closing price of a credit default swap on long- 
term subordinated debt of a bank holding com-
pany during a 30-day period. 
(B) REGULATIONS.—The Board, through 
regulations, shall develop a method to deter-
mine the daily closing price of a credit default 
swap on long-term subordinated debt of a bank 
holding company and shall calculate the average 
daily closing price accordingly. 
(2) BANK
HOLDING
COMPANY.—The term 
‘‘bank holding company’’ has the same meaning 
given such term in section 2 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841), but shall 
only include such companies with total consolidated 
assets greater than or equal to $50,000,000,000. 
(3) BOARD.—The term ‘‘Board’’ means the 
Board of Governors of the Federal Reserve System. 
(4) CREDIT DEFAULT SWAP.—The term ‘‘credit 
default swap’’ has the same meaning given the term 
‘‘swap agreement’’ in section 206A of the Gramm- 
Leach-Bliley Act (15 U.S.C. 78c nt). 
(5) LONG-TERM
SUBORDINATED
DEBT.—The 
term ‘‘long-term subordinated debt’’ means unse-
cured bonds or other debt instruments issued by a 
bank holding company that— 
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(A) is subordinated to the claims of deposi-
tors or general creditors; and 
(B) has a maturity date not less than 5 
years. 
(6) STRESS TEST.— 
(A) IN GENERAL.—The term ‘‘stress test’’ 
means an evaluation designed by the Board to 
determine whether a bank holding company— 
(i) has the capital, on a total consoli-
dated basis, necessary to absorb losses as 
a result of adverse economic conditions; 
and 
(ii) is sufficiently capitalized to meet 
systemically important obligations. 
(B) REGULATIONS.—The term ‘‘system-
ically important obligation’’ shall be defined in 
regulations prescribed by the Board. 
(7) TIER 1 CAPITAL.—The term ‘‘tier 1 capital’’ 
has the same meaning given in part 225 of title 12, 
Code of Federal Regulations, as in effect on the date 
of enactment of this Act, or any successor thereto. 
SEC. 3. MARKET-BASED TRIGGER TO DETERMINE ADE-
QUACY OF CAPITAL. 
(a) MARKET-BASED TRIGGER.— 
(1) GREATER THAN 50 BASIS POINTS.— 
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(A) IN GENERAL.—In the case that the av-
erage daily closing price exceeds 50 basis 
points— 
(i) the Board shall notify the bank 
holding company that it needs to raise ad-
ditional tier 1 capital in order to reduce 
such closing price below 50 basis points; 
(ii) not later than 14 days (or less if 
the Board makes a determination that con-
ditions warrant a shorter period of time) 
after such notification under clause (i), 
such company shall submit to the Board 
an action plan detailing how the company 
intends on remediating its capital defi-
ciency; 
(iii) such company has 30 days to im-
plement the plan submitted under clause 
(ii) after such plan is approved by the 
Board; and 
(iv) if after the end of the 30-day pe-
riod described in clause (iii) the average 
daily closing price exceeds 50 basis points, 
the Board and such company shall repeat 
clause (i) through (iii) until such closing 
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price is less than or equal to 50 basis 
points. 
(B) APPEAL.— 
(i) IN
GENERAL.—A bank holding 
company may appeal the findings of the 
Board under subparagraph (A) and re-
quest that the Board conduct a stress test. 
(ii) TOLLING.—An appeal made pur-
suant to clause (i) shall toll any deadline 
specified under subparagraph (A) until the 
conclusion of the appeals process. 
(iii) CAPITAL
DEFICIENCY.—If the 
Board determines, after conducting a 
stress test pursuant to clause (i), that the 
bank holding company has a capital defi-
ciency, the Board and the bank holding 
company shall repeat clause (i) through 
(iii) of subparagraph (A) in accordance 
with clause (iv) of such subparagraph. 
(2) GREATER THAN 75 BASIS POINTS.—In the 
case that the average daily closing price exceeds 75 
basis points— 
(A) the Board shall notify the bank hold-
ing company in accordance with clause (i) of 
paragraph (1)(A); 
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(B) such company shall submit and imple-
ment an action plan in accordance with clause 
(ii) and (iii) of paragraph (1)(A); 
(C) the Board may suspend or limit divi-
dends paid by the bank holding company until 
such company’s average daily closing price is 
less than or equal to 50 basis points; 
(D) the Board shall notify the company 
that it will be placed into receivership in accord-
ance with paragraph (3) if the average daily 
closing price exceeds 100 basis points; 
(E) the Board shall conduct a stress test; 
and 
(F) if the Board determines, after con-
ducting a stress test pursuant to subparagraph 
(E), that such company has a capital deficiency, 
not later than 14 days (or less if the Board 
makes a determination that conditions warrant 
a shorter period of time) after such stress test 
is completed, such company shall submit and 
implement an action plan in accordance with 
clause (ii) and (iii) of paragraph (1)(A). 
(3) GREATER THAN 100 BASIS POINTS.—In the 
case that the average daily closing price exceeds 100 
basis points, the Board shall place the company into 
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receivership in accordance with the orderly liquida-
tion authority provided under title II of the Dodd- 
Frank Wall Street Reform and Consumer Protection 
Act (12 U.S.C. 5381 et seq.). 
(b) FAILURE TO SUBMIT ACTION PLAN.—A failure 
by a bank holding company to submit an action plan pur-
suant to subsection (a) within the time period required 
under such subsection shall result in the Board placing 
such company into receivership as described in subsection 
(a)(3). 
(c) LIMITATION ON CLAIMS FOR HOLDERS OF LONG- 
TERM SUBORDINATED DEBT.—Any entity that is a holder 
of long-term subordinated debt of a bank holding company 
that has been placed into receivership pursuant to this sec-
tion shall receive the lesser of— 
(1) 80 percent of the face value of such debt; 
or 
(2) the residual value of such company after all 
other claims of other creditors have been satisfied. 
(d) SUBORDINATED DEBT REQUIREMENT.— 
(1) IN
GENERAL.—The Board shall require 
each bank holding company to issue and maintain 
long-term subordinated debt in an amount greater 
than or equal to 15 percent of the total consolidated 
assets of such company. 
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