I 
111TH CONGRESS 
1ST SESSION H. R. 3996 
To improve financial stability, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 3, 2009 
Mr. FRANK of Massachusetts introduced the following bill; which was referred 
to the Committee on Financial Services, and in addition to the Commit-
tees on the Judiciary, Agriculture, and Ways and Means, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To improve financial stability, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
TITLE I—FINANCIAL STABILITY 
IMPROVEMENT 
SEC. 1000. SHORT TITLE; DEFINITIONS; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This title may be cited as the 
‘‘Financial Stability Improvement Act of 2009’’. 
(b) DEFINITIONS.—For purposes of this Act, the fol-
lowing definitions shall apply: 
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(1) The term ‘‘Board’’ means the Board of 
Governors of the Federal Reserve System. 
(2) The term ‘‘Council’’ means the Financial 
Services Oversight Council established under section 
1001 of this Act. 
(3) The term ‘‘Federal financial regulatory 
agency’’ means any agency that has a voting mem-
ber of the Council as set forth in section 1001(b)(1). 
(4) The term ‘‘financial company’’ means a 
company or other entity— 
(A) that is— 
(i) incorporated or organized under 
the laws of the United States or any State, 
territory, or possession of the United 
States, the District of Columbia, Common-
wealth of Puerto Rico, Commonwealth of 
Northern Mariana Islands, Guam, Amer-
ican Samoa, or the United States Virgin 
Islands; 
(ii) a Federal or State branch or 
agency of a foreign bank as such terms are 
defined in the International Banking Act 
of 1978 (12 U.S.C. 3101(b)); or 
(iii) a United States affiliate or other 
United States operating entity of a com-
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pany that is incorporated or organized in 
a country other than the United States; 
and 
(B) that is, in whole or in part, directly or 
indirectly, engaged in financial activities. 
(5) The term ‘‘identified financial holding com-
pany’’ means a financial company that the Council 
has identified for heightened prudential standards 
under subtitle B of this Act, unless such financial 
company is required to establish an intermediate 
holding company under section 6 of the Bank Hold-
ing Company Act, in which case the ‘‘identified fi-
nancial holding company’’ is such section 6 holding 
company through which the financial company is re-
quired to conduct its financial activities. 
(6) The term ‘‘primary financial regulatory 
agency’’ means the following: 
(A) The Comptroller of the Currency, with 
respect to any national bank, any Federal 
branch or Federal agency of a foreign bank, 
and, after the date on which the functions of 
the Office of Thrift Supervision and the Direc-
tor of the Office of Thrift Supervision are 
transferred under subtitle C, a Federal savings 
association. 
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(B) The Board, with respect to— 
(i) a State member bank; 
(ii) any bank holding company and 
any subsidiary of such company (as such 
terms are defined in the Bank Holding 
Company Act), other than a subsidiary 
that is described in any other subpara-
graph of this paragraph to the extent that 
the subsidiary is engaged in an activity de-
scribed in such subparagraph; 
(iii) any identified financial holding 
company and any subsidiary (as such term 
is defined in the Bank Holding Company 
Act) of such company, other than a sub-
sidiary that is described in any other sub-
paragraph of this paragraph to the extent 
that the subsidiary is engaged in an activ-
ity described in such subparagraph; 
(iv) after the date on which the func-
tions of the Office of Thrift Supervision 
are transferred under subtitle C, any sav-
ings and loan holding company (as defined 
in section 10(a)(1)(D) of the Home Own-
ers’ Loan Act) and any subsidiary (as such 
term is defined in the Bank Holding Com-
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pany Act) of a such company, other than 
a subsidiary that is described in any other 
subparagraph of this paragraph, to the ex-
tent that the subsidiary is engaged in an 
activity described in such subparagraph; 
(v) any organization organized and 
operated under section 25 or 25A of the 
Federal Reserve Act (12 U.S.C. 601 et 
seq. or 611 et seq.); and 
(vi) any foreign bank or company that 
is treated as a bank holding company 
under subsection (a) of section 8 of the 
International Banking Act of 1978 applies 
and any subsidiary (other than a bank or 
other subsidiary that is described in any 
other subparagraph of this paragraph) of 
any such foreign bank or company. 
(C) The Federal Deposit Insurance Cor-
poration, with respect to a State nonmember 
bank, any insured State branch of a foreign 
bank (as such terms are defined in section 3 of 
the Federal Deposit Insurance Act), and, after 
the date on which the functions of the Office of 
Thrift Supervision are transferred under sub-
title C, any State savings association. 
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(D) The National Credit Union Adminis-
tration, with respect to any insured credit union 
under the Federal Credit Union Act (12 U.S.C. 
1751 et seq.). 
(E) The Securities and Exchange Commis-
sion, with respect to— 
(i) any broker or dealer registered 
with the Securities and Exchange Commis-
sion under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.); 
(ii) any investment company reg-
istered with the Securities and Exchange 
Commission under the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–1 et 
seq.); 
(iii) any investment adviser registered 
with the Securities and Exchange Commis-
sion under the Investment Advisers Act of 
1940 (15 U.S.C. 80b–1 et seq.) with re-
spect to the investment advisory activities 
of such company and activities incidental 
to such advisory activities; and 
(iv) any clearing agency registered 
with the Securities and Exchange Commis-
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(I) The Office of Thrift Supervision, with 
respect to any Federal savings association, 
State savings association, or savings and loan 
holding company, until the date on which the 
functions of the Office of Thrift Supervision are 
transferred under subtitle C. 
(7) TERMS DEFINED IN OTHER LAWS.— 
(A) AFFILIATE.—The term ‘‘affiliate’’ has 
the meaning given such term in section 2(k) of 
the Bank Holding Company Act of 1956. 
(B) STATE MEMBER BANK, STATE NON-
MEMBER
BANK.—The terms ‘‘State member 
bank’’ and ‘‘State nonmember bank’’ have the 
same meanings as in subsections (d)(2) and 
(e)(2), respectively, of section 3 of the Federal 
Deposit Insurance Act. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1000. Short title; definitions; table of contents. 
Subtitle A—The Financial Services Oversight Council 
Sec. 1001. Financial Services Oversight Council established. 
Sec. 1002. Resolution of disputes among Federal financial regulatory agencies. 
Sec. 1003. Technical and professional advisory committees. 
Sec. 1004. Financial Services Oversight Council meetings and council govern-
ance. 
Sec. 1005. Council staff and funding. 
Sec. 1006. Reports to the Congress. 
Sec. 1007. Applicability of certain Federal laws. 
Subtitle B—Prudential Regulation of Companies and Activities for Financial 
Stability Purposes 
Sec. 1101. Council and Board authority to obtain information. 
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Sec. 1102. Council prudential regulation recommendations to primary regu-
lators. 
Sec. 1103. Identification of financial companies for heightened prudential 
standards for financial stability purposes. 
Sec. 1104. Regulation of identified financial holding companies for financial 
stability purposes. 
Sec. 1105. Authority to file involuntary petition for bankruptcy. 
Sec. 1106. Identification of activities or practices for heightened prudential 
standards and safeguards for financial stability purposes. 
Sec. 1107. Regulation of identified activities for financial stability purposes. 
Sec. 1108. Effect of rescission of identification. 
Sec. 1109. Emergency financial stabilization. 
Sec. 1110. Examinations and enforcement actions for insurance and resolutions 
purposes. 
Sec. 1111. Rule of construction. 
Subtitle C—Improvements to Supervision and Regulation of Federal 
Depository Institutions 
Sec. 1201. Definitions. 
Sec. 1202. Amendments to the Home Owners’ Loan Act relating to transfer of 
functions. 
Sec. 1203. Amendments to the revised statutes. 
Sec. 1204. Power and duties transferred. 
Sec. 1205. Transfer date. 
Sec. 1206. Office of Thrift Supervision abolished. 
Sec. 1207. Savings provisions. 
Sec. 1208. Regulations and orders. 
Sec. 1209. Coordination of transition activities. 
Sec. 1210. Interim responsibilities of office of the comptroller of the currency 
and office of thrift supervision. 
Sec. 1211. Employees transferred. 
Sec. 1212. Property transferred. 
Sec. 1213. Funds transferred. 
Sec. 1214. Disposition of affairs. 
Sec. 1215. Continuation of services. 
Sec. 1216. Treatment of savings and loan holding companies. 
Sec. 1217. Practices of certain mutual thrift holding companies preserved. 
Sec. 1218. Composition of board of directors of the Federal Deposit Insurance 
Corporation. 
Sec. 1219. Amendments to section 3. 
Sec. 1220. Amendments to section 7. 
Sec. 1221. Amendments to section 8. 
Sec. 1222. Amendments to section 11. 
Sec. 1223. Amendments to section 13. 
Sec. 1224. Amendments to section 18. 
Sec. 1225. Amendments to section 28. 
Sec. 1226. Amendments to the Alternative Mortgage Transaction Parity Act of 
1982. 
Sec. 1227. Amendments to the Bank Holding Company Act of 1956. 
Sec. 1228. Amendments to the Bank Protection Act of 1968. 
Sec. 1229. Amendments to the Bank Service Company Act. 
Sec. 1230. Amendments to the Community Reinvestment Act of 1977. 
Sec. 1231. Amendments to the Depository Institution Management Interlocks 
Act. 
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Sec. 1232. Amendments to the Emergency Homeowner’s Relief Act. 
Sec. 1233. Amendments to the Equal Credit Opportunity Act. 
Sec. 1234. Amendments to the Federal Credit Union Act. 
Sec. 1235. Amendments to the Federal Financial Institutions Examination 
Council Act of 1978. 
Sec. 1236. Amendments to the Federal Home Loan Bank Act. 
Sec. 1237. Amendments to the Federal Reserve Act. 
Sec. 1238. Amendments to the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989. 
Sec. 1239. Amendments to the Housing Act of 1948. 
Sec. 1240. Amendments to the Housing and Community Development Act of 
1992. 
Sec. 1241. Amendments to the Housing and Urban-Rural Recovery Act of 
1983. 
Sec. 1242. Amendments to the National Housing Act. 
Sec. 1243. Amendments to the Right to Financial Privacy Act of 1978. 
Sec. 1244. Amendments to the Balanced Budget and Emergency Deficit Con-
trol Act of 1985. 
Sec. 1245. Amendments to the Crime Control Act of 1990. 
Sec. 1246. Amendment to the Flood Disaster Protection Act of 1973. 
Sec. 1247. Amendments to the Investment Company Act of 1940. 
Sec. 1248. Amendments to the Neighborhood Reinvestment Corporation Act. 
Sec. 1249. Amendments to the Securities Exchange Act of 1934. 
Sec. 1250. Amendments to title 18, United States Code. 
Sec. 1251. Amendments to title 31, United States Code. 
Subtitle D—Further Improvements to the Regulation of Bank Holding 
Companies and Depository Institutions 
Sec. 1301. Treatment of credit card banks, industrial loan companies, and cer-
tain other companies under the Bank Holding Company Act. 
Sec. 1302. Registration of certain companies as bank holding companies. 
Sec. 1303. Reports and examinations of bank holding companies; regulation of 
functionally regulated subsidiaries. 
Sec. 1304. Requirements for financial holding companies to remain well capital-
ized and well managed. 
Sec. 1305. Standards for interstate acquisitions. 
Sec. 1306. Enhancing existing restrictions on bank transactions with affiliates. 
Sec. 1307. Eliminating exceptions for transactions with financial subsidiaries. 
Sec. 1308. Lending limits applicable to credit exposure on derivative trans-
actions, repurchase agreements, reverse repurchase agree-
ments, and securities lending and borrowing transactions. 
Sec. 1309. Application of national bank lending limits to insured State banks. 
Sec. 1310. Restriction on conversions of troubled banks. 
Sec. 1311. Lending limits to insiders. 
Sec. 1312. Limitations on purchases of assets from insiders. 
Sec. 1313. Rules regarding capital levels of bank holding companies. 
Sec. 1314. Enhancements to factors to be considered in certain acquisitions. 
Sec. 1315 Elimination of elective investment bank holding company framework. 
Sec. 1316. Examination fees for large bank holding companies. 
Subtitle E—Payment, Clearing, and Settlement Supervision 
Sec. 1401. Short title. 
Sec. 1402. Findings and purposes. 
Sec. 1403. Definitions. 
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Sec. 1404. Identification of systemically important financial market utilities 
and payment, clearing, and settlement activities. 
Sec. 1405. Standards for systemically important financial market utilities and 
payment, clearing, or settlement activities. 
Sec. 1406. Operations and changes to rules, procedures, or operations of identi-
fied financial market utilities. 
Sec. 1407. Examination of and enforcement actions against identified financial 
market utilities. 
Sec. 1407. Examination of and enforcement actions against identified financial 
market utilities. 
Sec. 1408. Examination of and enforcement actions against financial institu-
tions subject to standards for identified activities. 
Sec. 1409. Provision of information, reports, or records. 
Sec. 1410. Rulemaking. 
Sec. 1411. Other authority. 
Sec. 1412. Effective date. 
Subtitle F—Improvements to the Asset-backed Securitization Process 
Sec. 1501. Short title. 
Sec. 1502. Credit risk retention. 
Sec. 1503. Periodic and other reporting under the Securities Exchange Act of 
1934 for asset-backed securities. 
Sec. 1504. Representations and warranties in asset-backed offerings. 
Sec. 1505. Exempted transactions under the Securities Act of 1933. 
Subtitle G—Enhanced Resolution Authority 
Sec. 1601. Short title. 
Sec. 1602. Definitions. 
Sec. 1603. Systemic risk determination. 
Sec. 1604. Resolution; stabilization. 
Sec. 1605. Judicial review. 
Sec. 1606. Directors not liable for acquiescing in appointment of receiver or 
qualified receiver. 
Sec. 1607. Termination and exclusion of other actions. 
Sec. 1608. Rulemaking. 
Sec. 1609 Powers and duties of corporation. 
Sec. 1610. Clarification of prohibition regarding concealment of assets from 
qualified receiver, receiver, or liquidating agent. 
Sec. 1611. Miscellaneous provisions. 
Subtitle H—Additional Improvements for Financial Crisis Management 
Sec. 1701. Additional improvements for financial crisis management. 
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Subtitle A—The Financial Services 
Oversight Council 
SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ES-
TABLISHED. 
(a) ESTABLISHMENT.—Immediately upon enactment 
of this title, there is established a Financial Services Over-
sight Council. 
(b) MEMBERSHIP.—The Council shall consist of the 
following: 
(1) VOTING MEMBERS.—Voting members, who 
shall each have one vote on the Council, as follows: 
(A) The Secretary of the Treasury, who 
shall serve as the Chairman of the Council. 
(B) The Chairman of the Board of Gov-
ernors of the Federal Reserve System. 
(C) The Comptroller of the Currency. 
(D) The Director of the Office of Thrift 
Supervision, until the functions of the Director 
of the Office of Thrift Supervision are trans-
ferred to pursuant to subtitle C of this title. 
(E) The Chairman of the Securities and 
Exchange Commission. 
(F) The Chairman of the Commodity Fu-
tures Trading Commission. 
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(G) The Chairperson of the Federal De-
posit Insurance Corporation. 
(H) The Director of the Federal Housing 
Finance Agency. 
(I) The Chairman of the National Credit 
Union Administration. 
(2) NONVOTING
MEMBERS.—Nonvoting mem-
bers, who shall serve in an advisory capacity: 
(A) A State insurance commissioner, to be 
designated by a selection process determined by 
the State insurance commissioners, provided 
that the term for which a State insurance com-
missioner may serve shall last no more than the 
2-year period beginning on the date that the 
commissioner is selected. 
(B) A State banking supervisor, to be des-
ignated by a selection process determined by 
the State bank supervisors, provided that the 
term for which a State banking supervisor may 
serve shall last no more than the 2-year period 
beginning on the date that the supervisor is se-
lected. 
(c) DUTIES.—The Council shall have the following 
duties. 
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(1) To advise the Congress on financial regula-
tion and make recommendations that will enhance 
the integrity, efficiency, orderliness, competitiveness, 
and stability of the United States financial markets. 
(2) To monitor the financial services market-
place to identify potential threats to the stability of 
the United States financial system. 
(3) To identify financial companies and finan-
cial activities that should be subject to heightened 
prudential standards in order to promote financial 
stability and mitigate systemic risk in accordance 
with sections subtitles B and E of this title. 
(4) To issue formal recommendations that a 
Council member agency adopt heightened prudential 
standards for firms it regulates to mitigate systemic 
risk in accordance with subtitle B of this title. 
(5) To facilitate information sharing and co-
ordination among the members of the Council re-
garding 
financial 
services 
policy 
development, 
rulemakings, examinations, reporting requirements, 
and enforcement actions. 
(6) To provide a forum for discussion and anal-
ysis of emerging market developments and financial 
regulatory issues among its members. 
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(7) At the request of an agency that is a Coun-
cil member, to resolve a jurisdictional or regulatory 
dispute between that agency and another agency 
that is a Council member in accordance with section 
1002 of this subtitle. 
SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FI-
NANCIAL REGULATORY AGENCIES. 
(a) REQUEST
FOR
DISPUTE
RESOLUTION.—The 
Council shall resolve a dispute among 2 or more Federal 
financial regulatory agencies if— 
(1) a Federal financial regulatory agency has a 
dispute with another Federal financial regulatory 
agency about the agencies’ respective jurisdiction 
over a particular financial company or financial ac-
tivity or product (excluding matters for which an-
other dispute mechanism specifically has been pro-
vided under Federal law); 
(2) the disputing agencies cannot, after a dem-
onstrated good faith effort, resolve the dispute 
among themselves; and 
(3) any of the Federal financial regulatory 
agencies involved in the dispute— 
(A) provides all other disputants prior no-
tice of its intent to request dispute resolution 
by the Council; and 
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(B) requests in writing, no earlier than 14 
days after providing the notice described in 
paragraph (A), that the Council resolve the dis-
pute. 
(b) COUNCIL DECISION.—The Council shall decide 
the dispute— 
(1) within a reasonable time after receiving the 
dispute resolution request; 
(2) after consideration of relevant information 
provided by each party to the dispute; and 
(3) by agreeing with 1 of the disputants regard-
ing the entirety of the matter or by determining a 
compromise position. 
(c) FORM AND BINDING EFFECT.—A Council deci-
sion under this section shall be in writing and include an 
explanation and shall be binding on all Federal financial 
regulatory agencies that are parties to the dispute. 
SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY 
COMMITTEES. 
The Council is authorized to appoint— 
(1) subsidiary working groups composed of 
Council members and their staff, Council staff, or a 
combination; and 
(2) such temporary special advisory, technical, 
or professional committees as may be useful in car-
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rying out its functions, which may be composed of 
Council members and their staff, other persons, or 
a combination. 
SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL 
MEETINGS AND COUNCIL GOVERNANCE. 
(a) MEETINGS.—The Council shall meet as fre-
quently as the Chairman deems necessary, but not less 
than quarterly. 
(b) VOTING.—Unless otherwise provided, the Council 
shall make all decisions the Council is required or author-
ized to make by a majority of the total voting membership 
of the Council under section 1001(b)(1). 
SEC. 1005. COUNCIL STAFF AND FUNDING. 
(a) DEPARTMENT
OF
THE TREASURY.—The Sec-
retary of the Treasury shall— 
(1) detail permanent staff from the Department 
of the Treasury to provide the Council (and any 
temporary special advisory, technical, or professional 
committees appointed by the Council) with profes-
sional and expert support; and 
(2) provide such other services and facilities 
necessary for the performance of the Council’s func-
tions and fulfillment of the duties and mission of the 
Council. 
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(b) OTHER DEPARTMENTS AND AGENCIES.—In addi-
tion to the assistance prescribed in subsection (a), depart-
ments and agencies of the United States may, with the 
approval of the Secretary of the Treasury— 
(1) detail department or agency staff on a tem-
porary basis to provide additional support to the 
Council (and any special advisory, technical, or pro-
fessional committees appointed by the Council); and 
(2) provide such services, and facilities as the 
other departments or agencies may determine advis-
able. 
(c) STAFF STATUS; COUNCIL FUNDING.— 
(1) STATUS.—Staff detailed to the Council by 
the Secretary of the Treasury and other United 
States departments or agencies shall— 
(A) report to and be subject to oversight 
by the Council during their assignment to the 
Council; and 
(B) be compensated by the department of 
agency from which the stall was detailed. 
(2) FUNDING.—The administrative expense of 
the Council shall be paid by the departments and 
agencies represented by voting members of the 
Council on an equal basis. 
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SEC. 1006. REPORTS TO THE CONGRESS. 
(a) IN GENERAL.—The Council shall submit an an-
nual report to the Committee on Financial Services of the 
House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate that— 
(1) describes significant financial market devel-
opments and potential emerging threats to the sta-
bility of the financial system; 
(2) recommends actions that will improve finan-
cial stability; 
(3) describes any company or activity identifica-
tions made under subtitles B and E; and 
(4) describes any dispute resolutions under-
taken under section 1002 and the result of such res-
olutions. 
(b) CONFIDENTIALITY.—The Committees of the Con-
gress receiving the Council’s report shall maintain the con-
fidentiality of the identity of companies described in ac-
cordance with subsection (a)(3) and the information relat-
ing to dispute resolutions described in accordance with 
subsection (a)(4). 
SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS. 
(a) The Federal Advisory Committee Act shall not 
apply to the Financial Services Oversight Council, or any 
special advisory, technical, or professional committees ap-
pointed by the Council (except that, if an advisory, tech-
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nical, or professional committee has one or more members 
who are not employees of or affiliated with the United 
States Government, the Council shall publish a list of the 
names of the members of such committee). 
(b) The Council shall not be deemed an ‘‘agency’’ for 
purposes of any State or Federal law. 
Subtitle B—Prudential Regulation 
of Companies and Activities for 
Financial Stability Purposes 
SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN 
INFORMATION. 
(a) IN GENERAL.—The Council and the Board are 
authorized to receive, and may request the production of, 
any data or information from members of the Council, as 
necessary— 
(1) to monitor the financial services market-
place to identify potential threats to the stability of 
the United States financial system; or 
(2) to otherwise carry out any of the provisions 
of this title, including to ascertain a primary finan-
cial regulatory agency’s implementation of rec-
ommended prudential standards under this subtitle. 
(b) SUBMISSION BY COUNCIL MEMBERS.—Notwith-
standing any provision of law, any voting or nonvoting 
member of the Council is authorized to provide informa-
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tion to the Council, and the members of the Council shall 
maintain the confidentiality of such information. 
(c) FINANCIAL DATA COLLECTION.— 
(1) IN GENERAL.—The Council or the Board 
may require the submission of periodic and other re-
ports from any financial company solely for the pur-
pose of assessing the extent to which a financial ac-
tivity or financial market in which the financial com-
pany participates, or the company itself, poses a 
threat to financial stability. 
(2) MITIGATION OF REPORT BURDEN.—Before 
requiring the submission of reports from financial 
companies that are regulated by the Federal finan-
cial regulatory agencies, the Council or the Board 
shall coordinate with such agencies and shall, when-
ever possible, rely on information already being col-
lected by such agencies. 
(d) CONSULTATION WITH AGENCIES
AND ENTI-
TIES.—The Council or the Board, as appropriate, may 
consult with Federal and State agencies and other entities 
to carry out any of the provisions of this subtitle. 
SEC. 
1102. 
COUNCIL 
PRUDENTIAL 
REGULATION 
REC-
OMMENDATIONS TO PRIMARY REGULATORS. 
(a) IN GENERAL.—The Council is authorized to issue 
formal recommendations, publicly or privately, that a Fed-
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eral financial regulatory agency adopt heightened pruden-
tial standards for firms it regulates to mitigate systemic 
risk. 
(b) AGENCY AUTHORITY TO IMPLEMENT STAND-
ARDS.—A Federal financial regulatory agency specifically 
is authorized to impose, require reports regarding, exam-
ine for compliance with, and enforce heightened prudential 
standards and safeguards for the firms it regulates to 
mitigate systemic risk. This authority is in addition to and 
does not limit any other authority of the Federal financial 
regulatory agencies. Compliance by an entity with actions 
taken by a Federal financial regulatory agency under this 
section shall be enforceable in accordance with the statutes 
governing the respective Federal financial regulatory 
agency’s jurisdiction over the entity as if the agency action 
were taken under those statutes. 
(c) AGENCY NOTICE TO COUNCIL.—A Federal finan-
cial regulatory agency shall, within 60 days of receiving 
a Council recommendation under this section, notify the 
Council in writing regarding— 
(1) the actions the Federal financial regulatory 
agency has taken in response to the Council’s rec-
ommendation; or 
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(2) the reason the Federal financial regulatory 
agency has failed to respond to the Council’s re-
quest. 
SEC. 1103. IDENTIFICATION OF FINANCIAL COMPANIES 
FOR HEIGHTENED PRUDENTIAL STANDARDS 
FOR FINANCIAL STABILITY PURPOSES. 
(a) IN GENERAL.—The Council may subject a finan-
cial company to heightened prudential standards under 
section 1104 if the Council determines that— 
(1) material financial distress at the company 
could pose a threat to financial stability or the econ-
omy; or 
(2) the nature, scope, or mix of the company’s 
activities could pose a threat to financial stability or 
the economy. 
(b) CRITERIA.—In making a determination under 
subsection (a), the Council shall consider the following cri-
teria: 
(1) The amount and nature of the company’s fi-
nancial assets. 
(2) The amount and nature of the company’s li-
abilities, including the degree of reliance on short- 
term funding. 
(3) The extent and nature of the company’s off- 
balance sheet exposures. 
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(4) The extent and nature of the company’s 
transactions and relationships with other financial 
companies. 
(5) The company’s importance as a source of 
credit for households, businesses, and State and 
local governments and as a source of liquidity for 
the financial system. 
(6) The nature, scope, and mix of the com-
pany’s activities. 
(7) Any other factors that the Council deems 
appropriate. 
(c) PERIODIC REVIEW AND RESCISSION OF FIND-
INGS.— 
(1) SUBMISSION OF ASSESSMENT.—The Board 
shall periodically submit a report to the Council con-
taining an assessment of whether each company sub-
jected to heightened prudential standards should 
continue to be subject to such standards. 
(2) REVIEW
AND
RESCISSION.—The Council 
shall— 
(A) review the assessment submitted pur-
suant to paragraph (1) and any information or 
recommendation submitted by members of the 
Council regarding whether an identified finan-
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cial holding company continues to merit height-
ened prudential standards; and 
(B) rescind the action subjecting a com-
pany to heightened prudential supervision if the 
Council determines that the company no longer 
meets the conditions for identification in sub-
sections (a) and (b). 
(d) PROCEDURE FOR IDENTIFYING OR RESCINDING 
IDENTIFICATION OF A COMPANY.— 
(1) COUNCIL AND BOARD COORDINATION.—The 
Council shall inform the Board if the Council is con-
sidering whether to identify or cease to identify a 
company under this section. 
(2) NOTICE AND OPPORTUNITY FOR CONSIDER-
ATION OF WRITTEN MATERIALS.— 
(A) IN GENERAL.—The Board shall, in an 
executive capacity on behalf of the Council, in-
form a financial company that the Council is 
considering whether to identify or cease to iden-
tify such company under this section, including 
an explanation of the basis of the Council’s con-
sideration, and shall provide such financial com-
pany 30 days to submit written materials to in-
form the Council’s decision. The Council shall 
make its decision, and the Board shall notify 
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the company of the Council’s decision by order, 
within 60 days of the due date for such written 
materials 
(B) EMERGENCY EXCEPTION TO PROCESS 
REQUIREMENTS.—The Council may waive or 
modify the requirements of subparagraph (A) 
with respect to a company if the Council deter-
mines that such waiver or modification is nec-
essary or appropriate to prevent or mitigate 
threats posed by the company to financial sta-
bility. The Board shall, in an executive capacity 
on behalf of the Council, provide notice of such 
waiver or modification to the financial company 
concerned as soon as practicable, which shall be 
no later than 24 hours after the waiver or 
modification. 
(3) CONSULTATION.—If a financial company 
being considered for identification under this section 
is, or has one or more subsidiaries that are, subject 
to regulation by a Federal financial regulatory agen-
cy, as such subsidiaries are described in øsection 
2(6)¿ of this subtitle, the Council shall consult with 
the relevant Federal financial regulatory agency for 
each such subsidiary before making any decision 
under this section. 
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(4) EMERGENCY
EXCEPTION
TO
MAJORITY 
VOTE OF COUNCIL REQUIREMENT.—If each of the 
Secretary of the Treasury, the Board, and the Fed-
eral Deposit Insurance Corporation determines that 
a financial company must be subjected to heightened 
prudential standards under this section immediately 
to prevent destabilization of the financial system or 
economy, the Secretary, the Board, and the Corpora-
tion may identify a financial company under this 
section upon certification by the President of the 
United States. 
(e) EFFECT OF IDENTIFICATION.— 
(1) APPLICATION OF THE BANK HOLDING COM-
PANY ACT.—A financial company that is not a bank 
holding company as defined in the Bank Holding 
Company Act at the time of its identification under 
this section, shall— 
(A) if such company conducts at the time 
of its identification only activities that are de-
termined to be financial in nature or incidental 
thereto under section 4(k) of the Bank Holding 
Company Act, be treated as a bank holding 
company that has elected to be a financial hold-
ing company for purposes of the Bank Holding 
Company Act of 1956, as amended, the Federal 
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Deposit Insurance Act, as amended, and all 
other Federal laws and regulations governing 
bank holding companies and financial holding 
companies; or 
(B) if such company conducts at the time 
of its identification activities other than those 
that are determined to be financial in nature or 
incidental thereto under section 4(k) of the 
Bank Holding Company Act, be required to es-
tablish and conduct all its activities that are de-
termined to be financial in nature or incidental 
thereto under section 4(k) of the Bank Holding 
Company Act in an intermediate holding com-
pany established under section 6 of the Bank 
Holding Company Act, which intermediate hold-
ing company shall be the ‘‘identified financial 
holding company’’ for purposes of this subtitle. 
(2) EXEMPTIVE AUTHORITY.—Notwithstanding 
any provision of the Bank Holding Company Act, 
the Board may, if it determines such action is nec-
essary to ensure appropriate heightened prudential 
supervision, issue such exemptions from that Act as 
may be necessary with regard to identified financial 
holding companies that do not control an insured de-
pository institution. 
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(3) HEIGHTENED PRUDENTIAL REGULATION.— 
The Board shall apply heightened prudential stand-
ards to each identified financial holding company 
subject to this title. 
(f) NO PUBLIC LIST OF IDENTIFIED COMPANIES.— 
The Council and the Board may not publicly release a list 
of companies identified under this section. 
SEC. 1104. REGULATION OF IDENTIFIED FINANCIAL HOLD-
ING COMPANIES FOR FINANCIAL STABILITY 
PURPOSES. 
(a) PRUDENTIAL STANDARDS FOR IDENTIFIED FI-
NANCIAL HOLDING COMPANIES.— 
(1) IN GENERAL.—To mitigate risks to finan-
cial stability and the economy posed by an identified 
financial holding company, the Board shall impose 
heightened prudential standards on such company. 
Such standards shall be designed to maximize finan-
cial stability taking costs to long-term financial and 
economic growth into account, be heightened when 
compared to the standards that otherwise would 
apply to financial holding companies that are not 
identified pursuant to this subtitle (including by ad-
dressing additional or different types of risks than 
otherwise applicable standards), and reflect the po-
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tential risk posed to financial stability by the identi-
fied financial holding company. 
(2) STANDARDS.— 
(A) REQUIRED STANDARDS.—The height-
ened standards imposed by the Board under 
this section shall include— 
(i) risk-based capital requirements; 
(ii) leverage limits; 
(iii) liquidity requirements; 
(iv) concentration requirements (as 
specified in subsection (c)); 
(v) prompt corrective action require-
ments (as specified in subsection (d)); 
(vi) resolution plan requirements (as 
specified in subsection (e)); and 
(vii) overall risk management require-
ments. 
(B) 
ADDITIONAL
STANDARDS.—The 
heightened standards imposed by the Board 
under this section also may include any other 
prudential standards that the Board deems ad-
visable, including taking actions to mitigate sys-
temic risk (as specified in paragraph (5). 
(3) APPLICATION OF REQUIRED STANDARDS.— 
In imposing prudential standards under this sub-
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section, the Board may differentiate among identi-
fied financial holding companies on an individual 
basis or by category, taking into consideration their 
capital structure, risk, complexity, financial activi-
ties, the financial activities of their subsidiaries, and 
any other factors that the Board deems appropriate. 
(4) WELL
CAPITALIZED
AND
WELL
MAN-
AGED.—An identified financial holding company 
shall at all times after it files its registration state-
ment as an identified financial holding company be 
well capitalized and well managed as defined by the 
Board. 
(5) MITIGATION
OF
SYSTEMIC
RISK.—If the 
Board determines, after notice and an opportunity 
for hearing, that the size of an identified financial 
holding company or the scope or nature of activities 
directly or indirectly conducted by an identified fi-
nancial holding company poses a threat to the safety 
and soundness of such company or to the financial 
stability of the United States, the Board may re-
quire the identified financial holding company to sell 
or otherwise transfer assets or off-balance sheet 
items to unaffiliated firms, to terminate one or more 
activities, or to impose conditions on the manner in 
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which the identified financial holding company con-
ducts one or more activities. 
(6) APPLICATION TO FOREIGN FINANCIAL COM-
PANIES.—The Board shall prescribe regulations re-
garding the application of heightened prudential 
standards to financial companies that are organized 
or incorporated in a country other than the United 
States, and that own or control a Federal or State 
branch, subsidiary, or operating entity that is an 
identified financial holding company, giving due re-
gard to the principle of national treatment and 
equality of competitive opportunity. 
(b) PRUDENTIAL STANDARDS
AT FUNCTIONALLY 
REGULATED SUBSIDIARIES
AND SUBSIDIARY DEPOSI-
TORY INSTITUTIONS.— 
(1) BOARD AUTHORITY TO RECOMMEND STAND-
ARDS.—With respect to a functionally regulated sub-
sidiary (as such term is defined in section 5 of the 
Bank Holding Company Act) or a subsidiary deposi-
tory institution of an identified financial holding 
company, the Board may recommend that the rel-
evant primary financial regulatory agency for such 
functionally regulated subsidiary or subsidiary de-
pository institution prescribe heightened prudential 
standards on such functionally regulated subsidiary 
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or subsidiary depository institution. Any standards 
recommended by the Board under this section shall 
be of the same type as those described in subsection 
(a)(2) that the Board is required or authorized to 
impose directly on the identified financial holding 
company. 
(2) 
AGENCY
AUTHORITY
TO
IMPLEMENT 
HEIGHTENED STANDARDS AND SAFEGUARDS.—Each 
primary financial regulatory agency that receives a 
Board recommendation under paragraph (1) is au-
thorized to impose, require reports regarding, exam-
ine for compliance with, and enforce standards 
under this subsection with respect to the entities de-
scribed in øsection 2(6)¿ for which it is the primary 
financial regulatory agency. This authority is in ad-
dition to and does not limit any other authority of 
the primary financial regulatory agencies. Compli-
ance by an entity with actions taken by a primary 
financial regulatory agency under this section shall 
be enforceable in accordance with the statutes gov-
erning the respective agency’s jurisdiction over the 
entity as if the agency action were taken under those 
statutes. 
(3) IMPOSITION
OF
STANDARDS.—Standards 
imposed by a primary financial regulatory agency 
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under this subsection shall be the standards rec-
ommended by the Board or any other similar stand-
ards that the Board deems acceptable after consulta-
tion between the Board and the primary financial 
regulatory agency. 
(4) FAILURE TO ADOPT STANDARDS; NOTICE 
TO COUNCIL AND BOARD.—If a primary financial 
regulatory agency fails to implement the prudential 
standards recommended by the Board or other simi-
lar standards that are acceptable to the Board with-
in 60 days of the Board’s recommendation, the 
agency shall justify in writing the failure of such 
agency to act to the Council and the Board within 
that same time period. 
(5) BACKUP AUTHORITY OF THE BOARD.— 
(A) IN GENERAL.—When notified that a 
primary financial regulatory agency has failed 
to impose the heightened prudential standards 
recommended by the Board for financial sta-
bility purposes under this subsection, the Board 
is authorized to directly impose, require reports 
regarding, examine for compliance with, and en-
force such heightened prudential standards 
under this subsection with respect to a func-
tionally regulated subsidiary for which the pri-
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mary financial regulatory agency ordinarily is 
responsible. 
(B) LIMITATIONS ON BOARD BACKUP AU-
THORITY.—The Board’s standard-imposition, 
report-related, examination, and enforcement 
activities under this subsection shall be limited 
to the heightened prudential standards imposed 
under this subsection. 
(c) CONCENTRATION LIMITS FOR IDENTIFIED FI-
NANCIAL HOLDING COMPANIES.— 
(1) STANDARDS.—In order to limit the risks 
that the failure of any company could pose to an 
identified financial holding company and to the sta-
bility of the United States financial system, the 
Board, by regulation, shall prescribe standards that 
limit the risks posed by the exposure of an identified 
financial holding company to any other company. 
(2) LIMITATION ON CREDIT EXPOSURE.—The 
regulations prescribed by the Board shall prohibit 
each identified financial holding company from hav-
ing credit exposure to any unaffiliated company that 
exceeds 25 percent of the identified financial holding 
company’s capital stock and surplus or such lower 
amount as the Board may determine by regulation 
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to be necessary to mitigate risks to financial sta-
bility. 
(3) CREDIT EXPOSURE.—For purposes of this 
subsection, an identified financial holding company’s 
‘‘credit exposure’’ to a company means— 
(A) all extensions of credit to the company, 
including loans, deposits, and lines of credit; 
(B) all repurchase agreements and reverse 
repurchase agreement with the company; 
(C) all securities borrowing and lending 
transactions with the company to the extent 
that such transactions create credit exposure of 
the identified financial holding company to the 
company; 
(D) all guarantees, acceptances, or letters 
of credit (including endorsement or standby let-
ters of credit) issued on behalf of the company; 
(E) all purchases of or investment in secu-
rities issued by the company; 
(F) counterparty credit exposure to the 
company in connection with a derivative trans-
action between the identified financial holding 
company and the company; and 
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(G) any other similar transactions that the 
Board by regulation determines to be a credit 
exposure for purposes of this section. 
(4) ATTRIBUTION RULE.—For purposes of this 
subsection, any transaction by an identified financial 
holding company with any person is deemed a trans-
action with a company to the extent that the pro-
ceeds of the transaction are used for the benefit of, 
or transferred to, that company. 
(5) RULEMAKING.—The Board may issue such 
regulations and orders, including definitions con-
sistent with this subsection, as may be necessary to 
administer and carry out the purpose of this sub-
section. 
(6) EXEMPTIONS.—The Board may, by regula-
tion or order, exempt transactions, in whole or in 
part, from the definition of credit exposure if it finds 
that the exemption is in the public interest and con-
sistent with the purpose of this subsection. 
(7) TRANSITION PERIOD.—This subsection and 
any regulations and orders of the Board under the 
authority of this subsection shall not be effective 
until three years from the effective date of this sub-
section. The Board can extend the effective date for 
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