Title: Megabank Accountability and Consequences Act of 2017
Policy area: Finance and Financial Sector

Summary:
Megabank Accountability and Consequences Act of 2017
This bill directs federal prudential banking agencies to review certain institutions for patterns or practices of (1) unsound banking practices, or (2) violations of federal consumer protection laws. Institutions found to demonstrate any such patterns or practices shall be subject to specified consequences, including the termination of their banking charters.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3937 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 3937

To require the Federal prudential banking agencies to determine whether 
 certain institutions they regulate engage in a pattern or practice of 
    violations of Federal banking and consumer protection laws and 
  regulations, to provide for the revocation of banking charters and 
    Federal deposit insurance for such institutions, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 4, 2017

Ms. Maxine Waters of California (for herself, Mr. Capuano, Mr. Ellison, 
   Mr. Al Green of Texas, Ms. Kaptur, Ms. Jayapal, Mr. Sarbanes, Mr. 
 Raskin, and Ms. Schakowsky) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To require the Federal prudential banking agencies to determine whether 
 certain institutions they regulate engage in a pattern or practice of 
    violations of Federal banking and consumer protection laws and 
  regulations, to provide for the revocation of banking charters and 
    Federal deposit insurance for such institutions, 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 ``Megabank Accountability and 
Consequences Act of 2017''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The Federal prudential banking agencies and the Bureau 
        of Consumer Financial Protection (``Consumer Bureau'') are 
        tasked with the responsibility for overseeing United States 
        banking organizations and foreign banks operating in the United 
        States. Prior to the enactment of the Dodd-Frank Wall Street 
        Reform and Consumer Protection Act in 2010 (``Dodd-Frank Act'') 
        and the existence of the Consumer Bureau, the Federal 
        prudential banking agencies were responsible for supervising 
        banks for safety and soundness and compliance with Federal 
        consumer financial laws.
            (2) Following the 2007-2009 financial crisis, Congress 
        conducted a series of hearings and concluded that in the years 
        leading up to the crisis, the Federal prudential banking 
        agencies were not adequately utilizing their rulemaking and 
        supervisory functions, nor enforcing Federal consumer financial 
        laws appropriately, which led to widespread consumer abuses 
        that in turn contributed to the crisis and led to the near 
        collapse of the United States banking system. To the extent 
        Federal prudential banking agencies took action to enforce 
        consumer protection laws, their actions were extremely limited 
        and focused on small banks even though the majority of consumer 
        complaints were tied to the largest banks. In order to better 
        protect consumers from many of the predatory acts and practices 
        within the consumer financial marketplace that contributed to 
        the financial crisis, and to restore integrity to the country's 
        financial system, Congress enacted the Consumer Financial 
        Protection Act of 2010 (``CFPA''), under title X of the Dodd-
        Frank Act. The CFPA established the Consumer Bureau to regulate 
        the offering and provision of consumer financial products or 
        services under the Federal consumer financial law for certain 
        covered entities. The Consumer Bureau's enforcement powers with 
        respect to very large banking organizations include 
        investigative authority and the ability to--
                    (A) conduct hearings and adjudication proceedings;
                    (B) commence civil action lawsuits and make 
                referrals to the U.S. Attorney General for criminal 
                proceedings;
                    (C) issue consent orders, under which restitution, 
                refunds, rescission or reformation of contracts, or 
                claw-back of compensation, is required; and
                    (D) impose civil money penalties.
            (3) In the years since Congress enacted the Dodd-Frank Act, 
        some very large banking organizations operating in the United 
        States have repeatedly violated Federal banking and consumer 
        protection laws by engaging in unethical business practices, 
        which have enabled them to maximize profits for shareholders at 
        the expense of the interest of the public. Enforcement actions 
        have been taken, most notably by the Consumer Bureau, but these 
        banks continue to act with impunity and violate numerous laws 
        designed to protect consumers.
            (4) Senior bank executives, including the chief executive 
        officer, board of directors and other senior officers at the 
        largest banking organizations have rarely been held personally 
        accountable for Federal consumer protection law violations and 
        other illicit practices that occurred during their tenure. In a 
        report to Congress from the Office of the Special Inspector 
        General for the Troubled Asset Relief Program (``SIGTARP''), 
        the SIGTARP wrote in 2016: ``The American people have called 
        for stronger reforms on Wall Street, frustrated by the lack of 
        senior executive accountability at the largest banks. I have 
        called for Wall Street reform based on the difficulties SIGTARP 
        has faced as a law enforcement agency in proving criminal 
        intent of senior executives at large institutions given how 
        isolated they are from knowledge of fraud in their company. 
        This isolation is part of the culture at large institutions, 
        and is something that is unlikely to change absent reform.''.
            (5) The Consumer Bureau has taken strides in fulfilling its 
        statutory objectives and mission to ensure that all consumers 
        have access to markets for consumer financial products and 
        services and that these markets are fair, transparent, and 
        competitive. Yet, unlike the broad authority of Federal 
        prudential banking regulators over entire operations of its 
        regulated entities, the scope of and applicability of the 
        Consumer Bureau's supervisory authority is limited. The 
        Consumer Bureau, for example, does not have the authority to 
        revoke a bank's charter or terminate a bank's Federal deposit 
        insurance, even when it has found a bank to have engaged in a 
        pattern of recurring and egregious violations of Federal 
        consumer financial laws and regulations.
            (6) The Federal prudential banking agencies are authorized 
        to not only license, charter, and approve the operations of 
        banking organizations, but also to supervise these institutions 
        for compliance with Federal banking laws and regulations. 
        Additionally, the Federal prudential banking agencies have 
        indicated, and Congress agrees, that instances of consumer harm 
        by a banking organization may be deemed an unsafe or unsound 
        banking practice of an institution, warranting additional 
        enforcement actions beyond those that have also been issued by 
        the Consumer. Federal Reserve Board Chair Janet Yellen said in 
        2016, ``Of course, consumer issues and issues that involve harm 
        of consumers can become safety and soundness issues. And if 
        there was--at least one of the lessons from the financial 
        crisis, I think, is that abuses of consumers of the sort that 
        we see--saw in subprime lending ultimately did become--become 
        safety and soundness issues. And so, of course, we need to have 
        that concern, and we'll focus there.''.
            (7) Formal and informal enforcement authorities afforded to 
        the Federal prudential banking agencies include consent orders, 
        cease and desist orders, civil money penalties, written 
        agreements, and the ability to place limitations on or remove 
        institution-affiliated parties--such as a director or officer 
        of an institution--for violations of laws or regulations. For 
        the most egregious cases, when institutions commit illegal acts 
        or repeatedly fail to comply with laws or regulations, the 
        Federal prudential banking agencies also have the authority, 
        and duty, to take more serious actions, such as limit the 
        activities or functions of a bank, permanently bar culpable 
        bank officials from working again in the banking industry, 
        terminate Federal deposit insurance for a bank, appoint a 
        receiver to unwind the bank or revoke the bank's national 
        charter.
            (8) Despite these important statutory powers, the Federal 
        prudential banking agencies continue to rely on enforcement 
        tools such as consent orders, cease and desist orders, and 
        civil money penalties, even in instances when an institution's 
        violations have demonstrated unsafe or unsound business 
        practices and past supervisory and enforcement actions have not 
        sufficiently deterred illegal practices.
            (9) The failure of the Federal prudential banking agencies 
        to exercise statutorily provided enforcement authorities--such 
        as revoking a bank's national charter or terminating its 
        Federal deposit insurance--on institutions that have 
        demonstrated a pattern or practice of unsafe or unsound banking 
        practices related to repeat violations of Federal consumer 
        financial laws or regulations, has resulted in insufficient 
        regulatory oversight that has allowed institutions to continue 
        to engage in inappropriate and illegal business practices 
        harming millions of consumers.
            (10) Unlike small community banks that serve consumers in 
        their local communities, megabanks (as identified as global 
        systemically important bank holding companies) are 
        comparatively extremely large and serve millions of consumers. 
        Whereas Federal prudential banking agencies have demonstrated 
        an ability to take enforcement actions against small community 
        banks, including for violations of Federal consumer financial 
        law, the same has not been demonstrated to be true of 
        megabanks. While the Dodd-Frank Act established a regulatory 
        framework that has made significant progress in leveling the 
        playing field between large and small banks, including with 
        respect to how the Consumer Bureau's authorities were designed 
        and how the toughest rules apply to megabanks, new laws should 
        be enacted that build on the Dodd-Frank Act's tiered and 
        tailored regulatory framework to mandate action in areas where 
        Federal prudential banking agencies have been reluctant to 
        exercise their discretion to take appropriate action against 
        megabanks that repeatedly violate laws and harm millions of 
        consumers. New laws should also be enacted to clarify repeated 
        violations of Federal consumer protection law are sufficient 
        grounds to take certain enforcement actions.
            (11) To ensure market discipline and confidence in the U.S. 
        financial system, Federal prudential banking regulators should 
        exercise all statutorily mandated powers, including revoking 
        the charter or terminating Federal deposit insurance of any 
        large banking organization that has demonstrated a pattern of 
        engaging in unsafe and unsound banking practices that 
        extensively harms consumers.
            (12) Any megabank, either through its holding company, 
        depository institutions, or affiliates, that repeatedly harms 
        consumers or violates Federal consumer financial laws or 
        regulations, has demonstrated a pattern of unsafe or unsound 
        banking practices that necessitates that Federal prudential 
        banking agencies immediately initiate proceedings, under 
        existing statutory authority, to revoke the its national 
        charter or terminate its Federal deposit insurance, and place 
        the institution into receivership for sale or dissolution.
            (13) Furthermore, even if a banking organization's 
        violations of Federal consumer financial laws are deemed not to 
        technically constitute unsafe or unsound banking practices, it 
        still may demonstrate a pattern of wrongdoing causing 
        unacceptable harm to its customers, such that continuing to 
        enable it to engage in the business of banking distorts the 
        regulatory purpose of providing national bank charters, deposit 
        insurance and other benefits, and undermines the overarching 
        mission of all Federal prudential banking agencies to protect 
        the interest of the public and the needs of consumers. Federal 
        legislation is needed, therefore, to underscore the importance 
        that Federal prudential banking regulators should, after 
        consulting with the Consumer Bureau, exercise all their 
        available enforcement powers with respect to large banking 
        organizations that repeatedly violate Federal consumer 
        financial laws, including authority to restrict business lines, 
        revoke an institution's national banking charter, terminate the 
        institution's Federal deposit insurance, and hold the 
        institution's board of directors and senior officers 
        accountable.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Banking organization.--The term ``banking 
        organization'' means any bank, savings association, bank 
        holding company, or savings and loan holding company, and 
        includes any subsidiary or affiliate of a bank holding company 
        or savings and loan holding company.
            (2) Board of governors.--The term ``Board of Governors'' 
        means the Board of Governors of the Federal Reserve System.
            (3) Comptroller.--The term ``Comptroller'' means the 
        Comptroller of the Currency.
            (4) Consumer bureau.--The term ``Consumer Bureau'' means 
        the Bureau of Consumer Financial Protection.
            (5) Corporation.--The term ``Corporation'' means the Board 
        of Directors of the Federal Deposit Insurance Corporation.
            (6) Federal consumer financial law.--The term ``Federal 
        consumer financial law'' has the meaning given that term under 
        section 1002 of the Consumer Financial Protection Act of 2010 
        (12 U.S.C. 5481).
            (7) Federal consumer protection law.--The term ``Federal 
        consumer protection law'' means--
                    (A) the Federal consumer financial law;
                    (B) the Fair Housing Act;
                    (C) the Federal Trade Commission Act;
                    (D) section 987 of title 10, United States Code 
                (commonly known as the ``Military Lending Act'');
                    (E) the Servicemembers Civil Relief Act; and
                    (F) any regulation issued under a law described 
                under subparagraph (A), (B), (C), (D), or (E).
            (8) Federal prudential banking agencies.--The term 
        ``Federal prudential banking agencies'' means the Board of 
        Governors, the Comptroller, and the Corporation.
            (9) Foreign bank.--The term ``foreign bank'' has the 
        meaning given that term under section 1(b) of the International 
        Banking Act of 1978 (12 U.S.C. 3101(b)).
            (10) Global systemically important bank holding company.--
                    (A) In general.--The term ``global systemically 
                important bank holding company'' means--
                            (i) a bank holding company that has been 
                        identified by the Board of Governors as a 
                        global systemically important bank holding 
                        company pursuant to section 217.402 of title 
                        12, Code of Federal Regulations; and
                            (ii) a global systemically important 
                        foreign banking organization, as defined under 
                        section 252.2 of title 12, Code of Federal 
                        Regulations.
                    (B) Treatment of existing gsibs.--A company or 
                organization described under clause (i) or (ii) of 
                subparagraph (A) on the date of the enactment of this 
                Act shall be deemed a global systemically important 
                bank holding company for purposes of this Act.
            (11) Pattern or practice of unsafe or unsound banking 
        practices and other violations related to consumer harm.--The 
        term ``pattern or practice of unsafe or unsound banking 
        practices and other violations related to consumer harm'' means 
        engaging in all of the following activities, to the extent each 
        activity was discovered or occurred at least once in the 10 
        years preceding the date of the enactment of this Act:
                    (A) Having unsafe or unsound practices in the 
                institution's risk management and oversight of the 
                institution's sales practices, as evidenced by--
                            (i) an institution lacking an enterprise-
                        wide sales practices oversight program that 
                        enables the institution to adequately monitor 
                        sales practices to prevent and detect unsafe or 
                        unsound sales practices and mitigate risks that 
                        may result from such unsafe and unsound sales 
                        practices; and
                            (ii) an institution lacking a comprehensive 
                        customer complaint monitoring process that--
                                    (I) enables the institution to 
                                assess customer complaint activity 
                                across the bank;
                                    (II) adequately monitors, manages, 
                                and reports on customer complaints; and
                                    (III) analyzes and understands the 
                                potential risks posed by the 
                                institution's sales practices.
                    (B) Engaging in unsafe and unsound sales practices, 
                as evidenced by the institution--
                            (i) opening more than one million 
                        unauthorized deposit, credit card, or other 
                        accounts;
                            (ii) performing unauthorized transfers of 
                        customer funds; and
                            (iii) performing unauthorized credit 
                        inquiries for purposes of the conduct described 
                        in clause (i) or (ii).
                    (C) Lacking adequate oversight of third-party 
                vendors for purposes of risk-mitigation, to prevent 
                abusive and deceptive practices in the vendor's 
                provision of consumer products or services.
                    (D) Having deficient policies and procedures for 
                sharing customers' personal identifiable information 
                with third-party vendors for litigation purposes that 
                led to inadvertent disclosure of such information to 
                unintended parties.
                    (E) Violating Federal consumer financial laws with 
                respect to mortgage loans, including charges of hidden 
                fees and unauthorized or improper disclosures tied to 
                home mortgage loan modifications.
                    (F) Engaging in unsafe or unsound banking practices 
                related to residential mortgage loan servicing and 
                foreclosure processing.
                    (G) Violating the Servicemembers Civil Relief Act.
            (12) Pattern or practice of violations of federal consumer 
        protection laws.--
                    (A) In general.--The term ``pattern or practice of 
                violations of Federal consumer protection laws'' 
                means--
                            (i) a pattern or practice of unsafe or 
                        unsound banking practices and other violations 
                        related to consumer harm; and
                            (ii) such other pattern or practice as the 
                        Director of the Consumer Bureau shall, in 
                        consultation with the Comptroller, the Board of 
                        Governors, and the Corporation, establish by 
                        regulation.
                    (B) Time period.--Eligible activities that may be 
                included in any pattern or practice described under 
                subparagraph (A) are those that were discovered or 
                occurred in the 10 years preceding any determination 
                made under section 101 or section 201.
                    (C) Rulemaking.--Not later than the end of the 1-
                year period beginning on the date of the enactment of 
                this Act, the Director of the Consumer Bureau shall 
                issue final regulations to carry out subparagraph 
                (A)(ii).
            (13) State.--The term ``State'' means the several States, 
        the District of Columbia, and any other territory or possession 
        of the United States.
            (14) Definitions related to subsidiaries and affiliates of 
        foreign banks.--The terms ``agency'', ``branch'', ``commercial 
        lending company'', and ``representative office'' have the 
        meanings given those terms, respectively, under section 1(b) of 
        the International Banking Act of 1978 (12 U.S.C. 3101(b)).
            (15) Other banking definitions.--The terms ``affiliate'', 
        ``appropriate Federal banking agency'', ``depository 
        institution'', ``Federal savings association'', ``insured 
        depository institution'', ``national bank'', ``savings 
        association'', ``subsidiary'', ``State depository 
        institution'', and ``State member bank'' have the meaning given 
        those terms, respectively, under section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813).

SEC. 4. AGENCY AUTHORITY.

    (a) In General.--Notwithstanding any other law and for the sole 
purpose of carrying out the requirements of this Act, in the event that 
the Board of Governors or the Corporation lack a quorum, a majority of 
the members of the Board of Governors and a majority of the members of 
the Corporation shall have the full authority to act on behalf of their 
respective agency.
    (b) Determination of Certain Violations.--In making any 
determination under this Act with respect to whether an institution has 
violated a Federal consumer protection law, if a Federal prudential 
banking agency does not have enforcement authority over the applicable 
Federal consumer protection law, the agency shall rely on publically 
available information with respect to such violations, such as criminal 
convictions and enforcement actions, and consult with any relevant 
Government department or agency that took such actions against the 
institution.
    (c) Rule of Construction.--Nothing in this Act shall be construed 
to reduce or impair any existing authority with respect to enforcement 
actions taken by an appropriate Federal banking agency. Furthermore, a 
violation of Federal consumer protection law or a pattern or practice 
of violations of Federal consumer protection laws by an institution 
shall not be deemed insufficient grounds for the appropriate Federal 
banking agency to take any enforcement action, including those 
referenced in this Act, it deems necessary and is otherwise authorized 
to take.

 TITLE I--CONGRESSIONAL MANDATE TO REVIEW AND WIND DOWN MEGABANKS THAT 
      CONTINUOUSLY ABUSE CONSUMERS AND REPEATEDLY VIOLATE THE LAW

SEC. 101. INITIATE PROCEEDINGS TO REVOKE CHARTER.

    (a) In General.--
            (1) Revocation of charter.--The Comptroller shall review 
        and determine, after consulting with the Director of the 
        Consumer Bureau, within 90 days of enactment of this Act 
        whether a national bank or Federal savings association 
        affiliated with a global systemically important bank holding 
        company, or the branch, representative office, or agency of a 
        foreign bank that is federally licensed and affiliated with a 
        global systemically important bank holding company, is engaging 
        or has engaged in a pattern or practice of unsafe or unsound 
        banking practices and other violations related to consumer 
        harm. Not later than 120 days after the date of enactment of 
        this Act, the Comptroller shall provide written notice to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate describing the review, listing any identified 
        institution with a detailed basis for the determination, and, 
        subject to subsection (d), immediately initiate proceedings to 
        terminate the Federal charter of any such institution or 
        appoint a receiver for any such institution, pursuant to title 
        LXII of the Revised Statutes of the United States, the National 
        Bank Receivership Act (12 U.S.C. 191 et seq.), or the Home 
        Owners' Loan Act (12 U.S.C. 1461 et seq.).
            (2) Termination of federal deposit insurance.--The 
        Corporation shall review and determine, after consulting with 
        the Director of the Consumer Bureau, within 90 days of 
        enactment of this Act, whether an insured depository 
        institution affiliated with a global systemically important 
        bank holding company has engaged or is engaging in a pattern or 
        practice of unsafe or unsound banking practices and other 
        violations related to consumer harm. Not later than 120 days 
        after the date of enactment of this Act, the Corporation shall 
        provide written notice to the Committee on Financial Services 
        of the House of Representatives and the Committee on Banking, 
        Housing, and Urban Affairs of the Senate describing the review, 
        listing any identified institution with a detailed basis for 
        the determination and, subject to subsection (d), immediately 
        initiate an involuntary termination of the deposit insurance of 
        the depository institution under and subject to the procedures 
        set forth in section 8(a) of the Federal Deposit Insurance Act 
        (12 U.S.C. 1818(a)).
            (3) Termination of federal reserve membership of a state 
        member bank.--The Board of Governors shall review and 
        determine, after consulting with the Director of the Consumer 
        Bureau, within 90 days of enactment of this Act, whether a 
        State member bank affiliated with a global systemically 
        important bank holding company is engaging or has engaged in a 
        pattern or practice of unsafe or unsound banking practices and 
        other violations related to consumer harm. Not later than 120 
        days after the date of enactment of this Act, the Board of 
        Governors shall provide written notice to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        describing the review, listing any identified institution with 
        a detailed basis for the determination and, subject to 
        subsection (d), immediately initiate proceedings to terminate 
        such bank's membership in the Federal Reserve System pursuant 
        to the Federal Reserve Act (12 U.S.C. 221 et seq.).
            (4) Termination of u.s. activities by foreign bank.--The 
        Board of Governors shall review and determine, after consulting 
        with the Director of the Consumer Bureau, within 90 days of 
        enactment of this Act whether--
                    (A) a foreign bank affiliated with a global 
                systemically important bank holding company that has a 
                State-licensed branch, agency, commercial lending 
                company, or representative office is engaging or has 
                engaged in a pattern or practice of unsafe or unsound 
                banking practices and other violations related to 
                consumer harm. Not later than 120 days after the date 
                of enactment of this Act, the Board of Governors shall 
                provide written notice to the Committee on Financial 
                Services of the House of Representatives and the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate describing the review, listing any identified 
                foreign bank with a detailed basis for the 
                determination and, subject to subsection (d), 
                immediately initiate proceedings to terminate the 
                foreign bank's ability to operate in the United States 
                pursuant to section 7(e) of the International Banking 
                Act of 1978 (12 U.S.C. 3105(e)); or
                    (B) a Federal branch or Federal agency of a foreign 
                bank affiliated with a global systemically important 
                bank holding company that is engaging or has engaged in 
                a pattern or practice of unsafe or unsound banking 
                practices and other violations related to consumer 
                harm. Not later than 120 days after the date of 
                enactment of this Act, the Board of Governors shall 
                provide written notice to the Committee on Financial 
                Services of the House of Representatives and the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate describing the review, listing any identified 
                institution with a detailed basis for the determination 
                and transmit within 24 hours to the Comptroller a 
                recommendation that the license of the Federal branch 
                or Federal agency be terminated pursuant to section 
                4(i) of the International Banking Act of 1978 (12 
                U.S.C. 3102(i)).
    (b) Mandatory Testimony.--The Federal prudential banking agencies 
shall testify before the Committee on Financial Services of the House 
of Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate regarding the review required by this section no 
later than 180 days after the date of enactment of this Act.
    (c) Coordinated and Unimpeded Action.--Each Federal prudential 
banking agency shall coordinate and share all relevant information with 
other Federal prudential banking agencies in carrying out this section. 
To the extent the same institution is identified by multiple Federal 
prudential banking agencies under this section, the appropriate Federal 
banking agency shall not delay or otherwise cease taking any action 
required by this Act with respect to the institution.
    (d) Judicial Review.--A determination by the Comptroller, the Board 
of Governors, or the Corporation under subsection (a) shall be subject 
to review by a Federal district court of competent jurisdiction under 
the procedures provided for under section 8(h) of the Federal Deposit 
Insurance Act (12 U.S.C. 1818(h)).
    (e) Removal of Directors and Senior Officers.--If the Comptroller, 
the Board of Governors, or the Corporation, as applicable, makes a 
determination to initiate proceedings to terminate a Federal charter 
for a national bank, Federal savings association, or branch, agency, 
commercial lending company, or representative office of a foreign bank 
under this section, or makes a determination to initiate an involuntary 
termination of the deposit insurance, the Comptroller, the Board the 
Governors, or the Corporation, as applicable, shall notify the 
institution that removal is required of any director or senior officers 
responsible, as determined by the appropriate Federal banking agency, 
for overseeing any division of the institution during the time that the 
institution was engaging in the identified pattern or practice of 
unsafe or unsound banking practices, pursuant to section 8(e) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818(e)). Any current and 
former directors and senior officers determined responsible by the 
appropriate Federal banking agency for overseeing any division of an 
institution during the time that the institution was found to be 
engaging in the pattern or practice of unsafe or unsound banking 
practices under this title shall also be permanently banned from 
working as an employee, officer, or director of any other banking 
organization, pursuant to section 8(e) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(e)).

SEC. 102. RECEIVERSHIP AND LIMITATION ON TRANSFER OF ASSETS.

    (a) Notice to FDIC.--The Comptroller and the Board of Governors 
shall notify within 24 hours the Corporation of any determination made 
under section 101.
    (b) Termination of Federal Deposit Insurance Based on Revocation of 
Federal Banking Charter.--For any insured depository institution 
identified by the Corporation under section 101, or upon being notified 
of the termination of a national bank or Federal savings association's 
Federal charter or termination of a Federal license for an insured 
branch or agency of a bank under subsection (a), the Corporation 
shall--
            (1) initiate an involuntary termination of the deposit 
        insurance of the institution under section 8 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1818); and
            (2) place the institution into receivership, with the 
        Corporation acting as the receiver, pursuant to the procedures 
        provided under section 11(c) of the Federal Deposit Insurance 
        Act (12 U.S.C. 1821(c)).
    (c) Limitation on Transfer of Assets.--In its capacity as receiver 
of a national bank, Federal savings association, or branch, agency, 
commercial lending company, or representative office of a foreign bank 
under this section, the Corporation may transfer any assets of the 
institution only to banking organizations that were assigned a rating 
of ``satisfactory record of meeting community credit needs'' or better 
for complying with the Community Reinvestment Act of 1977 in their most 
recent evaluation, and may not transfer any assets of the institution 
to either--
            (1) a global systemically important bank holding company, 
        or any subsidiary of such a bank holding company; or
            (2) a banking organization that has exhibited substantial 
        noncompliance with Federal consumer protection laws as 
        evidenced by any public enforcement actions, targeted 
        supervisory exams, or a rating of less than ``satisfactory'' on 
        its most recent consumer compliance examination.
    (d) Consultation.--When acting in the capacity of a receiver 
pursuant to subsection (b), the Corporation shall consult with the 
Office of Minority and Women Inclusion of the Corporation.

     TITLE II--CLARIFYING FEDERAL CHARTERS MUST BE TERMINATED FOR 
  INSTITUTIONS THAT ENGAGE IN A PATTERN OR PRACTICE OF VIOLATIONS OF 
            FEDERAL CONSUMER PROTECTION LAWS OR REGULATIONS

SEC. 201. PATTERN OR PRACTICE OF VIOLATIONS OF FEDERAL CONSUMER 
              PROTECTION LAWS.

    (a) Determination.--
            (1) Comptroller.--The Comptroller shall regularly review 
        and determine, in consultation with the Director of the 
        Consumer Bureau, whether a national bank or Federal savings 
        association affiliated with a global systemically important 
        bank holding company, or a federally licensed branch, agency, 
        commercial lending company, or representative office of any 
        foreign bank affiliated with a global systemically important 
        bank holding company is demonstrating a pattern or practice of 
        violations of Federal consumer protection laws. Upon such a 
        determination, the Comptroller shall provide a written, 
        confidential notice within 7 days to the other Federal 
        prudential banking agencies, Committee on Financial Services of 
        the House of Representatives, and the Committee on Banking, 
        Housing, and Urban Affairs of the Senate describing the review 
        and any identified institution and, in consultation with the 
        Director of the Consumer Bureau, immediately initiate 
        additional enforcement actions or proceedings to either appoint 
        a receiver or terminate the Federal charter of such 
        institution, pursuant to subsection (c).
            (2) Board of governors.--The Board of Governors shall 
        regularly review and determine, in consultation with the 
        Director of the Consumer Bureau, whether a State member bank 
        affiliated with a global systemically important bank holding 
        company or State-chartered branch, agency, or representative 
        office of a foreign bank affiliated with a global systemically 
        important bank holding company is demonstrating a pattern or 
        practice of violations of Federal consumer protection laws. 
        Upon such a determination, the Board of Governors shall provide 
        a written, confidential notice within 7 days to the other 
        Federal prudential banking agencies, to the Committee on 
        Financial Services of the House of Representatives, and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        describing the review and any identified institution and, in 
        consultation with the Director of the Consumer Bureau, 
        immediately initiate additional enforcement actions or 
        proceedings to terminate the bank's membership in the Federal 
        Reserve System or the foreign bank's activities in the United 
        States, as applicable, pursuant to subsection (c).
            (3) Corporation.--The Corporation shall regularly review 
        and determine, in consultation with the Director of the 
        Consumer Bureau, whether an insured depository institution 
        affiliated with a global systemically important bank holding 
        company is demonstrating a pattern or practice of violations of 
        Federal consumer protection laws. Upon such a determination, 
        the Corporation shall provide a written, confidential notice 
        within 7 days to the other Federal prudential banking agencies, 
        the Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, and 
        Urban Affairs of the Senate describing the review and any 
        identified institution and, in consultation with the Director 
        of the Consumer Bureau, immediately initiate additional 
        enforcement actions or proceedings to terminate the deposit 
        insurance of the institution, pursuant to subsection (c).
    (b) Considerations.--
            (1) In general.--In making a determination under subsection 
        (a) or paragraph (2), the Comptroller, the Board of Governors, 
        and the Corporation, as applicable, shall consider whether the 
        institution's continued operations, activities, and functions 
        are in the public interest, and whether the public benefits 
        provided to consumers by the institution outweigh the harms 
        posed by the institution, as well as whether the institution is 
        meeting the convenience and needs of the communities served by 
        the institution.
            (2) Recommendation by director.--Upon a finding by the 
        Director of the Consumer Bureau that a national bank, State 
        member bank, or Federal savings association affiliated with a 
        global systemically important bank holding company, or a 
        federally licensed branch, agency, representative office, or 
        commercial lending company of a foreign bank affiliated with a 
        global systemically important bank holding company is 
        demonstrating a pattern or practice of violations of Federal 
        consumer protection laws, the Director of the Consumer Bureau 
        shall, within 7 days, recommend to the Comptroller, the Board 
        of Governors, or the Corporation that determination should be 
        made under subsection (a). The Comptroller, the Board of 
        Governors, or the Corporation, as applicable, shall consider 
        such recommendation and publicly respond in writing, including 
        a detailed basis for its decision, within 90 days as to whether 
        they will follow such recommendation.
            (3) Detailed explanation.--In making a determination under 
        subsection (a), including in response to any recommendation 
        made by the Director of the Consumer Bureau and in any written 
        notice to the Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, and 
        Urban Affairs of the Senate, the Comptroller, the Board of 
        Governors, or the Corporation, as applicable, shall include a 
        detailed description of the review of the institution, the 
        basis for its determination, and which of the enforcement 
        actions or proceedings under subsection (c) that the agency has 
        determined to take against the institution.
            (4) Public hearings.--The Comptroller, the Board of 
        Governors, or the Corporation, as applicable, may convene 
        public hearings to consider facts, observations, evidence, and 
        testimony provided by any institution subject to a 
        determination under this title as well as affected 
        stakeholders. At least one public hearing must be granted if 
        made at the written request of the institution subject to a 
        determination under this title, the Director of the Consumer 
        Bureau, or by relevant State or local government agencies from 
        at least five States.
            (5) Annual report and testimony.--Each Federal prudential 
        banking agency shall annually submit a written report to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate describing the actions the agency has taken to carry out 
        the requirements of this Act, including the regular review 
        required by this section, and a list of each violation of 
        Federal law or regulation that was discovered or occurred in 
        the previous 10 years for each global systemically important 
        bank holding company, and any affiliate thereof, that is 
        subject to the agency's supervision. The Federal prudential 
        banking agencies shall annually testify before the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        on their respective annual report.
    (c) Consequence of Determination.--
            (1) In general.--If a determination is made under 
        subsection (a) with respect to an institution that is 
        demonstrating a pattern or practice of violations of Federal 
        consumer protection laws, the appropriate Federal banking 
        agency, in consultation with the Director of the Consumer 
        Bureau, shall take one or more of the following actions:
                    (A) Remove responsible senior officers or directors 
                of the institution, and permanently ban them from 
                working at another banking organization, pursuant to 
                section 8(e) of the Federal Deposit Insurance Act (12 
                U.S.C. 1818(e)).
                    (B) Restrict certain lines of business of the 
                institution, pursuant to section 8(b) of the Federal 
                Deposit Insurance Act (12 U.S.C. 1818(b)).
                    (C) Initiate proceedings to terminate the Federal 
                charter of the institution, terminate a foreign bank's 
                ability to operate in the United States, or appoint a 
                receiver pursuant to either title LXII of the Revised 
                Statutes of the United States, the National Bank 
                Receivership Act (12 U.S.C. 191 et seq.), or the Home 
                Owners' Loan Act (12 U.S.C. 1461 et seq.), with the 
                identified pattern or practice of violations of Federal 
                consumer protection laws deemed as grounds for 
                appointing a conservator or receiver under the Federal 
                Deposit Insurance Act or terminating deposit insurance 
                pursuant to section 8(a) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1818(a)).
            (2) Recommendation by director.--If a determination is made 
        under subsection (a) with respect to a national bank, Federal 
        savings association, or federally licensed branch, agency, 
        commercial lending company, or representative office of a 
        foreign bank--
                    (A) the Director of the Consumer Bureau may 
                recommend to the Comptroller, the Board of Governors, 
                or the Corporation what actions should be taken under 
                this subsection; and
                    (B) the Comptroller, the Board of Governors, or the 
                Corporation, as applicable, shall consider such 
                recommendation and publicly respond in writing within 
                30 days as to whether they will follow such 
                recommendation.
            (3) Mandatory enforcement actions.--If a determination is 
        made under subsection (a), the Comptroller, the Board of 
        Governors, or the Corporation, as applicable, shall take at 
        least one of the actions described under paragraph (1). If a 
        second determination is made under subsection (a) against the 
        same institution after enforcement actions are taken under this 
        section, the Comptroller, the Board of Governors, or the 
        Corporation, as applicable, shall immediately initiate 
        proceedings to terminate a Federal charter, a State member 
        bank's membership in the Federal Reserve System, a foreign 
        bank's ability to operate in the United States, or terminate 
        deposit insurance.
            (4) Judicial review.--A determination under subsection (a) 
        shall be subject to review by a Federal district court of 
        competent jurisdiction under the procedures provided for under 
        section 8(h) of the Federal Deposit Insurance Act (12 U.S.C. 
        1818(h)).

SEC. 202. RECEIVERSHIP AND LIMITATION ON TRANSFER OF ASSETS.

    (a) Notice to FDIC.--The Comptroller and the Board of Governors 
shall notify within 24 hours the Corporation of any determination made 
under section 201.
    (b) Termination of Federal Deposit Insurance Based on Revocation of 
Federal Banking Charter.--For any insured depository institution 
identified by the Corporation under section 201, or upon being notified 
of the termination of a national bank or Federal savings association's 
Federal charter or termination of a Federal license for an insured 
branch or agency of a bank under subsection (a), the Corporation 
shall--
            (1) initiate an involuntary termination of the deposit 
        insurance of the institution under section 8 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1818); and
            (2) place the institution into receivership, with the 
        Corporation acting as the receiver, pursuant to the procedures 
        provided under section 11(c) of the Federal Deposit Insurance 
        Act (12 U.S.C. 1821(c)).
    (c) Limitation on Transfer of Assets.--In its capacity as receiver 
of a national bank, Federal savings association, or branch, agency, 
commercial lending company, or representative office of a foreign bank 
under this section, the Corporation may transfer any assets of the 
institution only to a banking organization that was assigned a rating 
of ``satisfactory record of meeting community credit needs'' or better 
for complying with the Community Reinvestment Act of 1977 in the 
organization's most recent evaluation, and may not transfer any assets 
of the institution to either--
            (1) a global systemically important bank holding company, 
        or any subsidiary of such a bank holding company; or
            (2) a banking organization that has exhibited substantial 
        noncompliance with Federal consumer protection laws as 
        evidenced by any enforcement actions, targeted supervisory 
        exams, or a rating of less than ``satisfactory'' on its most 
        recent consumer compliance examination.
    (d) Consultation.--When acting in the capacity of a receiver 
pursuant to subsection (b), the Corporation shall consult with the 
Office of Minority and Women Inclusion of the Corporation.

SEC. 203. ADDRESSING PETITIONS FROM STATE AND LOCAL GOVERNMENT AGENCIES 
              WITH RESPECT TO VIOLATIONS OF FEDERAL CONSUMER PROTECTION 
              LAWS AND REGULATIONS.

    The Comptroller, the Corporation, and the Board of Governors 
shall--
            (1) consider petitions from relevant State and local 
        government agencies, including law enforcement and city and 
        State attorney generals, regarding a pattern or practice of 
        violations of Federal consumer protection laws by a national 
        bank, a State member bank, or a Federal savings association 
        affiliated with a global systemically important bank holding 
        company, or a United States branch, agency, commercial lending 
        company, or representative office of a foreign bank affiliated 
        with a global systemically important bank holding company, or a 
        State depository institution affiliated with a global 
        systemically important bank holding company, as applicable;
            (2) for any petition from State or local government 
        agencies from at least five States, provide a written response 
        within 180 days after receiving such a petition whether or not 
        a determination is made under this title, including a detailed 
        basis for the determination; and
            (3) for any written response under paragraph (2), send a 
        copy of the written response to the Committee on Financial 
        Services of the House of Representatives and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate.

  TITLE III--DETERRENCE AND EXECUTIVE ACCOUNTABILITY TO CURB CONSUMER 
                                 ABUSES

SEC. 301. ANNUAL CERTIFICATION BY EXECUTIVE OFFICERS AND DIRECTORS OF 
              THE BOARD.

    (a) In General.--Each executive officer and director of the board 
of a national bank or a Federal savings association affiliated with a 
global systemically important bank holding company, or the branch, 
representative office, or agency of a foreign bank that is federally 
licensed and affiliated with a global systemically important bank 
holding company shall certify and submit a written attestation, at 
least on an annual basis to the appropriate Federal banking agency, the 
Consumer Bureau, and any relevant Federal law enforcement agency that 
they have regularly reviewed the institution's lines of business and 
conducted due diligence to ensure that--
            (1) the institution has established and maintained internal 
        risk controls to identify significant deficiencies and 
        weaknesses in its compliance with all applicable Federal 
        consumer protection laws;
            (2) the institution has promptly disclosed all known 
        violations of applicable Federal consumer protection laws to 
        the Consumer Bureau and the appropriate Federal banking agency;
            (3) the institution is taking all reasonable steps to 
        correct any identified deficiencies and weaknesses in its 
        compliance with all applicable Federal consumer protection laws 
        based on a review of all regulatory examination results 
        received in prior years; and
            (4) the institution is in substantial compliance with all 
        applicable Federal consumer protection laws.
    (b) Guidance.--The Consumer Bureau, in consultation with the 
relevant Federal and State regulator and law enforcement agencies, 
shall issue final guidance on the content, form, and method of delivery 
of the annual certification required under subsection (a) within 6 
months of the date of the enactment of this Act.
    (c) Criminal Penalties.--Any individual who certifies and submits 
an attestation described under subsection (a) that contains a false 
statement--
            (1) if done knowingly, shall be fined not more than 
        $1,000,000 or imprisoned not more than 10 years, or both; or
            (2) if done intentionally, shall be fined not more than 
        $5,000,000 or imprisoned not more than 20 years or both.
    (d) Penalties for Failure To Comply.--Any individual who fails to 
certify and submit a required attestation described under subsection 
(a), shall be fined not more than $1,000,000 or imprisoned not more 
than 10 years or both.

SEC. 302. PERSONAL LIABILITY OF EXECUTIVE OFFICERS AND DIRECTORS OF THE 
              BOARD FOR FEDERAL CONSUMER PROTECTION LAW VIOLATIONS.

    (a) Civil Liability.--
            (1) In general.--If an executive officer or director of the 
        board of a national bank, Federal savings association, or 
        federally insured State depository institution affiliated with 
        a global systemically important bank holding company, or United 
        States branch, agency, commercial lending company, or 
        representative office of a foreign bank affiliated with a 
        global systemically important bank holding company, knowingly 
        violates any Federal consumer protection law (or directs any of 
        the agents, officers, or directors of the institution to so 
        violate or engage), such executive officer or director shall be 
        liable in their personal and individual capacity for damages 
        which the institution or any other person shall have sustained 
        in consequence of such violation or engagement. Any fines under 
        this subsection shall not be deemed to limit the relevant 
        Federal regulator or law enforcement entity's authority to 
        impose civil penalties, fines, or other appropriate consumer 
        redress on the institution.
            (2) Limitation on actions.--Except as otherwise provided by 
        law, a civil action arising under this section may not be 
        commenced after the later of--
                    (A) 2 years after the discovery of the facts 
                constituting the violation; or
                    (B) 5 years after such violation.
    (b) Criminal Liability.--Any executive officer or director of the 
board who knowingly causes a national bank, Federal savings 
association, or federally insured State depository institution 
affiliated with a global systemically important bank holding company, 
or United States branch, agency, or representative office of a foreign 
bank affiliated with a global systemically important bank holding 
company to violate any Federal consumer protection law (or who directs 
another agent, senior officer, or director of the institution to commit 
such a violation or engage in such acts that result in the director or 
officer being personally unjustly enriched and the institution being 
conducted in an unsafe and unsound manner) shall be--
            (1) fined in an amount not to exceed 100 percent of the 
        compensation (including stock options awarded as compensation) 
        received by such officer or director from the institution--
                    (A) during the time period in which the violations 
                occurred; or
                    (B) in the one to three year time period preceding 
                the date on which the violations were discovered; and
            (2) imprisoned for not more than 5 years.
    (c) Termination of Employment and Lifetime Ban.--If an executive 
officer or director of the board of a national bank, Federal savings 
association, or federally insured State depository institution 
affiliated with a global systemically important bank holding company, 
or United States branch, agency, commercial lending company, or 
representative office of a foreign bank affiliated with a global 
systemically important bank holding company commits a violation or 
engages in an act described under subsection (a) or is convicted of a 
violation or of engaging in an act described under subsection (b), the 
Comptroller, the Corporation, or the Board of Governors, as applicable, 
shall notify within 24 hours the institution that such executive, 
director, or senior officer must be terminated from their position with 
the institution and be permanently prohibited from engaging in the 
operation and management of any other federally chartered or federally 
insured banking organization, pursuant to section 8(e) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(e)).

                           TITLE IV--REPORTS

SEC. 401. REPORTS TO CONGRESS.

    The Board of Governors, the Comptroller, the Consumer Bureau, and 
the Corporation shall each submit an annual report to the Congress 
containing a description of actions taken to carry out this Act.

SEC. 402. REPORTS BY THE OFFICES OF MINORITY AND WOMEN INCLUSION.

    The Office of Minority and Women Inclusion of the Board of 
Governors, the Comptroller, the Consumer Bureau, and the Corporation 
shall each include, in the annual report required under section 342(e) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 5452(e)), a description of--
            (1) how the duties of the Office have been carried out with 
        respect to the requirements of this Act; and
            (2) with respect to the Office of the Corporation, how the 
        Office has carried out the consultations required under this 
        Act.
                                 <all>