Subsidy Reserve Act of 2017

Bill: 115-hr-493
Sponsor: full_name: Rep. Capuano, Michael E. [D-MA-7]
Introduced: 2017-01-12
Policy area: Finance and Financial Sector
Subjects: Administrative law and regulatory procedures

Banking and financial institutions regulation

Business investment and capital

Business records

Corporate finance and management

Federal Reserve System

Financial services and investments
Latest action: action_date: 2017-01-12
text: Referred to the House Committee on Financial Services.

Summaries:
action_date: 2017-01-12
action_desc: Introduced in House
text: <p><b>Subsidy Reserve Act of 2017</b></p> <p>This bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to require each nonbank financial company supervised by the Federal Reserve&nbsp;Board (FRB)&nbsp;and each bank holding company with total consolidated assets of at least $500 billion to establish and maintain a capital&nbsp;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&nbsp;for purposes of determining a company's compliance with&nbsp;regulatory capital requirements.</p>

tv_txt: I 115th CONGRESS 1st Session H. R. 493 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.

1. Short title This Act may be cited as the Subsidy Reserve Act of 2017 . 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. .