Title: Subsidy Reserve Act of 2017
Policy area: Finance and Financial Sector

Summary:
Subsidy Reserve Act of 2017
This bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to require each nonbank financial company supervised by the Federal Reserve Board (FRB) and each bank holding company with total consolidated assets of at least $500 billion to establish and maintain a capital account called a "subsidy reserve." The amount in a company's subsidy reserve shall be based, according to a formula established by the FRB, on the financial benefit received by the company as a result of the expectation of shareholders, creditors, and counterparties that the federal government will shield them from losses in the event of the company's failure. The amount in a company's subsidy reserve may be taken into account for purposes of determining a company's compliance with regulatory capital requirements.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 493 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 493

To amend the Dodd-Frank Wall Street Reform and Consumer Protection Act 
 to require certain systemically important entities to account for the 
 financial benefit they receive as a result of the expectations on the 
 part of shareholders, creditors, and counterparties of such entities 
   that the Government will shield them from losses in the event of 
                    failure, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 12, 2017

 Mr. Capuano (for himself, Mr. Lynch, and Mr. Ellison) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
To amend the Dodd-Frank Wall Street Reform and Consumer Protection Act 
 to require certain systemically important entities to account for the 
 financial benefit they receive as a result of the expectations on the 
 part of shareholders, creditors, and counterparties of such entities 
   that the Government will shield them from losses in the event of 
                    failure, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Subsidy Reserve Act of 2017''.

SEC. 2. SUBSIDY RESERVE.

    Section 165 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5365) is amended by adding at the end the 
following:
    ``(l) Subsidy Reserve.--
            ``(1) In general.--Each nonbank financial company 
        supervised by the Board of Governors and each bank holding 
        company with total consolidated assets equal to or greater than 
        $500,000,000,000 shall establish and maintain a capital account 
        called the `Subsidy Reserve'.
            ``(2) Computation of benefit.--The Board of Governors 
        shall, in consultation with the Council and the Office of 
        Financial Research, and after notice and opportunity for a 
        hearing, establish a formula for determining the financial 
        benefit received by a company described under paragraph (1) as 
        a result of the expectations on the part of shareholders, 
        creditors, and counterparties of such company that the 
        Government will shield such shareholders, creditors, and 
        counterparties from losses in the event of the failure of such 
        company.
            ``(3) Subsidy reserve amount.--The Board of Governors shall 
        require each company described under paragraph (1) to annually 
        apply the formula established under paragraph (2) to its annual 
        financial statement and maintain the resulting amount in the 
        company's Subsidy Reserve, in addition to any amounts so 
        maintained from previous years.
            ``(4) Use of subsidy reserve amounts.--The amount of funds 
        in the Subsidy Reserve may only be decreased if a company makes 
        a sale of assets, spins off a subsidiary, or makes a similar 
        divestiture, in which case the Subsidy Reserve may only be 
        decreased in an amount, as determined by the Board of 
        Governors, that reflects the amount of such sale, spin off, or 
        similar divestiture, either on a pro rata basis or according to 
        the risk weighting of the property sold, spun off, or divested.
            ``(5) Treatment of subsidy reserve amounts.--Amounts in the 
        Subsidy Reserve may be taken into account when determining the 
        capital of a company for purposes of meeting any regulatory 
        capital requirements.
            ``(6) Rulemaking.--The Board of Governors may issue such 
        regulations and orders as it considers necessary to carry out 
        this subsection.''.
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