H.R.4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act 111th Congress (2009-2010)
| Sponsor: | Rep. Frank, Barney [D-MA-4] (Introduced 12/02/2009) |
|---|---|
| Committees: | House - Agriculture; Financial Services; Energy and Commerce; Judiciary; Rules; Budget; Oversight and Government Reform; Ways and Means | Senate - Banking, Housing, and Urban Affairs |
| Committee Reports: | H. Rept. 111-517 (Conference Report) |
| Latest Action: | 07/21/2010 Became Public Law No: 111-203. (All Actions) |
| Roll Call Votes: | There have been 25 roll call votes |
| Tracker: Tip | This bill has the status Became Law Here are the steps for Status of Legislation:
|
Subject — Policy Area:
- Finance and Financial Sector
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Text: H.R.4173 — 111th Congress (2009-2010) All Information (Except Text)
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Public Law No. 111-203 (07/21/2010)
[111th Congress Public Law 203]
[From the U.S. Government Printing Office]
[[Page 1375]]
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
[[Page 124 STAT. 1376]]
Public Law 111-203
111th Congress
An Act
To promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes. <<NOTE: July 21, 2010 - [H.R. 4173]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Dodd-Frank Wall
Street Reform and Consumer Protection Act.>>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short <<NOTE: 12 USC 5301 note.>> Title.--This Act may be cited
as the ``Dodd-Frank Wall Street Reform and Consumer Protection Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Severability.
Sec. 4. Effective date.
Sec. 5. Budgetary effects.
Sec. 6. Antitrust savings clause.
TITLE I--FINANCIAL STABILITY
Sec. 101. Short title.
Sec. 102. Definitions.
Subtitle A--Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain
nonbank financial companies.
Sec. 114. Registration of nonbank financial companies supervised by the
Board of Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding
companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among member
agencies.
Sec. 120. Additional standards applicable to activities or practices for
financial stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Sec. 122. GAO Audit of Council.
Sec. 123. Study of the effects of size and complexity of financial
institutions on capital market efficiency and economic
growth.
Subtitle B--Office of Financial Research
Sec. 151. Definitions.
Sec. 152. Office of Financial Research established.
Sec. 153. Purpose and duties of the Office.
Sec. 154. Organizational structure; responsibilities of primary
programmatic units.
Sec. 155. Funding.
Sec. 156. Transition oversight.
[[Page 124 STAT. 1377]]
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies by
the Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain
financial companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
Sec. 171. Leverage and risk-based capital requirements.
Sec. 172. Examination and enforcement actions for insurance and orderly
liquidation purposes.
Sec. 173. Access to United States financial market by foreign
institutions.
Sec. 174. Studies and reports on holding company capital requirements.
Sec. 175. International policy coordination.
Sec. 176. Rule of construction.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
Sec. 201. Definitions.
Sec. 202. Judicial review.
Sec. 203. Systemic risk determination.
Sec. 204. Orderly liquidation of covered financial companies.
Sec. 205. Orderly liquidation of covered brokers and dealers.
Sec. 206. Mandatory terms and conditions for all orderly liquidation
actions.
Sec. 207. Directors not liable for acquiescing in appointment of
receiver.
Sec. 208. Dismissal and exclusion of other actions.
Sec. 209. Rulemaking; non-conflicting law.
Sec. 210. Powers and duties of the Corporation.
Sec. 211. Miscellaneous provisions.
Sec. 212. Prohibition of circumvention and prevention of conflicts of
interest.
Sec. 213. Ban on certain activities by senior executives and directors.
Sec. 214. Prohibition on taxpayer funding.
Sec. 215. Study on secured creditor haircuts.
Sec. 216. Study on bankruptcy process for financial and nonbank
financial institutions
Sec. 217. Study on international coordination relating to bankruptcy
process for nonbank financial institutions
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.
Subtitle A--Transfer of Powers and Duties
Sec. 311. Transfer date.
Sec. 312. Powers and duties transferred.
Sec. 313. Abolishment.
Sec. 314. Amendments to the Revised Statutes.
Sec. 315. Federal information policy.
Sec. 316. Savings provisions.
Sec. 317. References in Federal law to Federal banking agencies.
Sec. 318. Funding.
Sec. 319. Contracting and leasing authority.
Subtitle B--Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property of the Office of
Thrift Supervision.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.
[[Page 124 STAT. 1378]]
Sec. 327. Implementation plan and reports.
Subtitle C--Federal Deposit Insurance Corporation
Sec. 331. Deposit insurance reforms.
Sec. 332. Elimination of procyclical assessments.
Sec. 333. Enhanced access to information for deposit insurance purposes.
Sec. 334. Transition reserve ratio requirements to reflect new
assessment base.
Sec. 335. Permanent increase in deposit and share insurance.
Sec. 336. Management of the Federal Deposit Insurance Corporation.
Subtitle D--Other Matters
Sec. 341. Branching.
Sec. 342. Office of Minority and Women Inclusion.
Sec. 343. Insurance of transaction accounts.
Subtitle E--Technical and Conforming Amendments
Sec. 351. Effective date.
Sec. 352. Balanced Budget and Emergency Deficit Control Act of 1985.
Sec. 353. Bank Enterprise Act of 1991.
Sec. 354. Bank Holding Company Act of 1956.
Sec. 355. Bank Holding Company Act Amendments of 1970.
Sec. 356. Bank Protection Act of 1968.
Sec. 357. Bank Service Company Act.
Sec. 358. Community Reinvestment Act of 1977.
Sec. 359. Crime Control Act of 1990.
Sec. 360. Depository Institution Management Interlocks Act.
Sec. 361. Emergency Homeowners' Relief Act.
Sec. 362. Federal Credit Union Act.
Sec. 363. Federal Deposit Insurance Act.
Sec. 364. Federal Home Loan Bank Act.
Sec. 365. Federal Housing Enterprises Financial Safety and Soundness Act
of 1992.
Sec. 366. Federal Reserve Act.
Sec. 367. Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
Sec. 368. Flood Disaster Protection Act of 1973.
Sec. 369. Home Owners' Loan Act.
Sec. 370. Housing Act of 1948.
Sec. 371. Housing and Community Development Act of 1992.
Sec. 372. Housing and Urban-Rural Recovery Act of 1983.
Sec. 373. National Housing Act.
Sec. 374. Neighborhood Reinvestment Corporation Act.
Sec. 375. Public Law 93-100.
Sec. 376. Securities Exchange Act of 1934.
Sec. 377. Title 18, United States Code.
Sec. 378. Title 31, United States Code.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption
for foreign private advisers; limited intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations;
disclosures.
Sec. 405. Disclosure provision amendment.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund
advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for
Federal registration of investment advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.
TITLE V--INSURANCE
Subtitle A--Office of National Insurance
Sec. 501. Short title.
Sec. 502. Federal Insurance Office.
Subtitle B--State-Based Insurance Reform
Sec. 511. Short title.
[[Page 124 STAT. 1379]]
Sec. 512. Effective date.
PART I--Nonadmitted Insurance
Sec. 521. Reporting, payment, and allocation of premium taxes.
Sec. 522. Regulation of nonadmitted insurance by insured's home State.
Sec. 523. Participation in national producer database.
Sec. 524. Uniform standards for surplus lines eligibility.
Sec. 525. Streamlined application for commercial purchasers.
Sec. 526. GAO study of nonadmitted insurance market.
Sec. 527. Definitions.
PART II--Reinsurance
Sec. 531. Regulation of credit for reinsurance and reinsurance
agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III--Rule of Construction
Sec. 541. Rule of construction.
Sec. 542. Severability.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks,
industrial loan companies, and certain other companies under
the Bank Holding Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of
functionally regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of
depository institution subsidiaries of holding companies.
Sec. 606. Requirements for financial holding companies to remain well
capitalized and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with
affiliates.
Sec. 609. Eliminating exceptions for transactions with financial
subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative
transactions, repurchase agreements, reverse repurchase
agreements, and securities lending and borrowing
transactions.
Sec. 611. Consistent treatment of derivative transactions in lending
limits.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels.
Sec. 617. Elimination of elective investment bank holding company
framework.
Sec. 618. Securities holding companies.
Sec. 619. Prohibitions on proprietary trading and certain relationships
with hedge funds and private equity funds.
Sec. 620. Study of bank investment activities.
Sec. 621. Conflicts of interest.
Sec. 622. Concentration limits on large financial firms.
Sec. 623. Interstate merger transactions.
Sec. 624. Qualified thrift lenders.
Sec. 625. Treatment of dividends by certain mutual holding companies.
Sec. 626. Intermediate holding companies.
Sec. 627. Interest-bearing transaction accounts authorized.
Sec. 628. Credit card bank small business lending.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
Sec. 701. Short title.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--Regulatory Authority
Sec. 711. Definitions.
Sec. 712. Review of regulatory authority.
Sec. 713. Portfolio margining conforming changes.
Sec. 714. Abusive swaps.
Sec. 715. Authority to prohibit participation in swap activities.
[[Page 124 STAT. 1380]]
Sec. 716. Prohibition against Federal Government bailouts of swaps
entities.
Sec. 717. New product approval CFTC--SEC process.
Sec. 718. Determining status of novel derivative products.
Sec. 719. Studies.
Sec. 720. Memorandum.
PART II--Regulation of Swap Markets
Sec. 721. Definitions.
Sec. 722. Jurisdiction.
Sec. 723. Clearing.
Sec. 724. Swaps; segregation and bankruptcy treatment.
Sec. 725. Derivatives clearing organizations.
Sec. 726. Rulemaking on conflict of interest.
Sec. 727. Public reporting of swap transaction data.
Sec. 728. Swap data repositories.
Sec. 729. Reporting and recordkeeping.
Sec. 730. Large swap trader reporting.
Sec. 731. Registration and regulation of swap dealers and major swap
participants.
Sec. 732. Conflicts of interest.
Sec. 733. Swap execution facilities.
Sec. 734. Derivatives transaction execution facilities and exempt boards
of trade.
Sec. 735. Designated contract markets.
Sec. 736. Margin.
Sec. 737. Position limits.
Sec. 738. Foreign boards of trade.
Sec. 739. Legal certainty for swaps.
Sec. 740. Multilateral clearing organizations.
Sec. 741. Enforcement.
Sec. 742. Retail commodity transactions.
Sec. 743. Other authority.
Sec. 744. Restitution remedies.
Sec. 745. Enhanced compliance by registered entities.
Sec. 746. Insider trading.
Sec. 747. Antidisruptive practices authority.
Sec. 748. Commodity whistleblower incentives and protection.
Sec. 749. Conforming amendments.
Sec. 750. Study on oversight of carbon markets.
Sec. 751. Energy and environmental markets advisory committee.
Sec. 752. International harmonization.
Sec. 753. Anti-manipulation authority.
Sec. 754. Effective date.
Subtitle B--Regulation of Security-Based Swap Markets
Sec. 761. Definitions under the Securities Exchange Act of 1934.
Sec. 762. Repeal of prohibition on regulation of security-based swap
agreements.
Sec. 763. Amendments to the Securities Exchange Act of 1934.
Sec. 764. Registration and regulation of security-based swap dealers and
major security-based swap participants.
Sec. 765. Rulemaking on conflict of interest.
Sec. 766. Reporting and recordkeeping.
Sec. 767. State gaming and bucket shop laws.
Sec. 768. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 769. Definitions under the Investment Company Act of 1940.
Sec. 770. Definitions under the Investment Advisers Act of 1940.
Sec. 771. Other authority.
Sec. 772. Jurisdiction.
Sec. 773. Civil penalties.
Sec. 774. Effective date.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
Sec. 801. Short title.
Sec. 802. Findings and purposes.
Sec. 803. Definitions.
Sec. 804. Designation of systemic importance.
Sec. 805. Standards for systemically important financial market
utilities and payment, clearing, or settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated
financial market utilities.
Sec. 808. Examination of and enforcement actions against financial
institutions subject to standards for designated activities.
[[Page 124 STAT. 1381]]
Sec. 809. Requests for information, reports, or records.
Sec. 810. Rulemaking.
Sec. 811. Other authority.
Sec. 812. Consultation.
Sec. 813. Common framework for designated clearing entity risk
management.
Sec. 814. Effective date.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Sec. 901. Short title.
Subtitle A--Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
Sec. 912. Clarification of authority of the Commission to engage in
investor testing.
Sec. 913. Study and rulemaking regarding obligations of brokers,
dealers, and investment advisers.
Sec. 914. Study on enhancing investment adviser examinations.
Sec. 915. Office of the Investor Advocate.
Sec. 916. Streamlining of filing procedures for self-regulatory
organizations.
Sec. 917. Study regarding financial literacy among investors.
Sec. 918. Study regarding mutual fund advertising.
Sec. 919. Clarification of Commission authority to require investor
disclosures before purchase of investment products and
services.
Sec. 919A. Study on conflicts of interest.
Sec. 919B. Study on improved investor access to information on
investment advisers and broker-dealers.
Sec. 919C. Study on financial planners and the use of financial
designations.
Sec. 919D. Ombudsman.
Subtitle B--Increasing Regulatory Enforcement and Remedies
Sec. 921. Authority to restrict mandatory pre-dispute arbitration.
Sec. 922. Whistleblower protection.
Sec. 923. Conforming amendments for whistleblower protection.
Sec. 924. Implementation and transition provisions for whistleblower
protection.
Sec. 925. Collateral bars.
Sec. 926. Disqualifying felons and other ``bad actors'' from Regulation
D offerings.
Sec. 927. Equal treatment of self-regulatory organization rules.
Sec. 928. Clarification that section 205 of the Investment Advisers Act
of 1940 does not apply to State-registered advisers.
Sec. 929. Unlawful margin lending.
Sec. 929A. Protection for employees of subsidiaries and affiliates of
publicly traded companies.
Sec. 929B. Fair Fund amendments.
Sec. 929C. Increasing the borrowing limit on Treasury loans.
Sec. 929D. Lost and stolen securities.
Sec. 929E. Nationwide service of subpoenas.
Sec. 929F. Formerly associated persons.
Sec. 929G. Streamlined hiring authority for market specialists.
Sec. 929H. SIPC Reforms.
Sec. 929I. Protecting confidentiality of materials submitted to the
Commission.
Sec. 929J. Expansion of audit information to be produced and exchanged.
Sec. 929K. Sharing privileged information with other authorities.
Sec. 929L. Enhanced application of antifraud provisions.
Sec. 929M. Aiding and abetting authority under the Securities Act and
the Investment Company Act.
Sec. 929N. Authority to impose penalties for aiding and abetting
violations of the Investment Advisers Act.
Sec. 929O. Aiding and abetting standard of knowledge satisfied by
recklessness.
Sec. 929P. Strengthening enforcement by the Commission.
Sec. 929Q. Revision to recordkeeping rule.
Sec. 929R. Beneficial ownership and short-swing profit reporting.
Sec. 929S. Fingerprinting.
Sec. 929T. Equal treatment of self-regulatory organization rules.
Sec. 929U. Deadline for completing examinations, inspections and
enforcement actions.
Sec. 929V. Security Investor Protection Act amendments.
Sec. 929W. Notice to missing security holders.
Sec. 929X. Short sale reforms.
Sec. 929Y. Study on extraterritorial private rights of action.
Sec. 929Z. GAO study on securities litigation.
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.
[[Page 124 STAT. 1382]]
Sec. 932. Enhanced regulation, accountability, and transparency of
nationally recognized statistical rating organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the
issuer in rating decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Removal of statutory references to credit ratings.
Sec. 939A. Review of reliance on ratings.
Sec. 939B. Elimination of exemption from fair disclosure rule.
Sec. 939C. Securities and Exchange Commission study on strengthening
credit rating agency independence.
Sec. 939D. Government Accountability Office study on alternative
business models.
Sec. 939E. Government Accountability Office study on the creation of an
independent professional analyst organization.
Sec. 939F. Study and rulemaking on assigned credit ratings.
Sec. 939G. Effect of Rule 436(g).
Sec. 939H. Sense of Congress.
Subtitle D--Improvements to the Asset-Backed Securitization Process
Sec. 941. Regulation of credit risk retention.
Sec. 942. Disclosures and reporting for asset-backed securities.
Sec. 943. Representations and warranties in asset-backed offerings.
Sec. 944. Exempted transactions under the Securities Act of 1933.
Sec. 945. Due diligence analysis and disclosure in asset-backed
securities issues.
Sec. 946. Study on the macroeconomic effects of risk retention
requirements.
Subtitle E--Accountability and Executive Compensation
Sec. 951. Shareholder vote on executive compensation disclosures.
Sec. 952. Compensation committee independence.
Sec. 953. Executive compensation disclosures.
Sec. 954. Recovery of erroneously awarded compensation.
Sec. 955. Disclosure regarding employee and director hedging.
Sec. 956. Enhanced compensation structure reporting.
Sec. 957. Voting by brokers.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Sec. 967. Commission organizational study and reform.
Sec. 968. Study on SEC revolving door.
Subtitle G--Strengthening Corporate Governance
Sec. 971. Proxy access.
Sec. 972. Disclosures regarding chairman and CEO structures.
Subtitle H--Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board of
the MSRB.
Sec. 976. Government Accountability Office study of increased disclosure
to investors.
Sec. 977. Government Accountability Office study on the municipal
securities markets.
Sec. 978. Funding for Governmental Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
Sec. 981. Authority to share certain information with foreign
authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public Utility
Holding Company Act of 1935.
[[Page 124 STAT. 1383]]
Sec. 987. Amendment to definition of material loss and nonmaterial
losses to the Deposit Insurance Fund for purposes of
Inspector General reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial
losses to the National Credit Union Share Insurance Fund for
purposes of Inspector General reviews.
Sec. 989. Government Accountability Office study on proprietary trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Designated Federal entity inspectors general independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of Inspectors General of designated Federal entities.
Sec. 989E. Additional oversight of financial regulatory system.
Sec. 989F. GAO study of person to person lending.
Sec. 989G. Exemption for nonaccelerated filers.
Sec. 989H. Corrective responses by heads of certain establishments to
deficiencies identified by Inspectors General.
Sec. 989I. GAO study regarding exemption for smaller issuers.
Sec. 989J. Further promoting the adoption of the NAIC Model Regulations
that enhance protection of seniors and other consumers.
Subtitle J--Securities and Exchange Commission Match Funding
Sec. 991. Securities and Exchange Commission match funding.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A--Bureau of Consumer Financial Protection
Sec. 1011. Establishment of the Bureau of Consumer Financial Protection.
Sec. 1012. Executive and administrative powers.
Sec. 1013. Administration.
Sec. 1014. Consumer Advisory Board.
Sec. 1015. Coordination.
Sec. 1016. Appearances before and reports to Congress.
Sec. 1017. Funding; penalties and fines.
Sec. 1018. Effective date.
Subtitle B--General Powers of the Bureau
Sec. 1021. Purpose, objectives, and functions.
Sec. 1022. Rulemaking authority.
Sec. 1023. Review of Bureau regulations.
Sec. 1024. Supervision of nondepository covered persons.
Sec. 1025. Supervision of very large banks, savings associations, and
credit unions.
Sec. 1026. Other banks, savings associations, and credit unions.
Sec. 1027. Limitations on authorities of the Bureau; preservation of
authorities.
Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.
Sec. 1029. Exclusion for auto dealers.
Sec. 1029A. Effective date.
Subtitle C--Specific Bureau Authorities
Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 1032. Disclosures.
Sec. 1033. Consumer rights to access information.
Sec. 1034. Response to consumer complaints and inquiries.
Sec. 1035. Private education loan ombudsman.
Sec. 1036. Prohibited acts.
Sec. 1037. Effective date.
Subtitle D--Preservation of State Law
Sec. 1041. Relation to State law.
Sec. 1042. Preservation of enforcement powers of States.
Sec. 1043. Preservation of existing contracts.
Sec. 1044. State law preemption standards for national banks and
subsidiaries clarified.
Sec. 1045. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 1046. State law preemption standards for Federal savings
associations and subsidiaries clarified.
Sec. 1047. Visitorial standards for national banks and savings
associations.
Sec. 1048. Effective date.
Subtitle E--Enforcement Powers
Sec. 1051. Definitions.
[[Page 124 STAT. 1384]]
Sec. 1052. Investigations and administrative discovery.
Sec. 1053. Hearings and adjudication proceedings.
Sec. 1054. Litigation authority.
Sec. 1055. Relief available.
Sec. 1056. Referrals for criminal proceedings.
Sec. 1057. Employee protection.
Sec. 1058. Effective date.
Subtitle F--Transfer of Functions and Personnel; Transitional Provisions
Sec. 1061. Transfer of consumer financial protection functions.
Sec. 1062. Designated transfer date.
Sec. 1063. Savings provisions.
Sec. 1064. Transfer of certain personnel.
Sec. 1065. Incidental transfers.
Sec. 1066. Interim authority of the Secretary.
Sec. 1067. Transition oversight.
Subtitle G--Regulatory Improvements
Sec. 1071. Small business data collection.
Sec. 1072. Assistance for economically vulnerable individuals and
families.
Sec. 1073. Remittance transfers.
Sec. 1074. Department of the Treasury study on ending the
conservatorship of Fannie Mae, Freddie Mac, and reforming the
housing finance system.
Sec. 1075. Reasonable fees and rules for payment card transactions.
Sec. 1076. Reverse mortgage study and regulations.
Sec. 1077. Report on private education loans and private educational
lenders.
Sec. 1078. Study and report on credit scores.
Sec. 1079. Review, report, and program with respect to exchange
facilitators.
Sec. 1079A. Financial fraud provisions.
Subtitle H--Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act
of 1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and
Accurate Credit Transactions Act of 2003.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendment to Federal Financial Institutions Examination
Council Act of 1978.
Sec. 1092. Amendments to the Federal Trade Commission Act.
Sec. 1093. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 1095. Amendments to the Homeowners Protection Act of 1998.
Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of
1994.
Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of
1974.
Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act.
Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
Sec. 1100A. Amendments to the Truth in Lending Act.
Sec. 1100B. Amendments to the Truth in Savings Act.
Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 1100D. Amendments to the Paperwork Reduction Act.
Sec. 1100E. Adjustments for inflation in the Truth in Lending Act.
Sec. 1100F. Use of consumer reports.
Sec. 1100G. Small business fairness and regulatory transparency.
Sec. 1100H. Effective date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
Sec. 1101. Federal Reserve Act amendments on emergency lending
authority.
Sec. 1102. Reviews of special Federal reserve credit facilities.
Sec. 1103. Public access to information.
Sec. 1104. Liquidity event determination.
[[Page 124 STAT. 1385]]
Sec. 1105. Emergency financial stabilization.
Sec. 1106. Additional related amendments.
Sec. 1107. Federal Reserve Act amendments on Federal reserve bank
governance.
Sec. 1108. Federal Reserve Act amendments on supervision and regulation
policy.
Sec. 1109. GAO audit of the Federal Reserve facilities; publication of
Board actions.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
Sec. 1201. Short title.
Sec. 1202. Purpose.
Sec. 1203. Definitions.
Sec. 1204. Expanded access to mainstream financial institutions.
Sec. 1205. Low-cost alternatives to payday loans.
Sec. 1206. Grants to establish loan-loss reserve funds.
Sec. 1207. Procedural provisions.
Sec. 1208. Authorization of appropriations.
Sec. 1209. Regulations.
Sec. 1210. Evaluation and reports to Congress.
TITLE XIII--PAY IT BACK ACT
Sec. 1301. Short title.
Sec. 1302. Amendment to reduce TARP authorization.
Sec. 1303. Report.
Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.
Sec. 1305. Federal Housing Finance Agency report.
Sec. 1306. Repayment of unobligated ARRA funds.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Sec. 1400. Short title; designation as enumerated consumer law.
Subtitle A--Residential Mortgage Loan Origination Standards
Sec. 1401. Definitions.
Sec. 1402. Residential mortgage loan origination.
Sec. 1403. Prohibition on steering incentives.
Sec. 1404. Liability.
Sec. 1405. Regulations.
Sec. 1406. Study of shared appreciation mortgages.
Subtitle B--Minimum Standards For Mortgages
Sec. 1411. Ability to repay.
Sec. 1412. Safe harbor and rebuttable presumption.
Sec. 1413. Defense to foreclosure.
Sec. 1414. Additional standards and requirements.
Sec. 1415. Rule of construction.
Sec. 1416. Amendments to civil liability provisions.
Sec. 1417. Lender rights in the context of borrower deception.
Sec. 1418. Six-month notice required before reset of hybrid adjustable
rate mortgages.
Sec. 1419. Required disclosures.
Sec. 1420. Disclosures required in monthly statements for residential
mortgage loans.
Sec. 1421. Report by the GAO.
Sec. 1422. State attorney general enforcement authority.
Subtitle C--High-Cost Mortgages
Sec. 1431. Definitions relating to high-cost mortgages.
Sec. 1432. Amendments to existing requirements for certain mortgages.
Sec. 1433. Additional requirements for certain mortgages.
Subtitle D--Office of Housing Counseling
Sec. 1441. Short title.
Sec. 1442. Establishment of Office of Housing Counseling.
Sec. 1443. Counseling procedures.
Sec. 1444. Grants for housing counseling assistance.
Sec. 1445. Requirements to use HUD-certified counselors under HUD
programs.
Sec. 1446. Study of defaults and foreclosures.
Sec. 1447. Default and foreclosure database.
Sec. 1448. Definitions for counseling-related programs.
Sec. 1449. Accountability and transparency for grant recipients.
Sec. 1450. Updating and simplification of mortgage information booklet.
[[Page 124 STAT. 1386]]
Sec. 1451. Home inspection counseling.
Sec. 1452. Warnings to homeowners of foreclosure rescue scams.
Subtitle E--Mortgage Servicing
Sec. 1461. Escrow and impound accounts relating to certain consumer
credit transactions.
Sec. 1462. Disclosure notice required for consumers who waive escrow
services.
Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 1464. Truth in Lending Act amendments.
Sec. 1465. Escrows included in repayment analysis.
Subtitle F--Appraisal Activities
Sec. 1471. Property appraisal requirements.
Sec. 1472. Appraisal independence requirements.
Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC,
Appraiser Independence Monitoring, Approved Appraiser
Education, Appraisal Management Companies, Appraiser
Complaint Hotline, Automated Valuation Models, and Broker
Price Opinions.
Sec. 1474. Equal Credit Opportunity Act amendment.
Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees.
Sec. 1476. GAO study on the effectiveness and impact of various
appraisal methods, valuation models and distributions
channels, and on the Home Valuation Code of conduct and the
Appraisal Subcommittee.
Subtitle G--Mortgage Resolution and Modification
Sec. 1481. Multifamily mortgage resolution program.
Sec. 1482. Home Affordable Modification Program guidelines.
Sec. 1483. Public availability of information of Making Home Affordable
Program.
Sec. 1484. Protecting tenants at foreclosure extension and
clarification.
Subtitle H--Miscellaneous Provisions
Sec. 1491. Sense of Congress regarding the importance of government-
sponsored enterprises reform to enhance the protection,
limitation, and regulation of the terms of residential
mortgage credit.
Sec. 1492. GAO study report on government efforts to combat mortgage
foreclosure rescue scams and loan modification fraud.
Sec. 1493. Reporting of mortgage data by State.
Sec. 1494. Study of effect of drywall presence on foreclosures.
Sec. 1495. Definition.
Sec. 1496. Emergency mortgage relief.
Sec. 1497. Additional assistance for Neighborhood Stabilization Program.
Sec. 1498. Legal assistance for foreclosure-related issues.
TITLE XV--MISCELLANEOUS PROVISIONS
Sec. 1501. Restrictions on use of United States funds for foreign
governments; protection of American taxpayers.
Sec. 1502. Conflict minerals.
Sec. 1503. Reporting requirements regarding coal or other mine safety.
Sec. 1504. Disclosure of payments by resource extraction issuers.
Sec. 1505. Study by the Comptroller General.
Sec. 1506. Study on core deposits and brokered deposits.
TITLE XVI--SECTION 1256 CONTRACTS
Sec. 1601. Certain swaps, etc., not treated as section 1256 contracts.
SEC. 2. <<NOTE: 12 USC 5301.>> DEFINITIONS.
As used in this Act, the following definitions shall apply, except
as the context otherwise requires or as otherwise specifically provided
in this Act:
(1) Affiliate.--The term ``affiliate'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(2) Appropriate federal banking agency.--On and after the
transfer date, the term ``appropriate Federal banking agency''
has the same meaning as in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), as amended by title III.
[[Page 124 STAT. 1387]]
(3) Board of governors.--The term ``Board of Governors''
means the Board of Governors of the Federal Reserve System.
(4) Bureau.--The term ``Bureau'' means the Bureau of
Consumer Financial Protection established under title X.
(5) Commission.--The term ``Commission'' means the
Securities and Exchange Commission, except in the context of the
Commodity Futures Trading Commission.
(6) Commodity futures terms.--The terms ``futures commission
merchant'', ``swap'', ``swap dealer'', ``swap execution
facility'', ``derivatives clearing organization'', ``board of
trade'', ``commodity trading advisor'', ``commodity pool'', and
``commodity pool operator'' have the same meanings as given the
terms in section 1a of the Commodity Exchange Act (7 U.S.C. 1 et
seq.).
(7) Corporation.--The term ``Corporation'' means the Federal
Deposit Insurance Corporation.
(8) Council.--The term ``Council'' means the Financial
Stability Oversight Council established under title I.
(9) Credit union.--The term ``credit union'' means a Federal
credit union, State credit union, or State-chartered credit
union, as those terms are defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(10) Federal banking agency.--The term--
(A) ``Federal banking agency'' means, individually,
the Board of Governors, the Office of the Comptroller of
the Currency, and the Corporation; and
(B) ``Federal banking agencies'' means all of the
agencies referred to in subparagraph (A), collectively.
(11) Functionally regulated subsidiary.--The term
``functionally regulated subsidiary'' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act of 1956 (12
U.S.C. 1844(c)(5)).
(12) Primary financial regulatory agency.--The term
``primary financial regulatory agency'' means--
(A) the appropriate Federal banking agency, with
respect to institutions described in section 3(q) of the
Federal Deposit Insurance Act, except to the extent that
an institution is or the activities of an institution
are otherwise described in subparagraph (B), (C), (D),
or (E);
(B) the Securities and Exchange Commission, with
respect to--
(i) any broker or dealer that is registered
with the Commission under the Securities Exchange
Act of 1934, with respect to the activities of the
broker or dealer that require the broker or dealer
to be registered under that Act;
(ii) any investment company that is registered
with the Commission under the Investment Company
Act of 1940, with respect to the activities of the
investment company that require the investment
company to be registered under that Act;
(iii) any investment adviser that is
registered with the Commission under the
Investment Advisers Act of 1940, with respect to
the investment advisory activities of such company
and activities that are incidental to such
advisory activities;
[[Page 124 STAT. 1388]]
(iv) any clearing agency registered with the
Commission under the Securities Exchange Act of
1934, with respect to the activities of the
clearing agency that require the agency to be
registered under such Act;
(v) any nationally recognized statistical
rating organization registered with the Commission
under the Securities Exchange Act of 1934;
(vi) any transfer agent registered with the
Commission under the Securities Exchange Act of
1934;
(vii) any exchange registered as a national
securities exchange with the Commission under the
Securities Exchange Act of 1934;
(viii) any national securities association
registered with the Commission under the
Securities Exchange Act of 1934;
(ix) any securities information processor
registered with the Commission under the
Securities Exchange Act of 1934;
(x) the Municipal Securities Rulemaking Board
established under the Securities Exchange Act of
1934;
(xi) the Public Company Accounting Oversight
Board established under the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7211 et seq.);
(xii) the Securities Investor Protection
Corporation established under the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.); and
(xiii) any security-based swap execution
facility, security-based swap data repository,
security-based swap dealer or major security-based
swap participant registered with the Commission
under the Securities Exchange Act of 1934, with
respect to the security-based swap activities of
the person that require such person to be
registered under such Act;
(C) the Commodity Futures Trading Commission, with
respect to--
(i) any futures commission merchant registered
with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities of the
futures commission merchant that require the
futures commission merchant to be registered under
that Act;
(ii) any commodity pool operator registered
with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities of the
commodity pool operator that require the commodity
pool operator to be registered under that Act, or
a commodity pool, as defined in that Act;
(iii) any commodity trading advisor or
introducing broker registered with the Commodity
Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with respect to
the activities of the commodity trading advisor or
introducing broker that require the commodity
trading adviser or introducing broker to be
registered under that Act;
[[Page 124 STAT. 1389]]
(iv) any derivatives clearing organization
registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.), with respect to the activities
of the derivatives clearing organization that
require the derivatives clearing organization to
be registered under that Act;
(v) any board of trade designated as a
contract market by the Commodity Futures Trading
Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.);
(vi) any futures association registered with
the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et seq.);
(vii) any retail foreign exchange dealer
registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.), with respect to the activities
of the retail foreign exchange dealer that require
the retail foreign exchange dealer to be
registered under that Act;
(viii) any swap execution facility, swap data
repository, swap dealer, or major swap participant
registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.) with respect to the swap
activities of the person that require such person
to be registered under that Act; and
(ix) any registered entity under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with respect to
the activities of the registered entity that
require the registered entity to be registered
under that Act;
(D) the State insurance authority of the State in
which an insurance company is domiciled, with respect to
the insurance activities and activities that are
incidental to such insurance activities of an insurance
company that is subject to supervision by the State
insurance authority under State insurance law; and
(E) the Federal Housing Finance Agency, with respect
to Federal Home Loan Banks or the Federal Home Loan Bank
System, and with respect to the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation.
(13) Prudential standards.--The term ``prudential
standards'' means enhanced supervision and regulatory standards
developed by the Board of Governors under section 165.
(14) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(15) Securities terms.--The--
(A) terms ``broker'', ``dealer'', ``issuer'',
``nationally recognized statistical rating
organization'', ``security'', and ``securities laws''
have the same meanings as in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c);
(B) term ``investment adviser'' has the same meaning
as in section 202 of the Investment Advisers Act of 1940
(15 U.S.C. 80b-2); and
(C) term ``investment company'' has the same meaning
as in section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a-3).
[[Page 124 STAT. 1390]]
(16) State.--The term ``State'' means any State,
commonwealth, territory, or possession of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, American Samoa,
Guam, or the United States Virgin Islands.
(17) Transfer date.--The term ``transfer date'' means the
date established under section 311.
(18) Other incorporated definitions.--
(A) Federal deposit insurance act.--The terms
``bank'', ``bank holding company'', ``control'',
``deposit'', ``depository institution'', ``Federal
depository institution'', ``Federal savings
association'', ``foreign bank'', ``including'',
``insured branch'', ``insured depository institution'',
``national member bank'', ``national nonmember bank'',
``savings association'', ``State bank'', ``State
depository institution'', ``State member bank'', ``State
nonmember bank'', ``State savings association'', and
``subsidiary'' have the same meanings as in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813).
(B) Holding companies.--The term--
(i) ``bank holding company'' has the same
meaning as in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841);
(ii) ``financial holding company'' has the
same meaning as in section 2(p) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(p));
and
(iii) ``savings and loan holding company'' has
the same meaning as in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1467a(a)).
SEC. 3. <<NOTE: 12 USC 5302.>> SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or circumstance
is held to be unconstitutional, the remainder of this Act, the
amendments made by this Act, and the application of the provisions of
such to any person or circumstance shall not be affected thereby.
SEC. 4. <<NOTE: 12 USC 5301 note.>> EFFECTIVE DATE.
Except as otherwise specifically provided in this Act or the
amendments made by this Act, this Act and such amendments shall take
effect 1 day after the date of enactment of this Act.
SEC. 5. BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of complying with
the Statutory Pay-As-You-Go-Act of 2010, shall be determined by
reference to the latest statement titled ``Budgetary Effects of PAYGO
Legislation'' for this Act, jointly submitted for printing in the
Congressional Record by the Chairmen of the House and Senate Budget
Committees, provided that such statement has been submitted prior to the
vote on passage in the House acting first on this conference report or
amendment between the Houses.
SEC. 6. <<NOTE: 12 USC 5303.>> ANTITRUST SAVINGS CLAUSE.
Nothing in this Act, or any amendment made by this Act, shall be
construed to modify, impair, or supersede the operation of any of the
antitrust laws, unless otherwise <<NOTE: Definition.>> specified. For
purposes of this section, the term ``antitrust laws'' has the same
meaning
[[Page 124 STAT. 1391]]
as in subsection (a) of the first section of the Clayton Act, except
that such term includes section 5 of the Federal Trade Commission Act,
to the extent that such section 5 applies to unfair methods of
competition.
TITLE I-- <<NOTE: Financial Stability Act of 2010.>> FINANCIAL STABILITY
SEC. 101. <<NOTE: 12 USC 5301 note.>> SHORT TITLE.
This title may be cited as the ``Financial Stability Act of 2010''.
SEC. 102. <<NOTE: 12 USC 5311.>> DEFINITIONS.
(a) In General.--For purposes of this title, unless the context
otherwise requires, the following definitions shall apply:
(1) Bank holding company.--The term ``bank holding company''
has the same meaning as in section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841). A foreign bank or company that is
treated as a bank holding company for purposes of the Bank
Holding Company Act of 1956, pursuant to section 8(a) of the
International Banking Act of 1978 (12 U.S.C. 3106(a)), shall be
treated as a bank holding company for purposes of this title.
(2) Chairperson.--The term ``Chairperson'' means the
Chairperson of the Council.
(3) Member agency.--The term ``member agency'' means an
agency represented by a voting member of the Council.
(4) Nonbank financial company definitions.--
(A) Foreign nonbank financial company.--The term
``foreign nonbank financial company'' means a company
(other than a company that is, or is treated in the
United States as, a bank holding company) that is--
(i) incorporated or organized in a country
other than the United States; and
(ii) predominantly engaged in, including
through a branch in the United States, financial
activities, as defined in paragraph (6).
(B) U.S. nonbank financial company.--The term ``U.S.
nonbank financial company'' means a company (other than
a bank holding company, a Farm Credit System institution
chartered and subject to the provisions of the Farm
Credit Act of 1971 (12 U.S.C. 2001 et seq.), or a
national securities exchange (or parent thereof),
clearing agency (or parent thereof, unless the parent is
a bank holding company), security-based swap execution
facility, or security-based swap data repository
registered with the Commission, or a board of trade
designated as a contract market (or parent thereof), or
a derivatives clearing organization (or parent thereof,
unless the parent is a bank holding company), swap
execution facility or a swap data repository registered
with the Commodity Futures Trading Commission), that
is--
(i) incorporated or organized under the laws
of the United States or any State; and
(ii) predominantly engaged in financial
activities, as defined in paragraph (6).
[[Page 124 STAT. 1392]]
(C) Nonbank financial company.--The term ``nonbank
financial company'' means a U.S. nonbank financial
company and a foreign nonbank financial company.
(D) Nonbank financial company supervised by the
board of governors.--The term ``nonbank financial
company supervised by the Board of Governors'' means a
nonbank financial company that the Council has
determined under section 113 shall be supervised by the
Board of Governors.
(5) Office of financial research.--The term ``Office of
Financial Research'' means the office established under section
152.
(6) Predominantly engaged.--A company is ``predominantly
engaged in financial activities'' if--
(A) the annual gross revenues derived by the company
and all of its subsidiaries from activities that are
financial in nature (as defined in section 4(k) of the
Bank Holding Company Act of 1956) and, if applicable,
from the ownership or control of one or more insured
depository institutions, represents 85 percent or more
of the consolidated annual gross revenues of the
company; or
(B) the consolidated assets of the company and all
of its subsidiaries related to activities that are
financial in nature (as defined in section 4(k) of the
Bank Holding Company Act of 1956) and, if applicable,
related to the ownership or control of one or more
insured depository institutions, represents 85 percent
or more of the consolidated assets of the company.
(7) Significant institutions.--The terms ``significant
nonbank financial company'' and ``significant bank holding
company'' have the meanings given those terms by rule of the
Board of Governors, but in no instance shall the term
``significant nonbank financial company'' include those entities
that are excluded under paragraph (4)(B).
(b) Definitional Criteria.--The <<NOTE: Regulations.>> Board of
Governors shall establish, by regulation, the requirements for
determining if a company is predominantly engaged in financial
activities, as defined in subsection (a)(6).
(c) Foreign Nonbank Financial Companies.--For purposes of the
application of subtitles A and C (other than section 113(b)) with
respect to a foreign nonbank financial company, references in this title
to ``company'' or ``subsidiary'' include only the United States
activities and subsidiaries of such foreign company, except as otherwise
provided.
Subtitle A--Financial Stability Oversight Council
SEC. 111. <<NOTE: 12 USC 5321.>> FINANCIAL STABILITY OVERSIGHT
COUNCIL ESTABLISHED.
(a) Establishment.--Effective <<NOTE: Effective date.>> on the date
of enactment of this Act, there is established the Financial Stability
Oversight Council.
(b) Membership.--The Council shall consist of the following members:
(1) Voting members.--The voting members, who shall each have
1 vote on the Council shall be--
[[Page 124 STAT. 1393]]
(A) the Secretary of the Treasury, who shall serve
as Chairperson of the Council;
(B) the Chairman of the Board of Governors;
(C) the Comptroller of the Currency;
(D) the Director of the Bureau;
(E) the Chairman of the Commission;
(F) the Chairperson of the Corporation;
(G) the Chairperson of the Commodity Futures Trading
Commission;
(H) the Director of the Federal Housing Finance
Agency;
(I) the Chairman of the National Credit Union
Administration Board; and
(J) an independent member appointed by the
President, by and with the advice and consent of the
Senate, having insurance expertise.
(2) Nonvoting members.--The nonvoting members, who shall
serve in an advisory capacity as a nonvoting member of the
Council, shall be--
(A) the Director of the Office of Financial
Research;
(B) the Director of the Federal Insurance Office;
(C) a State insurance commissioner, to be designated
by a selection process determined by the State insurance
commissioners;
(D) a State banking supervisor, to be designated by
a selection process determined by the State banking
supervisors; and
(E) a State securities commissioner (or an officer
performing like functions), to be designated by a
selection process determined by such State securities
commissioners.
(3) Nonvoting member participation.--The nonvoting members
of the Council shall not be excluded from any of the
proceedings, meetings, discussions, or deliberations of the
Council, except that the Chairperson may, upon an affirmative
vote of the member agencies, exclude the nonvoting members from
any of the proceedings, meetings, discussions, or deliberations
of the Council when necessary to safeguard and promote the free
exchange of confidential supervisory information.
(c) Terms; Vacancy.--
(1) Terms.--The independent member of the Council shall
serve for a term of 6 years, and each nonvoting member described
in subparagraphs (C), (D), and (E) of subsection (b)(2) shall
serve for a term of 2 years.
(2) Vacancy.--Any vacancy on the Council shall be filled in
the manner in which the original appointment was made.
(3) Acting officials may serve.--In the event of a vacancy
in the office of the head of a member agency or department, and
pending the appointment of a successor, or during the absence or
disability of the head of a member agency or department, the
acting head of the member agency or department shall serve as a
member of the Council in the place of that agency or department
head.
(d) Technical and Professional Advisory Committees.--The Council may
appoint such special advisory, technical, or professional committees as
may be useful in carrying out the functions of the Council, including an
advisory committee consisting of State
[[Page 124 STAT. 1394]]
regulators, and the members of such committees may be members of the
Council, or other persons, or both.
(e) Meetings.--
(1) Timing.--The Council shall meet at the call of the
Chairperson or a majority of the members then serving, but not
less frequently than quarterly.
(2) Rules for conducting business.--The Council shall adopt
such rules as may be necessary for the conduct of the business
of the Council. Such rules shall be rules of agency
organization, procedure, or practice for purposes of section 553
of title 5, United States Code.
(f) Voting.--Unless otherwise specified, the Council shall make all
decisions that it is authorized or required to make by a majority vote
of the voting members then serving.
(g) Nonapplicability of FACA.--
The <<NOTE: Publication. List.>> Federal Advisory Committee Act (5
U.S.C. App.) shall not apply to the Council, or to any special advisory,
technical, or professional committee appointed by the Council, except
that, if an advisory, technical, or professional committee has one or
more members who are not employees of or affiliated with the United
States Government, the Council shall publish a list of the names of the
members of such committee.
(h) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Council and any special advisory,
technical, or professional committee appointed by the Council, such
services, funds, facilities, staff, and other support services as the
Council may determine advisable.
(i) Compensation of Members.--
(1) Federal employee members.--All members of the Council
who are officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
(2) Compensation for non-federal member.--Section 5314 of
title 5, United States Code, is amended by adding at the end the
following:
``Independent Member of the Financial Stability Oversight
Council (1).''.
(j) Detail of Government Employees.--Any employee of the Federal
Government may be detailed to the Council without reimbursement, and
such detail shall be without interruption or loss of civil service
status or privilege. An employee of the Federal Government detailed to
the Council shall report to and be subject to oversight by the Council
during the assignment to the Council, and shall be compensated by the
department or agency from which the employee was detailed.
SEC. 112. <<NOTE: 12 USC 5322.>> COUNCIL AUTHORITY.
(a) Purposes and Duties of the Council.--
(1) In general.--The purposes of the Council are--
(A) to identify risks to the financial stability of
the United States that could arise from the material
financial distress or failure, or ongoing activities, of
large, interconnected bank holding companies or nonbank
financial companies, or that could arise outside the
financial services marketplace;
(B) to promote market discipline, by eliminating
expectations on the part of shareholders, creditors, and
[[Page 124 STAT. 1395]]
counterparties of such companies that the Government
will shield them from losses in the event of failure;
and
(C) to respond to emerging threats to the stability
of the United States financial system.
(2) Duties.--The Council shall, in accordance with this
title--
(A) collect information from member agencies, other
Federal and State financial regulatory agencies, the
Federal Insurance Office and, if necessary to assess
risks to the United States financial system, direct the
Office of Financial Research to collect information from
bank holding companies and nonbank financial companies;
(B) provide direction to, and request data and
analyses from, the Office of Financial Research to
support the work of the Council;
(C) monitor the financial services marketplace in
order to identify potential threats to the financial
stability of the United States;
(D) to monitor domestic and international financial
regulatory proposals and developments, including
insurance and accounting issues, and to advise Congress
and make recommendations in such areas that will enhance
the integrity, efficiency, competitiveness, and
stability of the U.S. financial markets;
(E) facilitate information sharing and coordination
among the member agencies and other Federal and State
agencies regarding domestic financial services policy
development, rulemaking, examinations, reporting
requirements, and enforcement actions;
(F) recommend to the member agencies general
supervisory priorities and principles reflecting the
outcome of discussions among the member agencies;
(G) identify gaps in regulation that could pose
risks to the financial stability of the United States;
(H) require supervision by the Board of Governors
for nonbank financial companies that may pose risks to
the financial stability of the United States in the
event of their material financial distress or failure,
or because of their activities pursuant to section 113;
(I) make <<NOTE: Recommenda-
tions.>> recommendations to the Board of Governors
concerning the establishment of heightened prudential
standards for risk-based capital, leverage, liquidity,
contingent capital, resolution plans and credit exposure
reports, concentration limits, enhanced public
disclosures, and overall risk management for nonbank
financial companies and large, interconnected bank
holding companies supervised by the Board of Governors;
(J) identify systemically important financial market
utilities and payment, clearing, and settlement
activities (as that term is defined in title VIII);
(K) <<NOTE: Recommenda- tions.>> make
recommendations to primary financial regulatory agencies
to apply new or heightened standards and safeguards for
financial activities or practices that could create or
increase risks of significant liquidity, credit, or
other problems spreading among bank holding companies,
nonbank financial companies, and United States financial
markets;
[[Page 124 STAT. 1396]]
(L) review and, as appropriate, may submit comments
to the Commission and any standard-setting body with
respect to an existing or proposed accounting principle,
standard, or procedure;
(M) provide a forum for--
(i) discussion and analysis of emerging market
developments and financial regulatory issues; and
(ii) resolution of jurisdictional disputes
among the members of the Council; and
(N) <<NOTE: Deadline. Reports.>> annually report to
and testify before Congress on--
(i) the activities of the Council;
(ii) significant financial market and
regulatory developments, including insurance and
accounting regulations and standards, along with
an assessment of those developments on the
stability of the financial system;
(iii) potential emerging threats to the
financial stability of the United States;
(iv) all determinations made under section 113
or title VIII, and the basis for such
determinations;
(v) all recommendations made under section 119
and the result of such recommendations; and
(vi) recommendations--
(I) to enhance the integrity,
efficiency, competitiveness, and
stability of United States financial
markets;
(II) to promote market discipline;
and
(III) to maintain investor
confidence.
(b) Statements by Voting Members of the Council.--At the time at
which each report is submitted under subsection (a), each voting member
of the Council shall--
(1) if such member believes that the Council, the
Government, and the private sector are taking all reasonable
steps to ensure financial stability and to mitigate systemic
risk that would negatively affect the economy, submit a signed
statement to Congress stating such belief; or
(2) if such member does not believe that all reasonable
steps described under paragraph (1) are being taken, submit a
signed statement to Congress stating what actions such member
believes need to be taken in order to ensure that all reasonable
steps described under paragraph (1) are taken.
(c) Testimony by the Chairperson.--The Chairperson shall appear
before the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban Affairs
of the Senate at an annual hearing, after the report is submitted under
subsection (a)--
(1) to discuss the efforts, activities, objectives, and
plans of the Council; and
(2) to discuss and answer questions concerning such report.
(d) Authority To Obtain Information.--
(1) In general.--The Council may receive, and may request
the submission of, any data or information from the Office of
Financial Research, member agencies, and the Federal Insurance
Office, as necessary--
(A) to monitor the financial services marketplace to
identify potential risks to the financial stability of
the United States; or
[[Page 124 STAT. 1397]]
(B) to otherwise carry out any of the provisions of
this title.
(2) Submissions by the office and member agencies.--
Notwithstanding any other provision of law, the Office of
Financial Research, any member agency, and the Federal Insurance
Office, are authorized to submit information to the Council.
(3) Financial data collection.--
(A) In general.--The Council, acting through the
Office of Financial Research, may require the submission
of periodic and other reports from any nonbank financial
company or bank holding company for the purpose of
assessing the extent to which a financial activity or
financial market in which the nonbank financial company
or bank holding company participates, or the nonbank
financial company or bank holding company itself, poses
a threat to the financial stability of the United
States.
(B) Mitigation of report burden.--Before requiring
the submission of reports from any nonbank financial
company or bank holding company that is regulated by a
member agency or any primary financial regulatory
agency, the Council, acting through the Office of
Financial Research, shall coordinate with such agencies
and shall, whenever possible, rely on information
available from the Office of Financial Research or such
agencies.
(C) Mitigation in case of foreign financial
companies.--Before <<NOTE: Consultation.>> requiring the
submission of reports from a company that is a foreign
nonbank financial company or foreign-based bank holding
company, the Council shall, acting through the Office of
Financial Research, to the extent appropriate, consult
with the appropriate foreign regulator of such company
and, whenever possible, rely on information already
being collected by such foreign regulator, with English
translation.
(4) Back-up examination by the board of governors.--If the
Council is unable to determine whether the financial activities
of a U.S. nonbank financial company pose a threat to the
financial stability of the United States, based on information
or reports obtained under paragraphs (1) and (3), discussions
with management, and publicly available information, the Council
may request the Board of Governors, and the Board of Governors
is authorized, to conduct an examination of the U.S. nonbank
financial company for the sole purpose of determining whether
the nonbank financial company should be supervised by the Board
of Governors for purposes of this title.
(5) Confidentiality.--
(A) In general.--The Council, the Office of
Financial Research, and the other member agencies shall
maintain the confidentiality of any data, information,
and reports submitted under this title.
(B) Retention of privilege.--The submission of any
nonpublicly available data or information under this
subsection and subtitle B shall not constitute a waiver
of, or otherwise affect, any privilege arising under
Federal or State law (including the rules of any Federal
or State court) to which the data or information is
otherwise subject.
[[Page 124 STAT. 1398]]
(C) Freedom of information act.--
Section <<NOTE: Applicability.>> 552 of title 5, United
States Code, including the exceptions thereunder, shall
apply to any data or information submitted under this
subsection and subtitle B.
SEC. 113. <<NOTE: 12 USC 5323.>> AUTHORITY TO REQUIRE SUPERVISION
AND REGULATION OF CERTAIN NONBANK
FINANCIAL COMPANIES.
(a) U.S. Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis and
by a vote of not fewer than \2/3\ of the voting members then
serving, including an affirmative vote by the Chairperson, may
determine that a U.S. nonbank financial company shall be
supervised by the Board of Governors and shall be subject to
prudential standards, in accordance with this title, if the
Council determines that material financial distress at the U.S.
nonbank financial company, or the nature, scope, size, scale,
concentration, interconnectedness, or mix of the activities of
the U.S. nonbank financial company, could pose a threat to the
financial stability of the United States.
(2) Considerations.--In making a determination under
paragraph (1), the Council shall consider--
(A) the extent of the leverage of the company;
(B) the extent and nature of the off-balance-sheet
exposures of the company;
(C) the extent and nature of the transactions and
relationships of the company with other significant
nonbank financial companies and significant bank holding
companies;
(D) the importance of the company as a source of
credit for households, businesses, and State and local
governments and as a source of liquidity for the United
States financial system;
(E) the importance of the company as a source of
credit for low-income, minority, or underserved
communities, and the impact that the failure of such
company would have on the availability of credit in such
communities;
(F) the extent to which assets are managed rather
than owned by the company, and the extent to which
ownership of assets under management is diffuse;
(G) the nature, scope, size, scale, concentration,
interconnectedness, and mix of the activities of the
company;
(H) the degree to which the company is already
regulated by 1 or more primary financial regulatory
agencies;
(I) the amount and nature of the financial assets of
the company;
(J) the amount and types of the liabilities of the
company, including the degree of reliance on short-term
funding; and
(K) any other risk-related factors that the Council
deems appropriate.
(b) Foreign Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis and
by a vote of not fewer than \2/3\ of the voting members then
serving, including an affirmative vote by the Chairperson,
[[Page 124 STAT. 1399]]
may determine that a foreign nonbank financial company shall be
supervised by the Board of Governors and shall be subject to
prudential standards, in accordance with this title, if the
Council determines that material financial distress at the
foreign nonbank financial company, or the nature, scope, size,
scale, concentration, interconnectedness, or mix of the
activities of the foreign nonbank financial company, could pose
a threat to the financial stability of the United States.
(2) Considerations.--In making a determination under
paragraph (1), the Council shall consider--
(A) the extent of the leverage of the company;
(B) the extent and nature of the United States
related off-balance-sheet exposures of the company;
(C) the extent and nature of the transactions and
relationships of the company with other significant
nonbank financial companies and significant bank holding
companies;
(D) the importance of the company as a source of
credit for United States households, businesses, and
State and local governments and as a source of liquidity
for the United States financial system;
(E) the importance of the company as a source of
credit for low-income, minority, or underserved
communities in the United States, and the impact that
the failure of such company would have on the
availability of credit in such communities;
(F) the extent to which assets are managed rather
than owned by the company and the extent to which
ownership of assets under management is diffuse;
(G) the nature, scope, size, scale, concentration,
interconnectedness, and mix of the activities of the
company;
(H) the extent to which the company is subject to
prudential standards on a consolidated basis in its home
country that are administered and enforced by a
comparable foreign supervisory authority;
(I) the amount and nature of the United States
financial assets of the company;
(J) the amount and nature of the liabilities of the
company used to fund activities and operations in the
United States, including the degree of reliance on
short-term funding; and
(K) any other risk-related factors that the Council
deems appropriate.
(c) Antievasion.--
(1) Determinations.--In order to avoid evasion of this
title, the Council, on its own initiative or at the request of
the Board of Governors, may determine, on a nondelegable basis
and by a vote of not fewer than \2/3\ of the voting members then
serving, including an affirmative vote by the Chairperson,
that--
(A) material financial distress related to, or the
nature, scope, size, scale, concentration,
interconnectedness, or mix of, the financial activities
conducted directly or indirectly by a company
incorporated or organized under the laws of the United
States or any State or the financial activities in the
United States of a company incorporated or organized in
a country other than the United States would
[[Page 124 STAT. 1400]]
pose a threat to the financial stability of the United
States, based on consideration of the factors in
subsection (a)(2) or (b)(2), as applicable;
(B) the company is organized or operates in such a
manner as to evade the application of this title; and
(C) such financial activities of the company shall
be supervised by the Board of Governors and subject to
prudential standards in accordance with this title,
consistent with paragraph (3).
(2) Report.--Upon making a determination under paragraph
(1), the Council shall submit a report to the appropriate
committees of Congress detailing the reasons for making such
determination.
(3) Consolidated supervision of only financial activities;
establishment of an intermediate holding company.--
(A) Establishment of an intermediate holding
company.--Upon a determination under paragraph (1), the
company that is the subject of the determination may
establish an intermediate holding company in which the
financial activities of such company and its
subsidiaries shall be conducted (other than the
activities described in section 167(b)(2)) in compliance
with any regulations or guidance provided by the Board
of Governors. Such intermediate holding company shall be
subject to the supervision of the Board of Governors and
to prudential standards under this title as if the
intermediate holding company were a nonbank financial
company supervised by the Board of Governors.
(B) Action of the board of governors.--To facilitate
the supervision of the financial activities subject to
the determination in paragraph (1), the Board of
Governors may require a company to establish an
intermediate holding company, as provided for in section
167, which would be subject to the supervision of the
Board of Governors and to prudential standards under
this title, as if the intermediate holding company were
a nonbank financial company supervised by the Board of
Governors.
(4) Notice and opportunity for hearing and final
determination; judicial review.--
<<NOTE: Applicability.>> Subsections (d) through (h) shall apply
to determinations made by the Council pursuant to paragraph (1)
in the same manner as such subsections apply to nonbank
financial companies.
(5) Covered financial activities.--For purposes of this
subsection, the term ``financial activities''--
(A) <<NOTE: Definition.>> means activities that are
financial in nature (as defined in section 4(k) of the
Bank Holding Company Act of 1956);
(B) includes the ownership or control of one or more
insured depository institutions; and
(C) does not include internal financial activities
conducted for the company or any affiliate thereof,
including internal treasury, investment, and employee
benefit functions.
(6) Only financial activities subject to prudential
supervision.--Nonfinancial activities of the company shall not
[[Page 124 STAT. 1401]]
be subject to supervision by the Board of Governors and
prudential standards of the Board. For purposes of this Act, the
financial activities that are the subject of the determination
in paragraph (1) shall be subject to the same requirements as a
nonbank financial company supervised by the Board of Governors.
Nothing in this paragraph shall prohibit or limit the authority
of the Board of Governors to apply prudential standards under
this title to the financial activities that are subject to the
determination in paragraph (1).
(d) Reevaluation and Rescission.--The Council shall--
(1) <<NOTE: Deadline.>> not less frequently than annually,
reevaluate each determination made under subsections (a) and (b)
with respect to such nonbank financial company supervised by the
Board of Governors; and
(2) rescind any such determination, if the Council, by a
vote of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, determines
that the nonbank financial company no longer meets the standards
under subsection (a) or (b), as applicable.
(e) Notice <<NOTE: Deadlines.>> and Opportunity for Hearing and
Final Determination.--
(1) In general.--The Council shall provide to a nonbank
financial company written notice of a proposed determination of
the Council, including an explanation of the basis of the
proposed determination of the Council, that a nonbank financial
company shall be supervised by the Board of Governors and shall
be subject to prudential standards in accordance with this
title.
(2) Hearing.--Not later than 30 days after the date of
receipt of any notice of a proposed determination under
paragraph (1), the nonbank financial company may request, in
writing, an opportunity for a written or oral hearing before the
Council to contest the proposed determination. Upon receipt of a
timely request, the Council shall fix a time (not later than 30
days after the date of receipt of the request) and place at
which such company may appear, personally or through counsel, to
submit written materials (or, at the sole discretion of the
Council, oral testimony and oral argument).
(3) Final determination.--Not later than 60 days after the
date of a hearing under paragraph (2), the Council shall notify
the nonbank financial company of the final determination of the
Council, which shall contain a statement of the basis for the
decision of the Council.
(4) No hearing requested.--If a nonbank financial company
does not make a timely request for a hearing, the Council shall
notify the nonbank financial company, in writing, of the final
determination of the Council under subsection (a) or (b), as
applicable, not later than 10 days after the date by which the
company may request a hearing under paragraph (2).
(f) Emergency <<NOTE: Deadlines.>> Exception.--
(1) In general.--The <<NOTE: Waiver authority.>> Council may
waive or modify the requirements of subsection (e) with respect
to a nonbank financial company, if the Council determines, by a
vote of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, that such
waiver or modification is necessary or appropriate to prevent or
mitigate
[[Page 124 STAT. 1402]]
threats posed by the nonbank financial company to the financial
stability of the United States.
(2) Notice.--The Council shall provide notice of a waiver or
modification under this subsection to the nonbank financial
company concerned as soon as practicable, but not later than 24
hours after the waiver or modification is granted.
(3) International coordination.--
In <<NOTE: Consultation.>> making a determination under
paragraph (1), the Council shall consult with the appropriate
home country supervisor, if any, of the foreign nonbank
financial company that is being considered for such a
determination.
(4) Opportunity for hearing.--The Council shall allow a
nonbank financial company to request, in writing, an opportunity
for a written or oral hearing before the Council to contest a
waiver or modification under this subsection, not later than 10
days after the date of receipt of notice of the waiver or
modification by the company. Upon receipt of a timely request,
the Council shall fix a time (not later than 15 days after the
date of receipt of the request) and place at which the nonbank
financial company may appear, personally or through counsel, to
submit written materials (or, at the sole discretion of the
Council, oral testimony and oral argument).
(5) Notice of final determination.--Not later than 30 days
after the date of any hearing under paragraph (4), the Council
shall notify the subject nonbank financial company of the final
determination of the Council under this subsection, which shall
contain a statement of the basis for the decision of the
Council.
(g) Consultation.--The Council shall consult with the primary
financial regulatory agency, if any, for each nonbank financial company
or subsidiary of a nonbank financial company that is being considered
for supervision by the Board of Governors under this section before the
Council makes any final determination with respect to such nonbank
financial company under subsection (a), (b), or (c).
(h) Judicial Review.--If <<NOTE: Deadline.>> the Council makes a
final determination under this section with respect to a nonbank
financial company, such nonbank financial company may, not later than 30
days after the date of receipt of the notice of final determination
under subsection (d)(2), (e)(3), or (f)(5), bring an action in the
United States district court for the judicial district in which the home
office of such nonbank financial company is located, or in the United
States District Court for the District of Columbia, for an order
requiring that the final determination be rescinded, and the court
shall, upon review, dismiss such action or direct the final
determination to be rescinded. Review of such an action shall be limited
to whether the final determination made under this section was arbitrary
and capricious.
(i) International Coordination.--
In <<NOTE: Consultation.>> exercising its duties under this title with
respect to foreign nonbank financial companies, foreign-based bank
holding companies, and cross-border activities and markets, the Council
shall consult with appropriate foreign regulatory authorities, to the
extent appropriate.
[[Page 124 STAT. 1403]]
SEC. 114. <<NOTE: 12 USC 5324.>> REGISTRATION OF NONBANK FINANCIAL
COMPANIES SUPERVISED BY THE BOARD OF
GOVERNORS.
Not <<NOTE: Deadline.>> later than 180 days after the date of a
final Council determination under section 113 that a nonbank financial
company is to be supervised by the Board of Governors, such company
shall register with the Board of Governors, on forms prescribed by the
Board of Governors, which shall include such information as the Board of
Governors, in consultation with the Council, may deem necessary or
appropriate to carry out this title.
SEC. 115. <<NOTE: 12 USC 5325.>> ENHANCED SUPERVISION AND
PRUDENTIAL STANDARDS FOR NONBANK FINANCIAL
COMPANIES SUPERVISED BY THE BOARD OF
GOVERNORS AND CERTAIN BANK HOLDING
COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from
the material financial distress, failure, or ongoing activities
of large, interconnected financial institutions, the Council may
make recommendations to the Board of Governors concerning the
establishment and refinement of prudential standards and
reporting and disclosure requirements applicable to nonbank
financial companies supervised by the Board of Governors and
large, interconnected bank holding companies, that--
(A) are more stringent than those applicable to
other nonbank financial companies and bank holding
companies that do not present similar risks to the
financial stability of the United States; and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Recommended application of required standards.--In
making recommendations under this section, the Council may--
(A) differentiate among companies that are subject
to heightened standards on an individual basis or by
category, taking into consideration their capital
structure, riskiness, complexity, financial activities
(including the financial activities of their
subsidiaries), size, and any other risk-related factors
that the Council deems appropriate; or
(B) recommend an asset threshold that is higher than
$50,000,000,000 for the application of any standard
described in subsections (c) through (g).
(b) Development of Prudential Standards.--
(1) In general.--The recommendations of the Council under
subsection (a) may include--
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure report
requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures;
(H) short-term debt limits; and
(I) overall risk management requirements.
[[Page 124 STAT. 1404]]
(2) Prudential standards for foreign financial companies.--
In making recommendations concerning the standards set forth in
paragraph (1) that would apply to foreign nonbank financial
companies supervised by the Board of Governors or foreign-based
bank holding companies, the Council shall--
(A) give due regard to the principle of national
treatment and equality of competitive opportunity; and
(B) take into account the extent to which the
foreign nonbank financial company or foreign-based bank
holding company is subject on a consolidated basis to
home country standards that are comparable to those
applied to financial companies in the United States.
(3) Considerations.--In making recommendations concerning
prudential standards under paragraph (1), the Council shall--
(A) take into account differences among nonbank
financial companies supervised by the Board of Governors
and bank holding companies described in subsection (a),
based on--
(i) the factors described in subsections (a)
and (b) of section 113;
(ii) whether the company owns an insured
depository institution;
(iii) nonfinancial activities and affiliations
of the company; and
(iv) any other factors that the Council
determines appropriate;
(B) to the extent possible, ensure that small
changes in the factors listed in subsections (a) and (b)
of section 113 would not result in sharp, discontinuous
changes in the prudential standards established under
section 165; and
(C) adapt its recommendations as appropriate in
light of any predominant line of business of such
company, including assets under management or other
activities for which particular standards may not be
appropriate.
(c) Contingent Capital.--
(1) Study required.--The Council shall conduct a study of
the feasibility, benefits, costs, and structure of a contingent
capital requirement for nonbank financial companies supervised
by the Board of Governors and bank holding companies described
in subsection (a), which study shall include--
(A) an evaluation of the degree to which such
requirement would enhance the safety and soundness of
companies subject to the requirement, promote the
financial stability of the United States, and reduce
risks to United States taxpayers;
(B) an evaluation of the characteristics and amounts
of contingent capital that should be required;
(C) an analysis of potential prudential standards
that should be used to determine whether the contingent
capital of a company would be converted to equity in
times of financial stress;
(D) an evaluation of the costs to companies, the
effects on the structure and operation of credit and
other financial markets, and other economic effects of
requiring contingent capital;
[[Page 124 STAT. 1405]]
(E) an evaluation of the effects of such requirement
on the international competitiveness of companies
subject to the requirement and the prospects for
international coordination in establishing such
requirement; and
(F) recommendations for implementing regulations.
(2) Report.--The Council shall submit a report to Congress
regarding the study required by paragraph (1) not later than 2
years after the date of enactment of this Act.
(3) Recommendations.--
(A) In general.--Subsequent to submitting a report
to Congress under paragraph (2), the Council may make
recommendations to the Board of Governors to require any
nonbank financial company supervised by the Board of
Governors and any bank holding company described in
subsection (a) to maintain a minimum amount of
contingent capital that is convertible to equity in
times of financial stress.
(B) Factors to consider.--In making recommendations
under this subsection, the Council shall consider--
(i) an appropriate transition period for
implementation of a conversion under this
subsection;
(ii) the factors described in subsection
(b)(3);
(iii) capital requirements applicable to a
nonbank financial company supervised by the Board
of Governors or a bank holding company described
in subsection (a), and subsidiaries thereof;
(iv) results of the study required by
paragraph (1); and
(v) any other factor that the Council deems
appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Council may make recommendations
to the Board of Governors concerning the requirement that each
nonbank financial company supervised by the Board of Governors
and each bank holding company described in subsection (a) report
periodically to the Council, the Board of Governors, and the
Corporation, the plan of such company for rapid and orderly
resolution in the event of material financial distress or
failure.
(2) Credit exposure report.--The Council may make
recommendations to the Board of Governors concerning the
advisability of requiring each nonbank financial company
supervised by the Board of Governors and bank holding company
described in subsection (a) to report periodically to the
Council, the Board of Governors, and the Corporation on--
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other such
significant nonbank financial companies and significant
bank holding companies have credit exposure to that
company.
(e) Concentration Limits.--In order to limit the risks that the
failure of any individual company could pose to nonbank financial
companies supervised by the Board of Governors or bank holding companies
described in subsection (a), the Council may make recommendations to the
Board of Governors to prescribe standards to limit such risks, as set
forth in section 165.
[[Page 124 STAT. 1406]]
(f) Enhanced Public Disclosures.--The Council may make
recommendations to the Board of Governors to require periodic public
disclosures by bank holding companies described in subsection (a) and by
nonbank financial companies supervised by the Board of Governors, in
order to support market evaluation of the risk profile, capital
adequacy, and risk management capabilities thereof.
(g) Short-term Debt Limits.--The Council may make recommendations to
the Board of Governors to require short-term debt limits to mitigate the
risks that an over-accumulation of such debt could pose to bank holding
companies described in subsection (a), nonbank financial companies
supervised by the Board of Governors, or the financial system.
SEC. 116. <<NOTE: 12 USC 5326.>> REPORTS.
(a) In General.--Subject to subsection (b), the Council, acting
through the Office of Financial Research, may require a bank holding
company with total consolidated assets of $50,000,000,000 or greater or
a nonbank financial company supervised by the Board of Governors, and
any subsidiary thereof, to submit certified reports to keep the Council
informed as to--
(1) the financial condition of the company;
(2) systems for monitoring and controlling financial,
operating, and other risks;
(3) transactions with any subsidiary that is a depository
institution; and
(4) the extent to which the activities and operations of the
company and any subsidiary thereof, could, under adverse
circumstances, have the potential to disrupt financial markets
or affect the overall financial stability of the United States.
(b) Use of Existing Reports.--
(1) In general.--For purposes of compliance with subsection
(a), the Council, acting through the Office of Financial
Research, shall, to the fullest extent possible, use--
(A) reports that a bank holding company, nonbank
financial company supervised by the Board of Governors,
or any functionally regulated subsidiary of such company
has been required to provide to other Federal or State
regulatory agencies or to a relevant foreign supervisory
authority;
(B) information that is otherwise required to be
reported publicly; and
(C) externally audited financial statements.
(2) Availability.--Each bank holding company described in
subsection (a) and nonbank financial company supervised by the
Board of Governors, and any subsidiary thereof, shall provide to
the Council, at the request of the Council, copies of all
reports referred to in paragraph (1).
(3) Confidentiality.--The Council shall maintain the
confidentiality of the reports obtained under subsection (a) and
paragraph (1)(A) of this subsection.
SEC. 117. <<NOTE: 12 USC 5327.>> TREATMENT OF CERTAIN COMPANIES
THAT CEASE TO BE BANK HOLDING COMPANIES.
(a) Applicability.--This section shall apply to--
(1) any entity that--
[[Page 124 STAT. 1407]]
(A) was a bank holding company having total
consolidated assets equal to or greater than
$50,000,000,000 as of January 1, 2010; and
(B) received financial assistance under or
participated in the Capital Purchase Program established
under the Troubled Asset Relief Program authorized by
the Emergency Economic Stabilization Act of 2008; and
(2) any successor entity (as defined by the Board of
Governors, in consultation with the Council) to an entity
described in paragraph (1).
(b) Treatment.--If an entity described in subsection (a) ceases to
be a bank holding company at any time after January 1, 2010, then such
entity shall be treated as a nonbank financial company supervised by the
Board of Governors, as if the Council had made a determination under
section 113 with respect to that entity.
(c) <<NOTE: Deadlines.>> Appeal.--
(1) Request for hearing.--An entity may request, in writing,
an opportunity for a written or oral hearing before the Council
to appeal its treatment as a nonbank financial company
supervised by the Board of Governors in accordance with this
section. Upon receipt of the request, the Council shall fix a
time (not later than 30 days after the date of receipt of the
request) and place at which such entity may appear, personally
or through counsel, to submit written materials (or, at the sole
discretion of the Council, oral testimony and oral argument).
(2) Decision.--
(A) Proposed decision.--A Council decision to grant
an appeal under this subsection shall be made by a vote
of not fewer than \2/3\ of the voting members then
serving, including an affirmative vote by the
Chairperson. Not <<NOTE: Reports.>> later than 60 days
after the date of a hearing under paragraph (1), the
Council shall submit a report to, and may testify
before, the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives on the proposed
decision of the Council regarding an appeal under
paragraph (1), which report shall include a statement of
the basis for the proposed decision of the Council.
(B) Notice of final decision.--The Council shall
notify the subject entity of the final decision of the
Council regarding an appeal under paragraph (1), which
notice shall contain a statement of the basis for the
final decision of the Council, not later than 60 days
after the later of--
(i) the date of the submission of the report
under subparagraph (A); or
(ii) if, not later than 1 year after the date
of submission of the report under subparagraph
(A), the Committee on Banking, Housing, and Urban
Affairs of the Senate or the Committee on
Financial Services of the House of Representatives
holds one or more hearings regarding such report,
the date of the last such hearing.
(C) Considerations.--In making a decision regarding
an appeal under paragraph (1), the Council shall
consider whether the company meets the standards under
section 113(a) or 113(b), as applicable, and the
definition of the
[[Page 124 STAT. 1408]]
term ``nonbank financial company'' under section 102.
The decision of the Council shall be final, subject to
the review under paragraph (3).
(3) Review.--If the Council denies an appeal under this
subsection, the Council shall, not less frequently than
annually, review and reevaluate the decision.
SEC. 118. <<NOTE: 12 USC 5328.>> COUNCIL FUNDING.
Any expenses of the Council shall be treated as expenses of, and
paid by, the Office of Financial Research.
SEC. 119. <<NOTE: 12 USC 5329.>> RESOLUTION OF SUPERVISORY
JURISDICTIONAL DISPUTES AMONG MEMBER
AGENCIES.
(a) Request for Council Recommendation.--The Council shall seek to
resolve a dispute among 2 or more member agencies, if--
(1) a member agency has a dispute with another member agency
about the respective jurisdiction over a particular bank holding
company, nonbank financial company, or financial activity or
product (excluding matters for which another dispute mechanism
specifically has been provided under title X);
(2) the Council determines that the disputing agencies
cannot, after a demonstrated good faith effort, resolve the
dispute without the intervention of the Council; and
(3) any of the member agencies involved in the dispute--
(A) <<NOTE: Notice.>> provides all other disputants
prior notice of the intent to request dispute resolution
by the Council; and
(B) <<NOTE: Deadline.>> requests in writing, not
earlier than 14 days after providing the notice
described in subparagraph (A), that the Council seek to
resolve the dispute.
(b) Council Recommendation.--The Council shall seek to resolve each
dispute described in subsection (a)--
(1) within a reasonable time after receiving the dispute
resolution request;
(2) after consideration of relevant information provided by
each agency party to the dispute; and
(3) by agreeing with 1 of the disputants regarding the
entirety of the matter, or by determining a compromise position.
(c) Form of Recommendation.--Any Council recommendation under this
section shall--
(1) be in writing;
(2) include an explanation of the reasons therefor; and
(3) be approved by the affirmative vote of \2/3\ of the
voting members of the Council then serving.
(d) Nonbinding Effect.--Any recommendation made by the Council under
subsection (c) shall not be binding on the Federal agencies that are
parties to the dispute.
SEC. 120. <<NOTE: 12 USC 5330.>> ADDITIONAL STANDARDS APPLICABLE
TO ACTIVITIES OR PRACTICES FOR FINANCIAL
STABILITY PURPOSES.
(a) In General.--The Council may provide for more stringent
regulation of a financial activity by issuing recommendations to the
primary financial regulatory agencies to apply new or heightened
standards and safeguards, including standards enumerated in section 115,
for a financial activity or practice conducted by bank holding companies
or nonbank financial companies under their respective jurisdictions, if
the Council determines that the
[[Page 124 STAT. 1409]]
conduct, scope, nature, size, scale, concentration, or
interconnectedness of such activity or practice could create or increase
the risk of significant liquidity, credit, or other problems spreading
among bank holding companies and nonbank financial companies, financial
markets of the United States, or low-income, minority, or underserved
communities.
(b) Procedure for Recommendations to Regulators.--
(1) Notice and opportunity for comment.--
The <<NOTE: Consultation. Public comments.>> Council shall
consult with the primary financial regulatory agencies and
provide notice to the public and opportunity for comment for any
proposed recommendation that the primary financial regulatory
agencies apply new or heightened standards and safeguards for a
financial activity or practice.
(2) Criteria.--The new or heightened standards and
safeguards for a financial activity or practice recommended
under paragraph (1)--
(A) shall take costs to long-term economic growth
into account; and
(B) may include prescribing the conduct of the
activity or practice in specific ways (such as by
limiting its scope, or applying particular capital or
risk management requirements to the conduct of the
activity) or prohibiting the activity or practice.
(c) Implementation of Recommended Standards.--
(1) Role of primary financial regulatory agency.--
(A) In general.--Each primary financial regulatory
agency may impose, require reports regarding, examine
for compliance with, and enforce standards in accordance
with this section with respect to those entities for
which it is the primary financial regulatory agency.
(B) Rule of construction.--The authority under this
paragraph is in addition to, and does not limit, any
other authority of a primary financial regulatory
agency. Compliance by an entity with actions taken by a
primary financial regulatory agency under this section
shall be enforceable in accordance with the statutes
governing the respective jurisdiction of the primary
financial regulatory agency over the entity, as if the
agency action were taken under those statutes.
(2) Imposition of standards.--
The <<NOTE: Deadline.>> primary financial regulatory agency
shall impose the standards recommended by the Council in
accordance with subsection (a), or similar standards that the
Council deems acceptable, or shall explain in writing to the
Council, not later than 90 days after the date on which the
Council issues the recommendation, why the agency has determined
not to follow the recommendation of the Council.
(d) Report to Congress.--The Council shall report to Congress on--
(1) any recommendations issued by the Council under this
section;
(2) the implementation of, or failure to implement, such
recommendation on the part of a primary financial regulatory
agency; and
(3) in any case in which no primary financial regulatory
agency exists for the nonbank financial company conducting
financial activities or practices referred to in subsection (a),
[[Page 124 STAT. 1410]]
recommendations for legislation that would prevent such
activities or practices from threatening the stability of the
financial system of the United States.
(e) Effect of Rescission of Identification.--
(1) Notice.--The Council may recommend to the relevant
primary financial regulatory agency that a financial activity or
practice no longer requires any standards or safeguards
implemented under this section.
(2) Determination of primary financial regulatory agency to
continue.--
(A) In general.--Upon receipt of a recommendation
under paragraph (1), a primary financial regulatory
agency that has imposed standards under this section
shall determine whether such standards should remain in
effect.
(B) Appeal process.--
Each <<NOTE: Regulations.>> primary financial regulatory
agency that has imposed standards under this section
shall promulgate regulations to establish a procedure
under which entities under its jurisdiction may appeal a
determination by such agency under this paragraph that
standards imposed under this section should remain in
effect.
SEC. 121. <<NOTE: 12 USC 5331.>> MITIGATION OF RISKS TO FINANCIAL
STABILITY.
(a) Mitigatory Actions.--If the Board of Governors determines that a
bank holding company with total consolidated assets of $50,000,000,000
or more, or a nonbank financial company supervised by the Board of
Governors, poses a grave threat to the financial stability of the United
States, the Board of Governors, upon an affirmative vote of not fewer
than \2/3\ of the voting members of the Council then serving, shall--
(1) limit the ability of the company to merge with, acquire,
consolidate with, or otherwise become affiliated with another
company;
(2) restrict the ability of the company to offer a financial
product or products;
(3) require the company to terminate one or more activities;
(4) impose conditions on the manner in which the company
conducts 1 or more activities; or
(5) if the Board of Governors determines that the actions
described in paragraphs (1) through (4) are inadequate to
mitigate a threat to the financial stability of the United
States in its recommendation, require the company to sell or
otherwise transfer assets or off-balance-sheet items to
unaffiliated entities.
(b) Notice <<NOTE: Deadlines.>> and Hearing.--
(1) In general.--The Board of Governors, in consultation
with the Council, shall provide to a company described in
subsection (a) written notice that such company is being
considered for mitigatory action pursuant to this section,
including an explanation of the basis for, and description of,
the proposed mitigatory action.
(2) Hearing.--Not later than 30 days after the date of
receipt of notice under paragraph (1), the company may request,
in writing, an opportunity for a written or oral hearing before
the Board of Governors to contest the proposed mitigatory
action. Upon receipt of a timely request, the Board of Governors
shall fix a time (not later than 30 days after the date of
[[Page 124 STAT. 1411]]
receipt of the request) and place at which such company may
appear, personally or through counsel, to submit written
materials (or, at the discretion of the Board of Governors, in
consultation with the Council, oral testimony and oral
argument).
(3) Decision.--Not later than 60 days after the date of a
hearing under paragraph (2), or not later than 60 days after the
provision of a notice under paragraph (1) if no hearing was
held, the Board of Governors shall notify the company of the
final decision of the Board of Governors, including the results
of the vote of the Council, as described in subsection (a).
(c) Factors for Consideration.--The Board of Governors and the
Council shall take into consideration the factors set forth in
subsection (a) or (b) of section 113, as applicable, in making any
determination under subsection (a).
(d) Application to Foreign Financial Companies.--The Board of
Governors may prescribe regulations regarding the application of this
section to foreign nonbank financial companies supervised by the Board
of Governors and foreign-based bank holding companies--
(1) giving due regard to the principle of national treatment
and equality of competitive opportunity; and
(2) taking into account the extent to which the foreign
nonbank financial company or foreign-based bank holding company
is subject on a consolidated basis to home country standards
that are comparable to those applied to financial companies in
the United States.
SEC. 122. <<NOTE: 12 USC 5332.>> GAO AUDIT OF COUNCIL.
(a) Authority To Audit.--The Comptroller General of the United
States may audit the activities of--
(1) the Council; and
(2) any person or entity acting on behalf of or under the
authority of the Council, to the extent that such activities
relate to work for the Council by such person or entity.
(b) Access <<NOTE: Records.>> to Information.--
(1) In general.--Notwithstanding any other provision of law,
the Comptroller General shall, upon request and at such
reasonable time and in such reasonable form as the Comptroller
General may request, have access to--
(A) any records or other information under the
control of or used by the Council;
(B) any records or other information under the
control of a person or entity acting on behalf of or
under the authority of the Council, to the extent that
such records or other information is relevant to an
audit under subsection (a); and
(C) the officers, directors, employees, financial
advisors, staff, working groups, and agents and
representatives of the Council (as related to the
activities on behalf of the Council of such agent or
representative), at such reasonable times as the
Comptroller General may request.
(2) Copies.--The Comptroller General may make and retain
copies of such books, accounts, and other records, access to
which is granted under this section, as the Comptroller General
considers appropriate.
[[Page 124 STAT. 1412]]
SEC. 123. STUDY <<NOTE: 12 USC 5333.>> OF THE EFFECTS OF SIZE AND
COMPLEXITY OF FINANCIAL INSTITUTIONS ON
CAPITAL MARKET EFFICIENCY AND ECONOMIC
GROWTH.
(a) Study Required.--
(1) In general.--The Chairperson of the Council shall carry
out a study of the economic impact of possible financial
services regulatory limitations intended to reduce systemic
risk. Such study shall <<NOTE: Cost estimate.>> estimate the
benefits and costs on the efficiency of capital markets, on the
financial sector, and on national economic growth, of--
(A) explicit or implicit limits on the maximum size
of banks, bank holding companies, and other large
financial institutions;
(B) limits on the organizational complexity and
diversification of large financial institutions;
(C) requirements for operational separation between
business units of large financial institutions in order
to expedite resolution in case of failure;
(D) limits on risk transfer between business units
of large financial institutions;
(E) requirements to carry contingent capital or
similar mechanisms;
(F) limits on commingling of commercial and
financial activities by large financial institutions;
(G) segregation requirements between traditional
financial activities and trading or other high-risk
operations in large financial institutions; and
(H) other limitations on the activities or structure
of large financial institutions that may be useful to
limit systemic risk.
(2) Recommendations.--The study required by this section
shall include recommendations for the optimal structure of any
limits considered in subparagraphs (A) through (E), in order to
maximize their effectiveness and minimize their economic impact.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of enactment of this title, and not later than every 5 years
thereafter, the Chairperson shall issue a report to the Congress
containing any findings and determinations made in carrying out the
study required under subsection (a).
Subtitle B--Office of Financial Research
SEC. 151. <<NOTE: 12 USC 5341.>> DEFINITIONS.
For purposes of this subtitle--
(1) the terms ``Office'' and ``Director'' mean the Office of
Financial Research established under this subtitle and the
Director thereof, respectively;
(2) the term ``financial company'' has the same meaning as
in title II, and includes an insured depository institution and
an insurance company;
(3) the term ``Data Center'' means the data center
established under section 154;
(4) the term ``Research and Analysis Center'' means the
research and analysis center established under section 154;
[[Page 124 STAT. 1413]]
(5) the term ``financial transaction data'' means the
structure and legal description of a financial contract, with
sufficient detail to describe the rights and obligations between
counterparties and make possible an independent valuation;
(6) the term ``position data''--
(A) means data on financial assets or liabilities
held on the balance sheet of a financial company, where
positions are created or changed by the execution of a
financial transaction; and
(B) includes information that identifies
counterparties, the valuation by the financial company
of the position, and information that makes possible an
independent valuation of the position;
(7) the term ``financial contract'' means a legally binding
agreement between 2 or more counterparties, describing rights
and obligations relating to the future delivery of items of
intrinsic or extrinsic value among the counterparties; and
(8) the term ``financial instrument'' means a financial
contract in which the terms and conditions are publicly
available, and the roles of one or more of the counterparties
are assignable without the consent of any of the other
counterparties (including common stock of a publicly traded
company, government bonds, or exchange traded futures and
options contracts).
SEC. 152. <<NOTE: 12 USC 5342.>> OFFICE OF FINANCIAL RESEARCH
ESTABLISHED.
(a) Establishment.--There is established within the Department of
the Treasury the Office of Financial Research.
(b) Director.--
(1) In general.--
The <<NOTE: President. Appointment.>> Office shall be headed by
a Director, who shall be appointed by the President, by and with
the advice and consent of the Senate.
(2) Term of service.--The Director shall serve for a term of
6 years, except that, in the event that a successor is not
nominated and confirmed by the end of the term of service of a
Director, the Director may continue to serve until such time as
the next Director is appointed and confirmed.
(3) Executive level.--The Director shall be compensated at
Level III of the Executive Schedule.
(4) Prohibition on dual service.--The individual serving in
the position of Director may not, during such service, also
serve as the head of any financial regulatory agency.
(5) Responsibilities, duties, and authority.--The Director
shall have sole discretion in the manner in which the Director
fulfills the responsibilities and duties and exercises the
authorities described in this subtitle.
(c) Budget.--The Director, in consultation with the Chairperson,
shall establish the annual budget of the Office.
(d) Office Personnel.--
(1) In general.--The Director, in consultation with the
Chairperson, may fix the number of, and appoint and direct, all
employees of the Office.
(2) Compensation.--The Director, in consultation with the
Chairperson, shall fix, adjust, and administer the pay for all
employees of the Office, without regard to chapter 51 or
subchapter III of chapter 53 of title 5, United States Code,
relating to classification of positions and General Schedule pay
rates.
[[Page 124 STAT. 1414]]
(3) Comparability.--Section 1206(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 1833b(a)) is amended--
(A) by striking ``Finance Board,'' and inserting
``Finance Board, the Office of Financial Research, and
the Bureau of Consumer Financial Protection''; and
(B) by striking ``and the Office of Thrift
Supervision,''.
(4) Senior executives.--Section 3132(a)(1)(D) of title 5,
United States Code, is amended by striking ``and the National
Credit Union Administration;'' and inserting ``the National
Credit Union Administration, the Bureau of Consumer Financial
Protection, and the Office of Financial Research;''.
(e) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Office and any special advisory,
technical, or professional committees appointed by the Office, such
services, funds, facilities, staff, and other support services as the
Office may determine advisable. Any Federal Government employee may be
detailed to the Office without reimbursement, and such detail shall be
without interruption or loss of civil service status or privilege.
(f) Procurement of Temporary and Intermittent Services.--The
Director may procure temporary and intermittent services under section
3109(b) of title 5, United States Code, at rates for individuals which
do not exceed the daily equivalent of the annual rate of basic pay
prescribed for Level V of the Executive Schedule under section 5316 of
such title.
(g) Post-employment Prohibitions.--
The <<NOTE: Regulations.>> Secretary, with the concurrence of the
Director of the Office of Government Ethics, shall issue regulations
prohibiting the Director and any employee of the Office who has had
access to the transaction or position data maintained by the Data Center
or other business confidential information about financial entities
required to report to the Office from being employed by or providing
advice or consulting services to a financial company, for a period of 1
year after last having had access in the course of official duties to
such transaction or position data or business confidential information,
regardless of whether that entity is required to report to the Office.
For employees whose access to business confidential information was
limited, the regulations may provide, on a case-by-case basis, for a
shorter period of post-employment prohibition, provided that the shorter
period does not compromise business confidential information.
(h) Technical and Professional Advisory Committees.--The Office, in
consultation with the Chairperson, may appoint such special advisory,
technical, or professional committees as may be useful in carrying out
the functions of the Office, and the members of such committees may be
staff of the Office, or other persons, or both.
(i) Fellowship Program.--The Office, in consultation with the
Chairperson, may establish and maintain an academic and professional
fellowship program, under which qualified academics and professionals
shall be invited to spend not longer than 2 years at the Office, to
perform research and to provide advanced training for Office personnel.
(j) Executive Schedule Compensation.--Section 5314 of title 5,
United States Code, is amended by adding at the end the following new
item:
``Director of the Office of Financial Research.''.
[[Page 124 STAT. 1415]]
SEC. 153. <<NOTE: 12 USC 5343.>> PURPOSE AND DUTIES OF THE OFFICE.
(a) Purpose and Duties.--The purpose of the Office is to support the
Council in fulfilling the purposes and duties of the Council, as set
forth in subtitle A, and to support member agencies, by--
(1) collecting data on behalf of the Council, and providing
such data to the Council and member agencies;
(2) standardizing the types and formats of data reported and
collected;
(3) performing applied research and essential long-term
research;
(4) developing tools for risk measurement and monitoring;
(5) performing other related services;
(6) making the results of the activities of the Office
available to financial regulatory agencies; and
(7) assisting such member agencies in determining the types
and formats of data authorized by this Act to be collected by
such member agencies.
(b) Administrative Authority.--The Office may--
(1) share data and information, including software developed
by the Office, with the Council, member agencies, and the Bureau
of Economic Analysis, which shared data, information, and
software--
(A) shall be maintained with at least the same level
of security as is used by the Office; and
(B) may not be shared with any individual or entity
without the permission of the Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial analyses
undertaken at the request of other Federal agencies that are not
member agencies.
(c) Rulemaking Authority.--
(1) Scope.--The Office, in consultation with the
Chairperson, shall issue rules, regulations, and orders only to
the extent necessary to carry out the purposes and duties
described in paragraphs (1), (2), and (7) of subsection (a).
(2) Standardization.--Member agencies, in consultation with
the Office, shall implement regulations promulgated by the
Office under paragraph (1) to standardize the types and formats
of data reported and collected on behalf of the Council, as
described in subsection (a)(2). If <<NOTE: Time period.>> a
member agency fails to implement such regulations prior to the
expiration of the 3-year period following the date of
publication of final regulations, the Office, in consultation
with the Chairperson, may implement such regulations with
respect to the financial entities under the jurisdiction of the
member agency. This paragraph shall not supersede or interfere
with the independent authority of a member agency under other
law to collect data, in such format and manner as the member
agency requires.
(d) Testimony.--
(1) In general.--The <<NOTE: Reports.>> Director of the
Office shall report to and testify before the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
annually on the activities of the Office, including the work of
the Data Center and the Research and Analysis Center, and the
assessment of the
[[Page 124 STAT. 1416]]
Office of significant financial market developments and
potential emerging threats to the financial stability of the
United States.
(2) No prior review.--No officer or agency of the United
States shall have any authority to require the Director to
submit the testimony required under paragraph (1) or other
congressional testimony to any officer or agency of the United
States for approval, comment, or review prior to the submission
of such testimony. Any such testimony to Congress shall include
a statement that the views expressed therein are those of the
Director and do not necessarily represent the views of the
President.
(e) Additional Reports.--The Director may provide additional reports
to Congress concerning the financial stability of the United States. The
Director <<NOTE: Notification.>> shall notify the Council of any such
additional reports provided to Congress.
(f) Subpoena.--
(1) In general.--The Director may require from a financial
company, by subpoena, the production of the data requested under
subsection (a)(1) and section 154(b)(1), but only upon a written
finding by the Director that--
(A) such data is required to carry out the functions
described under this subtitle; and
(B) the Office has coordinated with the relevant
primary financial regulatory agency, as required under
section 154(b)(1)(B)(ii).
(2) Format.--Subpoenas under paragraph (1) shall bear the
signature of the Director, and shall be served by any person or
class of persons designated by the Director for that purpose.
(3) Enforcement.--In the case of contumacy or failure to
obey a subpoena, the subpoena shall be enforceable by order of
any appropriate district court of the United States. Any failure
to obey the order of the court may be punished by the court as a
contempt of court.
SEC. 154. <<NOTE: 12 USC 5344.>> ORGANIZATIONAL STRUCTURE;
RESPONSIBILITIES OF PRIMARY PROGRAMMATIC
UNITS.
(a) In General.--There are established within the Office, to carry
out the programmatic responsibilities of the Office--
(1) the Data Center; and
(2) the Research and Analysis Center.
(b) Data Center.--
(1) General duties.--
(A) Data collection.--The Data Center, on behalf of
the Council, shall collect, validate, and maintain all
data necessary to carry out the duties of the Data
Center, as described in this subtitle. The data
assembled shall be obtained from member agencies,
commercial data providers, publicly available data
sources, and financial entities under subparagraph (B).
(B) Authority.--
(i) In general.--The Office may, as determined
by the Council or by the Director in consultation
with the Council, require the submission of
periodic and other reports from any financial
company for the purpose of assessing the extent to
which a financial
[[Page 124 STAT. 1417]]
activity or financial market in which the
financial company participates, or the financial
company itself, poses a threat to the financial
stability of the United States.
(ii) Mitigation of report burden.--Before
requiring the submission of a report from any
financial company that is regulated by a member
agency, any primary financial regulatory agency, a
foreign supervisory authority, or the Office shall
coordinate with such agencies or authority, and
shall, whenever possible, rely on information
available from such agencies or authority.
(iii) Collection of financial transaction and
position data.--The Office shall collect, on a
schedule determined by the Director, in
consultation with the Council, financial
transaction data and position data from financial
companies.
(C) Rulemaking.--The Office shall promulgate
regulations pursuant to subsections (a)(1), (a)(2),
(a)(7), and (c)(1) of section 153 regarding the type and
scope of the data to be collected by the Data Center
under this paragraph.
(2) Responsibilities.--
(A) Publication.--The <<NOTE: Public
information.>> Data Center shall prepare and publish, in
a manner that is easily accessible to the public--
(i) a financial company reference database;
(ii) a financial instrument reference
database; and
(iii) formats and standards for Office data,
including standards for reporting financial
transaction and position data to the Office.
(B) Confidentiality.--The Data Center shall not
publish any confidential data under subparagraph (A).
(3) Information security.--The Director shall ensure that
data collected and maintained by the Data Center are kept secure
and protected against unauthorized disclosure.
(4) Catalog of financial entities and instruments.--The Data
Center shall maintain a catalog of the financial entities and
instruments reported to the Office.
(5) Availability to the council and member agencies.--The
Data Center shall make data collected and maintained by the Data
Center available to the Council and member agencies, as
necessary to support their regulatory responsibilities.
(6) Other authority.--The <<NOTE: Public
information.>> Office shall, after consultation with the member
agencies, provide certain data to financial industry
participants and to the general public to increase market
transparency and facilitate research on the financial system, to
the extent that intellectual property rights are not violated,
business confidential information is properly protected, and the
sharing of such information poses no significant threats to the
financial system of the United States.
(c) Research and Analysis Center.--
(1) General duties.--The Research and Analysis Center, on
behalf of the Council, shall develop and maintain independent
analytical capabilities and computing resources--
(A) to develop and maintain metrics and reporting
systems for risks to the financial stability of the
United States;
[[Page 124 STAT. 1418]]
(B) to monitor, investigate, and report on changes
in systemwide risk levels and patterns to the Council
and Congress;
(C) to conduct, coordinate, and sponsor research to
support and improve regulation of financial entities and
markets;
(D) to evaluate and report on stress tests or other
stability-related evaluations of financial entities
overseen by the member agencies;
(E) to maintain expertise in such areas as may be
necessary to support specific requests for advice and
assistance from financial regulators;
(F) to investigate disruptions and failures in the
financial markets, report findings, and make
recommendations to the Council based on those findings;
(G) to conduct studies and provide advice on the
impact of policies related to systemic risk; and
(H) to promote best practices for financial risk
management.
(d) Reporting Responsibilities.--
(1) Required reports.--Not later than 2 years after the date
of enactment of this Act, and not later than 120 days after the
end of each fiscal year thereafter, the Office shall prepare and
submit a report to Congress.
(2) Content.--Each report required by this subsection shall
assess the state of the United States financial system,
including--
(A) an analysis of any threats to the financial
stability of the United States;
(B) the status of the efforts of the Office in
meeting the mission of the Office; and
(C) key findings from the research and analysis of
the financial system by the Office.
SEC. <<NOTE: 12 USC 5345.>> 155. FUNDING.
(a) Financial Research Fund.--
(1) Fund established.--There is established in the Treasury
of the United States a separate fund to be known as the
``Financial Research Fund''.
(2) Fund receipts.--All amounts provided to the Office under
subsection (c), and all assessments that the Office receives
under subsection (d) shall be deposited into the Financial
Research Fund.
(3) Investments authorized.--
(A) Amounts in fund may be invested.--The Director
may request the Secretary to invest the portion of the
Financial Research Fund that is not, in the judgment of
the Director, required to meet the needs of the Office.
(B) Eligible investments.--Investments shall be made
by the Secretary in obligations of the United States or
obligations that are guaranteed as to principal and
interest by the United States, with maturities suitable
to the needs of the Financial Research Fund, as
determined by the Director.
(4) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
[[Page 124 STAT. 1419]]
held in the Financial Research Fund shall be credited to and
form a part of the Financial Research Fund.
(b) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or
credited to the Financial Research Fund shall be immediately
available to the Office, and shall remain available until
expended, to pay the expenses of the Office in carrying out the
duties and responsibilities of the Office.
(2) Fees, assessments, and other funds not government
funds.--Funds obtained by, transferred to, or credited to the
Financial Research Fund shall not be construed to be Government
funds or appropriated moneys.
(3) Amounts not subject to apportionment.--Notwithstanding
any other provision of law, amounts in the Financial Research
Fund shall not be subject to apportionment for purposes of
chapter 15 of title 31, United States Code, or under any other
authority, or for any other purpose.
(c) Interim Funding.--During <<NOTE: Time period.>> the 2-year
period following the date of enactment of this Act, the Board of
Governors shall provide to the Office an amount sufficient to cover the
expenses of the Office.
(d) Permanent Self-funding.--Beginning <<NOTE: Effective
date. Regulations. Assessments.>> 2 years after the date of enactment of
this Act, the Secretary shall establish, by regulation, and with the
approval of the Council, an assessment schedule, including the
assessment base and rates, applicable to bank holding companies with
total consolidated assets of 50,000,000,000 or greater and nonbank
financial companies supervised by the Board of Governors, that takes
into account differences among such companies, based on the
considerations for establishing the prudential standards under section
115, to collect assessments equal to the total expenses of the Office.
SEC. 156. <<NOTE: 12 USC 5346.>> TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Office--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits
programs.
(b) Reporting Requirement.--
(1) In general.--The Office shall submit an annual report to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph
(2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The
Office shall submit a training and workforce development
plan that includes, to the extent practicable--
(i) identification of skill and technical
expertise needs and actions taken to meet those
requirements;
(ii) steps taken to foster innovation and
creativity;
(iii) leadership development and succession
planning; and
(iv) effective use of technology by employees.
[[Page 124 STAT. 1420]]
(B) Workplace flexibility plan.--The Office shall
submit a workforce flexibility plan that includes, to
the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare
assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in
clauses (i) through (ix).
(C) Recruitment and retention plan.--The Office
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions relating
to--
(i) the steps necessary to target highly
qualified applicant pools with diverse
backgrounds;
(ii) streamlined employment application
processes;
(iii) the provision of timely notification of
the status of employment applications to
applicants; and
(iv) the collection of information to measure
indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
SEC. 161. <<NOTE: 12 USC 5361.>> REPORTS BY AND EXAMINATIONS OF
NONBANK FINANCIAL COMPANIES BY THE BOARD
OF GOVERNORS.
(a) Reports.--
(1) In general.--The Board of Governors may require each
nonbank financial company supervised by the Board of Governors,
and any subsidiary thereof, to submit reports under oath, to
keep the Board of Governors informed as to--
(A) the financial condition of the company or
subsidiary, systems of the company or subsidiary for
monitoring and controlling financial, operating, and
other risks, and the extent to which the activities and
operations of the company or subsidiary pose a threat to
the financial stability of the United States; and
(B) compliance by the company or subsidiary with the
requirements of this title.
[[Page 124 STAT. 1421]]
(2) Use of existing reports and information.--In carrying
out subsection (a), the Board of Governors shall, to the fullest
extent possible, use--
(A) reports and supervisory information that a
nonbank financial company or subsidiary thereof has been
required to provide to other Federal or State regulatory
agencies;
(B) information otherwise obtainable from Federal or
State regulatory agencies;
(C) information that is otherwise required to be
reported publicly; and
(D) externally audited financial statements of such
company or subsidiary.
(3) Availability.--Upon the request of the Board of
Governors, a nonbank financial company supervised by the Board
of Governors, or a subsidiary thereof, shall promptly provide to
the Board of Governors any information described in paragraph
(2).
(b) Examinations.--
(1) In general.--Subject to paragraph (2), the Board of
Governors may examine any nonbank financial company supervised
by the Board of Governors and any subsidiary of such company, to
inform the Board of Governors of--
(A) the nature of the operations and financial
condition of the company and such subsidiary;
(B) the financial, operational, and other risks of
the company or such subsidiary that may pose a threat to
the safety and soundness of such company or subsidiary
or to the financial stability of the United States;
(C) the systems for monitoring and controlling such
risks; and
(D) compliance by the company or such subsidiary
with the requirements of this title.
(2) Use of examination reports and information.--For
purposes of this subsection, the Board of Governors shall, to
the fullest extent possible, rely on reports of examination of
any subsidiary depository institution or functionally regulated
subsidiary made by the primary financial regulatory agency for
that subsidiary, and on information described in subsection
(a)(2).
(c) Coordination With Primary Financial Regulatory Agency.--The
Board of Governors shall--
(1) <<NOTE: Notice. Consultation.>> provide reasonable
notice to, and consult with, the primary financial regulatory
agency for any subsidiary before requiring a report or
commencing an examination of such subsidiary under this section;
and
(2) avoid duplication of examination activities, reporting
requirements, and requests for information, to the fullest
extent possible.
SEC. 162. <<NOTE: 12 USC 5362.>> ENFORCEMENT.
(a) In General.--Except as provided in subsection (b), a nonbank
financial company supervised by the Board of Governors and any
subsidiaries of such company (other than any depository institution
subsidiary) shall be subject to the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C.
1818), in the same manner and to the same extent as if the company were
a bank holding company, as provided
[[Page 124 STAT. 1422]]
in section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)(3)).
(b) Enforcement Authority for Functionally Regulated Subsidiaries.--
(1) Referral.--If the Board of Governors determines that a
condition, practice, or activity of a depository institution
subsidiary or functionally regulated subsidiary of a nonbank
financial company supervised by the Board of Governors does not
comply with the regulations or orders prescribed by the Board of
Governors under this Act, or otherwise poses a threat to the
financial stability of the United States, the Board of Governors
may recommend, in writing, to the primary financial regulatory
agency for the subsidiary that such agency initiate a
supervisory action or enforcement proceeding. The recommendation
shall be accompanied by a written explanation of the concerns
giving rise to the recommendation.
(2) Back-up authority of the board of governors.--If, during
the 60-day period beginning on the date on which the primary
financial regulatory agency receives a recommendation under
paragraph (1), the primary financial regulatory agency does not
take supervisory or enforcement action against a subsidiary that
is acceptable to the Board of Governors, the Board of Governors
(upon a vote of its members) may take the recommended
supervisory or enforcement action, as if the subsidiary were a
bank holding company subject to supervision by the Board of
Governors.
SEC. <<NOTE: 12 USC 5363.>> 163. ACQUISITIONS.
(a) Acquisitions of Banks; Treatment as a Bank Holding Company.--For
purposes of section 3 of the Bank Holding Company Act of 1956 (12 U.S.C.
1842), a nonbank financial company supervised by the Board of Governors
shall be deemed to be, and shall be treated as, a bank holding company.
(b) Acquisition of Nonbank Companies.--
(1) Prior notice for large acquisitions.--Notwithstanding
section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)(6)(B)), a bank holding company with total
consolidated assets equal to or greater than $50,000,000,000 or
a nonbank financial company supervised by the Board of Governors
shall not acquire direct or indirect ownership or control of any
voting shares of any company (other than an insured depository
institution) that is engaged in activities described in section
4(k) of the Bank Holding Company Act of 1956 having total
consolidated assets of $10,000,000,000 or more, without
providing written notice to the Board of Governors in advance of
the transaction.
(2) Exemptions.--The prior notice requirement in paragraph
(1) shall not apply with regard to the acquisition of shares
that would qualify for the exemptions in section 4(c) or section
4(k)(4)(E) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c) and (k)(4)(E)).
(3) Notice procedures.--The <<NOTE: Applicability.>> notice
procedures set forth in section 4(j)(1) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(j)(1)), without regard to
section 4(j)(3) of that Act, shall apply to an acquisition of
any company (other than an insured depository institution) by a
bank holding company with total consolidated assets equal to or
greater than
[[Page 124 STAT. 1423]]
$50,000,000,000 or a nonbank financial company supervised by the
Board of Governors, as described in paragraph (1), including any
such company engaged in activities described in section 4(k) of
that Act.
(4) Standards for review.--In addition to the standards
provided in section 4(j)(2) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall
consider the extent to which the proposed acquisition would
result in greater or more concentrated risks to global or United
States financial stability or the United States economy.
(5) Hart-Scott-Rodino filing requirement.--Solely for
purposes of section 7A(c)(8) of the Clayton Act (15 U.S.C.
18a(c)(8)), the transactions subject to the requirements of
paragraph (1) shall be treated as if Board of Governors approval
is not required.
SEC. <<NOTE: 12 USC 5364.>> 164. PROHIBITION AGAINST MANAGEMENT
INTERLOCKS BETWEEN CERTAIN FINANCIAL
COMPANIES.
A nonbank financial company supervised by the Board of Governors
shall be treated as a bank holding company for purposes of the
Depository Institutions Management Interlocks Act (12 U.S.C. 3201 et
seq.), except that the Board of Governors shall not exercise the
authority provided in section 7 of that Act (12 U.S.C. 3207) to permit
service by a management official of a nonbank financial company
supervised by the Board of Governors as a management official of any
bank holding company with total consolidated assets equal to or greater
than $50,000,000,000, or other nonaffiliated nonbank financial company
supervised by the Board of Governors (other than to provide a temporary
exemption for interlocks resulting from a merger, acquisition, or
consolidation).
SEC. 165. <<NOTE: 12 USC 5365.>> ENHANCED SUPERVISION AND
PRUDENTIAL STANDARDS FOR NONBANK FINANCIAL
COMPANIES SUPERVISED BY THE BOARD OF
GOVERNORS AND CERTAIN BANK HOLDING
COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from
the material financial distress or failure, or ongoing
activities, of large, interconnected financial institutions, the
Board of Governors shall, on its own or pursuant to
recommendations by the Council under section 115, establish
prudential standards for nonbank financial companies supervised
by the Board of Governors and bank holding companies with total
consolidated assets equal to or greater than $50,000,000,000
that--
(A) are more stringent than the standards and
requirements applicable to nonbank financial companies
and bank holding companies that do not present similar
risks to the financial stability of the United States;
and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Tailored application.--
(A) In general.--In prescribing more stringent
prudential standards under this section, the Board of
Governors may, on its own or pursuant to a
recommendation by the Council in accordance with section
115, differentiate among companies on an individual
basis or by category, taking into consideration their
capital structure, riskiness,
[[Page 124 STAT. 1424]]
complexity, financial activities (including the
financial activities of their subsidiaries), size, and
any other risk-related factors that the Board of
Governors deems appropriate.
(B) Adjustment of threshold for application of
certain standards.--The Board of Governors may, pursuant
to a recommendation by the Council in accordance with
section 115, establish an asset threshold above
$50,000,000,000 for the application of any standard
established under subsections (c) through (g).
(b) Development of Prudential Standards.--
(1) In general.--
(A) Required standards.--The Board of Governors
shall establish prudential standards for nonbank
financial companies supervised by the Board of Governors
and bank holding companies described in subsection (a),
that shall include--
(i) risk-based capital requirements and
leverage limits, unless the Board of Governors, in
consultation with the Council, determines that
such requirements are not appropriate for a
company subject to more stringent prudential
standards because of the activities of such
company (such as investment company activities or
assets under management) or structure, in which
case, the Board of Governors shall apply other
standards that result in similarly stringent risk
controls;
(ii) liquidity requirements;
(iii) overall risk management requirements;
(iv) resolution plan and credit exposure
report requirements; and
(v) concentration limits.
(B) Additional standards authorized.--The Board of
Governors may establish additional prudential standards
for nonbank financial companies supervised by the Board
of Governors and bank holding companies described in
subsection (a), that include--
(i) a contingent capital requirement;
(ii) enhanced public disclosures;
(iii) short-term debt limits; and
(iv) such other prudential standards as the
Board or Governors, on its own or pursuant to a
recommendation made by the Council in accordance
with section 115, determines are appropriate.
(2) Standards for foreign financial companies.--In applying
the standards set forth in paragraph (1) to any foreign nonbank
financial company supervised by the Board of Governors or
foreign-based bank holding company, the Board of Governors
shall--
(A) give due regard to the principle of national
treatment and equality of competitive opportunity; and
(B) take into account the extent to which the
foreign financial company is subject on a consolidated
basis to home country standards that are comparable to
those applied to financial companies in the United
States.
(3) Considerations.--In prescribing prudential standards
under paragraph (1), the Board of Governors shall--
[[Page 124 STAT. 1425]]
(A) take into account differences among nonbank
financial companies supervised by the Board of Governors
and bank holding companies described in subsection (a),
based on--
(i) the factors described in subsections (a)
and (b) of section 113;
(ii) whether the company owns an insured
depository institution;
(iii) nonfinancial activities and affiliations
of the company; and
(iv) any other risk-related factors that the
Board of Governors determines appropriate;
(B) to the extent possible, ensure that small
changes in the factors listed in subsections (a) and (b)
of section 113 would not result in sharp, discontinuous
changes in the prudential standards established under
paragraph (1) of this subsection;
(C) take into account any recommendations of the
Council under section 115; and
(D) adapt the required standards as appropriate in
light of any predominant line of business of such
company, including assets under management or other
activities for which particular standards may not be
appropriate.
(4) Consultation.--Before imposing prudential standards or
any other requirements pursuant to this section, including
notices of deficiencies in resolution plans and more stringent
requirements or divestiture orders resulting from such notices,
that are likely to have a significant impact on a functionally
regulated subsidiary or depository institution subsidiary of a
nonbank financial company supervised by the Board of Governors
or a bank holding company described in subsection (a), the Board
of Governors shall consult with each Council member that
primarily supervises any such subsidiary with respect to any
such standard or requirement.
(5) Report.--The Board of Governors shall submit an annual
report to Congress regarding the implementation of the
prudential standards required pursuant to paragraph (1),
including the use of such standards to mitigate risks to the
financial stability of the United States.
(c) Contingent Capital.--
(1) In general.--Subsequent to submission by the Council of
a report to Congress under section 115(c), the Board of
Governors may issue regulations that require each nonbank
financial company supervised by the Board of Governors and bank
holding companies described in subsection (a) to maintain a
minimum amount of contingent capital that is convertible to
equity in times of financial stress.
(2) Factors to consider.--In issuing regulations under this
subsection, the Board of Governors shall consider--
(A) the results of the study undertaken by the
Council, and any recommendations of the Council, under
section 115(c);
(B) an appropriate transition period for
implementation of contingent capital under this
subsection;
(C) the factors described in subsection (b)(3)(A);
(D) capital requirements applicable to the nonbank
financial company supervised by the Board of Governors
[[Page 124 STAT. 1426]]
or a bank holding company described in subsection (a),
and subsidiaries thereof; and
(E) any other factor that the Board of Governors
deems appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Board of Governors shall require
each nonbank financial company supervised by the Board of
Governors and bank holding companies described in subsection (a)
to report periodically to the Board of Governors, the Council,
and the Corporation the plan of such company for rapid and
orderly resolution in the event of material financial distress
or failure, which shall include--
(A) information regarding the manner and extent to
which any insured depository institution affiliated with
the company is adequately protected from risks arising
from the activities of any nonbank subsidiaries of the
company;
(B) full descriptions of the ownership structure,
assets, liabilities, and contractual obligations of the
company;
(C) identification of the cross-guarantees tied to
different securities, identification of major
counterparties, and a process for determining to whom
the collateral of the company is pledged; and
(D) any other information that the Board of
Governors and the Corporation jointly require by rule or
order.
(2) Credit exposure report.--The Board of Governors shall
require each nonbank financial company supervised by the Board
of Governors and bank holding companies described in subsection
(a) to report periodically to the Board of Governors, the
Council, and the Corporation on--
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(3) Review.--The Board of Governors and the Corporation
shall review the information provided in accordance with this
subsection by each nonbank financial company supervised by the
Board of Governors and bank holding company described in
subsection (a).
(4) Notice of deficiencies.--If the Board of Governors and
the Corporation jointly determine, based on their review under
paragraph (3), that the resolution plan of a nonbank financial
company supervised by the Board of Governors or a bank holding
company described in subsection (a) is not credible or would not
facilitate an orderly resolution of the company under title 11,
United States Code--
(A) the Board of Governors and the Corporation shall
notify the company of the deficiencies in the resolution
plan; and
(B) the company shall resubmit the resolution plan
within a timeframe determined by the Board of Governors
and the Corporation, with revisions demonstrating that
the plan is credible and would result in an orderly
resolution under title 11, United States Code, including
any
[[Page 124 STAT. 1427]]
proposed changes in business operations and corporate
structure to facilitate implementation of the plan.
(5) Failure to resubmit credible plan.--
(A) In general.--If a nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a) fails to timely
resubmit the resolution plan as required under paragraph
(4), with such revisions as are required under
subparagraph (B), the Board of Governors and the
Corporation may jointly impose more stringent capital,
leverage, or liquidity requirements, or restrictions on
the growth, activities, or operations of the company, or
any subsidiary thereof, until such time as the company
resubmits a plan that remedies the deficiencies.
(B) Divestiture.--The Board of Governors and the
Corporation, in consultation with the Council, may
jointly direct a nonbank financial company supervised by
the Board of Governors or a bank holding company
described in subsection (a), by order, to divest certain
assets or operations identified by the Board of
Governors and the Corporation, to facilitate an orderly
resolution of such company under title 11, United States
Code, in the event of the failure of such company, in
any case in which--
(i) the Board of Governors and the Corporation
have jointly imposed more stringent requirements
on the company pursuant to subparagraph (A); and
(ii) the company has failed, within the 2-year
period beginning on the date of the imposition of
such requirements under subparagraph (A), to
resubmit the resolution plan with such revisions
as were required under paragraph (4)(B).
(6) No limiting effect.--A resolution plan submitted in
accordance with this subsection shall not be binding on a
bankruptcy court, a receiver appointed under title II, or any
other authority that is authorized or required to resolve the
nonbank financial company supervised by the Board, any bank
holding company, or any subsidiary or affiliate of the
foregoing.
(7) No private right of action.--No private right of action
may be based on any resolution plan submitted in accordance with
this subsection.
(8) Rules.--Not <<NOTE: Deadline.>> later than 18 months
after the date of enactment of this Act, the Board of Governors
and the Corporation shall jointly issue final rules implementing
this subsection.
(e) Concentration Limits.--
(1) Standards.--In <<NOTE: Regulations.>> order to limit the
risks that the failure of any individual company could pose to a
nonbank financial company supervised by the Board of Governors
or a bank holding company described in subsection (a), the Board
of Governors, by regulation, shall prescribe standards that
limit such risks.
(2) Limitation on credit exposure.--The regulations
prescribed by the Board of Governors under paragraph (1) shall
prohibit each nonbank financial company supervised by the Board
of Governors and bank holding company described in subsection
(a) from having credit exposure to any unaffiliated company that
exceeds 25 percent of the capital stock and surplus (or such
lower amount as the Board of Governors may
[[Page 124 STAT. 1428]]
determine by regulation to be necessary to mitigate risks to the
financial stability of the United States) of the company.
(3) Credit exposure.--For <<NOTE: Definition.>> purposes of
paragraph (2), ``credit exposure'' to a company means--
(A) all extensions of credit to the company,
including loans, deposits, and lines of credit;
(B) all repurchase agreements and reverse repurchase
agreements with the company, and all securities
borrowing and lending transactions with the company, to
the extent that such transactions create credit exposure
for the nonbank financial company supervised by the
Board of Governors or a bank holding company described
in subsection (a);
(C) all guarantees, acceptances, or letters of
credit (including endorsement or standby letters of
credit) issued on behalf of the company;
(D) all purchases of or investment in securities
issued by the company;
(E) counterparty credit exposure to the company in
connection with a derivative transaction between the
nonbank financial company supervised by the Board of
Governors or a bank holding company described in
subsection (a) and the company; and
(F) any other similar transactions that the Board of
Governors, by regulation, determines to be a credit
exposure for purposes of this section.
(4) Attribution rule.--For purposes of this subsection, any
transaction by a nonbank financial company supervised by the
Board of Governors or a bank holding company described in
subsection (a) with any person is a transaction with a company,
to the extent that the proceeds of the transaction are used for
the benefit of, or transferred to, that company.
(5) Rulemaking.--The Board of Governors may issue such
regulations and orders, including definitions consistent with
this section, as may be necessary to administer and carry out
this subsection.
(6) Exemptions.--This subsection shall not apply to any
Federal home loan bank. The Board of Governors may, by
regulation or order, exempt transactions, in whole or in part,
from the definition of the term ``credit exposure'' for purposes
of this subsection, if the Board of Governors finds that the
exemption is in the public interest and is consistent with the
purpose of this subsection.
(7) Transition period.--
(A) In general.--This <<NOTE: Effective
date.>> subsection and any regulations and orders of the
Board of Governors under this subsection shall not be
effective until 3 years after the date of enactment of
this Act.
(B) Extension authorized.--The Board of Governors
may extend the period specified in subparagraph (A) for
not longer than an additional 2 years.
(f) Enhanced Public Disclosures.--The Board of Governors may
prescribe, by regulation, periodic public disclosures by nonbank
financial companies supervised by the Board of Governors and bank
holding companies described in subsection (a) in order to support market
evaluation of the risk profile, capital adequacy, and risk management
capabilities thereof.
[[Page 124 STAT. 1429]]
(g) Short-term Debt Limits.--
(1) In general.--In order to mitigate the risks that an
over-accumulation of short-term debt could pose to financial
companies and to the stability of the United States financial
system, the Board of Governors may, by regulation, prescribe a
limit on the amount of short-term debt, including off-balance
sheet exposures, that may be accumulated by any bank holding
company described in subsection (a) and any nonbank financial
company supervised by the Board of Governors.
(2) Basis of limit.--Any limit prescribed under paragraph
(1) shall be based on the short-term debt of the company
described in paragraph (1) as a percentage of capital stock and
surplus of the company or on such other measure as the Board of
Governors considers appropriate.
(3) Short-term debt defined.--For purposes of this
subsection, the term ``short-term debt'' means such liabilities
with short-dated maturity that the Board of Governors
identifies, by regulation, except that such term does not
include insured deposits.
(4) Rulemaking authority.--In addition to prescribing
regulations under paragraphs (1) and (3), the Board of Governors
may prescribe such regulations, including definitions consistent
with this subsection, and issue such orders, as may be necessary
to carry out this subsection.
(5) Authority to issue exemptions and adjustments.--
Notwithstanding the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), the Board of Governors may, if it determines such
action is necessary to ensure appropriate heightened prudential
supervision, with respect to a company described in paragraph
(1) that does not control an insured depository institution,
issue to such company an exemption from or adjustment to the
limit prescribed under paragraph (1).
(h) Risk Committee.--
(1) Nonbank financial companies supervised by the board of
governors.--The Board <<NOTE: Establishment. Deadline.>> of
Governors shall require each nonbank financial company
supervised by the Board of Governors that is a publicly traded
company to establish a risk committee, as set forth in paragraph
(3), not later than 1 year after the date of receipt of a notice
of final determination under section 113(e)(3) with respect to
such nonbank financial company supervised by the Board of
Governors.
(2) Certain bank holding companies.--
(A) Mandatory regulations.--The Board of Governors
shall issue regulations requiring each bank holding
company that is a publicly traded company and that has
total consolidated assets of not less than
$10,000,000,000 to establish a risk committee, as set
forth in paragraph (3).
(B) Permissive regulations.--The Board of Governors
may require each bank holding company that is a publicly
traded company and that has total consolidated assets of
less than $10,000,000,000 to establish a risk committee,
as set forth in paragraph (3), as determined necessary
or appropriate by the Board of Governors to promote
sound risk management practices.
(3) Risk committee.--A risk committee required by this
subsection shall--
[[Page 124 STAT. 1430]]
(A) be responsible for the oversight of the
enterprise-wide risk management practices of the nonbank
financial company supervised by the Board of Governors
or bank holding company described in subsection (a), as
applicable;
(B) include such number of independent directors as
the Board of Governors may determine appropriate, based
on the nature of operations, size of assets, and other
appropriate criteria related to the nonbank financial
company supervised by the Board of Governors or a bank
holding company described in subsection (a), as
applicable; and
(C) include at least 1 risk management expert having
experience in identifying, assessing, and managing risk
exposures of large, complex firms.
(4) Rulemaking.--The <<NOTE: Deadline. Effective
date.>> Board of Governors shall issue final rules to carry out
this subsection, not later than 1 year after the transfer date,
to take effect not later than 15 months after the transfer date.
(i) Stress Tests.--
(1) By the board of governors.--
(A) Annual tests required.--The Board of Governors,
in coordination with the appropriate primary financial
regulatory agencies and the Federal Insurance Office,
shall conduct annual analyses in which nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a) are
subject to evaluation of whether such companies have the
capital, on a total consolidated basis, necessary to
absorb losses as a result of adverse economic
conditions.
(B) Test parameters and consequences.--The Board of
Governors--
(i) shall provide for at least 3 different
sets of conditions under which the evaluation
required by this subsection shall be conducted,
including baseline, adverse, and severely adverse;
(ii) may require the tests described in
subparagraph (A) at bank holding companies and
nonbank financial companies, in addition to those
for which annual tests are required under
subparagraph (A);
(iii) may develop and apply such other
analytic techniques as are necessary to identify,
measure, and monitor risks to the financial
stability of the United States;
(iv) shall require the companies described in
subparagraph (A) to update their resolution plans
required under subsection (d)(1), as the Board of
Governors determines appropriate, based on the
results of the analyses; and
(v) shall <<NOTE: Publication.>> publish a
summary of the results of the tests required under
subparagraph (A) or clause (ii) of this
subparagraph.
(2) By the company.--
(A) Requirement.--A <<NOTE: Deadlines.>> nonbank
financial company supervised by the Board of Governors
and a bank holding company described in subsection (a)
shall conduct semiannual stress tests. All other
financial companies that have total consolidated assets
of more than $10,000,000,000 and are regulated by a
primary Federal financial regulatory
[[Page 124 STAT. 1431]]
agency shall conduct annual stress tests. The tests
required under this subparagraph shall be conducted in
accordance with the regulations prescribed under
subparagraph (C).
(B) Report.--A company required to conduct stress
tests under subparagraph (A) shall submit a report to
the Board of Governors and to its primary financial
regulatory agency at such time, in such form, and
containing such information as the primary financial
regulatory agency shall require.
(C) Regulations.--Each Federal primary financial
regulatory agency, in coordination with the Board of
Governors and the Federal Insurance Office, shall issue
consistent and comparable regulations to implement this
paragraph that shall--
(i) define the term ``stress test'' for
purposes of this paragraph;
(ii) establish methodologies for the conduct
of stress tests required by this paragraph that
shall provide for at least 3 different sets of
conditions, including baseline, adverse, and
severely adverse;
(iii) establish the form and content of the
report required by subparagraph (B); and
(iv) <<NOTE: Publication.>> require companies
subject to this paragraph to publish a summary of
the results of the required stress tests.
(j) Leverage Limitation.--
(1) Requirement.--The Board of Governors shall require a
bank holding company with total consolidated assets equal to or
greater than $50,000,000,000 or a nonbank financial company
supervised by the Board of Governors to maintain a debt to
equity ratio of no more than 15 to 1, upon a determination by
the Council that such company poses a grave threat to the
financial stability of the United States and that the imposition
of such requirement is necessary to mitigate the risk that such
company poses to the financial stability of the United States.
Nothing in this paragraph shall apply to a Federal home loan
bank.
(2) Considerations.--In making a determination under this
subsection, the Council shall consider the factors described in
subsections (a) and (b) of section 113 and any other risk-
related factors that the Council deems appropriate.
(3) Regulations.--The <<NOTE: Procedures.>> Board of
Governors shall promulgate regulations to establish procedures
and timelines for complying with the requirements of this
subsection.
(k) Inclusion of Off-balance-sheet Activities in Computing Capital
Requirements.--
(1) In general.--In the case of any bank holding company
described in subsection (a) or nonbank financial company
supervised by the Board of Governors, the computation of capital
for purposes of meeting capital requirements shall take into
account any off-balance-sheet activities of the company.
(2) Exemptions.--If the Board of Governors determines that
an exemption from the requirement under paragraph (1) is
appropriate, the Board of Governors may exempt a company, or any
transaction or transactions engaged in by such company, from the
requirements of paragraph (1).
[[Page 124 STAT. 1432]]
(3) Off-balance-sheet activities defined.--For purposes of
this subsection, the term ``off-balance-sheet activities'' means
an existing liability of a company that is not currently a
balance sheet liability, but may become one upon the happening
of some future event, including the following transactions, to
the extent that they may create a liability:
(A) Direct credit substitutes in which a bank
substitutes its own credit for a third party, including
standby letters of credit.
(B) Irrevocable letters of credit that guarantee
repayment of commercial paper or tax-exempt securities.
(C) Risk participations in bankers' acceptances.
(D) Sale and repurchase agreements.
(E) Asset sales with recourse against the seller.
(F) Interest rate swaps.
(G) Credit swaps.
(H) Commodities contracts.
(I) Forward contracts.
(J) Securities contracts.
(K) Such other activities or transactions as the
Board of Governors may, by rule, define.
SEC. 166. <<NOTE: 12 USC 5366.>> EARLY REMEDIATION REQUIREMENTS.
(a) In General.--The <<NOTE: Regulations.>> Board of Governors, in
consultation with the Council and the Corporation, shall prescribe
regulations establishing requirements to provide for the early
remediation of financial distress of a nonbank financial company
supervised by the Board of Governors or a bank holding company described
in section 165(a), except that nothing in this subsection authorizes the
provision of financial assistance from the Federal Government.
(b) Purpose of the Early Remediation Requirements.--The purpose of
the early remediation requirements under subsection (a) shall be to
establish a series of specific remedial actions to be taken by a nonbank
financial company supervised by the Board of Governors or a bank holding
company described in section 165(a) that is experiencing increasing
financial distress, in order to minimize the probability that the
company will become insolvent and the potential harm of such insolvency
to the financial stability of the United States.
(c) Remediation Requirements.--The regulations prescribed by the
Board of Governors under subsection (a) shall--
(1) define measures of the financial condition of the
company, including regulatory capital, liquidity measures, and
other forward-looking indicators; and
(2) establish requirements that increase in stringency as
the financial condition of the company declines, including--
(A) requirements in the initial stages of financial
decline, including limits on capital distributions,
acquisitions, and asset growth; and
(B) requirements at later stages of financial
decline, including a capital restoration plan and
capital-raising requirements, limits on transactions
with affiliates, management changes, and asset sales.
SEC. 167. <<NOTE: 12 USC 5367.>> AFFILIATIONS.
(a) Affiliations.--Nothing in this subtitle shall be construed to
require a nonbank financial company supervised by the Board
[[Page 124 STAT. 1433]]
of Governors, or a company that controls a nonbank financial company
supervised by the Board of Governors, to conform the activities thereof
to the requirements of section 4 of the Bank Holding Company Act of 1956
(12 U.S.C. 1843).
(b) Requirement.--
(1) In general.--
(A)
Board <<NOTE: Deadline. Notification.>> authority.--If a
nonbank financial company supervised by the Board of
Governors conducts activities other than those that are
determined to be financial in nature or incidental
thereto under section 4(k) of the Bank Holding Company
Act of 1956, the Board of Governors may require such
company to establish and conduct all or a portion of
such activities that are determined to be financial in
nature or incidental thereto in or through an
intermediate holding company established pursuant to
regulation of the Board of Governors, not later than 90
days (or such longer period as the Board of Governors
may deem appropriate) after the date on which the
nonbank financial company supervised by the Board of
Governors is notified of the determination of the Board
of Governors under this section.
(B) Necessary actions.--Notwithstanding subparagraph
(A), the Board of Governors shall require a nonbank
financial company supervised by the Board of Governors
to establish an intermediate holding company if the
Board of Governors makes a determination that the
establishment of such intermediate holding company is
necessary to--
(i) appropriately supervise activities that
are determined to be financial in nature or
incidental thereto; or
(ii) to ensure that supervision by the Board
of Governors does not extend to the commercial
activities of such nonbank financial company.
(2) Internal financial activities.--For purposes of this
subsection, activities that are determined to be financial in
nature or incidental thereto under section 4(k) of the Bank
Holding Company Act of 1956, as described in paragraph (1),
shall not include internal financial activities, including
internal treasury, investment, and employee benefit functions.
With respect to any internal financial activity engaged in for
the company or an affiliate and a non-affiliate of such company
during the year prior to the date of enactment of this Act, such
company (or an affiliate that is not an intermediate holding
company or subsidiary of an intermediate holding company) may
continue to engage in such activity, as long as not less than 2/
3 of the assets or 2/3 of the revenues generated from the
activity are from or attributable to such company or an
affiliate, subject to review by the Board of Governors, to
determine whether engaging in such activity presents undue risk
to such company or to the financial stability of the United
States.
(3) Source of strength.--A company that directly or
indirectly controls an intermediate holding company established
under this section shall serve as a source of strength to its
subsidiary intermediate holding company.
(4) Parent company reports.--The Board of Governors may,
from time to time, require reports under oath from a
[[Page 124 STAT. 1434]]
company that controls an intermediate holding company, and from
the appropriate officers or directors of such company, solely
for purposes of ensuring compliance with the provisions of this
section, including assessing the ability of the company to serve
as a source of strength to its subsidiary intermediate holding
company pursuant to paragraph (3) and enforcing such compliance.
(5) Limited parent company enforcement.--
(A) In general.--In addition to any other authority
of the Board of Governors, the Board of Governors may
enforce compliance with the provisions of this
subsection that are applicable to any company described
in paragraph (1) that controls an intermediate holding
company under section 8 of the Federal Deposit Insurance
Act, and such company shall be subject to such section
(solely for such purposes) in the same manner and to the
same extent as if such company were a bank holding
company.
(B) Application of other act.--Any violation of this
subsection by any company that controls an intermediate
holding company may also be treated as a violation of
the Federal Deposit Insurance Act for purposes of
subparagraph (A).
(C) No effect on other authority.--No provision of
this paragraph shall be construed as limiting any
authority of the Board of Governors or any other Federal
agency under any other provision of law.
(c) Regulations.--The Board of Governors--
(1) shall <<NOTE: Criteria.>> promulgate regulations to
establish the criteria for determining whether to require a
nonbank financial company supervised by the Board of Governors
to establish an intermediate holding company under subsection
(b); and
(2) may promulgate regulations to establish any restrictions
or limitations on transactions between an intermediate holding
company or a nonbank financial company supervised by the Board
of Governors and its affiliates, as necessary to prevent unsafe
and unsound practices in connection with transactions between
such company, or any subsidiary thereof, and its parent company
or affiliates that are not subsidiaries of such company, except
that such regulations shall not restrict or limit any
transaction in connection with the bona fide acquisition or
lease by an unaffiliated person of assets, goods, or services.
SEC. 168. <<NOTE: 12 USC 5368.>> REGULATIONS.
The Board of Governors shall have authority to issue regulations to
implement subtitles A and C and the amendments made thereunder.
Except <<NOTE: Deadline.>> as otherwise specified in subtitle A or C,
not later than 18 months after the effective date of this Act, the Board
of Governors shall issue final regulations to implement subtitles A and
C, and the amendments made thereunder.
SEC. 169. <<NOTE: 12 USC 5369.>> AVOIDING DUPLICATION.
The Board of Governors shall take any action that the Board of
Governors deems appropriate to avoid imposing requirements under this
subtitle that are duplicative of requirements applicable to bank holding
companies and nonbank financial companies under other provisions of law.
[[Page 124 STAT. 1435]]
SEC. 170. <<NOTE: 12 USC 5370.>> SAFE HARBOR.
(a) Regulations.--The <<NOTE: Criteria.>> Board of Governors shall
promulgate regulations on behalf of, and in consultation with, the
Council setting forth the criteria for exempting certain types or
classes of U.S. nonbank financial companies or foreign nonbank financial
companies from supervision by the Board of Governors.
(b) Considerations.--In developing the criteria under subsection
(a), the Board of Governors shall take into account the factors for
consideration described in subsections (a) and (b) of section 113 in
determining whether a U.S. nonbank financial company or foreign nonbank
financial company shall be supervised by the Board of Governors.
(c) Rule of Construction.--Nothing in this section shall be
construed to require supervision by the Board of Governors of a U.S.
nonbank financial company or foreign nonbank financial company, if such
company does not meet the criteria for exemption established under
subsection (a).
(d) Revisions.--
(1) In <<NOTE: Review.>> general.--The Board of Governors
shall, in consultation with the Council, review the regulations
promulgated under subsection (a), not less frequently than every
5 years, and based upon the review, the Board of Governors may
revise such regulations on behalf of, and in consultation with,
the Council to update as necessary the criteria set forth in
such regulations.
(2) Transition period.--No revisions under paragraph (1)
shall take effect before the end of the 2-year period after the
date of publication of such revisions in final form.
(e) Report.--The Chairman of the Board of Governors and the
Chairperson of the Council shall submit a joint report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives not later than 30
days after the date of the issuance in final form of regulations under
subsection (a), or any subsequent revision to such regulations under
subsection (d), as applicable. Such report shall include, at a minimum,
the rationale for exemption and empirical evidence to support the
criteria for exemption.
SEC. 171. <<NOTE: 12 USC 5371.>> LEVERAGE AND RISK-BASED CAPITAL
REQUIREMENTS.
(a) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Generally applicable leverage capital requirements.--The
term ``generally applicable leverage capital requirements''
means--
(A) the minimum ratios of tier 1 capital to average
total assets, as established by the appropriate Federal
banking agencies to apply to insured depository
institutions under the prompt corrective action
regulations implementing section 38 of the Federal
Deposit Insurance Act, regardless of total consolidated
asset size or foreign financial exposure; and
(B) includes the regulatory capital components in
the numerator of that capital requirement, average total
assets in the denominator of that capital requirement,
and the required ratio of the numerator to the
denominator.
[[Page 124 STAT. 1436]]
(2) Generally applicable risk-based capital requirements.--
The term ``generally applicable risk-based capital
requirements'' means--
(A) the risk-based capital requirements, as
established by the appropriate Federal banking agencies
to apply to insured depository institutions under the
prompt corrective action regulations implementing
section 38 of the Federal Deposit Insurance Act,
regardless of total consolidated asset size or foreign
financial exposure; and
(B) includes the regulatory capital components in
the numerator of those capital requirements, the risk-
weighted assets in the denominator of those capital
requirements, and the required ratio of the numerator to
the denominator.
(3) Definition of depository institution holding company.--
The term ``depository institution holding company'' means a bank
holding company or a savings and loan holding company (as those
terms are defined in section 3 of the Federal Deposit Insurance
Act) that is organized in the United States, including any bank
or savings and loan holding company that is owned or controlled
by a foreign organization, but does not include the foreign
organization.
(b) Minimum Capital Requirements.--
(1) Minimum leverage capital requirements.--The appropriate
Federal banking agencies shall establish minimum leverage
capital requirements on a consolidated basis for insured
depository institutions, depository institution holding
companies, and nonbank financial companies supervised by the
Board of Governors. The minimum leverage capital requirements
established under this paragraph shall not be less than the
generally applicable leverage capital requirements, which shall
serve as a floor for any capital requirements that the agency
may require, nor quantitatively lower than the generally
applicable leverage capital requirements that were in effect for
insured depository institutions as of the date of enactment of
this Act.
(2) Minimum risk-based capital requirements.--The
appropriate Federal banking agencies shall establish minimum
risk-based capital requirements on a consolidated basis for
insured depository institutions, depository institution holding
companies, and nonbank financial companies supervised by the
Board of Governors. The minimum risk-based capital requirements
established under this paragraph shall not be less than the
generally applicable risk-based capital requirements, which
shall serve as a floor for any capital requirements that the
agency may require, nor quantitatively lower than the generally
applicable risk-based capital requirements that were in effect
for insured depository institutions as of the date of enactment
of this Act.
(3) Investments in financial subsidiaries.--For purposes of
this section, investments in financial subsidiaries that insured
depository institutions are required to deduct from regulatory
capital under section 5136A of the Revised Statutes of the
United States or section 46(a)(2) of the Federal Deposit
Insurance Act need not be deducted from regulatory capital by
depository institution holding companies or nonbank financial
companies supervised by the Board of Governors, unless such
capital deduction is required by the Board of Governors
[[Page 124 STAT. 1437]]
or the primary financial regulatory agency in the case of
nonbank financial companies supervised by the Board of
Governors.
(4) Effective dates and phase-in periods.--
(A) Debt or equity instruments on or after may 19,
2010.--For debt or equity instruments issued on or after
May 19, 2010, by depository institution holding
companies or by nonbank financial companies supervised
by the Board of Governors, this section shall be deemed
to have become effective as of May 19, 2010.
(B) Debt or equity instruments issued before may 19,
2010.--For debt or equity instruments issued before May
19, 2010, by depository institution holding companies or
by nonbank financial companies supervised by the Board
of Governors, any regulatory capital deductions required
under this section shall be phased in incrementally over
a period of 3 years, with the phase-in period to begin
on January 1, 2013, except as set forth in subparagraph
(C).
(C) Debt or equity instruments of smaller
institutions.--For debt or equity instruments issued
before May 19, 2010, by depository institution holding
companies with total consolidated assets of less than
$15,000,000,000 as of December 31, 2009, and by
organizations that were mutual holding companies on May
19, 2010, the capital deductions that would be required
for other institutions under this section are not
required as a result of this section.
(D) Depository institution holding companies not
previously supervised by the board of governors.--For
any depository institution holding company that was not
supervised by the Board of Governors as of May 19, 2010,
the requirements of this section, except as set forth in
subparagraphs (A) and (B), shall be effective 5 years
after the date of enactment of this Act
(E) Certain bank holding company subsidiaries of
foreign banking organizations.--For bank holding company
subsidiaries of foreign banking organizations that have
relied on Supervision and Regulation Letter SR-01-1
issued by the Board of Governors (as in effect on May
19, 2010), the requirements of this section, except as
set forth in subparagraph (A), shall be effective 5
years after the date of enactment of this Act.
(5) Exceptions.--This section shall not apply to--
(A) debt or equity instruments issued to the United
States or any agency or instrumentality thereof pursuant
to the Emergency Economic Stabilization Act of 2008, and
prior to October 4, 2010;
(B) any Federal home loan bank; or
(C) any small bank holding company that is subject
to the Small Bank Holding Company Policy Statement of
the Board of Governors, as in effect on May 19, 2010.
(6) Study and report on small institution access to
capital.--
(A) Study required.--The Comptroller General of the
United States, after consultation with the Federal
banking
[[Page 124 STAT. 1438]]
agencies, shall conduct a study of access to capital by
smaller insured depository institutions.
(B) Scope.--For <<NOTE: Definition.>> purposes of
this study required by subparagraph (A), the term
``smaller insured depository institution'' means an
insured depository institution with total consolidated
assets of $5,000,000,000 or less.
(C) Report to congress.--Not later than 18 months
after the date of enactment of this Act, the Comptroller
General of the United States shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives a report summarizing the
results of the study conducted under subparagraph (A),
together with any recommendations for legislative or
regulatory action that would enhance the access to
capital of smaller insured depository institutions, in a
manner that is consistent with safe and sound banking
operations.
(7) Capital requirements to address activities that pose
risks to the financial system.--
(A) In general.--Subject to the recommendations of
the Council, in accordance with section 120, the Federal
banking agencies shall develop capital requirements
applicable to insured depository institutions,
depository institution holding companies, and nonbank
financial companies supervised by the Board of Governors
that address the risks that the activities of such
institutions pose, not only to the institution engaging
in the activity, but to other public and private
stakeholders in the event of adverse performance,
disruption, or failure of the institution or the
activity.
(B) Content.--Such rules shall address, at a
minimum, the risks arising from--
(i) significant volumes of activity in
derivatives, securitized products purchased and
sold, financial guarantees purchased and sold,
securities borrowing and lending, and repurchase
agreements and reverse repurchase agreements;
(ii) concentrations in assets for which the
values presented in financial reports are based on
models rather than historical cost or prices
deriving from deep and liquid 2-way markets; and
(iii) concentrations in market share for any
activity that would substantially disrupt
financial markets if the institution is forced to
unexpectedly cease the activity.
SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR INSURANCE AND
ORDERLY LIQUIDATION PURPOSES.
(a) Examinations for Insurance and Resolution Purposes.--Section
10(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)) is
amended--
(1) by striking ``In addition'' and inserting the following:
``(A) In general.--In addition''; and
(2) by striking ``whenever the board of directors
determines'' and all that follows through the period and
inserting the following: ``or nonbank financial company
supervised by the Board of Governors or a bank holding company
described in section
[[Page 124 STAT. 1439]]
165(a) of the Financial Stability Act of 2010, whenever the
Board of Directors determines that a special examination of any
such depository institution is necessary to determine the
condition of such depository institution for insurance purposes,
or of such nonbank financial company supervised by the Board of
Governors or bank holding company described in section 165(a) of
the Financial Stability Act of 2010, for the purpose of
implementing its authority to provide for orderly liquidation of
any such company under title II of that Act, provided that such
authority may not be used with respect to any such company that
is in a generally sound condition.
``(B) Limitation.--
Before <<NOTE: Review.>> conducting a special
examination of a nonbank financial company supervised by
the Board of Governors or a bank holding company
described in section 165(a) of the Financial Stability
Act of 2010, the Corporation shall review any available
and acceptable resolution plan that the company has
submitted in accordance with section 165(d) of that Act,
consistent with the nonbinding effect of such plan, and
available reports of examination, and shall coordinate
to the maximum extent practicable with the Board of
Governors, in order to minimize duplicative or
conflicting examinations.''.
(b) Enforcement Authority.--Section 8(t) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(t)) is amended--
(1) in paragraph (1), by inserting ``, any depository
institution holding company,'' before ``or any institution-
affiliated party'';
(2) in paragraph (2)--
(A) by striking ``or'' at the end of subparagraph
(B);
(B) at the end of subparagraph (C), by striking the
period and inserting ``or''; and
(C) by inserting at the end the following new
subparagraph:
``(D) the conduct or threatened conduct (including
any acts or omissions) of the depository institution
holding company poses a risk to the Deposit Insurance
Fund, provided that such authority may not be used with
respect to a depository institution holding company that
is in generally sound condition and whose conduct does
not pose a foreseeable and material risk of loss to the
Deposit Insurance Fund;''; and
(3) by adding at the end the following:
``(6) Powers and duties with respect to depository
institution holding companies.--For purposes of exercising the
backup authority provided in this subsection--
``(A) the Corporation shall have the same powers
with respect to a depository institution holding company
and its affiliates as the appropriate Federal banking
agency has with respect to the holding company and its
affiliates; and
``(B) the holding company and its affiliates shall
have the same duties and obligations with respect to the
Corporation as the holding company and its affiliates
have with respect to the appropriate Federal banking
agency.''.
(c) Rule <<NOTE: 12 USC 5372.>> of Construction.--Nothing in this
Act shall be construed to limit or curtail the Corporation's current
authority to
[[Page 124 STAT. 1440]]
examine or bring enforcement actions with respect to any insured
depository institution or institution-affiliated party.
SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN
INSTITUTIONS.
(a) Establishment of Foreign Bank Offices in the United States.--
Section 7(d)(3) of the International Banking Act of 1978 (12 U.S.C.
3105(d)(3)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking the period at the end
of and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) for a foreign bank that presents a risk to the
stability of United States financial system, whether the
home country of the foreign bank has adopted, or is
making demonstrable progress toward adopting, an
appropriate system of financial regulation for the
financial system of such home country to mitigate such
risk.''.
(b) Termination of Foreign Bank Offices in the United States.--
Section 7(e)(1) of the International Banking Act of 1978 (12 U.S.C.
3105(e)(1)) is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end
of and inserting ``; or''; and
(3) by inserting after subparagraph (B), the following new
subparagraph:
``(C) for a foreign bank that presents a risk to the
stability of the United States financial system, the
home country of the foreign bank has not adopted, or
made demonstrable progress toward adopting, an
appropriate system of financial regulation to mitigate
such risk.''.
(c) Registration or Succession to a United States Broker or Dealer
and Termination of Such Registration.--Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end the
following new subsections:
``(k) Registration or Succession to a United States Broker or
Dealer.--In determining whether to permit a foreign person or an
affiliate of a foreign person to register as a United States broker or
dealer, or succeed to the registration of a United States broker or
dealer, the Commission may consider whether, for a foreign person, or an
affiliate of a foreign person that presents a risk to the stability of
the United States financial system, the home country of the foreign
person has adopted, or made demonstrable progress toward adopting, an
appropriate system of financial regulation to mitigate such risk.
``(l) Termination of a United States Broker or Dealer.--For a
foreign person or an affiliate of a foreign person that presents such a
risk to the stability of the United States financial system, the
Commission may determine to terminate the registration of such foreign
person or an affiliate of such foreign person as a broker or dealer in
the United States, if the Commission determines that the home country of
the foreign person has not adopted, or made demonstrable progress toward
adopting, an appropriate system of financial regulation to mitigate such
risk.''.
[[Page 124 STAT. 1441]]
SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY CAPITAL
REQUIREMENTS.
(a) Study of Hybrid Capital Instruments.--The Comptroller General of
the United States, in consultation with the Board of Governors, the
Comptroller of the Currency, and the Corporation, shall conduct a study
of the use of hybrid capital instruments as a component of Tier 1
capital for banking institutions and bank holding companies. The study
shall consider--
(1) the current use of hybrid capital instruments, such as
trust preferred shares, as a component of Tier 1 capital;
(2) the differences between the components of capital
permitted for insured depository institutions and those
permitted for companies that control insured depository
institutions;
(3) the benefits and risks of allowing such instruments to
be used to comply with Tier 1 capital requirements;
(4) the economic impact of prohibiting the use of such
capital instruments for Tier 1;
(5) a review of the consequences of disqualifying trust
preferred instruments, and whether it could lead to the failure
or undercapitalization of existing banking organizations;
(6) the international competitive implications prohibiting
hybrid capital instruments for Tier 1;
(7) the impact on the cost and availability of credit in the
United States from such a prohibition;
(8) the availability of capital for financial institutions
with less than $10,000,000,000 in total assets; and
(9) any other relevant factors relating to the safety and
soundness of our financial system and potential economic impact
of such a prohibition.
(b) Study of Foreign Bank Intermediate Holding Company Capital
Requirements.--The Comptroller General of the United States, in
consultation with the Secretary, the Board of Governors, the Comptroller
of the Currency, and the Corporation, shall conduct a study of capital
requirements applicable to United States intermediate holding companies
of foreign banks that are bank holding companies or savings and loan
holding companies. The study shall consider--
(1) current Board of Governors policy regarding the
treatment of intermediate holding companies;
(2) the principle of national treatment and equality of
competitive opportunity for foreign banks operating in the
United States;
(3) the extent to which foreign banks are subject on a
consolidated basis to home country capital standards comparable
to United States capital standards;
(4) potential effects on United States banking organizations
operating abroad of changes to United States policy regarding
intermediate holding companies;
(5) the impact on the cost and availability of credit in the
United States from a change in United States policy regarding
intermediate holding companies; and
(6) any other relevant factors relating to the safety and
soundness of our financial system and potential economic impact
of such a prohibition.
(c) Report.--Not later than 18 months after the date of enactment of
this Act, the Comptroller General of the United States shall submit
reports to the Committee on Banking, Housing, and
[[Page 124 STAT. 1442]]
Urban Affairs of the Senate and the Committee on Financial Services of
the House of Representatives summarizing the results of the studies
required under subsection (a). The reports shall include specific
recommendations for legislative or regulatory action regarding the
treatment of hybrid capital instruments, including trust preferred
shares, and shall explain the basis for such recommendations.
SEC. 175. <<NOTE: Consultation. 12 USC 5373.>> INTERNATIONAL
POLICY COORDINATION.
(a) By the President.--The President, or a designee of the
President, may coordinate through all available international policy
channels, similar policies as those found in United States law relating
to limiting the scope, nature, size, scale, concentration, and
interconnectedness of financial companies, in order to protect financial
stability and the global economy.
(b) By the Council.--The Chairperson of the Council, in consultation
with the other members of the Council, shall regularly consult with the
financial regulatory entities and other appropriate organizations of
foreign governments or international organizations on matters relating
to systemic risk to the international financial system.
(c) By the Board of Governors and the Secretary.--The Board of
Governors and the Secretary shall consult with their foreign
counterparts and through appropriate multilateral organizations to
encourage comprehensive and robust prudential supervision and regulation
for all highly leveraged and interconnected financial companies.
SEC. 176. <<NOTE: 12 USC 5374.>> RULE OF CONSTRUCTION.
No regulation or standard imposed under this title may be construed
in a manner that would lessen the stringency of the requirements of any
applicable primary financial regulatory agency or any other Federal or
State agency that are otherwise applicable. This title, and the rules
and regulations or orders prescribed pursuant to this title, do not
divest any such agency of any authority derived from any other
applicable law.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
SEC. 201. <<NOTE: 12 USC 5381.>> DEFINITIONS.
(a) In General.--In this title, the following definitions shall
apply:
(1) Administrative expenses of the receiver.--The term
``administrative expenses of the receiver'' includes--
(A) the actual, necessary costs and expenses
incurred by the Corporation as receiver for a covered
financial company in liquidating a covered financial
company; and
(B) any obligations that the Corporation as receiver
for a covered financial company determines are necessary
and appropriate to facilitate the smooth and orderly
liquidation of the covered financial company.
(2) Bankruptcy code.--The term ``Bankruptcy Code'' means
title 11, United States Code.
(3) Bridge financial company.--The term ``bridge financial
company'' means a new financial company organized by
[[Page 124 STAT. 1443]]
the Corporation in accordance with section 210(h) for the
purpose of resolving a covered financial company.
(4) Claim.--The term ``claim'' means any right to payment,
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured.
(5) Company.--The term ``company'' has the same meaning as
in section 2(b) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(b)), except that such term includes any company
described in paragraph (11), the majority of the securities of
which are owned by the United States or any State.
(6) Court.--The term ``Court'' means the United States
District Court for the District of Columbia, unless the context
otherwise requires.
(7) Covered broker or dealer.--The term ``covered broker or
dealer'' means a covered financial company that is a broker or
dealer that--
(A) is registered with the Commission under section
15(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(b)); and
(B) is a member of SIPC.
(8) Covered financial company.--The term ``covered financial
company''--
(A) means a financial company for which a
determination has been made under section 203(b); and
(B) does not include an insured depository
institution.
(9) Covered subsidiary.--The term ``covered subsidiary''
means a subsidiary of a covered financial company, other than--
(A) an insured depository institution;
(B) an insurance company; or
(C) a covered broker or dealer.
(10) Definitions relating to covered brokers and dealers.--
The terms ``customer'', ``customer name securities'', ``customer
property'', and ``net equity'' in the context of a covered
broker or dealer, have the same meanings as in section 16 of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78lll).
(11) Financial company.--The term ``financial company''
means any company that--
(A) is incorporated or organized under any provision
of Federal law or the laws of any State;
(B) is--
(i) a bank holding company, as defined in
section 2(a) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(a));
(ii) a nonbank financial company supervised by
the Board of Governors;
(iii) any company that is predominantly
engaged in activities that the Board of Governors
has determined are financial in nature or
incidental thereto for purposes of section 4(k) of
the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)) other than a company described in clause
(i) or (ii); or
(iv) any subsidiary of any company described
in any of clauses (i) through (iii) that is
predominantly engaged in activities that the Board
of Governors has
[[Page 124 STAT. 1444]]
determined are financial in nature or incidental
thereto for purposes of section 4(k) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(k))
(other than a subsidiary that is an insured
depository institution or an insurance company);
and
(C) is not a Farm Credit System institution
chartered under and subject to the provisions of the
Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.), a governmental entity, or a regulated entity, as
defined under section 1303(20) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4502(20)).
(12) Fund.--The term ``Fund'' means the Orderly Liquidation
Fund established under section 210(n).
(13) Insurance company.--The term ``insurance company''
means any entity that is--
(A) engaged in the business of insurance;
(B) subject to regulation by a State insurance
regulator; and
(C) covered by a State law that is designed to
specifically deal with the rehabilitation, liquidation,
or insolvency of an insurance company.
(14) Nonbank financial company.--The term ``nonbank
financial company'' has the same meaning as in section
102(a)(4)(C).
(15) Nonbank financial company supervised by the board of
governors.--The term ``nonbank financial company supervised by
the Board of Governors'' has the same meaning as in section
102(a)(4)(D).
(16) SIPC.--The term ``SIPC'' means the Securities Investor
Protection Corporation.
(b) Definitional <<NOTE: Regulations.>> Criteria.--For purpose of
the definition of the term ``financial company'' under subsection
(a)(11), no company shall be deemed to be predominantly engaged in
activities that the Board of Governors has determined are financial in
nature or incidental thereto for purposes of section 4(k) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(k)), if the consolidated
revenues of such company from such activities constitute less than 85
percent of the total consolidated revenues of such company, as the
Corporation, in consultation with the Secretary, shall establish by
regulation. In determining whether a company is a financial company
under this title, the consolidated revenues derived from the ownership
or control of a depository institution shall be included.
SEC. 202. <<NOTE: 12 USC 5382.>> JUDICIAL REVIEW.
(a) Commencement of Orderly Liquidation.--
(1) Petition to district court.--
(A) District court review.--
(i) Petition to district court.--
Subsequent <<NOTE: Notification.>> to a
determination by the Secretary under section 203
that a financial company satisfies the criteria in
section 203(b), the Secretary shall notify the
Corporation and the covered financial
company. <<NOTE: Appointment.>> If the board of
directors (or body performing similar functions)
of the covered financial company acquiesces or
consents to the appointment of the Corporation as
receiver, the Secretary shall appoint the
Corporation as receiver. If
[[Page 124 STAT. 1445]]
the board of directors (or body performing similar
functions) of the covered financial company does
not acquiesce or consent to the appointment of the
Corporation as receiver, the Secretary shall
petition the United States District Court for the
District of Columbia for an order authorizing the
Secretary to appoint the Corporation as receiver.
(ii) Form and content of order.--The Secretary
shall present all relevant findings and the
recommendation made pursuant to section 203(a) to
the Court. The petition shall be filed under seal.
(iii) Determination.--On a strictly
confidential basis, and without any prior public
disclosure, the Court, after notice to the covered
financial company and a hearing in which the
covered financial company may oppose the petition,
shall determine whether the determination of the
Secretary that the covered financial company is in
default or in danger of default and satisfies the
definition of a financial company under section
201(a)(11) is arbitrary and capricious.
(iv) Issuance of order.--If the Court
determines that the determination of the Secretary
that the covered financial company is in default
or in danger of default and satisfies the
definition of a financial company under section
201(a)(11)--
(I) is not arbitrary and capricious,
the Court shall issue an order
immediately authorizing the Secretary to
appoint the Corporation as receiver of
the covered financial company; or
(II) is arbitrary and capricious,
the Court shall immediately provide to
the Secretary a written statement of
each reason supporting its
determination, and afford the Secretary
an immediate opportunity to amend and
refile the petition under clause (i).
(v) Petition granted by operation of law.--If
the Court does not make a determination within 24
hours of receipt of the petition--
(I) the petition shall be granted by
operation of law;
(II) the Secretary shall appoint the
Corporation as receiver; and
(III) liquidation under this title
shall automatically and without further
notice or action be commenced and the
Corporation may immediately take all
actions authorized under this title.
(B) Effect of determination.--The determination of
the Court under subparagraph (A) shall be final, and
shall be subject to appeal only in accordance with
paragraph (2). The decision shall not be subject to any
stay or injunction pending appeal.
Upon <<NOTE: Records.>> conclusion of its proceedings
under subparagraph (A), the Court shall provide
immediately for the record a written statement of each
reason supporting the decision of the Court, and shall
provide copies thereof to the Secretary and the covered
financial company.
[[Page 124 STAT. 1446]]
(C) Criminal penalties.--A person who recklessly
discloses a determination of the Secretary under section
203(b) or a petition of the Secretary under subparagraph
(A), or the pendency of court proceedings as provided
for under subparagraph (A), shall be fined not more than
250,000, or imprisoned for not more than 5 years, or
both.
(2) Appeal of decisions of the district court.--
(A) Appeal to court of appeals.--
(i) In general.--
Subject <<NOTE: Deadline.>> to clause (ii), the
United States Court of Appeals for the District of
Columbia Circuit shall have jurisdiction of an
appeal of a final decision of the Court filed by
the Secretary or a covered financial company,
through its board of directors, notwithstanding
section 210(a)(1)(A)(i), not later than 30 days
after the date on which the decision of the Court
is rendered or deemed rendered under this
subsection.
(ii) Condition of jurisdiction.--The Court of
Appeals shall have jurisdiction of an appeal by a
covered financial company only if the covered
financial company did not acquiesce or consent to
the appointment of a receiver by the Secretary
under paragraph (1)(A).
(iii) Expedition.--The Court of Appeals shall
consider any appeal under this subparagraph on an
expedited basis.
(iv) Scope of review.--For an appeal taken
under this subparagraph, review shall be limited
to whether the determination of the Secretary that
a covered financial company is in default or in
danger of default and satisfies the definition of
a financial company under section 201(a)(11) is
arbitrary and capricious.
(B) Appeal to the supreme court.--
(i) In <<NOTE: Deadline.>> general.--A
petition for a writ of certiorari to review a
decision of the Court of Appeals under
subparagraph (A) may be filed by the Secretary or
the covered financial company, through its board
of directors, notwithstanding section
210(a)(1)(A)(i), with the Supreme Court of the
United States, not later than 30 days after the
date of the final decision of the Court of
Appeals, and the Supreme Court shall have
discretionary jurisdiction to review such
decision.
(ii) Written statement.--
In <<NOTE: Records.>> the event of a petition
under clause (i), the Court of Appeals shall
immediately provide for the record a written
statement of each reason for its decision.
(iii) Expedition.--The Supreme Court shall
consider any petition under this subparagraph on
an expedited basis.
(iv) Scope of review.--Review by the Supreme
Court under this subparagraph shall be limited to
whether the determination of the Secretary that
the covered financial company is in default or in
danger of default and satisfies the definition of
a financial company under section 201(a)(11) is
arbitrary and capricious.
(b) Establishment and Transmittal of Rules and Procedures.--
[[Page 124 STAT. 1447]]
(1) In general.--Not <<NOTE: Deadline.>> later than 6 months
after the date of enactment of this Act, the Court shall
establish such rules and procedures as may be necessary to
ensure the orderly conduct of proceedings, including rules and
procedures to ensure that the 24-hour deadline is met and that
the Secretary shall have an ongoing opportunity to amend and
refile petitions under subsection (a)(1).
(2) Publication of rules.--The rules and procedures
established under paragraph (1), and any modifications of such
rules and procedures, shall be recorded and shall be transmitted
to--
(A) the Committee on the Judiciary of the Senate;
(B) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(C) the Committee on the Judiciary of the House of
Representatives; and
(D) the Committee on Financial Services of the House
of Representatives.
(c) Provisions Applicable to Financial Companies.--
(1) Bankruptcy code.--Except as provided in this subsection,
the provisions of the Bankruptcy Code and rules issued
thereunder or otherwise applicable insolvency law, and not the
provisions of this title, shall apply to financial companies
that are not covered financial companies for which the
Corporation has been appointed as receiver.
(2) This title.--The provisions of this title shall
exclusively apply to and govern all matters relating to covered
financial companies for which the Corporation is appointed as
receiver, and no provisions of the Bankruptcy Code or the rules
issued thereunder shall apply in such cases, except as expressly
provided in this title.
(d) Time Limit on Receivership Authority.--
(1) Baseline period.--Any appointment of the Corporation as
receiver under this section shall terminate at the end of the 3-
year period beginning on the date on which such appointment is
made.
(2) Extension of time limit.--
The <<NOTE: Certification.>> time limit established in paragraph
(1) may be extended by the Corporation for up to 1 additional
year, if the Chairperson of the Corporation determines and
certifies in writing to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives that continuation of
the receivership is necessary--
(A) to--
(i) maximize the net present value return from
the sale or other disposition of the assets of the
covered financial company; or
(ii) minimize the amount of loss realized upon
the sale or other disposition of the assets of the
covered financial company; and
(B) to protect the stability of the financial system
of the United States.
(3) Second extension of time limit.--
(A) In general.--The time limit under this
subsection, as extended under paragraph (2), may be
extended for
[[Page 124 STAT. 1448]]
up to 1 additional year, if the Chairperson of the
Corporation, with the concurrence of the Secretary,
submits the certifications described in paragraph (2).
(B) Additional report required.--Not later than 30
days after the date of commencement of the extension
under subparagraph (A), the Corporation shall submit a
report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives describing the
need for the extension and the specific plan of the
Corporation to conclude the receivership before the end
of the second extension.
(4) Ongoing litigation.--The <<NOTE: Deadline. Termination
date.>> time limit under this subsection, as extended under
paragraph (3), may be further extended solely for the purpose of
completing ongoing litigation in which the Corporation as
receiver is a party, provided that the appointment of the
Corporation as receiver shall terminate not later than 90 days
after the date of completion of such litigation, if--
(A) the Council determines that the Corporation used
its best efforts to conclude the receivership in
accordance with its plan before the end of the time
limit described in paragraph (3);
(B) the Council determines that the completion of
longer-term responsibilities in the form of ongoing
litigation justifies the need for an extension; and
(C) <<NOTE: Reports. Deadline.>> the Corporation
submits a report approved by the Council not later than
30 days after the date of the determinations by the
Council under subparagraphs (A) and (B) to the Committee
on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of
Representatives, describing--
(i) the ongoing litigation justifying the need
for an extension; and
(ii) the specific plan of the Corporation to
complete the litigation and conclude the
receivership.
(5) Regulations.--The Corporation may issue regulations
governing the termination of receiverships under this title.
(6) No liability.--The Corporation and the Deposit Insurance
Fund shall not be liable for unresolved claims arising from the
receivership after the termination of the receivership.
(e) Study of Bankruptcy and Orderly Liquidation Process for
Financial Companies.--
(1) Study.--
(A) In general.--The Administrative Office of the
United States Courts and the Comptroller General of the
United States shall each monitor the activities of the
Court, and each such Office shall conduct separate
studies regarding the bankruptcy and orderly liquidation
process for financial companies under the Bankruptcy
Code.
(B) Issues to be studied.--
In <<NOTE: Evaluation.>> conducting the study under
subparagraph (A), the Administrative Office of the
United States Courts and the Comptroller General of the
United States each shall evaluate--
(i) the effectiveness of chapter 7 or chapter
11 of the Bankruptcy Code in facilitating the
orderly liquidation or reorganization of financial
companies;
[[Page 124 STAT. 1449]]
(ii) ways to maximize the efficiency and
effectiveness of the Court; and
(iii) ways to make the orderly liquidation
process under the Bankruptcy Code for financial
companies more effective.
(2) Reports.--Not later than 1 year after the date of
enactment of this Act, in each successive year until the third
year, and every fifth year after that date of enactment, the
Administrative Office of the United States Courts and the
Comptroller General of the United States shall submit to the
Committee on Banking, Housing, and Urban Affairs and the
Committee on the Judiciary of the Senate and the Committee on
Financial Services and the Committee on the Judiciary of the
House of Representatives separate reports summarizing the
results of the studies conducted under paragraph (1).
(f) Study of International Coordination Relating to Bankruptcy
Process for Financial Companies.--
(1) Study.--
(A) In general.--The Comptroller General of the
United States shall conduct a study regarding
international coordination relating to the orderly
liquidation of financial companies under the Bankruptcy
Code.
(B) Issues to be studied.--In conducting the study
under subparagraph (A), the Comptroller General of the
United States shall evaluate, with respect to the
bankruptcy process for financial companies--
(i) the extent to which international
coordination currently exists;
(ii) current mechanisms and structures for
facilitating international cooperation;
(iii) barriers to effective international
coordination; and
(iv) ways to increase and make more effective
international coordination.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to the Committee on Banking, Housing, and
Urban Affairs and the Committee on the Judiciary of the Senate
and the Committee on Financial Services and the Committee on the
Judiciary of the House of Representatives and the Secretary a
report summarizing the results of the study conducted under
paragraph (1).
(g) Study of Prompt Corrective Action Implementation by the
Appropriate Federal Agencies.--
(1) Study.--The Comptroller General of the United States
shall conduct a study regarding the implementation of prompt
corrective action by the appropriate Federal banking agencies.
(2) Issues to be studied.--
In <<NOTE: Evaluation.>> conducting the study under paragraph
(1), the Comptroller General shall evaluate--
(A) the effectiveness of implementation of prompt
corrective action by the appropriate Federal banking
agencies and the resolution of insured depository
institutions by the Corporation; and
(B) ways to make prompt corrective action a more
effective tool to resolve the insured depository
institutions at the least possible long-term cost to the
Deposit Insurance Fund.
[[Page 124 STAT. 1450]]
(3) Report to council.--Not later than 1 year after the date
of enactment of this Act, the Comptroller General shall submit a
report to the Council on the results of the study conducted
under this subsection.
(4) Council report of action.--Not later than 6 months after
the date of receipt of the report from the Comptroller General
under paragraph (3), the Council shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives on actions taken in response to the report,
including any recommendations made to the Federal primary
financial regulatory agencies under section 120.
SEC. 203. <<NOTE: 12 USC 5383.>> SYSTEMIC RISK DETERMINATION.
(a) Written Recommendation and Determination.--
(1) Vote required.--
(A) In general.--On their own initiative, or at the
request of the Secretary, the Corporation and the Board
of Governors shall consider whether to make a written
recommendation described in paragraph (2) with respect
to whether the Secretary should appoint the Corporation
as receiver for a financial company. Such recommendation
shall be made upon a vote of not fewer than \2/3\ of the
members of the Board of Governors then serving and \2/3\
of the members of the board of directors of the
Corporation then serving.
(B) Cases involving brokers or dealers.--In the case
of a broker or dealer, or in which the largest United
States subsidiary (as measured by total assets as of the
end of the previous calendar quarter) of a financial
company is a broker or dealer, the Commission and the
Board of Governors, at the request of the Secretary, or
on their own initiative, shall consider whether to make
the written recommendation described in paragraph (2)
with respect to the financial company. Subject to the
requirements in paragraph (2), such recommendation shall
be made upon a vote of not fewer than \2/3\ of the
members of the Board of Governors then serving and \2/3\
of the members of the Commission then serving, and in
consultation with the Corporation.
(C) Cases involving insurance companies.--In the
case of an insurance company, or in which the largest
United States subsidiary (as measured by total assets as
of the end of the previous calendar quarter) of a
financial company is an insurance company, the Director
of the Federal Insurance Office and the Board of
Governors, at the request of the Secretary or on their
own initiative, shall consider whether to make the
written recommendation described in paragraph (2) with
respect to the financial company. Subject to the
requirements in paragraph (2), such recommendation shall
be made upon a vote of not fewer than \2/3\ of the Board
of Governors then serving and the affirmative approval
of the Director of the Federal Insurance Office, and in
consultation with the Corporation.
(2) Recommendation required.--Any written recommendation
pursuant to paragraph (1) shall contain--
[[Page 124 STAT. 1451]]
(A) an evaluation of whether the financial company
is in default or in danger of default;
(B) a description of the effect that the default of
the financial company would have on financial stability
in the United States;
(C) a description of the effect that the default of
the financial company would have on economic conditions
or financial stability for low income, minority, or
underserved communities;
(D) a recommendation regarding the nature and the
extent of actions to be taken under this title regarding
the financial company;
(E) an evaluation of the likelihood of a private
sector alternative to prevent the default of the
financial company;
(F) an evaluation of why a case under the Bankruptcy
Code is not appropriate for the financial company;
(G) an evaluation of the effects on creditors,
counterparties, and shareholders of the financial
company and other market participants; and
(H) an evaluation of whether the company satisfies
the definition of a financial company under section 201.
(b) Determination by the Secretary.--Notwithstanding any other
provision of Federal or State law, the Secretary shall take action in
accordance with section 202(a)(1)(A), if, upon the written
recommendation under subsection (a), the Secretary (in consultation with
the President) determines that--
(1) the financial company is in default or in danger of
default;
(2) the failure of the financial company and its resolution
under otherwise applicable Federal or State law would have
serious adverse effects on financial stability in the United
States;
(3) no viable private sector alternative is available to
prevent the default of the financial company;
(4) any effect on the claims or interests of creditors,
counterparties, and shareholders of the financial company and
other market participants as a result of actions to be taken
under this title is appropriate, given the impact that any
action taken under this title would have on financial stability
in the United States;
(5) any action under section 204 would avoid or mitigate
such adverse effects, taking into consideration the
effectiveness of the action in mitigating potential adverse
effects on the financial system, the cost to the general fund of
the Treasury, and the potential to increase excessive risk
taking on the part of creditors, counterparties, and
shareholders in the financial company;
(6) a Federal regulatory agency has ordered the financial
company to convert all of its convertible debt instruments that
are subject to the regulatory order; and
(7) the company satisfies the definition of a financial
company under section 201.
(c) Documentation and Review.--
(1) In general.--The Secretary shall--
(A) document any determination under subsection (b);
(B) retain the documentation for review under
paragraph (2); and
[[Page 124 STAT. 1452]]
(C) <<NOTE: Notification.>> notify the covered
financial company and the Corporation of such
determination.
(2) Report to congress.--Not later than 24 hours after the
date of appointment of the Corporation as receiver for a covered
financial company, the Secretary shall provide written notice of
the recommendations and determinations reached in accordance
with subsections (a) and (b) to the Majority Leader and the
Minority Leader of the Senate and the Speaker and the Minority
Leader of the House of Representatives, the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives,
which shall consist of a summary of the basis for the
determination, including, to the extent available at the time of
the determination--
(A) the size and financial condition of the covered
financial company;
(B) the sources of capital and credit support that
were available to the covered financial company;
(C) the operations of the covered financial company
that could have had a significant impact on financial
stability, markets, or both;
(D) identification of the banks and financial
companies which may be able to provide the services
offered by the covered financial company;
(E) any potential international ramifications of
resolution of the covered financial company under other
applicable insolvency law;
(F) an estimate of the potential effect of the
resolution of the covered financial company under other
applicable insolvency law on the financial stability of
the United States;
(G) the potential effect of the appointment of a
receiver by the Secretary on consumers;
(H) the potential effect of the appointment of a
receiver by the Secretary on the financial system,
financial markets, and banks and other financial
companies; and
(I) whether resolution of the covered financial
company under other applicable insolvency law would
cause banks or other financial companies to experience
severe liquidity distress.
(3) Reports to congress and the public.--
(A) In general.--Not later than 60 days after the
date of appointment of the Corporation as receiver for a
covered financial company, the Corporation shall file a
report with the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives--
(i) setting forth information on the financial
condition of the covered financial company as of
the date of the appointment, including a
description of its assets and liabilities;
(ii) describing the plan of, and actions taken
by, the Corporation to wind down the covered
financial company;
(iii) explaining each instance in which the
Corporation waived any applicable requirements of
part 366
[[Page 124 STAT. 1453]]
of title 12, Code of Federal Regulations (or any
successor thereto) with respect to conflicts of
interest by any person in the private sector who
was retained to provide services to the
Corporation in connection with such receivership;
(iv) describing the reasons for the provision
of any funding to the receivership out of the
Fund;
(v) setting forth the expected costs of the
orderly liquidation of the covered financial
company;
(vi) setting forth the identity of any
claimant that is treated in a manner different
from other similarly situated claimants under
subsection (b)(4), (d)(4), or (h)(5)(E), the
amount of any additional payment to such claimant
under subsection (d)(4), and the reason for any
such action; and
(vii) <<NOTE: Publication. Web
posting.>> which report the Corporation shall
publish on an online website maintained by the
Corporation, subject to maintaining appropriate
confidentiality.
(B) Amendments.--The <<NOTE: Deadline.>> Corporation
shall, on a timely basis, not less frequently than
quarterly, amend or revise and resubmit the reports
prepared under this paragraph, as necessary.
(C) Congressional testimony.--
The <<NOTE: Deadline.>> Corporation and the primary
financial regulatory agency, if any, of the financial
company for which the Corporation was appointed receiver
under this title shall appear before Congress, if
requested, not later than 30 days after the date on
which the Corporation first files the reports required
under subparagraph (A).
(4) Default or in danger of default.--For purposes of this
title, a financial company shall be considered to be in default
or in danger of default if, as determined in accordance with
subsection (b)--
(A) a case has been, or likely will promptly be,
commenced with respect to the financial company under
the Bankruptcy Code;
(B) the financial company has incurred, or is likely
to incur, losses that will deplete all or substantially
all of its capital, and there is no reasonable prospect
for the company to avoid such depletion;
(C) the assets of the financial company are, or are
likely to be, less than its obligations to creditors and
others; or
(D) the financial company is, or is likely to be,
unable to pay its obligations (other than those subject
to a bona fide dispute) in the normal course of
business.
(5) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any determination
under subsection (b), that results in the appointment of the
Corporation as receiver, including--
(A) the basis for the determination;
(B) the purpose for which any action was taken
pursuant thereto;
(C) the likely effect of the determination and such
action on the incentives and conduct of financial
companies and their creditors, counterparties, and
shareholders; and
[[Page 124 STAT. 1454]]
(D) the likely disruptive effect of the
determination and such action on the reasonable
expectations of creditors, counterparties, and
shareholders, taking into account the impact any action
under this title would have on financial stability in
the United States, including whether the rights of such
parties will be disrupted.
(d) Corporation Policies and Procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation shall establish
policies and procedures that are acceptable to the Secretary governing
the use of funds available to the Corporation to carry out this title,
including the terms and conditions for the provision and use of funds
under sections 204(d), 210(h)(2)(G)(iv), and 210(h)(9).
(e) Treatment of Insurance Companies and Insurance Company
Subsidiaries.--
(1) In general.--Notwithstanding subsection (b), if an
insurance company is a covered financial company or a subsidiary
or affiliate of a covered financial company, the liquidation or
rehabilitation of such insurance company, and any subsidiary or
affiliate of such company that is not excepted under paragraph
(2), shall be conducted as provided under applicable State law.
(2) Exception for subsidiaries and affiliates.--The
requirement of paragraph (1) shall not apply with respect to any
subsidiary or affiliate of an insurance company that is not
itself an insurance company.
(3) Backup <<NOTE: Time period.>> authority.--
Notwithstanding paragraph (1), with respect to a covered
financial company described in paragraph (1), if, after the end
of the 60-day period beginning on the date on which a
determination is made under section 202(a) with respect to such
company, the appropriate regulatory agency has not filed the
appropriate judicial action in the appropriate State court to
place such company into orderly liquidation under the laws and
requirements of the State, the Corporation shall have the
authority to stand in the place of the appropriate regulatory
agency and file the appropriate judicial action in the
appropriate State court to place such company into orderly
liquidation under the laws and requirements of the State.
SEC. 204. <<NOTE: 12 USC 5384.>> ORDERLY LIQUIDATION OF COVERED
FINANCIAL COMPANIES.
(a) Purpose of Orderly Liquidation Authority.--It is the purpose of
this title to provide the necessary authority to liquidate failing
financial companies that pose a significant risk to the financial
stability of the United States in a manner that mitigates such risk and
minimizes moral hazard. The authority provided in this title shall be
exercised in the manner that best fulfills such purpose, so that--
(1) creditors and shareholders will bear the losses of the
financial company;
(2) management responsible for the condition of the
financial company will not be retained; and
(3) the Corporation and other appropriate agencies will take
all steps necessary and appropriate to assure that all parties,
including management, directors, and third parties, having
responsibility for the condition of the financial company
[[Page 124 STAT. 1455]]
bear losses consistent with their responsibility, including
actions for damages, restitution, and recoupment of compensation
and other gains not compatible with such responsibility.
(b) Corporation as Receiver.--Upon the appointment of the
Corporation under section 202, the Corporation shall act as the receiver
for the covered financial company, with all of the rights and
obligations set forth in this title.
(c) Consultation.--The Corporation, as receiver--
(1) shall consult with the primary financial regulatory
agency or agencies of the covered financial company and its
covered subsidiaries for purposes of ensuring an orderly
liquidation of the covered financial company;
(2) may consult with, or under subsection (a)(1)(B)(v) or
(a)(1)(L) of section 210, acquire the services of, any outside
experts, as appropriate to inform and aid the Corporation in the
orderly liquidation process;
(3) shall consult with the primary financial regulatory
agency or agencies of any subsidiaries of the covered financial
company that are not covered subsidiaries, and coordinate with
such regulators regarding the treatment of such solvent
subsidiaries and the separate resolution of any such insolvent
subsidiaries under other governmental authority, as appropriate;
and
(4) shall consult with the Commission and the Securities
Investor Protection Corporation in the case of any covered
financial company for which the Corporation has been appointed
as receiver that is a broker or dealer registered with the
Commission under section 15(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(b)) and is a member of the Securities
Investor Protection Corporation, for the purpose of determining
whether to transfer to a bridge financial company organized by
the Corporation as receiver, without consent of any customer,
customer accounts of the covered financial company.
(d) Funding for Orderly Liquidation.--Upon its appointment as
receiver for a covered financial company, and thereafter as the
Corporation may, in its discretion, determine to be necessary or
appropriate, the Corporation may make available to the receivership,
subject to the conditions set forth in section 206 and subject to the
plan described in section 210(n)(9), funds for the orderly liquidation
of the covered financial company. All funds provided by the Corporation
under this subsection shall have a priority of claims under subparagraph
(A) or (B) of section 210(b)(1), as applicable, including funds used
for--
(1) making loans to, or purchasing any debt obligation of,
the covered financial company or any covered subsidiary;
(2) purchasing or guaranteeing against loss the assets of
the covered financial company or any covered subsidiary,
directly or through an entity established by the Corporation for
such purpose;
(3) assuming or guaranteeing the obligations of the covered
financial company or any covered subsidiary to 1 or more third
parties;
(4) taking a lien on any or all assets of the covered
financial company or any covered subsidiary, including a first
priority lien on all unencumbered assets of the covered
financial company or any covered subsidiary to secure repayment
of any transactions conducted under this subsection;
[[Page 124 STAT. 1456]]
(5) selling or transferring all, or any part, of such
acquired assets, liabilities, or obligations of the covered
financial company or any covered subsidiary; and
(6) making payments pursuant to subsections (b)(4), (d)(4),
and (h)(5)(E) of section 210.
SEC. 205. <<NOTE: 12 USC 5385.>> ORDERLY LIQUIDATION OF COVERED
BROKERS AND DEALERS.
(a) Appointment of SIPC as Trustee.--
(1) Appointment.--Upon the appointment of the Corporation as
receiver for any covered broker or dealer, the Corporation shall
appoint, without any need for court approval, the Securities
Investor Protection Corporation to act as trustee for the
liquidation under the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.) of the covered broker or dealer.
(2) Actions by sipc.--
(A) Filing.--Upon appointment of SIPC under
paragraph (1), SIPC shall promptly file with any Federal
district court of competent jurisdiction specified in
section 21 or 27 of the Securities Exchange Act of 1934
(15 U.S.C. 78u, 78aa), an application for a protective
decree under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.) as to the covered broker
or dealer. The Federal district court shall accept and
approve the filing, including outside of normal business
hours, and shall immediately issue the protective decree
as to the covered broker or dealer.
(B) Administration by sipc.--Following entry of the
protective decree, and except as otherwise provided in
this section, the determination of claims and the
liquidation of assets retained in the receivership of
the covered broker or dealer and not transferred to the
bridge financial company shall be administered under the
Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.) by SIPC, as trustee for the covered
broker or dealer.
(C) Definition of filing date.--For purposes of the
liquidation proceeding, the term ``filing date'' means
the date on which the Corporation is appointed as
receiver of the covered broker or dealer.
(D) Determination of claims.--As trustee for the
covered broker or dealer, SIPC shall determine and
satisfy, consistent with this title and with the
Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.), all claims against the covered broker or
dealer arising on or before the filing date.
(b) Powers and Duties of SIPC.--
(1) In general.--Except as provided in this section, upon
its appointment as trustee for the liquidation of a covered
broker or dealer, SIPC shall have all of the powers and duties
provided by the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), including, without limitation, all rights
of action against third parties, and shall conduct such
liquidation in accordance with the terms of the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.),
except that SIPC shall have no powers or duties with respect to
assets and liabilities transferred by the Corporation from the
covered
[[Page 124 STAT. 1457]]
broker or dealer to any bridge financial company established in
accordance with this title.
(2) Limitation of powers.--The exercise by SIPC of powers
and functions as trustee under subsection (a) shall not impair
or impede the exercise of the powers and duties of the
Corporation with regard to--
(A) any action, except as otherwise provided in this
title--
(i) to make funds available under section
204(d);
(ii) to organize, establish, operate, or
terminate any bridge financial company;
(iii) to transfer assets and liabilities;
(iv) to enforce or repudiate contracts; or
(v) to take any other action relating to such
bridge financial company under section 210; or
(B) determining claims under subsection (e).
(3) Protective decree.--SIPC and the Corporation, in
consultation with the Commission, shall jointly determine the
terms of the protective decree to be filed by SIPC with any
court of competent jurisdiction under section 21 or 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78u, 78aa), as
required by subsection (a).
(4) Qualified financial contracts.--Notwithstanding any
provision of the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) to the contrary (including section
5(b)(2)(C) of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights
and obligations of any party to a qualified financial contract
(as that term is defined in section 210(c)(8)) to which a
covered broker or dealer for which the Corporation has been
appointed receiver is a party shall be governed exclusively by
section 210, including the limitations and restrictions
contained in section 210(c)(10)(B).
(c) Limitation on Court Action.--Except as otherwise provided in
this title, no court may take any action, including any action pursuant
to the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et
seq.) or the Bankruptcy Code, to restrain or affect the exercise of
powers or functions of the Corporation as receiver for a covered broker
or dealer and any claims against the Corporation as such receiver shall
be determined in accordance with subsection (e) and such claims shall be
limited to money damages.
(d) Actions by Corporation as Receiver.--
(1) In general.--Notwithstanding any other provision of this
title, no action taken by the Corporation as receiver with
respect to a covered broker or dealer shall--
(A) adversely affect the rights of a customer to
customer property or customer name securities;
(B) diminish the amount or timely payment of net
equity claims of customers; or
(C) otherwise impair the recoveries provided to a
customer under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.).
(2) Net proceeds.--The net proceeds from any transfer, sale,
or disposition of assets of the covered broker or dealer, or
proceeds thereof by the Corporation as receiver for the covered
broker or dealer shall be for the benefit of the estate of the
covered broker or dealer, as provided in this title.
[[Page 124 STAT. 1458]]
(e) Claims Against the Corporation as Receiver.--Any claim against
the Corporation as receiver for a covered broker or dealer for assets
transferred to a bridge financial company established with respect to
such covered broker or dealer--
(1) shall be determined in accordance with section
210(a)(2); and
(2) may be reviewed by the appropriate district or
territorial court of the United States in accordance with
section 210(a)(5).
(f) Satisfaction of Customer Claims.--
(1) Obligations to customers.--Notwithstanding any other
provision of this title, all obligations of a covered broker or
dealer or of any bridge financial company established with
respect to such covered broker or dealer to a customer relating
to, or net equity claims based upon, customer property or
customer name securities shall be promptly discharged by SIPC,
the Corporation, or the bridge financial company, as applicable,
by the delivery of securities or the making of payments to or
for the account of such customer, in a manner and in an amount
at least as beneficial to the customer as would have been the
case had the actual proceeds realized from the liquidation of
the covered broker or dealer under this title been distributed
in a proceeding under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.) without the appointment of the
Corporation as receiver and without any transfer of assets or
liabilities to a bridge financial company, and with a filing
date as of the date on which the Corporation is appointed as
receiver.
(2) Satisfaction of claims by sipc.--SIPC, as trustee for a
covered broker or dealer, shall satisfy customer claims in the
manner and amount provided under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as if the
appointment of the Corporation as receiver had not occurred, and
with a filing date as of the date on which the Corporation is
appointed as receiver. The Corporation shall satisfy customer
claims, to the extent that a customer would have received more
securities or cash with respect to the allocation of customer
property had the covered financial company been subject to a
proceeding under the Securities Investor Protection Act (15
U.S.C. 78aaa et seq.) without the appointment of the Corporation
as receiver, and with a filing date as of the date on which the
Corporation is appointed as receiver.
(g) Priorities.--
(1) Customer property.--As trustee for a covered broker or
dealer, SIPC shall allocate customer property and deliver
customer name securities in accordance with section 8(c) of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78fff-
2(c)).
(2) Other claims.--All claims other than those described in
paragraph (1) (including any unpaid claim by a customer for the
allowed net equity claim of such customer from customer
property) shall be paid in accordance with the priorities in
section 210(b).
(h) Rulemaking.--The Commission and the Corporation, after
consultation with SIPC, shall jointly issue rules to implement this
section.
[[Page 124 STAT. 1459]]
SEC. 206. <<NOTE: 12 USC 5386.>> MANDATORY TERMS AND CONDITIONS
FOR ALL ORDERLY LIQUIDATION ACTIONS.
In taking action under this title, the Corporation shall--
(1) determine that such action is necessary for purposes of
the financial stability of the United States, and not for the
purpose of preserving the covered financial company;
(2) ensure that the shareholders of a covered financial
company do not receive payment until after all other claims and
the Fund are fully paid;
(3) ensure that unsecured creditors bear losses in
accordance with the priority of claim provisions in section 210;
(4) ensure that management responsible for the failed
condition of the covered financial company is removed (if such
management has not already been removed at the time at which the
Corporation is appointed receiver);
(5) ensure that the members of the board of directors (or
body performing similar functions) responsible for the failed
condition of the covered financial company are removed, if such
members have not already been removed at the time the
Corporation is appointed as receiver; and
(6) not take an equity interest in or become a shareholder
of any covered financial company or any covered subsidiary.
SEC. 207. <<NOTE: 12 USC 5387.>> DIRECTORS NOT LIABLE FOR
ACQUIESCING IN APPOINTMENT OF RECEIVER.
The members of the board of directors (or body performing similar
functions) of a covered financial company shall not be liable to the
shareholders or creditors thereof for acquiescing in or consenting in
good faith to the appointment of the Corporation as receiver for the
covered financial company under section 203.
SEC. 208. <<NOTE: Effective dates. 12 USC 5388.>> DISMISSAL AND
EXCLUSION OF OTHER ACTIONS.
(a) In General.--Effective as of the date of the appointment of the
Corporation as receiver for the covered financial company under section
202 or the appointment of SIPC as trustee for a covered broker or dealer
under section 205, as applicable, any case or proceeding commenced with
respect to the covered financial company under the Bankruptcy Code or
the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.)
shall be dismissed, upon notice to the bankruptcy court (with respect to
a case commenced under the Bankruptcy Code), and upon notice to SIPC
(with respect to a covered broker or dealer) and no such case or
proceeding may be commenced with respect to a covered financial company
at any time while the orderly liquidation is pending.
(b) Revesting of Assets.--Effective as of the date of appointment of
the Corporation as receiver, the assets of a covered financial company
shall, to the extent they have vested in any entity other than the
covered financial company as a result of any case or proceeding
commenced with respect to the covered financial company under the
Bankruptcy Code, the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), or any similar provision of State liquidation or
insolvency law applicable to the covered financial company, revest in
the covered financial company.
(c) Limitation.--Notwithstanding subsections (a) and (b), any order
entered or other relief granted by a bankruptcy court prior to the date
of appointment of the Corporation as receiver shall
[[Page 124 STAT. 1460]]
continue with the same validity as if an orderly liquidation had not
been commenced.
SEC. 209. <<NOTE: 12 USC 5389.>> RULEMAKING; NON-CONFLICTING LAW.
The Corporation shall, in consultation with the Council, prescribe
such rules or regulations as the Corporation considers necessary or
appropriate to implement this title, including rules and regulations
with respect to the rights, interests, and priorities of creditors,
counterparties, security entitlement holders, or other persons with
respect to any covered financial company or any assets or other property
of or held by such covered financial company, and address the potential
for conflicts of interest between or among individual receiverships
established under this title or under the Federal Deposit Insurance Act.
To the extent possible, the Corporation shall seek to harmonize
applicable rules and regulations promulgated under this section with the
insolvency laws that would otherwise apply to a covered financial
company.
SEC. 210. <<NOTE: 12 USC 5390.>> POWERS AND DUTIES OF THE
CORPORATION.
(a) Powers and Authorities.--
(1) General powers.--
(A) Successor to covered financial company.--The
Corporation shall, upon appointment as receiver for a
covered financial company under this title, succeed to--
(i) all rights, titles, powers, and privileges
of the covered financial company and its assets,
and of any stockholder, member, officer, or
director of such company; and
(ii) title to the books, records, and assets
of any previous receiver or other legal custodian
of such covered financial company.
(B) Operation of the covered financial company
during the period of orderly liquidation.--The
Corporation, as receiver for a covered financial
company, may--
(i) take over the assets of and operate the
covered financial company with all of the powers
of the members or shareholders, the directors, and
the officers of the covered financial company, and
conduct all business of the covered financial
company;
(ii) collect all obligations and money owed to
the covered financial company;
(iii) perform all functions of the covered
financial company, in the name of the covered
financial company;
(iv) manage the assets and property of the
covered financial company, consistent with
maximization of the value of the assets in the
context of the orderly liquidation; and
(v) provide by contract for assistance in
fulfilling any function, activity, action, or duty
of the Corporation as receiver.
(C) Functions of covered financial company officers,
directors, and shareholders.--The Corporation may
provide for the exercise of any function by any member
or stockholder, director, or officer of any covered
financial company for which the Corporation has been
appointed as receiver under this title.
[[Page 124 STAT. 1461]]
(D) Additional powers as receiver.--The Corporation
shall, as receiver for a covered financial company, and
subject to all legally enforceable and perfected
security interests and all legally enforceable security
entitlements in respect of assets held by the covered
financial company, liquidate, and wind-up the affairs of
a covered financial company, including taking steps to
realize upon the assets of the covered financial
company, in such manner as the Corporation deems
appropriate, including through the sale of assets, the
transfer of assets to a bridge financial company
established under subsection (h), or the exercise of any
other rights or privileges granted to the receiver under
this section.
(E) Additional powers with respect to failing
subsidiaries of a covered financial company.--
(i) In general.--In any case in which a
receiver is appointed for a covered financial
company under section 202, the Corporation may
appoint itself as receiver of any covered
subsidiary of the covered financial company that
is organized under Federal law or the laws of any
State, if the Corporation and the Secretary
jointly determine that--
(I) the covered subsidiary is in
default or in danger of default;
(II) such action would avoid or
mitigate serious adverse effects on the
financial stability or economic
conditions of the United States; and
(III) such action would facilitate
the orderly liquidation of the covered
financial company.
(ii) Treatment as covered financial company.--
If the Corporation is appointed as receiver of a
covered subsidiary of a covered financial company
under clause (i), the covered subsidiary shall
thereafter be considered a covered financial
company under this title, and the Corporation
shall thereafter have all the powers and rights
with respect to that covered subsidiary as it has
with respect to a covered financial company under
this title.
(F) Organization of bridge companies.--The
Corporation, as receiver for a covered financial
company, may organize a bridge financial company under
subsection (h).
(G) Merger; transfer of assets and liabilities.--
(i) In general.--Subject to clauses (ii) and
(iii), the Corporation, as receiver for a covered
financial company, may--
(I) merge the covered financial
company with another company; or
(II) transfer any asset or liability
of the covered financial company
(including any assets and liabilities
held by the covered financial company
for security entitlement holders, any
customer property, or any assets and
liabilities associated with any trust or
custody business) without obtaining any
approval, assignment, or consent with
respect to such transfer.
(ii) Federal agency approval; antitrust
review.--With respect to a transaction described
in
[[Page 124 STAT. 1462]]
clause (i)(I) that requires approval by a Federal
agency--
(I) the transaction may not be
consummated before the 5th calendar day
after the date of approval by the
Federal agency responsible for such
approval;
(II)
if, <<NOTE: Reports. Notification. Deadli
ne.>> in connection with any such
approval, a report on competitive
factors is required, the Federal agency
responsible for such approval shall
promptly notify the Attorney General of
the United States of the proposed
transaction, and the Attorney General
shall provide the required report not
later than 10 days after the date of the
request; and
(III) if <<NOTE: Termination
date.>> notification under section 7A of
the Clayton Act is required with respect
to such transaction, then the required
waiting period shall end on the 15th day
after the date on which the Attorney
General and the Federal Trade Commission
receive such notification, unless the
waiting period is terminated earlier
under subsection (b)(2) of such section
7A, or is extended pursuant to
subsection (e)(2) of such section 7A.
(iii) Setoff.--Subject to the other provisions
of this title, any transferee of assets from a
receiver, including a bridge financial company,
shall be subject to such claims or rights as would
prevail over the rights of such transferee in such
assets under applicable noninsolvency law.
(H) Payment of valid obligations.--The Corporation,
as receiver for a covered financial company, shall, to
the extent that funds are available, pay all valid
obligations of the covered financial company that are
due and payable at the time of the appointment of the
Corporation as receiver, in accordance with the
prescriptions and limitations of this title.
(I) Applicable noninsolvency law.--Except as may
otherwise be provided in this title, the applicable
noninsolvency law shall be determined by the
noninsolvency choice of law rules otherwise applicable
to the claims, rights, titles, persons, or entities at
issue.
(J) Subpoena authority.--
(i) In general.--The Corporation, as receiver
for a covered financial company, may, for purposes
of carrying out any power, authority, or duty with
respect to the covered financial company
(including determining any claim against the
covered financial company and determining and
realizing upon any asset of any person in the
course of collecting money due the covered
financial company), exercise any power established
under section 8(n) of the Federal Deposit
Insurance Act, as if the Corporation were the
appropriate Federal banking agency for the covered
financial company, and the covered financial
company were an insured depository institution.
(ii) Rule of construction.--This subparagraph
may not be construed as limiting any rights that
the
[[Page 124 STAT. 1463]]
Corporation, in any capacity, might otherwise have
to exercise any powers described in clause (i) or
under any other provision of law.
(K) Incidental powers.--The Corporation, as receiver
for a covered financial company, may exercise all powers
and authorities specifically granted to receivers under
this title, and such incidental powers as shall be
necessary to carry out such powers under this title.
(L) Utilization of private sector.--In carrying out
its responsibilities in the management and disposition
of assets from the covered financial company, the
Corporation, as receiver for a covered financial
company, may utilize the services of private persons,
including real estate and loan portfolio asset
management, property management, auction marketing,
legal, and brokerage services, if such services are
available in the private sector, and the Corporation
determines that utilization of such services is
practicable, efficient, and cost effective.
(M) Shareholders and creditors of covered financial
company.--Notwithstanding any other provision of law,
the Corporation, as receiver for a covered financial
company, shall succeed by operation of law to the
rights, titles, powers, and privileges described in
subparagraph (A), and shall terminate all rights and
claims that the stockholders and creditors of the
covered financial company may have against the assets of
the covered financial company or the Corporation arising
out of their status as stockholders or creditors, except
for their right to payment, resolution, or other
satisfaction of their claims, as permitted under this
section. The Corporation shall ensure that shareholders
and unsecured creditors bear losses, consistent with the
priority of claims provisions under this section.
(N) Coordination with foreign financial
authorities.--The Corporation, as receiver for a covered
financial company, shall coordinate, to the maximum
extent possible, with the appropriate foreign financial
authorities regarding the orderly liquidation of any
covered financial company that has assets or operations
in a country other than the United States.
(O) Restriction on transfers.--
(i) Selection of accounts for transfer.--If
the Corporation establishes one or more bridge
financial companies with respect to a covered
broker or dealer, the Corporation shall transfer
to one of such bridge financial companies, all
customer accounts of the covered broker or dealer,
and all associated customer name securities and
customer property, unless the Corporation, after
consulting with the Commission and SIPC,
determines that--
(I) the customer accounts, customer
name securities, and customer property
are likely to be promptly transferred to
another broker or dealer that is
registered with the Commission under
section 15(b) of the Securities Exchange
Act of 1934 (15 U.S.C. 73o(b)) and is a
member of SIPC; or
(II) the transfer of the accounts to
a bridge financial company would
materially interfere with
[[Page 124 STAT. 1464]]
the ability of the Corporation to avoid
or mitigate serious adverse effects on
financial stability or economic
conditions in the United States.
(ii) Transfer of property.--SIPC, as trustee
for the liquidation of the covered broker or
dealer, and the Commission shall provide any and
all reasonable assistance necessary to complete
such transfers by the Corporation.
(iii) Customer consent and court approval not
required.--Neither customer consent nor court
approval shall be required to transfer any
customer accounts or associated customer name
securities or customer property to a bridge
financial company in accordance with this section.
(iv) Notification of sipc and sharing of
information.--The Corporation shall identify to
SIPC the customer accounts and associated customer
name securities and customer property transferred
to the bridge financial company. The Corporation
and SIPC shall cooperate in the sharing of any
information necessary for each entity to discharge
its obligations under this title and under the
Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) including by providing
access to the books and records of the covered
financial company and any bridge financial company
established in accordance with this title.
(2) Determination of claims.--
(A) In general.--The <<NOTE: Reports.>> Corporation,
as receiver for a covered financial company, shall
report on claims, as set forth in section 203(c)(3).
Subject to paragraph (4) of this subsection, the
Corporation, as receiver for a covered financial
company, shall determine claims in accordance with the
requirements of this subsection and regulations
prescribed under section 209.
(B) Notice requirements.--
The <<NOTE: Publication. Deadlines.>> Corporation, as
receiver for a covered financial company, in any case
involving the liquidation or winding up of the affairs
of a covered financial company, shall--
(i) promptly publish a notice to the creditors
of the covered financial company to present their
claims, together with proof, to the receiver by a
date specified in the notice, which shall be not
earlier than 90 days after the date of publication
of such notice; and
(ii) republish such notice 1 month and 2
months, respectively, after the date of
publication under clause (i).
(C) Mailing required.--The Corporation as receiver
shall mail a notice similar to the notice published
under clause (i) or (ii) of subparagraph (B), at the
time of such publication, to any creditor shown on the
books and records of the covered financial company--
(i) at the last address of the creditor
appearing in such books;
(ii) in any claim filed by the claimant; or
(iii) upon <<NOTE: Deadline.>> discovery of
the name and address of a claimant not appearing
on the books and records of the covered financial
company, not later than 30
[[Page 124 STAT. 1465]]
days after the date of the discovery of such name
and address.
(3) Procedures for resolution of claims.--
(A) <<NOTE: Notification.>> Decision period.--
(i) In general.--Prior to the 180th day after
the date on which a claim against a covered
financial company is filed with the Corporation as
receiver, or such later date as may be agreed as
provided in clause (ii), the Corporation shall
notify the claimant whether it allows or disallows
the claim, in accordance with subparagraphs (B),
(C), and (D).
(ii) Extension <<NOTE: Deadline.>> of time.--
By written agreement executed not later than 180
days after the date on which a claim against a
covered financial company is filed with the
Corporation, the period described in clause (i)
may be extended by written agreement between the
claimant and the Corporation. Failure to notify
the claimant of any disallowance within the time
period set forth in clause (i), as it may be
extended by agreement under this clause, shall be
deemed to be a disallowance of such claim, and the
claimant may file or continue an action in court,
as provided in paragraph (4).
(iii) Mailing of notice sufficient.--The
requirements of clause (i) shall be deemed to be
satisfied if the notice of any decision with
respect to any claim is mailed to the last address
of the claimant which appears--
(I) on the books, records, or both
of the covered financial company;
(II) in the claim filed by the
claimant; or
(III) in documents submitted in
proof of the claim.
(iv) Contents of notice of disallowance.--If
the Corporation as receiver disallows any claim
filed under clause (i), the notice to the claimant
shall contain--
(I) a statement of each reason for
the disallowance; and
(II) the procedures required to file
or continue an action in court, as
provided in paragraph (4).
(B) Allowance of proven claim.--The receiver shall
allow any claim received by the receiver on or before
the date specified in the notice under paragraph
(2)(B)(i), which is proved to the satisfaction of the
receiver.
(C) Disallowance of claims filed after end of filing
period.--
(i) In general.--Except as provided in clause
(ii), claims filed after the date specified in the
notice published under paragraph (2)(B)(i) shall
be disallowed, and such disallowance shall be
final.
(ii) Certain exceptions.--Clause (i) shall not
apply with respect to any claim filed by a
claimant after the date specified in the notice
published under paragraph (2)(B)(i), and such
claim may be considered by the receiver under
subparagraph (B), if--
[[Page 124 STAT. 1466]]
(I) the claimant did not receive
notice of the appointment of the
receiver in time to file such claim
before such date; and
(II) such claim is filed in time to
permit payment of such claim.
(D) Authority to disallow claims.--
(i) In general.--The Corporation may disallow
any portion of any claim by a creditor or claim of
a security, preference, setoff, or priority which
is not proved to the satisfaction of the
Corporation.
(ii) Payments to undersecured creditors.--In
the case of a claim against a covered financial
company that is secured by any property or other
asset of such covered financial company, the
receiver--
(I) may treat the portion of such
claim which exceeds an amount equal to
the fair market value of such property
or other asset as an unsecured claim;
and
(II) may not make any payment with
respect to such unsecured portion of the
claim, other than in connection with the
disposition of all claims of unsecured
creditors of the covered financial
company.
(iii) Exceptions.--No provision of this
paragraph shall apply with respect to--
(I) any extension of credit from any
Federal reserve bank, or the
Corporation, to any covered financial
company; or
(II) subject to clause (ii), any
legally enforceable and perfected
security interest in the assets of the
covered financial company securing any
such extension of credit.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For
purposes of any applicable statute of limitations,
the filing of a claim with the receiver shall
constitute a commencement of an action.
(ii) No prejudice to other actions.--Subject
to paragraph (8), the filing of a claim with the
receiver shall not prejudice any right of the
claimant to continue any action which was filed
before the date of appointment of the receiver for
the covered financial company.
(4) Judicial determination of claims.--
(A) In general.--Subject to subparagraph (B), a
claimant may file suit on a claim (or continue an action
commenced before the date of appointment of the
Corporation as receiver) in the district or territorial
court of the United States for the district within which
the principal place of business of the covered financial
company is located (and such court shall have
jurisdiction to hear such claim).
(B) Timing.--A claim under subparagraph (A) may be
filed before the end of the 60-day period beginning on
the earlier of--
(i) the end of the period described in
paragraph (3)(A)(i) (or, if extended by agreement
of the Corporation and the claimant, the period
described in paragraph (3)(A)(ii)) with respect to
any claim against a
[[Page 124 STAT. 1467]]
covered financial company for which the
Corporation is receiver; or
(ii) the date of any notice of disallowance of
such claim pursuant to paragraph (3)(A)(i).
(C) Statute of limitations.--If any claimant fails
to file suit on such claim (or to continue an action on
such claim commenced before the date of appointment of
the Corporation as receiver) prior to the end of the 60-
day period described in subparagraph (B), the claim
shall be deemed to be disallowed (other than any portion
of such claim which was allowed by the receiver) as of
the end of such period, such disallowance shall be
final, and the claimant shall have no further rights or
remedies with respect to such claim.
(5) Expedited determination of claims.--
(A) Procedure required.--The Corporation shall
establish a procedure for expedited relief outside of
the claims process established under paragraph (3), for
any claimant that alleges--
(i) having a legally valid and enforceable or
perfected security interest in property of a
covered financial company or control of any
legally valid and enforceable security entitlement
in respect of any asset held by the covered
financial company for which the Corporation has
been appointed receiver; and
(ii) that irreparable injury will occur if the
claims procedure established under paragraph (3)
is followed.
(B) Determination period.--Prior to the end of the
90-day period beginning on the date on which a claim is
filed in accordance with the procedures established
pursuant to subparagraph (A), the Corporation shall--
(i) determine--
(I) whether to allow or disallow
such claim, or any portion thereof; or
(II) whether such claim should be
determined pursuant to the procedures
established pursuant to paragraph (3);
(ii) <<NOTE: Notification.>> notify the
claimant of the determination; and
(iii) if the claim is disallowed, provide a
statement of each reason for the disallowance and
the procedure for obtaining a judicial
determination.
(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited relief shall
be permitted to file suit (or continue a suit filed
before the date of appointment of the Corporation as
receiver seeking a determination of the rights of the
claimant with respect to such security interest (or such
security entitlement) after the earlier of--
(i) the end of the 90-day period beginning on
the date of the filing of a request for expedited
relief; or
(ii) the date on which the Corporation denies
the claim or a portion thereof.
(D) Statute <<NOTE: Time period.>> of limitations.--
If an action described in subparagraph (C) is not filed,
or the motion to renew a previously filed suit is not
made, before the end of the 30-day period beginning on
the date on which such action
[[Page 124 STAT. 1468]]
or motion may be filed in accordance with subparagraph
(C), the claim shall be deemed to be disallowed as of
the end of such period (other than any portion of such
claim which was allowed by the receiver), such
disallowance shall be final, and the claimant shall have
no further rights or remedies with respect to such
claim.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For
purposes of any applicable statute of limitations,
the filing of a claim with the receiver shall
constitute a commencement of an action.
(ii) No prejudice to other actions.--Subject
to paragraph (8), the filing of a claim with the
receiver shall not prejudice any right of the
claimant to continue any action which was filed
before the appointment of the Corporation as
receiver for the covered financial company.
(6) Agreements against interest of the receiver.--No
agreement that tends to diminish or defeat the interest of the
Corporation as receiver in any asset acquired by the receiver
under this section shall be valid against the receiver, unless
such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial company, or
confirmed in the ordinary course of business by the
covered financial company; and
(C) has been, since the time of its execution, an
official record of the company or the party claiming
under the agreement provides documentation, acceptable
to the receiver, of such agreement and its authorized
execution or confirmation by the covered financial
company.
(7) Payment of claims.--
(A) In general.--Subject to subparagraph (B), the
Corporation as receiver may, in its discretion and to
the extent that funds are available, pay creditor
claims, in such manner and amounts as are authorized
under this section, which are--
(i) allowed by the receiver;
(ii) approved by the receiver pursuant to a
final determination pursuant to paragraph (3) or
(5), as applicable; or
(iii) determined by the final judgment of a
court of competent jurisdiction.
(B) Limitation.--A creditor shall, in no event,
receive less than the amount that the creditor is
entitled to receive under paragraphs (2) and (3) of
subsection (d), as applicable.
(C) Payment of dividends on claims.--The Corporation
as receiver may, in its sole discretion, and to the
extent otherwise permitted by this section, pay
dividends on proven claims at any time, and no liability
shall attach to the Corporation as receiver, by reason
of any such payment or for failure to pay dividends to a
claimant whose claim is not proved at the time of any
such payment.
(D) Rulemaking by the corporation.--The Corporation
may prescribe such rules, including definitions of
[[Page 124 STAT. 1469]]
terms, as the Corporation deems appropriate to establish
an interest rate for or to make payments of post-
insolvency interest to creditors holding proven claims
against the receivership estate of a covered financial
company, except that no such interest shall be paid
until the Corporation as receiver has satisfied the
principal amount of all creditor claims.
(8) Suspension of legal actions.--
(A) In <<NOTE: Time period.>> general.--After the
appointment of the Corporation as receiver for a covered
financial company, the Corporation may request a stay in
any judicial action or proceeding in which such covered
financial company is or becomes a party, for a period of
not to exceed 90 days.
(B) Grant of stay by all courts required.--Upon
receipt of a request by the Corporation pursuant to
subparagraph (A), the court shall grant such stay as to
all parties.
(9) Additional rights and duties.--
(A) Prior final adjudication.--The Corporation shall
abide by any final, non-appealable judgment of any court
of competent jurisdiction that was rendered before the
appointment of the Corporation as receiver.
(B) Rights and remedies of receiver.--In the event
of any appealable judgment, the Corporation as receiver
shall--
(i) have all the rights and remedies available
to the covered financial company (before the date
of appointment of the Corporation as receiver
under section 202) and the Corporation, including
removal to Federal court and all appellate rights;
and
(ii) not be required to post any bond in order
to pursue such remedies.
(C) No attachment or execution.--No attachment or
execution may be issued by any court upon assets in the
possession of the Corporation as receiver for a covered
financial company.
(D) Limitation on judicial review.--Except as
otherwise provided in this title, no court shall have
jurisdiction over--
(i) any claim or action for payment from, or
any action seeking a determination of rights with
respect to, the assets of any covered financial
company for which the Corporation has been
appointed receiver, including any assets which the
Corporation may acquire from itself as such
receiver; or
(ii) any claim relating to any act or omission
of such covered financial company or the
Corporation as receiver.
(E) Disposition of assets.--In exercising any right,
power, privilege, or authority as receiver in connection
with any covered financial company for which the
Corporation is acting as receiver under this section,
the Corporation shall, to the greatest extent
practicable, conduct its operations in a manner that--
(i) maximizes the net present value return
from the sale or disposition of such assets;
[[Page 124 STAT. 1470]]
(ii) minimizes the amount of any loss realized
in the resolution of cases;
(iii) mitigates the potential for serious
adverse effects to the financial system;
(iv) ensures timely and adequate competition
and fair and consistent treatment of offerors; and
(v) prohibits discrimination on the basis of
race, sex, or ethnic group in the solicitation and
consideration of offers.
(10) Statute of limitations for actions brought by
receiver. <<NOTE: Time period.>> --
(A) In general.--Notwithstanding any provision of
any contract, the applicable statute of limitations with
regard to any action brought by the Corporation as
receiver for a covered financial company shall be--
(i) in the case of any contract claim, the
longer of--
(I) the 6-year period beginning on
the date on which the claim accrues; or
(II) the period applicable under
State law; and
(ii) in the case of any tort claim, the longer
of--
(I) the 3-year period beginning on
the date on which the claim accrues; or
(II) the period applicable under
State law.
(B) Date on which a claim accrues.--For purposes of
subparagraph (A), the date on which the statute of
limitations begins to run on any claim described in
subparagraph (A) shall be the later of--
(i) the date of the appointment of the
Corporation as receiver under this title; or
(ii) the date on which the cause of action
accrues.
(C) Revival of expired state causes of action.--
(i) In general.--In the case of any tort claim
described in clause (ii) for which the applicable
statute of limitations under State law has expired
not more than 5 years before the date of
appointment of the Corporation as receiver for a
covered financial company, the Corporation may
bring an action as receiver on such claim without
regard to the expiration of the statute of
limitations.
(ii) Claims described.--A tort claim referred
to in clause (i) is a claim arising from fraud,
intentional misconduct resulting in unjust
enrichment, or intentional misconduct resulting in
substantial loss to the covered financial company.
(11) Avoidable transfers.--
(A) Fraudulent transfers.--The Corporation, as
receiver for any covered financial company, may avoid a
transfer of any interest of the covered financial
company in property, or any obligation incurred by the
covered financial company, that was made or incurred at
or within 2 years before the date on which the
Corporation was appointed receiver, if--
(i) the covered financial company voluntarily
or involuntarily--
(I) made such transfer or incurred
such obligation with actual intent to
hinder, delay, or defraud
[[Page 124 STAT. 1471]]
any entity to which the covered
financial company was or became, on or
after the date on which such transfer
was made or such obligation was
incurred, indebted; or
(II) received less than a reasonably
equivalent value in exchange for such
transferor obligation; and
(ii) the covered financial company voluntarily
or involuntarily--
(I) was insolvent on the date that
such transfer was made or such
obligation was incurred, or became
insolvent as a result of such transfer
or obligation;
(II) was engaged in business or a
transaction, or was about to engage in
business or a transaction, for which any
property remaining with the covered
financial company was an unreasonably
small capital;
(III) intended to incur, or believed
that the covered financial company would
incur, debts that would be beyond the
ability of the covered financial company
to pay as such debts matured; or
(IV) made such transfer to or for
the benefit of an insider, or incurred
such obligation to or for the benefit of
an insider, under an employment contract
and not in the ordinary course of
business.
(B) Preferential transfers.--The Corporation as
receiver for any covered financial company may avoid a
transfer of an interest of the covered financial company
in property--
(i) to or for the benefit of a creditor;
(ii) for or on account of an antecedent debt
that was owed by the covered financial company
before the transfer was made;
(iii) that was made while the covered
financial company was insolvent;
(iv) that was made--
(I) 90 days or less before the date
on which the Corporation was appointed
receiver; or
(II) more than 90 days, but less
than 1 year before the date on which the
Corporation was appointed receiver, if
such creditor at the time of the
transfer was an insider; and
(v) that enables the creditor to receive more
than the creditor would receive if--
(I) the covered financial company
had been liquidated under chapter 7 of
the Bankruptcy Code;
(II) the transfer had not been made;
and
(III) the creditor received payment
of such debt to the extent provided by
the provisions of chapter 7 of the
Bankruptcy Code.
(C) Post-receivership transactions.--The Corporation
as receiver for any covered financial company may avoid
a transfer of property of the receivership that occurred
after the Corporation was appointed receiver that
[[Page 124 STAT. 1472]]
was not authorized under this title by the Corporation
as receiver.
(D) Right of recovery.--To the extent that a
transfer is avoided under subparagraph (A), (B), or (C),
the Corporation may recover, for the benefit of the
covered financial company, the property transferred or,
if a court so orders, the value of such property (at the
time of such transfer) from--
(i) the initial transferee of such transfer or
the person for whose benefit such transfer was
made; or
(ii) any immediate or mediate transferee of
any such initial transferee.
(E) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph (D)(ii)
from--
(i) any transferee that takes for value,
including in satisfaction of or to secure a
present or antecedent debt, in good faith, and
without knowledge of the voidability of the
transfer avoided; or
(ii) any immediate or mediate good faith
transferee of such transferee.
(F) Defenses.--Subject to the other provisions of
this title--
(i) a transferee or obligee from which the
Corporation seeks to recover a transfer or to
avoid an obligation under subparagraph (A), (B),
(C), or (D) shall have the same defenses available
to a transferee or obligee from which a trustee
seeks to recover a transfer or avoid an obligation
under sections 547, 548, and 549 of the Bankruptcy
Code; and
(ii) the authority of the Corporation to
recover a transfer or avoid an obligation shall be
subject to subsections (b) and (c) of section 546,
section 547(c), and section 548(c) of the
Bankruptcy Code.
(G) Rights under this section.--The rights of the
Corporation as receiver under this section shall be
superior to any rights of a trustee or any other party
(other than a Federal agency) under the Bankruptcy Code.
(H) Rules of construction; definitions.--For
purposes of--
(i) subparagraphs (A) and (B)--
(I) the term ``insider'' has the
same meaning as in section 101(31) of
the Bankruptcy Code;
(II) a transfer is made when such
transfer is so perfected that a bona
fide purchaser from the covered
financial company against whom
applicable law permits such transfer to
be perfected cannot acquire an interest
in the property transferred that is
superior to the interest in such
property of the transferee, but if such
transfer is not so perfected before the
date on which the Corporation is
appointed as receiver for the covered
financial company, such transfer is made
immediately before the date of such
appointment; and
(III) the term ``value'' means
property, or satisfaction or securing of
a present or antecedent debt of the
covered financial company, but does not
[[Page 124 STAT. 1473]]
include an unperformed promise to
furnish support to the covered financial
company; and
(ii) subparagraph (B)--
(I) the covered financial company is
presumed to have been insolvent on and
during the 90-day period immediately
preceding the date of appointment of the
Corporation as receiver; and
(II) the term ``insolvent'' has the
same meaning as in section 101(32) of
the Bankruptcy Code.
(12) Setoff.--
(A) Generally.--Except as otherwise provided in this
title, any right of a creditor to offset a mutual debt
owed by the creditor to any covered financial company
that arose before the Corporation was appointed as
receiver for the covered financial company against a
claim of such creditor may be asserted if enforceable
under applicable noninsolvency law, except to the extent
that--
(i) the claim of the creditor against the
covered financial company is disallowed;
(ii) the claim was transferred, by an entity
other than the covered financial company, to the
creditor--
(I) after the Corporation was
appointed as receiver of the covered
financial company; or
(II)(aa) after the 90-day period
preceding the date on which the
Corporation was appointed as receiver
for the covered financial company; and
(bb) while the covered financial
company was insolvent (except for a
setoff in connection with a qualified
financial contract); or
(iii) the debt owed to the covered financial
company was incurred by the covered financial
company--
(I) after the 90-day period
preceding the date on which the
Corporation was appointed as receiver
for the covered financial company;
(II) while the covered financial
company was insolvent; and
(III) for the purpose of obtaining a
right of setoff against the covered
financial company (except for a setoff
in connection with a qualified financial
contract).
(B) Insufficiency.--
(i) In general.--Except <<NOTE: Time
periods.>> with respect to a setoff in connection
with a qualified financial contract, if a creditor
offsets a mutual debt owed to the covered
financial company against a claim of the covered
financial company on or within the 90-day period
preceding the date on which the Corporation is
appointed as receiver for the covered financial
company, the Corporation may recover from the
creditor the amount so offset, to the extent that
any insufficiency on the date of such setoff is
less than the insufficiency on the later of--
(I) the date that is 90 days before
the date on which the Corporation is
appointed as receiver for the covered
financial company; or
(II) the first day on which there is
an insufficiency during the 90-day
period preceding the date
[[Page 124 STAT. 1474]]
on which the Corporation is appointed as
receiver for the covered financial
company.
(ii) Definition of insufficiency.--In this
subparagraph, the term ``insufficiency'' means the
amount, if any, by which a claim against the
covered financial company exceeds a mutual debt
owed to the covered financial company by the
holder of such claim.
(C) Insolvency.--The <<NOTE: Definition.>> term
``insolvent'' has the same meaning as in section 101(32)
of the Bankruptcy Code.
(D) Presumption <<NOTE: Time period.>> of
insolvency.--For purposes of this paragraph, the covered
financial company is presumed to have been insolvent on
and during the 90-day period preceding the date of
appointment of the Corporation as receiver.
(E) Limitation.--Nothing in this paragraph (12)
shall be the basis for any right of setoff where no such
right exists under applicable noninsolvency law.
(F) Priority claim.--Except as otherwise provided in
this title, the Corporation as receiver for the covered
financial company may sell or transfer any assets free
and clear of the setoff rights of any party, except that
such party shall be entitled to a claim, subordinate to
the claims payable under subparagraphs (A), (B), (C),
and (D) of subsection (b)(1), but senior to all other
unsecured liabilities defined in subsection (b)(1)(E),
in an amount equal to the value of such setoff rights.
(13) Attachment of assets and other injunctive relief.--
Subject to paragraph (14), any court of competent jurisdiction
may, at the request of the Corporation as receiver for a covered
financial company, issue an order in accordance with Rule 65 of
the Federal Rules of Civil Procedure, including an order placing
the assets of any person designated by the Corporation under the
control of the court and appointing a trustee to hold such
assets.
(14) Standards.--
(A) Showing.--Rule <<NOTE: Applicability.>> 65 of
the Federal Rules of Civil Procedure shall apply with
respect to any proceeding under paragraph (13), without
regard to the requirement that the applicant show that
the injury, loss, or damage is irreparable and
immediate.
(B) State proceeding.--If, in the case of any
proceeding in a State court, the court determines that
rules of civil procedure available under the laws of the
State provide substantially similar protections of the
right of the parties to due process as provided under
Rule 65 (as modified with respect to such proceeding by
subparagraph (A)), the relief sought by the Corporation
pursuant to paragraph (14) may be requested under the
laws of such State.
(15) Treatment of claims arising from breach of contracts
executed by the corporation as receiver.--Notwithstanding any
other provision of this title, any final and non-appealable
judgment for monetary damages entered against the Corporation as
receiver for a covered financial company for the breach of an
agreement executed or approved by the Corporation after the date
of its appointment shall be paid as an administrative expense of
the receiver. Nothing in this paragraph shall be construed to
limit the power of a receiver
[[Page 124 STAT. 1475]]
to exercise any rights under contract or law, including to
terminate, breach, cancel, or otherwise discontinue such
agreement.
(16) Accounting and recordkeeping requirements.--
(A) In general.--The Corporation as receiver for a
covered financial company shall, consistent with the
accounting and reporting practices and procedures
established by the Corporation, maintain a full
accounting of each receivership or other disposition of
any covered financial company.
(B) Annual accounting or report.--With respect to
each receivership to which the Corporation is appointed,
the Corporation shall make an annual accounting or
report, as appropriate, available to the Secretary and
the Comptroller General of the United States.
(C) Availability of reports.--Any <<NOTE: Public
information.>> report prepared pursuant to subparagraph
(B) and section 203(c)(3) shall be made available to the
public by the Corporation.
(D) Recordkeeping requirement.--
(i) In general.--
The <<NOTE: Regulations.>> Corporation shall
prescribe such regulations and establish such
retention schedules as are necessary to maintain
the documents and records of the Corporation
generated in exercising the authorities of this
title and the records of a covered financial
company for which the Corporation is appointed
receiver, with due regard for--
(I) the avoidance of duplicative
record retention; and
(II) the expected evidentiary needs
of the Corporation as receiver for a
covered financial company and the public
regarding the records of covered
financial companies.
(ii) Retention of records.--Unless otherwise
required by applicable Federal law or court order,
the Corporation may not, at any time, destroy any
records that are subject to clause (i).
(iii) Records defined.--As used in this
subparagraph, the terms ``records'' and ``records
of a covered financial company'' mean any
document, book, paper, map, photograph,
microfiche, microfilm, computer or electronically-
created record generated or maintained by the
covered financial company in the course of and
necessary to its transaction of business.
(b) Priority of Expenses and Unsecured Claims.--
(1) In general.--Unsecured claims against a covered
financial company, or the Corporation as receiver for such
covered financial company under this section, that are proven to
the satisfaction of the receiver shall have priority in the
following order:
(A) Administrative expenses of the receiver.
(B) Any amounts owed to the United States, unless
the United States agrees or consents otherwise.
(C) <<NOTE: Deadline.>> Wages, salaries, or
commissions, including vacation, severance, and sick
leave pay earned by an individual (other than an
individual described in subparagraph (G)), but only to
the extent of 11,725 for each individual (as indexed for
inflation, by regulation of the Corporation)
[[Page 124 STAT. 1476]]
earned not later than 180 days before the date of
appointment of the Corporation as receiver.
(D) <<NOTE: Deadline.>> Contributions owed to
employee benefit plans arising from services rendered
not later than 180 days before the date of appointment
of the Corporation as receiver, to the extent of the
number of employees covered by each such plan,
multiplied by 11,725 (as indexed for inflation, by
regulation of the Corporation), less the aggregate
amount paid to such employees under subparagraph (C),
plus the aggregate amount paid by the receivership on
behalf of such employees to any other employee benefit
plan.
(E) Any other general or senior liability of the
covered financial company (which is not a liability
described under subparagraph (F), (G), or (H)).
(F) Any obligation subordinated to general creditors
(which is not an obligation described under subparagraph
(G) or (H)).
(G) Any wages, salaries, or commissions, including
vacation, severance, and sick leave pay earned, owed to
senior executives and directors of the covered financial
company.
(H) Any obligation to shareholders, members, general
partners, limited partners, or other persons, with
interests in the equity of the covered financial company
arising as a result of their status as shareholders,
members, general partners, limited partners, or other
persons with interests in the equity of the covered
financial company.
(2) Post-receivership financing priority.--In the event that
the Corporation, as receiver for a covered financial company, is
unable to obtain unsecured credit for the covered financial
company from commercial sources, the Corporation as receiver may
obtain credit or incur debt on the part of the covered financial
company, which shall have priority over any or all
administrative expenses of the receiver under paragraph (1)(A).
(3) Claims of the united states.--Unsecured claims of the
United States shall, at a minimum, have a higher priority than
liabilities of the covered financial company that count as
regulatory capital.
(4) Creditors similarly situated.--All claimants of a
covered financial company that are similarly situated under
paragraph (1) shall be treated in a similar manner, except that
the Corporation may take any action (including making payments,
subject to subsection (o)(1)(D)(i)) that does not comply with
this subsection, if--
(A) the Corporation determines that such action is
necessary--
(i) to maximize the value of the assets of the
covered financial company;
(ii) to initiate and continue operations
essential to implementation of the receivership or
any bridge financial company;
(iii) to maximize the present value return
from the sale or other disposition of the assets
of the covered financial company; or
[[Page 124 STAT. 1477]]
(iv) to minimize the amount of any loss
realized upon the sale or other disposition of the
assets of the covered financial company; and
(B) all claimants that are similarly situated under
paragraph (1) receive not less than the amount provided
in paragraphs (2) and (3) of subsection (d).
(5) Secured claims unaffected.--This section shall not
affect secured claims or security entitlements in respect of
assets or property held by the covered financial company, except
to the extent that the security is insufficient to satisfy the
claim, and then only with regard to the difference between the
claim and the amount realized from the security.
(6) Priority of expenses and unsecured claims in the orderly
liquidation of sipc member.--Where the Corporation is appointed
as receiver for a covered broker or dealer, unsecured claims
against such covered broker or dealer, or the Corporation as
receiver for such covered broker or dealer under this section,
that are proven to the satisfaction of the receiver under
section 205(e), shall have the priority prescribed in paragraph
(1), except that--
(A) SIPC shall be entitled to recover administrative
expenses incurred in performing its responsibilities
under section 205 on an equal basis with the
Corporation, in accordance with paragraph (1)(A);
(B) the Corporation shall be entitled to recover any
amounts paid to customers or to SIPC pursuant to section
205(f), in accordance with paragraph (1)(B);
(C) SIPC shall be entitled to recover any amounts
paid out of the SIPC Fund to meet its obligations under
section 205 and under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall
be subordinate to the claims payable under subparagraphs
(A) and (B) of paragraph (1), but senior to all other
claims; and
(D) the Corporation may, after paying any proven
claims to customers under section 205 and the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et
seq.), and as provided above, pay dividends on other
proven claims, in its discretion, and to the extent that
funds are available, in accordance with the priorities
set forth in paragraph (1).
(c) Provisions Relating to Contracts Entered Into Before Appointment
of Receiver.--
(1) Authority to repudiate contracts.--In addition to any
other rights that a receiver may have, the Corporation as
receiver for any covered financial company may disaffirm or
repudiate any contract or lease--
(A) to which the covered financial company is a
party;
(B) the performance of which the Corporation as
receiver, in the discretion of the Corporation,
determines to be burdensome; and
(C) the disaffirmance or repudiation of which the
Corporation as receiver determines, in the discretion of
the Corporation, will promote the orderly administration
of the affairs of the covered financial company.
(2) Timing of repudiation.--The Corporation, as receiver for
any covered financial company, shall determine whether
[[Page 124 STAT. 1478]]
or not to exercise the rights of repudiation under this section
within a reasonable period of time.
(3) Claims for damages for repudiation.--
(A) In general.--Except as provided in paragraphs
(4), (5), and (6) and in subparagraphs (C), (D), and (E)
of this paragraph, the liability of the Corporation as
receiver for a covered financial company for the
disaffirmance or repudiation of any contract pursuant to
paragraph (1) shall be--
(i) limited to actual direct compensatory
damages; and
(ii) determined as of--
(I) the date of the appointment of
the Corporation as receiver; or
(II) in the case of any contract or
agreement referred to in paragraph (8),
the date of the disaffirmance or
repudiation of such contract or
agreement.
(B) No liability for other damages.--For purposes of
subparagraph (A), the term ``actual direct compensatory
damages'' does not include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity;
or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of qualified
financial contracts.--In the case of any qualified
financial contract or agreement to which paragraph (8)
applies, compensatory damages shall be--
(i) deemed to include normal and reasonable
costs of cover or other reasonable measures of
damages utilized in the industries for such
contract and agreement claims; and
(ii) paid in accordance with this paragraph
and subsection (d), except as otherwise
specifically provided in this subsection.
(D) Measure of damages for repudiation or
disaffirmance of debt obligation.--In the case of any
debt for borrowed money or evidenced by a security,
actual direct compensatory damages shall be no less than
the amount lent plus accrued interest plus any accreted
original issue discount as of the date the Corporation
was appointed receiver of the covered financial company
and, to the extent that an allowed secured claim is
secured by property the value of which is greater than
the amount of such claim and any accrued interest
through the date of repudiation or disaffirmance, such
accrued interest pursuant to paragraph (1).
(E) Measure of damages for repudiation or
disaffirmance of contingent obligation.--In the case of
any contingent obligation of a covered financial company
consisting of any obligation under a guarantee, letter
of credit, loan commitment, or similar credit
obligation, the Corporation may, by rule or regulation,
prescribe that actual direct compensatory damages shall
be no less than the estimated value of the claim as of
the date the Corporation was appointed receiver of the
covered financial company, as such value is measured
based on the likelihood
[[Page 124 STAT. 1479]]
that such contingent claim would become fixed and the
probable magnitude thereof.
(4) Leases under which the covered financial company is the
lessee.--
(A) In general.--If the Corporation as receiver
disaffirms or repudiates a lease under which the covered
financial company is the lessee, the receiver shall not
be liable for any damages (other than damages determined
pursuant to subparagraph (B)) for the disaffirmance or
repudiation of such lease.
(B) Payments of rent.--Notwithstanding subparagraph
(A), the lessor under a lease to which subparagraph (A)
would otherwise apply shall--
(i) be entitled to the contractual rent
accruing before the later of the date on which--
(I) the notice of disaffirmance or
repudiation is mailed; or
(II) the disaffirmance or
repudiation becomes effective, unless
the lessor is in default or breach of
the terms of the lease;
(ii) have no claim for damages under any
acceleration clause or other penalty provision in
the lease; and
(iii) have a claim for any unpaid rent,
subject to all appropriate offsets and defenses,
due as of the date of the appointment which shall
be paid in accordance with this paragraph and
subsection (d).
(5) Leases under which the covered financial company is the
lessor.--
(A) In general.--If the Corporation as receiver for
a covered financial company repudiates an unexpired
written lease of real property of the covered financial
company under which the covered financial company is the
lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease may
either--
(i) treat the lease as terminated by such
repudiation; or
(ii) remain in possession of the leasehold
interest for the balance of the term of the lease,
unless the lessee defaults under the terms of the
lease after the date of such repudiation.
(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described in
subparagraph (A) remains in possession of a leasehold
interest pursuant to clause (ii) of subparagraph (A)--
(i) the lessee--
(I) shall continue to pay the
contractual rent pursuant to the terms
of the lease after the date of the
repudiation of such lease; and
(II) may offset against any rent
payment which accrues after the date of
the repudiation of the lease, any
damages which accrue after such date due
to the nonperformance of any obligation
of the covered financial company under
the lease after such date; and
(ii) the Corporation as receiver shall not be
liable to the lessee for any damages arising after
such date
[[Page 124 STAT. 1480]]
as a result of the repudiation, other than the
amount of any offset allowed under clause (i)(II).
(6) Contracts for the sale of real property.--
(A) In general.--If the receiver repudiates any
contract (which meets the requirements of subsection
(a)(6)) for the sale of real property, and the purchaser
of such real property under such contract is in
possession and is not, as of the date of such
repudiation, in default, such purchaser may either--
(i) treat the contract as terminated by such
repudiation; or
(ii) remain in possession of such real
property.
(B) Provisions applicable to purchaser remaining in
possession.--If any purchaser of real property under any
contract described in subparagraph (A) remains in
possession of such property pursuant to clause (ii) of
subparagraph (A)--
(i) the purchaser--
(I) shall continue to make all
payments due under the contract after
the date of the repudiation of the
contract; and
(II) may offset against any such
payments any damages which accrue after
such date due to the nonperformance
(after such date) of any obligation of
the covered financial company under the
contract; and
(ii) the Corporation as receiver shall--
(I) not be liable to the purchaser
for any damages arising after such date
as a result of the repudiation, other
than the amount of any offset allowed
under clause (i)(II);
(II) deliver title to the purchaser
in accordance with the provisions of the
contract; and
(III) have no obligation under the
contract other than the performance
required under subclause (II).
(C) Assignment and sale allowed.--
(i) In general.--No provision of this
paragraph shall be construed as limiting the right
of the Corporation as receiver to assign the
contract described in subparagraph (A) and sell
the property, subject to the contract and the
provisions of this paragraph.
(ii) No liability after assignment and sale.--
If an assignment and sale described in clause (i)
is consummated, the Corporation as receiver shall
have no further liability under the contract
described in subparagraph (A) or with respect to
the real property which was the subject of such
contract.
(7) Provisions applicable to service contracts.--
(A) Services performed before appointment.--In the
case of any contract for services between any person and
any covered financial company for which the Corporation
has been appointed receiver, any claim of such person
for services performed before the date of appointment
shall be--
(i) a claim to be paid in accordance with
subsections (a), (b), and (d); and
[[Page 124 STAT. 1481]]
(ii) deemed to have arisen as of the date on
which the receiver was appointed.
(B) Services performed after appointment and prior
to repudiation.--If, in the case of any contract for
services described in subparagraph (A), the Corporation
as receiver accepts performance by the other person
before making any determination to exercise the right of
repudiation of such contract under this section--
(i) the other party shall be paid under the
terms of the contract for the services performed;
and
(ii) the amount of such payment shall be
treated as an administrative expense of the
receivership.
(C) Acceptance of performance no bar to subsequent
repudiation.--The acceptance by the Corporation as
receiver for services referred to in subparagraph (B) in
connection with a contract described in subparagraph (B)
shall not affect the right of the Corporation as
receiver to repudiate such contract under this section
at any time after such performance.
(8) Certain qualified financial contracts.--
(A) Rights of parties to contracts.--Subject to
subsection (a)(8) and paragraphs (9) and (10) of this
subsection, and notwithstanding any other provision of
this section, any other provision of Federal law, or the
law of any State, no person shall be stayed or
prohibited from exercising--
(i) any right that such person has to cause
the termination, liquidation, or acceleration of
any qualified financial contract with a covered
financial company which arises upon the date of
appointment of the Corporation as receiver for
such covered financial company or at any time
after such appointment;
(ii) any right under any security agreement or
arrangement or other credit enhancement related to
one or more qualified financial contracts
described in clause (i); or
(iii) any right to offset or net out any
termination value, payment amount, or other
transfer obligation arising under or in connection
with 1 or more contracts or agreements described
in clause (i), including any master agreement for
such contracts or agreements.
(B) Applicability of other provisions.--Subsection
(a)(8) shall apply in the case of any judicial action or
proceeding brought against the Corporation as receiver
referred to in subparagraph (A), or the subject covered
financial company, by any party to a contract or
agreement described in subparagraph (A)(i) with such
covered financial company.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding subsection
(a)(11), (a)(12), or (c)(12), section 5242 of the
Revised Statutes of the United States, or any
other provision of Federal or State law relating
to the avoidance of preferential or fraudulent
transfers, the Corporation, whether acting as the
Corporation or as receiver for a covered financial
company, may not avoid any transfer of money or
other property in connection with
[[Page 124 STAT. 1482]]
any qualified financial contract with a covered
financial company.
(ii) Exception for certain transfers.--Clause
(i) shall not apply to any transfer of money or
other property in connection with any qualified
financial contract with a covered financial
company if the transferee had actual intent to
hinder, delay, or defraud such company, the
creditors of such company, or the Corporation as
receiver appointed for such company.
(D) Certain contracts and agreements defined.--For
purposes of this subsection, the following definitions
shall apply:
(i) Qualified financial contract.--The term
``qualified financial contract'' means any
securities contract, commodity contract, forward
contract, repurchase agreement, swap agreement,
and any similar agreement that the Corporation
determines by regulation, resolution, or order to
be a qualified financial contract for purposes of
this paragraph.
(ii) Securities contract.--The term
``securities contract''--
(I) means a contract for the
purchase, sale, or loan of a security, a
certificate of deposit, a mortgage loan,
any interest in a mortgage loan, a group
or index of securities, certificates of
deposit, or mortgage loans or interests
therein (including any interest therein
or based on the value thereof), or any
option on any of the foregoing,
including any option to purchase or sell
any such security, certificate of
deposit, mortgage loan, interest, group
or index, or option, and including any
repurchase or reverse repurchase
transaction on any such security,
certificate of deposit, mortgage loan,
interest, group or index, or option
(whether or not such repurchase or
reverse repurchase transaction is a
``repurchase agreement'', as defined in
clause (v));
(II) does not include any purchase,
sale, or repurchase obligation under a
participation in a commercial mortgage
loan unless the Corporation determines
by regulation, resolution, or order to
include any such agreement within the
meaning of such term;
(III) means any option entered into
on a national securities exchange
relating to foreign currencies;
(IV) means the guarantee (including
by novation) by or to any securities
clearing agency of any settlement of
cash, securities, certificates of
deposit, mortgage loans or interests
therein, group or index of securities,
certificates of deposit or mortgage
loans or interests therein (including
any interest therein or based on the
value thereof) or an option on any of
the foregoing, including any option to
purchase or sell any such security,
certificate of deposit, mortgage loan,
interest, group or index, or option
(whether or not such
[[Page 124 STAT. 1483]]
settlement is in connection with any
agreement or transaction referred to in
subclauses (I) through (XII) (other than
subclause (II)));
(V) means any margin loan;
(VI) means any extension of credit
for the clearance or settlement of
securities transactions;
(VII) means any loan transaction
coupled with a securities collar
transaction, any prepaid securities
forward transaction, or any total return
swap transaction coupled with a
securities sale transaction;
(VIII) means any other agreement or
transaction that is similar to any
agreement or transaction referred to in
this clause;
(IX) means any combination of the
agreements or transactions referred to
in this clause;
(X) means any option to enter into
any agreement or transaction referred to
in this clause;
(XI) means a master agreement that
provides for an agreement or transaction
referred to in any of subclauses (I)
through (X), other than subclause (II),
together with all supplements to any
such master agreement, without regard to
whether the master agreement provides
for an agreement or transaction that is
not a securities contract under this
clause, except that the master agreement
shall be considered to be a securities
contract under this clause only with
respect to each agreement or transaction
under the master agreement that is
referred to in any of subclauses (I)
through (X), other than subclause (II);
and
(XII) means any security agreement
or arrangement or other credit
enhancement related to any agreement or
transaction referred to in this clause,
including any guarantee or reimbursement
obligation in connection with any
agreement or transaction referred to in
this clause.
(iii) Commodity contract.--The term
``commodity contract'' means--
(I) with respect to a futures
commission merchant, a contract for the
purchase or sale of a commodity for
future delivery on, or subject to the
rules of, a contract market or board of
trade;
(II) with respect to a foreign
futures commission merchant, a foreign
future;
(III) with respect to a leverage
transaction merchant, a leverage
transaction;
(IV) with respect to a clearing
organization, a contract for the
purchase or sale of a commodity for
future delivery on, or subject to the
rules of, a contract market or board of
trade that is cleared by such clearing
organization, or commodity option traded
on, or subject to the rules of, a
contract market or board of trade that
is cleared by such clearing
organization;
(V) with respect to a commodity
options dealer, a commodity option;
[[Page 124 STAT. 1484]]
(VI) any other agreement or
transaction that is similar to any
agreement or transaction referred to in
this clause;
(VII) any combination of the
agreements or transactions referred to
in this clause;
(VIII) any option to enter into any
agreement or transaction referred to in
this clause;
(IX) a master agreement that
provides for an agreement or transaction
referred to in any of subclauses (I)
through (VIII), together with all
supplements to any such master
agreement, without regard to whether the
master agreement provides for an
agreement or transaction that is not a
commodity contract under this clause,
except that the master agreement shall
be considered to be a commodity contract
under this clause only with respect to
each agreement or transaction under the
master agreement that is referred to in
any of subclauses (I) through (VIII); or
(X) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in this clause, including
any guarantee or reimbursement
obligation in connection with any
agreement or transaction referred to in
this clause.
(iv) Forward contract.--The term ``forward
contract'' means--
(I) a contract (other than a
commodity contract) for the purchase,
sale, or transfer of a commodity or any
similar good, article, service, right,
or interest which is presently or in the
future becomes the subject of dealing in
the forward contract trade, or product
or byproduct thereof, with a maturity
date that is more than 2 days after the
date on which the contract is entered
into, including a repurchase or reverse
repurchase transaction (whether or not
such repurchase or reverse repurchase
transaction is a ``repurchase
agreement'', as defined in clause (v)),
consignment, lease, swap, hedge
transaction, deposit, loan, option,
allocated transaction, unallocated
transaction, or any other similar
agreement;
(II) any combination of agreements
or transactions referred to in
subclauses (I) and (III);
(III) any option to enter into any
agreement or transaction referred to in
subclause (I) or (II);
(IV) a master agreement that
provides for an agreement or transaction
referred to in subclause (I), (II), or
(III), together with all supplements to
any such master agreement, without
regard to whether the master agreement
provides for an agreement or transaction
that is not a forward contract under
this clause, except that the master
agreement shall be considered to be a
forward contract under this clause only
with respect to each agreement or
transaction under the master
[[Page 124 STAT. 1485]]
agreement that is referred to in
subclause (I), (II), or (III); or
(V) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in subclause (I), (II),
(III), or (IV), including any guarantee
or reimbursement obligation in
connection with any agreement or
transaction referred to in any such
subclause.
(v) Repurchase agreement.--The term
``repurchase agreement'' (which definition also
applies to a reverse repurchase agreement)--
(I) means an agreement, including
related terms, which provides for the
transfer of one or more certificates of
deposit, mortgage related securities (as
such term is defined in section 3 of the
Securities Exchange Act of 1934),
mortgage loans, interests in mortgage-
related securities or mortgage loans,
eligible bankers' acceptances, qualified
foreign government securities (which,
for purposes of this clause, means a
security that is a direct obligation of,
or that is fully guaranteed by, the
central government of a member of the
Organization for Economic Cooperation
and Development, as determined by
regulation or order adopted by the Board
of Governors), or securities that are
direct obligations of, or that are fully
guaranteed by, the United States or any
agency of the United States against the
transfer of funds by the transferee of
such certificates of deposit, eligible
bankers' acceptances, securities,
mortgage loans, or interests with a
simultaneous agreement by such
transferee to transfer to the transferor
thereof certificates of deposit,
eligible bankers' acceptances,
securities, mortgage loans, or interests
as described above, at a date certain
not later than 1 year after such
transfers or on demand, against the
transfer of funds, or any other similar
agreement;
(II) does not include any repurchase
obligation under a participation in a
commercial mortgage loan, unless the
Corporation determines, by regulation,
resolution, or order to include any such
participation within the meaning of such
term;
(III) means any combination of
agreements or transactions referred to
in subclauses (I) and (IV);
(IV) means any option to enter into
any agreement or transaction referred to
in subclause (I) or (III);
(V) means a master agreement that
provides for an agreement or transaction
referred to in subclause (I), (III), or
(IV), together with all supplements to
any such master agreement, without
regard to whether the master agreement
provides for an agreement or transaction
that is not a repurchase agreement under
this clause, except
[[Page 124 STAT. 1486]]
that the master agreement shall be
considered to be a repurchase agreement
under this subclause only with respect
to each agreement or transaction under
the master agreement that is referred to
in subclause (I), (III), or (IV); and
(VI) means any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in subclause (I), (III),
(IV), or (V), including any guarantee or
reimbursement obligation in connection
with any agreement or transaction
referred to in any such subclause.
(vi) Swap agreement.--The term ``swap
agreement'' means--
(I) any agreement, including the
terms and conditions incorporated by
reference in any such agreement, which
is an interest rate swap, option,
future, or forward agreement, including
a rate floor, rate cap, rate collar,
cross-currency rate swap, and basis
swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign
exchange, precious metals, or other
commodity agreement; a currency swap,
option, future, or forward agreement; an
equity index or equity swap, option,
future, or forward agreement; a debt
index or debt swap, option, future, or
forward agreement; a total return,
credit spread or credit swap, option,
future, or forward agreement; a
commodity index or commodity swap,
option, future, or forward agreement;
weather swap, option, future, or forward
agreement; an emissions swap, option,
future, or forward agreement; or an
inflation swap, option, future, or
forward agreement;
(II) any agreement or transaction
that is similar to any other agreement
or transaction referred to in this
clause and that is of a type that has
been, is presently, or in the future
becomes, the subject of recurrent
dealings in the swap or other
derivatives markets (including terms and
conditions incorporated by reference in
such agreement) and that is a forward,
swap, future, option, or spot
transaction on one or more rates,
currencies, commodities, equity
securities or other equity instruments,
debt securities or other debt
instruments, quantitative measures
associated with an occurrence, extent of
an occurrence, or contingency associated
with a financial, commercial, or
economic consequence, or economic or
financial indices or measures of
economic or financial risk or value;
(III) any combination of agreements
or transactions referred to in this
clause;
(IV) any option to enter into any
agreement or transaction referred to in
this clause;
(V) a master agreement that provides
for an agreement or transaction referred
to in subclause (I), (II), (III), or
(IV), together with all supplements
[[Page 124 STAT. 1487]]
to any such master agreement, without
regard to whether the master agreement
contains an agreement or transaction
that is not a swap agreement under this
clause, except that the master agreement
shall be considered to be a swap
agreement under this clause only with
respect to each agreement or transaction
under the master agreement that is
referred to in subclause (I), (II),
(III), or (IV); and
(VI) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in any of subclauses (I)
through (V), including any guarantee or
reimbursement obligation in connection
with any agreement or transaction
referred to in any such clause.
(vii) Definitions relating to default.--When
used in this paragraph and paragraphs (9) and
(10)--
(I) the term ``default'' means, with
respect to a covered financial company,
any adjudication or other official
decision by any court of competent
jurisdiction, or other public authority
pursuant to which the Corporation has
been appointed receiver; and
(II) the term ``in danger of
default'' means a covered financial
company with respect to which the
Corporation or appropriate State
authority has determined that--
(aa) in the opinion of the
Corporation or such authority--
(AA) the covered
financial company is not
likely to be able to pay its
obligations in the normal
course of business; and
(BB) there is no
reasonable prospect that the
covered financial company
will be able to pay such
obligations without Federal
assistance; or
(bb) in the opinion of the
Corporation or such authority--
(AA) the covered
financial company has
incurred or is likely to
incur losses that will
deplete all or substantially
all of its capital; and
(BB) there is no
reasonable prospect that the
capital will be replenished
without Federal assistance.
(viii) Treatment of master agreement as one
agreement.--Any master agreement for any contract
or agreement described in any of clauses (i)
through (vi) (or any master agreement for such
master agreement or agreements), together with all
supplements to such master agreement, shall be
treated as a single agreement and a single
qualified financial contact. If a master agreement
contains provisions relating to agreements or
transactions that are not themselves qualified
financial contracts, the master agreement
[[Page 124 STAT. 1488]]
shall be deemed to be a qualified financial
contract only with respect to those transactions
that are themselves qualified financial contracts.
(ix) Transfer.--The term ``transfer'' means
every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of
disposing of or parting with property or with an
interest in property, including retention of title
as a security interest and foreclosure of the
equity of redemption of the covered financial
company.
(x) Person.--The term ``person'' includes any
governmental entity in addition to any entity
included in the definition of such term in section
1, title 1, United States Code.
(E) Clarification.--No provision of law shall be
construed as limiting the right or power of the
Corporation, or authorizing any court or agency to limit
or delay, in any manner, the right or power of the
Corporation to transfer any qualified financial contract
or to disaffirm or repudiate any such contract in
accordance with this subsection.
(F) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the
provisions of subparagraph (A) of this paragraph
and sections 403 and 404 of the Federal Deposit
Insurance Corporation Improvement Act of 1991, no
walkaway clause shall be enforceable in a
qualified financial contract of a covered
financial company in default.
(ii) Limited suspension of certain
obligations.--In <<NOTE: Time period.>> the case
of a qualified financial contract referred to in
clause (i), any payment or delivery obligations
otherwise due from a party pursuant to the
qualified financial contract shall be suspended
from the time at which the Corporation is
appointed as receiver until the earlier of--
(I) the time at which such party
receives notice that such contract has
been transferred pursuant to paragraph
(10)(A); or
(II) 5:00 p.m. (eastern time) on the
business day following the date of the
appointment of the Corporation as
receiver.
(iii) Walkaway clause defined.--For purposes
of this subparagraph, the term ``walkaway clause''
means any provision in a qualified financial
contract that suspends, conditions, or
extinguishes a payment obligation of a party, in
whole or in part, or does not create a payment
obligation of a party that would otherwise exist,
solely because of the status of such party as a
nondefaulting party in connection with the
insolvency of a covered financial company that is
a party to the contract or the appointment of or
the exercise of rights or powers by the
Corporation as receiver for such covered financial
company, and not as a result of the exercise by a
party of any right to offset, setoff, or net
obligations that exist under the contract, any
other contract between those parties, or
applicable law.
[[Page 124 STAT. 1489]]
(G) Certain obligations to clearing organizations.--
In the event that the Corporation has been appointed as
receiver for a covered financial company which is a
party to any qualified financial contract cleared by or
subject to the rules of a clearing organization (as
defined in paragraph (9)(D)), the receiver shall use its
best efforts to meet all margin, collateral, and
settlement obligations of the covered financial company
that arise under qualified financial contracts (other
than any margin, collateral, or settlement obligation
that is not enforceable against the receiver under
paragraph (8)(F)(i) or paragraph (10)(B)), as required
by the rules of the clearing organization when due.
Notwithstanding any other provision of this title, if
the receiver fails to satisfy any such margin,
collateral, or settlement obligations under the rules of
the clearing organization, the clearing organization
shall have the immediate right to exercise, and shall
not be stayed from exercising, all of its rights and
remedies under its rules and applicable law with respect
to any qualified financial contract of the covered
financial company, including, without limitation, the
right to liquidate all positions and collateral of such
covered financial company under the company's qualified
financial contracts, and suspend or cease to act for
such covered financial company, all in accordance with
the rules of the clearing organization.
(H) Recordkeeping.--
(i) Joint rulemaking.--The Federal primary
financial regulatory agencies shall jointly
prescribe regulations requiring that financial
companies maintain such records with respect to
qualified financial contracts (including market
valuations) that the Federal primary financial
regulatory agencies determine to be necessary or
appropriate in order to assist the Corporation as
receiver for a covered financial company in being
able to exercise its rights and fulfill its
obligations under this paragraph or paragraph (9)
or (10).
(ii) Time frame.--The Federal primary
financial regulatory agencies shall prescribe
joint final or interim final regulations not later
than 24 months after the date of enactment of this
Act.
(iii) Back-up rulemaking authority.--If the
Federal primary financial regulatory agencies do
not prescribe joint final or interim final
regulations within the time frame in clause (ii),
the Chairperson of the Council shall prescribe, in
consultation with the Corporation, the regulations
required by clause (i).
(iv) Categorization and tiering.--The joint
regulations prescribed under clause (i) shall, as
appropriate, differentiate among financial
companies by taking into consideration their size,
risk, complexity, leverage, frequency and dollar
amount of qualified financial contracts,
interconnectedness to the financial system, and
any other factors deemed appropriate.
(9) Transfer of qualified financial contracts.--
(A) In general.--In making any transfer of assets or
liabilities of a covered financial company in default,
[[Page 124 STAT. 1490]]
which includes any qualified financial contract, the
Corporation as receiver for such covered financial
company shall either--
(i) transfer to one financial institution,
other than a financial institution for which a
conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed or which
is otherwise the subject of a bankruptcy or
insolvency proceeding--
(I) all qualified financial
contracts between any person or any
affiliate of such person and the covered
financial company in default;
(II) all claims of such person or
any affiliate of such person against
such covered financial company under any
such contract (other than any claim
which, under the terms of any such
contract, is subordinated to the claims
of general unsecured creditors of such
company);
(III) all claims of such covered
financial company against such person or
any affiliate of such person under any
such contract; and
(IV) all property securing or any
other credit enhancement for any
contract described in subclause (I) or
any claim described in subclause (II) or
(III) under any such contract; or
(ii) transfer none of the qualified financial
contracts, claims, property or other credit
enhancement referred to in clause (i) (with
respect to such person and any affiliate of such
person).
(B) Transfer to foreign bank, financial institution,
or branch or agency thereof.--In transferring any
qualified financial contracts and related claims and
property under subparagraph (A)(i), the Corporation as
receiver for the covered financial company shall not
make such transfer to a foreign bank, financial
institution organized under the laws of a foreign
country, or a branch or agency of a foreign bank or
financial institution unless, under the law applicable
to such bank, financial institution, branch or agency,
to the qualified financial contracts, and to any netting
contract, any security agreement or arrangement or other
credit enhancement related to one or more qualified
financial contracts, the contractual rights of the
parties to such qualified financial contracts, netting
contracts, security agreements or arrangements, or other
credit enhancements are enforceable substantially to the
same extent as permitted under this section.
(C) Transfer of contracts subject to the rules of a
clearing organization.--In the event that the
Corporation as receiver for a financial institution
transfers any qualified financial contract and related
claims, property, or credit enhancement pursuant to
subparagraph (A)(i) and such contract is cleared by or
subject to the rules of a clearing organization, the
clearing organization shall not be required to accept
the transferee as a member by virtue of the transfer.
(D) Definitions.--For purposes of this paragraph--
[[Page 124 STAT. 1491]]
(i) the term ``financial institution'' means a
broker or dealer, a depository institution, a
futures commission merchant, a bridge financial
company, or any other institution determined by
the Corporation, by regulation, to be a financial
institution; and
(ii) the term ``clearing organization'' has
the same meaning as in section 402 of the Federal
Deposit Insurance Corporation Improvement Act of
1991.
(10) Notification of transfer.--
(A) In general.--
(i) Notice.--The Corporation shall provide
notice in accordance with clause (ii), if--
(I) the Corporation as receiver for
a covered financial company in default
or in danger of default transfers any
assets or liabilities of the covered
financial company; and
(II) the transfer includes any
qualified financial contract.
(ii) Timing.--The Corporation as receiver for
a covered financial company shall notify any
person who is a party to any contract described in
clause (i) of such transfer not later than 5:00
p.m. (eastern time) on the business day following
the date of the appointment of the Corporation as
receiver.
(B) Certain rights not enforceable.--
(i) Receivership.--A <<NOTE: Time
period.>> person who is a party to a qualified
financial contract with a covered financial
company may not exercise any right that such
person has to terminate, liquidate, or net such
contract under paragraph (8)(A) solely by reason
of or incidental to the appointment under this
section of the Corporation as receiver for the
covered financial company (or the insolvency or
financial condition of the covered financial
company for which the Corporation has been
appointed as receiver)--
(I) until 5:00 p.m. (eastern time)
on the business day following the date
of the appointment; or
(II) after the person has received
notice that the contract has been
transferred pursuant to paragraph
(9)(A).
(ii) Notice.--For purposes of this paragraph,
the Corporation as receiver for a covered
financial company shall be deemed to have notified
a person who is a party to a qualified financial
contract with such covered financial company, if
the Corporation has taken steps reasonably
calculated to provide notice to such person by the
time specified in subparagraph (A).
(C) Treatment of bridge financial company.--For
purposes of paragraph (9), a bridge financial company
shall not be considered to be a financial institution
for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been appointed,
or which is otherwise the subject of a bankruptcy or
insolvency proceeding.
(D) Business day defined.--For purposes of this
paragraph, the term ``business day'' means any day other
than any Saturday, Sunday, or any day on which either
the
[[Page 124 STAT. 1492]]
New York Stock Exchange or the Federal Reserve Bank of
New York is closed.
(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of the Corporation as receiver with respect to any
qualified financial contract to which a covered financial
company is a party, the Corporation shall either--
(A) disaffirm or repudiate all qualified financial
contracts between--
(i) any person or any affiliate of such
person; and
(ii) the covered financial company in default;
or
(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A)
(with respect to such person or any affiliate of such
person).
(12) Certain security and customer interests not
avoidable.--No provision of this subsection shall be construed
as permitting the avoidance of any--
(A) legally enforceable or perfected security
interest in any of the assets of any covered financial
company, except in accordance with subsection (a)(11);
or
(B) legally enforceable interest in customer
property, security entitlements in respect of assets or
property held by the covered financial company for any
security entitlement holder.
(13) Authority to enforce contracts.--
(A) In general.--The Corporation, as receiver for a
covered financial company, may enforce any contract,
other than a liability insurance contract of a director
or officer, a financial institution bond entered into by
the covered financial company, notwithstanding any
provision of the contract providing for termination,
default, acceleration, or exercise of rights upon, or
solely by reason of, insolvency, the appointment of or
the exercise of rights or powers by the Corporation as
receiver, the filing of the petition pursuant to section
202(a)(1), or the issuance of the recommendations or
determination, or any actions or events occurring in
connection therewith or as a result thereof, pursuant to
section 203.
(B) Certain rights not affected.--No provision of
this paragraph may be construed as impairing or
affecting any right of the Corporation as receiver to
enforce or recover under a liability insurance contract
of a director or officer or financial institution bond
under other applicable law.
(C) Consent requirement and ipso facto clauses.--
(i) In general.--Except <<NOTE: Time
period.>> as otherwise provided by this section,
no person may exercise any right or power to
terminate, accelerate, or declare a default under
any contract to which the covered financial
company is a party (and no provision in any such
contract providing for such default, termination,
or acceleration shall be enforceable), or to
obtain possession of or exercise control over any
property of the covered financial company or
affect any contractual rights of the covered
financial company, without the consent of the
[[Page 124 STAT. 1493]]
Corporation as receiver for the covered financial
company during the 90 day period beginning from
the appointment of the Corporation as receiver.
(ii) Exceptions.--No provision of this
subparagraph shall apply to a director or officer
liability insurance contract or a financial
institution bond, to the rights of parties to
certain qualified financial contracts pursuant to
paragraph (8), or to the rights of parties to
netting contracts pursuant to subtitle A of title
IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4401 et seq.),
or shall be construed as permitting the
Corporation as receiver to fail to comply with
otherwise enforceable provisions of such contract.
(D) Contracts to extend credit.--Notwithstanding any
other provision in this title, if the Corporation as
receiver enforces any contract to extend credit to the
covered financial company or bridge financial company,
any valid and enforceable obligation to repay such debt
shall be paid by the Corporation as receiver, as an
administrative expense of the receivership.
(14) Exception for federal reserve banks and corporation
security interest.--No provision of this subsection shall apply
with respect to--
(A) any extension of credit from any Federal reserve
bank or the Corporation to any covered financial
company; or
(B) any security interest in the assets of the
covered financial company securing any such extension of
credit.
(15) Savings clause.--The meanings of terms used in this
subsection are applicable for purposes of this subsection only,
and shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
similar terms under any other statute, regulation, or rule,
including the Gramm-Leach-Bliley Act, the Legal Certainty for
Bank Products Act of 2000, the securities laws (as that term is
defined in section 3(a)(47) of the Securities Exchange Act of
1934), and the Commodity Exchange Act.
(16) Enforcement of contracts guaranteed by the covered
financial company.--
(A) In general.--The Corporation, as receiver for a
covered financial company or as receiver for a
subsidiary of a covered financial company (including an
insured depository institution) shall have the power to
enforce contracts of subsidiaries or affiliates of the
covered financial company, the obligations under which
are guaranteed or otherwise supported by or linked to
the covered financial company, notwithstanding any
contractual right to cause the termination, liquidation,
or acceleration of such contracts based solely on the
insolvency, financial condition, or receivership of the
covered financial company, if--
(i) such guaranty or other support and all
related assets and liabilities are transferred to
and assumed by a bridge financial company or a
third party (other than a third party for which a
conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed, or which
is otherwise the subject of
[[Page 124 STAT. 1494]]
a bankruptcy or insolvency proceeding) within the
same period of time as the Corporation is entitled
to transfer the qualified financial contracts of
such covered financial company; or
(ii) the Corporation, as receiver, otherwise
provides adequate protection with respect to such
obligations.
(B) Rule of construction.--For purposes of this
paragraph, a bridge financial company shall not be
considered to be a third party for which a conservator,
receiver, trustee in bankruptcy, or other legal
custodian has been appointed, or which is otherwise the
subject of a bankruptcy or insolvency proceeding.
(d) Valuation of Claims in Default.--
(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method utilized by the Corporation for a covered financial
company, including transactions authorized under subsection (h),
this subsection shall govern the rights of the creditors of any
such covered financial company.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver for a covered financial company
or in any other capacity, to any person having a claim against
the Corporation as receiver or the covered financial company for
which the Corporation is appointed shall equal the amount that
such claimant would have received if--
(A) the Corporation had not been appointed receiver
with respect to the covered financial company; and
(B) the covered financial company had been
liquidated under chapter 7 of the Bankruptcy Code, or
any similar provision of State insolvency law applicable
to the covered financial company.
(3) Special provision for orderly liquidation by sipc.--The
maximum liability of the Corporation, acting as receiver or in
its corporate capacity for any covered broker or dealer to any
customer of such covered broker or dealer, with respect to
customer property of such customer, shall be--
(A) equal to the amount that such customer would
have received with respect to such customer property in
a case initiated by SIPC under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and
(B) determined <<NOTE: Determination.>> as of the
close of business on the date on which the Corporation
is appointed as receiver.
(4) Additional payments authorized.--
(A) In general.--Subject to subsection (o)(1)(D)(i),
the Corporation, with the approval of the Secretary, may
make additional payments or credit additional amounts to
or with respect to or for the account of any claimant or
category of claimants of the covered financial company,
if the Corporation determines that such payments or
credits are necessary or appropriate to minimize losses
to the Corporation as receiver from the orderly
liquidation of the covered financial company under this
section.
(B) Limitations.--
(i) Prohibition.--The Corporation shall not
make any payments or credit amounts to any
claimant or category of claimants that would
result in any claimant receiving more than the
face value amount of any
[[Page 124 STAT. 1495]]
claim that is proven to the satisfaction of the
Corporation.
(ii) No obligation.--Notwithstanding any other
provision of Federal or State law, or the
Constitution of any State, the Corporation shall
not be obligated, as a result of having made any
payment under subparagraph (A) or credited any
amount described in subparagraph (A) to or with
respect to, or for the account, of any claimant or
category of claimants, to make payments to any
other claimant or category of claimants.
(C) Manner of payment.--The Corporation may make
payments or credit amounts under subparagraph (A)
directly to the claimants or may make such payments or
credit such amounts to a company other than a covered
financial company or a bridge financial company
established with respect thereto in order to induce such
other company to accept liability for such claims.
(e) Limitation on Court Action.--Except as provided in this title,
no court may take any action to restrain or affect the exercise of
powers or functions of the receiver hereunder, and any remedy against
the Corporation or receiver shall be limited to money damages determined
in accordance with this title.
(f) Liability of Directors and Officers.--
(1) In general.--A director or officer of a covered
financial company may be held personally liable for monetary
damages in any civil action described in paragraph (2) by, on
behalf of, or at the request or direction of the Corporation,
which action is prosecuted wholly or partially for the benefit
of the Corporation--
(A) acting as receiver for such covered financial
company;
(B) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by the Corporation as receiver; or
(C) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed in whole or in part by a covered financial
company or its affiliate in connection with assistance
provided under this title.
(2) Actions covered.--Paragraph (1) shall apply with respect
to actions for gross negligence, including any similar conduct
or conduct that demonstrates a greater disregard of a duty of
care (than gross negligence) including intentional tortious
conduct, as such terms are defined and determined under
applicable State law.
(3) Savings clause.--Nothing in this subsection shall impair
or affect any right of the Corporation under other applicable
law.
(g) Damages.--In any proceeding related to any claim against a
director, officer, employee, agent, attorney, accountant, or appraiser
of a covered financial company, or any other party employed by or
providing services to a covered financial company, recoverable damages
determined to result from the improvident or otherwise improper use or
investment of any assets of the covered financial company shall include
principal losses and appropriate interest.
[[Page 124 STAT. 1496]]
(h) Bridge Financial Companies.--
(1) Organization.--
(A) Purpose.--The Corporation, as receiver for one
or more covered financial companies or in anticipation
of being appointed receiver for one or more covered
financial companies, may organize one or more bridge
financial companies in accordance with this subsection.
(B) Authorities.--Upon the creation of a bridge
financial company under subparagraph (A) with respect to
a covered financial company, such bridge financial
company may--
(i) assume such liabilities (including
liabilities associated with any trust or custody
business, but excluding any liabilities that count
as regulatory capital) of such covered financial
company as the Corporation may, in its discretion,
determine to be appropriate;
(ii) purchase such assets (including assets
associated with any trust or custody business) of
such covered financial company as the Corporation
may, in its discretion, determine to be
appropriate; and
(iii) perform any other temporary function
which the Corporation may, in its discretion,
prescribe in accordance with this section.
(2) Charter and establishment.--
(A) Establishment.--Except as provided in
subparagraph (H), where the covered financial company is
a covered broker or dealer, the Corporation, as receiver
for a covered financial company, may grant a Federal
charter to and approve articles of association for one
or more bridge financial company or companies, with
respect to such covered financial company which shall,
by operation of law and immediately upon issuance of its
charter and approval of its articles of association, be
established and operate in accordance with, and subject
to, such charter, articles, and this section.
(B) Management.--Upon its establishment, a bridge
financial company shall be under the management of a
board of directors appointed by the Corporation.
(C) Articles of association.--The articles of
association and organization certificate of a bridge
financial company shall have such terms as the
Corporation may provide, and shall be executed by such
representatives as the Corporation may designate.
(D) Terms of charter; rights and privileges.--
Subject to and in accordance with the provisions of this
subsection, the Corporation shall--
(i) establish the terms of the charter of a
bridge financial company and the rights, powers,
authorities, and privileges of a bridge financial
company granted by the charter or as an incident
thereto; and
(ii) provide for, and establish the terms and
conditions governing, the management (including
the bylaws and the number of directors of the
board of directors) and operations of the bridge
financial company.
(E) Transfer of rights and privileges of covered
financial company.--
[[Page 124 STAT. 1497]]
(i) In general.--Notwithstanding any other
provision of Federal or State law, the Corporation
may provide for a bridge financial company to
succeed to and assume any rights, powers,
authorities, or privileges of the covered
financial company with respect to which the bridge
financial company was established and, upon such
determination by the Corporation, the bridge
financial company shall immediately and by
operation of law succeed to and assume such
rights, powers, authorities, and privileges.
(ii) Effective without approval.--Any
succession to or assumption by a bridge financial
company of rights, powers, authorities, or
privileges of a covered financial company under
clause (i) or otherwise shall be effective without
any further approval under Federal or State law,
assignment, or consent with respect thereto.
(F) Corporate governance and election and
designation of body of law.--To the extent permitted by
the Corporation and consistent with this section and any
rules, regulations, or directives issued by the
Corporation under this section, a bridge financial
company may elect to follow the corporate governance
practices and procedures that are applicable to a
corporation incorporated under the general corporation
law of the State of Delaware, or the State of
incorporation or organization of the covered financial
company with respect to which the bridge financial
company was established, as such law may be amended from
time to time.
(G) Capital.--
(i) Capital not required.--Notwithstanding any
other provision of Federal or State law, a bridge
financial company may, if permitted by the
Corporation, operate without any capital or
surplus, or with such capital or surplus as the
Corporation may in its discretion determine to be
appropriate.
(ii) No contribution by the corporation
required.--The Corporation is not required to pay
capital into a bridge financial company or to
issue any capital stock on behalf of a bridge
financial company established under this
subsection.
(iii) Authority.--If the Corporation
determines that such action is advisable, the
Corporation may cause capital stock or other
securities of a bridge financial company
established with respect to a covered financial
company to be issued and offered for sale in such
amounts and on such terms and conditions as the
Corporation may, in its discretion, determine.
(iv) Operating funds in lieu of capital and
implementation plan.--Upon the organization of a
bridge financial company, and thereafter as the
Corporation may, in its discretion, determine to
be necessary or advisable, the Corporation may
make available to the bridge financial company,
subject to the plan described in subsection
(n)(9), funds for the operation of the bridge
financial company in lieu of capital.
(H) Bridge brokers or dealers.--
[[Page 124 STAT. 1498]]
(i) In general.--The Corporation, as receiver
for a covered broker or dealer, may approve
articles of association for one or more bridge
financial companies with respect to such covered
broker or dealer, which bridge financial company
or companies shall, by operation of law and
immediately upon approval of its articles of
association--
(I) be established and deemed
registered with the Commission under the
Securities Exchange Act of 1934 and a
member of SIPC;
(II) operate in accordance with such
articles and this section; and
(III) succeed to any and all
registrations and memberships of the
covered financial company with or in any
self-regulatory organizations.
(ii) Other requirements.--Except as provided
in clause (i), and notwithstanding any other
provision of this section, the bridge financial
company shall be subject to the Federal securities
laws and all requirements with respect to being a
member of a self-regulatory organization, unless
exempted from any such requirements by the
Commission, as is necessary or appropriate in the
public interest or for the protection of
investors.
(iii) Treatment of customers.--Except as
otherwise provided by this title, any customer of
the covered broker or dealer whose account is
transferred to a bridge financial company shall
have all the rights, privileges, and protections
under section 205(f) and under the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.), that such customer would have had if the
account were not transferred from the covered
financial company under this subparagraph.
(iv) Operation of bridge brokers or dealers.--
Notwithstanding any other provision of this title,
the Corporation shall not operate any bridge
financial company created by the Corporation under
this title with respect to a covered broker or
dealer in such a manner as to adversely affect the
ability of customers to promptly access their
customer property in accordance with applicable
law.
(3) Interests in and assets and obligations of covered
financial company.--Notwithstanding paragraph (1) or (2) or any
other provision of law--
(A) a bridge financial company shall assume,
acquire, or succeed to the assets or liabilities of a
covered financial company (including the assets or
liabilities associated with any trust or custody
business) only to the extent that such assets or
liabilities are transferred by the Corporation to the
bridge financial company in accordance with, and subject
to the restrictions set forth in, paragraph (1)(B); and
(B) a bridge financial company shall not assume,
acquire, or succeed to any obligation that a covered
financial company for which the Corporation has been
appointed receiver may have to any shareholder, member,
general
[[Page 124 STAT. 1499]]
partner, limited partner, or other person with an
interest in the equity of the covered financial company
that arises as a result of the status of that person
having an equity claim in the covered financial company.
(4) Bridge financial company treated as being in default for
certain purposes.--A bridge financial company shall be treated
as a covered financial company in default at such times and for
such purposes as the Corporation may, in its discretion,
determine.
(5) Transfer of assets and liabilities.--
(A) Authority of corporation.--The Corporation, as
receiver for a covered financial company, may transfer
any assets and liabilities of a covered financial
company (including any assets or liabilities associated
with any trust or custody business) to one or more
bridge financial companies, in accordance with and
subject to the restrictions of paragraph (1).
(B) Subsequent transfers.--At any time after the
establishment of a bridge financial company with respect
to a covered financial company, the Corporation, as
receiver, may transfer any assets and liabilities of
such covered financial company as the Corporation may,
in its discretion, determine to be appropriate in
accordance with and subject to the restrictions of
paragraph (1).
(C) Treatment of trust or custody business.--For
purposes of this paragraph, the trust or custody
business, including fiduciary appointments, held by any
covered financial company is included among its assets
and liabilities.
(D) Effective without approval.--The transfer of any
assets or liabilities, including those associated with
any trust or custody business of a covered financial
company, to a bridge financial company shall be
effective without any further approval under Federal or
State law, assignment, or consent with respect thereto.
(E) Equitable treatment of similarly situated
creditors.--The Corporation shall treat all creditors of
a covered financial company that are similarly situated
under subsection (b)(1), in a similar manner in
exercising the authority of the Corporation under this
subsection to transfer any assets or liabilities of the
covered financial company to one or more bridge
financial companies established with respect to such
covered financial company, except that the Corporation
may take any action (including making payments, subject
to subsection (o)(1)(D)(i)) that does not comply with
this subparagraph, if--
(i) the Corporation determines that such
action is necessary--
(I) to maximize the value of the
assets of the covered financial company;
(II) to maximize the present value
return from the sale or other
disposition of the assets of the covered
financial company; or
(III) to minimize the amount of any
loss realized upon the sale or other
disposition of the assets of the covered
financial company; and
[[Page 124 STAT. 1500]]
(ii) all creditors that are similarly situated
under subsection (b)(1) receive not less than the
amount provided under paragraphs (2) and (3) of
subsection (d).
(F) Limitation on transfer of liabilities.--
Notwithstanding any other provision of law, the
aggregate amount of liabilities of a covered financial
company that are transferred to, or assumed by, a bridge
financial company from a covered financial company may
not exceed the aggregate amount of the assets of the
covered financial company that are transferred to, or
purchased by, the bridge financial company from the
covered financial company.
(6) Stay of judicial action.--Any judicial action to which a
bridge financial company becomes a party by virtue of its
acquisition of any assets or assumption of any liabilities of a
covered financial company shall be stayed from further
proceedings for a period of not longer than 45 days (or such
longer period as may be agreed to upon the consent of all
parties) at the request of the bridge financial company.
(7) Agreements against interest of the bridge financial
company.--No agreement that tends to diminish or defeat the
interest of the bridge financial company in any asset of a
covered financial company acquired by the bridge financial
company shall be valid against the bridge financial company,
unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial company or
confirmed in the ordinary course of business by the
covered financial company; and
(C) has been on the official record of the company,
since the time of its execution, or with which, the
party claiming under the agreement provides
documentation of such agreement and its authorized
execution or confirmation by the covered financial
company that is acceptable to the receiver.
(8) No federal status.--
(A) Agency status.--A bridge financial company is
not an agency, establishment, or instrumentality of the
United States.
(B) Employee status.--Representatives for purposes
of paragraph (1)(B), directors, officers, employees, or
agents of a bridge financial company are not, solely by
virtue of service in any such capacity, officers or
employees of the United States. Any employee of the
Corporation or of any Federal instrumentality who serves
at the request of the Corporation as a representative
for purposes of paragraph (1)(B), director, officer,
employee, or agent of a bridge financial company shall
not--
(i) solely by virtue of service in any such
capacity lose any existing status as an officer or
employee of the United States for purposes of
title 5, United States Code, or any other
provision of law; or
(ii) receive any salary or benefits for
service in any such capacity with respect to a
bridge financial company in addition to such
salary or benefits as are obtained through
employment with the Corporation or such Federal
instrumentality.
[[Page 124 STAT. 1501]]
(9) Funding authorized.--The Corporation may, subject to the
plan described in subsection (n)(9), provide funding to
facilitate any transaction described in subparagraph (A), (B),
(C), or (D) of paragraph (13) with respect to any bridge
financial company, or facilitate the acquisition by a bridge
financial company of any assets, or the assumption of any
liabilities, of a covered financial company for which the
Corporation has been appointed receiver.
(10) Exempt tax status.--Notwithstanding any other provision
of Federal or State law, a bridge financial company, its
franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by any
territory, dependency, or possession thereof, or by any State,
county, municipality, or local taxing authority.
(11) Federal agency approval; antitrust review.--If a
transaction involving the merger or sale of a bridge financial
company requires approval by a Federal agency, the transaction
may not be consummated before the 5th calendar day after the
date of approval by the Federal agency responsible for such
approval with respect thereto.
If, <<NOTE: Notification. Reports. Deadline.>> in connection
with any such approval a report on competitive factors from the
Attorney General is required, the Federal agency responsible for
such approval shall promptly notify the Attorney General of the
proposed transaction and the Attorney General shall provide the
required report within 10 days of the request.
If <<NOTE: Termination date.>> a notification is required under
section 7A of the Clayton Act with respect to such transaction,
the required waiting period shall end on the 15th day after the
date on which the Attorney General and the Federal Trade
Commission receive such notification, unless the waiting period
is terminated earlier under section 7A(b)(2) of the Clayton Act,
or extended under section 7A(e)(2) of that Act.
(12) Duration of bridge <<NOTE: Termination
date.>> financial company.--Subject to paragraphs (13) and (14),
the status of a bridge financial company as such shall terminate
at the end of the 2-year period following the date on which it
was granted a charter. The Corporation may, in its discretion,
extend the status of the bridge financial company as such for no
more than 3 additional 1-year periods.
(13) Termination of bridge financial company status.--The
status of any bridge financial company as such shall terminate
upon the earliest of--
(A) the date of the merger or consolidation of the
bridge financial company with a company that is not a
bridge financial company;
(B) at the election of the Corporation, the sale of
a majority of the capital stock of the bridge financial
company to a company other than the Corporation and
other than another bridge financial company;
(C) the sale of 80 percent, or more, of the capital
stock of the bridge financial company to a person other
than the Corporation and other than another bridge
financial company;
(D) at the election of the Corporation, either the
assumption of all or substantially all of the
liabilities of the bridge financial company by a company
that is not a bridge financial company, or the
acquisition of all or
[[Page 124 STAT. 1502]]
substantially all of the assets of the bridge financial
company by a company that is not a bridge financial
company, or other entity as permitted under applicable
law; and
(E) the expiration of the period provided in
paragraph (12), or the earlier dissolution of the bridge
financial company, as provided in paragraph (15).
(14) Effect of termination events.--
(A) Merger or consolidation.--A
merger <<NOTE: Delaware.>> or consolidation, described
in paragraph (13)(A) shall be conducted in accordance
with, and shall have the effect provided in, the
provisions of applicable law. For the purpose of
effecting such a merger or consolidation, the bridge
financial company shall be treated as a corporation
organized under the laws of the State of Delaware
(unless the law of another State has been selected by
the bridge financial company in accordance with
paragraph (2)(F)), and the Corporation shall be treated
as the sole shareholder thereof, notwithstanding any
other provision of State or Federal law.
(B) Charter conversion.--Following the sale of a
majority of the capital stock of the bridge financial
company, as provided in paragraph (13)(B), the
Corporation may amend the charter of the bridge
financial company to reflect the termination of the
status of the bridge financial company as such,
whereupon the company shall have all of the rights,
powers, and privileges under its constituent documents
and applicable Federal or State law. In connection
therewith, the Corporation may take such steps as may be
necessary or convenient to reincorporate the bridge
financial company under the laws of a State and,
notwithstanding any provisions of Federal or State law,
such State-chartered corporation shall be deemed to
succeed by operation of law to such rights, titles,
powers, and interests of the bridge financial company as
the Corporation may provide, with the same effect as if
the bridge financial company had merged with the State-
chartered corporation under provisions of the corporate
laws of such State.
(C) Sale of stock.--Following the sale of 80 percent
or more of the capital stock of a bridge financial
company, as provided in paragraph (13)(C), the company
shall have all of the rights, powers, and privileges
under its constituent documents and applicable Federal
or State law. In connection therewith, the Corporation
may take such steps as may be necessary or convenient to
reincorporate the bridge financial company under the
laws of a State and, notwithstanding any provisions of
Federal or State law, the State-chartered corporation
shall be deemed to succeed by operation of law to such
rights, titles, powers and interests of the bridge
financial company as the Corporation may provide, with
the same effect as if the bridge financial company had
merged with the State-chartered corporation under
provisions of the corporate laws of such State.
(D) Assumption of liabilities and sale of assets.--
Following the assumption of all or substantially all of
the liabilities of the bridge financial company, or the
sale of
[[Page 124 STAT. 1503]]
all or substantially all of the assets of the bridge
financial company, as provided in paragraph (13)(D), at
the election of the Corporation, the bridge financial
company may retain its status as such for the period
provided in paragraph (12) or may be dissolved at the
election of the Corporation.
(E) Amendments to charter.--Following the
consummation of a transaction described in subparagraph
(A), (B), (C), or (D) of paragraph (13), the charter of
the resulting company shall be amended to reflect the
termination of bridge financial company status, if
appropriate.
(15) Dissolution of bridge financial company.--
(A) In general.--Notwithstanding any other provision
of Federal or State law, if the status of a bridge
financial company as such has not previously been
terminated by the occurrence of an event specified in
subparagraph (A), (B), (C), or (D) of paragraph (13)--
(i) the Corporation may, in its discretion,
dissolve the bridge financial company in
accordance with this paragraph at any time; and
(ii) the <<NOTE: Time period.>> Corporation
shall promptly commence dissolution proceedings in
accordance with this paragraph upon the expiration
of the 2-year period following the date on which
the bridge financial company was chartered, or any
extension thereof, as provided in paragraph (12).
(B) Procedures.--The Corporation shall remain the
receiver for a bridge financial company for the purpose
of dissolving the bridge financial company. The
Corporation as receiver for a bridge financial company
shall wind up the affairs of the bridge financial
company in conformity with the provisions of law
relating to the liquidation of covered financial
companies under this title. With respect to any such
bridge financial company, the Corporation as receiver
shall have all the rights, powers, and privileges and
shall perform the duties related to the exercise of such
rights, powers, or privileges granted by law to the
Corporation as receiver for a covered financial company
under this title and, notwithstanding any other
provision of law, in the exercise of such rights,
powers, and privileges, the Corporation shall not be
subject to the direction or supervision of any State
agency or other Federal agency.
(16) Authority to obtain credit.--
(A) In general.--A bridge financial company may
obtain unsecured credit and issue unsecured debt.
(B) Inability to obtain credit.--If a bridge
financial company is unable to obtain unsecured credit
or issue unsecured debt, the Corporation may authorize
the obtaining of credit or the issuance of debt by the
bridge financial company--
(i) with priority over any or all of the
obligations of the bridge financial company;
(ii) secured by a lien on property of the
bridge financial company that is not otherwise
subject to a lien; or
(iii) secured by a junior lien on property of
the bridge financial company that is subject to a
lien.
(C) Limitations.--
[[Page 124 STAT. 1504]]
(i) In general.--The Corporation, after notice
and a hearing, may authorize the obtaining of
credit or the issuance of debt by a bridge
financial company that is secured by a senior or
equal lien on property of the bridge financial
company that is subject to a lien, only if--
(I) the bridge financial company is
unable to otherwise obtain such credit
or issue such debt; and
(II) there is adequate protection of
the interest of the holder of the lien
on the property with respect to which
such senior or equal lien is proposed to
be granted.
(ii) Hearing.--The hearing required pursuant
to this subparagraph shall be before a court of
the United States, which shall have jurisdiction
to conduct such hearing and to authorize a bridge
financial company to obtain secured credit under
clause (i).
(D) Burden of proof.--In any hearing under this
paragraph, the Corporation has the burden of proof on
the issue of adequate protection.
(E) Qualified financial contracts.--No credit or
debt obtained or issued by a bridge financial company
may contain terms that impair the rights of a
counterparty to a qualified financial contract upon a
default by the bridge financial company, other than the
priority of such counterparty's unsecured claim (after
the exercise of rights) relative to the priority of the
bridge financial company's obligations in respect of
such credit or debt, unless such counterparty consents
in writing to any such impairment.
(17) Effect on debts and liens.--The reversal or
modification on appeal of an authorization under this subsection
to obtain credit or issue debt, or of a grant under this section
of a priority or a lien, does not affect the validity of any
debt so issued, or any priority or lien so granted, to an entity
that extended such credit in good faith, whether or not such
entity knew of the pendency of the appeal, unless such
authorization and the issuance of such debt, or the granting of
such priority or lien, were stayed pending appeal.
(i) Sharing Records.--If the Corporation has been appointed as
receiver for a covered financial company, other Federal regulators shall
make all records relating to the covered financial company available to
the Corporation, which may be used by the Corporation in any manner that
the Corporation determines to be appropriate.
(j) Expedited Procedures for Certain Claims.--
(1) Time for filing notice of appeal.--
The <<NOTE: Deadlines.>> notice of appeal of any order, whether
interlocutory or final, entered in any case brought by the
Corporation against a director, officer, employee, agent,
attorney, accountant, or appraiser of the covered financial
company, or any other person employed by or providing services
to a covered financial company, shall be filed not later than 30
days after the date of entry of the order. The hearing of the
appeal shall be held not later than 120 days after the date of
the notice of appeal. The appeal shall be decided not later than
180 days after the date of the notice of appeal.
[[Page 124 STAT. 1505]]
(2) Scheduling.--The <<NOTE: Courts.>> court shall expedite
the consideration of any case brought by the Corporation against
a director, officer, employee, agent, attorney, accountant, or
appraiser of a covered financial company or any other person
employed by or providing services to a covered financial
company. As far as practicable, the court shall give such case
priority on its docket.
(3) Judicial discretion.--The court may modify the schedule
and limitations stated in paragraphs (1) and (2) in a particular
case, based on a specific finding that the ends of justice that
would be served by making such a modification would outweigh the
best interest of the public in having the case resolved
expeditiously.
(k) Foreign Investigations.--The Corporation, as receiver for any
covered financial company, and for purposes of carrying out any power,
authority, or duty with respect to a covered financial company--
(1) may request the assistance of any foreign financial
authority and provide assistance to any foreign financial
authority in accordance with section 8(v) of the Federal Deposit
Insurance Act, as if the covered financial company were an
insured depository institution, the Corporation were the
appropriate Federal banking agency for the company, and any
foreign financial authority were the foreign banking authority;
and
(2) may maintain an office to coordinate foreign
investigations or investigations on behalf of foreign financial
authorities.
(l) Prohibition on Entering Secrecy Agreements and Protective
Orders.--The Corporation may not enter into any agreement or approve any
protective order which prohibits the Corporation from disclosing the
terms of any settlement of an administrative or other action for damages
or restitution brought by the Corporation in its capacity as receiver
for a covered financial company.
(m) Liquidation of Certain Covered Financial Companies or Bridge
Financial Companies.--
(1) In <<NOTE: Applicability.>> general.--Except as
specifically provided in this section, and notwithstanding any
other provision of law, the Corporation, in connection with the
liquidation of any covered financial company or bridge financial
company with respect to which the Corporation has been appointed
as receiver, shall--
(A) in the case of any covered financial company or
bridge financial company that is a stockbroker, but is
not a member of the Securities Investor Protection
Corporation, apply the provisions of subchapter III of
chapter 7 of the Bankruptcy Code, in respect of the
distribution to any customer of all customer name
security and customer property and member property, as
if such covered financial company or bridge financial
company were a debtor for purposes of such subchapter;
or
(B) in the case of any covered financial company or
bridge financial company that is a commodity broker,
apply the provisions of subchapter IV of chapter 7 the
Bankruptcy Code, in respect of the distribution to any
customer of all customer property and member property,
as if such covered financial company or bridge financial
company were a debtor for purposes of such subchapter.
(2) Definitions.--For purposes of this subsection--
[[Page 124 STAT. 1506]]
(A) the terms ``customer'', ``customer name
security'', and ``customer property and member
property'' have the same meanings as in sections 741 and
761 of title 11, United States Code; and
(B) the terms ``commodity broker'' and
``stockbroker'' have the same meanings as in section 101
of the Bankruptcy Code.
(n) Orderly Liquidation Fund.--
(1) Establishment.--There is established in the Treasury of
the United States a separate fund to be known as the ``Orderly
Liquidation Fund'', which shall be available to the Corporation
to carry out the authorities contained in this title, for the
cost of actions authorized by this title, including the orderly
liquidation of covered financial companies, payment of
administrative expenses, the payment of principal and interest
by the Corporation on obligations issued under paragraph (5),
and the exercise of the authorities of the Corporation under
this title.
(2) Proceeds.--Amounts received by the Corporation,
including assessments received under subsection (o), proceeds of
obligations issued under paragraph (5), interest and other
earnings from investments, and repayments to the Corporation by
covered financial companies, shall be deposited into the Fund.
(3) Management.--The Corporation shall manage the Fund in
accordance with this subsection and the policies and procedures
established under section 203(d).
(4) Investments.--At the request of the Corporation, the
Secretary may invest such portion of amounts held in the Fund
that are not, in the judgment of the Corporation, required to
meet the current needs of the Corporation, in obligations of the
United States having suitable maturities, as determined by the
Corporation. The interest on and the proceeds from the sale or
redemption of such obligations shall be credited to the Fund.
(5) Authority to issue obligations.--
(A) Corporation authorized to issue obligations.--
Upon appointment by the Secretary of the Corporation as
receiver for a covered financial company, the
Corporation is authorized to issue obligations to the
Secretary.
(B) Secretary authorized to purchase obligations.--
The Secretary may, under such terms and conditions as
the Secretary may require, purchase or agree to purchase
any obligations issued under subparagraph (A), and for
such purpose, the Secretary is authorized to use as a
public debt transaction the proceeds of the sale of any
securities issued under chapter 31 of title 31, United
States Code, and the purposes for which securities may
be issued under chapter 31 of title 31, United States
Code, are extended to include such purchases.
(C) Interest rate.--Each purchase of obligations by
the Secretary under this paragraph shall be upon such
terms and conditions as to yield a return at a rate
determined by the Secretary, taking into consideration
the current average yield on outstanding marketable
obligations of the United States of comparable maturity,
plus an
[[Page 124 STAT. 1507]]
interest rate surcharge to be determined by the
Secretary, which shall be greater than the difference
between--
(i) the current average rate on an index of
corporate obligations of comparable maturity; and
(ii) the current average rate on outstanding
marketable obligations of the United States of
comparable maturity.
(D) Secretary authorized to sell obligations.--The
Secretary may <<NOTE: Determination.>> sell, upon such
terms and conditions as the Secretary shall determine,
any of the obligations acquired under this paragraph.
(E) Public debt transactions.--All purchases and
sales by the Secretary of such obligations under this
paragraph shall be treated as public debt transactions
of the United States, and the proceeds from the sale of
any obligations acquired by the Secretary under this
paragraph shall be deposited into the Treasury of the
United States as miscellaneous receipts.
(6) Maximum obligation limitation.--The Corporation may not,
in connection with the orderly liquidation of a covered
financial company, issue or incur any obligation, if, after
issuing or incurring the obligation, the aggregate amount of
such obligations outstanding under this subsection for each
covered financial company would exceed--
(A) an amount that is equal to 10 percent of the
total consolidated assets of the covered financial
company, based on the most recent financial statement
available, during the 30-day period immediately
following the date of appointment of the Corporation as
receiver (or a shorter time period if the Corporation
has calculated the amount described under subparagraph
(B)); and
(B) the amount that is equal to 90 percent of the
fair value of the total consolidated assets of each
covered financial company that are available for
repayment, after the time period described in
subparagraph (A).
(7) Rulemaking.--The Corporation and the Secretary shall
jointly, in consultation with the Council, prescribe regulations
governing the calculation of the maximum obligation limitation
defined in this paragraph.
(8) Rule of construction.--
(A) In general.--Nothing in this section shall be
construed to affect the authority of the Corporation
under subsection (a) or (b) of section 14 or section
15(c)(5) of the Federal Deposit Insurance Act (12 U.S.C.
1824, 1825(c)(5)), the management of the Deposit
Insurance Fund by the Corporation, or the resolution of
insured depository institutions, provided that--
(i) the authorities of the Corporation
contained in this title shall not be used to
assist the Deposit Insurance Fund or to assist any
financial company under applicable law other than
this Act;
(ii) the authorities of the Corporation
relating to the Deposit Insurance Fund, or any
other responsibilities of the Corporation under
applicable law other than this title, shall not be
used to assist a covered financial company
pursuant to this title; and
[[Page 124 STAT. 1508]]
(iii) the Deposit Insurance Fund may not be
used in any manner to otherwise circumvent the
purposes of this title.
(B) Valuation.--For purposes of determining the
amount of obligations under this subsection--
(i) the Corporation shall include as an
obligation any contingent liability of the
Corporation pursuant to this title; and
(ii) the Corporation shall value any
contingent liability at its expected cost to the
Corporation.
(9) Orderly liquidation and repayment plans.--
(A) Orderly liquidation plan.--Amounts in the Fund
shall be available to the Corporation with regard to a
covered financial company for which the Corporation is
appointed receiver after the Corporation has developed
an orderly liquidation plan that is acceptable to the
Secretary with regard to such covered financial company,
including the provision and use of funds, including
taking any actions specified under section 204(d) and
subsection (h)(2)(G)(iv) and (h)(9) of this section, and
payments to third parties. The orderly liquidation plan
shall take into account actions to avoid or mitigate
potential adverse effects on low income, minority, or
underserved communities affected by the failure of the
covered financial company, and shall provide for
coordination with the primary financial regulatory
agencies, as appropriate, to ensure that such actions
are taken. The Corporation may, at any time, amend any
orderly liquidation plan approved by the Secretary with
the concurrence of the Secretary.
(B) Mandatory repayment plan.--
(i) In general.--
No <<NOTE: Contracts.>> amount authorized under
paragraph (6)(B) may be provided by the Secretary
to the Corporation under paragraph (5), unless an
agreement is in effect between the Secretary and
the Corporation that--
(I) provides a specific plan and
schedule to achieve the repayment of the
outstanding amount of any borrowing
under paragraph (5); and
(II) demonstrates that income to the
Corporation from the liquidated assets
of the covered financial company and
assessments under subsection (o) will be
sufficient to amortize the outstanding
balance within the period established in
the repayment schedule and pay the
interest accruing on such balance within
the time provided in subsection
(o)(1)(B).
(ii) Consultation with and report to
congress.--The Secretary and the Corporation
shall--
(I) consult with the Committee on
Banking, Housing, and Urban Affairs of
the Senate and the Committee on
Financial Services of the House of
Representatives on the terms of any
repayment schedule agreement; and
(II) submit <<NOTE: Records. Time
period.>> a copy of the repayment
schedule agreement to the Committees
described in subclause (I) before the
end of the 30-day period beginning on
the date on which any amount is provided
[[Page 124 STAT. 1509]]
by the Secretary to the Corporation
under paragraph (5).
(10) Implementation expenses.--
(A) In general.--Reasonable implementation expenses
of the Corporation incurred after the date of enactment
of this Act shall be treated as expenses of the Council.
(B) Requests for reimbursement.--The Corporation
shall periodically submit a request for reimbursement
for implementation expenses to the Chairperson of the
Council, who shall arrange for prompt reimbursement to
the Corporation of reasonable implementation expenses.
(C) Definition.--As used in this paragraph, the term
``implementation expenses''--
(i) means costs incurred by the Corporation
beginning on the date of enactment of this Act, as
part of its efforts to implement this title that
do not relate to a particular covered financial
company; and
(ii) includes the costs incurred in connection
with the development of policies, procedures,
rules, and regulations and other planning
activities of the Corporation consistent with
carrying out this title.
(o) Assessments.--
(1) Risk-based assessments.--
(A) Eligible financial companies defined.--For
purposes of this subsection, the term ``eligible
financial company'' means any bank holding company with
total consolidated assets equal to or greater than
$50,000,000,000 and any nonbank financial company
supervised by the Board of Governors.
(B) Assessments.--
The <<NOTE: Deadline.>> Corporation shall charge one or
more risk-based assessments in accordance with the
provisions of subparagraph (D), if such assessments are
necessary to pay in full the obligations issued by the
Corporation to the Secretary under this title within 60
months of the date of issuance of such obligations.
(C) Extensions authorized.--The Corporation may,
with the approval of the Secretary, extend the time
period under subparagraph (B), if the Corporation
determines that an extension is necessary to avoid a
serious adverse effect on the financial system of the
United States.
(D) Application of assessments.--To meet the
requirements of subparagraph (B), the Corporation
shall--
(i) impose assessments, as soon as
practicable, on any claimant that received
additional payments or amounts from the
Corporation pursuant to subsection (b)(4), (d)(4),
or (h)(5)(E), except for payments or amounts
necessary to initiate and continue operations
essential to implementation of the receivership or
any bridge financial company, to recover on a
cumulative basis, the entire difference between--
(I) the aggregate value the claimant
received from the Corporation on a claim
pursuant to this title (including
pursuant to subsection (b)(4), (d)(4),
and (h)(5)(E)), as of the date on which
such value was received; and
(II) the value the claimant was
entitled to receive from the Corporation
on such claim solely
[[Page 124 STAT. 1510]]
from the proceeds of the liquidation of
the covered financial company under this
title; and
(ii) if the amounts to be recovered on a
cumulative basis under clause (i) are insufficient
to meet the requirements of subparagraph (B),
after taking into account the considerations set
forth in paragraph (4), impose assessments on--
(I) eligible financial companies;
and
(II) financial companies with total
consolidated assets equal to or greater
than $50,000,000,000 that are not
eligible financial companies.
(E) Provision of financing.--Payments or amounts
necessary to initiate and continue operations essential
to implementation of the receivership or any bridge
financial company described in subparagraph (D)(i) shall
not include the provision of financing, as defined by
rule of the Corporation, to third parties.
(2) Graduated assessment rate.--The Corporation shall impose
assessments on a graduated basis, with financial companies
having greater assets and risk being assessed at a higher rate.
(3) Notification and payment.--The Corporation shall notify
each financial company of that company's assessment under this
subsection. Any financial company subject to assessment under
this subsection shall pay such assessment in accordance with the
regulations prescribed pursuant to paragraph (6).
(4) Risk-based assessment considerations.--
In <<NOTE: Recommenda- tion.>> imposing assessments under
paragraph (1)(D)(ii), the Corporation shall use a risk matrix.
The Council shall make a recommendation to the Corporation on
the risk matrix to be used in imposing such assessments, and the
Corporation shall take into account any such recommendation in
the establishment of the risk matrix to be used to impose such
assessments. In recommending or establishing such risk matrix,
the Council and the Corporation, respectively, shall take into
account--
(A) economic conditions generally affecting
financial companies so as to allow assessments to
increase during more favorable economic conditions and
to decrease during less favorable economic conditions;
(B) any assessments imposed on a financial company
or an affiliate of a financial company that--
(i) is an insured depository institution,
assessed pursuant to section 7 or 13(c)(4)(G) of
the Federal Deposit Insurance Act;
(ii) is a member of the Securities Investor
Protection Corporation, assessed pursuant to
section 4 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78ddd);
(iii) is an insured credit union, assessed
pursuant to section 202(c)(1)(A)(i) of the Federal
Credit Union Act (12 U.S.C. 1782(c)(1)(A)(i)); or
(iv) is an insurance company, assessed
pursuant to applicable State law to cover (or
reimburse payments made to cover) the costs of the
rehabilitation, liquidation, or other State
insolvency proceeding with respect to 1 or more
insurance companies;
[[Page 124 STAT. 1511]]
(C) the risks presented by the financial company to
the financial system and the extent to which the
financial company has benefitted, or likely would
benefit, from the orderly liquidation of a financial
company under this title, including--
(i) the amount, different categories, and
concentrations of assets of the financial company
and its affiliates, including both on-balance
sheet and off-balance sheet assets;
(ii) the activities of the financial company
and its affiliates;
(iii) the relevant market share of the
financial company and its affiliates;
(iv) the extent to which the financial company
is leveraged;
(v) the potential exposure to sudden calls on
liquidity precipitated by economic distress;
(vi) the amount, maturity, volatility, and
stability of the company's financial obligations
to, and relationship with, other financial
companies;
(vii) the amount, maturity, volatility, and
stability of the liabilities of the company,
including the degree of reliance on short-term
funding, taking into consideration existing
systems for measuring a company's risk-based
capital;
(viii) the stability and variety of the
company's sources of funding;
(ix) the company's importance as a source of
credit for households, businesses, and State and
local governments and as a source of liquidity for
the financial system;
(x) the extent to which assets are simply
managed and not owned by the financial company and
the extent to which ownership of assets under
management is diffuse; and
(xi) the amount, different categories, and
concentrations of liabilities, both insured and
uninsured, contingent and noncontingent, including
both on-balance sheet and off-balance sheet
liabilities, of the financial company and its
affiliates;
(D) any risks presented by the financial company
during the 10-year period immediately prior to the
appointment of the Corporation as receiver for the
covered financial company that contributed to the
failure of the covered financial company; and
(E) such other risk-related factors as the
Corporation, or the Council, as applicable, may
determine to be appropriate.
(5) Collection of information.--The Corporation may impose
on covered financial companies such collection of information
requirements as the Corporation deems necessary to carry out
this subsection after the appointment of the Corporation as
receiver under this title.
(6) Rulemaking.--
(A) In general.--
The <<NOTE: Consultation.>> Corporation shall prescribe
regulations to carry out this subsection. The
Corporation shall
[[Page 124 STAT. 1512]]
consult with the Secretary in the development and
finalization of such regulations.
(B) Equitable treatment.--The regulations prescribed
under subparagraph (A) shall take into account the
differences in risks posed to the financial stability of
the United States by financial companies, the
differences in the liability structures of financial
companies, and the different bases for other assessments
that such financial companies may be required to pay, to
ensure that assessed financial companies are treated
equitably and that assessments under this subsection
reflect such differences.
(p) Unenforceability of Certain Agreements.--
(1) In general.--No provision described in paragraph (2)
shall be enforceable against or impose any liability on any
person, as such enforcement or liability shall be contrary to
public policy.
(2) Prohibited provisions.--A provision described in this
paragraph is any term contained in any existing or future
standstill, confidentiality, or other agreement that, directly
or indirectly--
(A) affects, restricts, or limits the ability of any
person to offer to acquire or acquire;
(B) prohibits any person from offering to acquire or
acquiring; or
(C) prohibits any person from using any previously
disclosed information in connection with any such offer
to acquire or acquisition of,
all or part of any covered financial company, including any
liabilities, assets, or interest therein, in connection with any
transaction in which the Corporation exercises its authority
under this title.
(q) Other Exemptions.--
(1) In general.--When acting as a receiver under this
title--
(A) the Corporation, including its franchise, its
capital, reserves and surplus, and its income, shall be
exempt from all taxation imposed by any State, county,
municipality, or local taxing authority, except that any
real property of the Corporation shall be subject to
State, territorial, county, municipal, or local taxation
to the same extent according to its value as other real
property is taxed, except that, notwithstanding the
failure of any person to challenge an assessment under
State law of the value of such property, such value, and
the tax thereon, shall be determined as of the period
for which such tax is imposed;
(B) no property of the Corporation shall be subject
to levy, attachment, garnishment, foreclosure, or sale
without the consent of the Corporation, nor shall any
involuntary lien attach to the property of the
Corporation; and
(C) the Corporation shall not be liable for any
amounts in the nature of penalties or fines, including
those arising from the failure of any person to pay any
real property, personal property, probate, or recording
tax or any recording or filing fees when due; and
(D) the Corporation shall be exempt from all
prosecution by the United States or any State, county,
municipality, or local authority for any criminal
offense arising
[[Page 124 STAT. 1513]]
under Federal, State, county, municipal, or local law,
which was allegedly committed by the covered financial
company, or persons acting on behalf of the covered
financial company, prior to the appointment of the
Corporation as receiver.
(2) Limitation.--Paragraph (1) shall not apply with respect
to any tax imposed (or other amount arising) under the Internal
Revenue Code of 1986.
(r) Certain Sales of Assets Prohibited.--
(1) Persons who engaged in improper conduct with, or caused
losses to, covered <<NOTE: Regulations.>> financial companies.--
The Corporation shall prescribe regulations which, at a minimum,
shall prohibit the sale of assets of a covered financial company
by the Corporation to--
(A) any person who--
(i) has defaulted, or was a member of a
partnership or an officer or director of a
corporation that has defaulted, on 1 or more
obligations, the aggregate amount of which exceeds
$1,000,000, to such covered financial company;
(ii) has been found to have engaged in
fraudulent activity in connection with any
obligation referred to in clause (i); and
(iii) proposes to purchase any such asset in
whole or in part through the use of the proceeds
of a loan or advance of credit from the
Corporation or from any covered financial company;
(B) any person who participated, as an officer or
director of such covered financial company or of any
affiliate of such company, in a material way in any
transaction that resulted in a substantial loss to such
covered financial company; or
(C) any person who has demonstrated a pattern or
practice of defalcation regarding obligations to such
covered financial company.
(2) Convicted debtors.--Except as provided in paragraph (3),
a person may not purchase any asset of such institution from the
receiver, if that person--
(A) has been convicted of an offense under section
215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341,
1343, or 1344 of title 18, United States Code, or of
conspiring to commit such an offense, affecting any
covered financial company; and
(B) is in default on any loan or other extension of
credit from such covered financial company which, if not
paid, will cause substantial loss to the Fund or the
Corporation.
(3) Settlement of claims.--Paragraphs (1) and (2) shall not
apply to the sale or transfer by the Corporation of any asset of
any covered financial company to any person, if the sale or
transfer of the asset resolves or settles, or is part of the
resolution or settlement, of 1 or more claims that have been, or
could have been, asserted by the Corporation against the person.
(4) Definition of default.--For purposes of this subsection,
the term ``default'' means a failure to comply with
[[Page 124 STAT. 1514]]
the terms of a loan or other obligation to such an extent that
the property securing the obligation is foreclosed upon.
(s) Recoupment of Compensation From Senior Executives and
Directors.--
(1) In general.--The Corporation, as receiver of a covered
financial company, may recover from any current or former senior
executive or director substantially responsible for the failed
condition of the covered financial company any compensation
received during the 2-year period preceding the date on which
the Corporation was appointed as the receiver of the covered
financial company, except that, in the case of fraud, no time
limit shall apply.
(2) Cost considerations.--In seeking to recover any such
compensation, the Corporation shall weigh the financial and
deterrent benefits of such recovery against the cost of
executing the recovery.
(3) Rulemaking.--The Corporation shall promulgate
regulations to implement the requirements of this subsection,
including defining the term ``compensation'' to mean any
financial remuneration, including salary, bonuses, incentives,
benefits, severance, deferred compensation, or golden parachute
benefits, and any profits realized from the sale of the
securities of the covered financial company.
SEC. 211. <<NOTE: 12 USC 5391.>> MISCELLANEOUS PROVISIONS.
(a) Clarification of Prohibition Regarding Concealment of Assets
From Receiver or Liquidating Agent.--Section 1032(1) of title 18, United
States Code, is amended by inserting ``the Federal Deposit Insurance
Corporation acting as receiver for a covered financial company, in
accordance with title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act,'' before ``or the National Credit''.
(b) Conforming Amendment.--Section 1032 of title 18, United States
Code, is amended in the section heading, by striking ``of financial
institution''.
(c) Federal Deposit Insurance Corporation Improvement Act of 1991.--
Section 403(a) of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting ``section 210(c)
of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
section 1367 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4617(d)),'' after ``section 11(e) of
the Federal Deposit Insurance Act,''.
(d) FDIC Inspector General Reviews.--
(1) Scope.--The <<NOTE: Audits. Investigations.>> Inspector
General of the Corporation shall conduct, supervise, and
coordinate audits and investigations of the liquidation of any
covered financial company by the Corporation as receiver under
this title, including collecting and summarizing--
(A) a description of actions taken by the
Corporation as receiver;
(B) a description of any material sales, transfers,
mergers, obligations, purchases, and other material
transactions entered into by the Corporation;
(C) an evaluation of the adequacy of the policies
and procedures of the Corporation under section 203(d)
and orderly liquidation plan under section 210(n)(14);
[[Page 124 STAT. 1515]]
(D) an evaluation of the utilization by the
Corporation of the private sector in carrying out its
functions, including the adequacy of any conflict-of-
interest reviews; and
(E) an evaluation of the overall performance of the
Corporation in liquidating the covered financial
company, including administrative costs, timeliness of
liquidation process, and impact on the financial system.
(2) Frequency.--Not <<NOTE: Deadlines.>> later than 6 months
after the date of appointment of the Corporation as receiver
under this title and every 6 months thereafter, the Inspector
General of the Corporation shall conduct the audit and
investigation described in paragraph (1).
(3) Reports and testimony.--The Inspector General of the
Corporation shall include in the semiannual reports required by
section 5(a) of the Inspector General Act of 1978 (5 U.S.C.
App.), a summary of the findings and evaluations under paragraph
(1), and shall appear before the appropriate committees of
Congress, if requested, to present each such report.
(4) Funding.--
(A) Initial funding.--The expenses of the Inspector
General of the Corporation in carrying out this
subsection shall be considered administrative expenses
of the receivership.
(B) Additional funding.--If the maximum amount
available to the Corporation as receiver under this
title is insufficient to enable the Inspector General of
the Corporation to carry out the duties under this
subsection, the Corporation shall pay such additional
amounts from assessments imposed under section 210.
(5) Termination of responsibilities.--The duties and
responsibilities of the Inspector General of the Corporation
under this subsection shall terminate 1 year after the date of
termination of the receivership under this title.
(e) Treasury Inspector General Reviews.--
(1) Scope.--The <<NOTE: Audits. Investigations.>> Inspector
General of the Department of the Treasury shall conduct,
supervise, and coordinate audits and investigations of actions
taken by the Secretary related to the liquidation of any covered
financial company under this title, including collecting and
summarizing--
(A) a description of actions taken by the Secretary
under this title;
(B) an analysis of the approval by the Secretary of
the policies and procedures of the Corporation under
section 203 and acceptance of the orderly liquidation
plan of the Corporation under section 210; and
(C) an assessment of the terms and conditions
underlying the purchase by the Secretary of obligations
of the Corporation under section 210.
(2) Frequency.--Not <<NOTE: Deadlines.>> later than 6 months
after the date of appointment of the Corporation as receiver
under this title and every 6 months thereafter, the Inspector
General of the Department of the Treasury shall conduct the
audit and investigation described in paragraph (1).
(3) Reports and testimony.--The Inspector General of the
Department of the Treasury shall include in the semiannual
reports required by section 5(a) of the Inspector General Act
[[Page 124 STAT. 1516]]
of 1978 (5 U.S.C. App.), a summary of the findings and
assessments under paragraph (1), and shall appear before the
appropriate committees of Congress, if requested, to present
each such report.
(4) Termination of responsibilities.--The duties and
responsibilities of the Inspector General of the Department of
the Treasury under this subsection shall terminate 1 year after
the date on which the obligations purchased by the Secretary
from the Corporation under section 210 are fully redeemed.
(f) Primary Financial Regulatory Agency Inspector General Reviews.--
(1) Scope.--Upon <<NOTE: Reports.>> the appointment of the
Corporation as receiver for a covered financial company
supervised by a Federal primary financial regulatory agency or
the Board of Governors under section 165, the Inspector General
of the agency or the Board of Governors shall make a written
report reviewing the supervision by the agency or the Board of
Governors of the covered financial company, which shall--
(A) <<NOTE: Evaluation.>> evaluate the effectiveness
of the agency or the Board of Governors in carrying out
its supervisory responsibilities with respect to the
covered financial company;
(B) identify any acts or omissions on the part of
agency or Board of Governors officials that contributed
to the covered financial company being in default or in
danger of default;
(C) identify any actions that could have been taken
by the agency or the Board of Governors that would have
prevented the company from being in default or in danger
of default; and
(D) <<NOTE: Recommenda- tion.>> recommend
appropriate administrative or legislative action.
(2) Reports and testimony.--Not later than 1 year after the
date of appointment of the Corporation as receiver under this
title, the Inspector General of the Federal primary financial
regulatory agency or the Board of Governors shall provide the
report required by paragraph (1) to such agency or the Board of
Governors, and along with such agency or the Board of Governors,
as applicable, shall appear before the appropriate committees of
Congress, if requested, to present the report required by
paragraph (1). Not later than 90 days after the date of receipt
of the report required by paragraph (1), such agency or the
Board of Governors, as applicable, shall provide a written
report to Congress describing any actions taken in response to
the recommendations in the report, and if no such actions were
taken, describing the reasons why no actions were taken.
SEC. 212. <<NOTE: 12 USC 5392.>> PROHIBITION OF CIRCUMVENTION AND
PREVENTION OF CONFLICTS OF INTEREST.
(a) No Other Funding.--Funds for the orderly liquidation of any
covered financial company under this title shall only be provided as
specified under this title.
(b) Limit on Governmental Actions.--No governmental entity may take
any action to circumvent the purposes of this title.
[[Page 124 STAT. 1517]]
(c) Conflict of Interest.--In the event that the Corporation is
appointed receiver for more than 1 covered financial company or is
appointed receiver for a covered financial company and receiver for any
insured depository institution that is an affiliate of such covered
financial company, the Corporation shall take appropriate action, as
necessary to avoid any conflicts of interest that may arise in
connection with multiple receiverships.
SEC. 213. <<NOTE: 12 USC 5393.>> BAN ON CERTAIN ACTIVITIES BY
SENIOR EXECUTIVES AND DIRECTORS.
(a) Prohibition Authority.--The Board of Governors or, if the
covered financial company was not supervised by the Board of Governors,
the Corporation, may exercise the authority provided by this section.
(b) Authority To Issue Order.--The appropriate agency described in
subsection (a) may take any action authorized by subsection (c), if the
agency determines that--
(1) a senior executive or a director of the covered
financial company, prior to the appointment of the Corporation
as receiver, has, directly or indirectly--
(A) violated--
(i) any law or regulation;
(ii) any cease-and-desist order which has
become final;
(iii) any condition imposed in writing by a
Federal agency in connection with any action on
any application, notice, or request by such
company or senior executive; or
(iv) any written agreement between such
company and such agency;
(B) engaged or participated in any unsafe or unsound
practice in connection with any financial company; or
(C) committed or engaged in any act, omission, or
practice which constitutes a breach of the fiduciary
duty of such senior executive or director;
(2) by reason of the violation, practice, or breach
described in any subparagraph of paragraph (1), such senior
executive or director has received financial gain or other
benefit by reason of such violation, practice, or breach and
such violation, practice, or breach contributed to the failure
of the company; and
(3) such violation, practice, or breach--
(A) involves personal dishonesty on the part of such
senior executive or director; or
(B) demonstrates willful or continuing disregard by
such senior executive or director for the safety or
soundness of such company.
(c) Authorized Actions.--
(1) In general.--The <<NOTE: Notice. Time
period.>> appropriate agency for a financial company, as
described in subsection (a), may serve upon a senior executive
or director described in subsection (b) a written notice of the
intention of the agency to prohibit any further participation by
such person, in any manner, in the conduct of the affairs of any
financial company for a period of time determined by the
appropriate agency to be commensurate with such violation,
practice, or breach, provided such period shall be not less than
2 years.
[[Page 124 STAT. 1518]]
(2) Procedures.--The <<NOTE: Applicability.>> due process
requirements and other procedures under section 8(e) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(e)) shall apply to
actions under this section as if the covered financial company
were an insured depository institution and the senior executive
or director were an institution-affiliated party, as those terms
are defined in that Act.
(d) Regulations.--The Corporation and the Board of Governors, in
consultation with the Council, shall jointly prescribe rules or
regulations to administer and carry out this section, including rules,
regulations, or guidelines to further define the term senior executive
for the purposes of this section.
SEC. 214. <<NOTE: 12 USC 5394.>> PROHIBITION ON TAXPAYER FUNDING.
(a) Liquidation Required.--All financial companies put into
receivership under this title shall be liquidated. No taxpayer funds
shall be used to prevent the liquidation of any financial company under
this title.
(b) Recovery of Funds.--All funds expended in the liquidation of a
financial company under this title shall be recovered from the
disposition of assets of such financial company, or shall be the
responsibility of the financial sector, through assessments.
(c) No Losses to Taxpayers.--Taxpayers shall bear no losses from the
exercise of any authority under this title.
SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS.
(a) Study Required.--The Council shall conduct a study evaluating
the importance of maximizing United States taxpayer protections and
promoting market discipline with respect to the treatment of fully
secured creditors in the utilization of the orderly liquidation
authority authorized by this Act. In carrying out such study, the
Council shall--
(1) not be prejudicial to current or past laws or
regulations with respect to secured creditor treatment in a
resolution process;
(2) study the similarities and differences between the
resolution mechanisms authorized by the Bankruptcy Code, the
Federal Deposit Insurance Corporation Improvement Act of 1991,
and the orderly liquidation authority authorized by this Act;
(3) determine how various secured creditors are treated in
such resolution mechanisms and examine how a haircut (of various
degrees) on secured creditors could improve market discipline
and protect taxpayers;
(4) compare the benefits and dynamics of prudent lending
practices by depository institutions in secured loans for
consumers and small businesses to the lending practices of
secured creditors to large, interconnected financial firms;
(5) consider whether credit differs according to different
types of collateral and different terms and timing of the
extension of credit; amd
(6) include an examination of stakeholders who were
unsecured or under-collateralized and seek collateral when a
firm is failing, and the impact that such behavior has on
financial stability and an orderly resolution that protects
taxpayers if the firm fails.
(b) Report.--Not later than the end of the 1-year period beginning
on the date of enactment of this Act, the Council shall issue a report
to the Congress containing all findings and conclusions
[[Page 124 STAT. 1519]]
made by the Council in carrying out the study required under subsection
(a).
SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINANCIAL AND NONBANK
FINANCIAL INSTITUTIONS.
(a) Study.--
(1) In general.--Upon enactment of this Act, the Board of
Governors, in consultation with the Administrative Office of the
United States Courts, shall conduct a study regarding the
resolution of financial companies under the Bankruptcy Code,
under chapter 7 or 11 thereof .
(2) Issues to be studied.--Issues to be studied under this
section include--
(A) the effectiveness of chapter 7 and chapter 11 of
the Bankruptcy Code in facilitating the orderly
resolution or reorganization of systemic financial
companies;
(B) whether a special financial resolution court or
panel of special masters or judges should be established
to oversee cases involving financial companies to
provide for the resolution of such companies under the
Bankruptcy Code, in a manner that minimizes adverse
impacts on financial markets without creating moral
hazard;
(C) whether amendments to the Bankruptcy Code should
be adopted to enhance the ability of the Code to resolve
financial companies in a manner that minimizes adverse
impacts on financial markets without creating moral
hazard;
(D) whether amendments should be made to the
Bankruptcy Code, the Federal Deposit Insurance Act, and
other insolvency laws to address the manner in which
qualified financial contracts of financial companies are
treated; and
(E) the implications, challenges, and benefits to
creating a new chapter or subchapter of the Bankruptcy
Code to deal with financial companies.
(b) Reports to Congress.--Not later than 1 year after the date of
enactment of this Act, and in each successive year until the fifth year
after the date of enactment of this Act, the Administrative Office of
the United States courts shall submit to the Committees on Banking,
Housing, and Urban Affairs and the Judiciary of the Senate and the
Committees on Financial Services and the Judiciary of the House of
Representatives a report summarizing the results of the study conducted
under subsection (a).
SEC. 217. STUDY ON INTERNATIONAL COORDINATION RELATING TO
BANKRUPTCY PROCESS FOR NONBANK FINANCIAL
INSTITUTIONS.
(a) Study.--
(1) In general.--The Board of Governors, in consultation
with the Administrative Office of the United States Courts,
shall conduct a study regarding international coordination
relating to the resolution of systemic financial companies under
the United States Bankruptcy Code and applicable foreign law.
(2) Issues to be studied.--With respect to the bankruptcy
process for financial companies, issues to be studied under this
section include--
(A) the extent to which international coordination
currently exists;
[[Page 124 STAT. 1520]]
(B) current mechanisms and structures for
facilitating international cooperation;
(C) barriers to effective international
coordination; and
(D) ways to increase and make more effective
international coordination of the resolution of
financial companies, so as to minimize the impact on the
financial system without creating moral hazard.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Administrative office of the United States
Courts shall submit to the Committees on Banking, Housing, and Urban
Affairs and the Judiciary of the Senate and the Committees on Financial
Services and the Judiciary of the House of Representatives a report
summarizing the results of the study conducted under subsection (a).
TITLE III--TRANSFER <<NOTE: Enhancing Financial Institution Safety and
Soundness Act of 2010.>> OF POWERS TO THE COMPTROLLER OF THE CURRENCY,
THE CORPORATION, AND THE BOARD OF GOVERNORS
SEC. 300. <<NOTE: 12 USC 5301 note.>> SHORT TITLE.
This title may be cited as the ``Enhancing Financial Institution
Safety and Soundness Act of 2010''.
SEC. 301. <<NOTE: 12 USC 5401.>> PURPOSES.
The purposes of this title are--
(1) to provide for the safe and sound operation of the
banking system of the United States;
(2) to preserve and protect the dual system of Federal and
State-chartered depository institutions;
(3) to ensure the fair and appropriate supervision of each
depository institution, regardless of the size or type of
charter of the depository institution; and
(4) to streamline and rationalize the supervision of
depository institutions and the holding companies of depository
institutions.
SEC. 302. <<NOTE: 12 USC 5402.>> DEFINITION.
In this title, the term ``transferred employee'' means, as the
context requires, an employee transferred to the Office of the
Comptroller of the Currency or the Corporation under section 322.
Subtitle A--Transfer of Powers and Duties
SEC. 311. <<NOTE: 12 USC 5411.>> TRANSFER DATE.
(a) Transfer Date.--Except <<NOTE: Definition.>> as provided in
subsection (b), the term ``transfer date'' means the date that is 1 year
after the date of enactment of this Act.
(b) Extension Permitted.--
(1) Notice required.--The <<NOTE: Deadline.>> Secretary, in
consultation with the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the Chairman of the Board
of Governors, and the Chairperson of the Corporation, may extend
the period under subsection (a) and designate a transfer date
that is
[[Page 124 STAT. 1521]]
not later than 18 months after the date of enactment of this
Act, if the Secretary transmits to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives--
(A) a written determination that commencement of the
orderly process to implement this title is not feasible
by the date that is 1 year after the date of enactment
of this Act;
(B) an explanation of why an extension is necessary
to commence the process of orderly implementation of
this title;
(C) the transfer date designated under this
subsection; and
(D) a description of the steps that will be taken to
initiate the process of an orderly and timely
implementation of this title within the extended time
period.
(2) Publication of notice.--Not <<NOTE: Deadline. Federal
Register, publication.>> later than 270 days after the date of
enactment of this Act, the Secretary shall publish in the
Federal Register notice of any transfer date designated under
paragraph (1).
SEC. 312. <<NOTE: 12 USC 5412.>> POWERS AND DUTIES TRANSFERRED.
(a) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
(b) Functions of the Office of Thrift Supervision.--
(1) Savings and loan holding company functions
transferred.--
(A) Transfer of functions.--There are transferred to
the Board of Governors all functions of the Office of
Thrift Supervision and the Director of the Office of
Thrift Supervision (including the authority to issue
orders) relating to--
(i) the supervision of--
(I) any savings and loan holding
company; and
(II) any subsidiary (other than a
depository institution) of a savings and
loan holding company; and
(ii) all rulemaking authority of the Office of
Thrift Supervision and the Director of the Office
of Thrift Supervision relating to savings and loan
holding companies.
(B) Powers, authorities, rights, and duties.--The
Board of Governors shall succeed to all powers,
authorities, rights, and duties that were vested in the
Office of Thrift Supervision and the Director of the
Office of Thrift Supervision on the day before the
transfer date relating to the functions and authority
transferred under subparagraph (A).
(2) All other functions transferred.--
(A) Board of governors.--All rulemaking authority of
the Office of Thrift Supervision and the Director of the
Office of Thrift Supervision under section 11 of the
Home Owners' Loan Act (12 U.S.C. 1468) relating to
transactions with affiliates and extensions of credit to
executive officers, directors, and principal
shareholders and under section 5(q) of such Act relating
to tying arrangements is transferred to the Board of
Governors.
[[Page 124 STAT. 1522]]
(B) Comptroller of the currency.--Except as provided
in paragraph (1) and subparagraph (A)--
(i) there are transferred to the Office of the
Comptroller of the Currency and the Comptroller of
the Currency--
(I) all functions of the Office of
Thrift Supervision and the Director of
the Office of Thrift Supervision,
respectively, relating to Federal
savings associations; and
(II) all rulemaking authority of the
Office of Thrift Supervision and the
Director of the Office of Thrift
Supervision, respectively, relating to
savings associations; and
(ii) the Office of the Comptroller of the
Currency and the Comptroller of the Currency shall
succeed to all powers, authorities, rights, and
duties that were vested in the Office of Thrift
Supervision and the Director of the Office of
Thrift Supervision, respectively, on the day
before the transfer date relating to the functions
and authority transferred under clause (i).
(C) Corporation.--Except as provided in paragraph
(1) and subparagraphs (A) and (B)--
(i) all functions of the Office of Thrift
Supervision and the Director of the Office of
Thrift Supervision relating to State savings
associations are transferred to the Corporation;
and
(ii) the Corporation shall succeed to all
powers, authorities, rights, and duties that were
vested in the Office of Thrift Supervision and the
Director of the Office of Thrift Supervision on
the day before the transfer date relating to the
functions transferred under clause (i).
(c) Conforming Amendments.--Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) is amended--
(1) in subsection (q), by striking paragraphs (1) through
(4) and inserting the following:
``(1) the Office of the Comptroller of the Currency, in the
case of--
``(A) any national banking association;
``(B) any Federal branch or agency of a foreign
bank; and
``(C) any Federal savings association;
``(2) the Federal Deposit Insurance Corporation, in the case
of--
``(A) any State nonmember insured bank;
``(B) any foreign bank having an insured branch; and
``(C) any State savings association;
``(3) the Board of Governors of the Federal Reserve System,
in the case of--
``(A) any State member bank;
``(B) any branch or agency of a foreign bank with
respect to any provision of the Federal Reserve Act
which is made applicable under the International Banking
Act of 1978;
``(C) any foreign bank which does not operate an
insured branch;
[[Page 124 STAT. 1523]]
``(D) any agency or commercial lending company other
than a Federal agency;
``(E) supervisory or regulatory proceedings arising
from the authority given to the Board of Governors under
section 7(c)(1) of the International Banking Act of
1978, including such proceedings under the Financial
Institutions Supervisory Act of 1966;
``(F) any bank holding company and any subsidiary
(other than a depository institution) of a bank holding
company; and
``(G) any savings and loan holding company and any
subsidiary (other than a depository institution) of a
savings and loan holding company.''; and
(2) in paragraphs (1) and (3) of subsection (u), by striking
``(other than a bank holding company'' and inserting ``(other
than a bank holding company or savings and loan holding
company''.
(d) Consumer Protection.--Nothing in this section may be construed
to limit or otherwise affect the transfer of powers under title X.
SEC. 313. <<NOTE: 12 USC 5413.>> ABOLISHMENT.
Effective <<NOTE: Effective date.>> 90 days after the transfer date,
the Office of Thrift Supervision and the position of Director of the
Office of Thrift Supervision are abolished.
SEC. 314. AMENDMENTS TO THE REVISED STATUTES.
(a) Amendment to Section 324.--Section 324 of the Revised Statutes
of the United States (12 U.S.C. 1) is amended to read as follows:
``SEC. 324. COMPTROLLER OF THE CURRENCY.
``(a) Office of the Comptroller of the Currency Established.--There
is established in the Department of the Treasury a bureau to be known as
the `Office of the Comptroller of the Currency' which is charged with
assuring the safety and soundness of, and compliance with laws and
regulations, fair access to financial services, and fair treatment of
customers by, the institutions and other persons subject to its
jurisdiction.
``(b) Comptroller of the Currency.--
``(1) In general.--The chief officer of the Office of the
Comptroller of the Currency shall be known as the Comptroller of
the Currency. The Comptroller of the Currency shall perform the
duties of the Comptroller of the Currency under the general
direction of the Secretary of the Treasury. The Secretary of the
Treasury may not delay or prevent the issuance of any rule or
the promulgation of any regulation by the Comptroller of the
Currency, and may not intervene in any matter or proceeding
before the Comptroller of the Currency (including agency
enforcement actions), unless otherwise specifically provided by
law.
``(2) Additional authority.--The Comptroller of the Currency
shall have the same authority with respect to functions
transferred to the Comptroller of the Currency under the
Enhancing Financial Institution Safety and Soundness Act of 2010
as was vested in the Director of the Office of Thrift
Supervision on the transfer date, as defined in section 311 of
that Act.''.
[[Page 124 STAT. 1524]]
(b) Supervision of Federal Savings Associations.--Chapter 9 of title
VII of the Revised Statutes of the United States (12 U.S.C. 1 et seq.)
is amended by inserting after section 327A (12 U.S.C. 4a) the following:
``SEC. 327B. <<NOTE: 12 USC 4b.>> DEPUTY COMPTROLLER FOR THE
SUPERVISION AND EXAMINATION OF FEDERAL
SAVINGS ASSOCIATIONS.
``The <<NOTE: Designation.>> Comptroller of the Currency shall
designate a Deputy Comptroller, who shall be responsible for the
supervision and examination of Federal savings associations.''.
(c) Amendment to Section 329.--Section 329 of the Revised Statutes
of the United States (12 U.S.C. 11) is amended by inserting before the
period at the end the following: ``or any Federal savings association''.
(d) Effective <<NOTE: 12 USC 1 note.>> Date.--This section, and the
amendments made by this section, shall take effect on the transfer date.
SEC. 315. FEDERAL INFORMATION POLICY.
Section 3502(5) of title 44, United States Code, is amended by
inserting ``Office of the Comptroller of the Currency,'' after ``the
Securities and Exchange Commission,''.
SEC. 316. <<NOTE: 12 USC 5414.>> SAVINGS PROVISIONS.
(a) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not affected.--
Sections 312(b) and 313 shall not affect the validity of any
right, duty, or obligation of the United States, the Director of
the Office of Thrift Supervision, the Office of Thrift
Supervision, or any other person, that existed on the day before
the transfer date.
(2) Continuation of suits.--This title shall not abate any
action or proceeding commenced by or against the Director of the
Office of Thrift Supervision or the Office of Thrift Supervision
before the transfer date, except that--
(A) for any action or proceeding arising out of a
function of the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision transferred
to the Board of Governors by this title, the Board of
Governors shall be substituted for the Office of Thrift
Supervision or the Director of the Office of Thrift
Supervision as a party to the action or proceeding on
and after the transfer date;
(B) for any action or proceeding arising out of a
function of the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision transferred
to the Office of the Comptroller of the Currency or the
Comptroller of the Currency by this title, the Office of
the Comptroller of the Currency or the Comptroller of
the Currency shall be substituted for the Office of
Thrift Supervision or the Director of the Office of
Thrift Supervision, as the case may be, as a party to
the action or proceeding on and after the transfer date;
and
(C) for any action or proceeding arising out of a
function of the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision transferred
to the Corporation by this title, the Corporation shall
be substituted for the Office of Thrift Supervision or
the Director of the Office of Thrift Supervision as a
party to the action or proceeding on and after the
transfer date.
[[Page 124 STAT. 1525]]
(b) Continuation of Existing OTS Orders, Resolutions,
Determinations, Agreements, Regulations, etc.--All orders, resolutions,
determinations, agreements, and regulations, interpretative rules, other
interpretations, guidelines, procedures, and other advisory materials,
that have been issued, made, prescribed, or allowed to become effective
by the Office of Thrift Supervision or the Director of the Office of
Thrift Supervision, or by a court of competent jurisdiction, in the
performance of functions that are transferred by this title and that are
in effect on the day before the transfer date, shall continue in effect
according to the terms of such orders, resolutions, determinations,
agreements, and regulations, interpretative rules, other
interpretations, guidelines, procedures, and other advisory materials,
and shall be enforceable by or against--
(1) the Board of Governors, in the case of a function of the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision transferred to the Board of Governors, until
modified, terminated, set aside, or superseded in accordance
with applicable law by the Board of Governors, by any court of
competent jurisdiction, or by operation of law;
(2) the Office of the Comptroller of the Currency or the
Comptroller of the Currency, in the case of a function of the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision transferred to the Office of the Comptroller
of the Currency or the Comptroller of the Currency,
respectively, until modified, terminated, set aside, or
superseded in accordance with applicable law by the Office of
the Comptroller of the Currency or the Comptroller of the
Currency, by any court of competent jurisdiction, or by
operation of law; and
(3) the Corporation, in the case of a function of the Office
of Thrift Supervision or the Director of the Office of Thrift
Supervision transferred to the Corporation, until modified,
terminated, set aside, or superseded in accordance with
applicable law by the Corporation, by any court of competent
jurisdiction, or by operation of law.
(c) Identification <<NOTE: Deadlines. Federal Register,
publication.>> of Regulations Continued.--
(1) By the board of governors.--Not later than the transfer
date, the Board of Governors shall--
(A) identify the regulations continued under
subsection (b) that will be enforced by the Board of
Governors; and
(B) publish a list of the regulations identified
under subparagraph (A) in the Federal Register.
(2) By office of the comptroller of the currency.--Not later
than the transfer date, the Office of the Comptroller of the
Currency shall--
(A) after consultation with the Corporation,
identify the regulations continued under subsection (b)
that will be enforced by the Office of the Comptroller
of the Currency; and
(B) publish a list of the regulations identified
under subparagraph (A) in the Federal Register.
(3) By the corporation.--Not later than the transfer date,
the Corporation shall--
(A) after consultation with the Office of the
Comptroller of the Currency, identify the regulations
continued under subsection (b) that will be enforced by
the Corporation; and
[[Page 124 STAT. 1526]]
(B) publish a list of the regulations identified
under subparagraph (A) in the Federal Register.
(d) Status of Regulations Proposed or Not Yet Effective.--
(1) Proposed regulations.--Any proposed regulation of the
Office of Thrift Supervision, which the Office of Thrift
Supervision in performing functions transferred by this title,
has proposed before the transfer date but has not published as a
final regulation before such date, shall be deemed to be a
proposed regulation of the Office of the Comptroller of the
Currency or the Board of Governors, as appropriate, according to
the terms of the proposed regulation.
(2) Regulations not yet effective.--Any interim or final
regulation of the Office of Thrift Supervision, which the Office
of Thrift Supervision, in performing functions transferred by
this title, has published before the transfer date but which has
not become effective before that date, shall become effective as
a regulation of the Office of the Comptroller of the Currency or
the Board of Governors, as appropriate, according to the terms
of the interim or final regulation, unless modified, terminated,
set aside, or superseded in accordance with applicable law by
the Office of the Comptroller of the Currency or the Board of
Governors, as appropriate, by any court of competent
jurisdiction, or by operation of law.
SEC. 317. <<NOTE: 12 USC 5415.>> REFERENCES IN FEDERAL LAW TO
FEDERAL BANKING AGENCIES.
On and after the transfer date, any reference in Federal law to the
Director of the Office of Thrift Supervision or the Office of Thrift
Supervision, in connection with any function of the Director of the
Office of Thrift Supervision or the Office of Thrift Supervision
transferred under section 312(b) or any other provision of this
subtitle, shall be deemed to be a reference to the Comptroller of the
Currency, the Office of the Comptroller of the Currency, the Chairperson
of the Corporation, the Corporation, the Chairman of the Board of
Governors, or the Board of Governors, as appropriate and consistent with
the amendments made in subtitle E.
SEC. 318. FUNDING.
(a) Compensation of Examiners.--Section 5240 of the Revised Statutes
of the United States (12 U.S.C. 481 et seq.) is amended--
(1) in the second undesignated paragraph (12 U.S.C. 481), in
the fourth sentence, by striking ``without regard to the
provisions of other laws applicable to officers or employees of
the United States'' and inserting the following: ``set and
adjusted subject to chapter 71 of title 5, United States Code,
and without regard to the provisions of other laws applicable to
officers or employees of the United States''; and
(2) in the third undesignated paragraph (12 U.S.C. 482), in
the first sentence, by striking ``shall fix'' and inserting
``shall, subject to chapter 71 of title 5, United States Code,
fix''.
(b) Funding of Office of the Comptroller of the Currency.--Chapter 4
of title LXII of the Revised Statutes is amended by inserting after
section 5240 (12 U.S.C. 481, 482) the following:
``Sec. <<NOTE: 12 USC 16.>> 5240A. The Comptroller of the Currency
may collect an assessment, fee, or other charge from any entity
described in section 3(q)(1) of the Federal Deposit Insurance Act (12
U.S.C.
[[Page 124 STAT. 1527]]
1813(q)(1)), as the Comptroller determines is necessary or appropriate
to carry out the responsibilities of the Office of the Comptroller of
the Currency. In establishing the amount of an assessment, fee, or
charge collected from an entity under this section, the Comptroller of
the Currency may take into account the nature and scope of the
activities of the entity, the amount and type of assets that the entity
holds, the financial and managerial condition of the entity, and any
other factor, as the Comptroller of the Currency determines is
appropriate. Funds derived from any assessment, fee, or charge collected
or payment made pursuant to this section may be deposited by the
Comptroller of the Currency in accordance with the provisions of section
5234. Such funds shall not be construed to be Government funds or
appropriated monies, and shall not be subject to apportionment for
purposes of chapter 15 of title 31, United States Code, or any other
provision of law. The authority of the Comptroller of the Currency under
this section shall be in addition to the authority under section 5240.
``The Comptroller of the Currency shall have sole authority to
determine the manner in which the obligations of the Office of the
Comptroller of the Currency shall be incurred and its disbursements and
expenses allowed and paid, in accordance with this section, except as
provided in chapter 71 of title 5, United States Code (with respect to
compensation).''.
(c) Funding of Board of Governors.--Section 11 of the Federal
Reserve Act (12 U.S.C. 248) is amended by adding at the end the
following:
``(s) Assessments, Fees, and Other Charges for Certain Companies.--
``(1) In general.--The Board shall collect a total amount of
assessments, fees, or other charges from the companies described
in paragraph (2) that is equal to the total expenses the Board
estimates are necessary or appropriate to carry out the
supervisory and regulatory responsibilities of the Board with
respect to such companies.
``(2) Companies.--The companies described in this paragraph
are--
``(A) all bank holding companies having total
consolidated assets of $50,000,000,000 or more;
``(B) all savings and loan holding companies having
total consolidated assets of $50,000,000,000 or more;
and
``(C) all nonbank financial companies supervised by
the Board under section 113 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.''.
(d) Corporation Examination Fees.--Section 10(e) of the Federal
Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by striking
paragraph (1) and inserting the following:
``(1) Regular and special examinations of depository
institutions.--The cost of conducting any regular examination or
special examination of any depository institution under
subsection (b)(2), (b)(3), or (d) or of any entity described in
section 3(q)(2) may be assessed by the Corporation against the
institution or entity to meet the expenses of the Corporation in
carrying out such examinations.''.
(e) Effective <<NOTE: 12 USC 16 note.>> Date.--This section, and the
amendments made by this section, shall take effect on the transfer date.
[[Page 124 STAT. 1528]]
SEC. 319. <<NOTE: 12 USC 5416.>> CONTRACTING AND LEASING
AUTHORITY.
Notwithstanding the Federal Property and Administrative Services Act
of 1949 (41 U.S.C. 251 et seq.) or any other provision of law (except
the full and open competition requirements of the Competition in
Contracting Act), the Office of the Comptroller of the Currency may--
(1) enter into and perform contracts, execute instruments,
and acquire real property (or property interest) as the
Comptroller deems necessary to carry out the duties and
responsibilities of the Office of the Comptroller of the
Currency; and
(2) hold, maintain, sell, lease, or otherwise dispose of the
property (or property interest) acquired under paragraph (1).
Subtitle B--Transitional Provisions
SEC. 321. <<NOTE: 12 USC 5431.>> INTERIM USE OF FUNDS, PERSONNEL,
AND PROPERTY OF THE OFFICE OF THRIFT
SUPERVISION.
(a) In General.--Before the transfer date, the Office of the
Comptroller of the Currency, the Corporation, and the Board of Governors
shall--
(1) consult <<NOTE: Consultation.>> and cooperate with the
Office of Thrift Supervision to facilitate the orderly transfer
of functions to the Office of the Comptroller of the Currency,
the Corporation, and the Board of Governors in accordance with
this title;
(2) <<NOTE: Determination.>> determine jointly, from time to
time--
(A) the amount of funds necessary to pay any
expenses associated with the transfer of functions
(including expenses for personnel, property, and
administrative services) during the period beginning on
the date of enactment of this Act and ending on the
transfer date;
(B) which personnel are appropriate to facilitate
the orderly transfer of functions by this title; and
(C) what property and administrative services are
necessary to support the Office of the Comptroller of
the Currency, the Corporation, and the Board of
Governors during the period beginning on the date of
enactment of this Act and ending on the transfer date;
and
(3) take such actions as may be necessary to provide for the
orderly implementation of this title.
(b) Agency Consultation.--When requested jointly by the Office of
the Comptroller of the Currency, the Corporation, and the Board of
Governors to do so before the transfer date, the Office of Thrift
Supervision shall--
(1) pay <<NOTE: Payment.>> to the Office of the Comptroller
of the Currency, the Corporation, or the Board of Governors, as
applicable, from funds obtained by the Office of Thrift
Supervision through assessments, fees, or other charges that the
Office of Thrift Supervision is authorized by law to impose,
such amounts as the Office of the Comptroller of the Currency,
the Corporation, and the Board of Governors jointly determine to
be necessary under subsection (a);
(2) detail to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, as applicable, such
personnel as the Office of the Comptroller of the Currency, the
Corporation, and the Board of Governors jointly determine to be
appropriate under subsection (a); and
[[Page 124 STAT. 1529]]
(3) make available to the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors, as
applicable, such property and provide to the Office of the
Comptroller of the Currency, the Corporation, or the Board of
Governors, as applicable, such administrative services as the
Office of the Comptroller of the Currency, the Corporation, and
the Board of Governors jointly determine to be necessary under
subsection (a).
(c) Notice Required.--The Office of the Comptroller of the Currency,
the Corporation, and the Board of Governors shall jointly give the
Office of Thrift Supervision reasonable prior notice of any request that
the Office of the Comptroller of the Currency, the Corporation, and the
Board of Governors jointly intend to make under subsection (b).
SEC. 322. <<NOTE: 12 USC 5432.>> TRANSFER OF EMPLOYEES.
(a) In General.--
(1) Office of thrift supervision employees.--
(A) In general.--Except as provided in section 1064,
all employees of the Office of Thrift Supervision shall
be transferred to the Office of the Comptroller of the
Currency or the Corporation for employment in accordance
with this section.
(B) Allocating employees for transfer to receiving
agencies.--The Director of the Office of Thrift
Supervision, the Comptroller of the Currency, and the
Chairperson of the Corporation shall--
(i) jointly <<NOTE: Determination.>> determine
the number of employees of the Office of Thrift
Supervision necessary to perform or support the
functions that are transferred to the Office of
the Comptroller of the Currency or the Corporation
by this title; and
(ii) consistent with the determination under
clause (i), jointly identify employees of the
Office of Thrift Supervision for transfer to the
Office of the Comptroller of the Currency or the
Corporation.
(2) Employees transferred; service periods credited.--For
purposes of this section, periods of service with a Federal home
loan bank, a joint office of Federal home loan banks, or a
Federal reserve bank shall be credited as periods of service
with a Federal agency.
(3) Appointment authority for excepted service
transferred.--
(A) In general.--Except as provided in subparagraph
(B), any appointment authority of the Office of Thrift
Supervision under Federal law that relates to the
functions transferred under section 312, including the
regulations of the Office of Personnel Management, for
filling the positions of employees in the excepted
service shall be transferred to the Comptroller of the
Currency or the Chairperson of the Corporation, as
appropriate.
(B) Declining transfers allowed.--The Comptroller of
the Currency or the Chairperson of the Corporation may
decline to accept a transfer of authority under
subparagraph (A) (and the employees appointed under that
authority) to the extent that such authority relates to
positions excepted from the competitive service because
of their
[[Page 124 STAT. 1530]]
confidential, policy-making, policy-determining, or
policy-advocating character.
(4) Additional appointment authority.--Notwithstanding any
other provision of law, the Office of the Comptroller of the
Currency and the Corporation may appoint transferred employees
to positions in the Office of the Comptroller of the Currency or
the Corporation, respectively.
(b) Timing of Transfers and <<NOTE: Deadlines.>> Position
Assignments.--Each employee to be transferred under subsection (a)(1)
shall--
(1) be transferred not later than 90 days after the transfer
date; and
(2) receive <<NOTE: Notice.>> notice of the position
assignment of the employee not later than 120 days after the
effective date of the transfer of the employee.
(c) Transfer of Functions.--
(1) In general.--Notwithstanding any other provision of law,
the transfer of employees under this subtitle shall be deemed a
transfer of functions for the purpose of section 3503 of title
5, United States Code.
(2) Priority.--If any provision of this subtitle conflicts
with any protection provided to a transferred employee under
section 3503 of title 5, United States Code, the provisions of
this subtitle shall control.
(d) Employee Status and Eligibility.--The transfer of functions and
employees under this subtitle, and the abolishment of the Office of
Thrift Supervision under section 313, shall not affect the status of the
transferred employees as employees of an agency of the United States
under any provision of law.
(e) Equal Status and Tenure Positions.--
(1) Status and tenure.--Each transferred employee from the
Office of Thrift Supervision shall be placed in a position at
the Office of the Comptroller of the Currency or the Corporation
with the same status and tenure as the transferred employee held
on the day before the date on which the employee was
transferred.
(2) Functions.--To the extent practicable, each transferred
employee shall be placed in a position at the Office of the
Comptroller of the Currency or the Corporation, as applicable,
responsible for the same functions and duties as the transferred
employee had on the day before the date on which the employee
was transferred, in accordance with the expertise and
preferences of the transferred employee.
(f) No Additional Certification Requirements.--An examiner who is a
transferred employee shall not be subject to any additional
certification requirements before being placed in a comparable position
at the Office of the Comptroller of the Currency or the Corporation, if
the examiner carries out examinations of the same type of institutions
as an employee of the Office of the Comptroller of the Currency or the
Corporation as the employee was responsible for carrying out before the
date on which the employee was transferred.
(g) Personnel Actions Limited.--
(1) Protection.--
(A) In general.--Except <<NOTE: Time period.>> as
provided in paragraph (2), each affected employee shall
not, during the 30-month period beginning on the
transfer date, be involuntarily
[[Page 124 STAT. 1531]]
separated, or involuntarily reassigned outside his or
her locality pay area.
(B) Affected employees.--
For <<NOTE: Definition.>> purposes of this paragraph,
the term ``affected employee'' means--
(i) an employee transferred from the Office of
Thrift Supervision holding a permanent position on
the day before the transfer date; and
(ii) an employee of the Office of the
Comptroller of the Currency or the Corporation
holding a permanent position on the day before the
transfer date.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Office of the Comptroller of the Currency or the Corporation
to--
(A) separate an employee for cause or for
unacceptable performance;
(B) terminate an appointment to a position excepted
from the competitive service because of its confidential
policy-making, policy-determining, or policy-advocating
character; or
(C) reassign an employee outside such employee's
locality pay area when the Office of the Comptroller of
the Currency or the Corporation determines that the
reassignment is necessary for the efficient operation of
the agency.
(h) Pay.--
(1) 30-month protection.--Except as provided in paragraph
(2), during the 30-month period beginning on the date on which
the employee was transferred under this subtitle, a transferred
employee shall be paid at a rate that is not less than the basic
rate of pay, including any geographic differential, that the
transferred employee received during the pay period immediately
preceding the date on which the employee was transferred.
Notwithstanding the preceding sentence, if the employee was
receiving a higher rate of basic pay on a temporary basis
(because of a temporary assignment, temporary promotion, or
other temporary action) immediately before the transfer, the
Agency may reduce the rate of basic pay on the date the rate
would have been reduced but for the transfer, and the protected
rate for the remainder of the 30-month period will be the
reduced rate that would have applied but for the transfer.
(2) Exceptions.--The Comptroller of the Currency or the
Corporation may reduce the rate of basic pay of a transferred
employee--
(A) for cause, including for unacceptable
performance; or
(B) with the consent of the transferred employee.
(3) Protection only while employed.--
This <<NOTE: Applicability.>> subsection shall apply to a
transferred employee only during the period that the transferred
employee remains employed by Office of the Comptroller of the
Currency or the Corporation.
(4) Pay increases permitted.--Nothing in this subsection
shall limit the authority of the Comptroller of the Currency or
the Chairperson of the Corporation to increase the pay of a
transferred employee.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
[[Page 124 STAT. 1532]]
(A) In general.--
(i) Continuation of existing retirement
plan.--Each transferred employee shall remain
enrolled in the retirement plan of the transferred
employee, for as long as the transferred employee
is employed by the Office of the Comptroller of
the Currency or the Corporation.
(ii) Employer's contribution.--The Comptroller
of the Currency or the Chairperson of the
Corporation, as appropriate, shall pay any
employer contributions to the existing retirement
plan of each transferred employee, as required
under each such existing retirement plan.
(B) Definition.--In this paragraph, the term
``existing retirement plan'' means, with respect to a
transferred employee, the retirement plan (including the
Financial Institutions Retirement Fund), and any
associated thrift savings plan, of the agency from which
the employee was transferred in which the employee was
enrolled on the day before the date on which the
employee was transferred.
(2) Benefits other than retirement benefits.--
(A) During first year.--
(i) Existing <<NOTE: Time period.>> plans
continue.--During the 1-year period following the
transfer date, each transferred employee may
retain membership in any employee benefit program
(other than a retirement benefit program) of the
agency from which the employee was transferred
under this title, including any dental, vision,
long term care, or life insurance program to which
the employee belonged on the day before the
transfer date.
(ii) Employer's contribution.--The Office of
the Comptroller of the Currency or the
Corporation, as appropriate, shall pay any
employer cost required to extend coverage in the
benefit program to the transferred employee as
required under that program or negotiated
agreements.
(B) Dental, vision, or life insurance after first
year.--If, <<NOTE: Time period.>> after the 1-year
period beginning on the transfer date, the Office of the
Comptroller of the Currency or the Corporation
determines that the Office of the Comptroller of the
Currency or the Corporation, as the case may be, will
not continue to participate in any dental, vision, or
life insurance program of an agency from which an
employee was transferred, a transferred employee who is
a member of the program may, before the decision takes
effect and without regard to any regularly scheduled
open season, elect to enroll in--
(i) the enhanced dental benefits program
established under chapter 89A of title 5, United
States Code;
(ii) the enhanced vision benefits established
under chapter 89B of title 5, United States Code;
and
(iii) the Federal Employees' Group Life
Insurance Program established under chapter 87 of
title 5, United States Code, without regard to any
requirement of insurability.
[[Page 124 STAT. 1533]]
(C) Long term care insurance after 1st year.--
If, <<NOTE: Time period.>> after the 1-year period
beginning on the transfer date, the Office of the
Comptroller of the Currency or the Corporation
determines that the Office of the Comptroller of the
Currency or the Corporation, as appropriate, will not
continue to participate in any long term care insurance
program of an agency from which an employee transferred,
a transferred employee who is a member of such a program
may, before the decision takes effect, elect to apply
for coverage under the Federal Long Term Care Insurance
Program established under chapter 90 of title 5, United
States Code, under the underwriting requirements
applicable to a new active workforce member, as
described in part 875 of title 5, Code of Federal
Regulations (or any successor thereto).
(D) Contribution of transferred employee.--
(i) In general.--Subject to clause (ii), a
transferred employee who is enrolled in a plan
under the Federal Employees Health Benefits
Program shall pay any employee contribution
required under the plan.
(ii) Cost differential.--The Office of the
Comptroller of the Currency or the Corporation, as
applicable, shall pay any difference in cost
between the employee contribution required under
the plan provided to transferred employees by the
agency from which the employee transferred on the
date of enactment of this Act and the plan
provided by the Office of the Comptroller of the
Currency or the Corporation, as the case may be,
under this section.
(iii) Funds transfer.--The Office of the
Comptroller of the Currency or the Corporation, as
the case may be, shall transfer to the Employees
Health Benefits Fund established under section
8909 of title 5, United States Code, an amount
determined by the Director of the Office of
Personnel Management, after consultation with the
Comptroller of the Currency or the Chairperson of
the Corporation, as the case may be, and the
Office of Management and Budget, to be necessary
to reimburse the Fund for the cost to the Fund of
providing any benefits under this subparagraph
that are not otherwise paid for by a transferred
employee under clause (i).
(E) Special provisions to ensure continuation of
life insurance benefits.--
(i) In general.--An annuitant, as defined in
section 8901 of title 5, United States Code, who
is enrolled in a life insurance plan administered
by an agency from which employees are transferred
under this title on the day before the transfer
date shall be eligible for coverage by a life
insurance plan under sections 8706(b), 8714a,
8714b, or 8714c of title 5, United States Code, or
by a life insurance plan established by the Office
of the Comptroller of the Currency or the
Corporation, as applicable, without regard to any
regularly scheduled open season or any requirement
of insurability.
(ii) Contribution of transferred employee.--
[[Page 124 STAT. 1534]]
(I) In general.--Subject to
subclause (II), a transferred employee
enrolled in a life insurance plan under
this subparagraph shall pay any employee
contribution required by the plan.
(II) Cost differential.--The Office
of the Comptroller of the Currency or
the Corporation, as the case may be,
shall pay any difference in cost between
the benefits provided by the agency from
which the employee transferred on the
date of enactment of this Act and the
benefits provided under this section.
(III) Funds transfer.--The Office of
the Comptroller of the Currency or the
Corporation, as the case may be, shall
transfer to the Federal Employees' Group
Life Insurance Fund established under
section 8714 of title 5, United States
Code, an amount determined by the
Director of the Office of Personnel
Management, after consultation with the
Comptroller of the Currency or the
Chairperson of the Corporation, as the
case may be, and the Office of
Management and Budget, to be necessary
to reimburse the Federal Employees'
Group Life Insurance Fund for the cost
to the Federal Employees' Group Life
Insurance Fund of providing benefits
under this subparagraph not otherwise
paid for by a transferred employee under
subclause (I).
(IV) Credit for time enrolled in
other plans.--For any transferred
employee, enrollment in a life insurance
plan administered by the agency from
which the employee transferred,
immediately before enrollment in a life
insurance plan under chapter 87 of title
5, United States Code, shall be
considered as enrollment in a life
insurance plan under that chapter for
purposes of section 8706(b)(1)(A) of
title 5, United States Code.
(j) Incorporation Into Agency Pay System.--
Not <<NOTE: Deadline.>> later than 30 months after the transfer date,
the Comptroller of the Currency and the Chairperson of the Corporation
shall place each transferred employee into the established pay system
and structure of the appropriate employing agency.
(k) Equitable Treatment.--In administering the provisions of this
section, the Comptroller of the Currency and the Chairperson of the
Corporation--
(1) may not take any action that would unfairly disadvantage
a transferred employee relative to any other employee of the
Office of the Comptroller of the Currency or the Corporation on
the basis of prior employment by the Office of Thrift
Supervision;
(2) may take such action as is appropriate in an individual
case to ensure that a transferred employee receives equitable
treatment, with respect to the status, tenure, pay, benefits
(other than benefits under programs administered by the Office
of Personnel Management), and accrued leave or vacation time for
prior periods of service with any Federal agency of the
transferred employee;
[[Page 124 STAT. 1535]]
(3) shall, <<NOTE: Procedures.>> jointly with the Director
of the Office of Thrift Supervision, develop and adopt
procedures and safeguards designed to ensure that the
requirements of this subsection are met; and
(4) shall <<NOTE: Study.>> conduct a study detailing the
position assignments of all employees transferred pursuant to
subsection (a), describing the procedures and safeguards adopted
pursuant to paragraph (3), and demonstrating that the
requirements of this subsection have been met;
and <<NOTE: Deadline.>> shall, not later than 365 days after the
transfer date, submit a copy of such study to Congress.
(l) Reorganization.--
(1) In general.--If <<NOTE: Time period.>> the Comptroller
of the Currency or the Chairperson of the Corporation
determines, during the 2-year period beginning 1 year after the
transfer date, that a reorganization of the staff of the Office
of the Comptroller of the Currency or the Corporation,
respectively, is required, the reorganization shall be deemed a
``major reorganization'' for purposes of affording affected
employees retirement under section 8336(d)(2) or 8414(b)(1)(B)
of title 5, United States Code.
(2) Service credit.--For purposes of this subsection,
periods of service with a Federal home loan bank or a joint
office of Federal home loan banks shall be credited as periods
of service with a Federal agency.
SEC. 323. <<NOTE: 12 USC 5433.>> PROPERTY TRANSFERRED.
(a) Property Defined.--For purposes of this section, the term
``property'' includes all real property (including leaseholds) and all
personal property, including computers, furniture, fixtures, equipment,
books, accounts, records, reports, files, memoranda, paper, reports of
examination, work papers, and correspondence related to such reports,
and any other information or materials.
(b) Property of the Office of Thrift Supervision.--
(1) In general.--No <<NOTE: Deadline.>> later than 90 days
after the transfer date, all property of the Office of Thrift
Supervision (other than property described under paragraph
(b)(2)) that the Comptroller of the Currency and the Chairperson
of the Corporation jointly determine is used, on the day before
the transfer date, to perform or support the functions of the
Office of Thrift Supervision transferred to the Office of the
Comptroller of the Currency or the Corporation under this title,
shall be transferred to the Office of the Comptroller of the
Currency or the Corporation in a manner consistent with the
transfer of employees under this subtitle.
(2) Personal property.--All books, accounts, records,
reports, files, memoranda, papers, documents, reports of
examination, work papers, and correspondence of the Office of
Thrift Supervision that the Comptroller of the Currency, the
Chairperson of the Corporation, and the Chairman of the Board of
Governors jointly determine is used, on the day before the
transfer date, to perform or support the functions of the Office
of Thrift Supervision transferred to the Board of Governors
under this title shall be transferred to the Board of Governors
in a manner consistent with the purposes of this title.
(c) Contracts Related to Property Transferred.--Each contract,
agreement, lease, license, permit, and similar arrangement
[[Page 124 STAT. 1536]]
relating to property transferred to the Office of the Comptroller of the
Currency or the Corporation by this section shall be transferred to the
Office of the Comptroller of the Currency or the Corporation, as
appropriate, together with the property to which it relates.
(d) Preservation of Property.--Property identified for transfer
under this section shall not be altered, destroyed, or deleted before
transfer under this section.
SEC. 324. <<NOTE: 12 USC 5434.>> FUNDS TRANSFERRED.
The funds that, on the day before the transfer date, the Director of
the Office of Thrift Supervision (in consultation with the Comptroller
of the Currency, the Chairperson of the Corporation, and the Chairman of
the Board of Governors) determines are not necessary to dispose of the
affairs of the Office of Thrift Supervision under section 325 and are
available to the Office of Thrift Supervision to pay the expenses of the
Office of Thrift Supervision--
(1) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(2)(B), shall be
transferred to the Office of the Comptroller of the Currency on
the transfer date;
(2) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(2)(C), shall be
transferred to the Corporation on the transfer date; and
(3) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(1)(A), shall be
transferred to the Board of Governors on the transfer date.
SEC. 325. <<NOTE: Time periods. 12 USC 5435.>> DISPOSITION OF
AFFAIRS.
(a) Authority of Director.--During the 90-day period beginning on
the transfer date, the Director of the Office of Thrift Supervision--
(1) shall, solely for the purpose of winding up the affairs
of the Office of Thrift Supervision relating to any function
transferred to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors under this title--
(A) manage the employees of the Office of Thrift
Supervision who have not yet been transferred and
provide for the payment of the compensation and benefits
of the employees that accrue before the date on which
the employees are transferred under this title; and
(B) manage any property of the Office of Thrift
Supervision, until the date on which the property is
transferred under section 323; and
(2) may take any other action necessary to wind up the
affairs of the Office of Thrift Supervision.
(b) Status of Director.--
(1) In general.--Notwithstanding the transfer of functions
under this subtitle, during the 90-day period beginning on the
transfer date, the Director of the Office of Thrift Supervision
shall retain and may exercise any authority vested in the
Director of the Office of Thrift Supervision on the day before
the transfer date, only to the extent necessary--
(A) to wind up the Office of Thrift Supervision; and
(B) to carry out the transfer under this subtitle
during such 90-day period.
[[Page 124 STAT. 1537]]
(2) Other provisions.--For purposes of paragraph (1), the
Director of the Office of Thrift Supervision shall, during the
90-day period beginning on the transfer date, continue to be--
(A) treated as an officer of the United States; and
(B) entitled to receive compensation at the same
annual rate of basic pay that the Director of the Office
of Thrift Supervision received on the day before the
transfer date.
SEC. 326. <<NOTE: 12 USC 5436.>> CONTINUATION OF SERVICES.
Any agency, department, or other instrumentality of the United
States, and any successor to any such agency, department, or
instrumentality, that was, before the transfer date, providing support
services to the Office of Thrift Supervision in connection with
functions transferred to the Office of the Comptroller of the Currency,
the Corporation or the Board of Governors under this title, shall--
(1) continue to provide such services, subject to
reimbursement by the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, until the transfer
of functions under this title is complete; and
(2) consult <<NOTE: Consultation.>> with the Comptroller of
the Currency, the Chairperson of the Corporation, or the
Chairman of the Board of Governors, as appropriate, to
coordinate and facilitate a prompt and orderly transition.
SEC. 327. <<NOTE: 12 USC 5437.>> IMPLEMENTATION PLAN AND REPORTS.
(a) Plan Submission.--Within 180 days of the enactment of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, the Board of
Governors, the Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision, shall jointly submit a
plan to the Committee on Banking, Housing, and Urban Affairs of the
Senate, the Committee on Financial Services of the House of
Representatives, and the Inspectors General of the Department of the
Treasury, the Corporation, and the Board of Governors detailing the
steps the Board of Governors, the Corporation, the Office of the
Comptroller of the Currency, and the Office of Thrift Supervision will
take to implement the provisions of sections 301 through 326, and the
provisions of the amendments made by such sections.
(b) Inspectors General Review of the Plan.--Within 60 days of
receiving the plan required under subsection (a), the Inspectors General
of the Department of the Treasury, the Corporation, and the Board of
Governors shall jointly provide a written report to the Board of
Governors, the Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision and shall submit a copy
to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives
detailing whether the plan conforms with the provisions of sections 301
through 326, and the provisions of the amendments made by such sections,
including--
(1) whether the plan sufficiently takes into consideration
the orderly transfer of personnel;
(2) whether the plan describes procedures and safeguards to
ensure that the Office of Thrift Supervision employees are not
unfairly disadvantaged relative to employees of the Office of
the Comptroller of the Currency and the Corporation;
[[Page 124 STAT. 1538]]
(3) whether the plan sufficiently takes into consideration
the orderly transfer of authority and responsibilities;
(4) whether the plan sufficiently takes into consideration
the effective transfer of funds;
(5) whether the plan sufficiently takes in consideration the
orderly transfer of property; and
(6) any additional recommendations for an orderly and
effective process.
(c) Implementation Reports.--Not later than 6 months after the date
on which the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives receives the report required under subsection (b), and
every 6 months thereafter until all aspects of the plan have been
implemented, the Inspectors General of the Department of the Treasury,
the Corporation, and the Board of Governors shall jointly provide a
written report on the status of the implementation of the plan to the
Board of Governors, the Corporation, the Office of the Comptroller of
the Currency, and the Office of Thrift Supervision and shall submit a
copy to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives.
Subtitle C--Federal Deposit Insurance Corporation
SEC. 331. DEPOSIT INSURANCE REFORMS.
(a) Size Distinctions.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraph (D); and
(2) by redesignating subparagraph (C) as subparagraph (D).
(b) Assessment <<NOTE: 12 USC 1817 note.>> Base.--The Corporation
shall amend the regulations issued by the Corporation under section
7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) to
define the term ``assessment base'' with respect to an insured
depository institution for purposes of that section 7(b)(2), as an
amount equal to--
(1) the average consolidated total assets of the insured
depository institution during the assessment period; minus
(2) the sum of--
(A) the average tangible equity of the insured
depository institution during the assessment period; and
(B) in the case of an insured depository institution
that is a custodial bank (as defined by the Corporation,
based on factors including the percentage of total
revenues generated by custodial businesses and the level
of assets under custody) or a banker's bank (as that
term is used in section 5136 of the Revised Statutes (12
U.S.C. 24)), an amount that the Corporation determines
is necessary to establish assessments consistent with
the definition under section 7(b)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(1)) for a
custodial bank or a banker's bank.
[[Page 124 STAT. 1539]]
SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS.
Section 7(e) of the Federal Deposit Insurance Act <<NOTE: 12 USC
1817.>> is amended--
(1) in paragraph (2)--
(A) by amending subparagraph (B) to read as follows:
``(B) Limitation.--The Board of Directors may, in
its sole discretion, suspend or limit the declaration of
payment of dividends under subparagraph (A).'';
(B) by amending subparagraph (C) to read as follows:
``(C) Notice and <<NOTE: Regulations.>> opportunity
for comment.--The Corporation shall prescribe, by
regulation, after notice and opportunity for comment,
the method for the declaration, calculation,
distribution, and payment of dividends under this
paragraph''; and
(C) by striking subparagraphs (D) through (G); and
(2) in paragraph (4)(A) by striking ``paragraphs (2)(D)
and'' and inserting ``paragraphs (2) and''.
SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE
PURPOSES.
(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act is
amended by striking ``agreement'' and inserting ``consultation''.
(b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act is
amended--
(1) in clause (i), by striking ``such as'' and inserting
``including''; and
(2) in clause (iii), by striking ``Corporation'' and
inserting ``Corporation, except as provided in section
7(a)(2)(B)''.
SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT NEW
ASSESSMENT BASE.
(a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act is
amended to read as follows:
``(B) Minimum reserve ratio.--The reserve ratio
designated by the Board of Directors for any year may
not be less than 1.35 percent of estimated insured
deposits, or the comparable percentage of the assessment
base set forth in paragraph (2)(C).''.
(b) Section 3(y)(3) of the <<NOTE: 12 USC 1813.>> Federal Deposit
Insurance Act is amended by inserting ``, or such comparable percentage
of the assessment base set forth in section 7(b)(2)(C)'' before the
period.
(c) For a <<NOTE: Time period. Public information. 12 USC 1817
note.>> period of not less than 5 years after the date of the enactment
of this title, the Federal Deposit Insurance Corporation shall make
available to the public the reserve ratio and the designated reserve
ratio using both estimated insured deposits and the assessment base
under section 7(b)(2)(C) of the Federal Deposit Insurance Act.
(d) Reserve Ratio.--Notwithstanding the timing requirements of
section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act, the
Corporation shall take such steps as may be necessary for the reserve
ratio of the Deposit Insurance Fund to reach 1.35 percent of estimated
insured deposits by September 30, 2020.
(e) Offset.--In setting the assessments necessary to meet the
requirements of subsection (d), the Corporation shall offset the effect
of subsection (d) on insured depository institutions with total
consolidated assets of less than $10,000,000,000.
[[Page 124 STAT. 1540]]
SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE.
(a) Permanent Increase in Deposit Insurance.--Section 11(a)(1)(E) of
the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) is amended--
(1) by striking ``$100,000'' and inserting ``$250,000''; and
(2) by adding at the end the following new sentences:
``Notwithstanding any other provision of law, the increase in
the standard maximum deposit insurance amount to $250,000 shall
apply to depositors in any institution for which the Corporation
was appointed as receiver or conservator on or after January 1,
2008, and before October 3, 2008. The Corporation shall take
such actions as are necessary to carry out the requirements of
this section with respect to such depositors, without regard to
any time limitations under this Act. In implementing this and
the preceding 2 sentences, any payment on a deposit claim made
by the Corporation as receiver or conservator to a depositor
above the standard maximum deposit insurance amount in effect at
the time of the appointment of the Corporation as receiver or
conservator shall be deemed to be part of the net amount due to
the depositor under subparagraph (B).''
(b) Permanent Increase in Share Insurance.--Section 207(k)(5) of the
Federal Credit Union Act (12 U.S.C. 1787(k)(5)) is amended by striking
``$100,000'' and inserting ``$250,000''.
SEC. 336. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
(a) In General.--Section 2 of the Federal Deposit Insurance Act (12
U.S.C. 1812) is amended--
(1) in subsection (a)(1)(B), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Director of the
Consumer Financial Protection Bureau'';
(2) by amending subsection (d)(2) to read as follows:
``(2) Acting officials may serve.--In the event of a vacancy
in the office of the Comptroller of the Currency or the office
of Director of the Consumer Financial Protection Bureau and
pending the appointment of a successor, or during the absence or
disability of the Comptroller of the Currency or the Director of
the Consumer Financial Protection Bureau, the acting Comptroller
of the Currency or the acting Director of the Consumer Financial
Protection Bureau, as the case may be, shall be a member of the
Board of Directors in the place of the Comptroller or
Director.''; and
(3) in subsection (f)(2), by striking ``Office of Thrift
Supervision'' and inserting ``Consumer Financial Protection
Bureau''.
(b) Effective <<NOTE: 12 USC 1812 note.>> Date.--This section, and
the amendments made by this section, shall take effect on the transfer
date.
Subtitle D--Other Matters
SEC. <<NOTE: 12 USC 5451.>> 341. BRANCHING.
Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or
any other provision of Federal or State law, a savings association that
becomes a bank may--
[[Page 124 STAT. 1541]]
(1) continue to operate any branch or agency that the
savings association operated immediately before the savings
association became a bank; and
(2) establish, acquire, and operate additional branches and
agencies at any location within any State in which the savings
association operated a branch immediately before the savings
association became a bank, if the law of the State in which the
branch is located, or is to be located, would permit
establishment of the branch if the bank were a State bank
chartered by such State.
SEC. 342. <<NOTE: 12 USC 5452.>> OFFICE OF MINORITY AND WOMEN
INCLUSION.
(a) Office of Minority and Women Inclusion.--
(1) <<NOTE: Deadlines.>> Establishment.--
(A) In general.--Except as provided in subparagraph
(B), not later than 6 months after the date of enactment
of this Act, each agency shall establish an Office of
Minority and Women Inclusion that shall be responsible
for all matters of the agency relating to diversity in
management, employment, and business activities.
(B) Bureau.--The Bureau shall establish an Office of
Minority and Women Inclusion not later than 6 months
after the designated transfer date established under
section 1062.
(2) Transfer of responsibilities.--Each agency that, on the
day before the date of enactment of this Act, assigned the
responsibilities described in paragraph (1) (or comparable
responsibilities) to another office of the agency shall ensure
that such responsibilities are transferred to the Office.
(3) Duties with respect to civil rights laws.--The
responsibilities described in paragraph (1) do not include
enforcement of statutes, regulations, or executive orders
pertaining to civil rights, except each Director shall
coordinate with the agency administrator, or the designee of the
agency administrator, regarding the design and implementation of
any remedies resulting from violations of such statutes,
regulations, or executive orders.
(b) Director.--
(1) In general.--The Director of each Office shall be
appointed by, and shall report to, the agency administrator. The
position of Director shall be a career reserved position in the
Senior Executive Service, as that position is defined in section
3132 of title 5, United States Code, or an equivalent
designation.
(2) Duties.--Each <<NOTE: Standards.>> Director shall
develop standards for--
(A) equal employment opportunity and the racial,
ethnic, and gender diversity of the workforce and senior
management of the agency;
(B) increased participation of minority-owned and
women-owned businesses in the programs and contracts of
the agency, including standards for coordinating
technical assistance to such businesses; and
(C) assessing the diversity policies and practices
of entities regulated by the agency.
(3) Other duties.--Each Director shall advise the agency
administrator on the impact of the policies and regulations of
the agency on minority-owned and women-owned businesses.
[[Page 124 STAT. 1542]]
(4) Rule of construction.--Nothing in paragraph (2)(C) may
be construed to mandate any requirement on or otherwise affect
the lending policies and practices of any regulated entity, or
to require any specific action based on the findings of the
assessment.
(c) Inclusion in All Levels of Business Activities.--
(1) In general.--
The <<NOTE: Standards. Procedures.>> Director of each Office
shall develop and implement standards and procedures to ensure,
to the maximum extent possible, the fair inclusion and
utilization of minorities, women, and minority-owned and women-
owned businesses in all business and activities of the agency at
all levels, including in procurement, insurance, and all types
of contracts.
(2) Contracts.--The procedures established by each agency
for review and evaluation of contract proposals and for hiring
service providers shall include, to the extent consistent with
applicable law, a component that gives consideration to the
diversity of the applicant. Such procedure shall include a
written statement, in a form and with such content as the
Director shall prescribe, that a contractor shall ensure, to the
maximum extent possible, the fair inclusion of women and
minorities in the workforce of the contractor and, as
applicable, subcontractors.
(3) Termination.--
(A) Determination.--The standards and procedures
developed and implemented under this subsection shall
include a procedure for the Director to make a
determination whether an agency contractor, and, as
applicable, a subcontractor has failed to make a good
faith effort to include minorities and women in their
workforce.
(B) Effect of determination.--
(i) Recommendation to agency administrator.--
Upon a determination described in subparagraph
(A), the Director shall make a recommendation to
the agency administrator that the contract be
terminated.
(ii) Action by agency administrator.--Upon
receipt of a recommendation under clause (i), the
agency administrator may--
(I) terminate the contract;
(II) make a referral to the Office
of Federal Contract Compliance Programs
of the Department of Labor; or
(III) take other appropriate action.
(d) Applicability.--This section shall apply to all contracts of an
agency for services of any kind, including the services of financial
institutions, investment banking firms, mortgage banking firms, asset
management firms, brokers, dealers, financial services entities,
underwriters, accountants, investment consultants, and providers of
legal services. The contracts referred to in this subsection include all
contracts for all business and activities of an agency, at all levels,
including contracts for the issuance or guarantee of any debt, equity,
or security, the sale of assets, the management of the assets of the
agency, the making of equity investments by the agency, and the
implementation by the agency of programs to address economic recovery.
[[Page 124 STAT. 1543]]
(e) Reports.--Each Office shall submit to Congress an annual report
regarding the actions taken by the agency and the Office pursuant to
this section, which shall include--
(1) a statement of the total amounts paid by the agency to
contractors since the previous report;
(2) the percentage of the amounts described in paragraph (1)
that were paid to contractors described in subsection (c)(1);
(3) the successes achieved and challenges faced by the
agency in operating minority and women outreach programs;
(4) the challenges the agency may face in hiring qualified
minority and women employees and contracting with qualified
minority-owned and women-owned businesses; and
(5) any other information, findings, conclusions, and
recommendations for legislative or agency action, as the
Director determines appropriate.
(f) Diversity in Agency Workforce.--Each agency shall take
affirmative steps to seek diversity in the workforce of the agency at
all levels of the agency in a manner consistent with applicable law.
Such steps shall include--
(1) recruiting at historically black colleges and
universities, Hispanic-serving institutions, women's colleges,
and colleges that typically serve majority minority populations;
(2) sponsoring and recruiting at job fairs in urban
communities;
(3) placing employment advertisements in newspapers and
magazines oriented toward minorities and women;
(4) partnering with organizations that are focused on
developing opportunities for minorities and women to place
talented young minorities and women in industry internships,
summer employment, and full-time positions;
(5) where feasible, partnering with inner-city high schools,
girls' high schools, and high schools with majority minority
populations to establish or enhance financial literacy programs
and provide mentoring; and
(6) any other mass media communications that the Office
determines necessary.
(g) Definitions.--For <<NOTE: Applicability.>> purposes of this
section, the following definitions shall apply:
(1) Agency.--The term ``agency'' means--
(A) the Departmental Offices of the Department of
the Treasury;
(B) the Corporation;
(C) the Federal Housing Finance Agency;
(D) each of the Federal reserve banks;
(E) the Board;
(F) the National Credit Union Administration;
(G) the Office of the Comptroller of the Currency;
(H) the Commission; and
(I) the Bureau.
(2) Agency administrator.--The term ``agency administrator''
means the head of an agency.
(3) Minority.--The term ``minority'' has the same meaning as
in section 1204(c) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note).
(4) Minority-owned business.--The term ``minority-owned
business'' has the same meaning as in section 21A(r)(4)(A)
[[Page 124 STAT. 1544]]
of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)(A)), as
in effect on the day before the transfer date.
(5) Office.--The term ``Office'' means the Office of
Minority and Women Inclusion established by an agency under
subsection (a).
(6) Women-owned business.--The term ``women-owned business''
has the meaning given the term ``women's business'' in section
21A(r)(4)(B) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(r)(4)(B)), as in effect on the day before the transfer
date.
SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS.
(a) Banks and Savings Associations.--
(1) Amendments.--Section 11(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
(A) in subparagraph (B)--
(i) by striking ``The net amount'' and
inserting the following:
``(i) In general.--Subject to clause (ii), the
net amount''; and
(ii) by adding at the end the following new
clauses:
``(ii) Insurance for noninterest-bearing
transaction accounts.--Notwithstanding clause (i),
the Corporation shall fully insure the net amount
that any depositor at an insured depository
institution maintains in a noninterest-bearing
transaction account. Such amount shall not be
taken into account when computing the net amount
due to such depositor under clause (i).
``(iii) Noninterest-bearing transaction
account defined.--For purposes of this
subparagraph, the term `noninterest-bearing
transaction account' means a deposit or account
maintained at an insured depository institution--
``(I) with respect to which interest
is neither accrued nor paid;
``(II) on which the depositor or
account holder is permitted to make
withdrawals by negotiable or
transferable instrument, payment orders
of withdrawal, telephone or other
electronic media transfers, or other
similar items for the purpose of making
payments or transfers to third parties
or others; and
``(III) on which the insured
depository institution does not reserve
the right to require advance notice of
an intended withdrawal.''; and
(B) in subparagraph (C), by striking ``subparagraph
(B)'' and inserting ``subparagraph (B)(i)''.
(2) Effective date.--The <<NOTE: 12 USC 1821
note.>> amendments made by paragraph (1) shall take effect on
December 31, 2010.
(3) Prospective <<NOTE: Effective date. 12 USC 1821
note.>> repeal.--Effective January 1, 2013, section 11(a)(1) of
the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)), as
amended by paragraph (1), is amended--
(A) in subparagraph (B)--
(i) by striking ``deposit.--'' and all that
follows through ``clause (ii), the net amount''
and insert ``deposit.--The net amount''; and
[[Page 124 STAT. 1545]]
(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (C), by striking ``subparagraph
(B)(i)'' and inserting ``subparagraph (B)''.
(b) Credit Unions.--
(1) Amendments.--Section 207(k)(1) of the Federal Credit
Union Act (12 U.S.C. 1787(k)(1)) is amended--
(A) in subparagraph (A)--
(i) by striking ``Subject to the provisions of
paragraph (2), the net amount'' and inserting the
following:
``(i) Net amount of insurance payable.--
Subject to clause (ii) and the provisions of
paragraph (2), the net amount''; and
(ii) by adding at the end the following new
clauses:
``(ii) Insurance for noninterest-bearing
transaction accounts.--Notwithstanding clause (i),
the Board shall fully insure the net amount that
any member or depositor at an insured credit union
maintains in a noninterest-bearing transaction
account. Such amount shall not be taken into
account when computing the net amount due to such
member or depositor under clause (i).
``(iii) Noninterest-bearing transaction
account defined.--For purposes of this
subparagraph, the term `noninterest-bearing
transaction account' means an account or deposit
maintained at an insured credit union--
``(I) with respect to which interest
is neither accrued nor paid;
``(II) on which the account holder
or depositor is permitted to make
withdrawals by negotiable or
transferable instrument, payment orders
of withdrawal, telephone or other
electronic media transfers, or other
similar items for the purpose of making
payments or transfers to third parties
or others; and
``(III) on which the insured credit
union does not reserve the right to
require advance notice of an intended
withdrawal.''; and
(B) in subparagraph (B), by striking ``subparagraph
(A)'' and inserting ``subparagraph (A)(i)''.
(2) Effective <<NOTE: 12 USC 1787 note.>> date.--The
amendments made by paragraph (1) shall take effect upon the date
of the enactment of this Act
(3) Prospective <<NOTE: Effective date. 12 USC 1787
note.>> repeal.--Effective January 1, 2013, section 207(k)(1) of
the Federal Credit Union Act (12 U.S.C. 1787(k)(1)), as amended
by paragraph (1), is amended--
(A) in subparagraph (A)--
(i) by striking ``(i) net amount of insurance
payable.--'' and all that follows through
``paragraph (2), the net amount'' and inserting
``Subject to the provisions of paragraph (2), the
net amount''; and
(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (B), by striking ``subparagraph
(A)(i)'' and inserting ``subparagraph (A)''.
[[Page 124 STAT. 1546]]
Subtitle E--Technical and Conforming Amendments
SEC. 351. <<NOTE: 12 USC 906 note.>> EFFECTIVE DATE.
Except as provided in section 364(a), the amendments made by this
subtitle shall take effect on the transfer date.
SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF
1985.
Section 256(h) of the Balanced Budget and Emergency Deficit Control
Act of 1985 (2 U.S.C. 906(h)) is amended--
(1) in paragraph (4), by striking subparagraphs (C) and (G);
and
(2) by redesignating subparagraphs (D), (E), (F), and (H) as
subparagraphs (C), (D), (E), and (F), respectively.
SEC. 353. BANK ENTERPRISE ACT OF 1991.
Section 232(a) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834(a)) is amended--
(1) in the subsection heading, by striking ``by Federal
Reserve Board'';
(2) in paragraph (1)--
(A) by striking ``The Board of Governors of the
Federal Reserve System,'' and inserting ``The
Comptroller of the Currency''; and
(B) by striking ``section 7(b)(2)(H)'' and inserting
``section 7(b)(2)(E)'';
(3) in paragraph (2)(A), by striking ``Board'' and inserting
``Comptroller''; and
(4) in paragraph (3)--
(A) by redesignating subparagraphs (A) through (C)
as subparagraphs (B) through (D), respectively; and
(B) by inserting before subparagraph (B) the
following:
``(A) Comptroller.--The <<NOTE: Definition.>> term
`Comptroller' means the Comptroller of the Currency.''.
SEC. 354. BANK HOLDING COMPANY ACT OF 1956.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended--
(1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)), strike
``Director of the Office of Thrift Supervision'' and inserting
``appropriate Federal banking agency'';
(2) in section 4 (12 U.S.C. 1843)--
(A) in subsection (i)--
(i) in paragraph (4)--
(I) in subparagraph (A)--
(aa) in the subparagraph
heading, by striking ``to
director''; and
(bb) by striking ``Board''
and all that follows through the
end of the subparagraph and
inserting ``Board shall solicit
comments and recommendations
from--
``(i) the Comptroller of the Currency, with
respect to the acquisition of a Federal savings
association; and
[[Page 124 STAT. 1547]]
``(ii) the Federal Deposit Insurance
Corporation, with respect to the acquisition of a
State savings association.''.
(II) in subparagraph (B), by
striking ``Director'' each place that
term appears and inserting ``Comptroller
of the Currency or the Federal Deposit
Insurance Corporation, as applicable,'';
(ii) in paragraph (5)--
(I) in subparagraph (B), by striking
``Director with'' and inserting
``Comptroller of the Currency or the
Federal Deposit Insurance Corporation,
as applicable, with''; and
(II) by striking ``Director'' each
place that term appears and inserting
``Comptroller of the Currency or the
Federal Deposit Insurance Corporation'';
(iii) in paragraph (6), by striking
``Director'' and inserting ``Comptroller of the
Currency or the Federal Deposit Insurance
Corporation, as applicable,''; and
(iv) by striking paragraph (7); and
(3) in section 5(f) (12 U.S.C. 1844(f))--
(A) by striking ``subpena'' each place that term
appears and inserting ``subpoena'';
(B) by striking ``subpenas'' each place that term
appears and inserting ``subpoenas''; and
(C) by striking ``subpenaed'' and inserting
``subpoenaed''.
SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF 1970.
Section 106(b)(1) of the Bank Holding Company Act Amendments of 1970
(12 U.S.C. 1972(1)) is amended in the undesignated matter following
subparagraph (E) by inserting ``issue such regulations as are necessary
to carry out this section, and, in consultation with the Comptroller of
the Currency and the Federal Deposit Insurance Company, may'' after
``The Board may''.
SEC. 356. BANK PROTECTION ACT OF 1968.
The Bank Protection Act of 1968 (12 U.S.C. 1881 et seq.) is
amended--
(1) in section 2 (12 U.S.C. 1881), by striking ``the term''
and all that follows through the end of the section and
inserting ``the <<NOTE: Definition.>> term `Federal supervisory
agency' means the appropriate Federal banking agency, as defined
in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).'';
(2) in section 3 (12 U.S.C. 1882), by striking ``and loan''
each place that term appears; and
(3) in section 5 (12 U.S.C. 1884), by striking ``and loan''.
SEC. 357. BANK SERVICE COMPANY ACT.
The Bank Service Company Act (12 U.S.C. 1861 et seq.) is amended--
(1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))--
(A) by inserting after ``an insured bank,'' the
following: ``a savings association,'';
(B) by striking ``Director of the Office of Thrift
Supervision'' and inserting ``appropriate Federal
banking agency''; and
[[Page 124 STAT. 1548]]
(C) by striking ``, the Federal Savings and Loan
Insurance Corporation,'';
(2) in section 1(b)(5), by striking ``term `insured
depository institution' has the same meaning as in section
3(c)'' and inserting ``terms `depository institution' and
`savings association' have the same meanings as in section 3'';
and
(3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)), by inserting
``each'' after ``notify''.
SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977.
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is
amended--
(1) in section 803 (12 U.S.C. 2902)--
(A) in paragraph (1)--
(i) in subparagraph (A), by inserting ``and
Federal savings associations (the deposits of
which are insured by the Federal Deposit Insurance
Corporation)'' after ``banks'';
(ii) in subparagraph (B), by striking ``and
bank holding companies'' and inserting ``, bank
holding companies, and savings and loan holding
companies''; and
(iii) in subparagraph (C), by striking ``;
and'' and inserting ``, and State savings
associations (the deposits of which are insured by
the Federal Deposit Insurance Corporation).''; and
(B) by striking paragraph (2) (relating to the
Office of Thrift Supervision), as added by section
744(q) of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (Public Law 101-73; 103
Stat. 440); and
(2) in <<NOTE: Regulations. Applicability.>> section 806 (12
U.S.C. 2905), by inserting ``, except that the Comptroller of
the Currency shall prescribe regulations applicable to savings
associations and the Board of Governors shall prescribe
regulations applicable to insured State member banks, bank
holding companies and savings and loan holding companies,''
after ``supervisory agency''.
SEC. 359. CRIME CONTROL ACT OF 1990.
The Crime Control Act of 1990 is amended--
(1) in section 2539(c)(2) (28 U.S.C. 509 note)--
(A) by striking subparagraphs (C) and (D); and
(B) by redesignating subparagraphs (E) through (H)
as subparagraphs (C) through (G), respectively; and
(2) in section 2554(b)(2) (Public Law 101-647; 104 Stat.
4890)--
(A) in subparagraph (A), by striking ``, the
Director of the Office of Thrift Supervision,'' and
inserting ``the Comptroller of the Currency''; and
(B) in subparagraph (B), by striking ``, the
Director'' and all that follows through ``Trust
Corporation'' and inserting ``or the Federal Deposit
Insurance Corporation''.
SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.
The Depository Institution Management Interlocks Act (12 U.S.C. 3201
et seq.) is amended--
(1) in section 207 (12 U.S.C. 3206)--
(A) in paragraph (1), by inserting before the comma
at the end the following: ``and Federal savings
associations
[[Page 124 STAT. 1549]]
(the deposits of which are insured by the Federal
Deposit Insurance Corporation)'';
(B) in paragraph (2), by striking ``, and bank
holding companies'' and inserting ``, bank holding
companies, and savings and loan holding companies'';
(C) in paragraph (3), by striking ``Corporation,''
and inserting ``Corporation and State savings
associations (the deposits of which are insured by the
Federal Deposit Insurance Corporation),'';
(D) by striking paragraph (4);
(E) by redesignating paragraphs (5) and (6) as
paragraphs (4) and (5), respectively; and
(F) in paragraph (5), as so redesignated, by
striking ``through (5)'' and inserting ``through (4)'';
(2) in section 209 (12 U.S.C. 3207)--
(A) in paragraph (1), by inserting before the comma
at the end the following: ``and Federal savings
associations (the deposits of which are insured by the
Federal Deposit Insurance Corporation)'';
(B) in paragraph (2), by striking ``, and bank
holding companies'' and inserting ``, bank holding
companies, and savings and loan holding companies'';
(C) in paragraph (3), by striking ``Corporation,''
and inserting ``Corporation and State savings
associations (the deposits of which are insured by the
Federal Deposit Insurance Corporation),'';
(D) by striking paragraph (4); and
(E) by redesignating paragraph (5) as paragraph (4);
and
(3) in section 210(a) (12 U.S.C. 3208(a))--
(A) by striking ``his'' and inserting ``the''; and
(B) by inserting ``of the Attorney General'' after
``enforcement functions''.
SEC. 361. EMERGENCY HOMEOWNERS' RELIEF ACT.
Section 110 of the Emergency Homeowners' Relief Act (12 U.S.C. 2709)
is amended in the second sentence, by striking ``Home Loan Bank Board,
the Federal Savings and Loan Insurance Corporation'' and inserting
``Housing Finance Agency''.
SEC. 362. FEDERAL CREDIT UNION ACT.
The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended--
(1) in section 107(8) (12 U.S.C. 1757(8)), by striking ``or
the Federal Savings and Loan Insurance Corporation'';
(2) in section 205 (12 U.S.C. 1785)--
(A) in subsection (b)(2)(G)(i), by striking ``the
Office of Thrift Supervision and''; and
(B) in subsection (i)(1), by striking ``or the
Federal Savings and Loan Insurance Corporation''; and
(3) in section 206(g)(7) (12 U.S.C. 1786(g)(7))--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``(b)(8)'' and
inserting ``(b)(9)'';
(ii) in clause (v)--
(I) by striking ``depository'' and
inserting ``financial''; and
(II) by adding ``and'' at the end;
[[Page 124 STAT. 1550]]
(iii) in clause (vi)--
(I) by striking ``Board'' and
inserting ``Agency''; and
(II) by striking ``; and'' and
inserting a period; and
(iv) by striking clause (vii); and
(B) in subparagraph (D)--
(i) in clause (iii), by adding ``and'' at the
end;
(ii) in clause (iv)--
(I) by striking ``Board'' and
inserting ``Agency''; and
(II) by striking ``and'' at the end;
and
(iii) by striking clause (v).
SEC. 363. FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended--
(1) in section 3 (12 U.S.C. 1813)--
(A) in subsection (b)(1)(C), by striking ``Director
of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(B) in subsection (l)(5), in the matter preceding
subparagraph (A), by striking ``Director of the Office
of Thrift Supervision,''; and
(C) in subsection (z), by striking ``the Director of
the Office of Thrift Supervision,'';
(2) in section 7 (12 U.S.C. 1817)--
(A) in subsection (a)--
(i) in paragraph (2)--
(I) in subparagraph (A)--
(aa) in the first sentence,
by striking ``the Director of
the Office of Thrift
Supervision,'';
(bb) in the second
sentence--
(AA) by striking ``the
Director of the Office of
Thrift Supervision,'' and
inserting ``to''; and
(BB) by inserting ``to''
before ``any Federal home'';
and
(cc) by striking ``Finance
Board'' each place that term
appears and inserting ``Finance
Agency''; and
(II) in subparagraph (B), by
striking ``the Comptroller of the
Currency, the Board of Governors of the
Federal Reserve System, and the Director
of the Office of Thrift Supervision,''
and inserting ``the Comptroller of the
Currency and the Board of Governors of
the Federal Reserve System,'';
(ii) in paragraph (3), in the first sentence,
by striking ``Comptroller of the Currency, the
Chairman of the Board of Governors of the Federal
Reserve System, and the Director of the Office of
Thrift Supervision.'' and inserting ``Comptroller
of the Currency, and the Chairman of the Board of
Governors of the Federal Reserve System.'';
(iii) in paragraph (6), by striking ``section
232(a)(3)(C)'' and inserting ``section
232(a)(3)(D)''; and
[[Page 124 STAT. 1551]]
(iv) in paragraph (7), by striking ``, the
Director of the Office of Thrift Supervision,'';
and
(B) in subsection (n)--
(i) in the heading, by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(ii) in the first sentence--
(I) by striking ``the Director of
the Office of Thrift Supervision'' and
inserting ``the Comptroller of the
Currency''; and
(II) by inserting ``Federal'' before
``savings associations'';
(iii) in the third sentence, by striking ``,
the Financing Corporation, and the Resolution
Funding Corporation''; and
(iv) by striking ``the Director'' each place
that term appears and inserting ``the
Comptroller'';
(3) in section 8 (12 U.S.C. 1818)--
(A) in subsection (a)(8)(B)(ii), in the last
sentence, by striking ``Director of the Office of Thrift
Supervision'' each place that term appears and inserting
``Comptroller of the Currency'';
(B) in subsection (b)(3)--
(i) by inserting ``any savings and loan
holding company and any subsidiary (other than a
depository institution) of a savings and loan
holding company (as such terms are defined in
section 10 of Home Owners' Loan Act)), any
noninsured State member bank'' after ``Bank
Holding Company Act of 1956,''; and
(ii) by inserting ``or against a savings and
loan holding company or any subsidiary thereof
(other than a depository institution or a
subsidiary of such depository institution)''
before the period at the end;
(C) by striking paragraph (9) of subsection (b) and
inserting the following new paragraph:
``(9) [Repealed]''.
(D) in subsection (e)(7)--
(i) in subparagraph (A)--
(I) in clause (v), by inserting
``and'' after the semicolon;
(II) in clause (vi)--
(aa) by striking ``Board''
and inserting ``Agency''; and
(bb) by striking ``; and''
and inserting a period; and
(III) by striking clause (vii); and
(ii) in subparagraph (D)--
(I) in clause (iii), by inserting
``and'' after the semicolon;
(II) in clause (iv)--
(aa) by striking ``Board''
and inserting ``Agency''; and
(bb) by striking ``; and''
and inserting a period; and
(III) by striking clause (v);
(E) in subsection (j)--
[[Page 124 STAT. 1552]]
(i) in paragraph (2), by striking ``, or as a
savings association under subsection (b)(9) of
this section'';
(ii) in paragraph (3), by inserting ``or''
after the semicolon;
(iii) in paragraph (4), by striking ``; or''
and inserting a comma; and
(iv) by striking paragraph (5);
(F) in subsection (o), by striking ``Director of the
Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''; and
(G) in subsection (w)(3)(A), by striking ``and the
Office of Thrift Supervision'';
(4) in section 10 (12 U.S.C. 1820)--
(A) in subsection (d)(5), by striking ``or the
Resolution Trust Corporation'' each place that term
appears; and
(B) in subsection (k)(5)(B)--
(i) in clause (ii), by inserting ``and'' after
the semicolon;
(ii) in clause (iii), by striking ``; and''
and inserting a period; and
(iii) by striking clause (iv);
(5) in section 11 (12 U.S.C. 1821)--
(A) in subsection (c)--
(i) in paragraph (2)(A)(ii), by striking
``(other than section 21A of the Federal Home Loan
Bank Act)'';
(ii) in paragraph (4), by striking ``Except as
otherwise provided in section 21A of the Federal
Home Loan Bank Act and notwithstanding'' and
inserting ``Notwithstanding'';
(iii) in paragraph (6)--
(I) in the heading, by striking
``Director of the office of thrift
supervision'' and inserting
``Comptroller of the currency'';
(II) in subparagraph (A)--
(aa) by striking ``or the
Resolution Trust Corporation'';
and
(bb) by striking ``Director
of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency'';
and
(III) by amending subparagraph (B)
to read as follows:
``(B) Receiver.--The Corporation may, at the
discretion of the Comptroller of the Currency, be
appointed receiver and the Corporation may accept any
such appointment.'';
(iv) in paragraph (12)(A), by striking ``or
the Resolution Trust Corporation'';
(B) in subsection (d)--
(i) in paragraph (17)(A), by striking ``or the
Director of the Office of Thrift Supervision'';
and
(ii) in paragraph (18)(B), by striking ``or
the Director of the Office of Thrift
Supervision'';
(C) in subsection (m)--
(i) in paragraph (9), by striking ``or the
Director of the Office of Thrift Supervision, as
appropriate'';
[[Page 124 STAT. 1553]]
(ii) in paragraph (16), by striking ``or the
Director of the Office of Thrift Supervision, as
appropriate'' each place that term appears; and
(iii) in paragraph (18), by striking ``or the
Director of the Office of Thrift Supervision, as
appropriate'' each place that term appears;
(D) in subsection (n)--
(i) in paragraph (1)(A)--
(I) by striking ``, or the Director
of the Office of Thrift Supervision,
with respect to'' and inserting ``or'';
and
(II) by striking ``applicable,,''
and inserting ``applicable,'';
(ii) in paragraph (2)(A), by striking ``or the
Director of the Office of Thrift Supervision'';
(iii) in paragraph (4)(D), by striking ``and
the Director of the Office of Thrift Supervision,
as appropriate,'';
(iv) in paragraph (4)(G), by striking ``and
the Director of the Office of Thrift Supervision,
as appropriate,''; and
(v) in paragraph (12)(B)--
(I) by inserting ``as'' after
``shall appoint the Corporation'';
(II) by striking ``or the Director
of the Office of Thrift Supervision, as
appropriate,'' each place such term
appears;
(E) in subsection (p)--
(i) in paragraph (2)(B), by striking ``the
Corporation, the FSLIC Resolution Fund, or the
Resolution Trust Corporation,'' and inserting ``or
the Corporation,''; and
(ii) in paragraph (3)(B), by striking ``, the
FSLIC Resolution Fund, the Resolution Trust
Corporation,''; and
(F) in subsection (r), by striking ``and the
Resolution Trust Corporation'';
(6) in section 13(k)(1)(A)(iv) (12 U.S.C.
1823(k)(1)(A)(iv)), by striking ``Director of the Office of
Thrift Supervision'' and inserting ``Comptroller of the
Currency'';
(7) in section 18 (12 U.S.C. 1828)--
(A) in subsection (c)(2)--
(i) in subparagraph (A), by inserting ``or a
Federal savings association'' before the
semicolon;
(ii) in subparagraph (B), by adding ``and'' at
the end;
(iii) in subparagraph (C), by striking
``(except'' and all that follows through ``; and''
and inserting ``or a State savings association.'';
and
(iv) by striking subparagraph (D);
(B) in subsection (g)(1), by striking ``the Director
of the Office of Thrift Supervision''and inserting ``the
Comptroller of the Currency'';
(C) in subsection (i)(2)(C), by striking ``Director
of the Office of Thrift Supervision'' and inserting
``Corporation''; and
(D) in subsection (m)--
[[Page 124 STAT. 1554]]
(i) in paragraph (1)--
(I) in subparagraph (A), by striking
``and the Director of the Office of
Thrift Supervision'' and inserting ``or
the Comptroller of the Currency, as
appropriate,''; and
(II) in subparagraph (B), by
striking ``and orders of the Director of
the Office of Thrift Supervision'' and
inserting ``of the Comptroller of the
Currency and orders of the Corporation
and the Comptroller of the Currency'';
(ii) in paragraph (2)--
(I) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency, as
appropriate,''; and
(II) in subparagraph (B)--
(aa) in the matter before
clause (i), by striking
``Director of the Office of
Thrift Supervision'' and
inserting ``Corporation or the
Comptroller of the Currency, as
appropriate,''; and
(bb) in the matter following
clause (ii)--
(AA) in the first
sentence, by striking
``Director of the Office of
Thrift Supervision'' and
inserting ``Office of the
Comptroller of the Currency,
as appropriate,''; and
(BB) by striking the
second sentence and
inserting the following:
``The Corporation or the
Comptroller of the Currency,
as appropriate, may take any
other corrective measures
with respect to the
subsidiary, including the
authority to require the
subsidiary to terminate the
activities or operations
posing such risks, as the
Corporation or the
Comptroller of the Currency,
respectively, may deem
appropriate.''; and
(iii) in paragraph (3)--
(I) in subparagraph (A), in the
second sentence--
(aa) by inserting ``, in the
case of a Federal savings
association,'' before ``consult
with''; and
(bb) by striking ``Director
of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency'';
and
(II) in subparagraph (B)--
(aa) in the subparagraph
heading, by striking
``Director'' and inserting
``Comptroller of the currency'';
(bb) by striking ``Office of
Thrift Supervision'' and
inserting ``Comptroller of the
Currency'';
(cc) by inserting a comma
after ``soundness''; and
(dd) by inserting ``as to
Federal savings associations''
after ``compliance'';
(8) in section 19(e) (12 U.S.C. 1829(e))--
[[Page 124 STAT. 1555]]
(A) in paragraph (1), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Board of
Governors of the Federal Reserve System''; and
(B) in paragraph (2), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Board of
Governors of the Federal Reserve System'';
(9) in section 28 (12 U.S.C. 1831e)--
(A) in subsection (e)--
(i) in paragraph (2)--
(I) in subparagraph (A)(ii), by
striking ``Director of the Office of
Thrift Supervision'' and inserting
``Comptroller of the Currency or the
Corporation, as appropriate'';
(II) in subparagraph (C), by
striking ``Director of the Office of
Thrift Supervision'' and inserting
``Comptroller of the Currency or the
Corporation, as appropriate,''; and
(III) in subparagraph (F), by
striking ``Director of the Office of
Thrift Supervision'' and inserting
``Comptroller of the Currency or the
Corporation, as appropriate''; and
(ii) in paragraph (3)--
(I) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting
``Comptroller of the Currency or the
Corporation, as appropriate''; and
(II) in subparagraph (B), by
striking ``Director of the Office of
Thrift Supervision'' and inserting
``Comptroller of the Currency or the
Corporation, as appropriate,''; and
(B) in subsection (h)(2), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency, of the Corporation,'';
and
(10) in section 33(e) (12 U.S.C. 1831j(e)), by striking
``Federal Housing Finance Board, the Comptroller of the
Currency, and the Director of the Office of Thrift Supervision''
and inserting ``Federal Housing Finance Agency and the
Comptroller of the Currency''.
SEC. 364. FEDERAL HOME LOAN BANK ACT.
(a) Repeal <<NOTE: 12 USC 1438 note. Effective date.>> of Section
18(c).--Effective 90 days after the transfer date, section 18(c) of the
Federal Home Loan Bank Act (12 U.S.C. 1438(c)) is repealed.
(b) Repeal of Section 21A.--Section 21A of the Federal Home Loan
Bank Act (12 U.S.C. 1441a) is repealed.
SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND
SOUNDNESS ACT OF 1992.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) is amended--
(1) in section 1315(b) (12 U.S.C. 4515(b)), by striking
``the Federal Deposit Insurance Corporation, and the Office of
Thrift Supervision.'' and inserting ``and the Federal Deposit
Insurance Corporation.''; and
(2) in section 1317(c) (12 U.S.C. 4517(c)), by striking
``the Federal Deposit Insurance Corporation, or the Director of
the Office of Thrift Supervision'' and inserting ``or the
Federal Deposit Insurance Corporation''.
[[Page 124 STAT. 1556]]
SEC. 366. FEDERAL RESERVE ACT.
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended--
(1) in section 11(a)(2) (12 U.S.C. 248(a)(2))--
(A) by inserting ``State savings associations that
are insured depository institutions (as defined in
section 3 of the Federal Deposit Insurance Act),'' after
``case of insured'';
(B) by striking ``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of the
Currency'';
(C) by inserting ``Federal'' before ``savings
association which''; and
(D) by striking ``savings and loan association'' and
inserting ``savings association''; and
(2) in section 19(b) (12 U.S.C. 461(b))--
(A) in paragraph (1)(F), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''; and
(B) in paragraph (4)(B), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''.
SEC. 367. FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT
ACT OF 1989.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 is amended--
(1) in section 203 (12 U.S.C. 1812 note), by striking
subsection (b);
(2) in section 302(1) (12 U.S.C. 1467a note), by striking
``Director of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(3) in section 305(12 U.S.C. 1464 note), by striking
subsection (b);
(4) in section 308 (12 U.S.C. 1463 note)--
(A) in subsection (a), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Chairman
of the Board of Governors of the Federal Reserve System,
the Comptroller of the Currency, the Chairman of the
National Credit Union Administration,''; and
(B) by adding at the end the following new
subsection:
``(c) Reports.--The Secretary of the Treasury, the Chairman of the
Board of Governors of the Federal Reserve System, the Comptroller of the
Currency, the Chairman of the National Credit Union Administration, and
the Chairperson of Board of Directors of the Federal Deposit Insurance
Corporation shall each submit an annual report to the Congress
containing a description of actions taken to carry out this section.'';
(5) in section 402 (12 U.S.C. 1437 note)--
(A) in subsection (a), by striking ``Director of the
Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(B) by striking subsection (b);
(C) in subsection (e)--
(i) in paragraph (1), by striking ``Office of
Thrift Supervision'' and inserting ``Comptroller
of the Currency''; and
(ii) in each of paragraphs (2), (3), and (4),
by striking ``Director of the Office of Thrift
Supervision''
[[Page 124 STAT. 1557]]
each place that term appears and inserting
``Comptroller of the Currency''; and
(D) by striking ``Federal Housing Finance Board''
each place that term appears and inserting ``Federal
Housing Finance Agency'';
(6) in section 1103(a) (12 U.S.C. 3332(a)), by striking
``and the Resolution Trust Corporation'';
(7) in section 1205(b) (12 U.S.C. 1818 note)--
(A) in paragraph (1)--
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraphs (C)
through (F) as subparagraphs (B) through (E),
respectively; and
(B) in paragraph (2), by striking ``paragraph
(1)(F)'' and inserting ``paragraph (1)(E)'';
(8) in section 1206 (12 U.S.C. 1833b)--
(A) by striking ``Board, the Oversight Board of the
Resolution Trust Corporation'' and inserting ``Agency,
and''; and
(B) by striking ``, and the Office of Thrift
Supervision'';
(9) in section 1216 (12 U.S.C. 1833e)--
(A) in subsection (a)--
(i) in paragraph (3), by adding ``and'' at the
end;
(ii) in paragraph (4), by striking the
semicolon at the end and inserting a period;
(iii) by striking paragraphs (2), (5), and
(6); and
(iv) by redesignating paragraphs (3) and (4),
as paragraphs (2) and (3), respectively;
(B) in subsection (c)--
(i) by striking ``the Director of the Office
of Thrift Supervision,'' and inserting ``and'';
and
(ii) by striking ``the Thrift Depositor
Protection Oversight Board of the Resolution Trust
Corporation, and the Resolution Trust
Corporation''; and
(C) in subsection (d)--
(i) by striking paragraphs (3), (5), and (6);
and
(ii) by redesignating paragraphs (4), (7), and
(8) as paragraphs (3), (4), and (5), respectively.
SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973.
Section 3(a)(5) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4003(a)(5)) is amended by striking ``, the Office of Thrift
Supervision''.
SEC. 369. HOME OWNERS' LOAN ACT.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended--
(1) in section 1 (12 U.S.C. 1461), by striking the table of
contents;
(2) in section 2 (12 U.S.C. 1462), as amended by this Act--
(A) by striking paragraphs (1) and (3);
(B) by redesignating paragraph (2) as paragraph (1);
(C) by redesignating paragraphs (4) through (9) as
paragraphs (2) through (7), respectively; and
(D) by <<NOTE: Definitions.>> adding at the end the
following:
[[Page 124 STAT. 1558]]
``(8) Board.--The term `Board', other than in the context of
the Board of Directors of the Corporation, means the Board of
Governors of the Federal Reserve System.
``(9) Comptroller.--The term `Comptroller' means the
Comptroller of the Currency.'';
(3) in section 3 (12 U.S.C. 1462a)--
(A) by striking the section heading and inserting
the following:
``SEC. 3. ADMINISTRATIVE PROVISIONS.'';
(B) by striking subsections (a), (b), (c), (d), (g),
(h), (i), and (j);
(C) by redesignating subsections (e) and (f) as
subsections (a) and (b), respectively;
(D) in subsection (a), as so redesignated--
(i) in the heading by striking ``of the
Director''; and
(ii) in the matter preceding paragraph (1), by
striking ``The Director'' and inserting ``In
accordance with subtitle A of title III of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act, the appropriate Federal banking
agency''; and
(E) in subsection (b), as so redesignated, by
striking ``Director'' and inserting ``appropriate
Federal banking agency'';
(4) in section 4 (12 U.S.C. 1463)--
(A) in subsection (a)--
(i) in the subsection heading, by striking
``Federal'';
(ii) by striking paragraphs (1) and (2) and
inserting the following:
``(1) Examination and safe and sound operation.--
``(A) Federal savings associations.--The Comptroller
shall provide for the examination and safe and sound
operation of Federal savings associations.
``(B) State savings associations.--The Corporation
shall provide for the examination and safe and sound
operation of State savings associations.
``(2) Regulations for savings associations.--The Comptroller
may prescribe regulations with respect to savings associations,
as the Comptroller determines to be appropriate to carry out the
purposes of this Act.''; and
(iii) in paragraph (3), by striking
``Director'' each place that term appears and
inserting ``Comptroller and the Corporation'';
(B) in subsection (b)--
(i) in paragraph (2)--
(I) in subparagraph (A), by adding
``and'' at the end;
(II) in subparagraph (B), by
striking ``; and'' and inserting a
period; and
(III) by striking subparagraph (C);
and
(ii) by striking ``Director'' each place that
term appears and inserting ``Comptroller'';
(C) in subsection (c)--
[[Page 124 STAT. 1559]]
(i) by striking ``All regulations and policies
of the Director'' and inserting ``The regulations
of the Comptroller and the policies of the
Comptroller and the Corporation''; and
(ii) by striking ``of the Currency'';
(D) in subsection (e)(5), by striking ``Director''
and inserting ``Comptroller'';
(E) in subsection (f), by striking ``Director'' each
place that term appears and inserting ``appropriate
Federal banking agency''; and
(F) in subsection (h), by striking ``Director'' each
place that term appears and inserting ``appropriate
Federal banking agency'';
(5) in section 5 (12 U.S.C. 1464)--
(A) in subsection (a), by striking ``Director'',
each place such term appears and inserting ``Comptroller
of the Currency'';
(B) in subsection (b), by striking ``Director'',
each place such term appears and inserting ``Comptroller
of the Currency'';
(C) in subsection (c)--
(i) in paragraph (5)--
(I) in subparagraph (A), by striking
``Director'' and inserting ``appropriate
Federal banking agency''; and
(II) in subparagraph (B)--
(aa) by striking ``The
Director'' and inserting ``The
appropriate Federal banking
agency''; and
(bb) by striking ``the
Director'' and inserting ``the
appropriate Federal banking
agency'';
(D) in subsection (d)--
(i) in paragraph (1)--
(I) in subparagraph (A)--
(aa) in the first sentence,
by striking ``Director'' and
inserting ``appropriate Federal
banking agency'';
(bb) in the second
sentence--
(AA) by striking
``Director's own name and
through the Director's own
attorneys'' and inserting
``name of the appropriate
Federal banking agency and
through the attorneys of the
appropriate Federal banking
agency''; and
(BB) by striking
``Director'' each place that
term appears and inserting
``appropriate Federal
banking agency''; and
(cc) in the third sentence,
by striking ``Director'' each
place that term appears and
inserting ``Comptroller'';
(II) in subparagraph (B)--
(aa) in clauses (i) through
(iv), by striking ``Director''
each place that term appears and
inserting ``appropriate Federal
banking agency'';
(III) in clause (v)--
[[Page 124 STAT. 1560]]
(aa) in the matter preceding
subclause (I), by striking
``Director'' and inserting
``appropriate Federal banking
agency'';
(bb) in subclause (II), by
striking ``subpenas'' and
inserting ``subpoenas''; and
(cc) in the matter following
subclause (II), by striking
``subpena'' and inserting
``subpoena'';
(IV) in clause (vi)--
(aa) in the first sentence,
by striking ``Director'' and
inserting ``appropriate Federal
banking agency''; and
(bb) in the second sentence,
by striking ``Director'' and
inserting ``Comptroller'';
(V) in clause (vii)--
(aa) in the first sentence,
by striking ``subpena'' and
inserting ``subpoena'';
(bb) in the second sentence,
by striking ``subpenaed'' and
inserting ``subpoenaed''; and
(cc) in the third sentence,
by striking ``Director'' and
inserting ``appropriate Federal
banking agency'';
(ii) in paragraph (2)--
(I) in subparagraph (A)--
(aa) by striking ``Director
of the Office of Thrift
Supervision'' and inserting
``appropriate Federal banking
agency'';
(bb) by striking ``any
insured savings association''
and inserting ``an insured
savings association''; and
(cc) by striking ``Director
determines, in the Director's
discretion'' and inserting
``appropriate Federal banking
agency determines, in the
discretion of the appropriate
Federal banking agency'';
(II) in subparagraph (B), by
striking ``Director'' each place that
term appears and inserting ``appropriate
Federal banking agency'';
(III) in subparagraphs (C) and (D),
by striking ``Director'' and inserting
``appropriate Federal banking agency'';
(IV) in subparagraph (E)--
(aa) in clause (ii)--
(AA) in the clause
heading, by striking ``or
rtc''; and
(BB) by striking ``or
the Resolution Trust
Corporation, as
appropriate,'' each place
that term appears; and
(bb) by striking
``Director'' each place that
term appears and inserting
``appropriate Federal banking
agency''; and
(iii) in paragraph (3)--
(I) in subparagraph (A), by striking
``Director'' each place that term
appears and inserting ``Comptroller'';
and
(II) in subparagraph (B)--
[[Page 124 STAT. 1561]]
(aa) in the subparagraph
heading, by striking ``or rtc'';
(bb) by striking
``Corporation or the Resolution
Trust''; and
(cc) by striking
``Director'' and inserting
``Comptroller'';
(iv) in paragraph (4), by striking
``Director'' and inserting ``appropriate Federal
banking agency'';
(v) in paragraph (6)--
(I) in subparagraph (A), by striking
``Director'' and inserting
``Comptroller''; and
(II) in subparagraphs (B) and (C),
by striking ``Director'' each place that
term appears and inserting ``appropriate
Federal banking agency'';
(vi) in paragraph (7)--
(I) in subparagraphs (A), (B), and
(D), by striking ``Director'' each place
that term appears and inserting
``appropriate Federal banking agency'';
(II) in subparagraph (C), by
striking ``Director'' and inserting
``Federal Deposit Insurance Corporation
or the Comptroller, as appropriate,'';
and
(III) by striking subparagraph (E)
and inserting the following:
``(E) Administration by the comptroller and the
corporation.--The Comptroller may issue such
regulations, and the appropriate Federal banking agency
may issue such orders, including those issued pursuant
to section 8 of the Federal Deposit Insurance Act, as
may be necessary to administer and carry out this
paragraph and to prevent evasion of this paragraph.'';
(E) in subsection (e)(2), strike ``Director'' and
insert ``Comptroller'';
(F) in subsection (i)--
(i) by striking ``Director'', each place such
term appears, and inserting ``Comptroller'';
(ii) in paragraph (2), in the heading, by
striking ``director'' and inserting
``Comptroller'';
(iii) in paragraph (5)(A), by striking ``of
the Currency''; and
(iv) except as provided in clauses (i) through
(iii), by striking ``Director'' each place such
term appears and inserting ``Comptroller'';
(G) in subsection (o)--
(i) in paragraph (1), by striking ``Director''
and inserting ``Comptroller''; and
(ii) in paragraph (2)(B), by striking
``Director's determination'' and inserting
``determination of the Comptroller'';
(H) in subsections (m), (n), (o), and (p), by
striking ``Director'', each place such term appears, and
inserting ``Comptroller'';
(I) in subsection (q)--
(i) in paragraph (6), by striking ``of
Governors of the Federal Reserve System'';
(ii) by striking ``Director'' each place that
term appears and inserting ``Board''; and
[[Page 124 STAT. 1562]]
(iii) by inserting ``in consultation with the
Comptroller and the Corporation,'' before
``considers'';
(J) in subsection (r)(3), by striking ``Director''
and inserting ``Comptroller of the Currency'';
(K) in subsection (s)--
(i) in paragraph (1), strike ``Director'' and
insert ``Comptroller of the Currency'';
(ii) in paragraph (2), strike ``Director'' and
insert ``Comptroller of the Currency'';
(iii) in paragraph (3), by striking
``Director's discretion, the Director'' and
inserting ``discretion of the appropriate Federal
banking agency, the appropriate Federal banking
agency,'';
(iv) in paragraph (4), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking agency'';
and
(v) in paragraph (5)--
(I) by striking ``Director'', each
place such term appears, and inserting
``appropriate Federal banking agency'';
and
(II) by striking ``Director's
approval'' and inserting ``approval of
the appropriate Federal banking
agency'';
(L) in subsection (t)--
(i) in paragraph (1), by striking subparagraph
(D);
(ii) by striking paragraph (3) and inserting
the following:
``(3) [Repealed].'';
(iii) in paragraph (5)--
(I) in subparagraph (B), by striking
``Corporation, in its sole discretion''
and inserting ``appropriate Federal
banking agency, in the sole discretion
of the appropriate Federal banking
agency''; and
(II) by striking subparagraph (D);
(iv) in paragraph (6)--
(I) by striking subparagraph (A) and
inserting the following:
``(A) [Reserved].'';
(II) in subparagraph (B), by
striking ``Director'' each place that
term appears and inserting ``appropriate
Federal banking agency'';
(III) in subparagraph (C)--
(aa) in clause (i), by
striking ``Director's prior
approval'' and inserting ``prior
approval of the appropriate
Federal banking agency'';
(bb) in clause (ii), by
striking ``Director's
discretion'' and inserting
``discretion of the appropriate
Federal banking agency''; and
(cc) by striking
``Director'' each place that
term appears and inserting
``appropriate Federal banking
agency'';
(IV) in subparagraph (E), by
striking ``Director shall'' and
inserting ``appropriate Federal banking
agency may''; and
(V) in subparagraph (F), by striking
``Director'' and all that follows
through the end of the
[[Page 124 STAT. 1563]]
subparagraph and inserting ``appropriate
Federal banking agency under this Act or
any other provision of law.'';
(v) in paragraph (7), by striking ``Director''
each place that term appears and inserting
``appropriate Federal banking agency'';
(vi) by striking paragraph (8) and inserting
the following:
``(8) [Repealed].'';
(vii) in paragraph (9)--
(I) in subparagraph (A), by striking
``Director'' and inserting
``Comptroller'';
(II) in subparagraph (C), by
striking ``of the Currency''; and
(III) by striking subparagraph (B)
and redesignating subparagraphs (C) and
(D) as subparagraphs (B) and (C),
respectively; and
(viii) except as provided in clauses (i)
through (vii), by striking ``Director'' each place
that term appears and inserting ``appropriate
Federal banking agency'';
(M) in subsection (u), by striking ``Director'' each
place that term appears and inserting ``appropriate
Federal banking agency'';
(N) in subsection (v)--
(i) in paragraph (2), by striking ``Director's
determinations'' and inserting ``determinations of
the appropriate Federal banking agency''; and
(ii) by striking ``Director'' each place that
term appears and inserting ``appropriate Federal
banking agency'';
(O) in subsection (w)(1)--
(i) in subparagraph (A)(II), by striking
``Director's intention'' and inserting ``intention
of the Comptroller''; and
(ii) in subparagraph (B), by striking
``Director's intention'' and inserting ``intention
of the Comptroller''; and
(P) except as provided in subparagraphs (A) through
(J), by striking ``Director'' each place that term
appears and inserting ``Comptroller'';
(6) in section 8 (12 U.S.C. 1466a), by striking ``Director''
each place that term appears and inserting ``Comptroller'';
(7) in section 9 (12 U.S.C. 1467)--
(A) in subsection (a), by striking ``assessed by the
Director'' and all that follows through the end of the
subsection and inserting the following: ``assessed by--
``(1) the Comptroller, against each such Federal savings
association, as the Comptroller deems necessary or appropriate;
and
``(2) the Corporation, against each such State savings
association, as the Corporation deems necessary or
appropriate.'';
(B) in subsection (b), by striking ``Director'',
each place such term appears, and inserting
``Comptroller or Corporation, as appropriate'';
(C) in subsection (e)--
[[Page 124 STAT. 1564]]
(i) by striking ``Only the Director'' and
inserting ``The Comptroller''; and
(ii) by striking ``Director's designee'' and
inserting ``designee of the Comptroller'';
(D) by striking subsection (f) and inserting the
following:
``(f) [Reserved].'';
(E) in subsection (g)--
(i) in paragraph (1), by striking ``Director''
and inserting ``appropriate Federal banking
agency''; and
(ii) in paragraph (2), by striking ``Director,
or the Corporation, as the case may be,'' and
inserting ``appropriate Federal banking agency for
the savings association'';
(F) in subsection (i), by striking ``Director'' each
place that term appears and inserting ``appropriate
Federal banking agency'';
(G) in subsection (j), by striking ``Director's sole
discretion'' and inserting ``sole discretion of the
appropriate Federal banking agency'';
(H) in subsection (k), by striking ``Director may
assess against institutions for which the Director is
the appropriate Federal banking agency, as defined in
section 3 of the Federal Deposit Insurance Act,'' and
inserting ``appropriate Federal banking agency may
assess against an institution''; and
(I) except as provided in subparagraphs (A) through
(G), by striking ``Director'' each place that term
appears and inserting ``appropriate Federal banking
agency'';
(8) in section 10 (12 U.S.C. 1467a)--
(A) in subsection (a)(1), by striking ``Director''
each place that term appears and inserting ``appropriate
Federal banking agency'';
(B) in subsection (b)--
(i) in paragraph (2), by striking ``and the
regional office of the Director of the district in
which its principal office is located,''; and
(ii) in paragraph (6), by striking
``Director's own motion or application'' and
inserting ``motion or application of the Board'';
(C) in subsection (c)--
(i) in paragraph (2)(F), by striking ``of
Governors of the Federal Reserve System'';
(ii) in paragraph (4)(B), in the subparagraph
heading, by striking ``by director'';
(iii) in paragraph (6)(D), in the subparagraph
heading, by striking ``by director''; and
(iv) in paragraph (9)(E), by inserting ``(in
consultation with the appropriate Federal banking
agency)'' after ``including a determination'';
(D) in subsection (g)(5)(B), by striking ``the
Director's discretion'' and inserting ``the discretion
of the Board'';
(E) in subsection (l), by striking ``Director'' each
place that term appears and inserting ``appropriate
Federal banking agency'';
(F) in subsection (m), by striking ``Director'' and
inserting ``appropriate Federal banking agency'';
[[Page 124 STAT. 1565]]
(G) in subsection (p)--
(i) in paragraph (1)--
(I) by striking ``Director
determines'' the 1st place such term
appears and inserting ``Board or the
appropriate Federal banking agency for
the savings association determines'';
(II) by striking ``Director may''
and inserting ``Board may''; and
(III) by striking ``Director
determines'' the 2nd place such term
appears and inserting ``Board, in
consultation with the appropriate
Federal banking agency for the savings
association determines''; and
(ii) in paragraph (2), by striking
``Director'', each place such term appears, and
inserting ``Board'';
(H) in subsection (q), by striking ``Director'',
each place such term appears, and inserting ``Board'';
(I) in subsection (r), by striking ``Director'',
each place such term appears, and inserting ``Board or
appropriate Federal banking agency'';
(J) in subsection (s)--
(i) in paragraph (2)--
(I) in subparagraph (B)(ii), by
striking ``Director's judgment'' and
inserting ``judgment of the appropriate
Federal banking agency for the savings
association''; and
(II) by striking ``Director'' each
place that term appears and inserting
``appropriate Federal banking agency for
the savings association''; and
(ii) in paragraph (4), by striking
``Director'' and inserting ``Comptroller''; and
(K) except as provided in subparagraphs (A) through
(J), by striking ``Director'' each place that term
appears and inserting ``Board'';
(9) in section 11 (12 U.S.C. 1468), by striking ``Director''
each place that term appears and inserting ``appropriate Federal
banking agency'';
(10) in section 12 (12 U.S.C. 1468a), by striking ``the
Director'' and inserting ``a Federal banking agency''; and
(11) in section 13 (12 U.S.C. 1468a) is <<NOTE: 12 USC
1468b.>> amended by striking ``Director'' and inserting ``a
Federal banking agency''.
SEC. 370. HOUSING ACT OF 1948.
Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) is
amended--
(1) in the matter preceding paragraph (1), by striking ``and
the Director of the Office of Thrift Supervision'' and inserting
``, the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation''; and
(2) in paragraph (3), by striking ``Board'' and inserting
``Agency''.
SEC. 371. <<NOTE: 12 USC 1707 note.>> HOUSING AND COMMUNITY
DEVELOPMENT ACT OF 1992.
Section 543 of the Housing and Community Development Act of 1992
(Public Law 102-550; 106 Stat. 3798) is amended--
(1) in subsection (c)(1)--
(A) by striking subparagraphs (D) through (F); and
[[Page 124 STAT. 1566]]
(B) by redesignating subparagraphs (G) and (H) as
subparagraphs (D) and (E), respectively; and
(2) in subsection (f)--
(A) in paragraph (2), by striking ``the Office of
Thrift Supervision,'' each place that term appears; and
(B) in paragraph (3)--
(i) in the matter preceding subparagraph (A),
by striking ``the Office of Thrift Supervision,'';
and
(ii) in subparagraph (D), by striking ``Office
of Thrift Supervision,''.
SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983.
Section 469 of the Housing and Urban-Rural Recovery Act of 1983 (12
U.S.C. 1701p-1) is amended in the first sentence, by striking ``Federal
Home Loan Bank Board'' and inserting ``Federal Housing Finance Agency''.
SEC. 373. NATIONAL HOUSING ACT.
Section 202(f) of the National Housing Act (12 U.S.C. 1708(f)) is
amended--
(1) by striking paragraph (5) and inserting the following:
``(5) if the mortgagee is a national bank, a subsidiary or
affiliate of such bank, a Federal savings association or a
subsidiary or affiliate of a savings association, the
Comptroller of the Currency;'';
(2) in paragraph (6), by adding ``and'' at the end;
(3) in paragraph (7)--
(A) by inserting ``or State savings association''
after ``State bank''; and
(B) by striking ``; and'' and inserting a period;
and
(4) by striking paragraph (8).
SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION ACT.
Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act
(42 U.S.C. 8105(c)(3)) is amended by striking ``Federal Home Loan Bank
Board'' and inserting ``Federal Housing Finance Agency''.
SEC. 375. PUBLIC LAW 93-100.
Section 5(d) of Public Law 93-100 (12 U.S.C. 1470(a)) is amended--
(1) in paragraph (1), by striking ``Federal Savings and Loan
Insurance Corporation with respect to insured institutions, the
Board of Governors of the Federal Reserve System with respect to
State member insured banks, and the Federal Deposit Insurance
Corporation with respect to State nonmember insured banks'' and
inserting ``appropriate Federal banking agency, with respect to
the institutions subject to the jurisdiction of each such
agency,''; and
(2) in paragraph (2), by striking ``supervisory'' and
inserting ``banking''.
SEC. 376. SECURITIES EXCHANGE ACT OF 1934.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in section 3(a)(34) (15 U.S.C. 78c(a)(34))--
(A) in subparagraph (A)--
[[Page 124 STAT. 1567]]
(i) in clause (i), by striking ``or a
subsidiary or a department or division of any such
bank'' and inserting ``a subsidiary or a
department or division of any such bank, a Federal
savings association (as defined in section 3(b)(2)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are insured by
the Federal Deposit Insurance Corporation, or a
subsidiary or department or division of any such
Federal savings association'';
(ii) in clause (ii), by striking ``or a
subsidiary or a department or division of such
subsidiary'' and inserting ``a subsidiary or a
department or division of such subsidiary, or a
savings and loan holding company'';
(iii) in clause (iii), by striking ``or a
subsidiary or department or division thereof;''
and inserting ``a subsidiary or department or
division of any such bank, a State savings
association (as defined in section 3(b)(3) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b)(3))), the deposits of which are insured by
the Federal Deposit Insurance Corporation, or a
subsidiary or a department or division of any such
State savings association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause
(iv);
(B) in subparagraph (B)--
(i) in clause (i), by striking ``or a
subsidiary of any such bank'' and inserting ``a
subsidiary of any such bank, a Federal savings
association (as defined in section 3(b)(2) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are insured by
the Federal Deposit Insurance Corporation, or a
subsidiary of any such Federal savings
association'';
(ii) in clause (ii), by striking ``or a
subsidiary of a bank holding company which is a
bank other than a bank specified in clause (i),
(iii), or (iv) of this subparagraph'' and
inserting ``a subsidiary of a bank holding company
that is a bank other than a bank specified in
clause (i) or (iii) of this subparagraph, or a
savings and loan holding company'';
(iii) in clause (iii), by striking ``or a
subsidiary thereof;'' and inserting ``a subsidiary
of any such bank, a State savings association (as
defined in section 3(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(b)(3))), the
deposits of which are insured by the Federal
Deposit Insurance Corporation, or a subsidiary of
any such State savings association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause
(iv);
(C) in subparagraph (C)--
(i) in clause (i), by striking ``bank'' and
inserting ``bank or a Federal savings association
(as defined in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the
deposits of which are insured by the Federal
Deposit Insurance Corporation'';
[[Page 124 STAT. 1568]]
(ii) in clause (ii), by striking ``or a
subsidiary of a bank holding company which is a
bank other than a bank specified in clause (i),
(iii), or (iv) of this subparagraph'' and
inserting ``a subsidiary of a bank holding company
that is a bank other than a bank specified in
clause (i) or (iii) of this subparagraph, or a
savings and loan holding company'';
(iii) in clause (iii), by striking ``System)''
and inserting, ``System) or a State savings
association (as defined in section 3(b)(3) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b)(3))), the deposits of which are insured by
the Federal Deposit Insurance Corporation; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause
(iv);
(D) in subparagraph (D)--
(i) in clause (i), by inserting after ``bank''
the following: ``or a Federal savings association
(as defined in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the
deposits of which are insured by the Federal
Deposit Insurance Corporation'';
(ii) in clause (ii), by adding ``and'' at the
end;
(iii) by striking clause (iii);
(iv) by redesignating clause (iv) as clause
(iii); and
(v) in clause (iii), as so redesignated, by
inserting after ``bank'' the following: ``or a
State savings association (as defined in section
3(b)(3) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(3))), the deposits of which are
insured by the Federal Deposit Insurance
Corporation'';
(E) in subparagraph (F)--
(i) in clause (i), by inserting after ``bank''
the following: ``or a Federal savings association
(as defined in section 3(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the
deposits of which are insured by the Federal
Deposit Insurance Corporation'';
(ii) by striking clause (ii);
(iii) by redesignating clauses (iii), (iv),
and (v) as clauses (ii), (iii), and (iv),
respectively; and
(iv) in clause (iii), as so redesignated, by
inserting before the semicolon the following: ``or
a State savings association (as defined in section
3(b)(3) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(3))), the deposits of which are
insured by the Federal Deposit Insurance
Corporation'';
(F) in subparagraph (G)--
(i) in clause (i), by inserting after
``national bank'' the following: ``, a Federal
savings association (as defined in section 3(b)(2)
of the Federal Deposit Insurance Act), the
deposits of which are insured by the Federal
Deposit Insurance Corporation,'';
(ii) in clause (iii)--
(I) by inserting after ``bank)'' the
following: ``, a State savings
association (as defined in section
3(b)(3) of the Federal Deposit Insurance
Act), the deposits of which are insured
by the Federal Deposit Insurance
Corporation,''; and
[[Page 124 STAT. 1569]]
(II) by adding ``and'' at the end;
(iii) by striking clause (iv); and
(iv) by redesignating clause (v) as clause
(iv); and
(G) in the undesignated matter following
subparagraph (H), by striking ``, and the term `District
of Columbia savings and loan association' means any
association subject to examination and supervision by
the Office of Thrift Supervision under section 8 of the
Home Owners' Loan Act of 1933'';
(2) in section 12(i) (15 U.S.C. 78l(i))--
(A) in paragraph (1), by inserting after ``national
banks'' the following: ``and Federal savings
associations, the accounts of which are insured by the
Federal Deposit Insurance Corporation'';
(B) by striking ``(3)'' and all that follows through
``vested in the Office of Thrift Supervision'' and
inserting ``and (3) with respect to all other insured
banks and State savings associations, the accounts of
which are insured by the Federal Deposit Insurance
Corporation, are vested in the Federal Deposit Insurance
Corporation''; and
(C) in the second sentence, by striking ``the
Federal Deposit Insurance Corporation, and the Office of
Thrift Supervision'' and inserting ``and the Federal
Deposit Insurance Corporation'';
(3) in section 15C(g)(1) (15 U.S.C. 78o-5(g)(1)), by
striking ``the Director of the Office of Thrift Supervision, the
Federal Savings and Loan Insurance Corporation,''; and
(4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)), by striking
``, other than the Office of Thrift Supervision,''.
SEC. 377. TITLE 18, UNITED STATES CODE.
Title 18, United States Code, is amended--
(1) in section 212(c)(2)--
(A) by striking subparagraph (C); and
(B) by redesignating subparagraphs (D) through (H)
as subparagraphs (C) through (G), respectively;
(2) in section 657, by striking ``Office of Thrift
Supervision, the Resolution Trust Corporation,'';
(3) in section 981(a)(1)(D)--
(A) by striking ``Resolution Trust Corporation,'';
and
(B) by striking ``or the Office of Thrift
Supervision'';
(4) in section 982(a)(3)--
(A) by striking ``Resolution Trust Corporation,'';
and
(B) by striking ``or the Office of Thrift
Supervision'';
(5) in section 1006--
(A) by striking ``Office of Thrift Supervision,'';
and
(B) by striking ``the Resolution Trust
Corporation,'';
(6) in section 1014--
(A) by striking ``the Office of Thrift
Supervision''; and
(B) by striking ``the Resolution Trust
Corporation,''; and
(7) in section 1032(1)--
(A) by striking ``the Resolution Trust
Corporation,''; and
(B) by striking ``or the Director of the Office of
Thrift Supervision''.
[[Page 124 STAT. 1570]]
SEC. 378. TITLE 31, UNITED STATES CODE.
Title 31, United States Code, is amended--
(1) in section 321--
(A) in subsection (c)--
(i) in paragraph (1), by adding ``and'' at the
end;
(ii) in paragraph (2), by striking ``; and''
and inserting a period; and
(iii) by striking paragraph (3); and
(B) by striking subsection (e); and
(2) in section 714(a), by striking ``the Office of the
Comptroller of the Currency, and the Office of Thrift
Supervision.'' and inserting ``and the Office of the Comptroller
of the Currency.''.
TITLE IV--REGULATION <<NOTE: Private Fund Investment Advisers
Registration Act of 2010.>> OF ADVISERS TO HEDGE FUNDS AND OTHERS
SEC. 401. <<NOTE: 15 USC 80b-20 note.>> SHORT TITLE.
This title may be cited as the ``Private Fund Investment Advisers
Registration Act of 2010''.
SEC. 402. DEFINITIONS.
(a) Investment Advisers Act of 1940 Definitions.--Section 202(a) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended by
adding at the end the following:
``(29) The term `private fund' means an issuer that would be
an investment company, as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3), but for section 3(c)(1)
or 3(c)(7) of that Act.
``(30) The term `foreign private adviser' means any
investment adviser who--
``(A) has no place of business in the United States;
``(B) has, in total, fewer than 15 clients and
investors in the United States in private funds advised
by the investment adviser;
``(C) has aggregate assets under management
attributable to clients in the United States and
investors in the United States in private funds advised
by the investment adviser of less than $25,000,000, or
such higher amount as the Commission may, by rule, deem
appropriate in accordance with the purposes of this
title; and
``(D) neither--
``(i) holds itself out generally to the public
in the United States as an investment adviser; nor
``(ii) acts as--
``(I) an investment adviser to any
investment company registered under the
Investment Company Act of 1940; or
``(II) a company that has elected to
be a business development company
pursuant to section 54 of the Investment
Company Act of 1940 (15 U.S.C. 80a-53),
and has not withdrawn its election.''.
(b) Other <<NOTE: 15 USC 80b-2 note.>> Definitions.--As used in this
title, the terms ``investment adviser'' and ``private fund'' have the
same meanings as in section 202 of the Investment Advisers Act of 1940,
as amended by this title.
[[Page 124 STAT. 1571]]
SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED
EXEMPTION FOR FOREIGN PRIVATE ADVISERS;
LIMITED INTRASTATE EXEMPTION.
Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(b)) is amended--
(1) in paragraph (1), by inserting ``, other than an
investment adviser who acts as an investment adviser to any
private fund,'' before ``all of whose'';
(2) by striking paragraph (3) and inserting the following:
``(3) any investment adviser that is a foreign private
adviser;''; and
(3) in paragraph (5), by striking ``or'' at the end;
(4) in paragraph (6)--
(A) by striking ``any investment adviser'' and
inserting ``(A) any investment adviser'';
(B) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively; and
(C) in clause (ii) (as so redesignated), by striking
the period at the end and inserting ``; or''; and
(D) by adding at the end the following:
``(B) any investment adviser that is registered with the Commodity
Futures Trading Commission as a commodity trading advisor and advises a
private fund, provided that, if after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2010, the business
of the advisor should become predominately the provision of securities-
related advice, then such adviser shall register with the Commission.''.
(5) by adding at the end the following:
``(7) any investment adviser, other than any entity that has
elected to be regulated or is regulated as a business
development company pursuant to section 54 of the Investment
Company Act of 1940 (15 U.S.C. 80a-54), who solely advises--
``(A) small business investment companies that are
licensees under the Small Business Investment Act of
1958;
``(B) entities that have received from the Small
Business Administration notice to proceed to qualify for
a license as a small business investment company under
the Small Business Investment Act of 1958, which notice
or license has not been revoked; or
``(C) applicants that are affiliated with 1 or more
licensed small business investment companies described
in subparagraph (A) and that have applied for another
license under the Small Business Investment Act of 1958,
which application remains pending.''.
SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS;
DISCLOSURES.
Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4)
is amended--
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by inserting after subsection (a) the following:
``(b) Records and Reports of Private Funds.--
``(1) In general.--The Commission may require any investment
adviser registered under this title--
``(A) to maintain such records of, and file with the
Commission such reports regarding, private funds advised
[[Page 124 STAT. 1572]]
by the investment adviser, as necessary and appropriate
in the public interest and for the protection of
investors, or for the assessment of systemic risk by the
Financial Stability Oversight Council (in this
subsection referred to as the `Council'); and
``(B) to provide or make available to the Council
those reports or records or the information contained
therein.
``(2) Treatment of records.--The records and reports of any
private fund to which an investment adviser registered under
this title provides investment advice shall be deemed to be the
records and reports of the investment adviser.
``(3) Required information.--The records and reports
required to be maintained by an investment adviser and subject
to inspection by the Commission under this subsection shall
include, for each private fund advised by the investment
adviser, a description of--
``(A) the amount of assets under management and use
of leverage, including off-balance-sheet leverage;
``(B) counterparty credit risk exposure;
``(C) trading and investment positions;
``(D) valuation policies and practices of the fund;
``(E) types of assets held;
``(F) side arrangements or side letters, whereby
certain investors in a fund obtain more favorable rights
or entitlements than other investors;
``(G) trading practices; and
``(H) such other information as the Commission, in
consultation with the Council, determines is necessary
and appropriate in the public interest and for the
protection of investors or for the assessment of
systemic risk, which may include the establishment of
different reporting requirements for different classes
of fund advisers, based on the type or size of private
fund being advised.
``(4) Maintenance of records.--An investment adviser
registered under this title shall maintain such records of
private funds advised by the investment adviser for such period
or periods as the Commission, by rule, may prescribe as
necessary and appropriate in the public interest and for the
protection of investors, or for the assessment of systemic risk.
``(5) Filing of records.--The Commission shall issue rules
requiring each investment adviser to a private fund to file
reports containing such information as the Commission deems
necessary and appropriate in the public interest and for the
protection of investors or for the assessment of systemic risk.
``(6) Examination of records.--
``(A) Periodic and special examinations.--The
Commission--
``(i) shall conduct periodic inspections of
the records of private funds maintained by an
investment adviser registered under this title in
accordance with a schedule established by the
Commission; and
``(ii) may conduct at any time and from time
to time such additional, special, and other
examinations as the Commission may prescribe as
necessary and appropriate in the public interest
and for the protection of investors, or for the
assessment of systemic risk.
[[Page 124 STAT. 1573]]
``(B) Availability of records.--An investment
adviser registered under this title shall make available
to the Commission any copies or extracts from such
records as may be prepared without undue effort,
expense, or delay, as the Commission or its
representatives may reasonably request.
``(7) Information sharing.--
``(A) In general.--The Commission shall make
available to the Council copies of all reports,
documents, records, and information filed with or
provided to the Commission by an investment adviser
under this subsection as the Council may consider
necessary for the purpose of assessing the systemic risk
posed by a private fund.
``(B) Confidentiality.--The Council shall maintain
the confidentiality of information received under this
paragraph in all such reports, documents, records, and
information, in a manner consistent with the level of
confidentiality established for the Commission pursuant
to paragraph (8). The Council shall be exempt from
section 552 of title 5, United States Code, with respect
to any information in any report, document, record, or
information made available, to the Council under this
subsection.''.
``(8) Commission confidentiality of reports.--
Notwithstanding any other provision of law, the Commission may
not be compelled to disclose any report or information contained
therein required to be filed with the Commission under this
subsection, except that nothing in this subsection authorizes
the Commission--
``(A) to withhold information from Congress, upon an
agreement of confidentiality; or
``(B) prevent the Commission from complying with--
``(i) a request for information from any other
Federal department or agency or any self-
regulatory organization requesting the report or
information for purposes within the scope of its
jurisdiction; or
``(ii) an order of a court of the United
States in an action brought by the United States
or the Commission.
``(9) Other recipients confidentiality.--Any department,
agency, or self-regulatory organization that receives reports or
information from the Commission under this subsection shall
maintain the confidentiality of such reports, documents,
records, and information in a manner consistent with the level
of confidentiality established for the Commission under
paragraph (8).
``(10) Public information exception.--
``(A) In general.--The Commission, the Council, and
any other department, agency, or self-regulatory
organization that receives information, reports,
documents, records, or information from the Commission
under this subsection, shall be exempt from the
provisions of section 552 of title 5, United States
Code, with respect to any such report, document, record,
or information. Any proprietary information of an
investment adviser ascertained by the Commission from
any report required to be filed with the Commission
pursuant to this subsection shall be subject to the same
limitations on public disclosure as any facts
[[Page 124 STAT. 1574]]
ascertained during an examination, as provided by
section 210(b) of this title.
``(B) Proprietary information.--For purposes of this
paragraph, proprietary information includes sensitive,
non-public information regarding--
``(i) the investment or trading strategies of
the investment adviser;
``(ii) analytical or research methodologies;
``(iii) trading data;
``(iv) computer hardware or software
containing intellectual property; and
``(v) any additional information that the
Commission determines to be proprietary.
``(11) Annual report to congress.--The Commission shall
report annually to Congress on how the Commission has used the
data collected pursuant to this subsection to monitor the
markets for the protection of investors and the integrity of the
markets.''.
SEC. 405. DISCLOSURE PROVISION AMENDMENT.
Section 210(c) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-10(c)) is amended by inserting before the period at the end the
following: ``or for purposes of assessment of potential systemic risk''.
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
(1) in subsection (a), by inserting before the period at the
end of the first sentence the following: ``, including rules and
regulations defining technical, trade, and other terms used in
this title, except that the Commission may not define the term
`client' for purposes of paragraphs (1) and (2) of section 206
to include an investor in a private fund managed by an
investment adviser, if such private fund has entered into an
advisory contract with such adviser''; and
(2) by adding at the end the following:
``(e) Disclosure Rules on Private Funds.--
The <<NOTE: Consultation. Deadline.>> Commission and the Commodity
Futures Trading Commission shall, after consultation with the Council
but not later than 12 months after the date of enactment of the Private
Fund Investment Advisers Registration Act of 2010, jointly promulgate
rules to establish the form and content of the reports required to be
filed with the Commission under subsection 204(b) and with the Commodity
Futures Trading Commission by investment advisers that are registered
both under this title and the Commodity Exchange Act (7 U.S.C. 1a et
seq.).''.
SEC. 407. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND
ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3)
is amended by adding at the end the following:
``(l) Exemption of Venture Capital Fund Advisers.--No investment
adviser that acts as an investment adviser solely to 1 or more venture
capital funds shall be subject to the registration requirements of this
title with respect to the provision of investment advice relating to a
venture <<NOTE: Regulations.>> capital fund. Not later than 1 year after
the date of enactment of this subsection, the Commission
[[Page 124 STAT. 1575]]
shall issue final rules to define the term `venture capital fund' for
purposes of this subsection. The <<NOTE: Records.>> Commission shall
require such advisers to maintain such records and provide to the
Commission such annual or other reports as the Commission determines
necessary or appropriate in the public interest or for the protection of
investors.''.
SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND
ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3)
is amended by adding at the end the following:
``(m) Exemption of and Reporting by Certain Private Fund Advisers.--
``(1) In general.--The Commission shall provide an exemption
from the registration requirements under this section to any
investment adviser of private funds, if each of such investment
adviser acts solely as an adviser to private funds and has
assets under management in the United States of less than
$150,000,000.
``(2) Reporting.--The <<NOTE: Records.>> Commission shall
require investment advisers exempted by reason of this
subsection to maintain such records and provide to the
Commission such annual or other reports as the Commission
determines necessary or appropriate in the public interest or
for the protection of investors.
``(n) Registration and Examination of Mid-sized Private Fund
Advisers.--In prescribing <<NOTE: Regulations. Procedures.>> regulations
to carry out the requirements of this section with respect to investment
advisers acting as investment advisers to mid-sized private funds, the
Commission shall take into account the size, governance, and investment
strategy of such funds to determine whether they pose systemic risk, and
shall provide for registration and examination procedures with respect
to the investment advisers of such funds which reflect the level of
systemic risk posed by such funds.''.
SEC. 409. FAMILY OFFICES.
(a) In General.--Section 202(a)(11) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a)(11)) is amended by striking ``or (G)'' and
inserting the following: ``; (G) any family office, as defined by rule,
regulation, or order of the Commission, in accordance with the purposes
of this title; or (H)''.
(b) Rulemaking.--The <<NOTE: 15 USC 80b-2 note.>> rules,
regulations, or orders issued by the Commission pursuant to section
202(a)(11)(G) of the Investment Advisers Act of 1940, as added by this
section, regarding the definition of the term ``family office'' shall
provide for an exemption that--
(1) is consistent with the previous exemptive policy of the
Commission, as reflected in exemptive orders for family offices
in effect on the date of enactment of this Act, and the
grandfathering provisions in paragraph (3);
(2) recognizes the range of organizational, management, and
employment structures and arrangements employed by family
offices; and
(3) does not exclude any person who was not registered or
required to be registered under the Investment Advisers Act of
1940 on January 1, 2010 from the definition of the term ``family
office'', solely because such person provides investment advice
to, and was engaged before January 1, 2010 in providing
investment advice to--
[[Page 124 STAT. 1576]]
(A) natural persons who, at the time of their
applicable investment, are officers, directors, or
employees of the family office who--
(i) <<NOTE: Deadline.>> have invested with the
family office before January 1, 2010; and
(ii) are accredited investors, as defined in
Regulation D of the Commission (or any successor
thereto) under the Securities Act of 1933, or, as
the Commission may prescribe by rule, the
successors-in-interest thereto;
(B) any company owned exclusively and controlled by
members of the family of the family office, or as the
Commission may prescribe by rule;
(C) any investment adviser registered under the
Investment Adviser Act of 1940 that provides investment
advice to the family office and who identifies
investment opportunities to the family office, and
invests in such transactions on substantially the same
terms as the family office invests, but does not invest
in other funds advised by the family office, and whose
assets as to which the family office directly or
indirectly provides investment advice represent, in the
aggregate, not more than 5 percent of the value of the
total assets as to which the family office provides
investment advice.
(c) Antifraud Authority.--A family office that would not be a family
office, but for subsection (b)(3), shall be deemed to be an investment
adviser for the purposes of paragraphs (1), (2) and (4) of section 206
of the Investment Advisers Act of 1940.
SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD FOR
FEDERAL REGISTRATION OF INVESTMENT
ADVISERS.
Section 203A(a) of the of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3a(a)) is amended--
(1) by redesignating paragraph (2) as paragraph (3); and
(2) by inserting after paragraph (1) the following:
``(2) Treatment of mid-sized investment advisers.--
``(A) In general.--No investment adviser described
in subparagraph (B) shall register under section 203,
unless the investment adviser is an adviser to an
investment company registered under the Investment
Company Act of 1940, or a company which has elected to
be a business development company pursuant to section 54
of the Investment Company Act of 1940, and has not
withdrawn the election, except that, if by effect of
this paragraph an investment adviser would be required
to register with 15 or more States, then the adviser may
register under section 203.
``(B) Covered persons.--An investment adviser
described in this subparagraph is an investment adviser
that--
``(i) is required to be registered as an
investment adviser with the securities
commissioner (or any agency or office performing
like functions) of the State in which it maintains
its principal office and place of business and, if
registered, would be subject to examination as an
investment adviser by any such commissioner,
agency, or office; and
[[Page 124 STAT. 1577]]
``(ii) has assets under management between--
``(I) the amount specified under
subparagraph (A) of paragraph (1), as
such amount may have been adjusted by
the Commission pursuant to that
subparagraph; and
``(II) $100,000,000, or such higher
amount as the Commission may, by rule,
deem appropriate in accordance with the
purposes of this title.''.
SEC. 411. CUSTODY OF CLIENT ASSETS.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
amended by adding at the end the following new section:
``SEC. 223. <<NOTE: 15 USC 80b-18b.>> CUSTODY OF CLIENT ACCOUNTS.
``An investment adviser registered under this title shall take such
steps to safeguard client assets over which such adviser has custody,
including, without limitation, verification of such assets by an
independent public accountant, as the Commission may, by rule,
prescribe.''.
SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY RULE COSTS.
The Comptroller General of the United States shall--
(1) conduct a study of--
(A) the compliance costs associated with the current
Securities and Exchange Commission rules 204-2 (17
C.F.R. Parts 275.204-2) and rule 206(4)-2 (17 C.F.R.
275.206(4)-2) under the Investment Advisers Act of 1940
regarding custody of funds or securities of clients by
investment advisers; and
(B) the additional costs if subsection (b)(6) of
rule 206(4)-2 (17 C.F.R. 275.206(4)-2(b)(6)) relating to
operational independence were eliminated; and
(2) <<NOTE: Reports. Deadline.>> submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives on the results of such study, not later than 3
years after the date of enactment of this Act.
SEC. 413. <<NOTE: 15 USC 77b note.>> ADJUSTING THE ACCREDITED
INVESTOR STANDARD.
(a) In General.--The Commission shall adjust any net worth standard
for an accredited investor, as set forth in the rules of the Commission
under the Securities Act of 1933, so that the individual net worth of
any natural person, or joint net worth with the spouse of that person,
at the time of purchase, is more than $1,000,000 (as such amount is
adjusted periodically by rule of the Commission), excluding the value of
the primary residence of such natural person, except that during the 4-
year period that begins on the date of enactment of this Act, any net
worth standard shall be $1,000,000, excluding the value of the primary
residence of such natural person.
(b) Review and Adjustment.--
(1) Initial review and adjustment.--
(A) Initial review.--The Commission may undertake a
review of the definition of the term ``accredited
investor'', as such term applies to natural persons, to
determine whether the requirements of the definition,
excluding the requirement relating to the net worth
standard described in subsection (a), should be adjusted
or modified for the
[[Page 124 STAT. 1578]]
protection of investors, in the public interest, and in
light of the economy.
(B) Adjustment or modification.--Upon completion of
a review under subparagraph (A), the Commission may, by
notice and comment rulemaking, make such adjustments to
the definition of the term ``accredited investor'',
excluding adjusting or modifying the requirement
relating to the net worth standard described in
subsection (a), as such term applies to natural persons,
as the Commission may deem appropriate for the
protection of investors, in the public interest, and in
light of the economy.
(2) Subsequent reviews and adjustment.--
(A) Subsequent reviews. <<NOTE: Deadlines.>> --Not
earlier than 4 years after the date of enactment of this
Act, and not less frequently than once every 4 years
thereafter, the Commission shall undertake a review of
the definition, in its entirety, of the term
``accredited investor'', as defined in section 230.215
of title 17, Code of Federal Regulations, or any
successor thereto, as such term applies to natural
persons, to determine whether the requirements of the
definition should be adjusted or modified for the
protection of investors, in the public interest, and in
light of the economy.
(B) Adjustment or modification.--Upon completion of
a review under subparagraph (A), the Commission may, by
notice and comment rulemaking, make such adjustments to
the definition of the term ``accredited investor'', as
defined in section 230.215 of title 17, Code of Federal
Regulations, or any successor thereto, as such term
applies to natural persons, as the Commission may deem
appropriate for the protection of investors, in the
public interest, and in light of the economy.
SEC. 414. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES
EXCHANGE ACT.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
further amended by adding at the end the following new section:
``SEC. 224. <<NOTE: 15 USC 80b-18c.>> RULE OF CONSTRUCTION
RELATING TO THE COMMODITIES EXCHANGE ACT.
``Nothing in this title shall relieve any person of any obligation
or duty, or affect the availability of any right or remedy available to
the Commodity Futures Trading Commission or any private party, arising
under the Commodity Exchange Act (7 U.S.C. 1 et seq.) governing
commodity pools, commodity pool operators, or commodity trading
advisors.''.
SEC. 415. GAO STUDY AND REPORT ON ACCREDITED INVESTORS.
The Comptroller General of the United States shall conduct a study
on the appropriate criteria for determining the financial thresholds or
other criteria needed to qualify for accredited investor status and
eligibility to invest in private funds, and shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives on the
results of such study not later than 3 years after the date of enactment
of this Act.
[[Page 124 STAT. 1579]]
SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE
FUNDS.
The Comptroller General of the United States shall--
(1) conduct a study of the feasibility of forming a self-
regulatory organization to oversee private funds; and
(2) <<NOTE: Reports. Deadline.>> submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives on the results of such study, not later than 1
year after the date of enactment of this Act.
SEC. 417. COMMISSION STUDY AND REPORT ON SHORT SELLING.
(a) Studies.--The Division of Risk, Strategy, and Financial
Innovation of the Commission shall conduct--
(1) a study, taking into account current scholarship, on the
state of short selling on national securities exchanges and in
the over-the-counter markets, with particular attention to the
impact of recent rule changes and the incidence of--
(A) the failure to deliver shares sold short; or
(B) delivery of shares on the fourth day following
the short sale transaction; and
(2) a study of--
(A) the feasibility, benefits, and costs of
requiring reporting publicly, in real time short sale
positions of publicly listed securities, or, in the
alternative, reporting such short positions in real time
only to the Commission and the Financial Industry
Regulatory Authority; and
(B) the feasibility, benefits, and costs of
conducting a voluntary pilot program in which public
companies will agree to have all trades of their shares
marked ``short'', ``market maker short'', ``buy'',
``buy-to-cover'', or ``long'', and reported in real time
through the Consolidated Tape.
(b) Reports.--The Commission shall submit a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives--
(1) on the results of the study required under subsection
(a)(1), including recommendations for market improvements, not
later than 2 years after the date of enactment of this Act; and
(2) on the results of the study required under subsection
(a)(2), not later than 1 year after the date of enactment of
this Act.
SEC. 418. QUALIFIED CLIENT STANDARD.
Section 205(e) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-5(e)) is amended by adding at the end the following: ``With
respect <<NOTE: Order. Deadlines.>> to any factor used in any rule or
regulation by the Commission in making a determination under this
subsection, if the Commission uses a dollar amount test in connection
with such factor, such as a net asset threshold, the Commission shall,
by order, not later than 1 year after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2010, and every 5
years thereafter, adjust for the effects of inflation on such test. Any
such adjustment that is not a multiple of $100,000 shall be rounded to
the nearest multiple of $100,000.''.
[[Page 124 STAT. 1580]]
SEC. 419. <<NOTE: 15 USC 80b-2 note. Effective date.>> TRANSITION
PERIOD.
Except as otherwise provided in this title, this title and the
amendments made by this title shall become effective 1 year after the
date of enactment of this Act, except that any investment adviser may,
at the discretion of the investment adviser, register with the
Commission under the Investment Advisers Act of 1940 during that 1-year
period, subject to the rules of the Commission.
TITLE V--INSURANCE
Subtitle <<NOTE: Federal Insurance Office Act of 2010. 31 USC 301
note.>> A--Federal Insurance Office
SEC. 501. SHORT TITLE.
This subtitle may be cited as the ``Federal Insurance Office Act of
2010''.
SEC. 502. FEDERAL INSURANCE OFFICE.
(a) Establishment of Office.--Subchapter I of chapter 3 of subtitle
I of title 31, United States Code, is amended--
(1) by redesignating section 312 as section 315;
(2) by redesignating section 313 as section 312; and
(3) by inserting after section 312 (as so redesignated) the
following new sections:
``SEC. 313. FEDERAL INSURANCE OFFICE.
``(a) Establishment.--There is established within the Department of
the Treasury the Federal Insurance Office.
``(b) Leadership.--The Office shall be headed by a Director, who
shall be appointed by the Secretary of the Treasury. The position of
Director shall be a career reserved position in the Senior Executive
Service, as that position is defined under section 3132 of title 5,
United States Code.
``(c) Functions.--
``(1) Authority pursuant to direction of secretary.--The
Office, pursuant to the direction of the Secretary, shall have
the authority--
``(A) to monitor all aspects of the insurance
industry, including identifying issues or gaps in the
regulation of insurers that could contribute to a
systemic crisis in the insurance industry or the United
States financial system;
``(B) to monitor the extent to which traditionally
underserved communities and consumers, minorities (as
such term is defined in section 1204(c) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 1811 note)), and low- and moderate-
income persons have access to affordable insurance
products regarding all lines of insurance, except health
insurance;
``(C) to recommend to the Financial Stability
Oversight Council that it designate an insurer,
including the affiliates of such insurer, as an entity
subject to regulation as a nonbank financial company
supervised by the Board of Governors pursuant to title I
of the Dodd-Frank Wall Street Reform and Consumer
Protection Act;
``(D) to assist the Secretary in administering the
Terrorism Insurance Program established in the
Department
[[Page 124 STAT. 1581]]
of the Treasury under the Terrorism Risk Insurance Act
of 2002 (15 U.S.C. 6701 note);
``(E) to coordinate Federal efforts and develop
Federal policy on prudential aspects of international
insurance matters, including representing the United
States, as appropriate, in the International Association
of Insurance Supervisors (or a successor entity) and
assisting the Secretary in negotiating covered
agreements (as such term is defined in subsection (r));
``(F) to determine, in accordance with subsection
(f), whether State insurance measures are preempted by
covered agreements;
``(G) to consult with the States (including State
insurance regulators) regarding insurance matters of
national importance and prudential insurance matters of
international importance; and
``(H) to perform such other related duties and
authorities as may be assigned to the Office by the
Secretary.
``(2) Advisory functions.--The Office shall advise the
Secretary on major domestic and prudential international
insurance policy issues.
``(3) Advisory capacity on council.--The Director shall
serve in an advisory capacity on the Financial Stability
Oversight Council established under the Financial Stability Act
of 2010.
``(d) Scope.--The authority of the Office shall extend to all lines
of insurance except--
``(1) health insurance, as determined by the Secretary in
coordination with the Secretary of Health and Human Services
based on section 2791 of the Public Health Service Act (42
U.S.C. 300gg-91);
``(2) long-term care insurance, except long-term care
insurance that is included with life or annuity insurance
components, as determined by the Secretary in coordination with
the Secretary of Health and Human Services, and in the case of
long-term care insurance that is included with such components,
the Secretary shall coordinate with the Secretary of Health and
Human Services in performing the functions of the Office; and
``(3) crop insurance, as established by the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.).
``(e) Gathering of Information.--
``(1) In general.--In carrying out the functions required
under subsection (c), the Office may--
``(A) receive and collect data and information on
and from the insurance industry and insurers;
``(B) enter into information-sharing agreements;
``(C) analyze and disseminate data and information;
and
``(D) issue reports regarding all lines of insurance
except health insurance.
``(2) Collection of information from insurers and
affiliates.--
``(A) In general.--Except as provided in paragraph
(3), the Office may require an insurer, or any affiliate
of an insurer, to submit such data or information as the
[[Page 124 STAT. 1582]]
Office may reasonably require in carrying out the
functions described under subsection (c).
``(B) Rule of construction.--Notwithstanding any
other provision of this section, for purposes of
subparagraph (A), the term `insurer' means any entity
that writes insurance or reinsures risks and issues
contracts or policies in 1 or more States.
``(3) Exception for small insurers.--Paragraph (2) shall not
apply with respect to any insurer or affiliate thereof that
meets a minimum size threshold that the Office may establish,
whether by order or rule.
``(4) Advance coordination.--Before collecting any data or
information under paragraph (2) from an insurer, or affiliate of
an insurer, the Office shall coordinate with each relevant
Federal agency and State insurance regulator (or other relevant
Federal or State regulatory agency, if any, in the case of an
affiliate of an insurer) and any publicly available sources to
determine if the information to be collected is available from,
and may be obtained in a timely manner by, such Federal agency
or State insurance regulator, individually or collectively,
other regulatory agency, or publicly available sources. If the
Director determines that such data or information is available,
and may be obtained in a timely manner, from such an agency,
regulator, regulatory agency, or source, the Director shall
obtain the data or information from such agency, regulator,
regulatory agency, or source. If the Director determines that
such data or information is not so available, the Director may
collect such data or information from an insurer (or affiliate)
only if the Director complies with the requirements of
subchapter I of chapter 35 of title 44, United States Code
(relating to Federal information policy; commonly known as the
Paperwork Reduction Act), in collecting such data or
information. Notwithstanding any other provision of law, each
such relevant Federal agency and State insurance regulator or
other Federal or State regulatory agency is authorized to
provide to the Office such data or information.
``(5) Confidentiality.--
``(A) Retention of privilege.--The submission of any
nonpublicly available data and information to the Office
under this subsection shall not constitute a waiver of,
or otherwise affect, any privilege arising under Federal
or State law (including the rules of any Federal or
State court) to which the data or information is
otherwise subject.
``(B) Continued application of prior confidentiality
agreements.--Any requirement under Federal or State law
to the extent otherwise applicable, or any requirement
pursuant to a written agreement in effect between the
original source of any nonpublicly available data or
information and the source of such data or information
to the Office, regarding the privacy or confidentiality
of any data or information in the possession of the
source to the Office, shall continue to apply to such
data or information after the data or information has
been provided pursuant to this subsection to the Office.
``(C) Information-sharing agreement.--Any data or
information obtained by the Office may be made available
[[Page 124 STAT. 1583]]
to State insurance regulators, individually or
collectively, through an information-sharing agreement
that--
``(i) shall comply with applicable Federal
law; and
``(ii) shall not constitute a waiver of, or
otherwise affect, any privilege under Federal or
State law (including the rules of any Federal or
State court) to which the data or information is
otherwise subject.
``(D) Agency disclosure requirements.--Section 552
of title 5, United States Code, shall apply to any data
or information submitted to the Office by an insurer or
an affiliate of an insurer.
``(6) Subpoenas and enforcement.--The Director shall have
the power to require by subpoena the production of the data or
information requested under paragraph (2), but only upon a
written finding by the Director that such data or information is
required to carry out the functions described under subsection
(c) and that the Office has coordinated with such regulator or
agency as required under paragraph (4). Subpoenas shall bear the
signature of the Director and shall be served by any person or
class of persons designated by the Director for that purpose. In
the case of contumacy or failure to obey a subpoena, the
subpoena shall be enforceable by order of any appropriate
district court of the United States. Any failure to obey the
order of the court may be punished by the court as a contempt of
court.
``(f) Preemption of State Insurance Measures.--
``(1) Standard.--A State insurance measure shall be
preempted pursuant to this section or section 314 if, and only
to the extent that the Director determines, in accordance with
this subsection, that the measure--
``(A) results in less favorable treatment of a non-
United States insurer domiciled in a foreign
jurisdiction that is subject to a covered agreement than
a United States insurer domiciled, licensed, or
otherwise admitted in that State; and
``(B) is inconsistent with a covered agreement.
``(2) Determination.--
``(A) Notice of potential inconsistency.--Before
making any determination under paragraph (1), the
Director shall--
``(i) notify and consult with the appropriate
State regarding any potential inconsistency or
preemption;
``(ii) notify and consult with the United
States Trade Representative regarding any
potential inconsistency or preemption;
``(iii) <<NOTE: Federal Register,
publication.>> cause to be published in the
Federal Register notice of the issue regarding the
potential inconsistency or preemption, including a
description of each State insurance measure at
issue and any applicable covered agreement;
``(iv) <<NOTE: Comments.>> provide interested
parties a reasonable opportunity to submit written
comments to the Office; and
``(v) consider any comments received.
``(B) Scope of review.--For purposes of this
subsection, any determination of the Director regarding
State insurance measures, and any preemption under
paragraph (1) as a result of such determination, shall
be limited
[[Page 124 STAT. 1584]]
to the subject matter contained within the covered
agreement involved and shall achieve a level of
protection for insurance or reinsurance consumers that
is substantially equivalent to the level of protection
achieved under State insurance or reinsurance
regulation.
``(C) Notice of determination of inconsistency.--
Upon making any determination under paragraph (1), the
Director shall--
``(i) notify the appropriate State of the
determination and the extent of the inconsistency;
``(ii) establish a reasonable period of time,
which shall not be less than 30 days, before the
determination shall become effective; and
``(iii) notify the Committees on Financial
Services and Ways and Means of the House of
Representatives and the Committees on Banking,
Housing, and Urban Affairs and Finance of the
Senate.
``(3) Notice of effectiveness.--Upon the conclusion of the
period referred to in paragraph (2)(C)(ii), if the basis for
such determination still exists, the determination shall become
effective and the Director shall--
``(A) cause to be published a notice in the Federal
Register that the preemption has become effective, as
well as the effective date; and
``(B) notify the appropriate State.
``(4) Limitation.--No State may enforce a State insurance
measure to the extent that such measure has been preempted under
this subsection.
``(g) Applicability of Administrative Procedures Act.--
Determinations of inconsistency made pursuant to subsection (f)(2) shall
be subject to the applicable provisions of subchapter II of chapter 5 of
title 5, United States Code (relating to administrative procedure), and
chapter 7 of such title (relating to judicial review), except that in
any action for judicial review of a determination of inconsistency, the
court shall determine the matter de novo.
``(h) Regulations, Policies, and Procedures.--The Secretary may
issue orders, regulations, policies, and procedures to implement this
section.
``(i) Consultation.--The Director shall consult with State insurance
regulators, individually or collectively, to the extent the Director
determines appropriate, in carrying out the functions of the Office.
``(j) Savings Provisions.--Nothing in this section shall--
``(1) preempt--
``(A) any State insurance measure that governs any
insurer's rates, premiums, underwriting, or sales
practices;
``(B) any State coverage requirements for insurance;
``(C) the application of the antitrust laws of any
State to the business of insurance; or
``(D) any State insurance measure governing the
capital or solvency of an insurer, except to the extent
that such State insurance measure results in less
favorable treatment of a non-United State insurer than a
United States insurer;
``(2) be construed to alter, amend, or limit any provision
of the Consumer Financial Protection Agency Act of 2010; or
``(3) affect the preemption of any State insurance measure
otherwise inconsistent with and preempted by Federal law.
[[Page 124 STAT. 1585]]
``(k) Retention of Existing State Regulatory Authority.--Nothing in
this section or section 314 shall be construed to establish or provide
the Office or the Department of the Treasury with general supervisory or
regulatory authority over the business of insurance.
``(l) Retention of Authority of Federal Financial Regulatory
Agencies.--Nothing in this section or section 314 shall be construed to
limit the authority of any Federal financial regulatory agency,
including the authority to develop and coordinate policy, negotiate, and
enter into agreements with foreign governments, authorities, regulators,
and multinational regulatory committees and to preempt State measures to
affect uniformity with international regulatory agreements.
``(m) Retention of Authority of United States Trade
Representative.--Nothing in this section or section 314 shall be
construed to affect the authority of the Office of the United States
Trade Representative pursuant to section 141 of the Trade Act of 1974
(19 U.S.C. 2171) or any other provision of law, including authority over
the development and coordination of United States international trade
policy and the administration of the United States trade agreements
program.
``(n) Annual Reports to Congress.--
``(1) Section 313(f) reports.--Beginning September 30, 2011,
the Director shall submit a report on or before September 30 of
each calendar year to the President and to the Committees on
Financial Services and Ways and Means of the House of
Representatives and the Committees on Banking, Housing, and
Urban Affairs and Finance of the Senate on any actions taken by
the Office pursuant to subsection (f) (regarding preemption of
inconsistent State insurance measures).
``(2) Insurance industry.--Beginning September 30, 2011, the
Director shall submit a report on or before September 30 of each
calendar year to the President and to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate on the
insurance industry and any other information as deemed relevant
by the Director or requested by such Committees.
``(o) Reports on U.S. and Global Reinsurance Market.--The Director
shall submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban Affairs
of the Senate--
``(1) a report received not later than September 30, 2012,
describing the breadth and scope of the global reinsurance
market and the critical role such market plays in supporting
insurance in the United States; and
``(2) a report received not later than January 1, 2013, and
updated not later than January 1, 2015, describing the impact of
part II of the Nonadmitted and Reinsurance Reform Act of 2010 on
the ability of State regulators to access reinsurance
information for regulated companies in their jurisdictions.
``(p) Study and Report on Regulation of Insurance.--
``(1) In general.--Not later than 18 months after the date
of enactment of this section, the Director shall conduct a study
and submit a report to Congress on how to modernize and improve
the system of insurance regulation in the United States.
[[Page 124 STAT. 1586]]
``(2) Considerations.--The study and report required under
paragraph (1) shall be based on and guided by the following
considerations:
``(A) Systemic risk regulation with respect to
insurance.
``(B) Capital standards and the relationship between
capital allocation and liabilities, including standards
relating to liquidity and duration risk.
``(C) Consumer protection for insurance products and
practices, including gaps in State regulation.
``(D) The degree of national uniformity of State
insurance regulation.
``(E) The regulation of insurance companies and
affiliates on a consolidated basis.
``(F) International coordination of insurance
regulation.
``(3) Additional factors.--The study and report required
under paragraph (1) shall also examine the following factors:
``(A) The costs and benefits of potential Federal
regulation of insurance across various lines of
insurance (except health insurance).
``(B) The feasibility of regulating only certain
lines of insurance at the Federal level, while leaving
other lines of insurance to be regulated at the State
level.
``(C) The ability of any potential Federal
regulation or Federal regulators to eliminate or
minimize regulatory arbitrage.
``(D) The impact that developments in the regulation
of insurance in foreign jurisdictions might have on the
potential Federal regulation of insurance.
``(E) The ability of any potential Federal
regulation or Federal regulator to provide robust
consumer protection for policyholders.
``(F) The potential consequences of subjecting
insurance companies to a Federal resolution authority,
including the effects of any Federal resolution
authority--
``(i) on the operation of State insurance
guaranty fund systems, including the loss of
guaranty fund coverage if an insurance company is
subject to a Federal resolution authority;
``(ii) on policyholder protection, including
the loss of the priority status of policyholder
claims over other unsecured general creditor
claims;
``(iii) in the case of life insurance
companies, on the loss of the special status of
separate account assets and separate account
liabilities; and
``(iv) on the international competitiveness of
insurance companies.
``(G) Such other factors as the Director determines
necessary or appropriate, consistent with the principles
set forth in paragraph (2).
``(4) Required recommendations.--The study and report
required under paragraph (1) shall also contain any legislative,
administrative, or regulatory recommendations, as the Director
determines appropriate, to carry out or effectuate the findings
set forth in such report.
``(5) Consultation.--With respect to the study and report
required under paragraph (1), the Director shall consult with
[[Page 124 STAT. 1587]]
the State insurance regulators, consumer organizations,
representatives of the insurance industry and policyholders, and
other organizations and experts, as appropriate.
``(q) Use of Existing Resources.--To carry out this section, the
Office may employ personnel, facilities, and any other resource of the
Department of the Treasury available to the Secretary and the Secretary
shall dedicate specific personnel to the Office.
``(r) Definitions.--In this section and section 314, the following
definitions shall apply:
``(1) Affiliate.--The term `affiliate' means, with respect
to an insurer, any person who controls, is controlled by, or is
under common control with the insurer.
``(2) Covered agreement.--The term `covered agreement' means
a written bilateral or multilateral agreement regarding
prudential measures with respect to the business of insurance or
reinsurance that--
``(A) is entered into between the United States and
one or more foreign governments, authorities, or
regulatory entities; and
``(B) relates to the recognition of prudential
measures with respect to the business of insurance or
reinsurance that achieves a level of protection for
insurance or reinsurance consumers that is substantially
equivalent to the level of protection achieved under
State insurance or reinsurance regulation.
``(3) Insurer.--The term `insurer' means any person engaged
in the business of insurance, including reinsurance.
``(4) Federal financial regulatory agency.--The term
`Federal financial regulatory agency' means the Department of
the Treasury, the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the
Office of Thrift Supervision, the Securities and Exchange
Commission, the Commodity Futures Trading Commission, the
Federal Deposit Insurance Corporation, the Federal Housing
Finance Agency, or the National Credit Union Administration.
``(5) Non-united states insurer.--The term `non-United
States insurer' means an insurer that is organized under the
laws of a jurisdiction other than a State, but does not include
any United States branch of such an insurer.
``(6) Office.--The term `Office' means the Federal Insurance
Office established by this section.
``(7) State insurance measure.--The term `State insurance
measure' means any State law, regulation, administrative ruling,
bulletin, guideline, or practice relating to or affecting
prudential measures applicable to insurance or reinsurance.
``(8) State insurance regulator.--The term `State insurance
regulator' means any State regulatory authority responsible for
the supervision of insurers.
``(9) Substantially equivalent to the level of protection
achieved.--The term `substantially equivalent to the level of
protection achieved' means the prudential measures of a foreign
government, authority, or regulatory entity achieve a similar
outcome in consumer protection as the outcome achieved under
State insurance or reinsurance regulation.
``(10) United states insurer.--The term `United States
insurer' means--
[[Page 124 STAT. 1588]]
``(A) an insurer that is organized under the laws of
a State; or
``(B) a United States branch of a non-United States
insurer.
``(s) Authorization of Appropriations.--There are authorized to be
appropriated for the Office for each fiscal year such sums as may be
necessary.
``SEC. 314. COVERED AGREEMENTS.
``(a) Authority.--The Secretary and the United States Trade
Representative are authorized, jointly, to negotiate and enter into
covered agreements on behalf of the United States.
``(b) Requirements for Consultation With Congress.--
``(1) In general.--Before initiating negotiations to enter
into a covered agreement under subsection (a), during such
negotiations, and before entering into any such agreement, the
Secretary and the United States Trade Representative shall
jointly consult with the Committee on Financial Services and the
Committee on Ways and Means of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs and the
Committee on Finance of the Senate.
``(2) Scope.--The consultation described in paragraph (1)
shall include consultation with respect to--
``(A) the nature of the agreement;
``(B) how and to what extent the agreement will
achieve the applicable purposes, policies, priorities,
and objectives of section 313 and this section; and
``(C) the implementation of the agreement, including
the general effect of the agreement on existing State
laws.
``(c) Submission and Layover Provisions.--A covered agreement under
subsection (a) may enter into force with respect to the United States
only if--
``(1) the Secretary and the United States Trade
Representative jointly submit to the congressional committees
specified in subsection (b)(1), on a day on which both Houses of
Congress are in session, a copy of the final legal text of the
agreement; and
``(2) <<NOTE: Time period.>> a period of 90 calendar days
beginning on the date on which the copy of the final legal text
of the agreement is submitted to the congressional committees
under paragraph (1) has expired.''.
(b) Duties of Secretary.--Section 321(a) of title 31, United States
Code, is amended--
(1) in paragraph (7), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (8)(C), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(9) advise the President on major domestic and
international prudential policy issues in connection with all
lines of insurance except health insurance.''.
(c) Clerical Amendment.--The table of sections for subchapter I of
chapter 3 of title 31, United States Code, is amended by striking the
item relating to section 312 and inserting the following new items:
``Sec. 312. Terrorism and financial intelligence.
``Sec. 313. Federal Insurance Office.
[[Page 124 STAT. 1589]]
``Sec. 314. Covered agreements.
``Sec. 315. Continuing in office.''.
Subtitle <<NOTE: Nonadmitted and Reinsurance Reform Act of 2010. 15 USC
8201 note.>> B--State-Based Insurance Reform
SEC. 511. SHORT TITLE.
This subtitle may be cited as the ``Nonadmitted and Reinsurance
Reform Act of 2010''.
SEC. 512. <<NOTE: 15 USC 8201 note.>> EFFECTIVE DATE.
Except as otherwise specifically provided in this subtitle, this
subtitle shall take effect upon the expiration of the 12-month period
beginning on the date of the enactment of this subtitle.
PART I--NONADMITTED INSURANCE
SEC. 521. <<NOTE: 15 USC 8201.>> REPORTING, PAYMENT, AND
ALLOCATION OF PREMIUM TAXES.
(a) Home State's Exclusive Authority.--No State other than the home
State of an insured may require any premium tax payment for nonadmitted
insurance.
(b) Allocation of Nonadmitted Premium Taxes.--
(1) In general.--The States may enter into a compact or
otherwise establish procedures to allocate among the States the
premium taxes paid to an insured's home State described in
subsection (a).
(2) <<NOTE: Applicability.>> Effective date.--Except as
expressly otherwise provided in such compact or other
procedures, any such compact or other procedures--
(A) if adopted on or before the expiration of the
330-day period that begins on the date of the enactment
of this subtitle, shall apply to any premium taxes that,
on or after such date of enactment, are required to be
paid to any State that is subject to such compact or
procedures; and
(B) if adopted after the expiration of such 330-day
period, shall apply to any premium taxes that, on or
after January 1 of the first calendar year that begins
after the expiration of such 330-day period, are
required to be paid to any State that is subject to such
compact or procedures.
(3) Report.--Upon the expiration of the 330-day period
referred to in paragraph (2), the NAIC may submit a report to
the Committee on Financial Services and the Committee on the
Judiciary of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate identifying
and describing any compact or other procedures for allocation
among the States of premium taxes that have been adopted during
such period by any States.
(4) Nationwide system.--The Congress intends that each State
adopt nationwide uniform requirements, forms, and procedures,
such as an interstate compact, that provide for the reporting,
payment, collection, and allocation of premium taxes for
nonadmitted insurance consistent with this section.
(c) Allocation Based on Tax Allocation Report.--To facilitate the
payment of premium taxes among the States, an insured's home State may
require surplus lines brokers and insureds who
[[Page 124 STAT. 1590]]
have independently procured insurance to annually file tax allocation
reports with the insured's home State detailing the portion of the
nonadmitted insurance policy premium or premiums attributable to
properties, risks, or exposures located in each State. The filing of a
nonadmitted insurance tax allocation report and the payment of tax may
be made by a person authorized by the insured to act as its agent.
SEC. 522. <<NOTE: 15 USC 8202.>> REGULATION OF NONADMITTED
INSURANCE BY INSURED'S HOME STATE.
(a) Home State Authority.--Except as otherwise provided in this
section, the placement of nonadmitted insurance shall be subject to the
statutory and regulatory requirements solely of the insured's home
State.
(b) Broker Licensing.--No State other than an insured's home State
may require a surplus lines broker to be licensed in order to sell,
solicit, or negotiate nonadmitted insurance with respect to such
insured.
(c) Enforcement Provision.--With respect to section 521 and
subsections (a) and (b) of this section, any law, regulation, provision,
or action of any State that applies or purports to apply to nonadmitted
insurance sold to, solicited by, or negotiated with an insured whose
home State is another State shall be preempted with respect to such
application.
(d) Workers' Compensation Exception.--This section may not be
construed to preempt any State law, rule, or regulation that restricts
the placement of workers' compensation insurance or excess insurance for
self-funded workers' compensation plans with a nonadmitted insurer.
SEC. 523. <<NOTE: 15 USC 8203.>> PARTICIPATION IN NATIONAL
PRODUCER DATABASE.
<<NOTE: Time period.>> After the expiration of the 2-year period
beginning on the date of the enactment of this subtitle, a State may not
collect any fees relating to licensing of an individual or entity as a
surplus lines broker in the State unless the State has in effect at such
time laws or regulations that provide for participation by the State in
the national insurance producer database of the NAIC, or any other
equivalent uniform national database, for the licensure of surplus lines
brokers and the renewal of such licenses.
SEC. 524. <<NOTE: 15 USC 8204.>> UNIFORM STANDARDS FOR SURPLUS
LINES ELIGIBILITY.
A State may not--
(1) impose eligibility requirements on, or otherwise
establish eligibility criteria for, nonadmitted insurers
domiciled in a United States jurisdiction, except in conformance
with such requirements and criteria in sections 5A(2) and
5C(2)(a) of the Non-Admitted Insurance Model Act, unless the
State has adopted nationwide uniform requirements, forms, and
procedures developed in accordance with section 521(b) of this
subtitle that include alternative nationwide uniform eligibility
requirements; or
(2) prohibit a surplus lines broker from placing nonadmitted
insurance with, or procuring nonadmitted insurance from, a
nonadmitted insurer domiciled outside the United States that is
listed on the Quarterly Listing of Alien Insurers maintained by
the International Insurers Department of the NAIC.
[[Page 124 STAT. 1591]]
SEC. 525. <<NOTE: 15 USC 8205.>> STREAMLINED APPLICATION FOR
COMMERCIAL PURCHASERS.
A surplus lines broker seeking to procure or place nonadmitted
insurance in a State for an exempt commercial purchaser shall not be
required to satisfy any State requirement to make a due diligence search
to determine whether the full amount or type of insurance sought by such
exempt commercial purchaser can be obtained from admitted insurers if--
(1) the broker procuring or placing the surplus lines
insurance has disclosed to the exempt commercial purchaser that
such insurance may or may not be available from the admitted
market that may provide greater protection with more regulatory
oversight; and
(2) <<NOTE: Written request.>> the exempt commercial
purchaser has subsequently requested in writing the broker to
procure or place such insurance from a nonadmitted insurer.
SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET.
(a) In General.--The Comptroller General of the United States shall
conduct a study of the nonadmitted insurance market to determine the
effect of the enactment of this part on the size and market share of the
nonadmitted insurance market for providing coverage typically provided
by the admitted insurance market.
(b) Contents.--The study shall determine and analyze--
(1) the change in the size and market share of the
nonadmitted insurance market and in the number of insurance
companies and insurance holding companies providing such
business in the 18-month period that begins upon the effective
date of this subtitle;
(2) the extent to which insurance coverage typically
provided by the admitted insurance market has shifted to the
nonadmitted insurance market;
(3) the consequences of any change in the size and market
share of the nonadmitted insurance market, including differences
in the price and availability of coverage available in both the
admitted and nonadmitted insurance markets;
(4) the extent to which insurance companies and insurance
holding companies that provide both admitted and nonadmitted
insurance have experienced shifts in the volume of business
between admitted and nonadmitted insurance; and
(5) the extent to which there has been a change in the
number of individuals who have nonadmitted insurance policies,
the type of coverage provided under such policies, and whether
such coverage is available in the admitted insurance market.
(c) Consultation With NAIC.--In conducting the study under this
section, the Comptroller General shall consult with the NAIC.
(d) Report.--The Comptroller General shall complete the study under
this section and submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives regarding the findings of the study not
later than 30 months after the effective date of this subtitle.
SEC. 527. <<NOTE: 15 USC 8206.>> DEFINITIONS.
For purposes of this part, the following definitions shall apply:
[[Page 124 STAT. 1592]]
(1) Admitted insurer.--The term ``admitted insurer'' means,
with respect to a State, an insurer licensed to engage in the
business of insurance in such State.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insured, any entity that controls, is controlled by, or is
under common control with the insured.
(3) Affiliated group.--The term ``affiliated group'' means
any group of entities that are all affiliated.
(4) Control.--An entity has ``control'' over another entity
if--
(A) the entity directly or indirectly or acting
through 1 or more other persons owns, controls, or has
the power to vote 25 percent or more of any class of
voting securities of the other entity; or
(B) the entity controls in any manner the election
of a majority of the directors or trustees of the other
entity.
(5) Exempt commercial purchaser.--The term ``exempt
commercial purchaser'' means any person purchasing commercial
insurance that, at the time of placement, meets the following
requirements:
(A) The person employs or retains a qualified risk
manager to negotiate insurance coverage.
(B) The person has paid aggregate nationwide
commercial property and casualty insurance premiums in
excess of $100,000 in the immediately preceding 12
months.
(C)(i) The person meets at least 1 of the following
criteria:
(I) The person possesses a net worth in excess
of $20,000,000, as such amount is adjusted
pursuant to clause (ii).
(II) The person generates annual revenues in
excess of $50,000,000, as such amount is adjusted
pursuant to clause (ii).
(III) The person employs more than 500 full-
time or full-time equivalent employees per
individual insured or is a member of an affiliated
group employing more than 1,000 employees in the
aggregate.
(IV) The person is a not-for-profit
organization or public entity generating annual
budgeted expenditures of at least $30,000,000, as
such amount is adjusted pursuant to clause (ii).
(V) The person is a municipality with a
population in excess of 50,000 persons.
(ii) <<NOTE: Effective dates.>> Effective on the
fifth January 1 occurring after the date of the
enactment of this subtitle and each fifth January 1
occurring thereafter, the amounts in subclauses (I),
(II), and (IV) of clause (i) shall be adjusted to
reflect the percentage change for such 5-year period in
the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the
Department of Labor.
(6) Home state.--
(A) In general.--Except as provided in subparagraph
(B), the term ``home State'' means, with respect to an
insured--
[[Page 124 STAT. 1593]]
(i) the State in which an insured maintains
its principal place of business or, in the case of
an individual, the individual's principal
residence; or
(ii) if 100 percent of the insured risk is
located out of the State referred to in clause
(i), the State to which the greatest percentage of
the insured's taxable premium for that insurance
contract is allocated.
(B) Affiliated groups.--If more than 1 insured from
an affiliated group are named insureds on a single
nonadmitted insurance contract, the term ``home State''
means the home State, as determined pursuant to
subparagraph (A), of the member of the affiliated group
that has the largest percentage of premium attributed to
it under such insurance contract.
(7) Independently procured insurance.--The term
``independently procured insurance'' means insurance procured
directly by an insured from a nonadmitted insurer.
(8) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners or any successor entity.
(9) Nonadmitted insurance.--The term ``nonadmitted
insurance'' means any property and casualty insurance permitted
to be placed directly or through a surplus lines broker with a
nonadmitted insurer eligible to accept such insurance.
(10) Non-admitted insurance model act.--The term ``Non-
Admitted Insurance Model Act'' means the provisions of the Non-
Admitted Insurance Model Act, as adopted by the NAIC on August
3, 1994, and amended on September 30, 1996, December 6, 1997,
October 2, 1999, and June 8, 2002.
(11) Nonadmitted insurer.--The term ``nonadmitted
insurer''--
(A) means, with respect to a State, an insurer not
licensed to engage in the business of insurance in such
State; but
(B) does not include a risk retention group, as that
term is defined in section 2(a)(4) of the Liability Risk
Retention Act of 1986 (15 U.S.C. 3901(a)(4)).
(12) Premium tax.--The term ``premium tax'' means, with
respect to surplus lines or independently procured insurance
coverage, any tax, fee, assessment, or other charge imposed by a
government entity directly or indirectly based on any payment
made as consideration for an insurance contract for such
insurance, including premium deposits, assessments, registration
fees, and any other compensation given in consideration for a
contract of insurance.
(13) Qualified risk manager.--The term ``qualified risk
manager'' means, with respect to a policyholder of commercial
insurance, a person who meets all of the following requirements:
(A) The person is an employee of, or third-party
consultant retained by, the commercial policyholder.
(B) The person provides skilled services in loss
prevention, loss reduction, or risk and insurance
coverage analysis, and purchase of insurance.
(C) The person--
(i)(I) has a bachelor's degree or higher from
an accredited college or university in risk
management, business administration, finance,
economics, or any
[[Page 124 STAT. 1594]]
other field determined by a State insurance
commissioner or other State regulatory official or
entity to demonstrate minimum competence in risk
management; and
(II)(aa) has 3 years of experience in risk
financing, claims administration, loss prevention,
risk and insurance analysis, or purchasing
commercial lines of insurance; or
(bb) has--
(AA) a designation as a Chartered
Property and Casualty Underwriter (in
this subparagraph referred to as
``CPCU'') issued by the American
Institute for CPCU/Insurance Institute
of America;
(BB) a designation as an Associate
in Risk Management (ARM) issued by the
American Institute for CPCU/Insurance
Institute of America;
(CC) a designation as Certified Risk
Manager (CRM) issued by the National
Alliance for Insurance Education &
Research;
(DD) a designation as a RIMS Fellow
(RF) issued by the Global Risk
Management Institute; or
(EE) any other designation,
certification, or license determined by
a State insurance commissioner or other
State insurance regulatory official or
entity to demonstrate minimum competency
in risk management;
(ii)(I) has at least 7 years of experience in
risk financing, claims administration, loss
prevention, risk and insurance coverage analysis,
or purchasing commercial lines of insurance; and
(II) has any 1 of the designations specified
in subitems (AA) through (EE) of clause
(i)(II)(bb);
(iii) has at least 10 years of experience in
risk financing, claims administration, loss
prevention, risk and insurance coverage analysis,
or purchasing commercial lines of insurance; or
(iv) has a graduate degree from an accredited
college or university in risk management, business
administration, finance, economics, or any other
field determined by a State insurance commissioner
or other State regulatory official or entity to
demonstrate minimum competence in risk management.
(14) Reinsurance.--The term ``reinsurance'' means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(15) Surplus lines broker.--The term ``surplus lines
broker'' means an individual, firm, or corporation which is
licensed in a State to sell, solicit, or negotiate insurance on
properties, risks, or exposures located or to be performed in a
State with nonadmitted insurers.
(16) State.--The term ``State'' includes any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.
[[Page 124 STAT. 1595]]
PART II--REINSURANCE
SEC. 531. <<NOTE: 15 USC 8221.>> REGULATION OF CREDIT FOR
REINSURANCE AND REINSURANCE AGREEMENTS.
(a) Credit for Reinsurance.--If the State of domicile of a ceding
insurer is an NAIC-accredited State, or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, and recognizes credit for reinsurance for the
insurer's ceded risk, then no other State may deny such credit for
reinsurance.
(b) Additional Preemption of Extraterritorial Application of State
Law.--In addition to the application of subsection (a), all laws,
regulations, provisions, or other actions of a State that is not the
domiciliary State of the ceding insurer, except those with respect to
taxes and assessments on insurance companies or insurance income, are
preempted to the extent that they--
(1) restrict or eliminate the rights of the ceding insurer
or the assuming insurer to resolve disputes pursuant to
contractual arbitration to the extent such contractual provision
is not inconsistent with the provisions of title 9, United
States Code;
(2) require that a certain State's law shall govern the
reinsurance contract, disputes arising from the reinsurance
contract, or requirements of the reinsurance contract;
(3) attempt to enforce a reinsurance contract on terms
different than those set forth in the reinsurance contract, to
the extent that the terms are not inconsistent with this part;
or
(4) otherwise apply the laws of the State to reinsurance
agreements of ceding insurers not domiciled in that State.
SEC. 532. <<NOTE: 15 USC 8222.>> REGULATION OF REINSURER
SOLVENCY.
(a) Domiciliary State Regulation.--If the State of domicile of a
reinsurer is an NAIC-accredited State or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, such State shall be solely responsible for
regulating the financial solvency of the reinsurer.
(b) Nondomiciliary States.--
(1) Limitation on financial information requirements.--If
the State of domicile of a reinsurer is an NAIC-accredited State
or has financial solvency requirements substantially similar to
the requirements necessary for NAIC accreditation, no other
State may require the reinsurer to provide any additional
financial information other than the information the reinsurer
is required to file with its domiciliary State.
(2) Receipt of information.--No provision of this section
shall be construed as preventing or prohibiting a State that is
not the State of domicile of a reinsurer from receiving a copy
of any financial statement filed with its domiciliary State.
SEC. 533. <<NOTE: 15 USC 8223.>> DEFINITIONS.
For purposes of this part, the following definitions shall apply:
(1) Ceding insurer.--The term ``ceding insurer'' means an
insurer that purchases reinsurance.
(2) Domiciliary state.--The terms ``State of domicile'' and
``domiciliary State'' mean, with respect to an insurer or
[[Page 124 STAT. 1596]]
reinsurer, the State in which the insurer or reinsurer is
incorporated or entered through, and licensed.
(3) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners or any successor entity.
(4) Reinsurance.--The term ``reinsurance'' means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(5) Reinsurer.--
(A) In general.--The term ``reinsurer'' means an
insurer to the extent that the insurer--
(i) is principally engaged in the business of
reinsurance;
(ii) does not conduct significant amounts of
direct insurance as a percentage of its net
premiums; and
(iii) is not engaged in an ongoing basis in
the business of soliciting direct insurance.
(B) Determination.--A determination of whether an
insurer is a reinsurer shall be made under the laws of
the State of domicile in accordance with this paragraph.
(6) State.--The term ``State'' includes any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.
PART III--RULE OF CONSTRUCTION
SEC. 541. <<NOTE: 15 USC 8231.>> RULE OF CONSTRUCTION.
Nothing in this subtitle or the amendments made by this subtitle
shall be construed to modify, impair, or supersede the application of
the antitrust laws. Any implied or actual conflict between this subtitle
and any amendments to this subtitle and the antitrust laws shall be
resolved in favor of the operation of the antitrust laws.
SEC. 542. <<NOTE: 15 USC 8232.>> SEVERABILITY.
If any section or subsection of this subtitle, or any application of
such provision to any person or circumstance, is held to be
unconstitutional, the remainder of this subtitle, and the application of
the provision to any other person or circumstance, shall not be
affected.
TITLE VI--IMPROVEMENTS TO <<NOTE: Bank and Savings Association Holding
Company and Depository Institution Regulatory Improvements Act of
2010. 12 USC 1811 note.>> REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
SEC. 601. SHORT TITLE.
This title may be cited as the ``Bank and Savings Association
Holding Company and Depository Institution Regulatory Improvements Act
of 2010''.
SEC. 602. <<NOTE: 12 USC 1815 note.>> DEFINITION.
For purposes of this title, a company is a ``commercial firm'' if
the annual gross revenues derived by the company and all of its
affiliates from activities that are financial in nature (as defined
[[Page 124 STAT. 1597]]
in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k))) and, if applicable, from the ownership or control of one or
more insured depository institutions, represent less than 15 percent of
the consolidated annual gross revenues of the company.
SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD BANKS,
INDUSTRIAL LOAN COMPANIES, AND CERTAIN
OTHER COMPANIES UNDER THE BANK HOLDING
COMPANY ACT OF 1956.
(a) <<NOTE: 12 USC 1815 note.>> Moratorium.--
(1) Definitions.--In this subsection--
(A) the term ``credit card bank'' means an
institution described in section 2(c)(2)(F) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(B) the term ``industrial bank'' means an
institution described in section 2(c)(2)(H) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H));
and
(C) the term ``trust bank'' means an institution
described in section 2(c)(2)(D) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)).
(2) Moratorium on provision of deposit insurance.--The
Corporation may not approve an application for deposit insurance
under section 5 of the Federal Deposit Insurance Act (12 U.S.C.
1815) that is received after November 23, 2009, for an
industrial bank, a credit card bank, or a trust bank that is
directly or indirectly owned or controlled by a commercial firm.
(3) Change in control.--
(A) In general.--Except as provided in subparagraph
(B), the appropriate Federal banking agency shall
disapprove a change in control, as provided in section
7(j) of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)), of an industrial bank, a credit card bank, or
a trust bank if the change in control would result in
direct or indirect control of the industrial bank,
credit card bank, or trust bank by a commercial firm.
(B) Exceptions.--Subparagraph (A) shall not apply to
a change in control of an industrial bank, credit card
bank, or trust bank--
(i) that--
(I) is in danger of default, as
determined by the appropriate Federal
banking agency;
(II) results from the merger or
whole acquisition of a commercial firm
that directly or indirectly controls the
industrial bank, credit card bank, or
trust bank in a bona fide merger with or
acquisition by another commercial firm,
as determined by the appropriate Federal
banking agency; or
(III) results from an acquisition of
voting shares of a publicly traded
company that controls an industrial
bank, credit card bank, or trust bank,
if, after the acquisition, the acquiring
shareholder (or group of shareholders
acting in concert) holds less than 25
percent of any class of the voting
shares of the company; and
[[Page 124 STAT. 1598]]
(ii) that has obtained all regulatory
approvals otherwise required for such change of
control under any applicable Federal or State law,
including section 7(j) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(j)).
(4) Sunset.--This subsection shall cease to have effect 3
years after the date of enactment of this Act.
(b) Government Accountability Office Study of Exceptions Under the
Bank Holding Company Act of 1956.--
(1) Study required.--The Comptroller General of the United
States shall carry out a study to determine whether it is
necessary, in order to strengthen the safety and soundness of
institutions or the stability of the financial system, to
eliminate the exceptions under section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841) for institutions described
in--
(A) section 2(a)(5)(E) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(E));
(B) section 2(a)(5)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(F));
(C) section 2(c)(2)(D) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(D));
(D) section 2(c)(2)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(E) section 2(c)(2)(H) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and
(F) section 2(c)(2)(B) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(B)).
(2) Content of study.--
(A) In general.--The study required under paragraph
(1), with respect to the institutions referenced in each
of subparagraphs (A) through (E) of paragraph (1),
shall, to the extent feasible be based on information
provided to the Comptroller General by the appropriate
Federal or State regulator, and shall--
(i) identify the types and number of
institutions excepted from section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841) under
each of the subparagraphs described in
subparagraphs (A) through (E) of paragraph (1);
(ii) generally describe the size and
geographic locations of the institutions described
in clause (i);
(iii) determine the extent to which the
institutions described in clause (i) are held by
holding companies that are commercial firms;
(iv) determine whether the institutions
described in clause (i) have any affiliates that
are commercial firms;
(v) identify the Federal banking agency
responsible for the supervision of the
institutions described in clause (i) on and after
the transfer date;
(vi) determine the adequacy of the Federal
bank regulatory framework applicable to each
category of institution described in clause (i),
including any restrictions (including limitations
on affiliate transactions or cross-marketing) that
apply to transactions between
[[Page 124 STAT. 1599]]
an institution, the holding company of the
institution, and any other affiliate of the
institution; and
(vii) evaluate the potential consequences of
subjecting the institutions described in clause
(i) to the requirements of the Bank Holding
Company Act of 1956, including with respect to the
availability and allocation of credit, the
stability of the financial system and the economy,
the safe and sound operation of each category of
institution, and the impact on the types of
activities in which such institutions, and the
holding companies of such institutions, may
engage.
(B) Savings associations.--With respect to
institutions described in paragraph (1)(F), the study
required under paragraph (1) shall--
(i) determine the adequacy of the Federal bank
regulatory framework applicable to such
institutions, including any restrictions
(including limitations on affiliate transactions
or cross-marketing) that apply to transactions
between an institution, the holding company of the
institution, and any other affiliate of the
institution; and
(ii) evaluate the potential consequences of
subjecting the institutions described in paragraph
(1)(F) to the requirements of the Bank Holding
Company Act of 1956, including with respect to the
availability and allocation of credit, the
stability of the financial system and the economy,
the safe and sound operation of such institutions,
and the impact on the types of activities in which
such institutions, and the holding companies of
such institutions, may engage.
(3) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report on the study required under paragraph
(1).
SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES;
REGULATION OF FUNCTIONALLY REGULATED
SUBSIDIARIES.
(a) Reports by Bank Holding Companies.--Sections 5(c)(1) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended--
(1) by striking subclause (A)(ii) and inserting the
following:
``(ii) compliance by the bank holding company
or subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board
has specific jurisdiction to enforce
against the company or subsidiary; and
``(III) other than in the case of an
insured depository institution or
functionally regulated subsidiary, any
other applicable provision of Federal
law.'';
(2) by striking subparagraph (B) and inserting the
following:
[[Page 124 STAT. 1600]]
``(B) Use of existing reports and other supervisory
information.--The Board shall, to the fullest extent
possible, use--
``(i) reports and other supervisory
information that the bank holding company or any
subsidiary thereof has been required to provide to
other Federal or State regulatory agencies;
``(ii) externally audited financial statements
of the bank holding company or subsidiary;
``(iii) information otherwise available from
Federal or State regulatory agencies; and
``(iv) information that is otherwise required
to be reported publicly.''; and
(3) by adding at the end the following:
``(C) Availability.--Upon the request of the Board,
the bank holding company or a subsidiary of the bank
holding company shall promptly provide to the Board any
information described in clauses (i) through (iii) of
subparagraph (B).''.
(b) Examinations of Bank Holding Companies.--Section 5(c)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)) is amended to
read as follows:
``(2) Examinations.--
``(A) In general.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Board may
make examinations of a bank holding company and each
subsidiary of a bank holding company in order to--
``(i) inform the Board of--
``(I) the nature of the operations
and financial condition of the bank
holding company and the subsidiary;
``(II) the financial, operational,
and other risks within the bank holding
company system that may pose a threat
to--
``(aa) the safety and
soundness of the bank holding
company or of any depository
institution subsidiary of the
bank holding company; or
``(bb) the stability of the
financial system of the United
States; and
``(III) the systems of the bank
holding company for monitoring and
controlling the risks described in
subclause (II); and
``(ii) monitor the compliance of the bank
holding company and the subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board
has specific jurisdiction to enforce
against the company or subsidiary; and
``(III) other than in the case of an
insured depository institution or
functionally regulated subsidiary, any
other applicable provisions of Federal
law.
``(B) Use of reports to reduce examinations.--For
purposes of this paragraph, the Board shall, to the
fullest extent possible, rely on--
[[Page 124 STAT. 1601]]
``(i) examination reports made by other
Federal or State regulatory agencies relating to a
bank holding company and any subsidiary of a bank
holding company; and
``(ii) the reports and other information
required under paragraph (1).
``(C) Coordination with other regulators.--The Board
shall--
``(i) <<NOTE: Notice. Consultation.>> provide
reasonable notice to, and consult with, the
appropriate Federal banking agency, the Securities
and Exchange Commission, the Commodity Futures
Trading Commission, or State regulatory agency, as
appropriate, for a subsidiary that is a depository
institution or a functionally regulated subsidiary
of a bank holding company before commencing an
examination of the subsidiary under this section;
and
``(ii) to the fullest extent possible, avoid
duplication of examination activities, reporting
requirements, and requests for information.''.
(c) Authority To Regulate Functionally Regulated Subsidiaries of
Bank Holding Companies.--The Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) is amended--
(1) in section 5(c)(5)(B) (12 U.S.C. 1844(c)(5)(B)), by
striking clause (v) and inserting the following:
``(v) an entity that is subject to regulation
by, or registration with, the Commodity Futures
Trading Commission, with respect to activities
conducted as a futures commission merchant,
commodity trading adviser, commodity pool,
commodity pool operator, swap execution facility,
swap data repository, swap dealer, major swap
participant, and activities that are incidental to
such commodities and swaps activities.''; and
(2) by striking section 10A (12 U.S.C. 1848a).
(d) Acquisitions of Banks.--Section 3(c) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end the
following:
``(7) Financial stability.--In every case, the Board shall
take into consideration the extent to which a proposed
acquisition, merger, or consolidation would result in greater or
more concentrated risks to the stability of the United States
banking or financial system.''.
(e) Acquisitions of Nonbanks.--
(1) Notice procedures.--Section 4(j)(2)(A) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is amended
by striking ``or unsound banking practices'' and inserting
``unsound banking practices, or risk to the stability of the
United States banking or financial system''.
(2) Activities that are financial in nature.--Section
4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(6)(B)) is amended to read as follows:
``(B) Approval not required for certain financial
activities.--
``(i) In general.--Except as provided in
subsection (j) with regard to the acquisition of a
savings association and clause (ii), a financial
holding company may
[[Page 124 STAT. 1602]]
commence any activity, or acquire any company,
pursuant to paragraph (4) or any regulation
prescribed or order issued under paragraph (5),
without prior approval of the Board.
``(ii) Exception.--A financial holding company
may not acquire a company, without the prior
approval of the Board, in a transaction in which
the total consolidated assets to be acquired by
the financial holding company exceed
$10,000,000,000.
``(iii) Hart-Scott-Rodino filing
requirement.--Solely for purposes of section
7A(c)(8) of the Clayton Act (15 U.S.C. 18a(c)(8)),
the transactions subject to the requirements of
this paragraph shall be treated as if the approval
of the Board is not required.''.
(f) Bank Merger Act Transactions.--Section 18(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, in the matter
immediately following subparagraph (B), by striking ``and the
convenience and needs of the community to be served'' and inserting
``the convenience and needs of the community to be served, and the risk
to the stability of the United States banking or financial system''.
(g) Reports by Savings and Loan Holding Companies.--Section 10(b)(2)
of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) is amended--
(1) by striking ``Each savings'' and inserting the
following:
``(A) In general.--Each savings''; and
(2) by adding at the end the following:
``(B) Use of existing reports and other supervisory
information.--The Board shall, to the fullest extent
possible, use--
``(i) reports and other supervisory
information that the savings and loan holding
company or any subsidiary thereof has been
required to provide to other Federal or State
regulatory agencies;
``(ii) externally audited financial statements
of the savings and loan holding company or
subsidiary;
``(iii) information that is otherwise
available from Federal or State regulatory
agencies; and
``(iv) information that is otherwise required
to be reported publicly.
``(C) Availability.--Upon the request of the Board,
a savings and loan holding company or a subsidiary of a
savings and loan holding company shall promptly provide
to the Board any information described in clauses (i)
through (iii) of subparagraph (B).''.
(h) Examination of Savings and Loan Holding Companies.--
(1) Definitions.--Section 2 of the Home Owners' Loan Act (12
U.S.C. 1462) is amended by adding at the end the following:
``(10) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).
``(11) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act of 1956 (12
U.S.C. 1844(c)(5)).''.
[[Page 124 STAT. 1603]]
(2) Examination.--Section 10(b) of the Home Owners' Loan Act
(12 U.S.C. 1467a(b)) is amended by striking paragraph (4) and
inserting the following:
``(4) Examinations.--
``(A) In general.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Board may
make examinations of a savings and loan holding company
and each subsidiary of a savings and loan holding
company system, in order to--
``(i) inform the Board of--
``(I) the nature of the operations
and financial condition of the savings
and loan holding company and the
subsidiary;
``(II) the financial, operational,
and other risks within the savings and
loan holding company system that may
pose a threat to--
``(aa) the safety and
soundness of the savings and
loan holding company or of any
depository institution
subsidiary of the savings and
loan holding company; or
``(bb) the stability of the
financial system of the United
States; and
``(III) the systems of the savings
and loan holding company for monitoring
and controlling the risks described in
subclause (II); and
``(ii) monitor the compliance of the savings
and loan holding company and the subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board
has specific jurisdiction to enforce
against the company or subsidiary; and
``(III) other than in the case of an
insured depository institution or
functionally regulated subsidiary, any
other applicable provisions of Federal
law.
``(B) Use of reports to reduce examinations.--For
purposes of this subsection, the Board shall, to the
fullest extent possible, rely on--
``(i) the examination reports made by other
Federal or State regulatory agencies relating to a
savings and loan holding company and any
subsidiary; and
``(ii) the reports and other information
required under paragraph (2).
``(C) Coordination with other regulators.--The Board
shall--
``(i) <<NOTE: Notice. Consultation.>> provide
reasonable notice to, and consult with, the
appropriate Federal banking agency, the Securities
and Exchange Commission, the Commodity Futures
Trading Commission, or State regulatory agency, as
appropriate, for a subsidiary that is a depository
institution or a functionally regulated subsidiary
of a savings and loan holding company before
commencing an examination of the subsidiary under
this section; and
``(ii) to the fullest extent possible, avoid
duplication of examination activities, reporting
requirements, and requests for information.''.
[[Page 124 STAT. 1604]]
(i) Definition of the Term ``Savings and Loan Holding Company''.--
Section 10(a)(1)(D)(ii) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(D)(ii)) is amended to read as follows:
``(ii) Exclusion.--The term `savings and loan
holding company' does not include--
``(I) a bank holding company that is
registered under, and subject to, the
Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.), or to any company
directly or indirectly controlled by
such company (other than a savings
association);
``(II) a company that controls a
savings association that functions
solely in a trust or fiduciary capacity
as described in section 2(c)(2)(D) of
the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)(D)); or
``(III) a company described in
subsection (c)(9)(C) solely by virtue of
such company's control of an
intermediate holding company established
pursuant to section 10A.''.
(j) <<NOTE: 12 USC 1462 note.>> Effective Date.--The amendments
made by this section shall take effect on the transfer date.
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES
OF DEPOSITORY INSTITUTION SUBSIDIARIES OF
HOLDING COMPANIES.
(a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.) is amended by inserting after section 25 the following new
section:
``SEC. 26. <<NOTE: 12 USC 1831c.>> ASSURING CONSISTENT OVERSIGHT
OF SUBSIDIARIES OF HOLDING COMPANIES.
``(a) Definitions.--For purposes of this section:
``(1) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.
``(2) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act.
``(3) Lead insured depository institution.--The term `lead
insured depository institution' has the same meaning as in
section 2(o)(8) of the Bank Holding Company Act.
``(b) Examination Requirements.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Board shall examine the
activities of a nondepository institution subsidiary (other than a
functionally regulated subsidiary or a subsidiary of a depository
institution) of a depository institution holding company that are
permissible for the insured depository institution subsidiaries of the
depository institution holding company in the same manner, subject to
the same standards, and with the same frequency as would be required if
such activities were conducted in the lead insured depository
institution of the depository institution holding company.
``(c) State Coordination.--
``(1) Consultation and coordination.--If a nondepository
institution subsidiary is supervised by a State bank supervisor
or other State regulatory authority, the Board, in conducting
the examinations required in subsection (b), shall consult and
coordinate with such State regulator.
[[Page 124 STAT. 1605]]
``(2) Alternating examinations permitted.--The examinations
required under subsection (b) may be conducted in joint or
alternating manner with a State regulator, if the Board
determines that an examination of a nondepository institution
subsidiary conducted by the State carries out the purposes of
this section.
``(d) Appropriate Federal Banking Agency Backup Examination
Authority.--
``(1) In general.--In the event that the Board does not
conduct examinations required under subsection (b) in the same
manner, subject to the same standards, and with the same
frequency as would be required if such activities were conducted
by the lead insured depository institution subsidiary of the
depository institution holding company, the appropriate Federal
banking agency for the lead insured depository institution may
recommend in writing (which shall include a written explanation
of the concerns giving rise to the recommendation) that the
Board perform the examination required under subsection (b).
``(2) Examination by an appropriate federal banking
agency.--If the <<NOTE: Time period.>> Board does not, before
the end of the 60-day period beginning on the date on which the
Board receives a recommendation under paragraph (1), begin an
examination as required under subsection (b) or provide a
written explanation or plan to the appropriate Federal banking
agency making such recommendation responding to the concerns
raised by the appropriate Federal banking agency for the lead
insured depository institution, the appropriate Federal banking
agency for the lead insured depository institution may, subject
to the Consumer Financial Protection Act of 2010, examine the
activities that are permissible for a depository institution
subsidiary conducted by such nondepository institution
subsidiary (other than a functionally regulated subsidiary or a
subsidiary of a depository institution) of the depository
institution holding company as if the nondepository institution
subsidiary were an insured depository institution for which the
appropriate Federal banking agency of the lead insured
depository institution was the appropriate Federal banking
agency, to determine whether the activities--
``(A) pose a material threat to the safety and
soundness of any insured depository institution
subsidiary of the depository institution holding
company;
``(B) are conducted in accordance with applicable
Federal law; and
``(C) are subject to appropriate systems for
monitoring and controlling the financial, operating, and
other material risks of the activities that may pose a
material threat to the safety and soundness of the
insured depository institution subsidiaries of the
holding company.
``(3) Agency coordination with the board.--An appropriate
Federal banking agency that conducts an examination pursuant to
paragraph (2) shall coordinate examination of the activities of
nondepository institution subsidiaries described in subsection
(b) with the Board in a manner that--
``(A) avoids duplication;
``(B) shares information relevant to the supervision
of the depository institution holding company;
[[Page 124 STAT. 1606]]
``(C) achieves the objectives of subsection (b); and
``(D) ensures that the depository institution
holding company and the subsidiaries of the depository
institution holding company are not subject to
conflicting supervisory demands by such agency and the
Board.
``(4) Fee permitted for examination costs.--An appropriate
Federal banking agency that conducts an examination or
enforcement action pursuant to this section may collect an
assessment, fee, or such other charge from the subsidiary as the
appropriate Federal banking agency determines necessary or
appropriate to carry out the responsibilities of the appropriate
Federal banking agency in connection with such examination.
``(e) Referrals for Enforcement by Appropriate Federal Banking
Agency.--
``(1) Recommendation of enforcement action.--The appropriate
Federal banking agency for the lead insured depository
institution, based upon its examination of a nondepository
institution subsidiary conducted pursuant to subsection (d), or
other relevant information, may submit to the Board, in writing,
a recommendation that the Board take enforcement action against
such nondepository institution subsidiary, together with an
explanation of the concerns giving rise to the recommendation,
if the appropriate Federal banking agency determines (by a vote
of its members, if applicable) that the activities of the
nondepository institution subsidiary pose a material threat to
the safety and soundness of any insured depository institution
subsidiary of the depository institution holding company.
``(2) Back-up authority of the appropriate federal banking
agency.--If, within <<NOTE: Time period.>> the 60-day period
beginning on the date on which the Board receives a
recommendation under paragraph (1), the Board does not take
enforcement action against the nondepository institution
subsidiary or provide a plan for supervisory or enforcement
action that is acceptable to the appropriate Federal banking
agency that made the recommendation pursuant to paragraph (1),
such agency may take the recommended enforcement action against
the nondepository institution subsidiary, in the same manner as
if the nondepository institution subsidiary were an insured
depository institution for which the agency was the appropriate
Federal banking agency.
``(f) Coordination Among Appropriate Federal Banking Agencies.--Each
Federal banking agency, prior to or when exercising authority under
subsection (d) or (e) shall--
``(1) <<NOTE: Notice. Consultation.>> provide reasonable
notice to, and consult with, the appropriate Federal banking
agency or State bank supervisor (or other State regulatory
agency) of the nondepository institution subsidiary of a
depository institution holding company that is described in
subsection (d) before commencing any examination of the
subsidiary;
``(2) to the fullest extent possible--
``(A) rely on the examinations, inspections, and
reports of the appropriate Federal banking agency or the
State bank supervisor (or other State regulatory agency)
of the subsidiary;
[[Page 124 STAT. 1607]]
``(B) avoid duplication of examination activities,
reporting requirements, and requests for information;
and
``(C) ensure that the depository institution holding
company and the subsidiaries of the depository
institution holding company are not subject to
conflicting supervisory demands by the appropriate
Federal banking agencies.
``(g) Rule of Construction.--No provision of this section shall be
construed as limiting any authority of the Board, the Corporation, or
the Comptroller of the Currency under any other provision of law.''.
(b) <<NOTE: 12 USC 1831c note.>> Effective Date.--The amendment
made by subsection (a) shall take effect on the transfer date.
SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN
WELL CAPITALIZED AND WELL MANAGED.
(a) Amendment.--Section 4(l)(1) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(l)(1)) is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) by redesignating subparagraph (C) as subparagraph (D);
(3) by inserting after subparagraph (B) the following:
``(C) the bank holding company is well capitalized
and well managed; and''; and
(4) in subparagraph (D)(ii), as so redesignated, by striking
``subparagraphs (A) and (B)'' and inserting ``subparagraphs (A),
(B), and (C)''.
(b) Home Owners' Loan Act Amendment.--Section 10(c)(2) of the Home
Owners' Loan Act (12 U.S.C. 1467a(c)(2)) is amended by adding at the end
the following new subparagraph:
``(H) Any activity that is permissible for a
financial holding company (as such term is defined under
section 2(p) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(p)) to conduct under section 4(k) of the
Bank Holding Company Act of 1956 if--
``(i) the savings and loan holding company
meets all of the criteria to qualify as a
financial holding company, and complies with all
of the requirements applicable to a financial
holding company, under sections 4(l) and 4(m) of
the Bank Holding Company Act and section 804(c) of
the Community Reinvestment Act of 1977 (12 U.S.C.
2903(c)) as if the savings and loan holding
company was a bank holding company; and
``(ii) the savings and loan holding company
conducts the activity in accordance with the same
terms, conditions, and requirements that apply to
the conduct of such activity by a bank holding
company under the Bank Holding Company Act of 1956
and the Board's regulations and interpretations
under such Act.''.
(c) <<NOTE: 12 USC 1467a note.>> Effective Date.--The amendments
made by this section shall take effect on the transfer date.
SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.
(a) Acquisition of Banks.--Section 3(d)(1)(A) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended by striking
``adequately capitalized and adequately managed'' and inserting ``well
capitalized and well managed''.
[[Page 124 STAT. 1608]]
(b) Interstate Bank Mergers.--Section 44(b)(4)(B) of the Federal
Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended by striking
``will continue to be adequately capitalized and adequately managed''
and inserting ``will be well capitalized and well managed''.
(c) <<NOTE: 12 USC 1831u note.>> Effective Date.--The amendments
made by this section shall take effect on the transfer date.
SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS
WITH AFFILIATES.
(a) Affiliate Transactions.--Section 23A of the Federal Reserve Act
(12 U.S.C. 371c) is amended--
(1) in subsection (b)--
(A) in paragraph (1), by striking subparagraph (D)
and inserting the following:
``(D) any investment fund with respect to which a
member bank or affiliate thereof is an investment
adviser; and''; and
(B) in paragraph (7)--
(i) in subparagraph (A), by inserting before
the semicolon at the end the following: ``,
including a purchase of assets subject to an
agreement to repurchase'';
(ii) in subparagraph (C), by striking ``,
including assets subject to an agreement to
repurchase,'';
(iii) in subparagraph (D)--
(I) by inserting ``or other debt
obligations'' after ``acceptance of
securities''; and
(II) by striking ``or'' at the end;
and
(iv) by adding at the end the following:
``(F) a transaction with an affiliate that involves
the borrowing or lending of securities, to the extent
that the transaction causes a member bank or a
subsidiary to have credit exposure to the affiliate; or
``(G) a derivative transaction, as defined in
paragraph (3) of section 5200(b) of the Revised Statutes
of the United States (12 U.S.C. 84(b)), with an
affiliate, to the extent that the transaction causes a
member bank or a subsidiary to have credit exposure to
the affiliate;'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph (A),
by striking ``subsidiary'' and all that follows
through ``time of the transaction'' and inserting
``subsidiary, and any credit exposure of a member
bank or a subsidiary to an affiliate resulting
from a securities borrowing or lending
transaction, or a derivative transaction, shall be
secured at all times''; and
(ii) in each of subparagraphs (A) through (D),
by striking ``or letter of credit'' and inserting
``letter of credit, or credit exposure'';
(B) by striking paragraph (2);
(C) by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively;
(D) in paragraph (2), as so redesignated, by
inserting before the period at the end ``, or credit
exposure to an affiliate resulting from a securities
borrowing or lending transaction, or derivative
transaction''; and
[[Page 124 STAT. 1609]]
(E) in paragraph (3), as so redesignated--
(i) by inserting ``or other debt obligations''
after ``securities''; and
(ii) by striking ``or guarantee'' and all that
follows through ``behalf of,'' and inserting
``guarantee, acceptance, or letter of credit
issued on behalf of, or credit exposure from a
securities borrowing or lending transaction, or
derivative transaction to,'';
(3) in subsection (d)(4), in the matter preceding
subparagraph (A), by striking ``or issuing'' and all that
follows through ``behalf of,'' and inserting ``issuing a
guarantee, acceptance, or letter of credit on behalf of, or
having credit exposure resulting from a securities borrowing or
lending transaction, or derivative transaction to,''; and
(4) in subsection (f)--
(A) in paragraph (2)--
(i) by striking ``or order'';
(ii) by striking ``if it finds'' and all that
follows through the end of the paragraph and
inserting the following: ``if--
``(i) <<NOTE: Notification.>> the Board finds
the exemption to be in the public interest and
consistent with the purposes of this section, and
notifies the Federal Deposit Insurance Corporation
of such finding; and
``(ii) <<NOTE: Time period. Notice.>> before
the end of the 60-day period beginning on the date
on which the Federal Deposit Insurance Corporation
receives notice of the finding under clause (i),
the Federal Deposit Insurance Corporation does not
object, in writing, to the finding, based on a
determination that the exemption presents an
unacceptable risk to the Deposit Insurance
Fund.'';
(iii) by striking the Board and inserting the
following:
``(A) In general.--The Board''; and
(iv) by adding at the end the following:
``(B) Additional exemptions.--
``(i) National banks.--The Comptroller of the
Currency may, by order, exempt a transaction of a
national bank from the requirements of this
section if--
``(I) <<NOTE: Notification.>> the
Board and the Office of the Comptroller
of the Currency jointly find the
exemption to be in the public interest
and consistent with the purposes of this
section and notify the Federal Deposit
Insurance Corporation of such finding;
and
``(II) <<NOTE: Time
period. Notice.>> before the end of the
60-day period beginning on the date on
which the Federal Deposit Insurance
Corporation receives notice of the
finding under subclause (I), the Federal
Deposit Insurance Corporation does not
object, in writing, to the finding,
based on a determination that the
exemption presents an unacceptable risk
to the Deposit Insurance Fund.
``(ii) State banks.--The Federal Deposit
Insurance Corporation may, by order, exempt a
transaction of a State nonmember bank, and the
Board may, by order, exempt a transaction of a
State member bank, from the requirements of this
section if--
[[Page 124 STAT. 1610]]
``(I) the Board and the Federal
Deposit Insurance Corporation jointly
find that the exemption is in the public
interest and consistent with the
purposes of this section; and
``(II) the Federal Deposit Insurance
Corporation finds that the exemption
does not present an unacceptable risk to
the Deposit Insurance Fund.''; and
(B) by adding at the end the following:
``(4) Amounts of covered transactions.--The Board may issue
such regulations or interpretations as the Board determines are
necessary or appropriate with respect to the manner in which a
netting agreement may be taken into account in determining the
amount of a covered transaction between a member bank or a
subsidiary and an affiliate, including the extent to which
netting agreements between a member bank or a subsidiary and an
affiliate may be taken into account in determining whether a
covered transaction is fully secured for purposes of subsection
(d)(4). An interpretation under this paragraph with respect to a
specific member bank, subsidiary, or affiliate shall be issued
jointly with the appropriate Federal banking agency for such
member bank, subsidiary, or affiliate.''.
(b) Transactions With Affiliates.--Section 23B(e) of the Federal
Reserve Act (12 U.S.C. 371c-1(e)) is amended--
(1) by striking the undesignated matter following
subparagraph (B);
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and adjusting the clause margins
accordingly;
(3) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively, and adjusting the subparagraph
margins accordingly;
(4) by striking ``The Board'' and inserting the following:
``(1) In general.--The Board'';
(5) in paragraph (1)(B), as so redesignated--
(A) in the matter preceding clause (i), by inserting
before ``regulations'' the following: ``subject to
paragraph (2), <<NOTE: Notification.>> if the Board
finds that an exemption or exclusion is in the public
interest and is consistent with the purposes of this
section, and notifies the Federal Deposit Insurance
Corporation of such finding,''; and
(B) in clause (ii), by striking the comma at the end
and inserting a period; and
(6) by adding at the end the following:
``(2) Exception.-- <<NOTE: Time period. Notice.>> The Board
may grant an exemption or exclusion under this subsection only
if, during the 60-day period beginning on the date of receipt of
notice of the finding from the Board under paragraph (1)(B), the
Federal Deposit Insurance Corporation does not object, in
writing, to such exemption or exclusion, based on a
determination that the exemption presents an unacceptable risk
to the Deposit Insurance Fund.''.
(c) Home Owners' Loan Act.--Section 11 of the Home Owners' Loan Act
(12 U.S.C. 1468) is amended by adding at the end the following:
``(d) Exemptions.--
[[Page 124 STAT. 1611]]
``(1) Federal savings associations.--The Comptroller of the
Currency may, by order, exempt a transaction of a Federal
savings association from the requirements of this section if--
``(A) <<NOTE: Notification.>> the Board and the
Office of the Comptroller of the Currency jointly find
the exemption to be in the public interest and
consistent with the purposes of this section and notify
the Federal Deposit Insurance Corporation of such
finding; and
``(B) <<NOTE: Time period. Notice.>> before the end
of the 60-day period beginning on the date on which the
Federal Deposit Insurance Corporation receives notice of
the finding under subparagraph (A), the Federal Deposit
Insurance Corporation does not object, in writing, to
the finding, based on a determination that the exemption
presents an unacceptable risk to the Deposit Insurance
Fund.
``(2) State savings association.--The Federal Deposit
Insurance Corporation may, by order, exempt a transaction of a
State savings association from the requirements of this section
if the Board and the Federal Deposit Insurance Corporation
jointly find that--
``(A) the exemption is in the public interest and
consistent with the purposes of this section; and
``(B) the exemption does not present an unacceptable
risk to the Deposit Insurance Fund.''.
(d) <<NOTE: 12 USC 371c note.>> Effective Date.--The amendments
made by this section shall take effect 1 year after the transfer date.
SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL
SUBSIDIARIES.
(a) Amendment.--Section 23A(e) of the Federal Reserve Act (12 U.S.C.
371c(e)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph (3).
(b) <<NOTE: 12 USC 371c note.>> Prospective Application of
Amendment.--The amendments made by this section shall apply with respect
to any covered transaction between a bank and a subsidiary of the bank,
as those terms are defined in section 23A of the Federal Reserve Act (12
U.S.C. 371c), that is entered into on or after the date of enactment of
this Act.
(c) <<NOTE: 12 USC 371c note.>> Effective Date.--The amendments made
by this section shall take effect 1 year after the transfer date.
SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON
DERIVATIVE TRANSACTIONS, REPURCHASE
AGREEMENTS, REVERSE REPURCHASE AGREEMENTS,
AND SECURITIES LENDING AND BORROWING
TRANSACTIONS.
(a) National Banks.--Section 5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b)) is amended--
(1) in paragraph (1), by striking ``shall include'' and all
that follows through the end of the paragraph and inserting the
following: ``shall include--
``(A) all direct or indirect advances of funds to a
person made on the basis of any obligation of that
person to repay the funds or repayable from specific
property pledged by or on behalf of the person;
``(B) to the extent specified by the Comptroller of
the Currency, any liability of a national banking
association
[[Page 124 STAT. 1612]]
to advance funds to or on behalf of a person pursuant to
a contractual commitment; and
``(C) any credit exposure to a person arising from a
derivative transaction, repurchase agreement, reverse
repurchase agreement, securities lending transaction, or
securities borrowing transaction between the national
banking association and the person;'';
(2) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(3) the term `derivative transaction' includes any
transaction that is a contract, agreement, swap, warrant, note,
or option that is based, in whole or in part, on the value of,
any interest in, or any quantitative measure or the occurrence
of any event relating to, one or more commodities, securities,
currencies, interest or other rates, indices, or other
assets.''.
(b) Savings Associations.--Section 5(u)(3) of the Home Owners' Loan
Act (12 U.S.C. 1464(u)(3)) is amended by striking ``Director'' each
place that term appears and inserting ``Comptroller of the Currency''.
(c) <<NOTE: 12 USC 84 note.>> Effective Date.--The amendments made
by this section shall take effect 1 year after the transfer date.
SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS IN
LENDING LIMITS.
(a) Amendment.--Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by adding at the end the following:
``(y) State Lending Limit Treatment of Derivatives Transactions.--An
insured State bank may engage in a derivative transaction, as defined in
section 5200(b)(3) of the Revised Statutes of the United States (12
U.S.C. 84(b)(3)), only if the law with respect to lending limits of the
State in which the insured State bank is chartered takes into
consideration credit exposure to derivative transactions.''.
(b) <<NOTE: 12 USC 1828 note.>> Effective Date.--The amendment made
by this section shall take effect 18 months after the transfer date.
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) Conversion of a National Banking Association.--The Act entitled
``An Act to provide for the conversion of national banking associations
into and their merger or consolidation with State banks, and for other
purposes.'' (12 U.S.C. 214 et seq.) is amended by adding at the end the
following:
``SEC. 10. <<NOTE: 12 USC 214d.>> PROHIBITION ON CONVERSION.
``A national banking association may not convert to a State bank or
State savings association during any period in which the national
banking association is subject to a cease and desist order (or other
formal enforcement order) issued by, or a memorandum of understanding
entered into with, the Comptroller of the Currency with respect to a
significant supervisory matter.''.
(b) Conversion of a State Bank or Savings Association.--Section 5154
of the Revised Statutes of the United States (12 U.S.C. 35) is amended
by adding at the end the following: ``The Comptroller of the Currency
may not approve the conversion of a State bank or State savings
association to a national banking association or Federal savings
association during any period in which the State bank or State savings
association is subject to
[[Page 124 STAT. 1613]]
a cease and desist order (or other formal enforcement order) issued by,
or a memorandum of understanding entered into with, a State bank
supervisor or the appropriate Federal banking agency with respect to a
significant supervisory matter or a final enforcement action by a State
Attorney General.''.
(c) Conversion of a Federal Savings Association.--Section 5(i) of
the Home Owners' Loan Act (12 U.S.C. 1464(i)) is amended by adding at
the end the following:
``(6) Limitation on certain conversions by federal savings
associations.--A Federal savings association may not convert to
a State bank or State savings association during any period in
which the Federal savings association is subject to a cease and
desist order (or other formal enforcement order) issued by, or a
memorandum of understanding entered into with, the Office of
Thrift Supervision or the Comptroller of the Currency with
respect to a significant supervisory matter.''.
(d) <<NOTE: 12 USC 35 note.>> Exception.--The prohibition on the
approval of conversions under the amendments made by subsections (a),
(b), and (c) shall not apply, if--
(1) <<NOTE: Notice.>> the Federal banking agency that would
be the appropriate Federal banking agency after the proposed
conversion gives the appropriate Federal banking agency or State
bank supervisor that issued the cease and desist order (or other
formal enforcement order) or memorandum of understanding, as
appropriate, written notice of the proposed conversion including
a plan to address the significant supervisory matter in a manner
that is consistent with the safe and sound operation of the
institution;
(2) <<NOTE: Deadline.>> within 30 days of receipt of the
written notice required under paragraph (1), the appropriate
Federal banking agency or State bank supervisor that issued the
cease and desist order (or other formal enforcement order) or
memorandum of understanding, as appropriate, does not object to
the conversion or the plan to address the significant
supervisory matter;
(3) after conversion of the insured depository institution,
the appropriate Federal banking agency after the conversion
implements such plan; and
(4) in the case of a final enforcement action by a State
Attorney General, approval of the conversion is conditioned on
compliance by the insured depository institution with the terms
of such final enforcement action.
(e) <<NOTE: 12 USC 35 note.>> Notification of Pending Enforcement
Actions.--
(1) Copy of conversion application.--At the time an insured
depository institution files a conversion application, the
insured depository institution shall transmit a copy of the
conversion application to--
(A) the appropriate Federal banking agency for the
insured depository institution; and
(B) the Federal banking agency that would be the
appropriate Federal banking agency of the insured
depository institution after the proposed conversion.
(2) Notification and access to information.--Upon receipt of
a copy of the application described in paragraph (1), the
appropriate Federal banking agency for the insured depository
institution proposing the conversion shall--
(A) notify the Federal banking agency that would be
the appropriate Federal banking agency for the
institution
[[Page 124 STAT. 1614]]
after the proposed conversion in writing of any ongoing
supervisory or investigative proceedings that the
appropriate Federal banking agency for the institution
proposing to convert believes is likely to result, in
the near term and absent the proposed conversion, in a
cease and desist order (or other formal enforcement
order) or memorandum of understanding with respect to a
significant supervisory matter; and
(B) provide the Federal banking agency that would be
the appropriate Federal banking agency for the
institution after the proposed conversion access to all
investigative and supervisory information relating to
the proceedings described in subparagraph (A).
SEC. 613. DE NOVO BRANCHING INTO STATES.
(a) National Banks.--Section 5155(g)(1)(A) of the Revised Statutes
of the United States (12 U.S.C. 36(g)(1)(A)) is amended to read as
follows:
``(A) the law of the State in which the branch is
located, or is to be located, would permit establishment
of the branch, if the national bank were a State bank
chartered by such State; and''.
(b) State Insured Banks.--Section 18(d)(4)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to read as
follows:
``(i) the law of the State in which the branch
is located, or is to be located, would permit
establishment of the branch, if the bank were a
State bank chartered by such State; and''.
SEC. 614. LENDING LIMITS TO INSIDERS.
(a) Extensions of Credit.--Section 22(h)(9)(D)(i) of the Federal
Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended--
(1) by striking the period at the end and inserting ``;
or'';
(2) by striking ``a person'' and inserting ``the person'';
(3) by striking ``extends credit by making'' and inserting
the following: ``extends credit to a person by--
``(I) making''; and
(4) by adding at the end the following:
``(II) having credit exposure to the
person arising from a derivative
transaction (as defined in section
5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b))),
repurchase agreement, reverse repurchase
agreement, securities lending
transaction, or securities borrowing
transaction between the member bank and
the person.''.
(b) <<NOTE: 12 USC 375b note.>> Effective Date.--The amendments
made by this section shall take effect 1 year after the transfer date.
SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.
(a) Amendment to the Federal Deposit Insurance Act.--Section 18 of
the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding
at the end the following:
``(z) General Prohibition on Sale of Assets.--
``(1) In general.--An insured depository institution may not
purchase an asset from, or sell an asset to, an executive
officer, director, or principal shareholder of the insured
depository institution, or any related interest of such person
(as
[[Page 124 STAT. 1615]]
such terms are defined in section 22(h) of Federal Reserve Act),
unless--
``(A) the transaction is on market terms; and
``(B) if the transaction represents more than 10
percent of the capital stock and surplus of the insured
depository institution, the transaction has been
approved in advance by a majority of the members of the
board of directors of the insured depository institution
who do not have an interest in the transaction.
``(2) <<NOTE: Consultation.>> Rulemaking.--The Board of
Governors of the Federal Reserve System may issue such rules as
may be necessary to define terms and to carry out the purposes
this subsection. Before proposing or adopting a rule under this
paragraph, the Board of Governors of the Federal Reserve System
shall consult with the Comptroller of the Currency and the
Corporation as to the terms of the rule.''.
(b) Amendments to the Federal Reserve Act.--Section 22(d) of the
Federal Reserve Act (12 U.S.C. 375) is amended to read as follows:
``(d) [Reserved]''.
(c) <<NOTE: 12 USC 375 note.>> Effective Date.--The amendments made
by this section shall take effect on the transfer date.
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS.
(a) Capital Levels of Bank Holding Companies.--Section 5(b) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) is amended--
(1) by inserting after ``orders'' the following: ``,
including regulations and orders relating to the capital
requirements for bank holding companies,''; and
(2) by adding at the end the following: ``In establishing
capital regulations pursuant to this subsection, the Board shall
seek to make such requirements countercyclical, so that the
amount of capital required to be maintained by a company
increases in times of economic expansion and decreases in times
of economic contraction, consistent with the safety and
soundness of the company.''.
(b) Capital Levels of Savings and Loan Holding Companies.--Section
10(g)(1) of the Home Owners' Loan Act (12 U.S.C. 1467a(g)(1)) is
amended--
(1) by inserting after ``orders'' the following: ``,
including regulations and orders relating to capital
requirements for savings and loan holding companies,''; and
(2) by inserting at the end the following: ``In establishing
capital regulations pursuant to this subsection, the appropriate
Federal banking agency shall seek to make such requirements
countercyclical so that the amount of capital required to be
maintained by a company increases in times of economic expansion
and decreases in times of economic contraction, consistent with
the safety and soundness of the company.''.
(c) Capital Levels of Insured Depository Institutions.--Section
908(a)(1) of the International Lending Supervision Act of 1983 (12
U.S.C. 3907(a)(1)) is amended by adding at the end the following: ``Each
appropriate Federal banking agency shall seek to make the capital
standards required under this section or other provisions of Federal law
for insured depository institutions countercyclical so that the amount
of capital required to be maintained
[[Page 124 STAT. 1616]]
by an insured depository institution increases in times of economic
expansion and decreases in times of economic contraction, consistent
with the safety and soundness of the insured depository institution.''
(d) Source of Strength.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by inserting after section 38 (12 U.S.C.
1831o) the following:
``SEC. 38A. <<NOTE: 12 USC 1831o-1.>> SOURCE OF STRENGTH.
``(a) Holding Companies.--The appropriate Federal banking agency for
a bank holding company or savings and loan holding company shall require
the bank holding company or savings and loan holding company to serve as
a source of financial strength for any subsidiary of the bank holding
company or savings and loan holding company that is a depository
institution.
``(b) Other Companies.--If an insured depository institution is not
the subsidiary of a bank holding company or savings and loan holding
company, the appropriate Federal banking agency for the insured
depository institution shall require any company that directly or
indirectly controls the insured depository institution to serve as a
source of financial strength for such institution.
``(c) Reports.--The appropriate Federal banking agency for an
insured depository institution described in subsection (b) may, from
time to time, require the company, or a company that directly or
indirectly controls the insured depository institution, to submit a
report, under oath, for the purposes of--
``(1) assessing the ability of such company to comply with
the requirement under subsection (b); and
``(2) enforcing the compliance of such company with the
requirement under subsection (b).
``(d) <<NOTE: Deadline.>> Rules.--Not later than 1 year after the
transfer date, as defined in section 311 of the Enhancing Financial
Institution Safety and Soundness Act of 2010, the appropriate Federal
banking agencies shall jointly issue final rules to carry out this
section.
``(e) Definition.--In this section, the term `source of financial
strength' means the ability of a company that directly or indirectly
owns or controls an insured depository institution to provide financial
assistance to such insured depository institution in the event of the
financial distress of the insured depository institution.''.
(e) <<NOTE: 12 USC 1467a note.>> Effective Date.--The amendments
made by this section shall take effect on the transfer date.
SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY
FRAMEWORK.
(a) Amendment.--Section 17 of the Securities Exchange Act of 1934
(15 U.S.C. 78q) is amended--
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as subsections
(i) and (j), respectively.
(b) <<NOTE: 15 USC 78q note.>> Effective Date.--The amendments made
by this section shall take effect on the transfer date.
SEC. 618. <<NOTE: 12 USC 1850a.>> SECURITIES HOLDING COMPANIES.
(a) Definitions.--In this section--
(1) the term ``associated person of a securities holding
company'' means a person directly or indirectly controlling,
controlled by, or under common control with, a securities
holding company;
[[Page 124 STAT. 1617]]
(2) the term ``foreign bank'' has the same meaning as in
section 1(b)(7) of the International Banking Act of 1978 (12
U.S.C. 3101(7));
(3) the term ``insured bank'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(4) the term ``securities holding company''--
(A) means--
(i) a person (other than a natural person)
that owns or controls 1 or more brokers or dealers
registered with the Commission; and
(ii) the associated persons of a person
described in clause (i); and
(B) does not include a person that is--
(i) a nonbank financial company supervised by
the Board under title I;
(ii) an insured bank (other than an
institution described in subparagraphs (D), (F),
or (H) of section 2(c)(2) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)) or a
savings association;
(iii) an affiliate of an insured bank (other
than an institution described in subparagraphs
(D), (F), or (H) of section 2(c)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2))
or an affiliate of a savings association;
(iv) a foreign bank, foreign company, or
company that is described in section 8(a) of the
International Banking Act of 1978 (12 U.S.C.
3106(a));
(v) a foreign bank that controls, directly or
indirectly, a corporation chartered under section
25A of the Federal Reserve Act (12 U.S.C. 611 et
seq.); or
(vi) subject to comprehensive consolidated
supervision by a foreign regulator;
(5) the term ``supervised securities holding company'' means
a securities holding company that is supervised by the Board of
Governors under this section; and
(6) the terms ``affiliate'', ``bank'', ``bank holding
company'', ``company'', ``control'', ``savings association'',
and ``subsidiary'' have the same meanings as in section 2 of the
Bank Holding Company Act of 1956.
(b) Supervision of a Securities Holding Company Not Having a Bank or
Savings Association Affiliate.--
(1) In general.--A securities holding company that is
required by a foreign regulator or provision of foreign law to
be subject to comprehensive consolidated supervision may
register with the Board of Governors under paragraph (2) to
become a supervised securities holding
company. <<NOTE: Regulations.>> Any securities holding company
filing such a registration shall be supervised in accordance
with this section, and shall comply with the rules and orders
prescribed by the Board of Governors applicable to supervised
securities holding companies.
(2) Registration as a supervised securities holding
company.--
(A) Registration.--A securities holding company that
elects to be subject to comprehensive consolidated
supervision shall register by filing with the Board of
Governors
[[Page 124 STAT. 1618]]
such information and documents as the Board of
Governors, by regulation, may prescribe as necessary or
appropriate in furtherance of the purposes of this
section.
(B) Effective date.--A securities holding company
that registers under subparagraph (A) shall be deemed to
be a supervised securities holding company, effective on
the date that is 45 days after the date of receipt of
the registration information and documents under
subparagraph (A) by the Board of Governors, or within
such shorter period as the Board of Governors, by rule
or order, may determine.
(c) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(A) Recordkeeping and reporting required.--Each
supervised securities holding company and each affiliate
of a supervised securities holding company shall make
and keep for periods determined by the Board of
Governors such records, furnish copies of such records,
and make such reports, as the Board of Governors
determines to be necessary or appropriate to carry out
this section, to prevent evasions thereof, and to
monitor compliance by the supervised securities holding
company or affiliate with applicable provisions of law.
(B) Form and contents.--
(i) In general.--Any record or report required
to be made, furnished, or kept under this
paragraph shall--
(I) be prepared in such form and
according to such specifications
(including certification by a registered
public accounting firm), as the Board of
Governors may require; and
(II) be provided promptly to the
Board of Governors at any time, upon
request by the Board of Governors.
(ii) Contents.--Records and reports required
to be made, furnished, or kept under this
paragraph may include--
(I) a balance sheet or income
statement of the supervised securities
holding company or an affiliate of a
supervised securities holding company;
(II) an assessment of the
consolidated capital and liquidity of
the supervised securities holding
company;
(III) a report by an independent
auditor attesting to the compliance of
the supervised securities holding
company with the internal risk
management and internal control
objectives of the supervised securities
holding company; and
(IV) a report concerning the extent
to which the supervised securities
holding company or affiliate has
complied with the provisions of this
section and any regulations prescribed
and orders issued under this section.
(2) Use of existing reports.--
(A) In general.--The Board of Governors shall, to
the fullest extent possible, accept reports in
fulfillment
[[Page 124 STAT. 1619]]
of the requirements of this paragraph that a supervised
securities holding company or an affiliate of a
supervised securities holding company has been required
to provide to another regulatory agency or a self-
regulatory organization.
(B) Availability.--A supervised securities holding
company or an affiliate of a supervised securities
holding company shall promptly provide to the Board of
Governors, at the request of the Board of Governors, any
report described in subparagraph (A), as permitted by
law.
(3) Examination authority.--
(A) Focus of examination authority.--The Board of
Governors may make examinations of any supervised
securities holding company and any affiliate of a
supervised securities holding company to carry out this
subsection, to prevent evasions thereof, and to monitor
compliance by the supervised securities holding company
or affiliate with applicable provisions of law.
(B) Deference to other examinations.--For purposes
of this subparagraph, the Board of Governors shall, to
the fullest extent possible, use the reports of
examination made by other appropriate Federal or State
regulatory authorities with respect to any functionally
regulated subsidiary or any institution described in
subparagraph (D), (F), or (H) of section 2(c)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)).
(d) Capital and Risk Management.--
(1) In general.-- <<NOTE: Regulations.>> The Board of
Governors shall, by regulation or order, prescribe capital
adequacy and other risk management standards for supervised
securities holding companies that are appropriate to protect the
safety and soundness of the supervised securities holding
companies and address the risks posed to financial stability by
supervised securities holding companies.
(2) Differentiation.--In imposing standards under this
subsection, the Board of Governors may differentiate among
supervised securities holding companies on an individual basis,
or by category, taking into consideration the requirements under
paragraph (3).
(3) Content.--Any standards imposed on a supervised
securities holding company under this subsection shall take into
account--
(A) the differences among types of business
activities carried out by the supervised securities
holding company;
(B) the amount and nature of the financial assets of
the supervised securities holding company;
(C) the amount and nature of the liabilities of the
supervised securities holding company, including the
degree of reliance on short-term funding;
(D) the extent and nature of the off-balance sheet
exposures of the supervised securities holding company;
(E) the extent and nature of the transactions and
relationships of the supervised securities holding
company with other financial companies;
(F) the importance of the supervised securities
holding company as a source of credit for households,
businesses,
[[Page 124 STAT. 1620]]
and State and local governments, and as a source of
liquidity for the financial system; and
(G) the nature, scope, and mix of the activities of
the supervised securities holding company.
(4) <<NOTE: Effective date.>> Notice.--A capital requirement
imposed under this subsection may not take effect earlier than
180 days after the date on which a supervised securities holding
company is provided notice of the capital requirement.
(e) Other Provisions of Law Applicable to Supervised Securities
Holding Companies.--
(1) Federal deposit insurance act.--Subsections (b), (c)
through (s), and (u) of section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818) shall apply to any supervised
securities holding company, and to any subsidiary (other than a
bank or an institution described in subparagraph (D), (F), or
(H) of section 2(c)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)(2))) of a supervised securities holding
company, in the same manner as such subsections apply to a bank
holding company for which the Board of Governors is the
appropriate Federal banking agency. For purposes of applying
such subsections to a supervised securities holding company or a
subsidiary (other than a bank or an institution described in
subparagraph (D), (F), or (H) of section 2(c)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2))) of a
supervised securities holding company, the Board of Governors
shall be deemed the appropriate Federal banking agency for the
supervised securities holding company or subsidiary.
(2) Bank holding company act of 1956.--Except as the Board
of Governors may otherwise provide by regulation or order, a
supervised securities holding company shall be subject to the
provisions of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) in the same manner and to the same extent a bank
holding company is subject to such provisions, except that a
supervised securities holding company may not, by reason of this
paragraph, be deemed to be a bank holding company for purposes
of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C.
1843).
SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE
EQUITY FUNDS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 13. <<NOTE: 12 USC 1851.>> PROHIBITIONS ON PROPRIETARY
TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE
FUNDS AND PRIVATE EQUITY FUNDS.
``(a) In General.--
``(1) Prohibition.--Unless otherwise provided in this
section, a banking entity shall not--
``(A) engage in proprietary trading; or
``(B) acquire or retain any equity, partnership, or
other ownership interest in or sponsor a hedge fund or a
private equity fund.
``(2) Nonbank financial companies supervised by the board.--
Any nonbank financial company supervised by the Board that
engages in proprietary trading or takes or retains
[[Page 124 STAT. 1621]]
any equity, partnership, or other ownership interest in or
sponsors a hedge fund or a private equity fund shall be subject,
by rule, as provided in subsection (b)(2), to additional capital
requirements for and additional quantitative limits with regards
to such proprietary trading and taking or retaining any equity,
partnership, or other ownership interest in or sponsorship of a
hedge fund or a private equity fund, except that permitted
activities as described in subsection (d) shall not be subject
to the additional capital and additional quantitative limits
except as provided in subsection (d)(3), as if the nonbank
financial company supervised by the Board were a banking entity.
``(b) Study and Rulemaking.--
``(1) Study.-- <<NOTE: Deadline. Recommenda- tions.>> Not
later than 6 months after the date of enactment of this section,
the Financial Stability Oversight Council shall study and make
recommendations on implementing the provisions of this section
so as to--
``(A) promote and enhance the safety and soundness
of banking entities;
``(B) protect taxpayers and consumers and enhance
financial stability by minimizing the risk that insured
depository institutions and the affiliates of insured
depository institutions will engage in unsafe and
unsound activities;
``(C) limit the inappropriate transfer of Federal
subsidies from institutions that benefit from deposit
insurance and liquidity facilities of the Federal
Government to unregulated entities;
``(D) reduce conflicts of interest between the self-
interest of banking entities and nonbank financial
companies supervised by the Board, and the interests of
the customers of such entities and companies;
``(E) limit activities that have caused undue risk
or loss in banking entities and nonbank financial
companies supervised by the Board, or that might
reasonably be expected to create undue risk or loss in
such banking entities and nonbank financial companies
supervised by the Board;
``(F) appropriately accommodate the business of
insurance within an insurance company, subject to
regulation in accordance with the relevant insurance
company investment laws, while protecting the safety and
soundness of any banking entity with which such
insurance company is affiliated and of the United States
financial system; and
``(G) appropriately time the divestiture of illiquid
assets that are affected by the implementation of the
prohibitions under subsection (a).
``(2) Rulemaking.--
``(A) In general.-- <<NOTE: Deadline.>> Unless
otherwise provided in this section, not later than 9
months after the completion of the study under paragraph
(1), the appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity
Futures Trading Commission, shall consider the findings
of the study under paragraph (1) and adopt rules to
carry out this section, as provided in subparagraph (B).
[[Page 124 STAT. 1622]]
``(B) Coordinated rulemaking.--
``(i) Regulatory authority.--The regulations
issued under this paragraph shall be issued by--
``(I) the appropriate Federal
banking agencies, jointly, with respect
to insured depository institutions;
``(II) the Board, with respect to
any company that controls an insured
depository institution, or that is
treated as a bank holding company for
purposes of section 8 of the
International Banking Act, any nonbank
financial company supervised by the
Board, and any subsidiary of any of the
foregoing (other than a subsidiary for
which an agency described in subclause
(I), (III), or (IV) is the primary
financial regulatory agency);
``(III) the Commodity Futures
Trading Commission, with respect to any
entity for which the Commodity Futures
Trading Commission is the primary
financial regulatory agency, as defined
in section 2 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act; and
``(IV) the Securities and Exchange
Commission, with respect to any entity
for which the Securities and Exchange
Commission is the primary financial
regulatory agency, as defined in section
2 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act.
``(ii) Coordination, consistency, and
comparability.--In
developing <<NOTE: Consultation.>> and issuing
regulations pursuant to this section, the
appropriate Federal banking agencies, the
Securities and Exchange Commission, and the
Commodity Futures Trading Commission shall consult
and coordinate with each other, as appropriate,
for the purposes of assuring, to the extent
possible, that such regulations are comparable and
provide for consistent application and
implementation of the applicable provisions of
this section to avoid providing advantages or
imposing disadvantages to the companies affected
by this subsection and to protect the safety and
soundness of banking entities and nonbank
financial companies supervised by the Board.
``(iii) Council role.--The Chairperson of the
Financial Stability Oversight Council shall be
responsible for coordination of the regulations
issued under this section.
``(c) Effective Date.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), this section shall take effect on the earlier of--
``(A) 12 months after the date of the issuance of
final rules under subsection (b); or
``(B) 2 years after the date of enactment of this
section.
``(2) Conformance period for divestiture.--
A <<NOTE: Deadline.>> banking entity or nonbank financial
company supervised by the Board shall bring its activities and
investments into compliance with the requirements of this
section not later than 2 years after the date on which the
requirements become effective pursuant
[[Page 124 STAT. 1623]]
to this section or 2 years after the date on which the entity or
company becomes a nonbank financial company supervised by the
Board. The Board may, by rule or order, extend this two-year
period for not more than one year at a time, if, in the judgment
of the Board, such an extension is consistent with the purposes
of this section and would not be detrimental to the public
interest. The extensions made by the Board under the preceding
sentence may not exceed an aggregate of 3 years.
``(3) Extended transition for illiquid funds.--
``(A) Application.--The Board may, upon the
application of a banking entity, extend the period
during which the banking entity, to the extent necessary
to fulfill a contractual obligation that was in effect
on May 1, 2010, may take or retain its equity,
partnership, or other ownership interest in, or
otherwise provide additional capital to, an illiquid
fund.
``(B) Time limit on approval.--The Board may grant 1
extension under subparagraph (A), which may not exceed 5
years.
``(4) Divestiture required.--Except as otherwise provided in
subsection (d)(1)(G), a banking entity may not engage in any
activity prohibited under subsection (a)(1)(B) after the earlier
of--
``(A) the date on which the contractual obligation
to invest in the illiquid fund terminates; and
``(B) the date on which any extensions granted by
the Board under paragraph (3) expire.
``(5) <<NOTE: Regulations.>> Additional capital during
transition period.--Notwithstanding paragraph (2), on the date
on which the rules are issued under subsection (b)(2), the
appropriate Federal banking agencies, the Securities and
Exchange Commission, and the Commodity Futures Trading
Commission shall issue rules, as provided in subsection (b)(2),
to impose additional capital requirements, and any other
restrictions, as appropriate, on any equity, partnership, or
ownership interest in or sponsorship of a hedge fund or private
equity fund by a banking entity.
``(6) Special rulemaking.--Not later <<NOTE: Deadline.>>
than 6 months after the date of enactment of this section, the
Board shall issues rules to implement paragraphs (2) and (3).
``(d) Permitted Activities.--
``(1) In general.--Notwithstanding the restrictions under
subsection (a), to the extent permitted by any other provision
of Federal or State law, and subject to the limitations under
paragraph (2) and any restrictions or limitations that the
appropriate Federal banking agencies, the Securities and
Exchange Commission, and the Commodity Futures Trading
Commission, may determine, the following activities (in this
section referred to as `permitted activities') are permitted:
``(A) The purchase, sale, acquisition, or
disposition of obligations of the United States or any
agency thereof, obligations, participations, or other
instruments of or issued by the Government National
Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation,
a Federal Home Loan Bank, the Federal Agricultural
Mortgage Corporation, or a Farm Credit System
institution chartered under and subject to
[[Page 124 STAT. 1624]]
the provisions of the Farm Credit Act of 1971 (12 U.S.C.
2001 et seq.), and obligations of any State or of any
political subdivision thereof.
``(B) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) in connection with
underwriting or market-making-related activities, to the
extent that any such activities permitted by this
subparagraph are designed not to exceed the reasonably
expected near term demands of clients, customers, or
counterparties.
``(C) Risk-mitigating hedging activities in
connection with and related to individual or aggregated
positions, contracts, or other holdings of a banking
entity that are designed to reduce the specific risks to
the banking entity in connection with and related to
such positions, contracts, or other holdings.
``(D) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) on behalf of customers.
``(E) Investments in one or more small business
investment companies, as defined in section 102 of the
Small Business Investment Act of 1958 (15 U.S.C. 662),
investments designed primarily to promote the public
welfare, of the type permitted under paragraph (11) of
section 5136 of the Revised Statutes of the United
States (12 U.S.C. 24), or investments that are qualified
rehabilitation expenditures with respect to a qualified
rehabilitated building or certified historic structure,
as such terms are defined in section 47 of the Internal
Revenue Code of 1986 or a similar State historic tax
credit program.
``(F) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) by a regulated insurance
company directly engaged in the business of insurance
for the general account of the company and by any
affiliate of such regulated insurance company, provided
that such activities by any affiliate are solely for the
general account of the regulated insurance company, if--
``(i) the purchase, sale, acquisition, or
disposition is conducted in compliance with, and
subject to, the insurance company investment laws,
regulations, and written guidance of the State or
jurisdiction in which each such insurance company
is domiciled; and
``(ii) the appropriate Federal banking
agencies, after consultation with the Financial
Stability Oversight Council and the relevant
insurance commissioners of the States and
territories of the United States, have not jointly
determined, after notice and comment, that a
particular law, regulation, or written guidance
described in clause (i) is insufficient to protect
the safety and soundness of the banking entity, or
of the financial stability of the United States.
``(G) Organizing and offering a private equity or
hedge fund, including serving as a general partner,
managing member, or trustee of the fund and in any
manner selecting or controlling (or having employees,
officers, directors, or agents who constitute) a
majority of the directors, trustees,
[[Page 124 STAT. 1625]]
or management of the fund, including any necessary
expenses for the foregoing, only if--
``(i) the banking entity provides bona fide
trust, fiduciary, or investment advisory services;
``(ii) the fund is organized and offered only
in connection with the provision of bona fide
trust, fiduciary, or investment advisory services
and only to persons that are customers of such
services of the banking entity;
``(iii) the banking entity does not acquire or
retain an equity interest, partnership interest,
or other ownership interest in the funds except
for a de minimis investment subject to and in
compliance with paragraph (4);
``(iv) the banking entity complies with the
restrictions under paragraphs (1) and (2) of
subparagraph (f);
``(v) the banking entity does not, directly or
indirectly, guarantee, assume, or otherwise insure
the obligations or performance of the hedge fund
or private equity fund or of any hedge fund or
private equity fund in which such hedge fund or
private equity fund invests;
``(vi) the banking entity does not share with
the hedge fund or private equity fund, for
corporate, marketing, promotional, or other
purposes, the same name or a variation of the same
name;
``(vii) no director or employee of the banking
entity takes or retains an equity interest,
partnership interest, or other ownership interest
in the hedge fund or private equity fund, except
for any director or employee of the banking entity
who is directly engaged in providing investment
advisory or other services to the hedge fund or
private equity fund; and
``(viii) the banking entity discloses to
prospective and actual investors in the fund, in
writing, that any losses in such hedge fund or
private equity fund are borne solely by investors
in the fund and not by the banking entity, and
otherwise complies with any additional rules of
the appropriate Federal banking agencies, the
Securities and Exchange Commission, or the
Commodity Futures Trading Commission, as provided
in subsection (b)(2), designed to ensure that
losses in such hedge fund or private equity fund
are borne solely by investors in the fund and not
by the banking entity.
``(H) Proprietary trading conducted by a banking
entity pursuant to paragraph (9) or (13) of section
4(c), provided that the trading occurs solely outside of
the United States and that the banking entity is not
directly or indirectly controlled by a banking entity
that is organized under the laws of the United States or
of one or more States.
``(I) The acquisition or retention of any equity,
partnership, or other ownership interest in, or the
sponsorship of, a hedge fund or a private equity fund by
a banking entity pursuant to paragraph (9) or (13) of
section 4(c)
[[Page 124 STAT. 1626]]
solely outside of the United States, provided that no
ownership interest in such hedge fund or private equity
fund is offered for sale or sold to a resident of the
United States and that the banking entity is not
directly or indirectly controlled by a banking entity
that is organized under the laws of the United States or
of one or more States.
``(J) Such other activity as the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission
determine, by rule, as provided in subsection (b)(2),
would promote and protect the safety and soundness of
the banking entity and the financial stability of the
United States.
``(2) Limitation on permitted activities.--
``(A) In general.--No transaction, class of
transactions, or activity may be deemed a permitted
activity under paragraph (1) if the transaction, class
of transactions, or activity--
``(i) would involve or result in a material
conflict of interest (as such term shall be
defined by rule as provided in subsection (b)(2))
between the banking entity and its clients,
customers, or counterparties;
``(ii) would result, directly or indirectly,
in a material exposure by the banking entity to
high-risk assets or high-risk trading strategies
(as such terms shall be defined by rule as
provided in subsection (b)(2));
``(iii) would pose a threat to the safety and
soundness of such banking entity; or
``(iv) would pose a threat to the financial
stability of the United States.
``(B) Rulemaking.--The appropriate Federal banking
agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission shall issue
regulations to implement subparagraph (A), as part of
the regulations issued under subsection (b)(2).
``(3) Capital and quantitative limitations.--The appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission shall,
as provided in subsection (b)(2), adopt rules imposing
additional capital requirements and quantitative limitations,
including diversification requirements, regarding the activities
permitted under this section if the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission determine that additional
capital and quantitative limitations are appropriate to protect
the safety and soundness of banking entities engaged in such
activities.
``(4) De minimis investment.--
``(A) In general.--A banking entity may make and
retain an investment in a hedge fund or private equity
fund that the banking entity organizes and offers,
subject to the limitations and restrictions in
subparagraph (B) for the purposes of--
``(i) establishing the fund and providing the
fund with sufficient initial equity for investment
to permit the fund to attract unaffiliated
investors; or
[[Page 124 STAT. 1627]]
``(ii) making a de minimis investment.
``(B) Limitations and restrictions on investments.--
``(i) Requirement to seek other investors.--A
banking entity shall actively seek unaffiliated
investors to reduce or dilute the investment of
the banking entity to the amount permitted under
clause (ii).
``(ii) Limitations on size of investments.--
Notwithstanding any other provision of law,
investments by a banking entity in a hedge fund or
private equity fund shall--
``(I) <<NOTE: Deadline.>> not later
than 1 year after the date of
establishment of the fund, be reduced
through redemption, sale, or dilution to
an amount that is not more than 3
percent of the total ownership interests
of the fund;
``(II) be immaterial to the banking
entity, as defined, by rule, pursuant to
subsection (b)(2), but in no case may
the aggregate of all of the interests of
the banking entity in all such funds
exceed 3 percent of the Tier 1 capital
of the banking entity.
``(iii) Capital.--For purposes of determining
compliance with applicable capital standards under
paragraph (3), the aggregate amount of the
outstanding investments by a banking entity under
this paragraph, including retained earnings, shall
be deducted from the assets and tangible equity of
the banking entity, and the amount of the
deduction shall increase commensurate with the
leverage of the hedge fund or private equity fund.
``(C) Extension.--Upon an application by a banking
entity, the Board may extend the period of time to meet
the requirements under subparagraph (B)(ii)(I) for 2
additional years, if the Board finds that an extension
would be consistent with safety and soundness and in the
public interest.
``(e) Anti-evasion.--
``(1) Rulemaking.--The appropriate Federal banking agencies,
the Securities and Exchange Commission, and the Commodity
Futures Trading Commission shall issue regulations, as part of
the rulemaking provided for in subsection (b)(2), regarding
internal controls and recordkeeping, in order to insure
compliance with this section.
``(2) Termination of activities or investment.--
Notwithstanding any other provision of law, whenever an
appropriate Federal banking agency, the Securities and Exchange
Commission, or the Commodity Futures Trading Commission, as
appropriate, has reasonable cause to believe that a banking
entity or nonbank financial company supervised by the Board
under the respective agency's jurisdiction has made an
investment or engaged in an activity in a manner that functions
as an evasion of the requirements of this section (including
through an abuse of any permitted activity) or otherwise
violates the restrictions under this section, the appropriate
Federal banking agency, the Securities and Exchange Commission,
or the Commodity Futures Trading Commission, as appropriate,
shall
[[Page 124 STAT. 1628]]
order, after due notice and opportunity for hearing, the banking
entity or nonbank financial company supervised by the Board to
terminate the activity and, as relevant, dispose of the
investment. Nothing in this paragraph shall be construed to
limit the inherent authority of any Federal agency or State
regulatory authority to further restrict any investments or
activities under otherwise applicable provisions of law.
``(f) Limitations on Relationships With Hedge Funds and Private
Equity Funds.--
``(1) In general.--No banking entity that serves, directly
or indirectly, as the investment manager, investment adviser, or
sponsor to a hedge fund or private equity fund, or that
organizes and offers a hedge fund or private equity fund
pursuant to paragraph (d)(1)(G), and no affiliate of such
entity, may enter into a transaction with the fund, or with any
other hedge fund or private equity fund that is controlled by
such fund, that would be a covered transaction, as defined in
section 23A of the Federal Reserve Act (12 U.S.C. 371c), with
the hedge fund or private equity fund, as if such banking entity
and the affiliate thereof were a member bank and the hedge fund
or private equity fund were an affiliate thereof.
``(2) Treatment as member bank.--A banking entity that
serves, directly or indirectly, as the investment manager,
investment adviser, or sponsor to a hedge fund or private equity
fund, or that organizes and offers a hedge fund or private
equity fund pursuant to paragraph (d)(1)(G), shall be subject to
section 23B of the Federal Reserve Act (12 U.S.C. 371c-1), as if
such banking entity were a member bank and such hedge fund or
private equity fund were an affiliate thereof.
``(3) Permitted services.--
``(A) In general.--Notwithstanding paragraph (1),
the Board may permit a banking entity to enter into any
prime brokerage transaction with any hedge fund or
private equity fund in which a hedge fund or private
equity fund managed, sponsored, or advised by such
banking entity has taken an equity, partnership, or
other ownership interest, if--
``(i) the banking entity is in compliance with
each of the limitations set forth in subsection
(d)(1)(G) with regard to a hedge fund or private
equity fund organized and offered by such banking
entity;
``(ii) the chief executive officer (or
equivalent officer) of the banking entity
certifies in writing annually (with a duty to
update the certification if the information in the
certification materially changes) that the
conditions specified in subsection (d)(1)(g)(v)
are satisfied; and
``(iii) the Board has determined that such
transaction is consistent with the safe and sound
operation and condition of the banking entity.
``(B) Treatment of prime brokerage transactions.--
For purposes of subparagraph (A), a prime brokerage
transaction described in subparagraph (A) shall be
subject to section 23B of the Federal Reserve Act (12
U.S.C. 371c-1) as if the counterparty were an affiliate
of the banking entity.
[[Page 124 STAT. 1629]]
``(4) Application to nonbank financial companies supervised
by the board.--The appropriate <<NOTE: Regulations.>> Federal
banking agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission shall adopt rules, as
provided in subsection (b)(2), imposing additional capital
charges or other restrictions for nonbank financial companies
supervised by the Board to address the risks to and conflicts of
interest of banking entities described in paragraphs (1), (2),
and (3) of this subsection.
``(g) Rules of Construction.--
``(1) Limitation on contrary authority.--Except as provided
in this section, notwithstanding any other provision of law, the
prohibitions and restrictions under this section shall apply to
activities of a banking entity or nonbank financial company
supervised by the Board, even if such activities are authorized
for a banking entity or nonbank financial company supervised by
the Board.
``(2) Sale or securitization of loans.--Nothing in this
section shall be construed to limit or restrict the ability of a
banking entity or nonbank financial company supervised by the
Board to sell or securitize loans in a manner otherwise
permitted by law.
``(3) Authority of federal agencies and state regulatory
authorities.--Nothing in this section shall be construed to
limit the inherent authority of any Federal agency or State
regulatory authority under otherwise applicable provisions of
law.
``(h) Definitions.--In this section, the following definitions shall
apply:
``(1) Banking entity.--The term `banking entity' means any
insured depository institution (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)), any company
that controls an insured depository institution, or that is
treated as a bank holding company for purposes of section 8 of
the International Banking Act of 1978, and any affiliate or
subsidiary of any such entity. For purposes of this paragraph,
the term `insured depository institution' does not include an
institution that functions solely in a trust or fiduciary
capacity, if--
``(A) all or substantially all of the deposits of
such institution are in trust funds and are received in
a bona fide fiduciary capacity;
``(B) no deposits of such institution which are
insured by the Federal Deposit Insurance Corporation are
offered or marketed by or through an affiliate of such
institution;
``(C) such institution does not accept demand
deposits or deposits that the depositor may withdraw by
check or similar means for payment to third parties or
others or make commercial loans; and
``(D) such institution does not--
``(i) obtain payment or payment related
services from any Federal Reserve bank, including
any service referred to in section 11A of the
Federal Reserve Act (12 U.S.C. 248a); or
``(ii) exercise discount or borrowing
privileges pursuant to section 19(b)(7) of the
Federal Reserve Act (12 U.S.C. 461(b)(7)).
[[Page 124 STAT. 1630]]
``(2) Hedge fund; private equity fund.--The terms `hedge
fund' and `private equity fund' mean an issuer that would be an
investment company, as defined in the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.), but for section 3(c)(1) or
3(c)(7) of that Act, or such similar funds as the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission may, by
rule, as provided in subsection (b)(2), determine.
``(3) Nonbank financial company supervised by the board.--
The term `nonbank financial company supervised by the Board'
means a nonbank financial company supervised by the Board of
Governors, as defined in section 102 of the Financial Stability
Act of 2010.
``(4) Proprietary trading.--The term `proprietary trading',
when used with respect to a banking entity or nonbank financial
company supervised by the Board, means engaging as a principal
for the trading account of the banking entity or nonbank
financial company supervised by the Board in any transaction to
purchase or sell, or otherwise acquire or dispose of, any
security, any derivative, any contract of sale of a commodity
for future delivery, any option on any such security,
derivative, or contract, or any other security or financial
instrument that the appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission may, by rule as provided in subsection
(b)(2), determine.
``(5) Sponsor.--The term to `sponsor' a fund means--
``(A) to serve as a general partner, managing
member, or trustee of a fund;
``(B) in any manner to select or to control (or to
have employees, officers, or directors, or agents who
constitute) a majority of the directors, trustees, or
management of a fund; or
``(C) to share with a fund, for corporate,
marketing, promotional, or other purposes, the same name
or a variation of the same name.
``(6) Trading account.--The term `trading account' means any
account used for acquiring or taking positions in the securities
and instruments described in paragraph (4) principally for the
purpose of selling in the near term (or otherwise with the
intent to resell in order to profit from short-term price
movements), and any such other accounts as the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission may, by
rule as provided in subsection (b)(2), determine.
``(7) Illiquid fund.--
``(A) In general.--The term `illiquid fund' means a
hedge fund or private equity fund that--
``(i) as of May 1, 2010, was principally
invested in, or was invested and contractually
committed to principally invest in, illiquid
assets, such as portfolio companies, real estate
investments, and venture capital investments; and
``(ii) makes all investments pursuant to, and
consistent with, an investment strategy to
principally invest in illiquid assets. In issuing
rules regarding
[[Page 124 STAT. 1631]]
this subparagraph, the Board shall take into
consideration the terms of investment for the
hedge fund or private equity fund, including
contractual obligations, the ability of the fund
to divest of assets held by the fund, and any
other factors that the Board determines are
appropriate.
``(B) Hedge fund.--For the purposes of this
paragraph, the term `hedge fund' means any fund
identified under subsection (h)(2), and does not include
a private equity fund, as such term is used in section
203(m) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(m)).''.
SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES.
(a) Study.--
(1) <<NOTE: Deadline.>> In general.--Not later than 18
months after the date of enactment of this Act, the appropriate
Federal banking agencies shall jointly review and prepare a
report on the activities that a banking entity, as such term is
defined in the Bank Holding Company Act of 1956 (12 U.S.C. 1841
et. seq.), may engage in under Federal and State law, including
activities authorized by statute and by order, interpretation
and guidance.
(2) Content.--In carrying out the study under paragraph (1),
the appropriate Federal banking agencies shall review and
consider--
(A) the type of activities or investments;
(B) any financial, operational, managerial, or
reputation risks associated with or presented as a
result of the banking entity engaged in the activity or
making the investment; and
(C) risk mitigation activities undertaken by the
banking entity with regard to the risks.
(b) Report and Recommendations to the Council and to Congress.--The
appropriate Federal banking agencies shall submit to the Council, the
Committee on Financial Services of the House of Representatives, and the
Committee on Banking, Housing, and Urban Affairs of the Senate the study
conducted pursuant to subsection (a) no later than 2 months after its
completion. In addition to the information described in subsection (a),
the report shall include recommendations regarding--
(1) whether each activity or investment has or could have a
negative effect on the safety and soundness of the banking
entity or the United States financial system;
(2) the appropriateness of the conduct of each activity or
type of investment by banking entities; and
(3) additional restrictions as may be necessary to address
risks to safety and soundness arising from the activities or
types of investments described in subsection (a).
SEC. 621. CONFLICTS OF INTEREST.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended by inserting after section 27A the following:
``SEC. 27B. <<NOTE: 15 USC 77z-2a.>> CONFLICTS OF INTEREST
RELATING TO CERTAIN SECURITIZATIONS.
``(a) In General.--An underwriter, placement agent, initial
purchaser, or sponsor, or any affiliate or subsidiary of any such
entity, of an asset-backed security (as such term is defined in
[[Page 124 STAT. 1632]]
section 3 of the Securities and Exchange Act of 1934 (15 U.S.C. 78c),
which for the purposes of this section shall include a synthetic asset-
backed security), shall not, at any time for a period ending on the date
that is one year after the date of the first closing of the sale of the
asset-backed security, engage in any transaction that would involve or
result in any material conflict of interest with respect to any investor
in a transaction arising out of such activity.
``(b) <<NOTE: Deadline.>> Rulemaking.--Not later than 270 days
after the date of enactment of this section, the Commission shall issue
rules for the purpose of implementing subsection (a).
``(c) Exception.--The prohibitions of subsection (a) shall not apply
to--
``(1) risk-mitigating hedging activities in connection with
positions or holdings arising out of the underwriting,
placement, initial purchase, or sponsorship of an asset-backed
security, provided that such activities are designed to reduce
the specific risks to the underwriter, placement agent, initial
purchaser, or sponsor associated with positions or holdings
arising out of such underwriting, placement, initial purchase,
or sponsorship; or
``(2) purchases or sales of asset-backed securities made
pursuant to and consistent with--
``(A) commitments of the underwriter, placement
agent, initial purchaser, or sponsor, or any affiliate
or subsidiary of any such entity, to provide liquidity
for the asset-backed security, or
``(B) bona fide market-making in the asset backed
security.
``(d) Rule of Construction.--This subsection shall not otherwise
limit the application of section 15G of the Securities Exchange Act of
1934.''.
(b) <<NOTE: 15 USC 77z-2a note.>> Effective Date.--Section 27B of
the Securities Act of 1933, as added by this section, shall take effect
on the effective date of final rules issued by the Commission under
subsection (b) of such section 27B, except that subsections (b) and (d)
of such section 27B shall take effect on the date of enactment of this
Act.
SEC. 622. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 14. <<NOTE: 12 USC 1852.>> CONCENTRATION LIMITS ON LARGE
FINANCIAL FIRMS.
``(a) Definitions.--In this section--
``(1) the term `Council' means the Financial Stability
Oversight Council;
``(2) the term `financial company' means--
``(A) an insured depository institution;
``(B) a bank holding company;
``(C) a savings and loan holding company;
``(D) a company that controls an insured depository
institution;
``(E) a nonbank financial company supervised by the
Board under title I of the Dodd-Frank Wall Street Reform
and Consumer Protection Act; and
``(F) a foreign bank or company that is treated as a
bank holding company for purposes of this Act; and
``(3) the term `liabilities' means--
[[Page 124 STAT. 1633]]
``(A) with respect to a United States financial
company--
``(i) the total risk-weighted assets of the
financial company, as determined under the risk-
based capital rules applicable to bank holding
companies, as adjusted to reflect exposures that
are deducted from regulatory capital; less
``(ii) the total regulatory capital of the
financial company under the risk-based capital
rules applicable to bank holding companies;
``(B) with respect to a foreign-based financial
company--
``(i) the total risk-weighted assets of the
United States operations of the financial company,
as determined under the applicable risk-based
capital rules, as adjusted to reflect exposures
that are deducted from regulatory capital; less
``(ii) the total regulatory capital of the
United States operations of the financial company,
as determined under the applicable risk-based
capital rules; and
``(C) with respect to an insurance company or other
nonbank financial company supervised by the Board, such
assets of the company as the Board shall specify by
rule, in order to provide for consistent and equitable
treatment of such companies.
``(b) Concentration Limit.--Subject to the recommendations by the
Council under subsection (e), a financial company may not merge or
consolidate with, acquire all or substantially all of the assets of, or
otherwise acquire control of, another company, if the total consolidated
liabilities of the acquiring financial company upon consummation of the
transaction would exceed 10 percent of the aggregate consolidated
liabilities of all financial companies at the end of the calendar year
preceding the transaction.
``(c) Exception to Concentration Limit.--With the prior written
consent of the Board, the concentration limit under subsection (b) shall
not apply to an acquisition--
``(1) of a bank in default or in danger of default;
``(2) with respect to which assistance is provided by the
Federal Deposit Insurance Corporation under section 13(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or
``(3) that would result only in a de minimis increase in the
liabilities of the financial company.
``(d) Rulemaking and Guidance.--The Board shall issue regulations
implementing this section in accordance with the recommendations of the
Council under subsection (e), including the definition of terms, as
necessary. The Board may issue interpretations or guidance regarding the
application of this section to an individual financial company or to
financial companies in general.
``(e) Council Study and Rulemaking.--
``(1) <<NOTE: Deadline.>> Study and recommendations.--Not
later than 6 months after the date of enactment of this section,
the Council shall--
``(A) complete a study of the extent to which the
concentration limit under this section would affect
financial stability, moral hazard in the financial
system, the efficiency and competitiveness of United
States financial firms
[[Page 124 STAT. 1634]]
and financial markets, and the cost and availability of
credit and other financial services to households and
businesses in the United States; and
``(B) make recommendations regarding any
modifications to the concentration limit that the
Council determines would more effectively implement this
section.
``(2) <<NOTE: Deadline.>> Rulemaking.--Not later than 9
months after the date of completion of the study under paragraph
(1), and notwithstanding subsections (b) and (d), the Board
shall issue final regulations implementing this section, which
shall reflect any recommendations by the Council under paragraph
(1)(B).''.
SEC. 623. INTERSTATE MERGER TRANSACTIONS.
(a) Interstate Merger Transactions.--Section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by adding at the
end the following:
``(13)(A) Except as provided in subparagraph (B), the responsible
agency may not approve an application for an interstate merger
transaction if the resulting insured depository institution (including
all insured depository institutions which are affiliates of the
resulting insured depository institution), upon consummation of the
transaction, would control more than 10 percent of the total amount of
deposits of insured depository institutions in the United States.
``(B) Subparagraph (A) shall not apply to an interstate merger
transaction that involves 1 or more insured depository institutions in
default or in danger of default, or with respect to which the
Corporation provides assistance under section 13.
``(C) In this paragraph--
``(i) the term `interstate merger transaction' means a
merger transaction involving 2 or more insured depository
institutions that have different home States and that are not
affiliates; and
``(ii) the term `home State' means--
``(I) with respect to a national bank, the State in
which the main office of the bank is located;
``(II) with respect to a State bank or State savings
association, the State by which the State bank or State
savings association is chartered; and
``(III) with respect to a Federal savings
association, the State in which the home office (as
defined by the regulations of the Director of the Office
of Thrift Supervision, or, on and after the transfer
date, the Comptroller of the Currency) of the Federal
savings association is located.''.
(b) Acquisitions by Bank Holding Companies.--
(1) In general.--Section 4 of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843) is amended--
(A) in subsection (i), by adding at the end the
following:
``(8) Interstate acquisitions.--
``(A) In general.--The Board may not approve an
application by a bank holding company to acquire an
insured depository institution under subsection (c)(8)
or any other provision of this Act if--
``(i) the home State of such insured
depository institution is a State other than the
home State of the bank holding company; and
[[Page 124 STAT. 1635]]
``(ii) the applicant (including all insured
depository institutions which are affiliates of
the applicant) controls, or upon consummation of
the transaction would control, more than 10
percent of the total amount of deposits of insured
depository institutions in the United States.
``(B) Exception.--Subparagraph (A) shall not apply
to an acquisition that involves an insured depository
institution in default or in danger of default, or with
respect to which the Federal Deposit Insurance
Corporation provides assistance under section 13 of the
Federal Deposit Insurance Act (12 U.S.C. 1823).''; and
(B) in subsection (k)(6)(B), by striking ``savings
association'' and inserting ``insured depository
institution''.
(2) Definitions.--Section 2(o)(4) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(o)(4)) is amended--
(A) in subparagraph (B), by striking ``and'' at the
end;
(B) in subparagraph (C)(ii), by striking the period
at the end and inserting a semicolon; and
(C) by adding at the end the following:
``(D) with respect to a State savings association,
the State by which the savings association is chartered;
and
``(E) with respect to a Federal savings association,
the State in which the home office (as defined by the
regulations of the Director of the Office of Thrift
Supervision, or, on and after the transfer date, the
Comptroller of the Currency) of the Federal savings
association is located.''.
(c) Acquisitions by Savings and Loan Holding Companies.--Section
10(e)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)(2)) is
amended--
(1) in paragraph (2)--
(A) in subparagraph (C), by striking ``or'' at the
end;
(B) in subparagraph (D), by striking the period at
the end and inserting ``, or''; and
(C) by adding at the end the following:
``(E) in the case of an application by a savings and
loan holding company to acquire an insured depository
institution, if--
``(i) the home State of the insured depository
institution is a State other than the home State
of the savings and loan holding company;
``(ii) the applicant (including all insured
depository institutions which are affiliates of
the applicant) controls, or upon consummation of
the transaction would control, more than 10
percent of the total amount of deposits of insured
depository institutions in the United States; and
``(iii) the acquisition does not involve an
insured depository institution in default or in
danger of default, or with respect to which the
Federal Deposit Insurance Corporation provides
assistance under section 13 of the Federal Deposit
Insurance Act (12 U.S.C. 1823).''; and
(2) by adding at the end the following:
``(7) Definitions.--For purposes of paragraph (2)(E)--
``(A) the terms `default', `in danger of default',
and `insured depository institution' have the same
meanings
[[Page 124 STAT. 1636]]
as in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813); and
``(B) the term `home State' means--
``(i) with respect to a national bank, the
State in which the main office of the bank is
located;
``(ii) with respect to a State bank or State
savings association, the State by which the
savings association is chartered;
``(iii) with respect to a Federal savings
association, the State in which the home office
(as defined by the regulations of the Director of
the Office of Thrift Supervision, or, on and after
the transfer date, the Comptroller of the
Currency) of the Federal savings association is
located; and
``(iv) with respect to a savings and loan
holding company, the State in which the amount of
total deposits of all insured depository
institution subsidiaries of such company was the
greatest on the date on which the company became a
savings and loan holding company.''.
SEC. 624. QUALIFIED THRIFT LENDERS.
Section 10(m)(3) of the Home Owners' Loan Act (12 U.S.C.
1467a(m)(3)) is amended--
(1) by striking subparagraph (A) and inserting the
following:
``(A) In general.--A savings association that fails
to become or remain a qualified thrift lender shall
immediately be subject to the restrictions under
subparagraph (B).''; and
(2) in subparagraph (B)(i), by striking subclause (III) and
inserting the following:
``(III) Dividends.--The savings
association may not pay dividends,
except for dividends that--
``(aa) would be permissible
for a national bank;
``(bb) are necessary to meet
obligations of a company that
controls such savings
association; and
``(cc) are specifically
approved by the Comptroller of
the Currency and the Board after
a written request submitted to
the Comptroller of the Currency
and the Board by the savings
association not later than 30
days before the date of the
proposed payment.
``(IV) Regulatory authority.--A
savings association that fails to become
or remain a qualified thrift lender
shall be deemed to have violated section
5 of the Home Owners' Loan Act (12
U.S.C. 1464) and subject to actions
authorized by section 5(d) of the Home
Owners' Loan Act (12 U.S.C. 1464(d)).''.
SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING
COMPANIES.
(a) In General.--Section 10(o) of the Home Owners' Loan Act (12
U.S.C. 1467a(o) is amended by adding at the end the following:
[[Page 124 STAT. 1637]]
``(11) Dividends.--
``(A) Declaration of dividends.--
``(i) <<NOTE: Deadline.>> Advance notice
required.--Each subsidiary of a mutual holding
company that is a savings association shall give
the appropriate Federal banking agency and the
Board notice not later than 30 days before the
date of a proposed declaration by the board of
directors of the savings association of any
dividend on the guaranty, permanent, or other
nonwithdrawable stock of the savings association.
``(ii) <<NOTE: Time period.>> Invalid
dividends.--Any dividend described in clause (i)
that is declared without giving notice to the
appropriate Federal banking agency and the Board
under clause (i), or that is declared during the
30-day period preceding the date of a proposed
declaration for which notice is given to the
appropriate Federal banking agency and the Board
under clause (i), shall be invalid and shall
confer no rights or benefits upon the holder of
any such stock.
``(B) Waiver of dividends.--A mutual holding company
may waive the right to receive any dividend declared by
a subsidiary of the mutual holding company, if--
``(i) no insider of the mutual holding
company, associate of an insider, or tax-qualified
or non-tax-qualified employee stock benefit plan
of the mutual holding company holds any share of
the stock in the class of stock to which the
waiver would apply; or
``(ii) <<NOTE: Deadline.>> the mutual holding
company gives written notice to the Board of the
intent of the mutual holding company to waive the
right to receive dividends, not later than 30 days
before the date of the proposed date of payment of
the dividend, and the Board does not object to the
waiver.
``(C) Resolution included in waiver notice.--A
notice of a waiver under subparagraph (B) shall include
a copy of the resolution of the board of directors of
the mutual holding company, in such form and substance
as the Board may determine, together with any supporting
materials relied upon by the board of directors of the
mutual holding company, concluding that the proposed
dividend waiver is consistent with the fiduciary duties
of the board of directors to the mutual members of the
mutual holding company.
``(D) Standards for waiver of dividend.--The Board
may not object to a waiver of dividends under
subparagraph (B) if--
``(i) the waiver would not be detrimental to
the safe and sound operation of the savings
association;
``(ii) the board of directors of the mutual
holding company expressly determines that a waiver
of the dividend by the mutual holding company is
consistent with the fiduciary duties of the board
of directors to the mutual members of the mutual
holding company; and
``(iii) the mutual holding company has, prior
to December 1, 2009--
[[Page 124 STAT. 1638]]
``(I) reorganized into a mutual
holding company under subsection (o);
``(II) issued minority stock either
from its mid-tier stock holding company
or its subsidiary stock savings
association; and
``(III) waived dividends it had a
right to receive from the subsidiary
stock savings association.
``(E) Valuation.--
``(i) In general.--The appropriate Federal
banking agency shall consider waived dividends in
determining an appropriate exchange ratio in the
event of a full conversion to stock form.
``(ii) Exception.--In the case of a savings
association that has reorganized into a mutual
holding company, has issued minority stock from a
mid-tier stock holding company or a subsidiary
stock savings association of the mutual holding
company, and has waived dividends it had a right
to receive from a subsidiary savings association
before December 1, 2009, the appropriate Federal
banking agency shall not consider waived dividends
in determining an appropriate exchange ratio in
the event of a full conversion to stock form.''.
(b) <<NOTE: 12 USC 1467a note.>> Effective Date.--The amendment made
by subsection (a) shall take effect on the transfer date.
SEC. 626. INTERMEDIATE HOLDING COMPANIES.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended by
inserting after section 10 (12 U.S.C. 1467a) the following new section:
``SEC. 10A. <<NOTE: 12 USC 1467b.>> INTERMEDIATE HOLDING
COMPANIES.
``(a) Definition.--For purposes of this section:
``(1) Financial activities.--The term `financial activities'
means activities described in clauses (i) and (ii) of section
10(c)(9)(A).
``(2) Grandfathered unitary savings and loan holding
company.--The term `grandfathered unitary savings and loan
holding company' means a company described in section
10(c)(9)(C).
``(3) Internal financial activities.--The term `internal
financial activities' includes--
``(A) internal financial activities conducted by a
grandfathered savings and loan holding company or any
affiliate; and
``(B) internal treasury, investment, and employee
benefit functions.
``(b) Requirement.--
``(1) In general.--
``(A) Activities other than financial activities.--
If <<NOTE: Deadline.>> a grandfathered unitary savings
and loan holding company conducts activities other than
financial activities, the Board may require such company
to establish and conduct all or a portion of such
financial activities in or through an intermediate
holding company, which shall be a savings and loan
holding company, established pursuant to regulations of
the Board, not later than 90 days (or such longer
[[Page 124 STAT. 1639]]
period as the Board may deem appropriate) after the
transfer date.
``(B) Other activities.--Notwithstanding
subparagraph (A), the Board shall require a
grandfathered unitary savings and loan holding company
to establish an intermediate holding company if the
Board makes a determination that the establishment of
such intermediate holding company is necessary--
``(i) to appropriately supervise activities
that are determined to be financial activities; or
``(ii) to ensure that supervision by the Board
does not extend to the activities of such company
that are not financial activities.
``(2) Internal financial activities.--
``(A) Treatment of internal financial activities.--
For purposes of this subsection, the internal financial
activities of a grandfathered unitary savings and loan
holding company shall not be required to be placed in an
intermediate holding company.
``(B) Grandfathered activities.--A grandfathered
unitary savings and loan holding company may continue to
engage in an internal financial activity, subject to
review by the Board to determine whether engaging in
such activity presents undue risk to the grandfathered
unitary savings and loan holding company or to the
financial stability of the United States, if--
``(i) the grandfathered unitary savings and
loan holding company engaged in the activity
during the year before the date of enactment of
this section; and
``(ii) at least \2/3\ of the assets or \2/3\
of the revenues generated from the activity are
from or attributable to the grandfathered unitary
savings and loan holding company.
``(3) Source of strength.--A grandfathered unitary savings
and loan holding company that directly or indirectly controls an
intermediate holding company established under this section
shall serve as a source of strength to its subsidiary
intermediate holding company.
``(4) Parent company reports.--The Board, may from time to
time, examine and require reports under oath from a
grandfathered unitary savings and loan holding company that
controls an intermediate holding company, and from the
appropriate officers or directors of such company, solely for
purposes of ensuring compliance with the provisions of this
section, including assessing the ability of the company to serve
as a source of strength to its subsidiary intermediate holding
company as required under paragraph (3) and enforcing compliance
with such requirement.
``(5) Limited parent company enforcement.--
``(A) In general.--In addition to any other
authority of the Board, the Board may enforce compliance
with the provisions of this subsection that are
applicable to any company described in paragraph (1)(A)
that controls an intermediate holding company under
section 8 of the Federal Deposit Insurance Act, and a
company described in paragraph (1)(A) shall be subject
to such section (solely for purposes of this
subparagraph) in the same manner
[[Page 124 STAT. 1640]]
and to the same extent as if the company described in
paragraph (1)(A) were a savings and loan holding
company.
``(B) Application of other act.--Any violation of
this subsection by a grandfathered unitary savings and
loan holding company that controls an intermediate
holding company may also be treated as a violation of
the Federal Deposit Insurance Act for purposes of
subparagraph (A).
``(C) No effect on other authority.--No provision of
this paragraph shall be construed as limiting any
authority of the Board or any other Federal agency under
any other provision of law.
``(c) Regulations.--The Board--
``(1) shall promulgate regulations to establish the criteria
for determining whether to require a grandfathered unitary
savings and loan holding company to establish an intermediate
holding company under subsection (b); and
``(2) may promulgate regulations to establish any
restrictions or limitations on transactions between an
intermediate holding company or a parent of such company and its
affiliates, as necessary to prevent unsafe and unsound practices
in connection with transactions between the intermediate holding
company, or any subsidiary thereof, and its parent company or
affiliates that are not subsidiaries of the intermediate holding
company, except that such regulations shall not restrict or
limit any transaction in connection with the bona fide
acquisition or lease by an unaffiliated person of assets, goods,
or services.
``(d) Rules of Construction.--
``(1) Activities.--Nothing in this section shall be
construed to require a grandfathered unitary savings and loan
holding company to conform its activities to permissible
activities.
``(2) Permissible corporate reorganization.--The formation
of an intermediate holding company as required in subsection (b)
shall be presumed to be a permissible corporate reorganization
as described in section 10(c)(9)(D).''.
SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.
(a) Repeal of Prohibition on Payment of Interest on Demand
Deposits.--
(1) Federal reserve act.--Section 19(i) of the Federal
Reserve Act (12 U.S.C. 371a) is amended to read as follows:
``(i) [Repealed]''.
(2) Home owners' loan act.--The first sentence of section
5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C.
1464(b)(1)(B)) is amended by striking ``savings association may
not--'' and all that follows through ``(ii) permit any'' and
inserting ``savings association may not permit any''.
(3) Federal deposit insurance act.--Section 18(g) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to
read as follows:
``(g) [Repealed]''.
(b) <<NOTE: 12 USC 371a note.>> Effective Date.--The amendments made
by subsection (a) shall take effect 1 year after the date of the
enactment of this Act.
SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING.
Section 2(c)(2)(F)(v) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)(F)(v)) is amended by inserting before the
[[Page 124 STAT. 1641]]
period the following: ``, other than credit card loans that are made to
businesses that meet the criteria for a small business concern to be
eligible for business loans under regulations established by the Small
Business Administration under part 121 of title 13, Code of Federal
Regulations''.
TITLE <<NOTE: Wall Street Transparency and Accountability Act of
2010.>> VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
SEC. 701. <<NOTE: 15 USC 8301 note.>> SHORT TITLE.
This title may be cited as the ``Wall Street Transparency and
Accountability Act of 2010''.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--REGULATORY AUTHORITY
SEC. 711. <<NOTE: 15 USC 8301.>> DEFINITIONS.
In this subtitle, the terms ``prudential regulator'', ``swap'',
``swap dealer'', ``major swap participant'', ``swap data repository'',
``associated person of a swap dealer or major swap participant'',
``eligible contract participant'', ``swap execution facility'',
``security-based swap'', ``security-based swap dealer'', ``major
security-based swap participant'', and ``associated person of a
security-based swap dealer or major security-based swap participant''
have the meanings given the terms in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a), including any modification of the meanings
under section 721(b) of this Act.
SEC. 712. <<NOTE: 15 USC 8302.>> REVIEW OF REGULATORY AUTHORITY.
(a) Consultation.--
(1) Commodity futures trading commission.--Before commencing
any rulemaking or issuing an order regarding swaps, swap
dealers, major swap participants, swap data repositories,
derivative clearing organizations with regard to swaps, persons
associated with a swap dealer or major swap participant,
eligible contract participants, or swap execution facilities
pursuant to this subtitle, the Commodity Futures Trading
Commission shall consult and coordinate to the extent possible
with the Securities and Exchange Commission and the prudential
regulators for the purposes of assuring regulatory consistency
and comparability, to the extent possible.
(2) Securities and exchange commission.--Before commencing
any rulemaking or issuing an order regarding security-based
swaps, security-based swap dealers, major security-based swap
participants, security-based swap data repositories, clearing
agencies with regard to security-based swaps, persons associated
with a security-based swap dealer or major security-based swap
participant, eligible contract participants with regard to
security-based swaps, or security-based swap execution
facilities pursuant to subtitle B, the Securities and Exchange
Commission shall consult and coordinate to the
[[Page 124 STAT. 1642]]
extent possible with the Commodity Futures Trading Commission
and the prudential regulators for the purposes of assuring
regulatory consistency and comparability, to the extent
possible.
(3) Procedures and deadline.--Such regulations shall be
prescribed in accordance with applicable requirements of title
5, United States Code, and shall be issued in final form not
later than 360 days after the date of enactment of this Act.
(4) Applicability.--The requirements of paragraphs (1) and
(2) shall not apply to an order issued--
(A) in connection with or arising from a violation
or potential violation of any provision of the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
(B) in connection with or arising from a violation
or potential violation of any provision of the
securities laws; or
(C) in any proceeding that is conducted on the
record in accordance with sections 556 and 557 of title
5, United States Code.
(5) Effect.--Nothing in this subsection authorizes any
consultation or procedure for consultation that is not
consistent with the requirements of subchapter II of chapter 5,
and chapter 7, of title 5, United States Code (commonly known as
the ``Administrative Procedure Act'').
(6) Rules; orders.--In developing and promulgating rules or
orders pursuant to this subsection, each Commission shall
consider the views of the prudential regulators.
(7) Treatment of similar products and entities.--
(A) In general.--In adopting rules and orders under
this subsection, the Commodity Futures Trading
Commission and the Securities and Exchange Commission
shall treat functionally or economically similar
products or entities described in paragraphs (1) and (2)
in a similar manner.
(B) Effect.--Nothing in this subtitle requires the
Commodity Futures Trading Commission or the Securities
and Exchange Commission to adopt joint rules or orders
that treat functionally or economically similar products
or entities described in paragraphs (1) and (2) in an
identical manner.
(8) Mixed swaps.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission, after consultation
with the Board of Governors, shall jointly prescribe such
regulations regarding mixed swaps, as described in section
1a(47)(D) of the Commodity Exchange Act (7 U.S.C. 1a(47)(D)) and
in section 3(a)(68)(D) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(68)(D)), as may be necessary to carry out the
purposes of this title.
(b) Limitation.--
(1) Commodity futures trading commission.--Nothing in this
title, unless specifically provided, confers jurisdiction on the
Commodity Futures Trading Commission to issue a rule,
regulation, or order providing for oversight or regulation of--
(A) security-based swaps; or
(B) with regard to its activities or functions
concerning security-based swaps--
[[Page 124 STAT. 1643]]
(i) security-based swap dealers;
(ii) major security-based swap participants;
(iii) security-based swap data repositories;
(iv) associated persons of a security-based
swap dealer or major security-based swap
participant;
(v) eligible contract participants with
respect to security-based swaps; or
(vi) swap execution facilities with respect to
security-based swaps.
(2) Securities and exchange commission.--Nothing in this
title, unless specifically provided, confers jurisdiction on the
Securities and Exchange Commission or State securities
regulators to issue a rule, regulation, or order providing for
oversight or regulation of--
(A) swaps; or
(B) with regard to its activities or functions
concerning swaps--
(i) swap dealers;
(ii) major swap participants;
(iii) swap data repositories;
(iv) persons associated with a swap dealer or
major swap participant;
(v) eligible contract participants with
respect to swaps; or
(vi) swap execution facilities with respect to
swaps.
(3) Prohibition on certain futures associations and national
securities associations.--
(A) Futures associations.--Notwithstanding any other
provision of law (including regulations), unless
otherwise authorized by this title, no futures
association registered under section 17 of the Commodity
Exchange Act (7 U.S.C. 21) may issue a rule, regulation,
or order for the oversight or regulation of, or
otherwise assert jurisdiction over, for any purpose, any
security-based swap, except that this subparagraph shall
not limit the authority of a registered futures
association to examine for compliance with, and enforce,
its rules on capital adequacy.
(B) National securities associations.--
Notwithstanding any other provision of law (including
regulations), unless otherwise authorized by this title,
no national securities association registered under
section 15A of the Securities Exchange Act of 1934 (15
U.S.C. 78o-3) may issue a rule, regulation, or order for
the oversight or regulation of, or otherwise assert
jurisdiction over, for any purpose, any swap, except
that this subparagraph shall not limit the authority of
a national securities association to examine for
compliance with, and enforce, its rules on capital
adequacy.
(c) Objection to Commission Regulation.--
(1) Filing of petition for review.--
(A) <<NOTE: Deadline.>> In general.--If either
Commission referred to in this section determines that a
final rule, regulation, or order of the other Commission
conflicts with subsection (a)(7) or (b), then the
complaining Commission may obtain review of the final
rule, regulation, or order in the United States Court of
Appeals for the District of Columbia Circuit by filing
in the court, not later than 60 days after the
[[Page 124 STAT. 1644]]
date of publication of the final rule, regulation, or
order, a written petition requesting that the rule,
regulation, or order be set aside.
(B) Expedited proceeding.--A proceeding described in
subparagraph (A) shall be expedited by the United States
Court of Appeals for the District of Columbia Circuit.
(2) Transmittal of petition and record.--
(A) In general.--A copy <<NOTE: Deadline.>> of a
petition described in paragraph (1) shall be transmitted
not later than 1 business day after the date of filing
by the complaining Commission to the Secretary of the
responding Commission.
(B) Duty of responding commission.--On receipt of
the copy of a petition described in paragraph (1), the
responding Commission shall file with the United States
Court of Appeals for the District of Columbia Circuit--
(i) a copy of the rule, regulation, or order
under review (including any documents referred to
therein); and
(ii) any other materials prescribed by the
United States Court of Appeals for the District of
Columbia Circuit.
(3) Standard of review.--The United States Court of Appeals
for the District of Columbia Circuit shall--
(A) give deference to the views of neither
Commission; and
(B) determine to affirm or set aside a rule,
regulation, or order of the responding Commission under
this subsection, based on the determination of the court
as to whether the rule, regulation, or order is in
conflict with subsection (a)(7) or (b), as applicable.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall operate
as a stay of the rule, regulation, or order until the date on
which the determination of the United States Court of Appeals
for the District of Columbia Circuit is final (including any
appeal of the determination).
(d) Joint Rulemaking.--
(1) In general.--Notwithstanding any other provision of this
title and subsections (b) and (c), the Commodity Futures Trading
Commission and the Securities and Exchange Commission, in
consultation with the Board of Governors, shall further define
the terms ``swap'', ``security-based swap'', ``swap dealer'',
``security-based swap dealer'', ``major swap participant'',
``major security-based swap participant'', ``eligible contract
participant'', and ``security-based swap agreement'' in section
1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C.
1a(47)(A)(v)) and section 3(a)(78) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(78)).
(2) Authority of the commissions.--
(A) In general.--Notwithstanding any other provision
of this title, the Commodity Futures Trading Commission
and the Securities and Exchange Commission, in
consultation with the Board of Governors, shall jointly
adopt such other rules regarding such definitions as the
Commodity Futures Trading Commission and the Securities
and
[[Page 124 STAT. 1645]]
Exchange Commission determine are necessary and
appropriate, in the public interest, and for the
protection of investors.
(B) Trade repository recordkeeping.--Notwithstanding
any other provision of this title, the Commodity Futures
Trading Commission and the Securities and Exchange
Commission, in consultation with the Board of Governors,
shall engage in joint rulemaking to jointly adopt a rule
or rules governing the books and records that are
required to be kept and maintained regarding security-
based swap agreements by persons that are registered as
swap data repositories under the Commodity Exchange Act,
including uniform rules that specify the data elements
that shall be collected and maintained by each
repository.
(C) Books and records.--Notwithstanding any other
provision of this title, the Commodity Futures Trading
Commission and the Securities and Exchange Commission,
in consultation with the Board of Governors, shall
engage in joint rulemaking to jointly adopt a rule or
rules governing books and records regarding security-
based swap agreements, including daily trading records,
for swap dealers, major swap participants, security-
based swap dealers, and security-based swap
participants.
(D) Comparable rules.--Rules and regulations
prescribed jointly under this title by the Commodity
Futures Trading Commission and the Securities and
Exchange Commission shall be comparable to the maximum
extent possible, taking into consideration differences
in instruments and in the applicable statutory
requirements.
(E) Tracking uncleared transactions.--Any rules
prescribed under subparagraph (A) shall require the
maintenance of records of all activities relating to
security-based swap agreement transactions defined under
subparagraph (A) that are not cleared.
(F) Sharing of information.--The Commodity Futures
Trading Commission shall make available to the
Securities and Exchange Commission information relating
to security-based swap agreement transactions defined in
subparagraph (A) that are not cleared.
(3) Financial stability oversight council.--In the event
that the Commodity Futures Trading Commission and the Securities
and Exchange Commission fail to jointly prescribe rules pursuant
to paragraph (1) or (2) in a timely manner, at the request of
either Commission, the Financial Stability Oversight Council
shall resolve the dispute--
(A) within a reasonable time after receiving the
request;
(B) after consideration of relevant information
provided by each Commission; and
(C) by agreeing with 1 of the Commissions regarding
the entirety of the matter or by determining a
compromise position.
(4) Joint interpretation.--Any interpretation of, or
guidance by either Commission regarding, a provision of this
title, shall be effective only if issued jointly by the
Commodity Futures Trading Commission and the Securities and
Exchange Commission, after consultation with the Board of
Governors,
[[Page 124 STAT. 1646]]
if this title requires the Commodity Futures Trading Commission
and the Securities and Exchange Commission to issue joint
regulations to implement the provision.
(e) <<NOTE: Deadline.>> Global Rulemaking Timeframe.--Unless
otherwise provided in this title, or an amendment made by this title,
the Commodity Futures Trading Commission or the Securities and Exchange
Commission, or both, shall individually, and not jointly, promulgate
rules and regulations required of each Commission under this title or an
amendment made by this title not later than 360 days after the date of
enactment of this Act.
(f) Rules and Registration Before Final Effective Dates.--Beginning
on the date of enactment of this Act and notwithstanding the effective
date of any provision of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission may, in order to
prepare for the effective dates of the provisions of this Act--
(1) promulgate rules, regulations, or orders permitted or
required by this Act;
(2) conduct studies and prepare reports and recommendations
required by this Act;
(3) register persons under the provisions of this Act; and
(4) exempt persons, agreements, contracts, or transactions
from provisions of this Act, under the terms contained in this
Act,
provided, however, that no action by the Commodity Futures Trading
Commission or the Securities and Exchange Commission described in
paragraphs (1) through (4) shall become effective prior to the effective
date applicable to such action under the provisions of this Act.
SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES.
(a) Securities Exchange Act of 1934.--Section 15(c)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended by
adding at the end the following:
``(C) Notwithstanding any provision of sections
2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act
and the rules and regulations thereunder, and pursuant
to an exemption granted by the Commission under section
36 of this title or pursuant to a rule or regulation,
cash and securities may be held by a broker or dealer
registered pursuant to subsection (b)(1) and also
registered as a futures commission merchant pursuant to
section 4f(a)(1) of the Commodity Exchange Act, in a
portfolio margining account carried as a futures account
subject to section 4d of the Commodity Exchange Act and
the rules and regulations thereunder, pursuant to a
portfolio margining program approved by the Commodity
Futures Trading Commission, and subject to subchapter IV
of chapter 7 of title 11 of the United States Code and
the rules and regulations
thereunder. <<NOTE: Consultation.>> The Commission
shall consult with the Commodity Futures Trading
Commission to adopt rules to ensure that such
transactions and accounts are subject to comparable
requirements to the extent practicable for similar
products.''.
(b) Commodity Exchange Act.--Section 4d of the Commodity Exchange
Act (7 U.S.C. 6d) is amended by adding at the end the following:
[[Page 124 STAT. 1647]]
``(h) <<NOTE: Contracts.>> Notwithstanding subsection (a)(2) or the
rules and regulations thereunder, and pursuant to an exemption granted
by the Commission under section 4(c) of this Act or pursuant to a rule
or regulation, a futures commission merchant that is registered pursuant
to section 4f(a)(1) of this Act and also registered as a broker or
dealer pursuant to section 15(b)(1) of the Securities Exchange Act of
1934 may, pursuant to a portfolio margining program approved by the
Securities and Exchange Commission pursuant to section 19(b) of the
Securities Exchange Act of 1934, hold in a portfolio margining account
carried as a securities account subject to section 15(c)(3) of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder, a contract for the purchase or sale of a commodity for
future delivery or an option on such a contract, and any money,
securities or other property received from a customer to margin,
guarantee or secure such a contract, or accruing to a customer as the
result of such a contract. <<NOTE: Consultation.>> The Commission shall
consult with the Securities and Exchange Commission to adopt rules to
ensure that such transactions and accounts are subject to comparable
requirements to the extent practical for similar products.''.
(c) Duty of Commodity Futures Trading Commission.--Section 20 of the
Commodity Exchange Act (7 U.S.C. 24) is amended by adding at the end the
following:
``(c) The Commission shall exercise its authority to ensure that
securities held in a portfolio margining account carried as a futures
account are customer property and the owners of those accounts are
customers for the purposes of subchapter IV of chapter 7 of title 11 of
the United States Code.''.
SEC. 714. <<NOTE: 15 USC 8303.>> ABUSIVE SWAPS.
The Commodity Futures Trading Commission or the Securities and
Exchange Commission, or both, individually may, by rule or order--
(1) collect information as may be necessary concerning the
markets for any types of--
(A) swap (as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in section 1a of
the Commodity Exchange Act (7 U.S.C. 1a)); and
(2) <<NOTE: Reports.>> issue a report with respect to any
types of swaps or security-based swaps that the Commodity
Futures Trading Commission or the Securities and Exchange
Commission determines to be detrimental to--
(A) the stability of a financial market; or
(B) participants in a financial market.
SEC. 715. <<NOTE: 15 USC 8304.>> AUTHORITY TO PROHIBIT
PARTICIPATION IN SWAP ACTIVITIES.
Except as provided in section 4 of the Commodity Exchange Act (7
U.S.C. 6), if the Commodity Futures Trading Commission or the Securities
and Exchange Commission determines that the regulation of swaps or
security-based swaps markets in a foreign country undermines the
stability of the United States financial system, either Commission, in
consultation with the Secretary of the Treasury, may prohibit an entity
domiciled in the foreign country from participating in the United States
in any swap or security-based swap activities.
[[Page 124 STAT. 1648]]
SEC. 716. <<NOTE: 15 USC 8305.>> PROHIBITION AGAINST FEDERAL
GOVERNMENT BAILOUTS OF SWAPS ENTITIES.
(a) Prohibition on Federal Assistance.--Notwithstanding any other
provision of law (including regulations), no Federal assistance may be
provided to any swaps entity with respect to any swap, security-based
swap, or other activity of the swaps entity.
(b) Definitions.--In this section:
(1) Federal assistance.--The term ``Federal assistance''
means the use of any advances from any Federal Reserve credit
facility or discount window that is not part of a program or
facility with broad-based eligibility under section 13(3)(A) of
the Federal Reserve Act, Federal Deposit Insurance Corporation
insurance or guarantees for the purpose of--
(A) making any loan to, or purchasing any stock,
equity interest, or debt obligation of, any swaps
entity;
(B) purchasing the assets of any swaps entity;
(C) guaranteeing any loan or debt issuance of any
swaps entity; or
(D) entering into any assistance arrangement
(including tax breaks), loss sharing, or profit sharing
with any swaps entity.
(2) Swaps entity.--
(A) In general.--The term ``swaps entity'' means any
swap dealer, security-based swap dealer, major swap
participant, major security-based swap participant, that
is registered under--
(i) the Commodity Exchange Act (7 U.S.C. 1 et
seq.); or
(ii) the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
(B) Exclusion.--The term ``swaps entity'' does not
include any major swap participant or major security-
based swap participant that is an insured depository
institution.
(c) Affiliates of Insured Depository Institutions.--The prohibition
on Federal assistance contained in subsection (a) does not apply to and
shall not prevent an insured depository institution from having or
establishing an affiliate which is a swaps entity, as long as such
insured depository institution is part of a bank holding company, or
savings and loan holding company, that is supervised by the Federal
Reserve and such swaps entity affiliate complies with sections 23A and
23B of the Federal Reserve Act and such other requirements as the
Commodity Futures Trading Commission or the Securities Exchange
Commission, as appropriate, and the Board of Governors of the Federal
Reserve System, may determine to be necessary and appropriate.
(d) Only Bona Fide Hedging and Traditional Bank Activities
Permitted.--The prohibition <<NOTE: Applicability.>> in subsection (a)
shall apply to any insured depository institution unless the insured
depository institution limits its swap or security-based swap activities
to:
(1) Hedging and other similar risk mitigating activities
directly related to the insured depository institution's
activities.
(2) Acting as a swaps entity for swaps or security-based
swaps involving rates or reference assets that are permissible
for investment by a national bank under the paragraph designated
as ``Seventh.'' of section 5136 of the Revised Statutes of the
United States ( 12 U.S.C. 24), other than as described in
paragraph (3).
[[Page 124 STAT. 1649]]
(3) Limitation on credit default swaps.--Acting as a swaps
entity for credit default swaps, including swaps or security-
based swaps referencing the credit risk of asset-backed
securities as defined in section 3(a)(77) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(77)) (as amended by this
Act) shall not be considered a bank permissible activity for
purposes of subsection (d)(2) unless such swaps or security-
based swaps are cleared by a derivatives clearing organization
(as such term is defined in section la of the Commodity Exchange
Act (7 U.S.C. la)) or a clearing agency (as such term is defined
in section 3 of the Securities Exchange Act (15 U.S.C. 78c))
that is registered, or exempt from registration, as a
derivatives clearing organization under the Commodity Exchange
Act or as a clearing agency under the Securities Exchange Act,
respectively.
(e) <<NOTE: Applicability.>> Existing Swaps and Security-based
Swaps.--The prohibition in subsection (a) shall only apply to swaps or
security-based swaps entered into by an insured depository institution
after the end of the transition period described in subsection (f).
(f) Transition Period.--To the extent an insured depository
institution qualifies as a ``swaps entity'' and would be subject to the
Federal assistance prohibition in subsection (a), the appropriate
Federal banking agency, after consulting with and considering the views
of the Commodity Futures Trading Commission or the Securities Exchange
Commission, as appropriate, shall permit the insured depository
institution up to 24 months to divest the swaps entity or cease the
activities that require registration as a swaps entity. In establishing
the appropriate transition period to effect such divestiture or
cessation of activities, which may include making the swaps entity an
affiliate of the insured depository institution, the appropriate Federal
banking agency shall take into account and make written findings
regarding the potential impact of such divestiture or cessation of
activities on the insured depository institution's (1) mortgage lending,
(2) small business lending, (3) job creation, and (4) capital formation
versus the potential negative impact on insured depositors and the
Deposit Insurance Fund of the Federal Deposit Insurance Corporation. The
appropriate Federal banking agency may consider such other factors as
may be appropriate. The appropriate Federal banking agency may place
such conditions on the insured depository institution's divestiture or
ceasing of activities of the swaps entity as it deems necessary and
appropriate. The transition period under this subsection may be extended
by the appropriate Federal banking agency, after consultation with the
Commodity Futures Trading Commission and the Securities and Exchange
Commission, for a period of up to 1 additional year.
(g) Excluded Entities.--For purposes of this section, the term
``swaps entity'' shall not include any insured depository institution
under the Federal Deposit Insurance Act or a covered financial company
under title II which is in a conservatorship, receivership, or a bridge
bank operated by the Federal Deposit Insurance Corporation.
(h) Effective Date.--The prohibition in subsection (a) shall be
effective 2 years following the date on which this Act is effective.
(i) Liquidation Required.--
(1) In general.--
[[Page 124 STAT. 1650]]
(A) FDIC insured institutions.--All swaps entities
that are FDIC insured institutions that are put into
receivership or declared insolvent as a result of swap
or security-based swap activity of the swaps entities
shall be subject to the termination or transfer of that
swap or security-based swap activity in accordance with
applicable law prescribing the treatment of those
contracts. No taxpayer funds shall be used to prevent
the receivership of any swap entity resulting from swap
or security-based swap activity of the swaps entity.
(B) Institutions that pose a systemic risk and are
subject to heightened prudential supervision as
regulated under section 113.--All swaps entities that
are institutions that pose a systemic risk and are
subject to heightened prudential supervision as
regulated under section 113, that are put into
receivership or declared insolvent as a result of swap
or security-based swap activity of the swaps entities
shall be subject to the termination or transfer of that
swap or security-based swap activity in accordance with
applicable law prescribing the treatment of those
contracts. No taxpayer funds shall be used to prevent
the receivership of any swap entity resulting from swap
or security-based swap activity of the swaps entity.
(C) Non-FDIC insured, non-systemically significant
institutions not subject to heightened prudential
supervision as regulated under section 113.--No taxpayer
resources shall be used for the orderly liquidation of
any swaps entities that are non-FDIC insured, non-
systemically significant institutions not subject to
heightened prudential supervision as regulated under
section 113.
(2) Recovery of funds.--All funds expended on the
termination or transfer of the swap or security-based swap
activity of the swaps entity shall be recovered in accordance
with applicable law from the disposition of assets of such swap
entity or through assessments, including on the financial sector
as provided under applicable law.
(3) No losses to taxpayers.--Taxpayers shall bear no losses
from the exercise of any authority under this title.
(j) Prohibition on Unregulated Combination of Swaps Entities and
Banking.--At no time following adoption of the rules in subsection (k)
may a bank or bank holding company be permitted to be or become a swap
entity unless it conducts its swap or security-based swap activity in
compliance with such minimum standards set by its prudential regulator
as are reasonably calculated to permit the swaps entity to conduct its
swap or security-based swap activities in a safe and sound manner and
mitigate systemic risk.
(k) Rules.--In prescribing rules, the prudential regulator for a
swaps entity shall consider the following factors:
(1) The expertise and managerial strength of the swaps
entity, including systems for effective oversight.
(2) The financial strength of the swaps entity.
(3) Systems for identifying, measuring and controlling risks
arising from the swaps entity's operations.
(4) Systems for identifying, measuring and controlling the
swaps entity's participation in existing markets.
[[Page 124 STAT. 1651]]
(5) Systems for controlling the swaps entity's participation
or entry into in new markets and products.
(l) Authority of the Financial Stability Oversight Council.--The
Financial Stability Oversight Council may determine that, when other
provisions established by this Act are insufficient to effectively
mitigate systemic risk and protect taxpayers, that swaps entities may no
longer access Federal assistance with respect to any swap, security-
based swap, or other activity of the swaps entity. Any such
determination by the Financial Stability Oversight Council of a
prohibition of federal assistance shall be made on an institution-by-
institution basis, and shall require the vote of not fewer than two-
thirds of the members of the Financial Stability Oversight Council,
which must include the vote by the Chairman of the Council, the Chairman
of the Board of Governors of the Federal Reserve System, and the
Chairperson of the Federal Deposit Insurance Corporation. Notice and
hearing requirements for such determinations shall be consistent with
the standards provided in title I.
(m) Ban on Proprietary Trading in Derivatives.--An insured
depository institution shall comply with the prohibition on proprietary
trading in derivatives as required by section 619 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
SEC. 717. NEW PRODUCT APPROVAL CFTC--SEC PROCESS.
(a) Amendments to the Commodity Exchange Act.--Section 2(a)(1)(C) of
the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) is amended--
(1) in clause (i) by striking ``This'' and inserting ``(I)
Except as provided in subclause (II), this''; and
(2) by adding at the end of clause (i) the following:
``(II) This Act shall apply to and
the Commission shall have jurisdiction
with respect to accounts, agreements,
and transactions involving, and may
permit the listing for trading pursuant
to section 5c(c) of, a put, call, or
other option on 1 or more securities (as
defined in section 2(a)(1) of the
Securities Act of 1933 or section
3(a)(10) of the Securities Exchange Act
of 1934 on the date of enactment of the
Futures Trading Act of 1982), including
any group or index of such securities,
or any interest therein or based on the
value thereof, that is exempted by the
Securities and Exchange Commission
pursuant to section 36(a)(1) of the
Securities Exchange Act of 1934 with the
condition that the Commission exercise
concurrent jurisdiction over such put,
call, or other option; provided,
however, that nothing in this paragraph
shall be construed to affect the
jurisdiction and authority of the
Securities and Exchange Commission over
such put, call, or other option.''.
(b) Amendments to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 is amended by adding the following
section after section 3A (15 U.S.C. 78c-1):
``SEC. 3B. <<NOTE: 15 USC 78c-2.>> SECURITIES-RELATED
DERIVATIVES.
``(a) Any agreement, contract, or transaction (or class thereof)
that is exempted by the Commodity Futures Trading Commission
[[Page 124 STAT. 1652]]
pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C.
6(c)(1)) with the condition that the Commission exercise concurrent
jurisdiction over such agreement, contract, or transaction (or class
thereof) shall be deemed a security for purposes of the securities laws.
``(b) With respect to any agreement, contract, or transaction (or
class thereof) that is exempted by the Commodity Futures Trading
Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) with the condition that the Commission exercise
concurrent jurisdiction over such agreement, contract, or transaction
(or class thereof), references in the securities laws to the `purchase'
or `sale' of a security shall be deemed to include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing of
rights or obligations under such agreement, contract, or transaction, as
the context may require.''.
(c) Amendment to Securities Exchange Act of 1934.--Section 19(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by
adding at the end the following:
``(10) Notwithstanding paragraph (2), the time period within
which the Commission is required by order to approve a proposed
rule change or institute proceedings to determine whether the
proposed rule change should be disapproved is stayed pending a
determination by the Commission upon the request of the
Commodity Futures Trading Commission or its Chairman that the
Commission issue a determination as to whether a product that is
the subject of such proposed rule change is a security pursuant
to section 718 of the Wall Street Transparency and
Accountability Act of 2010.''.
(d) Amendment to Commodity Exchange Act.--Section 5c(c)(1) of the
Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is amended--
(1) by striking ``Subject to paragraph (2)'' and inserting
the following:
``(A) Election.--Subject to paragraph (2)''; and
(2) by adding at the end the following:
``(B) Certification.--The certification of a product
pursuant to this paragraph shall be stayed pending a
determination by the Commission upon the request of the
Securities and Exchange Commission or its Chairman that
the Commission issue a determination as to whether the
product that is the subject of such certification is a
contract of sale of a commodity for future delivery, an
option on such a contract, or an option on a commodity
pursuant to section 718 of the Wall Street Transparency
and Accountability Act of 2010.''.
SEC. 718. <<NOTE: 15 USC 8306.>> DETERMINING STATUS OF NOVEL
DERIVATIVE PRODUCTS.
(a) Process for Determining the Status of a Novel Derivative
Product.--
(1) Notice.--
(A) In general.--Any person filing a proposal to
list or trade a novel derivative product that may have
elements of both securities and contracts of sale of a
commodity for future delivery (or options on such
contracts or options on commodities) may concurrently
provide notice and furnish a copy of such filing with
the Securities and Exchange
[[Page 124 STAT. 1653]]
Commission and the Commodity Futures Trading Commission.
Any such notice shall state that notice has been made
with both Commissions.
(B) <<NOTE: Deadline.>> Notification.--If no
concurrent notice is made pursuant to subparagraph (A),
within 5 business days after determining that a proposal
that seeks to list or trade a novel derivative product
may have elements of both securities and contracts of
sale of a commodity for future delivery (or options on
such contracts or options on commodities), the
Securities and Exchange Commission or the Commodity
Futures Trading Commission, as applicable, shall notify
the other Commission and provide a copy of such filing
to the other Commission.
(2) Request for determination.--
(A) <<NOTE: Deadline.>> In general.--No later than
21 days after receipt of a notice under paragraph (1),
or upon its own initiative if no such notice is
received, the Commodity Futures Trading Commission may
request that the Securities and Exchange Commission
issue a determination as to whether a product is a
security, as defined in section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
(B) <<NOTE: Deadline.>> Request.--No later than 21
days after receipt of a notice under paragraph (1), or
upon its own initiative if no such notice is received,
the Securities and Exchange Commission may request that
the Commodity Futures Trading Commission issue a
determination as to whether a product is a contract of
sale of a commodity for future delivery, an option on
such a contract, or an option on a commodity subject to
the Commodity Futures Trading Commission's exclusive
jurisdiction under section 2(a)(1)(A) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)(A)).
(C) Requirement relating to request.--A request
under subparagraph (A) or (B) shall be made by
submitting such request, in writing, to the Securities
and Exchange Commission or the Commodity Futures Trading
Commission, as applicable.
(D) Effect.--Nothing in this paragraph shall be
construed to prevent--
(i) the Commodity Futures Trading Commission
from requesting that the Securities and Exchange
Commission grant an exemption pursuant to section
36(a)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78mm(a)(1)) with respect to a product
that is the subject of a filing under paragraph
(1); or
(ii) the Securities and Exchange Commission
from requesting that the Commodity Futures Trading
Commission grant an exemption pursuant to section
4(c)(1) of the Commodity Exchange Act (7 U.S.C.
6(c)(1)) with respect to a product that is the
subject of a filing under paragraph (1),
Provided, however, that nothing in this subparagraph
shall be construed to require the Commodity Futures
Trading Commission or the Securities and Exchange
Commission to issue an exemption requested pursuant to
this subparagraph; provided further, That an order
granting or denying an exemption described in this
subparagraph and issued
[[Page 124 STAT. 1654]]
under paragraph (3)(B) shall not be subject to judicial
review pursuant to subsection (b).
(E) Withdrawal of request.--A request under
subparagraph (A) or (B) may be withdrawn by the
Commission making the request at any time prior to a
determination being made pursuant to paragraph (3) for
any reason by providing written notice to the head of
the other Commission.
(3) <<NOTE: Deadline.>> Determination.--Notwithstanding any
other provision of law, no later than 120 days after the date of
receipt of a request--
(A) under subparagraph (A) or (B) of paragraph (2),
unless such request has been withdrawn pursuant to
paragraph (2)(E), the Securities and Exchange Commission
or the Commodity Futures Trading Commission, as
applicable, shall, by order, issue the determination
requested in subparagraph (A) or (B) of paragraph (2),
as applicable, and the reasons therefor; or
(B) under paragraph (2)(D), unless such request has
been withdrawn, the Securities and Exchange Commission
or the Commodity Futures Trading Commission, as
applicable, shall grant an exemption or provide reasons
for not granting such exemption, provided that any
decision by the Securities and Exchange Commission not
to grant such exemption shall not be reviewable under
section 25 of the Securities Exchange Act of 1934 (15
U.S.C. 78y).
(b) Judicial Resolution.--
(1) In general.--The Commodity <<NOTE: Deadline.>> Futures
Trading Commission or the Securities and Exchange Commission may
petition the United States Court of Appeals for the District of
Columbia Circuit for review of a final order of the other
Commission issued pursuant to subsection (a)(3)(A), with respect
to a novel derivative product that may have elements of both
securities and contracts of sale of a commodity for future
delivery (or options on such contracts or options on
commodities) that it believes affects its statutory jurisdiction
within 60 days after the date of entry of such order, a written
petition requesting a review of the order. Any such proceeding
shall be expedited by the Court of Appeals.
(2) Transmittal of petition and record.--A
copy <<NOTE: Deadline.>> of a petition described in paragraph
(1) shall be transmitted not later than 1 business day after
filing by the complaining Commission to the responding
Commission. On receipt of the petition, the responding
Commission shall file with the court a copy of the order under
review and any documents referred to therein, and any other
materials prescribed by the court.
(3) Standard of review.--The court, in considering a
petition filed pursuant to paragraph (1), shall give no
deference to, or presumption in favor of, the views of either
Commission.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall operate
as a stay of the order, until the date on which the
determination of the court is final (including any appeal of the
determination).
SEC. 719. <<NOTE: 15 USC 8307.>> STUDIES.
(a) Study on Effects of Position Limits on Trading on Exchanges in
the United States.--
[[Page 124 STAT. 1655]]
(1) Study.--The Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall conduct a study
of the effects (if any) of the position limits imposed pursuant
to the other provisions of this title on excessive speculation
and on the movement of transactions from exchanges in the United
States to trading venues outside the United States.
(2) Report to the congress.--Within 12 months after the
imposition of position limits pursuant to the other provisions
of this title, the Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall submit to the
Congress a report on the matters described in paragraph (1).
(3) Required hearing.-- <<NOTE: Deadline.>> Within 30
legislative days after the submission to the Congress of the
report described in paragraph (2), the Committee on Agriculture
of the House of Representatives shall hold a hearing examining
the findings of the report.
(4) Biennial reporting.--In addition to the study required
in paragraph (1), the Chairman of the Commodity Futures Trading
Commission shall prepare and submit to the Congress biennial
reports on the growth or decline of the derivatives markets in
the United States and abroad, which shall include assessments of
the causes of any such growth or decline, the effectiveness of
regulatory regimes in managing systemic risk, a comparison of
the costs of compliance at the time of the report for market
participants subject to regulation by the United States with the
costs of compliance in December 2008 for the market
participants, and the quality of the available data. In
preparing the report, the Chairman shall solicit the views of,
consult with, and address the concerns raised by, market
participants, regulators, legislators, and other interested
parties.
(b) Study on Feasibility of Requiring Use of Standardized
Algorithmic Descriptions for Financial Derivatives.--
(1) In general.--The Securities and Exchange Commission and
the Commodity Futures Trading Commission shall conduct a joint
study of the feasibility of requiring the derivatives industry
to adopt standardized computer-readable algorithmic descriptions
which may be used to describe complex and standardized financial
derivatives.
(2) Goals.--The algorithmic descriptions defined in the
study shall be designed to facilitate computerized analysis of
individual derivative contracts and to calculate net exposures
to complex derivatives. The algorithmic descriptions shall be
optimized for simultaneous use by--
(A) commercial users and traders of derivatives;
(B) derivative clearing houses, exchanges and
electronic trading platforms;
(C) trade repositories and regulator investigations
of market activities; and
(D) systemic risk regulators.
The study will also examine the extent to which the algorithmic
description, together with standardized and extensible legal
[[Page 124 STAT. 1656]]
definitions, may serve as the binding legal definition of
derivative contracts. The study will examine the logistics of
possible implementations of standardized algorithmic
descriptions for derivatives contracts. The study shall be
limited to electronic formats for exchange of derivative
contract descriptions and will not contemplate disclosure of
proprietary valuation models.
(3) International coordination.--In conducting the study,
the Securities and Exchange Commission and the Commodity Futures
Trading Commission shall coordinate the study with international
financial institutions and regulators as appropriate and
practical.
(4) Report.--Within 8 months after the date of the enactment
of this Act, the Securities and Exchange Commission and the
Commodity Futures Trading Commission shall jointly submit to the
Committees on Agriculture and on Financial Services of the House
of Representatives and the Committees on Agriculture, Nutrition,
and Forestry and on Banking, Housing, and Urban Affairs of the
Senate a written report which contains the results of the study
required by paragraphs (1) through (3).
(c) International Swap Regulation.--
(1) In general.-- <<NOTE: Study.>> The Commodity Futures
Trading Commission and the Securities and Exchange Commission
shall jointly conduct a study--
(A) relating to--
(i) swap regulation in the United States,
Asia, and Europe; and
(ii) clearing house and clearing agency
regulation in the United States, Asia, and Europe;
and
(B) that identifies areas of regulation that are
similar in the United States, Asia and Europe and other
areas of regulation that could be harmonized
(2) Report.--Not later than 18 months after the date of
enactment of this Act, the Commodity Futures Trading Commission
and the Securities and Exchange Commission shall submit to the
Committee on Agriculture, Nutrition, and Forestry and the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Agriculture and the Committee on Financial
Services of the House of Representatives a report that includes
a description of the results of the study under subsection (a),
including--
(A) identification of the major exchanges and their
regulator in each geographic area for the trading of
swaps and security-based swaps including a listing of
the major contracts and their trading volumes and
notional values as well as identification of the major
swap dealers participating in such markets;
(B) identification of the major clearing houses and
clearing agencies and their regulator in each geographic
area for the clearing of swaps and security-based swaps,
including a listing of the major contracts and the
clearing volumes and notional values as well as
identification of the major clearing members of such
clearing houses and clearing agencies in such markets;
(C) a description of the comparative methods of
clearing swaps in the United States, Asia, and Europe;
and
[[Page 124 STAT. 1657]]
(D) a description of the various systems used for
establishing margin on individual swaps, security-based
swaps, and swap portfolios.
(d) Stable Value Contracts.--
(1) Determination.--
(A) Status.--Not later <<NOTE: Deadline. Study.>>
than 15 months after the date of the enactment of this
Act, the Securities and Exchange Commission and the
Commodity Futures Trading Commission shall, jointly,
conduct a study to determine whether stable value
contracts fall within the definition of a swap. In
making the determination required under this
subparagraph, the Commissions jointly shall consult with
the Department of Labor, the Department of the Treasury,
and the State entities that regulate the issuers of
stable value contracts.
(B) Regulations.--If the Commissions determine that
stable value contracts fall within the definition of a
swap, the Commissions jointly shall determine if an
exemption for stable value contracts from the definition
of swap is appropriate and in the public interest. The
Commissions shall issue regulations implementing the
determinations required under this paragraph. Until the
effective date of such regulations, and notwithstanding
any other provision of this title, the requirements of
this title shall not apply to stable value contracts.
(C) Legal certainty.--Stable value contracts in
effect prior to the effective date of the regulations
described in subparagraph (B) shall not be considered
swaps.
(2) Definition.--For purposes of this subsection, the term
``stable value contract'' means any contract, agreement, or
transaction that provides a crediting interest rate and guaranty
or financial assurance of liquidity at contract or book value
prior to maturity offered by a bank, insurance company, or other
State or federally regulated financial institution for the
benefit of any individual or commingled fund available as an
investment in an employee benefit plan (as defined in section
3(3) of the Employee Retirement Income Security Act of 1974,
including plans described in section 3(32) of such Act) subject
to participant direction, an eligible deferred compensation plan
(as defined in section 457(b) of the Internal Revenue Code of
1986) that is maintained by an eligible employer described in
section 457(e)(1)(A) of such Code, an arrangement described in
section 403(b) of such Code, or a qualified tuition program (as
defined in section 529 of such Code).
SEC. 720. <<NOTE: 15 USC 8308.>> MEMORANDUM.
(a)(1) <<NOTE: Deadline.>> The Commodity Futures Trading Commission
and the Federal Energy Regulatory Commission shall, not later than 180
days after the date of the enactment of this Act, negotiate a memorandum
of understanding to establish procedures for--
(A) applying their respective authorities in a manner so as
to ensure effective and efficient regulation in the public
interest;
(B) resolving conflicts concerning overlapping jurisdiction
between the 2 agencies; and
(C) avoiding, to the extent possible, conflicting or
duplicative regulation.
[[Page 124 STAT. 1658]]
(2) Such memorandum and any subsequent amendments to the memorandum
shall be promptly submitted to the appropriate committees of Congress.
(b) <<NOTE: Deadline.>> The Commodity Futures Trading Commission and
the Federal Energy Regulatory Commission shall, not later than 180 days
after the date of the enactment of this section, negotiate a memorandum
of understanding to share information that may be requested where either
Commission is conducting an investigation into potential manipulation,
fraud, or market power abuse in markets subject to such Commission's
regulation or oversight. Shared information shall remain subject to the
same restrictions on disclosure applicable to the Commission initially
holding the information.
PART II--REGULATION OF SWAP MARKETS
SEC. 721. DEFINITIONS.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a) is amended--
(1) by redesignating paragraphs (2), (3) and (4), (5)
through (17), (18) through (23), (24) through (28), (29), (30),
(31) through (33), and (34) as paragraphs (6), (8) and (9), (11)
through (23), (26) through (31), (34) through (38), (40), (41),
(44) through (46), and (51), respectively;
(2) by inserting after paragraph (1) the following:
``(2) Appropriate federal banking agency.--The term
`appropriate Federal banking agency'--
``(A) has the meaning given the term in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813);
``(B) means the Board in the case of a noninsured
State bank; and
``(C) is the Farm Credit Administration for farm
credit system institutions.
``(3) Associated person of a security-based swap dealer or
major security-based swap participant.--The term `associated
person of a security-based swap dealer or major security-based
swap participant' has the meaning given the term in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(4) Associated person of a swap dealer or major swap
participant.--
``(A) In general.--The term `associated person of a
swap dealer or major swap participant' means a person
who is associated with a swap dealer or major swap
participant as a partner, officer, employee, or agent
(or any person occupying a similar status or performing
similar functions), in any capacity that involves--
``(i) the solicitation or acceptance of swaps;
or
``(ii) the supervision of any person or
persons so engaged.
``(B) Exclusion.--Other than for purposes of section
4s(b)(6), the term `associated person of a swap dealer
or major swap participant' does not include any person
associated with a swap dealer or major swap participant
the functions of which are solely clerical or
ministerial.
``(5) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.'';
[[Page 124 STAT. 1659]]
(3) by inserting after paragraph (6) (as redesignated by
paragraph (1)) the following:
``(7) Cleared swap.--The term `cleared swap' means any swap
that is, directly or indirectly, submitted to and cleared by a
derivatives clearing organization registered with the
Commission.'';
(4) in paragraph (9) (as redesignated by paragraph (1)), by
striking ``except onions'' and all that follows through the
period at the end and inserting the following: ``except onions
(as provided by the first section of Public Law 85-839 (7 U.S.C.
13-1)) and motion picture box office receipts (or any index,
measure, value, or data related to such receipts), and all
services, rights, and interests (except motion picture box
office receipts, or any index, measure, value or data related to
such receipts) in which contracts for future delivery are
presently or in the future dealt in.'';
(5) by inserting after paragraph (9) (as redesignated by
paragraph (1)) the following:
``(10) Commodity pool.--
``(A) In general.--The term `commodity pool' means
any investment trust, syndicate, or similar form of
enterprise operated for the purpose of trading in
commodity interests, including any--
``(i) commodity for future delivery, security
futures product, or swap;
``(ii) agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(iii) commodity option authorized under
section 4c; or
``(iv) leverage transaction authorized under
section 19.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `commodity pool' any investment trust, syndicate,
or similar form of enterprise if the Commission
determines that the rule or regulation will effectuate
the purposes of this Act.'';
(6) by striking paragraph (11) (as redesignated by paragraph
(1)) and inserting the following:
``(11) Commodity pool operator.--
``(A) In general.--The term `commodity pool
operator' means any person--
``(i) engaged in a business that is of the
nature of a commodity pool, investment trust,
syndicate, or similar form of enterprise, and who,
in connection therewith, solicits, accepts, or
receives from others, funds, securities, or
property, either directly or through capital
contributions, the sale of stock or other forms of
securities, or otherwise, for the purpose of
trading in commodity interests, including any--
``(I) commodity for future delivery,
security futures product, or swap;
``(II) agreement, contract, or
transaction described in section
2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(III) commodity option authorized
under section 4c; or
[[Page 124 STAT. 1660]]
``(IV) leverage transaction
authorized under section 19; or
``(ii) who is registered with the Commission
as a commodity pool operator.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `commodity pool operator' any person engaged in a
business that is of the nature of a commodity pool,
investment trust, syndicate, or similar form of
enterprise if the Commission determines that the rule or
regulation will effectuate the purposes of this Act.'';
(7) in paragraph (12) (as redesignated by paragraph (1)), in
subparagraph (A)--
(A) in clause (i)--
(i) in subclause (I), by striking ``made or to
be made on or subject to the rules of a contract
market or derivatives transaction execution
facility'' and inserting ``, security futures
product, or swap'';
(ii) by redesignating subclauses (II) and
(III) as subclauses (III) and (IV);
(iii) by inserting after subclause (I) the
following:
``(II) any agreement, contract, or
transaction described in section
2(c)(2)(C)(i) or section
2(c)(2)(D)(i)''; and
(iv) in subclause (IV) (as so redesignated),
by striking ``or'';
(B) in clause (ii), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following:
``(iii) is registered with the Commission as a
commodity trading advisor; or
``(iv) the Commission, by rule or regulation,
may include if the Commission determines that the
rule or regulation will effectuate the purposes of
this Act.'';
(8) in paragraph (17) (as redesignated by paragraph (1)), in
subparagraph (A), in the matter preceding clause (i), by
striking ``paragraph (12)(A)'' and inserting ``paragraph
(18)(A)'';
(9) in paragraph (18) (as redesignated by paragraph (1))--
(A) in subparagraph (A)--
(i) in the matter following clause
(vii)(III)--
(I) by striking ``section 1a
(11)(A)'' and inserting ``paragraph
(17)(A)''; and
(II) by striking ``$25,000,000'' and
inserting ``$50,000,000''; and
(ii) in clause (xi), in the matter preceding
subclause (I), by striking ``total assets in an
amount'' and inserting ``amounts invested on a
discretionary basis, the aggregate of which is'';
(10) by striking paragraph (22) (as redesignated by
paragraph (1)) and inserting the following:
``(22) Floor broker.--
``(A) In general.--The term `floor broker' means any
person--
``(i) who, in or surrounding any pit, ring,
post, or other place provided by a contract market
for the meeting of persons similarly engaged,
shall purchase or sell for any other person--
[[Page 124 STAT. 1661]]
``(I) any commodity for future
delivery, security futures product, or
swap; or
``(II) any commodity option
authorized under section 4c; or
``(ii) who is registered with the Commission
as a floor broker.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `floor broker' any person in or surrounding any
pit, ring, post, or other place provided by a contract
market for the meeting of persons similarly engaged who
trades for any other person if the Commission determines
that the rule or regulation will effectuate the purposes
of this Act.'';
(11) by striking paragraph (23) (as redesignated by
paragraph (1)) and inserting the following:
``(23) Floor trader.--
``(A) In general.--The term `floor trader' means any
person--
``(i) who, in or surrounding any pit, ring,
post, or other place provided by a contract market
for the meeting of persons similarly engaged,
purchases, or sells solely for such person's own
account--
``(I) any commodity for future
delivery, security futures product, or
swap; or
``(II) any commodity option
authorized under section 4c; or
``(ii) who is registered with the Commission
as a floor trader.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `floor trader' any person in or surrounding any
pit, ring, post, or other place provided by a contract
market for the meeting of persons similarly engaged who
trades solely for such person's own account if the
Commission determines that the rule or regulation will
effectuate the purposes of this Act.'';
(12) by inserting after paragraph (23) (as redesignated by
paragraph (1)) the following:
``(24) Foreign exchange forward.--The term `foreign exchange
forward' means a transaction that solely involves the exchange
of 2 different currencies on a specific future date at a fixed
rate agreed upon on the inception of the contract covering the
exchange.
``(25) Foreign exchange swap.--The term `foreign exchange
swap' means a transaction that solely involves--
``(A) an exchange of 2 different currencies on a
specific date at a fixed rate that is agreed upon on the
inception of the contract covering the exchange; and
``(B) a reverse exchange of the 2 currencies
described in subparagraph (A) at a later date and at a
fixed rate that is agreed upon on the inception of the
contract covering the exchange.'';
(13) by striking paragraph (28) (as redesignated by
paragraph (1)) and inserting the following:
``(28) Futures commission merchant.--
[[Page 124 STAT. 1662]]
``(A) In general.--The term `futures commission
merchant' means an individual, association, partnership,
corporation, or trust--
``(i) that--
``(I) is--
``(aa) engaged in soliciting
or in accepting orders for--
``(AA) the purchase or
sale of a commodity for
future delivery;
``(BB) a security
futures product;
``(CC) a swap;
``(DD) any agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(EE) any commodity
option authorized under
section 4c; or
``(FF) any leverage
transaction authorized under
section 19; or
``(bb) acting as a
counterparty in any agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or section
2(c)(2)(D)(i); and
``(II) in or in connection with the
activities described in items (aa) or
(bb) of subclause (I), accepts any
money, securities, or property (or
extends credit in lieu thereof) to
margin, guarantee, or secure any trades
or contracts that result or may result
therefrom; or
``(ii) that is registered with the Commission
as a futures commission merchant.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `futures commission merchant' any person who
engages in soliciting or accepting orders for, or acting
as a counterparty in, any agreement, contract, or
transaction subject to this Act, and who accepts any
money, securities, or property (or extends credit in
lieu thereof) to margin, guarantee, or secure any trades
or contracts that result or may result therefrom, if the
Commission determines that the rule or regulation will
effectuate the purposes of this Act.'';
(14) in paragraph (30) (as redesignated by paragraph (1)),
in subparagraph (B), by striking ``state'' and inserting
``State'';
(15) by striking paragraph (31) (as redesignated by
paragraph (1)) and inserting the following:
``(31) Introducing broker.--
``(A) In general.--The term `introducing broker'
means any person (except an individual who elects to be
and is registered as an associated person of a futures
commission merchant)--
``(i) who--
``(I) is engaged in soliciting or in
accepting orders for--
``(aa) the purchase or sale
of any commodity for future
delivery, security futures
product, or swap;
[[Page 124 STAT. 1663]]
``(bb) any agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(cc) any commodity option
authorized under section 4c; or
``(dd) any leverage
transaction authorized under
section 19; and
``(II) does not accept any money,
securities, or property (or extend
credit in lieu thereof) to margin,
guarantee, or secure any trades or
contracts that result or may result
therefrom; or
``(ii) who is registered with the Commission
as an introducing broker.
``(B) Further definition.--The Commission, by rule
or regulation, may include within, or exclude from, the
term `introducing broker' any person who engages in
soliciting or accepting orders for any agreement,
contract, or transaction subject to this Act, and who
does not accept any money, securities, or property (or
extend credit in lieu thereof) to margin, guarantee, or
secure any trades or contracts that result or may result
therefrom, if the Commission determines that the rule or
regulation will effectuate the purposes of this Act.'';
(16) by inserting after paragraph (31) (as redesignated by
paragraph (1)) the following:
``(32) Major security-based swap participant.--The term
`major security-based swap participant' has the meaning given
the term in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)).
``(33) Major swap participant.--
``(A) In general.--The term `major swap participant'
means any person who is not a swap dealer, and--
``(i) maintains a substantial position in
swaps for any of the major swap categories as
determined by the Commission, excluding--
``(I) positions held for hedging or
mitigating commercial risk; and
``(II) positions maintained by any
employee benefit plan (or any contract
held by such a plan) as defined in
paragraphs (3) and (32) of section 3 of
the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002) for the
primary purpose of hedging or mitigating
any risk directly associated with the
operation of the plan;
``(ii) whose outstanding swaps create
substantial counterparty exposure that could have
serious adverse effects on the financial stability
of the United States banking system or financial
markets; or
``(iii)(I) is a financial entity that is
highly leveraged relative to the amount of capital
it holds and that is not subject to capital
requirements established by an appropriate Federal
banking agency; and
``(II) maintains a substantial position in
outstanding swaps in any major swap category as
determined by the Commission.
``(B) <<NOTE: Regulations.>> Definition of
substantial position.--For purposes of subparagraph (A),
the Commission shall define
[[Page 124 STAT. 1664]]
by rule or regulation the term `substantial position' at
the threshold that the Commission determines to be
prudent for the effective monitoring, management, and
oversight of entities that are systemically important or
can significantly impact the financial system of the
United States. In setting the definition under this
subparagraph, the Commission shall consider the person's
relative position in uncleared as opposed to cleared
swaps and may take into consideration the value and
quality of collateral held against counterparty
exposures.
``(C) Scope of designation.--For purposes of
subparagraph (A), a person may be designated as a major
swap participant for 1 or more categories of swaps
without being classified as a major swap participant for
all classes of swaps.
``(D) Exclusions.--The definition under this
paragraph shall not include an entity whose primary
business is providing financing, and uses derivatives
for the purpose of hedging underlying commercial risks
related to interest rate and foreign currency exposures,
90 percent or more of which arise from financing that
facilitates the purchase or lease of products, 90
percent or more of which are manufactured by the parent
company or another subsidiary of the parent company.'';
(17) by inserting after paragraph (38) (as redesignated by
paragraph (1)) the following:
``(39) Prudential regulator.--The term `prudential
regulator' means--
``(A) the Board in the case of a swap dealer, major
swap participant, security-based swap dealer, or major
security-based swap participant that is--
``(i) a State-chartered bank that is a member
of the Federal Reserve System;
``(ii) a State-chartered branch or agency of a
foreign bank;
``(iii) any foreign bank which does not
operate an insured branch;
``(iv) any organization operating under
section 25A of the Federal Reserve Act or having
an agreement with the Board under section 225 of
the Federal Reserve Act;
``(v) any bank holding company (as defined in
section 2 of the Bank Holding Company Act of 1965
(12 U.S.C. 1841)), any foreign bank (as defined in
section 1(b)(7) of the International Banking Act
of 1978 (12 U.S.C. 3101(b)(7)) that is treated as
a bank holding company under section 8(a) of the
International Banking Act of 1978 (12 U.S.C.
3106(a)), and any subsidiary of such a company or
foreign bank (other than a subsidiary that is
described in subparagraph (A) or (B) or that is
required to be registered with the Commission as a
swap dealer or major swap participant under this
Act or with the Securities and Exchange Commission
as a security-based swap dealer or major security-
based swap participant);
[[Page 124 STAT. 1665]]
``(vi) after the transfer date (as defined in
section 311 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act), any savings and loan
holding company (as defined in section 10 of the
Home Owners' Loan Act (12 U.S.C. 1467a)) and any
subsidiary of such company (other than a
subsidiary that is described in subparagraph (A)
or (B) or that is required to be registered as a
swap dealer or major swap participant with the
Commission under this Act or with the Securities
and Exchange Commission as a security-based swap
dealer or major security-based swap participant);
or
``(vii) any organization operating under
section 25A of the Federal Reserve Act (12U.S.C.
611 et seq.) or having an agreement with the Board
under section 25 of the Federal Reserve Act (12
U.S.C. 601 et seq.);
``(B) the Office of the Comptroller of the Currency
in the case of a swap dealer, major swap participant,
security-based swap dealer, or major security-based swap
participant that is--
``(i) a national bank;
``(ii) a federally chartered branch or agency
of a foreign bank; or
``(iii) any Federal savings association;
``(C) the Federal Deposit Insurance Corporation in
the case of a swap dealer, major swap participant,
security-based swap dealer, or major security-based swap
participant that is--
``(i) a State-chartered bank that is not a
member of the Federal Reserve System; or
``(ii) any State savings association;
``(D) the Farm Credit Administration, in the case of
a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant
that is an institution chartered under the Farm Credit
Act of 1971 (12 U.S.C. 2001 et seq.); and
``(E) the Federal Housing Finance Agency in the case
of a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant
that is a regulated entity (as such term is defined in
section 1303 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992).'';
(18) in paragraph (40) (as redesignated by paragraph (1))--
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D), and (E)
as subparagraphs (B), (C), and (F), respectively;
(C) in subparagraph (C) (as so redesignated), by
striking ``and''; and
(D) by inserting after subparagraph (C) (as so
redesignated) the following:
``(D) a swap execution facility registered under
section 5h;
``(E) a swap data repository registered under
section 21; and'';
(19) by inserting after paragraph (41) (as redesignated by
paragraph (1)) the following:
[[Page 124 STAT. 1666]]
``(42) Security-based swap.--The term `security-based swap'
has the meaning given the term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(43) Security-based swap dealer.--The term `security-based
swap dealer' has the meaning given the term in section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).'';
(20) in paragraph (46) (as redesignated by paragraph (1)),
by striking ``subject to section 2(h)(7)'' and inserting
``subject to section 2(h)(5)'';
(21) by inserting after paragraph (46) (as redesignated by
paragraph (1)) the following:
``(47) Swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `swap' means any agreement,
contract, or transaction--
``(i) that is a put, call, cap, floor, collar,
or similar option of any kind that is for the
purchase or sale, or based on the value, of 1 or
more interest or other rates, currencies,
commodities, securities, instruments of
indebtedness, indices, quantitative measures, or
other financial or economic interests or property
of any kind;
``(ii) that provides for any purchase, sale,
payment, or delivery (other than a dividend on an
equity security) that is dependent on the
occurrence, nonoccurrence, or the extent of the
occurrence of an event or contingency associated
with a potential financial, economic, or
commercial consequence;
``(iii) that provides on an executory basis
for the exchange, on a fixed or contingent basis,
of 1 or more payments based on the value or level
of 1 or more interest or other rates, currencies,
commodities, securities, instruments of
indebtedness, indices, quantitative measures, or
other financial or economic interests or property
of any kind, or any interest therein or based on
the value thereof, and that transfers, as between
the parties to the transaction, in whole or in
part, the financial risk associated with a future
change in any such value or level without also
conveying a current or future direct or indirect
ownership interest in an asset (including any
enterprise or investment pool) or liability that
incorporates the financial risk so transferred,
including any agreement, contract, or transaction
commonly known as--
``(I) an interest rate swap;
``(II) a rate floor;
``(III) a rate cap;
``(IV) a rate collar;
``(V) a cross-currency rate swap;
``(VI) a basis swap;
``(VII) a currency swap;
``(VIII) a foreign exchange swap;
``(IX) a total return swap;
``(X) an equity index swap;
``(XI) an equity swap;
``(XII) a debt index swap;
``(XIII) a debt swap;
[[Page 124 STAT. 1667]]
``(XIV) a credit spread;
``(XV) a credit default swap;
``(XVI) a credit swap;
``(XVII) a weather swap;
``(XVIII) an energy swap;
``(XIX) a metal swap;
``(XX) an agricultural swap;
``(XXI) an emissions swap; and
``(XXII) a commodity swap;
``(iv) that is an agreement, contract, or
transaction that is, or in the future becomes,
commonly known to the trade as a swap;
``(v) including any security-based swap
agreement which meets the definition of `swap
agreement' as defined in section 206A of the
Gramm-Leach-Bliley Act (15 U.S.C. 78c note) of
which a material term is based on the price,
yield, value, or volatility of any security or any
group or index of securities, or any interest
therein; or
``(vi) that is any combination or permutation
of, or option on, any agreement, contract, or
transaction described in any of clauses (i)
through (v).
``(B) Exclusions.--The term `swap' does not
include--
``(i) any contract of sale of a commodity for
future delivery (or option on such a contract),
leverage contract authorized under section 19,
security futures product, or agreement, contract,
or transaction described in section 2(c)(2)(C)(i)
or section 2(c)(2)(D)(i);
``(ii) any sale of a nonfinancial commodity or
security for deferred shipment or delivery, so
long as the transaction is intended to be
physically settled;
``(iii) any put, call, straddle, option, or
privilege on any security, certificate of deposit,
or group or index of securities, including any
interest therein or based on the value thereof,
that is subject to--
``(I) the Securities Act of 1933 (15
U.S.C. 77a et seq.); and
``(II) the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.);
``(iv) any put, call, straddle, option, or
privilege relating to a foreign currency entered
into on a national securities exchange registered
pursuant to section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78f(a));
``(v) any agreement, contract, or transaction
providing for the purchase or sale of 1 or more
securities on a fixed basis that is subject to--
``(I) the Securities Act of 1933 (15
U.S.C. 77a et seq.); and
``(II) the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.);
``(vi) any agreement, contract, or transaction
providing for the purchase or sale of 1 or more
securities on a contingent basis that is subject
to the Securities Act of 1933 (15 U.S.C. 77a et
seq.) and the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), unless the agreement,
contract, or transaction predicates the
[[Page 124 STAT. 1668]]
purchase or sale on the occurrence of a bona fide
contingency that might reasonably be expected to
affect or be affected by the creditworthiness of a
party other than a party to the agreement,
contract, or transaction;
``(vii) any note, bond, or evidence of
indebtedness that is a security, as defined in
section 2(a)(1) of the Securities Act of 1933 (15
U.S.C. 77b(a)(1));
``(viii) any agreement, contract, or
transaction that is--
``(I) based on a security; and
``(II) entered into directly or
through an underwriter (as defined in
section 2(a)(11) of the Securities Act
of 1933 (15 U.S.C. 77b(a)(11)) by the
issuer of such security for the purposes
of raising capital, unless the
agreement, contract, or transaction is
entered into to manage a risk associated
with capital raising;
``(ix) any agreement, contract, or transaction
a counterparty of which is a Federal Reserve bank,
the Federal Government, or a Federal agency that
is expressly backed by the full faith and credit
of the United States; and
``(x) any security-based swap, other than a
security-based swap as described in subparagraph
(D).
``(C) Rule of construction regarding master
agreements.--
``(i) In general.--Except as provided in
clause (ii), the term `swap' includes a master
agreement that provides for an agreement,
contract, or transaction that is a swap under
subparagraph (A), together with each supplement to
any master agreement, without regard to whether
the master agreement contains an agreement,
contract, or transaction that is not a swap
pursuant to subparagraph (A).
``(ii) Exception.--For purposes of clause (i),
the master agreement shall be considered to be a
swap only with respect to each agreement,
contract, or transaction covered by the master
agreement that is a swap pursuant to subparagraph
(A).
``(D) Mixed swap.--The term `security-based swap'
includes any agreement, contract, or transaction that is
as described in section 3(a)(68)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and also
is based on the value of 1 or more interest or other
rates, currencies, commodities, instruments of
indebtedness, indices, quantitative measures, other
financial or economic interest or property of any kind
(other than a single security or a narrow-based security
index), or the occurrence, non-occurrence, or the extent
of the occurrence of an event or contingency associated
with a potential financial, economic, or commercial
consequence (other than an event described in
subparagraph (A)(iii)).
``(E) Treatment of foreign exchange swaps and
forwards.--
``(i) In <<NOTE: Determination.>> general.--
Foreign exchange swaps and foreign exchange
forwards shall be considered swaps under this
paragraph unless the Secretary makes a
[[Page 124 STAT. 1669]]
written determination under section 1b that either
foreign exchange swaps or foreign exchange
forwards or both--
``(I) should be not be regulated as
swaps under this Act; and
``(II) are not structured to evade
the Dodd-Frank Wall Street Reform and
Consumer Protection Act in violation of
any rule promulgated by the Commission
pursuant to section 721(c) of that Act.
``(ii) Congressional notice; effectiveness.--
The Secretary shall submit any written
determination under clause (i) to the appropriate
committees of Congress, including the Committee on
Agriculture, Nutrition, and Forestry of the Senate
and the Committee on Agriculture of the House of
Representatives. Any such written determination by
the Secretary shall not be effective until it is
submitted to the appropriate committees of
Congress.
``(iii) Reporting.--Notwithstanding a written
determination by the Secretary under clause (i),
all foreign exchange swaps and foreign exchange
forwards shall be reported to either a swap data
repository, or, if there is no swap data
repository that would accept such swaps or
forwards, to the Commission pursuant to section 4r
within such time period as the Commission may by
rule or regulation prescribe.
``(iv) Business standards.--Notwithstanding a
written determination by the Secretary pursuant to
clause (i), any party to a foreign exchange swap
or forward that is a swap dealer or major swap
participant shall conform to the business conduct
standards contained in section 4s(h).
``(v) Secretary.--For purposes of this
subparagraph, the term `Secretary' means the
Secretary of the Treasury.
``(F) Exception for certain foreign exchange swaps
and forwards.--
``(i) Registered entities.--Any foreign
exchange swap and any foreign exchange forward
that is listed and traded on or subject to the
rules of a designated contract market or a swap
execution facility, or that is cleared by a
derivatives clearing organization, shall not be
exempt from any provision of this Act or
amendments made by the Wall Street Transparency
and Accountability Act of 2010 prohibiting fraud
or manipulation.
``(ii) Retail transactions.--Nothing in
subparagraph (E) shall affect, or be construed to
affect, the applicability of this Act or the
jurisdiction of the Commission with respect to
agreements, contracts, or transactions in foreign
currency pursuant to section 2(c)(2).
``(48) Swap data repository.--The term `swap data
repository' means any person that collects and maintains
information or records with respect to transactions or positions
in, or the terms and conditions of, swaps entered into by third
parties
[[Page 124 STAT. 1670]]
for the purpose of providing a centralized recordkeeping
facility for swaps.
``(49) Swap dealer.--
``(A) In general.--The term `swap dealer' means any
person who--
``(i) holds itself out as a dealer in swaps;
``(ii) makes a market in swaps;
``(iii) regularly enters into swaps with
counterparties as an ordinary course of business
for its own account; or
``(iv) engages in any activity causing the
person to be commonly known in the trade as a
dealer or market maker in swaps,
provided however, in no event shall an insured
depository institution be considered to be a swap dealer
to the extent it offers to enter into a swap with a
customer in connection with originating a loan with that
customer.
``(B) Inclusion.--A person may be designated as a
swap dealer for a single type or single class or
category of swap or activities and considered not to be
a swap dealer for other types, classes, or categories of
swaps or activities.
``(C) Exception.--The term `swap dealer' does not
include a person that enters into swaps for such
person's own account, either individually or in a
fiduciary capacity, but not as a part of a regular
business.
``(D) De minimis exception.--The Commission shall
exempt from designation as a swap dealer an entity that
engages in a de minimis quantity of swap dealing in
connection with transactions with or on behalf of its
customers. The Commission shall promulgate regulations
to establish factors with respect to the making of this
determination to exempt.
``(50) Swap execution facility.--The term `swap execution
facility' means a trading system or platform in which multiple
participants have the ability to execute or trade swaps by
accepting bids and offers made by multiple participants in the
facility or system, through any means of interstate commerce,
including any trading facility, that--
``(A) facilitates the execution of swaps between
persons; and
``(B) is not a designated contract market.''.
(22) in paragraph (51) (as redesignated by paragraph (1)),
in subparagraph (A)(i), by striking ``partipants'' and inserting
``participants''.
(b) Authority <<NOTE: 15 USC 8321.>> To Define Terms.--The
Commodity Futures Trading Commission may adopt a rule to define--
(1) the term ``commercial risk''; and
(2) any other term included in an amendment to the Commodity
Exchange Act (7 U.S.C. 1 et seq.) made by this subtitle.
(c) Modification <<NOTE: 15 USC 8321.>> of Definitions.--To include
transactions and entities that have been structured to evade this
subtitle (or an amendment made by this subtitle), the Commodity Futures
Trading Commission shall adopt a rule to further define the terms
``swap'', ``swap dealer'', ``major swap participant'', and ``eligible
contract participant''.
[[Page 124 STAT. 1671]]
(d) Exemptions.--Section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) is amended by striking ``except that'' and all that
follows through the period at the end and inserting the following:
``except that--
``(A) unless the Commission is expressly authorized by any
provision described in this subparagraph to grant exemptions,
with respect to amendments made by subtitle A of the Wall Street
Transparency and Accountability Act of 2010--
``(i) with respect to--
``(I) paragraphs (2), (3), (4), (5), and (7),
paragraph (18)(A)(vii)(III), paragraphs (23),
(24), (31), (32), (38), (39), (41), (42), (46),
(47), (48), and (49) of section 1a, and sections
2(a)(13), 2(c)(1)(D), 4a(a), 4a(b), 4d(c), 4d(d),
4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c),
5b(i), 8e, and 21; and
``(II) section 206(e) of the Gramm-Leach-
Bliley Act (Public Law 106-102; 15 U.S.C. 78c
note); and
``(ii) in sections 721(c) and 742 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act; and
``(B) the Commission and the Securities and Exchange
Commission may by rule, regulation, or order jointly exclude any
agreement, contract, or transaction from section 2(a)(1)(D)) if
the Commissions determine that the exemption would be consistent
with the public interest.''.
(e) Conforming Amendments.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (cc)--
(i) in subitem (AA), by striking ``section
1a(20)'' and inserting ``section 1a''; and
(ii) in subitem (BB), by striking ``section
1a(20)'' and inserting ``section 1a''; and
(B) in item (dd), by striking ``section
1a(12)(A)(ii)'' and inserting ``section 1a(18)(A)(ii)''.
(2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended by striking ``section 1a(6)'' and inserting
``section 1a''.
(3) Section 4q(a)(1) of the Commodity Exchange Act (7 U.S.C.
6o-1(a)(1)) is <<NOTE: 7 USC 6q.>> amended by striking
``section 1a(4)'' and inserting ``section 1a(9)''.
(4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C.
7(e)(1)) is amended by striking ``section 1a(4)'' and inserting
``section 1a(9)''.
(5) Section 5a(b)(2)(F) of the Commodity Exchange Act (7
U.S.C. 7a(b)(2)(F)) is amended by striking ``section 1a(4)'' and
inserting ``section 1a(9)''.
(6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C.
7a-1(a)) is amended, in the matter preceding paragraph (1), by
striking ``section 1a(9)'' and inserting ``section 1a''.
(7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 7a-2(c)(2)(B)) is amended by striking ``section 1a(4)''
and inserting ``section 1a(9)''.
(8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
(A) in subclause (I), by striking ``section
1a(12)(B)(ii)'' and inserting ``section 1a(18)(B)(ii)'';
and
[[Page 124 STAT. 1672]]
(B) in subclause (II), by striking ``section
1a(12)'' and inserting ``section 1a(18)''.
(9) Section 402 of the Legal Certainty for Bank Products Act
of 2000 <<NOTE: 7 USC 27.>> (7 U.S.C. 27 et seq.) is amended--
(A) in subsection (a)(7), by striking ``section
1a(20)'' and inserting ``section 1a'';
(B) in subsection (b)(2), by striking ``section
1a(12)'' and inserting ``section 1a''; and
(C) in subsection (c), by striking ``section 1a(4)''
and inserting ``section 1a''.
(10) The first section of Public Law 85-839 (7 U.S.C. 13-1)
is amended in subsection (a), in the first sentence, by
inserting ``motion picture box office receipts (or any index,
measure, value, or data related to such receipts) or'' after
``sale of''.
(f) <<NOTE: 7 USC 1a note.>> Effective Date.--Notwithstanding any
other provision of this Act, the amendments made by subsection (a)(4)
shall take effect on June 1, 2010.
SEC. 722. JURISDICTION.
(a) Exclusive Jurisdiction.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended--
(1) in subparagraph (A), in the first sentence--
(A) by inserting ``the Wall Street Transparency and
Accountability Act of 2010 (including an amendment made
by that Act) and'' after ``otherwise provided in'';
(B) by striking ``(C) and (D)'' and inserting ``(C),
(D), and (I)'';
(C) by striking ``(c) through (i) of this section''
and inserting ``(c) and (f)'';
(D) by striking ``contracts of sale'' and inserting
``swaps or contracts of sale''; and
(E) by striking ``or derivatives transaction
execution facility registered pursuant to section 5 or
5a'' and inserting ``pursuant to section 5 or a swap
execution facility pursuant to section 5h''; and
(2) by adding at the end the following:
``(G)(i) Nothing in this paragraph shall limit the
jurisdiction conferred on the Securities and Exchange
Commission by the Wall Street Transparency and
Accountability Act of 2010 with regard to security-based
swap agreements as defined pursuant to section 3(a)(78)
of the Securities Exchange Act of 1934, and security-
based swaps.
``(ii) In addition to the authority of the
Securities and Exchange Commission described in clause
(i), nothing in this subparagraph shall limit or affect
any statutory authority of the Commission with respect
to an agreement, contract, or transaction described in
clause (i).
``(H) Notwithstanding any other provision of law,
the Wall Street Transparency and Accountability Act of
2010 shall not apply to, and the Commodity Futures
Trading Commission shall have no jurisdiction under such
Act (or any amendments to the Commodity Exchange Act
made by such Act) with respect to, any security other
than a security-based swap.''.
[[Page 124 STAT. 1673]]
(b) Regulation of Swaps Under Federal and State Law.--Section 12 of
the Commodity Exchange Act (7 U.S.C. 16) is amended by adding at the end
the following:
``(h) Regulation of Swaps as Insurance Under State Law.--A swap--
``(1) shall not be considered to be insurance; and
``(2) may not be regulated as an insurance contract under
the law of any State.''.
(c) Agreements, Contracts, and Transactions Traded on an Organized
Exchange.--Section 2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)(A)) is amended--
(1) in clause (i), by striking ``or'' at the end;
(2) by redesignating clause (ii) as clause (iii); and
(3) by inserting after clause (i) the following:
``(ii) a swap; or''.
(d) Applicability.--Section 2 of the Commodity Exchange Act (7
U.S.C. 2) (as amended by section 723(a)(3)) is amended by adding at the
end the following:
``(i) Applicability.--The provisions of this Act relating to swaps
that were enacted by the Wall Street Transparency and Accountability Act
of 2010 (including any rule prescribed or regulation promulgated under
that Act), shall not apply to activities outside the United States
unless those activities--
``(1) have a direct and significant connection with
activities in, or effect on, commerce of the United States; or
``(2) contravene such rules or regulations as the Commission
may prescribe or promulgate as are necessary or appropriate to
prevent the evasion of any provision of this Act that was
enacted by the Wall Street Transparency and Accountability Act
of 2010.''.
(e) Federal Energy Regulatory Commission.--Section 2(a)(1) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the
end the following:
``(I)(i) Nothing in this Act shall limit or affect
any statutory authority of the Federal Energy Regulatory
Commission or a State regulatory authority (as defined
in section 3(21) of the Federal Power Act (16 U.S.C.
796(21)) with respect to an agreement, contract, or
transaction that is entered into pursuant to a tariff or
rate schedule approved by the Federal Energy Regulatory
Commission or a State regulatory authority and is--
``(I) not executed, traded, or cleared on a
registered entity or trading facility; or
``(II) executed, traded, or cleared on a
registered entity or trading facility owned or
operated by a regional transmission organization
or independent system operator.
``(ii) In addition to the authority of the Federal
Energy Regulatory Commission or a State regulatory
authority described in clause (i), nothing in this
subparagraph shall limit or affect--
``(I) any statutory authority of the
Commission with respect to an agreement, contract,
or transaction described in clause (i); or
``(II) the jurisdiction of the Commission
under subparagraph (A) with respect to an
agreement, contract, or transaction that is
executed, traded, or cleared
[[Page 124 STAT. 1674]]
on a registered entity or trading facility that is
not owned or operated by a regional transmission
organization or independent system operator (as
defined by sections 3(27) and (28) of the Federal
Power Act (16 U.S.C. 796(27), 796(28)).''.
(f) Public Interest Waiver.--Section 4(c) of the Commodity Exchange
Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is amended by adding
at the end the following:
``(6) If the Commission determines that the exemption would
be consistent with the public interest and the purposes of this
Act, the Commission shall, in accordance with paragraphs (1) and
(2), exempt from the requirements of this Act an agreement,
contract, or transaction that is entered into--
``(A) pursuant to a tariff or rate schedule approved
or permitted to take effect by the Federal Energy
Regulatory Commission;
``(B) pursuant to a tariff or rate schedule
establishing rates or charges for, or protocols
governing, the sale of electric energy approved or
permitted to take effect by the regulatory authority of
the State or municipality having jurisdiction to
regulate rates and charges for the sale of electric
energy within the State or municipality; or
``(C) between entities described in section 201(f)
of the Federal Power Act (16 U.S.C. 824(f)).''.
(g) <<NOTE: 15 USC 8322.>> Authority of FERC.--Nothing in the Wall
Street Transparency and Accountability Act of 2010 or the amendments to
the Commodity Exchange Act made by such Act shall limit or affect any
statutory enforcement authority of the Federal Energy Regulatory
Commission pursuant to section 222 of the Federal Power Act and section
4A of the Natural Gas Act that existed prior to the date of enactment of
the Wall Street Transparency and Accountability Act of 2010.
(h) Determination.--The Commodity Exchange Act is amended by
inserting after section 1a (7 U.S.C. 1a) the following:
``SEC. 1b. <<NOTE: 7 USC 1b.>> REQUIREMENTS OF SECRETARY OF THE
TREASURY REGARDING EXEMPTION OF FOREIGN
EXCHANGE SWAPS AND FOREIGN EXCHANGE FORWARDS
FROM DEFINITION OF THE TERM `SWAP'.
``(a) Required Considerations.--In determining whether to exempt
foreign exchange swaps and foreign exchange forwards from the definition
of the term `swap', the Secretary of the Treasury (referred to in this
section as the `Secretary') shall consider--
``(1) whether the required trading and clearing of foreign
exchange swaps and foreign exchange forwards would create
systemic risk, lower transparency, or threaten the financial
stability of the United States;
``(2) whether foreign exchange swaps and foreign exchange
forwards are already subject to a regulatory scheme that is
materially comparable to that established by this Act for other
classes of swaps;
``(3) the extent to which bank regulators of participants in
the foreign exchange market provide adequate supervision,
including capital and margin requirements;
``(4) the extent of adequate payment and settlement systems;
and
[[Page 124 STAT. 1675]]
``(5) the use of a potential exemption of foreign exchange
swaps and foreign exchange forwards to evade otherwise
applicable regulatory requirements.
``(b) Determination.--If the Secretary makes a determination to
exempt foreign exchange swaps and foreign exchange forwards from the
definition of the term `swap', the Secretary shall submit to the
appropriate committees of Congress a determination that contains--
``(1) an explanation regarding why foreign exchange swaps
and foreign exchange forwards are qualitatively different from
other classes of swaps in a way that would make the foreign
exchange swaps and foreign exchange forwards ill-suited for
regulation as swaps; and
``(2) an identification of the objective differences of
foreign exchange swaps and foreign exchange forwards with
respect to standard swaps that warrant an exempted status.
``(c) Effect of Determination.--A determination by the Secretary
under subsection (b) shall not exempt any foreign exchange swaps and
foreign exchange forwards traded on a designated contract market or swap
execution facility from any applicable antifraud and antimanipulation
provision under this title.''.
SEC. 723. CLEARING.
(a) Clearing Requirement.--
(1) In general.--Section 2 of the Commodity Exchange Act (7
U.S.C. 2) is amended--
(A) by striking subsections (d), (e), (g), and (h);
and
(B) by redesignating subsection (i) as subsection
(g).
(2) Swaps; limitation on participation.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph
(1)) is amended by inserting after subsection (c) the following:
``(d) Swaps.--Nothing in this Act (other than subparagraphs (A),
(B), (C), (D), (G), and (H) of subsection (a)(1), subsections (f) and
(g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a, 4b,
and 4b-1, subsections (a), (b), and (g) of section 4c, sections 4d, 4e,
4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e,
and 5h, subsections (c) and (d) of section 6, sections 6c, 6d, 8, 8a,
and 9, subsections (e)(2), (f), and (h) of section 12, subsections (a)
and (b) of section 13, sections 17, 20, 21, and 22(a)(4), and any other
provision of this Act that is applicable to registered entities or
Commission registrants) governs or applies to a swap.
``(e) Limitation on Participation.--It shall be unlawful for any
person, other than an eligible contract participant, to enter into a
swap unless the swap is entered into on, or subject to the rules of, a
board of trade designated as a contract market under section 5.''.
(3) Mandatory clearing of swaps.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended by inserting after
subsection (g) (as redesignated by paragraph (1)(B)) the
following:
``(h) Clearing Requirement.--
``(1) In general.--
``(A) Standard for clearing.--It shall be unlawful
for any person to engage in a swap unless that person
submits such swap for clearing to a derivatives clearing
[[Page 124 STAT. 1676]]
organization that is registered under this Act or a
derivatives clearing organization that is exempt from
registration under this Act if the swap is required to
be cleared.
``(B) Open access.--The rules of a derivatives
clearing organization described in subparagraph (A)
shall--
``(i) prescribe that all swaps (but not
contracts of sale of a commodity for future
delivery or options on such contracts) submitted
to the derivatives clearing organization with the
same terms and conditions are economically
equivalent within the derivatives clearing
organization and may be offset with each other
within the derivatives clearing organization; and
``(ii) provide for non-discriminatory clearing
of a swap (but not a contract of sale of a
commodity for future delivery or option on such
contract) executed bilaterally or on or through
the rules of an unaffiliated designated contract
market or swap execution facility.
``(2) Commission review.--
``(A) Commission-initiated review.--
``(i) The Commission on an ongoing basis shall
review each swap, or any group, category, type, or
class of swaps to make a determination as to
whether the swap or group, category, type, or
class of swaps should be required to be cleared.
``(ii) <<NOTE: Public comment. Time period.>>
The Commission shall provide at least a 30-day
public comment period regarding any determination
made under clause (i).
``(B) Swap submissions.--
``(i) <<NOTE: Notice.>> A derivatives
clearing organization shall submit to the
Commission each swap, or any group, category,
type, or class of swaps that it plans to accept
for clearing, and provide notice to its members
(in a manner to be determined by the Commission)
of the submission.
``(ii) Any swap or group, category, type, or
class of swaps listed for clearing by a derivative
clearing organization as of the date of enactment
of this subsection shall be considered submitted
to the Commission.
``(iii) <<NOTE: Public information.>> The
Commission shall--
``(I) make available to the public
submissions received under clauses (i)
and (ii);
``(II) review each submission made
under clauses (i) and (ii), and
determine whether the swap, or group,
category, type, or class of swaps
described in the submission is required
to be cleared; and
``(III) <<NOTE: Public comment. Time
period.>> provide at least a 30-day
public comment period regarding its
determination as to whether the clearing
requirement under paragraph (1)(A) shall
apply to the submission.
``(C) Deadline.--The Commission shall make its
determination under subparagraph (B)(iii) not later than
90 days after receiving a submission made under
subparagraphs (B)(i) and (B)(ii), unless the submitting
derivatives clearing organization agrees to an extension
for the time limitation established under this
subparagraph.
[[Page 124 STAT. 1677]]
``(D) Determination.--
``(i) In reviewing a submission made under
subparagraph (B), the Commission shall review
whether the submission is consistent with section
5b(c)(2).
``(ii) In reviewing a swap, group of swaps, or
class of swaps pursuant to subparagraph (A) or a
submission made under subparagraph (B), the
Commission shall take into account the following
factors:
``(I) The existence of significant
outstanding notional exposures, trading
liquidity, and adequate pricing data.
``(II) The availability of rule
framework, capacity, operational
expertise and resources, and credit
support infrastructure to clear the
contract on terms that are consistent
with the material terms and trading
conventions on which the contract is
then traded.
``(III) The effect on the mitigation
of systemic risk, taking into account
the size of the market for such contract
and the resources of the derivatives
clearing organization available to clear
the contract.
``(IV) The effect on competition,
including appropriate fees and charges
applied to clearing.
``(V) The existence of reasonable
legal certainty in the event of the
insolvency of the relevant derivatives
clearing organization or 1 or more of
its clearing members with regard to the
treatment of customer and swap
counterparty positions, funds, and
property.
``(iii) In making a determination under
subparagraph (A) or (B)(iii) that the clearing
requirement shall apply, the Commission may
require such terms and conditions to the
requirement as the Commission determines to be
appropriate.
``(E) <<NOTE: Deadline.>> Rules.--Not later than 1
year after the date of the enactment of this subsection,
the Commission shall adopt rules for a derivatives
clearing organization's submission for review, pursuant
to this paragraph, of a swap, or a group, category,
type, or class of swaps, that it seeks to accept for
clearing. Nothing in this subparagraph limits the
Commission from making a determination under
subparagraph (B)(iii) for swaps described in
subparagraph (B)(ii).
``(3) Stay of clearing requirement.--
``(A) In general.--After making a determination
pursuant to paragraph (2)(B), the Commission, on
application of a counterparty to a swap or on its own
initiative, may stay the clearing requirement of
paragraph (1) until the Commission completes a review of
the terms of the swap (or the group, category, type, or
class of swaps) and the clearing arrangement.
``(B) Deadline.--The Commission shall complete a
review undertaken pursuant to subparagraph (A) not later
than 90 days after issuance of the stay, unless the
derivatives clearing organization that clears the swap,
or group,
[[Page 124 STAT. 1678]]
category, type, or class of swaps agrees to an extension
of the time limitation established under this
subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A), the Commission
may--
``(i) determine, unconditionally or subject to
such terms and conditions as the Commission
determines to be appropriate, that the swap, or
group, category, type, or class of swaps must be
cleared pursuant to this subsection if it finds
that such clearing is consistent with paragraph
(2)(D); or
``(ii) determine that the clearing requirement
of paragraph (1) shall not apply to the swap, or
group, category, type, or class of swaps.
``(D) <<NOTE: Deadline.>> Rules.--Not later than 1
year after the date of the enactment of the Wall Street
Transparency and Accountability Act of 2010, the
Commission shall adopt rules for reviewing, pursuant to
this paragraph, a derivatives clearing organization's
clearing of a swap, or a group, category, type, or class
of swaps, that it has accepted for clearing.
``(4) Prevention of evasion.--
``(A) <<NOTE: Regulations.>> In general.--The
Commission shall prescribe rules under this subsection
(and issue interpretations of rules prescribed under
this subsection) as determined by the Commission to be
necessary to prevent evasions of the mandatory clearing
requirements under this Act.
``(B) Duty of commission to investigate and take
certain actions.--To the extent the Commission finds
that a particular swap, group, category, type, or class
of swaps would otherwise be subject to mandatory
clearing but no derivatives clearing organization has
listed the swap, group, category, type, or class of
swaps for clearing, the Commission shall--
``(i) investigate the relevant facts and
circumstances;
``(ii) <<NOTE: Deadline. Public
information. Reports.>> within 30 days issue a
public report containing the results of the
investigation; and
``(iii) take such actions as the Commission
determines to be necessary and in the public
interest, which may include requiring the
retaining of adequate margin or capital by parties
to the swap, group, category, type, or class of
swaps.
``(C) Effect on authority.--Nothing in this
paragraph--
``(i) authorizes the Commission to adopt rules
requiring a derivatives clearing organization to
list for clearing a swap, group, category, type,
or class of swaps if the clearing of the swap,
group, category, type, or class of swaps would
threaten the financial integrity of the
derivatives clearing organization; and
``(ii) affects the authority of the Commission
to enforce the open access provisions of paragraph
(1)(B) with respect to a swap, group, category,
type, or class of swaps that is listed for
clearing by a derivatives clearing organization.
[[Page 124 STAT. 1679]]
``(5) Reporting transition rules.--Rules adopted by the
Commission under this section shall provide for the reporting of
data, as follows:
``(A) Swaps entered into before the date of the
enactment of this subsection shall be reported to a
registered swap data repository or the Commission no
later than 180 days after the effective date of this
subsection.
``(B) Swaps entered into on or after such date of
enactment shall be reported to a registered swap data
repository or the Commission no later than the later
of--
``(i) 90 days after such effective date; or
``(ii) such other time after entering into the
swap as the Commission may prescribe by rule or
regulation.
``(6) Clearing transition rules.--
``(A) Swaps entered into before the date of the
enactment of this subsection are exempt from the
clearing requirements of this subsection if reported
pursuant to paragraph (5)(A).
``(B) Swaps entered into before application of the
clearing requirement pursuant to this subsection are
exempt from the clearing requirements of this subsection
if reported pursuant to paragraph (5)(B).
``(7) Exceptions.--
``(A) In general.--The requirements of paragraph
(1)(A) shall not apply to a swap if 1 of the
counterparties to the swap--
``(i) is not a financial entity;
``(ii) is using swaps to hedge or mitigate
commercial risk; and
``(iii) <<NOTE: Notification.>> notifies the
Commission, in a manner set forth by the
Commission, how it generally meets its financial
obligations associated with entering into non-
cleared swaps.
``(B) Option to clear.--The application of the
clearing exception in subparagraph (A) is solely at the
discretion of the counterparty to the swap that meets
the conditions of clauses (i) through (iii) of
subparagraph (A).
``(C) Financial entity definition.--
``(i) In general.--For the purposes of this
paragraph, the term `financial entity' means--
``(I) a swap dealer;
``(II) a security-based swap dealer;
``(III) a major swap participant;
``(IV) a major security-based swap
participant;
``(V) a commodity pool;
``(VI) a private fund as defined in
section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80-b-
2(a));
``(VII) an employee benefit plan as
defined in paragraphs (3) and (32) of
section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C.
1002);
``(VIII) a person predominantly
engaged in activities that are in the
business of banking, or in activities
that are financial in nature, as defined
in section 4(k) of the Bank Holding
Company Act of 1956.
[[Page 124 STAT. 1680]]
``(ii) Exclusion.--The Commission shall
consider whether to exempt small banks, savings
associations, farm credit system institutions, and
credit unions, including--
``(I) depository institutions with
total assets of $10,000,000,000 or less;
``(II) farm credit system
institutions with total assets of
$10,000,000,000 or less; or
``(III) credit unions with total
assets of $10,000,000,000 or less.
``(iii) Limitation.--Such definition shall not
include an entity whose primary business is
providing financing, and uses derivatives for the
purpose of hedging underlying commercial risks
related to interest rate and foreign currency
exposures, 90 percent or more of which arise from
financing that facilitates the purchase or lease
of products, 90 percent or more of which are
manufactured by the parent company or another
subsidiary of the parent company.
``(D) Treatment of affiliates.--
``(i) In general.--An affiliate of a person
that qualifies for an exception under subparagraph
(A) (including affiliate entities predominantly
engaged in providing financing for the purchase of
the merchandise or manufactured goods of the
person) may qualify for the exception only if the
affiliate, acting on behalf of the person and as
an agent, uses the swap to hedge or mitigate the
commercial risk of the person or other affiliate
of the person that is not a financial entity.
``(ii) Prohibition relating to certain
affiliates.--The exception in clause (i) shall not
apply if the affiliate is--
``(I) a swap dealer;
``(II) a security-based swap dealer;
``(III) a major swap participant;
``(IV) a major security-based swap
participant;
``(V) an issuer that would be an
investment company, as defined in
section 3 of the Investment Company Act
of 1940 (15 U.S.C. 80a-3), but for
paragraph (1) or (7) of subsection (c)
of that Act (15 U.S.C. 80a-3(c));
``(VI) a commodity pool; or
``(VII) a bank holding company with
over $50,000,000,000 in consolidated
assets.
``(iii) Transition rule for affiliates.--
An <<NOTE: Exemption. Time period.>> affiliate,
subsidiary, or a wholly owned entity of a person
that qualifies for an exception under subparagraph
(A) and is predominantly engaged in providing
financing for the purchase or lease of merchandise
or manufactured goods of the person shall be
exempt from the margin requirement described in
section 4s(e) and the clearing requirement
described in paragraph (1) with regard to swaps
entered into to mitigate the risk of the financing
activities for not less than a 2-year period
beginning on the date of enactment of this clause.
``(E) Election of counterparty.--
[[Page 124 STAT. 1681]]
``(i) Swaps required to be cleared.--With
respect to any swap that is subject to the
mandatory clearing requirement under this
subsection and entered into by a swap dealer or a
major swap participant with a counterparty that is
not a swap dealer, major swap participant,
security-based swap dealer, or major security-
based swap participant, the counterparty shall
have the sole right to select the derivatives
clearing organization at which the swap will be
cleared.
``(ii) Swaps not required to be cleared.--With
respect to any swap that is not subject to the
mandatory clearing requirement under this
subsection and entered into by a swap dealer or a
major swap participant with a counterparty that is
not a swap dealer, major swap participant,
security-based swap dealer, or major security-
based swap participant, the counterparty--
``(I) may elect to require clearing
of the swap; and
``(II) shall have the sole right to
select the derivatives clearing
organization at which the swap will be
cleared.
``(F) Abuse of exception.--The Commission may
prescribe such rules or issue interpretations of the
rules as the Commission determines to be necessary to
prevent abuse of the exceptions described in this
paragraph. The Commission may also request information
from those persons claiming the clearing exception as
necessary to prevent abuse of the exceptions described
in this paragraph.
``(8) Trade execution.--
``(A) In general.--With respect to transactions
involving swaps subject to the clearing requirement of
paragraph (1), counterparties shall--
``(i) execute the transaction on a board of
trade designated as a contract market under
section 5; or
``(ii) execute the transaction on a swap
execution facility registered under 5h or a swap
execution facility that is exempt from
registration under section 5h(f) of this Act.
``(B) Exception.--The requirements of clauses (i)
and (ii) of subparagraph (A) shall not apply if no board
of trade or swap execution facility makes the swap
available to trade or for swap transactions subject to
the clearing exception under paragraph (7).''.
(b) Commodity Exchange Act.--Section 2 of the Commodity Exchange Act
(7 U.S.C. 2) is amended by adding at the end the following:
``(j) Committee Approval by Board.--Exemptions from the
requirements of subsection (h)(1) to clear a swap and subsection (h)(8)
to execute a swap through a board of trade or swap execution facility
shall be available to a counterparty that is an issuer of securities
that are registered under section 12 of the Securities Exchange Act of
1934 (15 U.S.C. 78l) or that is required to file reports pursuant to
section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
only if an appropriate committee of the issuer's board or governing body
has reviewed and approved its decision to enter into swaps that are
subject to such exemptions.''.
[[Page 124 STAT. 1682]]
(c) <<NOTE: 7 USC 2 note.>> Grandfather Provisions.--
(1) Legal certainty for certain transactions in exempt
commodities.--Not <<NOTE: Deadline.>> later than 60 days after
the date of enactment of this Act, a person may submit to the
Commodity Futures Trading Commission a petition to remain
subject to section 2(h) of the Commodity Exchange Act (7 U.S.C.
2(h)) (as in effect on the day before the date of enactment of
this Act).
(2) Consideration; authority of commodity futures trading
commission.--The Commodity Futures Trading Commission--
(A) shall consider any petition submitted under
subparagraph (A) in a prompt manner; and
(B) may allow a person to continue operating subject
to section 2(h) of the Commodity Exchange Act (7 U.S.C.
2(h)) (as in effect on the day before the date of
enactment of this Act) for not longer than a 1-year
period.
(3) Agricultural swaps.--
(A) In general.--Except as provided in subparagraph
(B), no person shall offer to enter into, enter into, or
confirm the execution of, any swap in an agricultural
commodity (as defined by the Commodity Futures Trading
Commission).
(B) <<NOTE: Regulations.>> Exception.--
Notwithstanding subparagraph (A), a person may offer to
enter into, enter into, or confirm the execution of, any
swap in an agricultural commodity pursuant to section
4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) or
any rule, regulation, or order issued thereunder
(including any rule, regulation, or order in effect as
of the date of enactment of this Act) by the Commodity
Futures Trading Commission to allow swaps under such
terms and conditions as the Commission shall prescribe.
(4) Required reporting.--If <<NOTE: Compliance. Records.>>
the exception described in section 2(h)(8)(B) of the Commodity
Exchange Act applies, the counterparties shall comply with any
recordkeeping and transaction reporting requirements that may be
prescribed by the Commission with respect to swaps subject to
section 2(h)(8)(B) of the Commodity Exchange Act.
SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.
(a) Segregation Requirements for Cleared Swaps.--Section 4d of the
Commodity Exchange Act (7 U.S.C. 6d) (as amended by section 732) is
amended by adding at the end the following:
``(f) Swaps.--
``(1) Registration requirement.--It shall be unlawful for
any person to accept any money, securities, or property (or to
extend any credit in lieu of money, securities, or property)
from, for, or on behalf of a swaps customer to margin,
guarantee, or secure a swap cleared by or through a derivatives
clearing organization (including money, securities, or property
accruing to the customer as the result of such a swap), unless
the person shall have registered under this Act with the
Commission as a futures commission merchant, and the
registration shall not have expired nor been suspended nor
revoked.
``(2) Cleared swaps.--
[[Page 124 STAT. 1683]]
``(A) Segregation required.--A futures commission
merchant shall treat and deal with all money,
securities, and property of any swaps customer received
to margin, guarantee, or secure a swap cleared by or
though a derivatives clearing organization (including
money, securities, or property accruing to the swaps
customer as the result of such a swap) as belonging to
the swaps customer.
``(B) Commingling prohibited.--Money, securities,
and property of a swaps customer described in
subparagraph (A) shall be separately accounted for and
shall not be commingled with the funds of the futures
commission merchant or be used to margin, secure, or
guarantee any trades or contracts of any swaps customer
or person other than the person for whom the same are
held.
``(3) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding paragraph
(2), money, securities, and property of swap
customers of a futures commission merchant
described in paragraph (2) may, for convenience,
be commingled and deposited in the same account or
accounts with any bank or trust company or with a
derivatives clearing organization.
``(ii) Withdrawal.--Notwithstanding paragraph
(2), such share of the money, securities, and
property described in clause (i) as in the normal
course of business shall be necessary to margin,
guarantee, secure, transfer, adjust, or settle a
cleared swap with a derivatives clearing
organization, or with any member of the
derivatives clearing organization, may be
withdrawn and applied to such purposes, including
the payment of commissions, brokerage, interest,
taxes, storage, and other charges, lawfully
accruing in connection with the cleared swap.
``(B) Commission action.--Notwithstanding paragraph
(2), in accordance with such terms and conditions as the
Commission may prescribe by rule, regulation, or order,
any money, securities, or property of the swaps
customers of a futures commission merchant described in
paragraph (2) may be commingled and deposited in
customer accounts with any other money, securities, or
property received by the futures commission merchant and
required by the Commission to be separately accounted
for and treated and dealt with as belonging to the swaps
customer of the futures commission merchant.
``(4) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political subdivision
of a State, and in obligations fully guaranteed as to principal
and interest by the United States, or in any other investment
that the Commission may by rule or regulation prescribe, and
such investments shall be made in accordance with such rules and
regulations and subject to such conditions as the Commission may
prescribe.
``(5) Commodity contract.--A swap cleared by or through a
derivatives clearing organization shall be considered to be a
commodity contract as such term is defined in section 761
[[Page 124 STAT. 1684]]
of title 11, United States Code, with regard to all money,
securities, and property of any swaps customer received by a
futures commission merchant or a derivatives clearing
organization to margin, guarantee, or secure the swap (including
money, securities, or property accruing to the customer as the
result of the swap).
``(6) Prohibition.--It shall be unlawful for any person,
including any derivatives clearing organization and any
depository institution, that has received any money, securities,
or property for deposit in a separate account or accounts as
provided in paragraph (2) to hold, dispose of, or use any such
money, securities, or property as belonging to the depositing
futures commission merchant or any person other than the swaps
customer of the futures commission merchant.''.
(b) Bankruptcy Treatment of Cleared Swaps.--Section 761 of title 11,
United States Code, is amended--
(1) in paragraph (4), by striking subparagraph (F) and
inserting the following:
``(F)(i) any other contract, option, agreement, or
transaction that is similar to a contract, option,
agreement, or transaction referred to in this paragraph;
and
``(ii) with respect to a futures commission merchant
or a clearing organization, any other contract, option,
agreement, or transaction, in each case, that is cleared
by a clearing organization;''; and
(2) in paragraph (9)(A)(i), by striking ``the commodity
futures account'' and inserting ``a commodity contract
account''.
(c) Segregation Requirements for Uncleared Swaps.--Section 4s of the
Commodity Exchange Act <<NOTE: 7 USC 6s.>> (as added by section 731) is
amended by adding at the end the following:
``(l) Segregation Requirements.--
``(1) Segregation of assets held as collateral in uncleared
swap transactions.--
``(A) Notification.--A swap dealer or major swap
participant shall be required to notify the counterparty
of the swap dealer or major swap participant at the
beginning of a swap transaction that the counterparty
has the right to require segregation of the funds or
other property supplied to margin, guarantee, or secure
the obligations of the counterparty.
``(B) Segregation and maintenance of funds.--At the
request of a counterparty to a swap that provides funds
or other property to a swap dealer or major swap
participant to margin, guarantee, or secure the
obligations of the counterparty, the swap dealer or
major swap participant shall--
``(i) segregate the funds or other property
for the benefit of the counterparty; and
``(ii) in accordance with such rules and
regulations as the Commission may promulgate,
maintain the funds or other property in a
segregated account separate from the assets and
other interests of the swap dealer or major swap
participant.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
[[Page 124 STAT. 1685]]
``(A) apply only to a swap between a counterparty
and a swap dealer or major swap participant that is not
submitted for clearing to a derivatives clearing
organization; and
``(B)(i) not apply to variation margin payments; or
``(ii) not preclude any commercial arrangement
regarding--
``(I) the investment of segregated funds or
other property that may only be invested in such
investments as the Commission may permit by rule
or regulation; and
``(II) the related allocation of gains and
losses resulting from any investment of the
segregated funds or other property.
``(3) Use of independent third-party custodians.--The
segregated account described in paragraph (1) shall be--
``(A) carried by an independent third-party
custodian; and
``(B) designated as a segregated account for and on
behalf of the counterparty.
``(4) Reporting requirement.--If the counterparty does not
choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of the
counterparty, the swap dealer or major swap participant shall
report to the counterparty of the swap dealer or major swap
participant on a quarterly basis that the back office procedures
of the swap dealer or major swap participant relating to margin
and collateral requirements are in compliance with the agreement
of the counterparties.''.
SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.
(a) Registration Requirement.--Section 5b of the Commodity Exchange
Act (7 U.S.C. 7a-1) is amended by striking subsections (a) and (b) and
inserting the following:
``(a) Registration Requirement.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for a derivatives clearing organization,
directly or indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions
of a derivatives clearing organization with respect to--
``(A) <<NOTE: Contracts.>> a contract of sale of a
commodity for future delivery (or an option on the
contract of sale) or option on a commodity, in each
case, unless the contract or option is--
``(i) excluded from this Act by subsection
(a)(1)(C)(i), (c), or (f) of section 2; or
``(ii) a security futures product cleared by a
clearing agency registered with the Securities and
Exchange Commission under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.); or
``(B) a swap.
``(2) Exception.--Paragraph (1) shall not apply to a
derivatives clearing organization that is registered with the
Commission.
``(b) Voluntary Registration.--A person that clears 1 or more
agreements, contracts, or transactions that are not required to
[[Page 124 STAT. 1686]]
be cleared under this Act may register with the Commission as a
derivatives clearing organization.''.
(b) Registration for Depository Institutions and Clearing Agencies;
Exemptions; Compliance Officer; Annual Reports.--Section 5b of the
Commodity Exchange Act (7 U.S.C. 7a-1) is amended by adding at the end
the following:
``(g) Existing Depository Institutions and Clearing Agencies.--
``(1) In general.--A depository institution or clearing
agency registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) that is required to be registered as a derivatives
clearing organization under this section is deemed to be
registered under this section to the extent that, before the
date of enactment of this subsection--
``(A) the depository institution cleared swaps as a
multilateral clearing organization; or
``(B) the clearing agency cleared swaps.
``(2) Conversion of depository institutions.--A depository
institution to which this subsection applies may, by the vote of
the shareholders owning not less than 51 percent of the voting
interests of the depository institution, be converted into a
State corporation, partnership, limited liability company, or
similar legal form pursuant to a plan of conversion, if the
conversion is not in contravention of applicable State law.
``(3) Sharing of information.--The Securities and Exchange
Commission shall make available to the Commission, upon request,
all information determined to be relevant by the Securities and
Exchange Commission regarding a clearing agency deemed to be
registered with the Commission under paragraph (1).
``(h) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a derivatives clearing organization from registration
under this section for the clearing of swaps if the Commission
determines that the derivatives clearing organization is subject to
comparable, comprehensive supervision and regulation by the Securities
and Exchange Commission or the appropriate government authorities in the
home country of the organization. Such conditions may include, but are
not limited to, requiring that the derivatives clearing organization be
available for inspection by the Commission and make available all
information requested by the Commission.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each derivatives clearing organization
shall designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the derivatives clearing organization;
``(B) review the compliance of the derivatives
clearing organization with respect to the core
principles described in subsection (c)(2);
``(C) in consultation with the board of the
derivatives clearing organization, a body performing a
function similar to the board of the derivatives
clearing organization, or the senior officer of the
derivatives clearing organization, resolve any conflicts
of interest that may arise;
[[Page 124 STAT. 1687]]
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the derivatives
clearing organization of the compliance officer
with respect to this Act (including regulations);
and
``(ii) each policy and procedure of the
derivatives clearing organization of the
compliance officer (including the code of ethics
and conflict of interest policies of the
derivatives clearing organization).
``(B) Requirements.--A compliance report under
subparagraph (A) shall--
``(i) accompany each appropriate financial
report of the derivatives clearing organization
that is required to be furnished to the Commission
pursuant to this section; and
``(ii) <<NOTE: Certification.>> include a
certification that, under penalty of law, the
compliance report is accurate and complete.''.
(c) Core Principles for Derivatives Clearing Organizations.--Section
5b(c) of the Commodity Exchange Act (7 U.S.C. 7a-1(c)) is amended by
striking paragraph (2) and inserting the following:
``(2) Core principles for derivatives clearing
organizations.--
``(A) Compliance.--
``(i) In general.--To be registered and to
maintain registration as a derivatives clearing
organization, a derivatives clearing organization
shall comply with each core principle described in
this paragraph and any requirement that the
Commission may impose by rule or regulation
pursuant to section 8a(5).
``(ii) Discretion of derivatives clearing
organization.--Subject to any rule or regulation
prescribed by the Commission, a derivatives
clearing organization shall have reasonable
discretion in establishing the manner by which the
derivatives clearing
[[Page 124 STAT. 1688]]
organization complies with each core principle
described in this paragraph.
``(B) Financial resources.--
``(i) In general.--Each derivatives clearing
organization shall have adequate financial,
operational, and managerial resources, as
determined by the Commission, to discharge each
responsibility of the derivatives clearing
organization.
``(ii) Minimum amount of financial
resources.--Each derivatives clearing organization
shall possess financial resources that, at a
minimum, exceed the total amount that would--
``(I) enable the organization to
meet its financial obligations to its
members and participants notwithstanding
a default by the member or participant
creating the largest financial exposure
for that organization in extreme but
plausible market conditions; and
``(II) enable the derivatives
clearing organization to cover the
operating costs of the derivatives
clearing organization for a period of 1
year (as calculated on a rolling basis).
``(C) Participant and product eligibility.--
``(i) In general.--Each derivatives clearing
organization shall establish--
``(I) appropriate admission and
continuing eligibility standards
(including sufficient financial
resources and operational capacity to
meet obligations arising from
participation in the derivatives
clearing organization) for members of,
and participants in, the derivatives
clearing organization; and
``(II) appropriate standards for
determining the eligibility of
agreements, contracts, or transactions
submitted to the derivatives clearing
organization for clearing.
``(ii) Required procedures.--Each derivatives
clearing organization shall establish and
implement procedures to verify, on an ongoing
basis, the compliance of each participation and
membership requirement of the derivatives clearing
organization.
``(iii) Requirements.--The participation and
membership requirements of each derivatives
clearing organization shall--
``(I) be objective;
``(II) be publicly disclosed; and
``(III) permit fair and open access.
``(D) Risk management.--
``(i) In general.--Each derivatives clearing
organization shall ensure that the derivatives
clearing organization possesses the ability to
manage the risks associated with discharging the
responsibilities of the derivatives clearing
organization through the use of appropriate tools
and procedures.
``(ii) Measurement of credit exposure.--Each
derivatives clearing organization shall--
``(I) not less than once during each
business day of the derivatives clearing
organization,
[[Page 124 STAT. 1689]]
measure the credit exposures of the
derivatives clearing organization to
each member and participant of the
derivatives clearing organization; and
``(II) monitor each exposure
described in subclause (I) periodically
during the business day of the
derivatives clearing organization.
``(iii) Limitation of exposure to potential
losses from defaults.--Each derivatives clearing
organization, through margin requirements and
other risk control mechanisms, shall limit the
exposure of the derivatives clearing organization
to potential losses from defaults by members and
participants of the derivatives clearing
organization to ensure that--
``(I) the operations of the
derivatives clearing organization would
not be disrupted; and
``(II) nondefaulting members or
participants would not be exposed to
losses that nondefaulting members or
participants cannot anticipate or
control.
``(iv) Margin requirements.--The margin
required from each member and participant of a
derivatives clearing organization shall be
sufficient to cover potential exposures in normal
market conditions.
``(v) Requirements regarding models and
parameters.--Each model and parameter used in
setting margin requirements under clause (iv)
shall be--
``(I) risk-based; and
``(II) reviewed on a regular basis.
``(E) Settlement procedures.--Each derivatives
clearing organization shall--
``(i) complete money settlements on a timely
basis (but not less frequently than once each
business day);
``(ii) employ money settlement arrangements to
eliminate or strictly limit the exposure of the
derivatives clearing organization to settlement
bank risks (including credit and liquidity risks
from the use of banks to effect money
settlements);
``(iii) ensure that money settlements are
final when effected;
``(iv) maintain an accurate record of the flow
of funds associated with each money settlement;
``(v) possess the ability to comply with each
term and condition of any permitted netting or
offset arrangement with any other clearing
organization;
``(vi) regarding physical settlements,
establish rules that clearly state each obligation
of the derivatives clearing organization with
respect to physical deliveries; and
``(vii) ensure that each risk arising from an
obligation described in clause (vi) is identified
and managed.
``(F) Treatment of funds.--
``(i) Required standards and procedures.--Each
derivatives clearing organization shall establish
standards and procedures that are designed to
protect and ensure the safety of member and
participant funds and assets.
[[Page 124 STAT. 1690]]
``(ii) Holding of funds and assets.--Each
derivatives clearing organization shall hold
member and participant funds and assets in a
manner by which to minimize the risk of loss or of
delay in the access by the derivatives clearing
organization to the assets and funds.
``(iii) Permissible investments.--Funds and
assets invested by a derivatives clearing
organization shall be held in instruments with
minimal credit, market, and liquidity risks.
``(G) Default rules and procedures.--
``(i) In general.--Each derivatives clearing
organization shall have rules and procedures
designed to allow for the efficient, fair, and
safe management of events during which members or
participants--
``(I) become insolvent; or
``(II) otherwise default on the
obligations of the members or
participants to the derivatives clearing
organization.
``(ii) Default procedures.--Each derivatives
clearing organization shall--
``(I) clearly state the default
procedures of the derivatives clearing
organization;
``(II) <<NOTE: Public
information.>> make publicly available
the default rules of the derivatives
clearing organization; and
``(III) ensure that the derivatives
clearing organization may take timely
action--
``(aa) to contain losses and
liquidity pressures; and
``(bb) to continue meeting
each obligation of the
derivatives clearing
organization.
``(H) Rule enforcement.--Each derivatives clearing
organization shall--
``(i) maintain adequate arrangements and
resources for--
``(I) the effective monitoring and
enforcement of compliance with the rules
of the derivatives clearing
organization; and
``(II) the resolution of disputes;
``(ii) have the authority and ability to
discipline, limit, suspend, or terminate the
activities of a member or participant due to a
violation by the member or participant of any rule
of the derivatives clearing organization; and
``(iii) <<NOTE: Reports.>> report to the
Commission regarding rule enforcement activities
and sanctions imposed against members and
participants as provided in clause (ii).
``(I) System safeguards.--Each derivatives clearing
organization shall--
``(i) establish and maintain a program of risk
analysis and oversight to identify and minimize
sources of operational risk through the
development of appropriate controls and
procedures, and automated systems, that are
reliable, secure, and have adequate scalable
capacity;
[[Page 124 STAT. 1691]]
``(ii) <<NOTE: Procedures.>> establish and
maintain emergency procedures, backup facilities,
and a plan for disaster recovery that allows for--
``(I) the timely recovery and
resumption of operations of the
derivatives clearing organization; and
``(II) the fulfillment of each
obligation and responsibility of the
derivatives clearing organization; and
``(iii) <<NOTE: Tests.>> periodically conduct
tests to verify that the backup resources of the
derivatives clearing organization are sufficient
to ensure daily processing, clearing, and
settlement.
``(J) Reporting.--Each derivatives clearing
organization shall provide to the Commission all
information that the Commission determines to be
necessary to conduct oversight of the derivatives
clearing organization.
``(K) Recordkeeping.--Each derivatives clearing
organization shall maintain records of all activities
related to the business of the derivatives clearing
organization as a derivatives clearing organization--
``(i) in a form and manner that is acceptable
to the Commission; and
``(ii) <<NOTE: Time period.>> for a period of
not less than 5 years.
``(L) Public information.--
``(i) In general.--Each derivatives clearing
organization shall provide to market participants
sufficient information to enable the market
participants to identify and evaluate accurately
the risks and costs associated with using the
services of the derivatives clearing organization.
``(ii) Availability of information.--Each
derivatives clearing organization shall make
information concerning the rules and operating and
default procedures governing the clearing and
settlement systems of the derivatives clearing
organization available to market participants.
``(iii) Public disclosure.--Each derivatives
clearing organization shall disclose publicly and
to the Commission information concerning--
``(I) the terms and conditions of
each contract, agreement, and
transaction cleared and settled by the
derivatives clearing organization;
``(II) each clearing and other fee
that the derivatives clearing
organization charges the members and
participants of the derivatives clearing
organization;
``(III) the margin-setting
methodology, and the size and
composition, of the financial resource
package of the derivatives clearing
organization;
``(IV) daily settlement prices,
volume, and open interest for each
contract settled or cleared by the
derivatives clearing organization; and
``(V) any other matter relevant to
participation in the settlement and
clearing activities of the derivatives
clearing organization.
[[Page 124 STAT. 1692]]
``(M) Information-sharing.--Each derivatives
clearing organization shall--
``(i) <<NOTE: Contracts.>> enter into, and
abide by the terms of, each appropriate and
applicable domestic and international information-
sharing agreement; and
``(ii) use relevant information obtained from
each agreement described in clause (i) in carrying
out the risk management program of the derivatives
clearing organization.
``(N) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a
derivatives clearing organization shall not--
``(i) adopt any rule or take any action that
results in any unreasonable restraint of trade; or
``(ii) impose any material anticompetitive
burden.
``(O) Governance fitness standards.--
``(i) Governance arrangements.--Each
derivatives clearing organization shall establish
governance arrangements that are transparent--
``(I) to fulfill public interest
requirements; and
``(II) to permit the consideration
of the views of owners and participants.
``(ii) Fitness standards.--Each derivatives
clearing organization shall establish and enforce
appropriate fitness standards for--
``(I) directors;
``(II) members of any disciplinary
committee;
``(III) members of the derivatives
clearing organization;
``(IV) any other individual or
entity with direct access to the
settlement or clearing activities of the
derivatives clearing organization; and
``(V) any party affiliated with any
individual or entity described in this
clause.
``(P) Conflicts of interest.--Each derivatives
clearing organization shall--
``(i) <<NOTE: Regulations.>> establish and
enforce rules to minimize conflicts of interest in
the decision-making process of the derivatives
clearing organization; and
``(ii) establish a process for resolving
conflicts of interest described in clause (i).
``(Q) Composition of governing boards.--Each
derivatives clearing organization shall ensure that the
composition of the governing board or committee of the
derivatives clearing organization includes market
participants.
``(R) Legal risk.--Each derivatives clearing
organization shall have a well-founded, transparent, and
enforceable legal framework for each aspect of the
activities of the derivatives clearing organization.''.
(d) <<NOTE: Regulations. 7 USC 7a-1 note.>> Conflicts of
Interest.--The Commodity Futures Trading Commission shall adopt rules
mitigating conflicts of interest in connection with the conduct of
business by a swap dealer or a major swap participant with a derivatives
clearing organization, board of trade, or a swap execution facility that
clears or trades swaps in which the swap dealer or major swap
participant has a material debt or material equity investment.
[[Page 124 STAT. 1693]]
(e) Reporting Requirements.--Section 5b of the Commodity Exchange
Act (7 U.S.C. 7a-1) (as amended by subsection (b)) is amended by adding
at the end the following:
``(k) Reporting Requirements.--
``(1) Duty of derivatives clearing organizations.--Each
derivatives clearing organization that clears swaps shall
provide to the Commission all information that is determined by
the Commission to be necessary to perform each responsibility of
the Commission under this Act.
``(2) Data collection and maintenance requirements.--The
Commission shall adopt data collection and maintenance
requirements for swaps cleared by derivatives clearing
organizations that are comparable to the corresponding
requirements for--
``(A) swaps data reported to swap data repositories;
and
``(B) swaps traded on swap execution facilities.
``(3) Reports on security-based swap agreements to be shared
with the securities and exchange commission.--
``(A) In general.--A derivatives clearing
organization that clears security-based swap agreements
(as defined in section 1a(47)(A)(v)) shall, upon
request, open to inspection and examination to the
Securities and Exchange Commission all books and records
relating to such security-based swap agreements,
consistent with the confidentiality and disclosure
requirements of section 8.
``(B) Jurisdiction.--Nothing in this paragraph shall
affect the exclusive jurisdiction of the Commission to
prescribe recordkeeping and reporting requirements for a
derivatives clearing organization that is registered
with the Commission.
``(4) Information sharing.--Subject to section 8, and upon
request, the Commission shall share information collected under
paragraph (2) with--
``(A) the Board;
``(B) the Securities and Exchange Commission;
``(C) each appropriate prudential regulator;
``(D) the Financial Stability Oversight Council;
``(E) the Department of Justice; and
``(F) any other person that the Commission
determines to be appropriate, including--
``(i) foreign financial supervisors (including
foreign futures authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries.
``(5) Confidentiality and indemnification agreement.--Before
the Commission may share information with any entity described
in paragraph (4)--
``(A) the Commission shall receive a written
agreement from each entity stating that the entity shall
abide by the confidentiality requirements described in
section 8 relating to the information on swap
transactions that is provided; and
``(B) each entity shall agree to indemnify the
Commission for any expenses arising from litigation
relating to the information provided under section 8.
[[Page 124 STAT. 1694]]
``(6) Public information.--Each derivatives clearing
organization that clears swaps shall provide to the Commission
(including any designee of the Commission) information under
paragraph (2) in such form and at such frequency as is required
by the Commission to comply with the public reporting
requirements contained in section 2(a)(13).''.
(f) Public Disclosure.--Section 8(e) of the Commodity Exchange Act
(7 U.S.C. 12(e)) is amended in the last sentence--
(1) by inserting ``, central bank and ministries,'' after
``department'' each place it appears; and
(2) by striking ``. is a party.'' and inserting ``, is a
party.''.
(g) Legal Certainty for Identified Banking Products.--
(1) Repeals.--The Legal Certainty for Bank Products Act of
2000 (7 U.S.C. 27 et seq.) is amended--
(A) by striking sections 404 and 407 (7 U.S.C. 27b,
27e);
(B) in section 402 (7 U.S.C. 27), by striking
subsection (d); and
(C) in section 408 (7 U.S.C. 27f)--
(i) in subsection (c)--
(I) by striking ``in the case'' and
all that follows through ``a hybrid''
and inserting ``in the case of a
hybrid'';
(II) by striking ``; or'' and
inserting a period; and
(III) by striking paragraph (2);
(ii) by striking subsection (b); and
(iii) by redesignating subsection (c) as
subsection (b).
(2) Legal certainty for bank products act of 2000.--Section
403 of the Legal Certainty for Bank Products Act of 2000 (7
U.S.C. 27a) is amended to read as follows:
``SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.
``(a) Exclusion.--Except as provided in subsection (b) or (c)--
``(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall
not apply to, and the Commodity Futures Trading Commission shall
not exercise regulatory authority under the Commodity Exchange
Act (7 U.S.C. 1 et seq.) with respect to, an identified banking
product; and
``(2) the definitions of `security-based swap' in section
3(a)(68) of the Securities Exchange Act of 1934 and `security-
based swap agreement' in section 1a(47)(A)(v) of the Commodity
Exchange Act and section 3(a)(78) of the Securities Exchange Act
of 1934 do not include any identified bank product.
``(b) Exception.--An appropriate Federal banking agency may except
an identified banking product of a bank under its regulatory
jurisdiction from the exclusion in subsection (a) if the agency
determines, in consultation with the Commodity Futures Trading
Commission and the Securities and Exchange Commission, that the
product--
``(1) would meet the definition of a `swap' under section
1a(47) of the Commodity Exchange Act (7 U.S.C. 1a) or a
`security-based swap' under that section 3(a)(68) of the
Securities Exchange Act of 1934; and
``(2) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
[[Page 124 STAT. 1695]]
banking product for the purpose of evading the provisions of the
Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act
of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.).
``(c) Exception.--The exclusions in subsection (a) shall not apply
to an identified bank product that--
``(1) is a product of a bank that is not under the
regulatory jurisdiction of an appropriate Federal banking
agency;
``(2) meets the definition of swap in section 1a(47) of the
Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities Exchange Act of 1934; and
``(3) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of the
Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act
of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.).''.
(h) Reducing Clearing Systemic Risk.--Section 5b(f)(1) of the
Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by adding at the
end the following: ``In order to minimize systemic risk, under no
circumstances shall a derivatives clearing organization be compelled to
accept the counterparty credit risk of another clearing organization.''.
SEC. 726. <<NOTE: 15 USC 8323.>> RULEMAKING ON CONFLICT OF
INTEREST.
(a) In General.--In <<NOTE: Deadline.>> order to mitigate conflicts
of interest, not later than 180 days after the date of enactment of the
Wall Street Transparency and Accountability Act of 2010, the Commodity
Futures Trading Commission shall adopt rules which may include numerical
limits on the control of, or the voting rights with respect to, any
derivatives clearing organization that clears swaps, or swap execution
facility or board of trade designated as a contract market that posts
swaps or makes swaps available for trading, by a bank holding company
(as defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841)) with total consolidated assets of $50,000,000,000 or more,
a nonbank financial company (as defined in section 102) supervised by
the Board, an affiliate of such a bank holding company or nonbank
financial company, a swap dealer, major swap participant, or associated
person of a swap dealer or major swap participant.
(b) Purposes.--The Commission shall adopt rules if it determines,
after the review described in subsection (a), that such rules are
necessary or appropriate to improve the governance of, or to mitigate
systemic risk, promote competition, or mitigate conflicts of interest in
connection with a swap dealer or major swap participant's conduct of
business with, a derivatives clearing organization, contract market, or
swap execution facility that clears or posts swaps or makes swaps
available for trading and in which such swap dealer or major swap
participant has a material debt or equity investment.
(c) Considerations.--In adopting rules pursuant to this section, the
Commodity Futures Trading Commission shall consider any conflicts of
interest arising from the amount of equity owned by a single investor,
the ability to vote, cause the vote of, or withhold votes entitled to be
cast on any matters by the holders of the ownership interest, and the
governance arrangements of any derivatives clearing organization that
clears swaps, or swap
[[Page 124 STAT. 1696]]
execution facility or board of trade designated as a contract market
that posts swaps or makes swaps available for trading.
SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) is
amended by adding at the end the following:
``(13) Public availability of swap transaction data.--
``(A) Definition of real-time public reporting.--In
this paragraph, the term `real-time public reporting'
means to report data relating to a swap transaction,
including price and volume, as soon as technologically
practicable after the time at which the swap transaction
has been executed.
``(B) Purpose.--The purpose of this section is to
authorize the Commission to make swap transaction and
pricing data available to the public in such form and at
such times as the Commission determines appropriate to
enhance price discovery.
``(C) General rule.--The Commission is authorized
and required to provide by rule for the public
availability of swap transaction and pricing data as
follows:
``(i) With respect to those swaps that are
subject to the mandatory clearing requirement
described in subsection (h)(1) (including those
swaps that are excepted from the requirement
pursuant to subsection (h)(7)), the Commission
shall require real-time public reporting for such
transactions.
``(ii) With respect to those swaps that are
not subject to the mandatory clearing requirement
described in subsection (h)(1), but are cleared at
a registered derivatives clearing organization,
the Commission shall require real-time public
reporting for such transactions.
``(iii) With respect to swaps that are not
cleared at a registered derivatives clearing
organization and which are reported to a swap data
repository or the Commission under subsection
(h)(6), the Commission shall require real-time
public reporting for such transactions, in a
manner that does not disclose the business
transactions and market positions of any person.
``(iv) With respect to swaps that are
determined to be required to be cleared under
subsection (h)(2) but are not cleared, the
Commission shall require real-time public
reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the swap transaction and pricing data
required to be reported under this paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for swaps described in clauses (i) and (ii)
of subparagraph (C), the rule promulgated by the
Commission shall contain provisions--
``(i) to ensure such information does not
identify the participants;
[[Page 124 STAT. 1697]]
``(ii) <<NOTE: Criteria.>> to specify the
criteria for determining what constitutes a large
notional swap transaction (block trade) for
particular markets and contracts;
``(iii) to specify the appropriate time delay
for reporting large notional swap transactions
(block trades) to the public; and
``(iv) that take into account whether the
public disclosure will materially reduce market
liquidity.
``(F) Timeliness of reporting.--Parties to a swap
(including agents of the parties to a swap) shall be
responsible for reporting swap transaction information
to the appropriate registered entity in a timely manner
as may be prescribed by the Commission.
``(G) Reporting of swaps to registered swap data
repositories.--Each swap (whether cleared or uncleared)
shall be reported to a registered swap data repository.
``(14) Semiannual and annual public reporting of aggregate
swap data.--
``(A) In general.--In accordance with subparagraph
(B), the Commission shall issue a written report on a
semiannual and annual basis to make available to the
public information relating to--
``(i) the trading and clearing in the major
swap categories; and
``(ii) the market participants and
developments in new products.
``(B) Use; consultation.--In preparing a report
under subparagraph (A), the Commission shall--
``(i) use information from swap data
repositories and derivatives clearing
organizations; and
``(ii) consult with the Office of the
Comptroller of the Currency, the Bank for
International Settlements, and such other
regulatory bodies as may be necessary.
``(C) Authority of the commission.--The Commission
may, by rule, regulation, or order, delegate the public
reporting responsibilities of the Commission under this
paragraph in accordance with such terms and conditions
as the Commission determines to be appropriate and in
the public interest.''.
SEC. 728. SWAP DATA REPOSITORIES.
The Commodity Exchange Act is amended by inserting after section 20
(7 U.S.C. 24) the following:
``SEC. 21. <<NOTE: 7 USC 24a.>> SWAP DATA REPOSITORIES.
``(a) Registration Requirement.--
``(1) Requirement; authority of derivatives clearing
organization.--
``(A) In general.--It shall be unlawful for any
person, unless registered with the Commission, directly
or indirectly to make use of the mails or any means or
instrumentality of interstate commerce to perform the
functions of a swap data repository.
``(B) Registration of derivatives clearing
organizations.--A derivatives clearing organization may
register as a swap data repository.
[[Page 124 STAT. 1698]]
``(2) Inspection and examination.--Each registered swap data
repository shall be subject to inspection and examination by any
representative of the Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a swap data repository, the swap data
repository shall comply with--
``(i) the requirements and core principles
described in this section; and
``(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section
8a(5).
``(B) Reasonable discretion of swap data
repository.--Unless otherwise determined by the
Commission by rule or regulation, a swap data repository
described in subparagraph (A) shall have reasonable
discretion in establishing the manner in which the swap
data repository complies with the core principles
described in this section.
``(b) Standard Setting.--
``(1) Data identification.--
``(A) In general.--In accordance with subparagraph
(B), the Commission shall prescribe standards that
specify the data elements for each swap that shall be
collected and maintained by each registered swap data
repository.
``(B) Requirement.--In carrying out subparagraph
(A), the Commission shall prescribe consistent data
element standards applicable to registered entities and
reporting counterparties.
``(2) Data collection and maintenance.--The Commission shall
prescribe data collection and data maintenance standards for
swap data repositories.
``(3) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the data
standards imposed by the Commission on derivatives clearing
organizations in connection with their clearing of swaps.
``(c) Duties.--A swap data repository shall--
``(1) accept data prescribed by the Commission for each swap
under subsection (b);
``(2) confirm with both counterparties to the swap the
accuracy of the data that was submitted;
``(3) maintain the data described in paragraph (1) in such
form, in such manner, and for such period as may be required by
the Commission;
``(4)(A) provide direct electronic access to the Commission
(or any designee of the Commission, including another registered
entity); and
``(B) provide the information described in paragraph (1) in
such form and at such frequency as the Commission may require to
comply with the public reporting requirements contained in
section 2(a)(13);
``(5) at the direction of the Commission, establish
automated systems for monitoring, screening, and analyzing swap
data, including compliance and frequency of end user clearing
exemption claims by individual and affiliated entities;
``(6) maintain the privacy of any and all swap transaction
information that the swap data repository receives from a swap
dealer, counterparty, or any other registered entity; and
[[Page 124 STAT. 1699]]
``(7) on a confidential basis pursuant to section 8, upon
request, and after notifying the Commission of the request, make
available all data obtained by the swap data repository,
including individual counterparty trade and position data, to--
``(A) each appropriate prudential regulator;
``(B) the Financial Stability Oversight Council;
``(C) the Securities and Exchange Commission;
``(D) the Department of Justice; and
``(E) any other person that the Commission
determines to be appropriate, including--
``(i) foreign financial supervisors (including
foreign futures authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries; and
``(8) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allows for the
timely recovery and resumption of operations and the fulfillment
of the responsibilities and obligations of the organization.
``(d) Confidentiality and Indemnification Agreement.--Before the
swap data repository may share information with any entity described in
subsection (c)(7)--
``(1) the swap data repository shall receive a written
agreement from each entity stating that the entity shall abide
by the confidentiality requirements described in section 8
relating to the information on swap transactions that is
provided; and
``(2) each entity shall agree to indemnify the swap data
repository and the Commission for any expenses arising from
litigation relating to the information provided under section 8.
``(e) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap data repository shall designate
an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the swap data repository;
``(B) review the compliance of the swap data
repository with respect to the requirements and core
principles described in this section;
``(C) in consultation with the board of the swap
data repository, a body performing a function similar to
the board of the swap data repository, or the senior
officer of the swap data repository, resolve any
conflicts of interest that may arise;
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
[[Page 124 STAT. 1700]]
``(v) validated complaint; and
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the swap data
repository of the chief compliance officer with
respect to this Act (including regulations); and
``(ii) each policy and procedure of the swap
data repository of the chief compliance officer
(including the code of ethics and conflict of
interest policies of the swap data repository).
``(B) Requirements.--A compliance report under
subparagraph (A) shall--
``(i) accompany each appropriate financial
report of the swap data repository that is
required to be furnished to the Commission
pursuant to this section; and
``(ii) <<NOTE: Certification.>> include a
certification that, under penalty of law, the
compliance report is accurate and complete.
``(f) Core Principles Applicable To Swap Data Repositories.--
``(1) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap data
repository shall not--
``(A) adopt any rule or take any action that results
in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
the trading, clearing, or reporting of transactions.
``(2) Governance arrangements.--Each swap data repository
shall establish governance arrangements that are transparent--
``(A) to fulfill public interest requirements; and
``(B) to support the objectives of the Federal
Government, owners, and participants.
``(3) Conflicts of interest.--Each swap data repository
shall--
``(A) <<NOTE: Regulations.>> establish and enforce
rules to minimize conflicts of interest in the decision-
making process of the swap data repository; and
``(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
``(4) Additional duties developed by commission.--
``(A) In general.--The Commission may develop 1 or
more additional duties applicable to swap data
repositories.
``(B) Consideration of evolving standards.--In
developing additional duties under subparagraph (A), the
Commission may take into consideration any evolving
standard of the United States or the international
community.
``(C) Additional duties for commission designees.--
The Commission shall establish additional duties for any
registrant described in section 1a(48) in order to
minimize
[[Page 124 STAT. 1701]]
conflicts of interest, protect data, ensure compliance,
and guarantee the safety and security of the swap data
repository.
``(g) Required Registration for Swap Data Repositories.--Any person
that is required to be registered as a swap data repository under this
section shall register with the Commission regardless of whether that
person is also licensed as a bank or registered with the Securities and
Exchange Commission as a swap data repository.
``(h) Rules.--The Commission shall adopt rules governing persons
that are registered under this section.''.
SEC. 729. REPORTING AND RECORDKEEPING.
The Commodity Exchange Act is amended by inserting after section
4q <<NOTE: 7 USC 6q.>> (7 U.S.C. 6o-1) the following:
``SEC. 4r. <<NOTE: 7 USC 6r.>> REPORTING AND RECORDKEEPING FOR
UNCLEARED SWAPS.
``(a) Required Reporting of Swaps Not Accepted by Any Derivatives
Clearing Organization.--
``(1) In general.--Each swap that is not accepted for
clearing by any derivatives clearing organization shall be
reported to--
``(A) a swap data repository described in section
21; or
``(B) in the case in which there is no swap data
repository that would accept the swap, to the Commission
pursuant to this section within such time period as the
Commission may by rule or regulation prescribe.
``(2) Transition rule for preenactment swaps.--
``(A) Swaps entered into before the date of
enactment of the wall street transparency and
accountability act of 2010.--Each swap entered into
before the date of enactment of the Wall Street
Transparency and Accountability Act of 2010, the terms
of which have not expired as of the date of enactment of
that Act, shall be reported to a registered swap data
repository or the Commission by a date that is not later
than--
``(i) 30 days after issuance of the interim
final rule; or
``(ii) such other period as the Commission
determines to be appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the
date of enactment of this section providing for the
reporting of each swap entered into before the date of
enactment as referenced in subparagraph (A).
``(C) Effective date.--The reporting provisions
described in this section shall be effective upon the
enactment of this section.
``(3) Reporting obligations.--
``(A) Swaps in which only 1 counterparty is a swap
dealer or major swap participant.--With respect to a
swap in which only 1 counterparty is a swap dealer or
major swap participant, the swap dealer or major swap
participant shall report the swap as required under
paragraphs (1) and (2).
``(B) Swaps in which 1 counterparty is a swap dealer
and the other a major swap participant.--With
[[Page 124 STAT. 1702]]
respect to a swap in which 1 counterparty is a swap
dealer and the other a major swap participant, the swap
dealer shall report the swap as required under
paragraphs (1) and (2).
``(C) Other swaps.--With respect to any other swap
not described in subparagraph (A) or (B), the
counterparties to the swap shall select a counterparty
to report the swap as required under paragraphs (1) and
(2).
``(b) Duties of Certain Individuals.--Any individual or entity that
enters into a swap shall meet each requirement described in subsection
(c) if the individual or entity did not--
``(1) clear the swap in accordance with section 2(h)(1); or
``(2) have the data regarding the swap accepted by a swap
data repository in accordance with rules (including timeframes)
adopted by the Commission under section 21.
``(c) Requirements.--An individual or entity described in subsection
(b) shall--
``(1) upon written request from the Commission, provide
reports regarding the swaps held by the individual or entity to
the Commission in such form and in such manner as the Commission
may request; and
``(2) maintain books and records pertaining to the swaps
held by the individual or entity in such form, in such manner,
and for such period as the Commission may require, which shall
be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Securities and Exchange Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this section, the
Commission shall require individuals and entities described in
subsection (b) to submit to the Commission a report that contains data
that is not less comprehensive than the data required to be collected by
swap data repositories under section 21.''.
SEC. 730. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding
after section 4s (as added by section 731) the following:
``SEC. 4t. <<NOTE: 7 USC 6t.>> LARGE SWAP TRADER REPORTING.
``(a) Prohibition.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for any person to enter into any swap that the
Commission determines to perform a significant price discovery
function with respect to registered entities if--
``(A) the person directly or indirectly enters into
the swap during any 1 day in an amount equal to or in
excess of such amount as shall be established
periodically by the Commission; and
``(B) the person directly or indirectly has or
obtains a position in the swap equal to or in excess of
such amount as shall be established periodically by the
Commission.
``(2) Exception.--Paragraph (1) shall not apply if--
``(A) the person files or causes to be filed with
the properly designated officer of the Commission such
reports
[[Page 124 STAT. 1703]]
regarding any transactions or positions described in
subparagraphs (A) and (B) of paragraph (1) as the
Commission may require by rule or regulation; and
``(B) in accordance with the rules and regulations
of the Commission, the person keeps books and records of
all such swaps and any transactions and positions in any
related commodity traded on or subject to the rules of
any designated contract market or swap execution
facility, and of cash or spot transactions in,
inventories of, and purchase and sale commitments of,
such a commodity.
``(b) <<NOTE: Records.>> Requirements.--
``(1) In general.--Books and records described in subsection
(a)(2)(B) shall--
``(A) show such complete details concerning all
transactions and positions as the Commission may
prescribe by rule or regulation;
``(B) be open at all times to inspection and
examination by any representative of the Commission; and
``(C) be open at all times to inspection and
examination by the Securities and Exchange Commission,
to the extent such books and records relate to
transactions in swaps (as that term is defined in
section 1a(47)(A)(v)), and consistent with the
confidentiality and disclosure requirements of section
8.
``(2) Jurisdiction.--Nothing in paragraph (1) shall affect
the exclusive jurisdiction of the Commission to prescribe
recordkeeping and reporting requirements for large swap traders
under this section.
``(c) Applicability.--For purposes of this section, the swaps,
futures, and cash or spot transactions and positions of any person shall
include the swaps, futures, and cash or spot transactions and positions
of any persons directly or indirectly controlled by the person.
``(d) Significant Price Discovery Function.--In making a
determination as to whether a swap performs or affects a significant
price discovery function with respect to registered entities, the
Commission shall consider the factors described in section 4a(a)(3).''.
SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR
SWAP PARTICIPANTS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4r (as added by section 729) the following:
``SEC. 4s. <<NOTE: 7 USC 6s.>> REGISTRATION AND REGULATION OF
SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.
``(a) Registration.--
``(1) Swap dealers.--It shall be unlawful for any person to
act as a swap dealer unless the person is registered as a swap
dealer with the Commission.
``(2) Major swap participants.--It shall be unlawful for any
person to act as a major swap participant unless the person is
registered as a major swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a swap dealer
or major swap participant by filing a registration application
with the Commission.
``(2) Contents.--
[[Page 124 STAT. 1704]]
``(A) In general.--The application shall be made in
such form and manner as prescribed by the Commission,
and shall contain such information, as the Commission
considers necessary concerning the business in which the
applicant is or will be engaged.
``(B) Continual reporting.--A person that is
registered as a swap dealer or major swap participant
shall continue to submit to the Commission reports that
contain such information pertaining to the business of
the person as the Commission may require.
``(3) Expiration.--Each registration under this section
shall expire at such time as the Commission may prescribe by
rule or regulation.
``(4) Rules.--Except as provided in subsections (d) and (e),
the Commission may prescribe rules applicable to swap dealers
and major swap participants, including rules that limit the
activities of swap dealers and major swap participants.
``(5) Transition.--Rules <<NOTE: Regulations. Deadline.>>
under this section shall provide for the registration of swap
dealers and major swap participants not later than 1 year after
the date of enactment of the Wall Street Transparency and
Accountability Act of 2010.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order,
it shall be unlawful for a swap dealer or a major swap
participant to permit any person associated with a swap dealer
or a major swap participant who is subject to a statutory
disqualification to effect or be involved in effecting swaps on
behalf of the swap dealer or major swap participant, if the swap
dealer or major swap participant knew, or in the exercise of
reasonable care should have known, of the statutory
disqualification.
``(c) Dual Registration.--
``(1) Swap dealer.--Any person that is required to be
registered as a swap dealer under this section shall register
with the Commission regardless of whether the person also is a
depository institution or is registered with the Securities and
Exchange Commission as a security-based swap dealer.
``(2) Major swap participant.--Any person that is required
to be registered as a major swap participant under this section
shall register with the Commission regardless of whether the
person also is a depository institution or is registered with
the Securities and Exchange Commission as a major security-based
swap participant.
``(d) Rulemakings.--
``(1) In general.--The Commission shall adopt rules for
persons that are registered as swap dealers or major swap
participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe
rules imposing prudential requirements on swap dealers
or major swap participants for which there is a
prudential regulator.
``(B) Applicability.--Subparagraph (A) does not
limit the authority of the Commission to prescribe rules
as directed under this section.
``(e) Capital and Margin Requirements.--
``(1) <<NOTE: Regulations.>> In general.--
[[Page 124 STAT. 1705]]
``(A) Swap dealers and major swap participants that
are banks.--Each registered swap dealer and major swap
participant for which there is a prudential regulator
shall meet such minimum capital requirements and minimum
initial and variation margin requirements as the
prudential regulator shall by rule or regulation
prescribe under paragraph (2)(A).
``(B) Swap dealers and major swap participants that
are not banks.--Each registered swap dealer and major
swap participant for which there is not a prudential
regulator shall meet such minimum capital requirements
and minimum initial and variation margin requirements as
the Commission shall by rule or regulation prescribe
under paragraph (2)(B).
``(2) Rules.--
``(A) Swap dealers and major swap participants that
are banks.--The prudential regulators, in consultation
with the Commission and the Securities and Exchange
Commission, shall jointly adopt rules for swap dealers
and major swap participants, with respect to their
activities as a swap dealer or major swap participant,
for which there is a prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin
requirements on all swaps that are not cleared by
a registered derivatives clearing organization.
``(B) Swap dealers and major swap participants that
are not banks.--The Commission shall adopt rules for
swap dealers and major swap participants, with respect
to their activities as a swap dealer or major swap
participant, for which there is not a prudential
regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin
requirements on all swaps that are not cleared by
a registered derivatives clearing organization.
``(C) Capital.--In setting capital requirements for
a person that is designated as a swap dealer or a major
swap participant for a single type or single class or
category of swap or activities, the prudential regulator
and the Commission shall take into account the risks
associated with other types of swaps or classes of swaps
or categories of swaps engaged in and the other
activities conducted by that person that are not
otherwise subject to regulation applicable to that
person by virtue of the status of the person as a swap
dealer or a major swap participant.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater risk to the
swap dealer or major swap participant and the financial
system arising from the use of swaps that are not
cleared, the requirements imposed under paragraph (2)
shall--
``(i) help ensure the safety and soundness of
the swap dealer or major swap participant; and
``(ii) be appropriate for the risk associated
with the non-cleared swaps held as a swap dealer
or major swap participant.
``(B) Rule of construction.--
[[Page 124 STAT. 1706]]
``(i) In general.--Nothing in this section
shall limit, or be construed to limit, the
authority--
``(I) of the Commission to set
financial responsibility rules for a
futures commission merchant or
introducing broker registered pursuant
to section 4f(a) (except for section
4f(a)(3)) in accordance with section
4f(b); or
``(II) of the Securities and
Exchange Commission to set financial
responsibility rules for a broker or
dealer registered pursuant to section
15(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(b)) (except for
section 15(b)(11) of that Act (15 U.S.C.
78o(b)(11)) in accordance with section
15(c)(3) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o(c)(3)).
``(ii) Futures commission merchants and other
dealers.--A futures commission merchant,
introducing broker, broker, or dealer shall
maintain sufficient capital to comply with the
stricter of any applicable capital requirements to
which such futures commission merchant,
introducing broker, broker, or dealer is subject
to under this Act or the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.).
``(C) Margin requirements.--In prescribing margin
requirements under this subsection, the prudential
regulator with respect to swap dealers and major swap
participants for which it is the prudential regulator
and the Commission with respect to swap dealers and
major swap participants for which there is no prudential
regulator shall permit the use of noncash collateral, as
the regulator or the Commission determines to be
consistent with--
``(i) preserving the financial integrity of
markets trading swaps; and
``(ii) preserving the stability of the United
States financial system.
``(D) Comparability of capital and margin
requirements.--
``(i) In general.--
The <<NOTE: Consultation.>> prudential
regulators, the Commission, and the Securities and
Exchange Commission shall periodically (but not
less frequently than annually) consult on minimum
capital requirements and minimum initial and
variation margin requirements.
``(ii) Comparability.--The entities described
in clause (i) shall, to the maximum extent
practicable, establish and maintain comparable
minimum capital requirements and minimum initial
and variation margin requirements, including the
use of non cash collateral, for--
``(I) swap dealers; and
``(II) major swap participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and major
swap participant--
[[Page 124 STAT. 1707]]
``(A) <<NOTE: Reports. Regulations.>> shall make
such reports as are required by the Commission by rule
or regulation regarding the transactions and positions
and financial condition of the registered swap dealer or
major swap participant;
``(B)(i) for which there is a prudential regulator,
shall keep books and records of all activities related
to the business as a swap dealer or major swap
participant in such form and manner and for such period
as may be prescribed by the Commission by rule or
regulation; and
``(ii) for which there is no prudential regulator,
shall keep books and records in such form and manner and
for such period as may be prescribed by the Commission
by rule or regulation;
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by
any representative of the Commission; and
``(D) shall keep any such books and records relating
to swaps defined in section 1a(47)(A)(v) open to
inspection and examination by the Securities and
Exchange Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for swap dealers and major swap
participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and major
swap participant shall maintain daily trading records of the
swaps of the registered swap dealer and major swap participant
and all related records (including related cash or forward
transactions) and recorded communications, including electronic
mail, instant messages, and recordings of telephone calls, for
such period as may be required by the Commission by rule or
regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require
by rule or regulation.
``(3) Counterparty records.--Each registered swap dealer and
major swap participant shall maintain daily trading records for
each counterparty in a manner and form that is identifiable with
each swap transaction.
``(4) Audit trail.--Each registered swap dealer and major
swap participant shall maintain a complete audit trail for
conducting comprehensive and accurate trade reconstructions.
``(5) Rules.--The Commission shall adopt rules governing
daily trading records for swap dealers and major swap
participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with such business conduct
standards as prescribed in paragraph (3) and as may be
prescribed by the Commission by rule or regulation that relate
to--
``(A) fraud, manipulation, and other abusive
practices involving swaps (including swaps that are
offered but not entered into);
``(B) diligent supervision of the business of the
registered swap dealer and major swap participant;
``(C) adherence to all applicable position limits;
and
[[Page 124 STAT. 1708]]
``(D) such other matters as the Commission
determines to be appropriate.
``(2) Responsibilities with respect to special entities.--
``(A) Advising special entities.--A swap dealer or
major swap participant that acts as an advisor to a
special entity regarding a swap shall comply with the
requirements of subparagraph (4) with respect to such
Special Entity.
``(B) Entering of swaps with respect to special
entities.--A <<NOTE: Compliance.>> swap dealer that
enters into or offers to enter into swap with a Special
Entity shall comply with the requirements of
subparagraph (5) with respect to such Special Entity.
``(C) Special entity defined.--For purposes of this
subsection, the term `special entity' means--
``(i) a Federal agency;
``(ii) a State, State agency, city, county,
municipality, or other political subdivision of a
State;
``(iii) any employee benefit plan, as defined
in section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002);
``(iv) any governmental plan, as defined in
section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002); or
``(v) any endowment, including an endowment
that is an organization described in section
501(c)(3) of the Internal Revenue Code of 1986.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish a duty for a swap dealer or major
swap participant to verify that any counterparty meets
the eligibility standards for an eligible contract
participant;
``(B) require disclosure by the swap dealer or major
swap participant to any counterparty to the transaction
(other than a swap dealer, major swap participant,
security-based swap dealer, or major security-based swap
participant) of--
``(i) information about the material risks and
characteristics of the swap;
``(ii) any material incentives or conflicts of
interest that the swap dealer or major swap
participant may have in connection with the swap;
and
``(iii)(I) for cleared swaps, upon the request
of the counterparty, receipt of the daily mark of
the transaction from the appropriate derivatives
clearing organization; and
``(II) for uncleared swaps, receipt of the
daily mark of the transaction from the swap dealer
or the major swap participant;
``(C) establish a duty for a swap dealer or major
swap participant to communicate in a fair and balanced
manner based on principles of fair dealing and good
faith; and
``(D) establish such other standards and
requirements as the Commission may determine are
appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the
purposes of this Act.
``(4) Special requirements for swap dealers acting as
advisors.--
[[Page 124 STAT. 1709]]
``(A) In general.--It shall be unlawful for a swap
dealer or major swap participant--
``(i) to employ any device, scheme, or
artifice to defraud any Special Entity or
prospective customer who is a Special Entity;
``(ii) to engage in any transaction, practice,
or course of business that operates as a fraud or
deceit on any Special Entity or prospective
customer who is a Special Entity; or
``(iii) to engage in any act, practice, or
course of business that is fraudulent, deceptive
or manipulative.
``(B) Duty.--Any swap dealer that acts as an advisor
to a Special Entity shall have a duty to act in the best
interests of the Special Entity.
``(C) Reasonable efforts.--Any swap dealer that acts
as an advisor to a Special Entity shall make reasonable
efforts to obtain such information as is necessary to
make a reasonable determination that any swap
recommended by the swap dealer is in the best interests
of the Special Entity, including information relating
to--
``(i) the financial status of the Special
Entity;
``(ii) the tax status of the Special Entity;
``(iii) the investment or financing objectives
of the Special Entity; and
``(iv) any other information that the
Commission may prescribe by rule or regulation.
``(5) Special requirements for swap dealers as
counterparties to special entities.--
``(A) Any swap dealer or major swap participant that
offers to enter or enters into a swap with a Special
Entity shall--
``(i) comply with any duty established by the
Commission for a swap dealer or major swap
participant, with respect to a counterparty that
is an eligible contract participant within the
meaning of subclause (I) or (II) of clause (vii)
of section 1a(18) of this Act, that requires the
swap dealer or major swap participant to have a
reasonable basis to believe that the counterparty
that is a Special Entity has an independent
representative that--
``(I) has sufficient knowledge to
evaluate the transaction and risks;
``(II) is not subject to a statutory
disqualification;
``(III) is independent of the swap
dealer or major swap participant;
``(IV) undertakes a duty to act in
the best interests of the counterparty
it represents;
``(V) makes appropriate disclosures;
``(VI) will provide written
representations to the Special Entity
regarding fair pricing and the
appropriateness of the transaction; and
``(VII) in the case of employee
benefit plans subject to the Employee
Retirement Income Security act of 1974,
is a fiduciary as defined in section 3
of that Act (29 U.S.C. 1002); and
[[Page 124 STAT. 1710]]
``(ii) before the initiation of the
transaction, disclose to the Special Entity in
writing the capacity in which the swap dealer is
acting; and
``(B) the Commission may establish such other
standards and requirements as the Commission may
determine are appropriate in the public interest, for
the protection of investors, or otherwise in furtherance
of the purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules under
this subsection governing business conduct standards for swap
dealers and major swap participants.
``(7) Applicability.--This section shall not apply with
respect to a transaction that is--
``(A) initiated by a Special Entity on an exchange
or swap execution facility; and
``(B) one in which the swap dealer or major swap
participant does not know the identity of the
counterparty to the transaction.
``(i) Documentation Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with such standards as may be
prescribed by the Commission by rule or regulation that relate
to timely and accurate confirmation, processing, netting,
documentation, and valuation of all swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation standards for swap dealers and major swap
participants.
``(j) Duties.--Each registered swap dealer and major swap
participant at all times shall comply with the following requirements:
``(1) Monitoring of trading.--The swap dealer or major swap
participant shall monitor its trading in swaps to prevent
violations of applicable position limits.
``(2) Risk management procedures.--The swap dealer or major
swap participant shall establish robust and professional risk
management systems adequate for managing the day-to-day business
of the swap dealer or major swap participant.
``(3) Disclosure of general information.--The swap dealer or
major swap participant shall disclose to the Commission and to
the prudential regulator for the swap dealer or major swap
participant, as applicable, information concerning--
``(A) terms and conditions of its swaps;
``(B) swap trading operations, mechanisms, and
practices;
``(C) financial integrity protections relating to
swaps; and
``(D) other information relevant to its trading in
swaps.
``(4) Ability to obtain information.--The swap dealer or
major swap participant shall--
``(A) establish and enforce internal systems and
procedures to obtain any necessary information to
perform any of the functions described in this section;
and
``(B) provide the information to the Commission and
to the prudential regulator for the swap dealer or major
swap participant, as applicable, on request.
[[Page 124 STAT. 1711]]
``(5) Conflicts of interest.--The swap dealer and major swap
participant shall implement conflict-of-interest systems and
procedures that--
``(A) establish structural and institutional
safeguards to ensure that the activities of any person
within the firm relating to research or analysis of the
price or market for any commodity or swap or acting in a
role of providing clearing activities or making
determinations as to accepting clearing customers are
separated by appropriate informational partitions within
the firm from the review, pressure, or oversight of
persons whose involvement in pricing, trading, or
clearing activities might potentially bias their
judgment or supervision and contravene the core
principles of open access and the business conduct
standards described in this Act; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap dealer
or major swap participant shall not--
``(A) adopt any process or take any action that
results in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(7) Rules.--The Commission shall prescribe rules under
this subsection governing duties of swap dealers and major swap
participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap dealer and major swap
participant shall designate an individual to serve as a chief
compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the swap dealer or major swap participant;
``(B) review the compliance of the swap dealer or
major swap participant with respect to the swap dealer
and major swap participant requirements described in
this section;
``(C) in consultation with the board of directors, a
body performing a function similar to the board, or the
senior officer of the organization, resolve any
conflicts of interest that may arise;
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this Act (including
regulations) relating to swaps, including each rule
prescribed by the Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
[[Page 124 STAT. 1712]]
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the swap dealer or
major swap participant with respect to this Act
(including regulations); and
``(ii) each policy and procedure of the swap
dealer or major swap participant of the chief
compliance officer (including the code of ethics
and conflict of interest policies).
``(B) Requirements.--A compliance report under
subparagraph (A) shall--
``(i) accompany each appropriate financial
report of the swap dealer or major swap
participant that is required to be furnished to
the Commission pursuant to this section; and
``(ii) <<NOTE: Certification.>> include a
certification that, under penalty of law, the
compliance report is accurate and complete.''.
SEC. 732. CONFLICTS OF INTEREST.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
(1) by redesignating subsection (c) as subsection (e); and
(2) by inserting after subsection (b) the following:
``(c) <<NOTE: Procedures.>> Conflicts of Interest.--The Commission
shall require that futures commission merchants and introducing brokers
implement conflict-of-interest systems and procedures that--
``(1) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for any
commodity are separated by appropriate informational partitions
within the firm from the review, pressure, or oversight of
persons whose involvement in trading or clearing activities
might potentially bias the judgment or supervision of the
persons; and
``(2) address such other issues as the Commission determines
to be appropriate.
``(d) <<NOTE: Regulations.>> Designation of Chief Compliance
Officer.--Each futures commission merchant shall designate an individual
to serve as its Chief Compliance Officer and perform such duties and
responsibilities as shall be set forth in regulations to be adopted by
the Commission or rules to be adopted by a futures association
registered under section 17.''.
SEC. 733. SWAP EXECUTION FACILITIES.
The Commodity Exchange Act is amended by inserting after section 5g
(7 U.S.C. 7b-2) the following:
``SEC. 5h. <<NOTE: 7 USC 7b-3.>> SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of swaps unless the facility is registered
as a swap execution facility or as a designated contract market
under this section.
[[Page 124 STAT. 1713]]
``(2) Dual registration.--Any person that is registered as a
swap execution facility under this section shall register with
the Commission regardless of whether the person also is
registered with the Securities and Exchange Commission as a swap
execution facility.
``(b) Trading and Trade Processing.--
``(1) In general.--Except as specified in paragraph (2), a
swap execution facility that is registered under subsection (a)
may--
``(A) make available for trading any swap; and
``(B) facilitate trade processing of any swap.
``(2) Agricultural swaps.--A swap execution facility may not
list for trading or confirm the execution of any swap in an
agricultural commodity (as defined by the Commission) except
pursuant to a rule or regulation of the Commission allowing the
swap under such terms and conditions as the Commission shall
prescribe.
``(c) Identification of Facility Used To Trade Swaps by Contract
Markets.--A board of trade that operates a contract market shall, to the
extent that the board of trade also operates a swap execution facility
and uses the same electronic trade execution system for listing and
executing trades of swaps on or through the contract market and the swap
execution facility, identify whether the electronic trading of such
swaps is taking place on or through the contract market or the swap
execution facility.
``(d) Rule-writing.--
``(1) The Securities and Exchange Commission and Commodity
Futures Trading Commission may promulgate rules defining the
universe of swaps that can be executed on a swap execution
facility. These rules shall take into account the price and
nonprice requirements of the counterparties to a swap and the
goal of this section as set forth in subsection (e).
``(2) For all swaps that are not required to be executed
through a swap execution facility as defined in paragraph (1),
such trades may be executed through any other available means of
interstate commerce.
``(3) The Securities and Exchange Commission and Commodity
Futures Trading Commission shall update these rules as necessary
to account for technological and other innovation.
``(e) Rule of Construction.--The goal of this section is to promote
the trading of swaps on swap execution facilities and to promote pre-
trade price transparency in the swaps market.
``(f) <<NOTE: Regulations.>> Core Principles for Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a swap execution facility, the swap
execution facility shall comply with--
``(i) the core principles described in this
subsection; and
``(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section
8a(5).
``(B) Reasonable discretion of swap execution
facility.--Unless otherwise determined by the Commission
by rule or regulation, a swap execution facility
[[Page 124 STAT. 1714]]
described in subparagraph (A) shall have reasonable
discretion in establishing the manner in which the swap
execution facility complies with the core principles
described in this subsection.
``(2) Compliance with rules.--A swap execution facility
shall--
``(A) establish and enforce compliance with any rule
of the swap execution facility, including--
``(i) the terms and conditions of the swaps
traded or processed on or through the swap
execution facility; and
``(ii) any limitation on access to the swap
execution facility;
``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate, and
enforce those rules, including means--
``(i) to provide market participants with
impartial access to the market; and
``(ii) to capture information that may be used
in establishing whether rule violations have
occurred;
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures
to be used in entering and executing orders traded or
posted on the facility, including block trades; and
``(D) provide by its rules that when a swap dealer
or major swap participant enters into or facilitates a
swap that is subject to the mandatory clearing
requirement of section 2(h), the swap dealer or major
swap participant shall be responsible for compliance
with the mandatory trading requirement under section
2(h)(8).
``(3) Swaps not readily susceptible to manipulation.--The
swap execution facility shall permit trading only in swaps that
are not readily susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The swap
execution facility shall--
``(A) establish and enforce rules or terms and
conditions defining, or specifications detailing--
``(i) trading procedures to be used in
entering and executing orders traded on or through
the facilities of the swap execution facility; and
``(ii) procedures for trade processing of
swaps on or through the facilities of the swap
execution facility; and
``(B) monitor trading in swaps to prevent
manipulation, price distortion, and disruptions of the
delivery or cash settlement process through
surveillance, compliance, and disciplinary practices and
procedures, including methods for conducting real-time
monitoring of trading and comprehensive and accurate
trade reconstructions.
``(5) Ability to obtain information.--The swap execution
facility shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission on
request; and
[[Page 124 STAT. 1715]]
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat of
market manipulation or congestion, especially during
trading in the delivery month, a swap execution facility
that is a trading facility shall adopt for each of the
contracts of the facility, as is necessary and
appropriate, position limitations or position
accountability for speculators.
``(B) <<NOTE: Contracts.>> Position limits.--For
any contract that is subject to a position limitation
established by the Commission pursuant to section 4a(a),
the swap execution facility shall--
``(i) set its position limitation at a level
no higher than the Commission limitation; and
``(ii) monitor positions established on or
through the swap execution facility for compliance
with the limit set by the Commission and the
limit, if any, set by the swap execution facility.
``(7) <<NOTE: Procedures.>> Financial integrity of
transactions.--The swap execution facility shall establish and
enforce rules and procedures for ensuring the financial
integrity of swaps entered on or through the facilities of the
swap execution facility, including the clearance and settlement
of the swaps pursuant to section 2(h)(1).
``(8) Emergency authority.--The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission,
as is necessary and appropriate, including the authority to
liquidate or transfer open positions in any swap or to suspend
or curtail trading in a swap.
``(9) Timely publication of trading information.--
``(A) <<NOTE: Public information.>> In general.--
The swap execution facility shall make public timely
information on price, trading volume, and other trading
data on swaps to the extent prescribed by the
Commission.
``(B) Capacity of swap execution facility.--The swap
execution facility shall be required to have the
capacity to electronically capture and transmit trade
information with respect to transactions executed on the
facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A swap execution facility shall--
``(i) <<NOTE: Time period.>> maintain records
of all activities relating to the business of the
facility, including a complete audit trail, in a
form and manner acceptable to the Commission for a
period of 5 years;
``(ii) report to the Commission, in a form and
manner acceptable to the Commission, such
information as the Commission determines to be
necessary or appropriate for the Commission to
perform the duties of the Commission under this
Act; and
``(iii) shall keep any such records relating
to swaps defined in section 1a(47)(A)(v) open to
inspection and examination by the Securities and
Exchange Commission.''
[[Page 124 STAT. 1716]]
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for swap execution
facilities that are comparable to corresponding
requirements for derivatives clearing organizations and
swap data repositories.
``(11) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap
execution facility shall not--
``(A) adopt any rules or taking any actions that
result in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(12) Conflicts of interest.--The swap execution facility
shall--
``(A) establish and enforce rules to minimize
conflicts of interest in its decision-making process;
and
``(B) establish a process for resolving the
conflicts of interest.
``(13) Financial resources.--
``(A) In general.--The swap execution facility shall
have adequate financial, operational, and managerial
resources to discharge each responsibility of the swap
execution facility.
``(B <<NOTE: Time period.>> Determination of
resource adequacy.--The financial resources of a swap
execution facility shall be considered to be adequate if
the value of the financial resources exceeds the total
amount that would enable the swap execution facility to
cover the operating costs of the swap execution facility
for a 1-year period, as calculated on a rolling basis.
``(14) System safeguards.--The swap execution facility
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational risk, through the development of
appropriate controls and procedures, and automated
systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allow for--
``(i) the timely recovery and resumption of
operations; and
``(ii) the fulfillment of the responsibilities
and obligations of the swap execution facility;
and
``(C) periodically conduct tests to verify that the
backup resources of the swap execution facility are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance and
``(iv) maintenance of a comprehensive and
accurate audit trail.
``(15) Designation of chief compliance officer.--
``(A) In general.--Each swap execution facility
shall designate an individual to serve as a chief
compliance officer.
[[Page 124 STAT. 1717]]
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the
senior officer of the facility;
``(ii) review compliance with the core
principles in this subsection;
``(iii) in consultation with the board of the
facility, a body performing a function similar to
that of a board, or the senior officer of the
facility, resolve any conflicts of interest that
may arise;
``(iv) be responsible for establishing and
administering the policies and procedures required
to be established pursuant to this section;
``(v) ensure compliance with this Act and the
rules and regulations issued under this Act,
including rules prescribed by the Commission
pursuant to this section; and
``(vi) establish procedures for the
remediation of noncompliance issues found during
compliance office reviews, look backs, internal or
external audit findings, self-reported errors, or
through validated complaints.
``(C) Requirements for procedures.--In establishing
procedures under subparagraph (B)(vi), the chief
compliance officer shall design the procedures to
establish the handling, management response,
remediation, retesting, and closing of noncompliance
issues.
``(D) Annual reports.--
``(i) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report
that contains a description of--
``(I) the compliance of the swap
execution facility with this Act; and
``(II) the policies and procedures,
including the code of ethics and
conflict of interest policies, of the
swap execution facility.
``(ii) Requirements.--The chief compliance
officer shall--
``(I) submit each report described
in clause (i) with the appropriate
financial report of the swap execution
facility that is required to be
submitted to the Commission pursuant to
this section; and
``(II) <<NOTE: Certification.>>
include in the report a certification
that, under penalty of law, the report
is accurate and complete.
``(g) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap execution facility from registration under this
section if the Commission finds that the facility is subject to
comparable, comprehensive supervision and regulation on a consolidated
basis by the Securities and Exchange Commission, a prudential regulator,
or the appropriate governmental authorities in the home country of the
facility.
``(h) Rules.--The Commission shall prescribe rules governing the
regulation of alternative swap execution facilities under this
section.''.
[[Page 124 STAT. 1718]]
SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT
BOARDS OF TRADE.
(a) <<NOTE: Repeal.>> In General.--Sections 5a and 5d of the
Commodity Exchange Act (7 U.S.C. 7a, 7a-3) are repealed.
(b) Conforming Amendments.--
(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended--
(A) in subsection (a)(1)(A), in the first sentence,
by striking ``or 5a''; and
(B) in paragraph (2) of subsection (g) (as
redesignated by section 723(a)(1)(B)), by striking
``section 5a of this Act'' and all that follows through
``5d of this Act'' and inserting ``section 5b of this
Act''.
(2) Section 6(g)(1)(A) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(1)(A)) is amended--
(A) by striking ``that--'' and all that follows
through ``(i) has been designated'' and inserting ``that
has been designated'';
(B) by striking ``; or'' and inserting ``; and'' and
(C) by striking clause (ii).
(c) <<NOTE: 7 USC 7a-3 note.>> Ability to Petition Commission.--
(1) In general.--Prior to the final effective dates in this
title, a person may petition the Commodity Futures Trading
Commission to remain subject to the provisions of section 5d of
the Commodity Exchange Act, as such provisions existed prior to
the effective date of this subtitle.
(2) Consideration of petition.--The Commodity Futures
Trading Commission shall consider any petition submitted under
paragraph (1) in a prompt manner and may allow a person to
continue operating subject to the provisions of section 5d of
the Commodity Exchange Act for up to 1 year after the effective
date of this subtitle.
SEC. 735. <<NOTE: Regulations. Procedures.>> DESIGNATED CONTRACT
MARKETS.
(a) Criteria for Designation.--Section 5 of the Commodity Exchange
Act (7 U.S.C. 7) is amended by striking subsection (b).
(b) Core Principles for Contract Markets.--Section 5 of the
Commodity Exchange Act (7 U.S.C. 7) is amended by striking subsection
(d) and inserting the following:
``(d) Core Principles for Contract Markets.--
``(1) Designation as contract market.--
``(A) In general.--To be designated, and maintain a
designation, as a contract market, a board of trade
shall comply with--
``(i) any core principle described in this
subsection; and
``(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section
8a(5).
``(B) Reasonable discretion of contract market.--
Unless otherwise determined by the Commission by rule or
regulation, a board of trade described in subparagraph
(A) shall have reasonable discretion in establishing the
manner in which the board of trade complies with the
core principles described in this subsection.
``(2) Compliance with rules.--
[[Page 124 STAT. 1719]]
``(A) In general.--The board of trade shall
establish, monitor, and enforce compliance with the
rules of the contract market, including--
``(i) access requirements;
``(ii) the terms and conditions of any
contracts to be traded on the contract market; and
``(iii) rules prohibiting abusive trade
practices on the contract market.
``(B) Capacity of contract market.--The board of
trade shall have the capacity to detect, investigate,
and apply appropriate sanctions to any person that
violates any rule of the contract market.
``(C) Requirement of rules.--The rules of the
contract market shall provide the board of trade with
the ability and authority to obtain any necessary
information to perform any function described in this
subsection, including the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(3) Contracts not readily subject to manipulation.--The
board of trade shall list on the contract market only contracts
that are not readily susceptible to manipulation.
``(4) Prevention of market disruption.--The board of trade
shall have the capacity and responsibility to prevent
manipulation, price distortion, and disruptions of the delivery
or cash-settlement process through market surveillance,
compliance, and enforcement practices and procedures,
including--
``(A) methods for conducting real-time monitoring of
trading; and
``(B) comprehensive and accurate trade
reconstructions.
``(5) Position limitations or accountability.--
``(A) In general.--To reduce the potential threat of
market manipulation or congestion (especially during
trading in the delivery month), the board of trade shall
adopt for each contract of the board of trade, as is
necessary and appropriate, position limitations or
position accountability for speculators.
``(B) Maximum allowable position limitation.--For
any contract that is subject to a position limitation
established by the Commission pursuant to section 4a(a),
the board of trade shall set the position limitation of
the board of trade at a level not higher than the
position limitation established by the Commission.
``(6) Emergency authority.--The board of trade, in
consultation or cooperation with the Commission, shall adopt
rules to provide for the exercise of emergency authority, as is
necessary and appropriate, including the authority--
``(A) to liquidate or transfer open positions in any
contract;
``(B) to suspend or curtail trading in any contract;
and
``(C) to require market participants in any contract
to meet special margin requirements.
``(7) Availability of general information.--The board of
trade shall make available to market authorities, market
participants, and the public accurate information concerning--
``(A) the terms and conditions of the contracts of
the contract market; and
[[Page 124 STAT. 1720]]
``(B)(i) the rules, regulations, and mechanisms for
executing transactions on or through the facilities of
the contract market; and
``(ii) the rules and specifications describing the
operation of the contract market's--
``(I) electronic matching platform; or
``(II) trade execution facility.
``(8) <<NOTE: Public information.>> Daily publication of
trading information.--The board of trade shall make public daily
information on settlement prices, volume, open interest, and
opening and closing ranges for actively traded contracts on the
contract market.
``(9) Execution of transactions.--
``(A) In general.--The board of trade shall provide
a competitive, open, and efficient market and mechanism
for executing transactions that protects the price
discovery process of trading in the centralized market
of the board of trade.
``(B) Rules.--The rules of the board of trade may
authorize, for bona fide business purposes--
``(i) transfer trades or office trades;
``(ii) an exchange of--
``(I) futures in connection with a
cash commodity transaction;
``(II) futures for cash commodities;
or
``(III) futures for swaps; or
``(iii) a futures commission merchant, acting
as principal or agent, to enter into or confirm
the execution of a contract for the purchase or
sale of a commodity for future delivery if the
contract is reported, recorded, or cleared in
accordance with the rules of the contract market
or a derivatives clearing organization.
``(10) <<NOTE: Records.>> Trade information.--The board of
trade shall maintain rules and procedures to provide for the
recording and safe storage of all identifying trade information
in a manner that enables the contract market to use the
information--
``(A) to assist in the prevention of customer and
market abuses; and
``(B) to provide evidence of any violations of the
rules of the contract market.
``(11) Financial integrity of transactions.--The board of
trade shall establish and enforce--
``(A) rules and procedures for ensuring the
financial integrity of transactions entered into on or
through the facilities of the contract market (including
the clearance and settlement of the transactions with a
derivatives clearing organization); and
``(B) rules to ensure--
``(i) the financial integrity of any--
``(I) futures commission merchant;
and
``(II) introducing broker; and
``(ii) the protection of customer funds.
``(12) Protection of markets and market participants.--The
board of trade shall establish and enforce rules--
[[Page 124 STAT. 1721]]
``(A) to protect markets and market participants
from abusive practices committed by any party, including
abusive practices committed by a party acting as an
agent for a participant; and
``(B) to promote fair and equitable trading on the
contract market.
``(13) Disciplinary procedures.--The board of trade shall
establish and enforce disciplinary procedures that authorize the
board of trade to discipline, suspend, or expel members or
market participants that violate the rules of the board of
trade, or similar methods for performing the same functions,
including delegation of the functions to third parties.
``(14) Dispute resolution.--The board of trade shall
establish and enforce rules regarding, and provide facilities
for alternative dispute resolution as appropriate for, market
participants and any market intermediaries.
``(15) Governance fitness standards.--The board of trade
shall establish and enforce appropriate fitness standards for
directors, members of any disciplinary committee, members of the
contract market, and any other person with direct access to the
facility (including any party affiliated with any person
described in this paragraph).
``(16) Conflicts of interest.--The board of trade shall
establish and enforce rules--
``(A) to minimize conflicts of interest in the
decision-making process of the contract market; and
``(B) to establish a process for resolving conflicts
of interest described in subparagraph (A).
``(17) Composition of governing boards of contract
markets.--The governance arrangements of the board of trade
shall be designed to permit consideration of the views of market
participants.
``(18) Recordkeeping.--The board of trade shall maintain
records of all activities relating to the business of the
contract market--
``(A) in a form and manner that is acceptable to the
Commission; and
``(B) <<NOTE: Time period.>> for a period of at
least 5 years.
``(19) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the board of
trade shall not--
``(A) adopt any rule or taking any action that
results in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading on the contract market.
``(20) System safeguards.--The board of trade shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational risk, through the development of
appropriate controls and procedures, and the development
of automated systems, that are reliable, secure, and
have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allow for the timely recovery and resumption of
operations and the fulfillment of the responsibilities
and obligations of the board of trade; and
[[Page 124 STAT. 1722]]
``(C) periodically conduct tests to verify that
backup resources are sufficient to ensure continued
order processing and trade matching, price reporting,
market surveillance, and maintenance of a comprehensive
and accurate audit trail.
``(21) Financial resources.--
``(A) In general.--The board of trade shall have
adequate financial, operational, and managerial
resources to discharge each responsibility of the board
of trade.
``(B) Determination of adequacy.--The financial
resources of the board of trade shall be considered to
be adequate if the value of the financial resources
exceeds the total amount that would enable the contract
market to cover the operating costs of the contract
market for a 1-year period, as calculated on a rolling
basis.
``(22) Diversity of board of directors.--The board of trade,
if a publicly traded company, shall endeavor to recruit
individuals to serve on the board of directors and the other
decision-making bodies (as determined by the Commission) of the
board of trade from among, and to have the composition of the
bodies reflect, a broad and culturally diverse pool of qualified
candidates.
``(23) <<NOTE: Records.>> Securities and exchange
commission.--The board of trade shall keep any such records
relating to swaps defined in section 1a(47)(A)(v) open to
inspection and examination by the Securities and Exchange
Commission.''.
SEC. 736. MARGIN.
Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 12a(7)) is
amended--
(1) in subparagraph (C), by striking ``, excepting the
setting of levels of margin'';
(2) by redesignating subparagraphs (D) through (F) as
subparagraphs (E) through (G), respectively; and
(3) by inserting after subparagraph (C) the following:
``(D) margin requirements, provided that the rules,
regulations, or orders shall--
``(i) be limited to protecting the financial
integrity of the derivatives clearing
organization;
``(ii) be designed for risk management
purposes to protect the financial integrity of
transactions; and
``(iii) not set specific margin amounts;''.
SEC. 737. POSITION LIMITS.
(a) Aggregate Position Limits.--Section 4a(a) of the Commodity
Exchange Act (7 U.S.C. 6a(a)) is amended--
(1) by inserting after ``(a)'' the following:
``(1) In general.--'';
(2) in the first sentence, by striking ``on electronic
trading facilities with respect to a significant price discovery
contract'' and inserting ``swaps that perform or affect a
significant price discovery function with respect to registered
entities'';
(3) in the second sentence--
(A) by inserting ``, including any group or class of
traders,'' after ``held by any person''; and
(B) by striking ``on an electronic trading facility
with respect to a significant price discovery
contract,'' and inserting ``swaps traded on or subject
to the rules of a
[[Page 124 STAT. 1723]]
designated contract market or a swap execution facility,
or swaps not traded on or subject to the rules of a
designated contract market or a swap execution facility
that performs a significant price discovery function
with respect to a registered entity,''; and
(4) by adding at the end the following:
``(2) Establishment of limitations.--
``(A) <<NOTE: Regulations. Contracts.>> In
general.--In accordance with the standards set forth in
paragraph (1) of this subsection and consistent with the
good faith exception cited in subsection (b)(2), with
respect to physical commodities other than excluded
commodities as defined by the Commission, the Commission
shall by rule, regulation, or order establish limits on
the amount of positions, as appropriate, other than bona
fide hedge positions, that may be held by any person
with respect to contracts of sale for future delivery or
with respect to options on the contracts or commodities
traded on or subject to the rules of a designated
contract market.
``(B) Timing.--
``(i) Exempt commodities.--For exempt
commodities, the limits required under
subparagraph (A) shall be established within 180
days after the date of the enactment of this
paragraph.
``(ii) Agricultural commodities.--For
agricultural commodities, the limits required
under subparagraph (A) shall be established within
270 days after the date of the enactment of this
paragraph.
``(C) Goal.--In establishing the limits required
under subparagraph (A), the Commission shall strive to
ensure that trading on foreign boards of trade in the
same commodity will be subject to comparable limits and
that any limits to be imposed by the Commission will not
cause price discovery in the commodity to shift to
trading on the foreign boards of trade.
``(3) Specific limitations.--In establishing the limits
required in paragraph (2), the Commission, as appropriate, shall
set limits--
``(A) on the number of positions that may be held by
any person for the spot month, each other month, and the
aggregate number of positions that may be held by any
person for all months; and
``(B) to the maximum extent practicable, in its
discretion--
``(i) to diminish, eliminate, or prevent
excessive speculation as described under this
section;
``(ii) to deter and prevent market
manipulation, squeezes, and corners;
``(iii) to ensure sufficient market liquidity
for bona fide hedgers; and
``(iv) to ensure that the price discovery
function of the underlying market is not
disrupted.
``(4) Significant price discovery function.--In making a
determination whether a swap performs or affects a significant
price discovery function with respect to regulated markets, the
Commission shall consider, as appropriate:
[[Page 124 STAT. 1724]]
``(A) Price linkage.--The extent to which the swap
uses or otherwise relies on a daily or final settlement
price, or other major price parameter, of another
contract traded on a regulated market based upon the
same underlying commodity, to value a position, transfer
or convert a position, financially settle a position, or
close out a position.
``(B) Arbitrage.--The extent to which the price for
the swap is sufficiently related to the price of another
contract traded on a regulated market based upon the
same underlying commodity so as to permit market
participants to effectively arbitrage between the
markets by simultaneously maintaining positions or
executing trades in the swaps on a frequent and
recurring basis.
``(C) Material price reference.--The extent to
which, on a frequent and recurring basis, bids, offers,
or transactions in a contract traded on a regulated
market are directly based on, or are determined by
referencing, the price generated by the swap.
``(D) Material liquidity.--The extent to which the
volume of swaps being traded in the commodity is
sufficient to have a material effect on another contract
traded on a regulated market.
``(E) Other material factors.--Such other material
factors as the Commission specifies by rule or
regulation as relevant to determine whether a swap
serves a significant price discovery function with
respect to a regulated market.
``(5) Economically equivalent contracts.--
``(A) Notwithstanding any other provision of this
section, the Commission shall establish limits on the
amount of positions, including aggregate position
limits, as appropriate, other than bona fide hedge
positions, that may be held by any person with respect
to swaps that are economically equivalent to contracts
of sale for future delivery or to options on the
contracts or commodities traded on or subject to the
rules of a designated contract market subject to
paragraph (2).
``(B) In establishing limits pursuant to
subparagraph (A), the Commission shall--
``(i) develop the limits concurrently with
limits established under paragraph (2), and the
limits shall have similar requirements as under
paragraph (3)(B); and
``(ii) establish the limits simultaneously
with limits established under paragraph (2).
``(6) <<NOTE: Contracts.>> Aggregate position limits.--The
Commission shall, by rule or regulation, establish limits
(including related hedge exemption provisions) on the aggregate
number or amount of positions in contracts based upon the same
underlying commodity (as defined by the Commission) that may be
held by any person, including any group or class of traders, for
each month across--
``(A) contracts listed by designated contract
markets;
``(B) with respect to an agreement contract, or
transaction that settles against any price (including
the daily or final settlement price) of 1 or more
contracts listed
[[Page 124 STAT. 1725]]
for trading on a registered entity, contracts traded on
a foreign board of trade that provides members or other
participants located in the United States with direct
access to its electronic trading and order matching
system; and
``(C) swap contracts that perform or affect a
significant price discovery function with respect to
regulated entities.
``(7) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any person
or class of persons, any swap or class of swaps, any contract of
sale of a commodity for future delivery or class of such
contracts, any option or class of options, or any transaction or
class of transactions from any requirement it may establish
under this section with respect to position limits.''.
(b) Conforming Amendments.--Section 4a(b) of the Commodity Exchange
Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution facility or
facilities''; and
(2) in paragraph (2), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution facility''.
(c) Bona Fide Hedging Transaction.--Section 4a(c) of the Commodity
Exchange Act is amended--
(1) by inserting ``(1)'' after ``(c)''; and
(2) by adding at the end the following:
``(2) <<NOTE: Contracts.>> For the purposes of
implementation of subsection (a)(2) for contracts of sale for
future delivery or options on the contracts or commodities, the
Commission shall define what constitutes a bona fide hedging
transaction or position as a transaction or position that--
``(A)(i) represents a substitute for transactions
made or to be made or positions taken or to be taken at
a later time in a physical marketing channel;
``(ii) is economically appropriate to the reduction
of risks in the conduct and management of a commercial
enterprise; and
``(iii) arises from the potential change in the
value of--
``(I) assets that a person owns, produces,
manufactures, processes, or merchandises or
anticipates owning, producing, manufacturing,
processing, or merchandising;
``(II) liabilities that a person owns or
anticipates incurring; or
``(III) services that a person provides,
purchases, or anticipates providing or purchasing;
or
``(B) reduces risks attendant to a position
resulting from a swap that--
``(i) was executed opposite a counterparty for
which the transaction would qualify as a bona fide
hedging transaction pursuant to subparagraph (A);
or
``(ii) meets the requirements of subparagraph
(A).''.
(d) <<NOTE: 7 USC 6a note.>> Effective Date.--This section and the
amendments made by this section shall become effective on the date of
the enactment of this section.
[[Page 124 STAT. 1726]]
SEC. 738. FOREIGN BOARDS OF TRADE.
(a) In General.--Section 4(b) of the Commodity Exchange Act (7
U.S.C. 6(b)) is amended--
(1) in the first sentence, by striking ``The Commission''
and inserting the following:
``(2) Persons located in the united states.--
``(A) In general.--The Commission'';
(2) in the second sentence, by striking ``Such rules and
regulations'' and inserting the following:
``(B) Different requirements.--Rules and regulations
described in subparagraph (A)'';
(3) in the third sentence--
(A) by striking ``No rule or regulation'' and
inserting the following:
``(C) Prohibition.--Except as provided in paragraphs
(1) and (2), no rule or regulation'';
(B) by striking ``that (1) requires'' and inserting
the following: ``that--
``(i) requires''; and
(C) by striking ``market, or (2) governs'' and
inserting the following: ``market; or
``(ii) governs''; and
(4) by inserting before paragraph (2) (as designated by
paragraph (1)) the following:
``(1) Foreign boards of trade.--
``(A) Registration.--The Commission may adopt rules
and regulations requiring registration with the
Commission for a foreign board of trade that provides
the members of the foreign board of trade or other
participants located in the United States with direct
access to the electronic trading and order matching
system of the foreign board of trade, including rules
and regulations prescribing procedures and requirements
applicable to the registration of such foreign boards of
trade. For purposes of this paragraph, `direct access'
refers to an explicit grant of authority by a foreign
board of trade to an identified member or other
participant located in the United States to enter trades
directly into the trade matching system of the foreign
board of trade. In adopting such rules and regulations,
the commission shall consider--
``(i) whether any such foreign board of trade
is subject to comparable, comprehensive
supervision and regulation by the appropriate
governmental authorities in the foreign board of
trade's home country; and
``(ii) any previous commission findings that
the foreign board of trade is subject to
comparable comprehensive supervision and
regulation by the appropriate government
authorities in the foreign board of trade's home
country.
``(B) Linked contracts.--The Commission may not
permit a foreign board of trade to provide to the
members of the foreign board of trade or other
participants located in the United States direct access
to the electronic trading and order-matching system of
the foreign board of trade with respect to an agreement,
contract, or transaction that settles against any price
(including the daily or final settlement price) of 1 or
more contracts listed for trading on
[[Page 124 STAT. 1727]]
a registered entity, unless the Commission determines
that--
``(i) the foreign board of trade makes public
daily trading information regarding the agreement,
contract, or transaction that is comparable to the
daily trading information published by the
registered entity for the 1 or more contracts
against which the agreement, contract, or
transaction traded on the foreign board of trade
settles; and
``(ii) the foreign board of trade (or the
foreign futures authority that oversees the
foreign board of trade)--
``(I) adopts position limits
(including related hedge exemption
provisions) for the agreement, contract,
or transaction that are comparable to
the position limits (including related
hedge exemption provisions) adopted by
the registered entity for the 1 or more
contracts against which the agreement,
contract, or transaction traded on the
foreign board of trade settles;
``(II) has the authority to require
or direct market participants to limit,
reduce, or liquidate any position the
foreign board of trade (or the foreign
futures authority that oversees the
foreign board of trade) determines to be
necessary to prevent or reduce the
threat of price manipulation, excessive
speculation as described in section 4a,
price distortion, or disruption of
delivery or the cash settlement process;
``(III) <<NOTE: Notification.>>
agrees to promptly notify the
Commission, with regard to the
agreement, contract, or transaction that
settles against any price (including the
daily or final settlement price) of 1 or
more contracts listed for trading on a
registered entity, of any change
regarding--
``(aa) <<NOTE: Public
information.>> the information
that the foreign board of trade
will make publicly available;
``(bb) the position limits
that the foreign board of trade
or foreign futures authority
will adopt and enforce;
``(cc) the position
reductions required to prevent
manipulation, excessive
speculation as described in
section 4a, price distortion, or
disruption of delivery or the
cash settlement process; and
``(dd) any other area of
interest expressed by the
Commission to the foreign board
of trade or foreign futures
authority;
``(IV) provides information to the
Commission regarding large trader
positions in the agreement, contract, or
transaction that is comparable to the
large trader position information
collected by the Commission for the 1 or
more contracts against which the
agreement, contract, or transaction
traded on the foreign board of trade
settles; and
``(V) <<NOTE: Reports.>> provides
the Commission such information as is
necessary to publish reports on
aggregate
[[Page 124 STAT. 1728]]
trader positions for the agreement,
contract, or transaction traded on the
foreign board of trade that are
comparable to such reports on aggregate
trader positions for the 1 or more
contracts against which the agreement,
contract, or transaction traded on the
foreign board of trade settles.
``(C) <<NOTE: Effective date.>> Existing foreign
boards of trade.--Subparagraphs (A) and (B) shall not be
effective with respect to any foreign board of trade to
which, prior to the date of enactment of this paragraph,
the Commission granted direct access permission until
the date that is 180 days after that date of
enactment.''.
(b) Liability of Registered Persons Trading on a Foreign Board of
Trade.--Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is
amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by inserting ``or by subsection (e)'' after ``Unless
exempted by the Commission pursuant to subsection (c)''; and
(2) by adding at the end the following:
``(e) Liability of Registered Persons Trading on a Foreign Board of
Trade.--
``(1) In general.--A person registered with the Commission,
or exempt from registration by the Commission, under this Act
may not be found to have violated subsection (a) with respect to
a transaction in, or in connection with, a contract of sale of a
commodity for future delivery if the person--
``(A) has reason to believe that the transaction and
the contract is made on or subject to the rules of a
foreign board of trade that is--
``(i) legally organized under the laws of a
foreign country;
``(ii) authorized to act as a board of trade
by a foreign futures authority; and
``(iii) subject to regulation by the foreign
futures authority; and
``(B) has not been determined by the Commission to
be operating in violation of subsection (a).
``(2) Rule of construction.--Nothing in this subsection
shall be construed as implying or creating any presumption that
a board of trade, exchange, or market is located outside the
United States, or its territories or possessions, for purposes
of subsection (a).''.
(c) Contract Enforcement for Foreign Futures Contracts.--Section
22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) (as amended by
section 739) is amended by adding at the end the following:
``(6) Contract Enforcement for Foreign Futures Contracts.--A
contract of sale of a commodity for future delivery traded or executed
on or through the facilities of a board of trade, exchange, or market
located outside the United States for purposes of section 4(a) shall not
be void, voidable, or unenforceable, and a party to such a contract
shall not be entitled to rescind or recover any payment made with
respect to the contract, based on the failure of the foreign board of
trade to comply with any provision of this Act.''.
[[Page 124 STAT. 1729]]
SEC. 739. LEGAL CERTAINTY FOR SWAPS.
Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is
amended by striking paragraph (4) and inserting the following:
``(4) Contract Enforcement Between Eligible Counterparties.--
``(A) In general.--No hybrid instrument sold to any investor
shall be void, voidable, or unenforceable, and no party to a
hybrid instrument shall be entitled to rescind, or recover any
payment made with respect to, the hybrid instrument under this
section or any other provision of Federal or State law, based
solely on the failure of the hybrid instrument to comply with
the terms or conditions of section 2(f) or regulations of the
Commission.
``(B) Swaps.--No agreement, contract, or transaction between
eligible contract participants or persons reasonably believed to
be eligible contract participants shall be void, voidable, or
unenforceable, and no party to such agreement, contract, or
transaction shall be entitled to rescind, or recover any payment
made with respect to, the agreement, contract, or transaction
under this section or any other provision of Federal or State
law, based solely on the failure of the agreement, contract, or
transaction--
``(i) to meet the definition of a swap under section
1a; or
``(ii) to be cleared in accordance with section
2(h)(1).
``(5) Legal Certainty for Long-term Swaps Entered Into Before the
Date of Enactment of the Wall Street Transparency and Accountability Act
of 2010.--
``(A) Effect on swaps.--Unless specifically reserved in the
applicable swap, neither the enactment of the Wall Street
Transparency and Accountability Act of 2010, nor any requirement
under that Act or an amendment made by that Act, shall
constitute a termination event, force majeure, illegality,
increased costs, regulatory change, or similar event under a
swap (including any related credit support arrangement) that
would permit a party to terminate, renegotiate, modify, amend,
or supplement 1 or more transactions under the swap.
``(B) Position limits.--Any position limit established under
the Wall Street Transparency and Accountability Act of 2010
shall not apply to a position acquired in good faith prior to
the effective date of any rule, regulation, or order under the
Act that establishes the position limit; provided, however, that
such positions shall be attributed to the trader if the trader's
position is increased after the effective date of such position
limit rule, regulation, or order.''.
SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.
Sections <<NOTE: Repeal.>> 408 and 409 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) are
repealed.
SEC. 741. ENFORCEMENT.
(a) Enforcement Authority.--The Commodity Exchange Act is amended by
inserting after section 4b (7 U.S.C. 6b) the following:
``SEC. 4b-1. <<NOTE: 7 USC 6b-1.>> ENFORCEMENT AUTHORITY.
``(a) Commodity Futures Trading Commission.--Except as provided in
subsections (b), (c), and (d), the Commission shall have exclusive
authority to enforce the provisions of subtitle A of the
[[Page 124 STAT. 1730]]
Wall Street Transparency and Accountability Act of 2010 with respect to
any person.
``(b) Prudential Regulators.--The prudential regulators shall have
exclusive authority to enforce the provisions of section 4s(e) with
respect to swap dealers or major swap participants for which they are
the prudential regulator.
``(c) Referrals.--
``(1) Prudential regulators.--If the prudential regulator
for a swap dealer or major swap participant has cause to believe
that the swap dealer or major swap participant, or any affiliate
or division of the swap dealer or major swap participant, may
have engaged in conduct that constitutes a violation of the
nonprudential requirements of this Act (including section 4s or
rules adopted by the Commission under that section), the
prudential regulator may promptly notify the Commission in a
written report that includes--
``(A) a request that the Commission initiate an
enforcement proceeding under this Act; and
``(B) an explanation of the facts and circumstances
that led to the preparation of the written report.
``(2) Commission.--If the Commission has cause to believe
that a swap dealer or major swap participant that has a
prudential regulator may have engaged in conduct that
constitutes a violation of any prudential requirement of section
4s or rules adopted by the Commission under that section, the
Commission may notify the prudential regulator of the conduct in
a written report that includes--
``(A) a request that the prudential regulator
initiate an enforcement proceeding under this Act or any
other Federal law (including regulations); and
``(B) an explanation of the concerns of the
Commission, and a description of the facts and
circumstances, that led to the preparation of the
written report.
``(d) <<NOTE: Time period.>> Backstop Enforcement Authority.--
``(1) Initiation of enforcement proceeding by prudential
regulator.--If the Commission does not initiate an enforcement
proceeding before the end of the 90-day period beginning on the
date on which the Commission receives a written report under
subsection (c)(1), the prudential regulator may initiate an
enforcement proceeding.
``(2) Initiation of enforcement proceeding by commission.--
If the prudential regulator does not initiate an enforcement
proceeding before the end of the 90-day period beginning on the
date on which the prudential regulator receives a written report
under subsection (c)(2), the Commission may initiate an
enforcement proceeding.''.
(b) Conforming Amendments.--
(1) Section 4b of the Commodity Exchange Act (7 U.S.C. 6b)
is amended--
(A) in subsection (a)(2), by striking ``or other
agreement, contract, or transaction subject to
paragraphs (1) and (2) of section 5a(g),'' and inserting
``or swap,'';
(B) in subsection (b), by striking ``or other
agreement, contract or transaction subject to paragraphs
(1) and (2) of section 5a(g),'' and inserting ``or
swap,''; and
(C) by adding at the end the following:
[[Page 124 STAT. 1731]]
``(e) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce, or of
the mails, or of any facility of any registered entity, in or in
connection with any order to make, or the making of, any contract of
sale of any commodity for future delivery (or option on such a
contract), or any swap, on a group or index of securities (or any
interest therein or based on the value thereof)--
``(1) to employ any device, scheme, or artifice to defraud;
``(2) to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which
they were made, not misleading; or
``(3) to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any
person.''.
(2) Section 4c(a)(1) of the Commodity Exchange Act (7 U.S.C.
6c(a)(1)) is amended by inserting ``or swap'' before ``if the
transaction is used or may be used''.
(3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9)
is amended in the first sentence by inserting ``or of any
swap,'' before ``or has willfully made''.
(4) Section 6(d) of the Commodity Exchange Act (7 U.S.C.
13b) is amended in the first sentence, in the matter preceding
the proviso, by inserting ``or of any swap,'' before ``or
otherwise is violating''.
(5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C.
13a-1(a)) is amended in the matter preceding the proviso by
inserting ``or any swap'' after ``commodity for future
delivery''.
(6) Section 9 of the Commodity Exchange Act (7 U.S.C. 13) is
amended--
(A) in subsection (a)--
(i) in paragraph (2), by inserting ``or of any
swap,'' before ``or to corner''; and
(ii) in paragraph (4), by inserting ``swap
data repository,'' before ``or futures
association'' and
(B) in subsection (e)(1)--
(i) by inserting ``swap data repository,''
before ``or registered futures association''; and
(ii) by inserting ``, or swaps,'' before ``on
the basis''.
(7) Section 9(a) of the Commodity Exchange Act (7 U.S.C.
13(a)) is amended by adding at the end the following:
``(6) Any person to abuse the end user clearing exemption
under section 2(h)(4), as determined by the Commission.''.
(8) Section 2(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(B)) is amended--
(A) by striking ``(dd),'' each place it appears;
(B) in clause (iii), by inserting ``, and accounts
or pooled investment vehicles described in clause
(vi),'' before ``shall be subject to''; and
(C) by adding at the end the following:
``(vi) <<NOTE: Applicability.>> This Act
applies to, and the Commission shall have
jurisdiction over, an account or pooled investment
vehicle that is offered for the purpose of
trading, or that trades, any agreement, contract,
or transaction in foreign currency described in
clause (i).''.
(9) Section 2(c)(2)(C) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(C)) is amended--
[[Page 124 STAT. 1732]]
(A) by striking ``(dd),'' each place it appears;
(B) in clause (ii)(I), by inserting ``, and accounts
or pooled investment vehicles described in clause
(vii),'' before ``shall be subject to''; and
(C) by adding at the end the following:
``(vii) <<NOTE: Applicability.>> This Act
applies to, and the Commission shall have
jurisdiction over, an account or pooled investment
vehicle that is offered for the purpose of
trading, or that trades, any agreement, contract,
or transaction in foreign currency described in
clause (i).''.
(10) Section 1a(19)(A)(iv)(II) of the Commodity Exchange Act
(7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section
721(a)(1)) is amended by inserting before the semicolon at the
end the following: ``provided, however, that for purposes of
section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the term
`eligible contract participant' shall not include a commodity
pool in which any participant is not otherwise an eligible
contract participant''.
(11) Section 6(e) of the Commodity Exchange Act (7 U.S.C.
9a) is amended by adding at the end the following:
``(4) <<NOTE: Penalty.>> Any designated clearing
organization that knowingly or recklessly evades or participates
in or facilitates an evasion of the requirements of section 2(h)
shall be liable for a civil money penalty in twice the amount
otherwise available for a violation of section 2(h).
``(5) <<NOTE: Penalty.>> Any swap dealer or major swap
participant that knowingly or recklessly evades or participates
in or facilitates an evasion of the requirements of section 2(h)
shall be liable for a civil money penalty in twice the amount
otherwise available for a violation of section 2(h).''.
(c) <<NOTE: 15 USC 8324.>> Savings Clause.--Notwithstanding any
other provision of this title, nothing in this subtitle shall be
construed as divesting any appropriate Federal banking agency of any
authority it may have to establish or enforce, with respect to a person
for which such agency is the appropriate Federal banking agency,
prudential or other standards pursuant to authority granted by Federal
law other than this title.
SEC. 742. RETAIL COMMODITY TRANSACTIONS.
(a) In General.--Section 2(c) of the Commodity Exchange Act (7
U.S.C. 2(c)) is amended--
(1) in paragraph (1), by striking ``5a (to the extent
provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))'' and
inserting ``, 5b, or 12(e)(2)(B))''; and
(2) in paragraph (2), by adding at the end the following:
``(D) <<NOTE: Contracts.>> Retail commodity
transactions.--
``(i) Applicability.--Except as provided in
clause (ii), this subparagraph shall apply to any
agreement, contract, or transaction in any
commodity that is--
``(I) entered into with, or offered
to (even if not entered into with), a
person that is not an eligible contract
participant or eligible commercial
entity; and
``(II) entered into, or offered
(even if not entered into), on a
leveraged or margined basis, or financed
by the offeror, the counterparty, or
[[Page 124 STAT. 1733]]
a person acting in concert with the
offeror or counterparty on a similar
basis.
``(ii) Exceptions.--This subparagraph shall
not apply to--
``(I) an agreement, contract, or
transaction described in paragraph (1)
or subparagraphs (A), (B), or (C),
including any agreement, contract, or
transaction specifically excluded from
subparagraph (A), (B), or (C);
``(II) any security;
``(III) a contract of sale that--
``(aa) results in actual
delivery within 28 days or such
other longer period as the
Commission may determine by rule
or regulation based upon the
typical commercial practice in
cash or spot markets for the
commodity involved; or
``(bb) creates an
enforceable obligation to
deliver between a seller and a
buyer that have the ability to
deliver and accept delivery,
respectively, in connection with
the line of business of the
seller and buyer; or
``(IV) an agreement, contract, or
transaction that is listed on a national
securities exchange registered under
section 6(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(a)); or
``(V) an identified banking product,
as defined in section 402(b) of the
Legal Certainty for Bank Products Act of
2000 (7 U.S.C.27(b)).
``(iii) <<NOTE: Applicability.>>
Enforcement.--Sections 4(a), 4(b), and 4b apply to
any agreement, contract, or transaction described
in clause (i), as if the agreement, contract, or
transaction was a contract of sale of a commodity
for future delivery.
``(iv) Eligible commercial entity.--For
purposes of this subparagraph, an agricultural
producer, packer, or handler shall be considered
to be an eligible commercial entity for any
agreement, contract, or transaction for a
commodity in connection with the line of business
of the agricultural producer, packer, or
handler.''.
(b) Gramm-Leach-Bliley Act.--Section 206(a) of the Gramm-Leach-
Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is amended, in the
matter preceding paragraph (1), by striking ``For purposes of'' and
inserting ``Except as provided in subsection (e), for purposes of''.
(c) Conforming Amendments Relating to Retail Foreign Exchange
Transactions.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (aa), by inserting ``United States''
before ``financial institution'';
(B) by striking items (dd) and (ff);
(C) by redesignating items (ee) and (gg) as items
(dd) and (ff), respectively; and
(D) in item (dd) (as so redesignated), by striking
the semicolon and inserting ``; or''.
[[Page 124 STAT. 1734]]
(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)) (as amended by subsection (a)(2)) is amended by adding
at the end the following:
``(E) Prohibition.--
``(i) Definition of federal regulatory
agency.--In this subparagraph, the term `Federal
regulatory agency' means--
``(I) the Commission;
``(II) the Securities and Exchange
Commission;
``(III) an appropriate Federal
banking agency;
``(IV) the National Credit Union
Association; and
``(V) the Farm Credit
Administration.
``(ii) <<NOTE: Contracts.>> Prohibition.--
``(I) In general.--Except as
provided in subclause (II), a person
described in subparagraph (B)(i)(II) for
which there is a Federal regulatory
agency shall not offer to, or enter into
with, a person that is not an eligible
contract participant, any agreement,
contract, or transaction in foreign
currency described in subparagraph
(B)(i)(I) except pursuant to a rule or
regulation of a Federal regulatory
agency allowing the agreement, contract,
or transaction under such terms and
conditions as the Federal regulatory
agency shall prescribe.
``(II) Effective date.--With regard
to persons described in subparagraph
(B)(i)(II) for which a Federal
regulatory agency has issued a proposed
rule concerning agreements, contracts,
or transactions in foreign currency
described in subparagraph (B)(i)(I)
prior to the date of enactment of this
subclause, subclause (I) shall take
effect 90 days after the date of
enactment of this subclause.
``(iii) Requirements of rules and
regulations.--
``(I) In general.--The rules and
regulations described in clause (ii)
shall prescribe appropriate requirements
with respect to--
``(aa) disclosure;
``(bb) recordkeeping;
``(cc) capital and margin;
``(dd) reporting;
``(ee) business conduct;
``(ff) documentation; and
``(gg) <<NOTE: Determination.>>
such other standards or
requirements as the Federal
regulatory agency shall
determine to be necessary.
``(II) Treatment.--The rules or
regulations described in clause (ii)
shall treat all agreements, contracts,
and transactions in foreign currency
described in subparagraph (B)(i)(I), and
all agreements, contracts, and
transactions in foreign currency that
are functionally or economically similar
to agreements, contracts, or
transactions described in subparagraph
(B)(i)(I), similarly.''.
[[Page 124 STAT. 1735]]
SEC. <<NOTE: 7 USC 1a note.>> 743. OTHER AUTHORITY.
Unless otherwise provided by the amendments made by this subtitle,
the amendments made by this subtitle do not divest any appropriate
Federal banking agency, the Commodity Futures Trading Commission, the
Securities and Exchange Commission, or other Federal or State agency of
any authority derived from any other applicable law.
SEC. 744. RESTITUTION REMEDIES.
Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a-1(d)) is
amended by adding at the end the following:
``(3) Equitable remedies.--In any action brought under this
section, the Commission may seek, and the court may impose, on a
proper showing, on any person found in the action to have
committed any violation, equitable remedies including--
``(A) restitution to persons who have sustained
losses proximately caused by such violation (in the
amount of such losses); and
``(B) disgorgement of gains received in connection
with such violation.''.
SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.
(a) Effect of Interpretation.--Section 5c(a) of the Commodity
Exchange Act (7 U.S.C. 7a-2(a)) is amended by striking paragraph (2) and
inserting the following:
``(2) Effect of interpretation.--An interpretation issued
under paragraph (1) may provide the exclusive means for
complying with each section described in paragraph (1).''.
(b) New Contracts, New Rules, and Rule Amendments.--Section 5c of
the Commodity Exchange Act (7 U.S.C. 7a-2) is amended by striking
subsection (c) and inserting the following:
``(c) <<NOTE: Certification.>> New Contracts, New Rules, and Rule
Amendments.--
``(1) In general.--A registered entity may elect to list for
trading or accept for clearing any new contract, or other
instrument, or may elect to approve and implement any new rule
or rule amendment, by providing to the Commission (and the
Secretary of the Treasury, in the case of a contract of sale of
a government security for future delivery (or option on such a
contract) or a rule or rule amendment specifically related to
such a contract) a written certification that the new contract
or instrument or clearing of the new contract or instrument, new
rule, or rule amendment complies with this Act (including
regulations under this Act).
``(2) Rule review.--The new rule or rule amendment described
in paragraph (1) <<NOTE: Effective
date. Notification. Determination.>> shall become effective,
pursuant to the certification of the registered entity and
notice of such certification to its members (in a manner to be
determined by the Commission), on the date that is 10 business
days after the date on which the Commission receives the
certification (or such shorter period as determined by the
Commission by rule or regulation) unless the Commission notifies
the registered entity within such time that it is staying the
certification because there exist novel or complex issues that
require additional time to analyze, an inadequate explanation by
the submitting registered entity, or a potential inconsistency
with this Act (including regulations under this Act).
[[Page 124 STAT. 1736]]
``(3) <<NOTE: Notification. Time period.>> Stay of
certification for rules.--
``(A) A notification by the Commission pursuant to
paragraph (2) shall stay the certification of the new
rule or rule amendment for up to an additional 90 days
from the date of the notification.
``(B) <<NOTE: Effective date.>> A rule or rule
amendment subject to a stay pursuant to subparagraph (A)
shall become effective, pursuant to the certification of
the registered entity, at the expiration of the period
described in subparagraph (A) unless the Commission--
``(i) withdraws the stay prior to that time;
or
``(ii) notifies the registered entity during
such period that it objects to the proposed
certification on the grounds that it is
inconsistent with this Act (including regulations
under this Act).
``(C) <<NOTE: Public comment.>> The Commission
shall provide a not less than 30-day public comment
period, within the 90-day period in which the stay is in
effect as described in subparagraph (A), whenever the
Commission reviews a rule or rule amendment pursuant to
a notification by the Commission under this paragraph.
``(4) Prior approval.--
``(A) In general.--A registered entity may request
that the Commission grant prior approval to any new
contract or other instrument, new rule, or rule
amendment.
``(B) Prior approval required.--Notwithstanding any
other provision of this section, a designated contract
market shall submit to the Commission for prior approval
each rule amendment that materially changes the terms
and conditions, as determined by the Commission, in any
contract of sale for future delivery of a commodity
specifically enumerated in section 1a(10) (or any option
thereon) traded through its facilities if the rule
amendment applies to contracts and delivery months which
have already been listed for trading and have open
interest.
``(C) Deadline.--If prior approval is requested
under subparagraph (A), the Commission shall take final
action on the request not later than 90 days after
submission of the request, unless the person submitting
the request agrees to an extension of the time
limitation established under this subparagraph.
``(5) Approval.--
``(A) Rules.--The Commission shall approve a new
rule, or rule amendment, of a registered entity unless
the Commission finds that the new rule, or rule
amendment, is inconsistent with this subtitle (including
regulations).
``(B) Contracts and instruments.--The Commission
shall approve a new contract or other instrument unless
the Commission finds that the new contract or other
instrument would violate this Act (including
regulations).
``(C) Special rule for review and approval of event
contracts and swaps contracts.--
``(i) Event contracts.--In connection with the
listing of agreements, contracts, transactions, or
swaps in excluded commodities that are based upon
the occurrence, extent of an occurrence, or
contingency (other than a change in the price,
rate, value, or levels of
[[Page 124 STAT. 1737]]
a commodity described in section 1a(2)(i)), by a
designated contract market or swap execution
facility, the Commission may determine that such
agreements, contracts, or transactions are
contrary to the public interest if the agreements,
contracts, or transactions involve--
``(I) activity that is unlawful
under any Federal or State law;
``(II) terrorism;
``(III) assassination;
``(IV) war;
``(V) gaming; or
``(VI) other similar activity
determined by the Commission, by rule or
regulation, to be contrary to the public
interest.
``(ii) Prohibition.--No agreement, contract,
or transaction determined by the Commission to be
contrary to the public interest under clause (i)
may be listed or made available for clearing or
trading on or through a registered entity.
``(iii) Swaps contracts.--
``(I) In general.--
In <<NOTE: Determination.>> connection
with the listing of a swap for clearing
by a derivatives clearing organization,
the Commission shall determine, upon
request or on its own motion, the
initial eligibility, or the continuing
qualification, of a derivatives clearing
organization to clear such a swap under
those criteria, conditions, or rules
that the Commission, in its discretion,
determines.
``(II) Requirements.--Any such
criteria, conditions, or rules shall
consider--
``(aa) the financial
integrity of the derivatives
clearing organization; and
``(bb) any other factors
which the Commission determines
may be appropriate.
``(iv) Deadline.--The Commission shall take
final action under clauses (i) and (ii) in not
later than 90 days from the commencement of its
review unless the party seeking to offer the
contract or swap agrees to an extension of this
time limitation.''.
(c) Violation of Core Principles.--Section 5c of the Commodity
Exchange Act (7 U.S.C. 7a-2) is amended by striking subsection (d).
SEC. 746. INSIDER TRADING.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended by adding at the end the following:
``(3) Contract of sale.--It shall be unlawful for any
employee or agent of any department or agency of the Federal
Government who, by virtue of the employment or position of the
employee or agent, acquires information that may affect or tend
to affect the price of any commodity in interstate commerce, or
for future delivery, or any swap, and which information has not
been disseminated by the department or agency of the Federal
Government holding or creating the information in a manner which
makes it generally available to the trading public, or disclosed
in a criminal, civil, or
[[Page 124 STAT. 1738]]
administrative hearing, or in a congressional, administrative,
or Government Accountability Office report, hearing, audit, or
investigation, to use the information in his personal capacity
and for personal gain to enter into, or offer to enter into--
``(A) a contract of sale of a commodity for future
delivery (or option on such a contract);
``(B) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78f(a)); or
``(C) a swap.
``(4) Nonpublic information.--
``(A) Imparting of nonpublic information.--It shall
be unlawful for any employee or agent of any department
or agency of the Federal Government who, by virtue of
the employment or position of the employee or agent,
acquires information that may affect or tend to affect
the price of any commodity in interstate commerce, or
for future delivery, or any swap, and which information
has not been disseminated by the department or agency of
the Federal Government holding or creating the
information in a manner which makes it generally
available to the trading public, or disclosed in a
criminal, civil, or administrative hearing, or in a
congressional, administrative, or Government
Accountability Office report, hearing, audit, or
investigation, to impart the information in his personal
capacity and for personal gain with intent to assist
another person, directly or indirectly, to use the
information to enter into, or offer to enter into--
``(i) a contract of sale of a commodity for
future delivery (or option on such a contract);
``(ii) an option (other than an option
executed or traded on a national securities
exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap.
``(B) Knowing use.--It shall be unlawful for any
person who receives information imparted by any employee
or agent of any department or agency of the Federal
Government as described in subparagraph (A) to knowingly
use such information to enter into, or offer to enter
into--
``(i) a contract of sale of a commodity for
future delivery (or option on such a contract);
``(ii) an option (other than an option
executed or traded on a national securities
exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap.
``(C) Theft of nonpublic information.--It shall be
unlawful for any person to steal, convert, or
misappropriate, by any means whatsoever, information
held or created by any department or agency of the
Federal Government that may affect or tend to affect the
price of any commodity in interstate commerce, or for
future delivery, or any swap, where such person knows,
or acts in reckless disregard of the fact, that such
information has not been disseminated by the department
or agency of the Federal Government
[[Page 124 STAT. 1739]]
holding or creating the information in a manner which
makes it generally available to the trading public, or
disclosed in a criminal, civil, or administrative
hearing, or in a congressional, administrative, or
Government Accountability Office report, hearing, audit,
or investigation, and to use such information, or to
impart such information with the intent to assist
another person, directly or indirectly, to use such
information to enter into, or offer to enter into--
``(i) a contract of sale of a commodity for
future delivery (or option on such a contract);
``(ii) an option (other than an option
executed or traded on a national securities
exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(iii) a swap, provided, however, that
nothing in this subparagraph shall preclude a
person that has provided information concerning,
or generated by, the person, its operations or
activities, to any employee or agent of any
department or agency of the Federal Government,
voluntarily or as required by law, from using such
information to enter into, or offer to enter into,
a contract of sale, option, or swap described in
clauses (i), (ii), or (iii).''.
SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) (as
amended by section 746) is amended by adding at the end the following:
``(5) Disruptive practices.--It shall be unlawful for any
person to engage in any trading, practice, or conduct on or
subject to the rules of a registered entity that--
``(A) violates bids or offers;
``(B) demonstrates intentional or reckless disregard
for the orderly execution of transactions during the
closing period; or
``(C) is, is of the character of, or is commonly
known to the trade as, `spoofing' (bidding or offering
with the intent to cancel the bid or offer before
execution).
``(6) Rulemaking authority.--The Commission may make and
promulgate such rules and regulations as, in the judgment of the
Commission, are reasonably necessary to prohibit the trading
practices described in paragraph (5) and any other trading
practice that is disruptive of fair and equitable trading.
``(7) Use of swaps to defraud.--It shall be unlawful for any
person to enter into a swap knowing, or acting in reckless
disregard of the fact, that its counterparty will use the swap
as part of a device, scheme, or artifice to defraud any third
party.''.
SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding
at the end the following:
``SEC. 23. <<NOTE: 7 USC 26.>> COMMODITY WHISTLEBLOWER INCENTIVES
AND PROTECTION.
``(a) Definitions.--In this section:
[[Page 124 STAT. 1740]]
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial
or administrative action brought by the Commission under this
Act that results in monetary sanctions exceeding $1,000,000.
``(2) Fund.--The term `Fund' means the Commodity Futures
Trading Commission Customer Protection Fund established under
subsection (g).
``(3) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative action
means--
``(A) any monies, including penalties, disgorgement,
restitution, and interest ordered to be paid; and
``(B) any monies deposited into a disgorgement fund
or other fund pursuant to section 308(b) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a
result of such action or any settlement of such action.
``(4) Original information.--The term `original information'
means information that--
``(A) is derived from the independent knowledge or
analysis of a whistleblower;
``(B) is not known to the Commission from any other
source, unless the whistleblower is the original source
of the information; and
``(C) is not exclusively derived from an allegation
made in a judicial or administrative hearing, in a
governmental report, hearing, audit, or investigation,
or from the news media, unless the whistleblower is a
source of the information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought by
the Commission under this Act, means any judicial or
administrative action brought by an entity described in
subclauses (I) through (VI) of subsection (h)(2)(C) that is
based upon the original information provided by a whistleblower
pursuant to subsection (a) that led to the successful
enforcement of the Commission action.
``(6) Successful resolution.--The term `successful
resolution', when used with respect to any judicial or
administrative action brought by the Commission under this Act,
includes any settlement of such action.
``(7) Whistleblower.--The term `whistleblower' means any
individual, or 2 or more individuals acting jointly, who
provides information relating to a violation of this Act to the
Commission, in a manner established by rule or regulation by the
Commission.
``(b) Awards.--
``(1) <<NOTE: Regulations.>> In general.--In any covered
judicial or administrative action, or related action, the
Commission, under regulations prescribed by the Commission and
subject to subsection (c), shall pay an award or awards to 1 or
more whistleblowers who voluntarily provided original
information to the Commission that led to the successful
enforcement of the covered judicial or administrative action, or
related action, in an aggregate amount equal to--
[[Page 124 STAT. 1741]]
``(A) not less than 10 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions; and
``(B) not more than 30 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Commission.
``(B) Criteria.--In determining the amount of an
award made under subsection (b), the Commission--
``(i) shall take into consideration--
``(I) the significance of the
information provided by the
whistleblower to the success of the
covered judicial or administrative
action;
``(II) the degree of assistance
provided by the whistleblower and any
legal representative of the
whistleblower in a covered judicial or
administrative action;
``(III) the programmatic interest of
the Commission in deterring violations
of the Act (including regulations under
the Act) by making awards to
whistleblowers who provide information
that leads to the successful enforcement
of such laws; and
``(IV) such additional relevant
factors as the Commission may establish
by rule or regulation; and
``(ii) shall not take into consideration the
balance of the Fund.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the
time the whistleblower acquired the original information
submitted to the Commission, a member, officer, or
employee of--
``(i) a appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a registered entity;
``(iv) a registered futures association;
``(v) a self-regulatory organization as
defined in section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)); or
``(vi) a law enforcement organization;
``(B) to any whistleblower who is convicted of a
criminal violation related to the judicial or
administrative action for which the whistleblower
otherwise could receive an award under this section;
``(C) to any whistleblower who submits information
to the Commission that is based on the facts underlying
the covered action submitted previously by another
whistleblower;
[[Page 124 STAT. 1742]]
``(D) to any whistleblower who fails to submit
information to the Commission in such form as the
Commission may, by rule or regulation, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who makes
a claim for an award under subsection (b) may be represented by
counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously
makes a claim for an award under subsection (b) shall be
represented by counsel if the whistleblower submits the
information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment
of an award, a whistleblower shall disclose the identity
of the whistleblower and provide such other information
as the Commission may require, directly or through
counsel for the whistleblower.
``(e) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Commission, by rule or regulation.
``(f) Appeals.--
``(1) In general.--Any determination made under this
section, including whether, to whom, or in what amount to make
awards, shall be in the discretion of the Commission.
``(2) Appeals.--Any <<NOTE: Deadline.>> determination
described in paragraph (1) may be appealed to the appropriate
court of appeals of the United States not more than 30 days
after the determination is issued by the Commission.
``(3) Review.--The court shall review the determination made
by the Commission in accordance with section 7064 of title 5,
United States Code.
``(g) Commodity Futures Trading Commission Customer Protection
Fund.--
``(1) Establishment.--There is established in the Treasury
of the United States a revolving fund to be known as the
`Commodity Futures Trading Commission Customer Protection Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) the payment of awards to whistleblowers as
provided in subsection (a); and
``(B) the funding of customer education initiatives
designed to help customers protect themselves against
fraud or other violations of this Act, or the rules and
regulations thereunder.
``(3) Deposits and credits.--There shall be deposited into
or credited to the Fund:
``(A) Monetary sanctions.--Any monetary sanctions
collected by the Commission in any covered judicial or
administrative action that is not otherwise distributed
to victims of a violation of this Act or the rules and
regulations thereunder underlying such action, unless
the balance of the Fund at the time the monetary
judgment is collected exceeds $100,000,000.
[[Page 124 STAT. 1743]]
``(B) Additional amounts.--If the amounts deposited
into or credited to the Fund under subparagraph (A) are
not sufficient to satisfy an award made under subsection
(b), there shall be deposited into or credited to the
Fund an amount equal to the unsatisfied portion of the
award from any monetary sanction collected by the
Commission in any judicial or administrative action
brought by the Commission under this Act that is based
on information provided by a whistleblower.
``(C) Investment income.--All income from
investments made under paragraph (4).
``(4) Investments.--
``(A) Amounts in fund may be invested.--The
Commission may request the Secretary of the Treasury to
invest the portion of the Fund that is not, in the
Commission's judgment, required to meet the current
needs of the Fund.
``(B) Eligible investments.--Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with
maturities suitable to the needs of the Fund as
determined by the Commission.
``(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Fund shall be credited to, and
form a part of, the Fund.
``(5) Reports to congress.--Not later than October 30 of
each year, the Commission shall transmit to the Committee on
Agriculture, Nutrition, and Forestry of the Senate, and the
Committee on Agriculture of the House of Representatives a
report on--
``(A) the Commission's whistleblower award program
under this section, including a description of the
number of awards granted and the types of cases in which
awards were granted during the preceding fiscal year;
``(B) customer education initiatives described in
paragraph (2)(B) that were funded by the Fund during the
preceding fiscal year;
``(C) the balance of the Fund at the beginning of
the preceding fiscal year;
``(D) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
``(E) the amount of earnings on investments of
amounts in the Fund during the preceding fiscal year;
``(F) the amount paid from the Fund during the
preceding fiscal year to whistleblowers pursuant to
subsection (b);
``(G) the amount paid from the Fund during the
preceding fiscal year for customer education initiatives
described in paragraph (2)(B);
``(H) the balance of the Fund at the end of the
preceding fiscal year; and
``(I) a complete set of audited financial
statements, including a balance sheet, income statement,
and cash flow analysis.
``(h) Protection of Whistleblowers.--
[[Page 124 STAT. 1744]]
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge,
demote, suspend, threaten, harass, directly or
indirectly, or in any other manner discriminate against,
a whistleblower in the terms and conditions of
employment because of any lawful act done by the
whistleblower--
``(i) in providing information to the
Commission in accordance with subsection (b); or
``(ii) in assisting in any investigation or
judicial or administrative action of the
Commission based upon or related to such
information.
``(B) Enforcement.--
``(i) Cause of action.--An individual who
alleges discharge or other discrimination in
violation of subparagraph (A) may bring an action
under this subsection in the appropriate district
court of the United States for the relief provided
in subparagraph (C), unless the individual who is
alleging discharge or other discrimination in
violation of subparagraph (A) is an employee of
the Federal Government, in which case the
individual shall only bring an action under
section 1221 of title 5, United States Code.
``(ii) Subpoenas.--A subpoena requiring the
attendance of a witness at a trial or hearing
conducted under this subsection may be served at
any place in the United States.
``(iii) Statute of limitations.--An action
under this subsection may not be brought more than
2 years after the date on which the violation
reported in subparagraph (A) is committed.
``(C) Relief.--Relief for an individual prevailing
in an action brought under subparagraph (B) shall
include--
``(i) reinstatement with the same seniority
status that the individual would have had, but for
the discrimination;
``(ii) the amount of back pay otherwise owed
to the individual, with interest; and
``(iii) compensation for any special damages
sustained as a result of the discharge or
discrimination, including litigation costs, expert
witness fees, and reasonable attorney's fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the Commission, and any
officer or employee of the Commission, shall not
disclose any information, including information provided
by a whistleblower to the Commission, which could
reasonably be expected to reveal the identity of a
whistleblower, except in accordance with the provisions
of section 552a of title 5, United States Code, unless
and until required to be disclosed to a defendant or
respondent in connection with a public proceeding
instituted by the Commission or any entity described in
subparagraph (C). For purposes of section 552 of title
5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B)
of such section 552.
[[Page 124 STAT. 1745]]
``(B) Effect.--Nothing in this paragraph is intended
to limit the ability of the Attorney General to present
such evidence to a grand jury or to share such evidence
with potential witnesses or defendants in the course of
an ongoing criminal investigation.
``(C) Availability to government agencies.--
``(i) In general.--Without the loss of its
status as confidential in the hands of the
Commission, all information referred to in
subparagraph (A) may, in the discretion of the
Commission, when determined by the Commission to
be necessary or appropriate to accomplish the
purposes of this Act and protect customers and in
accordance with clause (ii), be made available
to--
``(I) the Department of Justice;
``(II) an appropriate department or
agency of the Federal Government, acting
within the scope of its jurisdiction;
``(III) a registered entity,
registered futures association, or self-
regulatory organization as defined in
section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a));
``(IV) a State attorney general in
connection with any criminal
investigation;
``(V) an appropriate department or
agency of any State, acting within the
scope of its jurisdiction; and
``(VI) a foreign futures authority.
``(ii) Maintenance of information.--Each of
the entities, agencies, or persons described in
clause (i) shall maintain information described in
that clause as confidential, in accordance with
the requirements in subparagraph (A).
``(iii) Study on impact of foia exemption on
commodity futures trading commission.--
``(I) Study.--The Inspector General
of the Commission shall conduct a
study--
``(aa) on whether the
exemption under section
552(b)(3) of title 5, United
States Code (known as the
Freedom of Information Act)
established in paragraph (2)(A)
aids whistleblowers in
disclosing information to the
Commission;
``(bb) on what impact the
exemption has had on the
public's ability to access
information about the
Commission's regulation of
commodity futures and option
markets; and
``(cc) to make any
recommendations on whether the
Commission should continue to
use the exemption.
``(II) Report.--Not later than 30
months after the date of enactment of
this clause, the Inspector General
shall--
``(aa) submit a report on
the findings of the study
required under this clause to
the Committee on Banking,
Housing, and Urban Affairs of
the Senate and the Committee on
[[Page 124 STAT. 1746]]
Financial Services of the House
of Representatives; and
``(bb) <<NOTE: Public
information. Web posting.>>
make the report available to the
public through publication of a
report on the website of the
Commission.
``(3) Rights retained.--Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Rulemaking Authority.--The Commission shall have the authority
to issue such rules and regulations as may be necessary or appropriate
to implement the provisions of this section consistent with the purposes
of this section.
``(j) <<NOTE: Deadline.>> Implementing Rules.--The Commission shall
issue final rules or regulations implementing the provisions of this
section not later than 270 days after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010.
``(k) Original Information.--Information submitted to the Commission
by a whistleblower in accordance with rules or regulations implementing
this section shall not lose its status as original information solely
because the whistleblower submitted such information prior to the
effective date of such rules or regulations, provided such information
was submitted after the date of enactment of the Wall Street
Transparency and Accountability Act of 2010.
``(l) Awards.--A whistleblower may receive an award pursuant to this
section regardless of whether any violation of a provision of this Act,
or a rule or regulation thereunder, underlying the judicial or
administrative action upon which the award is based occurred prior to
the date of enactment of the Wall Street Transparency and Accountability
Act of 2010.
``(m) Provision of False Information.--A whistleblower who knowingly
and willfully makes any false, fictitious, or fraudulent statement or
representation, or who makes or uses any false writing or document
knowing the same to contain any false, fictitious, or fraudulent
statement or entry, shall not be entitled to an award under this section
and shall be subject to prosecution under section 1001 of title 18,
United States Code.
``(n) Nonenforceability of Certain Provisions Waiving Rights and
Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights and
remedies provided for in this section may not be waived by any
agreement, policy form, or condition of employment including by
a predispute arbitration agreement.
``(2) Predispute arbitration agreements.--No predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under this
section.''.
SEC. 749. CONFORMING AMENDMENTS.
(a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) (as
amended by section 724) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``engage as'' and inserting
``be a''; and
[[Page 124 STAT. 1747]]
(ii) by striking ``or introducing broker'' and
all that follows through ``or derivatives
transaction execution facility'';
(B) in paragraph (1), by striking ``or introducing
broker''; and
(C) in paragraph (2), by striking ``if a futures
commission merchant,''; and
(2) by adding at the end the following:
``(g) It shall be unlawful for any person to be an introducing
broker unless such person shall have registered under this Act with the
Commission as an introducing broker and such registration shall not have
expired nor been suspended nor revoked.''.
(b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is
amended--
(1) by striking ``(3) Subsection (1) of this section'' and
inserting the following:
``(3) Exception.--
``(A) In general.--Paragraph (1)''; and
(2) by striking ``to any investment trust'' and all that
follows through the period at the end and inserting the
following: ``to any commodity pool that is engaged primarily in
trading commodity interests.
``(B) Engaged primarily.--For purposes of subparagraph (A),
a commodity trading advisor or a commodity pool shall be
considered to be `engaged primarily' in the business of being a
commodity trading advisor or commodity pool if it is or holds
itself out to the public as being engaged primarily, or proposes
to engage primarily, in the business of advising on commodity
interests or investing, reinvesting, owning, holding, or trading
in commodity interests, respectively.
``(C) Commodity interests.--For purposes of this paragraph,
commodity interests shall include contracts of sale of a
commodity for future delivery, options on such contracts,
security futures, swaps, leverage contracts, foreign exchange,
spot and forward contracts on physical commodities, and any
monies held in an account used for trading commodity
interests.''.
(c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a)(1)--
(A) by striking ``, 5a(d),''; and
(B) by striking ``and section (2)(h)(7) with respect
to significant price discovery contracts,''; and
(2) in subsection (f)(1), by striking ``section 4d(c) of
this Act'' and inserting ``section 4d(e)''.
(d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) is
amended by striking ``or revocation of the right of an electronic
trading facility to rely on the exemption set forth in section 2(h)(3)
with respect to a significant price discovery contract,''.
(e) Section 6(b) of the Commodity Exchange Act (7 U.S.C. 8(b)) is
amended in the first sentence by striking ``, or to revoke the right of
an electronic trading facility to rely on the exemption set forth in
section 2(h)(3) with respect to a significant price discovery
contract,''.
(f) Section 12(e)(2)(B) of the Commodity Exchange Act (7 U.S.C.
16(e)(2)(B)) is amended--
[[Page 124 STAT. 1748]]
(1) by striking ``section 2(c), 2(d), 2(f), or 2(g) of this
Act'' and inserting ``section 2(c) or 2(f) of this Act''; and
(2) by striking ``2(h) or''.
(g) Section 17(r)(1) of the Commodity Exchange Act (7 U.S.C.
21(r)(1)) is amended by striking ``section 4d(c) of this Act'' and
inserting ``section 4d(e)''.
(h) Section 22 of the Commodity Exchange Act <<NOTE: 7 USC 25.>> is
amended--
(1) in subsection (a)(1)(B), by--
(A) inserting ``or any swap'' after ``commodity)'';
and
(B) inserting ``or any swap'' after ``such
contract'';
(2) in subsection (a)(1)(C), by adding at the end the
following:
``(iv) a swap; or''; and
(3) in subsection (b)(1)(A), by striking ``section 2(h)(7)
or sections 5 through 5c'' and inserting ``section 5, 5b, 5c,
5h, or 21''.
(i) Section 408(2)(C) of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended--
(1) by striking ``section 2(c), 2(d), 2(f), or (2)(g) of
such Act'' and inserting ``section 2(c), 2(f), or 2(i) of that
Act''; and
(2) by striking ``2(h) or''.
SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.
(a) <<NOTE: Establishment.>> Interagency Working Group.--There is
established to carry out this section an interagency working group
(referred to in this section as the ``interagency group'') composed of
the following members or designees:
(1) The Chairman of the Commodity Futures Trading Commission
(referred to in this section as the ``Commission''), who shall
serve as Chairman of the interagency group.
(2) The Secretary of Agriculture.
(3) The Secretary of the Treasury.
(4) The Chairman of the Securities and Exchange Commission.
(5) The Administrator of the Environmental Protection
Agency.
(6) The Chairman of the Federal Energy Regulatory
Commission.
(7) The Commissioner of the Federal Trade Commission.
(8) The Administrator of the Energy Information
Administration.
(b) Administrative Support.--The Commission shall provide the
interagency group such administrative support services as are necessary
to enable the interagency group to carry out the functions of the
interagency group under this section.
(c) Consultation.--In carrying out this section, the interagency
group shall consult with representatives of exchanges, clearinghouses,
self-regulatory bodies, major carbon market participants, consumers, and
the general public, as the interagency group determines to be
appropriate.
(d) Study.--The interagency group shall conduct a study on the
oversight of existing and prospective carbon markets to ensure an
efficient, secure, and transparent carbon market, including oversight of
spot markets and derivative markets.
(e) Report.--Not later than 180 days after the date of enactment of
this Act, the interagency group shall submit to Congress a report on the
results of the study conducted under subsection
[[Page 124 STAT. 1749]]
(b), including recommendations for the oversight of existing and
prospective carbon markets to ensure an efficient, secure, and
transparent carbon market, including oversight of spot markets and
derivative markets.
SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) (as
amended by section 727) is amended by adding at the end the following:
``(15) Energy and environmental markets advisory
committee.--
``(A) Establishment.--
``(i) In general.--An Energy and Environmental
Markets Advisory Committee is hereby established.
``(ii) Membership.--The Committee shall have 9
members.
``(iii) Activities.--The Committee's
objectives and scope of activities shall be--
``(I) to conduct public meetings;
``(II) to submit reports and
recommendations to the Commission
(including dissenting or minority views,
if any); and
``(III) otherwise to serve as a
vehicle for discussion and communication
on matters of concern to exchanges,
firms, end users, and regulators
regarding energy and environmental
markets and their regulation by the
Commission.
``(B) Requirements.--
``(i) In general.--The <<NOTE: Public
meetings.>> Committee shall hold public meetings
at such intervals as are necessary to carry out
the functions of the Committee, but not less
frequently than 2 times per year.
``(ii) Members.--Members shall be appointed to
3-year terms, but may be removed for cause by vote
of the Commission.
``(C) Appointment.--The Commission shall appoint
members with a wide diversity of opinion and who
represent a broad spectrum of interests, including
hedgers and consumers.
``(D) Reimbursement.--Members shall be entitled to
per diem and travel expense reimbursement by the
Commission.
``(E) FACA.--The Committee shall not be subject to
the Federal Advisory Committee Act (5 U.S.C. App.).''.
SEC. 752. <<NOTE: Consultation. Standards. 15 USC 8325.>>
INTERNATIONAL HARMONIZATION.
(a) <<NOTE: Securities.>> In order to promote effective and
consistent global regulation of swaps and security-based swaps, the
Commodity Futures Trading Commission, the Securities and Exchange
Commission, and the prudential regulators (as that term is defined in
section 1a(39) of the Commodity Exchange Act), as appropriate, shall
consult and coordinate with foreign regulatory authorities on the
establishment of consistent international standards with respect to the
regulation (including fees) of swaps, security-based swaps, swap
entities, and security-based swap entities and may agree to such
information-sharing arrangements as may be deemed to be necessary or
[[Page 124 STAT. 1750]]
appropriate in the public interest or for the protection of investors,
swap counterparties, and security-based swap counterparties.
(b) <<NOTE: Contracts.>> In order to promote effective and
consistent global regulation of contracts of sale of a commodity for
future delivery and options on such contracts, the Commodity Futures
Trading Commission shall consult and coordinate with foreign regulatory
authorities on the establishment of consistent international standards
with respect to the regulation of contracts of sale of a commodity for
future delivery and options on such contracts, and may agree to such
information-sharing arrangements as may be deemed necessary or
appropriate in the public interest for the protection of users of
contracts of sale of a commodity for future delivery.
SEC. 753. ANTI-MANIPULATION AUTHORITY.
(a) Prohibition Regarding Manipulation and False Information.--
Subsection (c) of section 6 of the Commodity Exchange Act (7 U.S.C. 9,
15) is amended to read as follows:
``(c) Prohibition Regarding Manipulation and False Information.--
``(1) <<NOTE: Regulations. Deadline.>> Prohibition against
manipulation.--It shall be unlawful for any person, directly or
indirectly, to use or employ, or attempt to use or employ, in
connection with any swap, or a contract of sale of any commodity
in interstate commerce, or for future delivery on or subject to
the rules of any registered entity, any manipulative or
deceptive device or contrivance, in contravention of such rules
and regulations as the Commission shall promulgate by not later
than 1 year after the date of enactment of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, provided no rule or
regulation promulgated by the Commission shall require any
person to disclose to another person nonpublic information that
may be material to the market price, rate, or level of the
commodity transaction, except as necessary to make any statement
made to the other person in or in connection with the
transaction not misleading in any material respect.
``(A) Special provision for manipulation by false
reporting.--Unlawful manipulation for purposes of this
paragraph shall include, but not be limited to,
delivering, or causing to be delivered for transmission
through the mails or interstate commerce, by any means
of communication whatsoever, a false or misleading or
inaccurate report concerning crop or market information
or conditions that affect or tend to affect the price of
any commodity in interstate commerce, knowing, or acting
in reckless disregard of the fact that such report is
false, misleading or inaccurate.
``(B) Effect on other law.--Nothing in this
paragraph shall affect, or be construed to affect, the
applicability of section 9(a)(2).
``(C) Good faith mistakes.--Mistakenly transmitting,
in good faith, false or misleading or inaccurate
information to a price reporting service would not be
sufficient to violate subsection (c)(1)(A).
``(2) Prohibition regarding false information.--It shall be
unlawful for any person to make any false or misleading
statement of a material fact to the Commission, including in any
registration application or any report filed with the
[[Page 124 STAT. 1751]]
Commission under this Act, or any other information relating to
a swap, or a contract of sale of a commodity, in interstate
commerce, or for future delivery on or subject to the rules of
any registered entity, or to omit to state in any such statement
any material fact that is necessary to make any statement of a
material fact made not misleading in any material respect, if
the person knew, or reasonably should have known, the statement
to be false or misleading.
``(3) Other manipulation.--In addition to the prohibition in
paragraph (1), it shall be unlawful for any person, directly or
indirectly, to manipulate or attempt to manipulate the price of
any swap, or of any commodity in interstate commerce, or for
future delivery on or subject to the rules of any registered
entity.
``(4) Enforcement.--
``(A) Authority of commission.--If the Commission
has reason to believe that any person (other than a
registered entity) is violating or has violated this
subsection, or any other provision of this Act
(including any rule, regulation, or order of the
Commission promulgated in accordance with this
subsection or any other provision of this Act), the
Commission may serve upon the person a complaint.
``(B) Contents of complaint.--A complaint under
subparagraph (A) shall--
``(i) contain a description of the charges
against the person that is the subject of the
complaint; and
``(ii) have attached or contain a notice of
hearing that specifies the date and location of
the hearing regarding the complaint.
``(C) Hearing.--A hearing described in subparagraph
(B)(ii)--
``(i) <<NOTE: Deadline.>> shall be held not
later than 3 days after service of the complaint
described in subparagraph (A);
``(ii) shall require the person to show cause
regarding why--
``(I) an order should not be made--
``(aa) to prohibit the
person from trading on, or
subject to the rules of, any
registered entity; and
``(bb) to direct all
registered entities to refuse
all privileges to the person
until further notice of the
Commission; and
``(II) the registration of the
person, if registered with the
Commission in any capacity, should not
be suspended or revoked; and
``(iii) may be held before--
``(I) the Commission; or
``(II) <<NOTE: Records.>> an
administrative law judge designated by
the Commission, under which the
administrative law judge shall ensure
that all evidence is recorded in written
form and submitted to the Commission.
``(5) Subpoena.--For the purpose of securing effective
enforcement of the provisions of this Act, for the purpose of
any investigation or proceeding under this Act, and for the
purpose of any action taken under section 12(f), any member
[[Page 124 STAT. 1752]]
of the Commission or any Administrative Law Judge or other
officer designated by the Commission (except as provided in
paragraph (7)) may administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence, and require
the production of any books, papers, correspondence, memoranda,
or other records that the Commission deems relevant or material
to the inquiry.
``(6) Witnesses.--The attendance of witnesses and the
production of any such records may be required from any place in
the United States, any State, or any foreign country or
jurisdiction at any designated place of hearing.
``(7) Service.--A subpoena issued under this section may be
served upon any person who is not to be found within the
territorial jurisdiction of any court of the United States in
such manner as the Federal Rules of Civil Procedure prescribe
for service of process in a foreign country, except that a
subpoena to be served on a person who is not to be found within
the territorial jurisdiction of any court of the United States
may be issued only on the prior approval of the Commission.
``(8) Refusal to obey.--In case of contumacy by, or refusal
to obey a subpoena issued to, any person, the Commission may
invoke the aid of any court of the United States within the
jurisdiction in which the investigation or proceeding is
conducted, or where such person resides or transacts business,
in requiring the attendance and testimony of witnesses and the
production of books, papers, correspondence, memoranda, and
other records. Such court may issue an order requiring such
person to appear before the Commission or member or
Administrative Law Judge or other officer designated by the
Commission, there to produce records, if so ordered, or to give
testimony touching the matter under investigation or in
question.
``(9) Failure to obey.--Any failure to obey such order of
the court may be punished by the court as a contempt thereof.
All process in any such case may be served in the judicial
district wherein such person is an inhabitant or transacts
business or wherever such person may be found.
``(10) Evidence.--On the receipt of evidence under paragraph
(4)(C)(iii), the Commission may--
``(A) prohibit the person that is the subject of the
hearing from trading on, or subject to the rules of, any
registered entity and require all registered entities to
refuse the person all privileges on the registered
entities for such period as the Commission may require
in the order;
``(B) if the person is registered with the
Commission in any capacity, suspend, for a period not to
exceed 180 days, or revoke, the registration of the
person;
``(C) assess such person--
``(i) a civil penalty of not more than an
amount equal to the greater of--
``(I) $140,000; or
``(II) triple the monetary gain to
such person for each such violation; or
``(ii) in any case of manipulation or
attempted manipulation in violation of this
subsection or section
[[Page 124 STAT. 1753]]
9(a)(2), a civil penalty of not more than an
amount equal to the greater of--
``(I) $1,000,000; or
``(II) triple the monetary gain to
the person for each such violation; and
``(D) require restitution to customers of damages
proximately caused by violations of the person.
``(11) Orders.--
``(A) Notice.--The Commission shall provide to a
person described in paragraph (10) and the appropriate
governing board of the registered entity notice of the
order described in paragraph (10) by--
``(i) registered mail;
``(ii) certified mail; or
``(iii) personal delivery.
``(B) Review.--
``(i) In general.--A person described in
paragraph (10) may obtain a review of the order or
such other equitable relief as determined to be
appropriate by a court described in clause (ii).
``(ii) Petition.--To obtain a review or other
relief under clause (i), a person may, not later
than 15 days after notice is given to the person
under clause (i), file a written petition to set
aside the order with the United States Court of
Appeals--
``(I) for the circuit in which the
petitioner carries out the business of
the petitioner; or
``(II) in the case of an order
denying registration, the circuit in
which the principal place of business of
the petitioner is located, as listed on
the application for registration of the
petitioner.
``(C) <<NOTE: Records.>> Procedure.--
``(i) Duty of clerk of appropriate court.--The
clerk of the appropriate court under subparagraph
(B)(ii) shall transmit to the Commission a copy of
a petition filed under subparagraph (B)(ii).
``(ii) Duty of commission.--In accordance with
section 2112 of title 28, United States Code, the
Commission shall file in the appropriate court
described in subparagraph (B)(ii) the record
theretofore made.
``(iii) Jurisdiction of appropriate court.--
Upon the filing of a petition under subparagraph
(B)(ii), the appropriate court described in
subparagraph (B)(ii) may affirm, set aside, or
modify the order of the Commission.''.
(b) Cease and Desist Orders, Fines.--Section 6(d) of the Commodity
Exchange Act (7 U.S.C. 13b) is amended to read as follows:
``(d) <<NOTE: Penalty.>> If any person (other than a registered
entity), is violating or has violated subsection (c) or any other
provisions of this Act or of the rules, regulations, or orders of the
Commission thereunder, the Commission may, upon notice and hearing, and
subject to appeal as in other cases provided for in subsection (c), make
and enter an order directing that such person shall cease and desist
therefrom and, if such person thereafter and after the lapse of the
period allowed for appeal of such order or after the affirmance
[[Page 124 STAT. 1754]]
of such order, shall knowingly fail or refuse to obey or comply with
such order, such person, upon conviction thereof, shall be fined not
more than the higher of $140,000 or triple the monetary gain to such
person, or imprisoned for not more than 1 year, or both, except that if
such knowing failure or refusal to obey or comply with such order
involves any offense within subsection (a) or (b) of section 9, such
person, upon conviction thereof, shall be subject to the penalties of
said subsection (a) or (b): Provided, That any such cease and desist
order under this subsection against any respondent in any case of
manipulation shall be issued only in conjunction with an order issued
against such respondent under subsection (c).''.
(c) Manipulations; Private Rights of Action.--Section 22(a)(1) of
the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is amended by striking
subparagraph (D) and inserting the following:
``(D) who purchased or sold a contract referred to in
subparagraph (B) hereof or swap if the violation constitutes--
``(i) the use or employment of, or an attempt to use
or employ, in connection with a swap, or a contract of
sale of a commodity, in interstate commerce, or for
future delivery on or subject to the rules of any
registered entity, any manipulative device or
contrivance in contravention of such rules and
regulations as the Commission shall promulgate by not
later than 1 year after the date of enactment of the
Dodd-Frank Wall Street Reform and Consumer Protection
Act; or
``(ii) a manipulation of the price of any such
contract or swap or the price of the commodity
underlying such contract or swap.''.
(d) <<NOTE: 7 USC 9 note.>> Effective Date.--
(1) The amendments made by this section shall take effect on
the date on which the final rule promulgated by the Commodity
Futures Trading Commission pursuant to this Act takes effect.
(2) Paragraph (1) shall not preclude the Commission from
undertaking prior to the effective date any rulemaking necessary
to implement the amendments contained in this section.
SEC. 754. <<NOTE: 7 USC 7a note.>> EFFECTIVE DATE.
Unless otherwise provided in this title, the provisions of this
subtitle shall take effect on the later of 360 days after the date of
the enactment of this subtitle or, to the extent a provision of this
subtitle requires a rulemaking, not less than 60 days after publication
of the final rule or regulation implementing such provision of this
subtitle.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
(a) Definitions.--Section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)) is amended--
[[Page 124 STAT. 1755]]
(1) in subparagraphs (A) and (B) of paragraph (5), by
inserting ``(not including security-based swaps, other than
security-based swaps with or for persons that are not eligible
contract participants)'' after ``securities'' each place that
term appears;
(2) in paragraph (10), by inserting ``security-based swap,''
after ``security future,'';
(3) in paragraph (13), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing
of rights or obligations under, a security-based swap, as the
context may require.'';
(4) in paragraph (14), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing
of rights or obligations under, a security-based swap, as the
context may require.'';
(5) in paragraph (39)--
(A) in subparagraph (B)(i)--
(i) in subclause (I), by striking ``or
government securities dealer'' and inserting
``government securities dealer, security-based
swap dealer, or major security-based swap
participant''; and
(ii) in subclause (II), by inserting
``security-based swap dealer, major security-based
swap participant,'' after ``government securities
dealer,'';
(B) in subparagraph (C), by striking ``or government
securities dealer'' and inserting ``government
securities dealer, security-based swap dealer, or major
security-based swap participant''; and
(C) in subparagraph (D), by inserting ``security-
based swap dealer, major security-based swap
participant,'' after ``government securities dealer,'';
and
(6) by adding at the end the following:
``(65) Eligible contract participant.--The term `eligible
contract participant' has the same meaning as in section 1a of
the Commodity Exchange Act (7 U.S.C. 1a).
``(66) Major swap participant.--The term `major swap
participant' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(67) Major security-based swap participant.--
``(A) In general.--The term `major security-based
swap participant' means any person--
``(i) who is not a security-based swap dealer;
and
``(ii)(I) who maintains a substantial position
in security-based swaps for any of the major
security-based swap categories, as such categories
are determined by the Commission, excluding both
positions held for hedging or mitigating
commercial risk and positions maintained by any
employee benefit plan (or any contract held by
such a plan) as defined in paragraphs (3) and (32)
of section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002) for the
primary purpose of hedging or mitigating any risk
directly associated with the operation of the
plan;
[[Page 124 STAT. 1756]]
``(II) whose outstanding security-based swaps
create substantial counterparty exposure that
could have serious adverse effects on the
financial stability of the United States banking
system or financial markets; or
``(III) that is a financial entity that--
``(aa) is highly leveraged relative
to the amount of capital such entity
holds and that is not subject to capital
requirements established by an
appropriate Federal banking agency; and
``(bb) maintains a substantial
position in outstanding security-based
swaps in any major security-based swap
category, as such categories are
determined by the Commission.
``(B) Definition of substantial position.--For
purposes of subparagraph (A), the Commission shall
define, by rule or regulation, the term `substantial
position' at the threshold that the Commission
determines to be prudent for the effective monitoring,
management, and oversight of entities that are
systemically important or can significantly impact the
financial system of the United States. In setting the
definition under this subparagraph, the Commission shall
consider the person's relative position in uncleared as
opposed to cleared security-based swaps and may take
into consideration the value and quality of collateral
held against counterparty exposures.
``(C) Scope of designation.--For purposes of
subparagraph (A), a person may be designated as a major
security-based swap participant for 1 or more categories
of security-based swaps without being classified as a
major security-based swap participant for all classes of
security-based swaps.
``(68) Security-based swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `security-based swap' means
any agreement, contract, or transaction that--
``(i) is a swap, as that term is defined under
section 1a of the Commodity Exchange Act (without
regard to paragraph (47)(B)(x) of such section);
and
``(ii) is based on--
``(I) an index that is a narrow-
based security index, including any
interest therein or on the value
thereof;
``(II) a single security or loan,
including any interest therein or on the
value thereof; or
``(III) the occurrence,
nonoccurrence, or extent of the
occurrence of an event relating to a
single issuer of a security or the
issuers of securities in a narrow-based
security index, provided that such event
directly affects the financial
statements, financial condition, or
financial obligations of the issuer.
``(B) Rule of construction regarding master
agreements.--The term `security-based swap' shall be
construed to include a master agreement that provides
for an agreement, contract, or transaction that is a
security-based swap pursuant to subparagraph (A),
together with
[[Page 124 STAT. 1757]]
all supplements to any such master agreement, without
regard to whether the master agreement contains an
agreement, contract, or transaction that is not a
security-based swap pursuant to subparagraph (A), except
that the master agreement shall be considered to be a
security-based swap only with respect to each agreement,
contract, or transaction under the master agreement that
is a security-based swap pursuant to subparagraph (A).
``(C) Exclusions.--The term `security-based swap'
does not include any agreement, contract, or transaction
that meets the definition of a security-based swap only
because such agreement, contract, or transaction
references, is based upon, or settles through the
transfer, delivery, or receipt of an exempted security
under paragraph (12), as in effect on the date of
enactment of the Futures Trading Act of 1982 (other than
any municipal security as defined in paragraph (29) as
in effect on the date of enactment of the Futures
Trading Act of 1982), unless such agreement, contract,
or transaction is of the character of, or is commonly
known in the trade as, a put, call, or other option.
``(D) Mixed swap.--The term `security-based swap'
includes any agreement, contract, or transaction that is
as described in subparagraph (A) and also is based on
the value of 1 or more interest or other rates,
currencies, commodities, instruments of indebtedness,
indices, quantitative measures, other financial or
economic interest or property of any kind (other than a
single security or a narrow-based security index), or
the occurrence, non-occurrence, or the extent of the
occurrence of an event or contingency associated with a
potential financial, economic, or commercial consequence
(other than an event described in subparagraph
(A)(ii)(III)).
``(E) Rule of construction regarding use of the term
index.--The term `index' means an index or group of
securities, including any interest therein or based on
the value thereof.
``(69) Swap.--The term `swap' has the same meaning as in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
``(70) Person associated with a security-based swap dealer
or major security-based swap participant.--
``(A) In general.--The term `person associated with
a security-based swap dealer or major security-based
swap participant' or `associated person of a security-
based swap dealer or major security-based swap
participant' means--
``(i) any partner, officer, director, or
branch manager of such security-based swap dealer
or major security-based swap participant (or any
person occupying a similar status or performing
similar functions);
``(ii) any person directly or indirectly
controlling, controlled by, or under common
control with such security-based swap dealer or
major security-based swap participant; or
``(iii) any employee of such security-based
swap dealer or major security-based swap
participant.
``(B) Exclusion.--Other than for purposes of section
15F(l)(2), the term `person associated with a security-
based swap dealer or major security-based swap
participant' or
[[Page 124 STAT. 1758]]
`associated person of a security-based swap dealer or
major security-based swap participant' does not include
any person associated with a security-based swap dealer
or major security-based swap participant whose functions
are solely clerical or ministerial.
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based swap
dealer' means any person who--
``(i) holds themself out as a dealer in
security-based swaps;
``(ii) makes a market in security-based swaps;
``(iii) regularly enters into security-based
swaps with counterparties as an ordinary course of
business for its own account; or
``(iv) engages in any activity causing it to
be commonly known in the trade as a dealer or
market maker in security-based swaps.
``(B) Designation by type or class.--A person may be
designated as a security-based swap dealer for a single
type or single class or category of security-based swap
or activities and considered not to be a security-based
swap dealer for other types, classes, or categories of
security-based swaps or activities.
``(C) Exception.--The term `security-based swap
dealer' does not include a person that enters into
security-based swaps for such person's own account,
either individually or in a fiduciary capacity, but not
as a part of regular business.
``(D) De minimis exception.--The Commission shall
exempt from designation as a security-based swap dealer
an entity that engages in a de minimis quantity of
security-based swap dealing in connection with
transactions with or on behalf of its customers. The
Commission shall promulgate regulations to establish
factors with respect to the making of any determination
to exempt.
``(72) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).
``(73) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.
``(74) Prudential regulator.--The term `prudential
regulator' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(75) Security-based swap data repository.--The term
`security-based swap data repository' means any person that
collects and maintains information or records with respect to
transactions or positions in, or the terms and conditions of,
security-based swaps entered into by third parties for the
purpose of providing a centralized recordkeeping facility for
security-based swaps.
``(76) Swap dealer.--The term `swap dealer' has the same
meaning as in section 1a of the Commodity Exchange Act (7 U.S.C.
1a).
``(77) Security-based swap execution facility.--The term
`security-based swap execution facility' means a trading system
or platform in which multiple participants have the
[[Page 124 STAT. 1759]]
ability to execute or trade security-based swaps by accepting
bids and offers made by multiple participants in the facility or
system, through any means of interstate commerce, including any
trading facility, that--
``(A) facilitates the execution of security-based
swaps between persons; and
``(B) is not a national securities exchange.
``(78) Security-based swap agreement.--
``(A) In general.--For purposes of sections 9, 10,
16, 20, and 21A of this Act, and section 17 of the
Securities Act of 1933 (15 U.S.C. 77q), the term
`security-based swap agreement' means a swap agreement
as defined in section 206A of the Gramm-Leach-Bliley Act
(15 U.S.C. 78c note) of which a material term is based
on the price, yield, value, or volatility of any
security or any group or index of securities, or any
interest therein.
``(B) Exclusions.--The term `security-based swap
agreement' does not include any security-based swap.''.
(b) <<NOTE: 15 USC 8341.>> Authority To Further Define Terms.--The
Securities and Exchange Commission may, by rule, further define--
(1) the term ``commercial risk'';
(2) any other term included in an amendment to the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) made by this
subtitle; and
(3) the terms ``security-based swap'', ``security-based swap
dealer'', ``major security-based swap participant'', and
``eligible contract participant'', with regard to security-based
swaps (as such terms are defined in the amendments made by
subsection (a)) for the purpose of including transactions and
entities that have been structured to evade this subtitle or the
amendments made by this subtitle.
SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED
SWAP AGREEMENTS.
(a) Repeal.--Sections 206B and 206C of the Gramm-Leach-Bliley Act
(Public Law 106-102; 15 U.S.C. 78c note) are repealed.
(b) Conforming Amendments to Gramm-Leach-Bliley.--Section 206A(a) of
the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended in the
material preceding paragraph (1), by striking ``Except as'' and all that
follows through ``that--'' and inserting the following: ``Except as
provided in subsection (b), as used in this section, the term `swap
agreement' means any agreement, contract, or transaction that--''.
(c) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A of the Securities Act of 1933 (15 U.S.C. 77b-
1) is amended--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the
Gramm-Leach-Bliley Act)'' each place that such term
appears and inserting ``(as defined in section 3(a)(78)
of the Securities Exchange Act of 1934)''.
(2) Section 17 of the Securities Act of 1933 (15 U.S.C. 77q)
is amended--
(A) in subsection (a)--
[[Page 124 STAT. 1760]]
(i) by inserting ``(including security-based
swaps)'' after ``securities''; and
(ii) by striking ``(as defined in section 206B
of the Gramm-Leach-Bliley Act)'' and inserting
``(as defined in section 3(a)(78) of the
Securities Exchange Act)''; and
(B) in subsection (d), by striking ``206B of the
Gramm-Leach-Bliley Act'' and inserting ``3(a)(78) of the
Securities Exchange Act of 1934''.
(d) Conforming Amendments to the Securities Exchange Act of 1934.--
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 3A (15 U.S.C. 78c-1)--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the
Gramm-Leach-Bliley Act)'' each place that the term
appears;
(2) in section 9 (15 U.S.C. 78i)--
(A) in subsection (a), by striking paragraphs (2)
through (5) and inserting the following:
``(2) To effect, alone or with 1 or more other persons, a series of
transactions in any security registered on a national securities
exchange, any security not so registered, or in connection with any
security-based swap or security-based swap agreement with respect to
such security creating actual or apparent active trading in such
security, or raising or depressing the price of such security, for the
purpose of inducing the purchase or sale of such security by others.
``(3) If a dealer, broker, security-based swap dealer, major
security-based swap participant, or other person selling or offering for
sale or purchasing or offering to purchase the security, a security-
based swap, or a security-based swap agreement with respect to such
security, to induce the purchase or sale of any security registered on a
national securities exchange, any security not so registered, any
security-based swap, or any security-based swap agreement with respect
to such security by the circulation or dissemination in the ordinary
course of business of information to the effect that the price of any
such security will or is likely to rise or fall because of market
operations of any 1 or more persons conducted for the purpose of raising
or depressing the price of such security.
``(4) If a dealer, broker, security-based swap dealer, major
security-based swap participant, or other person selling or offering for
sale or purchasing or offering to purchase the security, a security-
based swap, or security-based swap agreement with respect to such
security, to make, regarding any security registered on a national
securities exchange, any security not so registered, any security-based
swap, or any security-based swap agreement with respect to such
security, for the purpose of inducing the purchase or sale of such
security, such security-based swap, or such security-based swap
agreement any statement which was at the time and in the light of the
circumstances under which it was made, false or misleading with respect
to any material fact, and which that person knew or had reasonable
ground to believe was so false or misleading.
[[Page 124 STAT. 1761]]
``(5) For a consideration, received directly or indirectly from a
broker, dealer, security-based swap dealer, major security-based swap
participant, or other person selling or offering for sale or purchasing
or offering to purchase the security, a security-based swap, or
security-based swap agreement with respect to such security, to induce
the purchase of any security registered on a national securities
exchange, any security not so registered, any security-based swap, or
any security-based swap agreement with respect to such security by the
circulation or dissemination of information to the effect that the price
of any such security will or is likely to rise or fall because of the
market operations of any 1 or more persons conducted for the purpose of
raising or depressing the price of such security.''; and
(B) in subsection (i), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'';
(3) in section 10 (15 U.S.C. 78j)--
(A) in subsection (b), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act),'' each
place that term appears; and
(B) in the matter following subsection (b), by
striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act), in each place that such terms
appear'';
(4) in section 15 (15 U.S.C. 78o)--
(A) in subsection (c)(1)(A), by striking ``(as
defined in section 206B of the Gramm-Leach-Bliley
Act),'';
(B) in subparagraphs (B) and (C) of subsection
(c)(1), by striking ``(as defined in section 206B of the
Gramm-Leach-Bliley Act)'' each place that term appears;
(C) by redesignating subsection (i), as added by
section 303(f) of the Commodity Futures Modernization
Act of 2000 (Public Law 106-554; 114 Stat. 2763A-455)),
as subsection (j); and
(D) in subsection (j), as redesignated by
subparagraph (C), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(5) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking ``(as
defined in section 206(b) of the Gramm-Leach-Bliley Act
(15 U.S.C. 78c note))'';
(B) in subsection (a)(3)(B), by inserting ``or
security-based swaps'' after ``security-based swap
agreement'';
(C) in the first sentence of subsection (b), by
striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act)'';
(D) in the third sentence of subsection (b), by
striking ``(as defined in section 206B of the Gramm-
Leach Bliley Act)'' and inserting ``or a security-based
swap''; and
(E) in subsection (g), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'';
(6) in section 20 (15 U.S.C. 78t),
(A) in subsection (d), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (f), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(7) in section 21A (15 U.S.C. 78u-1)--
(A) in subsection (a)(1), by striking ``(as defined
in section 206B of the Gramm-Leach-Bliley Act)''; and
[[Page 124 STAT. 1762]]
(B) in subsection (g), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''.
SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Clearing for Security-based Swaps.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 3B
(as added by section 717 of this Act):
``SEC. 3C. <<NOTE: 15 USC 78c-3.>> CLEARING FOR SECURITY-BASED
SWAPS.
``(a) In General.--
``(1) Standard for clearing.--It shall be unlawful for any
person to engage in a security-based swap unless that person
submits such security-based swap for clearing to a clearing
agency that is registered under this Act or a clearing agency
that is exempt from registration under this Act if the security-
based swap is required to be cleared.
``(2) Open access.--The rules of a clearing agency described
in paragraph (1) shall--
``(A) prescribe that all security-based swaps
submitted to the clearing agency with the same terms and
conditions are economically equivalent within the
clearing agency and may be offset with each other within
the clearing agency; and
``(B) provide for non-discriminatory clearing of a
security-based swap executed bilaterally or on or
through the rules of an unaffiliated national securities
exchange or security-based swap execution facility.
``(b) Commission Review.--
``(1) Commission-initiated review.--
``(A) The Commission on an ongoing basis shall
review each security-based swap, or any group, category,
type, or class of security-based swaps to make a
determination that such security-based swap, or group,
category, type, or class of security-based swaps should
be required to be cleared.
``(B) <<NOTE: Public comment.>> The Commission
shall provide at least a 30-day public comment period
regarding any determination under subparagraph (A).
``(2) Swap submissions.--
``(A) <<NOTE: Notice.>> A clearing agency shall
submit to the Commission each security-based swap, or
any group, category, type, or class of security-based
swaps that it plans to accept for clearing and provide
notice to its members (in a manner to be determined by
the Commission) of such submission.
``(B) Any security-based swap or group, category,
type, or class of security-based swaps listed for
clearing by a clearing agency as of the date of
enactment of this subsection shall be considered
submitted to the Commission.
``(C) The Commission shall--
``(i) <<NOTE: Public information.>> make
available to the public any submission received
under subparagraphs (A) and (B);
``(ii) review each submission made under
subparagraphs (A) and (B), and determine whether
the security-based swap, or group, category, type,
or class of security-based swaps, described in the
submission is required to be cleared; and
``(iii) <<NOTE: Public comment.>> provide at
least a 30-day public comment period regarding its
determination whether the
[[Page 124 STAT. 1763]]
clearing requirement under subsection (a)(1) shall
apply to the submission.
``(3) Deadline.--The Commission shall make its determination
under paragraph (2)(C) not later than 90 days after receiving a
submission made under paragraphs (2)(A) and (2)(B), unless the
submitting clearing agency agrees to an extension for the time
limitation established under this paragraph.
``(4) Determination.--
``(A) In reviewing a submission made under paragraph
(2), the Commission shall review whether the submission
is consistent with section 17A.
``(B) In reviewing a security-based swap, group of
security-based swaps or class of security-based swaps
pursuant to paragraph (1) or a submission made under
paragraph (2), the Commission shall take into account
the following factors:
``(i) The existence of significant outstanding
notional exposures, trading liquidity and adequate
pricing data.
``(ii) The availability of rule framework,
capacity, operational expertise and resources, and
credit support infrastructure to clear the
contract on terms that are consistent with the
material terms and trading conventions on which
the contract is then traded.
``(iii) The effect on the mitigation of
systemic risk, taking into account the size of the
market for such contract and the resources of the
clearing agency available to clear the contract.
``(iv) The effect on competition, including
appropriate fees and charges applied to clearing.
``(v) The existence of reasonable legal
certainty in the event of the insolvency of the
relevant clearing agency or 1 or more of its
clearing members with regard to the treatment of
customer and security-based swap counterparty
positions, funds, and property.
``(C) In making a determination under subsection
(b)(1) or paragraph (2)(C) that the clearing requirement
shall apply, the Commission may require such terms and
conditions to the requirement as the Commission
determines to be appropriate.
``(5) Rules.--Not <<NOTE: Deadline.>> later than 1 year
after the date of the enactment of this section, the Commission
shall adopt rules for a clearing agency's submission for review,
pursuant to this subsection, of a security-based swap, or a
group, category, type, or class of security-based swaps, that it
seeks to accept for clearing. Nothing in this paragraph limits
the Commission from making a determination under paragraph
(2)(C) for security-based swaps described in paragraph (2)(B).
``(c) Stay of Clearing Requirement.--
``(1) In general.--After making a determination pursuant to
subsection (b)(2), the Commission, on application of a
counterparty to a security-based swap or on its own initiative,
may stay the clearing requirement of subsection (a)(1) until the
Commission completes a review of the terms of the security-based
swap (or the group, category, type, or class of security-based
swaps) and the clearing arrangement.
[[Page 124 STAT. 1764]]
``(2) Deadline.--The Commission shall complete a review
undertaken pursuant to paragraph (1) not later than 90 days
after issuance of the stay, unless the clearing agency that
clears the security-based swap, or group, category, type, or
class of security-based swaps, agrees to an extension of the
time limitation established under this paragraph.
``(3) Determination.--Upon completion of the review
undertaken pursuant to paragraph (1), the Commission may--
``(A) determine, unconditionally or subject to such
terms and conditions as the Commission determines to be
appropriate, that the security-based swap, or group,
category, type, or class of security-based swaps, must
be cleared pursuant to this subsection if it finds that
such clearing is consistent with subsection (b)(4); or
``(B) determine that the clearing requirement of
subsection (a)(1) shall not apply to the security-based
swap, or group, category, type, or class of security-
based swaps.
``(4) Rules.--Not <<NOTE: Deadline.>> later than 1 year
after the date of the enactment of this section, the Commission
shall adopt rules for reviewing, pursuant to this subsection, a
clearing agency's clearing of a security-based swap, or a group,
category, type, or class of security-based swaps, that it has
accepted for clearing.
``(d) Prevention of Evasion.--
``(1) In general.--The <<NOTE: Regulations.>> Commission
shall prescribe rules under this section (and issue
interpretations of rules prescribed under this section), as
determined by the Commission to be necessary to prevent evasions
of the mandatory clearing requirements under this Act.
``(2) Duty of commission to investigate and take certain
actions.--To the extent the Commission finds that a particular
security-based swap or any group, category, type, or class of
security-based swaps that would otherwise be subject to
mandatory clearing but no clearing agency has listed the
security-based swap or the group, category, type, or class of
security-based swaps for clearing, the Commission shall--
``(A) investigate the relevant facts and
circumstances;
``(B) <<NOTE: Deadline. Reports.>> within 30 days
issue a public report containing the results of the
investigation; and
``(C) take such actions as the Commission determines
to be necessary and in the public interest, which may
include requiring the retaining of adequate margin or
capital by parties to the security-based swap or the
group, category, type, or class of security-based swaps.
``(3) Effect on authority.--Nothing in this subsection--
``(A) authorizes the Commission to adopt rules
requiring a clearing agency to list for clearing a
security-based swap or any group, category, type, or
class of security-based swaps if the clearing of the
security-based swap or the group, category, type, or
class of security-based swaps would threaten the
financial integrity of the clearing agency; and
``(B) affects the authority of the Commission to
enforce the open access provisions of subsection (a)(2)
with respect to a security-based swap or the group,
category, type, or class of security-based swaps that is
listed for clearing by a clearing agency.
[[Page 124 STAT. 1765]]
``(e) Reporting <<NOTE: Deadlines.>> Transition Rules.--Rules
adopted by the Commission under this section shall provide for the
reporting of data, as follows:
``(1) Security-based swaps entered into before the date of
the enactment of this section shall be reported to a registered
security-based swap data repository or the Commission no later
than 180 days after the effective date of this section.
``(2) Security-based swaps entered into on or after such
date of enactment shall be reported to a registered security-
based swap data repository or the Commission no later than the
later of--
``(A) 90 days after such effective date; or
``(B) such other time after entering into the
security-based swap as the Commission may prescribe by
rule or regulation.
``(f) Clearing Transition Rules.--
``(1) Security-based swaps entered into before the date of
the enactment of this section are exempt from the clearing
requirements of this subsection if reported pursuant to
subsection (e)(1).
``(2) Security-based swaps entered into before application
of the clearing requirement pursuant to this section are exempt
from the clearing requirements of this section if reported
pursuant to subsection (e)(2).
``(g) Exceptions.--
``(1) In general.--The requirements of subsection (a)(1)
shall not apply to a security-based swap if 1 of the
counterparties to the security-based swap--
``(A) is not a financial entity;
``(B) is using security-based swaps to hedge or
mitigate commercial risk; and
``(C) <<NOTE: Notification.>> notifies the
Commission, in a manner set forth by the Commission, how
it generally meets its financial obligations associated
with entering into non-cleared security-based swaps.
``(2) Option to clear.--The application of the clearing
exception in paragraph (1) is solely at the discretion of the
counterparty to the security-based swap that meets the
conditions of subparagraphs (A) through (C) of paragraph (1).
``(3) Financial entity definition.--
``(A) In general.--For the purposes of this
subsection, the term `financial entity' means--
``(i) a swap dealer;
``(ii) a security-based swap dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap
participant;
``(v) a commodity pool as defined in section
1a(10) of the Commodity Exchange Act;
``(vi) a private fund as defined in section
202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80-b-2(a));
``(vii) an employee benefit plan as defined in
paragraphs (3) and (32) of section 3 of the
Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002);
``(viii) a person predominantly engaged in
activities that are in the business of banking or
financial in
[[Page 124 STAT. 1766]]
nature, as defined in section 4(k) of the Bank
Holding Company Act of 1956.
``(B) Exclusion.--The Commission shall consider
whether to exempt small banks, savings associations,
farm credit system institutions, and credit unions,
including--
``(i) depository institutions with total
assets of $10,000,000,000 or less;
``(ii) farm credit system institutions with
total assets of $10,000,000,000 or less; or
``(iii) credit unions with total assets of
$10,000,000,000 or less.
``(4) Treatment of affiliates.--
``(A) In general.--An affiliate of a person that
qualifies for an exception under this subsection
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise
or manufactured goods of the person) may qualify for the
exception only if the affiliate, acting on behalf of the
person and as an agent, uses the security-based swap to
hedge or mitigate the commercial risk of the person or
other affiliate of the person that is not a financial
entity.
``(B) Prohibition relating to certain affiliates.--
The exception in subparagraph (A) shall not apply if the
affiliate is--
``(i) a swap dealer;
``(ii) a security-based swap dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap
participant;
``(v) an issuer that would be an investment
company, as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3), but for
paragraph (1) or (7) of subsection (c) of that Act
(15 U.S.C. 80a-3(c));
``(vi) a commodity pool; or
``(vii) a bank holding company with over
$50,000,000,000 in consolidated assets.
``(C) Transition rule for affiliates.--An affiliate,
subsidiary, or a wholly owned entity of a person that
qualifies for an exception under subparagraph (A) and is
predominantly engaged in providing financing for the
purchase or lease of merchandise or manufactured goods
of the person shall be exempt from the margin
requirement described in section 15F(e) and the clearing
requirement described in subsection (a) with regard to
security-based swaps entered into to mitigate the risk
of the financing activities for not less than a 2-year
period beginning on the date of enactment of this
subparagraph.
``(5) Election of counterparty.--
``(A) Security-based swaps required to be cleared.--
With respect to any security-based swap that is subject
to the mandatory clearing requirement under subsection
(a) and entered into by a security-based swap dealer or
a major security-based swap participant with a
counterparty that is not a swap dealer, major swap
participant, security-based swap dealer, or major
security-based swap participant, the counterparty shall
have the
[[Page 124 STAT. 1767]]
sole right to select the clearing agency at which the
security-based swap will be cleared.
``(B) Security-based swaps not required to be
cleared.--With respect to any security-based swap that
is not subject to the mandatory clearing requirement
under subsection (a) and entered into by a security-
based swap dealer or a major security-based swap
participant with a counterparty that is not a swap
dealer, major swap participant, security-based swap
dealer, or major security-based swap participant, the
counterparty--
``(i) may elect to require clearing of the
security-based swap; and
``(ii) shall have the sole right to select the
clearing agency at which the security-based swap
will be cleared.
``(6) Abuse of exception.--The Commission may prescribe such
rules or issue interpretations of the rules as the Commission
determines to be necessary to prevent abuse of the exceptions
described in this subsection. The Commission may also request
information from those persons claiming the clearing exception
as necessary to prevent abuse of the exceptions described in
this subsection.
``(h) Trade Execution.--
``(1) In general.--With respect to transactions involving
security-based swaps subject to the clearing requirement of
subsection (a)(1), counterparties shall--
``(A) execute the transaction on an exchange; or
``(B) execute the transaction on a security-based
swap execution facility registered under section 3D or a
security-based swap execution facility that is exempt
from registration under section 3D(e).
``(2) Exception.--The requirements of subparagraphs (A) and
(B) of paragraph (1) shall not apply if no exchange or security-
based swap execution facility makes the security-based swap
available to trade or for security-based swap transactions
subject to the clearing exception under subsection (g).
``(i) Board Approval.--Exemptions from the requirements of this
section to clear a security-based swap or execute a security-based swap
through a national securities exchange or security-based swap execution
facility shall be available to a counterparty that is an issuer of
securities that are registered under section 12 or that is required to
file reports pursuant to section 15(d), only if an appropriate committee
of the issuer's board or governing body has reviewed and approved the
issuer's decision to enter into security-based swaps that are subject to
such exemptions.
``(j) Designation of Chief Compliance Officer.--
``(1) In general.--Each registered clearing agency shall
designate an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the clearing agency;
``(B) in consultation with its board, a body
performing a function similar thereto, or the senior
officer of the registered clearing agency, resolve any
conflicts of interest that may arise;
[[Page 124 STAT. 1768]]
``(C) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(D) ensure compliance with this title (including
regulations issued under this title) relating to
agreements, contracts, or transactions, including each
rule prescribed by the Commission under this section;
``(E) establish procedures for the remediation of
noncompliance issues identified by the compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(F) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the registered
clearing agency or security-based swap execution
facility of the compliance officer with respect to
this title (including regulations under this
title); and
``(ii) each policy and procedure of the
registered clearing agency of the compliance
officer (including the code of ethics and conflict
of interest policies of the registered clearing
agency).
``(B) Requirements.--A compliance report under
subparagraph (A) shall--
``(i) accompany each appropriate financial
report of the registered clearing agency that is
required to be furnished to the Commission
pursuant to this section; and
``(ii) include a certification that, under
penalty of law, the compliance report is accurate
and complete.''.
(b) Clearing Agency Requirements.--Section 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1) is amended by adding at the end
the following:
``(g) Registration Requirement.--It shall be unlawful for a clearing
agency, unless registered with the Commission, directly or indirectly to
make use of the mails or any means or instrumentality of interstate
commerce to perform the functions of a clearing agency with respect to a
security-based swap.
``(h) Voluntary Registration.--A person that clears agreements,
contracts, or transactions that are not required to be cleared under
this title may register with the Commission as a clearing agency.
``(i) Standards for Clearing Agencies Clearing Security-based Swap
Transactions.--To be registered and to maintain registration as a
clearing agency that clears security-based swap transactions, a clearing
agency shall comply with such standards as the Commission may establish
by rule. In establishing any such standards, and in the exercise of its
oversight of such a
[[Page 124 STAT. 1769]]
clearing agency pursuant to this title, the Commission may conform such
standards or oversight to reflect evolving United States and
international standards. Except where the Commission determines
otherwise by rule or regulation, a clearing agency shall have reasonable
discretion in establishing the manner in which it complies with any such
standards.
``(j) Rules.--The Commission shall adopt rules governing persons
that are registered as clearing agencies for security-based swaps under
this title.
``(k) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a clearing agency from registration under this section
for the clearing of security-based swaps if the Commission determines
that the clearing agency is subject to comparable, comprehensive
supervision and regulation by the Commodity Futures Trading Commission
or the appropriate government authorities in the home country of the
agency. Such conditions may include, but are not limited to, requiring
that the clearing agency be available for inspection by the Commission
and make available all information requested by the Commission.
``(l) Existing Depository Institutions and Derivative Clearing
Organizations.--
``(1) In general.--A depository institution or derivative
clearing organization registered with the Commodity Futures
Trading Commission under the Commodity Exchange Act that is
required to be registered as a clearing agency under this
section is deemed to be registered under this section solely for
the purpose of clearing security-based swaps to the extent that,
before the date of enactment of this subsection--
``(A) the depository institution cleared swaps as a
multilateral clearing organization; or
``(B) the derivative clearing organization cleared
swaps pursuant to an exemption from registration as a
clearing agency.
``(2) Conversion of depository institutions.--A depository
institution to which this subsection applies may, by the vote of
the shareholders owning not less than 51 percent of the voting
interests of the depository institution, be converted into a
State corporation, partnership, limited liability company, or
similar legal form pursuant to a plan of conversion, if the
conversion is not in contravention of applicable State law.
``(3) Sharing of information.--The Commodity Futures Trading
Commission shall make available to the Commission, upon request,
all information determined to be relevant by the Commodity
Futures Trading Commission regarding a derivatives clearing
organization deemed to be registered with the Commission under
paragraph (1).
``(m) Modification of Core Principles.--The Commission may conform
the core principles established in this section to reflect evolving
United States and international standards.''.
(c) Security-based Swap Execution Facilities.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting
after section 3C (as added by subsection (a) of this section) the
following:
``SEC. 3D. <<NOTE: 15 USC 78c-4.>> SECURITY-BASED SWAP EXECUTION
FACILITIES.
``(a) Registration.--
[[Page 124 STAT. 1770]]
``(1) In general.--No person may operate a facility for the
trading or processing of security-based swaps, unless the
facility is registered as a security-based swap execution
facility or as a national securities exchange under this
section.
``(2) Dual registration.--Any person that is registered as a
security-based swap execution facility under this section shall
register with the Commission regardless of whether the person
also is registered with the Commodity Futures Trading Commission
as a swap execution facility.
``(b) Trading and Trade Processing.--A security-based swap execution
facility that is registered under subsection (a) may--
``(1) make available for trading any security-based swap;
and
``(2) facilitate trade processing of any security-based
swap.
``(c) Identification of Facility Used To Trade Security-based Swaps
by National Securities Exchanges.--A national securities exchange shall,
to the extent that the exchange also operates a security-based swap
execution facility and uses the same electronic trade execution system
for listing and executing trades of security-based swaps on or through
the exchange and the facility, identify whether electronic trading of
such security-based swaps is taking place on or through the national
securities exchange or the security-based swap execution facility.
``(d) Core Principles for Security-based Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap execution
facility, the security-based swap execution facility
shall comply with--
``(i) the core principles described in this
subsection; and
``(ii) any requirement that the Commission may
impose by rule or regulation.
``(B) Reasonable discretion of security-based swap
execution facility.--Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
execution facility described in subparagraph (A) shall
have reasonable discretion in establishing the manner in
which it complies with the core principles described in
this subsection.
``(2) Compliance with rules.--A security-based swap
execution facility shall--
``(A) establish and enforce compliance with any rule
established by such security-based swap execution
facility, including--
``(i) the terms and conditions of the
security-based swaps traded or processed on or
through the facility; and
``(ii) any limitation on access to the
facility;
``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate, and
enforce those rules, including means--
``(i) to provide market participants with
impartial access to the market; and
``(ii) to capture information that may be used
in establishing whether rule violations have
occurred; and
[[Page 124 STAT. 1771]]
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures
to be used in entering and executing orders traded or
posted on the facility, including block trades.
``(3) Security-based swaps not readily susceptible to
manipulation.--The security-based swap execution facility shall
permit trading only in security-based swaps that are not readily
susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The
security-based swap execution facility shall--
``(A) establish and enforce rules or terms and
conditions defining, or specifications detailing--
``(i) trading procedures to be used in
entering and executing orders traded on or through
the facilities of the security-based swap
execution facility; and
``(ii) procedures for trade processing of
security-based swaps on or through the facilities
of the security-based swap execution facility; and
``(B) monitor trading in security-based swaps to
prevent manipulation, price distortion, and disruptions
of the delivery or cash settlement process through
surveillance, compliance, and disciplinary practices and
procedures, including methods for conducting real-time
monitoring of trading and comprehensive and accurate
trade reconstructions.
``(5) Ability to obtain information.--The security-based
swap execution facility shall--
``(A) <<NOTE: Regulations.>> establish and enforce
rules that will allow the facility to obtain any
necessary information to perform any of the functions
described in this subsection;
``(B) provide the information to the Commission on
request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Financial integrity of transactions.--
The <<NOTE: Regulations. Procedures.>> security-based swap
execution facility shall establish and enforce rules and
procedures for ensuring the financial integrity of security-
based swaps entered on or through the facilities of the
security-based swap execution facility, including the clearance
and settlement of security-based swaps pursuant to section
3C(a)(1).
``(7) Emergency authority.--The <<NOTE: Regulations.>>
security-based swap execution facility shall adopt rules to
provide for the exercise of emergency authority, in consultation
or cooperation with the Commission, as is necessary and
appropriate, including the authority to liquidate or transfer
open positions in any security-based swap or to suspend or
curtail trading in a security-based swap.
``(8) Timely publication of trading information.--
``(A) <<NOTE: Public information.>> In general.--
The security-based swap execution facility shall make
public timely information on price, trading volume, and
other trading data on security-based swaps to the extent
prescribed by the Commission.
``(B) Capacity of security-based swap execution
facility.--The security-based swap execution facility
shall be required to have the capacity to electronically
capture
[[Page 124 STAT. 1772]]
and transmit and disseminate trade information with
respect to transactions executed on or through the
facility.
``(9) Recordkeeping and reporting.--
``(A) In general.--A security-based swap execution
facility shall--
``(i) <<NOTE: Time period.>> maintain records
of all activities relating to the business of the
facility, including a complete audit trail, in a
form and manner acceptable to the Commission for a
period of 5 years; and
``(ii) report to the Commission, in a form and
manner acceptable to the Commission, such
information as the Commission determines to be
necessary or appropriate for the Commission to
perform the duties of the Commission under this
title.
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for security-based
swap execution facilities that are comparable to
corresponding requirements for clearing agencies and
security-based swap data repositories.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the security-
based swap execution facility shall not--
``(A) adopt any rules or taking any actions that
result in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(11) Conflicts of interest.--The security-based swap
execution facility shall--
``(A) <<NOTE: Regulations.>> establish and enforce
rules to minimize conflicts of interest in its decision-
making process; and
``(B) <<NOTE: Process.>> establish a process for
resolving the conflicts of interest.
``(12) Financial resources.--
``(A) In general.--The security-based swap execution
facility shall have adequate financial, operational, and
managerial resources to discharge each responsibility of
the security-based swap execution facility, as
determined by the Commission.
``(B) Determination of resource adequacy.--The
financial resources of a security-based swap execution
facility shall be considered to be adequate if the value
of the financial resources--
``(i) enables the organization to meet its
financial obligations to its members and
participants notwithstanding a default by the
member or participant creating the largest
financial exposure for that organization in
extreme but plausible market conditions; and
``(ii) exceeds the total amount that would
enable the security-based swap execution facility
to cover the operating costs of the security-based
swap execution facility for a 1-year period, as
calculated on a rolling basis.
``(13) System safeguards.--The security-based swap execution
facility shall--
[[Page 124 STAT. 1773]]
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational risk, through the development of
appropriate controls and procedures, and automated
systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) <<NOTE: Procedures.>> establish and maintain
emergency procedures, backup facilities, and a plan for
disaster recovery that allow for--
``(i) the timely recovery and resumption of
operations; and
``(ii) the fulfillment of the responsibilities
and obligations of the security-based swap
execution facility; and
``(C) <<NOTE: Tests.>> periodically conduct tests
to verify that the backup resources of the security-
based swap execution facility are sufficient to ensure
continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and
accurate audit trail.
``(14) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap
execution facility shall designate an individual to
serve as a chief compliance officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the
senior officer of the facility;
``(ii) review compliance with the core
principles in this subsection;
``(iii) in consultation with the board of the
facility, a body performing a function similar to
that of a board, or the senior officer of the
facility, resolve any conflicts of interest that
may arise;
``(iv) be responsible for establishing and
administering the policies and procedures required
to be established pursuant to this section;
``(v) ensure compliance with this title and
the rules and regulations issued under this title,
including rules prescribed by the Commission
pursuant to this section;
``(vi) establish procedures for the
remediation of noncompliance issues found during--
``(I) compliance office reviews;
``(II) look backs;
``(III) internal or external audit
findings;
``(IV) self-reported errors; or
``(V) through validated complaints;
and
``(vii) establish and follow appropriate
procedures for the handling, management response,
remediation, retesting, and closing of
noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report
that contains a description of--
[[Page 124 STAT. 1774]]
``(I) the compliance of the
security-based swap execution facility
with this title; and
``(II) the policies and procedures,
including the code of ethics and
conflict of interest policies, of the
security-based security-based swap
execution facility.
``(ii) Requirements.--The chief compliance
officer shall--
``(I) submit each report described
in clause (i) with the appropriate
financial report of the security-based
swap execution facility that is required
to be submitted to the Commission
pursuant to this section; and
``(II) include in the report a
certification that, under penalty of
law, the report is accurate and
complete.
``(e) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a security-based swap execution facility from
registration under this section if the Commission finds that the
facility is subject to comparable, comprehensive supervision and
regulation on a consolidated basis by the Commodity Futures Trading
Commission.
``(f) Rules.--The Commission shall prescribe rules governing the
regulation of security-based swap execution facilities under this
section.''.
(d) Segregation of Assets Held as Collateral in Security-based Swap
Transactions.--The Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by inserting after section 3D (as added by subsection
(b)) the following:
``SEC. 3E. <<NOTE: 15 USC 78c-5.>> SEGREGATION OF ASSETS HELD AS
COLLATERAL IN SECURITY-BASED SWAP
TRANSACTIONS.
``(a) Registration Requirement.--It shall be unlawful for any person
to accept any money, securities, or property (or to extend any credit in
lieu of money, securities, or property) from, for, or on behalf of a
security-based swaps customer to margin, guarantee, or secure a
security-based swap cleared by or through a clearing agency (including
money, securities, or property accruing to the customer as the result of
such a security-based swap), unless the person shall have registered
under this title with the Commission as a broker, dealer, or security-
based swap dealer, and the registration shall not have expired nor been
suspended nor revoked.
``(b) Cleared Security-based Swaps.--
``(1) Segregation required.--A broker, dealer, or security-
based swap dealer shall treat and deal with all money,
securities, and property of any security-based swaps customer
received to margin, guarantee, or secure a security-based swap
cleared by or though a clearing agency (including money,
securities, or property accruing to the security-based swaps
customer as the result of such a security-based swap) as
belonging to the security-based swaps customer.
``(2) Commingling prohibited.--Money, securities, and
property of a security-based swaps customer described in
paragraph (1) shall be separately accounted for and shall not be
commingled with the funds of the broker, dealer, or security-
based swap dealer or be used to margin, secure, or guarantee
[[Page 124 STAT. 1775]]
any trades or contracts of any security-based swaps customer or
person other than the person for whom the same are held.
``(c) Exceptions.--
``(1) Use of funds.--
``(A) In general.--Notwithstanding subsection (b),
money, securities, and property of a security-based
swaps customer of a broker, dealer, or security-based
swap dealer described in subsection (b) may, for
convenience, be commingled and deposited in the same 1
or more accounts with any bank or trust company or with
a clearing agency.
``(B) Withdrawal.--Notwithstanding subsection (b),
such share of the money, securities, and property
described in subparagraph (A) as in the normal course of
business shall be necessary to margin, guarantee,
secure, transfer, adjust, or settle a cleared security-
based swap with a clearing agency, or with any member of
the clearing agency, may be withdrawn and applied to
such purposes, including the payment of commissions,
brokerage, interest, taxes, storage, and other charges,
lawfully accruing in connection with the cleared
security-based swap.
``(2) Commission action.--Notwithstanding subsection (b), in
accordance with such terms and conditions as the Commission may
prescribe by rule, regulation, or order, any money, securities,
or property of the security-based swaps customer of a broker,
dealer, or security-based swap dealer described in subsection
(b) may be commingled and deposited as provided in this section
with any other money, securities, or property received by the
broker, dealer, or security-based swap dealer and required by
the Commission to be separately accounted for and treated and
dealt with as belonging to the security-based swaps customer of
the broker, dealer, or security-based swap dealer.
``(d) Permitted Investments.--Money described in subsection (b) may
be invested in obligations of the United States, in general obligations
of any State or of any political subdivision of a State, and in
obligations fully guaranteed as to principal and interest by the United
States, or in any other investment that the Commission may by rule or
regulation prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions as the
Commission may prescribe.
``(e) Prohibition.--It shall be unlawful for any person, including
any clearing agency and any depository institution, that has received
any money, securities, or property for deposit in a separate account or
accounts as provided in subsection (b) to hold, dispose of, or use any
such money, securities, or property as belonging to the depositing
broker, dealer, or security-based swap dealer or any person other than
the swaps customer of the broker, dealer, or security-based swap dealer.
``(f) Segregation Requirements for Uncleared Security-based Swaps.--
``(1) Segregation of assets held as collateral in uncleared
security-based swap transactions.--
``(A) Notification.--A security-based swap dealer or
major security-based swap participant shall be required
to notify the counterparty of the security-based swap
dealer or major security-based swap participant at the
beginning of a security-based swap transaction that the
counterparty
[[Page 124 STAT. 1776]]
has the right to require segregation of the funds of
other property supplied to margin, guarantee, or secure
the obligations of the counterparty.
``(B) Segregation and maintenance of funds.--At the
request of a counterparty to a security-based swap that
provides funds or other property to a security-based
swap dealer or major security-based swap participant to
margin, guarantee, or secure the obligations of the
counterparty, the security-based swap dealer or major
security-based swap participant shall--
``(i) segregate the funds or other property
for the benefit of the counterparty; and
``(ii) in accordance with such rules and
regulations as the Commission may promulgate,
maintain the funds or other property in a
segregated account separate from the assets and
other interests of the security-based swap dealer
or major security-based swap participant.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a security-based swap between a
counterparty and a security-based swap dealer or major
security-based swap participant that is not submitted
for clearing to a clearing agency; and
``(B)(i) not apply to variation margin payments; or
``(ii) not preclude any commercial arrangement
regarding--
``(I) the investment of segregated funds or
other property that may only be invested in such
investments as the Commission may permit by rule
or regulation; and
``(II) the related allocation of gains and
losses resulting from any investment of the
segregated funds or other property.
``(3) Use of independent third-party custodians.--The
segregated account described in paragraph (1) shall be--
``(A) carried by an independent third-party
custodian; and
``(B) designated as a segregated account for and on
behalf of the counterparty.
``(4) Reporting requirement.--If the counterparty does not
choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of the
counterparty, the security-based swap dealer or major security-
based swap participant shall report to the counterparty of the
security-based swap dealer or major security-based swap
participant on a quarterly basis that the back office procedures
of the security-based swap dealer or major security-based swap
participant relating to margin and collateral requirements are
in compliance with the agreement of the counterparties.
``(g) Bankruptcy.--A security-based swap, as defined in section
3(a)(68) shall be considered to be a security as such term is used in
section 101(53A)(B) and subchapter III of title 11, United States Code.
An account that holds a security-based swap, other than a portfolio
margining account referred to in section 15(c)(3)(C) shall be considered
to be a securities account, as that term is defined in section 741 of
title 11, United States Code. <<NOTE: Applicability.>> The definitions
[[Page 124 STAT. 1777]]
of the terms `purchase' and `sale' in section 3(a)(13) and (14) shall be
applied to the terms `purchase' and `sale', as used in section 741 of
title 11, United States Code. The term `customer', as defined in section
741 of title 11, United States Code, excludes any person, to the extent
that such person has a claim based on any open repurchase agreement,
open reverse repurchase agreement, stock borrowed agreement, non-cleared
option, or non-cleared security-based swap except to the extent of any
margin delivered to or by the customer with respect to which there is a
customer protection requirement under section 15(c)(3) or a segregation
requirement.''.
(e) Trading in Security-based Swaps.--Section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end the
following:
``(l) Security-based Swaps.--It shall be unlawful for any person to
effect a transaction in a security-based swap with or for a person that
is not an eligible contract participant, unless such transaction is
effected on a national securities exchange registered pursuant to
subsection (b).''.
(f) Additions of Security-based Swaps to Certain Enforcement
Provisions.--Section 9(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78i(b)) is amended by striking paragraphs (1) through (3) and
inserting the following:
``(1) any transaction in connection with any security
whereby any party to such transaction acquires--
``(A) any put, call, straddle, or other option or
privilege of buying the security from or selling the
security to another without being bound to do so;
``(B) any security futures product on the security;
or
``(C) any security-based swap involving the security
or the issuer of the security;
``(2) any transaction in connection with any security with
relation to which such person has, directly or indirectly, any
interest in any--
``(A) such put, call, straddle, option, or
privilege;
``(B) such security futures product; or
``(C) such security-based swap; or
``(3) any transaction in any security for the account of any
person who such person has reason to believe has, and who
actually has, directly or indirectly, any interest in any--
``(A) such put, call, straddle, option, or
privilege;
``(B) such security futures product with relation to
such security; or
``(C) any security-based swap involving such
security or the issuer of such security.''.
(g) Rulemaking Authority To Prevent Fraud, Manipulation and
Deceptive Conduct in Security-based Swaps.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended by adding at the end the
following:
``(j) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce or of
the mails, or of any facility of any national securities exchange, to
effect any transaction in, or to induce or attempt to induce the
purchase or sale of, any security-based swap, in connection with which
such person engages in any fraudulent, deceptive, or manipulative act or
practice, makes any fictitious quotation, or engages in any transaction,
practice, or course of business which operates as a fraud or deceit upon
any person. <<NOTE: Regulations.>> The Commission
[[Page 124 STAT. 1778]]
shall, for the purposes of this subsection, by rules and regulations
define, and prescribe means reasonably designed to prevent, such
transactions, acts, practices, and courses of business as are
fraudulent, deceptive, or manipulative, and such quotations as are
fictitious.''.
(h) Position Limits and Position Accountability for Security-based
Swaps.--The Securities Exchange Act of 1934 is amended by inserting
after section 10A (15 U.S.C. 78j-1) the following:
``SEC. 10B. <<NOTE: 15 USC 78j-2.>> POSITION LIMITS AND POSITION
ACCOUNTABILITY FOR SECURITY-BASED SWAPS
AND LARGE TRADER REPORTING.
``(a) Position Limits.-- <<NOTE: Fraud. Regulations.>> As a means
reasonably designed to prevent fraud and manipulation, the Commission
shall, by rule or regulation, as necessary or appropriate in the public
interest or for the protection of investors, establish limits (including
related hedge exemption provisions) on the size of positions in any
security-based swap that may be held by any person. In establishing such
limits, the Commission may require any person to aggregate positions
in--
``(1) any security-based swap and any security or loan or
group of securities or loans on which such security-based swap
is based, which such security-based swap references, or to which
such security-based swap is related as described in paragraph
(68) of section 3(a), and any other instrument relating to such
security or loan or group or index of securities or loans; or
``(2) any security-based swap and--
``(A) any security or group or index of securities,
the price, yield, value, or volatility of which, or of
which any interest therein, is the basis for a material
term of such security-based swap as described in
paragraph (68) of section 3(a); and
``(B) any other instrument relating to the same
security or group or index of securities described under
subparagraph (A).
``(b) Exemptions.--The Commission, by rule, regulation, or order,
may conditionally or unconditionally exempt any person or class of
persons, any security-based swap or class of security-based swaps, or
any transaction or class of transactions from any requirement the
Commission may establish under this section with respect to position
limits.
``(c) SRO Rules.--
``(1) In general.--As a means reasonably designed to prevent
fraud or manipulation, the Commission, by rule, regulation, or
order, as necessary or appropriate in the public interest, for
the protection of investors, or otherwise in furtherance of the
purposes of this title, may direct a self-regulatory
organization--
``(A) to adopt rules regarding the size of positions
in any security-based swap that may be held by--
``(i) any member of such self-regulatory
organization; or
``(ii) any person for whom a member of such
self-regulatory organization effects transactions
in such security-based swap; and
[[Page 124 STAT. 1779]]
``(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the
Commission under this subsection.
``(2) Requirement to aggregate positions.--In establishing
the limits under paragraph (1), the self-regulatory organization
may require such member or person to aggregate positions in--
``(A) any security-based swap and any security or
loan or group or narrow-based security index of
securities or loans on which such security-based swap is
based, which such security-based swap references, or to
which such security-based swap is related as described
in section 3(a)(68), and any other instrument relating
to such security or loan or group or narrow-based
security index of securities or loans; or
``(B)(i) any security-based swap; and
``(ii) any security-based swap and any other
instrument relating to the same security or group or
narrow-based security index of securities.
``(d) Large Trader Reporting.--The Commission, by rule or
regulation, may require any person that effects transactions for such
person's own account or the account of others in any securities-based
swap or uncleared security-based swap and any security or loan or group
or narrow-based security index of securities or loans as set forth in
paragraphs (1) and (2) of subsection (a) under this section to report
such information as the Commission may prescribe regarding any position
or positions in any security-based swap or uncleared security-based swap
and any security or loan or group or narrow-based security index of
securities or loans and any other instrument relating to such security
or loan or group or narrow-based security index of securities or loans
as set forth in paragraphs (1) and (2) of subsection (a) under this
section.''.
(i) Public Reporting and Repositories for Security-based Swaps.--
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by adding at the end the following:
``(m) Public Availability of Security-based Swap Transaction Data.--
``(1) In general.--
``(A) Definition of real-time public reporting.--In
this paragraph, the term `real-time public reporting'
means to report data relating to a security-based swap
transaction, including price and volume, as soon as
technologically practicable after the time at which the
security-based swap transaction has been executed.
``(B) Purpose.--The purpose of this subsection is to
authorize the Commission to make security-based swap
transaction and pricing data available to the public in
such form and at such times as the Commission determines
appropriate to enhance price discovery.
``(C) General rule.--The Commission is authorized to
provide by rule for the public availability of security-
based swap transaction, volume, and pricing data as
follows:
``(i) With respect to those security-based
swaps that are subject to the mandatory clearing
requirement described in section 3C(a)(1)
(including those security-based swaps that are
excepted from the requirement
[[Page 124 STAT. 1780]]
pursuant to section 3C(g)), the Commission shall
require real-time public reporting for such
transactions.
``(ii) With respect to those security-based
swaps that are not subject to the mandatory
clearing requirement described in section
3C(a)(1), but are cleared at a registered clearing
agency, the Commission shall require real-time
public reporting for such transactions.
``(iii) With respect to security-based swaps
that are not cleared at a registered clearing
agency and which are reported to a security-based
swap data repository or the Commission under
section 3C(a)(6), the Commission shall require
real-time public reporting for such transactions,
in a manner that does not disclose the business
transactions and market positions of any person.
``(iv) With respect to security-based swaps
that are determined to be required to be cleared
under section 3C(b) but are not cleared, the
Commission shall require real-time public
reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the security-based swap transaction and
pricing data required to be reported under this
paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for security-based swaps described in
clauses (i) and (ii) of subparagraph (C), the rule
promulgated by the Commission shall contain provisions--
``(i) to ensure such information does not
identify the participants;
``(ii) <<NOTE: Criteria.>> to specify the
criteria for determining what constitutes a large
notional security-based swap transaction (block
trade) for particular markets and contracts;
``(iii) to specify the appropriate time delay
for reporting large notional security-based swap
transactions (block trades) to the public; and
``(iv) that take into account whether the
public disclosure will materially reduce market
liquidity.
``(F) Timeliness of reporting.--Parties to a
security-based swap (including agents of the parties to
a security-based swap) shall be responsible for
reporting security-based swap transaction information to
the appropriate registered entity in a timely manner as
may be prescribed by the Commission.
``(G) Reporting of swaps to registered security-
based swap data repositories.--Each security-based swap
(whether cleared or uncleared) shall be reported to a
registered security-based swap data repository.
``(H) Registration of clearing agencies.--A clearing
agency may register as a security-based swap data
repository.
``(2) Semiannual and annual public reporting of aggregate
security-based swap data.--
[[Page 124 STAT. 1781]]
``(A) In general.--In accordance with subparagraph
(B), the Commission shall issue a written report on a
semiannual and annual basis to make available to the
public information relating to--
``(i) the trading and clearing in the major
security-based swap categories; and
``(ii) the market participants and
developments in new products.
``(B) Use; consultation.--In preparing a report
under subparagraph (A), the Commission shall--
``(i) use information from security-based swap
data repositories and clearing agencies; and
``(ii) consult with the Office of the
Comptroller of the Currency, the Bank for
International Settlements, and such other
regulatory bodies as may be necessary.
``(C) Authority of commission.--The Commission may,
by rule, regulation, or order, delegate the public
reporting responsibilities of the Commission under this
paragraph in accordance with such terms and conditions
as the Commission determines to be appropriate and in
the public interest.
``(n) Security-based Swap Data Repositories.--
``(1) Registration requirement.--It shall be unlawful for
any person, unless registered with the Commission, directly or
indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions
of a security-based swap data repository.
``(2) Inspection and examination.--Each registered security-
based swap data repository shall be subject to inspection and
examination by any representative of the Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap data repository,
the security-based swap data repository shall comply
with--
``(i) the requirements and core principles
described in this subsection; and
``(ii) any requirement that the Commission may
impose by rule or regulation.
``(B) Reasonable discretion of security-based swap
data repository.--Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
data repository described in subparagraph (A) shall have
reasonable discretion in establishing the manner in
which the security-based swap data repository complies
with the core principles described in this subsection.
``(4) Standard setting.--
``(A) Data identification.--
``(i) In general.--In accordance with clause
(ii), the Commission shall prescribe standards
that specify the data elements for each security-
based swap that shall be collected and maintained
by each registered security-based swap data
repository.
``(ii) Requirement.--In carrying out clause
(i), the Commission shall prescribe consistent
data element standards applicable to registered
entities and reporting counterparties.
[[Page 124 STAT. 1782]]
``(B) Data collection and maintenance.--The
Commission shall prescribe data collection and data
maintenance standards for security-based swap data
repositories.
``(C) Comparability.--The standards prescribed by
the Commission under this subsection shall be comparable
to the data standards imposed by the Commission on
clearing agencies in connection with their clearing of
security-based swaps.
``(5) Duties.--A security-based swap data repository shall--
``(A) accept data prescribed by the Commission for
each security-based swap under subsection (b);
``(B) confirm with both counterparties to the
security-based swap the accuracy of the data that was
submitted;
``(C) maintain the data described in subparagraph
(A) in such form, in such manner, and for such period as
may be required by the Commission;
``(D)(i) provide direct electronic access to the
Commission (or any designee of the Commission, including
another registered entity); and
``(ii) provide the information described in
subparagraph (A) in such form and at such frequency as
the Commission may require to comply with the public
reporting requirements set forth in subsection (m);
``(E) at the direction of the Commission, establish
automated systems for monitoring, screening, and
analyzing security-based swap data;
``(F) maintain the privacy of any and all security-
based swap transaction information that the security-
based swap data repository receives from a security-
based swap dealer, counterparty, or any other registered
entity; and
``(G) <<NOTE: Confidentiality. Notification.>> on a
confidential basis pursuant to section 24, upon request,
and after notifying the Commission of the request, make
available all data obtained by the security-based swap
data repository, including individual counterparty trade
and position data, to--
``(i) each appropriate prudential regulator;
``(ii) the Financial Stability Oversight
Council;
``(iii) the Commodity Futures Trading
Commission;
``(iv) the Department of Justice; and
``(v) any other person that the Commission
determines to be appropriate, including--
``(I) foreign financial supervisors
(including foreign futures authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(H) Confidentiality and indemnification
agreement.--Before the security-based swap data
repository may share information with any entity
described in subparagraph (G)--
``(i) the security-based swap data repository
shall receive a written agreement from each entity
stating that the entity shall abide by the
confidentiality requirements described in section
24 relating to the information on security-based
swap transactions that is provided; and
[[Page 124 STAT. 1783]]
``(ii) each entity shall agree to indemnify
the security-based swap data repository and the
Commission for any expenses arising from
litigation relating to the information provided
under section 24.
``(6) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap data
repository shall designate an individual to serve as a
chief compliance officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the
senior officer of the security-based swap data
repository;
``(ii) review the compliance of the security-
based swap data repository with respect to the
requirements and core principles described in this
subsection;
``(iii) in consultation with the board of the
security-based swap data repository, a body
performing a function similar to the board of the
security-based swap data repository, or the senior
officer of the security-based swap data
repository, resolve any conflicts of interest that
may arise;
``(iv) be responsible for administering each
policy and procedure that is required to be
established pursuant to this section;
``(v) ensure compliance with this title
(including regulations) relating to agreements,
contracts, or transactions, including each rule
prescribed by the Commission under this section;
``(vi) establish procedures for the
remediation of noncompliance issues identified by
the chief compliance officer through any--
``(I) compliance office review;
``(II) look-back;
``(III) internal or external audit
finding;
``(IV) self-reported error; or
``(V) validated complaint; and
``(vii) establish and follow appropriate
procedures for the handling, management response,
remediation, retesting, and closing of
noncompliance issues.
``(C) Annual reports.--
``(i) <<NOTE: Regulations.>> In general.--In
accordance with rules prescribed by the
Commission, the chief compliance officer shall
annually prepare and sign a report that contains a
description of--
``(I) the compliance of the
security-based swap data repository of
the chief compliance officer with
respect to this title (including
regulations); and
``(II) each policy and procedure of
the security-based swap data repository
of the chief compliance officer
(including the code of ethics and
conflict of interest policies of the
security-based swap data repository).
``(ii) Requirements.--A compliance report
under clause (i) shall--
``(I) accompany each appropriate
financial report of the security-based
swap data repository that is required to
be furnished to the Commission pursuant
to this section; and
[[Page 124 STAT. 1784]]
``(II) <<NOTE: Certification.>>
include a certification that, under
penalty of law, the compliance report is
accurate and complete.
``(7) Core principles applicable to security-based swap data
repositories.--
``(A) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the
swap data repository shall not--
``(i) adopt any rule or take any action that
results in any unreasonable restraint of trade; or
``(ii) impose any material anticompetitive
burden on the trading, clearing, or reporting of
transactions.
``(B) Governance arrangements.--Each security-based
swap data repository shall establish governance
arrangements that are transparent--
``(i) to fulfill public interest requirements;
and
``(ii) to support the objectives of the
Federal Government, owners, and participants.
``(C) Conflicts of interest.--Each security-based
swap data repository shall--
``(i) <<NOTE: Regulations.>> establish and
enforce rules to minimize conflicts of interest in
the decision-making process of the security-based
swap data repository; and
``(ii) <<NOTE: Process.>> establish a process
for resolving any conflicts of interest described
in clause (i).
``(D) Additional duties developed by commission.--
``(i) In general.--The Commission may develop
1 or more additional duties applicable to
security-based swap data repositories.
``(ii) Consideration of evolving standards.--
In developing additional duties under subparagraph
(A), the Commission may take into consideration
any evolving standard of the United States or the
international community.
``(iii) Additional duties for commission
designees.--The Commission shall establish
additional duties for any registrant described in
section 13(m)(2)(C) in order to minimize conflicts
of interest, protect data, ensure compliance, and
guarantee the safety and security of the security-
based swap data repository.
``(8) Required registration for security-based swap data
repositories.--Any person that is required to be registered as a
security-based swap data repository under this subsection shall
register with the Commission, regardless of whether that person
is also licensed under the Commodity Exchange Act as a swap data
repository.
``(9) Rules.--The Commission shall adopt rules governing
persons that are registered under this subsection.''.
SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP
DEALERS AND MAJOR SECURITY-BASED SWAP
PARTICIPANTS.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 15E (15 U.S.C. 78o-7) the
following:
[[Page 124 STAT. 1785]]
<<NOTE: 15 USC 78o-8.>> ``SEC. 15F. REGISTRATION AND REGULATION OF
SECURITY-BASED SWAP DEALERS AND MAJOR
SECURITY-BASED SWAP PARTICIPANTS.
``(a) Registration.--
``(1) Security-based swap dealers.--It shall be unlawful for
any person to act as a security-based swap dealer unless the
person is registered as a security-based swap dealer with the
Commission.
``(2) Major security-based swap participants.--It shall be
unlawful for any person to act as a major security-based swap
participant unless the person is registered as a major security-
based swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a security-
based swap dealer or major security-based swap participant by
filing a registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in
such form and manner as prescribed by the Commission,
and shall contain such information, as the Commission
considers necessary concerning the business in which the
applicant is or will be engaged.
``(B) Continual reporting.--A person that is
registered as a security-based swap dealer or major
security-based swap participant shall continue to submit
to the Commission reports that contain such information
pertaining to the business of the person as the
Commission may require.
``(3) Expiration.--Each registration under this section
shall expire at such time as the Commission may prescribe by
rule or regulation.
``(4) Rules.--Except as provided in subsections (d) and (e),
the Commission may prescribe rules applicable to security-based
swap dealers and major security-based swap participants,
including rules that limit the activities of non-bank security-
based swap dealers and major security-based swap participants.
``(5) Transition.-- <<NOTE: Deadline.>> Not later than 1
year after the date of enactment of the Wall Street Transparency
and Accountability Act of 2010, the Commission shall issue rules
under this section to provide for the registration of security-
based swap dealers and major security-based swap participants.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order of
the Commission, it shall be unlawful for a security-based swap
dealer or a major security-based swap participant to permit any
person associated with a security-based swap dealer or a major
security-based swap participant who is subject to a statutory
disqualification to effect or be involved in effecting security-
based swaps on behalf of the security-based swap dealer or major
security-based swap participant, if the security-based swap
dealer or major security-based swap participant knew, or in the
exercise of reasonable care should have known, of the statutory
disqualification.
``(c) Dual Registration.--
``(1) Security-based swap dealer.--Any person that is
required to be registered as a security-based swap dealer under
this section shall register with the Commission, regardless
[[Page 124 STAT. 1786]]
of whether the person also is registered with the Commodity
Futures Trading Commission as a swap dealer.
``(2) Major security-based swap participant.--Any person
that is required to be registered as a major security-based swap
participant under this section shall register with the
Commission, regardless of whether the person also is registered
with the Commodity Futures Trading Commission as a major swap
participant.
``(d) Rulemaking.--
``(1) In general.--The Commission shall adopt rules for
persons that are registered as security-based swap dealers or
major security-based swap participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe
rules imposing prudential requirements on security-based
swap dealers or major security-based swap participants
for which there is a prudential regulator.
``(B) Applicability.--Subparagraph (A) does not
limit the authority of the Commission to prescribe rules
as directed under this section.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Security-based swap dealers and major
security-based swap participants that are banks.--Each
registered security-based swap dealer and major
security-based swap participant for which there is not a
prudential regulator shall meet such minimum capital
requirements and minimum initial and variation margin
requirements as the prudential regulator shall by rule
or regulation prescribe under paragraph (2)(A).
``(B) Security-based swap dealers and major
security-based swap participants that are not banks.--
Each registered security-based swap dealer and major
security-based swap participant for which there is not a
prudential regulator shall meet such minimum capital
requirements and minimum initial and variation margin
requirements as the Commission shall by rule or
regulation prescribe under paragraph (2)(B).
``(2) Rules.--
``(A) Security-based swap dealers and major
security-based swap participants that are banks.--The
prudential regulators, in consultation with the
Commission and the Commodity Futures Trading Commission,
shall adopt rules for security-based swap dealers and
major security-based swap participants, with respect to
their activities as a swap dealer or major swap
participant, for which there is a prudential regulator
imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin
requirements on all security-based swaps that are
not cleared by a registered clearing agency.
``(B) Security-based swap dealers and major
security-based swap participants that are not banks.--
The Commission shall adopt rules for security-based swap
dealers and major security-based swap participants, with
respect to their activities as a swap dealer or major
swap
[[Page 124 STAT. 1787]]
participant, for which there is not a prudential
regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin
requirements on all swaps that are not cleared by
a registered clearing agency.
``(C) Capital.--In setting capital requirements for
a person that is designated as a security-based swap
dealer or a major security-based swap participant for a
single type or single class or category of security-
based swap or activities, the prudential regulator and
the Commission shall take into account the risks
associated with other types of security-based swaps or
classes of security-based swaps or categories of
security-based swaps engaged in and the other activities
conducted by that person that are not otherwise subject
to regulation applicable to that person by virtue of the
status of the person.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater risk to the
security-based swap dealer or major security-based swap
participant and the financial system arising from the
use of security-based swaps that are not cleared, the
requirements imposed under paragraph (2) shall --
``(i) help ensure the safety and soundness of
the security-based swap dealer or major security-
based swap participant; and
``(ii) be appropriate for the risk associated
with the non-cleared security-based swaps held as
a security-based swap dealer or major security-
based swap participant.
``(B) Rule of construction.--
``(i) In general.--Nothing in this section
shall limit, or be construed to limit, the
authority--
``(I) of the Commission to set
financial responsibility rules for a
broker or dealer registered pursuant to
section 15(b) (except for section
15(b)(11) thereof) in accordance with
section 15(c)(3); or
``(II) of the Commodity Futures
Trading Commission to set financial
responsibility rules for a futures
commission merchant or introducing
broker registered pursuant to section
4f(a) of the Commodity Exchange Act
(except for section 4f(a)(3) thereof) in
accordance with section 4f(b) of the
Commodity Exchange Act.
``(ii) Futures commission merchants and other
dealers.--A futures commission merchant,
introducing broker, broker, or dealer shall
maintain sufficient capital to comply with the
stricter of any applicable capital requirements to
which such futures commission merchant,
introducing broker, broker, or dealer is subject
to under this title or the Commodity Exchange Act.
``(C) Margin requirements.--In prescribing margin
requirements under this subsection, the prudential
regulator with respect to security-based swap dealers
and major security-based swap participants that are
depository
[[Page 124 STAT. 1788]]
institutions, and the Commission with respect to
security-based swap dealers and major security-based
swap participants that are not depository institutions
shall permit the use of noncash collateral, as the
regulator or the Commission determines to be consistent
with--
``(i) preserving the financial integrity of
markets trading security-based swaps; and
``(ii) preserving the stability of the United
States financial system.
``(D) Comparability of capital and margin
requirements.--
``(i) In general.--
<<NOTE: Deadline. Consultation.>> The prudential
regulators, the Commission, and the Securities and
Exchange Commission shall periodically (but not
less frequently than annually) consult on minimum
capital requirements and minimum initial and
variation margin requirements.
``(ii) Comparability.--The entities described
in clause (i) shall, to the maximum extent
practicable, establish and maintain comparable
minimum capital requirements and minimum initial
and variation margin requirements, including the
use of noncash collateral, for--
``(I) security-based swap dealers;
and
``(II) major security-based swap
participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant--
``(A) shall make such reports as are required by the
Commission, by rule or regulation, regarding the
transactions and positions and financial condition of
the registered security-based swap dealer or major
security-based swap participant;
``(B)(i) for which there is a prudential regulator,
shall keep books and records of all activities related
to the business as a security-based swap dealer or major
security-based swap participant in such form and manner
and for such period as may be prescribed by the
Commission by rule or regulation; and
``(ii) for which there is no prudential regulator,
shall keep books and records in such form and manner and
for such period as may be prescribed by the Commission
by rule or regulation; and
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by
any representative of the Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for security-based swap dealers and
major security-based swap participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall maintain
daily trading records of the security-based swaps of the
registered security-based swap dealer and major security-based
swap participant and all related records (including related cash
or forward transactions) and recorded communications, including
electronic mail, instant messages, and recordings of
[[Page 124 STAT. 1789]]
telephone calls, for such period as may be required by the
Commission by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require
by rule or regulation.
``(3) Counterparty records.--Each registered security-based
swap dealer and major security-based swap participant shall
maintain daily trading records for each counterparty in a manner
and form that is identifiable with each security-based swap
transaction.
``(4) Audit trail.--Each registered security-based swap
dealer and major security-based swap participant shall maintain
a complete audit trail for conducting comprehensive and accurate
trade reconstructions.
``(5) Rules.--The Commission shall adopt rules governing
daily trading records for security-based swap dealers and major
security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall conform
with such business conduct standards as prescribed in paragraph
(3) and as may be prescribed by the Commission by rule or
regulation that relate to--
``(A) fraud, manipulation, and other abusive
practices involving security-based swaps (including
security-based swaps that are offered but not entered
into);
``(B) diligent supervision of the business of the
registered security-based swap dealer and major
security-based swap participant;
``(C) adherence to all applicable position limits;
and
``(D) such other matters as the Commission
determines to be appropriate.
``(2) <<NOTE: Compliance.>> Responsibilities with respect
to special entities.--
``(A) Advising special entities.--A security-based
swap dealer or major security-based swap participant
that acts as an advisor to special entity regarding a
security-based swap shall comply with the requirements
of paragraph (4) with respect to such special entity.
``(B) Entering of security-based swaps with respect
to special entities.--A security-based swap dealer that
enters into or offers to enter into security-based swap
with a special entity shall comply with the requirements
of paragraph (5) with respect to such special entity.
``(C) Special entity defined.--For purposes of this
subsection, the term `special entity' means--
``(i) a Federal agency;
``(ii) a State, State agency, city, county,
municipality, or other political subdivision of a
State or;
``(iii) any employee benefit plan, as defined
in section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002);
``(iv) any governmental plan, as defined in
section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002); or
[[Page 124 STAT. 1790]]
``(v) any endowment, including an endowment
that is an organization described in section
501(c)(3) of the Internal Revenue Code of 1986.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) <<NOTE: Verification.>> establish a duty for
a security-based swap dealer or major security-based
swap participant to verify that any counterparty meets
the eligibility standards for an eligible contract
participant;
``(B) require disclosure by the security-based swap
dealer or major security-based swap participant to any
counterparty to the transaction (other than a security-
based swap dealer, major security-based swap
participant, security-based swap dealer, or major
security-based swap participant) of--
``(i) information about the material risks and
characteristics of the security-based swap;
``(ii) any material incentives or conflicts of
interest that the security-based swap dealer or
major security-based swap participant may have in
connection with the security-based swap; and
``(iii)(I) for cleared security-based swaps,
upon the request of the counterparty, receipt of
the daily mark of the transaction from the
appropriate derivatives clearing organization; and
``(II) for uncleared security-based swaps,
receipt of the daily mark of the transaction from
the security-based swap dealer or the major
security-based swap participant;
``(C) establish a duty for a security-based swap
dealer or major security-based swap participant to
communicate in a fair and balanced manner based on
principles of fair dealing and good faith; and
``(D) establish such other standards and
requirements as the Commission may determine are
appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the
purposes of this Act.
``(4) Special requirements for security-based swap dealers
acting as advisors.--
``(A) In general.--It shall be unlawful for a
security-based swap dealer or major security-based swap
participant--
``(i) to employ any device, scheme, or
artifice to defraud any special entity or
prospective customer who is a special entity;
``(ii) to engage in any transaction, practice,
or course of business that operates as a fraud or
deceit on any special entity or prospective
customer who is a special entity; or
``(iii) to engage in any act, practice, or
course of business that is fraudulent, deceptive,
or manipulative.
``(B) Duty.--Any security-based swap dealer that
acts as an advisor to a special entity shall have a duty
to act in the best interests of the special entity.
``(C) Reasonable efforts.--Any security-based swap
dealer that acts as an advisor to a special entity shall
make reasonable efforts to obtain such information as is
[[Page 124 STAT. 1791]]
necessary to make a reasonable determination that any
security-based swap recommended by the security-based
swap dealer is in the best interests of the special
entity, including information relating to--
``(i) the financial status of the special
entity;
``(ii) the tax status of the special entity;
``(iii) the investment or financing objectives
of the special entity; and
``(iv) any other information that the
Commission may prescribe by rule or regulation.
``(5) Special requirements for security-based swap dealers
as counterparties to special entities.--
``(A) In general.--Any security-based swap dealer or
major security-based swap participant that offers to or
enters into a security-based swap with a special entity
shall--
``(i) <<NOTE: Compliance.>> comply with any
duty established by the Commission for a security-
based swap dealer or major security-based swap
participant, with respect to a counterparty that
is an eligible contract participant within the
meaning of subclause (I) or (II) of clause (vii)
of section 1a(18) of the Commodity Exchange Act,
that requires the security-based swap dealer or
major security-based swap participant to have a
reasonable basis to believe that the counterparty
that is a special entity has an independent
representative that--
``(I) has sufficient knowledge to
evaluate the transaction and risks;
``(II) is not subject to a statutory
disqualification;
``(III) is independent of the
security-based swap dealer or major
security-based swap participant;
``(IV) undertakes a duty to act in
the best interests of the counterparty
it represents;
``(V) makes appropriate disclosures;
``(VI) will provide written
representations to the special entity
regarding fair pricing and the
appropriateness of the transaction; and
``(VII) in the case of employee
benefit plans subject to the Employee
Retirement Income Security act of 1974,
is a fiduciary as defined in section 3
of that Act (29 U.S.C. 1002); and
``(ii) before the initiation of the
transaction, disclose to the special entity in
writing the capacity in which the security-based
swap dealer is acting.
``(B) Commission authority.--The Commission may
establish such other standards and requirements under
this paragraph as the Commission may determine are
appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the
purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules under
this subsection governing business conduct standards for
security-based swap dealers and major security-based swap
participants.
[[Page 124 STAT. 1792]]
``(7) Applicability.--This subsection shall not apply with
respect to a transaction that is--
``(A) initiated by a special entity on an exchange
or security-based swaps execution facility; and
``(B) the security-based swap dealer or major
security-based swap participant does not know the
identity of the counterparty to the transaction.''
``(i) Documentation Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall conform
with such standards as may be prescribed by the Commission, by
rule or regulation, that relate to timely and accurate
confirmation, processing, netting, documentation, and valuation
of all security-based swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation standards for security-based swap dealers and
major security-based swap participants.
``(j) <<NOTE: Compliance.>> Duties.--Each registered security-based
swap dealer and major security-based swap participant shall, at all
times, comply with the following requirements:
``(1) Monitoring of trading.--The security-based swap dealer
or major security-based swap participant shall monitor its
trading in security-based swaps to prevent violations of
applicable position limits.
``(2) Risk management procedures.--The security-based swap
dealer or major security-based swap participant shall establish
robust and professional risk management systems adequate for
managing the day-to-day business of the security-based swap
dealer or major security-based swap participant.
``(3) Disclosure of general information.--The security-based
swap dealer or major security-based swap participant shall
disclose to the Commission and to the prudential regulator for
the security-based swap dealer or major security-based swap
participant, as applicable, information concerning--
``(A) terms and conditions of its security-based
swaps;
``(B) security-based swap trading operations,
mechanisms, and practices;
``(C) financial integrity protections relating to
security-based swaps; and
``(D) other information relevant to its trading in
security-based swaps.
``(4) Ability to obtain information.--The security-based
swap dealer or major security-based swap participant shall--
``(A) establish and enforce internal systems and
procedures to obtain any necessary information to
perform any of the functions described in this section;
and
``(B) provide the information to the Commission and
to the prudential regulator for the security-based swap
dealer or major security-based swap participant, as
applicable, on request.
``(5) <<NOTE: Procedures.>> Conflicts of interest.--The
security-based swap dealer and major security-based swap
participant shall implement conflict-of-interest systems and
procedures that--
``(A) establish structural and institutional
safeguards to ensure that the activities of any person
within the firm relating to research or analysis of the
price or market for any security-based swap or acting in
a role of providing
[[Page 124 STAT. 1793]]
clearing activities or making determinations as to
accepting clearing customers are separated by
appropriate informational partitions within the firm
from the review, pressure, or oversight of persons whose
involvement in pricing, trading, or clearing activities
might potentially bias their judgment or supervision and
contravene the core principles of open access and the
business conduct standards described in this title; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the security-
based swap dealer or major security-based swap participant shall
not--
``(A) adopt any process or take any action that
results in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(7) Rules.--The Commission shall prescribe rules under
this subsection governing duties of security-based swap dealers
and major security-based swap participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each security-based swap dealer and major
security-based swap participant shall designate an individual to
serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the security-based swap dealer or major
security-based swap participant;
``(B) review the compliance of the security-based
swap dealer or major security-based swap participant
with respect to the security-based swap dealer and major
security-based swap participant requirements described
in this section;
``(C) in consultation with the board of directors, a
body performing a function similar to the board, or the
senior officer of the organization, resolve any
conflicts of interest that may arise;
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this title (including
regulations) relating to security-based swaps, including
each rule prescribed by the Commission under this
section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
[[Page 124 STAT. 1794]]
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the security-based
swap dealer or major swap participant with respect
to this title (including regulations); and
``(ii) each policy and procedure of the
security-based swap dealer or major security-based
swap participant of the chief compliance officer
(including the code of ethics and conflict of
interest policies).
``(B) Requirements.--A compliance report under
subparagraph (A) shall--
``(i) accompany each appropriate financial
report of the security-based swap dealer or major
security-based swap participant that is required
to be furnished to the Commission pursuant to this
section; and
``(ii) <<NOTE: Certification.>> include a
certification that, under penalty of law, the
compliance report is accurate and complete.
``(l) Enforcement and Administrative Proceeding Authority.--
``(1) Primary enforcement authority.--
``(A) Securities and exchange commission.--Except as
provided in subparagraph (B), (C), or (D), the
Commission shall have primary authority to enforce
subtitle B, and the amendments made by subtitle B of the
Wall Street Transparency and Accountability Act of 2010,
with respect to any person.
``(B) Prudential regulators.--The prudential
regulators shall have exclusive authority to enforce the
provisions of subsection (e) and other prudential
requirements of this title (including risk management
standards), with respect to security-based swap dealers
or major security-based swap participants for which they
are the prudential regulator.
``(C) Referral.--
``(i) Violations of nonprudential
requirements.--If the appropriate Federal banking
agency for security-based swap dealers or major
security-based swap participants that are
depository institutions has cause to believe that
such security-based swap dealer or major security-
based swap participant may have engaged in conduct
that constitutes a violation of the nonprudential
requirements of this section or rules adopted by
the Commission thereunder, the agency may
recommend in writing to the Commission that the
Commission initiate an enforcement proceeding as
authorized under this title. The recommendation
shall be accompanied by a written explanation of
the concerns giving rise to the recommendation.
``(ii) Violations of prudential
requirements.--If the Commission has cause to
believe that a securities-based swap dealer or
major securities-based swap participant that has a
prudential regulator may have engaged in conduct
that constitute a violation of the prudential
requirements of subsection (e) or rules adopted
thereunder, the Commission may recommend
[[Page 124 STAT. 1795]]
in writing to the prudential regulator that the
prudential regulator initiate an enforcement
proceeding as authorized under this title. The
recommendation shall be accompanied by a written
explanation of the concerns giving rise to the
recommendation.
``(D) <<NOTE: Time period.>> Backstop enforcement
authority.--
``(i) Initiation of enforcement proceeding by
prudential regulator.--If the Commission does not
initiate an enforcement proceeding before the end
of the 90-day period beginning on the date on
which the Commission receives a written report
under subsection (C)(i), the prudential regulator
may initiate an enforcement proceeding.
``(ii) Initiation of enforcement proceeding by
commission.--If the prudential regulator does not
initiate an enforcement proceeding before the end
of the 90-day period beginning on the date on
which the prudential regulator receives a written
report under subsection (C)(ii), the Commission
may initiate an enforcement proceeding.
``(2) Censure, denial, suspension; notice and hearing.--The
Commission, by order, shall censure, place limitations on the
activities, functions, or operations of, or revoke the
registration of any security-based swap dealer or major
security-based swap participant that has registered with the
Commission pursuant to subsection (b) if the Commission finds,
on the record after notice and opportunity for hearing, that
such censure, placing of limitations, or revocation is in the
public interest and that such security-based swap dealer or
major security-based swap participant, or any person associated
with such security-based swap dealer or major security-based
swap participant effecting or involved in effecting transactions
in security-based swaps on behalf of such security-based swap
dealer or major security-based swap participant, whether prior
or subsequent to becoming so associated--
``(A) has committed or omitted any act, or is
subject to an order or finding, enumerated in
subparagraph (A), (D), or (E) of paragraph (4) of
section 15(b);
``(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years
of the commencement of the proceedings under this
subsection;
``(C) is enjoined from any action, conduct, or
practice specified in subparagraph (C) of such paragraph
(4);
``(D) is subject to an order or a final order
specified in subparagraph (F) or (H), respectively, of
such paragraph (4); or
``(E) has been found by a foreign financial
regulatory authority to have committed or omitted any
act, or violated any foreign statute or regulation,
enumerated in subparagraph (G) of such paragraph (4).
``(3) <<NOTE: Time period.>> Associated persons.--With
respect to any person who is associated, who is seeking to
become associated, or, at the time of the alleged misconduct,
who was associated or was seeking to become associated with a
security-based swap dealer or major security-based swap
participant for the purpose of effecting or being involved in
effecting security-based swaps
[[Page 124 STAT. 1796]]
on behalf of such security-based swap dealer or major security-
based swap participant, the Commission, by order, shall censure,
place limitations on the activities or functions of such person,
or suspend for a period not exceeding 12 months, or bar such
person from being associated with a security-based swap dealer
or major security-based swap participant, if the Commission
finds, on the record after notice and opportunity for a hearing,
that such censure, placing of limitations, suspension, or bar is
in the public interest and that such person--
``(A) has committed or omitted any act, or is
subject to an order or finding, enumerated in
subparagraph (A), (D), or (E) of paragraph (4) of
section 15(b);
``(B) <<NOTE: Deadline.>> has been convicted of any
offense specified in subparagraph (B) of such paragraph
(4) within 10 years of the commencement of the
proceedings under this subsection;
``(C) is enjoined from any action, conduct, or
practice specified in subparagraph (C) of such paragraph
(4);
``(D) is subject to an order or a final order
specified in subparagraph (F) or (H), respectively, of
such paragraph (4); or
``(E) has been found by a foreign financial
regulatory authority to have committed or omitted any
act, or violated any foreign statute or regulation,
enumerated in subparagraph (G) of such paragraph (4).
``(4) Unlawful conduct.--It shall be unlawful--
``(A) for any person as to whom an order under
paragraph (3) is in effect, without the consent of the
Commission, willfully to become, or to be, associated
with a security-based swap dealer or major security-
based swap participant in contravention of such order;
or
``(B) for any security-based swap dealer or major
security-based swap participant to permit such a person,
without the consent of the Commission, to become or
remain a person associated with the security-based swap
dealer or major security-based swap participant in
contravention of such order, if such security-based swap
dealer or major security-based swap participant knew, or
in the exercise of reasonable care should have known, of
such order.''.
(b) <<NOTE: 15 USC 8342.>> Savings Clause.--Notwithstanding any
other provision of this title, nothing in this subtitle shall be
construed as divesting any appropriate Federal banking agency of any
authority it may have to establish or enforce, with respect to a person
for which such agency is the appropriate Federal banking agency,
prudential or other standards pursuant to authority by Federal law other
than this title.
SEC. 765. <<NOTE: 15 USC 8343.>> RULEMAKING ON CONFLICT OF
INTEREST.
(a) <<NOTE: Deadline.>> In General.--In order to mitigate conflicts
of interest, not later than 180 days after the date of enactment of the
Wall Street Transparency and Accountability Act of 2010, the Securities
and Exchange Commission shall adopt rules which may include numerical
limits on the control of, or the voting rights with respect to, any
clearing agency that clears security-based swaps, or on the control of
any security-based swap execution facility or national securities
exchange that posts or makes available for trading security-based swaps,
by a bank holding company (as defined in section
[[Page 124 STAT. 1797]]
2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)) with total
consolidated assets of $50,000,000,000 or more, a nonbank financial
company (as defined in section 102) supervised by the Board of Governors
of the Federal Reserve System, affiliate of such a bank holding company
or nonbank financial company, a security-based swap dealer, major
security-based swap participant, or person associated with a security-
based swap dealer or major security-based swap participant.
(b) Purposes.--The Securities and Exchange Commission shall adopt
rules if the Commission determines, after the review described in
subsection (a), that such rules are necessary or appropriate to improve
the governance of, or to mitigate systemic risk, promote competition, or
mitigate conflicts of interest in connection with a security-based swap
dealer or major security-based swap participant's conduct of business
with, a clearing agency, national securities exchange, or security-based
swap execution facility that clears, posts, or makes available for
trading security-based swaps and in which such security-based swap
dealer or major security-based swap participant has a material debt or
equity investment.
(c) Considerations.--In adopting rules pursuant to this section, the
Securities and Exchange Commission shall consider any conflicts of
interest arising from the amount of equity owned by a single investor,
the ability to vote, cause the vote of, or withhold votes entitled to be
cast on any matters by the holders of the ownership interest, and the
governance arrangements of any derivatives clearing organization that
clears swaps, or swap execution facility or board of trade designated as
a contract market that posts swaps or makes swaps available for trading.
SEC. 766. REPORTING AND RECORDKEEPING.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 13 the following:
``SEC. 13A. <<NOTE: 15 USC 78m-1.>> REPORTING AND RECORDKEEPING
FOR CERTAIN SECURITY-BASED SWAPS.
``(a) Required Reporting of Security-based Swaps Not Accepted by Any
Clearing Agency or Derivatives Clearing Organization.--
``(1) In general.--Each security-based swap that is not
accepted for clearing by any clearing agency or derivatives
clearing organization shall be reported to--
``(A) a security-based swap data repository
described in section 13(n); or
``(B) in the case in which there is no security-
based swap data repository that would accept the
security-based swap, to the Commission pursuant to this
section within such time period as the Commission may by
rule or regulation prescribe.
``(2) Transition rule for preenactment security-based
swaps.--
``(A) Security-based swaps entered into before the
date of enactment of the wall street transparency and
accountability act of 2010.--Each security-based swap
entered into before the date of enactment of the Wall
Street Transparency and Accountability Act of 2010, the
terms of which have not expired as of the date of
enactment of that Act, shall be reported to a registered
[[Page 124 STAT. 1798]]
security-based swap data repository or the Commission by
a date that is not later than--
``(i) 30 days after issuance of the interim
final rule; or
``(ii) such other period as the Commission
determines to be appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the
date of enactment of this section providing for the
reporting of each security-based swap entered into
before the date of enactment as referenced in
subparagraph (A).
``(C) Effective date.--The reporting provisions
described in this section shall be effective upon the
date of the enactment of this section.
``(3) Reporting obligations.--
``(A) Security-based swaps in which only 1
counterparty is a security-based swap dealer or major
security-based swap participant.--With respect to a
security-based swap in which only 1 counterparty is a
security-based swap dealer or major security-based swap
participant, the security-based swap dealer or major
security-based swap participant shall report the
security-based swap as required under paragraphs (1) and
(2).
``(B) Security-based swaps in which 1 counterparty
is a security-based swap dealer and the other a major
security-based swap participant.--With respect to a
security-based swap in which 1 counterparty is a
security-based swap dealer and the other a major
security-based swap participant, the security-based swap
dealer shall report the security-based swap as required
under paragraphs (1) and (2).
``(C) Other security-based swaps.--With respect to
any other security-based swap not described in
subparagraph (A) or (B), the counterparties to the
security-based swap shall select a counterparty to
report the security-based swap as required under
paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or entity that
enters into a security-based swap shall meet each requirement described
in subsection (c) if the individual or entity did not--
``(1) clear the security-based swap in accordance with
section 3C(a)(1); or
``(2) have the data regarding the security-based swap
accepted by a security-based swap data repository in accordance
with rules (including timeframes) adopted by the Commission
under this title.
``(c) Requirements.--An individual or entity described in subsection
(b) shall--
``(1) upon written request from the Commission, provide
reports regarding the security-based swaps held by the
individual or entity to the Commission in such form and in such
manner as the Commission may request; and
``(2) maintain books and records pertaining to the security-
based swaps held by the individual or entity in such form, in
such manner, and for such period as the Commission may require,
which shall be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
[[Page 124 STAT. 1799]]
``(C) the Commodity Futures Trading Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this section, the
Commission shall require individuals and entities described in
subsection (b) to submit to the Commission a report that contains data
that is not less comprehensive than the data required to be collected by
security-based swap data repositories under this title.''.
(b) Beneficial Ownership Reporting.--Section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1), by inserting ``or otherwise
becomes or is deemed to become a beneficial owner of any of the
foregoing upon the purchase or sale of a security-based swap
that the Commission may define by rule, and'' after ``Alaska
Native Claims Settlement Act,''; and
(2) in subsection (g)(1), by inserting ``or otherwise
becomes or is deemed to become a beneficial owner of any
security of a class described in subsection (d)(1) upon the
purchase or sale of a security-based swap that the Commission
may define by rule'' after ``subsection (d)(1) of this
section''.
(c) Reports by Institutional Investment Managers.--Section 13(f)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended
by inserting ``or otherwise becomes or is deemed to become a beneficial
owner of any security of a class described in subsection (d)(1) upon the
purchase or sale of a security-based swap that the Commission may define
by rule,'' after ``subsection (d)(1) of this section''.
(d) Administrative Proceeding Authority.--Section 15(b)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended--
(1) in subparagraph (C), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(2) in subparagraph (F), by striking ``broker or dealer''
and inserting ``broker, dealer, security-based swap dealer, or a
major security-based swap participant''.
(e) Security-based Swap Beneficial Ownership.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at
the end the following:
``(o) Beneficial Ownership.--For purposes of this section and
section 16, a person shall be deemed to acquire beneficial ownership of
an equity security based on the purchase or sale of a security-based
swap, only to the extent that the Commission, by rule, determines after
consultation with the prudential regulators and the Secretary of the
Treasury, that the purchase or sale of the security-based swap, or class
of security-based swap, provides incidents of ownership comparable to
direct ownership of the equity security, and that it is necessary to
achieve the purposes of this section that the purchase or sale of the
security-based swaps, or class of security-based swap, be deemed the
acquisition of beneficial ownership of the equity security.''.
SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.
Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78bb(a)) is amended to read as follows:
``(a) Limitation on Judgments.--
[[Page 124 STAT. 1800]]
``(1) In general.--No person permitted to maintain a suit
for damages under the provisions of this title shall recover,
through satisfaction of judgment in 1 or more actions, a total
amount in excess of the actual damages to that person on account
of the act complained of. Except as otherwise specifically
provided in this title, nothing in this title shall affect the
jurisdiction of the securities commission (or any agency or
officer performing like functions) of any State over any
security or any person insofar as it does not conflict with the
provisions of this title or the rules and regulations under this
title.
``(2) Rule of construction.--Except as provided in
subsection (f), the rights and remedies provided by this title
shall be in addition to any and all other rights and remedies
that may exist at law or in equity.
``(3) State bucket shop laws.--No State law which prohibits
or regulates the making or promoting of wagering or gaming
contracts, or the operation of `bucket shops' or other similar
or related activities, shall invalidate--
``(A) any put, call, straddle, option, privilege, or
other security subject to this title (except any
security that has a pari-mutuel payout or otherwise is
determined by the Commission, acting by rule,
regulation, or order, to be appropriately subject to
such laws), or apply to any activity which is incidental
or related to the offer, purchase, sale, exercise,
settlement, or closeout of any such security;
``(B) any security-based swap between eligible
contract participants; or
``(C) any security-based swap effected on a national
securities exchange registered pursuant to section 6(b).
``(4) Other state provisions.--No provision of State law
regarding the offer, sale, or distribution of securities shall
apply to any transaction in a security-based swap or a security
futures product, except that this paragraph may not be construed
as limiting any State antifraud law of general applicability. A
security-based swap may not be regulated as an insurance
contract under any provision of State law.''.
SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT OF
SECURITY-BASED SWAPS.
(a) Definitions.--Section 2(a) of the Securities Act of 1933 (15
U.S.C. 77b(a)) is amended--
(1) in paragraph (1), by inserting ``security-based swap,''
after ``security future,'';
(2) in paragraph (3), by adding at the end the following:
``Any offer or sale of a security-based swap by or on behalf of
the issuer of the securities upon which such security-based swap
is based or is referenced, an affiliate of the issuer, or an
underwriter, shall constitute a contract for sale of, sale of,
offer for sale, or offer to sell such securities.''; and
(3) by adding at the end the following:
``(17) The terms `swap' and `security-based swap' have the
same meanings as in section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
``(18) The terms `purchase' or `sale' of a security-based
swap shall be deemed to mean the execution, termination (prior
to its scheduled maturity date), assignment, exchange, or
[[Page 124 STAT. 1801]]
similar transfer or conveyance of, or extinguishing of rights or
obligations under, a security-based swap, as the context may
require.''.
(b) Registration of Security-based Swaps.--Section 5 of the
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at the end
the following:
``(d) Notwithstanding the provisions of section 3 or 4, unless a
registration statement meeting the requirements of section 10(a) is in
effect as to a security-based swap, it shall be unlawful for any person,
directly or indirectly, to make use of any means or instruments of
transportation or communication in interstate commerce or of the mails
to offer to sell, offer to buy or purchase or sell a security-based swap
to any person who is not an eligible contract participant as defined in
section 1a(18) of the Commodity Exchange Act (7 U.S.C. 1a(18)).''.
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 1940.
Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-2)
is amended by adding at the end the following:
``(54) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap execution
facility' have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 1940.
Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2) is amended by adding at the end the following:
``(29) The terms `commodity pool', `commodity pool
operator', `commodity trading advisor', `major swap
participant', `swap', `swap dealer', and `swap execution
facility' have the same meanings as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 771. <<NOTE: 15 USC 8344.>> OTHER AUTHORITY.
Unless otherwise provided by its terms, this subtitle does not
divest any appropriate Federal banking agency, the Securities and
Exchange Commission, the Commodity Futures Trading Commission, or any
other Federal or State agency, of any authority derived from any other
provision of applicable law.
SEC. 772. JURISDICTION.
(a) In General.--Section 36 of the Securities Exchange Act of 1934
(15 U.S.C. 78mm) is amended by adding at the end the following:
``(c) Derivatives.--Unless the Commission is expressly authorized by
any provision described in this subsection to grant exemptions, the
Commission shall not grant exemptions, with respect to amendments made
by subtitle B of the Wall Street Transparency and Accountability Act of
2010, with respect to paragraphs (65), (66), (68), (69), (70), (71),
(72), (73), (74), (75), (76), and (79) of section 3(a), and sections
10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 17A(h), 17A(i), 17A(j),
17A(k), and 17A(l); provided that the Commission shall have exemptive
authority under this title with respect to security-based swaps as to
the same matters that the Commodity
[[Page 124 STAT. 1802]]
Futures Trading Commission has under the Wall Street Transparency and
Accountability Act of 2010 with respect to swaps, including under
section 4(c) of the Commodity Exchange Act.''.
(b) Rule of Construction.--Section 30 of the Securities Exchange Act
of 1934 (15 U.S.C. 78dd) is amended by adding at the end the following:
``(c) Rule of Construction.--No provision of this title that was
added by the Wall Street Transparency and Accountability Act of 2010, or
any rule or regulation thereunder, shall apply to any person insofar as
such person transacts a business in security-based swaps without the
jurisdiction of the United States, unless such person transacts such
business in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate to prevent the
evasion of any provision of this title that was added by the Wall Street
Transparency and Accountability Act of 2010. This subsection shall not
be construed to limit the jurisdiction of the Commission under any
provision of this title, as in effect prior to the date of enactment of
the Wall Street Transparency and Accountability Act of 2010.''.
SEC. 773. CIVIL PENALTIES.
Section 21B of the Securities Exchange Act of 1934 <<NOTE: 15 USC
78u-2.>> (15 U.S.C. 78p-2) is amended by adding at the end the
following:
``(f) Security-based Swaps.--
``(1) Clearing agency.--Any clearing agency that knowingly
or recklessly evades or participates in or facilitates an
evasion of the requirements of section 3C shall be liable for a
civil money penalty in twice the amount otherwise available for
a violation of section 3C.
``(2) Security-based swap dealer or major security-based
swap participant.--Any security-based swap dealer or major
security-based swap participant that knowingly or recklessly
evades or participates in or facilitates an evasion of the
requirements of section 3C shall be liable for a civil money
penalty in twice the amount otherwise available for a violation
of section 3C.''.
SEC. 774. <<NOTE: 15 USC 77b note.>> EFFECTIVE DATE.
Unless otherwise provided, the provisions of this subtitle shall
take effect on the later of 360 days after the date of the enactment of
this subtitle or, to the extent a provision of this subtitle requires a
rulemaking, not less than 60 days after publication of the final rule or
regulation implementing such provision of this subtitle.
TITLE <<NOTE: Payment, Clearing, and Settlement Supervision Act of
2010.>> VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
SEC. 801. <<NOTE: 12 USC 5301 note.>> SHORT TITLE.
This title may be cited as the ``Payment, Clearing, and Settlement
Supervision Act of 2010''.
SEC. 802. <<NOTE: 12 USC 5461.>> FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(1) The proper functioning of the financial markets is
dependent upon safe and efficient arrangements for the clearing
[[Page 124 STAT. 1803]]
and settlement of payment, securities, and other financial
transactions.
(2) Financial market utilities that conduct or support
multilateral payment, clearing, or settlement activities may
reduce risks for their participants and the broader financial
system, but such utilities may also concentrate and create new
risks and thus must be well designed and operated in a safe and
sound manner.
(3) Payment, clearing, and settlement activities conducted
by financial institutions also present important risks to the
participating financial institutions and to the financial
system.
(4) Enhancements to the regulation and supervision of
systemically important financial market utilities and the
conduct of systemically important payment, clearing, and
settlement activities by financial institutions are necessary--
(A) to provide consistency;
(B) to promote robust risk management and safety and
soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader
financial system.
(b) Purpose.--The purpose of this title is to mitigate systemic risk
in the financial system and promote financial stability by--
(1) authorizing the Board of Governors to promote uniform
standards for the--
(A) management of risks by systemically important
financial market utilities; and
(B) conduct of systemically important payment,
clearing, and settlement activities by financial
institutions;
(2) providing the Board of Governors an enhanced role in the
supervision of risk management standards for systemically
important financial market utilities;
(3) strengthening the liquidity of systemically important
financial market utilities; and
(4) providing the Board of Governors an enhanced role in the
supervision of risk management standards for systemically
important payment, clearing, and settlement activities by
financial institutions.
SEC. 803. <<NOTE: 12 USC 5462.>> DEFINITIONS.
In this title, the following definitions shall apply:
(1) Appropriate financial regulator.--The term ``appropriate
financial regulator'' means--
(A) the primary financial regulatory agency, as
defined in section 2 of this Act;
(B) the National Credit Union Administration, with
respect to any insured credit union under the Federal
Credit Union Act (12 U.S.C. 1751 et seq.); and
(C) the Board of Governors, with respect to
organizations operating under section 25A of the Federal
Reserve Act (12 U.S.C. 611), and any other financial
institution engaged in a designated activity.
(2) Designated activity.--The term ``designated activity''
means a payment, clearing, or settlement activity that the
Council has designated as systemically important under section
804.
[[Page 124 STAT. 1804]]
(3) Designated clearing entity.--The term ``designated
clearing entity'' means a designated financial market utility
that is a derivatives clearing organization registered under
section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) or a
clearing agency registered with the Securities and Exchange
Commission under section 17A of the Securities Exchange Act of
1934 (15 U.S.C. 78q-1).
(4) Designated financial market utility.--The term
``designated financial market utility'' means a financial market
utility that the Council has designated as systemically
important under section 804.
(5) Financial institution.--
(A) In general.--The term ``financial institution''
means--
(i) a depository institution, as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813);
(ii) a branch or agency of a foreign bank, as
defined in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101);
(iii) an organization operating under section
25 or 25A of the Federal Reserve Act (12 U.S.C.
601-604a and 611 through 631);
(iv) a credit union, as defined in section 101
of the Federal Credit Union Act (12 U.S.C. 1752);
(v) a broker or dealer, as defined in section
3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c);
(vi) an investment company, as defined in
section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a-3);
(vii) an insurance company, as defined in
section 2 of the Investment Company Act of 1940
(15 U.S.C. 80a-2);
(viii) an investment adviser, as defined in
section 202 of the Investment Advisers Act of 1940
(15 U.S.C. 80b-2);
(ix) a futures commission merchant, commodity
trading advisor, or commodity pool operator, as
defined in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a); and
(x) any company engaged in activities that are
financial in nature or incidental to a financial
activity, as described in section 4 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(k)).
(B) Exclusions.--The term ``financial institution''
does not include designated contract markets, registered
futures associations, swap data repositories, and swap
execution facilities registered under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), or national
securities exchanges, national securities associations,
alternative trading systems, securities information
processors solely with respect to the activities of the
entity as a securities information processor, security-
based swap data repositories, and swap execution
facilities registered under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.), or designated clearing
entities, provided that the exclusions in this
[[Page 124 STAT. 1805]]
subparagraph apply only with respect to the activities
that require the entity to be so registered.
(6) Financial market utility.--
(A) Inclusion.--The term ``financial market
utility'' means any person that manages or operates a
multilateral system for the purpose of transferring,
clearing, or settling payments, securities, or other
financial transactions among financial institutions or
between financial institutions and the person.
(B) Exclusions.--The term ``financial market
utility'' does not include--
(i) <<NOTE: Applicability.>> designated
contract markets, registered futures associations,
swap data repositories, and swap execution
facilities registered under the Commodity Exchange
Act (7 U.S.C. 1 et seq.), or national securities
exchanges, national securities associations,
alternative trading systems, security-based swap
data repositories, and swap execution facilities
registered under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.), solely by reason of
their providing facilities for comparison of data
respecting the terms of settlement of securities
or futures transactions effected on such exchange
or by means of any electronic system operated or
controlled by such entities, provided that the
exclusions in this clause apply only with respect
to the activities that require the entity to be so
registered; and
(ii) any broker, dealer, transfer agent, or
investment company, or any futures commission
merchant, introducing broker, commodity trading
advisor, or commodity pool operator, solely by
reason of functions performed by such institution
as part of brokerage, dealing, transfer agency, or
investment company activities, or solely by reason
of acting on behalf of a financial market utility
or a participant therein in connection with the
furnishing by the financial market utility of
services to its participants or the use of
services of the financial market utility by its
participants, provided that services performed by
such institution do not constitute critical risk
management or processing functions of the
financial market utility.
(7) Payment, clearing, or settlement activity.--
(A) In general.--The term ``payment, clearing, or
settlement activity'' means an activity carried out by 1
or more financial institutions to facilitate the
completion of financial transactions, but shall not
include any offer or sale of a security under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), or any
quotation, order entry, negotiation, or other pre-trade
activity or execution activity.
(B) Financial transaction.--For the purposes of
subparagraph (A), the term ``financial transaction''
includes--
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a commodity for
future delivery;
(iv) forward contracts;
(v) repurchase agreements;
[[Page 124 STAT. 1806]]
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap agreements;
(x) foreign exchange contracts;
(xi) financial derivatives contracts; and
(xii) any similar transaction that the Council
determines to be a financial transaction for
purposes of this title.
(C) Included activities.--When conducted with
respect to a financial transaction, payment, clearing,
and settlement activities may include--
(i) the calculation and communication of
unsettled financial transactions between
counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of trade,
contract, or instrument information;
(iv) the management of risks and activities
associated with continuing financial transactions;
(v) transmittal and storage of payment
instructions;
(vi) the movement of funds;
(vii) the final settlement of financial
transactions; and
(viii) other similar functions that the
Council may determine.
(D) Exclusion.--Payment, clearing, and settlement
activities shall not include public reporting of swap
transaction data under section 727 or 763(i) of the Wall
Street Transparency and Accountability Act of 2010.
(8) Supervisory agency.--
(A) In general.--The term ``Supervisory Agency''
means the Federal agency that has primary jurisdiction
over a designated financial market utility under Federal
banking, securities, or commodity futures laws, as
follows:
(i) The Securities and Exchange Commission,
with respect to a designated financial market
utility that is a clearing agency registered with
the Securities and Exchange Commission.
(ii) The Commodity Futures Trading Commission,
with respect to a designated financial market
utility that is a derivatives clearing
organization registered with the Commodity Futures
Trading Commission.
(iii) The appropriate Federal banking agency,
with respect to a designated financial market
utility that is an institution described in
section 3(q) of the Federal Deposit Insurance Act.
(iv) The Board of Governors, with respect to a
designated financial market utility that is
otherwise not subject to the jurisdiction of any
agency listed in clauses (i), (ii), and (iii).
(B) Multiple agency jurisdiction.--If a designated
financial market utility is subject to the
jurisdictional supervision of more than 1 agency listed
in subparagraph (A), then such agencies should agree on
1 agency to act as the Supervisory Agency, and if such
agencies cannot agree on which agency has primary
jurisdiction, the Council
[[Page 124 STAT. 1807]]
shall decide which agency is the Supervisory Agency for
purposes of this title.
(9) Systemically important and systemic importance.--The
terms ``systemically important'' and ``systemic importance''
mean a situation where the failure of or a disruption to the
functioning of a financial market utility or the conduct of a
payment, clearing, or settlement activity could create, or
increase, the risk of significant liquidity or credit problems
spreading among financial institutions or markets and thereby
threaten the stability of the financial system of the United
States.
SEC. 804. <<NOTE: 12 USC 5463.>> DESIGNATION OF SYSTEMIC
IMPORTANCE.
(a) Designation.--
(1) Financial stability oversight council.--The Council, on
a nondelegable basis and by a vote of not fewer than \2/3\ of
members then serving, including an affirmative vote by the
Chairperson of the Council, shall designate those financial
market utilities or payment, clearing, or settlement activities
that the Council determines are, or are likely to become,
systemically important.
(2) Considerations.--In determining whether a financial
market utility or payment, clearing, or settlement activity is,
or is likely to become, systemically important, the Council
shall take into consideration the following:
(A) The aggregate monetary value of transactions
processed by the financial market utility or carried out
through the payment, clearing, or settlement activity.
(B) The aggregate exposure of the financial market
utility or a financial institution engaged in payment,
clearing, or settlement activities to its
counterparties.
(C) The relationship, interdependencies, or other
interactions of the financial market utility or payment,
clearing, or settlement activity with other financial
market utilities or payment, clearing, or settlement
activities.
(D) The effect that the failure of or a disruption
to the financial market utility or payment, clearing, or
settlement activity would have on critical markets,
financial institutions, or the broader financial system.
(E) Any other factors that the Council deems
appropriate.
(b) Rescission of Designation.--
(1) In general.--The Council, on a nondelegable basis and by
a vote of not fewer than \2/3\ of members then serving,
including an affirmative vote by the Chairperson of the Council,
shall rescind a designation of systemic importance for a
designated financial market utility or designated activity if
the Council determines that the utility or activity no longer
meets the standards for systemic importance.
(2) Effect of rescission.--Upon rescission, the financial
market utility or financial institutions conducting the activity
will no longer be subject to the provisions of this title or any
rules or orders prescribed under this title.
(c) Consultation and Notice and Opportunity for Hearing.--
[[Page 124 STAT. 1808]]
(1) Consultation.--Before making any determination under
subsection (a) or (b), the Council shall consult with the
relevant Supervisory Agency and the Board of Governors.
(2) Advance notice and opportunity for hearing.--
(A) In general.--Before making any determination
under subsection (a) or (b), the Council shall provide
the financial market utility or, in the case of a
payment, clearing, or settlement activity, financial
institutions with advance notice of the proposed
determination of the Council.
(B) Notice in federal register.--The Council shall
provide such advance notice to financial institutions by
publishing a notice in the Federal Register.
(C) <<NOTE: Deadline.>> Requests for hearing.--
Within 30 days from the date of any notice of the
proposed determination of the Council, the financial
market utility or, in the case of a payment, clearing,
or settlement activity, a financial institution engaged
in the designated activity may request, in writing, an
opportunity for a written or oral hearing before the
Council to demonstrate that the proposed designation or
rescission of designation is not supported by
substantial evidence.
(D) <<NOTE: Deadline.>> Written submissions.--Upon
receipt of a timely request, the Council shall fix a
time, not more than 30 days after receipt of the
request, unless extended at the request of the financial
market utility or financial institution, and place at
which the financial market utility or financial
institution may appear, personally or through counsel,
to submit written materials, or, at the sole discretion
of the Council, oral testimony or oral argument.
(3) Emergency exception.--
(A) Waiver or modification by vote of the council.--
The Council may waive or modify the requirements of
paragraph (2) if the Council determines, by an
affirmative vote of not fewer than \2/3\ of members then
serving, including an affirmative vote by the
Chairperson of the Council, that the waiver or
modification is necessary to prevent or mitigate an
immediate threat to the financial system posed by the
financial market utility or the payment, clearing, or
settlement activity.
(B) <<NOTE: Deadlines.>> Notice of waiver or
modification.--The Council shall provide notice of the
waiver or modification to the financial market utility
concerned or, in the case of a payment, clearing, or
settlement activity, to financial institutions, as soon
as practicable, which shall be no later than 24 hours
after the waiver or modification in the case of a
financial market utility and 3 business days in the case
of financial institutions. <<NOTE: Web posting. Federal
Register, publication.>> The Council shall provide the
notice to financial institutions by posting a notice on
the website of the Council and by publishing a notice in
the Federal Register.
(d) <<NOTE: Deadlines.>> Notification of Final Determination.--
(1) After hearing.--Within 60 days of any hearing under
subsection (c)(2), the Council shall notify the financial market
utility or financial institutions of the final determination of
the Council in writing, which shall include findings of fact
upon which the determination of the Council is based.
[[Page 124 STAT. 1809]]
(2) When no hearing requested.--If the Council does not
receive a timely request for a hearing under subsection (c)(2),
the Council shall notify the financial market utility or
financial institutions of the final determination of the Council
in writing not later than 30 days after the expiration of the
date by which a financial market utility or a financial
institution could have requested a hearing. <<NOTE: Federal
Register, publication.>> All notices to financial institutions
under this subsection shall be published in the Federal
Register.
(e) Extension of Time Periods.--The Council may extend the time
periods established in subsections (c) and (d) as the Council determines
to be necessary or appropriate.
SEC. 805. <<NOTE: 12 USC 5464.>> STANDARDS FOR SYSTEMICALLY
IMPORTANT FINANCIAL MARKET UTILITIES AND
PAYMENT, CLEARING, OR SETTLEMENT
ACTIVITIES.
(a) Authority to Prescribe Standards.--
(1) Board of governors.--Except as provided in paragraph
(2), the Board of Governors, by rule or order, and in
consultation with the Council and the Supervisory Agencies,
shall prescribe risk management standards, taking into
consideration relevant international standards and existing
prudential requirements, governing--
(A) the operations related to the payment, clearing,
and settlement activities of designated financial market
utilities; and
(B) the conduct of designated activities by
financial institutions.
(2) Special procedures for designated clearing entities and
designated activities of certain financial institutions.--
(A) CFTC and commission.--The Commodity Futures
Trading Commission and the Commission may each prescribe
regulations, in consultation with the Council and the
Board of Governors, containing risk management
standards, taking into consideration relevant
international standards and existing prudential
requirements, for those designated clearing entities and
financial institutions engaged in designated activities
for which each is the Supervisory Agency or the
appropriate financial regulator, governing--
(i) the operations related to payment,
clearing, and settlement activities of such
designated clearing entities; and
(ii) the conduct of designated activities by
such financial institutions.
(B) Review and determination.--The Board of
Governors may determine that existing prudential
requirements of the Commodity Futures Trading
Commission, the Commission, or both (including
requirements prescribed pursuant to subparagraph (A))
with respect to designated clearing entities and
financial institutions engaged in designated activities
for which the Commission or the Commodity Futures
Trading Commission is the Supervisory Agency or the
appropriate financial regulator are insufficient to
prevent or mitigate significant liquidity, credit,
[[Page 124 STAT. 1810]]
operational, or other risks to the financial markets or
to the financial stability of the United States.
(C) Written determination.--Any determination by the
Board of Governors under subparagraph (B) shall be
provided in writing to the Commodity Futures Trading
Commission or the Commission, as applicable, and the
Council, and shall explain why existing prudential
requirements, considered as a whole, are insufficient to
ensure that the operations and activities of the
designated clearing entities or the activities of
financial institutions described in subparagraph (B)
will not pose significant liquidity, credit,
operational, or other risks to the financial markets or
to the financial stability of the United States. The
Board of Governors' determination shall contain a
detailed analysis supporting its findings and identify
the specific prudential requirements that are
insufficient.
(D) <<NOTE: Deadline.>> CFTC and commission
response.--The Commodity Futures Trading Commission or
the Commission, as applicable, shall within 60 days
either object to the Board of Governors' determination
with a detailed analysis as to why existing prudential
requirements are sufficient, or submit an explanation to
the Council and the Board of Governors describing the
actions to be taken in response to the Board of
Governors' determination.
(E) Authorization.--Upon an affirmative vote by not
fewer than 2/3 of members then serving on the Council,
the Council shall either find that the response
submitted under subparagraph (D) is sufficient, or
require the Commodity Futures Trading Commission, or the
Commission, as applicable, to prescribe such risk
management standards as the Council determines is
necessary to address the specific prudential
requirements that are determined to be insufficient.''
(b) Objectives and Principles.--The objectives and principles for
the risk management standards prescribed under subsection (a) shall be
to--
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial system.
(c) Scope.--The standards prescribed under subsection (a) may
address areas such as--
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies and
procedures;
(4) the ability to complete timely clearing and settlement
of financial transactions;
(5) capital and financial resource requirements for
designated financial market utilities; and
(6) other areas that are necessary to achieve the objectives
and principles in subsection (b).
(d) Limitation on Scope.--Except as provided in subsections (e) and
(f) of section 807, nothing in this title shall be construed to permit
the Council or the Board of Governors to take any action or exercise any
authority granted to the Commodity Futures Trading Commission under
section 2(h) of the Commodity Exchange
[[Page 124 STAT. 1811]]
Act or the Securities and Exchange Commission under section 3C(a) of the
Securities Exchange Act of 1934, including--
(1) the approval of, disapproval of, or stay of the clearing
requirement for any group, category, type, or class of swaps
that a designated clearing entity may accept for clearing;
(2) the determination that any group, category, type, or
class of swaps shall be subject to the mandatory clearing
requirement of section 2(h)(1) of the Commodity Exchange Act or
section 3C(a)(1) of the Securities Exchange Act of 1934;
(3) the determination that any person is exempt from the
mandatory clearing requirement of section 2(h)(1) of the
Commodity Exchange Act or section 3C(a)(1) of the Securities
Exchange Act of 1934; or
(4) any authority granted to the Commodity Futures Trading
Commission or the Securities and Exchange Commission with
respect to transaction reporting or trade execution.
(e) Threshold Level.--The standards prescribed under subsection (a)
governing the conduct of designated activities by financial institutions
shall, where appropriate, establish a threshold as to the level or
significance of engagement in the activity at which a financial
institution will become subject to the standards with respect to that
activity.
(f) Compliance Required.--Designated financial market utilities and
financial institutions subject to the standards prescribed under
subsection (a) for a designated activity shall conduct their operations
in compliance with the applicable risk management standards.
SEC. 806. <<NOTE: 12 USC 5465.>> OPERATIONS OF DESIGNATED
FINANCIAL MARKET UTILITIES.
(a) Federal Reserve Account and Services.--The Board of Governors
may authorize a Federal Reserve Bank to establish and maintain an
account for a designated financial market utility and provide the
services listed in section 11A(b) of the Federal Reserve Act (12 U.S.C.
248a(b)) and deposit accounts under the first undesignated paragraph of
section 13 of the Federal Reserve Act (12 U.S.C. 342) to the designated
financial market utility that the Federal Reserve Bank is authorized
under the Federal Reserve Act to provide to a depository institution,
subject to any applicable rules, orders, standards, or guidelines
prescribed by the Board of Governors.
(b) Advances.--The Board of Governors may authorize a Federal
Reserve bank under section 10B of the Federal Reserve Act (12 U.S.C.
347b) to provide to a designated financial market utility discount and
borrowing privileges only in unusual or exigent circumstances, upon the
affirmative vote of a majority of the Board of Governors then serving
(or such other number in accordance with the provisions of section
11(r)(2) of the Federal Reserve Act (12 U.S.C. 248(r)(2)) after
consultation with the Secretary, and upon a showing by the designated
financial market utility that it is unable to secure adequate credit
accommodations from other banking institutions. All such discounts and
borrowing privileges shall be subject to such other limitations,
restrictions, and regulations as the Board of Governors may prescribe.
Access to discount and borrowing privileges under section 10B of the
Federal Reserve Act as authorized in this section does not require a
designated
[[Page 124 STAT. 1812]]
financial market utility to be or become a bank or bank holding company.
(c) Earnings on Federal Reserve Balances.--A Federal Reserve Bank
may pay earnings on balances maintained by or on behalf of a designated
financial market utility in the same manner and to the same extent as
the Federal Reserve Bank may pay earnings to a depository institution
under the Federal Reserve Act, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of Governors.
(d) Reserve Requirements.--The Board of Governors may exempt a
designated financial market utility from, or modify any, reserve
requirements under section 19 of the Federal Reserve Act (12 U.S.C. 461)
applicable to a designated financial market utility.
(e) Changes to Rules, Procedures, or Operations.--
(1) Advance notice.--
(A) Advance notice of proposed changes required.--A
designated financial market utility shall provide notice
60 days in advance notice to its Supervisory Agency of
any proposed change to its rules, procedures, or
operations that could, as defined in rules of each
Supervisory Agency, materially affect, the nature or
level of risks presented by the designated financial
market utility.
(B) Terms and standards prescribed by the
supervisory agencies.--Each Supervisory Agency, in
consultation with the Board of Governors, shall
prescribe regulations that define and describe the
standards for determining when notice is required to be
provided under subparagraph (A).
(C) Contents of notice.--The notice of a proposed
change shall describe--
(i) the nature of the change and expected
effects on risks to the designated financial
market utility, its participants, or the market;
and
(ii) how the designated financial market
utility plans to manage any identified risks.
(D) Additional information.--The Supervisory Agency
may require a designated financial market utility to
provide any information necessary to assess the effect
the proposed change would have on the nature or level of
risks associated with the designated financial market
utility's payment, clearing, or settlement activities
and the sufficiency of any proposed risk management
techniques.
(E) <<NOTE: Deadline.>> Notice of objection.--The
Supervisory Agency shall notify the designated financial
market utility of any objection regarding the proposed
change within 60 days from the later of--
(i) the date that the notice of the proposed
change is received; or
(ii) the date any further information
requested for consideration of the notice is
received.
(F) Change not allowed if objection.--A designated
financial market utility shall not implement a change to
which the Supervisory Agency has an objection.
(G) Change allowed if no objection within 60 days.--
A designated financial market utility may implement a
change if it has not received an objection to the
proposed change within 60 days of the later of--
[[Page 124 STAT. 1813]]
(i) the date that the Supervisory Agency
receives the notice of proposed change; or
(ii) the date the Supervisory Agency receives
any further information it requests for
consideration of the notice.
(H) Review extension for novel or complex issues.--
<<NOTE: Time period.>> The Supervisory Agency may,
during the 60-day review period, extend the review
period for an additional 60 days for proposed changes
that raise novel or complex issues, subject to the
Supervisory Agency providing the designated financial
market utility with prompt written notice of the
extension. Any extension under this subparagraph will
extend the time periods under subparagraphs (E) and (G).
(I) Change allowed earlier if notified of no
objection.-- <<NOTE: Time period.>> A designated
financial market utility may implement a change in less
than 60 days from the date of receipt of the notice of
proposed change by the Supervisory Agency, or the date
the Supervisory Agency receives any further information
it requested, if the Supervisory Agency notifies the
designated financial market utility in writing that it
does not object to the proposed change and authorizes
the designated financial market utility to implement the
change on an earlier date, subject to any conditions
imposed by the Supervisory Agency.
(2) Emergency changes.--
(A) In general.--A designated financial market
utility may implement a change that would otherwise
require advance notice under this subsection if it
determines that--
(i) an emergency exists; and
(ii) immediate implementation of the change is
necessary for the designated financial market
utility to continue to provide its services in a
safe and sound manner.
(B) Notice required within 24 hours.--The designated
financial market utility shall provide notice of any
such emergency change to its Supervisory Agency, as soon
as practicable, which shall be no later than 24 hours
after implementation of the change.
(C) Contents of emergency notice.--In addition to
the information required for changes requiring advance
notice, the notice of an emergency change shall
describe--
(i) the nature of the emergency; and
(ii) the reason the change was necessary for
the designated financial market utility to
continue to provide its services in a safe and
sound manner.
(D) Modification or rescission of change may be
required.--The Supervisory Agency may require
modification or rescission of the change if it finds
that the change is not consistent with the purposes of
this Act or any applicable rules, orders, or standards
prescribed under section 805(a).
(3) Copying the board of governors.--The Supervisory Agency
shall provide the Board of Governors concurrently with a
complete copy of any notice, request, or other information it
issues, submits, or receives under this subsection.
[[Page 124 STAT. 1814]]
(4) Consultation with board of governors.--Before taking any
action on, or completing its review of, a change proposed by a
designated financial market utility, the Supervisory Agency
shall consult with the Board of Governors.
SEC. 807. <<NOTE: 12 USC 5466.>> EXAMINATION OF AND ENFORCEMENT
ACTIONS AGAINST DESIGNATED FINANCIAL
MARKET UTILITIES.
(a) Examination.--Notwithstanding any other provision of law and
subject to subsection (d), the Supervisory Agency shall conduct
examinations of a designated financial market utility at least once
annually in order to determine the following:
(1) The nature of the operations of, and the risks borne by,
the designated financial market utility.
(2) The financial and operational risks presented by the
designated financial market utility to financial institutions,
critical markets, or the broader financial system.
(3) The resources and capabilities of the designated
financial market utility to monitor and control such risks.
(4) The safety and soundness of the designated financial
market utility.
(5) The designated financial market utility's compliance
with--
(A) this title; and
(B) the rules and orders prescribed under this
title.
(b) Service Providers.--Whenever a service integral to the operation
of a designated financial market utility is performed for the designated
financial market utility by another entity, whether an affiliate or non-
affiliate and whether on or off the premises of the designated financial
market utility, the Supervisory Agency may examine whether the provision
of that service is in compliance with applicable law, rules, orders, and
standards to the same extent as if the designated financial market
utility were performing the service on its own premises.
(c) Enforcement.--For purposes of enforcing the provisions of this
title, a designated financial market utility shall be subject to, and
the appropriate Supervisory Agency shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the
same extent as if the designated financial market utility was an insured
depository institution and the Supervisory Agency was the appropriate
Federal banking agency for such insured depository institution.
(d) Board of Governors Involvement in Examinations.--
(1) Board of governors consultation on examination
planning.-- <<NOTE: Deadline.>> The Supervisory Agency shall
consult annually with the Board of Governors regarding the scope
and methodology of any examination conducted under subsections
(a) and (b). The Supervisory Agency shall lead all examinations
conducted under subsections (a) and (b)
(2) Board of governors participation in examination.--The
Board of Governors may, in its discretion, participate in any
examination led by a Supervisory Agency and conducted under
subsections (a) and (b).
(e) Board of Governors Enforcement Recommendations.--
(1) Recommendation.--The Board of Governors may, after
consulting with the Council and the Supervisory Agency, at any
time recommend to the Supervisory Agency that such
[[Page 124 STAT. 1815]]
agency take enforcement action against a designated financial
market utility in order to prevent or mitigate significant
liquidity, credit, operational, or other risks to the financial
markets or to the financial stability of the United States. Any
such recommendation for enforcement action shall provide a
detailed analysis supporting the recommendation of the Board of
Governors.
(2) <<NOTE: Deadline.>> Consideration.--The Supervisory
Agency shall consider the recommendation of the Board of
Governors and submit a response to the Board of Governors within
60 days.
(3) Binding arbitration.--If the Supervisory Agency rejects,
in whole or in part, the recommendation of the Board of
Governors, the Board of Governors may refer the recommendation
to the Council for a binding decision on whether an enforcement
action is warranted.
(4) Enforcement action.--Upon an affirmative vote by a
majority of the Council in favor of the Board of Governors'
recommendation under paragraph (3), the Council may require the
Supervisory Agency to--
(A) exercise the enforcement authority referenced in
subsection (c); and
(B) take enforcement action against the designated
financial market utility.
(f) Emergency Enforcement Actions by the Board of Governors.--
(1) Imminent risk of substantial harm.--The Board of
Governors may, after consulting with the Supervisory Agency and
upon an affirmative vote by a majority the Council, take
enforcement action against a designated financial market utility
if the Board of Governors has reasonable cause to conclude
that--
(A) either--
(i) an action engaged in, or contemplated by,
a designated financial market utility (including
any change proposed by the designated financial
market utility to its rules, procedures, or
operations that would otherwise be subject to
section 806(e)) poses an imminent risk of
substantial harm to financial institutions,
critical markets, or the broader financial system
of the United States; or
(ii) the condition of a designated financial
market utility poses an imminent risk of
substantial harm to financial institutions,
critical markets, or the broader financial system;
and
(B) the imminent risk of substantial harm precludes
the Board of Governors' use of the procedures in
subsection (e).
(2) Enforcement authority.--For purposes of taking
enforcement action under paragraph (1), a designated financial
market utility shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent as if
the designated financial market utility was an insured
depository institution and the Board of Governors was the
appropriate Federal banking agency for such insured depository
institution.
[[Page 124 STAT. 1816]]
SEC. 808. <<NOTE: 12 USC 5467.>> EXAMINATION OF AND ENFORCEMENT
ACTIONS AGAINST FINANCIAL INSTITUTIONS
SUBJECT TO STANDARDS FOR DESIGNATED
ACTIVITIES.
(a) Examination.--The appropriate financial regulator is authorized
to examine a financial institution subject to the standards prescribed
under section 805(a) for a designated activity in order to determine the
following:
(1) The nature and scope of the designated activities
engaged in by the financial institution.
(2) The financial and operational risks the designated
activities engaged in by the financial institution may pose to
the safety and soundness of the financial institution.
(3) The financial and operational risks the designated
activities engaged in by the financial institution may pose to
other financial institutions, critical markets, or the broader
financial system.
(4) The resources available to and the capabilities of the
financial institution to monitor and control the risks described
in paragraphs (2) and (3).
(5) The financial institution's compliance with this title
and the rules and orders prescribed under section 805(a).
(b) Enforcement.--For purposes of enforcing the provisions of this
title, and the rules and orders prescribed under this section, a
financial institution subject to the standards prescribed under section
805(a) for a designated activity shall be subject to, and the
appropriate financial regulator shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the
same extent as if the financial institution was an insured depository
institution and the appropriate financial regulator was the appropriate
Federal banking agency for such insured depository institution.
(c) <<NOTE: Consultation.>> Technical Assistance.--The Board of
Governors shall consult with and provide such technical assistance as
may be required by the appropriate financial regulators to ensure that
the rules and orders prescribed under this title are interpreted and
applied in as consistent and uniform a manner as practicable.
(d) Delegation.--
(1) Examination.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors
to conduct or participate in an examination of a
financial institution subject to the standards
prescribed under section 805(a) for a designated
activity in order to assess the compliance of such
financial institution with--
(i) this title; or
(ii) the rules or orders prescribed under this
title.
(B) Examination by board of governors.--Upon receipt
of an appropriate written request, the Board of
Governors will conduct the examination under such terms
and conditions to which the Board of Governors and the
appropriate financial regulator mutually agree.
(2) Enforcement.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors
to enforce this title or the rules or orders prescribed
[[Page 124 STAT. 1817]]
under this title against a financial institution that is
subject to the standards prescribed under section 805(a)
for a designated activity.
(B) <<NOTE: Determination.>> Enforcement by board
of governors.--Upon receipt of an appropriate written
request, the Board of Governors shall determine whether
an enforcement action is warranted, and, if so, it shall
enforce compliance with this title or the rules or
orders prescribed under this title and, if so, the
financial institution shall be subject to, and the Board
of Governors shall have authority under the provisions
of subsections (b) through (n) of section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818) in the
same manner and to the same extent as if the financial
institution was an insured depository institution and
the Board of Governors was the appropriate Federal
banking agency for such insured depository institution.
(e) Back-up Authority of the Board of Governors.--
(1) Examination and enforcement.--Notwithstanding any other
provision of law, the Board of Governors may--
(A) conduct an examination of the type described in
subsection (a) of any financial institution that is
subject to the standards prescribed under section 805(a)
for a designated activity; and
(B) enforce the provisions of this title or any
rules or orders prescribed under this title against any
financial institution that is subject to the standards
prescribed under section 805(a) for a designated
activity.
(2) Limitations.--
(A) Examination.--The Board of Governors may
exercise the authority described in paragraph (1)(A)
only if the Board of Governors has--
(i) reasonable cause to believe that a
financial institution is not in compliance with
this title or the rules or orders prescribed under
this title with respect to a designated activity;
(ii) <<NOTE: Notification.>> notified, in
writing, the appropriate financial regulator and
the Council of its belief under clause (i) with
supporting documentation included;
(iii) requested the appropriate financial
regulator to conduct a prompt examination of the
financial institution;
(iv) either--
(I) <<NOTE: Deadline.>> not been
afforded a reasonable opportunity to
participate in an examination of the
financial institution by the appropriate
financial regulator within 30 days after
the date of the Board's notification
under clause (ii); or
(II) reasonable cause to believe
that the financial institution's
noncompliance with this title or the
rules or orders prescribed under this
title poses a substantial risk to other
financial institutions, critical
markets, or the broader financial
system, subject to the Board of
Governors affording the appropriate
financial regulator a reasonable
opportunity to participate in the
examination; and
(v) obtained the approval of the Council upon
an affirmative vote by a majority of the Council.
[[Page 124 STAT. 1818]]
(B) Enforcement.--The Board of Governors may
exercise the authority described in paragraph (1)(B)
only if the Board of Governors has--
(i) reasonable cause to believe that a
financial institution is not in compliance with
this title or the rules or orders prescribed under
this title with respect to a designated activity;
(ii) <<NOTE: Notification.>> notified, in
writing, the appropriate financial regulator and
the Council of its belief under clause (i) with
supporting documentation included and with a
recommendation that the appropriate financial
regulator take 1 or more specific enforcement
actions against the financial institution;
(iii) either--
(I) <<NOTE: Deadline.>> not been
notified, in writing, by the appropriate
financial regulator of the commencement
of an enforcement action recommended by
the Board of Governors against the
financial institution within 60 days
from the date of the notification under
clause (ii); or
(II) reasonable cause to believe
that the financial institution's
noncompliance with this title or the
rules or orders prescribed under this
title poses significant liquidity,
credit, operational, or other risks to
the financial markets or to the
financial stability of the United
States, subject to the Board of
Governors notifying the appropriate
financial regulator of the Board's
enforcement action; and
(iv) obtained the approval of the Council upon
an affirmative vote by a majority of the Council.
(3) Enforcement provisions.--For purposes of taking
enforcement action under paragraph (1), the financial
institution shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent as if
the financial institution was an insured depository institution
and the Board of Governors was the appropriate Federal banking
agency for such insured depository institution.
SEC. 809. <<NOTE: 12 USC 5468.>> REQUESTS FOR INFORMATION,
REPORTS, OR RECORDS.
(a) Information To Assess Systemic Importance.--
(1) Financial market utilities.--The Council is authorized
to require any financial market utility to submit such
information as the Council may require for the sole purpose of
assessing whether that financial market utility is systemically
important, but only if the Council has reasonable cause to
believe that the financial market utility meets the standards
for systemic importance set forth in section 804.
(2) Financial institutions engaged in payment, clearing, or
settlement activities.--The Council is authorized to require any
financial institution to submit such information as the Council
may require for the sole purpose of assessing whether any
payment, clearing, or settlement activity engaged in or
supported by a financial institution is systemically important,
but only if the Council has reasonable cause to believe
[[Page 124 STAT. 1819]]
that the activity meets the standards for systemic importance
set forth in section 804.
(b) Reporting After Designation.--
(1) Designated financial market utilities.--The Board of
Governors and the Council may each require a designated
financial market utility to submit reports or data to the Board
of Governors and the Council in such frequency and form as
deemed necessary by the Board of Governors or the Council in
order to assess the safety and soundness of the utility and the
systemic risk that the utility's operations pose to the
financial system.
(2) Financial institutions subject to standards for
designated activities.--The Board of Governors and the Council
may each require 1 or more financial institutions subject to the
standards prescribed under section 805(a) for a designated
activity to submit, in such frequency and form as deemed
necessary by the Board of Governors or the Council, reports and
data to the Board of Governors and the Council solely with
respect to the conduct of the designated activity and solely to
assess whether--
(A) the rules, orders, or standards prescribed under
section 805(a) with respect to the designated activity
appropriately address the risks to the financial system
presented by such activity; and
(B) the financial institutions are in compliance
with this title and the rules and orders prescribed
under section 805(a) with respect to the designated
activity.
(3) Limitation.--The Board of Governors may, upon an
affirmative vote by a majority of the Council, prescribe
regulations under this section that impose a recordkeeping or
reporting requirement on designated clearing entities or
financial institutions engaged in designated activities that are
subject to standards that have been prescribed under section
805(a)(2).
(c) Coordination With Appropriate Federal Supervisory Agency.--
(1) Advance coordination.--Before requesting any material
information from, or imposing reporting or recordkeeping
requirements on, any financial market utility or any financial
institution engaged in a payment, clearing, or settlement
activity, the Board of Governors or the Council shall coordinate
with the Supervisory Agency for a financial market utility or
the appropriate financial regulator for a financial institution
to determine if the information is available from or may be
obtained by the agency in the form, format, or detail required
by the Board of Governors or the Council.
(2) Supervisory reports.--Notwithstanding any other
provision of law, the Supervisory Agency, the appropriate
financial regulator, and the Board of Governors are authorized
to disclose to each other and the Council copies of its
examination reports or similar reports regarding any financial
market utility or any financial institution engaged in payment,
clearing, or settlement activities.
(d) Timing of Response From Appropriate Federal Supervisory
Agency.-- <<NOTE: Deadline. Notice.>> If the information, report,
records, or data requested by the Board of Governors or the Council
under subsection (c)(1) are not provided in full by the Supervisory
Agency
[[Page 124 STAT. 1820]]
or the appropriate financial regulator in less than 15 days after the
date on which the material is requested, the Board of Governors or the
Council may request the information or impose recordkeeping or reporting
requirements directly on such persons as provided in subsections (a) and
(b) with notice to the agency.
(e) Sharing of Information.--
(1) Material concerns.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, and any Supervisory Agency are authorized
to--
(A) <<NOTE: Notification.>> promptly notify each
other of material concerns about a designated financial
market utility or any financial institution engaged in
designated activities; and
(B) share appropriate reports, information, or data
relating to such concerns.
(2) Other information.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, or any Supervisory Agency may, under such
terms and conditions as it deems appropriate, provide
confidential supervisory information and other information
obtained under this title to each other, and to the Secretary,
Federal Reserve Banks, State financial institution supervisory
agencies, foreign financial supervisors, foreign central banks,
and foreign finance ministries, subject to reasonable assurances
of confidentiality, provided, however, that no person or entity
receiving information pursuant to this section may disseminate
such information to entities or persons other than those listed
in this paragraph without complying with applicable law,
including section 8 of the Commodity Exchange Act (7 U.S.C. 12).
(f) Privilege Maintained.--The Board of Governors, the Council, the
appropriate financial regulator, and any Supervisory Agency providing
reports or data under this section shall not be deemed to have waived
any privilege applicable to those reports or data, or any portion
thereof, by providing the reports or data to the other party or by
permitting the reports or data, or any copies thereof, to be used by the
other party.
(g) Disclosure Exemption.--Information obtained by the Board of
Governors, the Supervisory Agencies, or the Council under this section
and any materials prepared by the Board of Governors, the Supervisory
Agencies, or the Council regarding their assessment of the systemic
importance of financial market utilities or any payment, clearing, or
settlement activities engaged in by financial institutions, and in
connection with their supervision of designated financial market
utilities and designated activities, shall be confidential supervisory
information exempt from disclosure under section 552 of title 5, United
States Code. For purposes of such section 552, this subsection shall be
considered a statute described in subsection (b)(3) of such section 552.
SEC. 810. <<NOTE: 12 USC 5469.>> RULEMAKING.
The Board of Governors, the Supervisory Agencies, and the Council
are authorized to prescribe such rules and issue such orders as may be
necessary to administer and carry out their respective authorities and
duties granted under this title and prevent evasions thereof.
[[Page 124 STAT. 1821]]
SEC. 811. <<NOTE: 12 USC 5470.>> OTHER AUTHORITY.
Unless otherwise provided by its terms, this title does not divest
any appropriate financial regulator, any Supervisory Agency, or any
other Federal or State agency, of any authority derived from any other
applicable law, except that any standards prescribed by the Board of
Governors under section 805 shall supersede any less stringent
requirements established under other authority to the extent of any
conflict.
SEC. 812. <<NOTE: 12 USC 5471.>> CONSULTATION.
(a) CFTC.--The Commodity Futures Trading Commission shall consult
with the Board of Governors--
(1) prior to exercising its authorities under sections
2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C), 2(h)(4)(A), and 2(h)(4)(B)
of the Commodity Exchange Act, as amended by the Wall Street
Transparency and Accountability Act of 2010;
(2) with respect to any rule or rule amendment of a
derivatives clearing organization for which a stay of
certification has been issued under section 745(b)(3) of the
Wall Street Transparency and Accountability Act of 2010; and
(3) prior to exercising its rulemaking authorities under
section 728 of the Wall Street Transparency and Accountability
Act of 2010.
(b) SEC.--The Commission shall consult with the Board of Governors--
(1) prior to exercising its authorities under sections
3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C), 3C(a)(4)(A), and
3C(a)(4)(B) of the Securities Exchange Act of 1934, as amended
by the Wall Street Transparency and Accountability Act of 2010;
(2) with respect to any proposed rule change of a clearing
agency for which an extension of the time for review has been
designated under section 19(b)(2) of the Securities Exchange Act
of 1934; and
(3) prior to exercising its rulemaking authorities under
section 13(n) of the Securities Exchange Act of 1934, as added
by section 763(i) of the Wall Street Transparency and
Accountability Act of 2010.
SEC. 813. <<NOTE: 12 USC 5472.>> COMMON FRAMEWORK FOR DESIGNATED
CLEARING ENTITY RISK MANAGEMENT.
The Commodity Futures Trading Commission and the Commission shall
coordinate with the Board of Governors to jointly develop risk
management supervision programs for designated clearing
entities. <<NOTE: Deadline. Reports.>> Not later than 1 year after the
date of enactment of this Act, the Commodity Futures Trading Commission,
the Commission, and the Board of Governors shall submit a joint report
to the Committee on Banking, Housing, and Urban Affairs and the
Committee on Agriculture, Nutrition, and Forestry of the Senate, and the
Committee on Financial Services and the Committee on Agriculture of the
House of Representatives recommendations for--
(1) improving consistency in the designated clearing entity
oversight programs of the Commission and the Commodity Futures
Trading Commission;
(2) promoting robust risk management by designated clearing
entities;
(3) promoting robust risk management oversight by regulators
of designated clearing entities; and
[[Page 124 STAT. 1822]]
(4) improving regulators' ability to monitor the potential
effects of designated clearing entity risk management on the
stability of the financial system of the United States.
SEC. 814. <<NOTE: 12 USC 5461 note.>> EFFECTIVE DATE.
This title is effective as of the date of enactment of this Act.
TITLE <<NOTE: Investor Protection and Securities Reform Act of 2010.>>
IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
SEC. 901. <<NOTE: 15 USC 78a note.>> SHORT TITLE.
This title may be cited as the ``Investor Protection and Securities
Reform Act of 2010''.
Subtitle A--Increasing Investor Protection
SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by adding at the end the following:
``SEC. 39. <<NOTE: 15 USC 78pp.>> INVESTOR ADVISORY COMMITTEE.
``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Investor Advisory Committee (referred to in this
section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) advise and consult with the Commission on--
``(i) regulatory priorities of the Commission;
``(ii) issues relating to the regulation of
securities products, trading strategies, and fee
structures, and the effectiveness of disclosure;
``(iii) initiatives to protect investor
interest; and
``(iv) initiatives to promote investor
confidence and the integrity of the securities
marketplace; and
``(B) submit to the Commission such findings and
recommendations as the Committee determines are
appropriate, including recommendations for proposed
legislative changes.
``(b) Membership.--
``(1) In general.--The members of the Committee shall be--
``(A) the Investor Advocate;
``(B) a representative of State securities
commissions;
``(C) a representative of the interests of senior
citizens; and
``(D) not fewer than 10, and not more than 20,
members appointed by the Commission, from among
individuals who--
``(i) represent the interests of individual
equity and debt investors, including investors in
mutual funds;
``(ii) represent the interests of
institutional investors, including the interests
of pension funds and registered investment
companies;
[[Page 124 STAT. 1823]]
``(iii) are knowledgeable about investment
issues and decisions; and
``(iv) have reputations of integrity.
``(2) Term.--Each member of the Committee appointed under
paragraph (1)(B) shall serve for a term of 4 years.
``(3) Members not commission employees.--Members appointed
under paragraph (1)(B) shall not be deemed to be employees or
agents of the Commission solely because of membership on the
Committee.
``(c) Chairman; Vice Chairman; Secretary; Assistant Secretary.--
``(1) In general.--The members of the Committee shall elect,
from among the members of the Committee--
``(A) a chairman, who may not be employed by an
issuer;
``(B) a vice chairman, who may not be employed by an
issuer;
``(C) a secretary; and
``(D) an assistant secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of 3 years in the capacity for which the member
was elected under paragraph (1).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than twice annually, at
the call of the chairman of the Committee; and
``(B) from time to time, at the call of the
Commission.
``(2) <<NOTE: Deadline.>> Notice.--The chairman of the
Committee shall give the members of the Committee written notice
of each meeting, not later than 2 weeks before the date of the
meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United States shall--
``(1) be entitled to receive compensation at a rate not to
exceed the daily equivalent of the annual rate of basic pay in
effect for a position at level V of the Executive Schedule under
section 5316 of title 5, United States Code, for each day during
which the member is engaged in the actual performance of the
duties of the Committee; and
``(2) while away from the home or regular place of business
of the member in the performance of services for the Committee,
be allowed travel expenses, including per diem in lieu of
subsistence, in the same manner as persons employed
intermittently in the Government service are allowed expenses
under section 5703(b) of title 5, United States Code.
``(f) Staff.--The Commission shall make available to the Committee
such staff as the chairman of the Committee determines are necessary to
carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the
Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, promptly issue a public
statement--
``(A) assessing the finding or recommendation of the
Committee; and
[[Page 124 STAT. 1824]]
``(B) disclosing the action, if any, the Commission
intends to take with respect to the finding or
recommendation.
``(h) Committee Findings.--Nothing in this section shall require the
Commission to agree to or act upon any finding or recommendation of the
Committee.
``(i) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to the
Committee and its activities.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated to the Commission such sums as are necessary to carry out
this section.''.
SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO ENGAGE
IN INVESTOR TESTING.
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is amended
by adding at the end the following:
``(e) Evaluation of Rules or Programs.--For the purpose of
evaluating any rule or program of the Commission issued or carried out
under any provision of the securities laws, as defined in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c), and the purposes of
considering, proposing, adopting, or engaging in any such rule or
program or developing new rules or programs, the Commission may--
``(1) gather information from and communicate with investors
or other members of the public;
``(2) engage in such temporary investor testing programs as
the Commission determines are in the public interest or would
protect investors; and
``(3) consult with academics and consultants, as necessary
to carry out this subsection.
``(f) Rule of Construction.--For purposes of the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.), any action taken under subsection (e)
shall not be construed to be a collection of information.''.
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF BROKERS,
DEALERS, AND INVESTMENT ADVISERS.
(a) <<NOTE: 15 USC 78o note.>> Definition.--For purposes of this
section, the term ``retail customer'' means a natural person, or the
legal representative of such natural person, who--
(1) receives personalized investment advice about securities
from a broker or dealer or investment adviser; and
(2) uses such advice primarily for personal, family, or
household purposes.
(b) <<NOTE: 15 USC 78o note.>> Study.--The Commission shall conduct
a study to evaluate--
(1) the effectiveness of existing legal or regulatory
standards of care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized
investment advice and recommendations about securities to retail
customers imposed by the Commission and a national securities
association, and other Federal and State legal or regulatory
standards; and
(2) whether there are legal or regulatory gaps,
shortcomings, or overlaps in legal or regulatory standards in
the protection of retail customers relating to the standards of
care
[[Page 124 STAT. 1825]]
for brokers, dealers, investment advisers, persons associated
with brokers or dealers, and persons associated with investment
advisers for providing personalized investment advice about
securities to retail customers that should be addressed by rule
or statute.
(c) <<NOTE: 15 USC 78o note.>> Considerations.--In conducting the
study required under subsection (b), the Commission shall consider--
(1) the effectiveness of existing legal or regulatory
standards of care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized
investment advice and recommendations about securities to retail
customers imposed by the Commission and a national securities
association, and other Federal and State legal or regulatory
standards;
(2) whether there are legal or regulatory gaps,
shortcomings, or overlaps in legal or regulatory standards in
the protection of retail customers relating to the standards of
care for brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers for providing personalized investment advice
about securities to retail customers that should be addressed by
rule or statute;
(3) whether retail customers understand that there are
different standards of care applicable to brokers, dealers,
investment advisers, persons associated with brokers or dealers,
and persons associated with investment advisers in the provision
of personalized investment advice about securities to retail
customers;
(4) whether the existence of different standards of care
applicable to brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers is a source of confusion for retail
customers regarding the quality of personalized investment
advice that retail customers receive;
(5) the regulatory, examination, and enforcement resources
devoted to, and activities of, the Commission, the States, and a
national securities association to enforce the standards of care
for brokers, dealers, investment advisers, persons associated
with brokers or dealers, and persons associated with investment
advisers when providing personalized investment advice and
recommendations about securities to retail customers,
including--
(A) the effectiveness of the examinations of
brokers, dealers, and investment advisers in determining
compliance with regulations;
(B) the frequency of the examinations; and
(C) the length of time of the examinations;
(6) the substantive differences in the regulation of
brokers, dealers, and investment advisers, when providing
personalized investment advice and recommendations about
securities to retail customers;
(7) the specific instances related to the provision of
personalized investment advice about securities in which--
(A) the regulation and oversight of investment
advisers provide greater protection to retail customers
than the regulation and oversight of brokers and
dealers; and
[[Page 124 STAT. 1826]]
(B) the regulation and oversight of brokers and
dealers provide greater protection to retail customers
than the regulation and oversight of investment
advisers;
(8) the existing legal or regulatory standards of State
securities regulators and other regulators intended to protect
retail customers;
(9) the potential impact on retail customers, including the
potential impact on access of retail customers to the range of
products and services offered by brokers and dealers, of
imposing upon brokers, dealers, and persons associated with
brokers or dealers--
(A) the standard of care applied under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.) for providing personalized investment advice about
securities to retail customers of investment advisers,
as interpreted by the Commission and the courts; and
(B) other requirements of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 et seq.);
(10) the potential impact of eliminating the broker and
dealer exclusion from the definition of ``investment adviser''
under section 202(a)(11)(C) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(11)(C)), in terms of--
(A) the impact and potential benefits and harm to
retail customers that could result from such a change,
including any potential impact on access to personalized
investment advice and recommendations about securities
to retail customers or the availability of such advice
and recommendations;
(B) the number of additional entities and
individuals that would be required to register under, or
become subject to, the Investment Advisers Act of 1940
(15 U.S.C. 80b-1 et seq.), and the additional
requirements to which brokers, dealers, and persons
associated with brokers and dealers would become
subject, including--
(i) any potential additional associated person
licensing, registration, and examination
requirements; and
(ii) the additional costs, if any, to the
additional entities and individuals; and
(C) the impact on Commission and State resources
to--
(i) conduct examinations of registered
investment advisers and the representatives of
registered investment advisers, including the
impact on the examination cycle; and
(ii) enforce the standard of care and other
applicable requirements imposed under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1
et seq.);
(11) the varying level of services provided by brokers,
dealers, investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers to
retail customers and the varying scope and terms of retail
customer relationships of brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers with such retail customers;
(12) the potential impact upon retail customers that could
result from potential changes in the regulatory requirements
[[Page 124 STAT. 1827]]
or legal standards of care affecting brokers, dealers,
investment advisers, persons associated with brokers or dealers,
and persons associated with investment advisers relating to
their obligations to retail customers regarding the provision of
investment advice, including any potential impact on--
(A) protection from fraud;
(B) access to personalized investment advice, and
recommendations about securities to retail customers; or
(C) the availability of such advice and
recommendations;
(13) the potential additional costs and expenses to--
(A) retail customers regarding and the potential
impact on the profitability of their investment
decisions; and
(B) brokers, dealers, and investment advisers
resulting from potential changes in the regulatory
requirements or legal standards affecting brokers,
dealers, investment advisers, persons associated with
brokers or dealers, and persons associated with
investment advisers relating to their obligations,
including duty of care, to retail customers; and
(14) any other consideration that the Commission considers
necessary and appropriate in determining whether to conduct a
rulemaking under subsection (f).
(d) <<NOTE: 15 USC 78o note.>> Report.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Commission shall submit a report on
the study required under subsection (b) to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the House
of Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings, conclusions, and
recommendations of the Commission from the study required under
subsection (b), including--
(A) a description of the considerations, analysis,
and public and industry input that the Commission
considered, as required under subsection (b), to make
such findings, conclusions, and policy recommendations;
and
(B) an analysis of whether any identified legal or
regulatory gaps, shortcomings, or overlap in legal or
regulatory standards in the protection of retail
customers relating to the standards of care for brokers,
dealers, investment advisers, persons associated with
brokers or dealers, and persons associated with
investment advisers for providing personalized
investment advice about securities to retail customers.
(e) <<NOTE: 15 USC 78o note.>> Public Comment.--The Commission
shall seek and consider public input, comments, and data in order to
prepare the report required under subsection (d).
(f) <<NOTE: 15 USC 78o note.>> Rulemaking.--The Commission may
commence a rulemaking, as necessary or appropriate in the public
interest and for the protection of retail customers (and such other
customers as the Commission may by rule provide), to address the legal
or regulatory standards of care for brokers, dealers, investment
advisers, persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized
[[Page 124 STAT. 1828]]
investment advice about securities to such retail customers. The
Commission shall consider the findings conclusions, and recommendations
of the study required under subsection (b).
(g) Authority to Establish a Fiduciary Duty for Brokers and
Dealers.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by
adding at the end the following:
``(k) Standard of Conduct.--
``(1) In general.--Notwithstanding any other provision of
this Act or the Investment Advisers Act of 1940, the Commission
may promulgate rules to provide that, with respect to a broker
or dealer, when providing personalized investment advice about
securities to a retail customer (and such other customers as the
Commission may by rule provide), the standard of conduct for
such broker or dealer with respect to such customer shall be the
same as the standard of conduct applicable to an investment
adviser under section 211 of the Investment Advisers Act of
1940. The receipt of compensation based on commission or other
standard compensation for the sale of securities shall not, in
and of itself, be considered a violation of such standard
applied to a broker or dealer. Nothing in this section shall
require a broker or dealer or registered representative to have
a continuing duty of care or loyalty to the customer after
providing personalized investment advice about securities.
``(2) Disclosure of range of products offered.--Where a
broker or dealer sells only proprietary or other limited range
of products, as determined by the Commission, the Commission may
by rule require that such broker or dealer provide notice to
each retail customer and obtain the consent or acknowledgment of
the customer. The sale of only proprietary or other limited
range of products by a broker or dealer shall not, in and of
itself, be considered a violation of the standard set forth in
paragraph (1).
``(l) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear
disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment advisers,
including any material conflicts of interest; and
``(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to the
public interest and the protection of investors.''.
(2) Investment advisers act of 1940.--Section 211 of the
Investment Advisers Act of 1940, <<NOTE: 15 USC 80b-11.>> is
further amended by adding at the end the following new
subsections:
``(g) Standard of Conduct.--
``(1) In general.--The Commission may promulgate rules to
provide that the standard of conduct for all brokers, dealers,
and investment advisers, when providing personalized investment
advice about securities to retail customers (and such other
customers as the Commission may by rule provide), shall be to
act in the best interest of the customer without regard to the
financial or other interest of the broker, dealer, or investment
adviser providing the advice. In accordance with such
[[Page 124 STAT. 1829]]
rules, any material conflicts of interest shall be disclosed and
may be consented to by the customer. Such rules shall provide
that such standard of conduct shall be no less stringent than
the standard applicable to investment advisers under section
206(1) and (2) of this Act when providing personalized
investment advice about securities, except the Commission shall
not ascribe a meaning to the term `customer' that would include
an investor in a private fund managed by an investment adviser,
where such private fund has entered into an advisory contract
with such adviser. The receipt of compensation based on
commission or fees shall not, in and of itself, be considered a
violation of such standard applied to a broker, dealer, or
investment adviser.
``(2) Retail customer defined.--For purposes of this
subsection, the term `retail customer' means a natural person,
or the legal representative of such natural person, who--
``(A) receives personalized investment advice about
securities from a broker, dealer, or investment adviser;
and
``(B) uses such advice primarily for personal,
family, or household purposes.
``(h) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear
disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment advisers,
including any material conflicts of interest; and
``(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to the
public interest and the protection of investors.''.
(h) Harmonization of Enforcement.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934, <<NOTE: 15 USC 78o.>> as
amended by subsection (g)(1), is further amended by adding at
the end the following new subsection:
``(m) Harmonization of Enforcement.--The enforcement authority of
the Commission with respect to violations of the standard of conduct
applicable to a broker or dealer providing personalized investment
advice about securities to a retail customer shall include--
``(1) the enforcement authority of the Commission with
respect to such violations provided under this Act; and
``(2) the enforcement authority of the Commission with
respect to violations of the standard of conduct applicable to
an investment adviser under the Investment Advisers Act of 1940,
including the authority to impose sanctions for such violations,
and
the Commission shall seek to prosecute and sanction violators of the
standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
under this Act to same extent as the Commission prosecutes and sanctions
violators of the standard of conduct applicable to an investment advisor
under the Investment Advisers Act of 1940.''.
(2) Investment advisers act of 1940.--Section 211 of the
Investment Advisers Act of 1940, as amended by subsection
[[Page 124 STAT. 1830]]
(g)(2), is further amended by adding at the end the following
new subsection:
``(i) Harmonization of Enforcement.--The enforcement authority of
the Commission with respect to violations of the standard of conduct
applicable to an investment adviser shall include--
``(1) the enforcement authority of the Commission with
respect to such violations provided under this Act; and
``(2) the enforcement authority of the Commission with
respect to violations of the standard of conduct applicable to a
broker or dealer providing personalized investment advice about
securities to a retail customer under the Securities Exchange
Act of 1934, including the authority to impose sanctions for
such violations, and
the Commission shall seek to prosecute and sanction violators of the
standard of conduct applicable to an investment adviser under this Act
to same extent as the Commission prosecutes and sanctions violators of
the standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
under the Securities Exchange Act of 1934.''.
SEC. 914. <<NOTE: 15 USC 80b-11 note.>> STUDY ON ENHANCING
INVESTMENT ADVISER EXAMINATIONS.
(a) Study Required.--
(1) <<NOTE: Review.>> In general.--The Commission shall
review and analyze the need for enhanced examination and
enforcement resources for investment advisers.
(2) Areas of consideration.--The study required by this
subsection shall examine--
(A) <<NOTE: Time period.>> the number and frequency
of examinations of investment advisers by the Commission
over the 5 years preceding the date of the enactment of
this subtitle;
(B) the extent to which having Congress authorize
the Commission to designate one or more self-regulatory
organizations to augment the Commission's efforts in
overseeing investment advisers would improve the
frequency of examinations of investment advisers; and
(C) current and potential approaches to examining
the investment advisory activities of dually registered
broker-dealers and investment advisers or affiliated
broker-dealers and investment advisers.
(b) Report Required.--The Commission shall report its findings to
the Committee on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate, not
later than 180 days after the date of enactment of this subtitle, and
shall use such findings to revise its rules and regulations, as
necessary. The report shall include a discussion of regulatory or
legislative steps that are recommended or that may be necessary to
address concerns identified in the study.
SEC. 915. OFFICE OF THE INVESTOR ADVOCATE.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(g) Office of the Investor Advocate.--
``(1) Office established.--There is established within the
Commission the Office of the Investor Advocate (in this
subsection referred to as the `Office').
[[Page 124 STAT. 1831]]
``(2) Investor advocate.--
``(A) In general.--The head of the Office shall be
the Investor Advocate, who shall--
``(i) report directly to the Chairman; and
``(ii) be appointed by the Chairman, in
consultation with the Commission, from among
individuals having experience in advocating for
the interests of investors in securities and
investor protection issues, from the perspective
of investors.
``(B) Compensation.--The annual rate of pay for the
Investor Advocate shall be equal to the highest rate of
annual pay for other senior executives who report to the
Chairman of the Commission.
``(C) <<NOTE: Time periods.>> Limitation on
service.--An individual who serves as the Investor
Advocate may not be employed by the Commission--
``(i) during the 2-year period ending on the
date of appointment as Investor Advocate; or
``(ii) during the 5-year period beginning on
the date on which the person ceases to serve as
the Investor Advocate.
``(3) Staff of office.--The Investor Advocate, after
consultation with the Chairman of the Commission, may retain or
employ independent counsel, research staff, and service staff,
as the Investor Advocate deems necessary to carry out the
functions, powers, and duties of the Office.
``(4) Functions of the investor advocate.--The Investor
Advocate shall--
``(A) assist retail investors in resolving
significant problems such investors may have with the
Commission or with self-regulatory organizations;
``(B) identify areas in which investors would
benefit from changes in the regulations of the
Commission or the rules of self-regulatory
organizations;
``(C) identify problems that investors have with
financial service providers and investment products;
``(D) analyze the potential impact on investors of--
``(i) proposed regulations of the Commission;
and
``(ii) proposed rules of self-regulatory
organizations registered under this title; and
``(E) to the extent practicable, propose to the
Commission changes in the regulations or orders of the
Commission and to Congress any legislative,
administrative, or personnel changes that may be
appropriate to mitigate problems identified under this
paragraph and to promote the interests of investors.
``(5) Access to documents.--The Commission shall ensure that
the Investor Advocate has full access to the documents of the
Commission and any self-regulatory organization, as necessary to
carry out the functions of the Office.
``(6) Annual reports.--
``(A) Report on objectives.--
``(i) In general.--Not later than June 30 of
each year after 2010, the Investor Advocate shall
submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives
a report on
[[Page 124 STAT. 1832]]
the objectives of the Investor Advocate for the
following fiscal year.
``(ii) Contents.--Each report required under
clause (i) shall contain full and substantive
analysis and explanation.
``(B) Report on activities.--
``(i) In general.--Not later than December 31
of each year after 2010, the Investor Advocate
shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee
on Financial Services of the House of
Representatives a report on the activities of the
Investor Advocate during the immediately preceding
fiscal year.
``(ii) Contents.--Each report required under
clause (i) shall include--
``(I) appropriate statistical
information and full and substantive
analysis;
``(II) information on steps that the
Investor Advocate has taken during the
reporting period to improve investor
services and the responsiveness of the
Commission and self-regulatory
organizations to investor concerns;
``(III) a summary of the most
serious problems encountered by
investors during the reporting period;
``(IV) an inventory of the items
described in subclause (III) that
includes--
``(aa) identification of any
action taken by the Commission
or the self-regulatory
organization and the result of
such action;
``(bb) the length of time
that each item has remained on
such inventory; and
``(cc) for items on which no
action has been taken, the
reasons for inaction, and an
identification of any official
who is responsible for such
action;
``(V) recommendations for such
administrative and legislative actions
as may be appropriate to resolve
problems encountered by investors; and
``(VI) any other information, as
determined appropriate by the Investor
Advocate.
``(iii) Independence.--Each report required
under this paragraph shall be provided directly to
the Committees listed in clause (i) without any
prior review or comment from the Commission, any
commissioner, any other officer or employee of the
Commission, or the Office of Management and
Budget.
``(iv) Confidentiality.--No report required
under clause (i) may contain confidential
information.
``(7) <<NOTE: Procedures. Deadline.>> Regulations.--The
Commission shall, by regulation, establish procedures requiring
a formal response to all recommendations submitted to the
Commission by the Investor Advocate, not later than 3 months
after the date of such submission.''.
[[Page 124 STAT. 1833]]
SEC. 916. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY
ORGANIZATIONS.
(a) Filing Procedures.--Section 19(b) of the Securities Exchange Act
of 1934 (15 U.S.C. 78s(b)) is amended by striking paragraph (2)
(including the undesignated matter immediately following subparagraph
(B)) and inserting the following:
``(2) <<NOTE: Deadlines.>> Approval process.--
``(A) Approval process established.--
``(i) In general.--Except as provided in
clause (ii), not later than 45 days after the date
of publication of a proposed rule change under
paragraph (1), the Commission shall--
``(I) by order, approve or
disapprove the proposed rule change; or
``(II) institute proceedings under
subparagraph (B) to determine whether
the proposed rule change should be
disapproved.
``(ii) Extension of time period.--The
Commission may extend the period established under
clause (i) by not more than an additional 45 days,
if--
``(I) <<NOTE: Publication.>> the
Commission determines that a longer
period is appropriate and publishes the
reasons for such determination; or
``(II) the self-regulatory
organization that filed the proposed
rule change consents to the longer
period.
``(B) Proceedings.--
``(i) Notice and hearing.--If the Commission
does not approve or disapprove a proposed rule
change under subparagraph (A), the Commission
shall provide to the self-regulatory organization
that filed the proposed rule change--
``(I) notice of the grounds for
disapproval under consideration; and
``(II) opportunity for hearing, to
be concluded not later than 180 days
after the date of publication of notice
of the filing of the proposed rule
change.
``(ii) Order of approval or disapproval.--
``(I) In general.--Except as
provided in subclause (II), not later
than 180 days after the date of
publication under paragraph (1), the
Commission shall issue an order
approving or disapproving the proposed
rule change.
``(II) Extension of time period.--
The Commission may extend the period for
issuance under clause (I) by not more
than 60 days, if--
``(aa) <<NOTE: Publication.>>
the Commission determines that a
longer period is appropriate and
publishes the reasons for such
determination; or
``(bb) the self-regulatory
organization that filed the
proposed rule change consents to
the longer period.
``(C) Standards for approval and disapproval.--
``(i) Approval.--The Commission shall approve
a proposed rule change of a self-regulatory
organization if it finds that such proposed rule
change is consistent
[[Page 124 STAT. 1834]]
with the requirements of this title and the rules
and regulations issued under this title that are
applicable to such organization.
``(ii) Disapproval.--The Commission shall
disapprove a proposed rule change of a self-
regulatory organization if it does not make a
finding described in clause (i).
``(iii) <<NOTE: Publication.>> Time for
approval.--The Commission may not approve a
proposed rule change earlier than 30 days after
the date of publication under paragraph (1),
unless the Commission finds good cause for so
doing and publishes the reason for the finding.
``(D) Result of failure to institute or conclude
proceedings.--A proposed rule change shall be deemed to
have been approved by the Commission, if--
``(i) the Commission does not approve or
disapprove the proposed rule change or begin
proceedings under subparagraph (B) within the
period described in subparagraph (A); or
``(ii) the Commission does not issue an order
approving or disapproving the proposed rule change
under subparagraph (B) within the period described
in subparagraph (B)(ii).
``(E) Publication date based on federal register
publishing.-- <<NOTE: Notice. Deadline. Web
posting.>> For purposes of this paragraph, if, after
filing a proposed rule change with the Commission
pursuant to paragraph (1), a self-regulatory
organization publishes a notice of the filing of such
proposed rule change, together with the substantive
terms of such proposed rule change, on a publicly
accessible website, the Commission shall thereafter send
the notice to the Federal Register for publication
thereof under paragraph (1) within 15 days of the date
on which such website publication is made. If the
Commission fails to send the notice for publication
thereof within such 15 day period, then the date of
publication shall be deemed to be the date on which such
website publication was made.
``(F) Rulemaking.--
``(i) <<NOTE: Deadline. Procedures.>> In
general.--Not later than 180 days after the date
of enactment of the Investor Protection and
Securities Reform Act of 2010, after consultation
with other regulatory agencies, the Commission
shall promulgate rules setting forth the
procedural requirements of the proceedings
required under this paragraph.
``(ii) Notice and comment not required.--The
rules promulgated by the Commission under clause
(i) are not required to include republication of
proposed rule changes or solicitation of public
comment.''.
(b) Clarification of Filing Date.--
(1) Rule of construction.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding at
the end the following:
``(10) Rule of construction relating to filing date of
proposed rule changes.--
``(A) In general.--For purposes of this subsection,
the date of filing of a proposed rule change shall be
deemed
[[Page 124 STAT. 1835]]
to be the date on which the Commission receives the
proposed rule change.
``(B) <<NOTE: Deadlines. Notification.>>
Exception.--A proposed rule change has not been received
by the Commission for purposes of subparagraph (A) if,
not later than 7 business days after the date of receipt
by the Commission, the Commission notifies the self-
regulatory organization that such proposed rule change
does not comply with the rules of the Commission
relating to the required form of a proposed rule change,
except that if the Commission determines that the
proposed rule change is unusually lengthy and is complex
or raises novel regulatory issues, the Commission shall
inform the self-regulatory organization of such
determination not later than 7 business days after the
date of receipt by the Commission and, for the purposes
of subparagraph (A), a proposed rule change has not been
received by the Commission, if, not later than 21 days
after the date of receipt by the Commission, the
Commission notifies the self-regulatory organization
that such proposed rule change does not comply with the
rules of the Commission relating to the required form of
a proposed rule change.''.
(2) Publication.--Section 19(b)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by
striking ``upon'' and inserting ``as soon as practicable after
the date of''.
(c) Effective Date of Proposed Rules.--Section 19(b)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``may take effect'' and inserting
``shall take effect''; and
(B) by inserting ``on any person, whether or not the
person is a member of the self-regulatory organization''
after ``charge imposed by the self-regulatory
organization''; and
(2) in subparagraph (C)--
(A) by amending the second sentence to read as
follows: ``At any time <<NOTE: Time period.>> within
the 60-day period beginning on the date of filing of
such a proposed rule change in accordance with the
provisions of paragraph (1), the Commission summarily
may temporarily suspend the change in the rules of the
self-regulatory organization made thereby, if it appears
to the Commission that such action is necessary or
appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the
purposes of this title.'';
(B) by inserting after the second sentence the
following: ``If the Commission takes such action, the
Commission shall institute proceedings under paragraph
(2)(B) to determine whether the proposed rule should be
approved or disapproved.''; and
(C) in the third sentence, by striking ``the
preceding sentence'' and inserting ``this
subparagraph''.
(d) Conforming Change.--Section 19(b)(4)(D) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read as
follows:
[[Page 124 STAT. 1836]]
``(D)(i) <<NOTE: Notification. Deadline.>> The
Commission shall order the temporary suspension of any
change in the rules of a clearing agency made by a
proposed rule change that has taken effect under
paragraph (3), if the appropriate regulatory agency for
the clearing agency notifies the Commission not later
than 30 days after the date on which the proposed rule
change was filed of--
``(I) the determination by the appropriate
regulatory agency that the rules of such clearing
agency, as so changed, may be inconsistent with
the safeguarding of securities or funds in the
custody or control of such clearing agency or for
which it is responsible; and
``(II) the reasons for the determination
described in subclause (I).
``(ii) If the Commission takes action under clause
(i), the Commission shall institute proceedings under
paragraph (2)(B) to determine if the proposed rule
change should be approved or disapproved.''.
SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.
(a) In General.--The Commission shall conduct a study to identify--
(1) the existing level of financial literacy among retail
investors, including subgroups of investors identified by the
Commission;
(2) methods to improve the timing, content, and format of
disclosures to investors with respect to financial
intermediaries, investment products, and investment services;
(3) the most useful and understandable relevant information
that retail investors need to make informed financial decisions
before engaging a financial intermediary or purchasing an
investment product or service that is typically sold to retail
investors, including shares of open-end companies, as that term
is defined in section 5 of the Investment Company Act of 1940
(15 U.S.C. 80a-5) that are registered under section 8 of that
Act;
(4) methods to increase the transparency of expenses and
conflicts of interests in transactions involving investment
services and products, including shares of open-end companies
described in paragraph (3);
(5) the most effective existing private and public efforts
to educate investors; and
(6) in consultation with the Financial Literacy and
Education Commission, a strategy (including, to the extent
practicable, measurable goals and objectives) to increase the
financial literacy of investors in order to bring about a
positive change in investor behavior.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Commission shall submit a report on the study required
under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
[[Page 124 STAT. 1837]]
SEC. 918. STUDY REGARDING MUTUAL FUND ADVERTISING.
(a) In General.--The Comptroller General of the United States shall
conduct a study on mutual fund advertising to identify--
(1) existing and proposed regulatory requirements for open-
end investment company advertisements;
(2) current marketing practices for the sale of open-end
investment company shares, including the use of past performance
data, funds that have merged, and incubator funds;
(3) the impact of such advertising on consumers; and
(4) recommendations to improve investor protections in
mutual fund advertising and additional information necessary to
ensure that investors can make informed financial decisions when
purchasing shares.
(b) Report.--Not later than 18 months after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report on the results of the study conducted under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the United States Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 919. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE
INVESTOR DISCLOSURES BEFORE PURCHASE OF
INVESTMENT PRODUCTS AND SERVICES.
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is
amended by adding at the end the following:
``(n) Disclosures to Retail Investors.--
``(1) In general.--Notwithstanding any other provision of
the securities laws, the Commission may issue rules designating
documents or information that shall be provided by a broker or
dealer to a retail investor before the purchase of an investment
product or service by the retail investor.
``(2) Considerations.--In developing any rules under
paragraph (1), the Commission shall consider whether the rules
will promote investor protection, efficiency, competition, and
capital formation.
``(3) Form and contents of documents and information.--Any
documents or information designated under a rule promulgated
under paragraph (1) shall--
``(A) be in a summary format; and
``(B) contain clear and concise information about--
``(i) investment objectives, strategies,
costs, and risks; and
``(ii) any compensation or other financial
incentive received by a broker, dealer, or other
intermediary in connection with the purchase of
retail investment products.''.
SEC. 919A. STUDY ON CONFLICTS OF INTEREST.
(a) In General.--The Comptroller General of the United States shall
conduct a study--
(1) to identify and examine potential conflicts of interest
that exist between the staffs of the investment banking and
equity and fixed income securities analyst functions within the
same firm; and
[[Page 124 STAT. 1838]]
(2) to make recommendations to Congress designed to protect
investors in light of such conflicts.
(b) Considerations.--In conducting the study under subsection (a),
the Comptroller General shall--
(1) consider--
(A) the potential for investor harm resulting from
conflicts, including consideration of the forms of
misconduct engaged in by the several securities firms
and individuals that entered into the Global Analyst
Research Settlements in 2003 (also known as the ``Global
Settlement'');
(B) the nature and benefits of the undertakings to
which those firms agreed in enforcement proceedings,
including firewalls between research and investment
banking, separate reporting lines, dedicated legal and
compliance staffs, allocation of budget, physical
separation, compensation, employee performance
evaluations, coverage decisions, limitations on
soliciting investment banking business, disclosures,
transparency, and other measures;
(C) whether any such undertakings should be codified
and applied permanently to securities firms, or whether
the Commission should adopt rules applying any such
undertakings to securities firms; and
(D) whether to recommend regulatory or legislative
measures designed to mitigate possible adverse
consequences to investors arising from the conflicts of
interest or to enhance investor protection or confidence
in the integrity of the securities markets; and
(2) consult with State attorneys general, State securities
officials, the Commission, the Financial Industry Regulatory
Authority (``FINRA''), NYSE Regulation, investor advocates,
brokers, dealers, retail investors, institutional investors, and
academics.
(c) Report.--The Comptroller General shall submit a report on the
results of the study required by this section to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, not later than 18
months after the date of enactment of this Act.
SEC. 919B. <<NOTE: 15 USC 80b-10 note.>> STUDY ON IMPROVED
INVESTOR ACCESS TO INFORMATION ON
INVESTMENT ADVISERS AND BROKER-DEALERS.
(a) Study.--
(1) <<NOTE: Deadlines.>> In general.--Not later than 6
months after the date of enactment of this Act, the Commission
shall complete a study, including recommendations, of ways to
improve the access of investors to registration information
(including disciplinary actions, regulatory, judicial, and
arbitration proceedings, and other information) about registered
and previously registered investment advisers, associated
persons of investment advisers, brokers and dealers and their
associated persons on the existing Central Registration
Depository and Investment Adviser Registration Depository
systems, as well as identify additional information that should
be made publicly available.
(2) Contents.--The study required by subsection (a) shall
include an analysis of the advantages and disadvantages of
further centralizing access to the information contained in the
2 systems, including--
[[Page 124 STAT. 1839]]
(A) identification of those data pertinent to
investors; and
(B) the identification of the method and format for
displaying and publishing such data to enhance
accessibility by and utility to investors.
(b) <<NOTE: Deadlines.>> Implementation.--Not later than 18 months
after the date of completion of the study required by subsection (a),
the Commission shall implement any recommendations of the study.
SEC. 919C. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL
DESIGNATIONS.
(a) <<NOTE: Evaluation. Regulations.>> In General.--The Comptroller
General of the United States shall conduct a study to evaluate--
(1) the effectiveness of State and Federal regulations to
protect investors and other consumers from individuals who hold
themselves out as financial planners through the use of
misleading titles, designations, or marketing materials;
(2) current State and Federal oversight structure and
regulations for financial planners; and
(3) legal or regulatory gaps in the regulation of financial
planners and other individuals who provide or offer to provide
financial planning services to consumers.
(b) Considerations.--In conducting the study required under
subsection (a), the Comptroller General shall consider--
(1) the role of financial planners in providing advice
regarding the management of financial resources, including
investment planning, income tax planning, education planning,
retirement planning, estate planning, and risk management;
(2) whether current regulations at the State and Federal
level provide adequate ethical and professional standards for
financial planners;
(3) the possible risk posed to investors and other consumers
by individuals who hold themselves out as financial planners or
as otherwise providing financial planning services in connection
with the sale of financial products, including insurance and
securities;
(4) the possible risk posed to investors and other consumers
by individuals who otherwise use titles, designations, or
marketing materials in a misleading way in connection with the
delivery of financial advice;
(6) the ability of investors and other consumers to
understand licensing requirements and standards of care that
apply to individuals who hold themselves out as financial
planners or as otherwise providing financial planning services;
(7) the possible benefits to investors and other consumers
of regulation and professional oversight of financial planners;
and
(8) any other consideration that the Comptroller General
deems necessary or appropriate to effectively execute the study
required under subsection (a).
(c) Recommendations.--In providing recommendations for the
appropriate regulation of financial planners and other individuals who
provide or offer to provide financial planning services, in order to
protect investors and other consumers of financial planning services,
the Comptroller General shall consider--
[[Page 124 STAT. 1840]]
(1) the appropriate structure for regulation of financial
planners and individuals providing financial planning services;
and
(2) the appropriate scope of the regulations needed to
protect investors and other consumers, including but not limited
to the need to establish competency standards, practice
standards, ethical guidelines, disciplinary authority, and
transparency to investors and other consumers.
(d) Report.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Special Committee on Aging of the Senate;
and
(C) the Committee on Financial Services of the House
of Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings and determinations
made by the Comptroller General in carrying out the study
required under subsection (a), including a description of the
considerations, analysis, and government, public, industry,
nonprofit and consumer input that the Comptroller General
considered to make such findings, conclusions, and legislative,
regulatory, or other recommendations.
SEC. 919D. <<NOTE: 15 USC 78d.>> OMBUDSMAN.
Section 4(g) of the Securities Exchange Act of 1934, as added by
section 914, is amended by adding at the end the following:
``(8) Ombudsman.--
``(A) <<NOTE: Deadline.>> Appointment.--Not later
than 180 days after the date on which the first Investor
Advocate is appointed under paragraph (2)(A)(i), the
Investor Advocate shall appoint an Ombudsman, who shall
report directly to the Investor Advocate.
``(B) Duties.--The Ombudsman appointed under
subparagraph (A) shall--
``(i) act as a liaison between the Commission
and any retail investor in resolving problems that
retail investors may have with the Commission or
with self-regulatory organizations;
``(ii) review and make recommendations
regarding policies and procedures to encourage
persons to present questions to the Investor
Advocate regarding compliance with the securities
laws; and
``(iii) establish safeguards to maintain the
confidentiality of communications between the
persons described in clause (ii) and the
Ombudsman.
``(C) Limitation.--In carrying out the duties of the
Ombudsman under subparagraph (B), the Ombudsman shall
utilize personnel of the Commission to the extent
practicable. Nothing in this paragraph shall be
construed as replacing, altering, or diminishing the
activities of any ombudsman or similar office of any
other agency.
``(D) Report.--The Ombudsman shall submit a
semiannual report to the Investor Advocate that
describes the
[[Page 124 STAT. 1841]]
activities and evaluates the effectiveness of the
Ombudsman during the preceding year. The Investor
Advocate shall include the reports required under this
section in the reports required to be submitted by the
Inspector Advocate under paragraph (6).''.
Subtitle B--Increasing Regulatory Enforcement and Remedies
SEC. 921. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.
(a) Amendment to Securities Exchange Act of 1934.--Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended by this
title, is further amended by adding at the end the following new
subsection:
``(o) Authority to Restrict Mandatory Pre-dispute Arbitration.--The
Commission, by rule, may prohibit, or impose conditions or limitations
on the use of, agreements that require customers or clients of any
broker, dealer, or municipal securities dealer to arbitrate any future
dispute between them arising under the Federal securities laws, the
rules and regulations thereunder, or the rules of a self-regulatory
organization if it finds that such prohibition, imposition of
conditions, or limitations are in the public interest and for the
protection of investors.''.
(b) Amendment to Investment Advisers Act of 1940.--Section 205 of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-5) is amended by
adding at the end the following new subsection:
``(f) Authority to Restrict Mandatory Pre-dispute Arbitration.--The
Commission, by rule, may prohibit, or impose conditions or limitations
on the use of, agreements that require customers or clients of any
investment adviser to arbitrate any future dispute between them arising
under the Federal securities laws, the rules and regulations thereunder,
or the rules of a self-regulatory organization if it finds that such
prohibition, imposition of conditions, or limitations are in the public
interest and for the protection of investors.''.
SEC. 922. WHISTLEBLOWER PROTECTION.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 21E the following:
``SEC. 21F. <<NOTE: 15 USC 78u-6.>> SECURITIES WHISTLEBLOWER
INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section the following definitions shall
apply:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial
or administrative action brought by the Commission under the
securities laws that results in monetary sanctions exceeding
$1,000,000.
``(2) Fund.--The term `Fund' means the Securities and
Exchange Commission Investor Protection Fund.
``(3) Original information.--The term `original information'
means information that--
[[Page 124 STAT. 1842]]
``(A) is derived from the independent knowledge or
analysis of a whistleblower;
``(B) is not known to the Commission from any other
source, unless the whistleblower is the original source
of the information; and
``(C) is not exclusively derived from an allegation
made in a judicial or administrative hearing, in a
governmental report, hearing, audit, or investigation,
or from the news media, unless the whistleblower is a
source of the information.
``(4) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative action,
means--
``(A) any monies, including penalties, disgorgement,
and interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund
or other fund pursuant to section 308(b) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a
result of such action or any settlement of such action.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought by
the Commission under the securities laws, means any judicial or
administrative action brought by an entity described in
subclauses (I) through (IV) of subsection (h)(2)(D)(i) that is
based upon the original information provided by a whistleblower
pursuant to subsection (a) that led to the successful
enforcement of the Commission action.
``(6) Whistleblower.--The term `whistleblower' means any
individual who provides, or 2 or more individuals acting jointly
who provide, information relating to a violation of the
securities laws to the Commission, in a manner established, by
rule or regulation, by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or administrative
action, or related action, the Commission, under regulations
prescribed by the Commission and subject to subsection (c),
shall pay an award or awards to 1 or more whistleblowers who
voluntarily provided original information to the Commission that
led to the successful enforcement of the covered judicial or
administrative action, or related action, in an aggregate amount
equal to--
``(A) not less than 10 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions; and
``(B) not more than 30 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Commission.
``(B) Criteria.--In determining the amount of an
award made under subsection (b), the Commission--
[[Page 124 STAT. 1843]]
``(i) shall take into consideration--
``(I) the significance of the
information provided by the
whistleblower to the success of the
covered judicial or administrative
action;
``(II) the degree of assistance
provided by the whistleblower and any
legal representative of the
whistleblower in a covered judicial or
administrative action;
``(III) the programmatic interest of
the Commission in deterring violations
of the securities laws by making awards
to whistleblowers who provide
information that lead to the successful
enforcement of such laws; and
``(IV) such additional relevant
factors as the Commission may establish
by rule or regulation; and
``(ii) shall not take into consideration the
balance of the Fund.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the
time the whistleblower acquired the original information
submitted to the Commission, a member, officer, or
employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization;
``(iv) the Public Company Accounting Oversight
Board; or
``(v) a law enforcement organization;
``(B) to any whistleblower who is convicted of a
criminal violation related to the judicial or
administrative action for which the whistleblower
otherwise could receive an award under this section;
``(C) to any whistleblower who gains the information
through the performance of an audit of financial
statements required under the securities laws and for
whom such submission would be contrary to the
requirements of section 10A of the Securities Exchange
Act of 1934 (15 U.S.C. 78j-1); or
``(D) to any whistleblower who fails to submit
information to the Commission in such form as the
Commission may, by rule, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who makes
a claim for an award under subsection (b) may be represented by
counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously
makes a claim for an award under subsection (b) shall be
represented by counsel if the whistleblower anonymously
submits the information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment
of an award, a whistleblower shall disclose the identity
of the whistleblower and provide such other information
[[Page 124 STAT. 1844]]
as the Commission may require, directly or through
counsel for the whistleblower.
``(e) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Commission by rule or regulation.
``(f) <<NOTE: Determination. Deadline.>> Appeals.--Any
determination made under this section, including whether, to whom, or in
what amount to make awards, shall be in the discretion of the
Commission. Any such determination, except the determination of the
amount of an award if the award was made in accordance with subsection
(b), may be appealed to the appropriate court of appeals of the United
States not more than 30 days after the determination is issued by the
Commission. The court shall <<NOTE: Courts.>> review the determination
made by the Commission in accordance with section 706 of title 5, United
States Code.
``(g) Investor Protection Fund.--
``(1) Fund established.--There is established in the
Treasury of the United States a fund to be known as the
`Securities and Exchange Commission Investor Protection Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) paying awards to whistleblowers as provided in
subsection (b); and
``(B) funding the activities of the Inspector
General of the Commission under section 4(i).
``(3) Deposits and credits.--
``(A) In general.--There shall be deposited into or
credited to the Fund an amount equal to--
``(i) any monetary sanction collected by the
Commission in any judicial or administrative
action brought by the Commission under the
securities laws that is not added to a
disgorgement fund or other fund under section 308
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246)
or otherwise distributed to victims of a violation
of the securities laws, or the rules and
regulations thereunder, underlying such action,
unless the balance of the Fund at the time the
monetary sanction is collected exceeds
$300,000,000;
``(ii) any monetary sanction added to a
disgorgement fund or other fund under section 308
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246)
that is not distributed to the victims for whom
the Fund was established, unless the balance of
the disgorgement fund at the time the
determination is made not to distribute the
monetary sanction to such victims exceeds
$200,000,000; and
``(iii) all income from investments made under
paragraph (4).
``(B) Additional amounts.--If the amounts deposited
into or credited to the Fund under subparagraph (A) are
not sufficient to satisfy an award made under subsection
(b), there shall be deposited into or credited to the
Fund an amount equal to the unsatisfied portion of the
award from any monetary sanction collected by the
Commission
[[Page 124 STAT. 1845]]
in the covered judicial or administrative action on
which the award is based.
``(4) Investments.--
``(A) Amounts in fund may be invested.--The
Commission may request the Secretary of the Treasury to
invest the portion of the Fund that is not, in the
discretion of the Commission, required to meet the
current needs of the Fund.
``(B) Eligible investments.--Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with
maturities suitable to the needs of the Fund as
determined by the Commission on the record.
``(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Fund shall be credited to the
Fund.
``(5) Reports to congress.--Not later than October 30 of
each fiscal year beginning after the date of enactment of this
subsection, the Commission shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives
a report on--
``(A) the whistleblower award program, established
under this section, including--
``(i) a description of the number of awards
granted; and
``(ii) the types of cases in which awards were
granted during the preceding fiscal year;
``(B) the balance of the Fund at the beginning of
the preceding fiscal year;
``(C) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
``(D) the amount of earnings on investments made
under paragraph (4) during the preceding fiscal year;
``(E) the amount paid from the Fund during the
preceding fiscal year to whistleblowers pursuant to
subsection (b);
``(F) the balance of the Fund at the end of the
preceding fiscal year; and
``(G) a complete set of audited financial
statements, including--
``(i) a balance sheet;
``(ii) income statement; and
``(iii) cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge,
demote, suspend, threaten, harass, directly or
indirectly, or in any other manner discriminate against,
a whistleblower in the terms and conditions of
employment because of any lawful act done by the
whistleblower--
``(i) in providing information to the
Commission in accordance with this section;
``(ii) in initiating, testifying in, or
assisting in any investigation or judicial or
administrative action of
[[Page 124 STAT. 1846]]
the Commission based upon or related to such
information; or
``(iii) in making disclosures that are
required or protected under the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7201 et seq.), the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.),
including section 10A(m) of such Act (15 U.S.C.
78f(m)), section 1513(e) of title 18, United
States Code, and any other law, rule, or
regulation subject to the jurisdiction of the
Commission.
``(B) Enforcement.--
``(i) Cause of action.--An individual who
alleges discharge or other discrimination in
violation of subparagraph (A) may bring an action
under this subsection in the appropriate district
court of the United States for the relief provided
in subparagraph (C).
``(ii) Subpoenas.--A subpoena requiring the
attendance of a witness at a trial or hearing
conducted under this section may be served at any
place in the United States.
``(iii) Statute of limitations.--
``(I) In general.--An action under
this subsection may not be brought--
``(aa) more than 6 years
after the date on which the
violation of subparagraph (A)
occurred; or
``(bb) more than 3 years
after the date when facts
material to the right of action
are known or reasonably should
have been known by the employee
alleging a violation of
subparagraph (A).
``(II) Required action within 10
years.--Notwithstanding subclause (I),
an action under this subsection may not
in any circumstance be brought more than
10 years after the date on which the
violation occurs.
``(C) Relief.--Relief for an individual prevailing
in an action brought under subparagraph (B) shall
include--
``(i) reinstatement with the same seniority
status that the individual would have had, but for
the discrimination;
``(ii) 2 times the amount of back pay
otherwise owed to the individual, with interest;
and
``(iii) compensation for litigation costs,
expert witness fees, and reasonable attorneys'
fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the Commission and any
officer or employee of the Commission shall not disclose
any information, including information provided by a
whistleblower to the Commission, which could reasonably
be expected to reveal the identity of a whistleblower,
except in accordance with the provisions of section 552a
of title 5, United States Code, unless and until
required to be disclosed to a defendant or respondent in
connection with a public proceeding instituted by the
Commission or any entity described in subparagraph (C).
For purposes of section
[[Page 124 STAT. 1847]]
552 of title 5, United States Code, this paragraph shall
be considered a statute described in subsection
(b)(3)(B) of such section.
``(B) Exempted statute.--For purposes of section 552
of title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B)
of such section 552.
``(C) Rule of construction.--Nothing in this section
is intended to limit, or shall be construed to limit,
the ability of the Attorney General to present such
evidence to a grand jury or to share such evidence with
potential witnesses or defendants in the course of an
ongoing criminal investigation.
``(D) Availability to government agencies.--
``(i) In general.--Without the loss of its
status as confidential in the hands of the
Commission, all information referred to in
subparagraph (A) may, in the discretion of the
Commission, when determined by the Commission to
be necessary to accomplish the purposes of this
Act and to protect investors, be made available
to--
``(I) the Attorney General of the
United States;
``(II) an appropriate regulatory
authority;
``(III) a self-regulatory
organization;
``(IV) a State attorney general in
connection with any criminal
investigation;
``(V) any appropriate State
regulatory authority;
``(VI) the Public Company Accounting
Oversight Board;
``(VII) a foreign securities
authority; and
``(VIII) a foreign law enforcement
authority.
``(ii) Confidentiality.--
``(I) In general.--Each of the
entities described in subclauses (I)
through (VI) of clause (i) shall
maintain such information as
confidential in accordance with the
requirements established under
subparagraph (A).
``(II) Foreign authorities.--Each of
the entities described in subclauses
(VII) and (VIII) of clause (i) shall
maintain such information in accordance
with such assurances of confidentiality
as the Commission determines
appropriate.
``(3) Rights retained.--Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Provision of False Information.--A whistleblower shall not be
entitled to an award under this section if the whistleblower--
``(1) knowingly and willfully makes any false, fictitious,
or fraudulent statement or representation; or
``(2) uses any false writing or document knowing the writing
or document contains any false, fictitious, or fraudulent
statement or entry.
``(j) Rulemaking Authority.--The Commission shall have the authority
to issue such rules and regulations as may be necessary
[[Page 124 STAT. 1848]]
or appropriate to implement the provisions of this section consistent
with the purposes of this section.''.
(b) Protection for Employees of Nationally Recognized Statistical
Rating Organizations.--Section 1514A(a) of title 18, United States Code,
is amended--
(1) by inserting ``or nationally recognized statistical
rating organization (as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c),'' after
``78o(d)),''; and
(2) by inserting ``or nationally recognized statistical
rating organization'' after ``such company''.
(c) Section 1514A of Title 18, United States Code.--
(1) Statute of limitations; jury trial.--Section 1514A(b)(2)
of title 18, United States Code, is amended--
(A) in subparagraph (D)--
(i) by striking ``90'' and inserting ``180'';
and
(ii) by striking the period at the end and
inserting ``, or after the date on which the
employee became aware of the violation.''; and
(B) by adding at the end the following:
``(E) Jury trial.--A party to an action brought
under paragraph (1)(B) shall be entitled to trial by
jury.''.
(2) Private securities litigation witnesses;
nonenforceability; information.--Section 1514A of title 18,
United States Code, is amended by adding at the end the
following:
``(e) Nonenforceability of Certain Provisions Waiving Rights and
Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights and
remedies provided for in this section may not be waived by any
agreement, policy form, or condition of employment, including by
a predispute arbitration agreement.
``(2) Predispute arbitration agreements.--No predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under this
section.''.
(d) Study of Whistleblower Protection Program.--
(1) Study.--The Inspector General of the Commission shall
conduct a study of the whistleblower protections established
under the amendments made by this section, including--
(A) whether the final rules and regulation issued
under the amendments made by this section have made the
whistleblower protection program (referred to in this
subsection as the ``program'') clearly defined and user-
friendly;
(B) whether the program is promoted on the website
of the Commission and has been widely publicized;
(C) whether the Commission is prompt in--
(i) responding to--
(I) information provided by
whistleblowers; and
(II) applications for awards filed
by whistleblowers;
(ii) updating whistleblowers about the status
of their applications; and
(iii) otherwise communicating with the
interested parties;
(D) whether the minimum and maximum reward levels
are adequate to entice whistleblowers to come forward
with
[[Page 124 STAT. 1849]]
information and whether the reward levels are so high as
to encourage illegitimate whistleblower claims;
(E) whether the appeals process has been unduly
burdensome for the Commission;
(F) whether the funding mechanism for the Investor
Protection Fund is adequate;
(G) whether, in the interest of protecting investors
and identifying and preventing fraud, it would be useful
for Congress to consider empowering whistleblowers or
other individuals, who have already attempted to pursue
the case through the Commission, to have a private right
of action to bring suit based on the facts of the same
case, on behalf of the Government and themselves,
against persons who have committee securities fraud;
(H)(i) whether the exemption under section 552(b)(3)
of title 5 (known as the Freedom of Information Act)
established in section 21F(h)(2)(A) of the Securities
Exchange Act of 1934, as added by this Act, aids
whistleblowers in disclosing information to the
Commission;
(ii) what impact the exemption described in clause
(i) has had on the ability of the public to access
information about the regulation and enforcement by the
Commission of securities; and
(iii) any recommendations on whether the exemption
described in clause (i) should remain in effect; and
(I) such other matters as the Inspector General
deems appropriate.
(2) Report.--Not later than 30 months after the date of
enactment of this Act, the Inspector General shall--
(A) submit a report on the findings of the study
required under paragraph (1) to the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House; and
(B) <<NOTE: Public information. Web posting.>> make
the report described in subparagraph (A) available to
the public through publication of the report on the
website of the Commission.
SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.
(a) In General.--
(1) Securities act of 1933.--Section 20(d)(3)(A) of the
Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by
inserting ``and section 21F of the Securities Exchange Act of
1934'' after ``the Sarbanes-Oxley Act of 2002''.
(2) Investment company act of 1940.--Section 42(e)(3)(A) of
the Investment Company Act of 1940 (15 U.S.C. 80a-41(e)(3)(A))
is amended by inserting ``and section 21F of the Securities
Exchange Act of 1934'' after ``the Sarbanes-Oxley Act of 2002''.
(3) Investment advisers act of 1940.--Section 209(e)(3)(A)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9(e)(3)(A)) is amended by inserting ``and section 21F of the
Securities Exchange Act of 1934'' after ``the Sarbanes-Oxley Act
of 2002''.
(b) Securities Exchange Act.--
(1) Section 21.--Section 21(d)(3)(C)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended
[[Page 124 STAT. 1850]]
by inserting ``and section 21F of this title'' after ``the
Sarbanes-Oxley Act of 2002''.
(2) Section 21a.--Section 21A of the Securities Exchange Act
of 1934 (15 U.S.C. 78u-1) is amended--
(A) in subsection (d)(1) by--
(i) striking ``(subject to subsection (e))'';
and
(ii) inserting ``and section 21F of this
title'' after ``the Sarbanes-Oxley Act of 2002'';
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and (g) as
subsections (e) and (f), respectively.
SEC. 924. <<NOTE: 15 USC 78u-7.>> IMPLEMENTATION AND TRANSITION
PROVISIONS FOR WHISTLEBLOWER PROTECTION.
(a) <<NOTE: Deadline.>> Implementing Rules.--The Commission shall
issue final regulations implementing the provisions of section 21F of
the Securities Exchange Act of 1934, as added by this subtitle, not
later than 270 days after the date of enactment of this Act.
(b) Original Information.--Information provided to the Commission in
writing by a whistleblower shall not lose the status of original
information (as defined in section 21F(a)(3) of the Securities Exchange
Act of 1934, as added by this subtitle) solely because the whistleblower
provided the information prior to the effective date of the regulations,
if the information is provided by the whistleblower after the date of
enactment of this subtitle.
(c) Awards.--A whistleblower may receive an award pursuant to
section 21F of the Securities Exchange Act of 1934, as added by this
subtitle, regardless of whether any violation of a provision of the
securities laws, or a rule or regulation thereunder, underlying the
judicial or administrative action upon which the award is based,
occurred prior to the date of enactment of this subtitle.
(d) <<NOTE: Establishment.>> Administration and Enforcement.--The
Securities and Exchange Commission shall establish a separate office
within the Commission to administer and enforce the provisions of
section 21F of the Securities Exchange Act of 1934 (as add by section
922(a)). <<NOTE: Reports. Deadline.>> Such office shall report annually
to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives
on its activities, whistleblower complaints, and the response of the
Commission to such complaints.
SEC. 925. COLLATERAL BARS.
(a) Securities Exchange Act of 1934.--
(1) Section 15.--Section 15(b)(6)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by
striking ``12 months, or bar such person from being associated
with a broker or dealer,'' and inserting ``12 months, or bar any
such person from being associated with a broker, dealer,
investment adviser, municipal securities dealer, municipal
advisor, transfer agent, or nationally recognized statistical
rating organization,''.
(2) Section 15b.--Section 15B(c)(4) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended by
striking ``twelve months or bar any such person from being
associated with a municipal securities dealer,'' and inserting
``12 months or bar any such person from being associated with a
broker, dealer, investment adviser, municipal securities
[[Page 124 STAT. 1851]]
dealer, municipal advisor, transfer agent, or nationally
recognized statistical rating organization,''.
(3) Section 17a.--Section 17A(c)(4)(C) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is amended by
striking ``twelve months or bar any such person from being
associated with the transfer agent,'' and inserting ``12 months
or bar any such person from being associated with any transfer
agent, broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, or nationally recognized statistical
rating organization,''.
(b) Investment Advisers Act of 1940.--Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by
striking ``twelve months or bar any such person from being associated
with an investment adviser,'' and inserting ``12 months or bar any such
person from being associated with an investment adviser, broker, dealer,
municipal securities dealer, municipal advisor, transfer agent, or
nationally recognized statistical rating organization,''.
SEC. 926. <<NOTE: 15 USC 77d note.>> DISQUALIFYING FELONS AND
OTHER ``BAD ACTORS'' FROM REGULATION D
OFFERINGS.
Not later <<NOTE: Deadline.>> than 1 year after the date of
enactment of this Act, the Commission shall issue rules for the
disqualification of offerings and sales of securities made under section
230.506 of title 17, Code of Federal Regulations, that--
(1) are substantially similar to the provisions of section
230.262 of title 17, Code of Federal Regulations, or any
successor thereto; and
(2) disqualify any offering or sale of securities by a
person that--
(A) is subject to a final order of a State
securities commission (or an agency or officer of a
State performing like functions), a State authority that
supervises or examines banks, savings associations, or
credit unions, a State insurance commission (or an
agency or officer of a State performing like functions),
an appropriate Federal banking agency, or the National
Credit Union Administration, that--
(i) bars the person from--
(I) association with an entity
regulated by such commission, authority,
agency, or officer;
(II) engaging in the business of
securities, insurance, or banking; or
(III) engaging in savings
association or credit union activities;
or
(ii) constitutes a final order based on a
violation of any law or regulation that prohibits
fraudulent, manipulative, or deceptive conduct
within the 10-year period ending on the date of
the filing of the offer or sale; or
(B) has been convicted of any felony or misdemeanor
in connection with the purchase or sale of any security
or involving the making of any false filing with the
Commission.
[[Page 124 STAT. 1852]]
SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ``an exchange required thereby'' and
inserting ``a self-regulatory organization,''.
SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT
ADVISERS ACT OF 1940 DOES NOT APPLY TO
STATE-REGISTERED ADVISERS.
Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-5(a)) is amended, in the matter preceding paragraph (1)--
(1) by striking ``, unless exempt from registration pursuant
to section 203(b),'' and inserting ``registered or required to
be registered with the Commission'';
(2) by striking ``make use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly,
to''; and
(3) by striking ``to'' after ``in any way''.
SEC. 929. UNLAWFUL MARGIN LENDING.
Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C.
78g(c)(1)(A)) is amended by striking ``; and'' and inserting ``; or''.
SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND AFFILIATES
OF PUBLICLY TRADED COMPANIES.
Section 1514A of title 18, United States Code, is amended by
inserting ``including any subsidiary or affiliate whose financial
information is included in the consolidated financial statements of such
company'' after ``the Securities Exchange Act of 1934 (15 U.S.C.
78o(d))''.
SEC. 929B. FAIR FUND AMENDMENTS.
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)) is
amended--
(1) by striking subsection (a) and inserting the following:
``(a) Civil Penalties to Be Used for the Relief of Victims.--If, in
any judicial or administrative action brought by the Commission under
the securities laws, the Commission obtains a civil penalty against any
person for a violation of such laws, or such person agrees, in
settlement of any such action, to such civil penalty, the amount of such
civil penalty shall, on the motion or at the direction of the
Commission, be added to and become part of a disgorgement fund or other
fund established for the benefit of the victims of such violation.'';
(2) in subsection (b)--
(A) by striking ``for a disgorgement fund described
in subsection (a)'' and inserting ``for a disgorgement
fund or other fund described in subsection (a)''; and
(B) by striking ``in the disgorgement fund'' and
inserting ``in such fund''; and
(3) by striking subsection (e).
SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.
Section 4(h) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78ddd(h)) is amended in the first sentence, by striking
``$1,000,000,000'' and inserting ``$2,500,000,000''.
[[Page 124 STAT. 1853]]
SEC. 929D. LOST AND STOLEN SECURITIES.
Section 17(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78q(f)(1)) is amended--
(1) in subparagraph (A), by striking ``missing, lost,
counterfeit, or stolen securities'' and inserting ``securities
that are missing, lost, counterfeit, stolen, or cancelled''; and
(2) in subparagraph (B), by striking ``or stolen'' and
inserting ``stolen, cancelled, or reported in such other manner
as the Commission, by rule, may prescribe''.
SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS.
(a) Securities Act of 1933.--Section 22(a) of the Securities Act of
1933 (15 U.S.C. 77v(a)) is amended by inserting after the second
sentence the following: ``In any action or proceeding instituted by the
Commission under this title in a United States district court for any
judicial district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or both) at a
hearing or trial may be served at any place within the United States.
Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.''.
(b) Securities Exchange Act of 1934.--Section 27 of the Securities
Exchange Act of 1934 (15 U.S.C. 78aa) is amended by inserting after the
third sentence the following: ``In any action or proceeding instituted
by the Commission under this title in a United States district court for
any judicial district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or both) at a
hearing or trial may be served at any place within the United States.
Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.''.
(c) Investment Company Act of 1940.--Section 44 of the Investment
Company Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after the
fourth sentence the following: ``In any action or proceeding instituted
by the Commission under this title in a United States district court for
any judicial district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or both) at a
hearing or trial may be served at any place within the United States.
Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.''.
(d) Investment Advisers Act of 1940.--Section 214 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after
the third sentence the following: ``In any action or proceeding
instituted by the Commission under this title in a United States
district court for any judicial district, a subpoena issued to compel
the attendance of a witness or the production of documents or tangible
things (or both) at a hearing or trial may be served at any place within
the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil
Procedure shall not apply to a subpoena issued under the preceding
sentence.''.
SEC. 929F. FORMERLY ASSOCIATED PERSONS.
(a) Member or Employee of the Municipal Securities Rulemaking
Board.--Section 15B(c)(8) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(c)(8)) is amended by striking ``any member
[[Page 124 STAT. 1854]]
or employee'' and inserting ``any person who is, or at the time of the
alleged violation or abuse was, a member or employee''.
(b) Person Associated With a Government Securities Broker or
Dealer.--Section 15C(c) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-5(c)) is amended--
(1) in paragraph (1)(C), by striking ``any person
associated, or seeking to become associated,'' and inserting
``any person who is, or at the time of the alleged misconduct
was, associated or seeking to become associated''; and
(2) in paragraph (2)--
(A) in subparagraph (A), by inserting ``, seeking to
become associated, or, at the time of the alleged
misconduct, associated or seeking to become associated''
after ``any person associated''; and
(B) in subparagraph (B), by inserting ``, seeking to
become associated, or, at the time of the alleged
misconduct, associated or seeking to become associated''
after ``any person associated''.
(c) Person Associated With a Member of a National Securities
Exchange or Registered Securities Association.--Section 21(a)(1) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended, in the
first sentence, by inserting ``, or, as to any act or practice, or
omission to act, while associated with a member, formerly associated''
after ``member or a person associated''.
(d) Participant of a Registered Clearing Agency.--Section 21(a)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended,
in the first sentence, by inserting ``or, as to any act or practice, or
omission to act, while a participant, was a participant,'' after ``in
which such person is a participant,''.
(e) Officer or Director of a Self-regulatory Organization.--Section
19(h)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(h)(4)) is
amended--
(1) by striking ``any officer or director'' and inserting
``any person who is, or at the time of the alleged misconduct
was, an officer or director''; and
(2) by striking ``such officer or director'' and inserting
``such person''.
(f) Officer or Director of an Investment Company.--Section 36(a) of
the Investment Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
(1) by striking ``a person serving or acting'' and inserting
``a person who is, or at the time of the alleged misconduct was,
serving or acting''; and
(2) by striking ``such person so serves or acts'' and
inserting ``such person so serves or acts, or at the time of the
alleged misconduct, so served or acted''.
(g) Person Associated With a Public Accounting Firm.--
(1) Sarbanes-oxley act of 2002 amendment.--Section 2(a)(9)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) is amended
by adding at the end the following:
``(C) <<NOTE: Applicability.>> Investigative and
enforcement authority.--For purposes of sections 3(c),
101(c), 105, and 107(c) and the rules of the Board and
Commission issued thereunder, except to the extent
specifically excepted by such rules, the terms defined
in subparagraph (A) shall include any
[[Page 124 STAT. 1855]]
person associated, seeking to become associated, or
formerly associated with a public accounting firm,
except that--
``(i) the authority to conduct an
investigation of such person under section 105(b)
shall apply only with respect to any act or
practice, or omission to act, by the person while
such person was associated or seeking to become
associated with a registered public accounting
firm; and
``(ii) the authority to commence a
disciplinary proceeding under section 105(c)(1),
or impose sanctions under section 105(c)(4),
against such person shall apply only with respect
to--
``(I) conduct occurring while such
person was associated or seeking to
become associated with a registered
public accounting firm; or
``(II) non-cooperation, as described
in section 105(b)(3), with respect to a
demand in a Board investigation for
testimony, documents, or other
information relating to a period when
such person was associated or seeking to
become associated with a registered
public accounting firm.''.
(2) Securities exchange act of 1934 amendment.--Section
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78u(a)(1)) is amended by striking ``or a person associated with
such a firm'' and inserting ``, a person associated with such a
firm, or, as to any act, practice, or omission to act, while
associated with such firm, a person formerly associated with
such a firm''.
(h) Supervisory Personnel of an Audit Firm.--Section 105(c)(6) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6)) is amended--
(1) in subparagraph (A), by striking ``the supervisory
personnel'' and inserting ``any person who is, or at the time of
the alleged failure reasonably to supervise was, a supervisory
person''; and
(2) in subparagraph (B)--
(A) by striking ``No associated person'' and
inserting ``No current or former supervisory person'';
and
(B) by striking ``any other person'' and inserting
``any associated person''.
(i) Member of the Public Company Accounting Oversight Board.--
Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7217(d)(3)) is amended by striking ``any member'' and inserting ``any
person who is, or at the time of the alleged misconduct was, a member''.
SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIALISTS.
(a) Appointment Authority.--Section 3114 of title 5, United States
Code, is amended by striking the section heading and all that follows
through the end of subsection (a) and inserting the following:
[[Page 124 STAT. 1856]]
``Sec. 3114. Appointment of candidates to certain positions in the
competitive service by the Securities and
Exchange Commission
``(a) Applicability.--This section applies with respect to any
position of accountant, economist, and securities compliance examiner at
the Commission that is in the competitive service, and any position at
the Commission in the competitive service that requires specialized
knowledge of financial and capital market formation or regulation,
financial market structures or surveillance, or information
technology.''.
(b) Clerical Amendment.--The table of sections for chapter 31 of
title 5, United States Code, is amended by striking the item relating to
section 3114 and inserting the following:
``3114. Appointment of candidates to positions in the competitive
service by the Securities and Exchange Commission.''.
(c) <<NOTE: 15 USC 78d note.>> Pay Authority.--The Commission may
set the rate of pay for experts and consultants appointed under the
authority of section 3109 of title 5, United States Code, in the same
manner in which it sets the rate of pay for employees of the Commission.
SEC. 929H. SIPC REFORMS.
(a) Increasing the Cash Limit of Protection.--Section 9 of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78fff-3) is
amended--
(1) in subsection (a)(1), by striking ``$100,000 for each
such customer'' and inserting ``the standard maximum cash
advance amount for each such customer, as determined in
accordance with subsection (d)''; and
(2) by adding the following new subsections:
``(d) Standard Maximum Cash Advance Amount Defined.--For purposes of
this section, the term `standard maximum cash advance amount' means
$250,000, as such amount may be adjusted after December 31, 2010, as
provided under subsection (e).
``(e) Inflation Adjustment.--
``(1) <<NOTE: Deadlines. Determination.>> In general.--Not
later than January 1, 2011, and every 5 years thereafter, and
subject to the approval of the Commission as provided under
section 3(e)(2), the Board of Directors of SIPC shall determine
whether an inflation adjustment to the standard maximum cash
advance amount is appropriate. If the Board of Directors of SIPC
determines such an adjustment is appropriate, then the standard
maximum cash advance amount shall be an amount equal to--
``(A) $250,000 multiplied by--
``(B) the ratio of the annual value of the Personal
Consumption Expenditures Chain-Type Price Index (or any
successor index thereto), published by the Department of
Commerce, for the calendar year preceding the year in
which such determination is made, to the published
annual value of such index for the calendar year
preceding the year in which this subsection was enacted.
The index values used in calculations under this paragraph shall
be, as of the date of the calculation, the values most recently
published by the Department of Commerce.
``(2) Rounding.--If the standard maximum cash advance amount
determined under paragraph (1) for any period is not
[[Page 124 STAT. 1857]]
a multiple of $10,000, the amount so determined shall be rounded
down to the nearest $10,000.
``(3) Publication and report to the congress.--Not later
than April 5 of any calendar year in which a determination is
required to be made under paragraph (1)--
``(A) <<NOTE: Federal Register, publication.>> the
Commission shall publish in the Federal Register the
standard maximum cash advance amount; and
``(B) the Board of Directors of SIPC shall submit a
report to the Congress stating the standard maximum cash
advance amount.
``(4) Implementation period.-- <<NOTE: Effective date.>> Any
adjustment to the standard maximum cash advance amount shall
take effect on January 1 of the year immediately succeeding the
calendar year in which such adjustment is made.
``(5) Inflation adjustment considerations.--In making any
determination under paragraph (1) to increase the standard
maximum cash advance amount, the Board of Directors of SIPC
shall consider--
``(A) the overall state of the fund and the economic
conditions affecting members of SIPC;
``(B) the potential problems affecting members of
SIPC; and
``(C) such other factors as the Board of Directors
of SIPC may determine appropriate.''.
(b) Liquidation of a Carrying Broker-dealer.--Section 5(a)(3) of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(a)(3)) is
amended--
(1) by striking the undesignated matter immediately
following subparagraph (B);
(2) in subparagraph (A), by striking ``any member of SIPC''
and inserting ``the member'';
(3) in subparagraph (B), by striking the comma at the end
and inserting a period;
(4) by striking ``If SIPC'' and inserting the following:
``(A) In general.--SIPC may, upon notice to a member
of SIPC, file an application for a protective decree
with any court of competent jurisdiction specified in
section 21(e) or 27 of the Securities Exchange Act of
1934, except that no such application shall be filed
with respect to a member, the only customers of which
are persons whose claims could not be satisfied by SIPC
advances pursuant to section 9, if SIPC''; and
(5) by adding at the end the following:
``(B) Consent required.--No member of SIPC that has
a customer may enter into an insolvency, receivership,
or bankruptcy proceeding, under Federal or State law,
without the specific consent of SIPC, except as provided
in title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.''.
SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO
THE COMMISSION.
(a) Securities Exchange Act of 1934.--Section 24 of the Securities
Exchange Act of 1934 (15 U.S.C. 78x) is amended--
(1) in subsection (d), by striking ``subsection (e)'' and
inserting ``subsection (f)'';
(2) by redesignating subsection (e) as subsection (f); and
[[Page 124 STAT. 1858]]
(3) by inserting after subsection (d) the following:
``(e) Records Obtained From Registered Persons.--
``(1) In general.--Except as provided in subsection (f), the
Commission shall not be compelled to disclose records or
information obtained pursuant to section 17(b), or records or
information based upon or derived from such records or
information, if such records or information have been obtained
by the Commission for use in furtherance of the purposes of this
title, including surveillance, risk assessments, or other
regulatory and oversight activities.
``(2) Treatment of information.--For purposes of section 552
of title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such
section 552. Collection of information pursuant to section 17
shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1)
of title 44, United States Code.''.
(b) Investment Company Act of 1940.--Section 31 of the Investment
Company Act of 1940 (15 U.S.C. 80a-30) is amended--
(1) by striking subsection (c) and inserting the following:
``(c) Limitations on Disclosure by Commission.--Notwithstanding any
other provision of law, the Commission shall not be compelled to
disclose any records or information provided to the Commission under
this section, or records or information based upon or derived from such
records or information, if such records or information have been
obtained by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the Congress or
prevent the Commission from complying with a request for information
from any other Federal department or agency requesting the information
for purposes within the scope of jurisdiction of that department or
agency, or complying with an order of a court of the United States in an
action brought by the United States or the Commission. For purposes of
section 552 of title 5, United States Code, this section shall be
considered a statute described in subsection (b)(3)(B) of such section
552. Collection of information pursuant to section 31 shall be an
administrative action involving an agency against specific individuals
or agencies pursuant to section 3518(c)(1) of title 44, United States
Code.'';
(2) by striking subsection (d); and
(3) by redesignating subsections (e) and (f) as subsections
(d) and (e), respectively.
(c) Investment Advisers Act of 1940.--Section 210 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-10) is amended by adding at the end
the following:
``(d) Limitations on Disclosure by the Commission.--Notwithstanding
any other provision of law, the Commission shall not be compelled to
disclose any records or information provided to the Commission under
section 204, or records or information based upon or derived from such
records or information, if such records or information have been
obtained by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the Congress or
prevent the Commission from
[[Page 124 STAT. 1859]]
complying with a request for information from any other Federal
department or agency requesting the information for purposes within the
scope of jurisdiction of that department or agency, or complying with an
order of a court of the United States in an action brought by the United
States or the Commission. For purposes of section 552 of title 5, United
States Code, this subsection shall be considered a statute described in
subsection (b)(3)(B) of such section 552. Collection of information
pursuant to section 204 shall be an administrative action involving an
agency against specific individuals or agencies pursuant to section
3518(c)(1) of title 44, United States Code.''.
SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND
EXCHANGED.
Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) is
amended--
(1) by striking subsection (b) and inserting the following:
``(b) Production of Documents.--
``(1) Production by foreign firms.--If a foreign public
accounting firm performs material services upon which a
registered public accounting firm relies in the conduct of an
audit or interim review, issues an audit report, performs audit
work, or conducts interim reviews, the foreign public accounting
firm shall--
``(A) produce the audit work papers of the foreign
public accounting firm and all other documents of the
firm related to any such audit work or interim review to
the Commission or the Board, upon request of the
Commission or the Board; and
``(B) be subject to the jurisdiction of the courts
of the United States for purposes of enforcement of any
request for such documents.
``(2) Other production.--Any registered public accounting
firm that relies, in whole or in part, on the work of a foreign
public accounting firm in issuing an audit report, performing
audit work, or conducting an interim review, shall--
``(A) produce the audit work papers of the foreign
public accounting firm and all other documents related
to any such work in response to a request for production
by the Commission or the Board; and
``(B) secure the agreement of any foreign public
accounting firm to such production, as a condition of
the reliance by the registered public accounting firm on
the work of that foreign public accounting firm.'';
(2) by redesignating subsection (d) as subsection (g); and
(3) by inserting after subsection (c) the following:
``(d) Service of Requests or Process.--
``(1) In general.--Any foreign public accounting firm that
performs work for a domestic registered public accounting firm
shall furnish to the domestic registered public accounting firm
a written irrevocable consent and power of attorney that
designates the domestic registered public accounting firm as an
agent upon whom may be served any request by the Commission or
the Board under this section or upon whom may be served any
process, pleadings, or other papers in any action brought to
enforce this section.
[[Page 124 STAT. 1860]]
``(2) <<NOTE: Designation.>> Specific audit work.--Any
foreign public accounting firm that performs material services
upon which a registered public accounting firm relies in the
conduct of an audit or interim review, issues an audit report,
performs audit work, or, performs interim reviews, shall
designate to the Commission or the Board an agent in the United
States upon whom may be served any request by the Commission or
the Board under this section or upon whom may be served any
process, pleading, or other papers in any action brought to
enforce this section.
``(e) Sanctions.--A willful refusal to comply, in whole in or in
part, with any request by the Commission or the Board under this
section, shall be deemed a violation of this Act.
``(f) Other Means of Satisfying Production Obligations.--
Notwithstanding any other provisions of this section, the staff of the
Commission or the Board may allow a foreign public accounting firm that
is subject to this section to meet production obligations under this
section through alternate means, such as through foreign counterparts of
the Commission or the Board.''.
SEC. 929K. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.
Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x) is
amended--
(1) in subsection (d), as amended by subsection (d)(1)(A),
by striking ``subsection (f)'' and inserting ``subsection (g)'';
(2) in subsection (e), as added by subsection (d)(1)(C), by
striking ``subsection (f)'' and inserting ``subsection (g)'';
(3) by redesignating subsection (f) as subsection (g); and
(4) by inserting after subsection (e) the following:
``(f) Sharing Privileged Information With Other Authorities.--
``(1) Privileged information provided by the commission.--
The Commission shall not be deemed to have waived any privilege
applicable to any information by transferring that information
to or permitting that information to be used by--
``(A) any agency (as defined in section 6 of title
18, United States Code);
``(B) the Public Company Accounting Oversight Board;
``(C) any self-regulatory organization;
``(D) any foreign securities authority;
``(E) any foreign law enforcement authority; or
``(F) any State securities or law enforcement
authority.
``(2) Nondisclosure of privileged information provided to
the commission.--The Commission shall not be compelled to
disclose privileged information obtained from any foreign
securities authority, or foreign law enforcement authority, if
the authority has in good faith determined and represented to
the Commission that the information is privileged.
``(3) Nonwaiver of privileged information provided to the
commission.--
``(A) In general.--Federal agencies, State
securities and law enforcement authorities, self-
regulatory organizations, and the Public Company
Accounting Oversight Board shall not be deemed to have
waived any privilege applicable to any information by
transferring that information to or permitting that
information to be used by the Commission.
[[Page 124 STAT. 1861]]
``(B) Exception.--The provisions of subparagraph (A)
shall not apply to a self-regulatory organization or the
Public Company Accounting Oversight Board with respect
to information used by the Commission in an action
against such organization.
``(4) Definitions.--For purposes of this subsection--
``(A) the term `privilege' includes any work-product
privilege, attorney-client privilege, governmental
privilege, or other privilege recognized under Federal,
State, or foreign law;
``(B) the term `foreign law enforcement authority'
means any foreign authority that is empowered under
foreign law to detect, investigate or prosecute
potential violations of law; and
``(C) the term `State securities or law enforcement
authority' means the authority of any State or territory
that is empowered under State or territory law to
detect, investigate, or prosecute potential violations
of law.''.
SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in <<NOTE: 15 USC 78i.>> section 9--
(A) by striking ``registered on a national
securities exchange'' each place that term appears and
inserting ``other than a government security'';
(B) in subsection (b), by striking ``by use of any
facility of a national securities exchange,''; and
(C) in subsection (c), by inserting after ``unlawful
for any'' the following: ``broker, dealer, or'';
(2) in section 10(a)(1), <<NOTE: 15 USC 78j.>> by striking
``registered on a national securities exchange'' and inserting
``other than a government security''; and
(3) in section 15(c)(1)(A), <<NOTE: 15 USC 78o.>> by
striking ``otherwise than on a national securities exchange of
which it is a member''.
SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT
AND THE INVESTMENT COMPANY ACT.
(a) Under the Securities Act of 1933.--Section 15 of the Securities
Act of 1933 (15 U.S.C. 77o) is amended--
(1) by striking ``Every person who'' and inserting ``(a)
Controlling Persons.--Every person who''; and
(2) by adding at the end the following:
``(b) Prosecution of Persons Who Aid and Abet Violations.--For
purposes of any action brought by the Commission under subparagraph (b)
or (d) of section 20, any person that knowingly or recklessly provides
substantial assistance to another person in violation of a provision of
this Act, or of any rule or regulation issued under this Act, shall be
deemed to be in violation of such provision to the same extent as the
person to whom such assistance is provided.''.
(b) Under the Investment Company Act of 1940.--Section 48 of the
Investment Company Act of 1940 <<NOTE: 15 USC 80a-47.>> (15 U.S.C. 80a-
48) is amended by redesignating subsection (b) as subsection (c) and
inserting after subsection (a) the following:
``(b) For purposes of any action brought by the Commission under
subsection (d) or (e) of section 42, any person that knowingly or
recklessly provides substantial assistance to another person in
[[Page 124 STAT. 1862]]
violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance is
provided.''.
SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING
VIOLATIONS OF THE INVESTMENT ADVISERS
ACT.
Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9)
is amended by inserting at the end the following new subsection:
``(f) Aiding and Abetting.--For purposes of any action brought by
the Commission under subsection (e), any person that knowingly or
recklessly has aided, abetted, counseled, commanded, induced, or
procured a violation of any provision of this Act, or of any rule,
regulation, or order hereunder, shall be deemed to be in violation of
such provision, rule, regulation, or order to the same extent as the
person that committed such violation.''.
SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY
RECKLESSNESS.
Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78t(e)) is amended by inserting ``or recklessly'' after ``knowingly''.
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION.
(a) Authority to Impose Civil Penalties in Cease and Desist
Proceedings.--
(1) Under the securities act of 1933.--Section 8A of the
Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding at
the end the following new subsection:
``(g) Authority to Impose Money Penalties.--
``(1) Grounds.--In any cease-and-desist proceeding under
subsection (a), the Commission may impose a civil penalty on a
person if the Commission finds, on the record, after notice and
opportunity for hearing, that--
``(A) such person--
``(i) is violating or has violated any
provision of this title, or any rule or regulation
issued under this title; or
``(ii) is or was a cause of the violation of
any provision of this title, or any rule or
regulation thereunder; and
``(B) such penalty is in the public interest.
``(2) Maximum amount of penalty.--
``(A) First tier.--The maximum amount of a penalty
for each act or omission described in paragraph (1)
shall be $7,500 for a natural person or $75,000 for any
other person.
``(B) Second tier.--Notwithstanding subparagraph
(A), the maximum amount of penalty for each such act or
omission shall be $75,000 for a natural person or
$375,000 for any other person, if the act or omission
described in paragraph (1) involved fraud, deceit,
manipulation, or deliberate or reckless disregard of a
regulatory requirement.
``(C) Third tier.--Notwithstanding subparagraphs (A)
and (B), the maximum amount of penalty for each such act
or omission shall be $150,000 for a natural person or
$725,000 for any other person, if--
[[Page 124 STAT. 1863]]
``(i) the act or omission described in
paragraph (1) involved fraud, deceit,
manipulation, or deliberate or reckless disregard
of a regulatory requirement; and
``(ii) such act or omission directly or
indirectly resulted in--
``(I) substantial losses or created
a significant risk of substantial losses
to other persons; or
``(II) substantial pecuniary gain to
the person who committed the act or
omission.
``(3) Evidence concerning ability to pay.--In any proceeding
in which the Commission may impose a penalty under this section,
a respondent may present evidence of the ability of the
respondent to pay such penalty. The Commission may, in its
discretion, consider such evidence in determining whether such
penalty is in the public interest. Such evidence may relate to
the extent of the ability of the respondent to continue in
business and the collectability of a penalty, taking into
account any other claims of the United States or third parties
upon the assets of the respondent and the amount of the assets
of the respondent.''.
(2) Under the securities exchange act of 1934.--Section
21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u-
2(a)) is amended--
(A) by striking the matter following paragraph (4);
(B) in the matter preceding paragraph (1), by
inserting after ``opportunity for hearing,'' the
following: ``that such penalty is in the public interest
and'';
(C) by redesignating paragraphs (1) through (4) as
subparagraphs (A) through (D), respectively, and
adjusting the margins accordingly;
(D) by striking ``In any proceeding'' and inserting
the following:
``(1) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(2) Cease-and-desist proceedings.--In any proceeding
instituted under section 21C against any person, the Commission
may impose a civil penalty, if the Commission finds, on the
record after notice and opportunity for hearing, that such
person--
``(A) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
``(B) is or was a cause of the violation of any
provision of this title, or any rule or regulation
issued under this title.''.
(3) Under the investment company act of 1940.--Section
9(d)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a-
9(d)(1)) is amended--
(A) by striking the matter following subparagraph
(C);
(B) in the matter preceding subparagraph (A), by
inserting after ``opportunity for hearing,'' the
following: ``that such penalty is in the public
interest, and'';
(C) by redesignating subparagraphs (A) through (C)
as clauses (i) through (iii), respectively, and
adjusting the margins accordingly;
(D) by striking ``In any proceeding'' and inserting
the following:
[[Page 124 STAT. 1864]]
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection (f) against
any person, the Commission may impose a civil penalty if
the Commission finds, on the record, after notice and
opportunity for hearing, that such person--
``(i) is violating or has violated any
provision of this title, or any rule or regulation
issued under this title; or
``(ii) is or was a cause of the violation of
any provision of this title, or any rule or
regulation issued under this title.''.
(4) Under the investment advisers act of 1940.--Section
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(i)(1)) is amended--
(A) by striking the matter following subparagraph
(D);
(B) in the matter preceding subparagraph (A), by
inserting after ``opportunity for hearing,'' the
following: ``that such penalty is in the public interest
and'';
(C) by redesignating subparagraphs (A) through (D)
as clauses (i) through (iv), respectively, and adjusting
the margins accordingly;
(D) by striking ``In any proceeding'' and inserting
the following:
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following new
subparagraph:
``(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection (k) against
any person, the Commission may impose a civil penalty if
the Commission finds, on the record, after notice and
opportunity for hearing, that such person--
``(i) is violating or has violated any
provision of this title, or any rule or regulation
issued under this title; or
``(ii) is or was a cause of the violation of
any provision of this title, or any rule or
regulation issued under this title.''.
(b) <<NOTE: Courts.>> Extraterritorial Jurisdiction of the
Antifraud Provisions of the Federal Securities Laws.--
(1) Under the securities act of 1933.--Section 22 of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by adding
at the end the following new subsection:
``(c) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of section 17(a)
involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
[[Page 124 STAT. 1865]]
(2) Under the securities exchange act of 1934.--Section 27
of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is
amended--
(A) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(B) by adding at the end the following new
subsection:
``(b) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of the antifraud
provisions of this title involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
(3) Under the investment advisers act of 1940.--Section 214
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is
amended--
(A) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(B) by adding at the end the following new
subsection:
``(b) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of section 206
involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
violation is committed by a foreign adviser and involves only
foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
(c) Control Person Liability Under the Securities Exchange Act of
1934.--Section 20(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78t(a)) is amended by inserting after ``controlled person is liable''
the following: ``(including to the Commission in any action brought
under paragraph (1) or (3) of section 21(d))''.
SEC. 929Q. REVISION TO RECORDKEEPING RULE.
(a) Investment Company Act of 1940 Amendments.--Section 31 of the
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended--
(1) in subsection (a)(1), by adding at the end the
following: ``Each person having custody or use of the
securities, deposits, or credits of a registered investment
company shall maintain and preserve all records that relate to
the custody or use by such person of the securities, deposits,
or credits of the registered investment company for such period
or periods as the Commission, by rule or regulation, may
prescribe, as necessary or appropriate in the public interest or
for the protection of investors.''; and
(2) in subsection (b), by adding at the end the following:
``(4) Records of persons with custody or use.--
[[Page 124 STAT. 1866]]
``(A) In general.--Records of persons having custody
or use of the securities, deposits, or credits of a
registered investment company that relate to such
custody or use, are subject at any time, or from time to
time, to such reasonable periodic, special, or other
examinations and other information and document requests
by representatives of the Commission, as the Commission
deems necessary or appropriate in the public interest or
for the protection of investors.
``(B) Certain persons subject to other regulation.--
Any person that is subject to regulation and examination
by a Federal financial institution regulatory agency (as
such term is defined under section 212(c)(2) of title
18, United States Code) may satisfy any examination
request, information request, or document request
described under subparagraph (A), by providing to the
Commission a detailed listing, in writing, of the
securities, deposits, or credits of the registered
investment company within the custody or use of such
person.''.
(b) Investment Advisers Act of 1940 Amendment.--Section 204 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended by adding
at the end the following new subsection:
``(d) Records of Persons With Custody or Use.--
``(1) In general.--Records of persons having custody or use
of the securities, deposits, or credits of a client, that relate
to such custody or use, are subject at any time, or from time to
time, to such reasonable periodic, special, or other
examinations and other information and document requests by
representatives of the Commission, as the Commission deems
necessary or appropriate in the public interest or for the
protection of investors.
``(2) Certain persons subject to other regulation.--Any
person that is subject to regulation and examination by a
Federal financial institution regulatory agency (as such term is
defined under section 212(c)(2) of title 18, United States Code)
may satisfy any examination request, information request, or
document request described under paragraph (1), by providing the
Commission with a detailed listing, in writing, of the
securities, deposits, or credits of the client within the
custody or use of such person.''.
SEC. 929R. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT REPORTING.
(a) Beneficial Ownership Reporting.--Section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1)--
(A) by inserting after ``within ten days after such
acquisition'' the following: ``or within such shorter
time as the Commission may establish by rule''; and
(B) by striking ``send to the issuer of the security
at its principal executive office, by registered or
certified mail, send to each exchange where the security
is traded, and'';
(2) in subsection (d)(2)--
(A) by striking ``in the statements to the issuer
and the exchange, and''; and
[[Page 124 STAT. 1867]]
(B) by striking ``shall be transmitted to the issuer
and the exchange and'';
(3) in subsection (g)(1), by striking ``shall send to the
issuer of the security and''; and
(4) in subsection (g)(2)--
(A) by striking ``sent to the issuer and''; and
(B) by striking ``shall be transmitted to the issuer
and''.
(b) Short-swing Profit Reporting.--Section 16(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended--
(1) in paragraph (1), by striking ``(and, if such security
is registered on a national securities exchange, also with the
exchange)''; and
(2) in paragraph (2)(B), by inserting after ``officer'' the
following: ``, or within such shorter time as the Commission may
establish by rule''.
SEC. 929S. FINGERPRINTING.
Section 17(f)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78q(f)(2)) is amended--
(1) in the first sentence, by striking ``and registered
clearing agency,'' and inserting ``registered clearing agency,
registered securities information processor, national securities
exchange, and national securities association''; and
(2) in the second sentence, by striking ``or clearing
agency,'' and inserting ``clearing agency, securities
information processor, national securities exchange, or national
securities association,''.
SEC. 929T. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ``an exchange required thereby'' and
inserting ``a self-regulatory organization,''.
SEC. 929U. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS AND
ENFORCEMENT ACTIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 4D the following new section:
``SEC. 4E. <<NOTE: 15 USC 78d-5.>> DEADLINE FOR COMPLETING
ENFORCEMENT INVESTIGATIONS AND COMPLIANCE
EXAMINATIONS AND INSPECTIONS.
``(a) Enforcement Investigations.--
``(1) <<NOTE: Notification. Filing.>> In general.--Not
later than 180 days after the date on which Commission staff
provide a written Wells notification to any person, the
Commission staff shall either file an action against such person
or provide notice to the Director of the Division of Enforcement
of its intent to not file an action.
``(2) <<NOTE: Time period.>> Exceptions for certain complex
actions.--Notwithstanding paragraph (1), if the Director of the
Division of Enforcement of the Commission or the Director's
designee determines that a particular enforcement investigation
is sufficiently complex such that a determination regarding the
filing of an action against a person cannot be completed within
the deadline specified in paragraph (1), the Director of the
Division of Enforcement of the Commission or the Director's
designee may, after providing notice to the Chairman of the
Commission,
[[Page 124 STAT. 1868]]
extend such deadline as needed for one additional 180-day
period. If after the additional 180-day period the Director of
the Division of Enforcement of the Commission or the Director's
designee determines that a particular enforcement investigation
is sufficiently complex such that a determination regarding the
filing of an action against a person cannot be completed within
the additional 180-day period, the Director of the Division of
Enforcement of the Commission or the Director's designee may,
after providing notice to and receiving approval of the
Commission, extend such deadline as needed for one or more
additional successive 180-day periods.
``(b) Compliance Examinations and Inspections.--
``(1) <<NOTE: Notification.>> In general.--Not later than
180 days after the date on which Commission staff completes the
on-site portion of its compliance examination or inspection or
receives all records requested from the entity being examined or
inspected, whichever is later, Commission staff shall provide
the entity being examined or inspected with written notification
indicating either that the examination or inspection has
concluded, has concluded without findings, or that the staff
requests the entity undertake corrective action.
``(2) <<NOTE: Time period.>> Exception for certain complex
actions.--Notwithstanding paragraph (1), if the head of any
division or office within the Commission responsible for
compliance examinations and inspections or his designee
determines that a particular compliance examination or
inspection is sufficiently complex such that a determination
regarding concluding the examination or inspection, or regarding
the staff requests the entity undertake corrective action,
cannot be completed within the deadline specified in paragraph
(1), the head of any division or office within the Commission
responsible for compliance examinations and inspections or his
designee may, after providing notice to the Chairman of the
Commission, extend such deadline as needed for one additional
180-day period.''.
SEC. 929V. SECURITY INVESTOR PROTECTION ACT AMENDMENTS.
(a) Increasing the Minimum Assessment Paid by SIPC Members.--Section
4(d)(1)(C) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78ddd(d)(1)(C)) is amended by striking ``$150 per annum'' and inserting
the following: ``0.02 percent of the gross revenues from the securities
business of such member of SIPC''.
(b) Increasing the Fine for Prohibited Acts Under SIPA.--Section
14(c) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78jjj(c)) is amended--
(1) in paragraph (1), by striking ``$50,000'' and inserting
``$250,000''; and
(2) in paragraph (2), by striking ``$50,000'' and inserting
``$250,000''.
(c) Penalty for Misrepresentation of SIPC Membership or
Protection.--Section 14 of the Securities Investor Protection Act of
1970 (15 U.S.C. 78jjj) is amended by adding at the end the following new
subsection:
``(d) Misrepresentation of SIPC Membership or Protection.--
``(1) In general.--Any person who falsely represents by any
means (including, without limitation, through the Internet or
any other medium of mass communication), with actual
[[Page 124 STAT. 1869]]
knowledge of the falsity of the representation and with an
intent to deceive or cause injury to another, that such person,
or another person, is a member of SIPC or that any person or
account is protected or is eligible for protection under this
Act or by SIPC, shall be liable for any damages caused thereby
and shall be fined not more than $250,000 or imprisoned for not
more than 5 years.
``(2) <<NOTE: Procedures. Certification. Records.>>
Injunctions.--Any court having jurisdiction of a civil action
arising under this Act may grant temporary injunctions and final
injunctions on such terms as the court deems reasonable to
prevent or restrain any violation of paragraph (1). Any such
injunction may be served anywhere in the United States on the
person enjoined, shall be operative throughout the United
States, and shall be enforceable, by proceedings in contempt or
otherwise, by any United States court having jurisdiction over
that person. The clerk of the court granting the injunction
shall, when requested by any other court in which enforcement of
the injunction is sought, transmit promptly to the other court a
certified copy of all papers in the case on file in such clerk's
office.''.
SEC. 929W. NOTICE TO MISSING SECURITY HOLDERS.
Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1)
is amended by adding at the end the following new subsection:
``(g) Due Diligence for the Delivery of Dividends, Interest, and
Other Valuable Property Rights.--
``(1) Revision of rules required.--The Commission shall
revise its regulations in section 240.17Ad-17 of title 17, Code
of Federal Regulations, as in effect on December 8, 1997, to
extend the application of such section to brokers and dealers
and to provide for the following:
``(A) <<NOTE: Notification. Deadline.>> A
requirement that the paying agent provide a single
written notification to each missing security holder
that the missing security holder has been sent a check
that has not yet been negotiated. The written
notification may be sent along with a check or other
mailing subsequently sent to the missing security holder
but must be provided no later than 7 months after the
sending of the not yet negotiated check.
``(B) An exclusion for paying agents from the
notification requirements when the value of the not yet
negotiated check is less than $25.
``(C) A provision clarifying that the requirements
described in subparagraph (A) shall have no effect on
State escheatment laws.
``(D) For purposes of such revised regulations--
``(i) a security holder shall be considered a
`missing security holder' if a check is sent to
the security holder and the check is not
negotiated before the earlier of the paying agent
sending the next regularly scheduled check or the
elapsing of 6 months after the sending of the not
yet negotiated check; and
``(ii) the term `paying agent' includes any
issuer, transfer agent, broker, dealer, investment
adviser, indenture trustee, custodian, or any
other person that
[[Page 124 STAT. 1870]]
accepts payments from the issuer of a security and
distributes the payments to the holders of the
security.
``(2) <<NOTE: Deadline.>> Rulemaking.--The Commission shall
adopt such rules, regulations, and orders necessary to implement
this subsection no later than 1 year after the date of enactment
of this subsection. In proposing such rules, the Commission
shall seek to minimize disruptions to current systems used by or
on behalf of paying agents to process payment to account holders
and avoid requiring multiple paying agents to send written
notification to a missing security holder regarding the same not
yet negotiated check.''.
SEC. 929X. SHORT SALE REFORMS.
(a) Short Sale Disclosure.--Section 13(f) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(f)) is amended by redesignating paragraphs
(2), (3), (4), and (5) as paragraphs (3), (4), (5), and (6),
respectively, and inserting after paragraph (1) the following:
``(2) <<NOTE: Regulations.>> The Commission shall prescribe
rules providing for the public disclosure of the name of the
issuer and the title, class, CUSIP number, aggregate amount of
the number of short sales of each security, and any additional
information determined by the Commission following the end of
the reporting period. <<NOTE: Deadline.>> At a minimum, such
public disclosure shall occur every month.''.
(b) Short Selling Enforcement.--Section 9 of the Securities Exchange
Act of 1934 (15 U.S.C. 78i) is amended--
(1) by redesignating subsections (d), (e), (f), (g), (h),
and (i) as subsections (e), (f), (g), (h), (i), and (j),
respectively; and
(2) inserting after subsection (c), the following new
subsection:
``(d) Transactions Relating to Short Sales of Securities.--It shall
be unlawful for any person, directly or indirectly, by the use of the
mails or any means or instrumentality of interstate commerce, or of any
facility of any national securities exchange, or for any member of a
national securities exchange to effect, alone or with one or more other
persons, a manipulative short sale of any
security. <<NOTE: Regulations.>> The Commission shall issue such other
rules as are necessary or appropriate to ensure that the appropriate
enforcement options and remedies are available for violations of this
subsection in the public interest or for the protection of investors.''.
(c) Investor Notification.--Section 15 of the Securities Exchange
Act of 1934 (15 U.S.C. 78o) is amended--
(1) by redesignating subsections (e), (f), (g), (h), and (i)
as subsections (f), (g), (h), (i), and (j), respectively; and
(2) inserting after subsection (d) the following new
subsection:
``(e) Notices to Customers Regarding Securities Lending.--Every
registered broker or dealer shall provide notice to its customers that
they may elect not to allow their fully paid securities to be used in
connection with short sales. If a broker or dealer uses a customer's
securities in connection with short sales, the broker or dealer shall
provide notice to its customer that the broker or dealer may receive
compensation in connection with lending the customer's securities. The
Commission, by rule, as it deems necessary or appropriate in the public
interest and for the protection
[[Page 124 STAT. 1871]]
of investors, may prescribe the form, content, time, and manner of
delivery of any notice required under this paragraph.''.
SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF ACTION.
(a) <<NOTE: Public comment.>> In General.--The Securities and
Exchange Commission of the United States shall solicit public comment
and thereafter conduct a study to determine the extent to which private
rights of action under the antifraud provisions of the Securities and
Exchange Act of 1934 (15 U.S.C. 78u-4) should be extended to cover--
(1) conduct within the United States that constitutes a
significant step in the furtherance of the violation, even if
the securities transaction occurs outside the United States and
involves only foreign investors; and
(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.
(b) Contents.--The study shall consider and analyze, among other
things--
(1) the scope of such a private right of action, including
whether it should extend to all private actors or whether it
should be more limited to extend just to institutional investors
or otherwise;
(2) what implications such a private right of action would
have on international comity;
(3) the economic costs and benefits of extending a private
right of action for transnational securities frauds; and
(4) whether a narrower extraterritorial standard should be
adopted.
(c) Report.--A report of the study shall be submitted and
recommendations made to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House not later than 18 months after the date of enactment of this Act.
SEC. 929Z. GAO STUDY ON SECURITIES LITIGATION.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the impact of authorizing a private right of action
against any person who aids or abets another person in violation of the
securities laws. To the extent feasible, this study shall include--
(1) a review of the role of secondary actors in companies
issuance of securities;
(2) the courts interpretation of the scope of liability for
secondary actors under Federal securities laws after January 14,
2008; and
(3) the types of lawsuits decided under the Private
Securities Litigation Act of 1995.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General shall submit a report to Congress on
the findings of the study required under subsection (a).
[[Page 124 STAT. 1872]]
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
SEC. 931. <<NOTE: 15 USC 78o-7 note.>> FINDINGS.
Congress finds the following:
(1) Because of the systemic importance of credit ratings and
the reliance placed on credit ratings by individual and
institutional investors and financial regulators, the activities
and performances of credit rating agencies, including nationally
recognized statistical rating organizations, are matters of
national public interest, as credit rating agencies are central
to capital formation, investor confidence, and the efficient
performance of the United States economy.
(2) Credit rating agencies, including nationally recognized
statistical rating organizations, play a critical ``gatekeeper''
role in the debt market that is functionally similar to that of
securities analysts, who evaluate the quality of securities in
the equity market, and auditors, who review the financial
statements of firms. Such role justifies a similar level of
public oversight and accountability.
(3) Because credit rating agencies perform evaluative and
analytical services on behalf of clients, much as other
financial ``gatekeepers'' do, the activities of credit rating
agencies are fundamentally commercial in character and should be
subject to the same standards of liability and oversight as
apply to auditors, securities analysts, and investment bankers.
(4) In certain activities, particularly in advising
arrangers of structured financial products on potential ratings
of such products, credit rating agencies face conflicts of
interest that need to be carefully monitored and that therefore
should be addressed explicitly in legislation in order to give
clearer authority to the Securities and Exchange Commission.
(5) In the recent financial crisis, the ratings on
structured financial products have proven to be inaccurate. This
inaccuracy contributed significantly to the mismanagement of
risks by financial institutions and investors, which in turn
adversely impacted the health of the economy in the United
States and around the world. Such inaccuracy necessitates
increased accountability on the part of credit rating agencies.
SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF
NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS.
(a) In General.--Section 15E of the Securities Exchange Act of 1934
(15 U.S.C. 78o-7) is amended--
(1) in subsection (b)--
(A) in paragraph (1)(A), by striking ``furnished''
and inserting ``filed'' and by striking ``furnishing''
and inserting ``filing'';
(B) in paragraph (1)(B), by striking ``furnishing''
and inserting ``filing''; and
(C) in the first sentence of paragraph (2), by
striking ``furnish to'' and inserting ``file with'';
(2) in subsection (c)--
(A) in paragraph (2)--
[[Page 124 STAT. 1873]]
(i) in the second sentence, by inserting ``any
other provision of this section, or'' after
``Notwithstanding''; and
(ii) by inserting after the period at the end
the following: ``Nothing in this paragraph may be
construed to afford a defense against any action
or proceeding brought by the Commission to enforce
the antifraud provisions of the securities
laws.''; and
(B) by adding at the end the following:
``(3) Internal controls over processes for determining
credit ratings.--
``(A) In general.--Each nationally recognized
statistical rating organization shall establish,
maintain, enforce, and document an effective internal
control structure governing the implementation of and
adherence to policies, procedures, and methodologies for
determining credit ratings, taking into consideration
such factors as the Commission may prescribe, by rule.
``(B) <<NOTE: Deadline. Reports.>> Attestation
requirement.--The Commission shall prescribe rules
requiring each nationally recognized statistical rating
organization to submit to the Commission an annual
internal controls report, which shall contain--
``(i) a description of the responsibility of
the management of the nationally recognized
statistical rating organization in establishing
and maintaining an effective internal control
structure under subparagraph (A);
``(ii) <<NOTE: Assessment.>> an assessment of
the effectiveness of the internal control
structure of the nationally recognized statistical
rating organization; and
``(iii) the attestation of the chief executive
officer, or equivalent individual, of the
nationally recognized statistical rating
organization.'';
(3) in subsection (d)--
(A) <<NOTE: Censure.>> by inserting after ``or
revoke the registration of any nationally recognized
statistical rating organization'' the following: ``, or
with respect to any person who is associated with, who
is seeking to become associated with, or, at the time of
the alleged misconduct, who was associated or was
seeking to become associated with a nationally
recognized statistical rating organization, the
Commission, by order, shall censure, place limitations
on the activities or functions of such person, suspend
for a period not exceeding 1 year, or bar such person
from being associated with a nationally recognized
statistical rating organization,'';
(B) by inserting ``bar'' after ``placing of
limitations, suspension,'';
(C) in paragraph (2), by striking ``furnished to''
and inserting ``filed with'';
(D) in paragraph (2), by redesignating subparagraphs
(A) and (B) as clauses (i) and (ii), respectively, and
adjusting the clause margins accordingly;
(E) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and
adjusting the subparagraph margins accordingly;
[[Page 124 STAT. 1874]]
(F) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The Commission'' and
inserting the following:
``(1) In general.--The Commission'';
(G) in subparagraph (D), as so redesignated--
(i) by striking ``furnish'' and inserting
``file''; and
(ii) by striking ``or'' at the end.
(H) in subparagraph (E), as so redesignated, by
striking the period at the end and inserting a
semicolon; and
(I) by adding at the end the following:
``(F) has failed reasonably to supervise, with a
view to preventing a violation of the securities laws,
an individual who commits such a violation, if the
individual is subject to the supervision of that person.
``(2) Suspension or revocation for particular class of
securities.--
``(A) In general.--The Commission may temporarily
suspend or permanently revoke the registration of a
nationally recognized statistical rating organization
with respect to a particular class or subclass of
securities, if the Commission finds, on the record after
notice and opportunity for hearing, that the nationally
recognized statistical rating organization does not have
adequate financial and managerial resources to
consistently produce credit ratings with integrity.
``(B) Considerations.--In making any determination
under subparagraph (A), the Commission shall consider--
``(i) whether the nationally recognized
statistical rating organization has failed over a
sustained period of time, as determined by the
Commission, to produce ratings that are accurate
for that class or subclass of securities; and
``(ii) such other factors as the Commission
may determine.'';
(4) in subsection (h), by adding at the end the following:
``(3) Separation of ratings from sales and marketing.--
``(A) Rules required.--The Commission shall issue
rules to prevent the sales and marketing considerations
of a nationally recognized statistical rating
organization from influencing the production of ratings
by the nationally recognized statistical rating
organization.
``(B) Contents of rules.--The rules issued under
subparagraph (A) shall provide for--
``(i) exceptions for small nationally
recognized statistical rating organizations with
respect to which the Commission determines that
the separation of the production of ratings and
sales and marketing activities is not appropriate;
and
``(ii) suspension or revocation of the
registration of a nationally recognized
statistical rating organization, if the Commission
finds, on the record, after notice and opportunity
for a hearing, that--
``(I) the nationally recognized
statistical rating organization has
committed a violation of a rule issued
under this subsection; and
``(II) the violation of a rule
issued under this subsection affected a
rating.
[[Page 124 STAT. 1875]]
``(4) Look-back requirement.--
``(A) Review by the nationally recognized
statistical rating organization.--
<<NOTE: Procedures.>> Each nationally recognized
statistical rating organization shall establish,
maintain, and enforce policies and procedures reasonably
designed to ensure that, in any case in which an
employee of a person subject to a credit rating of the
nationally recognized statistical rating organization or
the issuer, underwriter, or sponsor of a security or
money market instrument subject to a credit rating of
the nationally recognized statistical rating
organization was employed by the nationally recognized
statistical rating organization and participated in any
capacity in determining credit ratings for the person or
the securities or money market instruments during the 1-
year period preceding the date an action was taken with
respect to the credit rating, the nationally recognized
statistical rating organization shall--
``(i) conduct a review to determine whether
any conflicts of interest of the employee
influenced the credit rating; and
``(ii) take action to revise the rating if
appropriate, in accordance with such rules as the
Commission shall prescribe.
``(B) Review by commission.--
``(i) In general.--The Commission shall
conduct periodic reviews of the policies described
in subparagraph (A) and the implementation of the
policies at each nationally recognized statistical
rating organization to ensure they are reasonably
designed and implemented to most effectively
eliminate conflicts of interest.
``(ii) Timing of reviews.--The Commission
shall review the code of ethics and conflict of
interest policy of each nationally recognized
statistical rating organization--
``(I) not less frequently than
annually; and
``(II) whenever such policies are
materially modified or amended.
``(5) Report to commission on certain employment
transitions.--
``(A) Report required.--Each nationally recognized
statistical rating organization shall report to the
Commission any case such organization knows or can
reasonably be expected to know where a person associated
with such organization within the previous 5 years
obtains employment with any obligor, issuer,
underwriter, or sponsor of a security or money market
instrument for which the organization issued a credit
rating during the 12-month period prior to such
employment, if such employee--
``(i) was a senior officer of such
organization;
``(ii) participated in any capacity in
determining credit ratings for such obligor,
issuer, underwriter, or sponsor; or
``(iii) supervised an employee described in
clause (ii).
[[Page 124 STAT. 1876]]
``(B) Public disclosure.--Upon receiving such a
report, the Commission shall make such information
publicly available.'';
(5) in subsection (j)--
(A) by striking ``Each'' and inserting the
following:
``(1) In general.--Each''; and
(B) by adding at the end the following:
``(2) Limitations.--
``(A) In general.--Except as provided in
subparagraph (B), an individual designated under
paragraph (1) may not, while serving in the designated
capacity--
``(i) perform credit ratings;
``(ii) participate in the development of
ratings methodologies or models;
``(iii) perform marketing or sales functions;
or
``(iv) participate in establishing
compensation levels, other than for employees
working for that individual.
``(B) Exception.--The Commission may exempt a small
nationally recognized statistical rating organization
from the limitations under this paragraph, if the
Commission finds that compliance with such limitations
would impose an unreasonable burden on the nationally
recognized statistical rating organization.
``(3) Other duties.-- <<NOTE: Procedures.>> Each individual
designated under paragraph (1) shall establish procedures for
the receipt, retention, and treatment of--
``(A) complaints regarding credit ratings, models,
methodologies, and compliance with the securities laws
and the policies and procedures developed under this
section; and
``(B) confidential, anonymous complaints by
employees or users of credit ratings.
``(4) Compensation.--The compensation of each compliance
officer appointed under paragraph (1) shall not be linked to the
financial performance of the nationally recognized statistical
rating organization and shall be arranged so as to ensure the
independence of the officer's judgment.
``(5) Annual reports required.--
``(A) Annual reports required.--Each individual
designated under paragraph (1) shall submit to the
nationally recognized statistical rating organization an
annual report on the compliance of the nationally
recognized statistical rating organization with the
securities laws and the policies and procedures of the
nationally recognized statistical rating organization
that includes--
``(i) a description of any material changes to
the code of ethics and conflict of interest
policies of the nationally recognized statistical
rating organization; and
``(ii) a certification that the report is
accurate and complete.
``(B) Submission of reports to the commission.--Each
nationally recognized statistical rating organization
shall file the reports required under subparagraph (A)
together with the financial report that is required to
be submitted to the Commission under this section.'';
[[Page 124 STAT. 1877]]
(6) in subsection (k), by striking ``furnish to'' and
inserting ``file with'';
(7) in subsection (l)(2)(A)(i), by striking ``furnished''
and inserting ``filed''; and
(8) by striking subsection (p) and inserting the following:
``(p) Regulation of Nationally Recognized Statistical Rating
Organizations.--
``(1) Establishment of office of credit ratings.--
``(A) Office established.--The Commission shall
establish within the Commission an Office of Credit
Ratings (referred to in this subsection as the `Office')
to administer the rules of the Commission--
``(i) with respect to the practices of
nationally recognized statistical rating
organizations in determining ratings, for the
protection of users of credit ratings and in the
public interest;
``(ii) to promote accuracy in credit ratings
issued by nationally recognized statistical rating
organizations; and
``(iii) to ensure that such ratings are not
unduly influenced by conflicts of interest.
``(B) Director of the office.--The head of the
Office shall be the Director, who shall report to the
Chairman.
``(2) Staffing.--The Office established under this
subsection shall be staffed sufficiently to carry out fully the
requirements of this section. The staff shall include persons
with knowledge of and expertise in corporate, municipal, and
structured debt finance.
``(3) Commission examinations.--
``(A) Annual examinations required.--The Office
shall conduct an examination of each nationally
recognized statistical rating organization at least
annually.
``(B) Conduct of examinations.--Each examination
under subparagraph (A) shall include a review of--
``(i) whether the nationally recognized
statistical rating organization conducts business
in accordance with the policies, procedures, and
rating methodologies of the nationally recognized
statistical rating organization;
``(ii) the management of conflicts of interest
by the nationally recognized statistical rating
organization;
``(iii) implementation of ethics policies by
the nationally recognized statistical rating
organization;
``(iv) the internal supervisory controls of
the nationally recognized statistical rating
organization;
``(v) the governance of the nationally
recognized statistical rating organization;
``(vi) the activities of the individual
designated by the nationally recognized
statistical rating organization under subsection
(j)(1);
``(vii) the processing of complaints by the
nationally recognized statistical rating
organization; and
``(viii) the policies of the nationally
recognized statistical rating organization
governing the post-employment activities of former
staff of the nationally recognized statistical
rating organization.
[[Page 124 STAT. 1878]]
``(C) Inspection reports.-- <<NOTE: Public
information.>> The Commission shall make available to
the public, in an easily understandable format, an
annual report summarizing--
``(i) the essential findings of all
examinations conducted under subparagraph (A), as
deemed appropriate by the Commission;
``(ii) the responses by the nationally
recognized statistical rating organizations to any
material regulatory deficiencies identified by the
Commission under clause (i); and
``(iii) whether the nationally recognized
statistical rating organizations have
appropriately addressed the recommendations of the
Commission contained in previous reports under
this subparagraph.
``(4) <<NOTE: Fines. Penalties.>> Rulemaking authority.--
The Commission shall--
``(A) establish, by rule, fines, and other penalties
applicable to any nationally recognized statistical
rating organization that violates the requirements of
this section and the rules thereunder; and
``(B) issue such rules as may be necessary to carry
out this section.
``(q) Transparency of Ratings Performance.--
``(1) Rulemaking required.-- <<NOTE: Public
information.>> The Commission shall, by rule, require that each
nationally recognized statistical rating organization publicly
disclose information on the initial credit ratings determined by
the nationally recognized statistical rating organization for
each type of obligor, security, and money market instrument, and
any subsequent changes to such credit ratings, for the purpose
of allowing users of credit ratings to evaluate the accuracy of
ratings and compare the performance of ratings by different
nationally recognized statistical rating organizations.
``(2) Content.--The rules of the Commission under this
subsection shall require, at a minimum, disclosures that--
``(A) are comparable among nationally recognized
statistical rating organizations, to allow users of
credit ratings to compare the performance of credit
ratings across nationally recognized statistical rating
organizations;
``(B) are clear and informative for investors having
a wide range of sophistication who use or might use
credit ratings;
``(C) include performance information over a range
of years and for a variety of types of credit ratings,
including for credit ratings withdrawn by the nationally
recognized statistical rating organization;
``(D) are published and made freely available by the
nationally recognized statistical rating organization,
on an easily accessible portion of its website, and in
writing, when requested;
``(E) are appropriate to the business model of a
nationally recognized statistical rating organization;
and
``(F) each nationally recognized statistical rating
organization include an attestation with any credit
rating it issues affirming that no part of the rating
was influenced by any other business activities, that
the rating was based solely on the merits of the
instruments being rated, and
[[Page 124 STAT. 1879]]
that such rating was an independent evaluation of the
risks and merits of the instrument.
``(r) Credit Ratings Methodologies.-- <<NOTE: Regulations.>> The
Commission shall prescribe rules, for the protection of investors and in
the public interest, with respect to the procedures and methodologies,
including qualitative and quantitative data and models, used by
nationally recognized statistical rating organizations that require each
nationally recognized statistical rating organization--
``(1) to ensure that credit ratings are determined using
procedures and methodologies, including qualitative and
quantitative data and models, that are--
``(A) approved by the board of the nationally
recognized statistical rating organization, a body
performing a function similar to that of a board; and
``(B) in accordance with the policies and procedures
of the nationally recognized statistical rating
organization for the development and modification of
credit rating procedures and methodologies;
``(2) to ensure that when material changes to credit rating
procedures and methodologies (including changes to qualitative
and quantitative data and models) are made, that--
``(A) the changes are applied consistently to all
credit ratings to which the changed procedures and
methodologies apply;
``(B) to the extent that changes are made to credit
rating surveillance procedures and methodologies, the
changes are applied to then-current credit ratings by
the nationally recognized statistical rating
organization within a reasonable time period determined
by the Commission, by rule; and
``(C) the nationally recognized statistical rating
organization publicly discloses the reason for the
change; and
``(3) <<NOTE: Notification.>> to notify users of credit
ratings--
``(A) of the version of a procedure or methodology,
including the qualitative methodology or quantitative
inputs, used with respect to a particular credit rating;
``(B) when a material change is made to a procedure
or methodology, including to a qualitative model or
quantitative inputs;
``(C) when a significant error is identified in a
procedure or methodology, including a qualitative or
quantitative model, that may result in credit rating
actions; and
``(D) of the likelihood of a material change
described in subparagraph (B) resulting in a change in
current credit ratings.
``(s) Transparency of Credit Rating Methodologies and Information
Reviewed.--
``(1) Form for disclosures.-- <<NOTE: Regulations.>> The
Commission shall require, by rule, each nationally recognized
statistical rating organization to prescribe a form to accompany
the publication of each credit rating that discloses--
``(A) information relating to--
``(i) the assumptions underlying the credit
rating procedures and methodologies;
``(ii) the data that was relied on to
determine the credit rating; and
[[Page 124 STAT. 1880]]
``(iii) if applicable, how the nationally
recognized statistical rating organization used
servicer or remittance reports, and with what
frequency, to conduct surveillance of the credit
rating; and
``(B) information that can be used by investors and
other users of credit ratings to better understand
credit ratings in each class of credit rating issued by
the nationally recognized statistical rating
organization.
``(2) Format.--The form developed under paragraph (1)
shall--
``(A) be easy to use and helpful for users of credit
ratings to understand the information contained in the
report;
``(B) require the nationally recognized statistical
rating organization to provide the content described in
paragraph (3)(B) in a manner that is directly comparable
across types of securities; and
``(C) be made readily available to users of credit
ratings, in electronic or paper form, as the Commission
may, by rule, determine.
``(3) Content of form.--
``(A) Qualitative content.--Each nationally
recognized statistical rating organization shall
disclose on the form developed under paragraph (1)--
``(i) the credit ratings produced by the
nationally recognized statistical rating
organization;
``(ii) the main assumptions and principles
used in constructing procedures and methodologies,
including qualitative methodologies and
quantitative inputs and assumptions about the
correlation of defaults across underlying assets
used in rating structured products;
``(iii) the potential limitations of the
credit ratings, and the types of risks excluded
from the credit ratings that the nationally
recognized statistical rating organization does
not comment on, including liquidity, market, and
other risks;
``(iv) information on the uncertainty of the
credit rating, including--
``(I) information on the
reliability, accuracy, and quality of
the data relied on in determining the
credit rating; and
``(II) a statement relating to the
extent to which data essential to the
determination of the credit rating were
reliable or limited, including--
``(aa) any limits on the
scope of historical data; and
``(bb) any limits in
accessibility to certain
documents or other types of
information that would have
better informed the credit
rating;
``(v) whether and to what extent third party
due diligence services have been used by the
nationally recognized statistical rating
organization, a description of the information
that such third party reviewed in conducting due
diligence services, and a description of the
findings or conclusions of such third party;
[[Page 124 STAT. 1881]]
``(vi) a description of the data about any
obligor, issuer, security, or money market
instrument that were relied upon for the purpose
of determining the credit rating;
``(vii) a statement containing an overall
assessment of the quality of information available
and considered in producing a rating for an
obligor, security, or money market instrument, in
relation to the quality of information available
to the nationally recognized statistical rating
organization in rating similar issuances;
``(viii) information relating to conflicts of
interest of the nationally recognized statistical
rating organization; and
``(ix) such additional information as the
Commission may require.
``(B) Quantitative content.--Each nationally
recognized statistical rating organization shall
disclose on the form developed under this subsection--
``(i) an explanation or measure of the
potential volatility of the credit rating,
including--
``(I) any factors that might lead to
a change in the credit ratings; and
``(II) the magnitude of the change
that a user can expect under different
market conditions;
``(ii) information on the content of the
rating, including--
``(I) the historical performance of
the rating; and
``(II) the expected probability of
default and the expected loss in the
event of default;
``(iii) information on the sensitivity of the
rating to assumptions made by the nationally
recognized statistical rating organization,
including--
``(I) 5 assumptions made in the
ratings process that, without accounting
for any other factor, would have the
greatest impact on a rating if the
assumptions were proven false or
inaccurate; and
``(II) an analysis, using specific
examples, of how each of the 5
assumptions identified under subclause
(I) impacts a rating;
``(iv) such additional information as may be
required by the Commission.
``(4) Due diligence services for asset-backed securities.--
``(A) Findings.-- <<NOTE: Public information.>> The
issuer or underwriter of any asset-backed security shall
make publicly available the findings and conclusions of
any third-party due diligence report obtained by the
issuer or underwriter.
``(B) Certification required.--In any case in which
third-party due diligence services are employed by a
nationally recognized statistical rating organization,
an issuer, or an underwriter, the person providing the
due diligence services shall provide to any nationally
recognized statistical rating organization that produces
a rating to which
[[Page 124 STAT. 1882]]
such services relate, written certification, as provided
in subparagraph (C).
``(C) Format and content.--The Commission shall
establish the appropriate format and content for the
written certifications required under subparagraph (B),
to ensure that providers of due diligence services have
conducted a thorough review of data, documentation, and
other relevant information necessary for a nationally
recognized statistical rating organization to provide an
accurate rating.
``(D) Disclosure of certification.--
<<NOTE: Regulations. Public information.>> The
Commission shall adopt rules requiring a nationally
recognized statistical rating organization, at the time
at which the nationally recognized statistical rating
organization produces a rating, to disclose the
certification described in subparagraph (B) to the
public in a manner that allows the public to determine
the adequacy and level of due diligence services
provided by a third party.
``(t) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.-- <<NOTE: Establishment.>> Each
nationally recognized statistical rating organization shall have
a board of directors.
``(2) Independent directors.--
``(A) In general.--At least \1/2\ of the board of
directors, but not fewer than 2 of the members thereof,
shall be independent of the nationally recognized
statistical rating agency. A portion of the independent
directors shall include users of ratings from a
nationally recognized statistical rating organization.
``(B) Independence determination.--In order to be
considered independent for purposes of this subsection,
a member of the board of directors of a nationally
recognized statistical rating organization--
``(i) may not, other than in his or her
capacity as a member of the board of directors or
any committee thereof--
``(I) accept any consulting,
advisory, or other compensatory fee from
the nationally recognized statistical
rating organization; or
``(II) be a person associated with
the nationally recognized statistical
rating organization or with any
affiliated company thereof; and
``(ii) shall be disqualified from any
deliberation involving a specific rating in which
the independent board member has a financial
interest in the outcome of the rating.
``(C) Compensation and term.--The compensation of
the independent members of the board of directors of a
nationally recognized statistical rating organization
shall not be linked to the business performance of the
nationally recognized statistical rating organization,
and shall be arranged so as to ensure the independence
of their judgment. The term of office of the independent
directors shall be for a pre-agreed fixed period, not to
exceed 5 years, and shall not be renewable.
``(3) Duties of board of directors.--In addition to the
overall responsibilities of the board of directors, the board
shall oversee--
[[Page 124 STAT. 1883]]
``(A) the establishment, maintenance, and
enforcement of policies and procedures for determining
credit ratings;
``(B) the establishment, maintenance, and
enforcement of policies and procedures to address,
manage, and disclose any conflicts of interest;
``(C) the effectiveness of the internal control
system with respect to policies and procedures for
determining credit ratings; and
``(D) the compensation and promotion policies and
practices of the nationally recognized statistical
rating organization.
``(4) Treatment of nrsro subsidiaries.--If a nationally
recognized statistical rating organization is a subsidiary of a
parent entity, the board of the directors of the parent entity
may satisfy the requirements of this subsection by assigning to
a committee of such board of directors the duties under
paragraph (3), if--
``(A) at least \1/2\ of the members of the committee
(including the chairperson of the committee) are
independent, as defined in this section; and
``(B) at least 1 member of the committee is a user
of ratings from a nationally recognized statistical
rating organization.
``(5) Exception authority.--If the Commission finds that
compliance with the provisions of this subsection present an
unreasonable burden on a small nationally recognized statistical
rating organization, the Commission may permit the nationally
recognized statistical rating organization to delegate such
responsibilities to a committee that includes at least one
individual who is a user of ratings of a nationally recognized
statistical rating organization.''.
(b) Conforming Amendment.--Section 3(a)(62) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(62)) is amended by striking
subparagraph (A) and redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively.
SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.
(a) Accountability.--Section 15E(m) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-7(m)) is amended to read as follows:
``(m) Accountability.--
``(1) In general.-- <<NOTE: Applicability.>> The enforcement
and penalty provisions of this title shall apply to statements
made by a credit rating agency in the same manner and to the
same extent as such provisions apply to statements made by a
registered public accounting firm or a securities analyst under
the securities laws, and such statements shall not be deemed
forward-looking statements for the purposes of section 21E.
``(2) Rulemaking.--The Commission shall issue such rules as
may be necessary to carry out this subsection.''.
(b) State of Mind.--Section 21D(b)(2) of the Securities Exchange Act
of 1934 (15 U.S.C. 78u-4(b)(2)) is amended--
(1) by striking ``In any'' and inserting the following:
``(A) In general.--Except as provided in
subparagraph (B), in any''; and
(2) by adding at the end the following:
[[Page 124 STAT. 1884]]
``(B) Exception.--In the case of an action for money
damages brought against a credit rating agency or a
controlling person under this title, it shall be
sufficient, for purposes of pleading any required state
of mind in relation to such action, that the complaint
state with particularity facts giving rise to a strong
inference that the credit rating agency knowingly or
recklessly failed--
``(i) to conduct a reasonable investigation of
the rated security with respect to the factual
elements relied upon by its own methodology for
evaluating credit risk; or
``(ii) to obtain reasonable verification of
such factual elements (which verification may be
based on a sampling technique that does not amount
to an audit) from other sources that the credit
rating agency considered to be competent and that
were independent of the issuer and underwriter.''.
SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY
AUTHORITIES.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(u) Duty To Report Tips Alleging Material Violations of Law.--
``(1) Duty to report.--Each nationally recognized
statistical rating organization shall refer to the appropriate
law enforcement or regulatory authorities any information that
the nationally recognized statistical rating organization
receives from a third party and finds credible that alleges that
an issuer of securities rated by the nationally recognized
statistical rating organization has committed or is committing a
material violation of law that has not been adjudicated by a
Federal or State court.
``(2) Rule of construction.--Nothing in paragraph (1) may be
construed to require a nationally recognized statistical rating
organization to verify the accuracy of the information described
in paragraph (1).''.
SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER THAN THE
ISSUER IN RATING DECISIONS.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(v) Information From Sources Other Than the Issuer.--In producing
a credit rating, a nationally recognized statistical rating organization
shall consider information about an issuer that the nationally
recognized statistical rating organization has, or receives from a
source other than the issuer or underwriter, that the nationally
recognized statistical rating organization finds credible and
potentially significant to a rating decision.''.
SEC. 936. <<NOTE: 15 USC 78o-7 note.>> QUALIFICATION STANDARDS FOR
CREDIT RATING ANALYSTS.
Not <<NOTE: Deadline. Regulations.>> later than 1 year after the
date of enactment of this Act, the Commission shall issue rules that are
reasonably designed to ensure that any person employed by a nationally
recognized statistical rating organization to perform credit ratings--
[[Page 124 STAT. 1885]]
(1) meets standards of training, experience, and competence
necessary to produce accurate ratings for the categories of
issuers whose securities the person rates; and
(2) is tested for knowledge of the credit rating process.
SEC. 937. <<NOTE: 15 USC 78o-7 note.>> TIMING OF REGULATIONS.
Unless otherwise specifically provided in this subtitle, the
Commission shall issue final regulations, as required by this subtitle
and the amendments made by this subtitle, not later than 1 year after
the date of enactment of this Act.
SEC. 938. <<NOTE: 15 USC 78o-8.>> UNIVERSAL RATINGS SYMBOLS.
(a) <<NOTE: Procedures.>> Rulemaking.--The Commission shall
require, by rule, each nationally recognized statistical rating
organization to establish, maintain, and enforce written policies and
procedures that--
(1) assess the probability that an issuer of a security or
money market instrument will default, fail to make timely
payments, or otherwise not make payments to investors in
accordance with the terms of the security or money market
instrument;
(2) clearly define and disclose the meaning of any symbol
used by the nationally recognized statistical rating
organization to denote a credit rating; and
(3) apply any symbol described in paragraph (2) in a manner
that is consistent for all types of securities and money market
instruments for which the symbol is used.
(b) Rule of Construction.--Nothing in this section shall prohibit a
nationally recognized statistical rating organization from using
distinct sets of symbols to denote credit ratings for different types of
securities or money market instruments.
SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.
(a) Federal Deposit Insurance Act.--The Federal Deposit Insurance
Act (12 U.S.C. 1811 et seq.) is amended--
(1) in section 7(b)(1)(E)(i), <<NOTE: 12 USC 1817.>> by
striking ``credit rating entities, and other private economic''
and insert ``private economic, credit,'';
(2) in section <<NOTE: 12 USC 1831e.>> 28(d)--
(A) in the subsection heading, by striking ``Not of
Investment Grade'';
(B) in paragraph (1), by striking ``not of
investment grade'' and inserting ``that does not meet
standards of credit-worthiness as established by the
Corporation'';
(C) in paragraph (2), by striking ``not of
investment grade'';
(D) by striking paragraph (3);
(E) by redesignating paragraph (4) as paragraph (3);
and
(F) in paragraph (3), as so redesignated--
(i) by striking subparagraph (A);
(ii) by redesignating subparagraphs (B) and
(C) as subparagraphs (A) and (B), respectively;
and
(iii) in subparagraph (B), as so redesignated,
by striking ``not of investment grade'' and
inserting ``that does not meet standards of
credit-worthiness as established by the
Corporation''; and
(3) in section 28(e)--
[[Page 124 STAT. 1886]]
(A) in the subsection heading, by striking ``Not of
Investment Grade'';
(B) in paragraph (1), by striking ``not of
investment grade'' and inserting ``that does not meet
standards of credit-worthiness as established by the
Corporation''; and
(C) in paragraphs (2) and (3), by striking ``not of
investment grade'' each place that it appears and
inserting ``that does not meet standards of credit-
worthiness established by the Corporation''.
(b) Federal Housing Enterprises Financial Safety and Soundness Act
of 1992.--Section 1319 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended by striking
``that is a nationally recognized statistical rating organization, as
such term is defined in section 3(a) of the Securities Exchange Act of
1934,''.
(c) Investment Company Act of 1940.--Section 6(a)(5)(A)(iv)(I)
Investment Company Act of 1940 (15 U.S.C. 80a-6(a)(5)(A)(iv)(I)) is
amended by striking ``is rated investment grade by not less than 1
nationally recognized statistical rating organization'' and inserting
``meets such standards of credit-worthiness as the Commission shall
adopt''.
(d) Revised Statutes.--Section 5136A of title LXII of the Revised
Statutes of the United States (12 U.S.C. 24a) is amended--
(1) in subsection (a)(2)(E), by striking ``any applicable
rating'' and inserting ``standards of credit-worthiness
established by the Comptroller of the Currency'';
(2) in the heading for subsection (a)(3) by striking
``Rating or Comparable Requirement'' and inserting
``Requirement'';
(3) subsection (a)(3), by amending subparagraph (A) to read
as follows:
``(A) In general.--A national bank meets the
requirements of this paragraph if the bank is one of the
100 largest insured banks and has not fewer than 1 issue
of outstanding debt that meets standards of credit-
worthiness or other criteria as the Secretary of the
Treasury and the Board of Governors of the Federal
Reserve System may jointly establish.''.
(4) in the heading for subsection (f), by striking
``Maintain Public Rating or'' and inserting ``Meet Standards of
Credit-worthiness''; and
(5) in subsection (f)(1), by striking ``any applicable
rating'' and inserting ``standards of credit-worthiness
established by the Comptroller of the Currency''.
(e) Securities Exchange Act of 1934.--Section 3(a) Securities
Exchange Act of 1934 <<NOTE: 15 USC 78c.>> (15 U.S.C. 78a(3)(a)) is
amended--
(1) in paragraph (41), by striking ``is rated in one of the
two highest rating categories by at least one nationally
recognized statistical rating organization'' and inserting
``meets standards of credit-worthiness as established by the
Commission''; and
(2) in paragraph (53)(A), by striking ``is rated in 1 of the
4 highest rating categories by at least 1 nationally recognized
statistical rating organization'' and inserting ``meets
standards of credit-worthiness as established by the
Commission''.
(f) World Bank Discussions.--Section 3(a)(6) of the amendment in the
nature of a substitute to the text of H.R. 4645, as ordered reported
from the Committee on Banking, Finance and
[[Page 124 STAT. 1887]]
Urban Affairs on September 22, 1988, as enacted into law by section 555
of Public Law 100-461, (22 U.S.C. 286hh(a)(6)), is amended by striking
``credit rating'' and inserting ``credit-worthiness''.
(g) <<NOTE: 12 USC 24a note.>> Effective Date.--The amendments made
by this section shall take effect 2 years after the date of enactment of
this Act.
(h) Study and Report.--
(1) In general.--Commission shall undertake a study on the
feasability and desirability of--
(A) standardizing credit ratings terminology, so
that all credit rating agencies issue credit ratings
using identical terms;
(B) standardizing the market stress conditions under
which ratings are evaluated;
(C) requiring a quantitative correspondence between
credit ratings and a range of default probabilities and
loss expectations under standardized conditions of
economic stress; and
(D) standardizing credit rating terminology across
asset classes, so that named ratings correspond to a
standard range of default probabilities and expected
losses independent of asset class and issuing entity.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Commission shall submit to Congress a
report containing the findings of the study under paragraph (1)
and the recommendations, if any, of the Commission with respect
to the study.
SEC. 939A. <<NOTE: Regulations. 15 USC 78o-7 note.>> REVIEW OF
RELIANCE ON RATINGS.
(a) Agency Review.-- <<NOTE: Deadline.>> Not later than 1 year after
the date of the enactment of this subtitle, each Federal agency shall,
to the extent applicable, review--
(1) any regulation issued by such agency that requires the
use of an assessment of the credit-worthiness of a security or
money market instrument; and
(2) any references to or requirements in such regulations
regarding credit ratings.
(b) Modifications Required.--Each such agency shall modify any such
regulations identified by the review conducted under subsection (a) to
remove any reference to or requirement of reliance on credit ratings and
to substitute in such regulations such standard of credit-worthiness as
each respective agency shall determine as appropriate for such
regulations. <<NOTE: Standards.>> In making such determination, such
agencies shall seek to establish, to the extent feasible, uniform
standards of credit-worthiness for use by each such agency, taking into
account the entities regulated by each such agency and the purposes for
which such entities would rely on such standards of credit-worthiness.
(c) Report.--Upon conclusion of the review required under subsection
(a), each Federal agency shall transmit a report to Congress containing
a description of any modification of any regulation such agency made
pursuant to subsection (b).
SEC. 939B. <<NOTE: 15 USC 78m note.>> ELIMINATION OF EXEMPTION
FROM FAIR DISCLOSURE RULE.
Not <<NOTE: Deadline.>> later than 90 days after the date of
enactment of this subtitle, the Securities Exchange Commission shall
revise Regulation FD (17 C.F.R. 243.100) to remove from such regulation
the
[[Page 124 STAT. 1888]]
exemption for entities whose primary business is the issuance of credit
ratings (17 C.F.R. 243.100(b)(2)(iii)).
SEC. 939C. SECURITIES AND EXCHANGE COMMISSION STUDY ON
STRENGTHENING CREDIT RATING AGENCY
INDEPENDENCE.
(a) Study.--The Commission shall conduct a study of--
(1) the independence of nationally recognized statistical
rating organizations; and
(2) how the independence of nationally recognized
statistical rating organizations affects the ratings issued by
the nationally recognized statistical rating organizations.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Commission shall evaluate--
(1) the management of conflicts of interest raised by a
nationally recognized statistical rating organization providing
other services, including risk management advisory services,
ancillary assistance, or consulting services;
(2) the potential impact of rules prohibiting a nationally
recognized statistical rating organization that provides a
rating to an issuer from providing other services to the issuer;
and
(3) any other issue relating to nationally recognized
statistical rating organizations, as the Chairman of the
Commission determines is appropriate.
(c) Report.--Not later than 3 years after the date of enactment of
this Act, the Chairman of the Commission shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for improving the integrity of ratings issued
by nationally recognized statistical rating organizations.
SEC. 939D. <<NOTE: 15 USC 78o-9 note.>> GOVERNMENT ACCOUNTABILITY
OFFICE STUDY ON ALTERNATIVE BUSINESS
MODELS.
(a) Study.--The Comptroller General of the United States shall
conduct a study on alternative means for compensating nationally
recognized statistical rating organizations in order to create
incentives for nationally recognized statistical rating organizations to
provide more accurate credit ratings, including any statutory changes
that would be required to facilitate the use of an alternative means of
compensation.
(b) Report.--Not later than 18 months after the date of enactment of
this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for providing incentives to credit rating
agencies to improve the credit rating process.
SEC. 939E. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE CREATION
OF AN INDEPENDENT PROFESSIONAL ANALYST
ORGANIZATION.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the feasibility and merits of creating an independent
professional organization for rating analysts employed by nationally
recognized statistical rating organizations that would be responsible
for--
[[Page 124 STAT. 1889]]
(1) establishing independent standards for governing the
profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) Report.--Not later than 1 year after the date of publication of
the rules issued by the Commission pursuant to section 936, the
Comptroller General shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report on the results of the study
conducted under subsection (a).
SEC. 939F. <<NOTE: 15 USC 78o-9.>> STUDY AND RULEMAKING ON
ASSIGNED CREDIT RATINGS.
(a) Definition.--In this section, the term ``structured finance
product'' means an asset-backed security, as defined in section 3(a)(77)
of the Securities Exchange Act of 1934, as added by section 941, and any
structured product based on an asset-backed security, as determined by
the Commission, by rule.
(b) Study.--The Commission shall carry out a study of--
(1) the credit rating process for structured finance
products and the conflicts of interest associated with the
issuer-pay and the subscriber-pay models;
(2) the feasibility of establishing a system in which a
public or private utility or a self-regulatory organization
assigns nationally recognized statistical rating organizations
to determine the credit ratings of structured finance products,
including--
(A) an assessment of potential mechanisms for
determining fees for the nationally recognized
statistical rating organizations;
(B) appropriate methods for paying fees to the
nationally recognized statistical rating organizations;
(C) the extent to which the creation of such a
system would be viewed as the creation of moral hazard
by the Federal Government; and
(D) any constitutional or other issues concerning
the establishment of such a system;
(3) the range of metrics that could be used to determine the
accuracy of credit ratings; and
(4) alternative means for compensating nationally recognized
statistical rating organizations that would create incentives
for accurate credit ratings.
(c) Report and Recommendation.--Not later than 24 months after the
date of enactment of this Act, the Commission shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives a report
that contains--
(1) the findings of the study required under subsection (b);
and
(2) any recommendations for regulatory or statutory changes
that the Commission determines should be made to implement the
findings of the study required under subsection (b).
(d) Rulemaking.--
(1) Rulemaking.-- <<NOTE: Determinations.>> After submission
of the report under subsection (c), the Commission shall, by
rule, as the Commission determines is necessary or appropriate
in the public interest or for the protection of investors,
establish a system
[[Page 124 STAT. 1890]]
for the assignment of nationally recognized statistical rating
organizations to determine the initial credit ratings of
structured finance products, in a manner that prevents the
issuer, sponsor, or underwriter of the structured finance
product from selecting the nationally recognized statistical
rating organization that will determine the initial credit
ratings and monitor such credit ratings. In issuing any rule
under this paragraph, the Commission shall give thorough
consideration to the provisions of section 15E(w) of the
Securities Exchange Act of 1934, as that provision would have
been added by section 939D of H.R. 4173 (111th Congress), as
passed by the Senate on May 20, 2010, and shall implement the
system described in such section 939D unless the Commission
determines that an alternative system would better serve the
public interest and the protection of investors.
(2) Rule of construction.--Nothing in this subsection may be
construed to limit or suspend any other rulemaking authority of
the Commission.
SEC. 939G. EFFECT OF RULE 436(G).
Rule 436(g), promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, shall have no force or effect.
SEC. 939H. SENSE OF CONGRESS.
It is the sense of Congress that the Securities and Exchange
Commission should exercise the rulemaking authority of the Commission
under section 15E(h)(2)(B) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-7(h)(2)(B)) to prevent improper conflicts of interest arising
from employees of nationally recognized statistical rating organizations
providing services to issuers of securities that are unrelated to the
issuance of credit ratings, including consulting, advisory, and other
services.
Subtitle D--Improvements to the Asset-Backed Securitization Process
SEC. 941. REGULATION OF CREDIT RISK RETENTION.
(a) Definition of Asset-backed Security.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
at the end the following:
``(77) Asset-backed security.--The term `asset-backed
security'--
``(A) means a fixed-income or other security
collateralized by any type of self-liquidating financial
asset (including a loan, a lease, a mortgage, or a
secured or unsecured receivable) that allows the holder
of the security to receive payments that depend
primarily on cash flow from the asset, including--
``(i) a collateralized mortgage obligation;
``(ii) a collateralized debt obligation;
``(iii) a collateralized bond obligation;
``(iv) a collateralized debt obligation of
asset-backed securities;
``(v) a collateralized debt obligation of
collateralized debt obligations; and
[[Page 124 STAT. 1891]]
``(vi) a security that the Commission, by
rule, determines to be an asset-backed security
for purposes of this section; and
``(B) does not include a security issued by a
finance subsidiary held by the parent company or a
company controlled by the parent company, if none of the
securities issued by the finance subsidiary are held by
an entity that is not controlled by the parent
company.''.
(b) Credit Risk Retention.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 15F, as added
by this Act, the following:
``SEC. 15G. <<NOTE: 15 USC 78o-11.>> CREDIT RISK RETENTION.
``(a) Definitions.--In this section--
``(1) the term `Federal banking agencies' means the Office
of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, and the Federal Deposit Insurance
Corporation;
``(2) the term `insured depository institution' has the same
meaning as in section 3(c) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(c));
``(3) the term `securitizer' means--
``(A) an issuer of an asset-backed security; or
``(B) a person who organizes and initiates an asset-
backed securities transaction by selling or transferring
assets, either directly or indirectly, including through
an affiliate, to the issuer; and
``(4) the term `originator' means a person who--
``(A) through the extension of credit or otherwise,
creates a financial asset that collateralizes an asset-
backed security; and
``(B) sells an asset directly or indirectly to a
securitizer.
``(b) Regulations <<NOTE: Deadline.>> Required.--
``(1) In general.--Not later than 270 days after the date of
enactment of this section, the Federal banking agencies and the
Commission shall jointly prescribe regulations to require any
securitizer to retain an economic interest in a portion of the
credit risk for any asset that the securitizer, through the
issuance of an asset-backed security, transfers, sells, or
conveys to a third party.
``(2) Residential mortgages.--Not later than 270 days after
the date of the enactment of this section, the Federal banking
agencies, the Commission, the Secretary of Housing and Urban
Development, and the Federal Housing Finance Agency, shall
jointly prescribe regulations to require any securitizer to
retain an economic interest in a portion of the credit risk for
any residential mortgage asset that the securitizer, through the
issuance of an asset-backed security, transfers, sells, or
conveys to a third party.
``(c) Standards for Regulations.--
``(1) Standards.--The regulations prescribed under
subsection (b) shall--
``(A) prohibit a securitizer from directly or
indirectly hedging or otherwise transferring the credit
risk that the securitizer is required to retain with
respect to an asset;
``(B) require a securitizer to retain--
[[Page 124 STAT. 1892]]
``(i) not less than 5 percent of the credit
risk for any asset--
``(I) that is not a qualified
residential mortgage that is
transferred, sold, or conveyed through
the issuance of an asset-backed security
by the securitizer; or
``(II) that is a qualified
residential mortgage that is
transferred, sold, or conveyed through
the issuance of an asset-backed security
by the securitizer, if 1 or more of the
assets that collateralize the asset-
backed security are not qualified
residential mortgages; or
``(ii) less than 5 percent of the credit risk
for an asset that is not a qualified residential
mortgage that is transferred, sold, or conveyed
through the issuance of an asset-backed security
by the securitizer, if the originator of the asset
meets the underwriting standards prescribed under
paragraph (2)(B);
``(C) specify--
``(i) the permissible forms of risk retention
for purposes of this section;
``(ii) the minimum duration of the risk
retention required under this section; and
``(iii) that a securitizer is not required to
retain any part of the credit risk for an asset
that is transferred, sold or conveyed through the
issuance of an asset-backed security by the
securitizer, if all of the assets that
collateralize the asset-backed security are
qualified residential mortgages;
``(D) <<NOTE: Applicability.>> apply, regardless of
whether the securitizer is an insured depository
institution;
``(E) with respect to a commercial mortgage, specify
the permissible types, forms, and amounts of risk
retention that would meet the requirements of
subparagraph (B), which in the determination of the
Federal banking agencies and the Commission may
include--
``(i) retention of a specified amount or
percentage of the total credit risk of the asset;
``(ii) retention of the first-loss position by
a third-party purchaser that specifically
negotiates for the purchase of such first loss
position, holds adequate financial resources to
back losses, provides due diligence on all
individual assets in the pool before the issuance
of the asset-backed securities, and meets the same
standards for risk retention as the Federal
banking agencies and the Commission require of the
securitizer;
``(iii) a determination by the Federal banking
agencies and the Commission that the underwriting
standards and controls for the asset are adequate;
and
``(iv) provision of adequate representations
and warranties and related enforcement mechanisms;
and
``(F) establish appropriate standards for retention
of an economic interest with respect to collateralized
debt obligations, securities collateralized by
collateralized debt obligations, and similar instruments
collateralized by other asset-backed securities; and
``(G) provide for--
[[Page 124 STAT. 1893]]
``(i) a total or partial exemption of any
securitization, as may be appropriate in the
public interest and for the protection of
investors;
``(ii) a total or partial exemption for the
securitization of an asset issued or guaranteed by
the United States, or an agency of the United
States, as the Federal banking agencies and the
Commission jointly determine appropriate in the
public interest and for the protection of
investors, except that, for purposes of this
clause, the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation are
not agencies of the United States;
``(iii) a total or partial exemption for any
asset-backed security that is a security issued or
guaranteed by any State of the United States, or
by any political subdivision of a State or
territory, or by any public instrumentality of a
State or territory that is exempt from the
registration requirements of the Securities Act of
1933 by reason of section 3(a)(2) of that Act (15
U.S.C. 77c(a)(2)), or a security defined as a
qualified scholarship funding bond in section
150(d)(2) of the Internal Revenue Code of 1986, as
may be appropriate in the public interest and for
the protection of investors; and
``(iv) the allocation of risk retention
obligations between a securitizer and an
originator in the case of a securitizer that
purchases assets from an originator, as the
Federal banking agencies and the Commission
jointly determine appropriate.
``(2) Asset classes.--
``(A) Asset classes.--The regulations prescribed
under subsection (b) shall establish asset classes with
separate rules for securitizers of different classes of
assets, including residential mortgages, commercial
mortgages, commercial loans, auto loans, and any other
class of assets that the Federal banking agencies and
the Commission deem appropriate.
``(B) Contents.--For each asset class established
under subparagraph (A), the regulations prescribed under
subsection (b) shall include underwriting standards
established by the Federal banking agencies that specify
the terms, conditions, and characteristics of a loan
within the asset class that indicate a low credit risk
with respect to the loan.
``(d) Originators.--In determining how to allocate risk retention
obligations between a securitizer and an originator under subsection
(c)(1)(E)(iv), the Federal banking agencies and the Commission shall--
``(1) reduce the percentage of risk retention obligations
required of the securitizer by the percentage of risk retention
obligations required of the originator; and
``(2) consider--
``(A) whether the assets sold to the securitizer
have terms, conditions, and characteristics that reflect
low credit risk;
``(B) whether the form or volume of transactions in
securitization markets creates incentives for imprudent
[[Page 124 STAT. 1894]]
origination of the type of loan or asset to be sold to
the securitizer; and
``(C) the potential impact of the risk retention
obligations on the access of consumers and businesses to
credit on reasonable terms, which may not include the
transfer of credit risk to a third party.
``(e) Exemptions, Exceptions, and Adjustments.--
``(1) In general.--The Federal banking agencies and the
Commission may jointly adopt or issue exemptions, exceptions, or
adjustments to the rules issued under this section, including
exemptions, exceptions, or adjustments for classes of
institutions or assets relating to the risk retention
requirement and the prohibition on hedging under subsection
(c)(1).
``(2) Applicable standards.--Any exemption, exception, or
adjustment adopted or issued by the Federal banking agencies and
the Commission under this paragraph shall--
``(A) help ensure high quality underwriting
standards for the securitizers and originators of assets
that are securitized or available for securitization;
and
``(B) encourage appropriate risk management
practices by the securitizers and originators of assets,
improve the access of consumers and businesses to credit
on reasonable terms, or otherwise be in the public
interest and for the protection of investors.
``(3) Certain institutions and programs exempt.--
``(A) Farm credit system institutions.--
Notwithstanding any other provision of this section, the
requirements of this section shall not apply to any loan
or other financial asset made, insured, guaranteed, or
purchased by any institution that is subject to the
supervision of the Farm Credit Administration, including
the Federal Agricultural Mortgage Corporation.
``(B) Other federal programs.--This section shall
not apply to any residential, multifamily, or health
care facility mortgage loan asset, or securitization
based directly or indirectly on such an asset, which is
insured or guaranteed by the United States or an agency
of the United States. For purposes of this subsection,
the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, and the Federal home
loan banks shall not be considered an agency of the
United States.
``(4) Exemption for qualified residential mortgages.--
``(A) <<NOTE: Regulations.>> In general.--The
Federal banking agencies, the Commission, the Secretary
of Housing and Urban Development, and the Director of
the Federal Housing Finance Agency shall jointly issue
regulations to exempt qualified residential mortgages
from the risk retention requirements of this subsection.
``(B) <<NOTE: Definition.>> Qualified residential
mortgage.--The Federal banking agencies, the Commission,
the Secretary of Housing and Urban Development, and the
Director of the Federal Housing Finance Agency shall
jointly define the term `qualified residential mortgage'
for purposes of this subsection, taking into
consideration underwriting and product features that
historical loan performance data indicate result in a
lower risk of default, such as--
[[Page 124 STAT. 1895]]
``(i) documentation and verification of the
financial resources relied upon to qualify the
mortgagor;
``(ii) standards with respect to--
``(I) the residual income of the
mortgagor after all monthly obligations;
``(II) the ratio of the housing
payments of the mortgagor to the monthly
income of the mortgagor;
``(III) the ratio of total monthly
installment payments of the mortgagor to
the income of the mortgagor;
``(iii) mitigating the potential for payment
shock on adjustable rate mortgages through product
features and underwriting standards;
``(iv) mortgage guarantee insurance or other
types of insurance or credit enhancement obtained
at the time of origination, to the extent such
insurance or credit enhancement reduces the risk
of default; and
``(v) prohibiting or restricting the use of
balloon payments, negative amortization,
prepayment penalties, interest-only payments, and
other features that have been demonstrated to
exhibit a higher risk of borrower default.
``(C) Limitation on definition.--The Federal banking
agencies, the Commission, the Secretary of Housing and
Urban Development, and the Director of the Federal
Housing Finance Agency in defining the term `qualified
residential mortgage', as required by subparagraph (B),
shall define that term to be no broader than the
definition `qualified mortgage' as the term is defined
under section 129C(c)(2) of the Truth in Lending Act, as
amended by the Consumer Financial Protection Act of
2010, and regulations adopted thereunder.
``(5) Condition for qualified residential mortgage
exemption.--The regulations issued under paragraph (4) shall
provide that an asset-backed security that is collateralized by
tranches of other asset-backed securities shall not be exempt
from the risk retention requirements of this subsection.
``(6) Certification.--The Commission shall require an issuer
to certify, for each issuance of an asset-backed security
collateralized exclusively by qualified residential mortgages,
that the issuer has evaluated the effectiveness of the internal
supervisory controls of the issuer with respect to the process
for ensuring that all assets that collateralize the asset-backed
security are qualified residential mortgages.
``(f) Enforcement.--The regulations issued under this section shall
be enforced by--
``(1) the appropriate Federal banking agency, with respect
to any securitizer that is an insured depository institution;
and
``(2) the Commission, with respect to any securitizer that
is not an insured depository institution.
``(g) Authority of Commission.--The authority of the Commission
under this section shall be in addition to the authority of the
Commission to otherwise enforce the securities laws.
``(h) Authority to Coordinate on Rulemaking.--The Chairperson of the
Financial Stability Oversight Council shall coordinate all joint
rulemaking required under this section.
[[Page 124 STAT. 1896]]
``(i) Effective Date of Regulations.--The regulations issued under
this section shall become effective--
``(1) with respect to securitizers and originators of asset-
backed securities backed by residential mortgages, 1 year after
the date on which final rules under this section are published
in the Federal Register; and
``(2) with respect to securitizers and originators of all
other classes of asset-backed securities, 2 years after the date
on which final rules under this section are published in the
Federal Register.''.
(c) Study on Risk Retention.--
(1) Study.--The Board of Governors of the Federal Reserve
System, in coordination and consultation with the Comptroller of
the Currency, the Director of the Office of Thrift Supervision,
the Chairperson of the Federal Deposit Insurance Corporation,
and the Securities and Exchange Commission shall conduct a study
of the combined impact on each individual class of asset-backed
security established under section 15G(c)(2) of the Securities
Exchange Act of 1934, as added by subsection (b), of--
(A) the new credit risk retention requirements
contained in the amendment made by subsection (b),
including the effect credit risk retention requirements
have on increasing the market for Federally subsidized
loans; and
(B) the Financial Accounting Statements 166 and 167
issued by the Financial Accounting Standards Board.
(2) Report.--Not later than 90 days after the date of
enactment of this Act, the Board of Governors of the Federal
Reserve System shall submit to Congress a report on the study
conducted under paragraph (1). Such report shall include
statutory and regulatory recommendations for eliminating any
negative impacts on the continued viability of the asset-backed
securitization markets and on the availability of credit for new
lending identified by the study conducted under paragraph (1).
SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES.
(a) Securities Exchange Act of 1934.--Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended--
(1) by striking ``(d) Each'' and inserting the following:
``(d) Supplementary and Periodic Information.--
``(1) In general.--Each'';
(2) in the third sentence, by inserting after ``securities
of each class'' the following: ``, other than any class of
asset-backed securities,''; and
(3) by adding at the end the following:
``(2) Asset-backed securities.--
``(A) Suspension of duty to file.--The Commission
may, by rule or regulation, provide for the suspension
or termination of the duty to file under this subsection
for any class of asset-backed security, on such terms
and conditions and for such period or periods as the
Commission deems necessary or appropriate in the public
interest or for the protection of investors.
``(B) Classification of issuers.--The Commission
may, for purposes of this subsection, classify issuers
and
[[Page 124 STAT. 1897]]
prescribe requirements appropriate for each class of
issuers of asset-backed securities.''.
(b) Securities Act of 1933.--Section 7 of the Securities Act of 1933
(15 U.S.C. 77g) is amended by adding at the end the following:
``(c) Disclosure Requirements.--
``(1) <<NOTE: Regulations.>> In general.--The Commission
shall adopt regulations under this subsection requiring each
issuer of an asset-backed security to disclose, for each tranche
or class of security, information regarding the assets backing
that security.
``(2) Content of regulations.--In adopting regulations under
this subsection, the Commission shall--
``(A) set standards for the format of the data
provided by issuers of an asset-backed security, which
shall, to the extent feasible, facilitate comparison of
such data across securities in similar types of asset
classes; and
``(B) require issuers of asset-backed securities, at
a minimum, to disclose asset-level or loan-level data,
if such data are necessary for investors to
independently perform due diligence, including--
``(i) data having unique identifiers relating
to loan brokers or originators;
``(ii) the nature and extent of the
compensation of the broker or originator of the
assets backing the security; and
``(iii) the amount of risk retention by the
originator and the securitizer of such assets.''.
SEC. 943. <<NOTE: 15 USC 78o-7 note.>> REPRESENTATIONS AND
WARRANTIES IN ASSET-BACKED OFFERINGS.
Not <<NOTE: Deadline. Regulations.>> later than 180 days after the
date of enactment of this Act, the Securities and Exchange Commission
shall prescribe regulations on the use of representations and warranties
in the market for asset-backed securities (as that term is defined in
section 3(a)(77) of the Securities Exchange Act of 1934, as added by
this subtitle) that--
(1) require each national recognized statistical rating
organization to include in any report accompanying a credit
rating a description of--
(A) the representations, warranties, and enforcement
mechanisms available to investors; and
(B) how they differ from the representations,
warranties, and enforcement mechanisms in issuances of
similar securities; and
(2) require any securitizer (as that term is defined in
section 15G(a) of the Securities Exchange Act of 1934, as added
by this subtitle) to disclose fulfilled and unfulfilled
repurchase requests across all trusts aggregated by the
securitizer, so that investors may identify asset originators
with clear underwriting deficiencies.
SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) Exemption Eliminated.--Section 4 of the Securities Act of 1933
(15 U.S.C. 77d) is amended--
(1) by striking paragraph (5); and
(2) by striking ``(6) transactions'' and inserting the
following:
[[Page 124 STAT. 1898]]
``(5) transactions''.
(b) Conforming Amendment.--Section 3(a)(4)(B)(vii)(I) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is
amended by striking ``4(6)'' and inserting ``4(5)''.
SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSET-BACKED
SECURITIES ISSUES.
Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as amended
by this subtitle, is amended by adding at the end the following:
``(d) <<NOTE: Deadline. Regulations.>> Registration Statement for
Asset-backed Securities.--Not later than 180 days after the date of
enactment of this subsection, the Commission shall issue rules relating
to the registration statement required to be filed by any issuer of an
asset-backed security (as that term is defined in section 3(a)(77) of
the Securities Exchange Act of 1934) that require any issuer of an
asset-backed security--
``(1) to perform a review of the assets underlying the
asset-backed security; and
``(2) to disclose the nature of the review under paragraph
(1).''.
SEC. 946. STUDY ON THE MACROECONOMIC EFFECTS OF RISK RETENTION
REQUIREMENTS.
(a) Study Required.--The Chairman of the Financial Services
Oversight Council shall carry out a study on the macroeconomic effects
of the risk retention requirements under this subtitle, and the
amendments made by this subtitle, with emphasis placed on potential
beneficial effects with respect to stabilizing the real estate market.
Such study shall include--
(1) an analysis of the effects of risk retention on real
estate asset price bubbles, including a retrospective estimate
of what fraction of real estate losses may have been averted had
such requirements been in force in recent years;
(2) an analysis of the feasibility of minimizing real estate
price bubbles by proactively adjusting the percentage of risk
retention that must be borne by creditors and securitizers of
real estate debt, as a function of regional or national market
conditions;
(3) a comparable analysis for proactively adjusting mortgage
origination requirements;
(4) an assessment of whether such proactive adjustments
should be made by an independent regulator, or in a formulaic
and transparent manner;
(5) an assessment of whether such adjustments should take
place independently or in concert with monetary policy; and
(6) recommendations for implementation and enabling
legislation.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of the enactment of this title, the Chairman of the
Financial Services Oversight Council shall issue a report to the
Congress containing any findings and determinations made in carrying out
the study required under subsection (a).
[[Page 124 STAT. 1899]]
Subtitle E--Accountability and Executive Compensation
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 14 (15 U.S.C. 78n) the following:
``SEC. 14A. <<NOTE: 15 USC 78n-1.>> SHAREHOLDER APPROVAL OF
EXECUTIVE COMPENSATION.
``(a) <<NOTE: Deadlines.>> Separate Resolution Required.--
``(1) In general.--Not less frequently than once every 3
years, a proxy or consent or authorization for an annual or
other meeting of the shareholders for which the proxy
solicitation rules of the Commission require compensation
disclosure shall include a separate resolution subject to
shareholder vote to approve the compensation of executives, as
disclosed pursuant to section 229.402 of title 17, Code of
Federal Regulations, or any successor thereto.
``(2) Frequency of vote.--Not less frequently than once
every 6 years, a proxy or consent or authorization for an annual
or other meeting of the shareholders for which the proxy
solicitation rules of the Commission require compensation
disclosure shall include a separate resolution subject to
shareholder vote to determine whether votes on the resolutions
required under paragraph (1) will occur every 1, 2, or 3 years.
``(3) Effective date.--The proxy or consent or authorization
for the first annual or other meeting of the shareholders
occurring after the end of the 6-month period beginning on the
date of enactment of this section shall include--
``(A) the resolution described in paragraph (1); and
``(B) a separate resolution subject to shareholder
vote to determine whether votes on the resolutions
required under paragraph (1) will occur every 1, 2, or 3
years.
``(b) Shareholder Approval of Golden Parachute Compensation.--
``(1) Disclosure.-- <<NOTE: Regulations.>> In any proxy or
consent solicitation material (the solicitation of which is
subject to the rules of the Commission pursuant to subsection
(a)) for a meeting of the shareholders occurring after the end
of the 6-month period beginning on the date of enactment of this
section, at which shareholders are asked to approve an
acquisition, merger, consolidation, or proposed sale or other
disposition of all or substantially all the assets of an issuer,
the person making such solicitation shall disclose in the proxy
or consent solicitation material, in a clear and simple form in
accordance with regulations to be promulgated by the Commission,
any agreements or understandings that such person has with any
named executive officers of such issuer (or of the acquiring
issuer, if such issuer is not the acquiring issuer) concerning
any type of compensation (whether present, deferred, or
contingent) that is based on or otherwise relates to the
acquisition, merger, consolidation, sale, or other disposition
of all or substantially all of the assets of the issuer and the
aggregate total of all such compensation that may (and the
conditions upon which
[[Page 124 STAT. 1900]]
it may) be paid or become payable to or on behalf of such
executive officer.
``(2) Shareholder approval.--Any proxy or consent or
authorization relating to the proxy or consent solicitation
material containing the disclosure required by paragraph (1)
shall include a separate resolution subject to shareholder vote
to approve such agreements or understandings and compensation as
disclosed, unless such agreements or understandings have been
subject to a shareholder vote under subsection (a).
``(c) Rule of Construction.--The shareholder vote referred to in
subsections (a) and (b) shall not be binding on the issuer or the board
of directors of an issuer, and may not be construed--
``(1) as overruling a decision by such issuer or board of
directors;
``(2) to create or imply any change to the fiduciary duties
of such issuer or board of directors;
``(3) to create or imply any additional fiduciary duties for
such issuer or board of directors; or
``(4) to restrict or limit the ability of shareholders to
make proposals for inclusion in proxy materials related to
executive compensation.
``(d) Disclosure of Votes.-- <<NOTE: Reports. Deadline.>> Every
institutional investment manager subject to section 13(f) shall report
at least annually how it voted on any shareholder vote pursuant to
subsections (a) and (b), unless such vote is otherwise required to be
reported publicly by rule or regulation of the Commission.
``(e) Exemption.--The Commission may, by rule or order, exempt an
issuer or class of issuers from the requirement under subsection (a) or
(b). In determining whether to make an exemption under this subsection,
the Commission shall take into account, among other considerations,
whether the requirements under subsections (a) and (b)
disproportionately burdens small issuers.''.
SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78
et seq.) is amended by inserting after section 10B, as added by section
753, the following:
``SEC. 10C. <<NOTE: 15 USC 78j-3.>> COMPENSATION COMMITTEES.
``(a) Independence of Compensation Committees.--
``(1) <<NOTE: Regulations.>> Listing standards.--The
Commission shall, by rule, direct the national securities
exchanges and national securities associations to prohibit the
listing of any equity security of an issuer, other than an
issuer that is a controlled company, limited partnership,
company in bankruptcy proceedings, open-ended management
investment company that is registered under the Investment
Company Act of 1940, or a foreign private issuer that provides
annual disclosures to shareholders of the reasons that the
foreign private issuer does not have an independent compensation
committee, that does not comply with the requirements of this
subsection.
``(2) Independence of compensation committees.--The rules of
the Commission under paragraph (1) shall require that each
member of the compensation committee of the board of directors
of an issuer be--
``(A) a member of the board of directors of the
issuer; and
``(B) independent.
[[Page 124 STAT. 1901]]
``(3) Independence.--The rules of the Commission under
paragraph (1) shall require that, in determining the definition
of the term `independence' for purposes of paragraph (2), the
national securities exchanges and the national securities
associations shall consider relevant factors, including--
``(A) the source of compensation of a member of the
board of directors of an issuer, including any
consulting, advisory, or other compensatory fee paid by
the issuer to such member of the board of directors; and
``(B) whether a member of the board of directors of
an issuer is affiliated with the issuer, a subsidiary of
the issuer, or an affiliate of a subsidiary of the
issuer.
``(4) Exemption authority.--The rules of the Commission
under paragraph (1) shall permit a national securities exchange
or a national securities association to exempt a particular
relationship from the requirements of paragraph (2), with
respect to the members of a compensation committee, as the
national securities exchange or national securities association
determines is appropriate, taking into consideration the size of
an issuer and any other relevant factors.
``(b) Independence of Compensation Consultants and Other
Compensation Committee Advisers.--
``(1) In general.--The compensation committee of an issuer
may only select a compensation consultant, legal counsel, or
other adviser to the compensation committee after taking into
consideration the factors identified by the Commission under
paragraph (2).
``(2) Rules.--The Commission shall identify factors that
affect the independence of a compensation consultant, legal
counsel, or other adviser to a compensation committee of an
issuer. Such factors shall be competitively neutral among
categories of consultants, legal counsel, or other advisers and
preserve the ability of compensation committees to retain the
services of members of any such category, and shall include--
``(A) the provision of other services to the issuer
by the person that employs the compensation consultant,
legal counsel, or other adviser;
``(B) the amount of fees received from the issuer by
the person that employs the compensation consultant,
legal counsel, or other adviser, as a percentage of the
total revenue of the person that employs the
compensation consultant, legal counsel, or other
adviser;
``(C) the policies and procedures of the person that
employs the compensation consultant, legal counsel, or
other adviser that are designed to prevent conflicts of
interest;
``(D) any business or personal relationship of the
compensation consultant, legal counsel, or other adviser
with a member of the compensation committee; and
``(E) any stock of the issuer owned by the
compensation consultant, legal counsel, or other
adviser.
``(c) Compensation Committee Authority Relating to Compensation
Consultants.--
``(1) Authority to retain compensation consultant.--
[[Page 124 STAT. 1902]]
``(A) In general.--The compensation committee of an
issuer, in its capacity as a committee of the board of
directors, may, in its sole discretion, retain or obtain
the advice of a compensation consultant.
``(B) Direct responsibility of compensation
committee.--The compensation committee of an issuer
shall be directly responsible for the appointment,
compensation, and oversight of the work of a
compensation consultant.
``(C) Rule of construction.--This paragraph may not
be construed--
``(i) to require the compensation committee to
implement or act consistently with the advice or
recommendations of the compensation consultant; or
``(ii) to affect the ability or obligation of
a compensation committee to exercise its own
judgment in fulfillment of the duties of the
compensation committee.
``(2) Disclosure.--In any proxy or consent solicitation
material for an annual meeting of the shareholders (or a special
meeting in lieu of the annual meeting) occurring on or after the
date that is 1 year after the date of enactment of this section,
each issuer shall disclose in the proxy or consent material, in
accordance with regulations of the Commission, whether--
``(A) the compensation committee of the issuer
retained or obtained the advice of a compensation
consultant; and
``(B) the work of the compensation consultant has
raised any conflict of interest and, if so, the nature
of the conflict and how the conflict is being addressed.
``(d) Authority To Engage Independent Legal Counsel and Other
Advisers.--
``(1) In general.--The compensation committee of an issuer,
in its capacity as a committee of the board of directors, may,
in its sole discretion, retain and obtain the advice of
independent legal counsel and other advisers.
``(2) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly
responsible for the appointment, compensation, and oversight of
the work of independent legal counsel and other advisers.
``(3) Rule of construction.--This subsection may not be
construed--
``(A) to require a compensation committee to
implement or act consistently with the advice or
recommendations of independent legal counsel or other
advisers under this subsection; or
``(B) to affect the ability or obligation of a
compensation committee to exercise its own judgment in
fulfillment of the duties of the compensation committee.
``(e) Compensation of Compensation Consultants, Independent Legal
Counsel, and Other Advisers.--Each issuer shall provide for appropriate
funding, as determined by the compensation committee in its capacity as
a committee of the board of directors, for payment of reasonable
compensation--
``(1) to a compensation consultant; and
``(2) to independent legal counsel or any other adviser to
the compensation committee.
[[Page 124 STAT. 1903]]
``(f) Commission Rules.--
``(1) In general.-- <<NOTE: Deadline.>> Not later than 360
days after the date of enactment of this section, the Commission
shall, by rule, direct the national securities exchanges and
national securities associations to prohibit the listing of any
security of an issuer that is not in compliance with the
requirements of this section.
``(2) <<NOTE: Procedures.>> Opportunity to cure defects.--
The rules of the Commission under paragraph (1) shall provide
for appropriate procedures for an issuer to have a reasonable
opportunity to cure any defects that would be the basis for the
prohibition under paragraph (1), before the imposition of such
prohibition.
``(3) Exemption authority.--
``(A) In general.--The rules of the Commission under
paragraph (1) shall permit a national securities
exchange or a national securities association to exempt
a category of issuers from the requirements under this
section, as the national securities exchange or the
national securities association determines is
appropriate.
``(B) Considerations.--In determining appropriate
exemptions under subparagraph (A), the national
securities exchange or the national securities
association shall take into account the potential impact
of the requirements of this section on smaller reporting
issuers.
``(g) Controlled Company Exemption.--
``(1) In general.--This section shall not apply to any
controlled company.
``(2) Definition.--For purposes of this section, the term
`controlled company' means an issuer--
``(A) that is listed on a national securities
exchange or by a national securities association; and
``(B) that holds an election for the board of
directors of the issuer in which more than 50 percent of
the voting power is held by an individual, a group, or
another issuer.''.
(b) Study and Report.--
(1) Study.--The Securities and Exchange Commission shall
conduct a study and review of the use of compensation
consultants and the effects of such use.
(2) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit a report to
Congress on the results of the study and review required by this
subsection.
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.
(a) Disclosure of Pay Versus Performance.--Section 14 of the
Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended by this
title, is amended by adding at the end the following:
``(i) <<NOTE: Regulations.>> Disclosure of Pay Versus
Performance.--The Commission shall, by rule, require each issuer to
disclose in any proxy or consent solicitation material for an annual
meeting of the shareholders of the issuer a clear description of any
compensation required to be disclosed by the issuer under section
229.402 of title 17, Code of Federal Regulations (or any successor
thereto), including information that shows the relationship between
executive compensation actually paid and the financial performance of
the issuer, taking into account any change in the value of the shares of
stock and dividends of the issuer and any distributions. The
[[Page 124 STAT. 1904]]
disclosure under this subsection may include a graphic representation of
the information required to be disclosed.''.
(b) <<NOTE: 15 USC 78l note.>> Additional Disclosure
Requirements.--
(1) In general.-- <<NOTE: Regulations.>> The Commission
shall amend section 229.402 of title 17, Code of Federal
Regulations, to require each issuer to disclose in any filing of
the issuer described in section 229.10(a) of title 17, Code of
Federal Regulations (or any successor thereto)--
(A) the median of the annual total compensation of
all employees of the issuer, except the chief executive
officer (or any equivalent position) of the issuer;
(B) the annual total compensation of the chief
executive officer (or any equivalent position) of the
issuer; and
(C) the ratio of the amount described in
subparagraph (A) to the amount described in subparagraph
(B).
(2) Total compensation.--For purposes of this subsection,
the total compensation of an employee of an issuer shall be
determined in accordance with section 229.402(c)(2)(x) of title
17, Code of Federal Regulations, as in effect on the day before
the date of enactment of this Act.
SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
The Securities Exchange Act of 1934 is amended by inserting after
section 10C, as added by section 952, the following:
``SEC. 10D. <<NOTE: 15 USC 78j-4.>> RECOVERY OF ERRONEOUSLY
AWARDED COMPENSATION POLICY.
``(a) Listing Standards.-- <<NOTE: Regulations.>> The Commission
shall, by rule, direct the national securities exchanges and national
securities associations to prohibit the listing of any security of an
issuer that does not comply with the requirements of this section.
``(b) Recovery of Funds.--The rules of the Commission under
subsection (a) shall require each issuer to develop and implement a
policy providing--
``(1) for disclosure of the policy of the issuer on
incentive-based compensation that is based on financial
information required to be reported under the securities laws;
and
``(2) that, in the event that the issuer is required to
prepare an accounting restatement due to the material
noncompliance of the issuer with any financial reporting
requirement under the securities laws, the issuer will recover
from any current or former executive officer of the issuer who
received incentive-based compensation (including stock options
awarded as compensation) during the 3-year period preceding the
date on which the issuer is required to prepare an accounting
restatement, based on the erroneous data, in excess of what
would have been paid to the executive officer under the
accounting restatement.''.
SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR HEDGING.
Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n),
as amended by this title, is amended by adding at the end the following:
``(j) Disclosure of Hedging by Employees and Directors.--
The <<NOTE: Regulations.>> Commission shall, by rule, require each
issuer to disclose in any proxy or consent solicitation material for an
annual meeting of the shareholders of the issuer whether any employee or
member
[[Page 124 STAT. 1905]]
of the board of directors of the issuer, or any designee of such
employee or member, is permitted to purchase financial instruments
(including prepaid variable forward contracts, equity swaps, collars,
and exchange funds) that are designed to hedge or offset any decrease in
the market value of equity securities--
``(1) granted to the employee or member of the board of
directors by the issuer as part of the compensation of the
employee or member of the board of directors; or
``(2) held, directly or indirectly, by the employee or
member of the board of directors.''.
SEC. 956. <<NOTE: 12 USC 5641.>> ENHANCED COMPENSATION STRUCTURE
REPORTING.
(a) Enhanced Disclosure and Reporting of Compensation
Arrangements.--
(1) In general.-- <<NOTE: Deadline. Regulations.>> Not later
than 9 months after the date of enactment of this title, the
appropriate Federal regulators jointly shall prescribe
regulations or guidelines to require each covered financial
institution to disclose to the appropriate Federal regulator the
structures of all incentive-based compensation arrangements
offered by such covered financial institutions sufficient to
determine whether the compensation structure--
(A) provides an executive officer, employee,
director, or principal shareholder of the covered
financial institution with excessive compensation, fees,
or benefits; or
(B) could lead to material financial loss to the
covered financial institution.
(2) Rules of construction.--Nothing in this section shall be
construed as requiring the reporting of the actual compensation
of particular individuals. Nothing in this section shall be
construed to require a covered financial institution that does
not have an incentive-based payment arrangement to make the
disclosures required under this subsection.
(b) Prohibition on Certain Compensation
Arrangements. <<NOTE: Deadline. Regulations.>> --Not later than 9 months
after the date of enactment of this title, the appropriate Federal
regulators shall jointly prescribe regulations or guidelines that
prohibit any types of incentive-based payment arrangement, or any
feature of any such arrangement, that the regulators determine
encourages inappropriate risks by covered financial institutions--
(1) by providing an executive officer, employee, director,
or principal shareholder of the covered financial institution
with excessive compensation, fees, or benefits; or
(2) that could lead to material financial loss to the
covered financial institution.
(c) Standards.--The appropriate Federal regulators shall--
(1) ensure that any standards for compensation established
under subsections (a) or (b) are comparable to the standards
established under section of the Federal Deposit Insurance Act
(12 U.S.C. 2 1831p-1) for insured depository institutions; and
(2) in establishing such standards under such subsections,
take into consideration the compensation standards described in
section 39(c) of the Federal Deposit Insurance Act (12 U.S.C.
1831p- 9 1(c)).
(d) Enforcement.--The provisions of this section and the regulations
issued under this section shall be enforced under section
[[Page 124 STAT. 1906]]
505 of the Gramm-Leach-Bliley Act and, for purposes of such section, a
violation of this section or such regulations shall be treated as a
violation of subtitle A of title V of such Act.
(e) Definitions.--As used in this section--
(1) the term ``appropriate Federal regulator'' means the
Board of Governors of the Federal Reserve System, the Office of
the Comptroller of the Currency, the Board of Directors of the
Federal Deposit Insurance Corporation, the Director of the
Office of Thrift Supervision, the National Credit Union
Administration Board, the Securities and Exchange Commission,
the Federal Housing Finance Agency; and
(2) the term ``covered financial institution'' means--
(A) a depository institution or depository
institution holding company, as such terms are defined
in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813);
(B) a broker-dealer registered under section 15 of
the Securities Exchange Act of 1934 (15 U.S.C. 78o);
(C) a credit union, as described in section
19(b)(1)(A)(iv) of the Federal Reserve Act;
(D) an investment advisor, as such term is defined
in section 202(a)(11) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(11));
(E) the Federal National Mortgage Association;
(F) the Federal Home Loan Mortgage Corporation; and
(G) any other financial institution that the
appropriate Federal regulators, jointly, by rule,
determine should be treated as a covered financial
institution for purposes of this section.
(f) Exemption for Certain Financial Institutions.--The requirements
of this section shall not apply to covered financial institutions with
assets of less than $1,000,000,000.
SEC. 957. VOTING BY BROKERS.
Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(b)) is amended--
(1) in paragraph (9)--
(A) in subparagraph (A), by redesignating clauses
(i) through (v) as subclauses (I) through (V),
respectively, and adjusting the margins accordingly;
(B) by redesignating subparagraphs (A) through (D)
as clauses (i) through (iv), respectively, and adjusting
the margins accordingly;
(C) by inserting ``(A)'' after ``(9)''; and
(D) in the matter immediately following clause (iv),
as so redesignated, by striking ``As used'' and
inserting the following:
``(B) As used''.
(2) by adding at the end the following:
``(10)(A) The rules of the exchange prohibit any member that
is not the beneficial owner of a security registered under
section 12 from granting a proxy to vote the security in
connection with a shareholder vote described in subparagraph
(B), unless the beneficial owner of the security has instructed
the member to vote the proxy in accordance with the voting
instructions of the beneficial owner.
``(B) A shareholder vote described in this subparagraph is a
shareholder vote with respect to the election of a member
[[Page 124 STAT. 1907]]
of the board of directors of an issuer, executive compensation,
or any other significant matter, as determined by the
Commission, by rule, and does not include a vote with respect to
the uncontested election of a member of the board of directors
of any investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80b-1 et seq.).
``(C) Nothing in this paragraph shall be construed to
prohibit a national securities exchange from prohibiting a
member that is not the beneficial owner of a security registered
under section 12 from granting a proxy to vote the security in
connection with a shareholder vote not described in subparagraph
(A).''.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
SEC. 961. <<NOTE: 15 USC 78d-6.>> REPORT AND CERTIFICATION OF
INTERNAL SUPERVISORY CONTROLS.
(a) Annual Reports and Certification.--Not later than 90 days after
the end of each fiscal year, the Commission shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives on the
conduct by the Commission of examinations of registered entities,
enforcement investigations, and review of corporate financial securities
filings.
(b) Contents of Reports.--Each report under subsection (a) shall
contain--
(1) an assessment, as of the end of the most recent fiscal
year, of the effectiveness of--
(A) the internal supervisory controls of the
Commission; and
(B) the procedures of the Commission applicable to
the staff of the Commission who perform examinations of
registered entities, enforcement investigations, and
reviews of corporate financial securities filings;
(2) a certification that the Commission has adequate
internal supervisory controls to carry out the duties of the
Commission described in paragraph (1)(B); and
(3) a summary by the Comptroller General of the United
States of the review carried out under subsection (d).
(c) Certification.--
(1) Signature.--The certification under subsection (b)(2)
shall be signed by the Director of the Division of Enforcement,
the Director of the Division of Corporation Finance, and the
Director of the Office of Compliance Inspections and
Examinations (or the head of any successor division or office).
(2) Content of certification.--Each individual described in
paragraph (1) shall certify that the individual--
(A) is directly responsible for establishing and
maintaining the internal supervisory controls of the
Division or Office of which the individual is the head;
(B) is knowledgeable about the internal supervisory
controls of the Division or Office of which the
individual is the head;
[[Page 124 STAT. 1908]]
(C) <<NOTE: Time period.>> has evaluated the
effectiveness of the internal supervisory controls
during the 90-day period ending on the final day of the
fiscal year to which the report relates; and
(D) has disclosed to the Commission any significant
deficiencies in the design or operation of internal
supervisory controls that could adversely affect the
ability of the Division or Office to consistently
conduct inspections, or investigations, or reviews of
filings with professional competence and integrity.
(d) New Director or Acting Director.-- <<NOTE: Time
period.>> Notwithstanding subsection (a), if the Director of the
Division of Enforcement, the Director of the Division of Corporate
Finance, or the Director of the Office of Compliance Inspections and
Examinations has served as Director of the Division or Office for less
than 90 days on the date on which a report is required to be submitted
under subsection (a), the Commission may submit the report on the date
on which the Director has served as Director for 90 days. If there is no
Director of the Division of Enforcement, the Division of Corporate
Finance, or the Office of Compliance Inspections and Examinations, on
the date on which a report is required to be submitted under subsection
(a), the Acting Director of the Division or Office may make the
certification required under subsection (c).
(e) Review by the Comptroller General.--
(1) Report.--The Comptroller General of the United States
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of
the House of Representatives a report that contains a review of
the adequacy and effectiveness of the internal supervisory
control structure and procedures described in subsection (b)(1),
not less frequently than once every 3 years, at a time to
coincide with the publication of the reports of the Commission
under this section.
(2) Authority to hire experts.--The Comptroller General of
the United States may hire independent consultants with
specialized expertise in any area relevant to the duties of the
Comptroller General described in this section, in order to
assist the Comptroller General in carrying out such duties.
SEC. 962. <<NOTE: 15 USC 78d-7.>> TRIENNIAL REPORT ON PERSONNEL
MANAGEMENT.
(a) Triennial Report Required.--Once every 3 years, the Comptroller
General of the United States shall submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives on the quality of
personnel management by the Commission.
(b) Contents of Report.--Each report under subsection (a) shall
include--
(1) an evaluation of--
(A) the effectiveness of supervisors in using the
skills, talents, and motivation of the employees of the
Commission to achieve the goals of the Commission;
(B) the criteria for promoting employees of the
Commission to supervisory positions;
(C) the fairness of the application of the promotion
criteria to the decisions of the Commission;
[[Page 124 STAT. 1909]]
(D) the competence of the professional staff of the
Commission;
(E) the efficiency of communication between the
units of the Commission regarding the work of the
Commission (including communication between divisions
and between subunits of a division) and the efforts by
the Commission to promote such communication;
(F) the turnover within subunits of the Commission,
including the consideration of supervisors whose
subordinates have an unusually high rate of turnover;
(G) whether there are excessive numbers of low-
level, mid-level, or senior-level managers;
(H) any initiatives of the Commission that increase
the competence of the staff of the Commission;
(I) the actions taken by the Commission regarding
employees of the Commission who have failed to perform
their duties and circumstances under which the
Commission has issued to employees a notice of
termination; and
(J) such other factors relating to the management of
the Commission as the Comptroller General determines are
appropriate;
(2) an evaluation of any improvements made with respect to
the areas described in paragraph (1) since the date of
submission of the previous report; and
(3) recommendations for how the Commission can use the human
resources of the Commission more effectively and efficiently to
carry out the mission of the Commission.
(c) Consultation.--In preparing the report under subsection (a), the
Comptroller General shall consult with current employees of the
Commission, retired employees and other former employees of the
Commission, the Inspector General of the Commission, persons that have
business before the Commission, any union representing the employees of
the Commission, private management consultants, academics, and any other
source that the Comptroller General deems appropriate.
(d) Report by Commission.--Not later than 90 days after the date on
which the Comptroller General submits each report under subsection (a),
the Commission shall submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of
the House of Representatives a report describing the actions taken by
the Commission in response to the recommendations contained in the
report under subsection (a).
(e) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under this section, as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
(f) Authority to Hire Experts.--The Comptroller General of the
United States may hire independent consultants with specialized
expertise in any area relevant to the duties of the Comptroller
[[Page 124 STAT. 1910]]
General described in this section, in order to assist the Comptroller
General in carrying out such duties.
SEC. 963. <<NOTE: 15 USC 78d-8.>> ANNUAL FINANCIAL CONTROLS AUDIT.
(a) Reports of Commission.--
(1) Annual reports required.--Not later than 6 months after
the end of each fiscal year, the Commission shall publish and
submit to Congress a report that--
(A) describes the responsibility of the management
of the Commission for establishing and maintaining an
adequate internal control structure and procedures for
financial reporting; and
(B) contains an assessment of the effectiveness of
the internal control structure and procedures for
financial reporting of the Commission during that fiscal
year.
(2) Attestation.--The reports required under paragraph (1)
shall be attested to by the Chairman and chief financial officer
of the Commission.
(b) Report by Comptroller General.--
(1) Report required.--Not later than 6 months after the end
of the first fiscal year after the date of enactment of this
Act, the Comptroller General of the United States shall submit a
report to Congress that assesses--
(A) the effectiveness of the internal control
structure and procedures of the Commission for financial
reporting; and
(B) the assessment of the Commission under
subsection (a)(1)(B).
(2) Attestation.--The Comptroller General shall attest to,
and report on, the assessment made by the Commission under
subsection (a).
(c) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under subsection (b), as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
SEC. 964. <<NOTE: 15 USC 78d-9.>> REPORT ON OVERSIGHT OF NATIONAL
SECURITIES ASSOCIATIONS.
(a) Report Required.--Not later than 2 years after the date of
enactment of this Act, and every 3 years thereafter, the Comptroller
General of the United States shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that includes an
evaluation of the oversight by the Commission of national securities
associations registered under section 15A of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-3) with respect to--
(1) the governance of such national securities associations,
including the identification and management of conflicts of
interest by such national securities associations, together with
an analysis of the impact of any conflicts of interest on the
[[Page 124 STAT. 1911]]
regulatory enforcement or rulemaking by such national securities
associations;
(2) the examinations carried out by the national securities
associations, including the expertise of the examiners;
(3) the executive compensation practices of such national
securities associations;
(4) the arbitration services provided by the national
securities associations;
(5) the review performed by national securities associations
of advertising by the members of the national securities
associations;
(6) the cooperation with and assistance to State securities
administrators by the national securities associations to
promote investor protection;
(7) how the funding of national securities associations is
used to support the mission of the national securities
associations, including--
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national
securities association pending use; and
(D) the impact of the methods, sufficiency, and
investment of funds on regulatory enforcement by the
national securities associations;
(8) the policies regarding the employment of former
employees of national securities associations by regulated
entities;
(9) the ongoing effectiveness of the rules of the national
securities associations in achieving the goals of the rules;
(10) the transparency of governance and activities of the
national securities associations; and
(11) any other issue that has an impact, as determined by
the Comptroller General, on the effectiveness of such national
securities associations in performing their mission and in
dealing fairly with investors and members;
(b) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under subsection (a), as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
SEC. 965. COMPLIANCE EXAMINERS.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(h) Examiners.--
``(1) Division of trading and markets.--The Division of
Trading and Markets of the Commission, or any successor
organizational unit, shall have a staff of examiners who shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction of that
Division; and
``(B) report to the Director of that Division.
[[Page 124 STAT. 1912]]
``(2) Division of investment management.--The Division of
Investment Management of the Commission, or any successor
organizational unit, shall have a staff of examiners who shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction of that
Division; and
``(B) report to the Director of that Division.''.
SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 4C (15 U.S.C. 78d-3) the following:
``SEC. 4D. <<NOTE: 15 USC 78d-4.>> ADDITIONAL DUTIES OF INSPECTOR
GENERAL.
``(a) Suggestion Submissions by Commission Employees.--
``(1) Hotline established.--The Inspector General of the
Commission shall establish and maintain a telephone hotline or
other electronic means for the receipt of--
``(A) suggestions by employees of the Commission for
improvements in the work efficiency, effectiveness, and
productivity, and the use of the resources, of the
Commission; and
``(B) allegations by employees of the Commission of
waste, abuse, misconduct, or mismanagement within the
Commission.
``(2) Confidentiality.--The Inspector General shall maintain
as confidential--
``(A) the identity of any individual who provides
information by the means established under paragraph
(1), unless the individual requests otherwise, in
writing; and
``(B) at the request of any such individual, any
specific information provided by the individual.
``(b) Consideration of Reports.--The Inspector General shall
consider any suggestions or allegations received by the means
established under subsection (a)(1), and shall recommend appropriate
action in relation to such suggestions or allegations.
``(c) Recognition.--The Inspector General may recognize any employee
who makes a suggestion under subsection (a)(1) (or by other means) that
would or does--
``(1) increase the work efficiency, effectiveness, or
productivity of the Commission; or
``(2) reduce waste, abuse, misconduct, or mismanagement
within the Commission.
``(d) Report.--The Inspector General of the Commission shall submit
to Congress an annual report containing a description of--
``(1) the nature, number, and potential benefits of any
suggestions received under subsection (a);
``(2) the nature, number, and seriousness of any allegations
received under subsection (a);
``(3) any recommendations made or actions taken by the
Inspector General in response to substantiated allegations
received under subsection (a); and
``(4) any action the Commission has taken in response to
suggestions or allegations received under subsection (a).
``(e) Funding.--The activities of the Inspector General under this
subsection shall be funded by the Securities and Exchange
[[Page 124 STAT. 1913]]
Commission Investor Protection Fund established under section 21F.''.
SEC. 967. COMMISSION ORGANIZATIONAL STUDY AND REFORM.
(a) Study Required.--
(1) In general.-- <<NOTE: Deadline.>> Not later than the end
of the 90-day period beginning on the date of the enactment of
this subtitle, the Securities and Exchange Commission
(hereinafter in this section referred to as the ``SEC'') shall
hire an independent consultant of high caliber and with
expertise in organizational restructuring and the operations of
capital markets to examine the internal operations, structure,
funding, and the need for comprehensive reform of the SEC, as
well as the SEC's relationship with and the reliance on self-
regulatory organizations and other entities relevant to the
regulation of securities and the protection of securities
investors that are under the SEC's oversight.
(2) Specific areas for study.--The study required under
paragraph (1) shall, at a minimum, include the study of--
(A) the possible elimination of unnecessary or
redundant units at the SEC;
(B) improving communications between SEC offices and
divisions;
(C) the need to put in place a clear chain-of-
command structure, particularly for enforcement
examinations and compliance inspections;
(D) the effect of high-frequency trading and other
technological advances on the market and what the SEC
requires to monitor the effect of such trading and
advances on the market;
(E) the SEC's hiring authorities, workplace
policies, and personal practices, including--
(i) whether there is a need to further
streamline hiring authorities for those who are
not lawyers, accountants, compliance examiners, or
economists;
(ii) whether there is a need for further pay
reforms;
(iii) the diversity of skill sets of SEC
employees and whether the present skill set
diversity efficiently and effectively fosters the
SEC's mission of investor protection; and
(iv) the application of civil service laws by
the SEC;
(F) whether the SEC's oversight and reliance on
self-regulatory organizations promotes efficient and
effective governance for the securities markets; and
(G) whether adjusting the SEC's reliance on self-
regulatory organizations is necessary to promote more
efficient and effective governance for the securities
markets.
(b) Consultant Report.--Not later than the end of the 150-day period
after being retained, the independent consultant hired pursuant to
subsection (a)(1) shall issue a report to the SEC and the Congress
containing--
(1) a detailed description of any findings and conclusions
made while carrying out the study required under subsection
(a)(1); and
(2) recommendations for legislative, regulatory, or
administrative action that the consultant determines appropriate
to
[[Page 124 STAT. 1914]]
enable the SEC and other entities on which the consultant
reports to perform their statutorily or otherwise mandated
missions.
(c) SEC Report.--Not later than the end of the 6-month period
beginning on the date the consultant issues the report under subsection
(b), and every 6-months thereafter during the 2-year period following
the date on which the consultant issues such report, the SEC shall issue
a 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 SEC's implementation of the regulatory and
administrative recommendations contained in the consultant's report.
SEC. 968. STUDY ON SEC REVOLVING DOOR.
(a) Government Accountability Office Study.--The Comptroller General
of the United States shall conduct a study that will--
(1) review the number of employees who leave the Securities
and Exchange Commission to work for financial institutions
regulated by such Commission;
(2) determine how many employees who leave the Securities
and Exchange Commission worked on cases that involved financial
institutions regulated by such Commission;
(3) review the length of time employees work for the
Securities and Exchange Commission before leaving to be employed
by financial institutions regulated by such Commission;
(4) review existing internal controls and make
recommendations on strengthening such controls to ensure that
employees of the Securities and Exchange Commission who are
later employed by financial institutions did not assist such
institutions in violating any rules or regulations of the
Commission during the course of their employment with such
Commission;
(5) determine if greater post-employment restrictions are
necessary to prevent employees of the Securities and Exchange
Commission from being employed by financial institutions after
employment with such Commission;
(6) determine if the volume of employees of the Securities
and Exchange Commission who are later employed by financial
institutions has led to inefficiencies in enforcement;
(7) determine if employees of the Securities and Exchange
Commission who are later employed by financial institutions
assisted such institutions in circumventing Federal rules and
regulations while employed by such Commission;
(8) review any information that may address the volume of
employees of the Securities and Exchange Commission who are
later employed by financial institutions, and make
recommendations to Congress; and
(9) review other additional issues as may be raised during
the course of the study conducted under this subsection.
(b) Report.--Not later than 1 year after the date of the enactment
of this subtitle, the Comptroller General of the United States shall
submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban Affairs
of the Senate a report on the results of the study required by
subsection (a).
[[Page 124 STAT. 1915]]
Subtitle G--Strengthening Corporate Governance
SEC. 971. PROXY ACCESS.
(a) Proxy Access.--Section 14(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78n(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) The rules and regulations prescribed by the Commission under
paragraph (1) may include--
``(A) a requirement that a solicitation of proxy, consent,
or authorization by (or on behalf of) an issuer include a
nominee submitted by a shareholder to serve on the board of
directors of the issuer; and
``(B) a requirement that an issuer follow a certain
procedure in relation to a solicitation described in
subparagraph (A).''.
(b) <<NOTE: 15 USC 78n note.>> Regulations.--The Commission may
issue rules permitting the use by a shareholder of proxy solicitation
materials supplied by an issuer of securities for the purpose of
nominating individuals to membership on the board of directors of the
issuer, under such terms and conditions as the Commission determines are
in the interests of shareholders and for the protection of investors.
(c) <<NOTE: 15 USC 78n note.>> Exemptions.--The Commission may, by
rule or order, exempt an issuer or class of issuers from the requirement
made by this section or an amendment made by this section. In
determining whether to make an exemption under this subsection, the
Commission shall take into account, among other considerations, whether
the requirement in the amendment made by subsection (a)
disproportionately burdens small issuers.
SEC. 972. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.
The Securities Exchange Act of 1934 (15 U.S. C. 78a et seq.) is
amended by inserting after section 14A, as added by this title, the
following:
``SEC. 14B. <<NOTE: 15 USC 78n-2.>> CORPORATE GOVERNANCE.
`` <<NOTE: Deadline. Regulations.>> Not later than 180 days after
the date of enactment of this subsection, the Commission shall issue
rules that require an issuer to disclose in the annual proxy sent to
investors the reasons why the issuer has chosen--
``(1) the same person to serve as chairman of the board of
directors and chief executive officer (or in equivalent
positions); or
``(2) different individuals to serve as chairman of the
board of directors and chief executive officer (or in equivalent
positions of the issuer).''.
Subtitle H--Municipal Securities
SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO THE
BOARD OF THE MSRB.
(a) Registration of Municipal Securities Dealers and Municipal
Advisors.--Section 15B(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(a)) is amended--
[[Page 124 STAT. 1916]]
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(1)''; and
(B) by adding at the end the following:
``(B) It shall be unlawful for a municipal advisor
to provide advice to or on behalf of a municipal entity
or obligated person with respect to municipal financial
products or the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or
obligated person, unless the municipal advisor is
registered in accordance with this subsection.'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(3) in paragraph (3), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(4) in paragraph (4), by striking ``dealer, or municipal
securities dealer or class of brokers, dealers, or municipal
securities dealers'' and inserting ``dealer, municipal
securities dealer, or municipal advisor, or class of brokers,
dealers, municipal securities dealers, or municipal advisors'';
and
(5) by adding at the end the following:
``(5) No municipal advisor shall make use of the mails or
any means or instrumentality of interstate commerce to provide
advice to or on behalf of a municipal entity or obligated person
with respect to municipal financial products, the issuance of
municipal securities, or to undertake a solicitation of a
municipal entity or obligated person, in connection with which
such municipal advisor engages in any fraudulent, deceptive, or
manipulative act or practice.''.
(b) Municipal Securities Rulemaking Board.--Section 15B(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(b)) is amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking ``Not later
than'' and all that follows through ``appointed by the
Commission'' and inserting ``The Municipal Securities
Rulemaking Board shall be composed of 15 members, or
such other number of members as specified by rules of
the Board pursuant to paragraph (2)(B),'';
(B) by striking the second sentence and inserting
the following: ``The members of the Board shall serve as
members for a term of 3 years or for such other terms as
specified by rules of the Board pursuant to paragraph
(2)(B), and shall consist of (A) 8 individuals who are
independent of any municipal securities broker,
municipal securities dealer, or municipal advisor, at
least 1 of whom shall be representative of institutional
or retail investors in municipal securities, at least 1
of whom shall be representative of municipal entities,
and at least 1 of whom shall be a member of the public
with knowledge of or experience in the municipal
industry (which members are hereinafter referred to as
`public representatives'); and (B) 7 individuals who are
associated with a broker, dealer, municipal securities
dealer, or municipal advisor, including at least 1
individual who is associated with and representative of
brokers, dealers, or municipal securities dealers that
are not banks or subsidiaries or departments or
divisions of banks (which members are hereinafter
referred
[[Page 124 STAT. 1917]]
to as `broker-dealer representatives'), at least 1
individual who is associated with and representative of
municipal securities dealers which are banks or
subsidiaries or departments or divisions of banks (which
members are hereinafter referred to as `bank
representatives'), and at least 1 individual who is
associated with a municipal advisor (which members are
hereinafter referred to as `advisor representatives'
and, together with the broker-dealer representatives and
the bank representatives, are referred to as `regulated
representatives'). Each member of the board shall be
knowledgeable of matters related to the municipal
securities markets.''; and
(C) in the third sentence, by striking ``initial'';
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A)--
(i) by inserting before the period at the end
of the first sentence the following: ``and advice
provided to or on behalf of municipal entities or
obligated persons by brokers, dealers, municipal
securities dealers, and municipal advisors with
respect to municipal financial products, the
issuance of municipal securities, and
solicitations of municipal entities or obligated
persons undertaken by brokers, dealers, municipal
securities dealers, and municipal advisors''; and
(ii) by striking the second sentence;
(B) in subparagraph (A)--
(i) in the matter preceding clause (i)--
(I) by inserting ``, and no broker,
dealer, municipal securities dealer, or
municipal advisor shall provide advice
to or on behalf of a municipal entity or
obligated person with respect to
municipal financial products or the
issuance of municipal securities,''
after ``sale of, any municipal
security''; and
(II) by inserting ``and municipal
entities or obligated persons'' after
``protection of investors'';
(ii) in clause (i), by striking ``municipal
securities brokers and municipal securities
dealers'' each place that term appears and
inserting ``municipal securities brokers,
municipal securities dealers, and municipal
advisors'';
(iii) in clause (ii), by adding ``and'' at the
end;
(iv) in clause (iii), by striking ``; and''
and inserting a period; and
(v) by striking clause (iv);
(C) by amending subparagraph (B) to read as follows:
``(B) <<NOTE: Procedures.>> establish fair procedures for
the nomination and election of members of the Board and assure
fair representation in such nominations and elections of public
representatives, broker dealer representatives, bank
representatives, and advisor representatives. Such rules--
``(i) shall provide that the number of public
representatives of the Board shall at all times exceed
the total number of regulated representatives and that
the membership shall at all times be as evenly divided
in number as possible between public representatives and
regulated representatives;
[[Page 124 STAT. 1918]]
``(ii) shall specify the length or lengths of terms
members shall serve;
``(iii) may increase the number of members which
shall constitute the whole Board, provided that such
number is an odd number; and
``(iv) <<NOTE: Requirements.>> shall establish
requirements regarding the independence of public
representatives.''.
(D) in subparagraph (C)--
(i) by inserting ``and municipal financial
products'' after ``municipal securities'' the
first two times that term appears;
(ii) by inserting ``, municipal entities,
obligated persons,'' before ``and the public
interest'';
(iii) by striking ``between'' and inserting
``among'';
(iv) by striking ``issuers, municipal
securities brokers, or municipal securities
dealers, to fix'' and inserting ``municipal
entities, obligated persons, municipal securities
brokers, municipal securities dealers, or
municipal advisors, to fix''; and
(v) by striking ``brokers or municipal
securities dealers, to regulate'' and inserting
``brokers, municipal securities dealers, or
municipal advisors, to regulate'';
(E) in subparagraph (D)--
(i) by inserting ``and advice concerning
municipal financial products'' after
``transactions in municipal securities'';
(ii) by striking ``That no'' and inserting
``that no'';
(iii) by inserting ``municipal advisor,''
before ``or person associated''; and
(iv) by striking ``a municipal securities
broker or municipal securities dealer may be
compelled'' and inserting ``a municipal securities
broker, municipal securities dealer, or municipal
advisor may be compelled'';
(F) in subparagraph (E)--
(i) by striking ``municipal securities brokers
and municipal securities dealers'' and inserting
``municipal securities brokers, municipal
securities dealers, and municipal advisors''; and
(ii) by striking ``municipal securities broker
or municipal securities dealer'' and inserting
``municipal securities broker, municipal
securities dealer, or municipal advisor'';
(G) in subparagraph (G), by striking ``municipal
securities brokers and municipal securities dealers''
and inserting ``municipal securities brokers, municipal
securities dealers, and municipal advisors'';
(H) in subparagraph (J)--
(i) by striking ``municipal securities broker
and each municipal securities dealer'' and
inserting ``municipal securities broker, municipal
securities dealer, and municipal advisor''; and
(ii) by striking the period at the end of the
second sentence and inserting ``, which may
include charges for failure to submit to the
Board, or to any information system operated by
the Board, within the prescribed timeframes, any
items of information or documents
[[Page 124 STAT. 1919]]
required to be submitted under any rule issued by
the Board.'';
(I) in subparagraph (K)--
(i) by inserting ``broker, dealer, or'' before
``municipal securities dealer'' each place that
term appears; and
(ii) by striking ``municipal securities
investment portfolio'' and inserting ``related
account of a broker, dealer, or municipal
securities dealer''; and
(J) by adding at the end the following:
``(L) with respect to municipal advisors--
``(i) prescribe means reasonably designed to
prevent acts, practices, and courses of business
as are not consistent with a municipal advisor's
fiduciary duty to its clients;
``(ii) provide continuing education
requirements for municipal advisors;
``(iii) provide professional standards; and
``(iv) not impose a regulatory burden on small
municipal advisors that is not necessary or
appropriate in the public interest and for the
protection of investors, municipal entities, and
obligated persons, provided that there is robust
protection of investors against fraud.'';
(3) by redesignating paragraph (3) as paragraph (7); and
(4) by inserting after paragraph (2) the following:
``(3) The Board, in conjunction with or on behalf of any
Federal financial regulator or self-regulatory organization,
may--
``(A) establish information systems; and
``(B) assess such reasonable fees and charges for
the submission of information to, or the receipt of
information from, such systems from any persons which
systems may be developed for the purposes of serving as
a repository of information from municipal market
participants or otherwise in furtherance of the purposes
of the Board, a Federal financial regulator, or a self-
regulatory organization, except that the Board--
``(i) may not charge a fee to municipal
entities or obligated persons to submit documents
or other information to the Board or charge a fee
to any person to obtain, directly from the
Internet site of the Board, documents or
information submitted by municipal entities,
obligated persons, brokers, dealers, municipal
securities dealers, or municipal advisors,
including documents submitted under the rules of
the Board or the Commission; and
``(ii) shall not be prohibited from charging
commercially reasonable fees for automated
subscription-based feeds or similar services, or
for charging for other data or document-based
services customized upon request of any person,
made available to commercial enterprises,
municipal securities market professionals, or the
general public, whether delivered through the
Internet or any other means, that contain all or
part of the documents or information, subject to
approval of the fees by the Commission under
section 19(b).
[[Page 124 STAT. 1920]]
``(4) The Board may provide guidance and assistance in the
enforcement of, and examination for, compliance with the rules
of the Board to the Commission, a registered securities
association under section 15A, or any other appropriate
regulatory agency, as applicable.
``(5) The Board, the Commission, and a registered securities
association under section 15A, or the designees of the Board,
the Commission, or such association, shall meet not less
frequently than 2 times a year--
``(A) to describe the work of the Board, the
Commission, and the registered securities association
involving the regulation of municipal securities; and
``(B) to share information about--
``(i) the interpretation of the Board, the
Commission, and the registered securities
association of Board rules; and
``(ii) examination and enforcement of
compliance with Board rules.''.
(c) Discipline of Brokers, Dealers, Municipal Securities Dealers and
Municipal Advisors; Fiduciary Duty of Municipal Advisors.--Section
15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)) is
amended--
(1) in paragraph (1), by inserting ``, and no broker,
dealer, municipal securities dealer, or municipal advisor shall
make use of the mails or any means or instrumentality of
interstate commerce to provide advice to or on behalf of a
municipal entity or obligated person with respect to municipal
financial products, the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or obligated
person,'' after ``any municipal security'';
(2) by adding at the end of paragraph (1) the following: ``A
municipal advisor and any person associated with such municipal
advisor shall be deemed to have a fiduciary duty to any
municipal entity for whom such municipal advisor acts as a
municipal advisor, and no municipal advisor may engage in any
act, practice, or course of business which is not consistent
with a municipal advisor's fiduciary duty or that is in
contravention of any rule of the Board.''.
(3) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(4) in paragraph (3)--
(A) by inserting ``or municipal entities or
obligated person'' after ``protection of investors''
each place that term appears; and
(B) by inserting ``or municipal advisor'' after
``municipal securities dealer'' each place that term
appears;
(5) in paragraph (4), by inserting ``or municipal advisor''
after ``municipal securities dealer or obligated person'' each
place that term appears;
(6) in paragraph (6)(B), by inserting ``or municipal
entities or obligated person'' after ``protection of
investors'';
(7) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``; and'' and
inserting a semicolon;
(ii) in clause (ii), by striking the period
and inserting ``; and''; and
[[Page 124 STAT. 1921]]
(iii) by adding at the end the following:
``(iii) the Commission, or its designee, in
the case of municipal advisors.''.
(B) in subparagraph (B), by inserting ``or municipal
entities or obligated person'' after ``protection of
investors''; and
(8) by adding at the end the following:
``(9)(A) <<NOTE: Fines.>> Fines collected by the Commission
for violations of the rules of the Board shall be equally
divided between the Commission and the Board.
``(B) Fines collected by a registered securities association
under section 15A(7) with respect to violations of the rules of
the Board shall be accounted for by such registered securities
association separately from other fines collected under section
15A(7) and shall be allocated between such registered securities
association and the Board, and such allocation shall require the
registered securities association to pay to the Board \1/3\ of
all fines collected by the registered securities association
reasonably allocable to violations of the rules of the Board, or
such other portion of such fines as may be directed by the
Commission upon agreement between the registered securities
association and the Board.''.
(d) Issuance of Municipal Securities.--Section 15B(d)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)) is amended--
(1) by striking ``through a municipal securities broker or
municipal securities dealer or otherwise'' and inserting
``through a municipal securities broker, municipal securities
dealer, municipal advisor, or otherwise''; and
(2) by inserting ``or municipal advisors'' before ``to
furnish''.
(e) Definitions.--Section 15B of the Securities Exchange Act of 1934
(15 U.S.C. 78o-4) is amended by adding at the end the following:
``(e) Definitions.--For purposes of this section--
``(1) the term `Board' means the Municipal Securities
Rulemaking Board established under subsection (b)(1);
``(2) the term `guaranteed investment contract' includes any
investment that has specified withdrawal or reinvestment
provisions and a specifically negotiated or bid interest rate,
and also includes any agreement to supply investments on 2 or
more future dates, such as a forward supply contract;
``(3) the term `investment strategies' includes plans or
programs for the investment of the proceeds of municipal
securities that are not municipal derivatives, guaranteed
investment contracts, and the recommendation of and brokerage of
municipal escrow investments;
``(4) the term `municipal advisor'--
``(A) means a person (who is not a municipal entity
or an employee of a municipal entity) that--
``(i) provides advice to or on behalf of a
municipal entity or obligated person with respect
to municipal financial products or the issuance of
municipal securities, including advice with
respect to the structure, timing, terms, and other
similar matters concerning such financial products
or issues; or
``(ii) undertakes a solicitation of a
municipal entity;
[[Page 124 STAT. 1922]]
``(B) includes financial advisors, guaranteed
investment contract brokers, third-party marketers,
placement agents, solicitors, finders, and swap
advisors, if such persons are described in any of
clauses (i) through (iii) of subparagraph (A); and
``(C) does not include a broker, dealer, or
municipal securities dealer serving as an underwriter
(as defined in section 2(a)(11) of the Securities Act of
1933) (15 U.S.C. 77b(a)(11)), any investment adviser
registered under the Investment Advisers Act of 1940, or
persons associated with such investment advisers who are
providing investment advice, any commodity trading
advisor registered under the Commodity Exchange Act or
persons associated with a commodity trading advisor who
are providing advice related to swaps, attorneys
offering legal advice or providing services that are of
a traditional legal nature, or engineers providing
engineering advice;
``(5) the term `municipal financial product' means municipal
derivatives, guaranteed investment contracts, and investment
strategies;
``(6) the term `rules of the Board' means the rules proposed
and adopted by the Board under subsection (b)(2);
``(7) the term `person associated with a municipal advisor'
or `associated person of an advisor' means--
``(A) any partner, officer, director, or branch
manager of such municipal advisor (or any person
occupying a similar status or performing similar
functions);
``(B) any other employee of such municipal advisor
who is engaged in the management, direction,
supervision, or performance of any activities relating
to the provision of advice to or on behalf of a
municipal entity or obligated person with respect to
municipal financial products or the issuance of
municipal securities; and
``(C) any person directly or indirectly controlling,
controlled by, or under common control with such
municipal advisor;
``(8) the term `municipal entity' means any State, political
subdivision of a State, or municipal corporate instrumentality
of a State, including--
``(A) any agency, authority, or instrumentality of
the State, political subdivision, or municipal corporate
instrumentality;
``(B) any plan, program, or pool of assets sponsored
or established by the State, political subdivision, or
municipal corporate instrumentality or any agency,
authority, or instrumentality thereof; and
``(C) any other issuer of municipal securities;
``(9) the term `solicitation of a municipal entity or
obligated person' means a direct or indirect communication with
a municipal entity or obligated person made by a person, for
direct or indirect compensation, on behalf of a broker, dealer,
municipal securities dealer, municipal advisor, or investment
adviser (as defined in section 202 of the Investment Advisers
Act of 1940) that does not control, is not controlled by, or is
not under common control with the person undertaking such
solicitation for the purpose of obtaining or retaining an
engagement by a municipal entity or obligated person of a
broker, dealer,
[[Page 124 STAT. 1923]]
municipal securities dealer, or municipal advisor for or in
connection with municipal financial products, the issuance of
municipal securities, or of an investment adviser to provide
investment advisory services to or on behalf of a municipal
entity; and
``(10) the term `obligated person' means any person,
including an issuer of municipal securities, who is either
generally or through an enterprise, fund, or account of such
person, committed by contract or other arrangement to support
the payment of all or part of the obligations on the municipal
securities to be sold in an offering of municipal securities.''.
(f) Registered Securities Association.--Section 15A(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is amended by
adding at the end the following:
``(15) The rules of the association provide that the
association shall--
``(A) request guidance from the Municipal Securities
Rulemaking Board in interpretation of the rules of the
Municipal Securities Rulemaking Board; and
``(B) provide information to the Municipal
Securities Rulemaking Board about the enforcement
actions and examinations of the association under
section 15B(b)(2)(E), so that the Municipal Securities
Rulemaking Board may--
``(i) assist in such enforcement actions and
examinations; and
``(ii) evaluate the ongoing effectiveness of
the rules of the Board.''.
(g) Registration and Regulation of Brokers and Dealers.--Section 15
of the Securities Exchange Act of 1934 <<NOTE: 15 USC 78o.>> is
amended--
(1) in subsection (b)(4), by inserting ``municipal
advisor,'' after ``municipal securities dealer'' each place that
term appears; and
(2) in subsection (c), by inserting ``broker, dealer, or''
before ``municipal securities dealer'' each place that term
appears.
(h) Accounts and Records, Reports, Examinations of Exchanges,
Members, and Others.--Section 17(a)(1) of the Securities Exchange Act of
1934 <<NOTE: 15 USC 78q.>> is amended by inserting ``municipal
advisor,'' after ``municipal securities dealer''.
(i) <<NOTE: 15 USC 78o note.>> Effective Date.--This section, and
the amendments made by this section, shall take effect on October 1,
2010.
SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF INCREASED
DISCLOSURE TO INVESTORS.
(a) Study.--The Comptroller General of the United States shall
conduct a study and review of the disclosure required to be made by
issuers of municipal securities.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States shall--
(1) broadly describe--
(A) the size of the municipal securities markets and
the issuers and investors; and
(B) the disclosures provided by issuers to
investors;
(2) compare the amount, frequency, and quality of
disclosures that issuers of municipal securities are required by
law to provide for the benefit of municipal securities holders,
including the amount of and frequency of disclosures actually
[[Page 124 STAT. 1924]]
provided by issuers of municipal securities, with the amount of
and frequency of disclosures that issuers of corporate
securities provide for the benefit of corporate securities
holders, taking into account the differences between issuers of
municipal securities and issuers of corporate securities;
(3) evaluate the costs and benefits to various types of
issuers of municipal securities of requiring issuers of
municipal bonds to provide additional financial disclosures for
the benefit of investors;
(4) evaluate the potential benefit to investors from
additional financial disclosures by issuers of municipal bonds;
and
(5) make recommendations relating to disclosure requirements
for municipal issuers, including the advisability of the repeal
or retention of section 15B(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-4(d)) (commonly known as the ``Tower
Amendment'').
(c) Report.--Not later than 24 months after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report to Congress on the results of the study conducted under
subsection (a), including recommendations for how to improve disclosure
by issuers of municipal securities.
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE MUNICIPAL
SECURITIES MARKETS.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the municipal securities markets.
(b) Report.--Not later than 18 months after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report to the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House of
Representatives, with copies to the Special Committee on Aging of the
Senate and the Commission, on the results of the study conducted under
subsection (a), including--
(1) an analysis of the mechanisms for trading, quality of
trade executions, market transparency, trade reporting, price
discovery, settlement clearing, and credit enhancements;
(2) the needs of the markets and investors and the impact of
recent innovations;
(3) recommendations for how to improve the transparency,
efficiency, fairness, and liquidity of trading in the municipal
securities markets, including with reference to items listed in
paragraph (1); and
(4) potential uses of derivatives in the municipal
securities markets.
(c) Responses.-- <<NOTE: Deadline.>> Not later than 180 days after
receipt of the report required under subsection (b), the Commission
shall submit a response to the Committee on Banking, Housing, and Urban
Affairs of the Senate, and the Committee on Financial Services of the
House of Representatives, with a copy to the Special Committee on Aging
of the Senate, stating the actions the Commission has taken in response
to the recommendations contained in such report.
SEC. 978. FUNDING FOR GOVERNMENTAL ACCOUNTING STANDARDS BOARD.
(a) Amendment to the Securities Act of 1933.--Section 19 of the
Securities Act of 1933 (15 U.S.C. 77s), as amended by section 912, is
further amended by adding at the end the following:
[[Page 124 STAT. 1925]]
``(g) Funding for the GASB.--
``(1) In general.--The Commission may, subject to the
limitations imposed by section 15B of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4), require a national securities
association registered under the Securities Exchange Act of 1934
to establish--
``(A) a reasonable annual accounting support fee to
adequately fund the annual budget of the Governmental
Accounting Standards Board (referred to in this
subsection as the `GASB'); and
``(B) rules and procedures, in consultation with the
principal organizations representing State governors,
legislators, local elected officials, and State and
local finance officers, to provide for the equitable
allocation, assessment, and collection of the accounting
support fee established under subparagraph (A) from the
members of the association, and the remittance of all
such accounting support fees to the Financial Accounting
Foundation.
``(2) Annual budget.--For purposes of this subsection, the
annual budget of the GASB is the annual budget reviewed and
approved according to the internal procedures of the Financial
Accounting Foundation.
``(3) Use of funds.--Any fees or funds collected under this
subsection shall be used to support the efforts of the GASB to
establish standards of financial accounting and reporting
recognized as generally accepted accounting principles
applicable to State and local governments of the United States.
``(4) Limitation on fee.--The annual accounting support fees
collected under this subsection for a fiscal year shall not
exceed the recoverable annual budgeted expenses of the GASB
(which may include operating expenses, capital, and accrued
items).
``(5) Rules of construction.--
``(A) Fees not public monies.--Accounting support
fees collected under this subsection and other receipts
of the GASB shall not be considered public monies of the
United States.
``(B) Limitation on authority of the commission.--
Nothing in this subsection shall be construed to--
``(i) provide the Commission or any national
securities association direct or indirect
oversight of the budget or technical agenda of the
GASB; or
``(ii) affect the setting of generally
accepted accounting principles by the GASB.
``(C) Noninterference with states.--Nothing in this
subsection shall be construed to impair or limit the
authority of a State or local government to establish
accounting and financial reporting standards.''.
(b) Study of Funding for Governmental Accounting Standards Board.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that evaluates--
(A) the role and importance of the Governmental
Accounting Standards Board in the municipal securities
markets; and
(B) the manner and the level at which the
Governmental Accounting Standards Board has been funded.
[[Page 124 STAT. 1926]]
(2) Consultation.--In conducting the study required under
paragraph (1), the Comptroller General shall consult with the
principal organizations representing State governors,
legislators, local elected officials, and State and local
finance officers.
(3) Report.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report on the study required under paragraph
(1).
SEC. 979. <<NOTE: 15 USC 78o-4a.>> COMMISSION OFFICE OF MUNICIPAL
SECURITIES.
(a) <<NOTE: Establishment.>> In General.--There shall be in the
Commission an Office of Municipal Securities, which shall--
(1) administer the rules of the Commission with respect to
the practices of municipal securities brokers and dealers,
municipal securities advisors, municipal securities investors,
and municipal securities issuers; and
(2) coordinate with the Municipal Securities Rulemaking
Board for rulemaking and enforcement actions as required by law.
(b) Director of the Office.--The head of the Office of Municipal
Securities shall be the Director, who shall report to the Chairman.
(c) Staffing.--
(1) In general.--The Office of Municipal Securities shall be
staffed sufficiently to carry out the requirements of this
section.
(2) Requirement.--The staff of the Office of Municipal
Securities shall include individuals with knowledge of and
expertise in municipal finance.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN
AUTHORITIES.
(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7201(a)) is amended by adding at the end the following:
``(17) Foreign auditor oversight authority.--The term
`foreign auditor oversight authority' means any governmental
body or other entity empowered by a foreign government to
conduct inspections of public accounting firms or otherwise to
administer or enforce laws related to the regulation of public
accounting firms.''.
(b) Availability to Share Information.--Section 105(b)(5) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended by adding
at the end the following:
``(C) Availability to foreign oversight
authorities.--Without the loss of its status as
confidential and privileged in the hands of the Board,
all information referred to in subparagraph (A) that
relates to a public accounting firm that a foreign
government has empowered
[[Page 124 STAT. 1927]]
a foreign auditor oversight authority to inspect or
otherwise enforce laws with respect to, may, at the
discretion of the Board, be made available to the
foreign auditor oversight authority, if--
``(i) the Board finds that it is necessary to
accomplish the purposes of this Act or to protect
investors;
``(ii) the foreign auditor oversight authority
provides--
``(I) such assurances of
confidentiality as the Board may
request;
``(II) a description of the
applicable information systems and
controls of the foreign auditor
oversight authority; and
``(III) a description of the laws
and regulations of the foreign
government of the foreign auditor
oversight authority that are relevant to
information access; and
``(iii) the Board determines that it is
appropriate to share such information.''.
(c) Conforming Amendment.--Section 105(b)(5)(A) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by striking
``subparagraph (B)'' and inserting ``subparagraphs (B) and (C)''.
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.
(a) Definitions.--
(1) Definitions amended.--Title I of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7201 et seq.) is amended by adding at the end
the following new section:
``SEC. 110. <<NOTE: 15 USC 7220.>> DEFINITIONS.
``For the purposes of this title, the following definitions shall
apply:
``(1) Audit.--The term `audit' means an examination of the
financial statements, reports, documents, procedures, controls,
or notices of any issuer, broker, or dealer by an independent
public accounting firm in accordance with the rules of the Board
or the Commission, for the purpose of expressing an opinion on
the financial statements or providing an audit report.
``(2) Audit report.--The term `audit report' means a
document, report, notice, or other record--
``(A) prepared following an audit performed for
purposes of compliance by an issuer, broker, or dealer
with the requirements of the securities laws; and
``(B) in which a public accounting firm either--
``(i) sets forth the opinion of that firm
regarding a financial statement, report, notice,
or other document, procedures, or controls; or
``(ii) asserts that no such opinion can be
expressed.
``(3) Broker.--The term `broker' means a broker (as such
term is defined in section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial
statement is required to be certified by a registered public
accounting firm.
[[Page 124 STAT. 1928]]
``(4) Dealer.--The term `dealer' means a dealer (as such
term is defined in section 3(a)(5) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial
statement is required to be certified by a registered public
accounting firm.
``(5) Professional standards.--The term `professional
standards' means--
``(A) accounting principles that are--
``(i) established by the standard setting body
described in section 19(b) of the Securities Act
of 1933, as amended by this Act, or prescribed by
the Commission under section 19(a) of that Act (15
U.S.C. 17a(s)) or section 13(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78a(m)); and
``(ii) relevant to audit reports for
particular issuers, brokers, or dealers, or dealt
with in the quality control system of a particular
registered public accounting firm; and
``(B) auditing standards, standards for attestation
engagements, quality control policies and procedures,
ethical and competency standards, and independence
standards (including rules implementing title II) that
the Board or the Commission determines--
``(i) relate to the preparation or issuance of
audit reports for issuers, brokers, or dealers;
and
``(ii) are established or adopted by the Board
under section 103(a), or are promulgated as rules
of the Commission.
``(6) Self-regulatory organization.--The term `self-
regulatory organization' has the same meaning as in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).''.
(2) Conforming amendment.--Section 2(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in the matter
preceding paragraph (1), by striking ``In this'' and inserting
``Except as otherwise specifically provided in this Act, in
this''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7211) is amended--
(1) by striking ``issuers'' each place that term appears and
inserting ``issuers, brokers, and dealers''; and
(2) in subsection (a)--
(A) by striking ``public companies'' and inserting
``companies''; and
(B) by striking ``for companies the securities of
which are sold to, and held by and for, public
investors''.
(c) Registration With the Board.--Section 102 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7212) is amended--
(1) in subsection (a)--
(A) by striking ``Beginning 180'' and all that
follows through ``101(d), it'' and inserting ``It''; and
(B) by striking ``issuer'' and inserting ``issuer,
broker, or dealer'';
(2) in subsection (b)--
[[Page 124 STAT. 1929]]
(A) in paragraph (2)(A), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''; and
(B) by striking ``issuer'' each place that term
appears and inserting ``issuer, broker, or dealer''.
(d) Auditing and Independence.--Section 103(a) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7213(a)) is amended--
(1) in paragraph (1), by striking ``and such ethics
standards'' and inserting ``such ethics standards, and such
independence standards'';
(2) in paragraph (2)(A)(iii), by striking ``describe in each
audit report'' and inserting ``in each audit report for an
issuer, describe''; and
(3) in paragraph (2)(B)(i), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''.
(e) Inspections of Registered Public Accounting Firms.--
(1) Amendments.--Section 104(a) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7214(a)) is amended--
(A) by striking ``The Board shall'' and inserting
the following:
``(1) Inspections generally.--The Board shall''; and
(B) by adding at the end the following:
``(2) Inspections of audit reports for brokers and
dealers.--
``(A) The Board may, by rule, conduct and require a
program of inspection in accordance with paragraph (1),
on a basis to be determined by the Board, of registered
public accounting firms that provide one or more audit
reports for a broker or dealer. The Board, in
establishing such a program, may allow for
differentiation among classes of brokers and dealers, as
appropriate.
``(B) If the Board determines to establish a program
of inspection pursuant to subparagraph (A), the Board
shall consider in establishing any inspection schedules
whether differing schedules would be appropriate with
respect to registered public accounting firms that issue
audit reports only for one or more brokers or dealers
that do not receive, handle, or hold customer securities
or cash or are not a member of the Securities Investor
Protection Corporation.
``(C) Any rules of the Board pursuant to this
paragraph shall be subject to prior approval by the
Commission pursuant to section 107(b) before the rules
become effective, including an opportunity for public
notice and comment.
``(D) Notwithstanding anything to the contrary in
section 102 of this Act, a public accounting firm shall
not be required to register with the Board if the public
accounting firm is exempt from the inspection program
which may be established by the Board under subparagraph
(A).''.
(2) Conforming amendment.--Section 17(e)(1)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is
amended by striking ``registered public accounting firm'' and
inserting ``independent public accounting firm, or by a
registered public accounting firm if the firm is required to be
registered under the Sarbanes-Oxley Act of 2002,''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(7)(B))
is amended--
[[Page 124 STAT. 1930]]
(1) in the subparagraph heading, by inserting ``, broker, or
dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place that term appears
and inserting ``any issuer, broker, or dealer''; and
(3) by striking ``an issuer under this subsection'' and
inserting ``a registered public accounting firm under this
subsection''.
(g) Foreign Public Accounting Firms.--Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--
(1) in paragraph (1), by striking ``issuer'' and inserting
``issuer, broker, or dealer''; and
(2) in paragraph (2), by striking ``issuers'' and inserting
``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7219) is amended--
(1) in subsection (c)(2), by striking ``subsection (i)'' and
inserting ``subsection (j)'';
(2) in subsection (d)--
(A) in paragraph (2), by striking ``allowing for
differentiation among classes of issuers, as
appropriate'' and inserting ``and among brokers and
dealers, in accordance with subsection (h), and allowing
for differentiation among classes of issuers, brokers
and dealers, as appropriate''; and
(B) by adding at the end the following:
``(3) Brokers and dealers.-- <<NOTE: Fees.>> The Board shall
begin the allocation, assessment, and collection of fees under
paragraph (2) with respect to brokers and dealers with the
payment of support fees to fund the first full fiscal year
beginning after the date of enactment of the Investor Protection
and Securities Reform Act of 2010.'';
(3) <<NOTE: 15 USC 78m.>> by redesignating subsections (h),
(i), and (j) as subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the following:
``(h) Allocation of Accounting Support Fees Among Brokers and
Dealers.--
``(1) Obligation to pay.--Each broker or dealer shall pay to
the Board the annual accounting support fee allocated to such
broker or dealer under this section.
``(2) Allocation.--Any amount due from a broker or dealer
(or from a particular class of brokers and dealers) under this
section shall be allocated among brokers and dealers and payable
by the broker or dealer (or the brokers and dealers in the
particular class, as applicable).
``(3) Proportionality.--The amount due from a broker or
dealer shall be in proportion to the net capital of the broker
or dealer (before or after any adjustments), compared to the
total net capital of all brokers and dealers (before or after
any adjustments), in accordance with rules issued by the
Board.''.
(i) Referral of Investigations to a Self-regulatory Organization.--
Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(4)(B)) is amended--
(1) by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively; and
(2) by inserting after clause (i) the following:
[[Page 124 STAT. 1931]]
``(ii) to a self-regulatory organization, in
the case of an investigation that concerns an
audit report for a broker or dealer that is under
the jurisdiction of such self-regulatory
organization;''.
(j) Use of Documents Related to an Inspection or Investigation.--
Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(5)(B)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV), by striking the comma and inserting
``; and''; and
(3) by inserting after subclause (IV) the following:
``(V) a self-regulatory
organization, with respect to an audit
report for a broker or dealer that is
under the jurisdiction of such self-
regulatory organization,''.
SEC. 983. PORTFOLIO MARGINING.
(a) Advances.--Section 9(a)(1) of the Securities Investor Protection
Act of 1970 <<NOTE: 15 USC 78fff-3.>> (15 U.S.C. 78fff3(a)(1)) is
amended by inserting ``or options on commodity futures contracts'' after
``claim for securities''.
(b) Definitions.--Section 16 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78lll) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Customer.--
``(A) In general.--The term `customer' of a debtor
means any person (including any person with whom the
debtor deals as principal or agent) who has a claim on
account of securities received, acquired, or held by the
debtor in the ordinary course of its business as a
broker or dealer from or for the securities accounts of
such person for safekeeping, with a view to sale, to
cover consummated sales, pursuant to purchases, as
collateral, security, or for purposes of effecting
transfer.
``(B) Included persons.--The term `customer'
includes--
``(i) any person who has deposited cash with
the debtor for the purpose of purchasing
securities;
``(ii) any person who has a claim against the
debtor for cash, securities, futures contracts, or
options on futures contracts received, acquired,
or held in a portfolio margining account carried
as a securities account pursuant to a portfolio
margining program approved by the Commission; and
``(iii) any person who has a claim against the
debtor arising out of sales or conversions of such
securities.
``(C) Excluded persons.--The term `customer' does
not include any person, to the extent that--
``(i) the claim of such person arises out of
transactions with a foreign subsidiary of a member
of SIPC; or
``(ii) such person has a claim for cash or
securities which by contract, agreement, or
understanding, or by operation of law, is part of
the capital of the debtor, or is subordinated to
the claims of any or all creditors of the debtor,
notwithstanding that some ground exists
[[Page 124 STAT. 1932]]
for declaring such contract, agreement, or
understanding void or voidable in a suit between
the claimant and the debtor.'';
(2) in paragraph (4)--
(A) in subparagraph (C), by striking ``and'' at the
end;
(B) by redesignating subparagraph (D) as
subparagraph (E); and
(C) by inserting after subparagraph (C) the
following:
``(D) in the case of a portfolio margining account
of a customer that is carried as a securities account
pursuant to a portfolio margining program approved by
the Commission, a futures contract or an option on a
futures contract received, acquired, or held by or for
the account of a debtor from or for such portfolio
margining account, and the proceeds thereof; and'';
(3) in paragraph (9), in the matter following subparagraph
(L), by inserting after ``Such term'' the following: ``includes
revenues earned by a broker or dealer in connection with a
transaction in the portfolio margining account of a customer
carried as securities accounts pursuant to a portfolio margining
program approved by the Commission. Such term''; and
(4) in paragraph (11)--
(A) in subparagraph (A)--
(i) by striking ``filing date, all'' and all
that follows through the end of the subparagraph
and inserting the following: ``filing date--
``(i) all securities positions of such
customer (other than customer name securities
reclaimed by such customer); and
``(ii) all positions in futures contracts and
options on futures contracts held in a portfolio
margining account carried as a securities account
pursuant to a portfolio margining program approved
by the Commission, including all property
collateralizing such positions, to the extent that
such property is not otherwise included herein;
minus''; and
(B) in the matter following subparagraph (C), by
striking ``In determining'' and inserting the following:
``A claim for a commodity futures contract received,
acquired, or held in a portfolio margining account
pursuant to a portfolio margining program approved by
the Commission or a claim for a security futures
contract, shall be deemed to be a claim with respect to
such contract as of the filing date, and such claim
shall be treated as a claim for cash. In determining''.
SEC. 984. LOAN OR BORROWING OF SECURITIES.
(a) Rulemaking Authority.--Section 10 of the Securities Exchange Act
of 1934 (15 U.S.C. 78j) is amended by adding at the end the following:
``(c)(1) To effect, accept, or facilitate a transaction
involving the loan or borrowing of securities in contravention
of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the
protection of investors.
``(2) Nothing in paragraph (1) may be construed to limit the
authority of the appropriate Federal banking agency (as
[[Page 124 STAT. 1933]]
defined in section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q))), the National Credit Union Administration, or
any other Federal department or agency having a responsibility
under Federal law to prescribe rules or regulations restricting
transactions involving the loan or borrowing of securities in
order to protect the safety and soundness of a financial
institution or to protect the financial system from systemic
risk.''.
(b) <<NOTE: Deadline. 15 USC 78j note.>> Rulemaking Required.--Not
later than 2 years after the date of enactment of this Act, the
Commission shall promulgate rules that are designed to increase the
transparency of information available to brokers, dealers, and
investors, with respect to the loan or borrowing of securities.
SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.
(a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C.
77a et seq.) is amended--
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking
``individual;'' and inserting ``individual,'';
(2) in section 18 (15 U.S.C. 77r)--
(A) in subsection (b)(1)(C), by striking ``is a
security'' and inserting ``a security''; and
(B) in subsection (c)(2)(B)(i), by striking ``State,
or'' and inserting ``State or'';
(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by
striking ``in paragraph (1) of (3)'' and inserting ``in
paragraph (1) or (3)''; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
2(c)(1)(B)(ii)), by striking ``business entity;'' and inserting
``business entity,''.
(b) Securities Exchange Act of 1934.--The Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 2 (15 U.S.C. 78b), by striking ``affected''
and inserting ``effected'';
(2) in section 3 (15 U.S.C. 78c)--
(A) in subsection (a)(55)(A), by striking ``section
3(a)(12) of the Securities Exchange Act of 1934'' and
inserting ``section 3(a)(12) of this title''; and
(B) in subsection (g), by striking ``company,
account person, or entity'' and inserting ``company,
account, person, or entity'';
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j-1(i)(1)(B))--
(A) in the subparagraph heading, by striking
``minimus'' and inserting ``minimis''; and
(B) in clause (i), by striking ``nonaudit'' and
inserting ``non-audit'';
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
``earning statement'' and inserting ``earnings statement'';
(5) in section 15 (15 U.S.C. 78o)--
(A) in subsection (b)(1)--
(i) in subparagraph (B), by striking ``The
order granting'' and all that follows through
``from such membership.''; and
(ii) in the undesignated matter immediately
following subparagraph (B), by inserting after the
first sentence the following: ``The order granting
registration shall not be effective until such
broker or dealer has become a member of a
registered securities association,
[[Page 124 STAT. 1934]]
or until such broker or dealer has become a member
of a national securities exchange, if such broker
or dealer effects transactions solely on that
exchange, unless the Commission has exempted such
broker or dealer, by rule or order, from such
membership.'';
(6) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
(A) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively, and adjusting
the subparagraph margins accordingly;
(B) in subparagraph (B), as so redesignated, by
striking ``The order granting'' and all that follows
through ``from such membership.''; and
(C) in the matter following subparagraph (B), as so
redesignated, by inserting after the first sentence the
following: ``The order granting registration shall not
be effective until such government securities broker or
government securities dealer has become a member of a
national securities exchange registered under section 6
of this title, or a securities association registered
under section 15A of this title, unless the Commission
has exempted such government securities broker or
government securities dealer, by rule or order, from
such membership.'';
(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by
striking ``15A(k) gives'' and inserting ``15A(k), give''; and
(8) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by
striking ``paragraph (1) subsection'' and inserting ``Paragraph
(1)''.
(c) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking
``section 2 of such Act'' and inserting ``section 2(a) of such
Act''; and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by
striking ``, in the'' and inserting ``in the''.
(d) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)), in the
matter following subparagraph (B)(vii)--
(A) by striking ``clause (vi)'' each place that term
appears and inserting ``clause (vii)''; and
(B) in each of subparagraphs (A)(vi) and (B)(vi), by
adding ``and'' at the end of subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by
adding ``or'' after the semicolon at the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by
striking ``any provision of this subsection'' and inserting
``any provision of this paragraph'';
(4) in section 17(f) (15 U.S.C. 80a-17(f))--
(A) in paragraph (4), by striking ``No such member''
and inserting ``No member of a national securities
exchange''; and
(B) in paragraph (6), by striking ``company may
serve'' and inserting ``company, may serve''; and
(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
60(a)(3)(B)(iii))--
(A) by striking ``paragraph (1) of section 205'' and
inserting ``section 205(a)(1)''; and
[[Page 124 STAT. 1935]]
(B) by striking ``clause (A) or (B) of that
section'' and inserting ``paragraph (1) or (2) of
section 205(b)''.
(e) Investment Advisers Act of 1940.--The Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in section 203 (15 U.S.C. 80b-3)--
(A) in subsection (c)(1)(A), by striking ``principal
business office and'' and inserting ``principal office,
principal place of business, and''; and
(B) in subsection (k)(4)(B), in the matter following
clause (ii), by striking ``principal place of business''
and inserting ``principal office or place of business'';
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by adding ``or''
after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b-13(a)), by striking
``principal place of business'' and inserting ``principal office
or place of business''; and
(4) in section 222 (15 U.S.C. 80b-18a), by striking
``principal place of business'' each place that term appears and
inserting ``principal office and place of business''.
SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935.
(a) Securities Exchange Act of 1934.--The Securities Exchange Act of
1934 (15 U.S.C. 78 et seq.) is amended--
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking
``the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a
et seq.),'';
(2) in section 12(k) (15 U.S.C. 78l(k)), by amending
paragraph (7) to read as follows:
``(7) Definition.--For purposes of this subsection, the term
`emergency' means--
``(A) a major market disturbance characterized by or
constituting--
``(i) sudden and excessive fluctuations of
securities prices generally, or a substantial
threat thereof, that threaten fair and orderly
markets; or
``(ii) a substantial disruption of the safe or
efficient operation of the national system for
clearance and settlement of transactions in
securities, or a substantial threat thereof; or
``(B) a major disturbance that substantially
disrupts, or threatens to substantially disrupt--
``(i) the functioning of securities markets,
investment companies, or any other significant
portion or segment of the securities markets; or
``(ii) the transmission or processing of
securities transactions.''; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking
``section 18(c) of the Public Utility Holding Company Act of
1935,''.
(b) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph
(17) and inserting the following:
``(17) The terms `Securities Act of 1933' and `Securities
Exchange Act of 1934' shall be deemed to refer, respectively,
[[Page 124 STAT. 1936]]
to such Acts, as amended, whether amended prior to or after the
enactment of this title.'';
(2) in section 308 (15 U.S.C. 77hhh), by striking
``Securities Act of 1933, the Securities Exchange Act of 1934,
or the Public Utility Holding Company Act of 1935'' each place
that term appears and inserting ``Securities Act of 1933 or the
Securities Exchange Act of 1934'';
(3) in section 310 (15 U.S.C. 77jjj), by striking subsection
(c);
(4) in section 311 (15 U.S.C. 77kkk), by striking subsection
(c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935'' and
inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934''; and
(6) in section 326 (15 U.S.C. 77zzz), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935,'' and
inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934''.
(c) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by
striking `` `Public Utility Holding Company Act of 1935','';
(2) in section 3(c) (15 U.S.C. 80a-3(c)), by striking
paragraph (8) and inserting the following:
``(8) [Repealed]'';
(3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking
``the Public Utility Holding Company Act of 1935,''; and
(4) in section 50 (15 U.S.C. 80a-49), by striking ``the
Public Utility Holding Company Act of 1935,''.
(d) Investment Advisers Act of 1940.--Section 202(a)(21) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is amended by
striking `` `Public Utility Holding Company Act of 1935',''.
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE DEPOSIT INSURANCE FUND FOR
PURPOSES OF INSPECTOR GENERAL REVIEWS.
(a) In General.--Section 38(k) of the Federal Deposit Insurance
Act <<NOTE: 12 USC 1831o.>> (U.S.C. 1831o(k)) is amended--
(1) in paragraph (2), by striking subparagraph (B) and
inserting the following:
``(B) Material loss defined.--The term `material
loss' means any estimated loss in excess of--
``(i) $200,000,000, if the loss occurs during
the period beginning on January 1, 2010, and
ending on December 31, 2011;
``(ii) $150,000,000, if the loss occurs during
the period beginning on January 1, 2012, and
ending on December 31, 2013; and
``(iii) $50,000,000, if the loss occurs on or
after January 1, 2014, provided that if the
inspector general of a Federal banking agency
certifies to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee
on Financial Services of the House
[[Page 124 STAT. 1937]]
of Representatives that the number of projected
failures of depository institutions that would
require material loss reviews for the following 12
months will be greater than 30 and would hinder
the effectiveness of its oversight functions, then
the definition of `material loss' shall be
$75,000,000 for a duration of 1 year from the date
of the certification.'';
(2) in paragraph (4)(A) by striking ``the report'' and
inserting ``any report on losses required under this
subsection,'';
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph (6); and
(5) by inserting after paragraph (4) the following:
``(5) Losses that are not material.--
``(A) Semiannual report.-- <<NOTE: Time
period.>> For the 6-month period ending on March 31,
2010, and each 6-month period thereafter, the Inspector
General of each Federal banking agency shall--
``(i) identify losses that the Inspector
General estimates have been incurred by the
Deposit Insurance Fund during that 6-month period,
with respect to the insured depository
institutions supervised by the Federal banking
agency;
``(ii) for each loss incurred by the Deposit
Insurance Fund that is not a material loss,
determine--
``(I) the grounds identified by the
Federal banking agency or State bank
supervisor for appointing the
Corporation as receiver under section
11(c)(5); and
``(II) whether any unusual
circumstances exist that might warrant
an in-depth review of the loss; and
``(iii) prepare and submit a written report to
the appropriate Federal banking agency and to
Congress on the results of any determination by
the Inspector General, including--
``(I) an identification of any loss
that warrants an in-depth review,
together with the reasons why such
review is warranted, or, if the
Inspector General determines that no
review is warranted, an explanation of
such determination; and
``(II) for each loss identified
under subclause (I) that warrants an in-
depth review, the date by which such
review, and a report on such review
prepared in a manner consistent with
reports under paragraph (1)(A), will be
completed and submitted to the Federal
banking agency and Congress.
``(B) Deadline for semiannual report.--The Inspector
General of each Federal banking agency shall--
``(i) submit each report required under
paragraph (A) expeditiously, and not later than 90
days after the end of the 6-month period covered
by the report; and
``(ii) provide a copy of the report required
under paragraph (A) to any Member of Congress,
upon request.''.
[[Page 124 STAT. 1938]]
(b) Technical and Conforming Amendment.--The heading for subsection
(k) of section 38 of the Federal Deposit Insurance Act (U.S.C. 1831o(k))
is amended to read as follows:
``(k) Reviews Required When Deposit Insurance Fund Incurs Losses.--
''.
SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE NATIONAL CREDIT UNION SHARE
INSURANCE FUND FOR PURPOSES OF INSPECTOR
GENERAL REVIEWS.
(a) In General.--Section 216(j) of the Federal Credit Union Act (12
U.S.C. 1790d(j)) is amended to read as follows:
``(j) Reviews Required When Share Insurance Fund Experiences
Losses.--
``(1) In general.--If the Fund incurs a material loss with
respect to an insured credit union, the Inspector General of the
Board shall--
``(A) <<NOTE: Reports.>> submit to the Board a
written report reviewing the supervision of the credit
union by the Administration (including the
implementation of this section by the Administration),
which shall include--
``(i) a description of the reasons why the
problems of the credit union resulted in a
material loss to the Fund; and
``(ii) recommendations for preventing any such
loss in the future; and
``(B) submit a copy of the report under subparagraph
(A) to--
``(i) the Comptroller General of the United
States;
``(ii) the Corporation;
``(iii) in the case of a report relating to a
State credit union, the appropriate State
supervisor; and
``(iv) to any Member of Congress, upon
request.
``(2) Material loss defined.--For purposes of determining
whether the Fund has incurred a material loss with respect to an
insured credit union, a loss is material if it exceeds the sum
of--
``(A) $25,000,000; and
``(B) an amount equal to 10 percent of the total
assets of the credit union on the date on which the
Board initiated assistance under section 208 or was
appointed liquidating agent.
``(3) Public disclosure required.--
``(A) In general.--The Board shall disclose a report
under this subsection, upon request under section 552 of
title 5, United States Code, without excising--
``(i) any portion under section 552(b)(5) of
title 5, United States Code; or
``(ii) any information about the insured
credit union (other than trade secrets) under
section 552(b)(8) of title 5, United States Code.
``(B) Rule of construction.--Subparagraph (A) may
not be construed as requiring the agency to disclose the
name of any customer of the insured credit union (other
than an institution-affiliated party), or information
from which the identity of such customer could
reasonably be ascertained.
[[Page 124 STAT. 1939]]
``(4) Losses that are not material.--
``(A) Semiannual report.-- <<NOTE: Time
periods.>> For the 6-month period ending on March 31,
2010, and each 6-month period thereafter, the Inspector
General of the Board shall--
``(i) identify any losses that the Inspector
General estimates were incurred by the Fund during
such 6-month period, with respect to insured
credit unions;
``(ii) <<NOTE: Determination.>> for each loss
to the Fund that is not a material loss,
determine--
``(I) the grounds identified by the
Board or the State official having
jurisdiction over a State credit union
for appointing the Board as the
liquidating agent for any Federal or
State credit union; and
``(II) whether any unusual
circumstances exist that might warrant
an in-depth review of the loss; and
``(iii) prepare and submit a written report to
the Board and to Congress on the results of the
determinations of the Inspector General that
includes--
``(I) an identification of any loss
that warrants an in-depth review, and
the reasons such review is warranted, or
if the Inspector General determines that
no review is warranted, an explanation
of such determination; and
``(II) for each loss identified in
subclause (I) that warrants an in-depth
review, the date by which such review,
and a report on the review prepared in a
manner consistent with reports under
paragraph (1)(A), will be completed.
``(B) Deadline for semiannual report.--The Inspector
General of the Board shall--
``(i) submit each report required under
subparagraph (A) expeditiously, and not later than
90 days after the end of the 6-month period
covered by the report; and
``(ii) provide a copy of the report required
under subparagraph (A) to any Member of Congress,
upon request.
``(5) GAO review.--The Comptroller General of the United
States shall, under such conditions as the Comptroller General
determines to be appropriate--
``(A) review each report made under paragraph (1),
including the extent to which the Inspector General of
the Board complied with the requirements under section
8L of the Inspector General Act of 1978 (5 U.S.C. App.)
with respect to each such report; and
``(B) <<NOTE: Recommenda- tions.>> recommend
improvements to the supervision of insured credit unions
(including improvements relating to the implementation
of this section).''.
SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY
TRADING.
(a) Definitions.--In this section--
(1) the term ``covered entity'' means--
(A) an insured depository institution, an affiliate
of an insured depository institution, a bank holding
company,
[[Page 124 STAT. 1940]]
a financial holding company, or a subsidiary of a bank
holding company or a financial holding company, as those
terms are defined in the Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.); and
(B) any other entity, as the Comptroller General of
the United States may determine; and
(2) the term ``proprietary trading'' means the act of a
covered entity investing as a principal in securities,
commodities, derivatives, hedge funds, private equity firms, or
such other financial products or entities as the Comptroller
General may determine.
(b) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study regarding the risks and conflicts
associated with proprietary trading by and within covered
entities, including an evaluation of--
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States
financial system, and if so, the costs and benefits of
options for mitigating such systemic risk;
(B) whether proprietary trading presents material
risks to the safety and soundness of the covered
entities that engage in such activities, and if so, the
costs and benefits of options for mitigating such risks;
(C) whether proprietary trading presents material
conflicts of interest between covered entities that
engage in proprietary trading and the clients of the
institutions who use the firm to execute trades or who
rely on the firm to manage assets, and if so, the costs
and benefits of options for mitigating such conflicts of
interest;
(D) whether adequate disclosure regarding the risks
and conflicts of proprietary trading is provided to the
depositors, trading and asset management clients, and
investors of covered entities that engage in proprietary
trading, and if not, the costs and benefits of options
for the improvement of such disclosure; and
(E) whether the banking, securities, and commodities
regulators of institutions that engage in proprietary
trading have in place adequate systems and controls to
monitor and contain any risks and conflicts of interest
related to proprietary trading, and if not, the costs
and benefits of options for the improvement of such
systems and controls.
(2) Considerations.--In carrying out the study required
under paragraph (1), the Comptroller General shall consider--
(A) current practice relating to proprietary
trading;
(B) the advisability of a complete ban on
proprietary trading;
(C) limitations on the scope of activities that
covered entities may engage in with respect to
proprietary trading;
(D) the advisability of additional capital
requirements for covered entities that engage in
proprietary trading;
(E) enhanced restrictions on transactions between
affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to
proprietary trading;
(G) enhanced public disclosure relating to
proprietary trading; and
[[Page 124 STAT. 1941]]
(H) any other options the Comptroller General deems
appropriate.
(c) Report to Congress.--Not later than 15 months after the date of
enactment of this Act, the Comptroller General shall submit a report to
Congress on the results of the study conducted under subsection (b).
(d) Access by Comptroller General.--For purposes of conducting the
study required under subsection (b), the Comptroller General shall have
access, upon request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic communications,
or other papers, things, or property belonging to or in use by a covered
entity that engages in proprietary trading, and to the officers,
directors, employees, independent public accountants, financial
advisors, staff, and agents and representatives of a covered entity (as
related to the activities of the agent or representative on behalf of
the covered entity), at such reasonable times as the Comptroller General
may request. The Comptroller General may make and retain copies of
books, records, accounts, and other records, as the Comptroller General
deems appropriate.
(e) Confidentiality of Reports.--
(1) In general.--Except as provided in paragraph (2), the
Comptroller General may not disclose information regarding--
(A) any proprietary trading activity of a covered
entity, unless such information is disclosed at a level
of generality that does not reveal the investment or
trading position or strategy of the covered entity for
any specific security, commodity, derivative, or other
investment or financial product; or
(B) any individual interviewed by the Comptroller
General for purposes of the study under subsection (b),
unless such information is disclosed at a level of
generality that does not reveal--
(i) the name of or identifying details
relating to such individual; or
(ii) in the case of an individual who is an
employee of a third party that provides
professional services to a covered entity believed
to be engaged in proprietary trading, the name of
or any identifying details relating to such third
party.
(2) Exceptions.--The Comptroller General may disclose the
information described in paragraph (1)--
(A) to a department, agency, or official of the
Federal Government, for official use, upon request;
(B) to a committee of Congress, upon request; and
(C) to a court, upon an order of such court.
SEC. 989A. <<NOTE: 12 USC 5537.>> SENIOR INVESTOR PROTECTIONS.
(a) Definitions.--As used in this section--
(1) the term ``eligible entity'' means--
(A) a securities commission (or any agency or office
performing like functions) of a State that the Office
determines has adopted rules on the appropriate use of
designations in the offer or sale of securities or the
provision of investment advice that meet or exceed the
minimum requirements of the NASAA Model Rule on the Use
of
[[Page 124 STAT. 1942]]
Senior-Specific Certifications and Professional
Designations (or any successor thereto);
(B) the insurance commission (or any agency or
office performing like functions) of any State that the
Office determines has--
(i) adopted rules on the appropriate use of
designations in the sale of insurance products
that, to the extent practicable, conform to the
minimum requirements of the National Association
of Insurance Commissioners Model Regulation on the
Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life
Insurance and Annuities (or any successor
thereto); and
(ii) adopted rules with respect to fiduciary
or suitability requirements in the sale of
annuities that meet or exceed the minimum
requirements established by the Suitability in
Annuity Transactions Model Regulation of the
National Association of Insurance Commissioners
(or any successor thereto); or
(C) a consumer protection agency of any State, if--
(i) the securities commission (or any agency
or office performing like functions) of the State
is eligible under subparagraph (A); or
(ii) the insurance commission (or any agency
or office performing like functions) of the State
is eligible under subparagraph (B);
(2) the term ``financial product'' means a security, an
insurance product (including an insurance product that pays a
return, whether fixed or variable), a bank product, and a loan
product;
(3) the term ``misleading designation''--
(A) means a certification, professional designation,
or other purported credential that indicates or implies
that a salesperson or adviser has special certification
or training in advising or servicing seniors; and
(B) does not include a certification, professional
designation, license, or other credential that--
(i) was issued by or obtained from an academic
institution having regional accreditation;
(ii) meets the standards for certifications
and professional designations outlined by the
NASAA Model Rule on the Use of Senior-Specific
Certifications and Professional Designations (or
any successor thereto) or by the Model Regulations
on the Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life
Insurance and Annuities, adopted by the National
Association of Insurance Commissioners (or any
successor thereto); or
(iii) was issued by or obtained from a State;
(4) the term ``misleading or fraudulent marketing'' means
the use of a misleading designation by a person that sells to or
advises a senior in connection with the sale of a financial
product;
(5) the term ``NASAA'' means the North American Securities
Administrators Association;
(6) the term ``Office'' means the Office of Financial
Literacy of the Bureau;
[[Page 124 STAT. 1943]]
(7) the term ``senior'' means any individual who has
attained the age of 62 years or older; and
(8) the term ``State'' has the same meaning as in section 3
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
(b) Grants to States for Enhanced Protection of Seniors From Being
Misled by False Designations.--The Office shall establish a program
under which the Office may make grants to States or eligible entities--
(1) to hire staff to identify, investigate, and prosecute
(through civil, administrative, or criminal enforcement actions)
cases involving misleading or fraudulent marketing;
(2) to fund technology, equipment, and training for
regulators, prosecutors, and law enforcement officers, in order
to identify salespersons and advisers who target seniors through
the use of misleading designations;
(3) to fund technology, equipment, and training for
prosecutors to increase the successful prosecution of
salespersons and advisers who target seniors with the use of
misleading designations;
(4) to provide educational materials and training to
regulators on the appropriateness of the use of designations by
salespersons and advisers in connection with the sale and
marketing of financial products;
(5) to provide educational materials and training to seniors
to increase awareness and understanding of misleading or
fraudulent marketing;
(6) to develop comprehensive plans to combat misleading or
fraudulent marketing of financial products to seniors; and
(7) to enhance provisions of State law to provide protection
for seniors against misleading or fraudulent marketing.
(c) Applications.--A State or eligible entity desiring a grant under
this section shall submit an application to the Office, in such form and
in such a manner as the Office may determine, that includes--
(1) a proposal for activities to protect seniors from
misleading or fraudulent marketing that are proposed to be
funded using a grant under this section, including--
(A) an identification of the scope of the problem of
misleading or fraudulent marketing in the State;
(B) a description of how the proposed activities
would--
(i) protect seniors from misleading or
fraudulent marketing in the sale of financial
products, including by proactively identifying
victims of misleading and fraudulent marketing who
are seniors;
(ii) assist in the investigation and
prosecution of those using misleading or
fraudulent marketing; and
(iii) discourage and reduce cases of
misleading or fraudulent marketing; and
(C) a description of how the proposed activities
would be coordinated with other State efforts; and
(2) any other information, as the Office determines is
appropriate.
(d) Performance Objectives and Reporting Requirements.--The Office
may establish such performance objectives and reporting requirements for
States and eligible entities receiving a grant under this section as the
Office determines are necessary
[[Page 124 STAT. 1944]]
to carry out and assess the effectiveness of the program under this
section.
(e) Maximum Amount.--The amount of a grant under this section may
not exceed--
(1) $500,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted rules--
(A) on the appropriate use of designations in the
offer or sale of securities or investment advice that
meet or exceed the minimum requirements of the NASAA
Model Rule on the Use of Senior-Specific Certifications
and Professional Designations (or any successor
thereto);
(B) on the appropriate use of designations in the
sale of insurance products that, to the extent
practicable, conform to the minimum requirements of the
National Association of Insurance Commissioners Model
Regulation on the Use of Senior-Specific Certifications
and Professional Designations in the Sale of Life
Insurance and Annuities (or any successor thereto); and
(C) with respect to fiduciary or suitability
requirements in the sale of annuities that meet or
exceed the minimum requirements established by the
Suitability in Annuity Transactions Model Regulation of
the National Association of Insurance Commissioners (or
any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted--
(A) rules on the appropriate use of designations in
the offer or sale of securities or investment advice
that meet or exceed the minimum requirements of the
NASAA Model Rule on the Use of Senior-Specific
Certifications and Professional Designations (or any
successor thereto); or
(B) rules--
(i) on the appropriate use of designations in
the sale of insurance products that, to the extent
practicable, conform to the minimum requirements
of the National Association of Insurance
Commissioners Model Regulation on the Use of
Senior-Specific Certifications and Professional
Designations in the Sale of Life Insurance and
Annuities (or any successor thereto); and
(ii) with respect to fiduciary or suitability
requirements in the sale of annuities that meet or
exceed the minimum requirements established by the
Suitability in Annuity Transactions Model
Regulation of the National Association of
Insurance Commissioners (or any successor
thereto).
(f) Subgrants.--A State or eligible entity that receives a grant
under this section may make a subgrant, as the State or eligible entity
determines is necessary to carry out the activities funded using a grant
under this section.
(g) Reapplication.--A State or eligible entity that receives a grant
under this section may reapply for a grant under this section,
notwithstanding the limitations on grant amounts under subsection (e).
[[Page 124 STAT. 1945]]
(h) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, $8,000,000 for each of fiscal
years 2011 through 2015.
SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL
INDEPENDENCE.
Section 8G of the Inspector General Act of 1978 (5 U.S.C. App.) is
amended--
(1) in subsection (a)(4)--
(A) in the matter preceding subparagraph (A), by
inserting ``the board or commission of the designated
Federal entity, or in the event the designated Federal
entity does not have a board or commission,'' after
``means'';
(B) in subparagraph (A), by striking ``and'' after
the semicolon; and
(C) by adding after subparagraph (B) the following:
``(C) with respect to the Federal Labor Relations
Authority, such term means the members of the Authority
(described under section 7104 of title 5, United States
Code);
``(D) with respect to the National Archives and
Records Administration, such term means the Archivist of
the United States;
``(E) with respect to the National Credit Union
Administration, such term means the National Credit
Union Administration Board (described under section 102
of the Federal Credit Union Act (12 U.S.C. 1752a);
``(F) with respect to the National Endowment of the
Arts, such term means the National Council on the Arts;
``(G) with respect to the National Endowment for the
Humanities, such term means the National Council on the
Humanities; and
``(H) with respect to the Peace Corps, such term
means the Director of the Peace Corps;''; and
(2) in subsection (h), by inserting ``if the designated
Federal entity is not a board or commission, include'' after
``designated Federal entities and''.
SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY.
Section 5(a) of the Inspector General Act of 1978 (5 U.S.C. App.) is
amended--
(1) in paragraph (12), by striking ``and'' after the
semicolon;
(2) in paragraph (13), by striking the period and inserting
a semicolon; and
(3) by adding at the end the following:
``(14)(A) an appendix containing the results of any peer
review conducted by another Office of Inspector General during
the reporting period; or
``(B) if no peer review was conducted within that reporting
period, a statement identifying the date of the last peer review
conducted by another Office of Inspector General;
``(15) a list of any outstanding recommendations from any
peer review conducted by another Office of Inspector General
that have not been fully implemented, including a statement
describing the status of the implementation and why
implementation is not complete; and
``(16) a list of any peer reviews conducted by the Inspector
General of another Office of the Inspector General during the
[[Page 124 STAT. 1946]]
reporting period, including a list of any outstanding
recommendations made from any previous peer review (including
any peer review conducted before the reporting period) that
remain outstanding or have not been fully implemented.''.
SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED FEDERAL
ENTITIES.
Section 8G(e) of the Inspector General Act of 1978 (5 U.S.C. App.)
is amended--
(1) by redesignating the sentences following ``(e)'' as
paragraph (2); and
(2) by striking ``(e)'' and inserting the following:
``(e)(1) In the case of a designated Federal entity for which a
board or commission is the head of the designated Federal entity, a
removal under this subsection may only be made upon the written
concurrence of a \2/3\ majority of the board or commission.''.
SEC. 989E. <<NOTE: 5 USC app. 11 note.>> ADDITIONAL OVERSIGHT OF
FINANCIAL REGULATORY SYSTEM.
(a) Council of Inspectors General on Financial Oversight.--
(1) Establishment and membership.--There is established a
Council of Inspectors General on Financial Oversight (in this
section referred to as the ``Council of Inspectors General'')
chaired by the Inspector General of the Department of the
Treasury and composed of the inspectors general of the
following:
(A) The Board of Governors of the Federal Reserve
System.
(B) The Commodity Futures Trading Commission.
(C) The Department of Housing and Urban Development.
(D) The Department of the Treasury.
(E) The Federal Deposit Insurance Corporation.
(F) The Federal Housing Finance Agency.
(G) The National Credit Union Administration.
(H) The Securities and Exchange Commission.
(I) The Troubled Asset Relief Program (until the
termination of the authority of the Special Inspector
General for such program under section 121(k) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5231(k))).
(2) Duties.--
(A) Meetings.--The Council of Inspectors General
shall meet not less than once each quarter, or more
frequently if the chair considers it appropriate, to
facilitate the sharing of information among inspectors
general and to discuss the ongoing work of each
inspector general who is a member of the Council of
Inspectors General, with a focus on concerns that may
apply to the broader financial sector and ways to
improve financial oversight.
(B) Annual report.--Each year the Council of
Inspectors General shall submit to the Council and to
Congress a report including--
(i) for each inspector general who is a member
of the Council of Inspectors General, a section
within the exclusive editorial control of such
inspector general that highlights the concerns and
recommendations of such inspector general in such
inspector general's
[[Page 124 STAT. 1947]]
ongoing and completed work, with a focus on issues
that may apply to the broader financial sector;
and
(ii) a summary of the general observations of
the Council of Inspectors General based on the
views expressed by each inspector general as
required by clause (i), with a focus on measures
that should be taken to improve financial
oversight.
(3) Working groups to evaluate council.--
(A) Convening a working group.--The Council of
Inspectors General may, by majority vote, convene a
Council of Inspectors General Working Group to evaluate
the effectiveness and internal operations of the
Council.
(B) Personnel and resources.--The inspectors general
who are members of the Council of Inspectors General may
detail staff and resources to a Council of Inspectors
General Working Group established under this paragraph
to enable it to carry out its duties.
(C) Reports.--A Council of Inspectors General
Working Group established under this paragraph shall
submit regular reports to the Council and to Congress on
its evaluations pursuant to this paragraph.
(b) Response to Report by Council.--The Council shall respond to the
concerns raised in the report of the Council of Inspectors General under
subsection (a)(2)(B) for such year.
SEC. 989F. GAO STUDY OF PERSON TO PERSON LENDING.
(a) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of person to person lending to
determine the optimal Federal regulatory structure.
(2) Consultation.--In conducting the study required under
paragraph (1), the Comptroller General shall consult with
Federal banking agencies, the Commission, consumer groups,
outside experts, and the person to person lending industry.
(3) Content of study.--The study required under paragraph
(1) shall include an examination of--
(A) the regulatory structure as it exists on the
date of enactment of this Act, as determined by the
Commission, with particular attention to--
(i) the application of the Securities Act of
1933 to person to person lending platforms;
(ii) the posting of consumer loan information
on the EDGAR database of the Commission; and
(iii) the treatment of privately held person
to person lending platforms as public companies;
(B) the State and other Federal regulators
responsible for the oversight and regulation of person
to person lending markets;
(C) any Federal, State, or local government or
private studies of person to person lending completed or
in progress on the date of enactment of this Act;
(D) consumer privacy and data protections, minimum
credit standards, anti-money laundering and risk
management in the regulatory structure as it exists on
the date of enactment of this Act, and whether
additional or alternative safeguards are needed; and
[[Page 124 STAT. 1948]]
(E) the uses of person to person lending.
(b) Report.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives.
(2) Content of report.--The report required under paragraph
(1) shall include alternative regulatory options, including--
(A) the involvement of other Federal agencies; and
(B) alternative approaches by the Commission and
recommendations on whether the alternative approaches
are effective.
SEC. 989G. EXEMPTION FOR NONACCELERATED FILERS.
(a) Exemption.--Section 404 <<NOTE: 15 USC 7262.>> of the Sarbanes-
Oxley Act of 2002 is amended by adding at the end the following:
``(c) Exemption for Smaller Issuers.--Subsection (b) shall not apply
with respect to any audit report prepared for an issuer that is neither
a `large accelerated filer' nor an `accelerated filer' as those terms
are defined in Rule 12b-2 of the Commission (17 C.F.R. 240.12b-2).''.
(b) Study.--The Securities and Exchange Commission shall conduct a
study to determine how the Commission could reduce the burden of
complying with section 404(b) of the Sarbanes-Oxley Act of 2002 for
companies whose market capitalization is between $75,000,000 and
$250,000,000 for the relevant reporting period while maintaining
investor protections for such companies. The study shall also consider
whether any such methods of reducing the compliance burden or a complete
exemption for such companies from compliance with such section would
encourage companies to list on exchanges in the United States in their
initial public offerings. <<NOTE: Deadline. Reports.>> Not later than 9
months after the date of the enactment of this subtitle, the Commission
shall transmit a report of such study to Congress.
SEC. 989H. <<NOTE: 5 USC app. 5 note.>> CORRECTIVE RESPONSES BY
HEADS OF CERTAIN ESTABLISHMENTS TO
DEFICIENCIES IDENTIFIED BY INSPECTORS
GENERAL.
The Chairman of the Board of Governors of the Federal Reserve
System, the Chairman of the Commodity Futures Trading Commission, the
Chairman of the National Credit Union Administration, the Director of
the Pension Benefit Guaranty Corporation, and the Chairman of the
Securities and Exchange Commission shall each--
(1) take action to address deficiencies identified by a
report or investigation of the Inspector General of the
establishment concerned; or
(2) <<NOTE: Certification.>> certify to both Houses of
Congress that no action is necessary or appropriate in
connection with a deficiency described in paragraph (1).
SEC. 989I. GAO STUDY REGARDING EXEMPTION FOR SMALLER ISSUERS.
(a) Study Regarding Exemption for Smaller Issuers.--The Comptroller
General of the United States shall carry out a study
[[Page 124 STAT. 1949]]
on the impact of the amendments made by this Act to section 404(b) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), which shall include
an analysis of--
(1) whether issuers that are exempt from such section 404(b)
have fewer or more restatements of published accounting
statements than issuers that are required to comply with such
section 404(b);
(2) the cost of capital for issuers that are exempt from
such section 404(b) compared to the cost of capital for issuers
that are required to comply with such section 404(b);
(3) whether there is any difference in the confidence of
investors in the integrity of financial statements of issuers
that comply with such section 404(b) and issuers that are exempt
from compliance with such section 404(b);
(4) whether issuers that do not receive the attestation for
internal controls required under such section 404(b) should be
required to disclose the lack of such attestation to investors;
and
(5) the costs and benefits to issuers that are exempt from
such section 404(b) that voluntarily have obtained the
attestation of an independent auditor.
(b) Report.--Not later than 3 years after the date of enactment of
this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study required under subsection (a).
SEC. 989J. <<NOTE: 15 USC 77c note.>> FURTHER PROMOTING THE
ADOPTION OF THE NAIC MODEL REGULATIONS
THAT ENHANCE PROTECTION OF SENIORS AND
OTHER CONSUMERS.
(a) In General.--The Commission shall treat as exempt securities
described under section 3(a)(8) of the Securities Act of 1933 (15 U.S.C.
77c(a)(8)) any insurance or endowment policy or annuity contract or
optional annuity contract--
(1) the value of which does not vary according to the
performance of a separate account;
(2) that--
(A) satisfies standard nonforfeiture laws or similar
requirements of the applicable State at the time of
issue; or
(B) in the absence of applicable standard
nonforfeiture laws or requirements, satisfies the Model
Standard Nonforfeiture Law for Life Insurance or Model
Standard Nonforfeiture Law for Individual Deferred
Annuities, or any successor model law, as published by
the National Association of Insurance Commissioners; and
(3) that is issued--
(A) on and after June 16, 2013, in a State, or
issued by an insurance company that is domiciled in a
State, that--
(i) adopts rules that govern suitability
requirements in the sale of an insurance or
endowment policy or annuity contract or optional
annuity contract, which shall substantially meet
or exceed the minimum requirements established by
the Suitability in Annuity Transactions Model
Regulation adopted by the
[[Page 124 STAT. 1950]]
National Association of Insurance Commissioners in
March 2010; and
(ii) <<NOTE: Deadline.>> adopts rules that
substantially meet or exceed the minimum
requirements of any successor modifications to the
model regulations described in subparagraph (A)
within 5 years of the adoption by the Association
of any further successors thereto; or
(B) by an insurance company that adopts and
implements practices on a nationwide basis for the sale
of any insurance or endowment policy or annuity contract
or optional annuity contract that meet or exceed the
minimum requirements established by the National
Association of Insurance Commissioners Suitability in
Annuity Transactions Model Regulation (Model 275), and
any successor thereto, and is therefore subject to
examination by the State of domicile of the insurance
company, or by any other State where the insurance
company conducts sales of such products, for the purpose
of monitoring compliance under this section.
(b) Rule of Construction.--Nothing in this section shall be
construed to affect whether any insurance or endowment policy or annuity
contract or optional annuity contract that is not described in this
section is or is not an exempt security under section 3(a)(8) of the
Securities Act of 1933 (15 U.S.C. 77c(a)(8)).
Subtitle J--Securities and Exchange Commission Match Funding
SEC. 991. SECURITIES AND EXCHANGE COMMISSION MATCH FUNDING.
(a) Match Funding Authority.--
(1) Amendments.--Section 31 of the Securities Exchange Act
of 1934 (15 U.S.C. 78ee) is amended--
(A) by striking subsection (a) and inserting the
following:
``(a) Recovery of Costs of Annual Appropriation.--
<<NOTE: Fees. Assessments.>> The Commission shall, in accordance with
this section, collect transaction fees and assessments that are designed
to recover the costs to the Government of the annual appropriation to
the Commission by Congress.'';
(B) in subsection (e)(2), by striking ``September
30'' and inserting ``September 25'';
(C) in subsection (g), by striking ``April 30 of the
fiscal year preceding the fiscal year to which such rate
applies'' and inserting ``30 days after the date on
which an Act making a regular appropriation to the
Commission for such fiscal year is enacted'';
(D) by striking subsection (j) and inserting the
following:
``(j) Adjustments to Fee Rates.--
``(1) Annual adjustment.--Subject to subsections (i)(1)(B)
and (k), for each fiscal year, the Commission shall by order
adjust each of the rates applicable under subsections (b) and
(c) for such fiscal year to a uniform adjusted rate that, when
applied to the baseline estimate of the aggregate dollar amount
of sales for such fiscal year, is reasonably likely to produce
[[Page 124 STAT. 1951]]
aggregate fee collections under this section (including
assessments collected under subsection (d) of this section) that
are equal to the regular appropriation to the Commission by
Congress for such fiscal year.
``(2) Mid-year adjustment.--
<<NOTE: Determination. Deadline.>> Subject to subsections
(i)(1)(B) and (k), for each fiscal year, the Commission shall
determine, by March 1 of such fiscal year, whether, based on the
actual aggregate dollar volume of sales during the first 5
months of such fiscal year, the baseline estimate of the
aggregate dollar volume of sales used under paragraph (1) for
such fiscal year is reasonably likely to be 10 percent (or more)
greater or less than the actual aggregate dollar volume of sales
for such fiscal year. <<NOTE: Order. Deadline.>> If the
Commission so determines, the Commission shall by order, no
later than March 1, adjust each of the rates applicable under
subsections (b) and (c) for such fiscal year to a uniform
adjusted rate that, when applied to the revised estimate of the
aggregate dollar amount of sales for the remainder of such
fiscal year, is reasonably likely to produce aggregate fee
collections under this section (including fees collected during
such five-month period and assessments collected under
subsection (d) of this section) that are equal to the regular
appropriation to the Commission by Congress for such fiscal
year. In making such revised estimate, the Commission shall,
after consultation with the Congressional Budget Office and the
Office of Management and Budget, use the same methodology
required by subsection (l).
``(3) Review.--In exercising its authority under this
subsection, the Commission shall not be required to comply with
the provisions of section 553 of title 5, United States Code. An
adjusted rate prescribed under paragraph (1) or (2) and
published under subsection (g) shall not be subject to judicial
review.
``(4) Effective date.--
``(A) Annual adjustment.--Subject to subsections
(i)(1)(B) and (k), an adjusted rate prescribed under
paragraph (1) shall take effect on the later of--
``(i) the first day of the fiscal year to
which such rate applies; or
``(ii) 60 days after the date on which an Act
making a regular appropriation to the Commission
for such fiscal year is enacted.
``(B) Mid-year adjustment.--An adjusted rate
prescribed under paragraph (2) shall take effect on
April 1 of the fiscal year to which such rate
applies.'';
(E) in subsection (k), by striking ``30 days'' and
inserting ``60 days''; and
(F) in subsection (l), by striking ``Definitions.--
'' and all that follows through ``sales.--The baseline''
and inserting ``Baseline Estimate of the Aggregate
Dollar Amount of Sales.--The baseline''.
(2) <<NOTE: 15 USC 78ee.>> Effective date.--The amendments
made by this subsection shall take effect on the later of--
(A) October 1, 2011; or
(B) the date of enactment of an Act making a regular
appropriation to the Commission for fiscal year 2012.
(b) Amendments to Registration Fee Provisions.--
[[Page 124 STAT. 1952]]
(1) Section 6(b) of the securities act of 1933.--Section
6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is
amended--
(A) by striking ``offsetting'' each place that term
appears and inserting ``fee'';
(B) by striking paragraphs (1), (3), (4), (6), (8),
and (9);
(C) by redesignating paragraph (2) as paragraph (1);
(D) by redesignating paragraph (5) as paragraph (2);
(E) by redesignating paragraph (7) as paragraph (3);
(F) by redesignating paragraph (10) as paragraph
(5);
(G) by redesignating paragraph (11) as paragraph
(6);
(H) in paragraph (1), as so redesignated, by
striking ``paragraph (5) or (6).'' and inserting
``paragraph (2).'';
(I) in paragraph (2), as so redesignated--
(i) by striking ``of the fiscal years 2003
through 2011'' and inserting ``fiscal year''; and
(ii) by striking ``paragraph (2)'' and
inserting ``paragraph (1)'';
(J) by inserting after paragraph (3), as so
redesignated, the following:
``(4) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under
paragraph (2) and published under paragraph (5) shall not be
subject to judicial review. An adjusted rate prescribed under
paragraph (2) shall take effect on the first day of the fiscal
year to which such rate applies.'';
(K) in paragraph (5), as redesignated, by striking
``April 30'' and inserting ``August 31'';
(L) in paragraph (6), as so redesignated--
(i) by striking ``of the fiscal years 2002
through 2011'' and inserting ``fiscal year''; and
(ii) by inserting at the end of the table in
subparagraph (A) the following:
``2012................$425,000,000
2013..................$455,000,000
2014..................$485,000,000
2015..................$515,000,000
2016..................$550,000,000
2017..................$585,000,000
2018..................$620,000,000
2019..................$660,000,000
2020..................$705,000,000
2021 and each fiscal yAn amount that is equal to the target fee
thereafter. collection amount for the prior fiscal
year, adjusted by the rate of
inflation.''.
(2) Section 13(e) of the securities exchange act of 1934.--
Section 13(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(e)) is amended--
(A) in paragraph (3), by striking ``paragraphs (5)
and (6)'' and inserting ``paragraph (4)'';
(B) by striking paragraphs (4), (5), and (6);
(C) by inserting after paragraph (3) the following:
[[Page 124 STAT. 1953]]
``(4) Annual adjustment.--For each fiscal year, the
Commission shall by order adjust the rate required by paragraph
(3) for such fiscal year to a rate that is equal to the rate
(expressed in dollars per million) that is applicable under
section 6(b) of the Securities Act of 1933 for such fiscal year.
``(5) Fee collections.--Fees collected pursuant to this
subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the
Treasury and shall not be available for obligation.
``(6) Effective date; publication.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under
paragraph (4) shall be published and take effect in accordance
with section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)).''; and
(D) by striking paragraphs (8), (9), and (10).
(3) Section 14(g) of the securities exchange act of 1934.--
Section 14(g) of the Securities Exchange Act of 1934 (15 U.S.C.
78n(g)) is amended--
(A) in paragraph (1), by striking ``paragraphs (5)
and (6)'' each time that term appears and inserting
``paragraph (4)'';
(B) in paragraph (3), by striking ``paragraphs (5)
and (6)'' and inserting ``paragraph (4)'';
(C) by striking paragraphs (4), (5), and (6);
(D) by inserting after paragraph (3) the following:
``(4) <<NOTE: Order.>> Annual adjustment.--For each fiscal
year, the Commission shall by order adjust the rate required by
paragraphs (1) and (3) for such fiscal year to a rate that is
equal to the rate (expressed in dollars per million) that is
applicable under section 6(b) of the Securities Act of 1933 (15
U.S.C. 77f(b)) for such fiscal year.
``(5) Fee collection.--Fees collected pursuant to this
subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the
Treasury and shall not be available for obligation.
``(6) Review; effective date; publication.--In exercising
its authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under
paragraph (4) shall be published and take effect in accordance
with section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)).'';
(E) by striking paragraphs (8), (9), and (10); and
(F) by redesignating paragraph (11) as paragraph
(8).
(4) Effective date.-- <<NOTE: Publication. 15 USC 77f
note.>> The amendments made by this subsection shall take effect
on October 1, 2011, except that for fiscal year 2012, the
Commission shall publish the rate established under section 6(b)
of the Securities Act of 1933 (15 U.S.C. 77f(b)), as amended by
this Act, on August 31, 2011.
(c) Authorization of Appropriations.--Section 35 of the Securities
Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read as follows:
[[Page 124 STAT. 1954]]
``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.
``In addition to any other funds authorized to be appropriated to
the Commission, there are authorized to be appropriated to carry out the
functions, powers, and duties of the Commission--
``(1) for fiscal year 2011, $1,300,000,000;
``(2) for fiscal year 2012, $1,500,000,000;
``(3) for fiscal year 2013, $1,750,000,000;
``(4) for fiscal year 2014, $2,000,000,000; and
``(5) for fiscal year 2015, $2,250,000,000.''.
(d) Transmittal of Budget Requests.--
(1) Amendment.--Section 31 of the Securities Exchange Act of
1934 (15 U.S.C. 78ee) is amended by adding at the end the
following:
``(m) Transmittal of Commission Budget Requests.--
``(1) Budget required.--For fiscal year 2012, and each
fiscal year thereafter, the Commission shall prepare and submit
a budget to the President. Whenever the Commission submits a
budget estimate or request to the President or the Office of
Management and Budget, the Commission shall concurrently
transmit copies of the estimate or request to the Committee on
Appropriations of the Senate, the Committee on Appropriations of
the House of Representatives, the Committee on Banking, Housing,
and Urban Affairs of the Senate, and the Committee on Financial
Services of the House of Representatives.
``(2) Submission to congress.--The President shall submit
each budget submitted under paragraph (1) to Congress, in
unaltered form, together with the annual budget for the
Administration submitted by the President.
``(3) Contents.--The Commission shall include in each budget
submitted under paragraph (1)--
``(A) an itemization of the amount of funds
necessary to carry out the functions of the Commission.
``(B) an amount to be designated as contingency
funding to be used by the Commission to address
unanticipated needs; and
``(C) a designation of any activities of the
Commission for which multi-year budget authority would
be suitable.''.
(2) <<NOTE: 15 USC 78ee note.>> Budget of the president.--
For fiscal year 2012, and each fiscal year thereafter, the
annual budget for the Administration submitted by the President
to Congress shall reflect the amendments made by this section.
(e) Securities and Exchange Commission Reserve Fund.--
(1) Amendment.--Section 4 of the Securities Exchange Act of
1934 (15 U.S.C. 78d), as amended by this Act, is amended by
adding at the end the following:
``(i) Securities and Exchange Commission Reserve Fund.--
``(1) Reserve fund established.--There is established in the
Treasury of the United States a separate fund, to be known as
the `Securities and Exchange Commission Reserve Fund' (referred
to in this subsection as the `Reserve Fund').
``(2) Reserve fund amounts.--
``(A) In general.--Except as provided in
subparagraph (B), any registration fees collected by the
Commission under section 6(b) of the Securities Act of
1933 (15 U.S.C. 77f(b)) or section 24(f) of the
Investment Company Act of 1940
[[Page 124 STAT. 1955]]
(15 U.S.C. 80a-24(f)) shall be deposited into the
Reserve Fund.
``(B) Limitations.--For any 1 fiscal year--
``(i) the amount deposited in the Fund may not
exceed $50,000,000; and
``(ii) the balance in the Fund may not exceed
$100,000,000.
``(C) Excess fees.--Any amounts in excess of the
limitations described in subparagraph (B) that the
Commission collects from registration fees under section
6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or
section 24(f) of the Investment Company Act of 1940 (15
U.S.C. 80a-24(f)) shall be deposited in the General Fund
of the Treasury of the United States and shall not be
available for obligation by the Commission.
``(3) Use of amounts in reserve fund.--The Commission may
obligate amounts in the Reserve Fund, not to exceed a total of
$100,000,000 in any 1 fiscal year, as the Commission determines
is necessary to carry out the functions of the Commission. Any
amounts in the reserve fund shall remain available until
expended. <<NOTE: Deadline. Notification.>> Not later than 10
days after the date on which the Commission obligates amounts
under this paragraph, the Commission shall notify Congress of
the date, amount, and purpose of the obligation.
``(4) Rule of construction.--Amounts collected and deposited
in the Reserve Fund shall not be construed to be Government
funds or appropriated monies and shall not be subject to
apportionment for the purpose of chapter 15 of title 31, United
States Code, or under any other authority.''.
(2) <<NOTE: 15 USC 78d note.>> Effective date.--The
amendment made by this subsection shall take effect on October
1, 2011.
TITLE X-- <<NOTE: Consumer Financial Protection Act of 2010.>> BUREAU OF
CONSUMER FINANCIAL PROTECTION
SEC. 1001. <<NOTE: 12 USC 5301 note.>> SHORT TITLE.
This title may be cited as the ``Consumer Financial Protection Act
of 2010''.
SEC. 1002. <<NOTE: 12 USC 5481.>> DEFINITIONS.
Except as otherwise provided in this title, for purposes of this
title, the following definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means any person that
controls, is controlled by, or is under common control with
another person.
(2) Bureau.--The term ``Bureau'' means the Bureau of
Consumer Financial Protection.
(3) Business of insurance.--The term ``business of
insurance'' means the writing of insurance or the reinsuring of
risks by an insurer, including all acts necessary to such
writing or reinsuring and the activities relating to the writing
of insurance or the reinsuring of risks conducted by persons who
act as, or are, officers, directors, agents, or employees of
insurers or who are other persons authorized to act on behalf of
such persons.
[[Page 124 STAT. 1956]]
(4) Consumer.--The term ``consumer'' means an individual or
an agent, trustee, or representative acting on behalf of an
individual.
(5) Consumer financial product or service.--The term
``consumer financial product or service'' means any financial
product or service that is described in one or more categories
under--
(A) paragraph (15) and is offered or provided for
use by consumers primarily for personal, family, or
household purposes; or
(B) clause (i), (iii), (ix), or (x) of paragraph
(15)(A), and is delivered, offered, or provided in
connection with a consumer financial product or service
referred to in subparagraph (A).
(6) Covered person.--The term ``covered person'' means--
(A) any person that engages in offering or providing
a consumer financial product or service; and
(B) any affiliate of a person described in
subparagraph (A) if such affiliate acts as a service
provider to such person.
(7) Credit.--The term ``credit'' means the right granted by
a person to a consumer to defer payment of a debt, incur debt
and defer its payment, or purchase property or services and
defer payment for such purchase.
(8) Deposit-taking activity.--The term ``deposit-taking
activity'' means--
(A) the acceptance of deposits, maintenance of
deposit accounts, or the provision of services related
to the acceptance of deposits or the maintenance of
deposit accounts;
(B) the acceptance of funds, the provision of other
services related to the acceptance of funds, or the
maintenance of member share accounts by a credit union;
or
(C) the receipt of funds or the equivalent thereof,
as the Bureau may determine by rule or order, received
or held by a covered person (or an agent for a covered
person) for the purpose of facilitating a payment or
transferring funds or value of funds between a consumer
and a third party.
(9) Designated transfer date.--The term ``designated
transfer date'' means the date established under section 1062.
(10) Director.--The term ``Director'' means the Director of
the Bureau.
(11) Electronic conduit services.--The term ``electronic
conduit services''--
(A) means the provision, by a person, of electronic
data transmission, routing, intermediate or transient
storage, or connections to a telecommunications system
or network; and
(B) does not include a person that provides
electronic conduit services if, when providing such
services, the person--
(i) selects or modifies the content of the
electronic data;
(ii) transmits, routes, stores, or provides
connections for electronic data, including
financial data, in a manner that such financial
data is differentiated from other types of data of
the same form that such
[[Page 124 STAT. 1957]]
person transmits, routes, or stores, or with
respect to which, provides connections; or
(iii) is a payee, payor, correspondent, or
similar party to a payment transaction with a
consumer.
(12) Enumerated consumer laws.--Except as otherwise
specifically provided in section 1029, subtitle G or subtitle H,
the term ``enumerated consumer laws'' means--
(A) the Alternative Mortgage Transaction Parity Act
of 1982 (12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15 U.S.C. 1667
et seq.);
(C) the Electronic Fund Transfer Act (15 U.S.C. 1693
et seq.), except with respect to section 920 of that
Act;
(D) the Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.);
(E) the Fair Credit Billing Act (15 U.S.C. 1666 et
seq.);
(F) the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.), except with respect to sections 615(e) and 628 of
that Act (15 U.S.C. 1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998 (12
U.S.C. 4901 et seq.);
(H) the Fair Debt Collection Practices Act (15
U.S.C. 1692 et seq.);
(I) subsections (b) through (f) of section 43 of the
Federal Deposit Insurance Act (12 U.S.C. 1831t(c)-(f));
(J) sections 502 through 509 of the Gramm-Leach-
Bliley Act (15 U.S.C. 6802-6809) except for section 505
as it applies to section 501(b);
(K) the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2801 et seq.);
(L) the Home Ownership and Equity Protection Act of
1994 (15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C. 1601 et
seq.);
(P) the Truth in Savings Act (12 U.S.C. 4301 et
seq.);
(Q) section 626 of the Omnibus Appropriations Act,
2009 (Public Law 111-8); and
(R) the Interstate Land Sales Full Disclosure Act
(15 U.S.C. 1701).
(13) Fair lending.--The term ``fair lending'' means fair,
equitable, and nondiscriminatory access to credit for consumers.
(14) Federal consumer financial law.--The term ``Federal
consumer financial law'' means the provisions of this title, the
enumerated consumer laws, the laws for which authorities are
transferred under subtitles F and H, and any rule or order
prescribed by the Bureau under this title, an enumerated
consumer law, or pursuant to the authorities transferred under
subtitles F and H. The term does not include the Federal Trade
Commission Act.
(15) Financial product or service.--
(A) In general.--The term ``financial product or
service'' means--
[[Page 124 STAT. 1958]]
(i) extending credit and servicing loans,
including acquiring, purchasing, selling,
brokering, or other extensions of credit (other
than solely extending commercial credit to a
person who originates consumer credit
transactions);
(ii) extending or brokering leases of personal
or real property that are the functional
equivalent of purchase finance arrangements, if--
(I) the lease is on a non-operating
basis;
(II) the initial term of the lease
is at least 90 days; and
(III) in the case of a lease
involving real property, at the
inception of the initial lease, the
transaction is intended to result in
ownership of the leased property to be
transferred to the lessee, subject to
standards prescribed by the Bureau;
(iii) providing real estate settlement
services, except such services excluded under
subparagraph (C), or performing appraisals of real
estate or personal property;
(iv) engaging in deposit-taking activities,
transmitting or exchanging funds, or otherwise
acting as a custodian of funds or any financial
instrument for use by or on behalf of a consumer;
(v) selling, providing, or issuing stored
value or payment instruments, except that, in the
case of a sale of, or transaction to reload,
stored value, only if the seller exercises
substantial control over the terms or conditions
of the stored value provided to the consumer
where, for purposes of this clause--
(I) a seller shall not be found to
exercise substantial control over the
terms or conditions of the stored value
if the seller is not a party to the
contract with the consumer for the
stored value product, and another person
is principally responsible for
establishing the terms or conditions of
the stored value; and
(II) advertising the nonfinancial
goods or services of the seller on the
stored value card or device is not in
itself an exercise of substantial
control over the terms or conditions;
(vi) providing check cashing, check
collection, or check guaranty services;
(vii) providing payments or other financial
data processing products or services to a consumer
by any technological means, including processing
or storing financial or banking data for any
payment instrument, or through any payments
systems or network used for processing payments
data, including payments made through an online
banking system or mobile telecommunications
network, except that a person shall not be deemed
to be a covered person with respect to financial
data processing solely because the person--
[[Page 124 STAT. 1959]]
(I) is a merchant, retailer, or
seller of any nonfinancial good or
service who engages in financial data
processing by transmitting or storing
payments data about a consumer
exclusively for purpose of initiating
payments instructions by the consumer to
pay such person for the purchase of, or
to complete a commercial transaction
for, such nonfinancial good or service
sold directly by such person to the
consumer; or
(II) provides access to a host
server to a person for purposes of
enabling that person to establish and
maintain a website;
(viii) providing financial advisory services
(other than services relating to securities
provided by a person regulated by the Commission
or a person regulated by a State securities
Commission, but only to the extent that such
person acts in a regulated capacity) to consumers
on individual financial matters or relating to
proprietary financial products or services (other
than by publishing any bona fide newspaper, news
magazine, or business or financial publication of
general and regular circulation, including
publishing market data, news, or data analytics or
investment information or recommendations that are
not tailored to the individual needs of a
particular consumer), including--
(I) providing credit counseling to
any consumer; and
(II) providing services to assist a
consumer with debt management or debt
settlement, modifying the terms of any
extension of credit, or avoiding
foreclosure;
(ix) collecting, analyzing, maintaining, or
providing consumer report information or other
account information, including information
relating to the credit history of consumers, used
or expected to be used in connection with any
decision regarding the offering or provision of a
consumer financial product or service, except to
the extent that--
(I) a person--
(aa) collects, analyzes, or
maintains information that
relates solely to the
transactions between a consumer
and such person;
(bb) provides the
information described in item
(aa) to an affiliate of such
person; or
(cc) provides information
that is used or expected to be
used solely in any decision
regarding the offering or
provision of a product or
service that is not a consumer
financial product or service,
including a decision for
employment, government
licensing, or a residential
lease or tenancy involving a
consumer; and
(II) the information described in
subclause (I)(aa) is not used by such
person or affiliate in connection with
any decision regarding the offering or
provision of a consumer financial
product or
[[Page 124 STAT. 1960]]
service to the consumer, other than
credit described in section
1027(a)(2)(A);
(x) collecting debt related to any consumer
financial product or service; and
(xi) such other financial product or service
as may be defined by the Bureau, by regulation,
for purposes of this title, if the Bureau finds
that such financial product or service is--
(I) entered into or conducted as a
subterfuge or with a purpose to evade
any Federal consumer financial law; or
(II) permissible for a bank or for a
financial holding company to offer or to
provide under any provision of a Federal
law or regulation applicable to a bank
or a financial holding company, and has,
or likely will have, a material impact
on consumers.
(B) Rule of construction.--
(i) In general.--For purposes of subparagraph
(A)(xi)(II), and subject to clause (ii) of this
subparagraph, the following activities provided to
a covered person shall not, for purposes of this
title, be considered incidental or complementary
to a financial activity permissible for a
financial holding company to engage in under any
provision of a Federal law or regulation
applicable to a financial holding company:
(I) Providing information products
or services to a covered person for
identity authentication.
(II) Providing information products
or services for fraud or identify theft
detection, prevention, or investigation.
(III) Providing document retrieval
or delivery services.
(IV) Providing public records
information retrieval.
(V) Providing information products
or services for anti-money laundering
activities.
(ii) Limitation.--Nothing in clause (i) may be
construed as modifying or limiting the authority
of the Bureau to exercise any--
(I) examination or enforcement
powers authority under this title with
respect to a covered person or service
provider engaging in an activity
described in subparagraph (A)(ix); or
(II) powers authorized by this title
to prescribe rules, issue orders, or
take other actions under any enumerated
consumer law or law for which the
authorities are transferred under
subtitle F or H.
(C) Exclusions.--The term ``financial product or
service'' does not include--
(i) the business of insurance; or
(ii) electronic conduit services.
(16) Foreign exchange.--The term ``foreign exchange'' means
the exchange, for compensation, of currency of the United States
or of a foreign government for currency of another government.
[[Page 124 STAT. 1961]]
(17) Insured credit union.--The term ``insured credit
union'' has the same meaning as in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(18) Payment instrument.--The term ``payment instrument''
means a check, draft, warrant, money order, traveler's check,
electronic instrument, or other instrument, payment of funds, or
monetary value (other than currency).
(19) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or
other entity.
(20) Person regulated by the commodity futures trading
commission.--The term ``person regulated by the Commodity
Futures Trading Commission'' means any person that is
registered, or required by statute or regulation to be
registered, with the Commodity Futures Trading Commission, but
only to the extent that the activities of such person are
subject to the jurisdiction of the Commodity Futures Trading
Commission under the Commodity Exchange Act.
(21) Person regulated by the commission.--The term ``person
regulated by the Commission'' means a person who is--
(A) a broker or dealer that is required to be
registered under the Securities Exchange Act of 1934;
(B) an investment adviser that is registered under
the Investment Advisers Act of 1940;
(C) an investment company that is required to be
registered under the Investment Company Act of 1940, and
any company that has elected to be regulated as a
business development company under that Act;
(D) a national securities exchange that is required
to be registered under the Securities Exchange Act of
1934;
(E) a transfer agent that is required to be
registered under the Securities Exchange Act of 1934;
(F) a clearing corporation that is required to be
registered under the Securities Exchange Act of 1934;
(G) any self-regulatory organization that is
required to be registered with the Commission;
(H) any nationally recognized statistical rating
organization that is required to be registered with the
Commission;
(I) any securities information processor that is
required to be registered with the Commission;
(J) any municipal securities dealer that is required
to be registered with the Commission;
(K) any other person that is required to be
registered with the Commission under the Securities
Exchange Act of 1934; and
(L) any employee, agent, or contractor acting on
behalf of, registered with, or providing services to,
any person described in any of subparagraphs (A) through
(K), but only to the extent that any person described in
any of subparagraphs (A) through (K), or the employee,
agent, or contractor of such person, acts in a regulated
capacity.
(22) Person regulated by a state insurance regulator.--The
term ``person regulated by a State insurance regulator'' means
any person that is engaged in the business of
[[Page 124 STAT. 1962]]
insurance and subject to regulation by any State insurance
regulator, but only to the extent that such person acts in such
capacity.
(23) Person that performs income tax preparation activities
for consumers.--The term ``person that performs income tax
preparation activities for consumers'' means--
(A) any tax return preparer (as defined in section
7701(a)(36) of the Internal Revenue Code of 1986),
regardless of whether compensated, but only to the
extent that the person acts in such capacity;
(B) any person regulated by the Secretary under
section 330 of title 31, United States Code, but only to
the extent that the person acts in such capacity; and
(C) any authorized IRS e-file Providers (as defined
for purposes of section 7216 of the Internal Revenue
Code of 1986), but only to the extent that the person
acts in such capacity.
(24) Prudential regulator.--The term ``prudential
regulator'' means--
(A) in the case of an insured depository institution
or depository institution holding company (as defined in
section 3 of the Federal Deposit Insurance Act), or
subsidiary of such institution or company, the
appropriate Federal banking agency, as that term is
defined in section 3 of the Federal Deposit Insurance
Act; and
(B) in the case of an insured credit union, the
National Credit Union Administration.
(25) Related person.--The term ``related person''--
(A) shall apply only with respect to a covered
person that is not a bank holding company (as that term
is defined in section 2 of the Bank Holding Company Act
of 1956), credit union, or depository institution;
(B) shall be deemed to mean a covered person for all
purposes of any provision of Federal consumer financial
law; and
(C) means--
(i) any director, officer, or employee charged
with managerial responsibility for, or controlling
shareholder of, or agent for, such covered person;
(ii) any shareholder, consultant, joint
venture partner, or other person, as determined by
the Bureau (by rule or on a case-by-case basis)
who materially participates in the conduct of the
affairs of such covered person; and
(iii) any independent contractor (including
any attorney, appraiser, or accountant) who
knowingly or recklessly participates in any--
(I) violation of any provision of
law or regulation; or
(II) breach of a fiduciary duty.
(26) Service provider.--
(A) In general.--The term ``service provider'' means
any person that provides a material service to a covered
person in connection with the offering or provision by
such covered person of a consumer financial product or
service, including a person that--
[[Page 124 STAT. 1963]]
(i) participates in designing, operating, or
maintaining the consumer financial product or
service; or
(ii) processes transactions relating to the
consumer financial product or service (other than
unknowingly or incidentally transmitting or
processing financial data in a manner that such
data is undifferentiated from other types of data
of the same form as the person transmits or
processes).
(B) Exceptions.--The term ``service provider'' does
not include a person solely by virtue of such person
offering or providing to a covered person--
(i) a support service of a type provided to
businesses generally or a similar ministerial
service; or
(ii) time or space for an advertisement for a
consumer financial product or service through
print, newspaper, or electronic media.
(C) Rule of construction.--A person that is a
service provider shall be deemed to be a covered person
to the extent that such person engages in the offering
or provision of its own consumer financial product or
service.
(27) State.--The term ``State'' means any State, territory,
or possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, or the United
States Virgin Islands or any federally recognized Indian tribe,
as defined by the Secretary of the Interior under section 104(a)
of the Federally Recognized Indian Tribe List Act of 1994 (25
U.S.C. 479a-1(a)).
(28) Stored value.--
(A) In general.--The term ``stored value'' means
funds or monetary value represented in any electronic
format, whether or not specially encrypted, and stored
or capable of storage on electronic media in such a way
as to be retrievable and transferred electronically, and
includes a prepaid debit card or product, or any other
similar product, regardless of whether the amount of the
funds or monetary value may be increased or reloaded.
(B) Exclusion.--Notwithstanding subparagraph (A),
the term ``stored value'' does not include a special
purpose card or certificate, which shall be defined for
purposes of this paragraph as funds or monetary value
represented in any electronic format, whether or not
specially encrypted, that is--
(i) issued by a merchant, retailer, or other
seller of nonfinancial goods or services;
(ii) redeemable only for transactions with the
merchant, retailer, or seller of nonfinancial
goods or services or with an affiliate of such
person, which affiliate itself is a merchant,
retailer, or seller of nonfinancial goods or
services;
(iii) issued in a specified amount that,
except in the case of a card or product used
solely for telephone services, may not be
increased or reloaded;
(iv) purchased on a prepaid basis in exchange
for payment; and
[[Page 124 STAT. 1964]]
(v) honored upon presentation to such
merchant, retailer, or seller of nonfinancial
goods or services or an affiliate of such person,
which affiliate itself is a merchant, retailer, or
seller of nonfinancial goods or services, only for
any nonfinancial goods or services.
(29) Transmitting or exchanging funds.--The term
``transmitting or exchanging funds'' means receiving currency,
monetary value, or payment instruments from a consumer for the
purpose of exchanging or transmitting the same by any means,
including transmission by wire, facsimile, electronic transfer,
courier, the Internet, or through bill payment services or
through other businesses that facilitate third-party transfers
within the United States or to or from the United States.
Subtitle A--Bureau of Consumer Financial Protection
SEC. 1011. <<NOTE: 12 USC 5491.>> ESTABLISHMENT OF THE BUREAU OF
CONSUMER FINANCIAL PROTECTION.
(a) Bureau Established.--There is established in the Federal Reserve
System, an independent bureau to be known as the ``Bureau of Consumer
Financial Protection'', which shall regulate the offering and provision
of consumer financial products or services under the Federal consumer
financial laws. The Bureau shall be considered an Executive agency, as
defined in section 105 of title 5, United States
Code. <<NOTE: Applicability.>> Except as otherwise provided expressly
by law, all Federal laws dealing with public or Federal contracts,
property, works, officers, employees, budgets, or funds, including the
provisions of chapters 5 and 7 of title 5, shall apply to the exercise
of the powers of the Bureau.
(b) Director and Deputy Director.--
(1) In general.--There is established the position of the
Director, who shall serve as the head of the Bureau.
(2) Appointment.-- <<NOTE: President.>> Subject to paragraph
(3), the Director shall be appointed by the President, by and
with the advice and consent of the Senate.
(3) Qualification.-- <<NOTE: President.>> The President
shall nominate the Director from among individuals who are
citizens of the United States.
(4) Compensation.--The Director shall be compensated at the
rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(5) Deputy director.--There is established the position of
Deputy Director, who shall--
(A) be appointed by the Director; and
(B) serve as acting Director in the absence or
unavailability of the Director.
(c) Term.--
(1) In general.--The Director shall serve for a term of 5
years.
(2) Expiration of term.--An individual may serve as Director
after the expiration of the term for which appointed, until a
successor has been appointed and qualified.
(3) Removal for cause.--The President may remove the
Director for inefficiency, neglect of duty, or malfeasance in
office.
[[Page 124 STAT. 1965]]
(d) Service Restriction.--No Director or Deputy Director may hold
any office, position, or employment in any Federal reserve bank, Federal
home loan bank, covered person, or service provider during the period of
service of such person as Director or Deputy Director.
(e) Offices.--The principal office of the Bureau shall be in the
District of Columbia. The Director may establish regional offices of the
Bureau, including in cities in which the Federal reserve banks, or
branches of such banks, are located, in order to carry out the
responsibilities assigned to the Bureau under the Federal consumer
financial laws.
SEC. 1012. <<NOTE: 12 USC 5492.>> EXECUTIVE AND ADMINISTRATIVE
POWERS.
(a) Powers of the Bureau.--The Bureau is authorized to establish the
general policies of the Bureau with respect to all executive and
administrative functions, including--
(1) the establishment of rules for conducting the general
business of the Bureau, in a manner not inconsistent with this
title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of divisions
or other offices within the Bureau, in order to carry out the
responsibilities under the Federal consumer financial laws, and
to satisfy the requirements of other applicable law;
(4) to coordinate and oversee the operation of all
administrative, enforcement, and research activities of the
Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity for the
obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel employed by
the Bureau;
(8) the distribution of business among personnel appointed
and supervised by the Director and among administrative units of
the Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial laws
through rules, orders, guidance, interpretations, statements of
policy, examinations, and enforcement actions; and
(11) performing such other functions as may be authorized or
required by law.
(b) Delegation of Authority.--The Director of the Bureau may
delegate to any duly authorized employee, representative, or agent any
power vested in the Bureau by law.
(c) Autonomy of the Bureau.--
(1) Coordination with the board of governors.--
Notwithstanding any other provision of law applicable to the
supervision or examination of persons with respect to Federal
consumer financial laws, the Board of Governors may delegate to
the Bureau the authorities to examine persons subject to the
jurisdiction of the Board of Governors for compliance with the
Federal consumer financial laws.
(2) Autonomy.--Notwithstanding the authorities granted to
the Board of Governors under the Federal Reserve Act, the Board
of Governors may not--
(A) intervene in any matter or proceeding before the
Director, including examinations or enforcement actions,
unless otherwise specifically provided by law;
[[Page 124 STAT. 1966]]
(B) appoint, direct, or remove any officer or
employee of the Bureau; or
(C) merge or consolidate the Bureau, or any of the
functions or responsibilities of the Bureau, with any
division or office of the Board of Governors or the
Federal reserve banks.
(3) Rules and orders.--No rule or order of the Bureau shall
be subject to approval or review by the Board of Governors. The
Board of Governors may not delay or prevent the issuance of any
rule or order of the Bureau.
(4) Recommendations and testimony.--No officer or agency of
the United States shall have any authority to require the
Director or any other officer of the Bureau to submit
legislative recommendations, or testimony or comments on
legislation, to any officer or agency of the United States for
approval, comments, or review prior to the submission of such
recommendations, testimony, or comments to the Congress, if such
recommendations, testimony, or comments to the Congress include
a statement indicating that the views expressed therein are
those of the Director or such officer, and do not necessarily
reflect the views of the Board of Governors or the President.
(5) Clarification of autonomy of the bureau in legal
proceedings.--The Bureau shall not be liable under any provision
of law for any action or inaction of the Board of Governors, and
the Board of Governors shall not be liable under any provision
of law for any action or inaction of the Bureau.
SEC. 1013. <<NOTE: 12 USC 5493.>> ADMINISTRATION.
(a) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the number of,
and appoint and direct, all employees of the Bureau, in
accordance with the applicable provisions of title 5,
United States Code.
(B) Employees of the bureau.--The Director is
authorized to employ attorneys, compliance examiners,
compliance supervision analysts, economists,
statisticians, and other employees as may be deemed
necessary to conduct the business of the Bureau. Unless
otherwise provided expressly by law, any individual
appointed under this section shall be an employee as
defined in section 2105 of title 5, United States Code,
and subject to the provisions of such title and other
laws generally applicable to the employees of an
Executive agency.
(C) Waiver authority.--
(i) In general.--In making any appointment
under subparagraph (A), the Director may waive the
requirements of chapter 33 of title 5, United
States Code, and the regulations implementing such
chapter, to the extent necessary to appoint
employees on terms and conditions that are
consistent with those set forth in section 11(1)
of the Federal Reserve Act (12 U.S.C. 248(1)),
while providing for--
(I) fair, credible, and transparent
methods of establishing qualification
requirements for, recruitment for, and
appointments to positions;
[[Page 124 STAT. 1967]]
(II) fair and open competition and
equitable treatment in the consideration
and selection of individuals to
positions;
(III) fair, credible, and
transparent methods of assigning,
reassigning, detailing, transferring,
and promoting employees.
(ii) Veterans preferences.--In implementing
this subparagraph, the Director shall comply with
the provisions of section 2302(b)(11), regarding
veterans' preference requirements, in a manner
consistent with that in which such provisions are
applied under chapter 33 of title 5, United States
Code. <<NOTE: Expiration date.>> The authority
under this subparagraph to waive the requirements
of that chapter 33 shall expire 5 years after the
date of enactment of this Act.
(2) Compensation.-- <<NOTE: Applicability.>> Notwithstanding
any otherwise applicable provision of title 5, United States
Code, concerning compensation, including the provisions of
chapter 51 and chapter 53, the following provisions shall apply
with respect to employees of the Bureau:
(A) The rates of basic pay for all employees of the
Bureau may be set and adjusted by the Director.
(B) The Director shall at all times provide
compensation (including benefits) to each class of
employees that, at a minimum, are comparable to the
compensation and benefits then being provided by the
Board of Governors for the corresponding class of
employees.
(C) All such employees shall be compensated
(including benefits) on terms and conditions that are
consistent with the terms and conditions set forth in
section 11(l) of the Federal Reserve Act (12 U.S.C.
248(l)).
(3) Bureau participation in federal reserve system
retirement plan and federal reserve system thrift plan.--
(A) Employee election.--Employees appointed to the
Bureau may elect to participate in either--
(i) both the Federal Reserve System Retirement
Plan and the Federal Reserve System Thrift Plan,
under the same terms on which such participation
is offered to employees of the Board of Governors
who participate in such plans and under the terms
and conditions specified under section
1064(i)(1)(C); or
(ii) the Civil Service Retirement System under
chapter 83 of title 5, United States Code, or the
Federal Employees Retirement System under chapter
84 of title 5, United States Code, if previously
covered under one of those Federal employee
retirement systems.
(B) Election period.-- <<NOTE: Deadline.>> Bureau
employees shall make an election under this paragraph
not later than 1 year after the date of appointment by,
or transfer under subtitle F to, the Bureau.
Participation in, and benefit accruals under, any other
retirement plan established or maintained by the Federal
Government shall end not later than the date on which
participation in, and benefit accruals under, the
Federal Reserve System Retirement Plan and Federal
Reserve System Thrift Plan begin.
[[Page 124 STAT. 1968]]
(C) <<NOTE: Payments.>> Employer contribution.--The
Bureau shall pay an employer contribution to the Federal
Reserve System Retirement Plan, in the amount
established as an employer contribution under the
Federal Employees Retirement System, as established
under chapter 84 of title 5, United States Code, for
each Bureau employee who elects to participate in the
Federal Reserve System Retirement Plan. The Bureau shall
pay an employer contribution to the Federal Reserve
System Thrift Plan for each Bureau employee who elects
to participate in such plan, as required under the terms
of such plan.
(D) Controlled group status.--The Bureau is the same
employer as the Federal Reserve System (as comprised of
the Board of Governors and each of the 12 Federal
reserve banks prior to the date of enactment of this
Act) for purposes of subsections (b), (c), (m), and (o)
of section 414 of the Internal Revenue Code of 1986, (26
U.S.C. 414).
(4) Labor-management relations.--
<<NOTE: Applicability.>> Chapter 71 of title 5, United States
Code, shall apply to the Bureau and the employees of the Bureau.
(5) Agency ombudsman.--
(A) Establishment required.--
<<NOTE: Deadline. Appointment.>> Not later than 180 days
after the designated transfer date, the Bureau shall
appoint an ombudsman.
(B) Duties of ombudsman.--The ombudsman appointed in
accordance with subparagraph (A) shall--
(i) act as a liaison between the Bureau and
any affected person with respect to any problem
that such party may have in dealing with the
Bureau, resulting from the regulatory activities
of the Bureau; and
(ii) assure that safeguards exist to encourage
complainants to come forward and preserve
confidentiality.
(b) <<NOTE: Establishment.>> Specific Functional Units.--
(1) Research.--The Director shall establish a unit whose
functions shall include researching, analyzing, and reporting
on--
(A) developments in markets for consumer financial
products or services, including market areas of
alternative consumer financial products or services with
high growth rates and areas of risk to consumers;
(B) access to fair and affordable credit for
traditionally underserved communities;
(C) consumer awareness, understanding, and use of
disclosures and communications regarding consumer
financial products or services;
(D) consumer awareness and understanding of costs,
risks, and benefits of consumer financial products or
services;
(E) consumer behavior with respect to consumer
financial products or services, including performance on
mortgage loans; and
(F) experiences of traditionally underserved
consumers, including un-banked and under-banked
consumers.
[[Page 124 STAT. 1969]]
(2) Community affairs.--The Director shall establish a unit
whose functions shall include providing information, guidance,
and technical assistance regarding the offering and provision of
consumer financial products or services to traditionally
underserved consumers and communities.
(3) Collecting and tracking complaints.--
(A) In general.--The Director shall establish a unit
whose functions shall include establishing a single,
toll-free telephone number, a website, and a database or
utilizing an existing database to facilitate the
centralized collection of, monitoring of, and response
to consumer complaints regarding consumer financial
products or services. The Director shall coordinate with
the Federal Trade Commission or other Federal agencies
to route complaints to such agencies, where appropriate.
(B) Routing calls to states.--To the extent
practicable, State agencies may receive appropriate
complaints from the systems established under
subparagraph (A), if--
(i) the State agency system has the functional
capacity to receive calls or electronic reports
routed by the Bureau systems;
(ii) the State agency has satisfied any
conditions of participation in the system that the
Bureau may establish, including treatment of
personally identifiable information and sharing of
information on complaint resolution or related
compliance procedures and resources; and
(iii) participation by the State agency
includes measures necessary to provide for
protection of personally identifiable information
that conform to the standards for protection of
the confidentiality of personally identifiable
information and for data integrity and security
that apply to the Federal agencies described in
subparagraph (D).
(C) Reports to the congress.--The Director shall
present an annual report to Congress not later than
March 31 of each year on the complaints received by the
Bureau in the prior year regarding consumer financial
products and services. Such report shall include
information and analysis about complaint numbers,
complaint types, and, where applicable, information
about resolution of complaints.
(D) Data sharing required.--To facilitate
preparation of the reports required under subparagraph
(C), supervision and enforcement activities, and
monitoring of the market for consumer financial products
and services, the Bureau shall share consumer complaint
information with prudential regulators, the Federal
Trade Commission, other Federal agencies, and State
agencies, subject to the standards applicable to Federal
agencies for protection of the confidentiality of
personally identifiable information and for data
security and integrity. The prudential regulators, the
Federal Trade Commission, and other Federal agencies
shall share data relating to consumer complaints
regarding consumer financial products and services with
the Bureau, subject to the standards applicable to
Federal agencies
[[Page 124 STAT. 1970]]
for protection of confidentiality of personally
identifiable information and for data security and
integrity.
(c) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--The Director shall establish within the
Bureau the Office of Fair Lending and Equal Opportunity.
(2) Functions.--The Office of Fair Lending and Equal
Opportunity shall have such powers and duties as the Director
may delegate to the Office, including--
(A) providing oversight and enforcement of Federal
laws intended to ensure the fair, equitable, and
nondiscriminatory access to credit for both individuals
and communities that are enforced by the Bureau,
including the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act;
(B) coordinating fair lending efforts of the Bureau
with other Federal agencies and State regulators, as
appropriate, to promote consistent, efficient, and
effective enforcement of Federal fair lending laws;
(C) working with private industry, fair lending,
civil rights, consumer and community advocates on the
promotion of fair lending compliance and education; and
(D) providing annual reports to Congress on the
efforts of the Bureau to fulfill its fair lending
mandate.
(3) <<NOTE: Establishment.>> Administration of office.--
There is established the position of Assistant Director of the
Bureau for Fair Lending and Equal Opportunity, who--
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the Director may
delegate to such Assistant Director.
(d) Office of Financial Education.--
(1) Establishment.--The Director shall establish an Office
of Financial Education, which shall be responsible for
developing and implementing initiatives intended to educate and
empower consumers to make better informed financial decisions.
(2) Other duties.-- <<NOTE: Strategy.>> The Office of
Financial Education shall develop and implement a strategy to
improve the financial literacy of consumers that includes
measurable goals and objectives, in consultation with the
Financial Literacy and Education Commission, consistent with the
National Strategy for Financial Literacy, through activities
including providing opportunities for consumers to access--
(A) financial counseling, including community-based
financial counseling, where practicable;
(B) information to assist with the evaluation of
credit products and the understanding of credit
histories and scores;
(C) savings, borrowing, and other services found at
mainstream financial institutions;
(D) activities intended to--
(i) prepare the consumer for educational
expenses and the submission of financial aid
applications, and other major purchases;
(ii) reduce debt; and
(iii) improve the financial situation of the
consumer;
[[Page 124 STAT. 1971]]
(E) assistance in developing long-term savings
strategies; and
(F) wealth building and financial services during
the preparation process to claim earned income tax
credits and Federal benefits.
(3) Coordination.--The Office of Financial Education shall
coordinate with other units within the Bureau in carrying out
its functions, including--
(A) working with the Community Affairs Office to
implement the strategy to improve financial literacy of
consumers; and
(B) working with the research unit established by
the Director to conduct research related to consumer
financial education and counseling.
(4) Report.--Not later than 24 months after the designated
transfer date, and annually thereafter, the Director shall
submit a report on its financial literacy activities and
strategy to improve financial literacy of consumers to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the House
of Representatives.
(5) Membership in financial literacy and education
commission.--Section 513(c)(1) of the Financial Literacy and
Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended--
(A) in subparagraph (B), by striking ``and'' at the
end;
(B) by redesignating subparagraph (C) as
subparagraph (D); and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C) the Director of the Bureau of Consumer
Financial Protection; and''.
(6) Conforming amendment.--Section 513(d) of the Financial
Literacy and Education Improvement Act (20 U.S.C. 9702(d)) is
amended by adding at the end the following: ``The Director of
the Bureau of Consumer Financial Protection shall serve as the
Vice Chairman.''.
(7) Study and report on financial literacy program.--
(A) In general.--The Comptroller General of the
United States shall conduct a study to identify--
(i) the feasibility of certification of
persons providing the programs or performing the
activities described in paragraph (2), including
recognizing outstanding programs, and developing
guidelines and resources for community-based
practitioners, including--
(I) a potential certification
process and standards for certification;
(II) appropriate certifying
entities;
(III) resources required for funding
such a process; and
(IV) a cost-benefit analysis of such
certification;
(ii) technological resources intended to
collect, analyze, evaluate, or promote financial
literacy and counseling programs;
[[Page 124 STAT. 1972]]
(iii) effective methods, tools, and strategies
intended to educate and empower consumers about
personal finance management; and
(iv) recommendations intended to encourage the
development of programs that effectively improve
financial education outcomes and empower consumers
to make better informed financial decisions based
on findings.
(B) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the
United States shall submit a report on the results of
the study conducted under this paragraph to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives.
(e) Office of Service Member Affairs.--
(1) In general.-- <<NOTE: Establishment.>> The Director
shall establish an Office of Service Member Affairs, which shall
be responsible for developing and implementing initiatives for
service members and their families intended to--
(A) educate and empower service members and their
families to make better informed decisions regarding
consumer financial products and services;
(B) coordinate with the unit of the Bureau
established under subsection (b)(3), in order to monitor
complaints by service members and their families and
responses to those complaints by the Bureau or other
appropriate Federal or State agency; and
(C) coordinate efforts among Federal and State
agencies, as appropriate, regarding consumer protection
measures relating to consumer financial products and
services offered to, or used by, service members and
their families.
(2) Coordination.--
(A) Regional services.--The Director is authorized
to assign employees of the Bureau as may be deemed
necessary to conduct the business of the Office of
Service Member Affairs, including by establishing and
maintaining the functions of the Office in regional
offices of the Bureau located near military bases,
military treatment facilities, or other similar military
facilities.
(B) Agreements.--The Director is authorized to enter
into memoranda of understanding and similar agreements
with the Department of Defense, including any branch or
agency as authorized by the department, in order to
carry out the business of the Office of Service Member
Affairs.
(3) Definition.--As used in this subsection, the term
``service member'' means any member of the United States Armed
Forces and any member of the National Guard or Reserves.
(f) Timing.--The Office of Fair Lending and Equal Opportunity, the
Office of Financial Education, and the Office of Service Member Affairs
shall each be established not later than 1 year after the designated
transfer date.
(g) Office of Financial Protection for Older Americans.--
(1) Establishment.-- <<NOTE: Deadline.>> Before the end of
the 180-day period beginning on the designated transfer date,
the Director shall
[[Page 124 STAT. 1973]]
establish the Office of Financial Protection for Older
Americans, the functions of which shall include activities
designed to facilitate the financial literacy of individuals who
have attained the age of 62 years or more (in this subsection,
referred to as ``seniors'') on protection from unfair,
deceptive, and abusive practices and on current and future
financial choices, including through the dissemination of
materials to seniors on such topics.
(2) Assistant director.--The Office of Financial Protection
for Older Americans (in this subsection referred to as the
``Office'') shall be headed by an assistant director.
(3) Duties.--The Office shall--
(A) develop goals for programs that provide seniors
financial literacy and counseling, including programs
that--
(i) help seniors recognize warning signs of
unfair, deceptive, or abusive practices, protect
themselves from such practices;
(ii) provide one-on-one financial counseling
on issues including long-term savings and later-
life economic security; and
(iii) provide personal consumer credit
advocacy to respond to consumer problems caused by
unfair, deceptive, or abusive practices;
(B) monitor certifications or designations of
financial advisors who advise seniors and alert the
Commission and State regulators of certifications or
designations that are identified as unfair, deceptive,
or abusive;
(C) <<NOTE: Deadline. Recommenda- tions.>> not
later than 18 months after the date of the establishment
of the Office, submit to Congress and the Commission any
legislative and regulatory recommendations on the best
practices for--
(i) disseminating information regarding the
legitimacy of certifications of financial advisers
who advise seniors;
(ii) methods in which a senior can identify
the financial advisor most appropriate for the
senior's needs; and
(iii) methods in which a senior can verify a
financial advisor's credentials;
(D) conduct research to identify best practices and
effective methods, tools, technology and strategies to
educate and counsel seniors about personal finance
management with a focus on--
(i) protecting themselves from unfair,
deceptive, and abusive practices;
(ii) long-term savings; and
(iii) planning for retirement and long-term
care;
(E) coordinate consumer protection efforts of
seniors with other Federal agencies and State
regulators, as appropriate, to promote consistent,
effective, and efficient enforcement; and
(F) work with community organizations, non-profit
organizations, and other entities that are involved with
educating or assisting seniors (including the National
Education and Resource Center on Women and Retirement
Planning).
[[Page 124 STAT. 1974]]
SEC. 1014. CONSUMER ADVISORY BOARD.
(a) Establishment Required.--The Director shall establish a Consumer
Advisory Board to advise and consult with the Bureau in the exercise of
its functions under the Federal consumer financial laws, and to provide
information on emerging practices in the consumer financial products or
services industry, including regional trends, concerns, and other
relevant information.
(b) Membership.--In appointing the members of the Consumer Advisory
Board, the Director shall seek to assemble experts in consumer
protection, financial services, community development, fair lending and
civil rights, and consumer financial products or services and
representatives of depository institutions that primarily serve
underserved communities, and representatives of communities that have
been significantly impacted by higher-priced mortgage loans, and seek
representation of the interests of covered persons and consumers,
without regard to party affiliation. Not fewer than 6 members shall be
appointed upon the recommendation of the regional Federal Reserve Bank
Presidents, on a rotating basis.
(c) Meetings.--The Consumer Advisory Board shall meet from time to
time at the call of the Director, but, at a minimum, shall meet at least
twice in each year.
(d) Compensation and Travel Expenses.--Members of the Consumer
Advisory Board who are not full-time employees of the United States
shall--
(1) be entitled to receive compensation at a rate fixed by
the Director while attending meetings of the Consumer Advisory
Board, including travel time; and
(2) be allowed travel expenses, including transportation and
subsistence, while away from their homes or regular places of
business.
SEC. 1015. <<NOTE: 12 USC 5495.>> COORDINATION.
The Bureau shall coordinate with the Commission, the Commodity
Futures Trading Commission, the Federal Trade Commission, and other
Federal agencies and State regulators, as appropriate, to promote
consistent regulatory treatment of consumer financial and investment
products and services.
SEC. 1016. <<NOTE: 12 USC 5496.>> APPEARANCES BEFORE AND REPORTS
TO CONGRESS.
(a) Appearances Before Congress.--The Director of the Bureau shall
appear before the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services and the Committee on
Energy and Commerce of the House of Representatives at semi-annual
hearings regarding the reports required under subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with each semi-
annual hearing referred to in subsection (a), prepare and submit to the
President and to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services and the Committee on
Energy and Commerce of the House of Representatives, a report, beginning
with the session following the designated transfer date. The Bureau may
also submit such report to the Committee on Commerce, Science, and
Transportation of the Senate.
(c) Contents.--The reports required by subsection (b) shall
include--
[[Page 124 STAT. 1975]]
(1) a discussion of the significant problems faced by
consumers in shopping for or obtaining consumer financial
products or services;
(2) a justification of the budget request of the previous
year;
(3) a list of the significant rules and orders adopted by
the Bureau, as well as other significant initiatives conducted
by the Bureau, during the preceding year and the plan of the
Bureau for rules, orders, or other initiatives to be undertaken
during the upcoming period;
(4) an analysis of complaints about consumer financial
products or services that the Bureau has received and collected
in its central database on complaints during the preceding year;
(5) a list, with a brief statement of the issues, of the
public supervisory and enforcement actions to which the Bureau
was a party during the preceding year;
(6) the actions taken regarding rules, orders, and
supervisory actions with respect to covered persons which are
not credit unions or depository institutions;
(7) an assessment of significant actions by State attorneys
general or State regulators relating to Federal consumer
financial law;
(8) an analysis of the efforts of the Bureau to fulfill the
fair lending mission of the Bureau; and
(9) an analysis of the efforts of the Bureau to increase
workforce and contracting diversity consistent with the
procedures established by the Office of Minority and Women
Inclusion.
SEC. 1017. <<NOTE: 12 USC 5497.>> FUNDING; PENALTIES AND FINES.
(a) Transfer of Funds From Board Of Governors.--
(1) In general.-- <<NOTE: Effective date. Deadlines.>> Each
year (or quarter of such year), beginning on the designated
transfer date, and each quarter thereafter, the Board of
Governors shall transfer to the Bureau from the combined
earnings of the Federal Reserve System, the amount determined by
the Director to be reasonably necessary to carry out the
authorities of the Bureau under Federal consumer financial law,
taking into account such other sums made available to the Bureau
from the preceding year (or quarter of such year).
(2) Funding cap.--
(A) In general.--Notwithstanding paragraph (1), and
in accordance with this paragraph, the amount that shall
be transferred to the Bureau in each fiscal year shall
not exceed a fixed percentage of the total operating
expenses of the Federal Reserve System, as reported in
the Annual Report, 2009, of the Board of Governors,
equal to--
(i) 10 percent of such expenses in fiscal year
2011;
(ii) 11 percent of such expenses in fiscal
year 2012; and
(iii) 12 percent of such expenses in fiscal
year 2013, and in each year thereafter.
(B) Adjustment of amount.--The dollar amount
referred to in subparagraph (A)(iii) shall be adjusted
[[Page 124 STAT. 1976]]
annually, using the percent increase, if any, in the
employment cost index for total compensation for State
and local government workers published by the Federal
Government, or the successor index thereto, for the 12-
month period ending on September 30 of the year
preceding the transfer.
(C) Reviewability.--Notwithstanding any other
provision in this title, the funds derived from the
Federal Reserve System pursuant to this subsection shall
not be subject to review by the Committees on
Appropriations of the House of Representatives and the
Senate.
(3) Transition period.--Beginning on <<NOTE: Transfer
authority.>> the date of enactment of this Act and until the
designated transfer date, the Board of Governors shall transfer
to the Bureau the amount estimated by the Secretary needed to
carry out the authorities granted to the Bureau under Federal
consumer financial law, from the date of enactment of this Act
until the designated transfer date.
(4) Budget and financial management.--
(A) Financial operating plans and forecasts.--The
Director shall provide to the Director of the Office of
Management and Budget copies of the financial operating
plans and forecasts of the Director, as prepared by the
Director in the ordinary course of the operations of the
Bureau, and copies of the quarterly reports of the
financial condition and results of operations of the
Bureau, as prepared by the Director in the ordinary
course of the operations of the Bureau.
(B) Financial statements.--The
Bureau <<NOTE: Deadline.>> shall prepare annually a
statement of--
(i) assets and liabilities and surplus or
deficit;
(ii) income and expenses; and
(iii) sources and application of funds.
(C) Financial management systems.--The Bureau shall
implement and maintain financial management systems that
comply substantially with Federal financial management
systems requirements and applicable Federal accounting
standards.
(D) Assertion of internal controls.--The Director
shall provide to the Comptroller General of the United
States an assertion as to the effectiveness of the
internal controls that apply to financial reporting by
the Bureau, using the standards established in section
3512(c) of title 31, United States Code.
(E) Rule of construction.--This subsection may not
be construed as implying any obligation on the part of
the Director to consult with or obtain the consent or
approval of the Director of the Office of Management and
Budget with respect to any report, plan, forecast, or
other information referred to in subparagraph (A) or any
jurisdiction or oversight over the affairs or operations
of the Bureau.
(F) Financial statements.--The financial statements
of the Bureau shall not be consolidated with the
financial statements of either the Board of Governors or
the Federal Reserve System.
(5) Audit of the bureau.--
[[Page 124 STAT. 1977]]
(A) In general.--The
Comptroller <<NOTE: Deadline.>> General shall annually
audit the financial transactions of the Bureau in
accordance with the United States generally accepted
government auditing standards, as may be prescribed by
the Comptroller General of the United States. The audit
shall be conducted at the place or places where accounts
of the Bureau are normally kept. The representatives of
the Government Accountability Office shall have access
to the personnel and to all books, accounts, documents,
papers, records (including electronic records), reports,
files, and all other papers, automated data, things, or
property belonging to or under the control of or used or
employed by the Bureau pertaining to its financial
transactions and necessary to facilitate the audit, and
such representatives shall be afforded full facilities
for verifying transactions with the balances or
securities held by depositories, fiscal agents, and
custodians. All such books, accounts, documents,
records, reports, files, papers, and property of the
Bureau shall remain in possession and custody of the
Bureau. The Comptroller General may obtain and duplicate
any such books, accounts, documents, records, working
papers, automated data and files, or other information
relevant to such audit without cost to the Comptroller
General, and the right of access of the Comptroller
General to such information shall be enforceable
pursuant to section 716(c) of title 31, United States
Code.
(B) Report.--The Comptroller General shall submit to
the Congress a report of each annual audit conducted
under this subsection. The report to the Congress shall
set forth the scope of the audit and shall include the
statement of assets and liabilities and surplus or
deficit, the statement of income and expenses, the
statement of sources and application of funds, and such
comments and information as may be deemed necessary to
inform Congress of the financial operations and
condition of the Bureau, together with such
recommendations with respect thereto as the Comptroller
General may deem advisable. A copy of each report shall
be furnished to the President and to the Bureau at the
time submitted to the Congress.
(C) Assistance and costs.--For the purpose of
conducting an audit under this subsection, the
Comptroller General may, in the discretion of the
Comptroller General, employ by contract, without regard
to section 3709 of the Revised Statutes of the United
States (41 U.S.C. 5), professional services of firms and
organizations of certified public accountants for
temporary periods or for special purposes. Upon the
request <<NOTE: Transfer authority.>> of the
Comptroller General, the Director of the Bureau shall
transfer to the Government Accountability Office from
funds available, the amount requested by the Comptroller
General to cover the full costs of any audit and report
conducted by the Comptroller General. The Comptroller
General shall credit funds transferred to the account
established for salaries and expenses of the Government
Accountability Office, and such amount shall be
available upon receipt and without fiscal year
limitation to cover the full costs of the audit and
report.
(b) Consumer Financial Protection Fund.--
[[Page 124 STAT. 1978]]
(1) Separate fund in federal reserve established.--There is
established in the Federal Reserve a separate fund, to be known
as the ``Bureau of Consumer Financial Protection Fund''
(referred to in this section as the ``Bureau Fund''). The Bureau
Fund shall be maintained and established at a Federal reserve
bank, in accordance with such requirements as the Board of
Governors may impose.
(2) Fund receipts.--All amounts transferred to the Bureau
under subsection (a) shall be deposited into the Bureau Fund.
(3) Investment authority.--
(A) Amounts in bureau fund may be invested.--The
Bureau may request the Board of Governors to direct the
investment of the portion of the Bureau Fund that is
not, in the judgment of the Bureau, required to meet the
current needs of the Bureau.
(B) Eligible investments.--Investments authorized by
this paragraph shall be made in obligations of the
United States or obligations that are guaranteed as to
principal and interest by the United States, with
maturities suitable to the needs of the Bureau Fund, as
determined by the Bureau.
(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Bureau Fund shall be credited to
the Bureau Fund.
(c) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or
credited to the Bureau Fund shall be immediately available to
the Bureau and under the control of the Director, and shall
remain available until expended, to pay the expenses of the
Bureau in carrying out its duties and responsibilities. The
compensation of the Director and other employees of the Bureau
and all other expenses thereof may be paid from, obtained by,
transferred to, or credited to the Bureau Fund under this
section.
(2) Funds that are not government funds.--Funds obtained by
or transferred to the Bureau Fund shall not be construed to be
Government funds or appropriated monies.
(3) Amounts not subject to apportionment.--Notwithstanding
any other provision of law, amounts in the Bureau Fund and in
the Civil Penalty Fund established under subsection (d) shall
not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or under any other authority.
(d) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is
established in the Federal Reserve a separate fund, to be known
as the ``Consumer Financial Civil Penalty Fund'' (referred to in
this section as the ``Civil Penalty Fund''). The Civil Penalty
Fund shall be maintained and established at a Federal reserve
bank, in accordance with such requirements as the Board of
Governors may impose. If the Bureau obtains a civil penalty
against any person in any judicial or administrative action
under Federal consumer financial laws, the Bureau shall deposit
into the Civil Penalty Fund, the amount of the penalty
collected.
[[Page 124 STAT. 1979]]
(2) Payment to victims.--Amounts in the Civil Penalty Fund
shall be available to the Bureau, without fiscal year
limitation, for payments to the victims of activities for which
civil penalties have been imposed under the Federal consumer
financial laws. To the extent that such victims cannot be
located or such payments are otherwise not practicable, the
Bureau may use such funds for the purpose of consumer education
and financial literacy programs.
(e) Authorization of Appropriations; Annual Report.--
(1) Determination regarding need for appropriated funds.--
(A) In general.--The Director is authorized to
determine that sums available to the Bureau under this
section will not be sufficient to carry out the
authorities of the Bureau under Federal consumer
financial law for the upcoming year.
(B) Report required.--When making a determination
under subparagraph (A), the Director shall prepare a
report regarding the funding of the Bureau, including
the assets and liabilities of the Bureau, and the extent
to which the funding needs of the Bureau are anticipated
to exceed the level of the amount set forth in
subsection (a)(2). The Director shall submit the report
to the President and to the Committee on Appropriations
of the Senate and the Committee on Appropriations of the
House of Representatives.
(2) Authorization of appropriations.--If the Director makes
the determination and submits the report pursuant to paragraph
(1), there are hereby authorized to be appropriated to the
Bureau, for the purposes of carrying out the authorities granted
in Federal consumer financial law, $200,000,000 for each of
fiscal years 2010, 2011, 2012, 2013, and 2014.
(3) Apportionment.--Notwithstanding any other provision of
law, the amounts in paragraph (2) shall be subject to
apportionment under section 1517 of title 31, United States
Code, and restrictions that generally apply to the use of
appropriated funds in title 31, United States Code, and other
laws.
(4) Annual report.--The Director shall prepare and submit a
report, on an annual basis, to the Committee on Appropriations
of the Senate and the Committee on Appropriations of the House
of Representatives regarding the financial operating plans and
forecasts of the Director, the financial condition and results
of operations of the Bureau, and the sources and application of
funds of the Bureau, including any funds appropriated in
accordance with this subsection.
SEC. 1018. <<NOTE: 12 USC 5491 note.>> EFFECTIVE DATE.
This subtitle shall become effective on the date of enactment of
this Act.
Subtitle B--General Powers of the Bureau
SEC. 1021. <<NOTE: 12 USC 5511.>> PURPOSE, OBJECTIVES, AND
FUNCTIONS.
(a) Purpose.--The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently for the
purpose of ensuring that all consumers have access to markets
[[Page 124 STAT. 1980]]
for consumer financial products and services and that markets for
consumer financial products and services are fair, transparent, and
competitive.
(b) Objectives.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the purposes of
ensuring that, with respect to consumer financial products and
services--
(1) consumers are provided with timely and understandable
information to make responsible decisions about financial
transactions;
(2) consumers are protected from unfair, deceptive, or
abusive acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome regulations
are regularly identified and addressed in order to reduce
unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced consistently,
without regard to the status of a person as a depository
institution, in order to promote fair competition; and
(5) markets for consumer financial products and services
operate transparently and efficiently to facilitate access and
innovation.
(c) Functions.--The primary functions of the Bureau are--
(1) conducting financial education programs;
(2) collecting, investigating, and responding to consumer
complaints;
(3) collecting, researching, monitoring, and publishing
information relevant to the functioning of markets for consumer
financial products and services to identify risks to consumers
and the proper functioning of such markets;
(4) subject to sections 1024 through 1026, supervising
covered persons for compliance with Federal consumer financial
law, and taking appropriate enforcement action to address
violations of Federal consumer financial law;
(5) issuing rules, orders, and guidance implementing Federal
consumer financial law; and
(6) performing such support activities as may be necessary
or useful to facilitate the other functions of the Bureau.
SEC. 1022. <<NOTE: 12 USC 5512.>> RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer, enforce,
and otherwise implement the provisions of Federal consumer financial
law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe rules and
issue orders and guidance, as may be necessary or appropriate to
enable the Bureau to administer and carry out the purposes and
objectives of the Federal consumer financial laws, and to
prevent evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule under
the Federal consumer financial laws--
(A) the Bureau shall consider--
(i) the potential benefits and costs to
consumers and covered persons, including the
potential reduction of access by consumers to
consumer financial products or services resulting
from such rule; and
[[Page 124 STAT. 1981]]
(ii) the impact of proposed rules on covered
persons, as described in section 1026, and the
impact on consumers in rural areas;
(B) <<NOTE: Consultation.>> the Bureau shall
consult with the appropriate prudential regulators or
other Federal agencies prior to proposing a rule and
during the comment process regarding consistency with
prudential, market, or systemic objectives administered
by such agencies; and
(C) if, during the consultation process described in
subparagraph (B), a prudential regulator provides the
Bureau with a written objection to the proposed rule of
the Bureau or a portion thereof, the Bureau shall
include in the adopting release a description of the
objection and the basis for the Bureau decision, if any,
regarding such objection, except that nothing in this
clause shall be construed as altering or limiting the
procedures under section 1023 that may apply to any rule
prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may
conditionally or unconditionally exempt any class of
covered persons, service providers, or consumer
financial products or services, from any provision of
this title, or from any rule issued under this title, as
the Bureau determines necessary or appropriate to carry
out the purposes and objectives of this title, taking
into consideration the factors in subparagraph (B).
(B) Factors.--In issuing an exemption, as permitted
under subparagraph (A), the Bureau shall, as
appropriate, take into consideration--
(i) the total assets of the class of covered
persons;
(ii) the volume of transactions involving
consumer financial products or services in which
the class of covered persons engages; and
(iii) existing provisions of law which are
applicable to the consumer financial product or
service and the extent to which such provisions
provide consumers with adequate protections.
(4) Exclusive rulemaking authority.--
(A) In general.--Notwithstanding any other
provisions of Federal law and except as provided in
section 1061(b)(5), to the extent that a provision of
Federal consumer financial law authorizes the Bureau and
another Federal agency to issue regulations under that
provision of law for purposes of assuring compliance
with Federal consumer financial law and any regulations
thereunder, the Bureau shall have the exclusive
authority to prescribe rules subject to those provisions
of law.
(B) Deference.--Notwithstanding
any <<NOTE: Applicability.>> power granted to any
Federal agency or to the Council under this title, and
subject to section 1061(b)(5)(E), the deference that a
court affords to the Bureau with respect to a
determination by the Bureau regarding the meaning or
interpretation of any provision of a Federal consumer
financial law shall be applied as if the Bureau were the
only agency authorized to apply, enforce, interpret, or
administer the provisions of such Federal consumer
financial law.
(c) Monitoring.--
[[Page 124 STAT. 1982]]
(1) In general.--In order to support its rulemaking and
other functions, the Bureau shall monitor for risks to consumers
in the offering or provision of consumer financial products or
services, including developments in markets for such products or
services.
(2) Considerations.--In allocating its resources to perform
the monitoring required by this section, the Bureau may
consider, among other factors--
(A) likely risks and costs to consumers associated
with buying or using a type of consumer financial
product or service;
(B) understanding by consumers of the risks of a
type of consumer financial product or service;
(C) the legal protections applicable to the offering
or provision of a consumer financial product or service,
including the extent to which the law is likely to
adequately protect consumers;
(D) rates of growth in the offering or provision of
a consumer financial product or service;
(E) the extent, if any, to which the risks of a
consumer financial product or service may
disproportionately affect traditionally underserved
consumers; or
(F) the types, number, and other pertinent
characteristics of covered persons that offer or provide
the consumer financial product or service.
(3) Significant findings.--
(A) In general.--The
Bureau <<NOTE: Publication. Reports. Deadline.>> shall
publish not fewer than 1 report of significant findings
of its monitoring required by this subsection in each
calendar year, beginning with the first calendar year
that begins at least 1 year after the designated
transfer date.
(B) Confidential information.--The Bureau may make
public such information obtained by the Bureau under
this section as is in the public interest, through
aggregated reports or other appropriate formats designed
to protect confidential information in accordance with
paragraphs (4), (6), (8), and (9).
(4) Collection of information.--
(A) In general.--In conducting any monitoring or
assessment required by this section, the Bureau shall
have the authority to gather information from time to
time regarding the organization, business conduct,
markets, and activities of covered persons and service
providers.
(B) Methodology.--In order to gather information
described in subparagraph (A), the Bureau may--
(i) gather and compile information from a
variety of sources, including examination reports
concerning covered persons or service providers,
consumer complaints, voluntary surveys and
voluntary interviews of consumers, surveys and
interviews with covered persons and service
providers, and review of available databases; and
(ii) require covered persons and service
providers participating in consumer financial
services markets to file with the Bureau, under
oath or otherwise, in such form and within such
reasonable period of time as the Bureau may
prescribe by rule or order, annual
[[Page 124 STAT. 1983]]
or special reports, or answers in writing to
specific questions, furnishing information
described in paragraph (4), as necessary for the
Bureau to fulfill the monitoring, assessment, and
reporting responsibilities imposed by Congress.
(C) Limitation.--The Bureau may not use its
authorities under this paragraph to obtain records from
covered persons and service providers participating in
consumer financial services markets for purposes of
gathering or analyzing the personally identifiable
financial information of consumers.
(5) Limited information gathering.--In order to assess
whether a nondepository is a covered person, as defined in
section 1002, the Bureau may require such nondepository to file
with the Bureau, under oath or otherwise, in such form and
within such reasonable period of time as the Bureau may
prescribe by rule or order, annual or special reports, or
answers in writing to specific questions.
(6) Confidentiality rules.--
(A) Rulemaking.--The Bureau shall prescribe rules
regarding the confidential treatment of information
obtained from persons in connection with the exercise of
its authorities under Federal consumer financial law.
(B) Access by the bureau to reports of other
regulators.--
(i) Examination and financial condition
reports.--Upon providing reasonable assurances of
confidentiality, the Bureau shall have access to
any report of examination or financial condition
made by a prudential regulator or other Federal
agency having jurisdiction over a covered person
or service provider, and to all revisions made to
any such report.
(ii) Provision of other reports to the
bureau.--In addition to the reports described in
clause (i), a prudential regulator or other
Federal agency having jurisdiction over a covered
person or service provider may, in its discretion,
furnish to the Bureau any other report or other
confidential supervisory information concerning
any insured depository institution, credit union,
or other entity examined by such agency under
authority of any provision of Federal law.
(C) Access by other regulators to reports of the
bureau.--
(i) Examination reports.--Upon providing
reasonable assurances of confidentiality, a
prudential regulator, a State regulator, or any
other Federal agency having jurisdiction over a
covered person or service provider shall have
access to any report of examination made by the
Bureau with respect to such person, and to all
revisions made to any such report.
(ii) Provision of other reports to other
regulators.--In addition to the reports described
in clause (i), the Bureau may, in its discretion,
furnish to a prudential regulator or other agency
having jurisdiction over a covered person or
service provider any
[[Page 124 STAT. 1984]]
other report or other confidential supervisory
information concerning such person examined by the
Bureau under the authority of any other provision
of Federal law.
(7) Registration.--
(A) In general.--The Bureau may prescribe rules
regarding registration requirements applicable to a
covered person, other than an insured depository
institution, insured credit union, or related person.
(B) Registration information.--Subject to rules
prescribed by the Bureau, the Bureau may publicly
disclose registration information to facilitate the
ability of consumers to identify covered persons that
are registered with the Bureau.
(C) Consultation with state agencies.--In developing
and implementing registration requirements under this
paragraph, the Bureau shall consult with State agencies
regarding requirements or systems (including coordinated
or combined systems for registration), where
appropriate.
(8) Privacy considerations.--In collecting information from
any person, publicly releasing information held by the Bureau,
or requiring covered persons to publicly report information, the
Bureau shall take steps to ensure that proprietary, personal, or
confidential consumer information that is protected from public
disclosure under section 552(b) or 552a of title 5, United
States Code, or any other provision of law, is not made public
under this title.
(9) Consumer privacy.--
(A) In general.--The Bureau may not obtain from a
covered person or service provider any personally
identifiable financial information about a consumer from
the financial records of the covered person or service
provider, except--
(i) if the financial records are reasonably
described in a request by the Bureau and the
consumer provides written permission for the
disclosure of such information by the covered
person or service provider to the Bureau; or
(ii) as may be specifically permitted or
required under other applicable provisions of law
and in accordance with the Right to Financial
Privacy Act of 1978 (12 U.S.C. 3401 et seq.).
(B) Treatment of covered person or service
provider.--With respect to the application of any
provision of the Right to Financial Privacy Act of 1978,
to a disclosure by a covered person or service provider
subject to this subsection, the covered person or
service provider shall be treated as if it were a
``financial institution'', as defined in section 1101 of
that Act (12 U.S.C. 3401).
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an assessment of
each significant rule or order adopted by the Bureau under
Federal consumer financial law. The assessment shall address,
among other relevant factors, the effectiveness of the rule or
order in meeting the purposes and objectives of this title and
the specific goals stated by the Bureau. The assessment shall
[[Page 124 STAT. 1985]]
reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau <<NOTE: Publication.>> shall
publish a report of its assessment under this subsection not
later than 5 years after the effective date of the subject rule
or order.
(3) Public comment required.--Before publishing a report of
its assessment, the Bureau shall invite public comment on
recommendations for modifying, expanding, or eliminating the
newly adopted significant rule or order.
SEC. 1023. <<NOTE: 12 USC 5513.>> REVIEW OF BUREAU REGULATIONS.
(a) Review of Bureau Regulations.--On the petition of a member
agency of the Council, the Council may set aside a final regulation
prescribed by the Bureau, or any provision thereof, if the Council
decides, in accordance with subsection (c), that the regulation or
provision would put the safety and soundness of the United States
banking system or the stability of the financial system of the United
States at risk.
(b) Petition.--
(1) Procedure.--An agency represented by a member of the
Council may petition the Council, in writing, and in accordance
with rules prescribed pursuant to subsection (f), to stay the
effectiveness of, or set aside, a regulation if the member
agency filing the petition--
(A) has in good faith attempted to work with the
Bureau to resolve concerns regarding the effect of the
rule on the safety and soundness of the United States
banking system or the stability of the financial system
of the United States; and
(B) <<NOTE: Deadline.>> files the petition with the
Council not later than 10 days after the date on which
the regulation has been published in the Federal
Register.
(2) <<NOTE: Federal Register, publication.>> Publication.--
Any petition filed with the Council under this section shall be
published in the Federal Register and transmitted
contemporaneously with filing to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
(c) Stays and Set Asides.--
(1) Stay.--
(A) In general.--Upon the request of any member
agency, the Chairperson of the Council may stay the
effectiveness of a regulation for the purpose of
allowing appropriate consideration of the petition by
the Council.
(B) Expiration.--A stay issued under this paragraph
shall expire on the earlier of--
(i) 90 days after the date of filing of the
petition under subsection (b); or
(ii) the date on which the Council makes a
decision under paragraph (3).
(2) No adverse inference.--After the expiration of any stay
imposed under this section, no inference shall be drawn
regarding the validity or enforceability of a regulation which
was the subject of the petition.
(3) Vote.--
(A) In general.--The decision to issue a stay of, or
set aside, any regulation under this section shall be
made
[[Page 124 STAT. 1986]]
only with the affirmative vote in accordance with
subparagraph (B) of \2/3\ of the members of the Council
then serving.
(B) Authorization to vote.--A member of the Council
may vote to stay the effectiveness of, or set aside, a
final regulation prescribed by the Bureau only if the
agency or department represented by that member has--
(i) considered any relevant information
provided by the agency submitting the petition and
by the Bureau; and
(ii) made an official determination, at a
public meeting where applicable, that the
regulation which is the subject of the petition
would put the safety and soundness of the United
States banking system or the stability of the
financial system of the United States at risk.
(4) Decisions to set aside.--
(A) Effect of decision.--A decision by the Council
to set aside a regulation prescribed by the Bureau, or
provision thereof, shall render such regulation, or
provision thereof, unenforceable.
(B) Timely action required.--The Council may not
issue a decision to set aside a regulation, or provision
thereof, which is the subject of a petition under this
section after the expiration of the later of--
(i) 45 days following the date of filing of
the petition, unless a stay is issued under
paragraph (1); or
(ii) the expiration of a stay issued by the
Council under this section.
(C) Separate authority.--The issuance of a stay
under this section does not affect the authority of the
Council to set aside a regulation.
(5) Dismissal due to inaction.--A petition under this
section shall be deemed dismissed if the Council has not issued
a decision to set aside a regulation, or provision thereof,
within the period for timely action under paragraph (4)(B).
(6) <<NOTE: Federal Register, publication.>> Publication of
decision.--Any decision under this subsection to issue a stay
of, or set aside, a regulation or provision thereof shall be
published by the Council in the Federal Register as soon as
practicable after the decision is made, with an explanation of
the reasons for the decision.
(7) Rulemaking procedures inapplicable.--The notice and
comment procedures under section 553 of title 5, United States
Code, shall not apply to any decision under this section of the
Council to issue a stay of, or set aside, a regulation.
(8) Judicial review of decisions by the council.--A decision
by the Council to set aside a regulation prescribed by the
Bureau, or provision thereof, shall be subject to review under
chapter 7 of title 5, United States Code.
(d) Application of Other Law.--Nothing in this section shall be
construed as altering, limiting, or restricting the application of any
other provision of law, except as otherwise specifically provided in
this section, including chapter 5 and chapter 7 of title 5, United
States Code, to a regulation which is the subject of a petition filed
under this section.
(e) Savings Clause.--Nothing in this section shall be construed as
limiting or restricting the Bureau from engaging in a rulemaking in
accordance with applicable law.
[[Page 124 STAT. 1987]]
(f) Implementing Rules.--The Council shall prescribe procedural
rules to implement this section.
SEC. 1024. <<NOTE: 12 USC 5514.>> SUPERVISION OF NONDEPOSITORY
COVERED PERSONS.
(a) Scope of Coverage.--
(1) Applicability.--Notwithstanding any other provision of
this title, and except as provided in paragraph (3), this
section shall apply to any covered person who--
(A) offers or provides origination, brokerage, or
servicing of loans secured by real estate for use by
consumers primarily for personal, family, or household
purposes, or loan modification or foreclosure relief
services in connection with such loans;
(B) is a larger participant of a market for other
consumer financial products or services, as defined by
rule in accordance with paragraph (2);
(C) the Bureau has reasonable cause to determine, by
order, after notice to the covered person and a
reasonable opportunity for such covered person to
respond, based on complaints collected through the
system under section 1013(b)(3) or information from
other sources, that such covered person is engaging, or
has engaged, in conduct that poses risks to consumers
with regard to the offering or provision of consumer
financial products or services;
(D) offers or provides to a consumer any private
education loan, as defined in section 140 of the Truth
in Lending Act (15 U.S.C. 1650), notwithstanding section
1027(a)(2)(A) and subject to section 1027(a)(2)(C); or
(E) offers or provides to a consumer a payday loan.
(2) Rulemaking to define covered persons subject to this
section.--The Bureau <<NOTE: Consultation.>> shall consult with
the Federal Trade Commission prior to issuing a rule, in
accordance with paragraph (1)(B), to define covered persons
subject to this section. The Bureau <<NOTE: Deadline.>> shall
issue its initial rule not later than 1 year after the
designated transfer date.
(3) Rules of construction.--
(A) Certain persons excluded.--This section shall
not apply to persons described in section 1025(a) or
1026(a).
(B) Activity levels.--For purposes of computing
activity levels under paragraph (1) or rules issued
thereunder, activities of affiliated companies (other
than insured depository institutions or insured credit
unions) shall be aggregated.
(b) Supervision.--
(1) In general.--The
Bureau <<NOTE: Reports. Examinations.>> shall require reports
and conduct examinations on a periodic basis of persons
described in subsection (a)(1) for purposes of--
(A) assessing compliance with the requirements of
Federal consumer financial law;
(B) obtaining information about the activities and
compliance systems or procedures of such person; and
(C) detecting and assessing risks to consumers and
to markets for consumer financial products and services.
(2) Risk-based supervision program.--The Bureau shall
exercise its authority under paragraph (1) in a manner designed
to ensure that such exercise, with respect to persons described
in subsection (a)(1), is based on the assessment by the Bureau
[[Page 124 STAT. 1988]]
of the risks posed to consumers in the relevant product markets
and geographic markets, and taking into consideration, as
applicable--
(A) the asset size of the covered person;
(B) the volume of transactions involving consumer
financial products or services in which the covered
person engages;
(C) the risks to consumers created by the provision
of such consumer financial products or services;
(D) the extent to which such institutions are
subject to oversight by State authorities for consumer
protection; and
(E) any other factors that the Bureau determines to
be relevant to a class of covered persons.
(3) Coordination.--To minimize regulatory burden, the Bureau
shall coordinate its supervisory activities with the supervisory
activities conducted by prudential regulators and the State bank
regulatory authorities, including establishing their respective
schedules for examining persons described in subsection (a)(1)
and requirements regarding reports to be submitted by such
persons.
(4) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to persons described in
subsection (a)(1) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(5) Preservation of authority.--Nothing in this title may be
construed as limiting the authority of the Director to require
reports from persons described in subsection (a)(1), as
permitted under paragraph (1), regarding information owned or
under the control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(6) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(7) Registration, recordkeeping and other requirements for
certain persons.--
(A) <<NOTE: Regulations.>> In general.--The Bureau
shall prescribe rules to facilitate supervision of
persons described in subsection (a)(1) and assessment
and detection of risks to consumers.
(B) Recordkeeping.--The Bureau may require a person
described in subsection (a)(1), to generate, provide, or
retain records for the purposes of facilitating
supervision of such persons and assessing and detecting
risks to consumers.
(C) Requirements concerning obligations.--The Bureau
may prescribe rules regarding a person described in
subsection (a)(1), to ensure that such persons are
legitimate entities and are able to perform their
obligations to consumers. Such requirements may include
background checks for principals, officers, directors,
or key personnel and bonding or other appropriate
financial requirements.
[[Page 124 STAT. 1989]]
(D) Consultation with state agencies.--In developing
and implementing requirements under this paragraph, the
Bureau shall consult with State agencies regarding
requirements or systems (including coordinated or
combined systems for registration), where appropriate.
(c) Enforcement Authority.--
(1) The bureau to have enforcement authority.--Except as
provided in paragraph (3) and section 1061, with respect to any
person described in subsection (a)(1), to the extent that
Federal law authorizes the Bureau and another Federal agency to
enforce Federal consumer financial law, the Bureau shall have
exclusive authority to enforce that Federal consumer financial
law.
(2) Referral.--Any Federal agency authorized to enforce a
Federal consumer financial law described in paragraph (1) may
recommend in writing to the Bureau that the Bureau initiate an
enforcement proceeding, as the Bureau is authorized by that
Federal law or by this title.
(3) Coordination with the federal trade commission.--
(A) In general.--The Bureau <<NOTE: Contracts.>>
and the Federal Trade Commission shall negotiate an
agreement for coordinating with respect to enforcement
actions by each agency regarding the offering or
provision of consumer financial products or services by
any covered person that is described in subsection
(a)(1), or service providers thereto. The agreement
shall include procedures for notice to the other agency,
where feasible, prior to initiating a civil action to
enforce any Federal law regarding the offering or
provision of consumer financial products or services.
(B) Civil actions.--Whenever a civil action has been
filed by, or on behalf of, the Bureau or the Federal
Trade Commission for any violation of any provision of
Federal law described in subparagraph (A), or any
regulation prescribed under such provision of law--
(i) the other agency may not, during the
pendency of that action, institute a civil action
under such provision of law against any defendant
named in the complaint in such pending action for
any violation alleged in the complaint; and
(ii) the Bureau or the Federal Trade
Commission may intervene as a party in any such
action brought by the other agency, and, upon
intervening--
(I) be heard on all matters arising
in such enforcement action; and
(II) file petitions for appeal in
such actions.
(C) Agreement terms.--The terms of any agreement
negotiated under subparagraph (A) may modify or
supersede the provisions of subparagraph (B).
(D) Deadline.--The agencies shall reach the
agreement required under subparagraph (A) not later than
6 months after the designated transfer date.
(d) Exclusive Rulemaking and Examination Authority.--Notwithstanding
any other provision of Federal law and except as provided in section
1061, to the extent that Federal law authorizes the Bureau and another
Federal agency to issue regulations or guidance, conduct examinations,
or require reports from a person described in subsection (a)(1) under
such law for purposes of
[[Page 124 STAT. 1990]]
assuring compliance with Federal consumer financial law and any
regulations thereunder, the Bureau shall have the exclusive authority to
prescribe rules, issue guidance, conduct examinations, require reports,
or issue exemptions with regard to a person described in subsection
(a)(1), subject to those provisions of law.
(e) Service Providers.--A service provider to a person described in
subsection (a)(1) shall be subject to the authority of the Bureau under
this section, to the same extent as if such service provider were
engaged in a service relationship with a bank, and the Bureau were an
appropriate Federal banking agency under section 7(c) of the Bank
Service Company Act (12 U.S.C. 1867(c)). In <<NOTE: Coordination.>>
conducting any examination or requiring any report from a service
provider subject to this subsection, the Bureau shall coordinate with
the appropriate prudential regulator, as applicable.
(f) Preservation of Farm Credit Administration Authority.--No
provision of this title may be construed as modifying, limiting, or
otherwise affecting the authority of the Farm Credit Administration.
SEC. 1025. <<NOTE: 12 USC 5515.>> SUPERVISION OF VERY LARGE
BANKS, SAVINGS ASSOCIATIONS, AND CREDIT
UNIONS.
(a) Scope of Coverage.--This section <<NOTE: Applicability.>> shall
apply to any covered person that is--
(1) an insured depository institution with total assets of
more than $10,000,000,000 and any affiliate thereof; or
(2) an insured credit union with total assets of more than
$10,000,000,000 and any affiliate thereof.
(b) <<NOTE: Reports.>> Supervision.--
(1) <<NOTE: Examinations.>> In general.--The Bureau shall
have exclusive authority to require reports and conduct
examinations on a periodic basis of persons described in
subsection (a) for purposes of--
(A) assessing compliance with the requirements of
Federal consumer financial laws;
(B) obtaining information about the activities
subject to such laws and the associated compliance
systems or procedures of such persons; and
(C) detecting and assessing associated risks to
consumers and to markets for consumer financial products
and services.
(2) Coordination.--To minimize regulatory burden, the Bureau
shall coordinate its supervisory activities with the supervisory
activities conducted by prudential regulators and the State bank
regulatory authorities, including consultation regarding their
respective schedules for examining such persons described in
subsection (a) and requirements regarding reports to be
submitted by such persons.
(3) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in
subsection (a) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(4) Preservation of authority.--Nothing in this title may be
construed as limiting the authority of the Director to require
reports from a person described in subsection (a), as permitted
under paragraph (1), regarding information owned
[[Page 124 STAT. 1991]]
or under the control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(5) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(c) Primary Enforcement Authority.--
(1) The bureau to have primary enforcement authority.--To
the extent that the Bureau and another Federal agency are
authorized to enforce a Federal consumer financial law, the
Bureau shall have primary authority to enforce that Federal
consumer financial law with respect to any person described in
subsection (a).
(2) Referral.--Any Federal agency, other than the Federal
Trade Commission, that is authorized to enforce a Federal
consumer financial law may recommend, in writing, to the Bureau
that the Bureau initiate an enforcement proceeding with respect
to a person described in subsection (a), as the Bureau is
authorized to do by that Federal consumer financial law.
(3) Backup enforcement authority of other federal agency.--
If the <<NOTE: Deadline. Time period.>> Bureau does not, before
the end of the 120-day period beginning on the date on which the
Bureau receives a recommendation under paragraph (2), initiate
an enforcement proceeding, the other agency referred to in
paragraph (2) may initiate an enforcement proceeding, including
performing follow up supervisory and support functions
incidental thereto, to assure compliance with such proceeding.
(d) Service Providers.--A service provider to a person described in
subsection (a) shall be subject to the authority of the Bureau under
this section, to the same extent as if the Bureau were an appropriate
Federal banking agency under section 7(c) of the Bank Service Company
Act 12 U.S.C. 1867(c). <<NOTE: Coordination.>> In conducting any
examination or requiring any report from a service provider subject to
this subsection, the Bureau shall coordinate with the appropriate
prudential regulator.
(e) Simultaneous and Coordinated Supervisory Action.--
(1) Examinations.--A prudential regulator and the Bureau
shall, with respect to each insured depository institution,
insured credit union, or other covered person described in
subsection (a) that is supervised by the prudential regulator
and the Bureau, respectively--
(A) coordinate the scheduling of examinations of the
insured depository institution, insured credit union, or
other covered person described in subsection (a);
(B) conduct simultaneous examinations of each
insured depository institution or insured credit union,
unless such institution requests examinations to be
conducted separately;
(C) <<NOTE: Reports. Deadline.>> share each draft
report of examination with the other agency and permit
the receiving agency a reasonable opportunity (which
shall not be less than a period of 30 days after the
date of receipt) to comment on the draft report before
such report is made final; and
[[Page 124 STAT. 1992]]
(D) prior to issuing a final report of examination
or taking supervisory action, take into consideration
concerns, if any, raised in the comments made by the
other agency.
(2) Coordination with state bank supervisors.--The Bureau
shall pursue arrangements and agreements with State bank
supervisors to coordinate examinations, consistent with
paragraph (1).
(3) Avoidance of conflict in supervision.--
(A) Request.--If the proposed supervisory
determinations of the Bureau and a prudential regulator
(in this section referred to collectively as the
``agencies'') are conflicting, an insured depository
institution, insured credit union, or other covered
person described in subsection (a) may request the
agencies to coordinate and present a joint statement of
coordinated supervisory action.
(B) Joint statement.--The
agencies <<NOTE: Deadline.>> shall provide a joint
statement under subparagraph (A), not later than 30 days
after the date of receipt of the request of the insured
depository institution, credit union, or covered person
described in subsection (a).
(4) Appeals to governing panel.--
(A) In general.--If the agencies do not resolve the
conflict or issue a joint statement required by
subparagraph (B), or if either of the agencies takes or
attempts to take any supervisory action relating to the
request for the joint statement without the consent of
the other agency, an insured depository institution,
insured credit union, or other covered person described
in subsection (a) may institute an appeal to a governing
panel, as provided in this subsection, not later than 30
days after the expiration of the period during which a
joint statement is required to be filed under paragraph
(3)(B).
(B) <<NOTE: Establishment.>> Composition of
governing panel.--The governing panel for an appeal
under this paragraph shall be composed of--
(i) a representative from the Bureau and a
representative of the prudential regulator, both
of whom--
(I) have not participated in the
material supervisory determinations
under appeal; and
(II) do not directly or indirectly
report to the person who participated
materially in the supervisory
determinations under appeal; and
(ii) one individual representative, to be
determined on a rotating basis, from among the
Board of Governors, the Corporation, the National
Credit Union Administration, and the Office of the
Comptroller of the Currency, other than any agency
involved in the subject dispute.
(C) Conduct of appeal.--In an appeal under this
paragraph--
(i) the insured depository institution,
insured credit union, or other covered person
described in subsection (a)--
(I) shall include in its appeal all
the facts and legal arguments pertaining
to the matter; and
[[Page 124 STAT. 1993]]
(II) may, through counsel,
employees, or representatives, appear
before the governing panel in person or
by telephone; and
(ii) the governing panel--
(I) may request the insured
depository institution, insured credit
union, or other covered person described
in subsection (a), the Bureau, or the
prudential regulator to produce
additional information relevant to the
appeal; and
(II) <<NOTE: Determination. Deadline.>>
by a majority vote of its members, shall
provide a final determination, in
writing, not later than 30 days after
the date of filing of an informationally
complete appeal, or such longer period
as the panel and the insured depository
institution, insured credit union, or
other covered person described in
subsection (a) may jointly agree.
(D) <<NOTE: Publication.>> Public availability of
determinations.--A governing panel shall publish all
information contained in a determination by the
governing panel, with appropriate redactions of
information that would be subject to an exemption from
disclosure under section 552 of title 5, United States
Code.
(E) <<NOTE: Regulations.>> Prohibition against
retaliation.--The Bureau and the prudential regulators
shall prescribe rules to provide safeguards from
retaliation against the insured depository institution,
insured credit union, or other covered person described
in subsection (a) instituting an appeal under this
paragraph, as well as their officers and employees.
(F) Limitation.--The process provided in this
paragraph shall not apply to a determination by a
prudential regulator to appoint a conservator or
receiver for an insured depository institution or a
liquidating agent for an insured credit union, as the
case may be, or a decision to take action pursuant to
section 38 of the Federal Deposit Insurance Act (12
U.S.C. 1831o) or section 212 of the Federal Credit Union
Act (112 U.S.C. 1790a), as applicable.
(G) Effect on other authority.--Nothing in this
section shall modify or limit the authority of the
Bureau to interpret, or take enforcement action under,
any Federal consumer financial law, or the authority of
a prudential regulator to interpret or take enforcement
action under any other provision of Federal law for
safety and soundness purposes.
SEC. 1026. <<NOTE: 12 USC 5516.>> OTHER BANKS, SAVINGS
ASSOCIATIONS, AND CREDIT UNIONS.
(a) Scope of Coverage.--This section <<NOTE: Applicability.>> shall
apply to any covered person that is--
(1) an insured depository institution with total assets of
$10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) Reports.--The Director may require reports from a person
described in subsection (a), as necessary to support the role of the
Bureau in implementing Federal consumer financial law, to
[[Page 124 STAT. 1994]]
support its examination activities under subsection (c), and to assess
and detect risks to consumers and consumer financial markets.
(1) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in
subsection (a) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(2) Preservation of authority.--Nothing in this subsection
may be construed as limiting the authority of the Director from
requiring from a person described in subsection (a), as
permitted under paragraph (1), information owned or under the
control of such person, regardless of whether such information
is maintained, stored, or processed by another person.
(3) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(c) Examinations.--
(1) In general.--The Bureau may, at its discretion, include
examiners on a sampling basis of the examinations performed by
the prudential regulator to assess compliance with the
requirements of Federal consumer financial law of persons
described in subsection (a).
(2) Agency coordination.--The prudential regulator shall--
(A) <<NOTE: Reports. Records.>> provide all
reports, records, and documentation related to the
examination process for any institution included in the
sample referred to in paragraph (1) to the Bureau on a
timely and continual basis;
(B) involve such Bureau examiner in the entire
examination process for such person; and
(C) consider input of the Bureau concerning the
scope of an examination, conduct of the examination, the
contents of the examination report, the designation of
matters requiring attention, and examination ratings.
(d) Enforcement.--
(1) In general.--Except for requiring reports under
subsection (b), the prudential regulator is authorized to
enforce the requirements of Federal consumer financial laws and,
with respect to a covered person described in subsection (a),
shall have exclusive authority (relative to the Bureau) to
enforce such laws .
(2) Coordination with prudential regulator.--
(A) Referral.--When
the <<NOTE: Notification. Recommenda- tion.>> Bureau
has reason to believe that a person described in
subsection (a) has engaged in a material violation of a
Federal consumer financial law, the Bureau shall notify
the prudential regulator in writing and recommend
appropriate action to respond.
(B) Response.--Upon receiving <<NOTE: Deadline.>> a
recommendation under subparagraph (A), the prudential
regulator shall provide a written response to the Bureau
not later than 60 days thereafter.
(e) Service Providers.--A service provider to a substantial number
of persons described in subsection (a) shall be subject to the authority
of the Bureau under section 1025 to the same
[[Page 124 STAT. 1995]]
extent as if the Bureau were an appropriate Federal bank agency under
section 7(c) of the Bank Service Company Act (12 U.S.C. 1867(c)). When
conducting any examination or requiring any report from a service
provider subject to this subsection, the Bureau shall coordinate with
the appropriate prudential regulator.
SEC. 1027. <<NOTE: 12 USC 5517.>> LIMITATIONS ON AUTHORITIES OF
THE BUREAU; PRESERVATION OF AUTHORITIES.
(a) Exclusion for Merchants, Retailers, and Other Sellers of
Nonfinancial Goods or Services.--
(1) Sale or brokerage of nonfinancial good or service.--The
Bureau may not exercise any rulemaking, supervisory, enforcement
or other authority under this title with respect to a person who
is a merchant, retailer, or seller of any nonfinancial good or
service and is engaged in the sale or brokerage of such
nonfinancial good or service, except to the extent that such
person is engaged in offering or providing any consumer
financial product or service, or is otherwise subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(2) Offering or provision of certain consumer financial
products or services in connection with the sale or brokerage of
nonfinancial good or service.--
(A) In general.--Except as provided in subparagraph
(B), and subject to subparagraph (C), the Bureau may not
exercise any rulemaking, supervisory, enforcement, or
other authority under this title with respect to a
merchant, retailer, or seller of nonfinancial goods or
services, but only to the extent that such person--
(i) extends credit directly to a consumer, in
a case in which the good or service being provided
is not itself a consumer financial product or
service (other than credit described in this
subparagraph), exclusively for the purpose of
enabling that consumer to purchase such
nonfinancial good or service directly from the
merchant, retailer, or seller;
(ii) directly, or through an agreement with
another person, collects debt arising from credit
extended as described in clause (i); or
(iii) sells or conveys debt described in
clause (i) that is delinquent or otherwise in
default.
(B) Applicability.--Subparagraph (A) does not apply
to any credit transaction or collection of debt, other
than as described in subparagraph (C)(i), arising from a
transaction described in subparagraph (A)--
(i) in which the merchant, retailer, or seller
of nonfinancial goods or services assigns, sells
or otherwise conveys to another person such debt
owed by the consumer (except for a sale of debt
that is delinquent or otherwise in default, as
described in subparagraph (A)(iii));
(ii) in which the credit extended
significantly exceeds the market value of the
nonfinancial good or service provided, or the
Bureau otherwise finds that the sale of the
nonfinancial good or service is done as a
subterfuge, so as to evade or circumvent the
provisions of this title; or
[[Page 124 STAT. 1996]]
(iii) in which the merchant, retailer, or
seller of nonfinancial goods or services regularly
extends credit and the credit is subject to a
finance charge.
(C) Limitations.--
(i) <<NOTE: Applicability.>> In general.--
Notwithstanding subparagraph (B), subparagraph (A)
shall apply with respect to a merchant, retailer,
or seller of nonfinancial goods or services that
is not engaged significantly in offering or
providing consumer financial products or services.
(ii) Exception.--Subparagraph (A) and clause
(i) of this subparagraph do not apply to any
merchant, retailer, or seller of nonfinancial
goods or services--
(I) if such merchant, retailer, or
seller of nonfinancial goods or services
is engaged in a transaction described in
subparagraph (B)(i) or (B)(ii); or
(II) to the extent that such
merchant, retailer, or seller is subject
to any enumerated consumer law or any
law for which authorities are
transferred under subtitle F or H, but
the Bureau may exercise such authority
only with respect to that law.
(D) Rules.--
(i) Authority of other agencies.--No provision
of this title shall be construed as modifying,
limiting, or superseding the supervisory or
enforcement authority of the Federal Trade
Commission or any other agency (other than the
Bureau) with respect to credit extended, or the
collection of debt arising from such extension,
directly by a merchant or retailer to a consumer
exclusively for the purpose of enabling that
consumer to purchase nonfinancial goods or
services directly from the merchant or retailer.
(ii) Small businesses.--A merchant, retailer,
or seller of nonfinancial goods or services that
would otherwise be subject to the authority of the
Bureau solely by virtue of the application of
subparagraph (B)(iii) shall be deemed not to be
engaged significantly in offering or providing
consumer financial products or services under
subparagraph (C)(i), if such person--
(I) only extends credit for the sale
of nonfinancial goods or services, as
described in subparagraph (A)(i);
(II) retains such credit on its own
accounts (except to sell or convey such
debt that is delinquent or otherwise in
default); and
(III) meets the relevant industry
size threshold to be a small business
concern, based on annual receipts,
pursuant to section 3 of the Small
Business Act (15 U.S.C. 632) and the
implementing rules thereunder.
(iii) Initial year.--A merchant, retailer, or
seller of nonfinancial goods or services shall be
deemed to meet the relevant industry size
threshold described in clause (ii)(III) during the
first year of operations of that business concern
if, during that year, the
[[Page 124 STAT. 1997]]
receipts of that business concern reasonably are
expected to meet that size threshold.
(iv) Other standards for small business.--With
respect to a merchant, retailer, or seller of
nonfinancial goods or services that is a
classified on a basis other than annual receipts
for the purposes of section 3 of the Small
Business Act (15 U.S.C. 632) and the implementing
rules thereunder, such merchant, retailer, or
seller shall be deemed to meet the relevant
industry size threshold described in clause
(ii)(III) if such merchant, retailer, or seller
meets the relevant industry size threshold to be a
small business concern based on the number of
employees, or other such applicable measure,
established under that Act.
(E) Exception from state enforcement.--To the extent
that the Bureau may not exercise authority under this
subsection with respect to a merchant, retailer, or
seller of nonfinancial goods or services, no action by a
State attorney general or State regulator with respect
to a claim made under this title may be brought under
subsection 1042(a), with respect to an activity
described in any of clauses (i) through (iii) of
subparagraph (A) by such merchant, retailer, or seller
of nonfinancial goods or services.
(b) Exclusion for Real Estate Brokerage Activities.--
(1) Real estate brokerage activities excluded.--Without
limiting subsection (a), and except as permitted in paragraph
(2), the Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority under this title with respect to
a person that is licensed or registered as a real estate broker
or real estate agent, in accordance with State law, to the
extent that such person--
(A) acts as a real estate agent or broker for a
buyer, seller, lessor, or lessee of real property;
(B) brings together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(C) negotiates, on behalf of any party, any portion
of a contract relating to the sale, purchase, lease,
rental, or exchange of real property (other than in
connection with the provision of financing with respect
to any such transaction); or
(D) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), or (C).
(2) Description of activities.--The Bureau may exercise
rulemaking, supervisory, enforcement, or other authority under
this title with respect to a person described in paragraph (1)
when such person is--
(A) engaged in an activity of offering or providing
any consumer financial product or service, except that
the Bureau may exercise such authority only with respect
to that activity; or
(B) otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under
subtitle F or H, but the Bureau may exercise such
authority only with respect to that law.
(c) Exclusion for Manufactured Home Retailers and Modular Home
Retailers.--
[[Page 124 STAT. 1998]]
(1) In general.--The Director may not exercise any
rulemaking, supervisory, enforcement, or other authority over a
person to the extent that--
(A) such person is not described in paragraph (2);
and
(B) such person--
(i) acts as an agent or broker for a buyer or
seller of a manufactured home or a modular home;
(ii) facilitates the purchase by a consumer of
a manufactured home or modular home, by
negotiating the purchase price or terms of the
sales contract (other than providing financing
with respect to such transaction); or
(iii) offers to engage in any activity
described in clause (i) or (ii).
(2) Description of activities.--A person is described in
this paragraph to the extent that such person is engaged in the
offering or provision of any consumer financial product or
service or is otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under subtitle
F or H.
(3) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Manufactured home.--The term ``manufactured
home'' has the same meaning as in section 603 of the
National Manufactured Housing Construction and Safety
Standards Act of 1974 (42 U.S.C. 5402).
(B) Modular home.--The term ``modular home'' means a
house built in a factory in 2 or more modules that meet
the State or local building codes where the house will
be located, and where such modules are transported to
the building site, installed on foundations, and
completed.
(d) Exclusion for Accountants and Tax Preparers.--
(1) In general.--Except as permitted in paragraph (2), the
Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority over--
(A) any person that is a certified public
accountant, permitted to practice as a certified public
accounting firm, or certified or licensed for such
purpose by a State, or any individual who is employed by
or holds an ownership interest with respect to a person
described in this subparagraph, when such person is
performing or offering to perform--
(i) customary and usual accounting activities,
including the provision of accounting, tax,
advisory, or other services that are subject to
the regulatory authority of a State board of
accountancy or a Federal authority; or
(ii) other services that are incidental to
such customary and usual accounting activities, to
the extent that such incidental services are not
offered or provided--
(I) by the person separate and apart
from such customary and usual accounting
activities; or
(II) to consumers who are not
receiving such customary and usual
accounting activities; or
[[Page 124 STAT. 1999]]
(B) any person, other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) Description of activities.--
(A) In general.--Paragraph (1) shall not apply to
any person described in paragraph (1)(A) or (1)(B) to
the extent that such person is engaged in any activity
which is not a customary and usual accounting activity
described in paragraph (1)(A) or incidental thereto but
which is the offering or provision of any consumer
financial product or service, except to the extent that
a person described in paragraph (1)(A) is engaged in an
activity which is a customary and usual accounting
activity described in paragraph (1)(A), or incidental
thereto.
(B) Not a customary and usual accounting activity.--
For purposes of this subsection, extending or brokering
credit is not a customary and usual accounting activity,
or incidental thereto.
(C) Rule of construction.--For purposes of
subparagraphs (A) and (B), a person described in
paragraph (1)(A) shall not be deemed to be extending
credit, if such person is only extending credit directly
to a consumer, exclusively for the purpose of enabling
such consumer to purchase services described in clause
(i) or (ii) of paragraph (1)(A) directly from such
person, and such credit is--
(i) not subject to a finance charge; and
(ii) not payable by written agreement in more
than 4 installments.
(D) Other limitations.--Paragraph (1) does not apply
to any person described in paragraph (1)(A) or (1)(B)
that is otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under
subtitle F or H.
(e) Exclusion for Practice of Law.--
(1) In general.--Except as provided under paragraph (2),
the Bureau may not exercise any supervisory or enforcement
authority with respect to an activity engaged in by an attorney
as part of the practice of law under the laws of a State in
which the attorney is licensed to practice law.
(2) Rule of construction.--Paragraph (1) shall not be
construed so as to limit the exercise by the Bureau of any
supervisory, enforcement, or other authority regarding the
offering or provision of a consumer financial product or service
described in any subparagraph of section 1002(5)--
(A) that is not offered or provided as part of, or
incidental to, the practice of law, occurring
exclusively within the scope of the attorney-client
relationship; or
(B) that is otherwise offered or provided by the
attorney in question with respect to any consumer who is
not receiving legal advice or services from the attorney
in connection with such financial product or service.
(3) Existing authority.--Paragraph (1) shall not be
construed so as to limit the authority of the Bureau with
respect to any attorney, to the extent that such attorney is
otherwise subject to any of the enumerated consumer laws or the
authorities transferred under subtitle F or H.
[[Page 124 STAT. 2000]]
(f) Exclusion for Persons Regulated by a State Insurance
Regulator.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
any State insurance regulator to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by a State insurance regulator. Except as
provided in paragraph (2), the Bureau shall have no authority to
exercise any power to enforce this title with respect to a
person regulated by a State insurance regulator.
(2) Description of activities.--Paragraph (1) does not apply
to any person described in such paragraph to the extent that
such person is engaged in the offering or provision of any
consumer financial product or service or is otherwise subject to
any enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(3) State insurance authority under gramm-leach-bliley.--
Notwithstanding paragraph (2), the Bureau shall not exercise any
authorities that are granted a State insurance authority under
section 505(a)(6) of the Gramm-Leach-Bliley Act with respect to
a person regulated by a State insurance authority.
(g) Exclusion for Employee Benefit and Compensation Plans and
Certain Other Arrangements Under the Internal Revenue Code of 1986.--
(1) Preservation of authority of other agencies.--No
provision of this title shall be construed as altering,
amending, or affecting the authority of the Secretary of the
Treasury, the Secretary of Labor, or the Commissioner of
Internal Revenue to adopt regulations, initiate enforcement
proceedings, or take any actions with respect to any specified
plan or arrangement.
(2) Activities not constituting the offering or provision of
any consumer financial product or service.--For purposes of this
title, a person shall not be treated as having engaged in the
offering or provision of any consumer financial product or
service solely because such person is--
(A) a specified plan or arrangement;
(B) engaged in the activity of establishing or
maintaining, for the benefit of employees of such person
(or for members of an employee organization), any
specified plan or arrangement; or
(C) engaged in the activity of establishing or
maintaining a qualified tuition program under section
529(b)(1) of the Internal Revenue Code of 1986 offered
by a State or other prepaid tuition program offered by a
State.
(3) Limitation on bureau authority.--
(A) In general.--Except as provided under
subparagraphs (B) and (C), the Bureau may not exercise
any rulemaking or enforcement authority with respect to
products or services that relate to any specified plan
or arrangement.
(B) Bureau action pursuant to agency request.--
(i) Agency request.--The Secretary and the
Secretary of Labor may jointly issue a written
request to the Bureau regarding implementation of
appropriate consumer protection standards under
this title with
[[Page 124 STAT. 2001]]
respect to the provision of services relating to
any specified plan or arrangement.
(ii) Agency response.--In
response <<NOTE: Deadline.>> to a request by the
Bureau, the Secretary and the Secretary of Labor
shall jointly issue a written response, not later
than 90 days after receipt of such request, to
grant or deny the request of the Bureau regarding
implementation of appropriate consumer protection
standards under this title with respect to the
provision of services relating to any specified
plan or arrangement.
(iii) Scope of bureau action.--Subject to a
request or response pursuant to clause (i) or
clause (ii) by the agencies made under this
subparagraph, the Bureau may exercise rulemaking
authority, and may act to enforce a rule
prescribed pursuant to such request or response,
in accordance with the provisions of this title. A
request or response made by the Secretary and the
Secretary of Labor under this subparagraph shall
describe the basis for, and scope of, appropriate
consumer protection standards to be implemented
under this title with respect to the provision of
services relating to any specified plan or
arrangement.
(C) Description of products or services.--To the
extent that a person engaged in providing products or
services relating to any specified plan or arrangement
is subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H,
subparagraph (A) shall not apply with respect to that
law.
(4) <<NOTE: Definition.>> Specified plan or arrangement.--
For purposes of this subsection, the term ``specified plan or
arrangement'' means any plan, account, or arrangement described
in section 220, 223, 401(a), 403(a), 403(b), 408, 408A, 529, or
530 of the Internal Revenue Code of 1986, or any employee
benefit or compensation plan or arrangement, including a plan
that is subject to title I of the Employee Retirement Income
Security Act of 1974, or any prepaid tuition program offered by
a State.
(h) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
any securities commission (or any agency or office performing
like functions) of any State to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by any securities commission (or any
agency or office performing like functions) of any State. Except
as permitted in paragraph (2) and subsection (f), the Bureau
shall have no authority to exercise any power to enforce this
title with respect to a person regulated by any securities
commission (or any agency or office performing like functions)
of any State, but only to the extent that the person acts in
such regulated capacity.
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent such person is engaged in the
offering or provision of any consumer financial product or
service, or is otherwise subject to any enumerated consumer
[[Page 124 STAT. 2002]]
law or any law for which authorities are transferred under
subtitle F or H.
(i) Exclusion for Persons Regulated by the Commission.--
(1) In general.--No provision of this title may be construed
as altering, amending, or affecting the authority of the
Commission to adopt rules, initiate enforcement proceedings, or
take any other action with respect to a person regulated by the
Commission. The Bureau shall have no authority to exercise any
power to enforce this title with respect to a person regulated
by the Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commission shall consult and coordinate,
where feasible, with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking) regarding
an investment product or service that is the same type of
product as, or that competes directly with, a consumer financial
product or service that is subject to the jurisdiction of the
Bureau under this title or under any other
law. <<NOTE: Contracts. Procedures. Notification.>> In carrying
out this paragraph, the agencies shall negotiate an agreement to
establish procedures for such coordination, including procedures
for providing advance notice to the Bureau when the Commission
is initiating a rulemaking.
(j) Exclusion for Persons Regulated by the Commodity Futures Trading
Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
the Commodity Futures Trading Commission to adopt rules,
initiate enforcement proceedings, or take any other action with
respect to a person regulated by the Commodity Futures Trading
Commission. The Bureau shall have no authority to exercise any
power to enforce this title with respect to a person regulated
by the Commodity Futures Trading Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commodity Futures Trading Commission shall
consult and coordinate with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking) regarding
a product or service that is the same type of product as, or
that competes directly with, a consumer financial product or
service that is subject to the jurisdiction of the Bureau under
this title or under any other law.
(k) Exclusion for Persons Regulated by the Farm Credit
Administration.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
the Farm Credit Administration to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by the Farm Credit Administration. The
Bureau shall have no authority to exercise any power to enforce
this title with respect to a person regulated by the Farm Credit
Administration.
(2) Definition.--For purposes of this subsection, the term
``person regulated by the Farm Credit Administration'' means any
Farm Credit System institution that is chartered and subject to
the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et
seq.).
(l) Exclusion for Activities Relating to Charitable Contributions.--
[[Page 124 STAT. 2003]]
(1) In general.--The Director and the Bureau may not
exercise any rulemaking, supervisory, enforcement, or other
authority, including authority to order penalties, over any
activities related to the solicitation or making of voluntary
contributions to a tax-exempt organization as recognized by the
Internal Revenue Service, by any agent, volunteer, or
representative of such organizations to the extent the
organization, agent, volunteer, or representative thereof is
soliciting or providing advice, information, education, or
instruction to any donor or potential donor relating to a
contribution to the organization.
(2) Limitation.--The exclusion in paragraph (1) does not
apply to other activities not described in paragraph (1) that
are the offering or provision of any consumer financial product
or service, or are otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(m) Insurance.--The Bureau may not define as a financial product or
service, by regulation or otherwise, engaging in the business of
insurance.
(n) Limited Authority of the Bureau.--Notwithstanding subsections
(a) through (h) and (l), a person subject to or described in one or more
of such provisions--
(1) may be a service provider; and
(2) may be subject to requests from, or requirements imposed
by, the Bureau regarding information in order to carry out the
responsibilities and functions of the Bureau and in accordance
with section 1022, 1052, or 1053.
(o) No Authority To Impose Usury Limit.--No provision of this title
shall be construed as conferring authority on the Bureau to establish a
usury limit applicable to an extension of credit offered or made by a
covered person to a consumer, unless explicitly authorized by law.
(p) Attorney General.--No provision of this title, including section
1024(c)(1), shall affect the authorities of the Attorney General under
otherwise applicable provisions of law.
(q) Secretary of the Treasury.--No provision of this title shall
affect the authorities of the Secretary, including with respect to
prescribing rules, initiating enforcement proceedings, or taking other
actions with respect to a person that performs income tax preparation
activities for consumers.
(r) Deposit Insurance and Share Insurance.--Nothing in this title
shall affect the authority of the Corporation under the Federal Deposit
Insurance Act or the National Credit Union Administration Board under
the Federal Credit Union Act as to matters related to deposit insurance
and share insurance, respectively.
(s) Fair Housing Act.--No provision of this title shall be construed
as affecting any authority arising under the Fair Housing Act.
SEC. 1028. <<NOTE: 12 USC 5518.>> AUTHORITY TO RESTRICT MANDATORY
PRE-DISPUTE ARBITRATION.
(a) Study and Report.--The Bureau shall conduct a study of, and
shall provide a report to Congress concerning, the use of agreements
providing for arbitration of any future dispute
[[Page 124 STAT. 2004]]
between covered persons and consumers in connection with the offering or
providing of consumer financial products or services.
(b) Further Authority.--The Bureau, by regulation, may prohibit or
impose conditions or limitations on the use of an agreement between a
covered person and a consumer for a consumer financial product or
service providing for arbitration of any future dispute between the
parties, if the Bureau finds that such a prohibition or imposition of
conditions or limitations is in the public interest and for the
protection of consumers. The findings in such rule shall be consistent
with the study conducted under subsection (a).
(c) Limitation.--The authority described in subsection (b) may not
be construed to prohibit or restrict a consumer from entering into a
voluntary arbitration agreement with a covered person after a dispute
has arisen.
(d) Effective Date.--Notwithstanding any <<NOTE: Applicability.>>
other provision of law, any regulation prescribed by the Bureau under
subsection (b) shall apply, consistent with the terms of the regulation,
to any agreement between a consumer and a covered person entered into
after the end of the 180-day period beginning on the effective date of
the regulation, as established by the Bureau.
SEC. 1029. <<NOTE: 12 USC 5519.>> EXCLUSION FOR AUTO DEALERS.
(a) Sale, Servicing, and Leasing of Motor Vehicles Excluded.--Except
as permitted in subsection (b), the Bureau may not exercise any
rulemaking, supervisory, enforcement or any other authority, including
any authority to order assessments, over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.
(b) Certain Functions Excepted.--Subsection (a) shall not apply to
any person, to the extent that such person--
(1) provides consumers with any services related to
residential or commercial mortgages or self-financing
transactions involving real property;
(2) operates a line of business--
(A) that involves the extension of retail credit or
retail leases involving motor vehicles; and
(B) in which--
(i) the extension of retail credit or retail
leases are provided directly to consumers; and
(ii) the contract governing such extension of
retail credit or retail leases is not routinely
assigned to an unaffiliated third party finance or
leasing source; or
(3) offers or provides a consumer financial product or
service not involving or related to the sale, financing,
leasing, rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or any related
or ancillary product or service.
(c) Preservation of Authorities of Other Agencies.--Except as
provided in subsections (b) and (d), nothing in this title, including
subtitle F, shall be construed as modifying, limiting, or superseding
the operation of any provision of Federal law, or otherwise affecting
the authority of the Board of Governors, the Federal Trade Commission,
or any other Federal agency, with respect to a person described in
subsection (a).
(d) Federal Trade Commission Authority.--Notwithstanding section 18
of the Federal Trade Commission Act, the Federal Trade
[[Page 124 STAT. 2005]]
Commission is authorized to prescribe rules under sections 5 and
18(a)(1)(B) of the Federal Trade Commission Act. in accordance with
section 553 of title 5, United States Code, with respect to a person
described in subsection (a).
(e) Coordination With Office Of Service Member Affairs.--The Board
of Governors and the Federal Trade Commission shall coordinate with the
Office of Service Member Affairs, to ensure that--
(1) service members and their families are educated and
empowered to make better informed decisions regarding consumer
financial products and services offered by motor vehicle
dealers, with a focus on motor vehicle dealers in the proximity
of military installations; and
(2) complaints by service members and their families
concerning such motor vehicle dealers are effectively monitored
and responded to, and where appropriate, enforcement action is
pursued by the authorized agencies.
(f) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Motor vehicle.--The term ``motor vehicle'' means--
(A) any self-propelled vehicle designed for
transporting persons or property on a street, highway,
or other road;
(B) recreational boats and marine equipment;
(C) motorcycles;
(D) motor homes, recreational vehicle trailers, and
slide-in campers, as those terms are defined in sections
571.3 and 575.103 (d) of title 49, Code of Federal
Regulations, or any successor thereto; and
(E) other vehicles that are titled and sold through
dealers.
(2) Motor vehicle dealer.--The term ``motor vehicle dealer''
means any person or resident in the United States, or any
territory of the United States, who--
(A) is licensed by a State, a territory of the
United States, or the District of Columbia to engage in
the sale of motor vehicles; and
(B) takes title to, holds an ownership in, or takes
physical custody of motor vehicles.
SEC. 1029A. <<NOTE: 12 USC 5511 note.>> EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date, except that sections 1022, 1024, and 1025(e) shall become
effective on the date of enactment of this Act.
Subtitle C--Specific Bureau Authorities
SEC. 1031. <<NOTE: 12 USC 5531.>> PROHIBITING UNFAIR, DECEPTIVE,
OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Bureau may take any action authorized under
subtitle E to prevent a covered person or service provider from
committing or engaging in an unfair, deceptive, or abusive act or
practice under Federal law in connection with any transaction with a
consumer for a consumer financial product or service, or the offering of
a consumer financial product or service.
(b) Rulemaking.--The Bureau may prescribe rules applicable to a
covered person or service provider identifying as unlawful
[[Page 124 STAT. 2006]]
unfair, deceptive, or abusive acts or practices in connection with any
transaction with a consumer for a consumer financial product or service,
or the offering of a consumer financial product or service. Rules under
this section may include requirements for the purpose of preventing such
acts or practices.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority under
this section to declare an act or practice in connection with a
transaction with a consumer for a consumer financial product or
service, or the offering of a consumer financial product or
service, to be unlawful on the grounds that such act or practice
is unfair, unless the Bureau has a reasonable basis to conclude
that--
(A) the act or practice causes or is likely to cause
substantial injury to consumers which is not reasonably
avoidable by consumers; and
(B) such substantial injury is not outweighed by
countervailing benefits to consumers or to competition.
(2) Consideration of public policies.--In determining
whether an act or practice is unfair, the Bureau may consider
established public policies as evidence to be considered with
all other evidence. Such public policy considerations may not
serve as a primary basis for such determination.
(d) Abusive.--The Bureau shall have no authority under this section
to declare an act or practice abusive in connection with the provision
of a consumer financial product or service, unless the act or practice--
(1) materially interferes with the ability of a consumer to
understand a term or condition of a consumer financial product
or service; or
(2) takes unreasonable advantage of--
(A) a lack of understanding on the part of the
consumer of the material risks, costs, or conditions of
the product or service;
(B) the inability of the consumer to protect the
interests of the consumer in selecting or using a
consumer financial product or service; or
(C) the reasonable reliance by the consumer on a
covered person to act in the interests of the consumer.
(e) Consultation.--In prescribing rules under this section, the
Bureau shall consult with the Federal banking agencies, or other Federal
agencies, as appropriate, concerning the consistency of the proposed
rule with prudential, market, or systemic objectives administered by
such agencies.
(f) Consideration of Seasonal Income.--The rules of the Bureau under
this section shall provide, with respect to an extension of credit
secured by residential real estate or a dwelling, if documented income
of the borrower, including income from a small business, is a repayment
source for an extension of credit secured by residential real estate or
a dwelling, the creditor may consider the seasonality and irregularity
of such income in the underwriting of and scheduling of payments for
such credit.
SEC. 1032. <<NOTE: 12 USC 5532.>> DISCLOSURES.
(a) In General.--The Bureau may prescribe rules to ensure that the
features of any consumer financial product or service, both initially
and over the term of the product or service, are
[[Page 124 STAT. 2007]]
fully, accurately, and effectively disclosed to consumers in a manner
that permits consumers to understand the costs, benefits, and risks
associated with the product or service, in light of the facts and
circumstances.
(b) Model Disclosures.--
(1) In general.--Any final rule prescribed by the Bureau
under this section requiring disclosures may include a model
form that may be used at the option of the covered person for
provision of the required disclosures.
(2) Format.--A model form issued pursuant to paragraph (1)
shall contain a clear and conspicuous disclosure that, at a
minimum--
(A) uses plain language comprehensible to consumers;
(B) contains a clear format and design, such as an
easily readable type font; and
(C) succinctly explains the information that must be
communicated to the consumer.
(3) Consumer testing.--Any model form issued pursuant to
this subsection shall be validated through consumer testing.
(c) Basis for Rulemaking.--In prescribing rules under this section,
the Bureau shall consider available evidence about consumer awareness,
understanding of, and responses to disclosures or communications about
the risks, costs, and benefits of consumer financial products or
services.
(d) Safe Harbor.--Any covered person that uses a model form included
with a rule issued under this section shall be deemed to be in
compliance with the disclosure requirements of this section with respect
to such model form.
(e) Trial Disclosure Programs.--
(1) In general.--The Bureau may permit a covered person to
conduct a trial program that is limited in time and scope,
subject to specified standards and procedures, for the purpose
of providing trial disclosures to consumers that are designed to
improve upon any model form issued pursuant to subsection
(b)(1), or any other model form issued to implement an
enumerated statute, as applicable.
(2) Safe harbor.--The standards and procedures issued by the
Bureau shall be designed to encourage covered persons to conduct
trial disclosure programs. For the purposes of administering
this subsection, the Bureau may establish a limited period
during which a covered person conducting a trial disclosure
program shall be deemed to be in compliance with, or may be
exempted from, a requirement of a rule or an enumerated consumer
law.
(3) Public disclosure.--The rules of the Bureau shall
provide for public disclosure of trial disclosure programs,
which public disclosure may be limited, to the extent necessary
to encourage covered persons to conduct effective trials.
(f) Combined Mortgage Loan Disclosure.--Not
later <<NOTE: Deadline. Public comment.>> than 1 year after the
designated transfer date, the Bureau shall propose for public comment
rules and model disclosures that combine the disclosures required under
the Truth in Lending Act and sections 4 and 5 of the Real Estate
Settlement Procedures Act of 1974, into a single, integrated disclosure
for mortgage loan transactions covered by those laws, unless the Bureau
determines that any proposal issued by the Board of Governors and the
Secretary of Housing and Urban Development carries out the same purpose.
[[Page 124 STAT. 2008]]
SEC. 1033. <<NOTE: 12 USC 5533.>> CONSUMER RIGHTS TO ACCESS
INFORMATION.
(a) In General.--Subject to rules prescribed by the Bureau, a
covered person shall make available to a consumer, upon request,
information in the control or possession of the covered person
concerning the consumer financial product or service that the consumer
obtained from such covered person, including information relating to any
transaction, series of transactions, or to the account including costs,
charges and usage data. The information shall be made available in an
electronic form usable by consumers.
(b) Exceptions.--A covered person may not be required by this
section to make available to the consumer--
(1) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores or
predictors;
(2) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or detecting,
or making any report regarding other unlawful or potentially
unlawful conduct;
(3) any information required to be kept confidential by any
other provision of law; or
(4) any information that the covered person cannot retrieve
in the ordinary course of its business with respect to that
information.
(c) No Duty To Maintain Records.--Nothing in this section shall be
construed to impose any duty on a covered person to maintain or keep any
information about a consumer.
(d) Standardized Formats for Data.--The Bureau, by rule, shall
prescribe standards applicable to covered persons to promote the
development and use of standardized formats for information, including
through the use of machine readable files, to be made available to
consumers under this section.
(e) Consultation.--The Bureau shall, when prescribing any rule under
this section, consult with the Federal banking agencies and the Federal
Trade Commission to ensure, to the extent appropriate, that the rules--
(1) impose substantively similar requirements on covered
persons;
(2) take into account conditions under which covered persons
do business both in the United States and in other countries;
and
(3) do not require or promote the use of any particular
technology in order to develop systems for compliance.
SEC. 1034. <<NOTE: 12 USC 5534.>> RESPONSE TO CONSUMER COMPLAINTS
AND INQUIRIES.
(a) <<NOTE: Procedures.>> Timely Regulator Response to Consumers.--
The Bureau shall establish, in consultation with the appropriate Federal
regulatory agencies, reasonable procedures to provide a timely response
to consumers, in writing where appropriate, to complaints against, or
inquiries concerning, a covered person, including--
(1) steps that have been taken by the regulator in response
to the complaint or inquiry of the consumer;
(2) any responses received by the regulator from the covered
person; and
(3) any follow-up actions or planned follow-up actions by
the regulator in response to the complaint or inquiry of the
consumer.
[[Page 124 STAT. 2009]]
(b) Timely Response to Regulator by Covered Person.--A covered
person subject to supervision and primary enforcement by the Bureau
pursuant to section 1025 shall provide a timely response, in writing
where appropriate, to the Bureau, the prudential regulators, and any
other agency having jurisdiction over such covered person concerning a
consumer complaint or inquiry, including--
(1) steps that have been taken by the covered person to
respond to the complaint or inquiry of the consumer;
(2) responses received by the covered person from the
consumer; and
(3) follow-up actions or planned follow-up actions by the
covered person to respond to the complaint or inquiry of the
consumer.
(c) Provision of Information to Consumers.--
(1) In general.--A covered <<NOTE: Compliance.>> person
subject to supervision and primary enforcement by the Bureau
pursuant to section 1025 shall, in a timely manner, comply with
a consumer request for information in the control or possession
of such covered person concerning the consumer financial product
or service that the consumer obtained from such covered person,
including supporting written documentation, concerning the
account of the consumer.
(2) Exceptions.--A covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025, a
prudential regulator, and any other agency having jurisdiction
over a covered person subject to supervision and primary
enforcement by the Bureau pursuant to section 1025 may not be
required by this section to make available to the consumer--
(A) any confidential commercial information,
including an algorithm used to derive credit scores or
other risk scores or predictors;
(B) any information collected by the covered person
for the purpose of preventing fraud or money laundering,
or detecting or making any report regarding other
unlawful or potentially unlawful conduct;
(C) any information required to be kept confidential
by any other provision of law; or
(D) any nonpublic or confidential information,
including confidential supervisory information.
(d) Agreements With Other Agencies.--The
Bureau <<NOTE: Memorandum.>> shall enter into a memorandum of
understanding with any affected Federal regulatory agency regarding
procedures by which any covered person, and the prudential regulators,
and any other agency having jurisdiction over a covered person,
including the Secretary of the Department of Housing and Urban
Development and the Secretary of Education, shall comply with this
section.
SEC. 1035. <<NOTE: 12 USC 5535.>> PRIVATE EDUCATION LOAN
OMBUDSMAN.
(a) Establishment.--The Secretary, <<NOTE: Designation.>> in
consultation with the Director, shall designate a Private Education Loan
Ombudsman (in this section referred to as the ``Ombudsman'') within the
Bureau, to provide timely assistance to borrowers of private education
loans.
(b) Public Information.--The Secretary and the Director shall
disseminate information about the availability and functions of the
Ombudsman to borrowers and potential borrowers, as well
[[Page 124 STAT. 2010]]
as institutions of higher education, lenders, guaranty agencies, loan
servicers, and other participants in private education student loan
programs.
(c) Functions of Ombudsman.--The Ombudsman designated under this
subsection shall--
(1) in accordance with regulations of the Director, receive,
review, and attempt to resolve informally complaints from
borrowers of loans described in subsection (a), including, as
appropriate, attempts to resolve such complaints in
collaboration with the Department of Education and with
institutions of higher education, lenders, guaranty agencies,
loan servicers, and other participants in private education loan
programs;
(2) <<NOTE: Deadline. Memorandum.>> not later than 90 days
after the designated transfer date, establish a memorandum of
understanding with the student loan ombudsman established under
section 141(f) of the Higher Education Act of 1965 (20 U.S.C.
1018(f)), to ensure coordination in providing assistance to and
serving borrowers seeking to resolve complaints related to their
private education or Federal student loans;
(3) compile and analyze data on borrower complaints
regarding private education loans; and
(4) <<NOTE: Recommenda- tions.>> make appropriate
recommendations to the Director, the Secretary, the Secretary of
Education, the Committee on Banking, Housing, and Urban Affairs
and the Committee on Health, Education, Labor, and Pensions of
the Senate and the Committee on Financial Services and the
Committee on Education and Labor of the House of
Representatives.
(d) Annual Reports.--
(1) In general.--The Ombudsman shall prepare an annual
report that describes the activities, and evaluates the
effectiveness of the Ombudsman during the preceding year.
(2) Submission.--The report required by paragraph (1) shall
be submitted on the same date annually to the Secretary, the
Secretary of Education, the Committee on Banking, Housing, and
Urban Affairs and the Committee on Health, Education, Labor, and
Pensions of the Senate and the Committee on Financial Services
and the Committee on Education and Labor of the House of
Representatives.
(e) Definitions.--For purposes of this section, the terms ``private
education loan'' and ``institution of higher education'' have the same
meanings as in section 140 of the Truth in Lending Act (15 U.S.C. 1650).
SEC. 1036. <<NOTE: 12 USC 5536.>> PROHIBITED ACTS.
(a) In General.--It shall be unlawful for--
(1) any covered person or service provider--
(A) to offer or provide to a consumer any financial
product or service not in conformity with Federal
consumer financial law, or otherwise commit any act or
omission in violation of a Federal consumer financial
law; or
(B) to engage in any unfair, deceptive, or abusive
act or practice;
(2) any covered person or service provider to fail or
refuse, as required by Federal consumer financial law, or any
rule or order issued by the Bureau thereunder--
(A) to permit access to or copying of records;
(B) to establish or maintain records; or
[[Page 124 STAT. 2011]]
(C) to make reports or provide information to the
Bureau; or
(3) any person to knowingly or recklessly provide
substantial assistance to a covered person or service provider
in violation of the provisions of section 1031, or any rule or
order issued thereunder, and notwithstanding any provision of
this title, the provider of such substantial assistance shall be
deemed to be in violation of that section to the same extent as
the person to whom such assistance is provided.
(b) Exception.--No person shall be held to have violated subsection
(a)(1) solely by virtue of providing or selling time or space to a
covered person or service provider placing an advertisement.
SEC. 1037. <<NOTE: 12 USC 5531 note.>> EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle D--Preservation of State Law
SEC. 1041. <<NOTE: 12 USC 5551.>> RELATION TO STATE LAW.
(a) In General.--
(1) Rule of construction.--This title, other than sections
1044 through 1048, may not be construed as annulling, altering,
or affecting, or exempting any person subject to the provisions
of this title from complying with, the statutes, regulations,
orders, or interpretations in effect in any State, except to the
extent that any such provision of law is inconsistent with the
provisions of this title, and then only to the extent of the
inconsistency.
(2) Greater protection under state law.--For purposes of
this subsection, a statute, regulation, order, or interpretation
in effect in any State is not inconsistent with the provisions
of this title if the protection that such statute, regulation,
order, or interpretation affords to consumers is greater than
the protection provided under this title. A determination
regarding whether a statute, regulation, order, or
interpretation in effect in any State is inconsistent with the
provisions of this title may be made by the Bureau on its own
motion or in response to a nonfrivolous petition initiated by
any interested person.
(b) Relation to Other Provisions of Enumerated Consumer Laws That
Relate to State Law.--No provision of this title, except as provided in
section 1083, shall be construed as modifying, limiting, or superseding
the operation of any provision of an enumerated consumer law that
relates to the application of a law in effect in any State with respect
to such Federal law.
(c) Additional Consumer Protection Regulations in Response to State
Action.--
(1) Notice of proposed rule required.--The Bureau shall
issue a notice of proposed rulemaking whenever a majority of the
States has enacted a resolution in support of the establishment
or modification of a consumer protection regulation by the
Bureau.
(2) Bureau considerations required for issuance of final
regulation.--Before prescribing a final regulation based upon a
notice issued pursuant to paragraph (1), the Bureau shall take
into account whether--
[[Page 124 STAT. 2012]]
(A) the proposed regulation would afford greater
protection to consumers than any existing regulation;
(B) the intended benefits of the proposed regulation
for consumers would outweigh any increased costs or
inconveniences for consumers, and would not discriminate
unfairly against any category or class of consumers; and
(C) a Federal banking agency has advised that the
proposed regulation is likely to present an unacceptable
safety and soundness risk to insured depository
institutions.
(3) Explanation of considerations.--The Bureau--
(A) shall include a discussion of the considerations
required in paragraph (2) in the Federal Register notice
of a final regulation prescribed pursuant to this
subsection; and
(B) <<NOTE: Federal Register, publication.>>
whenever the Bureau determines not to prescribe a final
regulation, shall publish an explanation of such
determination in the Federal Register, and provide a
copy of such explanation to each State that enacted a
resolution in support of the proposed regulation, the
Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the
House of Representatives.
(4) Reservation of authority.--No provision of this
subsection shall be construed as limiting or restricting the
authority of the Bureau to enhance consumer protection standards
established pursuant to this title in response to its own motion
or in response to a request by any other interested person.
(5) Rule of construction.--No provision of this subsection
shall be construed as exempting the Bureau from complying with
subchapter II of chapter 5 of title 5, United States Code.
(6) Definition.--For purposes of this subsection, the term
``consumer protection regulation'' means a regulation that the
Bureau is authorized to prescribe under the Federal consumer
financial laws.
SEC. 1042. <<NOTE: 12 USC 5552.>> PRESERVATION OF ENFORCEMENT
POWERS OF STATES.
(a) In General.--
(1) Action by state.--Except as provided in paragraph (2),
the attorney general (or the equivalent thereof) of any State
may bring a civil action in the name of such State in any
district court of the United States in that State or in State
court that is located in that State and that has jurisdiction
over the defendant, to enforce provisions of this title or
regulations issued under this title, and to secure remedies
under provisions of this title or remedies otherwise provided
under other law. A State regulator may bring a civil action or
other appropriate proceeding to enforce the provisions of this
title or regulations issued under this title with respect to any
entity that is State-chartered, incorporated, licensed, or
otherwise authorized to do business under State law (except as
provided in paragraph (2)), and to secure remedies under
provisions of this title or remedies otherwise provided under
other provisions of law with respect to such an entity.
[[Page 124 STAT. 2013]]
(2) Action by state against national bank or federal savings
association to enforce rules.--
(A) In general.--Except as permitted under
subparagraph (B), the attorney general (or equivalent
thereof) of any State may not bring a civil action in
the name of such State against a national bank or
Federal savings association to enforce a provision of
this title.
(B) Enforcement of rules permitted.--The attorney
general (or the equivalent thereof) of any State may
bring a civil action in the name of such State against a
national bank or Federal savings association in any
district court of the United States in the State or in
State court that is located in that State and that has
jurisdiction over the defendant to enforce a regulation
prescribed by the Bureau under a provision of this title
and to secure remedies under provisions of this title or
remedies otherwise provided under other law.
(3) Rule of construction.--No provision of this title shall
be construed as modifying, limiting, or superseding the
operation of any provision of an enumerated consumer law that
relates to the authority of a State attorney general or State
regulator to enforce such Federal law.
(b) Consultation Required.--
(1) <<NOTE: Records.>> Notice.--
(A) In general.--Before initiating any action in a
court or other administrative or regulatory proceeding
against any covered person as authorized by subsection
(a) to enforce any provision of this title, including
any regulation prescribed by the Bureau under this
title, a State attorney general or State regulator shall
timely provide a copy of the complete complaint to be
filed and written notice describing such action or
proceeding to the Bureau and the prudential regulator,
if any, or the designee thereof.
(B) Emergency action.--If prior notice is not
practicable, the State attorney general or State
regulator shall provide a copy of the complete complaint
and the notice to the Bureau and the prudential
regulator, if any, immediately upon instituting the
action or proceeding.
(C) Contents of notice.--The notification required
under this paragraph shall, at a minimum, describe--
(i) the identity of the parties;
(ii) the alleged facts underlying the
proceeding; and
(iii) whether there may be a need to
coordinate the prosecution of the proceeding so as
not to interfere with any action, including any
rulemaking, undertaken by the Bureau, a prudential
regulator, or another Federal agency.
(2) Bureau response.--In any action described in paragraph
(1), the Bureau may--
(A) intervene in the action as a party;
(B) upon intervening--
(i) remove the action to the appropriate
United States district court, if the action was
not originally brought there; and
[[Page 124 STAT. 2014]]
(ii) be heard on all matters arising in the
action; and
(C) appeal any order or judgment, to the same extent
as any other party in the proceeding may.
(c) Regulations.--The Bureau shall prescribe regulations to
implement the requirements of this section and, from time to time,
provide guidance in order to further coordinate actions with the State
attorneys general and other regulators.
(d) Preservation of State Authority.--
(1) State claims.--No provision of this section shall be
construed as altering, limiting, or affecting the authority of a
State attorney general or any other regulatory or enforcement
agency or authority to bring an action or other regulatory
proceeding arising solely under the law in effect in that State.
(2) State securities regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State securities commission (or any agency or
office performing like functions) under State law to adopt
rules, initiate enforcement proceedings, or take any other
action with respect to a person regulated by such commission or
authority.
(3) State insurance regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State insurance commission or State insurance
regulator under State law to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by such commission or regulator.
SEC. 1043. <<NOTE: 12 USC 5553.>> PRESERVATION OF EXISTING
CONTRACTS.
This title, and regulations, orders, guidance, and interpretations
prescribed, issued, or established by the Bureau, shall not be construed
to alter or affect the applicability of any regulation, order, guidance,
or interpretation prescribed, issued, and established by the Comptroller
of the Currency or the Director of the Office of Thrift Supervision
regarding the applicability of State law under Federal banking law to
any contract entered into on or before the date of enactment of this
Act, by national banks, Federal savings associations, or subsidiaries
thereof that are regulated and supervised by the Comptroller of the
Currency or the Director of the Office of Thrift Supervision,
respectively.
SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
(a) In General.--Chapter one of title LXII of the Revised Statutes
of the United States (12 U.S.C. 21 et seq.) is amended by inserting
after section 5136B the following new section:
``SEC. 5136C. <<NOTE: 12 USC 25b.>> STATE LAW PREEMPTION
STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
``(a) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) National bank.--The term `national bank' includes--
``(A) any bank organized under the laws of the
United States; and
``(B) any Federal branch established in accordance
with the International Banking Act of 1978.
``(2) State consumer financial laws.--The term `State
consumer financial law' means a State law that does not directly
or indirectly discriminate against national banks and that
[[Page 124 STAT. 2015]]
directly and specifically regulates the manner, content, or
terms and conditions of any financial transaction (as may be
authorized for national banks to engage in), or any account
related thereto, with respect to a consumer.
``(3) Other definitions.--The terms `affiliate',
`subsidiary', `includes', and `including' have the same meanings
as in section 3 of the Federal Deposit Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws are
preempted, only if--
``(A) application of a State consumer financial law
would have a discriminatory effect on national banks, in
comparison with the effect of the law on a bank
chartered by that State;
``(B) in accordance with the legal standard for
preemption in the decision of the Supreme Court of the
United States in Barnett Bank of Marion County, N. A. v.
Nelson, Florida Insurance Commissioner, et al., 517 U.S.
25 (1996), the State consumer financial law prevents or
significantly interferes with the exercise by the
national bank of its powers; and any preemption
determination under this subparagraph may be made by a
court, or by regulation or order of the Comptroller of
the Currency on a case-by-case basis, in accordance with
applicable law; or
``(C) the State consumer financial law is preempted
by a provision of Federal law other than this title.
``(2) Savings clause.--This title and section 24 of the
Federal Reserve Act (12 U.S.C. 371) do not preempt, annul, or
affect the applicability of any State law to any subsidiary or
affiliate of a national bank (other than a subsidiary or
affiliate that is chartered as a national bank).
``(3) Case-by-case basis.--
``(A) Definition.--As used in this section the term
`case-by-case basis' refers to a determination pursuant
to this section made by the Comptroller concerning the
impact of a particular State consumer financial law on
any national bank that is subject to that law, or the
law of any other State with substantively equivalent
terms.
``(B) Consultation.--When making a determination on
a case-by-case basis that a State consumer financial law
of another State has substantively equivalent terms as
one that the Comptroller is preempting, the Comptroller
shall first consult with the Bureau of Consumer
Financial Protection and shall take the views of the
Bureau into account when making the determination.
``(4) Rule of construction.--This title does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any
determinations made by the Comptroller regarding
preemption of a State law by this title or section 24 of
the Federal Reserve Act (12 U.S.C. 371) shall assess the
validity of such determinations, depending upon the
thoroughness evident in the consideration of the agency,
the validity of the reasoning of the agency, the
consistency with other valid determinations made by the
agency, and other factors
[[Page 124 STAT. 2016]]
which the court finds persuasive and relevant to its
decision.
``(B) Savings clause.--Except as provided in
subparagraph (A), nothing in this section shall affect
the deference that a court may afford to the Comptroller
in making determinations regarding the meaning or
interpretation of title LXII of the Revised Statutes of
the United States or other Federal laws.
``(6) Comptroller determination not delegable.--Any
regulation, order, or determination made by the Comptroller of
the Currency under paragraph (1)(B) shall be made by the
Comptroller, and shall not be delegable to another officer or
employee of the Comptroller of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection (b)(1)(B), shall
be interpreted or applied so as to invalidate, or otherwise declare
inapplicable to a national bank, the provision of the State consumer
financial law, unless substantial evidence, made on the record of the
proceeding, supports the specific finding regarding the preemption of
such provision in accordance with the legal standard of the decision of
the Supreme Court of the United States in Barnett Bank of Marion County,
N.A. v. Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25
(1996).
``(d) Periodic Review of Preemption Determinations.--
``(1) In general.--The Comptroller <<NOTE: Notice. Public
comment.>> of the Currency shall periodically conduct a review,
through notice and public comment, of each determination that a
provision of Federal law preempts a State consumer financial
law. <<NOTE: Deadline.>> The agency shall conduct such review
within the 5-year period after prescribing or otherwise issuing
such determination, and at least once during each 5-year period
thereafter. <<NOTE: Federal Register, publication.>> After
conducting the review of, and inspecting the comments made on,
the determination, the agency shall publish a notice in the
Federal Register announcing the decision to continue or rescind
the determination or a proposal to amend the determination. Any
such notice of a proposal to amend a determination and the
subsequent resolution of such proposal shall comply with the
procedures set forth in subsections (a) and (b) of section 5244
of the Revised Statutes of the United States (12 U.S.C. 43 (a),
(b)).
``(2) Reports to congress.--At the time of issuing a review
conducted under paragraph (1), the Comptroller of the Currency
shall submit a report regarding such review to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate.
The report submitted to the respective committees shall address
whether the agency intends to continue, rescind, or propose to
amend any determination that a provision of Federal law preempts
a State consumer financial law, and the reasons therefor.
``(e) Application of State Consumer Financial Law to Subsidiaries
and Affiliates.--Notwithstanding any provision of this title or section
24 of Federal Reserve Act (12 U.S.C. 371), a State consumer financial
law shall apply to a subsidiary or affiliate of a national bank (other
than a subsidiary or affiliate that is chartered as a national bank) to
the same extent that
[[Page 124 STAT. 2017]]
the State consumer financial law applies to any person, corporation, or
other entity subject to such State law.
``(f) Preservation of Powers Related to Charging Interest.--No
provision of this title shall be construed as altering or otherwise
affecting the authority conferred by section 5197 of the Revised
Statutes of the United States (12 U.S.C. 85) for the charging of
interest by a national bank at the rate allowed by the laws of the
State, territory, or district where the bank is located, including with
respect to the meaning of `interest' under such provision.
``(g) Transparency of OCC Preemption Determinations.--The
Comptroller <<NOTE: Publication. Deadline. Records.>> of the Currency
shall publish and update no less frequently than quarterly, a list of
preemption determinations by the Comptroller of the Currency then in
effect that identifies the activities and practices covered by each
determination and the requirements and constraints determined to be
preempted.''.
(b) Clerical Amendment.--The table of sections for chapter one of
title LXII of the Revised Statutes of the United States is amended by
inserting after the item relating to section 5136B the following new
item:
``Sec. 5136C. State law preemption standards for national banks and
subsidiaries clarified.''.
SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY
INSTITUTION SUBSIDIARIES.
Section 5136C of the Revised Statutes of the United <<NOTE: 12 USC
25b.>> States (as added by this subtitle) is amended by adding at the
end the following:
``(h) Clarification of Law Applicable to Nondepository Institution
Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this subsection, the
terms `depository institution', `subsidiary', and `affiliate'
have the same meanings as in section 3 of the Federal Deposit
Insurance Act.
``(2) Rule of construction.--No provision of this title or
section 24 of the Federal Reserve Act (12 U.S.C. 371) shall be
construed as preempting, annulling, or affecting the
applicability of State law to any subsidiary, affiliate, or
agent of a national bank (other than a subsidiary, affiliate, or
agent that is chartered as a national bank).''.
SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.
(a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461 et seq.)
is amended by inserting after section 5 the following new section:
``SEC. 6. <<NOTE: 12 USC 1465.>> STATE LAW PREEMPTION STANDARDS
FOR FEDERAL SAVINGS ASSOCIATIONS CLARIFIED.
``(a) In General.--Any determination by a court or by the Director
or any successor officer or agency regarding the relation of State law
to a provision of this Act or any regulation or order prescribed under
this Act shall be made in accordance with the laws and legal standards
applicable to national banks regarding the preemption of State law.
``(b) Principles of Conflict Preemption Applicable.--Notwithstanding
the authorities granted under sections 4 and 5, this Act does not occupy
the field in any area of State law.''.
[[Page 124 STAT. 2018]]
(b) Clerical Amendment.--The table of sections for the Home Owners'
Loan Act (12 U.S.C. 1461 et seq.) is amended by striking the item
relating to section 6 and inserting the following new item:
``Sec. 6. State law preemption standards for Federal savings
associations and subsidiaries clarified.''.
SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND SAVINGS
ASSOCIATIONS.
(a) National Banks.--Section 5136C of the Revised Statutes of the
United States <<NOTE: 12 USC 25b.>> (as added by this subtitle) is
amended by adding at the end the following:
``(i) Visitorial Powers.--
``(1) In general.--In accordance with the decision of the
Supreme Court of the United States in Cuomo v. Clearing House
Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision of this
title which relates to visitorial powers or otherwise limits or
restricts the visitorial authority to which any national bank is
subject shall be construed as limiting or restricting the
authority of any attorney general (or other chief law
enforcement officer) of any State to bring an action against a
national bank in a court of appropriate jurisdiction to enforce
an applicable law and to seek relief as authorized by such law.
``(j) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this title or section 5 of
the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
(b) Savings Associations.--Section 6 of the Home Owners' Loan
Act <<NOTE: 12 USC 1465.>> (as added by this title) is amended by
adding at the end the following:
``(c) Visitorial Powers.--The provisions <<NOTE: Applicability.>>
of sections 5136C(i) of the Revised Statutes of the United States shall
apply to Federal savings associations, and any subsidiary thereof, to
the same extent and in the same manner as if such savings associations,
or subsidiaries thereof, were national banks or subsidiaries of national
banks, respectively.''
``(d) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this Act or section 5 of
the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
SEC. 1048. <<NOTE: 12 USC 5551 note.>> EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle E--Enforcement Powers
SEC. 1051. <<NOTE: 12 USC 5561.>> DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Bureau investigation.--The term ``Bureau investigation''
means any inquiry conducted by a Bureau investigator for the
purpose of ascertaining whether any person is or has
[[Page 124 STAT. 2019]]
been engaged in any conduct that is a violation, as defined in
this section.
(2) Bureau investigator.--The term ``Bureau investigator''
means any attorney or investigator employed by the Bureau who is
charged with the duty of enforcing or carrying into effect any
Federal consumer financial law.
(3) Custodian.--The term ``custodian'' means the custodian
or any deputy custodian designated by the Bureau.
(4) Documentary material.--The term ``documentary material''
includes the original or any copy of any book, document, record,
report, memorandum, paper, communication, tabulation, chart,
logs, electronic files, or other data or data compilations
stored in any medium.
(5) Violation.--The term ``violation'' means any act or
omission that, if proved, would constitute a violation of any
provision of Federal consumer financial law.
SEC. 1052. <<NOTE: 12 USC 5562.>> INVESTIGATIONS AND
ADMINISTRATIVE DISCOVERY.
(a) Joint Investigations.--
(1) In general.--The Bureau or, where appropriate, a Bureau
investigator, may engage in joint investigations and requests
for information, as authorized under this title.
(2) Fair lending.--The authority under paragraph (1)
includes matters relating to fair lending, and where
appropriate, joint investigations with, and requests for
information from, the Secretary of Housing and Urban
Development, the Attorney General of the United States, or both.
(b) Subpoenas.--
(1) In general.--The Bureau or a Bureau investigator may
issue subpoenas for the attendance and testimony of witnesses
and the production of relevant papers, books, documents, or
other material in connection with hearings under this title.
(2) Failure to obey.--In the case of contumacy or refusal to
obey a subpoena issued pursuant to this paragraph and served
upon any person, the district court of the United States for any
district in which such person is found, resides, or transacts
business, upon application by the Bureau or a Bureau
investigator and after notice to such person, may issue an order
requiring such person to appear and give testimony or to appear
and produce documents or other material.
(3) Contempt.--Any failure to obey an order of the court
under this subsection may be punished by the court as a contempt
thereof.
(c) Demands.--
(1) In general.--Whenever the Bureau has reason to believe
that any person may be in possession, custody, or control of any
documentary material or tangible things, or may have any
information, relevant to a violation, the Bureau may, before the
institution of any proceedings under the Federal consumer
financial law, issue in writing, and cause to be served upon
such person, a civil investigative demand requiring such person
to--
(A) produce such documentary material for inspection
and copying or reproduction in the form or medium
requested by the Bureau;
(B) submit such tangible things;
(C) file written reports or answers to questions;
[[Page 124 STAT. 2020]]
(D) give oral testimony concerning documentary
material, tangible things, or other information; or
(E) furnish any combination of such material,
answers, or testimony.
(2) Requirements.--Each civil investigative demand shall
state the nature of the conduct constituting the alleged
violation which is under investigation and the provision of law
applicable to such violation.
(3) Production of documents.--Each civil investigative
demand for the production of documentary material shall--
(A) describe each class of documentary material to
be produced under the demand with such definiteness and
certainty as to permit such material to be fairly
identified;
(B) prescribe a return date or dates which will
provide a reasonable period of time within which the
material so demanded may be assembled and made available
for inspection and copying or reproduction; and
(C) identify the custodian to whom such material
shall be made available.
(4) Production of things.--Each civil investigative demand
for the submission of tangible things shall--
(A) describe each class of tangible things to be
submitted under the demand with such definiteness and
certainty as to permit such things to be fairly
identified;
(B) prescribe a return date or dates which will
provide a reasonable period of time within which the
things so demanded may be assembled and submitted; and
(C) identify the custodian to whom such things shall
be submitted.
(5) Demand for written reports or answers.--Each civil
investigative demand for written reports or answers to questions
shall--
(A) propound with definiteness and certainty the
reports to be produced or the questions to be answered;
(B) prescribe a date or dates at which time written
reports or answers to questions shall be submitted; and
(C) identify the custodian to whom such reports or
answers shall be submitted.
(6) Oral testimony.--Each civil investigative demand for the
giving of oral testimony shall--
(A) prescribe a date, time, and place at which oral
testimony shall be commenced; and
(B) identify a Bureau investigator who shall conduct
the investigation and the custodian to whom the
transcript of such investigation shall be submitted.
(7) Service.--Any civil investigative demand issued, and any
enforcement petition filed, under this section may be served--
(A) by any Bureau investigator at any place within
the territorial jurisdiction of any court of the United
States; and
(B) upon any person who is not found within the
territorial jurisdiction of any court of the United
States--
(i) in such manner as the Federal Rules of
Civil Procedure prescribe for service in a foreign
nation; and
[[Page 124 STAT. 2021]]
(ii) to the extent that the courts of the
United States have authority to assert
jurisdiction over such person, consistent with due
process, the United States District Court for the
District of Columbia shall have the same
jurisdiction to take any action respecting
compliance with this section by such person that
such district court would have if such person were
personally within the jurisdiction of such
district court.
(8) Method of service.--Service of any civil investigative
demand or any enforcement petition filed under this section may
be made upon a person, including any legal entity, by--
(A) delivering a duly executed copy of such demand
or petition to the individual or to any partner,
executive officer, managing agent, or general agent of
such person, or to any agent of such person authorized
by appointment or by law to receive service of process
on behalf of such person;
(B) delivering a duly executed copy of such demand
or petition to the principal office or place of business
of the person to be served; or
(C) depositing a duly executed copy in the United
States mails, by registered or certified mail, return
receipt requested, duly addressed to such person at the
principal office or place of business of such person.
(9) Proof of service.--
(A) In general.--A verified return by the individual
serving any civil investigative demand or any
enforcement petition filed under this section setting
forth the manner of such service shall be proof of such
service.
(B) Return receipts.--In the case of service by
registered or certified mail, such return shall be
accompanied by the return post office receipt of
delivery of such demand or enforcement petition.
(10) <<NOTE: Certificate.>> Production of documentary
material.--The production of documentary material in response to
a civil investigative demand shall be made under a sworn
certificate, in such form as the demand designates, by the
person, if a natural person, to whom the demand is directed or,
if not a natural person, by any person having knowledge of the
facts and circumstances relating to such production, to the
effect that all of the documentary material required by the
demand and in the possession, custody, or control of the person
to whom the demand is directed has been produced and made
available to the custodian.
(11) <<NOTE: Certificate.>> Submission of tangible
things.--The submission of tangible things in response to a
civil investigative demand shall be made under a sworn
certificate, in such form as the demand designates, by the
person to whom the demand is directed or, if not a natural
person, by any person having knowledge of the facts and
circumstances relating to such production, to the effect that
all of the tangible things required by the demand and in the
possession, custody, or control of the person to whom the demand
is directed have been submitted to the custodian.
(12) <<NOTE: Certificate.>> Separate answers.--Each
reporting requirement or question in a civil investigative
demand shall be answered separately and fully in writing under
oath, unless it is objected
[[Page 124 STAT. 2022]]
to, in which event the reasons for the objection shall be stated
in lieu of an answer, and it shall be submitted under a sworn
certificate, in such form as the demand designates, by the
person, if a natural person, to whom the demand is directed or,
if not a natural person, by any person responsible for answering
each reporting requirement or question, to the effect that all
information required by the demand and in the possession,
custody, control, or knowledge of the person to whom the demand
is directed has been submitted.
(13) Testimony.--
(A) In general.--
(i) Oath and recordation.--The examination of
any person pursuant to a demand for oral testimony
served under this subsection shall be taken before
an officer authorized to administer oaths and
affirmations by the laws of the United States or
of the place at which the examination is held. The
officer before whom oral testimony is to be taken
shall put the witness on oath or affirmation and
shall personally, or by any individual acting
under the direction of and in the presence of the
officer, record the testimony of the witness.
(ii) Transcription.--The testimony shall be
taken stenographically and transcribed.
(iii) Transmission to custodian.--After the
testimony is fully transcribed, the officer
investigator before whom the testimony is taken
shall promptly transmit a copy of the transcript
of the testimony to the custodian.
(B) Parties present.--Any Bureau investigator before
whom oral testimony is to be taken shall exclude from
the place where the testimony is to be taken all other
persons, except the person giving the testimony, the
attorney for that person, the officer before whom the
testimony is to be taken, an investigator or
representative of an agency with which the Bureau is
engaged in a joint investigation, and any stenographer
taking such testimony.
(C) Location.--The oral testimony of any person
taken pursuant to a civil investigative demand shall be
taken in the judicial district of the United States in
which such person resides, is found, or transacts
business, or in such other place as may be agreed upon
by the Bureau investigator before whom the oral
testimony of such person is to be taken and such person.
(D) Attorney representation.--
(i) In general.--Any person compelled to
appear under a civil investigative demand for oral
testimony pursuant to this section may be
accompanied, represented, and advised by an
attorney.
(ii) Authority.--The attorney may advise a
person described in clause (i), in confidence,
either upon the request of such person or upon the
initiative of the attorney, with respect to any
question asked of such person.
(iii) Objections.--A person described in
clause (i), or the attorney for that person, may
object on the record to any question, in whole or
in part, and such
[[Page 124 STAT. 2023]]
person shall briefly state for the record the
reason for the objection. An objection may
properly be made, received, and entered upon the
record when it is claimed that such person is
entitled to refuse to answer the question on
grounds of any constitutional or other legal right
or privilege, including the privilege against
self-incrimination, but such person shall not
otherwise object to or refuse to answer any
question, and such person or attorney shall not
otherwise interrupt the oral examination.
(iv) Refusal to answer.--If a person described
in clause (i) refuses to answer any question--
(I) the Bureau may petition the
district court of the United States
pursuant to this section for an order
compelling such person to answer such
question; and
(II) if the refusal is on grounds of
the privilege against self-
incrimination, the testimony of such
person may be compelled in accordance
with the provisions of section 6004 of
title 18, United States Code.
(E) Transcripts.--For purposes of this subsection--
(i) after the testimony of any witness is
fully transcribed, the Bureau investigator shall
afford the witness (who may be accompanied by an
attorney) a reasonable opportunity to examine the
transcript;
(ii) the transcript shall be read to or by the
witness, unless such examination and reading are
waived by the witness;
(iii) any changes in form or substance which
the witness desires to make shall be entered and
identified upon the transcript by the Bureau
investigator, with a statement of the reasons
given by the witness for making such changes;
(iv) the transcript shall be signed by the
witness, unless the witness in writing waives the
signing, is ill, cannot be found, or refuses to
sign; and
(v) <<NOTE: Time period.>> if the transcript
is not signed by the witness during the 30-day
period following the date on which the witness is
first afforded a reasonable opportunity to examine
the transcript, the Bureau investigator shall sign
the transcript and state on the record the fact of
the waiver, illness, absence of the witness, or
the refusal to sign, together with any reasons
given for the failure to sign.
(F) Certification by investigator.--The Bureau
investigator shall certify on the transcript that the
witness was duly sworn by him or her and that the
transcript is a true record of the testimony given by
the witness, and the Bureau investigator shall promptly
deliver the transcript or send it by registered or
certified mail to the custodian.
(G) Copy of transcript.--The Bureau investigator
shall furnish a copy of the transcript (upon payment of
reasonable charges for the transcript) to the witness
only, except that the Bureau may for good cause limit
such
[[Page 124 STAT. 2024]]
witness to inspection of the official transcript of his
testimony.
(H) Witness fees.--Any witness appearing for the
taking of oral testimony pursuant to a civil
investigative demand shall be entitled to the same fees
and mileage which are paid to witnesses in the district
courts of the United States.
(d) Confidential Treatment of Demand Material.--
(1) In general.--Documentary materials and tangible things
received as a result of a civil investigative demand shall be
subject to requirements and procedures regarding
confidentiality, in accordance with rules established by the
Bureau.
(2) Disclosure to congress.--No rule established by the
Bureau regarding the confidentiality of materials submitted to,
or otherwise obtained by, the Bureau shall be intended to
prevent disclosure to either House of Congress or to an
appropriate committee of the Congress, except that the Bureau is
permitted to adopt rules allowing prior notice to any party that
owns or otherwise provided the material to the Bureau and had
designated such material as confidential.
(e) Petition for Enforcement.--
(1) In general.--Whenever any person fails to comply with
any civil investigative demand duly served upon him under this
section, or whenever satisfactory copying or reproduction of
material requested pursuant to the demand cannot be accomplished
and such person refuses to surrender such material, the Bureau,
through such officers or attorneys as it may designate, may
file, in the district court of the United States for any
judicial district in which such person resides, is found, or
transacts business, and serve upon such person, a petition for
an order of such court for the enforcement of this section.
(2) Service of process.--All process of any court to which
application may be made as provided in this subsection may be
served in any judicial district.
(f) Petition for Order Modifying or Setting Aside Demand.--
(1) In general.--Not later <<NOTE: Deadline.>> than 20 days
after the service of any civil investigative demand upon any
person under subsection (b), or at any time before the return
date specified in the demand, whichever period is shorter, or
within such period exceeding 20 days after service or in excess
of such return date as may be prescribed in writing, subsequent
to service, by any Bureau investigator named in the demand, such
person may file with the Bureau a petition for an order by the
Bureau modifying or setting aside the demand.
(2) Compliance during pendency.--The time permitted for
compliance with the demand in whole or in part, as determined
proper and ordered by the Bureau, shall not run during the
pendency of a petition under paragraph (1) at the Bureau, except
that such person shall comply with any portions of the demand
not sought to be modified or set aside.
(3) Specific grounds.--A petition under paragraph (1) shall
specify each ground upon which the petitioner relies in seeking
relief, and may be based upon any failure of the demand to
comply with the provisions of this section, or upon any
constitutional or other legal right or privilege of such person.
[[Page 124 STAT. 2025]]
(g) Custodial Control.--At any time during which any custodian is in
custody or control of any documentary material, tangible things,
reports, answers to questions, or transcripts of oral testimony given by
any person in compliance with any civil investigative demand, such
person may file, in the district court of the United States for the
judicial district within which the office of such custodian is situated,
and serve upon such custodian, a petition for an order of such court
requiring the performance by such custodian of any duty imposed upon him
by this section or rule promulgated by the Bureau.
(h) Jurisdiction of Court.--
(1) In general.--Whenever any petition is filed in any
district court of the United States under this section, such
court shall have jurisdiction to hear and determine the matter
so presented, and to enter such order or orders as may be
required to carry out the provisions of this section.
(2) Appeal.--Any final order entered as described in
paragraph (1) shall be subject to appeal pursuant to section
1291 of title 28, United States Code.
SEC. 1053. <<NOTE: 12 USC 5563.>> HEARINGS AND ADJUDICATION
PROCEEDINGS.
(a) In General.--The Bureau is authorized to conduct hearings and
adjudication proceedings with respect to any person in the manner
prescribed by chapter 5 of title 5, United States Code in order to
ensure or enforce compliance with--
(1) the provisions of this title, including any rules
prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is authorized to
enforce, including an enumerated consumer law, and any
regulations or order prescribed thereunder, unless such Federal
law specifically limits the Bureau from conducting a hearing or
adjudication proceeding and only to the extent of such
limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Orders authorized.--
(A) In general.--If, in the opinion of the Bureau,
any covered person or service provider is engaging or
has engaged in an activity that violates a law, rule, or
any condition imposed in writing on the person by the
Bureau, the Bureau may, subject to sections 1024, 1025,
and 1026, issue and serve upon the covered person or
service provider a notice of charges in respect thereof.
(B) Content of notice.--The
notice <<NOTE: Deadlines.>> under subparagraph (A)
shall contain a statement of the facts constituting the
alleged violation or violations, and shall fix a time
and place at which a hearing will be held to determine
whether an order to cease and desist should issue
against the covered person or service provider, such
hearing to be held not earlier than 30 days nor later
than 60 days after the date of service of such notice,
unless an earlier or a later date is set by the Bureau,
at the request of any party so served.
(C) Consent.--Unless the party or parties served
under subparagraph (B) appear at the hearing personally
or by a duly authorized representative, such person
shall be deemed to have consented to the issuance of the
cease-and-desist order.
[[Page 124 STAT. 2026]]
(D) Procedure.--In the event of consent under
subparagraph (C), or if, upon the record, made at any
such hearing, the Bureau finds that any violation
specified in the notice of charges has been established,
the Bureau may issue and serve upon the covered person
or service provider an order to cease and desist from
the violation or practice. Such order may, by provisions
which may be mandatory or otherwise, require the covered
person or service provider to cease and desist from the
subject activity, and to take affirmative action to
correct the conditions resulting from any such
violation.
(2) Effectiveness of order.--A cease-and-desist order shall
become effective at the expiration of 30 days after the date of
service of an order under paragraph (1) upon the covered person
or service provider concerned (except in the case of a cease-
and-desist order issued upon consent, which shall become
effective at the time specified therein), and shall remain
effective and enforceable as provided therein, except to such
extent as the order is stayed, modified, terminated, or set
aside by action of the Bureau or a reviewing court.
(3) Decision and appeal.--Any hearing provided for in this
subsection shall be held in the Federal judicial district or in
the territory in which the residence or principal office or
place of business of the person is located unless the person
consents to another place, and shall be conducted in accordance
with the provisions of chapter 5 of title 5 of the United States
Code. After <<NOTE: Deadline. Notification. Order.>> such
hearing, and within 90 days after the Bureau has notified the
parties that the case has been submitted to the Bureau for final
decision, the Bureau shall render its decision (which shall
include findings of fact upon which its decision is predicated)
and shall issue and serve upon each party to the proceeding an
order or orders consistent with the provisions of this section.
Judicial review of any such order shall be exclusively as
provided in this subsection. Unless a petition for review is
timely filed in a court of appeals of the United States, as
provided in paragraph (4), and thereafter until the record in
the proceeding has been filed as provided in paragraph (4), the
Bureau may at any time, upon such notice and in such manner as
the Bureau shall determine proper, modify, terminate, or set
aside any such order. Upon filing of the record as provided, the
Bureau may modify, terminate, or set aside any such order with
permission of the court.
(4) Appeal to court of appeals.--Any
party <<NOTE: Deadline. Petition.>> to any proceeding under
this subsection may obtain a review of any order served pursuant
to this subsection (other than an order issued with the consent
of the person concerned) by the filing in the court of appeals
of the United States for the circuit in which the principal
office of the covered person is located, or in the United States
Court of Appeals for the District of Columbia Circuit, within 30
days after the date of service of such order, a written petition
praying that the order of the Bureau be modified, terminated, or
set aside. <<NOTE: Records.>> A copy of such petition shall be
forthwith transmitted by the clerk of the court to the Bureau,
and thereupon the Bureau shall file in the court the record in
the proceeding, as provided in section 2112 of title 28 of the
United States Code. Upon the filing of such petition, such court
shall have jurisdiction, which upon
[[Page 124 STAT. 2027]]
the filing of the record shall except as provided in the last
sentence of paragraph (3) be exclusive, to affirm, modify,
terminate, or set aside, in whole or in part, the order of the
Bureau. Review of such proceedings shall be had as provided in
chapter 7 of title 5 of the United States Code. The judgment and
decree of the court shall be final, except that the same shall
be subject to review by the Supreme Court of the United States,
upon certiorari, as provided in section 1254 of title 28 of the
United States Code.
(5) No stay.--The commencement of proceedings for judicial
review under paragraph (4) shall not, unless specifically
ordered by the court, operate as a stay of any order issued by
the Bureau.
(c) Special Rules for Temporary Cease-and-desist Proceedings.--
(1) In general.--Whenever the Bureau determines that the
violation specified in the notice of charges served upon a
person, including a service provider, pursuant to subsection
(b), or the continuation thereof, is likely to cause the person
to be insolvent or otherwise prejudice the interests of
consumers before the completion of the proceedings conducted
pursuant to subsection (b), the Bureau may issue a temporary
order requiring the person to cease and desist from any such
violation or practice and to take affirmative action to prevent
or remedy such insolvency or other condition pending completion
of such proceedings. Such order may include any requirement
authorized under this subtitle. Such order shall become
effective upon service upon the person and, unless set aside,
limited, or suspended by a court in proceedings authorized by
paragraph (2), shall remain effective and enforceable pending
the completion of the administrative proceedings pursuant to
such notice and until such time as the Bureau shall dismiss the
charges specified in such notice, or if a cease-and-desist order
is issued against the person, until the effective date of such
order.
(2) Appeal.--Not later <<NOTE: Deadline.>> than 10 days
after the covered person or service provider concerned has been
served with a temporary cease-and-desist order, the person may
apply to the United States district court for the judicial
district in which the residence or principal office or place of
business of the person is located, or the United States District
Court for the District of Columbia, for an injunction setting
aside, limiting, or suspending the enforcement, operation, or
effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges
served upon the person under subsection (b), and such court
shall have jurisdiction to issue such injunction.
(3) Incomplete or inaccurate records.--
(A) Temporary order.--If a notice of charges served
under subsection (b) specifies, on the basis of
particular facts and circumstances, that the books and
records of a covered person or service provider are so
incomplete or inaccurate that the Bureau is unable to
determine the financial condition of that person or the
details or purpose of any transaction or transactions
that may have a material effect on the financial
condition of that person, the Bureau may issue a
temporary order requiring--
[[Page 124 STAT. 2028]]
(i) the cessation of any activity or practice
which gave rise, whether in whole or in part, to
the incomplete or inaccurate state of the books or
records; or
(ii) affirmative action to restore such books
or records to a complete and accurate state, until
the completion of the proceedings under subsection
(b)(1).
(B) Effective period.--Any temporary order issued
under subparagraph (A)--
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended
by a court in proceedings under paragraph (2),
shall remain in effect and enforceable until the
earlier of--
(I) the completion of the proceeding
initiated under subsection (b) in
connection with the notice of charges;
or
(II) the date the Bureau determines,
by examination or otherwise, that the
books and records of the covered person
or service provider are accurate and
reflect the financial condition thereof.
(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Bureau may in its discretion apply to
the United States district court within the jurisdiction of
which the principal office or place of business of the person is
located, for the enforcement of any effective and outstanding
notice or order issued under this section, and such court shall
have jurisdiction and power to order and require compliance
herewith.
(2) Exception.--Except as otherwise provided in this
subsection, no court shall have jurisdiction to affect by
injunction or otherwise the issuance or enforcement of any
notice or order or to review, modify, suspend, terminate, or set
aside any such notice or order.
(e) Rules.--The Bureau shall prescribe rules establishing such
procedures as may be necessary to carry out this section.
SEC. 1054. <<NOTE: 12 USC 5564.>> LITIGATION AUTHORITY.
(a) In General.--If any person violates a Federal consumer financial
law, the Bureau may, subject to sections 1024, 1025, and 1026, commence
a civil action against such person to impose a civil penalty or to seek
all appropriate legal and equitable relief including a permanent or
temporary injunction as permitted by law.
(b) Representation.--The Bureau may act in its own name and through
its own attorneys in enforcing any provision of this title, rules
thereunder, or any other law or regulation, or in any action, suit, or
proceeding to which the Bureau is a party.
(c) Compromise of Actions.--The Bureau may compromise or settle any
action if such compromise is approved by the court.
(d) Notice to the Attorney General.--
(1) In general.--When commencing a civil action under
Federal consumer financial law, or any rule thereunder, the
Bureau shall notify the Attorney General and, with respect to a
civil action against an insured depository institution or
insured credit union, the appropriate prudential regulator.
(2) Notice and coordination.--
(A) Notice of other actions.--In addition to any
notice required under paragraph (1), the Bureau shall
[[Page 124 STAT. 2029]]
notify the Attorney General concerning any action, suit,
or proceeding to which the Bureau is a party, except an
action, suit, or proceeding that involves the offering
or provision of consumer financial products or services.
(B) Coordination.--In
order <<NOTE: Consultation. Deadline.>> to avoid
conflicts and promote consistency regarding litigation
of matters under Federal law, the Attorney General and
the Bureau shall consult regarding the coordination of
investigations and proceedings, including by negotiating
an agreement for coordination by not later than 180 days
after the designated transfer date. The agreement under
this subparagraph shall include provisions to ensure
that parallel investigations and proceedings involving
the Federal consumer financial laws are conducted in a
manner that avoids conflicts and does not impede the
ability of the Attorney General to prosecute violations
of Federal criminal laws.
(C) Rule of construction.--Nothing in this paragraph
shall be construed to limit the authority of the Bureau
under this title, including the authority to interpret
Federal consumer financial law.
(e) <<NOTE: Deadlines.>> Appearance Before the Supreme Court.--The
Bureau may represent itself in its own name before the Supreme Court of
the United States, provided that the Bureau makes a written request to
the Attorney General within the 10-day period which begins on the date
of entry of the judgment which would permit any party to file a petition
for writ of certiorari, and the Attorney General concurs with such
request or fails to take action within 60 days of the request of the
Bureau.
(f) Forum.--Any civil action brought under this title may be brought
in a United States district court or in any court of competent
jurisdiction of a state in a district in which the defendant is located
or resides or is doing business, and such court shall have jurisdiction
to enjoin such person and to require compliance with any Federal
consumer financial law.
(g) Time for Bringing Action.--
(1) In general.--Except as otherwise permitted by law or
equity, no action may be brought under this title more than 3
years after the date of discovery of the violation to which an
action relates.
(2) Limitations under other federal laws.--
(A) In general.--An action arising under this title
does not include claims arising solely under enumerated
consumer laws.
(B) Bureau authority.--In any action arising solely
under an enumerated consumer law, the Bureau may
commence, defend, or intervene in the action in
accordance with the requirements of that provision of
law, as applicable.
(C) Transferred authority.--In any action arising
solely under laws for which authorities were transferred
under subtitles F and H, the Bureau may commence,
defend, or intervene in the action in accordance with
the requirements of that provision of law, as
applicable.
SEC. 1055. <<NOTE: 12 USC 5565.>> RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
[[Page 124 STAT. 2030]]
(1) Jurisdiction.--The court (or the Bureau, as the case may
be) in an action or adjudication proceeding brought under
Federal consumer financial law, shall have jurisdiction to grant
any appropriate legal or equitable relief with respect to a
violation of Federal consumer financial law, including a
violation of a rule or order prescribed under a Federal consumer
financial law.
(2) Relief.--Relief under this section may include, without
limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real property;
(C) restitution;
(D) disgorgement or compensation for unjust
enrichment;
(E) payment of damages or other monetary relief;
(F) public notification regarding the violation,
including the costs of notification;
(G) limits on the activities or functions of the
person; and
(H) civil money penalties, as set forth more fully
in subsection (c).
(3) No exemplary or punitive damages.--Nothing in this
subsection shall be construed as authorizing the imposition of
exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the Bureau, a State
attorney general, or any State regulator to enforce any Federal consumer
financial law, the Bureau, the State attorney general, or the State
regulator may recover its costs in connection with prosecuting such
action if the Bureau, the State attorney general, or the State regulator
is the prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative Actions.--
(1) In general.--Any person that violates, through any act
or omission, any provision of Federal consumer financial law
shall forfeit and pay a civil penalty pursuant to this
subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a law, rule,
or final order or condition imposed in writing by the
Bureau, a civil penalty may not exceed $5,000 for each
day during which such violation or failure to pay
continues.
(B) Second tier.--Notwithstanding paragraph (A), for
any person that recklessly engages in a violation of a
Federal consumer financial law, a civil penalty may not
exceed $25,000 for each day during which such violation
continues.
(C) Third tier.--Notwithstanding subparagraphs (A)
and (B), for any person that knowingly violates a
Federal consumer financial law, a civil penalty may not
exceed $1,000,000 for each day during which such
violation continues.
(3) Mitigating factors.--In determining the amount of any
penalty assessed under paragraph (2), the Bureau or the court
shall take into account the appropriateness of the penalty with
respect to--
(A) the size of financial resources and good faith
of the person charged;
[[Page 124 STAT. 2031]]
(B) the gravity of the violation or failure to pay;
(C) the severity of the risks to or losses of the
consumer, which may take into account the number of
products or services sold or provided;
(D) the history of previous violations; and
(E) such other matters as justice may require.
(4) Authority to modify or remit penalty.--The Bureau may
compromise, modify, or remit any penalty which may be assessed
or had already been assessed under paragraph (2). The amount of
such penalty, when finally determined, shall be exclusive of any
sums owed by the person to the United States in connection with
the costs of the proceeding, and may be deducted from any sums
owing by the United States to the person charged.
(5) Notice and hearing.--No civil penalty may be assessed
under this subsection with respect to a violation of any Federal
consumer financial law, unless--
(A) the Bureau gives notice and an opportunity for a
hearing to the person accused of the violation; or
(B) the appropriate court has ordered such
assessment and entered judgment in favor of the Bureau.
SEC. 1056. <<NOTE: 12 USC 5566.>> REFERRALS FOR CRIMINAL
PROCEEDINGS.
If the Bureau obtains evidence that any person, domestic or foreign,
has engaged in conduct that may constitute a violation of Federal
criminal law, the Bureau shall transmit such evidence to the Attorney
General of the United States, who may institute criminal proceedings
under appropriate law. Nothing in this section affects any other
authority of the Bureau to disclose information.
SEC. 1057. <<NOTE: 12 USC 5567.>> EMPLOYEE PROTECTION.
(a) In General.--No covered person or service provider shall
terminate or in any other way discriminate against, or cause to be
terminated or discriminated against, any covered employee or any
authorized representative of covered employees by reason of the fact
that such employee or representative, whether at the initiative of the
employee or in the ordinary course of the duties of the employee (or any
person acting pursuant to a request of the employee), has--
(1) provided, caused to be provided, or is about to provide
or cause to be provided, information to the employer, the
Bureau, or any other State, local, or Federal, government
authority or law enforcement agency relating to any violation
of, or any act or omission that the employee reasonably believes
to be a violation of, any provision of this title or any other
provision of law that is subject to the jurisdiction of the
Bureau, or any rule, order, standard, or prohibition prescribed
by the Bureau;
(2) testified or will testify in any proceeding resulting
from the administration or enforcement of any provision of this
title or any other provision of law that is subject to the
jurisdiction of the Bureau, or any rule, order, standard, or
prohibition prescribed by the Bureau;
(3) filed, instituted, or caused to be filed or instituted
any proceeding under any Federal consumer financial law; or
(4) objected to, or refused to participate in, any activity,
policy, practice, or assigned task that the employee (or other
such person) reasonably believed to be in violation of any law,
[[Page 124 STAT. 2032]]
rule, order, standard, or prohibition, subject to the
jurisdiction of, or enforceable by, the Bureau.
(b) Definition of Covered Employee.--For the purposes of this
section, the term ``covered employee'' means any individual performing
tasks related to the offering or provision of a consumer financial
product or service.
(c) <<NOTE: Deadlines.>> Procedures and Timetables.--
(1) Complaint.--
(A) In general.--A person who believes that he or
she has been discharged or otherwise discriminated
against by any person in violation of subsection (a)
may, not later than 180 days after the date on which
such alleged violation occurs, file (or have any person
file on his or her behalf) a complaint with the
Secretary of Labor alleging such discharge or
discrimination and identifying the person responsible
for such act.
(B) <<NOTE: Notification.>> Actions of secretary of
labor.--Upon receipt of such a complaint, the Secretary
of Labor shall notify, in writing, the person named in
the complaint who is alleged to have committed the
violation, of--
(i) the filing of the complaint;
(ii) the allegations contained in the
complaint;
(iii) the substance of evidence supporting the
complaint; and
(iv) opportunities that will be afforded to
such person under paragraph (2).
(2) Investigation by secretary of labor.--
(A) In general.--Not later than 60 days after the
date of receipt of a complaint filed under paragraph
(1), and after affording the complainant and the person
named in the complaint who is alleged to have committed
the violation that is the basis for the complaint an
opportunity to submit to the Secretary of Labor a
written response to the complaint and an opportunity to
meet with a representative of the Secretary of Labor to
present statements from witnesses, the Secretary of
Labor shall--
(i) <<NOTE: Determination.>> initiate an
investigation and determine whether there is
reasonable cause to believe that the complaint has
merit; and
(ii) <<NOTE: Notification.>> notify the
complainant and the person alleged to have
committed the violation of subsection (a), in
writing, of such determination.
(B) Notice of relief available.--If
the <<NOTE: Order.>> Secretary of Labor concludes that
there is reasonable cause to believe that a violation of
subsection (a) has occurred, the Secretary of Labor
shall, together with the notice under subparagraph
(A)(ii), issue a preliminary order providing the relief
prescribed by paragraph (4)(B).
(C) Request for hearing.--Not later than 30 days
after the date of receipt of notification of a
determination of the Secretary of Labor under this
paragraph, either the person alleged to have committed
the violation or the complainant may file objections to
the findings or preliminary order, or both, and request
a hearing on the record. The filing of such objections
shall not operate to stay any reinstatement remedy
contained in the preliminary order. Any such hearing
shall be conducted expeditiously, and
[[Page 124 STAT. 2033]]
if a hearing is not requested in such 30-day period, the
preliminary order shall be deemed a final order that is
not subject to judicial review.
(3) Grounds for determination of complaints.--
(A) In general.--The Secretary of Labor shall
dismiss a complaint filed under this subsection, and
shall not conduct an investigation otherwise required
under paragraph (2), unless the complainant makes a
prima facie showing that any behavior described in
paragraphs (1) through (4) of subsection (a) was a
contributing factor in the unfavorable personnel action
alleged in the complaint.
(B) Rebuttal evidence.--Notwithstanding a finding by
the Secretary of Labor that the complainant has made the
showing required under subparagraph (A), no
investigation otherwise required under paragraph (2)
shall be conducted, if the employer demonstrates, by
clear and convincing evidence, that the employer would
have taken the same unfavorable personnel action in the
absence of that behavior.
(C) Evidentiary standards.--The Secretary of Labor
may determine that a violation of subsection (a) has
occurred only if the complainant demonstrates that any
behavior described in paragraphs (1) through (4) of
subsection (a) was a contributing factor in the
unfavorable personnel action alleged in the complaint.
Relief may not be ordered under subparagraph (A) if the
employer demonstrates by clear and convincing evidence
that the employer would have taken the same unfavorable
personnel action in the absence of that behavior.
(4) Issuance of final orders; review procedures.--
(A) Timing.--Not later than 120 days after the date
of conclusion of any hearing under paragraph (2), the
Secretary of Labor shall issue a final order providing
the relief prescribed by this paragraph or denying the
complaint. At any time before issuance of a final order,
a proceeding under this subsection may be terminated on
the basis of a settlement agreement entered into by the
Secretary of Labor, the complainant, and the person
alleged to have committed the violation.
(B) Penalties.--
(i) Order of secretary of labor.--If, in
response to a complaint filed under paragraph (1),
the Secretary of Labor determines that a violation
of subsection (a) has occurred, the Secretary of
Labor shall order the person who committed such
violation--
(I) to take affirmative action to
abate the violation;
(II) to reinstate the complainant to
his or her former position, together
with compensation (including back pay)
and restore the terms, conditions, and
privileges associated with his or her
employment; and
(III) to provide compensatory
damages to the complainant.
(ii) Penalty.--If an <<NOTE: Assessment.>>
order is issued under clause (i), the Secretary of
Labor, at the request of the complainant, shall
assess against the person against
[[Page 124 STAT. 2034]]
whom the order is issued, a sum equal to the
aggregate amount of all costs and expenses
(including attorney fees and expert witness fees)
reasonably incurred, as determined by the
Secretary of Labor, by the complainant for, or in
connection with, the bringing of the complaint
upon which the order was issued.
(C) Penalty for frivolous claims.--If the Secretary
of Labor finds that a complaint under paragraph (1) is
frivolous or has been brought in bad faith, the
Secretary of Labor may award to the prevailing employer
a reasonable attorney fee, not exceeding $1,000, to be
paid by the complainant.
(D) De novo review.--
(i) <<NOTE: Deadlines.>> Failure of the
secretary to act.--If the Secretary of Labor has
not issued a final order within 210 days after the
date of filing of a complaint under this
subsection, or within 90 days after the date of
receipt of a written determination, the
complainant may bring an action at law or equity
for de novo review in the appropriate district
court of the United States having jurisdiction,
which shall have jurisdiction over such an action
without regard to the amount in controversy, and
which action shall, at the request of either party
to such action, be tried by the court with a jury.
(ii) Procedures.--A proceeding under clause
(i) shall be governed by the same legal burdens of
proof specified in paragraph (3). The court shall
have jurisdiction to grant all relief necessary to
make the employee whole, including injunctive
relief and compensatory damages, including--
(I) reinstatement with the same
seniority status that the employee would
have had, but for the discharge or
discrimination;
(II) the amount of back pay, with
interest; and
(III) compensation for any special
damages sustained as a result of the
discharge or discrimination, including
litigation costs, expert witness fees,
and reasonable attorney fees.
(E) <<NOTE: Deadline.>> Other appeals.--Unless the
complainant brings an action under subparagraph (D), any
person adversely affected or aggrieved by a final order
issued under subparagraph (A) may file a petition for
review of the order in the United States Court of
Appeals for the circuit in which the violation with
respect to which the order was issued, allegedly
occurred or the circuit in which the complainant resided
on the date of such violation, not later than 60 days
after the date of the issuance of the final order of the
Secretary of Labor under subparagraph (A). Review shall
conform to chapter 7 of title 5, United States Code. The
commencement of proceedings under this subparagraph
shall not, unless ordered by the court, operate as a
stay of the order. An order of the Secretary of Labor
with respect to which review could have been obtained
under this subparagraph shall not be subject to judicial
review in any criminal or other civil proceeding.
[[Page 124 STAT. 2035]]
(5) Failure to comply with order.--
(A) Actions by the secretary.--If any person has
failed to comply with a final order issued under
paragraph (4), the Secretary of Labor may file a civil
action in the United States district court for the
district in which the violation was found to have
occurred, or in the United States district court for the
District of Columbia, to enforce such order. In actions
brought under this paragraph, the district courts shall
have jurisdiction to grant all appropriate relief
including injunctive relief and compensatory damages.
(B) Civil actions to compel compliance.--A person on
whose behalf an order was issued under paragraph (4) may
commence a civil action against the person to whom such
order was issued to require compliance with such order.
The appropriate United States district court shall have
jurisdiction, without regard to the amount in
controversy or the citizenship of the parties, to
enforce such order.
(C) Award of costs authorized.--The court, in
issuing any final order under this paragraph, may award
costs of litigation (including reasonable attorney and
expert witness fees) to any party, whenever the court
determines such award is appropriate.
(D) Mandamus proceedings.--Any nondiscretionary duty
imposed by this section shall be enforceable in a
mandamus proceeding brought under section 1361 of title
28, United States Code.
(d) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Except as provided
under paragraph (3), and notwithstanding any other provision of
law, the rights and remedies provided for in this section may
not be waived by any agreement, policy, form, or condition of
employment, including by any predispute arbitration agreement.
(2) No predispute arbitration agreements.--Except as
provided under paragraph (3), and notwithstanding any other
provision of law, no predispute arbitration agreement shall be
valid or enforceable to the extent that it requires arbitration
of a dispute arising under this section.
(3) <<NOTE: Regulation.>> Exception.--Notwithstanding
paragraphs (1) and (2), an arbitration provision in a collective
bargaining agreement shall be enforceable as to disputes arising
under subsection (a)(4), unless the Bureau determines, by rule,
that such provision is inconsistent with the purposes of this
title.
SEC. 1058. <<NOTE: 12 USC 5561 note.>> EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle F--Transfer of Functions and Personnel; Transitional Provisions
SEC. 1061. <<NOTE: 12 USC 5581.>> TRANSFER OF CONSUMER FINANCIAL
PROTECTION FUNCTIONS.
(a) Defined Terms.--For purposes of this subtitle--
[[Page 124 STAT. 2036]]
(1) the term ``consumer financial protection functions''
means--
(A) all authority to prescribe rules or issue orders
or guidelines pursuant to any Federal consumer financial
law, including performing appropriate functions to
promulgate and review such rules, orders, and
guidelines; and
(B) the examination authority described in
subsection (c)(1), with respect to a person described in
subsection 1025(a); and
(2) the terms ``transferor agency'' and ``transferor
agencies'' mean, respectively--
(A) the Board of Governors (and any Federal reserve
bank, as the context requires), the Federal Deposit
Insurance Corporation, the Federal Trade Commission, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, and the Department of Housing and Urban
Development, and the heads of those agencies; and
(B) the agencies listed in subparagraph (A),
collectively.
(b) In General.--Except as provided in subsection (c), consumer
financial protection functions are transferred as follows:
(1) Board of governors.--
(A) Transfer of functions.--All consumer financial
protection functions of the Board of Governors are
transferred to the Bureau.
(B) Board of governors authority.--The Bureau shall
have all powers and duties that were vested in the Board
of Governors, relating to consumer financial protection
functions, on the day before the designated transfer
date.
(2) Comptroller of the currency.--
(A) Transfer of functions.--All consumer financial
protection functions of the Comptroller of the Currency
are transferred to the Bureau.
(B) Comptroller authority.--The Bureau shall have
all powers and duties that were vested in the
Comptroller of the Currency, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(3) Director of the office of thrift supervision.--
(A) Transfer of functions.--All consumer financial
protection functions of the Director of the Office of
Thrift Supervision are transferred to the Bureau.
(B) Director authority.--The Bureau shall have all
powers and duties that were vested in the Director of
the Office of Thrift Supervision, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(4) Federal deposit insurance corporation.--
(A) Transfer of functions.--All consumer financial
protection functions of the Federal Deposit Insurance
Corporation are transferred to the Bureau.
(B) Corporation authority.--The Bureau shall have
all powers and duties that were vested in the Federal
Deposit Insurance Corporation, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(5) Federal trade commission.--
[[Page 124 STAT. 2037]]
(A) Transfer of functions.--The authority of the
Federal Trade Commission under an enumerated consumer
law to prescribe rules, issue guidelines, or conduct a
study or issue a report mandated under such law shall be
transferred to the Bureau on the designated transfer
date. Nothing in this title shall be construed to
require a mandatory transfer of any employee of the
Federal Trade Commission.
(B) Bureau authority.--
(i) In general.--The Bureau shall have all
powers and duties under the enumerated consumer
laws to prescribe rules, issue guidelines, or to
conduct studies or issue reports mandated by such
laws, that were vested in the Federal Trade
Commission on the day before the designated
transfer date.
(ii) Federal trade commission act.--Subject to
subtitle B, the Bureau may enforce a rule
prescribed under the Federal Trade Commission Act
by the Federal Trade Commission with respect to an
unfair or deceptive act or practice to the extent
that such rule applies to a covered person or
service provider with respect to the offering or
provision of a consumer financial product or
service as if it were a rule prescribed under
section 1031 of this title.
(C) Authority of the federal trade commission.--
(i) In general.--No provision of this title
shall be construed as modifying, limiting, or
otherwise affecting the authority of the Federal
Trade Commission (including its authority with
respect to affiliates described in section
1025(a)(1)) under the Federal Trade Commission Act
or any other law, other than the authority under
an enumerated consumer law to prescribe rules,
issue official guidelines, or conduct a study or
issue a report mandated under such law.
(ii) Commission authority relating to rules
prescribed by the bureau.--Subject to subtitle B,
the Federal Trade Commission shall have authority
to enforce under the Federal Trade Commission Act
(15 U.S.C. 41 et seq.) a rule prescribed by the
Bureau under this title with respect to a covered
person subject to the jurisdiction of the Federal
Trade Commission under that Act, and a violation
of such a rule by such a person shall be treated
as a violation of a rule issued under section 18
of that Act (15 U.S.C. 57a) with respect to unfair
or deceptive acts or practices.
(D) Coordination.--To avoid <<NOTE: Contracts.>>
duplication of or conflict between rules prescribed by
the Bureau under section 1031 of this title and the
Federal Trade Commission under section 18(a)(1)(B) of
the Federal Trade Commission Act that apply to a covered
person or service provider with respect to the offering
or provision of consumer financial products or services,
the agencies shall negotiate an agreement with respect
to rulemaking by each agency, including consultation
with the other agency prior to proposing a rule and
during the comment period.
[[Page 124 STAT. 2038]]
(E) Deference.--No provision of this title shall be
construed as altering, limiting, expanding, or otherwise
affecting the deference that a court affords to the--
(i) Federal Trade Commission in making
determinations regarding the meaning or
interpretation of any provision of the Federal
Trade Commission Act, or of any other Federal law
for which the Commission has authority to
prescribe rules; or
(ii) Bureau in making determinations regarding
the meaning or interpretation of any provision of
a Federal consumer financial law (other than any
law described in clause (i)).
(6) National credit union administration.--
(A) Transfer of functions.--All consumer financial
protection functions of the National Credit Union
Administration are transferred to the Bureau.
(B) National credit union administration
authority.--The Bureau shall have all powers and duties
that were vested in the National Credit Union
Administration, relating to consumer financial
protection functions, on the day before the designated
transfer date.
(7) Department of housing and urban development.--
(A) Transfer of functions.--All consumer protection
functions of the Secretary of the Department of Housing
and Urban Development relating to the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et
seq.), the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (12 U.S.C. 5102 et seq.), and the
Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq.) are transferred to the Bureau.
(B) Authority of the department of housing and urban
development.--The Bureau shall have all powers and
duties that were vested in the Secretary of the
Department of Housing and Urban Development relating to
the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.), the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et
seq.), and the Interstate Land Sales Full Disclosure Act
(15 U.S.C. 1701 et seq.), on the day before the
designated transfer date.
(c) Authorities of the Prudential Regulators.--
(1) Examination.--A transferor agency that is a prudential
regulator shall have--
(A) authority to require reports from and conduct
examinations for compliance with Federal consumer
financial laws with respect to a person described in
section 1025(a), that is incidental to the backup and
enforcement procedures provided to the regulator under
section 1025(c); and
(B) exclusive authority (relative to the Bureau) to
require reports from and conduct examinations for
compliance with Federal consumer financial laws with
respect to a person described in section 1026(a), except
as provided to the Bureau under subsections (b) and (c)
of section 1026.
(2) Enforcement.--
[[Page 124 STAT. 2039]]
(A) Limitation.--The authority of a transferor
agency that is a prudential regulator to enforce
compliance with Federal consumer financial laws with
respect to a person described in section 1025(a), shall
be limited to the backup and enforcement procedures in
described in section 1025(c).
(B) Exclusive authority.--A transferor agency that
is a prudential regulator shall have exclusive authority
(relative to the Bureau) to enforce compliance with
Federal consumer financial laws with respect to a person
described in section 1026(a), except as provided to the
Bureau under subsections (b) and (c) of section 1026.
(C) Statutory enforcement.--For purposes of carrying
out the authorities under, and subject to the
limitations of, subtitle B, each prudential regulator
may enforce compliance with the requirements imposed
under this title, and any rule or order prescribed by
the Bureau under this title, under--
(i) the Federal Credit Union Act (12 U.S.C.
1751 et seq.), by the National Credit Union
Administration Board with respect to any covered
person or service provider that is an insured
credit union, or service provider thereto, or any
affiliate of an insured credit union, who is
subject to the jurisdiction of the Board under
that Act; and
(ii) section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818), by the appropriate
Federal banking agency, as defined in section 3(q)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)), with respect to a covered person or
service provider that is a person described in
section 3(q) of that Act and who is subject to the
jurisdiction of that agency, as set forth in
sections 3(q) and 8 of the Federal Deposit
Insurance Act; or
(iii) the Bank Service Company Act (12 U.S.C.
1861 et seq.).
(d) Effective Date.--Subsections (b) and (c) shall become effective
on the designated transfer date.
SEC. 1062. <<NOTE: 12 USC 5582.>> DESIGNATED TRANSFER DATE.
(a) In General.--Not later <<NOTE: Deadline.>> than 60 days after
the date of enactment of this Act, the Secretary shall--
(1) in consultation with the Chairman of the Board of
Governors, the Chairperson of the Corporation, the Chairman of
the Federal Trade Commission, the Chairman of the National
Credit Union Administration Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the
Secretary of the Department of Housing and Urban Development,
and the Director of the Office of Management and Budget,
designate a single calendar date for the transfer of functions
to the Bureau under section 1061; and
(2) <<NOTE: Notice. Federal Register, publication.>>
publish notice of that designated date in the Federal Register.
(b) Changing Designation.--The Secretary--
(1) may, in consultation with the Chairman of the Board of
Governors, the Chairperson of the Federal Deposit Insurance
Corporation, the Chairman of the Federal Trade Commission, the
Chairman of the National Credit Union Administration
[[Page 124 STAT. 2040]]
Board, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Secretary of the Department of
Housing and Urban Development, and the Director of the Office of
Management and Budget, change the date designated under
subsection (a); and
(2) <<NOTE: Notice. Federal Register, publication.>> shall
publish notice of any changed designated date in the Federal
Register.
(c) Permissible Dates.--
(1) In general.--Except as <<NOTE: Time period.>> provided
in paragraph (2), any date designated under this section shall
be not earlier than 180 days, nor later than 12 months, after
the date of enactment of this Act.
(2) Extension of time.--The Secretary may designate a date
that is later than 12 months after the date of enactment of this
Act if the Secretary transmits to appropriate committees of
Congress--
(A) <<NOTE: Determination.>> a written
determination that orderly implementation of this title
is not feasible before the date that is 12 months after
the date of enactment of this Act;
(B) an explanation of why an extension is necessary
for the orderly implementation of this title; and
(C) a description of the steps that will be taken to
effect an orderly and timely implementation of this
title within the extended time period.
(3) Extension limited.--In no case may any date designated
under this section be later than 18 months after the date of
enactment of this Act.
SEC. 1063. <<NOTE: 12 USC 5583.>> SAVINGS PROVISIONS.
(a) Board of Governors.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(1) does not affect the validity of any right,
duty, or obligation of the United States, the Board of Governors
(or any Federal reserve bank), or any other person that--
(A) arises under any provision of law relating to
any consumer financial protection function of the Board
of Governors transferred to the Bureau by this title;
and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Board of
Governors (or any Federal reserve bank) before the designated
transfer date with respect to any consumer financial protection
function of the Board of Governors (or any Federal reserve bank)
transferred to the Bureau by this title, except that the Bureau,
subject to sections 1024, 1025, and 1026, shall be substituted
for the Board of Governors (or Federal reserve bank) as a party
to any such proceeding as of the designated transfer date.
(b) Federal Deposit Insurance Corporation.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(4) does not affect the validity of any right,
duty, or obligation of the United States, the Federal Deposit
Insurance Corporation, the Board of Directors of that
Corporation, or any other person, that--
[[Page 124 STAT. 2041]]
(A) arises under any provision of law relating to
any consumer financial protection function of the
Federal Deposit Insurance Corporation transferred to the
Bureau by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal Deposit
Insurance Corporation (or the Board of Directors of that
Corporation) before the designated transfer date with respect to
any consumer financial protection function of the Federal
Deposit Insurance Corporation transferred to the Bureau by this
title, except that the Bureau, subject to sections 1024, 1025,
and 1026, shall be substituted for the Federal Deposit Insurance
Corporation (or Board of Directors) as a party to any such
proceeding as of the designated transfer date.
(c) Federal Trade Commission.--Section 1061(b)(5) does not affect
the validity of any right, duty, or obligation of the United States, the
Federal Trade Commission, or any other person, that--
(1) arises under any provision of law relating to any
consumer financial protection function of the Federal Trade
Commission transferred to the Bureau by this title; and
(2) existed on the day before the designated transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(6) does not affect the validity of any right,
duty, or obligation of the United States, the National Credit
Union Administration, the National Credit Union Administration
Board, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
National Credit Union Administration transferred to the
Bureau by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the National Credit
Union Administration (or the National Credit Union
Administration Board) before the designated transfer date with
respect to any consumer financial protection function of the
National Credit Union Administration transferred to the Bureau
by this title, except that the Bureau, subject to sections 1024,
1025, and 1026, shall be substituted for the National Credit
Union Administration (or National Credit Union Administration
Board) as a party to any such proceeding as of the designated
transfer date.
(e) Office of the Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(2) does not affect the validity of any right,
duty, or obligation of the United States, the Comptroller of the
Currency, the Office of the Comptroller of the Currency, or any
other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Comptroller of the Currency transferred to the Bureau by
this title; and
[[Page 124 STAT. 2042]]
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Comptroller of
the Currency (or the Office of the Comptroller of the Currency)
with respect to any consumer financial protection function of
the Comptroller of the Currency transferred to the Bureau by
this title before the designated transfer date, except that the
Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Comptroller of the Currency (or the Office
of the Comptroller of the Currency) as a party to any such
proceeding as of the designated transfer date.
(f) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(3) does not affect the validity of any right,
duty, or obligation of the United States, the Director of the
Office of Thrift Supervision, the Office of Thrift Supervision,
or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Director of the Office of Thrift Supervision transferred
to the Bureau by this title; and
(B) that existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Director of the
Office of Thrift Supervision (or the Office of Thrift
Supervision) with respect to any consumer financial protection
function of the Director of the Office of Thrift Supervision
transferred to the Bureau by this title before the designated
transfer date, except that the Bureau, subject to sections 1024,
1025, and 1026, shall be substituted for the Director (or the
Office of Thrift Supervision) as a party to any such proceeding
as of the designated transfer date.
(g) Department of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(7) shall not affect the validity of any right,
duty, or obligation of the United States, the Secretary of the
Department of Housing and Urban Development (or the Department
of Housing and Urban Development), or any other person, that--
(A) arises under any provision of law relating to
any function of the Secretary of the Department of
Housing and Urban Development with respect to the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601
et seq.), the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (12 U.S.C. 5102 et seq.), or the
Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq) transferred to the Bureau by this title;
and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--This title shall not abate any
proceeding commenced by or against the Secretary of the
Department of Housing and Urban Development (or the Department
of Housing and Urban Development) with respect to any consumer
financial protection function of the Secretary
[[Page 124 STAT. 2043]]
of the Department of Housing and Urban Development transferred
to the Bureau by this title before the designated transfer date,
except that the Bureau, subject to sections 1024, 1025, and
1026, shall be substituted for the Secretary of the Department
of Housing and Urban Development (or the Department of Housing
and Urban Development) as a party to any such proceeding as of
the designated transfer date.
(h) Continuation of Existing Orders, Rulings, Determinations,
Agreements, and Resolutions.--
(1) In general.--Except as provided in paragraph (2) and
under subsection (i), all orders, resolutions, determinations,
agreements, and rulings that have been issued, made, prescribed,
or allowed to become effective by any transferor agency or by a
court of competent jurisdiction, in the performance of consumer
financial protection functions that are transferred by this
title and that are in effect on the day before the designated
transfer date, shall continue in effect, and shall continue to
be enforceable by the appropriate transferor agency, according
to the terms of those orders, resolutions, determinations,
agreements, and rulings, and shall not be enforceable by or
against the Bureau.
(2) Exception for orders applicable to persons described in
section 1025(a).--All orders, resolutions, determinations,
agreements, and rulings that have been issued, made, prescribed,
or allowed to become effective by any transferor agency or by a
court of competent jurisdiction, in the performance of consumer
financial protection functions that are transferred by this
title and that are in effect on the day before the designated
transfer date with respect to any person described in section
1025(a), shall continue in effect, according to the terms of
those orders, resolutions, determinations, agreements, and
rulings, and shall be enforceable by or against the Bureau or
transferor agency.
(i) Identification of Rules and Orders Continued.--Not later than
the designated transfer date, the Bureau--
(1) shall, after consultation with the head of each
transferor agency, identify the rules and orders that will be
enforced by the Bureau; and
(2) <<NOTE: List. Federal Register, publication.>> shall
publish a list of such rules and orders in the Federal Register.
(j) Status of Rules Proposed or Not Yet Effective.--
(1) Proposed rules.--Any proposed rule of a transferor
agency which that agency, in performing consumer financial
protection functions transferred by this title, has proposed
before the designated transfer date, but has not been published
as a final rule before that date, shall be deemed to be a
proposed rule of the Bureau.
(2) Rules not yet effective.--Any interim or final rule of a
transferor agency which that agency, in performing consumer
financial protection functions transferred by this title, has
published before the designated transfer date, but which has not
become effective before that date, shall become effective as a
rule of the Bureau according to its terms.
SEC. 1064. <<NOTE: 12 USC 5584.>> TRANSFER OF CERTAIN PERSONNEL.
(a) <<NOTE: Determinations.>> In General.--
[[Page 124 STAT. 2044]]
(1) Certain federal reserve system employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Board of Governors shall--
(i) jointly determine the number of employees
of the Board of Governors necessary to perform or
support the consumer financial protection
functions of the Board of Governors that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Board of Governors for transfer to the Bureau,
in a manner that the Bureau and the Board of
Governors, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees
of the Board of Governors identified under subparagraph
(A)(ii) shall be transferred to the Bureau for
employment.
(C) Federal reserve bank employees.--Employees of
any Federal reserve bank who are performing consumer
financial protection functions on behalf of the Board of
Governors shall be treated as employees of the Board of
Governors for purposes of subparagraphs (A) and (B).
(2) Certain fdic employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Board of Directors of the Federal Deposit
Insurance Corporation shall--
(i) jointly determine the number of employees
of that Corporation necessary to perform or
support the consumer financial protection
functions of the Corporation that are transferred
to the Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Corporation for transfer to the Bureau, in a
manner that the Bureau and the Board of Directors
of the Corporation, in their sole discretion,
determine equitable.
(B) Identified employees transferred.--All employees
of the Corporation identified under subparagraph (A)(ii)
shall be transferred to the Bureau for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the National Credit Union Administration Board
shall--
(i) jointly determine the number of employees
of the National Credit Union Administration
necessary to perform or support the consumer
financial protection functions of the National
Credit Union Administration that are transferred
to the Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the National Credit Union Administration for
transfer to the Bureau, in a manner that the
Bureau and the National Credit Union
Administration Board, in their sole discretion,
determine equitable.
[[Page 124 STAT. 2045]]
(B) Identified employees transferred.--All employees
of the National Credit Union Administration identified
under subparagraph (A)(ii) shall be transferred to the
Bureau for employment.
(4) Certain office of the comptroller of the currency
employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Comptroller of the Currency shall--
(i) jointly determine the number of employees
of the Office of the Comptroller of the Currency
necessary to perform or support the consumer
financial protection functions of the Office of
the Comptroller of the Currency that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Office of the Comptroller of the Currency for
transfer to the Bureau, in a manner that the
Bureau and the Office of the Comptroller of the
Currency, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees
of the Office of the Comptroller of the Currency
identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(5) Certain office of thrift supervision employees
transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Director of the Office of Thrift Supervision
shall--
(i) jointly determine the number of employees
of the Office of Thrift Supervision necessary to
perform or support the consumer financial
protection functions of the Office of Thrift
Supervision that are transferred to the Bureau by
this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Office of Thrift Supervision for transfer to
the Bureau, in a manner that the Bureau and the
Office of Thrift Supervision, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All employees
of the Office of Thrift Supervision identified under
subparagraph (A)(ii) shall be transferred to the Bureau
for employment.
(6) Certain employees of department of housing and urban
development transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Secretary of the Department of Housing and Urban
Development shall--
(i) jointly determine the number of employees
of the Department of Housing and Urban Development
necessary to perform or support the consumer
protection functions of the Department that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Department of Housing and Urban Development
for transfer to the Bureau in a manner that the
Bureau and the
[[Page 124 STAT. 2046]]
Secretary of the Department of Housing and Urban
Development, in their sole discretion, deem
equitable.
(B) Identified employees transferred.--All employees
of the Department of Housing and Urban Development
identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(7) Consumer education, financial literacy, consumer
complaints, and research functions.--The Bureau and each of the
transferor agencies (except the Federal Trade Commission) shall
jointly determine the number of employees and the types and
grades of employees necessary to perform the functions of the
Bureau under subtitle A, including consumer education, financial
literacy, policy analysis, responses to consumer complaints and
inquiries, research, and similar functions. All employees
jointly identified under this paragraph shall be transferred to
the Bureau for employment.
(8) Authority of the president to resolve disputes.--
(A) Action authorized.--In the event that the Bureau
and a transferor agency are unable to reach an agreement
under paragraphs (1) through (7) by the designated
transfer date, the President, or the designee thereof,
may issue an order or directive to the transferor agency
to effect the transfer of personnel and property under
this subtitle.
(B) Transmittal to congress required.--If an order
or directive is issued under subparagraph (A), the
President shall transmit a copy of the written
determination made with respect to such order or
directive, including an explanation for the need for the
order or directive, to the Committee on Banking,
Housing, and Urban Affairs and the Committee on
Appropriations of the Senate and the Committee on
Financial Services and the Committee on Appropriations
of the House of Representatives.
(C) Sunset.--The authority provided in this
paragraph shall terminate 3 years after the designated
transfer date.
(9) Appointment authority for excepted service and senior
executive service transferred.--
(A) In general.--In the case of an employee
occupying a position in the excepted service or the
Senior Executive Service, any appointment authority
established pursuant to law or regulations of the Office
of Personnel Management for filling such positions shall
be transferred, subject to subparagraph (B).
(B) Declining transfers allowed.--An agency or
entity may decline to make a transfer of authority under
subparagraph (A) (and the employees appointed pursuant
thereto) to the extent that such authority relates to
positions excepted from the competitive service because
of their confidential, policy-making, policy-
determining, or policy-advocating character, and non-
career positions in the Senior Executive Service (within
the meaning of section 3132(a)(7) of title 5, United
States Code).
(b) Timing of Transfers and Position Assignments.--Each employee to
be transferred under this section shall--
(1) be transferred not later than 90 days after the
designated transfer date; and
(2) receive notice of a position assignment not later than
120 days after the effective date of his or her transfer.
[[Page 124 STAT. 2047]]
(c) Transfer of Function.--
(1) In general.--Notwithstanding any other provision of law,
the transfer of employees shall be deemed a transfer of
functions for the purpose of section 3503 of title 5, United
States Code.
(2) Priority of this title.--If any provisions of this title
conflict with any protection provided to transferred employees
under section 3503 of title 5, United States Code, the
provisions of this title shall control.
(d) Equal Status and Tenure Positions.--
(1) Employees transferred from the federal reserve system,
fdic, hud, ncua, occ, and ots.--Each employee transferred to the
Bureau from the Board of Governors, a Federal reserve bank, the
Federal Deposit Insurance Corporation, the Department of Housing
and Urban Development, the National Credit Union Administration,
the Office of the Comptroller of the Currency, or the Office of
Thrift Supervision shall be placed in a position at the Bureau
with the same status and tenure as that employee held on the day
before the designated transfer date.
(2) Employees transferred from the federal reserve system.--
For purposes of determining the status and position placement of
a transferred employee, any period of service with the Board of
Governors or a Federal reserve bank shall be credited as a
period of service with a Federal agency.
(e) Additional Certification Requirements Limited.--Examiners
transferred to the Bureau are not subject to any additional
certification requirements before being placed in a comparable examiner
position at the Bureau examining the same types of institutions as they
examined before they were transferred.
(f) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in paragraph (2),
each transferred employee holding a permanent position on the
day before the designated transfer date may not, during the 2-
year period beginning on the designated transfer date, be
involuntarily separated, or involuntarily reassigned outside his
or her locality pay area.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau--
(A) to separate an employee for cause or for
unacceptable performance;
(B) to terminate an appointment to a position
excepted from the competitive service because of its
confidential policy-making, policy-determining, or
policy-advocating character; or
(C) to reassign a supervisory employee outside of
his or her locality pay area when the Bureau determines
that the reassignment is necessary for the efficient
operation of the Bureau.
(g) Pay.--
(1) 2-year protection.--
(A) In general.--Except as provided in paragraph
(2), each transferred employee shall, during the 2-year
period beginning on the designated transfer date,
receive pay at a rate equal to not less than the basic
rate of pay (including any geographic differential) that
the employee received
[[Page 124 STAT. 2048]]
during the pay period immediately preceding the date of
transfer.
(B) Limitation.--Notwithstanding subparagraph (A),
if the employee was receiving a higher rate of basic pay
on a temporary basis (because of a temporary assignment,
temporary promotion, or other temporary action)
immediately before the date of transfer, the Bureau may
reduce the rate of basic pay on the date on which the
rate would have been reduced but for the transfer, and
the protected rate for the remainder of the 2-year
period shall be the reduced rate that would have
applied, but for the transfer.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau to reduce the rate of basic pay of a transferred
employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) <<NOTE: Applicability.>> Protection only while
employed.--Paragraph (1) applies to a transferred employee only
while that employee remains employed by the Bureau.
(4) Pay increases permitted.--Paragraph (1) does not limit
the authority of the Bureau to increase the pay of a transferred
employee.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the <<NOTE: Determination. Time
period.>> Bureau determines, during the 2-year period
beginning 1 year after the designated transfer date,
that a reorganization of the staff of the Bureau is
required--
(i) that reorganization shall be deemed a
``substantial reorganization'' for purposes of
affording affected employees retirement under
section 8336(d)(2) or 8414(b)(1)(B) of title 5,
United States Code;
(ii) before the reorganization occurs, all
employees in the same locality pay area as defined
by the Office of Personnel Management shall be
placed in a uniform position classification
system; and
(iii) any resulting reduction in force shall
be governed by the provisions of chapter 35 of
title 5, United States Code, except that the
Bureau shall--
(I) establish competitive areas (as
that term is defined in regulations
issued by the Office of Personnel
Management) to include at a minimum all
employees in the same locality pay area
as defined by the Office of Personnel
Management;
(II) establish competitive levels
(as that term is defined in regulations
issued by the Office of Personnel
Management) without regard to whether
the particular employees have been
appointed to positions in the
competitive service or the excepted
service; and
(III) afford employees appointed to
positions in the excepted service (other
than to a position excepted from the
competitive service because of its
confidential policy-making, policy-
determining, or policy-advocating
character) the same assignment rights to
positions within the Bureau as
[[Page 124 STAT. 2049]]
employees appointed to positions in the
competitive service.
(B) Service credit for reductions in force.--For
purposes of this paragraph, periods of service with a
Federal home loan bank, a joint office of the Federal
home loan banks, the Board of Governors, a Federal
reserve bank, the Federal Deposit Insurance Corporation,
or the National Credit Union Administration shall be
credited as periods of service with a Federal agency.
(2) After 3rd year.--
(A) In general.--If the Bureau determines, at any
time after the 3-year period beginning on the designated
transfer date, that a reorganization of the staff of the
Bureau is required, any resulting reduction in force
shall be governed by the provisions of chapter 35 of
title 5, United States Code, except that the Bureau
shall establish competitive levels (as that term is
defined in regulations issued by the Office of Personnel
Management) without regard to types of appointment held
by particular employees transferred under this section.
(B) Service credit for reductions in force.--For
purposes of this paragraph, periods of service with a
Federal home loan bank, a joint office of the Federal
home loan banks, the Board of Governors, a Federal
reserve bank, the Federal Deposit Insurance Corporation,
or the National Credit Union Administration shall be
credited as periods of service with a Federal agency.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement
plan.--Unless an election is made under clause
(iii) or subparagraph (B), each employee
transferred pursuant to this subtitle shall remain
enrolled in the existing retirement plan of that
employee as of the date of transfer, through any
period of continuous employment with the Bureau.
(ii) Employer contribution.--The
Bureau <<NOTE: Payments.>> shall pay any employer
contributions to the existing retirement plan of
each transferred employee, as required under that
plan.
(iii) Option to elect into the federal reserve
system retirement plan and federal reserve system
thrift plan.--Any employee transferred pursuant to
this subtitle may, during the 1-year period
beginning 6 months after the designated transfer
date, elect to end their participation and benefit
accruals under their existing retirement plan or
plans and elect to participate in both the Federal
Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan, through any period of
continuous employment with the Bureau, under the
same terms as are applicable to Federal Reserve
System transferred employees, as provided in
subparagraph (C). <<NOTE: Effective date.>> An
election of coverage by the Federal Reserve System
Retirement Plan and the Federal Reserve System
Thrift Plan shall begin on the day following the
end of the 18-
[[Page 124 STAT. 2050]]
month period beginning on the designated transfer
date, and benefit accruals under the existing
retirement plan of the transferred employee shall
end on the last day of the 18-month period
beginning on the designated transfer date If an
employee elects to participate in the Federal
Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan, all of the service of
the employee that was creditable under their
existing retirement plan shall be transferred to
the Federal Reserve System Retirement Plan on the
day following the end of the 18-month period
beginning on the designated transfer date.
(iv) Bureau contribution.--The Bureau shall
pay an employer contribution to the Federal
Reserve System Retirement Plan, in the amount
established as an employer contribution under the
Federal Employees Retirement System, as
established under chapter 84 of title 5, United
States Code, for each Bureau employee who elects
to participate in the Federal Reserve System
Retirement Plan under this subparagraph. The
Bureau shall pay an employer contribution to the
Federal Reserve System Thrift Plan for each Bureau
employee who elects to participate in such plan,
as required under the terms of the Federal Reserve
System Thrift Plan.
(v) Additional funding.--The Bureau shall
transfer to the Federal Reserve System Retirement
Plan an amount determined by the Board of
Governors, in consultation with the Bureau, to be
necessary to reimburse the Federal Reserve System
Retirement Plan for the costs to such plan of
providing benefits to employees electing coverage
under the Federal Reserve System Retirement Plan
under subparagraph (iii), and who were transferred
to the Bureau from outside of the Federal Reserve
System.
(vi) Option to elect into thrift plan created
by the bureau.--If the Bureau chooses to establish
a thrift plan, the employees transferred pursuant
to this subtitle shall have the option to elect,
under such terms and conditions as the Bureau may
establish, coverage under such a thrift plan
established by the Bureau. Transferred employees
may not remain in the thrift plan of the agency
from which the employee transferred under this
subtitle, if the employee elects to participate in
a thrift plan established by the Bureau.
(B) Option for employees transferred from federal
reserve system to be subject to the federal employee
retirement program.--
(i) Election.--Any Federal Reserve System
transferred employee who was enrolled in the
Federal Reserve System Retirement Plan on the day
before the date of his or her transfer to the
Bureau may, during the 1-year period beginning 6
months after the designated transfer date, elect
to be subject to the Federal Employee Retirement
Program.
[[Page 124 STAT. 2051]]
(ii) Effective date of coverage.--An election
of coverage by the Federal Employee Retirement
Program under this subparagraph shall begin on the
day following the end of the 18-month period
beginning on the designated transfer date, and
benefit accruals under the existing retirement
plan of the Federal Reserve System transferred
employee shall end on the last day of the 18-month
period beginning on the designated transfer date.
(C) Bureau participation in federal reserve system
retirement plan.--
(i) Benefits provided.--Federal Reserve System
employees transferred pursuant to this subtitle
shall continue to be eligible to participate in
the Federal Reserve System Retirement Plan and
Federal Reserve System Thrift Plan through any
period of continuous employment with the Bureau,
unless the employee makes an election under
subparagraph (A)(vi) or (B). The retirement
benefits, formulas, and features offered to the
Federal Reserve System transferred employees shall
be the same as those offered to employees of the
Board of Governors who participate in the Federal
Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan, as amended from time
to time.
(ii) Limitation.--The Bureau shall not have
responsibility or authority--
(I) to amend an existing retirement
plan (including the Federal Reserve
System Retirement Plan or Federal
Reserve System Thrift Plan);
(II) for administering an existing
retirement plan (including the Federal
Reserve System Retirement Plan or
Federal Reserve System Thrift Plan); or
(III) for ensuring the plans comply
with applicable laws, fiduciary rules,
and related responsibilities.
(iii) Tax qualified status.--Notwithstanding
any other provision of law, providing benefits to
Federal Reserve System employees transferred to
the Bureau pursuant to this subtitle, and to
employees who elect coverage pursuant to
subparagraph (A)(iii) or under section
1013(a)(2)(B), shall not cause any existing
retirement plan (including the Federal Reserve
System Retirement Plan and the Federal Reserve
System Thrift Plan) to lose its tax-qualified
status under sections 401(a) and 501(a) of the
Internal Revenue Code of 1986.
(iv) Bureau contribution.--The Bureau shall
pay any employer contributions to the existing
retirement plan (including the Federal Reserve
System Retirement Plan and the Federal Reserve
System Thrift Plan) for each Federal Reserve
System transferred employee participating in those
plans, as required under the plan, after the
designated transfer date.
(v) Controlled group status.--The Bureau is
the same employer as the Federal Reserve System
[[Page 124 STAT. 2052]]
(as comprised of the Board of Governors and each
of the 12 Federal reserve banks prior to the date
of enactment of this Act) for purposes of
subsections (b), (c), (m), and (o) of section 414
of the Internal Revenue Code of 1986 (26 U.S.C.
414).
(D) Definitions.--For purposes of this paragraph--
(i) the term ``existing retirement plan''
means, with respect to an employee transferred
pursuant to this subtitle, the retirement plan
(including the Financial Institutions Retirement
Fund) and any associated thrift savings plan, of
the agency from which the employee was transferred
under this subtitle, in which the employee was
enrolled on the day before the date on which the
employee was transferred;
(ii) the term ``Federal Employee Retirement
Program'' means either the Civil Service
Retirement System established under chapter 83 of
title 5, United States Code, or the Federal
Employees Retirement System established under
chapter 84 of title 5, United States Code,
depending upon the service history of the
individual;
(iii) the term ``Federal Reserve System
transferred employee'' means a transferred
employee who is an employee of the Board of
Governors or a Federal reserve bank on the day
before the designated transfer date, and who is
transferred to the Bureau on the designated
transfer date pursuant to this subtitle;
(iv) the term ``Federal Reserve System
Retirement Plan'' means the Retirement Plan for
Employees of the Federal Reserve System; and
(v) the term ``Federal Reserve System Thrift
Plan'' means the Thrift Plan for Employees of the
Federal Reserve System.
(2) Benefits other than retirement benefits for transferred
employees.--
(A) During 1st year.--
(i) Existing plans continue.--Each employee
transferred pursuant to this subtitle may, for 1
year after the designated transfer date, retain
membership in any other employee benefit program
of the agency or bank from which the employee
transferred, including a medical, dental, vision,
long term care, or life insurance program, to
which the employee belonged on the day before the
designated transfer date.
(ii) Employer contribution.--The Bureau shall
reimburse the agency or bank from which an
employee was transferred for any cost incurred by
that agency or bank in continuing to extend
coverage in the benefit program to the employee,
as required under that program or negotiated
agreements.
(B) Medical, dental, vision, or life insurance after
first year.--If, at the end of the 1-year period
beginning on the designated transfer date, the Bureau
has not established its own, or arranged for
participation in another entity's, medical, dental,
vision, or life insurance program, an employee
transferred pursuant to this subtitle who was a member
of such a program at the agency or
[[Page 124 STAT. 2053]]
Federal reserve bank from which the employee transferred
may, before the coverage of that employee ends under
subparagraph (A)(i), elect to enroll, without regard to
any regularly scheduled open season, in--
(i) the enhanced dental benefits program
established under chapter 89A of title 5, United
States Code;
(ii) the enhanced vision benefits established
under chapter 89B of title 5, United States Code;
(iii) the Federal Employees Group Life
Insurance Program established under chapter 87 of
title 5, United States Code, without regard to any
requirement of insurability; and
(iv) the Federal Employees Health Benefits
Program established under chapter 89 of title 5,
United States Code.
(C) Long term care insurance after 1st year.--If, at
the end of the 1-year period beginning on the designated
transfer date, the Bureau has not established its own,
or arranged for participation in another entity's, long
term care insurance program, an employee transferred
pursuant to this subtitle who was a member of such a
program at the agency or Federal reserve bank from which
the employee transferred may, before the coverage of
that employee ends under subparagraph (A)(i), elect to
apply for coverage under the Federal Long Term Care
Insurance Program established under chapter 90 of title
5, United States Code, under the underwriting
requirements applicable to a new active workforce member
(as defined in part 875 of title 5, Code of Federal
Regulations).
(D) Employee contribution.--An individual enrolled
in the Federal Employees Health Benefits program shall
pay any employee contribution required by the plan.
(E) Additional funding.--The Bureau shall transfer
to the Federal Employees Health Benefits Fund
established under section 8909 of title 5, United States
Code, an amount determined by the Director of the Office
of Personnel Management, after consultation with the
Bureau and the Office of Management and Budget, to be
necessary to reimburse the Fund for the cost to the Fund
of providing benefits under this paragraph.
(F) Credit for time enrolled in other plans.--For
employees transferred under this title, enrollment in a
health benefits plan administered by a transferor agency
or a Federal reserve bank, as the case may be,
immediately before enrollment in a health benefits plan
under chapter 89 of title 5, United States Code, shall
be considered as enrollment in a health benefits plan
under that chapter for purposes of section 8905(b)(1)(A)
of title 5, United States Code.
(G) Special provisions to ensure continuation of
life insurance benefits.--
(i) In general.--An annuitant (as defined in
section 8901(3) of title 5, United States Code)
who is enrolled in a life insurance plan
administered by a transferor agency on the day
before the designated transfer date shall be
eligible for coverage by a life
[[Page 124 STAT. 2054]]
insurance plan under sections 8706(b), 8714a,
8714b, and 8714c of title 5, United States Code,
or in a life insurance plan established by the
Bureau, without regard to any regularly scheduled
open season and requirement of insurability.
(ii) Employee contribution.--An individual
enrolled in a life insurance plan under this
subparagraph shall pay any employee contribution
required by the plan.
(iii) Additional funding.--The Bureau shall
transfer to the Employees' Life Insurance Fund
established under section 8714 of title 5, United
States Code, an amount determined by the Director
of the Office of Personnel Management, after
consultation with the Bureau and the Office of
Management and Budget, to be necessary to
reimburse the Fund for the cost to the Fund of
providing benefits under this subparagraph not
otherwise paid for by the employee under clause
(ii).
(iv) Credit for time enrolled in other
plans.--For employees transferred under this
title, enrollment in a life insurance plan
administered by a transferor agency immediately
before enrollment in a life insurance plan under
chapter 87 of title 5, United States Code, shall
be considered as enrollment in a life insurance
plan under that chapter for purposes of section
8706(b)(1)(A) of title 5, United States Code.
(3) OPM rules.--The Office of Personnel Management shall
issue such rules as are necessary to carry out this subsection.
(j) Implementation of Uniform Pay and Classification System.--Not
later <<NOTE: Deadline.>> than 2 years after the designated transfer
date, the Bureau shall implement a uniform pay and classification system
for all employees transferred under this title.
(k) Equitable Treatment.--In administering the provisions of this
section, the Bureau--
(1) shall take no action that would unfairly disadvantage
transferred employees relative to each other based on their
prior employment by the Board of Governors, the Federal Deposit
Insurance Corporation, the Department of Housing and Urban
Development, the National Credit Union Administration, the
Office of the Comptroller of the Currency, the Office of Thrift
Supervision, a Federal reserve bank, a Federal home loan bank,
or a joint office of the Federal home loan banks; and
(2) may take such action as is appropriate in individual
cases so that employees transferred under this section receive
equitable treatment, with respect to the status, tenure, pay,
benefits (other than benefits under programs administered by the
Office of Personnel Management), and accrued leave or vacation
time of those employees, for prior periods of service with any
Federal agency, including the Board of Governors, the
Corporation, the Department of Housing and Urban Development,
the National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision, a
Federal reserve bank, a Federal home loan bank, or a joint
office of the Federal home loan banks.
[[Page 124 STAT. 2055]]
(l) Implementation.--In implementing the provisions of this section,
the Bureau shall coordinate with the Office of Personnel Management and
other entities having expertise in matters related to employment to
ensure a fair and orderly transition for affected employees.
SEC. 1065. <<NOTE: 12 USC 5585.>> INCIDENTAL TRANSFERS.
(a) Incidental Transfers Authorized.--The Director of the Office of
Management and Budget, in consultation with the Secretary, shall make
such additional incidental transfers and dispositions of assets and
liabilities held, used, arising from, available, or to be made
available, in connection with the functions transferred by this title,
as the Director may determine necessary to accomplish the purposes of
this title.
(b) Sunset.--The authority provided in this section shall terminate
5 years after the date of enactment of this Act.
SEC. 1066. <<NOTE: 12 USC 5586.>> INTERIM AUTHORITY OF THE
SECRETARY.
(a) In General.--The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the Director of the
Bureau is confirmed by the Senate in accordance with section 1011.
(b) Interim Administrative Services by the Department of the
Treasury.--The Department of the Treasury may provide administrative
services necessary to support the Bureau before the designated transfer
date.
SEC. 1067. <<NOTE: 12 USC 5587.>> TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Bureau--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits
programs.
(b) Reporting Requirement.--
(1) In general.--The Bureau shall submit an annual report to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph
(2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The
Bureau shall submit a training and workforce development
plan that includes, to the extent practicable--
(i) identification of skill and technical
expertise needs and actions taken to meet those
requirements;
(ii) steps taken to foster innovation and
creativity;
(iii) leadership development and succession
planning; and
(iv) effective use of technology by employees.
(B) Workplace flexibilities plan.--The Bureau shall
submit a workforce flexibility plan that includes, to
the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
[[Page 124 STAT. 2056]]
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare
assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in
clauses (i) through (ix).
(C) Recruitment and retention plan.--The Bureau
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions relating
to--
(i) the steps necessary to target highly
qualified applicant pools with diverse
backgrounds;
(ii) streamlined employment application
processes;
(iii) the provision of timely notification of
the status of employment applications to
applicants; and
(iv) the collection of information to measure
indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.
(e) Participation in Examinations.--In order to prepare the Bureau
to conduct examinations under section 1025 upon the designated transfer
date, the Bureau and the applicable prudential regulator may agree to
include, on a sampling basis, examiners on examinations of the
compliance with Federal consumer financial law of institutions described
in section 1025(a) conducted by the prudential regulators prior to the
designated transfer date.
Subtitle G--Regulatory Improvements
SEC. 1071. SMALL BUSINESS DATA COLLECTION.
(a) In General.--The Equal Credit Opportunity Act (15 U.S.C. 1691 et
seq.) is amended by inserting after section 704A the following:
``SEC. 704B. <<NOTE: 15 USC 1691o-2.>> SMALL BUSINESS LOAN DATA
COLLECTION.
``(a) Purpose.--The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities, governmental
entities, and creditors to identify business and community development
needs and opportunities of women-owned, minority-owned, and small
businesses.
``(b) Information Gathering.--Subject to the requirements of this
section, in the case of any application to a financial institution for
credit for women-owned, minority-owned, or small business, the financial
institution shall--
``(1) inquire whether the business is a women-owned,
minority-owned, or small business, without regard to whether
such application is received in person, by mail, by telephone,
[[Page 124 STAT. 2057]]
by electronic mail or other form of electronic transmission, or
by any other means, and whether or not such application is in
response to a solicitation by the financial institution; and
``(2) <<NOTE: Records.>> maintain a record of the responses
to such inquiry, separate from the application and accompanying
information.
``(c) Right To Refuse.--Any applicant for credit may refuse to
provide any information requested pursuant to subsection (b) in
connection with any application for credit.
``(d) No Access by Underwriters.--
``(1) Limitation.--Where feasible, no loan underwriter or
other officer or employee of a financial institution, or any
affiliate of a financial institution, involved in making any
determination concerning an application for credit shall have
access to any information provided by the applicant pursuant to
a request under subsection (b) in connection with such
application.
``(2) Limited access.--If
a <<NOTE: Determination. Notice.>> financial institution
determines that a loan underwriter or other officer or employee
of a financial institution, or any affiliate of a financial
institution, involved in making any determination concerning an
application for credit should have access to any information
provided by the applicant pursuant to a request under subsection
(b), the financial institution shall provide notice to the
applicant of the access of the underwriter to such information,
along with notice that the financial institution may not
discriminate on the basis of such information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial <<NOTE: Records.>>
institution shall compile and maintain, in accordance with
regulations of the Bureau, a record of the information provided
by any loan applicant pursuant to a request under subsection
(b).
``(2) Itemization.--Information compiled and maintained
under paragraph (1) shall be itemized in order to clearly and
conspicuously disclose--
``(A) the number of the application and the date on
which the application was received;
``(B) the type and purpose of the loan or other
credit being applied for;
``(C) the amount of the credit or credit limit
applied for, and the amount of the credit transaction or
the credit limit approved for such applicant;
``(D) the type of action taken with respect to such
application, and the date of such action;
``(E) the census tract in which is located the
principal place of business of the women-owned,
minority-owned, or small business loan applicant;
``(F) the gross annual revenue of the business in
the last fiscal year of the women-owned, minority-owned,
or small business loan applicant preceding the date of
the application;
``(G) the race, sex, and ethnicity of the principal
owners of the business; and
``(H) any additional data that the Bureau determines
would aid in fulfilling the purposes of this section.
``(3) No personally identifiable information.--In compiling
and maintaining any record of information under this
[[Page 124 STAT. 2058]]
section, a financial institution may not include in such record
the name, specific address (other than the census tract required
under paragraph (1)(E)), telephone number, electronic mail
address, or any other personally identifiable information
concerning any individual who is, or is connected with, the
women-owned, minority-owned, or small business loan applicant.
``(4) Discretion to delete or modify publicly available
data.--The Bureau may, at its discretion, delete or modify data
collected under this section which is or will be available to
the public, if the Bureau determines that the deletion or
modification of the data would advance a privacy interest.
``(f) Availability of Information.--
``(1) Submission to bureau.--The data <<NOTE: Deadline.>>
required to be compiled and maintained under this section by any
financial institution shall be submitted annually to the Bureau.
``(2) Availability of information.--Information compiled and
maintained under this section shall be--
``(A) <<NOTE: Time period.>> retained for not less
than 3 years after the date of preparation;
``(B) made available to any member of the public,
upon request, in the form required under regulations
prescribed by the Bureau;
``(C) annually made available to the public
generally by the Bureau, in such form and in such manner
as is determined by the Bureau, by regulation.
``(3) Compilation of aggregate data.--The Bureau may, at its
discretion--
``(A) compile and aggregate data collected under
this section for its own use; and
``(B) make public such compilations of aggregate
data.
``(g) Bureau Action.--
``(1) In general.--The Bureau shall prescribe such rules and
issue such guidance as may be necessary to carry out, enforce,
and compile data pursuant to this section.
``(2) Exceptions.--The Bureau, by rule or order, may adopt
exceptions to any requirement of this section and may,
conditionally or unconditionally, exempt any financial
institution or class of financial institutions from the
requirements of this section, as the Bureau deems necessary or
appropriate to carry out the purposes of this section.
``(3) Guidance.--The Bureau shall issue guidance designed to
facilitate compliance with the requirements of this section,
including assisting financial institutions in working with
applicants to determine whether the applicants are women-owned,
minority-owned, or small businesses for purposes of this
section.
``(h) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Financial institution.--The term `financial
institution' means any partnership, company, corporation,
association (incorporated or unincorporated), trust, estate,
cooperative organization, or other entity that engages in any
financial activity.
``(2) Small business.--The term `small business' has the
same meaning as the term `small business concern' in section 3
of the Small Business Act (15 U.S.C. 632).
[[Page 124 STAT. 2059]]
``(3) Small business loan.--The term `small business loan'
means a loan made to a small business.
``(4) Minority.--The term `minority' has the same meaning as
in section 1204(c)(3) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
``(5) Minority-owned business.--The term `minority-owned
business' means a business--
``(A) more than 50 percent of the ownership or
control of which is held by 1 or more minority
individuals; and
``(B) more than 50 percent of the net profit or loss
of which accrues to 1 or more minority individuals.
``(6) Women-owned business.--The term `women-owned business'
means a business--
``(A) more than 50 percent of the ownership or
control of which is held by 1 or more women; and
``(B) more than 50 percent of the net profit or loss
of which accrues to 1 or more women.''.
(b) Technical and Conforming Amendments.--Section 701(b) of the
Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is amended--
(1) in paragraph (3), by striking ``or'' at the end;
(2) in paragraph (4), by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (4), the following:
``(5) to make an inquiry under section 704B, in accordance
with the requirements of that section.''.
(c) <<NOTE: 15 USC 1691 note.>> Clerical Amendment.--The table of
sections for title VII of the Consumer Credit Protection Act is amended
by inserting after the item relating to section 704A the following new
item:
``704B. Small business loan data collection.''.
(d) Effective Date.--This section shall become effective on the
designated transfer date.
SEC. 1072. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND
FAMILIES.
(a) HERA Amendments.--Section 1132 of the Housing and Economic
Recovery Act of 2008 (12 U.S.C. 1701x note) is amended--
(1) in subsection (a), by inserting in each of paragraphs
(1), (2), (3), and (4) ``or economically vulnerable individuals
and families'' after ``homebuyers'' each place that term
appears;
(2) in subsection (b)(1), by inserting ``or economically
vulnerable individuals and families'' after ``homebuyers'';
(3) in subsection (c)(1)--
(A) in subparagraph (A), by striking ``or'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986;
and
``(ii) specializes or has expertise in working
with economically vulnerable individuals and
families, but whose primary purpose is not
provision of credit counseling services.''; and
(4) in subsection (d)(1), by striking ``not more than 5''.
[[Page 124 STAT. 2060]]
(b) <<NOTE: 12 USC 1701x note.>> Applicability.--Amendments made by
subsection (a) shall not apply to programs authorized by section 1132 of
the Housing and Economic Recovery Act of 2008 (12 U.S.C. 1701x note)
that are funded with appropriations prior to fiscal year 2011.
SEC. 1073. <<NOTE: 12 USC 5601.>> REMITTANCE TRANSFERS.
(a) Treatment of Remittance Transfers.--The Electronic Fund Transfer
Act (15 U.S.C. 1693 et seq.) is amended--
(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting
``and remittance'' after ``electronic fund'';
(2) in section 904(c) (15 U.S.C. 1693b(c)), in the first
sentence, by inserting ``or remittance transfers'' after
``electronic fund transfers'';
(3) by redesignating sections 919, 920, 921, and
922 <<NOTE: 15 USC 1693p-1693r, 1693 note.>> as sections 920,
921, 922, and 923, respectively; and
(4) by inserting after section 918 the following:
``SEC. 919. <<NOTE: 15 USC 1693o-1.>> REMITTANCE TRANSFERS.
``(a) Disclosures Required for Remittance Transfers.--
``(1) In general.--Each remittance transfer provider shall
make disclosures as required under this section and in
accordance with rules prescribed by the Board. Disclosures
required under this section shall be in addition to any other
disclosures applicable under this title.
``(2) Disclosures.--Subject to rules prescribed by the
Board, a remittance transfer provider shall provide, in writing
and in a form that the sender may keep, to each sender
requesting a remittance transfer, as applicable to the
transaction--
``(A) at the time at which the sender requests a
remittance transfer to be initiated, and prior to the
sender making any payment in connection with the
remittance transfer, a disclosure describing--
``(i) the amount of currency that will be
received by the designated recipient, using the
values of the currency into which the funds will
be exchanged;
``(ii) the amount of transfer and any other
fees charged by the remittance transfer provider
for the remittance transfer; and
``(iii) any exchange rate to be used by the
remittance transfer provider for the remittance
transfer, to the nearest 1/100th of a point; and
``(B) at the time at which the sender makes payment
in connection with the remittance transfer--
``(i) a receipt showing--
``(I) the information described in
subparagraph (A);
``(II) the promised date of delivery
to the designated recipient; and
``(III) the name and either the
telephone number or the address of the
designated recipient, if either the
telephone number or the address of the
designated recipient is provided by the
sender; and
``(ii) a statement containing--
``(I) information about the rights
of the sender under this section
regarding the resolution of errors; and
[[Page 124 STAT. 2061]]
``(II) appropriate contact
information for--
``(aa) the remittance
transfer provider; and
``(bb) the State agency that
regulates the remittance
transfer provider and the Board,
including the toll-free
telephone number established
under section 1013 of the
Consumer Financial Protection
Act of 2010.
``(3) Requirements relating to disclosures.--With respect to
each disclosure required to be provided under paragraph (2) a
remittance transfer provider shall--
``(A) <<NOTE: Notice.>> provide an initial notice
and receipt, as required by subparagraphs (A) and (B) of
paragraph (2), and an error resolution statement, as
required by subsection (d), that clearly and
conspicuously describe the information required to be
disclosed therein; and
``(B) with respect to any transaction that a sender
conducts electronically, comply with the Electronic
Signatures in Global and National Commerce Act (15
U.S.C. 7001 et seq.).
``(4) Exception for disclosures of amount received.--
``(A) In general.--Subject to the rules prescribed
by the Board, and except as provided under subparagraph
(B), the disclosures required regarding the amount of
currency that will be received by the designated
recipient shall be deemed to be accurate, so long as the
disclosures provide a reasonably accurate estimate of
the foreign currency to be
received. <<NOTE: Applicability.>> This paragraph shall
apply only to a remittance transfer provider who is an
insured depository institution, as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813),
or an insured credit union, as defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752), and if--
``(i) a remittance transfer is conducted
through a demand deposit, savings deposit, or
other asset account that the sender holds with
such remittance transfer provider; and
``(ii) at the time at which the sender
requests the transaction, the remittance transfer
provider is unable to know, for reasons beyond its
control, the amount of currency that will be made
available to the designated recipient.
``(B) Deadline.--The application <<NOTE: Termination
date. Determination.>> of subparagraph (A) shall
terminate 5 years after the date of enactment of the
Consumer Financial Protection Act of 2010, unless the
Board determines that termination of such provision
would negatively affect the ability of remittance
transfer providers described in subparagraph (A) to send
remittances to locations in foreign countries, in which
case, the Board may, by rule, extend the application of
subparagraph (A) to not longer than 10 years after the
date of enactment of the Consumer Financial Protection
Act of 2010.
``(5) Exemption authority.--The Board may, by rule, permit a
remittance transfer provider to satisfy the requirements of--
``(A) paragraph (2)(A) orally, if the transaction is
conducted entirely by telephone;
[[Page 124 STAT. 2062]]
``(B) <<NOTE: Deadline.>> paragraph (2)(B), in the
case of a transaction conducted entirely by telephone,
by mailing the disclosures required under such
subparagraph to the sender, not later than 1 business
day after the date on which the transaction is
conducted, or by including such documents in the next
periodic statement, if the telephone transaction is
conducted through a demand deposit, savings deposit, or
other asset account that the sender holds with the
remittance transfer provider;
``(C) subparagraphs (A) and (B) of paragraph (2)
together in one written disclosure, but only to the
extent that the information provided in accordance with
paragraph (3)(A) is accurate at the time at which
payment is made in connection with the subject
remittance transfer; and
``(D) paragraph (2)(A), without compliance with
section 101(c) of the Electronic Signatures in Global
Commerce Act, if a sender initiates the transaction
electronically and the information is displayed
electronically in a manner that the sender can keep.
``(6) Storefront and internet notices.--
``(A) In general.--
``(i) Prominent posting.--Subject to
subparagraph (B), the Board may prescribe rules to
require a remittance transfer provider to
prominently post, and timely update, a notice
describing a model remittance transfer for one or
more amounts, as the Board may determine, which
notice shall show the amount of currency that will
be received by the designated recipient, using the
values of the currency into which the funds will
be exchanged.
``(ii) Onsite displays.--The Board may require
the notice prescribed under this subparagraph to
be displayed in every physical storefront location
owned or controlled by the remittance transfer
provider.
``(iii) Internet notices.--Subject to
paragraph (3), the Board shall prescribe rules to
require a remittance transfer provider that
provides remittance transfers via the Internet to
provide a notice, comparable to a storefront
notice described in this subparagraph, located on
the home page or landing page (with respect to
such remittance transfer services) owned or
controlled by the remittance transfer provider.
``(iv) Rulemaking authority.--In prescribing
rules under this subparagraph, the Board may
impose standards or requirements regarding the
provision of the storefront and Internet notices
required under this subparagraph and the provision
of the disclosures required under paragraphs (2)
and (3).
``(B) Study and analysis.--Prior to proposing rules
under subparagraph (A), the Board shall undertake
appropriate studies and analyses, which shall be
consistent with section 904(a)(2), and may include an
advanced notice of proposed rulemaking, to determine
whether a storefront notice or Internet notice
facilitates the ability of a consumer--
``(i) to compare prices for remittance
transfers; and
[[Page 124 STAT. 2063]]
``(ii) to understand the types and amounts of
any fees or costs imposed on remittance transfers.
``(b) Foreign Language Disclosures.--The disclosures required under
this section shall be made in English and in each of the foreign
languages principally used by the remittance transfer provider, or any
of its agents, to advertise, solicit, or market, either orally or in
writing, at that office.
``(c) Regulations Regarding Transfers to Certain Nations.--If
the <<NOTE: Deadline.>> Board determines that a recipient nation does
not legally allow, or the method by which transactions are made in the
recipient country do not allow, a remittance transfer provider to know
the amount of currency that will be received by the designated
recipient, the Board may prescribe rules (not later than 18 months after
the date of enactment of the Consumer Financial Protection Act of 2010)
addressing the issue, which rules shall include standards for a
remittance transfer provider to provide--
``(1) a receipt that is consistent with subsections (a) and
(b); and
``(2) a reasonably accurate estimate of the foreign currency
to be received, based on the rate provided to the sender by the
remittance transfer provider at the time at which the
transaction was initiated by the sender.
``(d) <<NOTE: Notices. Deadlines.>> Remittance Transfer Errors.--
``(1) Error resolution.--
``(A) In general.--If a remittance transfer provider
receives oral or written notice from the sender within
180 days of the promised date of delivery that an error
occurred with respect to a remittance transfer,
including the amount of currency designated in
subsection (a)(3)(A) that was to be sent to the
designated recipient of the remittance transfer, using
the values of the currency into which the funds should
have been exchanged, but was not made available to the
designated recipient in the foreign country, the
remittance transfer provider shall resolve the error
pursuant to this subsection and investigate the reason
for the error.
``(B) Remedies.--Not later than 90 days after the
date of receipt of a notice from the sender pursuant to
subparagraph (A), the remittance transfer provider
shall, as applicable to the error and as designated by
the sender--
``(i) refund to the sender the total amount of
funds tendered by the sender in connection with
the remittance transfer which was not properly
transmitted;
``(ii) make available to the designated
recipient, without additional cost to the
designated recipient or to the sender, the amount
appropriate to resolve the error;
``(iii) provide such other remedy, as
determined appropriate by rule of the Board for
the protection of senders; or
``(iv) provide written notice to the sender
that there was no error with an explanation
responding to the specific complaint of the
sender.
``(2) Rules.--The Board <<NOTE: Deadline.>> shall
establish, by rule issued not later than 18 months after the
date of enactment of the Consumer Financial Protection Act of
2010, clear and appropriate standards for remittance transfer
providers with respect to
[[Page 124 STAT. 2064]]
error resolution relating to remittance transfers, to protect
senders from such errors. Standards prescribed under this
paragraph shall include appropriate standards regarding record
keeping, as required, including documentation--
``(A) of the complaint of the sender;
``(B) that the sender provides the remittance
transfer provider with respect to the alleged error; and
``(C) of the findings of the remittance transfer
provider regarding the investigation of the alleged
error that the sender brought to their attention.
``(3) <<NOTE: Deadline.>> Cancellation and refund policy
rules.--Not later than 18 months after the date of enactment of
the Consumer Financial Protection Act of 2010, the Board shall
issue final rules regarding appropriate remittance transfer
cancellation and refund policies for consumers.
``(e) Applicability of This Title.--
``(1) In general.--A remittance transfer that is not an
electronic fund transfer, as defined in section 903, shall not
be subject to any of the provisions of sections 905 through 913.
A remittance transfer that is an electronic fund transfer, as
defined in section 903, shall be subject to all provisions of
this title, except for section 908, that are otherwise
applicable to electronic fund transfers under this title.
``(2) Rule of construction.--Nothing in this section shall
be construed--
``(A) to affect the application to any transaction,
to any remittance provider, or to any other person of
any of the provisions of subchapter II of chapter 53 of
title 31, United States Code, section 21 of the Federal
Deposit Insurance Act (12 U.S.C. 1829b), or chapter 2 of
title I of Public Law 91-508 (12 U.S.C. 1951-1959), or
any regulations promulgated thereunder; or
``(B) to cause any fund transfer that would not
otherwise be treated as such under paragraph (1) to be
treated as an electronic fund transfer, or as otherwise
subject to this title, for the purposes of any of the
provisions referred to in subparagraph (A) or any
regulations promulgated thereunder.
``(f) Acts of Agents.--
``(1) In general.--A remittance transfer provider shall be
liable for any violation of this section by any agent,
authorized delegate, or person affiliated with such provider,
when such agent, authorized delegate, or affiliate acts for that
remittance transfer provider.
``(2) Obligations of remittance transfer providers.--The
Board shall prescribe rules to implement appropriate standards
or conditions of, liability of a remittance transfer provider,
including a provider who acts through an agent or authorized
delegate. An agency charged with enforcing the requirements of
this section, or rules prescribed by the Board under this
section, may consider, in any action or other proceeding against
a remittance transfer provider, the extent to which the provider
had established and maintained policies or procedures for
compliance, including policies, procedures, or other appropriate
oversight measures designed to assure compliance by an agent or
authorized delegate acting for such provider.
[[Page 124 STAT. 2065]]
``(g) Definitions.--As used in this section--
``(1) the term `designated recipient' means any person
located in a foreign country and identified by the sender as the
authorized recipient of a remittance transfer to be made by a
remittance transfer provider, except that a designated recipient
shall not be deemed to be a consumer for purposes of this Act;
``(2) the term `remittance transfer'--
``(A) means the electronic (as defined in section
106(2) of the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. 7006(2))) transfer of
funds requested by a sender located in any State to a
designated recipient that is initiated by a remittance
transfer provider, whether or not the sender holds an
account with the remittance transfer provider or whether
or not the remittance transfer is also an electronic
fund transfer, as defined in section 903; and
``(B) does not include a transfer described in
subparagraph (A) in an amount that is equal to or lesser
than the amount of a small-value transaction determined,
by rule, to be excluded from the requirements under
section 906(a);
``(3) the term `remittance transfer provider' means any
person or financial institution that provides remittance
transfers for a consumer in the normal course of its business,
whether or not the consumer holds an account with such person or
financial institution; and
``(4) the term `sender' means a consumer who requests a
remittance provider to send a remittance transfer for the
consumer to a designated recipient.''.
(b) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors shall work
with the Federal reserve banks and the Department of the
Treasury to expand the use of the automated clearinghouse system
and other payment mechanisms for remittance transfers to foreign
countries, with a focus on countries that receive significant
remittance transfers from the United States, based on--
(A) the number, volume, and size of such transfers;
(B) the significance of the volume of such transfers
relative to the external financial flows of the
receiving country, including--
(i) the total amount transferred; and
(ii) the total volume of payments made by
United States Government agencies to beneficiaries
and retirees living abroad;
(C) the feasibility of such an expansion; and
(D) the ability of the Federal Reserve System to
establish payment gateways in different geographic
regions and currency zones to receive remittance
transfers and route them through the payments systems in
the destination countries.
(2) Report to congress.--Not later than one calendar year
after the date of enactment of this Act, and on April 30
biennially thereafter during the 10-year period beginning on
that date of enactment, the Board of Governors shall submit a
report to the Committee on Banking, Housing, and Urban
[[Page 124 STAT. 2066]]
Affairs of the Senate and the Committee on Financial Services of
the House of Representatives on the status of the automated
clearinghouse system and its progress in complying with the
requirements of this subsection. The report shall include an
analysis of adoption rates of International ACH Transactions
rules and formats, the efficacy of increasing adoption rates,
and potential recommendations to increase adoption.
(c) Expansion of Financial Institution Provision of Remittance
Transfers.--
(1) Provision of guidelines to institutions.--Each of the
Federal banking agencies and the National Credit Union
Administration shall provide guidelines to financial
institutions under the jurisdiction of the agency regarding the
offering of low-cost remittance transfers and no-cost or low-
cost basic consumer accounts, as well as agency services to
remittance transfer providers.
(2) Assistance to financial literacy commission.--As part of
its duties as members of the Financial Literacy and Education
Commission, the Bureau, the Federal banking agencies, and the
National Credit Union Administration shall assist the Financial
Literacy and Education Commission in executing the Strategy for
Assuring Financial Empowerment (or the ``SAFE Strategy''), as it
relates to remittances.
(d) Federal Credit Union Act Conforming Amendment.--Paragraph (12)
of section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is
amended to read as follows:
``(12) in accordance with regulations prescribed by the
Board--
``(A) to sell, to persons in the field of
membership, negotiable checks (including travelers
checks), money orders, and other similar money transfer
instruments (including international and domestic
electronic fund transfers and remittance transfers, as
defined in section 919 of the Electronic Fund Transfer
Act); and
``(B) to cash checks and money orders for persons in
the field of membership for a fee;''.
(e) Report on Feasibility of and Impediments to Use of Remittance
History in Calculation of Credit Score.--Before the end of the 365-day
period beginning on the date of enactment of this Act, the Director
shall submit a report to the President, the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the Committee on Financial
Services of the House of Representatives regarding--
(1) the manner in which the remittance history of a consumer
could be used to enhance the credit score of the consumer;
(2) the current legal and business model barriers and
impediments that impede the use of the remittance history of the
consumer to enhance the credit score of the consumer; and
(3) recommendations on the manner in which maximum
transparency and disclosure to consumers of exchange rates for
remittance transfers subject to this title and the amendments
made by this title may be accomplished, whether or not such
exchange rates are known at the time of origination or payment
by the consumer for the remittance transfer, including
disclosure to the sender of the actual exchange rate
[[Page 124 STAT. 2067]]
used and the amount of currency that the recipient of the
remittance transfer received, using the values of the currency
into which the funds were exchanged, as contained in sections
919(a)(2)(D) and 919(a)(3) of the Electronic Fund Transfer Act
(as amended by this section).
SEC. 1074. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE
CONSERVATORSHIP OF FANNIE MAE, FREDDIE
MAC, AND REFORMING THE HOUSING FINANCE
SYSTEM.
(a) Study Required.--
(1) In general.--The Secretary <<NOTE: Recommenda- tions.>>
of the Treasury shall conduct a study of and develop
recommendations regarding the options for ending the
conservatorship of the Federal National Mortgage Association (in
this section referred to as ``Fannie Mae'') and the Federal Home
Loan Mortgage Corporation (in this section referred to as
``Freddie Mac''), while minimizing the cost to taxpayers,
including such options as--
(A) the gradual wind-down and liquidation of such
entities;
(B) the privatization of such entities;
(C) the incorporation of the functions of such
entities into a Federal agency;
(D) the dissolution of Fannie Mae and Freddie Mac
into smaller companies; or
(E) any other measures the Secretary determines
appropriate.
(2) Analyses.--The study required under paragraph (1) shall
include an analysis of--
(A) the role of the Federal Government in supporting
a stable, well-functioning housing finance system, and
whether and to what extent the Federal Government should
bear risks in meeting Federal housing finance
objectives;
(B) how the current structure of the housing finance
system can be improved;
(C) how the housing finance system should support
the continued availability of mortgage credit to all
segments of the market;
(D) how the housing finance system should be
structured to ensure that consumers continue to have
access to 30-year, fixed rate, pre-payable mortgages and
other mortgage products that have simple terms that can
be easily understood;
(E) the role of the Federal Housing Administration
and the Department of Veterans Affairs in a future
housing system;
(F) the impact of reforms of the housing finance
system on the financing of rental housing;
(G) the impact of reforms of the housing finance
system on secondary market liquidity;
(H) the role of standardization in the housing
finance system;
(I) how housing finance systems in other countries
offer insights that can help inform options for reform
in the United States; and
(J) the options for transition to a reformed housing
finance system.
[[Page 124 STAT. 2068]]
(b) Report and Recommendations.--Not later than January 31, 2011,
the Secretary of the Treasury shall submit the report and
recommendations required under subsection (a) to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
SEC. 1075. REASONABLE FEES AND RULES FOR PAYMENT CARD
TRANSACTIONS.
(a) In General.--The Electronic Fund Transfer Act (15 U.S.C. 1693 et
seq.) is amended--
(1) by redesignating sections 920 and 921 <<NOTE: 15 USC
1693p, 1693q.>> as sections 921 and 922, respectively; and
(2) by inserting after section 919 the following:
``SEC. 920. <<NOTE: 15 USC 1693o-2.>> REASONABLE FEES AND RULES
FOR PAYMENT CARD TRANSACTIONS.
``(a) Reasonable Interchange Transaction Fees for Electronic Debit
Transactions.--
``(1) Regulatory authority over interchange transaction
fees.--The Board may prescribe regulations, pursuant to section
553 of title 5, United States Code, regarding any interchange
transaction fee that an issuer may receive or charge with
respect to an electronic debit transaction, to implement this
subsection (including related definitions), and to prevent
circumvention or evasion of this subsection.
``(2) Reasonable interchange transaction fees.--The amount
of any interchange transaction fee that an issuer may receive or
charge with respect to an electronic debit transaction shall be
reasonable and proportional to the cost incurred by the issuer
with respect to the transaction.
``(3) Rulemaking required.--
``(A) In general.--The
Board <<NOTE: Deadline. Standards.>> shall prescribe
regulations in final form not later than 9 months after
the date of enactment of the Consumer Financial
Protection Act of 2010, to establish standards for
assessing whether the amount of any interchange
transaction fee described in paragraph (2) is reasonable
and proportional to the cost incurred by the issuer with
respect to the transaction.
``(B) Information collection.--The Board may require
any issuer (or agent of an issuer) or payment card
network to provide the Board with such information as
may be necessary to carry out the provisions of this
subsection and the Board, in issuing rules under
subparagraph (A) and on at least a bi-annual basis
thereafter, shall disclose such aggregate or summary
information concerning the costs incurred, and
interchange transaction fees charged or received, by
issuers or payment card networks in connection with the
authorization, clearance or settlement of electronic
debit transactions as the Board considers appropriate
and in the public interest.
``(4) Considerations; consultation.--In prescribing
regulations under paragraph (3)(A), the Board shall--
``(A) consider the functional similarity between--
``(i) electronic debit transactions; and
``(ii) checking transactions that are required
within the Federal Reserve bank system to clear at
par;
``(B) distinguish between--
[[Page 124 STAT. 2069]]
``(i) the incremental cost incurred by an
issuer for the role of the issuer in the
authorization, clearance, or settlement of a
particular electronic debit transaction, which
cost shall be considered under paragraph (2); and
``(ii) other costs incurred by an issuer which
are not specific to a particular electronic debit
transaction, which costs shall not be considered
under paragraph (2); and
``(C) consult, as appropriate, with the Comptroller
of the Currency, the Board of Directors of the Federal
Deposit Insurance Corporation, the Director of the
Office of Thrift Supervision, the National Credit Union
Administration Board, the Administrator of the Small
Business Administration, and the Director of the Bureau
of Consumer Financial Protection.
``(5) Adjustments to interchange transaction fees for fraud
prevention costs.--
``(A) Adjustments.--The Board may allow for an
adjustment to the fee amount received or charged by an
issuer under paragraph (2), if--
``(i) such adjustment is reasonably necessary
to make allowance for costs incurred by the issuer
in preventing fraud in relation to electronic
debit transactions involving that issuer; and
``(ii) the issuer complies with the fraud-
related standards established by the Board under
subparagraph (B), which standards shall--
``(I) be designed to ensure that any
fraud-related adjustment of the issuer
is limited to the amount described in
clause (i) and takes into account any
fraud-related reimbursements (including
amounts from charge-backs) received from
consumers, merchants, or payment card
networks in relation to electronic debit
transactions involving the issuer; and
``(II) require issuers to take
effective steps to reduce the occurrence
of, and costs from, fraud in relation to
electronic debit transactions, including
through the development and
implementation of cost-effective fraud
prevention technology.
``(B) Rulemaking required.--
``(i) In general.--The
Board <<NOTE: Deadline. Standards.>> shall
prescribe regulations in final form not later than
9 months after the date of enactment of the
Consumer Financial Protection Act of 2010, to
establish standards for making adjustments under
this paragraph.
``(ii) Factors for consideration.--In issuing
the standards and prescribing regulations under
this paragraph, the Board shall consider--
``(I) the nature, type, and
occurrence of fraud in electronic debit
transactions;
``(II) the extent to which the
occurrence of fraud depends on whether
authorization in an electronic debit
transaction is based on signature, PIN,
or other means;
[[Page 124 STAT. 2070]]
``(III) the available and economical
means by which fraud on electronic debit
transactions may be reduced;
``(IV) the fraud prevention and data
security costs expended by each party
involved in electronic debit
transactions (including consumers,
persons who accept debit cards as a form
of payment, financial institutions,
retailers and payment card networks);
``(V) the costs of fraudulent
transactions absorbed by each party
involved in such transactions (including
consumers, persons who accept debit
cards as a form of payment, financial
institutions, retailers and payment card
networks);
``(VI) the extent to which
interchange transaction fees have in the
past reduced or increased incentives for
parties involved in electronic debit
transactions to reduce fraud on such
transactions; and
``(VII) such other factors as the
Board considers appropriate.
``(6) Exemption for small issuers.--
``(A) In general.--This subsection shall not apply
to any issuer that, together with its affiliates, has
assets of less than $10,000,000,000, and the Board shall
exempt such issuers from regulations prescribed under
paragraph (3)(A).
``(B) Definition.--For purposes of this paragraph,
the term ``issuer'' shall be limited to the person
holding the asset account that is debited through an
electronic debit transaction.
``(7) Exemption for government-administered payment programs
and reloadable prepaid cards.--
``(A) In general.--This subsection shall not apply
to an interchange transaction fee charged or received
with respect to an electronic debit transaction in which
a person uses--
``(i) a debit card or general-use prepaid card
that has been provided to a person pursuant to a
Federal, State or local government-administered
payment program, in which the person may only use
the debit card or general-use prepaid card to
transfer or debit funds, monetary value, or other
assets that have been provided pursuant to such
program; or
``(ii) a plastic card, payment code, or device
that is--
``(I) linked to funds, monetary
value, or assets which are purchased or
loaded on a prepaid basis;
``(II) not issued or approved for
use to access or debit any account held
by or for the benefit of the card holder
(other than a subaccount or other method
of recording or tracking funds purchased
or loaded on the card on a prepaid
basis);
``(III) redeemable at multiple,
unaffiliated merchants or service
providers, or automated teller machines;
[[Page 124 STAT. 2071]]
``(IV) used to transfer or debit
funds, monetary value, or other assets;
and
``(V) reloadable and not marketed or
labeled as a gift card or gift
certificate.
``(B) <<NOTE: Applicability.>> Exception.--
Notwithstanding subparagraph (A), after the end of the
1-year period beginning on the effective date provided
in paragraph (9), this subsection shall apply to an
interchange transaction fee charged or received with
respect to an electronic debit transaction described in
subparagraph (A)(i) in which a person uses a general-use
prepaid card, or an electronic debit transaction
described in subparagraph (A)(ii), if any of the
following fees may be charged to a person with respect
to the card:
``(i) A fee for an overdraft, including a
shortage of funds or a transaction processed for
an amount exceeding the account balance.
``(ii) A fee imposed by the issuer for the
first withdrawal per month from an automated
teller machine that is part of the issuer's
designated automated teller machine network.
``(C) Definition.--For purposes of subparagraph (B),
the term `designated automated teller machine network'
means either--
``(i) all automated teller machines identified
in the name of the issuer; or
``(ii) any network of automated teller
machines identified by the issuer that provides
reasonable and convenient access to the issuer's
customers.
``(D) Reporting.--Beginning 12 <<NOTE: Effective
date.>> months after the date of enactment of the
Consumer Financial Protection Act of 2010, the Board
shall annually provide a report to the Congress
regarding --
``(i) the prevalence of the use of general-use
prepaid cards in Federal, State or local
government-administered payment programs; and
``(ii) the interchange transaction fees and
cardholder fees charged with respect to the use of
such general-use prepaid cards.
``(8) Regulatory authority over network fees.--
``(A) In general.--The Board may prescribe
regulations, pursuant to section 553 of title 5, United
States Code, regarding any network fee.
``(B) Limitation.--The authority under subparagraph
(A) to prescribe regulations shall be limited to
regulations to ensure that--
``(i) a network fee is not used to directly or
indirectly compensate an issuer with respect to an
electronic debit transaction; and
``(ii) a network fee is not used to circumvent
or evade the restrictions of this subsection and
regulations prescribed under such subsection.
``(C) Rulemaking required.--The
Board <<NOTE: Deadline.>> shall prescribe regulations
in final form before the end of the 9-month period
beginning on the date of the enactment of the Consumer
Financial Protection Act of 2010, to carry out the
authorities provided under subparagraph (A).
[[Page 124 STAT. 2072]]
``(9) Effective date.--This subsection shall take effect at
the end of the 12-month period beginning on the date of the
enactment of the Consumer Financial Protection Act of 2010.
``(b) Limitation on Payment Card Network Restrictions.--
``(1) <<NOTE: Deadlines.>> Prohibitions against exclusivity
arrangements.--
``(A) No exclusive network.--The Board shall, before
the end of the 1-year period beginning on the date of
the enactment of the Consumer Financial Protection Act
of 2010, prescribe regulations providing that an issuer
or payment card network shall not directly or through
any agent, processor, or licensed member of a payment
card network, by contract, requirement, condition,
penalty, or otherwise, restrict the number of payment
card networks on which an electronic debit transaction
may be processed to--
``(i) 1 such network; or
``(ii) 2 or more such networks which are
owned, controlled, or otherwise operated by --
``(I) affiliated persons; or
``(II) networks affiliated with such
issuer.
``(B) No routing restrictions.--The Board shall,
before the end of the 1-year period beginning on the
date of the enactment of the Consumer Financial
Protection Act of 2010, prescribe regulations providing
that an issuer or payment card network shall not,
directly or through any agent, processor, or licensed
member of the network, by contract, requirement,
condition, penalty, or otherwise, inhibit the ability of
any person who accepts debit cards for payments to
direct the routing of electronic debit transactions for
processing over any payment card network that may
process such transactions.
``(2) Limitation on restrictions on offering discounts for
use of a form of payment.--
``(A) In general.--A payment card network shall not,
directly or through any agent, processor, or licensed
member of the network, by contract, requirement,
condition, penalty, or otherwise, inhibit the ability of
any person to provide a discount or in-kind incentive
for payment by the use of cash, checks, debit cards, or
credit cards to the extent that--
``(i) in the case of a discount or in-kind
incentive for payment by the use of debit cards,
the discount or in-kind incentive does not
differentiate on the basis of the issuer or the
payment card network;
``(ii) in the case of a discount or in-kind
incentive for payment by the use of credit cards,
the discount or in-kind incentive does not
differentiate on the basis of the issuer or the
payment card network; and
``(iii) to the extent required by Federal law
and applicable State law, such discount or in-kind
incentive is offered to all prospective buyers and
disclosed clearly and conspicuously.
``(B) Lawful discounts.--For purposes of this
paragraph, the network may not penalize any person for
the providing of a discount that is in compliance with
Federal law and applicable State law.
[[Page 124 STAT. 2073]]
``(3) Limitation on restrictions on setting transaction
minimums or maximums.--
``(A) In general.--A payment card network shall not,
directly or through any agent, processor, or licensed
member of the network, by contract, requirement,
condition, penalty, or otherwise, inhibit the ability--
``(i) of any person to set a minimum dollar
value for the acceptance by that person of credit
cards, to the extent that --
``(I) such minimum dollar value does
not differentiate between issuers or
between payment card networks; and
``(II) such minimum dollar value
does not exceed $10.00; or
``(ii) of any Federal agency or institution of
higher education to set a maximum dollar value for
the acceptance by that Federal agency or
institution of higher education of credit cards,
to the extent that such maximum dollar value does
not differentiate between issuers or between
payment card networks.
``(B) Increase in minimum dollar amount.--The Board
may, by regulation prescribed pursuant to section 553 of
title 5, United States Code, increase the amount of the
dollar value listed in subparagraph (A)(i)(II).
``(4) Rule of construction:.--No provision of this
subsection shall be construed to authorize any person--
``(A) to discriminate between debit cards within a
payment card network on the basis of the issuer that
issued the debit card; or
``(B) to discriminate between credit cards within a
payment card network on the basis of the issuer that
issued the credit card.
``(c) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Affiliate.--The term `affiliate' means any company
that controls, is controlled by, or is under common control with
another company.
``(2) Debit card.--The term `debit card'--
``(A) means any card, or other payment code or
device, issued or approved for use through a payment
card network to debit an asset account (regardless of
the purpose for which the account is established),
whether authorization is based on signature, PIN, or
other means;
``(B) includes a general-use prepaid card, as that
term is defined in section 915(a)(2)(A); and
``(C) does not include paper checks.
``(3) Credit card.--The term `credit card' has the same
meaning as in section 103 of the Truth in Lending Act.
``(4) Discount.--The term `discount'--
``(A) means a reduction made from the price that
customers are informed is the regular price; and
``(B) does not include any means of increasing the
price that customers are informed is the regular price.
``(5) Electronic debit transaction.--The term `electronic
debit transaction' means a transaction in which a person uses a
debit card.
``(6) Federal agency.--The term `Federal agency' means--
[[Page 124 STAT. 2074]]
``(A) an agency (as defined in section 101 of title
31, United States Code); and
``(B) a Government corporation (as defined in
section 103 of title 5, United States Code).
``(7) Institution of higher education.--The term
`institution of higher education' has the same meaning as in 101
and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001,
1002).
``(8) Interchange transaction fee.--The term `interchange
transaction fee' means any fee established, charged or received
by a payment card network for the purpose of compensating an
issuer for its involvement in an electronic debit transaction.
``(9) Issuer.--The term `issuer' means any person who issues
a debit card, or credit card, or the agent of such person with
respect to such card.
``(10) Network fee.--The term `network fee' means any fee
charged and received by a payment card network with respect to
an electronic debit transaction, other than an interchange
transaction fee.
``(11) Payment card network.--The term `payment card
network' means an entity that directly, or through licensed
members, processors, or agents, provides the proprietary
services, infrastructure, and software that route information
and data to conduct debit card or credit card transaction
authorization, clearance, and settlement, and that a person uses
in order to accept as a form of payment a brand of debit card,
credit card or other device that may be used to carry out debit
or credit transactions.
``(d) Enforcement.--
``(1) In general.--Compliance with the requirements imposed
under this section shall be enforced under section 918.
``(2) Exception.--Sections 916 and 917 shall not apply with
respect to this section or the requirements imposed pursuant to
this section.''.
(b) Amendment to the Food and Nutrition Act of 2008.--Section
7(h)(10) of the Food and Nutrition Act of 2008 (7 U.S.C. 2016(h)(10)) is
amended to read as follows:
``(10) Federal law not applicable.--Section 920 of the
Electronic Fund Transfer Act shall not apply to electronic
benefit transfer or reimbursement systems under this Act.''.
(c) Amendment to the Farm Security and Rural Investment Act of
2002.--Section 4402 of the Farm Security and Rural Investment Act of
2002 (7 U.S.C. 3007) is amended by adding at the end the following new
subsection:
``(f) Federal Law Not Applicable.--Section 920 of the Electronic
Fund Transfer Act shall not apply to electronic benefit transfer systems
established under this section.''.
(d) Amendment to the Child Nutrition Act of 1966.--Section 11 of the
Child Nutrition Act of 1966 (42 U.S.C. 1780) is amended by adding at the
end the following:
``(c) Federal Law Not Applicable.--Section 920 of the Electronic
Fund Transfer Act shall not apply to electronic benefit transfer systems
established under this Act or the Richard B. Russell National School
Lunch Act (42 U.S.C. 1751 et seq.).''.
[[Page 124 STAT. 2075]]
SEC. 1076. <<NOTE: 12 USC 5602.>> REVERSE MORTGAGE STUDY AND
REGULATIONS.
(a) Study.--Not later than 1 year after the designated transfer
date, the Bureau shall conduct a study on reverse mortgage transactions.
(b) Regulations.--
(1) In general.--If the Bureau determines through the study
required under subsection (a) that conditions or limitations on
reverse mortgage transactions are necessary or appropriate for
accomplishing the purposes and objectives of this title,
including protecting borrowers with respect to the obtaining of
reverse mortgage loans for the purpose of funding investments,
annuities, and other investment products and the suitability of
a borrower in obtaining a reverse mortgage for such purpose.
(2) Identified practices and integrated disclosures.--The
regulations prescribed under paragraph (1) may, as the Bureau
may so determine--
(A) identify any practice as unfair, deceptive, or
abusive in connection with a reverse mortgage
transaction; and
(B) provide for an integrated disclosure standard
and model disclosures for reverse mortgage transactions,
consistent with section 4302(d), that combines the
relevant disclosures required under the Truth in Lending
Act (15 U.S.C. 1601 et seq.) and the Real Estate
Settlement Procedures Act, with the disclosures required
to be provided to consumers for Home Equity Conversion
Mortgages under section 255 of the National Housing Act.
(c) Rule of Construction.--This section shall not be construed as
limiting the authority of the Bureau to issue regulations, orders, or
guidance that apply to reverse mortgages prior to the completion of the
study required under subsection (a).
SEC. 1077. REPORT ON PRIVATE EDUCATION LOANS AND PRIVATE
EDUCATIONAL LENDERS.
(a) Report.--Not later than 2 years after the date of enactment of
this Act, the Director and the Secretary of Education, in consultation
with the Commissioners of the Federal Trade Commission, and the Attorney
General of the United States, shall submit a report to the Committee on
Banking, Housing, and Urban Affairs and the Committee on Health,
Education, Labor, and Pensions of the Senate and the Committee on
Financial Services and the Committee on Education and Labor of the House
of Representatives, on private education loans (as that term is defined
in section 140 of the Truth in Lending Act (15 U.S.C. 1650)) and private
educational lenders (as that term is defined in such section).
(b) Content.--The report required by this section shall examine, at
a minimum--
(1) the growth and changes of the private education loan
market in the United States;
(2) factors influencing such growth and changes;
(3) the extent to which students and parents of students
rely on private education loans to finance postsecondary
education and the private education loan indebtedness of
borrowers;
(4) the characteristics of private education loan borrowers,
including--
[[Page 124 STAT. 2076]]
(A) the types of institutions of higher education
that they attend;
(B) socioeconomic characteristics (including income
and education levels, racial characteristics,
geographical background, age, and gender);
(C) what other forms of financing borrowers use to
pay for education;
(D) whether they exhaust their Federal loan options
before taking out a private loan;
(E) whether such borrowers are dependent or
independent students (as determined under part F of
title IV of the Higher Education Act of 1965) or parents
of such students;
(F) whether such borrowers are students enrolled in
a program leading to a certificate, license, or
credential other than a degree, an associates degree, a
baccalaureate degree, or a graduate or professional
degree; and
(G) if practicable, employment and repayment
behaviors;
(5) the characteristics of private educational lenders,
including whether such creditors are for-profit, non-profit, or
institutions of higher education;
(6) the underwriting criteria used by private educational
lenders, including the use of cohort default rate (as such term
is defined in section 435(m) of the Higher Education Act of
1965);
(7) the terms, conditions, and pricing of private education
loans;
(8) the consumer protections available to private education
loan borrowers, including the effectiveness of existing
disclosures and requirements and borrowers' awareness and
understanding about terms and conditions of various financial
products;
(9) whether Federal regulators and the public have access to
information sufficient to provide them with assurances that
private education loans are provided in accord with the Nation's
fair lending laws and that allows public officials to determine
lender compliance with fair lending laws; and
(10) any statutory or legislative recommendations necessary
to improve consumer protections for private education loan
borrowers and to better enable Federal regulators and the public
to ascertain private educational lender compliance with fair
lending laws.
SEC. 1078. STUDY AND REPORT ON CREDIT SCORES.
(a) Study.--The Bureau shall conduct a study on the nature, range,
and size of variations between the credit scores sold to creditors and
those sold to consumers by consumer reporting agencies that compile and
maintain files on consumers on a nationwide basis (as defined in section
603(p) of the Fair Credit Reporting Act; 15 U.S.C. 1681a(p)), and
whether such variations disadvantage consumers.
(b) Report to Congress.--The Bureau shall submit a report to
Congress on the results of the study conducted under subsection (a) not
later than 1 year after the date of enactment of this Act.
[[Page 124 STAT. 2077]]
SEC. 1079. <<NOTE: 12 USC 5603.>> REVIEW, REPORT, AND PROGRAM WITH
RESPECT TO EXCHANGE FACILITATORS.
(a) Review.--The Director shall review all Federal laws and
regulations relating to the protection of consumers who use exchange
facilitators for transactions primarily for personal, family, or
household purposes.
(b) Report.--Not later than 1 year after the designated transfer
date, the Director shall submit to Congress a report describing--
(1) recommendations for legislation to ensure the
appropriate protection of consumers who use exchange
facilitators for transactions primarily for personal, family, or
household purposes;
(2) recommendations for updating the regulations of Federal
departments and agencies to ensure the appropriate protection of
such consumers; and
(3) recommendations for regulations to ensure the
appropriate protection of such consumers.
(c) Program.--Not later than 2 years after the date of the
submission of the report under subsection (b), the Bureau shall,
consistent with subtitle B, propose regulations or otherwise establish a
program to protect consumers who use exchange facilitators.
(d) Exchange Facilitator Defined.--In this section, the term
``exchange facilitator'' means a person that--
(1) facilitates, for a fee, an exchange of like kind
property by entering into an agreement with a taxpayer by which
the exchange facilitator acquires from the taxpayer the
contractual rights to sell the taxpayer's relinquished property
and transfers a replacement property to the taxpayer as a
qualified intermediary (within the meaning of Treasury
Regulations section 1.1031(k)-1(g)(4)) or enters into an
agreement with the taxpayer to take title to a property as an
exchange accommodation titleholder (within the meaning of
Revenue Procedure 2000-37) or enters into an agreement with a
taxpayer to act as a qualified trustee or qualified escrow
holder (within the meaning of Treasury Regulations section
1.1031(k)-1(g)(3));
(2) maintains an office for the purpose of soliciting
business to perform the services described in paragraph (1); or
(3) advertises any of the services described in paragraph
(1) or solicits clients in printed publications, direct mail,
television or radio advertisements, telephone calls, facsimile
transmissions, or other electronic communications directed to
the general public for purposes of providing any such services.
SEC. 1079A. FINANCIAL FRAUD PROVISIONS.
(a) Sentencing <<NOTE: Review.>> Guidelines.--
(1) Securities <<NOTE: 28 USC 994 note.>> fraud.--
(A) Directive.--Pursuant to its authority under
section 994 of title 28, United States Code, and in
accordance with this paragraph, the United States
Sentencing Commission shall review and, if appropriate,
amend the Federal Sentencing Guidelines and policy
statements applicable to persons convicted of offenses
relating to securities fraud or any other similar
provision of law, in order to reflect the intent of
Congress that penalties for the offenses under the
guidelines and policy statements appropriately account
for the potential and actual harm to the public and the
financial markets from the offenses.
[[Page 124 STAT. 2078]]
(B) Requirements.--In making any amendments to the
Federal Sentencing Guidelines and policy statements
under subparagraph (A), the United States Sentencing
Commission shall--
(i) ensure that the guidelines and policy
statements, particularly section 2B1.1(b)(14) and
section 2B1.1(b)(17) (and any successors thereto),
reflect--
(I) the serious nature of the
offenses described in subparagraph (A);
(II) the need for an effective
deterrent and appropriate punishment to
prevent the offenses; and
(III) the effectiveness of
incarceration in furthering the
objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the
guidelines appropriately account for the potential
and actual harm to the public and the financial
markets resulting from the offenses;
(iii) ensure reasonable consistency with other
relevant directives and guidelines and Federal
statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet
the purposes of sentencing, as set forth in
section 3553(a)(2) of title 18, United States
Code.
(2) Financial <<NOTE: 28 USC 994 note.>> institution
fraud.--
(A) Directive.--Pursuant to its authority under
section 994 of title 28, United States Code, and in
accordance with this paragraph, the United States
Sentencing Commission shall review and, if appropriate,
amend the Federal Sentencing Guidelines and policy
statements applicable to persons convicted of fraud
offenses relating to financial institutions or federally
related mortgage loans and any other similar provisions
of law, to reflect the intent of Congress that the
penalties for the offenses under the guidelines and
policy statements ensure appropriate terms of
imprisonment for offenders involved in substantial bank
frauds or other frauds relating to financial
institutions.
(B) Requirements.--In making any amendments to the
Federal Sentencing Guidelines and policy statements
under subparagraph (A), the United States Sentencing
Commission shall--
(i) ensure that the guidelines and policy
statements reflect--
(I) the serious nature of the
offenses described in subparagraph (A);
(II) the need for an effective
deterrent and appropriate punishment to
prevent the offenses; and
(III) the effectiveness of
incarceration in furthering the
objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the
guidelines appropriately account for the potential
and actual harm
[[Page 124 STAT. 2079]]
to the public and the financial markets resulting
from the offenses;
(iii) ensure reasonable consistency with other
relevant directives and guidelines and Federal
statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet
the purposes of sentencing, as set forth in
section 3553(a)(2) of title 18, United States
Code.
(b) Extension of Statute of Limitations for Securities Fraud
Violations.--
(1) In general.--Chapter 213 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 3301. Securities fraud offenses
``(a) Definition.--In this section, the term `securities fraud
offense' means a violation of, or a conspiracy or an attempt to
violate--
``(1) section 1348;
``(2) section 32(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78ff(a));
``(3) section 24 of the Securities Act of 1933 (15 U.S.C.
77x);
``(4) section 217 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-17);
``(5) section 49 of the Investment Company Act of 1940 (15
U.S.C. 80a-48); or
``(6) section 325 of the Trust Indenture Act of 1939 (15
U.S.C. 77yyy).
``(b) Limitation.--No person shall be prosecuted, tried, or punished
for a securities fraud offense, unless the indictment is found or the
information is instituted within 6 years after the commission of the
offense.''.
(2) Technical and conforming amendment.--The table of
sections for chapter 213 of title 18, United States Code, is
amended by adding at the end the following:
``3301. Securities fraud offenses.''.
(c) Amendments to the False Claims Act Relating to Limitations on
Actions.--Section 3730(h) of title 31, United States Code, is amended--
(1) in paragraph (1), by striking ``or agent on behalf of
the employee, contractor, or agent or associated others in
furtherance of other efforts to stop 1 or more violations of
this subchapter'' and inserting ``agent or associated others in
furtherance of an action under this section or other efforts to
stop 1 or more violations of this subchapter''; and
(2) by adding at the end the following:
``(3) Limitation on bringing civil action.--A civil action
under this subsection may not be brought more than 3 years after
the date when the retaliation occurred.''.
[[Page 124 STAT. 2080]]
Subtitle H--Conforming Amendments
SEC. 1081. <<NOTE: 5 USC app. 8G note.>> AMENDMENTS TO THE
INSPECTOR GENERAL ACT.
Effective <<NOTE: Effective date.>> on the date of enactment of
this Act, the Inspector General Act of 1978 <<NOTE: 5 USC app. 8G.>> (5
U.S.C. App. 3) is amended--
(1) in section 8G(a)(2), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'';
(2) in <<NOTE: Appointment.>> section 8G(c), by adding at
the end the following: ``For purposes of implementing this
section, the Chairman of the Board of Governors of the Federal
Reserve System shall appoint the Inspector General of the Board
of Governors of the Federal Reserve System and the Bureau of
Consumer Financial Protection. The Inspector General of the
Board of Governors of the Federal Reserve System and the Bureau
of Consumer Financial Protection shall have all of the
authorities and responsibilities provided by this Act with
respect to the Bureau of Consumer Financial Protection, as if
the Bureau were part of the Board of Governors of the Federal
Reserve System.''; and
(3) in section 8G(g)(3), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'' the first place that term appears.
SEC. 1082. <<NOTE: 5 USC 552a note.>> AMENDMENTS TO THE PRIVACY
ACT OF 1974.
Effective <<NOTE: Effective date.>> on the date of enactment of this
Act, section 552a of title 5, United States Code, is amended by adding
at the end the following:
``(w) Applicability to Bureau of Consumer Financial Protection.--
Except as provided in the Consumer Financial Protection Act of 2010,
this section shall apply with respect to the Bureau of Consumer
Financial Protection.''.
SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION
PARITY ACT OF 1982.
(a) In General.--The Alternative Mortgage Transaction Parity Act of
1982 (12 U.S.C. 3801 et seq.) is amended--
(1) in section 803 (12 U.S.C. 3802(1)), by striking ``1974''
and all that follows through ``described and defined'' and
inserting the following: ``1974), in which the interest rate or
finance charge may be adjusted or renegotiated, described and
defined''; and
(2) in section 804 (12 U.S.C. 3803)--
(A) in subsection (a)--
(i) in each of paragraphs (1), (2), and (3),
by inserting after ``transactions made'' each
place that term appears ``on or before the
designated transfer date, as determined under
section 1062 of the Consumer Financial Protection
Act of 2010,'';
(ii) in paragraph (2), by striking ``and'' at
the end;
(iii) in paragraph (3), by striking the period
at the end and inserting ``; and''; and
(iv) by adding at the end the following new
paragraph:
``(4) with respect to transactions made after the designated
transfer date, only in accordance with regulations governing
alternative mortgage transactions, as issued by the Bureau
[[Page 124 STAT. 2081]]
of Consumer Financial Protection for federally chartered housing
creditors, in accordance with the rulemaking authority granted
to the Bureau of Consumer Financial Protection with regard to
federally chartered housing creditors under provisions of law
other than this section.'';
(B) by striking subsection (c) and inserting the
following:
``(c) Preemption of State Law.--An alternative mortgage transaction
may be made by a housing creditor in accordance with this section,
notwithstanding any State constitution, law, or regulation that
prohibits an alternative mortgage transaction. For purposes of this
subsection, a State constitution, law, or regulation that prohibits an
alternative mortgage transaction does not include any State
constitution, law, or regulation that regulates mortgage transactions
generally, including any restriction on prepayment penalties or late
charges.''; and
(C) by adding at the end the following:
``(d) Bureau Actions.--The Bureau of Consumer Financial Protection
shall--
``(1) <<NOTE: Review.>> review the regulations identified by
the Comptroller of the Currency and the National Credit Union
Administration, (as those rules exist on the designated transfer
date), as applicable under paragraphs (1) through (3) of
subsection (a);
``(2) <<NOTE: Determination.>> determine whether such
regulations are fair and not deceptive and otherwise meet the
objectives of the Consumer Financial Protection Act of 2010; and
``(3) promulgate <<NOTE: Regulations.>> regulations under
subsection (a)(4) after the designated transfer date.
``(e) Designated <<NOTE: Definition.>> Transfer Date.--As used in
this section, the term `designated transfer date' means the date
determined under section 1062 of the Consumer Financial Protection Act
of 2010.''.
(b) Effective <<NOTE: 12 USC 3802 note.>> Date.--This section and
the amendments made by this section shall become effective on the
designated transfer date.
(c) Rule <<NOTE: 12 USC 3802 note.>> of Construction.--The
amendments made by subsection (a) shall not affect any transaction
covered by the Alternative Mortgage Transaction Parity Act of l982 (12
U.S.C. 3801 et seq.) and entered into on or before the designated
transfer date.
SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.
The Electronic Fund Transfer Act <<NOTE: 15 USC 1693a et seq.>> (15
U.S.C. 1693 et seq.) is amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'', except in subsections (a) and (e) of
section 904 (as amended in paragraph (3) of this section) and in
918 (15 U.S.C. 1693o) (as so designated by the Credit Card Act
of 2009) and section 920 (as added by section 1076);
(2) in section 903 (15 U.S.C. 1693a)--
(A) by redesignating paragraphs (3) through (11) as
paragraphs (4) through (12), respectively; and
(B) by inserting after paragraph (3) the following:
``(4) <<NOTE: Definition.>> the term `Bureau' means the
Bureau of Consumer Financial Protection;'';
(3) in section 904 (15 U.S.C. 1693b)--
[[Page 124 STAT. 2082]]
(A) in subsection (a), by striking ``(a)
Prescription by Board.--The <<NOTE: Regulations.>> Board
shall prescribe regulations to carry out the purposes of
this title.'' and inserting the following:
``(a) Prescription <<NOTE: Regulations.>> by the Bureau and the
Board.--
``(1) In general.--Except as provided in paragraph (2), the
Bureau shall prescribe rules to carry out the purposes of this
title.
``(2) Authority of the board.--The Board shall have sole
authority to prescribe rules--
``(A) to carry out the purposes of this title with
respect to a person described in section 1029(a) of the
Consumer Financial Protection Act of 2010; and
``(B) to carry out the purposes of section 920.'';
and
(B) by adding at the end the following new
subsection:
``(e) Deference.--No provision of this title may be construed as
altering, limiting, or otherwise affecting the deference that a court
affords to--
``(1) the Bureau in making determinations regarding the
meaning or interpretation of any provision of this title for
which the Bureau has authority to prescribe regulations; or
``(2) the Board in making determinations regarding the
meaning or interpretation of section 920.''.
(4) in section 916(d) (15 U.S.C. 1693m) (as so designated by
the Credit CARD Act of 2009)--
(A) in the subsection heading, by striking ``of
Board or Approval of Duly Authorized Official or
Employee of Federal Reserve System'';
(B) by inserting ``Bureau or the'' before ``Board''
each place that term appears; and
(C) by inserting ``Bureau of Consumer Financial
Protection or the'' before ``Federal Reserve System'';
and
(5) in section 918 (15 U.S.C. 1693o) (as so designated by
the Credit CARD Act of 2009)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting
``Subject to subtitle B of the Consumer Financial
Protection Act of 2010, compliance'';
(ii) by striking paragraphs (1) and (2), and
inserting the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with
respect to--
``(A) national banks, Federal savings associations,
and Federal branches and Federal agencies of foreign
banks;
``(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of
foreign banks (other than Federal branches, Federal
agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by
foreign banks, and organizations operating under section
25 or 25A of the Federal Reserve Act; and
``(C) banks and State savings associations insured
by the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured
State branches of foreign banks;'';
[[Page 124 STAT. 2083]]
(iii) by redesignating paragraphs (3) through
(5) as paragraphs (2) through (4), respectively;
(iv) in paragraph (2) (as so redesignated), by
striking the period at the end and inserting a
semicolon;
(v) in paragraph (3) (as so redesignated), by
striking ``and'' at the end;
(vi) in paragraph (4) (as so redesignated), by
striking the period at the end and inserting
``and''; and
(vii) by adding at the end the following:
``(5) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title, except that the Bureau shall not have authority to
enforce the requirements of section 920 or any regulations
prescribed by the Board under section 920.'';
(B) in subsection (b), by inserting ``any of
paragraphs (1) through (4) of'' before ``subsection
(a)'' each place that term appears; and
(C) by striking subsection (c) and inserting the
following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under any of paragraphs (1) through (4) of subsection
(a), and subject to subtitle B of the Consumer Financial Protection Act
of 2010, the Federal Trade Commission shall be authorized to enforce
such requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that Act. All
of the functions and powers of the Federal Trade Commission under the
Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person subject to the
jurisdiction of the Federal Trade Commission with the requirements
imposed under this title, irrespective of whether that person is engaged
in commerce or meets any other jurisdictional tests under the Federal
Trade Commission Act.''.
SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears,
other than in section 703(f) (as added by this section) and
section 704(a)(4) (15 U.S.C. 1691c(a)(4)), and inserting
``Bureau'';
(2) in section 702 (15 U.S.C. 1691a), by striking subsection
(c) and inserting the following:
``(c) The <<NOTE: Definition.>> term `Bureau' means the Bureau of
Consumer Financial Protection.'';
(3) in section 703 (15 U.S.C. 1691b)--
(A) by striking the section heading and inserting
the following:
``SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.'';
(B) by striking ``(a) Regulations.--'';
(C) by striking subsection (b);
[[Page 124 STAT. 2084]]
(D) by redesignating paragraphs (1) through (5) as
subsections (a) through (e), respectively;
(E) in subsection (c), as so redesignated, by
striking ``paragraph (2)'' and inserting ``subsection
(b)''; and
(F) by adding at the end the following:
``(f) Board <<NOTE: Regulations.>> Authority.--Notwithstanding
subsection (a), the Board shall prescribe regulations to carry out the
purposes of this title with respect to a person described in section
1029(a) of the Consumer Financial Protection Act of 2010. These
regulations may contain but are not limited to such classifications,
differentiation, or other provision, and may provide for such
adjustments and exceptions for any class of transactions, as in the
judgment of the Board are necessary or proper to effectuate the purposes
of this title, to prevent circumvention or evasion thereof, or to
facilitate or substantiate compliance therewith.
``(g) Deference.--Notwithstanding any power granted to any Federal
agency under this title, the deference that a court affords to a Federal
agency with respect to a determination made by such agency relating to
the meaning or interpretation of any provision of this title that is
subject to the jurisdiction of such agency shall be applied as if that
agency were the only agency authorized to apply, enforce, interpret, or
administer the provisions of this title'';
(4) in section 704 (15 U.S.C. 1691c)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting
``Subject to subtitle B of the Consumer Protection
Financial Protection Act of 2010'';
(ii) by striking paragraphs (1) and (2) and
inserting the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with
respect to--
``(A) national banks, Federal savings associations,
and Federal branches and Federal agencies of foreign
banks;
``(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of
foreign banks (other than Federal branches, Federal
agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by
foreign banks, and organizations operating under section
25 or 25A of the Federal Reserve Act; and
``(C) banks and State savings associations insured
by the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured
State branches of foreign banks;'';
(iii) by redesignating paragraphs (3) through
(9) as paragraphs (2) through (8), respectively;
(iv) in paragraph (7) (as so redesignated), by
striking ``and'' at the end;
(v) in paragraph (8) (as so redesignated), by
striking the period at the end, and inserting ``;
and''; and
(vi) by adding at the end the following:
[[Page 124 STAT. 2085]]
``(9) Subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.'';
(B) by striking subsection (c) and inserting the
following:
``(c) Overall Enforcement Authority of Federal Trade Commission.--
Except to the extent that enforcement of the requirements imposed under
this title is specifically committed to some other Government agency
under any of paragraphs (1) through (8) of subsection (a), and subject
to subtitle B of the Consumer Financial Protection Act of 2010, the
Federal Trade Commission shall be authorized to enforce such
requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), a violation of any requirement
imposed under this subchapter shall be deemed a violation of a
requirement imposed under that Act. All of the functions and powers of
the Federal Trade Commission under the Federal Trade Commission Act are
available to the Federal Trade Commission to enforce compliance by any
person with the requirements imposed under this title, irrespective of
whether that person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission Act, including
the power to enforce any rule prescribed by the Bureau under this title
in the same manner as if the violation had been a violation of a Federal
Trade Commission trade regulation rule.''; and
(C) in subsection (d), by striking ``Board'' and
inserting ``Bureau'';
(5) in section 706(e) (15 U.S.C. 1691e(e))--
(A) in the subsection heading--
(i) by striking ``Board'' each place that term
appears and inserting ``Bureau''; and
(ii) by striking ``Federal Reserve System''
and inserting ``Bureau of Consumer Financial
Protection''; and
(B) by striking ``Federal Reserve System'' and
inserting ``Bureau of Consumer Financial Protection'';
(6) in section 706(g) (15 U.S.C. 1691e(g)), by striking
``(3)'' and inserting ``(9)''; and
(7) in section 706(f) (15 U.S.C. 1691e(f)), by striking
``two years from'' each place that term appears and inserting
``5 years after''.
SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.
(a) Amendment to Section 603.--Section 603(d)(1) of the Expedited
Funds Availability Act (12 U.S.C. 4002) is amended by inserting after
``Board'' the following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''.
(b) Amendments to Section 604.--Section 604 of the Expedited Funds
Availability Act (12 U.S.C. 4003) is amended--
(1) by inserting after ``Board'' each place that term
appears, other than in subsection (f), the following: ``,
jointly with the Director of the Bureau of Consumer Financial
Protection,''; and
[[Page 124 STAT. 2086]]
(2) in subsection (f), by striking ``Board.'' each place
that term appears and inserting the following: ``Board, jointly
with the Director of the Bureau of Consumer Financial
Protection.''.
(c) Amendments to Section 605.--Section 605 of the Expedited Funds
Availability Act (12 U.S.C. 4004) is amended--
(1) by inserting after ``Board'' each place that term
appears, other than in the heading for section 605(f)(1), the
following: ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) in subsection (f)(1), in the paragraph heading, by
inserting ``and bureau'' after ``board''.
(d) Amendments to Section 609.--Section 609 of the Expedited Funds
Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ``Board'' the
following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) by striking subsection (e) and inserting the following:
``(e) Consultations.--In prescribing regulations under subsections
(a) and (b), the Board and the Director of the Bureau of Consumer
Financial Protection, in the case of subsection (a), and the Board, in
the case of subsection (b), shall consult with the Comptroller of the
Currency, the Board of Directors of the Federal Deposit Insurance
Corporation, and the National Credit Union Administration Board.''.
(e) Expedited Funds Availability Improvements.--Section 603 of the
Expedited Funds Availability Act (12 U.S.C. 4002) is amended--
(1) in subsection (a)(2)(D), by striking ``$100'' and
inserting ``$200''; and
(2) in subsection (b)(3)(C), in the subparagraph heading, by
striking ``$100'' and inserting ``$200''; and
(3) in subsection (c)(1)(B)(iii), in the clause heading, by
striking ``$100'' and inserting ``$200''.
(f) Regular Adjustments for Inflation.--Section 607 of the Expedited
Funds Availability Act (12 U.S.C. 4006) is amended by adding at the end
the following:
``(f) Adjustments to Dollar Amounts
for <<NOTE: Deadline.>> Inflation.--The dollar amounts under this title
shall be adjusted every 5 years after December 31, 2011, by the annual
percentage increase in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, as published by the Bureau of Labor Statistics,
rounded to the nearest multiple of $25.''.
SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.
The Fair Credit Billing Act <<NOTE: 15 USC 1666, 1666c, 1666j.>> (15
U.S.C. 1666-1666j) is amended by striking ``Board'' each place that term
appears, other than in section 105(i) (as added by this subtitle) and
inserting ``Bureau''.
SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND THE
FAIR AND ACCURATE CREDIT TRANSACTIONS
ACT OF 2003.
(a) Fair Credit Reporting Act.--The Fair Credit Reporting Act (15
U.S.C. 1681 et seq.) is amended--
(1) in section 603 (15 U.S.C. 1681a)--
(A) by redesignating subsections (w) and (x) as
subsections (x) and (y), respectively; and
(B) by inserting after subsection (v) the following:
[[Page 124 STAT. 2087]]
``(w) <<NOTE: Definition.>> The term `Bureau' means the Bureau of
Consumer Financial Protection.''; and
(2) except as otherwise specifically provided in this
subsection--
(A) by <<NOTE: 15 USC 1681a et seq.>> striking
``Federal Trade Commission'' each place that term
appears and inserting ``Bureau'';
(B) by <<NOTE: 15 USC 1681s.>> striking ``FTC'' each
place that term appears and inserting ``Bureau'';
(C) by <<NOTE: 15 USC 1681a et seq.>> striking ``the
Commission'' each place that term appears, other than
sections 615(e) (15 U.S.C. 1681m(e)) and 628(a)(1) (15
U.S.C. 1681w(a)(1)), and inserting ``the Bureau''; and
(D) <<NOTE: 15 USC 1681c, 1681s-2.>> by striking
``The Federal banking agencies, the National Credit
Union Administration, and the Commission shall jointly''
each place that term appears, other than section
615(e)(1) (15 U.S.C. 1681m(e)) and section 628(a)(1) (15
U.S.C. 1681w(a)(1)), and inserting ``The Bureau shall'';
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by
striking ``Board of Governors of the Federal Reserve System''
and inserting ``Bureau'';
(4) in section 604(g) (15 U.S.C. 1681b(g))--
(A) in paragraph (3), by striking subparagraph (C)
and inserting the following:
``(C) as otherwise determined to be necessary and
appropriate, by regulation or order, by the Bureau or
the applicable State insurance authority (with respect
to any person engaged in providing insurance or
annuities).''; and
(B) by striking paragraph (5) and inserting the
following:
``(5) Regulations and effective date for paragraph (2).--
``(A) Regulations required.--The Bureau may, after
notice and opportunity for comment, prescribe
regulations that permit transactions under paragraph (2)
that are determined to be necessary and appropriate to
protect legitimate operational, transactional, risk,
consumer, and other needs (and which shall include
permitting actions necessary for administrative
verification purposes), consistent with the intent of
paragraph (2) to restrict the use of medical information
for inappropriate purposes.'';
(5) in section 605(h)(2)(A) (15 U.S.C. 1681c(h)(2)(A)), by
striking ``with respect to the entities that are subject to
their respective enforcement authority under section 621'' and
inserting ``, in consultation with the Federal banking agencies,
the National Credit Union Administration, and the Federal Trade
Commission,''.
(6) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking
paragraph (2) and inserting the following:
``(2) Exclusion.--Complaints received or obtained by the
Bureau pursuant to its investigative authority under the
Consumer Financial Protection Act of 2010 shall not be subject
to paragraph (1).'';
(7) in section 615(d)(2)(B) (15 U.S.C. 1681m(d)(2)(B)), by
striking ``the Federal banking agencies'' and inserting ``the
Federal Trade Commission, the Federal banking agencies,'';
(8) in section 615(e)(1) (15 U.S.C. 1681m(e)(1)), by
striking ``and the Commission'' and inserting ``the Federal
Trade
[[Page 124 STAT. 2088]]
Commission, the Commodity Futures Trading Commission, and the
Securities and Exchange Commission'';
(9) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by
striking subparagraph (A) and inserting the following:
``(A) Rules required.--The Bureau shall prescribe
rules to carry out this subsection.'';
(10) in section 621 (15 U.S.C. 1681s)--
(A) by striking subsection (a) and inserting the
following:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--The Federal Trade Commission shall be
authorized to enforce compliance with the requirements imposed
by this title under the Federal Trade Commission Act (15 U.S.C.
41 et seq.), with respect to consumer reporting agencies and all
other persons subject thereto, except to the extent that
enforcement of the requirements imposed under this title is
specifically committed to some other Government agency under any
of subparagraphs (A) through (G) of subsection (b)(1), and
subject to subtitle B of the Consumer Financial Protection Act
of 2010, subsection (b). For the purpose of the exercise by the
Federal Trade Commission of its functions and powers under the
Federal Trade Commission Act, a violation of any requirement or
prohibition imposed under this title shall constitute an unfair
or deceptive act or practice in commerce, in violation of
section 5(a) of the Federal Trade Commission Act (15 U.S.C.
45(a)), and shall be subject to enforcement by the Federal Trade
Commission under section 5(b) of that Act with respect to any
consumer reporting agency or person that is subject to
enforcement by the Federal Trade Commission pursuant to this
subsection, irrespective of whether that person is engaged in
commerce or meets any other jurisdictional tests under the
Federal Trade Commission Act. The Federal Trade Commission shall
have such procedural, investigative, and enforcement powers,
including the power to issue procedural rules in enforcing
compliance with the requirements imposed under this title and to
require the filing of reports, the production of documents, and
the appearance of witnesses, as though the applicable terms and
conditions of the Federal Trade Commission Act were part of this
title. Any person violating any of the provisions of this title
shall be subject to the penalties and entitled to the privileges
and immunities provided in the Federal Trade Commission Act as
though the applicable terms and provisions of such Act are part
of this title.
``(2) Penalties.--
``(A) Knowing violations.--Except as otherwise
provided by subtitle B of the Consumer Financial
Protection Act of 2010, in the event of a knowing
violation, which constitutes a pattern or practice of
violations of this title, the Federal Trade Commission
may commence a civil action to recover a civil penalty
in a district court of the United States against any
person that violates this title. In such action, such
person shall be liable for a civil penalty of not more
than $2,500 per violation.
``(B) Determining penalty amount.--In determining
the amount of a civil penalty under subparagraph (A),
the court shall take into account the degree of
culpability, any history of such prior conduct, ability
to pay, effect
[[Page 124 STAT. 2089]]
on ability to continue to do business, and such other
matters as justice may require.
``(C) Limitation.--Notwithstanding paragraph (2), a
court may not impose any civil penalty on a person for a
violation of section 623(a)(1), unless the person has
been enjoined from committing the violation, or ordered
not to commit the violation, in an action or proceeding
brought by or on behalf of the Federal Trade Commission,
and has violated the injunction or order, and the court
may not impose any civil penalty for any violation
occurring before the date of the violation of the
injunction or order.'';
(B) by striking subsection (b) and inserting the
following:
``(b) Enforcement by Other Agencies.--
``(1) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the
requirements imposed under this title with respect to consumer
reporting agencies, persons who use consumer reports from such
agencies, persons who furnish information to such agencies, and
users of information that are subject to section 615(d) shall be
enforced under--
``(A) section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818), by the appropriate Federal banking
agency, as defined in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(i) any national bank or State savings
association, and any Federal branch or Federal
agency of a foreign bank;
``(ii) any member bank of the Federal Reserve
System (other than a national bank), a branch or
agency of a foreign bank (other than a Federal
branch, Federal agency, or insured State branch of
a foreign bank), a commercial lending company
owned or controlled by a foreign bank, and any
organization operating under section 25 or 25A of
the Federal Reserve Act; and
``(iii) any bank or Federal savings
association insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System) and any insured State
branch of a foreign bank;
``(B) the Federal Credit Union Act (12 U.S.C. 1751
et seq.), by the Administrator of the National Credit
Union Administration with respect to any Federal credit
union;
``(C) subtitle IV of title 49, United States Code,
by the Secretary of Transportation, with respect to all
carriers subject to the jurisdiction of the Surface
Transportation Board;
``(D) the Federal Aviation Act of 1958 (49 U.S.C.
App. 1301 et seq.), by the Secretary of Transportation,
with respect to any air carrier or foreign air carrier
subject to that Act;
``(E) the Packers and Stockyards Act, 1921 (7 U.S.C.
181 et seq.) (except as provided in section 406 of that
Act), by the Secretary of Agriculture, with respect to
any activities subject to that Act;
[[Page 124 STAT. 2090]]
``(F) the Commodity Exchange Act, with respect to a
person subject to the jurisdiction of the Commodity
Futures Trading Commission;
``(G) the Federal securities laws, and any other
laws that are subject to the jurisdiction of the
Securities and Exchange Commission, with respect to a
person that is subject to the jurisdiction of the
Securities and Exchange Commission; and
``(H) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this title.
``(2) Incorporated definitions.--The terms used in paragraph
(1) that are not defined in this title or otherwise defined in
section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) have the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).'';
(C) in subsection (c)(2)--
(i) by inserting ``and the Federal Trade
Commission'' before ``or the appropriate''; and
(ii) by inserting ``and the Federal Trade
Commission'' before ``or appropriate'' each place
that term appears;
(D) in subsection (c)(4), by inserting before ``or
the appropriate'' each place that term appears the
following: ``, the Federal Trade Commission,'';
(E) by striking subsection (e) and inserting the
following:
``(e) Regulatory <<NOTE: Applicability.>> Authority.--
``(1) In general.--The Bureau shall prescribe such
regulations as are necessary to carry out the purposes of this
title, except with respect to sections 615(e) and 628. The
Bureau may prescribe regulations as may be necessary or
appropriate to administer and carry out the purposes and
objectives of this title, and to prevent evasions thereof or to
facilitate compliance therewith. Except as provided in section
1029(a) of the Consumer Financial Protection Act of 2010, the
regulations prescribed by the Bureau under this title shall
apply to any person that is subject to this title,
notwithstanding the enforcement authorities granted to other
agencies under this section.
``(2) Deference.--Notwithstanding any power granted to any
Federal agency under this title, the deference that a court
affords to a Federal agency with respect to a determination made
by such agency relating to the meaning or interpretation of any
provision of this title that is subject to the jurisdiction of
such agency shall be applied as if that agency were the only
agency authorized to apply, enforce, interpret, or administer
the provisions of this title The regulations prescribed by the
Bureau under this title shall apply to any person that is
subject to this title, notwithstanding the enforcement
authorities granted to other agencies under this section.''; and
(F) in subsection (f)(2), by striking ``the Federal
banking agencies'' and insert ``the Federal Trade
Commission, the Federal banking agencies,'';
(11) in section 623 (15 U.S.C. 1681s-2)--
(A) in subsection (a)(7), by striking subparagraph
(D) and inserting the following:
``(D) Model disclosure.--
[[Page 124 STAT. 2091]]
``(i) Duty of bureau.--The Bureau shall
prescribe a brief model disclosure that a
financial institution may use to comply with
subparagraph (A), which shall not exceed 30 words.
``(ii) Use of model not required.--No
provision of this paragraph may be construed to
require a financial institution to use any such
model form prescribed by the Bureau.
``(iii) Compliance using model.--A financial
institution shall be deemed to be in compliance
with subparagraph (A) if the financial institution
uses any model form prescribed by the Bureau under
this subparagraph, or the financial institution
uses any such model form and rearranges its
format.'';
(B) in subsection (a)(8), by inserting ``, in
consultation with the Federal Trade Commission, the
Federal banking agencies, and the National Credit Union
Administration,'' before ``shall jointly''; and
(C) by striking subsection (e) and inserting the
following:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Bureau shall, with respect to persons
or entities that are subject to the enforcement authority of the
Bureau under section 621--
``(A) establish and maintain guidelines for use by
each person that furnishes information to a consumer
reporting agency regarding the accuracy and integrity of
the information relating to consumers that such entities
furnish to consumer reporting agencies, and update such
guidelines as often as necessary; and
``(B) prescribe regulations requiring each person
that furnishes information to a consumer reporting
agency to establish reasonable policies and procedures
for implementing the guidelines established pursuant to
subparagraph (A).
``(2) Criteria.--In developing the guidelines required by
paragraph (1)(A), the Bureau shall--
``(A) identify patterns, practices, and specific
forms of activity that can compromise the accuracy and
integrity of information furnished to consumer reporting
agencies;
``(B) <<NOTE: Review.>> review the methods
(including technological means) used to furnish
information relating to consumers to consumer reporting
agencies;
``(C) <<NOTE: Determination.>> determine whether
persons that furnish information to consumer reporting
agencies maintain and enforce policies to ensure the
accuracy and integrity of information furnished to
consumer reporting agencies; and
``(D) <<NOTE: Examination.>> examine the policies
and processes that persons that furnish information to
consumer reporting agencies employ to conduct
reinvestigations and correct inaccurate information
relating to consumers that has been furnished to
consumer reporting agencies.'';
(12) in section 628(a)(1) (15 U.S.C. 1681w(a)(1)), by
striking ``Not later than'' and all that follows through
``Exchange Commission,'' and inserting ``The Federal Trade
Commission, the Securities and Exchange Commission, the
Commodity Futures Trading Commission, the Federal banking
agencies,
[[Page 124 STAT. 2092]]
and the National Credit Union Administration, with respect to
the entities that are subject to their respective enforcement
authority under section 621,''; and
(13) in section 628(a)(3) (15 U.S.C. 1681w(a)(3)), by
striking ``the Federal banking agencies, the National Credit
Union Administration, the Commission, and the Securities and
Exchange Commission'' and inserting ``the agencies identified in
paragraph (1)''.
(b) Fair and Accurate Credit Transactions Act of 2003.--The Fair and
Accurate Credit Transactions Act of 2003 (Public Law 108-159) is
amended--
(1) in section 112(b) (15 U.S.C. 1681c-1 note), by striking
``Commission'' and inserting ``Bureau'';
(2) in section 211(d) (15 U.S.C. 1681j note), by striking
``Commission'' each place that term appears and inserting
``Bureau'';
(3) in section 214(b) (15 U.S.C. 1681s-3 note), by striking
paragraph (1) and inserting the following:
``(1) In general.--Regulations <<NOTE: Regulations.>> to
carry out section 624 of the Fair Credit Reporting Act (15
U.S.C. 1681s-3), shall be prescribed, as described in paragraph
(2), by--
``(A) the Commodity Futures Trading Commission, with
respect to entities subject to its enforcement
authorities;
``(B) the Securities and Exchange Commission, with
respect to entities subject to its enforcement
authorities; and
``(C) the Bureau, with respect to other entities
subject to this Act.''; and
(4) in section 214(e)(1) (15 U.S.C. 1681s-3 note), by
striking ``Commission'' and inserting ``Bureau''.
SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is
amended--
(1) by <<NOTE: 15 USC 1692k, 1692m, 1692o.>> striking
``Commission'' each place that term appears and inserting
``Bureau'';
(2) in section 803 (15 U.S.C. 1692a)--
(A) by striking paragraph (1) and inserting the
following:
``(1) The <<NOTE: Definition.>> term `Bureau' means the
Bureau of Consumer Financial Protection.'';
(3) in section 814 (15 U.S.C. 1692l)--
(A) by striking subsection (a) and inserting the
following:
``(a) Federal <<NOTE: Compliance.>> Trade Commission.--The Federal
Trade Commission shall be authorized to enforce compliance with this
title, except to the extent that enforcement of the requirements imposed
under this title is specifically committed to another Government agency
under any of paragraphs (1) through (5) of subsection (b), subject to
subtitle B of the Consumer Financial Protection Act of 2010. For purpose
of the exercise by the Federal Trade Commission of its functions and
powers under the Federal Trade Commission Act (15 U.S.C. 41 et seq.), a
violation of this title shall be deemed an unfair or deceptive act or
practice in violation of that Act. All of the functions and powers of
the Federal Trade Commission
[[Page 124 STAT. 2093]]
under the Federal Trade Commission Act are available to the Federal
Trade Commission to enforce compliance by any person with this title,
irrespective of whether that person is engaged in commerce or meets any
other jurisdictional tests under the Federal Trade Commission Act,
including the power to enforce the provisions of this title, in the same
manner as if the violation had been a violation of a Federal Trade
Commission trade regulation rule.''; and
(B) in subsection (b)--
(i) by striking ``Compliance'' and inserting
``Subject to subtitle B of the Consumer Financial
Protection Act of 2010, compliance'';
(ii) by striking paragraphs (1) and (2) and
inserting the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with
respect to--
``(A) national banks, Federal savings associations,
and Federal branches and Federal agencies of foreign
banks;
``(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of
foreign banks (other than Federal branches, Federal
agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by
foreign banks, and organizations operating under section
25 or 25A of the Federal Reserve Act; and
``(C) banks and State savings associations insured
by the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured
State branches of foreign banks;'';
(iii) by redesignating paragraphs (3) through
(6), as paragraphs (2) through (5), respectively;
(iv) in paragraph (4) (as so redesignated), by
striking ``and'' at the end;
(v) in paragraph (5) (as so redesignated), by
striking the period at the end and inserting ``;
and''; and
(vi) by inserting before the undesignated
matter at the end the following:
``(6) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.''.
(4) in subsection (d), by striking ``Neither the
Commission'' and all that follows through the end of the
subsection and inserting the following: ``Except as provided in
section 1029(a) of the Consumer Financial Protection Act of
2010, the Bureau may prescribe rules with respect to the
collection of debts by debt collectors, as defined in this
title.''.
SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended--
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the
end the following:
[[Page 124 STAT. 2094]]
``(6) Referral to bureau of consumer financial protection.--
Subject to subtitle B of the Consumer Financial Protection Act
of 2010, each appropriate Federal banking agency shall make a
referral to the Bureau of Consumer Financial Protection when the
Federal banking agency has a reasonable belief that a violation
of an enumerated consumer law, as defined in the Consumer
Financial Protection Act of 2010, has been committed by any
insured depository institution or institution-affiliated party
within the jurisdiction of that appropriate Federal banking
agency.''; and
(2) in section 43 (12 U.S.C. 1831t)--
(A) in subsection (c), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(B) in subsection (d), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(C) in subsection (e)--
(i) in paragraph (2), by striking ``Federal
Trade Commission'' and inserting ``Bureau''; and
(ii) by adding at the end the following new
paragraph:
``(5) Bureau.--The <<NOTE: Definition.>> term `Bureau' means
the Bureau of Consumer Financial Protection.''; and
(D) in subsection (f)--
(i) by striking paragraph (1) and inserting
the following:
``(1) Limited enforcement authority.--Compliance with the
requirements of subsections (b), (c), and (e), and any
regulation prescribed or order issued under such subsection,
shall be enforced under the Consumer Financial Protection Act of
2010, by the Bureau, subject to subtitle B of the Consumer
Financial Protection Act of 2010, and under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) by the Federal Trade
Commission.''; and
(ii) in paragraph (2), by striking
subparagraph (C) and inserting the following:
``(C) Limitation on state action while federal
action pending.--If the Bureau or Federal Trade
Commission has instituted an enforcement action for a
violation of this section, no appropriate State
supervisory agency may, during the pendency of such
action, bring an action under this section against any
defendant named in the complaint of the Bureau or
Federal Trade Commission for any violation of this
section that is alleged in that complaint.''.
SEC. 1091. AMENDMENT TO FEDERAL FINANCIAL INSTITUTIONS EXAMINATION
COUNCIL ACT OF 1978.
Section 1004(a)(4) of the Federal Financial Institutions Examination
Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by striking
``Director, Office of Thrift Supervision'' and inserting ``Director of
the Consumer Financial Protection Bureau''.
SEC. 1092. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.
Section 18(f) of the Federal Trade Commission Act (15 U.S.C. 57a(f))
is amended--
(1) by striking the subsection heading and inserting the
following:
[[Page 124 STAT. 2095]]
``(f) Definitions of Banks, Savings and Loan Institutions, and
Federal Credit Unions.--''.
(2) by striking paragraph (1) and inserting the following:
``(1) [Repealed.]'';
(3) by striking paragraphs (5) through (7);
(4) in paragraph (2)--
(A) by striking ``(2) Enforcement'' and all that
follows through ``in the case of'' and inserting the
following:
``(2) Definition.--For purposes of this Act, the term `bank'
means'';
(B) in subparagraph (A), by striking ``, by the
division'' and all that follows through ``Currency'';
(C) in subparagraph (B)--
(i) by striking ``, by the division'' and all
that follows through ``System''; and
(ii) by striking ``25(a)'' and inserting
``25A''; and
(D) in subparagraph (C)--
(i) by striking ``(other'' and inserting
``(other than''; and
(ii) by striking ``, by the division'' and all
that follows through ``Corporation'';
(5) in paragraph (3), by striking ``Compliance'' and all
that follows through ``as defined in'' and inserting the
following: ``For purposes of this Act, the term ``savings and
loan institution'' has the same meaning as in''; and
(6) in paragraph (4), by striking ``Compliance'' and all
that follows through ``credit unions under'' and inserting the
following: ``For purposes of this Act, the term ``Federal credit
union'' has the same meaning as in''.
SEC. 1093. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.
Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) is
amended--
(1) in section 501(b) (15 U.S.C. 6801(b)), by inserting ``,
other than the Bureau of Consumer Financial Protection,'' after
``505(a)'';
(2) in section 502(e)(5) (15 U.S.C. 6802(e)(5)), by
inserting ``the Bureau of Consumer Financial Protection'' after
``(including'';
(3) in section 504(a) (15 U.S.C. 6804(a))--
(A) by striking paragraphs (1) and (2) and inserting
the following:
``(1) Rulemaking.--
``(A) In general.--Except as provided in
subparagraph (C), the Bureau of Consumer Financial
Protection and the Securities and Exchange Commission
shall have authority to prescribe such regulations as
may be necessary to carry out the purposes of this
subtitle with respect to financial institutions and
other persons subject to their respective jurisdiction
under section 505 (and notwithstanding subtitle B of the
Consumer Financial Protection Act of 2010), except that
the Bureau of Consumer Financial Protection shall not
have authority to prescribe regulations with respect to
the standards under section 501.
``(B) CFTC.--The Commodity Futures Trading
Commission shall have authority to prescribe such
regulations as may be necessary to carry out the
purposes of
[[Page 124 STAT. 2096]]
this subtitle with respect to financial institutions and
other persons subject to the jurisdiction of the
Commodity Futures Trading Commission under section 5g of
the Commodity Exchange Act.
``(C) Federal trade commission authority.--
Notwithstanding the authority of the Bureau of Consumer
Financial Protection under subparagraph (A), the Federal
Trade Commission shall have authority to prescribe such
regulations as may be necessary to carry out the
purposes of this subtitle with respect to any financial
institution that is a person described in section
1029(a) of the Consumer Financial Protection Act of
2010.
``(D) Rule of construction.--Nothing in this
paragraph shall be construed to alter, affect, or
otherwise limit the authority of a State insurance
authority to adopt regulations to carry out this
subtitle.
``(2) Coordination, consistency, and comparability.--
Each <<NOTE: Consultation.>> of the agencies authorized under
paragraph (1) to prescribe regulations shall consult and
coordinate with the other such agencies and, as appropriate, and
with representatives of State insurance authorities designated
by the National Association of Insurance Commissioners, for the
purpose of assuring, to the extent possible, that the
regulations prescribed by each such agency are consistent and
comparable with the regulations prescribed by the other such
agencies.''; and
(B) in <<NOTE: Deadline.>> paragraph (3), by
striking ``, and shall be issued in final form not later
than 6 months after the date of enactment of this Act'';
(4) in section 505(a) (15 U.S.C. 6805(a))--
(A) by striking ``This subtitle'' and all that
follows through ``as follows:'' and inserting ``Subject
to subtitle B of the Consumer Financial Protection Act
of 2010, this subtitle and the regulations prescribed
thereunder shall be enforced by the Bureau of Consumer
Financial Protection, the Federal functional regulators,
the State insurance authorities, and the Federal Trade
Commission with respect to financial institutions and
other persons subject to their jurisdiction under
applicable law, as follows:'';
(B) in paragraph (1)--
(i) in the matter preceding subparagraph (A),
by inserting ``by the appropriate Federal banking
agency, as defined in section 3(q) of the Federal
Deposit Insurance Act,'' after ``Act,'';
(ii) in subparagraph (A), by striking ``, by
the Office of the Comptroller of the Currency'';
(iii) in subparagraph (B), by striking ``, by
the Board of Governors of the Federal Reserve
System'';
(iv) in subparagraph (C), by striking ``, by
the Board of Directors of the Federal Deposit
Insurance Corporation''; and
(v) in subparagraph (D), by striking ``, by
the Director of the Office of Thrift
Supervision''; and
(C) by adding at the end the following:
``(8) Under subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau of Consumer Financial Protection, in
the case of any financial institution and other covered person
or service provider that is subject to the jurisdiction of the
[[Page 124 STAT. 2097]]
Bureau and any person subject to this subtitle, but not with
respect to the standards under section 501.'';
(5) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by
inserting ``, other than the Bureau of Consumer Financial
Protection,'' after ``subsection (a)''; and
(6) in section 507(b) (15 U.S.C. 6807), by striking
``Federal Trade Commission'' and inserting ``Bureau of Consumer
Financial Protection''.
SEC. 1094. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 1975.
The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.) is
amended--
(1) by <<NOTE: 12 USC 2803 et seq.>> striking ``Board'' each
place that term appears, other than in sections 303, 304(h),
305(b) (as amended by this section), and 307(a) (as amended by
this section) and inserting ``Bureau''.
(2) in section 303 (12 U.S.C. 2802)--
(A) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively; and
(B) by inserting before paragraph (2) the following:
``(1) the <<NOTE: Definition.>> term `Bureau' means the
Bureau of Consumer Financial Protection;'';
(3) in section 304 (12 U.S.C. 2803)--
(A) in subsection (b)--
(i) in paragraph (4), by inserting ``age,''
before ``and gender'';
(ii) in paragraph (3), by striking ``and'' at
the end;
(iii) in paragraph (4), by striking the period
at the end and inserting a semicolon; and
(iv) by adding at the end the following:
``(5) the number and dollar amount of mortgage loans grouped
according to measurements of--
``(A) the total points and fees payable at
origination in connection with the mortgage as
determined by the Bureau, taking into account 15 U.S.C.
1602(aa)(4);
``(B) the difference between the annual percentage
rate associated with the loan and a benchmark rate or
rates for all loans;
``(C) the term in months of any prepayment penalty
or other fee or charge payable on repayment of some
portion of principal or the entire principal in advance
of scheduled payments; and
``(D) such other information as the Bureau may
require; and
``(6) the number and dollar amount of mortgage loans and
completed applications grouped according to measurements of--
``(A) the value of the real property pledged or
proposed to be pledged as collateral;
``(B) the actual or proposed term in months of any
introductory period after which the rate of interest may
change;
``(C) the presence of contractual terms or proposed
contractual terms that would allow the mortgagor or
applicant to make payments other than fully amortizing
payments during any portion of the loan term;
[[Page 124 STAT. 2098]]
``(D) the actual or proposed term in months of the
mortgage loan;
``(E) the channel through which application was
made, including retail, broker, and other relevant
categories;
``(F) as the Bureau may determine to be appropriate,
a unique identifier that identifies the loan originator
as set forth in section 1503 of the S.A.F.E. Mortgage
Licensing Act of 2008;
``(G) as the Bureau may determine to be appropriate,
a universal loan identifier;
``(H) as the Bureau may determine to be appropriate,
the parcel number that corresponds to the real property
pledged or proposed to be pledged as collateral;
``(I) the credit score of mortgage applicants and
mortgagors, in such form as the Bureau may prescribe;
and
``(J) such other information as the Bureau may
require.'';
(B) by striking subsection (h) and inserting the
following:
``(h) Submission to Agencies.--
``(1) In <<NOTE: Regulations.>> general.--The data required
to be disclosed under subsection (b) shall be submitted to the
Bureau or to the appropriate agency for the institution
reporting under this title, in accordance with rules prescribed
by <<NOTE: Notice. Public comment.>> the Bureau. Notwithstanding
the requirement of subsection (a)(2)(A) for disclosure by census
tract, the Bureau, in consultation with other appropriate
agencies described in paragraph (2) and, after notice and
comment, shall develop regulations that--
``(A) prescribe the format for such disclosures, the
method for submission of the data to the appropriate
agency, and the procedures for disclosing the
information to the public;
``(B) require the collection of data required to be
disclosed under subsection (b) with respect to loans
sold by each institution reporting under this title;
``(C) require disclosure of the class of the
purchaser of such loans;
``(D) permit any reporting institution to submit in
writing to the Bureau or to the appropriate agency such
additional data or explanations as it deems relevant to
the decision to originate or purchase mortgage loans;
and
``(E) modify or require modification of itemized
information, for the purpose of protecting the privacy
interests of the mortgage applicants or mortgagors, that
is or will be available to the public.
``(2) Other appropriate agencies.--The appropriate agencies
described in this paragraph are--
``(A) the appropriate Federal banking agencies, as
defined in section 3(q) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)), with respect to the entities
that are subject to the jurisdiction of each such
agency, respectively;
``(B) the Federal Deposit Insurance Corporation for
banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System), mutual savings banks, insured State branches of
foreign banks, and any other depository institution
described in
[[Page 124 STAT. 2099]]
section 303(2)(A) which is not otherwise referred to in
this paragraph;
``(C) the National Credit Union Administration Board
with respect to credit unions; and
``(D) the Secretary of Housing and Urban Development
with respect to other lending institutions not regulated
by the agencies referred to in subparagraph (A) or (B).
``(3) Rules for modifications under paragraph (1).--
``(A) Application.--A modification under paragraph
(1)(E) shall apply to information concerning--
``(i) credit score data described in
subsection (b)(6)(I), in a manner that is
consistent with the purpose described in paragraph
(1)(E); and
``(ii) age or any other category of data
described in paragraph (5) or (6) of subsection
(b), as the Bureau determines to be necessary to
satisfy the purpose described in paragraph (1)(E),
and in a manner consistent with that purpose.
``(B) Standards.--The Bureau shall prescribe
standards for any modification under paragraph (1)(E) to
effectuate the purposes of this title, in light of the
privacy interests of mortgage applicants or mortgagors.
Where necessary to protect the privacy interests of
mortgage applicants or mortgagors, the Bureau shall
provide for the disclosure of information described in
subparagraph (A) in aggregate or other reasonably
modified form, in order to effectuate the purposes of
this title.'';
(C) in subsection (i), by striking ``subsection
(b)(4)'' and inserting ``subsections (b)(4), (b)(5), and
(b)(6)'';
(D) in subsection (j)--
(i) by striking paragraph (3) and inserting
the following:
``(3) Change of form not required.--A depository institution
meets the disclosure requirement of paragraph (1) if the
institution provides the information required under such
paragraph in such formats as the Bureau may require''; and
(ii) in paragraph (2)(A), by striking ``in the
format in which such information is maintained by
the institution'' and inserting ``in such formats
as the Bureau may require'';
(E) in subsection (m), by striking paragraph (2) and
inserting the following:
``(2) Form of information.--In complying with paragraph (1),
a depository institution shall provide the person requesting the
information with a copy of the information requested in such
formats as the Bureau may require.''; and
(F) by adding at the end the following:
``(n) Timing of Certain Disclosures.--
The <<NOTE: Regulations.>> data required to be disclosed under
subsection (b) shall be submitted to the Bureau or to the appropriate
agency for any institution reporting under this title, in accordance
with regulations prescribed by the Bureau. Institutions shall not be
required to report new data under paragraph (5) or (6) of subsection (b)
before the first January 1 that occurs after the end of the 9-month
period beginning on the date on which regulations are issued by the
Bureau in final form with respect to such disclosures.'';
(4) in section 305 (12 U.S.C. 2804)--
[[Page 124 STAT. 2100]]
(A) by striking subsection (b) and inserting the
following:
``(b) Powers of Certain Other Agencies.--
``(1) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the
requirements of this title shall be enforced--
``(A) under section 8 of the Federal Deposit
Insurance Act, the appropriate Federal banking agency,
as defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to--
``(i) any national bank or Federal savings
association, and any Federal branch or Federal
agency of a foreign bank;
``(ii) any member bank of the Federal Reserve
System (other than a national bank), branch or
agency of a foreign bank (other than a Federal
branch, Federal agency, and insured State branch
of a foreign bank), commercial lending company
owned or controlled by a foreign bank, and any
organization operating under section 25 or 25A of
the Federal Reserve Act; and
``(iii) any bank or State savings association
insured by the Federal Deposit Insurance
Corporation (other than a member of the Federal
Reserve System), any mutual savings bank as,
defined in section 3(f) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(f)), any insured
State branch of a foreign bank, and any other
depository institution not referred to in this
paragraph or subparagraph (B) or (C);
``(B) under subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau, with respect to
any person subject to this subtitle;
``(C) under the Federal Credit Union Act, by the
Administrator of the National Credit Union
Administration with respect to any insured credit union;
and
``(D) with respect to other lending institutions, by
the Secretary of Housing and Urban Development.
``(2) Incorporated definitions.--The terms used in paragraph
(1) that are not defined in this title or otherwise defined in
section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) shall have the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).''; and
(B) by adding at the end the following:
``(d) Overall Enforcement Authority of the Bureau of Consumer
Financial Protection.--Subject to subtitle B of the Consumer Financial
Protection Act of 2010, enforcement of the requirements imposed under
this title is committed to each of the agencies under subsection (b). To
facilitate research, examinations, and enforcement, all data collected
pursuant to section 304 shall be available to the entities listed under
subsection (b). The Bureau may exercise its authorities under the
Consumer Financial Protection Act of 2010 to exercise principal
authority to examine and enforce compliance by any person with the
requirements of this title.'';
(5) in section 306 (12 U.S.C. 2805(b)), by striking
subsection (b) and inserting the following:
``(b) Exemption Authority.--The Bureau may, by regulation, exempt
from the requirements of this title any State-chartered
[[Page 124 STAT. 2101]]
depository institution within any State or subdivision thereof, if the
agency determines that, under the law of such State or subdivision, that
institution is subject to requirements that are substantially similar to
those imposed under this title, and that such law contains adequate
provisions for enforcement. Notwithstanding any other provision of this
subsection, compliance with the requirements imposed under this
subsection shall be enforced by the Office of the Comptroller of the
Currency under section 8 of the Federal Deposit Insurance Act, in the
case of national banks and Federal savings associations, the deposits of
which are insured by the Federal Deposit Insurance Corporation.''; and
(6) by striking section 307 (12 U.S.C. 2806) and inserting
the following:
``SEC. 307. COMPLIANCE <<NOTE: 12 USC 2806.>> IMPROVEMENT
METHODS.
``(a) In General.--
``(1) Consultation required.--The Director of the Bureau of
Consumer Financial Protection, with the assistance of the
Secretary, the Director of the Bureau of the Census, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and such other persons as the Bureau
deems appropriate, shall develop or assist in the improvement
of, methods of matching addresses and census tracts to
facilitate compliance by depository institutions in as
economical a manner as possible with the requirements of this
title.
``(2) Authorization of appropriations.--There are authorized
to be appropriated, such sums as may be necessary to carry out
this subsection.
``(3) Contracting authority.--The Director of the Bureau of
Consumer Financial Protection is authorized to utilize, contract
with, act through, or compensate any person or agency in order
to carry out this subsection.
``(b) Recommendations to Congress.--The Director of the Bureau of
Consumer Financial Protection shall recommend to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, such additional
legislation as the Director of the Bureau of Consumer Financial
Protection deems appropriate to carry out the purpose of this title.''.
SEC. 1095. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT OF 1998.
Section 10 of the Homeowners Protection Act of 1998 (12 U.S.C. 4909)
is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and all that follows
through the end of paragraph (1) and inserting the
following: ``Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the
requirements imposed under this Act shall be enforced
under--
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency (as defined in section 3(q)
of that Act), with respect to--
``(A) insured depository institutions (as defined in
section 3(c)(2) of that Act);
``(B) depository institutions described in clause
(i), (ii), or (iii) of section 19(b)(1)(A) of the
Federal Reserve Act
[[Page 124 STAT. 2102]]
which are not insured depository institutions (as
defined in section 3(c)(2) of the Federal Deposit
Insurance Act); and
``(C) depository institutions described in clause
(v) or (vi) of section 19(b)(1)(A) of the Federal
Reserve Act which are not insured depository
institutions (as defined in section 3(c)(2) of the
Federal Deposit Insurance Act);'';
(B) in paragraph (2), by striking ``and'' at the
end;
(C) in paragraph (3), by striking the period at the
end and inserting ``; and''; and
(D) by adding at the end the following:
``(4) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau of Consumer Financial Protection, with
respect to any person subject to this Act.''; and
(2) in subsection (b)(2), by inserting before the period at
the end the following: ``, subject to subtitle B of the Consumer
Financial Protection Act of 2010''.
SEC. 1096. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY PROTECTION
ACT OF 1994.
The Home Ownership and Equity Protection Act of 1994 (15 U.S.C. 1601
note) is amended--
(1) in section 158(a), by striking ``Board of Governors of
the Federal Reserve System, in consultation with the Consumer
Advisory Council of the Board'' and inserting ``Bureau, in
consultation with the Advisory Board to the Bureau''; and
(2) in section 158(b), by striking ``Board of Governors of
the Federal Reserve System'' and inserting ``Bureau''.
SEC. 1097. <<NOTE: 15 USC 1638 note.>> AMENDMENTS TO THE OMNIBUS
APPROPRIATIONS ACT, 2009.
Section 626 of the Omnibus Appropriations Act, 2009 (15 U.S.C. 1638
note) is amended--
(1) by striking subsection (a) and inserting the following:
``(a)(1) The <<NOTE: Regulations.>> Bureau of Consumer Financial
Protection shall have authority to prescribe rules with respect to
mortgage loans in accordance with section 553 of title 5, United States
Code. Such rulemaking shall relate to unfair or deceptive acts or
practices regarding mortgage loans, which may include unfair or
deceptive acts or practices involving loan modification and foreclosure
rescue services. Any violation of a rule prescribed under this paragraph
shall be treated as a violation of a rule prohibiting unfair, deceptive,
or abusive acts or practices under the Consumer Financial Protection Act
of 2010 and a violation of a rule under section 18 of the Federal Trade
Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or
practices.
``(2) The Bureau of Consumer Financial Protection shall enforce the
rules issued under paragraph (1) in the same manner, by the same means,
and with the same jurisdiction, powers, and duties, as though all
applicable terms and provisions of the Consumer Financial Protection Act
of 2010 were incorporated into and made part of this subsection.
``(3) Subject to subtitle B of the Consumer Financial Protection Act
of 2010, the Federal Trade Commission shall enforce the rules issued
under paragraph (1), in the same manner, by the same means, and with the
same jurisdiction, as though all applicable terms and provisions of the
Federal Trade Commission Act were incorporated into and made part of
this section.''; and
[[Page 124 STAT. 2103]]
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting the
following:
``(1) Except as provided in paragraph (6), in any case in
which the attorney general of a State has reason to believe that
an interest of the residents of the State has been or is
threatened or adversely affected by the engagement of any person
subject to a rule prescribed under subsection (a) in practices
that violate such rule, the State, as parens patriae, may bring
a civil action on behalf of its residents in an appropriate
district court of the United States or other court of competent
jurisdiction--
``(A) to enjoin that practice;
``(B) to enforce compliance with the rule;
``(C) to obtain damages, restitution, or other
compensation on behalf of the residents of the State; or
``(D) to obtain penalties and relief provided under
the Consumer Financial Protection Act of 2010, the
Federal Trade Commission Act, and such other relief as
the court deems appropriate.'';
(B) in paragraphs (2) and (3), by striking ``the
primary Federal regulator'' each time the term appears
and inserting ``the Bureau of Consumer Financial
Protection or the Commission, as appropriate'';
(C) in paragraph (3), by inserting ``and subject to
subtitle B of the Consumer Financial Protection Act of
2010,'' after ``paragraph (2),''; and
(D) in paragraph (6), by striking ``the primary
Federal regulator'' each place that term appears and
inserting ``the Bureau of Consumer Financial Protection
or the Commission''.
SEC. 1098. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT
OF 1974.
The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et
seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (7), by striking ``and'' at the
end;
(B) in paragraph (8), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(9) <<NOTE: Definition.>> the term `Bureau' means the
Bureau of Consumer Financial Protection.'';
(2) in section 4 (12 U.S.C. 2603)--
(A) in <<NOTE: Publication.>> subsection (a), by
striking the first sentence and inserting the following:
``The Bureau shall publish a single, integrated
disclosure for mortgage loan transactions (including
real estate settlement cost statements) which includes
the disclosure requirements of this section and section
5, in conjunction with the disclosure requirements of
the Truth in Lending Act that, taken together, may apply
to a transaction that is subject to both or either
provisions of law. The purpose of such model disclosure
shall be to facilitate compliance with the disclosure
requirements of this title and the Truth in Lending Act,
and
[[Page 124 STAT. 2104]]
to aid the borrower or lessee in understanding the
transaction by utilizing readily understandable language
to simplify the technical nature of the disclosures.'';
(B) by striking ``Secretary'' each place that term
appears and inserting ``Bureau''; and
(C) by striking ``form'' each place that term
appears and inserting ``forms'';
(3) in section 5 (12 U.S.C. 2604)--
(A) by striking ``Secretary'' each place that term
appears and inserting ``Bureau''; and
(B) in subsection (a), by striking the first
sentence and inserting the following:
``The <<NOTE: Booklets.>> Bureau shall prepare and
distribute booklets jointly addressing compliance with
the requirements of the Truth in Lending Act and the
provisions of this title, in order to help persons
borrowing money to finance the purchase of residential
real estate better to understand the nature and costs of
real estate settlement services.'';
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))--
(A) by striking ``Secretary'' and inserting
``Bureau''; and
(B) by striking ``, by regulations that shall take
effect not later than April 20, 1991,'';
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking
``Secretary'' and inserting ``Bureau'';
(6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking
``Secretary'' and inserting ``Bureau'';
(7) in section 8(d) (12 U.S.C. 2607(d))--
(A) in the subsection heading, by inserting ``Bureau
and'' before ``Secretary''; and
(B) by striking paragraph (4), and inserting the
following:
``(4) The Bureau, the Secretary, or the attorney general or
the insurance commissioner of any State may bring an action to
enjoin violations of this section. Except, to the extent that a
person is subject to the jurisdiction of the Bureau, the
Secretary, or the attorney general or the insurance commissioner
of any State, the Bureau shall have primary authority to enforce
or administer this section, subject to subtitle B of the
Consumer Financial Protection Act of 2010.'';
(8) in section 10(c) (12 U.S.C. 2609(c) and (d)), by
striking ``Secretary'' and inserting ``Bureau'';
(9) in section 16 (12 U.S.C. 2614), by inserting ``the
Bureau,'' before ``the Secretary'';
(10) in section 18 (12 U.S.C. 2616), by striking
``Secretary'' each place that term appears and inserting
``Bureau''; and
(11) in section 19 (12 U.S.C. 2617)--
(A) in the section heading by striking ``secretary''
and inserting ``bureau'';
(B) in subsection (a), by striking ``Secretary''
each place that term appears and inserting ``Bureau'';
and
(C) in subsections (b) and (c), by striking ``the
Secretary'' each place that term appears and inserting
``the Bureau''.
[[Page 124 STAT. 2105]]
SEC. 1098A. AMENDMENTS TO THE INTERSTATE LAND SALES FULL
DISCLOSURE ACT.
The Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et
seq.) is amended--
(1) by <<NOTE: 15 USC 1702 et seq.>> striking ``Secretary''
each place that term appears and inserting ``Director'';
(2) <<NOTE: 15 USC 1715.>> by striking ``Department of
Housing and Urban Development'' each place that term appears and
inserting ``Bureau of Consumer Financial Protection'';
(3) by <<NOTE: 15 USC 1715.>> striking ``Department'' each
place that term appears and inserting ``Bureau'';
(4) in section 1402 (15 U.S.C. 1701)--
(A) by striking paragraph (1) and inserting the
following:
``(1) `Director' <<NOTE: Definition.>> means the Director of
the Bureau of Consumer FinancialProtection;'';
(B) in paragraph (10), by striking ``and'' at the
end;
(C) in paragraph (11), by striking the period at the
end and inserting ``; and''; and
(D) by adding at the end the following:
``(12) `Bureau' <<NOTE: Definition.>> means the Bureau of
Consumer Financial Protection.''; and
(5) in section 1416(a) (15 U.S.C. 1715(a)), by striking
``Secretary of Housing and Urban Development'' and inserting
``Director of the Bureau of Consumer Financial Protection''.
SEC. 1099. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF
1978.
The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.)
is amended--
(1) in section 1101-- <<NOTE: 12 USC 3401.>>
(A) in paragraph (6)--
(i) in subparagraph (A), by inserting ``and''
after the semicolon;
(ii) in subparagraph (B), by striking ``and''
at the end; and
(iii) by striking subparagraph (C); and
(B) in paragraph (7), by striking subparagraph (B),
and inserting the following:
``(B) the Bureau of Consumer Financial
Protection;'';
(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking
``and the Commodity Futures Trading Commission is permitted''
and inserting ``the Commodity Futures Trading Commission, and
the Bureau of Consumer Financial Protection is permitted''; and
(3) in section 1113 (12 U.S.C. 3413), by adding at the end
the following new subsection:
``(r) Disclosure to the Bureau of Consumer Financial Protection.--
Nothing in this title shall apply to the examination by or disclosure to
the Bureau of Consumer Financial Protection of financial records or
information in the exercise of its authority with respect to a financial
institution.''.
SEC. 1100. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR
MORTGAGE LICENSING ACT OF 2008.
The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.)
is amended--
[[Page 124 STAT. 2106]]
(1) by striking ``a Federal banking agency'' each place that
term appears, other than in paragraphs (7) and (11) of section
1503 and section 1507(a)(1), and inserting ``the Bureau'';
(2) by <<NOTE: 12 USC 5102, 5106.>> striking ``Federal
banking agencies'' each place that term appears and inserting
``Bureau''; and
(3) by <<NOTE: 12 USC 5102 et seq.>> striking ``Secretary''
each place that term appears and inserting ``Director'';
(4) in section 1503 (12 U.S.C. 5102)--
(A) by redesignating paragraphs (2) through (12) as
(3) through (13), respectively;
(B) <<NOTE: Definitions.>> by striking paragraph (1)
and inserting the following:
``(1) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.
``(2) Federal banking agency.--The term `Federal banking
agency' means the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the
National Credit Union Administration, and the Federal Deposit
Insurance Corporation.''; and
(C) by striking paragraph (10), as so designated by
this section, and inserting the following:
``(10) Director.--The <<NOTE: Definition.>> term `Director'
means the Director of the Bureau of Consumer Financial
Protection.''; and
(5) in section 1507 (12 U.S.C. 5106)--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) In <<NOTE: System.>> general.--The Bureau shall
develop and maintain a system for registering employees of a
depository institution, employees of a subsidiary that is owned
and controlled by a depository institution and regulated by a
Federal banking agency, or employees of an institution regulated
by the Farm Credit Administration, as registered loan
originators with the Nationwide Mortgage
Licensing <<NOTE: Deadline.>> System and Registry. The system
shall be implemented before the end of the 1-year period
beginning on the date of enactment of the Consumer Financial
Protection Act of 2010.''; and
(ii) in paragraph (2)--
(I) by striking ``appropriate
Federal banking agency and the Farm
Credit Administration'' and inserting
``Bureau''; and
(II) by striking ``employees's
identity'' and inserting ``identity of
the employee''; and
(B) in subsection (b), by striking ``through the
Financial Institutions Examination Council, and the Farm
Credit Administration'', and inserting ``and the Bureau
of Consumer Financial Protection'';
(6) in section 1508 (12 U.S.C. 5107)--
(A) by striking the section heading and inserting
the following: ``sec. 1508. bureau of consumer financial
protection backup authority to establish loan originator
licensing system.''; and
(B) by adding at the end the following:
``(f) Regulation Authority.--
[[Page 124 STAT. 2107]]
``(1) In general.--The Bureau is authorized to promulgate
regulations setting minimum net worth or surety bond
requirements for residential mortgage loan originators and
minimum requirements for recovery funds paid into by loan
originators.
``(2) Considerations.--In issuing regulations under
paragraph (1), the Bureau shall take into account the need to
provide originators adequate incentives to originate affordable
and sustainable mortgage loans, as well as the need to ensure a
competitive origination market that maximizes consumer access to
affordable and sustainable mortgage loans.'';
(7) by striking section 1510 (12 U.S.C. 5109) and inserting
the following:
``SEC. <<NOTE: 12 USC 5109.>> 1510. FEES.
``The Bureau, the Farm Credit Administration, and the Nationwide
Mortgage Licensing System and Registry may charge reasonable fees to
cover the costs of maintaining and providing access to information from
the Nationwide Mortgage Licensing System and Registry, to the extent
that such fees are not charged to consumers for access to such system
and registry.'';
(8) by striking section 1513 (12 U.S.C. 5112) and inserting
the following:
``SEC. 1513. <<NOTE: 12 USC 5112.>> LIABILITY PROVISIONS.
``The Bureau, any State official or agency, or any organization
serving as the administrator of the Nationwide Mortgage Licensing System
and Registry or a system established by the Director under section 1509,
or any officer or employee of any such entity, shall not be subject to
any civil action or proceeding for monetary damages by reason of the
good faith action or omission of any officer or employee of any such
entity, while acting within the scope of office or employment, relating
to the collection, furnishing, or dissemination of information
concerning persons who are loan originators or are applying for
licensing or registration as loan originators.''; and
(9) in section 1514 (12 U.S.C. 5113) in the section heading,
by striking ``under hud backup licensing system'' and inserting
``by the bureau''.
SEC. 1100A. AMENDMENTS TO THE TRUTH IN LENDING ACT.
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended--
(1) in section 103 (15 U.S.C. 1602)--
(A) by redesignating subsections (b) through (bb) as
subsections (c) through (cc), respectively; and
(B) by inserting after subsection (a) the following:
``(b) Bureau.--The <<NOTE: Definition.>> term `Bureau' means the
Bureau of Consumer Financial Protection.'';
(2) by <<NOTE: 15 USC 1602 et seq.>> striking ``Board'' each
place that term appears, other than in section 140(d) and
sections 105(i) and 108(a), as amended by this section, and
inserting ``Bureau'';
(3) by <<NOTE: 15 USC 1616, 1632, 1651.>> striking ``Federal
Trade Commission'' each place that term appears, other than in
section 108(c) and section 129(m), as amended by this Act, and
other than in the context of a reference to the Federal Trade
Commission Act, and inserting ``Bureau'';
(4) in section 105(a) (15 U.S.C. 1604(a)), in the second
sentence--
[[Page 124 STAT. 2108]]
(A) by striking ``Except in the case of a mortgage
referred to in section 103(aa), these regulations may
contain such'' and inserting ``Except with respect to
the provisions of section 129 that apply to a mortgage
referred to in section 103(aa), such regulations may
contain such additional requirements,''; and
(B) by inserting ``all or'' after ``exceptions
for'';
(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the
first sentence and inserting the following:
``The <<NOTE: Publication.>> Bureau shall publish a single,
integrated disclosure for mortgage loan transactions (including
real estate settlement cost statements) which includes the
disclosure requirements of this title in conjunction with the
disclosure requirements of the Real Estate Settlement Procedures
Act of 1974 that, taken together, may apply to a transaction
that is subject to both or either provisions of law. The purpose
of such model disclosure shall be to facilitate compliance with
the disclosure requirements of this title and the Real Estate
Settlement Procedures Act of 1974, and to aid the borrower or
lessee in understanding the transaction by utilizing readily
understandable language to simplify the technical nature of the
disclosures.'';
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by
inserting ``all or'' after ``from all or part of this title'';
(7) in section 105 (15 U.S.C. 1604), by adding at the end
the following:
``(i) Authority of the board to prescribe
rules.--Notwithstanding subsection (a), the Board
shall have authority to prescribe rules under this
title with respect to a person described in
section 1029(a) of the Consumer Financial
Protection Act of 2010. Regulations prescribed
under this subsection may contain such
classifications, differentiations, or other
provisions, as in the judgment of the Board are
necessary or proper to effectuate the purposes of
this title, to prevent circumvention or evasion
thereof, or to facilitate compliance therewith.'';
(8) in section 108 <<NOTE: 15 USC 1607.>> (15 U.S.C. 1604),
by adding at the end the following:
(A) by striking subsection (a) and inserting the
following:
``(a) Enforcing Agencies.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements
imposed under this title shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with
respect to--
``(A) national banks, Federal savings associations,
and Federal branches and Federal agencies of foreign
banks;
``(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of
foreign banks (other than Federal branches, Federal
agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by
foreign banks, and organizations operating under section
25 or 25A of the Federal Reserve Act; and
[[Page 124 STAT. 2109]]
``(C) banks and State savings associations insured
by the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured
State branches of foreign banks;
``(2) the Federal Credit Union Act, by the Director of the
National Credit Union Administration, with respect to any
Federal credit union;
``(3) the Federal Aviation Act of 1958, by the Secretary of
Transportation, with respect to any air carrier or foreign air
carrier subject to that Act;
``(4) the Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the Secretary of
Agriculture, with respect to any activities subject to that Act;
``(5) the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to any Federal land bank, Federal
land bank association, Federal intermediate credit bank, or
production credit association; and
``(6) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.''; and
(B) by striking subsection (c) and inserting the
following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under any of paragraphs (1) through (5) of subsection
(a), and subject to subtitle B of the Consumer Financial Protection Act
of 2010, the Federal Trade Commission shall be authorized to enforce
such requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that Act. All
of the functions and powers of the Federal Trade Commission under the
Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person with the requirements
under this title, irrespective of whether that person is engaged in
commerce or meets any other jurisdictional tests under the Federal Trade
Commission Act.''; and
(9) in section 129 (15 U.S.C. 1639), by striking subsection
(m) and inserting the following:
``(m) Civil Penalties in Federal Trade Commission Enforcement
Actions.--For purposes of enforcement by the Federal Trade Commission,
any violation of a regulation issued by the Bureau pursuant to
subsection (l)(2) shall be treated as a violation of a rule promulgated
under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a)
regarding unfair or deceptive acts or practices.''; and
(10) in chapter 5 (15 U.S.C. 1667 et seq.)--
(A) <<NOTE: 15 USC 1667c, 1667e, 1667f.>> by
striking ``the Board'' each place that term appears and
inserting ``the Bureau''; and
(B) by <<NOTE: 15 USC 1667a, 1667e,
1667f.>> striking ``The Board'' each place that term
appears and inserting ``The Bureau''.
SEC. 1100B. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
The Truth in Savings Act (12 U.S.C. 4301 et seq.) is amended--
[[Page 124 STAT. 2110]]
(1) by <<NOTE: 12 USC 4302 et seq.>> striking ``Board'' each
place that term appears, other than in section 272(b) (12 U.S.C.
4311), and inserting ``Bureau'';
(2) in section 270(a) (12 U.S.C. 4309)--
(A) by striking ``Compliance'' and all that follows
through the end of paragraph (1) and inserting:
``Subject to subtitle B of the Consumer Financial
Protection Act of 2010, compliance with the requirements
imposed under this subtitle shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act by the
appropriate Federal banking agency (as defined in section 3(q)
of that Act), with respect to--
``(A) insured depository institutions (as defined in
section 3(c)(2) of that Act);
``(B) depository institutions described in clause
(i), (ii), or (iii) of section 19(b)(1)(A) of the
Federal Reserve Act which are not insured depository
institutions (as defined in section 3(c)(2) of the
Federal Deposit Insurance Act); and
``(C) depository institutions described in clause
(v) or (vi) of section 19(b)(1)(A) of the Federal
Reserve Act which are not insured depository
institutions (as defined in section 3(c)(2) of the
Federal Deposit Insurance Act);'';
(B) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(3) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
subtitle.'';
(3) in section 272(b) (12 U.S.C. 4311(b)), by striking
``regulation prescribed by the Board'' each place that term
appears and inserting ``regulation prescribed by the Bureau'';
and
(4) in section 274 (12 U.S.C. 4313), by striking paragraph
(4) and inserting the following:
``(4) Bureau.--The <<NOTE: Definition.>> term `Bureau' means
the Bureau of Consumer Financial Protection.''.
SEC. 1100C. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD AND
ABUSE PREVENTION ACT.
(a) Amendments to Section 3.--Section 3 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6102) is amended by
striking subsections (b) and (c) and inserting the following:
``(b) Rulemaking Authority.--The Commission shall have authority to
prescribe rules under subsection (a), in accordance with section 553 of
title 5, United States <<NOTE: Consultation.>> Code. In prescribing a
rule under this section that relates to the provision of a consumer
financial product or service that is subject to the Consumer Financial
Protection Act of 2010, including any enumerated consumer law
thereunder, the Commission shall consult with the Bureau of Consumer
Financial Protection regarding the consistency of a proposed rule with
standards, purposes, or objectives administered by the Bureau of
Consumer Financial Protection.
``(c) Violations.--Any violation of any rule prescribed under
subsection (a)--
``(1) shall be treated as a violation of a rule under
section 18 of the Federal Trade Commission Act regarding unfair
or deceptive acts or practices; and
[[Page 124 STAT. 2111]]
``(2) that is committed by a person subject to the Consumer
Financial Protection Act of 2010 shall be treated as a violation
of a rule under section 1031 of that Act regarding unfair,
deceptive, or abusive acts or practices.''.
(b) Amendments to Section 4.--Section 4(d) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6103(d)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(c) Amendments to Section 5.--Section 5(c) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6104(c)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(d) Amendment to Section 6.--Section 6 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) is amended by
adding at the end the following:
``(d) Enforcement by Bureau of Consumer Financial Protection.--
Except as otherwise provided in sections 3(d), 3(e), 4, and 5, and
subject to subtitle B of the Consumer Financial Protection Act of 2010,
this Act shall be enforced by the Bureau of Consumer Financial
Protection under subtitle E of the Consumer Financial Protection Act of
2010, with respect to the offering or provision of a consumer financial
product or service subject to that Act.''.
SEC. 1100D. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.
(a) Designation as an Independent Agency.--Section 2(5) of the
Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended by inserting
``the Bureau of Consumer Financial Protection, the Office of Financial
Research,'' after ``the Securities and Exchange Commission,''.
(b) Comparable Treatment.--Section 3513 of title 44, United States
Code, is amended by adding at the end the following:
``(c) Comparable Treatment.--Notwithstanding any other provision of
law, the Director shall treat or review a rule or order prescribed or
proposed by the Director of the Bureau of Consumer Financial Protection
on the same terms and conditions as apply to any rule or order
prescribed or proposed by the Board of Governors of the Federal Reserve
System.''.
SEC. 1100E. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING ACT.
(a) Caps.--
(1) Credit transactions.--Section 104(3) of the Truth in
Lending Act (15 U.S.C. 1603(3)) is amended by striking
``$25,000'' and inserting ``$50,000''.
(2) Consumer leases.--Section 181(1) of the Truth in Lending
Act (15 U.S.C. 1667(1)) is amended by striking ``$25,000'' and
inserting ``$50,000''.
(b) Adjustments for Inflation.--On <<NOTE: Deadline. 15 USC 1603
note.>> and after December 31, 2011, the Bureau shall adjust annually
the dollar amounts described in sections 104(3) and 181(1) of the Truth
in Lending Act (as amended by this section), by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and Clerical
Workers, as published by the Bureau of Labor Statistics, rounded to the
nearest multiple of $100, or $1,000, as applicable.
[[Page 124 STAT. 2112]]
SEC. 1100F. USE OF CONSUMER REPORTS.
Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is
amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
(B) by inserting after paragraph (1) the following:
``(2) provide to the consumer written or electronic
disclosure--
``(A) of a numerical credit score as defined in
section 609(f)(2)(A) used by such person in taking any
adverse action based in whole or in part on any
information in a consumer report; and
``(B) of the information set forth in subparagraphs
(B) through (E) of section 609(f)(1);''; and
(C) in paragraph (4) (as so redesignated), by
striking ``paragraph (2)'' and inserting ``paragraph
(3)''; and
(2) in subsection (h)(5)--
(A) in subparagraph (C), by striking ``; and'' and
inserting a semicolon;
(B) in subparagraph (D), by striking the period and
inserting ``; and''; and
(C) by inserting at the end the following:
``(E) include a statement informing the consumer
of--
``(i) a numerical credit score as defined in
section 609(f)(2)(A), used by such person in
making the credit decision described in paragraph
(1) based in whole or in part on any information
in a consumer report; and
``(ii) the information set forth in
subparagraphs (B) through (E) of section
609(f)(1).''.
SEC. 1100G. SMALL BUSINESS FAIRNESS AND REGULATORY TRANSPARENCY.
(a) Panel Requirement.--Section 609(d) of title 5, United States
Code, is amended by striking ``means the'' and all that follows and
inserting the following: ``means--
``(1) the Environmental Protection Agency;
``(2) the Consumer Financial Protection Bureau of the
Federal Reserve System; and
``(3) the Occupational Safety and Health Administration of
the Department of Labor.''.
(b) Initial Regulatory Flexibility Analysis.--Section 603 of title
5, United States Code, is amended by adding at the end the following:
``(d)(1) For a covered agency, as defined in section 609(d)(2), each
initial regulatory flexibility analysis shall include a description of--
``(A) any projected increase in the cost of credit for small
entities;
``(B) any significant alternatives to the proposed rule
which accomplish the stated objectives of applicable statutes
and which minimize any increase in the cost of credit for small
entities; and
``(C) advice and recommendations of representatives of small
entities relating to issues described in subparagraphs (A) and
(B) and subsection (b).
[[Page 124 STAT. 2113]]
``(2) A covered agency, as defined in section 609(d)(2), shall, for
purposes of complying with paragraph (1)(C)--
``(A) identify representatives of small entities in
consultation with the Chief Counsel for Advocacy of the Small
Business Administration; and
``(B) collect advice and recommendations from the
representatives identified under subparagraph (A) relating to
issues described in subparagraphs (A) and (B) of paragraph (1)
and subsection (b).''.
(c) Final Regulatory Flexibility Analysis.--Section 604(a) of title
5, United States Code, is amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(6) for a covered agency, as defined in section 609(d)(2),
a description of the steps the agency has taken to minimize any
additional cost of credit for small entities.''.
SEC. 1100H. <<NOTE: 5 USC 552a note.>> EFFECTIVE DATE.
Except as otherwise provided in this subtitle and the amendments
made by this subtitle, this subtitle and the amendments made by this
subtitle, other than sections 1081 and 1082, shall become effective on
the designated transfer date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
SEC. 1101. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY LENDING
AUTHORITY.
(a) Federal Reserve Act.--The third undesignated paragraph of
section 13 of the Federal Reserve Act (12 U.S.C. 343) (relating to
emergency lending authority) is amended--
(1) by inserting ``(3)(A)'' before ``In unusual'';
(2) by striking ``individual, partnership, or corporation''
the first place that term appears and inserting the following:
``participant in any program or facility with broad-based
eligibility'';
(3) by striking ``exchange for an individual or a
partnership or corporation'' and inserting ``exchange,'';
(4) by striking ``such individual, partnership, or
corporation'' and inserting the following: ``such participant in
any program or facility with broad-based eligibility'';
(5) by striking ``for individuals, partnerships,
corporations'' and inserting ``for any participant in any
program or facility with broad-based eligibility''; and
(6) by striking ``may prescribe.'' and inserting the
following: ``may prescribe.
``(B)(i) <<NOTE: Regulation. Procedures.>> As soon
as is practicable after the date of enactment of this
subparagraph, the Board shall establish, by regulation,
in consultation with the Secretary of the Treasury, the
policies and procedures governing emergency lending
under this paragraph. Such policies and procedures shall
be designed to ensure that any emergency lending program
or facility is for the purpose of providing liquidity to
the financial system, and not to aid a failing financial
[[Page 124 STAT. 2114]]
company, and that the security for emergency loans is
sufficient to protect taxpayers from losses and that any
such program is terminated in a timely and orderly
fashion. The policies and procedures established by the
Board shall require that a Federal reserve bank assign,
consistent with sound risk management practices and to
ensure protection for the taxpayer, a lendable value to
all collateral for a loan executed by a Federal reserve
bank under this paragraph in determining whether the
loan is secured satisfactorily for purposes of this
paragraph.
``(ii) The Board shall establish procedures to
prohibit borrowing from programs and facilities by
borrowers that are insolvent. Such procedures may
include a certification from the chief executive officer
(or other authorized officer) of the borrower, at the
time the borrower initially borrows under the program or
facility (with a duty by the borrower to update the
certification if the information in the certification
materially changes), that the borrower is not insolvent.
A borrower shall be considered insolvent for purposes of
this subparagraph, if the borrower is in bankruptcy,
resolution under title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, or any other Federal
or State insolvency proceeding.
``(iii) A program or facility that is structured to
remove assets from the balance sheet of a single and
specific company, or that is established for the purpose
of assisting a single and specific company avoid
bankruptcy, resolution under title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, or any
other Federal or State insolvency proceeding, shall not
be considered a program or facility with broad-based
eligibility.
``(iv) The Board may not establish any program or
facility under this paragraph without the prior approval
of the Secretary of the Treasury.
``(C) <<NOTE: Deadlines. Reports.>> The Board shall
provide to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives--
``(i) not later than 7 days after the Board
authorizes any loan or other financial assistance
under this paragraph, a report that includes--
``(I) the justification for the
exercise of authority to provide such
assistance;
``(II) the identity of the
recipients of such assistance;
``(III) the date and amount of the
assistance, and form in which the
assistance was provided; and
``(IV) the material terms of the
assistance, including--
``(aa) duration;
``(bb) collateral pledged
and the value thereof;
``(cc) all interest, fees,
and other revenue or items of
value to be received in exchange
for the assistance;
[[Page 124 STAT. 2115]]
``(dd) any requirements
imposed on the recipient with
respect to employee
compensation, distribution of
dividends, or any other
corporate decision in exchange
for the assistance; and
``(ee) the expected costs to
the taxpayers of such
assistance; and
``(ii) once every 30 days, with respect to any
outstanding loan or other financial assistance
under this paragraph, written updates on--
``(I) the value of collateral;
``(II) the amount of interest, fees,
and other revenue or items of value
received in exchange for the assistance;
and
``(III) the expected or final cost
to the taxpayers of such assistance.
``(D) The information required to be submitted to
Congress under subparagraph (C) related to--
``(i) the identity of the participants in an
emergency lending program or facility commenced
under this paragraph;
``(ii) the amounts borrowed by each
participant in any such program or facility;
``(iii) <<NOTE: Confidentiality.>> identifying
details concerning the assets or collateral held
by, under, or in connection with such a program or
facility,
shall be kept confidential, upon the written request of
the Chairman of the Board, in which case such
information shall be made available only to the
Chairpersons or Ranking Members of the Committees
described in subparagraph (C).
``(E) If an entity to which a Federal reserve bank
has provided a loan under this paragraph becomes a
covered financial company, as defined in section 201 of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act, at any time while such loan is
outstanding, and the Federal reserve bank incurs a
realized net loss on the loan, then the Federal reserve
bank shall have a claim equal to the amount of the net
realized loss against the covered entity, with the same
priority as an obligation to the Secretary of the
Treasury under section 210(b) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.''.
(b) Conforming Amendment.--Section 507(a)(2) of title 11, United
States Code, is amended by inserting ``unsecured claims of any Federal
reserve bank related to loans made through programs or facilities
authorized under section 13(3) of the Federal Reserve Act (12 U.S.C.
343),'' after ``this title,''.
(c) References.--On <<NOTE: Effective date. 12 USC 343 note.>> and
after the date of enactment of this Act, any reference in any provision
of Federal law to the third undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 343) shall be deemed to be a reference to
section 13(3) of the Federal Reserve Act, as so designated by this
section.
SEC. 1102. AUDITS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES.
(a) Audits.--Section 714 of title 31, United States Code, is amended
by adding at the end the following:
[[Page 124 STAT. 2116]]
``(f) Audits of Credit Facilities of the Federal Reserve System.--
``(1) Definitions.--In this subsection, the following
definitions shall apply:
``(A) Credit facility.--The term `credit facility'
means a program or facility, including any special
purpose vehicle or other entity established by or on
behalf of the Board of Governors of the Federal Reserve
System or a Federal reserve bank, authorized by the
Board of Governors under section 13(3) of the Federal
Reserve Act (12 U.S.C. 343), that is not subject to
audit under subsection (e).
``(B) Covered transaction.--The term `covered
transaction' means any open market transaction or
discount window advance that meets the definition of
`covered transaction' in section 11(s) of the Federal
Reserve Act.
``(2) Authority for audits and examinations.--Subject to
paragraph (3), and notwithstanding any limitation in subsection
(b) on the auditing and oversight of certain functions of the
Board of Governors of the Federal Reserve System or any Federal
reserve bank, the Comptroller General of the United States may
conduct audits, including onsite examinations, of the Board of
Governors, a Federal reserve bank, or a credit facility, if the
Comptroller General determines that such audits are appropriate,
solely for the purposes of assessing, with respect to a credit
facility or a covered transaction--
``(A) the operational integrity, accounting,
financial reporting, and internal controls governing the
credit facility or covered transaction;
``(B) the effectiveness of the security and
collateral policies established for the facility or
covered transaction in mitigating risk to the relevant
Federal reserve bank and taxpayers;
``(C) whether the credit facility or the conduct of
a covered transaction inappropriately favors one or more
specific participants over other institutions eligible
to utilize the facility; and
``(D) the policies governing the use, selection, or
payment of third-party contractors by or for any credit
facility or to conduct any covered transaction.
``(3) Reports and delayed disclosure.--
``(A) Reports required.--A report on each audit
conducted under paragraph (2) shall be submitted by the
Comptroller General to the Congress before the end of
the 90-day period beginning on the date on which such
audit is completed.
``(B) Contents.--The report under subparagraph (A)
shall include a detailed description of the findings and
conclusions of the Comptroller General with respect to
the matters described in paragraph (2) that were audited
and are the subject of the report, together with such
recommendations for legislative or administrative action
relating to such matters as the Comptroller General may
determine to be appropriate.
``(C) Delayed release of certain information.--
``(i) In general.--The Comptroller General
shall not disclose to any person or entity,
including to Congress, the names or identifying
details of specific
[[Page 124 STAT. 2117]]
participants in any credit facility or covered
transaction, the amounts borrowed by or
transferred by or to specific participants in any
credit facility or covered transaction, or
identifying details regarding assets or collateral
held or transferred by, under, or in connection
with any credit facility or covered transaction,
and any report provided under subparagraph (A)
shall be redacted to ensure that such names and
details are not disclosed.
``(ii) Delayed <<NOTE: Expiration date.>>
release.--The nondisclosure obligation under
clause (i) shall expire with respect to any
participant on the date on which the Board of
Governors, directly or through a Federal reserve
bank, publicly discloses the identity of the
subject participant or the identifying details of
the subject assets, collateral, or transaction.
``(iii) General <<NOTE: Deadline.>>
release.--The Comptroller General shall release a
nonredacted version of any report on a credit
facility 1 year after the effective date of the
termination by the Board of Governors of the
authorization for the credit facility. For
purposes of this clause, a credit facility shall
be deemed to have terminated 24 months after the
date on which the credit facility ceases to make
extensions of credit and loans, unless the credit
facility is otherwise terminated by the Board of
Governors.
``(iv) Exceptions.--The nondisclosure
obligation under clause (i) shall not apply to the
credit facilities Maiden Lane, Maiden Lane II, and
Maiden Lane III.
``(v) Release of covered transaction
information.--The Comptroller General shall
release a nonredacted version of any report
regarding covered transactions upon the release of
the information regarding such covered
transactions by the Board of Governors of the
Federal Reserve System, as provided in section
11(s) of the Federal Reserve Act.''.
(b) Access to Records.--Section 714(d) of title 31, United States
Code, is amended--
(1) in paragraph (2), by inserting ``or any person or entity
described in paragraph (3)(A)'' after ``used by an agency'';
(2) in paragraph (3), by inserting ``or (f)'' after
``subsection (e)'' each place that term appears;
(3) in clauses (i) and (ii) of paragraph (3)(A), by
inserting ``or the Federal Reserve banks'' after ``by the
Board'' each place that term appears;
(4) in paragraph (3)(A)(ii), by inserting ``participating in
or'' after ``any entity''; and
(5) in paragraph (3)(B), by adding at the end the following:
``The Comptroller General may make and retain copies of books,
accounts, and other records provided under subparagraph (A) as
the Comptroller General deems <<NOTE: Records.>> appropriate.
The Comptroller General shall provide to any person or entity
described in subparagraph (A) a current list of officers and
employees to whom, with proper identification, records and
property may be made available, and who may make notes or copies
necessary to carry out a audit or examination under this
subsection.''.
[[Page 124 STAT. 2118]]
SEC. 1103. PUBLIC ACCESS TO INFORMATION.
(a) In General.--Section 2B of the Federal Reserve Act (12 U.S.C.
225b) is amended by adding at the end the following:
``(c) Public Access to Information.--The <<NOTE: Web posting. Time
period.>> Board shall place on its home Internet website, a link
entitled `Audit', which shall link to a webpage that shall serve as a
repository of information made available to the public for a reasonable
period of time, not less than 6 months following the date of release of
the relevant information, including--
``(1) the reports prepared by the Comptroller General under
section 714 of title 31, United States Code;
``(2) the annual financial statements prepared by an
independent auditor for the Board in accordance with section
11B;
``(3) the reports to the Committee on Banking, Housing, and
Urban Affairs of the Senate required under section 13(3)
(relating to emergency lending authority); and
``(4) such other information as the Board reasonably
believes is necessary or helpful to the public in understanding
the accounting, financial reporting, and internal controls of
the Board and the Federal reserve banks.''.
(b) Federal Reserve Transparency and Release of Information.--
Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by
adding at the end the following new subsection:
``(s) Federal Reserve Transparency and Release of Information.--
``(1) In general.--In order to ensure the disclosure in a
timely manner consistent with the purposes of this Act of
information concerning the borrowers and counterparties
participating in emergency credit facilities, discount window
lending programs, and open market operations authorized or
conducted by the Board or a Federal reserve bank, the Board of
Governors shall disclose, as provided in paragraph (2)--
``(A) the names and identifying details of each
borrower, participant, or counterparty in any credit
facility or covered transaction;
``(B) the amount borrowed by or transferred by or to
a specific borrower, participant, or counterparty in any
credit facility or covered transaction;
``(C) the interest rate or discount paid by each
borrower, participant, or counterparty in any credit
facility or covered transaction; and
``(D) information identifying the types and amounts
of collateral pledged or assets transferred in
connection with participation in any credit facility or
covered transaction.
``(2) Mandatory release date.--In the case of--
``(A) a credit facility, the Board shall disclose
the information described in paragraph (1) on the date
that is 1 year after the effective date of the
termination by the Board of the authorization of the
credit facility; and
``(B) a covered transaction, the Board shall
disclose the information described in paragraph (1) on
the last day of the eighth calendar quarter following
the calendar quarter in which the covered transaction
was conducted.
``(3) Earlier release date authorized.--The Chairman of the
Board may publicly release the information described in
paragraph (1) before the relevant date specified in paragraph
[[Page 124 STAT. 2119]]
(2), if the Chairman determines that such disclosure would be in
the public interest and would not harm the effectiveness of the
relevant credit facility or the purpose or conduct of covered
transactions.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Credit facility.--The term `credit facility'
has the same meaning as in section 714(f)(1)(A) of title
31, United States Code.
``(B) Covered transaction.--The term `covered
transaction' means--
``(i) any open market transaction with a
nongovernmental third party conducted under the
first undesignated paragraph of section 14 or
subparagraph (a), (b), or (c) of the 2nd
undesignated paragraph of such section, after the
date of enactment of the Dodd-Frank Wall Street
Reform and Consumer Protection Act; and
``(ii) any advance made under section 10B
after the date of enactment of that Act.
``(5) Termination of credit facility by operation of law.--A
credit facility shall be deemed to have terminated as of the end
of the 24-month period beginning on the date on which the credit
facility ceases to make extensions of credit and loans, unless
the credit facility is otherwise terminated by the Board before
such date.
``(6) Consistent treatment
of <<NOTE: Confidentiality.>> information.--Except as provided
in this subsection or section 13(3)(D), or in section
714(f)(3)(C) of title 31, United States Code, the information
described in paragraph (1) and information concerning the
transactions described in section 714(f) of such title, shall be
confidential, including for purposes of section 552(b)(3) of
title 5 of such Code, until the relevant mandatory release date
described in paragraph (2), unless the Chairman of the Board
determines that earlier disclosure of such information would be
in the public interest and would not harm the effectiveness of
the relevant credit facility or the purpose of conduct of the
relevant transactions.
``(7) Protection of personal privacy.--This subsection and
section 13(3)(C), section 714(f)(3)(C) of title 31, United
States Code, and subsection (a) or (c) of section 1109 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act shall
not be construed as requiring any disclosure of nonpublic
personal information (as defined for purposes of section 502 of
the Gramm-Leach-Bliley Act (12 U.S.C. 6802)) concerning any
individual who is referenced in collateral pledged or assets
transferred in connection with a credit facility or covered
transaction, unless the person is a borrower, participant, or
counterparty under the credit facility or covered transaction.
``(8) Study of foia exemption impact.--
``(A) Study.--The Inspector General of the Board of
Governors of the Federal Reserve System shall--
``(i) conduct a study on the impact that the
exemption from section 552(b)(3) of title 5 (known
as the Freedom of Information Act) established
under paragraph (6) has had on the ability of the
public to access information about the
administration by the Board of Governors of
emergency credit facilities, discount
[[Page 124 STAT. 2120]]
window lending programs, and open market
operations; and
``(ii) make any recommendations on whether the
exemption described in clause (i) should remain in
effect.
``(B) Report.--Not <<NOTE: Publication. Web
posting.>> later than 30 months after the date of
enactment of this section, the Inspector General of the
Board of Governors of the Federal Reserve System shall
submit a report on the findings of the study required
under subparagraph (A) to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives, and publish the report on the website
of the Board.
``(9) Rule of construction.--Nothing in this section is
meant to affect any pending litigation or lawsuit filed under
section 552 of title 5, United States Code (popularly known as
the Freedom of Information Act), on or before the date of
enactment of the Dodd-Frank Wall Street Reform and Consumer
Protection Act.''.
SEC. 1104. <<NOTE: 12 USC 5611.>> LIQUIDITY EVENT DETERMINATION.
(a) Determination and Written Recommendation.--
(1) Determination request.--The Secretary may request the
Corporation and the Board of Governors to determine whether a
liquidity event exists that warrants use of the guarantee
program authorized under section 1105.
(2) Requirements of determination.--Any determination
pursuant to paragraph (1) shall--
(A) be written; and
(B) contain an evaluation of the evidence that--
(i) a liquidity event exists;
(ii) failure to take action would have serious
adverse effects on financial stability or economic
conditions in the United States; and
(iii) actions authorized under section 1105
are needed to avoid or mitigate potential adverse
effects on the United States financial system or
economic conditions.
(b) Procedures.--Notwithstanding any other provision of Federal or
State law, upon the determination of both the Corporation (upon a vote
of not fewer than \2/3\ of the members of the Corporation then serving)
and the Board of Governors (upon a vote of not fewer than \2/3\ of the
members of the Board of Governors then serving) under subsection (a)
that a liquidity event exists that warrants use of the guarantee program
authorized under section 1105, and with the written consent of the
Secretary--
(1) the Corporation shall take action in accordance with
section 1105(a); and
(2) the Secretary (in consultation with the President) shall
take action in accordance with section 1105(c).
(c) Documentation and Review.--
(1) Documentation.--The Secretary shall--
(A) maintain the written documentation of each
determination of the Corporation and the Board of
Governors under this section; and
(B) provide the documentation for review under
paragraph (2).
[[Page 124 STAT. 2121]]
(2) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any determination
of the Corporation and the Board of Governors under subsection
(a), including--
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) Report to Congress.--On the earlier of the date of a submission
made to Congress under section 1105(c), or within 30 days of the date of
a determination under subsection (a), the Secretary shall provide
written notice of the determination of the Corporation and the Board of
Governors to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives, including a description of the basis for the
determination.
SEC. 1105. <<NOTE: 12 USC 5612.>> EMERGENCY FINANCIAL
STABILIZATION.
(a) In General.--Upon the written determination of the Corporation
and the Board of Governors under section 1104, the Corporation shall
create a widely available program to guarantee obligations of solvent
insured depository institutions or solvent depository institution
holding companies (including any affiliates thereof) during times of
severe economic distress, except that a guarantee of obligations under
this section may not include the provision of equity in any form.
(b) Rulemaking and Terms and Conditions.--
(1) Policies and procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation shall
establish, by regulation, and in consultation with the
Secretary, policies and procedures governing the issuance of
guarantees authorized by this section. Such policies and
procedures may include a requirement of collateral as a
condition of any such guarantee.
(2) Terms and conditions.--The terms and conditions of any
guarantee program shall be established by the Corporation, with
the concurrence of the Secretary.
(c) Determination of Guaranteed Amount.--
(1) In general.--In connection with any program established
pursuant to subsection (a) and subject to paragraph (2) of this
subsection, the Secretary (in consultation with the President)
shall determine the maximum amount of debt outstanding that the
Corporation may guarantee under this section, and the President
may transmit to Congress a written report on the plan of the
Corporation to exercise the authority under this section to
issue guarantees up to that maximum amount and a request for
approval of such plan. The Corporation shall exercise the
authority under this section to issue guarantees up to that
specified maximum amount upon passage of the joint resolution of
approval, as provided in subsection (d). Absent such approval,
the Corporation shall issue no such guarantees.
(2) Additional debt guarantee authority.--If the Secretary
(in consultation with the President) determines, after a
submission to Congress under paragraph (1), that the maximum
guarantee amount should be raised, and the Council concurs with
that determination, the President may transmit to Congress a
written report on the plan of the Corporation to exercise the
authority under this section to issue guarantees
[[Page 124 STAT. 2122]]
up to the increased maximum debt guarantee amount. The
Corporation shall exercise the authority under this section to
issue guarantees up to that specified maximum amount upon
passage of the joint resolution of approval, as provided in
subsection (d). Absent such approval, the Corporation shall
issue no such guarantees.
(d) Resolution of Approval.--
(1) Additional debt guarantee authority.--
A <<NOTE: President.>> request by the President under this
section shall be considered granted by Congress upon adoption of
a joint resolution approving such request. Such joint resolution
shall be considered in the Senate under expedited procedures.
(2) Fast track consideration in senate.--
(A) Reconvening.--
Upon <<NOTE: Notification. Deadline.>> receipt of a
request under subsection (c), if the Senate has
adjourned or recessed for more than 2 days, the majority
leader of the Senate, after consultation with the
minority leader of the Senate, shall notify the Members
of the Senate that, pursuant to this section, the Senate
shall convene not later than the second calendar day
after receipt of such message.
(B) Placement on calendar.--Upon introduction in the
Senate, the joint resolution shall be placed immediately
on the calendar.
(C) Floor consideration.--
(i) In general.--Notwithstanding <<NOTE: Time
period.>> Rule XXII of the Standing Rules of the
Senate, it is in order at any time during the
period beginning on the 4th day after the date on
which Congress receives a request under subsection
(c), and ending on the 7th day after that date
(even though a previous motion to the same effect
has been disagreed to) to move to proceed to the
consideration of the joint resolution, and all
points of order against the joint resolution (and
against consideration of the joint resolution) are
waived. The motion to proceed is not debatable.
The motion is not subject to a motion to postpone.
A motion to reconsider the vote by which the
motion is agreed to or disagreed to shall not be
in order. If a motion to proceed to the
consideration of the resolution is agreed to, the
joint resolution shall remain the unfinished
business until disposed of.
(ii) Debate.--Debate <<NOTE: Limitation.>> on
the joint resolution, and on all debatable motions
and appeals in connection therewith, shall be
limited to not more than 10 hours, which shall be
divided equally between the majority and minority
leaders or their designees. A motion further to
limit debate is in order and not debatable. An
amendment to, or a motion to postpone, or a motion
to proceed to the consideration of other business,
or a motion to recommit the joint resolution is
not in order.
(iii) Vote on passage.--The vote on passage
shall occur immediately following the conclusion
of the debate on the joint resolution, and a
single quorum call at the conclusion of the debate
if requested in accordance with the rules of the
Senate.
[[Page 124 STAT. 2123]]
(iv) Rulings <<NOTE: Appeals.>> of the chair
on procedure.--Appeals from the decisions of the
Chair relating to the application of the rules of
the Senate, as the case may be, to the procedure
relating to a joint resolution shall be decided
without debate.
(3) Rules.--
(A) Coordination with action by house of
representatives.--
<<NOTE: Procedures. Applicability.>> If, before the
passage by the Senate of a joint resolution of the
Senate, the Senate receives a joint resolution, from the
House of Representatives, then the following procedures
shall apply:
(i) The joint resolution of the House of
Representatives shall not be referred to a
committee.
(ii) With respect to a joint resolution of the
Senate--
(I) the procedure in the Senate
shall be the same as if no joint
resolution had been received from the
other House; but
(II) the vote on passage shall be on
the joint resolution of the House of
Representatives.
(B) Treatment of joint resolution of house of
representatives.--If the Senate fails to introduce or
consider a joint resolution under this section, the
joint resolution of the House of Representatives shall
be entitled to expedited floor procedures under this
subsection.
(C) Treatment of companion measures.--If, following
passage of the joint resolution in the Senate, the
Senate then receives the companion measure from the
House of Representatives, the companion measure shall
not be debatable.
(D) Rules of the senate.--This subsection is enacted
by Congress--
(i) as an exercise of the rulemaking power of
the Senate, and as such it is deemed a part of the
rules of the Senate, but applicable only with
respect to the procedure to be followed in the
Senate in the case of a joint resolution, and it
supersedes other rules, only to the extent that it
is inconsistent with such rules; and
(ii) with full recognition of the
constitutional right of the Senate to change the
rules (so far as relating to the procedure of the
Senate) at any time, in the same manner, and to
the same extent as in the case of any other rule
of the Senate.
(4) Definition.--As used in this subsection, the term
``joint resolution'' means only a joint resolution--
(A) <<NOTE: Deadline.>> that is introduced not later
than 3 calendar days after the date on which the request
referred to in subsection (c) is received by Congress;
(B) that does not have a preamble;
(C) the title of which is as follows: ``Joint
resolution relating to the approval of a plan to
guarantee obligations under section 1105 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act'';
and
(D) the matter after the resolving clause of which
is as follows: ``That Congress approves the obligation
of
[[Page 124 STAT. 2124]]
any amount described in section 1105(c) of the Dodd-
Frank Wall Street Reform and Consumer Protection Act.''.
(e) Funding.--
(1) Fees and other charges.--The Corporation shall charge
fees and other assessments to all participants in the program
established pursuant to this section, in such amounts as are
necessary to offset projected losses and administrative
expenses, including amounts borrowed pursuant to paragraph (3),
and such amounts shall be available to the Corporation.
(2) Excess funds.--If, at the conclusion of the program
established under this section, there are any excess funds
collected from the fees associated with such program, the funds
shall be deposited in the General Fund of the Treasury.
(3) Authority of corporation.--The Corporation--
(A) may borrow funds from the Secretary of the
Treasury and issue obligations of the Corporation to the
Secretary for amounts borrowed, and the amounts borrowed
shall be available to the Corporation for purposes of
carrying out a program established pursuant to this
section, including the payment of reasonable costs of
administering the program, and the obligations issued
shall be repaid in full with interest through fees and
charges paid by participants in accordance with
paragraphs (1) and (4), as applicable; and
(B) may not borrow funds from the Deposit Insurance
Fund established pursuant to section 11(a)(4) of the
Federal Deposit Insurance Act.
(4) Backup special assessments.--To the extent that the
funds collected pursuant to paragraph (1) are insufficient to
cover any losses or expenses, including amounts borrowed
pursuant to paragraph (3), arising from a program established
pursuant to this section, the Corporation shall impose a special
assessment solely on participants in the program, in amounts
necessary to address such insufficiency, and which shall be
available to the Corporation to cover such losses or expenses.
(5) Authority of the secretary.--The Secretary may purchase
any obligations issued under paragraph (3)(A). For such purpose,
the Secretary may use the proceeds of the sale of any securities
issued under chapter 31 of title 31, United States Code, and the
purposes for which securities may be issued under that chapter
31 are extended to include such purchases, and the amount of any
securities issued under that chapter 31 for such purpose shall
be treated in the same manner as securities issued under section
208(n)(5)(E).
(f) Rule of Construction.--For purposes of this section, a guarantee
of deposits held by insured depository institutions shall not be treated
as a debt guarantee program.
(g) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Company.--The term ``company'' means any entity other
than a natural person that is incorporated or organized under
Federal law or the laws of any State.
(2) Depository institution holding company.--The term
``depository institution holding company'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(3) Liquidity event.--The term ``liquidity event'' means--
[[Page 124 STAT. 2125]]
(A) an exceptional and broad reduction in the
general ability of financial market participants--
(i) to sell financial assets without an
unusual and significant discount; or
(ii) to borrow using financial assets as
collateral without an unusual and significant
increase in margin; or
(B) an unusual and significant reduction in the
ability of financial market participants to obtain
unsecured credit.
(4) Solvent.--The term ``solvent'' means that the value of
the assets of an entity exceed its obligations to creditors.
SEC. 1106. <<NOTE: 12 USC 5613.>> ADDITIONAL RELATED AMENDMENTS.
(a) Suspension of Parallel Federal Deposit Insurance Act
Authority.--Effective <<NOTE: Effective date.>> upon the date of
enactment of this section, the Corporation may not exercise its
authority under section 13(c)(4)(G)(i) of the Federal Deposit Insurance
Act (12 U.S.C. 1823(c)(4)(G)(i)) to establish any widely available debt
guarantee program for which section 1105 would provide authority.
(b) Federal Deposit Insurance Act.--Section 13(c)(4)(G) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) is amended--
(1) in clause (i)--
(A) in subclause (I), by inserting ``for which the
Corporation has been appointed receiver'' before ``would
have serious''; and
(B) in the undesignated matter following subclause
(II), by inserting ``for the purpose of winding up the
insured depository institution for which the Corporation
has been appointed receiver'' after ``provide assistance
under this section''; and
(2) in clause (v)(I), by striking ``The'' and inserting
``Not later than 3 days after making a determination under
clause (i), the''.
(c) Effect of Default on an FDIC Guarantee.--If an insured
depository institution or depository institution holding company (as
those terms are defined in section 3 of the Federal Deposit Insurance
Act) participating in a program under section 1105, or any participant
in a debt guarantee program established pursuant to section
13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults on any
obligation guaranteed by the Corporation after the date of enactment of
this Act, the Corporation shall--
(1) appoint itself as receiver for the insured depository
institution that defaults; and
(2) with respect to any other participating company that is
not an insured depository institution that defaults--
(A) require--
(i) consideration of whether a determination
shall be made, as provided in section 203 to
resolve the company under section 202; and
(ii) <<NOTE: Deadline.>> the company to file a
petition for bankruptcy under section 301 of title
11, United States Code, if the Corporation is not
appointed receiver pursuant to section 202 within
30 days of the date of default; or
[[Page 124 STAT. 2126]]
(B) file a petition for involuntary bankruptcy on
behalf of the company under section 303 of title 11,
United States Code.
SEC. 1107. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL RESERVE BANK
GOVERNANCE.
The 5th subparagraph of the 4th undesignated paragraph of section 4
of the Federal Reserve Act (12 U.S.C. 341) is amended by striking the
2nd sentence and inserting the following: ``The president shall be the
chief executive officer of the bank and shall be appointed by the Class
B and Class C directors of the bank, with the approval of the Board of
Governors of the Federal Reserve System, for a term of 5 years; and all
other executive officers and all employees of the bank shall be directly
responsible to the president.''.
SEC. 1108. FEDERAL RESERVE ACT AMENDMENTS ON SUPERVISION AND
REGULATION POLICY.
(a) Establishment of the Position of Vice Chairman for
Supervision.--
(1) Position established.--The second undesignated paragraph
of section 10 of the Federal Reserve Act (12 U.S.C. 242)
(relating to the Chairman and Vice Chairman of the Board) is
amended by striking the third sentence and inserting the
following: ``Of the persons thus appointed, 1 shall be
designated by the President, by and with the advice and consent
of the Senate, to serve as Chairman of the Board for a term of 4
years, and 2 shall be designated by the President, by and with
the advice and consent of the Senate, to serve as Vice Chairmen
of the Board, each for a term of 4 years, 1 of whom shall serve
in the absence of the Chairman, as provided in the fourth
undesignated paragraph of this section, and 1 of whom shall be
designated Vice Chairman for Supervision. The Vice Chairman for
Supervision shall develop policy recommendations for the Board
regarding supervision and regulation of depository institution
holding companies and other financial firms supervised by the
Board, and shall oversee the supervision and regulation of such
firms.''.
(2) Effective <<NOTE: 12 USC 242 note.>> date.--The
amendment made by subsection (a) takes effect on the date of
enactment of this title and applies to individuals who are
designated by the President on or after that date to serve as
Vice Chairman of Supervision.
(b) Appearances Before Congress.--Section 10 of the Federal Reserve
Act (12 U.S.C. 241 et seq.) is amended by adding at the end the
following:
``(12) Appearances <<NOTE: 12 USC 247b.>> before
congress.--The Vice Chairman for Supervision shall appear before
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives and at semi-annual hearings regarding the
efforts, activities, objectives, and plans of the Board with
respect to the conduct of supervision and regulation of
depository institution holding companies and other financial
firms supervised by the Board.''.
(c) Board Responsibility To Set Supervision and Regulatory Policy.--
Section 11 of the Federal Reserve Act (12 U.S.C. 248) (relating to
enumerated powers of the Board) is amended by adding at the end of
subsection (k) (relating to delegation)
[[Page 124 STAT. 2127]]
the following: ``The Board of Governors may not delegate to a Federal
reserve bank its functions for the establishment of policies for the
supervision and regulation of depository institution holding companies
and other financial firms supervised by the Board of Governors.''.
(d) Exercise <<NOTE: 12 USC 5614.>> of Federal Reserve Authority.--
(1) No decisions by federal reserve bank presidents.--No
provision of title I relating to the authority of the Board of
Governors shall be construed as conferring any decision-making
authority on presidents of Federal reserve banks.
(2) Voting decisions by board.--The Board of Governors shall
not delegate the authority to make any voting decision that the
Board of Governors is authorized or required to make under title
I of this Act in contravention of section 11(k) of the Federal
Reserve Act.
SEC. 1109. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES;
PUBLICATION OF BOARD ACTIONS.
(a) GAO Audit.--
(1) In general.--Notwithstanding <<NOTE: Time period.>>
section 714(b) of title 31, United States Code, or any other
provision of law, the Comptroller General of the United States
(in this subsection referred to as the ``Comptroller General'')
shall conduct a one-time audit of all loans and other financial
assistance provided during the period beginning on December 1,
2007 and ending on the date of enactment of this Act by the
Board of Governors or a Federal reserve bank under the Asset-
Backed Commercial Paper Money Market Mutual Fund Liquidity
Facility, the Term Asset-Backed Securities Loan Facility, the
Primary Dealer Credit Facility, the Commercial Paper Funding
Facility, the Term Securities Lending Facility, the Term Auction
Facility, Maiden Lane, Maiden Lane II, Maiden Lane III, the
agency Mortgage-Backed Securities program, foreign currency
liquidity swap lines, and any other program created as a result
of section 13(3) of the Federal Reserve Act (as so designated by
this title).
(2) Assessments.--In conducting the audit under paragraph
(1), the Comptroller General shall assess--
(A) the operational integrity, accounting, financial
reporting, and internal controls of the credit facility;
(B) the effectiveness of the security and collateral
policies established for the facility in mitigating risk
to the relevant Federal reserve bank and taxpayers;
(C) whether the credit facility inappropriately
favors one or more specific participants over other
institutions eligible to utilize the facility;
(D) the policies governing the use, selection, or
payment of third-party contractors by or for any credit
facility; and
(E) whether there were conflicts of interest with
respect to the manner in which such facility was
established or operated.
(3) Timing.--The audit required by this subsection shall be
commenced not later than 30 days after the date of enactment of
this Act, and shall be completed not later than 12 months after
that date of enactment.
[[Page 124 STAT. 2128]]
(4) Report required.--The Comptroller General shall submit a
report on the audit conducted under paragraph (1) to the
Congress not later than 12 months after the date of enactment of
this Act, and such report shall be made available to--
(A) the Speaker of the House of Representatives;
(B) the majority and minority leaders of the House
of Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee
on Banking, Housing, and Urban Affairs of the Senate and
of the Committee on Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(b) Audit of Federal Reserve Bank Governance.--
(1) Audit.--
(A) In general.--Not <<NOTE: Deadline.>> later than
1 year after the date of enactment of this Act, the
Comptroller General shall complete an audit of the
governance of the Federal reserve bank system.
(B) Required examinations.--The audit required under
subparagraph (A) shall--
(i) examine the extent to which the current
system of appointing Federal reserve bank
directors effectively represents ``the public,
without discrimination on the basis of race,
creed, color, sex or national origin, and with due
but not exclusive consideration to the interests
of agriculture, commerce, industry, services,
labor, and consumers'' in the selection of bank
directors, as such requirement is set forth under
section 4 of the Federal Reserve Act;
(ii) examine whether there are actual or
potential conflicts of interest created when the
directors of Federal reserve banks, which execute
the supervisory functions of the Board of
Governors of the Federal Reserve System, are
elected by member banks;
(iii) examine the establishment and operations
of each facility described in subsection (a)(1)
and each Federal reserve bank involved in the
establishment and operations thereof; and
(iv) identify changes to selection procedures
for Federal reserve bank directors, or to other
aspects of Federal reserve bank governance, that
would--
(I) improve how the public is
represented;
(II) eliminate actual or potential
conflicts of interest in bank
supervision;
(III) increase the availability of
information useful for the formation and
execution of monetary policy; or
(IV) in other ways increase the
effectiveness or efficiency of reserve
banks.
(2) Report required.--A report on the audit conducted under
paragraph (1) shall be submitted by the Comptroller General to
the Congress before the end of the 90-day period beginning on
the date on which such audit is completed, and such report shall
be made available to--
(A) the Speaker of the House of Representatives;
[[Page 124 STAT. 2129]]
(B) the majority and minority leaders of the House
of Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee
on Banking, Housing, and Urban Affairs of the Senate and
of the Committee on Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(c) Publication of Board <<NOTE: Web posting. Deadline.>> Actions.--
Notwithstanding any other provision of law, the Board of Governors shall
publish on its website, not later than December 1, 2010, with respect to
all loans and other financial assistance provided during the period
beginning on December 1, 2007 and ending on the date of enactment of
this Act under the Asset-Backed Commercial Paper Money Market Mutual
Fund Liquidity Facility, the Term Asset-Backed Securities Loan Facility,
the Primary Dealer Credit Facility, the Commercial Paper Funding
Facility, the Term Securities Lending Facility, the Term Auction
Facility, Maiden Lane, Maiden Lane II, Maiden Lane III, the agency
Mortgage-Backed Securities program, foreign currency liquidity swap
lines, and any other program created as a result of section 13(3) of the
Federal Reserve Act (as so designated by this title)--
(1) the identity of each business, individual, entity, or
foreign central bank to which the Board of Governors or a
Federal reserve bank has provided such assistance;
(2) the type of financial assistance provided to that
business, individual, entity, or foreign central bank;
(3) the value or amount of that financial assistance;
(4) the date on which the financial assistance was provided;
(5) the specific terms of any repayment expected, including
the repayment time period, interest charges, collateral,
limitations on executive compensation or dividends, and other
material terms; and
(6) the specific rationale for each such facility or
program.
TITLE XII--IMPROVING <<NOTE: Improving Access to Mainstream Financial
Institutions Act of 2010.>> ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
SEC. <<NOTE: 12 USC 5301 note.>> 1201. SHORT TITLE.
This title may be cited as the ``Improving Access to Mainstream
Financial Institutions Act of 2010''.
SEC. <<NOTE: 12 USC 5621.>> 1202. PURPOSE.
The purpose of this title is to encourage initiatives for financial
products and services that are appropriate and accessible for millions
of Americans who are not fully incorporated into the financial
mainstream.
SEC. <<NOTE: 12 USC 5622.>> 1203. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Account.--The term ``account'' means an agreement
between an individual and an eligible entity under which the
individual obtains from or through the entity 1 or more banking
products and services, and includes a deposit account, a savings
[[Page 124 STAT. 2130]]
account (including a money market savings account), an account
for a closed-end loan, and other products or services, as the
Secretary deems appropriate.
(2) Community development financial institution.--The term
``community development financial institution'' has the same
meaning as in section 103(5) of the Community Development
Banking and Financial Institutions Act of 1994 (12 U.S.C.
4702(5)).
(3) Eligible entity.--The term ``eligible entity'' means--
(A) an organization described in section 501(c)(3)
of the Internal Revenue Code of 1986, and exempt from
tax under section 501(a) of such Code;
(B) a federally insured depository institution;
(C) a community development financial institution;
(D) a State, local, or tribal government entity; or
(E) a partnership or other joint venture comprised
of 1 or more of the entities described in subparagraphs
(A) through (D), in accordance with regulations
prescribed by the Secretary under this title.
(4) Federally insured depository institution.--The term
``federally insured depository institution'' means any insured
depository institution (as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813)) and any
insured credit union (as that term is defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752)).
SEC. 1204. <<NOTE: 12 USC 5623.>> EXPANDED ACCESS TO MAINSTREAM
FINANCIAL INSTITUTIONS.
(a) In <<NOTE: Grants.>> General.--The Secretary is authorized to
establish a multiyear program of grants, cooperative agreements,
financial agency agreements, and similar contracts or undertakings to
promote initiatives designed--
(1) to enable low- and moderate-income individuals to
establish one or more accounts in a federally insured depository
institution that are appropriate to meet the financial needs of
such individuals; and
(2) to improve access to the provision of accounts, on
reasonable terms, for low- and moderate-income individuals.
(b) Program Eligibility and Activities.--
(1) In general.--The Secretary shall restrict participation
in any program established under subsection (a) to an eligible
entity. Subject to regulations prescribed by the Secretary under
this title, 1 or more eligible entities may participate in 1 or
several programs established under subsection (a).
(2) Account activities.--Subject to regulations prescribed
by the Secretary, an eligible entity may, in participating in a
program established under subsection (a), offer or provide to
low- and moderate-income individuals products and services
relating to accounts, including--
(A) small-dollar value loans; and
(B) financial education and counseling relating to
conducting transactions in and managing accounts.
SEC. 1205. <<NOTE: 12 USC 5624.>> LOW-COST ALTERNATIVES TO SMALL
DOLLAR LOANS.
(a) Grants Authorized.--The Secretary is authorized to establish
multiyear demonstration programs by means of grants, cooperative
agreements, financial agency agreements, and similar contracts or
undertakings, with eligible entities to provide low-cost, small
[[Page 124 STAT. 2131]]
loans to consumers that will provide alternatives to more costly small
dollar loans.
(b) Terms and Conditions.--
(1) In general.--Loans under this section shall be made on
terms and conditions, and pursuant to lending practices, that
are reasonable for consumers.
(2) Financial literacy and education opportunities.--
(A) In general.--Each <<NOTE: Grants.>> eligible
entity awarded a grant under this section shall promote
and take appropriate steps to ensure the provision of
financial literacy and education opportunities, such as
relevant counseling services, educational courses, or
wealth building programs, to each consumer provided with
a loan pursuant to this section.
(B) Authority to expand access.--As part of the
grants, agreements, and undertakings established under
this section, the Secretary may implement reasonable
measures or programs designed to expand access to
financial literacy and education opportunities,
including relevant counseling services, educational
courses, or wealth building programs to be provided to
individuals who obtain loans from eligible entities
under this section.
SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
The Community Development Banking and Financial Institutions Act of
1994 (12 U.S.C. 4701 et seq.) is amended by adding at the end the
following:
``SEC. 122. GRANTS <<NOTE: 12 USC 4719.>> TO ESTABLISH LOAN-LOSS
RESERVE FUNDS.
``(a) Purposes.--The purposes of this section are--
``(1) to make financial assistance available from the Fund
in order to help community development financial institutions
defray the costs of operating small dollar loan programs, by
providing the amounts necessary for such institutions to
establish their own loan loss reserve funds to mitigate some of
the losses on such small dollar loan programs; and
``(2) to encourage community development financial
institutions to establish and maintain small dollar loan
programs that would help give consumers access to mainstream
financial institutions and combat high cost small dollar
lending.
``(b) Grants.--
``(1) Loan-loss reserve fund grants.--The Fund shall make
grants to community development financial institutions or to any
partnership between such community development financial
institutions and any other federally insured depository
institution with a primary mission to serve targeted investment
areas, as such areas are defined under section 103(16), to
enable such institutions or any partnership of such institutions
to establish a loan-loss reserve fund in order to defray the
costs of a small dollar loan program established or maintained
by such institution.
``(2) Matching requirement.--A community development
financial institution or any partnership of institutions
established pursuant to paragraph (1) shall provide non-Federal
matching funds in an amount equal to 50 percent of the amount of
any grant received under this section.
``(3) Use of funds.--Any grant amounts received by a
community development financial institution or any partnership
between or among such institutions under paragraph (1)--
[[Page 124 STAT. 2132]]
``(A) may not be used by such institution to provide
direct loans to consumers;
``(B) may be used by such institution to help
recapture a portion or all of a defaulted loan made
under the small dollar loan program of such institution;
and
``(C) may be used to designate and utilize a fiscal
agent for services normally provided by such an agent.
``(4) Technical assistance grants.--The Fund shall make
technical assistance grants to community development financial
institutions or any partnership between or among such
institutions to support and maintain a small dollar loan
program. Any grant amounts received under this paragraph may be
used for technology, staff support, and other costs associated
with establishing a small dollar loan program.
``(c) Definitions.--For purposes of this section--
``(1) the term `consumer reporting agency that compiles and
maintains files on consumers on a nationwide basis' has the same
meaning given such term in section 603(p) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(p)); and
``(2) the term `small dollar loan program' means a loan
program wherein a community development financial institution or
any partnership between or among such institutions offers loans
to consumers that--
``(A) are made in amounts not exceeding $2,500;
``(B) must be repaid in installments;
``(C) have no pre-payment penalty;
``(D) the institution has to report payments
regarding the loan to at least 1 of the consumer
reporting agencies that compiles and maintains files on
consumers on a nationwide basis; and
``(E) meet any other affordability requirements as
may be established by the Administrator.''.
SEC. 1207. <<NOTE: Application. 12 USC 5625.>> PROCEDURAL
PROVISIONS.
An eligible entity desiring to participate in a program or obtain a
grant under this title shall submit an application to the Secretary, in
such form and containing such information as the Secretary may require.
SEC. 1208. <<NOTE: 12 USC 5626.>> AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization to the Secretary.--There are authorized to be
appropriated to the Secretary, such sums as are necessary to both
administer and fund the programs and projects authorized by this title,
to remain available until expended.
(b) Authorization to the Fund.--There is authorized to be
appropriated to the Fund for each fiscal year beginning in fiscal year
2010, an amount equal to the amount of the administrative costs of the
Fund for the operation of the grant program established under this
title.
SEC. <<NOTE: 12 USC 5627.>> 1209. REGULATIONS.
(a) In General.--The Secretary is authorized to promulgate
regulations to implement and administer the grant programs and
undertakings authorized by this title.
(b) Regulatory Authority.--Regulations prescribed under this section
may contain such classifications, differentiations, or other provisions,
and may provide for such adjustments and exceptions for any class of
grant programs, undertakings, or eligible
[[Page 124 STAT. 2133]]
entities, as, in the judgment of the Secretary, are necessary or proper
to effectuate the purposes of this title, to prevent circumvention or
evasion of this title, or to facilitate compliance with this title.
SEC. 1210. <<NOTE: 12 USC 5628.>> EVALUATION AND REPORTS TO
CONGRESS.
For each fiscal year in which a program or project is carried out
under this title, the Secretary shall submit a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives containing a
description of the activities funded, amounts distributed, and
measurable results, as appropriate and available.
TITLE XIII--PAY <<NOTE: Pay It Back Act.>> IT BACK ACT
SEC. 1301. <<NOTE: 12 USC 5201 note.>> SHORT TITLE.
This title may be cited as the ``Pay It Back Act''.
SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION.
Section 115(a) of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5225(a)) is amended--
(1) in paragraph (3)--
(A) by striking ``, $700,000,000,000, as such amount
is reduced by $1,259,000,000, as such amount is reduced
by $1,244,000,000'' and inserting ``$475,000,000,000'';
and
(B) by striking ``outstanding at any one time''; and
(2) by adding at the end the following:
``(4) For purposes of this subsection, the amount of
authority considered to be exercised by the Secretary shall not
be reduced by--
``(A) any amounts received by the Secretary before,
on, or after the date of enactment of the Pay It Back
Act from repayment of the principal of financial
assistance by an entity that has received financial
assistance under the TARP or any other program enacted
by the Secretary under the authorities granted to the
Secretary under this Act;
``(B) any amounts committed for any guarantees
pursuant to the TARP that became or become uncommitted;
or
``(C) any losses realized by the Secretary.
``(5) No authority under this Act may be used to incur any
obligation for a program or initiative that was not initiated
prior to June 25, 2010.''.
SEC. 1303. REPORT.
Section 106 of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5216) is amended by inserting at the end the following:
``(f) Report.--The Secretary of the Treasury shall report to
Congress every 6 months on amounts received and transferred to the
general fund under subsection (d).''.
[[Page 124 STAT. 2134]]
SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT OF
2008.
(a) Sale of Fannie Mae Obligations and Securities by the Treasury;
Deficit Reduction.--Section 304(g)(2) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(g)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D);
and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the
Treasury shall deposit in the General Fund of the
Treasury any amounts received by the Secretary from the
sale of any obligation acquired by the Secretary under
this subsection, where such amounts shall be--
``(i) dedicated for the sole purpose of
deficit reduction; and
``(ii) prohibited from use as an offset for
other spending increases or revenue reductions.''.
(b) Sale of Freddie Mac Obligations and Securities by the Treasury;
Deficit Reduction.--Section 306(l)(2) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1455(l)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D);
and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the
Treasury shall deposit in the General Fund of the
Treasury any amounts received by the Secretary from the
sale of any obligation acquired by the Secretary under
this subsection, where such amounts shall be--
``(i) dedicated for the sole purpose of
deficit reduction; and
``(ii) prohibited from use as an offset for
other spending increases or revenue reductions.''.
(c) Sale of Federal Home Loan Banks Obligations by the Treasury;
Deficit Reduction.--Section 11(l)(2) of the Federal Home Loan Bank Act
(12 U.S.C. 1431(l)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D);
and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the
Treasury shall deposit in the General Fund of the
Treasury any amounts received by the Secretary from the
sale of any obligation acquired by the Secretary under
this subsection, where such amounts shall be--
``(i) dedicated for the sole purpose of
deficit reduction; and
``(ii) prohibited from use as an offset for
other spending increases or revenue reductions.''.
(d) Repayment <<NOTE: 12 USC 1455 note.>> of Fees.--Any periodic
commitment fee or any other fee or assessment paid by the Federal
National Mortgage Association or Federal Home Loan Mortgage Corporation
to the Secretary of the Treasury as a result of any preferred stock
purchase agreement, mortgage-backed security purchase program, or any
other program or activity authorized or carried out pursuant to the
authorities granted to the Secretary of the Treasury under section 1117
of the Housing and Economic Recovery Act of 2008
[[Page 124 STAT. 2135]]
(Public Law 110-289; 122 Stat. 2683), including any fee agreed to by
contract between the Secretary and the Association or Corporation, shall
be deposited in the General Fund of the Treasury where such amounts
shall be--
(1) dedicated for the sole purpose of deficit reduction; and
(2) prohibited from use as an offset for other spending
increases or revenue reductions.
SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT.
The Director of the Federal Housing Finance Agency shall submit to
Congress a report on the plans of the Agency to continue to support and
maintain the Nation's vital housing industry, while at the same time
guaranteeing that the American taxpayer will not suffer unnecessary
losses.
SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS.
(a) Rejection of ARRA Funds by State.--Section 1607 of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 305)
is amended by adding at the end the following:
``(d) Statewide Rejection of Funds.--If funds provided to any State
in any division of this Act are not accepted for use by the Governor of
the State pursuant to subsection (a) or by the State legislature
pursuant to subsection (b), then all such funds shall be--
``(1) <<NOTE: Rescission.>> rescinded; and
``(2) deposited in the General Fund of the Treasury where
such amounts shall be--
``(A) dedicated for the sole purpose of deficit
reduction; and
``(B) prohibited from use as an offset for other
spending increases or revenue reductions.''.
(b) Withdrawal or Recapture of Unobligated Funds.--Title XVI of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123
Stat. 302) is amended by adding at the end the following:
``SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.
``Notwithstanding any other provision of this Act, if the head of
any executive agency withdraws or recaptures for any reason funds
appropriated or otherwise made available under this division, and such
funds have not been obligated by a State to a local government or for a
specific project, such recaptured funds shall be--
``(1) rescinded; and
``(2) deposited in the General Fund of the Treasury where
such amounts shall be--
``(A) dedicated for the sole purpose of deficit
reduction; and
``(B) prohibited from use as an offset for other
spending increases or revenue reductions.''.
(c) Return of Unobligated Funds by End of 2012.--Section 1603 of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123
Stat. 302) is amended by--
(1) striking ``All funds'' and inserting ``(a) In General.--
All funds''; and
(2) adding at the end the following:
``(b) Repayment of Unobligated Funds.--Any discretionary
appropriations made available in this division that have not been
[[Page 124 STAT. 2136]]
obligated as of December 31, 2012, are hereby rescinded, and such
amounts shall be deposited in the General Fund of the Treasury where
such amounts shall be--
``(1) dedicated for the sole purpose of deficit reduction;
and
``(2) prohibited from use as an offset for other spending
increases or revenue reductions.
``(c) Presidential Waiver Authority.--
``(1) In general.--The President may waive the requirements
under subsection (b), if the President determines that it is not
in the best interest of the Nation to rescind a specific
unobligated amount after December 31, 2012.
``(2) Requests.--The head of an executive agency may also
apply to the President for a waiver from the requirements under
subsection (b).''.
TITLE XIV-- <<NOTE: Mortgage Reform and Anti-Predatory Lending
Act.>> MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
SEC. 1400. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER LAW.
(a) Short <<NOTE: 15 USC 1601 note.>> Title.--This title may be
cited as the ``Mortgage Reform and Anti-Predatory Lending Act''.
(b) Designation <<NOTE: 12 USC 5481 note.>> as Enumerated Consumer
Law Under the Purview of the Bureau of Consumer Financial Protection.--
Subtitles A, B, C, and E and sections 1471, 1472, 1475, and 1476, and
the amendments made by such subtitles and sections, shall be enumerated
consumer laws, as defined in section 1002, and come under the purview of
the Bureau of Consumer Financial Protection for purposes of title X,
including the transfer of functions and personnel under subtitle F of
title X and the savings provisions of such subtitle.
(c) Regulations; <<NOTE: 15 USC 1601 note.>> Effective Date.--
(1) Regulations.--The regulations required to be prescribed
under this title or the amendments made by this title shall--
(A) be prescribed in final form before the end of
the 18-month period beginning on the designated transfer
date; and
(B) take effect not later than 12 months after the
date of issuance of the regulations in final form.
(2) Effective date established by rule.--Except as provided
in paragraph (3), a section, or provision thereof, of this title
shall take effect on the date on which the final regulations
implementing such section, or provision, take effect.
(3) Effective date.--A section of this title for which
regulations have not been issued on the date that is 18 months
after the designated transfer date shall take effect on such
date.
[[Page 124 STAT. 2137]]
Subtitle A--Residential Mortgage Loan Origination Standards
SEC. 1401. DEFINITIONS.
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended
by adding at the end the following new subsection:
``(cc) Definitions Relating to Mortgage Origination and Residential
Mortgage Loans.--
``(1) Commission.--Unless otherwise specified, the term
`Commission' means the Federal Trade Commission.
``(2) Mortgage originator.--The term `mortgage originator'--
``(A) means any person who, for direct or indirect
compensation or gain, or in the expectation of direct or
indirect compensation or gain--
``(i) takes a residential mortgage loan
application;
``(ii) assists a consumer in obtaining or
applying to obtain a residential mortgage loan; or
``(iii) offers or negotiates terms of a
residential mortgage loan;
``(B) includes any person who represents to the
public, through advertising or other means of
communicating or providing information (including the
use of business cards, stationery, brochures, signs,
rate lists, or other promotional items), that such
person can or will provide any of the services or
perform any of the activities described in subparagraph
(A);
``(C) does not include any person who is (i) not
otherwise described in subparagraph (A) or (B) and who
performs purely administrative or clerical tasks on
behalf of a person who is described in any such
subparagraph, or (ii) an employee of a retailer of
manufactured homes who is not described in clause (i) or
(iii) of subparagraph (A) and who does not advise a
consumer on loan terms (including rates, fees, and other
costs);
``(D) does not include a person or entity that only
performs real estate brokerage activities and is
licensed or registered in accordance with applicable
State law, unless such person or entity is compensated
by a lender, a mortgage broker, or other mortgage
originator or by any agent of such lender, mortgage
broker, or other mortgage originator;
``(E) does not include, with respect to a
residential mortgage loan, a person, estate, or trust
that provides mortgage financing for the sale of 3
properties in any 12-month period to purchasers of such
properties, each of which is owned by such person,
estate, or trust and serves as security for the loan,
provided that such loan--
``(i) is not made by a person, estate, or
trust that has constructed, or acted as a
contractor for the construction of, a residence on
the property in the ordinary course of business of
such person, estate, or trust;
``(ii) is fully amortizing;
[[Page 124 STAT. 2138]]
``(iii) is with respect to a sale for which
the seller determines in good faith and documents
that the buyer has a reasonable ability to repay
the loan;
``(iv) has a fixed rate or an adjustable rate
that is adjustable after 5 or more years, subject
to reasonable annual and lifetime limitations on
interest rate increases; and
``(v) meets any other criteria the Board may
prescribe;
``(F) does not include the creditor (except the
creditor in a table-funded transaction) under paragraph
(1), (2), or (4) of section 129B(c); and
``(G) does not include a servicer or servicer
employees, agents and contractors, including but not
limited to those who offer or negotiate terms of a
residential mortgage loan for purposes of renegotiating,
modifying, replacing and subordinating principal of
existing mortgages where borrowers are behind in their
payments, in default or have a reasonable likelihood of
being in default or falling behind.
``(3) Nationwide mortgage licensing system and registry.--
The term `Nationwide Mortgage Licensing System and Registry' has
the same meaning as in the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008.
``(4) Other definitions relating to mortgage originator.--
For purposes of this subsection, a person `assists a consumer in
obtaining or applying to obtain a residential mortgage loan' by,
among other things, advising on residential mortgage loan terms
(including rates, fees, and other costs), preparing residential
mortgage loan packages, or collecting information on behalf of
the consumer with regard to a residential mortgage loan.
``(5) Residential mortgage loan.--The term `residential
mortgage loan' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or, for
purposes of sections 129B and 129C and section 128(a) (16),
(17), (18), and (19), and sections 128(f) and 130(k), and any
regulations promulgated thereunder, an extension of credit
relating to a plan described in section 101(53D) of title 11,
United States Code.
``(6) Secretary.--The term `Secretary', when used in
connection with any transaction or person involved with a
residential mortgage loan, means the Secretary of Housing and
Urban Development.
``(7) Servicer.--The term `servicer' has the same meaning as
in section 6(i)(2) of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2605(i)(2)).''.
SEC. 1402. RESIDENTIAL MORTGAGE LOAN ORIGINATION.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended--
(1) by redesignating the 2nd of the 2 sections designated as
section 129 (15 U.S.C. 1639a) (relating to duty of servicers of
residential mortgages) as section 129A; and
[[Page 124 STAT. 2139]]
(2) by inserting after section 129A (as so redesignated) the
following new section:
``Sec. 129B. <<NOTE: 15 USC 1639b.>> Residential mortgage loan
origination
``(a) Finding and Purpose.--
``(1) Finding.--The Congress finds that economic
stabilization would be enhanced by the protection, limitation,
and regulation of the terms of residential mortgage credit and
the practices related to such credit, while ensuring that
responsible, affordable mortgage credit remains available to
consumers.
``(2) Purpose.--It is the purpose of this section and
section 129C to assure that consumers are offered and receive
residential mortgage loans on terms that reasonably reflect
their ability to repay the loans and that are understandable and
not unfair, deceptive or abusive.
``(b) Duty of Care.--
``(1) Standard.--Subject to regulations prescribed under
this subsection, each mortgage originator shall, in addition to
the duties imposed by otherwise applicable provisions of State
or Federal law--
``(A) be qualified and, when required, registered
and licensed as a mortgage originator in accordance with
applicable State or Federal law, including the Secure
and Fair Enforcement for Mortgage Licensing Act of 2008;
and
``(B) include on all loan documents any unique
identifier of the mortgage originator provided by the
Nationwide Mortgage Licensing System and Registry.
``(2) Compliance <<NOTE: Regulations.>> procedures
required.--The Board shall prescribe regulations requiring
depository institutions to establish and maintain procedures
reasonably designed to assure and monitor the compliance of such
depository institutions, the subsidiaries of such institutions,
and the employees of such institutions or subsidiaries with the
requirements of this section and the registration procedures
established under section 1507 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129 the following new items:
``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.
SEC. 1403. PROHIBITION ON STEERING INCENTIVES.
Section 129B of the Truth in Lending Act (as added by section
1402(a)) is amended by inserting after subsection (b) the following new
subsection:
``(c) Prohibition on Steering Incentives.--
``(1) In general.--For any residential mortgage loan, no
mortgage originator shall receive from any person and no person
shall pay to a mortgage originator, directly or indirectly,
compensation that varies based on the terms of the loan (other
than the amount of the principal).
``(2) Restructuring of financing origination fee.--
``(A) In general.--For any mortgage loan, a mortgage
originator may not receive from any person other than
the consumer and no person, other than the consumer, who
knows or has reason to know that a consumer has
[[Page 124 STAT. 2140]]
directly compensated or will directly compensate a
mortgage originator may pay a mortgage originator any
origination fee or charge except bona fide third party
charges not retained by the creditor, mortgage
originator, or an affiliate of the creditor or mortgage
originator .
``(B) Exception.--Notwithstanding subparagraph (A),
a mortgage originator may receive from a person other
than the consumer an origination fee or charge, and a
person other than the consumer may pay a mortgage
originator an origination fee or charge, if--
``(i) the mortgage originator does not receive
any compensation directly from the consumer; and
``(ii) <<NOTE: Waiver authority.>> the
consumer does not make an upfront payment of
discount points, origination points, or fees,
however denominated (other than bona fide third
party charges not retained by the mortgage
originator, creditor, or an affiliate of the
creditor or originator), except that the Board
may, by rule, waive or provide exemptions to this
clause if the Board determines that such waiver or
exemption is in the interest of consumers and in
the public interest.
``(3) Regulations.--The Board shall prescribe regulations to
prohibit--
``(A) mortgage originators from steering any
consumer to a residential mortgage loan that--
``(i) the consumer lacks a reasonable ability
to repay (in accordance with regulations
prescribed under section 129C(a)); or
``(ii) has predatory characteristics or
effects (such as equity stripping, excessive fees,
or abusive terms);
``(B) mortgage originators from steering any
consumer from a residential mortgage loan for which the
consumer is qualified that is a qualified mortgage (as
defined in section 129C(b)(2)) to a residential mortgage
loan that is not a qualified mortgage;
``(C) abusive or unfair lending practices that
promote disparities among consumers of equal credit
worthiness but of different race, ethnicity, gender, or
age; and
``(D) mortgage originators from--
``(i) mischaracterizing the credit history of
a consumer or the residential mortgage loans
available to a consumer;
``(ii) mischaracterizing or suborning the
mischaracterization of the appraised value of the
property securing the extension of credit; or
``(iii) if unable to suggest, offer, or
recommend to a consumer a loan that is not more
expensive than a loan for which the consumer
qualifies, discouraging a consumer from seeking a
residential mortgage loan secured by a consumer's
principal dwelling from another mortgage
originator.
``(4) Rules of construction.--No provision of this
subsection shall be construed as--
``(A) permitting any yield spread premium or other
similar compensation that would, for any residential
mortgage loan, permit the total amount of direct and
indirect compensation from all sources permitted to a
mortgage
[[Page 124 STAT. 2141]]
originator to vary based on the terms of the loan (other
than the amount of the principal);
``(B) limiting or affecting the amount of
compensation received by a creditor upon the sale of a
consummated loan to a subsequent purchaser;
``(C) restricting a consumer's ability to finance,
at the option of the consumer, including through
principal or rate, any origination fees or costs
permitted under this subsection, or the mortgage
originator's right to receive such fees or costs
(including compensation) from any person, subject to
paragraph (2)(B), so long as such fees or costs do not
vary based on the terms of the loan (other than the
amount of the principal) or the consumer's decision
about whether to finance such fees or costs; or
``(D) prohibiting incentive payments to a mortgage
originator based on the number of residential mortgage
loans originated within a specified period of time.''.
SEC. 1404. LIABILITY.
Section 129B of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 1403) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.-- <<NOTE: Applicability.>> For purposes of
providing a cause of action for any failure by a mortgage
originator, other than a creditor, to comply with any
requirement imposed under this section and any regulation
prescribed under this section, section 130 shall be applied with
respect to any such failure by substituting `mortgage
originator' for `creditor' each place such term appears in each
such subsection.
``(2) Maximum.--The maximum amount of any liability of a
mortgage originator under paragraph (1) to a consumer for any
violation of this section shall not exceed the greater of actual
damages or an amount equal to 3 times the total amount of direct
and indirect compensation or gain accruing to the mortgage
originator in connection with the residential mortgage loan
involved in the violation, plus the costs to the consumer of the
action, including a reasonable attorney's fee.''.
SEC. 1405. REGULATIONS.
(a) Discretionary Regulatory Authority.--Section 129B of the Truth
in Lending Act is amended by inserting after subsection (d) (as added by
section 1404) the following new subsection:
``(e) Discretionary Regulatory Authority.--
``(1) In general.--The Board shall, by regulations, prohibit
or condition terms, acts or practices relating to residential
mortgage loans that the Board finds to be abusive, unfair,
deceptive, predatory, necessary or proper to ensure that
responsible, affordable mortgage credit remains available to
consumers in a manner consistent with the purposes of this
section and section 129C, necessary or proper to effectuate the
purposes of this section and section 129C, to prevent
circumvention or evasion thereof, or to facilitate compliance
with such sections, or are not in the interest of the borrower.
``(2) Application.--The regulations prescribed under
paragraph (1) shall be applicable to all residential mortgage
loans and shall be applied in the same manner as regulations
prescribed under section 105.
[[Page 124 STAT. 2142]]
``(f) Section 129B and any regulations promulgated thereunder do not
apply to an extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.''.
(b) Disclosures.--Notwithstanding <<NOTE: 15 USC 1601 note.>> any
other provision of this title, in order to improve consumer awareness
and understanding of transactions involving residential mortgage loans
through the use of disclosures, the Board may, by rule, exempt from or
modify disclosure requirements, in whole or in part, for any class of
residential mortgage loans if the Board determines that such exemption
or modification is in the interest of consumers and in the public
interest.
SEC. 1406. STUDY OF SHARED APPRECIATION MORTGAGES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury and other relevant
agencies, shall conduct a comprehensive study to determine prudent
statutory and regulatory requirements sufficient to provide for the
widespread use of shared appreciation mortgages to strengthen local
housing markets, provide new opportunities for affordable homeownership,
and enable homeowners at risk of foreclosure to refinance or modify
their mortgages.
(b) Report.--Not later than the expiration of the 6-month period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit a report to the Congress on
the results of the study, which shall include recommendations for the
regulatory and legislative requirements referred to in subsection (a).
Subtitle B--Minimum Standards For Mortgages
SEC. 1411. ABILITY TO REPAY.
(a) In General.--
(1) Rule <<NOTE: 15 USC 1639c note.>> of construction.--No
regulation, order, or guidance issued by the Bureau under this
title shall be construed as requiring a depository institution
to apply mortgage underwriting standards that do not meet the
minimum underwriting standards required by the appropriate
prudential regulator of the depository institution.
(2) Amendment to truth in lending act.--Chapter 2 of the
Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by
inserting after section 129B (as added by section 1402(a)) the
following new section:
``Sec. 129C. Minimum <<NOTE: 15 USC 1639c.>> standards for
residential mortgage loans
``(a) Ability To Repay.--
``(1) In general.--In accordance with regulations prescribed
by the Board, no creditor may make a residential mortgage loan
unless the creditor makes a reasonable and good faith
determination based on verified and documented information that,
at the time the loan is consummated, the consumer has a
reasonable ability to repay the loan, according to its terms,
and all applicable taxes, insurance (including mortgage
guarantee insurance), and assessments.
``(2) Multiple loans.--If the creditor knows, or has reason
to know, that 1 or more residential mortgage loans secured
[[Page 124 STAT. 2143]]
by the same dwelling will be made to the same consumer, the
creditor shall make a reasonable and good faith determination,
based on verified and documented information, that the consumer
has a reasonable ability to repay the combined payments of all
loans on the same dwelling according to the terms of those loans
and all applicable taxes, insurance (including mortgage
guarantee insurance), and assessments.
``(3) Basis for determination.--A determination under this
subsection of a consumer's ability to repay a residential
mortgage loan shall include consideration of the consumer's
credit history, current income, expected income the consumer is
reasonably assured of receiving, current obligations, debt-to-
income ratio or the residual income the consumer will have after
paying non-mortgage debt and mortgage-related obligations,
employment status, and other financial resources other than the
consumer's equity in the dwelling or real property that secures
repayment of the loan. A creditor shall determine the ability of
the consumer to repay using a payment schedule that fully
amortizes the loan over the term of the loan.
``(4) Income verification.--A creditor making a residential
mortgage loan shall verify amounts of income or assets that such
creditor relies on to determine repayment ability, including
expected income or assets, by reviewing the consumer's Internal
Revenue Service Form W-2, tax returns, payroll receipts,
financial institution records, or other third-party documents
that provide reasonably reliable evidence of the consumer's
income or assets. In order to safeguard against fraudulent
reporting, any consideration of a consumer's income history in
making a determination under this subsection shall include the
verification of such income by the use of--
``(A) Internal Revenue Service transcripts of tax
returns; or
``(B) a method that quickly and effectively verifies
income documentation by a third party subject to rules
prescribed by the Board.
``(5) Exemption.--With respect to loans made, guaranteed, or
insured by Federal departments or agencies identified in
subsection (b)(3)(B)(ii), such departments or agencies may
exempt refinancings under a streamlined refinancing from this
income verification requirement as long as the following
conditions are met:
``(A) The consumer is not 30 days or more past due
on the prior existing residential mortgage loan.
``(B) The refinancing does not increase the
principal balance outstanding on the prior existing
residential mortgage loan, except to the extent of fees
and charges allowed by the department or agency making,
guaranteeing, or insuring the refinancing.
``(C) Total points and fees (as defined in section
103(aa)(4), other than bona fide third party charges not
retained by the mortgage originator, creditor, or an
affiliate of the creditor or mortgage originator)
payable in connection with the refinancing do not exceed
3 percent of the total new loan amount.
``(D) The interest rate on the refinanced loan is
lower than the interest rate of the original loan,
unless the borrower is refinancing from an adjustable
rate to a fixed-
[[Page 124 STAT. 2144]]
rate loan, under guidelines that the department or
agency shall establish for loans they make, guarantee,
or issue.
``(E) The <<NOTE: Regulations.>> refinancing is
subject to a payment schedule that will fully amortize
the refinancing in accordance with the regulations
prescribed by the department or agency making,
guaranteeing, or insuring the refinancing.
``(F) The terms of the refinancing do not result in
a balloon payment, as defined in subsection
(b)(2)(A)(ii).
``(G) Both the residential mortgage loan being
refinanced and the refinancing satisfy all requirements
of the department or agency making, guaranteeing, or
insuring the refinancing.
``(6) Nonstandard loans.--
``(A) Variable rate loans that defer repayment of
any principal or interest.--For purposes of determining,
under this subsection, a consumer's ability to repay a
variable rate residential mortgage loan that allows or
requires the consumer to defer the repayment of any
principal or interest, the creditor shall use a fully
amortizing repayment schedule.
``(B) Interest-only loans.--For purposes of
determining, under this subsection, a consumer's ability
to repay a residential mortgage loan that permits or
requires the payment of interest only, the creditor
shall use the payment amount required to amortize the
loan by its final maturity.
``(C) Calculation for negative amortization.--In
making any determination under this subsection, a
creditor shall also take into consideration any balance
increase that may accrue from any negative amortization
provision.
``(D) Calculation process.--For purposes of making
any determination under this subsection, a creditor
shall calculate the monthly payment amount for principal
and interest on any residential mortgage loan by
assuming--
``(i) the loan proceeds are fully disbursed on
the date of the consummation of the loan;
``(ii) the loan is to be repaid in
substantially equal monthly amortizing payments
for principal and interest over the entire term of
the loan with no balloon payment, unless the loan
contract requires more rapid repayment (including
balloon payment), in which case the calculation
shall be made (I) in accordance with regulations
prescribed by the Board, with respect to any loan
which has an annual percentage rate that does not
exceed the average prime offer rate for a
comparable transaction, as of the date the
interest rate is set, by 1.5 or more percentage
points for a first lien residential mortgage loan;
and by 3.5 or more percentage points for a
subordinate lien residential mortgage loan; or
(II) using the contract's repayment schedule, with
respect to a loan which has an annual percentage
rate, as of the date the interest rate is set,
that is at least 1.5 percentage points above the
average prime offer rate for a first lien
residential mortgage loan; and 3.5 percentage
points above the average prime offer rate for a
subordinate lien residential mortgage loan; and
[[Page 124 STAT. 2145]]
``(iii) the interest rate over the entire term
of the loan is a fixed rate equal to the fully
indexed rate at the time of the loan closing,
without considering the introductory rate.
``(E) Refinance of hybrid loans with current
lender.--In considering any application for refinancing
an existing hybrid loan by the creditor into a standard
loan to be made by the same creditor in any case in
which there would be a reduction in monthly payment and
the mortgagor has not been delinquent on any payment on
the existing hybrid loan, the creditor may--
``(i) consider the mortgagor's good standing
on the existing mortgage;
``(ii) consider if the extension of new credit
would prevent a likely default should the original
mortgage reset and give such concerns a higher
priority as an acceptable underwriting practice;
and
``(iii) offer rate discounts and other
favorable terms to such mortgagor that would be
available to new customers with high credit
ratings based on such underwriting practice.
``(7) Fully-indexed rate defined.--For purposes of this
subsection, the term `fully indexed rate' means the index rate
prevailing on a residential mortgage loan at the time the loan
is made plus the margin that will apply after the expiration of
any introductory interest rates.
``(8) Reverse mortgages and bridge loans.--This subsection
shall not apply with respect to any reverse mortgage or
temporary or bridge loan with a term of 12 months or less,
including to any loan to purchase a new dwelling where the
consumer plans to sell a different dwelling within 12 months.
``(9) Seasonal income.--If documented income, including
income from a small business, is a repayment source for a
residential mortgage loan, a creditor may consider the
seasonality and irregularity of such income in the underwriting
of and scheduling of payments for such credit.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129B (as added by section 1402(b)) the following new item:
``129C. Minimum standards for residential mortgage loans.''.
SEC. 1412. SAFE HARBOR AND REBUTTABLE PRESUMPTION.
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (a) (as added by section 1411) the following new
subsection:
``(b) Presumption of Ability To Repay.--
``(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee of such loan subject
to liability under this title, may presume that the loan has met
the requirements of subsection (a), if the loan is a qualified
mortgage.
``(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Qualified mortgage.--The term `qualified
mortgage' means any residential mortgage loan--
[[Page 124 STAT. 2146]]
``(i) for which the regular periodic payments
for the loan may not--
``(I) result in an increase of the
principal balance; or
``(II) except as provided in
subparagraph (E), allow the consumer to
defer repayment of principal;
``(ii) except as provided in subparagraph (E),
the terms of which do not result in a balloon
payment, where a `balloon payment' is a scheduled
payment that is more than twice as large as the
average of earlier scheduled payments;
``(iii) for which the income and financial
resources relied upon to qualify the obligors on
the loan are verified and documented;
``(iv) in the case of a fixed rate loan, for
which the underwriting process is based on a
payment schedule that fully amortizes the loan
over the loan term and takes into account all
applicable taxes, insurance, and assessments;
``(v) in the case of an adjustable rate loan,
for which the underwriting is based on the maximum
rate permitted under the loan during the first 5
years, and a payment schedule that fully amortizes
the loan over the loan term and takes into account
all applicable taxes, insurance, and assessments;
``(vi) that complies with any guidelines or
regulations established by the Board relating to
ratios of total monthly debt to monthly income or
alternative measures of ability to pay regular
expenses after payment of total monthly debt,
taking into account the income levels of the
borrower and such other factors as the Board may
determine relevant and consistent with the
purposes described in paragraph (3)(B)(i);
``(vii) for which the total points and fees
(as defined in subparagraph (C)) payable in
connection with the loan do not exceed 3 percent
of the total loan amount;
``(viii) for which the term of the loan does
not exceed 30 years, except as such term may be
extended under paragraph (3), such as in high-cost
areas; and
``(ix) in the case of a reverse mortgage
(except for the purposes of subsection (a) of
section 129C, to the extent that such mortgages
are exempt altogether from those requirements), a
reverse mortgage which meets the standards for a
qualified mortgage, as set by the Board in rules
that are consistent with the purposes of this
subsection.
``(B) Average prime offer rate.--The term `average
prime offer rate' means the average prime offer rate for
a comparable transaction as of the date on which the
interest rate for the transaction is set, as published
by the Board..
``(C) Points and fees.--
``(i) In general.--For purposes of
subparagraph (A), the term `points and fees' means
points and fees as defined by section 103(aa)(4)
(other than bona fide
[[Page 124 STAT. 2147]]
third party charges not retained by the mortgage
originator, creditor, or an affiliate of the
creditor or mortgage originator).
``(ii) Computation.--For purposes of computing
the total points and fees under this subparagraph,
the total points and fees shall exclude either of
the amounts described in the following subclauses,
but not both:
``(I) Up to and including 2 bona
fide discount points payable by the
consumer in connection with the
mortgage, but only if the interest rate
from which the mortgage's interest rate
will be discounted does not exceed by
more than 1 percentage point the average
prime offer rate.
``(II) Unless 2 bona fide discount
points have been excluded under
subclause (I), up to and including 1
bona fide discount point payable by the
consumer in connection with the
mortgage, but only if the interest rate
from which the mortgage's interest rate
will be discounted does not exceed by
more than 2 percentage points the
average prime offer rate.
``(iii) Bona fide discount points defined.--
For purposes of clause (ii), the term `bona fide
discount points' means loan discount points which
are knowingly paid by the consumer for the purpose
of reducing, and which in fact result in a bona
fide reduction of, the interest rate or time-price
differential applicable to the mortgage.
``(iv) Interest rate reduction.--Subclauses
(I) and (II) of clause (ii) shall not apply to
discount points used to purchase an interest rate
reduction unless the amount of the interest rate
reduction purchased is reasonably consistent with
established industry norms and practices for
secondary mortgage market transactions.
``(D) Smaller loans.--
The <<NOTE: Regulations.>> Board shall prescribe rules
adjusting the criteria under subparagraph (A)(vii) in
order to permit lenders that extend smaller loans to
meet the requirements of the presumption of compliance
under paragraph (1). In prescribing <<NOTE: Urban and
rural areas.>> such rules, the Board shall consider the
potential impact of such rules on rural areas and other
areas where home values are lower.
``(E) Balloon loans.--The Board may, by regulation,
provide that the term `qualified mortgage' includes a
balloon loan--
``(i) that meets all of the criteria for a
qualified mortgage under subparagraph (A) (except
clauses (i)(II), (ii), (iv), and (v) of such
subparagraph);
``(ii) for which the creditor makes a
determination that the consumer is able to make
all scheduled payments, except the balloon
payment, out of income or assets other than the
collateral;
``(iii) for which the underwriting is based on
a payment schedule that fully amortizes the loan
over a period of not more than 30 years and takes
into
[[Page 124 STAT. 2148]]
account all applicable taxes, insurance, and
assessments; and
``(iv) that is extended by a creditor that--
``(I) operates predominantly in
rural or underserved areas;
``(II) together with all affiliates,
has total annual residential mortgage
loan originations that do not exceed a
limit set by the Board;
``(III) retains the balloon loans in
portfolio; and
``(IV) meets any asset size
threshold and any other criteria as the
Board may establish, consistent with the
purposes of this subtitle.
``(3) Regulations.--
``(A) In general.--The Board shall prescribe
regulations to carry out the purposes of this
subsection.
``(B) Revision of safe harbor criteria.--
``(i) In general.--The Board may prescribe
regulations that revise, add to, or subtract from
the criteria that define a qualified mortgage upon
a finding that such regulations are necessary or
proper to ensure that responsible, affordable
mortgage credit remains available to consumers in
a manner consistent with the purposes of this
section, necessary and appropriate to effectuate
the purposes of this section and section 129B, to
prevent circumvention or evasion thereof, or to
facilitate compliance with such sections.
``(ii) Loan definition.--The following
agencies shall, in consultation with the Board,
prescribe rules defining the types of loans they
insure, guarantee, or administer, as the case may
be, that are qualified mortgages for purposes of
paragraph (2)(A), and such rules may revise, add
to, or subtract from the criteria used to define a
qualified mortgage under paragraph (2)(A), upon a
finding that such rules are consistent with the
purposes of this section and section 129B, to
prevent circumvention or evasion thereof, or to
facilitate compliance with such sections:
``(I) The Department of Housing and
Urban Development, with regard to
mortgages insured under the National
Housing Act (12 U.S.C. 1707 et seq.).
``(II) The Department of Veterans
Affairs, with regard to a loan made or
guaranteed by the Secretary of Veterans
Affairs.
``(III) The Department of
Agriculture, with regard loans
guaranteed by the Secretary of
Agriculture pursuant to 42 U.S.C.
1472(h).
``(IV) The Rural Housing Service,
with regard to loans insured by the
Rural Housing Service.''.
SEC. 1413. DEFENSE TO FORECLOSURE.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended
by adding at the end the following new subsection:
``(k) Defense to Foreclosure.--
``(1) In general.--Notwithstanding any other provision of
law, when a creditor, assignee, or other holder of a residential
[[Page 124 STAT. 2149]]
mortgage loan or anyone acting on behalf of such creditor,
assignee, or holder, initiates a judicial or nonjudicial
foreclosure of the residential mortgage loan, or any other
action to collect the debt in connection with such loan, a
consumer may assert a violation by a creditor of paragraph (1)
or (2) of section 129B(c), or of section 129C(a), as a matter of
defense by recoupment or set off without regard for the time
limit on a private action for damages under subsection (e).
``(2) Amount of recoupment or setoff.--
``(A) In general.--The amount of recoupment or set-
off under paragraph (1) shall equal the amount to which
the consumer would be entitled under subsection (a) for
damages for a valid claim brought in an original action
against the creditor, plus the costs to the consumer of
the action, including a reasonable attorney's fee.
``(B) Special rule.--Where such judgment is rendered
after the expiration of the applicable time limit on a
private action for damages under subsection (e), the
amount of recoupment or set-off under paragraph (1)
derived from damages under subsection (a)(4) shall not
exceed the amount to which the consumer would have been
entitled under subsection (a)(4) for damages computed up
to the day preceding the expiration of the applicable
time limit.''.
SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS.
(a) In General.--Section 129C of the Truth in Lending Act is amended
by inserting after subsection (b) (as added by this title) the following
new subsections:
``(c) Prohibition on Certain Prepayment Penalties.--
``(1) Prohibited on certain loans.--
``(A) In general.--A residential mortgage loan that
is not a `qualified mortgage', as defined under
subsection (b)(2), may not contain terms under which a
consumer must pay a prepayment penalty for paying all or
part of the principal after the loan is consummated.
``(B) Exclusions.--For purposes of this subsection,
a `qualified mortgage' may not include a residential
mortgage loan that--
``(i) has an adjustable rate; or
``(ii) has an annual percentage rate that
exceeds the average prime offer rate for a
comparable transaction, as of the date the
interest rate is set--
``(I) by 1.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that is equal to or less than the amount
of the maximum limitation on the
original principal obligation of
mortgage in effect for a residence of
the applicable size, as of the date of
such interest rate set, pursuant to the
6th sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2));
``(II) by 2.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that is more than the amount of the
maximum limitation on the original
principal obligation of mortgage in
[[Page 124 STAT. 2150]]
effect for a residence of the applicable
size, as of the date of such interest
rate set, pursuant to the 6th sentence
of section 305(a)(2) the Federal Home
Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)); and
``(III) by 3.5 or more percentage
points, in the case of a subordinate
lien residential mortgage loan.
``(2) Publication of average prime offer rate and apr
thresholds.--The Board--
``(A) <<NOTE: Deadline.>> shall publish, and update
at least weekly, average prime offer rates;
``(B) may publish multiple rates based on varying
types of mortgage transactions; and
``(C) shall adjust the thresholds established under
subclause (I), (II), and (III) of paragraph (1)(B)(ii)
as necessary to reflect significant changes in market
conditions and to effectuate the purposes of the
Mortgage Reform and Anti-Predatory Lending Act.
``(3) Phased-out <<NOTE: Time periods.>> penalties on
qualified mortgages.--A qualified mortgage (as defined in
subsection (b)(2)) may not contain terms under which a consumer
must pay a prepayment penalty for paying all or part of the
principal after the loan is consummated in excess of the
following limitations:
``(A) During the 1-year period beginning on the date
the loan is consummated, the prepayment penalty shall
not exceed an amount equal to 3 percent of the
outstanding balance on the loan.
``(B) During the 1-year period beginning after the
period described in subparagraph (A), the prepayment
penalty shall not exceed an amount equal to 2 percent of
the outstanding balance on the loan.
``(C) During the 1-year period beginning after the
1-year period described in subparagraph (B), the
prepayment penalty shall not exceed an amount equal to 1
percent of the outstanding balance on the loan.
``(D) After the end of the 3-year period beginning
on the date the loan is consummated, no prepayment
penalty may be imposed on a qualified mortgage.
``(4) Option for no prepayment penalty required.--A creditor
may not offer a consumer a residential mortgage loan product
that has a prepayment penalty for paying all or part of the
principal after the loan is consummated as a term of the loan
without offering the consumer a residential mortgage loan
product that does not have a prepayment penalty as a term of the
loan.
``(d) Single Premium Credit Insurance Prohibited.--No creditor may
finance, directly or indirectly, in connection with any residential
mortgage loan or with any extension of credit under an open end consumer
credit plan secured by the principal dwelling of the consumer, any
credit life, credit disability, credit unemployment, or credit property
insurance, or any other accident, loss-of-income, life, or health
insurance, or any payments directly or indirectly for any debt
cancellation or suspension agreement or contract, except that--
[[Page 124 STAT. 2151]]
``(1) insurance premiums or debt cancellation or suspension
fees calculated and paid in full on a monthly basis shall not be
considered financed by the creditor; and
``(2) this subsection shall not apply to credit unemployment
insurance for which the unemployment insurance premiums are
reasonable, the creditor receives no direct or indirect
compensation in connection with the unemployment insurance
premiums, and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to an
affiliate of the creditor.
``(e) Arbitration.--
``(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit plan
secured by the principal dwelling of the consumer may include
terms which require arbitration or any other nonjudicial
procedure as the method for resolving any controversy or
settling any claims arising out of the transaction.
``(2) Post-controversy agreements.--Subject to paragraph
(3), paragraph (1) shall not be construed as limiting the right
of the consumer and the creditor or any assignee to agree to
arbitration or any other nonjudicial procedure as the method for
resolving any controversy at any time after a dispute or claim
under the transaction arises.
``(3) No waiver of statutory cause of action.--No provision
of any residential mortgage loan or of any extension of credit
under an open end consumer credit plan secured by the principal
dwelling of the consumer, and no other agreement between the
consumer and the creditor relating to the residential mortgage
loan or extension of credit referred to in paragraph (1), shall
be applied or interpreted so as to bar a consumer from bringing
an action in an appropriate district court of the United States,
or any other court of competent jurisdiction, pursuant to
section 130 or any other provision of law, for damages or other
relief in connection with any alleged violation of this section,
any other provision of this title, or any other Federal law.
``(f) Mortgages With Negative Amortization.--No creditor may extend
credit to a borrower in connection with a consumer credit transaction
under an open or closed end consumer credit plan secured by a dwelling
or residential real property that includes a dwelling, other than a
reverse mortgage, that provides or permits a payment plan that may, at
any time over the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
``(1) the creditor provides the consumer with a statement
that--
``(A) the pending transaction will or may, as the
case may be, result in negative amortization;
``(B) describes negative amortization in such manner
as the Board shall prescribe;
``(C) negative amortization increases the
outstanding principal balance of the account; and
``(D) negative amortization reduces the consumer's
equity in the dwelling or real property; and
``(2) in the case of a first-time borrower with respect to a
residential mortgage loan that is not a qualified mortgage, the
first-time borrower provides the creditor with sufficient
[[Page 124 STAT. 2152]]
documentation to demonstrate that the consumer received
homeownership counseling from organizations or counselors
certified by the Secretary of Housing and Urban Development as
competent to provide such counseling.''.
(b) Conforming Amendment Relating to Enforcement.--Section 108(a) of
the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting
after paragraph (6) the following new paragraph:
``(7) sections 21B and 21C of the Securities Exchange Act of
1934, in the case of a broker or dealer, other than a depository
institution, by the Securities and Exchange Commission.''.
(c) Protection Against Loss of Anti-deficiency Protection.--Section
129C of the Truth in Lending Act is amended by inserting after
subsection (f) (as added by subsection (a)) the following new
subsection:
``(g) Protection Against Loss of Anti-deficiency Protection.--
``(1) Definition.--For purposes of this subsection, the term
`anti-deficiency law' means the law of any State which provides
that, in the event of foreclosure on the residential property of
a consumer securing a mortgage, the consumer is not liable, in
accordance with the terms and limitations of such State law, for
any deficiency between the sale price obtained on such property
through foreclosure and the outstanding balance of the mortgage.
``(2) Notice at time of consummation.--In the case of any
residential mortgage loan that is, or upon consummation will be,
subject to protection under an anti-deficiency law, the creditor
or mortgage originator shall provide a written notice to the
consumer describing the protection provided by the anti-
deficiency law and the significance for the consumer of the loss
of such protection before such loan is consummated.
``(3) Notice before refinancing that would cause loss of
protection.--In the case of any residential mortgage loan that
is subject to protection under an anti-deficiency law, if a
creditor or mortgage originator provides an application to a
consumer, or receives an application from a consumer, for any
type of refinancing for such loan that would cause the loan to
lose the protection of such anti-deficiency law, the creditor or
mortgage originator shall provide a written notice to the
consumer describing the protection provided by the anti-
deficiency law and the significance for the consumer of the loss
of such protection before any agreement for any such refinancing
is consummated.''.
(d) Policy Regarding Acceptance of Partial Payment.--Section 129C of
the Truth in Lending Act is amended by inserting after subsection (g)
(as added by subsection (c)) the following new subsection:
``(h) Policy Regarding Acceptance of Partial Payment.--In the case
of any residential mortgage loan, a creditor shall disclose prior to
settlement or, in the case of a person becoming a creditor with respect
to an existing residential mortgage loan, at the time such person
becomes a creditor--
``(1) the creditor's policy regarding the acceptance of
partial payments; and
[[Page 124 STAT. 2153]]
``(2) if partial payments are accepted, how such payments
will be applied to such mortgage and if such payments will be
placed in escrow.
``(i) Timeshare Plans.--This section and any regulations promulgated
under this section do not apply to an extension of credit relating to a
plan described in section 101(53D) of title 11, United States Code.''.
SEC. 1415. <<NOTE: 15 USC 1639b note.>> RULE OF CONSTRUCTION.
Except as otherwise expressly provided in section 129B or 129C of
the Truth in Lending Act (as added by this title), no provision of such
section 129B or 129C shall be construed as superseding, repealing, or
affecting any duty, right, obligation, privilege, or remedy of any
person under any other provision of the Truth in Lending Act or any
other provision of Federal or State law.
SEC. 1416. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.
(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a) of the Truth in Lending Act (15 U.S.C.
1640(a)) is amended--
(1) in paragraph (2)(A)(ii)--
(A) by striking ``$100'' and inserting ``$200''; and
(B) by striking ``$1,000'' and inserting ``$2,000'';
(2) in paragraph (2)(B), by striking ``$500,000'' and
inserting ``$1,000,000''; and
(3) in paragraph (4), by inserting ``, paragraph (1) or (2)
of section 129B(c), or section 129C(a)'' after ``section 129''.
(b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended--
(1) in the first sentence, by striking ``Any action'' and
inserting ``Except as provided in the subsequent sentence, any
action''; and
(2) by inserting after the first sentence the following new
sentence: ``Any action under this section with respect to any
violation of section 129, 129B, or 129C may be brought in any
United States district court, or in any other court of competent
jurisdiction, before the end of the 3-year period beginning on
the date of the occurrence of the violation.''.
SEC. 1417. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended
by adding after subsection (k) (as added by this title) the following
new subsection:
``(l) Exemption From Liability and Rescission in Case of Borrower
Fraud or Deception.--In addition to any other remedy available by law or
contract, no creditor or assignee shall be liable to an obligor under
this section, if such obligor, or co-obligor has been convicted of
obtaining by actual fraud such residential mortgage loan.''.
SEC. 1418. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID
ADJUSTABLE RATE MORTGAGES.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 128 the following
new section:
[[Page 124 STAT. 2154]]
``Sec. 128A. <<NOTE: 15 USC 1638a.>> Reset of hybrid adjustable
rate mortgages
``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of
this section, the term `hybrid adjustable rate mortgage' means a
consumer credit transaction secured by the consumer's principal
residence with a fixed interest rate for an introductory period that
adjusts or resets to a variable interest rate after such period.
``(b) Notice of Reset and Alternatives.--During <<NOTE: Time
period.>> the 1-month period that ends 6 months before the date on which
the interest rate in effect during the introductory period of a hybrid
adjustable rate mortgage adjusts or resets to a variable interest rate
or, in the case of such an adjustment or resetting that occurs within
the first 6 months after consummation of such loan, at consummation, the
creditor or servicer of such loan shall provide a written notice,
separate and distinct from all other correspondence to the consumer,
that includes the following:
``(1) Any index or formula used in making adjustments to or
resetting the interest rate and a source of information about
the index or formula.
``(2) An explanation of how the new interest rate and
payment would be determined, including an explanation of how the
index was adjusted, such as by the addition of a margin.
``(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of the
monthly payment that will apply after the date of the adjustment
or reset, and the assumptions on which this estimate is based.
``(4) A list of alternatives consumers may pursue before the
date of adjustment or reset, and descriptions of the actions
consumers must take to pursue these alternatives, including--
``(A) refinancing;
``(B) renegotiation of loan terms;
``(C) payment forbearances; and
``(D) pre-foreclosure sales.
``(5) The names, addresses, telephone numbers, and Internet
addresses of counseling agencies or programs reasonably
available to the consumer that have been certified or approved
and made publicly available by the Secretary of Housing and
Urban Development or a State housing finance authority (as
defined in section 1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989).
``(6) The address, telephone number, and Internet address
for the State housing finance authority (as so defined) for the
State in which the consumer resides.
``(c) Savings Clause.--The Board may require the notice in paragraph
(b) or other notice consistent with this Act for adjustable rate
mortgage loans that are not hybrid adjustable rate mortgage loans.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 128 the following new item:
``128A. Reset of hybrid adjustable rate mortgages.''.
SEC. 1419. REQUIRED DISCLOSURES.
Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is
amended by adding at the end the following new paragraphs:
[[Page 124 STAT. 2155]]
``(16) In the case of a variable rate residential mortgage
loan for which an escrow or impound account will be established
for the payment of all applicable taxes, insurance, and
assessments--
``(A) the amount of initial monthly payment due
under the loan for the payment of principal and
interest, and the amount of such initial monthly payment
including the monthly payment deposited in the account
for the payment of all applicable taxes, insurance, and
assessments; and
``(B) the amount of the fully indexed monthly
payment due under the loan for the payment of principal
and interest, and the amount of such fully indexed
monthly payment including the monthly payment deposited
in the account for the payment of all applicable taxes,
insurance, and assessments.
``(17) In the case of a residential mortgage loan, the
aggregate amount of settlement charges for all settlement
services provided in connection with the loan, the amount of
charges that are included in the loan and the amount of such
charges the borrower must pay at closing, the approximate amount
of the wholesale rate of funds in connection with the loan, and
the aggregate amount of other fees or required payments in
connection with the loan.
``(18) In the case of a residential mortgage loan, the
aggregate amount of fees paid to the mortgage originator in
connection with the loan, the amount of such fees paid directly
by the consumer, and any additional amount received by the
originator from the creditor.
``(19) In the case of a residential mortgage loan, the total
amount of interest that the consumer will pay over the life of
the loan as a percentage of the principal of the loan. Such
amount shall be computed assuming the consumer makes each
monthly payment in full and on-time, and does not make any over-
payments.''.
SEC. 1420. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR
RESIDENTIAL MORTGAGE LOANS.
Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended
by adding at the end the following new subsection:
``(f) Periodic Statements for Residential Mortgage Loans.--
``(1) In general.--The creditor, assignee, or servicer with
respect to any residential mortgage loan shall transmit to the
obligor, for each billing cycle, a statement setting forth each
of the following items, to the extent applicable, in a
conspicuous and prominent manner:
``(A) The amount of the principal obligation under
the mortgage.
``(B) The current interest rate in effect for the
loan.
``(C) The date on which the interest rate may next
reset or adjust.
``(D) The amount of any prepayment fee to be
charged, if any.
``(E) A description of any late payment fees.
``(F) A telephone number and electronic mail address
that may be used by the obligor to obtain information
regarding the mortgage.
[[Page 124 STAT. 2156]]
``(G) The names, addresses, telephone numbers, and
Internet addresses of counseling agencies or programs
reasonably available to the consumer that have been
certified or approved and made publicly available by the
Secretary of Housing and Urban Development or a State
housing finance authority (as defined in section 1301 of
the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989).
``(H) Such other information as the Board may
prescribe in regulations.
``(2) Development and use of standard form.--The Board shall
develop and prescribe a standard form for the disclosure
required under this subsection, taking into account that the
statements required may be transmitted in writing or
electronically.
``(3) Exception.--Paragraph (1) shall not apply to any fixed
rate residential mortgage loan where the creditor, assignee, or
servicer provides the obligor with a coupon book that provides
the obligor with substantially the same information as required
in paragraph (1).''.
SEC. 1421. REPORT BY THE GAO.
(a) Report Required.--The Comptroller General of the United States
shall conduct a study to determine the effects the enactment of this Act
will have on the availability and affordability of credit for consumers,
small businesses, homebuyers, and mortgage lending, including the
effect--
(1) on the mortgage market for mortgages that are not within
the safe harbor provided in the amendments made by this
subtitle;
(2) on the ability of prospective homebuyers to obtain
financing;
(3) on the ability of homeowners facing resets or
adjustments to refinance--for example, do they have fewer
refinancing options due to the unavailability of certain loan
products that were available before the enactment of this Act;
(4) on minorities' ability to access affordable credit
compared with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on adjustable
rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an investor's
ability to transfer a property after foreclosure;
(8) of expanding the existing provisions of the Home
Ownership and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-cost
mortgages; and
(10) of establishing counseling services under the
Department of Housing and Urban Development and offered through
the Office of Housing Counseling.
(b) Report.--Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report to the Congress containing the findings and conclusions of the
Comptroller General with respect to the study conducted pursuant to
subsection (a).
(c) Examination Related to Certain Credit Risk Retention
Provisions.--The report required by subsection (b) shall also
[[Page 124 STAT. 2157]]
include an analysis by the Comptroller General of the effect on the
capital reserves and funding of lenders of credit risk retention
provisions for non-qualified mortgages, including an analysis of the
exceptions and adjustments authorized in section 129C(b)(3) of the Truth
in Lending Act and a recommendation on whether a uniform standard is
needed.
(d) Analysis of Credit Risk Retention Provisions.--The report
required by subsection (b) shall also include--
(1) an analysis by the Comptroller General of whether the
credit risk retention provisions have significantly reduced
risks to the larger credit market of the repackaging and selling
of securitized loans on a secondary market; and
(2) recommendations to the Congress on adjustments that
should be made, or additional measures that should be
undertaken.
SEC. 1422. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended by striking ``section 129 may also'' and inserting ``section
129, 129B, 129C, 129D, 129E, 129F, 129G, or 129H of this Act may also''.
Subtitle C--High-Cost Mortgages
SEC. 1431. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.
(a) High-cost Mortgage Defined.--Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that
precedes paragraph (2) and inserting the following:
``(aa) High-cost Mortgage.--
``(1) Definition.--
``(A) In general.--The term `high-cost mortgage',
and a mortgage referred to in this subsection, means a
consumer credit transaction that is secured by the
consumer's principal dwelling, other than a reverse
mortgage transaction, if--
``(i) in the case of a credit transaction
secured--
``(I) by a first mortgage on the
consumer's principal dwelling, the
annual percentage rate at consummation
of the transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the dwelling is
personal property and the transaction is
for less than $50,000) the average prime
offer rate, as defined in section
129C(b)(2)(B), for a comparable
transaction; or
``(II) by a subordinate or junior
mortgage on the consumer's principal
dwelling, the annual percentage rate at
consummation of the transaction will
exceed by more than 8.5 percentage
points the average prime offer rate, as
defined in section 129C(b)(2)(B), for a
comparable transaction;
``(ii) the total points and fees payable in
connection with the transaction, other than bona
fide third party charges not retained by the
mortgage originator, creditor, or an affiliate of
the creditor or mortgage originator, exceed--
[[Page 124 STAT. 2158]]
``(I) in the case of a transaction
for $20,000 or more, 5 percent of the
total transaction amount; or
``(II) in the case of a transaction
for less than $20,000, the lesser of 8
percent of the total transaction amount
or $1,000 (or such other dollar amount
as the Board shall prescribe by
regulation); or
``(iii) the credit transaction documents
permit the creditor to charge or collect
prepayment fees or penalties more than 36 months
after the transaction closing or such fees or
penalties exceed, in the aggregate, more than 2
percent of the amount prepaid.
``(B) Introductory rates taken into account.--For
purposes of subparagraph (A)(i), the annual percentage
rate of interest shall be determined based on the
following interest rate:
``(i) In the case of a fixed-rate transaction
in which the annual percentage rate will not vary
during the term of the loan, the interest rate in
effect on the date of consummation of the
transaction.
``(ii) In the case of a transaction in which
the rate of interest varies solely in accordance
with an index, the interest rate determined by
adding the index rate in effect on the date of
consummation of the transaction to the maximum
margin permitted at any time during the loan
agreement.
``(iii) In the case of any other transaction
in which the rate may vary at any time during the
term of the loan for any reason, the interest
charged on the transaction at the maximum rate
that may be charged during the term of the loan.
``(C) Mortgage insurance.--For the purposes of
computing the total points and fees under paragraph (4),
the total points and fees shall exclude--
``(i) any premium provided by an agency of the
Federal Government or an agency of a State;
``(ii) any amount that is not in excess of the
amount payable under policies in effect at the
time of origination under section 203(c)(2)(A) of
the National Housing Act (12 U.S.C.
1709(c)(2)(A)), provided that the premium, charge,
or fee is required to be refundable on a pro-rated
basis and the refund is automatically issued upon
notification of the satisfaction of the underlying
mortgage loan; and
``(iii) any premium paid by the consumer after
closing.''.
(b) Adjustment of Percentage Points.--Section 103(aa)(2) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking
subparagraph (B) and inserting the following new subparagraph:
``(B) An increase or decrease under subparagraph
(A)--
``(i) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(I) being less than 6 percentage points
or greater than 10 percentage points; and
[[Page 124 STAT. 2159]]
``(ii) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(II) being less than 8 percentage points
or greater than 12 percentage points.''.
(c) Points and Fees Defined.--
(1) In general.--Section 103(aa)(4) of the Truth in Lending
Act (15 U.S.C. 1602(aa)(4)) is amended--
(A) by striking subparagraph (B) and inserting the
following:
``(B) all compensation paid directly or indirectly
by a consumer or creditor to a mortgage originator from
any source, including a mortgage originator that is also
the creditor in a table-funded transaction;'';
(B) by redesignating subparagraph (D) as
subparagraph (G); and
(C) by inserting after subparagraph (C) the
following new subparagraphs:
``(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit
unemployment, or credit property insurance, or any other
accident, loss-of-income, life or health insurance, or
any payments directly or indirectly for any debt
cancellation or suspension agreement or contract, except
that insurance premiums or debt cancellation or
suspension fees calculated and paid in full on a monthly
basis shall not be considered financed by the creditor;
``(E) the maximum prepayment fees and penalties
which may be charged or collected under the terms of the
credit transaction;
``(F) all prepayment fees or penalties that are
incurred by the consumer if the loan refinances a
previous loan made or currently held by the same
creditor or an affiliate of the creditor; and''.
(2) Calculation of points and fees for open-end consumer
credit plans.--Section 103(aa) of the Truth in Lending Act (15
U.S.C. 1602(aa)) is amended--
(A) by redesignating paragraph (5) as paragraph (6);
and
(B) by inserting after paragraph (4) the following
new paragraph:
``(5) Calculation of points and fees for open-end consumer
credit plans.--In the case of open-end consumer credit plans,
points and fees shall be calculated, for purposes of this
section and section 129, by adding the total points and fees
known at or before closing, including the maximum prepayment
penalties which may be charged or collected under the terms of
the credit transaction, plus the minimum additional fees the
consumer would be required to pay to draw down an amount equal
to the total credit line.''.
(d) Bona Fide Discount Loan Discount Points.--Section 103 of the
Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after
subsection (cc) (as added by section 1401) the following new subsection:
``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the
purposes of determining the amount of points and fees for purposes of
subsection (aa), either the amounts
[[Page 124 STAT. 2160]]
described in paragraph (1) or (2) of the following paragraphs, but not
both, shall be excluded:
``(1) Up to and including 2 bona fide discount points
payable by the consumer in connection with the mortgage, but
only if the interest rate from which the mortgage's interest
rate will be discounted does not exceed by more than 1
percentage point--
``(A) the average prime offer rate, as defined in
section 129C; or
``(B) if secured by a personal property loan, the
average rate on a loan in connection with which
insurance is provided under title I of the National
Housing Act (12 U.S.C. 1702 et seq.).
``(2) Unless 2 bona fide discount points have been excluded
under paragraph (1), up to and including 1 bona fide discount
point payable by the consumer in connection with the mortgage,
but only if the interest rate from which the mortgage's interest
rate will be discounted does not exceed by more than 2
percentage points--
``(A) the average prime offer rate, as defined in
section 129C; or
``(B) if secured by a personal property loan, the
average rate on a loan in connection with which
insurance is provided under title I of the National
Housing Act (12 U.S.C. 1702 et seq.).
``(3) For purposes of paragraph (1), the term `bona fide
discount points' means loan discount points which are knowingly
paid by the consumer for the purpose of reducing, and which in
fact result in a bona fide reduction of, the interest rate or
time-price differential applicable to the mortgage.
``(4) Paragraphs (1) and (2) shall not apply to discount
points used to purchase an interest rate reduction unless the
amount of the interest rate reduction purchased is reasonably
consistent with established industry norms and practices for
secondary mortgage market transactions.''.
SEC. 1432. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN
MORTGAGES.
(a) Prepayment Penalty Provisions.-- <<NOTE: Repeal.>> Section
129(c)(2) of the Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby
repealed.
(b) No Balloon Payments.--Section 129(e) of the Truth in Lending Act
(15 U.S.C. 1639(e)) is amended to read as follows:
``(e) No Balloon Payments.--No high-cost mortgage may contain a
scheduled payment that is more than twice as large as the average of
earlier scheduled payments. This subsection shall not apply when the
payment schedule is adjusted to the seasonal or irregular income of the
consumer.''.
SEC. 1433. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Additional Requirements for Certain Mortgages.--Section 129 of
the Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (j), (k), (l) and (m) as
subsections (n), (o), (p), and (q) respectively; and
(2) by inserting after subsection (i) the following new
subsections:
``(j) Recommended Default.--No creditor shall recommend or encourage
default on an existing loan or other debt prior to and in connection
with the closing or planned closing of a high-cost
[[Page 124 STAT. 2161]]
mortgage that refinances all or any portion of such existing loan or
debt.
``(k) Late Fees.--
``(1) In general.--No creditor may impose a late payment
charge or fee in connection with a high-cost mortgage--
``(A) in an amount in excess of 4 percent of the
amount of the payment past due;
``(B) unless the loan documents specifically
authorize the charge or fee;
``(C) <<NOTE: Deadlines.>> before the end of the 15-
day period beginning on the date the payment is due, or
in the case of a loan on which interest on each
installment is paid in advance, before the end of the
30-day period beginning on the date the payment is due;
or
``(D) more than once with respect to a single late
payment.
``(2) Coordination with subsequent late fees.--If a payment
is otherwise a full payment for the applicable period and is
paid on its due date or within an applicable grace period, and
the only delinquency or insufficiency of payment is attributable
to any late fee or delinquency charge assessed on any earlier
payment, no late fee or delinquency charge may be imposed on
such payment.
``(3) Failure to make installment payment.--If, in the case
of a loan agreement the terms of which provide that any payment
shall first be applied to any past due principal balance, the
consumer fails to make an installment payment and the consumer
subsequently resumes making installment payments but has not
paid all past due installments, the creditor may impose a
separate late payment charge or fee for any principal due
(without deduction due to late fees or related fees) until the
default is cured.
``(l) Acceleration of Debt.--No high-cost mortgage may contain a
provision which permits the creditor to accelerate the indebtedness,
except when repayment of the loan has been accelerated by default in
payment, or pursuant to a due-on-sale provision, or pursuant to a
material violation of some other provision of the loan document
unrelated to payment schedule.
``(m) Restriction on Financing Points and Fees.--No creditor may
directly or indirectly finance, in connection with any high-cost
mortgage, any of the following:
``(1) Any prepayment fee or penalty payable by the consumer
in a refinancing transaction if the creditor or an affiliate of
the creditor is the noteholder of the note being refinanced.
``(2) Any points or fees.''.
(b) Prohibitions on Evasions.--Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as so
redesignated by subsection (a)(1)) the following new subsection:
``(r) Prohibitions on Evasions, Structuring of Transactions, and
Reciprocal Arrangements.--A creditor may not take any action in
connection with a high-cost mortgage--
``(1) to structure a loan transaction as an open-end credit
plan or another form of loan for the purpose and with the intent
of evading the provisions of this title; or
[[Page 124 STAT. 2162]]
``(2) to divide any loan transaction into separate parts for
the purpose and with the intent of evading provisions of this
title.''.
(c) Modification or Deferral Fees.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(r) (as added by subsection (b) of this section) the following new
subsection:
``(s) Modification and Deferral Fees Prohibited.--A creditor,
successor in interest, assignee, or any agent of any of the above, may
not charge a consumer any fee to modify, renew, extend, or amend a high-
cost mortgage, or to defer any payment due under the terms of such
mortgage.''.
(d) Payoff Statement.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (s) (as added by
subsection (c) of this section) the following new subsection:
``(t) Payoff Statement.--
``(1) Fees.--
``(A) In general.--Except as provided in
subparagraph (B), no creditor or servicer may charge a
fee for informing or transmitting to any person the
balance due to pay off the outstanding balance on a
high-cost mortgage.
``(B) Transaction fee.--When payoff information
referred to in subparagraph (A) is provided by facsimile
transmission or by a courier service, a creditor or
servicer may charge a processing fee to cover the cost
of such transmission or service in an amount not to
exceed an amount that is comparable to fees imposed for
similar services provided in connection with consumer
credit transactions that are secured by the consumer's
principal dwelling and are not high-cost mortgages.
``(C) Fee disclosure.--Prior to charging a
transaction fee as provided in subparagraph (B), a
creditor or servicer shall disclose that payoff balances
are available for free pursuant to subparagraph (A).
``(D) Multiple requests.--If a creditor or servicer
has provided payoff information referred to in
subparagraph (A) without charge, other than the
transaction fee allowed by subparagraph (B), on 4
occasions during a calendar year, the creditor or
servicer may thereafter charge a reasonable fee for
providing such information during the remainder of the
calendar year.
``(2) Prompt delivery.--Payoff <<NOTE: Deadline.>> balances
shall be provided within 5 business days after receiving a
request by a consumer or a person authorized by the consumer to
obtain such information.''.
(e) Pre-Loan Counseling Required.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection t)
(as added by subsection (d) of this section) the following new
subsection:
``(u) Pre-Loan Counseling.--
``(1) In general.--A <<NOTE: Certification.>> creditor may
not extend credit to a consumer under a high-cost mortgage
without first receiving certification from a counselor that is
approved by the Secretary of Housing and Urban Development, or
at the discretion of
[[Page 124 STAT. 2163]]
the Secretary, a State housing finance authority, that the
consumer has received counseling on the advisability of the
mortgage. Such counselor shall not be employed by the creditor
or an affiliate of the creditor or be affiliated with the
creditor.
``(2) Disclosures required prior to counseling.--No
counselor may certify that a consumer has received counseling on
the advisability of the high-cost mortgage unless the counselor
can verify that the consumer has received each statement
required (in connection with such loan) by this section or the
Real Estate Settlement Procedures Act of 1974 with respect to
the transaction.
``(3) Regulations.--The Board may prescribe such regulations
as the Board determines to be appropriate to carry out the
requirements of paragraph (1).''.
(f) Corrections and Unintentional Violations.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (u) (as added by subsection (e)) the following new
subsection:
``(v) Corrections and
Unintentional <<NOTE: Deadlines. Notifications.>> Violations.--A
creditor or assignee in a high-cost mortgage who, when acting in good
faith, fails to comply with any requirement under this section will not
be deemed to have violated such requirement if the creditor or assignee
establishes that either--
``(1) within 30 days of the loan closing and prior to the
institution of any action, the consumer is notified of or
discovers the violation, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change
the terms of the loan in a manner beneficial to the
consumer so that the loan will no longer be a high-cost
mortgage; or
``(2) within 60 days of the creditor's discovery or receipt
of notification of an unintentional violation or bona fide error
and prior to the institution of any action, the consumer is
notified of the compliance failure, appropriate restitution is
made, and whatever adjustments are necessary are made to the
loan to either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change
the terms of the loan in a manner beneficial so that the
loan will no longer be a high-cost mortgage.''.
Subtitle D--Office <<NOTE: Expand and Preserve Home Ownership Through
Counseling Act.>> of Housing Counseling
SEC. 1441. <<NOTE: 12 USC 1701 note.>> SHORT TITLE.
This subtitle may be cited as the ``Expand and Preserve Home
Ownership Through Counseling Act''.
SEC. 1442. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.
Section 4 of the Department of Housing and Urban Development Act (42
U.S.C. 3533) is amended by adding at the end the following new
subsection:
[[Page 124 STAT. 2164]]
``(g) Office of Housing Counseling.--
``(1) Establishment.--There is established, in the
Department, the Office of Housing Counseling.
``(2) Director.--There is established the position of
Director of Housing Counseling. The Director shall be the head
of the Office of Housing Counseling and shall be appointed by,
and shall report to, the Secretary. Such position shall be a
career-reserved position in the Senior Executive Service.
``(3) Functions.--
``(A) In general.--The Director shall have primary
responsibility within the Department for all activities
and matters relating to homeownership counseling and
rental housing counseling, including--
``(i) research, grant administration, public
outreach, and policy development relating to such
counseling; and
``(ii) establishment, coordination, and
administration of all regulations, requirements,
standards, and performance measures under programs
and laws administered by the Department that
relate to housing counseling, homeownership
counseling (including maintenance of homes),
mortgage-related counseling (including home equity
conversion mortgages and credit protection options
to avoid foreclosure), and rental housing
counseling, including the requirements, standards,
and performance measures relating to housing
counseling.
``(B) Specific functions.--The Director shall carry
out the functions assigned to the Director and the
Office under this section and any other provisions of
law. Such functions shall include establishing rules
necessary for--
``(i) the counseling procedures under section
106(g)(1) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(h)(1));
``(ii) carrying out all other functions of the
Secretary under section 106(g) of the Housing and
Urban Development Act of 1968, including the
establishment, operation, and publication of the
availability of the toll-free telephone number
under paragraph (2) of such section;
``(iii) contributing to the distribution of
home buying information booklets pursuant to
section 5 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2604);
``(iv) carrying out the certification program
under section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e));
``(v) carrying out the assistance program
under section 106(a)(4) of the Housing and Urban
Development Act of 1968, including criteria for
selection of applications to receive assistance;
``(vi) carrying out any functions regarding
abusive, deceptive, or unscrupulous lending
practices relating to residential mortgage loans
that the Secretary considers appropriate, which
shall include conducting the study under section 6
of the Expand and Preserve Home Ownership Through
Counseling Act;
[[Page 124 STAT. 2165]]
``(vii) providing for operation of the
advisory committee established under paragraph (4)
of this subsection;
``(viii) collaborating with community-based
organizations with expertise in the field of
housing counseling; and
``(ix) providing for the building of capacity
to provide housing counseling services in areas
that lack sufficient services, including
underdeveloped areas that lack basic water and
sewer systems, electricity services, and safe,
sanitary housing.
``(4) Advisory committee.--
``(A) In general.--
The <<NOTE: Appointment.>> Secretary shall appoint an
advisory committee to provide advice regarding the
carrying out of the functions of the Director.
``(B) Members.--Such advisory committee shall
consist of not more than 12 individuals, and the
membership of the committee shall equally represent the
mortgage and real estate industry, including consumers
and housing counseling agencies certified by the
Secretary.
``(C) Terms.--Except as provided in subparagraph
(D), each member of the advisory committee shall be
appointed for a term of 3 years. Members may be
reappointed at the discretion of the Secretary.
``(D) Terms of initial appointees.--As designated by
the Secretary at the time of appointment, of the members
first appointed to the advisory committee, 4 shall be
appointed for a term of 1 year and 4 shall be appointed
for a term of 2 years.
``(E) Prohibition of pay; travel expenses.--Members
of the advisory committee shall serve without pay, but
shall receive travel expenses, including per diem in
lieu of subsistence, in accordance with applicable
provisions under subchapter I of chapter 57 of title 5,
United States Code.
``(F) Advisory role only.--The advisory committee
shall have no role in reviewing or awarding housing
counseling grants.
``(5) Scope of homeownership counseling.--In carrying out
the responsibilities of the Director, the Director shall ensure
that homeownership counseling provided by, in connection with,
or pursuant to any function, activity, or program of the
Department addresses the entire process of homeownership,
including the decision to purchase a home, the selection and
purchase of a home, issues arising during or affecting the
period of ownership of a home (including refinancing, default
and foreclosure, and other financial decisions), and the sale or
other disposition of a home.''.
SEC. 1443. COUNSELING PROCEDURES.
(a) In General.--Section 106 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the
following new subsection:
``(g) Procedures and Activities.--
``(1) Counseling <<NOTE: Definitions.>> procedures.--
[[Page 124 STAT. 2166]]
``(A) In general.--The Secretary shall establish,
coordinate, and monitor the administration by the
Department of Housing and Urban Development of the
counseling procedures for homeownership counseling and
rental housing counseling provided in connection with
any program of the Department, including all
requirements, standards, and performance measures that
relate to homeownership and rental housing counseling.
``(B) Homeownership counseling.--For purposes of
this subsection and as used in the provisions referred
to in this subparagraph, the term `homeownership
counseling' means counseling related to homeownership
and residential mortgage loans. Such term includes
counseling related to homeownership and residential
mortgage loans that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 8(y)(1)(D) (42 U.S.C.
1437f(y)(1)(D));
``(III) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
``(IV) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(V) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(VI) section 33(d)(2)(B) (42
U.S.C. 1437z-5(d)(2)(B));
``(VII) sections 302(b)(6) and
303(b)(7) (42 U.S.C. 1437aaa-1(b)(6),
1437aaa-2(b)(7)); and
``(VIII) section 304(c)(4) (42
U.S.C. 1437aaa-3(c)(4));
``(iii) section 302(a)(4) of the American
Homeownership and Economic Opportunity Act of 2000
(42 U.S.C. 1437f note);
``(iv) sections 233(b)(2) and 258(b) of the
Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. 12773(b)(2), 12808(b));
``(v) this section and section 101(e) of the
Housing and Urban Development Act of 1968 (12
U.S.C. 1701x, 1701w(e));
``(vi) section 220(d)(2)(G) of the Low-Income
Housing Preservation and Resident Homeownership
Act of 1990 (12 U.S.C. 4110(d)(2)(G));
``(vii) sections 422(b)(6), 423(b)(7),
424(c)(4), 442(b)(6), and 443(b)(6) of the
Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. 12872(b)(6), 12873(b)(7), 12874(c)(4),
12892(b)(6), and 12893(b)(6));
``(viii) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
``(ix) sections 202(3) and 810(b)(2)(A) of the
Native American Housing and Self-Determination Act
of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A));
``(x) in the National Housing Act--
``(I) in section 203 (12 U.S.C.
1709), the penultimate undesignated
paragraph of paragraph (2)
[[Page 124 STAT. 2167]]
of subsection (b), subsection (c)(2)(A),
and subsection (r)(4);
``(II) subsections (a) and (c)(3) of
section 237 (12 U.S.C. 1715z-2); and
``(III) subsections (d)(2)(B) and
(m)(1) of section 255 (12 U.S.C. 1715z-
20);
``(xi) section 502(h)(4)(B) of the Housing Act
of 1949 (42 U.S.C. 1472(h)(4)(B));
``(xii) section 508 of the Housing and Urban
Development Act of 1970 (12 U.S.C. 1701z-7); and
``(xiii) section 106 of the Energy Policy Act
of 1992 (42 U.S.C. 12712 note).
``(C) Rental housing counseling.--For purposes of
this subsection, the term `rental housing counseling'
means counseling related to rental of residential
property, which may include counseling regarding future
homeownership opportunities and providing referrals for
renters and prospective renters to entities providing
counseling and shall include counseling related to such
topics that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
``(III) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(IV) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(V) section 33(d)(2)(B) (42 U.S.C.
1437z-5(d)(2)(B)); and
``(VI) section 302(b)(6) (42 U.S.C.
1437aaa-1(b)(6));
``(iii) section 233(b)(2) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12773(b)(2));
``(iv) section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x);
``(v) section 422(b)(6) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12872(b)(6));
``(vi) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
``(vii) sections 202(3) and 810(b)(2)(A) of
the Native American Housing and Self-Determination
Act of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A));
and
``(viii) the rental assistance program under
section 8 of the United States Housing Act of 1937
(42 U.S.C. 1437f).
``(2) Standards for materials.--The Secretary, in
consultation with the advisory committee established under
subsection (g)(4) of the Department of Housing and Urban
Development Act, shall establish standards for materials and
forms to be used, as appropriate, by organizations providing
homeownership counseling services, including any recipients of
assistance pursuant to subsection (a)(4).
``(3) Mortgage software systems.--
[[Page 124 STAT. 2168]]
``(A) Certification.--The Secretary shall provide
for the certification of various computer software
programs for consumers to use in evaluating different
residential mortgage loan proposals. The Secretary shall
require, for such certification, that the mortgage
software systems take into account--
``(i) the consumer's financial situation and
the cost of maintaining a home, including
insurance, taxes, and utilities;
``(ii) the amount of time the consumer expects
to remain in the home or expected time to maturity
of the loan; and
``(iii) such other factors as the Secretary
considers appropriate to assist the consumer in
evaluating whether to pay points, to lock in an
interest rate, to select an adjustable or fixed
rate loan, to select a conventional or government-
insured or guaranteed loan and to make other
choices during the loan application process.
If the Secretary determines that available existing
software is inadequate to assist consumers during the
residential mortgage loan application process, the
Secretary shall arrange for the development by private
sector software companies of new mortgage software
systems that meet the Secretary's specifications.
``(B) Use and initial availability.--Such certified
computer software programs shall be used to supplement,
not replace, housing counseling. The Secretary shall
provide that such programs are initially used only in
connection with the assistance of housing counselors
certified pursuant to subsection (e).
``(C) Availability.--After <<NOTE: Web posting.>> a
period of initial availability under subparagraph (B) as
the Secretary considers appropriate, the Secretary shall
take reasonable steps to make mortgage software systems
certified pursuant to this paragraph widely available
through the Internet and at public locations, including
public libraries, senior-citizen centers, public housing
sites, offices of public housing agencies that
administer rental housing assistance vouchers, and
housing counseling centers.
``(D) Budget compliance.--This paragraph shall be
effective only to the extent that amounts to carry out
this paragraph are made available in advance in
appropriations Acts.
``(4) National public service multimedia campaigns to
promote housing counseling.--
``(A) In general.--The Director of Housing
Counseling shall develop, implement, and conduct
national public service multimedia campaigns designed to
make persons facing mortgage foreclosure, persons
considering a subprime mortgage loan to purchase a home,
elderly persons, persons who face language barriers,
low-income persons, minorities, and other potentially
vulnerable consumers aware that it is advisable, before
seeking or maintaining a residential mortgage loan, to
obtain homeownership counseling from an unbiased and
reliable
[[Page 124 STAT. 2169]]
sources and that such homeownership counseling is
available, including through programs sponsored by the
Secretary of Housing and Urban Development.
``(B) Contact information.-- <<NOTE: Public
information. Web posting.>> Each segment of the
multimedia campaign under subparagraph (A) shall
publicize the toll-free telephone number and website of
the Department of Housing and Urban Development through
which persons seeking housing counseling can locate a
housing counseling agency in their State that is
certified by the Secretary of Housing and Urban
Development and can provide advice on buying a home,
renting, defaults, foreclosures, credit issues, and
reverse mortgages.
``(C) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary, not to
exceed $3,000,000 for fiscal years 2009, 2010, and 2011,
for the development, implementation, and conduct of
national public service multimedia campaigns under this
paragraph.
``(D) Foreclosure rescue education programs.--
``(i) In general.--Ten percent of any funds
appropriated pursuant to the authorization under
subparagraph (C) shall be used by the Director of
Housing Counseling to conduct an education program
in areas that have a high density of foreclosure.
Such program shall involve direct mailings to
persons living in such areas describing--
``(I) tips on avoiding foreclosure
rescue scams;
``(II) tips on avoiding predatory
lending mortgage agreements;
``(III) tips on avoiding for-profit
foreclosure counseling services; and
``(IV) local counseling resources
that are approved by the Department of
Housing and Urban Development.
``(ii) Program emphasis.--In conducting the
education program described under clause (i), the
Director of Housing Counseling shall also place an
emphasis on serving communities that have a high
percentage of retirement communities or a high
percentage of low-income minority communities.
``(iii) Terms defined.--For purposes of this
subparagraph:
``(I) High density of
foreclosures.--An area has a `high
density of foreclosures' if such area is
one of the metropolitan statistical
areas (as that term is defined by the
Director of the Office of Management and
Budget) with the highest home
foreclosure rates.
``(II) High percentage of retirement
communities.--An area has a `high
percentage of retirement communities' if
such area is one of the metropolitan
statistical areas (as that term is
defined by the Director of the Office of
Management and Budget) with the highest
percentage of residents aged 65 or
older.
``(III) High percentage of low-
income minority communities.--An area
has a `high
[[Page 124 STAT. 2170]]
percentage of low-income minority
communities' if such area contains a
higher-than-normal percentage of
residents who are both minorities and
low-income, as defined by the Director
of Housing Counseling.
``(5) Education programs.--The Secretary shall provide
advice and technical assistance to States, units of general
local government, and nonprofit organizations regarding the
establishment and operation of, including assistance with the
development of content and materials for, educational programs
to inform and educate consumers, particularly those most
vulnerable with respect to residential mortgage loans (such as
elderly persons, persons facing language barriers, low-income
persons, minorities, and other potentially vulnerable
consumers), regarding home mortgages, mortgage refinancing, home
equity loans, home repair loans, and where appropriate by
region, any requirements and costs associated with obtaining
flood or other disaster-specific insurance coverage.''.
(b) Conforming Amendments to Grant Program for Homeownership
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is
amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after subclause (IV) the following new
subclause:
``(V) <<NOTE: Notification.>> notify
the housing or mortgage applicant of the
availability of mortgage software
systems provided pursuant to subsection
(g)(3).''.
SEC. 1444. GRANTS FOR HOUSING COUNSELING ASSISTANCE.
Section 106(a) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)) is amended by adding at the end the following new
paragraph:
``(4) Homeownership and Rental Counseling Assistance.--
``(A) In general.--The Secretary shall make financial
assistance available under this paragraph to HUD-approved
housing counseling agencies and State housing finance agencies.
``(B) Qualified entities.--
The <<NOTE: Standards. Guidelines.>> Secretary shall establish
standards and guidelines for eligibility of organizations
(including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance with subparagraph
(D).
``(C) Distribution.--Assistance made available under this
paragraph shall be distributed in a manner that encourages
efficient and successful counseling programs and that ensures
adequate distribution of amounts for rural areas having
traditionally low levels of access to such counseling services,
including areas with insufficient access to the Internet. In
distributing such assistance, the Secretary may give priority
consideration to entities serving areas with the highest home
foreclosure rates.
``(D) Limitation on distribution of assistance.--
``(i) In general.--None of the amounts made
available under this paragraph shall be distributed to--
[[Page 124 STAT. 2171]]
``(I) any organization which has been
convicted for a violation under Federal law
relating to an election for Federal office; or
``(II) any organization which employs
applicable individuals.
``(ii) Definition of applicable individuals.--In
this subparagraph, the term `applicable individual'
means an individual who--
``(I) is--
``(aa) employed by the organization
in a permanent or temporary capacity;
``(bb) contracted or retained by the
organization; or
``(cc) acting on behalf of, or with
the express or apparent authority of,
the organization; and
``(II) has been convicted for a violation
under Federal law relating to an election for
Federal office.
``(E) Grantmaking process.--In making assistance available
under this paragraph, the Secretary shall consider appropriate
ways of streamlining and improving the processes for grant
application, review, approval, and award.
``(F) Authorization of appropriations.--There are authorized
to be appropriated $45,000,000 for each of fiscal years 2009
through 2012 for--
``(i) the operations of the Office of Housing
Counseling of the Department of Housing and Urban
Development;
``(ii) the responsibilities of the Director of
Housing Counseling under paragraphs (2) through (5) of
subsection (g); and
``(iii) assistance pursuant to this paragraph for
entities providing homeownership and rental
counseling.''.
SEC. 1445. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD
PROGRAMS.
Section 106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) Requirement for assistance.--An organization may not
receive assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or
under section 101(e), unless the organization, or the
individuals through which the organization provides such
counseling, has been certified by the Secretary under this
subsection as competent to provide such counseling.'';
(2) in paragraph (2)--
(A) by inserting ``and for certifying
organizations'' before the period at the end of the
first sentence; and
(B) in the second sentence by striking ``for
certification'' and inserting ``, for certification of
an organization, that each individual through which the
organization provides counseling shall demonstrate, and,
for certification of an individual,'';
(3) in paragraph (3), by inserting ``organizations and''
before ``individuals'';
(4) by redesignating paragraph (3) as paragraph (5); and
[[Page 124 STAT. 2172]]
(5) by inserting after paragraph (2) the following new
paragraphs:
``(3) Requirement under hud programs.--Any homeownership
counseling or rental housing counseling (as such terms are
defined in subsection (g)(1)) required under, or provided in
connection with, any program administered by the Department of
Housing and Urban Development shall be provided only by
organizations or counselors certified by the Secretary under
this subsection as competent to provide such counseling.
``(4) Outreach.--The Secretary shall take such actions as
the Secretary considers appropriate to ensure that individuals
and organizations providing homeownership or rental housing
counseling are aware of the certification requirements and
standards of this subsection and of the training and
certification programs under subsection (f).''.
SEC. 1446. STUDY OF DEFAULTS AND FORECLOSURES.
The Secretary of Housing and Urban Development shall conduct an
extensive study of the root causes of default and foreclosure of home
loans, using as much empirical data as are available. The study shall
also examine the role of escrow accounts in helping prime and nonprime
borrowers to avoid defaults and foreclosures, and the role of computer
registries of mortgages, including those used for trading mortgage
loans. Not later <<NOTE: Deadlines. Reports.>> than 12 months after the
date of the enactment of this Act, the Secretary shall submit to the
Congress a preliminary report regarding the study. Not later than 24
months after such date of enactment, the Secretary shall submit a final
report regarding the results of the study, which shall include any
recommended legislation relating to the study, and recommendations for
best practices and for a process to identify populations that need
counseling the most.
SEC. 1447. <<NOTE: 12 USC 1701p-2.>> DEFAULT AND FORECLOSURE
DATABASE.
(a) Establishment.--The <<NOTE: Public information.>> Secretary of
Housing and Urban Development and the Director of the Bureau, in
consultation with the Federal agencies responsible for regulation of
banking and financial institutions involved in residential mortgage
lending and servicing, shall establish and maintain a database of
information on foreclosures and defaults on mortgage loans for one- to
four-unit residential properties and shall make such information
publicly available, subject to subsection (e).
(b) Census Tract Data.--Information in the database may be
collected, aggregated, and made available on a census tract basis.
(c) Requirements.--Information collected and made available through
the database shall include--
(1) the number and percentage of such mortgage loans that
are delinquent by more than 30 days;
(2) the number and percentage of such mortgage loans that
are delinquent by more than 90 days;
(3) the number and percentage of such properties that are
real estate-owned;
(4) number and percentage of such mortgage loans that are in
the foreclosure process;
(5) the number and percentage of such mortgage loans that
have an outstanding principal obligation amount that is greater
than the value of the property for which the loan was made; and
[[Page 124 STAT. 2173]]
(6) such other information as the Secretary of Housing and
Urban Development and the Director of the Bureau consider
appropriate.
(d) Rule of Construction.--Nothing in this section shall be
construed to encourage discriminatory or unsound allocation of credit or
lending policies or practices.
(e) Privacy and Confidentiality.--In establishing and maintaining
the database described in subsection (a), the Secretary of Housing and
Urban Development and the Director of the Bureau shall--
(1) be subject to the standards applicable to Federal
agencies for the protection of the confidentiality of personally
identifiable information and for data security and integrity;
(2) implement the necessary measures to conform to the
standards for data integrity and security described in paragraph
(1); and
(3) collect and make available information under this
section, in accordance with paragraphs (5) and (6) of section
1022(c) and the rules prescribed under such paragraphs, in order
to protect privacy and confidentiality.
SEC. 1448. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is amended by adding at the end the following new subsection:
``(h) Definitions.--For purposes of this section:
``(1) Nonprofit organization.--The term `nonprofit
organization' has the meaning given such term in section 104(5)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12704(5)), except that subparagraph (D) of such section
shall not apply for purposes of this section.
``(2) State.--The term `State' means each of the several
States, the Commonwealth of Puerto Rico, the District of
Columbia, the Commonwealth of the Northern Mariana Islands,
Guam, the Virgin Islands, American Samoa, the Trust Territories
of the Pacific, or any other possession of the United States.
``(3) Unit of general local government.--The term `unit of
general local government' means any city, county, parish, town,
township, borough, village, or other general purpose political
subdivision of a State.
``(4) HUD-approved counseling agency.--The term `HUD-
approved counseling agency' means a private or public nonprofit
organization that is--
``(A) exempt from taxation under section 501(c) of
the Internal Revenue Code of 1986; and
``(B) certified by the Secretary to provide housing
counseling services.
``(5) State housing finance agency.--The term `State housing
finance agency' means any public body, agency, or
instrumentality specifically created under State statute that is
authorised to finance activities designed to provide housing and
related facilities throughout an entire State through land
acquisition, construction, or rehabilitation.''.
[[Page 124 STAT. 2174]]
SEC. 1449. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is amended by adding at the end the following:
``(i) Accountability for Recipients of Covered Assistance.--
``(1) Tracking of funds.--The Secretary shall--
``(A) develop and maintain a system to ensure that
any organization or entity that receives any covered
assistance uses all amounts of covered assistance in
accordance with this section, the regulations issued
under this section, and any requirements or conditions
under which such amounts were provided; and
``(B) require any organization or entity, as a
condition of receipt of any covered assistance, to agree
to comply with such requirements regarding covered
assistance as the Secretary shall establish, which shall
include--
``(i) <<NOTE: Reports. Records.>> appropriate
periodic financial and grant activity reporting,
record retention, and audit requirements for the
duration of the covered assistance to the
organization or entity to ensure compliance with
the limitations and requirements of this section,
the regulations under this section, and any
requirements or conditions under which such
amounts were provided; and
``(ii) any other requirements that the
Secretary determines are necessary to ensure
appropriate administration and compliance.
``(2) Misuse of funds.--If any organization or entity that
receives any covered assistance is determined by the Secretary
to have used any covered assistance in a manner that is
materially in violation of this section, the regulations issued
under this section, or any requirements or conditions under
which such assistance was provided--
``(A)
the <<NOTE: Deadline. Reimbursement.>> Secretary shall
require that, within 12 months after the determination
of such misuse, the organization or entity shall
reimburse the Secretary for such misused amounts and
return to the Secretary any such amounts that remain
unused or uncommitted for use; and
``(B) such organization or entity shall be
ineligible, at any time after such determination, to
apply for or receive any further covered assistance.
The remedies under this paragraph are in addition to any other
remedies that may be available under law.
``(3) Covered assistance.--For <<NOTE: Definition.>>
purposes of this subsection, the term `covered assistance' means
any grant or other financial assistance provided under this
section.''.
SEC. 1450. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION
BOOKLET.
Section 5 of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604) is amended--
(1) in the section heading, by striking ``special'' and
inserting ``home buying'';
(2) by striking subsections (a) and (b) and inserting the
following new subsections:
[[Page 124 STAT. 2175]]
``(a) Preparation and <<NOTE: Deadline.>> Distribution.--The
Director of the Bureau of Consumer Financial Protection (hereafter in
this section referred to as the `Director') shall prepare, at least once
every 5 years, a booklet to help consumers applying for federally
related mortgage loans to understand the nature and costs of real estate
settlement services. The Director shall prepare the booklet in various
languages and cultural styles, as the Director determines to be
appropriate, so that the booklet is understandable and accessible to
homebuyers of different ethnic and cultural backgrounds. The Director
shall distribute such booklets to all lenders that make federally
related mortgage loans. The <<NOTE: Lists.>> Director shall also
distribute to such lenders lists, organized by location, of
homeownership counselors certified under section 106(e) of the Housing
and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for use in
complying with the requirement under subsection (c) of this section.
``(b) Contents.--Each booklet shall be in such form and detail as
the Director shall prescribe and, in addition to such other information
as the Director may provide, shall include in plain and understandable
language the following information:
``(1) A description and explanation of the nature and
purpose of the costs incident to a real estate settlement or a
federally related mortgage loan. The description and explanation
shall provide general information about the mortgage process as
well as specific information concerning, at a minimum--
``(A) balloon payments;
``(B) prepayment penalties;
``(C) the advantages of prepayment; and
``(D) the trade-off between closing costs and the
interest rate over the life of the loan.
``(2) An explanation and sample of the uniform settlement
statement required by section 4.
``(3) <<NOTE: List.>> A list and explanation of lending
practices, including those prohibited by the Truth in Lending
Act or other applicable Federal law, and of other unfair
practices and unreasonable or unnecessary charges to be avoided
by the prospective buyer with respect to a real estate
settlement.
``(4) A <<NOTE: List.>> list and explanation of questions a
consumer obtaining a federally related mortgage loan should ask
regarding the loan, including whether the consumer will have the
ability to repay the loan, whether the consumer sufficiently
shopped for the loan, whether the loan terms include prepayment
penalties or balloon payments, and whether the loan will benefit
the borrower.
``(5) An explanation of the right of rescission as to
certain transactions provided by sections 125 and 129 of the
Truth in Lending Act.
``(6) A brief explanation of the nature of a variable rate
mortgage and a reference to the booklet entitled `Consumer
Handbook on Adjustable Rate Mortgages', published by the
Director, or to any suitable substitute of such booklet that the
Director may subsequently adopt pursuant to such section.
``(7) A brief explanation of the nature of a home equity
line of credit and a reference to the pamphlet required to be
provided under section 127A of the Truth in Lending Act.
``(8) Information about homeownership counseling services
made available pursuant to section 106(a)(4) of the Housing
[[Page 124 STAT. 2176]]
and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a
recommendation that the consumer use such services, and
notification that a list of certified providers of homeownership
counseling in the area, and their contact information, is
available.
``(9) An explanation of the nature and purpose of escrow
accounts when used in connection with loans secured by
residential real estate and the requirements under section 10 of
this Act regarding such accounts.
``(10) An explanation of the choices available to buyers of
residential real estate in selecting persons to provide
necessary services incidental to a real estate settlement.
``(11) An explanation of a consumer's responsibilities,
liabilities, and obligations in a mortgage transaction.
``(12) An explanation of the nature and purpose of real
estate appraisals, including the difference between an appraisal
and a home inspection.
``(13) Notice that the Office of Housing of the Department
of Housing and Urban Development has made publicly available a
brochure regarding loan fraud and a World Wide Web address and
toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures that may
exist among the several States and territories of the United States and
among separate political subdivisions within the same State and
territory.'';
(3) in subsection (c), by inserting at the end the following
new sentence: ``Each lender shall also include with the booklet
a reasonably complete or updated list of homeownership
counselors who are certified pursuant to section 106(e) of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e))
and located in the area of the lender.''; and
(4) in subsection (d), by inserting after the period at the
end of the first sentence the following: ``The lender shall
provide the booklet in the version that is most appropriate for
the person receiving it.''.
SEC. 1451. <<NOTE: 12 USC 1701x-1.>> HOME INSPECTION COUNSELING.
(a) Public Outreach.--
(1) In general.--The Secretary of Housing and Urban
Development (in this section referred to as the ``Secretary'')
shall take such actions as may be necessary to inform potential
homebuyers of the availability and importance of obtaining an
independent home inspection. Such actions shall include--
(A) publication of the HUD/FHA form HUD 92564-CN
entitled ``For Your Protection: Get a Home Inspection'',
in both English and Spanish languages;
(B) publication of the HUD/FHA booklet entitled
``For Your Protection: Get a Home Inspection'', in both
English and Spanish languages;
(C) development and publication of a HUD booklet
entitled ``For Your Protection--Get a Home Inspection''
that does not reference FHA-insured homes, in both
English and Spanish languages; and
(D) publication of the HUD document entitled ``Ten
Important Questions To Ask Your Home Inspector'', in
both English and Spanish languages.
[[Page 124 STAT. 2177]]
(2) Availability.-- <<NOTE: Public information.>> The
Secretary shall make the materials specified in paragraph (1)
available for electronic access and, where appropriate, inform
potential homebuyers of such availability through home purchase
counseling public service announcements and toll-free telephone
hotlines of the Department of Housing and Urban Development. The
Secretary shall give special emphasis to reaching first-time and
low-income homebuyers with these materials and efforts.
(3) Updating.--The Secretary may periodically update and
revise such materials, as the Secretary determines to be
appropriate.
(b) Requirement for FHA-approved Lenders.--Each mortgagee approved
for participation in the mortgage insurance programs under title II of
the National Housing Act shall provide prospective homebuyers, at first
contact, whether upon pre-qualification, pre-approval, or initial
application, the materials specified in subparagraphs (A), (B), and (D)
of subsection (a)(1).
(c) Requirements for HUD-approved Counseling Agencies.--Each
counseling agency certified pursuant by the Secretary to provide housing
counseling services shall provide each of their clients, as part of the
home purchase counseling process, the materials specified in
subparagraphs (C) and (D) of subsection (a)(1).
(d) Training.--Training provided the Department of Housing and Urban
Development for housing counseling agencies, whether such training is
provided directly by the Department or otherwise, shall include--
(1) providing information on counseling potential homebuyers
of the availability and importance of getting an independent
home inspection;
(2) providing information about the home inspection process,
including the reasons for specific inspections such as radon and
lead-based paint testing;
(3) providing information about advising potential
homebuyers on how to locate and select a qualified home
inspector; and
(4) review of home inspection public outreach materials of
the Department.
SEC. 1452. <<NOTE: 42 USC 8108.>> WARNINGS TO HOMEOWNERS OF
FORECLOSURE RESCUE SCAMS.
(a) Assistance to NRC.-- <<NOTE: Notice.>> Notwithstanding any other
provision of law, of any amounts made available for any fiscal year
pursuant to section 106(a)(4)(F) of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by section 1444), 10
percent shall be used only for assistance to the Neighborhood
Reinvestment Corporation for activities, in consultation with servicers
of residential mortgage loans, to provide notice to borrowers under such
loans who are delinquent with respect to payments due under such loans
that makes such borrowers aware of the dangers of fraudulent activities
associated with foreclosure.
(b) Notice.--The Neighborhood Reinvestment Corporation, in
consultation with servicers of residential mortgage loans, shall use the
amounts provided pursuant to subsection (a) to carry out activities to
inform borrowers under residential mortgage loans--
(1) that the foreclosure process is complex and can be
confusing;
[[Page 124 STAT. 2178]]
(2) that the borrower may be approached during the
foreclosure process by persons regarding saving their home and
they should use caution in any such dealings;
(3) that there are Federal Government and nonprofit agencies
that may provide information about the foreclosure process,
including the Department of Housing and Urban Development;
(4) that they should contact their lender immediately,
contact the Department of Housing and Urban Development to find
a housing counseling agency certified by the Department to
assist in avoiding foreclosure, or visit the Department's
website regarding tips for avoiding foreclosure; and
(5) of the telephone number of the loan servicer or
successor, the telephone number of the Department of Housing and
Urban Development housing counseling line, and the Uniform
Resource Locators (URLs) for the Department of Housing and Urban
Development Web sites for housing counseling and for tips for
avoiding foreclosure.
Subtitle E--Mortgage Servicing
SEC. 1461. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN
CONSUMER CREDIT TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129C (as added by
section 1411) the following new section:
``Sec. 129D. <<NOTE: 15 USC 1639d.>> Escrow or impound accounts
relating to certain consumer credit transactions
``(a) In General.--Except as provided in subsection (b), (c), (d),
or (e), a creditor, in connection with the consummation of a consumer
credit transaction secured by a first lien on the principal dwelling of
the consumer, other than a consumer credit transaction under an open end
credit plan or a reverse mortgage, shall establish, before the
consummation of such transaction, an escrow or impound account for the
payment of taxes and hazard insurance, and, if applicable, flood
insurance, mortgage insurance, ground rents, and any other required
periodic payments or premiums with respect to the property or the loan
terms, as provided in, and in accordance with, this section.
``(b) When Required.--No impound, trust, or other type of account
for the payment of property taxes, insurance premiums, or other purposes
relating to the property may be required as a condition of a real
property sale contract or a loan secured by a first deed of trust or
mortgage on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit plan or a reverse
mortgage, except when--
``(1) any such impound, trust, or other type of escrow or
impound account for such purposes is required by Federal or
State law;
``(2) a loan is made, guaranteed, or insured by a State or
Federal governmental lending or insuring agency;
``(3) the transaction is secured by a first mortgage or lien
on the consumer's principal dwelling having an original
principal obligation amount that--
``(A) does not exceed the amount of the maximum
limitation on the original principal obligation of
mortgage
[[Page 124 STAT. 2179]]
in effect for a residence of the applicable size, as of
the date such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the
annual percentage rate will exceed the average prime
offer rate as defined in section 129C by 1.5 or more
percentage points; or
``(B) exceeds the amount of the maximum limitation
on the original principal obligation of mortgage in
effect for a residence of the applicable size, as of the
date such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the
annual percentage rate will exceed the average prime
offer rate as defined in section 129C by 2.5 or more
percentage points; or
``(4) so required pursuant to regulation.
``(c) Exemptions.--The Board may, by regulation, exempt from the
requirements of subsection (a) a creditor that--
``(1) operates predominantly in rural or underserved areas;
``(2) together with all affiliates, has total annual
mortgage loan originations that do not exceed a limit set by the
Board;
``(3) retains its mortgage loan originations in portfolio;
and
``(4) meets any asset size threshold and any other criteria
the Board may establish, consistent with the purposes of this
subtitle.
``(d) Duration of Mandatory Escrow or Impound Account.--An escrow or
impound account established pursuant to subsection (b) shall remain in
existence for a minimum period of 5 years, beginning with the date of
the consummation of the loan, unless and until--
``(1) such borrower has sufficient equity in the dwelling
securing the consumer credit transaction so as to no longer be
required to maintain private mortgage insurance;
``(2) such borrower is delinquent;
``(3) such borrower otherwise has not complied with the
legal obligation, as established by rule; or
``(4) the underlying mortgage establishing the account is
terminated.
``(e) Limited Exemptions for Loans Secured by Shares in a
Cooperative or in Which an Association Must Maintain a Master Insurance
Policy.--Escrow accounts need not be established for loans secured by
shares in a cooperative. Insurance premiums need not be included in
escrow accounts for loans secured by dwellings or units, where the
borrower must join an association as a condition of ownership, and that
association has an obligation to the dwelling or unit owners to maintain
a master policy insuring the dwellings or units.
``(f) Clarification on Escrow Accounts for Loans Not Meeting
Statutory Test.--For mortgages not covered by the requirements of
subsection (b), no provision of this section shall be construed as
precluding the establishment of an impound, trust, or other type of
account for the payment of property taxes, insurance premiums, or other
purposes relating to the property--
``(1) on terms mutually agreeable to the parties to the
loan;
``(2) at the discretion of the lender or servicer, as
provided by the contract between the lender or servicer and the
borrower; or
[[Page 124 STAT. 2180]]
``(3) pursuant to the requirements for the escrowing of
flood insurance payments for regulated lending institutions in
section 102(d) of the Flood Disaster Protection Act of 1973.
``(g) Administration of Mandatory Escrow or Impound Accounts.--
``(1) In general.--Except as may otherwise be provided for
in this title or in regulations prescribed by the Board, escrow
or impound accounts established pursuant to subsection (b) shall
be established in a federally insured depository institution or
credit union.
``(2) Administration.--Except as provided in this section or
regulations prescribed under this section, an escrow or impound
account subject to this section shall be administered in
accordance with--
``(A) the Real Estate Settlement Procedures Act of
1974 and regulations prescribed under such Act;
``(B) the Flood Disaster Protection Act of 1973 and
regulations prescribed under such Act; and
``(C) the law of the State, if applicable, where the
real property securing the consumer credit transaction
is located.
``(3) Applicability of payment of interest.--If prescribed
by applicable State or Federal law, each creditor shall pay
interest to the consumer on the amount held in any impound,
trust, or escrow account that is subject to this section in the
manner as prescribed by that applicable State or Federal law.
``(4) Penalty coordination with respa.--Any action or
omission on the part of any person which constitutes a violation
of the Real Estate Settlement Procedures Act of 1974 or any
regulation prescribed under such Act for which the person has
paid any fine, civil money penalty, or other damages shall not
give rise to any additional fine, civil money penalty, or other
damages under this section, unless the action or omission also
constitutes a direct violation of this section.
``(h) Disclosures Relating to Mandatory Escrow or Impound Account.--
<<NOTE: Notice. Deadline. Regulations.>> In the case of any impound,
trust, or escrow account that is required under subsection (b), the
creditor shall disclose by written notice to the consumer at least 3
business days before the consummation of the consumer credit transaction
giving rise to such account or in accordance with timeframes established
in prescribed regulations the following information:
``(1) The fact that an escrow or impound account will be
established at consummation of the transaction.
``(2) The amount required at closing to initially fund the
escrow or impound account.
``(3) The amount, in the initial year after the consummation
of the transaction, of the estimated taxes and hazard insurance,
including flood insurance, if applicable, and any other required
periodic payments or premiums that reflects, as appropriate,
either the taxable assessed value of the real property securing
the transaction, including the value of any improvements on the
property or to be constructed on the property (whether or not
such construction will be financed from the proceeds of the
transaction) or the replacement costs of the property.
``(4) The estimated monthly amount payable to be escrowed
for taxes, hazard insurance (including flood insurance, if
[[Page 124 STAT. 2181]]
applicable) and any other required periodic payments or
premiums.
``(5) The fact that, if the consumer chooses to terminate
the account in the future, the consumer will become responsible
for the payment of all taxes, hazard insurance, and flood
insurance, if applicable, as well as any other required periodic
payments or premiums on the property unless a new escrow or
impound account is established.
``(6) Such other information as the Board determines
necessary for the protection of the consumer.
``(i) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Flood insurance.--The term `flood insurance' means
flood insurance coverage provided under the national flood
insurance program pursuant to the National Flood Insurance Act
of 1968.
``(2) Hazard insurance.--The term `hazard insurance' shall
have the same meaning as provided for `hazard insurance',
`casualty insurance', `homeowner's insurance', or other similar
term under the law of the State where the real property securing
the consumer credit transaction is located.''.
(b) <<NOTE: 15 USC 1639d note.>> Exemptions and Modifications.--The
Board may prescribe rules that revise, add to, or subtract from the
criteria of section 129D(b) of the Truth in Lending Act if the Board
determines that such rules are in the interest of consumers and in the
public interest.
(c) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129C (as added by section 1411) the following new item:
``129D. Escrow or impound accounts relating to certain consumer credit
transactions.''.
SEC. 1462. <<NOTE: 15 USC 1639d.>> DISCLOSURE NOTICE REQUIRED FOR
CONSUMERS WHO WAIVE ESCROW SERVICES.
Section 129D of the Truth in Lending Act (as added by section 1461)
is amended by adding at the end the following new subsection:
``(j) Disclosure Notice Required for Consumers Who Waive Escrow
Services.--
``(1) In general.--If--
``(A) an impound, trust, or other type of account
for the payment of property taxes, insurance premiums,
or other purposes relating to real property securing a
consumer credit transaction is not established in
connection with the transaction; or
``(B) a consumer chooses, and provides written
notice to the creditor or servicer of such choice, at
any time after such an account is established in
connection with any such transaction and in accordance
with any statute, regulation, or contractual agreement,
to close such account,
the creditor or servicer shall provide a timely and clearly
written disclosure to the consumer that advises the consumer of
the responsibilities of the consumer and implications for the
consumer in the absence of any such account.
``(2) Disclosure requirements.--Any disclosure provided to a
consumer under paragraph (1) shall include the following:
[[Page 124 STAT. 2182]]
``(A) Information concerning any applicable fees or
costs associated with either the non-establishment of
any such account at the time of the transaction, or any
subsequent closure of any such account.
``(B) A clear and prominent statement that the
consumer is responsible for personally and directly
paying the non-escrowed items, in addition to paying the
mortgage loan payment, in the absence of any such
account, and the fact that the costs for taxes,
insurance, and related fees can be substantial.
``(C) A clear explanation of the consequences of any
failure to pay non-escrowed items, including the
possible requirement for the forced placement of
insurance by the creditor or servicer and the
potentially higher cost (including any potential
commission payments to the servicer) or reduced coverage
for the consumer in the event of any such creditor-
placed insurance.
``(D) Such other information as the Board determines
necessary for the protection of the consumer.''.
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
AMENDMENTS.
(a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end
the following new subsections:
``(k) Servicer Prohibitions.--
``(1) In general.--A servicer of a federally related
mortgage shall not--
``(A) obtain force-placed hazard insurance unless
there is a reasonable basis to believe the borrower has
failed to comply with the loan contract's requirements
to maintain property insurance;
``(B) charge fees for responding to valid qualified
written requests (as defined in regulations which the
Bureau of Consumer Financial Protection shall prescribe)
under this section;
``(C) fail to take timely action to respond to a
borrower's requests to correct errors relating to
allocation of payments, final balances for purposes of
paying off the loan, or avoiding foreclosure, or other
standard servicer's duties;
``(D) <<NOTE: Deadline.>> fail to respond within 10
business days to a request from a borrower to provide
the identity, address, and other relevant contact
information about the owner or assignee of the loan; or
``(E) fail to comply with any other obligation found
by the Bureau of Consumer Financial Protection, by
regulation, to be appropriate to carry out the consumer
protection purposes of this Act.
``(2) Force-placed insurance defined.--For purposes of this
subsection and subsections (l) and (m), the term `force-placed
insurance' means hazard insurance coverage obtained by a
servicer of a federally related mortgage when the borrower has
failed to maintain or renew hazard insurance on such property as
required of the borrower under the terms of the mortgage.
``(l) Requirements for Force-placed Insurance.--A servicer of a
federally related mortgage shall not be construed as having
[[Page 124 STAT. 2183]]
a reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
``(1) Written notices to borrower.--A servicer may not
impose any charge on any borrower for force-placed insurance
with respect to any property securing a federally related
mortgage unless--
``(A) the servicer has sent, by first-class mail, a
written notice to the borrower containing--
``(i) a reminder of the borrower's obligation
to maintain hazard insurance on the property
securing the federally related mortgage;
``(ii) a statement that the servicer does not
have evidence of insurance coverage of such
property;
``(iii) a clear and conspicuous statement of
the procedures by which the borrower may
demonstrate that the borrower already has
insurance coverage; and
``(iv) a statement that the servicer may
obtain such coverage at the borrower's expense if
the borrower does not provide such demonstration
of the borrower's existing coverage in a timely
manner;
``(B) <<NOTE: Deadline.>> the servicer has sent, by
first-class mail, a second written notice, at least 30
days after the mailing of the notice under subparagraph
(A) that contains all the information described in each
clause of such subparagraph; and
``(C) <<NOTE: Time period.>> the servicer has not
received from the borrower any demonstration of hazard
insurance coverage for the property securing the
mortgage by the end of the 15-day period beginning on
the date the notice under subparagraph (B) was sent by
the servicer.
``(2) Sufficiency of demonstration.--A servicer of a
federally related mortgage shall accept any reasonable form of
written confirmation from a borrower of existing insurance
coverage, which shall include the existing insurance policy
number along with the identity of, and contact information for,
the insurance company or agent, or as otherwise required by the
Bureau of Consumer Financial Protection.
``(3) Termination of force-placed insurance.--
<<NOTE: Deadline.>> Within 15 days of the receipt by a servicer
of confirmation of a borrower's existing insurance coverage, the
servicer shall--
``(A) terminate the force-placed insurance; and
``(B) refund to the consumer all force-placed
insurance premiums paid by the borrower during any
period during which the borrower's insurance coverage
and the force-placed insurance coverage were each in
effect, and any related fees charged to the consumer's
account with respect to the force-placed insurance
during such period.
``(4) Clarification with respect to flood disaster
protection act.--No provision of this section shall be construed
as prohibiting a servicer from providing simultaneous or
concurrent notice of a lack of flood insurance pursuant to
section 102(e) of the Flood Disaster Protection Act of 1973.
``(m) Limitations on Force-placed Insurance Charges.--All charges,
apart from charges subject to State regulation as the business of
insurance, related to force-placed insurance imposed on the borrower by
or through the servicer shall be bona fide and reasonable.''.
[[Page 124 STAT. 2184]]
(b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
(1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000''
each place such term appears and inserting ``$2,000''; and
(2) in paragraph (2)(B)(i), by striking ``$500,000'' and
inserting ``$1,000,000''.
(c) Decrease in Response Times.--Section 6(e) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
(1) in paragraph (1)(A), by striking ``20 days'' and
inserting ``5 days'';
(2) in paragraph (2), by striking ``60 days'' and inserting
``30 days''; and
(3) by adding at the end the following new paragraph:
``(4) Limited extension of response time.--
<<NOTE: Deadline. Notification.>> The 30-day period described in
paragraph (2) may be extended for not more than 15 days if,
before the end of such 30-day period, the servicer notifies the
borrower of the extension and the reasons for the delay in
responding.''.
(d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g)) is
amended by adding at the end the following new
sentence: <<NOTE: Deadline.>> ``Any balance in any such account that is
within the servicer's control at the time the loan is paid off shall be
promptly returned to the borrower within 20 business days or credited to
a similar account for a new mortgage loan to the borrower with the same
lender.''.
SEC. 1464. TRUTH IN LENDING ACT AMENDMENTS.
(a) Requirements for Prompt Crediting of Home Loan Payments.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after section 129E (as added by section 1472) the
following new section:
``Sec. 129F. <<NOTE: 15 USC 1639f.>> Requirements for prompt
crediting of home loan payments
``(a) In General.--In connection with a consumer credit transaction
secured by a consumer's principal dwelling, no servicer shall fail to
credit a payment to the consumer's loan account as of the date of
receipt, except when a delay in crediting does not result in any charge
to the consumer or in the reporting of negative information to a
consumer reporting agency, except as required in subsection (b).
``(b) Exception.--If a servicer specifies in writing requirements
for the consumer to follow in making payments, but accepts a payment
that does not conform to the requirements, the servicer shall credit the
payment as of 5 days after receipt.''.
(b) Requests for Payoff Amounts.--Chapter 2 of the Truth in Lending
Act (15 U.S.C. 1631 et seq.), as amended by this title, is amended by
inserting after section 129F (as added by subsection (a)) the following
new section:
``Sec. 129G. <<NOTE: 15 USC 1639g.>> Requests for payoff amounts
of home loan
<<NOTE: Deadline.>> ``A creditor or servicer of a home loan shall
send an accurate payoff balance within a reasonable time, but in no case
more
[[Page 124 STAT. 2185]]
than 7 business days, after the receipt of a written request for such
balance from or on behalf of the borrower.''.
SEC. 1465. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.
Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is
amended by adding at the end the following new paragraph:
``(4) Repayment analysis required to include escrow
payments.--
``(A) In general.--In the case of any consumer
credit transaction secured by a first mortgage or lien
on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit
plan or a reverse mortgage, for which an impound, trust,
or other type of account has been or will be established
in connection with the transaction for the payment of
property taxes, hazard and flood (if any) insurance
premiums, or other periodic payments or premiums with
respect to the property, the information required to be
provided under subsection (a) with respect to the
number, amount, and due dates or period of payments
scheduled to repay the total of payments shall take into
account the amount of any monthly payment to such
account for each such repayment in accordance with
section 10(a)(2) of the Real Estate Settlement
Procedures Act of 1974.
``(B) Assessment value.--The amount taken into
account under subparagraph (A) for the payment of
property taxes, hazard and flood (if any) insurance
premiums, or other periodic payments or premiums with
respect to the property shall reflect the taxable
assessed value of the real property securing the
transaction after the consummation of the transaction,
including the value of any improvements on the property
or to be constructed on the property (whether or not
such construction will be financed from the proceeds of
the transaction), if known, and the replacement costs of
the property for hazard insurance, in the initial year
after the transaction.''.
Subtitle F--Appraisal Activities
SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after 129G (as added by section 1464(b)) the
following new section:
``Sec. 129H. <<NOTE: 15 USC 1639h.>> Property appraisal
requirements
``(a) In General.--A creditor may not extend credit in the form of a
higher-risk mortgage to any consumer without first obtaining a written
appraisal of the property to be mortgaged prepared in accordance with
the requirements of this section.
``(b) Appraisal Requirements.--
``(1) Physical property visit.--Subject to the rules
prescribed under paragraph (4), an appraisal of property to be
secured by a higher-risk mortgage does not meet the requirement
of this section unless it is performed by a certified or
licensed appraiser who conducts a physical property visit of the
interior of the mortgaged property.
``(2) Second appraisal under certain circumstances.--
[[Page 124 STAT. 2186]]
``(A) In general.--If the purpose of a higher-risk
mortgage is to finance the purchase or acquisition of
the mortgaged property from a person within 180 days of
the purchase or acquisition of such property by that
person at a price that was lower than the current sale
price of the property, the creditor shall obtain a
second appraisal from a different certified or licensed
appraiser. The second appraisal shall include an
analysis of the difference in sale prices, changes in
market conditions, and any improvements made to the
property between the date of the previous sale and the
current sale.
``(B) No cost to applicant.--The cost of any second
appraisal required under subparagraph (A) may not be
charged to the applicant.
``(3) Certified or licensed appraiser defined.--For purposes
of this section, the term `certified or licensed appraiser'
means a person who--
``(A) is, at a minimum, certified or licensed by the
State in which the property to be appraised is located;
and
``(B) performs each appraisal in conformity with the
Uniform Standards of Professional Appraisal Practice and
title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, and the regulations
prescribed under such title, as in effect on the date of
the appraisal.
``(4) Regulations.--
``(A) In general.--The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal
Housing Finance Agency, and the Bureau shall jointly
prescribe regulations to implement this section.
``(B) Exemption.--The agencies listed in
subparagraph (A) may jointly exempt, by rule, a class of
loans from the requirements of this subsection or
subsection (a) if the agencies determine that the
exemption is in the public interest and promotes the
safety and soundness of creditors.
``(c) Free Copy of Appraisal.-- <<NOTE: Deadline.>> A creditor shall
provide 1 copy of each appraisal conducted in accordance with this
section in connection with a higher-risk mortgage to the applicant
without charge, and at least 3 days prior to the transaction closing
date.
``(d) Consumer Notification.--At the time of the initial mortgage
application, the applicant shall be provided with a statement by the
creditor that any appraisal prepared for the mortgage is for the sole
use of the creditor, and that the applicant may choose to have a
separate appraisal conducted at the expense of the applicant.
``(e) Violations.--In addition to any other liability to any person
under this title, a creditor found to have willfully failed to obtain an
appraisal as required in this section shall be liable to the applicant
or borrower for the sum of $2,000.
``(f) Higher-risk Mortgage Defined.--For purposes of this section,
the term `higher-risk mortgage' means a residential mortgage loan, other
than a reverse mortgage loan that is a qualified mortgage, as defined in
section 129C, secured by a principal dwelling--
[[Page 124 STAT. 2187]]
``(1) that is not a qualified mortgage, as defined in
section 129C; and
``(2) with an annual percentage rate that exceeds the
average prime offer rate for a comparable transaction, as
defined in section 129C, as of the date the interest rate is
set--
``(A) by 1.5 or more percentage points, in the case
of a first lien residential mortgage loan having an
original principal obligation amount that does not
exceed the amount of the maximum limitation on the
original principal obligation of mortgage in effect for
a residence of the applicable size, as of the date of
such interest rate set, pursuant to the sixth sentence
of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2));
``(B) by 2.5 or more percentage points, in the case
of a first lien residential mortgage loan having an
original principal obligation amount that exceeds the
amount of the maximum limitation on the original
principal obligation of mortgage in effect for a
residence of the applicable size, as of the date of such
interest rate set, pursuant to the sixth sentence of
section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)); and
``(C) by 3.5 or more percentage points for a
subordinate lien residential mortgage loan.''.
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129D (as added by
section 1461(a)) the following new section:
``Sec. 129E. <<NOTE: 15 USC 1639e.>> Appraisal independence
requirements
``(a) In General.--It shall be unlawful, in extending credit or in
providing any services for a consumer credit transaction secured by the
principal dwelling of the consumer, to engage in any act or practice
that violates appraisal independence as described in or pursuant to
regulations prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection (a), acts
or practices that violate appraisal independence shall include--
``(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with an
interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person, appraisal management company, firm, or other entity
conducting or involved in an appraisal, or attempts, to
compensate, coerce, extort, collude, instruct, induce, bribe, or
intimidate such a person, for the purpose of causing the
appraised value assigned, under the appraisal, to the property
to be based on any factor other than the independent judgment of
the appraiser;
``(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
``(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making or
pricing of the transaction; and
[[Page 124 STAT. 2188]]
``(4) withholding or threatening to withhold timely payment
for an appraisal report or for appraisal services rendered when
the appraisal report or services are provided for in accordance
with the contract between the parties.
``(c) Exceptions.--The requirements of subsection (b) shall not be
construed as prohibiting a mortgage lender, mortgage broker, mortgage
banker, real estate broker, appraisal management company, employee of an
appraisal management company, consumer, or any other person with an
interest in a real estate transaction from asking an appraiser to
undertake 1 or more of the following:
``(1) Consider additional, appropriate property information,
including the consideration of additional comparable properties
to make or support an appraisal.
``(2) Provide further detail, substantiation, or explanation
for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management company
procuring or facilitating, an appraisal in connection with a consumer
credit transaction secured by the principal dwelling of a consumer may
have a direct or indirect interest, financial or otherwise, in the
property or transaction involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company,
employee of an appraisal management company, or any other person
involved in a real estate transaction involving an appraisal in
connection with a consumer credit transaction secured by the principal
dwelling of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws, or is
otherwise engaging in unethical or unprofessional conduct, shall refer
the matter to the applicable State appraiser certifying and licensing
agency.
``(f) No Extension of Credit.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, a creditor who
knows, at or before loan consummation, of a violation of the appraisal
independence standards established in subsections (b) or (d) shall not
extend credit based on such appraisal unless the creditor documents that
the creditor has acted with reasonable diligence to determine that the
appraisal does not materially misstate or misrepresent the value of such
dwelling.
``(g) Rules and Interpretive Guidelines.--
``(1) In general.--Except as provided under paragraph (2),
the Board, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the National Credit Union Administration
Board, the Federal Housing Finance Agency, and the Bureau may
jointly issue rules, interpretive guidelines, and general
statements of policy with respect to acts or practices that
violate appraisal independence in the provision of mortgage
lending services for a consumer credit transaction secured by
the principal dwelling of the consumer and mortgage brokerage
services for such a transaction, within the meaning of
subsections (a), (b), (c), (d), (e), (f), (h), and (i).
``(2) Interim final regulations.-- <<NOTE: Deadline.>> The
Board shall, for purposes of this section, prescribe interim
final regulations no later than 90 days after the date of
enactment of this section defining with specificity acts or
practices that violate
[[Page 124 STAT. 2189]]
appraisal independence in the provision of mortgage lending
services for a consumer credit transaction secured by the
principal dwelling of the consumer or mortgage brokerage
services for such a transaction and defining any terms in this
section or such regulations. Rules prescribed by the Board under
this paragraph shall be deemed to be rules prescribed by the
agencies jointly under paragraph (1).
``(h) Appraisal Report Portability.--Consistent with the
requirements of this section, the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the National Credit
Union Administration Board, the Federal Housing Finance Agency, and the
Bureau may jointly issue regulations that address the issue of appraisal
report portability, including regulations that ensure the portability of
the appraisal report between lenders for a consumer credit transaction
secured by a 1-4 unit single family residence that is the principal
dwelling of the consumer, or mortgage brokerage services for such a
transaction.
``(i) Customary and Reasonable Fee.--
``(1) In general.--Lenders and their agents shall compensate
fee appraisers at a rate that is customary and reasonable for
appraisal services performed in the market area of the property
being appraised. Evidence for such fees may be established by
objective third-party information, such as government agency fee
schedules, academic studies, and independent private sector
surveys. Fee studies shall exclude assignments ordered by known
appraisal management companies.
``(2) Fee appraiser definition.--For purposes of this
section, the term `fee appraiser' means a person who is not an
employee of the mortgage loan originator or appraisal management
company engaging the appraiser and is--
``(A) a State licensed or certified appraiser who
receives a fee for performing an appraisal and certifies
that the appraisal has been prepared in accordance with
the Uniform Standards of Professional Appraisal
Practice; or
``(B) a company not subject to the requirements of
section 1124 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et
seq.) that utilizes the services of State licensed or
certified appraisers and receives a fee for performing
appraisals in accordance with the Uniform Standards of
Professional Appraisal Practice.
``(3) Exception for complex assignments.--In the case of an
appraisal involving a complex assignment, the customary and
reasonable fee may reflect the increased time, difficulty, and
scope of the work required for such an appraisal and include an
amount over and above the customary and reasonable fee for non-
complex assignments.
``(j) Sunset.--Effective on the date the interim final regulations
are promulgated pursuant to subsection (g), the Home Valuation Code of
Conduct announced by the Federal Housing Finance Agency on December 23,
2008, shall have no force or effect.
``(k) Penalties.--
``(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who violates
this section shall forfeit and pay a civil penalty of not more
than $10,000 for each day any such violation continues.
[[Page 124 STAT. 2190]]
``(2) Subsequent violations.-- <<NOTE: Applicability.>> In
the case of any person on whom a civil penalty has been imposed
under paragraph (1), paragraph (1) shall be applied by
substituting `$20,000' for `$10,000' with respect to all
subsequent violations.
``(3) Assessment.--The agency referred to in subsection (a)
or (c) of section 108 with respect to any person described in
paragraph (1) shall assess any penalty under this subsection to
which such person is subject.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129D (as added by section 1461(c)) the following new items:
``129E. Appraisal independence requirements.
``129F. Requirements for prompt crediting of home loan payments.
``129G. Requests for payoff amounts of home loan.
``129H. Property appraisal requirements.''.
(c) Deference.--Section 105 of the Truth in Lending Act (15 U.S.C.
1604) is amended by adding at the end the following:
``(h) Deference.-- <<NOTE: Applicability.>> Notwithstanding any
power granted to any Federal agency under this title, the deference that
a court affords to the Bureau with respect to a determination made by
the Bureau relating to the meaning or interpretation of any provision of
this title, other than section 129E or 129H, shall be applied as if the
Bureau were the only agency authorized to apply, enforce, interpret, or
administer the provisions of this title.''.
(d) Conforming Amendments in Title X Not Applicable to Sections 129E
and 129H.--Notwithstanding section 1099A, the term ``Board'' in sections
129E and 129H, as added by this subtitle, shall not be substituted by
the term ``Bureau''.
SEC. 1473. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FFIEC,
APPRAISER INDEPENDENCE MONITORING,
APPROVED APPRAISER EDUCATION, APPRAISAL
MANAGEMENT COMPANIES, APPRAISER
COMPLAINT HOTLINE, AUTOMATED VALUATION
MODELS, AND BROKER PRICE OPINIONS.
(a) Threshold Levels.--Section 1112(b) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3341(b)) is
amended by inserting before the period the following: ``, and receives
concurrence from the Bureau of Consumer Financial Protection that such
threshold level provides reasonable protection for consumers who
purchase 1-4 unit single-family residences''.
(b) Annual Report of Appraisal Subcommittee.--Section 1103(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3332(a)) is amended at the end by inserting the following new
paragraph:
``(5) transmit an annual report to the Congress not later
than June 15 of each year that describes the manner in which
each function assigned to the Appraisal Subcommittee has been
carried out during the preceding year. The report shall also
detail the activities of the Appraisal Subcommittee, including
the results of all audits of State appraiser regulatory
agencies, and provide an accounting of disapproved actions and
warnings taken in the previous year, including a description of
the conditions causing the disapproval and actions taken to
achieve compliance.''.
[[Page 124 STAT. 2191]]
(c) Open Meetings.--Section 1104(b) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is
amended--
(1) by inserting ``in public session after notice in the
Federal Register, but may close certain portions of these
meetings related to personnel and review of preliminary State
audit reports,'' after ``shall meet''; and
(2) by adding after the final period the following: ``The
subject matter discussed in any closed or executive session
shall be described in the Federal Register notice of the
meeting.''.
(d) Regulations.--Section 1106 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is amended--
(1) by inserting ``prescribe regulations in accordance with
chapter 5 of title 5, United States Code (commonly referred to
as the Administrative Procedures Act) after notice and
opportunity for comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations prescribed by
the Appraisal Subcommittee shall (unless otherwise provided in
this title) be limited to the following functions: temporary
practice, national registry, information sharing, and
enforcement. <<NOTE: Establishment.>> For purposes of
prescribing regulations, the Appraisal Subcommittee shall
establish an advisory committee of industry participants,
including appraisers, lenders, consumer advocates, real estate
agents, and government agencies, and hold meetings as necessary
to support the development of regulations.''.
(e) Appraisal Reviews and Complex Appraisals.--
(1) Section 1110.--Section 1110 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3339) is amended--
(A) in paragraph (1), by striking ``and'';
(B) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(C) by inserting after paragraph (2) the following:
``(3) that such appraisals shall be subject to appropriate
review for compliance with the Uniform Standards of Professional
Appraisal Practice.''.
(2) Section 1113.--Section 1113 of the Financial
Institutions and Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3342) is amended by inserting before the period the
following: <<NOTE: Definition.>> ``, where a complex 1-to-4
unit single family residential appraisal means an appraisal for
which the property to be appraised, the form of ownership, the
property characteristics, or the market conditions are
atypical''.
(f) Appraisal Management Services.--
(1) Supervision of third party providers of appraisal
management services.--Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3332(a)) (as previously amended by this section) is
amended--
(A) by amending paragraph (1) to read as follows:
``(1) monitor the requirements established by States--
``(A) for the certification and licensing of
individuals who are qualified to perform appraisals in
connection with federally related transactions,
including a code of professional responsibility; and
[[Page 124 STAT. 2192]]
``(B) for the registration and supervision of the
operations and activities of an appraisal management
company;''; and
(B) by adding at the end the following new
paragraph:
``(6) maintain a national registry of appraisal management
companies that either are registered with and subject to
supervision of a State appraiser certifying and licensing agency
or are operating subsidiaries of a Federally regulated financial
institution.''.
(2) Appraisal management company minimum requirements.--
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by
adding at the end the following new section (and amending the
table of contents accordingly):
``SEC. 1124. <<NOTE: 12 USC 3353.>> APPRAISAL MANAGEMENT COMPANY
MINIMUM REQUIREMENTS.
``(a) In General.--
<<NOTE: Regulations. Applicability. States.>> The Board of Governors of
the Federal Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union Administration
Board, the Federal Housing Finance Agency, and the Bureau of Consumer
Financial Protection shall jointly, by rule, establish minimum
requirements to be applied by a State in the registration of appraisal
management companies. Such requirements shall include a requirement that
such companies--
``(1) register with and be subject to supervision by a State
appraiser certifying and licensing agency in each State in which
such company operates;
``(2) verify that only licensed or certified appraisers are
used for federally related transactions;
``(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
``(4) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant to
the appraisal independence standards established under section
129E of the Truth in Lending Act.
``(b) Relation to State Law.--Nothing in this section shall be
construed to prevent States from establishing requirements in addition
to any rules promulgated under subsection (a).
``(c) Federally Regulated Financial Institutions.--
<<NOTE: Applicability.>> The requirements of subsection (a) shall apply
to an appraisal management company that is a subsidiary owned and
controlled by a financial institution and regulated by a Federal
financial institution regulatory agency. An appraisal management company
that is a subsidiary owned and controlled by a financial institution
regulated by a Federal financial institution regulatory agency shall not
be required to register with a State.
``(d) Registration Limitations.--An appraisal management company
shall not be registered by a State or included on the national registry
if such company, in whole or in part, directly or indirectly, is owned
by any person who has had an appraiser license or certificate refused,
denied, cancelled, surrendered in lieu of revocation, or revoked in any
State. <<NOTE: Investigation.>> Additionally, each person that owns
more than 10 percent of an appraisal management company shall be of good
moral character, as determined by the State appraiser certifying and
licensing agency, and shall submit to a
[[Page 124 STAT. 2193]]
background investigation carried out by the State appraiser certifying
and licensing agency.
``(e) Reporting.-- <<NOTE: Regulations.>> The Board of Governors of
the Federal Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union Administration
Board, the Federal Housing Finance Agency, and the Bureau of Consumer
Financial Protection shall jointly promulgate regulations for the
reporting of the activities of appraisal management companies to the
Appraisal Subcommittee in determining the payment of the annual registry
fee.
``(f) Effective Date.--
``(1) In general.--No appraisal management company may
perform services related to a federally related transaction in a
State after the date that is 36 months after the date on which
the regulations required to be prescribed under subsection (a)
are prescribed in final form unless such company is registered
with such State or subject to oversight by a Federal financial
institutions regulatory agency.
``(2) Extension of effective date.--Subject to the approval
of the Council, the Appraisal Subcommittee may extend by an
additional 12 months the requirements for the registration and
supervision of appraisal management companies if it makes a
written finding that a State has made substantial progress in
establishing a State appraisal management company registration
and supervision system that appears to conform with the
provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is
amended by adding at the end the following: ``The duties of such
agency may additionally include the registration and supervision
of appraisal management companies and the addition of
information about the appraisal management company to the
national registry.''.
(4) Appraisal management company definition.--Section 1121
of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3350) is amended by adding at the end the
following:
``(11) Appraisal management company.--The term `appraisal
management company' means, in connection with valuing properties
collateralizing mortgage loans or mortgages incorporated into a
securitization, any external third party authorized either by a
creditor of a consumer credit transaction secured by a
consumer's principal dwelling or by an underwriter of or other
principal in the secondary mortgage markets, that oversees a
network or panel of more than 15 certified or licensed
appraisers in a State or 25 or more nationally within a given
year--
``(A) to recruit, select, and retain appraisers;
``(B) to contract with licensed and certified
appraisers to perform appraisal assignments;
``(C) to manage the process of having an appraisal
performed, including providing administrative duties
such as receiving appraisal orders and appraisal
reports, submitting completed appraisal reports to
creditors and underwriters, collecting fees from
creditors and underwriters for
[[Page 124 STAT. 2194]]
services provided, and reimbursing appraisers for
services performed; or
``(D) to review and verify the work of
appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) transmit reports on the issuance and renewal of
licenses and certifications, sanctions, disciplinary actions,
license and certification revocations, and license and
certification suspensions on a timely basis to the national
registry of the Appraisal Subcommittee;
``(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or other
third-party providers of appraisals and appraisal management
services, including investigations initiated and disciplinary
actions taken; and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(a)) is amended--
(A) by amending paragraph (4) (as modified by
section 1473(g)) to read as follows:
``(4) collect--
``(A) from such individuals who perform or seek to
perform appraisals in federally related transactions, an
annual registry fee of not more than $40, such fees to
be transmitted by the State agencies to the Council on
an annual basis; and
``(B) from an appraisal management company that
either has registered with a State appraiser certifying
and licensing agency in accordance with this title or
operates as a subsidiary of a federally regulated
financial institution, an annual registry fee of--
``(i) in the case of such a company that has
been in existence for more than a year, $25
multiplied by the number of appraisers working for
or contracting with such company in such State
during the previous year, but where such $25
amount may be adjusted, up to a maximum of $50, at
the discretion of the Appraisal Subcommittee, if
necessary to carry out the Subcommittee's
functions under this title; and
``(ii) in the case of such a company that has
not been in existence for more than a year, $25
multiplied by an appropriate number to be
determined by the Appraisal Subcommittee, and
where such number will be used for determining the
fee of all such companies that were not in
existence for more than a year, but where such $25
amount may be adjusted, up to a maximum of $50, at
the discretion of the Appraisal Subcommittee, if
necessary to carry out the Subcommittee's
functions under this title.''; and
[[Page 124 STAT. 2195]]
(B) by amending the matter following paragraph (4),
as redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee may
adjust the dollar amount of registry fees under paragraph (4)(A), up to
a maximum of $80 per annum, as necessary to carry out its functions
under this title. <<NOTE: Deadline.>> The Appraisal Subcommittee shall
consider at least once every 5 years whether to adjust the dollar amount
of the registry fees to account for inflation. In implementing any
change in registry fees, the Appraisal Subcommittee shall provide
flexibility to the States for multi-year certifications and licenses
already in place, as well as a transition period to implement the
changes in registry fees. In establishing the amount of the annual
registry fee for an appraisal management company, the Appraisal
Subcommittee shall have the discretion to impose a minimum annual
registry fee for an appraisal management company to protect against the
under reporting of the number of appraisers working for or contracted by
the appraisal management company.''.
(2) Incremental revenues.--Incremental revenues collected
pursuant to the increases required by this subsection shall be
placed in a separate account at the United States Treasury,
entitled the ``Appraisal Subcommittee Account''.
(i) <<NOTE: 12 USC 3338 note.>> Grants and Reports.--Section
1109(b) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3338(b)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon;
(3) by adding at the end the following new paragraphs:
``(5) to make grants to State appraiser certifying and
licensing agencies, in accordance with policies to be developed
by the Appraisal Subcommittee, to support the efforts of such
agencies to comply with this title, including--
``(A) the complaint process, complaint
investigations, and appraiser enforcement activities of
such agencies; and
``(B) the submission of data on State licensed and
certified appraisers and appraisal management companies
to the National appraisal registry, including
information affirming that the appraiser or appraisal
management company meets the required qualification
criteria and formal and informal disciplinary actions;
and
``(6) to report to all State appraiser certifying and
licensing agencies when a license or certification is
surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent
of the fiscal year total of incremental increase in fees collected and
deposited in the ``Appraisal Subcommittee Account'' pursuant to
subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
(1) in subsection (c), by inserting ``whose criteria for the
licensing of a real estate appraiser currently meet or exceed
the minimum criteria issued by the Appraisal Qualifications
Board of The Appraisal Foundation for the licensing of real
estate appraisers'' before the period at the end; and
[[Page 124 STAT. 2196]]
(2) by striking subsection (e) and inserting the following
new subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee Appraiser' and
`Supervisory Appraiser' shall meet or exceed the minimum qualification
requirements of the Appraiser Qualifications Board of The Appraisal
Foundation. The Appraisal Subcommittee shall have the authority to
enforce these requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor each
State appraiser certifying and licensing agency for the purposes of
determining whether such agency--
``(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
``(2) processes complaints and completes investigations in a
reasonable time period;
``(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
``(4) maintains an effective regulatory program; and
``(5) reports complaints and disciplinary actions on a
timely basis to the national registries on appraisers and
appraisal management companies maintained by the Appraisal
Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State
licensed or certified appraiser or a registered appraisal management
company from a national registry on an interim basis, not to exceed 90
days, pending State agency action on licensing, certification,
registration, and disciplinary proceedings. The Appraisal Subcommittee
and all agencies, instrumentalities, and Federally recognized entities
under this title shall not recognize appraiser certifications and
licenses from States whose appraisal policies, practices, funding,
staffing, or procedures are found to be inconsistent with this title.
The Appraisal Subcommittee shall have the authority to impose sanctions,
as described in this section, against a State agency that fails to have
an effective appraiser regulatory program. In determining whether such a
program is effective, the Appraisal Subcommittee shall include an
analysis of the licensing and certification of appraisers, the
registration of appraisal management companies, the issuance of
temporary licenses and certifications for appraisers, the receiving and
tracking of submitted complaints against appraisers and appraisal
management companies, the investigation of complaints, and enforcement
actions against appraisers and appraisal management companies. The
Appraisal Subcommittee shall have the authority to impose interim
actions and suspensions against a State agency as an alternative to, or
in advance of, the derecognition of a State agency.''.
(2) in subsection (b)(2), by inserting after ``authority''
the following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351(b)) is amended to read as follows:
``(b) Reciprocity.--Notwithstanding any other provisions of this
title, a federally related transaction shall not be appraised
[[Page 124 STAT. 2197]]
by a certified or licensed appraiser unless the State appraiser
certifying or licensing agency of the State certifying or licensing such
appraiser has in place a policy of issuing a reciprocal certification or
license for an individual from another State when--
``(1) the appraiser licensing and certification program of
such other State is in compliance with the provisions of this
title; and
``(2) the appraiser holds a valid certification from a State
whose requirements for certification or licensing meet or exceed
the licensure standards established by the State where an
individual seeks appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--Section
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not
exclude'' and all that follows through the end of the subsection and
inserting the following: ``may include education achieved, experience,
sample appraisals, and references from prior clients. Membership in a
nationally recognized professional appraisal organization may be a
criteria considered, though lack of membership therein shall not be the
sole bar against consideration for an assignment under these
criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by adding at the end the following new subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal Subcommittee
shall monitor each State appraiser certifying and licensing agency for
the purpose of determining whether such agency's policies, practices,
and procedures are consistent with the purposes of maintaining appraiser
independence and whether such State has adopted and maintains effective
laws, regulations, and policies aimed at maintaining appraiser
independence.''.
(o) Appraiser Education.--Section 1122 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended by inserting after subsection (g) (as added by subsection (l) of
this section) the following new subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the Appraiser
Qualification Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351), as amended by this section, is amended by adding at the end the
following new subsection:
``(i) Appraisal Complaint National Hotline.--
<<NOTE: Deadline. Determination.>> If, 6 months after the date of the
enactment of this subsection, the Appraisal Subcommittee determines that
no national hotline exists to receive complaints of non-compliance with
appraisal independence standards and Uniform Standards of Professional
Appraisal Practice, including complaints from appraisers, individuals,
or other entities concerning the improper influencing or attempted
improper influencing of appraisers or the appraisal process, the
Appraisal Subcommittee shall establish and operate such a national
hotline, which shall include a toll-free telephone number and an email
address. If the Appraisal Subcommittee operates such a national hotline,
the Appraisal Subcommittee shall refer complaints for further action to
appropriate governmental bodies, including a State appraiser certifying
and licensing agency, a financial institution regulator,
[[Page 124 STAT. 2198]]
or other appropriate legal authorities. For complaints referred to State
appraiser certifying and licensing agencies or to Federal regulators,
the Appraisal Subcommittee shall have the authority to follow up such
complaint referrals in order to determine the status of the resolution
of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331 et seq.), as amended by this section, is amended by adding at the
end the following new section (and amending the table of contents
accordingly):
``SEC. 1125. <<NOTE: 12 USC 3354.>> AUTOMATED VALUATION MODELS
USED TO ESTIMATE COLLATERAL VALUE FOR
MORTGAGE LENDING PURPOSES.
``(a) In General.--Automated valuation models shall adhere to
quality control standards designed to--
``(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest;
``(4) require random sample testing and reviews; and
``(5) account for any other such factor that the agencies
listed in subsection (b) determine to be appropriate.
``(b) Adoption of Regulations.--The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the National Credit
Union Administration Board, the Federal Housing Finance Agency, and the
Bureau of Consumer Financial Protection, in consultation with the staff
of the Appraisal Subcommittee and the Appraisal Standards Board of the
Appraisal Foundation, shall promulgate regulations to implement the
quality control standards required under this section.
``(c) Enforcement.--Compliance with regulations issued under this
subsection shall be enforced by--
``(1) with respect to a financial institution, or subsidiary
owned and controlled by a financial institution and regulated by
a Federal financial institution regulatory agency, the Federal
financial institution regulatory agency that acts as the primary
Federal supervisor of such financial institution or subsidiary;
and
``(2) with respect to other participants in the market for
appraisals of 1-to-4 unit single family residential real estate,
the Federal Trade Commission, the Bureau of Consumer Financial
Protection, and a State attorney general.
``(d) Automated Valuation Model Defined.--For purposes of this
section, the term `automated valuation model' means any computerized
model used by mortgage originators and secondary market issuers to
determine the collateral worth of a mortgage secured by a consumer's
principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.),
as amended by this section, is amended by adding at the end the
following new section (and amending the table of contents accordingly):
``SEC. 1126. <<NOTE: 12 USC 3355.>> BROKER PRICE OPINIONS.
``(a) General Prohibition.--In conjunction with the purchase of a
consumer's principal dwelling, broker price opinions may not be used as
the primary basis to determine the value of a piece
[[Page 124 STAT. 2199]]
of property for the purpose of a loan origination of a residential
mortgage loan secured by such piece of property.
``(b) Broker Price Opinion Defined.--For purposes of this section,
the term `broker price opinion' means an estimate prepared by a real
estate broker, agent, or sales person that details the probable selling
price of a particular piece of real estate property and provides a
varying level of detail about the property's condition, market, and
neighborhood, and information on comparable sales, but does not include
an automated valuation model, as defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of the
Federal Financial Institutions Examination Council Act of 1978 (12
U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the period the
following: ``, the Bureau of Consumer Financial Protection, and
the Federal Housing Finance Agency''; and
(2) by inserting at the end the following: ``At all times at
least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the appraisal
profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) is
amended by striking ``council,'' and inserting ``Council,''.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is
amended by striking ``Corporations,'' and inserting
``Corporation,''.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is
amended by striking ``council'' and inserting ``Council''.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended--
(A) in subsection (a)(1) by moving the left margin
of subparagraphs (A), (B), and (C) 2 ems to the right;
and
(B) in subsection (c)--
(i) by striking ``Federal Financial
Institutions Examination Council'' and inserting
``Financial Institutions Examination Council'';
and
(ii) by striking ``the council's functions''
and inserting ``the Council's functions''.
SEC. 1474. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.
Subsection (e) of section 701 of the Equal Credit Opportunity Act
(15 U.S.C. 1691) is amended to read as follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.-- <<NOTE: Deadline.>> Each creditor shall
furnish to an applicant a copy of any and all written appraisals
and valuations developed in connection with the applicant's
application for a loan that is secured or would have been
secured by a first lien on a dwelling promptly upon completion,
but in no case later than 3 days prior to the closing of the
loan, whether the creditor grants or denies the applicant's
request for credit or the application is incomplete or
withdrawn.
[[Page 124 STAT. 2200]]
``(2) Waiver.--The applicant may waive the 3 day requirement
provided for in paragraph (1), except where otherwise required
in law.
``(3) Reimbursement.--The applicant may be required to pay a
reasonable fee to reimburse the creditor for the cost of the
appraisal, except where otherwise required in law.
``(4) Free copy.--Notwithstanding paragraph (3), the
creditor shall provide a copy of each written appraisal or
valuation at no additional cost to the applicant.
``(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in writing
of the right to receive a copy of each written appraisal and
valuation under this subsection.
``(6) Valuation defined.--For purposes of this subsection,
the term `valuation' shall include any estimate of the value of
a dwelling developed in connection with a creditor's decision to
provide credit, including those values developed pursuant to a
policy of a government sponsored enterprise or by an automated
valuation model, a broker price opinion, or other methodology or
mechanism.''.
SEC. 1475. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT
RELATING TO CERTAIN APPRAISAL FEES.
Section 4 of the Real Estate Settlement Procedures Act of
1974 <<NOTE: 12 USC 2603.>> is amended by adding at the end the
following new subsection:
``(c) The standard form described in subsection (a) may include, in
the case of an appraisal coordinated by an appraisal management company
(as such term is defined in section 1121(11) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3350(11))), a clear disclosure of--
``(1) the fee paid directly to the appraiser by such
company; and
``(2) the administration fee charged by such company.''.
SEC. 1476. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS
APPRAISAL METHODS, VALUATION MODELS AND
DISTRIBUTIONS CHANNELS, AND ON THE HOME
VALUATION CODE OF CONDUCT AND THE
APPRAISAL SUBCOMMITTEE.
(a) In General.--The Government Accountability Office shall conduct
a study on--
(1) the effectiveness and impact of--
(A) appraisal methods, including the cost approach,
the comparative sales approach, the income approach, and
others that may be available;
(B) appraisal valuation models, including licensed
and certified appraisals, broker-priced opinions, and
automated valuation models; and
(C) appraisal distribution channels, including
appraisal management companies, independent appraisal
operations within mortgage originators, and fee-for-
service appraisers;
(2) the Home Valuation Code of Conduct; and
(3) the Appraisal Subcommittee's functions pursuant to title
XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
(b) Study.--Not later than--
(1) <<NOTE: Deadline.>> 12 months after the date of
enactment of this Act, the Government Accountability Office
shall submit a study
[[Page 124 STAT. 2201]]
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives; and
(2) <<NOTE: Deadline. Reports.>> 90 days after the date of
enactment of this Act, the Government Accountability Office
shall provide a report on the status of the study and any
preliminary findings to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives.
(c) Content of Study.--The study required by this section shall
include an examination of the following:
(1) Appraisal approaches, valuation models, and distribution
channels.--
(A) The prevalence, alone or in combination, of
certain appraisal approaches, models, and channels in
purchase-money and refinance mortgage transactions.
(B) The accuracy of these approaches, models, and
channels in assessing the property as collateral.
(C) Whether and how these approaches, models, and
channels contributed to price speculation during the
previous cycle.
(D) The costs to consumers of these approaches,
models, and channels.
(E) The disclosure of fees to consumers in the
appraisal process.
(F) To what extent the usage of these approaches,
models, and channels may be influenced by a conflict of
interest between the mortgage lender and the appraiser
and the mechanism by which the lender selects and
compensates the appraiser.
(G) The suitability of these approaches, models, and
channels in rural versus urban areas.
(2) Home valuation code of conduct (hvcc).--
(A) How the HVCC affects mortgage lenders' selection
of appraisers.
(B) How the HVCC affects State regulation of
appraisers and appraisal distribution channels.
(C) How the HVCC affects the quality and cost of
appraisals and the length of time to obtain an
appraisal.
(D) How the HVCC affects mortgage brokers, small
businesses, and consumers.
(d) Additional Study Required.--
(1) In general.-- <<NOTE: Deadline.>> Not later than 18
months after the date of enactment of this Act, the Government
Accountability Office shall submit a study to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives.
(2) Content of additional study.--The study required under
paragraph (1) shall include--
(A) an examination of--
(i) the Appraisal Subcommittee's ability to
monitor and enforce State and Federal
certification requirements and standards,
including by providing a summary with a
statistical breakdown of enforcement actions taken
during the last 10 years;
[[Page 124 STAT. 2202]]
(ii) whether existing Federal financial
institutions regulatory agency exemptions on
appraisals for federally related transactions
needs to be revised; and
(iii) whether new means of data collection,
such as the establishment of a national
repository, would benefit the Appraisal
Subcommittee's ability to perform its functions;
and
(B) recommendations from this examination for
administrative and legislative action at the Federal and
State level.
Subtitle G--Mortgage Resolution and Modification
SEC. 1481. <<NOTE: 12 USC 5220b.>> MULTIFAMILY MORTGAGE RESOLUTION
PROGRAM.
(a) Establishment.--The Secretary of Housing and Urban Development
shall develop a program under this subsection to ensure the protection
of current and future tenants and at-risk multifamily properties, where
feasible, based on criteria that may include--
(1) creating sustainable financing of such properties, that
may take into consideration such factors as--
(A) the rental income generated by such properties;
and
(B) the preservation of adequate operating reserves;
(2) maintaining the level of Federal, State, and city
subsidies in effect as of the date of the enactment of this Act;
(3) providing funds for rehabilitation; and
(4) facilitating the transfer of such properties, when
appropriate and with the agreement of owners, to responsible new
owners and ensuring affordability of such properties.
(b) Coordination.--The Secretary of Housing and Urban Development
may, in carrying out the program developed under this section,
coordinate with the Secretary of the Treasury, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Federal Housing Finance Agency, and any other Federal
Government agency that the Secretary considers appropriate.
(c) Definition.--For purposes of this section, the term
``multifamily properties'' means a residential structure that consists
of 5 or more dwelling units.
(d) Prevention of Qualification for Criminal Applicants.--
(1) In general.-- <<NOTE: Time period.>> No person shall be
eligible to begin receiving assistance from the Making Home
Affordable Program authorized under the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5201 et seq.), or any other
mortgage assistance program authorized or funded by that Act, on
or after 60 days after the date of the enactment of this Act, if
such person, in connection with a mortgage or real estate
transaction, has been convicted, within the last 10 years, of
any one of the following:
(A) Felony larceny, theft, fraud, or forgery.
(B) Money laundering.
(C) Tax evasion.
(2) Procedures.--The Secretary shall establish procedures to
ensure compliance with this subsection.
[[Page 124 STAT. 2203]]
(3) Report.--The Secretary shall report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
regarding the implementation of this provision. The report shall
also describe the steps taken to implement this subsection.
SEC. 1482. <<NOTE: 12 USC 5219a.>> HOME AFFORDABLE MODIFICATION
PROGRAM GUIDELINES.
(a) Net Present Value Input Data.--The Secretary of the Treasury (in
this section referred to as the ``Secretary'') shall revise the
supplemental directives and other guidelines for the Home Affordable
Modification Program of the Making Home Affordable initiative of the
Secretary of the Treasury, authorized under the Emergency Economic
Stabilization Act of 2008 (Public Law 110-343), to require each mortgage
servicer participating in such program to provide each borrower under a
mortgage whose request for a mortgage modification under the Program is
denied with all borrower-related and mortgage-related input data used in
any net present value (NPV) analyses performed in connection with the
subject mortgage. Such input data shall be provided to the borrower at
the time of such denial.
(b) Web-based Site for NPV Calculator and Application.--
(1) NPV calculator.--In carrying out the Home Affordable
Modification Program, the Secretary shall establish and maintain
a site on the World Wide Web that provides a calculator for net
present value analyses of a mortgage, based on the Secretary's
methodology for calculating such value, that mortgagors can use
to enter information regarding their own mortgages and that
provides a determination after entering such information
regarding a mortgage of whether such mortgage would be accepted
or rejected for modification under the Program, using such
methodology.
(2) Disclosure.--Such Web site shall also prominently
disclose that each mortgage servicer participating in such
Program may use a method for calculating net present value of a
mortgage that is different than the method used by such
calculator.
(3) Application.--The Secretary shall make a reasonable
effort to include on such World Wide Web site a method for
homeowners to apply for a mortgage modification under the Home
Affordable Modification Program.
(c) Public Availability of NPV Methodology, Computer Model, and
Variables.--The Secretary shall make publicly available, including by
posting on a World Wide Web site of the Secretary--
(1) the Secretary's methodology and computer model,
including all formulae used in such computer model, used for
calculating net present value of a mortgage that is used by the
calculator established pursuant to subsection (b); and
(2) all non-proprietary variables used in such net present
value analysis.
SEC. 1483. <<NOTE: 12 USC 5219b.>> PUBLIC AVAILABILITY OF
INFORMATION OF MAKING HOME AFFORDABLE
PROGRAM.
(a) Revisions to Program Guidelines.--The Secretary of the Treasury
(in this section referred to as the ``Secretary'') shall revise the
guidelines for the Home Affordable Modification Program of the Making
Home Affordable initiative of the Secretary of the
[[Page 124 STAT. 2204]]
Treasury, authorized under the Emergency Economic Stabilization Act of
2008 (Public Law 110-343), to provide that the data being collected by
the Secretary from each mortgage servicer and lender participating in
the Program is made public in accordance with subsection (b).
(b) <<NOTE: Deadlines.>> Public Availability.--Data shall be made
available according to the following guidelines:
(1) <<NOTE: Reports. Web posting.>> Not more than 14 days
after each monthly deadline for submission of data by mortgage
servicers and lenders participating in the Program, reports
shall be made publicly available by means of a World Wide Web
site of the Secretary, and by submitting a report to the
Congress, that shall includes the following information:
(A) The number of requests for mortgage
modifications under the Program that the servicer or
lender has received.
(B) The number of requests for mortgage
modifications under the Program that the servicer or
lender has processed.
(C) The number of requests for mortgage
modifications under the Program that the servicer or
lender has approved.
(D) The number of requests for mortgage
modifications under the Program that the servicer or
lender has denied.
(2) <<NOTE: Records.>> Not more than 60 days after each
monthly deadline for submission of data by mortgage servicers
and lenders participating in the Program, the Secretary shall
make data tables available to the public at the individual
record level. The <<NOTE: Regulations.>> Secretary shall issue
regulations prescribing--
(A) the procedures for disclosing such data to the
public; and
(B) such deletions as the Secretary may determine to
be appropriate to protect any privacy interest of any
mortgage modification applicant, including the deletion
or alteration of the applicant's name and identification
number.
SEC. 1484. PROTECTING TENANTS AT FORECLOSURE EXTENSION AND
CLARIFICATION.
The Protecting Tenants at Foreclosure Act is amended--
(1) in section 702 (12 U.S.C. 5220 note)--
(A) in subsection (a)(2), by striking ``, as of the
date of such notice of foreclosure''; and
(B) in subsection (c), by inserting after the period
the following: ``For purposes of this section, the date
of a notice of foreclosure shall be deemed to be the
date on which complete title to a property is
transferred to a successor entity or person as a result
of an order of a court or pursuant to provisions in a
mortgage, deed of trust, or security deed.''; and
(2) in section 704 (12 U.S.C. 5201 note), by striking
``2012'' and inserting ``2014''.
[[Page 124 STAT. 2205]]
Subtitle H--Miscellaneous Provisions
SEC. 1491. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF
GOVERNMENT-SPONSORED ENTERPRISES REFORM
TO ENHANCE THE PROTECTION, LIMITATION,
AND REGULATION OF THE TERMS OF
RESIDENTIAL MORTGAGE CREDIT.
(a) Findings.--The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac), were chartered by Congress
to ensure a reliable and affordable supply of mortgage funding,
but enjoy a dual legal status as privately owned corporations
with Government mandated affordable housing goals.
(2) In 1996, the Department of Housing and Urban Development
required that 42 percent of Fannie Mae's and Freddie Mac's
mortgage financing should go to borrowers with income levels
below the median for a given area.
(3) In 2004, the Department of Housing and Urban Development
revised those goals, increasing them to 56 percent of their
overall mortgage purchases by 2008, and additionally mandated
that 12 percent of all mortgage purchases by Fannie Mae and
Freddie Mac be ``special affordable'' loans made to borrowers
with incomes less than 60 percent of an area's median income, a
target that ultimately increased to 28 percent for 2008.
(4) To help fulfill those mandated affordable housing goals,
in 1995 the Department of Housing and Urban Development
authorized Fannie Mae and Freddie Mac to purchase subprime
securities that included loans made to low-income borrowers.
(5) After this authorization to purchase subprime
securities, subprime and near-prime loans increased from 9
percent of securitized mortgages in 2001 to 40 percent in 2006,
while the market share of conventional mortgages dropped from
78.8 percent in 2003 to 50.1 percent by 2007 with a
corresponding increase in subprime and Alt-A loans from 10.1
percent to 32.7 percent over the same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac purchased
$175,000,000,000 in subprime mortgage securities, which
accounted for 44 percent of the market that year, and from 2005
through 2007, Fannie Mae and Freddie Mac purchased approximately
$1,000,000,000,000 in subprime and Alt-A loans, while Fannie
Mae's acquisitions of mortgages with less than 10 percent down
payments almost tripled.
(7) According to data from the Federal Housing Finance
Agency (FHFA) for the fourth quarter of 2008, Fannie Mae and
Freddie Mac own or guarantee 75 percent of all newly originated
mortgages, and Fannie Mae and Freddie Mac currently own 13.3
percent of outstanding mortgage debt in the United States and
have issued mortgage-backed securities for 31.0 percent of the
residential debt market, a combined total of 44.3 percent of
outstanding mortgage debt in the United States.
(8) On September 7, 2008, the FHFA placed Fannie Mae and
Freddie Mac into conservatorship, with the Treasury
[[Page 124 STAT. 2206]]
Department subsequently agreeing to purchase at least
$200,000,000,000 of preferred stock from each enterprise in
exchange for warrants for the purchase of 79.9 percent of each
enterprise's common stock.
(9) The conservatorship for Fannie Mae and Freddie Mac has
potentially exposed taxpayers to upwards of $5,300,000,000,000
worth of risk.
(10) The hybrid public-private status of Fannie Mae and
Freddie Mac is untenable and must be resolved to assure that
consumers are offered and receive residential mortgage loans on
terms that reasonably reflect their ability to repay the loans
and that are understandable and not unfair, deceptive, or
abusive.
(b) Sense of the Congress.--It is the sense of the Congress that
efforts to enhance by the protection, limitation, and regulation of the
terms of residential mortgage credit and the practices related to such
credit would be incomplete without enactment of meaningful structural
reforms of Fannie Mae and Freddie Mac.
SEC. 1492. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT
MORTGAGE FORECLOSURE RESCUE SCAMS AND
LOAN MODIFICATION FRAUD.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the current inter-agency efforts of the Secretary of
the Treasury, the Secretary of Housing and Urban Development, the
Attorney General, and the Federal Trade Commission to crackdown on
mortgage foreclosure rescue scams and loan modification fraud in order
to advise the Congress to the risks and vulnerabilities of emerging
schemes in the loan modification arena.
(b) Report.--
(1) In general.--The Comptroller General shall submit a
report to the Congress on the study conducted under subsection
(a) containing such recommendations for legislative and
administrative actions as the Comptroller General may determine
to be appropriate in addition to the recommendations required
under paragraph (2).
(2) Specific topics.--The report made under paragraph (1)
shall include--
(A) an evaluation of the effectiveness of the inter-
agency task force current efforts to combat mortgage
foreclosure rescue scams and loan modification fraud
scams;
(B) specific recommendations on agency or
legislative action that are essential to properly
protect homeowners from mortgage foreclosure rescue
scams and loan modification fraud scams; and
(C) the adequacy of financial resources that the
Federal Government is allocating to--
(i) crackdown on loan modification and
foreclosure rescue scams; and
(ii) the education of homeowners about
fraudulent scams relating to loan modification and
foreclosure rescues.
SEC. 1493. REPORTING OF MORTGAGE DATA BY STATE.
(a) In General.--Section 104(a) of the Helping Families Save Their
Homes Act of 2009 (division A of Public Law 111-22) <<NOTE: 12
USC 1715z-25.>> is amended--
[[Page 124 STAT. 2207]]
(1) in paragraph (2), by striking ``resulting'' and
inserting ``in each State that result'';
(2) in paragraph (3), by inserting ``each State for'' after
``modifications in''; and
(3) in paragraph (4), by inserting ``in each State'' after
``total number of loans''.
(b) Conforming Amendment.--Section 104(b)(1)(A) of such Act is
amended by adding at the end the following
sentence: <<NOTE: Deadline.>> ``Not later than 60 days after the date
of the enactment of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, the Comptroller of the Currency and the Director of the
Office of Thrift Supervision shall update such requirements to reflect
amendments made to this section by such Act.''.
SEC. 1494. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury, shall conduct a study
of the effect on residential mortgage loan foreclosures of--
(1) the presence in residential structures subject to such
mortgage loans of drywall that was imported from China during
the period beginning with 2004 and ending at the end of 2007;
and
(2) the availability of property insurance for residential
structures in which such drywall is present.
(b) Report.--Not later than the expiration of the 120-day period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit to the Congress a report on
the study conducted under subsection (a) containing its findings,
conclusions, and recommendations.
SEC. 1495. <<NOTE: 15 USC 1601 note.>> DEFINITION.
For purposes of this title, the term ``designated transfer date''
means the date established under section 1062 of this Act.
SEC. 1496. EMERGENCY MORTGAGE RELIEF.
(a) Emergency Homeowners' Relief Fund.-- <<NOTE: Effective date. 12
USC 2706 note.>> Effective October 1, 2010, and notwithstanding any
other provision of law, there is hereby made available to the Secretary
of Housing and Urban Development such sums as are necessary to provide
$1,000,000,000 in assistance through the Emergency Homeowners' Relief
Fund, which such Secretary shall establish pursuant to section 107 of
the Emergency Housing Act of 1975 (12 U.S.C. 2706), as such Act is
amended by this section, for use for emergency mortgage assistance in
accordance with title I of such Act.
(b) Reauthorization of Emergency Mortgage Relief Program.--Title I
of the Emergency Housing Act of 1975 is amended--
(1) in section 103 (12 U.S.C. 2702)--
(A) in paragraph (2)--
(i) by striking ``have indicated'' and all
that follows through ``regulation of the holder''
and insert ``have certified'';
(ii) by striking ``(such as the volume of
delinquent loans in its portfolio)''; and
(iii) by striking ``, except that such
statement'' and all that follows through
``purposes of this title''; and
[[Page 124 STAT. 2208]]
(B) in paragraph (4), by inserting ``or medical
conditions'' after ``adverse economic conditions'';
(2) in section 104 (12 U.S.C. 2703)--
(A) in subsection (b), by striking ``, but such
assistance'' and all that follows through the period at
the end and inserting the
following: <<NOTE: Determination.>> ``. The amount of
assistance provided to a homeowner under this title
shall be an amount that the Secretary determines is
reasonably necessary to supplement such amount as the
homeowner is capable of contributing toward such
mortgage payment, except that the aggregate amount of
such assistance provided for any homeowner shall not
exceed $50,000.'';
(B) in subsection (d), by striking ``interest on a
loan or advance'' and all that follows through the end
of the subsection and inserting the following: ``(1) the
rate of interest on any loan or advance of credit
insured under this title shall be fixed for the life of
the loan or advance of credit and shall not exceed the
rate of interest that is generally charged for mortgages
on single-family housing insured by the Secretary of
Housing and Urban Development under title II of the
National Housing Act at the time such loan or advance of
credit is made, and (2) no interest shall be charged on
interest which is deferred on a loan or advance of
credit made under this title. In establishing rates,
terms and conditions for loans or advances of credit
made under this title, the Secretary shall take into
account a homeowner's ability to repay such loan or
advance of credit.''; and
(C) in subsection (e), by inserting after the period
at the end of the first sentence the following: ``Any
eligible homeowner who receives a grant or an advance of
credit under this title may repay the loan in full,
without penalty, by lump sum or by installment payments
at any time before the loan becomes due and payable.'';
(3) in section 105 (12 U.S.C. 2704)--
(A) by striking subsection (b);
(B) in subsection (e)--
(i) by inserting ``and emergency mortgage
relief payments made under section 106'' after
``insured under this section''; and
(ii) by striking ``$1,500,000,000 at any one
time'' and inserting ``$3,000,000,000'';
(C) by redesignating subsections (c), (d), and (e)
as subsections (b), (c), and (d), respectively; and
(D) by adding at the end the following new
subsection:
``(e) <<NOTE: Guidelines. Procedures.>> The Secretary shall
establish underwriting guidelines or procedures to allocate amounts made
available for loans and advances insured under this section and for
emergency relief payments made under section 106 based on the likelihood
that a mortgagor will be able to resume mortgage payments, pursuant to
the requirement under section 103(5).'';
(4) in <<NOTE: 12 USC 2706.>> section 107--
(A) by striking ``(a)''; and
(B) by striking subsection (b);
(5) in section 108 (12 U.S.C. 2707), by adding at the end
the following new subsection:
[[Page 124 STAT. 2209]]
``(d) Coverage of Existing Programs.-- <<NOTE: Determination.>> The
Secretary shall allow funds to be administered by a State that has an
existing program that is determined by the Secretary to provide
substantially similar assistance to homeowners. After such determination
is made such State shall not be required to modify such program to
comply with the provisions of this title.'';
(6) in section 109 (12 U.S.C. 2708)--
(A) in the section heading, by striking
``authorization and'';
(B) by striking subsection (a);
(C) by striking ``(b)''; and
(D) by striking ``1977'' and inserting ``2011'';
(7) by striking sections 110, 111, and 113 (12 U.S.C. 2709,
2710, 2712); and
(8) by redesignating section 112 (12 U.S.C. 2711) as section
110.
SEC. 1497. <<NOTE: 42 USC 5301 note.>> ADDITIONAL ASSISTANCE FOR
NEIGHBORHOOD STABILIZATION PROGRAM.
(a) In General.-- <<NOTE: Effective date. State and local
governments.>> Effective October 1, 2010, out of funds in the Treasury
not otherwise appropriated, there is hereby made available to the
Secretary of Housing and Urban Development $1,000,000,000, and the
Secretary of Housing and Urban Development shall use such amounts for
assistance to States and units of general local government for the
redevelopment of abandoned and foreclosed homes, in accordance with the
same provisions applicable under the second undesignated paragraph under
the heading ``Community Planning and Development--Community Development
Fund'' in title XII of division A of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 217) to amounts
made available under such second undesignated paragraph, except as
follows:
(1) Notwithstanding the matter of such second undesignated
paragraph that precedes the first proviso, amounts made
available by this section shall remain available until expended.
(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such
second undesignated paragraph shall not apply to amounts made
available by this section.
(3) Amounts made available by this section shall be
allocated based on a funding formula for such amounts
established by the Secretary in accordance with section 2301(b)
of the Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301
note), except that--
(A) <<NOTE: Deadline.>> notwithstanding paragraph
(2) of such section 2301(b), the formula shall be
established not later than 30 days after the date of the
enactment of this Act;
(B) notwithstanding such section 2301(b), each State
shall receive, at a minimum, not less than 0.5 percent
of funds made available under this section;
(C) the Secretary may establish a minimum grant
amount for direct allocations to units of general local
government located within a State, which shall not
exceed $1,000,000;
(D) <<NOTE: Procedures.>> each State and local
government receiving grant amounts shall establish
procedures to create preferences
[[Page 124 STAT. 2210]]
for the development of affordable rental housing for
properties assisted with amounts made available by this
section; and
(E) the Secretary may use not more than 2 percent of
the funds made available under this section for
technical assistance to grantees.
(4) Paragraph (1) of section 2301(c) of the Housing and
Economic Recovery Act of 2008 shall not apply to amounts made
available by this section.
(5) <<NOTE: Applicability.>> The fourth proviso from the end
of such second undesignated paragraph shall be applied to
amounts made available by this section by substituting ``2013''
for ``2012''.
(6) <<NOTE: Definition.>> Notwithstanding section 2301(a)
of the Housing and Economic Recovery Act of 2008, the term
``State'' means any State, as defined in section 102 of the
Housing and Community Development Act of 1974 (42 U.S.C. 5302),
and the District of Columbia, for purposes of this section and
this title, as applied to amounts made available by this
section.
(7)(A) <<NOTE: Election violations.>> None of the amounts
made available by this section shall be distributed to--
(i) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
(ii) any organization which employs applicable
individuals.
(B) <<NOTE: Definition.>> In this paragraph, the term
``applicable individual'' means an individual who--
(i) is--
(I) employed by the organization in a
permanent or temporary capacity;
(II) contracted or retained by the
organization; or
(III) acting on behalf of, or with the express
or apparent authority of, the organization; and
(ii) has been convicted for a violation under
Federal law relating to an election for Federal office.
(8) An eligible entity receiving a grant under this section
shall, to the maximum extent feasible, provide for the hiring of
employees who reside in the vicinity, as such term is defined by
the Secretary, of projects funded under this section or contract
with small businesses that are owned and operated by persons
residing in the vicinity of such projects.
(b) Additional Amendments.--
(1) <<NOTE: 42 USC 5301 note.>> Section 2301.--Section
2301(f)(3)(A)(ii) of the Housing and Economic Recovery Act of
2008 (42 U.S.C. 5301(f)(3)(A)(ii))--
(A) is amended by striking ``for the purchase and
redevelopment of abandoned and foreclosed upon homes or
residential properties that will be used''; and
(B) <<NOTE: Applicability.>> shall apply with
respect to any unexpended or unobligated balances,
including recaptured and reallocated funds made
available under this Act, section 2301 of the Housing
and Economic Recovery Act of 2008 (42 U.S.C. 5301), and
the heading ``Community Planning and Development--
Community Development Fund'' in title XII of division A
of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5; 123 Stat. 217).
[[Page 124 STAT. 2211]]
(2) Notice of foreclosure.--For any amounts made available
under this section, under division B, title III of the Housing
and Economic Recovery Act of 2008 (42 U.S.C. 5301), or under the
heading ``Community Planning and Development--Community
Development Fund'' in title XII of division A of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123
Stat. 217), the date of a notice of foreclosure shall be deemed
to be the date on which complete title to a property is
transferred to a successor entity or person as a result of an
order of a court or pursuant to provisions in a mortgage, deed
of trust, or security deed.
SEC. 1498. <<NOTE: Grants. 12 USC 1701x-2.>> LEGAL ASSISTANCE FOR
FORECLOSURE-RELATED ISSUES.
(a) Establishment.--The Secretary of Housing and Urban Development
(hereafter in this section referred to as the ``Secretary'') shall
establish a program for making grants for providing a full range of
foreclosure legal assistance to low- and moderate-income homeowners and
tenants related to home ownership preservation, home foreclosure
prevention, and tenancy associated with home foreclosure.
(b) Competitive Allocation.-- <<NOTE: States and local
organizations.>> The Secretary shall allocate amounts made available for
grants under this section to State and local legal organizations on the
basis of a competitive process. For purposes of this subsection ``State
and local legal organizations'' are those State and local organizations
whose primary business or mission is to provide legal assistance.
(c) Priority to Certain Areas.--In allocating amounts in accordance
with subsection (b), the Secretary shall give priority consideration to
State and local legal organizations that are operating in the 125
metropolitan statistical areas (as that term is defined by the Director
of the Office of Management and Budget) with the highest home
foreclosure rates.
(d) Legal Assistance.--
(1) In general.--Any State or local legal organization that
receives financial assistance pursuant to this section may use
such amounts only to assist--
(A) homeowners of owner-occupied homes with
mortgages in default, in danger of default, or subject
to or at risk of foreclosure; and
(B) tenants at risk of or subject to eviction as a
result of foreclosure of the property in which such
tenant resides.
(2) Commence use within 90 days.--Any State or local legal
organization that receives financial assistance pursuant to this
section shall begin using any financial assistance received
under this section within 90 days after receipt of the
assistance.
(3) Prohibition on class actions.--No funds provided to a
State or local legal organization under this section may be used
to support any class action litigation.
(4) Limitation on legal assistance.--Legal assistance funded
with amounts provided under this section shall be limited to
mortgage-related default, eviction, or foreclosure proceedings,
without regard to whether such foreclosure is judicial or
nonjudicial.
(5) Effective date.--Notwithstanding any other provision of
this Act, this subsection shall take effect on the date of the
enactment of this Act.
[[Page 124 STAT. 2212]]
(e) Limitation on Distribution of Assistance.--
(1) In general.--None of the amounts made available under
this section shall be distributed to--
(A) <<NOTE: Election violations.>> any organization
which has been convicted for a violation under Federal
law relating to an election for Federal office; or
(B) any organization which employs applicable
individuals.
(2) Definition of applicable individuals.--In this
subsection, the term ``applicable individual'' means an
individual who--
(A) is--
(i) employed by the organization in a
permanent or temporary capacity;
(ii) contracted or retained by the
organization; or
(iii) acting on behalf of, or with the express
or apparent authority of, the organization; and
(B) has been convicted for a violation under Federal
law relating to an election for Federal office.
(f) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $35,000,000 for each of fiscal years 2011
through 2012 for grants under this section.
TITLE XV--MISCELLANEOUS PROVISIONS
SEC. 1501. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN
GOVERNMENTS; PROTECTION OF AMERICAN
TAXPAYERS.
The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is amended
by adding at the end the following:
``SEC. 68. <<NOTE: 22 USC 286tt.>> RESTRICTIONS ON USE OF UNITED
STATES FUNDS FOR FOREIGN GOVERNMENTS;
PROTECTION OF AMERICAN TAXPAYERS.
``(a) In General.--The Secretary of the Treasury shall instruct the
United States Executive Director at the International Monetary Fund--
``(1) to evaluate, prior to consideration by the Board of
Executive Directors of the Fund , any proposal submitted to the
Board for the Fund to make a loan to a country if--
``(A) the amount of the public debt of the country
exceeds the gross domestic product of the country as of
the most recent year for which such information is
available; and
``(B) the country is not eligible for assistance
from the International Development Association.
``(2) Opposition to loans unlikely to be repaid in full.--If
any such evaluation indicates that the proposed loan is not
likely to be repaid in full, the Secretary of the Treasury shall
instruct the United States Executive Director at the Fund to use
the voice and vote of the United States to oppose the proposal.
``(b) Reports to Congress.--Within 30 days after the Board of
Executive Directors of the Fund approves a proposal described in
subsection (a), and annually thereafter by June 30, for the
[[Page 124 STAT. 2213]]
duration of any program approved under such proposals, the Secretary of
the Treasury shall report in writing to the Committee on Financial
Services of the House of Representatives and the Committee on Foreign
Relations and the Committee on Banking, Housing, and Urban Affairs of
the Senate assessing the likelihood that loans made pursuant to such
proposals will be repaid in full, including--
``(1) the borrowing country's current debt status,
including, to the extent possible, its maturity structure,
whether it has fixed or floating rates, whether it is indexed,
and by whom it is held;
``(2) the borrowing country's external and internal
vulnerabilities that could potentially affect its ability to
repay; and
``(3) the borrowing country's debt management strategy.''.
SEC. 1502. <<NOTE: 15 USC 78m note.>> CONFLICT MINERALS.
(a) Sense of Congress on Exploitation and Trade of Conflict Minerals
Originating in the Democratic Republic of the Congo.--It is the sense of
Congress that the exploitation and trade of conflict minerals
originating in the Democratic Republic of the Congo is helping to
finance conflict characterized by extreme levels of violence in the
eastern Democratic Republic of the Congo, particularly sexual- and
gender-based violence, and contributing to an emergency humanitarian
situation therein, warranting the provisions of section 13(p) of the
Securities Exchange Act of 1934, as added by subsection (b).
(b) Disclosure Relating to Conflict Minerals Originating in the
Democratic Republic of the Congo.--Section 13 of the Securities Exchange
Act of 1934 (15 U.S.C. 78m), as amended by this Act, is amended by
adding at the end the following new subsection:
``(p) Disclosures Relating to Conflict Minerals Originating in the
Democratic Republic of the Congo.--
``(1) Regulations.--
``(A) In general.-- <<NOTE: Deadlines. Effective
date. Reports.>> Not later than 270 days after the date
of the enactment of this subsection, the Commission
shall promulgate regulations requiring any person
described in paragraph (2) to disclose annually,
beginning with the person's first full fiscal year that
begins after the date of promulgation of such
regulations, whether conflict minerals that are
necessary as described in paragraph (2)(B), in the year
for which such reporting is required, did originate in
the Democratic Republic of the Congo or an adjoining
country and, in cases in which such conflict minerals
did originate in any such country, submit to the
Commission a report that includes, with respect to the
period covered by the report--
``(i) a description of the measures taken by
the person to exercise due diligence on the source
and chain of custody of such minerals, which
measures shall include an independent private
sector audit of such report submitted through the
Commission that is conducted in accordance with
standards established by the Comptroller General
of the United States, in accordance with rules
promulgated by the Commission, in consultation
with the Secretary of State; and
[[Page 124 STAT. 2214]]
``(ii) a description of the products
manufactured or contracted to be manufactured that
are not DRC conflict free (`DRC conflict free' is
defined to mean the products that do not contain
minerals that directly or indirectly finance or
benefit armed groups in the Democratic Republic of
the Congo or an adjoining country), the entity
that conducted the independent private sector
audit in accordance with clause (i), the
facilities used to process the conflict minerals,
the country of origin of the conflict minerals,
and the efforts to determine the mine or location
of origin with the greatest possible specificity.
``(B) Certification.--The person submitting a report
under subparagraph (A) shall certify the audit described
in clause (i) of such subparagraph that is included in
such report. Such a certified audit shall constitute a
critical component of due diligence in establishing the
source and chain of custody of such minerals.
``(C) Unreliable determination.--If a report
required to be submitted by a person under subparagraph
(A) relies on a determination of an independent private
sector audit, as described under subparagraph (A)(i), or
other due diligence processes previously determined by
the Commission to be unreliable, the report shall not
satisfy the requirements of the regulations promulgated
under subparagraph (A)(i).
``(D) DRC conflict free.--For purposes of this
paragraph, a product may be labeled as `DRC conflict
free' if the product does not contain conflict minerals
that directly or indirectly finance or benefit armed
groups in the Democratic Republic of the Congo or an
adjoining country.
``(E) Information available to the public.--
<<NOTE: Web posting.>> Each person described under
paragraph (2) shall make available to the public on the
Internet website of such person the information
disclosed by such person under subparagraph (A).
``(2) Person described.--A person is described in this
paragraph if--
``(A) the person is required to file reports with
the Commission pursuant to paragraph (1)(A); and
``(B) conflict minerals are necessary to the
functionality or production of a product manufactured by
such person.
``(3) Revisions and waivers.--
<<NOTE: President. Determination.>> The Commission shall revise
or temporarily waive the requirements described in paragraph (1)
if the President transmits to the Commission a determination
that--
``(A) such revision or waiver is in the national
security interest of the United States and the President
includes the reasons therefor; and
``(B) <<NOTE: Publication.>> establishes a date, not
later than 2 years after the initial publication of such
exemption, on which such exemption shall expire.
``(4) Termination of disclosure requirements.--
<<NOTE: President. Determination. Certification.>> The
requirements of paragraph (1) shall terminate on the date on
which the President determines and certifies to the appropriate
congressional committees, but in no case earlier than
[[Page 124 STAT. 2215]]
the date that is one day after the end of the 5-year period
beginning on the date of the enactment of this subsection, that
no armed groups continue to be directly involved and benefitting
from commercial activity involving conflict minerals.
``(5) Definitions.--For purposes of this subsection, the
terms `adjoining country', `appropriate congressional
committees', `armed group', and `conflict mineral' have the
meaning given those terms under section 1502 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act.''.
(c) Strategy and Map to Address Linkages Between Conflict Minerals
and Armed Groups.--
(1) Strategy.--
(A) In general.-- <<NOTE: Deadline.>> Not later than
180 days after the date of the enactment of this Act,
the Secretary of State, in consultation with the
Administrator of the United States Agency for
International Development, shall submit to the
appropriate congressional committees a strategy to
address the linkages between human rights abuses, armed
groups, mining of conflict minerals, and commercial
products.
(B) Contents.--The strategy required by subparagraph
(A) shall include the following:
(i) A plan to promote peace and security in
the Democratic Republic of the Congo by supporting
efforts of the Government of the Democratic
Republic of the Congo, including the Ministry of
Mines and other relevant agencies, adjoining
countries, and the international community, in
particular the United Nations Group of Experts on
the Democratic Republic of Congo, to--
(I) monitor and stop commercial
activities involving the natural
resources of the Democratic Republic of
the Congo that contribute to the
activities of armed groups and human
rights violations in the Democratic
Republic of the Congo; and
(II) develop stronger governance and
economic institutions that can
facilitate and improve transparency in
the cross-border trade involving the
natural resources of the Democratic
Republic of the Congo to reduce
exploitation by armed groups and promote
local and regional development.
(ii) A plan to provide guidance to commercial
entities seeking to exercise due diligence on and
formalize the origin and chain of custody of
conflict minerals used in their products and on
their suppliers to ensure that conflict minerals
used in the products of such suppliers do not
directly or indirectly finance armed conflict or
result in labor or human rights violations.
(iii) A description of punitive measures that
could be taken against individuals or entities
whose commercial activities are supporting armed
groups and human rights violations in the
Democratic Republic of the Congo.
(2) Map.--
(A) In general.-- <<NOTE: Deadline.>> Not later than
180 days after the date of the enactment of this Act,
the Secretary of State shall, in accordance with the
recommendation of the United
[[Page 124 STAT. 2216]]
Nations Group of Experts on the Democratic Republic of
the Congo in their December 2008 report--
(i) produce a map of mineral-rich zones, trade
routes, and areas under the control of armed
groups in the Democratic Republic of the Congo and
adjoining countries based on data from multiple
sources, including--
(I) the United Nations Group of
Experts on the Democratic Republic of
the Congo;
(II) the Government of the
Democratic Republic of the Congo, the
governments of adjoining countries, and
the governments of other Member States
of the United Nations; and
(III) local and international
nongovernmental organizations;
(ii) <<NOTE: Public information.>> make such
map available to the public; and
(iii) provide to the appropriate congressional
committees an explanatory note describing the
sources of information from which such map is
based and the identification, where possible, of
the armed groups or other forces in control of the
mines depicted.
(B) Designation.--The map required under
subparagraph (A) shall be known as the ``Conflict
Minerals Map'', and mines located in areas under the
control of armed groups in the Democratic Republic of
the Congo and adjoining countries, as depicted on such
Conflict Minerals Map, shall be known as ``Conflict Zone
Mines''.
(C) Updates.-- <<NOTE: Deadline.>> The Secretary of
State shall update the map required under subparagraph
(A) not less frequently than once every 180 days until
the date on which the disclosure requirements under
paragraph (1) of section 13(p) of the Securities
Exchange Act of 1934, as added by subsection (b),
terminate in accordance with the provisions of paragraph
(4) of such section 13(p).
(D) Publication in federal register.--The Secretary
of State shall add minerals to the list of minerals in
the definition of conflict minerals under section 1502,
as appropriate. <<NOTE: Notice. Deadline.>> The
Secretary shall publish in the Federal Register notice
of intent to declare a mineral as a conflict mineral
included in such definition not later than one year
before such declaration.
(d) Reports.--
(1) Baseline report.--Not later than 1 year after the date
of the enactment of this Act and annually thereafter until the
termination of the disclosure requirements under section 13(p)
of the Securities Exchange Act of 1934, the Comptroller General
of the United States shall submit to appropriate congressional
committees a report that includes an assessment of the rate of
sexual- and gender-based violence in war-torn areas of the
Democratic Republic of the Congo and adjoining countries.
(2) Regular report on effectiveness.--Not later than 2 years
after the date of the enactment of this Act and annually
thereafter, the Comptroller General of the United States shall
submit to the appropriate congressional committees a report that
includes the following:
[[Page 124 STAT. 2217]]
(A) An assessment of the effectiveness of section
13(p) of the Securities Exchange Act of 1934, as added
by subsection (b), in promoting peace and security in
the Democratic Republic of the Congo and adjoining
countries.
(B) A description of issues encountered by the
Securities and Exchange Commission in carrying out the
provisions of such section 13(p).
(C)(i) A general review of persons described in
clause (ii) and whether information is publicly
available about--
(I) the use of conflict minerals by such
persons; and
(II) whether such conflict minerals originate
from the Democratic Republic of the Congo or an
adjoining country.
(ii) A person is described in this clause if--
(I) the person is not required to file reports
with the Securities and Exchange Commission
pursuant to section 13(p)(1)(A) of the Securities
Exchange Act of 1934, as added by subsection (b);
and
(II) conflict minerals are necessary to the
functionality or production of a product
manufactured by such person.
(3) Report on private sector auditing.--Not later than 30
months after the date of the enactment of this Act, and annually
thereafter, the Secretary of Commerce shall submit to the
appropriate congressional committees a report that includes the
following:
(A) An assessment of the accuracy of the independent
private sector audits and other due diligence processes
described under section 13(p) of the Securities Exchange
Act of 1934.
(B) Recommendations for the processes used to carry
out such audits, including ways to--
(i) improve the accuracy of such audits; and
(ii) establish standards of best practices.
(C) A listing of all known conflict mineral
processing facilities worldwide.
(e) Definitions.--For purposes of this section:
(1) Adjoining country.--The term ``adjoining country'', with
respect to the Democratic Republic of the Congo, means a country
that shares an internationally recognized border with the
Democratic Republic of the Congo.
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Appropriations, the Committee
on Foreign Affairs, the Committee on Ways and Means, and
the Committee on Financial Services of the House of
Representatives; and
(B) the Committee on Appropriations, the Committee
on Foreign Relations, the Committee on Finance, and the
Committee on Banking, Housing, and Urban Affairs of the
Senate.
(3) Armed group.--The term ``armed group'' means an armed
group that is identified as perpetrators of serious human rights
abuses in the annual Country Reports on Human Rights Practices
under sections 116(d) and 502B(b) of the Foreign Assistance Act
of 1961 (22 U.S.C. 2151n(d) and 2304(b)) relating
[[Page 124 STAT. 2218]]
to the Democratic Republic of the Congo or an adjoining country.
(4) Conflict mineral.--The term ``conflict mineral'' means--
(A) columbite-tantalite (coltan), cassiterite, gold,
wolframite, or their derivatives; or
(B) any other mineral or its derivatives determined
by the Secretary of State to be financing conflict in
the Democratic Republic of the Congo or an adjoining
country.
(5) Under the control of armed groups.--The term ``under the
control of armed groups'' means areas within the Democratic
Republic of the Congo or adjoining countries in which armed
groups--
(A) physically control mines or force labor of
civilians to mine, transport, or sell conflict minerals;
(B) tax, extort, or control any part of trade routes
for conflict minerals, including the entire trade route
from a Conflict Zone Mine to the point of export from
the Democratic Republic of the Congo or an adjoining
country; or
(C) tax, extort, or control trading facilities, in
whole or in part, including the point of export from the
Democratic Republic of the Congo or an adjoining
country.
SEC. 1503. <<NOTE: 15 USC 78m-2.>> REPORTING REQUIREMENTS
REGARDING COAL OR OTHER MINE SAFETY.
(a) Reporting Mine Safety Information.--Each issuer that is required
to file reports pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m, 78o) and that is an operator, or
that has a subsidiary that is an operator, of a coal or other mine shall
include, in each periodic report filed with the Commission under the
securities laws on or after the date of enactment of this Act, the
following information for the time period covered by such report:
(1) For each coal or other mine of which the issuer or a
subsidiary of the issuer is an operator--
(A) the total number of violations of mandatory
health or safety standards that could significantly and
substantially contribute to the cause and effect of a
coal or other mine safety or health hazard under section
104 of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 814) for which the operator received a
citation from the Mine Safety and Health Administration;
(B) the total number of orders issued under section
104(b) of such Act (30 U.S.C. 814(b));
(C) the total number of citations and orders for
unwarrantable failure of the mine operator to comply
with mandatory health or safety standards under section
104(d) of such Act (30 U.S.C. 814(d));
(D) the total number of flagrant violations under
section 110(b)(2) of such Act (30 U.S.C. 820(b)(2));
(E) the total number of imminent danger orders
issued under section 107(a) of such Act (30 U.S.C.
817(a));
(F) the total dollar value of proposed assessments
from the Mine Safety and Health Administration under
such Act (30 U.S.C. 801 et seq.); and
(G) the total number of mining-related fatalities.
[[Page 124 STAT. 2219]]
(2) A list of such coal or other mines, of which the issuer
or a subsidiary of the issuer is an operator, that receive
written notice from the Mine Safety and Health Administration
of--
(A) a pattern of violations of mandatory health or
safety standards that are of such nature as could have
significantly and substantially contributed to the cause
and effect of coal or other mine health or safety
hazards under section 104(e) of such Act (30 U.S.C.
814(e)); or
(B) the potential to have such a pattern.
(3) Any pending legal action before the Federal Mine Safety
and Health Review Commission involving such coal or other mine.
(b) Reporting Shutdowns and Patterns of Violations.--
Beginning <<NOTE: Effective date.>> on and after the date of enactment
of this Act, each issuer that is an operator, or that has a subsidiary
that is an operator, of a coal or other mine shall file a current report
with the Commission on Form 8-K (or any successor form) disclosing the
following regarding each coal or other mine of which the issuer or
subsidiary is an operator:
(1) The receipt of an imminent danger order issued under
section 107(a) of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 817(a)).
(2) The receipt of written notice from the Mine Safety and
Health Administration that the coal or other mine has--
(A) a pattern of violations of mandatory health or
safety standards that are of such nature as could have
significantly and substantially contributed to the cause
and effect of coal or other mine health or safety
hazards under section 104(e) of such Act (30 U.S.C.
814(e)); or
(B) the potential to have such a pattern.
(c) Rule of Construction.--Nothing in this section shall be
construed to affect any obligation of a person to make a disclosure
under any other applicable law in effect before, on, or after the date
of enactment of this Act.
(d) Commission Authority.--
(1) Enforcement.--A violation by any person of this section,
or any rule or regulation of the Commission issued under this
section, shall be treated for all purposes in the same manner as
a violation of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) or the rules and regulations issued thereunder,
consistent with the provisions of this section, and any such
person shall be subject to the same penalties, and to the same
extent, as for a violation of such Act or the rules or
regulations issued thereunder.
(2) Rules and regulations.--The Commission is authorized to
issue such rules or regulations as are necessary or appropriate
for the protection of investors and to carry out the purposes of
this section.
(e) Definitions.--In this section--
(1) the terms ``issuer'' and ``securities laws'' have the
meaning given the terms in section 3 of the Securities Exchange
Act of 1934 (15 U.S.C. 78c);
(2) the term ``coal or other mine'' means a coal or other
mine, as defined in section 3 of the Federal Mine Safety and
Health Act of 1977 (30 U.S.C. 802), that is subject to the
provisions of such Act (30 U.S.C. 801 et seq.); and
[[Page 124 STAT. 2220]]
(3) the term ``operator'' has the meaning given the term in
section 3 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 802).
(f) Effective Date.--This section shall take effect on the day that
is 30 days after the date of enactment of this Act.
SEC. 1504. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION ISSUERS.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m),
as amended by this Act, is amended by adding at the end the following:
``(q) Disclosure of Payments by Resource Extraction Issuers.--
``(1) Definitions.--In this subsection--
``(A) the term `commercial development of oil,
natural gas, or minerals' includes exploration,
extraction, processing, export, and other significant
actions relating to oil, natural gas, or minerals, or
the acquisition of a license for any such activity, as
determined by the Commission;
``(B) the term `foreign government' means a foreign
government, a department, agency, or instrumentality of
a foreign government, or a company owned by a foreign
government, as determined by the Commission;
``(C) the term `payment'--
``(i) means a payment that is--
``(I) made to further the commercial
development of oil, natural gas, or
minerals; and
``(II) not de minimis; and
``(ii) includes taxes, royalties, fees
(including license fees), production entitlements,
bonuses, and other material benefits, that the
Commission, consistent with the guidelines of the
Extractive Industries Transparency Initiative (to
the extent practicable), determines are part of
the commonly recognized revenue stream for the
commercial development of oil, natural gas, or
minerals;
``(D) the term `resource extraction issuer' means an
issuer that--
``(i) is required to file an annual report
with the Commission; and
``(ii) engages in the commercial development
of oil, natural gas, or minerals;
``(E) the term `interactive data format' means an
electronic data format in which pieces of information
are identified using an interactive data standard; and
``(F) the term `interactive data standard' means
standardized list of electronic tags that mark
information included in the annual report of a resource
extraction issuer.
``(2) Disclosure.--
``(A) Information required.--
<<NOTE: Deadline. Regulations. Reports.>> Not later than
270 days after the date of enactment of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, the
Commission shall issue final rules that require each
resource extraction issuer to include in an annual
report of the resource extraction issuer information
relating to any payment made by the resource extraction
issuer, a subsidiary of the resource
[[Page 124 STAT. 2221]]
extraction issuer, or an entity under the control of the
resource extraction issuer to a foreign government or
the Federal Government for the purpose of the commercial
development of oil, natural gas, or minerals,
including--
``(i) the type and total amount of such
payments made for each project of the resource
extraction issuer relating to the commercial
development of oil, natural gas, or minerals; and
``(ii) the type and total amount of such
payments made to each government.
``(B) Consultation in rulemaking.--In issuing rules
under subparagraph (A), the Commission may consult with
any agency or entity that the Commission determines is
relevant.
``(C) Interactive data format.--The rules issued
under subparagraph (A) shall require that the
information included in the annual report of a resource
extraction issuer be submitted in an interactive data
format.
``(D) Interactive data standard.--
``(i) In general.--The rules issued under
subparagraph (A) shall establish an interactive
data standard for the information included in the
annual report of a resource extraction issuer.
``(ii) Electronic tags.--The interactive data
standard shall include electronic tags that
identify, for any payments made by a resource
extraction issuer to a foreign government or the
Federal Government--
``(I) the total amounts of the
payments, by category;
``(II) the currency used to make the
payments;
``(III) the financial period in
which the payments were made;
``(IV) the business segment of the
resource extraction issuer that made the
payments;
``(V) the government that received
the payments, and the country in which
the government is located;
``(VI) the project of the resource
extraction issuer to which the payments
relate; and
``(VII) such other information as
the Commission may determine is
necessary or appropriate in the public
interest or for the protection of
investors.
``(E) International transparency efforts.--To the
extent practicable, the rules issued under subparagraph
(A) shall support the commitment of the Federal
Government to international transparency promotion
efforts relating to the commercial development of oil,
natural gas, or minerals.
``(F) Effective date.--With respect to each resource
extraction issuer, the final rules issued under
subparagraph (A) shall take effect on the date on which
the resource extraction issuer is required to submit an
annual report relating to the fiscal year of the
resource extraction issuer that ends not earlier than 1
year after the date on which the Commission issues final
rules under subparagraph (A).
``(3) Public availability of information.--
[[Page 124 STAT. 2222]]
``(A) In general.-- <<NOTE: Web posting.>> To the
extent practicable, the Commission shall make available
online, to the public, a compilation of the information
required to be submitted under the rules issued under
paragraph (2)(A).
``(B) Other information.--Nothing in this paragraph
shall require the Commission to make available online
information other than the information required to be
submitted under the rules issued under paragraph (2)(A).
``(4) Authorization of appropriations.--There are authorized
to be appropriated to the Commission such sums as may be
necessary to carry out this subsection.''.
SEC. 1505. STUDY BY THE COMPTROLLER GENERAL.
(a) In General.-- <<NOTE: Deadline. Reports.>> Not later than 1 year
after the date of enactment of this Act, the Comptroller General of the
United States shall issue a report assessing the relative independence,
effectiveness, and expertise of presidentially appointed inspectors
general and inspectors general of designated Federal entities, as such
term is defined under section 8G of the Inspector General Act of 1978,
and the effects on independence of the amendments to the Inspector
General Act of 1978 made by this Act.
(b) Report.--The report required by subsection (a) shall be issued
to the Committees on Financial Services and Oversight and Government
Reform of the House of Representatives and the Committees on Banking,
Housing, and Urban Affairs and Homeland Security and Governmental
Affairs of the Senate.
SEC. 1506. STUDY ON CORE DEPOSITS AND BROKERED DEPOSITS.
(a) Study.--The Corporation shall conduct a study to evaluate--
(1) the definition of core deposits for the purpose of
calculating the insurance premiums of banks;
(2) the potential impact on the Deposit Insurance Fund of
revising the definitions of brokered deposits and core deposits
to better distinguish between them;
(3) an assessment of the differences between core deposits
and brokered deposits and their role in the economy and banking
sector of the United States;
(4) the potential stimulative effect on local economies of
redefining core deposits; and
(5) the competitive parity between large institutions and
community banks that could result from redefining core deposits.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Corporation shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study under subsection (a) that includes legislative
recommendations, if any, to address concerns arising in connection with
the definitions of core deposits and brokered deposits.
[[Page 124 STAT. 2223]]
TITLE XVI--SECTION 1256 CONTRACTS
SEC. 1601. CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256
CONTRACTS.
(a) In General.--Subsection (b) of section 1256 of the Internal
Revenue Code of 1986 <<NOTE: 26 USC 1256.>> is amended--
(1) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and by indenting
such subparagraphs (as so redesignated) accordingly,
(2) by striking ``For purposes of'' and inserting the
following:
``(1) In general.--For purposes of'', and
(3) by striking the last sentence and inserting the
following new paragraph:
``(2) Exceptions.--The term `section 1256 contract' shall
not include--
``(A) any securities futures contract or option on
such a contract unless such contract or option is a
dealer securities futures contract, or
``(B) any interest rate swap, currency swap, basis
swap, interest rate cap, interest rate floor, commodity
swap, equity swap, equity index swap, credit default
swap, or similar agreement.''.
(b) <<NOTE: 26 USC 1256 note.>> Effective Date.--The amendments
made by this section shall apply to taxable years beginning after the
date of the enactment of this Act.
Approved July 21, 2010.
LEGISLATIVE HISTORY--H.R. 4173 (S. 3217):
---------------------------------------------------------------------------
HOUSE REPORTS: No. 111-517 (Comm. of Conference).
SENATE REPORTS: No. 111-176 (Comm. on Banking, Housing, and Urban
Affairs) accompanying S. 3217.
CONGRESSIONAL RECORD:
Vol. 155 (2009):
Dec. 9-11, considered and passed
House.
Vol. 156 (2010):
May 20, considered and passed
Senate, amended, in lieu of
S. 3217.
June 30, House agreed to conference
report.
July 13, 15, Senate considered and
agreed to conference report.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010):
July 21, Presidential remarks.
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