safety and soundness of the United States and inter-
national financial systems.
(5) Given that most of the institutions and
wealthy individuals that invest in hedge funds are
highly sophisticated, market forces, rather than gov-
ernment regulations, are the best tools for con-
straining hedge funds from engaging in excessive le-
verage.
(6) Market forces are similarly the most effec-
tive means of disciplining financial institutions that
have allowed hedge fund dealings to threaten their
stability.
(7) The United States Government must insure
that the failure of 1 or more hedge funds never
causes a severe burden on the United States finan-
cial system or the United States payments system
and that Federal resources are not squandered in ef-
forts to salvage collapsed hedge funds.
(8) Market forces cannot properly function with
respect to hedge fund risks without a minimum of
reliable information about hedge funds activities.
SEC. 3. DEFINITIONS.
(1) BOARD.—The term ‘‘Board’’ means the
Board of Governors of the Federal Reserve System.
(2) FEDERAL BANKING AGENCIES.—The term
‘‘Federal banking agency’’ has the meaning given to
such term in section 3(z) of the Federal Deposit In-
surance Act.
(3) UNREGULATED HEDGE FUND.—The term
‘‘unregulated hedge fund’’ means—
(A) any pooled investment vehicle that—
(i) has capital of $3,000,000,000 or
more;
(ii) is privately organized, adminis-
tered by professional investment managers,
and not widely available to the public; and
(iii) is not registered as an investment
company under the Investment Company
Act of 1940; and
(B) any group or family of pooled invest-
ment vehicles described in clauses (ii) and (iii)
of subparagraph (A) that has total assets under
management of $20,000,000,000 or more.
SEC. 4. PUBLIC REPORTS REQUIRED.
(a) IN GENERAL.—Before the end of the 15-day pe-
riod beginning at the end of each calendar quarter, each
unregulated hedge fund shall submit a report to the Board
which shall include the following information:
(1) The total assets of the fund, the total no-
tional amount of the fund’s derivatives position, and
the balance sheet leverage ratio of assets to liabil-
ities, as of the end of the calendar quarter.
(2) Meaningful and comprehensive measures of
market risk (such as value-at-risk or stress test re-
sults) as of the end of the calendar quarter.
(3) Such other information as the Board, in
consultation with the Secretary of the Treasury, the
Chairman of the Securities and Exchange Commis-
sion, the Chairperson of the Commodities Futures
Trading Commission, and the Federal banking agen-
cies, may require by regulation.
(b) AVAILABILITY OF REPORTS.—Upon receipt of re-
ports under subsection (a), the Board shall—
(1) immediately transmit copies of the reports
to the Secretary of the Treasury, the Chairman of
the Securities and Exchange Commission, the Chair-
person of the Commodities Futures Trading Com-
mission, and the Federal banking agencies; and
(2) subject to subsection (c), make the reports
available to the public on a timely basis.
(c) SEQUESTRATION OF ANY PROPRIETARY INFOR-
MATION.—If, in order to provide a complete and meaning-
ful report under subsection (a), an unregulated hedge fund
includes any proprietary information concerning invest-
ment strategies and positions in the report, such informa-
tion may, to the extent and in the manner provided in
regulations prescribed by the Board, in consultation with
the Secretary of the Treasury, the Chairman of the Securi-
ties and Exchange Commission, the Chairperson of the
Commodities Futures Trading Commission, and the Fed-
eral banking agencies, be segregated in a confidential sec-
tion of the report which shall not be available to the public
under subsection (b)(2).
(d) REGULATION TIME-FRAME.—The Board shall—
(1) publish proposed regulations under this sec-
tion in the Federal Register before the end of the
90-day period beginning on the date of the enact-
ment of this Act, to allow for public comment; and
(2) prescribe such regulations in final form be-
fore the end of the 90-day period beginning on the
date the proposed regulations are so published, un-
less the Board determines that additional time, not
to exceed 60 days, for comment on the proposed reg-
ulations is necessary.
(e) ORDERS.—The Board may issue an order to any
unregulated hedge fund to comply with the requirements
of this section and the regulations prescribed under this
section.
SEC. 5. JUDICIAL ENFORCEMENT OF ORDERS.
(a) IN GENERAL.—The Board may, in the sole dis-
cretion of the Board, apply to—
(1) the United States district court within the
jurisdiction of which the principal office of the un-
regulated hedge fund is located; or
(2) in the case of an unregulated hedge fund
which is a person of a foreign country (as defined
in section 3502(d) of the Omnibus Trade and Com-
petitiveness Act of 1988) and borrows from, accepts
investments by, or is a counterparty to any person
who resides within or is organized under the laws of
the United States or any State, the United States
District Court for the District of Columbia,
for the enforcement of any effective and outstanding order
issued under section 3 or 4, and such court shall have
jurisdiction and power to order and require compliance
therewith.
(b) NO JUDICIAL REVIEW.—No court shall have ju-
risdiction to affect by injunction or otherwise the issuance
or enforcement of any order under section 4 or to review,
modify, suspend, terminate, or set aside any such order.
SEC. 6. PUBLIC DISCLOSURE OF DIRECT MATERIAL EXPO-
SURES TO SIGNIFICANTLY LEVERAGED FI-
NANCIAL INSTITUTIONS.
(a) SENSE OF THE CONGRESS.—It is the sense of the
Congress that each public company, including financial in-
stitutions, should regularly and publicly disclose a sum-
mary of direct material exposures of the company, whether
in the form of equity, loans, or other credit exposure, to
significantly leveraged financial institutions, including
commercial banks, investment banks, finance companies,
and unregulated hedge funds.
(b) REGULATIONS
AUTHORIZED.—The Securities
and Exchange Commission, the Commodities Futures
Trading Commission, and the Federal banking agencies
shall prescribe regulations to require the disclosures de-
scribed in subsection (a).
SEC. 7. ENHANCED COUNTERPARTY RISK MANAGEMENT BY
DEPOSITORY INSTITUTIONS.
Section 39(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1831s(a)(1)) is amended—
(1) by redesignating subparagraphs (E) and
(F) as subparagraphs (F) and (G); and
(2) by inserting after subparagraph (D) the fol-
lowing new subparagraph:
‘‘(E) counterparty risk management;’’.
Æ