Title: A bill to break up large financial entities.
Policy area: Finance and Financial Sector

Summary:
This bill (1) directs the Federal Reserve Board to break up any financial institution with a total exposure equal to or greater than 3% of the annual gross domestic product of the United States, and (2) otherwise limits the activities of such financial institutions.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3542 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3542

                 To break up large financial entities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            October 3 (legislative day, September 28), 2018

  Mr. Sanders introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 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. 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) Total Exposure.--
            (1) Total exposure.--
                    (A) In general.--On February 1, May 1, August 1, 
                and November 1 of each year, no covered entity may have 
                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.
                    (B) Other reporting.--If a covered entity is not 
                required to complete a 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 
                risk exposures of the financial institution, including 
                off-balance sheet exposures and derivatives exposure 
                within 18 months of the date of enactment of this Act. 
                Once designated a reporting form, on February 1, May 1, 
                August 1, and November 1 no covered entity may have a 
                total exposure, as reported by the covered entity 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.
            (2) Restructuring.--
                    (A) In general.--
                            (i) Designation.--Any covered entity that 
                        violates paragraph (1) shall immediately be 
                        designated as a ``Too Big to Exist 
                        Institution'' by the Financial Stability 
                        Oversight Council.
                            (ii) 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 to comply 
                        with paragraph (1) not later than 2 years after 
                        the date on which the first violation arises.
                    (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 to comply with 
                paragraph (1) not later than 1 year after the 
                institution is again found to be in excess of the 
                threshold specified in paragraph (1).
    (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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