Title: Too Big To Fail, Too Big To Exist Act
Policy area: Finance and Financial Sector

Summary:
Too Big To Fail, Too Big To Exist Act
This bill provides for the restructuring of financial institutions with specified exposure and financial-risk characteristics.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7383 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 7383

                 To break up large financial entities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 20, 2018

 Mr. Sherman introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
                 To break up large financial entities.

    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 ``Too Big To Fail, Too Big To Exist 
Act''.

SEC. 2. TOO BIG TO FAIL, TOO BIG TO EXIST.

    (a) Definitions.--In this section--
            (1) the term ``covered entity''--
                    (A) means a financial institution, as defined in 
                section 803 of the Payment, Clearing, and Settlement 
                Supervision Act of 2010 (12 U.S.C. 5462); and
                    (B) does not include--
                            (i) a Farm Credit System institution 
                        chartered under and subject to the provisions 
                        of the Farm Credit Act of 1971 (12 U.S.C. 2001 
                        et seq.);
                            (ii) a governmental entity; or
                            (iii) a regulated entity, as defined in 
                        section 1303 of the Federal Housing Enterprises 
                        Financial Safety and Soundness Act of 1992 (12 
                        U.S.C. 4502); and
            (2) the term ``gross domestic product'' means gross 
        domestic product as calculated by the Bureau of Economic 
        Analysis of the Department of Commerce.
    (b) Limitations.--
            (1) In general.--
                    (A) In general.--On February 1, May 1, August 1, 
                and November 1 of each year, no covered entity may be a 
                ``Too Big To Exist Institution''.
                    (B) Entities required to file federal reserve 
                systemic risk profile form.--If, on February 1, May 1, 
                August 1, or November 1 of any year, a covered entity 
                has a total exposure, as reported by the covered entity 
                on the Federal Reserve form required to monitor the 
                systemic risk profile of financial institutions for the 
                previous reporting period, equal to or greater than 3 
                percent of the most recent estimate for annual gross 
                domestic product of the United States (in current 
                dollars) for the previous calendar year, the Financial 
                Stability Oversight Council may designate such covered 
                entity as a ``Too Big To Exist Institution''.
                    (C) Other reporting.--
                            (i) In general.--If a covered entity is not 
                        required to complete the Federal Reserve form 
                        required to monitor the systemic risk profile 
                        of financial institutions, the Financial 
                        Stability Oversight Council shall design and 
                        assign a quarterly reporting form as 
                        appropriate for each covered entity with total 
                        assets greater than $50,000,000,000 that 
                        reflects the total liability to U.S. persons of 
                        the financial institution, within 18 months of 
                        the date of enactment of this Act.
                            (ii) Designation of companies with total 
                        liability to u.s. persons between 3 to 4 
                        percent of gdp.--If, on February 1, May 1, 
                        August 1, or November 1 of any year, a covered 
                        entity described under clause (i) has a total 
                        liability to U.S. persons, as reported by the 
                        covered entity on the form described under 
                        clause (i), equal to or greater than 3 percent 
                        but less than 4 percent of the most recent 
                        estimate for annual gross domestic product of 
                        the United States (in current dollars) for the 
                        previous calendar year, the Financial Stability 
                        Oversight Council may designate such covered 
                        entity as a ``Too Big To Exist Institution'', 
                        if the Council determines such designation is 
                        appropriate.
                            (iii) Designation of companies with total 
                        liability to u.s. persons over 4 percent of 
                        gdp.--If, on February 1, May 1, August 1, or 
                        November 1 of any year, a covered entity 
                        described under clause (i) has a total 
                        liability to U.S. persons, as reported by the 
                        covered entity on the form described under 
                        clause (i), greater than 4 percent of the most 
                        recent estimate for annual gross domestic 
                        product of the United States (in current 
                        dollars) for the previous calendar year, the 
                        Financial Stability Oversight Council may 
                        designate such covered entity as a ``Too Big To 
                        Exist Institution'', if the Council determines 
                        such designation is appropriate.
                            (iv) Exemptions when calculating 
                        liabilities.--In calculating a covered entity's 
                        total liability to U.S. persons under this 
                        subparagraph, such calculation shall not 
                        include--
                                    (I) any assets under management by 
                                the covered entity; and
                                    (II) with respect to a covered 
                                entity that is an insurance company, 
                                any liabilities to pay out an insurance 
                                claim, so long as the insurance company 
                                meets all capital standards set by any 
                                State that regulates the insurance 
                                company.
            (2) Restructuring.--
                    (A) Supervision.--The Vice Chair for Supervision of 
                the Board of Governors of the Federal Reserve System, 
                or during any period in which that position is vacant, 
                the Chair of the Board of Governors of the Federal 
                Reserve System, shall require and supervise a ``Too Big 
                To Exist Institution'' to restructure such that the 
                entity is no longer a ``Too Big To Exist Institution'' 
                not later than 2 years after the date on which the 
                entity was designated as a ``Too Big To Exist 
                Institution''.
                    (B) Subsequent requirements.--After the date on 
                which a covered entity is required to restructure under 
                subparagraph (A), the Vice Chair for Supervision of the 
                Board of Governors of the Federal Reserve System or, 
                during any period in which that position is vacant, the 
                Chair of the Board of Governors of the Federal Reserve 
                System, shall require and supervise any ``Too Big To 
                Exist Institution'' to restructure such that the entity 
                is no longer a ``Too Big To Exist Institution'' not 
                later than 1 year after the entity is again designated 
                as a ``Too Big To Exist Institution''.
    (c) Prohibition Against Use of Federal Reserve Financing.--
Notwithstanding any other provision of law (including regulations), any 
``Too Big To Exist Institution'' may not use or otherwise have access 
to advances from any Federal Reserve credit facility, the Federal 
Reserve discount window, or any other program or facility made 
available under the Federal Reserve Act (12 U.S.C. 221 et seq.), 
including any asset purchases, temporary or bridge loans, government 
investments in debt or equity, or capital injections from any Federal 
institution.
    (d) Prohibition on Use of Insured Deposits.--
            (1) In general.--Any ``Too Big To Exist Institution'' that 
        is an insured depository institution, or owns such an 
        institution, may not use any insured deposit amounts to fund--
                    (A) any activity relating to hedging that is not 
                directly related to commercial banking activity at the 
                insured bank;
                    (B) any creation or use of derivatives for 
                speculative purposes;
                    (C) any activity related to the dealing of 
                derivatives;
                    (D) any creation of, or lending against, new or 
                existing forms of structured or structured derivatives 
                products, including collateralized debt obligations, 
                collateralized loan obligations, and synthetic 
                derivatives of collateralized debt obligations and 
                collateralized loan obligations; or
                    (E) any other form of speculative activity that 
                regulators specify.
            (2) Risk of loss.--A ``Too Big To Exist Institution'' may 
        not conduct any activity listed in paragraph (1) in such a 
        manner that--
                    (A) puts insured deposits at risk; or
                    (B) creates a risk of loss to the Deposit Insurance 
                Fund.
    (e) Report; Testimony.--The Vice Chair for Supervision of the Board 
of Governors of the Federal Reserve System, or during any period in 
which that position is vacant, the Chair of the Board of Governors of 
the Federal Reserve System, and the Chair of the Financial Stability 
Oversight Council shall annually testify before the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Committee on 
Financial Services of the House of Representatives and submit to those 
committees an annual report the restructuring and designation under 
subsection (b)(2).
    (f) Effective Date.--Subsections (c) and (d) shall apply to a 
covered entity 90 days after the date on which a covered entity is 
designated as a ``Too Big To Exist Institution''.
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