.C. 1813) or the appropriate Federal 

12 banking agency shall prescribe for swap dealers that are 

13 depository institutions. Any such funds or other property 

14 provided as initial margin or collateral shall be treated as 

15 customer property under this Act. 

16 ‘‘(b) OTHER SWAPS.—At the request of a swap 

17 counterparty who provides funds or other property as ini18 tial margin or collateral to a swap dealer to margin, guar19 antee, or secure the obligations of the counterparty under 

20 a swap between the counterparty and the swap dealer that 

21 is not submitted for clearing to a derivatives clearing orga22 nization, the swap dealer shall segregate the funds or 

23 other property provided as initial margin or collateral for 

24 the benefit of the counterparty, and maintain the funds 

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1 pendent third-party custodian and designated as a seg2 regated account for the counterparty, in accordance with 

3 such rules and regulations as the Commission shall pre4 scribe for swap dealers that are not depository institu5 tions, as that term is defined in section 3 of the Federal 

6 Deposit Insurance Act (12 U.S.C. 1813) or the appro7 priate Federal banking agency shall prescribe for swap 

8 dealers that are depository institutions. Any segregation 

9 requested under this subsection shall be made available 

10 by a swap dealer to a counterparty on fair and reasonable 

11 terms on a non-discriminatory basis. This subsection shall 

12 not be interpreted to preclude commercial arrangements 

13 regarding the investment of the segregated funds or other 

14 property and the related allocation of gains and losses re15 sulting from any such investment, provided, however, that 

16 the segregated funds or other property under this sub17 section may be invested only in such investments as the 

18 Commission or the appropriate Federal banking agency, 

19 as applicable, permits by rule or regulation, and shall not 

20 be pledged, re-hypothecated, or otherwise encumbered by 

21 a swap dealer.’’. 

22 SEC. 719. CONFLICTS OF INTEREST. 

23 Section 4d of the Commodity Exchange Act (7 U.S.C. 

24 6d) is amended by— 


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1 (1) redesignating subsection (c) as subsection 

2 (d); and 

3 (2) inserting after subsection (b) the following: 

4 ‘‘(c) CONFLICTS OF INTEREST.—The Commission 

5 shall require that futures commission merchants and in6 troducing brokers implement conflict of interest systems 

7 and procedures that— 

8 ‘‘(1) establish structural and institutional safe9 guards to assure that the activities of any person 

10 within the firm relating to research or analysis of 

11 the price or market for any commodity are separated 

12 by appropriate informational partitions within the 

13 firm from the review, pressure, or oversight of those 

14 whose involvement in trading or clearing activities 

15 might potentially bias their judgment or supervision; 

16 and 

17 ‘‘(2) address such other issues as the Commis18 sion determines appropriate.’’. 

19 SEC. 720. ALTERNATIVE SWAP EXECUTION FACILITIES. 

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

21 is amended by inserting after section 5g the following: 

22 ‘‘SEC. 5h. ALTERNATIVE SWAP EXECUTION FACILITIES. 

23 ‘‘(a) DEFINITION.—For purposes of this section, the 

24 term ‘alternative swap execution facility’ means an elec25 tronic trading system with pre-trade and post-trade transVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00589 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 parency in which multiple participants have the ability to 

2 execute or trade swaps by accepting bids and offers made 

3 by other participants that are open to multiple partici4 pants in the system, but which is not an exchange. 

5 ‘‘(b) REGISTRATION.— 

6 ‘‘(1) IN GENERAL.—No person may operate a 

7 facility for the trading of swaps unless the facility is 

8 registered as an alternative swap execution facility 

9 under this section or as a designated contract mar10 ket registered under this Act. 

11 ‘‘(2) REQUIRED REGISTRATION FOR ALTER12 NATIVE SWAP EXECUTION FACILITIES.—Any person 

13 that is required to be registered as an alternative 

14 swap execution facility under this section shall reg15 ister with the Commission regardless of whether that 

16 person also is registered with the Securities and Ex17 change Commission as an alternative swap execution 

18 facility. 

19 ‘‘(c) REQUIREMENTS FOR TRADING.—An alternative 

20 swap execution facility that is registered under subsection 

21 (b) may trade any swap. 

22 ‘‘(d) TRADING BY CONTRACT MARKETS.—A board of 

23 trade that operates a contract market shall, to the extent 

24 that the board of trade also operates an alternative swap 

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1 tion system for trading on the contract market and the 

2 alternative swap execution facility, identify whether elec3 tronic trading is taking place on the contract market or 

4 the alternative swap execution facility. 

5 ‘‘(e) CRITERIA FOR REGISTRATION.— 

6 ‘‘(1) IN GENERAL.—To be registered as an al7 ternative swap execution facility, the facility shall be 

8 required to demonstrate to the Commission that 

9 such facility meets the criteria established under this 

10 section. 

11 ‘‘(2) DETERRENCE OF ABUSES.—Each alter12 native swap execution facility shall establish and en13 force trading and participation rules that will deter 

14 abuses and have the capacity to detect, investigate, 

15 and enforce those rules, including— 

16 ‘‘(A) means to obtain information nec17 essary to perform the functions required under 

18 this section; or 

19 ‘‘(B) means to— 

20 ‘‘(i) provide market participants with 

21 impartial access to the market; and 

22 ‘‘(ii) capture information that may be 

23 used in establishing whether any violations 

24 of this section have occurred. 


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1 ‘‘(3) TRADING PROCEDURES.—Each alternative 

2 swap execution facility shall establish and enforce 

3 rules or terms and conditions defining, or specifica4 tions detailing, trading procedures to be used in en5 tering and executing orders traded on or through its 

6 facilities. 

7 ‘‘(4) FINANCIAL INTEGRITY OF TRANS8 ACTIONS.—Each alternative swap execution facility 

9 shall establish and enforce rules and procedures for 

10 ensuring the financial integrity of swaps entered on 

11 or through its facilities, including the clearance and 

12 settlement of the swaps pursuant to section 2(j)(1). 

13 ‘‘(f) CORE PRINCIPLES FOR ALTERNATIVE SWAP

14 EXECUTION FACILITIES.— 

15 ‘‘(1) COMPLIANCE.— 

16 ‘‘(A) IN GENERAL.—To maintain its reg17 istration as an alternative swap execution facil18 ity, the facility shall comply with the core prin19 ciples established in this subsection and any re20 quirement that the Commission may impose by 

21 rule or regulation pursuant to section 8a(5). 

22 ‘‘(B) REASONABLE DISCRETION.—Except 

23 where the Commission determines otherwise by 

24 rule or regulation, the facility shall have reason25 able discretion in establishing the manner in 


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1 which it complies with the core principles estab2 lished in this subsection. 

3 ‘‘(2) COMPLIANCE WITH RULES.—Each alter4 native swap execution facility shall monitor and en5 force compliance with any of the rules of the facility, 

6 including the terms and conditions of the swaps 

7 traded on or through the facility and any limitations 

8 on access to the facility. 

9 ‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MA10 NIPULATION.—Each alternative swap execution facil11 ity shall permit trading only in swaps that are not 

12 readily susceptible to manipulation. 

13 ‘‘(4) MONITORING OF TRADING.—Each alter14 native swap execution facility shall monitor trading 

15 in swaps to prevent manipulation, price distortion, 

16 and disruptions of the delivery or cash settlement 

17 process through surveillance, compliance, and dis18 ciplinary practices and procedures, including meth19 ods for conducting real-time monitoring of trading 

20 and comprehensive and accurate trade reconstruc21 tions. 

22 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—Each 

23 alternative swap execution facility shall— 

24 ‘‘(A) establish and enforce rules that will 

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1 mation to perform any of the functions de2 scribed in this subsection; 

3 ‘‘(B) provide the information to the Com4 mission upon request; and 

5 ‘‘(C) have the capacity to carry out such 

6 international information-sharing agreements as 

7 the Commission may require. 

8 ‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 

9 ‘‘(A) IN GENERAL.—To reduce the poten10 tial threat of market manipulation or conges11 tion, especially during trading in the delivery 

12 month, and to eliminate or prevent excessive 

13 speculation as described in section 4a(a), an al14 ternative swap execution facility shall adopt for 

15 each of its contracts, where necessary and ap16 propriate, position limitations or position ac17 countability for speculators. 

18 ‘‘(B) FOR CERTAIN CONTRACTS.—For any 

19 contract that is subject to a position limitation 

20 established by the Commission pursuant to sec21 tion 4a(a), an alternative swap execution facil22 ity shall set its position limitation at a level no 

23 higher than the Commission limitation. 

24 ‘‘(7) EMERGENCY AUTHORITY.—Each alter25 native swap execution facility shall adopt rules to 


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1 provide for the exercise of emergency authority, in 

2 consultation or cooperation with the Commission, 

3 where necessary and appropriate, including the au4 thority— 

5 ‘‘(A) to liquidate or transfer open positions 

6 in any swap; or 

7 ‘‘(B) to suspend or curtail trading in a 

8 swap. 

9 ‘‘(8) TIMELY PUBLICATION OF TRADING INFOR10 MATION.—Each alternative swap execution facility 

11 shall make public timely information on price, trad12 ing volume, and other trading data on swaps to the 

13 extent prescribed by the Commission. 

14 ‘‘(9) RECORDKEEPING AND REPORTING.— 

15 ‘‘(A) IN GENERAL.—Each alternative swap 

16 execution facility shall— 

17 ‘‘(i) maintain records of all activities 

18 related to the business of the facility, in19 cluding a complete audit trail, in a form 

20 and manner acceptable to the Commission 

21 for a period of 5 years; 

22 ‘‘(ii) report to the Commission all in23 formation determined by the Commission 

24 to be necessary or appropriate for the 

25 Commission to perform its responsibilities 


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1 under this Act in a form and manner ac2 ceptable to the Commission; and 

3 ‘‘(iii) make available to the Securities 

4 and Exchange Commission, upon request, 

5 all information, including a complete audit 

6 trail, relating to transactions in security7 based swap agreements (as such term is 

8 defined in section 3(a)(75) of the Securi9 ties Exchange Act of 1934). 

10 ‘‘(B) DATA COLLECTION REQUIRE11 MENTS.—The Commission shall adopt data col12 lection and reporting requirements for alter13 native swap execution facilities that are com14 parable to corresponding requirements for de15 rivatives clearing organizations and swap re16 positories. 

17 ‘‘(10) ANTITRUST CONSIDERATIONS.—Unless 

18 necessary or appropriate to achieve the purposes of 

19 this Act, an alternative swap execution facility shall 

20 avoid— 

21 ‘‘(A) adopting any rules or taking any ac22 tions that result in any unreasonable restraints 

23 of trade; or 


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1 ‘‘(B) imposing any material anticompeti2 tive burden on trading on the swap execution 

3 facility. 

4 ‘‘(11) CONFLICTS OF INTEREST.—Each alter5 native swap execution facility shall— 

6 ‘‘(A) establish and enforce rules to mini7 mize conflicts of interest in its decision making 

8 process; and 

9 ‘‘(B) establish a process for resolving any 

10 conflicts of interest. 

11 ‘‘(12) DESIGNATION OF COMPLIANCE OFFI12 CER.— 

13 ‘‘(A) IN GENERAL.—Each alternative swap 

14 execution facility shall designate an individual 

15 to serve as a compliance officer. 

16 ‘‘(B) DUTIES.—The compliance officer 

17 shall perform the following duties: 

18 ‘‘(i) Reporting directly to the board or 

19 to the senior officer of the facility. 

20 ‘‘(ii) Reviewing the compliance of the 

21 facility with the core principles established 

22 in this subsection. 

23 ‘‘(iii) Consulting with the board of the 

24 facility, a body performing a function simi25 lar to that of a board, or the senior officer 


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1 of the facility, to resolve any conflicts of 

2 interest that may arise. 

3 ‘‘(iv) Administering the policies and 

4 procedures of the facility required to be es5 tablished pursuant to this section. 

6 ‘‘(v) Ensuring compliance with com7 modity laws and the rules and regulations 

8 issued thereunder, including any rules pre9 scribed by the Commission pursuant to 

10 this section. 

11 ‘‘(vi) Establishing procedures for re12 mediation of noncompliance issues found 

13 during compliance office reviews, 

14 lookbacks, internal or external audit find15 ings, self-reported errors, or through vali16 dated complaints. Procedures to be estab17 lished under this clause include procedures 

18 related to the handling, management re19 sponse, remediation, retesting, and closing 

20 of noncompliance issues. 

21 ‘‘(C) ANNUAL REPORTS REQUIRED.— 

22 ‘‘(i) IN GENERAL.—The compliance 

23 officer shall annually prepare and sign a 

24 report on the compliance of the alternative 

25 swap execution facility with the commodity 


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1 laws and the policies and procedures of the 

2 facility, including the code of ethics and 

3 conflict of interest policies of the facility, 

4 in accordance with rules prescribed by the 

5 Commission. 

6 ‘‘(ii) SUBMISSION.—The compliance 

7 report required under clause (i) shall ac8 company the financial reports of the alter9 native swap execution facility that are re10 quired to be furnished to the Commission 

11 pursuant to this section and shall include 

12 a certification that, under penalty of law, 

13 the report is accurate and complete. 

14 ‘‘(g) EXEMPTIONS.—The Commission may exempt, 

15 conditionally or unconditionally, an alternative swap exe16 cution facility from registration under this section if the 

17 Commission finds that such facility is subject to com18 parable, comprehensive supervision and regulation on a 

19 consolidated basis by the Securities and Exchange Com20 mission, an appropriate Federal banking agency, or the 

21 appropriate governmental authorities in the organization’s 

22 home country. 

23 ‘‘(h) HARMONIZATION OF RULES.—Not later than 

24 180 days after the date of the enactment of the Over-the25 Counter Derivatives Markets Act of 2010, the Commission 


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1 and the Securities and Exchange Commission shall jointly 

2 prescribe rules governing the regulation of alternative 

3 swap execution facilities under this section and section 3C 

4 of the Securities Exchange Act of 1934.’’. 

5 SEC. 721. DERIVATIVES TRANSACTION EXECUTION FACILI6 TIES AND EXEMPT BOARDS OF TRADE. 

7 (a) IN GENERAL.—Sections 5a and 5d of the Com8 modity Exchange Act (7 U.S.C. 7a and 7a-3) are repealed. 

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Section 2 of the Commodity Exchange Act 

11 (7 U.S.C. 2) is amended— 

12 (A) in subsection (a)(1)(A), in the first 

13 sentence, by striking ‘‘or 5a’’; 

14 (B) in subsection (a)(1)(C)— 

15 (i) in clause (ii)— 

16 (I) by striking ‘‘, or register a de17 rivatives transaction execution facility 

18 that trades or executes,’’; 

19 (II) by striking ‘‘, and no deriva20 tives transaction execution facility 

21 shall trade or execute such contracts 

22 of sale (or options on such contracts) 

23 for future delivery,’’; and 


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1 (III) by striking ‘‘or the deriva2 tives transaction execution facility,’’; 

3 and 

4 (ii) in clause (v)— 

5 (I) in subclause (II), by striking 

6 ‘‘or derivatives transaction execution 

7 facility’’; and 

8 (II) in subclause (V), by striking 

9 ‘‘or registered derivatives transaction 

10 execution facility,’’; 

11 (C) in subsection (a)(1)(D)— 

12 (i) in clause (i)— 

13 (I) in the matter preceding sub14 clause (I)— 

15 (aa) by striking ‘‘, or reg16 ister a derivatives transaction 

17 execution facility that trades or 

18 executes,’’; and 

19 (bb) by striking ‘‘, or reg20 istered as a derivatives trans21 action execution facility for,’’; 

22 and 

23 (II) in subclause (IV), by striking 

24 ‘‘registered derivatives transaction 


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1 execution facility,’’ each place that 

2 term appears; 

3 (ii) by amending clause (ii)(I) to read 

4 as follows: 

5 ‘‘(I) the transaction is conducted 

6 on or subject to the rules of a board 

7 of trade that has been designated by 

8 the Commission as a contract market 

9 in such security futures product;’’; 

10 (iii) in clause (ii)(II), by striking ‘‘or 

11 registered derivatives transaction execution 

12 facility’’; and 

13 (iv) in clause (ii)(III), by striking ‘‘or 

14 registered derivatives transaction execution 

15 facility’’; 

16 (D) in subsection (a)(9)(B)(ii), by striking 

17 ‘‘or derivatives transaction execution facility’’, 

18 each place that term appears; 

19 (E) in subsection (c)(1), by striking ‘‘sec20 tion 5a of this Act’’ and all that follows through 

21 ‘‘5d of this Act’’ and inserting ‘‘section 5b of 

22 this Act’’; 

23 (F) in subsection (c)(2)(B)(iv)— 


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1 (i) in subclause (II)(cc), by striking 

2 ‘‘or a derivatives transaction execution fa3 cility’’; and 

4 (ii) in subclause (IV)(cc), by striking 

5 ‘‘or a derivatives transaction execution fa6 cility’’; 

7 (G) in subsection (c)(2)(C)(iii)— 

8 (i) in subclause (II)(cc), by striking 

9 ‘‘or a derivatives transaction execution fa10 cility’’; and 

11 (ii) in subclause (IV)(cc), by striking 

12 ‘‘or a derivatives transaction execution fa13 cility’’; 

14 (H) in subsection (e)(2), by striking ‘‘or a 

15 derivatives transaction execution facility,’’; 

16 (I) in subsection (g), by striking ‘‘section 

17 5a of this Act’’ and all that follows through ‘‘5d 

18 of this Act’’ and inserting ‘‘section 5b of this 

19 Act’’; 

20 (J) in subsection (h)(7)(B)— 

21 (i) in clause (i), by striking ‘‘, or a de22 rivatives transaction execution facility,’’; 

23 (ii) in clause (ii), by striking ‘‘, or a 

24 derivatives transaction execution facility,’’; 

25 and 


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1 (iii) in clause (iv), ‘‘, a derivatives 

2 transaction execution facility,’’; and 

3 (K) in subsection (i)(2), by striking ‘‘sec4 tion 5a of this Act’’ and all that follows through 

5 ‘‘5d of this Act’’ and inserting ‘‘section 5b of 

6 this Act’’. 

7 (2) The Commodity Exchange Act (7 U.S.C. 1 

8 et seq.) is amended— 

9 (A) by striking ‘‘or derivatives transaction 

10 execution facility’’ each place that term ap11 pears; 

12 (B) by striking ‘‘or derivatives transaction 

13 execution facility,’’ each place that term ap14 pears; 

15 (C) by striking ‘‘, derivatives transaction 

16 execution facility,’’ each place that term ap17 pears; 

18 (D) by striking ‘‘derivatives transaction 

19 execution facility’’ each place that term ap20 pears; 

21 (E) by striking ‘‘or derivatives transaction 

22 execution facilities,’’ each place that term ap23 pears; 


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1 (F) by striking ‘‘or derivatives transaction 

2 execution facilities’’ each place that term ap3 pears; 

4 (G) by striking ‘‘or registered derivatives 

5 transaction execution facility’’ each place that 

6 term appears; 

7 (H) by striking ‘‘or registered derivatives 

8 transaction execution facility,’’ each place that 

9 term appears; and 

10 (I) by striking ‘‘and registered derivatives 

11 transaction execution facility’’ each place that 

12 term appears. 

13 (3) Section 4j of the Commodity Exchange Act 

14 (7 U.S.C. 6j) is amended in the heading by striking 

15 ‘‘AND REGISTERED DERIVATIVES TRANS16 ACTION EXECUTION FACILITIES’’. 

17 (4) Section 5(e)(2) of the Commodity Exchange 

18 Act (7 U.S.C. 5(e)) is repealed. 

19 (5) Sections 555, 556, 559, and 560 of title 11, 

20 United States Code, are each amended by striking ‘‘, 

21 a derivatives transaction execution facility registered 

22 under the Commodity Exchange Act,’’ each place 

23 that term appears. 

24 (6) Section 561 of title 11, United States Code, 

25 is amended by striking ‘‘or a derivatives transaction 


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1 execution facility registered under the Commodity 

2 Exchange Act’’. 

3 (7) Section 3(55)(C)(iii)(I) of the Securities Ex4 change Act of 1934 (15 U.S.C. 78c(55)(C)(iii)(I)) is 

5 amended by striking ‘‘or registered derivatives trans6 action execution facility’’. 

7 (8) Section 6(g)(1)(A) of the Securities Ex8 change Act of 1934 (15 U.S.C. 78f(g)(1)(A)) is 

9 amended— 

10 (A) by striking ‘‘that—’’ and all that fol11 lows through ‘‘(i) has been designated’’ and in12 serting ‘‘that has been designated’’; 

13 (B) by striking ‘‘; or’’ and inserting ‘‘; 

14 and’’; and 

15 (C) by striking clause (ii). 

16 (9) Section 5(b)(2)(C)(iii) of the Securities In17 vestor Protection Act of 1970 (15 U.S.C. 

18 78eee(b)(2)(C)(iii)) is amended by striking ‘‘, a de19 rivatives transaction execution facility registered 

20 under the Commodity Exchange Act,’’. 

21 SEC. 722. DESIGNATED CONTRACT MARKETS. 

22 (a) EXECUTION OF TRANSACTIONS.—Section 5(d) of 

23 the Commodity Exchange Act (7 U.S.C. 7(d)) is amended 

24 by amending paragraph (9) to read as follows: 

25 ‘‘(9) EXECUTION OF TRANSACTIONS.— 


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1 ‘‘(A) OPEN MARKET.—The board of trade 

2 shall provide a competitive, open, and efficient 

3 market and mechanism for executing trans4 actions that protects the price discovery process 

5 of trading in the board of trade’s centralized 

6 market. 

7 ‘‘(B) PERMISSIBLE TRANSACTIONS.—The 

8 rules may authorize, for bona fide business pur9 poses— 

10 ‘‘(i) transfer trades or office trades; 

11 ‘‘(ii) an exchange of— 

12 ‘‘(I) futures in connection with a 

13 cash commodity transaction; 

14 ‘‘(II) futures for cash commod15 ities; or 

16 ‘‘(III) futures for swaps; or 

17 ‘‘(iii) a futures commission merchant, 

18 acting as principal or agent, to enter into 

19 or confirm the execution of a contract for 

20 the purchase or sale of a commodity for fu21 ture delivery if the contract is reported, re22 corded, or cleared in accordance with the 

23 rules of the contract market or a deriva24 tives clearing organization.’’. 


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1 (b) ADDITIONAL PRINCIPLES.—Section 5(d) of the 

2 Commodity Exchange Act (7 U.S.C. 7(d)) is amended by 

3 adding at the end the following: 

4 ‘‘(19) FINANCIAL RESOURCES.—The board of 

5 trade shall have adequate financial, operational, and 

6 managerial resources to discharge the responsibil7 ities of a contract market. For the board of trade’s 

8 financial resources to be considered adequate, their 

9 value shall exceed the total amount that would en10 able the contract market to cover its operating costs 

11 for a period of 1 year, calculated on a rolling basis. 

12 ‘‘(20) SYSTEM SAFEGUARDS.—The board of 

13 trade shall— 

14 ‘‘(A) establish and maintain a program of 

15 risk analysis and oversight to identify and mini16 mize sources of operational risk through the de17 velopment of appropriate controls and proce18 dures, and the development of automated sys19 tems, that are reliable, secure, and give ade20 quate scalable capacity; 

21 ‘‘(B) establish and maintain emergency 

22 procedures, backup facilities, and a plan for dis23 aster recovery that allow for the timely recovery 

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1 ment of the board of trade’s responsibilities and 

2 obligations; and 

3 ‘‘(C) periodically conduct tests to verify 

4 that backup resources are sufficient to ensure 

5 continued order processing and trade matching, 

6 price reporting, market surveillance, and main7 tenance of a comprehensive and accurate audit 

8 trail.’’. 

9 SEC. 723. MARGIN. 

10 Section 8a of the Commodity Exchange Act (7 U.S.C. 

11 12a) is amended in paragraph (7)(C) by striking ‘‘, ex12 cepting the setting of levels of margin’’. 

13 SEC. 724. POSITION LIMITS. 

14 (a) EXCESSIVE SPECULATION.—Section 4a(a) of the 

15 Commodity Exchange Act (7 U.S.C. 6a(a)) is amended— 

16 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; 

17 (2) in the first sentence, by striking ‘‘on elec18 tronic trading facilities with respect to a significant 

19 price discovery contract’’ and inserting ‘‘swaps that 

20 perform or affect a significant price discovery func21 tion with respect to regulated markets’’; 

22 (3) in the second sentence, by— 

23 (A) inserting ‘‘, including any group or 

24 class of traders,’’ after ‘‘held by any person’’; 

25 and 


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1 (B) striking ‘‘on an electronic trading fa2 cility with respect to a significant price dis3 covery contract,’’ and inserting ‘‘swaps that 

4 perform or affect a significant price discovery 

5 function with respect to regulated markets,’’; 

6 and 

7 (4) inserting at the end the following: 

8 ‘‘(2) AGGREGATE POSITION LIMITS.—The Com9 mission may, by rule or regulation, establish limits 

10 (including related hedge exemption provisions) on 

11 the aggregate number or amount of positions in con12 tracts based upon the same underlying commodity 

13 (as defined by the Commission) that may be held by 

14 any person, including any group or class of traders, 

15 for each month across— 

16 ‘‘(A) contracts listed by designated con17 tract markets; 

18 ‘‘(B) contracts traded on a foreign board 

19 of trade that provides members or other partici20 pants located in the United States with direct 

21 access to its electronic trading and order 

22 matching system; and 

23 ‘‘(C) swap contracts that perform or affect 

24 a significant price discovery function with re25 spect to regulated markets. 


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1 ‘‘(3) SIGNIFICANT PRICE DISCOVERY FUNC2 TION.—In making a determination under paragraph 

3 (2) whether a swap performs or affects a significant 

4 price discovery function with respect to regulated 

5 markets, the Commission shall consider, as appro6 priate, the following: 

7 ‘‘(A) PRICE LINKAGE.—The extent to 

8 which the swap uses or otherwise relies on a 

9 daily or final settlement price, or other major 

10 price parameter, of another contract traded on 

11 a regulated market based upon the same under12 lying commodity, to value a position, transfer or 

13 convert a position, financially settle a position, 

14 or close out a position. 

15 ‘‘(B) ARBITRAGE.—The extent to which 

16 the price for the swap is sufficiently related to 

17 the price of another contract traded on a regu18 lated market based upon the same underlying 

19 commodity so as to permit market participants 

20 to effectively arbitrage between the markets by 

21 simultaneously maintaining positions or exe22 cuting trades in the swaps on a frequent and 

23 recurring basis. 

24 ‘‘(C) MATERIAL PRICE REFERENCE.—The 

25 extent to which, on a frequent and recurring 


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1 basis, bids, offers, or transactions in a contract 

2 traded on a regulated market are directly based 

3 on, or are determined by referencing, the price 

4 generated by the swap. 

5 ‘‘(D) MATERIAL LIQUIDITY.—The extent 

6 to which the volume of swaps being traded in 

7 the commodity is sufficient to have a material 

8 effect on another contract traded on a regulated 

9 market. 

10 ‘‘(E) OTHER MATERIAL FACTORS.—Such 

11 other material factors as the Commission speci12 fies by rule or regulation as relevant to deter13 mine whether a swap serves a significant price 

14 discovery function with respect to a regulated 

15 market. 

16 ‘‘(4) EXEMPTIONS.—The Commission, by rule, 

17 regulation, or order, may exempt, conditionally or 

18 unconditionally, any person or class of persons, any 

19 swap or class of swaps, or any transaction or class 

20 of transactions from any requirement the Commis21 sion may establish under this section with respect to 

22 position limits.’’. 

23 (b) TRACKING POSITION LIMITS.—Section 4a(b) of 

24 the Commodity Exchange Act (7 U.S.C. 6a(b)) is amend25 ed— 


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1 (1) in paragraph (1), by striking ‘‘or derivatives 

2 transaction execution facility or facilities or elec3 tronic trading facility’’ and inserting ‘‘or alternative 

4 swap execution facility or facilities’’; and 

5 (2) in paragraph (2), by striking ‘‘or derivatives 

6 transaction execution facility or facilities or elec7 tronic trading facility’’ and inserting ‘‘or alternative 

8 swap execution facility’’. 

9 SEC. 725. ENHANCED AUTHORITY OVER REGISTERED ENTI10 TIES. 

11 (a) Section 5(d)(1) of the Commodity Exchange Act 

12 (7 U.S.C. 7(d)(1)) is amended by striking ‘‘The board of 

13 trade shall have’’ and inserting ‘‘Except where the Com14 mission otherwise determines by rule or regulation pursu15 ant to section 8a(5), the board of trade shall have’’. 

16 (b) Section 5b(c)(2)(A) of the Commodity Exchange 

17 Act (7 U.S.C. 7a–1(c)(2)(A)) is amended by striking ‘‘The 

18 applicant shall have’’ and inserting ‘‘Except where the 

19 Commission otherwise determines by rule or regulation 

20 pursuant to section 8a(5), the applicant shall have’’. 

21 (c) Section 5c(a) of the Commodity Exchange Act (7 

22 U.S.C. 7a–2(a)) is amended— 

23 (1) in paragraph (1), by striking ‘‘5a(d) and 

24 5b(c)(2)’’ and inserting ‘‘5b(c)(2) and 5h(e)’’; and 


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1 (2) in paragraph (2), by striking ‘‘shall not’’ 

2 and inserting ‘‘may’’. 

3 (d) Section 5c(c)(1) of the Commodity Exchange Act 

4 (7 U.S.C. 7a–2(c)(1)) is amended— 

5 (1) by striking ‘‘(1) IN GENERAL.—Subject to’’ 

6 and inserting the following: 

7 ‘‘(1) IN GENERAL.— 

8 ‘‘(A) Subject to’’; and 

9 (2) by adding at the end the following: 

10 ‘‘(B) Unless section 805(e) of the Pay11 ment, Clearing, and Settlement Supervision Act 

12 of 2009 applies, the new contract or instrument 

13 or clearing of the new contract or instrument, 

14 new rule, or new amendment shall become ef15 fective, pursuant to the registered entity’s cer16 tification, 10 business days after the Commis17 sion’s receipt of the certification (or such short18 er period as may be determined by the Commis19 sion by rule or regulation) unless the Commis20 sion notifies the registered entity within such 

21 time that the Commission is staying the certifi22 cation because there exist novel or complex 

23 issues that require additional time to analyze, 

24 an inadequate explanation by the submitting 

25 registered entity, or a potential inconsistency 


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1 with this Act (including regulations under this 

2 Act). 

3 ‘‘(C) A notification by the Commission 

4 pursuant to subparagraph (B) shall stay the 

5 certification of the new contract or instrument 

6 or clearing of the new contract or instrument, 

7 new rule, or new amendment for up to an addi8 tional 90 days from the date of such notifica9 tion.’’. 

10 (e) Section 5c(d) of the Commodity Exchange Act (7 

11 U.S.C. 7a–2(d)) is repealed. 

12 SEC. 726. FOREIGN BOARDS OF TRADE. 

13 (a) TECHNICAL AMENDMENT.—Section 4(b) of the 

14 Commodity Exchange Act (7 U.S.C. 6(b)) is amended in 

15 the third sentence by striking ‘‘No rule or regulation’’ and 

16 inserting ‘‘Except as provided in paragraphs (1) and (2), 

17 no rule or regulation’’. 

18 (b) REGISTRATION.—Section 4(b) of the Commodity 

19 Exchange Act (7 U.S.C. 6(b)) is further amended by in20 serting before ‘‘The Commission’’ the following: 

21 ‘‘(1) REGISTRATION.—The Commission may 

22 adopt rules and regulations requiring registration 

23 with the Commission for a foreign board of trade 

24 that provides the members of the foreign board of 

25 trade or other participants located in the United 


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1 States direct access to the electronic trading and 

2 order matching system of the foreign board of trade, 

3 including rules and regulations prescribing proce4 dures and requirements applicable to the registration 

5 of such foreign boards of trade. For purposes of this 

6 paragraph, ‘direct access’ refers to an explicit grant 

7 of authority by a foreign board of trade to an identi8 fied member or other participant located in the 

9 United States to enter trades directly into the elec10 tronic trading and order matching system of the for11 eign board of trade. 

12 ‘‘(2) LINKED CONTRACTS.—It shall be unlawful 

13 for a foreign board of trade to provide to the mem14 bers of the foreign board of trade or other partici15 pants located in the United States direct access to 

16 the electronic trading and order matching system of 

17 the foreign board of trade with respect to an agree18 ment, contract, or transaction that settles against 

19 any price (including the daily or final settlement 

20 price) of 1 or more contracts listed for trading on 

21 a registered entity, unless the Commission deter22 mines that— 

23 ‘‘(A) the foreign board of trade makes pub24 lic daily trading information regarding the 

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1 parable to the daily trading information pub2 lished by the registered entity for the 1 or more 

3 contracts against which the agreement, con4 tract, or transaction traded on the foreign 

5 board of trade settles; and 

6 ‘‘(B) the foreign board of trade (or the for7 eign futures authority that oversees the foreign 

8 board of trade)— 

9 ‘‘(i) adopts position limits (including 

10 related hedge exemption provisions) for the 

11 agreement, contract, or transaction that 

12 are comparable to the position limits (in13 cluding related hedge exemption provi14 sions) adopted by the registered entity for 

15 the 1 or more contracts against which the 

16 agreement, contract, or transaction traded 

17 on the foreign board of trade settles; 

18 ‘‘(ii) has the authority to require or 

19 direct market participants to limit, reduce, 

20 or liquidate any position the foreign board 

21 of trade (or the foreign futures authority 

22 that oversees the foreign board of trade) 

23 determines to be necessary to prevent or 

24 reduce the threat of price manipulation, 

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1 tion 4a, price distortion, or disruption of 

2 delivery or the cash settlement process; 

3 ‘‘(iii) agrees to promptly notify the 

4 Commission, with regard to the agreement, 

5 contract, or transaction that settles against 

6 any price (including the daily or final set7 tlement price) of 1 or more contracts listed 

8 for trading on a registered entity, of any 

9 change regarding— 

10 ‘‘(I) the information that the for11 eign board of trade will make publicly 

12 available; 

13 ‘‘(II) the position limits that the 

14 foreign board of trade or foreign fu15 tures authority will adopt and enforce; 

16 ‘‘(III) the position reductions re17 quired to prevent manipulation, exces18 sive speculation as described in sec19 tion 4a, price distortion, or disruption 

20 of delivery or the cash settlement 

21 process; and 

22 ‘‘(IV) any other area of interest 

23 expressed by the Commission to the 

24 foreign board of trade or foreign fu25 tures authority; 


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1 ‘‘(iv) provides information to the 

2 Commission regarding large trader posi3 tions in the agreement, contract, or trans4 action that is comparable to the large trad5 er position information collected by the 

6 Commission for the 1 or more contracts 

7 against which the agreement, contract, or 

8 transaction traded on the foreign board of 

9 trade settles; and 

10 ‘‘(v) provides the Commission with in11 formation necessary to publish reports on 

12 aggregate trader positions for the agree13 ment, contract, or transaction traded on 

14 the foreign board of trade that are com15 parable to such reports on aggregate trad16 er positions for the 1 or more contracts 

17 against which the agreement, contract, or 

18 transaction traded on the foreign board of 

19 trade settles. 

20 ‘‘(3) EXISTING FOREIGN BOARDS OF TRADE.— 

21 Paragraphs (1) and (2) shall not be effective with 

22 respect to any foreign board of trade to which the 

23 Commission has granted direct access permission be24 fore the date of the enactment of this subsection 


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1 until the date that is 180 days after such date of en2 actment. 

3 ‘‘(4) PERSONS LOCATED IN THE UNITED

4 STATES.—’’. 

5 (c) LIABILITY OF REGISTERED PERSONS TRADING

6 ON A FOREIGN BOARD OF TRADE.— 

7 (1) Section 4(a) of the Commodity Exchange 

8 Act (7 U.S.C. 6(a)) is amended by inserting ‘‘or by 

9 subsection (f)’’ after ‘‘Unless exempted by the Com10 mission pursuant to subsection (c)’’. 

11 (2) Section 4 of the Commodity Exchange Act 

12 (7 U.S.C. 6) is further amended by adding at the 

13 end the following: 

14 ‘‘(f) ADDITIONAL EXEMPTION.—A person registered 

15 with the Commission, or exempt from registration by the 

16 Commission, under this Act may not be found to have vio17 lated subsection (a) with respect to a transaction in, or 

18 in connection with, a contract of sale of a commodity for 

19 future delivery if the person has reason to believe that the 

20 transaction and the contract is made on or subject to the 

21 rules of a foreign board of trade that has complied with 

22 paragraphs (1) and (2) of subsection (b).’’. 

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1 change Act (7 U.S.C. 25(a)) is amended by adding at the 

2 end the following: 

3 ‘‘(5) CONTRACT ENFORCEMENT FOR FOREIGN

4 FUTURES CONTRACTS.—A contract of sale of a com5 modity for future delivery traded or executed on or 

6 through the facilities of a board of trade, exchange, 

7 or market located outside the United States for pur8 poses of section 4(a) shall not be void, voidable, or 

9 unenforceable, and a party to such a contract shall 

10 not be entitled to rescind or recover any payment 

11 made with respect to the contract, based on the fail12 ure of the foreign board of trade to comply with any 

13 provision of this Act.’’. 

14 SEC. 727. LEGAL CERTAINTY FOR SWAPS. 

15 Section 22(a)(4) of the Commodity Exchange Act (7 

16 U.S.C. 25(a)(4)) is amended to read as follows: 

17 ‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELI18 GIBLE COUNTERPARTIES.— 

19 ‘‘(A) HYBRIDS.—No hybrid instrument 

20 sold to any investor shall be void, voidable, or 

21 unenforceable, and no party to such hybrid in22 strument shall be entitled to rescind, or recover 

23 any payment made with respect to, such a hy24 brid instrument under this section or any other 

25 provision of Federal or State law, based solely 


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1 on the failure of the hybrid instrument to com2 ply with the terms or conditions of section 2(f) 

3 or regulations of the Commission. 

4 ‘‘(B) AGREEMENTS BETWEEN CONTRACT

5 PARTICIPANTS.—No agreement, contract, or 

6 transaction between eligible contract partici7 pants or persons reasonably believed to be eligi8 ble contract participants shall be void, voidable, 

9 or unenforceable, and no party thereto shall be 

10 entitled to rescind, or recover any payment 

11 made with respect to, such agreement, contract, 

12 or transaction under this section or any other 

13 provision of Federal or State law, based solely 

14 on the failure of the agreement, contract, or 

15 transaction to meet the definition of a swap set 

16 forth in section 1a or to be cleared pursuant to 

17 section 2(j)(1).’’. 

18 SEC. 728. FDICIA AMENDMENTS. 

19 Sections 408 and 409 of the Federal Deposit Insur20 ance Corporation Improvement Act of 1991 (12 U.S.C. 

21 4421-4422) are hereby repealed. 

22 SEC. 729. PRIMARY ENFORCEMENT AUTHORITY. 

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

24 is amended by adding the following new section after sec25 tion 4b: 


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1 ‘‘SEC. 4b–1. PRIMARY ENFORCEMENT AUTHORITY. 

2 ‘‘(a) COMMODITY FUTURES TRADING COMMIS3 SION.—Except as provided in subsections (b), (c), and (d), 

4 the Commission shall have primary authority to enforce 

5 the provisions of subtitle A of the Over-the-Counter De6 rivatives Markets Act of 2010 with respect to any person. 

7 ‘‘(b) APPROPRIATE FEDERAL BANKING AGENCY.— 

8 The appropriate Federal banking agency shall have exclu9 sive authority to enforce the provisions of section 4s(e) 

10 and other prudential requirements of this Act with respect 

11 to depository institutions (as that term is defined in sec12 tion 3 of the Federal Deposit Insurance Act (12 U.S.C. 

13 1813) that are swap dealers or major swap participants. 

14 ‘‘(c) REFERRAL.—If the appropriate Federal banking 

15 agency has cause to believe that a swap dealer or major 

16 swap participant that is a depository institution may have 

17 engaged in conduct that constitutes a violation of the non18 prudential requirements of section 4s or rules adopted by 

19 the Commission thereunder, the agency may recommend 

20 in writing to the Commission that the Commission initiate 

21 an enforcement proceeding as authorized under this Act. 

22 The recommendation shall be accompanied by a written 

23 explanation of the concerns giving rise to the recommenda24 tion. 

25 ‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.—If the 

26 Commission does not initiate an enforcement proceeding 


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1 before the end of the 90-day period beginning on the date 

2 on which the Commission receives a recommendation 

3 under subsection (c), the appropriate Federal banking 

4 agency may initiate an enforcement proceeding as per5 mitted under Federal law.’’. 

6 SEC. 730. ENFORCEMENT. 

7 (a) Section 4b(a)(2) of the Commodity Exchange Act 

8 (7 U.S.C. 6b(a)(2)) is amended by striking ‘‘or other 

9 agreement, contract, or transaction subject to paragraphs 

10 (1) and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 

11 (b) Section 4b(b) of the Commodity Exchange Act 

12 (7 U.S.C. 6b(b)) is amended by striking ‘‘or other agree13 ment, contract or transaction subject to paragraphs (1) 

14 and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 

15 (c) Section 4c(a) of the Commodity Exchange Act (7 

16 U.S.C. 6c(a)) is amended by inserting ‘‘or swap’’ before 

17 ‘‘if the transaction is used or may be used’’. 

18 (d) Section 6(c) of the Commodity Exchange Act (7 

19 U.S.C. 9) is amended by inserting ‘‘or of any swap,’’ be20 fore ‘‘or has willfully made’’. 

21 (e) Section 6(d) of the Commodity Exchange Act (7 

22 U.S.C. 13b) is amended by inserting ‘‘or of any swap,’’ 

23 before ‘‘or otherwise is violating’’. 


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1 (f) Section 6c of the Commodity Exchange Act (7 

2 U.S.C. 13a-1) is amended by inserting ‘‘or any swap’’ 

3 after ‘‘commodity for future delivery’’. 

4 (g) Section 9(a)(2) of the Commodity Exchange Act 

5 (7 U.S.C. 13(a)(2)) is amended by inserting ‘‘or of any 

6 swap,’’ before ‘‘or to corner’’. 

7 (h) Section 9(a)(4) of the Commodity Exchange Act 

8 (7 U.S.C. 13(a)(4)) is amended by inserting ‘‘swap reposi9 tory,’’ before ‘‘or futures association’’. 

10 (i) Section 9(e)(1) of the Commodity Exchange Act 

11 (7 U.S.C. 13(e)(1)) is amended— 

12 (1) by inserting ‘‘swap repository,’’ before ‘‘or 

13 registered futures association’’; and 

14 (2) by inserting ‘‘, or swaps,’’ before ‘‘on the 

15 basis’’. 

16 (j) Section 8(b) of the Federal Deposit Insurance Act 

17 (12 U.S.C. 1818(b)) is amended— 

18 (1) by redesignating paragraphs (6), (7), (8), 

19 (9), and (10) as paragraphs (7), (8), (9), (10), and 

20 (11), respectively; and 

21 (2) by inserting after paragraph (5), the fol22 lowing: 

23 ‘‘(6) This section shall apply to any swap deal24 er, major swap participant, security-based swap 

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1 rivatives clearing organization, swap repository, or 

2 alternative swap execution facility, whether or not it 

3 is an insured depository institution, for which there 

4 is an appropriate Federal banking agency for pur5 poses of the Over-the-Counter Derivatives Markets 

6 Act of 2010.’’. 

7 SEC. 731. RETAIL COMMODITY TRANSACTIONS. 

8 Section 2(c) of the Commodity Exchange Act (7 

9 U.S.C. 2(c)) is amended— 

10 (1) in paragraph (1), by striking ‘‘(to the extent 

11 provided in section 5a(g), 5b, 5d, or 12(e)(2)(B))’’ 

12 and inserting ‘‘5b, or 12(e)(2)(B))’’; and 

13 (2) in paragraph (2), by adding at the end the 

14 following: 

15 ‘‘(D) RETAIL COMMODITY TRANS16 ACTIONS.— 

17 ‘‘(i) This subparagraph shall apply to 

18 any agreement, contract, or transaction in 

19 any commodity that is— 

20 ‘‘(I) entered into with, or offered 

21 to (even if not entered into with), a 

22 person that is not an eligible contract 

23 participant or eligible commercial en24 tity; and 


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1 ‘‘(II) entered into, or offered 

2 (even if not entered into), on a lever3 aged or margined basis, or financed 

4 by the offeror, the counterparty, or a 

5 person acting in concert with the of6 feror or counterparty on a similar 

7 basis. 

8 ‘‘(ii) Clause (i) shall not apply to— 

9 ‘‘(I) an agreement, contract, or 

10 transaction described in paragraph (1) 

11 or subparagraph (A), (B), or (C), in12 cluding any agreement, contract, or 

13 transaction specifically excluded from 

14 subparagraph (A), (B), or (C); 

15 ‘‘(II) any security; 

16 ‘‘(III) a contract of sale that— 

17 ‘‘(aa) results in actual deliv18 ery not later than 28 days or 

19 such other period as the Commis20 sion may determine by rule or 

21 regulation based upon the typical 

22 commercial practice in cash or 

23 spot markets for the commodity 

24 involved; or 


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1 ‘‘(bb) creates an enforceable 

2 obligation to deliver between a 

3 seller and a buyer that have the 

4 ability to deliver and accept deliv5 ery, respectively, in connection 

6 with their line of business; 

7 ‘‘(IV) an agreement, contract, or 

8 transaction that is listed on a national 

9 securities exchange registered under 

10 section 6(a) of the Securities Ex11 change Act of 1934 (15 U.S.C. 

12 78f(a)); or 

13 ‘‘(V) an identified banking prod14 uct, as defined in section 402(b) of 

15 the Legal Certainty for Bank Prod16 ucts Act of 2000 (7 U.S.C. 27(b)). 

17 ‘‘(iii) Sections 4(a), 4(b), and 4b shall 

18 apply to any agreement, contract or trans19 action described in clause (i), that is not 

20 excluded from clause (i) by clause (ii), as 

21 if the agreement, contract, or transaction 

22 were a contract of sale of a commodity for 

23 future delivery. 

24 ‘‘(iv) This subparagraph shall not be 

25 construed to limit any jurisdiction that the 


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1 Commission may otherwise have under any 

2 other provision of this Act over an agree3 ment, contract, or transaction that is a 

4 contract of sale of a commodity for future 

5 delivery. 

6 ‘‘(v) This subparagraph shall not be 

7 construed to limit any jurisdiction that the 

8 Commission or the Securities and Ex9 change Commission may otherwise have 

10 under any other provisions of this Act with 

11 respect to security futures products and 

12 persons effecting transactions in security 

13 futures products. 

14 ‘‘(vi) For the purposes of this sub15 paragraph, an agricultural producer, pack16 er, or handler shall be considered an eligi17 ble commercial entity for any agreement, 

18 contract, or transaction for a commodity in 

19 connection with its line of business.’’. 

20 SEC. 732. LARGE SWAP TRADER REPORTING. 

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

22 is amended by adding after section 4t (as added by section 

23 718) the following: 


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1 ‘‘SEC. 4u. LARGE SWAP TRADER REPORTING. 

2 ‘‘(a) MANDATORY REPORTING OF CERTAIN

3 SWAPS.— 

4 ‘‘(1) IN GENERAL.—A person that enters into 

5 any swap shall file or cause to be filed with the 

6 properly designated officer of the Commission the 

7 reports described in paragraph (2). 

8 ‘‘(2) REPORTS.— 

9 ‘‘(A) SWAP REPORTS.—Each person de10 scribed in paragraph (1) shall, in accordance 

11 with the rules and regulations of the Commis12 sion, keep books and records of any swaps or 

13 transactions and positions in any related com14 modity traded on or subject to the rules of any 

15 board of trade. 

16 ‘‘(B) CASH OR SPOT TRANSACTIONS.— 

17 Each person described in paragraph (1) shall, 

18 in accordance with the rules and regulations of 

19 the Commission, keep books and records of any 

20 cash or spot transactions in, inventories of, and 

21 purchase and sale commitments of, any related 

22 commodity traded on or subject to the rules of 

23 any board of trade, if— 

24 ‘‘(i) such person directly or indirectly 

25 enters into such swaps during any 1 day in 

26 an amount equal to or in excess of such 


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1 amount as shall be fixed from time to time 

2 by the Commission; and 

3 ‘‘(ii) such person directly or indirectly 

4 has or obtains a position in such swaps 

5 equal to or in excess of such amount as 

6 shall be fixed from time to time by the 

7 Commission. 

8 ‘‘(b) RECORDKEEPING.—Any books and records re9 quired to be kept under subsection (a) shall— 

10 ‘‘(1) show complete details concerning all trans11 actions and positions as the Commission may by rule 

12 or regulation prescribe; 

13 ‘‘(2) be open at all times to inspection and ex14 amination by any representative of the Commission; 

15 and 

16 ‘‘(3) be open at all times to inspection and ex17 amination by the Securities and Exchange Commis18 sion, to the extent such books and records relate to 

19 transactions in security-based swap agreements (as 

20 that term is defined in section 3(a)(75) of the Secu21 rities Exchange Act of 1934). 

22 ‘‘(c) RULE OF CONSTRUCTION.—For the purpose of 

23 this section, the swaps, futures, and cash or spot trans24 actions and positions of any person shall include such 


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1 transactions and positions of any persons directly or indi2 rectly controlled by such person. 

3 ‘‘(d) CONSIDERATIONS.—In making a determination 

4 under this section whether a swap performs or affects a 

5 significant price discovery function with respect to regu6 lated markets, the Commission shall consider the factors 

7 set forth in section 4a(a)(3).’’. 

8 SEC. 733. OTHER AUTHORITY. 

9 Unless otherwise provided by its terms, this subtitle 

10 does not divest any appropriate Federal banking agency, 

11 the Commission, the Securities and Exchange Commis12 sion, or other Federal or State agency, of any authority 

13 derived from any other applicable law. 

14 SEC. 734. ANTITRUST. 

15 Nothing in the amendments made by this subtitle 

16 shall be construed to modify, impair, or supersede the op17 eration of any of the antitrust laws. For purposes of this 

18 subtitle, the term ‘‘antitrust laws’’ has the same meaning 

19 given such term in subsection (a) of the first section of 

20 the Clayton Act, except that such term includes section 

21 5 of the Federal Trade Commission Act to the extent that 

22 such section 5 applies to unfair methods of competition. 


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1 Subtitle B—Regulation of Security2 Based Swap Markets 

3 SEC. 751. DEFINITIONS UNDER THE SECURITIES EX4 CHANGE ACT OF 1934. 

5 Section 3(a) of the Securities Exchange Act of 1934 

6 (15 U.S.C. 78c(a)) is amended— 

7 (1) in subparagraphs (A) and (B) of paragraph 

8 (5), by inserting ‘‘(but not security-based swaps, 

9 other than security-based swaps with or for persons 

10 that are not eligible contract participants)’’ after 

11 ‘‘securities’’ each place that term appears; 

12 (2) in paragraph (10), by inserting ‘‘security13 based swap,’’ after ‘‘security future,’’; 

14 (3) in paragraph (13), by adding at the end the 

15 following: ‘‘For security-based swaps, such terms in16 clude the execution, termination (prior to its sched17 uled maturity date), assignment, exchange, or simi18 lar transfer or conveyance of, or extinguishing of 

19 rights or obligations under, a security-based swap, 

20 as the context may require.’’; 

21 (4) in paragraph (14), by adding at the end the 

22 following: ‘‘For security-based swaps, such terms in23 clude the execution, termination (prior to its sched24 uled maturity date), assignment, exchange, or simi25 lar transfer or conveyance of, or extinguishing of 


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1 rights or obligations under, a security-based swap, 

2 as the context may require.’’; 

3 (5) in paragraph (39)— 

4 (A) by striking ‘‘or government securities 

5 dealer’’ and inserting ‘‘government securities 

6 dealer, security-based swap dealer, or major se7 curity-based swap participant’’ each place that 

8 term appears; and 

9 (B) in subparagraph (B)(i)(II), by insert10 ing ‘‘security-based swap dealer, major security11 based swap participant,’’ after ‘‘government se12 curities dealer,’’; and 

13 (6) by adding at the end the following: 

14 ‘‘(65) ELIGIBLE CONTRACT PARTICIPANT.—The 

15 term ‘eligible contract participant’ has the same 

16 meaning as in section 1a(12) of the Commodity Ex17 change Act (7 U.S.C. 1a(12)). 

18 ‘‘(66) MAJOR SWAP PARTICIPANT.—The term 

19 ‘major swap participant’ has the same meaning as in 

20 section 1a(39) of the Commodity Exchange Act (7 

21 U.S.C. 1a(39)). 

22 ‘‘(67) MAJOR SECURITY-BASED SWAP PARTICI23 PANT.— 


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1 ‘‘(A) IN GENERAL.—The term ‘major secu2 rity-based swap participant’ means any person 

3 who is not a security-based swap dealer— 

4 ‘‘(i) who maintains a substantial net 

5 position in outstanding security-based 

6 swaps, excluding positions held primarily 

7 for hedging, reducing, or otherwise miti8 gating commercial risk; or 

9 ‘‘(ii) whose failure to perform under 

10 the terms of its security-based swaps would 

11 cause significant credit losses to its secu12 rity-based swap counterparties. 

13 ‘‘(B) IMPLEMENTATION.—The Commission 

14 shall implement the definition under this para15 graph by rule or regulation in a manner that is 

16 prudent for the effective monitoring, manage17 ment, and oversight of the financial system. 

18 ‘‘(68) SECURITY-BASED SWAP.— 

19 ‘‘(A) IN GENERAL.—Except as provided in 

20 subparagraph (B), the term ‘security-based 

21 swap’ means any agreement, contract, or trans22 action that would be a swap under section 

23 1a(34) of the Commodity Exchange Act (7 

24 U.S.C. 1a(34)) (without regard to paragraph 


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1 (34)(B)(xii) of such section), and that is based 

2 on— 

3 ‘‘(i) an index that is a narrow-based 

4 security index, including any interest 

5 therein or based on the value thereof; 

6 ‘‘(ii) a single security or loan, includ7 ing any interest therein or based on the 

8 value thereof; or 

9 ‘‘(iii) the occurrence, nonoccurrence, 

10 or extent of the occurrence of an event re11 lating to a single issuer of a security or the 

12 issuers of securities in a narrow-based se13 curity index, provided that such event di14 rectly affects the financial statements, fi15 nancial condition, or financial obligations 

16 of the issuer. 

17 ‘‘(B) EXCLUSION.—The term ‘security18 based swap’ does not include any agreement, 

19 contract, or transaction that meets the defini20 tion of security-based swap only because such 

21 agreement, contract, or transaction references 

22 or is based upon a government security. 

23 ‘‘(C) MIXED SWAP.— 

24 ‘‘(i) IN GENERAL.—The term ‘secu25 rity-based swap’ includes any agreement, 


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1 contract, or transaction that is as de2 scribed in subparagraph (A) and also is 

3 based on— 

4 ‘‘(I) the value of 1 or more inter5 est or other rates, currencies, com6 modities, instruments of indebtedness, 

7 indices, quantitative measures, other 

8 financial or economic interest or prop9 erty of any kind (other than securities 

10 or any other financial or economic in11 terest or property described in sub12 paragraph (A) or a narrow-based se13 curity index); or 

14 ‘‘(II) the occurrence, nonoccur15 rence, or the extent of the occurrence 

16 of an event or contingency associated 

17 with a potential financial, economic, 

18 or commercial consequence (other 

19 than an event or contingency de20 scribed in subparagraph (A)(iii)). 

21 ‘‘(ii) RULE OF CONSTRUCTION.—A se22 curity-based swap shall not constitute, nor 

23 shall be construed to constitute, a mixed 

24 swap solely because the obligations or 

25 rights of 1 party to the swap agreement 


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1 are defined by reference to 1 or more in2 terest rates or currencies. 

3 ‘‘(D) RULE OF CONSTRUCTION REGARDING

4 MASTER AGREEMENTS.—The term ‘security5 based swap’ shall be construed to include a 

6 master agreement that provides for an agree7 ment, contract, or transaction that is a secu8 rity-based swap pursuant to subparagraph (A), 

9 together with all supplements to any such mas10 ter agreement, without regard to whether the 

11 master agreement contains an agreement, con12 tract, or transaction that is not a security-based 

13 swap pursuant to subparagraph (A), except 

14 that the master agreement shall be considered 

15 to be a security-based swap only with respect to 

16 each agreement, contract, or transaction under 

17 the master agreement that is a security-based 

18 swap pursuant to subparagraph (A). 

19 ‘‘(69) SWAP.—The term ‘swap’ has the same 

20 meaning as in section 1a(34) of the Commodity Ex21 change Act (7 U.S.C. 1a(34)). 

22 ‘‘(70) PERSON ASSOCIATED WITH A SECURITY23 BASED SWAP DEALER OR MAJOR SECURITY-BASED

24 SWAP PARTICIPANT.—The term ‘person associated 

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1 based swap participant’ or ‘associated person of a 

2 security-based swap dealer or major security-based 

3 swap participant’ means— 

4 ‘‘(A) any partner, officer, director, or 

5 branch manager of such security-based swap 

6 dealer or major security-based swap participant 

7 (or any person occupying a similar status or 

8 performing similar functions); 

9 ‘‘(B) any person directly or indirectly con10 trolling, controlled by, or under common control 

11 with such security-based swap dealer or major 

12 security-based swap participant; or 

13 ‘‘(C) any employee of such security-based 

14 swap dealer or major security-based swap par15 ticipant, except that any person associated with 

16 a security-based swap dealer or major security17 based swap participant whose functions are 

18 solely clerical or ministerial shall not be in19 cluded in the meaning of such term other than 

20 for purposes of section 15F(l). 

21 ‘‘(71) SECURITY-BASED SWAP DEALER.— 

22 ‘‘(A) IN GENERAL.—The term ‘security23 based swap dealer’ means any person engaged 

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1 based swaps for such person’s own account, 

2 through a broker or otherwise. 

3 ‘‘(B) EXCEPTION.—The term ‘security4 based swap dealer’ does not include a person 

5 that buys or sells security-based swaps for such 

6 person’s own account, either individually or in 

7 a fiduciary capacity, but not as a part of a reg8 ular business. 

9 ‘‘(72) APPROPRIATE FEDERAL BANKING AGEN10 CY.—The term ‘appropriate Federal banking agency’ 

11 has the same meaning as in section 3 of the Federal 

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

13 ‘‘(73) BOARD.—The term ‘Board’ means the 

14 Board of Governors of the Federal Reserve System. 

15 ‘‘(74) SWAP DEALER.—The term ‘swap dealer’ 

16 has the same meaning as in section 1a(38) of the 

17 Commodity Exchange Act (7 U.S.C. 1a(38)). 

18 ‘‘(75) SECURITY-BASED SWAP AGREEMENT.— 

19 ‘‘(A) IN GENERAL.—For purposes of sec20 tions 9, 10, 10B, 16, 20, and 21A of this Act, 

21 and section 17 of the Securities Act of 1933, 

22 the term ‘security-based swap agreement’ 

23 means a swap agreement as defined in section 

24 206A of the Gramm-Leach-Bliley Act (15 

25 U.S.C. 78c note) of which a material term is 


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1 based on the price, yield, value, or volatility of 

2 any security or any group or index of securities, 

3 or any interest therein. 

4 ‘‘(B) EXCLUSIONS.—The term ‘security5 based swap agreement’ does not include any se6 curity-based swap. 

7 ‘‘(76) PRIMARY FINANCIAL REGULATORY AGEN8 CY.—The term ‘primary financial regulatory agency’ 

9 has the same meaning as in section 2 of the Restor10 ing American Financial Stability Act of 2010.’’. 

11 SEC. 752. REPEAL OF PROHIBITION ON REGULATION OF SE12 CURITY-BASED SWAPS. 

13 (a) REPEAL.—Sections 206B and 206C of the 

14 Gramm-Leach-Bliley Act (15 U.S.C. 78c note) are hereby 

15 repealed. 

16 (b) CONFORMING AMENDMENTS TO GRAMM-LEACH17 BLILEY.—Section 206A(a) of the Gramm-Leach-Bliley 

18 Act (15 U.S.C. 78c note) is amended in the material pre19 ceding paragraph (1), by striking ‘‘Except as’’ and all that 

20 follows through ‘‘that—’’ and inserting the following: ‘‘Ex21 cept as provided in subsection (b), as used in this section, 

22 the term ‘swap agreement’ means any agreement, con23 tract, or transaction that—’’ 

24 (c) CONFORMING AMENDMENTS TO THE SECURITIES

25 ACT OF 1933.— 


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1 (1) Section 2A(b) of the Securities Act of 1933 

2 (15 U.S.C. 77b–1) is amended— 

3 (A) by striking subsection (a) and reserv4 ing the subsection; and 

5 (B) in subsection (b)— 

6 (i) by striking ‘‘(as defined in section 

7 206B of the Gramm-Leach-Bliley Act)’’ 

8 each place that term appears; 

9 (ii) by striking paragraph (1); and 

10 (iii) by redesignating paragraphs (2), 

11 (3), and (4) as paragraphs (1), (2), and 

12 (3), respectively. 

13 (2) Section 17 of the Securities Act of 1933 (15 

14 U.S.C. 77q) is amended— 

15 (A) in subsection (a), by striking ‘‘206B of 

16 the Gramm-Leach-Bliley Act’’ and inserting 

17 ‘‘3(a)(75) of the Securities Exchange Act of 

18 1934’’; and 

19 (B) in subsection (d), by striking ‘‘206B of 

20 the Gramm-Leach-Bliley Act’’ and inserting 

21 ‘‘3(a)(75) of the Securities Exchange Act of 

22 1934’’. 

23 (d) CONFORMING AMENDMENTS TO THE SECURITIES

24 EXCHANGE ACT OF 1934.—The Securities Exchange Act 

25 of 1934 (15 U.S.C. 78a et seq.) is amended— 


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1 (1) in section 3A (15 U.S.C. 78c–1)— 

2 (A) by striking ‘‘(as defined in section 

3 206B of the Gramm-Leach-Bliley Act)’’ each 

4 place that term appears; 

5 (B) by striking subsection (a) and reserv6 ing the subsection; and 

7 (C) in subsection (b)— 

8 (i) by striking paragraph (1); 

9 (ii) by redesignating paragraphs (2), 

10 (3), and (4) as paragraphs (1), (2), and 

11 (3), respectively; and 

12 (iii) in paragraph (2) (as so redesig13 nated), by inserting ‘‘or section 9(j) with 

14 respect to rulemaking authority to prevent 

15 fraudulent, deceptive, or manipulative 

16 practices’’ after ‘‘reporting requirements’’; 

17 (2) in section 9(a) (15 U.S.C. 78i(a)), by strik18 ing paragraphs (2) through (5) and inserting the 

19 following: 

20 ‘‘(2) To effect, alone or with 1 or more other 

21 persons, a series of transactions in any security reg22 istered on a national securities exchange or in con23 nection with any security-based swap or security24 based swap agreement with respect to such security 

25 creating actual or apparent active trading in such 


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1 security, or raising or depressing the price of such 

2 security, for the purpose of inducing the purchase or 

3 sale of such security by others. 

4 ‘‘(3) If a dealer, broker, security-based swap 

5 dealer, major security-based swap participant, or 

6 other person selling or offering for sale or pur7 chasing or offering to purchase the security or secu8 rity-based swap or security based-swap agreement 

9 with respect to such security to induce the purchase 

10 or sale of any security registered on a national secu11 rities exchange or any security-based swap or secu12 rity-based swap agreement with respect to such se13 curity by the circulation or dissemination in the or14 dinary course of business of information to the effect 

15 that the price of any such security will or is likely 

16 to rise or fall because of market operations of any 

17 1 or more persons conducted for the purpose of rais18 ing or depressing the price of such security. 

19 ‘‘(4) If a dealer, broker, security-based swap 

20 dealer, major security-based swap participant, or 

21 other person selling or offering for sale or pur22 chasing or offering to purchase the security or a se23 curity-based swap or security-based swap agreement 

24 with respect to such security, to make, regarding 

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1 change or any security-based swap or security-based 

2 swap agreement with respect to such security, for 

3 the purpose of inducing the purchase or sale of such 

4 security or such security-based swap or security5 based swap agreement, any statement which was at 

6 the time and in the light of the circumstances under 

7 which it was made, false or misleading with respect 

8 to any material fact, and which he or she knew or 

9 had reasonable ground to believe was so false or 

10 misleading. 

11 ‘‘(5) For a consideration, received directly or 

12 indirectly from a dealer, broker, security-based swap 

13 dealer, major security-based swap participant, or 

14 other person selling or offering for sale or pur15 chasing or offering to purchase the security or secu16 rity-based swap or security-based swap agreement 

17 with respect to such security, to induce the purchase 

18 or sale of any security registered on a national secu19 rities exchange or any security-based swap or secu20 rity-based swap agreement with respect to such se21 curity by the circulation or dissemination of informa22 tion to the effect that the price of any such security 

23 will or is likely to rise or fall because of the market 

24 operations of any 1 or more persons conducted for 


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1 the purpose of raising or depressing the price of 

2 such security.’’; 

3 (3) in section 9(i) (15 U.S.C. 78i(i)), by strik4 ing ‘‘(as defined in section 206B of the Gramm5 Leach-Bliley Act)’’; 

6 (4) in section 10 (15 U.S.C. 78j), by striking 

7 ‘‘(as defined in section 206B of the Gramm-Leach8 Bliley Act)’’ each place that term appears; 

9 (5) in section 15(c)(1) (15 U.S.C. 78o(c)(1))— 

10 (A) in subparagraph (A), by striking ‘‘, or 

11 any security-based swap agreement (as defined 

12 in section 206B of the Gramm-Leach-Bliley 

13 Act),’’; and 

14 (B) in subparagraphs (B) and (C), by 

15 striking ‘‘agreement (as defined in section 206B 

16 of the Gramm-Leach-Bliley Act)’’ each place 

17 that term appears; 

18 (6) in section 15(i) (15 U.S.C. 78o(i)), as 

19 added by section 303(f) of the Commodity Futures 

20 Modernization Act of 2000 (Public Law 106–554; 

21 114 Stat. 2763A–455)), by striking ‘‘(as defined in 

22 section 206B of the Gramm-Leach-Bliley Act)’’; 

23 (7) in section 16 (15 U.S.C. 78p)— 

24 (A) in subsection (a)(2)(C), by striking 

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1 Leach-Bliley Act)’’ and inserting ‘‘or a security2 based swap’’; 

3 (B) in subsection (a)(3)(B), by inserting 

4 ‘‘or security-based swaps’’ after ‘‘security-based 

5 swap agreements’’; 

6 (C) in subsection (b)— 

7 (i) by striking ‘‘(as defined in section 

8 206B of the Gramm-Leach-Bliley Act)’’ 

9 each place that term appears; and 

10 (ii) inserting ‘‘or a security-based 

11 swap’’ after ‘‘security-based swap agree12 ment’’ each place that term appears; and 

13 (D) in subsection (g), by striking ‘‘(as de14 fined in section 206B of the Gramm-Leach-Bli15 ley Act)’’; 

16 (8) in section 20 (15 U.S.C. 78t)— 

17 (A) in subsection (d), by striking ‘‘(as de18 fined in section 206B of the Gramm-Leach-Bli19 ley Act)’’; and 

20 (B) in subsection (f), by striking ‘‘(as de21 fined in section 206B of the Gramm-Leach-Bli22 ley Act)’’; and 

23 (9) in section 21A (15 U.S.C. 78u–1)— 


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1 (A) in subsection (a)(1), by striking ‘‘(as 

2 defined in section 206B of the Gramm-Leach3 Bliley Act)’’; and 

4 (B) in subsection (g), by striking ‘‘(as de5 fined in section 206B of the Gramm-Leach-Bli6 ley Act)’’. 

7 SEC. 753. AMENDMENTS TO THE SECURITIES EXCHANGE 

8 ACT OF 1934. 

9 (a) CLEARING FOR SECURITY-BASED SWAPS.— 

10 (1) IN GENERAL.—The Securities Exchange 

11 Act of 1934 (15 U.S.C. 78a et seq.) is amended by 

12 adding the following section after section 3A: 

13 ‘‘SEC. 3B. CLEARING FOR SECURITY-BASED SWAPS. 

14 ‘‘(a) CLEARING REQUIREMENT.— 

15 ‘‘(1) SUBMISSION.— 

16 ‘‘(A) IN GENERAL.—Except as provided in 

17 paragraph (9), any person who is a party to a 

18 security-based swap shall submit such security19 based swap for clearing to a clearing agency 

20 registered under section 17A of this Act. 

21 ‘‘(B) REQUIRED CONDITIONS.—The rules 

22 of a clearing agency described in subparagraph 

23 (A) shall— 

24 ‘‘(i) prescribe that all security-based 

25 swaps with the same terms and conditions 


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1 accepted for clearing by the clearing agen2 cy are fungible and may be offset with 

3 each other; and 

4 ‘‘(ii) provide for nondiscriminatory 

5 clearing of a security-based swap executed 

6 on or through the rules of an unaffiliated 

7 national securities exchange or an alter8 native swap execution facility. 

9 ‘‘(2) COMMISSION APPROVAL.— 

10 ‘‘(A) IN GENERAL.—A clearing agency 

11 shall submit to the Commission for prior ap12 proval any group, category, type, or class of se13 curity-based swaps that the clearing agency 

14 seeks to accept for clearing, which submission 

15 the Commission shall make available to the 

16 public. 

17 ‘‘(B) DEADLINE.—The Commission shall 

18 take final action on a request submitted pursu19 ant to subparagraph (A) not later than 90 days 

20 after submission of the request, unless the 

21 clearing agency submitting the request agrees 

22 to an extension of the time limitation estab23 lished under this subparagraph. 

24 ‘‘(C) APPROVAL.—The Commission shall 

25 approve, unconditionally or subject to such 


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1 terms and conditions as the Commission deter2 mines to be appropriate, any request submitted 

3 pursuant to subparagraph (A) if the Commis4 sion finds that the request is consistent with 

5 the requirements of section 17A. The Commis6 sion shall not approve any such request if the 

7 Commission does not make such finding. 

8 ‘‘(D) RULES.—Not later than 180 days 

9 after the date of the enactment of the Over-the10 Counter Derivatives Markets Act of 2010, the 

11 Commission shall adopt rules for a clearing 

12 agency’s submission for approval, pursuant to 

13 this paragraph, of any group, category, type, or 

14 class of security-based swaps that the clearing 

15 agency seeks to accept for clearing. 

16 ‘‘(3) STAY OF CLEARING REQUIREMENT.—At 

17 any time after issuance of an approval pursuant to 

18 paragraph (2): 

19 ‘‘(A) REVIEW PROCESS.—The Commission, 

20 on application of a counterparty to a security21 based swap or on its own initiative, may stay 

22 the clearing requirement of paragraph (1) until 

23 the Commission completes a review of the terms 

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1 egory, type, or class of security-based swaps, 

2 and the clearing arrangement. 

3 ‘‘(B) DEADLINE.—The Commission shall 

4 complete a review undertaken pursuant to sub5 paragraph (A) not later than 90 days after 

6 issuance of the stay, unless the clearing agency 

7 that clears the security-based swap, or the 

8 group, category, type or class of security-based 

9 swaps, agrees to an extension of the time limi10 tation established under this subparagraph. 

11 ‘‘(C) DETERMINATION.—Upon completion 

12 of the review undertaken pursuant to subpara13 graph (A)— 

14 ‘‘(i) the Commission may determine, 

15 unconditionally or subject to such terms 

16 and conditions as the Commission deter17 mines to be appropriate, that the security18 based swap, or the group, category, type, 

19 or class of security-based swaps, must be 

20 cleared pursuant to this subsection if the 

21 Commission finds that such clearing— 

22 ‘‘(I) is consistent with the re23 quirements of section 17A; and 

24 ‘‘(II) is otherwise in the public 

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1 tors, and consistent with the purposes 

2 of this title; 

3 ‘‘(ii) the Commission may determine 

4 that the clearing requirement of paragraph 

5 (1) shall not apply to the security-based 

6 swap, or the group, category, type, or class 

7 of security-based swaps; or 

8 ‘‘(iii) if a determination is made that 

9 the clearing requirement of paragraph (1) 

10 shall no longer apply, then it shall still be 

11 permissible to clear such security-based 

12 swap, or the group, category, type, or class 

13 of security-based swaps. 

14 ‘‘(D) RULES.—Not later than 180 days 

15 after the date of the enactment of the Over-the16 Counter Derivatives Markets Act of 2010, the 

17 Commission shall adopt rules for reviewing, 

18 pursuant to this paragraph, a clearing agency’s 

19 clearing of a security-based swap, or a group, 

20 category, type, or class of security-based swaps 

21 that the Commission has accepted for clearing. 

22 ‘‘(4) SECURITY-BASED SWAPS REQUIRED TO BE

23 ACCEPTED FOR CLEARING.— 

24 ‘‘(A) RULEMAKING.—Not later than 180 

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1 Counter Derivatives Markets Act of 2010, the 

2 Commission and the Commodity Futures Trad3 ing Commission shall jointly adopt rules to fur4 ther identify any group, category, type, or class 

5 of security-based swaps not submitted for ap6 proval under paragraph (2) that the Commis7 sion and the Commodity Futures Trading Com8 mission deem should be accepted for clearing. 

9 In adopting such rules, the Commission and the 

10 Commodity Futures Trading Commission shall 

11 take into account the following factors: 

12 ‘‘(i) The extent to which any of the 

13 terms of the group, category, type, or class 

14 of security-based swaps, including price, 

15 are disseminated to third parties or are 

16 referenced in other agreements, contracts, 

17 or transactions. 

18 ‘‘(ii) The volume of transactions in 

19 the group, category, type, or class of secu20 rity-based swaps. 

21 ‘‘(iii) The extent to which the terms of 

22 the group, category, type, or class of secu23 rity-based swaps are similar to the terms 

24 of other agreements, contracts, or trans25 actions that are centrally cleared. 


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1 ‘‘(iv) Whether any differences in the 

2 terms of the group, category, type, or class 

3 of security-based swaps, compared to other 

4 agreements, contracts, or transactions that 

5 are centrally cleared, are of economic sig6 nificance. 

7 ‘‘(v) Whether a clearing agency is pre8 pared to clear the group, category, type, or 

9 class of security-based swaps and such 

10 clearing agency has in place effective risk 

11 management systems. 

12 ‘‘(vi) Any other factors the Commis13 sion and the Commodity Futures Trading 

14 Commission determine to be appropriate. 

15 ‘‘(B) OTHER DESIGNATIONS.—At any time 

16 after the adoption of the rules required under 

17 subparagraph (A), the Commission may sepa18 rately designate a particular security-based 

19 swap or class of security-based swaps as subject 

20 to the clearing requirement in paragraph (1), 

21 taking into account the factors established in 

22 clauses (i) through (vi) of subparagraph (A) 

23 and the joint rules adopted in such subpara24 graph. 


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1 ‘‘(5) PREVENTION OF EVASION.—The Commis2 sion shall have authority to prescribe rules under 

3 this section, or issue interpretations of such rules, as 

4 necessary to prevent evasions of this section. 

5 ‘‘(6) REQUIRED REPORTING.— 

6 ‘‘(A) BOTH COUNTERPARTIES.—Both 

7 counterparties to a security-based swap that is 

8 not cleared by any clearing agency shall report 

9 such a security-based swap either to a reg10 istered security-based swap repository described 

11 in section 13(n) or, if there is no repository 

12 that would accept the security-based swap, to 

13 the Commission pursuant to section 13A. 

14 ‘‘(B) TIMING.—Counterparties to a secu15 rity-based swap shall submit the reports re16 quired under subparagraph (A) not later than 

17 such time period as the Commission may by 

18 rule or regulation prescribe. 

19 ‘‘(7) TRANSITION RULES.— 

20 ‘‘(A) REPORTING TRANSITION RULES.— 

21 Rules adopted by the Commission under this 

22 section shall provide for the reporting of data, 

23 as follows: 

24 ‘‘(i) Security-based swaps entered into 

25 before the date of the enactment of this 


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1 section shall be reported to a registered se2 curity-based swap repository or the Com3 mission not later than 180 days after the 

4 effective date of this section. 

5 ‘‘(ii) Security-based swaps entered 

6 into on or after such date of enactment 

7 shall be reported to a registered security8 based swap repository or the Commission 

9 not later than the later of— 

10 ‘‘(I) 90 days after such effective 

11 date; or 

12 ‘‘(II) such other time after enter13 ing into the security-based swap as 

14 the Commission may prescribe by rule 

15 or regulation. 

16 ‘‘(B) CLEARING TRANSITION RULES.— 

17 ‘‘(i) Security-based swaps entered into 

18 before the date of the enactment of this 

19 section are exempt from the clearing re20 quirements of this subsection if reported 

21 pursuant to subparagraph (A)(i). 

22 ‘‘(ii) Security-based swaps entered 

23 into before application of the clearing re24 quirement pursuant to this section are ex25 empt from the clearing requirements of 


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1 this section if reported pursuant to sub2 paragraph (A)(ii). 

3 ‘‘(8) TRADE EXECUTION.— 

4 ‘‘(A) IN GENERAL.—With respect to trans5 actions involving security-based swaps subject 

6 to the clearing requirement of paragraph (1), 

7 counterparties shall— 

8 ‘‘(i) execute the transaction on an ex9 change; or 

10 ‘‘(ii) execute the transaction on an al11 ternative swap execution facility registered 

12 under section 3C or an alternative swap 

13 execution facility that is exempt from reg14 istration under section 3C(f) of this Act. 

15 ‘‘(B) EXCEPTION.—The requirements of 

16 clauses (i) and (ii) of subparagraph (A) shall 

17 not apply if no exchange or alternative swap 

18 execution facility makes the swap available to 

19 trade. 

20 ‘‘(9) EXEMPTIONS.— 

21 ‘‘(A) REQUIRED EXEMPTION.—Subject to 

22 paragraph (4), the Commission shall exempt a 

23 security-based swap from the requirements of 

24 paragraphs (1) and (8) and any rules issued 

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1 istered under this Act will accept the security2 based swap for clearing. 

3 ‘‘(B) PERMISSIVE EXEMPTION.—Subject to 

4 paragraph (4), the Commission by rule or 

5 order, as the Commission deems consistent with 

6 the public interest, may conditionally or uncon7 ditionally exempt a security-based swap from 

8 the requirements of paragraphs (1) and (8), 

9 and any rules issued under this subsection, if 1 

10 of the counterparties to the security-based 

11 swap— 

12 ‘‘(i) is not a security-based swap deal13 er or major security-based swap partici14 pant; and 

15 ‘‘(ii) does not meet the eligibility re16 quirements of any clearing agency that 

17 clears the security-based swap. 

18 ‘‘(C) DETERMINATION OF THE FINANCIAL

19 STABILITY OVERSIGHT COUNCIL.—The Com20 mission may act by rule or order to exempt a 

21 security-based swap from any requirement or 

22 rule under this subsection only if— 

23 ‘‘(i) the Commission has provided a 

24 written notice to the Financial Stability 


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1 Oversight Council describing the proposed 

2 exemption; and 

3 ‘‘(ii) the Financial Stability Oversight 

4 Council has not made a determination and 

5 notified the Commission within 60 days of 

6 receipt of such notice that such exemption 

7 would pose a threat to the stability of the 

8 United States financial system. 

9 ‘‘(D) OPTION TO CLEAR.—If a security10 based swap is exempt from the clearing require11 ments of paragraph (1)— 

12 ‘‘(i) the parties to the security-based 

13 swap may submit the security-based swap 

14 for clearing; and 

15 ‘‘(ii) the security-based swap shall be 

16 submitted for clearing upon the request of 

17 a party to the security-based swap. 

18 ‘‘(10) RELATIONSHIP TO DERIVATIVES CLEAR19 ING ORGANIZATIONS.—A clearing agency may clear 

20 swaps that are required to be cleared by a person 

21 who is registered as a derivatives clearing organiza22 tion under the Commodity Exchange Act (7 U.S.C. 

23 1 et seq.). 

24 ‘‘(11) REQUIRED REGISTRATION FOR DEPOSI25 TORY INSTITUTIONS AND CLEARING AGENCIES.— 


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1 Any person that is required to be registered as a 

2 clearing agency under this title shall register with 

3 the Commission regardless of whether that person is 

4 also a depository institution (as that term is defined 

5 in section 3 of the Federal Deposit Insurance Act 

6 (12 U.S.C. 1813)) or a derivatives clearing organiza7 tion registered with the Commodity Futures Trading 

8 Commission under the Commodity Exchange Act (7 

9 U.S.C. 1 et seq.). 

10 ‘‘(b) REPORTING.— 

11 ‘‘(1) TRANSPARENCY.— 

12 ‘‘(A) IN GENERAL.—A clearing agency that 

13 clears security-based swaps shall provide to the 

14 Commission and any security-based swap repos15 itory designated by the Commission all informa16 tion determined by the Commission to be nec17 essary to perform its responsibilities under this 

18 Act. 

19 ‘‘(B) DATA COLLECTION REQUIRE20 MENTS.—The Commission shall adopt data col21 lection and maintenance requirements for secu22 rity-based swaps cleared by clearing agencies 

23 that are comparable to the corresponding re24 quirements for security-based swaps accepted 

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1 rity-based swaps traded on alternative swap 

2 execution facilities. 

3 ‘‘(C) SHARING OF INFORMATION.—The 

4 Commission shall share such information, upon 

5 request, with the Board, the Commodity Fu6 tures Trading Commission, the appropriate 

7 Federal banking agencies, the Financial Sta8 bility Oversight Council, and the Department of 

9 Justice or to other persons the Commission 

10 deems appropriate, including foreign financial 

11 supervisors (including foreign futures authori12 ties), foreign central banks, and foreign min13 istries. 

14 ‘‘(2) PUBLIC INFORMATION.—A clearing agency 

15 that clears security-based swaps shall provide to the 

16 Commission, or its designee, such information as is 

17 required by, and in a form and at a frequency to be 

18 determined by, the Commission, in order to comply 

19 with the public reporting requirements contained in 

20 section 13. 

21 ‘‘(c) DESIGNATION OF COMPLIANCE OFFICER.— 

22 ‘‘(1) IN GENERAL.—Each clearing agency shall 

23 designate an individual to serve as a compliance offi24 cer. 


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1 ‘‘(2) DUTIES.—The compliance officer shall 

2 perform the following duties: 

3 ‘‘(A) Reporting directly to the board or to 

4 the senior officer of the clearing agency. 

5 ‘‘(B) Consulting with the board of the 

6 clearing agency, a body performing a function 

7 similar to that of a board, or the senior officer 

8 of the clearing agency, to resolve any conflicts 

9 of interest that may arise. 

10 ‘‘(C) Administering the policies and proce11 dures of the clearing agency required to be es12 tablished pursuant to this section. 

13 ‘‘(D) Ensuring compliance with securities 

14 laws and the rules and regulations issued there15 under, including rules prescribed by the Com16 mission pursuant to this section. 

17 ‘‘(E) Establishing procedures for remedi18 ation of noncompliance issues found during 

19 compliance office reviews, lookbacks, internal or 

20 external audit findings, self-reported errors, or 

21 through validated complaints. Procedures to be 

22 established under this subparagraph include 

23 procedures related to the handling, manage24 ment response, remediation, retesting, and clos25 ing of noncompliance issues. 


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1 ‘‘(3) ANNUAL REPORTS REQUIRED.— 

2 ‘‘(A) IN GENERAL.—The compliance offi3 cer shall annually prepare and sign a report on 

4 the compliance of the clearing agency with the 

5 securities laws and the policies and procedures 

6 of the agency, including the code of ethics and 

7 conflict of interest policies of the agency, in ac8 cordance with rules prescribed by the Commis9 sion. 

10 ‘‘(B) SUBMISSION.—The compliance report 

11 required under subparagraph (A) shall accom12 pany the financial reports of the clearing agen13 cy that are required to be furnished to the 

14 Commission pursuant to this section and shall 

15 include a certification that, under penalty of 

16 law, the report is accurate and complete. 

17 ‘‘(d) CONSULTATION.—The Commission and the 

18 Commodity Futures Trading Commission shall consult 

19 with the appropriate Federal banking agencies and each 

20 other prior to adopting rules under this section with re21 spect to security-based swaps. 

22 ‘‘(e) HARMONIZATION OF RULES.—Not later than 

23 180 days after the effective date of the Over-the-Counter 

24 Derivatives Markets Act of 2010, the Commission and the 


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1 Commodity Futures Trading Commission shall jointly 

2 adopt uniform rules governing— 

3 ‘‘(1) the clearing and settlement of swaps, as 

4 well as persons that are registered as derivatives 

5 clearing organizations for swaps under the Com6 modity Exchange Act (7 U.S.C. 1 et seq.); and 

7 ‘‘(2) the clearing and settlement of security8 based swaps, as well as persons that are registered 

9 as clearing agencies for security-based swaps under 

10 this Act.’’. 

11 (2) EXISTING DEPOSITORY INSTITUTIONS AND

12 DERIVATIVES CLEARING ORGANIZATIONS.—Section 

13 17A(b) of the Securities Exchange Act of 1934 (15 

14 U.S.C. 78q-1(b)) is amended by adding at the end 

15 the following: 

16 ‘‘(9) A depository institution (as that term is 

17 defined in section 3 of the Federal Deposit Insur18 ance Act (12 U.S.C. 1813)) or a derivatives clearing 

19 organization registered with the Commodity Futures 

20 Trading Commission under the Commodities Ex21 change Act required to be registered as a clearing 

22 agency under this section is deemed to be registered 

23 under this section to the extent that the depository 

24 institution cleared security-based swaps, as defined 

25 in this Act, as a multilateral clearing organization or 


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1 the derivatives clearing organization cleared security2 based swaps, as defined in this Act, before the date 

3 of the enactment of this paragraph. Such depository 

4 institution or derivatives clearing organization shall 

5 be subject to the requirements of this Act and the 

6 regulations thereunder that are applicable to reg7 istered clearing agencies. A depository institution to 

8 which this paragraph applies may, by the vote of the 

9 shareholders owning not less than 51 percent of the 

10 voting interests of the institution, be converted into 

11 a State corporation, partnership, limited liability 

12 company, or other similar legal form pursuant to a 

13 plan of conversion, if the conversion is not in con14 travention of applicable State law.’’. 

15 (b) ALTERNATIVE SWAP EXECUTION FACILITIES.— 

16 The Securities Exchange Act of 1934 (15 U.S.C. 78a et 

17 seq.) is further amended by adding after section 3B the 

18 following: 

19 ‘‘SEC. 3C. ALTERNATIVE SWAP EXECUTION FACILITIES. 

20 ‘‘(a) DEFINITION.—For purposes of this section, the 

21 term ‘alternative swap execution facility’ means an elec22 tronic trading system with pre-trade and post-trade trans23 parency in which multiple participants have the ability to 

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1 pants in the system, but which is not a designated contract 

2 market. 

3 ‘‘(b) REGISTRATION.— 

4 ‘‘(1) IN GENERAL.—No person may operate a 

5 facility for the trading of security-based swaps un6 less the facility is registered as an alternative swap 

7 execution facility under this section or as a securities 

8 exchange registered under this Act. 

9 ‘‘(2) DUAL REGISTRATION.—Any person that is 

10 required to be registered as an alternative swap exe11 cution facility under this section shall register with 

12 the Commission regardless of whether that person 

13 also is registered with the Commodity Futures Trad14 ing Commission as an alternative swap execution fa15 cility. 

16 ‘‘(c) REQUIREMENTS FOR TRADING.—An alternative 

17 swap execution facility that is registered under subsection 

18 (b) may trade any security-based swap. 

19 ‘‘(d) TRADING BY EXCHANGES.—An exchange shall, 

20 to the extent that the exchange also operates an alter21 native swap execution facility and uses the same electronic 

22 trade execution system for trading on the exchange and 

23 the alternative swap execution facility, identify whether 

24 the electronic trading is taking place on the exchange or 

25 the alternative swap execution facility. 


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1 ‘‘(e) CRITERIA FOR REGISTRATION.— 

2 ‘‘(1) IN GENERAL.—To be registered as an al3 ternative swap execution facility, the facility shall be 

4 required to demonstrate to the Commission such fa5 cility meets the criteria established by this section. 

6 ‘‘(2) DETERRENCE OF ABUSES.—Each alter7 native swap execution facility shall establish and en8 force trading and participation rules that will deter 

9 abuses and have the capacity to detect, investigate, 

10 and enforce those rules, including— 

11 ‘‘(A) means to obtain information nec12 essary to perform the functions required under 

13 this section; or 

14 ‘‘(B) means to— 

15 ‘‘(i) provide market participants with 

16 impartial access to the market; and 

17 ‘‘(ii) capture information that may be 

18 used in establishing whether any violations 

19 of this section have occurred. 

20 ‘‘(3) TRADING PROCEDURES.—Each alternative 

21 swap execution facility shall establish and enforce 

22 rules or terms and conditions defining, or specifica23 tions detailing, trading procedures to be used in en24 tering and executing orders traded on or through its 

25 facilities. 


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1 ‘‘(4) FINANCIAL INTEGRITY OF TRANS2 ACTIONS.—Each alternative swap execution facility 

3 shall establish and enforce rules and procedures for 

4 ensuring the financial integrity of security-based 

5 swaps entered on or through its facilities, including 

6 the clearance and settlement of the security-based 

7 swaps. 

8 ‘‘(f) CORE PRINCIPLES FOR ALTERNATIVE SWAP

9 EXECUTION FACILITIES.— 

10 ‘‘(1) COMPLIANCE.— 

11 ‘‘(A) IN GENERAL.—To maintain its reg12 istration as an alternative swap execution facil13 ity, the facility shall comply with the core prin14 ciples established in this subsection and any re15 quirement that the Commission may impose by 

16 rule or regulation. 

17 ‘‘(B) REASONABLE DISCRETION.—Except 

18 where the Commission determines otherwise by 

19 rule or regulation, the facility shall have reason20 able discretion in establishing the manner in 

21 which it complies with the core principles estab22 lished in this subsection. 

23 ‘‘(2) COMPLIANCE WITH RULES.—Each alter24 native swap execution facility shall monitor and en25 force compliance with any of the rules of the facility, 


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1 including the terms and conditions of the security2 based swaps traded on or through the facility and 

3 any limitations on access to the facility. 

4 ‘‘(3) SECURITY-BASED SWAPS NOT READILY

5 SUSCEPTIBLE TO MANIPULATION.—Each alternative 

6 swap execution facility shall permit trading only in 

7 security-based swaps that are not readily susceptible 

8 to manipulation. 

9 ‘‘(4) MONITORING OF TRADING.—Each alter10 native swap execution facility shall monitor trading 

11 in security-based swaps to prevent manipulation and 

12 price distortion through surveillance, compliance, 

13 and disciplinary practices and procedures, including 

14 methods for conducting real-time monitoring of trad15 ing and comprehensive and accurate trade recon16 structions. 

17 ‘‘(5) ABILITY TO OBTAIN INFORMATION.—Each 

18 alternative swap execution facility shall— 

19 ‘‘(A) establish and enforce rules that will 

20 allow the facility to obtain any necessary infor21 mation to perform any of the functions de22 scribed in this subsection; 

23 ‘‘(B) provide the information to the Com24 mission upon request; and 


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1 ‘‘(C) have the capacity to carry out such 

2 international information-sharing agreements as 

3 the Commission may require. 

4 ‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 

5 ‘‘(A) IN GENERAL.—To reduce the poten6 tial threat of market manipulation or conges7 tion, an alternative swap execution facility shall 

8 adopt for each of its contracts, where necessary 

9 and appropriate, position limitations or position 

10 accountability. 

11 ‘‘(B) FOR CERTAIN CONTRACTS.—For any 

12 contract that is subject to a position limitation 

13 established by the Commission pursuant to sec14 tion 10B, an alternative swap execution facility 

15 shall set its position limitation at a level no 

16 higher than the Commission limitation. 

17 ‘‘(7) EMERGENCY AUTHORITY.—Each alter18 native swap execution facility shall adopt rules to 

19 provide for the exercise of emergency authority, in 

20 consultation or cooperation with the Commission, 

21 where necessary and appropriate, including the au22 thority to suspend or curtail trading in a security23 based swap. 

24 ‘‘(8) TIMELY PUBLICATION OF TRADING INFOR25 MATION.—Each alternative swap execution facility 


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1 shall make public timely information on price, trad2 ing volume, and other trading data to the extent 

3 prescribed by the Commission. 

4 ‘‘(9) RECORDKEEPING AND REPORTING.— 

5 ‘‘(A) IN GENERAL.—Each alternative swap 

6 execution facility shall— 

7 ‘‘(i) maintain records of all activities 

8 related to the business of the facility, in9 cluding a complete audit trail, in a form 

10 and manner acceptable to the Commission 

11 for a period of 5 years; and 

12 ‘‘(ii) report to the Commission all in13 formation determined by the Commission 

14 to be necessary or appropriate for the 

15 Commission to perform its responsibilities 

16 under this Act in a form and manner ac17 ceptable to the Commission. 

18 ‘‘(B) DATA COLLECTION REQUIRE19 MENTS.—The Commission shall adopt data col20 lection and reporting requirements for alter21 native swap execution facilities that are com22 parable to corresponding requirements for clear23 ing agencies and security-based swap reposi24 tories. 


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1 ‘‘(10) ANTITRUST CONSIDERATIONS.—Unless 

2 necessary or appropriate to achieve the purposes of 

3 this Act, an alternative swap execution facility shall 

4 avoid— 

5 ‘‘(A) adopting any rules or taking any ac6 tions that result in any unreasonable restraints 

7 of trade; or 

8 ‘‘(B) imposing any material anticompeti9 tive burden on trading on the swap execution 

10 facility. 

11 ‘‘(11) CONFLICTS OF INTEREST.—Each alter12 native swap execution facility shall— 

13 ‘‘(A) establish and enforce rules to mini14 mize conflicts of interest in its decision making 

15 process; and 

16 ‘‘(B) establish a process for resolving any 

17 conflicts of interest. 

18 ‘‘(12) DESIGNATION OF COMPLIANCE OFFI19 CER.— 

20 ‘‘(A) IN GENERAL.—Each alternative swap 

21 execution facility shall designate an individual 

22 to serve as a compliance officer. 

23 ‘‘(B) DUTIES.—The compliance officer 

24 shall perform the following duties: 


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1 ‘‘(i) Reporting directly to the board or 

2 to the senior officer of the facility. 

3 ‘‘(ii) Reviewing the compliance of the 

4 facility with the core principles established 

5 in this subsection. 

6 ‘‘(iii) Consulting with the board of the 

7 facility, a body performing a function simi8 lar to that of a board, or the senior officer 

9 of the facility, to resolve any conflicts of 

10 interest that may arise. 

11 ‘‘(iv) Administering the policies and 

12 procedures of the facility required to be es13 tablished pursuant to this section. 

14 ‘‘(v) Ensuring compliance with securi15 ties laws and the rules and regulations 

16 issued thereunder, including any rules pre17 scribed by the Commission pursuant to 

18 this section. 

19 ‘‘(vi) Establishing procedures for re20 mediation of noncompliance issues found 

21 during compliance office reviews, 

22 lookbacks, internal or external audit find23 ings, self-reported errors, or through vali24 dated complaints. Procedures to be estab25 lished under this clause include procedures 


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1 related to the handling, management re2 sponse, remediation, retesting, and closing 

3 of noncompliance issues. 

4 ‘‘(C) ANNUAL REPORTS REQUIRED.— 

5 ‘‘(i) IN GENERAL.—The compliance 

6 officer shall annually prepare and sign a 

7 report on the compliance of the alternative 

8 swap execution facility with the securities 

9 laws and the policies and procedures of the 

10 facility, including the code of ethics and 

11 conflict of interest policies of the facility, 

12 in accordance with rules prescribed by the 

13 Commission. 

14 ‘‘(ii) SUBMISSION.—The compliance 

15 report required under clause (i) shall ac16 company the financial reports of the alter17 native swap execution facility that are re18 quired to be furnished to the Commission 

19 pursuant to this section and shall include 

20 a certification that, under penalty of law, 

21 the report is accurate and complete. 

22 ‘‘(g) EXEMPTIONS.—The Commission may exempt, 

23 conditionally or unconditionally, an alternative swap exe24 cution facility from registration under this section if the 

25 Commission finds that such organization is subject to 


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1 comparable, comprehensive supervision and regulation on 

2 a consolidated basis by the Commodity Futures Trading 

3 Commission, an appropriate Federal banking agency, or 

4 the appropriate governmental authorities in the organiza5 tion’s home country. 

6 ‘‘(h) HARMONIZATION OF RULES.—Not later than 

7 180 days of the effective date of the Over-the-Counter De8 rivatives Markets Act of 2010, the Commission and the 

9 Commodity Futures Trading Commission shall jointly pre10 scribe rules governing the regulation of alternative swap 

11 execution facilities under this section and section 5h of 

12 the Commodity Exchange Act.’’. 

13 (c) TRADING IN SECURITY-BASED SWAP AGREE14 MENTS.—Section 6 of the Securities Exchange Act of 

15 1934 (15 U.S.C. 78f) is amended by adding at the end 

16 the following: 

17 ‘‘(l) PROHIBITION.—It shall be unlawful for any per18 son to effect a transaction in a security-based swap with 

19 or for a person that is not an eligible contract participant 

20 unless such transaction is effected on a national securities 

21 exchange registered pursuant to subsection (b).’’. 

22 (d) REGISTRATION AND REGULATION OF SECURITY23 BASED SWAP DEALERS AND MAJOR SECURITY-BASED

24 SWAP PARTICIPANTS.—The Securities Exchange Act of 


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1 1934 (15 U.S.C. 78a et seq.) is amended by inserting after 

2 section 15E (15 U.S.C. 78o–7) the following: 

3 ‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY4 BASED SWAP DEALERS AND MAJOR SECU5 RITY-BASED SWAP PARTICIPANTS. 

6 ‘‘(a) REGISTRATION.—It shall be unlawful for any 

7 person— 

8 ‘‘(1) to act as a security-based swap dealer un9 less such person is registered as a security-based 

10 swap dealer with the Commission; and 

11 ‘‘(2) to act as a major security-based swap par12 ticipant unless such person is registered as a major 

13 security-based swap participant with the Commis14 sion. 

15 ‘‘(b) REQUIREMENTS.— 

16 ‘‘(1) IN GENERAL.—A person shall register as 

17 a security-based swap dealer or major security-based 

18 swap participant by filing a registration application 

19 with the Commission. 

20 ‘‘(2) CONTENTS.—The application required 

21 under paragraph (1) shall be made in such form and 

22 manner as prescribed by the Commission, giving any 

23 information and facts as the Commission may deem 

24 necessary concerning the business in which the ap25 plicant is or will be engaged. Such person, when regVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00676 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 istered as a security-based swap dealer or major se2 curity-based swap participant, shall continue to re3 port and furnish to the Commission such informa4 tion pertaining to such person’s business as the 

5 Commission may require. 

6 ‘‘(3) EXPIRATION.—Each registration shall ex7 pire at such time as the Commission may by rule or 

8 regulation prescribe. 

9 ‘‘(4) RULES.—Except as provided in sub10 sections (c), (d), and (e), the Commission may pre11 scribe rules applicable to security-based swap dealers 

12 and major security-based swap participants, includ13 ing rules that limit the activities of security-based 

14 swap dealers and major security-based swap partici15 pants. Except as provided in subsections (c) and (e), 

16 the Commission may provide conditional or uncondi17 tional exemptions from rules prescribed under this 

18 section for security-based swap dealers and major 

19 security-based swap participants that are subject to 

20 substantially similar requirements as brokers or 

21 dealers. 

22 ‘‘(5) TRANSITION.—Rules adopted under this 

23 section shall provide for the registration of security24 based swap dealers and major security-based swap 

25 participants not later than 1 year after the effective 


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1 date of the Over-the-Counter Derivatives Markets 

2 Act of 2010. 

3 ‘‘(c) DUAL REGISTRATION.— 

4 ‘‘(1) SECURITY-BASED SWAP DEALER.—Any 

5 person that is required to be registered as a secu6 rity-based swap dealer under this section shall reg7 ister with the Commission regardless of whether that 

8 person also is a depository institution or is reg9 istered with the Commodity Futures Trading Com10 mission as a swap dealer. 

11 ‘‘(2) MAJOR SECURITY-BASED SWAP PARTICI12 PANT.—Any person that is required to be registered 

13 as a major security-based swap participant under 

14 this section shall register with the Commission re15 gardless of whether that person also is a depository 

16 institution or is registered with the Commodity Fu17 tures Trading Commission as a major swap partici18 pant. 

19 ‘‘(d) JOINT RULES.— 

20 ‘‘(1) IN GENERAL.—Not later than 180 days 

21 after the effective date of the Over-the-Counter De22 rivatives Markets Act of 2010, the Commission and 

23 the Commodity Futures Trading Commission shall 

24 jointly adopt uniform rules for persons that are reg25 istered— 


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1 ‘‘(A) as security-based swap dealers or 

2 major security-based swap participants under 

3 this section; and 

4 ‘‘(B) as swap dealers or major swap par5 ticipants under the Commodity Exchange Act 

6 (7 U.S.C. 1 et seq.). 

7 ‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE8 MENTS.—The Commission and the Commodity Fu9 tures Trading Commission shall not prescribe rules 

10 imposing prudential requirements (including activity 

11 restrictions) on security-based swap dealers, major 

12 security-based swap participants, swap dealers, or 

13 major swap participants that are depository institu14 tions, as that term is defined in section 3 of the 

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

16 This provision shall not be construed as limiting the 

17 authority of the Commission and the Commodity 

18 Futures Trading Commission to prescribe appro19 priate business conduct, reporting, and record20 keeping requirements to protect investors. 

21 ‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 

22 ‘‘(1) IN GENERAL.— 

23 ‘‘(A) SECURITY-BASED SWAP DEALERS

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1 TIONS.—Each registered security-based swap 

2 dealer and major security-based swap partici3 pant that is a depository institution, as that 

4 term is defined in section 3 of the Federal De5 posit Insurance Act (12 U.S.C. 1813), shall 

6 meet such minimum capital requirements and 

7 minimum initial and variation margin require8 ments as the appropriate Federal banking agen9 cy shall by rule or regulation prescribe under 

10 paragraph (2)(A) to help ensure the safety and 

11 soundness of the security-based swap dealer or 

12 major security-based swap participant. 

13 ‘‘(B) SECURITY-BASED SWAP DEALERS

14 AND MAJOR SECURITY-BASED SWAP PARTICI15 PANTS THAT ARE NOT DEPOSITORY INSTITU16 TIONS.—Each registered security-based swap 

17 dealer and major security-based swap partici18 pant that is not a depository institution, as that 

19 term is defined in section 3 of the Federal De20 posit Insurance Act (12 U.S.C. 1813), shall 

21 meet such minimum capital requirements and 

22 minimum initial and variation margin require23 ments as the Commission and the Commodity 

24 Futures Trading Commission shall by rule or 

25 regulation jointly prescribe under paragraph 


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1 (2)(B) to help ensure the safety and soundness 

2 of the security-based swap dealer or major secu3 rity-based swap participant. 

4 ‘‘(2) JOINT RULES.— 

5 ‘‘(A) SECURITY-BASED SWAP DEALERS

6 AND MAJOR SECURITY-BASED SWAP PARTICI7 PANTS THAT ARE DEPOSITORY INSTITU8 TIONS.—Not later than 180 days after the date 

9 of the enactment of the Over-the-Counter De10 rivatives Markets Act of 2010, the appropriate 

11 Federal banking agencies, in consultation with 

12 the Commission and the Commodity Futures 

13 Trading Commission, shall jointly adopt rules 

14 imposing capital and margin requirements 

15 under this subsection for security-based swap 

16 dealers and major security-based swap partici17 pants that are depository institutions, as that 

18 term is defined in section 3 of the Federal De19 posit Insurance Act (12 U.S.C. 1813). 

20 ‘‘(B) SECURITY-BASED SWAP DEALERS

21 AND MAJOR SECURITY-BASED SWAP PARTICI22 PANTS THAT ARE NOT DEPOSITORY INSTITU23 TIONS.—Not later than 180 days after the date 

24 of the enactment of the Over-the-Counter De25 rivatives Markets Act of 2010, the Commission 


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1 and the Commodity Futures Trading Commis2 sion shall jointly adopt rules imposing capital 

3 and margin requirements under this subsection 

4 for security-based swap dealers and major secu5 rity-based swap participants that are not depos6 itory institutions, as that term is defined in sec7 tion 3 of the Federal Deposit Insurance Act (12 

8 U.S.C. 1813). 

9 ‘‘(3) CAPITAL.— 

10 ‘‘(A) SECURITY-BASED SWAP DEALERS

11 AND MAJOR SECURITY-BASED SWAP PARTICI12 PANTS THAT ARE DEPOSITORY INSTITU13 TIONS.—The capital requirements prescribed 

14 under paragraph (2)(A) for security-based swap 

15 dealers and major security-based swap partici16 pants that are depository institutions shall con17 tain— 

18 ‘‘(i) a capital requirement that is 

19 greater than zero for security-based swaps 

20 that are cleared by a clearing agency; and 

21 ‘‘(ii) to offset the greater risk to the 

22 security-based swap dealer or major secu23 rity-based swap participant and to the fi24 nancial system arising from the use of se25 curity-based swaps that are not centrally 


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1 cleared, substantially higher capital re2 quirements for security-based swaps that 

3 are not cleared by a clearing agency than 

4 for security-based swaps that are centrally 

5 cleared. 

6 ‘‘(B) SECURITY-BASED SWAP DEALERS

7 AND MAJOR SECURITY-BASED SWAP PARTICI8 PANTS THAT ARE NOT DEPOSITORY INSTITU9 TIONS.—The capital requirements prescribed 

10 under paragraph (2)(B) for security-based swap 

11 dealers and major security-based swap partici12 pants that are not depository institutions shall 

13 be as strict as or stricter than the capital re14 quirements prescribed for security-based swap 

15 dealers and major security-based swap partici16 pants that are depository institutions under 

17 paragraph (2)(A). 

18 ‘‘(C) RULE OF CONSTRUCTION.— 

19 ‘‘(i) IN GENERAL.—Nothing in this 

20 section shall limit, or be construed to limit, 

21 the authority— 

22 ‘‘(I) of the Commission to set fi23 nancial responsibility rules for a 

24 broker or dealer registered pursuant 

25 to section 15(b) (except for section 


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1 15(b)(11) thereof) in accordance with 

2 section 15(c)(3); or 

3 ‘‘(II) of the Commodity Futures 

4 Trading Commission to set financial 

5 responsibility rules for a futures com6 mission merchant or introducing 

7 broker registered pursuant to section 

8 4f(a) of the Commodity Exchange Act 

9 (except for section 4f(a)(3) thereof) in 

10 accordance with section 4f(b) of the 

11 Commodity Exchange Act. 

12 ‘‘(ii) FUTURES COMMISSION MER13 CHANTS AND OTHER DEALERS.—A futures 

14 commission merchant, introducing broker, 

15 broker, or dealer shall maintain sufficient 

16 capital to comply with the stricter of any 

17 applicable capital requirements to which 

18 such futures commission merchant, intro19 ducing broker, broker, or dealer is subject 

20 to under this title or the Commodity Ex21 change Act. 

22 ‘‘(4) MARGIN.— 

23 ‘‘(A) SECURITY-BASED SWAP DEALERS

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1 PANTS THAT ARE DEPOSITORY INSTITU2 TIONS.— 

3 ‘‘(i) IN GENERAL.—The appropriate 

4 Federal banking agency for security-based 

5 swap dealers and major security-based 

6 swap participants that are depository insti7 tutions shall impose both initial and vari8 ation margin requirements in accordance 

9 with paragraph (2)(A) on all security10 based swaps that are not cleared by a 

11 clearing agency. 

12 ‘‘(ii) EXEMPTION.—The appropriate 

13 Federal banking agency for security-based 

14 swap dealers and major security-based 

15 swap participants that are depository insti16 tutions, by rule or order, as the agency 

17 deems consistent with the public interest, 

18 may conditionally or unconditionally ex19 empt a security-based swap dealer or a 

20 major security-based swap participant that 

21 is a depository institution from the re22 quirements of this subparagraph and the 

23 rules issued under this subparagraph with 

24 regard to any security-based swap in which 

25 1 of the counterparties is— 


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1 ‘‘(I) not a security-based swap 

2 dealer, major security-based swap par3 ticipant, swap dealer, or a major swap 

4 participant; 

5 ‘‘(II) using the security-based 

6 swap as part of an effective hedge 

7 under generally accepted accounting 

8 principles; and 

9 ‘‘(III) predominantly engaged in 

10 activities that are not financial in na11 ture, as defined in section 4(k) of the 

12 Bank Holding Company Act of 1956 

13 (12 U.S.C. 1843(k)). 

14 ‘‘(iii) DETERMINATION OF THE FI15 NANCIAL STABILITY OVERSIGHT COUN16 CIL.—The appropriate Federal banking 

17 agency may act by rule or order to exempt 

18 a security-based swap dealer or major se19 curity-based swap participant for which it 

20 is the primary financial regulatory agency 

21 from any requirement or rule under this 

22 subsection only if— 

23 ‘‘(I) the appropriate Federal 

24 banking agency has provided a written 

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1 sight Council describing the proposed 

2 exemption; and 

3 ‘‘(II) the Financial Stability 

4 Oversight Council has not made a de5 termination and notified the appro6 priate Federal banking agency within 

7 60 days of receipt of such notice that 

8 such exemption would pose a threat to 

9 the stability of the United States fi10 nancial system. 

11 ‘‘(B) SECURITY-BASED SWAP DEALERS

12 AND MAJOR SECURITY-BASED SWAP PARTICI13 PANTS THAT ARE NOT DEPOSITORY INSTITU14 TIONS.— 

15 ‘‘(i) IN GENERAL.—The Commission 

16 and the Commodity Futures Trading Com17 mission shall impose both initial and vari18 ation margin requirements in accordance 

19 with paragraph (2)(B) for security-based 

20 swap dealers and major security-based 

21 swap participants that are not depository 

22 institutions on all security-based swaps 

23 that are not cleared by a clearing agency. 

24 Any such initial and variation margin re25 quirements shall be as strict as or stricter 


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1 than the margin requirements prescribed 

2 under paragraph (4)(A). 

3 ‘‘(ii) EXEMPTION.—The Commission 

4 by rule or order, as the Commission deems 

5 consistent with the public interest, may 

6 conditionally or unconditionally exempt a 

7 security-based swap dealer or a major se8 curity-based swap participant that is not a 

9 depository institution from the require10 ments of this subparagraph and the rules 

11 issued under this subparagraph with re12 gard to any security-based swap in which 

13 1 of the counterparties is— 

14 ‘‘(I) not a security-based swap 

15 dealer, major security-based swap par16 ticipant, swap dealer, or a major swap 

17 participant; 

18 ‘‘(II) using the security-based 

19 swap as part of an effective hedge 

20 under generally accepted accounting 

21 principles; and 

22 ‘‘(III) predominantly engaged in 

23 activities that are not financial in na24 ture, as defined in section 4(k) of the 


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1 Bank Holding Company Act of 1956 

2 (12 U.S.C. 1843(k)). 

3 ‘‘(iii) DETERMINATION OF THE FI4 NANCIAL STABILITY OVERSIGHT COUN5 CIL.—The Commission may act by rule or 

6 order to exempt a security-based swap 

7 dealer or major security-based swap partic8 ipant that is not a depository institution 

9 from any requirement or rule under this 

10 subsection only if— 

11 ‘‘(I) the Commission has pro12 vided a written notice to the Financial 

13 Stability Oversight Council describing 

14 the proposed exemption; and 

15 ‘‘(II) the Financial Stability 

16 Oversight Council has not made a de17 termination and notified the Commis18 sion within 60 days of receipt of such 

19 notice that such exemption would pose 

20 a threat to the stability of the United 

21 States financial system. 

22 ‘‘(5) MARGIN REQUIREMENTS.—In prescribing 

23 margin requirements under this subsection, the ap24 propriate Federal banking agency with respect to se25 curity-based swap dealers and major security-based 


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1 swap participants that are depository institutions 

2 and the Commission and the Commodity Futures 

3 Trading Commission with respect to security-based 

4 swap dealers and major security-based swap partici5 pants that are not depository institutions may per6 mit the use of noncash collateral, as the agency or 

7 the Commission and the Commodity Futures Trad8 ing Commission determines to be consistent with— 

9 ‘‘(A) preserving the financial integrity of 

10 markets trading security-based swaps; and 

11 ‘‘(B) preserving the stability of the United 

12 States financial system. 

13 ‘‘(6) REQUESTED MARGIN.—If any party to a 

14 security-based swap that is exempt from the margin 

15 requirements of paragraph (4)(A)(i) pursuant to the 

16 provisions of paragraph (4)(A)(ii) or from the mar17 gin requirements of paragraph (4)(B)(i) pursuant to 

18 the provisions of paragraph (4)(B)(ii) requests that 

19 such security-based swap be margined, then— 

20 ‘‘(A) the exemption shall not apply; and 

21 ‘‘(B) the counterparty to such security22 based swap shall provide the requested margin. 

23 ‘‘(f) REPORTING AND RECORDKEEPING.— 


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1 ‘‘(1) IN GENERAL.—Each registered security2 based swap dealer and major security-based swap 

3 participant— 

4 ‘‘(A) shall make such reports as are pre5 scribed by rule or regulation regarding the 

6 transactions and positions and financial condi7 tion of such dealer or participant; 

8 ‘‘(B) that is— 

9 ‘‘(i) a depository institution shall keep 

10 books and records of all activities related 

11 to its business as a security-based swap 

12 dealer or major security-based swap partic13 ipant in such form and manner and for 

14 such period as may be prescribed by rule 

15 or regulation by the appropriate Federal 

16 banking agency; and 

17 ‘‘(ii) not a depository institution shall 

18 keep books and records in such form and 

19 manner and for such period as may be pre20 scribed by rule or regulation pursuant to 

21 paragraph (2); and 

22 ‘‘(C) shall keep such books and records 

23 open to inspection and examination by any rep24 resentative of the Commission. 


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1 ‘‘(2) RULES.—Not later than 1 year after the 

2 date of the enactment of the Over-the-Counter De3 rivatives Markets Act of 2010, the Commission and 

4 the Commodity Futures Trading Commission shall 

5 jointly adopt rules governing reporting and record6 keeping for security-based swap dealers, major secu7 rity-based swap participants, swap dealers, and 

8 major swap participants that are not depository in9 stitutions. 

10 ‘‘(g) DAILY TRADING RECORDS.— 

11 ‘‘(1) IN GENERAL.—Each registered security12 based swap dealer and major security-based swap 

13 participant shall, for such period as may be pre14 scribed by rule or regulation, maintain daily trading 

15 records of that dealer’s or participant’s— 

16 ‘‘(A) security-based swaps and all related 

17 records (including related transactions); and 

18 ‘‘(B) recorded communications, including 

19 electronic mail, instant messages, and record20 ings of telephone calls. 

21 ‘‘(2) INFORMATION REQUIREMENTS.—The daily 

22 trading records required to be maintained under 

23 paragraph (1) shall include such information as shall 

24 be prescribed by rule or regulation. 


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1 ‘‘(3) CUSTOMER RECORDS.—Each registered se2 curity-based swap dealer or major security-based 

3 swap participant shall maintain daily trading records 

4 for each customer or counterparty in such manner 

5 and form as to be identifiable with each security6 based swap transaction. 

7 ‘‘(4) AUDIT TRAIL.— 

8 ‘‘(A) MAINTENANCE OF AUDIT TRAIL.— 

9 Each registered security-based swap dealer or 

10 major security-based swap participant shall 

11 maintain a complete audit trail for conducting 

12 comprehensive and accurate trade reconstruc13 tions. 

14 ‘‘(B) PERMISSIBLE COMPLIANCE BY ENTI15 TY OTHER THAN DEALER OR PARTICIPANT.—A 

16 registered security-based swap repository may, 

17 at the request of a registered security-based 

18 swap dealer or major security-based swap par19 ticipant, satisfy the requirement of subpara20 graph (A) on behalf of such registered security21 based swap dealer or major security-based swap 

22 participant. 

23 ‘‘(5) RULES.—Not later than 1 year after the 

24 date of the enactment of the Over-the-Counter De25 rivatives Markets Act of 2010, the Commission and 


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1 the Commodity Futures Trading Commission shall 

2 jointly adopt rules governing daily trading records 

3 for swap dealers, major swap participants, security4 based swap dealers, and major security-based swap 

5 participants. 

6 ‘‘(h) BUSINESS CONDUCT STANDARDS.— 

7 ‘‘(1) IN GENERAL.—Each registered security8 based swap dealer and major security-based swap 

9 participant shall conform with such business conduct 

10 standards as may be prescribed by rule or regula11 tion, including any standards addressing— 

12 ‘‘(A) fraud, manipulation, and other abu13 sive practices involving security-based swaps 

14 (including security-based swaps that are offered 

15 but not entered into); 

16 ‘‘(B) diligent supervision of its business as 

17 a security-based swap dealer; 

18 ‘‘(C) adherence to all applicable position 

19 limits; and 

20 ‘‘(D) such other matters as the Commis21 sion shall determine to be necessary or appro22 priate. 

23 ‘‘(2) BUSINESS CONDUCT REQUIREMENTS.— 

24 Business conduct requirements adopted by the Com25 mission pursuant to paragraph (1) shall— 


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1 ‘‘(A) establish a standard of care for a se2 curity-based swap dealer or major security3 based swap participant to verify that any secu4 rity-based swap counterparty meets the eligi5 bility standards for an eligible contract partici6 pant; 

7 ‘‘(B) require disclosure by the security8 based swap dealer or major security-based swap 

9 participant to any counterparty to the security10 based swap (other than a swap dealer, major 

11 swap participant, security-based swap dealer, or 

12 major security-based swap participant) of— 

13 ‘‘(i) information about the material 

14 risks and characteristics of the security15 based swap; 

16 ‘‘(ii) the source and amount of any 

17 fees or other material remuneration that 

18 the security-based swap dealer or major se19 curity-based swap participant would di20 rectly or indirectly expect to receive in con21 nection with the security-based swap; and 

22 ‘‘(iii) any other material incentives or 

23 conflicts of interest that the security-based 

24 swap dealer or major security-based swap 


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1 participant may have in connection with 

2 the security-based swap; 

3 ‘‘(C) establish a standard of conduct for a 

4 security-based swap dealer or major security5 based swap participant to communicate in a 

6 fair and balanced manner based on principles of 

7 fair dealing and good faith; 

8 ‘‘(D) establish a standard of conduct for a 

9 security-based swap dealer or major security10 based swap participant, with respect to a 

11 counterparty that is an eligible contract partici12 pant within the meaning of subclause (I) or (II) 

13 of clause (vii) section 1a(12) of the Commodity 

14 Exchange Act (7 U.S.C. 1a(12)), to have a rea15 sonable basis to believe that the counterparty 

16 has an independent representative that— 

17 ‘‘(i) has sufficient knowledge to evalu18 ate the transaction and risks; 

19 ‘‘(ii) is not subject to a statutory dis20 qualification; 

21 ‘‘(iii) is independent of the security22 based swap dealer or major security-based 

23 swap participant; 


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1 ‘‘(iv) undertakes a duty to act in the 

2 best interests of the counterparty it rep3 resents; 

4 ‘‘(v) makes appropriate disclosures; 

5 and 

6 ‘‘(vi) will provide written representa7 tions to the eligible contract participant re8 garding fair pricing and the appropriate9 ness of the transaction; and 

10 ‘‘(E) establish such other standards and 

11 requirements as the Commission may determine 

12 are necessary or appropriate in the public inter13 est, for the protection of investors, or otherwise 

14 in furtherance of the purposes of this title. 

15 ‘‘(3) RULES.—Not later than 1 year after the 

16 date of the enactment of the Over-the-Counter De17 rivatives Markets Act of 2010, the Commission and 

18 the Commodity Futures Trading Commission shall 

19 jointly prescribe rules under this subsection gov20 erning business conduct standards for swap dealers, 

21 major swap participants, security-based swap deal22 ers, and major security-based swap participants. 

23 ‘‘(i) DOCUMENTATION AND BACK OFFICE STAND24 ARDS.— 


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1 ‘‘(1) IN GENERAL.—Each registered security2 based swap dealer and major security-based swap 

3 participant shall conform with standards, as may be 

4 prescribed by rule or regulation, addressing timely 

5 and accurate confirmation, processing, netting, docu6 mentation, and valuation of all security-based swaps. 

7 ‘‘(2) RULES.—Not later than 1 year after the 

8 date of the enactment of the Over-the-Counter De9 rivatives Markets Act of 2010, the Commission and 

10 the Commodity Futures Trading Commission shall 

11 jointly adopt rules governing documentation and 

12 back office standards for swap dealers, major swap 

13 participants, security-based swap dealers, and major 

14 security-based swap participants. 

15 ‘‘(j) DEALER RESPONSIBILITIES.—Each registered 

16 security-based swap dealer and major security-based swap 

17 participant shall, at all times, comply with the following 

18 requirements: 

19 ‘‘(1) MONITORING OF TRADING.—The security20 based swap dealer or major security-based swap par21 ticipant shall monitor its trading in security-based 

22 swaps to prevent violations of applicable position 

23 limits. 

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1 curity-based swap participant shall disclose to the 

2 Commission information concerning— 

3 ‘‘(A) terms and conditions of its security4 based swaps; 

5 ‘‘(B) security-based swap trading oper6 ations, mechanisms, and practices; 

7 ‘‘(C) financial integrity protections relating 

8 to security-based swaps; and 

9 ‘‘(D) other information relevant to its trad10 ing in security-based swaps. 

11 ‘‘(3) ABILITY TO OBTAIN INFORMATION.—The 

12 security-based swap dealer or major security-based 

13 swap participant shall— 

14 ‘‘(A) establish and enforce internal systems 

15 and procedures to obtain any necessary infor16 mation to perform any of the functions de17 scribed in this section; and 

18 ‘‘(B) provide the information to the Com19 mission upon request. 

20 ‘‘(4) CONFLICTS OF INTEREST.—The security21 based swap dealer and major security-based swap 

22 participant shall implement conflict of interest sys23 tems and procedures that— 

24 ‘‘(A) establish structural and institutional 

25 safeguards to assure that the activities of any 


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1 person within the firm relating to research or 

2 analysis of the price or market for any security 

3 are separated by appropriate informational par4 titions within the firm from the review, pres5 sure, or oversight of those whose involvement in 

6 trading or clearing activities might potentially 

7 bias their judgment or supervision; and 

8 ‘‘(B) address such other issues as the 

9 Commission determines appropriate. 

10 ‘‘(5) ANTITRUST CONSIDERATIONS.—Unless 

11 necessary or appropriate to achieve the purposes of 

12 this Act, a security-based swap dealer or major secu13 rity-based swap participant shall avoid— 

14 ‘‘(A) adopting any processes or taking any 

15 actions that result in any unreasonable re16 straints of trade; or 

17 ‘‘(B) imposing any material anticompeti18 tive burden on trading. 

19 ‘‘(k) RULES.—The Commission and the Commodity 

20 Futures Trading Commission shall consult with each other 

21 prior to adopting any rules under the Over-the-Counter 

22 Derivatives Markets Act of 2010. 

23 ‘‘(l) STATUTORY DISQUALIFICATION.—Except to the 

24 extent otherwise specifically provided by rule, regulation, 

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1 rity-based swap dealer or a major security-based swap par2 ticipant to permit any person associated with a security3 based swap dealer or a major security-based swap partici4 pant who is subject to a statutory disqualification to effect 

5 or be involved in effecting security-based swaps on behalf 

6 of such security-based swap dealer or major security-based 

7 swap participant, if such security-based swap dealer or 

8 major security-based swap participant knew, or in the ex9 ercise of reasonable care should have known, of such stat10 utory disqualification. 

11 ‘‘(m) ENFORCEMENT AND ADMINISTRATIVE PRO12 CEEDING AUTHORITY.— 

13 ‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.— 

14 ‘‘(A) SECURITIES AND EXCHANGE COMMIS15 SION.—Except as provided in subsection (b), 

16 the Commission shall have primary authority to 

17 enforce the provisions of subtitle B of the Over18 the-Counter Derivatives Markets Act of 2010 

19 with respect to any person. 

20 ‘‘(B) APPROPRIATE FEDERAL BANKING

21 AGENCY.—The appropriate Federal banking 

22 agency for security-based swap dealers and 

23 major security-based swap participants that are 

24 depository institutions, as that term is defined 

25 in section 3 of the Federal Deposit Insurance 


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1 Act (12 U.S.C. 1813), shall have exclusive au2 thority to enforce the provisions of subsection 

3 (e) and other prudential requirements of this 

4 Act with respect to depository institutions that 

5 are security-based swap dealers or major secu6 rity-based swap participants. 

7 ‘‘(C) REFERRAL.—If the appropriate Fed8 eral banking agency for security-based swap 

9 dealers and major security-based swap partici10 pants that are depository institutions has cause 

11 to believe that such security-based swap dealer 

12 or major security-based swap participant may 

13 have engaged in conduct that constitutes a vio14 lation of the nonprudential requirements of this 

15 section or rules adopted by the Commission 

16 thereunder, the agency may recommend in writ17 ing to the Commission that the Commission ini18 tiate an enforcement proceeding as authorized 

19 under this Act. The recommendation shall be 

20 accompanied by a written explanation of the 

21 concerns giving rise to the recommendation. 

22 ‘‘(D) BACKSTOP ENFORCEMENT AUTHOR23 ITY.—If the Commission does not initiate an 

24 enforcement proceeding before the end of the 

25 90-day period beginning on the date on which 


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1 the Commission receives a recommendation 

2 under subparagraph (C), the appropriate Fed3 eral banking agency for security-based swap 

4 dealers and major security-based swap partici5 pants that are depository institutions may ini6 tiate an enforcement proceeding as permitted 

7 under Federal law. 

8 ‘‘(2) ENFORCEMENT ACTIONS.—The Commis9 sion, by order, shall censure, place limitations on the 

10 activities, functions, or operations of, or reject the 

11 filing of any security-based swap dealer or major se12 curity-based swap participant that has registered 

13 with the Commission pursuant to subsection (b) if it 

14 finds, on the record after notice and opportunity for 

15 hearing, that such censure, placing of limitations, or 

16 rejection is in the public interest and that such secu17 rity-based swap dealer or major security-based swap 

18 participant, or any person associated with such secu19 rity-based swap dealer or major security-based swap 

20 participant effecting or involved in effecting trans21 actions in security-based swaps on behalf of such se22 curity-based swap dealer or major security-based 

23 swap participant, whether prior or subsequent to be24 coming so associated— 


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1 ‘‘(A) has committed or omitted any act, or 

2 is subject to an order or finding, described in 

3 subparagraph (A), (D), or (E) of paragraph (4) 

4 of section 15(b); 

5 ‘‘(B) has been convicted of any offense 

6 specified in subparagraph (B) of such para7 graph (4) not later than 10 years of the com8 mencement of the proceedings under this sub9 section; 

10 ‘‘(C) is enjoined from any action, conduct, 

11 or practice specified in subparagraph (C) of 

12 such paragraph (4); 

13 ‘‘(D) is subject to an order or a final order 

14 specified in subparagraph (F) or (H), respec15 tively, of such paragraph (4); or 

16 ‘‘(E) has been found by a foreign financial 

17 regulatory authority to have committed or omit18 ted any act, or violated any foreign statute or 

19 regulation, described in subparagraph (G) of 

20 such paragraph (4). 

21 ‘‘(3) PERSONNEL ENFORCEMENT ACTIONS.— 

22 With respect to any person who is associated, who 

23 is seeking to become associated, or, at the time of 

24 the alleged misconduct, who was associated or was 

25 seeking to become associated with a security-based 


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1 swap dealer or major security-based swap partici2 pant for the purpose of effecting or being involved 

3 in effecting security-based swaps on behalf of such 

4 security-based swap dealer or major security-based 

5 swap participant, the Commission, by order, shall 

6 censure, place limitations on the activities or func7 tions of such person, or suspend for a period not ex8 ceeding 12 months, or bar such person from being 

9 associated with a security-based swap dealer or 

10 major security-based swap participant, if the Com11 mission finds, on the record after notice and oppor12 tunity for a hearing, that such censure, placing of 

13 limitations, suspension, or bar is in the public inter14 est and that such person— 

15 ‘‘(A) has committed or omitted any act, or 

16 is subject to an order or finding, described in 

17 subparagraph (A), (D), or (E) of paragraph (4) 

18 of section 15(b); 

19 ‘‘(B) has been convicted of any offense 

20 specified in subparagraph (B) of such para21 graph (4) not later than 10 years of the com22 mencement of the proceedings under this sub23 section; 


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1 ‘‘(C) is enjoined from any action, conduct, 

2 or practice specified in subparagraph (C) of 

3 such paragraph (4); 

4 ‘‘(D) is subject to an order or a final order 

5 specified in subparagraph (F) or (H), respec6 tively, of such paragraph (4); or 

7 ‘‘(E) has been found by a foreign financial 

8 regulatory authority to have committed or omit9 ted any act, or violated any foreign statute or 

10 regulation, described in subparagraph (G) of 

11 such paragraph (4). 

12 ‘‘(4) NO VIOLATIONS OF ORDERS.—It shall be 

13 unlawful— 

14 ‘‘(A) for any person as to whom an order 

15 under paragraph (3) is in effect, without the 

16 consent of the Commission, willfully to become, 

17 or to be, associated with a security-based swap 

18 dealer or major security-based swap participant 

19 in contravention of such order; or 

20 ‘‘(B) for any security-based swap dealer or 

21 major security-based swap participant to permit 

22 such a person, without the consent of the Com23 mission, to become or remain a person associ24 ated with the security-based swap dealer or 

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1 travention of such order, if such security-based 

2 swap dealer or major security-based swap par3 ticipant knew, or in the exercise of reasonable 

4 care should have known, of such order.’’. 

5 (e) ADDITIONS OF SECURITY-BASED SWAPS TO CER6 TAIN ENFORCEMENT PROVISIONS.—Paragraphs (1) 

7 through (3) of section 9(b) of the Securities Exchange Act 

8 of 1934 (15 U.S.C. 78i(b)(1)–(3)) are amended to read 

9 as follows: 

10 ‘‘(1) any transaction in connection with any se11 curity whereby any party to such transaction ac12 quires— 

13 ‘‘(A) any put, call, straddle, or other op14 tion or privilege of buying the security from or 

15 selling the security to another without being 

16 bound to do so; 

17 ‘‘(B) any security futures product on the 

18 security; or 

19 ‘‘(C) any security-based swap involving the 

20 security or the issuer of the security; 

21 ‘‘(2) any transaction in connection with any se22 curity with relation to which he has, directly or indi23 rectly, any interest in any— 

24 ‘‘(A) such put, call, straddle, option, or 

25 privilege; 


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1 ‘‘(B) such security futures product; or 

2 ‘‘(C) such security-based swap; or 

3 ‘‘(3) any transaction in any security for the ac4 count of any person who he has reason to believe 

5 has, and who actually has, directly or indirectly, any 

6 interest in any— 

7 ‘‘(A) such put, call, straddle, option, or 

8 privilege; 

9 ‘‘(B) such security futures product with re10 lation to such security; or 

11 ‘‘(C) any security-based swap involving 

12 such security or the issuer of such security.’’. 

13 (f) RULEMAKING AUTHORITY TO PREVENT FRAUD, 

14 MANIPULATION, AND DECEPTIVE CONDUCT IN SECURITY15 BASED SWAPS AND SECURITY-BASED SWAP AGREE16 MENTS.—Section 9 of the Securities Exchange Act of 

17 1934 (15 U.S.C. 78i) is amended by adding at the end 

18 the following: 

19 ‘‘(j) PROHIBITION.—It shall be unlawful for any per20 son, directly or indirectly, by the use of any means or in21 strumentality of interstate commerce or of the mails, or 

22 of any facility of any national securities exchange, to effect 

23 any transaction in, or to induce or attempt to induce the 

24 purchase or sale of, any security-based swap or any secu25 rity-based swap agreement, in connection with which such 


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1 person engages in any fraudulent, deceptive, or manipula2 tive act or practice, makes any fictitious quotation, or en3 gages in any transaction, practice, or course of business 

4 which operates as a fraud or deceit upon any person. The 

5 Commission shall, for the purposes of this subsection, by 

6 rules and regulations define, and prescribe means reason7 ably designed to prevent, such transactions, acts, prac8 tices, and courses of business as are fraudulent, deceptive, 

9 or manipulative, and such quotations as are fictitious.’’. 

10 (g) POSITION LIMITS AND POSITION ACCOUNT11 ABILITY FOR SECURITY-BASED SWAPS.—The Securities 

12 Exchange Act of 1934 is amended by inserting after sec13 tion 10A (15 U.S.C. 78j–1) the following new section: 

14 ‘‘SEC. 10B. POSITION LIMITS AND POSITION ACCOUNT15 ABILITY FOR SECURITY-BASED SWAPS AND 

16 LARGE TRADER REPORTING. 

17 ‘‘(a) AGGREGATE POSITION LIMITS.—As a means 

18 reasonably designed to prevent fraud and manipulation, 

19 the Commission may, by rule or regulation, as necessary 

20 or appropriate in the public interest or for the protection 

21 of investors, establish limits (including related hedge ex22 emption provisions) on the aggregate number or amount 

23 of positions that may be held by any person or persons 

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1 nificant price discovery function with respect to regulated 

2 markets. 

3 ‘‘(b) EXEMPTIONS.—The Commission, by rule, regu4 lation, or order, may conditionally or unconditionally ex5 empt any person or class of persons, any security-based 

6 swap or class of security-based swaps, or any transaction 

7 or class of transactions from any requirement it may es8 tablish under this section with respect to position limits. 

9 ‘‘(c) SELF-REGULATORY ORGANIZATION RULES.—As 

10 a means reasonably designed to prevent fraud or manipu11 lation, the Commission, by rule, regulation, or order, as 

12 necessary or appropriate in the public interest, for the pro13 tection of investors, or otherwise in furtherance of the pur14 poses of this title, may direct a self-regulatory organiza15 tion— 

16 ‘‘(1) to adopt rules regarding the size of posi17 tions in any security-based swap and any security on 

18 which such security-based swap is based that may be 

19 held by— 

20 ‘‘(A) any member of such self-regulatory 

21 organization; or 

22 ‘‘(B) any person for whom a member of 

23 such self-regulatory organization effects trans24 actions in such security-based swap or other se25 curity; and 


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1 ‘‘(2) to adopt rules reasonably designed to en2 sure compliance with requirements prescribed by the 

3 Commission under subsection (a). 

4 ‘‘(d) LARGE SECURITY-BASED SWAP TRADER RE5 PORTING.— 

6 ‘‘(1) IN GENERAL.—A person that enters into 

7 any security-based swap shall file or cause to be filed 

8 with the properly designated officer of the Commis9 sion the reports described in paragraph (2). 

10 ‘‘(2) REPORTS.— 

11 ‘‘(A) SECURITY-BASED SWAP REPORTS.— 

12 Each person described in paragraph (1) shall, 

13 in accordance with the rules and regulations of 

14 the Commission, keep books and records of any 

15 security-based swaps or transactions and posi16 tions in any related security traded on or sub17 ject to the rules of any national securities ex18 change. 

19 ‘‘(B) CASH OR SPOT TRANSACTIONS.— 

20 Each person described in paragraph (1) shall, 

21 in accordance with the rules and regulations of 

22 the Commission, keep books and records of any 

23 cash or spot transactions in, inventories of, and 

24 purchase and sale commitments of, any related 


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1 security traded on or subject to the rules of any 

2 national securities exchange, if— 

3 ‘‘(i) such person directly or indirectly 

4 enters into such security-based swaps dur5 ing any 1 day in an amount equal to or in 

6 excess of such amount as shall be fixed 

7 from time to time by the Commission; and 

8 ‘‘(ii) such person directly or indirectly 

9 has or obtains a position in such security10 based swaps equal to or in excess of such 

11 amount as shall be fixed from time to time 

12 by the Commission. 

13 ‘‘(3) RECORDKEEPING.—The books and records 

14 required to be kept under paragraph (2) shall— 

15 ‘‘(A) show complete details concerning all 

16 transactions and positions as the Commission 

17 may by rule or regulation prescribe; and 

18 ‘‘(B) be open at all times to inspection and 

19 examination by any representative of the Com20 mission. 

21 ‘‘(4) RULE OF CONSTRUCTION.—For the pur22 pose of this subsection, the security-based swaps, 

23 and securities transactions and positions of any per24 son shall include such security-based swaps, transVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00712 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 actions and positions of any persons directly or indi2 rectly controlled by such person.’’. 

3 (h) PUBLIC REPORTING AND REPOSITORIES FOR SE4 CURITY-BASED SWAP AGREEMENTS.—Section 13 of the 

5 Securities Exchange Act of 1934 (15 U.S.C. 78m) is 

6 amended by adding at the end the following: 

7 ‘‘(m) PUBLIC REPORTING OF AGGREGATE SECURITY8 BASED SWAP DATA.— 

9 ‘‘(1) IN GENERAL.—The Commission, or a per10 son designated by the Commission pursuant to para11 graph (2), shall make available to the public, in a 

12 manner that does not disclose the business trans13 actions and market positions of any person, aggre14 gate data on security-based swap trading volumes 

15 and positions from the sources set forth in para16 graph (3). 

17 ‘‘(2) DESIGNEE OF THE COMMISSION.—The 

18 Commission may designate a clearing agency or a 

19 security-based swap repository to carry out the pub20 lic reporting requirement described in paragraph (1). 

21 ‘‘(3) SOURCES OF INFORMATION.—The sources 

22 of the information to be publicly reported as de23 scribed in paragraph (1) are— 

24 ‘‘(A) clearing agencies pursuant to section 

25 3B; 


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1 ‘‘(B) security-based swap repositories pur2 suant to subsection (n); and 

3 ‘‘(C) reports received by the Commission 

4 pursuant to section 13A. 

5 ‘‘(n) SECURITY-BASED SWAP REPOSITORIES.— 

6 ‘‘(1) REGISTRATION REQUIREMENT.— 

7 ‘‘(A) IN GENERAL.—A person may register 

8 as a security-based swap repository by filing 

9 with the Commission an application in such 

10 form as the Commission, by rule, may pre11 scribe, containing the rules of the security12 based swap repository and such other informa13 tion and documentation as the Commission, by 

14 rule, may prescribe as necessary or appropriate 

15 in the public interest, for the protection of in16 vestors, or in the furtherance of the purposes of 

17 this section. 

18 ‘‘(B) INSPECTION AND EXAMINATION.— 

19 Registered security-based swap repositories 

20 shall be subject to inspection and examination 

21 by any representatives of the Commission. 

22 ‘‘(2) STANDARD SETTING.— 

23 ‘‘(A) DATA IDENTIFICATION.—The Com24 mission shall prescribe standards that specify 

25 the data elements for each security-based swap 


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1 that shall be collected and maintained by each 

2 security-based swap repository. 

3 ‘‘(B) DATA COLLECTION AND MAINTE4 NANCE.—The Commission shall prescribe data 

5 collection and data maintenance standards for 

6 security-based swap repositories. 

7 ‘‘(C) COMPARABILITY.—The standards 

8 prescribed by the Commission under this sub9 section shall be comparable to the data stand10 ards imposed by the Commission on clearing 

11 agencies that clear security-based swaps. 

12 ‘‘(3) DUTIES.—A security-based swap reposi13 tory shall— 

14 ‘‘(A) accept data prescribed by the Com15 mission for each security-based swap under 

16 paragraph (2); 

17 ‘‘(B) maintain such data in such form and 

18 manner and for such period as may be required 

19 by the Commission; 

20 ‘‘(C) provide to the Commission, or its des21 ignee, such information as is required by, and 

22 in a form and at a frequency to be determined 

23 by, the Commission, in order to comply with the 

24 public reporting requirements contained in sub25 section (m); and 


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1 ‘‘(D) make available, on a confidential 

2 basis, all data obtained by the security-based 

3 swap repository, including individual 

4 counterparty trade and position data, to the 

5 Commission, the appropriate Federal banking 

6 agencies, the Commodity Futures Trading 

7 Commission, the Financial Stability Oversight 

8 Council, and the Department of Justice or to 

9 other persons the Commission deems appro10 priate, including foreign financial supervisors 

11 (including foreign futures authorities), foreign 

12 central banks, and foreign ministries. 

13 ‘‘(4) REQUIRED REGISTRATION FOR SECURITY14 BASED SWAP REPOSITORIES.—Any person that is re15 quired to be registered as a securities-based swap re16 pository under this subsection shall register with the 

17 Commission, regardless of whether that person also 

18 is registered with the Commodity Futures Trading 

19 Commission as a swap repository. 

20 ‘‘(5) HARMONIZATION OF RULES.—Not later 

21 than 180 days after the effective date of the Over22 the-Counter Derivatives Markets Act of 2010, the 

23 Commission and the Commodity Futures Trading 

24 Commission shall jointly adopt uniform rules gov25 erning persons that are registered under this section 


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1 and persons that are registered as swap repositories 

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

3 seq.), including uniform rules that specify the data 

4 elements that shall be collected and maintained by 

5 each repository. 

6 ‘‘(6) EXEMPTIONS.—The Commission may ex7 empt, conditionally or unconditionally, a security8 based swap repository from the requirements of this 

9 section if the Commission finds that such security10 based swap repository is subject to comparable, com11 prehensive supervision or regulation on a consoli12 dated basis by the Commodity Futures Trading 

13 Commission, an appropriate Federal banking agen14 cy, or the appropriate governmental authorities in 

15 the organization’s home country.’’. 

16 (i) RECORDKEEPING BY SECURITY-BASED SWAP RE17 POSITORIES.—Section 17(a)(1) of the Securities Exchange 

18 Act of 1934 (15 U.S.C. 78m) is amended by inserting 

19 ‘‘registered security-based swap repository,’’ after ‘‘reg20 istered securities information processor,’’. 

21 SEC. 754. SEGREGATION OF ASSETS HELD AS COLLATERAL 

22 IN SECURITY-BASED SWAP TRANSACTIONS. 

23 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

24 et seq.) is further amended by adding after section 3C (as 

25 added by section 753) the following: 


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1 ‘‘SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL 

2 IN SECURITY-BASED SWAP TRANSACTIONS. 

3 ‘‘(a) CLEARED SECURITY-BASED SWAPS.—A secu4 rity-based swap dealer or clearing agency by or through 

5 which funds or other property provided as initial margin 

6 or collateral are held to margin, guarantee, or secure the 

7 obligations of a counterparty under a security-based swap 

8 to be cleared by or through a clearing agency shall seg9 regate, maintain, and use the funds or other property pro10 vided as initial margin or collateral for the benefit of the 

11 counterparty, in accordance with such rules and regula12 tions as the Commission shall prescribe for security-based 

13 swap dealers that are not depository institutions, as that 

14 term is defined in section 3 of the Federal Deposit Insur15 ance Act (12 U.S.C. 1813), or clearing agencies, or the 

16 appropriate Federal banking agency shall prescribe for se17 curity-based swap dealers that are depository institutions. 

18 Any such funds or other property provided as initial mar19 gin or collateral shall be treated as customer property 

20 under this Act. 

21 ‘‘(b) OTHER SECURITY-BASED SWAPS.—At the re22 quest of a security-based swap counterparty who provides 

23 funds or other property as initial margin or collateral to 

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1 based swap dealer that is not submitted for clearing to 

2 a clearing agency, the security-based swap dealer shall 

3 segregate the funds or other property provided as initial 

4 margin or collateral for the benefit of the counterparty, 

5 and maintain the funds or other property in an account 

6 which is carried by an independent third-party custodian 

7 and designated as a segregated account for the 

8 counterparty, in accordance with such rules and regula9 tions as the Commission shall prescribe for security-based 

10 swap dealers that are not depository institutions, as that 

11 term is defined in section 3 of the Federal Deposit Insur12 ance Act (12 U.S.C. 1813), or clearing agencies, or the 

13 appropriate Federal banking agency shall prescribe for se14 curity-based swap dealers that are depository institutions. 

15 Any segregation requested under this subsection shall be 

16 made available by a security-based swap dealer to a 

17 counterparty on fair and reasonable terms on a non-dis18 criminatory basis. This subsection shall not be interpreted 

19 to preclude commercial arrangements regarding the in20 vestment of the segregated funds or other property and 

21 the related allocation of gains and losses resulting from 

22 any such investment, provided, however, that the seg23 regated funds or other property under this subsection may 

24 be invested only in such investments as the Commission 

25 or the appropriate Federal banking agency, as applicable, 


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1 permits by rule or regulation, and shall not be pledged, 

2 re-hypothecated, or otherwise encumbered by a security3 based swap dealer.’’. 

4 SEC. 755. REPORTING AND RECORDKEEPING. 

5 (a) ADDITIONAL REPORTING REQUIREMENTS.—The 

6 Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

7 is amended by inserting after section 13 the following sec8 tion: 

9 ‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CER10 TAIN SECURITY-BASED SWAPS. 

11 ‘‘(a) IN GENERAL.—Any person who enters into a se12 curity-based swap shall satisfy the reporting requirements 

13 under subsection (b), if such person— 

14 ‘‘(1) did not clear the security-based swap in 

15 accordance with section 3B; and 

16 ‘‘(2) did not have data regarding the security17 based swap accepted by a security-based swap repos18 itory in accordance with rules adopted by the Com19 mission under section 13(n). 

20 ‘‘(b) REPORTS.—Any person described in subsection 

21 (a) shall— 

22 ‘‘(1) make such reports in such form and man23 ner and for such period as the Commission shall pre24 scribe by rule or regulation regarding the security25 based swaps held by the person; and 


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1 ‘‘(2) keep books and records pertaining to the 

2 security-based swaps held by the person in such 

3 form and manner and for such period as may be re4 quired by the Commission, which books and records 

5 shall be open to inspection by any representative of 

6 the Commission, an appropriate Federal banking 

7 agency, the Commodity Futures Trading Commis8 sion, the Financial Stability Oversight Council, and 

9 the Department of Justice. 

10 ‘‘(c) IDENTICAL DATA.—In adopting rules under this 

11 section, the Commission shall require persons described in 

12 subsection (a) to report the same or more comprehensive 

13 data than the Commission requires security-based swap 

14 repositories to collect under section 13(n).’’. 

15 (b) BENEFICIAL OWNERSHIP REPORTING.— 

16 (1) Section 13(d)(1) of the Securities Exchange 

17 Act of 1934 (15 U.S.C. 78m(d)(1)) is amended by 

18 inserting ‘‘or otherwise becomes or is deemed to be19 come a beneficial owner of any of the foregoing upon 

20 the purchase or sale of a security-based swap or 

21 other derivative instrument that the Commission 

22 may define by rule, and’’ after ‘‘Alaska Native 

23 Claims Settlement Act,’’. 

24 (2) Section 13(g)(1) of the Securities Exchange 

25 Act of 1934 (15 U.S.C. 78m(g)(1)) is amended by 


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1 inserting ‘‘or otherwise becomes or is deemed to be2 come a beneficial owner of any security of a class de3 scribed in subsection (d)(1) upon the purchase or 

4 sale of a security-based swap or other derivative in5 strument that the Commission may define by rule’’ 

6 after ‘‘subsection (d)(1) of this section’’. 

7 (c) REPORTS BY INSTITUTIONAL INVESTMENT MAN8 AGERS.—Section 13(f) of the Securities Exchange Act of 

9 1934 (15 U.S.C. 78m(f)(1)) is amended— 

10 (1) in paragraph (1)— 

11 (A) by inserting ‘‘(A)’’ after ‘‘accounts 

12 holding’’; and 

13 (B) by inserting ‘‘or (B) security-based de14 rivative instruments or other derivative securi15 ties that the Commission may determine by 

16 rule, having such values as the Commission, by 

17 rule, may determine’’ after ‘‘less than 

18 $10,000,000) as the Commission, by rule, may 

19 determine.’’; and 

20 (2) in paragraph (3), by striking ‘‘section 

21 13(d)(1) of this title’’ and inserting ‘‘subsection 

22 (d)(1) of this section and of security-based swaps or 

23 other derivative instrument that the Commission 

24 may determine by rule,’’. 


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1 (d) ADMINISTRATIVE PROCEEDING AUTHORITY.— 

2 Section 15(b)(4) of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78o(b)(4)) is amended— 

4 (1) in subparagraph (C), by inserting ‘‘security5 based swap dealer, major security-based swap partic6 ipant,’’ after ‘‘government securities dealer,’’; and 

7 (2) in subparagraph (F), by inserting ‘‘, or se8 curity-based swap dealer, or a major security-based 

9 swap participant’’ after ‘‘or dealer’’. 

10 (e) TRANSACTIONS BY CORPORATE INSIDERS.—Sec11 tion 16(f) of the Securities Exchange Act of 1934 (15 

12 U.S.C. 78p) is amended by inserting ‘‘or security-based 

13 swaps’’ after ‘‘security futures products’’. 

14 SEC. 756. STATE GAMING AND BUCKET SHOP LAWS. 

15 Section 28(a) of the Securities Exchange Act of 1934 

16 (15 U.S.C. 78bb(a)) is amended to read as follows: 

17 ‘‘(a) ADDITIONAL RIGHTS AND REMEDIES; RECOV18 ERY OF ACTUAL DAMAGES; STATE SECURITIES COMMIS19 SIONS.—Except as provided in subsection (f), the rights 

20 and remedies provided by this title shall be in addition 

21 to any and all other rights and remedies that may exist 

22 at law or in equity, but no person permitted to maintain 

23 a suit for damages under the provisions of this title shall 

24 recover, through satisfaction of judgment in 1 or more ac25 tions, a total amount in excess of his actual damages on 


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1 account of the act complained of. Except as otherwise spe2 cifically provided in this title, nothing in this title shall 

3 affect the jurisdiction of the securities commission (or any 

4 agency or officer performing like functions) of any State 

5 over any security or any person insofar as it does not con6 flict with the provisions of this title or the rules and regu7 lations thereunder. No State law that prohibits or regu8 lates the making or promoting of wagering or gaming con9 tracts, or the operation of ‘bucket shops’ or other similar 

10 or related activities, shall invalidate— 

11 ‘‘(1) any put, call, straddle, option, privilege, or 

12 other security subject to this title (except a security13 based swap agreement and any security that has a 

14 pari-mutuel payout or otherwise is determined by 

15 the Commission, acting by rule, regulation, or order, 

16 to be appropriately subject to such laws), or apply 

17 to any activity which is incidental or related to the 

18 offer, purchase, sale, exercise, settlement, or closeout 

19 of any such security; 

20 ‘‘(2) any security-based swap between eligible 

21 contract participants; or 

22 ‘‘(3) any security-based swap effected on a na23 tional securities exchange registered pursuant to sec24 tion 6(b). 


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1 No provision of State law regarding the offer, sale, or dis2 tribution of securities shall apply to any transaction in a 

3 security-based swap or a security futures product, except 

4 that this sentence shall not be construed as limiting any 

5 State antifraud law of general applicability.’’. 

6 SEC. 757. AMENDMENTS TO THE SECURITIES ACT OF 1933; 

7 TREATMENT OF SECURITY-BASED SWAPS. 

8 (a) DEFINITIONS.—Section 2(a) of the Securities Act 

9 of 1933 (15 U.S.C. 77b(a)) is amended— 

10 (1) in paragraph (1), by inserting ‘‘security11 based swap,’’ after ‘‘security future,’’; 

12 (2) in paragraph (3), by adding at the end the 

13 following: ‘‘Any offer or sale of a security-based 

14 swap by or on behalf of the issuer of the securities 

15 upon which such security-based swap is based or is 

16 referenced, an affiliate of the issuer, or an under17 writer, shall constitute a contract for sale of, sale of, 

18 offer for sale, or offer to sell such securities,’’; and 

19 (3) by adding at the end the following: 

20 ‘‘(17) The terms ‘swap’ and ‘security-based 

21 swap’ have the same meanings as provided in sec22 tions 1a(34) of the Commodity Exchange Act (7 

23 U.S.C. 1a(34)) and section 3(a)(68) of the Securi24 ties Exchange Act of 1934 (15 U.S.C. 78(c)(a)(68)), 

25 respectively. 


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1 ‘‘(18) The terms ‘purchase’ or ‘sale’ of a secu2 rity-based swap shall be deemed to mean the execu3 tion, termination (prior to its scheduled maturity 

4 date), assignment, exchange, or similar transfer or 

5 conveyance of, or extinguishing of rights or obliga6 tions under, a security-based swap, as the context 

7 may require.’’. 

8 (b) REGISTRATION OF SECURITY-BASED SWAPS.— 

9 Section 5 of the Securities Act of 1933 (15 U.S.C. 77e) 

10 is amended by adding at the end the following: 

11 ‘‘(d) MANDATORY REGISTRATION: PROHIBITION ON

12 SALE.—Notwithstanding the provisions of section 3 or 

13 section 4, except as the Commission shall otherwise ex14 empt by rule or regulation pursuant to this title, unless 

15 a registration statement meeting the requirements of sub16 section (a) of section 10 is in effect as to a security-based 

17 swap, it shall be unlawful for any person, directly or indi18 rectly, to make use of any means or instruments of trans19 portation or communication in interstate commerce or of 

20 the mails to offer to sell, offer to buy or purchase or sell 

21 a security-based swap to any person who is not an eligible 

22 contract participant as defined in section 1a(12) of the 

23 Commodity Exchange Act (7 U.S.C. 1a(12)).’’. 


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1 SEC. 758. OTHER AUTHORITY. 

2 Unless otherwise provided by its terms, this subtitle 

3 does not divest any appropriate Federal banking agency, 

4 the Commission, the Commodity Futures Trading Com5 mission, or other Federal or State agency, of any authority 

6 derived from any other applicable law. 

7 SEC. 759. JURISDICTION. 

8 Section 36 of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78mm) is amended— 

10 (1) in subsection (a)(1), by inserting ‘‘and (c) 

11 and subject to subsection (d)’’ after ‘‘Except as pro12 vided in subsection (b)’’; and 

13 (2) by adding at the end the following: 

14 ‘‘(c) LIMITATION ON AUTHORITY.—The Commission 

15 shall not have the authority to grant exemptions from the 

16 security-based swap provisions of this Act or the Over-the17 Counter Derivatives Markets Act of 2010, except as ex18 pressly authorized under the provisions of that Act. 

19 ‘‘(d) EXPRESS AUTHORITY.—The Commission is ex20 pressly authorized to use any authority granted to the 

21 Commission under subsection (a) to exempt any person, 

22 security, or transaction, or any class or classes of persons, 

23 securities, or transactions from any provision or provisions 

24 of this title, or of any rule or regulation thereunder, that 

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1 cause a ‘security-based swap’ is a ‘security’ under section 

2 3(a).’’. 

3 Subtitle C—Other Provisions 

4 SEC. 761. INTERNATIONAL HARMONIZATION. 

5 In order to promote effective and consistent global 

6 regulation of swaps and security-based swaps, the Securi7 ties and Exchange Commission, the Commodity Futures 

8 Trading Commission, the Financial Stability Oversight 

9 Council, and the Treasury Department— 

10 (1) shall, both individually and collectively, con11 sult and coordinate with foreign regulatory authori12 ties on the establishment of consistent international 

13 standards with respect to the regulation of such 

14 swaps; and 

15 (2) may, both individually and collectively, 

16 agree to such information-sharing arrangements as 

17 may be deemed to be necessary or appropriate in the 

18 public interest or for the protection of investors and 

19 swap counterparties. 

20 SEC. 762. INTERAGENCY COOPERATION. 

21 (a) JOINT ADVISORY COMMITTEE.— 

22 (1) ESTABLISHMENT.—The Securities and Ex23 change Commission and the Commodity Futures 

24 Trading Commission, shall establish a joint advisory 

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1 sory committee to consider and develop solutions to 

2 emerging and ongoing issues of common interest re3 lating to the trading and regulation of products reg4 ulated by the Securities and Exchange Commission 

5 and the Commodity Futures Trading Commission, 

6 including securities, commodity futures, swaps and 

7 securities-based swaps. 

8 (2) MEMBERSHIP.—The joint advisory com9 mittee shall— 

10 (A) be fairly balanced in terms of the 

11 points of view represented and the functions to 

12 be performed by the committee; 

13 (B) include at least 1 representative from 

14 each of the Securities and Exchange Commis15 sion and the Commodity Futures Trading Com16 mission; and 

17 (C) include other individuals with expertise 

18 in commodities and securities trading, commod19 ities and securities law, investor protection, con20 sumer protection, or international markets. 

21 (3) REPORTING.—Not later than 6 months 

22 after the date of enactment of this title, and every 

23 6 months thereafter, the joint advisory committee 

24 shall report its findings and recommendations to 

25 the— 


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1 (A) Committee on Banking, Housing, and 

2 Urban Affairs of the Senate; 

3 (B) Committee on Financial Services of 

4 the House of Representatives; 

5 (C) Committee on Agriculture, Nutrition, 

6 and Forestry of the Senate; and 

7 (D) Committee on Agriculture of the 

8 House of Representatives. 

9 (4) JOINT FUNDING.—Notwithstanding any 

10 other provision of law, amounts made available to 

11 the Commodity Futures Trading Commission and 

12 the Securities and Exchange Commission for the 

13 current or subsequent fiscal years by a current or 

14 future appropriations Act may be used for the inter15 agency funding of the joint advisory committee spon16 sored by such agencies pursuant to this section. 

17 (b) JOINT ENFORCEMENT TASK FORCE.—The Secu18 rities and Exchange Commission and the Commodity Fu19 tures Trading Commission shall jointly establish an inter20 agency group to be known as the Joint Enforcement Task 

21 Force in order to improve market oversight, enhance en22 forcement, and relieve duplicative regulatory burdens. The 

23 Task Force shall consist of staff from each agency to co24 ordinate and develop processes for conducting joint inves25 tigations in response to events that affect both the comVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00730 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 modities and securities markets. The Task Force shall 

2 prepare and offer training programs for the staffs of both 

3 agencies, develop enforcement and examination standards 

4 and protocols, and coordinate information sharing. 

5 (c) TRADING AND MARKETS FELLOWSHIP PRO6 GRAM.— 

7 (1) IN GENERAL.—The Securities and Ex8 change Commission, the Commodity Futures Trad9 ing Commission, and the Board of Governors of the 

10 Federal Reserve System shall jointly establish a 

11 Trading and Markets Fellowship Program in order 

12 to enhance staff understanding about the inter13 actions between financial markets and the economy. 

14 (2) SELECTION OF FELLOWS.—On January 1 

15 of each calendar year, the Chairmen of the Securi16 ties and Exchange Commission, the Commodity Fu17 tures Trading Commission, and the Board of Gov18 ernors of the Federal Reserve System shall jointly 

19 announce the selection of 3 employees from their re20 spective agencies to participate in the fellowship pro21 gram established under paragraph (1), for a total 

22 annual class size of 9 fellows per calendar year. 

23 (3) JOINT TRAINING CURRICULUM.— 

24 (A) DEVELOPMENT.—The Securities and 

25 Exchange Commission, the Commodity Futures 


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1 Trading Commission, and the Board of Gov2 ernors of the Federal Reserve System shall 

3 jointly develop a 1-month long training cur4 riculum that focuses on the mission and activi5 ties of each agency, enforcement matters, and 

6 economic and financial analysis. 

7 (B) FACULTY.—The training curriculum 

8 developed under subparagraph (A) shall be 

9 taught by senior officials from each agency, ex10 perienced academics, and professionals from 

11 commodities and securities trading. 

12 (C) MANDATORY ATTENDANCE.—Each of 

13 the 9 fellows selected under paragraph (2) shall 

14 complete the training curriculum developed 

15 under this paragraph. 

16 (4) CROSS-AGENCY ROTATION.— 

17 (A) IN GENERAL.—Following the comple18 tion of the 1-month training curriculum devel19 oped under paragraph (3), each fellow shall be 

20 assigned to serve at each participating agency 

21 for 3 months each. 

22 (B) SUBMISSION OF PAPER.—Upon com23 pletion of the Trading and Markets Fellowship 

24 Program, each fellow shall submit a written 

25 paper to the Chairmen of the Securities and 


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1 Exchange Commission, the Commodity Futures 

2 Trading Commission, and the Board of Gov3 ernors of the Federal Reserve System— 

4 (i) summarizing his or her observa5 tions from participating in the program; 

6 and 

7 (ii) providing recommendations for en8 hancing the contribution of each agency to 

9 the stable functioning of the financial mar10 kets and economy of the nation. 

11 (d) CROSS-AGENCY ENFORCEMENT.—The Securities 

12 and Exchange Commission and the Commodity Futures 

13 Trading Commission shall jointly establish a cross-agency 

14 training and education curriculum for enforcement per15 sonnel in order to improve the ability of employees at both 

16 agencies to understand and respond to matters where both 

17 agencies have enforcement jurisdiction and interest. 

18 (e) DETAILING OF STAFF.—The Securities and Ex19 change Commission and the Commodity Futures Trading 

20 Commission shall jointly establish a program for the reg21 ular detailing of staff between such agencies. 

22 SEC. 763. STUDY AND REPORT ON IMPLEMENTATION. 

23 (a) STUDY REQUIRED.—The Comptroller General of 

24 the United States shall conduct a study of— 


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1 (1) how the Commodity Futures Trading Com2 mission and the Securities and Exchange Commis3 sion have implemented this title and the amend4 ments made by this title; 

5 (2) the extent to which jurisdictional disputes 

6 have created challenges in the process of imple7 menting this title and the amendments made by this 

8 title; 

9 (3) the benefits and drawbacks of harmonizing 

10 laws implemented by the Commodity Futures Trad11 ing Commission and the Securities and Exchange 

12 Commission, and merging those agencies; 

13 (4) the benefits and feasibility of— 

14 (A) holding of both futures and securities 

15 products in the same account to allow cross-net16 ting; and 

17 (B) creating the ability to cross-net across 

18 securities and futures accounts; and 

19 (5) the benefits and feasibility of imposing a 

20 uniform fiduciary duty on financial intermediaries 

21 who provide similar investment advisory services. 

22 (b) REPORT REQUIRED.—Not later than 1 year after 

23 the date of enactment of this title, the Comptroller Gen24 eral shall submit a report on the results of the study re25 quired by this section to Congress, the Commodity FuVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00734 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 tures Trading Commission, and the Securities and Ex2 change Commission. 

3 SEC. 764. RECOMMENDATIONS FOR CHANGES TO INSOL4 VENCY LAWS. 

5 Not later than 180 days after the date of enactment 

6 of this Act, the Securities and Exchange Commission and 

7 the Commodity Futures Trading Commission shall trans8 mit to Congress recommendations on legislative changes 

9 to the Federal insolvency laws— 

10 (1) in order to enhance the legal certainty with 

11 respect to swap participants clearing swaps and se12 curity-based swaps through a derivatives clearing or13 ganization or clearing agency, including— 

14 (A) customer rights to cover margin depos15 its or custodial property held at or through an 

16 insolvent swap clearinghouse or clearing partici17 pant; and 

18 (B) the enforceability or clearing rules re19 lating to the portability of customer swap posi20 tions (and associated margins) upon the insol21 vency of a clearing participant; 

22 (2) to clarify and harmonize the insolvency law 

23 framework applicable to entities that are both com24 modity brokers (as defined in section 101(6) of title 

25 11, United States Code) and registered brokers or 


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1 dealers (as defined in section 3(a) of the Securities 

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

3 (3) to facilitate the portfolio margining of secu4 rities and commodities futures and options positions 

5 held through entities that are both futures commis6 sion merchants (as defined in section 1a of the Com7 modity Exchange Act) and registered brokers or 

8 dealers (as defined in section 3(a) of the Securities 

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

10 SEC. 765. EFFECTIVE DATE. 

11 Except as specifically provided in the amendments 

12 made by this title, this title, and the amendments made 

13 by this title, shall take effect 180 days after the date of 

14 enactment of this Act. 

15 TITLE VIII—PAYMENT, CLEAR16 ING, AND SETTLEMENT SU17 PERVISION 

18 SEC. 801. SHORT TITLE. 

19 This title may be cited as the ‘‘Payment, Clearing, 

20 and Settlement Supervision Act of 2010’’. 

21 SEC. 802. FINDINGS AND PURPOSES. 

22 (a) FINDINGS.—Congress finds the following: 

23 (1) The proper functioning of the financial mar24 kets is dependent upon safe and efficient arrangeVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00736 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ments for the clearing and settlement of payment, 

2 securities, and other financial transactions. 

3 (2) Financial market utilities that conduct or 

4 support multilateral payment, clearing, or settlement 

5 activities may reduce risks for their participants and 

6 the broader financial system, but such utilities may 

7 also concentrate and create new risks and thus must 

8 be well designed and operated in a safe and sound 

9 manner. 

10 (3) Payment, clearing, and settlement activities 

11 conducted by financial institutions also present im12 portant risks to the participating financial institu13 tions and to the financial system. 

14 (4) Enhancements to the regulation and super15 vision of systemically important financial market 

16 utilities and the conduct of systemically important 

17 payment, clearing, and settlement activities by finan18 cial institutions are necessary— 

19 (A) to provide consistency; 

20 (B) to promote robust risk management 

21 and safety and soundness; 

22 (C) to reduce systemic risks; and 

23 (D) to support the stability of the broader 

24 financial system. 


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1 (b) PURPOSE.—The purpose of this title is to miti2 gate systemic risk in the financial system and promote fi3 nancial stability by— 

4 (1) authorizing the Board of Governors to pre5 scribe uniform standards for the— 

6 (A) management of risks by systemically 

7 important financial market utilities; and 

8 (B) conduct of systemically important pay9 ment, clearing, and settlement activities by fi10 nancial institutions; 

11 (2) providing the Board of Governors an en12 hanced role in the supervision of risk management 

13 standards for systemically important financial mar14 ket utilities; 

15 (3) strengthening the liquidity of systemically 

16 important financial market utilities; and 

17 (4) providing the Board of Governors an en18 hanced role in the supervision of risk management 

19 standards for systemically important payment, clear20 ing, and settlement activities by financial institu21 tions. 

22 SEC. 803. DEFINITIONS. 

23 In this title, the following definitions shall apply: 

24 (1) APPROPRIATE FINANCIAL REGULATOR.— 

25 The term ‘‘appropriate financial regulator’’ means— 


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1 (A) the primary financial regulatory agen2 cy, as defined in section 2 of this Act; 

3 (B) the National Credit Union Administra4 tion, with respect to any insured credit union 

5 under the Federal Credit Union Act (12 U.S.C. 

6 1751 et seq.); and 

7 (C) the Board of Governors, with respect 

8 to organizations operating under section 25A of 

9 the Federal Reserve Act (12 U.S.C. 611), and 

10 any other financial institution engaged in a des11 ignated activity. 

12 (2) DESIGNATED ACTIVITY.—The term ‘‘des13 ignated activity’’ means a payment, clearing, or set14 tlement activity that the Council has designated as 

15 systemically important under section 804. 

16 (3) DESIGNATED FINANCIAL MARKET UTIL17 ITY.—The term ‘‘designated financial market util18 ity’’ means a financial market utility that the Coun19 cil has designated as systemically important under 

20 section 804. 

21 (4) FINANCIAL INSTITUTION.—The term ‘‘fi22 nancial institution’’ means— 

23 (A) a depository institution, as defined in 

24 section 3 of the Federal Deposit Insurance Act 

25 (12 U.S.C. 1813); 


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1 (B) a branch or agency of a foreign bank, 

2 as defined in section 1(b) of the International 

3 Banking Act of 1978 (12 U.S.C. 3101); 

4 (C) an organization operating under sec5 tion 25 or 25A of the Federal Reserve Act (12 

6 U.S.C. 601–604a and 611 through 631); 

7 (D) a credit union, as defined in section 

8 101 of the Federal Credit Union Act (12 

9 U.S.C. 1752); 

10 (E) a broker or dealer, as defined in sec11 tion 3 of the Securities Exchange Act of 1934 

12 (15 U.S.C. 78c); 

13 (F) an investment company, as defined in 

14 section 3 of the Investment Company Act of 

15 1940 (15 U.S.C. 80a–3); 

16 (G) an insurance company, as defined in 

17 section 2 of the Investment Company Act of 

18 1940 (15 U.S.C. 80a–2); 

19 (H) an investment adviser, as defined in 

20 section 202 of the Investment Advisers Act of 

21 1940 (15 U.S.C. 80b–2); 

22 (I) a futures commission merchant, com23 modity trading advisor, or commodity pool oper24 ator, as defined in section 1a of the Commodity 

25 Exchange Act (7 U.S.C. 1a); and 


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1 (J) any company engaged in activities that 

2 are financial in nature or incidental to a finan3 cial activity, as described in section 4 of the 

4 Bank Holding Company Act of 1956 (12 

5 U.S.C. 1843(k)). 

6 (5) FINANCIAL MARKET UTILITY.—The term 

7 ‘‘financial market utility’’ means any person that 

8 manages or operates a multilateral system for the 

9 purpose of transferring, clearing, or settling pay10 ments, securities, or other financial transactions 

11 among financial institutions or between financial in12 stitutions and the person. 

13 (6) PAYMENT, CLEARING, OR SETTLEMENT AC14 TIVITY.— 

15 (A) IN GENERAL.—The term ‘‘payment, 

16 clearing, or settlement activity’’ means an activ17 ity carried out by 1 or more financial institu18 tions to facilitate the completion of financial 

19 transactions. 

20 (B) FINANCIAL TRANSACTION.—For the 

21 purposes of subparagraph (A), the term ‘‘finan22 cial transaction’’ includes— 

23 (i) funds transfers; 

24 (ii) securities contracts; 


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1 (iii) contracts of sale of a commodity 

2 for future delivery; 

3 (iv) forward contracts; 

4 (v) repurchase agreements; 

5 (vi) swaps; 

6 (vii) security-based swaps; 

7 (viii) swap agreements; 

8 (ix) security-based swap agreements; 

9 (x) foreign exchange contracts; 

10 (xi) financial derivatives contracts; 

11 and 

12 (xii) any similar transaction that the 

13 Council determines to be a financial trans14 action for purposes of this title. 

15 (C) INCLUDED ACTIVITIES.—When con16 ducted with respect to a financial transaction, 

17 payment, clearing, and settlement activities may 

18 include— 

19 (i) the calculation and communication 

20 of unsettled financial transactions between 

21 counterparties; 

22 (ii) the netting of transactions; 

23 (iii) provision and maintenance of 

24 trade, contract, or instrument information; 


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1 (iv) the management of risks and ac2 tivities associated with continuing financial 

3 transactions; 

4 (v) transmittal and storage of pay5 ment instructions; 

6 (vi) the movement of funds; 

7 (vii) the final settlement of financial 

8 transactions; and 

9 (viii) other similar functions that the 

10 Council may determine. 

11 (7) SUPERVISORY AGENCY.— 

12 (A) IN GENERAL.—The term ‘‘Supervisory 

13 Agency’’ means the Federal agency that has 

14 primary jurisdiction over a designated financial 

15 market utility under Federal banking, securi16 ties, or commodity futures laws, as follows: 

17 (i) The Securities and Exchange Com18 mission, with respect to a designated fi19 nancial market utility that is a clearing 

20 agency registered with the Securities and 

21 Exchange Commission. 

22 (ii) The Commodity Futures Trading 

23 Commission, with respect to a designated 

24 financial market utility that is a deriva25 tives clearing organization registered with 


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1 the Commodity Futures Trading Commis2 sion. 

3 (iii) The appropriate Federal banking 

4 agency, with respect to a designated finan5 cial market utility that is an institution de6 scribed in section 3(q) of the Federal De7 posit Insurance Act. 

8 (iv) The Board of Governors, with re9 spect to a designated financial market util10 ity that is otherwise not subject to the ju11 risdiction of any agency listed in clauses 

12 (i), (ii), and (iii). 

13 (B) MULTIPLE AGENCY JURISDICTION.—If 

14 a designated financial market utility is subject 

15 to the jurisdictional supervision of more than 1 

16 agency listed in subparagraph (A), then such 

17 agencies should agree on 1 agency to act as the 

18 Supervisory Agency, and if such agencies can19 not agree on which agency has primary jurisdic20 tion, the Council shall decide which agency is 

21 the Supervisory Agency for purposes of this 

22 title. 

23 (8) SYSTEMICALLY IMPORTANT AND SYSTEMIC

24 IMPORTANCE.—The terms ‘‘systemically important’’ 

25 and ‘‘systemic importance’’ mean a situation where 


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1 the failure of or a disruption to the functioning of 

2 a financial market utility or the conduct of a pay3 ment, clearing, or settlement activity could create, or 

4 increase, the risk of significant liquidity or credit 

5 problems spreading among financial institutions or 

6 markets and thereby threaten the stability of the fi7 nancial system. 

8 SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE. 

9 (a) DESIGNATION.— 

10 (1) FINANCIAL STABILITY OVERSIGHT COUN11 CIL.—The Council, on a nondelegable basis and by 

a vote of not fewer than 2 12 ⁄3 of members then serving, 

13 including an affirmative vote by the Chairperson of 

14 the Council, shall designate those financial market 

15 utilities or payment, clearing, or settlement activities 

16 that the Council determines are, or are likely to be17 come, systemically important. 

18 (2) CONSIDERATIONS.—In determining whether 

19 a financial market utility or payment, clearing, or 

20 settlement activity is, or is likely to become, system21 ically important, the Council shall take into consid22 eration the following: 

23 (A) The aggregate monetary value of 

24 transactions processed by the financial market 


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1 utility or carried out through the payment, 

2 clearing, or settlement activity. 

3 (B) The aggregate exposure of the finan4 cial market utility or a financial institution en5 gaged in payment, clearing, or settlement activi6 ties to its counterparties. 

7 (C) The relationship, interdependencies, or 

8 other interactions of the financial market utility 

9 or payment, clearing, or settlement activity with 

10 other financial market utilities or payment, 

11 clearing, or settlement activities. 

12 (D) The effect that the failure of or a dis13 ruption to the financial market utility or pay14 ment, clearing, or settlement activity would 

15 have on critical markets, financial institutions, 

16 or the broader financial system. 

17 (E) Any other factors that the Council 

18 deems appropriate. 

19 (b) RESCISSION OF DESIGNATION.— 

20 (1) IN GENERAL.—The Council, on a nondelegable basis and by a vote of not fewer than 2 21 ⁄3 of 

22 members then serving, including an affirmative vote 

23 by the Chairperson of the Council, shall rescind a 

24 designation of systemic importance for a designated 

25 financial market utility or designated activity if the 


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1 Council determines that the utility or activity no 

2 longer meets the standards for systemic importance. 

3 (2) EFFECT OF RESCISSION.—Upon rescission, 

4 the financial market utility or financial institutions 

5 conducting the activity will no longer be subject to 

6 the provisions of this title or any rules or orders pre7 scribed by the Council under this title. 

8 (c) CONSULTATION AND NOTICE AND OPPORTUNITY

9 FOR HEARING.— 

10 (1) CONSULTATION.—Before making any deter11 mination under subsection (a) or (b), the Council 

12 shall consult with the relevant Supervisory Agency 

13 and the Board of Governors. 

14 (2) ADVANCE NOTICE AND OPPORTUNITY FOR

15 HEARING.— 

16 (A) IN GENERAL.—Before making any de17 termination under subsection (a) or (b), the 

18 Council shall provide the financial market util19 ity or, in the case of a payment, clearing, or 

20 settlement activity, financial institutions with 

21 advance notice of the proposed determination of 

22 the Council. 

23 (B) NOTICE IN FEDERAL REGISTER.—The 

24 Council shall provide such advance notice to fiVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00747 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 nancial institutions by publishing a notice in 

2 the Federal Register. 

3 (C) REQUESTS FOR HEARING.—Within 30 

4 days from the date of any notice of the pro5 posed determination of the Council, the finan6 cial market utility or, in the case of a payment, 

7 clearing, or settlement activity, a financial insti8 tution engaged in the designated activity may 

9 request, in writing, an opportunity for a written 

10 or oral hearing before the Council to dem11 onstrate that the proposed designation or re12 scission of designation is not supported by sub13 stantial evidence. 

14 (D) WRITTEN SUBMISSIONS.—Upon re15 ceipt of a timely request, the Council shall fix 

16 a time, not more than 30 days after receipt of 

17 the request, unless extended at the request of 

18 the financial market utility or financial institu19 tion, and place at which the financial market 

20 utility or financial institution may appear, per21 sonally or through counsel, to submit written 

22 materials, or, at the sole discretion of the Coun23 cil, oral testimony or oral argument. 

24 (3) EMERGENCY EXCEPTION.— 


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1 (A) WAIVER OR MODIFICATION BY VOTE

2 OF THE COUNCIL.—The Council may waive or 

3 modify the requirements of paragraph (2) if the 

4 Council determines, by an affirmative vote of 

not less than 2 5 ⁄3 of all members then serving, 

6 including an affirmative vote by the Chair7 person of the Council, that the waiver or modi8 fication is necessary to prevent or mitigate an 

9 immediate threat to the financial system posed 

10 by the financial market utility or the payment, 

11 clearing, or settlement activity. 

12 (B) NOTICE OF WAIVER OR MODIFICA13 TION.—The Council shall provide notice of the 

14 waiver or modification to the financial market 

15 utility concerned or, in the case of a payment, 

16 clearing, or settlement activity, to financial in17 stitutions, as soon as practicable, which shall be 

18 no later than 24 hours after the waiver or 

19 modification in the case of a financial market 

20 utility and 3 business days in the case of finan21 cial institutions. The Council shall provide the 

22 notice to financial institutions by posting a no23 tice on the website of the Council and by pub24 lishing a notice in the Federal Register. 

25 (d) NOTIFICATION OF FINAL DETERMINATION.— 


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1 (1) AFTER HEARING.—Within 60 days of any 

2 hearing under subsection (c)(3), the Council shall 

3 notify the financial market utility or financial insti4 tutions of the final determination of the Council in 

5 writing, which shall include findings of fact upon 

6 which the determination of the Council is based. 

7 (2) WHEN NO HEARING REQUESTED.—If the 

8 Council does not receive a timely request for a hear9 ing under subsection (c)(3), the Council shall notify 

10 the financial market utility or financial institutions 

11 of the final determination of the Council in writing 

12 not later than 30 days after the expiration of the 

13 date by which a financial market utility or a finan14 cial institution could have requested a hearing. All 

15 notices to financial institutions under this subsection 

16 shall be published in the Federal Register. 

17 (e) EXTENSION OF TIME PERIODS.—The Council 

18 may extend the time periods established in subsections (c) 

19 and (d) as the Council determines to be necessary or ap20 propriate. 

21 SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FI22 NANCIAL MARKET UTILITIES AND PAYMENT, 

23 CLEARING, OR SETTLEMENT ACTIVITIES. 

24 (a) AUTHORITY TO PRESCRIBE STANDARDS.—The 

25 Board, by rule or order, and in consultation with the 


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1 Council and the Supervisory Agencies, shall prescribe risk 

2 management standards, taking into consideration relevant 

3 international standards and existing prudential require4 ments, governing— 

5 (1) the operations related to the payment, clear6 ing, and settlement activities of designated financial 

7 market utilities; and 

8 (2) the conduct of designated activities by fi9 nancial institutions. 

10 (b) OBJECTIVES AND PRINCIPLES.—The objectives 

11 and principles for the risk management standards pre12 scribed under subsection (a) shall be to— 

13 (1) promote robust risk management; 

14 (2) promote safety and soundness; 

15 (3) reduce systemic risks; and 

16 (4) support the stability of the broader financial 

17 system. 

18 (c) SCOPE.—The standards prescribed under sub19 section (a) may address areas such as— 

20 (1) risk management policies and procedures; 

21 (2) margin and collateral requirements; 

22 (3) participant or counterparty default policies 

23 and procedures; 

24 (4) the ability to complete timely clearing and 

25 settlement of financial transactions; 


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1 (5) capital and financial resource requirements 

2 for designated financial market utilities; and 

3 (6) other areas that the Board determines are 

4 necessary to achieve the objectives and principles in 

5 subsection (b). 

6 (d) THRESHOLD LEVEL.—The standards prescribed 

7 under subsection (a) governing the conduct of designated 

8 activities by financial institutions shall, where appropriate, 

9 establish a threshold as to the level or significance of en10 gagement in the activity at which a financial institution 

11 will become subject to the standards with respect to that 

12 activity. 

13 (e) COMPLIANCE REQUIRED.—Designated financial 

14 market utilities and financial institutions subject to the 

15 standards prescribed by the Board of Governors for a des16 ignated activity shall conduct their operations in compli17 ance with the applicable risk management standards pre18 scribed by the Board of Governors. 

19 SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MAR20 KET UTILITIES. 

21 (a) FEDERAL RESERVE ACCOUNT AND SERVICES.— 

22 The Board of Governors may authorize a Federal Reserve 

23 Bank to establish and maintain an account for a des24 ignated financial market utility and provide services to the 

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1 serve Bank is authorized under the Federal Reserve Act 

2 to provide to a depository institution, subject to any appli3 cable rules, orders, standards, or guidelines prescribed by 

4 the Board of Governors. 

5 (b) ADVANCES.—The Board of Governors may au6 thorize a Federal Reserve Bank to provide to a designated 

7 financial market utility the same discount and borrowing 

8 privileges as the Federal Reserve Bank may provide to a 

9 depository institution under the Federal Reserve Act, sub10 ject to any applicable rules, orders, standards, or guide11 lines prescribed by the Board of Governors. 

12 (c) EARNINGS ON FEDERAL RESERVE BALANCES.— 

13 A Federal Reserve Bank may pay earnings on balances 

14 maintained by or on behalf of a designated financial mar15 ket utility in the same manner and to the same extent 

16 as the Federal Reserve Bank may pay earnings to a depos17 itory institution under the Federal Reserve Act, subject 

18 to any applicable rules, orders, standards, or guidelines 

19 prescribed by the Board of Governors. 

20 (d) RESERVE REQUIREMENTS.—The Board of Gov21 ernors may exempt a designated financial market utility 

22 from, or modify any, reserve requirements under section 

23 19 of the Federal Reserve Act (12 U.S.C. 461) applicable 

24 to a designated financial market utility. 


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1 (e) CHANGES TO RULES, PROCEDURES, OR OPER2 ATIONS.— 

3 (1) ADVANCE NOTICE.— 

4 (A) ADVANCE NOTICE OF PROPOSED

5 CHANGES REQUIRED.—A designated financial 

6 market utility shall provide notice 60 days in 

7 advance advance notice to its Supervisory Agen8 cy and the Board of Governors of any proposed 

9 change to its rules, procedures, or operations 

10 that could, as defined in rules of the Board of 

11 Governors, materially affect, the nature or level 

12 of risks presented by the designated financial 

13 market utility. 

14 (B) TERMS AND STANDARDS PRESCRIBED

15 BY THE BOARD OF GOVERNORS.—The Board of 

16 Governors shall prescribe regulations that de17 fine and describe the standards for determining 

18 when notice is required to be provided under 

19 subparagraph (A). 

20 (C) CONTENTS OF NOTICE.—The notice of 

21 a proposed change shall describe— 

22 (i) the nature of the change and ex23 pected effects on risks to the designated fi24 nancial market utility, its participants, or 

25 the market; and 


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1 (ii) how the designated financial mar2 ket utility plans to manage any identified 

3 risks. 

4 (D) ADDITIONAL INFORMATION.—The Su5 pervisory Agency or the Board of Governors 

6 may require a designated financial market util7 ity to provide any information necessary to as8 sess the effect the proposed change would have 

9 on the nature or level of risks associated with 

10 the designated financial market utility’s pay11 ment, clearing, or settlement activities and the 

12 sufficiency of any proposed risk management 

13 techniques. 

14 (E) NOTICE OF OBJECTION.—The Super15 visory Agency or the Board of Governors shall 

16 notify the designated financial market utility of 

17 any objection regarding the proposed change 

18 within 60 days from the later of— 

19 (i) the date that the notice of the pro20 posed change is received; or 

21 (ii) the date any further information 

22 requested for consideration of the notice is 

23 received. 

24 (F) CHANGE NOT ALLOWED IF OBJEC25 TION.—A designated financial market utility 


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1 shall not implement a change to which the 

2 Board of Governors or the Supervisory Agency 

3 has an objection. 

4 (G) CHANGE ALLOWED IF NO OBJECTION

5 WITHIN 60 DAYS.—A designated financial mar6 ket utility may implement a change if it has not 

7 received an objection to the proposed change 

8 within 60 days of the later of— 

9 (i) the date that the Supervisory 

10 Agency or the Board of Governors receives 

11 the notice of proposed change; or 

12 (ii) the date the Supervisory Agency 

13 or the Board of Governors receives any 

14 further information it requests for consid15 eration of the notice. 

16 (H) REVIEW EXTENSION FOR NOVEL OR

17 COMPLEX ISSUES.—The Supervisory Agency or 

18 the Board of Governors may, during the 60-day 

19 review period, extend the review period for an 

20 additional 60 days for proposed changes that 

21 raise novel or complex issues, subject to the Su22 pervisory Agency or the Board of Governors 

23 providing the designated financial market utility 

24 with prompt written notice of the extension. 

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1 tend the time periods under subparagraphs (D) 

2 and (F). 

3 (I) CHANGE ALLOWED EARLIER IF NOTI4 FIED OF NO OBJECTION.—A designated finan5 cial market utility may implement a change in 

6 less than 60 days from the date of receipt of 

7 the notice of proposed change by the Super8 visory Agency or the Board of Governors, or the 

9 date the Supervisory Agency or the Board of 

10 Governors receives any further information it 

11 requested, if the Supervisory Agency or the 

12 Board of Governors notifies the designated fi13 nancial market utility in writing that it does 

14 not object to the proposed change and author15 izes the designated financial market utility to 

16 implement the change on an earlier date, sub17 ject to any conditions imposed by the Super18 visory Agency or the Board of Governors. 

19 (2) EMERGENCY CHANGES.— 

20 (A) IN GENERAL.—A designated financial 

21 market utility may implement a change that 

22 would otherwise require advance notice under 

23 this subsection if it determines that— 

24 (i) an emergency exists; and 


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1 (ii) immediate implementation of the 

2 change is necessary for the designated fi3 nancial market utility to continue to pro4 vide its services in a safe and sound man5 ner. 

6 (B) NOTICE REQUIRED WITHIN 24

7 HOURS.—The designated financial market util8 ity shall provide notice of any such emergency 

9 change to its Supervisory Agency and the 

10 Board of Governors, as soon as practicable, 

11 which shall be no later than 24 hours after im12 plementation of the change. 

13 (C) CONTENTS OF EMERGENCY NOTICE.— 

14 In addition to the information required for 

15 changes requiring advance notice, the notice of 

16 an emergency change shall describe— 

17 (i) the nature of the emergency; and 

18 (ii) the reason the change was nec19 essary for the designated financial market 

20 utility to continue to provide its services in 

21 a safe and sound manner. 

22 (D) MODIFICATION OR RESCISSION OF

23 CHANGE MAY BE REQUIRED.—The Supervisory 

24 Agency or the Board of Governors may require 

25 modification or rescission of the change if it 


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1 finds that the change is not consistent with the 

2 purposes of this Act or any rules, orders, or 

3 standards prescribed by the Board of Governors 

4 hereunder. 

5 (3) COPYING THE BOARD OF GOVERNORS.—The 

6 Supervisory Agency shall provide the Board of Gov7 ernors concurrently with a complete copy of any no8 tice, request, or other information it issues, submits, 

9 or receives under this subsection. 

10 (4) CONSULTATION WITH BOARD OF GOV11 ERNORS.—Before taking any action on, or com12 pleting its review of, a change proposed by a des13 ignated financial market utility, the Supervisory 

14 Agency shall consult with the Board of Governors. 

15 SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS 

16 AGAINST DESIGNATED FINANCIAL MARKET 

17 UTILITIES. 

18 (a) EXAMINATION.—Notwithstanding any other pro19 vision of law and subject to subsection (d), the Supervisory 

20 Agency shall conduct examinations of a designated finan21 cial market utility at least once annually in order to deter22 mine the following: 

23 (1) The nature of the operations of, and the 

24 risks borne by, the designated financial market util25 ity. 


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1 (2) The financial and operational risks pre2 sented by the designated financial market utility to 

3 financial institutions, critical markets, or the broad4 er financial system. 

5 (3) The resources and capabilities of the des6 ignated financial market utility to monitor and con7 trol such risks. 

8 (4) The safety and soundness of the designated 

9 financial market utility. 

10 (5) The designated financial market utility’s 

11 compliance with— 

12 (A) this title; and 

13 (B) the rules and orders prescribed by the 

14 Board of Governors under this title. 

15 (b) SERVICE PROVIDERS.—Whenever a service inte16 gral to the operation of a designated financial market util17 ity is performed for the designated financial market utility 

18 by another entity, whether an affiliate or non-affiliate and 

19 whether on or off the premises of the designated financial 

20 market utility, the Supervisory Agency may examine 

21 whether the provision of that service is in compliance with 

22 applicable law, rules, orders, and standards to the same 

23 extent as if the designated financial market utility were 

24 performing the service on its own premises. 


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1 (c) ENFORCEMENT.—For purposes of enforcing the 

2 provisions of this section, a designated financial market 

3 utility shall be subject to, and the appropriate Supervisory 

4 Agency shall have authority under the provisions of sub5 sections (b) through (n) of section 8 of the Federal De6 posit Insurance Act (12 U.S.C. 1818) in the same manner 

7 and to the same extent as if the designated financial mar8 ket utility was an insured depository institution and the 

9 Supervisory Agency was the appropriate Federal banking 

10 agency for such insured depository institution. 

11 (d) BOARD OF GOVERNORS INVOLVEMENT IN EXAMI12 NATIONS.— 

13 (1) BOARD OF GOVERNORS CONSULTATION ON

14 EXAMINATION PLANNING.—The Supervisory Agency 

15 shall consult with the Board of Governors regarding 

16 the scope and methodology of any examination con17 ducted under subsections (a) and (b). 

18 (2) BOARD OF GOVERNORS PARTICIPATION IN

19 EXAMINATION.—The Board of Governors may, in its 

20 discretion, participate in any examination led by a 

21 Supervisory Agency and conducted under sub22 sections (a) and (b). 

23 (e) BOARD OF GOVERNORS ENFORCEMENT REC24 OMMENDATIONS.— 


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1 (1) RECOMMENDATION.—The Board of Gov2 ernors may at any time recommend to the Super3 visory Agency that such agency take enforcement ac4 tion against a designated financial market utility. 

5 Any such recommendation for enforcement action 

6 shall provide a detailed analysis supporting the rec7 ommendation of the Board of Governors. 

8 (2) CONSIDERATION.—The Supervisory Agency 

9 shall consider the recommendation of the Board of 

10 Governors and submit a response to the Board of 

11 Governors within 60 days. 

12 (3) MEDIATION.—If the Supervisory Agency re13 jects, in whole or in part, the recommendation of the 

14 Board of Governors, the Board of Governors may 

15 dispute the matter by referring the recommendation 

16 to the Council, which shall attempt to resolve the 

17 dispute. 

18 (4) ENFORCEMENT ACTION.—If the Council is 

19 unable to resolve the dispute under paragraph (3) 

20 within 30 days from the date of referral, the Board 

21 of Governors may, upon a vote of its members— 

22 (A) exercise the enforcement authority ref23 erenced in subsection (c) as if it were the Su24 pervisory Agency; and 


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1 (B) take enforcement action against the 

2 designated financial market utility. 

3 (f) EMERGENCY ENFORCEMENT ACTIONS BY THE

4 BOARD OF GOVERNORS.— 

5 (1) IMMINENT RISK OF SUBSTANTIAL HARM.— 

6 The Board of Governors may, after consulting with 

7 the Council and the Supervisory Agency, take en8 forcement action against a designated financial mar9 ket utility if the Board of Governors has reasonable 

10 cause to believe that— 

11 (A) either— 

12 (i) an action engaged in, or con13 templated by, a designated financial mar14 ket utility (including any change proposed 

15 by the designated financial market utility 

16 to its rules, procedures, or operations that 

17 would otherwise be subject to section 

18 806(e)) poses an imminent risk of substan19 tial harm to financial institutions, critical 

20 markets, or the broader financial system; 

21 or 

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1 tutions, critical markets, or the broader fi2 nancial system; and 

3 (B) the imminent risk of substantial harm 

4 precludes the Board of Governors’ use of the 

5 procedures in subsection (e). 

6 (2) ENFORCEMENT AUTHORITY.—For purposes 

7 of taking enforcement action under paragraph (1), a 

8 designated financial market utility shall be subject 

9 to, and the Board of Governors shall have authority 

10 under the provisions of subsections (b) through (n) 

11 of section 8 of the Federal Deposit Insurance Act 

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

13 same extent as if the designated financial market 

14 utility was an insured depository institution and the 

15 Board of Governors was the appropriate Federal 

16 banking agency for such insured depository institu17 tion. 

18 (3) PROMPT NOTICE TO SUPERVISORY AGENCY

19 OF ENFORCEMENT ACTION.—Within 24 hours of 

20 taking an enforcement action under this subsection, 

21 the Board of Governors shall provide written notice 

22 to the designated financial market utility’s Super23 visory Agency containing a detailed analysis of the 

24 action of the Board of Governors, with supporting 

25 documentation included. 


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1 SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS 

2 AGAINST FINANCIAL INSTITUTIONS SUBJECT 

3 TO STANDARDS FOR DESIGNATED ACTIVI4 TIES. 

5 (a) EXAMINATION.—The appropriate financial regu6 lator is authorized to examine a financial institution sub7 ject to the standards prescribed by the Board of Governors 

8 for a designated activity in order to determine the fol9 lowing: 

10 (1) The nature and scope of the designated ac11 tivities engaged in by the financial institution. 

12 (2) The financial and operational risks the des13 ignated activities engaged in by the financial institu14 tion may pose to the safety and soundness of the fi15 nancial institution. 

16 (3) The financial and operational risks the des17 ignated activities engaged in by the financial institu18 tion may pose to other financial institutions, critical 

19 markets, or the broader financial system. 

20 (4) The resources available to and the capabili21 ties of the financial institution to monitor and con22 trol the risks described in paragraphs (2) and (3). 

23 (5) The financial institution’s compliance with 

24 this title and the rules and orders prescribed by the 

25 Board of Governors under this title. 


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1 (b) ENFORCEMENT.—For purposes of enforcing the 

2 provisions of this section, and the rules and orders pre3 scribed by the Board of Governors under this section, a 

4 financial institution subject to the standards prescribed by 

5 the Board of Governors for a designated activity shall be 

6 subject to, and the appropriate financial regulator shall 

7 have authority under the provisions of subsections (b) 

8 through (n) of section 8 of the Federal Deposit Insurance 

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

10 extent as if the financial institution was an insured deposi11 tory institution and the appropriate financial regulator 

12 was the appropriate Federal banking agency for such in13 sured depository institution. 

14 (c) TECHNICAL ASSISTANCE.—The Board of Gov15 ernors shall consult with and provide such technical assist16 ance as may be required by the appropriate financial regu17 lators to ensure that the rules and orders prescribed by 

18 the Board of Governors under this title are interpreted 

19 and applied in as consistent and uniform a manner as 

20 practicable. 

21 (d) DELEGATION.— 

22 (1) EXAMINATION.— 

23 (A) REQUEST TO BOARD OF GOV24 ERNORS.—The appropriate financial regulator 

25 may request the Board of Governors to conduct 


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1 or participate in an examination of a financial 

2 institution subject to the standards prescribed 

3 by the Board of Governors for a designated ac4 tivity in order to assess the compliance of such 

5 financial institution with— 

6 (i) this title; or 

7 (ii) the rules or orders prescribed by 

8 the Board of Governors under this title. 

9 (B) EXAMINATION BY BOARD OF GOV10 ERNORS.—Upon receipt of an appropriate writ11 ten request, the Board of Governors will con12 duct the examination under such terms and 

13 conditions to which the Board of Governors and 

14 the appropriate financial regulator mutually 

15 agree. 

16 (2) ENFORCEMENT.— 

17 (A) REQUEST TO BOARD OF GOV18 ERNORS.—The appropriate financial regulator 

19 may request the Board of Governors to enforce 

20 this title or the rules or orders prescribed by 

21 the Board of Governors under this title against 

22 a financial institution that is subject to the 

23 standards prescribed by the Board of Governors 

24 for a designated activity. 


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1 (B) ENFORCEMENT BY BOARD OF GOV2 ERNORS.—Upon receipt of an appropriate writ3 ten request, the Board of Governors shall deter4 mine whether an enforcement action is war5 ranted, and, if so, it shall enforce compliance 

6 with this title or the rules or orders prescribed 

7 by the Board of Governors under this title and, 

8 if so, the financial institution shall be subject 

9 to, and the Board of Governors shall have au10 thority under the provisions of subsections (b) 

11 through (n) of section 8 of the Federal Deposit 

12 Insurance Act (12 U.S.C. 1818) in the same 

13 manner and to the same extent as if the finan14 cial institution was an insured depository insti15 tution and the Board of Governors was the ap16 propriate Federal banking agency for such in17 sured depository institution 

18 (e) BACK-UP AUTHORITY OF THE BOARD OF GOV19 ERNORS.— 

20 (1) EXAMINATION AND ENFORCEMENT.—Not21 withstanding any other provision of law, the Board 

22 of Governors may— 

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1 scribed by the Board of Governors for a des2 ignated activity; and 

3 (B) enforce the provisions of this title or 

4 any rules or orders prescribed by the Board of 

5 Governors under this title against any financial 

6 institution that is subject to the standards pre7 scribed by the Board of Governors for a des8 ignated activity. 

9 (2) LIMITATIONS.— 

10 (A) EXAMINATION.—The Board of Gov11 ernors may exercise the authority described in 

12 paragraph (1)(A) only if the Board of Gov13 ernors has— 

14 (i) reasonable cause to believe that a 

15 financial institution is not in compliance 

16 with this title or the rules or orders pre17 scribed by the Board of Governors under 

18 this title with respect to a designated activ19 ity; 

20 (ii) notified, in writing, the appro21 priate financial regulator and the Council 

22 of its belief under clause (i) with sup23 porting documentation included; 


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1 (iii) requested the appropriate finan2 cial regulator to conduct a prompt exam3 ination of the financial institution; and 

4 (iv) either— 

5 (I) not been afforded a reason6 able opportunity to participate in an 

7 examination of the financial institu8 tion by the appropriate financial regu9 lator within 30 days after the date of 

10 the Board’s notification under clause 

11 (ii); or 

12 (II) reasonable cause to believe 

13 that the financial institution’s non14 compliance with this title or the rules 

15 or orders prescribed by the Board of 

16 Governors under this title poses a 

17 substantial risk to other financial in18 stitutions, critical markets, or the 

19 broader financial system, subject to 

20 the Board of Governors affording the 

21 appropriate financial regulator a rea22 sonable opportunity to participate in 

23 the examination. 

24 (B) ENFORCEMENT.—The Board of Gov25 ernors may exercise the authority described in 


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1 paragraph (1)(B) only if the Board of Gov2 ernors has— 

3 (i) reasonable cause to believe that a 

4 financial institution is not in compliance 

5 with this title or the rules or orders pre6 scribed by the Board of Governors under 

7 this title with respect to a designated activ8 ity; 

9 (ii) notified, in writing, the appro10 priate financial regulator and the Council 

11 of its belief under clause (i) with sup12 porting documentation included and with a 

13 recommendation that the appropriate fi14 nancial regulator take 1 or more specific 

15 enforcement actions against the financial 

16 institution; and 

17 (iii) either— 

18 (I) not been notified, in writing, 

19 by the appropriate financial regulator 

20 of the commencement of an enforce21 ment action recommended by the 

22 Board of Governors against the finan23 cial institution within 60 days from 

24 the date of the notification under 

25 clause (ii); or 


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1 (II) reasonable cause to believe 

2 that the financial institution’s non3 compliance with this title or the rules 

4 or orders prescribed by the Board of 

5 Governors under this title poses a 

6 substantial risk to other financial in7 stitutions, critical markets, or the 

8 broader financial system, subject to 

9 the Board of Governors notifying the 

10 appropriate financial regulator of the 

11 Board’s enforcement action. 

12 (3) ENFORCEMENT PROVISIONS.—For purposes 

13 of taking enforcement action under paragraph (1), 

14 the financial institution shall be subject to, and the 

15 Board of Governors shall have authority under the 

16 provisions of subsections (b) through (n) of section 

17 8 of the Federal Deposit Insurance Act (12 U.S.C. 

18 1818) in the same manner and to the same extent 

19 as if the financial institution was an insured deposi20 tory institution and the Board of Governors was the 

21 appropriate Federal banking agency for such insured 

22 depository institution. 


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1 SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR 

2 RECORDS. 

3 (a) INFORMATION TO ASSESS SYSTEMIC IMPOR4 TANCE.— 

5 (1) FINANCIAL MARKET UTILITIES.—The Coun6 cil is authorized to require any financial market util7 ity to submit such information as the Council may 

8 require for the sole purpose of assessing whether 

9 that financial market utility is systemically impor10 tant, but only if the Council has reasonable cause to 

11 believe that the financial market utility meets the 

12 standards for systemic importance set forth in sec13 tion 804. 

14 (2) FINANCIAL INSTITUTIONS ENGAGED IN PAY15 MENT, CLEARING, OR SETTLEMENT ACTIVITIES.— 

16 The Council is authorized to require any financial 

17 institution to submit such information as the Coun18 cil may require for the sole purpose of assessing 

19 whether any payment, clearing, or settlement activ20 ity engaged in or supported by a financial institution 

21 is systemically important, but only if the Council has 

22 reasonable cause to believe that the activity meets 

23 the standards for systemic importance set forth in 

24 section 804. 

25 (b) REPORTING AFTER DESIGNATION.— 


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1 (1) DESIGNATED FINANCIAL MARKET UTILI2 TIES.—The Board of Governors and the Council 

3 may require a designated financial market utility to 

4 submit reports or data to the Board of Governors 

5 and the Council in such frequency and form as 

6 deemed necessary by the Board of Governors and 

7 the Council in order to assess the safety and sound8 ness of the utility and the systemic risk that the 

9 utility’s operations pose to the financial system. 

10 (2) FINANCIAL INSTITUTIONS SUBJECT TO

11 STANDARDS FOR DESIGNATED ACTIVITIES.—The 

12 Board of Governors and the Council may require 1 

13 or more financial institutions subject to the stand14 ards prescribed by the Board of Governors for a des15 ignated activity to submit, in such frequency and 

16 form as deemed necessary by the Board of Gov17 ernors and the Council, reports and data to the 

18 Board of Governors and the Council solely with re19 spect to the conduct of the designated activity and 

20 solely to assess whether— 

21 (A) the rules, orders, or standards pre22 scribed by the Board of Governors with respect 

23 to the designated activity appropriately address 

24 the risks to the financial system presented by 

25 such activity; and 


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1 (B) the financial institutions are in compli2 ance with this title and the rules and orders 

3 prescribed by the Board of Governors under 

4 this title with respect to the designated activity. 

5 (c) COORDINATION WITH APPROPRIATE FEDERAL

6 SUPERVISORY AGENCY.— 

7 (1) ADVANCE COORDINATION.—Before directly 

8 requesting any material information from, or impos9 ing reporting or recordkeeping requirements on, any 

10 financial market utility or any financial institution 

11 engaged in a payment, clearing, or settlement activ12 ity, the Board of Governors and the Council shall co13 ordinate with the Supervisory Agency for a financial 

14 market utility or the appropriate financial regulator 

15 for a financial institution to determine if the infor16 mation is available from or may be obtained by the 

17 agency in the form, format, or detail required by the 

18 Board of Governors and the Council. 

19 (2) SUPERVISORY REPORTS.—Notwithstanding 

20 any other provision of law, the Supervisory Agency, 

21 the appropriate financial regulator, and the Board of 

22 Governors are authorized to disclose to each other 

23 and the Council copies of its examination reports or 

24 similar reports regarding any financial market utility 


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1 or any financial institution engaged in payment, 

2 clearing, or settlement activities. 

3 (d) TIMING OF RESPONSE FROM APPROPRIATE FED4 ERAL SUPERVISORY AGENCY.—If the information, report, 

5 records, or data requested by the Board of Governors or 

6 the Council under subsection (c)(1) are not provided in 

7 full by the Supervisory Agency or the appropriate financial 

8 regulator in less than 15 days after the date on which 

9 the material is requested, the Board of Governors or the 

10 Council may request the information or impose record11 keeping or reporting requirements directly on such per12 sons as provided in subsections (a) and (b) with notice 

13 to the agency. 

14 (e) SHARING OF INFORMATION.— 

15 (1) MATERIAL CONCERNS.—Notwithstanding 

16 any other provision of law, the Board of Governors, 

17 the Council, the appropriate financial regulator, and 

18 any Supervisory Agency are authorized to— 

19 (A) promptly notify each other of material 

20 concerns about a designated financial market 

21 utility or any financial institution engaged in 

22 designated activities; and 

23 (B) share appropriate reports, information, 

24 or data relating to such concerns. 


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1 (2) OTHER INFORMATION.—Notwithstanding 

2 any other provision of law, the Board of Governors, 

3 the Council, the appropriate financial regulator, or 

4 any Supervisory Agency may, under such terms and 

5 conditions as it deems appropriate, provide confiden6 tial supervisory information and other information 

7 obtained under this title to other persons it deems 

8 appropriate, including the Secretary, State financial 

9 institution supervisory agencies, foreign financial su10 pervisors, foreign central banks, and foreign finance 

11 ministries, subject to reasonable assurances of con12 fidentiality. 

13 (f) PRIVILEGE MAINTAINED.—The Board of Gov14 ernors, the Council, the appropriate financial regulator, 

15 and any Supervisory Agency providing reports or data 

16 under this section shall not be deemed to have waived any 

17 privilege applicable to those reports or data, or any portion 

18 thereof, by providing the reports or data to the other party 

19 or by permitting the reports or data, or any copies thereof, 

20 to be used by the other party. 

21 (g) DISCLOSURE EXEMPTION.—Information obtained 

22 by the Board of Governors or the Council under this sec23 tion and any materials prepared by the Board of Gov24 ernors or the Council regarding its assessment of the sys25 temic importance of financial market utilities or any payVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00777 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 ment, clearing, or settlement activities engaged in by fi2 nancial institutions, and in connection with its supervision 

3 of designated financial market utilities and designated ac4 tivities, shall be confidential supervisory information ex5 empt from disclosure under section 552 of title 5, United 

6 States Code. For purposes of such section 552, this sub7 section shall be considered a statute described in sub8 section (b)(3) of such section 552. 

9 SEC. 810. RULEMAKING. 

10 The Board of Governors and the Council are author11 ized to prescribe such rules and issue such orders as may 

12 be necessary to administer and carry out the authorities 

13 and duties granted to the Board of Governors or the 

14 Council, respectively, and prevent evasions thereof. 

15 SEC. 811. OTHER AUTHORITY. 

16 Unless otherwise provided by its terms, this title does 

17 not divest any appropriate financial regulator, any Super18 visory Agency, or any other Federal or State agency, of 

19 any authority derived from any other applicable law, ex20 cept that any standards prescribed by the Board of Gov21 ernors under section 805 shall supersede any less strin22 gent requirements established under other authority to the 

23 extent of any conflict. 


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1 SEC. 812. EFFECTIVE DATE. 

2 This title is effective as of the date of enactment of 

3 this Act. 

4 TITLE IX—INVESTOR PROTEC5 TIONS AND IMPROVEMENTS 

6 TO THE REGULATION OF SE7 CURITIES 

8 Subtitle A—Increasing Investor 

9 Protection 

10 SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED. 

11 Title I of the Securities Exchange Act of 1934 (15 

12 U.S.C. 78a et seq.) is amended by adding at the end the 

13 following: 

14 ‘‘SEC. 39. INVESTOR ADVISORY COMMITTEE. 

15 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 

16 ‘‘(1) ESTABLISHMENT.—There is established 

17 within the Commission the Investor Advisory Com18 mittee (referred to in this section as the ‘Com19 mittee’). 

20 ‘‘(2) PURPOSE.—The Committee shall— 

21 ‘‘(A) advise and consult with the Commis22 sion on— 

23 ‘‘(i) regulatory priorities of the Com24 mission; 

25 ‘‘(ii) issues relating to the regulation 

26 of securities products, trading strategies, 


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1 and fee structures, and the effectiveness of 

2 disclosure; 

3 ‘‘(iii) initiatives to protect investor in4 terest; and 

5 ‘‘(iv) initiatives to promote investor 

6 confidence and the integrity of the securi7 ties marketplace; and 

8 ‘‘(B) submit to the Commission such find9 ings and recommendations as the Committee 

10 determines are appropriate, including rec11 ommendations for proposed legislative changes. 

12 ‘‘(b) MEMBERSHIP.— 

13 ‘‘(1) IN GENERAL.—The members of the Com14 mittee shall be— 

15 ‘‘(A) the Investor Advocate; 

16 ‘‘(B) a representative of State securities 

17 commissions; 

18 ‘‘(C) a representative of the interests of 

19 senior citizens; and 

20 ‘‘(D) not fewer than 10, and not more 

21 than 20, members appointed by the Commis22 sion, from among individuals who— 

23 ‘‘(i) represent the interests of indi24 vidual equity and debt investors, including 

25 investors in mutual funds; 


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1 ‘‘(ii) represent the interests of institu2 tional investors, including the interests of 

3 pension funds and registered investment 

4 companies; 

5 ‘‘(iii) are knowledgeable about invest6 ment issues and decisions; and 

7 ‘‘(iv) have reputations of integrity. 

8 ‘‘(2) TERM.—Each member of the Committee 

9 appointed under paragraph (1)(B) shall serve for a 

10 term of 4 years. 

11 ‘‘(3) MEMBERS NOT COMMISSION EMPLOY12 EES.—Members appointed under paragraph (1)(B) 

13 shall not be deemed to be employees or agents of the 

14 Commission solely because of membership on the 

15 Committee. 

16 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS17 SISTANT SECRETARY.— 

18 ‘‘(1) IN GENERAL.—The members of the Com19 mittee shall elect, from among the members of the 

20 Committee— 

21 ‘‘(A) a chairman, who may not be em22 ployed by an issuer; 

23 ‘‘(B) a vice chairman, who may not be em24 ployed by an issuer; 

25 ‘‘(C) a secretary; and 


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1 ‘‘(D) an assistant secretary. 

2 ‘‘(2) TERM.—Each member elected under para3 graph (1) shall serve for a term of 3 years in the 

4 capacity for which the member was elected under 

5 paragraph (1). 

6 ‘‘(d) MEETINGS.— 

7 ‘‘(1) FREQUENCY OF MEETINGS.—The Com8 mittee shall meet— 

9 ‘‘(A) not less frequently than twice annu10 ally, at the call of the chairman of the Com11 mittee; and 

12 ‘‘(B) from time to time, at the call of the 

13 Commission. 

14 ‘‘(2) NOTICE.—The chairman of the Committee 

15 shall give the members of the Committee written no16 tice of each meeting, not later than 2 weeks before 

17 the date of the meeting. 

18 ‘‘(e) COMPENSATION AND TRAVEL EXPENSES.— 

19 Each member of the Committee who is not a full-time em20 ployee of the United States shall— 

21 ‘‘(1) be compensated at a rate not to exceed the 

22 daily equivalent of the annual rate of basic pay in 

23 effect for a position at level V of the Executive 

24 Schedule under section 5316 of title 5, United 

25 States Code, for each day during which the member 


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1 is engaged in the actual performance of the duties 

2 of the Committee; and 

3 ‘‘(2) while away from the home or regular place 

4 of business of the member in the performance of 

5 services for the Committee, be allowed travel ex6 penses, including per diem in lieu of subsistence, in 

7 the same manner as persons employed intermittently 

8 in the Government service are allowed expenses 

9 under section 5703(b) of title 5, United States Code. 

10 ‘‘(f) STAFF.—The Commission shall make available 

11 to the Committee such staff as the chairman of the Com12 mittee determines are necessary to carry out this section. 

13 ‘‘(g) REVIEW BY COMMISSION.—The Commission 

14 shall— 

15 ‘‘(1) review the findings and recommendations 

16 of the Committee; and 

17 ‘‘(2) each time the Committee submits a finding 

18 or recommendation to the Commission, issue a pub19 lic statement— 

20 ‘‘(A) assessing the finding or recommenda21 tion of the Committee; and 

22 ‘‘(B) disclosing the action, if any, the Com23 mission intends to take with respect to the find24 ing or recommendation. 


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1 ‘‘(h) COMMITTEE FINDINGS.—Nothing in this section 

2 shall require the Commission to agree to or act upon any 

3 finding or recommendation of the Committee. 

4 ‘‘(i) FEDERAL ADVISORY COMMITTEE ACT.—The 

5 Federal Advisory Committee Act (5 U.S.C. App.) shall not 

6 apply with respect to the Committee and its activities. 

7 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There 

8 is authorized to be appropriated to the Commission such 

9 sums as are necessary to carry out this section.’’. 

10 SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMIS11 SION TO ENGAGE IN INVESTOR TESTING. 

12 Section 19 of the Securities Act of 1933 (15 U.S.C. 

13 77s) is amended by adding at the end the following: 

14 ‘‘(e) EVALUATION OF RULES OR PROGRAMS.—For 

15 the purpose of evaluating any rule or program of the Com16 mission issued or carried out under any provision of the 

17 securities laws, as defined in section 3 of the Securities 

18 Exchange Act of 1934 (15 U.S.C. 78c), and the purposes 

19 of considering, proposing, adopting, or engaging in any 

20 such rule or program or developing new rules or programs, 

21 the Commission may— 

22 ‘‘(1) gather information from and communicate 

23 with investors or other members of the public; 


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1 ‘‘(2) engage in such temporary investor testing 

2 programs as the Commission determines are in the 

3 public interest or would protect investors; and 

4 ‘‘(3) consult with academics and consultants, as 

5 necessary to carry out this subsection. 

6 ‘‘(f) RULE OF CONSTRUCTION.—For purposes of the 

7 Paperwork Reduction Act (44 U.S.C. 3501 et seq.), any 

8 action taken under subsection (e) shall not be construed 

9 to be a collection of information.’’. 

10 SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGA11 TIONS OF BROKERS, DEALERS, AND INVEST12 MENT ADVISERS. 

13 (a) DEFINITIONS.—In this section— 

14 (1) the term ‘‘FINRA’’ means the Financial In15 dustry Regulatory Authority; and 

16 (2) the term ‘‘retail customer’’ means an indi17 vidual customer of a broker, dealer, investment ad18 viser, person associated with a broker or dealer, or 

19 a person associated with an investment adviser. 

20 (b) IN GENERAL.—The Commission shall conduct a 

21 study to evaluate— 

22 (1) the effectiveness of existing legal or regu23 latory standards of care for brokers, dealers, invest24 ment advisers, persons associated with brokers or 

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1 visers for providing personalized investment advice 

2 and recommendations about securities to retail cus3 tomers imposed by the Commission and FINRA, 

4 and other Federal and State legal or regulatory 

5 standards; and 

6 (2) whether there are legal or regulatory gaps 

7 or overlap in legal or regulatory standards in the 

8 protection of retail customers relating to the stand9 ards of care for brokers, dealers, investment advis10 ers, persons associated with brokers or dealers, and 

11 persons associated with investment advisers for pro12 viding personalized investment advice about securi13 ties to retail customers that should be addressed by 

14 rule or statute. 

15 (c) CONSIDERATIONS.—In conducting the study re16 quired under subsection (b), the Commission shall con17 sider— 

18 (1) the regulatory, examination, and enforce19 ment resources devoted to, and activities of, the 

20 Commission and FINRA to enforce the standards of 

21 care for brokers, dealers, investment advisers, per22 sons associated with brokers or dealers, and persons 

23 associated with investment advisers when providing 

24 personalized investment advice and recommendations 

25 about securities to retail customers, including— 


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1 (A) the frequency of examinations of bro2 kers, dealers, and investment advisers; and 

3 (B) the length of time of the examinations; 

4 (2) the substantive differences, compared and 

5 contrasted in detail, in the regulation of brokers, 

6 dealers, and investment advisers, when providing 

7 personalized investment advice and recommendations 

8 about securities to retail customers, including the 

9 differences in the amount of resources devoted to the 

10 regulation and examination of brokers, dealers, and 

11 investment advisers, by the Commission and 

12 FINRA; 

13 (3) the specific instances in which— 

14 (A) the regulation and oversight of invest15 ment advisers provide greater protection to re16 tail customers than the regulation and oversight 

17 of brokers and dealers; and 

18 (B) the regulation and oversight of brokers 

19 and dealers provide greater protection to retail 

20 customers than the regulation and oversight of 

21 investment advisers; 

22 (4) the existing legal or regulatory standards of 

23 State securities regulators and other regulators in24 tended to protect retail customers; 


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1 (5) the potential impact on retail customers, in2 cluding the potential impact on access of retail cus3 tomers to the range of products and services offered 

4 by brokers and dealers, of imposing upon brokers, 

5 dealers, and persons associated with brokers or deal6 ers— 

7 (A) the standard of care applied under the 

8 Investment Advisers Act of 1940 (15 U.S.C. 

9 80b–1 et seq.) for providing personalized invest10 ment advice about securities to retail customers 

11 of investment advisers; and 

12 (B) other requirements of the Investment 

13 Advisers Act of 1940 (15 U.S.C. 80b–1 et 

14 seq.); 

15 (6) the potential impact of— 

16 (A) imposing on investment advisers the 

17 standard of care applied by the Commission 

18 and FINRA under the Securities Exchange Act 

19 of 1934 (15 U.S.C. 78a et seq.) for providing 

20 recommendations about securities to retail cus21 tomers of brokers and dealers and other Com22 mission and FINRA requirements applicable to 

23 brokers and dealers; and 

24 (B) authorizing the Commission to des25 ignate 1 or more self-regulatory organizations 


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1 to augment the efforts of the Commission to 

2 oversee investment advisers; 

3 (7) the potential impact of eliminating the 

4 broker and dealer exclusion from the definition of 

5 ‘‘investment adviser’’ under section 202(a)(11)(C) of 

6 the Investment Advisers Act of 1940 (15 U.S.C. 

7 80b–2(a)(11)(C)), in terms of— 

8 (A) the potential benefits or harm to retail 

9 customers that could result from such a change, 

10 including any potential impact on access to per11 sonalized investment advice and recommenda12 tions about securities to retail customers or the 

13 availability of such advice and recommenda14 tions; 

15 (B) the number of additional entities and 

16 individuals that would be required to register 

17 under, or become subject to, the Investment 

18 Advisers Act of 1940 (15 U.S.C. 80b–1 et 

19 seq.), and the additional requirements to which 

20 brokers, dealers, and persons associated with 

21 brokers and dealers would become subject, in22 cluding— 

23 (i) any potential additional associated 

24 person licensing, registration, and exam25 ination requirements; and 


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1 (ii) the additional costs, if any, to the 

2 additional entities and individuals; and 

3 (C) the impact on Commission resources 

4 to— 

5 (i) conduct examinations of registered 

6 investment advisers and the representatives 

7 of registered investment advisers, including 

8 the impact on the examination cycle; and 

9 (ii) enforce the standard of care and 

10 other applicable requirements imposed 

11 under the Investment Advisers Act of 1940 

12 (15 U.S.C. 80b–1 et seq.); 

13 (8) the ability of investors to understand the 

14 differences in terms of regulatory oversight and ex15 aminations between brokers, dealers, and investment 

16 advisers; 

17 (9) the varying level of services provided by bro18 kers, dealers, investment advisers, persons associated 

19 with brokers or dealers, and persons associated with 

20 investment advisers to retail customers and the vary21 ing scope and terms of retail customer relationships 

22 of brokers, dealers, investment advisers, persons as23 sociated with brokers or dealers, and persons associ24 ated with investment advisers with such retail cus25 tomers; 


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1 (10) any potential benefits or harm to retail 

2 customers that could result from any potential 

3 changes in the regulatory requirements or legal 

4 standards affecting brokers, dealers, investment ad5 visers, persons associated with brokers or dealers, 

6 and persons associated with investment advisers re7 lating to their obligations to retail customers, includ8 ing any potential impact on— 

9 (A) protection from fraud; 

10 (B) access to personalized investment ad11 vice, and recommendations about securities to 

12 retail customers; or 

13 (C) the availability of such advice and rec14 ommendations; 

15 (11) the additional costs and expenses to retail 

16 customers and to brokers, dealers, and investment 

17 advisers resulting from potential changes in the reg18 ulatory requirements or legal standards affecting 

19 brokers, dealers, investment advisers, persons associ20 ated with brokers or dealers, and persons associated 

21 with investment advisers relating to their obligations 

22 to retail customers; and 

23 (12) any other consideration that the Commis24 sion deems necessary and appropriate to effectively 

25 execute the study required under subsection (b). 


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1 (d) REPORT.— 

2 (1) IN GENERAL.—Not later than 1 year after 

3 the date of enactment of this Act, the Commission 

4 shall submit a report on the study required under 

5 subsection (b) to— 

6 (A) the Committee on Banking, Housing, 

7 and Urban Affairs of the Senate; and 

8 (B) the Committee on Financial Services 

9 of the House of Representatives. 

10 (2) CONTENT REQUIREMENTS.—The report re11 quired under paragraph (1) shall describe the find12 ings, conclusions, and recommendations of the Com13 mission from the study required under subsection 

14 (b), including— 

15 (A) a description of the considerations, 

16 analysis, and public and industry input that the 

17 Commission considered, as required under sub18 section (e), to make such findings, conclusions, 

19 and policy recommendations; and 

20 (B) an analysis of— 

21 (i) whether any identified legal or reg22 ulatory gaps or overlap in legal or regu23 latory standards in the protection of retail 

24 customers relating to the standards of care 

25 for brokers, dealers, investment advisers, 


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1 persons associated with brokers or dealers, 

2 and persons associated with investment ad3 visers for providing personalized invest4 ment advice about securities to retail cus5 tomers can be addressed by rule; and 

6 (ii) whether, and the extent to which, 

7 the Commission would require additional 

8 statutory authority to address such gaps or 

9 overlap. 

10 (e) PUBLIC COMMENT.—The Commission shall seek 

11 and consider public input, comments, and data in order 

12 to prepare the report required under subsection (d). 

13 (f) RULEMAKING.— 

14 (1) IN GENERAL.—If the study required under 

15 subsection (b) identifies any gaps or overlap in the 

16 legal or regulatory standards in the protection of re17 tail customers relating to the standards of care for 

18 brokers, dealers, investment advisers, persons associ19 ated with brokers or dealers, and persons associated 

20 with investment advisers for providing personalized 

21 investment advice about securities to such retail cus22 tomers, the Commission, not later than 2 years after 

23 the date of enactment of this Act, shall— 

24 (A) commence a rulemaking, as necessary 

25 or appropriate in the public interest and for the 


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1 protection of retail customers, to address such 

2 regulatory gaps and overlap that can be ad3 dressed by rule, using its authority under the 

4 Securities Exchange Act of 1934 (15 U.S.C. 

5 78a et seq.) and the Investment Advisers Act of 

6 1940 (15 U.S.C. 80b–1 et seq.); and 

7 (B) consider and take into account the 

8 findings, conclusions, and recommendations of 

9 the study required under this section. 

10 (2) RULE OF CONSTRUCTION.—Nothing in this 

11 section shall be construed to limit the rulemaking 

12 authority of the Commission under any other provi13 sion of Federal law. 

14 SEC. 914. OFFICE OF THE INVESTOR ADVOCATE. 

15 Section 4 of the Securities Exchange Act of 1934 (15 

16 U.S.C. 78d) is amended by adding at the end the fol17 lowing: 

18 ‘‘(g) OFFICE OF THE INVESTOR ADVOCATE.— 

19 ‘‘(1) OFFICE ESTABLISHED.—There is estab20 lished within the Commission the Office of the In21 vestor Advocate (in this subsection referred to as the 

22 ‘Office’). 

23 ‘‘(2) INVESTOR ADVOCATE.— 

24 ‘‘(A) IN GENERAL.—The head of the Of25 fice shall be the Investor Advocate, who shall— 


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1 ‘‘(i) report directly to the Chairman; 

2 and 

3 ‘‘(ii) be appointed by the Chairman, in 

4 consultation with the Commission, from 

5 among individuals having experience in ad6 vocating for the interests of investors in se7 curities and investor protection issues, 

8 from the perspective of investors. 

9 ‘‘(B) COMPENSATION.—The annual rate of 

10 pay for the Investor Advocate shall be equal to 

11 the highest rate of annual pay for a Senior Ex12 ecutive Service position within the Commission. 

13 ‘‘(C) LIMITATION ON SERVICE.—An indi14 vidual who serves as the Investor Advocate may 

15 not be employed by the Commission— 

16 ‘‘(i) during the 2-year period ending 

17 on the date of appointment as Investor Ad18 vocate; or 

19 ‘‘(ii) during the 5-year period begin20 ning on the date on which the person 

21 ceases to serve as the Investor Advocate. 

22 ‘‘(3) STAFF OF OFFICE.—The Investor Advo23 cate may retain or employ independent counsel, re24 search staff, and service staff, as the Investor AdvoVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00795 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 cate deems necessary to carry out the functions, 

2 powers, and duties of the Office. 

3 ‘‘(4) FUNCTIONS OF THE INVESTOR ADVO4 CATE.—The Investor Advocate shall— 

5 ‘‘(A) assist retail investors in resolving sig6 nificant problems such investors may have with 

7 the Commission or with self-regulatory organi8 zations; 

9 ‘‘(B) identify areas in which investors 

10 would benefit from changes in the regulations 

11 of the Commission or the rules of self-regu12 latory organizations; 

13 ‘‘(C) identify problems that investors have 

14 with financial service providers and investment 

15 products; 

16 ‘‘(D) analyze the potential impact on inves17 tors of— 

18 ‘‘(i) proposed regulations of the Com19 mission; and 

20 ‘‘(ii) proposed rules of self-regulatory 

21 organizations registered under this title; 

22 and 

23 ‘‘(E) to the extent practicable, propose to 

24 the Commission changes in the regulations or 

25 orders of the Commission and to Congress any 


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1 legislative, administrative, or personnel changes 

2 that may be appropriate to mitigate problems 

3 identified under this paragraph and to promote 

4 the interests of investors. 

5 ‘‘(5) ACCESS TO DOCUMENTS.—The Commis6 sion shall ensure that the Investor Advocate has full 

7 access to the documents of the Commission and any 

8 self-regulatory organization, as necessary to carry 

9 out the functions of the Office. 

10 ‘‘(6) ANNUAL REPORTS.— 

11 ‘‘(A) REPORT ON OBJECTIVES.— 

12 ‘‘(i) IN GENERAL.—Not later than 

13 June 30 of each year after 2010, the In14 vestor Advocate shall submit to the Com15 mittee on Banking, Housing, and Urban 

16 Affairs of the Senate and the Committee 

17 on Financial Services of the House of Rep18 resentatives a report on the objectives of 

19 the Investor Advocate for the following fis20 cal year. 

21 ‘‘(ii) CONTENTS.—Each report re22 quired under clause (i) shall contain full 

23 and substantive analysis and explanation. 

24 ‘‘(B) REPORT ON ACTIVITIES.— 


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1 ‘‘(i) IN GENERAL.—Not later than 

2 December 31 of each year after 2010, the 

3 Investor Advocate shall submit to the Com4 mittee on Banking, Housing, and Urban 

5 Affairs of the Senate and the Committee 

6 on Financial Services of the House of Rep7 resentatives a report on the activities of 

8 the Investor Advocate during the imme9 diately preceding fiscal year. 

10 ‘‘(ii) CONTENTS.—Each report re11 quired under clause (i) shall include— 

12 ‘‘(I) appropriate statistical infor13 mation and full and substantive anal14 ysis; 

15 ‘‘(II) information on steps that 

16 the Investor Advocate has taken dur17 ing the reporting period to improve in18 vestor services and the responsiveness 

19 of the Commission and self-regulatory 

20 organizations to investor concerns; 

21 ‘‘(III) a summary of the most se22 rious problems encountered by inves23 tors during the reporting period; 


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1 ‘‘(IV) an inventory of the items 

2 described in subclauses (III) that in3 cludes— 

4 ‘‘(aa) identification of any 

5 action taken by the Commission 

6 or the self-regulatory organiza7 tion and the result of such ac8 tion; 

9 ‘‘(bb) the length of time that 

10 each item has remained on such 

11 inventory; and 

12 ‘‘(cc) for items on which no 

13 action has been taken, the rea14 sons for inaction, and an identi15 fication of any official who is re16 sponsible for such action; 

17 ‘‘(V) recommendations for such 

18 administrative and legislative actions 

19 as may be appropriate to resolve prob20 lems encountered by investors; and 

21 ‘‘(VI) any other information, as 

22 determined appropriate by the Inves23 tor Advocate. 

24 ‘‘(iii) INDEPENDENCE.—Each report 

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1 vided directly to the Committees listed in 

2 clause (i) without any prior review or com3 ment from the Commission, any commis4 sioner, any other officer or employee of the 

5 Commission, or the Office of Management 

6 and Budget. 

7 ‘‘(iv) CONFIDENTIALITY.—No report 

8 required under clause (i) may contain con9 fidential information. 

10 ‘‘(7) REGULATIONS.—The Commission shall, by 

11 regulation, establish procedures requiring a formal 

12 response to all recommendations submitted to the 

13 Commission by the Investor Advocate, not later than 

14 3 months after the date of such submission.’’. 

15 SEC. 915. STREAMLINING OF FILING PROCEDURES FOR 

16 SELF-REGULATORY ORGANIZATIONS. 

17 (a) FILING PROCEDURES.—Section 19(b) of the Se18 curities Exchange Act of 1934 (15 U.S.C. 78s(b)) is 

19 amended by striking paragraph (2) (including the undesig20 nated matter immediately following subparagraph (B)) 

21 and inserting the following: 

22 ‘‘(2) APPROVAL PROCESS.— 

23 ‘‘(A) APPROVAL PROCESS ESTABLISHED.— 

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (ii), not later than 45 days 


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1 after the date of publication of a proposed 

2 rule change under paragraph (1), the Com3 mission shall— 

4 ‘‘(I) by order, approve the pro5 posed rule change; or 

6 ‘‘(II) institute proceedings under 

7 subparagraph (B) to determine wheth8 er the proposed rule change should be 

9 disapproved. 

10 ‘‘(ii) EXTENSION OF TIME PERIOD.— 

11 The Commission may extend the period es12 tablished under clause (i) by not more than 

13 an additional 45 days, if— 

14 ‘‘(I) the Commission determines 

15 that a longer period is appropriate 

16 and publishes the reasons for such de17 termination; or 

18 ‘‘(II) the self-regulatory organiza19 tion that filed the proposed rule 

20 change consents to the longer period. 

21 ‘‘(B) PROCEEDINGS.— 

22 ‘‘(i) NOTICE AND HEARING.—If the 

23 Commission does not approve a proposed 

24 rule change under subparagraph (A), the 

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1 latory organization that filed the proposed 

2 rule change— 

3 ‘‘(I) notice of the grounds for 

4 disapproval under consideration; and 

5 ‘‘(II) opportunity for hearing, to 

6 be concluded not later than 180 days 

7 after the date of publication of notice 

8 of the filing of the proposed rule 

9 change. 

10 ‘‘(ii) ORDER OF APPROVAL OR DIS11 APPROVAL.— 

12 ‘‘(I) IN GENERAL.—Except as 

13 provided in subclause (II), not later 

14 than 180 days after the date of publi15 cation under paragraph (1), the Com16 mission shall issue an order approving 

17 or disapproving the proposed rule 

18 change. 

19 ‘‘(II) EXTENSION OF TIME PE20 RIOD.—The Commission may extend 

21 the period for issuance under clause 

22 (I) by not more than 60 days, if— 

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1 propriate and publishes the rea2 sons for such determination; or 

3 ‘‘(bb) the self-regulatory or4 ganization that filed the proposed 

5 rule change consents to the 

6 longer period. 

7 ‘‘(C) STANDARDS FOR APPROVAL AND DIS8 APPROVAL.— 

9 ‘‘(i) APPROVAL.—The Commission 

10 shall approve a proposed rule change of a 

11 self-regulatory organization if it finds that 

12 such proposed rule change is consistent 

13 with the requirements of this title and the 

14 rules and regulations issued under this 

15 title that are applicable to such organiza16 tion. 

17 ‘‘(ii) DISAPPROVAL.—The Commission 

18 shall disapprove a proposed rule change of 

19 a self-regulatory organization if it does not 

20 make a finding described in clause (i). 

21 ‘‘(iii) TIME FOR APPROVAL.—The 

22 Commission may not approve a proposed 

23 rule change earlier than 30 days after the 

24 date of publication under paragraph (1), 

25 unless the Commission finds good cause 


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1 for so doing and publishes the reason for 

2 the finding. 

3 ‘‘(D) RESULT OF FAILURE TO INSTITUTE

4 OR CONCLUDE PROCEEDINGS.—A proposed rule 

5 change shall be deemed to have been approved 

6 by the Commission, if— 

7 ‘‘(i) the Commission does not approve 

8 the proposed rule change or begin pro9 ceedings under subparagraph (B) within 

10 the period described in subparagraph (A); 

11 or 

12 ‘‘(ii) the Commission does not issue 

13 an order approving or disapproving the 

14 proposed rule change under subparagraph 

15 (B) within the period described in subpara16 graph (B)(ii). 

17 ‘‘(E) PUBLICATION DATE BASED ON FED18 ERAL REGISTER PUBLISHING.—For purposes of 

19 this paragraph, if, after filing a proposed rule 

20 change with the Commission pursuant to para21 graph (1), a self-regulatory organization pub22 lishes a notice of the filing of such proposed 

23 rule change, together with the substantive 

24 terms of such proposed rule change, on a pub25 licly accessible website, the Commission shall 


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1 thereafter send the notice to the Federal Reg2 ister for publication thereof under paragraph 

3 (1) within 15 days of the date on which such 

4 website publication is made. If the Commission 

5 fails to send the notice for publication thereof 

6 within such 15 day period, then the date of 

7 publication shall be deemed to be the date on 

8 which such website publication was made.’’. 

9 (b) CLARIFICATION OF FILING DATE.— 

10 (1) RULE OF CONSTRUCTION.—Section 19(b) of 

11 the Securities Exchange Act of 1934 (15 U.S.C. 

12 78s(b)) is amended by adding at the end the fol13 lowing: 

14 ‘‘(10) RULE OF CONSTRUCTION RELATING TO

15 FILING DATE OF PROPOSED RULE CHANGES.— 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 subsection, the date of filing of a proposed rule 

18 change shall be deemed to be the date on which 

19 the Commission receives the proposed rule 

20 change. 

21 ‘‘(B) EXCEPTION.—A proposed rule 

22 change has not been received by the Commis23 sion for purposes of subparagraph (A) if, not 

24 later than 7 days after the date of receipt by 

25 the Commission, the Commission notifies the 


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1 self-regulatory organization that such proposed 

2 rule change does not comply with the rules of 

3 the Commission relating to the required form of 

4 a proposed rule change.’’. 

5 (2) PUBLICATION.—Section 19(b)(1) of the Se6 curities Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) 

7 is amended by striking ‘‘upon’’ and inserting ‘‘as 

8 soon as practicable after the date of’’. 

9 (c) EFFECTIVE DATE OF PROPOSED RULES.—Sec10 tion 19(b)(3) of the Securities Exchange Act of 1934 (15 

11 U.S.C. 78s(b)(3)) is amended— 

12 (1) in subparagraph (A)— 

13 (A) by striking ‘‘may take effect’’ and in14 serting ‘‘shall take effect’’; and 

15 (B) by inserting ‘‘on any person, whether 

16 or not the person is a member of the self-regu17 latory organization’’ after ‘‘charge imposed by 

18 the self-regulatory organization’’; and 

19 (2) in subparagraph (C)— 

20 (A) by amending the second sentence to 

21 read as follows: ‘‘At any time within the 60-day 

22 period beginning on the date of filing of such 

23 a proposed rule change in accordance with the 

24 provisions of paragraph (1), the Commission 

25 summarily may temporarily suspend the change 


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1 in the rules of the self-regulatory organization 

2 made thereby, if it appears to the Commission 

3 that such action is necessary or appropriate in 

4 the public interest, for the protection of inves5 tors, or otherwise in furtherance of the pur6 poses of this title.’’; 

7 (B) by inserting after the second sentence 

8 the following: ‘‘If the Commission takes such 

9 action, the Commission shall institute pro10 ceedings under paragraph (2)(B) to determine 

11 whether the proposed rule should be approved 

12 or disapproved.’’; and 

13 (C) in the third sentence, by striking ‘‘the 

14 preceding sentence’’ and inserting ‘‘this sub15 paragraph’’. 

16 (d) CONFORMING CHANGE.—Section 19(b)(4)(D) of 

17 the Securities Exchange Act of 1934 (15 U.S.C. 

18 78s(b)(4)(D)) is amended to read as follows: 

19 ‘‘(D)(i) The Commission shall order the 

20 temporary suspension of any change in the 

21 rules of a clearing agency made by a proposed 

22 rule change that has taken effect under para23 graph (3), if the appropriate regulatory agency 

24 for the clearing agency notifies the Commission 


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1 not later than 30 days after the date on which 

2 the proposed rule change was filed of— 

3 ‘‘(I) the determination by the appro4 priate regulatory agency that the rules of 

5 such clearing agency, as so changed, may 

6 be inconsistent with the safeguarding of 

7 securities or funds in the custody or con8 trol of such clearing agency or for which it 

9 is responsible; and 

10 ‘‘(II) the reasons for the determina11 tion described in subclause (I). 

12 ‘‘(ii) If the Commission takes action under 

13 clause (i), the Commission shall institute pro14 ceedings under paragraph (2)(B) to determine 

15 if the proposed rule change should be approved 

16 or disapproved.’’. 

17 SEC. 916. STUDY REGARDING FINANCIAL LITERACY AMONG 

18 INVESTORS. 

19 (a) IN GENERAL.—The Commission shall conduct a 

20 study to identify— 

21 (1) the existing level of financial literacy among 

22 retail investors, including subgroups of investors 

23 identified by the Commission; 

24 (2) methods to improve the timing, content, and 

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1 nancial intermediaries, investment products, and in2 vestment services; 

3 (3) the most useful and understandable relevant 

4 information that retail investors need to make in5 formed financial decisions before engaging a finan6 cial intermediary or purchasing an investment prod7 uct or service that is typically sold to retail inves8 tors, including shares of open-end companies, as 

9 that term is defined in section 5 of the Investment 

10 Company Act of 1940 (15 U.S.C. 80a–5) that are 

11 registered under section 8 of that Act; 

12 (4) methods to increase the transparency of ex13 penses and conflicts of interests in transactions in14 volving investment services and products, including 

15 shares of open-end companies described in para16 graph (3); 

17 (5) the most effective existing private and pub18 lic efforts to educate investors; and 

19 (6) in consultation with the Financial Literacy 

20 and Education Commission, a strategy (including, to 

21 the extent practicable, measurable goals and objec22 tives) to increase the financial literacy of investors 

23 in order to bring about a positive change in investor 

24 behavior. 


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1 (b) REPORT.—Not later than 2 years after the date 

2 of enactment of this Act, the Commission shall submit a 

3 report on the study required under subsection (a) to— 

4 (1) the Committee on Banking, Housing, and 

5 Urban Affairs of the Senate; and 

6 (2) the Committee on Financial Services of the 

7 House of Representatives. 

8 SEC. 917. STUDY REGARDING MUTUAL FUND ADVERTISING. 

9 (a) IN GENERAL.—The Comptroller General of the 

10 United States shall conduct a study on mutual fund adver11 tising to identify— 

12 (1) existing and proposed regulatory require13 ments for open-end investment company advertise14 ments; 

15 (2) current marketing practices for the sale of 

16 open-end investment company shares, including the 

17 use of past performance data, funds that have 

18 merged, and incubator funds; 

19 (3) the impact of such advertising on con20 sumers; and 

21 (4) recommendations to improve investor pro22 tections in mutual fund advertising and additional 

23 information necessary to ensure that investors can 

24 make informed financial decisions when purchasing 

25 shares. 


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1 (b) REPORT.—Not later than 1 year after the date 

2 of enactment of this Act, the Comptroller General of the 

3 United States shall submit a report on the results of the 

4 study conducted under subsection (a) to— 

5 (1) the Committee on Banking, Housing, and 

6 Urban Affairs of the United States Senate; and 

7 (2) the Committee on Financial Services of the 

8 House of Representatives. 

9 SEC. 918. CLARIFICATION OF COMMISSION AUTHORITY TO 

10 REQUIRE INVESTOR DISCLOSURES BEFORE 

11 PURCHASE OF INVESTMENT PRODUCTS AND 

12 SERVICES. 

13 Section 15 of the Securities Exchange Act of 1934 

14 (15 U.S.C. 78o) is amended by adding at the end the fol15 lowing: 

16 ‘‘(k) DISCLOSURES TO RETAIL INVESTORS.— 

17 ‘‘(1) IN GENERAL.—Notwithstanding any other 

18 provision of the securities laws, the Commission may 

19 issue rules designating documents or information 

20 that shall be provided by a broker or dealer to a re21 tail investor before the purchase of an investment 

22 product or service by the retail investor. 

23 ‘‘(2) CONSIDERATIONS.—In developing any 

24 rules under paragraph (1), the Commission shall 

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1 tection, efficiency, competition, and capital forma2 tion. 

3 ‘‘(3) FORM AND CONTENTS OF DOCUMENTS

4 AND INFORMATION.—Any documents or information 

5 designated under a rule promulgated under para6 graph (1) shall— 

7 ‘‘(A) be in a summary format; and 

8 ‘‘(B) contain clear and concise information 

9 about— 

10 ‘‘(i) investment objectives, strategies, 

11 costs, and risks; and 

12 ‘‘(ii) any compensation or other finan13 cial incentive received by a broker, dealer, 

14 or other intermediary in connection with 

15 the purchase of retail investment prod16 ucts.’’. 

17 SEC. 919. STUDY ON CONFLICTS OF INTEREST. 

18 (a) IN GENERAL.—The Comptroller General of the 

19 United States shall conduct a study— 

20 (1) to identify and examine potential conflicts 

21 of interest that exist between the staffs of the invest22 ment banking and equity and fixed income securities 

23 analyst functions within the same firm; and 

24 (2) to make recommendations to Congress de25 signed to protect investors in light of such conflicts. 


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1 (b) CONSIDERATIONS.—In conducting the study 

2 under subsection (a), the Comptroller General shall— 

3 (1) consider— 

4 (A) the potential for investor harm result5 ing from conflicts, including consideration of 

6 the forms of misconduct engaged in by the sev7 eral securities firms and individuals that en8 tered into the Global Analyst Research Settle9 ments in 2003 (also known as the ‘‘Global Set10 tlement’’); 

11 (B) the nature and benefits of the under12 takings to which those firms agreed in enforce13 ment proceedings, including firewalls between 

14 research and investment banking, separate re15 porting lines, dedicated legal and compliance 

16 staffs, allocation of budget, physical separation, 

17 compensation, employee performance evalua18 tions, coverage decisions, limitations on solic19 iting investment banking business, disclosures, 

20 transparency, and other measures; 

21 (C) whether any such undertakings should 

22 be codified and applied permanently to securi23 ties firms, or whether the Commission should 

24 adopt rules applying any such undertakings to 

25 securities firms; and 


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1 (D) whether to recommend regulatory or 

2 legislative measures designed to mitigate pos3 sible adverse consequences to investors arising 

4 from the conflicts of interest or to enhance in5 vestor protection or confidence in the integrity 

6 of the securities markets; and 

7 (2) consult with State attorneys general, State 

8 securities officials, the Commission, the Financial 

9 Industry Regulatory Authority (‘‘FINRA’’), NYSE 

10 Regulation, investor advocates, brokers, dealers, re11 tail investors, institutional investors, and academics. 

12 (c) REPORT.—The Comptroller General shall submit 

13 a report on the results of the study required by this section 

14 to the Committee on Banking, Housing, and Urban Af15 fairs of the Senate and the Committee on Financial Serv16 ices of the House of Representatives, not later than 18 

17 months after the date of enactment of this Act. 

18 SEC. 919A. STUDY ON IMPROVED INVESTOR ACCESS TO IN19 FORMATION ON INVESTMENT ADVISERS AND 

20 BROKER-DEALERS. 

21 (a) STUDY.— 

22 (1) IN GENERAL.—Not later than 6 months 

23 after the date of enactment of this Act, the Commis24 sion shall complete a study, including recommenda25 tions, of ways to improve the access of investors to 


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1 registration information (including disciplinary ac2 tions, regulatory, judicial, and arbitration pro3 ceedings, and other information) about registered 

4 and previously registered investment advisers, asso5 ciated persons of investment advisers, brokers and 

6 dealers and their associated persons on the existing 

7 Central Registration Depository and Investment Ad8 viser Registration Depository systems, as well as 

9 identify additional information that should be made 

10 publicly available. 

11 (2) CONTENTS.—The study required by sub12 section (a) shall include an analysis of the advan13 tages and disadvantages of further centralizing ac14 cess to the information contained in the 2 systems, 

15 including— 

16 (A) identification of those data pertinent 

17 to investors; and 

18 (B) the identification of the method and 

19 format for displaying and publishing such data 

20 to enhance accessibility by and utility to inves21 tors. 

22 (b) IMPLEMENTATION.—Not later than 18 months 

23 after the date of completion of the study required by sub24 section (a), the Commission shall implement any rec25 ommendations of the study. 


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1 SEC. 919B. STUDY ON FINANCIAL PLANNERS AND THE USE 

2 OF FINANCIAL DESIGNATIONS. 

3 (a) IN GENERAL.—The Comptroller General of the 

4 United States shall conduct a study to evaluate— 

5 (1) the effectiveness of State and Federal regu6 lations to protect consumers from individuals who 

7 hold themselves out as financial planners through 

8 the use of misleading designations; 

9 (2) current State and Federal oversight struc10 ture and regulations for financial planners; and 

11 (3) legal or regulatory gaps in the regulation of 

12 financial planners and other individuals who provide 

13 or offer to provide financial planning services to con14 sumers. 

15 (b) CONSIDERATIONS.—In conducting the study re16 quired under subsection (a), the Comptroller General shall 

17 consider— 

18 (1) the role of financial planners in providing 

19 advice regarding the management of financial re20 sources, including investment planning, income tax 

21 planning, education planning, retirement planning, 

22 estate planning, and risk management; 

23 (2) whether current regulations at the State 

24 and Federal level provide adequate ethical and pro25 fessional standards for financial planners; 


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1 (3) the use of the title ‘‘financial planner’’ and 

2 misleading designations in connection with sale of fi3 nancial products, including insurance and securities; 

4 (4) the possible risk posed to consumers by in5 dividuals who hold themselves out as financial plan6 ners through the use of misleading designations, in7 cluding ‘‘financial advisor’’ and ‘‘financial consult8 ant’’; 

9 (5) the ability of consumers to understand li10 censing requirements and standards of care that 

11 apply to individuals who provide financial advice; 

12 (6) the possible benefits to consumers of regula13 tion and professional oversight of financial planners; 

14 and 

15 (7) any other consideration that the Comp16 troller General deems necessary or appropriate to ef17 fectively execute the study required under subsection 

18 (a). 

19 (c) RECOMMENDATIONS.—In providing recommenda20 tions for the appropriate regulation of financial planners 

21 and other individuals who provide or offer to provide fi22 nancial planning services, in order to protect consumers 

23 of financial planning services, the Comptroller General 

24 shall consider— 


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1 (1) the appropriate structure for regulation of 

2 financial planners and individuals providing financial 

3 planning services; and 

4 (2) the appropriate scope of the regulations 

5 needed to protect consumers, including but not lim6 ited to the need to establish competency standards, 

7 practice standards, ethical guidelines, disciplinary 

8 authority, and transparency to consumers. 

9 (d) REPORT.— 

10 (1) IN GENERAL.—Not later than 180 days 

11 after the date of enactment of this Act, the Comp12 troller General shall submit a report on the study re13 quired under subsection (a) to— 

14 (A) the Committee on Banking, Housing, 

15 and Urban Affairs of the Senate; 

16 (B) the Special Committee on Aging of the 

17 Senate; and 

18 (C) the Committee on Financial Services of 

19 the House of Representatives. 

20 (2) CONTENT REQUIREMENTS.—The report re21 quired under paragraph (1) shall describe the find22 ings and determinations made by the Comptroller 

23 General in carrying out the study required under 

24 subsection (a), including a description of the consid25 erations, analysis, and government, public, industry, 


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1 nonprofit and consumer input that the Comptroller 

2 General considered to make such findings, conclu3 sions, and legislative, regulatory, or other rec4 ommendations. 

5 Subtitle B—Increasing Regulatory 

6 Enforcement and Remedies 

7 SEC. 921. AUTHORITY TO ISSUE RULES RELATED TO MAN8 DATORY PREDISPUTE ARBITRATION. 

9 (a) AMENDMENT TO SECURITIES EXCHANGE ACT OF

10 1934.—Section 15 of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78o), as amended by section 918, is amended 

12 by adding at the end the following: 

13 ‘‘(l) AUTHORITY TO RESTRICT MANDATORY

14 PREDISPUTE ARBITRATION.—The Commission may con15 duct a rulemaking to reaffirm or prohibit, or impose or 

16 not impose conditions or limitations on the use of, agree17 ments that require customers or clients of any broker, 

18 dealer, or municipal securities dealer to arbitrate any dis19 pute between them and such broker, dealer, or municipal 

20 securities dealer that arises under the securities laws or 

21 the rules of a self-regulatory organization, if the Commis22 sion finds that such reaffirmation, prohibition, imposition 

23 of conditions or limitations, or other action is in the public 

24 interest and for the protection of investors.’’. 


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1 (b) AMENDMENT TO INVESTMENT ADVISERS ACT OF

2 1940.—Section 205 of the Investment Advisers Act of 

3 1940 (15 U.S.C. 80b–5) is amended by adding at the end 

4 the following: 

5 ‘‘(f) AUTHORITY TO ISSUE RULES RELATED TO

6 MANDATORY PREDISPUTE ARBITRATION.—The Commis7 sion may conduct rulemaking to reaffirm or prohibit, or 

8 impose or not impose conditions or limitations on the use 

9 of, agreements that require customers or clients of any 

10 investment adviser to arbitrate any dispute between them 

11 and such investment adviser that arises under the securi12 ties laws, as defined in section 3 of the Securities Ex13 change Act of 1934 (15 U.S.C. 78c), or the rules of a 

14 self-regulatory organization, if the Commission finds that 

15 such reaffirmation, prohibition, imposition of conditions or 

16 limitations, or other action is in the public interest and 

17 for the protection of investors.’’. 

18 SEC. 922. WHISTLEBLOWER PROTECTION. 

19 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

20 et seq.) is amended by inserting after section 21E the fol21 lowing: 

22 ‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 

23 PROTECTION. 

24 ‘‘(a) DEFINITIONS.—In this section the following 

25 definitions shall apply: 


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1 ‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE

2 ACTION.—The term ‘covered judicial or administra3 tive action’ means any judicial or administrative ac4 tion brought by the Commission under the securities 

5 laws that results in monetary sanctions exceeding 

6 $1,000,000. 

7 ‘‘(2) FUND.—The term ‘Fund’ means the Secu8 rities and Exchange Commission Investor Protection 

9 Fund. 

10 ‘‘(3) ORIGINAL INFORMATION.—The term 

11 ‘original information’ means information that— 

12 ‘‘(A) is derived from the independent 

13 knowledge or analysis of a whistleblower; 

14 ‘‘(B) is not known to the Commission from 

15 any other source, unless the whistleblower is the 

16 original source of the information; and 

17 ‘‘(C) is not exclusively derived from an al18 legation made in a judicial or administrative 

19 hearing, in a governmental report, hearing, 

20 audit, or investigation, or from the news media, 

21 unless the whistleblower is a source of the infor22 mation. 

23 ‘‘(4) MONETARY SANCTIONS.—The term ‘mone24 tary sanctions’, when used with respect to any judi25 cial or administrative action, means— 


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1 ‘‘(A) any monies, including penalties, 

2 disgorgement, and interest, ordered to be paid; 

3 and 

4 ‘‘(B) any monies deposited into a 

5 disgorgement fund or other fund pursuant to 

6 section 308(b) of the Sarbanes-Oxley Act of 

7 2002 (15 U.S.C. 7246(b)), as a result of such 

8 action or any settlement of such action. 

9 ‘‘(5) RELATED ACTION.—The term ‘related ac10 tion’, when used with respect to any judicial or ad11 ministrative action brought by the Commission 

12 under the securities laws, means any judicial or ad13 ministrative action brought by an entity described in 

14 subclauses (I) through (IV) of subsection 

15 (h)(2)(D)(i) that is based upon the original informa16 tion provided by a whistleblower pursuant to sub17 section (a) that led to the successful enforcement of 

18 the Commission action. 

19 ‘‘(6) WHISTLEBLOWER.—The term ‘whistle20 blower’ means any individual, or 2 or more individ21 uals acting jointly, who provides information relating 

22 to a violation of the securities laws to the Commis23 sion, in a manner established, by rule or regulation, 

24 by the Commission. 

25 ‘‘(b) AWARDS.— 


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1 ‘‘(1) IN GENERAL.—In any covered judicial or 

2 administrative action, or related action, the Commis3 sion, under regulations prescribed by the Commis4 sion and subject to subsection (c), shall pay an 

5 award or awards to 1 or more whistleblowers who 

6 voluntarily provided original information to the 

7 Commission that led to the successful enforcement 

8 of the covered judicial or administrative action, or 

9 related action, in an aggregate amount equal to— 

10 ‘‘(A) not less than 10 percent, in total, of 

11 what has been collected of the monetary sanc12 tions imposed in the action or related actions; 

13 and 

14 ‘‘(B) not more than 30 percent, in total, of 

15 what has been collected of the monetary sanc16 tions imposed in the action or related actions. 

17 ‘‘(2) PAYMENT OF AWARDS.—Any amount paid 

18 under paragraph (1) shall be paid from the Fund. 

19 ‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DE20 NIAL OF AWARD.— 

21 ‘‘(1) DETERMINATION OF AMOUNT OF

22 AWARD.— 

23 ‘‘(A) DISCRETION.—The determination of 

24 the amount of an award made under subsection 

25 (b) shall be in the discretion of the Commission. 


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1 ‘‘(B) CRITERIA.—In determining the 

2 amount of an award made under subsection (b), 

3 the Commission shall take into account— 

4 ‘‘(i) the significance of the informa5 tion provided by the whistleblower to the 

6 success of the covered judicial or adminis7 trative action; 

8 ‘‘(ii) the degree of assistance provided 

9 by the whistleblower and any legal rep10 resentative of the whistleblower in a cov11 ered judicial or administrative action; 

12 ‘‘(iii) the programmatic interest of the 

13 Commission in deterring violations of the 

14 securities laws by making awards to whis15 tleblowers who provide information that 

16 lead to the successful enforcement of such 

17 laws; and 

18 ‘‘(iv) such additional relevant factors 

19 as the Commission may establish by rule 

20 or regulation. 

21 ‘‘(2) DENIAL OF AWARD.—No award under 

22 subsection (b) shall be made— 

23 ‘‘(A) to any whistleblower who is, or was at 

24 the time the whistleblower acquired the original 


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1 information submitted to the Commission, a 

2 member, officer, or employee of— 

3 ‘‘(i) an appropriate regulatory agency; 

4 ‘‘(ii) the Department of Justice; 

5 ‘‘(iii) a self-regulatory organization; 

6 ‘‘(iv) the Public Company Accounting 

7 Oversight Board; or 

8 ‘‘(v) a law enforcement organization; 

9 ‘‘(B) to any whistleblower who is convicted 

10 of a criminal violation related to the judicial or 

11 administrative action for which the whistle12 blower otherwise could receive an award under 

13 this section; 

14 ‘‘(C) to any whistleblower who gains the 

15 information through the performance of an 

16 audit of financial statements required under the 

17 securities laws and for whom such submission 

18 would be contrary to the requirements of sec19 tion 101A of the Securities Exchange Act of 

20 1934 (15 U.S.C. 78j–1); or 

21 ‘‘(D) to any whistleblower who fails to sub22 mit information to the Commission in such 

23 form as the Commission may, by rule, require. 

24 ‘‘(d) REPRESENTATION.— 


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1 ‘‘(1) PERMITTED REPRESENTATION.—Any 

2 whistleblower who makes a claim for an award under 

3 subsection (b) may be represented by counsel. 

4 ‘‘(2) REQUIRED REPRESENTATION.— 

5 ‘‘(A) IN GENERAL.—Any whistleblower 

6 who anonymously makes a claim for an award 

7 under subsection (b) shall be represented by 

8 counsel if the whistleblower anonymously sub9 mits the information upon which the claim is 

10 based. 

11 ‘‘(B) DISCLOSURE OF IDENTITY.—Prior to 

12 the payment of an award, a whistleblower shall 

13 disclose the identity of the whistleblower and 

14 provide such other information as the Commis15 sion may require, directly or through counsel 

16 for the whistleblower. 

17 ‘‘(e) NO CONTRACT NECESSARY.—No contract with 

18 the Commission is necessary for any whistleblower to re19 ceive an award under subsection (b), unless otherwise re20 quired by the Commission by rule or regulation. 

21 ‘‘(f) APPEALS.—Any determination made under this 

22 section, including whether, to whom, or in what amount 

23 to make awards, shall be in the discretion of the Commis24 sion. Any such determination may be appealed to the ap25 propriate court of appeals of the United States not more 


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1 than 30 days after the determination is issued by the 

2 Commission. The court shall review the determination 

3 made by the Commission in accordance with section 706 

4 of title 5, United States Code. 

5 ‘‘(g) INVESTOR PROTECTION FUND.— 

6 ‘‘(1) FUND ESTABLISHED.—There is estab7 lished in the Treasury of the United States a fund 

8 to be known as the ‘Securities and Exchange Com9 mission Investor Protection Fund’. 

10 ‘‘(2) USE OF FUND.—The Fund shall be avail11 able to the Commission, without further appropria12 tion or fiscal year limitation, for— 

13 ‘‘(A) paying awards to whistleblowers as 

14 provided in subsection (b); and 

15 ‘‘(B) funding the activities of the Inspector 

16 General of the Commission under section 4(i). 

17 ‘‘(3) DEPOSITS AND CREDITS.—There shall be 

18 deposited into or credited to the Fund an amount 

19 equal to— 

20 ‘‘(A) the amount awarded under subsection 

21 (b) from any monetary sanction collected by the 

22 Commission in any judicial or administrative 

23 action brought by the Commission that is based 

24 on information provided by a whistleblower 

25 under the securities laws, unless, the balance of 


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1 the Fund at the time the monetary sanction is 

2 collected exceeds $200,000,000; 

3 ‘‘(B) any monetary sanction added to a 

4 disgorgement fund or other fund pursuant to 

5 section 308 of the Sarbanes-Oxley Act of 2002 

6 (15 U.S.C. 7246) that is not distributed to the 

7 victims for whom the disgorgement fund was 

8 established, unless the balance of the 

9 disgorgement fund at the time the determina10 tion is made not to distribute the monetary 

11 sanction to such victims exceeds $100,000,000; 

12 and 

13 ‘‘(C) all income from investments made 

14 under paragraph (4). 

15 ‘‘(4) INVESTMENTS.— 

16 ‘‘(A) AMOUNTS IN FUND MAY BE IN17 VESTED.—The Commission may request the 

18 Secretary of the Treasury to invest the portion 

19 of the Fund that is not, in the discretion of the 

20 Commission, required to meet the current needs 

21 of the Fund. 

22 ‘‘(B) ELIGIBLE INVESTMENTS.—Invest23 ments shall be made by the Secretary of the 

24 Treasury in obligations of the United States or 

25 obligations that are guaranteed as to principal 


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1 and interest by the United States, with matu2 rities suitable to the needs of the Fund as de3 termined by the Commission on the record. 

4 ‘‘(C) INTEREST AND PROCEEDS CRED5 ITED.—The interest on, and the proceeds from 

6 the sale or redemption of, any obligations held 

7 in the Fund shall be credited to the Fund. 

8 ‘‘(5) REPORTS TO CONGRESS.—Not later than 

9 October 30 of each fiscal year beginning after the 

10 date of enactment of this subsection, the Commis11 sion shall submit to the Committee on Banking, 

12 Housing, and Urban Affairs of the Senate, and the 

13 Committee on Financial Services of the House of 

14 Representatives a report on— 

15 ‘‘(A) the whistleblower award program, es16 tablished under this section, including— 

17 ‘‘(i) a description of the number of 

18 awards granted; and 

19 ‘‘(ii) the types of cases in which 

20 awards were granted during the preceding 

21 fiscal year; 

22 ‘‘(B) the balance of the Fund at the begin23 ning of the preceding fiscal year; 


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1 ‘‘(C) the amounts deposited into or cred2 ited to the Fund during the preceding fiscal 

3 year; 

4 ‘‘(D) the amount of earnings on invest5 ments made under paragraph (4) during the 

6 preceding fiscal year; 

7 ‘‘(E) the amount paid from the Fund dur8 ing the preceding fiscal year to whistleblowers 

9 pursuant to subsection (b); 

10 ‘‘(F) the balance of the Fund at the end 

11 of the preceding fiscal year; and 

12 ‘‘(G) a complete set of audited financial 

13 statements, including— 

14 ‘‘(i) a balance sheet; 

15 ‘‘(ii) income statement; and 

16 ‘‘(iii) cash flow analysis. 

17 ‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 

18 ‘‘(1) PROHIBITION AGAINST RETALIATION.— 

19 ‘‘(A) IN GENERAL.—No employer may dis20 charge, demote, suspend, threaten, harass, di21 rectly or indirectly, or in any other manner dis22 criminate against, a whistleblower in the terms 

23 and conditions of employment because of any 

24 lawful act done by the whistleblower— 


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1 ‘‘(i) in providing information to the 

2 Commission in accordance with subsection 

3 (a); or 

4 ‘‘(ii) in assisting in any investigation 

5 or judicial or administrative action of the 

6 Commission based upon or related to such 

7 information. 

8 ‘‘(B) ENFORCEMENT.— 

9 ‘‘(i) CAUSE OF ACTION.—An indi10 vidual who alleges discharge or other dis11 crimination in violation of subparagraph 

12 (A) may bring an action under this sub13 section in the appropriate district court of 

14 the United States for the relief provided in 

15 subparagraph (C). 

16 ‘‘(ii) SUBPOENAS.—A subpoena re17 quiring the attendance of a witness at a 

18 trial or hearing conducted under this sec19 tion may be served at any place in the 

20 United States. 

21 ‘‘(iii) STATUTE OF LIMITATIONS.— 

22 ‘‘(I) IN GENERAL.—An action 

23 under this subsection may not be 

24 brought— 


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1 ‘‘(aa) more than 6 years 

2 after the date on which the viola3 tion of subparagraph (A) oc4 curred; or 

5 ‘‘(bb) more than 3 years 

6 after the date when facts mate7 rial to the right of action are 

8 known or reasonably should have 

9 been known by the employee al10 leging a violation of subpara11 graph (A). 

12 ‘‘(II) REQUIRED ACTION WITHIN

13 10 YEARS.—Notwithstanding sub14 clause (I), an action under this sub15 section may not in any circumstance 

16 be brought more than 10 years after 

17 the date on which the violation occurs. 

18 ‘‘(C) RELIEF.—Relief for an individual 

19 prevailing in an action brought under subpara20 graph (B) shall include— 

21 ‘‘(i) reinstatement with the same se22 niority status that the individual would 

23 have had, but for the discrimination; 


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1 ‘‘(ii) 2 times the amount of back pay 

2 otherwise owed to the individual, with in3 terest; and 

4 ‘‘(iii) compensation for litigation 

5 costs, expert witness fees, and reasonable 

6 attorneys’ fees. 

7 ‘‘(2) CONFIDENTIALITY.— 

8 ‘‘(A) IN GENERAL.—Unless and until re9 quired to be disclosed to a defendant or re10 spondent in connection with a proceeding insti11 tuted by the Commission or any entity de12 scribed in subparagraph (D), all information 

13 provided to the Commission by a whistle14 blower— 

15 ‘‘(i) in any proceeding in any Federal 

16 or State court or administrative agency— 

17 ‘‘(I) shall be confidential and 

18 privileged as an evidentiary matter; 

19 and 

20 ‘‘(II) shall not be subject to civil 

21 discovery or other legal process; and 

22 ‘‘(ii) shall not be subject to disclosure 

23 under section 552 of title 5, United States 

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1 dom of Information Act) or under any pro2 ceeding under that section. 

3 ‘‘(B) EXEMPTED STATUTE.—For purposes 

4 of section 552 of title 5, United States Code, 

5 this paragraph shall be considered a statute de6 scribed in subsection (b)(3)(B) of such section 

7 552. 

8 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

9 in this section is intended to limit, or shall be 

10 construed to limit, the ability of the Attorney 

11 General to present such evidence to a grand 

12 jury or to share such evidence with potential 

13 witnesses or defendants in the course of an on14 going criminal investigation. 

15 ‘‘(D) AVAILABILITY TO GOVERNMENT

16 AGENCIES.— 

17 ‘‘(i) IN GENERAL.—Without the loss 

18 of its status as confidential and privileged 

19 in the hands of the Commission, all infor20 mation referred to in subparagraph (A) 

21 may, in the discretion of the Commission, 

22 when determined by the Commission to be 

23 necessary to accomplish the purposes of 

24 this Act and to protect investors, be made 

25 available to— 


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1 ‘‘(I) the Attorney General of the 

2 United States; 

3 ‘‘(II) an appropriate regulatory 

4 authority; 

5 ‘‘(III) a self-regulatory organiza6 tion; 

7 ‘‘(IV) a State attorney general in 

8 connection with any criminal inves9 tigation; 

10 ‘‘(V) any appropriate State regu11 latory authority; 

12 ‘‘(VI) the Public Company Ac13 counting Oversight Board; 

14 ‘‘(VII) a foreign securities au15 thority; and 

16 ‘‘(VIII) a foreign law enforce17 ment authority. 

18 ‘‘(ii) CONFIDENTIALITY.— 

19 ‘‘(I) IN GENERAL.—Each of the 

20 entities described in subclauses (I) 

21 through (VI) of clause (i) shall main22 tain such information as confidential 

23 and privileged, in accordance with the 

24 requirements established under sub25 paragraph (A). 


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1 ‘‘(II) FOREIGN AUTHORITIES.— 

2 Each of the entities described in sub3 clauses (VII) and (VIII) of clause (i) 

4 shall maintain such information in ac5 cordance with such assurances of con6 fidentiality as the Commission deter7 mines appropriate. 

8 ‘‘(3) RIGHTS RETAINED.—Nothing in this sec9 tion shall be deemed to diminish the rights, privi10 leges, or remedies of any whistleblower under any 

11 Federal or State law, or under any collective bar12 gaining agreement. 

13 ‘‘(i) PROVISION OF FALSE INFORMATION.—A whis14 tleblower shall not be entitled to an award under this sec15 tion if the whistleblower— 

16 ‘‘(1) knowingly and willfully makes any false, 

17 fictitious, or fraudulent statement or representation; 

18 or 

19 ‘‘(2) uses any false writing or document know20 ing the writing or document contains any false, ficti21 tious, or fraudulent statement or entry. 

22 ‘‘(j) RULEMAKING AUTHORITY.—The Commission 

23 shall have the authority to issue such rules and regulations 

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1 visions of this section consistent with the purposes of this 

2 section.’’. 

3 SEC. 923. CONFORMING AMENDMENTS FOR WHISTLE4 BLOWER PROTECTION. 

5 (a) IN GENERAL.— 

6 (1) SECURITIES ACT OF 1933.—Section 

7 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C. 

8 77t(d)(3)(A)) is amended by inserting ‘‘and section 

9 21F of the Securities Exchange Act of 1934’’ after 

10 ‘‘the Sarbanes-Oxley Act of 2002’’. 

11 (2) INVESTMENT COMPANY ACT OF 1940.—Sec12 tion 42(e)(3)(A) of the Investment Company Act of 

13 1940 (15 U.S.C. 80a–41(e)(3)(A)) is amended by 

14 inserting ‘‘and section 21F of the Securities Ex15 change Act of 1934’’ after ‘‘the Sarbanes-Oxley Act 

16 of 2002’’. 

17 (3) INVESTMENT ADVISERS ACT OF 1940.—Sec18 tion 209(e)(3)(A) of the Investment Advisers Act of 

19 1940 (15 U.S.C. 80b–9(e)(3)(A)) is amended by in20 serting ‘‘and section 21F of the Securities Exchange 

21 Act of 1934’’ after ‘‘the Sarbanes-Oxley Act of 

22 2002’’. 

23 (b) SECURITIES EXCHANGE ACT.— 

24 (1) SECTION 21.—Section 21(d)(3)(C)(i) of the 

25 Securities Exchange Act of 1934 (15 U.S.C. 


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1 78u(d)(3)(C)(i)) is amended by inserting ‘‘and sec2 tion 21F of this title’’ after ‘‘the Sarbanes-Oxley Act 

3 of 2002’’. 

4 (2) SECTION 21A.—Section 21A of the Securi5 ties Exchange Act of 1934 (15 U.S.C. 78u–1) is 

6 amended— 

7 (A) in subsection (d)(1) by— 

8 (i) striking ‘‘(subject to subsection 

9 (e))’’; and 

10 (ii) inserting ‘‘and section 21F of this 

11 title’’ after ‘‘the Sarbanes-Oxley Act of 

12 2002’’; 

13 (B) by striking subsection (e); and 

14 (C) by redesignating subsections (f) and 

15 (g) as subsections (e) and (f), respectively. 

16 SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS 

17 FOR WHISTLEBLOWER PROTECTION. 

18 (a) IMPLEMENTING RULES.—The Commission shall 

19 issue final regulations implementing the provisions of sec20 tion 21F of the Securities Exchange Act of 1934, as added 

21 by this subtitle, not later than 270 days after the date 

22 of enactment of this Act. 

23 (b) ORIGINAL INFORMATION.—Information provided 

24 to the Commission by a whistleblower in accordance with 

25 the regulations referenced in subsection (a) shall not lose 


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1 the status of original information (as defined in section 

2 21F(i)(1) of the Securities Exchange Act of 1934, as 

3 added by this subtitle) solely because the whistleblower 

4 provided the information prior to the effective date of the 

5 regulations, provided that the information is— 

6 (1) provided by the whistleblower after the date 

7 of enactment of this subtitle, or monetary sanctions 

8 are collected after the date of enactment of this sub9 title; or 

10 (2) related to a violation for which an award 

11 under section 21F of the Securities Exchange Act of 

12 1934, as added by this subtitle, could have been paid 

13 at the time the information was provided by the 

14 whistleblower. 

15 (c) AWARDS.—A whistleblower may receive an award 

16 pursuant to section 21F of the Securities Exchange Act 

17 of 1934, as added by this subtitle, regardless of whether 

18 any violation of a provision of the securities laws, or a 

19 rule or regulation thereunder, underlying the judicial or 

20 administrative action upon which the award is based, oc21 curred prior to the date of enactment of this subtitle. 

22 SEC. 925. COLLATERAL BARS. 

23 (a) SECURITIES EXCHANGE ACT OF 1934.— 

24 (1) SECTION 15.—Section 15(b)(6)(A) of the 

25 Securities Exchange Act of 1934 (15 U.S.C. 


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1 78o(b)(6)(A)) is amended by striking ‘‘12 months, 

2 or bar such person from being associated with a 

3 broker or dealer,’’ and inserting ‘‘12 months, or bar 

4 any such person from being associated with a 

5 broker, dealer, investment adviser, municipal securi6 ties dealer, municipal advisor, transfer agent, or na7 tionally recognized statistical rating organization,’’. 

8 (2) SECTION 15B.—Section 15B(c)(4) of the Se9 curities Exchange Act of 1934 (15 U.S.C. 78o– 

10 4(c)(4)) is amended by striking ‘‘twelve months or 

11 bar any such person from being associated with a 

12 municipal securities dealer,’’ and inserting ‘‘12 

13 months or bar any such person from being associ14 ated with a broker, dealer, investment adviser, mu15 nicipal securities dealer, municipal advisor, transfer 

16 agent, or nationally recognized statistical rating or17 ganization,’’. 

18 (3) SECTION 17A.—Section 17A(c)(4)(C) of the 

19 Securities Exchange Act of 1934 (15 U.S.C. 78q– 

20 1(c)(4)(C)) is amended by striking ‘‘twelve months 

21 or bar any such person from being associated with 

22 the transfer agent,’’ and inserting ‘‘12 months or 

23 bar any such person from being associated with any 

24 transfer agent, broker, dealer, investment adviser, 


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1 municipal securities dealer, municipal advisor, or na2 tionally recognized statistical rating organization,’’. 

3 (b) INVESTMENT ADVISERS ACT OF 1940.—Section 

4 203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 

5 80b–3(f)) is amended by striking ‘‘twelve months or bar 

6 any such person from being associated with an investment 

7 adviser,’’ and inserting ‘‘12 months or bar any such per8 son from being associated with an investment adviser, 

9 broker, dealer, municipal securities dealer, municipal advi10 sor, transfer agent, or nationally recognized statistical rat11 ing organization,’’. 

12 SEC. 926. AUTHORITY OF STATE REGULATORS OVER REGU13 LATION D OFFERINGS. 

14 Section 18(b)(4) of the Securities Act of 1933 (15 

15 U.S.C. 77r(b)(4)) is amended— 

16 (1) by striking ‘‘A security’’ and inserting ‘‘(A) 

17 IN GENERAL—A security’’; 

18 (2) by redesignating subparagraphs (A) through 

19 (D) as clauses (i) through (iv), respectively, and ad20 justing the margins accordingly; and 

21 (3) by striking clause (iv), as so redesignated, 

22 and inserting the following: 

23 ‘‘(iv) Commission rules or regulations 

24 issued under section 4(2), except that the 

25 Commission may designate, by rule, a class 


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1 of securities that it deems not to be cov2 ered securities because the offering of such 

3 securities is not of sufficient size or scope. 

4 ‘‘(v) Not later than 360 days after the 

5 date of enactment of the Restoring Amer6 ican Financial Stability Act of 2010, the 

7 Commission shall conduct a rulemaking to 

8 determine whether to designate a class of 

9 securities because the offering of such se10 curities is not of sufficient size or scope. 

11 ‘‘(B) DESIGNATION OF NON-COVERED SE12 CURITIES.—In making a designation under sub13 paragraph (A)(iv), the Commission shall con14 sider— 

15 ‘‘(i) the size of the offering; 

16 ‘‘(ii) the number of States in which 

17 the security is being offered; and 

18 ‘‘(iii) the nature of the persons to 

19 whom the security is being offered. 

20 ‘‘(C) REVIEW OF FILINGS.— 

21 ‘‘(i) IN GENERAL.—The Commission 

22 shall review any filings made relating to 

23 any security issued under Commission 

24 rules or regulations under section 4(2), 

25 other than one designated as a non-covered 


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1 security under subparagraph (A)(iv), not 

2 later than 120 days of the filing with the 

3 Commission. 

4 ‘‘(ii) FAILURE TO REVIEW WITHIN 120

5 DAYS.—If the Commission fails to review a 

6 filing required under clause (i), the secu7 rity shall no longer be a covered security, 

8 except that— 

9 ‘‘(I) the failure of the Commis10 sion to review a filing shall not result 

11 in the loss of status as a covered secu12 rity if the Commission, not later than 

13 120 days of the filing with the Com14 mission, has determined that there 

15 has been a good faith and reasonable 

16 attempt by the issuer to comply with 

17 all applicable terms, conditions, and 

18 requirements of the filing; and 

19 ‘‘(II) upon review of the filing, if 

20 the Commission, not later than 120 

21 days of the filing with the Commis22 sion, determines that any failure to 

23 comply with the applicable filing 

24 terms, conditions, and requirements is 


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1 insignificant to the offering as a 

2 whole. 

3 ‘‘(D) EFFECT ON STATE FILING REQUIRE4 MENTS.— 

5 ‘‘(i) IN GENERAL.—Nothing in sub6 paragraph (A)(iv), (B), or (C) shall be con7 strued to prohibit a State from imposing 

8 notice filing requirements that are substan9 tially similar to filing requirements re10 quired by rule or regulation under section 

11 4(4) that were in effect on September 1, 

12 1996. 

13 ‘‘(ii) NOTIFICATION.—Not later than 

14 180 days after the date of enactment of 

15 the Restoring American Financial Stability 

16 Act of 2010, the Commission shall imple17 ment procedures, after consultation with 

18 the States, to promptly notify States upon 

19 completion of review of securities offerings 

20 described in subparagraph (A)(iv) by the 

21 Commission. 

22 ‘‘(E) OFFERINGS AFFECTED.—The re23 quirements of this section shall apply to offer24 ings filed on or after the date of enactment of 

25 the Restoring Financial Stability Act of 2010.’’. 


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1 SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGA2 NIZATION RULES. 

3 Section 29(a) of the Securities Exchange Act of 1934 

4 (15 U.S.C. 78cc(a)) is amended by striking ‘‘an exchange 

5 required thereby’’ and inserting ‘‘a self-regulatory organi6 zation,’’. 

7 SEC. 928. CLARIFICATION THAT SECTION 205 OF THE IN8 VESTMENT ADVISERS ACT OF 1940 DOES NOT 

9 APPLY TO STATE-REGISTERED ADVISERS. 

10 Section 205(a) of the Investment Advisers Act of 

11 1940 (15 U.S.C. 80b–5(a)) is amended, in the matter pre12 ceding paragraph (1)— 

13 (1) by striking ‘‘, unless exempt from registra14 tion pursuant to section 203(b),’’ and inserting 

15 ‘‘registered or required to be registered with the 

16 Commission’’; 

17 (2) by striking ‘‘make use of the mails or any 

18 means or instrumentality of interstate commerce, di19 rectly or indirectly, to’’; and 

20 (3) by striking ‘‘to’’ after ‘‘in any way’’. 

21 SEC. 929. UNLAWFUL MARGIN LENDING. 

22 Section 7(c)(1)(A) of the Securities Exchange Act of 

23 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; 

24 and’’ and inserting ‘‘; or’’. 


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1 SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDI2 ARIES AND AFFILIATES OF PUBLICLY TRAD3 ED COMPANIES. 

4 Section 1514A of title 18, United States Code, is 

5 amended by inserting ‘‘including any subsidiary or affil6 iate whose financial information is included in the consoli7 dated financial statements of such company’’ after ‘‘the 

8 Securities Exchange Act of 1934 (15 U.S.C. 78o(d))’’. 

9 SEC. 929B. FAIR FUND AMENDMENTS. 

10 Section 308 of the Sarbanes-Oxley Act of 2002 (15 

11 U.S.C. 7246(a)) is amended— 

12 (1) by striking subsection (a) and inserting the 

13 following: 

14 ‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RE15 LIEF OF VICTIMS.—If, in any judicial or administrative 

16 action brought by the Commission under the securities 

17 laws, the Commission obtains a civil penalty against any 

18 person for a violation of such laws, or such person agrees, 

19 in settlement of any such action, to such civil penalty, the 

20 amount of such civil penalty shall, on the motion or at 

21 the direction of the Commission, be added to and become 

22 part of a disgorgement fund or other fund established for 

23 the benefit of the victims of such violation.’’; 

24 (2) in subsection (b)— 

25 (A) by striking ‘‘for a disgorgement fund 

26 described in subsection (a)’’ and inserting ‘‘for 


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1 a disgorgement fund or other fund described in 

2 subsection (a)’’; and 

3 (B) by striking ‘‘in the disgorgement fund’’ 

4 and inserting ‘‘in such fund’’; and 

5 (3) by striking subsection (e). 

6 SEC. 929C. INCREASING THE BORROWING LIMIT ON TREAS7 URY LOANS. 

8 Section 4(h) of the Securities Investor Protection Act 

9 of 1970 (15 U.S.C. 78ddd(h)) is amended in the first sen10 tence, by striking ‘‘$1,000,000,000’’ and inserting 

11 ‘‘$2,500,000,000’’. 

12 Subtitle C—Improvements to the 

13 Regulation of Credit Rating 

14 Agencies 

15 SEC. 931. FINDINGS. 

16 Congress finds the following: 

17 (1) Because of the systemic importance of cred18 it ratings and the reliance placed on credit ratings 

19 by individual and institutional investors and finan20 cial regulators, the activities and performances of 

21 credit rating agencies, including nationally recog22 nized statistical rating organizations, are matters of 

23 national public interest, as credit rating agencies are 

24 central to capital formation, investor confidence, and 


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1 the efficient performance of the United States econ2 omy. 

3 (2) Credit rating agencies, including nationally 

4 recognized statistical rating organizations, play a 

5 critical ‘‘gatekeeper’’ role in the debt market that is 

6 functionally similar to that of securities analysts, 

7 who evaluate the quality of securities in the equity 

8 market, and auditors, who review the financial state9 ments of firms. Such role justifies a similar level of 

10 public oversight and accountability. 

11 (3) Because credit rating agencies perform eval12 uative and analytical services on behalf of clients, 

13 much as other financial ‘‘gatekeepers’’ do, the activi14 ties of credit rating agencies are fundamentally com15 mercial in character and should be subject to the 

16 same standards of liability and oversight as apply to 

17 auditors, securities analysts, and investment bank18 ers. 

19 (4) In certain activities, particularly in advising 

20 arrangers of structured financial products on poten21 tial ratings of such products, credit rating agencies 

22 face conflicts of interest that need to be carefully 

23 monitored and that therefore should be addressed 

24 explicitly in legislation in order to give clearer au25 thority to the Securities and Exchange Commission. 


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1 (5) In the recent financial crisis, the ratings on 

2 structured financial products have proven to be inac3 curate. This inaccuracy contributed significantly to 

4 the mismanagement of risks by financial institutions 

5 and investors, which in turn adversely impacted the 

6 health of the economy in the United States and 

7 around the world. Such inaccuracy necessitates in8 creased accountability on the part of credit rating 

9 agencies. 

10 SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND 

11 TRANSPARENCY OF NATIONALLY RECOG12 NIZED STATISTICAL RATING ORGANIZA13 TIONS. 

14 Section 15E of the Securities Exchange Act of 1934 

15 (15 U.S.C. 78o–7) is amended— 

16 (1) in subsection (c)— 

17 (A) in paragraph (2)— 

18 (i) in the second sentence, by insert19 ing ‘‘any other provision of this section, 

20 or’’ after ‘‘Notwithstanding’’; and 

21 (ii) by inserting after the period at 

22 the end the following: ‘‘Nothing in this 

23 paragraph may be construed to afford a 

24 defense against any action or proceeding 

25 brought by the Commission to enforce the 


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1 antifraud provisions of the securities 

2 laws.’’; and 

3 (B) by adding at the end the following: 

4 ‘‘(3) INTERNAL CONTROLS OVER PROCESSES

5 FOR DETERMINING CREDIT RATINGS.— 

6 ‘‘(A) IN GENERAL.—Each nationally recog7 nized statistical rating organization shall estab8 lish, maintain, enforce, and document an effec9 tive internal control structure governing the im10 plementation of and adherence to policies, pro11 cedures, and methodologies for determining 

12 credit ratings, taking into consideration such 

13 factors as the Commission may prescribe, by 

14 rule. 

15 ‘‘(B) ATTESTATION REQUIREMENT.—The 

16 Commission shall prescribe rules requiring each 

17 nationally recognized statistical rating organiza18 tion to submit to the Commission an annual in19 ternal controls report, which shall contain— 

20 ‘‘(i) a description of the responsibility 

21 of the management of the nationally recog22 nized statistical rating organization in es23 tablishing and maintaining an effective in24 ternal control structure under subpara25 graph (A); 


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1 ‘‘(ii) an assessment of the effective2 ness of the internal control structure of the 

3 nationally recognized statistical rating or4 ganization; and 

5 ‘‘(iii) the attestation of the chief exec6 utive officer, or equivalent individual, of 

7 the nationally recognized statistical rating 

8 organization.’’; 

9 (2) in subsection (d)— 

10 (A) in the subsection heading, by inserting 

11 ‘‘FINE,’’ after ‘‘CENSURE,’’; 

12 (B) by inserting ‘‘fine,’’ after ‘‘censure,’’ 

13 each place that term appears; 

14 (C) in paragraph (2), by redesignating 

15 subparagraphs (A) and (B) as clauses (i) and 

16 (ii), respectively, and adjusting the clause mar17 gins accordingly; 

18 (D) by redesignating paragraphs (1) 

19 through (5) as subparagraphs (A) through (E), 

20 respectively, and adjusting the subparagraph 

21 margins accordingly; 

22 (E) in the matter preceding subparagraph 

23 (A), as so redesignated, by striking ‘‘The Com24 mission’’ and inserting the following: 

25 ‘‘(1) IN GENERAL.—The Commission’’; 


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1 (F) in subparagraph (D), as so redesig2 nated, by striking ‘‘or’’ at the end; 

3 (G) in subparagraph (E), as so redesig4 nated, by striking the period at the end and in5 serting a semicolon; and 

6 (H) by adding at the end the following: 

7 ‘‘(F) has failed reasonably to supervise, 

8 with a view to preventing a violation of the se9 curities laws, an individual who commits such a 

10 violation, if the individual is subject to the su11 pervision of that person. 

12 ‘‘(2) SUSPENSION OR REVOCATION FOR PAR13 TICULAR CLASS OF SECURITIES.— 

14 ‘‘(A) IN GENERAL.—The Commission may 

15 temporarily suspend or permanently revoke the 

16 registration of a nationally recognized statistical 

17 rating organization with respect to a particular 

18 class or subclass of securities, if the Commis19 sion finds, on the record after notice and oppor20 tunity for hearing, that the nationally recog21 nized statistical rating organization does not 

22 have adequate financial and managerial re23 sources to consistently produce credit ratings 

24 with integrity. 


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1 ‘‘(B) CONSIDERATIONS.—In making any 

2 determination under subparagraph (A), the 

3 Commission shall consider— 

4 ‘‘(i) whether the nationally recognized 

5 statistical rating organization has failed 

6 over a sustained period of time, as deter7 mined by the Commission, to produce rat8 ings that are accurate for that class or 

9 subclass of securities; and 

10 ‘‘(ii) such other factors as the Com11 mission may determine.’’; 

12 (3) in subsection (h), by adding at the end the 

13 following: 

14 ‘‘(3) SEPARATION OF RATINGS FROM SALES

15 AND MARKETING.— 

16 ‘‘(A) RULES REQUIRED.—The Commission 

17 shall issue rules to prevent the sales and mar18 keting considerations of a nationally recognized 

19 statistical rating organization from influencing 

20 the production of ratings by the nationally rec21 ognized statistical rating organization. 

22 ‘‘(B) CONTENTS OF RULES.—The rules 

23 issued under subparagraph (A) shall provide 

24 for— 


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1 ‘‘(i) exceptions for small nationally 

2 recognized statistical rating organizations 

3 with respect to which the Commission de4 termines that the separation of the produc5 tion of ratings and sales and marketing ac6 tivities is not appropriate; and 

7 ‘‘(ii) suspension or revocation of the 

8 registration of a nationally recognized sta9 tistical rating organization, if the Commis10 sion finds, on the record, after notice and 

11 opportunity for a hearing, that— 

12 ‘‘(I) the nationally recognized 

13 statistical rating organization has 

14 committed a violation of a rule issued 

15 under this subsection; and 

16 ‘‘(II) the violation of a rule 

17 issued under this subsection affected a 

18 rating.’’; 

19 (4) in subsection (j)— 

20 (A) by striking ‘‘Each’’ and inserting the 

21 following: 

22 ‘‘(1) IN GENERAL.—Each’’; and 

23 (B) by adding at the end the following: 

24 ‘‘(2) LIMITATIONS.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), an individual designated 

3 under paragraph (1) may not, while serving in 

4 the designated capacity— 

5 ‘‘(i) perform credit ratings; 

6 ‘‘(ii) participate in the development of 

7 ratings methodologies or models; 

8 ‘‘(iii) perform marketing or sales 

9 functions; or 

10 ‘‘(iv) participate in establishing com11 pensation levels, other than for employees 

12 working for that individual. 

13 ‘‘(B) EXCEPTION.—The Commission may 

14 exempt a small nationally recognized statistical 

15 rating organization from the limitations under 

16 this paragraph, if the Commission finds that 

17 compliance with such limitations would impose 

18 an unreasonable burden on the nationally recog19 nized statistical rating organization. 

20 ‘‘(3) OTHER DUTIES.—Each individual des21 ignated under paragraph (1) shall establish proce22 dures for the receipt, retention, and treatment of— 

23 ‘‘(A) complaints regarding credit ratings, 

24 models, methodologies, and compliance with the 


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1 securities laws and the policies and procedures 

2 developed under this section; and 

3 ‘‘(B) confidential, anonymous complaints 

4 by employees or users of credit ratings. 

5 ‘‘(4) ANNUAL REPORTS REQUIRED.— 

6 ‘‘(A) ANNUAL REPORTS REQUIRED.—Each 

7 individual designated under paragraph (1) shall 

8 submit to the nationally recognized statistical 

9 rating organization an annual report on the 

10 compliance of the nationally recognized statis11 tical rating organization with the securities laws 

12 and the policies and procedures of the nation13 ally recognized statistical rating organization 

14 that includes— 

15 ‘‘(i) a description of any material 

16 changes to the code of ethics and conflict 

17 of interest policies of the nationally recog18 nized statistical rating organization; and 

19 ‘‘(ii) a certification that the report is 

20 accurate and complete. 

21 ‘‘(B) SUBMISSION OF REPORTS TO THE

22 COMMISSION.—Each nationally recognized sta23 tistical rating organization shall file the reports 

24 required under subparagraph (A) together with 

25 the financial report that is required to be subVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00856 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 mitted to the Commission under this section.’’; 

2 and 

3 (5) by striking subsection (p) and inserting the 

4 following: 

5 ‘‘(p) REGULATION OF NATIONALLY RECOGNIZED

6 STATISTICAL RATING ORGANIZATIONS.— 

7 ‘‘(1) ESTABLISHMENT OF OFFICE OF CREDIT

8 RATINGS.— 

9 ‘‘(A) OFFICE ESTABLISHED.—The Com10 mission shall establish within the Commission 

11 an Office of Credit Ratings (referred to in this 

12 subsection as the ‘Office’) to administer the 

13 rules of the Commission— 

14 ‘‘(i) with respect to the practices of 

15 nationally recognized statistical rating or16 ganizations in determining ratings, for the 

17 protection of users of credit ratings and in 

18 the public interest; 

19 ‘‘(ii) to promote accuracy in credit 

20 ratings issued by nationally recognized sta21 tistical rating organizations; and 

22 ‘‘(iii) to ensure that such ratings are 

23 not unduly influenced by conflicts of inter24 est. 


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1 ‘‘(B) DIRECTOR OF THE OFFICE.—The 

2 head of the Office shall be the Director, who 

3 shall report to the Chairman. 

4 ‘‘(2) STAFFING.—The Office established under 

5 this subsection shall be staffed sufficiently to carry 

6 out fully the requirements of this section. The staff 

7 shall include persons with knowledge of and exper8 tise in corporate, municipal, and structured debt fi9 nance. 

10 ‘‘(3) COMMISSION EXAMINATIONS.— 

11 ‘‘(A) ANNUAL EXAMINATIONS RE12 QUIRED.—The Office shall conduct an examina13 tion of each nationally recognized statistical 

14 rating organization at least annually. 

15 ‘‘(B) CONDUCT OF EXAMINATIONS.—Each 

16 examination under subparagraph (A) shall in17 clude a review of— 

18 ‘‘(i) whether the nationally recognized 

19 statistical rating organization conducts 

20 business in accordance with the policies, 

21 procedures, and rating methodologies of 

22 the nationally recognized statistical rating 

23 organization; 


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1 ‘‘(ii) the management of conflicts of 

2 interest by the nationally recognized statis3 tical rating organization; 

4 ‘‘(iii) implementation of ethics policies 

5 by the nationally recognized statistical rat6 ing organization; 

7 ‘‘(iv) the internal supervisory controls 

8 of the nationally recognized statistical rat9 ing organization; 

10 ‘‘(v) the governance of the nationally 

11 recognized statistical rating organization; 

12 ‘‘(vi) the activities of the individual 

13 designated by the nationally recognized 

14 statistical rating organization under sub15 section (j)(1); 

16 ‘‘(vii) the processing of complaints by 

17 the nationally recognized statistical rating 

18 organization; and 

19 ‘‘(viii) the policies of the nationally 

20 recognized statistical rating organization 

21 governing the post-employment activities of 

22 former staff of the nationally recognized 

23 statistical rating organization. 

24 ‘‘(C) INSPECTION REPORTS.—The Com25 mission shall make available to the public, in an 


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1 easily understandable format, an annual report 

2 summarizing— 

3 ‘‘(i) the essential findings of all ex4 aminations conducted under subparagraph 

5 (A), as deemed appropriate by the Com6 mission; 

7 ‘‘(ii) the responses by the nationally 

8 recognized statistical rating organizations 

9 to any material regulatory deficiencies 

10 identified by the Commission under clause 

11 (i); and 

12 ‘‘(iii) whether the nationally recog13 nized statistical rating organizations have 

14 appropriately addressed the recommenda15 tions of the Commission contained in pre16 vious reports under this subparagraph. 

17 ‘‘(4) RULEMAKING AUTHORITY.—The Commis18 sion shall— 

19 ‘‘(A) establish, by rule, fines, and other 

20 penalties applicable to any nationally recognized 

21 statistical rating organization that violates the 

22 requirements of this subsection and the rules 

23 thereunder; and 

24 ‘‘(B) issue such rules as may be necessary 

25 to carry out this subsection. 


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1 ‘‘(q) TRANSPARENCY OF RATINGS PERFORMANCE.— 

2 ‘‘(1) RULEMAKING REQUIRED.—The Commis3 sion shall, by rule, require that each nationally rec4 ognized statistical rating organization publicly dis5 close information on the initial credit ratings deter6 mined by the nationally recognized statistical rating 

7 organization for each type of obligor, security, and 

8 money market instrument, and any subsequent 

9 changes to such credit ratings, for the purpose of al10 lowing users of credit ratings to evaluate the accu11 racy of ratings and compare the performance of rat12 ings by different nationally recognized statistical rat13 ing organizations. 

14 ‘‘(2) CONTENT.—The rules of the Commission 

15 under this subsection shall require, at a minimum, 

16 disclosures that— 

17 ‘‘(A) are comparable among nationally rec18 ognized statistical rating organizations, to allow 

19 users of credit ratings to compare the perform20 ance of credit ratings across nationally recog21 nized statistical rating organizations; 

22 ‘‘(B) are clear and informative for inves23 tors who use or might use credit ratings; 

24 ‘‘(C) include performance information over 

25 a range of years and for a variety of types of 


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1 credit ratings, including for credit ratings with2 drawn by the nationally recognized statistical 

3 rating organization; 

4 ‘‘(D) are published and made freely avail5 able by the nationally recognized statistical rat6 ing organization, on an easily accessible portion 

7 of its website, and in writing, when requested; 

8 and 

9 ‘‘(E) are appropriate to the business model 

10 of a nationally recognized statistical rating or11 ganization. 

12 ‘‘(r) CREDIT RATINGS METHODOLOGIES.—The Com13 mission shall prescribe rules, for the protection of inves14 tors and in the public interest, with respect to the proce15 dures and methodologies, including qualitative and quan16 titative data and models, used by nationally recognized 

17 statistical rating organizations that require each nation18 ally recognized statistical rating organization— 

19 ‘‘(1) to ensure that credit ratings are deter20 mined using procedures and methodologies, includ21 ing qualitative and quantitative data and models, 

22 that are— 

23 ‘‘(A) approved by the board of the nation24 ally recognized statistical rating organization, a 

25 body performing a function similar to that of a 


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1 board, or the senior credit officer of the nation2 ally recognized statistical rating organization; 

3 and 

4 ‘‘(B) in accordance with the policies and 

5 procedures of the nationally recognized statis6 tical rating organization for the development 

7 and modification of credit rating procedures 

8 and methodologies; 

9 ‘‘(2) to ensure that when material changes to 

10 credit rating procedures and methodologies (includ11 ing changes to qualitative and quantitative data and 

12 models) are made, that— 

13 ‘‘(A) the changes are applied consistently 

14 to all credit ratings to which the changed proce15 dures and methodologies apply; 

16 ‘‘(B) to the extent that changes are made 

17 to credit rating surveillance procedures and 

18 methodologies, the changes are applied to then19 current credit ratings by the nationally recog20 nized statistical rating organization within a 

21 reasonable time period determined by the Com22 mission, by rule; and 

23 ‘‘(C) the nationally recognized statistical 

24 rating organization publicly discloses the reason 

25 for the change; and 


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1 ‘‘(3) to notify users of credit ratings— 

2 ‘‘(A) of the version of a procedure or meth3 odology, including the qualitative methodology 

4 or quantitative inputs, used with respect to a 

5 particular credit rating; 

6 ‘‘(B) when a material change is made to a 

7 procedure or methodology, including to a quali8 tative model or quantitative inputs; 

9 ‘‘(C) when a significant error is identified 

10 in a procedure or methodology, including a 

11 qualitative or quantitative model, that may re12 sult in credit rating actions; and 

13 ‘‘(D) of the likelihood of a material change 

14 described in subparagraph (B) resulting in a 

15 change in current credit ratings. 

16 ‘‘(s) TRANSPARENCY OF CREDIT RATING METH17 ODOLOGIES AND INFORMATION REVIEWED.— 

18 ‘‘(1) FORM FOR DISCLOSURES.—The Commis19 sion shall require, by rule, each nationally recognized 

20 statistical rating organization to prescribe a form to 

21 accompany the publication of each credit rating that 

22 discloses— 

23 ‘‘(A) information relating to— 


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1 ‘‘(i) the assumptions underlying the 

2 credit rating procedures and methodolo3 gies; 

4 ‘‘(ii) the data that was relied on to de5 termine the credit rating; and 

6 ‘‘(iii) if applicable, how the nationally 

7 recognized statistical rating organization 

8 used servicer or remittance reports, and 

9 with what frequency, to conduct surveil10 lance of the credit rating; and 

11 ‘‘(B) information that can be used by in12 vestors and other users of credit ratings to bet13 ter understand credit ratings in each class of 

14 credit rating issued by the nationally recognized 

15 statistical rating organization. 

16 ‘‘(2) FORMAT.—The form developed under 

17 paragraph (1) shall— 

18 ‘‘(A) be easy to use and helpful for users 

19 of credit ratings to understand the information 

20 contained in the report; 

21 ‘‘(B) require the nationally recognized sta22 tistical rating organization to provide the con23 tent described in paragraph (3)(B) in a manner 

24 that is directly comparable across types of secu25 rities; and 


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1 ‘‘(C) be made readily available to users of 

2 credit ratings, in electronic or paper form, as 

3 the Commission may, by rule, determine. 

4 ‘‘(3) CONTENT OF FORM.— 

5 ‘‘(A) QUALITATIVE CONTENT.—Each na6 tionally recognized statistical rating organiza7 tion shall disclose on the form developed under 

8 paragraph (1)— 

9 ‘‘(i) the credit ratings produced by the 

10 nationally recognized statistical rating or11 ganization; 

12 ‘‘(ii) the main assumptions and prin13 ciples used in constructing procedures and 

14 methodologies, including qualitative meth15 odologies and quantitative inputs and as16 sumptions about the correlation of defaults 

17 across obligors used in rating structured 

18 products; 

19 ‘‘(iii) the potential limitations of the 

20 credit ratings, and the types of risks ex21 cluded from the credit ratings that the na22 tionally recognized statistical rating orga23 nization does not comment on, including li24 quidity, market, and other risks; 


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1 ‘‘(iv) information on the uncertainty 

2 of the credit rating, including— 

3 ‘‘(I) information on the reli4 ability, accuracy, and quality of the 

5 data relied on in determining the 

6 credit rating; and 

7 ‘‘(II) a statement relating to the 

8 extent to which data essential to the 

9 determination of the credit rating 

10 were reliable or limited, including— 

11 ‘‘(aa) any limits on the 

12 scope of historical data; and 

13 ‘‘(bb) any limits in accessi14 bility to certain documents or 

15 other types of information that 

16 would have better informed the 

17 credit rating; 

18 ‘‘(v) whether and to what extent third 

19 party due diligence services have been used 

20 by the nationally recognized statistical rat21 ing organization, a description of the infor22 mation that such third party reviewed in 

23 conducting due diligence services, and a 

24 description of the findings or conclusions 

25 of such third party; 


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1 ‘‘(vi) a description of the data about 

2 any obligor, issuer, security, or money 

3 market instrument that were relied upon 

4 for the purpose of determining the credit 

5 rating; 

6 ‘‘(vii) a statement containing an over7 all assessment of the quality of information 

8 available and considered in producing a 

9 rating for an obligor, security, or money 

10 market instrument, in relation to the qual11 ity of information available to the nation12 ally recognized statistical rating organiza13 tion in rating similar issuances; 

14 ‘‘(viii) information relating to conflicts 

15 of interest of the nationally recognized sta16 tistical rating organization; and 

17 ‘‘(ix) such additional information as 

18 the Commission may require. 

19 ‘‘(B) QUANTITATIVE CONTENT.—Each na20 tionally recognized statistical rating organiza21 tion shall disclose on the form developed under 

22 this subsection— 

23 ‘‘(i) an explanation or measure of the 

24 potential volatility of the credit rating, in25 cluding— 


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1 ‘‘(I) any factors that might lead 

2 to a change in the credit ratings; and 

3 ‘‘(II) the magnitude of the 

4 change that a user can expect under 

5 different market conditions; 

6 ‘‘(ii) information on the content of the 

7 rating, including— 

8 ‘‘(I) the historical performance of 

9 the rating; and 

10 ‘‘(II) the expected probability of 

11 default and the expected loss in the 

12 event of default; 

13 ‘‘(iii) information on the sensitivity of 

14 the rating to assumptions made by the na15 tionally recognized statistical rating orga16 nization; and 

17 ‘‘(iv) such additional information as 

18 may be required by the Commission. 

19 ‘‘(4) DUE DILIGENCE SERVICES FOR ASSET20 BACKED SECURITIES.— 

21 ‘‘(A) FINDINGS.—The issuer or under22 writer of any asset-backed security shall make 

23 publicly available the findings and conclusions 

24 of any third-party due diligence report obtained 

25 by the issuer or underwriter. 


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1 ‘‘(B) CERTIFICATION REQUIRED.—In any 

2 case in which third-party due diligence services 

3 are employed by a nationally recognized statis4 tical rating organization, an issuer, or an un5 derwriter, the person providing the due dili6 gence services shall provide to any nationally 

7 recognized statistical rating organization that 

8 produces a rating to which such services relate, 

9 written certification, as provided in subpara10 graph (C). 

11 ‘‘(C) FORMAT AND CONTENT.—The Com12 mission shall establish the appropriate format 

13 and content for the written certifications re14 quired under subparagraph (B), to ensure that 

15 providers of due diligence services have con16 ducted a thorough review of data, documenta17 tion, and other relevant information necessary 

18 for a nationally recognized statistical rating or19 ganization to provide an accurate rating. 

20 ‘‘(D) DISCLOSURE OF CERTIFICATION.— 

21 The Commission shall adopt rules requiring a 

22 nationally recognized statistical rating organiza23 tion, at the time at which the nationally recog24 nized statistical rating organization produces a 

25 rating, to disclose the certification described in 


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1 subparagraph (B) to the public in a manner 

2 that allows the public to determine the ade3 quacy and level of due diligence services pro4 vided by a third party. 

5 ‘‘(t) CORPORATE GOVERNANCE, ORGANIZATION, AND

6 MANAGEMENT OF CONFLICTS OF INTEREST.— 

7 ‘‘(1) BOARD OF DIRECTORS.—Each nationally 

8 recognized statistical rating organization shall have 

9 a board of directors. 

10 ‘‘(2) INDEPENDENT DIRECTORS.— 

‘‘(A) IN GENERAL.—At least 1 11 ⁄2 of the 

12 board of directors, but not fewer than 2 of the 

13 members thereof, shall be independent of the 

14 nationally recognized statistical rating agency. 

15 A portion of the independent directors shall in16 clude users of ratings from a nationally recog17 nized statistical rating organization. 

18 ‘‘(B) INDEPENDENCE DETERMINATION.— 

19 In order to be considered independent for pur20 poses of this subsection, a member of the board 

21 of directors of a nationally recognized statistical 

22 rating organization— 

23 ‘‘(i) may not, other than in his or her 

24 capacity as a member of the board of di25 rectors or any committee thereof— 


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1 ‘‘(I) accept any consulting, advi2 sory, or other compensatory fee from 

3 the nationally recognized statistical 

4 rating organization; or 

5 ‘‘(II) be a person associated with 

6 the nationally recognized statistical 

7 rating organization or with any affili8 ated company thereof; and 

9 ‘‘(ii) shall be disqualified from any de10 liberation involving a specific rating in 

11 which the independent board member has 

12 a financial interest in the outcome of the 

13 rating. 

14 ‘‘(C) COMPENSATION AND TERM.—The 

15 compensation of the independent members of 

16 the board of directors of a nationally recognized 

17 statistical rating organization shall not be 

18 linked to the business performance of the na19 tionally recognized statistical rating organiza20 tion, and shall be arranged so as to ensure the 

21 independence of their judgment. The term of 

22 office of the independent directors shall be for 

23 a pre-agreed fixed period, not to exceed 5 years, 

24 and shall not be renewable. 


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1 ‘‘(3) DUTIES OF BOARD OF DIRECTORS.—In 

2 addition to the overall responsibilities of the board of 

3 directors, the board shall oversee— 

4 ‘‘(A) the establishment, maintenance, and 

5 enforcement of policies and procedures for de6 termining credit ratings; 

7 ‘‘(B) the establishment, maintenance, and 

8 enforcement of policies and procedures to ad9 dress, manage, and disclose any conflicts of in10 terest; 

11 ‘‘(C) the effectiveness of the internal con12 trol system with respect to policies and proce13 dures for determining credit ratings; and 

14 ‘‘(D) the compensation and promotion poli15 cies and practices of the nationally recognized 

16 statistical rating organization. 

17 ‘‘(4) TREATMENT OF NRSRO SUBSIDIARIES.—If 

18 a nationally recognized statistical rating organiza19 tion is a subsidiary of a parent entity, the board of 

20 the directors of the parent entity may satisfy the re21 quirements of this subsection by assigning to a com22 mittee of such board of directors the duties under 

23 paragraph (3), if— 

‘‘(A) at least 1 24 ⁄2 of the members of the 

25 committee (including the chairperson of the 


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1 committee) are independent, as defined in this 

2 section; and 

3 ‘‘(B) at least 1 member of the committee 

4 is a user of ratings from a nationally recognized 

5 statistical rating organization. 

6 ‘‘(5) EXCEPTION AUTHORITY.—If the Commis7 sion finds that compliance with the provisions of this 

8 subsection present an unreasonable burden on a 

9 small nationally recognized statistical rating organi10 zation, the Commission may permit the nationally 

11 recognized statistical rating organization to delegate 

12 such responsibilities to a committee that includes at 

13 least one individual who is a user of ratings of a na14 tionally recognized statistical rating organization.’’. 

15 SEC. 933. STATE OF MIND IN PRIVATE ACTIONS. 

16 (a) ACCOUNTABILITY.—Section 15E(m) of the Secu17 rities Exchange Act of 1934 (15 U.S.C. 78o–7(m)) is 

18 amended to read as follows: 

19 ‘‘(m) ACCOUNTABILITY.— 

20 ‘‘(1) IN GENERAL.—The enforcement and pen21 alty provisions of this title shall apply to statements 

22 made by a credit rating agency in the same manner 

23 and to the same extent as such provisions apply to 

24 statements made by a registered public accounting 

25 firm or a securities analyst under the securities laws, 


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1 and such statements shall not be deemed forward2 looking statements for the purposes of section 21E. 

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

4 issue such rules as may be necessary to carry out 

5 this subsection.’’. 

6 (b) STATE OF MIND.—Section 21D(b)(2) of the Se7 curities Exchange Act of 1934 (15 U.S.C. 78u–4(b)(2)) 

8 is amended— 

9 (1) by striking ‘‘In any’’ and inserting the fol10 lowing: 

11 ‘‘(A) IN GENERAL.—Except as provided in 

12 subparagraph (B), in any’’; and 

13 (2) by adding at the end the following: 

14 ‘‘(B) EXCEPTION.—In the case of an ac15 tion for money damages brought against a cred16 it rating agency or a controlling person under 

17 this title, it shall be sufficient, for purposes of 

18 pleading any required state of mind in relation 

19 to such action, that the complaint state with 

20 particularity facts giving rise to a strong infer21 ence that the credit rating agency knowingly or 

22 recklessly failed— 

23 ‘‘(i) to conduct a reasonable investiga24 tion of the rated security with respect to 


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1 the factual elements relied upon by its own 

2 methodology for evaluating credit risk; or 

3 ‘‘(ii) to obtain reasonable verification 

4 of such factual elements (which verification 

5 may be based on a sampling technique that 

6 does not amount to an audit) from other 

7 sources that the credit rating agency con8 sidered to be competent and that were 

9 independent of the issuer and under10 writer.’’. 

11 SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR 

12 REGULATORY AUTHORITIES. 

13 Section 15E of the Securities Exchange Act of 1934 

14 (15 U.S.C. 78o–7), as amended by this subtitle, is amend15 ed by adding at the end the following: 

16 ‘‘(u) DUTY TO REPORT TIPS ALLEGING MATERIAL

17 VIOLATIONS OF LAW.— 

18 ‘‘(1) DUTY TO REPORT.—Each nationally rec19 ognized statistical rating organization shall refer to 

20 the appropriate law enforcement or regulatory au21 thorities any information that the nationally recog22 nized statistical rating organization receives from a 

23 third party and finds credible that alleges that an 

24 issuer of securities rated by the nationally recog25 nized statistical rating organization has committed 


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1 or is committing a material violation of law that has 

2 not been adjudicated by a Federal or State court. 

3 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

4 paragraph (1) may be construed to require a nation5 ally recognized statistical rating organization to 

6 verify the accuracy of the information described in 

7 paragraph (1).’’. 

8 SEC. 935. CONSIDERATION OF INFORMATION FROM 

9 SOURCES OTHER THAN THE ISSUER IN RAT10 ING DECISIONS. 

11 Section 15E of the Securities Exchange Act of 1934 

12 (15 U.S.C. 78o–7), as amended by this subtitle, is amend13 ed by adding at the end the following: 

14 ‘‘(v) INFORMATION FROM SOURCES OTHER THAN

15 THE ISSUER.—In producing a credit rating, a nationally 

16 recognized statistical rating organization shall consider in17 formation about an issuer that the nationally recognized 

18 statistical rating organization has, or receives from a 

19 source other than the issuer, that the nationally recog20 nized statistical rating organization finds credible and po21 tentially significant to a rating decision.’’. 

22 SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RAT23 ING ANALYSTS. 

24 Not later than 1 year after the date of enactment 

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1 sonably designed to ensure that any person employed by 

2 a nationally recognized statistical rating organization to 

3 perform credit ratings— 

4 (1) meets standards of training, experience, and 

5 competence necessary to produce accurate ratings 

6 for the categories of issuers whose securities the per7 son rates; and 

8 (2) is tested for knowledge of the credit rating 

9 process. 

10 SEC. 937. TIMING OF REGULATIONS. 

11 Unless otherwise specifically provided in this subtitle, 

12 the Commission shall issue final regulations, as required 

13 by this subtitle and the amendments made by this subtitle, 

14 not later than 1 year after the date of enactment of this 

15 Act. 

16 SEC. 938. UNIVERSAL RATINGS SYMBOLS. 

17 (a) RULEMAKING.—The Commission shall require, by 

18 rule, each nationally recognized statistical rating organiza19 tion to establish, maintain, and enforce written policies 

20 and procedures that— 

21 (1) assess the probability that an issuer of a se22 curity or money market instrument will default, fail 

23 to make timely payments, or otherwise not make 

24 payments to investors in accordance with the terms 

25 of the security or money market instrument; 


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1 (2) clearly define and disclose the meaning of 

2 any symbol used by the nationally recognized statis3 tical rating organization to denote a credit rating; 

4 and 

5 (3) apply any symbol described in paragraph 

6 (2) in a manner that is consistent for all types of 

7 securities and money market instruments for which 

8 the symbol is used. 

9 (b) RULE OF CONSTRUCTION.—Nothing in this sec10 tion shall prohibit a nationally recognized statistical rating 

11 organization from using distinct sets of symbols to denote 

12 credit ratings for different types of securities or money 

13 market instruments. 

14 SEC. 939. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

15 AND FEDERAL AGENCY REVIEW OF RE16 QUIRED USES OF NATIONALLY RECOGNIZED 

17 STATISTICAL RATING ORGANIZATION RAT18 INGS. 

19 (a) STUDY.—The Comptroller General of the United 

20 States shall conduct a study of the scope of provisions of 

21 Federal and State laws and regulations with respect to 

22 the regulation of securities markets, banking, insurance, 

23 and other areas that require the use of ratings issued by 

24 nationally recognized statistical rating organizations (in 

25 this section referred to as the ‘‘ratings requirements’’). 


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1 (b) SUBJECTS FOR EVALUATION; PROCESS OF EVAL2 UATION.— 

3 (1) SUBJECTS FOR EVALUATION.—In con4 ducting the study under subsection (a), the Comp5 troller General of the United States shall evaluate— 

6 (A) the necessity for and purpose of rat7 ings requirements; 

8 (B) which ratings requirements, if any, 

9 could be removed with minimal disruption to 

10 the financial markets; 

11 (C) the potential impact on the financial 

12 markets and on investors if the ratings require13 ments identified under subparagraph (B) were 

14 rescinded; and 

15 (D) whether the financial markets and in16 vestors would benefit from the rescission of 

17 such ratings requirements. 

18 (2) PROCESS OF EVALUATION.—In conducting 

19 the study under subsection (a), the Comptroller Gen20 eral of the United States shall research and take 

21 into consideration the views of— 

22 (A) the Federal financial regulatory agen23 cies; 

24 (B) hedge funds; 

25 (C) banks; 


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1 (D) brokerage firms; 

2 (E) mutual funds; 

3 (F) pension funds; and 

4 (G) all other interested parties. 

5 (c) REPORT AND RECOMMENDATIONS.—Not later 

6 than 2 years after the date of enactment of this Act, the 

7 Comptroller General of the United States shall submit to 

8 the Committee on Banking, Housing, and Urban Affairs 

9 of the Senate and the Committee on Financial Services 

10 of the House of Representatives a report on the results 

11 of the study conducted under subsection (a), including rec12 ommendations, if any, on— 

13 (1) which ratings requirements, if any, could be 

14 removed with minimal disruption to the markets; 

15 and 

16 (2) whether the financial markets and investors 

17 would benefit from the rescission of the ratings re18 quirements identified under paragraph (1). 

19 (d) FEDERAL AGENCY REVIEW OF RATINGS RE20 QUIREMENTS.— 

21 (1) REVIEW.—Each covered Federal agency 

22 shall review— 

23 (A) any regulation of the covered Federal 

24 agency that requires the use of an assessment 


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1 of the credit worthiness of a security or money 

2 market instrument; 

3 (B) any other reference to credit ratings or 

4 requirement relating to credit ratings in a regu5 lation of the covered Federal agency; and 

6 (C) alternative standards of creditworthi7 ness that are based on market-generated indica8 tors, including yield spreads, bond prices, and 

9 credit default swap spreads. 

10 (2) MODIFICATIONS REQUIRED.—Except as 

11 provided in paragraph (3), each covered Federal 

12 agency shall modify any regulation identified under 

13 paragraph (1)— 

14 (A) to remove any reference to credit rat15 ings or a credit ratings requirement in the reg16 ulation; and 

17 (B) to amend the regulation to require the 

18 use of a standard of credit worthiness that— 

19 (i) is not related to credit ratings; and 

20 (ii) the covered Federal agency deter21 mines appropriate. 

22 (3) EXCEPTION.—A covered Federal agency 

23 may elect not to amend a regulation identified under 

24 paragraph (1), if the covered Federal agency deter25 mines that— 


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1 (A) there is no reasonable alternative 

2 standard of credit worthiness that could replace 

3 a credit rating for purposes of the regulation; 

4 and 

5 (B) an amendment to the regulation would 

6 be inconsistent with the purposes of the statute 

7 that authorized the regulation and not in the 

8 public interest. 

9 (4) REPORT.—Not later than 1 year after the 

10 date on which the Comptroller General submits the 

11 report required under subsection (c), each covered 

12 Federal agency shall submit to Congress a report 

13 that contains— 

14 (A) a description of any amendment under 

15 paragraph (2); and 

16 (B) an explanation of any determination 

17 under paragraph (3). 

18 (5) DEFINITION.—In this subsection, the term 

19 ‘‘covered Federal agency’’ means— 

20 (A) the Commission; 

21 (B) the Corporation; 

22 (C) the Office of the Comptroller of the 

23 Currency; 

24 (D) the Board of Governors; 


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1 (E) the National Credit Union Administra2 tion; and 

3 (F) the Federal Housing Finance Agency. 

4 SEC. 939A. SECURITIES AND EXCHANGE COMMISSION 

5 STUDY ON STRENGTHENING CREDIT RATING 

6 AGENCY INDEPENDENCE. 

7 (a) STUDY.—The Commission shall conduct a study 

8 of— 

9 (1) the independence of nationally recognized 

10 statistical rating organizations; and 

11 (2) how the independence of nationally recog12 nized statistical rating organizations affects the rat13 ings issued by the nationally recognized statistical 

14 rating organizations. 

15 (b) SUBJECTS FOR EVALUATION.—In conducting the 

16 study under subsection (a), the Commission shall evalu17 ate— 

18 (1) the management of conflicts of interest 

19 raised by a nationally recognized statistical rating 

20 organization providing other services, including risk 

21 management advisory services, ancillary assistance, 

22 or consulting services; 

23 (2) the potential impact of rules prohibiting a 

24 nationally recognized statistical rating organization 


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1 that provides a rating to an issuer from providing 

2 other services to the issuer; and 

3 (3) any other issue relating to nationally recog4 nized statistical rating organizations, as the Chair5 man of the Commission determines is appropriate. 

6 (c) REPORT.—Not later than 3 years after the date 

7 of enactment of this Act, the Chairman of the Commission 

8 shall submit to the Committee on Banking, Housing, and 

9 Urban Affairs of the Senate and the Committee on Finan10 cial Services of the House of Representatives a report on 

11 the results of the study conducted under subsection (a), 

12 including recommendations, if any, for improving the in13 tegrity of ratings issued by nationally recognized statis14 tical rating organizations. 

15 SEC. 939B. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

16 ON ALTERNATIVE BUSINESS MODELS. 

17 (a) STUDY.—The Comptroller General of the United 

18 States shall conduct a study on alternative means for com19 pensating nationally recognized statistical rating organiza20 tions in order to create incentives for nationally recognized 

21 statistical rating organizations to provide more accurate 

22 credit ratings, including any statutory changes that would 

23 be required to facilitate the use of an alternative means 

24 of compensation. 


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1 (b) REPORT.—Not later than 1 year after the date 

2 of enactment of this Act, the Comptroller General shall 

3 submit to the Committee on Banking, Housing, and 

4 Urban Affairs of the Senate and the Committee on Finan5 cial Services of the House of Representatives a report on 

6 the results of the study conducted under subsection (a), 

7 including recommendations, if any, for providing incen8 tives to credit rating agencies to improve the credit rating 

9 process. 

10 SEC. 939C. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

11 ON THE CREATION OF AN INDEPENDENT 

12 PROFESSIONAL ANALYST ORGANIZATION. 

13 (a) STUDY.—The Comptroller General of the United 

14 States shall conduct a study on the feasibility and merits 

15 of creating an independent professional organization for 

16 rating analysts employed by nationally recognized statis17 tical rating organizations that would be responsible for— 

18 (1) establishing independent standards for gov19 erning the profession of rating analysts; 

20 (2) establishing a code of ethical conduct; and 

21 (3) overseeing the profession of rating analysts. 

22 (b) REPORT.—Not later than 1 year after the date 

23 of enactment of this Act, the Comptroller General shall 

24 submit to the Committee on Banking, Housing, and 

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1 cial Services of the House of Representatives a report on 

2 the results of the study conducted under subsection (a). 

3 Subtitle D—Improvements to the 

4 Asset-Backed Securitization 

5 Process 

6 SEC. 941. REGULATION OF CREDIT RISK RETENTION. 

7 (a) DEFINITION OF ASSET-BACKED SECURITY.—Sec8 tion 3(a) of the Securities Exchange Act of 1934 (15 

9 U.S.C. 78c(a)) is amended by adding at the end the fol10 lowing: 

11 ‘‘(77) ASSET-BACKED SECURITY.—The term 

12 ‘asset-backed security’— 

13 ‘‘(A) means a fixed-income or other secu14 rity collateralized by any type of self-liquidating 

15 financial asset (including a loan, a lease, a 

16 mortgage, or a secured or unsecured receivable) 

17 that allows the holder of the security to receive 

18 payments that depend primarily on cash flow 

19 from the asset, including— 

20 ‘‘(i) a collateralized mortgage obliga21 tion; 

22 ‘‘(ii) a collateralized debt obligation; 

23 ‘‘(iii) a collateralized bond obligation; 

24 ‘‘(iv) a collateralized debt obligation of 

25 asset-backed securities; 


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1 ‘‘(v) a collateralized debt obligation of 

2 collateralized debt obligations; and 

3 ‘‘(vi) a security that the Commission, 

4 by rule, determines to be an asset-backed 

5 security for purposes of this section; and 

6 ‘‘(B) does not include a security issued by 

7 a finance subsidiary held by the parent com8 pany or a company controlled by the parent 

9 company, if none of the securities issued by the 

10 finance subsidiary are held by an entity that is 

11 not controlled by the parent company.’’. 

12 (b) CREDIT RISK RETENTION.—The Securities Ex13 change Act of 1934 (15 U.S.C. 78a et seq.) is amended 

14 by inserting after section 15F, as added by this Act, the 

15 following: 

16 ‘‘SEC. 15G. CREDIT RISK RETENTION. 

17 ‘‘(a) DEFINITIONS.—In this section— 

18 ‘‘(1) the term ‘Federal banking agencies’ means 

19 the Office of the Comptroller of the Currency and 

20 the Federal Deposit Insurance Corporation; 

21 ‘‘(2) the term ‘insured depository institution’ 

22 has the same meaning as in section 3(c) of the Fed23 eral Deposit Insurance Act (12 U.S.C. 1813(c)); 

24 ‘‘(3) the term ‘securitizer’ means— 


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1 ‘‘(A) an issuer of an asset-backed security; 

2 or 

3 ‘‘(B) a person who organizes and initiates 

4 an asset-backed securities transaction by selling 

5 or transferring assets, either directly or indi6 rectly, including through an affiliate, to the 

7 issuer; and 

8 ‘‘(4) the term ‘originator’ means a person 

9 who— 

10 ‘‘(A) through the extension of credit or 

11 otherwise, creates a financial asset that 

12 collateralizes an asset-backed security; and 

13 ‘‘(B) sells an asset to a securitizer. 

14 ‘‘(b) IN GENERAL.—Not later than 270 days after 

15 the date of enactment of this section, the Federal banking 

16 agencies and the Commission shall jointly prescribe regu17 lations to require any securitizer to retain an economic 

18 interest in a portion of the credit risk for any asset that 

19 the securitizer, through the issuance of an asset-backed 

20 security, transfers, sells, or conveys to a third party. 

21 ‘‘(c) STANDARDS FOR REGULATIONS.— 

22 ‘‘(1) STANDARDS.—The regulations prescribed 

23 under subsection (b) shall— 

24 ‘‘(A) prohibit a securitizer from directly or 

25 indirectly hedging or otherwise transferring the 


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1 credit risk that the securitizer is required to re2 tain with respect to an asset; 

3 ‘‘(B) require a securitizer to retain— 

4 ‘‘(i) not less than 5 percent of the 

5 credit risk for any asset that is trans6 ferred, sold, or conveyed through the 

7 issuance of an asset-backed security by the 

8 securitizer; or 

9 ‘‘(ii) less than 5 percent of the credit 

10 risk for an asset that is transferred, sold, 

11 or conveyed through the issuance of an 

12 asset-backed security by the securitizer, if 

13 the originator of the asset meets the un14 derwriting standards prescribed under 

15 paragraph (2)(B); 

16 ‘‘(C) specify— 

17 ‘‘(i) the permissible forms of risk re18 tention for purposes of this section; and 

19 ‘‘(ii) the minimum duration of the 

20 risk retention required under this section; 

21 ‘‘(D) apply, regardless of whether the 

22 securitizer is an insured depository institution; 

23 and 

24 ‘‘(E) provide for— 


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1 ‘‘(i) a total or partial exemption of 

2 any securitization, as may be appropriate 

3 in the public interest and for the protec4 tion of investors; and 

5 ‘‘(ii) the allocation of risk retention 

6 obligations between a securitizer and an 

7 originator in the case of a securitizer that 

8 purchases assets from an originator, as the 

9 Federal banking agencies and the Commis10 sion jointly determine appropriate. 

11 ‘‘(2) ASSET CLASSES.— 

12 ‘‘(A) ASSET CLASSES.—The regulations 

13 prescribed under subsection (b) shall establish 

14 asset classes with separate rules for securitizers 

15 of different classes of assets, including residen16 tial mortgages, commercial mortgages, commer17 cial loans, auto loans, and any other class of as18 sets that the Federal banking agencies and the 

19 Commission deem appropriate. 

20 ‘‘(B) CONTENTS.—For each asset class es21 tablished under subparagraph (A), the regula22 tions prescribed under subsection (b) shall es23 tablish underwriting standards that specify the 

24 terms, conditions, and characteristics of a loan 


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1 within the asset class that indicate a reduced 

2 credit risk with respect to the loan. 

3 ‘‘(d) ORIGINATORS.—In determining how to allocate 

4 risk retention obligations between a securitizer and an 

5 originator under subsection (c)(1)(E)(ii), the Federal 

6 banking agencies and the Commission shall— 

7 ‘‘(1) reduce the percentage of risk retention ob8 ligations required of the securitizer by the percent9 age of risk retention obligations required of the 

10 originator; and 

11 ‘‘(2) consider— 

12 ‘‘(A) whether the assets sold to the 

13 securitizer have terms, conditions, and charac14 teristics that reflect reduced credit risk; 

15 ‘‘(B) whether the form or volume of trans16 actions in securitization markets creates incen17 tives for imprudent origination of the type of 

18 loan or asset to be sold to the securitizer; and 

19 ‘‘(C) the potential impact of the risk reten20 tion obligations on the access of consumers and 

21 businesses to credit on reasonable terms, which 

22 may not include the transfer of credit risk to a 

23 third party. 

24 ‘‘(e) EXEMPTIONS, EXCEPTIONS, AND ADJUST25 MENTS.— 


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1 ‘‘(1) IN GENERAL.—The Federal banking agen2 cies and the Commission may jointly adopt or issue 

3 exemptions, exceptions, or adjustments to the rules 

4 issued under this section, including exemptions, ex5 ceptions, or adjustments for classes of institutions or 

6 assets relating to the risk retention requirement and 

7 the prohibition on hedging under subsection (c)(1). 

8 ‘‘(2) APPLICABLE STANDARDS.—Any exemp9 tion, exception, or adjustment adopted or issued by 

10 the Federal banking agencies and the Commission 

11 under this paragraph shall— 

12 ‘‘(A) help ensure high quality underwriting 

13 standards for the securitizers and originators of 

14 assets that are securitized or available for 

15 securitization; and 

16 ‘‘(B) encourage appropriate risk manage17 ment practices by the securitizers and origina18 tors of assets, improve the access of consumers 

19 and businesses to credit on reasonable terms, or 

20 otherwise be in the public interest and for the 

21 protection of investors. 

22 ‘‘(3) FARM CREDIT SYSTEM INSTITUTIONS.—A 

23 Farm Credit System institution, including the Fed24 eral Agricultural Mortgage Corporation, that is 

25 chartered and subject to the provisions of the Farm 


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1 Credit Act of 1971, as amended (12 U.S.C. 2001 et 

2 seq.), shall be exempt from the risk retention provi3 sions of this subsection. 

4 ‘‘(f) ENFORCEMENT.—The regulations issued under 

5 this section shall be enforced by— 

6 ‘‘(1) the appropriate Federal banking agency, 

7 with respect to any securitizer that is an insured de8 pository institution; and 

9 ‘‘(2) the Commission, with respect to any 

10 securitizer that is not an insured depository institu11 tion. 

12 ‘‘(g) AUTHORITY OF COMMISSION.—The authority of 

13 the Commission under this section shall be in addition to 

14 the authority of the Commission to otherwise enforce the 

15 securities laws. 

16 ‘‘(h) EFFECTIVE DATE OF REGULATIONS.—The reg17 ulations issued under this section shall become effective— 

18 ‘‘(1) with respect to securitizers and originators 

19 of asset-backed securities backed by residential 

20 mortgages, 1 year after the date on which final rules 

21 under this section are published in the Federal Reg22 ister; and 

23 ‘‘(2) with respect to securitizers and originators 

24 of all other classes of asset-backed securities, 2 years 


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1 after the date on which final rules under this section 

2 are published in the Federal Register.’’. 

3 SEC. 942. DISCLOSURES AND REPORTING FOR ASSET4 BACKED SECURITIES. 

5 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

6 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 

7 78o(d)) is amended— 

8 (1) by striking ‘‘(d) Each’’ and inserting the 

9 following: 

10 ‘‘(d) SUPPLEMENTARY AND PERIODIC INFORMA11 TION.— 

12 ‘‘(1) IN GENERAL.—Each’’; 

13 (2) in the third sentence, by inserting after ‘‘se14 curities of each class’’ the following: ‘‘, other than 

15 any class of asset-backed securities,’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(2) ASSET-BACKED SECURITIES.— 

18 ‘‘(A) SUSPENSION OF DUTY TO FILE.—The 

19 Commission may, by rule or regulation, provide 

20 for the suspension or termination of the duty to 

21 file under this subsection for any class of asset22 backed security, on such terms and conditions 

23 and for such period or periods as the Commis24 sion deems necessary or appropriate in the pub25 lic interest or for the protection of investors. 


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1 ‘‘(B) CLASSIFICATION OF ISSUERS.—The 

2 Commission may, for purposes of this sub3 section, classify issuers and prescribe require4 ments appropriate for each class of issuers of 

5 asset-backed securities.’’. 

6 (b) SECURITIES ACT OF 1933.—Section 7 of the Se7 curities Act of 1933 (15 U.S.C. 77g) is amended by add8 ing at the end the following: 

9 ‘‘(c) DISCLOSURE REQUIREMENTS.— 

10 ‘‘(1) IN GENERAL.—The Commission shall 

11 adopt regulations under this subsection requiring 

12 each issuer of an asset-backed security to disclose, 

13 for each tranche or class of security, information re14 garding the assets backing that security. 

15 ‘‘(2) CONTENT OF REGULATIONS.—In adopting 

16 regulations under this subsection, the Commission 

17 shall— 

18 ‘‘(A) set standards for the format of the 

19 data provided by issuers of an asset-backed se20 curity, which shall, to the extent feasible, facili21 tate comparison of such data across securities 

22 in similar types of asset classes; and 

23 ‘‘(B) require issuers of asset-backed securi24 ties, at a minimum, to disclose asset-level or 


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1 loan-level data necessary for investors to inde2 pendently perform due diligence, including— 

3 ‘‘(i) data having unique identifiers re4 lating to loan brokers or originators; 

5 ‘‘(ii) the nature and extent of the 

6 compensation of the broker or originator of 

7 the assets backing the security; and 

8 ‘‘(iii) the amount of risk retention by 

9 the originator and the securitizer of such 

10 assets.’’. 

11 SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET12 BACKED OFFERINGS. 

13 Not later than 180 days after the date of enactment 

14 of this Act, the Securities and Exchange Commission shall 

15 prescribe regulations on the use of representations and 

16 warranties in the market for asset-backed securities (as 

17 that term is defined in section 3(a)(77) of the Securities 

18 Exchange Act of 1934, as added by this subtitle) that— 

19 (1) require each national recognized statistical 

20 rating organization to include in any report accom21 panying a credit rating a description of— 

22 (A) the representations, warranties, and 

23 enforcement mechanisms available to investors; 

24 and 


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1 (B) how they differ from the representa2 tions, warranties, and enforcement mechanisms 

3 in issuances of similar securities; and 

4 (2) require any securitizer (as that term is de5 fined in section 15G(a) of the Securities Exchange 

6 Act of 1934, as added by this subtitle) to disclose 

7 fulfilled and unfulfilled repurchase requests across 

8 all trusts aggregated by the securitizer, so that in9 vestors may identify asset originators with clear un10 derwriting deficiencies. 

11 SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURI12 TIES ACT OF 1933. 

13 (a) EXEMPTION ELIMINATED.—Section 4 of the Se14 curities Act of 1933 (15 U.S.C. 77d) is amended— 

15 (1) by striking paragraph (5); and 

16 (2) by striking ‘‘(6) transactions’’ and inserting 

17 the following: 

18 ‘‘(5) transactions’’. 

19 (b) CONFORMING AMENDMENT.—Section 

20 3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 

21 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 

22 ‘‘4(6)’’ and inserting ‘‘4(5)’’. 


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1 SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN 

2 ASSET-BACKED SECURITIES ISSUES. 

3 Section 7 of the Securities Act of 1933 (15 U.S.C. 

4 77g), as amended by this subtitle, is amended by adding 

5 at the end the following: 

6 ‘‘(d) REGISTRATION STATEMENT FOR ASSET7 BACKED SECURITIES.—Not later than 180 days after the 

8 date of enactment of this subsection, the Commission shall 

9 issue rules relating to the registration statement required 

10 to be filed by any issuer of an asset-backed security (as 

11 that term is defined in section 3(a)(77) of the Securities 

12 Exchange Act of 1934) that require any issuer of an asset13 backed security— 

14 ‘‘(1) to perform a due diligence analysis of the 

15 assets underlying the asset-backed security; and 

16 ‘‘(2) to disclose the nature of the analysis under 

17 paragraph (1).’’. 

18 Subtitle E—Accountability and 

19 Executive Compensation 

20 SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA21 TION DISCLOSURES. 

22 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

23 et seq.) is amended by inserting after section 14 (15 

24 U.S.C. 78n) the following: 


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1 ‘‘SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECU2 TIVE COMPENSATION. 

3 ‘‘(a) SEPARATE RESOLUTION REQUIRED.—Any 

4 proxy or consent or authorization for an annual or other 

5 meeting of the shareholders occurring after the end of the 

6 6-month period beginning on the date of enactment of this 

7 section, for which the proxy solicitation rules of the Com8 mission require compensation disclosure, shall include a 

9 separate resolution subject to shareholder vote to approve 

10 the compensation of executives, as disclosed pursuant to 

11 section 229.402 of title 17, Code of Federal Regulations, 

12 or any successor thereto. 

13 ‘‘(b) RULE OF CONSTRUCTION.—The shareholder 

14 vote referred to in subsection (a) shall not be binding on 

15 the issuer or the board of directors of an issuer, and may 

16 not be construed— 

17 ‘‘(1) as overruling a decision by such issuer or 

18 board of directors; 

19 ‘‘(2) to create or imply any change to the fidu20 ciary duties of such issuer or board of directors; 

21 ‘‘(3) to create or imply any additional fiduciary 

22 duties for such issuer or board of directors; or 

23 ‘‘(4) to restrict or limit the ability of share24 holders to make proposals for inclusion in proxy ma25 terials related to executive compensation.’’. 


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1 SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE. 

2 The Securities Exchange Act of 1934 (15 U.S.C. 78 

3 et seq.) is amended by inserting after section 10B, as 

4 added by section 753, the following: 

5 ‘‘SEC. 10C. COMPENSATION COMMITTEES. 

6 ‘‘(a) INDEPENDENCE OF COMPENSATION COMMIT7 TEES.— 

8 ‘‘(1) LISTING STANDARDS.—The Commission 

9 shall, by rule, direct the national securities ex10 changes and national securities associations to pro11 hibit the listing of any security of an issuer that 

12 does not comply with the requirements of this sub13 section. 

14 ‘‘(2) INDEPENDENCE OF COMPENSATION COM15 MITTEES.—The rules of the Commission under para16 graph (1) shall require that each member of the 

17 compensation committee of the board of directors of 

18 an issuer be— 

19 ‘‘(A) a member of the board of directors of 

20 the issuer; and 

21 ‘‘(B) independent. 

22 ‘‘(3) INDEPENDENCE.—The rules of the Com23 mission under paragraph (1) shall require that, in 

24 determining the definition of the term ‘independ25 ence’ for purposes of paragraph (2), the national seVerDate Nov 24 2008 00:02 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00901 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 curities exchanges and the national securities asso2 ciations shall consider relevant factors, including— 

3 ‘‘(A) the source of compensation of a mem4 ber of the board of directors of an issuer, in5 cluding any consulting, advisory, or other com6 pensatory fee paid by the issuer to such mem7 ber of the board of directors; and 

8 ‘‘(B) whether a member of the board of di9 rectors of an issuer is affiliated with the issuer, 

10 a subsidiary of the issuer, or an affiliate of a 

11 subsidiary of the issuer. 

12 ‘‘(4) EXEMPTION AUTHORITY.—The rules of 

13 the Commission under paragraph (1) shall permit a 

14 national securities exchange or a national securities 

15 association to exempt a particular relationship from 

16 the requirements of paragraph (2), with respect to 

17 the members of a compensation committee, as the 

18 national securities exchange or national securities 

19 association determines is appropriate, taking into 

20 consideration the size of an issuer and any other rel21 evant factors. 

22 ‘‘(b) INDEPENDENCE OF COMPENSATION CONSULT23 ANTS AND OTHER COMPENSATION COMMITTEE ADVIS24 ERS.— 


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1 ‘‘(1) IN GENERAL.—The compensation com2 mittee of an issuer may only select a compensation 

3 consultant, legal counsel, or other adviser to the 

4 compensation committee after taking into consider5 ation the factors identified by the Commission under 

6 paragraph (2). 

7 ‘‘(2) RULES.—The Commission shall identify 

8 factors that affect the independence of a compensa9 tion consultant, legal counsel, or other adviser to a 

10 compensation committee of an issuer, including— 

11 ‘‘(A) the provision of other services to the 

12 issuer by the person that employs the com13 pensation consultant, legal counsel, or other ad14 viser; 

15 ‘‘(B) the amount of fees received from the 

16 issuer by the person that employs the com17 pensation consultant, legal counsel, or other ad18 viser, as a percentage of the total revenue of 

19 the person that employs the compensation con20 sultant, legal counsel, or other adviser; 

21 ‘‘(C) the policies and procedures of the 

22 person that employs the compensation consult23 ant, legal counsel, or other adviser that are de24 signed to prevent conflicts of interest; 


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1 ‘‘(D) any business or personal relationship 

2 of the compensation consultant, legal counsel, 

3 or other adviser with a member of the com4 pensation committee; and 

5 ‘‘(E) any stock of the issuer owned by the 

6 compensation consultant, legal counsel, or other 

7 adviser. 

8 ‘‘(c) COMPENSATION COMMITTEE AUTHORITY RE9 LATING TO COMPENSATION CONSULTANTS.— 

10 ‘‘(1) AUTHORITY TO RETAIN COMPENSATION

11 CONSULTANT.— 

12 ‘‘(A) IN GENERAL.—The compensation 

13 committee of an issuer, in its capacity as a 

14 committee of the board of directors, may, in its 

15 sole discretion, retain or obtain the advice of a 

16 compensation consultant. 

17 ‘‘(B) DIRECT RESPONSIBILITY OF COM18 PENSATION COMMITTEE.—The compensation 

19 committee of an issuer shall be directly respon20 sible for the appointment, compensation, and 

21 oversight of the work of a compensation con22 sultant. 

23 ‘‘(C) RULE OF CONSTRUCTION.—This 

24 paragraph may not be construed— 


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1 ‘‘(i) to require the compensation com2 mittee to implement or act consistently 

3 with the advice or recommendations of the 

4 compensation consultant; or 

5 ‘‘(ii) to affect the ability or obligation 

6 of a compensation committee to exercise its 

7 own judgment in fulfillment of the duties 

8 of the compensation committee. 

9 ‘‘(2) DISCLOSURE.—In any proxy or consent 

10 solicitation material for an annual meeting of the 

11 shareholders (or a special meeting in lieu of the an12 nual meeting) occurring on or after the date that is 

13 1 year after the date of enactment of this section, 

14 each issuer shall disclose in the proxy or consent 

15 material, in accordance with regulations of the Com16 mission, whether— 

17 ‘‘(A) the compensation committee of the 

18 issuer retained or obtained the advice of a com19 pensation consultant; and 

20 ‘‘(B) the work of the compensation con21 sultant has raised any conflict of interest and, 

22 if so, the nature of the conflict and how the 

23 conflict is being addressed. 

24 ‘‘(d) AUTHORITY TO ENGAGE INDEPENDENT LEGAL

25 COUNSEL AND OTHER ADVISERS.— 


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1 ‘‘(1) IN GENERAL.—The compensation com2 mittee of an issuer, in its capacity as a committee 

3 of the board of directors, may, in its sole discretion, 

4 retain and obtain the advice of independent legal 

5 counsel and other advisers. 

6 ‘‘(2) DIRECT RESPONSIBILITY OF COMPENSA7 TION COMMITTEE.—The compensation committee of 

8 an issuer shall be directly responsible for the ap9 pointment, compensation, and oversight of the work 

10 of independent legal counsel and other advisers. 

11 ‘‘(3) RULE OF CONSTRUCTION.—This sub12 section may not be construed— 

13 ‘‘(A) to require a compensation committee 

14 to implement or act consistently with the advice 

15 or recommendations of independent legal coun16 sel or other advisers under this subsection; or 

17 ‘‘(B) to affect the ability or obligation of a 

18 compensation committee to exercise its own 

19 judgment in fulfillment of the duties of the 

20 compensation committee. 

21 ‘‘(e) COMPENSATION OF COMPENSATION CONSULT22 ANTS, INDEPENDENT LEGAL COUNSEL, AND OTHER AD23 VISERS.—Each issuer shall provide for appropriate fund24 ing, as determined by the compensation committee in its 


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1 capacity as a committee of the board of directors, for pay2 ment of reasonable compensation— 

3 ‘‘(1) to a compensation consultant; and 

4 ‘‘(2) to independent legal counsel or any other 

5 adviser to the compensation committee. 

6 ‘‘(f) COMMISSION RULES.— 

7 ‘‘(1) IN GENERAL.—Not later than 360 days 

8 after the date of enactment of this section, the Com9 mission shall, by rule, direct the national securities 

10 exchanges and national securities associations to 

11 prohibit the listing of any security of an issuer that 

12 is not in compliance with the requirements of this 

13 section. 

14 ‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The 

15 rules of the Commission under paragraph (1) shall 

16 provide for appropriate procedures for an issuer to 

17 have a reasonable opportunity to cure any defects 

18 that would be the basis for the prohibition under 

19 paragraph (1), before the imposition of such prohibi20 tion. 

21 ‘‘(3) EXEMPTION AUTHORITY.— 

22 ‘‘(A) IN GENERAL.—The rules of the Com23 mission under paragraph (1) shall permit a na24 tional securities exchange or a national securi25 ties association to exempt a category of issuers 


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1 from the requirements under this section, as 

2 the national securities exchange or the national 

3 securities association determines is appropriate. 

4 ‘‘(B) CONSIDERATIONS.—In determining 

5 appropriate exemptions under subparagraph 

6 (A), the national securities exchange or the na7 tional securities association shall take into ac8 count the potential impact of the requirements 

9 of this section on smaller reporting issuers.’’. 

10 SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES. 

11 (a) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 

12 Section 14 of the Securities Exchange Act of 1934 (15 

13 U.S.C. 78n), as amended by this title, is amended by add14 ing at the end the following: 

15 ‘‘(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 

16 The Commission shall, by rule, require each issuer to dis17 close in any proxy or consent solicitation material for an 

18 annual meeting of the shareholders of the issuer a clear 

19 description of any compensation required to be disclosed 

20 by the issuer under section 229.402 of title 17, Code of 

21 Federal Regulations (or any successor thereto), including 

22 information that shows the relationship between executive 

23 compensation actually paid and the financial performance 

24 of the issuer, taking into account any change in the value 

25 of the shares of stock and dividends of the issuer and any 


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1 distributions. The disclosure under this subsection may in2 clude a graphic representation of the information required 

3 to be disclosed.’’. 

4 (b) ADDITIONAL DISCLOSURE REQUIREMENTS.— 

5 (1) IN GENERAL.—The Commission shall 

6 amend section 229.402 of title 17, Code of Federal 

7 Regulations, to require each issuer to disclose in any 

8 filing of the issuer described in section 229.10(a) of 

9 title 17, Code of Federal Regulations (or any suc10 cessor thereto)— 

11 (A) the median of the annual total com12 pensation of all employees of the issuer, except 

13 the chief executive officer (or any equivalent po14 sition) of the issuer; 

15 (B) the annual total compensation of the 

16 chief executive officer (or any equivalent posi17 tion) of the issuer; and 

18 (C) the ratio of the amount described in 

19 subparagraph (A) to the amount described in 

20 subparagraph (B). 

21 (2) TOTAL COMPENSATION.—For purposes of 

22 this subsection, the total compensation of an em23 ployee of an issuer shall be determined in accordance 

24 with section 229.402(c)(2)(x) of title 17, Code of 


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1 Federal Regulations, as in effect on the day before 

2 the date of enactment of this Act. 

3 SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COM4 PENSATION. 

5 The Securities Exchange Act of 1934 is amended by 

6 inserting after section 10C, as added by section 952, the 

7 following: 

8 ‘‘SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COM9 PENSATION POLICY. 

10 ‘‘(a) LISTING STANDARDS.—The Commission shall, 

11 by rule, direct the national securities exchanges and na12 tional securities associations to prohibit the listing of any 

13 security of an issuer that does not comply with the re14 quirements of this section. 

15 ‘‘(b) RECOVERY OF FUNDS.—The rules of the Com16 mission under subsection (a) shall require each issuer to 

17 develop and implement a policy providing— 

18 ‘‘(1) for disclosure of the policy of the issuer on 

19 incentive-based compensation that is based on finan20 cial information required to be reported under the 

21 securities laws; and 

22 ‘‘(2) that, in the event that the issuer is re23 quired to prepare an accounting restatement due to 

24 the material noncompliance of the issuer with any fi25 nancial reporting requirement under the securities 


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1 laws, the issuer will recover from any current or 

2 former executive officer of the issuer who received 

3 incentive-based compensation (including stock op4 tions awarded as compensation) during the 3-year 

5 period preceding the date on which the issuer is re6 quired to prepare an accounting restatement, based 

7 on the erroneous data, in excess of what would have 

8 been paid to the executive officer under the account9 ing restatement.’’. 

10 SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIREC11 TOR HEDGING. 

12 Section 14 of the Securities Exchange Act of 1934 

13 (15 U.S.C. 78n), as amended by this title, is amended by 

14 adding at the end the following: 

15 ‘‘(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND

16 DIRECTORS.—The Commission shall, by rule, require each 

17 issuer to disclose in any proxy or consent solicitation mate18 rial for an annual meeting of the shareholders of the issuer 

19 whether any employee or member of the board of directors 

20 of the issuer, or any designee of such employee or member, 

21 is permitted to purchase financial instruments (including 

22 prepaid variable forward contracts, equity swaps, collars, 

23 and exchange funds) that are designed to hedge or offset 

24 any decrease in the market value of equity securities— 


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1 ‘‘(1) granted to the employee or member of the 

2 board of directors by the issuer as part of the com3 pensation of the employee or member of the board 

4 of directors; or 

5 ‘‘(2) held, directly or indirectly, by the employee 

6 or member of the board of directors.’’. 

7 SEC. 956. EXCESSIVE COMPENSATION BY HOLDING COMPA8 NIES OF DEPOSITORY INSTITUTIONS. 

9 Section 5 of the Bank Holding Company Act of 1956 

10 (12 U.S.C. 1844) is amended by adding at the end the 

11 following: 

12 ‘‘(i) EXCESSIVE COMPENSATION.— 

13 ‘‘(1) IN GENERAL.—Not later than 180 days 

14 after the transfer date established under section 311 

15 of the Restoring American Financial Stability Act of 

16 2010, the Board of Governors, in consultation with 

17 the Comptroller of the Currency and the Federal 

18 Deposit Insurance Corporation, shall, by rule, estab19 lish standards prohibiting as an unsafe and unsound 

20 practice any compensation plan of a bank holding 

21 company that— 

22 ‘‘(A) provides an executive officer, em23 ployee, director, or principal shareholder of the 

24 bank holding company with excessive compensa25 tion, fees, or benefits; or 


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1 ‘‘(B) could lead to material financial loss 

2 to the bank holding company. 

3 ‘‘(2) CONSIDERATIONS.—In establishing the 

4 standards under paragraph (1), the Board of Gov5 ernors shall take into consideration the compensa6 tion standards described in section 39(c) of the Fed7 eral Deposit Insurance Act (12 U.S.C. 1831p–1(c)) 

8 and the views and recommendations of the Comp9 troller of the Currency and the Federal Deposit In10 surance Corporation.’’. 

11 SEC. 957. VOTING BY BROKERS. 

12 Section 6(b) of the Securities Exchange Act of 1934 

13 (15 U.S.C. 78f(b)) is amended— 

14 (1) in paragraph (9)— 

15 (A) in subparagraph (A), by redesignating 

16 clauses (i) through (v) as subclauses (I) 

17 through (V), respectively, and adjusting the 

18 margins accordingly; 

19 (B) by redesignating subparagraphs (A) 

20 through (D) as clauses (i) through (iv), respec21 tively, and adjusting the margins accordingly; 

22 (C) by inserting ‘‘(A)’’ after ‘‘(9)’’; and 

23 (D) in the matter immediately following 

24 clause (iv), as so redesignated, by striking ‘‘As 

25 used’’ and inserting the following: 


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1 ‘‘(B) As used’’. 

2 (2) by adding at the end the following: 

3 ‘‘(10)(A) The rules of the exchange prohibit 

4 any member that is not the beneficial owner of a se5 curity registered under section 12 from granting a 

6 proxy to vote the security in connection with a 

7 shareholder vote described in subparagraph (B), un8 less the beneficial owner of the security has in9 structed the member to vote the proxy in accordance 

10 with the voting instructions of the beneficial owner. 

11 ‘‘(B) A shareholder vote described in this sub12 paragraph is a shareholder vote with respect to the 

13 election of a member of the board of directors of an 

14 issuer, executive compensation, or any other signifi15 cant matter, as determined by the Commission, by 

16 rule. 

17 ‘‘(C) Nothing in this paragraph shall be con18 strued to prohibit a national securities exchange 

19 from prohibiting a member that is not the beneficial 

20 owner of a security registered under section 12 from 

21 granting a proxy to vote the security in connection 

22 with a shareholder vote not described in subpara23 graph (A).’’. 


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1 Subtitle F—Improvements to the 

2 Management of the Securities 

3 and Exchange Commission 

4 SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SU5 PERVISORY CONTROLS. 

6 (a) ANNUAL REPORTS AND CERTIFICATION.—Not 

7 later than 90 days after the end of each fiscal year, the 

8 Commission shall submit a report to the Committee on 

9 Banking, Housing, and Urban Affairs of the Senate and 

10 the Committee on Financial Services of the House of Rep11 resentatives on the conduct by the Commission of exami12 nations of registered entities, enforcement investigations, 

13 and review of corporate financial securities filings. 

14 (b) CONTENTS OF REPORTS.—Each report under 

15 subsection (a) shall contain— 

16 (1) an assessment, as of the end of the most re17 cent fiscal year, of the effectiveness of— 

18 (A) the internal supervisory controls of the 

19 Commission; and 

20 (B) the procedures of the Commission ap21 plicable to the staff of the Commission who per22 form examinations of registered entities, en23 forcement investigations, and reviews of cor24 porate financial securities filings; 


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1 (2) a certification that the Commission has ade2 quate internal supervisory controls to carry out the 

3 duties of the Commission described in paragraph 

4 (1)(B); and 

5 (3) a summary by the Comptroller General of 

6 the United States of the review carried out under 

7 subsection (d). 

8 (c) CERTIFICATION.— 

9 (1) SIGNATURE.—The certification under sub10 section (b)(2) shall be signed by the Director of the 

11 Division of Enforcement, the Director of the Divi12 sion of Corporation Finance, and the Director of the 

13 Office of Compliance Inspections and Examinations 

14 (or the head of any successor division or office). 

15 (2) CONTENT OF CERTIFICATION.—Each indi16 vidual described in paragraph (1) shall certify that 

17 the individual— 

18 (A) is directly responsible for establishing 

19 and maintaining the internal supervisory con20 trols of the Division or Office of which the indi21 vidual is the head; 

22 (B) is knowledgeable about the internal su23 pervisory controls of the Division or Office of 

24 which the individual is the head; 


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1 (C) has evaluated the effectiveness of the 

2 internal supervisory controls during the 90-day 

3 period ending on the final day of the fiscal year 

4 to which the report relates; and 

5 (D) has disclosed to the Commission any 

6 significant deficiencies in the design or oper7 ation of internal supervisory controls that could 

8 adversely affect the ability of the Division or 

9 Office to consistently conduct inspections, or in10 vestigations, or reviews of filings with profes11 sional competence and integrity. 

12 (d) REVIEW BY THE COMPTROLLER GENERAL.—Not 

13 later than the date on which the first report is submitted 

14 under subsection (a), the Comptroller General of the 

15 United States shall submit to the Committee on Banking, 

16 Housing, and Urban Affairs of the Senate and the Com17 mittee on Financial Services of the House of Representa18 tives an initial report that contains a review of the ade19 quacy and effectiveness of the internal supervisory control 

20 structure and procedures described in subsection (b)(1). 

21 SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGE22 MENT. 

23 (a) TRIENNIAL REPORT REQUIRED.—Once every 3 

24 years, the Comptroller General of the United States shall 

25 submit a report to the Committee on Banking, Housing, 


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1 and Urban Affairs of the Senate and the Committee on 

2 Financial Services of the House of Representatives on the 

3 quality of personnel management by the Commission. 

4 (b) CONTENTS OF REPORT.—Each report under sub5 section (a) shall include— 

6 (1) an evaluation of— 

7 (A) the effectiveness of supervisors in 

8 using the skills, talents, and motivation of the 

9 employees of the Commission to achieve the 

10 goals of the Commission; 

11 (B) the criteria for promoting employees of 

12 the Commission to supervisory positions; 

13 (C) the fairness of the application of the 

14 promotion criteria to the decisions of the Com15 mission; 

16 (D) the competence of the professional 

17 staff of the Commission; 

18 (E) the efficiency of communication be19 tween the units of the Commission regarding 

20 the work of the Commission (including commu21 nication between divisions and between subunits 

22 of a division) and the efforts by the Commission 

23 to promote such communication; 

24 (F) the turnover within subunits of the 

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1 pervisors whose subordinates have an unusually 

2 high rate of turnover; 

3 (G) whether there are excessive numbers of 

4 low-level, mid-level, or senior-level managers; 

5 (H) any initiatives of the Commission that 

6 increase the competence of the staff of the 

7 Commission; 

8 (I) the actions taken by the Commission 

9 regarding employees of the Commission who 

10 have failed to perform their duties; and 

11 (J) such other factors relating to the man12 agement of the Commission as the Comptroller 

13 General determines are appropriate; 

14 (2) an evaluation of any improvements made 

15 with respect to the areas described in paragraph (1) 

16 since the date of submission of the previous report; 

17 and 

18 (3) recommendations for how the Commission 

19 can use the human resources of the Commission 

20 more effectively and efficiently to carry out the mis21 sion of the Commission. 

22 (c) CONSULTATION.—In preparing the report under 

23 subsection (a), the Comptroller General shall consult with 

24 current employees of the Commission, retired employees 

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1 spector General of the Commission, persons that have 

2 business before the Commission, any union representing 

3 the employees of the Commission, private management 

4 consultants, academics, and any other source that the 

5 Comptroller General deems appropriate. 

6 (d) REPORT BY COMMISSION.—Not later than 90 

7 days after the date on which the Comptroller General sub8 mits each report under subsection (a), the Commission 

9 shall submit to the Committee on Banking, Housing, and 

10 Urban Affairs of the Senate and the Committee on Finan11 cial Services of the House of Representatives a report de12 scribing the actions taken by the Commission in response 

13 to the recommendations contained in the report under 

14 subsection (a). 

15 (e) REIMBURSEMENTS FOR COST OF REPORTS.— 

16 (1) REIMBURSEMENTS REQUIRED.—The Com17 mission shall reimburse the Government Account18 ability Office for the full cost of making the reports 

19 under this section, as billed therefor by the Comp20 troller General. 

21 (2) CREDITING AND USE OF REIMBURSE22 MENTS.—Such reimbursements shall— 

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1 countability Office’’ current when the payment 

2 is received; and 

3 (B) remain available until expended. 

4 SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT. 

5 (a) REPORTS OF COMMISSION.— 

6 (1) ANNUAL REPORTS REQUIRED.—Not later 

7 than 6 months after the end of each fiscal year, the 

8 Commission shall publish and submit to Congress a 

9 report that— 

10 (A) describes the responsibility of the man11 agement of the Commission for establishing and 

12 maintaining an adequate internal control struc13 ture and procedures for financial reporting; and 

14 (B) contains an assessment of the effec15 tiveness of the internal control structure and 

16 procedures for financial reporting of the Com17 mission during that fiscal year. 

18 (2) ATTESTATION.—The reports required under 

19 paragraph (1) shall be attested to by the Chairman 

20 and chief financial officer of the Commission. 

21 (b) REPORT BY COMPTROLLER GENERAL.— 

22 (1) REPORT REQUIRED.—Not later than 6 

23 months after the end of the first fiscal year after the 

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1 eral of the United States shall submit a report to 

2 Congress that assesses— 

3 (A) the effectiveness of the internal control 

4 structure and procedures of the Commission for 

5 financial reporting; and 

6 (B) the assessment of the Commission 

7 under subsection (a)(1)(B). 

8 (2) ATTESTATION.—The Comptroller General 

9 shall attest to, and report on, the assessment made 

10 by the Commission under subsection (a). 

11 (c) REIMBURSEMENTS FOR COST OF REPORTS.— 

12 (1) REIMBURSEMENTS REQUIRED.—The Com13 mission shall reimburse the Government Account14 ability Office for the full cost of making the reports 

15 under subsection (b), as billed therefor by the Comp16 troller General. 

17 (2) CREDITING AND USE OF REIMBURSE18 MENTS.—Such reimbursements shall— 

19 (A) be credited to the appropriation ac20 count ‘‘Salaries and Expenses, Government Ac21 countability Office’’ current when the payment 

22 is received; and 

23 (B) remain available until expended. 


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1 SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURI2 TIES ASSOCIATIONS. 

3 (a) REPORT REQUIRED.—Not later than 2 years 

4 after the date of enactment of this Act, and every 3 years 

5 thereafter, the Comptroller General of the United States 

6 shall submit to the Committee on Banking, Housing, and 

7 Urban Affairs of the Senate and the Committee on Finan8 cial Services of the House of Representatives a report that 

9 includes an evaluation of the oversight by the Commission 

10 of national securities associations registered under section 

11 15A of the Securities Exchange Act of 1934 (15 U.S.C. 

12 78o–3) with respect to— 

13 (1) the governance of such national securities 

14 associations, including the identification and man15 agement of conflicts of interest by such national se16 curities associations, together with an analysis of the 

17 impact of any conflicts of interest on the regulatory 

18 enforcement or rulemaking by such national securi19 ties associations; 

20 (2) the examinations carried out by the national 

21 securities associations, including the expertise of the 

22 examiners; 

23 (3) the executive compensation practices of such 

24 national securities associations; 

25 (4) the arbitration services provided by the na26 tional securities associations; 


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1 (5) the review performed by national securities 

2 associations of advertising by the members of the 

3 national securities associations; 

4 (6) the cooperation with and assistance to State 

5 securities administrators by the national securities 

6 associations to promote investor protection; 

7 (7) how the funding of national securities asso8 ciations is used to support the mission of the na9 tional securities associations, including— 

10 (A) the methods of funding; 

11 (B) the sufficiency of funds; 

12 (C) how funds are invested by the national 

13 securities association pending use; and 

14 (D) the impact of the methods, sufficiency, 

15 and investment of funds on regulatory enforce16 ment by the national securities associations; 

17 (8) the policies regarding the employment of 

18 former employees of national securities associations 

19 by regulated entities; 

20 (9) the ongoing effectiveness of the rules of the 

21 national securities associations in achieving the goals 

22 of the rules; 

23 (10) the transparency of governance and activi24 ties of the national securities associations; and 


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1 (11) any other issue that has an impact, as de2 termined by the Comptroller General, on the effec3 tiveness of such national securities associations in 

4 performing their mission and in dealing fairly with 

5 investors and members; 

6 (b) REIMBURSEMENTS FOR COST OF REPORTS.— 

7 (1) REIMBURSEMENTS REQUIRED.—The Com8 mission shall reimburse the Government Account9 ability Office for the full cost of making the reports 

10 under subsection (a), as billed therefor by the Comp11 troller General. 

12 (2) CREDITING AND USE OF REIMBURSE13 MENTS.—Such reimbursements shall— 

14 (A) be credited to the appropriation ac15 count ‘‘Salaries and Expenses, Government Ac16 countability Office’’ current when the payment 

17 is received; and 

18 (B) remain available until expended. 

19 SEC. 965. COMPLIANCE EXAMINERS. 

20 Section 4 of the Securities Exchange Act of 1934 (15 

21 U.S.C. 78d) is amended by adding at the end the fol22 lowing: 

23 ‘‘(h) EXAMINERS.— 

24 ‘‘(1) DIVISION OF TRADING AND MARKETS.— 

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1 mission, or any successor organizational unit, shall 

2 have a staff of examiners who shall— 

3 ‘‘(A) perform compliance inspections and 

4 examinations of entities under the jurisdiction 

5 of that Division; and 

6 ‘‘(B) report to the Director of that Divi7 sion. 

8 ‘‘(2) DIVISION OF INVESTMENT MANAGE9 MENT.—The Division of Investment Management of 

10 the Commission, or any successor organizational 

11 unit, shall have a staff of examiners who shall— 

12 ‘‘(A) perform compliance inspections and 

13 examinations of entities under the jurisdiction 

14 of that Division; and 

15 ‘‘(B) report to the Director of that Divi16 sion.’’. 

17 SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE 

18 COMMISSION. 

19 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

20 et seq.) is amended by inserting after section 4C (15 

21 U.S.C. 78d–3) the following: 

22 ‘‘SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL. 

23 ‘‘(a) SUGGESTION SUBMISSIONS BY COMMISSION EM24 PLOYEES.— 


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1 ‘‘(1) HOTLINE ESTABLISHED.—The Inspector 

2 General of the Commission shall establish and main3 tain a telephone hotline or other electronic means for 

4 the receipt of— 

5 ‘‘(A) suggestions by employees of the Com6 mission for improvements in the work effi7 ciency, effectiveness, and productivity, and the 

8 use of the resources, of the Commission; and 

9 ‘‘(B) allegations by employees of the Com10 mission of waste, abuse, misconduct, or mis11 management within the Commission. 

12 ‘‘(2) CONFIDENTIALITY.—The Inspector Gen13 eral shall maintain as confidential— 

14 ‘‘(A) the identity of any individual who 

15 provides information by the means established 

16 under paragraph (1), unless the individual re17 quests otherwise, in writing; and 

18 ‘‘(B) at the request of any such individual, 

19 any specific information provided by the indi20 vidual. 

21 ‘‘(b) CONSIDERATION OF REPORTS.—The Inspector 

22 General shall consider any suggestions or allegations re23 ceived by the means established under subsection (a)(1), 

24 and shall recommend appropriate action in relation to 

25 such suggestions or allegations. 


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1 ‘‘(c) RECOGNITION.—The Inspector General may rec2 ognize any employee who makes a suggestion under sub3 section (a)(1) (or by other means) that would or does— 

4 ‘‘(1) increase the work efficiency, effectiveness, 

5 or productivity of the Commission; or 

6 ‘‘(2) reduce waste, abuse, misconduct, or mis7 management within the Commission. 

8 ‘‘(d) REPORT.—The Inspector General of the Com9 mission shall submit to Congress an annual report con10 taining a description of— 

11 ‘‘(1) the nature, number, and potential benefits 

12 of any suggestions received under subsection (a); 

13 ‘‘(2) the nature, number, and seriousness of 

14 any allegations received under subsection (a); 

15 ‘‘(3) any recommendations made or actions 

16 taken by the Inspector General in response to sub17 stantiated allegations received under subsection (a); 

18 and 

19 ‘‘(4) any action the Commission has taken in 

20 response to suggestions or allegations received under 

21 subsection (a). 

22 ‘‘(e) FUNDING.—The activities of the Inspector Gen23 eral under this subsection shall be funded by the Securities 

24 and Exchange Commission Investor Protection Fund es25 tablished under section 21F.’’. 


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1 Subtitle G—Strengthening 

2 Corporate Governance 

3 SEC. 971. ELECTION OF DIRECTORS BY MAJORITY VOTE IN 

4 UNCONTESTED ELECTIONS. 

5 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

6 et seq.) is amended by inserting after section 14A, as 

7 added by this title, the following: 

8 ‘‘SEC. 14B. CORPORATE GOVERNANCE. 

9 ‘‘(a) CORPORATE GOVERNANCE STANDARDS.— 

10 ‘‘(1) LISTING STANDARDS.— 

11 ‘‘(A) IN GENERAL.—Not later than 1 year 

12 after the date of enactment of this subsection, 

13 the Commission shall, by rule, direct the na14 tional securities exchanges and national securi15 ties associations to prohibit the listing of any 

16 security of an issuer that is not in compliance 

17 with any of the requirements of this subsection. 

18 ‘‘(B) OPPORTUNITY TO COMPLY AND

19 CURE.—The rules established under this para20 graph shall allow an issuer to have an oppor21 tunity to come into compliance with the require22 ments of this subsection, and to cure any defect 

23 that would be the basis for a prohibition under 

24 subparagraph (A), before the imposition of such 

25 prohibition. 


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1 ‘‘(C) AUTHORITY TO EXEMPT.—The Com2 mission may, by rule or order, exempt an issuer 

3 from any or all of the requirements of this sub4 section and the rules issued under this sub5 section, based on the size of the issuer, the 

6 market capitalization of the issuer, the number 

7 of shareholders of record of the issuer, or any 

8 other criteria, as the Commission deems nec9 essary and appropriate in the public interest or 

10 for the protection of investors. 

11 ‘‘(2) COMMISSION RULES ON ELECTIONS.—In 

12 an election for membership on the board of directors 

13 of an issuer— 

14 ‘‘(A) that is uncontested, each director who 

15 receives a majority of the votes cast shall be 

16 deemed to be elected; 

17 ‘‘(B) that is contested, if the number of 

18 nominees exceeds the number of directors to be 

19 elected, each director shall be elected by the 

20 vote of a plurality of the shares represented at 

21 a meeting and entitled to vote; and 

22 ‘‘(C) if a director of an issuer receives less 

23 than a majority of the votes cast in an 

24 uncontested election— 


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1 ‘‘(i) the director shall tender the res2 ignation of the director to the board of di3 rectors; and 

4 ‘‘(ii) the board of directors— 

5 ‘‘(I) shall— 

6 ‘‘(aa) accept the resignation 

7 of the director; 

8 ‘‘(bb) determine a date on 

9 which the resignation will take 

10 effect, within a reasonable period 

11 of time, as established by the 

12 Commission; and 

13 ‘‘(cc) make the date under 

14 item (bb) public within a reason15 able period of time, as estab16 lished by the Commission; or 

17 ‘‘(II) shall, upon a unanimous 

18 vote of the board, decline to accept 

19 the resignation and, not later than 30 

20 days after the date of the vote (or 

21 within such shorter period as the 

22 Commission may establish), make 

23 public, together with a discussion of 

24 the analysis used in reaching the con25 clusion, the specific reasons that— 


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1 ‘‘(aa) the board chose not to 

2 accept the resignation; and 

3 ‘‘(bb) the decision was in the 

4 best interests of the issuer and 

5 the shareholders of the issuer.’’. 

6 SEC. 972. PROXY ACCESS. 

7 (a) PROXY ACCESS.—Section 14(a) of the Securities 

8 Exchange Act of 1934 (15 U.S.C. 78n(a)) is amended— 

9 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(2) The rules and regulations prescribed by the 

12 Commission under paragraph (1) may include— 

13 ‘‘(A) a requirement that a solicitation of proxy, 

14 consent, or authorization by (or on behalf of) an 

15 issuer include a nominee submitted by a shareholder 

16 to serve on the board of directors of the issuer; and 

17 ‘‘(B) a requirement that an issuer follow a cer18 tain procedure in relation to a solicitation described 

19 in subparagraph (A).’’. 

20 (b) REGULATIONS.—The Commission may issue rules 

21 permitting the use by shareholders of proxy solicitation 

22 materials supplied by an issuer of securities for the pur23 pose of nominating individuals to membership on the 

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1 ditions as the Commission determines are in the interests 

2 of shareholders and for the protection of investors. 

3 SEC. 973. DISCLOSURES REGARDING CHAIRMAN AND CEO 

4 STRUCTURES. 

5 Section 14B of the Securities Exchange Act of 1934, 

6 as added by section 971, is amended by adding at the end 

7 the following: 

8 ‘‘(b) DISCLOSURES REGARDING CHAIRMAN AND CEO 

9 STRUCTURES.—Not later than 180 days after the date of 

10 enactment of this subsection, the Commission shall issue 

11 rules that require an issuer to disclose in the annual proxy 

12 sent to investors the reasons why the issuer has chosen— 

13 ‘‘(1) the same person to serve as chairman of 

14 the board of directors and chief executive officer (or 

15 in equivalent positions); or 

16 ‘‘(2) different individuals to serve as chairman 

17 of the board of directors and chief executive officer 

18 (or in equivalent positions of the issuer).’’. 

19 Subtitle H—Municipal Securities 

20 SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND 

21 CHANGES TO THE BOARD OF THE MSRB. 

22 (a) REGISTRATION OF MUNICIPAL SECURITIES

23 DEALERS AND MUNICIPAL ADVISORS.—Section 15B(a) of 

24 the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(a)) 

25 is amended— 


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1 (1) in paragraph (1)— 

2 (A) by inserting ‘‘(A)’’ after ‘‘(1)’’; and 

3 (B) by adding at the end the following: 

4 ‘‘(B) It shall be unlawful for a municipal 

5 advisor to provide advice to or on behalf of a 

6 municipal entity or obligated person with re7 spect to municipal financial products or the 

8 issuance of municipal securities, or to under9 take a solicitation of a municipal entity or obli10 gated person, unless the municipal advisor is 

11 registered in accordance with this subsection.’’; 

12 (2) in paragraph (2), by inserting ‘‘or municipal 

13 advisor’’ after ‘‘municipal securities dealer’’ each 

14 place that term appears; 

15 (3) in paragraph (3), by inserting ‘‘or municipal 

16 advisor’’ after ‘‘municipal securities dealer’’ each 

17 place that term appears; 

18 (4) in paragraph (4), by striking ‘‘dealer, or 

19 municipal securities dealer or class of brokers, deal20 ers, or municipal securities dealers’’ and inserting 

21 ‘‘dealer, municipal securities dealer, or municipal ad22 visor, or class of brokers, dealers, municipal securi23 ties dealers, or municipal advisors’’; and 

24 (5) by adding at the end the following: 


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1 ‘‘(5) No municipal advisor shall make use of the 

2 mails or any means or instrumentality of interstate 

3 commerce to provide advice to or on behalf of a mu4 nicipal entity or obligated person with respect to mu5 nicipal financial products, the issuance of municipal 

6 securities, or participation in the issuance of munic7 ipal securities, or to undertake a solicitation of a 

8 municipal entity or obligated person, in connection 

9 with which such municipal advisor engages in any 

10 fraudulent, deceptive, or manipulative act or prac11 tice.’’. 

12 (b) MUNICIPAL SECURITIES RULEMAKING BOARD.— 

13 Section 15B(b) of the Securities Exchange Act of 1934 

14 (15 U.S.C. 78o–4(b)) is amended— 

15 (1) in paragraph (1)— 

16 (A) in the first sentence, by striking ‘‘Not 

17 later than’’ and all that follows through ‘‘ap18 pointed by the Commission’’ and inserting ‘‘The 

19 Municipal Securities Rulemaking Board shall be 

20 composed of 15 members, or such other number 

21 of members as specified by rules of the Board 

22 pursuant to paragraph (2)(B),’’; 

23 (B) by striking the second sentence and in24 serting the following: ‘‘The members of the 

25 Board shall serve as members for a term of 3 


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1 years or for such other terms as specified by 

2 rules of the Board pursuant to paragraph 

3 (2)(B), and shall consist of (A) 8 individuals 

4 who are not associated with any broker, dealer, 

5 municipal securities dealer, or municipal advisor 

6 (other than by reason of being under common 

7 control with, or indirectly controlling, any 

8 broker or dealer which is not a municipal secu9 rities broker or municipal securities dealer), at 

10 least 1 of whom shall be representative of insti11 tutional or retail investors in municipal securi12 ties, at least 1 of whom shall be representative 

13 of municipal entities, and at least 1 of whom 

14 shall be a member of the public with knowledge 

15 of or experience in the municipal industry 

16 (which members are hereinafter referred to as 

17 ‘public representatives’); and (B) 7 individuals 

18 who are associated with a broker, dealer, mu19 nicipal securities dealer, or municipal advisor, 

20 including at least 1 individual who is associated 

21 with and representative of brokers, dealers, or 

22 municipal securities dealers that are not banks 

23 or subsidiaries or departments or divisions of 

24 banks (which members are hereinafter referred 

25 to as ‘broker-dealer representatives’), at least 1 


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1 individual who is associated with and represent2 ative of municipal securities dealers which are 

3 banks or subsidiaries or departments or divi4 sions of banks (which members are hereinafter 

5 referred to as ‘bank representatives’), and at 

6 least 1 individual who is associated with a mu7 nicipal advisor (which member is hereinafter re8 ferred to as the ‘advisor representative’).’’; and 

9 (C) in the third sentence, by striking ‘‘ini10 tial’’; 

11 (2) in paragraph (2)— 

12 (A) in the matter preceding subparagraph 

13 (A)— 

14 (i) by inserting before the period at 

15 the end of the first sentence the following: 

16 ‘‘and advice provided to or on behalf of 

17 municipal entities or obligated persons by 

18 brokers, dealers, municipal securities deal19 ers, and municipal advisors with respect to 

20 municipal financial products, the issuance 

21 of municipal securities, or participation in 

22 the issuance of municipal securities, and 

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1 ers, municipal securities dealers, and mu2 nicipal advisors’’; and 

3 (ii) by striking the second sentence; 

4 (B) in subparagraph (A)— 

5 (i) in the matter preceding clause 

6 (i)— 

7 (I) by inserting ‘‘, and no broker, 

8 dealer, municipal securities dealer, or 

9 municipal advisor shall provide advice 

10 to or on behalf of a municipal entity 

11 or obligated person with respect to 

12 municipal financial products, the 

13 issuance of municipal securities, or 

14 participation in the issuance of munic15 ipal securities’’ after ‘‘sale of, any mu16 nicipal security’’; and 

17 (II) by inserting ‘‘and municipal 

18 entities or obligated persons’’ after 

19 ‘‘protection of investors’’; 

20 (ii) in clause (i), by striking ‘‘munic21 ipal securities brokers and municipal secu22 rities dealers’’ each place that term ap23 pears and inserting ‘‘municipal securities 

24 brokers, municipal securities dealers, and 

25 municipal advisors’’; 


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1 (iii) in clause (ii), by adding ‘‘and’’ at 

2 the end; 

3 (iv) in clause (iii), by striking ‘‘; and’’ 

4 and inserting a period; and 

5 (v) by striking clause (iv); 

6 (C) in subparagraph (B), by striking 

7 ‘‘nominations and elections’’ and all that follows 

8 through ‘‘specify’’ and inserting ‘‘nominations 

9 and elections of public representatives, broker10 dealer representatives, bank representatives, 

11 and advisor representatives. Such rules shall 

12 provide that the membership of the Board shall 

13 at all times be as evenly divided in number as 

14 possible between entities or individuals who are 

15 subject to regulation by the Board and entities 

16 or individuals not subject to regulation by the 

17 Board, provided, however, that a majority of 

18 the members of the Board shall at all times be 

19 public representatives. Such rules shall also 

20 specify’’; 

21 (D) in subparagraph (C)— 

22 (i) by inserting ‘‘and municipal finan23 cial products’’ after ‘‘municipal securities’’ 

24 the first two times that term appears; 


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1 (ii) by inserting ‘‘, municipal entities, 

2 obligated persons,’’ before ‘‘and the public 

3 interest’’; 

4 (iii) by striking ‘‘between’’ and insert5 ing ‘‘among’’; 

6 (iv) by striking ‘‘issuers, municipal se7 curities brokers, or municipal securities 

8 dealers, to fix’’ and inserting ‘‘municipal 

9 entities, obligated persons, municipal secu10 rities brokers, municipal securities dealers, 

11 or municipal advisors, to fix’’; and 

12 (v) by striking ‘‘brokers or municipal 

13 securities dealers, to regulate’’ and insert14 ing ‘‘brokers, municipal securities dealers, 

15 or municipal advisors, to regulate’’; 

16 (E) in subparagraph (D)— 

17 (i) by inserting ‘‘and advice con18 cerning municipal financial products’’ after 

19 ‘‘transactions in municipal securities’’; 

20 (ii) by striking ‘‘That no’’ and insert21 ing ‘‘that no’’; 

22 (iii) by inserting ‘‘municipal advisor,’’ 

23 before ‘‘or person associated’’; and 

24 (iv) by striking ‘‘a municipal securi25 ties broker or municipal securities dealer 


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1 may be compelled’’ and inserting ‘‘a mu2 nicipal securities broker, municipal securi3 ties dealer, or municipal advisor may be 

4 compelled’’; 

5 (F) in subparagraph (E)— 

6 (i) by striking ‘‘municipal securities 

7 brokers and municipal securities dealers’’ 

8 and inserting ‘‘municipal securities bro9 kers, municipal securities dealers, and mu10 nicipal advisors’’; and 

11 (ii) by striking ‘‘municipal securities 

12 broker or municipal securities dealer’’ and 

13 inserting ‘‘municipal securities broker, mu14 nicipal securities dealer, or municipal advi15 sor’’; 

16 (G) in subparagraph (G), by striking ‘‘mu17 nicipal securities brokers and municipal securi18 ties dealers’’ and inserting ‘‘municipal securities 

19 brokers, municipal securities dealers, and mu20 nicipal advisors’’; 

21 (H) in subparagraph (J)— 

22 (i) by striking ‘‘municipal securities 

23 broker and each municipal securities deal24 er’’ and inserting ‘‘municipal securities 


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1 broker, municipal securities dealer, and 

2 municipal advisor’’; and 

3 (ii) by striking the period at the end 

4 of the second sentence and inserting ‘‘, 

5 which may include charges for failure to 

6 submit to the Board required information 

7 or documents to any information system 

8 operated by the Board in a full, accurate, 

9 or timely manner, or any other failure to 

10 comply with the rules of the Board.’’; 

11 (I) in subparagraph (K)— 

12 (i) by inserting ‘‘broker, dealer, or’’ 

13 before ‘‘municipal securities dealer’’ each 

14 place that term appears; and 

15 (ii) by striking ‘‘municipal securities 

16 investment portfolio’’ and inserting ‘‘re17 lated account of a broker, dealer, or mu18 nicipal securities dealer’’; and 

19 (J) by adding at the end the following: 

20 ‘‘(L) provide continuing education require21 ments for municipal advisors. 

22 ‘‘(M) provide professional standards. 

23 ‘‘(N) not impose a regulatory burden on 

24 small municipal advisors that is not necessary 

25 or appropriate in the public interest and for the 


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1 protection of investors, municipal entities, and 

2 obligated persons.’’; 

3 (3) by redesignating paragraph (3) as para4 graph (7); and 

5 (4) by inserting after paragraph (2) the fol6 lowing: 

7 ‘‘(3) The Board, in conjunction with or on be8 half of any Federal financial regulator or self-regu9 latory organization, may— 

10 ‘‘(A) establish information systems; and 

11 ‘‘(B) assess such reasonable fees and 

12 charges for the submission of information to, or 

13 the receipt of information from, such systems 

14 from any persons which systems may be devel15 oped for the purposes of serving as a repository 

16 of information from municipal market partici17 pants or otherwise in furtherance of the pur18 poses of the Board, a Federal financial regu19 lator, or a self-regulatory organization. 

20 ‘‘(4) The Board shall provide guidance and as21 sistance in the enforcement of, and examination for, 

22 compliance with the rules of the Board to the Com23 mission, a registered securities association under 

24 section 15A, or any other appropriate regulatory 

25 agency, as applicable.’’. 


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1 (c) DISCIPLINE OF DEALERS AND MUNICIPAL ADVI2 SORS AND OTHER MATTERS.—Section 15B(c) of the Se3 curities Exchange Act of 1934 (15 U.S.C. 78o–4(c)) is 

4 amended— 

5 (1) in paragraph (1), by inserting ‘‘, and no 

6 broker, dealer, municipal securities dealer, or munic7 ipal advisor shall make use of the mails or any 

8 means or instrumentality of interstate commerce to 

9 provide advice to or on behalf of a municipal entity 

10 or obligated person with respect to municipal finan11 cial products, the issuance of municipal securities, or 

12 participation in the issuance of municipal securities, 

13 or to undertake a solicitation of a municipal entity 

14 or obligated person,’’ after ‘‘any municipal security’’; 

15 (2) in paragraph (2), by inserting ‘‘or municipal 

16 advisor’’ after ‘‘municipal securities dealer’’ each 

17 place that term appears; 

18 (3) in paragraph (3)— 

19 (A) by inserting ‘‘or municipal entities or 

20 obligated person’’ after ‘‘protection of inves21 tors’’ each place that term appears; and 

22 (B) by inserting ‘‘or municipal advisor’’ 

23 after ‘‘municipal securities dealer’’ each place 

24 that term appears; 


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1 (4) in paragraph (4), by inserting ‘‘or municipal 

2 advisor’’ after ‘‘municipal securities dealer or obli3 gated person’’ each place that term appears; 

4 (5) in paragraph (6)(B), by inserting ‘‘or mu5 nicipal entities’’ after ‘‘protection of investors’’; 

6 (6) in paragraph (7)— 

7 (A) in subparagraph (A)— 

8 (i) in clause (i), by striking ‘‘; and’’ 

9 and inserting a semicolon; 

10 (ii) in clause (ii), by striking the pe11 riod and inserting ‘‘; and’’; and 

12 (iii) by adding at the end the fol13 lowing: 

14 ‘‘(iii) the Commission, or its designee, 

15 in the case of municipal advisors.’’. 

16 (B) in subparagraph (B), by inserting ‘‘or 

17 municipal entities or obligated person’’ after 

18 ‘‘protection of investors’’; and 

19 (7) by adding at the end the following: 

20 ‘‘(9)(A) Fines collected by the Commission for 

21 violations of the rules of the Board shall be equally 

22 divided between the Commission and the Board. 

23 ‘‘(B) Fines collected by a registered securities 

24 association under section 15A(7) with respect to vio25 lations of the rules of the Board shall be accounted 


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1 for by such registered securities association sepa2 rately from other fines collected under section 

3 15A(7) and shall be allocated between such reg4 istered securities association and the Board at the 

5 direction of the Commission.’’. 

6 (d) ISSUANCE OF MUNICIPAL SECURITIES.—Section 

7 15B(d)(2) of the Securities Exchange Act of 1934 (15 

8 U.S.C. 78o–4(d)) is amended— 

9 (1) by striking ‘‘through a municipal securities 

10 broker or municipal securities dealer or otherwise’’ 

11 and inserting ‘‘through a municipal securities 

12 broker, municipal securities dealer, municipal advi13 sor, or otherwise’’; and 

14 (2) by inserting ‘‘or municipal advisors’’ before 

15 ‘‘to furnish’’. 

16 (e) DEFINITIONS.—Section 15B of the Securities Ex17 change Act of 1934 (15 U.S.C. 78o–4) is amended by add18 ing at the end the following: 

19 ‘‘(e) DEFINITIONS.—For purposes of this section— 

20 ‘‘(1) the term ‘Board’ means the Municipal Se21 curities Rulemaking Board established under sub22 section (b)(1); 

23 ‘‘(2) the term ‘guaranteed investment contract’ 

24 includes any investment that has specified with25 drawal or reinvestment provisions and a specifically 


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1 negotiated or bid interest rate, and also includes any 

2 agreement to supply investments on 2 or more fu3 ture dates, such as a forward supply contract; 

4 ‘‘(3) the term ‘investment strategies’ includes 

5 plans or programs for the investment of the proceeds 

6 of municipal securities that are not municipal de7 rivatives, guaranteed investment contracts, and the 

8 recommendation of and brokerage of municipal es9 crow investments; 

10 ‘‘(4) the term ‘municipal advisor’— 

11 ‘‘(A) means a person (who is not a munic12 ipal entity or an employee of a municipal enti13 ty) that— 

14 ‘‘(i) provides advice to or on behalf of 

15 a municipal entity or obligated person with 

16 respect to municipal financial products or 

17 the issuance of municipal securities, in18 cluding advice with respect to the struc19 ture, timing, terms, and other similar mat20 ters concerning such financial products or 

21 issues; 

22 ‘‘(ii) participates in the issuance of 

23 municipal securities; or 

24 ‘‘(iii) undertakes a solicitation of a 

25 municipal entity; 


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1 ‘‘(B) includes financial advisors, guaran2 teed investment contract brokers, third-party 

3 marketers, placement agents, solicitors, finders, 

4 and swap advisors, if such persons are de5 scribed in any of clauses (i) through (iii) of sub6 paragraph (A); and 

7 ‘‘(C) does not include a broker, dealer, or 

8 municipal securities dealer serving as an under9 writer (as defined in section 2(a)(11) of the Se10 curities Act of 1933) (15 U.S.C. 77b(a)(11)), 

11 any investment adviser registered under the In12 vestment Advisers Act of 1940, or persons asso13 ciated with such investment advisers who are 

14 providing investment advice, attorneys offering 

15 legal advice or providing services that are of a 

16 traditional legal nature, or engineers providing 

17 engineering advice; 

18 ‘‘(5) the term ‘municipal derivative’ means any 

19 financial instrument or contract designed to hedge a 

20 risk (including interest rate swaps, basis swaps, 

21 credit default swaps, caps, floors, and collars); 

22 ‘‘(6) the term ‘municipal financial product’ 

23 means municipal derivatives, guaranteed investment 

24 contracts, and investment strategies; 


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1 ‘‘(7) the term ‘rules of the Board’ means the 

2 rules proposed and adopted by the Board under sub3 section (b)(2); 

4 ‘‘(8) the term ‘person associated with a munic5 ipal advisor’ or ‘associated person of an advisor’ 

6 means— 

7 ‘‘(A) any partner, officer, director, or 

8 branch manager of such municipal advisor (or 

9 any person occupying a similar status or per10 forming similar functions); 

11 ‘‘(B) any other employee of such municipal 

12 advisor who is engaged in the management, di13 rection, supervision, or performance of any ac14 tivities relating to the provision of advice to or 

15 on behalf of a municipal entity or obligated per16 son with respect to municipal financial prod17 ucts, the issuance of municipal securities, or 

18 participation in the issuance of municipal secu19 rities; and 

20 ‘‘(C) any person directly or indirectly con21 trolling, controlled by, or under common control 

22 with such municipal advisor; 

23 ‘‘(9) the term ‘municipal entity’ means any 

24 State, political subdivision of a State, or municipal 

25 corporate instrumentality of a State, including— 


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1 ‘‘(A) any agency, authority, or instrumen2 tality of the State, political subdivision, or mu3 nicipal corporate instrumentality; 

4 ‘‘(B) any plan, program, or pool of assets 

5 sponsored or established by the State, political 

6 subdivision, or municipal corporate instrumen7 tality or any agency, authority, or instrumen8 tality thereof; and 

9 ‘‘(C) any other issuer of municipal securi10 ties; 

11 ‘‘(10) the term ‘solicitation of a municipal enti12 ty or obligated person’ means a direct or indirect 

13 communication with a municipal entity or obligated 

14 person made by a person, for direct or indirect com15 pensation, on behalf of a broker, dealer, municipal 

16 securities dealer, municipal advisor, or investment 

17 adviser (as defined in section 202 of the Investment 

18 Advisers Act of 1940) that does not control, is not 

19 controlled by, or is not under common control with 

20 the person undertaking such solicitation for the pur21 pose of obtaining or retaining an engagement by a 

22 municipal entity or obligated person of a broker, 

23 dealer, municipal securities dealer, or municipal ad24 visor for or in connection with municipal financial 

25 products, the issuance of municipal securities, or 


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1 participation in the issuance of municipal securities, 

2 or of an investment adviser to provide investment 

3 advisory services to or on behalf of a municipal enti4 ty; and 

5 ‘‘(11) the term ‘obligated person’ means any 

6 person, including an issuer of municipal securities, 

7 who is either generally or through an enterprise, 

8 fund, or account of such person, committed by con9 tract or other arrangement to support the payment 

10 of all or part of the obligations on the municipal se11 curities to be sold in an offering of municipal securi12 ties.’’. 

13 (f) REGISTERED SECURITIES ASSOCIATION.—Section 

14 15A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 

15 78o–3(b)) is amended by adding at the end the following: 

16 ‘‘(15) The rules of the association provide that 

17 the association shall— 

18 ‘‘(A) request guidance from the Municipal 

19 Securities Rulemaking Board in interpretation 

20 of the rules of the Municipal Securities Rule21 making Board; and 

22 ‘‘(B) provide information to the Municipal 

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1 tion under section 15B(b)(2)(E), so that the 

2 Municipal Securities Rulemaking Board may— 

3 ‘‘(i) assist in such enforcement actions 

4 and examinations; and 

5 ‘‘(ii) evaluate the ongoing effective6 ness of the rules of the Board.’’. 

7 (g) REGISTRATION AND REGULATION OF BROKERS

8 AND DEALERS.—Section 15 of the Securities Exchange 

9 Act of 1934 is amended— 

10 (1) in subsection (b)(4), by inserting ‘‘munic11 ipal advisor,’’ after ‘‘municipal securities dealer’’ 

12 each place that term appears; and 

13 (2) in subsection (c), by inserting ‘‘broker, deal14 er, or’’ before ‘‘municipal securities dealer’’ each 

15 place that term appears. 

16 (h) ACCOUNTS AND RECORDS, REPORTS, EXAMINA17 TIONS OF EXCHANGES, MEMBERS, AND OTHERS.—Sec18 tion 17(a)(1) of the Securities Exchange Act of 1934 is 

19 amended by inserting ‘‘municipal advisor,’’ after ‘‘munic20 ipal securities dealer’’. 

21 (i) SAVINGS CLAUSE.—Notwithstanding any provi22 sion of the Over-the-Counter Derivatives Markets Act of 

23 2010, or any amendment made pursuant to such Act, the 

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1 suant to this section, shall apply to any municipal deriva2 tive. 

3 (j) EFFECTIVE DATE.—This section, and the amend4 ments made by this section, shall take effect on October 

5 1, 2010. 

6 SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

7 OF INCREASED DISCLOSURE TO INVESTORS. 

8 (a) STUDY.—The Comptroller General of the United 

9 States shall conduct a study and review of the disclosure 

10 required to be made by issuers of municipal securities. 

11 (b) SUBJECTS FOR EVALUATION.—In conducting the 

12 study under subsection (a), the Comptroller General of the 

13 United States shall— 

14 (1) broadly describe— 

15 (A) the size of the municipal securities 

16 markets and the issuers and investors; and 

17 (B) the disclosures provided by issuers to 

18 investors; 

19 (2) compare the amount, frequency, and quality 

20 of disclosures that issuers of municipal securities are 

21 required by law to provide for the benefit of munic22 ipal securities holders, including the amount of and 

23 frequency of disclosures actually provided by issuers 

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1 rities provide for the benefit of corporate securities 

2 holders, taking into account the differences between 

3 issuers of municipal securities and issuers of cor4 porate securities; 

5 (3) evaluate the costs and benefits to various 

6 types of issuers of municipal securities of requiring 

7 issuers of municipal bonds to provide additional fi8 nancial disclosures for the benefit of investors; 

9 (4) evaluate the potential benefit to investors 

10 from additional financial disclosures by issuers of 

11 municipal bonds; and 

12 (5) make recommendations relating to disclo13 sure requirements for municipal issuers, including 

14 the advisability of the repeal or retention of section 

15 15B(d) of the Securities Exchange Act of 1934 (15 

16 U.S.C. 78o–4(d)) (commonly known as the ‘‘Tower 

17 Amendment’’). 

18 (c) REPORT.—Not later than 1 year after the date 

19 of enactment of this Act, the Comptroller General of the 

20 United States shall submit a report to Congress on the 

21 results of the study conducted under subsection (a), in22 cluding recommendations for how to improve disclosure by 

23 issuers of municipal securities. 


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1 SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

2 ON THE MUNICIPAL SECURITIES MARKETS. 

3 (a) STUDY.—The Comptroller General of the United 

4 States shall conduct a study of the municipal securities 

5 markets. 

6 (b) REPORT.—Not later than 180 days after the date 

7 of enactment of this Act, the Comptroller General of the 

8 United States shall submit a report to the Committee on 

9 Banking, Housing, and Urban Affairs of the Senate, and 

10 the Committee on Financial Services of the House of Rep11 resentatives, with copies to the Special Committee on 

12 Aging of the Senate and the Commission, on the results 

13 of the study conducted under subsection (a), including— 

14 (1) an analysis of the mechanisms for trading, 

15 quality of trade executions, market transparency, 

16 trade reporting, price discovery, settlement clearing, 

17 and credit enhancements; 

18 (2) the needs of the markets and investors and 

19 the impact of recent innovations; 

20 (3) recommendations for how to improve the 

21 transparency, efficiency, fairness, and liquidity of 

22 trading in the municipal securities markets, includ23 ing with reference to items listed in paragraph (1); 

24 and 

25 (4) potential uses of derivatives in the munic26 ipal securities markets. 


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1 (c) RESPONSES.—Not later than 180 days after re2 ceipt of the report required under subsection (b), the Com3 mission shall submit a response to the Committee on 

4 Banking, Housing, and Urban Affairs of the Senate, and 

5 the Committee on Financial Services of the House of Rep6 resentatives, with a copy to the Special Committee on 

7 Aging of the Senate, stating the actions the Commission 

8 has taken in response to the recommendations contained 

9 in such report. 

10 SEC. 978. STUDY OF FUNDING FOR GOVERNMENT AC11 COUNTING STANDARDS BOARD. 

12 (a) STUDY.—The Commission shall conduct a study 

13 that evaluates— 

14 (1) the role and importance of the Government 

15 Accounting Standards Board in the municipal secu16 rities markets; 

17 (2) the manner in which the Government Ac18 counting Standards Board is funded, and how such 

19 manner of funding affects the financial information 

20 available to securities investors; 

21 (3) the advisability of changes to the manner in 

22 which the Government Accounting Standards Board 

23 is funded; and 

24 (4) whether legislative changes to the manner 

25 in which the Government Accounting Standards 


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1 Board is funded are necessary for the benefit of in2 vestors and in the public interest. 

3 (b) CONSULTATION.—In conducting the study re4 quired under subsection (a), the Commission shall consult 

5 with State and local government financial officers. 

6 (c) REPORT.—Not later than 270 days after the date 

7 of enactment of this Act, the Commission shall submit to 

8 the Committee on Banking, Housing, and Urban Affairs 

9 of the Senate and the Committee on Financial Services 

10 of the House of Representatives a report on the study re11 quired under subsection (a). 

12 SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES. 

13 (a) IN GENERAL.—There shall be in the Commission 

14 an Office of Municipal Securities, which shall— 

15 (1) administer the rules of the Commission with 

16 respect to the practices of municipal securities bro17 kers and dealers, municipal securities advisors, mu18 nicipal securities investors, and municipal securities 

19 issuers; and 

20 (2) coordinate with the Municipal Securities 

21 Rulemaking Board for rulemaking and enforcement 

22 actions as required by law. 

23 (b) DIRECTOR OF THE OFFICE.—The head of the Of24 fice of Municipal Securities shall be the Director, who 

25 shall report to the Chairman. 


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1 (c) STAFFING.— 

2 (1) IN GENERAL.—The Office of Municipal Se3 curities shall be staffed sufficiently to carry out the 

4 requirements of this section. 

5 (2) REQUIREMENT.—The staff of the Office of 

6 Municipal Securities shall include individuals with 

7 knowledge of and expertise in municipal finance. 

8 Subtitle I—Public Company Ac9 counting Oversight Board, Port10 folio Margining, and Other Mat11 ters 

12 SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION 

13 WITH FOREIGN AUTHORITIES. 

14 (a) DEFINITION.—Section 2(a) of the Sarbanes15 Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended by 

16 adding at the end the following: 

17 ‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHOR18 ITY.—The term ‘foreign auditor oversight authority’ 

19 means any governmental body or other entity em20 powered by a foreign government to conduct inspec21 tions of public accounting firms or otherwise to ad22 minister or enforce laws related to the regulation of 

23 public accounting firms.’’. 

24 (b) AVAILABILITY TO SHARE INFORMATION.—Sec25 tion 105(b)(5) of the Sarbanes-Oxley Act of 2002 (15 


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1 U.S.C. 7215(b)(5)) is amended by adding at the end the 

2 following: 

3 ‘‘(C) AVAILABILITY TO FOREIGN OVER4 SIGHT AUTHORITIES.—Without the loss of its 

5 status as confidential and privileged in the 

6 hands of the Board, all information referred to 

7 in subparagraph (A) that relates to a public ac8 counting firm that a foreign government has 

9 empowered a foreign auditor oversight authority 

10 to inspect or otherwise enforce laws with re11 spect to, may, at the discretion of the Board, be 

12 made available to the foreign auditor oversight 

13 authority, if— 

14 ‘‘(i) the Board finds that it is nec15 essary to accomplish the purposes of this 

16 Act or to protect investors; 

17 ‘‘(ii) the foreign auditor oversight au18 thority provides— 

19 ‘‘(I) such assurances of confiden20 tiality as the Board may request; 

21 ‘‘(II) a description of the applica22 ble information systems and controls 

23 of the foreign auditor oversight au24 thority; and 


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1 ‘‘(III) a description of the laws 

2 and regulations of the foreign govern3 ment of the foreign auditor oversight 

4 authority that are relevant to informa5 tion access; and 

6 ‘‘(iii) the Board determines that it is 

7 appropriate to share such information.’’. 

8 (c) CONFORMING AMENDMENT.—Section 

9 105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 

10 U.S.C. 7215(b)(5)(A)) is amended by striking ‘‘subpara11 graph (B)’’ and inserting ‘‘subparagraphs (B) and (C)’’. 

12 SEC. 982. OVERSIGHT OF BROKERS AND DEALERS. 

13 (a) DEFINITIONS.— 

14 (1) DEFINITIONS AMENDED.—Title I of the 

15 Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et 

16 seq.) is amended by adding at the end the following 

17 new section: 

18 ‘‘SEC. 110. DEFINITIONS. 

19 ‘‘For the purposes of this title, the following defini20 tions shall apply: 

21 ‘‘(1) AUDIT.—The term ‘audit’ means an exam22 ination of the financial statements, reports, docu23 ments, procedures, controls, or notices of any issuer, 

24 broker, or dealer by an independent public account25 ing firm in accordance with the rules of the Board 


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1 or the Commission, for the purpose of expressing an 

2 opinion on the financial statements or providing an 

3 audit report. 

4 ‘‘(2) AUDIT REPORT.—The term ‘audit report’ 

5 means a document, report, notice, or other record— 

6 ‘‘(A) prepared following an audit per7 formed for purposes of compliance by an issuer, 

8 broker, or dealer with the requirements of the 

9 securities laws; and 

10 ‘‘(B) in which a public accounting firm ei11 ther— 

12 ‘‘(i) sets forth the opinion of that firm 

13 regarding a financial statement, report, no14 tice, or other document, procedures, or 

15 controls; or 

16 ‘‘(ii) asserts that no such opinion can 

17 be expressed. 

18 ‘‘(3) BROKER.—The term ‘broker’ means a 

19 broker (as such term is defined in section 3(a)(4) of 

20 the Securities Exchange Act of 1934 (15 U.S.C. 

21 78c(a)(4))) that is required to file a balance sheet, 

22 income statement, or other financial statement 

23 under section 17(e)(1)(A) of such Act (15 U.S.C. 

24 78q(e)(1)(A)), where such balance sheet, income 


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1 statement, or financial statement is required to be 

2 certified by a registered public accounting firm. 

3 ‘‘(4) DEALER.—The term ‘dealer’ means a 

4 dealer (as such term is defined in section 3(a)(5) of 

5 the Securities Exchange Act of 1934 (15 U.S.C. 

6 78c(a)(5))) that is required to file a balance sheet, 

7 income statement, or other financial statement 

8 under section 17(e)(1)(A) of such Act (15 U.S.C. 

9 78q(e)(1)(A)), where such balance sheet, income 

10 statement, or financial statement is required to be 

11 certified by a registered public accounting firm. 

12 ‘‘(5) PROFESSIONAL STANDARDS.—The term 

13 ‘professional standards’ means— 

14 ‘‘(A) accounting principles that are— 

15 ‘‘(i) established by the standard set16 ting body described in section 19(b) of the 

17 Securities Act of 1933, as amended by this 

18 Act, or prescribed by the Commission 

19 under section 19(a) of that Act (15 U.S.C. 

20 17a(s)) or section 13(b) of the Securities 

21 Exchange Act of 1934 (15 U.S.C. 78a(m)); 

22 and 

23 ‘‘(ii) relevant to audit reports for par24 ticular issuers, brokers, or dealers, or dealt 

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1 ticular registered public accounting firm; 

2 and 

3 ‘‘(B) auditing standards, standards for at4 testation engagements, quality control policies 

5 and procedures, ethical and competency stand6 ards, and independence standards (including 

7 rules implementing title II) that the Board or 

8 the Commission determines— 

9 ‘‘(i) relate to the preparation or 

10 issuance of audit reports for issuers, bro11 kers, or dealers; and 

12 ‘‘(ii) are established or adopted by the 

13 Board under section 103(a), or are pro14 mulgated as rules of the Commission. 

15 ‘‘(6) SELF-REGULATORY ORGANIZATION.—The 

16 term ‘self-regulatory organization’ has the same 

17 meaning as in section 3(a) of the Securities Ex18 change Act of 1934 (15 U.S.C. 78c(a)).’’. 

19 (2) CONFORMING AMENDMENT.—Section 2(a) 

20 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

21 7201(a)) is amended in the matter preceding para22 graph (1), by striking ‘‘In this’’ and inserting ‘‘Ex23 cept as otherwise specifically provided in this Act, in 

24 this’’. 


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1 (b) ESTABLISHMENT AND ADMINISTRATION OF THE

2 PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.— 

3 Section 101 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

4 7211) is amended— 

5 (1) by striking ‘‘issuers’’ each place that term 

6 appears and inserting ‘‘issuers, brokers, and deal7 ers’’; and 

8 (2) in subsection (a)— 

9 (A) by striking ‘‘public companies’’ and in10 serting ‘‘companies’’; and 

11 (B) by striking ‘‘for companies the securi12 ties of which are sold to, and held by and for, 

13 public investors’’. 

14 (c) REGISTRATION WITH THE BOARD.—Section 102 

15 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is 

16 amended— 

17 (1) in subsection (a)— 

18 (A) by striking ‘‘Beginning 180’’ and all 

19 that follows through ‘‘101(d), it’’ and inserting 

20 ‘‘It’’; and 

21 (B) by striking ‘‘issuer’’ and inserting 

22 ‘‘issuer, broker, or dealer’’; 

23 (2) in subsection (b)— 


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1 (A) in paragraph (2)(A), by striking 

2 ‘‘issuers’’ and inserting ‘‘issuers, brokers, and 

3 dealers’’; and 

4 (B) by striking ‘‘issuer’’ each place that 

5 term appears and inserting ‘‘issuer, broker, or 

6 dealer’’. 

7 (d) AUDITING AND INDEPENDENCE.—Section 103(a) 

8 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) 

9 is amended— 

10 (1) in paragraph (1), by striking ‘‘and such eth11 ics standards’’ and inserting ‘‘such ethics standards, 

12 and such independence standards’’; 

13 (2) in paragraph (2)(A)(iii), by striking ‘‘de14 scribe in each audit report’’ and inserting ‘‘in each 

15 audit report for an issuer, describe’’; and 

16 (3) in paragraph (2)(B)(i), by striking 

17 ‘‘issuers’’ and inserting ‘‘issuers, brokers, and deal18 ers’’. 

19 (e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNT20 ING FIRMS.—Section 104 of the Sarbanes-Oxley Act of 

21 2002 (15 U.S.C. 7214) is amended— 

22 (1) in subsection (a), by striking ‘‘issuers’’ and 

23 inserting ‘‘issuers, brokers, and dealers’’; and 

24 (2) in subsection (b)(1)— 


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1 (A) by striking ‘‘audit reports for’’ each 

2 place that term appears and inserting ‘‘audit 

3 reports on annual financial statements for’’; 

4 (B) in subparagraph (A), by striking 

5 ‘‘and’’ at the end; 

6 (C) in subparagraph (B), by striking the 

7 period at the end and inserting ‘‘; and’’; and 

8 (D) by adding at the end the following: 

9 ‘‘(C) with respect to each registered public 

10 accounting firm that regularly provides audit 

11 reports and that is not described in subpara12 graph (A) or (B), on a basis determined by the 

13 Board, by rule, that is consistent with the pub14 lic interest and protection of investors.’’. 

15 (f) INVESTIGATIONS AND DISCIPLINARY PRO16 CEEDINGS.—Section 105(c)(7)(B) of the Sarbanes-Oxley 

17 Act of 2002 (15 U.S.C. 7215(c)(7)(B)) is amended— 

18 (1) in the subparagraph heading, by inserting 

19 ‘‘, BROKER, OR DEALER’’ after ‘‘ISSUER’’; 

20 (2) by striking ‘‘any issuer’’ each place that 

21 term appears and inserting ‘‘any issuer, broker, or 

22 dealer’’; and 

23 (3) by striking ‘‘an issuer under this sub24 section’’ and inserting ‘‘a registered public account25 ing firm under this subsection’’. 


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1 (g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 

2 106(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

3 7216(a)) is amended— 

4 (1) in paragraph (1), by striking ‘‘issuer’’ and 

5 inserting ‘‘issuer, broker, or dealer’’; and 

6 (2) in paragraph (2), by striking ‘‘issuers’’ and 

7 inserting ‘‘issuers, brokers, or dealers’’. 

8 (h) FUNDING.—Section 109 of the Sarbanes-Oxley 

9 Act of 2002 (15 U.S.C. 7219) is amended— 

10 (1) in subsection (c)(2), by striking ‘‘subsection 

11 (i)’’ and inserting ‘‘subsection (j)’’; 

12 (2) in subsection (d)— 

13 (A) in paragraph (2), by striking ‘‘allowing 

14 for differentiation among classes of issuers, as 

15 appropriate’’ and inserting ‘‘and among brokers 

16 and dealers, in accordance with subsection (h), 

17 and allowing for differentiation among classes 

18 of issuers, brokers and dealers, as appropriate’’; 

19 and 

20 (B) by adding at the end the following: 

21 ‘‘(3) BROKERS AND DEALERS.—The Board 

22 shall begin the allocation, assessment, and collection 

23 of fees under paragraph (2) with respect to brokers 

24 and dealers with the payment of support fees to 


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1 fund the first full fiscal year beginning after the ef2 fective date of this paragraph.’’; 

3 (3) by redesignating subsections (h), (i), and (j) 

4 as subsections (i), (j), and (k), respectively; and 

5 (4) by inserting after subsection (g) the fol6 lowing: 

7 ‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES

8 AMONG BROKERS AND DEALERS.— 

9 ‘‘(1) OBLIGATION TO PAY.—Each broker or 

10 dealer shall pay to the Board the annual accounting 

11 support fee allocated to such broker or dealer under 

12 this section. 

13 ‘‘(2) ALLOCATION.—Any amount due from a 

14 broker or dealer (or from a particular class of bro15 kers and dealers) under this section shall be allo16 cated among brokers and dealers and payable by the 

17 broker or dealer (or the brokers and dealers in the 

18 particular class, as applicable). 

19 ‘‘(3) PROPORTIONALITY.—The amount due 

20 from a broker or dealer shall be in proportion to the 

21 net capital of the broker or dealer, compared to the 

22 total net capital of all brokers and dealers, in ac23 cordance with rules issued by the Board.’’. 

24 (i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU25 LATORY ORGANIZATION.—Section 105(b)(4)(B) of the 


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1 Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(4)(B)) 

2 is amended— 

3 (1) by redesignating clauses (ii) and (iii) as 

4 clauses (iii) and (iv), respectively; and 

5 (2) by inserting after clause (i) the following: 

6 ‘‘(ii) to a self-regulatory organization, 

7 in the case of an investigation that con8 cerns an audit report for a broker or deal9 er that is under the jurisdiction of such 

10 self-regulatory organization;’’. 

11 (j) USE OF DOCUMENTS RELATED TO AN INSPEC12 TION OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of the 

13 Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) 

14 is amended— 

15 (1) in subclause (III), by striking ‘‘and’’ at the 

16 end; 

17 (2) in subclause (IV), by striking the comma 

18 and inserting ‘‘; and’’; and 

19 (3) by inserting after subclause (IV) the fol20 lowing: 

21 ‘‘(V) a self-regulatory organiza22 tion, with respect to an audit report 

23 for a broker or dealer that is under 

24 the jurisdiction of such self-regulatory 

25 organization,’’. 


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1 (k) EFFECTIVE DATE.—The amendments made by 

2 this section shall take effect 180 days after the date of 

3 enactment of this Act. 

4 SEC. 983. PORTFOLIO MARGINING. 

5 (a) ADVANCES.—Section 9(a)(1) of the Securities In6 vestor Protection Act of 1970 (15 U.S.C. 78fff–3(a)(1)) 

7 is amended by inserting ‘‘or options on commodity futures 

8 contracts’’ after ‘‘claim for securities’’. 

9 (b) DEFINITIONS.—Section 16 of the Securities In10 vestor Protection Act of 1970 (15 U.S.C. 78lll) is amend11 ed— 

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

13 following: 

14 ‘‘(2) CUSTOMER.— 

15 ‘‘(A) IN GENERAL.—The term ‘customer’ 

16 of a debtor means any person (including any 

17 person with whom the debtor deals as principal 

18 or agent) who has a claim on account of securi19 ties received, acquired, or held by the debtor in 

20 the ordinary course of its business as a broker 

21 or dealer from or for the securities accounts of 

22 such person for safekeeping, with a view to sale, 

23 to cover consummated sales, pursuant to pur24 chases, as collateral, security, or for purposes of 

25 effecting transfer. 


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1 ‘‘(B) INCLUDED PERSONS.—The term 

2 ‘customer’ includes— 

3 ‘‘(i) any person who has deposited 

4 cash with the debtor for the purpose of 

5 purchasing securities; 

6 ‘‘(ii) any person who has a claim 

7 against the debtor for cash, securities, fu8 tures contracts, or options on futures con9 tracts received, acquired, or held in a port10 folio margining account carried as a secu11 rities account pursuant to a portfolio mar12 gining program approved by the Commis13 sion; and 

14 ‘‘(iii) any person who has a claim 

15 against the debtor arising out of sales or 

16 conversions of such securities. 

17 ‘‘(C) EXCLUDED PERSONS.—The term 

18 ‘customer’ does not include any person, to the 

19 extent that— 

20 ‘‘(i) the claim of such person arises 

21 out of transactions with a foreign sub22 sidiary of a member of SIPC; or 

23 ‘‘(ii) such person has a claim for cash 

24 or securities which by contract, agreement, 

25 or understanding, or by operation of law, 


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1 is part of the capital of the debtor, or is 

2 subordinated to the claims of any or all 

3 creditors of the debtor, notwithstanding 

4 that some ground exists for declaring such 

5 contract, agreement, or understanding void 

6 or voidable in a suit between the claimant 

7 and the debtor.’’; 

8 (2) in paragraph (4)— 

9 (A) in subparagraph (C), by striking 

10 ‘‘and’’ at the end; 

11 (B) by redesignating subparagraph (D) as 

12 subparagraph (E); and 

13 (C) by inserting after subparagraph (C) 

14 the following: 

15 ‘‘(D) in the case of a portfolio margining 

16 account of a customer that is carried as a secu17 rities account pursuant to a portfolio margining 

18 program approved by the Commission, a futures 

19 contract or an option on a futures contract re20 ceived, acquired, or held by or for the account 

21 of a debtor from or for such portfolio margining 

22 account, and the proceeds thereof; and’’; 

23 (3) in paragraph (9), in the matter following 

24 subparagraph (L), by inserting after ‘‘Such term’’ 

25 the following: ‘‘includes revenues earned by a broker 


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1 or dealer in connection with a transaction in the 

2 portfolio margining account of a customer carried as 

3 securities accounts pursuant to a portfolio margining 

4 program approved by the Commission. Such term’’; 

5 and 

6 (4) in paragraph (11)— 

7 (A) in subparagraph (A)— 

8 (i) by striking ‘‘filing date, all’’ and 

9 all that follows through the end of the sub10 paragraph and inserting the following: ‘‘fil11 ing date— 

12 ‘‘(i) all securities positions of such 

13 customer (other than customer name secu14 rities reclaimed by such customer); and 

15 ‘‘(ii) all positions in futures contracts 

16 and options on futures contracts held in a 

17 portfolio margining account carried as a 

18 securities account pursuant to a portfolio 

19 margining program approved by the Com20 mission, including all property 

21 collateralizing such positions, to the extent 

22 that such property is not otherwise in23 cluded herein; minus’’; and 

24 (B) in the matter following subparagraph 

25 (C), by striking ‘‘In determining’’ and inserting 


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1 the following: ‘‘A claim for a commodity futures 

2 contract received, acquired, or held in a port3 folio margining account pursuant to a portfolio 

4 margining program approved by the Commis5 sion or a claim for a security futures contract, 

6 shall be deemed to be a claim with respect to 

7 such contract as of the filing date, and such 

8 claim shall be treated as a claim for cash. In 

9 determining’’. 

10 SEC. 984. LOAN OR BORROWING OF SECURITIES. 

11 (a) RULEMAKING AUTHORITY.—Section 10 of the Se12 curities Exchange Act of 1934 (15 U.S.C. 78j) is amended 

13 by adding at the end the following: 

14 ‘‘(c)(1) To effect, accept, or facilitate a trans15 action involving the loan or borrowing of securities 

16 in contravention of such rules and regulations as the 

17 Commission may prescribe as necessary or appro18 priate in the public interest or for the protection of 

19 investors. 

20 ‘‘(2) Nothing in paragraph (1) may be con21 strued to limit the authority of the appropriate Fed22 eral banking agency (as defined in section 3(q) of 

23 the Federal Deposit Insurance Act (12 U.S.C. 

24 1813(q))), the National Credit Union Administra25 tion, or any other Federal department or agency 


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1 having a responsibility under Federal law to pre2 scribe rules or regulations restricting transactions 

3 involving the loan or borrowing of securities in order 

4 to protect the safety and soundness of a financial in5 stitution or to protect the financial system from sys6 temic risk.’’. 

7 (b) RULEMAKING REQUIRED.—Not later than 2 

8 years after the date of enactment of this Act, the Commis9 sion shall promulgate rules that are designed to increase 

10 the transparency of information available to brokers, deal11 ers, and investors, with respect to the loan or borrowing 

12 of securities. 

13 SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURI14 TIES LAWS. 

15 (a) SECURITIES ACT OF 1933.—The Securities Act 

16 of 1933 (15 U.S.C. 77a et seq.) is amended— 

17 (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by 

18 striking ‘‘individual;’’ and inserting ‘‘individual,’’; 

19 (2) in section 18 (15 U.S.C. 77r)— 

20 (A) in subsection (b)(1)(C), by striking ‘‘is 

21 a security’’ and inserting ‘‘a security’’; and 

22 (B) in subsection (c)(2)(B)(i), by striking 

23 ‘‘State, or’’ and inserting ‘‘State or’’; 


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1 (3) in section 19(d)(6)(A) (15 U.S.C. 

2 77s(d)(6)(A)), by striking ‘‘in paragraph (1) of (3)’’ 

3 and inserting ‘‘in paragraph (1) or (3)’’; and 

4 (4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z– 

5 2(c)(1)(B)(ii)), by striking ‘‘business entity;’’ and in6 serting ‘‘business entity,’’. 

7 (b) SECURITIES EXCHANGE ACT OF 1934.—The Se8 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

9 is amended— 

10 (1) in section 2 (15 U.S.C. 78b), by striking 

11 ‘‘affected’’ and inserting ‘‘effected’’; 

12 (2) in section 3 (15 U.S.C. 78c)— 

13 (A) in subsection (a)(55)(A), by striking 

14 ‘‘section 3(a)(12) of the Securities Exchange 

15 Act of 1934’’ and inserting ‘‘section 3(a)(12) of 

16 this title’’; and 

17 (B) in subsection (g), by striking ‘‘com18 pany, account person, or entity’’ and inserting 

19 ‘‘company, account, person, or entity’’; 

20 (3) in section 10A(i)(1)(B) (15 U.S.C. 78j– 

21 1(i)(1)(B))— 

22 (A) in the subparagraph heading, by strik23 ing ‘‘MINIMUS’’ and inserting ‘‘MINIMIS’’; and 

24 (B) in clause (i), by striking ‘‘nonaudit’’ 

25 and inserting ‘‘non-audit’’; 


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1 (4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), 

2 by striking ‘‘earning statement’’ and inserting 

3 ‘‘earnings statement’’; 

4 (5) in section 15 (15 U.S.C. 78o)— 

5 (A) in subsection (b)(1)— 

6 (i) in subparagraph (B), by striking 

7 ‘‘The order granting’’ and all that follows 

8 through ‘‘from such membership.’’; and 

9 (ii) in the undesignated matter imme10 diately following subparagraph (B), by in11 serting after the first sentence the fol12 lowing: ‘‘The order granting registration 

13 shall not be effective until such broker or 

14 dealer has become a member of a reg15 istered securities association, or until such 

16 broker or dealer has become a member of 

17 a national securities exchange, if such 

18 broker or dealer effects transactions solely 

19 on that exchange, unless the Commission 

20 has exempted such broker or dealer, by 

21 rule or order, from such membership.’’; 

22 (6) in section 15C(a)(2) (15 U.S.C. 78o– 

23 5(a)(2))— 

24 (A) by redesignating clauses (i) and (ii) as 

25 subparagraphs (A) and (B), respectively, and 


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1 adjusting the subparagraph margins accord2 ingly; 

3 (B) in subparagraph (B), as so redesig4 nated, by striking ‘‘The order granting’’ and all 

5 that follows through ‘‘from such membership.’’; 

6 and 

7 (C) in the matter following subparagraph 

8 (B), as so redesignated, by inserting after the 

9 first sentence the following: ‘‘The order grant10 ing registration shall not be effective until such 

11 government securities broker or government se12 curities dealer has become a member of a na13 tional securities exchange registered under sec14 tion 6 of this title, or a securities association 

15 registered under section 15A of this title, unless 

16 the Commission has exempted such government 

17 securities broker or government securities deal18 er, by rule or order, from such membership.’’; 

19 (7) in section 17(b)(1)(B) (15 U.S.C. 

20 78q(b)(1)(B)), by striking ‘‘15A(k) gives’’ and in21 serting ‘‘15A(k), give’’; and 

22 (8) in section 21C(c)(2) (15 U.S.C. 78u– 

23 3(c)(2)), by striking ‘‘paragraph (1) subsection’’ and 

24 inserting ‘‘Paragraph (1)’’. 


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1 (c) TRUST INDENTURE ACT OF 1939.—The Trust 

2 Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 

3 amended— 

4 (1) in section 304(b) (15 U.S.C. 77ddd(b)), by 

5 striking ‘‘section 2 of such Act’’ and inserting ‘‘sec6 tion 2(a) of such Act’’; and 

7 (2) in section 317(a)(1) (15 U.S.C. 

8 77qqq(a)(1)), by striking ‘‘, in the’’ and inserting 

9 ‘‘in the’’. 

10 (d) INVESTMENT COMPANY ACT OF 1940.—The In11 vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 

12 is amended— 

13 (1) in section 2(a)(19) (15 U.S.C. 80a– 

14 2(a)(19)), in the matter following subparagraph 

15 (B)(vii)— 

16 (A) by striking ‘‘clause (vi)’’ each place 

17 that term appears and inserting ‘‘clause (vii)’’; 

18 and 

19 (B) in each of subparagraphs (A)(vi) and 

20 (B)(vi), by adding ‘‘and’’ at the end of sub21 clause (III); 

22 (2) in section 9(b)(4)(B) (15 U.S.C. 80a– 

23 9(b)(4)(B)), by adding ‘‘or’’ after the semicolon at 

24 the end; 


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1 (3) in section 12(d)(1)(J) (15 U.S.C. 80a– 

2 12(d)(1)(J)), by striking ‘‘any provision of this sub3 section’’ and inserting ‘‘any provision of this para4 graph’’; 

5 (4) in section 17(f) (15 U.S.C. 80a–17(f))— 

6 (A) in paragraph (4), by striking ‘‘No such 

7 member’’ and inserting ‘‘No member of a na8 tional securities exchange’’; and 

9 (B) in paragraph (6), by striking ‘‘com10 pany may serve’’ and inserting ‘‘company, may 

11 serve’’; and 

12 (5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 

13 60(a)(3)(B)(iii))— 

14 (A) by striking ‘‘paragraph (1) of section 

15 205’’ and inserting ‘‘section 205(a)(1)’’; and 

16 (B) by striking ‘‘clause (A) or (B) of that 

17 section’’ and inserting ‘‘paragraph (1) or (2) of 

18 section 205(b)’’. 

19 (e) INVESTMENT ADVISERS ACT OF 1940.—The In20 vestment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) 

21 is amended— 

22 (1) in section 203 (15 U.S.C. 80b–3)— 

23 (A) in subsection (c)(1)(A), by striking 

24 ‘‘principal business office and’’ and inserting 


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1 ‘‘principal office, principal place of business, 

2 and’’; and 

3 (B) in subsection (k)(4)(B), in the matter 

4 following clause (ii), by striking ‘‘principal place 

5 of business’’ and inserting ‘‘principal office or 

6 place of business’’; 

7 (2) in section 206(3) (15 U.S.C. 80b–6(3)), by 

8 adding ‘‘or’’ after the semicolon at the end; 

9 (3) in section 213(a) (15 U.S.C. 80b–13(a)), by 

10 striking ‘‘principal place of business’’ and inserting 

11 ‘‘principal office or place of business’’; and 

12 (4) in section 222 (15 U.S.C. 80b–18a), by 

13 striking ‘‘principal place of business’’ each place that 

14 term appears and inserting ‘‘principal office and 

15 place of business’’. 

16 SEC. 986. CONFORMING AMENDMENTS RELATING TO RE17 PEAL OF THE PUBLIC UTILITY HOLDING 

18 COMPANY ACT OF 1935. 

19 (a) SECURITIES EXCHANGE ACT OF 1934.—The Se20 curities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is 

21 amended— 

22 (1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), 

23 by striking ‘‘the Public Utility Holding Company 

24 Act of 1935 (15 U.S.C. 79a et seq.),’’; 


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1 (2) in section 12(k) (15 U.S.C. 78l(k)), by 

2 amending paragraph (7) to read as follows:

3 ‘‘(7) DEFINITION.—For purposes of this sub4 section, the term ‘emergency’ means— 

5 ‘‘(A) a major market disturbance charac6 terized by or constituting— 

7 ‘‘(i) sudden and excessive fluctuations 

8 of securities prices generally, or a substan9 tial threat thereof, that threaten fair and 

10 orderly markets; or 

11 ‘‘(ii) a substantial disruption of the 

12 safe or efficient operation of the national 

13 system for clearance and settlement of 

14 transactions in securities, or a substantial 

15 threat thereof; or 

16 ‘‘(B) a major disturbance that substan17 tially disrupts, or threatens to substantially dis18 rupt— 

19 ‘‘(i) the functioning of securities mar20 kets, investment companies, or any other 

21 significant portion or segment of the secu22 rities markets; or 

23 ‘‘(ii) the transmission or processing of 

24 securities transactions.’’; and 


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1 (3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), 

2 by striking ‘‘section 18(c) of the Public Utility Hold3 ing Company Act of 1935,’’. 

4 (b) TRUST INDENTURE ACT OF 1939.—The Trust 

5 Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 

6 amended— 

7 (1) in section 303 (15 U.S.C. 77ccc), by strik8 ing paragraph (17) and inserting the following: 

9 ‘‘(17) The terms ‘Securities Act of 1933’ and 

10 ‘Securities Exchange Act of 1934’ shall be deemed 

11 to refer, respectively, to such Acts, as amended, 

12 whether amended prior to or after the enactment of 

13 this title.’’; 

14 (2) in section 308 (15 U.S.C. 77hhh), by strik15 ing ‘‘Securities Act of 1933, the Securities Exchange 

16 Act of 1934, or the Public Utility Holding Company 

17 Act of 1935’’ each place that term appears and in18 serting ‘‘Securities Act of 1933 or the Securities Ex19 change Act of 1934’’; 

20 (3) in section 310 (15 U.S.C. 77jjj), by striking 

21 subsection (c); 

22 (4) in section 311 (15 U.S.C. 77kkk), by strik23 ing subsection (c); 

24 (5) in section 323(b) (15 U.S.C. 77www(b)), by 

25 striking ‘‘Securities Act of 1933, or the Securities 


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1 Exchange Act of 1934, or the Public Utility Holding 

2 Company Act of 1935’’ and inserting ‘‘Securities Act 

3 of 1933 or the Securities Exchange Act of 1934’’; 

4 and 

5 (6) in section 326 (15 U.S.C. 77zzz), by strik6 ing ‘‘Securities Act of 1933, or the Securities Ex7 change Act of 1934, or the Public Utility Holding 

8 Company Act of 1935,’’ and inserting ‘‘Securities 

9 Act of 1933 or the Securities Exchange Act of 

10 1934’’. 

11 (c) INVESTMENT COMPANY ACT OF 1940.—The In12 vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 

13 is amended— 

14 (1) in section 2(a)(44) (15 U.S.C. 80a– 

15 2(a)(44)), by striking ‘‘ ‘Public Utility Holding Com16 pany Act of 1935’,’’; 

17 (2) in section 3(c) (15 U.S.C. 80a–3(c)), by 

18 striking paragraph (8) and inserting the following: 

19 ‘‘(8) [Repealed]’’; 

20 (3) in section 38(b) (15 U.S.C. 80a–37(b)), by 

21 striking ‘‘the Public Utility Holding Company Act of 

22 1935,’’; and 

23 (4) in section 50 (15 U.S.C. 80a–49), by strik24 ing ‘‘the Public Utility Holding Company Act of 

25 1935,’’. 


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1 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

2 202(a)(21) of the Investment Advisers Act of 1940 (15 

3 U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public 

4 Utility Holding Company Act of 1935’,’’. 

5 SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS 

6 AND NONMATERIAL LOSSES TO THE DEPOSIT 

7 INSURANCE FUND FOR PURPOSES OF IN8 SPECTOR GENERAL REVIEWS. 

9 (a) IN GENERAL.—Section 38(k) of the Federal De10 posit Insurance Act (U.S.C. 1831o(k)) is amended— 

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

12 (B) and inserting the following: 

13 ‘‘(B) MATERIAL LOSS DEFINED.—The 

14 term ‘material loss’ means any estimated loss in 

15 excess of— 

16 ‘‘(i) $100,000,000, if the loss occurs 

17 during the period beginning on September 

18 30, 2009, and ending on December 31, 

19 2010; 

20 ‘‘(ii) $75,000,000, if the loss occurs 

21 during the period beginning on January 1, 

22 2011, and ending on December 31, 2011; 

23 and 

24 ‘‘(iii) $50,000,000, if the loss occurs 

25 on or after January 1, 2012.’’; 


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1 (2) in paragraph (4)(A) by striking ‘‘the re2 port’’ and inserting ‘‘any report on losses required 

3 under this subsection,’’; 

4 (3) by striking paragraph (6); 

5 (4) by redesignating paragraph (5) as para6 graph (6); and 

7 (5) by inserting after paragraph (4) the fol8 lowing: 

9 ‘‘(5) LOSSES THAT ARE NOT MATERIAL.— 

10 ‘‘(A) SEMIANNUAL REPORT.—For the 6- 

11 month period ending on March 31, 2010, and 

12 each 6-month period thereafter, the Inspector 

13 General of each Federal banking agency shall— 

14 ‘‘(i) identify losses that the Inspector 

15 General estimates have been incurred by 

16 the Deposit Insurance Fund during that 6- 

17 month period, with respect to the insured 

18 depository institutions supervised by the 

19 Federal banking agency; 

20 ‘‘(ii) for each loss incurred by the De21 posit Insurance Fund that is not a mate22 rial loss, determine— 

23 ‘‘(I) the grounds identified by the 

24 Federal banking agency or State bank 

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1 tion as receiver under section 

2 11(c)(5); and 

3 ‘‘(II) whether any unusual cir4 cumstances exist that might warrant 

5 an in-depth review of the loss; and 

6 ‘‘(iii) prepare and submit a written re7 port to the appropriate Federal banking 

8 agency and to Congress on the results of 

9 any determination by the Inspector Gen10 eral, including— 

11 ‘‘(I) an identification of any loss 

12 that warrants an in-depth review, to13 gether with the reasons why such re14 view is warranted, or, if the Inspector 

15 General determines that no review is 

16 warranted, an explanation of such de17 termination; and 

18 ‘‘(II) for each loss identified 

19 under subclause (I) that warrants an 

20 in-depth review, the date by which 

21 such review, and a report on such re22 view prepared in a manner consistent 

23 with reports under paragraph (1)(A), 

24 will be completed and submitted to 


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1 the Federal banking agency and Con2 gress. 

3 ‘‘(B) DEADLINE FOR SEMIANNUAL RE4 PORT.—The Inspector General of each Federal 

5 banking agency shall— 

6 ‘‘(i) submit each report required 

7 under paragraph (A) expeditiously, and not 

8 later than 90 days after the end of the 6- 

9 month period covered by the report; and 

10 ‘‘(ii) provide a copy of the report re11 quired under paragraph (A) to any Mem12 ber of Congress, upon request.’’. 

13 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

14 The heading for subsection (k) of section 38 of the Fed15 eral Deposit Insurance Act (U.S.C. 1831o(k)) is amended 

16 to read as follows: 

17 ‘‘(k) REVIEWS REQUIRED WHEN DEPOSIT INSUR18 ANCE FUND INCURS LOSSES.—’’. 


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1 SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS 

2 AND NONMATERIAL LOSSES TO THE NA3 TIONAL CREDIT UNION SHARE INSURANCE 

4 FUND FOR PURPOSES OF INSPECTOR GEN5 ERAL REVIEWS. 

6 (a) IN GENERAL.—Section 216(j) of the Federal 

7 Credit Union Act (12 U.S.C. 1790d(j)) is amended to read 

8 as follows: 

9 ‘‘(j) REVIEWS REQUIRED WHEN SHARE INSURANCE

10 FUND EXPERIENCES LOSSES.— 

11 ‘‘(1) IN GENERAL.—If the Fund incurs a mate12 rial loss with respect to an insured credit union, the 

13 Inspector General of the Board shall— 

14 ‘‘(A) submit to the Board a written report 

15 reviewing the supervision of the credit union by 

16 the Administration (including the implementa17 tion of this section by the Administration), 

18 which shall include— 

19 ‘‘(i) a description of the reasons why 

20 the problems of the credit union resulted 

21 in a material loss to the Fund; and 

22 ‘‘(ii) recommendations for preventing 

23 any such loss in the future; and 

24 ‘‘(B) submit a copy of the report under 

25 subparagraph (A) to— 


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1 ‘‘(i) the Comptroller General of the 

2 United States; 

3 ‘‘(ii) the Corporation; 

4 ‘‘(iii) in the case of a report relating 

5 to a State credit union, the appropriate 

6 State supervisor; and 

7 ‘‘(iv) to any Member of Congress, 

8 upon request. 

9 ‘‘(2) MATERIAL LOSS DEFINED.—For purposes 

10 of determining whether the Fund has incurred a ma11 terial loss with respect to an insured credit union, a 

12 loss is material if it exceeds the sum of— 

13 ‘‘(A) $25,000,000; and 

14 ‘‘(B) an amount equal to 10 percent of the 

15 total assets of the credit union on the date on 

16 which the Board initiated assistance under sec17 tion 208 or was appointed liquidating agent. 

18 ‘‘(3) PUBLIC DISCLOSURE REQUIRED.— 

19 ‘‘(A) IN GENERAL.—The Board shall dis20 close a report under this subsection, upon re21 quest under section 552 of title 5, United 

22 States Code, without excising— 

23 ‘‘(i) any portion under section 

24 552(b)(5) of title 5, United States Code; or 


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1 ‘‘(ii) any information about the in2 sured credit union (other than trade se3 crets) under section 552(b)(8) of title 5, 

4 United States Code. 

5 ‘‘(B) RULE OF CONSTRUCTION.—Subpara6 graph (A) may not be construed as requiring 

7 the agency to disclose the name of any cus8 tomer of the insured credit union (other than 

9 an institution-affiliated party), or information 

10 from which the identity of such customer could 

11 reasonably be ascertained. 

12 ‘‘(4) LOSSES THAT ARE NOT MATERIAL.— 

13 ‘‘(A) SEMIANNUAL REPORT.—For the 6- 

14 month period ending on March 31, 2010, and 

15 each 6-month period thereafter, the Inspector 

16 General of the Board shall— 

17 ‘‘(i) identify any losses that the In18 spector General estimates were incurred by 

19 the Fund during such 6-month period, 

20 with respect to insured credit unions; 

21 ‘‘(ii) for each loss to the Fund that is 

22 not a material loss, determine— 

23 ‘‘(I) the grounds identified by the 

24 Board or the State official having ju25 risdiction over a State credit union for 


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1 appointing the Board as the liqui2 dating agent for any Federal or State 

3 credit union; and 

4 ‘‘(II) whether any unusual cir5 cumstances exist that might warrant 

6 an in-depth review of the loss; and 

7 ‘‘(iii) prepare and submit a written re8 port to the Board and to Congress on the 

9 results of the determinations of the Inspec10 tor General that includes— 

11 ‘‘(I) an identification of any loss 

12 that warrants an in-depth review, and 

13 the reasons such review is warranted, 

14 or if the Inspector General determines 

15 that no review is warranted, an expla16 nation of such determination; and 

17 ‘‘(II) for each loss identified in 

18 subclause (I) that warrants an in19 depth review, the date by which such 

20 review, and a report on the review 

21 prepared in a manner consistent with 

22 reports under paragraph (1)(A), will 

23 be completed. 


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1 ‘‘(B) DEADLINE FOR SEMIANNUAL RE2 PORT.—The Inspector General of the Board 

3 shall— 

4 ‘‘(i) submit each report required 

5 under subparagraph (A) expeditiously, and 

6 not later than 90 days after the end of the 

7 6-month period covered by the report; and 

8 ‘‘(ii) provide a copy of the report re9 quired under subparagraph (A) to any 

10 Member of Congress, upon request. 

11 ‘‘(5) GAO REVIEW.—The Comptroller General 

12 of the United States shall, under such conditions as 

13 the Comptroller General determines to be appro14 priate— 

15 ‘‘(A) review each report made under para16 graph (1), including the extent to which the In17 spector General of the Board complied with the 

18 requirements under section 8L of the Inspector 

19 General Act of 1978 (5 U.S.C. App.) with re20 spect to each such report; and 

21 ‘‘(B) recommend improvements to the su22 pervision of insured credit unions (including im23 provements relating to the implementation of 

24 this section).’’. 


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1 SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 

2 ON PROPRIETARY TRADING. 

3 (a) DEFINITIONS.—In this section— 

4 (1) the term ‘‘covered entity’’ means— 

5 (A) an insured depository institution, an 

6 affiliate of an insured depository institution, a 

7 bank holding company, a financial holding com8 pany, or a subsidiary of a bank holding com9 pany or a financial holding company, as those 

10 terms are defined in the Bank Holding Com11 pany Act of 1956 (12 U.S.C. 1841 et seq.); and 

12 (B) any other entity, as the Comptroller 

13 General of the United States may determine; 

14 and 

15 (2) the term ‘‘proprietary trading’’ means the 

16 act of a covered entity investing as a principal in se17 curities, commodities, derivatives, hedge funds, pri18 vate equity firms, or such other financial products or 

19 entities as the Comptroller General may determine. 

20 (b) STUDY.— 

21 (1) IN GENERAL.—The Comptroller General of 

22 the United States shall conduct a study regarding 

23 the risks and conflicts associated with proprietary 

24 trading by and within covered entities, including an 

25 evaluation of— 


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1 (A) whether proprietary trading presents a 

2 material systemic risk to the stability of the 

3 United States financial system, and if so, the 

4 costs and benefits of options for mitigating such 

5 systemic risk; 

6 (B) whether proprietary trading presents 

7 material risks to the safety and soundness of 

8 the covered entities that engage in such activi9 ties, and if so, the costs and benefits of options 

10 for mitigating such risks; 

11 (C) whether proprietary trading presents 

12 material conflicts of interest between covered 

13 entities that engage in proprietary trading and 

14 the clients of the institutions who use the firm 

15 to execute trades or who rely on the firm to 

16 manage assets, and if so, the costs and benefits 

17 of options for mitigating such conflicts of inter18 est; 

19 (D) whether adequate disclosure regarding 

20 the risks and conflicts of proprietary trading is 

21 provided to the depositors, trading and asset 

22 management clients, and investors of covered 

23 entities that engage in proprietary trading, and 

24 if not, the costs and benefits of options for the 

25 improvement of such disclosure; and 


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1 (E) whether the banking, securities, and 

2 commodities regulators of institutions that en3 gage in proprietary trading have in place ade4 quate systems and controls to monitor and con5 tain any risks and conflicts of interest related 

6 to proprietary trading, and if not, the costs and 

7 benefits of options for the improvement of such 

8 systems and controls. 

9 (2) CONSIDERATIONS.—In carrying out the 

10 study required under paragraph (1), the Comptroller 

11 General shall consider— 

12 (A) current practice relating to proprietary 

13 trading; 

14 (B) the advisability of a complete ban on 

15 proprietary trading; 

16 (C) limitations on the scope of activities 

17 that covered entities may engage in with respect 

18 to proprietary trading; 

19 (D) the advisability of additional capital 

20 requirements for covered entities that engage in 

21 proprietary trading; 

22 (E) enhanced restrictions on transactions 

23 between affiliates related to proprietary trading; 

24 (F) enhanced accounting disclosures relat25 ing to proprietary trading; 


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1 (G) enhanced public disclosure relating to 

2 proprietary trading; and 

3 (H) any other options the Comptroller 

4 General deems appropriate. 

5 (c) REPORT TO CONGRESS.—Not later than 15 

6 months after the date of enactment of this Act, the Comp7 troller General shall submit a report to Congress on the 

8 results of the study conducted under subsection (b). 

9 (d) ACCESS BY COMPTROLLER GENERAL.—For pur10 poses of conducting the study required under subsection 

11 (b), the Comptroller General shall have access, upon re12 quest, to any information, data, schedules, books, ac13 counts, financial records, reports, files, electronic commu14 nications, or other papers, things, or property belonging 

15 to or in use by a covered entity that engages in proprietary 

16 trading, and to the officers, directors, employees, inde17 pendent public accountants, financial advisors, staff, and 

18 agents and representatives of a covered entity (as related 

19 to the activities of the agent or representative on behalf 

20 of the covered entity), at such reasonable times as the 

21 Comptroller General may request. The Comptroller Gen22 eral may make and retain copies of books, records, ac23 counts, and other records, as the Comptroller General 

24 deems appropriate. 

25 (e) CONFIDENTIALITY OF REPORTS.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the Comptroller General may not disclose 

3 information regarding— 

4 (A) any proprietary trading activity of a 

5 covered entity, unless such information is dis6 closed at a level of generality that does not re7 veal the investment or trading position or strat8 egy of the covered entity for any specific secu9 rity, commodity, derivative, or other investment 

10 or financial product; or 

11 (B) any individual interviewed by the 

12 Comptroller General for purposes of the study 

13 under subsection (b), unless such information is 

14 disclosed at a level of generality that does not 

15 reveal— 

16 (i) the name of or identifying details 

17 relating to such individual; or 

18 (ii) in the case of an individual who is 

19 an employee of a third party that provides 

20 professional services to a covered entity be21 lieved to be engaged in proprietary trading, 

22 the name of or any identifying details re23 lating to such third party. 


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1 (2) EXCEPTIONS.—The Comptroller General 

2 may disclose the information described in paragraph 

3 (1)— 

4 (A) to a department, agency, or official of 

5 the Federal Government, for official use, upon 

6 request; 

7 (B) to a committee of Congress, upon re8 quest; and 

9 (C) to a court, upon an order of such 

10 court. 

11 SEC. 989A. SENIOR INVESTOR PROTECTIONS. 

12 (a) DEFINITIONS.—As used in this section— 

13 (1) the term ‘‘eligible entity’’ means— 

14 (A) a securities commission (or any agency 

15 or office performing like functions) of a State 

16 that the Office determines has adopted rules on 

17 the appropriate use of designations in the offer 

18 or sale of securities or investment advice that 

19 meet or exceed the minimum requirements of 

20 the NASAA Model Rule on the Use of Senior21 Specific Certifications and Professional Des22 ignations (or any successor thereto); 

23 (B) the insurance commission (or any 

24 agency or office performing like functions) of 

25 any State that the Office determines has— 


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1 (i) adopted rules on the appropriate 

2 use of designations in the sale of insurance 

3 products that, to the extent practicable, 

4 conform to the minimum requirements of 

5 the National Association of Insurance 

6 Commissioners Model Regulation on the 

7 Use of Senior-Specific Certifications and 

8 Professional Designations in the Sale of 

9 Life Insurance and Annuities (or any suc10 cessor thereto); and 

11 (ii) adopted rules with respect to fidu12 ciary or suitability requirements in the sale 

13 of annuities that meet or exceed the min14 imum requirements established by the 

15 Suitability in Annuity Transactions Model 

16 Regulation of the National Association of 

17 Insurance Commissioners (or any successor 

18 thereto); or 

19 (C) a consumer protection agency of any 

20 State, if— 

21 (i) the securities commission (or any 

22 agency or office performing like functions) 

23 of the State is eligible under subparagraph 

24 (A); or 


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1 (ii) the insurance commission (or any 

2 agency or office performing like functions) 

3 of the State is eligible under subparagraph 

4 (B); 

5 (2) the term ‘‘financial product’’ means a secu6 rity, an insurance product (including an insurance 

7 product that pays a return, whether fixed or vari8 able), a bank product, and a loan product; 

9 (3) the term ‘‘misleading designation’’— 

10 (A) means a certification, professional des11 ignation, or other purported credential that in12 dicates or implies that a salesperson or adviser 

13 has special certification or training in advising 

14 or servicing seniors; and 

15 (B) does not include a certification, profes16 sional designation, license, or other credential 

17 that— 

18 (i) was issued by or obtained from an 

19 academic institution having regional ac20 creditation; 

21 (ii) meets the standards for certifi22 cations, licenses, and professional designa23 tions outlined by the NASAA Model Rule 

24 on the Use of Senior-Specific Certifications 

25 and Professional Designations in the Sale 


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1 of Life Insurance and Annuities, adopted 

2 by the National Association of Insurance 

3 Commissioners (or any successor thereto); 

4 or 

5 (iii) was issued by or obtained from a 

6 State; 

7 (4) the term ‘‘misleading or fraudulent mar8 keting’’ means the use of a misleading designation 

9 by a person that sells to or advises a senior in con10 nection with the sale of a financial product; 

11 (5) the term ‘‘NASAA’’ means the North Amer12 ican Securities Administrators Association; 

13 (6) the term ‘‘Office’’ means the Office of Fi14 nancial Literacy of the Bureau; and 

15 (7) the term ‘‘senior’’ means any individual who 

16 has attained the age of 62 years or older. 

17 (b) GRANTS TO STATES FOR ENHANCED PROTEC18 TION OF SENIORS FROM BEING MISLED BY FALSE DES19 IGNATIONS.—The Office shall establish a program under 

20 which the Office may make grants to States or eligible 

21 entities— 

22 (1) to hire staff to identify, investigate, and 

23 prosecute (through civil, administrative, or criminal 

24 enforcement actions) cases involving misleading or 

25 fraudulent marketing; 


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1 (2) to fund technology, equipment, and training 

2 for regulators, prosecutors, and law enforcement of3 ficers, in order to identify salespersons and advisers 

4 who target seniors through the use of misleading 

5 designations; 

6 (3) to fund technology, equipment, and training 

7 for prosecutors to increase the successful prosecution 

8 of salespersons and advisers who target seniors with 

9 the use of misleading designations; 

10 (4) to provide educational materials and train11 ing to regulators on the appropriateness of the use 

12 of designations by salespersons and advisers in con13 nection with the sale and marketing of financial 

14 products; 

15 (5) to provide educational materials and train16 ing to seniors to increase awareness and under17 standing of misleading or fraudulent marketing; 

18 (6) to develop comprehensive plans to combat 

19 misleading or fraudulent marketing of financial 

20 products to seniors; and 

21 (7) to enhance provisions of State law to pro22 vide protection for seniors against misleading or 

23 fraudulent marketing. 

24 (c) APPLICATIONS.—A State or eligible entity desir25 ing a grant under this section shall submit an application 


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1 to the Office, in such form and in such a manner as the 

2 Office may determine, that includes— 

3 (1) a proposal for activities to protect seniors 

4 from misleading or fraudulent marketing that are 

5 proposed to be funded using a grant under this sec6 tion, including— 

7 (A) an identification of the scope of the 

8 problem of misleading or fraudulent marketing 

9 in the State; 

10 (B) a description of how the proposed ac11 tivities would— 

12 (i) protect seniors from misleading or 

13 fraudulent marketing in the sale of finan14 cial products, including by proactively iden15 tifying victims of misleading and fraudu16 lent marketing who are seniors; 

17 (ii) assist in the investigation and 

18 prosecution of those using misleading or 

19 fraudulent marketing; and 

20 (iii) discourage and reduce cases of 

21 misleading or fraudulent marketing; and 

22 (C) a description of how the proposed ac23 tivities would be coordinated with other State 

24 efforts; and 


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1 (2) any other information, as the Office deter2 mines is appropriate. 

3 (d) PERFORMANCE OBJECTIVES AND REPORTING

4 REQUIREMENTS.—The Office may establish such perform5 ance objectives and reporting requirements for States and 

6 eligible entities receiving a grant under this section as the 

7 Office determines are necessary to carry out and assess 

8 the effectiveness of the program under this section. 

9 (e) MAXIMUM AMOUNT.—The amount of a grant 

10 under this section may not exceed— 

11 (1) $500,000 for each of 3 consecutive fiscal 

12 years, if the recipient is a State, or an eligible entity 

13 of a State, that has adopted rules— 

14 (A) on the appropriate use of designations 

15 in the offer or sale of securities or investment 

16 advice that meet or exceed the minimum re17 quirements of the NASAA Model Rule on the 

18 Use of Senior-Specific Certifications and Pro19 fessional Designations (or any successor there20 to); 

21 (B) on the appropriate use of designations 

22 in the sale of insurance products that, to the 

23 extent practicable, conform to the minimum re24 quirements of the National Association of In25 surance Commissioners Model Regulation on 


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1 the Use of Senior-Specific Certifications and 

2 Professional Designations in the Sale of Life 

3 Insurance and Annuities (or any successor 

4 thereto); and 

5 (C) with respect to fiduciary or suitability 

6 requirements in the sale of annuities that meet 

7 or exceed the minimum requirements estab8 lished by the Suitability in Annuity Trans9 actions Model Regulation of the National Asso10 ciation of Insurance Commissioners (or any 

11 successor thereto); and 

12 (2) $100,000 for each of 3 consecutive fiscal 

13 years, if the recipient is a State, or an eligible entity 

14 of a State, that has adopted— 

15 (A) rules on the appropriate use of des16 ignations in the offer or sale of securities or in17 vestment advice that meet or exceed the min18 imum requirements of the NASAA Model Rule 

19 on the Use of Senior-Specific Certifications and 

20 Professional Designations (or any successor 

21 thereto); or 

22 (B) rules— 

23 (i) on the appropriate use of designa24 tions in the sale of insurance products 

25 that, to the extent practicable, conform to 


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1 the minimum requirements of the National 

2 Association of Insurance Commissioners 

3 Model Regulation on the Use of Senior4 Specific Certifications and Professional 

5 Designations in the Sale of Life Insurance 

6 and Annuities (or any successor thereto); 

7 and 

8 (ii) with respect to fiduciary or suit9 ability requirements in the sale of annu10 ities that meet or exceed the minimum re11 quirements established by the Suitability in 

12 Annuity Transactions Model Regulation of 

13 the National Association of Insurance 

14 Commissioners (or any successor thereto). 

15 (f) SUBGRANTS.—A State or eligible entity that re16 ceives a grant under this section may make a subgrant, 

17 as the State or eligible entity determines is necessary to 

18 carry out the activities funded using a grant under this 

19 section. 

20 (g) REAPPLICATION.—A State or eligible entity that 

21 receives a grant under this section may reapply for a grant 

22 under this section, notwithstanding the limitations on 

23 grant amounts under subsection (e). 


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1 (h) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section, 

3 $8,000,000 for each of fiscal years 2011 through 2015. 

4 SEC. 989B. CHANGES IN APPOINTMENT OF CERTAIN IN5 SPECTORS GENERAL. 

6 (a) ELEVATION OF CERTAIN INSPECTORS GENERAL

7 TO APPOINTMENT PURSUANT TO SECTION 3 OF THE IN8 SPECTOR GENERAL ACT OF 1978.— 

9 (1) INCLUSION IN CERTAIN DEFINITIONS.—Sec10 tion 12 of the Inspector General Act of 1978 (5 

11 U.S.C. App.) is amended— 

12 (A) in paragraph (1), by striking ‘‘or the 

13 Federal Cochairpersons of the Commissions es14 tablished under section 15301 of title 40, 

15 United States Code;’’ and inserting ‘‘the Fed16 eral Cochairpersons of the Commissions estab17 lished under section 15301 of title 40, United 

18 States Code; the Chairman of the Board of 

19 Governors of the Federal Reserve System; the 

20 Chairman of the Commodity Futures Trading 

21 Commission; the Chairman of the National 

22 Credit Union Administration; the Chairman of 

23 the Board of Directors of the Pension Benefit 

24 Guaranty Corporation; the Chairman of the Se25 curities and Exchange Commission; or the DiVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01008 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 rector of the Bureau of Consumer Financial 

2 Protection;’’; and 

3 (B) in paragraph (2), by striking ‘‘or the 

4 Commissions established under section 15301 

5 of title 40, United States Code,’’ and inserting 

6 ‘‘the Commissions established under section 

7 15301 of title 40, United States Code, the 

8 Board of Governors of the Federal Reserve Sys9 tem, the Commodity Futures Trading Commis10 sion, the National Credit Union Administration, 

11 the Pension Benefit Guaranty Corporation, the 

12 Securities and Exchange Commission, or the 

13 Director of the Bureau of Consumer Financial 

14 Protection,’’. 

15 (2) EXCLUSION FROM DEFINITION OF DES16 IGNATED FEDERAL ENTITY.—Section 8G(a)(2) of 

17 the Inspector General Act of 1978 (5 U.S.C. App.) 

18 is amended— 

19 (A) by striking ‘‘the Board of Governors of 

20 the Federal Reserve System,’’; 

21 (B) by striking ‘‘the Commodity Futures 

22 Trading Commission,’’; 

23 (C) by striking ‘‘the National Credit Union 

24 Administration,’’; and 


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1 (D) by striking ‘‘the Pension Benefit 

2 Guaranty Corporation, the Securities and Ex3 change Commission,’’. 

4 (b) CONTINUATION OF PROVISIONS RELATING TO

5 PERSONNEL.— 

6 (1) IN GENERAL.—The Inspector General Act 

7 of 1978 (5 U.S.C. App.) is amended by inserting 

8 after section 8L the following: 

9 ‘‘SEC. 8M. SPECIAL PROVISIONS CONCERNING CERTAIN ES10 TABLISHMENTS. 

11 ‘‘(a) DEFINITION.—For purposes of this section, the 

12 term ‘covered establishment’ means the Board of Gov13 ernors of the Federal Reserve System, the Commodity Fu14 tures Trading Commission, the National Credit Union Ad15 ministration, the Pension Benefit Guaranty Corporation, 

16 and the Securities and Exchange Commission. 

17 ‘‘(b) PROVISIONS RELATING TO ALL COVERED ES18 TABLISHMENTS.— 

19 ‘‘(1) PROVISIONS RELATING TO INSPECTORS

20 GENERAL.—In the case of the Inspector General of 

21 a covered establishment, subsections (b) and (c) of 

22 section 4 of the Inspector General Reform Act of 

23 2008 (Public Law 110–409; 122 Stat. 4304) shall 

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1 tion 8G of this Act. An Inspector General who is 

2 subject to the preceding sentence shall not be sub3 ject to section 3(e) of this Act. 

4 ‘‘(2) PROVISIONS RELATING TO OTHER PER5 SONNEL.—Notwithstanding paragraphs (7) and (8) 

6 of section 6(a), the Inspector General of a covered 

7 establishment may select, appoint, and employ such 

8 officers and employees as may be necessary for car9 rying out the functions, powers, and duties of the 

10 Office of Inspector General of the covered establish11 ment and to obtain the temporary or intermittent 

12 services of experts or consultants or an organization 

13 of experts or consultants, subject to the applicable 

14 laws and regulations that govern such selections, ap15 pointments, and employment, and the obtaining of 

16 such services, within the covered establishment. 

17 ‘‘(c) PROVISION RELATING TO THE BOARD OF GOV18 ERNORS OF THE FEDERAL RESERVE SYSTEM.—The pro19 visions of subsection (a) of section 8D (other than the pro20 visions of subparagraphs (A), (B), (C), and (E) of para21 graph (1) of such subsection (a)) shall apply to the Inspec22 tor General of the Board of Governors of the Federal Re23 serve System and the Chairman of the Board of Governors 

24 of the Federal Reserve System in the same manner as 

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1 partment of the Treasury and the Secretary of the Treas2 ury, respectively.’’. 

3 (2) CONFORMING AMENDMENT.—Paragraph (3) 

4 of section 8G(g) of the Inspector General Act of 

5 1978 (5 U.S.C. App.) is repealed. 

6 (c) CORRECTIVE RESPONSES BY HEADS OF CERTAIN

7 ESTABLISHMENTS TO DEFICIENCIES IDENTIFIED BY IN8 SPECTORS GENERAL.—The Chairman of the Board of 

9 Governors, the Chairman of the Commodity Futures 

10 Trading Commission, the Chairman of the National Credit 

11 Union Administration, the Chairman of the Board of Di12 rectors of the Pension Benefit Guaranty Corporation, and 

13 the Chairman of the Commission shall each— 

14 (1) take action to address deficiencies identified 

15 by a report or investigation of the Inspector General 

16 of the establishment concerned; or 

17 (2) certify to the Senate and the House of Rep18 resentatives that no action is necessary or appro19 priate in connection with a deficiency described in 

20 paragraph (1). 

21 (d) EFFECTIVE DATE; TRANSITION RULE.— 

22 (1) EFFECTIVE DATE.—This section and the 

23 amendments made by this section shall take effect 

24 30 days after the date of enactment of this Act. 


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1 (2) TRANSITION RULE.—An individual serving 

2 as Inspector General of the Board of Governors, the 

3 Commodity Futures Trading Commission, the Na4 tional Credit Union Administration, the Pension 

5 Benefit Guaranty Corporation, or the Commission 

6 on the effective date of this section pursuant to an 

7 appointment made under section 8G of the Inspector 

8 General Act of 1978 (5 U.S.C. App.)— 

9 (A) may continue so serving until the 

10 President makes an appointment under section 

11 3(a) of such Act with respect to the Board of 

12 Governors, the Commodity Futures Trading 

13 Commission, the National Credit Union Admin14 istration, the Pension Benefit Guaranty Cor15 poration, or the Commission, as the case may 

16 be, consistent with the amendments made by 

17 subsection (a); and 

18 (B) shall, while serving under subpara19 graph (A)— 

20 (i) remain subject to the provisions of 

21 section 8G of such Act that applied with 

22 respect to the Inspector General of the 

23 Board of Governors, the Commodity Fu24 tures Trading Commission, the National 

25 Credit Union Administration, the Pension 


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1 Benefit Guaranty Corporation, or the 

2 Commission, as the case may be, on the 

3 day before the effective date of this sec4 tion; and 

5 (ii) suffer no reduction in pay. 

6 Subtitle J—Self-funding of the Se7 curities and Exchange Commis8 sion 

9 SEC. 991. SECURITIES AND EXCHANGE COMMISSION SELF10 FUNDING. 

11 (a) SELF-FUNDING AUTHORITY.—Section 4 of the 

12 Securities Exchange Act of 1934 (15 U.S.C. 78d) is 

13 amended— 

14 (1) in subsection (c), in the second sentence, by 

15 striking ‘‘credited to the appropriated funds of the 

16 Commission’’ and inserting ‘‘deposited in the ac17 count described in subsection (i)(4)’’; 

18 (2) in subsection (f), in the second sentence, by 

19 striking ‘‘considered a reimbursement to the appro20 priated funds of the Commission’’ and inserting ‘‘de21 posited in the account described in subsection 

22 (i)(4)’’; and 

23 (3) by adding at the end the following: 

24 ‘‘(i) FUNDING OF THE COMMISSION.— 


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1 ‘‘(1) BUDGET.—For each fiscal year, the Chair2 man of the Commission shall prepare and submit to 

3 Congress a budget to Congress. Such budget shall be 

4 submitted at the same time the President submits a 

5 budget of the United States to Congress for such 

6 fiscal year. The budget submitted by the Chairman 

7 of the Commission pursuant to this paragraph shall 

8 not be considered a request for appropriations. 

9 ‘‘(2) TREASURY PAYMENT.— 

10 ‘‘(A) On the first day of each fiscal year, 

11 the Treasury shall pay into the account de12 scribed in paragraph (4) an amount equal to 

13 the budget submitted by the Chairman of the 

14 Commission pursuant to paragraph (1) for such 

15 fiscal year. 

16 ‘‘(B) At or prior to the end of each fiscal 

17 year, the Commission shall pay to the Treasury 

18 from fees and assessments deposited in the ac19 count described in paragraph (4) an amount 

20 equal to the amount paid by the Treasury pur21 suant to subparagraph (A) for such fiscal year, 

22 unless there are not sufficient fees and assess23 ments deposited in such account at or prior to 

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1 ment, in which case the Commission shall make 

2 such payment in a subsequent fiscal year. 

3 ‘‘(3) OBLIGATIONS AND EXPENSES.— 

4 ‘‘(A) IN GENERAL.—The Commission shall 

5 determine and prescribe the manner in which— 

6 ‘‘(i) the obligations of the Commission 

7 shall be incurred; and 

8 ‘‘(ii) the disbursements and expenses 

9 of the Commission allowed and paid. 

10 ‘‘(B) INSUFFICIENT FUNDS.—If, in the 

11 course of any fiscal year, the Chairman of the 

12 Commission determines that, due to unforeseen 

13 circumstances, the obligations of the Commis14 sion will exceed those provided for in the budget 

15 submitted under paragraph (1), the Chairman 

16 of the Commission may notify Congress of the 

17 amount and expected uses of the additional ob18 ligations. 

19 ‘‘(C) AUTHORITY TO INCUR EXCESS OBLI20 GATIONS.—The Commission may incur obliga21 tions in excess of the budget submitted under 

22 paragraph (1) from amounts available in the 

23 account described in paragraph (4). 


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1 ‘‘(D) RULE OF CONSTRUCTION.—Any noti2 fication to Congress under this paragraph shall 

3 not be considered a request for appropriations. 

4 ‘‘(4) ACCOUNT.— 

5 ‘‘(A) ESTABLISHMENT.—Fees and assess6 ments collected under this title, section 6(b) of 

7 the Securities Act of 1933 (15 U.S.C. 77f(b)), 

8 and section 24(f) of the Investment Company 

9 Act of 1940 (15 U.S.C. 80a–24(f)) and pay10 ments made by the Treasury pursuant to para11 graph (2)(A) for any fiscal year shall be depos12 ited into an account established at any regular 

13 Government depositary or any State or national 

14 bank. 

15 ‘‘(B) RULE OF CONSTRUCTION.—Any 

16 amounts deposited into the account established 

17 under subparagraph (A) shall not be construed 

18 to be Government funds or appropriated mon19 ies. 

20 ‘‘(C) NO APPORTIONMENT.—Any amounts 

21 deposited into the account established under 

22 subparagraph (A) shall not be subject to appor23 tionment for the purpose of chapter 15 of title 

24 31, United States Code, or under any other au25 thority. 


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1 ‘‘(5) USE OF ACCOUNT FUNDS.— 

2 ‘‘(A) PERMISSIBLE USES.—Amounts avail3 able in the account described in paragraph (4) 

4 may be withdrawn by the Commission and used 

5 for the purposes described in paragraphs (2) 

6 and (3). 

7 ‘‘(B) IMPERMISSIBLE USE.—Except as 

8 provided in paragraph (6), no amounts available 

9 in the account described in paragraph (4) shall 

10 be deposited and credited as general revenue of 

11 the Treasury. 

12 ‘‘(6) EXCESS FUNDS.—If, at the end of any fis13 cal year and after all payments have been made to 

14 the Treasury pursuant to paragraph (2)(B) for such 

15 fiscal year and all prior fiscal years, the balance of 

16 the account described in paragraph (4) exceeds 25 

17 percent of the budget of the Commission for the fol18 lowing fiscal year, the amount by which the balance 

19 exceeds 25 percent of such budget shall be credited 

20 as general revenue of the Treasury.’’. 

21 (b) CONFORMING AMENDMENTS TO TRANSACTION

22 FEE PROVISIONS.—Section 31 of the Securities Exchange 

23 Act of 1934 (15 U.S.C. 78ee) is amended— 

24 (1) by amending subsection (a) to read as fol25 lows: 


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1 ‘‘(a) RECOVERY OF COSTS AND EXPENSES.— 

2 ‘‘(1) IN GENERAL.—The Commission shall, in 

3 accordance with this section, collect transaction fees 

4 and assessments that are designed— 

5 ‘‘(A) to recover the reasonable costs and 

6 expenses of the Commission, as set forth in the 

7 annual budget of the Commission; and 

8 ‘‘(B) to provide funds necessary to main9 tain a reserve. 

10 ‘‘(2) OVERPAYMENTS.—The authority to collect 

11 transaction fees and assessments in accordance with 

12 this section shall include the authority to offset from 

13 such collection any overpayment of transaction fees 

14 or assessments, regardless of the fiscal year in which 

15 such overpayment is made.’’; 

16 (2) in subsection (e)(2), by striking ‘‘September 

17 30’’ and inserting ‘‘September 25’’; 

18 (3) in subsection (g), by striking ‘‘April 30’’ 

19 and inserting ‘‘August 31’’; 

20 (4) by amending subsection (i) to read as fol21 lows: 

22 ‘‘(i) FEE COLLECTIONS.—Fees and assessments col23 lected pursuant to this section shall be deposited and cred24 ited in accordance with section 4(g) of this title.’’; 


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1 (5) by amending subsection (j) to read as fol2 lows: 

3 ‘‘(j) ADJUSTMENTS TO TRANSACTION FEE RATES.— 

4 ‘‘(1) ANNUAL ADJUSTMENT.—For each fiscal 

5 year, the Commission shall by order adjust each of 

6 the rates applicable under subsections (b) and (c) 

7 for such fiscal year to a uniform adjusted rate that, 

8 when applied to the baseline estimate of the aggre9 gate dollar amount of sales for such fiscal year, is 

10 reasonably likely to produce aggregate fee collections 

11 under this section (including assessments collected 

12 under subsection (d)) that are equal to the budget 

13 of the Commission for such fiscal year, plus amounts 

14 necessary to maintain a reserve. 

15 ‘‘(2) MID-YEAR ADJUSTMENT.—For each fiscal 

16 year, the Commission shall determine, by March 1 of 

17 such fiscal year, whether, based on the actual aggre18 gate dollar volume of sales during the first 4 months 

19 of such fiscal year, the baseline estimate of the ag20 gregate dollar volume of sales used under paragraph 

21 (1) for such fiscal year is reasonably likely to be 10 

22 percent (or more) greater or less than the actual ag23 gregate dollar volume of sales for such fiscal year. 

24 If the Commission so determines, the Commission 

25 shall by order, not later than March 1, adjust each 


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1 of the rates applicable under subsections (b) and (c) 

2 for such fiscal year to a uniform adjusted rate that, 

3 when applied to the revised estimate of the aggre4 gate dollar amount of sales for the remainder of 

5 such fiscal year, is reasonably likely to produce ag6 gregate fee collections under this section (including 

7 fees estimated to be collected under subsections (b) 

8 and (c) during such fiscal year prior to the effective 

9 date of the new uniform adjusted rate and assess10 ments collected under subsection (d)) that are equal 

11 to the budget of the Commission for such fiscal year, 

12 plus amounts necessary to maintain a reserve. In 

13 making such revised estimate, the Commission shall, 

14 after consultation with the Congressional Budget Of15 fice and the Office of Management and Budget, use 

16 the same methodology required by paragraph (4). 

17 ‘‘(3) REVIEW AND EFFECTIVE DATE.—In exer18 cising its authority under this subsection, the Com19 mission shall not be required to comply with the pro20 visions of section 553 of title 5 United States Code. 

21 An adjusted rate prescribed under paragraph (1) or 

22 (2) and published under subsection (g) shall not be 

23 subject to judicial review. An adjusted rate pre24 scribed under paragraph (1) shall take effect on the 

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1 plies. An adjusted rate prescribed under paragraph 

2 (2) shall take effect on April 1 of the fiscal year to 

3 which such rate applies. 

4 ‘‘(4) BASELINE ESTIMATE OF THE AGGREGATE

5 DOLLAR AMOUNT OF SALES.—For purposes of this 

6 subsection, the baseline estimate of the aggregate 

7 dollar amount of sales for any fiscal year is the 

8 baseline estimate of the aggregate dollar amount of 

9 sales of securities (other than bonds, debentures, 

10 other evidences of indebtedness, security futures 

11 products, and options on securities indexes excluding 

12 a narrow-based security index) to be transacted on 

13 each national securities exchange and by or through 

14 any member of each national securities association 

15 (otherwise than on a national securities exchange) 

16 during such fiscal year as determined by the Com17 mission, after consultation with the Congressional 

18 Budget Office and the Office of Management and 

19 Budget, using the methodology required for making 

20 projections pursuant to section 907 of title 2.’’; and 

21 (6) by striking subsections (k) and (l). 

22 (c) CONFORMING AMENDMENTS TO REGISTRATION

23 FEE PROVISIONS.— 


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1 (1) SECTION 6(B) OF THE SECURITIES ACT OF

2 1933.—Section 6(b) of the Securities Act of 1933 

3 (15 U.S.C. 77f(b)) is amended— 

4 (A) by striking ‘‘offsetting’’ each place that 

5 term appears and inserting ‘‘fee’’; 

6 (B) in paragraph (3), in the paragraph 

7 heading, by striking ‘‘OFFSETTING’’ and insert8 ing ‘‘FEE’’; 

9 (C) in paragraph (11)(A), in the subpara10 graph heading, by striking ‘‘OFFSETTING’’ and 

11 inserting ‘‘FEE’’; 

12 (D) by striking paragraphs (1), (3), (4), 

13 (6), (8), and (9); 

14 (E) by redesignating paragraph (2) as 

15 paragraph (1); 

16 (F) in paragraph (1), as so redesignated, 

17 by striking ‘‘(5) or (6)’’ and inserting ‘‘(3)’’; 

18 (G) by inserting after paragraph (1), as so 

19 redesignated, the following: 

20 ‘‘(2) FEE COLLECTIONS.—Fees collected pursu21 ant to this subsection shall be deposited and credited 

22 in accordance with section 4(i) of the Securities Ex23 change Act of 1934.’’; 

24 (H) by redesignating paragraph (5) as 

25 paragraph (3); 


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1 (I) in paragraph (3), as redesignated— 

2 (i) by striking ‘‘of the fiscal years 

3 2003 through 2011’’ and inserting ‘‘fiscal 

4 year’’; and 

5 (ii) by striking ‘‘paragraph (2)’’ and 

6 inserting ‘‘paragraph (1)’’; 

7 (J) by redesignating paragraph (7) as 

8 paragraph (4); 

9 (K) by inserting after paragraph (4), as so 

10 redesignated, the following: 

11 ‘‘(5) REVIEW AND EFFECTIVE DATE.—In exer12 cising its authority under this subsection, the Com13 mission shall not be required to comply with the pro14 visions of section 553 of title 5, United States Code. 

15 An adjusted rate prescribed under paragraph (3) 

16 and published under paragraph (6) shall not be sub17 ject to judicial review. An adjusted rate prescribed 

18 under paragraph (3) shall take effect on the first 

19 day of the fiscal year to which such rate applies.’’; 

20 (L) by redesignating paragraphs (10) and 

21 (11), as paragraphs (6) and (7); 

22 (M) in paragraph (6), as redesignated, by 

23 striking ‘‘April 30’’ and inserting ‘‘August 31’’; 

24 and 

25 (N) in paragraph (7), as redesignated— 


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1 (i) by striking ‘‘of the fiscal years 

2 2002 through 2011’’ and inserting ‘‘fiscal 

3 year’’; and 

4 (ii) by inserting at the end of the 

5 table in subparagraph (A) the following: 

2012 and each succeeding fiscal year An amount that is 

equal to the target fee collection amount for 

the prior fiscal 

year adjusted 

by the rate of 

inflation. 

6 (2) SECTION 13(E) OF THE SECURITIES EX7 CHANGE ACT OF 1934.—Section 13(e) of the Securi8 ties Exchange Act of 1934 (15 U.S.C. 78m(e)) is 

9 amended— 

10 (A) by striking ‘‘offsetting’’ each place that 

11 term appears and inserting ‘‘fee’’; 

12 (B) in paragraph (3) by striking ‘‘para13 graphs (5) and (6)’’ and inserting ‘‘paragraph 

14 (5)’’; 

15 (C) by amending paragraph (4) to read as 

16 follows: 

17 ‘‘(4) FEE COLLECTIONS.—Fees collected pursu18 ant to this subsection shall be deposited and credited 

19 in accordance with section 4(g) of this title.’’; 


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1 (D) in paragraph (5), by striking ‘‘of the 

2 fiscal years 2003 through 2011’’ and inserting 

3 ‘‘fiscal year’’; 

4 (E) by striking paragraphs (6), (7), and 

5 (8); 

6 (F) by redesignating paragraph (7) as 

7 paragraph (6); 

8 (G) by inserting after paragraph (6), as so 

9 redesignated, the following: 

10 ‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer11 cising its authority under this subsection, the Com12 mission shall not be required to comply with the pro13 visions of section 553 of title 5. An adjusted rate 

14 prescribed under paragraph (5) and published under 

15 paragraph (8) shall not be subject to judicial review. 

16 An adjusted rate prescribed under paragraph (5) 

17 shall take effect on the first day of the fiscal year 

18 to which such rate applies.’’; 

19 (H) by striking paragraph (9); 

20 (I) by redesignating paragraph (10) as 

21 paragraph (8); and 

22 (J) in paragraph (8), as so redesignated, 

23 by striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(6)’’. 

24 (3) SECTION 14 OF THE SECURITIES EXCHANGE

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1 change Act of 1934 (15 U.S.C. 78n(g)) is amend2 ed— 

3 (A) by striking the word ‘‘offsetting’’ each 

4 time that it appears and inserting in its place 

5 the word ‘‘fee’’; 

6 (B) in paragraph (1)(A), by striking 

7 ‘‘paragraphs (5) and (6)’’ each time it appears 

8 and inserting ‘‘paragraph (5)’’; 

9 (C) in paragraph (3), by striking ‘‘para10 graphs (5) and (6)’’ and inserting ‘‘paragraph 

11 (5)’’; 

12 (D) by amending paragraph (4) to read as 

13 follows: 

14 ‘‘(4) FEE COLLECTIONS.—Fees collected pursu15 ant to this subsection shall be deposited and credited 

16 in accordance with section 4(g) of this title.’’; 

17 (E) in paragraph (5), by striking ‘‘of the 

18 fiscal years 2003 through 2011’’ and inserting 

19 ‘‘fiscal year’’; 

20 (F) by striking paragraphs (6), (8), and 

21 (9); 

22 (G) by redesignating paragraph (7) as 

23 paragraph (6); 

24 (H) by inserting after paragraph (6), as so 

25 redesignated, the following: 


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1 ‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer2 cising its authority under this subsection, the Com3 mission shall not be required to comply with the pro4 visions of section 553 of title 5. An adjusted rate 

5 prescribed under paragraph (5) and published under 

6 paragraph (8) shall not be subject to judicial review. 

7 An adjusted rate prescribed under paragraph (5) 

8 shall take effect on the first day of the fiscal year 

9 to which such rate applies.’’; 

10 (I) by redesignating paragraphs (10) and 

11 (11) as paragraphs (8) and (9), respectively; 

12 and 

13 (J) in paragraph (9), as so redesignated, 

14 by striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(7)’’. 

15 (d) REPEAL OF AUTHORIZATION OF APPROPRIA16 TIONS.—Section 35 of the Securities Exchange Act of 

17 1934 (15 U.S.C. 78kk) is repealed. 

18 (e) EFFECTIVE DATE AND TRANSITION PROVI19 SIONS.— 

20 (1) IN GENERAL.—Except as provided in para21 graphs (2) and (3), the amendments made by this 

22 section shall be effective on the first day of the fiscal 

23 year following the fiscal year in which this Act is en24 acted. 


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1 (2) TRANSITION PERIOD.—For the fiscal year 

2 following the fiscal year in which this Act is enacted, 

3 the budget of the Commission shall be deemed to be 

4 the budget submitted by the Chairman of the Com5 mission to the President for such fiscal year in ac6 cordance with the provisions of section 1108 of title 

7 31, United States Code. 

8 (3) OTHER PROVISIONS.—The amendments 

9 made by this section to subsections (g) and (j)(1) of 

10 section 31 of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78ee) shall be effective on the date of en12 actment of this Act, and shall require the Commis13 sion to make and publish an annual adjustment to 

14 the fee rates applicable under subsections (b) and 

15 (c) of section 31 of the Securities Exchange Act of 

16 1934 (15 U.S.C. 78ee) for the fiscal year following 

17 the fiscal year in which this Act is enacted. The ad18 justed rate described in the preceding sentence shall 

19 supersede any previously published adjusted rate ap20 plicable under subsections (b) and (c) of section 31 

21 of the Securities Exchange Act of 1934 for the fiscal 

22 year following the fiscal year in which this Act is en23 acted and shall take effect on the first day of the fis24 cal year following the fiscal year in which this Act 

25 is enacted, except that, if this Act is enacted on or 


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1 after August 31 and on or prior to September 30, 

2 the adjusted rate described in the first sentence shall 

3 be published not later than 15 days after the date 

4 of enactment of this Act and take effect 30 days 

5 thereafter, and the Commission shall continue to col6 lect fees under subsections (b) and (c) of section 31 

7 of the Securities Exchange Act of 1934 at the rate 

8 in effect during the preceding fiscal year until the 

9 adjusted rate is effective. 

10 TITLE X—BUREAU OF CON11 SUMER FINANCIAL PROTEC12 TION 

13 SEC. 1001. SHORT TITLE. 

14 This title may be cited as the ‘‘Consumer Financial 

15 Protection Act of 2010’’. 

16 SEC. 1002. DEFINITIONS. 

17 Except as otherwise provided in this title, for pur18 poses of this title, the following definitions shall apply: 

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

20 any person that controls, is controlled by, or is 

21 under common control with another person. 

22 (2) BUREAU.—The term ‘‘Bureau’’ means the 

23 Bureau of Consumer Financial Protection. 

24 (3) BUSINESS OF INSURANCE.—The term 

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1 ance or the reinsuring of risks by an insurer, includ2 ing all acts necessary to such writing or reinsuring 

3 and the activities relating to the writing of insurance 

4 or the reinsuring of risks conducted by persons who 

5 act as, or are, officers, directors, agents, or employ6 ees of insurers or who are other persons authorized 

7 to act on behalf of such persons. 

8 (4) CONSUMER.—The term ‘‘consumer’’ means 

9 an individual or an agent, trustee, or representative 

10 acting on behalf of an individual. 

11 (5) CONSUMER FINANCIAL PRODUCT OR SERV12 ICE.—The term ‘‘consumer financial product or 

13 service’’ means any financial product or service that 

14 is described in one or more categories under— 

15 (A) paragraph (13) and is offered or pro16 vided for use by consumers primarily for per17 sonal, family, or household purposes; or 

18 (B) clause (i), (iii), (ix), or (x) of para19 graph (13)(A), and is delivered, offered, or pro20 vided in connection with a consumer financial 

21 product or service referred to in subparagraph 

22 (A). 

23 (6) COVERED PERSON.—The term ‘‘covered 

24 person’’ means— 


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1 (A) any person that engages in offering or 

2 providing a consumer financial product or serv3 ice; and 

4 (B) any affiliate of a person described in 

5 subparagraph (A) if such affiliate acts as a 

6 service provider to such person. 

7 (7) CREDIT.—The term ‘‘credit’’ means the 

8 right granted by a person to a consumer to defer 

9 payment of a debt, incur debt and defer its payment, 

10 or purchase property or services and defer payment 

11 for such purchase. 

12 (8) DEPOSIT-TAKING ACTIVITY.—The term ‘‘de13 posit-taking activity’’ means— 

14 (A) the acceptance of deposits, mainte15 nance of deposit accounts, or the provision of 

16 services related to the acceptance of deposits or 

17 the maintenance of deposit accounts; 

18 (B) the acceptance of funds, the provision 

19 of other services related to the acceptance of 

20 funds, or the maintenance of member share ac21 counts by a credit union; or 

22 (C) the receipt of funds or the equivalent 

23 thereof, as the Bureau may determine by rule 

24 or order, received or held by a covered person 

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1 pose of facilitating a payment or transferring 

2 funds or value of funds between a consumer 

3 and a third party. 

4 (9) DESIGNATED TRANSFER DATE.—The term 

5 ‘‘designated transfer date’’ means the date estab6 lished under section 1062. 

7 (10) DIRECTOR.—The term ‘‘Director’’ means 

8 the Director of the Bureau. 

9 (11) ENUMERATED CONSUMER LAWS.—The 

10 term ‘‘enumerated consumer laws’’ means— 

11 (A) the Alternative Mortgage Transaction 

12 Parity Act of 1982 (12 U.S.C. 3801 et seq.); 

13 (B) the Consumer Leasing Act of 1976 

14 (15 U.S.C. 1667 et seq.); 

15 (C) the Electronic Fund Transfer Act (15 

16 U.S.C. 1693 et seq.); 

17 (D) the Equal Credit Opportunity Act (15 

18 U.S.C. 1691 et seq.); 

19 (E) the Fair Credit Billing Act (15 U.S.C. 

20 1666 et seq.); 

21 (F) the Fair Credit Reporting Act (15 

22 U.S.C. 1681 et seq.), except with respect to sec23 tions 615(e) and 628 of that Act (15 U.S.C. 

24 1681m(e), 1681w); 


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1 (G) the Home Owners Protection Act of 

2 1998 (12 U.S.C. 4901 et seq.); 

3 (H) the Fair Debt Collection Practices Act 

4 (15 U.S.C. 1692 et seq.); 

5 (I) subsections (c) through (f) of section 

6 43 of the Federal Deposit Insurance Act (12 

7 U.S.C. 1831t(c)–(f)); 

8 (J) sections 502 through 509 of the 

9 Gramm-Leach-Bliley Act (15 U.S.C. 6802– 

10 6809); 

11 (K) the Home Mortgage Disclosure Act of 

12 1975 (12 U.S.C. 2801 et seq.); 

13 (L) the Home Ownership and Equity Pro14 tection Act of 1994 (15 U.S.C. 1601 note); 

15 (M) the Real Estate Settlement Procedures 

16 Act of 1974 (12 U.S.C. 2601 et seq.); 

17 (N) the S.A.F.E. Mortgage Licensing Act 

18 of 2008 (12 U.S.C. 5101 et seq.); 

19 (O) the Truth in Lending Act (15 U.S.C. 

20 1601 et seq.); and 

21 (P) the Truth in Savings Act (12 U.S.C. 

22 4301 et seq.). 

23 (12) FEDERAL CONSUMER FINANCIAL LAW.— 

24 The term ‘‘Federal consumer financial law’’ means 

25 the provisions of this title, the enumerated consumer 


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1 laws, the laws for which authorities are transferred 

2 under subtitles F and H, and any rule or order pre3 scribed by the Bureau under this title, an enumer4 ated consumer law, or pursuant to the authorities 

5 transferred under subtitles F and H. 

6 (13) FINANCIAL PRODUCT OR SERVICE.—The 

7 term ‘‘financial product or service’’— 

8 (A) means— 

9 (i) extending credit and servicing 

10 loans, including acquiring, purchasing, sell11 ing, brokering, or other extensions of credit 

12 (other than solely extending commercial 

13 credit to a person who originates consumer 

14 credit transactions); 

15 (ii) extending or brokering leases of 

16 personal or real property that are the func17 tional equivalent of purchase finance ar18 rangements, if— 

19 (I) the lease is on a non-oper20 ating basis; 

21 (II) the initial term of the lease 

22 is at least 90 days; and 

23 (III) in the case of a lease involv24 ing real property, at the inception of 

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1 tended to result in ownership of the 

2 leased property to be transferred to 

3 the lessee, subject to standards pre4 scribed by the Bureau; 

5 (iii) providing real estate settlement 

6 services or performing appraisals of real 

7 estate or personal property; 

8 (iv) engaging in deposit-taking activi9 ties, transmitting or exchanging funds, or 

10 otherwise acting as a custodian of funds or 

11 any financial instrument for use by or on 

12 behalf of a consumer; 

13 (v) selling, providing, or issuing stored 

14 value or payment instruments, except that, 

15 in the case of a sale of, or transaction to 

16 reload, stored value, only if the seller exer17 cises substantial control over the terms or 

18 conditions of the stored value provided to 

19 the consumer where, for purposes of this 

20 clause— 

21 (I) a seller shall not be found to 

22 exercise substantial control over the 

23 terms or conditions of the stored value 

24 if the seller is not a party to the con25 tract with the consumer for the stored 


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1 value product, and another person is 

2 principally responsible for establishing 

3 the terms or conditions of the stored 

4 value; and 

5 (II) advertising the nonfinancial 

6 goods or services of the seller on the 

7 stored value card or device is not in 

8 itself an exercise of substantial control 

9 over the terms or conditions; 

10 (vi) providing check cashing, check 

11 collection, or check guaranty services; 

12 (vii) providing payments or other fi13 nancial data processing products or serv14 ices to a consumer by any technological 

15 means, including processing or storing fi16 nancial or banking data for any payment 

17 instrument, or through any payments sys18 tems or network used for processing pay19 ments data, including payments made 

20 through an online banking system or mo21 bile telecommunications network, except 

22 that a person shall not be deemed to be a 

23 covered person with respect to financial 

24 data processing solely because the per25 son— 


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1 (I) unknowingly or incidentally 

2 processes, stores, or transmits over 

3 the Internet, telephone line, mobile 

4 network, or any other mode of trans5 mission, as part of a stream of other 

6 types of data, financial data in a man7 ner that such data is undifferentiated 

8 from other types of data of the same 

9 form that the person processes, stores, 

10 or transmits; 

11 (II) is a merchant, retailer, or 

12 seller of any nonfinancial good or 

13 service who engages in financial data 

14 processing by transmitting or storing 

15 payments data about a consumer ex16 clusively for purpose of initiating pay17 ments instructions by the consumer to 

18 pay such person for the purchase of, 

19 or to complete a commercial trans20 action for, such nonfinancial good or 

21 service sold directly by such person to 

22 the consumer; or 

23 (III) provides access to a host 

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1 abling that person to establish and 

2 maintain a website; 

3 (viii) providing financial advisory serv4 ices to consumers on individual financial 

5 matters or relating to proprietary financial 

6 products or services (other than by pub7 lishing any bona fide newspaper, news 

8 magazine, or business or financial publica9 tion of general and regular circulation, in10 cluding publishing market data, news, or 

11 data analytics or investment information or 

12 recommendations that are not tailored to 

13 the individual needs of a particular con14 sumer), including— 

15 (I) providing credit counseling to 

16 any consumer; and 

17 (II) providing services to assist a 

18 consumer with debt management or 

19 debt settlement, modifying the terms 

20 of any extension of credit, or avoiding 

21 foreclosure; 

22 (ix) collecting, analyzing, maintaining, 

23 or providing consumer report information 

24 or other account information, including in25 formation relating to the credit history of 


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1 consumers, used or expected to be used in 

2 connection with any decision regarding the 

3 offering or provision of a consumer finan4 cial product or service, except to the extent 

5 that— 

6 (I) a person— 

7 (aa) collects, analyzes, or 

8 maintains information that re9 lates solely to the transactions 

10 between a consumer and such 

11 person; or 

12 (bb) provides the informa13 tion described in item (aa) to an 

14 affiliate of such person; and 

15 (II) the information described in 

16 subclause (I)(aa) is not used by such 

17 person or affiliate in connection with 

18 any decision regarding the offering or 

19 provision of a consumer financial 

20 product or service to the consumer, 

21 other than credit described in section 

22 1027(a)(2)(A); 

23 (x) collecting debt related to any con24 sumer financial product or service; and 


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1 (xi) such other financial product or 

2 service as may be defined by the Bureau, 

3 by regulation, for purposes of this title, if 

4 the Bureau finds that such financial prod5 uct or service is— 

6 (I) entered into or conducted as 

7 a subterfuge or with a purpose to 

8 evade any Federal consumer financial 

9 law; or 

10 (II) permissible for a bank or for 

11 a financial holding company to offer 

12 or to provide under any provision of a 

13 Federal law or regulation applicable 

14 to a bank or a financial holding com15 pany, and has, or likely will have, a 

16 material impact on consumers; and 

17 (B) does not include the business of insur18 ance. 

19 (14) FOREIGN EXCHANGE.—The term ‘‘foreign 

20 exchange’’ means the exchange, for compensation, of 

21 currency of the United States or of a foreign govern22 ment for currency of another government. 

23 (15) INSURED CREDIT UNION.—The term ‘‘in24 sured credit union’’ has the same meaning as in secVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01041 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 tion 101 of the Federal Credit Union Act (12 U.S.C. 

2 1752). 

3 (16) PAYMENT INSTRUMENT.—The term ‘‘pay4 ment instrument’’ means a check, draft, warrant, 

5 money order, traveler’s check, electronic instrument, 

6 or other instrument, payment of funds, or monetary 

7 value (other than currency). 

8 (17) PERSON.—The term ‘‘person’’ means an 

9 individual, partnership, company, corporation, asso10 ciation (incorporated or unincorporated), trust, es11 tate, cooperative organization, or other entity. 

12 (18) PERSON REGULATED BY THE COMMODITY

13 FUTURES TRADING COMMISSION.—The term ‘‘person 

14 regulated by the Commodity Futures Trading Com15 mission’’ means any person that is registered, or re16 quired by statute or regulation to be registered, with 

17 the Commodity Futures Trading Commission, but 

18 only to the extent that the activities of such person 

19 are subject to the jurisdiction of the Commodity Fu20 tures Trading Commission under the Commodity 

21 Exchange Act. 

22 (19) PERSON REGULATED BY THE COMMIS23 SION.—The term ‘‘person regulated by the Commis24 sion’’ means a person who is— 


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1 (A) a broker or dealer that is required to 

2 be registered under the Securities Exchange Act 

3 of 1934; 

4 (B) an investment adviser that is reg5 istered under the Investment Advisers Act of 

6 1940; 

7 (C) an investment company that is re8 quired to be registered under the Investment 

9 Company Act of 1940, and any company that 

10 has elected to be regulated as a business devel11 opment company under that Act; 

12 (D) a national securities exchange that is 

13 required to be registered under the Securities 

14 Exchange Act of 1934; 

15 (E) a transfer agent that is required to be 

16 registered under the Securities Exchange Act of 

17 1934; 

18 (F) a clearing corporation that is required 

19 to be registered under the Securities Exchange 

20 Act of 1934; 

21 (G) any self-regulatory organization that is 

22 required to be registered with the Commission; 

23 (H) any nationally recognized statistical 

24 rating organization that is required to be reg25 istered with the Commission; 


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1 (I) any securities information processor 

2 that is required to be registered with the Com3 mission; 

4 (J) any municipal securities dealer that is 

5 required to be registered with the Commission; 

6 (K) any other person that is required to be 

7 registered with the Commission under the Secu8 rities Exchange Act of 1934; and 

9 (L) any employee, agent, or contractor act10 ing on behalf of, registered with, or providing 

11 services to, any person described in any of sub12 paragraphs (A) through (K), but only to the ex13 tent that any person described in any of sub14 paragraphs (A) through (K), or the employee, 

15 agent, or contractor of such person, acts in a 

16 regulated capacity. 

17 (20) PERSON REGULATED BY A STATE INSUR18 ANCE REGULATOR.—The term ‘‘person regulated by 

19 a State insurance regulator’’ means any person that 

20 is engaged in the business of insurance and subject 

21 to regulation by any State insurance regulator, but 

22 only to the extent that such person acts in such ca23 pacity. 

24 (21) PERSON THAT PERFORMS INCOME TAX

25 PREPARATION ACTIVITIES FOR CONSUMERS.—The 


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1 term ‘‘person that performs income tax preparation 

2 activities for consumers’’ means— 

3 (A) any tax return preparer (as defined in 

4 section 7701(a)(36) of the Internal Revenue 

5 Code of 1986), regardless of whether com6 pensated, but only to the extent that the person 

7 acts in such capacity; 

8 (B) any person regulated by the Secretary 

9 under section 330 of title 31, United States 

10 Code, but only to the extent that the person 

11 acts in such capacity; and 

12 (C) any authorized IRS e-file Providers (as 

13 defined for purposes of section 7216 of the In14 ternal Revenue Code of 1986), but only to the 

15 extent that the person acts in such capacity. 

16 (22) PRUDENTIAL REGULATOR.—The term 

17 ‘‘prudential regulator’’ means— 

18 (A) in the case of an insured depository in19 stitution, the appropriate Federal banking 

20 agency, as that term is defined in section 3 of 

21 the Federal Deposit Insurance Act; and 

22 (B) in the case of an insured credit union, 

23 the National Credit Union Administration. 

24 (23) RELATED PERSON.—The term ‘‘related 

25 person’’— 


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1 (A) shall apply only with respect to a cov2 ered person that is not a bank holding company 

3 (as that term is defined in section 2 of the 

4 Bank Holding Company Act of 1956), credit 

5 union, or depository institution; 

6 (B) shall be deemed to mean a covered 

7 person for all purposes of any provision of Fed8 eral consumer financial law; and 

9 (C) means— 

10 (i) any director, officer, or employee 

11 charged with managerial responsibility for, 

12 or controlling shareholder of, or agent for, 

13 such covered person; 

14 (ii) any shareholder, consultant, joint 

15 venture partner, or other person, as deter16 mined by the Bureau (by rule or on a case17 by-case basis) who materially participates 

18 in the conduct of the affairs of such cov19 ered person; and 

20 (iii) any independent contractor (in21 cluding any attorney, appraiser, or ac22 countant) who knowingly or recklessly par23 ticipates in any— 

24 (I) violation of any provision of 

25 law or regulation; or 


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1 (II) breach of a fiduciary duty. 

2 (24) SERVICE PROVIDER.— 

3 (A) IN GENERAL.—The term ‘‘service pro4 vider’’ means any person that provides a mate5 rial service to a covered person in connection 

6 with the offering or provision by such covered 

7 person of a consumer financial product or serv8 ice, including a person that— 

9 (i) participates in designing, oper10 ating, or maintaining the consumer finan11 cial product or service; or 

12 (ii) processes transactions relating to 

13 the consumer financial product or service 

14 (other than unknowingly or incidentally 

15 transmitting or processing financial data in 

16 a manner that such data is undifferen17 tiated from other types of data of the same 

18 form as the person transmits or processes). 

19 (B) EXCEPTIONS.—The term ‘‘service pro20 vider’’ does not include a person solely by virtue 

21 of such person offering or providing to a cov22 ered person— 

23 (i) a support service of a type pro24 vided to businesses generally or a similar 

25 ministerial service; or 


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1 (ii) time or space for an advertisement 

2 for a consumer financial product or service 

3 through print, newspaper, or electronic 

4 media. 

5 (C) RULE OF CONSTRUCTION.—A person 

6 that is a service provider shall be deemed to be 

7 a covered person to the extent that such person 

8 engages in the offering or provision of its own 

9 consumer financial product or service. 

10 (25) STATE.—The term ‘‘State’’ means any 

11 State, territory, or possession of the United States, 

12 the District of Columbia, the Commonwealth of 

13 Puerto Rico, the Commonwealth of the Northern 

14 Mariana Islands, Guam, American Samoa, or the 

15 United States Virgin Islands or any federally recog16 nized Indian tribe, as defined by the Secretary of the 

17 Interior under section 104(a) of the Federally Rec18 ognized Indian Tribe List Act of 1994 (25 U.S.C. 

19 479a–1(a)). 

20 (26) STORED VALUE.—The term ‘‘stored value’’ 

21 means funds or monetary value represented in any 

22 electronic format, whether or not specially encrypted, 

23 and stored or capable of storage on electronic media 

24 in such a way as to be retrievable and transferred 

25 electronically, and includes a prepaid debit card or 


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1 product, or any other similar product, regardless of 

2 whether the amount of the funds or monetary value 

3 may be increased or reloaded. 

4 (27) TRANSMITTING OR EXCHANGING FUNDS.— 

5 The term ‘‘transmitting or exchanging funds’’ means 

6 receiving currency, monetary value, or payment in7 struments from a consumer for the purpose of ex8 changing or transmitting the same by any means, 

9 including transmission by wire, facsimile, electronic 

10 transfer, courier, the Internet, or through bill pay11 ment services or through other businesses that facili12 tate third-party transfers within the United States 

13 or to or from the United States. 

14 Subtitle A—Bureau of Consumer 

15 Financial Protection 

16 SEC. 1011. ESTABLISHMENT OF THE BUREAU. 

17 (a) BUREAU ESTABLISHED.—There is established in 

18 the Federal Reserve System the Bureau of Consumer Fi19 nancial Protection, which shall regulate the offering and 

20 provision of consumer financial products or services under 

21 the Federal consumer financial laws. 

22 (b) DIRECTOR AND DEPUTY DIRECTOR.— 

23 (1) IN GENERAL.—There is established the po24 sition of the Director, who shall serve as the head 

25 of the Bureau. 


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1 (2) APPOINTMENT.—Subject to paragraph (3), 

2 the Director shall be appointed by the President, by 

3 and with the advice and consent of the Senate. 

4 (3) QUALIFICATION.—The President shall 

5 nominate the Director from among individuals who 

6 are citizens of the United States. 

7 (4) COMPENSATION.—The Director shall be 

8 compensated at the rate prescribed for level II of the 

9 Executive Schedule under section 5313 of title 5, 

10 United States Code. 

11 (5) DEPUTY DIRECTOR.—There is established 

12 the position of Deputy Director, who shall— 

13 (A) be appointed by the Director; and 

14 (B) serve as acting Director in the absence 

15 or unavailability of the Director. 

16 (c) TERM.— 

17 (1) IN GENERAL.—The Director shall serve for 

18 a term of 5 years. 

19 (2) EXPIRATION OF TERM.—An individual may 

20 serve as Director after the expiration of the term for 

21 which appointed, until a successor has been ap22 pointed and qualified. 

23 (3) REMOVAL FOR CAUSE.—The President may 

24 remove the Director for inefficiency, neglect of duty, 

25 or malfeasance in office. 


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1 (d) SERVICE RESTRICTION.—No Director or Deputy 

2 Director may hold any office, position, or employment in 

3 any Federal reserve bank, Federal home loan bank, cov4 ered person, or service provider during the period of serv5 ice of such person as Director or Deputy Director. 

6 (e) OFFICES.—The principal office of the Bureau 

7 shall be in the District of Columbia. The Director may 

8 establish regional offices of the Bureau, including in cities 

9 in which the Federal reserve banks, or branches of such 

10 banks, are located, in order to carry out the responsibil11 ities assigned to the Bureau under the Federal consumer 

12 financial laws. 

13 SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS. 

14 (a) POWERS OF THE BUREAU.—The Bureau is au15 thorized to establish the general policies of the Bureau 

16 with respect to all executive and administrative functions, 

17 including— 

18 (1) the establishment of rules for conducting 

19 the general business of the Bureau, in a manner not 

20 inconsistent with this title; 

21 (2) to bind the Bureau and enter into con22 tracts; 

23 (3) directing the establishment and mainte24 nance of divisions or other offices within the Bureau, 

25 in order to carry out the responsibilities under the 


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1 Federal consumer financial laws, and to satisfy the 

2 requirements of other applicable law; 

3 (4) to coordinate and oversee the operation of 

4 all administrative, enforcement, and research activi5 ties of the Bureau; 

6 (5) to adopt and use a seal; 

7 (6) to determine the character of and the neces8 sity for the obligations and expenditures of the Bu9 reau; 

10 (7) the appointment and supervision of per11 sonnel employed by the Bureau; 

12 (8) the distribution of business among per13 sonnel appointed and supervised by the Director and 

14 among administrative units of the Bureau; 

15 (9) the use and expenditure of funds; 

16 (10) implementing the Federal consumer finan17 cial laws through rules, orders, guidance, interpreta18 tions, statements of policy, examinations, and en19 forcement actions; and 

20 (11) performing such other functions as may be 

21 authorized or required by law. 

22 (b) DELEGATION OF AUTHORITY.—The Director of 

23 the Bureau may delegate to any duly authorized employee, 

24 representative, or agent any power vested in the Bureau 

25 by law. 


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1 (c) AUTONOMY OF THE BUREAU.— 

2 (1) COORDINATION WITH THE BOARD OF GOV3 ERNORS.—Notwithstanding section 18 of the Fed4 eral Trade Commission Act (15 U.S.C. 57a) and any 

5 other provision of law applicable to the supervision 

6 or examination of persons with respect to Federal 

7 consumer financial laws, the Board of Governors 

8 may delegate to the Bureau the authorities to exam9 ine persons subject to the jurisdiction of the Board 

10 of Governors for compliance with the Federal con11 sumer financial laws. 

12 (2) AUTONOMY.—Notwithstanding the authori13 ties granted to the Board of Governors under the 

14 Federal Reserve Act, the Board of Governors may 

15 not— 

16 (A) intervene in any matter or proceeding 

17 before the Director, including examinations or 

18 enforcement actions, unless otherwise specifi19 cally provided by law; 

20 (B) appoint, direct, or remove any officer 

21 or employee of the Bureau; or 

22 (C) merge or consolidate the Bureau, or 

23 any of the functions or responsibilities of the 

24 Bureau, with any division or office of the Board 

25 of Governors or the Federal reserve banks. 


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1 (3) RULES AND ORDERS.—No rule or order of 

2 the Bureau shall be subject to approval or review by 

3 the Board of Governors. The Board of Governors 

4 may not delay or prevent the issuance of any rule 

5 or order of the Bureau. 

6 (4) RECOMMENDATIONS AND TESTIMONY.—No 

7 officer or agency of the United States shall have any 

8 authority to require the Director or any other officer 

9 of the Bureau to submit legislative recommenda10 tions, or testimony or comments on legislation, to 

11 any officer or agency of the United States for ap12 proval, comments, or review prior to the submission 

13 of such recommendations, testimony, or comments to 

14 the Congress, if such recommendations, testimony, 

15 or comments to the Congress include a statement in16 dicating that the views expressed therein are those 

17 of the Director or such officer, and do not nec18 essarily reflect the views of the Board of Governors 

19 or the President. 

20 SEC. 1013. ADMINISTRATION. 

21 (a) PERSONNEL.— 

22 (1) APPOINTMENT.— 

23 (A) IN GENERAL.—The Director may fix 

24 the number of, and appoint and direct, all em25 ployees of the Bureau. 


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1 (B) EMPLOYEES OF THE BUREAU.—The 

2 Director is authorized to employ attorneys, 

3 compliance examiners, compliance supervision 

4 analysts, economists, statisticians, and other 

5 employees as may be deemed necessary to con6 duct the business of the Bureau. Notwith7 standing any other provision of law, all such 

8 employees shall be appointed and compensated 

9 on terms and conditions that are consistent 

10 with the terms and conditions set forth in sec11 tion 11(l) of the Federal Reserve Act (12 

12 U.S.C. 248(l)). 

13 (2) COMPENSATION.—The Director shall at all 

14 times provide compensation and benefits to each 

15 class of employees that, at a minimum, are equiva16 lent to the compensation and benefits then being 

17 provided by the Board of Governors for the cor18 responding class of employees. 

19 (b) SPECIFIC FUNCTIONAL UNITS.— 

20 (1) RESEARCH.—The Director shall establish a 

21 unit whose functions shall include researching, ana22 lyzing, and reporting on— 

23 (A) developments in markets for consumer 

24 financial products or services, including market 

25 areas of alternative consumer financial products 


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1 or services with high growth rates and areas of 

2 risk to consumers; 

3 (B) access to fair and affordable credit for 

4 traditionally underserved communities; 

5 (C) consumer awareness, understanding, 

6 and use of disclosures and communications re7 garding consumer financial products or services; 

8 (D) consumer awareness and under9 standing of costs, risks, and benefits of con10 sumer financial products or services; and 

11 (E) consumer behavior with respect to con12 sumer financial products or services. 

13 (2) COMMUNITY AFFAIRS.—The Director shall 

14 establish a unit whose functions shall include pro15 viding information, guidance, and technical assist16 ance regarding the offering and provision of con17 sumer financial products or services to traditionally 

18 underserved consumers and communities. 

19 (3) COLLECTING AND TRACKING COM20 PLAINTS.— 

21 (A) IN GENERAL.—The Director shall es22 tablish a unit whose functions shall include es23 tablishing a single, toll-free telephone number, a 

24 website, and a database to facilitate the central25 ized collection of, monitoring of, and response 


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1 to consumer complaints regarding consumer fi2 nancial products or services. The Director shall 

3 coordinate with other Federal agencies to route 

4 complaints to other Federal regulators, where 

5 appropriate. 

6 (B) ROUTING CALLS TO STATES.—To the 

7 extent practicable, State agencies may receive 

8 appropriate complaints from the systems estab9 lished under subparagraph (A), if— 

10 (i) the State agency system has the 

11 functional capacity to receive calls or elec12 tronic reports routed by the Bureau sys13 tems; and 

14 (ii) the State agency has satisfied any 

15 conditions of participation in the system 

16 that the Bureau may establish, including 

17 treatment of personally identifiable infor18 mation and sharing of information on com19 plaint resolution or related compliance pro20 cedures and resources. 

21 (C) REPORTS TO THE CONGRESS.—The 

22 Director shall present an annual report to Con23 gress not later than March 31 of each year on 

24 the complaints received by the Bureau in the 

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1 ucts and services. Such report shall include in2 formation and analysis about complaint num3 bers, complaint types, and, where applicable, in4 formation about resolution of complaints. 

5 (D) DATA SHARING REQUIRED.—To facili6 tate preparation of the reports required under 

7 subparagraph (C), supervision and enforcement 

8 activities, and monitoring of the market for 

9 consumer financial products and services, the 

10 Bureau shall share consumer complaint infor11 mation with prudential regulators, other Fed12 eral agencies, and State agencies, consistent 

13 with Federal law applicable to personally identi14 fiable information. The prudential regulators 

15 and other Federal agencies shall share data re16 lating to consumer complaints regarding con17 sumer financial products and services with the 

18 Bureau, consistent with Federal law applicable 

19 to personally identifiable information. 

20 (c) OFFICE OF FAIR LENDING AND EQUAL OPPOR21 TUNITY.— 

22 (1) ESTABLISHMENT.—The Director shall es23 tablish within the Bureau the Office of Fair Lending 

24 and Equal Opportunity. 


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1 (2) FUNCTIONS.—The Office of Fair Lending 

2 and Equal Opportunity shall have such powers and 

3 duties as the Director may delegate to the Office, in4 cluding— 

5 (A) providing oversight and enforcement of 

6 Federal laws intended to ensure the fair, equi7 table, and nondiscriminatory access to credit for 

8 both individuals and communities that are en9 forced by the Bureau, including the Equal 

10 Credit Opportunity Act and the Home Mort11 gage Disclosure Act; 

12 (B) coordinating fair lending and fair 

13 housing efforts of the Bureau with other Fed14 eral agencies and State regulators, as appro15 priate, to promote consistent, efficient, and ef16 fective enforcement of Federal fair lending laws; 

17 (C) working with private industry, fair 

18 lending, civil rights, consumer and community 

19 advocates on the promotion of fair lending com20 pliance and education; and 

21 (D) providing annual reports to Congress 

22 on the efforts of the Bureau to fulfill its fair 

23 lending mandate. 

24 (3) ADMINISTRATION OF OFFICE.—There is es25 tablished the position of Assistant Director of the 


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1 Bureau for Fair Lending and Equal Opportunity, 

2 who— 

3 (A) shall be appointed by the Director; and 

4 (B) shall carry out such duties as the Di5 rector may delegate to such Assistant Director. 

6 (d) OFFICE OF FINANCIAL LITERACY.— 

7 (1) ESTABLISHMENT.—The Director shall es8 tablish an Office of Financial Literacy, which shall 

9 be responsible for developing and implementing ini10 tiatives intended to educate and empower consumers 

11 to make better informed financial decisions. 

12 (2) OTHER DUTIES.—The Office of Financial 

13 Literacy shall develop and implement a strategy to 

14 improve the financial literacy of consumers that in15 cludes measurable goals and objectives, in consulta16 tion with the Financial Literacy and Education 

17 Commission, consistent with the National Strategy 

18 for Financial Education, through activities including 

19 providing opportunities for consumers to access— 

20 (A) financial counseling; 

21 (B) information to assist with the evalua22 tion of credit products and the understanding 

23 of credit histories and scores; 

24 (C) savings, borrowing, and other services 

25 found at mainstream financial institutions; 


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1 (D) activities intended to— 

2 (i) prepare the consumer for edu3 cational expenses and the submission of fi4 nancial aid applications, and other major 

5 purchases; 

6 (ii) reduce debt; and 

7 (iii) improve the financial situation of 

8 the consumer; 

9 (E) assistance in developing long-term sav10 ings strategies; and 

11 (F) wealth building and financial services 

12 during the preparation process to claim earned 

13 income tax credits and Federal benefits. 

14 (3) COORDINATION.—The Office of Financial 

15 Literacy shall coordinate with other units within the 

16 Bureau in carrying out its functions, including— 

17 (A) working with the Community Affairs 

18 Office to implement the strategy to improve fi19 nancial literacy of consumers; and 

20 (B) working with the research unit estab21 lished by the Director to conduct research re22 lated to consumer financial education and coun23 seling. 

24 (4) REPORT.—Not later than 24 months after 

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1 after, the Director shall submit a report on its finan2 cial literacy activities and strategy to improve finan3 cial literacy of consumers to— 

4 (A) the Committee on Banking, Housing, 

5 and Urban Affairs of the Senate; and 

6 (B) the Committee on Financial Services 

7 of the House of Representatives. 

8 (5) MEMBERSHIP IN FINANCIAL LITERACY AND

9 EDUCATION COMMISSION.—Section 513(c)(1) of the 

10 Financial Literacy and Education Improvement Act 

11 (20 U.S.C. 9702(c)(1)) is amended— 

12 (A) in subparagraph (B), by striking 

13 ‘‘and’’ at the end; 

14 (B) by redesignating subparagraph (C) as 

15 subparagraph (D); and 

16 (C) by inserting after subparagraph (B) 

17 the following new subparagraph: 

18 ‘‘(C) the Director of the Bureau of Con19 sumer Financial Protection; and’’. 

20 (6) CONFORMING AMENDMENT.—Section 

21 513(d) of the Financial Literacy and Education Im22 provement Act (20 U.S.C. 9702(d)) is amended by 

23 adding at the end the following: ‘‘The Director of 

24 the Bureau of Consumer Financial Protection shall 

25 serve as the Vice Chairman.’’. 


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1 SEC. 1014. CONSUMER ADVISORY BOARD. 

2 (a) ESTABLISHMENT REQUIRED.—The Director shall 

3 establish a Consumer Advisory Board to advise and con4 sult with the Bureau in the exercise of its functions under 

5 the Federal consumer financial laws, and to provide infor6 mation on emerging practices in the consumer financial 

7 products or services industry, including regional trends, 

8 concerns, and other relevant information. 

9 (b) MEMBERSHIP.—In appointing the members of 

10 the Consumer Advisory Board, the Director shall seek to 

11 assemble experts in consumer protection, financial serv12 ices, community development, fair lending, and consumer 

13 financial products or services and seek representation of 

14 the interests of covered persons and consumers, without 

15 regard to party affiliation. Not fewer than 6 members 

16 shall be appointed upon the recommendation of the re17 gional Federal Reserve Bank Presidents, on a rotating 

18 basis. 

19 (c) MEETINGS.—The Consumer Advisory Board shall 

20 meet from time to time at the call of the Director, but, 

21 at a minimum, shall meet at least twice in each year. 

22 (d) COMPENSATION AND TRAVEL EXPENSES.—Mem23 bers of the Consumer Advisory Board who are not full24 time employees of the United States shall— 

25 (1) be entitled to receive compensation at a rate 

26 fixed by the Director while attending meetings of the 


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1 Consumer Advisory Board, including travel time; 

2 and 

3 (2) be allowed travel expenses, including trans4 portation and subsistence, while away from their 

5 homes or regular places of business. 

6 SEC. 1015. COORDINATION. 

7 The Bureau shall coordinate with the Commission, 

8 the Commodity Futures Trading Commission, and other 

9 Federal agencies and State regulators, as appropriate, to 

10 promote consistent regulatory treatment of consumer fi11 nancial and investment products and services. 

12 SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CON13 GRESS. 

14 (a) APPEARANCES BEFORE CONGRESS.—The Direc15 tor of the Bureau shall appear before the Committee on 

16 Banking, Housing, and Urban Affairs of the Senate and 

17 the Committee on Financial Services of the House of Rep18 resentatives at semi-annual hearings regarding the reports 

19 required under subsection (b). 

20 (b) REPORTS REQUIRED.—The Bureau shall, concur21 rent with each semi-annual hearing referred to in sub22 section (a), prepare and submit to the President and to 

23 the Committee on Banking, Housing, and Urban Affairs 

24 of the Senate and the Committee on Financial Services 


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1 of the House of Representatives, a report, beginning with 

2 the session following the designated transfer date. 

3 (c) CONTENTS.—The reports required by subsection 

4 (b) shall include— 

5 (1) a discussion of the significant problems 

6 faced by consumers in shopping for or obtaining 

7 consumer financial products or services; 

8 (2) a justification of the budget request of the 

9 previous year; 

10 (3) a list of the significant rules and orders 

11 adopted by the Bureau, as well as other significant 

12 initiatives conducted by the Bureau, during the pre13 ceding year and the plan of the Bureau for rules, or14 ders, or other initiatives to be undertaken during the 

15 upcoming period; 

16 (4) an analysis of complaints about consumer 

17 financial products or services that the Bureau has 

18 received and collected in its central database on 

19 complaints during the preceding year; 

20 (5) a list, with a brief statement of the issues, 

21 of the public supervisory and enforcement actions to 

22 which the Bureau was a party during the preceding 

23 year; 

24 (6) the actions taken regarding rules, orders, 

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1 sons which are not credit unions or depository insti2 tutions; 

3 (7) an assessment of significant actions by 

4 State attorneys general or State regulators relating 

5 to Federal consumer financial law; and 

6 (8) an analysis of the efforts of the Bureau to 

7 fulfill the fair lending mission of the Bureau. 

8 SEC. 1017. FUNDING; PENALTIES AND FINES. 

9 (a) TRANSFER OF FUNDS FROM BOARD OF GOV10 ERNORS.— 

11 (1) IN GENERAL.—Each year (or quarter of 

12 such year), beginning on the designated transfer 

13 date, and each quarter thereafter, the Board of Gov14 ernors shall transfer to the Bureau from the com15 bined earnings of the Federal Reserve System, the 

16 amount determined by the Director to be reasonably 

17 necessary to carry out the authorities of the Bureau 

18 under Federal consumer financial law, taking into 

19 account such other sums made available to the Bu20 reau from the preceding year (or quarter of such 

21 year). 

22 (2) FUNDING CAP.— 

23 (A) IN GENERAL.—Notwithstanding para24 graph (1), and in accordance with this para25 graph, the amount that shall be transferred to 


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1 the Bureau in each fiscal year shall not exceed 

2 a fixed percentage of the total operating ex3 penses of the Federal Reserve System, as re4 ported in the Annual Report, 2009, of the 

5 Board of Governors, equal to— 

6 (i) 10 percent of such expenses in fis7 cal year 2011; 

8 (ii) 11 percent of such expenses in fis9 cal year 2012; and 

10 (iii) 12 percent of such expenses in 

11 fiscal year 2013, and in each year there12 after. 

13 (B) AMOUNT ADJUSTED FOR INFLA14 TION.—The dollar amount referred to in sub15 paragraph (A)(iii) shall be adjusted annually, 

16 using the percent by which the average urban 

17 consumer price index for the quarter preceding 

18 the date of the payment differs from the aver19 age of that index for the same quarter in the 

20 prior year. 

21 (3) TRANSITION PERIOD.—Beginning on the 

22 date of enactment of this Act and until the des23 ignated transfer date, the Board of Governors shall 

24 transfer to the Bureau the amount estimated by the 

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1 ed to the Bureau under Federal consumer financial 

2 law, from the date of enactment of this Act until the 

3 designated transfer date. 

4 (4) BUDGET AND FINANCIAL MANAGEMENT.— 

5 (A) FINANCIAL OPERATING PLANS AND

6 FORECASTS.—The Director shall provide to the 

7 Director of the Office of Management and 

8 Budget copies of the financial operating plans 

9 and forecasts of the Director, as prepared by 

10 the Director in the ordinary course of the oper11 ations of the Bureau, and copies of the quar12 terly reports of the financial condition and re13 sults of operations of the Bureau, as prepared 

14 by the Director in the ordinary course of the 

15 operations of the Bureau. 

16 (B) FINANCIAL STATEMENTS.—The Bu17 reau shall prepare annually a statement of— 

18 (i) assets and liabilities and surplus or 

19 deficit; 

20 (ii) income and expenses; and 

21 (iii) sources and application of funds. 

22 (C) FINANCIAL MANAGEMENT SYSTEMS.— 

23 The Bureau shall implement and maintain fi24 nancial management systems that comply sub25 stantially with Federal financial management 


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1 systems requirements and applicable Federal 

2 accounting standards. 

3 (D) ASSERTION OF INTERNAL CON4 TROLS.—The Director shall provide to the 

5 Comptroller General of the United States an as6 sertion as to the effectiveness of the internal 

7 controls that apply to financial reporting by the 

8 Bureau, using the standards established in sec9 tion 3512(c) of title 31, United States Code. 

10 (E) RULE OF CONSTRUCTION.—This sub11 section may not be construed as implying any 

12 obligation on the part of the Director to consult 

13 with or obtain the consent or approval of the 

14 Director of the Office of Management and 

15 Budget with respect to any report, plan, fore16 cast, or other information referred to in sub17 paragraph (A) or any jurisdiction or oversight 

18 over the affairs or operations of the Bureau. 

19 (5) AUDIT OF THE BUREAU.— 

20 (A) IN GENERAL.—The Comptroller Gen21 eral shall annually audit the financial trans22 actions of the Bureau in accordance with the 

23 United States generally accepted government 

24 auditing standards, as may be prescribed by the 

25 Comptroller General of the United States. The 


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1 audit shall be conducted at the place or places 

2 where accounts of the Bureau are normally 

3 kept. The representatives of the Government 

4 Accountability Office shall have access to the 

5 personnel and to all books, accounts, docu6 ments, papers, records (including electronic 

7 records), reports, files, and all other papers, 

8 automated data, things, or property belonging 

9 to or under the control of or used or employed 

10 by the Bureau pertaining to its financial trans11 actions and necessary to facilitate the audit, 

12 and such representatives shall be afforded full 

13 facilities for verifying transactions with the bal14 ances or securities held by depositories, fiscal 

15 agents, and custodians. All such books, ac16 counts, documents, records, reports, files, pa17 pers, and property of the Bureau shall remain 

18 in possession and custody of the Bureau. The 

19 Comptroller General may obtain and duplicate 

20 any such books, accounts, documents, records, 

21 working papers, automated data and files, or 

22 other information relevant to such audit with23 out cost to the Comptroller General, and the 

24 right of access of the Comptroller General to 

25 such information shall be enforceable pursuant 


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1 to section 716(c) of title 31, United States 

2 Code. 

3 (B) REPORT.—The Comptroller General 

4 shall submit to the Congress a report of each 

5 annual audit conducted under this subsection. 

6 The report to the Congress shall set forth the 

7 scope of the audit and shall include the state8 ment of assets and liabilities and surplus or 

9 deficit, the statement of income and expenses, 

10 the statement of sources and application of 

11 funds, and such comments and information as 

12 may be deemed necessary to inform Congress of 

13 the financial operations and condition of the 

14 Bureau, together with such recommendations 

15 with respect thereto as the Comptroller General 

16 may deem advisable. A copy of each report shall 

17 be furnished to the President and to the Bu18 reau at the time submitted to the Congress. 

19 (C) ASSISTANCE AND COSTS.—For the 

20 purpose of conducting an audit under this sub21 section, the Comptroller General may, in the 

22 discretion of the Comptroller General, employ 

23 by contract, without regard to section 3709 of 

24 the Revised Statutes of the United States (41 

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1 ganizations of certified public accountants for 

2 temporary periods or for special purposes. Upon 

3 the request of the Comptroller General, the Di4 rector of the Bureau shall transfer to the Gov5 ernment Accountability Office from funds avail6 able, the amount requested by the Comptroller 

7 General to cover the full costs of any audit and 

8 report conducted by the Comptroller General. 

9 The Comptroller General shall credit funds 

10 transferred to the account established for sala11 ries and expenses of the Government Account12 ability Office, and such amount shall be avail13 able upon receipt and without fiscal year limita14 tion to cover the full costs of the audit and re15 port. 

16 (b) CONSUMER FINANCIAL PROTECTION FUND.— 

17 (1) SEPARATE FUND IN FEDERAL RESERVE

18 BOARD ESTABLISHED.—There is established in the 

19 Federal Reserve Board a separate fund, to be known 

20 as the ‘‘Consumer Financial Protection Fund’’ (re21 ferred to in this section as the ‘‘Bureau Fund’’). 

22 (2) FUND RECEIPTS.—All amounts transferred 

23 to the Bureau under subsection (a) shall be depos24 ited into the Bureau Fund. 

25 (3) INVESTMENT AUTHORITY.— 


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1 (A) AMOUNTS IN BUREAU FUND MAY BE

2 INVESTED.—The Bureau may request the 

3 Board of Governors to invest the portion of the 

4 Bureau Fund that is not, in the judgment of 

5 the Bureau, required to meet the current needs 

6 of the Bureau. 

7 (B) ELIGIBLE INVESTMENTS.—Invest8 ments authorized by this paragraph shall be 

9 made by the Board of Governors in obligations 

10 of the United States or obligations that are 

11 guaranteed as to principal and interest by the 

12 United States, with maturities suitable to the 

13 needs of the Bureau Fund, as determined by 

14 the Bureau. 

15 (C) INTEREST AND PROCEEDS CRED16 ITED.—The interest on, and the proceeds from 

17 the sale or redemption of, any obligations held 

18 in the Bureau Fund shall be credited to the 

19 Bureau Fund. 

20 (c) USE OF FUNDS.— 

21 (1) IN GENERAL.—Funds obtained by, trans22 ferred to, or credited to the Bureau Fund shall be 

23 immediately available to the Bureau and under the 

24 control of the Director, and shall remain available 

25 until expended, to pay the expenses of the Bureau 


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1 in carrying out its duties and responsibilities. The 

2 compensation of the Director and other employees of 

3 the Bureau and all other expenses thereof may be 

4 paid from, obtained by, transferred to, or credited to 

5 the Bureau Fund under this section. 

6 (2) FUNDS THAT ARE NOT GOVERNMENT

7 FUNDS.—Funds obtained by or transferred to the 

8 Bureau Fund shall not be construed to be Govern9 ment funds or appropriated monies. 

10 (3) AMOUNTS NOT SUBJECT TO APPORTION11 MENT.—Notwithstanding any other provision of law, 

12 amounts in the Bureau Fund and in the Civil Pen13 alty Fund established under subsection (d) shall not 

14 be subject to apportionment for purposes of chapter 

15 15 of title 31, United States Code, or under any 

16 other authority. 

17 (d) PENALTIES AND FINES.— 

18 (1) ESTABLISHMENT OF VICTIMS RELIEF

19 FUND.—There is established in the Federal Reserve 

20 Board a fund to be known as the ‘‘Consumer Finan21 cial Protection Civil Penalty Fund’’ (referred to in 

22 this subsection as the ‘‘Civil Penalty Fund’’). If the 

23 Bureau obtains a civil penalty against any person in 

24 any judicial or administrative action under Federal 

25 consumer financial laws, the Bureau shall deposit 


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1 into the Civil Penalty Fund, the amount of the pen2 alty collected. 

3 (2) PAYMENT TO VICTIMS.—Amounts in the 

4 Civil Penalty Fund shall be available to the Bureau, 

5 without fiscal year limitation, for payments to the 

6 victims of activities for which civil penalties have 

7 been imposed under the Federal consumer financial 

8 laws. To the extent such victims cannot be located 

9 or such payments are otherwise not practicable, the 

10 Bureau may use such funds for the purpose of con11 sumer education and financial literacy programs. 

12 SEC. 1018. EFFECTIVE DATE. 

13 This subtitle shall become effective on the date of en14 actment of this Act. 

15 Subtitle B—General Powers of the 

16 Bureau 

17 SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS. 

18 (a) PURPOSE.—The Bureau shall seek to implement 

19 and, where applicable, enforce Federal consumer financial 

20 law consistently for the purpose of ensuring that markets 

21 for consumer financial products and services are fair, 

22 transparent, and competitive. 

23 (b) OBJECTIVES.—The Bureau is authorized to exer24 cise its authorities under Federal consumer financial law 


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1 for the purposes of ensuring that, with respect to con2 sumer financial products and services— 

3 (1) consumers are provided with timely and un4 derstandable information to make responsible deci5 sions about financial transactions; 

6 (2) consumers are protected from unfair, decep7 tive, or abusive acts and practices and from dis8 crimination; 

9 (3) outdated, unnecessary, or unduly burden10 some regulations are regularly identified and ad11 dressed in order to reduce unwarranted regulatory 

12 burdens; 

13 (4) Federal consumer financial law is enforced 

14 consistently, without regard to the status of a person 

15 as a depository institution, in order to promote fair 

16 competition; and 

17 (5) markets for consumer financial products 

18 and services operate transparently and efficiently to 

19 facilitate access and innovation. 

20 (c) FUNCTIONS.—The primary functions of the Bu21 reau are— 

22 (1) conducting financial education programs; 

23 (2) collecting, investigating, and responding to 

24 consumer complaints; 


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1 (3) collecting, researching, monitoring, and 

2 publishing information relevant to the functioning of 

3 markets for consumer financial products and serv4 ices to identify risks to consumers and the proper 

5 functioning of such markets; 

6 (4) subject to sections 1024 through 1026, su7 pervising covered persons for compliance with Fed8 eral consumer financial law, and taking appropriate 

9 enforcement action to address violations of Federal 

10 consumer financial law; 

11 (5) issuing rules, orders, and guidance imple12 menting Federal consumer financial law; and 

13 (6) performing such support activities as may 

14 be necessary or useful to facilitate the other func15 tions of the Bureau. 

16 SEC. 1022. RULEMAKING AUTHORITY. 

17 (a) IN GENERAL.—The Bureau is authorized to exer18 cise its authorities under Federal consumer financial law 

19 to administer, enforce, and otherwise implement the provi20 sions of Federal consumer financial law. 

21 (b) RULEMAKING, ORDERS, AND GUIDANCE.— 

22 (1) GENERAL AUTHORITY.—The Director may 

23 prescribe rules and issue orders and guidance, as 

24 may be necessary or appropriate to enable the Bu25 reau to administer and carry out the purposes and 


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1 objectives of the Federal consumer financial laws, 

2 and to prevent evasions thereof. 

3 (2) STANDARDS FOR RULEMAKING.—In pre4 scribing a rule under the Federal consumer financial 

5 laws— 

6 (A) the Bureau shall consider the potential 

7 benefits and costs to consumers and covered 

8 persons, including the potential reduction of ac9 cess by consumers to consumer financial prod10 ucts or services resulting from such rule; 

11 (B) the Bureau shall consult with the ap12 propriate prudential regulators or other Federal 

13 agencies prior to proposing a rule and during 

14 the comment process regarding consistency with 

15 prudential, market, or systemic objectives ad16 ministered by such agencies; and 

17 (C) if, during the consultation process de18 scribed in subparagraph (B), a prudential regu19 lator provides the Bureau with a written objec20 tion to the proposed rule of the Bureau or a 

21 portion thereof, the Bureau shall include in the 

22 adopting release a description of the objection 

23 and the basis for the Bureau decision, if any, 

24 regarding such objection, except that nothing in 

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1 iting the procedures under section 1023 that 

2 may apply to any rule prescribed by the Bu3 reau. 

4 (3) EXEMPTIONS.— 

5 (A) IN GENERAL.—The Bureau, by rule, 

6 may conditionally or unconditionally exempt 

7 any class of covered persons, service providers, 

8 or consumer financial products or services, from 

9 any provision of this title, or from any rule 

10 issued under this title, as the Bureau deter11 mines necessary or appropriate to carry out the 

12 purposes and objectives of this title, taking into 

13 consideration the factors in subparagraph (B). 

14 (B) FACTORS.—In issuing an exemption, 

15 as permitted under subparagraph (A), the Bu16 reau shall, as appropriate, take into consider17 ation— 

18 (i) the total assets of the class of cov19 ered persons; 

20 (ii) the volume of transactions involv21 ing consumer financial products or services 

22 in which the class of covered persons en23 gages; and 

24 (iii) existing provisions of law which 

25 are applicable to the consumer financial 


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1 product or service and the extent to which 

2 such provisions provide consumers with 

3 adequate protections. 

4 (4) EXCLUSIVE RULEMAKING AUTHORITY.— 

5 Notwithstanding any other provisions of Federal 

6 law, to the extent that a provision of Federal con7 sumer financial law authorizes the Bureau and an8 other Federal agency to issue regulations under that 

9 provision of law for purposes of assuring compliance 

10 with Federal consumer financial law and any regula11 tions thereunder, the Bureau shall have the exclusive 

12 authority to prescribe rules subject to those provi13 sions of law. 

14 (c) MONITORING.— 

15 (1) IN GENERAL.—In order to support its rule16 making and other functions, the Bureau shall mon17 itor for risks to consumers in the offering or provi18 sion of consumer financial products or services, in19 cluding developments in markets for such products 

20 or services. 

21 (2) CONSIDERATIONS.—In allocating its re22 sources to perform the monitoring required by this 

23 section, the Bureau may consider, among other fac24 tors— 


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1 (A) likely risks and costs to consumers as2 sociated with buying or using a type of con3 sumer financial product or service; 

4 (B) understanding by consumers of the 

5 risks of a type of consumer financial product or 

6 service; 

7 (C) the legal protections applicable to the 

8 offering or provision of a consumer financial 

9 product or service, including the extent to which 

10 the law is likely to adequately protect con11 sumers; 

12 (D) rates of growth in the offering or pro13 vision of a consumer financial product or serv14 ice; 

15 (E) the extent, if any, to which the risks 

16 of a consumer financial product or service may 

17 disproportionately affect traditionally under18 served consumers; or 

19 (F) the types, number, and other pertinent 

20 characteristics of covered persons that offer or 

21 provide the consumer financial product or serv22 ice. 

23 (3) REPORTS.—The Bureau shall publish not 

24 fewer than 1 report of significant findings of its 

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1 endar year, beginning with the first calendar year 

2 that begins at least 1 year after the designated 

3 transfer date. 

4 (4) COLLECTION OF INFORMATION.—In con5 ducting research on the offering and provision of 

6 consumer financial products or services, the Bureau 

7 shall have the authority to gather information from 

8 time to time regarding the organization, business 

9 conduct, markets, and activities of persons operating 

10 in consumer financial services markets. In order to 

11 gather such information, the Bureau may— 

12 (A) gather and compile information from 

13 examination reports concerning covered persons 

14 or service providers, assessment of consumer 

15 complaints, surveys, and interviews of covered 

16 persons and consumers, and review of available 

17 databases; 

18 (B) require persons to file with the Bu19 reau, under oath or otherwise, in such form and 

20 within such reasonable period of time as the 

21 Bureau may prescribe, by rule or order, annual 

22 or special reports, or answers in writing to spe23 cific questions, furnishing such information as 

24 the Bureau may require; and 


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1 (C) make public such information obtained 

2 by the Bureau under this section, as is in the 

3 public interest in reports or otherwise in the 

4 manner best suited for public information and 

5 use. 

6 (5) CONFIDENTIALITY RULES.—The Bureau 

7 shall prescribe rules regarding the confidential treat8 ment of information obtained from persons in con9 nection with the exercise of its authorities under 

10 Federal consumer financial law. 

11 (A) ACCESS BY THE BUREAU TO REPORTS

12 OF OTHER REGULATORS.— 

13 (i) EXAMINATION AND FINANCIAL

14 CONDITION REPORTS.—Upon providing 

15 reasonable assurances of confidentiality, 

16 the Bureau shall have access to any report 

17 of examination or financial condition made 

18 by a prudential regulator or other Federal 

19 agency having jurisdiction over a covered 

20 person or service provider, and to all revi21 sions made to any such report. 

22 (ii) PROVISION OF OTHER REPORTS

23 TO THE BUREAU.—In addition to the re24 ports described in clause (i), a prudential 

25 regulator or other Federal agency having 


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1 jurisdiction over a covered person or serv2 ice provider may, in its discretion, furnish 

3 to the Bureau any other report or other 

4 confidential supervisory information con5 cerning any insured depository institution, 

6 credit union, or other entity examined by 

7 such agency under authority of any provi8 sion of Federal law. 

9 (B) ACCESS BY OTHER REGULATORS TO

10 REPORTS OF THE BUREAU.— 

11 (i) EXAMINATION REPORTS.—Upon 

12 providing reasonable assurances of con13 fidentiality, a prudential regulator, a State 

14 regulator, or any other Federal agency 

15 having jurisdiction over a covered person 

16 or service provider shall have access to any 

17 report of examination made by the Bureau 

18 with respect to such person, and to all re19 visions made to any such report. 

20 (ii) PROVISION OF OTHER REPORTS

21 TO OTHER REGULATORS.—In addition to 

22 the reports described in clause (i), the Bu23 reau may, in its discretion, furnish to a 

24 prudential regulator or other agency hav25 ing jurisdiction over a covered person or 


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1 service provider any other report or other 

2 confidential supervisory information con3 cerning such person examined by the Bu4 reau under the authority of any other pro5 vision of Federal law. 

6 (6) PRIVACY CONSIDERATIONS.—In collecting 

7 information from any person, publicly releasing in8 formation held by the Bureau, or requiring covered 

9 persons to publicly report information, the Bureau 

10 shall take steps to ensure that proprietary, personal, 

11 or confidential consumer information that is pro12 tected from public disclosure under section 552(b) or 

13 552a of title 5, United States Code, or any other 

14 provision of law, is not made public under this title. 

15 (d) ASSESSMENT OF SIGNIFICANT RULES.— 

16 (1) IN GENERAL.—The Bureau shall conduct 

17 an assessment of each significant rule or order 

18 adopted by the Bureau under Federal consumer fi19 nancial law. The assessment shall address, among 

20 other relevant factors, the effectiveness of the rule or 

21 order in meeting the purposes and objectives of this 

22 title and the specific goals stated by the Bureau. 

23 The assessment shall reflect available evidence and 

24 any data that the Bureau reasonably may collect. 


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1 (2) REPORTS.—The Bureau shall publish a re2 port of its assessment under this subsection not 

3 later than 5 years after the effective date of the sub4 ject rule or order. 

5 (3) PUBLIC COMMENT REQUIRED.—Before pub6 lishing a report of its assessment, the Bureau shall 

7 invite public comment on recommendations for modi8 fying, expanding, or eliminating the newly adopted 

9 significant rule or order. 

10 (e) INFORMATION GATHERING.—In conducting any 

11 monitoring or assessment required by this section, the Bu12 reau may gather information through a variety of meth13 ods, including by conducting surveys or interviews of con14 sumers. 

15 SEC. 1023. REVIEW OF BUREAU REGULATIONS. 

16 SEC. 1024. . 

17 (a) REVIEW OF BUREAU REGULATIONS.—On the pe18 tition of a member agency of the Council, the Council may 

19 set aside a final regulation prescribed by the Bureau, or 

20 any provision thereof, if the Council decides, in accordance 

21 with subsection (c), that the regulation or provision would 

22 put the safety and soundness of the United States banking 

23 system or the stability of the financial system of the 

24 United States at risk. 

25 (b) PETITION.— 


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1 (1) PROCEDURE.—An agency represented by a 

2 member of the Council may petition the Council, in 

3 writing, and in accordance with rules prescribed pur4 suant to subsection (f), to stay the effectiveness of, 

5 or set aside, a regulation if the member agency filing 

6 the petition— 

7 (A) has in good faith attempted to work 

8 with the Bureau to resolve concerns regarding 

9 the effect of the rule on the safety and sound10 ness of the United States banking system or 

11 the stability of the financial system of the 

12 United States; and 

13 (B) files the petition with the Council not 

14 later than 10 days after the date on which the 

15 regulation has be 

16 (C) en published in the Federal Register. 

17 (2) PUBLICATION.—Any petition filed with the 

18 Council under this section shall be published in the 

19 Federal Register and transmitted contemporaneously 

20 with filing to the Committee on Banking, Housing, 

21 and Urban Affairs of the Senate and the Committee 

22 on Financial Services of the House of Representa23 tives. 

24 (c) STAYS AND SET ASIDES.— 

25 (1) STAY.— 


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1 (A) IN GENERAL.—Upon the request of 

2 any member agency, the Chairperson of the 

3 Council may stay the effectiveness of a regula4 tion for the purpose of allowing appropriate 

5 consideration of the petition by the Council. 

6 (B) EXPIRATION.—A stay issued under 

7 this paragraph shall expire on the earlier of— 

8 (i) 90 days after the date of filing of 

9 the petition under subsection (b); or 

10 (ii) the date on which the Council 

11 makes a decision under paragraph (3). 

12 (2) NO ADVERSE INFERENCE.—After the expi13 ration of any stay imposed under this section, no in14 ference shall be drawn regarding the validity or en15 forceability of a regulation which was the subject of 

16 the petition. 

17 (3) VOTE.— 

18 (A) IN GENERAL.—The decision to issue a 

19 stay of, or set aside, any regulation under this 

20 section shall be made only with the affirmative 

vote in accordance with subparagraph (B) of 2 21 ⁄3

22 of the members of the Council then serving. 

23 (B) AUTHORIZATION TO VOTE.—A member 

24 of the Council may vote to stay the effectiveness 

25 of, or set aside, a final regulation prescribed by 


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1 the Bureau only if the agency or department 

2 represented by that member has— 

3 (i) considered any relevant informa4 tion provided by the agency submitting the 

5 petition and by the Bureau; and 

6 (ii) made an official determination, at 

7 a public meeting where applicable, that the 

8 regulation which is the subject of the peti9 tion would put the safety and soundness of 

10 the United States banking system or the 

11 stability of the financial system of the 

12 United States at risk. 

13 (4) DECISIONS TO SET ASIDE.— 

14 (A) EFFECT OF DECISION.—A decision by 

15 the Council to set aside a regulation prescribed 

16 by the Bureau, or provision thereof, shall 

17 render such regulation, or provision thereof, un18 enforceable. 

19 (B) TIMELY ACTION REQUIRED.—The 

20 Council may not issue a decision to set aside a 

21 regulation, or provision thereof, which is the 

22 subject of a petition under this section after the 

23 expiration of the later of— 


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1 (i) 45 days following the date of filing 

2 of the petition, unless a stay is issued 

3 under paragraph (1); or 

4 (ii) the expiration of a stay issued by 

5 the Council under this section. 

6 (C) SEPARATE AUTHORITY.—The issuance 

7 of a stay under this section does not affect the 

8 authority of the Council to set aside a regula9 tion. 

10 (5) DISMISSAL DUE TO INACTION.—A petition 

11 under this section shall be deemed dismissed if the 

12 Council has not issued a decision to set aside a regu13 lation, or provision thereof, within the period for 

14 timely action under paragraph (4)(B). 

15 (6) PUBLICATION OF DECISION.—Any decision 

16 under this subsection to issue a stay of, or set aside, 

17 a regulation or provision thereof shall be published 

18 by the Council in the Federal Register as soon as 

19 practicable after the decision is made, with an expla20 nation of the reasons for the decision. 

21 (7) RULEMAKING PROCEDURES INAPPLI22 CABLE.—The notice and comment procedures under 

23 section 553 of title 5, United States Code, shall not 

24 apply to any decision under this section of the Coun25 cil to issue a stay of, or set aside, a regulation. 


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1 (8) JUDICIAL REVIEW OF DECISIONS BY THE

2 COUNCIL.—A decision by the Council to set aside a 

3 regulation prescribed by the Bureau, or provision 

4 thereof, shall be subject to review under chapter 7 

5 of title 5, United States Code. 

6 (d) APPLICATION OF OTHER LAW.—Nothing in this 

7 section shall be construed as altering, limiting, or restrict8 ing the application of any other provision of law, except 

9 as otherwise specifically provided in this section, including 

10 chapter 5 and chapter 7 of title 5, United States Code, 

11 to a regulation which is the subject of a petition filed 

12 under this section. 

13 (e) SAVINGS CLAUSE.—Nothing in this section shall 

14 be construed as limiting or restricting the Bureau from 

15 engaging in a rulemaking in accordance with applicable 

16 law. 

17 (f) IMPLEMENTING RULES.—The Council shall pre18 scribe procedural rules to implement this section. 

19 SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED 

20 PERSONS. 

21 (a) SCOPE OF COVERAGE.— 

22 (1) APPLICABILITY.—Notwithstanding any 

23 other provision of this title, and except as provided 

24 in paragraph (3), this section shall apply to any cov25 ered person who— 


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1 (A) offers or provides origination, broker2 age, or servicing of loans secured by real estate 

3 for use by consumers primarily for personal, 

4 family, or household purposes, or loan modifica5 tion or foreclosure relief services in connection 

6 with such loans; or 

7 (B) is a larger participant of a market for 

8 other consumer financial products or services, 

9 as defined by rule in accordance with paragraph 

10 (2). 

11 (2) RULEMAKING TO DEFINE COVERED PER12 SONS SUBJECT TO THIS SECTION.—The Bureau 

13 shall consult with the Federal Trade Commission 

14 prior to issuing a rule to define covered persons sub15 ject to this section, in accordance with paragraph 

16 (1)(B). The Bureau shall issue its initial rule within 

17 1 year of the designated transfer date. 

18 (3) RULES OF CONSTRUCTION.— 

19 (A) CERTAIN PERSONS EXCLUDED.—This 

20 section shall not apply to persons described in 

21 section 1025(a) or 1026(a). 

22 (B) ACTIVITY LEVELS.—For purposes of 

23 computing activity levels under paragraph (1) 

24 or rules issued thereunder, activities of affili25 ated companies (other than insured depository 


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1 institutions or insured credit unions) shall be 

2 aggregated. 

3 (b) SUPERVISION.— 

4 (1) IN GENERAL.—The Bureau shall require re5 ports and conduct examinations on a periodic basis 

6 of persons described in subsection (a) for purposes 

7 of— 

8 (A) assessing compliance with the require9 ments of Federal consumer financial law; 

10 (B) obtaining information about the activi11 ties and compliance systems or procedures of 

12 such person; and 

13 (C) detecting and assessing risks to con14 sumers and to markets for consumer financial 

15 products and services. 

16 (2) RISK-BASED SUPERVISION PROGRAM.—The 

17 Bureau shall exercise its authority under paragraph 

18 (1) in a manner designed to ensure that such exer19 cise, with respect to persons described in subsection 

20 (a), is based on the assessment by the Bureau of the 

21 risks posed to consumers in the relevant product 

22 markets and geographic markets, and taking into 

23 consideration, as applicable— 

24 (A) the asset size of the covered person; 


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1 (B) the volume of transactions involving 

2 consumer financial products or services in 

3 which the covered person engages; 

4 (C) the risks to consumers created by the 

5 provision of such consumer financial products 

6 or services; 

7 (D) the extent to which such institutions 

8 are subject to oversight by State authorities for 

9 consumer protection; and 

10 (E) any other factors that the Bureau de11 termines to be relevant to a class of covered 

12 persons. 

13 (3) COORDINATION.—To minimize regulatory 

14 burden, the Bureau shall coordinate its supervisory 

15 activities with the supervisory activities conducted by 

16 prudential regulators and the State bank regulatory 

17 authorities, including establishing their respective 

18 schedules for examining persons described in sub19 section (a) and requirements regarding reports to be 

20 submitted by such persons. 

21 (4) USE OF EXISTING REPORTS.—The Bureau 

22 shall, to the fullest extent possible, use— 

23 (A) reports pertaining to persons described 

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1 quired to have been provided to a Federal or 

2 State agency; and 

3 (B) information that has been reported 

4 publicly. 

5 (5) PRESERVATION OF AUTHORITY.—Nothing 

6 in this title may be construed as limiting the author7 ity of the Director to require reports from persons 

8 described in subsection (a), as permitted under para9 graph (1), regarding information owned or under the 

10 control of such person, regardless of whether such 

11 information is maintained, stored, or processed by 

12 another person. 

13 (6) REPORTS OF TAX LAW NONCOMPLIANCE.— 

14 The Bureau shall provide the Commissioner of In15 ternal Revenue with any report of examination or re16 lated information identifying possible tax law non17 compliance. 

18 (7) REGISTRATION, RECORDKEEPING, AND

19 OTHER REQUIREMENTS FOR CERTAIN PERSONS.— 

20 (A) IN GENERAL.—The Bureau shall pre21 scribe rules to facilitate supervision of persons 

22 described in subsection (a) and assessment and 

23 detection of risks to consumers. 

24 (B) REGISTRATION.— 


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1 (i) IN GENERAL.—The Bureau shall 

2 prescribe rules regarding registration re3 quirements for persons described in sub4 section (a). 

5 (ii) EXCEPTION FOR RELATED PER6 SONS.—The Bureau may not impose re7 quirements under this section regarding 

8 the registration of a related person. 

9 (iii) REGISTRATION INFORMATION.— 

10 Subject to rules prescribed by the Bureau, 

11 the Bureau shall publicly disclose the reg12 istration information about persons de13 scribed in subsection (a) to facilitate the 

14 ability of consumers to identify persons de15 scribed in subsection (a) registered with 

16 the Bureau. 

17 (C) RECORDKEEPING.—The Bureau may 

18 require a person described in subsection (a), to 

19 generate, provide, or retain records for the pur20 poses of facilitating supervision of such persons 

21 and assessing and detecting risks to consumers. 

22 (D) REQUIREMENTS CONCERNING OBLIGA23 TIONS.—The Bureau may prescribe rules re24 garding a person described in subsection (a), to 

25 ensure that such persons are legitimate entities 


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1 and are able to perform their obligations to con2 sumers. Such requirements may include back3 ground checks for principals, officers, directors, 

4 or key personnel and bonding or other appro5 priate financial requirements. 

6 (E) CONSULTATION WITH STATE AGEN7 CIES.—In developing and implementing require8 ments under this paragraph, the Bureau shall 

9 consult with State agencies regarding require10 ments or systems (including coordinated or 

11 combined systems for registration), where ap12 propriate. 

13 (c) EXCLUSIVE ENFORCEMENT AUTHORITY.— 

14 (1) THE BUREAU TO HAVE EXCLUSIVE EN15 FORCEMENT AUTHORITY.—To the extent that Fed16 eral law authorizes the Bureau and another Federal 

17 agency to enforce Federal consumer financial law, 

18 the Bureau shall have exclusive authority to enforce 

19 that Federal consumer financial law with respect to 

20 any person described in subsection (a)(1)(B). 

21 (2) REFERRAL.—Any Federal agency author22 ized to enforce a Federal consumer financial law de23 scribed in paragraph (1) may recommend in writing 

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1 ment proceeding, as the Bureau is authorized by 

2 that Federal law or by this title. 

3 (3) COORDINATION WITH THE FEDERAL TRADE

4 COMMISSION.— 

5 (A) IN GENERAL.—The Bureau and the 

6 Federal Trade Commission shall coordinate en7 forcement actions for violations of Federal law 

8 regarding the offering or provision of consumer 

9 financial products or services by any covered 

10 person that is described in subsection (a)(1)(A), 

11 or service providers thereto. In carrying out this 

12 subparagraph, the agencies shall negotiate an 

13 agreement to establish procedures for such co14 ordination, including procedures for notice to 

15 the other agency, where feasible, prior to initi16 ating a civil action to enforce a Federal law re17 garding the offering or provision of consumer 

18 financial products or services. 

19 (B) CIVIL ACTIONS.—Whenever a civil ac20 tion has been filed by, or on behalf of, the Bu21 reau or the Federal Trade Commission for any 

22 violation of any provision of Federal law de23 scribed in subparagraph (A), or any regulation 

24 prescribed under such provision of law— 


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1 (i) the other agency may not, during 

2 the pendency of that action, institute a 

3 civil action under such provision of law 

4 against any defendant named in the com5 plaint in such pending action for any viola6 tion alleged in the complaint; and 

7 (ii) the Bureau or the Federal Trade 

8 Commission may intervene as a party in 

9 any such action brought by the other agen10 cy, and, upon intervening— 

11 (I) be heard on all matters aris12 ing in such enforcement action; and 

13 (II) file petitions for appeal in 

14 such actions. 

15 (C) AGREEMENT TERMS.—The terms of 

16 any agreement negotiated under subparagraph 

17 (A) may modify or supersede the provisions of 

18 subparagraph (B). 

19 (D) DEADLINE.—The agencies shall reach 

20 the agreement required under subparagraph (A) 

21 not later than 6 months after the designated 

22 transfer date. 

23 (d) EXCLUSIVE RULEMAKING AND EXAMINATION

24 AUTHORITY.—Notwithstanding any other provision of 

25 Federal law, to the extent that Federal law authorizes the 


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1 Bureau and another Federal agency to issue regulations 

2 or guidance, conduct examinations, or require reports 

3 from a person described in subsection (a) under such law 

4 for purposes of assuring compliance with Federal con5 sumer financial law and any regulations thereunder, the 

6 Bureau shall have the exclusive authority to prescribe 

7 rules, issue guidance, conduct examinations, require re8 ports, or issue exemptions with regard to a person de9 scribed in subsection (a), subject to those provisions of 

10 law. 

11 (e) SERVICE PROVIDERS.—A service provider to a 

12 person described in subsection (a) shall be subject to the 

13 authority of the Bureau under this section, to the same 

14 extent as if such service provider were engaged in a service 

15 relationship with a bank, and the Bureau were an appro16 priate Federal banking agency under section 7(c) of the 

17 Bank Service Company Act (12 U.S.C. 1867(c)). In con18 ducting any examination or requiring any report from a 

19 service provider subject to this subsection, the Bureau 

20 shall coordinate with the appropriate prudential regulator, 

21 as applicable. 

22 (f) PRESERVATION OF FARM CREDIT ADMINISTRA23 TION AUTHORITY.—No provision of this title may be con24 strued as modifying, limiting, or otherwise affecting the 

25 authority of the Farm Credit Administration. 


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1 SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS 

2 ASSOCIATIONS, AND CREDIT UNIONS. 

3 (a) SCOPE OF COVERAGE.— 

4 (1) APPLICABILITY.—This section shall apply 

5 to any covered person that is— 

6 (A) an insured depository institution with 

7 total assets of more than $10,000,000,000 and 

8 any affiliate thereof; or 

9 (B) an insured credit union with total as10 sets of more than $10,000,000,000 and any af11 filiate thereof. 

12 (2) RULE OF CONSTRUCTION.—For purposes of 

13 determining total assets under this section and sec14 tion 1026, the Bureau shall rely on the same regula15 tions and interim methodologies specified in section 

16 312(e). 

17 (b) SUPERVISION.— 

18 (1) IN GENERAL.—The Bureau shall require re19 ports and conduct examinations on a periodic basis 

20 of persons described in subsection (a) for purposes 

21 of— 

22 (A) assessing compliance with the require23 ments of Federal consumer financial laws; 

24 (B) obtaining information about the activi25 ties and compliance systems or procedures of 

26 such persons; and 


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1 (C) detecting and assessing risks to con2 sumers and to markets for consumer financial 

3 products and services. 

4 (2) COORDINATION.—To minimize regulatory 

5 burden, the Bureau shall coordinate its supervisory 

6 activities with the supervisory activities conducted by 

7 prudential regulators and the State bank regulatory 

8 authorities, including establishing their respective 

9 schedules for examining such persons described in 

10 subsection (a) and requirements regarding reports to 

11 be submitted by such persons. 

12 (3) USE OF EXISTING REPORTS.—The Bureau 

13 shall, to the fullest extent possible, use— 

14 (A) reports pertaining to a person de15 scribed in subsection (a) that have been pro16 vided or required to have been provided to a 

17 Federal or State agency; and 

18 (B) information that has been reported 

19 publicly. 

20 (4) PRESERVATION OF AUTHORITY.—Nothing 

21 in this title may be construed as limiting the author22 ity of the Director to require reports from a person 

23 described in subsection (a), as permitted under para24 graph (1), regarding information owned or under the 

25 control of such person, regardless of whether such 


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1 information is maintained, stored, or processed by 

2 another person. 

3 (5) REPORTS OF TAX LAW NONCOMPLIANCE.— 

4 The Bureau shall provide the Commissioner of In5 ternal Revenue with any report of examination or re6 lated information identifying possible tax law non7 compliance. 

8 (c) PRIMARY ENFORCEMENT AUTHORITY.— 

9 (1) THE BUREAU TO HAVE PRIMARY ENFORCE10 MENT AUTHORITY.—To the extent that the Bureau 

11 and another Federal agency are authorized to en12 force a Federal consumer financial law, the Bureau 

13 shall have primary authority to enforce that Federal 

14 consumer financial law with respect to any person 

15 described in subsection (a). 

16 (2) REFERRAL.—Any Federal agency, other 

17 than the Federal Trade Commission, that is author18 ized to enforce a Federal consumer financial law 

19 may recommend, in writing, to the Bureau that the 

20 Bureau initiate an enforcement proceeding with re21 spect to a person described in subsection (a), as the 

22 Bureau is authorized to do by that Federal con23 sumer financial law. 

24 (3) BACKUP ENFORCEMENT AUTHORITY OF

25 OTHER FEDERAL AGENCY.—If the Bureau does not, 


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1 before the end of the 120-day period beginning on 

2 the date on which the Bureau receives a rec3 ommendation under paragraph (2), initiate an en4 forcement proceeding, the other agency referred to 

5 in paragraph (2) may initiate an enforcement pro6 ceeding, as permitted by the subject provision of 

7 Federal law. 

8 (d) SERVICE PROVIDERS.—A service provider to a 

9 person described in subsection (a) shall be subject to the 

10 authority of the Bureau under this section, to the same 

11 extent as if the Bureau were an appropriate Federal bank12 ing agency under section 7(c) of the Bank Service Com13 pany Act 12 U.S.C. 1867(c). In conducting any examina14 tion or requiring any report from a service provider sub15 ject to this subsection, the Bureau shall coordinate with 

16 the appropriate prudential regulator. 

17 (e) SIMULTANEOUS AND COORDINATED SUPER18 VISORY ACTION.— 

19 (1) EXAMINATIONS.—A prudential regulator 

20 and the Bureau shall, with respect to each insured 

21 depository institution, insured credit union, or other 

22 covered person described in subsection (a) that is su23 pervised by the prudential regulator and the Bureau, 

24 respectively— 


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1 (A) coordinate the scheduling of examina2 tions of the insured depository institution, in3 sured credit union, or other covered person de4 scribed in subsection (a); 

5 (B) conduct simultaneous examinations of 

6 each insured depository institution, insured 

7 credit union, or other covered person described 

8 in subsection (a), unless such institution re9 quests examinations to be conducted separately; 

10 (C) share each draft report of examination 

11 with the other agency and permit the receiving 

12 agency a reasonable opportunity (which shall 

13 not be less than a period of 30 days after the 

14 date of receipt) to comment on the draft report 

15 before such report is made final; and 

16 (D) prior to issuing a final report of exam17 ination or taking supervisory action, take into 

18 consideration concerns, if any, raised in the 

19 comments made by the other agency. 

20 (2) COORDINATION WITH STATE BANK SUPER21 VISORS.—The Bureau shall pursue arrangements 

22 and agreements with State bank supervisors to co23 ordinate examinations, consistent with paragraph 

24 (1). 


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1 (3) AVOIDANCE OF CONFLICT IN SUPER2 VISION.— 

3 (A) REQUEST.—If the proposed super4 visory determinations of the Bureau and a pru5 dential regulator (in this section referred to col6 lectively as the ‘‘agencies’’) are conflicting, an 

7 insured depository institution, insured credit 

8 union, or other covered person described in sub9 section (a) may request the agencies to coordi10 nate and present a joint statement of coordi11 nated supervisory action. 

12 (B) JOINT STATEMENT.—The agencies 

13 shall provide a joint statement under subpara14 graph (A), not later than 30 days after the date 

15 of receipt of the request of the insured deposi16 tory institution, credit union, or covered person 

17 described in subsection (a). 

18 (4) APPEALS TO GOVERNING PANEL.— 

19 (A) IN GENERAL.—If the agencies do not 

20 resolve the conflict or issue a joint statement 

21 required by subparagraph (B), or if either of 

22 the agencies takes or attempts to take any su23 pervisory action relating to the request for the 

24 joint statement without the consent of the other 

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1 sured credit union, or other covered person de2 scribed in subsection (a) may institute an ap3 peal to a governing panel, as provided in this 

4 subsection, not later than 30 days after the ex5 piration of the period during which a joint 

6 statement is required to be filed under para7 graph (3)(B). 

8 (B) COMPOSITION OF GOVERNING

9 PANEL.—The governing panel for an appeal 

10 under this paragraph shall be composed of— 

11 (i) a representative from the Bureau 

12 and a representative of the prudential reg13 ulator, both of whom— 

14 (I) have not participated in the 

15 material supervisory determinations 

16 under appeal; and 

17 (II) do not directly or indirectly 

18 report to the person who participated 

19 materially in the supervisory deter20 minations under appeal; and 

21 (ii) one individual representative, to 

22 be determined on a rotating basis, from 

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1 troller of the Currency, other than any 

2 agency involved in the subject dispute. 

3 (C) CONDUCT OF APPEAL.—In an appeal 

4 under this paragraph— 

5 (i) the insured depository institution, 

6 insured credit union, or other covered per7 son described in subsection (a)— 

8 (I) shall include in its appeal all 

9 the facts and legal arguments per10 taining to the matter; and 

11 (II) may, through counsel, em12 ployees, or representatives, appear be13 fore the governing panel in person or 

14 by telephone; and 

15 (ii) the governing panel— 

16 (I) may request the insured de17 pository institution, insured credit 

18 union, or other covered person de19 scribed in subsection (a), the Bureau, 

20 or the prudential regulator to produce 

21 additional information relevant to the 

22 appeal; and 

23 (II) by a majority vote of its 

24 members, shall provide a final deter25 mination, in writing, not later than 30 


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1 days after the date of filing of an 

2 informationally complete appeal, or 

3 such longer period as the panel and 

4 the insured depository institution, in5 sured credit union, or other covered 

6 person described in subsection (a) 

7 may jointly agree. 

8 (D) PUBLIC AVAILABILITY OF DETERMINA9 TIONS.—A governing panel shall publish all in10 formation contained in a determination by the 

11 governing panel, with appropriate redactions of 

12 information that would be subject to an exemp13 tion from disclosure under section 552 of title 

14 5, United States Code. 

15 (E) PROHIBITION AGAINST RETALIA16 TION.—The Bureau and the prudential regu17 lators shall prescribe rules to provide safe18 guards from retaliation against the insured de19 pository institution, insured credit union, or 

20 other covered person described in subsection (a) 

21 instituting an appeal under this paragraph, as 

22 well as their officers and employees. 

23 (F) LIMITATION.—The process provided in 

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1 servator or receiver for an insured depository 

2 institution or a liquidating agent for an insured 

3 credit union, as the case may be, or a decision 

4 to take action pursuant to section 38 of the 

5 Federal Deposit Insurance Act (12 U.S.C. 

6 1831o) or section 212 of the Federal Credit 

7 Union Act (112 U.S.C. 1790a), as applicable. 

8 (G) EFFECT ON OTHER AUTHORITY.— 

9 Nothing in this section shall modify or limit the 

10 authority of the Bureau to interpret, or take 

11 enforcement action under, any Federal con12 sumer financial law. 

13 SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND 

14 CREDIT UNIONS. 

15 (a) SCOPE OF COVERAGE.—This section shall apply 

16 to any covered person that is— 

17 (1) an insured depository institution with total 

18 assets of $10,000,000,000 or less; or 

19 (2) an insured credit union with total assets of 

20 $10,000,000,000 or less. 

21 (b) REPORTS.—The Director may require reports 

22 from a person described in subsection (a), as necessary 

23 to support the role of the Bureau in implementing Federal 

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1 ties under subsection (c), and to assess and detect risks 

2 to consumers and consumer financial markets. 

3 (1) USE OF EXISTING REPORTS.—The Bureau 

4 shall, to the fullest extent possible, use— 

5 (A) reports pertaining to a person de6 scribed in subsection (a) that have been pro7 vided or required to have been provided to a 

8 Federal or State agency; and 

9 (B) information that has been reported 

10 publicly. 

11 (2) PRESERVATION OF AUTHORITY.—Nothing 

12 in this subsection may be construed as limiting the 

13 authority of the Director from requiring from a per14 son described in subsection (a), as permitted under 

15 paragraph (1), information owned or under the con16 trol of such person, regardless of whether such infor17 mation is maintained, stored, or processed by an18 other person. 

19 (3) REPORTS OF TAX LAW NONCOMPLIANCE.— 

20 The Bureau shall provide the Commissioner of In21 ternal Revenue with any report of examination or re22 lated information identifying possible tax law non23 compliance. 

24 (c) EXAMINATIONS.— 


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1 (1) IN GENERAL.—The Bureau may, at its dis2 cretion, include examiners on a sampling basis of the 

3 examinations performed by the prudential regulator 

4 of persons described in subsection (a). 

5 (2) AGENCY COORDINATION.—The prudential 

6 regulator shall— 

7 (A) provide all reports, records, and docu8 mentation related to the examination process 

9 for any institution included in the sample re10 ferred to in paragraph (1) to the Bureau on a 

11 timely and continual basis; 

12 (B) involve such Bureau examiner in the 

13 entire examination process for such person; and 

14 (C) consider input of the Bureau con15 cerning the scope of an examination, conduct of 

16 the examination, the contents of the examina17 tion report, the designation of matters requiring 

18 attention, and examination ratings. 

19 (d) ENFORCEMENT.— 

20 (1) IN GENERAL.—Except for requiring reports 

21 under subsection (b), the prudential regulator shall 

22 have exclusive authority to enforce compliance with 

23 respect to a person described in subsection (a). 

24 (2) COORDINATION WITH PRUDENTIAL REGU25 LATOR.— 


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1 (A) REFERRAL.—When the Bureau has 

2 reason to believe that a person described in sub3 section (a) has engaged in a material violation 

4 of a Federal consumer financial law, the Bu5 reau shall notify the prudential regulator in 

6 writing and recommend appropriate action to 

7 respond. 

8 (B) RESPONSE.—Upon receiving a rec9 ommendation under subparagraph (A), the pru10 dential regulator shall provide a written re11 sponse to the Bureau not later than 60 days 

12 thereafter. 

13 (e) SERVICE PROVIDERS.—A service provider to a 

14 substantial number of persons described in subsection (a) 

15 shall be subject to the authority of the Bureau under sec16 tion 1025 to the same extent as if the Bureau were an 

17 appropriate Federal bank agency under section 7(c) of the 

18 Bank Service Company Act (12 U.S.C. 1867(c)). When 

19 conducting any examination or requiring any report from 

20 a service provider subject to this subsection, the Bureau 

21 shall coordinate with the appropriate prudential regulator. 


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1 SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; 

2 PRESERVATION OF AUTHORITIES. 

3 (a) EXCLUSION FOR MERCHANTS, RETAILERS, AND

4 OTHER SELLERS OF NONFINANCIAL GOODS OR SERV5 ICES.— 

6 (1) SALE OR BROKERAGE OF NONFINANCIAL

7 GOOD OR SERVICE.—The Bureau may not exercise 

8 any rulemaking, supervisory, enforcement or other 

9 authority under this title with respect to a person 

10 who is a merchant, retailer, or seller of any non11 financial good or service and is engaged in the sale 

12 or brokerage of such nonfinancial good or service, 

13 except to the extent that such person is engaged in 

14 offering or providing any consumer financial product 

15 or service, or is otherwise subject to any enumerated 

16 consumer law or any law for which authorities are 

17 transferred under subtitle F or H. 

18 (2) OFFERING OR PROVISION OF CERTAIN CON19 SUMER FINANCIAL PRODUCTS OR SERVICES IN CON20 NECTION WITH THE SALE OR BROKERAGE OF NON21 FINANCIAL GOOD OR SERVICE.— 

22 (A) IN GENERAL.—Except as provided in 

23 subparagraph (B), and subject to subparagraph 

24 (C), the Bureau may not exercise any rule25 making, supervisory, enforcement, or other au26 thority under this title with respect to a merVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01114 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 chant, retailer, or seller of nonfinancial goods or 

2 services who— 

3 (i) extends credit directly to a con4 sumer, in a case in which the good or serv5 ice being provided is not itself a consumer 

6 financial product or service (other than 

7 credit described in this subparagraph), ex8 clusively for the purpose of enabling that 

9 consumer to purchase such nonfinancial 

10 good or service directly from the merchant, 

11 retailer, or seller; 

12 (ii) directly, or through an agreement 

13 with another person, collects debt arising 

14 from credit extended as described in clause 

15 (i); or 

16 (iii) sells or conveys debt described in 

17 clause (i) that is delinquent or otherwise in 

18 default. 

19 (B) APPLICABILITY.—Subparagraph (A) 

20 does not apply to any credit transaction or col21 lection of debt, other than as described in sub22 paragraph (C), arising from a transaction de23 scribed in subparagraph (A)— 

24 (i) in which the merchant, retailer, or 

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1 signs, sells or otherwise conveys to another 

2 person such debt owed by the consumer 

3 (except for a sale of debt that is delinquent 

4 or otherwise in default, as described in 

5 subparagraph (A)(iii)); 

6 (ii) in which the credit extended ex7 ceeds the market value of the nonfinancial 

8 good or service provided, or the Bureau 

9 otherwise finds that the sale of the non10 financial good or service is done as a sub11 terfuge, so as to evade or circumvent the 

12 provisions of this title; or 

13 (iii) in which the merchant, retailer, 

14 or seller of nonfinancial goods or services 

15 regularly extends credit and the credit is— 

16 (I) subject to a finance charge; or 

17 (II) payable by written agree18 ment in more than 4 installments. 

19 (C) LIMITATION.—Notwithstanding sub20 paragraph (B), the Bureau may not exercise 

21 any rulemaking, supervisory, enforcement, or 

22 other authority under this title with respect to 

23 a merchant, retailer, or seller of nonfinancial 

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1 cantly in offering or providing consumer finan2 cial products or services. 

3 (D) RULE OF CONSTRUCTION.—No provi4 sion of this title may be construed as modifying, 

5 limiting, or superseding the supervisory or en6 forcement authority of the Federal Trade Com7 mission or any other agency (other than the 

8 Bureau) with respect to credit extended, or the 

9 collection of debt arising from such extension, 

10 directly by a merchant or retailer to a consumer 

11 exclusively for the purpose of enabling that con12 sumer to purchase nonfinancial goods or serv13 ices directly from the merchant or retailer. 

14 (b) EXCLUSION FOR REAL ESTATE BROKERAGE AC15 TIVITIES.— 

16 (1) REAL ESTATE BROKERAGE ACTIVITIES EX17 CLUDED.—Without limiting subsection (a), and ex18 cept as permitted in paragraph (2), the Bureau may 

19 not exercise any rulemaking, supervisory, enforce20 ment, or other authority under this title with respect 

21 to a person that is licensed or registered as a real 

22 estate broker or real estate agent, in accordance 

23 with State law, to the extent that such person— 


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1 (A) acts as a real estate agent or broker 

2 for a buyer, seller, lessor, or lessee of real prop3 erty; 

4 (B) brings together parties interested in 

5 the sale, purchase, lease, rental, or exchange of 

6 real property; 

7 (C) negotiates, on behalf of any party, any 

8 portion of a contract relating to the sale, pur9 chase, lease, rental, or exchange of real prop10 erty (other than in connection with the provi11 sion of financing with respect to any such 

12 transaction); or 

13 (D) offers to engage in any activity, or act 

14 in any capacity, described in subparagraph (A), 

15 (B), or (C). 

16 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

17 (1) shall not apply to any person to the extent that 

18 such person is engaged in the offering or provision 

19 of any consumer financial product or service or is 

20 otherwise subject to any enumerated consumer law 

21 or any law for which authorities are transferred 

22 under subtitle F or H. 

23 (c) EXCLUSION FOR MANUFACTURED HOME RETAIL24 ERS AND MODULAR HOME RETAILERS.— 


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1 (1) IN GENERAL.—The Director may not exer2 cise any rulemaking, supervisory, enforcement, or 

3 other authority over a person to the extent that— 

4 (A) such person is not described in para5 graph (2); and 

6 (B) such person— 

7 (i) acts as an agent or broker for a 

8 buyer or seller of a manufactured home or 

9 a modular home; 

10 (ii) facilitates the purchase by a con11 sumer of a manufactured home or modular 

12 home, by negotiating the purchase price or 

13 terms of the sales contract (other than 

14 providing financing with respect to such 

15 transaction); or 

16 (iii) offers to engage in any activity 

17 described in clause (i) or (ii). 

18 (2) DESCRIPTION OF ACTIVITIES.—A person is 

19 described in this paragraph to the extent that such 

20 person is engaged in the offering or provision of any 

21 consumer financial product or service or is otherwise 

22 subject to any enumerated consumer law or any law 

23 for which authorities are transferred under subtitle 

24 F or H. 


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1 (3) DEFINITIONS.—For purposes of this sub2 section, the following definitions shall apply: 

3 (A) MANUFACTURED HOME.—The term 

4 ‘‘manufactured home’’ has the same meaning as 

5 in section 603 of the National Manufactured 

6 Housing Construction and Safety Standards 

7 Act of 1974 (42 U.S.C. 5402). 

8 (B) MODULAR HOME.—The term ‘‘mod9 ular home’’ means a house built in a factory in 

10 2 or more modules that meet the State or local 

11 building codes where the house will be located, 

12 and where such modules are transported to the 

13 building site, installed on foundations, and com14 pleted. 

15 (d) EXCLUSION FOR ACCOUNTANTS AND TAX PRE16 PARERS.— 

17 (1) IN GENERAL.—Except as permitted in para18 graph (2), the Bureau may not exercise any rule19 making, supervisory, enforcement, or other authority 

20 over— 

21 (A) any person that is a certified public ac22 countant, permitted to practice as a certified 

23 public accounting firm, or certified or licensed 

24 for such purpose by a State, or any individual 

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1 est with respect to a person described in this 

2 subparagraph, when such person is performing 

3 or offering to perform— 

4 (i) customary and usual accounting 

5 activities, including the provision of ac6 counting, tax, advisory, or other services 

7 that are subject to the regulatory authority 

8 of a State board of accountancy or a Fed9 eral authority; or 

10 (ii) other services that are incidental 

11 to such customary and usual accounting 

12 activities, to the extent that such incidental 

13 services are not offered or provided— 

14 (I) by the person separate and 

15 apart from such customary and usual 

16 accounting activities; or 

17 (II) to consumers who are not re18 ceiving such customary and usual ac19 counting activities; or 

20 (B) any person, other than a person de21 scribed in subparagraph (A) that performs in22 come tax preparation activities for consumers. 

23 (2) DESCRIPTION OF ACTIVITIES.— 

24 (A) IN GENERAL.—Paragraph (1) shall not 

25 apply to any person described in paragraph 


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1 (1)(A) or (1)(B) to the extent that such person 

2 is engaged in any activity which is not a cus3 tomary and usual accounting activity described 

4 in paragraph (1)(A) or incidental thereto but 

5 which is the offering or provision of any con6 sumer financial product or service, except to the 

7 extent that a person described in paragraph 

8 (1)(A) is engaged in an activity which is a cus9 tomary and usual accounting activity described 

10 in paragraph (1)(A), or incidental thereto. 

11 (B) NOT A CUSTOMARY AND USUAL AC12 COUNTING ACTIVITY.—For purposes of this 

13 subsection, extending or brokering credit is not 

14 a customary and usual accounting activity, or 

15 incidental thereto. 

16 (C) RULE OF CONSTRUCTION.—For pur17 poses of subparagraphs (A) and (B), a person 

18 described in paragraph (1)(A) shall not be 

19 deemed to be extending credit, if such person is 

20 only extending credit directly to a consumer, ex21 clusively for the purpose of enabling such con22 sumer to purchase services described in clause 

23 (i) or (ii) of paragraph (1)(A) directly from 

24 such person, and such credit is— 


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1 (i) not subject to a finance charge; 

2 and 

3 (ii) not payable by written agreement 

4 in more than 4 installments. 

5 (D) OTHER LIMITATIONS.—Paragraph (1) 

6 does not apply to any person described in para7 graph (1)(A) or (1)(B) that is otherwise subject 

8 to any enumerated consumer law or any law for 

9 which authorities are transferred under subtitle 

10 F or H. 

11 (e) EXCLUSION FOR ATTORNEYS.— 

12 (1) IN GENERAL.—The Bureau may not exer13 cise any authority to conduct examinations of an at14 torney licensed by a State, to the extent that the at15 torney is engaged in the practice of law under the 

16 laws of such State. 

17 (2) EXCEPTION FOR ENUMERATED CONSUMER

18 LAWS AND TRANSFERRED AUTHORITIES.—Para19 graph (1) shall not apply to an attorney who is en20 gaged in the offering or provision of any consumer 

21 financial product or service, or is otherwise subject 

22 to any enumerated consumer law or any law for 

23 which authorities are transferred under subtitle F or 

24 H. 


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1 (f) EXCLUSION FOR PERSONS REGULATED BY A

2 STATE INSURANCE REGULATOR.— 

3 (1) IN GENERAL.—No provision of this title 

4 shall be construed as altering, amending, or affect5 ing the authority of any State insurance regulator to 

6 adopt rules, initiate enforcement proceedings, or 

7 take any other action with respect to a person regu8 lated by a State insurance regulator. Except as pro9 vided in paragraph (2), the Bureau shall have no au10 thority to exercise any power to enforce this title 

11 with respect to a person regulated by a State insur12 ance regulator. 

13 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

14 (1) does not apply to any person described in such 

15 paragraph to the extent that such person is engaged 

16 in the offering or provision of any consumer finan17 cial product or service or is otherwise subject to any 

18 enumerated consumer law or any law for which au19 thorities are transferred under subtitle F or H. 

20 (g) EXCLUSION FOR EMPLOYEE BENEFIT AND COM21 PENSATION PLANS AND CERTAIN OTHER ARRANGEMENTS

22 UNDER THE INTERNAL REVENUE CODE OF 1986.— 

23 (1) PRESERVATION OF AUTHORITY OF OTHER

24 AGENCIES.—No provision of this title shall be con25 strued as altering, amending, or affecting the auVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01124 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 thority of the Secretary of the Treasury, the Sec2 retary of Labor, or the Commissioner of Internal 

3 Revenue to adopt regulations, initiate enforcement 

4 proceedings, or take any actions with respect to any 

5 specified plan or arrangement. 

6 (2) ACTIVITIES NOT CONSTITUTING THE OF7 FERING OR PROVISION OF ANY CONSUMER FINAN8 CIAL PRODUCT OR SERVICE.—For purposes of this 

9 title, a person shall not be treated as having engaged 

10 in the offering or provision of any consumer finan11 cial product or service solely because such person is 

12 a specified plan or arrangement, or is engaged in the 

13 activity of establishing or maintaining, for the ben14 efit of employees of such person (or for members of 

15 an employee organization), any specified plan or ar16 rangement. 

17 (3) LIMITATION ON BUREAU AUTHORITY.— 

18 (A) IN GENERAL.—Except as provided 

19 under subparagraphs (B) and (C), the Bureau 

20 may not exercise any rulemaking or enforce21 ment authority with respect to products or serv22 ices that relate to any specified plan or arrange23 ment. 

24 (B) BUREAU ACTION ONLY PURSUANT TO

25 AGENCY REQUEST.—The Secretary and the SecVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01125 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 retary of Labor may jointly issue a written re2 quest to the Bureau regarding implementation 

3 of appropriate consumer protection standards 

4 under this title with respect to the provision of 

5 services relating to any specified plan or ar6 rangement. Subject to a request made under 

7 this subparagraph, the Bureau may exercise 

8 rulemaking authority, and may act to enforce a 

9 rule prescribed pursuant to such request, in ac10 cordance with the provisions of this title. A re11 quest made by the Secretary and the Secretary 

12 of Labor under this subparagraph shall describe 

13 the basis for, and scope of, appropriate con14 sumer protection standards to be implemented 

15 under this title with respect to the provision of 

16 services relating to any specified plan or ar17 rangement. 

18 (C) DESCRIPTION OF PRODUCTS OR SERV19 ICES.—To the extent that a person engaged in 

20 providing products or services relating to any 

21 specified plan or arrangement is subject to any 

22 enumerated consumer law or any law for which 

23 authorities are transferred under subtitle F or 

24 H, subparagraph (A) shall not apply with re25 spect to that law. 


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1 (4) SPECIFIED PLAN OR ARRANGEMENT.—For 

2 purposes of this subsection, the term ‘‘specified plan 

3 or arrangement’’ means any plan, account, or ar4 rangement described in section 220, 223, 401(a), 

5 403(a), 403(b), 408, 408A, 529, or 530 of the Inter6 nal Revenue Code of 1986, or any employee benefit 

7 or compensation plan or arrangement, including a 

8 plan that is subject to title I of the Employee Retire9 ment Income Security Act of 1974. 

10 (h) PERSONS REGULATED BY A STATE SECURITIES

11 COMMISSION.— 

12 (1) IN GENERAL.—No provision of this title 

13 shall be construed as altering, amending, or affect14 ing the authority of any securities commission (or 

15 any agency or office performing like functions) of 

16 any State to adopt rules, initiate enforcement pro17 ceedings, or take any other action with respect to a 

18 person regulated by any securities commission (or 

19 any agency or office performing like functions) of 

20 any State. Except as permitted in paragraph (2) and 

21 subsection (f), the Bureau shall have no authority to 

22 exercise any power to enforce this title with respect 

23 to a person regulated by any securities commission 

24 (or any agency or office performing like functions) 


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1 of any State, but only to the extent that the person 

2 acts in such regulated capacity. 

3 (2) DESCRIPTION OF ACTIVITIES.—Paragraph 

4 (1) shall not apply to any person to the extent such 

5 person is engaged in the offering or provision of any 

6 consumer financial product or service, or is other7 wise subject to any enumerated consumer law or any 

8 law for which authorities are transferred under sub9 title F or H. 

10 (i) EXCLUSION FOR PERSONS REGULATED BY THE

11 COMMISSION.— 

12 (1) IN GENERAL.—No provision of this title 

13 may be construed as altering, amending, or affecting 

14 the authority of the Commission to adopt rules, ini15 tiate enforcement proceedings, or take any other ac16 tion with respect to a person regulated by the Com17 mission. The Bureau shall have no authority to exer18 cise any power to enforce this title with respect to 

19 a person regulated by the Commission. 

20 (2) CONSULTATION AND COORDINATION.—Not21 withstanding paragraph (1), the Commission shall 

22 consult and coordinate, where feasible, with the Bu23 reau with respect to any rule (including any advance 

24 notice of proposed rulemaking) regarding an invest25 ment product or service that is the same type of 


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1 product as, or that competes directly with, a con2 sumer financial product or service that is subject to 

3 the jurisdiction of the Bureau under this title or 

4 under any other law. In carrying out this paragraph, 

5 the agencies shall negotiate an agreement to estab6 lish procedures for such coordination, including pro7 cedures for providing advance notice to the Bureau 

8 when the Commission is initiating a rulemaking. 

9 (j) EXCLUSION FOR PERSONS REGULATED BY THE

10 COMMODITY FUTURES TRADING COMMISSION.— 

11 (1) IN GENERAL.—No provision of this title 

12 shall be construed as altering, amending, or affect13 ing the authority of the Commodity Futures Trading 

14 Commission to adopt rules, initiate enforcement pro15 ceedings, or take any other action with respect to a 

16 person regulated by the Commodity Futures Trading 

17 Commission. The Bureau shall have no authority to 

18 exercise any power to enforce this title with respect 

19 to a person regulated by the Commodity Futures 

20 Trading Commission. 

21 (2) CONSULTATION AND COORDINATION.—Not22 withstanding paragraph (1), the Commodity Futures 

23 Trading Commission shall consult and coordinate 

24 with the Bureau with respect to any rule (including 

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1 ing a product or service that is the same type of 

2 product as, or that competes directly with, a con3 sumer financial product or service that is subject to 

4 the jurisdiction of the Bureau under this title or 

5 under any other law. 

6 (k) EXCLUSION FOR PERSONS REGULATED BY THE

7 FARM CREDIT ADMINISTRATION.— 

8 (1) IN GENERAL.—No provision of this title 

9 shall be construed as altering, amending, or affect10 ing the authority of the Farm Credit Administration 

11 to adopt rules, initiate enforcement proceedings, or 

12 take any other action with respect to a person regu13 lated by the Farm Credit Administration. The Bu14 reau shall have no authority to exercise any power 

15 to enforce this title with respect to a person regu16 lated by the Farm Credit Administration. 

17 (2) DEFINITION.—For purposes of this sub18 section, the term ‘‘person regulated by the Farm 

19 Credit Administration’’ means any Farm Credit Sys20 tem institution that is chartered and subject to the 

21 provisions of the Farm Credit Act of 1971 (12 

22 U.S.C. 2001 et seq.). 

23 (l) EXCLUSION FOR ACTIVITIES RELATING TO CHAR24 ITABLE CONTRIBUTIONS.— 


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1 (1) IN GENERAL.—The Director and the Bu2 reau may not exercise any rulemaking, supervisory, 

3 enforcement, or other authority, including authority 

4 to order penalties, over any activities related to the 

5 solicitation or making of voluntary contributions to 

6 a tax-exempt organization as recognized by the In7 ternal Revenue Service, by any agent, volunteer, or 

8 representative of such organizations to the extent 

9 the organization, agent, volunteer, or representative 

10 thereof is soliciting or providing advice, information, 

11 education, or instruction to any donor or potential 

12 donor relating to a contribution to the organization. 

13 (2) LIMITATION.—The exclusion in paragraph 

14 (1) does not apply to other activities not described 

15 in paragraph (1) that are the offering or provision 

16 of any consumer financial product or service, or are 

17 otherwise subject to any enumerated consumer law 

18 or any law for which authorities are transferred 

19 under subtitle F or H. 

20 (m) INSURANCE.—The Bureau may not define as a 

21 financial product or service, by regulation or otherwise, 

22 engaging in the business of insurance. 

23 (n) LIMITED AUTHORITY OF THE BUREAU.—Not24 withstanding subsections (a) through (h) and (l), a person 


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1 subject to or described in one or more of such sub2 sections— 

3 (1) may be a service provider; and 

4 (2) may be subject to requests from, or require5 ments imposed by, the Bureau regarding informa6 tion in order to carry out the responsibilities and 

7 functions of the Bureau and in accordance with sec8 tion 1022, 1052, or 1053. 

9 (o) NO AUTHORITY TO IMPOSE USURY LIMIT.—No 

10 provision of this title shall be construed as conferring au11 thority on the Bureau to establish a usury limit applicable 

12 to an extension of credit offered or made by a covered per13 son to a consumer, unless explicitly authorized by law. 

14 (p) ATTORNEY GENERAL.—No provision of this title, 

15 including section 1024(c)(1), shall affect the authorities 

16 of the Attorney General under otherwise applicable provi17 sions of law. 

18 (q) SECRETARY OF THE TREASURY.—No provision of 

19 this title shall affect the authorities of the Secretary, in20 cluding with respect to prescribing rules, initiating en21 forcement proceedings, or taking other actions with re22 spect to a person that performs income tax preparation 

23 activities for consumers. 

24 (r) DEPOSIT INSURANCE AND SHARE INSURANCE.— 

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1 poration under the Federal Deposit Insurance Act or the 

2 National Credit Union Administration Board under the 

3 Federal Credit Union Act as to matters related to deposit 

4 insurance and share insurance, respectively. 

5 SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DIS6 PUTE ARBITRATION. 

7 (a) STUDY AND REPORT.—The Bureau shall conduct 

8 a study of, and shall provide a report to Congress con9 cerning, the use of agreements providing for arbitration 

10 of any future dispute between covered persons and con11 sumers in connection with the offering or providing of con12 sumer financial products or services. 

13 (b) FURTHER AUTHORITY.—The Bureau, by regula14 tion, may prohibit or impose conditions or limitations on 

15 the use of an agreement between a covered person and 

16 a consumer for a consumer financial product or service 

17 providing for arbitration of any future dispute between the 

18 parties, if the Bureau finds that such a prohibition or im19 position of conditions or limitations is in the public inter20 est and for the protection of consumers. The findings in 

21 such rule shall be consistent with the study conducted 

22 under subsection (a). 

23 (c) LIMITATION.—The authority described in sub24 section (b) may not be construed to prohibit or restrict 

25 a consumer from entering into a voluntary arbitration 


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1 agreement with a covered person after a dispute has aris2 en. 

3 (d) EFFECTIVE DATE.—Notwithstanding any other 

4 provision of law, any regulation prescribed by the Bureau 

5 under subsection (a) shall apply, consistent with the terms 

6 of the regulation, to any agreement between a consumer 

7 and a covered person entered into after the end of the 

8 180-day period beginning on the effective date of the regu9 lation, as established by the Bureau. 

10 SEC. 1029. EFFECTIVE DATE. 

11 This subtitle shall become effective on the designated 

12 transfer date. 

13 Subtitle C—Specific Bureau 

14 Authorities 

15 SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE 

16 ACTS OR PRACTICES. 

17 (a) IN GENERAL.—The Bureau may take any action 

18 authorized under subtitle E to prevent a covered person 

19 or service provider from committing or engaging in an un20 fair, deceptive, or abusive act or practice under Federal 

21 law in connection with any transaction with a consumer 

22 for a consumer financial product or service, or the offering 

23 of a consumer financial product or service. 

24 (b) RULEMAKING.—The Bureau may prescribe rules 

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1 fying as unlawful unfair, deceptive, or abusive acts or 

2 practices in connection with any transaction with a con3 sumer for a consumer financial product or service, or the 

4 offering of a consumer financial product or service. Rules 

5 under this section may include requirements for the pur6 pose of preventing such acts or practices. 

7 (c) UNFAIRNESS.— 

8 (1) IN GENERAL.—The Bureau shall have no 

9 authority under this section to declare an act or 

10 practice in connection with a transaction with a con11 sumer for a consumer financial product or service, 

12 or the offering of a consumer financial product or 

13 service, to be unlawful on the grounds that such act 

14 or practice is unfair, unless the Bureau has a rea15 sonable basis to conclude that— 

16 (A) the act or practice causes or is likely 

17 to cause substantial injury to consumers which 

18 is not reasonably avoidable by consumers; and 

19 (B) such substantial injury is not out20 weighed by countervailing benefits to consumers 

21 or to competition. 

22 (2) CONSIDERATION OF PUBLIC POLICIES.—In 

23 determining whether an act or practice is unfair, the 

24 Bureau may consider established public policies as 

25 evidence to be considered with all other evidence. 


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1 Such public policy considerations may not serve as 

2 a primary basis for such determination. 

3 (d) ABUSIVE.—The Bureau shall have no authority 

4 under this section to declare an act or practice abusive 

5 in connection with the provision of a consumer financial 

6 product or service, unless the act or practice— 

7 (1) materially interferes with the ability of a 

8 consumer to understand a term or condition of a 

9 consumer financial product or service; or 

10 (2) takes unreasonable advantage of— 

11 (A) a lack of understanding on the part of 

12 the consumer of the material risks, costs, or 

13 conditions of the product or service; 

14 (B) the inability of the consumer to protect 

15 the interests of the consumer in selecting or 

16 using a consumer financial product or service; 

17 or 

18 (C) the reasonable reliance by the con19 sumer on a covered person to act in the inter20 ests of the consumer. 

21 (e) CONSULTATION.—In prescribing rules under this 

22 section, the Bureau shall consult with the Federal banking 

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1 tial, market, or systemic objectives administered by such 

2 agencies. 

3 SEC. 1032. DISCLOSURES. 

4 (a) IN GENERAL.—The Bureau may prescribe rules 

5 to ensure that the features of any consumer financial 

6 product or service, both initially and over the term of the 

7 product or service, are fully, accurately, and effectively 

8 disclosed to consumers in a manner that permits con9 sumers to understand the costs, benefits, and risks associ10 ated with the product or service, in light of the facts and 

11 circumstances. 

12 (b) MODEL DISCLOSURES.— 

13 (1) IN GENERAL.—Any final rule prescribed by 

14 the Bureau under this section requiring disclosures 

15 may include a model form that may be used at the 

16 option of the covered person for provision of the re17 quired disclosures. 

18 (2) FORMAT.—A model form issued pursuant to 

19 paragraph (1) shall contain a clear and conspicuous 

20 disclosure that, at a minimum— 

21 (A) uses plain language comprehensible to 

22 consumers; 

23 (B) contains a clear format and design, 

24 such as an easily readable type font; and 


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1 (C) succinctly explains the information 

2 that must be communicated to the consumer. 

3 (3) CONSUMER TESTING.—Any model form 

4 issued pursuant to this subsection shall be validated 

5 through consumer testing. 

6 (c) BASIS FOR RULEMAKING.—In prescribing rules 

7 under this section, the Bureau shall consider available evi8 dence about consumer awareness, understanding of, and 

9 responses to disclosures or communications about the 

10 risks, costs, and benefits of consumer financial products 

11 or services. 

12 (d) SAFE HARBOR.—Any covered person that uses a 

13 model form included with a rule issued under this section 

14 shall be deemed to be in compliance with the disclosure 

15 requirements of this section with respect to such model 

16 form. 

17 (e) TRIAL DISCLOSURE PROGRAMS.— 

18 (1) IN GENERAL.—The Bureau may permit a 

19 covered person to conduct a trial program that is 

20 limited in time and scope, subject to specified stand21 ards and procedures, for the purpose of providing 

22 trial disclosures to consumers that are designed to 

23 improve upon any model form issued pursuant to 

24 subsection (b)(1), or any other model form issued to 

25 implement an enumerated statute, as applicable. 


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1 (2) SAFE HARBOR.—The standards and proce2 dures issued by the Bureau shall be designed to en3 courage covered persons to conduct trial disclosure 

4 programs. For the purposes of administering this 

5 subsection, the Bureau may establish a limited pe6 riod during which a covered person conducting a 

7 trial disclosure program shall be deemed to be in 

8 compliance with, or may be exempted from, a re9 quirement of a rule or an enumerated consumer law. 

10 (3) PUBLIC DISCLOSURE.—The rules of the Bu11 reau shall provide for public disclosure of trial dis12 closure programs, which public disclosure may be 

13 limited, to the extent necessary to encourage covered 

14 persons to conduct effective trials. 

15 (f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not 

16 later than 1 year after the designated transfer date, the 

17 Bureau shall propose for public comment rules and model 

18 disclosures that combine the disclosures required under 

19 the Truth in Lending Act and the Real Estate Settlement 

20 Procedures Act of 1974, into a single, integrated disclo21 sure for mortgage loan transactions covered by those laws, 

22 unless the Bureau determines that any proposal issued by 

23 the Board of Governors and the Secretary of Housing and 

24 Urban Development carries out the same purpose. 


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1 SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION. 

2 (a) IN GENERAL.—Subject to rules prescribed by the 

3 Bureau, a covered person shall make available to a con4 sumer, upon request, information in the control or posses5 sion of the covered person concerning the consumer finan6 cial product or service that the consumer obtained from 

7 such covered person, including information relating to any 

8 transaction, series of transactions, or to the account in9 cluding costs, charges and usage data. The information 

10 shall be made available in an electronic form usable by 

11 consumers. 

12 (b) EXCEPTIONS.—A covered person may not be re13 quired by this section to make available to the consumer— 

14 (1) any confidential commercial information, in15 cluding an algorithm used to derive credit scores or 

16 other risk scores or predictors; 

17 (2) any information collected by the covered 

18 person for the purpose of preventing fraud or money 

19 laundering, or detecting, or making any report re20 garding other unlawful or potentially unlawful con21 duct; 

22 (3) any information required to be kept con23 fidential by any other provision of law; or 

24 (4) any information that the covered person 

25 cannot retrieve in the ordinary course of its business 

26 with respect to that information. 


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1 (c) NO DUTY TO MAINTAIN RECORDS.—Nothing in 

2 this section shall be construed to impose any duty on a 

3 covered person to maintain or keep any information about 

4 a consumer. 

5 (d) STANDARDIZED FORMATS FOR DATA.—The Bu6 reau, by rule, shall prescribe standards applicable to cov7 ered persons to promote the development and use of stand8 ardized formats for information, including through the use 

9 of machine readable files, to be made available to con10 sumers under this section. 

11 (e) CONSULTATION.—The Bureau shall, when pre12 scribing any rule under this section, consult with the Fed13 eral banking agencies and the Federal Trade Commission 

14 to ensure that the rules— 

15 (1) impose substantively similar requirements 

16 on covered persons; 

17 (2) take into account conditions under which 

18 covered persons do business both in the United 

19 States and in other countries; and 

20 (3) do not require or promote the use of any 

21 particular technology in order to develop systems for 

22 compliance. 


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1 SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND IN2 QUIRIES. 

3 (a) TIMELY REGULATOR RESPONSE TO CON4 SUMERS.—The Bureau shall establish, in consultation 

5 with the appropriate Federal regulatory agencies, reason6 able procedures to provide a timely response to consumers, 

7 in writing where appropriate, to complaints against, or in8 quiries concerning, a covered person, including— 

9 (1) all steps that have been taken by the regu10 lator in response to the complaint or inquiry of the 

11 consumer; 

12 (2) any responses received by the regulator 

13 from the covered person; and 

14 (3) any follow-up actions or planned follow-up 

15 actions by the regulator in response to the complaint 

16 or inquiry of the consumer. 

17 (b) TIMELY RESPONSE TO REGULATOR BY COVERED

18 PERSON.—A covered person subject to supervision and 

19 primary enforcement by the Bureau pursuant to section 

20 1025 shall provide a timely response, in writing where ap21 propriate, to the Bureau, the prudential regulators, and 

22 any other agency having jurisdiction over such covered 

23 person concerning a consumer complaint or inquiry, in24 cluding— 


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1 (1) steps that have been taken by the covered 

2 person to respond to the complaint or inquiry of the 

3 consumer; 

4 (2) responses received by the covered person 

5 from the consumer; and 

6 (3) follow-up actions or planned follow-up ac7 tions by the covered person to respond to the com8 plaint or inquiry of the consumer. 

9 (c) PROVISION OF INFORMATION TO CONSUMERS.— 

10 (1) IN GENERAL.—A covered person subject to 

11 supervision and primary enforcement by the Bureau 

12 pursuant to section 1025 shall, in a timely manner, 

13 comply with a consumer request for information in 

14 the control or possession of such covered person con15 cerning the consumer financial product or service 

16 that the consumer obtained from such covered per17 son, including supporting written documentation, 

18 concerning the account of the consumer. 

19 (2) EXCEPTIONS.—A covered person subject to 

20 supervision and primary enforcement by the Bureau 

21 pursuant to section 1025, a prudential regulator, 

22 and any other agency having jurisdiction over a cov23 ered person subject to supervision and primary en24 forcement by the Bureau pursuant to section 1025 


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1 may not be required by this section to make avail2 able to the consumer— 

3 (A) any confidential commercial informa4 tion, including an algorithm used to derive cred5 it scores or other risk scores or predictors; 

6 (B) any information collected by the cov7 ered person for the purpose of preventing fraud 

8 or money laundering, or detecting or making 

9 any report regarding other unlawful or poten10 tially unlawful conduct; 

11 (C) any information required to be kept 

12 confidential by any other provision of law; or 

13 (D) any nonpublic or confidential informa14 tion, including confidential supervisory informa15 tion. 

16 (d) AGREEMENTS WITH OTHER AGENCIES.—The 

17 Bureau shall enter into a memorandum of understanding 

18 with any affected Federal regulatory agency to establish 

19 procedures by which any covered person, and the pruden20 tial regulators, and any other agency having jurisdiction 

21 over a covered person, including the Secretary of the De22 partment of Housing and Urban Development and the 

23 Secretary of Education, shall comply with this section. 


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1 SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN. 

2 (a) ESTABLISHMENT.—The Secretary, in consulta3 tion with the Director, shall designate a Private Education 

4 Loan Ombudsman (in this section referred to as the ‘‘Om5 budsman’’) within the Bureau, to provide timely assist6 ance to borrowers of private education loans. 

7 (b) PUBLIC INFORMATION.—The Secretary and the 

8 Director shall disseminate information about the avail9 ability and functions of the Ombudsman to borrowers and 

10 potential borrowers, as well as institutions of higher edu11 cation, lenders, guaranty agencies, loan servicers, and 

12 other participants in private education student loan pro13 grams. 

14 (c) FUNCTIONS OF OMBUDSMAN.—The Ombudsman 

15 designated under this subsection shall— 

16 (1) in accordance with regulations of the Direc17 tor, receive, review, and attempt to resolve infor18 mally complaints from borrowers of loans described 

19 in subsection (a), including, as appropriate, attempts 

20 to resolve such complaints in collaboration with the 

21 Department of Education and with institutions of 

22 higher education, lenders, guaranty agencies, loan 

23 servicers, and other participants in private education 

24 loan programs; 

25 (2) not later than 90 days after the designated 

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1 standing with the student loan ombudsman estab2 lished under section 141(f) of the Higher Education 

3 Act of 1965 (20 U.S.C. 1018(f)), to ensure coordi4 nation in providing assistance to and serving bor5 rowers seeking to resolve complaints related to their 

6 private education or Federal student loans; 

7 (3) compile and analyze data on borrower com8 plaints regarding private education loans; and 

9 (4) make appropriate recommendations to the 

10 Director, the Secretary, the Secretary of Education, 

11 the Committee on Banking, Housing, and Urban Af12 fairs and the Committee on Health, Education, 

13 Labor, and Pensions of the Senate and the Com14 mittee on Financial Services and the Committee on 

15 Education and Labor of the House of Representa16 tives. 

17 (d) ANNUAL REPORTS.— 

18 (1) IN GENERAL.—The Ombudsman shall pre19 pare an annual report that describes the activities, 

20 and evaluates the effectiveness of the Ombudsman 

21 during the preceding year. 

22 (2) SUBMISSION.—The report required by para23 graph (1) shall be submitted on the same date annu24 ally to the Secretary, the Secretary of Education, 

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1 fairs and the Committee on Health, Education, 

2 Labor, and Pensions of the Senate and the Com3 mittee on Financial Services and the Committee on 

4 Education and Labor of the House of Representa5 tives. 

6 (e) DEFINITIONS.—For purposes of this section, the 

7 terms ‘‘private education loan’’ and ‘‘institution of higher 

8 education’’ have the same meanings as in section 140 of 

9 the Truth in Lending Act (15 U.S.C. 1650). 

10 SEC. 1036. PROHIBITED ACTS. 

11 It shall be unlawful for any person— 

12 (1) to— 

13 (A) advertise, market, offer, or sell a con14 sumer financial product or service not in con15 formity with this title or applicable rules or or16 ders issued by the Bureau; 

17 (B) enforce, or attempt to enforce, any 

18 agreement with a consumer (including any term 

19 or change in terms in respect of such agree20 ment), or impose, or attempt to impose, any fee 

21 or charge on a consumer in connection with a 

22 consumer financial product or service that is 

23 not in conformity with this title or applicable 

24 rules or orders issued by the Bureau; or 


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1 (C) engage in any unfair, deceptive, or 

2 abusive act or practice, 

3 except that no person shall be held to have vio4 lated this paragraph solely by virtue of pro5 viding or selling time or space to a person plac6 ing an advertisement; 

7 (2) to fail or refuse, as required by Federal con8 sumer financial law, or any rule or order issued by 

9 the Bureau thereunder— 

10 (A) to permit access to or copying of 

11 records; 

12 (B) to establish or maintain records; or 

13 (C) to make reports or provide information 

14 to the Bureau; or 

15 (3) knowingly or recklessly to provide substan16 tial assistance to another person in violation of the 

17 provisions of section 1031, or any rule or order 

18 issued thereunder, and notwithstanding any provi19 sion of this title, the provider of such substantial as20 sistance shall be deemed to be in violation of that 

21 section to the same extent as the person to whom 

22 such assistance is provided. 

23 SEC. 1037. EFFECTIVE DATE. 

24 This subtitle shall take effect on the designated 

25 transfer date. 


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1 Subtitle D—Preservation of State 

2 Law 

3 SEC. 1041. RELATION TO STATE LAW. 

4 (a) IN GENERAL.— 

5 (1) RULE OF CONSTRUCTION.—This title, other 

6 than sections 1044 through 1048, may not be con7 strued as annulling, altering, or affecting, or ex8 empting any person subject to the provisions of this 

9 title from complying with, the statutes, regulations, 

10 orders, or interpretations in effect in any State, ex11 cept to the extent that any such provision of law is 

12 inconsistent with the provisions of this title, and 

13 then only to the extent of the inconsistency. 

14 (2) GREATER PROTECTION UNDER STATE

15 LAW.—For purposes of this subsection, a statute, 

16 regulation, order, or interpretation in effect in any 

17 State is not inconsistent with the provisions of this 

18 title if the protection that such statute, regulation, 

19 order, or interpretation affords to consumers is 

20 greater than the protection provided under this title. 

21 A determination regarding whether a statute, regu22 lation, order, or interpretation in effect in any State 

23 is inconsistent with the provisions of this title may 

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1 sponse to a nonfrivolous petition initiated by any in2 terested person. 

3 (b) RELATION TO OTHER PROVISIONS OF ENUMER4 ATED CONSUMER LAWS THAT RELATE TO STATE LAW.— 

5 No provision of this title, except as provided in section 

6 1083, shall be construed as modifying, limiting, or super7 seding the operation of any provision of an enumerated 

8 consumer law that relates to the application of a law in 

9 effect in any State with respect to such Federal law. 

10 (c) ADDITIONAL CONSUMER PROTECTION REGULA11 TIONS IN RESPONSE TO STATE ACTION.— 

12 (1) NOTICE OF PROPOSED RULE REQUIRED.— 

13 The Bureau shall issue a notice of proposed rule14 making whenever a majority of the States has en15 acted a resolution in support of the establishment or 

16 modification of a consumer protection regulation by 

17 the Bureau. 

18 (2) BUREAU CONSIDERATIONS REQUIRED FOR

19 ISSUANCE OF FINAL REGULATION.—Before pre20 scribing a final regulation based upon a notice 

21 issued pursuant to paragraph (1), the Bureau shall 

22 take into account whether— 

23 (A) the proposed regulation would afford 

24 greater protection to consumers than any exist25 ing regulation; 


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1 (B) the intended benefits of the proposed 

2 regulation for consumers would outweigh any 

3 increased costs or inconveniences for con4 sumers, and would not discriminate unfairly 

5 against any category or class of consumers; and 

6 (C) a Federal banking agency has advised 

7 that the proposed regulation is likely to present 

8 an unacceptable safety and soundness risk to 

9 insured depository institutions. 

10 (3) EXPLANATION OF CONSIDERATIONS.—The 

11 Bureau— 

12 (A) shall include a discussion of the con13 siderations required in paragraph (2) in the 

14 Federal Register notice of a final regulation 

15 prescribed pursuant to this subsection; and 

16 (B) whenever the Bureau determines not 

17 to prescribe a final regulation, shall publish an 

18 explanation of such determination in the Fed19 eral Register, and provide a copy of such expla20 nation to each State that enacted a resolution 

21 in support of the proposed regulation, the Com22 mittee on Financial Services of the House of 

23 Representatives, and the Committee on Bank24 ing, Housing, and Urban Affairs of the Senate. 


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1 (4) RESERVATION OF AUTHORITY.—No provi2 sion of this subsection shall be construed as limiting 

3 or restricting the authority of the Bureau to enhance 

4 consumer protection standards established pursuant 

5 to this title in response to its own motion or in re6 sponse to a request by any other interested person. 

7 (5) RULE OF CONSTRUCTION.—No provision of 

8 this subsection shall be construed as exempting the 

9 Bureau from complying with subchapter II of chap10 ter 5 of title 5, United States Code. 

11 (6) DEFINITION.—For purposes of this sub12 section, the term ‘‘consumer protection regulation’’ 

13 means a regulation that the Bureau is authorized to 

14 prescribe under the Federal consumer financial laws. 

15 SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF 

16 STATES. 

17 (a) IN GENERAL.— 

18 (1) ACTION BY STATE.—The attorney general 

19 (or the equivalent thereof) of any State may bring 

20 a civil action in the name of such State, as parens 

21 patriae on behalf of natural persons residing in such 

22 State, in any district court of the United States in 

23 that State or in State court having jurisdiction over 

24 the defendant, to enforce provisions of this title or 

25 regulations issued thereunder and to secure remedies 


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1 under provisions of this title or remedies otherwise 

2 provided under other law. A State regulator may 

3 bring a civil action or other appropriate proceeding 

4 to enforce the provisions of this title or regulations 

5 issued thereunder with respect to any entity that is 

6 State-chartered, incorporated, licensed, or otherwise 

7 authorized to do business under State law, and to 

8 secure remedies under provisions of this title or rem9 edies otherwise provided under other provisions of 

10 law with respect to a State-chartered entity. 

11 (2) RULE OF CONSTRUCTION.—No provision of 

12 this title shall be construed as modifying, limiting, 

13 or superseding the operation of any provision of an 

14 enumerated consumer law that relates to the author15 ity of a State attorney general or State regulator to 

16 enforce such Federal law. 

17 (b) CONSULTATION REQUIRED.— 

18 (1) NOTICE.— 

19 (A) IN GENERAL.—Before initiating any 

20 action in a court or other administrative or reg21 ulatory proceeding against any covered person 

22 to enforce any provision of this title, including 

23 any regulation prescribed by the Director under 

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1 plete complaint to be filed and written notice 

2 describing such action or proceeding to the Bu3 reau and the prudential regulator, if any, or the 

4 designee thereof. 

5 (B) EMERGENCY ACTION.—If prior notice 

6 is not practicable, the State attorney general or 

7 State regulator shall provide a copy of the com8 plete complaint and the notice to the Bureau 

9 and the prudential regulator, if any, imme10 diately upon instituting the action or pro11 ceeding. 

12 (C) CONTENTS OF NOTICE.—The notifica13 tion required under this paragraph shall, at a 

14 minimum, describe— 

15 (i) the identity of the parties; 

16 (ii) the alleged facts underlying the 

17 proceeding; and 

18 (iii) whether there may be a need to 

19 coordinate the prosecution of the pro20 ceeding so as not to interfere with any ac21 tion, including any rulemaking, undertaken 

22 by the Director, a prudential regulator, or 

23 another Federal agency. 

24 (2) BUREAU RESPONSE.—In any action de25 scribed in paragraph (1), the Bureau may— 


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1 (A) intervene in the action as a party; 

2 (B) upon intervening— 

3 (i) remove the action to the appro4 priate United States district court, if the 

5 action was not originally brought there; 

6 and 

7 (ii) be heard on all matters arising in 

8 the action; and 

9 (C) appeal any order or judgment, to the 

10 same extent as any other party in the pro11 ceeding may. 

12 (c) REGULATIONS.—The Director shall prescribe reg13 ulations to implement the requirements of this section 

14 and, from time to time, provide guidance in order to fur15 ther coordinate actions with the State attorneys general 

16 and other regulators. 

17 (d) PRESERVATION OF STATE AUTHORITY.— 

18 (1) STATE CLAIMS.—No provision of this sec19 tion shall be construed as altering, limiting, or af20 fecting the authority of a State attorney general or 

21 any other regulatory or enforcement agency or au22 thority to bring an action or other regulatory pro23 ceeding arising solely under the law in effect in that 

24 State. 


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1 (2) STATE SECURITIES REGULATORS.—No pro2 vision of this title shall be construed as altering, lim3 iting, or affecting the authority of a State securities 

4 commission (or any agency or office performing like 

5 functions) under State law to adopt rules, initiate 

6 enforcement proceedings, or take any other action 

7 with respect to a person regulated by such commis8 sion or authority. 

9 (3) STATE INSURANCE REGULATORS.—No pro10 vision of this title shall be construed as altering, lim11 iting, or affecting the authority of a State insurance 

12 commission or State insurance regulator under State 

13 law to adopt rules, initiate enforcement proceedings, 

14 or take any other action with respect to a person 

15 regulated by such commission or regulator. 

16 SEC. 1043. PRESERVATION OF EXISTING CONTRACTS. 

17 This title, and regulations, orders, guidance, and in18 terpretations prescribed, issued, or established by the Bu19 reau, shall not be construed to alter or affect the applica20 bility of any regulation, order, guidance, or interpretation 

21 prescribed, issued, and established by the Comptroller of 

22 the Currency or the Director of the Office of Thrift Super23 vision regarding the applicability of State law under Fed24 eral banking law to any contract entered into on or before 

25 the date of the enactment of this title, by national banks, 


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1 Federal savings associations, or subsidiaries thereof that 

2 are regulated and supervised by the Comptroller of the 

3 Currency or the Director of the Office of Thrift Super4 vision, respectively. 

5 SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NA6 TIONAL BANKS AND SUBSIDIARIES CLARI7 FIED. 

8 (a) IN GENERAL.—Chapter one of title LXII of the 

9 Revised Statutes of the United States (12 U.S.C. 21 et 

10 seq.) is amended by inserting after section 5136B the fol11 lowing new section: 

12 ‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NA13 TIONAL BANKS AND SUBSIDIARIES CLARI14 FIED. 

15 ‘‘(a) DEFINITIONS.—For purposes of this section, the 

16 following definitions shall apply: 

17 ‘‘(1) NATIONAL BANK.—The term ‘national 

18 bank’ includes— 

19 ‘‘(A) any bank organized under the laws of 

20 the United States; and 

21 ‘‘(B) any Federal branch established in ac22 cordance with the International Banking Act of 

23 1978. 

24 ‘‘(2) STATE CONSUMER FINANCIAL LAWS.—The 

25 term ‘State consumer financial law’ means a State 


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1 law that does not directly or indirectly discriminate 

2 against national banks and that directly and specifi3 cally regulates the manner, content, or terms and 

4 conditions of any financial transaction (as may be 

5 authorized for national banks to engage in), or any 

6 account related thereto, with respect to a consumer. 

7 ‘‘(3) OTHER DEFINITIONS.—The terms ‘affil8 iate’, ‘subsidiary’, ‘includes’, and ‘including’ have the 

9 same meanings as in section 3 of the Federal De10 posit Insurance Act. 

11 ‘‘(b) PREEMPTION STANDARD.— 

12 ‘‘(1) IN GENERAL.—State consumer financial 

13 laws are preempted, only if— 

14 ‘‘(A) application of a State consumer fi15 nancial law would have a discriminatory effect 

16 on national banks, in comparison with the effect 

17 of the law on a bank chartered by that State; 

18 ‘‘(B) the preemption of the State consumer 

19 financial law is in accordance with the legal 

20 standard of the decision of the Supreme Court 

21 of the United States in Barnett Bank of Mar22 ion County, N.A. v. Nelson, Florida Insurance 

23 Commissioner, et al, 517 U.S. 25 (1996), and 

24 a preemption determination under this subpara25 graph may be made by a court or by regulation 


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1 or order of the Comptroller of the Currency, in 

2 accordance with applicable law, on a case-by3 case basis, and any such determination by a 

4 court shall comply with the standards set forth 

5 in subsection (d), with the court making the 

6 finding under subsection (d), de novo; or 

7 ‘‘(C) the State consumer financial law is 

8 preempted by a provision of Federal law other 

9 than this title. 

10 ‘‘(2) SAVINGS CLAUSE.—This title does not pre11 empt, annul, or affect the applicability of any State 

12 law to any subsidiary or affiliate of a national bank 

13 (other than a subsidiary or affiliate that is chartered 

14 as a national bank). 

15 ‘‘(3) CASE-BY-CASE BASIS.— 

16 ‘‘(A) DEFINITION.—As used in this section 

17 the term ‘case-by-case basis’ refers to a deter18 mination pursuant to this section made by the 

19 Comptroller concerning the impact of a par20 ticular State consumer financial law on any na21 tional bank that is subject to that law, or the 

22 law of any other State with substantively equiv23 alent terms. 

24 ‘‘(B) CONSULTATION.—When making a 

25 determination on a case-by-case basis that a 


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1 State consumer financial law of another State 

2 has substantively equivalent terms as one that 

3 the Comptroller is preempting, the Comptroller 

4 shall first consult with the Bureau of Consumer 

5 Financial Protection and shall take the views of 

6 the Bureau into account when making the de7 termination. 

8 ‘‘(4) RULE OF CONSTRUCTION.—This title does 

9 not occupy the field in any area of State law. 

10 ‘‘(5) STANDARDS OF REVIEW.— 

11 ‘‘(A) PREEMPTION.—A court reviewing 

12 any determinations made by the Comptroller re13 garding preemption of a State law by this title 

14 shall assess the validity of such determinations, 

15 depending upon the thoroughness evident in the 

16 consideration of the agency, the validity of the 

17 reasoning of the agency, the consistency with 

18 other valid determinations made by the agency, 

19 and other factors which the court finds persua20 sive and relevant to its decision. 

21 ‘‘(B) SAVINGS CLAUSE.—Except as pro22 vided in subparagraph (A), nothing in this sec23 tion shall affect the deference that a court may 

24 afford to the Comptroller in making determina25 tions regarding the meaning or interpretation of 


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1 title LXII of the Revised Statutes of the United 

2 States or other Federal laws. 

3 ‘‘(6) COMPTROLLER DETERMINATION NOT DEL4 EGABLE.—Any regulation, order, or determination 

5 made by the Comptroller of the Currency under 

6 paragraph (1)(B) shall be made by the Comptroller, 

7 and shall not be delegable to another officer or em8 ployee of the Comptroller of the Currency. 

9 ‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation or 

10 order of the Comptroller of the Currency prescribed under 

11 subsection (b)(1)(B), shall be interpreted or applied so as 

12 to invalidate, or otherwise declare inapplicable to a na13 tional bank, the provision of the State consumer financial 

14 law, unless substantial evidence, made on the record of 

15 the proceeding, supports the specific finding regarding the 

16 preemption of such provision in accordance with the legal 

17 standard of the decision of the Supreme Court of the 

18 United States in Barnett Bank of Marion County, N.A. 

19 v. Nelson, Florida Insurance Commissioner, et al., 517 

20 U.S. 25 (1996). 

21 ‘‘(d) OTHER FEDERAL LAWS.—Notwithstanding any 

22 other provision of law, the Comptroller of the Currency 

23 may not prescribe a regulation or order pursuant to sub24 section (b)(1)(B) until the Comptroller of the Currency, 

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1 sumer Financial Protection, makes a finding, in writing, 

2 that a Federal law provides a substantive standard, appli3 cable to a national bank, which regulates the particular 

4 conduct, activity, or authority that is subject to such pro5 vision of the State consumer financial law. 

6 ‘‘(e) PERIODIC REVIEW OF PREEMPTION DETER7 MINATIONS.— 

8 ‘‘(1) IN GENERAL.—The Comptroller of the 

9 Currency shall periodically conduct a review, 

10 through notice and public comment, of each deter11 mination that a provision of Federal law preempts a 

12 State consumer financial law. The agency shall con13 duct such review within the 5-year period after pre14 scribing or otherwise issuing such determination, 

15 and at least once during each 5-year period there16 after. After conducting the review of, and inspecting 

17 the comments made on, the determination, the agen18 cy shall publish a notice in the Federal Register an19 nouncing the decision to continue or rescind the de20 termination or a proposal to amend the determina21 tion. Any such notice of a proposal to amend a de22 termination and the subsequent resolution of such 

23 proposal shall comply with the procedures set forth 

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1 vised Statutes of the United States (12 U.S.C. 43 

2 (a), (b)). 

3 ‘‘(2) REPORTS TO CONGRESS.—At the time of 

4 issuing a review conducted under paragraph (1), the 

5 Comptroller of the Currency shall submit a report 

6 regarding such review to the Committee on Finan7 cial Services of the House of Representatives and 

8 the Committee on Banking, Housing, and Urban Af9 fairs of the Senate. The report submitted to the re10 spective committees shall address whether the agen11 cy intends to continue, rescind, or propose to amend 

12 any determination that a provision of Federal law 

13 preempts a State consumer financial law, and the 

14 reasons therefor. 

15 ‘‘(f) APPLICATION OF STATE CONSUMER FINANCIAL

16 LAW TO SUBSIDIARIES AND AFFILIATES.—Notwith17 standing any provision of this title, a State consumer fi18 nancial law shall apply to a subsidiary or affiliate of a 

19 national bank (other than a subsidiary or affiliate that is 

20 chartered as a national bank) to the same extent that the 

21 State consumer financial law applies to any person, cor22 poration, or other entity subject to such State law. 

23 ‘‘(g) PRESERVATION OF POWERS RELATED TO

24 CHARGING INTEREST.—No provision of this title shall be 

25 construed as altering or otherwise affecting the authority 


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1 conferred by section 5197 of the Revised Statutes of the 

2 United States (12 U.S.C. 85) for the charging of interest 

3 by a national bank at the rate allowed by the laws of the 

4 State, territory, or district where the bank is located, in5 cluding with respect to the meaning of ‘interest’ under 

6 such provision. 

7 ‘‘(h) TRANSPARENCY OF OCC PREEMPTION DETER8 MINATIONS.—The Comptroller of the Currency shall pub9 lish and update no less frequently than quarterly, a list 

10 of preemption determinations by the Comptroller of the 

11 Currency then in effect that identifies the activities and 

12 practices covered by each determination and the require13 ments and constraints determined to be preempted.’’. 

14 (b) CLERICAL AMENDMENT.—The table of sections 

15 for chapter one of title LXII of the Revised Statutes of 

16 the United States is amended by inserting after the item 

17 relating to section 5136B the following new item: 

‘‘Sec. 5136C. State law preemption standards for national banks and subsidiaries clarified.’’. 

18 SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NON19 DEPOSITORY INSTITUTION SUBSIDIARIES. 

20 Section 5136C of the Revised Statutes of the United 

21 States (as added by this subtitle) is amended by adding 

22 at the end the following: 


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1 ‘‘(i) CLARIFICATION OF LAW APPLICABLE TO NON2 DEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILI3 ATES OF NATIONAL BANKS.— 

4 ‘‘(1) DEFINITIONS.—For purposes of this sub5 section, the terms ‘depository institution’, ‘sub6 sidiary’, and ‘affiliate’ have the same meanings as in 

7 section 3 of the Federal Deposit Insurance Act. 

8 ‘‘(2) RULE OF CONSTRUCTION.—No provision 

9 of this title shall be construed as preempting, annul10 ling, or affecting the applicability of State law to 

11 any subsidiary, affiliate, or agent of a national bank 

12 (other than a subsidiary, affiliate, or agent that is 

13 chartered as a national bank).’’. 

14 SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FED15 ERAL SAVINGS ASSOCIATIONS AND SUBSIDI16 ARIES CLARIFIED. 

17 (a) IN GENERAL.—The Home Owners’ Loan Act (12 

18 U.S.C. 1461 et seq.) is amended by inserting after section 

19 5 the following new section: 

20 ‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FED21 ERAL SAVINGS ASSOCIATIONS CLARIFIED. 

22 ‘‘(a) IN GENERAL.—Any determination by a court or 

23 by the Director or any successor officer or agency regard24 ing the relation of State law to a provision of this Act 

25 or any regulation or order prescribed under this Act shall 


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1 be made in accordance with the laws and legal standards 

2 applicable to national banks regarding the preemption of 

3 State law. 

4 ‘‘(b) PRINCIPLES OF CONFLICT PREEMPTION APPLI5 CABLE.—Notwithstanding the authorities granted under 

6 sections 4 and 5, this Act does not occupy the field in 

7 any area of State law.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for the Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) 

10 is amended by striking the item relating to section 6 and 

11 inserting the following new item: 

‘‘Sec. 6.. State law preemption standards for Federal savings associations 

and subsidiaries clarified.’’. 

12 SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS 

13 AND SAVINGS ASSOCIATIONS. 

14 (a) NATIONAL BANKS.—Section 5136C of the Re15 vised Statutes of the United States (as added by this sub16 title) is amended by adding at the end the following: 

17 ‘‘(j) VISITORIAL POWERS.— 

18 ‘‘(1) IN GENERAL.—No provision of this title 

19 which relates to visitorial powers to which any na20 tional bank is subject shall be construed as limiting 

21 or restricting the authority of any attorney general 

22 (or other chief law enforcement officer) of any State 

23 to bring any action in any court of appropriate juris24 diction, as authorized under section 5240(a)— 


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1 ‘‘(A) to enforce any applicable provision of 

2 Federal or State law, as authorized by such 

3 law; or 

4 ‘‘(B) on behalf of residents of such State, 

5 to enforce any applicable provision of any Fed6 eral or nonpreempted State law against a na7 tional bank, as authorized by such law, or to 

8 seek relief for such residents from any violation 

9 of any such law by any national bank. 

10 ‘‘(2) PRIOR CONSULTATION WITH OCC RE11 QUIRED.—The attorney general (or other chief law 

12 enforcement officer) of any State shall consult with 

13 the Comptroller of the Currency before acting under 

14 paragraph (1). 

15 ‘‘(k) ENFORCEMENT ACTIONS.—The ability of the 

16 Comptroller of the Currency to bring an enforcement ac17 tion under this title or section 5 of the Federal Trade 

18 Commission Act does not preclude any private party from 

19 enforcing rights granted under Federal or State law in the 

20 courts.’’. 

21 (b) SAVINGS ASSOCIATIONS.—Section 6 of the Home 

22 Owners’ Loan Act (as added by this title) is amended by 

23 adding at the end the following: 

24 ‘‘(c) VISITORIAL POWERS.— 


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1 ‘‘(1) IN GENERAL.—No provision of this Act 

2 shall be construed as limiting or restricting the au3 thority of any attorney general (or other chief law 

4 enforcement officer) of any State to bring any action 

5 in any court of appropriate jurisdiction— 

6 ‘‘(A) to enforce any applicable provision of 

7 Federal or State law, as authorized by such 

8 law; or 

9 ‘‘(B) on behalf of residents of such State, 

10 to enforce any applicable provision of any Fed11 eral or nonpreempted State law against a Fed12 eral savings association, as authorized by such 

13 law, or to seek relief for such residents from 

14 any violation of any such law by any Federal 

15 savings association. 

16 ‘‘(2) PRIOR CONSULTATION WITH OCC RE17 QUIRED.—The attorney general (or other chief law 

18 enforcement officer) of any State shall consult with 

19 the Comptroller of the Currency before acting under 

20 paragraph (1). 

21 ‘‘(d) ENFORCEMENT ACTIONS.—The ability of the 

22 Comptroller of the Currency to bring an enforcement ac23 tion under this Act or section 5 of the Federal Trade Com24 mission Act does not preclude any private party from enVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01168 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 forcing rights granted under Federal or State law in the 

2 courts.’’. 

3 SEC. 1048. EFFECTIVE DATE. 

4 This subtitle shall become effective on the designated 

5 transfer date. 

6 Subtitle E—Enforcement Powers 

7 SEC. 1051. DEFINITIONS. 

8 For purposes of this subtitle, the following definitions 

9 shall apply: 

10 (1) BUREAU INVESTIGATION.—The term ‘‘Bu11 reau investigation’’ means any inquiry conducted by 

12 a Bureau investigator for the purpose of 

13 ascertaining whether any person is or has been en14 gaged in any conduct that is a violation, as defined 

15 in this section. 

16 (2) BUREAU INVESTIGATOR.—The term ‘‘Bu17 reau investigator’’ means any attorney or investi18 gator employed by the Bureau who is charged with 

19 the duty of enforcing or carrying into effect any 

20 Federal consumer financial law. 

21 (3) CIVIL INVESTIGATIVE DEMAND AND DE22 MAND.—The terms ‘‘civil investigative demand’’ and 

23 ‘‘demand’’ mean any demand issued by the Bureau. 


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1 (4) CUSTODIAN.—The term ‘‘custodian’’ means 

2 the custodian or any deputy custodian designated by 

3 the Bureau. 

4 (5) DOCUMENTARY MATERIAL.—The term 

5 ‘‘documentary material’’ includes the original or any 

6 copy of any book, document, record, report, memo7 randum, paper, communication, tabulation, chart, 

8 logs, electronic files, or other data or data compila9 tions stored in any medium. 

10 (6) VIOLATION.—The term ‘‘violation’’ means 

11 any act or omission that, if proved, would constitute 

12 a violation of any provision of Federal consumer fi13 nancial law. 

14 SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DIS15 COVERY. 

16 (a) JOINT INVESTIGATIONS.— 

17 (1) IN GENERAL.—The Bureau or, where ap18 propriate, a Bureau investigator, may engage in 

19 joint investigations and requests for information, as 

20 authorized under this title. 

21 (2) FAIR LENDING.—The authority under para22 graph (1) includes matters relating to fair lending, 

23 and where appropriate, joint investigations with, and 

24 requests for information from, the Secretary of 


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1 Housing and Urban Development, the Attorney Gen2 eral of the United States, or both. 

3 (b) SUBPOENAS.— 

4 (1) IN GENERAL.—The Bureau or a Bureau in5 vestigator may issue subpoenas for the attendance 

6 and testimony of witnesses and the production of 

7 relevant papers, books, documents, or other material 

8 in connection with hearings under this title. 

9 (2) FAILURE TO OBEY.—In the case of contu10 macy or refusal to obey a subpoena issued pursuant 

11 to this paragraph and served upon any person, the 

12 district court of the United States for any district in 

13 which such person is found, resides, or transacts 

14 business, upon application by the Bureau or a Bu15 reau investigator and after notice to such person, 

16 may issue an order requiring such person to appear 

17 and give testimony or to appear and produce docu18 ments or other material. 

19 (3) CONTEMPT.—Any failure to obey an order 

20 of the court under this subsection may be punished 

21 by the court as a contempt thereof. 

22 (c) DEMANDS.— 

23 (1) IN GENERAL.—Whenever the Bureau has 

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1 rial or tangible things, or may have any information, 

2 relevant to a violation, the Bureau may, before the 

3 institution of any proceedings under the Federal 

4 consumer financial law, issue in writing, and cause 

5 to be served upon such person, a civil investigative 

6 demand requiring such person to— 

7 (A) produce such documentary material for 

8 inspection and copying or reproduction in the 

9 form or medium requested by the Bureau; 

10 (B) submit such tangible things; 

11 (C) file written reports or answers to ques12 tions; 

13 (D) give oral testimony concerning docu14 mentary material, tangible things, or other in15 formation; or 

16 (E) furnish any combination of such mate17 rial, answers, or testimony. 

18 (2) REQUIREMENTS.—Each civil investigative 

19 demand shall state the nature of the conduct consti20 tuting the alleged violation which is under investiga21 tion and the provision of law applicable to such vio22 lation. 

23 (3) PRODUCTION OF DOCUMENTS.—Each civil 

24 investigative demand for the production of documen25 tary material shall— 


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1 (A) describe each class of documentary 

2 material to be produced under the demand with 

3 such definiteness and certainty as to permit 

4 such material to be fairly identified; 

5 (B) prescribe a return date or dates which 

6 will provide a reasonable period of time within 

7 which the material so demanded may be assem8 bled and made available for inspection and 

9 copying or reproduction; and 

10 (C) identify the custodian to whom such 

11 material shall be made available. 

12 (4) PRODUCTION OF THINGS.—Each civil inves13 tigative demand for the submission of tangible 

14 things shall— 

15 (A) describe each class of tangible things 

16 to be submitted under the demand with such 

17 definiteness and certainty as to permit such 

18 things to be fairly identified; 

19 (B) prescribe a return date or dates which 

20 will provide a reasonable period of time within 

21 which the things so demanded may be assem22 bled and submitted; and 

23 (C) identify the custodian to whom such 

24 things shall be submitted. 


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1 (5) DEMAND FOR WRITTEN REPORTS OR AN2 SWERS.—Each civil investigative demand for written 

3 reports or answers to questions shall— 

4 (A) propound with definiteness and cer5 tainty the reports to be produced or the ques6 tions to be answered; 

7 (B) prescribe a date or dates at which time 

8 written reports or answers to questions shall be 

9 submitted; and 

10 (C) identify the custodian to whom such 

11 reports or answers shall be submitted. 

12 (6) ORAL TESTIMONY.—Each civil investigative 

13 demand for the giving of oral testimony shall— 

14 (A) prescribe a date, time, and place at 

15 which oral testimony shall be commenced; and 

16 (B) identify a Bureau investigator who 

17 shall conduct the investigation and the custo18 dian to whom the transcript of such investiga19 tion shall be submitted. 

20 (7) SERVICE.—Any civil investigative demand 

21 and any enforcement petition filed under this section 

22 may be served— 

23 (A) by any Bureau investigator at any 

24 place within the territorial jurisdiction of any 

25 court of the United States; and 


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1 (B) upon any person who is not found 

2 within the territorial jurisdiction of any court of 

3 the United States— 

4 (i) in such manner as the Federal 

5 Rules of Civil Procedure prescribe for serv6 ice in a foreign nation; and 

7 (ii) to the extent that the courts of 

8 the United States have authority to assert 

9 jurisdiction over such person, consistent 

10 with due process, the United States Dis11 trict Court for the District of Columbia 

12 shall have the same jurisdiction to take 

13 any action respecting compliance with this 

14 section by such person that such district 

15 court would have if such person were per16 sonally within the jurisdiction of such dis17 trict court. 

18 (8) METHOD OF SERVICE.—Service of any civil 

19 investigative demand or any enforcement petition 

20 filed under this section may be made upon a person, 

21 including any legal entity, by— 

22 (A) delivering a duly executed copy of such 

23 demand or petition to the individual or to any 

24 partner, executive officer, managing agent, or 

25 general agent of such person, or to any agent 


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1 of such person authorized by appointment or by 

2 law to receive service of process on behalf of 

3 such person; 

4 (B) delivering a duly executed copy of such 

5 demand or petition to the principal office or 

6 place of business of the person to be served; or 

7 (C) depositing a duly executed copy in the 

8 United States mails, by registered or certified 

9 mail, return receipt requested, duly addressed 

10 to such person at the principal office or place 

11 of business of such person. 

12 (9) PROOF OF SERVICE.— 

13 (A) IN GENERAL.—A verified return by the 

14 individual serving any civil investigative demand 

15 or any enforcement petition filed under this sec16 tion setting forth the manner of such service 

17 shall be proof of such service. 

18 (B) RETURN RECEIPTS.—In the case of 

19 service by registered or certified mail, such re20 turn shall be accompanied by the return post 

21 office receipt of delivery of such demand or en22 forcement petition. 

23 (10) PRODUCTION OF DOCUMENTARY MATE24 RIAL.—The production of documentary material in 

25 response to a civil investigative demand shall be 


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1 made under a sworn certificate, in such form as the 

2 demand designates, by the person, if a natural per3 son, to whom the demand is directed or, if not a 

4 natural person, by any person having knowledge of 

5 the facts and circumstances relating to such produc6 tion, to the effect that all of the documentary mate7 rial required by the demand and in the possession, 

8 custody, or control of the person to whom the de9 mand is directed has been produced and made avail10 able to the custodian. 

11 (11) SUBMISSION OF TANGIBLE THINGS.—The 

12 submission of tangible things in response to a civil 

13 investigative demand shall be made under a sworn 

14 certificate, in such form as the demand designates, 

15 by the person to whom the demand is directed or, 

16 if not a natural person, by any person having knowl17 edge of the facts and circumstances relating to such 

18 production, to the effect that all of the tangible 

19 things required by the demand and in the posses20 sion, custody, or control of the person to whom the 

21 demand is directed have been submitted to the cus22 todian. 

23 (12) SEPARATE ANSWERS.—Each reporting re24 quirement or question in a civil investigative demand 

25 shall be answered separately and fully in writing 


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1 under oath, unless it is objected to, in which event 

2 the reasons for the objection shall be stated in lieu 

3 of an answer, and it shall be submitted under a 

4 sworn certificate, in such form as the demand des5 ignates, by the person, if a natural person, to whom 

6 the demand is directed or, if not a natural person, 

7 by any person responsible for answering each report8 ing requirement or question, to the effect that all in9 formation required by the demand and in the posses10 sion, custody, control, or knowledge of the person to 

11 whom the demand is directed has been submitted. 

12 (13) TESTIMONY.— 

13 (A) IN GENERAL.— 

14 (i) OATH OR AFFIRMATION.—Any Bu15 reau investigator before whom oral testi16 mony is to be taken shall put the witness 

17 under oath or affirmation, and shall per18 sonally, or by any individual acting under 

19 the direction of and in the presence of the 

20 Bureau investigator, record the testimony 

21 of the witness. 

22 (ii) TRANSCRIPTION.—The testimony 

23 shall be taken stenographically and tran24 scribed. 


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1 (iii) TRANSMISSION TO CUSTODIAN.— 

2 After the testimony is fully transcribed, 

3 the Bureau investigator before whom the 

4 testimony is taken shall promptly transmit 

5 a copy of the transcript of the testimony to 

6 the custodian. 

7 (B) PARTIES PRESENT.—Any Bureau in8 vestigator before whom oral testimony is to be 

9 taken shall exclude from the place where the 

10 testimony is to be taken all other persons, ex11 cept the person giving the testimony, the attor12 ney of that person, the officer before whom the 

13 testimony is to be taken, and any stenographer 

14 taking such testimony. 

15 (C) LOCATION.—The oral testimony of any 

16 person taken pursuant to a civil investigative 

17 demand shall be taken in the judicial district of 

18 the United States in which such person resides, 

19 is found, or transacts business, or in such other 

20 place as may be agreed upon by the Bureau in21 vestigator before whom the oral testimony of 

22 such person is to be taken and such person. 

23 (D) ATTORNEY REPRESENTATION.— 

24 (i) IN GENERAL.—Any person com25 pelled to appear under a civil investigative 


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1 demand for oral testimony pursuant to this 

2 section may be accompanied, represented, 

3 and advised by an attorney. 

4 (ii) AUTHORITY.—The attorney may 

5 advise a person described in clause (i), in 

6 confidence, either upon the request of such 

7 person or upon the initiative of the attor8 ney, with respect to any question asked of 

9 such person. 

10 (iii) OBJECTIONS.—A person de11 scribed in clause (i), or the attorney for 

12 that person, may object on the record to 

13 any question, in whole or in part, and such 

14 person shall briefly state for the record the 

15 reason for the objection. An objection may 

16 properly be made, received, and entered 

17 upon the record when it is claimed that 

18 such person is entitled to refuse to answer 

19 the question on grounds of any constitu20 tional or other legal right or privilege, in21 cluding the privilege against self-incrimina22 tion, but such person shall not otherwise 

23 object to or refuse to answer any question, 

24 and such person or attorney shall not oth25 erwise interrupt the oral examination. 


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1 (iv) REFUSAL TO ANSWER.—If a per2 son described in clause (i) refuses to an3 swer any question— 

4 (I) the Bureau may petition the 

5 district court of the United States 

6 pursuant to this section for an order 

7 compelling such person to answer 

8 such question; and 

9 (II) on grounds of the privilege 

10 against self-incrimination, the testi11 mony of such person may be com12 pelled in accordance with the provi13 sions of section 6004 of title 18, 

14 United States Code. 

15 (E) TRANSCRIPTS.—For purposes of this 

16 subsection— 

17 (i) after the testimony of any witness 

18 is fully transcribed, the Bureau investi19 gator shall afford the witness (who may be 

20 accompanied by an attorney) a reasonable 

21 opportunity to examine the transcript; 

22 (ii) the transcript shall be read to or 

23 by the witness, unless such examination 

24 and reading are waived by the witness; 


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1 (iii) any changes in form or substance 

2 which the witness desires to make shall be 

3 entered and identified upon the transcript 

4 by the Bureau investigator, with a state5 ment of the reasons given by the witness 

6 for making such changes; 

7 (iv) the transcript shall be signed by 

8 the witness, unless the witness in writing 

9 waives the signing, is ill, cannot be found, 

10 or refuses to sign; and 

11 (v) if the transcript is not signed by 

12 the witness during the 30-day period fol13 lowing the date on which the witness is 

14 first afforded a reasonable opportunity to 

15 examine the transcript, the Bureau investi16 gator shall sign the transcript and state on 

17 the record the fact of the waiver, illness, 

18 absence of the witness, or the refusal to 

19 sign, together with any reasons given for 

20 the failure to sign. 

21 (F) CERTIFICATION BY INVESTIGATOR.— 

22 The Bureau investigator shall certify on the 

23 transcript that the witness was duly sworn by 

24 him or her and that the transcript is a true 

25 record of the testimony given by the witness, 


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1 and the Bureau investigator shall promptly de2 liver the transcript or send it by registered or 

3 certified mail to the custodian. 

4 (G) COPY OF TRANSCRIPT.—The Bureau 

5 investigator shall furnish a copy of the tran6 script (upon payment of reasonable charges for 

7 the transcript) to the witness only, except that 

8 the Bureau may for good cause limit such wit9 ness to inspection of the official transcript of 

10 his testimony. 

11 (H) WITNESS FEES.—Any witness appear12 ing for the taking of oral testimony pursuant to 

13 a civil investigative demand shall be entitled to 

14 the same fees and mileage which are paid to 

15 witnesses in the district courts of the United 

16 States. 

17 (d) CONFIDENTIAL TREATMENT OF DEMAND MATE18 RIAL.— 

19 (1) IN GENERAL.—Documentary materials and 

20 tangible things received as a result of a civil inves21 tigative demand shall be subject to requirements and 

22 procedures regarding confidentiality, in accordance 

23 with rules established by the Bureau. 

24 (2) DISCLOSURE TO CONGRESS.—No rule es25 tablished by the Bureau regarding the confidentiality 


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1 of materials submitted to, or otherwise obtained by, 

2 the Bureau shall be intended to prevent disclosure to 

3 either House of Congress or to an appropriate com4 mittee of the Congress, except that the Bureau is 

5 permitted to adopt rules allowing prior notice to any 

6 party that owns or otherwise provided the material 

7 to the Bureau and had designated such material as 

8 confidential. 

9 (e) PETITION FOR ENFORCEMENT.— 

10 (1) IN GENERAL.—Whenever any person fails 

11 to comply with any civil investigative demand duly 

12 served upon him under this section, or whenever sat13 isfactory copying or reproduction of material re14 quested pursuant to the demand cannot be accom15 plished and such person refuses to surrender such 

16 material, the Bureau, through such officers or attor17 neys as it may designate, may file, in the district 

18 court of the United States for any judicial district 

19 in which such person resides, is found, or transacts 

20 business, and serve upon such person, a petition for 

21 an order of such court for the enforcement of this 

22 section. 

23 (2) SERVICE OF PROCESS.—All process of any 

24 court to which application may be made as provided 


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1 in this subsection may be served in any judicial dis2 trict. 

3 (f) PETITION FOR ORDER MODIFYING OR SETTING

4 ASIDE DEMAND.— 

5 (1) IN GENERAL.—Not later than 20 days after 

6 the service of any civil investigative demand upon 

7 any person under subsection (b), or at any time be8 fore the return date specified in the demand, which9 ever period is shorter, or within such period exceed10 ing 20 days after service or in excess of such return 

11 date as may be prescribed in writing, subsequent to 

12 service, by any Bureau investigator named in the de13 mand, such person may file with the Bureau a peti14 tion for an order by the Bureau modifying or setting 

15 aside the demand. 

16 (2) COMPLIANCE DURING PENDENCY.—The 

17 time permitted for compliance with the demand in 

18 whole or in part, as determined proper and ordered 

19 by the Bureau, shall not run during the pendency of 

20 a petition under paragraph (1) at the Bureau, ex21 cept that such person shall comply with any portions 

22 of the demand not sought to be modified or set 

23 aside. 

24 (3) SPECIFIC GROUNDS.—A petition under 

25 paragraph (1) shall specify each ground upon which 


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1 the petitioner relies in seeking relief, and may be 

2 based upon any failure of the demand to comply 

3 with the provisions of this section, or upon any con4 stitutional or other legal right or privilege of such 

5 person. 

6 (g) CUSTODIAL CONTROL.—At any time during 

7 which any custodian is in custody or control of any docu8 mentary material, tangible things, reports, answers to 

9 questions, or transcripts of oral testimony given by any 

10 person in compliance with any civil investigative demand, 

11 such person may file, in the district court of the United 

12 States for the judicial district within which the office of 

13 such custodian is situated, and serve upon such custodian, 

14 a petition for an order of such court requiring the per15 formance by such custodian of any duty imposed upon him 

16 by this section or rule promulgated by the Bureau. 

17 (h) JURISDICTION OF COURT.— 

18 (1) IN GENERAL.—Whenever any petition is 

19 filed in any district court of the United States under 

20 this section, such court shall have jurisdiction to 

21 hear and determine the matter so presented, and to 

22 enter such order or orders as may be required to 

23 carry out the provisions of this section. 

24 (2) APPEAL.—Any final order entered as de25 scribed in paragraph (1) shall be subject to appeal 


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1 pursuant to section 1291 of title 28, United States 

2 Code. 

3 SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS. 

4 (a) IN GENERAL.—The Bureau is authorized to con5 duct hearings and adjudication proceedings with respect 

6 to any person in the manner prescribed by chapter 5 of 

7 title 5, United States Code in order to ensure or enforce 

8 compliance with— 

9 (1) the provisions of this title, including any 

10 rules prescribed by the Bureau under this title; and 

11 (2) any other Federal law that the Bureau is 

12 authorized to enforce, including an enumerated con13 sumer law, and any regulations or order prescribed 

14 thereunder, unless such Federal law specifically lim15 its the Bureau from conducting a hearing or adju16 dication proceeding and only to the extent of such 

17 limitation. 

18 (b) SPECIAL RULES FOR CEASE-AND-DESIST PRO19 CEEDINGS.— 

20 (1) ORDERS AUTHORIZED.— 

21 (A) IN GENERAL.—If, in the opinion of the 

22 Bureau, any covered person or service provider 

23 is engaging or has engaged in an activity that 

24 violates a law, rule, or any condition imposed in 

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1 reau may, subject to sections 1024, 1025, and 

2 1026, issue and serve upon the covered person 

3 or service provider a notice of charges in re4 spect thereof. 

5 (B) CONTENT OF NOTICE.—The notice 

6 under subparagraph (A) shall contain a state7 ment of the facts constituting the alleged viola8 tion or violations, and shall fix a time and place 

9 at which a hearing will be held to determine 

10 whether an order to cease and desist should 

11 issue against the covered person or service pro12 vider, such hearing to be held not earlier than 

13 30 days nor later than 60 days after the date 

14 of service of such notice, unless an earlier or a 

15 later date is set by the Bureau, at the request 

16 of any party so served. 

17 (C) CONSENT.—Unless the party or par18 ties served under subparagraph (B) appear at 

19 the hearing personally or by a duly authorized 

20 representative, such person shall be deemed to 

21 have consented to the issuance of the cease-and22 desist order. 

23 (D) PROCEDURE.—In the event of consent 

24 under subparagraph (C), or if, upon the record, 

25 made at any such hearing, the Bureau finds 


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1 that any violation specified in the notice of 

2 charges has been established, the Bureau may 

3 issue and serve upon the covered person or 

4 service provider an order to cease and desist 

5 from the violation or practice. Such order may, 

6 by provisions which may be mandatory or other7 wise, require the covered person or service pro8 vider to cease and desist from the subject activ9 ity, and to take affirmative action to correct the 

10 conditions resulting from any such violation. 

11 (2) EFFECTIVENESS OF ORDER.—A cease-and12 desist order shall become effective at the expiration 

13 of 30 days after the date of service of an order 

14 under paragraph (1) upon the covered person or 

15 service provider concerned (except in the case of a 

16 cease-and-desist order issued upon consent, which 

17 shall become effective at the time specified therein), 

18 and shall remain effective and enforceable as pro19 vided therein, except to such extent as the order is 

20 stayed, modified, terminated, or set aside by action 

21 of the Bureau or a reviewing court. 

22 (3) DECISION AND APPEAL.—Any hearing pro23 vided for in this subsection shall be held in the Fed24 eral judicial district or in the territory in which the 

25 residence or principal office or place of business of 


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1 the person is located unless the person consents to 

2 another place, and shall be conducted in accordance 

3 with the provisions of chapter 5 of title 5 of the 

4 United States Code. After such hearing, and within 

5 90 days after the Bureau has notified the parties 

6 that the case has been submitted to the Bureau for 

7 final decision, the Bureau shall render its decision 

8 (which shall include findings of fact upon which its 

9 decision is predicated) and shall issue and serve 

10 upon each party to the proceeding an order or or11 ders consistent with the provisions of this section. 

12 Judicial review of any such order shall be exclusively 

13 as provided in this subsection. Unless a petition for 

14 review is timely filed in a court of appeals of the 

15 United States, as provided in paragraph (4), and 

16 thereafter until the record in the proceeding has 

17 been filed as provided in paragraph (4), the Bureau 

18 may at any time, upon such notice and in such man19 ner as the Bureau shall determine proper, modify, 

20 terminate, or set aside any such order. Upon filing 

21 of the record as provided, the Bureau may modify, 

22 terminate, or set aside any such order with permis23 sion of the court. 

24 (4) APPEAL TO COURT OF APPEALS.—Any 

25 party to any proceeding under this subsection may 


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1 obtain a review of any order served pursuant to this 

2 subsection (other than an order issued with the con3 sent of the person concerned) by the filing in the 

4 court of appeals of the United States for the circuit 

5 in which the principal office of the covered person is 

6 located, or in the United States Court of Appeals for 

7 the District of Columbia Circuit, within 30 days 

8 after the date of service of such order, a written pe9 tition praying that the order of the Bureau be modi10 fied, terminated, or set aside. A copy of such peti11 tion shall be forthwith transmitted by the clerk of 

12 the court to the Bureau, and thereupon the Bureau 

13 shall file in the court the record in the proceeding, 

14 as provided in section 2112 of title 28 of the United 

15 States Code. Upon the filing of such petition, such 

16 court shall have jurisdiction, which upon the filing of 

17 the record shall except as provided in the last sen18 tence of paragraph (3) be exclusive, to affirm, mod19 ify, terminate, or set aside, in whole or in part, the 

20 order of the Bureau. Review of such proceedings 

21 shall be had as provided in chapter 7 of title 5 of 

22 the United States Code. The judgment and decree of 

23 the court shall be final, except that the same shall 

24 be subject to review by the Supreme Court of the 


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1 United States, upon certiorari, as provided in section 

2 1254 of title 28 of the United States Code. 

3 (5) NO STAY.—The commencement of pro4 ceedings for judicial review under paragraph (4) 

5 shall not, unless specifically ordered by the court, 

6 operate as a stay of any order issued by the Bureau. 

7 (c) SPECIAL RULES FOR TEMPORARY CEASE-AND8 DESIST PROCEEDINGS.— 

9 (1) IN GENERAL.—Whenever the Bureau deter10 mines that the violation specified in the notice of 

11 charges served upon a person, including a service 

12 provider, pursuant to subsection (b), or the continu13 ation thereof, is likely to cause the person to be in14 solvent or otherwise prejudice the interests of con15 sumers before the completion of the proceedings con16 ducted pursuant to subsection (b), the Bureau may 

17 issue a temporary order requiring the person to 

18 cease and desist from any such violation or practice 

19 and to take affirmative action to prevent or remedy 

20 such insolvency or other condition pending comple21 tion of such proceedings. Such order may include 

22 any requirement authorized under this subtitle. Such 

23 order shall become effective upon service upon the 

24 person and, unless set aside, limited, or suspended 

25 by a court in proceedings authorized by paragraph 


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1 (2), shall remain effective and enforceable pending 

2 the completion of the administrative proceedings 

3 pursuant to such notice and until such time as the 

4 Bureau shall dismiss the charges specified in such 

5 notice, or if a cease-and-desist order is issued 

6 against the person, until the effective date of such 

7 order. 

8 (2) APPEAL.—Not later than 10 days after the 

9 covered person or service provider concerned has 

10 been served with a temporary cease-and-desist order, 

11 the person may apply to the United States district 

12 court for the judicial district in which the residence 

13 or principal office or place of business of the person 

14 is located, or the United States District Court for 

15 the District of Columbia, for an injunction setting 

16 aside, limiting, or suspending the enforcement, oper17 ation, or effectiveness of such order pending the 

18 completion of the administrative proceedings pursu19 ant to the notice of charges served upon the person 

20 under subsection (b), and such court shall have ju21 risdiction to issue such injunction. 

22 (3) INCOMPLETE OR INACCURATE RECORDS.— 

23 (A) TEMPORARY ORDER.—If a notice of 

24 charges served under subsection (b) specifies, 

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1 cumstances, that the books and records of a 

2 covered person or service provider are so incom3 plete or inaccurate that the Bureau is unable to 

4 determine the financial condition of that person 

5 or the details or purpose of any transaction or 

6 transactions that may have a material effect on 

7 the financial condition of that person, the Bu8 reau may issue a temporary order requiring— 

9 (i) the cessation of any activity or 

10 practice which gave rise, whether in whole 

11 or in part, to the incomplete or inaccurate 

12 state of the books or records; or 

13 (ii) affirmative action to restore such 

14 books or records to a complete and accu15 rate state, until the completion of the pro16 ceedings under subsection (b)(1). 

17 (B) EFFECTIVE PERIOD.—Any temporary 

18 order issued under subparagraph (A)— 

19 (i) shall become effective upon service; 

20 and 

21 (ii) unless set aside, limited, or sus22 pended by a court in proceedings under 

23 paragraph (2), shall remain in effect and 

24 enforceable until the earlier of— 


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1 (I) the completion of the pro2 ceeding initiated under subsection (b) 

3 in connection with the notice of 

4 charges; or 

5 (II) the date the Bureau deter6 mines, by examination or otherwise, 

7 that the books and records of the cov8 ered person or service provider are ac9 curate and reflect the financial condi10 tion thereof. 

11 (d) SPECIAL RULES FOR ENFORCEMENT OF OR12 DERS.— 

13 (1) IN GENERAL.—The Bureau may in its dis14 cretion apply to the United States district court 

15 within the jurisdiction of which the principal office 

16 or place of business of the person is located, for the 

17 enforcement of any effective and outstanding notice 

18 or order issued under this section, and such court 

19 shall have jurisdiction and power to order and re20 quire compliance herewith. 

21 (2) EXCEPTION.—Except as otherwise provided 

22 in this subsection, no court shall have jurisdiction to 

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1 ify, suspend, terminate, or set aside any such notice 

2 or order. 

3 (e) RULES.—The Bureau shall prescribe rules estab4 lishing such procedures as may be necessary to carry out 

5 this section. 

6 SEC. 1054. LITIGATION AUTHORITY. 

7 (a) IN GENERAL.—If any person violates a Federal 

8 consumer financial law, the Bureau may, subject to sec9 tions 1024, 1025, and 1026, commence a civil action 

10 against such person to impose a civil penalty or to seek 

11 all appropriate legal and equitable relief including a per12 manent or temporary injunction as permitted by law. 

13 (b) REPRESENTATION.—The Bureau may act in its 

14 own name and through its own attorneys in enforcing any 

15 provision of this title, rules thereunder, or any other law 

16 or regulation, or in any action, suit, or proceeding to which 

17 the Bureau is a party. 

18 (c) COMPROMISE OF ACTIONS.—The Bureau may 

19 compromise or settle any action if such compromise is ap20 proved by the court. 

21 (d) NOTICE TO THE ATTORNEY GENERAL.—When 

22 commencing a civil action under Federal consumer finan23 cial law, or any rule thereunder, the Bureau shall notify 

24 the Attorney General and, with respect to a civil action 


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1 against an insured depository institution or insured credit 

2 union, the appropriate prudential regulator. 

3 (e) APPEARANCE BEFORE THE SUPREME COURT.— 

4 The Bureau may represent itself in its own name before 

5 the Supreme Court of the United States, provided that 

6 the Bureau makes a written request to the Attorney Gen7 eral within the 10-day period which begins on the date 

8 of entry of the judgment which would permit any party 

9 to file a petition for writ of certiorari, and the Attorney 

10 General concurs with such request or fails to take action 

11 within 60 days of the request of the Bureau. 

12 (f) FORUM.—Any civil action brought under this title 

13 may be brought in a United States district court or in 

14 any court of competent jurisdiction of a state in a district 

15 in which the defendant is located or resides or is doing 

16 business, and such court shall have jurisdiction to enjoin 

17 such person and to require compliance with any Federal 

18 consumer financial law. 

19 (g) TIME FOR BRINGING ACTION.— 

20 (1) IN GENERAL.—Except as otherwise per21 mitted by law or equity, no action may be brought 

22 under this title more than 3 years after the date of 

23 discovery of the violation to which an action relates. 

24 (2) LIMITATIONS UNDER OTHER FEDERAL

25 LAWS.— 


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1 (A) IN GENERAL.—For purposes of this 

2 subsection, an action arising under this title 

3 does not include claims arising solely under 

4 enumerated consumer laws. 

5 (B) BUREAU AUTHORITY.—In any action 

6 arising solely under an enumerated consumer 

7 law, the Bureau may commence, defend, or in8 tervene in the action in accordance with the re9 quirements of that provision of law, as applica10 ble. 

11 (C) TRANSFERRED AUTHORITY.—In any 

12 action arising solely under laws for which au13 thorities were transferred under subtitles F and 

14 H, the Bureau may commence, defend, or inter15 vene in the action in accordance with the re16 quirements of that provision of law, as applica17 ble. 

18 SEC. 1055. RELIEF AVAILABLE. 

19 (a) ADMINISTRATIVE PROCEEDINGS OR COURT AC20 TIONS.— 

21 (1) JURISDICTION.—The court (or the Bureau, 

22 as the case may be) in an action or adjudication pro23 ceeding brought under Federal consumer financial 

24 law, shall have jurisdiction to grant any appropriate 

25 legal or equitable relief with respect to a violation of 


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1 Federal consumer financial law, including a violation 

2 of a rule or order prescribed under a Federal con3 sumer financial law. 

4 (2) RELIEF.—Relief under this section may in5 clude, without limitation— 

6 (A) rescission or reformation of contracts; 

7 (B) refund of moneys or return of real 

8 property; 

9 (C) restitution; 

10 (D) disgorgement or compensation for un11 just enrichment; 

12 (E) payment of damages or other mone13 tary relief; 

14 (F) public notification regarding the viola15 tion, including the costs of notification; 

16 (G) limits on the activities or functions of 

17 the person; and 

18 (H) civil money penalties, as set forth 

19 more fully in subsection (c). 

20 (3) NO EXEMPLARY OR PUNITIVE DAMAGES.— 

21 Nothing in this subsection shall be construed as au22 thorizing the imposition of exemplary or punitive 

23 damages. 

24 (b) RECOVERY OF COSTS.—In any action brought by 

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1 lator to enforce any Federal consumer financial law, the 

2 Bureau, the State attorney general, or the State regulator 

3 may recover its costs in connection with prosecuting such 

4 action if the Bureau, the State attorney general, or the 

5 State regulator is the prevailing party in the action. 

6 (c) CIVIL MONEY PENALTY IN COURT AND ADMINIS7 TRATIVE ACTIONS.— 

8 (1) IN GENERAL.—Any person that violates, 

9 through any act or omission, any provision of Fed10 eral consumer financial law shall forfeit and pay a 

11 civil penalty pursuant to this subsection. 

12 (2) PENALTY AMOUNTS.— 

13 (A) FIRST TIER.—For any violation of a 

14 law, rule, or final order or condition imposed in 

15 writing by the Bureau, a civil penalty may not 

16 exceed $5,000 for each day during which such 

17 violation or failure to pay continues. 

18 (B) SECOND TIER.—Notwithstanding 

19 paragraph (A), for any person that recklessly 

20 engages in a violation of a Federal consumer fi21 nancial law, a civil penalty may not exceed 

22 $25,000 for each day during which such viola23 tion continues. 

24 (C) THIRD TIER.—Notwithstanding sub25 paragraphs (A) and (B), for any person that 


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1 knowingly violates a Federal consumer financial 

2 law, a civil penalty may not exceed $1,000,000 

3 for each day during which such violation con4 tinues. 

5 (3) MITIGATING FACTORS.—In determining the 

6 amount of any penalty assessed under paragraph 

7 (2), the Bureau or the court shall take into account 

8 the appropriateness of the penalty with respect to— 

9 (A) the size of financial resources and good 

10 faith of the person charged; 

11 (B) the gravity of the violation or failure 

12 to pay; 

13 (C) the severity of the risks to or losses of 

14 the consumer, which may take into account the 

15 number of products or services sold or provided; 

16 (D) the history of previous violations; and 

17 (E) such other matters as justice may re18 quire. 

19 (4) AUTHORITY TO MODIFY OR REMIT PEN20 ALTY.—The Bureau may compromise, modify, or 

21 remit any penalty which may be assessed or had al22 ready been assessed under paragraph (2). The 

23 amount of such penalty, when finally determined, 

24 shall be exclusive of any sums owed by the person 

25 to the United States in connection with the costs of 


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1 the proceeding, and may be deducted from any sums 

2 owing by the United States to the person charged. 

3 (5) NOTICE AND HEARING.—No civil penalty 

4 may be assessed under this subsection with respect 

5 to a violation of any Federal consumer financial law, 

6 unless— 

7 (A) the Bureau gives notice and an oppor8 tunity for a hearing to the person accused of 

9 the violation; or 

10 (B) the appropriate court has ordered such 

11 assessment and entered judgment in favor of 

12 the Bureau. 

13 SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS. 

14 If the Bureau obtains evidence that any person, do15 mestic or foreign, has engaged in conduct that may con16 stitute a violation of Federal criminal law, the Bureau 

17 shall have the power to transmit such evidence to the At18 torney General of the United States, who may institute 

19 criminal proceedings under appropriate law. Nothing in 

20 this section affects any other authority of the Bureau to 

21 disclose information. 

22 SEC. 1057. EMPLOYEE PROTECTION. 

23 (a) IN GENERAL.—No covered person or service pro24 vider shall terminate or in any other way discriminate 

25 against, or cause to be terminated or discriminated 


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1 against, any covered employee or any authorized rep2 resentative of covered employees by reason of the fact that 

3 such employee or representative, whether at the initiative 

4 of the employee or in the ordinary course of the duties 

5 of the employee (or any person acting pursuant to a re6 quest of the employee), has— 

7 (1) provided, caused to be provided, or is about 

8 to provide or cause to be provided, information to 

9 the employer, the Bureau, or any other State, local, 

10 or Federal, government authority or law enforce11 ment agency relating to any violation of, or any act 

12 or omission that the employee reasonably believes to 

13 be a violation of, any provision of this title or any 

14 other provision of law that is subject to the jurisdic15 tion of the Bureau, or any rule, order, standard, or 

16 prohibition prescribed by the Bureau; 

17 (2) testified or will testify in any proceeding re18 sulting from the administration or enforcement of 

19 any provision of this title or any other provision of 

20 law that is subject to the jurisdiction of the Bureau, 

21 or any rule, order, standard, or prohibition pre22 scribed by the Bureau; 

23 (3) filed, instituted, or caused to be filed or in24 stituted any proceeding under any Federal consumer 

25 financial law; or 


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1 (4) objected to, or refused to participate in, any 

2 activity, policy, practice, or assigned task that the 

3 employee (or other such person) reasonably believed 

4 to be in violation of any law, rule, order, standard, 

5 or prohibition, subject to the jurisdiction of, or en6 forceable by, the Bureau. 

7 (b) DEFINITION OF COVERED EMPLOYEE.—For the 

8 purposes of this section, the term ‘‘covered employee’’ 

9 means any individual performing tasks related to the of10 fering or provision of a consumer financial product or 

11 service. 

12 (c) PROCEDURES AND TIMETABLES.— 

13 (1) COMPLAINT.— 

14 (A) IN GENERAL.—A person who believes 

15 that he or she has been discharged or otherwise 

16 discriminated against by any person in violation 

17 of subsection (a) may, not later than 180 days 

18 after the date on which such alleged violation 

19 occurs, file (or have any person file on his or 

20 her behalf) a complaint with the Secretary of 

21 Labor alleging such discharge or discrimination 

22 and identifying the person responsible for such 

23 act. 

24 (B) ACTIONS OF SECRETARY OF LABOR.— 

25 Upon receipt of such a complaint, the Secretary 


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1 of Labor shall notify, in writing, the person 

2 named in the complaint who is alleged to have 

3 committed the violation, of — 

4 (i) the filing of the complaint; 

5 (ii) the allegations contained in the 

6 complaint; 

7 (iii) the substance of evidence sup8 porting the complaint; and 

9 (iv) opportunities that will be afforded 

10 to such person under paragraph (2). 

11 (2) INVESTIGATION BY SECRETARY OF

12 LABOR.— 

13 (A) IN GENERAL.—Not later than 60 days 

14 after the date of receipt of a complaint filed 

15 under paragraph (1), and after affording the 

16 complainant and the person named in the com17 plaint who is alleged to have committed the vio18 lation that is the basis for the complaint an op19 portunity to submit to the Secretary of Labor 

20 a written response to the complaint and an op21 portunity to meet with a representative of the 

22 Secretary of Labor to present statements from 

23 witnesses, the Secretary of Labor shall— 


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1 (i) initiate an investigation and deter2 mine whether there is reasonable cause to 

3 believe that the complaint has merit; and 

4 (ii) notify the complainant and the 

5 person alleged to have committed the viola6 tion of subsection (a), in writing, of such 

7 determination. 

8 (B) NOTICE OF RELIEF AVAILABLE.—If 

9 the Secretary of Labor concludes that there is 

10 reasonable cause to believe that a violation of 

11 subsection (a) has occurred, the Secretary of 

12 Labor shall, together with the notice under sub13 paragraph (A)(ii), issue a preliminary order 

14 providing the relief prescribed by paragraph 

15 (4)(B). 

16 (C) REQUEST FOR HEARING.—Not later 

17 than 30 days after the date of receipt of notifi18 cation of a determination of the Secretary of 

19 Labor under this paragraph, either the person 

20 alleged to have committed the violation or the 

21 complainant may file objections to the findings 

22 or preliminary order, or both, and request a 

23 hearing on the record. The filing of such objec24 tions shall not operate to stay any reinstate25 ment remedy contained in the preliminary 


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1 order. Any such hearing shall be conducted ex2 peditiously, and if a hearing is not requested in 

3 such 30-day period, the preliminary order shall 

4 be deemed a final order that is not subject to 

5 judicial review. 

6 (3) GROUNDS FOR DETERMINATION OF COM7 PLAINTS.— 

8 (A) IN GENERAL.—The Secretary of Labor 

9 shall dismiss a complaint filed under this sub10 section, and shall not conduct an investigation 

11 otherwise required under paragraph (2), unless 

12 the complainant makes a prima facie showing 

13 that any behavior described in paragraphs (1) 

14 through (4) of subsection (a) was a contrib15 uting factor in the unfavorable personnel action 

16 alleged in the complaint. 

17 (B) REBUTTAL EVIDENCE.—Notwith18 standing a finding by the Secretary of Labor 

19 that the complainant has made the showing re20 quired under subparagraph (A), no investiga21 tion otherwise required under paragraph (2) 

22 shall be conducted, if the employer dem23 onstrates, by clear and convincing evidence, 

24 that the employer would have taken the same 


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1 unfavorable personnel action in the absence of 

2 that behavior. 

3 (C) EVIDENTIARY STANDARDS.—The Sec4 retary of Labor may determine that a violation 

5 of subsection (a) has occurred only if the com6 plainant demonstrates that any behavior de7 scribed in paragraphs (1) through (4) of sub8 section (a) was a contributing factor in the un9 favorable personnel action alleged in the com10 plaint. Relief may not be ordered under sub11 paragraph (A) if the employer demonstrates by 

12 clear and convincing evidence that the employer 

13 would have taken the same unfavorable per14 sonnel action in the absence of that behavior. 

15 (4) ISSUANCE OF FINAL ORDERS; REVIEW PRO16 CEDURES.— 

17 (A) TIMING.—Not later than 120 days 

18 after the date of conclusion of any hearing 

19 under paragraph (2), the Secretary of Labor 

20 shall issue a final order providing the relief pre21 scribed by this paragraph or denying the com22 plaint. At any time before issuance of a final 

23 order, a proceeding under this subsection may 

24 be terminated on the basis of a settlement 

25 agreement entered into by the Secretary of 


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1 Labor, the complainant, and the person alleged 

2 to have committed the violation. 

3 (B) PENALTIES.— 

4 (i) ORDER OF SECRETARY OF

5 LABOR.—If, in response to a complaint 

6 filed under paragraph (1), the Secretary of 

7 Labor determines that a violation of sub8 section (a) has occurred, the Secretary of 

9 Labor shall order the person who com10 mitted such violation— 

11 (I) to take affirmative action to 

12 abate the violation; 

13 (II) to reinstate the complainant 

14 to his or her former position, together 

15 with compensation (including back 

16 pay) and restore the terms, condi17 tions, and privileges associated with 

18 his or her employment; and 

19 (III) to provide compensatory 

20 damages to the complainant. 

21 (ii) PENALTY.—If an order is issued 

22 under clause (i), the Secretary of Labor, at 

23 the request of the complainant, shall assess 

24 against the person against whom the order 

25 is issued, a sum equal to the aggregate 


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1 amount of all costs and expenses (includ2 ing attorney fees and expert witness fees) 

3 reasonably incurred, as determined by the 

4 Secretary of Labor, by the complainant 

5 for, or in connection with, the bringing of 

6 the complaint upon which the order was 

7 issued. 

8 (C) PENALTY FOR FRIVOLOUS CLAIMS.—If 

9 the Secretary of Labor finds that a complaint 

10 under paragraph (1) is frivolous or has been 

11 brought in bad faith, the Secretary of Labor 

12 may award to the prevailing employer a reason13 able attorney fee, not exceeding $1,000, to be 

14 paid by the complainant. 

15 (D) DE NOVO REVIEW.— 

16 (i) FAILURE OF THE SECRETARY TO

17 ACT.—If the Secretary of Labor has not 

18 issued a final order within 210 days after 

19 the date of filing of a complaint under this 

20 subsection, or within 90 days after the 

21 date of receipt of a written determination, 

22 the complainant may bring an action at 

23 law or equity for de novo review in the ap24 propriate district court of the United 

25 States having jurisdiction, which shall have 


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1 jurisdiction over such an action without re2 gard to the amount in controversy, and 

3 which action shall, at the request of either 

4 party to such action, be tried by the court 

5 with a jury. 

6 (ii) PROCEDURES.—A proceeding 

7 under clause (i) shall be governed by the 

8 same legal burdens of proof specified in 

9 paragraph (3). The court shall have juris10 diction to grant all relief necessary to 

11 make the employee whole, including injunc12 tive relief and compensatory damages, in13 cluding— 

14 (I) reinstatement with the same 

15 seniority status that the employee 

16 would have had, but for the discharge 

17 or discrimination; 

18 (II) the amount of back pay, with 

19 interest; and 

20 (III) compensation for any spe21 cial damages sustained as a result of 

22 the discharge or discrimination, in23 cluding litigation costs, expert witness 

24 fees, and reasonable attorney fees. 


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1 (E) OTHER APPEALS.—Unless the com2 plainant brings an action under subparagraph 

3 (D), any person adversely affected or aggrieved 

4 by a final order issued under subparagraph (A) 

5 may file a petition for review of the order in the 

6 United States Court of Appeals for the circuit 

7 in which the violation with respect to which the 

8 order was issued, allegedly occurred or the cir9 cuit in which the complainant resided on the 

10 date of such violation, not later than 60 days 

11 after the date of the issuance of the final order 

12 of the Secretary of Labor under subparagraph 

13 (A). Review shall conform to chapter 7 of title 

14 5, United States Code. The commencement of 

15 proceedings under this subparagraph shall not, 

16 unless ordered by the court, operate as a stay 

17 of the order. An order of the Secretary of 

18 Labor with respect to which review could have 

19 been obtained under this subparagraph shall 

20 not be subject to judicial review in any criminal 

21 or other civil proceeding. 

22 (5) FAILURE TO COMPLY WITH ORDER.— 

23 (A) ACTIONS BY THE SECRETARY.—If any 

24 person has failed to comply with a final order 

25 issued under paragraph (4), the Secretary of 


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1 Labor may file a civil action in the United 

2 States district court for the district in which 

3 the violation was found to have occurred, or in 

4 the United States district court for the District 

5 of Columbia, to enforce such order. In actions 

6 brought under this paragraph, the district 

7 courts shall have jurisdiction to grant all appro8 priate relief including injunctive relief and com9 pensatory damages. 

10 (B) CIVIL ACTIONS TO COMPEL COMPLI11 ANCE.—A person on whose behalf an order was 

12 issued under paragraph (4) may commence a 

13 civil action against the person to whom such 

14 order was issued to require compliance with 

15 such order. The appropriate United States dis16 trict court shall have jurisdiction, without re17 gard to the amount in controversy or the citi18 zenship of the parties, to enforce such order. 

19 (C) AWARD OF COSTS AUTHORIZED.—The 

20 court, in issuing any final order under this 

21 paragraph, may award costs of litigation (in22 cluding reasonable attorney and expert witness 

23 fees) to any party, whenever the court deter24 mines such award is appropriate. 


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1 (D) MANDAMUS PROCEEDINGS.—Any non2 discretionary duty imposed by this section shall 

3 be enforceable in a mandamus proceeding 

4 brought under section 1361 of title 28, United 

5 States Code. 

6 (d) UNENFORCEABILITY OF CERTAIN AGREE7 MENTS.— 

8 (1) NO WAIVER OF RIGHTS AND REMEDIES.— 

9 Except as provided under paragraph (3), and not10 withstanding any other provision of law, the rights 

11 and remedies provided for in this section may not be 

12 waived by any agreement, policy, form, or condition 

13 of employment, including by any predispute arbitra14 tion agreement. 

15 (2) NO PREDISPUTE ARBITRATION AGREE16 MENTS.—Except as provided under paragraph (3), 

17 and notwithstanding any other provision of law, no 

18 predispute arbitration agreement shall be valid or 

19 enforceable to the extent that it requires arbitration 

20 of a dispute arising under this section. 

21 (3) EXCEPTION.—Notwithstanding paragraphs 

22 (1) and (2), an arbitration provision in a collective 

23 bargaining agreement shall be enforceable as to dis24 putes arising under subsection (a)(4), unless the BuVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01214 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 reau determines, by rule, that such provision is in2 consistent with the purposes of this title. 

3 SEC. 1058. EFFECTIVE DATE. 

4 This subtitle shall become effective on the designated 

5 transfer date. 

6 Subtitle F—Transfer of Functions 

7 and Personnel; Transitional 

8 Provisions 

9 SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTEC10 TION FUNCTIONS. 

11 (a) DEFINED TERMS.—For purposes of this sub12 title— 

13 (1) the term ‘‘consumer financial protection 

14 functions’’ means research, rulemaking, issuance of 

15 orders or guidance, supervision, examination, and 

16 enforcement activities, powers, and duties relating to 

17 the offering or provision of consumer financial prod18 ucts or services; and 

19 (2) the terms ‘‘transferor agency’’ and ‘‘trans20 feror agencies’’ mean, respectively— 

21 (A) the Board of Governors (and any Fed22 eral reserve bank, as the context requires), the 

23 Federal Deposit Insurance Corporation, the 

24 Federal Trade Commission, the National Credit 

25 Union Administration, the Office of the CompVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01215 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 troller of the Currency, the Office of Thrift Su2 pervision, and the Department of Housing and 

3 Urban Development, and the heads of those 

4 agencies; and 

5 (B) the agencies listed in subparagraph 

6 (A), collectively. 

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

8 (c), consumer financial protection functions are trans9 ferred as follows: 

10 (1) BOARD OF GOVERNORS.— 

11 (A) TRANSFER OF FUNCTIONS.—All con12 sumer financial protection functions of the 

13 Board of Governors are transferred to the Bu14 reau. 

15 (B) BOARD OF GOVERNORS AUTHORITY.— 

16 The Bureau shall have all powers and duties 

17 that were vested in the Board of Governors, re18 lating to consumer financial protection func19 tions, on the day before the designated transfer 

20 date. 

21 (2) COMPTROLLER OF THE CURRENCY.— 

22 (A) TRANSFER OF FUNCTIONS.—All con23 sumer financial protection functions of the 

24 Comptroller of the Currency are transferred to 

25 the Bureau. 


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1 (B) COMPTROLLER AUTHORITY.—The Bu2 reau shall have all powers and duties that were 

3 vested in the Comptroller of the Currency, re4 lating to consumer financial protection func5 tions, on the day before the designated transfer 

6 date. 

7 (3) DIRECTOR OF THE OFFICE OF THRIFT SU8 PERVISION.— 

9 (A) TRANSFER OF FUNCTIONS.—All con10 sumer financial protection functions of the Di11 rector of the Office of Thrift Supervision are 

12 transferred to the Bureau. 

13 (B) DIRECTOR AUTHORITY.—The Bureau 

14 shall have all powers and duties that were vest15 ed in the Director of the Office of Thrift Super16 vision, relating to consumer financial protection 

17 functions, on the day before the designated 

18 transfer date. 

19 (4) FEDERAL DEPOSIT INSURANCE CORPORA20 TION.— 

21 (A) TRANSFER OF FUNCTIONS.—All con22 sumer financial protection functions of the Fed23 eral Deposit Insurance Corporation are trans24 ferred to the Bureau. 


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1 (B) CORPORATION AUTHORITY.—The Bu2 reau shall have all powers and duties that were 

3 vested in the Federal Deposit Insurance Cor4 poration, relating to consumer financial protec5 tion functions, on the day before the designated 

6 transfer date. 

7 (5) FEDERAL TRADE COMMISSION.— 

8 (A) TRANSFER OF FUNCTIONS.—Except as 

9 provided in subparagraph (C), all consumer fi10 nancial protection functions of the Federal 

11 Trade Commission are transferred to the Bu12 reau. 

13 (B) COMMISSION AUTHORITY.—Except as 

14 provided in subparagraph (C), the Bureau shall 

15 have all powers and duties that were vested in 

16 the Federal Trade Commission relating to con17 sumer financial protection functions on the day 

18 before the designated transfer date. 

19 (C) CONTINUATION OF CERTAIN COMMIS20 SION AUTHORITIES.—Notwithstanding subpara21 graphs (A) and (B), the Federal Trade Com22 mission shall continue to have authority to en23 force, and issue rules with respect to— 

24 (i) the Credit Repair Organizations 

25 Act (15 U.S.C. 1679 et seq.); 


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1 (ii) section 5 of the Federal Trade 

2 Commission Act (15 U.S.C. 45); and 

3 (iii) the Telemarketing and Consumer 

4 Fraud and Abuse Prevention Act (15 

5 U.S.C. 6101 et seq.). 

6 (6) NATIONAL CREDIT UNION ADMINISTRA7 TION.— 

8 (A) TRANSFER OF FUNCTIONS.—All con9 sumer financial protection functions of the Na10 tional Credit Union Administration are trans11 ferred to the Bureau. 

12 (B) NATIONAL CREDIT UNION ADMINIS13 TRATION AUTHORITY.—The Bureau shall have 

14 all powers and duties that were vested in the 

15 National Credit Union Administration, relating 

16 to consumer financial protection functions, on 

17 the day before the designated transfer date. 

18 (7) DEPARTMENT OF HOUSING AND URBAN DE19 VELOPMENT.— 

20 (A) TRANSFER OF FUNCTIONS.—All con21 sumer protection functions of the Secretary of 

22 the Department of Housing and Urban Devel23 opment relating to the Real Estate Settlement 

24 Procedures Act of 1974 (12 U.S.C. 2601 et 

25 seq.) and the Secure and Fair Enforcement for 


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1 Mortgage Licensing Act of 2008 (12 U.S.C. 

2 5102 et seq.) are transferred to the Bureau. 

3 (B) AUTHORITY OF THE DEPARTMENT OF

4 HOUSING AND URBAN DEVELOPMENT.—The 

5 Bureau shall have all powers and duties that 

6 were vested in the Secretary of the Department 

7 of Housing and Urban Development relating to 

8 the Real Estate Settlement Procedures Act of 

9 1974 (12 U.S.C. 2601 et seq.), and the Secure 

10 and Fair Enforcement for Mortgage Licensing 

11 Act of 2008 (12 U.S.C. 5101 et seq.), on the 

12 day before the designated transfer date. 

13 (c) TRANSFERS OF FUNCTIONS SUBJECT TO EXAM14 INATION AND ENFORCEMENT AUTHORITY REMAINING

15 WITH TRANSFEROR AGENCIES.—The transfers of func16 tions in subsection (b) do not affect the authority of the 

17 agencies identified in subsection (b) from conducting ex18 aminations or initiating and maintaining enforcement pro19 ceedings, including performing appropriate supervisory 

20 and support functions relating thereto, in accordance with 

21 sections 1024, 1025, and 1026. 

22 (d) EFFECTIVE DATE.—Subsections (b) and (c) shall 

23 become effective on the designated transfer date. 


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1 SEC. 1062. DESIGNATED TRANSFER DATE. 

2 (a) IN GENERAL.—Not later than 60 days after the 

3 date of enactment of this Act, the Secretary shall— 

4 (1) in consultation with the Chairman of the 

5 Board of Governors, the Chairperson of the Cor6 poration, the Chairman of the Federal Trade Com7 mission, the Chairman of the National Credit Union 

8 Administration Board, the Comptroller of the Cur9 rency, the Director of the Office of Thrift Super10 vision, the Secretary of the Department of Housing 

11 and Urban Development, and the Director of the Of12 fice of Management and Budget, designate a single 

13 calendar date for the transfer of functions to the 

14 Bureau under section 1061; and 

15 (2) publish notice of that designated date in the 

16 Federal Register. 

17 (b) CHANGING DESIGNATION.—The Secretary— 

18 (1) may, in consultation with the Chairman of 

19 the Board of Governors, the Chairperson of the Fed20 eral Deposit Insurance Corporation, the Chairman 

21 of the Federal Trade Commission, the Chairman of 

22 the National Credit Union Administration Board, 

23 the Comptroller of the Currency, the Director of the 

24 Office of Thrift Supervision, the Secretary of the 

25 Department of Housing and Urban Development, 

26 and the Director of the Office of Management and 


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1 Budget, change the date designated under sub2 section (a); and 

3 (2) shall publish notice of any changed des4 ignated date in the Federal Register. 

5 (c) PERMISSIBLE DATES.— 

6 (1) IN GENERAL.—Except as provided in para7 graph (2), any date designated under this section 

8 shall be not earlier than 180 days, nor later than 18 

9 months, after the date of enactment of this Act. 

10 (2) EXTENSION OF TIME.—The Secretary may 

11 designate a date that is later than 18 months after 

12 the date of enactment of this Act if the Secretary 

13 transmits to appropriate committees of Congress— 

14 (A) a written determination that orderly 

15 implementation of this title is not feasible be16 fore the date that is 18 months after the date 

17 of enactment of this Act; 

18 (B) an explanation of why an extension is 

19 necessary for the orderly implementation of this 

20 title; and 

21 (C) a description of the steps that will be 

22 taken to effect an orderly and timely implemen23 tation of this title within the extended time pe24 riod. 


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1 (3) EXTENSION LIMITED.—In no case may any 

2 date designated under this section be later than 24 

3 months after the date of enactment of this Act. 

4 SEC. 1063. SAVINGS PROVISIONS. 

5 (a) BOARD OF GOVERNORS.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 1061(b)(1) does 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Board of Governors 

10 (or any Federal reserve bank), or any other person 

11 that— 

12 (A) arises under any provision of law relat13 ing to any consumer financial protection func14 tion of the Board of Governors transferred to 

15 the Bureau by this title; and 

16 (B) existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—No provision of 

19 this Act shall abate any proceeding commenced by 

20 or against the Board of Governors (or any Federal 

21 reserve bank) before the designated transfer date 

22 with respect to any consumer financial protection 

23 function of the Board of Governors (or any Federal 

24 reserve bank) transferred to the Bureau by this title, 

25 except that the Bureau, subject to sections 1024, 


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1 1025, and 1026, shall be substituted for the Board 

2 of Governors (or Federal reserve bank) as a party 

3 to any such proceeding as of the designated transfer 

4 date. 

5 (b) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 1061(b)(4) does 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Federal Deposit In10 surance Corporation, the Board of Directors of that 

11 Corporation, or any other person, that— 

12 (A) arises under any provision of law relat13 ing to any consumer financial protection func14 tion of the Federal Deposit Insurance Corpora15 tion transferred to the Bureau by this title; and 

16 (B) existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—No provision of 

19 this Act shall abate any proceeding commenced by 

20 or against the Federal Deposit Insurance Corpora21 tion (or the Board of Directors of that Corporation) 

22 before the designated transfer date with respect to 

23 any consumer financial protection function of the 

24 Federal Deposit Insurance Corporation transferred 

25 to the Bureau by this title, except that the Bureau, 


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1 subject to sections 1024, 1025, and 1026, shall be 

2 substituted for the Federal Deposit Insurance Cor3 poration (or Board of Directors) as a party to any 

4 such proceeding as of the designated transfer date. 

5 (c) FEDERAL TRADE COMMISSION.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 1061(b)(5) does 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Federal Trade Com10 mission, or any other person, that— 

11 (A) arises under any provision of law relat12 ing to any consumer financial protection func13 tion of the Federal Trade Commission trans14 ferred to the Bureau by this title; and 

15 (B) existed on the day before the des16 ignated transfer date. 

17 (2) CONTINUATION OF SUITS.—No provision of 

18 this Act shall abate any proceeding commenced by 

19 or against the Federal Trade Commission before the 

20 designated transfer date with respect to any con21 sumer financial protection function of the Federal 

22 Trade Commission transferred to the Bureau by this 

23 title, except that the Bureau, subject to sections 

24 1024, 1025, and 1026, shall be substituted for the 


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1 Federal Trade Commission as a party to any such 

2 proceeding as of the designated transfer date. 

3 (d) NATIONAL CREDIT UNION ADMINISTRATION.— 

4 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA5 TIONS NOT AFFECTED.—Section 1061(b)(6) does 

6 not affect the validity of any right, duty, or obliga7 tion of the United States, the National Credit Union 

8 Administration, the National Credit Union Adminis9 tration Board, or any other person, that— 

10 (A) arises under any provision of law relat11 ing to any consumer financial protection func12 tion of the National Credit Union Administra13 tion transferred to the Bureau by this title; and 

14 (B) existed on the day before the des15 ignated transfer date. 

16 (2) CONTINUATION OF SUITS.—No provision of 

17 this Act shall abate any proceeding commenced by 

18 or against the National Credit Union Administration 

19 (or the National Credit Union Administration 

20 Board) before the designated transfer date with re21 spect to any consumer financial protection function 

22 of the National Credit Union Administration trans23 ferred to the Bureau by this title, except that the 

24 Bureau, subject to sections 1024, 1025, and 1026, 

25 shall be substituted for the National Credit Union 


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1 Administration (or National Credit Union Adminis2 tration Board) as a party to any such proceeding as 

3 of the designated transfer date. 

4 (e) OFFICE OF THE COMPTROLLER OF THE CUR5 RENCY.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 1061(b)(2) does 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Comptroller of the 

10 Currency, the Office of the Comptroller of the Cur11 rency, or any other person, that— 

12 (A) arises under any provision of law relat13 ing to any consumer financial protection func14 tion of the Comptroller of the Currency trans15 ferred to the Bureau by this title; and 

16 (B) existed on the day before the des17 ignated transfer date. 

18 (2) CONTINUATION OF SUITS.—No provision of 

19 this Act shall abate any proceeding commenced by 

20 or against the Comptroller of the Currency (or the 

21 Office of the Comptroller of the Currency) with re22 spect to any consumer financial protection function 

23 of the Comptroller of the Currency transferred to 

24 the Bureau by this title before the designated trans25 fer date, except that the Bureau, subject to sections 


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1 1024, 1025, and 1026, shall be substituted for the 

2 Comptroller of the Currency (or the Office of the 

3 Comptroller of the Currency) as a party to any such 

4 proceeding as of the designated transfer date. 

5 (f) OFFICE OF THRIFT SUPERVISION.— 

6 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA7 TIONS NOT AFFECTED.—Section 1061(b)(3) does 

8 not affect the validity of any right, duty, or obliga9 tion of the United States, the Director of the Office 

10 of Thrift Supervision, the Office of Thrift Super11 vision, or any other person, that— 

12 (A) arises under any provision of law relat13 ing to any consumer financial protection func14 tion of the Director of the Office of Thrift Su15 pervision transferred to the Bureau by this 

16 title; and 

17 (B) that existed on the day before the des18 ignated transfer date. 

19 (2) CONTINUATION OF SUITS.—No provision of 

20 this Act shall abate any proceeding commenced by 

21 or against the Director of the Office of Thrift Su22 pervision (or the Office of Thrift Supervision) with 

23 respect to any consumer financial protection func24 tion of the Director of the Office of Thrift Super25 vision transferred to the Bureau by this title before 


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1 the designated transfer date, except that the Bu2 reau, subject to sections 1024, 1025, and 1026, 

3 shall be substituted for the Director (or the Office 

4 of Thrift Supervision) as a party to any such pro5 ceeding as of the designated transfer date. 

6 (g) DEPARTMENT OF HOUSING AND URBAN DEVEL7 OPMENT.— 

8 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA9 TIONS NOT AFFECTED.—Section 1061(b)(7) shall 

10 not affect the validity of any right, duty, or obliga11 tion of the United States, the Secretary of the De12 partment of Housing and Urban Development (or 

13 the Department of Housing and Urban Develop14 ment), or any other person, that— 

15 (A) arises under any provision of law relat16 ing to any function of the Secretary of the De17 partment of Housing and Urban Development 

18 with respect to the Real Estate Settlement Pro19 cedures Act of 1974 (12 U.S.C. 2601 et seq.) 

20 or the Secure and Fair Enforcement for Mort21 gage Licensing Act of 2008 (12 U.S.C. 5102 et 

22 seq.) transferred to the Bureau by this title; 

23 and 

24 (B) existed on the day before the des25 ignated transfer date. 


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1 (2) CONTINUATION OF SUITS.—This title shall 

2 not abate any proceeding commenced by or against 

3 the Secretary of the Department of Housing and 

4 Urban Development (or the Department of Housing 

5 and Urban Development) with respect to any con6 sumer financial protection function of the Secretary 

7 of the Department of Housing and Urban Develop8 ment transferred to the Bureau by this title before 

9 the designated transfer date, except that the Bu10 reau, subject to sections 1024, 1025, and 1026, 

11 shall be substituted for the Secretary of the Depart12 ment of Housing and Urban Development (or the 

13 Department of Housing and Urban Development) as 

14 a party to any such proceeding as of the designated 

15 transfer date. 

16 (h) CONTINUATION OF EXISTING ORDERS, RULES, 

17 DETERMINATIONS, AGREEMENTS, AND RESOLUTIONS.— 

18 All orders, resolutions, determinations, agreements, and 

19 rules that have been issued, made, prescribed, or allowed 

20 to become effective by any transferor agency or by a court 

21 of competent jurisdiction, in the performance of consumer 

22 financial protection functions that are transferred by this 

23 title and that are in effect on the day before the designated 

24 transfer date, shall continue in effect according to the 

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1 ments, and rules, and shall not be enforceable by or 

2 against the Bureau. 

3 (i) IDENTIFICATION OF RULES CONTINUED.—Not 

4 later than the designated transfer date, the Bureau— 

5 (1) shall, after consultation with the head of 

6 each transferor agency, identify the rules continued 

7 under subsection (h) that will be enforced by the 

8 Bureau; and 

9 (2) shall publish a list of such rules in the Fed10 eral Register. 

11 (j) STATUS OF RULES PROPOSED OR NOT YET EF12 FECTIVE.— 

13 (1) PROPOSED RULES.—Any proposed rule of a 

14 transferor agency which that agency, in performing 

15 consumer financial protection functions transferred 

16 by this title, has proposed before the designated 

17 transfer date, but has not been published as a final 

18 rule before that date, shall be deemed to be a pro19 posed rule of the Bureau. 

20 (2) RULES NOT YET EFFECTIVE.—Any interim 

21 or final rule of a transferor agency which that agen22 cy, in performing consumer financial protection 

23 functions transferred by this title, has published be24 fore the designated transfer date, but which has not 


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1 become effective before that date, shall become effec2 tive as a rule of the Bureau according to its terms. 

3 SEC. 1064. TRANSFER OF CERTAIN PERSONNEL. 

4 (a) IN GENERAL.— 

5 (1) CERTAIN FEDERAL RESERVE SYSTEM EM6 PLOYEES TRANSFERRED.— 

7 (A) IDENTIFYING EMPLOYEES FOR TRANS8 FER.—The Bureau and the Board of Governors 

9 shall— 

10 (i) jointly determine the number of 

11 employees of the Board of Governors nec12 essary to perform or support the consumer 

13 financial protection functions of the Board 

14 of Governors that are transferred to the 

15 Bureau by this title; and 

16 (ii) consistent with the number deter17 mined under clause (i), jointly identify em18 ployees of the Board of Governors for 

19 transfer to the Bureau, in a manner that 

20 the Bureau and the Board of Governors, in 

21 their sole discretion, determine equitable. 

22 (B) IDENTIFIED EMPLOYEES TRANS23 FERRED.—All employees of the Board of Gov24 ernors identified under subparagraph (A)(ii) 


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1 shall be transferred to the Bureau for employ2 ment. 

3 (C) FEDERAL RESERVE BANK EMPLOY4 EES.—Employees of any Federal reserve bank 

5 who, on the day before the designated transfer 

6 date, are performing consumer financial protec7 tion functions on behalf of the Board of Gov8 ernors shall be treated as employees of the 

9 Board of Governors for purposes of subpara10 graphs (A) and (B). 

11 (2) CERTAIN FDIC EMPLOYEES TRANS12 FERRED.— 

13 (A) IDENTIFYING EMPLOYEES FOR TRANS14 FER.—The Bureau and the Board of Directors 

15 of the Federal Deposit Insurance Corporation 

16 shall— 

17 (i) jointly determine the number of 

18 employees of that Corporation necessary to 

19 perform or support the consumer financial 

20 protection functions of the Corporation 

21 that are transferred to the Bureau by this 

22 title; and 

23 (ii) consistent with the number deter24 mined under clause (i), jointly identify em25 ployees of the Corporation for transfer to 


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1 the Bureau, in a manner that the Bureau 

2 and the Board of Directors of the Corpora3 tion, in their sole discretion, determine eq4 uitable. 

5 (B) IDENTIFIED EMPLOYEES TRANS6 FERRED.—All employees of the Corporation 

7 identified under subparagraph (A)(ii) shall be 

8 transferred to the Bureau for employment. 

9 (3) CERTAIN NCUA EMPLOYEES TRANS10 FERRED.— 

11 (A) IDENTIFYING EMPLOYEES FOR TRANS12 FER.—The Bureau and the National Credit 

13 Union Administration Board shall— 

14 (i) jointly determine the number of 

15 employees of the National Credit Union 

16 Administration necessary to perform or 

17 support the consumer financial protection 

18 functions of the National Credit Union Ad19 ministration that are transferred to the 

20 Bureau by this title; and 

21 (ii) consistent with the number deter22 mined under clause (i), jointly identify em23 ployees of the National Credit Union Ad24 ministration for transfer to the Bureau, in 

25 a manner that the Bureau and the NaVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01234 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 tional Credit Union Administration Board, 

2 in their sole discretion, determine equi3 table. 

4 (B) IDENTIFIED EMPLOYEES TRANS5 FERRED.—All employees of the National Credit 

6 Union Administration identified under subpara7 graph (A)(ii) shall be transferred to the Bureau 

8 for employment. 

9 (4) CERTAIN OFFICE OF THE COMPTROLLER OF

10 THE CURRENCY EMPLOYEES TRANSFERRED.— 

11 (A) IDENTIFYING EMPLOYEES FOR TRANS12 FER.—The Bureau and the Comptroller of the 

13 Currency shall— 

14 (i) jointly determine the number of 

15 employees of the Office of the Comptroller 

16 of the Currency necessary to perform or 

17 support the consumer financial protection 

18 functions of the Office of the Comptroller 

19 of the Currency that are transferred to the 

20 Bureau by this title; and 

21 (ii) consistent with the number deter22 mined under clause (i), jointly identify em23 ployees of the Office of the Comptroller of 

24 the Currency for transfer to the Bureau, in 

25 a manner that the Bureau and the Office 


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1 of the Comptroller of the Currency, in 

2 their sole discretion, determine equitable. 

3 (B) IDENTIFIED EMPLOYEES TRANS4 FERRED.—All employees of the Office of the 

5 Comptroller of the Currency identified under 

6 subparagraph (A)(ii) shall be transferred to the 

7 Bureau for employment. 

8 (5) CERTAIN OFFICE OF THRIFT SUPERVISION

9 EMPLOYEES TRANSFERRED.— 

10 (A) IDENTIFYING EMPLOYEES FOR TRANS11 FER.—The Bureau and the Director of the Of12 fice of Thrift Supervision shall— 

13 (i) jointly determine the number of 

14 employees of the Office of Thrift Super15 vision necessary to perform or support the 

16 consumer financial protection functions of 

17 the Office of Thrift Supervision that are 

18 transferred to the Bureau by this title; and 

19 (ii) consistent with the number deter20 mined under clause (i), jointly identify em21 ployees of the Office of Thrift Supervision 

22 for transfer to the Bureau, in a manner 

23 that the Bureau and the Office of Thrift 

24 Supervision, in their sole discretion, deter25 mine equitable. 


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1 (B) IDENTIFIED EMPLOYEES TRANS2 FERRED.—All employees of the Office of Thrift 

3 Supervision identified under subparagraph 

4 (A)(ii) shall be transferred to the Bureau for 

5 employment. 

6 (6) CERTAIN EMPLOYEES OF DEPARTMENT OF

7 HOUSING AND URBAN DEVELOPMENT TRANS8 FERRED.— 

9 (A) IDENTIFYING EMPLOYEES FOR TRANS10 FER.—The Bureau and the Secretary of the 

11 Department of Housing and Urban Develop12 ment shall— 

13 (i) jointly determine the number of 

14 employees of the Department of Housing 

15 and Urban Development necessary to per16 form or support the consumer protection 

17 functions of the Department that are 

18 transferred to the Bureau by this title; and 

19 (ii) consistent with the number deter20 mined under clause (i), jointly identify em21 ployees of the Department of Housing and 

22 Urban Development for transfer to the Bu23 reau in a manner that the Bureau and the 

24 Secretary of the Department of Housing 


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1 and Urban Development, in their sole dis2 cretion, deem equitable. 

3 (B) IDENTIFIED EMPLOYEES TRANS4 FERRED.—All employees of the Department of 

5 Housing and Urban Development identified 

6 under subparagraph (A)(ii) shall be transferred 

7 to the Bureau for employment. 

8 (7) APPOINTMENT AUTHORITY FOR EXCEPTED

9 SERVICE AND SENIOR EXECUTIVE SERVICE TRANS10 FERRED.— 

11 (A) IN GENERAL.—In the case of an em12 ployee occupying a position in the excepted 

13 service or the Senior Executive Service, any ap14 pointment authority established pursuant to law 

15 or regulations of the Office of Personnel Man16 agement for filling such positions shall be 

17 transferred, subject to subparagraph (B). 

18 (B) DECLINING TRANSFERS ALLOWED.— 

19 An agency or entity may decline to make a 

20 transfer of authority under subparagraph (A) 

21 (and the employees appointed pursuant thereto) 

22 to the extent that such authority relates to posi23 tions excepted from the competitive service be24 cause of their confidential, policy-making, pol25 icy-determining, or policy-advocating character, 


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1 and non-career positions in the Senior Execu2 tive Service (within the meaning of section 

3 3132(a)(7) of title 5, United States Code). 

4 (b) TIMING OF TRANSFERS AND POSITION ASSIGN5 MENTS.—Each employee to be transferred under this sec6 tion shall— 

7 (1) be transferred not later than 90 days after 

8 the designated transfer date; and 

9 (2) receive notice of a position assignment not 

10 later than 120 days after the effective date of his or 

11 her transfer. 

12 (c) TRANSFER OF FUNCTION.— 

13 (1) IN GENERAL.—Notwithstanding any other 

14 provision of law, the transfer of employees shall be 

15 deemed a transfer of functions for the purpose of 

16 section 3503 of title 5, United States Code. 

17 (2) PRIORITY OF THIS TITLE.—If any provi18 sions of this title conflict with any protection pro19 vided to transferred employees under section 3503 of 

20 title 5, United States Code, the provisions of this 

21 title shall control. 

22 (d) EQUAL STATUS AND TENURE POSITIONS.— 

23 (1) EMPLOYEES TRANSFERRED FROM FDIC, 

24 FTC, HUD, NCUA, OCC, AND OTS.—Each employee 

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1 poration, the Federal Trade Commission, the Na2 tional Credit Union Administration, the Office of the 

3 Comptroller of the Currency, the Office of Thrift 

4 Supervision, or the Department of Housing and 

5 Urban Development shall be placed in a position at 

6 the Bureau with the same status and tenure as that 

7 employee held on the day before the designated 

8 transfer date. 

9 (2) EMPLOYEES TRANSFERRED FROM THE

10 FEDERAL RESERVE SYSTEM.— 

11 (A) COMPARABILITY.—Each employee 

12 transferred from the Board of Governors or 

13 from a Federal reserve bank shall be placed in 

14 a position with the same status and tenure as 

15 that of an employee transferring to the Bureau 

16 from the Office of the Comptroller of the Cur17 rency who perform similar functions and have 

18 similar periods of service. 

19 (B) SERVICE PERIODS CREDITED.—For 

20 purposes of this paragraph, periods of service 

21 with the Board of Governors or a Federal re22 serve bank shall be credited as periods of serv23 ice with a Federal agency. 

24 (e) ADDITIONAL CERTIFICATION REQUIREMENTS

25 LIMITED.—Examiners transferred to the Bureau are not 


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1 subject to any additional certification requirements before 

2 being placed in a comparable examiner position at the Bu3 reau examining the same types of institutions as they ex4 amined before they were transferred. 

5 (f) PERSONNEL ACTIONS LIMITED.— 

6 (1) 2-YEAR PROTECTION.—Except as provided 

7 in paragraph (2), each transferred employee holding 

8 a permanent position on the day before the des9 ignated transfer date may not, during the 2-year pe10 riod beginning on the designated transfer date, be 

11 involuntarily separated, or involuntarily reassigned 

12 outside his or her locality pay area, as defined by 

13 the Office of Personnel Management. 

14 (2) EXCEPTIONS.—Paragraph (1) does not 

15 limit the right of the Bureau— 

16 (A) to separate an employee for cause or 

17 for unacceptable performance; 

18 (B) to terminate an appointment to a posi19 tion excepted from the competitive service be20 cause of its confidential policy-making, policy21 determining, or policy-advocating character; or 

22 (C) to reassign a supervisory employee out23 side his or her locality pay area, as defined by 

24 the Office of Personnel Management, when the 

25 Bureau determines that the reassignment is 


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1 necessary for the efficient operation of the Bu2 reau. 

3 (g) PAY.— 

4 (1) 2-YEAR PROTECTION.—Except as provided 

5 in paragraph (2), each transferred employee shall, 

6 during the 2-year period beginning on the des7 ignated transfer date, receive pay at a rate equal to 

8 not less than the basic rate of pay (including any ge9 ographic differential) that the employee received 

10 during the pay period immediately preceding the 

11 date of transfer. 

12 (2) EXCEPTIONS.—Paragraph (1) does not 

13 limit the right of the Bureau to reduce the rate of 

14 basic pay of a transferred employee— 

15 (A) for cause; 

16 (B) for unacceptable performance; or 

17 (C) with the consent of the employee. 

18 (3) PROTECTION ONLY WHILE EMPLOYED.— 

19 Paragraph (1) applies to a transferred employee 

20 only while that employee remains employed by the 

21 Bureau. 

22 (4) PAY INCREASES PERMITTED.—Paragraph 

23 (1) does not limit the authority of the Bureau to in24 crease the pay of a transferred employee. 

25 (h) REORGANIZATION.— 


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1 (1) BETWEEN 1ST AND 3RD YEAR.— 

2 (A) IN GENERAL.—If the Bureau deter3 mines, during the 2-year period beginning 1 

4 year after the designated transfer date, that a 

5 reorganization of the staff of the Bureau is re6 quired— 

7 (i) that reorganization shall be 

8 deemed a ‘‘major reorganization’’ for pur9 poses of affording affected employees re10 tirement under section 8336(d)(2) or 

11 8414(b)(1)(B) of title 5, United States 

12 Code; 

13 (ii) before the reorganization occurs, 

14 all employees in the same locality pay area 

15 as defined by the Office of Personnel Man16 agement shall be placed in a uniform posi17 tion classification system; and 

18 (iii) any resulting reduction in force 

19 shall be governed by the provisions of 

20 chapter 35 of title 5, United States Code, 

21 except that the Bureau shall— 

22 (I) establish competitive areas 

23 (as that term is defined in regulations 

24 issued by the Office of Personnel 

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1 imum all employees in the same local2 ity pay area as defined by the Office 

3 of Personnel Management; 

4 (II) establish competitive levels 

5 (as that term is defined in regulations 

6 issued by the Office of Personnel 

7 Management) without regard to 

8 whether the particular employees have 

9 been appointed to positions in the 

10 competitive service or the excepted 

11 service; and 

12 (III) afford employees appointed 

13 to positions in the excepted service 

14 (other than to a position excepted 

15 from the competitive service because 

16 of its confidential policy-making, pol17 icy-determining, or policy-advocating 

18 character) the same assignment rights 

19 to positions within the Bureau as em20 ployees appointed to positions in the 

21 competitive service. 

22 (B) SERVICE CREDIT FOR REDUCTIONS IN

23 FORCE.—For purposes of this paragraph, peri24 ods of service with a Federal home loan bank, 

25 a joint office of the Federal home loan banks, 


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1 the Board of Governors, a Federal reserve 

2 bank, the Federal Deposit Insurance Corpora3 tion, or the National Credit Union Administra4 tion shall be credited as periods of service with 

5 a Federal agency. 

6 (2) AFTER 3RD YEAR.— 

7 (A) IN GENERAL.—If the Bureau deter8 mines, at any time after the 3-year period be9 ginning on the designated transfer date, that a 

10 reorganization of the staff of the Bureau is re11 quired, any resulting reduction in force shall be 

12 governed by the provisions of chapter 35 of title 

13 5, United States Code, except that the Bureau 

14 shall establish competitive levels (as that term 

15 is defined in regulations issued by the Office of 

16 Personnel Management) without regard to 

17 types of appointment held by particular employ18 ees transferred under this section. 

19 (B) SERVICE CREDIT FOR REDUCTIONS IN

20 FORCE.—For purposes of this paragraph, peri21 ods of service with a Federal home loan bank, 

22 a joint office of the Federal home loan banks, 

23 the Board of Governors, a Federal reserve 

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1 tion shall be credited as periods of service with 

2 a Federal agency. 

3 (i) BENEFITS.— 

4 (1) RETIREMENT BENEFITS FOR TRANSFERRED

5 EMPLOYEES.— 

6 (A) IN GENERAL.— 

7 (i) CONTINUATION OF EXISTING RE8 TIREMENT PLAN.—Except as provided in 

9 subparagraph (B), each transferred em10 ployee shall remain enrolled in his or her 

11 existing retirement plan, through any pe12 riod of continuous employment with the 

13 Bureau. 

14 (ii) EMPLOYER CONTRIBUTION.—The 

15 Bureau shall pay any employer contribu16 tions to the existing retirement plan of 

17 each transferred employee, as required 

18 under that plan. 

19 (B) OPTION FOR EMPLOYEES TRANS20 FERRED FROM FEDERAL RESERVE SYSTEM TO

21 BE SUBJECT TO FEDERAL EMPLOYEE RETIRE22 MENT PROGRAM.— 

23 (i) ELECTION.—Any transferred em24 ployee who was enrolled in a Federal Re25 serve System retirement plan on the day 


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1 before his or her transfer to the Bureau 

2 may, during the 1-year period beginning 6 

3 months after the designated transfer date, 

4 elect to be subject to the Federal employee 

5 retirement program. 

6 (ii) EFFECTIVE DATE OF COV7 ERAGE.—For any employee making an 

8 election under clause (i), coverage by the 

9 Federal employee retirement program shall 

10 begin 1 year after the designated transfer 

11 date. 

12 (C) BUREAU PARTICIPATION IN FEDERAL

13 RESERVE SYSTEM RETIREMENT PLAN.— 

14 (i) SEPARATE ACCOUNT IN FEDERAL

15 RESERVE SYSTEM RETIREMENT PLAN ES16 TABLISHED.—Notwithstanding any other 

17 provision of law, and subject to the terms 

18 and conditions of this section, a separate 

19 account in the Federal Reserve System re20 tirement plan shall be established for Bu21 reau employees who do not make the elec22 tion under subparagraph (B). 

23 (ii) FUNDS ATTRIBUTABLE TO TRANS24 FERRED EMPLOYEES REMAINING IN FED25 ERAL RESERVE SYSTEM RETIREMENT


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1 PLAN TRANSFERRED.—The proportionate 

2 share of funds in the Federal Reserve Sys3 tem retirement plan, including the propor4 tionate share of any funding surplus in 

5 that plan, attributable to a transferred em6 ployee who does not make the election 

7 under subparagraph (B), shall be trans8 ferred to the account established under 

9 clause (i). 

10 (iii) EMPLOYER CONTRIBUTIONS DE11 POSITED.—The Bureau shall deposit into 

12 the account established under clause (i) 

13 the employer contributions that the Bu14 reau makes on behalf of employees who do 

15 not make the election under subparagraph 

16 (B). 

17 (iv) ACCOUNT ADMINISTRATION.—The 

18 Bureau shall administer the account estab19 lished under clause (i) as a participating 

20 employer in the Federal Reserve System 

21 retirement plan. 

22 (D) DEFINITIONS.—For purposes of this 

23 paragraph— 

24 (i) the term ‘‘existing retirement 

25 plan’’ means, with respect to any employee 


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1 transferred under this section, the par2 ticular retirement plan (including the Fi3 nancial Institutions Retirement Fund) and 

4 any associated thrift savings plan of the 

5 agency or Federal reserve bank from which 

6 the employee was transferred, in which the 

7 employee was enrolled on the day before 

8 the designated transfer date; and 

9 (ii) the term ‘‘Federal employee re10 tirement program’’ means the retirement 

11 program for Federal employees established 

12 by chapter 84 of title 5, United States 

13 Code. 

14 (2) BENEFITS OTHER THAN RETIREMENT BEN15 EFITS FOR TRANSFERRED EMPLOYEES.— 

16 (A) DURING 1ST YEAR.— 

17 (i) EXISTING PLANS CONTINUE.— 

18 Each transferred employee may, for 1 year 

19 after the designated transfer date, retain 

20 membership in any other employee benefit 

21 program of the agency or bank from which 

22 the employee transferred, including a den23 tal, vision, long term care, or life insurance 

24 program, to which the employee belonged 


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1 on the day before the designated transfer 

2 date. 

3 (ii) EMPLOYER CONTRIBUTION.—The 

4 Bureau shall reimburse the agency or bank 

5 from which an employee was transferred 

6 for any cost incurred by that agency or 

7 bank in continuing to extend coverage in 

8 the benefit program to the employee, as re9 quired under that program or negotiated 

10 agreements. 

11 (B) DENTAL, VISION, OR LIFE INSURANCE

12 AFTER 1ST YEAR.—If, after the 1-year period 

13 beginning on the designated transfer date, the 

14 Bureau decides not to continue participation in 

15 any dental, vision, or life insurance program of 

16 an agency or bank from which an employee 

17 transferred, a transferred employee who is a 

18 member of such a program may, before the de19 cision of the Bureau takes effect, elect to enroll, 

20 without regard to any regularly scheduled open 

21 season, in— 

22 (i) the enhanced dental benefits estab23 lished by chapter 89A of title 5, United 

24 States Code; 


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1 (ii) the enhanced vision benefits estab2 lished by chapter 89B of title 5, United 

3 States Code; or 

4 (iii) the Federal Employees Group 

5 Life Insurance Program established by 

6 chapter 87 of title 5, United States Code, 

7 without regard to any requirement of in8 surability. 

9 (C) LONG TERM CARE INSURANCE AFTER

10 1ST YEAR.—If, after the 1-year period begin11 ning on the designated transfer date, the Bu12 reau decides not to continue participation in 

13 any long term care insurance program of an 

14 agency or bank from which an employee trans15 ferred, a transferred employee who is a member 

16 of such a program may, before the decision of 

17 the Bureau takes effect, elect to apply for cov18 erage under the Federal Long Term Care In19 surance Program established by chapter 90 of 

20 title 5, United States Code, under the under21 writing requirements applicable to a new active 

22 workforce member (as defined in part 875, title 

23 5, Code of Federal Regulations). 

24 (D) EMPLOYEE CONTRIBUTION.—An indi25 vidual enrolled in the Federal Employees 


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1 Health Benefits program shall pay any em2 ployee contribution required by the plan. 

3 (E) ADDITIONAL FUNDING.—The Bureau 

4 shall transfer to the Federal Employees Health 

5 Benefits Fund established under section 8909 

6 of title 5, United States Code, an amount deter7 mined by the Director of the Office of Per8 sonnel Management, after consultation with the 

9 Bureau and the Office of Management and 

10 Budget, to be necessary to reimburse the Fund 

11 for the cost to the Fund of providing benefits 

12 under this paragraph. 

13 (F) CREDIT FOR TIME ENROLLED IN

14 OTHER PLANS.—For employees transferred 

15 under this title, enrollment in a health benefits 

16 plan administered by a transferor agency or a 

17 Federal reserve bank, as the case may be, im18 mediately before enrollment in a health benefits 

19 plan under chapter 89 of title 5, United States 

20 Code, shall be considered as enrollment in a 

21 health benefits plan under that chapter for pur22 poses of section 8905(b)(1)(A) of title 5, United 

23 States Code. 

24 (G) SPECIAL PROVISIONS TO ENSURE CON25 TINUATION OF LIFE INSURANCE BENEFITS.— 


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1 (i) IN GENERAL.—An annuitant (as 

2 defined in section 8901(3) of title 5, 

3 United States Code) who is enrolled in a 

4 life insurance plan administered by a 

5 transferor agency on the day before the 

6 designated transfer date shall be eligible 

7 for coverage by a life insurance plan under 

8 sections 8706(b), 8714a, 8714b, and 

9 8714c of title 5, United States Code, or in 

10 a life insurance plan established by the 

11 Bureau, without regard to any regularly 

12 scheduled open season and requirement of 

13 insurability. 

14 (ii) EMPLOYEE CONTRIBUTION.—An 

15 individual enrolled in a life insurance plan 

16 under this subparagraph shall pay any em17 ployee contribution required by the plan. 

18 (iii) ADDITIONAL FUNDING.—The Bu19 reau shall transfer to the Employees’ Life 

20 Insurance Fund established under section 

21 8714 of title 5, United States Code, an 

22 amount determined by the Director of the 

23 Office of Personnel Management, after 

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1 essary to reimburse the Fund for the cost 

2 to the Fund of providing benefits under 

3 this subparagraph not otherwise paid for 

4 by the employee under clause (ii). 

5 (iv) CREDIT FOR TIME ENROLLED IN

6 OTHER PLANS.—For employees transferred 

7 under this title, enrollment in a life insur8 ance plan administered by a transferor 

9 agency immediately before enrollment in a 

10 life insurance plan under chapter 87 of 

11 title 5, United States Code, shall be con12 sidered as enrollment in a life insurance 

13 plan under that chapter for purposes of 

14 section 8706(b)(1)(A) of title 5, United 

15 States Code. 

16 (3) OPM RULES.—The Office of Personnel 

17 Management shall issue such rules as are necessary 

18 to carry out this subsection. 

19 (j) IMPLEMENTATION OF UNIFORM PAY AND CLASSI20 FICATION SYSTEM.—Not later than 2 years after the des21 ignated transfer date, the Bureau shall implement a uni22 form pay and classification system for all employees trans23 ferred under this title. 

24 (k) EQUITABLE TREATMENT.—In administering the 

25 provisions of this section, the Bureau— 


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1 (1) shall take no action that would unfairly dis2 advantage transferred employees relative to each 

3 other based on their prior employment by the Board 

4 of Governors, the Federal Deposit Insurance Cor5 poration, the Federal Trade Commission, the Na6 tional Credit Union Administration, the Office of the 

7 Comptroller of the Currency, the Office of Thrift 

8 Supervision, a Federal reserve bank, a Federal home 

9 loan bank, or a joint office of the Federal home loan 

10 banks; and 

11 (2) may take such action as is appropriate in 

12 individual cases so that employees transferred under 

13 this section receive equitable treatment, with respect 

14 to the status, tenure, pay, benefits (other than bene15 fits under programs administered by the Office of 

16 Personnel Management), and accrued leave or vaca17 tion time of those employees, for prior periods of 

18 service with any Federal agency, including the 

19 Board of Governors, the Corporation, the Federal 

20 Trade Commission, the National Credit Union Ad21 ministration, the Office of the Comptroller of the 

22 Currency, the Office of Thrift Supervision, a Federal 

23 reserve bank, a Federal home loan bank, or a joint 

24 office of the Federal home loan banks. 


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1 (l) IMPLEMENTATION.—In implementing the provi2 sions of this section, the Bureau shall coordinate with the 

3 Office of Personnel Management and other entities having 

4 expertise in matters related to employment to ensure a 

5 fair and orderly transition for affected employees. 

6 SEC. 1065. INCIDENTAL TRANSFERS. 

7 (a) INCIDENTAL TRANSFERS AUTHORIZED.—The Di8 rector of the Office of Management and Budget, in con9 sultation with the Secretary, shall make such additional 

10 incidental transfers and dispositions of assets and liabil11 ities held, used, arising from, available, or to be made 

12 available, in connection with the functions transferred by 

13 this title, as the Director may determine necessary to ac14 complish the purposes of this title. 

15 (b) SUNSET.—The authority provided in this section 

16 shall terminate 5 years after the date of enactment of this 

17 Act. 

18 SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY. 

19 (a) IN GENERAL.—The Secretary is authorized to 

20 perform the functions of the Bureau under this subtitle 

21 until the Director of the Bureau is confirmed by the Sen22 ate in accordance with section 1011. 

23 (b) INTERIM ADMINISTRATIVE SERVICES BY THE

24 DEPARTMENT OF THE TREASURY.—The Department of 

25 the Treasury may provide administrative services necVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01256 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 essary to support the Bureau before the designated trans2 fer date. 

3 SEC. 1067. TRANSITION OVERSIGHT. 

4 (a) PURPOSE.—The purpose of this section is to en5 sure that the Bureau— 

6 (1) has an orderly and organized startup; 

7 (2) attracts and retains a qualified workforce; 

8 and 

9 (3) establishes comprehensive employee training 

10 and benefits programs. 

11 (b) REPORTING REQUIREMENT.— 

12 (1) IN GENERAL.—The Bureau shall submit an 

13 annual report to the Committee on Banking, Hous14 ing, and Urban Affairs of the Senate and the Com15 mittee on Financial Services of the House of Rep16 resentatives that includes the plans described in 

17 paragraph (2). 

18 (2) PLANS.—The plans described in this para19 graph are as follows: 

20 (A) TRAINING AND WORKFORCE DEVELOP21 MENT PLAN.—The Bureau shall submit a train22 ing and workforce development plan that in23 cludes, to the extent practicable— 


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1 (i) identification of skill and technical 

2 expertise needs and actions taken to meet 

3 those requirements; 

4 (ii) steps taken to foster innovation 

5 and creativity; 

6 (iii) leadership development and suc7 cession planning; and 

8 (iv) effective use of technology by em9 ployees. 

10 (B) WORKPLACE FLEXIBILITIES PLAN.— 

11 The Bureau shall submit a workforce flexibility 

12 plan that includes, to the extent practicable— 

13 (i) telework; 

14 (ii) flexible work schedules; 

15 (iii) phased retirement; 

16 (iv) reemployed annuitants; 

17 (v) part-time work; 

18 (vi) job sharing; 

19 (vii) parental leave benefits and 

20 childcare assistance; 

21 (viii) domestic partner benefits; 

22 (ix) other workplace flexibilities; or 

23 (x) any combination of the items de24 scribed in clauses (i) through (ix). 


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1 (C) RECRUITMENT AND RETENTION

2 PLAN.—The Bureau shall submit a recruitment 

3 and retention plan that includes, to the extent 

4 practicable, provisions relating to— 

5 (i) the steps necessary to target highly 

6 qualified applicant pools with diverse back7 grounds; 

8 (ii) streamlined employment applica9 tion processes; 

10 (iii) the provision of timely notifica11 tion of the status of employment applica12 tions to applicants; and 

13 (iv) the collection of information to 

14 measure indicators of hiring effectiveness. 

15 (c) EXPIRATION.—The reporting requirement under 

16 subsection (b) shall terminate 5 years after the date of 

17 enactment of this Act. 

18 (d) RULE OF CONSTRUCTION.—Nothing in this sec19 tion may be construed to affect— 

20 (1) a collective bargaining agreement, as that 

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

22 United States Code, that is in effect on the date of 

23 enactment of this Act; or 

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

25 title 5, United States Code. 


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1 Subtitle G—Regulatory 

2 Improvements 

3 SEC. 1071. COLLECTION OF DEPOSIT ACCOUNT DATA. 

4 (a) PURPOSE.—The purpose of this section is to pro5 mote awareness and understanding of the access of indi6 viduals and communities to financial services, and to iden7 tify business and community development needs and op8 portunities. 

9 (b) IN GENERAL.— 

10 (1) RECORDS REQUIRED.—For each branch, 

11 automated teller machine at which deposits are ac12 cepted, and other deposit taking service facility with 

13 respect to any financial institution, the financial in14 stitution shall maintain a record of the number and 

15 dollar amounts of the deposit accounts of customers. 

16 (2) GEO-CODED ADDRESSES OF DEPOSITORS.— 

17 Customer addresses shall be geo-coded for the collec18 tion of data regarding the census tracts of the resi19 dences or business locations of customers. 

20 (3) IDENTIFICATION OF DEPOSITOR TYPE.—In 

21 maintaining records on any deposit account under 

22 this section, the financial institution shall record 

23 whether the deposit account is for a residential or 

24 commercial customer. 

25 (4) PUBLIC AVAILABILITY.— 


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1 (A) IN GENERAL.—Each financial institu2 tion shall make publicly available on an annual 

3 basis, from information collected under this sec4 tion— 

5 (i) the address and census tract of 

6 each branch, automated teller machine at 

7 which deposits are accepted, and other de8 posit taking service facility with respect to 

9 the financial institution; 

10 (ii) the type of deposit account, in11 cluding whether the account was a check12 ing or savings account; and 

13 (iii) data on the number and dollar 

14 amount of the accounts, presented by cen15 sus tract location of the residential and 

16 commercial customer. 

17 (B) PROTECTION OF IDENTITY.—In mak18 ing data publicly available, any personally iden19 tifiable data element shall be removed so as to 

20 protect the identities of the commercial and res21 idential customers. 

22 (c) AVAILABILITY OF INFORMATION.— 

23 (1) SUBMISSION TO AGENCIES.—The data re24 quired to be compiled and maintained under this 

25 section by any financial institution shall be subVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01261 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 mitted annually to the Bureau, or to a Federal 

2 banking agency, in accordance with rules prescribed 

3 by the Bureau. 

4 (2) AVAILABILITY OF INFORMATION.—Informa5 tion compiled and maintained under this section 

6 shall be retained for not less than 3 years after the 

7 date of preparation and shall be made available to 

8 the public, upon request, in the form required under 

9 rules prescribed by the Bureau. 

10 (d) BUREAU USE.—The Bureau— 

11 (1) shall use the data on branches and deposit 

12 accounts acquired under this section as part of the 

13 examination of a covered person as part of an exam14 ination under this title; 

15 (2) shall assess the distribution of residential 

16 and commercial accounts at such financial institu17 tion across income and minority level of census 

18 tracts; and 

19 (3) may use the data for any other purpose as 

20 permitted by law. 

21 (e) RULES AND GUIDANCE.—The Bureau shall pre22 scribe such rules and issue guidance as may be necessary 

23 to carry out, enforce, and compile data pursuant to this 

24 section. The Bureau shall prescribe rules regarding the 

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1 eral banking agencies to carry out the purposes of this 

2 section, and shall issue guidance to financial institutions 

3 regarding measures to facilitate compliance with this sec4 tion and the requirements of rules prescribed thereunder. 

5 (f) DEFINITIONS.—For purposes of this section, the 

6 following definitions shall apply: 

7 (1) DEPOSIT ACCOUNT.—The term ‘‘deposit ac8 count’’ includes any checking account, savings ac9 count, credit union share account, and other types of 

10 accounts, as defined by the Bureau. 

11 (2) FINANCIAL INSTITUTION.—The term ‘‘fi12 nancial institution’’— 

13 (A) has the meaning given to the term ‘‘in14 sured depository institution’’ in section 3(c)(2) 

15 of the Federal Deposit Insurance Act; and 

16 (B) includes any credit union. 

17 (g) EFFECTIVE DATE.—This section shall become ef18 fective on the designated transfer date. 

19 SEC. 1072. SMALL BUSINESS DATA COLLECTION. 

20 (a) IN GENERAL.—The Equal Credit Opportunity 

21 Act (15 U.S.C. 1691 et seq.) is amended by inserting after 

22 section 704A the following: 

23 ‘‘SEC. 740B. SMALL BUSINESS LOAN DATA COLLECTION. 

24 ‘‘(a) PURPOSE.—The purpose of this section is to fa25 cilitate enforcement of fair lending laws and enable comVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01263 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 munities, governmental entities, and creditors to identify 

2 business and community development needs and opportu3 nities of women-owned and minority-owned small busi4 nesses. 

5 ‘‘(b) INFORMATION GATHERING.—Subject to the re6 quirements of this section, in the case of any application 

7 to a financial institution for credit for a small business, 

8 the financial institution shall— 

9 ‘‘(1) inquire whether the small business is a 

10 women- or minority-owned small business, without 

11 regard to whether such application is received in 

12 person, by mail, by telephone, by electronic mail or 

13 other form of electronic transmission, or by any 

14 other means, and whether or not such application is 

15 in response to a solicitation by the financial institu16 tion; and 

17 ‘‘(2) maintain a record of the responses to such 

18 inquiry, separate from the application and accom19 panying information. 

20 ‘‘(c) RIGHT TO REFUSE.—Any applicant for credit 

21 may refuse to provide any information requested pursuant 

22 to subsection (b) in connection with any application for 

23 credit. 

24 ‘‘(d) NO ACCESS BY UNDERWRITERS.— 


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1 ‘‘(1) LIMITATION.—Where feasible, no loan un2 derwriter or other officer or employee of a financial 

3 institution, or any affiliate of a financial institution, 

4 involved in making any determination concerning an 

5 application for credit shall have access to any infor6 mation provided by the applicant pursuant to a re7 quest under subsection (b) in connection with such 

8 application. 

9 ‘‘(2) LIMITED ACCESS.—If a financial institu10 tion determines that a loan underwriter or other of11 ficer or employee of a financial institution, or any 

12 affiliate of a financial institution, involved in making 

13 any determination concerning an application for 

14 credit should have access to any information pro15 vided by the applicant pursuant to a request under 

16 subsection (b), the financial institution shall provide 

17 notice to the applicant of the access of the under18 writer to such information, along with notice that 

19 the financial institution may not discriminate on the 

20 basis of such information. 

21 ‘‘(e) FORM AND MANNER OF INFORMATION.— 

22 ‘‘(1) IN GENERAL.—Each financial institution 

23 shall compile and maintain, in accordance with regu24 lations of the Bureau, a record of the information 


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1 provided by any loan applicant pursuant to a request 

2 under subsection (b). 

3 ‘‘(2) ITEMIZATION.—Information compiled and 

4 maintained under paragraph (1) shall be itemized in 

5 order to clearly and conspicuously disclose— 

6 ‘‘(A) the number of the application and the 

7 date on which the application was received; 

8 ‘‘(B) the type and purpose of the loan or 

9 other credit being applied for; 

10 ‘‘(C) the amount of the credit or credit 

11 limit applied for, and the amount of the credit 

12 transaction or the credit limit approved for such 

13 applicant; 

14 ‘‘(D) the type of action taken with respect 

15 to such application, and the date of such action; 

16 ‘‘(E) the census tract in which is located 

17 the principal place of business of the small busi18 ness loan applicant; 

19 ‘‘(F) the gross annual revenue of the busi20 ness in the last fiscal year of the small business 

21 loan applicant preceding the date of the appli22 cation; 

23 ‘‘(G) the race and ethnicity of the principal 

24 owners of the business; and 


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1 ‘‘(H) any additional data that the Bureau 

2 determines would aid in fulfilling the purposes 

3 of this section. 

4 ‘‘(3) NO PERSONALLY IDENTIFIABLE INFORMA5 TION.—In compiling and maintaining any record of 

6 information under this section, a financial institution 

7 may not include in such record the name, specific 

8 address (other than the census tract required under 

9 paragraph (1)(E)), telephone number, electronic 

10 mail address, or any other personally identifiable in11 formation concerning any individual who is, or is 

12 connected with, the small business loan applicant. 

13 ‘‘(4) DISCRETION TO DELETE OR MODIFY PUB14 LICLY AVAILABLE DATA.—The Bureau may, at its 

15 discretion, delete or modify data collected under this 

16 section which is or will be available to the public, if 

17 the Bureau determines that the deletion or modifica18 tion of the data would advance a compelling privacy 

19 interest. 

20 ‘‘(f) AVAILABILITY OF INFORMATION.— 

21 ‘‘(1) SUBMISSION TO BUREAU.—The data re22 quired to be compiled and maintained under this 

23 section by any financial institution shall be sub24 mitted annually to the Bureau. 


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1 ‘‘(2) AVAILABILITY OF INFORMATION.—Infor2 mation compiled and maintained under this section 

3 shall be— 

4 ‘‘(A) retained for not less than 3 years 

5 after the date of preparation; 

6 ‘‘(B) made available to any member of the 

7 public, upon request, in the form required 

8 under regulations prescribed by the Bureau; 

9 ‘‘(C) annually made available to the public 

10 generally by the Bureau, in such form and in 

11 such manner as is determined appropriate by 

12 the Bureau. 

13 ‘‘(3) COMPILATION OF AGGREGATE DATA.—The 

14 Bureau may, at its discretion— 

15 ‘‘(A) compile and aggregate data collected 

16 under this section for its own use; and 

17 ‘‘(B) make public such compilations of ag18 gregate data. 

19 ‘‘(g) BUREAU ACTION.— 

20 ‘‘(1) IN GENERAL.—The Bureau shall prescribe 

21 such rules and issue such guidance as may be nec22 essary to carry out, enforce, and compile data pursu23 ant to this section. 

24 ‘‘(2) EXCEPTIONS.—The Bureau, by rule or 

25 order, may adopt exceptions to any requirement of 


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1 this section and may, conditionally or uncondition2 ally, exempt any financial institution or class of fi3 nancial institutions from the requirements of this 

4 section, as the Bureau deems necessary or appro5 priate to carry out the purposes of this section. 

6 ‘‘(3) GUIDANCE.—The Bureau shall issue guid7 ance designed to facilitate compliance with the re8 quirements of this section, including assisting finan9 cial institutions in working with applicants to deter10 mine whether the applicants are women- or minor11 ity-owned for purposes of this section. 

12 ‘‘(h) DEFINITIONS.—For purposes of this section, the 

13 following definitions shall apply: 

14 ‘‘(1) FINANCIAL INSTITUTION.—The term ‘fi15 nancial institution’ means any partnership, com16 pany, corporation, association (incorporated or unin17 corporated), trust, estate, cooperative organization, 

18 or other entity that engages in any financial activity. 

19 ‘‘(2) MINORITY.—The term ‘minority’ has the 

20 same meaning as in section 1204(c)(3) of the Finan21 cial Institutions Reform, Recovery, and Enforcement 

22 Act of 1989. 

23 ‘‘(3) MINORITY-OWNED SMALL BUSINESS.—The 

24 term ‘minority-owned small business’ means a small 

25 business— 


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1 ‘‘(A) more than 50 percent of the owner2 ship or control of which is held by 1 or more 

3 minority individuals; and 

4 ‘‘(B) more than 50 percent of the net prof5 it or loss of which accrues to 1 or more minor6 ity individuals. 

7 ‘‘(4) SMALL BUSINESS LOAN.—The term ‘small 

8 business loan’ shall be defined by the Bureau, which 

9 may take into account— 

10 ‘‘(A) the gross revenues of the borrower; 

11 ‘‘(B) the total number of employees of the 

12 borrower; 

13 ‘‘(C) the industry in which the borrower 

14 has its primary operations; and 

15 ‘‘(D) the size of the loan. 

16 ‘‘(5) WOMEN-OWNED SMALL BUSINESS.—The 

17 term ‘women-owned small business’ means a busi18 ness— 

19 ‘‘(A) more than 50 percent of the owner20 ship or control of which is held by 1 or more 

21 women; and 

22 ‘‘(B) more than 50 percent of the net prof23 it or loss of which accrues to 1 or more 

24 women.’’. 


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1 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

2 Section 701(b) of the Equal Credit Opportunity Act (15 

3 U.S.C. 1691(b)) is amended— 

4 (1) in paragraph (3), by striking ‘‘or’’ at the 

5 end; 

6 (2) in paragraph (4), by striking the period at 

7 the end and inserting ‘‘; or’’; and 

8 (3) by inserting after paragraph (4), the fol9 lowing: 

10 ‘‘(5) to make an inquiry under section 704B, in 

11 accordance with the requirements of that section.’’. 

12 (c) CLERICAL AMENDMENT.—The table of sections 

13 for title VII of the Consumer Credit Protection Act is 

14 amended by inserting after the item relating to section 

15 704A the following new item: 

‘‘704B. Small business loan data collection.’’. 

16 (d) EFFECTIVE DATE.—This section shall become ef17 fective on the designated transfer date. 

18 SEC. 1073. GAO STUDY ON THE EFFECTIVENESS AND IM19 PACT OF VARIOUS APPRAISAL METHODS. 

20 (a) IN GENERAL.—The Government Accountability 

21 Office shall conduct a study on the effectiveness and im22 pact of various appraisal methods, including the cost ap23 proach, the comparative sales approach, the income ap24 proach, and others that may be available. 

25 (b) STUDY.—Not later than— 


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1 (1) 1 year after the date of enactment of this 

2 Act, the Government Accountability Office shall sub3 mit a study to the Committee on Banking, Housing, 

4 and Urban Affairs of the Senate and the Committee 

5 on Financial Services of the House of Representa6 tives; 

7 (2) 90 days after the date of enactment of this 

8 Act, the Government Accountability Office shall pro9 vide a report on the status of the study and any pre10 liminary findings to the Committee on Banking, 

11 Housing, and Urban Affairs of the Senate and the 

12 Committee on Financial Services of the House of 

13 Representatives. 

14 (c) CONTENT OF STUDY.—The study required by this 

15 section shall include an examination of— 

16 (1) the prevalence, alone or in combination, of 

17 these approaches in purchase-money and refinance 

18 mortgage transactions; 

19 (2) the accuracy of the various approaches in 

20 assessing the property as collateral; 

21 (3) whether and how the approaches contrib22 uted to price speculation in the previous cycle; 

23 (4) the costs to consumers of these approaches; 

24 (5) the disclosure of fees to consumers in the 

25 appraisal process; 


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1 (6) to what extent such approaches may be in2 fluenced by a conflict of interest between the mort3 gage lender and the appraiser and the mechanism by 

4 which the lender selects and compensates the ap5 praiser; and 

6 (7) the suitability of appraisal approaches in 

7 rural versus urban areas. 

8 SEC. 1074. PROHIBITION ON CERTAIN PREPAYMENT PEN9 ALTIES. 

10 (a) IN GENERAL.—Chapter 2 of the Truth in Lend11 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

12 after section 129A (15 U.S.C. 1639a) the following new 

13 section: 

14 ‘‘SEC. 129B. PROHIBITION ON CERTAIN PREPAYMENT PEN15 ALTIES. 

16 ‘‘(a) PROHIBITED ON CERTAIN LOANS.—A residen17 tial mortgage loan that is not a qualified mortgage may 

18 not contain terms under which a consumer is required to 

19 pay a prepayment penalty for paying all or part of the 

20 principal after the loan is consummated. 

21 ‘‘(b) PHASED-OUT PENALTIES ON QUALIFIED MORT22 GAGES.— 

23 ‘‘(1) IN GENERAL.—A qualified mortgage may 

24 not contain terms under which a consumer is re25 quired to pay a prepayment penalty for paying all or 


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1 part of the principal after the loan is consummated 

2 in excess of— 

3 ‘‘(A) during the 1-year period beginning on 

4 the date on which the loan is consummated, an 

5 amount equal to 3 percent of the outstanding 

6 balance on the loan; 

7 ‘‘(B) during the 1-year period beginning 

8 immediately after the end of the period de9 scribed in subparagraph (A), an amount equal 

10 to 2 percent of the outstanding balance on the 

11 loan; and 

12 ‘‘(C) during the 1-year period beginning 

13 immediately after the end of the 1-year period 

14 described in subparagraph (B), an amount 

15 equal to 1 percent of the outstanding balance 

16 on the loan. 

17 ‘‘(2) PROHIBITION.—After the end of the 3- 

18 year period beginning on the date on which the loan 

19 is consummated, no prepayment penalty may be im20 posed on a qualified mortgage. 

21 ‘‘(c) OPTION FOR NO PREPAYMENT PENALTY RE22 QUIRED.—A creditor may not offer a consumer a residen23 tial mortgage loan product that has a prepayment penalty 

24 for paying all or part of the principal after the loan is 

25 consummated as a term of the loan, without offering to 


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1 the consumer a residential mortgage loan product that 

2 does not have a prepayment penalty as a term of the loan. 

3 ‘‘(d) PROHIBITIONS ON EVASIONS, STRUCTURING OF

4 TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 

5 creditor may not take any action in connection with a resi6 dential mortgage loan— 

7 ‘‘(1) to structure a loan transaction as an open 

8 end consumer credit plan or another form of loan for 

9 the purpose and with the intent of evading the provi10 sions of this section; or 

11 ‘‘(2) to divide any loan transaction into sepa12 rate parts for the purpose and with the intent of 

13 evading provisions of this section. 

14 ‘‘(e) PUBLICATION OF AVERAGE PRIME OFFER RATE

15 AND APR THRESHOLDS.—The Board— 

16 ‘‘(1) shall publish, and update at least weekly, 

17 average prime offer rates; 

18 ‘‘(2) may publish multiple rates based on vary19 ing types of mortgage transactions; and 

20 ‘‘(3) shall adjust the thresholds of 1.50 percent21 age points in subsection (g)(3)(A)(v)(I), 2.50 per22 centage points in subsection (g)(3)(A)(v)(II), and 

23 3.50 percentage points in subsection 

24 (g)(3)(A)(v)(III), as necessary to reflect significant 


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1 changes in market conditions and to effectuate the 

2 purposes of this section. 

3 ‘‘(f) REGULATIONS.— 

4 ‘‘(1) IN GENERAL.—The Bureau shall prescribe 

5 regulations to carry out this section. 

6 ‘‘(2) REVISION OF SAFE HARBOR CRITERIA.— 

7 The Bureau may prescribe regulations that revise, 

8 add to, or subtract from the criteria that define a 

9 qualified mortgage, upon a finding that such regula10 tions are necessary or appropriate— 

11 ‘‘(A) to ensure that responsible, affordable 

12 mortgage credit remains available to consumers 

13 in a manner consistent with the purposes of 

14 this section; 

15 ‘‘(B) to effectuate the purposes of this sec16 tion; 

17 ‘‘(C) to prevent circumvention or evasion 

18 thereof; or 

19 ‘‘(D) to facilitate compliance with this sec20 tion. 

21 ‘‘(3) INTERAGENCY HARMONIZATION.— 

22 ‘‘(A) DETERMINATION OF QUALIFYING

23 MORTGAGE TREATMENT.—The agencies and of24 ficials described in subparagraph (B) shall, in 

25 consultation with the Bureau, prescribe rules 


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1 defining the types of loans they insure, guar2 antee, or administer, as the case may be, that 

3 are qualified mortgages for purposes of this sec4 tion, upon a finding that such rules are con5 sistent with the purposes of this section or are 

6 appropriate to prevent circumvention or evasion 

7 thereof or to facilitate compliance with this sec8 tion. 

9 ‘‘(B) AGENCIES AND OFFICIALS.—The 

10 agencies and officials described in this subpara11 graph are— 

12 ‘‘(i) the Secretary of the Department 

13 of Housing and Urban Development, with 

14 regard to mortgages insured under title II 

15 of the National Housing Act (12 U.S.C. 

16 1707 et seq.); 

17 ‘‘(ii) the Secretary of Veterans Af18 fairs, with regard to a loan made or guar19 anteed by the Secretary of Veterans Af20 fairs; 

21 ‘‘(iii) the Secretary of Agriculture, 

22 with regard to loans guaranteed by the 

23 Secretary of Agriculture pursuant to sec24 tion 502 of the Housing Act of 1949 (42 

25 U.S.C. 1472(h)); 


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1 ‘‘(iv) the Federal Housing Finance 

2 Agency, with regard to loans meeting the 

3 conforming loan standards of the Federal 

4 National Mortgage Association or the Fed5 eral Home Loan Mortgage Corporation; 

6 and 

7 ‘‘(v) the Rural Housing Service, with 

8 regard to loans insured by the Rural Hous9 ing Service. 

10 ‘‘(4) IMPLEMENTATION.—Regulations required 

11 or authorized to be prescribed under this sub12 section— 

13 ‘‘(A) shall be prescribed in final form be14 fore the end of the 12-month period beginning 

15 on the date of enactment of this section; and 

16 ‘‘(B) shall take effect not later than 18 

17 months after the date of enactment of this sec18 tion. 

19 ‘‘(g) DEFINITIONS.—For purposes of this section, the 

20 following definitions shall apply: 

21 ‘‘(1) AVERAGE PRIME OFFER RATE.—The term 

22 ‘average prime offer rate’ means an annual percent23 age rate that is derived from average interest rates, 

24 points, and other loan pricing terms currently of25 fered to consumers by a representative sample of 


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1 creditors for mortgage transactions that have low2 risk pricing characteristics. 

3 ‘‘(2) PREPAYMENT PENALTY.—The term ‘pre4 payment penalty’ means any penalty for paying all 

5 or part of the principal on an extension of credit be6 fore the date on which the principal is due, including 

7 a computation of a refund of unearned interest by 

8 a method that is less favorable to the consumer than 

9 the actuarial method, as defined in section 933(d) of 

10 the Housing and Community Development Act of 

11 1992 (15 U.S.C. 1615(d)). 

12 ‘‘(3) QUALIFIED MORTGAGE.—The term ‘quali13 fied mortgage’ means— 

14 ‘‘(A) any residential mortgage loan— 

15 ‘‘(i) that does not have an adjustable 

16 rate; 

17 ‘‘(ii) that does not allow a consumer 

18 to defer repayment of principal or interest, 

19 or is not otherwise deemed a ‘non-tradi20 tional mortgage’ under guidance, 

21 advisories, or regulations prescribed by the 

22 Bureau; 

23 ‘‘(iii) that does not provide for a re24 payment schedule that results in negative 

25 amortization at any time; 


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1 ‘‘(iv) for which the terms are fully 

2 amortizing and which does not result in a 

3 balloon payment, where a ‘balloon pay4 ment’ is a scheduled payment that is more 

5 than twice as large as the average of ear6 lier scheduled payments; 

7 ‘‘(v) which has an annual percentage 

8 rate that does not exceed the average 

9 prime offer rate for a comparable trans10 action, as of the date on which the interest 

11 rate is set— 

12 ‘‘(I) by 1.5 or more percentage 

13 points, in the case of a first lien resi14 dential mortgage loan having an origi15 nal principal obligation amount that is 

16 equal to or less than the amount of 

17 the maximum limitation on the origi18 nal principal obligation of a mortgage 

19 in effect for a residence of the appli20 cable size, as of the date on which 

21 such interest rate is set, pursuant to 

22 the sixth sentence of section 305(a)(2) 

23 of the Federal Home Loan Mortgage 

24 Corporation Act (12 U.S.C. 

25 1454(a)(2)); 


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1 ‘‘(II) by 2.5 or more percentage 

2 points, in the case of a first lien resi3 dential mortgage loan having an origi4 nal principal obligation amount that is 

5 more than the amount of the max6 imum limitation on the original prin7 cipal obligation of a mortgage in ef8 fect for a residence of the applicable 

9 size, as of the date on which such in10 terest rate is set, pursuant to the 

11 sixth sentence of section 305(a)(2) of 

12 the Federal Home Loan Mortgage 

13 Corporation Act (12 U.S.C. 

14 1454(a)(2)); or 

15 ‘‘(III) by 3.5 or more percentage 

16 points, in the case of a subordinate 

17 lien residential mortgage loan; 

18 ‘‘(vi) for which the income and finan19 cial resources relied upon to qualify the ob20 ligors on the loan are verified and docu21 mented; 

22 ‘‘(vii) for which the underwriting proc23 ess is based on a payment schedule that 

24 fully amortizes the loan over the loan term 


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1 and takes into account all applicable taxes, 

2 insurance, and assessments; 

3 ‘‘(viii) that does not cause the total 

4 monthly debts of the consumer, including 

5 amounts under the loan, to exceed a per6 centage established by regulation of the 

7 monthly gross income of the consumer, or 

8 such other maximum percentage of such 

9 income, as may be prescribed by regulation 

10 under subsection (g), which rules shall 

11 take into consideration the income of the 

12 consumer available to pay regular expenses 

13 after payment of all installment and revolv14 ing debt; 

15 ‘‘(ix) for which the total points and 

16 fees payable in connection with the loan do 

17 not exceed 2 percent of the total loan 

18 amount, where the term ‘points and fees’ 

19 means points and fees as defined by Sec20 tion 103(aa)(4) of the Truth in Lending 

21 Act (15 U.S.C. 1602(aa)(4)); and 

22 ‘‘(x) for which the term of the loan 

23 does not exceed 30 years, except as such 

24 term may be extended under subsection 

25 (g); and 


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1 ‘‘(B) any reverse mortgage that is insured 

2 by the Federal Housing Administration or com3 plies with the condition established in subpara4 graph (A)(v). 

5 ‘‘(4) RESIDENTIAL MORTGAGE LOAN.—The 

6 term ‘residential mortgage loan’ means any con7 sumer credit transaction that is secured by a mort8 gage, deed of trust, or other equivalent consensual 

9 security interest on a dwelling or on residential real 

10 property that includes a dwelling, other than a con11 sumer credit transaction under an open end credit 

12 plan or an extension of credit relating to a plan de13 scribed in section 101(53D) of title 11, United 

14 States Code.’’. 

15 (b) CONFORMING AMENDMENTS.—Section 129(c) of 

16 the Truth in Lending Act (15 U.S.C. 1639(c)) is amend17 ed— 

18 (1) by striking paragraph (2); 

19 (2) by striking ‘‘(1) IN GENERAL.—’’; and 

20 (3) by redesignating subparagraphs (A) and 

21 (B) as paragraphs (1) and (2), respectively. 


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1 SEC. 1075. ASSISTANCE FOR ECONOMICALLY VULNERABLE 

2 INDIVIDUALS AND FAMILIES. 

3 (a) HERA AMENDMENTS.—Section 1132 of the 

4 Housing and Economic Recovery Act of 2008 (12 U.S.C. 

5 1701x note) is amended— 

6 (1) in subsection (a), by inserting in each of 

7 paragraphs (1), (2), (3), and (4) ‘‘or economically 

8 vulnerable individuals and families’’ after ‘‘home9 buyers’’ each place that term appears; 

10 (2) in subsection (b)(1), by inserting ‘‘or eco11 nomically vulnerable individuals and families’’ after 

12 ‘‘homebuyers’’; 

13 (3) in subsection (c)(1)— 

14 (A) in subparagraph (A), by striking ‘‘or’’ 

15 at the end; 

16 (B) in subparagraph (B), by striking the 

17 period at the end and inserting ‘‘; or’’; and 

18 (C) by adding at the end the following: 

19 ‘‘(C) a nonprofit corporation that— 

20 ‘‘(i) is exempt from taxation under 

21 section 501(c)(3) of the Internal Revenue 

22 Code of 1986; and 

23 ‘‘(ii) specializes or has expertise in 

24 working with economically vulnerable indi25 viduals and families, but whose primary 


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1 purpose is not provision of credit coun2 seling services.’’; and 

3 (4) in subsection (d)(1), by striking ‘‘not more 

4 than 5’’. 

5 (b) APPLICABILITY.—Amendments made by sub6 section (a) shall not apply to programs authorized by sec7 tion 1132 of the Housing and Economic Recovery Act of 

8 2008 (12 U.S.C. 1701x note) that are funded with appro9 priations prior to fiscal year 2011. 

10 SEC. 1076. REMITTANCE TRANSFERS. 

11 (a) TREATMENT OF REMITTANCE TRANSFERS.—The 

12 Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) 

13 is amended— 

14 (1) in section 902(b) (15 U.S.C. 1693(b)), by 

15 inserting ‘‘and remittance’’ after ‘‘electronic fund’’; 

16 (2) by redesignating sections 919, 920, 921, 

17 and 922 as sections 920, 921, 922, and 923, respec18 tively; and 

19 (3) by inserting after section 918 the following: 

20 ‘‘SEC. 919. REMITTANCE TRANSFERS. 

21 ‘‘(a) DISCLOSURES REQUIRED FOR REMITTANCE

22 TRANSFERS.— 

23 ‘‘(1) IN GENERAL.—Each remittance transfer 

24 provider shall make disclosures as required under 


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1 this section and in accordance with rules prescribed 

2 by the Board. 

3 ‘‘(2) STOREFRONT DISCLOSURES.— 

4 ‘‘(A) IN GENERAL.—At every physical 

5 storefront location owned or controlled by a re6 mittance transfer provider (with respect to re7 mittance transfer activities), the remittance 

8 transfer provider shall prominently post, and 

9 update daily, a notice describing a model trans10 fer for the amounts of $100 and $200 (in 

11 United States dollars) showing the amount of 

12 currency that will be received by the designated 

13 recipient, using the values of the currency into 

14 which the funds will be exchanged for the 3 

15 currencies to which that particular storefront 

16 sends the greatest number of remittance trans17 fer payments, measured irrespective of the 

18 value of such payments. The values shall in19 clude all fees charged by the remittance trans20 fer provider, taken out of the $100 and $200 

21 amounts. 

22 ‘‘(B) ELECTRONIC DISCLOSURE.—Subject 

23 to the rules prescribed by the Board, a remit24 tance transfer provider shall prominently post, 

25 and update daily, a notice describing a model 


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1 transfer, as described in subparagraph (A), on 

2 the Internet site owned or controlled by the re3 mittance transfer provider which senders use to 

4 electronically conduct remittance transfer trans5 actions. 

6 ‘‘(3) SPECIFIC DISCLOSURES.—In addition to 

7 any other disclosures applicable under this title, and 

8 subject to paragraph (4), a remittance transfer pro9 vider shall provide, in writing and in a form that the 

10 sender may keep, to each sender requesting a remit11 tance transfer, as applicable to the transaction— 

12 ‘‘(A) at the time at which the sender re13 quests a remittance transfer to be initiated, and 

14 prior to the sender making any payment in con15 nection with the remittance transfer, a disclo16 sure describing the amount of currency that will 

17 be sent to the designated recipient, using the 

18 values of the currency into which the funds will 

19 be exchanged; and 

20 ‘‘(B) at the time at which the sender 

21 makes payment in connection with the remit22 tance transfer— 

23 ‘‘(i) a receipt showing— 

24 ‘‘(I) the information described in 

25 subparagraph (A); 


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1 ‘‘(II) the promised date of deliv2 ery to the designated recipient; and 

3 ‘‘(III) the name and either the 

4 telephone number or the address of 

5 the designated recipient; and 

6 ‘‘(ii) a statement containing— 

7 ‘‘(I) information about the rights 

8 of the sender under this section re9 garding the resolution of errors; and 

10 ‘‘(II) appropriate contact infor11 mation for— 

12 ‘‘(aa) the remittance trans13 fer provider; and 

14 ‘‘(bb) each State or Federal 

15 agency supervising the remit16 tance transfer provider, including 

17 its State licensing authority or 

18 Federal regulator, as applicable. 

19 ‘‘(4) REQUIREMENTS RELATING TO DISCLO20 SURES.—With respect to each disclosure required to 

21 be provided under paragraph (3), and subject to 

22 paragraph (5), a remittance transfer provider 

23 shall— 

24 ‘‘(A) provide an initial notice and receipt, 

25 as required by subparagraphs (A) and (B) of 


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1 paragraph (3), and an error resolution state2 ment, as required by subsection (c), that clearly 

3 and conspicuously describe the information re4 quired to be disclosed therein; and 

5 ‘‘(B) with respect to any transaction that 

6 a sender conducts electronically, comply with 

7 the Electronic Signatures in Global and Na8 tional Commerce Act (15 U.S.C. 7001 et seq.). 

9 ‘‘(5) EXEMPTION AUTHORITY.—The Board 

10 may, by rule, permit a remittance transfer provider 

11 to satisfy the requirements of— 

12 ‘‘(A) paragraph (3)(A) orally, if the trans13 action is conducted entirely by telephone; 

14 ‘‘(B) paragraph (3)(B), by mailing the 

15 documents required under such subparagraph 

16 to the sender, not later than 1 business day 

17 after the date on which the transaction is con18 ducted, if the transaction is conducted entirely 

19 by telephone; 

20 ‘‘(C) subparagraphs (A) and (B) of para21 graph (3) together in one written disclosure, 

22 but only to the extent that the information pro23 vided in accordance with paragraph (3)(A) is 

24 accurate at the time at which payment is made 


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1 in connection with the subject remittance trans2 fer; 

3 ‘‘(D) paragraph (3)(A), if a sender initi4 ates a transaction to one of those countries dis5 played, in the exact amount of the transfers 

6 displayed pursuant to paragraph (2), if the 

7 Board finds it to be appropriate; and 

8 ‘‘(E) paragraph (3)(A), without compliance 

9 with section 101(c) of the Electronic Signatures 

10 in Global Commerce Act, if a sender initiates 

11 the transaction electronically and the informa12 tion is displayed electronically in a manner that 

13 the sender can keep. 

14 ‘‘(b) FOREIGN LANGUAGE DISCLOSURES.— 

15 ‘‘(1) IN GENERAL.—The disclosures required 

16 under this section shall be made in English and in 

17 each of the same foreign languages principally used 

18 by the remittance transfer provider, or any of its 

19 agents, to advertise, solicit, or market, either orally 

20 or in writing, at that office. 

21 ‘‘(2) ACCOUNTS.—In the case of a sender who 

22 holds a demand deposit, savings deposit, or other 

23 asset account with the remittance transfer provider 

24 (other than an occasional or incidental credit bal25 ance under an open end credit plan, as defined in 


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1 section 103(i) of the Truth in Lending Act), the dis2 closures required under this section shall be made in 

3 the language or languages principally used by the re4 mittance transfer provider to communicate to the 

5 sender with respect to the account. 

6 ‘‘(c) REMITTANCE TRANSFER ERRORS.— 

7 ‘‘(1) ERROR RESOLUTION.— 

8 ‘‘(A) IN GENERAL.—If a remittance trans9 fer provider receives oral or written notice from 

10 the sender within 180 days of the promised 

11 date of delivery that an error occurred with re12 spect to a remittance transfer, including the 

13 amount of currency designated in subsection 

14 (a)(3)(A) that was to be sent to the designated 

15 recipient of the remittance transfer, using the 

16 values of the currency into which the funds 

17 should have been exchanged, but was not made 

18 available to the designated recipient in the for19 eign country, the remittance transfer provider 

20 shall resolve the error pursuant to this sub21 section and investigate the reason for the error. 

22 ‘‘(B) REMEDIES.—Not later than 90 days 

23 after the date of receipt of a notice from the 

24 sender pursuant to subparagraph (A), the reVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01291 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 mittance transfer provider shall, as applicable 

2 to the error and as designated by the sender— 

3 ‘‘(i) refund to the sender the total 

4 amount of funds tendered by the sender in 

5 connection with the remittance transfer 

6 which was not properly transmitted; 

7 ‘‘(ii) make available to the designated 

8 recipient, without additional cost to the 

9 designated recipient or to the sender, the 

10 amount appropriate to resolve the error; 

11 ‘‘(iii) provide such other remedy, as 

12 determined appropriate by rule of the 

13 Board for the protection of senders; or 

14 ‘‘(iv) provide written notice to the 

15 sender that there was no error with an ex16 planation responding to the specific com17 plaint of the sender. 

18 ‘‘(2) RULES.—The Board shall establish, by 

19 rule issued not later than 1 calendar year after the 

20 date of enactment of the Restoring American Finan21 cial Stability Act of 2010, clear and appropriate 

22 standards for remittance transfer providers with re23 spect to error resolution relating to remittance 

24 transfers, to protect senders from such errors. 

25 Standards prescribed under this paragraph shall inVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01292 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 clude appropriate standards regarding record keep2 ing, as required, including documentation— 

3 ‘‘(A) of the complaint of the sender; 

4 ‘‘(B) that the sender provides the remit5 tance transfer provider with respect to the al6 leged error; and 

7 ‘‘(C) of the findings of the remittance 

8 transfer provider regarding the investigation of 

9 the alleged error that the sender brought to 

10 their attention. 

11 ‘‘(d) APPLICABILITY OF THIS TITLE.— 

12 ‘‘(1) IN GENERAL.—A remittance transfer that 

13 is not an electronic fund transfer, as defined in sec14 tion 903, shall not be subject to any of the provi15 sions of sections 905 through 913. A remittance 

16 transfer that is an electronic fund transfer, as de17 fined in section 903, shall be subject to all provisions 

18 of this title, except for section 908, that are other19 wise applicable to electronic fund transfers under 

20 this title. 

21 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

22 this section shall be construed— 

23 ‘‘(A) to affect the application to any trans24 action, to any remittance provider, or to any 

25 other person of any of the provisions of subVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01293 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 chapter II of chapter 53 of title 31, United 

2 States Code, section 21 of the Federal Deposit 

3 Insurance Act (12 U.S.C. 1829b), or chapter 2 

4 of title I of Public Law 91–508 (12 U.S.C. 

5 1951–1959), or any regulations promulgated 

6 thereunder; or 

7 ‘‘(B) to cause any fund transfer that would 

8 not otherwise be treated as such under para9 graph (1) to be treated as an electronic fund 

10 transfer, or as otherwise subject to this title, for 

11 the purposes of any of the provisions referred to 

12 in subparagraph (A) or any regulations promul13 gated thereunder. 

14 ‘‘(e) ACTS OF AGENTS.—A remittance transfer pro15 vider shall be liable for any violation of this section by 

16 any agent, authorized delegate, or person affiliated with 

17 such provider, when such agent, authorized delegate, or 

18 affiliate acts for that remittance transfer provider. 

19 ‘‘(f) DEFINITIONS.—As used in this section— 

20 ‘‘(1) the term ‘designated recipient’ means any 

21 person located in a foreign country and identified by 

22 the sender as the authorized recipient of a remit23 tance transfer to be made by a remittance transfer 

24 provider, except that a designated recipient shall not 


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1 be deemed to be a consumer for purposes of this 

2 Act; 

3 ‘‘(2) the term ‘remittance transfer’ means the 

4 electronic (as defined in section 106(2) of the Elec5 tronic Signatures in Global and National Commerce 

6 Act (15 U.S.C. 7006(2))) transfer of funds re7 quested by a sender located in any State to a des8 ignated recipient that is initiated by a remittance 

9 transfer provider, whether or not the sender holds 

10 an account with the remittance transfer provider or 

11 whether or not the remittance transfer is also an 

12 electronic fund transfer, as defined in section 903; 

13 ‘‘(3) the term ‘remittance transfer provider’ 

14 means any person or financial institution that pro15 vides remittance transfers for a consumer in the nor16 mal course of its business, whether or not the con17 sumer holds an account with such person or finan18 cial institution; and 

19 ‘‘(4) the term ‘sender’ means a consumer who 

20 requests a remittance provider to send a remittance 

21 transfer for the consumer to a designated recipi22 ent.’’. 

23 (b) AUTOMATED CLEARINGHOUSE SYSTEM.— 

24 (1) EXPANSION OF SYSTEM.—The Board of 

25 Governors shall work with the Federal reserve banks 


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1 to expand the use of the automated clearinghouse 

2 system for remittance transfers to foreign countries, 

3 with a focus on countries that receive significant re4 mittance transfers from the United States, based 

5 on— 

6 (A) the number, volume, and size of such 

7 transfers; 

8 (B) the significance of the volume of such 

9 transfers relative to the external financial flows 

10 of the receiving country, including— 

11 (i) the total amount transferred; and 

12 (ii) the total volume of payments 

13 made by United States Government agen14 cies to beneficiaries and retirees living 

15 abroad; 

16 (C) the feasibility of such an expansion; 

17 and 

18 (D) the ability of the Federal Reserve Sys19 tem to establish payment gateways in different 

20 geographic regions and currency zones to re21 ceive remittance transfers and route them 

22 through the payments systems in the destina23 tion countries. 

24 (2) REPORT TO CONGRESS.—Not later than one 

25 calendar year after the date of enactment of this 


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1 Act, and on April 30 biennially thereafter during the 

2 10-year period beginning on that date of enactment, 

3 the Board of Governors shall submit a report to the 

4 Committee on Banking, Housing, and Urban Affairs 

5 of the Senate and the Committee on Financial Serv6 ices of the House of Representatives on the status 

7 of the automated clearinghouse system and its 

8 progress in complying with the requirements of this 

9 subsection. The report shall include an analysis of 

10 adoption rates of International ACH Transactions 

11 rules and formats, the efficacy of increasing adop12 tion rates, and potential recommendations to in13 crease adoption. 

14 (c) EXPANSION OF FINANCIAL INSTITUTION PROVI15 SION OF REMITTANCE TRANSFERS.— 

16 (1) PROVISION OF GUIDELINES TO INSTITU17 TIONS.—Each of the Federal banking agencies and 

18 the National Credit Union Administration shall pro19 vide guidelines to financial institutions under the ju20 risdiction of the agency regarding the offering of 

21 low-cost remittance transfers and no-cost or low-cost 

22 basic consumer accounts, as well as agency services 

23 to remittance transfer providers. 

24 (2) ASSISTANCE TO FINANCIAL LITERACY COM25 MISSION.—As part of its duties as members of the 


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1 Financial Literacy and Education Commission, the 

2 Bureau, the Federal banking agencies, and the Na3 tional Credit Union Administration shall assist the 

4 Financial Literacy and Education Commission in 

5 executing the Strategy for Assuring Financial Em6 powerment (or the ‘‘SAFE Strategy’’), as it relates 

7 to remittances. 

8 (d) FEDERAL CREDIT UNION ACT CONFORMING

9 AMENDMENT.—Paragraph (12) of section 107 of the Fed10 eral Credit Union Act (12 U.S.C. 1757) is amended to 

11 read as follows: 

12 ‘‘(12) in accordance with regulations prescribed 

13 by the Board— 

14 ‘‘(A) to sell, to persons in the field of 

15 membership, negotiable checks (including trav16 elers checks), money orders, and other similar 

17 money transfer instruments (including inter18 national and domestic electronic fund trans19 fers); 

20 ‘‘(B) to provide remittance transfers, as 

21 defined in section 919 of the Electronic Fund 

22 Transfer Act, to persons in the field of member23 ship; and 

24 ‘‘(C) to cash checks and money orders for 

25 persons in the field of membership for a fee;’’. 


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1 Subtitle H—Conforming 

2 Amendments 

3 SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL 

4 ACT. 

5 Effective on the date of enactment of this Act, the 

6 Inspector General Act of 1978 (5 U.S.C. App. 3) is 

7 amended— 

8 (1) in section 8G(a)(2), by inserting ‘‘and the 

9 Bureau of Consumer Financial Protection’’ after 

10 ‘‘Board of Governors of the Federal Reserve Sys11 tem’’; 

12 (2) in section 8G(c), by adding at the end the 

13 following: ‘‘For purposes of implementing this sec14 tion, the Chairman of the Board of Governors of the 

15 Federal Reserve System shall appoint the Inspector 

16 General of the Board of Governors of the Federal 

17 Reserve System and the Bureau of Consumer Finan18 cial Protection. The Inspector General of the Board 

19 of Governors of the Federal Reserve System and the 

20 Bureau of Consumer Financial Protection shall have 

21 all of the authorities and responsibilities provided by 

22 this Act with respect to the Bureau of Consumer Fi23 nancial Protection, as if the Bureau were part of the 

24 Board of Governors of the Federal Reserve Sys25 tem.’’; and 


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1 (3) in section 8G(g)(3), by inserting ‘‘and the 

2 Bureau of Consumer Financial Protection’’ after 

3 ‘‘Board of Governors of the Federal Reserve Sys4 tem’’ the first place that term appears. 

5 SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974. 

6 Effective on the date of enactment of this Act, section 

7 552a of title 5, United States Code, is amended by adding 

8 at the end the following: 

9 ‘‘(w) APPLICABILITY TO BUREAU OF CONSUMER FI10 NANCIAL PROTECTION.—Except as provided in the Con11 sumer Financial Protection Act of 2010, this section shall 

12 apply with respect to the Bureau of Consumer Financial 

13 Protection.’’. 

14 SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORT15 GAGE TRANSACTION PARITY ACT OF 1982. 

16 (a) IN GENERAL.—The Alternative Mortgage Trans17 action Parity Act of 1982 (12 U.S.C. 3801 et seq.) is 

18 amended— 

19 (1) in section 803 (12 U.S.C. 3802(1)), by 

20 striking ‘‘1974’’ and all that follows through ‘‘de21 scribed and defined’’ and inserting the following: 

22 ‘‘1974), in which the interest rate or finance charge 

23 may be adjusted or renegotiated, described and de24 fined’’; and 

25 (2) in section 804 (12 U.S.C. 3803)— 


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1 (A) in subsection (a)— 

2 (i) in each of paragraphs (1), (2), and 

3 (3), by inserting after ‘‘transactions made’’ 

4 each place that term appears ‘‘on or before 

5 the designated transfer date, as deter6 mined under section 1062 of the Consumer 

7 Financial Protection Act of 2010,’’; 

8 (ii) in paragraph (2), by striking 

9 ‘‘and’’ at the end; 

10 (iii) in paragraph (3), by striking the 

11 period at the end and inserting ‘‘; and’’; 

12 and 

13 (iv) by adding at the end the following 

14 new paragraph: 

15 ‘‘(4) with respect to transactions made after the 

16 designated transfer date, only in accordance with 

17 regulations governing alternative mortgage trans18 actions, as issued by the Bureau of Consumer Fi19 nancial Protection for federally chartered housing 

20 creditors, in accordance with the rulemaking author21 ity granted to the Bureau of Consumer Financial 

22 Protection with regard to federally chartered hous23 ing creditors under provisions of law other than this 

24 section.’’; 


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1 (B) by striking subsection (c) and insert2 ing the following: 

3 ‘‘(c) PREEMPTION OF STATE LAW.—An alternative 

4 mortgage transaction may be made by a housing creditor 

5 in accordance with this section, notwithstanding any State 

6 constitution, law, or regulation that prohibits an alter7 native mortgage transaction. For purposes of this sub8 section, a State constitution, law, or regulation that pro9 hibits an alternative mortgage transaction does not in10 clude any State constitution, law, or regulation that regu11 lates mortgage transactions generally, including any re12 striction on prepayment penalties or late charges.’’; and 

13 (C) by adding at the end the following: 

14 ‘‘(d) BUREAU ACTIONS.—The Bureau of Consumer 

15 Financial Protection shall— 

16 ‘‘(1) review the regulations identified by the 

17 Comptroller of the Currency and the National Credit 

18 Union Administration, (as those rules exist on the 

19 designated transfer date), as applicable under para20 graphs (1) through (3) of subsection (a); 

21 ‘‘(2) determine whether such regulations are 

22 fair and not deceptive and otherwise meet the objec23 tives of the Consumer Financial Protection Act of 

24 2010; and 


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1 ‘‘(3) promulgate regulations under subsection 

2 (a)(4) after the designated transfer date. 

3 ‘‘(e) DESIGNATED TRANSFER DATE.—As used in 

4 this section, the term ‘designated transfer date’ means the 

5 date determined under section 1062 of the Consumer Fi6 nancial Protection Act of 2010.’’. 

7 (b) EFFECTIVE DATE.—This section and the amend8 ments made by this section shall become effective on the 

9 designated transfer date. 

10 (c) RULE OF CONSTRUCTION.—The amendments 

11 made by subsection (a) shall not affect any transaction 

12 covered by the Alternative Mortgage Transaction Parity 

13 Act of l982 (12 U.S.C. 3801 et seq.) and entered into on 

14 or before the designated transfer date. 

15 SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND 

16 TRANSFER ACT. 

17 The Electronic Fund Transfer Act (15 U.S.C. 1693 

18 et seq.) is amended— 

19 (1) by striking ‘‘Board’’ each place that term 

20 appears and inserting ‘‘Bureau’’, except in section 

21 918 (as so designated by the Credit Card Act of 

22 2009) (15 U.S.C. 1693o); 

23 (2) in section 903 (15 U.S.C. 1693a), by strik24 ing paragraph (3) and inserting the following: 


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1 ‘‘(3) the term ‘Bureau’ means the Bureau of 

2 Consumer Financial Protection;’’; 

3 (3) in section 916(d) (as so designated by sec4 tion 401 of the Credit CARD Act of 2009) (15 

5 U.S.C. 1693m)— 

6 (A) by striking ‘‘FEDERAL RESERVE SYS7 TEM’’ and inserting ‘‘BUREAU OF CONSUMER

8 FINANCIAL PROTECTION’’; and 

9 (B) by striking ‘‘Federal Reserve System’’ 

10 and inserting ‘‘Bureau of Consumer Financial 

11 Protection’’; and 

12 (4) in section 918 (as so designated by the 

13 Credit CARD Act of 2009) (15 U.S.C. 1693o)— 

14 (A) in subsection (a)— 

15 (i) by striking ‘‘Compliance’’ and in16 serting ‘‘Except as otherwise provided by 

17 subtitle B of the Consumer Financial Pro18 tection Act of 2010, compliance’’; and 

19 (ii) by striking paragraph (2) and in20 serting the following: 

21 ‘‘(2) subtitle E of the Consumer Financial Pro22 tection Act of 2010, by the Bureau;’’; and 

23 (B) by striking subsection (c) and insert24 ing the following: 


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1 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

2 FEDERAL TRADE COMMISSION.—Except to the extent 

3 that enforcement of the requirements imposed under this 

4 title is specifically committed to some other Government 

5 agency under subsection (a), and subject to subtitle B of 

6 the Consumer Financial Protection Act of 2010, the Fed7 eral Trade Commission shall enforce such requirements. 

8 For the purpose of the exercise by the Federal Trade 

9 Commission of its functions and powers under the Federal 

10 Trade Commission Act, a violation of any requirement im11 posed under this title shall be deemed a violation of a re12 quirement imposed under that Act. All of the functions 

13 and powers of the Federal Trade Commission under the 

14 Federal Trade Commission Act are available to the Fed15 eral Trade Commission to enforce compliance by any per16 son subject to the jurisdiction of the Federal Trade Com17 mission with the requirements imposed under this title, 

18 irrespective of whether that person is engaged in com19 merce or meets any other jurisdictional tests under the 

20 Federal Trade Commission Act.’’. 

21 SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPOR22 TUNITY ACT. 

23 The Equal Credit Opportunity Act (15 U.S.C. 1691 

24 et seq.) is amended— 


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1 (1) by striking ‘‘Board’’ each place that term 

2 appears and inserting ‘‘Bureau’’; 

3 (2) in section 702 (15 U.S.C. 1691a), by strik4 ing subsection (c) and inserting the following: 

5 ‘‘(c) The term ‘Bureau’ means the Bureau of Con6 sumer Financial Protection.’’; 

7 (3) in section 703 (15 U.S.C. 1691b)— 

8 (A) by striking the section heading and in9 serting the following: 

10 ‘‘SEC. 703. PROMULGATION OF REGULATIONS BY THE BU11 REAU.’’; 

12 (B) by striking ‘‘(a) REGULATIONS.—’’; 

13 (C) by striking subsection (b); 

14 (D) by redesignating paragraphs (1) 

15 through (5) as subsections (a) through (e), re16 spectively; and 

17 (E) in subsection (c), as so redesignated, 

18 by striking ‘‘paragraph (2)’’ and inserting ‘‘sub19 section (b)’’; 

20 (4) in section 704 (15 U.S.C. 1691c)— 

21 (A) in subsection (a)— 

22 (i) by striking ‘‘Compliance’’ and in23 serting ‘‘Except as otherwise provided by 

24 subtitle B of the Consumer Protection Fi25 nancial Protection Act of 2010’’; and 


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1 (ii) by striking paragraph (2) and in2 serting the following: 

3 ‘‘(2) Subtitle E of the Consumer Financial Pro4 tection Act of 2010, by the Bureau.’’; 

5 (B) by striking subsection (c) and insert6 ing the following: 

7 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF FED8 ERAL TRADE COMMISSION.—Except to the extent that en9 forcement of the requirements imposed under this title is 

10 specifically committed to some other Government agency 

11 under subsection (a), and subject to subtitle B of the Con12 sumer Financial Protection Act of 2010, the Federal 

13 Trade Commission shall enforce such requirements. For 

14 the purpose of the exercise by the Federal Trade Commis15 sion of its functions and powers under the Federal Trade 

16 Commission Act (15 U.S.C. 41 et seq.), a violation of any 

17 requirement imposed under this subchapter shall be 

18 deemed a violation of a requirement imposed under that 

19 Act. All of the functions and powers of the Federal Trade 

20 Commission under the Federal Trade Commission Act are 

21 available to the Federal Trade Commission to enforce 

22 compliance by any person with the requirements imposed 

23 under this title, irrespective of whether that person is en24 gaged in commerce or meets any other jurisdictional tests 

25 under the Federal Trade Commission Act, including the 


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1 power to enforce any rule prescribed by the Bureau under 

2 this title in the same manner as if the violation had been 

3 a violation of a Federal Trade Commission trade regula4 tion rule.’’; and 

5 (C) in subsection (d), by striking ‘‘Board’’ 

6 and inserting ‘‘Bureau’’; and 

7 (5) in section 706(e) (15 U.S.C. 1691e(e))— 

8 (A) in the subsection heading— 

9 (i) by striking ‘‘BOARD’’ each place 

10 that term appears and inserting ‘‘BU11 REAU’’; and 

12 (ii) by striking ‘‘FEDERAL RESERVE

13 SYSTEM’’ and inserting ‘‘BUREAU OF CON14 SUMER FINANCIAL PROTECTION’’; and 

15 (B) by striking ‘‘Federal Reserve System’’ 

16 and inserting ‘‘Bureau of Consumer Financial 

17 Protection’’. 

18 SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS 

19 AVAILABILITY ACT. 

20 (a) AMENDMENT TO SECTION 603.—Section 

21 603(d)(1) of the Expedited Funds Availability Act (12 

22 U.S.C. 4002) is amended by inserting after ‘‘Board’’ the 

23 following ‘‘, jointly with the Director of the Bureau of 

24 Consumer Financial Protection,’’. 


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1 (b) AMENDMENTS TO SECTION 604.—Section 604 of 

2 the Expedited Funds Availability Act (12 U.S.C. 4003) 

3 is amended— 

4 (1) by inserting after ‘‘Board’’ each place that 

5 term appears, other than in subsection (f), the fol6 lowing: ‘‘, jointly with the Director of the Bureau of 

7 Consumer Financial Protection,’’; and 

8 (2) in subsection (f), by striking ‘‘Board.’’ each 

9 place that term appears and inserting the following: 

10 ‘‘Board, jointly with the Director of the Bureau of 

11 Consumer Financial Protection.’’. 

12 (c) AMENDMENTS TO SECTION 605.—Section 605 of 

13 the Expedited Funds Availability Act (12 U.S.C. 4004) 

14 is amended— 

15 (1) by inserting after ‘‘Board’’ each place that 

16 term appears, other than in the heading for section 

17 605(f)(1), the following: ‘‘, jointly with the Director 

18 of the Bureau of Consumer Financial Protection,’’; 

19 and 

20 (2) in subsection (f)(1), in the paragraph head21 ing, by inserting ‘‘AND BUREAU’’ after ‘‘BOARD’’. 

22 (d) AMENDMENTS TO SECTION 609.—Section 609 of 

23 the Expedited Funds Availability Act (12 U.S.C. 4008) 

24 is amended: 


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1 (1) in subsection (a), by inserting after 

2 ‘‘Board’’ the following ‘‘, jointly with the Director of 

3 the Bureau of Consumer Financial Protection,’’; and 

4 (2) by striking subsection (e) and inserting the 

5 following: 

6 ‘‘(e) CONSULTATIONS.—In prescribing regulations 

7 under subsections (a) and (b), the Board and the Director 

8 of the Bureau of Consumer Financial Protection, in the 

9 case of subsection (a), and the Board, in the case of sub10 section (b), shall consult with the Comptroller of the Cur11 rency, the Board of Directors of the Federal Deposit In12 surance Corporation, and the National Credit Union Ad13 ministration Board.’’. 

14 (e) EXPEDITED FUNDS AVAILABILITY IMPROVE15 MENTS.—Section 603 of the Expedited Funds Availability 

16 Act (12 U.S.C. 4002) is amended— 

17 (1) in subsection (a)(2)(D), by striking ‘‘$100’’ 

18 and inserting ‘‘$200’’; and 

19 (2) in subsection (b)(3)(C), in the subpara20 graph heading, by striking ‘‘$100’’ and inserting 

21 ‘‘$200’’; and 

22 (3) in subsection (c)(1)(B)(iii), in the clause 

23 heading, by striking ‘‘$100’’ and inserting ‘‘$200’’. 

24 (f) REGULAR ADJUSTMENTS FOR INFLATION.—Sec25 tion 607 of the Expedited Funds Availability Act (12 


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1 U.S.C. 4006) is amended by adding at the end the fol2 lowing: 

3 ‘‘(f) ADJUSTMENTS TO DOLLAR AMOUNTS FOR IN4 FLATION.—The dollar amounts under this title shall be 

5 adjusted every 5 years after December 31, 2011, by the 

6 annual percentage increase in the Consumer Price Index 

7 for Urban Wage Earners and Clerical Workers, as pub8 lished by the Bureau of Labor Statistics, rounded to the 

9 nearest multiple of $25.’’. 

10 SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING 

11 ACT. 

12 The Fair Credit Billing Act (15 U.S.C. 1666–1666j) 

13 is amended by striking ‘‘Board’’ each place that term ap14 pears and inserting ‘‘Bureau’’. 

15 SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING 

16 ACT AND THE FAIR AND ACCURATE CREDIT 

17 TRANSACTIONS ACT. 

18 (a) FAIR CREDIT REPORTING ACT.—The Fair Credit 

19 Reporting Act (15 U.S.C. 1681 et seq.) is amended— 

20 (1) in section 603 (15 U.S.C. 1681a)— 

21 (A) by redesignating subsections (w) and 

22 (x) as subsections (x) and (y), respectively; and 

23 (B) by inserting after subsection (v) the 

24 following: 


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1 ‘‘(w) The term ‘Bureau’ means the Bureau of Con2 sumer Financial Protection.’’; and 

3 (2) except as otherwise specifically provided in 

4 this subsection— 

5 (A) by striking ‘‘Federal Trade Commis6 sion’’ each place that term appears and insert7 ing ‘‘Bureau’’; 

8 (B) by striking ‘‘FTC’’ each place that 

9 term appears and inserting ‘‘Bureau’’; 

10 (C) by striking ‘‘the Commission’’ each 

11 place that term appears and inserting ‘‘the Bu12 reau’’; and 

13 (D) by striking ‘‘The Federal banking 

14 agencies, the National Credit Union Adminis15 tration, and the Commission shall jointly’’ each 

16 place that term appears and inserting ‘‘The Bu17 reau shall’’; 

18 (3) in section 603(k)(2) (15 U.S.C. 

19 1681a(k)(2)), by striking ‘‘Board of Governors of 

20 the Federal Reserve System’’ and inserting ‘‘Bu21 reau’’; 

22 (4) in section 604(g) (15 U.S.C. 1681b(g))— 

23 (A) in paragraph (3), by striking subpara24 graph (C) and inserting the following: 


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1 ‘‘(C) as otherwise determined to be nec2 essary and appropriate, by regulation or order, 

3 by the Bureau (consistent with the enforcement 

4 authorities prescribed under section 621(b)), or 

5 the applicable State insurance authority (with 

6 respect to any person engaged in providing in7 surance or annuities).’’; 

8 (B) by striking paragraph (5) and insert9 ing the following: 

10 ‘‘(5) REGULATIONS AND EFFECTIVE DATE FOR

11 PARAGRAPH (2).— 

12 ‘‘(A) REGULATIONS REQUIRED.—The Bu13 reau may, after notice and opportunity for com14 ment, prescribe regulations that permit trans15 actions under paragraph (2) that are deter16 mined to be necessary and appropriate to pro17 tect legitimate operational, transactional, risk, 

18 consumer, and other needs (and which shall in19 clude permitting actions necessary for adminis20 trative verification purposes), consistent with 

21 the intent of paragraph (2) to restrict the use 

22 of medical information for inappropriate pur23 poses.’’; and 

24 (C) by striking paragraph (6); 


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1 (5) in section 611(e)(2) (15 U.S.C. 1681i(e)), 

2 by striking paragraph (2) and inserting the fol3 lowing: 

4 ‘‘(2) EXCLUSION.—Complaints received or ob5 tained by the Bureau pursuant to its investigative 

6 authority under the Consumer Financial Protection 

7 Act of 2010 shall not be subject to paragraph (1).’’; 

8 (6) in section 615(h)(6) (15 U.S.C. 

9 1681m(h)(6)), by striking subparagraph (A) and in10 serting the following: 

11 ‘‘(A) RULES REQUIRED.—The Bureau 

12 shall prescribe rules to carry out this sub13 section.’’; 

14 (7) in section 621 (15 U.S.C. 1681s)— 

15 (A) by striking subsection (a) and insert16 ing the following: 

17 ‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMIS18 SION.— 

19 ‘‘(1) IN GENERAL.—Except as otherwise pro20 vided by subtitle B of the Consumer Financial Pro21 tection Act of 2010, compliance with the require22 ments imposed under this title shall be enforced 

23 under the Federal Trade Commission Act (15 

24 U.S.C. 41 et seq.) by the Federal Trade Commis25 sion, with respect to consumer reporting agencies 


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1 and all other persons subject thereto, except to the 

2 extent that enforcement of the requirements imposed 

3 under this title is specifically committed to some 

4 other Government agency under subsection (b). For 

5 the purpose of the exercise by the Federal Trade 

6 Commission of its functions and powers under the 

7 Federal Trade Commission Act, a violation of any 

8 requirement or prohibition imposed under this title 

9 shall constitute an unfair or deceptive act or practice 

10 in commerce, in violation of section 5(a) of the Fed11 eral Trade Commission Act (15 U.S.C. 45(a)), and 

12 shall be subject to enforcement by the Federal Trade 

13 Commission under section 5(b) of that Act with re14 spect to any consumer reporting agency or person 

15 that is subject to enforcement by the Federal Trade 

16 Commission pursuant to this subsection, irrespective 

17 of whether that person is engaged in commerce or 

18 meets any other jurisdictional tests under the Fed19 eral Trade Commission Act. The Federal Trade 

20 Commission shall have such procedural, investiga21 tive, and enforcement powers (except as otherwise 

22 provided by subtitle B of the Consumer Financial 

23 Protection Act of 2010), including the power to 

24 issue procedural rules in enforcing compliance with 

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1 quire the filing of reports, the production of docu2 ments, and the appearance of witnesses, as though 

3 the applicable terms and conditions of the Federal 

4 Trade Commission Act were part of this title. Any 

5 person violating any of the provisions of this title 

6 shall be subject to the penalties and entitled to the 

7 privileges and immunities provided in the Federal 

8 Trade Commission Act as though the applicable 

9 terms and provisions of such Act are part of this 

10 title. 

11 ‘‘(2) PENALTIES.— 

12 ‘‘(A) KNOWING VIOLATIONS.—Except as 

13 otherwise provided by subtitle B of the Con14 sumer Financial Protection Act of 2010, in the 

15 event of a knowing violation, which constitutes 

16 a pattern or practice of violations of this title, 

17 the Federal Trade Commission may commence 

18 a civil action to recover a civil penalty in a dis19 trict court of the United States against any 

20 person that violates this title. In such action, 

21 such person shall be liable for a civil penalty of 

22 not more than $2,500 per violation. 

23 ‘‘(B) DETERMINING PENALTY AMOUNT.— 

24 In determining the amount of a civil penalty 

25 under subparagraph (A), the court shall take 


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1 into account the degree of culpability, any his2 tory of such prior conduct, ability to pay, effect 

3 on ability to continue to do business, and such 

4 other matters as justice may require. 

5 ‘‘(C) LIMITATION.—Notwithstanding para6 graph (2), a court may not impose any civil 

7 penalty on a person for a violation of section 

8 623(a)(1), unless the person has been enjoined 

9 from committing the violation, or ordered not to 

10 commit the violation, in an action or proceeding 

11 brought by or on behalf of the Federal Trade 

12 Commission, and has violated the injunction or 

13 order, and the court may not impose any civil 

14 penalty for any violation occurring before the 

15 date of the violation of the injunction or 

16 order.’’; 

17 (8) by striking subsection (b) and inserting the 

18 following: 

19 ‘‘(b) ENFORCEMENT BY OTHER AGENCIES.— 

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided by subtitle B of the Consumer Financial Pro22 tection Act of 2010, compliance with the require23 ments imposed under this title with respect to con24 sumer reporting agencies, persons who use consumer 

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1 formation to such agencies, and users of information 

2 that are subject to section 615(d) shall be enforced 

3 under— 

4 ‘‘(A) section 8 of the Federal Deposit In5 surance Act (12 U.S.C. 1818), in the case of— 

6 ‘‘(i) any national bank, and any Fed7 eral branch or Federal agency of a foreign 

8 bank, by the Office of the Comptroller of 

9 the Currency; 

10 ‘‘(ii) any member bank of the Federal 

11 Reserve System (other than a national 

12 bank), a branch or agency of a foreign 

13 bank (other than a Federal branch, Fed14 eral agency, or insured State branch of a 

15 foreign bank), a commercial lending com16 pany owned or controlled by a foreign 

17 bank, and any organization operating 

18 under section 25 or 25A of the Federal 

19 Reserve Act, by the Board of Governors of 

20 the Federal Reserve System; and 

21 ‘‘(iii) any bank insured by the Federal 

22 Deposit Insurance Corporation (other than 

23 a member of the Federal Reserve System) 

24 and any insured State branch of a foreign 


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1 bank, by the Board of Directors of the 

2 Federal Deposit Insurance Corporation; 

3 ‘‘(B) subtitle E of the Consumer Financial 

4 Protection Act of 2010, by the Bureau; 

5 ‘‘(C) the Federal Credit Union Act (12 

6 U.S.C. 1751 et seq.), by the Administrator of 

7 the National Credit Union Administration with 

8 respect to any Federal credit union; 

9 ‘‘(D) subtitle IV of title 49, United States 

10 Code, by the Secretary of Transportation, with 

11 respect to all carriers subject to the jurisdiction 

12 of the Surface Transportation Board; 

13 ‘‘(E) the Federal Aviation Act of 1958 (49 

14 U.S.C. App. 1301 et seq.), by the Secretary of 

15 Transportation, with respect to any air carrier 

16 or foreign air carrier subject to that Act; 

17 ‘‘(F) the Packers and Stockyards Act, 

18 1921 (7 U.S.C. 181 et seq.) (except as provided 

19 in section 406 of that Act), by the Secretary of 

20 Agriculture, with respect to any activities sub21 ject to that Act; 

22 ‘‘(G) the Commodity Exchange Act, with 

23 respect to a person subject to the jurisdiction of 

24 the Commodity Futures Trading Commission; 

25 and 


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1 ‘‘(H) the Federal securities laws, and any 

2 other laws that are subject to the jurisdiction of 

3 the Securities and Exchange Commission, with 

4 respect to a person that is subject to the juris5 diction of the Securities and Exchange Commis6 sion. 

7 ‘‘(2) INCORPORATED DEFINITIONS.—The terms 

8 used in paragraph (1) that are not defined in this 

9 title or otherwise defined in section 3(s) of the Fed10 eral Deposit Insurance Act (12 U.S.C. 1813(s)) have 

11 the same meanings as in section 1(b) of the Inter12 national Banking Act of 1978 (12 U.S.C. 3101).’’; 

13 (9) by striking subsection (e) and inserting the 

14 following: 

15 ‘‘(e) REGULATORY AUTHORITY.—The Bureau shall 

16 prescribe such regulations as are necessary to carry out 

17 the purposes of this Act. The regulations prescribed by 

18 the Bureau under this subsection shall apply to any person 

19 that is subject to this Act, notwithstanding the enforce20 ment authorities granted to other agencies under this sec21 tion.’’; and 

22 (10) in section 623 (15 U.S.C. 1681s–2)— 

23 (A) in subsection (a)(7), by striking sub24 paragraph (D) and inserting the following: 

25 ‘‘(D) MODEL DISCLOSURE.— 


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1 ‘‘(i) DUTY OF BUREAU.—The Bureau 

2 shall prescribe a brief model disclosure 

3 that a financial institution may use to 

4 comply with subparagraph (A), which shall 

5 not exceed 30 words. 

6 ‘‘(ii) USE OF MODEL NOT RE7 QUIRED.—No provision of this paragraph 

8 may be construed to require a financial in9 stitution to use any such model form pre10 scribed by the Bureau. 

11 ‘‘(iii) COMPLIANCE USING MODEL.—A 

12 financial institution shall be deemed to be 

13 in compliance with subparagraph (A) if the 

14 financial institution uses any model form 

15 prescribed by the Bureau under this sub16 paragraph, or the financial institution uses 

17 any such model form and rearranges its 

18 format.’’; and 

19 (B) by striking subsection (e) and insert20 ing the following: 

21 ‘‘(e) ACCURACY GUIDELINES AND REGULATIONS RE22 QUIRED.— 

23 ‘‘(1) GUIDELINES.—The Bureau shall, with re24 spect to persons or entities that are subject to the 


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1 enforcement authority of the Bureau under section 

2 621— 

3 ‘‘(A) establish and maintain guidelines for 

4 use by each person that furnishes information 

5 to a consumer reporting agency regarding the 

6 accuracy and integrity of the information relat7 ing to consumers that such entities furnish to 

8 consumer reporting agencies, and update such 

9 guidelines as often as necessary; and 

10 ‘‘(B) prescribe regulations requiring each 

11 person that furnishes information to a con12 sumer reporting agency to establish reasonable 

13 policies and procedures for implementing the 

14 guidelines established pursuant to subpara15 graph (A). 

16 ‘‘(2) CRITERIA.—In developing the guidelines 

17 required by paragraph (1)(A), the Bureau shall— 

18 ‘‘(A) identify patterns, practices, and spe19 cific forms of activity that can compromise the 

20 accuracy and integrity of information furnished 

21 to consumer reporting agencies; 

22 ‘‘(B) review the methods (including techno23 logical means) used to furnish information re24 lating to consumers to consumer reporting 

25 agencies; 


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1 ‘‘(C) determine whether persons that fur2 nish information to consumer reporting agen3 cies maintain and enforce policies to ensure the 

4 accuracy and integrity of information furnished 

5 to consumer reporting agencies; and 

6 ‘‘(D) examine the policies and processes 

7 that persons that furnish information to con8 sumer reporting agencies employ to conduct re9 investigations and correct inaccurate informa10 tion relating to consumers that has been fur11 nished to consumer reporting agencies.’’. 

12 (b) FAIR AND ACCURATE CREDIT TRANSACTIONS

13 ACT OF 2003.—Section 214(b)(1) of the Fair and Accu14 rate Credit Transactions Act of 2003 (15 U.S.C. 1681s– 

15 3 note) is amended by striking paragraph (1) and insert16 ing the following: 

17 ‘‘(1) IN GENERAL.—Regulations to carry out 

18 section 624 of the Fair Credit Reporting Act (15 

19 U.S.C. 1681s–3), shall be prescribed, as described in 

20 paragraph (2), by— 

21 ‘‘(A) the Commodity Futures Trading 

22 Commission, with respect to entities subject to 

23 its enforcement authorities; 


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1 ‘‘(B) the Securities and Exchange Commis2 sion, with respect to entities subject to its en3 forcement authorities; and 

4 ‘‘(C) the Bureau, with respect to other en5 tities subject to this Act.’’. 

6 SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION 

7 PRACTICES ACT. 

8 The Fair Debt Collection Practices Act (15 U.S.C. 

9 1692 et seq.) is amended— 

10 (1) by striking ‘‘Commission’’ each place that 

11 term appears and inserting ‘‘Bureau’’; 

12 (2) in section 803 (15 U.S.C. 1692a)— 

13 (A) by striking paragraph (1) and insert14 ing the following: 

15 ‘‘(1) The term ‘Bureau’ means the Bureau of 

16 Consumer Financial Protection.’’; 

17 (3) in section 814 (15 U.S.C. 1692l)— 

18 (A) by striking subsection (a) and insert19 ing the following: 

20 ‘‘(a) FEDERAL TRADE COMMISSION.—Except as oth21 erwise provided by subtitle B of the Consumer Financial 

22 Protection Act of 2010, compliance with this title shall 

23 be enforced by the Federal Trade Commission, except to 

24 the extent that enforcement of the requirements imposed 

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1 ernment agency under subsection (b). For purpose of the 

2 exercise by the Federal Trade Commission of its functions 

3 and powers under the Federal Trade Commission Act (15 

4 U.S.C. 41 et seq.), a violation of this title shall be deemed 

5 an unfair or deceptive act or practice in violation of that 

6 Act. All of the functions and powers of the Federal Trade 

7 Commission under the Federal Trade Commission Act are 

8 available to the Federal Trade Commission to enforce 

9 compliance by any person with this title, irrespective of 

10 whether that person is engaged in commerce or meets any 

11 other jurisdictional tests under the Federal Trade Com12 mission Act, including the power to enforce the provisions 

13 of this title, in the same manner as if the violation had 

14 been a violation of a Federal Trade Commission trade reg15 ulation rule.’’; and 

16 (B) in subsection (b)— 

17 (i) by striking ‘‘Compliance’’ and in18 serting ‘‘Except as otherwise provided by 

19 subtitle B of the Consumer Financial Pro20 tection Act of 2010, compliance’’; and 

21 (ii) by striking paragraph (2) and in22 serting the following: 

23 ‘‘(2) subtitle E of the Consumer Financial Pro24 tection Act of 2010, by the Bureau;’’; and 


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1 (4) in subsection (d), by striking ‘‘Neither the 

2 Commission’’ and all that follows through the end of 

3 the subsection and inserting the following: ‘‘The Bu4 reau may prescribe rules with respect to the collec5 tion of debts by debt collectors, as defined in this 

6 Act.’’. 

7 SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT IN8 SURANCE ACT. 

9 The Federal Deposit Insurance Act (12 U.S.C. 1811 

10 et seq.) is amended— 

11 (1) in section 8(t) (12 U.S.C. 1818(t)), by add12 ing at the end the following: 

13 ‘‘(6) REFERRAL TO BUREAU OF CONSUMER FI14 NANCIAL PROTECTION.—Subject to subtitle B of the 

15 Consumer Financial Protection Act of 2010, each 

16 appropriate Federal banking agency shall make a re17 ferral to the Bureau of Consumer Financial Protec18 tion when the Federal banking agency has a reason19 able belief that a violation of an enumerated con20 sumer law, as defined in the Consumer Financial 

21 Protection Act of 2010, has been committed by any 

22 insured depository institution or institution-affiliated 

23 party within the jurisdiction of that appropriate 

24 Federal banking agency.’’; and 

25 (2) in section 43 (12 U.S.C. 1831t)— 


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1 (A) in subsection (c), by striking ‘‘Federal 

2 Trade Commission’’ and inserting ‘‘Bureau’’; 

3 (B) in subsection (d), by striking ‘‘Federal 

4 Trade Commission’’ and inserting ‘‘Bureau’’; 

5 (C) in subsection (e)— 

6 (i) in paragraph (2), by striking 

7 ‘‘Federal Trade Commission’’ and insert8 ing ‘‘Bureau’’; and 

9 (ii) by adding at the end the following 

10 new paragraph: 

11 ‘‘(5) BUREAU.—The term ‘Bureau’ means the 

12 Bureau of Consumer Financial Protection.’’; and 

13 (D) in subsection (f)— 

14 (i) by striking paragraph (1) and in15 serting the following: 

16 ‘‘(1) LIMITED ENFORCEMENT AUTHORITY.— 

17 Compliance with the requirements of subsections (b), 

18 (c), and (e), and any regulation prescribed or order 

19 issued under such subsection, shall be enforced 

20 under the Consumer Financial Protection Act of 

21 2010, by the Bureau, subject to subtitle B of the 

22 Consumer Financial Protection Act of 2010, and 

23 under the Federal Trade Commission Act (15 

24 U.S.C. 41 et seq.) by the Federal Trade Commis25 sion.’’; and 


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1 (ii) in paragraph (2), by striking sub2 paragraph (C) and inserting the following: 

3 ‘‘(C) LIMITATION ON STATE ACTION

4 WHILE FEDERAL ACTION PENDING.—If the Bu5 reau or Federal Trade Commission has insti6 tuted an enforcement action for a violation of 

7 this section, no appropriate State supervisory 

8 agency may, during the pendency of such ac9 tion, bring an action under this section against 

10 any defendant named in the complaint of the 

11 Bureau or Federal Trade Commission for any 

12 violation of this section that is alleged in that 

13 complaint.’’. 

14 SEC. 1091. AMENDMENTS TO THE GRAMM-LEACH-BLILEY 

15 ACT. 

16 Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 

17 6801 et seq.) is amended— 

18 (1) in section 504(a)(1) (15 U.S.C. 

19 6804(a)(1))— 

20 (A) by striking ‘‘The Federal banking 

21 agencies, the National Credit Union Adminis22 tration, the Secretary of the Treasury,’’ and in23 serting ‘‘The Bureau of Consumer Financial 

24 Protection and’’; and 


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1 (B) by striking ‘‘, and the Federal Trade 

2 Commission’’; 

3 (2) in section 505(a) (15 U.S.C. 6805(a))— 

4 (A) by striking ‘‘This subtitle’’ and all that 

5 follows through ‘‘as follows:’’ and inserting 

6 ‘‘Except as otherwise provided by subtitle B of 

7 the Consumer Financial Protection Act of 

8 2010, this subtitle and the regulations pre9 scribed thereunder shall be enforced by the Bu10 reau of Consumer Financial Protection, the 

11 Federal functional regulators, the State insur12 ance authorities, and the Federal Trade Com13 mission with respect to financial institutions 

14 and other persons subject to their jurisdiction 

15 under applicable law, as follows:’’; 

16 (B) in paragraph (1)— 

17 (i) in subparagraph (B), by inserting 

18 ‘‘and’’ after the semicolon; 

19 (ii) in subparagraph (C), by striking 

20 ‘‘; and’’ and inserting a period; and 

21 (iii) by striking subparagraph (D); 

22 and 

23 (C) by adding at the end the following: 

24 ‘‘(8) Under the Consumer Financial Protection 

25 Act of 2010, by the Bureau of Consumer Financial 


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1 Protection, in the case of any financial institution 

2 and other covered person or service provider that is 

3 subject to the jurisdiction of the Bureau under that 

4 Act, but not with respect to the standards under sec5 tion 501.’’; and 

6 (3) in section 505(b)(1) (15 U.S.C. 

7 6805(b)(1)), by inserting ‘‘, other than the Bureau 

8 of Consumer Financial Protection,’’ after ‘‘sub9 section (a)’’. 

10 SEC. 1092. AMENDMENTS TO THE HOME MORTGAGE DIS11 CLOSURE ACT. 

12 The Home Mortgage Disclosure Act of 1975 (12 

13 U.S.C. 2801 et seq.) is amended— 

14 (1) except as otherwise specifically provided in 

15 this section, by striking ‘‘Board’’ each place that 

16 term appears and inserting ‘‘Bureau’’; 

17 (2) in section 303 (12 U.S.C. 2802)— 

18 (A) by redesignating paragraphs (1) 

19 through (6) as paragraphs (2) through (7), re20 spectively; and 

21 (B) by inserting before paragraph (2) the 

22 following: 

23 ‘‘(1) the term ‘Bureau’ means the Bureau of 

24 Consumer Financial Protection;’’; 

25 (3) in section 304 (12 U.S.C. 2803)— 


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1 (A) in subsection (b)— 

2 (i) in paragraph (4), by inserting 

3 ‘‘age,’’ before ‘‘and gender’’; 

4 (ii) in paragraph (3), by striking 

5 ‘‘and’’ at the end; 

6 (iii) in paragraph (4), by striking the 

7 period at the end and inserting a semi8 colon; and 

9 (iv) by adding at the end the fol10 lowing: 

11 ‘‘(5) the number and dollar amount of mort12 gage loans grouped according to measurements of— 

13 ‘‘(A) the total points and fees payable at 

14 origination in connection with the mortgage as 

15 determined by the Bureau, taking into account 

16 15 U.S.C. 1602(aa)(4); 

17 ‘‘(B) the difference between the annual 

18 percentage rate associated with the loan and a 

19 benchmark rate or rates for all loans; 

20 ‘‘(C) the term in months of any prepay21 ment penalty or other fee or charge payable on 

22 repayment of some portion of principal or the 

23 entire principal in advance of scheduled pay24 ments; and 


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1 ‘‘(D) such other information as the Bureau 

2 may require; and 

3 ‘‘(6) the number and dollar amount of mort4 gage loans and completed applications grouped ac5 cording to measurements of— 

6 ‘‘(A) the value of the real property pledged 

7 or proposed to be pledged as collateral; 

8 ‘‘(B) the actual or proposed term in 

9 months of any introductory period after which 

10 the rate of interest may change; 

11 ‘‘(C) the presence of contractual terms or 

12 proposed contractual terms that would allow the 

13 mortgagor or applicant to make payments other 

14 than fully amortizing payments during any por15 tion of the loan term; 

16 ‘‘(D) the actual or proposed term in 

17 months of the mortgage loan; 

18 ‘‘(E) the channel through which applica19 tion was made, including retail, broker, and 

20 other relevant categories; 

21 ‘‘(F) as the Bureau may determine to be 

22 appropriate, a unique identifier that identifies 

23 the loan originator as set forth in section 1503 

24 of the S.A.F.E. Mortgage Licensing Act of 

25 2008; 


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1 ‘‘(G) as the Bureau may determine to be 

2 appropriate, a universal loan identifier; 

3 ‘‘(H) as the Bureau may determine to be 

4 appropriate, the parcel number that cor5 responds to the real property pledged or pro6 posed to be pledged as collateral; 

7 ‘‘(I) the credit score of mortgage appli8 cants and mortgagors, in such form as the Bu9 reau may prescribe, except that the Bureau 

10 shall modify or require modification of credit 

11 score data that is or will be available to the 

12 public to protect the compelling privacy interest 

13 of the mortgage applicant or mortgagors; and 

14 ‘‘(J) such other information as the Bureau 

15 may require.’’; 

16 (B) in subsection (i), by striking ‘‘sub17 section (b)(4)’’ and inserting ‘‘subsections 

18 (b)(4), (b)(5), and (b)(6)’’; 

19 (C) in subsection (j)— 

20 (i) in paragraph (1), by striking ‘‘(as’’ 

21 and inserting ‘‘(containing loan-level and 

22 application-level information relating to 

23 disclosures required under subsections (a) 

24 and (b) and as otherwise’’; 


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1 (ii) by striking paragraph (3) and in2 serting the following: 

3 ‘‘(3) CHANGE OF FORM NOT REQUIRED.—A de4 pository institution meets the disclosure requirement 

5 of paragraph (1) if the institution provides the infor6 mation required under such paragraph in such for7 mats as the Bureau may require’’; and 

8 (iii) in paragraph (2)(A), by striking 

9 ‘‘in the format in which such information 

10 is maintained by the institution’’ and in11 serting ‘‘in such formats as the Bureau 

12 may require’’; 

13 (D) in subsection (m), by striking para14 graph (2) and inserting the following: 

15 ‘‘(2) FORM OF INFORMATION.—In complying 

16 with paragraph (1), a depository institution shall 

17 provide the person requesting the information with 

18 a copy of the information requested in such formats 

19 as the Bureau may require’’; 

20 (E) by striking subsection (h) and insert21 ing the following: 

22 ‘‘(h) SUBMISSION TO AGENCIES.— 

23 ‘‘(1) IN GENERAL.—The data required to be 

24 disclosed under subsection (b) shall be submitted to 

25 the Bureau or to the appropriate agency for the inVerDate Nov 24 2008 00:41 Apr 16, 2010 Jkt 089200 PO 00000 Frm 01334 Fmt 6652 Sfmt 6201 E:\BILLS\S3217.PCS S3217

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1 stitution reporting under this title, in accordance 

2 with rules prescribed by the Bureau. Notwith3 standing the requirement of subsection (a)(2)(A) for 

4 disclosure by census tract, the Bureau, in coopera5 tion with other appropriate regulators described in 

6 paragraph (2), shall develop regulations that— 

7 ‘‘(A) prescribe the format for such disclo8 sures, the method for submission of the data to 

9 the appropriate regulatory agency, and the pro10 cedures for disclosing the information to the 

11 public; 

12 ‘‘(B) require the collection of data required 

13 to be disclosed under subsection (b) with re14 spect to loans sold by each institution reporting 

15 under this title; 

16 ‘‘(C) require disclosure of the class of the 

17 purchaser of such loans; and 

18 ‘‘(D) permit any reporting institution to 

19 submit in writing to the Bureau or to the ap20 propriate agency such additional data or expla21 nations as it deems relevant to the decision to 

22 originate or purchase mortgage loans. 

23 ‘‘(2) OTHER APPROPRIATE AGENCIES.—The ap24 propriate regulators described in this paragraph 

25 are— 


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1 ‘‘(A) the Office of the Comptroller of the 

2 Currency (hereafter referred to in this Act as 

3 ‘Comptroller’) for national banks and Federal 

4 branches, Federal agencies of foreign banks, 

5 and savings associations; 

6 ‘‘(B) the Federal Deposit Insurance Cor7 poration for banks insured by the Federal De8 posit Insurance Corporation (other than mem9 bers of the Federal Reserve System), mutual 

10 savings banks, insured State branches of for11 eign banks, and any other depository institution 

12 described in section 303(2)(A) which is not oth13 erwise referred to in this paragraph; 

14 ‘‘(C) the National Credit Union Adminis15 tration Board for credit unions; and 

16 ‘‘(D) the Secretary of Housing and Urban 

17 Development for other lending institutions not 

18 regulated by the agencies referred to in sub19 paragraphs (A) through (C).’’; and 

20 (F) by adding at the end the following: 

21 ‘‘(n) TIMING OF CERTAIN DISCLOSURES.—The data 

22 required to be disclosed under subsection (b) shall be sub23 mitted to the Bureau or to the appropriate agency for any 

24 institution reporting under this title, in accordance with 

25 regulations prescribed by the Bureau. Institutions shall 


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1 not be required to report new data under paragraph (5) 

2 or (6) of subsection (b) before the first January 1 that 

3 occurs after the end of the 9-month period beginning on 

4 the date on which regulations are issued by the Bureau 

5 in final form with respect to such disclosures.’’; 

6 (4) in section 305 (12 U.S.C. 2804)— 

7 (A) by striking subsection (b) and insert8 ing the following: 

9 ‘‘(b) POWERS OF CERTAIN OTHER AGENCIES.— 

10 ‘‘(1) IN GENERAL.—Except as otherwise pro11 vided by subtitle B of the Consumer Financial Pro12 tection Act of 2010, compliance with the require13 ments of this title shall be enforced— 

14 ‘‘(A) under section 8 of the Federal De15 posit Insurance Act, in the case of— 

16 ‘‘(i) any national bank, and any Fed17 eral branch or Federal agency of a foreign 

18 bank, by the Office of the Comptroller of 

19 the Currency; 

20 ‘‘(ii) any member bank of the Federal 

21 Reserve System (other than a national 

22 bank), branch or agency of a foreign bank 

23 (other than a Federal branch, Federal 

24 agency, and insured State branch of a for25 eign bank), commercial lending company 


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1 owned or controlled by a foreign bank, and 

2 any organization operating under section 

3 25 or 25(a) of the Federal Reserve Act, by 

4 the Board; and 

5 ‘‘(iii) any bank insured by the Federal 

6 Deposit Insurance Corporation (other than 

7 a member of the Federal Reserve System), 

8 any mutual savings bank as, defined in 

9 section 3(f) of the Federal Deposit Insur10 ance Act (12 U.S.C. 1813(f)), any insured 

11 State branch of a foreign bank, and any 

12 other depository institution not referred to 

13 in this paragraph or subparagraph (B) or 

14 (C), by the Federal Deposit Insurance Cor15 poration; 

16 ‘‘(B) under subtitle E of the Consumer Fi17 nancial Protection Act of 2010, by the Bureau; 

18 ‘‘(C) under the Federal Credit Union Act, 

19 by the Administrator of the National Credit 

20 Union Administration with respect to any in21 sured credit union; and 

22 ‘‘(D) with respect to other lending institu23 tions, by the Secretary of Housing and Urban 

24 Development. 


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1 ‘‘(2) INCORPORATED DEFINITIONS.—The terms 

2 used in paragraph (1) that are not defined in this 

3 title or otherwise defined in section 3(s) of the Fed4 eral Deposit Insurance Act (12 U.S.C. 1813(s)) 

5 shall have the same meanings as in section 1(b) of 

6 the International Banking Act of 1978 (12 U.S.C. 

7 3101).’’; and 

8 (B) by adding at the end the following: 

9 ‘‘(d) OVERALL ENFORCEMENT AUTHORITY OF THE

10 BUREAU OF CONSUMER FINANCIAL PROTECTION.—Sub11 ject to subtitle B of the Consumer Financial Protection 

12 Act of 2010, enforcement of the requirements imposed 

13 under this title is committed to each of the agencies under 

14 subsection (b). The Bureau may exercise its authorities 

15 under the Consumer Financial Protection Act of 2010 to 

16 exercise principal authority to examine and enforce com17 pliance by any person with the requirements of this title.’’; 

18 (5) in section 306 (12 U.S.C. 2805(b)), by 

19 striking subsection (b) and inserting the following: 

20 ‘‘(b) EXEMPTION AUTHORITY.—The Bureau may, by 

21 regulation, exempt from the requirements of this title any 

22 State-chartered depository institution within any State or 

23 subdivision thereof, if the agency determines that, under 

24 the law of such State or subdivision, that institution is 

25 subject to requirements that are substantially similar to 


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1 those imposed under this title, and that such law contains 

2 adequate provisions for enforcement. Notwithstanding any 

3 other provision of this subsection, compliance with the re4 quirements imposed under this subsection shall be en5 forced by the Office of the Comptroller of the Currency 

6 under section 8 of the Federal Deposit Insurance Act, in 

7 the case of national banks and savings associations, the 

8 deposits of which are insured by the Federal Deposit In9 surance Corporation.’’; and 

10 (6) by striking section 307 (12 U.S.C. 2806) 

11 and inserting the following: 

12 ‘‘SEC. 307. COMPLIANCE IMPROVEMENT METHODS. 

13 ‘‘(a) IN GENERAL.— 

14 ‘‘(1) CONSULTATION REQUIRED.—The Director 

15 of the Bureau of Consumer Financial Protection, 

16 with the assistance of the Secretary, the Director of 

17 the Bureau of the Census, the Board of Governors 

18 of the Federal Reserve System, the Federal Deposit 

19 Insurance Corporation, and such other persons as 

20 the Bureau deems appropriate, shall develop or as21 sist in the improvement of, methods of matching ad22 dresses and census tracts to facilitate compliance by 

23 depository institutions in as economical a manner as 

24 possible with the requirements of this title. 


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1 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

2 There are authorized to be appropriated, such sums 

3 as may be necessary to carry out this subsection. 

4 ‘‘(3) CONTRACTING AUTHORITY.—The Director 

5 of the Bureau of Consumer Financial Protection is 

6 authorized to utilize, contract with, act through, or 

7 compensate any person or agency in order to carry 

8 out this subsection. 

9 ‘‘(b) RECOMMENDATIONS TO CONGRESS.—The Di10 rector of the Bureau of Consumer Financial Protection 

11 shall recommend to the Committee on Banking, Housing, 

12 and Urban Affairs of the Senate and the Committee on 

13 Financial Services of the House of Representatives, such 

14 additional legislation as the Director of the Bureau of 

15 Consumer Financial Protection deems appropriate to 

16 carry out the purpose of this title.’’. 

17 SEC. 1093. AMENDMENTS TO THE HOMEOWNERS PROTEC18 TION ACT OF 1998. 

19 Section 10 of the Homeowners Protection Act of 

20 1998 (12 U.S.C. 4909) is amended— 

21 (1) in subsection (a)— 

22 (A) by striking ‘‘Compliance’’ and insert23 ing ‘‘Except as otherwise provided by subtitle B 

24 of the Consumer Financial Protection Act of 

25 2010, compliance’’; 


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1 (B) in paragraph (2), by striking ‘‘and’’ at 

2 the end; 

3 (C) in paragraph (3), by striking the pe4 riod at the end and inserting ‘‘; and’’; and 

5 (D) by adding at the end the following: 

6 ‘‘(4) subtitle E of the Consumer Financial Pro7 tection Act of 2010, by the Bureau of Consumer Fi8 nancial Protection.’’; and 

9 (2) in subsection (b)(2), by inserting before the 

10 period at the end the following: ‘‘, subject to subtitle 

11 B of the Consumer Financial Protection Act of 

12 2010’’. 

13 SEC. 1094. AMENDMENTS TO THE HOME OWNERSHIP AND 

14 EQUITY PROTECTION ACT OF 1994. 

15 The Home Ownership and Equity Protection Act of 

16 1994 (15 U.S.C. 1601 note) is amended— 

17 (1) in section 158(a), by striking ‘‘Consumer 

18 Advisory Council of the Board’’ and inserting ‘‘Advi19 sory Board to the Bureau’’; and 

20 (2) by striking ‘‘Board’’ each place that term 

21 appears and inserting ‘‘Bureau’’. 

22 SEC. 1095. AMENDMENTS TO THE OMNIBUS APPROPRIA23 TIONS ACT, 2009. 

24 Section 626 of the Omnibus Appropriations Act, 

25 2009 (15 U.S.C. 1638 note) is amended— 


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1 (1) by striking subsection (a) and inserting the 

2 following: 

3 ‘‘(a)(1) The Bureau of Consumer Financial Protec4 tion shall have authority to prescribe rules with respect 

5 to mortgage loans in accordance with section 553 of title 

6 5, United States Code. Such rulemaking shall relate to 

7 unfair or deceptive acts or practices regarding mortgage 

8 loans, which may include unfair or deceptive acts or prac9 tices involving loan modification and foreclosure rescue 

10 services. Any violation of a rule prescribed under this 

11 paragraph shall be treated as a violation of a rule prohib12 iting unfair, deceptive, or abusive acts or practices under 

13 the Consumer Financial Protection Act of 2010 and a vio14 lation of a rule under section 18 of the Federal Trade 

15 Commission Act (15 U.S.C. 57a) regarding unfair or de16 ceptive acts or practices. 

17 ‘‘(2) The Bureau of Consumer Financial Protection 

18 shall enforce the rules issued under paragraph (1) in the 

19 same manner, by the same means, and with the same ju20 risdiction, powers, and duties, as though all applicable 

21 terms and provisions of the Consumer Financial Protec22 tion Act of 2010 were incorporated into and made part 

23 of this subsection.’’; and 

24 (2) in subsection (b)— 


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1 (A) by striking paragraph (1) and insert2 ing the following: 

3 ‘‘(1) Except as provided in paragraph (6), in 

4 any case in which the attorney general of a State 

5 has reason to believe that an interest of the resi6 dents of the State has been or is threatened or ad7 versely affected by the engagement of any person 

8 subject to a rule prescribed under subsection (a) in 

9 practices that violate such rule, the State, as parens 

10 patriae, may bring a civil action on behalf of its resi11 dents in an appropriate district court of the United 

12 States or other court of competent jurisdiction— 

13 ‘‘(A) to enjoin that practice; 

14 ‘‘(B) to enforce compliance with the rule; 

15 ‘‘(C) to obtain damages, restitution, or 

16 other compensation on behalf of the residents of 

17 the State; or 

18 ‘‘(D) to obtain penalties and relief provided 

19 under the Consumer Financial Protection Act 

20 of 2010, the Federal Trade Commission Act, 

21 and such other relief as the court deems appro22 priate.’’; 

23 (B) in paragraphs (2) and (3), by striking 

24 ‘‘the primary Federal regulator’’ each time the 

25 term appears and inserting ‘‘the Bureau of 


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1 Consumer Financial Protection or the Commis2 sion, as appropriate’’; 

3 (C) in paragraph (3), by inserting ‘‘and 

4 subject to subtitle B of the Consumer Financial 

5 Protection Act of 2010,’’ after ‘‘paragraph 

6 (2),’’; and 

7 (D) in paragraph (6), by striking ‘‘the pri8 mary Federal regulator’’ each place that term 

9 appears and inserting ‘‘the Bureau of Con10 sumer Financial Protection or the Commis11 sion’’. 

12 SEC. 1096. AMENDMENTS TO THE REAL ESTATE SETTLE13 MENT PROCEDURES ACT. 

14 The Real Estate Settlement Procedures Act of 1974 

15 (12 U.S.C. 2601 et seq.) is amended— 

16 (1) in section 3 (12 U.S.C. 2602)— 

17 (A) in paragraph (7), by striking ‘‘and’’ at 

18 the end; 

19 (B) in paragraph (8), by striking the pe20 riod at the end and inserting ‘‘; and’’; and 

21 (C) by adding at the end the following: 

22 ‘‘(9) the term ‘Bureau’ means the Bureau of 

23 Consumer Financial Protection.’’; 

24 (2) in section 4 (12 U.S.C. 2603)— 


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1 (A) in subsection (a), by striking the first 

2 sentence and inserting the following: ‘‘The Bu3 reau shall publish a single, integrated disclosure 

4 for mortgage loan transactions (including real 

5 estate settlement cost statements) which in6 cludes the disclosure requirements of this title, 

7 in conjunction with the disclosure requirements 

8 of the Truth in Lending Act that, taken to9 gether, may apply to a transaction that is sub10 ject to both or either provisions of law. The 

11 purpose of such model disclosure shall be to fa12 cilitate compliance with the disclosure require13 ments of this title and the Truth in Lending 

14 Act, and to aid the borrower or lessee in under15 standing the transaction by utilizing readily un16 derstandable language to simplify the technical 

17 nature of the disclosures.’’; 

18 (B) by striking ‘‘Secretary’’ each place 

19 that term appears and inserting ‘‘Bureau’’; and 

20 (C) by striking ‘‘form’’ each place that 

21 term appears and inserting ‘‘forms’’; 

22 (3) in section 5 (12 U.S.C. 2604)— 

23 (A) by striking ‘‘Secretary’’ each place that 

24 term appears and inserting ‘‘Bureau’’; and 


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1 (B) in subsection (a), by striking the first 

2 sentence and inserting the following: ‘‘The Bu3 reau shall prepare and distribute booklets joint4 ly addressing compliance with the requirements 

5 of the Truth in Lending Act and the provisions 

6 of this title, in order to help persons borrowing 

7 money to finance the purchase of residential 

8 real estate better to understand the nature and 

9 costs of real estate settlement services.’’; 

10 (4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))— 

11 (A) by striking ‘‘Secretary’’ and inserting 

12 ‘‘Bureau’’; and 

13 (B) by striking ‘‘, by regulations that shall 

14 take effect not later than April 20, 1991,’’; 

15 (5) in section 7(b) (12 U.S.C. 2606(b)) by 

16 striking ‘‘Secretary’’ and inserting ‘‘Bureau’’; 

17 (6) in section 8(d) (12 U.S.C. 2607(d))— 

18 (A) in the subsection heading, by inserting 

19 ‘‘BUREAU AND’’ before ‘‘SECRETARY’’; and 

20 (B) by striking paragraph (4), and insert21 ing the following: 

22 ‘‘(4) The Bureau, the Secretary, or the attorney 

23 general or the insurance commissioner of any State 

24 may bring an action to enjoin violations of this sec25 tion. Except, to the extent that a person is subject 


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1 to the jurisdiction of the Bureau, the Secretary, or 

2 the attorney general or the insurance commissioner 

3 of any State, the Bureau shall have primary author4 ity to enforce or administer this section, subject to 

5 subtitle B of the Consumer Financial Protection Act 

6 of 2010.’’. 

7 (7) in section 10(c) (12 U.S.C. 2609(c) and 

8 (d)), by striking ‘‘Secretary’’ and inserting ‘‘Bu9 reau’’; 

10 (8) in section 16 (12 U.S.C. 2614), by inserting 

11 ‘‘the Bureau,’’ before ‘‘the Secretary’’; 

12 (9) in section 18 (12 U.S.C. 2616), by striking 

13 ‘‘Secretary’’ each place that term appears and in14 serting ‘‘Bureau’’; and 

15 (10) in section 19 (12 U.S.C. 2617)— 

16 (A) in the section heading by striking 

17 ‘‘SECRETARY’’ and inserting ‘‘BUREAU’’; 

18 (B) by striking ‘‘Secretary’’ each place 

19 that term appears and inserting ‘‘Bureau’’; 

20 (C) in subsection (b), by inserting ‘‘the 

21 Bureau’’ before ‘‘the Secretary’’; and 

22 (D) in subsection (c), by inserting ‘‘or the 

23 Bureau’’ after ‘‘the Secretary’’ each time that 

24 term appears. 


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1 SEC. 1097. AMENDMENTS TO THE RIGHT TO FINANCIAL 

2 PRIVACY ACT OF 1978. 

3 The Right to Financial Privacy Act of 1978 (12 

4 U.S.C. 3401 et seq.) is amended— 

5 (1) in section 1101— 

6 (A) in paragraph (6)— 

7 (i) in subparagraph (A), by inserting 

8 ‘‘and’’ after the semicolon; 

9 (ii) in subparagraph (B), by striking 

10 ‘‘and’’ at the end; and 

11 (iii) by striking subparagraph (C); 

12 and 

13 (B) in paragraph (7), by striking subpara14 graph (E), and inserting the following: 

15 ‘‘(E) the Bureau of Consumer Financial 

16 Protection;’’; 

17 (2) in section 1112(e) (12 U.S.C. 3412(e)), by 

18 striking ‘‘and the Commodity Futures Trading Com19 mission is permitted’’ and inserting ‘‘the Commodity 

20 Futures Trading Commission, and the Bureau of 

21 Consumer Financial Protection is permitted’’; and 

22 (3) in section 1113 (12 U.S.C. 3413), by add23 ing at the end the following new subsection: 

24 ‘‘(r) DISCLOSURE TO THE BUREAU OF CONSUMER

25 FINANCIAL PROTECTION.—Nothing in this title shall 

26 apply to the examination by or disclosure to the Bureau 


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1 of Consumer Financial Protection of financial records or 

2 information in the exercise of its authority with respect 

3 to a financial institution.’’. 

4 SEC. 1098. AMENDMENTS TO THE SECURE AND FAIR EN5 FORCEMENT FOR MORTGAGE LICENSING ACT 

6 OF 2008. 

7 The S.A.F.E. Mortgage Licensing Act of 2008 (12 

8 U.S.C. 5101 et seq.) is amended— 

9 (1) by striking ‘‘a Federal banking agency’’ 

10 each place that term appears, other than in para11 graphs (7) and (11) of section 1503 and section 

12 1507(a)(1), and inserting ‘‘the Bureau’’; 

13 (2) by striking ‘‘Federal banking agencies’’ 

14 each place that term appears and inserting ‘‘Bu15 reau’’; and 

16 (3) by striking ‘‘Secretary’’ each place that 

17 term appears and inserting ‘‘Director’’; 

18 (4) in section 1503 (12 U.S.C. 5102)— 

19 (A) by redesignating paragraphs (2) 

20 through (12) as (3) through (13), respectively; 

21 (B) by striking paragraph (1) and insert22 ing the following: 

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

24 Bureau of Consumer Financial Protection. 


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1 ‘‘(2) FEDERAL BANKING AGENCY.—The term 

2 ‘Federal banking agency’ means the Board of Gov3 ernors of the Federal Reserve System, the Office of 

4 the Comptroller of the Currency, the National Credit 

5 Union Administration, and the Federal Deposit In6 surance Corporation.’’; and 

7 (C) by striking paragraph (10), as so des8 ignated by this section, and inserting the fol9 lowing: 

10 ‘‘(10) DIRECTOR.—The term ‘Director’ means 

11 the Director of the Bureau of Consumer Financial 

12 Protection.’’; and 

13 (5) in section 1507 (12 U.S.C. 5106)— 

14 (A) in subsection (a)— 

15 (i) by striking paragraph (1) and in16 serting the following: 

17 ‘‘(1) IN GENERAL.—The Bureau shall develop 

18 and maintain a system for registering employees of 

19 a depository institution, employees of a subsidiary 

20 that is owned and controlled by a depository institu21 tion and regulated by a Federal banking agency, or 

22 employees of an institution regulated by the Farm 

23 Credit Administration, as registered loan originators 

24 with the Nationwide Mortgage Licensing System and 

25 Registry. The system shall be implemented before 


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1 the end of the 1-year period beginning on the date 

2 of enactment of the Consumer Financial Protection 

3 Act of 2010.’’; and 

4 (ii) in paragraph (2)— 

5 (I) by striking ‘‘appropriate Fed6 eral banking agency and the Farm 

7 Credit Administration’’ and inserting 

8 ‘‘Bureau’’; and 

9 (II) by striking ‘‘employees’s 

10 identity’’ and inserting ‘‘identity of 

11 the employee’’; and 

12 (B) in subsection (b), by striking ‘‘through 

13 the Financial Institutions Examination Council, 

14 and the Farm Credit Administration’’, and in15 serting ‘‘and the Bureau of Consumer Financial 

16 Protection’’; 

17 (6) in section 1508 (12 U.S.C. 5107)— 

18 (A) by striking the section heading and in19 serting the following: ‘‘SEC. 1508. BUREAU OF

20 CONSUMER FINANCIAL PROTECTION

21 BACKUP AUTHORITY TO ESTABLISH LOAN

22 ORIGINATOR LICENSING SYSTEM.’’; and 

23 (B) by adding at the end the following: 

24 ‘‘(f) REGULATION AUTHORITY.— 


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1 ‘‘(1) IN GENERAL.—The Bureau is authorized 

2 to promulgate regulations setting minimum net 

3 worth or surety bond requirements for residential 

4 mortgage loan originators and minimum require5 ments for recovery funds paid into by loan origina6 tors. 

7 ‘‘(2) CONSIDERATIONS.—In issuing regulations 

8 under paragraph (1), the Bureau shall take into ac9 count the need to provide originators adequate in10 centives to originate affordable and sustainable 

11 mortgage loans, as well as the need to ensure a com12 petitive origination market that maximizes consumer 

13 access to affordable and sustainable mortgage 

14 loans.’’; 

15 (7) by striking section 1510 (12 U.S.C. 5109) 

16 and inserting the following: 

17 ‘‘SEC. 1510. FEES. 

18 ‘‘The Bureau, the Farm Credit Administration, and 

19 the Nationwide Mortgage Licensing System and Registry 

20 may charge reasonable fees to cover the costs of maintain21 ing and providing access to information from the Nation22 wide Mortgage Licensing System and Registry, to the ex23 tent that such fees are not charged to consumers for ac24 cess to such system and registry.’’; 


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1 (8) by striking section 1513 (12 U.S.C. 5112) 

2 and inserting the following: 

3 ‘‘SEC. 1513. LIABILITY PROVISIONS. 

4 ‘‘The Bureau, any State official or agency, or any or5 ganization serving as the administrator of the Nationwide 

6 Mortgage Licensing System and Registry or a system es7 tablished by the Director under section 1509, or any offi8 cer or employee of any such entity, shall not be subject 

9 to any civil action or proceeding for monetary damages 

10 by reason of the good faith action or omission of any offi11 cer or employee of any such entity, while acting within 

12 the scope of office or employment, relating to the collec13 tion, furnishing, or dissemination of information con14 cerning persons who are loan originators or are applying 

15 for licensing or registration as loan originators.’’; and 

16 (9) in section 1514 (12 U.S.C. 5113) in the 

17 section heading, by striking ‘‘UNDER HUD BACKUP

18 LICENSING SYSTEM’’ and inserting ‘‘BY THE BU19 REAU’’. 

20 SEC. 1099. AMENDMENTS TO THE TRUTH IN LENDING ACT. 

21 The Truth in Lending Act (15 U.S.C. 1601 et seq.) 

22 is amended— 

23 (1) in section 103 (5 U.S.C. 1602)— 


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1 (A) by redesignating subsections (b) 

2 through (bb) as subsections (c) through (cc), 

3 respectively; and 

4 (B) by inserting after subsection (a) the 

5 following: 

6 ‘‘(b) BUREAU.—The term ‘Bureau’ means the Bu7 reau of Consumer Financial Protection.’’; 

8 (2) by striking ‘‘Board’’ each place that term 

9 appears, other than in section 140(d) and section 

10 108(a), as amended by this section, and inserting 

11 ‘‘Bureau’’; 

12 (3) by striking ‘‘Federal Trade Commission’’ 

13 each place that term appears, other than in section 

14 108(c) and section 129(m), as amended by this Act, 

15 and other than in the context of a reference to the 

16 Federal Trade Commission Act, and inserting ‘‘Bu17 reau’’; 

18 (4) in section 105(a) (15 U.S.C. 1604(a)), in 

19 the second sentence— 

20 (A) by striking ‘‘Except in the case of a 

21 mortgage referred to in section 103(aa), these 

22 regulations may contain such’’ and inserting 

23 ‘‘Except with respect to the provisions of sec24 tion 129 that apply to a mortgage referred to 


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1 in section 103(aa), such regulations may con2 tain such additional requirements,’’; and 

3 (B) by inserting ‘‘all or’’ after ‘‘exceptions 

4 for’’; 

5 (5) in section 105(b) (15 U.S.C. 1604(b)), by 

6 striking the first sentence and inserting the fol7 lowing: ‘‘The Bureau shall publish a single, inte8 grated disclosure for mortgage loan transactions (in9 cluding real estate settlement cost statements) which 

10 includes the disclosure requirements of this title in 

11 conjunction with the disclosure requirements of the 

12 Real Estate Settlement Procedures Act of 1974 

13 that, taken together, may apply to a transaction that 

14 is subject to both or either provisions of law. The 

15 purpose of such model disclosure shall be to facili16 tate compliance with the disclosure requirements of 

17 this title and the Real Estate Settlement Procedures 

18 Act of 1974, and to aid the borrower or lessee in un19 derstanding the transaction by utilizing readily un20 derstandable language to simplify the technical na21 ture of the disclosures.’’; 

22 (6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), 

23 by inserting ‘‘all or’’ after ‘‘from all or part of this 

24 title’’; 

25 (7) in section 108 (15 U.S.C. 1607)— 


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1 (A) by striking subsection (a) and insert2 ing the following: 

3 ‘‘(a) ENFORCING AGENCIES.—Except as otherwise 

4 provided in subtitle B of the Consumer Financial Protec5 tion Act of 2010, compliance with the requirements im6 posed under this title shall be enforced under— 

7 ‘‘(1) section 8 of the Federal Deposit Insurance 

8 Act, in the case of— 

9 ‘‘(A) any national bank, and Federal 

10 branch or Federal agency of a foreign bank, by 

11 the Office of the Comptroller of the Currency; 

12 ‘‘(B) any member bank of the Federal Re13 serve System (other than a national bank), any 

14 branch or agency of a foreign bank (other than 

15 a Federal branch, Federal agency, or insured 

16 State branch of a foreign bank), any commer17 cial lending company owned or controlled by a 

18 foreign bank, and organizations operating 

19 under section 25 or 25(a) of the Federal Re20 serve Act, by the Board; and 

21 ‘‘(C) any bank insured by the Federal De22 posit Insurance Corporation (other than a 

23 member of the Federal Reserve System) and an 

24 insured State branch of a foreign bank, by the 


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1 Board of Directors of the Federal Deposit In2 surance Corporation; 

3 ‘‘(2) subtitle E of the Consumer Financial Pro4 tection Act of 2010, by the Bureau; 

5 ‘‘(3) the Federal Credit Union Act, by the Di6 rector of the National Credit Union Administration, 

7 with respect to any Federal credit union; 

8 ‘‘(4) the Federal Aviation Act of 1958, by the 

9 Secretary of Transportation, with respect to any air 

10 carrier or foreign air carrier subject to that Act; 

11 ‘‘(5) the Packers and Stockyards Act, 1921 (ex12 cept as provided in section 406 of that Act), by the 

13 Secretary of Agriculture, with respect to any activi14 ties subject to that Act; and 

15 ‘‘(6) the Farm Credit Act of 1971, by the Farm 

16 Credit Administration with respect to any Federal 

17 land bank, Federal land bank association, Federal 

18 intermediate credit bank, or production credit asso19 ciation.’’; and 

20 (B) by striking subsection (c) and insert21 ing the following: 

22 ‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE

23 FEDERAL TRADE COMMISSION.—Except to the extent 

24 that enforcement of the requirements imposed under this 

25 title is specifically committed to some other Government 


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1 agency under subsection (a), and subject to subtitle B of 

2 the Consumer Financial Protection Act of 2010, the Fed3 eral Trade Commission shall enforce such requirements. 

4 For the purpose of the exercise by the Federal Trade 

5 Commission of its functions and powers under the Federal 

6 Trade Commission Act, a violation of any requirement im7 posed under this title shall be deemed a violation of a re8 quirement imposed under that Act. All of the functions 

9 and powers of the Federal Trade Commission under the 

10 Federal Trade Commission Act are available to the Fed11 eral Trade Commission to enforce compliance by any per12 son with the requirements under this title, irrespective of 

13 whether that person is engaged in commerce or meets any 

14 other jurisdictional tests under the Federal Trade Com15 mission Act.’’; 

16 (8) in section 129 (15 U.S.C. 1639), by striking 

17 subsection (m) and inserting the following: 

18 ‘‘(m) CIVIL PENALTIES IN FEDERAL TRADE COM19 MISSION ENFORCEMENT ACTIONS.—For purposes of en20 forcement by the Federal Trade Commission, any violation 

21 of a regulation issued by the Bureau pursuant to sub22 section (l)(2) shall be treated as a violation of a rule pro23 mulgated under section 18 of the Federal Trade Commis24 sion Act (15 U.S.C. 57a) regarding unfair or deceptive 

25 acts or practices.’’; and 


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1 (9) in chapter 5 (15 U.S.C. 1667 et seq.)— 

2 (A) by striking ‘‘the Board’’ each place 

3 that term appears and inserting ‘‘the Bureau’’; 

4 and 

5 (B) by striking ‘‘The Board’’ each place 

6 that term appears and inserting ‘‘The Bureau’’. 

7 SEC. 1100. AMENDMENTS TO THE TRUTH IN SAVINGS ACT. 

8 The Truth in Savings Act (12 U.S.C. 4301 et seq.) 

9 is amended— 

10 (1) by striking ‘‘Board’’ each place that term 

11 appears and inserting ‘‘Bureau’’; 

12 (2) in section 270(a) (12 U.S.C. 4309)— 

13 (A) by striking ‘‘Compliance’’ and insert14 ing ‘‘Except as otherwise provided in subtitle B 

15 of the Consumer Financial Protection Act of 

16 2010, compliance’’; 

17 (B) in paragraph (1)— 

18 (i) in subparagraph (B), by striking 

19 ‘‘and’’ at the end; and 

20 (ii) by striking subparagraph (C); 

21 (C) in paragraph (2), by striking the pe22 riod at the end and inserting ‘‘; and’’; and 

23 (D) by adding at the end the following: 

24 ‘‘(3) subtitle E of the Consumer Financial Pro25 tection Act of 2010, by the Bureau.’’; 


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1 (3) in section 272(b) (12 U.S.C. 4311(b)), by 

2 striking ‘‘regulation prescribed by the Board’’ each 

3 place that term appears and inserting ‘‘regulation 

4 prescribed by the Bureau’’; and 

5 (4) in section 274 (12 U.S.C. 4313), by striking 

6 paragraph (4) and inserting the following: 

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

8 Bureau of Consumer Financial Protection.’’. 

9 SEC. 1101. AMENDMENTS TO THE TELEMARKETING AND 

10 CONSUMER FRAUD AND ABUSE PREVENTION 

11 ACT. 

12 (a) AMENDMENTS TO SECTION 3.—Section 3 of the 

13 Telemarketing and Consumer Fraud and Abuse Preven14 tion Act (15 U.S.C. 6102) is amended by striking sub15 sections (b) and (c) and inserting the following: 

16 ‘‘(b) RULEMAKING AUTHORITY.—The Commission 

17 shall have authority to prescribe rules under subsection 

18 (a), in accordance with section 553 of title 5, United 

19 States Code. In prescribing a rule under this section that 

20 relates to the provision of a consumer financial product 

21 or service that is subject to the Consumer Financial Pro22 tection Act of 2010, including any enumerated consumer 

23 law thereunder, the Commission shall consult with the Bu24 reau of Consumer Financial Protection regarding the con25 sistency of a proposed rule with standards, purposes, or 


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1 objectives administered by the Bureau of Consumer Fi2 nancial Protection. 

3 ‘‘(c) VIOLATIONS.—Any violation of any rule pre4 scribed under subsection (a)— 

5 ‘‘(1) shall be treated as a violation of a rule 

6 under section 18 of the Federal Trade Commission 

7 Act regarding unfair or deceptive acts or practices; 

8 and 

9 ‘‘(2) that is committed by a person subject to 

10 the Consumer Financial Protection Act of 2010 

11 shall be treated as a violation of a rule under section 

12 1031 of that Act regarding unfair, deceptive, or abu13 sive acts or practices.’’. 

14 (b) AMENDMENTS TO SECTION 4.—Section 4(d) of 

15 the Telemarketing and Consumer Fraud and Abuse Pre16 vention Act (15 U.S.C. 6103(d)) is amended by inserting 

17 after ‘‘Commission’’ each place that term appears the fol18 lowing: ‘‘or the Bureau of Consumer Financial Protec19 tion’’. 

20 (c) AMENDMENTS TO SECTION 5.—Section 5(c) of 

21 the Telemarketing and Consumer Fraud and Abuse Pre22 vention Act (15 U.S.C. 6104(c)) is amended by inserting 

23 after ‘‘Commission’’ each place that term appears the fol24 lowing: ‘‘or the Bureau of Consumer Financial Protec25 tion’’. 


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1 (d) AMENDMENT TO SECTION 6.—Section 6 of the 

2 Telemarketing and Consumer Fraud and Abuse Preven3 tion Act (15 U.S.C. 6105) is amended by adding at the 

4 end the following: 

5 ‘‘(d) ENFORCEMENT BY BUREAU OF CONSUMER FI6 NANCIAL PROTECTION.—Except as otherwise provided in 

7 sections 3(d), 3(e), 4, and 5, and subject to subtitle B 

8 of the Consumer Financial Protection Act of 2010, this 

9 Act shall be enforced by the Bureau of Consumer Finan10 cial Protection under subtitle E of the Consumer Finan11 cial Protection Act of 2010.’’. 

12 SEC. 1102. AMENDMENTS TO THE PAPERWORK REDUCTION 

13 ACT. 

14 (a) DESIGNATION AS AN INDEPENDENT AGENCY.— 

15 Section 2(5) of the Paperwork Reduction Act (44 U.S.C. 

16 3502(5)) is amended by inserting ‘‘the Bureau of Con17 sumer Financial Protection, the Office of Financial Re18 search,’’ after ‘‘the Securities and Exchange Commis19 sion,’’. 

20 (b) COMPARABLE TREATMENT.—Section 3513 of 

21 title 44, United States Code, is amended by adding at the 

22 end the following: 

23 ‘‘(c) COMPARABLE TREATMENT.—Notwithstanding 

24 any other provision of law, the Director shall treat or re25 view a rule or order prescribed or proposed by the Director 


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1 of the Bureau of Consumer Financial Protection on the 

2 same terms and conditions as apply to any rule or order 

3 prescribed or proposed by the Board of Governors of the 

4 Federal Reserve System.’’. 

5 SEC. 1103. ADJUSTMENTS FOR INFLATION IN THE TRUTH 

6 IN LENDING ACT. 

7 (a) CAPS.— 

8 (1) CREDIT TRANSACTIONS.—Section 104(3) of 

9 the Truth in Lending Act (15 U.S.C. 1603(3)) is 

10 amended by striking ‘‘$25,000’’ and inserting 

11 ‘‘$50,000’’. 

12 (2) CONSUMER LEASES.—Section 181(1) of the 

13 Truth in Lending Act (15 U.S.C. 1667(1)) is 

14 amended by striking ‘‘$25,000’’ and inserting 

15 ‘‘$50,000’’. 

16 (b) ADJUSTMENTS FOR INFLATION.—On and after 

17 December 31, 2011, the Bureau may adjust annually the 

18 dollar amounts described in sections 104(3) and 181(1) 

19 of the Truth in Lending Act (as amended by this section), 

20 by the annual percentage increase in the Consumer Price 

21 Index for Urban Wage Earners and Clerical Workers, as 

22 published by the Bureau of Labor Statistics, rounded to 

23 the nearest multiple of $100, or $1,000, as applicable. 


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1 SEC. 1104. EFFECTIVE DATE. 

2 Except as otherwise provided in this subtitle and the 

3 amendments made by this subtitle, this subtitle and the 

4 amendments made by this subtitle, other than sections 

5 1081 and 1082, shall become effective on the designated 

6 transfer date. 

7 TITLE XI—FEDERAL RESERVE 

8 SYSTEM PROVISIONS 

9 SEC. 1151. FEDERAL RESERVE ACT AMENDMENTS ON 

10 EMERGENCY LENDING AUTHORITY. 

11 The third undesignated paragraph of section 13 of 

12 the Federal Reserve Act (12 U.S.C. 343) (relating to 

13 emergency lending authority) is amended— 

14 (1) by inserting ‘‘(3)(A)’’ before ‘‘In unusual’’; 

15 (2) by striking ‘‘individual, partnership, or cor16 poration’’ the first place that term appears and in17 serting the following: ‘‘participant in any program or 

18 facility with broad-based eligibility’’; 

19 (3) by striking ‘‘exchange for an individual or 

20 a partnership or corporation’’ and inserting ‘‘ex21 change,’’; 

22 (4) by striking ‘‘such individual, partnership, or 

23 corporation’’ and inserting the following: ‘‘such par24 ticipant in any program or facility with broad-based 

25 eligibility’’; 


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1 (5) by striking ‘‘for individuals, partnerships, 

2 corporations’’ and inserting ‘‘for any participant in 

3 any program or facility with broad-based eligibility’’; 

4 (6) by striking ‘‘may prescribe.’’ and inserting 

5 the following: ‘‘may prescribe. 

6 ‘‘(B)(i) As soon as is practicable after the 

7 date of enactment of this subparagraph, the 

8 Board shall establish, by regulation, in con9 sultation with the Secretary of the Treasury, 

10 the policies and procedures governing emer11 gency lending under this paragraph. Such poli12 cies and procedures shall be designed to ensure 

13 that any emergency lending program or facility 

14 is for the purpose of providing liquidity to the 

15 financial system, and not to aid a failing finan16 cial company, and that the collateral for emer17 gency loans is of sufficient quality to protect 

18 taxpayers from losses. 

19 ‘‘(ii) The Board may not establish any pro20 gram or facility under this paragraph without 

21 the prior approval of the Secretary of the 

22 Treasury. 

23 ‘‘(C) The Board shall provide to the Com24 mittee on Banking, Housing, and Urban Affairs 


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1 of the Senate and the Committee on Financial 

2 Services of the House of Representatives— 

3 ‘‘(i) not later than 7 days after pro4 viding any loan or other financial assist5 ance under this paragraph, a report that 

6 includes— 

7 ‘‘(I) the justification for the exer8 cise of authority to provide such as9 sistance; 

10 ‘‘(II) the identity of the recipi11 ents of such assistance, subject to 

12 subparagraph (D); 

13 ‘‘(III) the date and amount of 

14 the assistance, and form in which the 

15 assistance was provided; and 

16 ‘‘(IV) the material terms of the 

17 assistance, including— 

18 ‘‘(aa) duration; 

19 ‘‘(bb) collateral pledged and 

20 the value thereof; 

21 ‘‘(cc) all interest, fees, and 

22 other revenue or items of value to 

23 be received in exchange for the 

24 assistance; 


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1 ‘‘(dd) any requirements im2 posed on the recipient with re3 spect to employee compensation, 

4 distribution of dividends, or any 

5 other corporate decision in ex6 change for the assistance; and 

7 ‘‘(ee) the expected costs to 

8 the taxpayers of such assistance; 

9 and 

10 ‘‘(ii) once every 30 days, with respect 

11 to any outstanding loan or other financial 

12 assistance under this paragraph, written 

13 updates on— 

14 ‘‘(I) the value of collateral; 

15 ‘‘(II) the amount of interest, 

16 fees, and other revenue or items of 

17 value received in exchange for the as18 sistance; and 

19 ‘‘(III) the expected or final cost 

20 to the taxpayers of such assistance. 

21 ‘‘(D)(i) The Board shall disclose, not later 

22 than 1 year after the date on which assistance 

23 was first received under the program or facility, 

24 unless the Board determines that such disclo25 sure likely would reduce the effectiveness of the 


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1 program or facility in addressing or mitigating 

2 the financial market disruptions, financial mar3 ket conditions, or other unusual and exigent cir4 cumstances sought to be addressed or mitigated 

5 by the program or facility, or would otherwise 

6 have a significant effect on economic or finan7 cial market conditions— 

8 ‘‘(I) the identity of the participants in 

9 an emergency lending program or facility 

10 commenced under this paragraph; 

11 ‘‘(II) the amounts borrowed by each 

12 participant in any such program or facility; 

13 and 

14 ‘‘(III) identifying details concerning 

15 the assets or collateral held by, under, or 

16 in connection with such a program or facil17 ity within 1 year of the date on which as18 sistance was first received under the pro19 gram or facility. 

20 ‘‘(ii) If the Board determines not to make 

21 the disclosures required by clause (i) within 1 

22 year of the date on which a participant first re23 ceived assistance under a program or facility, 

24 the Board shall— 


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1 ‘‘(I) provide to the Committee on 

2 Banking, Housing, and Urban Affairs of 

3 the Senate and the Committee on Finan4 cial Services of the House of Representa5 tives a written report explaining the rea6 sons for delaying the disclosures about 

7 such program or facility not later than 30 

8 days after making such determination; and 

9 ‘‘(II) provide to the Committee on 

10 Banking, Housing, and Urban Affairs of 

11 the Senate and the Committee on Finan12 cial Services of the House of Representa13 tives each year thereafter a written report 

14 explaining the reasons for continuing to 

15 delay disclosure, until the disclosures are 

16 complete. 

17 ‘‘(iii) The disclosures required by clause (i) 

18 shall be made not later than 12 months after 

19 the effective date of the termination of the facil20 ity by the Board. 

21 ‘‘(iv) If the Board determines not to make 

22 the disclosures required by clause (i), the 

23 Comptroller General of the United States shall 

24 issue a report to the Committee on Banking, 

25 Housing, and Urban Affairs of the Senate and 


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1 the Committee on Financial Services of the 

2 House of Representatives evaluating whether 

3 that determination is reasonable.’’. 

4 SEC. 1152. REVIEWS OF SPECIAL FEDERAL RESERVE CRED5 IT FACILITIES. 

6 (a) REVIEWS.—Section 714 of title 31, United States 

7 Code, is amended by adding at the end the following: 

8 ‘‘(f) REVIEWS OF CREDIT FACILITIES OF THE FED9 ERAL RESERVE SYSTEM.— 

10 ‘‘(1) DEFINITION.—In this subsection, the term 

11 ‘credit facility’ means a program or facility, includ12 ing any special purpose vehicle or other entity estab13 lished by or on behalf of the Board of Governors of 

14 the Federal Reserve System or a Federal reserve 

15 bank, authorized by the Board of Governors under 

16 the third undesignated paragraph of section 13 of 

17 the Federal Reserve Act (12 U.S.C. 343), that is not 

18 subject to audit under subsection (e), including— 

19 ‘‘(A) the Asset-Backed Commercial Paper 

20 Money Market Mutual Fund Liquidity Facility; 

21 ‘‘(B) the Term Asset-Backed Securities 

22 Loan Facility; 

23 ‘‘(C) the Primary Dealer Credit Facility; 

24 ‘‘(D) the Commercial Paper Funding Fa25 cility; and 


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1 ‘‘(E) the Term Securities Lending Facility. 

2 ‘‘(2) AUTHORITY FOR REVIEWS AND EXAMINA3 TIONS.—Subject to paragraph (3), and notwith4 standing any limitation in subsection (b) on the au5 diting and oversight of certain functions of the 

6 Board of Governors of the Federal Reserve System 

7 or any Federal reserve bank, the Comptroller Gen8 eral of the United States may conduct reviews, in9 cluding onsite examinations, of the Board of Gov10 ernors, a Federal reserve bank, or a credit facility, 

11 if the Comptroller General determines that such re12 views are appropriate, solely for the purposes of as13 sessing, with respect to a credit facility— 

14 ‘‘(A) the operational integrity, accounting, 

15 financial reporting, and internal controls of the 

16 credit facility; 

17 ‘‘(B) the effectiveness of the collateral poli18 cies established for the facility in mitigating 

19 risk to the relevant Federal reserve bank and 

20 taxpayers; 

21 ‘‘(C) whether the credit facility inappropri22 ately favors one or more specific participants 

23 over other institutions eligible to utilize the fa24 cility; and 


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1 ‘‘(D) the policies governing the use, selec2 tion, or payment of third-party contractors by 

3 or for any credit facility. 

4 ‘‘(3) REPORTS AND DELAYED DISCLOSURE.— 

5 ‘‘(A) REPORTS REQUIRED.—A report on 

6 each review conducted under paragraph (2) 

7 shall be submitted by the Comptroller General 

8 to the Congress before the end of the 90-day 

9 period beginning on the date on which such re10 view is completed. 

11 ‘‘(B) CONTENTS.—The report under sub12 paragraph (A) shall include a detailed descrip13 tion of the findings and conclusions of the 

14 Comptroller General with respect to the matters 

15 described in paragraph (2) that were reviewed 

16 and are the subject of the report, together with 

17 such recommendations for legislative or admin18 istrative action relating to such matters as the 

19 Comptroller General may determine to be ap20 propriate. 

21 ‘‘(C) DELAYED RELEASE OF CERTAIN IN22 FORMATION.— 

23 ‘‘(i) IN GENERAL.—The Comptroller 

24 General shall not disclose to any person or 

25 entity, including to Congress, the names or 


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1 identifying details of specific participants 

2 in any credit facility, the amounts bor3 rowed by specific participants in any credit 

4 facility, or identifying details regarding as5 sets or collateral held by, under, or in con6 nection with any credit facility, and any re7 port provided under subparagraph (A) 

8 shall be redacted to ensure that such 

9 names and details are not disclosed. 

10 ‘‘(ii) DELAYED RELEASE.—The non11 disclosure obligation under clause (i) shall 

12 expire with respect to any participant on 

13 the date on which the Board of Governors, 

14 directly or through a Federal reserve bank, 

15 publicly discloses the identity of the subject 

16 participant or the identifying details of the 

17 subject assets or collateral. 

18 ‘‘(iii) GENERAL RELEASE.—The 

19 Comptroller General shall release a non20 redacted version of any report on a credit 

21 facility 1 year after the effective date of 

22 the termination by the Board of Governors 

23 of the authorization for the credit facility. 

24 For purposes of this clause, a credit facil25 ity shall be deemed to have terminated 24 


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1 months after the date on which the credit 

2 facility ceases to make extensions of credit 

3 and loans, unless the credit facility is oth4 erwise terminated by the Board of Gov5 ernors. 

6 ‘‘(iv) EXCEPTIONS.—The nondisclo7 sure obligation under clause (i) shall not 

8 apply to the credit facilities Maiden Lane, 

9 Maiden Lane II, and Maiden Lane III.’’. 

10 (b) ACCESS TO RECORDS.—Section 714(d) of title 

11 31, United States Code, is amended— 

12 (1) in paragraph (2), by inserting ‘‘or any per13 son or entity described in paragraph (3)(A)’’ after 

14 ‘‘used by an agency’’; 

15 (2) in paragraph (3), by inserting ‘‘or (f)’’ after 

16 ‘‘subsection (e)’’ each place that term appears; and 

17 (3) in paragraph (3)(B), by adding at the end 

18 the following: ‘‘The Comptroller General may make 

19 and retain copies of books, accounts, and other 

20 records provided under subparagraph (A) as the 

21 Comptroller General deems appropriate. The Comp22 troller General shall provide to any person or entity 

23 described in subparagraph (A) a current list of offi24 cers and employees to whom, with proper identifica25 tion, records and property may be made available, 


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1 and who may make notes or copies necessary to 

2 carry out a review or examination under this sub3 section.’’. 

4 SEC. 1153. PUBLIC ACCESS TO INFORMATION. 

5 Section 2B of the Federal Reserve Act (12 U.S.C. 

6 225b) is amended by adding at the end the following: 

7 ‘‘(c) PUBLIC ACCESS TO INFORMATION.—The Board 

8 shall place on its home Internet website, a link entitled 

9 ‘Audit’, which shall link to a webpage that shall serve as 

10 a repository of information made available to the public 

11 for a reasonable period of time, not less than 6 months 

12 following the date of release of the relevant information, 

13 including— 

14 ‘‘(1) the reports prepared by the Comptroller 

15 General under section 714 of title 31, United States 

16 Code; 

17 ‘‘(2) the annual financial statements prepared 

18 by an independent auditor for the Board in accord19 ance with section 11B; 

20 ‘‘(3) the reports to the Committee on Banking, 

21 Housing, and Urban Affairs of the Senate required 

22 under the third undesignated paragraph of section 

23 13 (relating to emergency lending authority); and 

24 ‘‘(4) such other information as the Board rea25 sonably believes is necessary or helpful to the public 


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1 in understanding the accounting, financial reporting, 

2 and internal controls of the Board and the Federal 

3 reserve banks.’’. 

4 SEC. 1154. LIQUIDITY EVENT DETERMINATION. 

5 (a) DETERMINATION AND WRITTEN RECOMMENDA6 TION.— 

7 (1) DETERMINATION REQUEST.—The Secretary 

8 may request the Corporation and the Board of Gov9 ernors to determine whether a liquidity event exists 

10 that warrants use of the guarantee program author11 ized under section 1155. 

12 (2) REQUIREMENTS OF DETERMINATION.—Any 

13 determination pursuant to paragraph (1) shall— 

14 (A) be written; and 

15 (B) contain an evaluation of the evidence 

16 that— 

17 (i) a liquidity event exists; 

18 (ii) failure to take action would have 

19 serious adverse effects on financial stability 

20 or economic conditions in the United 

21 States; and 

22 (iii) actions authorized under section 

23 1155 are needed to avoid or mitigate po24 tential adverse effects on the United States 

25 financial system or economic conditions. 


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1 (b) PROCEDURES.—Notwithstanding any other provi2 sion of Federal or State law, upon the determination of 

both the Corporation (upon a vote of not fewer than 2 3 ⁄3

4 of the members of the Corporation then serving) and the 

Board of Governors (upon a vote of not fewer than 2 5 ⁄3

6 of the members of the Board of Governors then serving) 

7 under subsection (a) that a liquidity event exists that war8 rants use of the guarantee program authorized under sec9 tion 1155, and with the written consent of the Secretary— 

10 (1) the Corporation shall take action in accord11 ance with section 1155(a); and 

12 (2) the Secretary (in consultation with the 

13 President) shall take action in accordance with sec14 tion 1155(c). 

15 (c) DOCUMENTATION AND REVIEW.— 

16 (1) DOCUMENTATION.—The Secretary shall— 

17 (A) maintain the written documentation of 

18 each determination of the Corporation and the 

19 Board of Governors under this section; and 

20 (B) provide the documentation for review 

21 under paragraph (2). 

22 (2) GAO REVIEW.—The Comptroller General of 

23 the United States shall review and report to Con24 gress on any determination of the Corporation and 


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1 the Board of Governors under subsection (a), includ2 ing— 

3 (A) the basis for the determination; and 

4 (B) the likely effect of the actions taken. 

5 (d) REPORT TO CONGRESS.—On the earlier of the 

6 date of a submission made to Congress under section 

7 1155(c), or within 30 days of the date of a determination 

8 under subsection (a), the Secretary shall provide written 

9 notice of the determination of the Corporation and the 

10 Board of Governors to the Committee on Banking, Hous11 ing, and Urban Affairs of the Senate and the Committee 

12 on Financial Services of the House of Representatives, in13 cluding a description of the basis for the determination. 

14 SEC. 1155. EMERGENCY FINANCIAL STABILIZATION. 

15 (a) IN GENERAL.—Upon the written determination 

16 of the Corporation and the Board of Governors under sec17 tion 1154, the Corporation shall create a widely available 

18 program to guarantee obligations of solvent insured depos19 itory institutions or solvent depository institution holding 

20 companies (including any affiliates thereof) during times 

21 of severe economic distress, except that a guarantee of ob22 ligations under this section may not include the provision 

23 of equity in any form. 

24 (b) RULEMAKING AND TERMS AND CONDITIONS.— 


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1 (1) POLICIES AND PROCEDURES.—As soon as is 

2 practicable after the date of enactment of this Act, 

3 the Corporation shall establish, by regulation, and in 

4 consultation with the Secretary, policies and proce5 dures governing the issuance of guarantees author6 ized by this section. Such policies and procedures 

7 may include a requirement of collateral as a condi8 tion of any such guarantee. 

9 (2) TERMS AND CONDITIONS.—The terms and 

10 conditions of any guarantee program shall be estab11 lished by the Corporation, with the concurrence of 

12 the Secretary. 

13 (c) DETERMINATION OF GUARANTEED AMOUNT.— 

14 (1) IN GENERAL.—In connection with any pro15 gram established pursuant to subsection (a) and 

16 subject to paragraph (2) of this subsection, the Sec17 retary (in consultation with the President) shall de18 termine the maximum amount of debt outstanding 

19 that the Corporation may guarantee under this sec20 tion, and the President may transmit to Congress a 

21 written report on the plan of the Corporation to ex22 ercise the authority under this section to issue guar23 antees up to that maximum amount. Upon the expi24 ration of the 5-calendar-day period beginning on the 

25 date on which Congress receives the report on the 


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1 plan of the Corporation, the Corporation may exer2 cise the authority under this section to issue guaran3 tees up to that specified maximum amount, unless 

4 there is enacted, within that 5-calendar-day period, 

5 a joint resolution disapproving such report, as pro6 vided in subsection (d). 

7 (2) ADDITIONAL DEBT GUARANTEE AUTHOR8 ITY.—If the Secretary (in consultation with the 

9 President) determines, after a submission to Con10 gress under paragraph (1), that the maximum guar11 antee amount should be raised, and the Council con12 curs with that determination, the President may 

13 transmit to Congress a written report on the plan of 

14 the Corporation to exercise the authority under this 

15 section to issue guarantees up to the increased max16 imum debt guarantee amount. Upon the expiration 

17 of the 5-calendar-day period beginning on the date 

18 on which Congress receives the report on the plan of 

19 the Corporation, the Corporation may exercise the 

20 authority under this section to issue guarantees up 

21 to that specified maximum amount, unless there is 

22 enacted, within that 5-calendar-day period, a joint 

23 resolution disapproving such report, as provided in 

24 subsection (d). 

25 (d) JOINT RESOLUTION.— 


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1 (1) FAST TRACK CONSIDERATION IN HOUSE OF

2 REPRESENTATIVES.— 

3 (A) CONTENTS OF JOINT RESOLUTION.— 

4 For purposes of this section, the term ‘‘joint 

5 resolution’’ means only a joint resolution— 

6 (i) that is introduced not later than 3 

7 calendar days after the date on which the 

8 report of the Secretary referred to in sec9 tion 1154(d) is received by Congress; 

10 (ii) that does not have a preamble; 

11 (iii) the title of which is as follows: 

12 ‘‘Joint resolution relating to the dis13 approval of a plan to guarantee obligations 

14 under section 1155 of the Restoring Amer15 ican Financial Stability Act of 2010’’; and 

16 (iv) the matter after the resolving 

17 clause of which is as follows: ‘‘That Con18 gress disapproves the obligation of any 

19 amount described in section 1155(c) of the 

20 Restoring American Financial Stability Act 

21 of 2010.’’. 

22 (B) RECONVENING.—Upon receipt of a re23 port under subsection (c), the Speaker, if the 

24 House of Representatives would otherwise be 

25 adjourned, shall notify the Members of the 


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1 House of Representatives that, pursuant to this 

2 section, the House of Representatives shall con3 vene not later than the second calendar day 

4 after the date of receipt of such report. 

5 (C) REPORTING AND DISCHARGE.—Any 

6 committee of the House of Representatives to 

7 which a joint resolution is referred shall report 

8 it to the House of Representatives not later 

9 than 4 calendar days after the date of receipt 

10 of the report under subsection (c). If a com11 mittee fails to report the joint resolution within 

12 that period, the committee shall be discharged 

13 from further consideration of the joint resolu14 tion and the joint resolution shall be referred to 

15 the appropriate calendar. 

16 (D) PROCEEDING TO CONSIDERATION.— 

17 After each committee authorized to consider a 

18 joint resolution reports it to the House of Rep19 resentatives or has been discharged from its 

20 consideration, it shall be in order, not later 

21 than the 5th day after Congress receives the re22 port under subsection (c), to move to proceed to 

23 consider the joint resolution in the House of 

24 Representatives. All points of order against the 

25 motion are waived. Such a motion shall not be 


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1 in order after the House of Representatives has 

2 disposed of a motion to proceed on the joint 

3 resolution. The previous question shall be con4 sidered as ordered on the motion to its adoption 

5 without intervening motion. The motion shall 

6 not be debatable. A motion to reconsider the 

7 vote by which the motion is disposed of shall 

8 not be in order. 

9 (E) CONSIDERATION.—The joint resolution 

10 shall be considered as read. All points of order 

11 against the joint resolution and against its con12 sideration are waived. The previous question 

13 shall be considered as ordered on the joint reso14 lution to its passage without intervening motion 

15 except 2 hours of debate equally divided and 

16 controlled by the proponent and an opponent. A 

17 motion to reconsider the vote on passage of the 

18 joint resolution shall not be in order. 

19 (2) FAST TRACK CONSIDERATION IN SENATE.— 

20 (A) RECONVENING.—Upon receipt of a re21 port under subsection (c), if the Senate has ad22 journed or recessed for more than 2 days, the 

23 majority leader of the Senate, after consultation 

24 with the minority leader of the Senate, shall no25 tify the Members of the Senate that, pursuant 


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1 to this section, the Senate shall convene not 

2 later than the second calendar day after receipt 

3 of such message. 

4 (B) PLACEMENT ON CALENDAR.—Upon in5 troduction in the Senate, the joint resolution 

6 shall be placed immediately on the calendar. 

7 (C) FLOOR CONSIDERATION.— 

8 (i) IN GENERAL.—Notwithstanding 

9 Rule XXII of the Standing Rules of the 

10 Senate, it is in order at any time during 

11 the period beginning on the 4th day after 

12 the date on which Congress receives a re13 port under subsection (c), and ending on 

14 the 5th day after the date on which Con15 gress receives a report under subsection (c) 

16 (even though a previous motion to the 

17 same effect has been disagreed to) to move 

18 to proceed to the consideration of the joint 

19 resolution, and all points of order against 

20 the joint resolution (and against consider21 ation of the joint resolution) are waived. 

22 The motion to proceed is not debatable. 

23 The motion is not subject to a motion to 

24 postpone. A motion to reconsider the vote 

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1 agreed to shall not be in order. If a motion 

2 to proceed to the consideration of the reso3 lution is agreed to, the joint resolution 

4 shall remain the unfinished business until 

5 disposed of. 

6 (ii) DEBATE.—Debate on the joint 

7 resolution, and on all debatable motions 

8 and appeals in connection therewith, shall 

9 be limited to not more than 10 hours, 

10 which shall be divided equally between the 

11 majority and minority leaders or their des12 ignees. A motion further to limit debate is 

13 in order and not debatable. An amendment 

14 to, or a motion to postpone, or a motion to 

15 proceed to the consideration of other busi16 ness, or a motion to recommit the joint 

17 resolution is not in order. 

18 (iii) VOTE ON PASSAGE.—The vote on 

19 passage shall occur immediately following 

20 the conclusion of the debate on the joint 

21 resolution, and a single quorum call at the 

22 conclusion of the debate if requested in ac23 cordance with the rules of the Senate. 

24 (iv) RULINGS OF THE CHAIR ON PRO25 CEDURE.—Appeals from the decisions of 


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1 the Chair relating to the application of the 

2 rules of the Senate, as the case may be, to 

3 the procedure relating to a joint resolution 

4 shall be decided without debate. 

5 (3) RULES RELATING TO SENATE AND HOUSE

6 OF REPRESENTATIVES.— 

7 (A) COORDINATION WITH ACTION BY

8 OTHER HOUSE.—If, before the passage by one 

9 House of a joint resolution of that House, that 

10 House receives from the other House a joint 

11 resolution, then the following procedures shall 

12 apply: 

13 (i) The joint resolution of the other 

14 House shall not be referred to a com15 mittee. 

16 (ii) With respect to a joint resolution 

17 of the House receiving the resolution— 

18 (I) the procedure in that House 

19 shall be the same as if no joint resolu20 tion had been received from the other 

21 House; but 

22 (II) the vote on passage shall be 

23 on the joint resolution of the other 

24 House. 


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1 (B) TREATMENT OF JOINT RESOLUTION

2 OF OTHER HOUSE.—If one House fails to intro3 duce or consider a joint resolution under this 

4 section, the joint resolution of the other House 

5 shall be entitled to expedited floor procedures 

6 under this section. 

7 (C) TREATMENT OF COMPANION MEAS8 URES.—If, following passage of the joint resolu9 tion in the Senate, the Senate then receives the 

10 companion measure from the House of Rep11 resentatives, the companion measure shall not 

12 be debatable. 

13 (D) CONSIDERATION AFTER PASSAGE.— 

14 (i) IN GENERAL.—If Congress passes 

15 a joint resolution, the period beginning on 

16 the date the President is presented with 

17 the joint resolution and ending on the date 

18 the President takes action with respect to 

19 the joint resolution shall be disregarded in 

20 computing the 5-day period described in 

21 subsection (c). 

22 (ii) VETOES.—If the President vetoes 

23 the joint resolution— 

24 (I) the period beginning on the 

25 date the President vetoes the joint 


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1 resolution and ending on the date the 

2 Congress receives the veto message 

3 with respect to the joint resolution 

4 shall be disregarded in computing the 

5 5-day period described in subsection 

6 (c); and 

7 (II) debate on a veto message in 

8 the Senate under this section shall be 

9 1 hour equally divided between the 

10 majority and minority leaders or their 

11 designees. 

12 (E) RULES OF HOUSE OF REPRESENTA13 TIVES AND SENATE.—This subsection is en14 acted by Congress— 

15 (i) as an exercise of the rulemaking 

16 power of the Senate and House of Rep17 resentatives, respectively, and as such it is 

18 deemed a part of the rules of each House, 

19 respectively, but applicable only with re20 spect to the procedure to be followed in 

21 that House in the case of a joint resolu22 tion, and it supersedes other rules only to 

23 the extent that it is inconsistent with such 

24 rules; and 


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1 (ii) with full recognition of the con2 stitutional right of either House to change 

3 the rules (so far as relating to the proce4 dure of that House) at any time, in the 

5 same manner, and to the same extent as in 

6 the case of any other rule of that House. 

7 (e) FUNDING.— 

8 (1) FEES AND OTHER CHARGES.—The Corpora9 tion shall charge fees and other assessments to all 

10 participants in the program established pursuant to 

11 this section, in such amounts as are necessary to off12 set projected losses and administrative expenses, in13 cluding amounts borrowed pursuant to paragraph 

14 (3), and such amounts shall be available to the Cor15 poration. 

16 (2) EXCESS FUNDS.—If, at the conclusion of 

17 the program established under this section, there are 

18 any excess funds collected from the fees associated 

19 with such program, the funds shall be deposited in 

20 the General Fund of the Treasury. 

21 (3) AUTHORITY OF CORPORATION.—The Cor22 poration— 

23 (A) may borrow funds from the Secretary 

24 of the Treasury and issue obligations of the 

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1 rowed, and the amounts borrowed shall be 

2 available to the Corporation for purposes of car3 rying out a program established pursuant to 

4 this section, including the payment of reason5 able costs of administering the program, and 

6 the obligations issued shall be repaid in full 

7 with interest through fees and charges paid by 

8 participants in accordance with paragraphs (1) 

9 and (4), as applicable; and 

10 (B) may not borrow funds from the De11 posit Insurance Fund established pursuant to 

12 section 11(a)(4) of the Federal Deposit Insur13 ance Act. 

14 (4) BACKUP SPECIAL ASSESSMENTS.—To the 

15 extent that the funds collected pursuant to para16 graph (1) are insufficient to cover any losses or ex17 penses, including amounts borrowed pursuant to 

18 paragraph (3), arising from a program established 

19 pursuant to this section, the Corporation shall im20 pose a special assessment solely on participants in 

21 the program, in amounts necessary to address such 

22 insufficiency, and which shall be available to the 

23 Corporation to cover such losses or expenses. 

24 (5) AUTHORITY OF THE SECRETARY.—The Sec25 retary may purchase any obligations issued under 


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1 paragraph (3)(A). For such purpose, the Secretary 

2 may use the proceeds of the sale of any securities 

3 issued under chapter 31 of title 31, United States 

4 Code, and the purposes for which securities may be 

5 issued under that chapter 31 are extended to include 

6 such purchases, and the amount of any securities 

7 issued under that chapter 31 for such purpose shall 

8 be treated in the same manner as securities issued 

9 under section 208(n)(3)(B). 

10 (f) RULE OF CONSTRUCTION.—For purposes of this 

11 section, a guarantee of deposits held by insured depository 

12 institutions shall not be treated as a debt guarantee pro13 gram. 

14 (g) DEFINITIONS.—For purposes of this section, the 

15 following definitions shall apply: 

16 (1) COMPANY.—The term ‘‘company’’ means 

17 any entity other than a natural person that is incor18 porated or organized under Federal law or the laws 

19 of any State. 

20 (2) DEPOSITORY INSTITUTION HOLDING COM21 PANY.—The term ‘‘depository institution holding 

22 company’’ has the same meaning as in section 3 of 

23 the Federal Deposit Insurance Act (12 U.S.C. 

24 1813). 


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1 (3) LIQUIDITY EVENT.—The term ‘‘liquidity 

2 event’’ means— 

3 (A) a reduction in the usual ability of fi4 nancial market participants— 

5 (i) to sell a type of financial asset, 

6 without a significant reduction in price; or 

7 (ii) to borrow using that type of asset 

8 as collateral without a significant increase 

9 in margin; or 

10 (B) a significant reduction in the usual 

11 ability of financial and nonfinancial market par12 ticipants to obtain unsecured credit. 

13 (4) SOLVENT.—The term ‘‘solvent’’ means that 

14 the value of the assets of an entity exceed its obliga15 tions to creditors. 

16 SEC. 1156. ADDITIONAL RELATED AMENDMENTS. 

17 (a) SUSPENSION OF PARALLEL FEDERAL DEPOSIT

18 INSURANCE ACT AUTHORITY.—Effective upon the date of 

19 enactment of this section, the Corporation may not exer20 cise its authority under section 13(c)(4)(G)(i) of the Fed21 eral Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) 

22 to establish any widely available debt guarantee program 

23 for which section 1155 would provide authority. 

24 (b) MITIGATION.—Section 13(c)(4)(G)(i) of the Fed25 eral Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) 


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1 is amended by striking ‘‘such effects.’’ and inserting ‘‘such 

2 effects, provided the insured depository institution has 

3 been placed in receivership.’’. 

4 (c) EFFECT OF DEFAULT ON AN FDIC GUAR5 ANTEE.—If an insured depository institution or depository 

6 institution holding company (as those terms are defined 

7 in section 3 of the Federal Deposit Insurance Act) partici8 pating in a program under section 1155, or any partici9 pant in a debt guarantee program established pursuant 

10 to section 13(c)(4)(G)(i) of the Federal Deposit Insurance 

11 Act defaults on any obligation guaranteed by the Corpora12 tion after the date of enactment of this Act, the Corpora13 tion shall— 

14 (1) appoint itself as receiver for the insured de15 pository institution that defaults; and 

16 (2) with respect to any other participating com17 pany that is not an insured depository institution 

18 that defaults— 

19 (A) require— 

20 (i) consideration of whether a deter21 mination shall be made, as provided in sec22 tion 202 to resolve the company under sec23 tion 203; and 

24 (ii) the company to file a petition for 

25 bankruptcy under section 301 of title 11, 


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1 United States Code, if the Corporation is 

2 not appointed receiver pursuant to section 

3 203 within 30 days of the date of default; 

4 or 

5 (B) file a petition for involuntary bank6 ruptcy on behalf of the company under section 

7 303 of title 11, United States Code. 

8 SEC. 1157. FEDERAL RESERVE ACT AMENDMENTS ON FED9 ERAL RESERVE BANK GOVERNANCE. 

10 The Federal Reserve Act (12 U.S.C. 221 et seq.) is 

11 amended in section 4 by adding at the end the following: 

12 ‘‘(25) SELECTION OF THE PRESIDENT OF THE

13 FEDERAL RESERVE BANK OF NEW YORK.—Notwith14 standing any other provision of this section, after 

15 the date of enactment of the Restoring American Fi16 nancial Stability Act of 2010, the president of the 

17 Federal Reserve Bank of New York shall be ap18 pointed by the President, by and with the advice and 

19 consent of the Senate, for terms of 5 years. 

20 ‘‘(26) LIMITATION ON ELIGIBILITY TO VOTE

21 FOR OR SERVE AS A FEDERAL RESERVE BANK DI22 RECTOR.—Notwithstanding any other provision of 

23 this section, after the date of enactment of the Re24 storing American Financial Stability Act of 2010, no 

25 company, or subsidiary or affiliate of a company 


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1 that is supervised by the Board, may vote for mem2 bers of the board of directors of a Federal reserve 

3 bank, and no past or current officer, director, or em4 ployee of such company, or subsidiary or affiliate of 

5 such company, may serve as a member of the board 

6 of directors of a Federal reserve bank.’’. 

7 SEC. 1158. AMENDMENTS TO THE FEDERAL RESERVE ACT 

8 RELATING TO SUPERVISION AND REGULA9 TION POLICY. 

10 (a) ESTABLISHMENT OF THE POSITION OF VICE

11 CHAIRMAN FOR SUPERVISION.— 

12 (1) POSITION ESTABLISHED.—The second un13 designated paragraph of section 10 of the Federal 

14 Reserve Act (12 U.S.C. 242) (relating to the Chair15 man and Vice Chairman of the Board) is amended 

16 by striking the third sentence and inserting the fol17 lowing: ‘‘Of the persons thus appointed, 1 shall be 

18 designated by the President, by and with the advice 

19 and consent of the Senate, to serve as Chairman of 

20 the Board for a term of 4 years, and 2 shall be des21 ignated by the President, by and with the advice and 

22 consent of the Senate, to serve as Vice Chairmen of 

23 the Board, each for a term of 4 years, 1 of whom 

24 shall serve in the absence of the Chairman, as pro25 vided in the fourth undesignated paragraph of this 


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1 section, and 1 of whom shall be designated Vice 

2 Chairman for Supervision. The Vice Chairman for 

3 Supervision shall develop policy recommendations for 

4 the Board regarding supervision and regulation of 

5 depository institution holding companies and other 

6 financial firms supervised by the Board, and shall 

7 oversee the supervision and regulation of such 

8 firms.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by subsection (a) takes effect on the date of enact11 ment of this title and applies to individuals who are 

12 designated by the President on or after that date to 

13 serve as Vice Chairman of Supervision. 

14 (b) FINANCIAL STABILITY AS BOARD FUNCTION.— 

15 Section 10 of the Federal Reserve Act (12 U.S.C. 241) 

16 is amended by adding at the end the following: 

17 ‘‘(11) FINANCIAL STABILITY FUNCTION.—The 

18 Board of Governors shall identify, measure, monitor, 

19 and mitigate risks to the financial stability of the 

20 United States.’’. 

21 (c) APPEARANCES BEFORE CONGRESS.—Section 10 

22 of the Federal Reserve Act (12 U.S.C. 241) is amended 

23 by adding at the end the following: 

24 ‘‘(12) APPEARANCES BEFORE CONGRESS.—The 

25 Vice Chairman for Supervision shall appear before 


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1 the Committee on Banking, Housing, and Urban Af2 fairs of the Senate and the Committee on Financial 

3 Services of the House of Representatives and at 

4 semi-annual hearings regarding the efforts, activi5 ties, objectives, and plans of the Board with respect 

6 to the conduct of supervision and regulation of de7 pository institution holding companies and other fi8 nancial firms supervised by the Board.’’. 

9 (d) BOARD RESPONSIBILITY TO SET SUPERVISION

10 AND REGULATORY POLICY.—Section 11 of the Federal 

11 Reserve Act (12 U.S.C. 248) (relating to enumerated pow12 ers of the Board) is amended by adding at the end of sub13 section (k) (relating to delegation) the following: ‘‘The 

14 Board of Governors may not delegate to a Federal reserve 

15 bank its functions for the establishment of policies for the 

16 supervision and regulation of depository institution hold17 ing companies and other financial firms supervised by the 

18 Board of Governors.’’. 

19 TITLE XII—IMPROVING ACCESS 

20 TO MAINSTREAM FINANCIAL 

21 INSTITUTIONS 

22 SECTION 1201. SHORT TITLE. 

23 This title may be cited as the ‘‘Improving Access to 

24 Mainstream Financial Institutions Act of 2010’’. 


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1 SEC. 1202. PURPOSE. 

2 The purpose of this title is to encourage initiatives 

3 for financial products and services that are appropriate 

4 and accessible for millions of Americans who are not fully 

5 incorporated into the financial mainstream. 

6 SEC. 1203. DEFINITIONS. 

7 In this title, the following definitions shall apply: 

8 (1) ACCOUNT.—The term ‘‘account’’ means an 

9 agreement between an individual and an eligible en10 tity under which the individual obtains from or 

11 through the entity 1 or more banking products and 

12 services, and includes a deposit account, a savings 

13 account (including a money market savings ac14 count), an account for a closed-end loan, and other 

15 products or services, as the Secretary deems appro16 priate. 

17 (2) COMMUNITY DEVELOPMENT FINANCIAL IN18 STITUTION.—The term ‘‘community development fi19 nancial institution’’ has the same meaning as in sec20 tion 103(5) of the Community Development Banking 

21 and Financial Institutions Act of 1994 (12 U.S.C. 

22 4702(5)). 

23 (3) ELIGIBLE ENTITY.—The term ‘‘eligible enti24 ty’’ means— 

25 (A) an organization described in section 

26 501(c)(3) of the Internal Revenue Code of 


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1 1986, and exempt from tax under section 

2 501(a) of such Code; 

3 (B) a federally insured depository institu4 tion; 

5 (C) a community development financial in6 stitution; 

7 (D) a State, local, or tribal government en8 tity; or 

9 (E) a partnership or other joint venture 

10 comprised of 1 or more of the entities described 

11 in subparagraphs (A) through (D), in accord12 ance with regulations prescribed by the Sec13 retary under this title. 

14 (4) FEDERALLY INSURED DEPOSITORY INSTI15 TUTION.—The term ‘‘federally insured depository in16 stitution’’ means any insured depository institution 

17 (as that term is defined in section 3 of the Federal 

18 Deposit Insurance Act (12 U.S.C. 1813)) and any 

19 insured credit union (as that term is defined in sec20 tion 101 of the Federal Credit Union Act (12 U.S.C. 

21 1752)). 

22 (5) PAYDAY LOAN.—The term ‘‘payday loan’’ 

23 means any transaction in which a small cash ad24 vance is made to a consumer in exchange for— 


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1 (A) the personal check or share draft of 

2 the consumer, in the amount of the advance 

3 plus a fee, where presentment or negotiation of 

4 such check or share draft is deferred by agree5 ment of the parties until a designated future 

6 date; or 

7 (B) the authorization of the consumer to 

8 debit the transaction account or share draft ac9 count of the consumer, in the amount of the ad10 vance plus a fee, where such account will be 

11 debited on or after a designated future date. 

12 SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL 

13 INSTITUTIONS. 

14 (a) IN GENERAL.—The Secretary is authorized to es15 tablish a multiyear program of grants, cooperative agree16 ments, financial agency agreements, and similar contracts 

17 or undertakings to promote initiatives designed— 

18 (1) to enable low- and moderate-income individ19 uals to establish one or more accounts in a federally 

20 insured depository institution that are appropriate to 

21 meet the financial needs of such individuals; and 

22 (2) to improve access to the provision of ac23 counts, on reasonable terms, for low- and moderate24 income individuals. 

25 (b) PROGRAM ELIGIBILITY AND ACTIVITIES.— 


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1 (1) IN GENERAL.—The Secretary shall restrict 

2 participation in any program established under sub3 section (a) to an eligible entity. Subject to regula4 tions prescribed by the Secretary under this title, 1 

5 or more eligible entities may participate in 1 or sev6 eral programs established under subsection (a). 

7 (2) ACCOUNT ACTIVITIES.—Subject to regula8 tions prescribed by the Secretary, an eligible entity 

9 may, in participating in a program established under 

10 subsection (a), offer or provide to low- and mod11 erate-income individuals products and services relat12 ing to accounts, including— 

13 (A) small-dollar value loans; and 

14 (B) financial education and counseling re15 lating to conducting transactions in and man16 aging accounts. 

17 SEC. 1205. LOW-COST ALTERNATIVES TO PAYDAY LOANS. 

18 (a) GRANTS AUTHORIZED.—The Secretary is author19 ized to establish multiyear demonstration programs by 

20 means of grants, cooperative agreements, financial agency 

21 agreements, and similar contracts or undertakings, with 

22 eligible entities to provide low-cost, small loans to con23 sumers that will provide alternatives to more costly payday 

24 loans. 

25 (b) TERMS AND CONDITIONS.— 


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1 (1) IN GENERAL.—Loans under this section 

2 shall be made on terms and conditions, and pursu3 ant to lending practices, that are reasonable for con4 sumers. 

5 (2) FINANCIAL LITERACY AND EDUCATION OP6 PORTUNITIES.— 

7 (A) IN GENERAL.—Each eligible entity 

8 awarded a grant under this section shall pro9 mote and take appropriate steps to ensure the 

10 provision of financial literacy and education op11 portunities, such as relevant counseling services, 

12 educational courses, or wealth building pro13 grams, to each consumer provided with a loan 

14 pursuant to this section. 

15 (B) AUTHORITY TO EXPAND ACCESS.—As 

16 part of the grants, agreements, and under17 takings established under this section, the Sec18 retary may implement reasonable measures or 

19 programs designed to expand access to financial 

20 literacy and education opportunities, including 

21 relevant counseling services, educational 

22 courses, or wealth building programs to be pro23 vided to individuals who obtain loans from eligi24 ble entities under this section. 


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1 SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

2 FUNDS. 

3 The Community Development Banking and Financial 

4 Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is 

5 amended by adding at the end the following: 

6 ‘‘SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

7 FUNDS. 

8 ‘‘(a) PURPOSES.—The purposes of this section are— 

9 ‘‘(1) to make financial assistance available from 

10 the Fund in order to help community development 

11 financial institutions defray the costs of operating 

12 small dollar loan programs, by providing the 

13 amounts necessary for such institutions to establish 

14 their own loan loss reserve funds to mitigate some 

15 of the losses on such small dollar loan programs; 

16 and 

17 ‘‘(2) to encourage community development fi18 nancial institutions to establish and maintain small 

19 dollar loan programs that would help give consumers 

20 access to mainstream financial institutions and com21 bat payday lending. 

22 ‘‘(b) GRANTS.— 

23 ‘‘(1) LOAN-LOSS RESERVE FUND GRANTS.—The 

24 Fund shall make grants to community development 

25 financial institutions or to any partnership between 

26 such community development financial institutions 


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1 and any other federally insured depository institu2 tion with a primary mission to serve targeted invest3 ment areas, as such areas are defined under section 

4 103(16), to enable such institutions or any partner5 ship of such institutions to establish a loan-loss re6 serve fund in order to defray the costs of a small 

7 dollar loan program established or maintained by 

8 such institution. 

9 ‘‘(2) MATCHING REQUIREMENT.—A community 

10 development financial institution or any partnership 

11 of institutions established pursuant to paragraph (1) 

12 shall provide non-Federal matching funds in an 

13 amount equal to 50 percent of the amount of any 

14 grant received under this section. 

15 ‘‘(3) USE OF FUNDS.—Any grant amounts re16 ceived by a community development financial institu17 tion or any partnership between or among such in18 stitutions under paragraph (1)— 

19 ‘‘(A) may not be used by such institution 

20 to provide direct loans to consumers; 

21 ‘‘(B) may be used by such institution to 

22 help recapture a portion or all of a defaulted 

23 loan made under the small dollar loan program 

24 of such institution; and 


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1 ‘‘(C) may be used to designate and utilize 

2 a fiscal agent for services normally provided by 

3 such an agent. 

4 ‘‘(4) TECHNICAL ASSISTANCE GRANTS.—The 

5 Fund shall make technical assistance grants to com6 munity development financial institutions or any 

7 partnership between or among such institutions to 

8 support and maintain a small dollar loan program. 

9 Any grant amounts received under this paragraph 

10 may be used for technology, staff support, and other 

11 costs associated with establishing a small dollar loan 

12 program. 

13 ‘‘(c) DEFINITIONS.—For purposes of this section— 

14 ‘‘(1) the term ‘consumer reporting agency that 

15 compiles and maintains files on consumers on a na16 tionwide basis’ has the same meaning given such 

17 term in section 603(p) of the Fair Credit Reporting 

18 Act (15 U.S.C. 1681a(p)); and 

19 ‘‘(2) the term ‘small dollar loan program’ 

20 means a loan program wherein a community devel21 opment financial institution or any partnership be22 tween or among such institutions offers loans to con23 sumers that— 

24 ‘‘(A) are made in amounts not exceeding 

25 $2,500; 


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1 ‘‘(B) must be repaid in installments; 

2 ‘‘(C) have no pre-payment penalty; 

3 ‘‘(D) the institution has to report pay4 ments regarding the loan to at least 1 of the 

5 consumer reporting agencies that compiles and 

6 maintains files on consumers on a nationwide 

7 basis; and 

8 ‘‘(E) meet any other affordability require9 ments as may be established by the Adminis10 trator.’’. 

11 SEC. 1207. PROCEDURAL PROVISIONS. 

12 An eligible entity desiring to participate in a program 

13 or obtain a grant under this title shall submit an applica14 tion to the Secretary, in such form and containing such 

15 information as the Secretary may require. 

16 SEC. 1208. AUTHORIZATION OF APPROPRIATIONS. 

17 (a) AUTHORIZATION TO THE SECRETARY.—There 

18 are authorized to be appropriated to the Secretary, such 

19 sums as are necessary to both administer and fund the 

20 programs and projects authorized by this title, to remain 

21 available until expended. 

22 (b) AUTHORIZATION TO THE FUND.—There is au23 thorized to be appropriated to the Fund for each fiscal 

24 year beginning in fiscal year 2010, an amount equal to 

25 the amount of the administrative costs of the Fund for 


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1 the operation of the grant program established under this 

2 title. 

3 SEC. 1209. REGULATIONS. 

4 (a) IN GENERAL.—The Secretary is authorized to 

5 promulgate regulations to implement and administer the 

6 grant programs and undertakings authorized by this title. 

7 (b) REGULATORY AUTHORITY.—Regulations pre8 scribed under this section may contain such classifications, 

9 differentiations, or other provisions, and may provide for 

10 such adjustments and exceptions for any class of grant 

11 programs, undertakings, or eligible entities, as, in the 

12 judgment of the Secretary, are necessary or proper to ef13 fectuate the purposes of this title, to prevent circumven14 tion or evasion of this title, or to facilitate compliance with 

15 this title. 

16 SEC. 1210. EVALUATION AND REPORTS TO CONGRESS. 

17 For each fiscal year in which a program or project 

18 is carried out under this Title, the Secretary shall submit 

19 a report to the Committee on Banking, Housing, and 

20 Urban Affairs of the Senate and the Committee on Finan21 cial Services of the House of Representatives containing 

22 a description of the activities funded, amounts distributed, 

23 and measurable results, as appropriate and available. 


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Calendar No. 349 

111TH CONGRESS 

2D SESSION S. 3217 

A BILL 

To promote the financial stability of the United 

purposes. sive financial services practices, and for other ending bailouts, to protect consumers from abuto fail’’, to protect the American taxpayer by parency in the financial system, to end ‘‘too big States by improving accountability and transAPRIL 15, 2010 

Read twice and placed on the calendar 


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