I 

111TH CONGRESS 

1ST SESSION H. R. 3310 

To reform the financial regulatory system of the United States, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 23, 2009 

Mr. BACHUS (for himself, Mr. BOEHNER, Mr. CANTOR, Mr. PENCE, Mr. 

SMITH of Texas, Mr. FRANKS of Arizona, Mr. ISSA, Mr. NEUGEBAUER, 

Mr. GARRETT of New Jersey, Mr. HENSARLING, Mr. PRICE of Georgia, 

Mrs. BIGGERT, Mrs. CAPITO, Mr. JONES, Mr. POSEY, Mr. LANCE, Mr. 

MARCHANT, Mr. ROYCE, Mr. LEE of New York, Mr. LUCAS, Mr. 

ROSKAM, Mrs. BACHMANN, Ms. JENKINS, Mr. BARRETT of South Carolina, Mr. SCALISE, Mr. GOODLATTE, Mr. GERLACH, and Mr. RYAN of 

Wisconsin) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Education and Labor, Transportation and Infrastructure, the Judiciary, Agriculture, Oversight and Government Reform, the Budget, Rules, and Energy and Commerce, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To reform the financial regulatory system of the United 

States, 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. 

2 This Act may be cited as the ‘‘Consumer Protection 

3 and Regulatory Enhancement Act’’. 

4 SEC. 2. TABLE OF CONTENTS. 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

TITLE I—RESOLUTION OF NON-BANK FINANCIAL INSTITUTIONS 

Sec. 101. Amendments to title 28 of the United States Code. 

Sec. 102. Amendments to title 11 of the United States Code. 

Sec. 103. Effective date; application of amendments. 

TITLE II—MARKET STABILITY AND CAPITAL ADEQUACY 

Sec. 201. Establishment of Market Stability and Capital Adequacy Board. 

Sec. 202. Functions of Board. 

Sec. 203. Powers of Board. 

Sec. 204. Responsibilities of Federal functional regulators. 

Sec. 205. Staff of Board. 

Sec. 206. Compensation and travel expenses. 

TITLE III—REGULATORY CONSOLIDATION AND CONSUMER 

PROTECTION 

Sec. 301. Establishment. 

Sec. 302. Board of Directors. 

Sec. 303. Powers and duties of the FIR. 

Sec. 304. Allocation of responsibility among FIR divisions. 

Sec. 305. Technical and conforming amendments relating to transfers of functions to the FIR. 

Sec. 306. Office of Comptroller of the Currency and position of Comptroller of 

the Currency abolished. 

Sec. 307. Office of Thrift Supervision and position of Director of the Office of 

Thrift Supervision abolished. 

Sec. 308. Savings provisions. 

Sec. 309. References in Federal law to Federal banking agencies. 

Sec. 310. National Credit Union Administration moved within the FIR. 

Sec. 311. Office of Consumer Protection. 

TITLE IV—FEDERAL RESERVE REFORM 

Sec. 401. GAO authority to audit the Federal Reserve System. 

Sec. 402. Monetary policy and inflation targets. 

Sec. 403. Reforms of section 13 emergency powers. 

TITLE V—GOVERNMENT-SPONSORED ENTERPRISES REFORM 

Sec. 501. Short title. 

Sec. 502. Definitions. 

Sec. 503. Termination of current conservatorship. 

Sec. 504. Limitation of enterprise authority upon emergence from conservatorship. 


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Sec. 505. Requirement to periodically renew charter until wind down and dissolution. 

Sec. 506. Required wind down of operations and dissolution of enterprise. 

TITLE VI—CREDIT RATING AGENCY REFORM 

Sec. 601. Clarification of designation. 

Sec. 602. Elimination of security credit rating requirements in Federal law. 

Sec. 603. Elimination of security credit rating requirements in regulations. 

TITLE VII—ANTI-FRAUD PROVISIONS 

Sec. 701. Authority to impose civil penalties in cease and desist proceedings. 

Sec. 702. Formerly associated persons. 

Sec. 703. Collateral bars. 

Sec. 704. Unlawful margin lending. 

Sec. 705. Nationwide service of subpoenas. 

Sec. 706. Reauthorization of the Financial Crimes Enforcement Network. 

Sec. 707. Fair fund improvements. 

Sec. 708. Authority to contract for collection of delinquent judgments and orders. 

1 TITLE I—RESOLUTION OF NON2 BANK FINANCIAL INSTITUTIONS 

3 SEC. 101. AMENDMENTS TO TITLE 28 OF THE UNITED 

4 STATES CODE. 

5 Title 28 of the United States Code is amended— 

6 (1) in section 1408 by striking ‘‘section 1409’’ 

7 and inserting ‘‘sections 1409 and 1409A’’, 

8 (2) by inserting after section 1409 the fol9 lowing: 

10 ‘‘§ 1409A. Venue of cases involving non-bank financial 

11 institutions 

12 ‘‘A case under chapter 14 may be commenced in the 

13 district court of the United States for the district— 

14 ‘‘(1) in which the debtor has its principal place 

15 of business or principal assets in the United States 


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1 if a Federal Reserve Bank is located in that district, 

2 or 

3 ‘‘(2) if venue does not exist under paragraph 

4 (1), in which there is a Federal Reserve Bank and 

5 in a Federal circuit in which the debtor has its prin6 cipal place of business or principal assets in the 

7 United States.’’, and 

8 (3) by amending the table of sections of chapter 

9 87 of such title to insert after the item relating to 

10 section 1408 the following: 

‘‘1409A. Venue of cases involving non-bank financial institutions.’’. 

11 SEC. 102. AMENDMENTS TO TITLE 11 OF THE UNITED 

12 STATES CODE. 

13 (a) DEFINITIONS.—Section 101 of title 11, United 

14 States Code, is amended— 

15 (1) by inserting after paragraph (26) the fol16 lowing: 

17 ‘‘(26A) The term ‘functional regulator’ means 

18 the Federal regulatory agency with the primary Fed19 eral regulatory authority over the debtor, such as an 

20 agency listed in section 509 of the Gramm-Leach21 Bliley Act.’’, 

22 (2) by redesignating paragraphs (38A) and 

23 (38B) as paragraphs (38B) and (38C), respectively, 

24 (3) by inserting after paragraph (38) the fol25 lowing: 


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1 ‘‘(38A) the term ‘Market Stability and Capital 

2 Adequacy Board’ means the entity established in 

3 section 201 of the Consumer Protection and Regu4 lator Enhancement Act.’’, and 

5 (4) by inserting after paragraph (40) the fol6 lowing: 

7 ‘‘(40A) The term ‘non-bank financial institu8 tion’ means an institution the business of which is 

9 engaging in financial activities that is not an insured 

10 depository institution.’’. 

11 (b) APPLICABILITY OF CHAPTERS.—Section 103 of 

12 title 11, United States Code, is amended— 

13 (1) in subsection (a) by striking ‘‘13’’ and in14 serting ‘‘13, and 14’’, 

15 (2) by redesignating subsection (k) as sub16 section (l), and 

17 (3) by inserting after subsection (j) the fol18 lowing: 

19 ‘‘(k) Chapter 14 applies only in a case under such 

20 chapter.’’. 

21 (c) WHO MAY BE A DEBTOR.—Section 109 of title 

22 11, United States Code, is amended— 

23 (1) in subsection (b)— 

24 (A) in paragraph (2) by striking ‘‘or’’ at 

25 the end, 


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1 (B) in paragraph (3) by striking the period 

2 at the end and insert and inserting ‘‘; or’’, and 

3 (C) by adding at the end the following: 

4 ‘‘(4) a non-bank financial institution that has 

5 not been a debtor under chapter 14 of this title.’’, 

6 (2) in subsection (d) by striking ‘‘or commodity 

7 broker’’ and inserting ‘‘, commodity broker, or a 

8 non-bank financial institution’’, and 

9 (3) by adding at the end the following: 

10 ‘‘(i) Only a non-bank financial institution may be a 

11 debtor under chapter 14 of this title.’’. 

12 (d) INVOLUNTARY CASES.—Section 303 of title 11, 

13 the United States Code, is amended— 

14 (1) in subsection (a) by striking ‘‘or 11’’ and 

15 inserting ‘‘, 11, or 14’’, and 

16 (2) in subsection (b) by striking ‘‘or 11’’ and 

17 inserting ‘‘, 11, or 14’’. 

18 (e) OBTAINING CREDIT.—Section 364 of title 11, 

19 United States Code, is amended by adding at the end the 

20 following: 

21 ‘‘(g) Notwithstanding any other provision of this sec22 tion, the trustee may not, and the court may not authorize 

23 the trustee to, obtain credit, if the source of that credit 

24 either directly or indirectly is the United States.’’. 


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1 (f) CHAPTER 14.—Title 11, United States Code, is 

2 amended— 

3 (1) by inserting the following after chapter 13: 

4 ‘‘CHAPTER 14—ADJUSTMENT TO THE 

5 DEBTS OF A NON-BANK FINANCIAL IN6 STITUTION 

‘‘1401. Inapplicability of other sections. 

‘‘1402. Applicability of chapter 11 to cases under this chapter. 

‘‘1403. Prepetition consultation. 

‘‘1404. Appointment of trustee. 

‘‘1405. Right to be heard. 

‘‘1406. Right to communicate. 

‘‘1407. Exemption with respect to certain contracts or agreements. 

‘‘1408. Conversion or dismissal. 

7 ‘‘§ 1401. Inapplicability of other sections 

8 ‘‘Except as provided in section 1408, sections 

9 362(b)(6), 362(b)(7), 559, 560, and 561 do not apply in 

10 a case under this chapter. 

11 ‘‘§ 1402. Applicability of chapter 11 to cases under 

12 this chapter 

13 ‘‘With the exception of sections 1104(d), 1109, 

14 1112(a), 1115, and 1116, subchapters I, II, and III of 

15 chapter 11 apply in a case under this chapter. 

16 ‘‘§ 1403. Prepetition consultation 

17 ‘‘(a) Subject to subsection (b)— 

18 ‘‘(1) a non-bank financial institution may not 

19 be a debtor under this chapter unless that institu20 tion has, at least 10 days prior to the date of the 


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1 filing of the petition by such institution, taken part 

2 in the consultation described in subsection (c); and 

3 ‘‘(2) a creditor may not commence an involun4 tary case under this chapter unless, at least 10 days 

5 prior to the date of the filing of the petition by such 

6 creditor, the creditor notifies the non-bank financial 

7 institution, the functional regulator, and the Market 

8 Stability and Capital Adequacy Board of its intent 

9 to file a petition and requests a consultation as de10 scribed in subsection (c). 

11 ‘‘(b) If the non-bank financial institution, the func12 tional regulator, and the Market Stability and Capital 

13 Adequacy Board, in consultation with any agency charged 

14 with administering a nonbankruptcy insolvency regime for 

15 any component of the debtor, certify that the immediate 

16 filing of a petition under section 301 or 303 is necessary, 

17 or that an immediate filing would be in the interests of 

18 justice, a petition may be filed notwithstanding subsection 

19 (a). 

20 ‘‘(c) The non-bank financial institution, the func21 tional regulator, the Market Stability and Capital Ade22 quacy Board, and any agency charged with administering 

23 a nonbankruptcy insolvency regime for any component of 

24 the debtor shall engage in prepetition consultation in order 

25 to attempt to avoid the need for the non-bank financial 


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1 institution’s liquidation or reorganization in bankruptcy, 

2 to make any liquidation or reorganization of the non-bank 

3 financial institution under this title more orderly, or to 

4 aid in the nonbankruptcy resolution of any of the non5 bank financial institution’s components under its non6 bankruptcy insolvency regime. Such consultation shall spe7 cifically include the attempt to negotiate forbearance of 

8 claims between the non-bank financial institution and its 

9 creditors if such forbearance would likely help to avoid the 

10 commencement of a case under this title, would make any 

11 liquidation or reorganization under this title more orderly, 

12 or would aid in the nonbankruptcy resolution of any of 

13 the non-bank financial institution’s components under its 

14 nonbankruptcy insolvency regime. Additionally, the con15 sultation shall consider whether, if a petition is filed under 

16 section 301 or 303, the debtor should file a motion for 

17 an exemption authorized by section 1407. 

18 ‘‘(d) The court may allow the consultation process to 

19 continue for 30 days after the petition, upon motion by 

20 the debtor or a creditor. Any post-petition consultation 

21 proceedings authorized should be facilitated by the court’s 

22 mediation services, under seal, and exclude ex parte com23 munications. 

24 ‘‘(e) The Market Stability and Capital Adequacy 

25 Board and the functional regulator shall publish and 


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1 transmit to Congress a report documenting the course of 

2 any consultation. Such report shall be published and 

3 transmitted to Congress within 30 days of the conclusion 

4 of the consultation. 

5 ‘‘(f) Nothing in this section shall be interpreted to 

6 set aside any of the limitations on the use of Federal funds 

7 set forth in the Consumer Protection and Regulator En8 hancement Act or the amendments made by such Act. 

9 ‘‘§ 1404. Appointment of trustee 

10 ‘‘In applying section 1104 to a case under this chap11 ter, if the court orders the appointment of a trustee or 

12 an examiner, if the trustee or an examiner dies or resigns 

13 during the case or is removed under section 324, or if a 

14 trustee fails to qualify under section 322, the functional 

15 regulator, in consultation with the Market Stability and 

16 Capital Adequacy Board, shall submit a list of five disin17 terested persons that are qualified and willing to serve as 

18 trustees in the case and the United States trustee shall 

19 appoint, subject to the court’s approval, one of such per20 sons to serve as trustee in the case. 

21 ‘‘§ 1405. Right to be heard 

22 ‘‘(a) The functional regulator, the Market Stability 

23 and Capital Adequacy Board, the Federal Reserve, the 

24 Department of the Treasury, the Securities and Exchange 

25 Commission, and any domestic or foreign agency charged 


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1 with administering a nonbankruptcy insolvency regime for 

2 any component of the debtor may raise and may appear 

3 and be heard on any issue in a case under this chapter, 

4 but may not appeal from any judgment, order, or decree 

5 entered in the case. 

6 ‘‘(b) A party in interest, including the debtor, the 

7 trustee, a creditors’ committee, an equity security holders’ 

8 committee, a creditor, an equity security holder, or any 

9 indenture trustee may raise, and may appear and be heard 

10 on, any issue in a case under this chapter. 

11 ‘‘§ 1406. Right to communicate 

12 ‘‘The court is entitled to communicate directly with, 

13 or to request information or assistance directly from, the 

14 functional regulator, the Market Stability and Capital 

15 Adequacy Board, the Board of Governors of the Federal 

16 Reserve System, the Department of the Treasury, or any 

17 agency charged with administering a nonbankruptcy insol18 vency regime for any component of the debtor, subject to 

19 the rights of a party in interest to notice and participation. 

20 ‘‘§ 1407. Exemption with respect to certain contracts 

21 or agreements 

22 ‘‘(a) Subject to subsection (b)— 

23 ‘‘(1) upon motion of the debtor, consented to by 

24 the Market Stability and Capital Adequacy Board— 


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1 ‘‘(A) the debtor and the estate shall be ex2 empt from the operation of sections 362(b)(6), 

3 362(b)(7), 559, 560, and 561; 

4 ‘‘(B) if the Market Stability and Capital 

5 Adequacy Board consents to the filing of such 

6 motion by the debtor, the Board shall inform 

7 the court of its reasons for consenting; and 

8 ‘‘(C) the debtor may limit its motion, or 

9 the board may limit its consent, to exempt the 

10 debtor and the estate from the operation of sec11 tion 362(b)(6), 362(b)(7), 559, 560, or 561, or 

12 any combination thereof; and 

13 ‘‘(2) if the Market Stability and Capital Ade14 quacy Board does not consent to the filing of a mo15 tion by the debtor under paragraph (1), the debtor 

16 may file a motion to exempt the debtor and the es17 tate from the operation of sections 362(b)(6), 

18 362(b)(7), 559, 560, and 561. 

19 ‘‘(b) The court shall commence a hearing on a motion 

20 under subsection (a) not later than 5 days after the filing 

21 of the motion to determine whether to maintain, termi22 nate, annul, modify, or condition the exemption under sub23 section (a)(1) or, in the case of a motion under subsection 

24 (a)(2), grant the exemption. The court shall request that 

25 the functional regulator and the Market Stability and 


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1 Capital Adequacy Board file briefs on whether the court 

2 should maintain the exemption. The court shall decide the 

3 motion not later than 5 days after commencing such hear4 ing unless— 

5 ‘‘(1) the parties in interest consent to a exten6 sion for a specific period of time; or 

7 ‘‘(2) except with respect to an exemption from 

8 the operation of section 559, the court sua sponte 

9 extends for 5 additional days the period for decision 

10 if such extension would be in the interests of justice 

11 or is required by compelling circumstances. 

12 ‘‘(c) The court shall maintain, terminate, annul, mod13 ify, or condition the exemption under subsection (a)(1), 

14 or, in the case of a motion under subsection (a)(2), grant 

15 the exemption only upon showing of good cause. In deter16 mining whether good cause has been shown, the court 

17 shall balance the interests of both debtor and creditors 

18 while attempting to preserve the debtor’s assets for repay19 ment and reorganization of the debtors obligations, or to 

20 provide for a more orderly liquidation. 

21 ‘‘§ 1408. Conversion or dismissal 

22 ‘‘In applying section 1112 to a case under this chap23 ter, the debtor may convert a case under this chapter to 

24 a case under chapter 7 of this title if the debtor may be 


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1 a debtor under such chapter unless the debtor is not a 

2 debtor in possession.’’, and 

3 (2) by amending the table of chapters of such 

4 title by adding at the end the following: 

‘‘14. Adjustment to the Debts of a Non-Bank Financial Institution ....... 1401’’. 

5 SEC. 103. EFFECTIVE DATE; APPLICATION OF AMEND6 MENTS. 

7 (a) EFFECTIVE DATE.—Except as provided in sub8 section (b), this Act and the amendments made by this 

9 Act shall take effect on the date of the enactment of this 

10 Act. 

11 (b) APPLICATION OF AMENDMENTS.—The amend12 ments made by this Act shall apply only with respect to 

13 cases commenced under title 11 of the United States Code 

14 on or after the date of the enactment of this Act. 

15 TITLE II—MARKET STABILITY 

16 AND CAPITAL ADEQUACY 

17 SEC. 201. ESTABLISHMENT OF MARKET STABILITY AND 

18 CAPITAL ADEQUACY BOARD. 

19 (a) IN GENERAL.—There is hereby established the 

20 Market Stability and Capital Adequacy Board (hereafter 

21 in this title referred to as the ‘‘Board’’) as an independent 

22 establishment in the Executive Branch. 

23 (b) CONSTITUTION OF BOARD.—Subject to para24 graph (4), the Board shall have 11 members as follows: 


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1 (1) PUBLIC MEMBERS.—The following shall be 

2 members of the Board— 

3 (A) The Secretary of the Treasury. 

4 (B) The Chairman of the Board of Gov5 ernors of the Federal Reserve System. 

6 (C) The Chairman of the Securities and 

7 Exchange Commission. 

8 (D) The Chairperson of the Federal De9 posit Insurance Corporation. 

10 (E) The Chairman of the Commodity Fu11 tures Trading Commission. 

12 (F) The Chairperson of the Financial In13 stitutions Regulator. 

14 (2) PRIVATE MEMBERS.—The Board shall also 

15 have 5 members appointed by the President, by and 

16 with the advise and consent of the Senate, who shall 

17 be appointed from among individuals who— 

18 (A) are specially qualified to serve on the 

19 Board by virtue of their education, training, 

20 and experience; and 

21 (B) are not officers or employees of the 

22 Federal Government, including the Board of 

23 Governors of the Federal Reserve System. 


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1 (3) CHAIRPERSON.—The Secretary of the 

2 Treasury shall serve as the Chairperson of the 

3 Board. 

4 (4) DIRECTOR OF FHFA AS INTERIM MEM5 BER.—Until such time as the charters of the Fed6 eral National Mortgage Association and the Federal 

7 Home Loan Mortgage Corporation are both repealed 

8 pursuant to section 506(d), the Board shall consist 

9 of 12 members with the Director of the Federal 

10 Housing Finance Agency serving as a public member 

11 under paragraph (1). 

12 (c) APPOINTMENTS.— 

13 (1) TERM.— 

14 (A) IN GENERAL.—Each appointed mem15 ber shall be appointed for a term of 5 years. 

16 (B) STAGGERED TERMS.—Of the members 

17 of the Board first appointed under subsection 

18 (b)(2), as designated by the President at the 

19 time of appointment— 

20 (i) 1 shall be appointed for a term of 

21 5 years; 

22 (ii) 1 shall be appointed for a term of 

23 4 years; 

24 (iii) 1 shall be appointed for a term of 

25 3 years; 


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1 (iv) 1 shall be appointed for a term of 

2 2 years; and 

3 (v) 1 shall be appointed for a term of 

4 1 year. 

5 (2) INTERIM APPOINTMENTS.—Any member ap6 pointed to fill a vacancy occurring before the expira7 tion of the term for which such member’s prede8 cessor was appointed shall be appointed only for the 

9 remainder of such term. 

10 (3) CONTINUATION OF SERVICE.—Each ap11 pointed member may continue to serve after the ex12 piration of the term of office to which such member 

13 was appointed until a successor has been appointed 

14 and qualified. 

15 (4) REAPPOINTMENT TO A 2ND TERM.—Each 

16 member appointed to a term on the Board under 

17 subsection (b)(2), including an interim appointment 

18 under paragraph (2), may be reappointed by the 

19 President to serve 1 additional term. 

20 (d) VACANCY.— 

21 (1) IN GENERAL.—Any vacancy on the Board 

22 shall be filled in the manner in which the original 

23 appointment was made. 

24 (2) ACTING OFFICIALS MAY SERVE.—In the 

25 event of a vacancy in any position listed in subVerDate Nov 24 2008 05:11 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H3310.IH H3310

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1 section (b)(1) and pending the appointment of a suc2 cessor, or during the absence or disability of the in3 dividual serving in such position, any acting official 

4 in such position shall be a member of the Board 

5 while such vacancy, absence or disability continues 

6 and the acting official continues acting in such posi7 tion. 

8 (e) INELIGIBILITY FOR OTHER OFFICES.— 

9 (1) POSTSERVICE RESTRICTION.—No member 

10 of the Board may hold any office, position, or em11 ployment in any financial institution or affiliate of a 

12 financial institution during— 

13 (A) the time such member is in office; and 

14 (B) the 2-year period beginning on the 

15 date such member ceases to serve on the Board. 

16 (2) CERTIFICATION.—Upon taking office, each 

17 member of the Board shall certify under oath that 

18 such member has complied with this subsection and 

19 such certification shall be filed with the secretary of 

20 the Board. 

21 (f) QUALIFICATIONS; INITIAL MEETING.— 

22 (1) POLITICAL PARTY AFFILIATION.—Not more 

23 than 3 members of the Board appointed under sub24 section (b)(2) shall be from the same political party. 


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1 (2) QUALIFICATIONS GENERALLY.—It is the 

2 sense of the Congress that individuals appointed to 

3 the Commission should be prominent United States 

4 citizens, with national recognition and significant 

5 depth of experience commensurate with the duties of 

6 the Board. 

7 (3) SPECIFIC APPOINTMENT QUALIFICATIONS

8 FOR CERTAIN APPOINTED MEMBERS.— 

9 (A) STATE BANK.—Of the members ap10 pointed to the Board under subsection (b)(2), 

11 at least 1 shall be appointed from among indi12 viduals who have had experience as a State 

13 bank supervisor or senior management execu14 tive with a State depository institution. 

15 (B) INSURANCE COMMISSIONER.—Of the 

16 members appointed to the Board under sub17 section (b)(2), at least 1 shall be appointed 

18 from among individuals who have served as a 

19 State insurance commissioner or supervisor. 

20 (4) INITIAL MEETING.—The Board shall meet 

21 and begin the operations of the Board as soon as 

22 practicable but not later than the end of the 180-day 

23 period beginning the date of the enactment of this 

24 Act. 


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1 (g) QUORUM.—Four of the members of the Board 

2 designated under subsection (b)(1) and 3 members of the 

3 Board appointed under (b)(2) shall constitute a quorum. 

4 (h) QUARTERLY MEETINGS.—The Board shall meet 

5 upon the call of the chairperson or a majority of the mem6 bers at least once in each calendar quarter 

7 SEC. 202. FUNCTIONS OF BOARD. 

8 (a) PRINCIPAL FUNCTIONS.—The principal functions 

9 of the Board shall be to— 

10 (1) monitor the interactions of various sectors 

11 of the financial system; and 

12 (2) identify risks that could endanger the sta13 bility and soundness of the system. 

14 (b) SPECIFIC REVIEW FUNCTIONS INCLUDED.—In 

15 carrying out the functions described in subsection (a), the 

16 Board shall— 

17 (1) review financial industry data collected from 

18 the appropriate functional regulators; 

19 (2) review insurance industry data, in coordina20 tion with State insurance supervisors, for all lines of 

21 insurance other than health insurance; 

22 (3) monitor government policies and initiatives; 

23 (4) review risk management practices within fi24 nancial regulatory agencies; 


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1 (5) review capital standards set by the appro2 priate functional regulators and make recommenda3 tions to ensure capital and leverage ratios match 

4 risks regulated entities are taking on; 

5 (6) review transparency and regulatory under6 standing of risk exposures in the over-the-counter 

7 derivatives markets and make recommendations re8 garding the appropriate clearing of trades in those 

9 markets through central counterparties; 

10 (7) make recommendations regarding any gov11 ernment or industry policies and practices that are 

12 exacerbating systemic risk; and 

13 (8) take such other actions and make such 

14 other recommendations as the Board, in the discre15 tion of the Board, determines to be appropriate. 

16 (c) REPORTS TO FEDERAL FUNCTIONAL REGU17 LATORS AND THE CONGRESS.—The Board shall periodi18 cally make a report to the Congress and the functional 

19 regulators on the findings, conclusions, and recommenda20 tions of the Board in a manner and within a time frame 

21 that allows the Congress and such regulators to act to con22 tain risks posed by specific firms, industry practices, ac23 tivities and interactions of entities under different regu24 latory regimes, or government policies. 


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1 (d) TESTIMONY TO CONGRESS.—Not later than Feb2 ruary 20 and July 20 of each year, the Chairperson of 

3 the Board shall testify to the Congress at semiannual 

4 hearings before the Committee on Banking, Housing, and 

5 Urban Affairs of the Senate and the Committee on Finan6 cial Services of the House of Representatives, about the 

7 state of systemic risk in the financial services industry and 

8 proposals or recommendations by the Board to address 

9 any undue risk. 

10 (e) RULE OF CONSTRUCTION.—No provision of this 

11 title shall be construed as giving the Board any enforce12 ment authority over any financial institution. 

13 SEC. 203. POWERS OF BOARD. 

14 (a) CONTRACTING.—The Board may, to such extent 

15 and in such amounts as are provided in appropriation 

16 Acts, enter into contracts to enable the Board to discharge 

17 its duties under this title. 

18 (b) INFORMATION FROM FEDERAL AGENCIES.— 

19 (1) IN GENERAL.—The Board may secure di20 rectly from any executive department, agency, or 

21 independent establishment, or any other instrumen22 tality of the United States information and rec23 ommendations for the purposes of this title. 

24 (2) DELIVERY OF REQUESTED INFORMATION.— 

25 Each executive department, agency, or independent 


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1 establishment, or any other instrumentality of the 

2 United States shall, to the extent authorized by law, 

3 furnish any information and recommendations re4 quested under paragraph (1) directly to the Board, 

5 upon request made by the chairperson or any mem6 ber designated by a majority of the Commission. 

7 (3) RECEIPT, HANDLING, STORAGE, AND DIS8 SEMINATION.—Information shall only be received, 

9 handled, stored, and disseminated by members of 

10 the Board and its staff consistent with all applicable 

11 statutes, regulations, and Executive orders. 

12 (c) ASSISTANCE FROM FEDERAL AGENCIES.— 

13 (1) GENERAL SERVICES ADMINISTRATION.— 

14 The Administrator of General Services shall provide 

15 to the Board on a reimbursable basis administrative 

16 support and other services for the performance of 

17 the Commission’s functions. 

18 (2) OTHER DEPARTMENTS AND AGENCIES.—In 

19 addition to the assistance prescribed in paragraph 

20 (1), departments and agencies of the United States 

21 may provide to the Commission such services, funds, 

22 facilities, staff, and other support services as they 

23 may determine advisable and as may be authorized 

24 by law, including agencies represented on the Board 

25 under section 201(b)(1). 


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1 SEC. 204. RESPONSIBILITIES OF FEDERAL FUNCTIONAL 

2 REGULATORS. 

3 (a) FEDERAL FUNCTIONAL REGULATOR DEFINED.— 

4 For purposes of this title, the term ‘‘Federal functional 

5 regulator’’ has the same meaning as in section 509(2) of 

6 the Gramm-Leach-Bliley Act, except that such term in7 cludes the Commodity Futures Trading Commission. 

8 (b) ASSESSMENTS AND REVIEWS.—In order to ad9 dress current regulatory gaps, each Federal functional 

10 regulator shall, before each quarterly meeting of the 

11 Board,— 

12 (1) assess the effects on macroeconomic sta13 bility of the activities of financial institutions that 

14 are subject to the jurisdiction of such agency; 

15 (2) review how such financial institutions inter16 act with entities outside the jurisdiction of such 

17 agency; and 

18 (3) report the results of such assessment and 

19 review to the Board, together with such rec20 ommendations for administrative action as the agen21 cy determines to be appropriate. 

22 SEC. 205. STAFF OF BOARD. 

23 (a) APPOINTMENT AND COMPENSATION.—The chair24 person, in accordance with rules agreed upon by the Board 

25 and title 5, United States Code, may appoint and fix the 

26 compensation of a staff director and such other personnel 


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1 as may be necessary to enable the Board to carry out its 

2 functions. 

3 (b) DETAILEES.—Any Federal Government employee 

4 may be detailed to the Board and such detailee shall retain 

5 the rights, status, and privileges of his or her regular em6 ployment without interruption. 

7 (c) CONSULTANT SERVICES.—The Board may pro8 cure the services of experts and consultants in accordance 

9 with section 3109 of title 5, United States Code, but at 

10 rates not to exceed the daily rate paid a person occupying 

11 a position at level IV of the Executive Schedule under sec12 tion 5315 of title 5, United States Code. 

13 SEC. 206. COMPENSATION AND TRAVEL EXPENSES. 

14 (a) COMPENSATION.—Each member of the Board ap15 pointed under section 201(b)(2) may be compensated at 

16 not to exceed the daily equivalent of the annual rate of 

17 basic pay in effect for a position at level IV of the Execu18 tive Schedule under section 5315 of title 5, United States 

19 Code, for each day during which that member is engaged 

20 in the actual performance of the duties of the Board. 

21 (b) TRAVEL EXPENSES.—While away from their 

22 homes or regular places of business in the performance 

23 of services for the Board, members of the Board shall be 

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1 mittently in the Government service are allowed expenses 

2 under section 5703(b) of title 5, United States Code. 

3 TITLE III—REGULATORY CON4 SOLIDATION AND CONSUMER 

5 PROTECTION 

6 SEC. 301. ESTABLISHMENT. 

7 (a) IN GENERAL.—There is hereby established in the 

8 executive branch of the Government an independent agen9 cy to be known as the Financial Institutions Regulator 

10 (hereafter in this title referred to as the ‘‘FIR’’). 

11 (b) DIVISIONS OF THE FIR.—There are hereby es12 tablished within the FIR— 

13 (1) a division to be known as the Federal Bank14 ing Division; and 

15 (2) a division to be known as the State Banking 

16 Division; 

17 (c) INSURED DEPOSITORY INSTITUTION DEFINED.— 

18 For purposes of this title, the term ‘‘insured depository 

19 institution’’ has the meaning given to such term in section 

20 3(c) of the Federal Deposit Insurance Act. 

21 SEC. 302. BOARD OF DIRECTORS. 

22 (a) IN GENERAL.—The management of the FIR shall 

23 be vested in a Board of Directors consisting of 5 mem24 bers— 


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1 (1) 1 of whom shall be the Chairman of the 

2 FIR and who shall be appointed by the President, 

3 by and with the advice and consent of the Senate; 

4 (2) 1 of whom shall be the head of the Federal 

5 Banking Division and who shall be appointed by the 

6 President, by and with the advice and consent of the 

7 Senate; 

8 (3) 1 of whom shall be the head of the State 

9 Banking Division and who shall be appointed by the 

10 President, by and with the advice and consent of the 

11 Senate; 

12 (4) 1 of whom shall be the Chairman of the Na13 tional Credit Union Administration; and 

14 (5) 1 of whom shall be the Chairperson of the 

15 Board of Directors of the Federal Deposit Insurance 

16 Corporation. 

17 (b) TERMS.— 

18 (1) 5–YEAR TERMS.—Each member appointed 

19 under paragraphs (1), (2), and (3) of subsection (a) 

20 shall be appointed for a term of 5 years. 

21 (2) INTERIM APPOINTMENTS.—Any member ap22 pointed to fill a vacancy occurring before the end of 

23 the term to which such member’s predecessor was 

24 appointed shall be appointed only for the remainder 

25 of such term. 


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1 (3) CONTINUATION OF SERVICE.—Any member 

2 may continue to serve after the expiration of the 

3 term of office to which such member was appointed 

4 until a successor has been appointed and confirmed. 

5 (c) VACANCY.—Any vacancy on the Board of Direc6 tors shall be filled in the manner in which the original 

7 appointment was made. 

8 (d) INELIGIBILITY FOR OTHER OFFICES.— 

9 (1) RESTRICTIONS ON EMPLOYMENT BY DEPOS10 ITORY INSTITUTIONS.—No member of the Board of 

11 Directors may hold any office, position, or employ12 ment in any insured depository institution or any af13 filiate (as defined in section 2(k) of the Bank Hold14 ing Company Act of 1956) of an insured depository 

15 institution during— 

16 (A) the time such member is in office; and 

17 (B) the 2-year period beginning on the 

18 date such member ceases to serve on the Board 

19 of Directors. 

20 (2) OTHER RESTRICTIONS DURING SERVICE AS

21 MEMBER.—No member of the Board of Directors 

22 may— 

23 (A) be an officer or director of any Federal 

24 Reserve bank or Federal home loan bank; or 


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1 (B) hold any stock in any insured deposi2 tory institution or any affiliate (as defined in 

3 section 2(k) of the Bank Holding Company Act 

4 of 1956) of an insured depository institution. 

5 (3) CERTIFICATION.—Upon taking office, each 

6 member of the Board of Directors shall file a certifi7 cation under oath with the secretary of the Board of 

8 Directors that such member has complied with the 

9 requirements of this subsection. 

10 SEC. 303. POWERS AND DUTIES OF THE FIR. 

11 (a) REGULATION OF NATIONAL BANKS.— 

12 (1) TRANSFER TO THE FIR.—All functions of 

13 the Comptroller of the Currency are hereby trans14 ferred to the FIR. 

15 (2) FIR POWERS.—The FIR shall have all pow16 ers, duties, and authority which, before the date of 

17 the enactment of this Act, were vested in the Comp18 troller of the Currency under any provision of Fed19 eral law to the extent such provision applies to na20 tional banks or the office, officers, or employees of 

21 the Comptroller of the Currency. 

22 (b) REGULATION OF MEMBER BANKS, BANK HOLD23 ING COMPANIES AND AFFILIATES, AND VARIOUS INTER24 NATIONAL BANKING ENTITIES.— 


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1 (1) TRANSFER TO THE FIR.—All functions of 

2 the Board of Governors of the Federal Reserve Sys3 tem (and any Federal reserve bank) relating to— 

4 (A) the supervision and regulation of 

5 banks which are members of the Federal Re6 serve System, 

7 (B) the supervision and regulation of bank 

8 holding companies and any subsidiary or affil9 iate of a bank holding company which is not a 

10 depository institution, 

11 (C) the supervision and regulation of com12 panies operating under section 25 or 25A of the 

13 Federal Reserve Act or the International Bank14 ing Act of 1978, 

15 (D) the supervision and regulation of any 

16 company which is subject to supervision and 

17 regulation by the Board of Governors under any 

18 title of the Consumer Credit Protection Act, 

19 and 

20 (E) the supervision and regulation of any 

21 foreign bank, any branch or agency of a foreign 

22 bank, and any commercial lending company 

23 controlled by a foreign bank, 

24 are hereby transferred to the FIR. 


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1 (2) FIR POWERS.—The FIR shall have all pow2 ers, duties, and authority which, before the date of 

3 the enactment of this Act, were vested in the Board 

4 of Governors of the Federal Reserve System under 

5 any provision of Federal law to the extent such pro6 visions apply to banks or other companies described 

7 in any subparagraph of paragraph (1). 

8 (c) REGULATION OF SAVINGS ASSOCIATIONS AND

9 SAVINGS AND LOAN HOLDING COMPANIES.— 

10 (1) TRANSFER TO THE FEDERAL BANKING DI11 VISION.—All functions of the Director of the Office 

12 of Thrift Supervision are hereby transferred to the 

13 FIR. 

14 (2) FIR POWERS.—The FIR shall have all pow15 ers, duties, and authority which, before the date of 

16 the enactment of this Act, were vested in the Direc17 tor of the Office of Thrift Supervision under any 

18 provision of Federal law to the extent such provision 

19 applies to savings associations, savings and loan 

20 holding companies, or the office, officers, or employ21 ees of the Director. 

22 (d) REGULATION OF STATE NONMEMBER BANKS.— 

23 (1) TRANSFER TO THE FIR.—All functions of 

24 the Federal Deposit Insurance Corporation relating 

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1 member banks, including savings banks, (other than 

2 insurance, conservatorship, or receivership functions) 

3 and foreign banks with insured branches (as defined 

4 in section 3(s)(3) of the Federal Deposit Insurance 

5 Act) are hereby transferred to the FIR. 

6 (2) FIR POWERS.—The FIR shall have all pow7 ers, duties, and authority which, before the date of 

8 the enactment of this Act, were vested in the Fed9 eral Deposit Insurance Corporation under any provi10 sion of Federal law to the extent such provisions 

11 apply to the supervision and regulation of State non12 member banks, including savings banks, (other than 

13 insurance, conservatorship, or receivership functions) 

14 and foreign banks with insured branches (as defined 

15 in section 3(s)(3) of the Federal Deposit Insurance 

16 Act). 

17 (e) REGULATIONS AND ORDERS.—In addition to any 

18 authority under any provision referred to in subsection 

19 (a), (b), (c), or (d), the FIR may prescribe such regula20 tions and issue such orders as the FIR may determine 

21 to be appropriate to carry out the purposes of this title 

22 and the powers and duties of the FIR under this title and 

23 any provision referred to in any such subsection. 


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1 (f) NO INTENDED IMPACT ON EXISTING RIGHTS AND

2 JUDICIAL PRECEDENT.—Nothing in this section shall be 

3 construed— 

4 (1) to impact any existing right or obligation 

5 under any function or power transferred to the FIR, 

6 solely by reason of such transfer; or 

7 (2) to impact any judicial precedent established 

8 with respect to any function or power transferred to 

9 the FIR, solely by reason of such transfer. 

10 (g) EFFECTIVE DATE.—The provisions of this sec11 tion shall take effect after the end of the 90-day period 

12 beginning on the date of the enactment of this Act. 

13 SEC. 304. ALLOCATION OF RESPONSIBILITY AMONG FIR DI14 VISIONS. 

15 (a) FEDERAL BANKING DIVISION.—The Federal 

16 Banking Division shall have the primary responsibility for 

17 carrying out the FIR’s authority with respect to— 

18 (1) national banking associations; 

19 (2) foreign banks and Federal branches or 

20 agencies of a foreign bank; 

21 (3) bank holding companies and any subsidiary 

22 or affiliate of a bank holding company which is not 

23 a depository institution, other than a bank holding 

24 company, subsidiary, or affiliate that consists solely 

25 of State banks that are insured banks (as such 


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1 terms is defined in section 3(h) of the Federal De2 posit Insurance Act (12 U.S.C. 1813(h)); 

3 (4) companies operating under section 25 or 

4 25A of the Federal Reserve Act or the International 

5 Banking Act of 1978; 

6 (5) commercial lending companies, other than a 

7 Federal agency; 

8 (6) savings associations; 

9 (7) savings and loan holding companies; and 

10 (8) such additional areas as the Board of Direc11 tors may prescribe. 

12 (b) STATE BANKING DIVISION.—The State Banking 

13 Division shall have the primary responsibility for carrying 

14 out the FIR’s authority with respect to— 

15 (1) any State bank that is an insured bank (as 

16 such terms is defined in section 3(h) of the Federal 

17 Deposit Insurance Act (12 U.S.C. 1813(h))); 

18 (2) any bank holding company or subsidiary or 

19 affiliate of a bank holding company, if such bank 

20 holding company, subsidiary, or affiliate consists 

21 solely of State banks described in paragraph (1); 

22 and 

23 (3) such additional areas as the Board of Direc24 tors may prescribe. 


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1 SEC. 305. TECHNICAL AND CONFORMING AMENDMENTS RE2 LATING TO TRANSFERS OF FUNCTIONS TO 

3 THE FIR. 

4 (a) APPROPRIATE FEDERAL BANKING AGENCY RE5 DEFINED.—Section 3(q) of the Federal Deposit Insurance 

6 Act (12 U.S.C. 1813(q)) is amended to read as follows: 

7 ‘‘(q) APPROPRIATE FEDERAL BANKING AGENCY.— 

8 The term ‘appropriate Federal banking agency’ means the 

9 Financial Institutions Regulator.’’. 

10 (b) MEMBERS OF FDIC BOARD.—Section 2(a)(1) of 

11 the Federal Deposit Insurance Act (12 U.S.C. 1812(a)(1)) 

12 is amended— 

13 (1) by striking subparagraph (A) and redesig14 nating subparagraphs (B) and (C) as subparagraphs 

15 (A) and (B), respectively; 

16 (2) in subparagraph (A) (as so redesignated by 

17 paragraph (1)), by striking ‘‘Director of the Office 

18 of Thrift Supervision’’ and inserting ‘‘Chairman of 

19 the Financial Institutions Regulator’’; and 

20 (3) in subparagraph (B) (as so redesignated by 

21 paragraph (1)), by striking ‘‘3’’ and inserting ‘‘4’’. 

22 (c) EFFECTIVE DATE.—The provisions of this section 

23 shall take effect after the end of the 90-day period begin24 ning on the date of the enactment of this Act. 


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1 SEC. 306. OFFICE OF COMPTROLLER OF THE CURRENCY 

2 AND POSITION OF COMPTROLLER OF THE 

3 CURRENCY ABOLISHED. 

4 (a) IN GENERAL.—Effective at the end of the 180- 

5 day period beginning on the date of the enactment of this 

6 Act, the Office of the Comptroller of the Currency and 

7 the position of Comptroller of the Currency are hereby 

8 abolished. 

9 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

10 Effective at the end of the 180-day period beginning on 

11 the date of the enactment of this Act: 

12 (1) Chapter nine of title VII of the Revised 

13 Statutes is amended by striking sections 324, 325, 

14 and 326. 

15 (2) Subchapter I of chapter 3 of title 31, 

16 United States Code, is amended by striking section 

17 307. 

18 SEC. 307. OFFICE OF THRIFT SUPERVISION AND POSITION 

19 OF DIRECTOR OF THE OFFICE OF THRIFT SU20 PERVISION ABOLISHED. 

21 (a) IN GENERAL.—Effective at the end of the 180- 

22 day period beginning on the date of the enactment of this 

23 Act, the Office of Thrift Supervision and the position of 

24 Director of the Office of Thrift Supervision are hereby 

25 abolished. 


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1 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

2 Effective at the end of the 180-day period beginning on 

3 the date of the enactment of this Act: 

4 (1) Section 3 of the Home Owners’ Loan Act 

5 (12 U.S.C. 1462a) is amended by striking sub6 sections (a) and (b). 

7 (2) Subchapter I of chapter 3 of title 31, 

8 United States Code, is amended by striking section 

9 309. 

10 SEC. 308. SAVINGS PROVISIONS. 

11 (a) SAVINGS PROVISIONS RELATING TO THE COMP12 TROLLER OF THE CURRENCY.— 

13 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA14 TIONS NOT AFFECTED.—Sections 303(a)(1) and 306 

15 shall not affect the validity of any right, duty, or ob16 ligation of the United States, the Comptroller of the 

17 Currency, the Office of the Comptroller of the Cur18 rency, or any other person, which— 

19 (A) arises under or pursuant to any provi20 sion of law referred to in section 303(a)(2); and 

21 (B) existed on the day before the date of 

22 the enactment of this Act. 

23 (2) CONTINUATION OF SUITS.—No action or 

24 other proceeding commenced by or against the 

25 Comptroller of the Currency or the Office of the 


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1 Comptroller of the Currency shall abate by reason of 

2 the enactment of this Act, except that the FIR shall 

3 be substituted for the Comptroller or Office as a 

4 party to any such action or proceeding. 

5 (b) SAVINGS PROVISIONS RELATING TO THE BOARD

6 OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.— 

7 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA8 TIONS NOT AFFECTED.—Section 303(b)(1) shall not 

9 affect the validity of any right, duty, or obligation of 

10 the United States, the Board of Governors of the 

11 Federal Reserve System, or any other person, 

12 which— 

13 (A) arises under or pursuant to any provi14 sion of law referred to in section 303(b)(2); and 

15 (B) existed on the day before the date of 

16 the enactment of this Act. 

17 (2) CONTINUATION OF SUITS.—No action or 

18 other proceeding commenced by or against the 

19 Board of Governors of the Federal Reserve System 

20 with respect to any function transferred to the FIR 

21 shall abate by reason of the enactment of this Act, 

22 except that the FIR shall be substituted for the 

23 Board of Governors as a party to any such action 

24 or proceeding. 


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1 (c) SAVINGS PROVISIONS RELATING TO THE DIREC2 TOR OF THE OFFICE OF THRIFT SUPERVISION.— 

3 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA4 TIONS NOT AFFECTED.—Sections 303(c)(1) and 307 

5 shall not affect the validity of any right, duty, or ob6 ligation of the United States, the Director of the Of7 fice of Thrift Supervision, the Office of Thrift Su8 pervision, or any other person, which— 

9 (A) arises under or pursuant to any provi10 sion of law referred to in section 303(c)(2); and 

11 (B) existed on the day before the date of 

12 the enactment of this Act. 

13 (2) CONTINUATION OF SUITS.—No action or 

14 other proceeding commenced by or against the Di15 rector of the Office of Thrift Supervision or the Of16 fice of Thrift Supervision shall abate by reason of 

17 the enactment of this Act, except that the FIR shall 

18 be substituted for the Director or Office as a party 

19 to any such action or proceeding. 

20 (d) SAVINGS PROVISIONS RELATING TO THE FED21 ERAL DEPOSIT INSURANCE CORPORATION.— 

22 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA23 TIONS NOT AFFECTED.—Section 303(d)(1) shall not 

24 affect the validity of any right, duty, or obligation of 

25 the United States, the Federal Deposit Insurance 


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1 Corporation, the Board of Directors of such Cor2 poration, or any other person, which— 

3 (A) arises under or pursuant to any provi4 sion of law referred to in section 303(d)(2); and 

5 (B) existed on the day before the date of 

6 the enactment of this Act. 

7 (2) CONTINUATION OF SUITS.—No action or 

8 other proceeding commenced by or against the Fed9 eral Deposit Insurance Corporation or the Board of 

10 Directors of such Corporation with respect to any 

11 function transferred to the FIR shall abate by rea12 son of the enactment of this Act, except that the 

13 FIR may be substituted for the Corporation or 

14 Board of Directors, as the case may be, as a party 

15 to any such action or proceeding. 

16 (e) CONTINUATION OF ORDERS, RESOLUTIONS, DE17 TERMINATIONS, AND REGULATIONS.—All orders, resolu18 tions, determinations, and regulations, which— 

19 (1) have been issued, made, prescribed, or al20 lowed to become effective by the Director of the Of21 fice of Thrift Supervision, the Comptroller of the 

22 Currency, the Federal Deposit Insurance Corpora23 tion, or the Board of Governors of the Federal Re24 serve System (including orders, resolutions, deter25 minations, and regulations which relate to the conVerDate Nov 24 2008 05:11 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\H3310.IH H3310

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1 duct of conservatorships and receiverships), or by a 

2 court of competent jurisdiction, in the performance 

3 of functions which are transferred by this Act, and 

4 (2) are in effect on the date this Act takes ef5 fect (or become effective after such date pursuant to 

6 the terms of the order, resolution, determination or 

7 regulation, as in effect on such date), 

8 shall continue in effect according to the terms of such or9 ders, resolutions, determinations, and regulations and 

10 shall be enforceable by or against the FIR until modified, 

11 terminated, set aside, or superseded in accordance with 

12 applicable law by the FIR, by any court of competent ju13 risdiction, or by operation of law. 

14 (f) EFFECTIVE DATE.—The provisions of this section 

15 shall take effect after the end of the 90-day period begin16 ning on the date of the enactment of this Act. 

17 SEC. 309. REFERENCES IN FEDERAL LAW TO FEDERAL 

18 BANKING AGENCIES. 

19 (a) COMPTROLLER OF THE CURRENCY AND DIREC20 TOR OF THE OFFICE OF THRIFT SUPERVISION.—Any ref21 erence in any Federal law to the Comptroller of the Cur22 rency, the Office of the Comptroller of the Currency, the 

23 Director of the Office of Thrift Supervision, or the Office 

24 of Thrift Supervision shall be deemed to be a reference 

25 to the FIR. 


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1 (b) BOARD OF GOVERNORS OF THE FEDERAL RE2 SERVE SYSTEM.—Any reference in any Federal law to the 

3 Board of Governors of the Federal Reserve System in con4 nection with any function of the Board under any provi5 sion of law referred to in section 304(b)(2) shall be 

6 deemed to be a reference to the FIR. 

7 (c) FEDERAL DEPOSIT INSURANCE CORPORATION.— 

8 Any reference in any Federal law to the Federal Deposit 

9 Insurance Corporation or the Board of Directors of such 

10 Corporation in connection with any function of the Cor11 poration or Board of Directors under any provision of law 

12 referred to in section 303(d)(2) shall be deemed to be a 

13 reference to the FIR. 

14 (d) EFFECTIVE DATE.—The provisions of this sec15 tion shall take effect after the end of the 90-day period 

16 beginning on the date of the enactment of this Act. 

17 SEC. 310. NATIONAL CREDIT UNION ADMINISTRATION 

18 MOVED WITHIN THE FIR. 

19 (a) IN GENERAL.—The Nation Credit Union Admin20 istration is hereby moved within the FIR and shall be 

21 maintained as a distinct entity within the FIR. 

22 (b) EFFECTIVE DATE.—The provisions of this sec23 tion shall take effect after the end of the 90-day period 

24 beginning on the date of the enactment of this Act. 


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1 SEC. 311. OFFICE OF CONSUMER PROTECTION. 

2 (a) OFFICE OF CONSUMER PROTECTION.—There is 

3 hereby established within the FIR an Office of Consumer 

4 Protection (hereinafter in this section referred to as the 

5 ‘‘Office’’). 

6 (b) DELEGATION OF AUTHORITY TO THE OFFICE.— 

7 The Office shall have the primary responsibility for car8 rying out the FIR’s authority with respect to laws and 

9 regulations relating to consumer protection, including the 

10 authority of the FIR under the Consumer Credit Protec11 tion Act. 

12 (c) RULEMAKING APPROVAL.—No rule or regulation 

13 issued by the Office shall take effect unless the Board of 

14 Directors of the FIR approves such rule or regulation. 

15 (d) CONSUMER COMPLAINT HOTLINE AND

16 WEBSITE.—The Office shall establish a toll-free hotline 

17 and a website for consumers to contact regarding inquiries 

18 or complaints related to insured depository institutions. 

19 Such hotline and website shall then refer such inquiries 

20 or complaints to the appropriate FIR division, which will 

21 then respond to the inquiry or complaint. 

22 (e) DISCLOSURE REVIEW.—Not less than once every 

23 7 years, the Office shall undertake a comprehensive review 

24 of all public disclosures (including policies, procedures, 

25 guidelines, standards, and regulatory filings) made by the 

26 FIR and each division of the FIR. In making such review 


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1 the Office shall perform a cost and benefit analysis of each 

2 such disclosure and determine if the policy of the FIR to3 wards such disclosure should remain the same or be re4 vised. 

5 (f) CONSUMER TESTING REQUIREMENT.—Before 

6 prescribing any regulation pursuant to the authority of the 

7 FIR under the Consumer Credit Protection Act, the Office 

8 shall carry out consumer testing with respect to such regu9 lation. 

10 (g) PERIODIC REVIEW OF REGULATIONS.— 

11 (1) REVIEW.—Not less than once every 7 years, 

12 the Office shall undertake a comprehensive review of 

13 all regulations issued by the Office, the FIR, or any 

14 entity preceding the FIR, with respect to the author15 ity of the FIR under the Consumer Credit Protec16 tion Act. In making such review, the Office shall 

17 perform a cost and benefit analysis of each regula18 tion and determine if such regulation should remain 

19 the same or if such regulation should be revised. 

20 (2) REPORT.—After performing a review re21 quired by paragraph (1), the Office shall issue a re22 port to the Congress describing the review process, 

23 any determinations made by the Office, and any re24 visions to regulations that the Office determined 

25 were needed. 


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1 TITLE IV—FEDERAL RESERVE 

2 REFORM 

3 SEC. 401. GAO AUTHORITY TO AUDIT THE FEDERAL RE4 SERVE SYSTEM. 

5 (a) IN GENERAL.—Subsection (b) of section 714 of 

6 title 31, United States Code, is amended by striking all 

7 after ‘‘shall audit an agency’’ and inserting a period. 

8 (b) AUDIT.—Section 714 of title 31, United States 

9 Code, is amended by adding at the end the following new 

10 subsection: 

11 ‘‘(e) AUDIT AND REPORT OF THE FEDERAL RE12 SERVE SYSTEM.— 

13 ‘‘(1) IN GENERAL.—The audit of the Board of 

14 Governors of the Federal Reserve System and the 

15 Federal reserve banks under subsection (b) shall be 

16 completed before the end of 2010. 

17 ‘‘(2) REPORT.— 

18 ‘‘(A) REQUIRED.—A report on the audit 

19 referred to in paragraph (1) shall be submitted 

20 by the Comptroller General to the Congress be21 fore the end of the 90-day period beginning on 

22 the date on which such audit is completed and 

23 made available to the Speaker of the House, the 

24 majority and minority leaders of the House of 

25 Representatives, the majority and minority 


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1 leaders of the Senate, the Chairman and Rank2 ing Member of the committee and each sub3 committee of jurisdiction in the House of Rep4 resentatives and the Senate, and any other 

5 Member of Congress who requests it. 

6 ‘‘(B) CONTENTS.—The report under sub7 paragraph (A) shall include a detailed descrip8 tion of the findings and conclusion of the 

9 Comptroller General with respect to the audit 

10 that is the subject of the report, together with 

11 such recommendations for legislative or admin12 istrative action as the Comptroller General may 

13 determine to be appropriate.’’. 

14 SEC. 402. MONETARY POLICY AND INFLATION TARGETS. 

15 Section 2A of the Federal Reserve Act (12 U.S.C. 

16 225a) is amended to read as follows: 

17 ‘‘SEC. 2A. MONETARY POLICY. 

18 ‘‘(a) PRICE STABILITY.—The Board and the Federal 

19 Open Market Committee shall— 

20 ‘‘(1) establish an explicit numerical definition of 

21 the term ‘price stability’; 

22 ‘‘(2) implement such definition through infla23 tion targets; and 

24 ‘‘(3) maintain a monetary policy that effectively 

25 promotes long-term price stability. 


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1 ‘‘(b) MARKET STABILITY AND LIQUIDITY.—Sub2 section (a) shall not be construed as a limitation on the 

3 authority or responsibility of the Board— 

4 ‘‘(1) to provide liquidity to markets in the event 

5 of a disruption that threatens the smooth func6 tioning and stability of the financial sector; or 

7 ‘‘(2) to serve as a lender of last resort under 

8 this Act when the Board determines such action is 

9 necessary.’’. 

10 SEC. 403. REFORMS OF SECTION 13 EMERGENCY POWERS. 

11 (a) RESTRICTIONS ON EMERGENCY POWERS.—The 

12 third undesignated paragraph of section 13 of the Federal 

13 Reserve Act is amended— 

14 (1) by striking ‘‘In unusual and exigent’’ and 

15 inserting the following: 

16 ‘‘(3) EMERGENCY AUTHORITY.— 

17 ‘‘(A) IN GENERAL.—In unusual and exi18 gent’’; and 

19 (2) by adding at the end the following new sub20 paragraph: 

21 ‘‘(B) REQUIREMENT FOR BROAD AVAIL22 ABILITY OF DISCOUNTS.—Subject to the limita23 tions provided under subparagraph (A), any au24 thorization made pursuant to the authority pro25 vided under subparagraph (A) shall require disVerDate Nov 24 2008 05:11 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00047 Fmt 6652 Sfmt 6201 E:\BILLS\H3310.IH H3310

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1 counts to be made broadly available to individ2 uals, partnerships, and corporations within the 

3 market sector for which such authorization is 

4 being made. 

5 ‘‘(C) TRANSPARENCY AND OVERSIGHT.— 

6 ‘‘(i) SECRETARY OF THE TREASURY

7 APPROVAL REQUIRED; NOTICE TO THE

8 CONGRESS.—No authorization may be 

9 made pursuant to the authority provided 

10 under subparagraph (A) unless— 

11 ‘‘(I) such authorization is first 

12 approved by the Secretary of the 

13 Treasury; and 

14 ‘‘(II) the Secretary of the Treas15 ury issues a notice to the Congress 

16 detailing what authorization the Sec17 retary has approved. 

18 ‘‘(ii) PROGRAMS MOVED ON-BUDGET

19 AFTER 90 DAYS.—On and after the date 

20 that is 90 days after the date on which any 

21 authorization is made pursuant to the au22 thority provided under subparagraph (A), 

23 all receipts and disbursements resulting 

24 from such authorization shall be counted 


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1 as new budget authority, outlays, receipts, 

2 or deficit or surplus for purposes of— 

3 ‘‘(I) the budget of the United 

4 States Government as submitted by 

5 the President; 

6 ‘‘(II) the congressional budget; 

7 and 

8 ‘‘(III) the Balanced Budget and 

9 Emergency Deficit Control Act of 

10 1985. 

11 ‘‘(D) JOINT RESOLUTION OF DIS12 APPROVAL.— 

13 ‘‘(i) IN GENERAL.—With respect to an 

14 authorization made pursuant to the au15 thority provided under subparagraph (A), 

16 if, during the 90-day period beginning on 

17 the date the Congress receives a notice de18 scribed under subparagraph (C)(i)(II) with 

19 respect to such authorization, there is en20 acted into law a joint resolution dis21 approving such authorization, any action 

22 taken under such authorization must be 

23 discontinued and unwound not later than 

24 the end of the 180-day period beginning on 

25 the date that such authorization was made. 


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1 ‘‘(ii) CONTENTS OF JOINT RESOLU2 TION.—For the purpose of this paragraph, 

3 the term ‘joint resolution’ means only a 

4 joint resolution— 

5 ‘‘(I) that is introduced not later 

6 than 3 calendar days after the date on 

7 which the notice referred to in clause 

8 (i) is received by the Congress; 

9 ‘‘(II) which does not have a pre10 amble; 

11 ‘‘(III) the title of which is as fol12 lows: ‘Joint resolution relating to the 

13 disapproval of authorization under the 

14 emergency powers of the Federal Re15 serve Act’; and 

16 ‘‘(IV) the matter after the resolv17 ing clause of which is as follows: 

18 ‘That Congress disapproves the au19 thorization contained in the notice 

20 submitted to the Congress by the Sec21 retary of the Treasury on the date of 

22 lllllll relating to 

23 lllllll.’ (The blank spaces 

24 being appropriately filled in.). 


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1 ‘‘(E) FAST TRACK CONSIDERATION IN

2 HOUSE OF REPRESENTATIVES.— 

3 ‘‘(i) RECONVENING.—Upon receipt of 

4 a notice referred to in subparagraph 

5 (D)(i), the Speaker, if the House would 

6 otherwise be adjourned, shall notify the 

7 Members of the House that, pursuant to 

8 this section, the House shall convene not 

9 later than the second calendar day after 

10 receipt of such report. 

11 ‘‘(ii) REPORTING AND DISCHARGE.— 

12 Any committee of the House of Represent13 atives to which a joint resolution is re14 ferred shall report it to the House not later 

15 than 5 calendar days after the date of re16 ceipt of the notice referred to in subpara17 graph (D)(i). If a committee fails to report 

18 the joint resolution within that period, the 

19 committee shall be discharged from further 

20 consideration of the joint resolution and 

21 the joint resolution shall be referred to the 

22 appropriate calendar. 

23 ‘‘(iii) PROCEEDING TO CONSIDER24 ATION.—After each committee authorized 

25 to consider a joint resolution reports it to 


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1 the House or has been discharged from its 

2 consideration, it shall be in order, not later 

3 than the sixth day after Congress receives 

4 the notice referred to in subparagraph 

5 (D)(i), to move to proceed to consider the 

6 joint resolution in the House. All points of 

7 order against the motion are waived. Such 

8 a motion shall not be in order after the 

9 House has disposed of a motion to proceed 

10 on the joint resolution. The previous ques11 tion shall be considered as ordered on the 

12 motion to its adoption without intervening 

13 motion. The motion shall not be debatable. 

14 A motion to reconsider the vote by which 

15 the motion is disposed of shall not be in 

16 order. 

17 ‘‘(iv) CONSIDERATION.—The joint res18 olution shall be considered as read. All 

19 points of order against the joint resolution 

20 and against its consideration are waived. 

21 The previous question shall be considered 

22 as ordered on the joint resolution to its 

23 passage without intervening motion except 

24 two hours of debate equally divided and 

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1 nent. A motion to reconsider the vote on 

2 passage of the joint resolution shall not be 

3 in order. 

4 ‘‘(F) FAST TRACK CONSIDERATION IN SEN5 ATE.— 

6 ‘‘(i) RECONVENING.—Upon receipt of 

7 a notice referred to in subparagraph 

8 (D)(i), if the Senate has adjourned or re9 cessed for more than 2 days, the majority 

10 leader of the Senate, after consultation 

11 with the minority leader of the Senate, 

12 shall notify the Members of the Senate 

13 that, pursuant to this section, the Senate 

14 shall convene not later than the second cal15 endar day after receipt of such message. 

16 ‘‘(ii) PLACEMENT ON CALENDAR.— 

17 Upon introduction in the Senate, the joint 

18 resolution shall be placed immediately on 

19 the calendar. 

20 ‘‘(iii) FLOOR CONSIDERATION.— 

21 ‘‘(I) IN GENERAL.—Notwith22 standing Rule XXII of the Standing 

23 Rules of the Senate, it is in order at 

24 any time during the period beginning 

25 on the 4th day after the date on 


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1 which Congress receives a notice re2 ferred to in subparagraph (D)(i) and 

3 ending on the 6th day after the date 

4 on which Congress receives a notice 

5 referred to in subparagraph (D)(i) 

6 (even though a previous motion to the 

7 same effect has been disagreed to) to 

8 move to proceed to the consideration 

9 of the joint resolution, and all points 

10 of order against the joint resolution 

11 (and against consideration of the joint 

12 resolution) are waived. The motion to 

13 proceed is not debatable. The motion 

14 is not subject to a motion to postpone. 

15 A motion to reconsider the vote by 

16 which the motion is agreed to or dis17 agreed to shall not be in order. If a 

18 motion to proceed to the consideration 

19 of the resolution is agreed to, the joint 

20 resolution shall remain the unfinished 

21 business until disposed of. 

22 ‘‘(II) DEBATE.—Debate on the 

23 joint resolution, and on all debatable 

24 motions and appeals in connection 

25 therewith, shall be limited to not more 


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1 than 10 hours, which shall be divided 

2 equally between the majority and mi3 nority leaders or their designees. A 

4 motion further to limit debate is in 

5 order and not debatable. An amend6 ment to, or a motion to postpone, or 

7 a motion to proceed to the consider8 ation of other business, or a motion to 

9 recommit the joint resolution is not in 

10 order. 

11 ‘‘(III) VOTE ON PASSAGE.—The 

12 vote on passage shall occur imme13 diately following the conclusion of the 

14 debate on a joint resolution, and a 

15 single quorum call at the conclusion of 

16 the debate if requested in accordance 

17 with the rules of the Senate. 

18 ‘‘(IV) RULINGS OF THE CHAIR

19 ON PROCEDURE.—Appeals from the 

20 decisions of the Chair relating to the 

21 application of the rules of the Senate, 

22 as the case may be, to the procedure 

23 relating to a joint resolution shall be 

24 decided without debate. 


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1 ‘‘(G) RULES RELATING TO SENATE AND

2 HOUSE OF REPRESENTATIVES.— 

3 ‘‘(i) COORDINATION WITH ACTION BY

4 OTHER HOUSE.—If, before the passage by 

5 one House of a joint resolution of that 

6 House, that House receives from the other 

7 House a joint resolution, then the following 

8 procedures shall apply: 

9 ‘‘(I) The joint resolution of the 

10 other House shall not be referred to a 

11 committee. 

12 ‘‘(II) With respect to a joint res13 olution of the House receiving the res14 olution— 

15 ‘‘(aa) the procedure in that 

16 House shall be the same as if no 

17 joint resolution had been received 

18 from the other House; but 

19 ‘‘(bb) the vote on passage 

20 shall be on the joint resolution of 

21 the other House. 

22 ‘‘(ii) TREATMENT OF JOINT RESOLU23 TION OF OTHER HOUSE.—If one House 

24 fails to introduce or consider a joint resolu25 tion under this section, the joint resolution 


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1 of the other House shall be entitled to ex2 pedited floor procedures under this section. 

3 ‘‘(iii) TREATMENT OF COMPANION

4 MEASURES.—If, following passage of the 

5 joint resolution in the Senate, the Senate 

6 then receives the companion measure from 

7 the House of Representatives, the com8 panion measure shall not be debatable. 

9 ‘‘(iv) VETOES.—If the President ve10 toes the joint resolution, debate on a veto 

11 message in the Senate under this section 

12 shall be 1 hour equally divided between the 

13 majority and minority leaders or their des14 ignees. 

15 ‘‘(v) RULES OF HOUSE OF REP16 RESENTATIVES AND SENATE.—This sub17 paragraph and subparagraphs (D), (E), 

18 and (F) are enacted by Congress— 

19 ‘‘(I) as an exercise of the rule20 making power of the Senate and 

21 House of Representatives, respec22 tively, and as such it is deemed a part 

23 of the rules of each House, respec24 tively, but applicable only with respect 

25 to the procedure to be followed in that 


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1 House in the case of a joint resolu2 tion, and it supersedes other rules 

3 only to the extent that it is incon4 sistent with such rules; and 

5 ‘‘(II) with full recognition of the 

6 constitutional right of either House to 

7 change the rules (so far as relating to 

8 the procedure of that House) at any 

9 time, in the same manner, and to the 

10 same extent as in the case of any 

11 other rule of that House.’’. 

12 (b) CURRENT PROGRAMS MOVED ON-BUDGET.—Not 

13 later than 90 days after the date of the enactment of this 

14 Act, all receipts and disbursements resulting from any au15 thorization made before the date of the enactment of this 

16 Act pursuant to the authority granted by the third undes17 ignated paragraph of section 13 of the Federal Reserve 

18 Act shall be counted as new budget authority, outlays, re19 ceipts, or deficit or surplus for purposes of— 

20 (1) the budget of the United States Govern21 ment as submitted by the President; 

22 (2) the congressional budget; and 

23 (3) the Balanced Budget and Emergency Def24 icit Control Act of 1985. 


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1 TITLE V—GOVERNMENT-SPON2 SORED ENTERPRISES RE3 FORM 

4 SEC. 501. SHORT TITLE. 

5 This title may be cited as the ‘‘Government-Spon6 sored Enterprises Free Market Reform Act of 2009’’. 

7 SEC. 502. DEFINITIONS. 

8 For purposes of this title, the following definitions 

9 shall apply: 

10 (1) CHARTER.—The term ‘‘charter’’ means— 

11 (A) with respect to the Federal National 

12 Mortgage Association, the Federal National 

13 Mortgage Association Charter Act (12 U.S.C. 

14 1716 et seq.); and 

15 (B) with respect to the Federal Home 

16 Loan Mortgage Corporation, the Federal Home 

17 Loan Mortgage Corporation Act (12 U.S.C. 

18 1451 et seq.). 

19 (2) DIRECTOR.—The term ‘‘Director’’ means 

20 the Director of the Federal Housing Finance Agen21 cy. 

22 (3) ENTERPRISE.—The term ‘‘enterprise’’ 

23 means— 

24 (A) the Federal National Mortgage Asso25 ciation; and 


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1 (B) the Federal Home Loan Mortgage 

2 Corporation. 

3 (4) GUARANTEE.—The term ‘‘guarantee’’ 

4 means, with respect to an enterprise, the credit sup5 port of the enterprise that is provided by the Fed6 eral Government through its charter as a Govern7 ment-sponsored enterprise. 

8 SEC. 503. TERMINATION OF CURRENT CONSERVATORSHIP. 

9 (a) IN GENERAL.—Upon the expiration of the period 

10 referred to in subsection (b), the Director of the Federal 

11 Housing Finance Agency shall determine, with respect to 

12 each enterprise, if the enterprise is financially viable at 

13 that time and— 

14 (1) if the Director determines that the enter15 prise is financially viable, immediately take all ac16 tions necessary to terminate the conservatorship for 

17 each of the enterprises; or 

18 (2) if the Director determines that the enter19 prise is not financially viable, immediately appoint 

20 the Federal Housing Finance Agency as receiver 

21 under section 1367 of the Federal Housing Enter22 prises Financial Safety and Soundness Act of 1992 

23 and carry out such receivership under the authority 

24 of such section. 


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1 (b) TIMING.—The period referred to in this sub2 section is, with respect to an enterprise— 

3 (1) except as provided in paragraph (2), the 24- 

4 month period beginning upon the date of the enact5 ment of this Act; or 

6 (2) if the Director determines before the expira7 tion of the period referred to in paragraph (1) that 

8 the financial markets would be adversely affected 

9 without the extension of such period under this 

10 paragraph with respect to that enterprise, the 30- 

11 month period beginning upon the date of the enact12 ment of this Act. 

13 (c) FINANCIAL VIABILITY.—The Director may not 

14 determine that an enterprise is financially viable for pur15 poses of subsection (a) if the Director determines that any 

16 of the conditions for receivership set forth in paragraph 

17 (3) or (4) of section 1367(a) of the Federal Housing En18 terprises Financial Safety and Soundness Act of 1992 (12 

19 U.S.C. 4617(a)) exists at the time with respect to the en20 terprise. 

21 SEC. 504. LIMITATION OF ENTERPRISE AUTHORITY UPON 

22 EMERGENCE FROM CONSERVATORSHIP. 

23 (a) REVISED AUTHORITY.—Upon the expiration of 

24 the period referred to in section 503(b), if the Director 


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1 makes the determination under section 503(a)(1), the fol2 lowing provisions shall take effect: 

3 (1) PORTFOLIO LIMITATIONS.—Subtitle B of 

4 title XIII of the Housing and Community Develop5 ment Act of 1992 (12 U.S.C. 4611 et seq.) is 

6 amended by adding at the end the following new sec7 tion: 

8 ‘‘SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF EN9 TERPRISES. 

10 ‘‘(a) RESTRICTION.—No enterprise shall own, as of 

11 any applicable date in this subsection or thereafter, mort12 gage assets in excess of— 

13 ‘‘(1) upon the expiration of the period referred 

14 to in section 503(b) of the Government-Sponsored 

15 Enterprises Free Market Reform Act of 2009, 

16 $850,000,000,000; or 

17 ‘‘(2) on December 31 of each year thereafter, 

18 80.0 percent of the aggregate amount of mortgage 

19 assets of the enterprise as of December 31 of the 

20 immediately preceding calendar year; 

21 except that in no event shall an enterprise be required 

22 under this section to own less than $250,000,000,000 in 

23 mortgage assets. 

24 ‘‘(b) DEFINITION OF MORTGAGE ASSETS.—For pur25 poses of this section, the term ‘mortgage assets’ means, 


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1 with respect to an enterprise, assets of such enterprise 

2 consisting of mortgages, mortgage loans, mortgage-related 

3 securities, participation certificates, mortgage-backed 

4 commercial paper, obligations of real estate mortgage in5 vestment conduits and similar assets, in each case to the 

6 extent such assets would appear on the balance sheet of 

7 such enterprise in accordance with generally accepted ac8 counting principles in effect in the United States as of 

9 September 7, 2008 (as set forth in the opinions and pro10 nouncements of the Accounting Principles Board and the 

11 American Institute of Certified Public Accountants and 

12 statements and pronouncements of the Financial Account13 ing Standards Board from time to time; and without giv14 ing any effect to any change that may be made after Sep15 tember 7, 2008, in respect of Statement of Financial Ac16 counting Standards No. 140 or any similar accounting 

17 standard).’’. 

18 (2) INCREASE IN MINIMUM CAPITAL REQUIRE19 MENT.—Section 1362 of the Federal Housing En20 terprises Financial Safety and Soundness Act of 

21 1992 (12 U.S.C. 4612), as amended by section 1111 

22 of the Housing and Economic Recovery Act of 2008 

23 (Public Law 110–289), is amended— 

24 (A) in subsection (a), by striking ‘‘For 

25 purposes of this subtitle, the minimum capital 


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1 level for each enterprise shall be’’ and inserting 

2 ‘‘The minimum capital level established under 

3 subsection (g) for each enterprise may not be 

4 lower than’’; 

5 (B) in subsection (c)— 

6 (i) by striking ‘‘subsections (a) and’’ 

7 and inserting ‘‘subsection’’; 

8 (ii) by striking ‘‘regulated entities’’ 

9 the first place such term appears and in10 serting ‘‘Federal Home Loan Banks’’; 

11 (iii) by striking ‘‘for the enterprises,’’; 

12 (iv) by striking ‘‘, or for both the en13 terprises and the banks,’’; 

14 (v) by striking ‘‘the level specified in 

15 subsection (a) for the enterprises or’’; and 

16 (vi) by striking ‘‘the regulated entities 

17 operate’’ and inserting ‘‘such banks oper18 ate’’; 

19 (C) in subsection (d)(1)— 

20 (i) by striking ‘‘subsections (a) and’’ 

21 and inserting ‘‘subsection’’; and 

22 (ii) by striking ‘‘regulated entity’’ 

23 each place such term appears and inserting 

24 ‘‘Federal home loan bank’’; 


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1 (D) in subsection (e), by striking ‘‘regu2 lated entity’’ each place such term appears and 

3 inserting ‘‘Federal home loan bank’’; 

4 (E) in subsection (f)— 

5 (i) by striking ‘‘the amount of core 

6 capital maintained by the enterprises,’’; 

7 and 

8 (ii) by striking ‘‘regulated entities’’ 

9 and inserting ‘‘banks’’; and 

10 (F) by adding at the end the following new 

11 subsection: 

12 ‘‘(g) ESTABLISHMENT OF REVISED MINIMUM CAP13 ITAL LEVELS.— 

14 ‘‘(1) IN GENERAL.—The Director shall cause 

15 the enterprises to achieve and maintain adequate 

16 capital by establishing minimum levels of capital for 

17 the enterprises and by using such other methods as 

18 the Director deems appropriate. 

19 ‘‘(2) AUTHORITY.—The Director shall have the 

20 authority to establish such minimum level of capital 

21 for an enterprise in excess of the level specified 

22 under subsection (a) as the Director, in the Direc23 tor’s discretion, deems to be necessary or appro24 priate in light of the particular circumstances of the 

25 enterprise. 


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1 ‘‘(h) FAILURE TO MAINTAIN REVISED MINIMUM

2 CAPITAL LEVELS.— 

3 ‘‘(1) UNSAFE AND UNSOUND PRACTICE OR CON4 DITION.—Failure of an enterprise to maintain cap5 ital at or above its minimum level as established 

6 pursuant to subsection (c) of this section may be 

7 deemed by the Director, in his discretion, to con8 stitute an unsafe and unsound practice or condition 

9 within the meaning of this title. 

10 ‘‘(2) DIRECTIVE TO ACHIEVE CAPITAL

11 LEVEL.— 

12 ‘‘(A) AUTHORITY.—In addition to, or in 

13 lieu of, any other action authorized by law, in14 cluding paragraph (1), the Director may issue 

15 a directive to an enterprise that fails to main16 tain capital at or above its required level as es17 tablished pursuant to subsection (c) of this sec18 tion. 

19 ‘‘(B) PLAN.—Such directive may require 

20 the enterprise to submit and adhere to a plan 

21 acceptable to the Director describing the means 

22 and timing by which the enterprise shall achieve 

23 its required capital level. 

24 ‘‘(C) ENFORCEMENT.—Any such directive 

25 issued pursuant to this paragraph, including 


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1 plans submitted pursuant thereto, shall be en2 forceable under the provisions of subtitle C of 

3 this title to the same extent as an effective and 

4 outstanding order issued pursuant to subtitle C 

5 of this title which has become final. 

6 ‘‘(3) ADHERENCE TO PLAN.— 

7 ‘‘(A) CONSIDERATION.—The Director may 

8 consider such enterprise’s progress in adhering 

9 to any plan required under this subsection 

10 whenever such enterprise seeks the requisite ap11 proval of the Director for any proposal which 

12 would divert earnings, diminish capital, or oth13 erwise impede such enterprise’s progress in 

14 achieving its minimum capital level. 

15 ‘‘(B) DENIAL.—The Director may deny 

16 such approval where it determines that such 

17 proposal would adversely affect the ability of 

18 the enterprise to comply with such plan.’’. 

19 (3) REPEAL OF INCREASES TO CONFORMING

20 LOAN LIMITS.— 

21 (A) REPEAL OF TEMPORARY INCREASES.— 

22 (i) ECONOMIC STIMULUS ACT OF

23 2008.—Section 201 of the Economic Stim24 ulus Act of 2008 (Public Law 110–185) is 

25 hereby repealed. 


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1 (ii) AMERICAN RECOVERY AND REIN2 VESTMENT ACT OF 2009.—Section 1203 of 

3 division A of the American Recovery and 

4 Reinvestment Act of 2009 (Public Law 

5 111–5; 123 Stat. 225) is hereby repealed. 

6 (B) REPEAL OF GENERAL LIMIT AND PER7 MANENT HIGH-COST AREA INCREASE.—Para8 graph (2) of section 302(b) of the Federal Na9 tional Mortgage Association Charter Act (12 

10 U.S.C. 1717(b)(2)) and paragraph (2) of sec11 tion 305(a) of the Federal Home Loan Mort12 gage Corporation Act (12 U.S.C. 1454(a)(2)) 

13 are each amended to read as such sections were 

14 in effect immediately before the enactment of 

15 the Housing and Economic Recovery Act of 

16 2008 (Public Law 110–289). 

17 (C) REPEAL OF NEW HOUSING PRICE

18 INDEX.—Section 1322 of the Federal Housing 

19 Enterprises Financial Safety and Soundness 

20 Act of 1992, as added by section 1124(d) of the 

21 Housing and Economic Recovery Act of 2008 

22 (Public Law 110–289), is hereby repealed. 

23 (D) REPEAL.—Section 1124 of the Hous24 ing and Economic Recovery Act of 2008 (Public 

25 Law 110–289) is hereby repealed. 


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1 (E) ESTABLISHMENT OF CONFORMING

2 LOAN LIMIT.—For the year in which the expira3 tion of the period referred to in section 503(b) 

4 of this section occurs, the limitations governing 

5 the maximum original principal obligation of 

6 conventional mortgages that may be purchased 

7 by the Federal National Mortgage Association 

8 and the Federal Home Loan Mortgage Cor9 poration, referred to in section 302(b)(2) of the 

10 Federal National Mortgage Association Charter 

11 Act (12 U.S.C. 1717(b)(2)) and section 

12 305(a)(2) of the Federal Home Loan Mortgage 

13 Corporation Act (12 U.S.C. 1454(a)(2)), re14 spectively, shall be considered to be— 

15 (i) $417,000 for a mortgage secured 

16 by a single-family residence, 

17 (ii) $533,850 for a mortgage secured 

18 by a 2-family residence, 

19 (iii) $645,300 for a mortgage secured 

20 by a 3-family residence, and 

21 (iv) $801,950 for a mortgage secured 

22 by a 4-family residence, 

23 and such limits shall be adjusted effective each 

24 January 1 thereafter in accordance with such 

25 sections 302(b)(2) and 305(a)(2). 


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1 (F) PROHIBITION OF PURCHASE OF MORT2 GAGES EXCEEDING MEDIAN AREA HOME

3 PRICE.— 

4 (i) FANNIE MAE.—Section 302(b)(2) 

5 of the Federal National Mortgage Associa6 tion Charter Act (12 U.S.C. 1717(b)(2)) is 

7 amended by adding at the end the fol8 lowing new sentence: ‘‘Notwithstanding 

9 any other provision of this title, the cor10 poration may not purchase any mortgage 

11 for a property having a principal obligation 

12 that exceeds the median home price, for 

13 properties of the same size, for the area in 

14 which such property subject to the mort15 gage is located.’’. 

16 (ii) FREDDIE MAC.—Section 

17 305(a)(2) of the Federal Home Loan 

18 Mortgage Corporation Act (12 U.S.C. 

19 1454(a)(2)) is amended by adding at the 

20 end the following new sentence: ‘‘Notwith21 standing any other provision of this title, 

22 the Corporation may not purchase any 

23 mortgage for a property having a principal 

24 obligation that exceeds the median home 

25 price, for properties of the same size, for 


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1 the area in which such property subject to 

2 the mortgage is located.’’. 

3 (4) REQUIREMENT TO PAY STATE AND LOCAL

4 TAXES.— 

5 (A) FANNIE MAE.—Paragraph (2) of sec6 tion 309(c) of the Federal National Mortgage 

7 Association Charter Act (12 U.S.C. 

8 1723a(c)(2)) is amended— 

9 (i) by striking ‘‘shall be exempt from’’ 

10 and inserting ‘‘shall be subject to’’; and 

11 (ii) by striking ‘‘except that any’’ and 

12 inserting ‘‘and any’’. 

13 (B) FREDDIE MAC.—Section 303(e) of the 

14 Federal Home Loan Mortgage Corporation Act 

15 (12 U.S.C. 1452(e)) is amended— 

16 (i) by striking ‘‘shall be exempt from’’ 

17 and inserting ‘‘shall be subject to’’; and 

18 (ii) by striking ‘‘except that any’’ and 

19 inserting ‘‘and any’’. 

20 (5) REPEALS RELATING TO REGISTRATION OF

21 SECURITIES.— 

22 (A) FANNIE MAE.— 

23 (i) MORTGAGE-BACKED SECURI24 TIES.—Section 304(d) of the Federal Na25 tional Mortgage Association Charter Act 


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1 (12 U.S.C. 1719(d)) is amended by strik2 ing the fourth sentence. 

3 (ii) SUBORDINATE OBLIGATIONS.— 

4 Section 304(e) of the Federal National 

5 Mortgage Association Charter Act (12 

6 U.S.C. 1719(e)) is amended by striking the 

7 fourth sentence. 

8 (B) FREDDIE MAC.—Section 306 of the 

9 Federal Home Loan Mortgage Corporation Act 

10 (12 U.S.C. 1455) is amended by striking sub11 section (g). 

12 (6) RECOUPMENT OF COSTS FOR FEDERAL

13 GUARANTEE.— 

14 (A) ASSESSMENTS.—The Director of the 

15 Federal Housing Finance Agency shall establish 

16 and collect from each enterprise assessments in 

17 the amount determined under subparagraph 

18 (B). In determining the method and timing for 

19 making such assessments, the Director shall 

20 take into consideration the determinations and 

21 conclusions of the study under subsection (b) of 

22 this section. 

23 (B) DETERMINATION OF COSTS OF GUAR24 ANTEE.—Assessments under subparagraph (A) 

25 with respect to an enterprise shall be in such 


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1 amount as the Director determines necessary to 

2 recoup to the Federal Government the full value 

3 of the benefit the enterprise receives from the 

4 guarantee provided by the Federal Government 

5 for the obligations and financial viability of the 

6 enterprise, based upon the dollar value of such 

7 benefit in the market to such enterprise when 

8 not operating under conservatorship or receiver9 ship. To determine such amount, the Director 

10 shall establish a risk-based pricing mechanism 

11 as the Director considers appropriate, taking 

12 into consideration the determinations and con13 clusions of the study under subsection (b) of 

14 this section. 

15 (C) TREATMENT OF RECOUPED

16 AMOUNTS.—The Director shall cover into the 

17 general fund of the Treasury any amounts re18 ceived from assessments made under this para19 graph. 

20 (b) GAO STUDY REGARDING RECOUPMENT OF

21 COSTS FOR FEDERAL GOVERNMENT GUARANTEE.—The 

22 Comptroller General of the United States shall conduct 

23 a study to determine a risk-based pricing mechanism to 

24 accurately determine the value of the benefit the enter25 prises receive from the guarantee provided by the Federal 


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1 Government for the obligations and financial viability of 

2 the enterprises. Such study shall establish a dollar value 

3 of such benefit in the market to each enterprise when not 

4 operating under conservatorship or receivership, shall ana5 lyze various methods of the Federal Government assessing 

6 a charge for such value received (including methods involv7 ing an annual fee or a fee for each mortgage purchased 

8 or securitized), and shall make a recommendation of the 

9 best such method for assessing such charge. Not later 

10 than 12 months after the date of the enactment of this 

11 Act, the Comptroller General shall submit to the Congress 

12 a report setting forth the determinations and conclusions 

13 of such study. 

14 SEC. 505. REQUIREMENT TO PERIODICALLY RENEW CHAR15 TER UNTIL WIND DOWN AND DISSOLUTION. 

16 (a) REQUIRED RENEWAL; WIND DOWN AND DIS17 SOLUTION UPON NON-RENEWAL.—Upon the expiration of 

18 the 3-year period that begins upon the expiration of the 

19 period referred to in section 503(b), unless the charter of 

20 an enterprise is renewed pursuant to subsection (b) of this 

21 section, section 506 (relating to wind down of operations 

22 and dissolution of enterprise) shall apply to the enterprise. 

23 (b) RENEWAL PROCEDURE.— 

24 (1) APPLICATION; TIMING.—The Director shall 

25 provide for each enterprise to apply to the Director, 


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1 before the expiration of the 3-year period under sub2 section (a), for renewal of the charter of the enter3 prise. 

4 (2) STANDARD.—The Director shall approve 

5 the application of an enterprise for the renewal of 

6 the charter of the enterprise if— 

7 (A) the application includes a certification 

8 by the enterprise that the enterprise is finan9 cially sound and is complying with all provisions 

10 of, and amendments made by, section 504 of 

11 this title applicable to such enterprise; and 

12 (B) the Director verifies that the certifi13 cation made pursuant to subparagraph (A) is 

14 accurate. 

15 (c) OPTION TO REAPPLY.—Nothing in this section 

16 may be construed to require an enterprise to apply under 

17 this section for renewal of the charter of the enterprise. 

18 SEC. 506. REQUIRED WIND DOWN OF OPERATIONS AND DIS19 SOLUTION OF ENTERPRISE. 

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

21 enterprise— 

22 (1) upon the expiration of the 3-year period re23 ferred to in such section 505(a), to the extent pro24 vided in such section; and 


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1 (2) if this section has not previously applied to 

2 the enterprise, upon the expiration of the 6-year pe3 riod that begins upon the expiration of the period re4 ferred to in section 503(b). 

5 (b) WIND DOWN.—Upon the applicability of this sec6 tion to an enterprise, the Director and the Secretary of 

7 the Treasury shall jointly take such action, and may pre8 scribe such regulations and procedures, as may be nec9 essary to wind down the operations of an enterprise as 

10 an entity chartered by the United States Government over 

11 the duration of the 10-year period beginning upon the ap12 plicability of this section to the enterprise (pursuant to 

13 subsection (a)) in an orderly manner consistent with this 

14 title and the ongoing obligations of the enterprise. 

15 (c) DIVISION OF ASSETS AND LIABILITIES; AUTHOR16 ITY TO ESTABLISH HOLDING CORPORATION AND DIS17 SOLUTION TRUST FUND.—The action and procedures re18 quired under subsection (b)— 

19 (1) shall include the establishment and execu20 tion of plans to provide for an equitable division and 

21 distribution of assets and liabilities of the enterprise, 

22 including any liability of the enterprise to the United 

23 States Government or a Federal reserve bank that 

24 may continue after the end of the period described 

25 in subsection (b); and 


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1 (2) may provide for establishment of— 

2 (A) a holding corporation organized under 

3 the laws of any State of the United States or 

4 the District of Columbia for the purposes of the 

5 reorganization and restructuring of the enter6 prise; and 

7 (B) one or more trusts to which to trans8 fer— 

9 (i) remaining debt obligations of the 

10 enterprise, for the benefit of holders of 

11 such remaining obligations; or 

12 (ii) remaining mortgages held for the 

13 purpose of backing mortgage-backed secu14 rities, for the benefit of holders of such re15 maining securities. 

16 (d) REPEAL OF CHARTER.—Effective upon the expi17 ration of the 10-year period referred to in subsection (b) 

18 for an enterprise, the charter for the enterprise is re19 pealed, except that the provisions of such charter in effect 

20 immediately before such repeal shall continue to apply 

21 with respect to the rights and obligations of any holders 

22 of outstanding debt obligations and mortgage-backed secu23 rities of the enterprise. 


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1 TITLE VI—CREDIT RATING 

2 AGENCY REFORM 

3 SEC. 601. CLARIFICATION OF DESIGNATION. 

4 (a) IN GENERAL.— 

5 (1) SINGULAR.—Each applicable law is amend6 ed by striking ‘‘nationally recognized statistical rat7 ing organization’’ each place it appears and inserting 

8 ‘‘nationally registered statistical rating organiza9 tion’’. 

10 (2) PLURAL.—Each applicable law is amended 

11 by striking ‘‘nationally recognized statistical rating 

12 organizations’’ each place it appears and inserting 

13 ‘‘nationally registered statistical rating organiza14 tions’’. 

15 (b) APPLICABLE LAWS.—For purposes of this sec16 tion, the term ‘‘applicable laws’’ means— 

17 (1) the Securities Exchange Act of 1934; and 

18 (2) the Investment Advisers Act of 1940. 

19 SEC. 602. ELIMINATION OF SECURITY CREDIT RATING RE20 QUIREMENTS IN FEDERAL LAW. 

21 (a) SECURITIES EXCHANGE ACT OF 1934.—The Se22 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 

23 is amended— 

24 (1) in section 3(a)(41), by striking ‘‘is rated in 

25 one of the two highest rating categories by at least 


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1 one nationally recognized statistical rating organiza2 tion, and’’; and 

3 (2) in section 3(a)(53)(A), by striking ‘‘is rated 

4 in 1 of the 4 highest rating categories by at least 1 

5 nationally recognized statistical rating organization, 

6 and’’. 

7 (b) INVESTMENT COMPANY ACT OF 1940.—Section 

8 6(a)(5)(A) of the Investment Company Act of 1940 (15 

9 U.S.C. 80a–6(a)(5)(A)) is amended— 

10 (1) in clause (ii), by adding ‘‘and’’ at the end; 

11 (2) in clause (iii), by striking ‘‘; and’’ and in12 serting a period; and 

13 (3) by striking clause (iv). 

14 (c) HIGHER EDUCATION ACT OF 1965.—Section 439 

15 of the Higher Education Act of 1965 (20 U.S.C. 1087– 

16 2) is amended— 

17 (1) by striking subsection (d)(5); and 

18 (2) in subsection (r), by striking paragraph 

19 (11) and inserting the following: 

20 ‘‘(11) [Repealed]’’. 

21 (d) LAUNCHING OUR COMMUNITIES’ ACCESS TO

22 LOCAL TELEVISION ACT OF 2000.—Section 

23 1004(d)(2)(D) of the Launching Our Communities’ Ac24 cess to Local Television Act of 2000 (47 U.S.C. 

25 1103(d)(2)(D)) is amended— 


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1 (1) in clause (i)(II), by striking ‘‘, if the Board 

2 determines that such nonprofit corporation has one 

3 or more issues of outstanding long-term debt that is 

4 rated within the highest three rating categories of a 

5 nationally recognized statistical rating organization’’; 

6 and 

7 (2) by striking clause (ii) (and redesignating 

8 succeeding clauses accordingly). 

9 (e) EMPLOYEE RETIREMENT INCOME SECURITY ACT

10 OF 1974.—Section 4041(b)(5)(B) of the Employee Retire11 ment Income Security Act of 1974 (29 U.S.C. 

12 1341(b)(5)(B)) is amended to read as follows: 

13 ‘‘(B) LIMITATION.—Subparagraph (A) 

14 shall not apply to any transaction or series of 

15 transactions unless the employer maintaining 

16 the plan after the transaction or series of trans17 actions employs at least 20 percent of the em18 ployees located in the United States who were 

19 employed by such employer immediately before 

20 the transaction or series of transactions.’’. 

21 (f) CHAPTER 6 OF TITLE 23.—Chapter 6 of title 23, 

22 United States Code, is amended— 

23 (1) in section 601(a), by striking paragraph (3) 

24 and paragraph (10) and redesignating succeeding 

25 paragraphs accordingly; 


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1 (2) in section 602(b)(2), by amending subpara2 graph (B) to read as follows: 

3 ‘‘(B) [Repealed]’’; 

4 (3) in section 603(a)(3)— 

5 (A) by striking ‘‘and each rating agency 

6 providing a preliminary rating opinion letter 

7 under section 602 (b)(2)(B)’’; and 

8 (B) by striking ‘‘, taking into account such 

9 letter’’; 

10 (4) in section 603(a), by striking paragraph 

11 (4); 

12 (5) in section 603(b)(2), by striking ‘‘ or, if the 

13 secured loan does not receive an investment grade 

14 rating, the amount of the senior project obligations’’; 

15 (6) in section 604(a)(3)— 

16 (A) by striking ‘‘and each rating agency 

17 providing a preliminary rating opinion letter 

18 under section 602 (b)(2)(B)’’; and 

19 (B) by striking ‘‘, taking into account such 

20 letter’’; 

21 (7) in section 604(a), by striking paragraph 

22 (4); and 

23 (8) by striking section 604(a)(4). 

24 (g) FEDERAL HOUSING ENTERPRISES FINANCIAL

25 SAFETY AND SOUNDNESS ACT OF 1992.—Section 1319 


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1 of the Federal Housing Enterprises Financial Safety and 

2 Soundness Act of 1992 (12 U.S.C. 4519) is amended by 

3 striking ‘‘that is a nationally recognized statistical rating 

4 organization, as such term is defined in section 3(a) of 

5 the Securities Exchange Act of 1934,’’. 

6 (h) REVISED STATUTES.—Section 5136A of title 

7 LXII of the Revised Statutes of the United States is 

8 amended— 

9 (1) in subsection (a)(2)(E), by striking ‘‘appli10 cable rating or other’’; 

11 (2) in the heading for subsection (a)(3) by 

12 striking ‘‘Rating or comparable requirement’’ and 

13 inserting ‘‘Requirement’’; 

14 (3) by amending subsection (a)(3)(A) to read as 

15 follows: 

16 ‘‘(A) IN GENERAL.—A national bank meets 

17 the requirements of this paragraph if the bank 

18 is 1 of the second 50 largest insured banks and 

19 meets such criteria as the Secretary of the 

20 Treasury and the Board of Governors of the 

21 Federal Reserve System may jointly establish 

22 by regulation.’’; 

23 (4) in the heading for subsection (f), by striking 

24 ‘‘maintain public rating or’’; and 


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1 (5) in subsection (f)(1), by striking ‘‘applicable 

2 rating or other’’. 

3 (i) FEDERAL DEPOSIT INSURANCE ACT.—Section 28 

4 of the Federal Deposit Insurance Act (12 U.S.C. 1831e) 

5 is amended by striking subsections (d) and (e) (and redes6 ignating succeeding subsections accordingly). 

7 SEC. 603. ELIMINATION OF SECURITY CREDIT RATING RE8 QUIREMENTS IN REGULATIONS. 

9 Not later than 3 months after the date of the enact10 ment of this Act, each Federal agency and department 

11 shall modify any regulation promulgated by such agency 

12 or department that requires the use of an assessment of 

13 the creditworthiness of a security or money market instru14 ment by removing such requirement from any such regula15 tion. 

16 TITLE VII—ANTI-FRAUD 

17 PROVISIONS 

18 SEC. 701. AUTHORITY TO IMPOSE CIVIL PENALTIES IN 

19 CEASE AND DESIST PROCEEDINGS. 

20 (a) UNDER THE SECURITIES ACT OF 1933.—Section 

21 8A of the Securities Act of 1933 (15 U.S.C. 77h–1) is 

22 amended by adding at the end the following new sub23 section: 

24 ‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.— 


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1 ‘‘(1) GROUNDS FOR IMPOSING.—In any cease2 and-desist proceeding under subsection (a), the 

3 Commission may impose a civil penalty on a person 

4 if it finds, on the record after notice and opportunity 

5 for hearing, that— 

6 ‘‘(A) such person— 

7 ‘‘(i) is violating or has violated any 

8 provision of this title, or any rule or regu9 lation thereunder; or 

10 ‘‘(ii) is or was a cause of the violation 

11 of any provision of this title, or any rule or 

12 regulation thereunder; and 

13 ‘‘(B) such penalty is in the public interest. 

14 ‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 

15 ‘‘(A) FIRST TIER.—The maximum amount 

16 of penalty for each act or omission described in 

17 paragraph (1) shall be $6,500 for a natural 

18 person or $65,000 for any other person. 

19 ‘‘(B) SECOND TIER.—Notwithstanding 

20 paragraph (A), the maximum amount of pen21 alty for each such act or omission shall be 

22 $65,000 for a natural person or $325,000 for 

23 any other person if the act or omission de24 scribed in paragraph (1) involved fraud, deceit, 


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1 manipulation, or deliberate or reckless dis2 regard of a regulatory requirement. 

3 ‘‘(C) THIRD TIER.—Notwithstanding para4 graphs (A) and (B), the maximum amount of 

5 penalty for each such act or omission shall be 

6 $130,000 for a natural person or $650,000 for 

7 any other person if— 

8 ‘‘(i) the act or omission described in 

9 paragraph (1) involved fraud, deceit, ma10 nipulation, or deliberate or reckless dis11 regard of a regulatory requirement; and 

12 ‘‘(ii) such act or omission directly or 

13 indirectly resulted in substantial losses or 

14 created a significant risk of substantial 

15 losses to other persons or resulted in sub16 stantial pecuniary gain to the person who 

17 committed the act or omission. 

18 ‘‘(3) EVIDENCE CONCERNING ABILITY TO

19 PAY.—In any proceeding in which the Commission 

20 may impose a penalty under this section, a respond21 ent may present evidence of the respondent’s ability 

22 to pay such penalty. The Commission may, in its 

23 discretion, consider such evidence in determining 

24 whether such penalty is in the public interest. Such 

25 evidence may relate to the extent of such person’s 


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1 ability to continue in business and the collectability 

2 of a penalty, taking into account any other claims of 

3 the United States or third parties upon such per4 son’s assets and the amount of such person’s as5 sets.’’. 

6 (b) UNDER THE SECURITIES EXCHANGE ACT OF

7 1934.—Subsection (a) of section 21B of the Securities 

8 Exchange Act of 1934 (15 U.S.C. 78u–2(a)) is amend9 ed— 

10 (1) by striking ‘‘(a) COMMISSION AUTHORITY

11 TO ASSESS MONEY PENALTIES.—In any pro12 ceeding’’ and inserting the following: 

13 ‘‘(a) COMMISSION AUTHORITY TO ASSESS MONEY

14 PENALTIES.— 

15 ‘‘(1) IN GENERAL.—In any proceeding’’; 

16 (2) by redesignating paragraphs (1) through 

17 (4) of such subsection as subparagraphs (A) through 

18 (D), respectively and moving such redesignated sub19 paragraphs and the matter following such subpara20 graphs 2 ems to the right; and 

21 (3) by adding at the end of such subsection the 

22 following new paragraph: 

23 ‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In 

24 any proceeding instituted pursuant to section 21C of 

25 this title against any person, the Commission may 


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1 impose a civil penalty if it finds, on the record after 

2 notice and opportunity for hearing, that such per3 son— 

4 ‘‘(A) is violating or has violated any provi5 sion of this title, or any rule or regulation 

6 thereunder; or 

7 ‘‘(B) is or was a cause of the violation of 

8 any provision of this title, or any rule or regula9 tion thereunder.’’. 

10 (c) UNDER THE INVESTMENT COMPANY ACT OF

11 1940.—Paragraph (1) of section 9(d) of the Investment 

12 Company Act of 1940 (15 U.S.C. 80a–9(d)(1)) is amend13 ed— 

14 (1) by striking ‘‘(1) AUTHORITY OF COMMIS15 SION.—In any proceeding’’ and inserting the fol16 lowing: 

17 ‘‘(1) AUTHORITY OF COMMISSION.— 

18 ‘‘(A) IN GENERAL.—In any proceeding’’; 

19 (2) by redesignating subparagraphs (A) through 

20 (C) of such paragraph as clauses (i) through (iii), 

21 respectively and by moving such redesignated clauses 

22 and the matter following such subparagraphs 2 ems 

23 to the right; and 

24 (3) by adding at the end of such paragraph the 

25 following new subparagraph: 


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1 ‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 

2 In any proceeding instituted pursuant to sub3 section (f) against any person, the Commission 

4 may impose a civil penalty if it finds, on the 

5 record after notice and opportunity for hearing, 

6 that such person— 

7 ‘‘(i) is violating or has violated any 

8 provision of this title, or any rule or regu9 lation thereunder; or 

10 ‘‘(ii) is or was a cause of the violation 

11 of any provision of this title, or any rule or 

12 regulation thereunder.’’. 

13 (d) UNDER THE INVESTMENT ADVISERS ACT OF

14 1940.—Paragraph (1) of section 203(i) of the Investment 

15 Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is amend16 ed— 

17 (1) by striking ‘‘(1) AUTHORITY OF COMMIS18 SION.—In any proceeding’’ and inserting the fol19 lowing: 

20 ‘‘(1) AUTHORITY OF COMMISSION.— 

21 ‘‘(A) IN GENERAL.—In any proceeding’’; 

22 (2) by redesignating subparagraphs (A) through 

23 (D) of such paragraph as clauses (i) through (iv), 

24 respectively and moving such redesignated clauses 


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1 and the matter following such subparagraphs 2 ems 

2 to the right; and 

3 (3) by adding at the end of such paragraph the 

4 following new subparagraph: 

5 ‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 

6 In any proceeding instituted pursuant to sub7 section (k) against any person, the Commission 

8 may impose a civil penalty if it finds, on the 

9 record after notice and opportunity for hearing, 

10 that such person— 

11 ‘‘(i) is violating or has violated any 

12 provision of this title, or any rule or regu13 lation thereunder; or 

14 ‘‘(ii) is or was a cause of the violation 

15 of any provision of this title, or any rule or 

16 regulation thereunder.’’. 

17 SEC. 702. FORMERLY ASSOCIATED PERSONS. 

18 (a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SE19 CURITIES RULEMAKING BOARD.—Section 15B(c)(8) of 

20 the Securities Exchange Act of 1934 (15 U.S.C. 78o– 

21 4(c)(8)) is amended by striking ‘‘any member or em22 ployee’’ and inserting ‘‘any person who is, or at the time 

23 of the alleged misconduct was, a member or employee’’. 

24 (b) PERSON ASSOCIATED WITH A GOVERNMENT SE25 CURITIES BROKER OR DEALER.—Section 15C of the SeVerDate Nov 24 2008 05:11 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00089 Fmt 6652 Sfmt 6201 E:\BILLS\H3310.IH H3310

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1 curities Exchange Act of 1934 (15 U.S.C. 78o–5) is 

2 amended— 

3 (1) in subsection (c)(1)(C), by striking ‘‘or 

4 seeking to become associated,’’ and inserting ‘‘seek5 ing to become associated, or, at the time of the al6 leged misconduct, associated or seeking to become 

7 associated’’; 

8 (2) in subsection (c)(2)(A), by inserting ‘‘, seek9 ing to become associated, or, at the time of the al10 leged misconduct, associated or seeking to become 

11 associated’’ after ‘‘any person associated’’; and 

12 (3) in subsection (c)(2)(B), by inserting ‘‘, 

13 seeking to become associated, or, at the time of the 

14 alleged misconduct, associated or seeking to become 

15 associated’’ after ‘‘any person associated’’. 

16 (c) PERSON ASSOCIATED WITH A MEMBER OF A NA17 TIONAL SECURITIES EXCHANGE OR REGISTERED SECURI18 TIES ASSOCIATION.—Section 21(a)(1) of the Securities 

19 Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended 

20 by inserting ‘‘, or, as to any act or practice, or omission 

21 to act, while associated with a member, formerly associ22 ated’’ after ‘‘member or a person associated’’. 

23 (d) PARTICIPANT OF A REGISTERED CLEARING

24 AGENCY.—Section 21(a)(1) of the Securities Exchange 

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1 ing ‘‘or, as to any act or practice, or omission to act, while 

2 a participant, was a participant,’’ after ‘‘in which such 

3 person is a participant,’’. 

4 (e) OFFICER OR DIRECTOR OF A SELF-REGULATORY

5 ORGANIZATION.—Section 19(h)(4) of the Securities Ex6 change Act of 1934 (15 U.S.C. 78s(h)(4)) is amended— 

7 (1) by striking ‘‘any officer or director’’ and in8 serting ‘‘any person who is, or at the time of the al9 leged misconduct was, an officer or director’’; and 

10 (2) by striking ‘‘such officer or director’’ and 

11 inserting ‘‘such person’’. 

12 (f) OFFICER OR DIRECTOR OF AN INVESTMENT COM13 PANY.—Section 36(a) of the Investment Company Act of 

14 1940 (15 U.S.C. 80a–35(a)) is amended— 

15 (1) by striking ‘‘a person serving or acting’’ and 

16 inserting ‘‘a person who is, or at the time of the al17 leged misconduct was, serving or acting’’; and 

18 (2) by striking ‘‘such person so serves or acts’’ 

19 and inserting ‘‘such person so serves or acts, or at 

20 the time of the alleged misconduct, so served or 

21 acted’’. 

22 SEC. 703. COLLATERAL BARS. 

23 (a) SECTION 15(b)(6)(A) OF THE SECURITIES EX24 CHANGE ACT OF 1934.—Section 15(b)(6)(A) of the Secu25 rities Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is 


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1 amended by striking ‘‘12 months, or bar such person from 

2 being associated with a broker or dealer,’’ and inserting 

3 ‘‘12 months, or bar any such person from being associated 

4 with a broker, dealer, investment adviser, municipal secu5 rities dealer, or transfer agent,’’. 

6 (b) SECTION 15B(c)(4) OF THE SECURITIES EX7 CHANGE ACT OF 1934.—Section 15B(c)(4) of the Securi8 ties Exchange Act of 1934 (15 U.S.C. 78o–4(c)(4)) is 

9 amended by striking ‘‘twelve months or bar any such per10 son from being associated with a municipal securities deal11 er,’’ and inserting ‘‘twelve months or bar any such person 

12 from being associated with a broker, dealer, investment 

13 adviser, municipal securities dealer, or transfer agent,’’. 

14 (c) SECTION 17A(c)(4)(C) OF THE SECURITIES EX15 CHANGE ACT OF 1934.—Section 17A(c)(4)(C) of the Se16 curities Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) 

17 is amended by striking ‘‘twelve months or bar any such 

18 person from being associated with the transfer agent,’’ 

19 and inserting ‘‘twelve months or bar any such person from 

20 being associated with any transfer agent, broker, dealer, 

21 investment adviser, or municipal securities dealer,’’. 

22 (d) SECTION 203(f) OF THE INVESTMENT ADVISERS

23 ACT OF 1940.—Section 203(f) of the Investment Advisers 

24 Act of 1940 (15 U.S.C. 80b–3(f)) is amended by striking 

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1 ated with an investment adviser,’’ and inserting ‘‘twelve 

2 months or bar any such person from being associated with 

3 an investment adviser, broker, dealer, municipal securities 

4 dealer, or transfer agent,’’. 

5 SEC. 704. UNLAWFUL MARGIN LENDING. 

6 Section 7(c)(1)(A) of the Securities Exchange Act of 

7 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; 

8 and’’ and inserting ‘‘; or’’. 

9 SEC. 705. NATIONWIDE SERVICE OF SUBPOENAS. 

10 (a) SECURITIES ACT OF 1933.—Section 22(a) of the 

11 Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 

12 inserting after the second sentence the following: ‘‘In any 

13 action or proceeding instituted by the Commission under 

14 this title in a United States district court for any judicial 

15 district, subpoenas issued by or on behalf of such court 

16 to compel the attendance of witnesses or the production 

17 of documents or tangible things (or both) may be served 

18 in any other district. Such subpoenas may be served and 

19 enforced without application to the court or a showing of 

20 cause, notwithstanding the provisions of rule 45(b)(2), 

21 (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules of 

22 Civil Procedure.’’. 

23 (b) SECURITIES EXCHANGE ACT OF 1934.—Section 

24 27 of the Securities Exchange Act of 1934 (15 U.S.C. 

25 78aa) is amended by inserting after the third sentence the 


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1 following: ‘‘In any action or proceeding instituted by the 

2 Commission under this title in a United States district 

3 court for any judicial district, subpoenas issued by or on 

4 behalf of such court to compel the attendance of witnesses 

5 or the production of documents or tangible things (or 

6 both) may be served in any other district. Such subpoenas 

7 may be served and enforced without application to the 

8 court or a showing of cause, notwithstanding the provi9 sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 

10 the Federal Rules of Civil Procedure.’’. 

11 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

12 44 of the Investment Company Act of 1940 (15 U.S.C. 

13 80a–43) is amended by inserting after the fourth sentence 

14 the following: ‘‘In any action or proceeding instituted by 

15 the Commission under this title in a United States district 

16 court for any judicial district, subpoenas issued by or on 

17 behalf of such court to compel the attendance of witnesses 

18 or the production of documents or tangible things (or 

19 both) may be served in any other district. Such subpoenas 

20 may be served and enforced without application to the 

21 court or a showing of cause, notwithstanding the provi22 sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 

23 the Federal Rules of Civil Procedure.’’. 

24 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

25 214 of the Investment Advisers Act of 1940 (15 U.S.C. 


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1 80b–14) is amended by inserting after the third sentence 

2 the following: ‘‘In any action or proceeding instituted by 

3 the Commission under this title in a United States district 

4 court for any judicial district, subpoenas issued by or on 

5 behalf of such court to compel the attendance of witnesses 

6 or the production of documents or tangible things (or 

7 both) may be served in any other district. Such subpoenas 

8 may be served and enforced without application to the 

9 court or a showing of cause, notwithstanding the provi10 sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 

11 the Federal Rules of Civil Procedure.’’. 

12 SEC. 706. REAUTHORIZATION OF THE FINANCIAL CRIMES 

13 ENFORCEMENT NETWORK. 

14 (a) FINDINGS.— 

15 (1) The Congress finds as follows: 

16 (A) The work of the Financial Crimes En17 forcement Network (hereinafter in this section 

18 referred to as ‘‘FinCEN’’) is essential to safe19 guard the United States financial system and 

20 its international affiliates from the abuses of fi21 nancial crime, including terrorist financing, 

22 weapons of mass destruction proliferation, and 

23 money laundering. 

24 (B) All avenues of financial intermediation 

25 are vulnerable to abuse by illicit actors, and 


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1 FinCEN exercises the authorities of the Bank 

2 Secrecy Act over a broad range of financial in3 stitutions. 

4 (2) The Congress further finds and recognizes 

5 the recent establishment by FinCEN of an Inter6 national Programs Division to expand and enhance 

7 global financial intelligence sharing initiatives aimed 

8 at combating transnational crime threats facing 

9 United States financial markets, and takes note of 

10 FinCEN’s efforts to collaborate with foreign finan11 cial intelligence unit partners on analytical projects 

12 to identify and address emerging threats and 

13 vulnerabilities. 

14 (3) The Congress further finds and recognizes 

15 the role of FinCEN in discovering and investigating 

16 widespread fraud in the mortgage market and else17 where in the financial services industry. Alongside 

18 an effective licensing and registration system for all 

19 mortgage originators, a vigilant FinCEN is critical 

20 to the recovery of our housing markets and con21 sumer confidence in both the home buying process 

22 and the financial services industry as a whole. 

23 (b) REAUTHORIZATION.—Section 310(d)(1) of title 

24 31, United States Code, is amended by striking ‘‘such 

25 sums as may be necessary for fiscal years 2002, 2003, 


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1 2004, and 2005’’ and inserting ‘‘not more than 

2 $105,500,000 for fiscal year 2010, and such sums as may 

3 be necessary for fiscal years 2011, 2012, 2013, and 

4 2014’’. 

5 (c) ADDITIONAL FINANCIAL FRAUD AUTHORIZATION

6 OF APPROPRIATIONS.—In addition to such other amounts 

7 otherwise made available or appropriated to FinCEN, 

8 there are authorized to be appropriated to FinCEN 

9 $15,000,000 to be used specifically for efforts to detect 

10 financial fraud. Such sums are authorized to remain avail11 able until expended. 

12 SEC. 707. FAIR FUND IMPROVEMENTS. 

13 (a) AMENDMENT.—Subsection (a) of section 308 of 

14 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)) is 

15 amended to read as follows: 

16 ‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RE17 LIEF OF VICTIMS.—If in any judicial or administrative ac18 tion brought by the Commission under the securities laws 

19 (as such term is defined in section 3(a)(47) of the Securi20 ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the 

21 Commission obtains a civil penalty against any person for 

22 a violation of such laws, the amount of such civil penalty 

23 shall, on the motion or at the direction of the Commission, 

24 be added to and become part of a disgorgement fund or 


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1 other fund established for the benefit of the victims of 

2 such violation.’’. 

3 (b) CONFORMING AMENDMENTS.—Section 308 of 

4 such Act is amended— 

5 (1) in subsection (b)— 

6 (A) by striking ‘‘for a disgorgement fund 

7 described in subsection (a)’’ and inserting ‘‘for 

8 a disgorgement fund or other fund described in 

9 subsection (a)’’; and 

10 (B) by striking ‘‘in the disgorgement fund’’ 

11 and inserting ‘‘in such fund’’; and 

12 (2) by striking subsection (e). 

13 SEC. 708. AUTHORITY TO CONTRACT FOR COLLECTION OF 

14 DELINQUENT JUDGMENTS AND ORDERS. 

15 Subsection (b) of section 4 of the Securities Exchange 

16 Act of 1934 (15 U.S.C. 78d(b)) is amended— 

17 (1) in the heading of such subsection, by strik18 ing ‘‘AND LEASING AUTHORITY’’ and inserting ‘‘, 

19 LEASING AUTHORITY, AND CONTRACTING AUTHOR20 ITY’’; and 

21 (2) by adding at the end the following new 

22 paragraph: 

23 ‘‘(4) CONTRACTING AUTHORITY.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding any 

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1 thorized to enter into contracts to assist in the 

2 collection of any claim of indebtedness resulting 

3 from any judgment or order (either by litigation 

4 or settlement) obtained by the Commission in 

5 any judicial action or administrative proceeding 

6 brought by or on behalf of the Commission. 

7 This authority includes, but is not limited to, 

8 the retention of private legal counsel to furnish 

9 legal services, including representation in litiga10 tion, negotiation, compromise, and settlement. 

11 Private counsel retained under this paragraph 

12 may represent the Commission in such debt col13 lection matters to the same extent as the Com14 mission may represent itself. 

15 ‘‘(B) TERMS AND CONDITIONS OF CON16 TRACT.—Each such contract shall include such 

17 terms and conditions as the Commission con18 siders necessary and appropriate, and shall in19 clude provisions specifying— 

20 ‘‘(i) the amount of the fee to be paid 

21 under such contract or the method for cal22 culating that fee; 

23 ‘‘(ii) that the Commission retains the 

24 authority to represent itself, resolve a dis25 pute, compromise a claim, end collection 


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1 efforts, and refer a matter to other counsel 

2 or to the Attorney General; and 

3 ‘‘(iii) that the Commission may termi4 nate either the contract or the private 

5 counsel’s representation of the Commission 

6 in particular cases for any reason, includ7 ing for the convenience of the Commission. 

8 ‘‘(C) PAYMENT OF FEES.—Notwith9 standing section 3302(b) of title 31, United 

10 States Code, a contract under this paragraph 

11 may provide that fees and costs incurred by pri12 vate counsel under such contracts are payable 

13 from the amounts recovered. 

14 ‘‘(D) COMPETITION REQUIRED.—Nothing 

15 in this paragraph shall relieve the Commission 

16 of the competition requirements set forth in 

17 title III of the Federal Property and Adminis18 trative Services Act of 1949 (41 U.S.C. 251 et 

19 seq.). 

20 ‘‘(E) COUNTERCLAIMS.—In any action to 

21 recover indebtedness which is brought on behalf 

22 of the Commission by private counsel retained 

23 under this paragraph, no counterclaim may be 

24 asserted against the Commission unless the 

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1 sion. Such service shall be made in accordance 

2 with the rules of procedure of the court in 

3 which the action is brought.’’. 

Æ 


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