Systemic Risk Designation Improvement Act of 2016

To amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to specify when bank holding companies may be subject to certain enhanced supervision, and for other purposes. 1. Short title This Act may be cited as the Systemic Risk Designation Improvement Act of 2016 2. Table of contents The table of contents for the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5301 et seq. Sec. 113. Authority to require enhanced supervision and regulation of certain nonbank financial companies and certain bank holding companies. . 3. Revisions to council authority (a) Purposes and duties Section 112 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5322 , which have been the subject of a final determination under section 113 (b) Bank holding company designation Section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5323 (1) by amending the heading for such section to read as follows: Authority to require enhanced supervision and regulation of certain nonbank financial companies and certain bank holding companies (2) by redesignating subsections (c), (d), (e), (f), (g), (h), and (i) as subsections (d), (e), (f), (g), (h), (i), and (j), respectively; (3) by inserting after subsection (b) the following: (c) Bank holding companies subject to enhanced supervision and prudential standards under section 165 (1) Determination The Council, on a nondelegable basis and by a vote of not fewer than 2⁄3 (2) Considerations In making a determination under paragraph (1), the Council shall use the indicator-based measurement approach established by the Basel Committee on Banking Supervision to determine systemic importance, which considers— (A) the size of the bank holding company; (B) the interconnectedness of the bank holding company; (C) the extent of readily available substitutes or financial institution infrastructure for the services of the bank holding company; (D) the global cross-jurisdictional activity of the bank holding company; and (E) the complexity of the bank holding company. (3) G SIB Notwithstanding any other provision of this subsection, a bank holding company that is designated, as of the date of enactment of this subsection, as a Global Systemically Important Bank by the Financial Stability Board shall be deemed to have been the subject of a final determination under paragraph (1). ; (4) in subsection (d), as so redesignated— (A) in paragraph (1)(A), by striking subsection (a)(2) or (b)(2) subsection (a)(2), (b)(2), or (c)(2) (B) in paragraph (4), by striking Subsections (d) through (h) Subsections (e) through (i) (5) in subsections (e), (f), (g), (h), (i), and (j)— (A) by striking subsections (a) and (b) subsections (a), (b), and (c) (B) by striking nonbank financial company bank holding company for which there has been a determination under subsection (c) or nonbank financial company (6) in subsection (g), as so redesignated, by striking subsection (e) subsection (f) (7) in subsection (h), as so redesignated, by striking subsection (a), (b), or (c) subsection (a), (b), (c), or (d) (8) in subsection (i), as so redesignated, by striking subsection (d)(2), (e)(3), or (f)(5) subsection (e)(2), (f)(3), or (g)(5) (c) Enhanced supervision Section 115 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5325 (1) in subsection (a)(1), by striking large, interconnected bank holding companies bank holding companies which have been the subject of a final determination under section 113 (2) in subsection (a)(2)— (A) in subparagraph (A), by striking ; or (B) by striking the Council may differentiate the Council may differentiate (C) by striking subparagraph (B); and (3) in subsection (b)(3), by striking subsections (a) and (b) of section 113 subsections (a), (b), and (c) of section 113 (d) Reports Section 116(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5326(a) with total consolidated assets of $50,000,000,000 or greater which has been the subject of a final determination under section 113 (e) Mitigation Section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5331 (1) in subsection (a), by striking with total consolidated assets of $50,000,000,000 or more which has been the subject of a final determination under section 113 (2) in subsection (c), by striking subsection (a) or (b) of section 113 subsection (a), (b), or (c) of section 113 (f) Office of financial research Section 155 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5345 with total consolidated assets of 50,000,000,000 or greater which have been the subject of a final determination under section 113 4. Revisions to Board authority (a) Acquisitions Section 163 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5363 with total consolidated assets equal to or greater than $50,000,000,000 which has been the subject of a final determination under section 113 (b) Management interlocks Section 164 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5364 with total consolidated assets equal to or greater than $50,000,000,000 which has been the subject of a final determination under section 113 (c) Enhanced supervision and prudential standards Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5365 (1) in subsection (a), by striking with total consolidated assets equal to or greater than $50,000,000,000 which have been the subject of a final determination under section 113 (2) in subsection (a)(2)— (A) by striking (A) In general.— (B) by striking subparagraph (B); (3) by striking subsections (a) and (b) of section 113 subsections (a), (b), and (c) of section 113 (4) in subsection (j), by striking with total consolidated assets equal to or greater than $50,000,000,000 which has been the subject of a final determination under section 113 (d) Conforming Amendment The second subsection (s) (relating to Assessments, Fees, and Other Charges for Certain Companies 12 U.S.C. 248 (1) by redesignating such subsection as subsection (t); and (2) in paragraph (2)— (A) in subparagraph (A), by striking having total consolidated assets of $50,000,000,000 or more; which have been the subject of a final determination under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and (B) by striking subparagraph (B); and (C) by redesignating subparagraph (C) as subparagraph (B). 5. Effective date; rule of application (a) Effective date The Financial Stability Oversight Council may begin proceedings with respect to a bank holding company under section 113(c)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as added by this Act, on the date of the enactment of this Act, but may not make a final determination under such section 113(c)(1) with respect to a bank holding company before the end of the 1-year period beginning on the date of the enactment of this Act. (b) Immediate application to large bank holding companies During the 1-year period described under subsection (a), a bank holding company with total consolidated assets equal to or greater than $50,000,000,000 shall be deemed to have been the subject of a final determination under section 113(c)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 6. Existing assessment termination schedule (a) Temporary extension of existing assessment (1) In general Each bank holding company with total consolidated assets equal to or greater than $50,000,000,000 and which has not been the subject of a final determination under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5323 (2) Limitation on amount of assessments The aggregate amount collected pursuant to paragraph (1) from all bank holding companies assessed under such paragraph shall be $115,000,000. (3) Expedited assessments If necessary, the Secretary of the Treasury shall expedite assessments made pursuant to paragraph (1) to ensure that all $115,000,000 of assessments permitted by paragraph (2) is collected before fiscal year 2018. (4) Payment period options The Secretary of the Treasury shall offer the option of payments spread out before the end of fiscal year 2018, or shorter periods including the option of a one-time payment, at the discretion of each bank holding company paying assessments pursuant to paragraph (1). (b) Use of assessments Of the total amount collected pursuant to subsection (a)— (1) $60,000,000 shall be transferred to the Financial Stability Oversight Council to pay for any administrative costs resulting from this Act and the amendments made by this Act; and (2) $55,000,000 shall be transferred to the Federal Deposit Insurance Corporation to pay for any resolution costs resulting from this Act and the amendments made by this Act. (c) Treatment upon determination A bank holding company assessed under this section shall no longer be subject to such assessments in the event it is subject to a final determination under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5323 (d) Rule of construction A bank holding company deemed to have been the subject of a final determination under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5323

Summary: Systemic Risk Designation Improvement Act of 2016 This bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to authorize the Financial Stability Oversight Council (FSOC) to subject a bank holding company to enhanced supervision and prudential standards by the Board of Governors of the Federal Reserve System if FSOC makes a final determination that material financial distress at the bank holding company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities, could threaten the financial stability of the United States. This FSOC determination procedure replaces the current process under which bank holding companies with total consolidated assets of $50 billion or more are automatically subject to such enhanced supervision and prudential standards. FSOC's determination must be based upon specified factors, using an indicator-based measurement approach established by the Basel Committee on Banking Supervision to determine systemic importance. A bank holding company designated as a Global Systemically Important Bank by the Financial Stability Board, as of this bill's enactment, shall be deemed to have been the subject of a final determination that it could pose a threat to U.S. financial stability for any of those reasons.