Traditional Banking Regulatory Relief Act of 2015

To establish regulatory relief for certain financial institutions, and for other purposes. 1. Short title This Act may be cited as the Traditional Banking Regulatory Relief Act of 2015 2. Regulatory relief for traditional banking organizations (a) Regulatory capital requirements (1) In general Section 18 of the Federal Deposit Insurance Act ( 12 U.S.C. 1828 (aa) Treatment of traditional banking organizations (1) Regulatory capital requirements (A) Simple leverage ratio The appropriate Federal banking agencies shall issue regulations establishing a minimum simple leverage ratio at no less than 10 percent. The simple leverage ratio requirement shall be consistent with regulations promulgated pursuant to section 38 (relating to prompt corrective action). (B) Application to traditional banking organization Notwithstanding any other provision of law, a traditional banking organization that meets the minimum simple leverage ratio established under subparagraph (A) may elect, by notice to the appropriate Federal banking agencies, to maintain the minimum simple leverage ratio as its sole measure of capital adequacy. (C) Exemption from risk-based capital requirement The risk-based capital requirement in section 38(c)(1)(A) shall not apply to a traditional banking organization that makes an election under subparagraph (B) and complies with regulations issued in accordance with this paragraph. (D) Grace period A traditional banking organization that makes an election under subparagraph (B) and fails to maintain the minimum simple leverage ratio described in subparagraph (A) (as determined by the first quarterly report of condition issued after making such an election) shall be exempt from the risk-based capital requirement in section 38(c)(1)(A) for a period of 18 months beginning on the date of such determination. (2) Reservation of authority Notwithstanding any other provision of this subsection, an appropriate Federal banking agency may require additional capital adequacy measures applicable to a newly chartered traditional banking organization or for an individual traditional banking organization if such measures are required to ensure the safety and soundness of the banking organization or to prevent an unacceptable risk to the Deposit Insurance Fund. (3) Definitions (A) Traditional banking organization The term traditional banking organization (i) Has zero trading assets and zero trading liabilities. (ii) Does not engage in swaps or security-based swaps (as such terms are defined in section 1a of the Commodity Exchange Act ( 7 U.S.C. 1a (iii) Has a total gross notional exposure of swaps and security-based swaps of not more than $3,000,000,000. (B) Simple leverage ratio (i) In general The term simple leverage ratio (I) total equity less goodwill and deferred tax assets, divided by (II) total assets less goodwill and deferred tax assets, as measured by generally accepted accounting principles. (ii) Measurements For purposes of measuring the simple leverage ratio capital requirements of a traditional banking organization, the appropriate Federal banking agencies may, by regulation, require— (I) the exclusion, from total equity, of other intangible assets; or (II) the addition, to total assets, of off-balance sheet items. (iii) Rule of construction The simple leverage ratio shall not be construed to be a generally applicable leverage capital requirement for purposes of section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5371 . (2) Phase-in for certain organizations (A) In general Notwithstanding the minimum simple leverage ratio requirement under section 18(aa)(1)(B) of the Federal Deposit Insurance Act, a traditional banking organization with a simple leverage ratio of 8 percent or more may make an election under such section 18(aa)(1)(B) during the 18-month period beginning on the date of the enactment of this Act. (B) Requirement to meet the minimum simple leverage ratio A traditional banking organization making an election pursuant to subparagraph (A) shall have until the end of the 18-month period described under subparagraph (A) to meet the minimum simple leverage ratio, or the organization’s election under section 18(aa)(1)(B) of the Federal Deposit Insurance Act shall be terminated. (C) Definitions For purposes of this paragraph: (i) Minimum simple leverage ratio The term minimum simple leverage ratio (ii) Other terms The terms simple leverage ratio traditional banking organization (b) Short form call report Section 7(a) of the Federal Deposit Insurance Act ( 12 U.S.C. 1817(a) (12) Short form reporting The appropriate Federal banking agencies shall issue regulations allowing for a reduced reporting requirement for a traditional banking organization that elects to maintain a simple leverage ratio as its sole measure of capital adequacy pursuant to section 18(aa). . (c) On-Site examinations Section 10(d) of the Federal Deposit Insurance Act ( 12 U.S.C. 1820(d) (1) in paragraph (4)— (A) in the paragraph heading, by inserting and traditional banking organizations certain small institutions (B) in subparagraph (A), by inserting or is a traditional banking organization defined in section 18(aa)(3) $1,000,000,000 (C) by striking subparagraph (B) and redesignating subparagraphs (C) through (E) as subparagraphs (B) through (D), respectively; (D) in subparagraph (B) (as so redesignated), by striking condition $200,000,000 condition was found to be outstanding or good (E) in subparagraph (C) (as so redesignated), by striking and (F) in subparagraph (D) (as so redesignated), by striking the period at the end and inserting ; and (G) by adding at the end the following new subparagraph: (E) the appropriate Federal banking agency believes the 18-month period is consistent with the safety and soundness of the banking organization. ; and (2) by striking paragraph (10). (d) Stress testing Section 165(i)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5365(i)(2)(A) , unless such companies are traditional banking organizations (as defined in section 18(aa)(3) of the Federal Deposit Insurance Act) annual stress tests (e) Technical amendment Section 18 of the Federal Deposit Insurance Act ( 12 U.S.C. 1828

Summary: Traditional Banking Regulatory Relief Act of 2015 This bill amends the Federal Deposit Insurance Act (FDIA) to prescribe capital requirements for traditional banking organizations (TBOs) at a minimum simple leverage ratio of no less than 10%. A TBO is any bank holding company, savings and loan holding company, bank, or savings association that individually (and when including its parent, subsidiaries, and affiliates) meets the following criteria: has zero trading assets and zero trading liabilities, does not engage in swaps or security-based swaps other than those referencing interest rates or foreign exchange swaps, and has a total gross notional exposure of swaps and security-based swaps of not more than $3 billion. "Simple leverage ratio" means: total equity less goodwill and deferred tax assets, divided by total assets less goodwill and deferred tax assets, as measured by generally accepted accounting principles. A TBO meeting this minimum simple leverage ratio may notify the federal banking agencies to maintain it as the sole measure of its capital adequacy. The risk-based capital requirement shall not apply to it. If the TBO fails to maintain the minimum simple leverage ratio, it shall remain exempt from the risk-based capital requirement for an 18-month grace period. The bill grants a TBO with a simple leverage ratio of 8% or more a phase-in period of 18 months after enactment of this bill within which to elect to meet the minimum simple leverage ratio as its sole measure of capital adequacy. The federal banking agencies, with respect to reports of condition, shall permit a reduced reporting requirement for a TBO electing to maintain a simple leverage ratio as its sole measure of capital adequacy. The 18-month on-site examination cycle shall apply to TBOs (and, as under current law, to insured depository institutions whose assets total less than $1 billion) if the appropriate federal banking agency believes this is consistent with the TBO's safety and soundness. The bill repeals the authority of federal banking agencies, at their discretion, to increase the maximum asset amount of insured depository institutions for certain purposes. The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended to exempt TBOs from mandatory annual stress tests.