H. R. 4173—210 
‘‘(k) RETENTION OF EXISTING STATE REGULATORY AUTHORITY.— 
Nothing in this section or section 314 shall be construed to establish 
or provide the Office or the Department of the Treasury with 
general supervisory or regulatory authority over the business of 
insurance. 
‘‘(l) RETENTION OF AUTHORITY OF FEDERAL FINANCIAL REGU-
LATORY AGENCIES.—Nothing in this section or section 314 shall 
be construed to limit the authority of any Federal financial regu-
latory agency, including the authority to develop and coordinate 
policy, negotiate, and enter into agreements with foreign govern-
ments, authorities, regulators, and multinational regulatory 
committees and to preempt State measures to affect uniformity 
with international regulatory agreements. 
‘‘(m) RETENTION OF AUTHORITY OF UNITED STATES TRADE REP-
RESENTATIVE.—Nothing in this section or section 314 shall be con-
strued to affect the authority of the Office of the United States 
Trade Representative pursuant to section 141 of the Trade Act 
of 1974 (19 U.S.C. 2171) or any other provision of law, including 
authority over the development and coordination of United States 
international trade policy and the administration of the United 
States trade agreements program. 
‘‘(n) ANNUAL REPORTS TO CONGRESS.— 
‘‘(1) SECTION
313(f) REPORTS.—Beginning September 30, 
2011, the Director shall submit a report on or before September 
30 of each calendar year to the President and to the Committees 
on Financial Services and Ways and Means of the House of 
Representatives and the Committees on Banking, Housing, and 
Urban Affairs and Finance of the Senate on any actions taken 
by the Office pursuant to subsection (f) (regarding preemption 
of inconsistent State insurance measures). 
‘‘(2) INSURANCE INDUSTRY.—Beginning September 30, 2011, 
the Director shall submit a report on or before September 
30 of each calendar year to the President and to the Committee 
on Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of 
the Senate on the insurance industry and any other information 
as deemed relevant by the Director or requested by such 
Committees. 
‘‘(o) REPORTS ON U.S. AND GLOBAL REINSURANCE MARKET.— 
The Director shall submit to the Committee on Financial Services 
of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate— 
‘‘(1) a report received not later than September 30, 2012, 
describing the breadth and scope of the global reinsurance 
market and the critical role such market plays in supporting 
insurance in the United States; and 
‘‘(2) a report received not later than January 1, 2013, 
and updated not later than January 1, 2015, describing the 
impact of part II of the Nonadmitted and Reinsurance Reform 
Act of 2010 on the ability of State regulators to access reinsur-
ance information for regulated companies in their jurisdictions. 
‘‘(p) STUDY AND REPORT ON REGULATION OF INSURANCE.— 
‘‘(1) IN GENERAL.—Not later than 18 months after the date 
of enactment of this section, the Director shall conduct a study 
and submit a report to Congress on how to modernize and 
improve the system of insurance regulation in the United 
States.
H. R. 4173—211 
‘‘(2) CONSIDERATIONS.—The study and report required 
under paragraph (1) shall be based on and guided by the 
following considerations: 
‘‘(A) Systemic risk regulation with respect to insurance. 
‘‘(B) Capital standards and the relationship between 
capital allocation and liabilities, including standards 
relating to liquidity and duration risk. 
‘‘(C) Consumer protection for insurance products and 
practices, including gaps in State regulation. 
‘‘(D) The degree of national uniformity of State insur-
ance regulation. 
‘‘(E) The regulation of insurance companies and affili-
ates on a consolidated basis. 
‘‘(F) International coordination of insurance regulation. 
‘‘(3) ADDITIONAL FACTORS.—The study and report required 
under paragraph (1) shall also examine the following factors: 
‘‘(A) The costs and benefits of potential Federal regula-
tion of insurance across various lines of insurance (except 
health insurance). 
‘‘(B) The feasibility of regulating only certain lines 
of insurance at the Federal level, while leaving other lines 
of insurance to be regulated at the State level. 
‘‘(C) The ability of any potential Federal regulation 
or Federal regulators to eliminate or minimize regulatory 
arbitrage. 
‘‘(D) The impact that developments in the regulation 
of insurance in foreign jurisdictions might have on the 
potential Federal regulation of insurance. 
‘‘(E) The ability of any potential Federal regulation 
or Federal regulator to provide robust consumer protection 
for policyholders. 
‘‘(F) The potential consequences of subjecting insurance 
companies to a Federal resolution authority, including the 
effects of any Federal resolution authority— 
‘‘(i) on the operation of State insurance guaranty 
fund systems, including the loss of guaranty fund cov-
erage if an insurance company is subject to a Federal 
resolution authority; 
‘‘(ii) on policyholder protection, including the loss 
of the priority status of policyholder claims over other 
unsecured general creditor claims; 
‘‘(iii) in the case of life insurance companies, on 
the loss of the special status of separate account assets 
and separate account liabilities; and 
‘‘(iv) on the international competitiveness of insur-
ance companies. 
‘‘(G) Such other factors as the Director determines 
necessary or appropriate, consistent with the principles 
set forth in paragraph (2). 
‘‘(4) REQUIRED RECOMMENDATIONS.—The study and report 
required under paragraph (1) shall also contain any legislative, 
administrative, or regulatory recommendations, as the Director 
determines appropriate, to carry out or effectuate the findings 
set forth in such report. 
‘‘(5) CONSULTATION.—With respect to the study and report 
required under paragraph (1), the Director shall consult with
H. R. 4173—212 
the State insurance regulators, consumer organizations, rep-
resentatives of the insurance industry and policyholders, and 
other organizations and experts, as appropriate. 
‘‘(q) USE OF EXISTING RESOURCES.—To carry out this section, 
the Office may employ personnel, facilities, and any other resource 
of the Department of the Treasury available to the Secretary and 
the Secretary shall dedicate specific personnel to the Office. 
‘‘(r) DEFINITIONS.—In this section and section 314, the following 
definitions shall apply: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ means, with respect 
to an insurer, any person who controls, is controlled by, or 
is under common control with the insurer. 
‘‘(2) COVERED AGREEMENT.—The term ‘covered agreement’ 
means a written bilateral or multilateral agreement regarding 
prudential measures with respect to the business of insurance 
or reinsurance that— 
‘‘(A) is entered into between the United States and 
one or more foreign governments, authorities, or regulatory 
entities; and 
‘‘(B) relates to the recognition of prudential measures 
with respect to the business of insurance or reinsurance 
that achieves a level of protection for insurance or reinsur-
ance consumers that is substantially equivalent to the level 
of protection achieved under State insurance or reinsurance 
regulation. 
‘‘(3) INSURER.—The term ‘insurer’ means any person 
engaged in the business of insurance, including reinsurance. 
‘‘(4) FEDERAL FINANCIAL REGULATORY AGENCY.—The term 
‘Federal financial regulatory agency’ means the Department 
of the Treasury, the Board of Governors of the Federal Reserve 
System, the Office of the Comptroller of the Currency, the 
Office of Thrift Supervision, the Securities and Exchange 
Commission, the Commodity Futures Trading Commission, the 
Federal Deposit Insurance Corporation, the Federal Housing 
Finance Agency, or the National Credit Union Administration. 
‘‘(5) NON-UNITED STATES INSURER.—The term ‘non-United 
States insurer’ means an insurer that is organized under the 
laws of a jurisdiction other than a State, but does not include 
any United States branch of such an insurer. 
‘‘(6) OFFICE.—The term ‘Office’ means the Federal Insur-
ance Office established by this section. 
‘‘(7) STATE INSURANCE MEASURE.—The term ‘State insur-
ance measure’ means any State law, regulation, administrative 
ruling, bulletin, guideline, or practice relating to or affecting 
prudential measures applicable to insurance or reinsurance. 
‘‘(8) STATE INSURANCE REGULATOR.—The term ‘State insur-
ance regulator’ means any State regulatory authority respon-
sible for the supervision of insurers. 
‘‘(9) SUBSTANTIALLY EQUIVALENT TO THE LEVEL OF PROTEC-
TION ACHIEVED.—The term ‘substantially equivalent to the level 
of protection achieved’ means the prudential measures of a 
foreign government, authority, or regulatory entity achieve a 
similar outcome in consumer protection as the outcome achieved 
under State insurance or reinsurance regulation. 
‘‘(10) UNITED STATES INSURER.—The term ‘United States 
insurer’ means—
H. R. 4173—213 
‘‘(A) an insurer that is organized under the laws of 
a State; or 
‘‘(B) a United States branch of a non-United States 
insurer. 
‘‘(s) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 
to be appropriated for the Office for each fiscal year such sums 
as may be necessary. 
‘‘SEC. 314. COVERED AGREEMENTS. 
‘‘(a) AUTHORITY.—The Secretary and the United States Trade 
Representative are authorized, jointly, to negotiate and enter into 
covered agreements on behalf of the United States. 
‘‘(b) REQUIREMENTS FOR CONSULTATION WITH CONGRESS.— 
‘‘(1) IN GENERAL.—Before initiating negotiations to enter 
into a covered agreement under subsection (a), during such 
negotiations, and before entering into any such agreement, 
the Secretary and the United States Trade Representative shall 
jointly consult with the Committee on Financial Services and 
the Committee on Ways and Means of the House of Representa-
tives and the Committee on Banking, Housing, and Urban 
Affairs and the Committee on Finance of the Senate. 
‘‘(2) SCOPE.—The consultation described in paragraph (1) 
shall include consultation with respect to— 
‘‘(A) the nature of the agreement; 
‘‘(B) how and to what extent the agreement will achieve 
the applicable purposes, policies, priorities, and objectives 
of section 313 and this section; and 
‘‘(C) the implementation of the agreement, including 
the general effect of the agreement on existing State laws. 
‘‘(c) SUBMISSION AND LAYOVER PROVISIONS.—A covered agree-
ment under subsection (a) may enter into force with respect to 
the United States only if— 
‘‘(1) the Secretary and the United States Trade Representa-
tive jointly submit to the congressional committees specified 
in subsection (b)(1), on a day on which both Houses of Congress 
are in session, a copy of the final legal text of the agreement; 
and 
‘‘(2) a period of 90 calendar days beginning on the date 
on which the copy of the final legal text of the agreement 
is submitted to the congressional committees under paragraph 
(1) has expired.’’. 
(b) DUTIES OF SECRETARY.—Section 321(a) of title 31, United 
States Code, is amended— 
(1) in paragraph (7), by striking ‘‘; and’’ and inserting 
a semicolon; 
(2) in paragraph (8)(C), by striking the period at the end 
and inserting ‘‘; and’’; and 
(3) by adding at the end the following new paragraph: 
‘‘(9) advise the President on major domestic and inter-
national prudential policy issues in connection with all lines 
of insurance except health insurance.’’. 
(c) CLERICAL AMENDMENT.—The table of sections for subchapter 
I of chapter 3 of title 31, United States Code, is amended by 
striking the item relating to section 312 and inserting the following 
new items: 
‘‘Sec. 312. Terrorism and financial intelligence. 
‘‘Sec. 313. Federal Insurance Office.
H. R. 4173—214 
‘‘Sec. 314. Covered agreements. 
‘‘Sec. 315. Continuing in office.’’. 
Subtitle B—State-Based Insurance Reform 
SEC. 511. SHORT TITLE. 
This subtitle may be cited as the ‘‘Nonadmitted and Reinsur-
ance Reform Act of 2010’’. 
SEC. 512. EFFECTIVE DATE. 
Except as otherwise specifically provided in this subtitle, this 
subtitle shall take effect upon the expiration of the 12-month period 
beginning on the date of the enactment of this subtitle. 
PART I—NONADMITTED INSURANCE 
SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM 
TAXES. 
(a) HOME STATE’S EXCLUSIVE AUTHORITY.—No State other than 
the home State of an insured may require any premium tax pay-
ment for nonadmitted insurance. 
(b) ALLOCATION OF NONADMITTED PREMIUM TAXES.— 
(1) IN GENERAL.—The States may enter into a compact 
or otherwise establish procedures to allocate among the States 
the premium taxes paid to an insured’s home State described 
in subsection (a). 
(2) EFFECTIVE DATE.—Except as expressly otherwise pro-
vided in such compact or other procedures, any such compact 
or other procedures— 
(A) if adopted on or before the expiration of the 330- 
day period that begins on the date of the enactment of 
this subtitle, shall apply to any premium taxes that, on 
or after such date of enactment, are required to be paid 
to any State that is subject to such compact or procedures; 
and 
(B) if adopted after the expiration of such 330-day 
period, shall apply to any premium taxes that, on or after 
January 1 of the first calendar year that begins after 
the expiration of such 330-day period, are required to be 
paid to any State that is subject to such compact or proce-
dures. 
(3) REPORT.—Upon the expiration of the 330-day period 
referred to in paragraph (2), the NAIC may submit a report 
to the Committee on Financial Services and the Committee 
on the Judiciary of the House of Representatives and the Com-
mittee on Banking, Housing, and Urban Affairs of the Senate 
identifying and describing any compact or other procedures 
for allocation among the States of premium taxes that have 
been adopted during such period by any States. 
(4) NATIONWIDE SYSTEM.—The Congress intends that each 
State adopt nationwide uniform requirements, forms, and proce-
dures, such as an interstate compact, that provide for the 
reporting, payment, collection, and allocation of premium taxes 
for nonadmitted insurance consistent with this section. 
(c) ALLOCATION BASED ON TAX ALLOCATION REPORT.—To facili-
tate the payment of premium taxes among the States, an insured’s 
home State may require surplus lines brokers and insureds who
H. R. 4173—215 
have independently procured insurance to annually file tax alloca-
tion reports with the insured’s home State detailing the portion 
of the nonadmitted insurance policy premium or premiums attrib-
utable to properties, risks, or exposures located in each State. 
The filing of a nonadmitted insurance tax allocation report and 
the payment of tax may be made by a person authorized by the 
insured to act as its agent. 
SEC. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED’S 
HOME STATE. 
(a) HOME STATE AUTHORITY.—Except as otherwise provided 
in this section, the placement of nonadmitted insurance shall be 
subject to the statutory and regulatory requirements solely of the 
insured’s home State. 
(b) BROKER LICENSING.—No State other than an insured’s home 
State may require a surplus lines broker to be licensed in order 
to sell, solicit, or negotiate nonadmitted insurance with respect 
to such insured. 
(c) ENFORCEMENT PROVISION.—With respect to section 521 and 
subsections (a) and (b) of this section, any law, regulation, provision, 
or action of any State that applies or purports to apply to non-
admitted insurance sold to, solicited by, or negotiated with an 
insured whose home State is another State shall be preempted 
with respect to such application. 
(d) WORKERS’ COMPENSATION EXCEPTION.—This section may 
not be construed to preempt any State law, rule, or regulation 
that restricts the placement of workers’ compensation insurance 
or excess insurance for self-funded workers’ compensation plans 
with a nonadmitted insurer. 
SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE. 
After the expiration of the 2-year period beginning on the 
date of the enactment of this subtitle, a State may not collect 
any fees relating to licensing of an individual or entity as a surplus 
lines broker in the State unless the State has in effect at such 
time laws or regulations that provide for participation by the State 
in the national insurance producer database of the NAIC, or any 
other equivalent uniform national database, for the licensure of 
surplus lines brokers and the renewal of such licenses. 
SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY. 
A State may not— 
(1) impose eligibility requirements on, or otherwise estab-
lish eligibility criteria for, nonadmitted insurers domiciled in 
a United States jurisdiction, except in conformance with such 
requirements and criteria in sections 5A(2) and 5C(2)(a) of 
the Non-Admitted Insurance Model Act, unless the State has 
adopted nationwide uniform requirements, forms, and proce-
dures developed in accordance with section 521(b) of this sub-
title that include alternative nationwide uniform eligibility 
requirements; or 
(2) prohibit a surplus lines broker from placing non-
admitted insurance with, or procuring nonadmitted insurance 
from, a nonadmitted insurer domiciled outside the United 
States that is listed on the Quarterly Listing of Alien Insurers 
maintained by the International Insurers Department of the 
NAIC.
H. R. 4173—216 
SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL PUR-
CHASERS. 
A surplus lines broker seeking to procure or place nonadmitted 
insurance in a State for an exempt commercial purchaser shall 
not be required to satisfy any State requirement to make a due 
diligence search to determine whether the full amount or type 
of insurance sought by such exempt commercial purchaser can 
be obtained from admitted insurers if— 
(1) the broker procuring or placing the surplus lines insur-
ance has disclosed to the exempt commercial purchaser that 
such insurance may or may not be available from the admitted 
market that may provide greater protection with more regu-
latory oversight; and 
(2) the exempt commercial purchaser has subsequently 
requested in writing the broker to procure or place such insur-
ance from a nonadmitted insurer. 
SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study of the nonadmitted insurance market to 
determine the effect of the enactment of this part on the size 
and market share of the nonadmitted insurance market for pro-
viding coverage typically provided by the admitted insurance 
market. 
(b) CONTENTS.—The study shall determine and analyze— 
(1) the change in the size and market share of the non-
admitted insurance market and in the number of insurance 
companies and insurance holding companies providing such 
business in the 18-month period that begins upon the effective 
date of this subtitle; 
(2) the extent to which insurance coverage typically pro-
vided by the admitted insurance market has shifted to the 
nonadmitted insurance market; 
(3) the consequences of any change in the size and market 
share of the nonadmitted insurance market, including dif-
ferences in the price and availability of coverage available 
in both the admitted and nonadmitted insurance markets; 
(4) the extent to which insurance companies and insurance 
holding companies that provide both admitted and nonadmitted 
insurance have experienced shifts in the volume of business 
between admitted and nonadmitted insurance; and 
(5) the extent to which there has been a change in the 
number of individuals who have nonadmitted insurance poli-
cies, the type of coverage provided under such policies, and 
whether such coverage is available in the admitted insurance 
market. 
(c) CONSULTATION WITH NAIC.—In conducting the study under 
this section, the Comptroller General shall consult with the NAIC. 
(d) REPORT.—The Comptroller General shall complete the study 
under this section and submit a report to the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of Representatives 
regarding the findings of the study not later than 30 months after 
the effective date of this subtitle. 
SEC. 527. DEFINITIONS. 
For purposes of this part, the following definitions shall apply:
H. R. 4173—217 
(1) ADMITTED
INSURER.—The term ‘‘admitted insurer’’ 
means, with respect to a State, an insurer licensed to engage 
in the business of insurance in such State. 
(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect 
to an insured, any entity that controls, is controlled by, or 
is under common control with the insured. 
(3) AFFILIATED GROUP.—The term ‘‘affiliated group’’ means 
any group of entities that are all affiliated. 
(4) CONTROL.—An entity has ‘‘control’’ over another entity 
if— 
(A) the entity directly or indirectly or acting through 
1 or more other persons owns, controls, or has the power 
to vote 25 percent or more of any class of voting securities 
of the other entity; or 
(B) the entity controls in any manner the election 
of a majority of the directors or trustees of the other entity. 
(5) EXEMPT COMMERCIAL PURCHASER.—The term ‘‘exempt 
commercial purchaser’’ means any person purchasing commer-
cial insurance that, at the time of placement, meets the fol-
lowing requirements: 
(A) The person employs or retains a qualified risk 
manager to negotiate insurance coverage. 
(B) The person has paid aggregate nationwide commer-
cial property and casualty insurance premiums in excess 
of $100,000 in the immediately preceding 12 months. 
(C)(i) The person meets at least 1 of the following 
criteria: 
(I) The person possesses a net worth in excess 
of $20,000,000, as such amount is adjusted pursuant 
to clause (ii). 
(II) The person generates annual revenues in 
excess of $50,000,000, as such amount is adjusted 
pursuant to clause (ii). 
(III) The person employs more than 500 full-time 
or full-time equivalent employees per individual 
insured or is a member of an affiliated group employing 
more than 1,000 employees in the aggregate. 
(IV) The person is a not-for-profit organization or 
public entity generating annual budgeted expenditures 
of at least $30,000,000, as such amount is adjusted 
pursuant to clause (ii). 
(V) The person is a municipality with a population 
in excess of 50,000 persons. 
(ii) Effective on the fifth January 1 occurring after 
the date of the enactment of this subtitle and each fifth 
January 1 occurring thereafter, the amounts in subclauses 
(I), (II), and (IV) of clause (i) shall be adjusted to reflect 
the percentage change for such 5-year period in the Con-
sumer Price Index for All Urban Consumers published 
by the Bureau of Labor Statistics of the Department of 
Labor. 
(6) HOME STATE.— 
(A) IN GENERAL.—Except as provided in subparagraph 
(B), the term ‘‘home State’’ means, with respect to an 
insured—
H. R. 4173—218 
(i) the State in which an insured maintains its 
principal place of business or, in the case of an indi-
vidual, the individual’s principal residence; or 
(ii) if 100 percent of the insured risk is located 
out of the State referred to in clause (i), the State 
to which the greatest percentage of the insured’s tax-
able premium for that insurance contract is allocated. 
(B) AFFILIATED GROUPS.—If more than 1 insured from 
an affiliated group are named insureds on a single non-
admitted insurance contract, the term ‘‘home State’’ means 
the home State, as determined pursuant to subparagraph 
(A), of the member of the affiliated group that has the 
largest percentage of premium attributed to it under such 
insurance contract. 
(7) INDEPENDENTLY
PROCURED
INSURANCE.—The term 
‘‘independently procured insurance’’ means insurance procured 
directly by an insured from a nonadmitted insurer. 
(8) NAIC.—The term ‘‘NAIC’’ means the National Associa-
tion of Insurance Commissioners or any successor entity. 
(9) NONADMITTED
INSURANCE.—The term ‘‘nonadmitted 
insurance’’ means any property and casualty insurance per-
mitted to be placed directly or through a surplus lines broker 
with a nonadmitted insurer eligible to accept such insurance. 
(10) NON-ADMITTED
INSURANCE
MODEL
ACT.—The term 
‘‘Non-Admitted Insurance Model Act’’ means the provisions of 
the Non-Admitted Insurance Model Act, as adopted by the 
NAIC on August 3, 1994, and amended on September 30, 
1996, December 6, 1997, October 2, 1999, and June 8, 2002. 
(11) NONADMITTED
INSURER.—The term ‘‘nonadmitted 
insurer’’— 
(A) means, with respect to a State, an insurer not 
licensed to engage in the business of insurance in such 
State; but 
(B) does not include a risk retention group, as that 
term is defined in section 2(a)(4) of the Liability Risk 
Retention Act of 1986 (15 U.S.C. 3901(a)(4)). 
(12) PREMIUM TAX.—The term ‘‘premium tax’’ means, with 
respect to surplus lines or independently procured insurance 
coverage, any tax, fee, assessment, or other charge imposed 
by a government entity directly or indirectly based on any 
payment made as consideration for an insurance contract for 
such insurance, including premium deposits, assessments, reg-
istration fees, and any other compensation given in consider-
ation for a contract of insurance. 
(13) QUALIFIED RISK MANAGER.—The term ‘‘qualified risk 
manager’’ means, with respect to a policyholder of commercial 
insurance, a person who meets all of the following requirements: 
(A) The person is an employee of, or third-party 
consultant retained by, the commercial policyholder. 
(B) The person provides skilled services in loss preven-
tion, loss reduction, or risk and insurance coverage anal-
ysis, and purchase of insurance. 
(C) The person— 
(i)(I) has a bachelor’s degree or higher from an 
accredited college or university in risk management, 
business administration, finance, economics, or any
H. R. 4173—219 
other field determined by a State insurance commis-
sioner or other State regulatory official or entity to 
demonstrate minimum competence in risk manage-
ment; and 
(II)(aa) has 3 years of experience in risk financing, 
claims administration, loss prevention, risk and insur-
ance analysis, or purchasing commercial lines of insur-
ance; or 
(bb) has— 
(AA) a designation as a Chartered Property 
and Casualty Underwriter (in this subparagraph 
referred to as ‘‘CPCU’’) issued by the American 
Institute for CPCU/Insurance Institute of America; 
(BB) a designation as an Associate in Risk 
Management (ARM) issued by the American 
Institute for CPCU/Insurance Institute of America; 
(CC) a designation as Certified Risk Manager 
(CRM) issued by the National Alliance for Insur-
ance Education & Research; 
(DD) a designation as a RIMS Fellow (RF) 
issued by the Global Risk Management Institute; 
or 
(EE) any other designation, certification, or 
license determined by a State insurance commis-
sioner or other State insurance regulatory official 
or entity to demonstrate minimum competency in 
risk management; 
(ii)(I) has at least 7 years of experience in risk 
financing, claims administration, loss prevention, risk 
and insurance coverage analysis, or purchasing 
commercial lines of insurance; and 
(II) has any 1 of the designations specified in 
subitems (AA) through (EE) of clause (i)(II)(bb); 
(iii) has at least 10 years of experience in risk 
financing, claims administration, loss prevention, risk 
and insurance coverage analysis, or purchasing 
commercial lines of insurance; or 
(iv) has a graduate degree from an accredited col-
lege or university in risk management, business 
administration, finance, economics, or any other field 
determined by a State insurance commissioner or other 
State regulatory official or entity to demonstrate min-
imum competence in risk management. 
(14) REINSURANCE.—The term ‘‘reinsurance’’ means the 
assumption by an insurer of all or part of a risk undertaken 
originally by another insurer. 
(15) SURPLUS
LINES
BROKER.—The term ‘‘surplus lines 
broker’’ means an individual, firm, or corporation which is 
licensed in a State to sell, solicit, or negotiate insurance on 
properties, risks, or exposures located or to be performed in 
a State with nonadmitted insurers. 
(16) STATE.—The term ‘‘State’’ includes any State of the 
United States, the District of Columbia, the Commonwealth 
of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin 
Islands, and American Samoa.
H. R. 4173—220 
PART II—REINSURANCE 
SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSUR-
ANCE AGREEMENTS. 
(a) CREDIT FOR REINSURANCE.—If the State of domicile of a 
ceding insurer is an NAIC-accredited State, or has financial solvency 
requirements substantially similar to the requirements necessary 
for NAIC accreditation, and recognizes credit for reinsurance for 
the insurer’s ceded risk, then no other State may deny such credit 
for reinsurance. 
(b) ADDITIONAL PREEMPTION OF EXTRATERRITORIAL APPLICATION 
OF STATE LAW.—In addition to the application of subsection (a), 
all laws, regulations, provisions, or other actions of a State that 
is not the domiciliary State of the ceding insurer, except those 
with respect to taxes and assessments on insurance companies 
or insurance income, are preempted to the extent that they— 
(1) restrict or eliminate the rights of the ceding insurer 
or the assuming insurer to resolve disputes pursuant to contrac-
tual arbitration to the extent such contractual provision is 
not inconsistent with the provisions of title 9, United States 
Code; 
(2) require that a certain State’s law shall govern the 
reinsurance contract, disputes arising from the reinsurance 
contract, or requirements of the reinsurance contract; 
(3) attempt to enforce a reinsurance contract on terms 
different than those set forth in the reinsurance contract, to 
the extent that the terms are not inconsistent with this part; 
or 
(4) otherwise apply the laws of the State to reinsurance 
agreements of ceding insurers not domiciled in that State. 
SEC. 532. REGULATION OF REINSURER SOLVENCY. 
(a) DOMICILIARY STATE REGULATION.—If the State of domicile 
of a reinsurer is an NAIC-accredited State or has financial solvency 
requirements substantially similar to the requirements necessary 
for NAIC accreditation, such State shall be solely responsible for 
regulating the financial solvency of the reinsurer. 
(b) NONDOMICILIARY STATES.— 
(1) LIMITATION
ON
FINANCIAL
INFORMATION
REQUIRE-
MENTS.—If the State of domicile of a reinsurer is an NAIC- 
accredited State or has financial solvency requirements 
substantially similar to the requirements necessary for NAIC 
accreditation, no other State may require the reinsurer to pro-
vide any additional financial information other than the 
information the reinsurer is required to file with its domiciliary 
State. 
(2) RECEIPT OF INFORMATION.—No provision of this section 
shall be construed as preventing or prohibiting a State that 
is not the State of domicile of a reinsurer from receiving a 
copy of any financial statement filed with its domiciliary State. 
SEC. 533. DEFINITIONS. 
For purposes of this part, the following definitions shall apply: 
(1) CEDING INSURER.—The term ‘‘ceding insurer’’ means 
an insurer that purchases reinsurance. 
(2) DOMICILIARY STATE.—The terms ‘‘State of domicile’’ and 
‘‘domiciliary State’’ mean, with respect to an insurer or
H. R. 4173—221 
reinsurer, the State in which the insurer or reinsurer is incor-
porated or entered through, and licensed. 
(3) NAIC.—The term ‘‘NAIC’’ means the National Associa-
tion of Insurance Commissioners or any successor entity. 
(4) REINSURANCE.—The term ‘‘reinsurance’’ means the 
assumption by an insurer of all or part of a risk undertaken 
originally by another insurer. 
(5) REINSURER.— 
(A) IN
GENERAL.—The term ‘‘reinsurer’’ means an 
insurer to the extent that the insurer— 
(i) is principally engaged in the business of reinsur-
ance; 
(ii) does not conduct significant amounts of direct 
insurance as a percentage of its net premiums; and 
(iii) is not engaged in an ongoing basis in the 
business of soliciting direct insurance. 
(B) DETERMINATION.—A determination of whether an 
insurer is a reinsurer shall be made under the laws of 
the State of domicile in accordance with this paragraph. 
(6) STATE.—The term ‘‘State’’ includes any State of the 
United States, the District of Columbia, the Commonwealth 
of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin 
Islands, and American Samoa. 
PART III—RULE OF CONSTRUCTION 
SEC. 541. RULE OF CONSTRUCTION. 
Nothing in this subtitle or the amendments made by this sub-
title shall be construed to modify, impair, or supersede the applica-
tion of the antitrust laws. Any implied or actual conflict between 
this subtitle and any amendments to this subtitle and the antitrust 
laws shall be resolved in favor of the operation of the antitrust 
laws. 
SEC. 542. SEVERABILITY. 
If any section or subsection of this subtitle, or any application 
of such provision to any person or circumstance, is held to be 
unconstitutional, the remainder of this subtitle, and the application 
of the provision to any other person or circumstance, shall not 
be affected. 
TITLE VI—IMPROVEMENTS TO REGULA-
TION OF BANK AND SAVINGS ASSO-
CIATION HOLDING COMPANIES AND 
DEPOSITORY INSTITUTIONS 
SEC. 601. SHORT TITLE. 
This title may be cited as the ‘‘Bank and Savings Association 
Holding Company and Depository Institution Regulatory Improve-
ments Act of 2010’’. 
SEC. 602. DEFINITION. 
For purposes of this title, a company is a ‘‘commercial firm’’ 
if the annual gross revenues derived by the company and all of 
its affiliates from activities that are financial in nature (as defined
H. R. 4173—222 
in section 4(k) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1843(k))) and, if applicable, from the ownership or control 
of one or more insured depository institutions, represent less than 
15 percent of the consolidated annual gross revenues of the com-
pany. 
SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD 
BANKS, INDUSTRIAL LOAN COMPANIES, AND CERTAIN 
OTHER COMPANIES UNDER THE BANK HOLDING COMPANY 
ACT OF 1956. 
(a) MORATORIUM.— 
(1) DEFINITIONS.—In this subsection— 
(A) the term ‘‘credit card bank’’ means an institution 
described in section 2(c)(2)(F) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 
(B) the term ‘‘industrial bank’’ means an institution 
described in section 2(c)(2)(H) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and 
(C) the term ‘‘trust bank’’ means an institution 
described in section 2(c)(2)(D) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(c)(2)(D)). 
(2) MORATORIUM ON PROVISION OF DEPOSIT INSURANCE.— 
The Corporation may not approve an application for deposit 
insurance under section 5 of the Federal Deposit Insurance 
Act (12 U.S.C. 1815) that is received after November 23, 2009, 
for an industrial bank, a credit card bank, or a trust bank 
that is directly or indirectly owned or controlled by a commer-
cial firm. 
(3) CHANGE IN CONTROL.— 
(A) IN GENERAL.—Except as provided in subparagraph 
(B), the appropriate Federal banking agency shall dis-
approve a change in control, as provided in section 7(j) 
of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)), 
of an industrial bank, a credit card bank, or a trust bank 
if the change in control would result in direct or indirect 
control of the industrial bank, credit card bank, or trust 
bank by a commercial firm. 
(B) EXCEPTIONS.—Subparagraph (A) shall not apply 
to a change in control of an industrial bank, credit card 
bank, or trust bank— 
(i) that— 
(I) is in danger of default, as determined by 
the appropriate Federal banking agency; 
(II) results from the merger or whole acquisi-
tion of a commercial firm that directly or indirectly 
controls the industrial bank, credit card bank, or 
trust bank in a bona fide merger with or acquisi-
tion by another commercial firm, as determined 
by the appropriate Federal banking agency; or 
(III) results from an acquisition of voting 
shares of a publicly traded company that controls 
an industrial bank, credit card bank, or trust bank, 
if, after the acquisition, the acquiring shareholder 
(or group of shareholders acting in concert) holds 
less than 25 percent of any class of the voting 
shares of the company; and
H. R. 4173—223 
(ii) that has obtained all regulatory approvals 
otherwise required for such change of control under 
any applicable Federal or State law, including section 
7(j) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(j)). 
(4) SUNSET.—This subsection shall cease to have effect 
3 years after the date of enactment of this Act. 
(b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF EXCEP-
TIONS UNDER THE BANK HOLDING COMPANY ACT OF 1956.— 
(1) STUDY
REQUIRED.—The Comptroller General of the 
United States shall carry out a study to determine whether 
it is necessary, in order to strengthen the safety and soundness 
of institutions or the stability of the financial system, to elimi-
nate the exceptions under section 2 of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841) for institutions described 
in— 
(A) section 2(a)(5)(E) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(a)(5)(E)); 
(B) section 2(a)(5)(F) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(a)(5)(F)); 
(C) section 2(c)(2)(D) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)(D)); 
(D) section 2(c)(2)(F) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 
(E) section 2(c)(2)(H) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and 
(F) section 2(c)(2)(B) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)(B)). 
(2) CONTENT OF STUDY.— 
(A) IN GENERAL.—The study required under paragraph 
(1), with respect to the institutions referenced in each 
of subparagraphs (A) through (E) of paragraph (1), shall, 
to the extent feasible be based on information provided 
to the Comptroller General by the appropriate Federal 
or State regulator, and shall— 
(i) identify the types and number of institutions 
excepted from section 2 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841) under each of the subpara-
graphs described in subparagraphs (A) through (E) 
of paragraph (1); 
(ii) generally describe the size and geographic loca-
tions of the institutions described in clause (i); 
(iii) determine the extent to which the institutions 
described in clause (i) are held by holding companies 
that are commercial firms; 
(iv) determine whether the institutions described 
in clause (i) have any affiliates that are commercial 
firms; 
(v) identify the Federal banking agency responsible 
for the supervision of the institutions described in 
clause (i) on and after the transfer date; 
(vi) determine the adequacy of the Federal bank 
regulatory framework applicable to each category of 
institution described in clause (i), including any restric-
tions (including limitations on affiliate transactions or 
cross-marketing) that apply to transactions between
H. R. 4173—224 
an institution, the holding company of the institution, 
and any other affiliate of the institution; and 
(vii) evaluate the potential consequences of sub-
jecting the institutions described in clause (i) to the 
requirements of the Bank Holding Company Act of 
1956, including with respect to the availability and 
allocation of credit, the stability of the financial system 
and the economy, the safe and sound operation of 
each category of institution, and the impact on the 
types of activities in which such institutions, and the 
holding companies of such institutions, may engage. 
(B) SAVINGS ASSOCIATIONS.—With respect to institu-
tions described in paragraph (1)(F), the study required 
under paragraph (1) shall— 
(i) determine the adequacy of the Federal bank 
regulatory framework applicable to such institutions, 
including any restrictions (including limitations on 
affiliate transactions or cross-marketing) that apply 
to transactions between an institution, the holding 
company of the institution, and any other affiliate of 
the institution; and 
(ii) evaluate the potential consequences of sub-
jecting the institutions described in paragraph (1)(F) 
to the requirements of the Bank Holding Company 
Act of 1956, including with respect to the availability 
and allocation of credit, the stability of the financial 
system and the economy, the safe and sound operation 
of such institutions, and the impact on the types of 
activities in which such institutions, and the holding 
companies of such institutions, may engage. 
(3) REPORT.—Not later than 18 months after the date of 
enactment of this Act, the Comptroller General shall submit 
to the Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Services of 
the House of Representatives a report on the study required 
under paragraph (1). 
SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES; 
REGULATION OF FUNCTIONALLY REGULATED SUBSIDI-
ARIES. 
(a) REPORTS BY BANK HOLDING COMPANIES.—Sections 5(c)(1) 
of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) 
is amended— 
(1) by striking subclause (A)(ii) and inserting the following: 
‘‘(ii) compliance by the bank holding company or 
subsidiary with— 
‘‘(I) this Act; 
‘‘(II) Federal laws that the Board has specific 
jurisdiction to enforce against the company or sub-
sidiary; and 
‘‘(III) other than in the case of an insured 
depository institution or functionally regulated 
subsidiary, any other applicable provision of Fed-
eral law.’’; 
(2) by striking subparagraph (B) and inserting the fol-
lowing:
H. R. 4173—225 
‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY 
INFORMATION.—The Board shall, to the fullest extent pos-
sible, use— 
‘‘(i) reports and other supervisory information that 
the bank holding company or any subsidiary thereof 
has been required to provide to other Federal or State 
regulatory agencies; 
‘‘(ii) externally audited financial statements of the 
bank holding company or subsidiary; 
‘‘(iii) information otherwise available from Federal 
or State regulatory agencies; and 
‘‘(iv) information that is otherwise required to be 
reported publicly.’’; and 
(3) by adding at the end the following: 
‘‘(C) AVAILABILITY.—Upon the request of the Board, 
the bank holding company or a subsidiary of the bank 
holding company shall promptly provide to the Board any 
information described in clauses (i) through (iii) of subpara-
graph (B).’’. 
(b) EXAMINATIONS
OF BANK HOLDING COMPANIES.—Section 
5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1844(c)(2)) is amended to read as follows: 
‘‘(2) EXAMINATIONS.— 
‘‘(A) IN GENERAL.—Subject to subtitle B of the Con-
sumer Financial Protection Act of 2010, the Board may 
make examinations of a bank holding company and each 
subsidiary of a bank holding company in order to— 
‘‘(i) inform the Board of— 
‘‘(I) the nature of the operations and financial 
condition of the bank holding company and the 
subsidiary; 
‘‘(II) the financial, operational, and other risks 
within the bank holding company system that may 
pose a threat to— 
‘‘(aa) the safety and soundness of the bank 
holding company or of any depository institu-
tion subsidiary of the bank holding company; 
or 
‘‘(bb) the stability of the financial system 
of the United States; and 
‘‘(III) the systems of the bank holding company 
for monitoring and controlling the risks described 
in subclause (II); and 
‘‘(ii) monitor the compliance of the bank holding 
company and the subsidiary with— 
‘‘(I) this Act; 
‘‘(II) Federal laws that the Board has specific 
jurisdiction to enforce against the company or sub-
sidiary; and 
‘‘(III) other than in the case of an insured 
depository institution or functionally regulated 
subsidiary, any other applicable provisions of Fed-
eral law. 
‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For 
purposes of this paragraph, the Board shall, to the fullest 
extent possible, rely on—
H. R. 4173—226 
‘‘(i) examination reports made by other Federal 
or State regulatory agencies relating to a bank holding 
company and any subsidiary of a bank holding com-
pany; and 
‘‘(ii) the reports and other information required 
under paragraph (1). 
‘‘(C) COORDINATION
WITH
OTHER
REGULATORS.—The 
Board shall— 
‘‘(i) provide reasonable notice to, and consult with, 
the appropriate Federal banking agency, the Securities 
and Exchange Commission, the Commodity Futures 
Trading Commission, or State regulatory agency, as 
appropriate, for a subsidiary that is a depository 
institution or a functionally regulated subsidiary of 
a bank holding company before commencing an exam-
ination of the subsidiary under this section; and 
‘‘(ii) to the fullest extent possible, avoid duplication 
of examination activities, reporting requirements, and 
requests for information.’’. 
(c) AUTHORITY
TO
REGULATE
FUNCTIONALLY
REGULATED 
SUBSIDIARIES OF BANK HOLDING COMPANIES.—The Bank Holding 
Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended— 
(1) in section 5(c)(5)(B) (12 U.S.C. 1844(c)(5)(B)), by striking 
clause (v) and inserting the following: 
‘‘(v) an entity that is subject to regulation by, 
or registration with, the Commodity Futures Trading 
Commission, with respect to activities conducted as 
a futures commission merchant, commodity trading 
adviser, commodity pool, commodity pool operator, 
swap execution facility, swap data repository, swap 
dealer, major swap participant, and activities that are 
incidental to such commodities and swaps activities.’’; 
and 
(2) by striking section 10A (12 U.S.C. 1848a). 
(d) ACQUISITIONS OF BANKS.—Section 3(c) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding 
at the end the following: 
‘‘(7) FINANCIAL STABILITY.—In every case, the Board shall 
take into consideration the extent to which a proposed acquisi-
tion, merger, or consolidation would result in greater or more 
concentrated risks to the stability of the United States banking 
or financial system.’’. 
(e) ACQUISITIONS OF NONBANKS.— 
(1) NOTICE PROCEDURES.—Section 4(j)(2)(A) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is 
amended by striking ‘‘or unsound banking practices’’ and 
inserting ‘‘unsound banking practices, or risk to the stability 
of the United States banking or financial system’’. 
(2) ACTIVITIES THAT ARE FINANCIAL IN NATURE.—Section 
4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1843(k)(6)(B)) is amended to read as follows: 
‘‘(B) APPROVAL NOT REQUIRED FOR CERTAIN FINANCIAL 
ACTIVITIES.— 
‘‘(i) IN GENERAL.—Except as provided in subsection 
(j) with regard to the acquisition of a savings associa-
tion and clause (ii), a financial holding company may
H. R. 4173—227 
commence any activity, or acquire any company, pursu-
ant to paragraph (4) or any regulation prescribed or 
order issued under paragraph (5), without prior 
approval of the Board. 
‘‘(ii) EXCEPTION.—A financial holding company may 
not acquire a company, without the prior approval 
of the Board, in a transaction in which the total consoli-
dated assets to be acquired by the financial holding 
company exceed $10,000,000,000. 
‘‘(iii) HART-SCOTT-RODINO FILING REQUIREMENT.— 
Solely for purposes of section 7A(c)(8) of the Clayton 
Act (15 U.S.C. 18a(c)(8)), the transactions subject to 
the requirements of this paragraph shall be treated 
as if the approval of the Board is not required.’’. 
(f) BANK MERGER ACT TRANSACTIONS.—Section 18(c)(5) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, 
in the matter immediately following subparagraph (B), by striking 
‘‘and the convenience and needs of the community to be served’’ 
and inserting ‘‘the convenience and needs of the community to 
be served, and the risk to the stability of the United States banking 
or financial system’’. 
(g) REPORTS BY SAVINGS AND LOAN HOLDING COMPANIES.— 
Section 10(b)(2) of the Home Owners’ Loan Act (12 U.S.C. 
1467a(b)(2) is amended— 
(1) by striking ‘‘Each savings’’ and inserting the following: 
‘‘(A) IN GENERAL.—Each savings’’; and 
(2) by adding at the end the following: 
‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY 
INFORMATION.—The Board shall, to the fullest extent pos-
sible, use— 
‘‘(i) reports and other supervisory information that 
the savings and loan holding company or any sub-
sidiary thereof has been required to provide to other 
Federal or State regulatory agencies; 
‘‘(ii) externally audited financial statements of the 
savings and loan holding company or subsidiary; 
‘‘(iii) information that is otherwise available from 
Federal or State regulatory agencies; and 
‘‘(iv) information that is otherwise required to be 
reported publicly. 
‘‘(C) AVAILABILITY.—Upon the request of the Board, 
a savings and loan holding company or a subsidiary of 
a savings and loan holding company shall promptly provide 
to the Board any information described in clauses (i) 
through (iii) of subparagraph (B).’’. 
(h) EXAMINATION OF SAVINGS AND LOAN HOLDING COMPANIES.— 
(1) DEFINITIONS.—Section 2 of the Home Owners’ Loan 
Act (12 U.S.C. 1462) is amended by adding at the end the 
following: 
‘‘(10) APPROPRIATE FEDERAL BANKING AGENCY.—The term 
‘appropriate Federal banking agency’ has the same meaning 
as in section 3(q) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q)). 
‘‘(11) FUNCTIONALLY
REGULATED
SUBSIDIARY.—The term 
‘functionally regulated subsidiary’ has the same meaning as 
in section 5(c)(5) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844(c)(5)).’’.
H. R. 4173—228 
(2) EXAMINATION.—Section 10(b) of the Home Owners’ Loan 
Act (12 U.S.C. 1467a(b)) is amended by striking paragraph 
(4) and inserting the following: 
‘‘(4) EXAMINATIONS.— 
‘‘(A) IN GENERAL.—Subject to subtitle B of the Con-
sumer Financial Protection Act of 2010, the Board may 
make examinations of a savings and loan holding company 
and each subsidiary of a savings and loan holding company 
system, in order to— 
‘‘(i) inform the Board of— 
‘‘(I) the nature of the operations and financial 
condition of the savings and loan holding company 
and the subsidiary; 
‘‘(II) the financial, operational, and other risks 
within the savings and loan holding company 
system that may pose a threat to— 
‘‘(aa) the safety and soundness of the 
savings and loan holding company or of any 
depository institution subsidiary of the savings 
and loan holding company; or 
‘‘(bb) the stability of the financial system 
of the United States; and 
‘‘(III) the systems of the savings and loan 
holding company for monitoring and controlling 
the risks described in subclause (II); and 
‘‘(ii) monitor the compliance of the savings and 
loan holding company and the subsidiary with— 
‘‘(I) this Act; 
‘‘(II) Federal laws that the Board has specific 
jurisdiction to enforce against the company or sub-
sidiary; and 
‘‘(III) other than in the case of an insured 
depository institution or functionally regulated 
subsidiary, any other applicable provisions of Fed-
eral law. 
‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For 
purposes of this subsection, the Board shall, to the fullest 
extent possible, rely on— 
‘‘(i) the examination reports made by other Federal 
or State regulatory agencies relating to a savings and 
loan holding company and any subsidiary; and 
‘‘(ii) the reports and other information required 
under paragraph (2). 
‘‘(C) COORDINATION
WITH
OTHER
REGULATORS.—The 
Board shall— 
‘‘(i) provide reasonable notice to, and consult with, 
the appropriate Federal banking agency, the Securities 
and Exchange Commission, the Commodity Futures 
Trading Commission, or State regulatory agency, as 
appropriate, for a subsidiary that is a depository 
institution or a functionally regulated subsidiary of 
a savings and loan holding company before com-
mencing an examination of the subsidiary under this 
section; and 
‘‘(ii) to the fullest extent possible, avoid duplication 
of examination activities, reporting requirements, and 
requests for information.’’.
H. R. 4173—229 
(i) DEFINITION
OF
THE TERM ‘‘SAVINGS
AND LOAN HOLDING 
COMPANY’’.—Section 10(a)(1)(D)(ii) of the Home Owners’ Loan Act 
(12 U.S.C. 1467a(a)(1)(D)(ii)) is amended to read as follows: 
‘‘(ii) EXCLUSION.—The term ‘savings and loan 
holding company’ does not include— 
‘‘(I) a bank holding company that is registered 
under, and subject to, the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841 et seq.), or to any 
company directly or indirectly controlled by such 
company (other than a savings association); 
‘‘(II) a company that controls a savings associa-
tion that functions solely in a trust or fiduciary 
capacity as described in section 2(c)(2)(D) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(D)); or 
‘‘(III) a company described in subsection 
(c)(9)(C) solely by virtue of such company’s control 
of an intermediate holding company established 
pursuant to section 10A.’’. 
(j) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE 
ACTIVITIES OF DEPOSITORY INSTITUTION SUBSIDIARIES 
OF HOLDING COMPANIES. 
(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by inserting after section 25 the following 
new section: 
‘‘SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDIARIES OF 
HOLDING COMPANIES. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) BOARD.—The term ‘Board’ means the Board of Gov-
ernors of the Federal Reserve System. 
‘‘(2) FUNCTIONALLY
REGULATED
SUBSIDIARY.—The term 
‘functionally regulated subsidiary’ has the same meaning as 
in section 5(c)(5) of the Bank Holding Company Act. 
‘‘(3) LEAD
INSURED
DEPOSITORY
INSTITUTION.—The term 
‘lead insured depository institution’ has the same meaning as 
in section 2(o)(8) of the Bank Holding Company Act. 
‘‘(b) EXAMINATION REQUIREMENTS.—Subject to subtitle B of the 
Consumer Financial Protection Act of 2010, the Board shall examine 
the activities of a nondepository institution subsidiary (other than 
a functionally regulated subsidiary or a subsidiary of a depository 
institution) of a depository institution holding company that are 
permissible for the insured depository institution subsidiaries of 
the depository institution holding company in the same manner, 
subject to the same standards, and with the same frequency as 
would be required if such activities were conducted in the lead 
insured depository institution of the depository institution holding 
company. 
‘‘(c) STATE COORDINATION.— 
‘‘(1) CONSULTATION AND COORDINATION.—If a nondepository 
institution subsidiary is supervised by a State bank supervisor 
or other State regulatory authority, the Board, in conducting 
the examinations required in subsection (b), shall consult and 
coordinate with such State regulator.
H. R. 4173—230 
‘‘(2) 
ALTERNATING
EXAMINATIONS
PERMITTED.—The 
examinations required under subsection (b) may be conducted 
in joint or alternating manner with a State regulator, if the 
Board determines that an examination of a nondepository 
institution subsidiary conducted by the State carries out the 
purposes of this section. 
‘‘(d) APPROPRIATE FEDERAL BANKING AGENCY BACKUP EXAMINA-
TION AUTHORITY.— 
‘‘(1) IN GENERAL.—In the event that the Board does not 
conduct examinations required under subsection (b) in the same 
manner, subject to the same standards, and with the same 
frequency as would be required if such activities were conducted 
by the lead insured depository institution subsidiary of the 
depository institution holding company, the appropriate Federal 
banking agency for the lead insured depository institution may 
recommend in writing (which shall include a written expla-
nation of the concerns giving rise to the recommendation) that 
the Board perform the examination required under subsection 
(b). 
‘‘(2) EXAMINATION BY AN APPROPRIATE FEDERAL BANKING 
AGENCY.—If the Board does not, before the end of the 60- 
day period beginning on the date on which the Board receives 
a recommendation under paragraph (1), begin an examination 
as required under subsection (b) or provide a written expla-
nation or plan to the appropriate Federal banking agency 
making such recommendation responding to the concerns raised 
by the appropriate Federal banking agency for the lead insured 
depository institution, the appropriate Federal banking agency 
for the lead insured depository institution may, subject to the 
Consumer Financial Protection Act of 2010, examine the activi-
ties that are permissible for a depository institution subsidiary 
conducted by such nondepository institution subsidiary (other 
than a functionally regulated subsidiary or a subsidiary of 
a depository institution) of the depository institution holding 
company as if the nondepository institution subsidiary were 
an insured depository institution for which the appropriate 
Federal banking agency of the lead insured depository institu-
tion was the appropriate Federal banking agency, to determine 
whether the activities— 
‘‘(A) pose a material threat to the safety and soundness 
of any insured depository institution subsidiary of the 
depository institution holding company; 
‘‘(B) are conducted in accordance with applicable Fed-
eral law; and 
‘‘(C) are subject to appropriate systems for monitoring 
and controlling the financial, operating, and other material 
risks of the activities that may pose a material threat 
to the safety and soundness of the insured depository 
institution subsidiaries of the holding company. 
‘‘(3) AGENCY COORDINATION WITH THE BOARD.—An appro-
priate Federal banking agency that conducts an examination 
pursuant to paragraph (2) shall coordinate examination of the 
activities of nondepository institution subsidiaries described in 
subsection (b) with the Board in a manner that— 
‘‘(A) avoids duplication; 
‘‘(B) shares information relevant to the supervision 
of the depository institution holding company;
H. R. 4173—231 
‘‘(C) achieves the objectives of subsection (b); and 
‘‘(D) ensures that the depository institution holding 
company and the subsidiaries of the depository institution 
holding company are not subject to conflicting supervisory 
demands by such agency and the Board. 
‘‘(4) FEE PERMITTED FOR EXAMINATION COSTS.—An appro-
priate Federal banking agency that conducts an examination 
or enforcement action pursuant to this section may collect an 
assessment, fee, or such other charge from the subsidiary as 
the appropriate Federal banking agency determines necessary 
or appropriate to carry out the responsibilities of the appro-
priate Federal banking agency in connection with such exam-
ination. 
‘‘(e) REFERRALS FOR ENFORCEMENT BY APPROPRIATE FEDERAL 
BANKING AGENCY.— 
‘‘(1) RECOMMENDATION
OF
ENFORCEMENT
ACTION.—The 
appropriate Federal banking agency for the lead insured deposi-
tory institution, based upon its examination of a nondepository 
institution subsidiary conducted pursuant to subsection (d), 
or other relevant information, may submit to the Board, in 
writing, a recommendation that the Board take enforcement 
action against such nondepository institution subsidiary, 
together with an explanation of the concerns giving rise to 
the recommendation, if the appropriate Federal banking agency 
determines (by a vote of its members, if applicable) that the 
activities of the nondepository institution subsidiary pose a 
material threat to the safety and soundness of any insured 
depository institution subsidiary of the depository institution 
holding company. 
‘‘(2) BACK-UP
AUTHORITY
OF
THE
APPROPRIATE
FEDERAL 
BANKING AGENCY.—If, within the 60-day period beginning on 
the date on which the Board receives a recommendation under 
paragraph (1), the Board does not take enforcement action 
against the nondepository institution subsidiary or provide a 
plan for supervisory or enforcement action that is acceptable 
to the appropriate Federal banking agency that made the rec-
ommendation pursuant to paragraph (1), such agency may take 
the recommended enforcement action against the nondepository 
institution subsidiary, in the same manner as if the nondeposi-
tory institution subsidiary were an insured depository institu-
tion for which the agency was the appropriate Federal banking 
agency. 
‘‘(f) COORDINATION AMONG APPROPRIATE FEDERAL BANKING 
AGENCIES.—Each Federal banking agency, prior to or when exer-
cising authority under subsection (d) or (e) shall— 
‘‘(1) provide reasonable notice to, and consult with, the 
appropriate Federal banking agency or State bank supervisor 
(or other State regulatory agency) of the nondepository institu-
tion subsidiary of a depository institution holding company 
that is described in subsection (d) before commencing any exam-
ination of the subsidiary; 
‘‘(2) to the fullest extent possible— 
‘‘(A) rely on the examinations, inspections, and reports 
of the appropriate Federal banking agency or the State 
bank supervisor (or other State regulatory agency) of the 
subsidiary;
H. R. 4173—232 
‘‘(B) avoid duplication of examination activities, 
reporting requirements, and requests for information; and 
‘‘(C) ensure that the depository institution holding com-
pany and the subsidiaries of the depository institution 
holding company are not subject to conflicting supervisory 
demands by the appropriate Federal banking agencies. 
‘‘(g) RULE OF CONSTRUCTION.—No provision of this section shall 
be construed as limiting any authority of the Board, the Corpora-
tion, or the Comptroller of the Currency under any other provision 
of law.’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the transfer date. 
SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO 
REMAIN WELL CAPITALIZED AND WELL MANAGED. 
(a) AMENDMENT.—Section 4(l)(1) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843(l)(1)) is amended— 
(1) in subparagraph (B), by striking ‘‘and’’ at the end; 
(2) by redesignating subparagraph (C) as subparagraph 
(D); 
(3) by inserting after subparagraph (B) the following: 
‘‘(C) the bank holding company is well capitalized and 
well managed; and’’; and 
(4) in subparagraph (D)(ii), as so redesignated, by striking 
‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A), 
(B), and (C)’’. 
(b) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 10(c)(2) 
of the Home Owners’ Loan Act (12 U.S.C. 1467a(c)(2)) is amended 
by adding at the end the following new subparagraph: 
‘‘(H) Any activity that is permissible for a financial 
holding company (as such term is defined under section 
2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(p)) to conduct under section 4(k) of the Bank Holding 
Company Act of 1956 if— 
‘‘(i) the savings and loan holding company meets 
all of the criteria to qualify as a financial holding 
company, and complies with all of the requirements 
applicable to a financial holding company, under sec-
tions 4(l) and 4(m) of the Bank Holding Company 
Act and section 804(c) of the Community Reinvestment 
Act of 1977 (12 U.S.C. 2903(c)) as if the savings and 
loan holding company was a bank holding company; 
and 
‘‘(ii) the savings and loan holding company con-
ducts the activity in accordance with the same terms, 
conditions, and requirements that apply to the conduct 
of such activity by a bank holding company under 
the Bank Holding Company Act of 1956 and the 
Board’s regulations and interpretations under such 
Act.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS. 
(a) ACQUISITION
OF BANKS.—Section 3(d)(1)(A) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended 
by striking ‘‘adequately capitalized and adequately managed’’ and 
inserting ‘‘well capitalized and well managed’’.
H. R. 4173—233 
(b) INTERSTATE BANK MERGERS.—Section 44(b)(4)(B) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended 
by striking ‘‘will continue to be adequately capitalized and ade-
quately managed’’ and inserting ‘‘will be well capitalized and well 
managed’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANS-
ACTIONS WITH AFFILIATES. 
(a) AFFILIATE TRANSACTIONS.—Section 23A of the Federal 
Reserve Act (12 U.S.C. 371c) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1), by striking subparagraph (D) 
and inserting the following: 
‘‘(D) any investment fund with respect to which a 
member bank or affiliate thereof is an investment adviser; 
and’’; and 
(B) in paragraph (7)— 
(i) in subparagraph (A), by inserting before the 
semicolon at the end the following: ‘‘, including a pur-
chase of assets subject to an agreement to repurchase’’; 
(ii) in subparagraph (C), by striking ‘‘, including 
assets subject to an agreement to repurchase,’’; 
(iii) in subparagraph (D)— 
(I) by inserting ‘‘or other debt obligations’’ after 
‘‘acceptance of securities’’; and 
(II) by striking ‘‘or’’ at the end; and 
(iv) by adding at the end the following: 
‘‘(F) a transaction with an affiliate that involves the 
borrowing or lending of securities, to the extent that the 
transaction causes a member bank or a subsidiary to have 
credit exposure to the affiliate; or 
‘‘(G) a derivative transaction, as defined in paragraph 
(3) of section 5200(b) of the Revised Statutes of the United 
States (12 U.S.C. 84(b)), with an affiliate, to the extent 
that the transaction causes a member bank or a subsidiary 
to have credit exposure to the affiliate;’’; 
(2) in subsection (c)— 
(A) in paragraph (1)— 
(i) in the matter preceding subparagraph (A), by 
striking ‘‘subsidiary’’ and all that follows through ‘‘time 
of the transaction’’ and inserting ‘‘subsidiary, and any 
credit exposure of a member bank or a subsidiary 
to an affiliate resulting from a securities borrowing 
or lending transaction, or a derivative transaction, 
shall be secured at all times’’; and 
(ii) in each of subparagraphs (A) through (D), by 
striking ‘‘or letter of credit’’ and inserting ‘‘letter of 
credit, or credit exposure’’; 
(B) by striking paragraph (2); 
(C) by redesignating paragraphs (3) through (5) as 
paragraphs (2) through (4), respectively; 
(D) in paragraph (2), as so redesignated, by inserting 
before the period at the end ‘‘, or credit exposure to an 
affiliate resulting from a securities borrowing or lending 
transaction, or derivative transaction’’; and
H. R. 4173—234 
(E) in paragraph (3), as so redesignated— 
(i) by inserting ‘‘or other debt obligations’’ after 
‘‘securities’’; and 
(ii) by striking ‘‘or guarantee’’ and all that follows 
through ‘‘behalf of,’’ and inserting ‘‘guarantee, accept-
ance, or letter of credit issued on behalf of, or credit 
exposure from a securities borrowing or lending trans-
action, or derivative transaction to,’’; 
(3) in subsection (d)(4), in the matter preceding subpara-
graph (A), by striking ‘‘or issuing’’ and all that follows through 
‘‘behalf of,’’ and inserting ‘‘issuing a guarantee, acceptance, 
or letter of credit on behalf of, or having credit exposure 
resulting from a securities borrowing or lending transaction, 
or derivative transaction to,’’; and 
(4) in subsection (f)— 
(A) in paragraph (2)— 
(i) by striking ‘‘or order’’; 
(ii) by striking ‘‘if it finds’’ and all that follows 
through the end of the paragraph and inserting the 
following: ‘‘if— 
‘‘(i) the Board finds the exemption to be in the 
public interest and consistent with the purposes of 
this section, and notifies the Federal Deposit Insurance 
Corporation of such finding; and 
‘‘(ii) before the end of the 60-day period beginning 
on the date on which the Federal Deposit Insurance 
Corporation receives notice of the finding under clause 
(i), the Federal Deposit Insurance Corporation does 
not object, in writing, to the finding, based on a deter-
mination that the exemption presents an unacceptable 
risk to the Deposit Insurance Fund.’’; 
(iii) by striking the Board and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.—The Board’’; and 
(iv) by adding at the end the following: 
‘‘(B) ADDITIONAL EXEMPTIONS.— 
‘‘(i) NATIONAL BANKS.—The Comptroller of the Cur-
rency may, by order, exempt a transaction of a national 
bank from the requirements of this section if— 
‘‘(I) the Board and the Office of the Comp-
troller of the Currency jointly find the exemption 
to be in the public interest and consistent with 
the purposes of this section and notify the Federal 
Deposit Insurance Corporation of such finding; and 
‘‘(II) before the end of the 60-day period begin-
ning on the date on which the Federal Deposit 
Insurance Corporation receives notice of the 
finding under subclause (I), the Federal Deposit 
Insurance Corporation does not object, in writing, 
to the finding, based on a determination that the 
exemption presents an unacceptable risk to the 
Deposit Insurance Fund. 
‘‘(ii) STATE BANKS.—The Federal Deposit Insurance 
Corporation may, by order, exempt a transaction of 
a State nonmember bank, and the Board may, by order, 
exempt a transaction of a State member bank, from 
the requirements of this section if—
H. R. 4173—235 
‘‘(I) the Board and the Federal Deposit Insur-
ance Corporation jointly find that the exemption 
is in the public interest and consistent with the 
purposes of this section; and 
‘‘(II) the Federal Deposit Insurance Corpora-
tion finds that the exemption does not present 
an unacceptable risk to the Deposit Insurance 
Fund.’’; and 
(B) by adding at the end the following: 
‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.—The Board may 
issue such regulations or interpretations as the Board deter-
mines are necessary or appropriate with respect to the manner 
in which a netting agreement may be taken into account in 
determining the amount of a covered transaction between a 
member bank or a subsidiary and an affiliate, including the 
extent to which netting agreements between a member bank 
or a subsidiary and an affiliate may be taken into account 
in determining whether a covered transaction is fully secured 
for purposes of subsection (d)(4). An interpretation under this 
paragraph with respect to a specific member bank, subsidiary, 
or affiliate shall be issued jointly with the appropriate Federal 
banking agency for such member bank, subsidiary, or affiliate.’’. 
(b) TRANSACTIONS WITH AFFILIATES.—Section 23B(e) of the Fed-
eral Reserve Act (12 U.S.C. 371c–1(e)) is amended— 
(1) by striking the undesignated matter following subpara-
graph (B); 
(2) by redesignating subparagraphs (A) and (B) as clauses 
(i) and (ii), respectively, and adjusting the clause margins 
accordingly; 
(3) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), respectively, and adjusting the subpara-
graph margins accordingly; 
(4) by striking ‘‘The Board’’ and inserting the following: 
‘‘(1) IN GENERAL.—The Board’’; 
(5) in paragraph (1)(B), as so redesignated— 
(A) in the matter preceding clause (i), by inserting 
before ‘‘regulations’’ the following: ‘‘subject to paragraph 
(2), if the Board finds that an exemption or exclusion 
is in the public interest and is consistent with the purposes 
of this section, and notifies the Federal Deposit Insurance 
Corporation of such finding,’’; and 
(B) in clause (ii), by striking the comma at the end 
and inserting a period; and 
(6) by adding at the end the following: 
‘‘(2) EXCEPTION.—The Board may grant an exemption or 
exclusion under this subsection only if, during the 60-day period 
beginning on the date of receipt of notice of the finding from 
the Board under paragraph (1)(B), the Federal Deposit Insur-
ance Corporation does not object, in writing, to such exemption 
or exclusion, based on a determination that the exemption 
presents an unacceptable risk to the Deposit Insurance Fund.’’. 
(c) HOME OWNERS’ LOAN ACT.—Section 11 of the Home Owners’ 
Loan Act (12 U.S.C. 1468) is amended by adding at the end the 
following: 
‘‘(d) EXEMPTIONS.—
H. R. 4173—236 
‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The Comptroller of 
the Currency may, by order, exempt a transaction of a Federal 
savings association from the requirements of this section if— 
‘‘(A) the Board and the Office of the Comptroller of 
the Currency jointly find the exemption to be in the public 
interest and consistent with the purposes of this section 
and notify the Federal Deposit Insurance Corporation of 
such finding; and 
‘‘(B) before the end of the 60-day period beginning 
on the date on which the Federal Deposit Insurance Cor-
poration receives notice of the finding under subparagraph 
(A), the Federal Deposit Insurance Corporation does not 
object, in writing, to the finding, based on a determination 
that the exemption presents an unacceptable risk to the 
Deposit Insurance Fund. 
‘‘(2) STATE
SAVINGS
ASSOCIATION.—The Federal Deposit 
Insurance Corporation may, by order, exempt a transaction 
of a State savings association from the requirements of this 
section if the Board and the Federal Deposit Insurance Corpora-
tion jointly find that— 
‘‘(A) the exemption is in the public interest and con-
sistent with the purposes of this section; and 
‘‘(B) the exemption does not present an unacceptable 
risk to the Deposit Insurance Fund.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall take effect 1 year after the transfer date. 
SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINAN-
CIAL SUBSIDIARIES. 
(a) AMENDMENT.—Section 23A(e) of the Federal Reserve Act 
(12 U.S.C. 371c(e)) is amended— 
(1) by striking paragraph (3); and 
(2) by redesignating paragraph (4) as paragraph (3). 
(b) PROSPECTIVE APPLICATION OF AMENDMENT.—The amend-
ments made by this section shall apply with respect to any covered 
transaction between a bank and a subsidiary of the bank, as those 
terms are defined in section 23A of the Federal Reserve Act (12 
U.S.C. 371c), that is entered into on or after the date of enactment 
of this Act. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect 1 year after the transfer date. 
SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON 
DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, 
REVERSE REPURCHASE AGREEMENTS, AND SECURITIES 
LENDING AND BORROWING TRANSACTIONS. 
(a) NATIONAL BANKS.—Section 5200(b) of the Revised Statutes 
of the United States (12 U.S.C. 84(b)) is amended— 
(1) in paragraph (1), by striking ‘‘shall include’’ and all 
that follows through the end of the paragraph and inserting 
the following: ‘‘shall include— 
‘‘(A) all direct or indirect advances of funds to a person 
made on the basis of any obligation of that person to 
repay the funds or repayable from specific property pledged 
by or on behalf of the person; 
‘‘(B) to the extent specified by the Comptroller of the 
Currency, any liability of a national banking association
H. R. 4173—237 
to advance funds to or on behalf of a person pursuant 
to a contractual commitment; and 
‘‘(C) any credit exposure to a person arising from a 
derivative transaction, repurchase agreement, reverse 
repurchase agreement, securities lending transaction, or 
securities borrowing transaction between the national 
banking association and the person;’’; 
(2) in paragraph (2), by striking the period at the end 
and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(3) the term ‘derivative transaction’ includes any trans-
action that is a contract, agreement, swap, warrant, note, or 
option that is based, in whole or in part, on the value of, 
any interest in, or any quantitative measure or the occurrence 
of any event relating to, one or more commodities, securities, 
currencies, interest or other rates, indices, or other assets.’’. 
(b) SAVINGS
ASSOCIATIONS.—Section 5(u)(3) of the Home 
Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended by striking 
‘‘Director’’ each place that term appears and inserting ‘‘Comptroller 
of the Currency’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect 1 year after the transfer date. 
SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS 
IN LENDING LIMITS. 
(a) AMENDMENT.—Section 18 of the Federal Deposit Insurance 
Act (12 U.S.C. 1828) is amended by adding at the end the following: 
‘‘(y) STATE LENDING LIMIT TREATMENT OF DERIVATIVES TRANS-
ACTIONS.—An insured State bank may engage in a derivative trans-
action, as defined in section 5200(b)(3) of the Revised Statutes 
of the United States (12 U.S.C. 84(b)(3)), only if the law with 
respect to lending limits of the State in which the insured State 
bank is chartered takes into consideration credit exposure to deriva-
tive transactions.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect 18 months after the transfer date. 
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS. 
(a) CONVERSION OF A NATIONAL BANKING ASSOCIATION.—The 
Act entitled ‘‘An Act to provide for the conversion of national 
banking associations into and their merger or consolidation with 
State banks, and for other purposes.’’ (12 U.S.C. 214 et seq.) is 
amended by adding at the end the following: 
‘‘SEC. 10. PROHIBITION ON CONVERSION. 
‘‘A national banking association may not convert to a State 
bank or State savings association during any period in which the 
national banking association is subject to a cease and desist order 
(or other formal enforcement order) issued by, or a memorandum 
of understanding entered into with, the Comptroller of the Currency 
with respect to a significant supervisory matter.’’. 
(b) CONVERSION OF A STATE BANK OR SAVINGS ASSOCIATION.— 
Section 5154 of the Revised Statutes of the United States (12 
U.S.C. 35) is amended by adding at the end the following: ‘‘The 
Comptroller of the Currency may not approve the conversion of 
a State bank or State savings association to a national banking 
association or Federal savings association during any period in 
which the State bank or State savings association is subject to
H. R. 4173—238 
a cease and desist order (or other formal enforcement order) issued 
by, or a memorandum of understanding entered into with, a State 
bank supervisor or the appropriate Federal banking agency with 
respect to a significant supervisory matter or a final enforcement 
action by a State Attorney General.’’. 
(c) CONVERSION OF A FEDERAL SAVINGS ASSOCIATION.—Section 
5(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(i)) is amended 
by adding at the end the following: 
‘‘(6) LIMITATION
ON
CERTAIN
CONVERSIONS
BY
FEDERAL 
SAVINGS ASSOCIATIONS.—A Federal savings association may not 
convert to a State bank or State savings association during 
any period in which the Federal savings association is subject 
to a cease and desist order (or other formal enforcement order) 
issued by, or a memorandum of understanding entered into 
with, the Office of Thrift Supervision or the Comptroller of 
the Currency with respect to a significant supervisory matter.’’. 
(d) EXCEPTION.—The prohibition on the approval of conversions 
under the amendments made by subsections (a), (b), and (c) shall 
not apply, if— 
(1) the Federal banking agency that would be the appro-
priate Federal banking agency after the proposed conversion 
gives the appropriate Federal banking agency or State bank 
supervisor that issued the cease and desist order (or other 
formal enforcement order) or memorandum of understanding, 
as appropriate, written notice of the proposed conversion 
including a plan to address the significant supervisory matter 
in a manner that is consistent with the safe and sound oper-
ation of the institution; 
(2) within 30 days of receipt of the written notice required 
under paragraph (1), the appropriate Federal banking agency 
or State bank supervisor that issued the cease and desist order 
(or other formal enforcement order) or memorandum of under-
standing, as appropriate, does not object to the conversion 
or the plan to address the significant supervisory matter; 
(3) after conversion of the insured depository institution, 
the appropriate Federal banking agency after the conversion 
implements such plan; and 
(4) in the case of a final enforcement action by a State 
Attorney General, approval of the conversion is conditioned 
on compliance by the insured depository institution with the 
terms of such final enforcement action. 
(e) NOTIFICATION OF PENDING ENFORCEMENT ACTIONS.— 
(1) COPY OF CONVERSION APPLICATION.—At the time an 
insured depository institution files a conversion application, 
the insured depository institution shall transmit a copy of the 
conversion application to— 
(A) the appropriate Federal banking agency for the 
insured depository institution; and 
(B) the Federal banking agency that would be the 
appropriate Federal banking agency of the insured deposi-
tory institution after the proposed conversion. 
(2) NOTIFICATION
AND
ACCESS
TO
INFORMATION.—Upon 
receipt of a copy of the application described in paragraph 
(1), the appropriate Federal banking agency for the insured 
depository institution proposing the conversion shall— 
(A) notify the Federal banking agency that would be 
the appropriate Federal banking agency for the institution
H. R. 4173—239 
after the proposed conversion in writing of any ongoing 
supervisory or investigative proceedings that the appro-
priate Federal banking agency for the institution proposing 
to convert believes is likely to result, in the near term 
and absent the proposed conversion, in a cease and desist 
order (or other formal enforcement order) or memorandum 
of understanding with respect to a significant supervisory 
matter; and 
(B) provide the Federal banking agency that would 
be the appropriate Federal banking agency for the institu-
tion after the proposed conversion access to all investigative 
and supervisory information relating to the proceedings 
described in subparagraph (A). 
SEC. 613. DE NOVO BRANCHING INTO STATES. 
(a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the Revised Stat-
utes of the United States (12 U.S.C. 36(g)(1)(A)) is amended to 
read as follows: 
‘‘(A) the law of the State in which the branch is located, 
or is to be located, would permit establishment of the 
branch, if the national bank were a State bank chartered 
by such State; and’’. 
(b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) of the Federal 
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to 
read as follows: 
‘‘(i) the law of the State in which the branch is 
located, or is to be located, would permit establishment 
of the branch, if the bank were a State bank chartered 
by such State; and’’. 
SEC. 614. LENDING LIMITS TO INSIDERS. 
(a) EXTENSIONS OF CREDIT.—Section 22(h)(9)(D)(i) of the Fed-
eral Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended— 
(1) by striking the period at the end and inserting ‘‘; or’’; 
(2) by striking ‘‘a person’’ and inserting ‘‘the person’’; 
(3) by striking ‘‘extends credit by making’’ and inserting 
the following: ‘‘extends credit to a person by— 
‘‘(I) making’’; and 
(4) by adding at the end the following: 
‘‘(II) having credit exposure to the person 
arising from a derivative transaction (as defined 
in section 5200(b) of the Revised Statutes of the 
United States (12 U.S.C. 84(b))), repurchase agree-
ment, reverse repurchase agreement, securities 
lending transaction, or securities borrowing trans-
action between the member bank and the person.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect 1 year after the transfer date. 
SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS. 
(a) AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.— 
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) 
is amended by adding at the end the following: 
‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.— 
‘‘(1) IN GENERAL.—An insured depository institution may 
not purchase an asset from, or sell an asset to, an executive 
officer, director, or principal shareholder of the insured deposi-
tory institution, or any related interest of such person (as
H. R. 4173—240 
such terms are defined in section 22(h) of Federal Reserve 
Act), unless— 
‘‘(A) the transaction is on market terms; and 
‘‘(B) if the transaction represents more than 10 percent 
of the capital stock and surplus of the insured depository 
institution, the transaction has been approved in advance 
by a majority of the members of the board of directors 
of the insured depository institution who do not have an 
interest in the transaction. 
‘‘(2) RULEMAKING.—The Board of Governors of the Federal 
Reserve System may issue such rules as may be necessary 
to define terms and to carry out the purposes this subsection. 
Before proposing or adopting a rule under this paragraph, 
the Board of Governors of the Federal Reserve System shall 
consult with the Comptroller of the Currency and the Corpora-
tion as to the terms of the rule.’’. 
(b) AMENDMENTS TO THE FEDERAL RESERVE ACT.—Section 22(d) 
of the Federal Reserve Act (12 U.S.C. 375) is amended to read 
as follows: 
‘‘(d) [Reserved]’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS. 
(a) CAPITAL LEVELS OF BANK HOLDING COMPANIES.—Section 
5(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) 
is amended— 
(1) by inserting after ‘‘orders’’ the following: ‘‘, including 
regulations and orders relating to the capital requirements 
for bank holding companies,’’; and 
(2) by adding at the end the following: ‘‘In establishing 
capital regulations pursuant to this subsection, the Board shall 
seek to make such requirements countercyclical, so that the 
amount of capital required to be maintained by a company 
increases in times of economic expansion and decreases in 
times of economic contraction, consistent with the safety and 
soundness of the company.’’. 
(b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLDING COMPA-
NIES.—Section 10(g)(1) of the Home Owners’ Loan Act (12 U.S.C. 
1467a(g)(1)) is amended— 
(1) by inserting after ‘‘orders’’ the following: ‘‘, including 
regulations and orders relating to capital requirements for 
savings and loan holding companies,’’; and 
(2) by inserting at the end the following: ‘‘In establishing 
capital regulations pursuant to this subsection, the appropriate 
Federal banking agency shall seek to make such requirements 
countercyclical so that the amount of capital required to be 
maintained by a company increases in times of economic expan-
sion and decreases in times of economic contraction, consistent 
with the safety and soundness of the company.’’. 
(c) CAPITAL LEVELS OF INSURED DEPOSITORY INSTITUTIONS.— 
Section 908(a)(1) of the International Lending Supervision Act of 
1983 (12 U.S.C. 3907(a)(1)) is amended by adding at the end the 
following: ‘‘Each appropriate Federal banking agency shall seek 
to make the capital standards required under this section or other 
provisions of Federal law for insured depository institutions counter-
cyclical so that the amount of capital required to be maintained
H. R. 4173—241 
by an insured depository institution increases in times of economic 
expansion and decreases in times of economic contraction, consistent 
with the safety and soundness of the insured depository institution.’’ 
(d) SOURCE OF STRENGTH.—The Federal Deposit Insurance Act 
(12 U.S.C. 1811 et seq.) is amended by inserting after section 
38 (12 U.S.C. 1831o) the following: 
‘‘SEC. 38A. SOURCE OF STRENGTH. 
‘‘(a) HOLDING COMPANIES.—The appropriate Federal banking 
agency for a bank holding company or savings and loan holding 
company shall require the bank holding company or savings and 
loan holding company to serve as a source of financial strength 
for any subsidiary of the bank holding company or savings and 
loan holding company that is a depository institution. 
‘‘(b) OTHER COMPANIES.—If an insured depository institution 
is not the subsidiary of a bank holding company or savings and 
loan holding company, the appropriate Federal banking agency 
for the insured depository institution shall require any company 
that directly or indirectly controls the insured depository institution 
to serve as a source of financial strength for such institution. 
‘‘(c) REPORTS.—The appropriate Federal banking agency for 
an insured depository institution described in subsection (b) may, 
from time to time, require the company, or a company that directly 
or indirectly controls the insured depository institution, to submit 
a report, under oath, for the purposes of— 
‘‘(1) assessing the ability of such company to comply with 
the requirement under subsection (b); and 
‘‘(2) enforcing the compliance of such company with the 
requirement under subsection (b). 
‘‘(d) RULES.—Not later than 1 year after the transfer date, 
as defined in section 311 of the Enhancing Financial Institution 
Safety and Soundness Act of 2010, the appropriate Federal banking 
agencies shall jointly issue final rules to carry out this section. 
‘‘(e) DEFINITION.—In this section, the term ‘source of financial 
strength’ means the ability of a company that directly or indirectly 
owns or controls an insured depository institution to provide finan-
cial assistance to such insured depository institution in the event 
of the financial distress of the insured depository institution.’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING 
COMPANY FRAMEWORK. 
(a) AMENDMENT.—Section 17 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78q) is amended— 
(1) by striking subsection (i); and 
(2) by redesignating subsections (j) and (k) as subsections 
(i) and (j), respectively. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the transfer date. 
SEC. 618. SECURITIES HOLDING COMPANIES. 
(a) DEFINITIONS.—In this section— 
(1) the term ‘‘associated person of a securities holding com-
pany’’ means a person directly or indirectly controlling, con-
trolled by, or under common control with, a securities holding 
company;
H. R. 4173—242 
(2) the term ‘‘foreign bank’’ has the same meaning as 
in section 1(b)(7) of the International Banking Act of 1978 
(12 U.S.C. 3101(7)); 
(3) the term ‘‘insured bank’’ has the same meaning as 
in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813); 
(4) the term ‘‘securities holding company’’— 
(A) means— 
(i) a person (other than a natural person) that 
owns or controls 1 or more brokers or dealers registered 
with the Commission; and 
(ii) the associated persons of a person described 
in clause (i); and 
(B) does not include a person that is— 
(i) a nonbank financial company supervised by the 
Board under title I; 
(ii) an insured bank (other than an institution 
described in subparagraphs (D), (F), or (H) of section 
2(c)(2) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(c)(2)) or a savings association; 
(iii) an affiliate of an insured bank (other than 
an institution described in subparagraphs (D), (F), or 
(H) of section 2(c)(2) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)) or an affiliate of 
a savings association; 
(iv) a foreign bank, foreign company, or company 
that is described in section 8(a) of the International 
Banking Act of 1978 (12 U.S.C. 3106(a)); 
(v) a foreign bank that controls, directly or 
indirectly, a corporation chartered under section 25A 
of the Federal Reserve Act (12 U.S.C. 611 et seq.); 
or 
(vi) subject to comprehensive consolidated super-
vision by a foreign regulator; 
(5) the term ‘‘supervised securities holding company’’ means 
a securities holding company that is supervised by the Board 
of Governors under this section; and 
(6) the terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding company’’, 
‘‘company’’, ‘‘control’’, ‘‘savings association’’, and ‘‘subsidiary’’ 
have the same meanings as in section 2 of the Bank Holding 
Company Act of 1956. 
(b) SUPERVISION
OF
A SECURITIES HOLDING COMPANY NOT 
HAVING A BANK OR SAVINGS ASSOCIATION AFFILIATE.— 
(1) IN
GENERAL.—A securities holding company that is 
required by a foreign regulator or provision of foreign law 
to be subject to comprehensive consolidated supervision may 
register with the Board of Governors under paragraph (2) to 
become a supervised securities holding company. Any securities 
holding company filing such a registration shall be supervised 
in accordance with this section, and shall comply with the 
rules and orders prescribed by the Board of Governors 
applicable to supervised securities holding companies. 
(2) REGISTRATION AS A SUPERVISED SECURITIES HOLDING 
COMPANY.— 
(A) REGISTRATION.—A securities holding company that 
elects to be subject to comprehensive consolidated super-
vision shall register by filing with the Board of Governors
H. R. 4173—243 
such information and documents as the Board of Governors, 
by regulation, may prescribe as necessary or appropriate 
in furtherance of the purposes of this section. 
(B) EFFECTIVE DATE.—A securities holding company 
that registers under subparagraph (A) shall be deemed 
to be a supervised securities holding company, effective 
on the date that is 45 days after the date of receipt of 
the registration information and documents under subpara-
graph (A) by the Board of Governors, or within such shorter 
period as the Board of Governors, by rule or order, may 
determine. 
(c) SUPERVISION OF SECURITIES HOLDING COMPANIES.— 
(1) RECORDKEEPING AND REPORTING.— 
(A) RECORDKEEPING AND REPORTING REQUIRED.—Each 
supervised securities holding company and each affiliate 
of a supervised securities holding company shall make 
and keep for periods determined by the Board of Governors 
such records, furnish copies of such records, and make 
such reports, as the Board of Governors determines to 
be necessary or appropriate to carry out this section, to 
prevent evasions thereof, and to monitor compliance by 
the supervised securities holding company or affiliate with 
applicable provisions of law. 
(B) FORM AND CONTENTS.— 
(i) IN
GENERAL.—Any record or report required 
to be made, furnished, or kept under this paragraph 
shall— 
(I) be prepared in such form and according 
to such specifications (including certification by 
a registered public accounting firm), as the Board 
of Governors may require; and 
(II) be provided promptly to the Board of Gov-
ernors at any time, upon request by the Board 
of Governors. 
(ii) CONTENTS.—Records and reports required to 
be made, furnished, or kept under this paragraph may 
include— 
(I) a balance sheet or income statement of 
the supervised securities holding company or an 
affiliate of a supervised securities holding com-
pany; 
(II) an assessment of the consolidated capital 
and liquidity of the supervised securities holding 
company; 
(III) a report by an independent auditor 
attesting to the compliance of the supervised secu-
rities holding company with the internal risk 
management and internal control objectives of the 
supervised securities holding company; and 
(IV) a report concerning the extent to which 
the supervised securities holding company or affil-
iate has complied with the provisions of this sec-
tion and any regulations prescribed and orders 
issued under this section. 
(2) USE OF EXISTING REPORTS.— 
(A) IN GENERAL.—The Board of Governors shall, to 
the fullest extent possible, accept reports in fulfillment
H. R. 4173—244 
of the requirements of this paragraph that a supervised 
securities holding company or an affiliate of a supervised 
securities holding company has been required to provide 
to another regulatory agency or a self-regulatory organiza-
tion. 
(B) AVAILABILITY.—A supervised securities holding 
company or an affiliate of a supervised securities holding 
company shall promptly provide to the Board of Governors, 
at the request of the Board of Governors, any report 
described in subparagraph (A), as permitted by law. 
(3) EXAMINATION AUTHORITY.— 
(A) FOCUS
OF
EXAMINATION
AUTHORITY.—The Board 
of Governors may make examinations of any supervised 
securities holding company and any affiliate of a supervised 
securities holding company to carry out this subsection, 
to prevent evasions thereof, and to monitor compliance 
by the supervised securities holding company or affiliate 
with applicable provisions of law. 
(B) DEFERENCE
TO
OTHER
EXAMINATIONS.—For pur-
poses of this subparagraph, the Board of Governors shall, 
to the fullest extent possible, use the reports of examination 
made by other appropriate Federal or State regulatory 
authorities with respect to any functionally regulated sub-
sidiary or any institution described in subparagraph (D), 
(F), or (H) of section 2(c)(2) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2)). 
(d) CAPITAL AND RISK MANAGEMENT.— 
(1) IN GENERAL.—The Board of Governors shall, by regula-
tion or order, prescribe capital adequacy and other risk manage-
ment standards for supervised securities holding companies 
that are appropriate to protect the safety and soundness of 
the supervised securities holding companies and address the 
risks posed to financial stability by supervised securities 
holding companies. 
(2) DIFFERENTIATION.—In imposing standards under this 
subsection, the Board of Governors may differentiate among 
supervised securities holding companies on an individual basis, 
or by category, taking into consideration the requirements 
under paragraph (3). 
(3) CONTENT.—Any standards imposed on a supervised 
securities holding company under this subsection shall take 
into account— 
(A) the differences among types of business activities 
carried out by the supervised securities holding company; 
(B) the amount and nature of the financial assets of 
the supervised securities holding company; 
(C) the amount and nature of the liabilities of the 
supervised securities holding company, including the 
degree of reliance on short-term funding; 
(D) the extent and nature of the off-balance sheet 
exposures of the supervised securities holding company; 
(E) the extent and nature of the transactions and rela-
tionships of the supervised securities holding company with 
other financial companies; 
(F) the importance of the supervised securities holding 
company as a source of credit for households, businesses,
H. R. 4173—245 
and State and local governments, and as a source of 
liquidity for the financial system; and 
(G) the nature, scope, and mix of the activities of 
the supervised securities holding company. 
(4) NOTICE.—A capital requirement imposed under this 
subsection may not take effect earlier than 180 days after 
the date on which a supervised securities holding company 
is provided notice of the capital requirement. 
(e) OTHER PROVISIONS
OF LAW APPLICABLE
TO SUPERVISED 
SECURITIES HOLDING COMPANIES.— 
(1) FEDERAL DEPOSIT INSURANCE ACT.—Subsections (b), (c) 
through (s), and (u) of section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818) shall apply to any supervised securities 
holding company, and to any subsidiary (other than a bank 
or an institution described in subparagraph (D), (F), or (H) 
of section 2(c)(2) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(c)(2))) of a supervised securities holding com-
pany, in the same manner as such subsections apply to a 
bank holding company for which the Board of Governors is 
the appropriate Federal banking agency. For purposes of 
applying such subsections to a supervised securities holding 
company or a subsidiary (other than a bank or an institution 
described in subparagraph (D), (F), or (H) of section 2(c)(2) 
of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2))) of a supervised securities holding company, the 
Board of Governors shall be deemed the appropriate Federal 
banking agency for the supervised securities holding company 
or subsidiary. 
(2) BANK HOLDING COMPANY ACT OF 1956.—Except as the 
Board of Governors may otherwise provide by regulation or 
order, a supervised securities holding company shall be subject 
to the provisions of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841 et seq.) in the same manner and to the same 
extent a bank holding company is subject to such provisions, 
except that a supervised securities holding company may not, 
by reason of this paragraph, be deemed to be a bank holding 
company for purposes of section 4 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843). 
SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN 
RELATIONSHIPS 
WITH 
HEDGE 
FUNDS 
AND 
PRIVATE 
EQUITY FUNDS. 
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) is amended by adding at the end the following: 
‘‘SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN 
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY 
FUNDS. 
‘‘(a) IN GENERAL.— 
‘‘(1) PROHIBITION.—Unless otherwise provided in this sec-
tion, a banking entity shall not— 
‘‘(A) engage in proprietary trading; or 
‘‘(B) acquire or retain any equity, partnership, or other 
ownership interest in or sponsor a hedge fund or a private 
equity fund. 
‘‘(2) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE 
BOARD.—Any nonbank financial company supervised by the 
Board that engages in proprietary trading or takes or retains
H. R. 4173—246 
any equity, partnership, or other ownership interest in or spon-
sors a hedge fund or a private equity fund shall be subject, 
by rule, as provided in subsection (b)(2), to additional capital 
requirements for and additional quantitative limits with 
regards to such proprietary trading and taking or retaining 
any equity, partnership, or other ownership interest in or 
sponsorship of a hedge fund or a private equity fund, except 
that permitted activities as described in subsection (d) shall 
not be subject to the additional capital and additional quan-
titative limits except as provided in subsection (d)(3), as if 
the nonbank financial company supervised by the Board were 
a banking entity. 
‘‘(b) STUDY AND RULEMAKING.— 
‘‘(1) STUDY.—Not later than 6 months after the date of 
enactment of this section, the Financial Stability Oversight 
Council shall study and make recommendations on imple-
menting the provisions of this section so as to— 
‘‘(A) promote and enhance the safety and soundness 
of banking entities; 
‘‘(B) protect taxpayers and consumers and enhance 
financial stability by minimizing the risk that insured 
depository institutions and the affiliates of insured deposi-
tory institutions will engage in unsafe and unsound activi-
ties; 
‘‘(C) limit the inappropriate transfer of Federal sub-
sidies from institutions that benefit from deposit insurance 
and liquidity facilities of the Federal Government to 
unregulated entities; 
‘‘(D) reduce conflicts of interest between the self- 
interest of banking entities and nonbank financial compa-
nies supervised by the Board, and the interests of the 
customers of such entities and companies; 
‘‘(E) limit activities that have caused undue risk or 
loss in banking entities and nonbank financial companies 
supervised by the Board, or that might reasonably be 
expected to create undue risk or loss in such banking 
entities and nonbank financial companies supervised by 
the Board; 
‘‘(F) appropriately accommodate the business of insur-
ance within an insurance company, subject to regulation 
in accordance with the relevant insurance company invest-
ment laws, while protecting the safety and soundness of 
any banking entity with which such insurance company 
is affiliated and of the United States financial system; 
and 
‘‘(G) appropriately time the divestiture of illiquid assets 
that are affected by the implementation of the prohibitions 
under subsection (a). 
‘‘(2) RULEMAKING.— 
‘‘(A) IN GENERAL.—Unless otherwise provided in this 
section, not later than 9 months after the completion of 
the study under paragraph (1), the appropriate Federal 
banking agencies, the Securities and Exchange Commis-
sion, and the Commodity Futures Trading Commission, 
shall consider the findings of the study under paragraph 
(1) and adopt rules to carry out this section, as provided 
in subparagraph (B).
H. R. 4173—247 
‘‘(B) COORDINATED RULEMAKING.— 
‘‘(i) REGULATORY
AUTHORITY.—The regulations 
issued under this paragraph shall be issued by— 
‘‘(I) the appropriate Federal banking agencies, 
jointly, with respect to insured depository institu-
tions; 
‘‘(II) the Board, with respect to any company 
that controls an insured depository institution, or 
that is treated as a bank holding company for 
purposes of section 8 of the International Banking 
Act, any nonbank financial company supervised 
by the Board, and any subsidiary of any of the 
foregoing (other than a subsidiary for which an 
agency described in subclause (I), (III), or (IV) 
is the primary financial regulatory agency); 
‘‘(III) 
the 
Commodity 
Futures 
Trading 
Commission, with respect to any entity for which 
the Commodity Futures Trading Commission is 
the primary financial regulatory agency, as defined 
in section 2 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act; and 
‘‘(IV) the Securities and Exchange Commis-
sion, with respect to any entity for which the Secu-
rities and Exchange Commission is the primary 
financial regulatory agency, as defined in section 
2 of the Dodd-Frank Wall Street Reform and Con-
sumer Protection Act. 
‘‘(ii) 
COORDINATION, 
CONSISTENCY, 
AND
COM-
PARABILITY.—In developing and issuing regulations 
pursuant to this section, the appropriate Federal 
banking 
agencies, 
the 
Securities 
and 
Exchange 
Commission, and the Commodity Futures Trading 
Commission shall consult and coordinate with each 
other, as appropriate, for the purposes of assuring, 
to the extent possible, that such regulations are com-
parable and provide for consistent application and 
implementation of the applicable provisions of this sec-
tion to avoid providing advantages or imposing dis-
advantages to the companies affected by this subsection 
and to protect the safety and soundness of banking 
entities and nonbank financial companies supervised 
by the Board. 
‘‘(iii) COUNCIL
ROLE.—The Chairperson of the 
Financial Stability Oversight Council shall be respon-
sible for coordination of the regulations issued under 
this section. 
‘‘(c) EFFECTIVE DATE.— 
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (3), this section shall take effect on the earlier of— 
‘‘(A) 12 months after the date of the issuance of final 
rules under subsection (b); or 
‘‘(B) 2 years after the date of enactment of this section. 
‘‘(2) CONFORMANCE PERIOD FOR DIVESTITURE.—A banking 
entity or nonbank financial company supervised by the Board 
shall bring its activities and investments into compliance with 
the requirements of this section not later than 2 years after 
the date on which the requirements become effective pursuant
H. R. 4173—248 
to this section or 2 years after the date on which the entity 
or company becomes a nonbank financial company supervised 
by the Board. The Board may, by rule or order, extend this 
two-year period for not more than one year at a time, if, 
in the judgment of the Board, such an extension is consistent 
with the purposes of this section and would not be detrimental 
to the public interest. The extensions made by the Board under 
the preceding sentence may not exceed an aggregate of 3 years. 
‘‘(3) EXTENDED TRANSITION FOR ILLIQUID FUNDS.— 
‘‘(A) APPLICATION.—The Board may, upon the applica-
tion of a banking entity, extend the period during which 
the banking entity, to the extent necessary to fulfill a 
contractual obligation that was in effect on May 1, 2010, 
may take or retain its equity, partnership, or other owner-
ship interest in, or otherwise provide additional capital 
to, an illiquid fund. 
‘‘(B) TIME LIMIT ON APPROVAL.—The Board may grant 
1 extension under subparagraph (A), which may not exceed 
5 years. 
‘‘(4) DIVESTITURE REQUIRED.—Except as otherwise provided 
in subsection (d)(1)(G), a banking entity may not engage in 
any activity prohibited under subsection (a)(1)(B) after the ear-
lier of— 
‘‘(A) the date on which the contractual obligation to 
invest in the illiquid fund terminates; and 
‘‘(B) the date on which any extensions granted by the 
Board under paragraph (3) expire. 
‘‘(5) ADDITIONAL CAPITAL DURING TRANSITION PERIOD.—Not-
withstanding paragraph (2), on the date on which the rules 
are issued under subsection (b)(2), the appropriate Federal 
banking agencies, the Securities and Exchange Commission, 
and the Commodity Futures Trading Commission shall issue 
rules, as provided in subsection (b)(2), to impose additional 
capital requirements, and any other restrictions, as appropriate, 
on any equity, partnership, or ownership interest in or sponsor-
ship of a hedge fund or private equity fund by a banking 
entity. 
‘‘(6) SPECIAL RULEMAKING.—Not later than 6 months after 
the date of enactment of this section, the Board shall issues 
rules to implement paragraphs (2) and (3). 
‘‘(d) PERMITTED ACTIVITIES.— 
‘‘(1) IN GENERAL.—Notwithstanding the restrictions under 
subsection (a), to the extent permitted by any other provision 
of Federal or State law, and subject to the limitations under 
paragraph (2) and any restrictions or limitations that the appro-
priate Federal banking agencies, the Securities and Exchange 
Commission, and the Commodity Futures Trading Commission, 
may determine, the following activities (in this section referred 
to as ‘permitted activities’) are permitted: 
‘‘(A) The purchase, sale, acquisition, or disposition of 
obligations of the United States or any agency thereof, 
obligations, participations, or other instruments of or issued 
by the Government National Mortgage Association, the 
Federal National Mortgage Association, the Federal Home 
Loan Mortgage Corporation, a Federal Home Loan Bank, 
the Federal Agricultural Mortgage Corporation, or a Farm 
Credit System institution chartered under and subject to
H. R. 4173—249 
the provisions of the Farm Credit Act of 1971 (12 U.S.C. 
2001 et seq.), and obligations of any State or of any political 
subdivision thereof. 
‘‘(B) The purchase, sale, acquisition, or disposition of 
securities and other instruments described in subsection 
(h)(4) in connection with underwriting or market-making- 
related activities, to the extent that any such activities 
permitted by this subparagraph are designed not to exceed 
the reasonably expected near term demands of clients, 
customers, or counterparties. 
‘‘(C) Risk-mitigating hedging activities in connection 
with and related to individual or aggregated positions, 
contracts, or other holdings of a banking entity that are 
designed to reduce the specific risks to the banking entity 
in connection with and related to such positions, contracts, 
or other holdings. 
‘‘(D) The purchase, sale, acquisition, or disposition of 
securities and other instruments described in subsection 
(h)(4) on behalf of customers. 
‘‘(E) Investments in one or more small business invest-
ment companies, as defined in section 102 of the Small 
Business Investment Act of 1958 (15 U.S.C. 662), invest-
ments designed primarily to promote the public welfare, 
of the type permitted under paragraph (11) of section 5136 
of the Revised Statutes of the United States (12 U.S.C. 
24), or investments that are qualified rehabilitation 
expenditures with respect to a qualified rehabilitated 
building or certified historic structure, as such terms are 
defined in section 47 of the Internal Revenue Code of 
1986 or a similar State historic tax credit program. 
‘‘(F) The purchase, sale, acquisition, or disposition of 
securities and other instruments described in subsection 
(h)(4) by a regulated insurance company directly engaged 
in the business of insurance for the general account of 
the company and by any affiliate of such regulated insur-
ance company, provided that such activities by any affiliate 
are solely for the general account of the regulated insurance 
company, if— 
‘‘(i) the purchase, sale, acquisition, or disposition 
is conducted in compliance with, and subject to, the 
insurance company investment laws, regulations, and 
written guidance of the State or jurisdiction in which 
each such insurance company is domiciled; and 
‘‘(ii) the appropriate Federal banking agencies, 
after consultation with the Financial Stability Over-
sight Council and the relevant insurance commis-
sioners of the States and territories of the United 
States, have not jointly determined, after notice and 
comment, that a particular law, regulation, or written 
guidance described in clause (i) is insufficient to protect 
the safety and soundness of the banking entity, or 
of the financial stability of the United States. 
‘‘(G) Organizing and offering a private equity or hedge 
fund, including serving as a general partner, managing 
member, or trustee of the fund and in any manner selecting 
or controlling (or having employees, officers, directors, or 
agents who constitute) a majority of the directors, trustees,
H. R. 4173—250 
or management of the fund, including any necessary 
expenses for the foregoing, only if— 
‘‘(i) the banking entity provides bona fide trust, 
fiduciary, or investment advisory services; 
‘‘(ii) the fund is organized and offered only in 
connection with the provision of bona fide trust, fidu-
ciary, or investment advisory services and only to per-
sons that are customers of such services of the banking 
entity; 
‘‘(iii) the banking entity does not acquire or retain 
an equity interest, partnership interest, or other 
ownership interest in the funds except for a de minimis 
investment subject to and in compliance with para-
graph (4); 
‘‘(iv) the banking entity complies with the restric-
tions under paragraphs (1) and (2) of subparagraph 
(f); 
‘‘(v) the banking entity does not, directly or 
indirectly, guarantee, assume, or otherwise insure the 
obligations or performance of the hedge fund or private 
equity fund or of any hedge fund or private equity 
fund in which such hedge fund or private equity fund 
invests; 
‘‘(vi) the banking entity does not share with the 
hedge fund or private equity fund, for corporate, mar-
keting, promotional, or other purposes, the same name 
or a variation of the same name; 
‘‘(vii) no director or employee of the banking entity 
takes or retains an equity interest, partnership 
interest, or other ownership interest in the hedge fund 
or private equity fund, except for any director or 
employee of the banking entity who is directly engaged 
in providing investment advisory or other services to 
the hedge fund or private equity fund; and 
‘‘(viii) the banking entity discloses to prospective 
and actual investors in the fund, in writing, that any 
losses in such hedge fund or private equity fund are 
borne solely by investors in the fund and not by the 
banking entity, and otherwise complies with any addi-
tional rules of the appropriate Federal banking agen-
cies, the Securities and Exchange Commission, or the 
Commodity Futures Trading Commission, as provided 
in subsection (b)(2), designed to ensure that losses 
in such hedge fund or private equity fund are borne 
solely by investors in the fund and not by the banking 
entity. 
‘‘(H) Proprietary trading conducted by a banking entity 
pursuant to paragraph (9) or (13) of section 4(c), provided 
that the trading occurs solely outside of the United States 
and that the banking entity is not directly or indirectly 
controlled by a banking entity that is organized under 
the laws of the United States or of one or more States. 
‘‘(I) The acquisition or retention of any equity, partner-
ship, or other ownership interest in, or the sponsorship 
of, a hedge fund or a private equity fund by a banking 
entity pursuant to paragraph (9) or (13) of section 4(c)
H. R. 4173—251 
solely outside of the United States, provided that no owner-
ship interest in such hedge fund or private equity fund 
is offered for sale or sold to a resident of the United 
States and that the banking entity is not directly or 
indirectly controlled by a banking entity that is organized 
under the laws of the United States or of one or more 
States. 
‘‘(J) Such other activity as the appropriate Federal 
banking agencies, the Securities and Exchange Commis-
sion, and the Commodity Futures Trading Commission 
determine, by rule, as provided in subsection (b)(2), would 
promote and protect the safety and soundness of the 
banking entity and the financial stability of the United 
States. 
‘‘(2) LIMITATION ON PERMITTED ACTIVITIES.— 
‘‘(A) IN
GENERAL.—No transaction, class of trans-
actions, or activity may be deemed a permitted activity 
under paragraph (1) if the transaction, class of transactions, 
or activity— 
‘‘(i) would involve or result in a material conflict 
of interest (as such term shall be defined by rule as 
provided in subsection (b)(2)) between the banking 
entity and its clients, customers, or counterparties; 
‘‘(ii) would result, directly or indirectly, in a mate-
rial exposure by the banking entity to high-risk assets 
or high-risk trading strategies (as such terms shall 
be defined by rule as provided in subsection (b)(2)); 
‘‘(iii) would pose a threat to the safety and sound-
ness of such banking entity; or 
‘‘(iv) would pose a threat to the financial stability 
of the United States. 
‘‘(B) RULEMAKING.—The appropriate Federal banking 
agencies, the Securities and Exchange Commission, and 
the Commodity Futures Trading Commission shall issue 
regulations to implement subparagraph (A), as part of the 
regulations issued under subsection (b)(2). 
‘‘(3) CAPITAL AND QUANTITATIVE LIMITATIONS.—The appro-
priate Federal banking agencies, the Securities and Exchange 
Commission, and the Commodity Futures Trading Commission 
shall, as provided in subsection (b)(2), adopt rules imposing 
additional capital requirements and quantitative limitations, 
including diversification requirements, regarding the activities 
permitted under this section if the appropriate Federal banking 
agencies, the Securities and Exchange Commission, and the 
Commodity Futures Trading Commission determine that addi-
tional capital and quantitative limitations are appropriate to 
protect the safety and soundness of banking entities engaged 
in such activities. 
‘‘(4) DE MINIMIS INVESTMENT.— 
‘‘(A) IN GENERAL.—A banking entity may make and 
retain an investment in a hedge fund or private equity 
fund that the banking entity organizes and offers, subject 
to the limitations and restrictions in subparagraph (B) 
for the purposes of— 
‘‘(i) establishing the fund and providing the fund 
with sufficient initial equity for investment to permit 
the fund to attract unaffiliated investors; or
H. R. 4173—252 
‘‘(ii) making a de minimis investment. 
‘‘(B) LIMITATIONS
AND
RESTRICTIONS
ON
INVEST-
MENTS.— 
‘‘(i) REQUIREMENT
TO
SEEK
OTHER
INVESTORS.— 
A banking entity shall actively seek unaffiliated inves-
tors to reduce or dilute the investment of the banking 
entity to the amount permitted under clause (ii). 
‘‘(ii) LIMITATIONS ON SIZE OF INVESTMENTS.—Not-
withstanding any other provision of law, investments 
by a banking entity in a hedge fund or private equity 
fund shall— 
‘‘(I) not later than 1 year after the date of 
establishment of the fund, be reduced through 
redemption, sale, or dilution to an amount that 
is not more than 3 percent of the total ownership 
interests of the fund; 
‘‘(II) be immaterial to the banking entity, as 
defined, by rule, pursuant to subsection (b)(2), but 
in no case may the aggregate of all of the interests 
of the banking entity in all such funds exceed 
3 percent of the Tier 1 capital of the banking 
entity. 
‘‘(iii) 
CAPITAL.—For 
purposes 
of 
determining 
compliance with applicable capital standards under 
paragraph (3), the aggregate amount of the outstanding 
investments by a banking entity under this paragraph, 
including retained earnings, shall be deducted from 
the assets and tangible equity of the banking entity, 
and the amount of the deduction shall increase 
commensurate with the leverage of the hedge fund 
or private equity fund. 
‘‘(C) EXTENSION.—Upon an application by a banking 
entity, the Board may extend the period of time to meet 
the requirements under subparagraph (B)(ii)(I) for 2 addi-
tional years, if the Board finds that an extension would 
be consistent with safety and soundness and in the public 
interest. 
‘‘(e) ANTI-EVASION.— 
‘‘(1) RULEMAKING.—The appropriate Federal banking agen-
cies, the Securities and Exchange Commission, and the Com-
modity Futures Trading Commission shall issue regulations, 
as part of the rulemaking provided for in subsection (b)(2), 
regarding internal controls and recordkeeping, in order to 
insure compliance with this section. 
‘‘(2) TERMINATION OF ACTIVITIES OR INVESTMENT.—Notwith-
standing any other provision of law, whenever an appropriate 
Federal banking agency, the Securities and Exchange Commis-
sion, or the Commodity Futures Trading Commission, as appro-
priate, has reasonable cause to believe that a banking entity 
or nonbank financial company supervised by the Board under 
the respective agency’s jurisdiction has made an investment 
or engaged in an activity in a manner that functions as an 
evasion of the requirements of this section (including through 
an abuse of any permitted activity) or otherwise violates the 
restrictions under this section, the appropriate Federal banking 
agency, the Securities and Exchange Commission, or the Com-
modity Futures Trading Commission, as appropriate, shall
H. R. 4173—253 
order, after due notice and opportunity for hearing, the banking 
entity or nonbank financial company supervised by the Board 
to terminate the activity and, as relevant, dispose of the invest-
ment. Nothing in this paragraph shall be construed to limit 
the inherent authority of any Federal agency or State regu-
latory authority to further restrict any investments or activities 
under otherwise applicable provisions of law. 
‘‘(f) LIMITATIONS ON RELATIONSHIPS WITH HEDGE FUNDS AND 
PRIVATE EQUITY FUNDS.— 
‘‘(1) IN GENERAL.—No banking entity that serves, directly 
or indirectly, as the investment manager, investment adviser, 
or sponsor to a hedge fund or private equity fund, or that 
organizes and offers a hedge fund or private equity fund pursu-
ant to paragraph (d)(1)(G), and no affiliate of such entity, 
may enter into a transaction with the fund, or with any other 
hedge fund or private equity fund that is controlled by such 
fund, that would be a covered transaction, as defined in section 
23A of the Federal Reserve Act (12 U.S.C. 371c), with the 
hedge fund or private equity fund, as if such banking entity 
and the affiliate thereof were a member bank and the hedge 
fund or private equity fund were an affiliate thereof. 
‘‘(2) TREATMENT AS MEMBER BANK.—A banking entity that 
serves, directly or indirectly, as the investment manager, invest-
ment adviser, or sponsor to a hedge fund or private equity 
fund, or that organizes and offers a hedge fund or private 
equity fund pursuant to paragraph (d)(1)(G), shall be subject 
to section 23B of the Federal Reserve Act (12 U.S.C. 371c– 
1), as if such banking entity were a member bank and such 
hedge fund or private equity fund were an affiliate thereof. 
‘‘(3) PERMITTED SERVICES.— 
‘‘(A) IN GENERAL.—Notwithstanding paragraph (1), the 
Board may permit a banking entity to enter into any prime 
brokerage transaction with any hedge fund or private 
equity fund in which a hedge fund or private equity fund 
managed, sponsored, or advised by such banking entity 
has taken an equity, partnership, or other ownership 
interest, if— 
‘‘(i) the banking entity is in compliance with each 
of the limitations set forth in subsection (d)(1)(G) with 
regard to a hedge fund or private equity fund organized 
and offered by such banking entity; 
‘‘(ii) the chief executive officer (or equivalent 
officer) of the banking entity certifies in writing 
annually (with a duty to update the certification if 
the information in the certification materially changes) 
that the conditions specified in subsection (d)(1)(g)(v) 
are satisfied; and 
‘‘(iii) the Board has determined that such trans-
action is consistent with the safe and sound operation 
and condition of the banking entity. 
‘‘(B) TREATMENT OF PRIME BROKERAGE TRANSACTIONS.— 
For purposes of subparagraph (A), a prime brokerage trans-
action described in subparagraph (A) shall be subject to 
section 23B of the Federal Reserve Act (12 U.S.C. 371c- 
1) as if the counterparty were an affiliate of the banking 
entity.
H. R. 4173—254 
‘‘(4) APPLICATION TO NONBANK FINANCIAL COMPANIES SUPER-
VISED BY THE BOARD.—The appropriate Federal banking agen-
cies, the Securities and Exchange Commission, and the Com-
modity Futures Trading Commission shall adopt rules, as pro-
vided in subsection (b)(2), imposing additional capital charges 
or other restrictions for nonbank financial companies supervised 
by the Board to address the risks to and conflicts of interest 
of banking entities described in paragraphs (1), (2), and (3) 
of this subsection. 
‘‘(g) RULES OF CONSTRUCTION.— 
‘‘(1) LIMITATION ON CONTRARY AUTHORITY.—Except as pro-
vided in this section, notwithstanding any other provision of 
law, the prohibitions and restrictions under this section shall 
apply to activities of a banking entity or nonbank financial 
company supervised by the Board, even if such activities are 
authorized for a banking entity or nonbank financial company 
supervised by the Board. 
‘‘(2) SALE OR SECURITIZATION OF LOANS.—Nothing in this 
section shall be construed to limit or restrict the ability of 
a banking entity or nonbank financial company supervised 
by the Board to sell or securitize loans in a manner otherwise 
permitted by law. 
‘‘(3) AUTHORITY OF FEDERAL AGENCIES AND STATE REGU-
LATORY AUTHORITIES.—Nothing in this section shall be con-
strued to limit the inherent authority of any Federal agency 
or State regulatory authority under otherwise applicable provi-
sions of law. 
‘‘(h) DEFINITIONS.—In this section, the following definitions 
shall apply: 
‘‘(1) BANKING ENTITY.—The term ‘banking entity’ means 
any insured depository institution (as defined in section 3 of 
the Federal Deposit Insurance Act (12 U.S.C. 1813)), any com-
pany that controls an insured depository institution, or that 
is treated as a bank holding company for purposes of section 
8 of the International Banking Act of 1978, and any affiliate 
or subsidiary of any such entity. For purposes of this paragraph, 
the term ‘insured depository institution’ does not include an 
institution that functions solely in a trust or fiduciary capacity, 
if— 
‘‘(A) all or substantially all of the deposits of such 
institution are in trust funds and are received in a bona 
fide fiduciary capacity; 
‘‘(B) no deposits of such institution which are insured 
by the Federal Deposit Insurance Corporation are offered 
or marketed by or through an affiliate of such institution; 
‘‘(C) such institution does not accept demand deposits 
or deposits that the depositor may withdraw by check 
or similar means for payment to third parties or others 
or make commercial loans; and 
‘‘(D) such institution does not— 
‘‘(i) obtain payment or payment related services 
from any Federal Reserve bank, including any service 
referred to in section 11A of the Federal Reserve Act 
(12 U.S.C. 248a); or 
‘‘(ii) exercise discount or borrowing privileges 
pursuant to section 19(b)(7) of the Federal Reserve 
Act (12 U.S.C. 461(b)(7)).
H. R. 4173—255 
‘‘(2) HEDGE FUND; PRIVATE EQUITY FUND.—The terms ‘hedge 
fund’ and ‘private equity fund’ mean an issuer that would 
be an investment company, as defined in the Investment Com-
pany Act of 1940 (15 U.S.C. 80a-1 et seq.), but for section 
3(c)(1) or 3(c)(7) of that Act, or such similar funds as the 
appropriate Federal banking agencies, the Securities and 
Exchange Commission, and the Commodity Futures Trading 
Commission may, by rule, as provided in subsection (b)(2), 
determine. 
‘‘(3) NONBANK
FINANCIAL
COMPANY
SUPERVISED
BY
THE 
BOARD.—The term ‘nonbank financial company supervised by 
the Board’ means a nonbank financial company supervised 
by the Board of Governors, as defined in section 102 of the 
Financial Stability Act of 2010. 
‘‘(4) PROPRIETARY TRADING.—The term ‘proprietary trading’, 
when used with respect to a banking entity or nonbank financial 
company supervised by the Board, means engaging as a prin-
cipal for the trading account of the banking entity or nonbank 
financial company supervised by the Board in any transaction 
to purchase or sell, or otherwise acquire or dispose of, any 
security, any derivative, any contract of sale of a commodity 
for future delivery, any option on any such security, derivative, 
or contract, or any other security or financial instrument that 
the appropriate Federal banking agencies, the Securities and 
Exchange Commission, and the Commodity Futures Trading 
Commission may, by rule as provided in subsection (b)(2), deter-
mine. 
‘‘(5) SPONSOR.—The term to ‘sponsor’ a fund means— 
‘‘(A) to serve as a general partner, managing member, 
or trustee of a fund; 
‘‘(B) in any manner to select or to control (or to have 
employees, officers, or directors, or agents who constitute) 
a majority of the directors, trustees, or management of 
a fund; or 
‘‘(C) to share with a fund, for corporate, marketing, 
promotional, or other purposes, the same name or a vari-
ation of the same name. 
‘‘(6) TRADING ACCOUNT.—The term ‘trading account’ means 
any account used for acquiring or taking positions in the securi-
ties and instruments described in paragraph (4) principally 
for the purpose of selling in the near term (or otherwise with 
the intent to resell in order to profit from short-term price 
movements), and any such other accounts as the appropriate 
Federal banking agencies, the Securities and Exchange 
Commission, and the Commodity Futures Trading Commission 
may, by rule as provided in subsection (b)(2), determine. 
‘‘(7) ILLIQUID FUND.— 
‘‘(A) IN GENERAL.—The term ‘illiquid fund’ means a 
hedge fund or private equity fund that— 
‘‘(i) as of May 1, 2010, was principally invested 
in, or was invested and contractually committed to 
principally invest in, illiquid assets, such as portfolio 
companies, real estate investments, and venture cap-
ital investments; and 
‘‘(ii) makes all investments pursuant to, and con-
sistent with, an investment strategy to principally 
invest in illiquid assets. In issuing rules regarding
H. R. 4173—256 
this subparagraph, the Board shall take into consider-
ation the terms of investment for the hedge fund or 
private equity fund, including contractual obligations, 
the ability of the fund to divest of assets held by 
the fund, and any other factors that the Board deter-
mines are appropriate. 
‘‘(B) HEDGE FUND.—For the purposes of this paragraph, 
the term ‘hedge fund’ means any fund identified under 
subsection (h)(2), and does not include a private equity 
fund, as such term is used in section 203(m) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b-3(m)).’’. 
SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES. 
(a) STUDY.— 
(1) IN GENERAL.—Not later than 18 months after the date 
of enactment of this Act, the appropriate Federal banking agen-
cies shall jointly review and prepare a report on the activities 
that a banking entity, as such term is defined in the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et. seq.), may 
engage in under Federal and State law, including activities 
authorized by statute and by order, interpretation and guid-
ance. 
(2) CONTENT.—In carrying out the study under paragraph 
(1), the appropriate Federal banking agencies shall review and 
consider— 
(A) the type of activities or investments; 
(B) any financial, operational, managerial, or reputa-
tion risks associated with or presented as a result of the 
banking entity engaged in the activity or making the invest-
ment; and 
(C) risk mitigation activities undertaken by the 
banking entity with regard to the risks. 
(b) REPORT AND RECOMMENDATIONS TO THE COUNCIL AND TO 
CONGRESS.—The appropriate Federal banking agencies shall submit 
to the Council, the Committee on Financial Services of the House 
of Representatives, and the Committee on Banking, Housing, and 
Urban Affairs of the Senate the study conducted pursuant to sub-
section (a) no later than 2 months after its completion. In addition 
to the information described in subsection (a), the report shall 
include recommendations regarding— 
(1) whether each activity or investment has or could have 
a negative effect on the safety and soundness of the banking 
entity or the United States financial system; 
(2) the appropriateness of the conduct of each activity or 
type of investment by banking entities; and 
(3) additional restrictions as may be necessary to address 
risks to safety and soundness arising from the activities or 
types of investments described in subsection (a). 
SEC. 621. CONFLICTS OF INTEREST. 
(a) IN GENERAL.—The Securities Act of 1933 (15 U.S.C. 77a 
et seq.) is amended by inserting after section 27A the following: 
‘‘SEC. 
27B. 
CONFLICTS 
OF 
INTEREST 
RELATING 
TO 
CERTAIN 
SECURITIZATIONS. 
‘‘(a) IN GENERAL.—An underwriter, placement agent, initial 
purchaser, or sponsor, or any affiliate or subsidiary of any such 
entity, of an asset-backed security (as such term is defined in
H. R. 4173—257 
section 3 of the Securities and Exchange Act of 1934 (15 U.S.C. 
78c), which for the purposes of this section shall include a synthetic 
asset-backed security), shall not, at any time for a period ending 
on the date that is one year after the date of the first closing 
of the sale of the asset-backed security, engage in any transaction 
that would involve or result in any material conflict of interest 
with respect to any investor in a transaction arising out of such 
activity. 
‘‘(b) RULEMAKING.—Not later than 270 days after the date 
of enactment of this section, the Commission shall issue rules 
for the purpose of implementing subsection (a). 
‘‘(c) EXCEPTION.—The prohibitions of subsection (a) shall not 
apply to— 
‘‘(1) risk-mitigating hedging activities in connection with 
positions or holdings arising out of the underwriting, placement, 
initial purchase, or sponsorship of an asset-backed security, 
provided that such activities are designed to reduce the specific 
risks to the underwriter, placement agent, initial purchaser, 
or sponsor associated with positions or holdings arising out 
of such underwriting, placement, initial purchase, or sponsor-
ship; or 
‘‘(2) purchases or sales of asset-backed securities made 
pursuant to and consistent with— 
‘‘(A) commitments of the underwriter, placement agent, 
initial purchaser, or sponsor, or any affiliate or subsidiary 
of any such entity, to provide liquidity for the asset-backed 
security, or 
‘‘(B) bona fide market-making in the asset backed secu-
rity. 
‘‘(d) RULE OF CONSTRUCTION.—This subsection shall not other-
wise limit the application of section 15G of the Securities Exchange 
Act of 1934.’’. 
(b) EFFECTIVE DATE.—Section 27B of the Securities Act of 1933, 
as added by this section, shall take effect on the effective date 
of final rules issued by the Commission under subsection (b) of 
such section 27B, except that subsections (b) and (d) of such section 
27B shall take effect on the date of enactment of this Act. 
SEC. 622. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS. 
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) is amended by adding at the end the following: 
‘‘SEC. 14. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘Council’ means the Financial Stability Over-
sight Council; 
‘‘(2) the term ‘financial company’ means— 
‘‘(A) an insured depository institution; 
‘‘(B) a bank holding company; 
‘‘(C) a savings and loan holding company; 
‘‘(D) a company that controls an insured depository 
institution; 
‘‘(E) a nonbank financial company supervised by the 
Board under title I of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act; and 
‘‘(F) a foreign bank or company that is treated as 
a bank holding company for purposes of this Act; and 
‘‘(3) the term ‘liabilities’ means—
H. R. 4173—258 
‘‘(A) with respect to a United States financial com-
pany— 
‘‘(i) the total risk-weighted assets of the financial 
company, as determined under the risk-based capital 
rules applicable to bank holding companies, as adjusted 
to reflect exposures that are deducted from regulatory 
capital; less 
‘‘(ii) the total regulatory capital of the financial 
company under the risk-based capital rules applicable 
to bank holding companies; 
‘‘(B) with respect to a foreign-based financial com-
pany— 
‘‘(i) the total risk-weighted assets of the United 
States operations of the financial company, as deter-
mined under the applicable risk-based capital rules, 
as adjusted to reflect exposures that are deducted from 
regulatory capital; less 
‘‘(ii) the total regulatory capital of the United 
States operations of the financial company, as deter-
mined under the applicable risk-based capital rules; 
and 
‘‘(C) with respect to an insurance company or other 
nonbank financial company supervised by the Board, such 
assets of the company as the Board shall specify by rule, 
in order to provide for consistent and equitable treatment 
of such companies. 
‘‘(b) CONCENTRATION LIMIT.—Subject to the recommendations 
by the Council under subsection (e), a financial company may not 
merge or consolidate with, acquire all or substantially all of the 
assets of, or otherwise acquire control of, another company, if the 
total consolidated liabilities of the acquiring financial company upon 
consummation of the transaction would exceed 10 percent of the 
aggregate consolidated liabilities of all financial companies at the 
end of the calendar year preceding the transaction. 
‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With the prior writ-
ten consent of the Board, the concentration limit under subsection 
(b) shall not apply to an acquisition— 
‘‘(1) of a bank in default or in danger of default; 
‘‘(2) with respect to which assistance is provided by the 
Federal Deposit Insurance Corporation under section 13(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or 
‘‘(3) that would result only in a de minimis increase in 
the liabilities of the financial company. 
‘‘(d) RULEMAKING AND GUIDANCE.—The Board shall issue regu-
lations implementing this section in accordance with the rec-
ommendations of the Council under subsection (e), including the 
definition of terms, as necessary. The Board may issue interpreta-
tions or guidance regarding the application of this section to an 
individual financial company or to financial companies in general. 
‘‘(e) COUNCIL STUDY AND RULEMAKING.— 
‘‘(1) STUDY
AND
RECOMMENDATIONS.—Not later than 6 
months after the date of enactment of this section, the Council 
shall— 
‘‘(A) complete a study of the extent to which the con-
centration limit under this section would affect financial 
stability, moral hazard in the financial system, the effi-
ciency and competitiveness of United States financial firms
H. R. 4173—259 
and financial markets, and the cost and availability of 
credit and other financial services to households and 
businesses in the United States; and 
‘‘(B) make recommendations regarding any modifica-
tions to the concentration limit that the Council determines 
would more effectively implement this section. 
‘‘(2) RULEMAKING.—Not later than 9 months after the date 
of completion of the study under paragraph (1), and notwith-
standing subsections (b) and (d), the Board shall issue final 
regulations implementing this section, which shall reflect any 
recommendations by the Council under paragraph (1)(B).’’. 
SEC. 623. INTERSTATE MERGER TRANSACTIONS. 
(a) INTERSTATE MERGER TRANSACTIONS.—Section 18(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by 
adding at the end the following: 
‘‘(13)(A) Except as provided in subparagraph (B), the responsible 
agency may not approve an application for an interstate merger 
transaction if the resulting insured depository institution (including 
all insured depository institutions which are affiliates of the 
resulting insured depository institution), upon consummation of 
the transaction, would control more than 10 percent of the total 
amount of deposits of insured depository institutions in the United 
States. 
‘‘(B) Subparagraph (A) shall not apply to an interstate merger 
transaction that involves 1 or more insured depository institutions 
in default or in danger of default, or with respect to which the 
Corporation provides assistance under section 13. 
‘‘(C) In this paragraph— 
‘‘(i) the term ‘interstate merger transaction’ means a merger 
transaction involving 2 or more insured depository institutions 
that have different home States and that are not affiliates; 
and 
‘‘(ii) the term ‘home State’ means— 
‘‘(I) with respect to a national bank, the State in which 
the main office of the bank is located; 
‘‘(II) with respect to a State bank or State savings 
association, the State by which the State bank or State 
savings association is chartered; and 
‘‘(III) with respect to a Federal savings association, 
the State in which the home office (as defined by the 
regulations of the Director of the Office of Thrift Super-
vision, or, on and after the transfer date, the Comptroller 
of the Currency) of the Federal savings association is 
located.’’. 
(b) ACQUISITIONS BY BANK HOLDING COMPANIES.— 
(1) IN GENERAL.—Section 4 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843) is amended— 
(A) in subsection (i), by adding at the end the following: 
‘‘(8) INTERSTATE ACQUISITIONS.— 
‘‘(A) IN
GENERAL.—The Board may not approve an 
application by a bank holding company to acquire an 
insured depository institution under subsection (c)(8) or 
any other provision of this Act if— 
‘‘(i) the home State of such insured depository 
institution is a State other than the home State of 
the bank holding company; and
H. R. 4173—260 
‘‘(ii) the applicant (including all insured depository 
institutions which are affiliates of the applicant) con-
trols, or upon consummation of the transaction would 
control, more than 10 percent of the total amount 
of deposits of insured depository institutions in the 
United States. 
‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply 
to an acquisition that involves an insured depository 
institution in default or in danger of default, or with respect 
to which the Federal Deposit Insurance Corporation pro-
vides assistance under section 13 of the Federal Deposit 
Insurance Act (12 U.S.C. 1823).’’; and 
(B) in subsection (k)(6)(B), by striking ‘‘savings associa-
tion’’ and inserting ‘‘insured depository institution’’. 
(2) DEFINITIONS.—Section 2(o)(4) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(o)(4)) is amended— 
(A) in subparagraph (B), by striking ‘‘and’’ at the end; 
(B) in subparagraph (C)(ii), by striking the period at 
the end and inserting a semicolon; and 
(C) by adding at the end the following: 
‘‘(D) with respect to a State savings association, the 
State by which the savings association is chartered; and 
‘‘(E) with respect to a Federal savings association, the 
State in which the home office (as defined by the regula-
tions of the Director of the Office of Thrift Supervision, 
or, on and after the transfer date, the Comptroller of the 
Currency) of the Federal savings association is located.’’. 
(c) ACQUISITIONS BY SAVINGS AND LOAN HOLDING COMPANIES.— 
Section 10(e)(2) of the Home Owners’ Loan Act (12 U.S.C. 
1467a(e)(2)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (C), by striking ‘‘or’’ at the end; 
(B) in subparagraph (D), by striking the period at 
the end and inserting ‘‘, or’’; and 
(C) by adding at the end the following: 
‘‘(E) in the case of an application by a savings and 
loan holding company to acquire an insured depository 
institution, if— 
‘‘(i) the home State of the insured depository 
institution is a State other than the home State of 
the savings and loan holding company; 
‘‘(ii) the applicant (including all insured depository 
institutions which are affiliates of the applicant) con-
trols, or upon consummation of the transaction would 
control, more than 10 percent of the total amount 
of deposits of insured depository institutions in the 
United States; and 
‘‘(iii) the acquisition does not involve an insured 
depository institution in default or in danger of default, 
or with respect to which the Federal Deposit Insurance 
Corporation provides assistance under section 13 of 
the Federal Deposit Insurance Act (12 U.S.C. 1823).’’; 
and 
(2) by adding at the end the following: 
‘‘(7) DEFINITIONS.—For purposes of paragraph (2)(E)— 
‘‘(A) the terms ‘default’, ‘in danger of default’, and 
‘insured depository institution’ have the same meanings
H. R. 4173—261 
as in section 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813); and 
‘‘(B) the term ‘home State’ means— 
‘‘(i) with respect to a national bank, the State 
in which the main office of the bank is located; 
‘‘(ii) with respect to a State bank or State savings 
association, the State by which the savings association 
is chartered; 
‘‘(iii) with respect to a Federal savings association, 
the State in which the home office (as defined by 
the regulations of the Director of the Office of Thrift 
Supervision, or, on and after the transfer date, the 
Comptroller of the Currency) of the Federal savings 
association is located; and 
‘‘(iv) with respect to a savings and loan holding 
company, the State in which the amount of total 
deposits of all insured depository institution subsidi-
aries of such company was the greatest on the date 
on which the company became a savings and loan 
holding company.’’. 
SEC. 624. QUALIFIED THRIFT LENDERS. 
Section 10(m)(3) of the Home Owners’ Loan Act (12 U.S.C. 
1467a(m)(3)) is amended— 
(1) by striking subparagraph (A) and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.—A savings association that fails to 
become or remain a qualified thrift lender shall imme-
diately be subject to the restrictions under subparagraph 
(B).’’; and 
(2) in subparagraph (B)(i), by striking subclause (III) and 
inserting the following: 
‘‘(III) DIVIDENDS.—The savings association 
may not pay dividends, except for dividends that— 
‘‘(aa) would be permissible for a national 
bank; 
‘‘(bb) are necessary to meet obligations of 
a company that controls such savings associa-
tion; and 
‘‘(cc) are specifically approved by the 
Comptroller of the Currency and the Board 
after a written request submitted to the Comp-
troller of the Currency and the Board by the 
savings association not later than 30 days 
before the date of the proposed payment. 
‘‘(IV) REGULATORY
AUTHORITY.—A savings 
association that fails to become or remain a quali-
fied thrift lender shall be deemed to have violated 
section 5 of the Home Owners’ Loan Act (12 U.S.C. 
1464) and subject to actions authorized by section 
5(d) of the Home Owners’ Loan Act (12 U.S.C. 
1464(d)).’’. 
SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING 
COMPANIES. 
(a) IN GENERAL.—Section 10(o) of the Home Owners’ Loan 
Act (12 U.S.C. 1467a(o) is amended by adding at the end the 
following:
H. R. 4173—262 
‘‘(11) DIVIDENDS.— 
‘‘(A) DECLARATION OF DIVIDENDS.— 
‘‘(i) ADVANCE NOTICE REQUIRED.—Each subsidiary 
of a mutual holding company that is a savings associa-
tion shall give the appropriate Federal banking agency 
and the Board notice not later than 30 days before 
the date of a proposed declaration by the board of 
directors of the savings association of any dividend 
on the guaranty, permanent, or other nonwithdrawable 
stock of the savings association. 
‘‘(ii) INVALID DIVIDENDS.—Any dividend described 
in clause (i) that is declared without giving notice 
to the appropriate Federal banking agency and the 
Board under clause (i), or that is declared during the 
30-day period preceding the date of a proposed declara-
tion for which notice is given to the appropriate Federal 
banking agency and the Board under clause (i), shall 
be invalid and shall confer no rights or benefits upon 
the holder of any such stock. 
‘‘(B) WAIVER OF DIVIDENDS.—A mutual holding com-
pany may waive the right to receive any dividend declared 
by a subsidiary of the mutual holding company, if— 
‘‘(i) no insider of the mutual holding company, 
associate of an insider, or tax-qualified or non-tax- 
qualified employee stock benefit plan of the mutual 
holding company holds any share of the stock in the 
class of stock to which the waiver would apply; or 
‘‘(ii) the mutual holding company gives written 
notice to the Board of the intent of the mutual holding 
company to waive the right to receive dividends, not 
later than 30 days before the date of the proposed 
date of payment of the dividend, and the Board does 
not object to the waiver. 
‘‘(C) RESOLUTION
INCLUDED
IN
WAIVER
NOTICE.—A 
notice of a waiver under subparagraph (B) shall include 
a copy of the resolution of the board of directors of the 
mutual holding company, in such form and substance as 
the Board may determine, together with any supporting 
materials relied upon by the board of directors of the 
mutual holding company, concluding that the proposed divi-
dend waiver is consistent with the fiduciary duties of the 
board of directors to the mutual members of the mutual 
holding company. 
‘‘(D) STANDARDS FOR WAIVER OF DIVIDEND.—The Board 
may not object to a waiver of dividends under subparagraph 
(B) if— 
‘‘(i) the waiver would not be detrimental to the 
safe and sound operation of the savings association; 
‘‘(ii) the board of directors of the mutual holding 
company expressly determines that a waiver of the 
dividend by the mutual holding company is consistent 
with the fiduciary duties of the board of directors to 
the mutual members of the mutual holding company; 
and 
‘‘(iii) the mutual holding company has, prior to 
December 1, 2009—
H. R. 4173—263 
‘‘(I) reorganized into a mutual holding com-
pany under subsection (o); 
‘‘(II) issued minority stock either from its mid- 
tier stock holding company or its subsidiary stock 
savings association; and 
‘‘(III) waived dividends it had a right to receive 
from the subsidiary stock savings association. 
‘‘(E) VALUATION.— 
‘‘(i) IN GENERAL.—The appropriate Federal banking 
agency shall consider waived dividends in determining 
an appropriate exchange ratio in the event of a full 
conversion to stock form. 
‘‘(ii) EXCEPTION.—In the case of a savings associa-
tion that has reorganized into a mutual holding com-
pany, has issued minority stock from a mid-tier stock 
holding company or a subsidiary stock savings associa-
tion of the mutual holding company, and has waived 
dividends it had a right to receive from a subsidiary 
savings association before December 1, 2009, the appro-
priate Federal banking agency shall not consider 
waived dividends in determining an appropriate 
exchange ratio in the event of a full conversion to 
stock form.’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the transfer date. 
SEC. 626. INTERMEDIATE HOLDING COMPANIES. 
The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is 
amended by inserting after section 10 (12 U.S.C. 1467a) the fol-
lowing new section: 
‘‘SEC. 10A. INTERMEDIATE HOLDING COMPANIES. 
‘‘(a) DEFINITION.—For purposes of this section: 
‘‘(1) FINANCIAL ACTIVITIES.—The term ‘financial activities’ 
means activities described in clauses (i) and (ii) of section 
10(c)(9)(A). 
‘‘(2) GRANDFATHERED UNITARY SAVINGS AND LOAN HOLDING 
COMPANY.—The term ‘grandfathered unitary savings and loan 
holding company’ means a company described in section 
10(c)(9)(C). 
‘‘(3) INTERNAL FINANCIAL ACTIVITIES.—The term ‘internal 
financial activities’ includes— 
‘‘(A) internal financial activities conducted by a grand-
fathered savings and loan holding company or any affiliate; 
and 
‘‘(B) internal treasury, investment, and employee ben-
efit functions. 
‘‘(b) REQUIREMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) ACTIVITIES OTHER THAN FINANCIAL ACTIVITIES.— 
If a grandfathered unitary savings and loan holding com-
pany conducts activities other than financial activities, the 
Board may require such company to establish and conduct 
all or a portion of such financial activities in or through 
an intermediate holding company, which shall be a savings 
and loan holding company, established pursuant to regula-
tions of the Board, not later than 90 days (or such longer
H. R. 4173—264 
period as the Board may deem appropriate) after the 
transfer date. 
‘‘(B) OTHER
ACTIVITIES.—Notwithstanding subpara-
graph (A), the Board shall require a grandfathered unitary 
savings and loan holding company to establish an inter-
mediate holding company if the Board makes a determina-
tion that the establishment of such intermediate holding 
company is necessary— 
‘‘(i) to appropriately supervise activities that are 
determined to be financial activities; or 
‘‘(ii) to ensure that supervision by the Board does 
not extend to the activities of such company that are 
not financial activities. 
‘‘(2) INTERNAL FINANCIAL ACTIVITIES.— 
‘‘(A) TREATMENT OF INTERNAL FINANCIAL ACTIVITIES.— 
For purposes of this subsection, the internal financial 
activities of a grandfathered unitary savings and loan 
holding company shall not be required to be placed in 
an intermediate holding company. 
‘‘(B) GRANDFATHERED
ACTIVITIES.—A grandfathered 
unitary savings and loan holding company may continue 
to engage in an internal financial activity, subject to review 
by the Board to determine whether engaging in such 
activity presents undue risk to the grandfathered unitary 
savings and loan holding company or to the financial sta-
bility of the United States, if— 
‘‘(i) the grandfathered unitary savings and loan 
holding company engaged in the activity during the 
year before the date of enactment of this section; and 
‘‘(ii) at least 2⁄3 of the assets or 2⁄3 of the revenues 
generated from the activity are from or attributable 
to the grandfathered unitary savings and loan holding 
company. 
‘‘(3) SOURCE
OF
STRENGTH.—A grandfathered unitary 
savings and loan holding company that directly or indirectly 
controls an intermediate holding company established under 
this section shall serve as a source of strength to its subsidiary 
intermediate holding company. 
‘‘(4) PARENT COMPANY REPORTS.—The Board, may from time 
to time, examine and require reports under oath from a grand-
fathered unitary savings and loan holding company that con-
trols an intermediate holding company, and from the appro-
priate officers or directors of such company, solely for purposes 
of ensuring compliance with the provisions of this section, 
including assessing the ability of the company to serve as 
a source of strength to its subsidiary intermediate holding 
company as required under paragraph (3) and enforcing compli-
ance with such requirement. 
‘‘(5) LIMITED PARENT COMPANY ENFORCEMENT.— 
‘‘(A) IN GENERAL.—In addition to any other authority 
of the Board, the Board may enforce compliance with the 
provisions of this subsection that are applicable to any 
company described in paragraph (1)(A) that controls an 
intermediate holding company under section 8 of the Fed-
eral Deposit Insurance Act, and a company described in 
paragraph (1)(A) shall be subject to such section (solely 
for purposes of this subparagraph) in the same manner
H. R. 4173—265 
and to the same extent as if the company described in 
paragraph (1)(A) were a savings and loan holding company. 
‘‘(B) APPLICATION OF OTHER ACT.—Any violation of this 
subsection by a grandfathered unitary savings and loan 
holding company that controls an intermediate holding 
company may also be treated as a violation of the Federal 
Deposit Insurance Act for purposes of subparagraph (A). 
‘‘(C) NO EFFECT ON OTHER AUTHORITY.—No provision 
of this paragraph shall be construed as limiting any 
authority of the Board or any other Federal agency under 
any other provision of law. 
‘‘(c) REGULATIONS.—The Board— 
‘‘(1) shall promulgate regulations to establish the criteria 
for determining whether to require a grandfathered unitary 
savings and loan holding company to establish an intermediate 
holding company under subsection (b); and 
‘‘(2) may promulgate regulations to establish any restric-
tions or limitations on transactions between an intermediate 
holding company or a parent of such company and its affiliates, 
as necessary to prevent unsafe and unsound practices in connec-
tion with transactions between the intermediate holding com-
pany, or any subsidiary thereof, and its parent company or 
affiliates that are not subsidiaries of the intermediate holding 
company, except that such regulations shall not restrict or 
limit any transaction in connection with the bona fide acquisi-
tion or lease by an unaffiliated person of assets, goods, or 
services. 
‘‘(d) RULES OF CONSTRUCTION.— 
‘‘(1) ACTIVITIES.—Nothing in this section shall be construed 
to require a grandfathered unitary savings and loan holding 
company to conform its activities to permissible activities. 
‘‘(2) PERMISSIBLE CORPORATE REORGANIZATION.—The forma-
tion of an intermediate holding company as required in sub-
section (b) shall be presumed to be a permissible corporate 
reorganization as described in section 10(c)(9)(D).’’. 
SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED. 
(a) REPEAL
OF PROHIBITION
ON PAYMENT
OF INTEREST
ON 
DEMAND DEPOSITS.— 
(1) FEDERAL RESERVE ACT.—Section 19(i) of the Federal 
Reserve Act (12 U.S.C. 371a) is amended to read as follows: 
‘‘(i) [Repealed]’’. 
(2) HOME OWNERS’ LOAN ACT.—The first sentence of section 
5(b)(1)(B) of the Home Owners’ Loan Act (12 U.S.C. 
1464(b)(1)(B)) is amended by striking ‘‘savings association may 
not—’’ and all that follows through ‘‘(ii) permit any’’ and 
inserting ‘‘savings association may not permit any’’. 
(3) FEDERAL DEPOSIT INSURANCE ACT.—Section 18(g) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended 
to read as follows: 
‘‘(g) [Repealed]’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall take effect 1 year after the date of the enactment of 
this Act. 
SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING. 
Section 2(c)(2)(F)(v) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(c)(2)(F)(v)) is amended by inserting before the
H. R. 4173—266 
period the following: ‘‘, other than credit card loans that are made 
to businesses that meet the criteria for a small business concern 
to be eligible for business loans under regulations established by 
the Small Business Administration under part 121 of title 13, 
Code of Federal Regulations’’. 
TITLE VII—WALL STREET 
TRANSPARENCY AND ACCOUNTABILITY 
SEC. 701. SHORT TITLE. 
This title may be cited as the ‘‘Wall Street Transparency and 
Accountability Act of 2010’’. 
Subtitle A—Regulation of Over-the- 
Counter Swaps Markets 
PART I—REGULATORY AUTHORITY 
SEC. 711. DEFINITIONS. 
In this subtitle, the terms ‘‘prudential regulator’’, ‘‘swap’’, ‘‘swap 
dealer’’, ‘‘major swap participant’’, ‘‘swap data repository’’, ‘‘associ-
ated person of a swap dealer or major swap participant’’, ‘‘eligible 
contract participant’’, ‘‘swap execution facility’’, ‘‘security-based 
swap’’, ‘‘security-based swap dealer’’, ‘‘major security-based swap 
participant’’, and ‘‘associated person of a security-based swap dealer 
or major security-based swap participant’’ have the meanings given 
the terms in section 1a of the Commodity Exchange Act (7 U.S.C. 
1a), including any modification of the meanings under section 721(b) 
of this Act. 
SEC. 712. REVIEW OF REGULATORY AUTHORITY. 
(a) CONSULTATION.— 
(1) COMMODITY
FUTURES
TRADING
COMMISSION.—Before 
commencing any rulemaking or issuing an order regarding 
swaps, swap dealers, major swap participants, swap data 
repositories, derivative clearing organizations with regard to 
swaps, persons associated with a swap dealer or major swap 
participant, eligible contract participants, or swap execution 
facilities pursuant to this subtitle, the Commodity Futures 
Trading Commission shall consult and coordinate to the extent 
possible with the Securities and Exchange Commission and 
the prudential regulators for the purposes of assuring regu-
latory consistency and comparability, to the extent possible. 
(2) SECURITIES AND EXCHANGE COMMISSION.—Before com-
mencing any rulemaking or issuing an order regarding security- 
based swaps, security-based swap dealers, major security-based 
swap participants, security-based swap data repositories, 
clearing agencies with regard to security-based swaps, persons 
associated with a security-based swap dealer or major security- 
based swap participant, eligible contract participants with 
regard to security-based swaps, or security-based swap execu-
tion facilities pursuant to subtitle B, the Securities and 
Exchange Commission shall consult and coordinate to the
H. R. 4173—267 
extent possible with the Commodity Futures Trading Commis-
sion and the prudential regulators for the purposes of assuring 
regulatory consistency and comparability, to the extent possible. 
(3) PROCEDURES
AND
DEADLINE.—Such regulations shall 
be prescribed in accordance with applicable requirements of 
title 5, United States Code, and shall be issued in final form 
not later than 360 days after the date of enactment of this 
Act. 
(4) APPLICABILITY.—The requirements of paragraphs (1) 
and (2) shall not apply to an order issued— 
(A) in connection with or arising from a violation or 
potential violation of any provision of the Commodity 
Exchange Act (7 U.S.C. 1 et seq.); 
(B) in connection with or arising from a violation or 
potential violation of any provision of the securities laws; 
or 
(C) in any proceeding that is conducted on the record 
in accordance with sections 556 and 557 of title 5, United 
States Code. 
(5) EFFECT.—Nothing in this subsection authorizes any 
consultation or procedure for consultation that is not consistent 
with the requirements of subchapter II of chapter 5, and chapter 
7, of title 5, United States Code (commonly known as the 
‘‘Administrative Procedure Act’’). 
(6) RULES; ORDERS.—In developing and promulgating rules 
or orders pursuant to this subsection, each Commission shall 
consider the views of the prudential regulators. 
(7) TREATMENT OF SIMILAR PRODUCTS AND ENTITIES.— 
(A) IN GENERAL.—In adopting rules and orders under 
this subsection, the Commodity Futures Trading Commis-
sion and the Securities and Exchange Commission shall 
treat functionally or economically similar products or enti-
ties described in paragraphs (1) and (2) in a similar 
manner. 
(B) EFFECT.—Nothing in this subtitle requires the 
Commodity Futures Trading Commission or the Securities 
and Exchange Commission to adopt joint rules or orders 
that treat functionally or economically similar products 
or entities described in paragraphs (1) and (2) in an iden-
tical manner. 
(8) MIXED
SWAPS.—The Commodity Futures Trading 
Commission and the Securities and Exchange Commission, 
after consultation with the Board of Governors, shall jointly 
prescribe such regulations regarding mixed swaps, as described 
in section 1a(47)(D) of the Commodity Exchange Act (7 U.S.C. 
1a(47)(D)) and in section 3(a)(68)(D) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c(a)(68)(D)), as may be necessary 
to carry out the purposes of this title. 
(b) LIMITATION.— 
(1) COMMODITY FUTURES TRADING COMMISSION.—Nothing 
in this title, unless specifically provided, confers jurisdiction 
on the Commodity Futures Trading Commission to issue a 
rule, regulation, or order providing for oversight or regulation 
of— 
(A) security-based swaps; or 
(B) with regard to its activities or functions concerning 
security-based swaps—
H. R. 4173—268 
(i) security-based swap dealers; 
(ii) major security-based swap participants; 
(iii) security-based swap data repositories; 
(iv) associated persons of a security-based swap 
dealer or major security-based swap participant; 
(v) eligible contract participants with respect to 
security-based swaps; or 
(vi) swap execution facilities with respect to secu-
rity-based swaps. 
(2) SECURITIES AND EXCHANGE COMMISSION.—Nothing in 
this title, unless specifically provided, confers jurisdiction on 
the Securities and Exchange Commission or State securities 
regulators to issue a rule, regulation, or order providing for 
oversight or regulation of— 
(A) swaps; or 
(B) with regard to its activities or functions concerning 
swaps— 
(i) swap dealers; 
(ii) major swap participants; 
(iii) swap data repositories; 
(iv) persons associated with a swap dealer or major 
swap participant; 
(v) eligible contract participants with respect to 
swaps; or 
(vi) swap execution facilities with respect to swaps. 
(3) PROHIBITION ON CERTAIN FUTURES ASSOCIATIONS AND 
NATIONAL SECURITIES ASSOCIATIONS.— 
(A) FUTURES
ASSOCIATIONS.—Notwithstanding any 
other provision of law (including regulations), unless other-
wise authorized by this title, no futures association reg-
istered under section 17 of the Commodity Exchange Act 
(7 U.S.C. 21) may issue a rule, regulation, or order for 
the oversight or regulation of, or otherwise assert jurisdic-
tion over, for any purpose, any security-based swap, except 
that this subparagraph shall not limit the authority of 
a registered futures association to examine for compliance 
with, and enforce, its rules on capital adequacy. 
(B) NATIONAL
SECURITIES
ASSOCIATIONS.—Notwith-
standing any other provision of law (including regulations), 
unless otherwise authorized by this title, no national securi-
ties association registered under section 15A of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78o–3) may issue 
a rule, regulation, or order for the oversight or regulation 
of, or otherwise assert jurisdiction over, for any purpose, 
any swap, except that this subparagraph shall not limit 
the authority of a national securities association to examine 
for compliance with, and enforce, its rules on capital ade-
quacy. 
(c) OBJECTION TO COMMISSION REGULATION.— 
(1) FILING OF PETITION FOR REVIEW.— 
(A) IN GENERAL.—If either Commission referred to in 
this section determines that a final rule, regulation, or 
order of the other Commission conflicts with subsection 
(a)(7) or (b), then the complaining Commission may obtain 
review of the final rule, regulation, or order in the United 
States Court of Appeals for the District of Columbia Circuit 
by filing in the court, not later than 60 days after the
H. R. 4173—269 
date of publication of the final rule, regulation, or order, 
a written petition requesting that the rule, regulation, or 
order be set aside. 
(B) EXPEDITED PROCEEDING.—A proceeding described 
in subparagraph (A) shall be expedited by the United States 
Court of Appeals for the District of Columbia Circuit. 
(2) TRANSMITTAL OF PETITION AND RECORD.— 
(A) IN GENERAL.—A copy of a petition described in 
paragraph (1) shall be transmitted not later than 1 business 
day after the date of filing by the complaining Commission 
to the Secretary of the responding Commission. 
(B) DUTY OF RESPONDING COMMISSION.—On receipt of 
the copy of a petition described in paragraph (1), the 
responding Commission shall file with the United States 
Court of Appeals for the District of Columbia Circuit— 
(i) a copy of the rule, regulation, or order under 
review (including any documents referred to therein); 
and 
(ii) any other materials prescribed by the United 
States Court of Appeals for the District of Columbia 
Circuit. 
(3) STANDARD
OF
REVIEW.—The United States Court of 
Appeals for the District of Columbia Circuit shall— 
(A) give deference to the views of neither Commission; 
and 
(B) determine to affirm or set aside a rule, regulation, 
or order of the responding Commission under this sub-
section, based on the determination of the court as to 
whether the rule, regulation, or order is in conflict with 
subsection (a)(7) or (b), as applicable. 
(4) JUDICIAL STAY.—The filing of a petition by the com-
plaining Commission pursuant to paragraph (1) shall operate 
as a stay of the rule, regulation, or order until the date on 
which the determination of the United States Court of Appeals 
for the District of Columbia Circuit is final (including any 
appeal of the determination). 
(d) JOINT RULEMAKING.— 
(1) IN GENERAL.—Notwithstanding any other provision of 
this title and subsections (b) and (c), the Commodity Futures 
Trading Commission and the Securities and Exchange Commis-
sion, in consultation with the Board of Governors, shall further 
define the terms ‘‘swap’’, ‘‘security-based swap’’, ‘‘swap dealer’’, 
‘‘security-based swap dealer’’, ‘‘major swap participant’’, ‘‘major 
security-based swap participant’’, ‘‘eligible contract participant’’, 
and ‘‘security-based swap agreement’’ in section 1a(47)(A)(v) 
of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v)) and 
section 3(a)(78) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(78)). 
(2) AUTHORITY OF THE COMMISSIONS.— 
(A) IN GENERAL.—Notwithstanding any other provision 
of this title, the Commodity Futures Trading Commission 
and the Securities and Exchange Commission, in consulta-
tion with the Board of Governors, shall jointly adopt such 
other rules regarding such definitions as the Commodity 
Futures Trading Commission and the Securities and
H. R. 4173—270 
Exchange Commission determine are necessary and appro-
priate, in the public interest, and for the protection of 
investors. 
(B) TRADE
REPOSITORY
RECORDKEEPING.—Notwith-
standing any other provision of this title, the Commodity 
Futures Trading Commission and the Securities and 
Exchange Commission, in consultation with the Board of 
Governors, shall engage in joint rulemaking to jointly adopt 
a rule or rules governing the books and records that are 
required to be kept and maintained regarding security- 
based swap agreements by persons that are registered as 
swap data repositories under the Commodity Exchange 
Act, including uniform rules that specify the data elements 
that shall be collected and maintained by each repository. 
(C) BOOKS AND RECORDS.—Notwithstanding any other 
provision of this title, the Commodity Futures Trading 
Commission and the Securities and Exchange Commission, 
in consultation with the Board of Governors, shall engage 
in joint rulemaking to jointly adopt a rule or rules gov-
erning books and records regarding security-based swap 
agreements, including daily trading records, for swap 
dealers, major swap participants, security-based swap 
dealers, and security-based swap participants. 
(D) COMPARABLE RULES.—Rules and regulations pre-
scribed jointly under this title by the Commodity Futures 
Trading Commission and the Securities and Exchange 
Commission shall be comparable to the maximum extent 
possible, 
taking 
into 
consideration 
differences 
in 
instruments and in the applicable statutory requirements. 
(E) TRACKING UNCLEARED TRANSACTIONS.—Any rules 
prescribed under subparagraph (A) shall require the 
maintenance of records of all activities relating to security- 
based swap agreement transactions defined under subpara-
graph (A) that are not cleared. 
(F) 
SHARING
OF
INFORMATION.—The 
Commodity 
Futures Trading Commission shall make available to the 
Securities and Exchange Commission information relating 
to security-based swap agreement transactions defined in 
subparagraph (A) that are not cleared. 
(3) FINANCIAL STABILITY OVERSIGHT COUNCIL.—In the event 
that the Commodity Futures Trading Commission and the Secu-
rities and Exchange Commission fail to jointly prescribe rules 
pursuant to paragraph (1) or (2) in a timely manner, at the 
request of either Commission, the Financial Stability Oversight 
Council shall resolve the dispute— 
(A) within a reasonable time after receiving the 
request; 
(B) after consideration of relevant information provided 
by each Commission; and 
(C) by agreeing with 1 of the Commissions regarding 
the entirety of the matter or by determining a compromise 
position. 
(4) JOINT INTERPRETATION.—Any interpretation of, or guid-
ance by either Commission regarding, a provision of this title, 
shall be effective only if issued jointly by the Commodity 
Futures Trading Commission and the Securities and Exchange 
Commission, after consultation with the Board of Governors,
H. R. 4173—271 
if this title requires the Commodity Futures Trading Commis-
sion and the Securities and Exchange Commission to issue 
joint regulations to implement the provision. 
(e) GLOBAL RULEMAKING TIMEFRAME.—Unless otherwise pro-
vided in this title, or an amendment made by this title, the Com-
modity Futures Trading Commission or the Securities and Exchange 
Commission, or both, shall individually, and not jointly, promulgate 
rules and regulations required of each Commission under this title 
or an amendment made by this title not later than 360 days 
after the date of enactment of this Act. 
(f) RULES
AND
REGISTRATION
BEFORE
FINAL
EFFECTIVE 
DATES.—Beginning on the date of enactment of this Act and not-
withstanding the effective date of any provision of this Act, the 
Commodity Futures Trading Commission and the Securities and 
Exchange Commission may, in order to prepare for the effective 
dates of the provisions of this Act— 
(1) promulgate rules, regulations, or orders permitted or 
required by this Act; 
(2) conduct studies and prepare reports and recommenda-
tions required by this Act; 
(3) register persons under the provisions of this Act; and 
(4) exempt persons, agreements, contracts, or transactions 
from provisions of this Act, under the terms contained in this 
Act, 
provided, however, that no action by the Commodity Futures 
Trading Commission or the Securities and Exchange Commission 
described in paragraphs (1) through (4) shall become effective prior 
to the effective date applicable to such action under the provisions 
of this Act. 
SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 15(c)(3) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended 
by adding at the end the following: 
‘‘(C) 
Notwithstanding 
any 
provision 
of 
sections 
2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act 
and the rules and regulations thereunder, and pursuant 
to an exemption granted by the Commission under section 
36 of this title or pursuant to a rule or regulation, cash 
and securities may be held by a broker or dealer registered 
pursuant to subsection (b)(1) and also registered as a 
futures commission merchant pursuant to section 4f(a)(1) 
of the Commodity Exchange Act, in a portfolio margining 
account carried as a futures account subject to section 
4d of the Commodity Exchange Act and the rules and 
regulations thereunder, pursuant to a portfolio margining 
program approved by the Commodity Futures Trading 
Commission, and subject to subchapter IV of chapter 7 
of title 11 of the United States Code and the rules and 
regulations thereunder. The Commission shall consult with 
the Commodity Futures Trading Commission to adopt rules 
to ensure that such transactions and accounts are subject 
to comparable requirements to the extent practicable for 
similar products.’’. 
(b) COMMODITY EXCHANGE ACT.—Section 4d of the Commodity 
Exchange Act (7 U.S.C. 6d) is amended by adding at the end 
the following:
H. R. 4173—272 
‘‘(h) Notwithstanding subsection (a)(2) or the rules and regula-
tions thereunder, and pursuant to an exemption granted by the 
Commission under section 4(c) of this Act or pursuant to a rule 
or regulation, a futures commission merchant that is registered 
pursuant to section 4f(a)(1) of this Act and also registered as a 
broker or dealer pursuant to section 15(b)(1) of the Securities 
Exchange Act of 1934 may, pursuant to a portfolio margining pro-
gram approved by the Securities and Exchange Commission pursu-
ant to section 19(b) of the Securities Exchange Act of 1934, hold 
in a portfolio margining account carried as a securities account 
subject to section 15(c)(3) of the Securities Exchange Act of 1934 
and the rules and regulations thereunder, a contract for the pur-
chase or sale of a commodity for future delivery or an option 
on such a contract, and any money, securities or other property 
received from a customer to margin, guarantee or secure such 
a contract, or accruing to a customer as the result of such a 
contract. The Commission shall consult with the Securities and 
Exchange Commission to adopt rules to ensure that such trans-
actions and accounts are subject to comparable requirements to 
the extent practical for similar products.’’. 
(c) DUTY OF COMMODITY FUTURES TRADING COMMISSION.—Sec-
tion 20 of the Commodity Exchange Act (7 U.S.C. 24) is amended 
by adding at the end the following: 
‘‘(c) The Commission shall exercise its authority to ensure that 
securities held in a portfolio margining account carried as a futures 
account are customer property and the owners of those accounts 
are customers for the purposes of subchapter IV of chapter 7 of 
title 11 of the United States Code.’’. 
SEC. 714. ABUSIVE SWAPS. 
The Commodity Futures Trading Commission or the Securities 
and Exchange Commission, or both, individually may, by rule or 
order— 
(1) collect information as may be necessary concerning 
the markets for any types of— 
(A) swap (as defined in section 1a of the Commodity 
Exchange Act (7 U.S.C. 1a)); or 
(B) security-based swap (as defined in section 1a of 
the Commodity Exchange Act (7 U.S.C. 1a)); and 
(2) issue a report with respect to any types of swaps or 
security-based swaps that the Commodity Futures Trading 
Commission or the Securities and Exchange Commission deter-
mines to be detrimental to— 
(A) the stability of a financial market; or 
(B) participants in a financial market. 
SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVI-
TIES. 
Except as provided in section 4 of the Commodity Exchange 
Act (7 U.S.C. 6), if the Commodity Futures Trading Commission 
or the Securities and Exchange Commission determines that the 
regulation of swaps or security-based swaps markets in a foreign 
country undermines the stability of the United States financial 
system, either Commission, in consultation with the Secretary of 
the Treasury, may prohibit an entity domiciled in the foreign 
country from participating in the United States in any swap or 
security-based swap activities.
H. R. 4173—273 
SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS 
OF SWAPS ENTITIES. 
(a) PROHIBITION
ON FEDERAL ASSISTANCE.—Notwithstanding 
any other provision of law (including regulations), no Federal assist-
ance may be provided to any swaps entity with respect to any 
swap, security-based swap, or other activity of the swaps entity. 
(b) DEFINITIONS.—In this section: 
(1) FEDERAL ASSISTANCE.—The term ‘‘Federal assistance’’ 
means the use of any advances from any Federal Reserve 
credit facility or discount window that is not part of a program 
or facility with broad-based eligibility under section 13(3)(A) 
of the Federal Reserve Act, Federal Deposit Insurance Corpora-
tion insurance or guarantees for the purpose of— 
(A) making any loan to, or purchasing any stock, equity 
interest, or debt obligation of, any swaps entity; 
(B) purchasing the assets of any swaps entity; 
(C) guaranteeing any loan or debt issuance of any 
swaps entity; or 
(D) 
entering 
into 
any 
assistance 
arrangement 
(including tax breaks), loss sharing, or profit sharing with 
any swaps entity. 
(2) SWAPS ENTITY.— 
(A) IN GENERAL.—The term ‘‘swaps entity’’ means any 
swap dealer, security-based swap dealer, major swap 
participant, major security-based swap participant, that 
is registered under— 
(i) the Commodity Exchange Act (7 U.S.C. 1 et 
seq.); or 
(ii) the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.). 
(B) EXCLUSION.—The term ‘‘swaps entity’’ does not 
include any major swap participant or major security-based 
swap participant that is an insured depository institution. 
(c) AFFILIATES
OF INSURED DEPOSITORY INSTITUTIONS.—The 
prohibition on Federal assistance contained in subsection (a) does 
not apply to and shall not prevent an insured depository institution 
from having or establishing an affiliate which is a swaps entity, 
as long as such insured depository institution is part of a bank 
holding company, or savings and loan holding company, that is 
supervised by the Federal Reserve and such swaps entity affiliate 
complies with sections 23A and 23B of the Federal Reserve Act 
and such other requirements as the Commodity Futures Trading 
Commission or the Securities Exchange Commission, as appro-
priate, and the Board of Governors of the Federal Reserve System, 
may determine to be necessary and appropriate. 
(d) ONLY BONA FIDE HEDGING AND TRADITIONAL BANK ACTIVI-
TIES PERMITTED.—The prohibition in subsection (a) shall apply to 
any insured depository institution unless the insured depository 
institution limits its swap or security-based swap activities to: 
(1) Hedging and other similar risk mitigating activities 
directly related to the insured depository institution’s activities. 
(2) Acting as a swaps entity for swaps or security-based 
swaps involving rates or reference assets that are permissible 
for investment by a national bank under the paragraph des-
ignated as ‘‘Seventh.’’ of section 5136 of the Revised Statutes 
of the United States ( 12 U.S.C. 24), other than as described 
in paragraph (3).
H. R. 4173—274 
(3) LIMITATION ON CREDIT DEFAULT SWAPS.—Acting as a 
swaps entity for credit default swaps, including swaps or secu-
rity-based swaps referencing the credit risk of asset-backed 
securities as defined in section 3(a)(77) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(77)) (as amended by 
this Act) shall not be considered a bank permissible activity 
for purposes of subsection (d)(2) unless such swaps or security- 
based swaps are cleared by a derivatives clearing organization 
(as such term is defined in section la of the Commodity 
Exchange Act (7 U.S.C. la)) or a clearing agency (as such 
term is defined in section 3 of the Securities Exchange Act 
(15 U.S.C. 78c)) that is registered, or exempt from registration, 
as a derivatives clearing organization under the Commodity 
Exchange Act or as a clearing agency under the Securities 
Exchange Act, respectively. 
(e) EXISTING SWAPS AND SECURITY-BASED SWAPS.—The prohibi-
tion in subsection (a) shall only apply to swaps or security-based 
swaps entered into by an insured depository institution after the 
end of the transition period described in subsection (f). 
(f) TRANSITION PERIOD.—To the extent an insured depository 
institution qualifies as a ‘‘swaps entity’’ and would be subject to 
the Federal assistance prohibition in subsection (a), the appropriate 
Federal banking agency, after consulting with and considering the 
views of the Commodity Futures Trading Commission or the Securi-
ties Exchange Commission, as appropriate, shall permit the insured 
depository institution up to 24 months to divest the swaps entity 
or cease the activities that require registration as a swaps entity. 
In establishing the appropriate transition period to effect such 
divestiture or cessation of activities, which may include making 
the swaps entity an affiliate of the insured depository institution, 
the appropriate Federal banking agency shall take into account 
and make written findings regarding the potential impact of such 
divestiture or cessation of activities on the insured depository 
institution’s (1) mortgage lending, (2) small business lending, (3) 
job creation, and (4) capital formation versus the potential negative 
impact on insured depositors and the Deposit Insurance Fund of 
the Federal Deposit Insurance Corporation. The appropriate Federal 
banking agency may consider such other factors as may be appro-
priate. The appropriate Federal banking agency may place such 
conditions on the insured depository institution’s divestiture or 
ceasing of activities of the swaps entity as it deems necessary 
and appropriate. The transition period under this subsection may 
be extended by the appropriate Federal banking agency, after con-
sultation with the Commodity Futures Trading Commission and 
the Securities and Exchange Commission, for a period of up to 
1 additional year. 
(g) EXCLUDED ENTITIES.—For purposes of this section, the term 
‘‘swaps entity’’ shall not include any insured depository institution 
under the Federal Deposit Insurance Act or a covered financial 
company under title II which is in a conservatorship, receivership, 
or a bridge bank operated by the Federal Deposit Insurance Cor-
poration. 
(h) EFFECTIVE DATE.—The prohibition in subsection (a) shall 
be effective 2 years following the date on which this Act is effective. 
(i) LIQUIDATION REQUIRED.— 
(1) IN GENERAL.—
H. R. 4173—275 
(A) FDIC INSURED INSTITUTIONS.—All swaps entities 
that are FDIC insured institutions that are put into 
receivership or declared insolvent as a result of swap or 
security-based swap activity of the swaps entities shall 
be subject to the termination or transfer of that swap 
or security-based swap activity in accordance with 
applicable law prescribing the treatment of those contracts. 
No taxpayer funds shall be used to prevent the receivership 
of any swap entity resulting from swap or security-based 
swap activity of the swaps entity. 
(B) INSTITUTIONS THAT POSE A SYSTEMIC RISK AND ARE 
SUBJECT TO HEIGHTENED PRUDENTIAL SUPERVISION AS REGU-
LATED UNDER SECTION 113.—All swaps entities that are 
institutions that pose a systemic risk and are subject to 
heightened prudential supervision as regulated under sec-
tion 113, that are put into receivership or declared insolvent 
as a result of swap or security-based swap activity of the 
swaps entities shall be subject to the termination or 
transfer of that swap or security-based swap activity in 
accordance with applicable law prescribing the treatment 
of those contracts. No taxpayer funds shall be used to 
prevent the receivership of any swap entity resulting from 
swap or security-based swap activity of the swaps entity. 
(C) NON-FDIC INSURED, NON-SYSTEMICALLY
SIGNIFI-
CANT INSTITUTIONS NOT SUBJECT TO HEIGHTENED PRUDEN-
TIAL SUPERVISION AS REGULATED UNDER SECTION 113.—No 
taxpayer resources shall be used for the orderly liquidation 
of any swaps entities that are non-FDIC insured, non- 
systemically significant institutions not subject to height-
ened prudential supervision as regulated under section 113. 
(2) RECOVERY OF FUNDS.—All funds expended on the termi-
nation or transfer of the swap or security-based swap activity 
of the swaps entity shall be recovered in accordance with 
applicable law from the disposition of assets of such swap 
entity or through assessments, including on the financial sector 
as provided under applicable law. 
(3) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no 
losses from the exercise of any authority under this title. 
(j) PROHIBITION
ON UNREGULATED COMBINATION
OF SWAPS 
ENTITIES AND BANKING.—At no time following adoption of the rules 
in subsection (k) may a bank or bank holding company be permitted 
to be or become a swap entity unless it conducts its swap or 
security-based swap activity in compliance with such minimum 
standards set by its prudential regulator as are reasonably cal-
culated to permit the swaps entity to conduct its swap or security- 
based swap activities in a safe and sound manner and mitigate 
systemic risk. 
(k) RULES.—In prescribing rules, the prudential regulator for 
a swaps entity shall consider the following factors: 
(1) The expertise and managerial strength of the swaps 
entity, including systems for effective oversight. 
(2) The financial strength of the swaps entity. 
(3) Systems for identifying, measuring and controlling risks 
arising from the swaps entity’s operations. 
(4) Systems for identifying, measuring and controlling the 
swaps entity’s participation in existing markets.
H. R. 4173—276 
(5) Systems for controlling the swaps entity’s participation 
or entry into in new markets and products. 
(l) AUTHORITY
OF
THE
FINANCIAL
STABILITY
OVERSIGHT 
COUNCIL.—The Financial Stability Oversight Council may deter-
mine that, when other provisions established by this Act are insuffi-
cient to effectively mitigate systemic risk and protect taxpayers, 
that swaps entities may no longer access Federal assistance with 
respect to any swap, security-based swap, or other activity of the 
swaps entity. Any such determination by the Financial Stability 
Oversight Council of a prohibition of federal assistance shall be 
made on an institution-by-institution basis, and shall require the 
vote of not fewer than two-thirds of the members of the Financial 
Stability Oversight Council, which must include the vote by the 
Chairman of the Council, the Chairman of the Board of Governors 
of the Federal Reserve System, and the Chairperson of the Federal 
Deposit Insurance Corporation. Notice and hearing requirements 
for such determinations shall be consistent with the standards 
provided in title I. 
(m) BAN
ON
PROPRIETARY
TRADING
IN
DERIVATIVES.—An 
insured depository institution shall comply with the prohibition 
on proprietary trading in derivatives as required by section 619 
of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act. 
SEC. 717. NEW PRODUCT APPROVAL CFTC—SEC PROCESS. 
(a) AMENDMENTS TO THE COMMODITY EXCHANGE ACT.—Section 
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) 
is amended— 
(1) in clause (i) by striking ‘‘This’’ and inserting ‘‘(I) Except 
as provided in subclause (II), this’’; and 
(2) by adding at the end of clause (i) the following: 
‘‘(II) This Act shall apply to and the Commis-
sion shall have jurisdiction with respect to 
accounts, agreements, and transactions involving, 
and may permit the listing for trading pursuant 
to section 5c(c) of, a put, call, or other option 
on 1 or more securities (as defined in section 2(a)(1) 
of the Securities Act of 1933 or section 3(a)(10) 
of the Securities Exchange Act of 1934 on the 
date of enactment of the Futures Trading Act of 
1982), including any group or index of such securi-
ties, or any interest therein or based on the value 
thereof, that is exempted by the Securities and 
Exchange Commission pursuant to section 36(a)(1) 
of the Securities Exchange Act of 1934 with the 
condition that the Commission exercise concurrent 
jurisdiction over such put, call, or other option; 
provided, however, that nothing in this paragraph 
shall be construed to affect the jurisdiction and 
authority of the Securities and Exchange Commis-
sion over such put, call, or other option.’’. 
(b) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.— 
The Securities Exchange Act of 1934 is amended by adding the 
following section after section 3A (15 U.S.C. 78c–1): 
‘‘SEC. 3B. SECURITIES-RELATED DERIVATIVES. 
‘‘(a) Any agreement, contract, or transaction (or class thereof) 
that is exempted by the Commodity Futures Trading Commission
H. R. 4173—277 
pursuant to section 4(c)(1) of the Commodity Exchange Act (7 
U.S.C. 6(c)(1)) with the condition that the Commission exercise 
concurrent jurisdiction over such agreement, contract, or transaction 
(or class thereof) shall be deemed a security for purposes of the 
securities laws. 
‘‘(b) With respect to any agreement, contract, or transaction 
(or class thereof) that is exempted by the Commodity Futures 
Trading Commission pursuant to section 4(c)(1) of the Commodity 
Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commis-
sion exercise concurrent jurisdiction over such agreement, contract, 
or transaction (or class thereof), references in the securities laws 
to the ‘purchase’ or ‘sale’ of a security shall be deemed to include 
the execution, termination (prior to its scheduled maturity date), 
assignment, exchange, or similar transfer or conveyance of, or extin-
guishing of rights or obligations under such agreement, contract, 
or transaction, as the context may require.’’. 
(c) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) 
is amended by adding at the end the following: 
‘‘(10) Notwithstanding paragraph (2), the time period 
within which the Commission is required by order to approve 
a proposed rule change or institute proceedings to determine 
whether the proposed rule change should be disapproved is 
stayed pending a determination by the Commission upon the 
request of the Commodity Futures Trading Commission or its 
Chairman that the Commission issue a determination as to 
whether a product that is the subject of such proposed rule 
change is a security pursuant to section 718 of the Wall Street 
Transparency and Accountability Act of 2010.’’. 
(d) AMENDMENT
TO
COMMODITY
EXCHANGE
ACT.—Section 
5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(1)) is 
amended— 
(1) by striking ‘‘Subject to paragraph (2)’’ and inserting 
the following: 
‘‘(A) ELECTION.—Subject to paragraph (2)’’; and 
(2) by adding at the end the following: 
‘‘(B) CERTIFICATION.—The certification of a product 
pursuant to this paragraph shall be stayed pending a deter-
mination by the Commission upon the request of the Securi-
ties and Exchange Commission or its Chairman that the 
Commission issue a determination as to whether the 
product that is the subject of such certification is a contract 
of sale of a commodity for future delivery, an option on 
such a contract, or an option on a commodity pursuant 
to section 718 of the Wall Street Transparency and Account-
ability Act of 2010.’’. 
SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS. 
(a) PROCESS FOR DETERMINING THE STATUS OF A NOVEL DERIVA-
TIVE PRODUCT.— 
(1) NOTICE.— 
(A) IN GENERAL.—Any person filing a proposal to list 
or trade a novel derivative product that may have elements 
of both securities and contracts of sale of a commodity 
for future delivery (or options on such contracts or options 
on commodities) may concurrently provide notice and fur-
nish a copy of such filing with the Securities and Exchange
H. R. 4173—278 
Commission and the Commodity Futures Trading Commis-
sion. Any such notice shall state that notice has been 
made with both Commissions. 
(B) NOTIFICATION.—If no concurrent notice is made 
pursuant to subparagraph (A), within 5 business days after 
determining that a proposal that seeks to list or trade 
a novel derivative product may have elements of both secu-
rities and contracts of sale of a commodity for future 
delivery (or options on such contracts or options on 
commodities), the Securities and Exchange Commission or 
the Commodity Futures Trading Commission, as applicable, 
shall notify the other Commission and provide a copy of 
such filing to the other Commission. 
(2) REQUEST FOR DETERMINATION.— 
(A) IN GENERAL.—No later than 21 days after receipt 
of a notice under paragraph (1), or upon its own initiative 
if no such notice is received, the Commodity Futures 
Trading Commission may request that the Securities and 
Exchange Commission issue a determination as to whether 
a product is a security, as defined in section 3(a)(10) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)). 
(B) REQUEST.—No later than 21 days after receipt of 
a notice under paragraph (1), or upon its own initiative 
if no such notice is received, the Securities and Exchange 
Commission may request that the Commodity Futures 
Trading Commission issue a determination as to whether 
a product is a contract of sale of a commodity for future 
delivery, an option on such a contract, or an option on 
a commodity subject to the Commodity Futures Trading 
Commission’s exclusive jurisdiction under section 2(a)(1)(A) 
of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)). 
(C) REQUIREMENT RELATING TO REQUEST.—A request 
under subparagraph (A) or (B) shall be made by submitting 
such request, in writing, to the Securities and Exchange 
Commission or the Commodity Futures Trading Commis-
sion, as applicable. 
(D) EFFECT.—Nothing in this paragraph shall be con-
strued to prevent— 
(i) the Commodity Futures Trading Commission 
from requesting that the Securities and Exchange 
Commission grant an exemption pursuant to section 
36(a)(1) of the Securities Exchange Act of 1934 (15 
U.S.C. 78mm(a)(1)) with respect to a product that is 
the subject of a filing under paragraph (1); or 
(ii) the Securities and Exchange Commission from 
requesting that the Commodity Futures Trading 
Commission grant an exemption pursuant to section 
4(c)(1) of the Commodity Exchange Act (7 U.S.C. 
6(c)(1)) with respect to a product that is the subject 
of a filing under paragraph (1), 
Provided, however, that nothing in this subparagraph shall 
be construed to require the Commodity Futures Trading 
Commission or the Securities and Exchange Commission 
to issue an exemption requested pursuant to this subpara-
graph; provided further, That an order granting or denying 
an exemption described in this subparagraph and issued