II 118th CONGRESS 1st Session S. 2497 IN THE SENATE OF THE UNITED STATES July 26, 2023 Mr. Vance introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Federal Deposit Insurance Act to convert certain insured State banks into national banks.

1. Short title This Act may be cited as the Bank Failure Prevention Act . 2. Conversion of insured State bank with total consolidated assets equal to or greater than $100,000,000,000 into a national bank (a) In general Section 24 of Federal Deposit Insurance Act ( 12 U.S.C. 1831a ) is amended by adding at the end the following: (k) Automatic conversion to a national banking association (1) Definitions In this subsection: (A) Average total consolidated assets The term average total consolidated assets means the average of total consolidated assets for the four most recent calendar quarters or, if the insured State bank has not reported total consolidated assets for each of the four most recent calendar quarters, the total consolidated assets for the most recent calendar quarter or average of the most recent calendar quarters, as applicable. (B) Covered insured state bank The term “covered insured State bank” means an insured State bank with average total consolidated assets equal to or greater than $100,000,000,000. (2) Conversion (A) In general By operation of law, a covered insured State bank shall convert to and become a national banking association on the date that is 180 days after the end of the quarter in which the insured State bank became a covered insured State bank. The Comptroller of the Currency shall issue a certificate of organization to the association on such date. The requirements and restrictions on the conversion of a State Bank or Savings Association contained in Section 5154 of the Revised Statutes of the United States ( 12 U.S.C. 35 ) do not apply to conversions under this section. A covered insured State bank may continue to operate any branch or agency that the covered insured State bank operated on the date on which the Comptroller of the Currency issues the certificate of organization. The Comptroller of the Currency may, in the Comptroller’s discretion and subject to such terms and conditions as the Comptroller may prescribe, permit such covered insured State bank to retain and carry at a value determined by the Comptroller such of the assets of such converting bank as do not conform to the legal requirements relative to assets acquired and held by national banking associations. The Comptroller of the Currency may extend or accelerate any compliance date of this section if the Comptroller determines that such extension or acceleration is appropriate. In determining whether an extension or acceleration is appropriate, the Comptroller will consider the effect of the modification on financial stability, the period of time for which the modification would be necessary to facilitate compliance with this section, and the actions the covered insured State bank is taking to come into compliance with this section. (B) Rights and duties When the covered insured State bank has received its certificate of organization from the Comptroller of the Currency, such bank shall be considered a national bank and supervised and regulated as such, and the bank and all its stockholders, officers, and employees shall have the same powers and privileges and shall be subject to the same duties, liabilities, and regulations, in all respects, as shall have been prescribed by the Federal Reserve Act ( 12 U.S.C. 221 et seq. ) and the National Banking Act for associations originally organized as national banking associations. (C) Notice A covered insured State bank shall submit a notice to the Comptroller of the Currency and the appropriate Federal banking agency within 60 days of becoming a covered insured State bank. The notice shall contain— (i) the date on which the insured State bank became a covered insured State bank; (ii) the date on which the covered insured State bank will convert to a national banking association; and (iii) the name to be assumed by such association following conversion, which shall include the word national . (3) Transitions (A) No transition for certain insured state banks An insured State bank that would be a covered insured State bank immediately prior to December 31, 2023, shall be considered to have become a covered insured State bank on January 1, 2024. (B) Orderly transition Following receipt of the notice under subsection (k)(2)(C), the appropriate Federal banking agency shall provide to the Comptroller of the Currency the covered insured State bank’s reports of condition and other relevant financial and supervisory information, as requested by the Comptroller. (4) Rulemaking The Comptroller of the Currency, after consulting with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, shall issue rules to carry out this section that— (A) establish streamlined standards and procedures that clearly identify required documentation and timelines for compliance with applicable law; and (B) require a covered insured State bank automatically converting under subsection (k)(2) to identify activities and investments, whether conducted by the covered insured State bank or its affiliates, that— (i) do not conform to the requirements for activities and investments of a national bank; and (ii) are held by the covered insured State bank or its affiliates on the date on which the covered State bank submits the notice pursuant to subsection (k)(2)(A); (C) establish— (i) a transition process for bringing the activities and investments described in paragraph (B) into conformance with the requirements for a national bank under applicable law; and (ii) procedures for allowing the covered insured State bank to submit to the Comptroller of the Currency an application to continue to hold activities and investments described in paragraph (B) after conversion, which may be approved or denied by the Comptroller in his discretion; and (D) the Comptroller of the Currency determines necessary in the interests of safety and soundness. . (b) Effective date The amendments made by this section shall take effect on December 31, 2023.